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Palace Capital (PCA)

Business description

Palace Capital is a UK property investment company. It is not sector-specific and looks for opportunities where it can enhance long-term income and capital value through asset management and strategic capital development in locations outside London.

Investment summary

FY18 was one of significant development and growth for Palace, including the £68m acquisition of RT Warren, its largest acquisition to date, a £70m capital raise and a move to trading on the Main Market of the LSE. The shares joined the FTSE Small Cap Index and FTSE All Share Indices on 18 June. Primarily reflecting RT Warren, assets and income grew significantly. Adjusted EPS of 21.1p covered the increased DPS of 19.0p (FY17: 18.5p) 1.1x. Diluted EPRA NAV per share of 414p benefitted from valuation gains, and was higher than we forecast, while LTV reduced to 30%, with cash and unutilised debt facilities providing headroom for accretive acquisitions. Although our forecasts show the increased FY19 DPS less than fully covered, acquisitions are not factored into our forecast and neither is upside from the significant asset management opportunity offered by the enlarged portfolio. The shares offer an attractive yield and trade at a significant discount to NAV.

Last updated on 29/06/2018

Y/E Mar Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2017A 14.3 9.3 6.7 22.2 15.8 N/A
2018A 16.7 10.7 8.5 21.2 16.5 N/A
2019E 18.2 13.5 9.7 17.2 20.3 N/A
2020E 18.5 14.0 10.2 18.1 19.3 N/A

Last updated on 25/06/2018

Latest video

Executive interview - Palace Capital

Industry outlook

Regional occupier demand is generally firm, driven by continuing economic growth and business relocation away from London, while new supply remains limited. Meanwhile, the yield spread between the regions and London remains historically wide, representing a clear potential for narrowing.

Last updated on 29/06/2018

Key management

Neil Sinclair, CEO
Stephen Silvester, CFO

Company address

One George Yard
London
EC3V 9DF
United Kingdom
+44 (0)20 3301 8335
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