Palace Capital Plc · LSE:PCA
Palace Capital — FY2022 Earnings Presentation
30 slides from Palace Capital's earnings presentation, June 2022
Slide 1: Palace Capital Plc Final Results, Year Ended 31 March 2022
EXPERTS IN REGIONAL PROPERTY PALACE CAPITAL PLC FINAL RESULTS YEAR ENDED 31 MARCH 2022
Slide 2: Agenda
EXPERTS IN REGIONAL PROPERTY Agenda Corporate update Key highlights Financial review Operational review Outlook Appendices Page 1 | Palace Capital plc | Investor Presentation June 2022 | palacecapitalplc.com
Slide 3: Corporate Update
OVERVIEW Corporate Update ⚫ The Board announced on 14 June that CEO Neil Sinclair had stepped down and that Steven Owen, previously Non-Executive Chairman, would assume the role of Interim Executive Chairman with immediate effect ⚫ The Board announced in the Trading Update on 6 April that, in consul
Slide 4: Key Highlights
OVERVIEW Key Highlights ⚫ Total property return +12.5% (2021: +1.0%) ⚫ Total accounting return +14.8% (2021: -1.2%) ⚫ Adjusted profit before tax +4.0% to £7.8m (2021: -6.3% to £7.5m) Acquisition January 2022: Market street, Maidenhead ⚫ EPRA NTA + 11.4% to 390p per share (2021: -3.8% to 350p) ⚫ Like
Slide 5: Key Financial Highlights
FY22: FINANCIAL REVIEW A strong performance underpinned by the Key Financial Highlights resilience of our portfolio ADJUSTED PROFIT IFRS PROFIT EPRA NTA ANNUAL NET LTV PER SHARE BEFORE TAX BEFORE TAX DIVIDEND £7.8m £24.6m 390p 13.25p 28% +4.0% Up £30.1m +11.4% +26.2% FY21: £7.5m FY21: (£5.5m) FY21:
Slide 6: Financial Performance
FY22: FINANCIAL REVIEW Financial Performance Year ended 31 March 2022 FY22 FY21 Change FY22 FY21 INCOME STATEMENT BALANCE SHEET Gross property income £17.5m £17.3m +1.2% Portfolio value £259.0m £282.8m Trading property revenue £27.4m - Cash £28.1m £9.4m Other income* £4.2m £5.0m Drawn debt £101.8m £
Slide 7: Income Statement Review
FY22: FINANCIAL REVIEW Income Statement Review Execution of business strategy producing strong profits £27.0m £25.0m £0.2m £23.0m IFRS profit before tax £3.8m £21.0m increased to £24.6m (FY21: £19.0m £5.5m loss) as a result of: £5.0m £17.0m ⚫ Increase in our property £15.0m £24.6m valuations of £8.2
Slide 8: Balance Sheet Strengthened
FY22: FINANCIAL REVIEW Balance Sheet Strengthened EPRA NTA per share movement in the year 410p 2.0p 400p 8.2p (11.7p) 390p 10.7p (3.8p) 380p March March Change 17.7p 2022 2021 370p EPRA NTA £180.6m £161.3m +12.0% 360p 390p EPRA NTA per share 390p 350p +11.4% 16.9p +1,600 350p Total accounting return
Slide 9: Capital Structure
FY22: FINANCIAL REVIEW Capital Structure Significantly reduced debt with conservative gearing ⚫ Cash and cash equivalents of £28.1m at 31 March 2022, at 10 June £22.7m* Debt Debt Debt ⚫ Debt reduced by £26.5m in the year, including £20.6m of the Lender Facility Drawn Maturity Hedging development fac
Slide 10: Property Portfolio - Overview
OPERATIONAL REVIEW Property Portfolio - Overview Portfolio repositioning underway March March 2021 2022 Portfolio value £282.8m £259.0m* 3.8% Net initial yield** 5.6% 5.6% 8.9% Reversionary yield 7.3% 7.5% Office Contractual rental income** £16.4m £15.9m 9.1% Industrial Estimated rental value*** £20
Slide 11: ESG Focus
OPERATIONAL REVIEW ESG Focus Playing our part in being a responsible business Stakeholder feedback incorporated into Purpose and Strategy Collaborative approach to Dedicated engagement & action programme with tenants reflect all stakeholders Recommendations from Workforce Advisory Panel fed directly
Slide 12: Implementing ESG
Portfolio EPC rating OPERATIONAL REVIEW 40% 37% 38% 34% 31-Mar-21 31-Mar-22 28% Implementing ESG 30% 20% 15% 16% 9% 10% Future Proofing Our Portfolio 10% 1% 1% 7% 1% 1% 0% 0% A B C D E F G E • Overall upgrade of portfolio CASE STUDIES: • 89% of portfolio with ratings of A-D • £5m capex FY22. £10m al
Slide 13: Valuations
OPERATIONAL REVIEW Valuations Improved valuations following completed asset management initiatives EPRA Market value Market value Net Gain/(loss) topped up Reversionary 31 March 31 March Initial % Net Initial Yield ⚫ Like for like valuations up 2021 (£) 2022 (£) Yield Yield*** 3.9% Offices* 110,754,
Slide 14: Asset Management
OPERATIONAL REVIEW Asset Management Strong letting activity in the year ⚫ 55 lease events to 31 March, providing £2.1m +17% additional income of £1.9m pa made up of: £1.8m ⚫ 22 new leases: 17% ahead of ERV, providing Adding value +10% additional income of £1.6m pa £1.5m to our ⚫ 22 lease renewals: 1
Slide 15: Portfolio Growth Potential
OPERATIONAL REVIEW Portfolio Growth Potential +22% potential uplift £21.0m ⚫ Majority of reversion is £20.0m £0.2m through letting vacant (£0.5m) space £19.0m £1.6m ⚫ Dedicated resource in the £18.0m team focused on letting £19.4m vacant units £17.0m £2.2m ⚫ 123,400 sq ft of new lettings £16.0m in t
Slide 16: Hudson Quarter
OPERATIONAL REVIEW Hudson Quarter Strong residential sales & office lettings ⚫ 84 apartments completed or exchanged for a total of £29.1m, 7 under offer to the value of £2.9m and 36 units remaining ⚫ £26.5m development loan repaid 8 months ahead of schedule ⚫ Over 18,000 sq ft of office space let, w
Slide 17: Disposal Strategy
OPERATIONAL REVIEW Disposal Strategy £30m of disposals completed, ahead of target £31.5m 19% 12% £15.4m 11% ABOVE FY21 BOOK ABOVE PURCHASE NET EQUITY SALES PROCEEDS VALUE PRICE RECEIVED UNGEARED IRR ⚫ Higher quality portfolio of 37 properties at 31 March 2022, with HISTORIC DISPOSAL PERFORMANCE impr
Slide 18: Strategy in Action
OPERATIONAL REVIEW Sector: Office Location: South East Strategy in Action Size (sq ft): 21,852 Maidenhead office acquisition Price: £10.25m Yield: 6.83% ⚫ In line with our disciplined investment strategy focused on good quality regional towns and city centres with rental growth Lease term: 5 years C
Slide 19: Outlook
LOOKING FORWARD Outlook ✓ Macroeconomic and geo-political uncertainty likely to constrain UK economic growth ✓ Well placed with regional portfolio set to benefit from Levelling Up agenda ✓ Further disposals of non-core assets and Hudson Quarter apartments to generate cash and improve overall portfol
Slide 20: Appendices
EXPERTS IN REGIONAL PROPERTY APPENDICES
Slide 21: Income statement & dividends
APPENDICES Income statement & dividends Year ended 31 March 2022 FY22 FY21 (£’m) (£’m) FY18 FY19 FY20 FY21 FY22 INCOME STATEMENT Adjusted EPS 21.2p 17.3p 17.5p 16.4p 16.9p Adjusted profit before tax 7.8 7.5 Dividend per share 19.0p 19.0p 12.0p 10.5p 13.25p Fair value of options, (0.4) (0.3) Dividend
Slide 22: Rent collection and bad debt provisions
APPENDICES Rent collection and bad debt provisions Year ended 31 March 2022 FY22 Rent Rent Cash Collection 31 March 31 March BY ACTIVITY collection Demanded Collected rate 2022 2021 Office £8.16m £8.04m 98% CVA/administration - £0.5m Industrial £2.47m £2.42m 99% Other leisure and retail £0.5m £0.5m
Slide 23: Top 20 Tenant Rent Collection
APPENDICES Top 20 Tenant Rent Collection 100% of rent secured Sustainable income: 41% of passing rents from top 20 tenants from Top 20 Tenants Contracted Contracted FY22 rent FY22 rent Tenant Location Industry Rent pa Tenant Location Industry Rent pa collection collection (£’000) (£’000) Halifax Lei
Slide 24: Regional portfolio
APPENDICES Regional portfolio Focused on office & industrial growth sectors ⚫ Balanced portfolio of 37 properties ⚫ Diversified granular income ⚫ 164 tenants in the portfolio ⚫ Top 20 tenants represent 41% of portfolio ⚫ WAULT to break of 4.7 years ⚫ Low risk & defensive characteristics ⚫ Located cl
Slide 25: Sector splits
APPENDICES Sector splits Regional Office and Industrial focus Market value % of Portfolio WAULT No. No. Contractual rental Total ERV 31 March by market Area (sq ft) ERV (£)* to break properties leases income p.a. (£) of void (£) 2021 (£) value (yrs) Offices 122,125,000 47.2% 19 93 633,591 7,486,455
Slide 26: Top assets by value
APPENDICES Top 10 assets by value 58% of total portfolio Area Gross rental Reversionary WAULT to Property Name Sector (sq ft) income p.a. (£) yield* break (yrs) Hudson Quarter, York - Residential Development n/a n/a n/a n/a Broad Street Plaza, Halifax Leisure 117,767 1,829,618 7.33% 10.1 2 & 3 St Ja
Slide 27: EPRA Occupancy
APPENDICES EPRA Occupancy 89.0% 0.5% 87.0% 2.0% 85.0% 2.2% (4.2%) 83.0% 3.4% 88.5% 81.0% (1.8%) 86.4% 79.0% 77.0% 75.0% EPRA Occupancy HQ commercial Vacancies New leases (excl. Disposals HQ new leases ERV change EPRA Occupancy at 31 March 2021 PC HQ) at 31 March 2022 Page 26 | Palace Capital plc | I
Slide 28: Biographies
Biographies STEVEN OWEN MATTHEW SIMPSON RICHARD STARR Interim Executive Chairman Chief Financial Officer Executive Property Director Steven is the Non-Executive Chairman Chartered Certified Accountant Chartered Surveyor MRICS of FTSE 250 property investment FCCA Richard joined Palace Capital in 2013
Slide 29: Disclaimer
Disclaimer The information in this presentation may include forward-looking statements, which are based on current expectations and projections about future events. These forward looking statements reflect the Directors’ beliefs and expectations and are subject to risks, uncertainties and assumption
Slide 30: mi noon
mi noon oon jelole! aaa PALACE CAPITAL plc