Palace Capital Plc · LSE:PCA
Palace Capital — Investor Presentation (October 2016)
27 slides from Palace Capital's investor presentation, October 2016
Slide 1: Investor Presentation October 2016
INVESTOR PRESENTATION OCTOBER 2016 Chief Executive - Neil Sinclair Finance Director - Stephen Silvester Executive Director - Richard Starr
Slide 2: Contents
CONTENTS Introduction to Palace Capital 2 Growth Story 4 Financial Update 6 Portfolio Update 11 Market Outlook 25 Summary 26 1
Slide 3: Introduction to Palace Capital
INTRODUCTION TO PALACE CAPITAL Our strategy is to invest in commercial properties in key regional UK towns and cities outside of London • We make corporate and direct property acquisitions • We enhance income returns and reduce void costs through active asset management • We look to generate capital
Slide 4: Why Palace Capital
WHY PALACE CAPITAL Our competitive advantage can be highlighted as follows: Experienced Management Team with a growing reputation. Established regional presence via 53 properties with a carrying value of £174.5m at 31 Mar-16. Quality portfolio with considerable potential for growth both from income
Slide 5: Growth Story Since 2011
GROWTH STORY SINCE 2011 OCT 11 OCT 13 AUG £1.82m Hockenhull Estates portfolio acquisition 14 APR 15 £39.25m Signal portfolio acquisition £23.5m equity fundraising at 200p JUN £32m PIH portfolio acquisition 15 £20m equity fundraising at 310p AUG 15 £10m Bank House, Leeds acquisition FEB Funded from c
Slide 6: Peer Group Performance Comparison
PEER GROUP PERFORMANCE COMPARISON 100.0% 90.0% NAV per share since Sequel transaction (30 months) to 31 Mar-16 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Source: Arden Partners plc We have raised £63.5m equity since RTO in October 2013 and outperformed the listed real estate sector with fa
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS YEAR ENDED 31 MAR-16 FY16 FY 15 Profit Before Tax £11.8m £13.9m Net Assets £106.8m £80.0m EPRA NAV per Share 414p 396p EPRA Earnings £7.7m £4.7m Adjusted Earnings £4.6m £4.8m Basic EPS 44p 82p EPRA EPS 31p 28p Dividend per Share* 16p 13p Dividend Cover 2.0x 2.1x Loan to Value 37
Slide 8: Financial Results
FINANCIAL RESULTS YEAR ENDED 31 MARCH FY 16 FY 15 £000’s £000’s Net Rental Income 12,969 7,437 Admin Costs (2,048) (1,439) Finance Costs (2,264) (1,398) Earnings before tax 8,657 4,600 Tax charge (953) 107 EPRA Earnings 7,704 4,707 Revaluation gains 3,620 9,769 Profits on disposal 290 178 Costs of a
Slide 9: Balance Sheet
BALANCE SHEET 31 March 2016 31 March 2015 31 March 2014 £000’s £000’s £000’s Property Portfolio 174,542 102,988 59,440 Cash 8,576 12,278 5,123 Borrowings (71,944) (35,806) (18,584) Other Net Assets / (Liabilities) (4,359) 556 (1,603) Net Assets 106,815 80,016 44,376 EPRA Net Assets 106,924 80,125 45
Slide 10: Movement in EPRA NAV per ordinary share
Movement in EPRA NAV per ordinary share 10% growth 430.0 420.0 7.0 15.9 3.6 410.0 400.0 Pence 31.3 390.0 11.6 417.6 408.7 404.2 380.0 7.0 384.4 370.0 396.0 377.4 414.0 382.2 377.4 360.0 EPRA NAV Share issue Dividends EPRA NAV EPRA earnings Revaluation Dividends Purchase costs EPRA NAV Mar‐15 discoun
Slide 11: Debt Summary
DEBT SUMMARY Debt Facility Debt Drawn Debt Portfolio/Asset Lender Years (£m) (£m) Maturity Hockenhull Portfolio Close 1.2 1.2 1.0 30/09/2017 Signal Portfolio Nationwide 19.2 19.2 4.1 30/09/2020 PIH and Properties Portfolios NatWest 29.8 26.2 4.4 09/03/2021 Bank House, Leeds Lloyds 4.2 4.2 2.6 28/04/
Slide 12: Portfolio Highlights
PORTFOLIO HIGHLIGHTS MARCH 2015 MARCH 2016 PORTFOLIO 69% VALUATION £103m £174.5m CONTRACTUAL 57% RENTAL INCOME £8.6m £13.5m NET RENTAL INCOME £7.5m 57% £11.8m -1% OCCUPANCY 90% 89% 14% WAULT 4.5 years 6.3 years 11
Slide 13: Property Portfolio
PROPERTY PORTFOLIO OFFICE 43% LEISURE 21% INDUSTRIAL 18% RETAIL 8% RETAIL WAREHOUSE 6% CAR PARK 4% 12
Slide 14: The Year's Journey
THE YEARS JOURNEY BANK HOUSE LEEDS HIGH STREET SUTTON BROAD STREET PLAZA HALIFAX APRIL 2015 AUGUST 2015 £10.0 million £3.95 million MARCH 2016 £24.18 million HUDSON HOUSE MIDSUMMER YORK BOULEVARD MILTON KEYNES SOL CENTRAL NORTHAMPTON JUNE 2015 FEBRUARY 2016 £20.7 million FEBRUARY 2016 £7.225 million
Slide 15: Post Year-End Acquisition
POST YEAR-END ACQUISITION | OFFICE BOULTON HOUSE, MANCHESTER ∙ Purchased for £10.55m in August 2016. ∙ 76,918 sq. ft. ∙ Key tenants: Learn Direct, Trillium, Northern Rail ∙ NIY: 5.5% , Reversionary: 9.27% ∙ WAULT: 1.84 years ∙ Occupancy: 82.5% ∙ Multi-let office building in the heart of Manchester.
Slide 16: Acquisitions: Broad Street Plaza, Halifax
ACQUISITIONS | LEISURE BROAD STREET PLAZA, HALIFAX ∙ Purchased for £24.2m in March 2016. ∙ 113,000 sq. ft. ∙ Key tenants: Vue Cinema, Pizza Express, JD Wetherspoon, Apcoa, NHS, Mitchells & Butlers, TGI Fridays ∙ NIY: 7.25% ∙ WAULT: 14 years ∙ ROE: 16% in 2017 ∙ New 10 year facility. £15.2m , 2.9% 15
Slide 17: Acquisitions: Midsummer Boulevard, Milton Keynes
ACQUISITIONS | OFFICE MIDSUMMER BOULEVARD, MILTON KEYNES ∙ Purchased for £7.2m in February 2016 ∙ 49,000 sq. ft. ∙ Occupancy: 100% ∙ Key tenants: DHL and Crawford & Co Loss Adjusters ∙ NIY: 7.2% ∙ WAULT: 2.45 years 16
Slide 18: Acquisitions: Sol Central, Northampton
ACQUISITIONS | LEISURE SOL CENTRAL, NORTHAMPTON ∙ Purchased for £20.7m in June 2015 ∙ 189,298 sq. ft. ∙ Key tenants: Vue Cinema, Accor Hotels ∙ NIY: 8.9% ∙ WAULT: 12.19 years ∙ Progress: Gala surrender of lease for £3.8m and £0.2m rates refund. ∙ Strip out of Gala space completed. ∙ Architect appoin
Slide 19: Acquisitions: Bank House, Leeds
ACQUISITIONS | OFFICE BANK HOUSE, KING STREET, LEEDS ∙ Purchased for £10m in April 2015 ∙ 88,036 sq. ft. ∙ Key tenants: Bank of England, Walker Morris Solicitors ∙ NIY: 8.1% ∙ WAULT: 2.9 years ∙ Occupancy: 78% ∙ Progress: Minor refurbishment works to vacant space. Ready for letting in Autumn 2016. 1
Slide 20: Acquisitions: 46-54 High Street, Sutton
ACQUISITIONS | OFFICE 46-54 HIGH STREET, SUTTON ∙ Purchased for £3.95m in August 2015. ∙ 21,056 sq. ft. ∙ Key tenants: London Borough of Sutton, Foxtons ∙ NIY: 8.0% ∙ WAULT: 6.5years ∙ Occupancy: 100% 19
Slide 21: Operational Highlights
OPERATIONAL HIGHLIGHTS INVESTMENT ASSET MANAGEMENT ● Ovest House, Brighton: Refurbishment works completed Acquisitions £76.5 million following dilapidation settlement. Leases exchanged for Boulton House, Manchester £10.55m, 5.5% NIY all upper floors to Quarto Publishing plc. Broad Street Plaza, Hali
Slide 22: Hudson House, York
HUDSON HOUSE, YORK | OFFICE HUDSON HOUSE, YORK ∙ 103,000 sq ft ∙ Well located in the heart of York ∙ Fast non-stop train service into London ∙ Approval secured for change of use to 139 residential apartments in February 2016 ∙ Resolution to grant permission in April 2016 from City of York Council to
Slide 23: Portfolio Update
PORTFOLIO UPDATE 2-4 PITFIELD KILN FARM, MILTON KEYNES | A&B, BRIDGE RETAIL PARK, EAST GRINSTEAD | WINCHESTER ST, SALISBURY | SANDRINGHAM HOUSE, HARLOW | 22
Slide 24: Portfolio Update
PORTFOLIO UPDATE DARTFORD STOCKPORT EXETER Convert vacant offices to 13 residential flats. Surrender of lease completed. 3rd floor on market to let. To complete during October 2015. Under offer for sale. COVENTRY BRIGHTON STAINES Refurbished vacant office space Refurbished vacant office building Let
Slide 25: Portfolio Update
PORTFOLIO UPDATE MALDON LEAMINGTON SPA STOKE ON TRENT Part sold. Refurbished vacant suite. Sold. On market to let. SOUTHAMPTON FARNBOROUGH AVONMOUTH Negotiate with council and adjoining owners for Letting of vacant units and rent review Medium term development opportunity. potential mixed use develo
Slide 26: Market Outlook
MARKET OUTLOOK POSITIVE OUTLOOK We consider total returns from UK commercial property outside of London will continue to be generated from a combination of capital and rental growth. ∙ Demand for space in good quality regional towns is increasing, improving terms for landlords and resulting in reduc
Slide 27: Summary
SUMMARY Palace Capital has made excellent progress in the past 18 months: Profit before tax for the year ended 31 Mar-16 of £11.8m EPRA NAV per share growth of 5% to 414 pence at 31 Mar-16, 10% post Jun-15 equity raise £20m equity raised and £80m new debt facilities completed in the year 5 a
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