Slide 1: Investor Presentation: FY17 Annual Results
INVESTOR PRESENTATION FY17 Annual Results June 2017 Chief Executive - Neil Sinclair Finance Director - Stephen Silvester Executive Director - Richard Starr Chief Executive - Neil Sinclair Finance Director - Stephen Silvester Executive Director - Richard Starr
Slide 2: Contents
CONTENTS Introduction & Highlights NEIL SINCLAIR, CHIEF EXECUTIVE Financial Results STEPHEN SILVESTER, FINANCE DIRECTOR Portfolio Review RICHARD STARR, EXECUTIVE DIRECTOR Conclusions NEIL SINCLAIR, CHIEF EXECUTIVE Q&A 1
Slide 3: Presentation Team
PRESENTATION TEAM NEIL SINCLAIR STEPHEN SILVESTER RICHARD STARR CHIEF EXECUTIVE FINANCE DIRECTOR EXECUTIVE DIRECTOR 2
Slide 4: Introduction: Who Are Palace Capital plc?
INTRODUCTION LSE: PCA WHO ARE PALACE CAPITAL plc? Palace Capital is a unique AIM-listed UK Real Estate company, focused outside London • Identified as one of the top 25 property growth companies 2017 • The company has driven and will • Palace Capital has grown its NAV per continue to drive rental in
Slide 5: Our Strategy
OUR STRATEGY To invest in regional commercial property outside of London, through corporate & direct property investment, diversified by sector and location. ACTIVE ASSET MANAGEMENT STRATEGIC CAPEX AND DEVELOPMENT We enhance income returns and reduce vacant costs We generate income and capital growt
Slide 6: Highlights: FY17
HIGHLIGHTS: FY17 ACTIVE ASSET MANAGEMENT OPPORTUNISTIC ACQUISITIONS • IFRS profit before tax £12.6m +7% • Acquisition of Boulton House, Central (FY16: £11.8m) Manchester office building for £10.6m at a NIY 5.5% and reversionary yield of 8.5% • Portfolio Valuation £183.2m +6% • Total ownership of 44
Slide 7: Financial Results
FINANCIAL RESULTS FY17 FY16 Movement BALANCE SHEET Property Portfolio £183.2m £173.4m +6% Net Assets £109.6m £106.8m +3% EPRA NAV per Share 443p 414p +7% Loan to Value 37% 37% - INCOME STATEMENT IFRS Profit Before Tax £12.6m £11.8m +6% Adjusted PBT* £6.7m £5.6m +20% Adjusted EPS 22.2p 18.9p +17% Div
Slide 8: Earnings
EARNINGS FY17 FY16 £m £m Net Rental Income 12.2 9.8* +24% Administrative Expenses (2.7) (1.9) Net Finance Costs (2.8) (2.3) Adjusted Profit Before Tax 6.7 5.6 +20% Tax Charge (1.0) (1.0) Adjusted Profit After Tax 5.7 4.6 +24% Revaluation Gains 3.1 3.6 Profits on Disposal 3.2 0.3 Cost of Acquisitions
Slide 9: Dividends & Performance
DIVIDENDS & PERFORMANCE PEER GROUP COMPARISON Track Record of delivering progressive dividend NAV per share since the Signal acquisition (3.5 years) to 31 Mar-17 9.5p 120% 9.0p 9.0p 100% 80% 7.0p 7.0p 6.0p 60% 40% 20% 2.5p 0% Jul-14 Dec-14 Jul-15 Dec-15 Jul-16 Dec-16 Jul-17 2017 final dividend of 9.
Slide 10: Balance Sheet
BALANCE SHEET FY17 FY16 £m £m Property Valuations 183.2 173.4 Cash 11.2 8.6 Borrowings (77.8) (71.9) Other Net Assets / (Liabilities) (4.8) (3.3) EPRA Net Assets 111.8 106.8 Deferred Tax Liability (2.2) - Net Assets 109.6 106.8 NAV per share 436p 414p EPRA NAV per share 443p 414p LTV % 37% 37% CAPIT
Slide 11: Capital Growth
CAPITAL GROWTH Movements in EPRA NAV per share Pence 460.0 18.0 450.0 22.2 2.0 2.1 440.0 12.6 430.0 420.0 12.3 443.1 441.0 443.0 443.0 438.9 426.3 410.0 414.0 414.0 400.0 EPRA NAV Revaluation Profits on Adjusted Dividends Purchase & Share buy-back EPRA NAV Mar-16 Gains disposal Earnings refinance co
Slide 12: EPRA NAV Growth & Accounting Return
EPRA NAV Growth & Accounting Return Palace Capital continues to outperform its peer group in the year to 31 March 2017 growing NAV per share 7%. 29p NAV growth + 18p Dividends paid in the year: The Company has generated a strong Accounting Return of 11.4%. 1 yr NAV Growth to 31 Mar 2017 8.0% 6.0% 4.
Slide 13: Debt Summary
DEBT SUMMARY Debt Facility Debt Drawn Debt Lender Years (£m) (£m) Maturity Scottish Widows 15.0 15.0 9.3 06/07/2026 NatWest 29.3 25.7 3.9 11/03/2021 Nationwide 18.2 18.2 3.6 11/11/2020 Santander 15.7 15.7 3.2 15/06/2020 Lloyds 4.1 4.1 2.1 28/04/2019 82.3 78.7 4.6 FY17 FY16 Property Portfolio Gross D
Slide 14: Property Acquisition Story
PROPERTY ACQUISITION STORY OCT 11 OCT 13 AUG £1.8m Hockenhull Estates portfolio 14 APR £39.2m Signal portfolio 15 £23.5m equity fundraising at 200p JUN £32m PIH portfolio 15 £20m equity fundraising at 310p AUG £10m Bank House, Leeds 15 Funded from cash FEB £20.7m Sol Central, Northampton Portfolio g
Slide 15: Property Portfolio
PROPERTY PORTFOLIO PROPERTY VALUATION £183.2m CONTRACTUAL RENTAL INCOME £12.7m NET RENTAL INCOME £11.0m OCCUPANCY 91% WAULT 5.8 years (to break) 42% 24% 20% 10% 4% 14
Slide 16: Portfolio Metrics
PORTFOLIO METRICS The portfolio is diversified by both sector and geographically and has no exposure to Central London. The top 10 tenants contribute 31.5% of all contractual income, providing security of income streams on the basis of strong credit ratings and low risk of default. TOP 10 TENANTS GE
Slide 17: Hudson House, York
HUDSON HOUSE, YORK | OFFICE HUDSON HOUSE, YORK ∙ 103,000 sq ft ∙ One minute’s walk from York station ∙ Fast, 110 minute non-stop train service into London ∙ Approval secured for change of use to 139 residential apartments in February 2016 ∙ Planning permission was granted by City of York Council in
Slide 18: Broad Street Plaza, Halifax
BROAD STREET PLAZA, HALIFAX | LEISURE BROAD STREET PLAZA, HALIFAX ∙ Purchased for £24.2m in March 2016. ∙ 118,000 sq. ft. ∙ Key tenants: Vue Cinema, Pizza Express, JD Wetherspoon, Apcoa, NHS, Mitchells & Butlers, TGI Fridays ∙ WAULT: 13.2 years ∙ Fixed rental increases driving 17% ROE for FY18 ∙ 10
Slide 19: Boulton House, Manchester
BOULTON HOUSE, MANCHESTER | OFFICE BOULTON HOUSE, MANCHESTER ∙ Purchased for £10.6m in August 2016 ∙ 75,000 sq. ft. ∙ Key tenants: Learn Direct, Trillium, Northern Rail ∙ WAULT: 1.4 years ∙ Vacant space refurbishment completed and currently being marketed to let ∙ Entrance refurbishment underway ∙ M
Slide 20: Copperfields, Dartford
COPPERFIELDS, DARTFORD COPPERFIELDS, DARTFORD ∙ 24,000 sq. ft. mixed-used scheme ∙ Purchased as part of the Signal portfolio ∙ Following the office tenant vacating, we obtained permission to convert the office space to 13 residential flats in a £2.1m scheme which was completed in December 2016 ∙ Dar
Slide 21: Sol Central, Northampton
SOL CENTRAL, NORTHAMPTON | LEISURE SOL CENTRAL, NORTHAMPTON ∙ Purchased for £20.7m in June 2015 ∙ 189,000 sq. ft. ∙ Key tenants: Vue Cinema, Accor Hotels ∙ WAULT: 8.9 years ∙ Rental income uplift from car park expected and additional turnover rent of £90,000 received from Accor in the last financial
Slide 22: Maldon, Essex
MALDON, ESSEX | OFFICE MALDON DISPOSAL ∙ Purchased for £2.0m in October 2013 ∙ 75,000 sq. ft. ∙ Investigated potential for residential conversion ∙ Ten year lease incorporating minimum rental increases was agreed with existing tenant, Rockwell Automation, with a mutual break at years 3 and 7 ∙ Limit
Slide 23: Valuations
VALUATIONS Market Value Market Value Surplus/ Movement FY17 FY16 (deficit) % £m £m £m Offices £65.4 £61.9 £3.5 5.7% Industrial £36.6 £33.6 £3.0 8.9% Leisure £43.0 £42.6 £0.4 1.0% Retail £18.4 £16.3 £2.1 12.9% Retail Warehouse £7.7 £7.8 -£0.1 -1.3% Like-for-like £171.1 £163.6 £8.9 4.5% Acquisitions £
Slide 24: Portfolio Analysis
PORTFOLIO ANALYSIS Gross WAULT Market Value % of Portfolio by No. No. Area ERV Rental Income To Break (£) Market Value Properties Leases (sq. ft.) (£ p.a.) (£ p.a.) (yrs) Retail 18,435,000 10.1% 10 36 105,222 £1,463,519 £1,726,940 5.1 Offices 77,495,000 42.3% 16 70 594,363 £4,534,500 £7,050,986 3.5
Slide 25: Lease Expiries
LEASE EXPIRIES Weighted average unexpired lease term of 5.8 years at 31 March 2017 Lease Expiries by gross rental income (%) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2017 2018 2019 2020 2021 2022+ Retail Offices Leisure Industrial Retail Warehouses The portfolio is diversified across the regional m
Slide 26: Top Assets
TOP 10 ASSETS TOP 10 ASSETS MAKE UP 61% OF OUR TOTAL PORTFOLIO % of Market Area Gross WAULT Portfolio by Value (Sq. ft.) Rental Income To Break Market Value 31 Mar-17 (£ p.a.) (yrs) Broad Street Plaza, Halifax 13.2% £24.3m 117,768 £1,785,285 13.2 Sol Central, Northampton 10.1% £18.6m 129,703 £1,764,
Slide 27: Looking to the Future
LOOKING TO THE FUTURE • Palace Capital is uniquely positioned in the market to deliver sector-leading income & capital returns (NAV up 103% in 3.5 years) • Regional diversified portfolio outside London continues to outperform peer group (NAV up 7% for FY17) • Strong cash generation at modest rents i
Slide 28: Selection from the Portfolio
SELECTION FROM THE PORTFOLIO A&B, BRIDGE RETAIL PARK, EAST GRINSTEAD WINCHESTER STREET, SALISBURY SANDRINGHAM HOUSE, HARLOW 249 MIDSUMMER BOULEVARD, MILTON KEYNES POINT 4 INDUSTRIAL ESTATE, AVONMOUTH THE FORUM, EXETER 27
Slide 29: Selection from the Portfolio
SELECTION FROM THE PORTFOLIO IMPERIAL COURT & IMPERIAL HOUSE, FRASER HOUSE, STAINES LEAMINGTON SPA OVEST HOUSE, BRIGHTON HARNHAM BUSINESS PARK, SALISBURY PRINCETON HOUSE, FARNBOROUGH 28
Slide 30: FY17 Annual Results
FY17 ANNUAL RESULTS ALAC rat ple s$4, London EBA Stock Exchange Group 1000 COMPANIES TO INSPIRE NV BRITAIN: Uniquely positioned M Sector-leading returns VJ Palace Capital plc 25 Bury Street St James's London SW1Y 6AL