Palace Capital Plc · LSE:PCA
Palace Capital — H1 2018 Earnings Presentation
24 slides from Palace Capital's earnings presentation, December 2017
Slide 1: Investor presentation – Interim Results to 30 Sep 2017
Investor presentation – Interim Results to 30 Sep 2017 December 2017 Uniquely positioned Chief Executive - Neil Sinclair Sector-leading Finance Director - Stephen Silvester Executive Director - Richard Starr Chief Executive - Neil Sinclair Finance Director - Stephen Silvester Executive Director - Ri
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
INTRODUCTION • Palace Capital is a unique AIM-listed UK commercial real estate investment company, focused outside London. • It has been identified by the London Stock Exchange as one of the top 25 property growth companies for 2017. • Palace Capital has grown its NAV per share by 107% since October
Slide 5: Highlights
HIGHLIGHTS FINANCIAL OPERATIONAL • Contracts exchanged for the transformational £68m acquisition of • Interim dividend up 5.6% to 9.5p (H1 2017: 9p) RT Warren (Investments)Ltd completed post period-end on 9th • EPRA NAV per share 451p +1.8% (Mar-17: 443p) October 2017 • Corporate acquisition of St J
Slide 6: Post Fundraise Activity
POST FUNDRAISE ACTIVITY • Progress securing JV partner at Hudson House, York • London Court, Southampton let within six weeks of R.T. Warren ownership • Two vacant property sales due to complete before Christmas, reducing shortfalls • Asset management at Farnborough, Kettering, Newbury and East Grin
Slide 7: Financial Results
FINANCIAL RESULTS BALANCE SHEET Sep-17 Mar-17 Movement Property Portfolio £202.8m £183.2m +11% Net Assets £111.6m £109.6m +1.8% EPRA NAV per Share 451p 443p +1.8% Loan to Value 42% 37% - INCOME STATEMENT H1 2018 H1 2017 Movement IFRS Profit Before Tax £4.9m £3.9m +26% Adjusted PBT* £3.7m £3.2m +16%
Slide 8: Earnings
EARNINGS H1 2018 H1 2017 Movement £m £m Net Rental Income 6.5 5.9 +10% Administrative Expenses (1.4) (1.3) Net Finance Costs (1.4) (1.4) Adjusted Profit Before Tax 3.7 3.2 +16% Tax Charge (0.5) (0.5) Adjusted Profit After Tax 3.2 2.7 +19% Revaluation Gains 1.4 - Profits on Disposal (0.2) 0.9 Non-rec
Slide 9: Dividends & Performance
DIVIDENDS & PERFORMANCE 9.5p 9.5p 9.0p Track Record of delivering progressive dividend 9.0p 7.0p INCOME 7.0p 6.0p • Interim dividend of 9.5p payable 29th Dec-17 (to all 45.8m shares currently in issue) 2.5p • Ex div date 7th Dec-17 • Record date: 8th Dec-17 Jul-14 Dec-14 Jul-15 Dec-15 Jul-16 Dec-16
Slide 10: Balance Sheet
BALANCE SHEET Sep-17 Mar-17 £m £m Property Valuations 202.8 183.2 Cash 8.7 11.2 Borrowings (92.7) (77.8) Other Net Assets / (Liabilities) (4.7) (4.8) EPRA Net Assets 114.1 111.8 Deferred Tax Liability (2.5) (2.2) Net Assets 111.6 109.6 NAV per share 442p 436p EPRA NAV per share 451p 443p LTV % 42% 3
Slide 11: £93.8m debt facilities
DEBT SUMMARY Debt Facility Debt Drawn Debt Lender Years (£m) (£m) Maturity Scottish Widows 14.8 14.8 8.8 06/07/2026 100% fixed NatWest 31.3 31.3 3.4 11/03/2021 Includes £20m RCF Nationwide 16.8 16.8 3.1 11/11/2020 To be refinanced in 2018 Santander 27.0 27.0 4.8 03/08/2022 Refinanced in this period
Slide 12: Property Acquisition Story
PROPERTY ACQUISITION STORY Hockenhull PIH portfolio £20m 249 Midsummer Boulton House, R.T. Warren portfolio, Sol Central, Northampton Estates portfolio equity fundraising at Boulevard, Milton Manchester. £70m equity £20m equity fundraising AUG 310p Keynes. Funded Funded 16 from cash fundraise at 340
Slide 13: Property Portfolio
PROPERTY PORTFOLIO Including RT Warren As at 30/09/17 PROPERTY VALUATION £274.6m £202.8m CONTRACTUAL RENTAL INCOME £17.8m £14.1m NET RENTAL INCOME £15.8m £12.4m ERV (excluding Hudson House) £20.7m £16.1m WAULT (to break) 4.8 years 5.2 years RT Warren portfolio Existing portfolio 12
Slide 14: 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 34% of all contractual income, providing security of income streams on the basis of strong credit ratings and low risk of default. TOP 10 TENANTS GEOG
Slide 15: R.T. Warren Portfolio
R.T. WARREN PORTFOLIO York – Lendal Southampton - London Court Winchester - Hyde Abbey House Negotiating to let vacant retail space Letting of 11,638 sq ft @ £150,000 per Progress on outstanding dilapidations. annum for 10 years with 5 year break Awaiting advice on office refurbishment Interest from
Slide 16: St James Gate, Newcastle-upon-Tyne
ST JAMES GATE, NEWCASTLE-UPON-TYNE | OFFICE • £20m corporate acquisition • Freehold multi let office building of 82,500 sq ft and 16,500 sq ft of retail space • City centre location, close to the Railway Station • Passing rental of £1.765m per annum reflecting a net initial yield of 8.6% • WAULT: 4.
Slide 17: Boulton House, Manchester
BOULTON HOUSE, MANCHESTER 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 and ground floor reception refurbished ∙ 30% of the space vacant at purchase now let @ £17.25psf | OFFICE
Slide 18: 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: 8.6 years ∙ Rental income uplift from car park expected and additional turnover rent of £90,000 received from Accor in the last financial
Slide 19: Portfolio Analysis (30 Sep 17)
PORTFOLIO ANALYSIS (30 Sep 17) Gross % of Portfolio by No. No. ERV Market Value (£) Rental Income Market Value Properties Leases (£ p.a.) (£ p.a.) Retail 14,205,000 7.0 6 39 1,372,925 1,531,855 Offices 103,975,000 51.3 17 91 6,476,684 8,977,388 Leisure 42,325,000 20.9 4 22 3,776,732 3,457,225 Indust
Slide 20: Top 10 Assets
TOP 10 ASSETS TOP 10 ASSETS MAKE UP 65% OF OUR TOTAL PORTFOLIO % of Market Area Gross WAULT Portfolio by Value (Sq. ft.) Rental Income To Break Market Value 30 Sep-17 (£ p.a.) (yrs) Broad Street Plaza, Halifax 11.8 £24.0m 117,768 1,948,979 12.9 2&3 St James Gate, Newcastle upon Tyne 9.9 £20.0m 99,06
Slide 21: Interim Results – Looking to the Future
INTERIM RESULTS – LOOKING TO THE FUTURE • Palace Capital is uniquely positioned in the market to deliver sector-leading income & capital returns • Regional diversified portfolio outside London continues to outperform peer group • Continue to source and execute off-market transactions • Recycling of
Slide 22: 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 21
Slide 23: 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 22
Slide 24: RT Warren Portfolio
RT WARREN PORTFOLIO Warren House, Thame Millbarn Medical, Beaconsfield Aldi, Gosport Westminster House, Gerrards Cross High Street, Uxbridge Black Moor Road, Verwood Harbour Court, Portsmouth Pelham Square, Brighton 23