Slide 1: Annual Results Investor Presentation – June 2016
ANNUAL RESULTS INVESTOR PRESENTATION – JUNE 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 24 Summary 25 1
Slide 3: Introduction to Palace Capital
INTRODUCTION TO PALACE CAPITAL • Our strategy is to invest in commercial properties in key regional UK town 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 capita
Slide 4: Why Palace Capital
WHY PALACE CAPITAL Our competitive advantage can be highlighted as follows: 1. Experienced Management Team with a growing reputation. 2. Established regional presence via 54 properties with a carrying value of £174.5m. 3. Quality portfolio with considerable potential for growth both from income and
Slide 5: Growth Story Since 2011
GROWTH STORY SINCE 2011 OCT OCT 11 AUG 13 14 £1.82m Hockenhull Estates portfolio acquisition APR £39.25m Signal portfolio acquisition £23.5m equity fundraising at 200p 15 JUN £32m PIH portfolio acquisition 15 £20m equity fundraising at 310p £10m Bank House, Leeds acquisition Funded from cash AUG Por
Slide 6: Peer Group Performance Comparison
PEER GROUP PERFORMANCE COMPARISON Source: Arden Partners We have raised £63.5m equity since IPO in August 2013 and outperformed the listed real estate sector with faster NAV growth than the above peer group. 5
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS 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% 23% EPRA is the Eur
Slide 8: Financial Results
FINANCIAL RESULTS 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 acquisitions (815) (6
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 1.5 30/09/2017 Signal Portfolio Nationwide 20.0 20.0 4.6 30/09/2020 PIH and Properties Portfolios NatWest 30.0 22.0 4.9 09/03/2021 Bank House, Leeds Lloyds 4.3 4.3 3.1 28/04/
Slide 12: Portfolio Highlights
PORTFOLIO HIGHLIGHTS MARCH 2015 MARCH 2016 PORTFOLIO 69% VALUATION £103m £174.5m CONTRACTUAL RENTAL INCOME £8.6m 57% £13.5m NET RENTAL INCOME £7.5m 57% £11.8m -1% OCCUPANCY 90% 89% WAULT 4.5 years 14% 6.3 years 11
Slide 13: Property Portfolio
PROPERTY PORTFOLIO York Leeds Halifax Sheffield Manchester Stockport Stoke Retail – 8% Birmingham Coventry Office – 43% Leamington Spa Northampton Retail Warehouse – 6% Milton Keynes Dartford Industrial – 18% Bristol East Grinstead Leisure & Car Parking– 25% Salisbury Brighton Southampton Exeter Ply
Slide 14: This Year's Journey
THIS YEAR’S 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 milli
Slide 15: 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 ∙ Credit approved terms to refinance deb
Slide 16: 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 15
Slide 17: 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 18: Acquisitions: Bank House, King Street, 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 19: 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% 18
Slide 20: Operational Highlights
OPERATIONAL HIGHLIGHTS ASSET MANAGEMENT INVESTMENT ● Ovest House, Brighton: Refurbishment works being undertaken through dilapidations and tenants works Acquisitions £66 million as floors become vacant. Broad Street Plaza, Halifax: £24.2m, 7.25% NIY ● Copperfields, Dartford: Works underway to conver
Slide 21: Hudson House, York
HUDSON HOUSE, YORK 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 residential in February 2016 ∙ Resolution to grant permission in April 2016 from City of York Council to convert building to 82
Slide 22: Portfolio Update
PORTFOLIO UPDATE 2-4 PITFIELD KILN FARM, MILTON KEYNES | A&B, BRIDGE RETAIL PARK, EAST GRINSTEAD | WINCHESTER ST, SALISBURY | SANDRINGHAM HOUSE, HARLOW | 21
Slide 23: Portfolio Update
PORTFOLIO UPDATE DARTFORD STOCKPORT EXETER Surrender of lease completed. Convert vacant offices to 14 residential flats Third floor on market to let. On market for sale/let. COVENTRY BRIGHTON STAINES Refurbished vacant office space Refurbished vacant office building & common areas. Vacant building.
Slide 24: Portfolio Update
PORTFOLIO UPDATE MALDON LEAMINGTON SPA STOKE ON TRENT Extension of existing lease and part sale to Refurbished vacant suite. owner occupier. On market for sale following lease expiry. On market to let. SOUTHAMPTON FARNBOROUGH AVONMOUTH Negotiate with council and adjoining owners for Letting of vacan
Slide 25: 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 26: Summary
SUMMARY Palace Capital has made excellent progress in the past 12 months: ∙ PBT of £11.8m ∙ EPRA NAV per share growth of 5% to 414 pence ∙ £20m equity raised in the period and £81m new debt facilities ∙ 5 acquisitions completed this period totalling £66m ∙ Portfolio now valued at £174.5m Palace Capi