Palace Capital Plc · LSE:PCA
Palace Capital — FY2023 Earnings Presentation
23 slides from Palace Capital's earnings presentation, June 2023
Slide 1: Palace Capital Plc Final Results, Year Ended 31 March 2023
EXPERTS IN REGIONAL PROPERTY PALACE CAPITAL PLC FINAL RESULTS YEAR ENDED 31 MARCH 2023
Slide 2: Agenda
Agenda ⚫ Key highlights ⚫ Financial review ⚫ Operational review ⚫ Outlook ⚫ Appendices Page 1 | Palace Capital plc | Investor Presentation June 2023 | palacecapitalplc.com
Slide 3: Key Highlights
OVERVIEW Key Highlights Good progress achieved in strategy to maximise cash returns to shareholders in difficult market conditions ⚫ £59.0m of investment properties and £12.3m of HQ apartments completed or exchanged from 1 April 2022 to date ⚫ Disposals facilitated gross debt reduction of £37.5m in
Slide 4: Key Financial Highlights FY 23
FY 23: FINANCIAL REVIEW Key Financial Highlights FY 23 ADJUSTED PROFIT EPRA NTA GROSS DEBT ANNUALISED BEFORE TAX PER SHARE COST SAVINGS £7.6m 296p £64.3m £1.4m FY 22: £7.8m FY 22: 390p FY 22: £101.8m ADJUSTED EPS DIVIDENDS PAID LOAN TO VALUE SHARE OR DECLARED BUYBACKS 17.1p 15.0p 31% £6.7m FY 22: 16
Slide 5: Financial Statement Review
FY 23: FINANCIAL REVIEW Financial Statement Review INCOME STATEMENT 31 March 23 31 March 22 31 March 23 31 March 22 Gross property income (excl. ECL provision) £17.9m £17.4m BALANCE SHEET Property operating expenses (£2.6m) (£2.6m) Portfolio value £192.4m £259.0m ECL provision £0.3m £0.4m Cash £5.5m
Slide 6: Balance Sheet: EPRA NTA per share movement
FY 23: FINANCIAL REVIEW Balance Sheet EPRA NTA per share movement in the year 1.8p 1.1p 400p 17.1p 8.0p (96.4p) 350p (14.5p) 300p 390.0p (5.5p) (4.1p) (1.5) 250p 296.0p 200p EPRA NTA AT 31 Share buybacks Adjusted profit Sale of HQ trading profit Property portfolio Cash dividends Fair value adj. of P
Slide 7: Capital Structure
FY 23: FINANCIAL REVIEW Capital Structure Significantly reduced debt with conservative gearing Gross Gross Gross ⚫ Gross debt reduced by £37.5m in FY 23 to £64.3m (net Lender Debt 31 Debt 31 Debt 12 Debt Hedging March 22 March 23 June 23 Maturity debt £58.8m). Post year end and by 31 July 2023 gross
Slide 8: Portfolio Overview
OPERATIONAL REVIEW Portfolio Overview 3.7% March September March 6.1% 2023 2022 2022 6.6% Office Portfolio value £192.4m £235.6m £259.0m Industrial Net initial yield* 7.4% 6.8% 5.6% Leisure Reversionary yield* 9.6% 8.6% 7.5% 15.2% 49.7% Retail Contracted rental income £15.7m £17.1m £16.7m Residentia
Slide 9: Like-for-Like Investment Property Valuations
OPERATIONAL REVIEW Like-for-Like Investment Property Valuations Valuations down following volatility and uncertainty in the markets Market Market EPRA Net value value Gain/(loss) topped up Reversionary Initial 31 March 31 March % Net Initial Yield Yield 2023 (£) 2022 (£) Yield*** ⚫ Impact of higher
Slide 10: Asset Management Overview
OPERATIONAL REVIEW Asset Management Overview Good letting activity in the year £2.3m +12% ⚫ 45 lease events to 31 March 2023, 11% ahead of £2.0m ERV, providing additional income of £1.1m pa Adding value £1.8m made up of: £1.5m to our ⚫ 14 new leases: 14% ahead of ERV, providing £1.3m +8% additional
Slide 11: Asset Management Highlights
OPERATIONAL REVIEW Asset Management Highlights Value creation New lettings in the year included: ⚫ 15-year lease without a break at Sol, Northampton let to Chi, an aspirational F&B operator at £85,000 pa (with turnover top up) 107% ahead of the March 2022 ERV. The unit had been vacant for over 5 yea
Slide 12: Portfolio Growth Potential
OPERATIONAL REVIEW Portfolio Growth Potential +20% potential uplift £20.0m £19.0m £18.0m £0.9m (£0.1m) ⚫ Majority of reversion is £17.0m through letting vacant space £2.3m £16.0m ⚫ Dedicated resource in the £15.0m team focused on reducing £18.8m £14.0m voids £13.0m £15.7m ⚫ 228,000 sq ft of asset £1
Slide 13: ERV Growth
OPERATIONAL REVIEW ERV* Growth 3.9% on a like-for-like basis ERV ERV Like-for-like Sector 31 March 2023 31 March 2022 increase % Office 11,050,952 10,734,162 3.0% Industrial 2,820,749 2,610,100 8.1% Leisure 3,324,009 3,270,645 1.6% Retail 1,053,718 1,036,896 1.6% Retail Warehouse 502,685 401,300 25.
Slide 14: FY 23 Disposals
OPERATIONAL REVIEW FY 23 Disposals FY 23 FY 23 Number of Properties Sold FY 23 H1 FY 23 H2 Sales Price FY 23 H1 FY 23 H2 TOTAL TOTAL Investment properties 4 4 8 Investment properties £4.8m £10.8m £15.6m Hudson Quarter residential 9 14 23 Hudson Quarter residential £3.9m £6.2m £10.1m TOTAL 13 18 31 T
Slide 15: Post Year End Disposals
OPERATIONAL REVIEW Post Year End Disposals ⚫ Nine properties completed or exchanged post year end for £43.4m, 6% ahead of 31 March 2023 book value, these include: → 6 industrial properties for £34.0m, 3.0% ahead of March 2023 book value → Aldi, Gosport for £5.6m, 7.3% ahead of March 2023 book value
Slide 16: Implementing ESG
OPERATIONAL REVIEW Implementing ESG Improving EPC ratings E • Overall upgrade of portfolio • 96.2% of portfolio with ratings of A-D (FY 22: 88.8%) Portfolio EPC rating • 72.2% of portfolio with ratings of A-C (FY 22: 55.2%) 96.2% 100% 88.8% • 99% of landlord-controlled properties use renewable elect
Slide 17: Outlook
LOOKING FORWARD Outlook ✓ FY 24 is likely to be further affected by continuing macroeconomic and geo-political uncertainty but inflation outlook in the UK is expected to improve. Increases in interest rates have adversely impacted the commercial property market in relation to investment activity res
Slide 18: Appendices
EXPERTS IN REGIONAL PROPERTY APPENDICES
Slide 19: Sector splits
APPENDICES Sector splits Market value % of Portfolio WAULT No. No. Contracted rental Total ERV 31 March by market Area (sq ft) ERV (£)* to break properties leases income p.a. (£) of void (£) 2023 (£) value (yrs) Office 95,615,000 49.7% 17 87 622,905 8,040,169 11,050,952 3.6 2,084,948 Industrial 35,8
Slide 20: Rent collection
APPENDICES Rent collection 99% of rent collected in the year FY 23 RENT COLLECTION % BY SECTOR 100% 100% 100% 99% 99% Robust rent 98% 97% 98% 75% collection for the 12 months to 31 50% March 2023 of 99% (2022: 98%) 25% Office Retail Industrial Retail Leisure Total FY23 Total FY22 warehouse collectio
Slide 21: Biographies
Biographies STEVEN OWEN MATTHEW SIMPSON Interim Executive Chairman Chief Financial Officer Steven is the Non-Executive Chairman of Chartered Certified Accountant FCCA FTSE 250 property investment group Primary Matthew is a Chartered Certified Health Properties plc (“PHP”) having been Accountant, wit
Slide 22: 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 23: mi noon
mi noon oon jelole! aaa PALACE CAPITAL plc