|Thnx to speedsgh for posting this interview with the PCA CEO over on the PCA thread:
New Stocktube video interview with CEO Neil Sinclair...
'We're still a bit under the radar', says Palace Capital's Neil Sinclair (10/4/17):
At the 360p offer price the discount = 16.3%+; and the f/c yield = 5%.
As posted before, the next Update will be in c4weeks time; with the Prelims the following month in June.|
|Edison initiates coverage on UKCM with new research note...
Income key in world of low numbers - HTTP://www.edisoninvestmentresearch.com/research/report/uk-commercial-property-trust|
|Looking forward to both RLE and HSTN|
|thanks Skyship and others for the great informative thread...|
|HSTN Finals due on Tuesday|
|Foreign investment boost for the regions:
Research from Savills seen exclusively by The Sunday Telegraph shows that Middle and Far Eastern buyers have been particularly active in the last year, almost doubling the amount of money they have spent in the UK’s regional markets in 2016 to around £1.9bn. In total, foreign investors accounted for nearly one third of all investment that took place in the UK regional commercial property market last year. In Edinburgh, they made up 80pc of all of 2016’s spending on commercial property.
James Gulliford and Richard Merryweather, who jointly lead Savills’ UK investment team, say the trend is set to continue.
Gulliford explains that UK investment makes sense for many overseas buyers because of its legal system and standardised market.
“On top of this, the sterling devaluation has made pricing attractive for investors whose currency is pegged to the US dollar,” he says. “There has also been a temporary absence of UK institutional buyers which has created a marginally less competitive marketplace.”
As prices increase in London, investors may look further afield to find better value, adds Merryweather.
“We’re seeing the first signs of foreign buyers looking at markets such as Bracknell and Portsmouth that provide more yield compared to the traditional hubs of Birmingham and Manchester,” he explains.
We find London challenging from a pricing standpoint, whereas in the regions, the pricing is not as acute. There is often better value to be found in buildings outside London, where a relatively untapped property market can yield stronger returns because the value of buildings is relatively much lower than the capital, while rents are still at a reasonable level.
“We find London challenging from a pricing standpoint,” explains Rob Wilkinson, chief executive of Paris-based asset management firm AEW Europe, “whereas in the regions, the pricing is not as acute and the occupational side is pretty good in most city centres.”
One of the biggest deals completed last year was the purchase of Green Park, a huge office park just outside Reading which is home to German pharmaceutical Bayer and housebuilder Berkeley Homes. It was bought by Singapore-based investor Mapletree last year for £563m from Canadian investors Oxford Properties, which also recently sold its stake in The Cheesegrater tower, also known as 20 Fenchurch Street, London.
Paul Brundage, Oxford Properties’ chief executive, who is also the vice president of the British Property Federation, says that although the Brexit vote might have dampened enthusiasm for the UK briefly, it remains a popular place to put money.
“The UK was one of the preferred markets and that’s still the case today, no matter what we’re experiencing on the political front,” he says. “That’s not to say there isn’t concern – and the outcome of the negotiations with the European Union will be crucial.”
Elsewhere, Liverpool One shopping centre was bought by Abu Dhabi Investments for around £300m and a major redevelopment scheme in Edinburgh city centre was bought by Dutch pension fund APG for a reported £400m. The schemes attracted the interest of investors because of lower competition than for London assets and the successful businesses that they house.
Tom Warburton, who is responsible for Newcastle’s £450m capital programme, explains that investment from outside of the UK is vital.
“No one is doing speculative building [of offices],” he explains, “so we’ve been doing a number of approaches to bring private capital into the city. These developments are about the public sector working with the private sector. Having already built a scheme with Legal & General, we’re keen to find investors willing to fund other projects such as our Stephenson Quarter development.” The scheme includes five huge new buildings in Newcastle city centre.
Among other things, the Government used the conference to launch a £7bn investment portfolio for The Midlands, which included trying to find a backer for a number of buildings linked to the new High Speed 2 rail link.
Birmingham’s new Curzon district, where the new HS2 station would be, needs £500m investment, according to the Department of International Trade, and those funds could well come from overseas.
Sir John Peace, chairman of the Government’s Midlands Engine project, explains that the move demonstrates ministers’ ambitions for development outside London.
“We have some truly incredible projects available this year; whether it is investments that have been born as a result of HS2 or smaller projects that will deliver real change, economic growth and jobs for of our cities,” he says. “The work we are doing in the region is a clear sign to international investors that the UK is open for business.”|
|Thnx to speedsgh for posting this on the PCA thread today. PCA is unquestionably the best value of the regional & income plays:
New Edison research note...
Another NAV-accretive disposal - HTTP://www.edisoninvestmentresearch.com/research/report/palace-capital1/preview/
Valuation: Significant unrecognised value
Palace’s shares trade at c 16% below last reported EPRA NAV per share of 419p, and the company has made disposals in the last month at c 9p per share above the book value of the assets in total. With some earnings being retained and allowing for the share buyback announced on 13 March, we forecast EPRA NAV of 430p per share at 31 March 2017, the financial year-end, implying that the shares trade at a discount of 19%. This is well above the average of regional property investment peers, which trade at close to or above EPRA NAV. As illustrated on page 2, there appears to be scope for this gap to close, supported by the earnings yield. Possible catalysts include the full-year results and reinvestment of capital.|
|Just swapped out of CREI and into RGL. CREI above NAV, RGL below NAV. RGL offering higher yield. Higher LTV with RGL, but still looks to be a good deal and I regard the two as decent alternatives.|
|Thanks Skyship. Looks v interesting.|
|Simon Thompson revisited his PCA tip in his IC Online article today - uprated his Target from 380p to 400p. Instigated a load of small buys, mostly @ 352p.
Has to be a good chance that might find its way into the print edition on Friday.
Incidentally, The Finals in June will be preceded by an Update early May, in which we will have the dividend confirmed - at least that was what happened last year. The concensus is for 18p v. last year's 16p. The more I look at it the more I think that 19p or 20p may be more likely.|
|Posted this on the LEMON site today:
PALACE CAPITAL (PCA) is an AIM-quoted property investment company focused on commercial real estate in the UK outside London.
# The £184m (Feb’17) property portfolio is diverse, with the sector split being: Offices @ 42%; Leisure @ 23%; Industrial @ 20%; Retail @ 10% & Retail Warehouse @ 5%.
# Geographical split shows: Midlands @ 26%; North @ 36%; South & East @ 38%
# Gross Rental Income = £13.7m; occupancy is at 89% with an everage WAULT of 5.8yrs
# Debt is £73m net of cash, giving an LTV of 39%; with an average debt cost of just 2.9%
The company has an excellent growth record; funded by institutional support in share placings – the last raising £20m @ 360p in Jun’15. The investment case of active asset management and asset growth is supported by a generous dividend policy. Last year’s 16p/share is forecast to increase to no less than 18p/share; placing the shares at 355p on a very acceptable yield of 5%.
The excellent website simplifies research as does the latest investor presentation – see below
The Finals to end Mar’17 are due in June. Those will likely show an NAV increase to c430p; that would provide a 17.4% NAV discount.
The combination of asset growth and yield makes PCA an attractive proposition at the current offer price of 355p.
(DISCLOSURE: I own PCA and increased my holding after today’s RNS, announcing a property sale at a 66% premium to the last valuation)
INVESTOR PRESENTATION – Feb’17:
EDISON RESEARCH report – Nov’16:
|portland's sale this morning seems to imply a VERY pessimistic outlook for london property - gearing of only 11%, and selling at a discount property leased to Facebook!
From the FT...
West End property company Great Portland Estates has sold Facebook’s new London headquarters at a discount to its latest valuation as the group prepares for a property market downturn.
The freehold of Rathbone Square, Great Portland’s largest ever development project, has been sold to a company owned by the German investment group Deka and real estate investment trust WestInvest Gesellschaft for £435m, roughly 4 per cent below its most recent valuation.
The group, seen as one of the most resilient UK property companies during the 2008 financial crisis, will hand back the £110m capital return from the project to shareholders through a special dividend.
Great Portland said the deal would ensure that the company “retains the significant financial flexibility created over recent years as it looks ahead to a continued period of market uncertainty”.
Once the sale is complete, Great Portland’s loan-to-value ratio will stand at 7.3 per cent before rising to 11 per cent when the special dividend is paid. These figures mark a fresh low for the group’s borrowing, which in September stood at 22 per cent.|
|Looked at AEWU skyship?
Priced fractionally below NAV here, but c. 8.4% yield which looks just about covered, low LTV (c. 19%).
Perhaps a reasonable one for income seekers...|
|SKYSHIP - Thanks for the link to the Telegraph article. It is of course likely to end in tears for many. Not sure how long it will go on for (usually longer than we all anticipate) but once the bubble bursts many will doubtless be left with their trousers round their ankles. Aimho|
|Thnx to langland on the LSR thread for posting the link below:
Private investors ditching Buy-to-Let and moving across to buying tertiary commercial property. A trend we noted last year, but that article adds some meat to the bone. Good news for LSR specifically:
|An update on the chart showing the Real Estate sector underperforming the FTSE. The chart and the MACD indicator suggest we could be seeing a turnaround:
free stock charts from uk.advfn.com|
|Good news for provincial property - esp. Manchester:
Virgin Media, Vodafone and Eversheds seek larger offices in Manchester.
The Manchester office market is poised to start 2017 with a bang as a trio of major requirements totalling 240,000 sq ft launch.|
|I've added PILR to the Header
|Forgot to post this here. This Update includes an interesting analysis of the state of the UK property Market:
|This chart clearly shows the sector underperformance since 1st September:
free stock charts from uk.advfn.com|
|I'm surprised that BBOX isn't included in the header; has been doing well of late and over the last year.|
|Employment figures today are good with more employed-so no loss of jobs yet caused by Brexit so no effect on commercial prperty occupation levels.
In fact what could happen I think, is that due to our ability to have more trade deals with other countries we may see INCREASED demand for offices as other countries set up here.
Room for thought.
It will be interesting to see when more up to date info on the market comes out.|