Palace Capital Share Discussion Threads

[konradpuss] 19/4/2023 19:30

'kit price' = building price.

[nickrl] 18/4/2023 09:56

Baner for sure the new team is repositioning them nicely and there's more to come from admin savings they've enacted to right size there needs to the small propco they are not the fantasy land that Sinclair inhabited. Anyhow id rather they were paying down the floating debt particularly the Nat West RCF which is at 6.28% currently as its linked to SONIA

[baner] 18/4/2023 09:20

What do u mean with ”kit price” ?

[konradpuss] 18/4/2023 09:12

It's the kit price that troubles me in respect of your thesis Baner.

[baner] 18/4/2023 08:36

More buy-backs in Palace - very good news for patient shareholders staying in. These buy-backs are a ”license to print money” as they buy £1 for say 65-70 pence. This will increase the pro forma NAV per share for the remaining shares - we may well end up at 400p, to be paid out to all remaining shareholders once the disposal program has been completed, if they can get hold of more substantial volumes at the prevailing market price. Palace is in a very good position to play this game, with low gearing and strong cash flow. and - a BOD who is clearly focussed on the best interest of all shareholders.

[baner] 04/4/2023 21:32

Thanks nickrl - but i believe you should assume the NAV to be 320p+/- and if so, the risk/reward is really very attractive in the PC shares at the prevailing price. However, we shall see who is right-ish. Under any circumstances, buying at 215p should more likely generate a good return, than not.

[nickrl] 04/4/2023 14:20

@baner the 40% premium on Industrials (MLI) was to last share price more like 4% to last NAV which being was a while back may have slipped further by now so not sure they are even paying a premia. To my mind MLI are selling out too easy but I suspect they will retain the managers to grow the business off the digital platform they have created is the attraction for recommending the deal.

Here i still reckon 280p NAV forecast tso here is upside but we will need to be patient as its going to take a while to unwind the portfolio.

[baner] 04/4/2023 13:35

Alders

pls read pdosullivans post, follwing yours............i think the premium on Industrials was just over 40%.........does this help you to understand better maybe? you must ask those selling out at 215p what reasons they have. maybe need for cash.

[pdosullivan] 04/4/2023 13:03

The Blackstone deal for Industrials REIT is good to see. Might we see PCA revive its plans to sell its assets in that space?

[alders15] 04/4/2023 09:33

So why are the shares still stuck at 220p? As Abe Lincoln once said “You can fool some of the people some of the time etc”

[baner] 04/4/2023 09:09

assuming a NAV of 320p, PC yesterday made £75k for its remaining shareholders when buying back 75k shares. a licence to print money ! yesterday´s announcement of the take over of a REIT focussed on industrial properties by a US investor was indeed encouraging - indicating the transaction market is again alive. this will allow PC to accelerate the implementation of its declared strategy: an orderly sale of the assets and a distribution of the net proceeds to shareholders - by share buy backs at a discount to NAV and thus further increase the NAV/share, and eventually probably also a cash distribution pro rata. meanwhile, there is a sound dividend paid out from a lowly geared PC. smashing risk/reward!it seems the new chairman mr Owen is a very safe pair of hands responsible for this implementation.

[baner] 31/3/2023 15:47

the LTV is so low today there will be no problems with covenants, rest assured.

personally i reckon NAV will be north of 300p - probably ca 320p.

[nickrl] 31/3/2023 12:15

I believe "new" PCA were making progress but they have c55% of the debt now floating at avg 6.2% and exposed to anymore IR rises is hurting them. They must realise this as they regularly update on debt metrics with RNS which is good. However, the Sanatander facility is now at 6.38% and looks like this is the one they are paying down with proceeds from disposals & HQ sales but my estimate is IR cost have increased by c800k on an annualised basis. So this is neutralising any benefit from reduced admin costs so can't see a divi increase being on the cards. Anyhow hopefully the April trading update will give us a further update on where debt is now. There is potentially a risk any one of the five loan facilities could have an LTV issue and end up cash trapped as well depending on how much valuers bash property valuations down.

@baner personally i reckon NAV will be sub 300p

[poacher45] 31/3/2023 08:57

If we are talking about savings. The two former directors have retired and there bonuses have been paid. Also savings have been made on overheads especially moving headquarters in London.

[baner] 31/3/2023 07:57

The 400p will come from the shares bought back at the prevailing market price, adding substantially to the nav of the remaining shares. If you assume the Update nav is 320p and you buy shares back at 220p, there is a 100p/share ”profit” per share, that adds to the nav of the remaining shares. As simple as that.

[pdosullivan] 31/3/2023 01:12

I think debt paydown is a better use of proceeds given the risks to UK commercial real estate values.

[alders15] 30/3/2023 23:30

Where do you get 400p from? The NAV at the end of September was 356p. This is likely to be reduced quite a bit, although we may know more from the Trading Update due next month. If you think we are going to get 400p why are you not buying any shares you can get your hands on? You would virtually double your money.

[spectoacc] 30/3/2023 20:26

Hard to believe those flats at Hudson Qtr are still around. They've literally been right through a property boom!

[baner] 30/3/2023 19:42

POACHER

MANY THANKS FOR (HOPEFULLY) CLARIFYING TO ALDERS !!!

ALDERS: GROSS INCOME WILL BE REDUCED AS ASSETS ARE SOLD, FOR SURE. BUT THEN, CENTRAL COSTS WILL BE REDUCED WHILE SHARES WILL BE BOUGHT BACK AND/OR CASH DISTRIBUTED SO THAT FREE CASH FLOW/REMAINING NO OF SHARES WILL POTENTIALLY INCREASE - WHAT IS IT YOU DO NOT UNDERSTAND ? EVENTUALLY THERE MAY WELL BE 400P TO PAY OUT TO THE REMAINING NO OF SHARES - THIS IS A SUPERB RISK/REWARD IN MY VIEW. MAYBE YOU HAVE BETTER INVESTMENTS TO CONSIDER IN WHICH CASE YOU ARE TO BE CONGRATULATED.

[poacher45] 30/3/2023 16:05

Flats at Hudson Quarter are not income producing so this money could be used to buy shares back. Selling assets at balance sheet value and buying shares back at 40% discount to asset value seems a good deal to me.

[alders15] 30/3/2023 09:47

Yield is under threat as income producing assets are sold, whilst liquidation in a downturn will mean reduced expectations on prices to be achieved. Remember the old saying "Buy when people are selling and sell when people are buying."

[baner] 30/3/2023 07:43

Palace increase the buy backs - i guess they make almost £1/share they can buy back and eventually cancel. Looks really good for those patient shareholders who stay in: 7-8% of dividend yield and then a good chance of 50% uplift in the share value once assets are sold. Not much downside given the low gearing and strong cash flow.

[baner] 29/3/2023 09:55

Alders - what do you mean with ”as with the current policy”…..? Is the current policy not just that: an orderly liquidation of the assets and then a distribution of net proceeds to shareholders - also through share buy backs? This looks like a very sound ”current policy” given the steep discount to the NAV at which the shares trade!and much better than having to hope for someone else to come in and buy the shares - most likely at a continued discount to the underlying value?

[alders15] 27/3/2023 18:34

He may have bought weeks ago but he would not have had to announce.He is sticking in there as with the current policy there would unlikely to be a buyer for any significant amount of his shares except the Company.

[nickrl] 27/3/2023 14:08

Alders that maybe the reason for triggering the need to issue an RNS but there was a difference between the total shares held between the two RNS

21/3/23 4868393 shares
12/7/22 4725000 shares

Anyhow at least hes sticking in there