Palace Capital Share Discussion Threads

[nickrl] 19/6/2023 21:26

@Baner The recent industrial sales has surrendered 2.2m + Gosport Aldi 0.3m in rent but as I say offsetting this is reduced o/h's and lower interest costs as debt paid down but that is incurring early redemption fees. My assessment remains that divi cover is c95% but im content that Hudson sales are used to balance the books as they were worth 8m at FY23.

Given the bulk of the debt is now floating paying it down in the current environment is eminently sensible.

Note given fluidity on debt levels and exact run rate on o/h's my forecast is within the margin that could swing it to be more than a 100%.

[baner] 19/6/2023 14:49

Nick

They do not need the free cash from HQ to support the divi. Check the numbers again pls.

[baner] 19/6/2023 13:54

Alders

I am now convinced Boris will return as PM!

[spectoacc] 18/6/2023 17:45

Believe +0.5% is expected now, particularly with the long gap to the next meeting. Who knows tho - there's been a couple who keep voting for Unchanged!

[nickrl] 18/6/2023 10:58

They need the free cash from Hudson Qtr sales to support the divi now post the recent industrial sales losing at least another 2m of NRI. They are doing the right thing driving down the unprotected debt though some of which will be at 7% when we get next weeks expect 0.25% rise.

[konradpuss] 17/6/2023 14:29

Alders, spot on.

Before the market reprices their remaining investments they should hold a 'liquidation sale'. People love sales.

I see Peter has not added. That is telling.

Things are going to get much worse in later 23 and 24 in my humble opinion.

[alders15] 17/6/2023 13:25

Wake up Baner. These results are awful. NTA down 25% even after the share buybacks, so it could have been even worse. They have sold the low hanging fruit too cheaply and the way they are going there is as much chance of 350p as Boris returning as PM.

Nothing other than destruction of shareholder value by a Board who are not up to the job, where two of them failed miserably at their former companies.

I like to back winners.

[makinbuks] 15/6/2023 09:46

If they intend buying back a further1m shares at £2.5m max they might have to be quick

[jbarcroftr] 15/6/2023 09:45

And while we wait we get a good dividend

[baner] 15/6/2023 09:40

NAV is already today in excess of 300p as a result of recent sales above March Valuation and then also buy back of shares at a good discount to the NAV. Rental income will increase so Admin costs not really an issue unless they sell a significant portion of the remaining portfolio - in which case buy back and distribution can be accelerated. Leisure properties value at 10%-ish yield likely to prove far too cautious. With continued disposals and buy backs following, NAV could well approach 350p again in a year or two. As this will be paid out to shareholders one way or another, the risk/reward is indeed attractive here. Well done to the new regime who really focus on delivering values to the shareholders!

[nickrl] 15/6/2023 08:54

FY23 out NAV down to 294p as expected as sales and revaluation effects kick in. Given another wedge of sales has been declared post year end presumably NAV fallen further so this one starting to look fairly valued. They will be using proceeds to bash down debt which bar a small percentage is now all floating some as high as 6.53%. At least this year we will see the impact of the reduced overheads but the more they sell down the more overheads become dominant again especially as the rump of the assets that are left will be harder to shift ie Bank House. Mind you still have c7-8m of HQ to shift which is free cash so debt will be well under control here in 12mths.

Not had time to listen in to presentation so will take a look later on.

[cwa1] 09/5/2023 16:00

Tipped by Thommo in the chronic...

Deep share price discount to NAV
The deep share price discount partly reflects the fact that Palace will have to commit significant capital expenditure to upgrade its assets to meet the Minimum Energy Efficiency Standards (MEES). That’s because 96 per cent of the portfolio has an EPC band rating A to D, but it is required to have a minimum C rating by April 2027 and B rating by April 2030.

That said, the portfolio has strong reversionary value as highlighted by 14 new lettings, 15 lease renewals and 16 rent reviews that generated £1.1mn of additional contracted rent in the 2022/23 financial year, or 11 per cent ahead of March 2022 ERV. Moreover, recent disposals have been made above carrying valuations, suggesting the ongoing asset disposal programme could surprise to the upside.

So, having last rated the shares a hold, at 205p, for their income and potential for capital upside when the market stabilises (‘Priced for a severe property downturn that’s unlikely to happen’, 24 November 2022), I now feel that the markedly improved debt position and more favourable market conditions for the asset disposal programme support a buy recommendation ahead of annual results on Thursday, 15 June 2023. Buy.

[konradpuss] 06/5/2023 11:54

I find it most amusing that if you visit the co. web site you first see a picture of a 'flash' office reception.

Then if you scroll down you are met by the following mug shots:-

CFO
Head of Asset Management
Head of Investment
Senior Asset Manager
Asset Manager
Financial Controller
FP & A Analyst
Company Secretary

This company is in work out/sell down mode.

They could work from a small sub-let office above an industrial unit in Park Royal.
It could be run with a book keeper, one surveyor, a part time finance director/company secretary and a CEO - probably a surveyor who could get his hands dirty.

[makinbuks] 06/5/2023 11:15

Totally, I am not in favour of buybacks normally but this is one instance where the case is clear. In fact once the variable rate debt is gone it makes sense to do buy backs rather than incur early repayment charges

[pdosullivan] 05/5/2023 16:35

I agree. For those of us who are more patient with our capital, a series of buybacks would be the most accretive outcome.

[baner] 05/5/2023 09:02

Poacher - spot on. In fact, if they can buy back say 10m shares @ 240p, this will leave Eq of, say, 133-24= 109m or 320p/share - and so on……R30;…a further 10m at 260p and the NAV increase to 345p…………and so on……R30;….another 10m at 280p and NAV goes to 390p………..it is not going to happen overnight, but meanwhile there is a good and secure dividend income on the shares. Those who stay in for the last distribution/buy back may well end up north of 400p.

[nickrl] 05/5/2023 09:02

Two of the loans are fixed for term so presumably will cost to liquidate early. The other three are SONIA+margin which should be largely eliminated from the disposals and interest charges saved on these more than covers the lost rental income. So divi is still covered and with at least another 5m to come from HQ as well leaves things favourable.

If the strategy is complete rundown thats going to take a while yet as im not sure whats left would be attractive to any single buyer now unless well below NAV.

[poacher45] 05/5/2023 08:48

They have also improved there energy efficient certificate which I feel will save them a lot of cost in future years. With cost savings, Directors wages savings and further sales at Hudson Quarter the future looks a lot brighter.

[poacher45] 05/5/2023 08:40

konradpuss I think the Hudson Quarter development was right for York. A load of students would have been a bad idea. It looks smart and it has been very successful.
I would suggest that now is the time to make tender offers for shares which would be an easy way of increasing asset value quickly.

[eezymunny] 05/5/2023 07:43

Most of what's left is offices plus a bit of leisure. Goodness only knows what happens in the office market with every lazy sod "working from home", 4 day weeks etc. Discount not big enough to excite me here but can't help feeling I'll miss out on a modest gain.

[baner] 05/5/2023 07:40

Elsa

192-59 = 133

133/44 = 302p so discount rather nearer to 30%. As the company will continue to sell assets and pay proceeds out to shareholders, 220p should turn into 300p plus = 36% plus profits from buy backs and a good divi on top of that. Rather attractive.

[elsa7878] 05/5/2023 07:17

Property value £192 million (assume to include the sold properties announced today as valuation was at 31/3).
Equity £94 million
Debt £59 million.
Discount approx 20%?

[baner] 05/5/2023 06:56

Excellent news this morning. Sales price strong and gearing now very low with further reduction in the pipeline. This means the company can now accelerate its buy back program. NAV by march 2023 should be just north of 300p so buy backs at the prevailing share price is of course a no-brainer that will increase the NAV for remaining shares. The risk/reward is really sound, with a well covered dividend and then the upside in the capital value on top of that. Clearly the new BOD is delivering here.

[alders15] 24/4/2023 17:25

I do not think he is the retiring type.