Update on trading and rent collection

13 October 2020

PALACE CAPITAL PLC

("Palace Capital" or the Company)

Update on trading and rent collection

Palace Capital ( LSE: PCA) the Main Market listed property investment company that has a diversified portfolio of UK commercial real estate in carefully selected locations outside of London, provides the following update ahead of its interim results for the period ended 30 September 2020, which are expected to be announced on Tuesday 17 November 2020.

Highlights:

·    94% and 90% of rents collected for the March and June quarters, respectively.

·    70% of all rents due on the September quarter date collected, a higher percentage than at the equivalent stage in the previous two quarters with November and December monthly payments to come.

·    Cash reserves as at 30 September 2020 were £14.3 million with a further £5.0 million available from the revolving credit facility.

·    Eight further apartments sold since the year end at Hudson Quarter, York, with 36 now sold at an aggregate value of £9.6 million.

·    Concessions granted at Sol Northampton with Accor Hotels in return for a five-year lease extension until 2032 and with Gravity Fitness in return for removal of the break clause, securing lease to 2034.   

·    Disposals of Meadowcourt, Sheffield for £1.25 million, 30% above book value, and Hyde Abbey House, Winchester sold post half year end for £1.46 million, 16% above book value.

·    Minimum dividend payments of 2.5p per quarter recommenced, with next payment due on 16 October 2020.

Neil Sinclair, Chief Executive of Palace Capital commented:

"Our financial year commenced only one week after the UK went into a national lockdown. From that point we have been actively engaging in meaningful dialogues with all of our tenants and the success of this strategy, together with the quality of our occupier base, is reflected in our rental collection levels. Our team is composed of experts in active asset management and they have excelled over the last few months in very difficult circumstances."

Hudson Quarter, York:

As previously indicated, the lockdown and materials supply problems affected construction on site, but activity did not cease. Completion of the scheme is now due in March 2021 and it remains on budget. Momentum on apartment marketing and sales has gathered pace in recent weeks and contracts have now been exchanged on 36 units at an aggregate value of £9.6 million.

The next phase of apartments at the Victoria block has been launched and there is continuing strong interest in the high quality development, which is one minute's walk from York railway station, and buyers are able to take advantage of the stamp duty holiday.

Having pre-let 4,500 sq ft of offices to Knights, the listed legal and professional services business, at a record rent for York of £25.00 per sq ft, we have continuing interest in HQ, our 35,000 sq ft office building, for both the entire space and individual floors, notwithstanding the current restrictions. 

Disposals:

Meadowcourt, Sheffield sold in July for £1.25 million, 30% above book value, and Hyde Abbey House, Winchester sold post half year end for £1.46 million, 16% above book value. Both were uncharged properties, further supplementing cash reserves. Agents have been instructed on four further sales of non-core assets, with a combined book value of £7.5 million as at 31 March 2020.

Cash Position:

As at 30 September 2020, we had cash and available facilities of £19.3 million with the continuing strategic disposals programme expected to considerably enhance this. In the current economic climate, there is a focus on maintaining maximum liquidity to handle any unforeseen circumstances and to take advantage of potential opportunities in the short to medium term.

For further information please contact:

PALACE CAPITAL PLC

Neil Sinclair, Chief Executive

Stephen Silvester, Finance Director

Tel. +44 (0)20 3301 8331

Broker

Numis Securities

Heraclis Economides / George Fry

Tel: +44 (0)20 7260 1000

Broker

Arden Partners plc

Corporate Finance: Paul Shackleton / Ciaran Walsh / Daniel Gee-Summons

Corporate Broking: James Reed-Daunter

Tel: +44 (0)207 614 5900

Financial PR

FTI Consulting

Claire Turvey / Methuselah Tanyanyiwa

Tel: +44 (0)20 3727 1000

[email protected]

The information contained in this announcement is deemed by the Company to constitute inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014

About Palace Capital plc

Palace Capital plc (LSE: PCA) is a UK REIT that has a £277.8 million diversified portfolio of UK regional commercial property. The Company maintains a disciplined investment strategy focused on towns and cities outside of London that are characterised by thriving local economies and strengthening fundamentals. Within those locations the highly experienced management team select assets that provide opportunities to drive both capital value and long-term rental income through tailored active asset management programmes ultimately delivering attractive shareholder returns.

www.palacecapitalplc.com