With its move to the Main Market of the LSE completed, Palace Capital PLC (LON:PCA) recently provided an update on trading for the year to March 2018, ahead of preliminary results on 11 June. Management expects to report adjusted earnings (excluding revaluation movements and other one-offs) ahead of market expectations. Looking forward, the portfolio, enlarged by the RT Warren acquisition, offers significant asset management opportunities, while management seeks further accretive acquisitions, neither of which is reflected in our estimates. The shares offer an attractive yield and trade at a significant discount to NAV.
FY18 was another significant year of growth
The October 2017 £67.9m acquisition of RT Warren increased the portfolio value by around a third to c £270m. The acquisition was conservatively funded, with £70m (gross) of new equity and an 81% increase in the share count, significantly increasing the market capitalisation and setting the scene for the move to the Main Market of the LSE. With regional commercial property markets remaining firm and rents generally benefiting from a positive demand–supply balance, Palace has significant asset management and further acquisition opportunities to pursue, supported by a robust balance sheet position (LTV 31%).
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