DJ Hardman & Co Research: Palace Capital (PCA): Interim results on track - upside clear in FY'22
Hardman & Co Research
Hardman & Co Research: Palace Capital (PCA): Interim results on track - upside
clear in FY'22
24-Nov-2020 / 17:20 GMT/BST
Hardman & Co Research: Interim results on track - upside clear in FY'22
Palace Capital has a mix of real estate sector exposure, the largest four
segments being offices, development assets, leisure and industrial. In each of
the past four years, Palace Capital assets have outperformed the MSCI index.
Regional offices' (43% of assets) returns have exceeded returns for London
offices every year since 2016 and are clearly set to continue to do so.
The company's office leases are relatively short, but we are positive about
this asset class' prospects. The development assets are set to show a 50%
cash-on-cash return in calendar 2021. Palace Capital's asset management and
capital recycling strategy works, and investors should take into account that
development assets generate zero profits during the development phase, so
profits are effectively understated at this point in time. Industrial assets
are in a cycle of rising rents.
Turning to leisure, the leases average 11 years to break and, indeed, the
tenants have extended some leases. Leisure tenants have all worked well with
the landlord, bar the effect of two small CVAs. Overall, this is a REIT with
plenty of upside potential, albeit dividends have been cut.
Our research sees scope, in due course, for a theoretical but achievable 90%
upside to dividends from this reduced base.
Please click on the link below for the full report:
https://www.hardmanandco.com/research/corporate-research/interim-results-on-tr
ack-upside-clear-in-fy22/ [1]
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by clicking on the above link
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1150358 24-Nov-2020
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(END) Dow Jones Newswires
November 24, 2020 12:20 ET (17:20 GMT)
