We are delighted to share the first episode of the Hardman Talks series with an interview from Mike Foster and Palace Capital. The series is designed to share the latest sector insights and company investment cases from our corporate clients and our expert team of analysts.
In early September, Mike Foster interviewed Palace Capital CEO, Neil Sinclair to discuss the REIT’s portfolio, development strategies and COVID-19.
Palace Capital’s portfolio is valued at £280m. It is focused on the office and industrial sector, with the remaining assets in leisure, residential and a fraction invested in retail, with a flagship development in York. The recent Sheffield disposal is a prime example of management’s style and strategy to “recycling investments” and invest in higher growth opportunities. With more development pipeline than most competitor REITs, the regional office and residential property in York has become the flagship development for Palace Capital, with attractive rental yields expected. As the York project gets underway, LTVs are c.41% currently, yet once practical completion of the apartments in York is done by March 2021, sales of the apartments will reduce the gearing significantly and LTVs will drop to just over 30%.
Mitigating the effects from COVID-19, management have managed their risk with the small exposure to leisure and residential properties by negotiating mutually beneficial rentals and extending lease terms. This approach has successfully left Palace Capital in the advantageous position of an expected 90% rental collection for the June-Sept period.
Watch the video below for more details.