Posted on 05 Sep 2014

Palace Directors Bet the Farm


Not for the first time, the experienced chairman of regional property group Palace Capital (PCA) is putting his money where his mouth is. Stanley Davis, aged 75, plumped for nearly £500,000-worth of shares in a recent £20m placing priced at 310p a share. Three other directors followed suit and snapped up another £260,000 collectively.

The placing is part of a £32m deal to buy 17 properties from an unlisted property investment company that ran into difficulties after entering into costly interest rate swap arrangements just before the financial crisis. Palace’s strategy is to pick up regional and secondary property at a knock-down price - the portfolio was independently valued at £59m in March 2007 - and actively manage the portfolio to reduce vacancies and improve yields.

Mr Davis has form here. Palace has swiftly turned round a portfolio of mixed-use commercial property from Quintain Estates acquired in late 2013 for £39m; alongside a broadly rising UK property market, the company's book value per share increased by a whopping 54 per cent in just six months to 356p a share as of 31 March. If you had followed Mr Davis’ advice at the time of that acquisition and invested when he did - subscribing for £2.6m in a corresponding placing priced at 200p a share - you would be one happy shareholder indeed.