RNS announcement

2 October 2018

Palace Capital PLC

("Palace Capital" or the "Company")

20 YEAR LEASE AGREED WITH ALDI AT GOSPORT

Palace Capital (LSE: PCA), the property investment company that focuses on commercial property outside London, has signed a new 20 year lease with Aldi, the German discount supermarket chain, at its property in Gosport, Hampshire, securing a 17.4% uplift in rental income. 

The asset was originally acquired in October 2017 as part of the £71.8 million RT Warren portfolio and the new lease terms are reflective of the long term rental and capital growth opportunities originally identified by the Company and which are being captured through active asset management.

Aldi previously leased a 16,500 sq ft supermarket on the site from RT Warren on a lease expiring in August 2030 at a rental of £247,800 per annum. This existing lease has now been surrendered and a new 20 year lease has been agreed with the Company, which also now includes a small amount of additional land for car parking, until September 2038 without break at an increased rental of £291,000 per annum. A rent review will be undertaken every 5 years, based on the Retail Price Index with a collar of 1% and a cap of 2.75% which compounds annually.

The property will continue to be held as a long term investment by Palace Capital.

Neil Sinclair, Chief Executive of Palace Capital, commented: "When we acquired the RT Warren portfolio, which was the best portfolio we had seen in the UK property market for some time, we knew that it contained significant latent potential that we would be able to unlock with our asset management expertise, and this new deal is a strong example of that. We have increased our income and lease term to 20 years to a strong covenant which has a positive effect on the value of this property. We continue to actively asset manage the other properties within the RT Warren portfolio and look forward to updating the market on our progress in due course."

For further information, contact:

Palace Capital plc

Neil Sinclair, Chief Executive

Stephen Silvester, Finance Director

Tel. 44 (0)20 3301 8331

Arden Partners plc (Lead Broker)

Ciaran Walsh / Alex Penney

Tel. 44 (0)207 614 5900

Allenby Capital Limited (Joint Broker)

Nick Naylor / James Reeve / Asha Chotai

Tel. 44 (0)20 3328 5656

FTI Consulting (Financial PR)

Claire Turvey / Methuselah Tanyanyiwa

palacecapital@fticonsulting.com

Tel. 44 (0)20 7271000

About Palace Capital plc (www.palacecapitalplc.com):

Palace Capital is a UK property investment company admitted to trading on the London Stock Exchange plc's main market (LSE: PCA). The Company is not sector specific and looks for opportunities where it can enhance the long-term income and capital value through asset management and strategic capital development in locations outside London. In its last reported financial year, Palace Capital produced a 27% increase in adjusted profit before tax, a 7% uplift in EPRA NAV per share from a post fundraise proforma base and a 3% increase in dividends for the year ending 31 March 2018.