17 January 2022
Palace Capital plc
("Palace Capital" or the "Company")
Palace Capital acquires Maidenhead office building for £10.25m
- Redeployment of disposal strategy proceeds underway -
Palace Capital (LSE: PCA) the Main Market property investment company that has a diversified portfolio of UK commercial real estate in carefully selected locations outside of London with a focus on the office & industrial sectors, announces that it has acquired 22 Market Street, an office building in the centre of Maidenhead, Berkshire for £10.25 million reflecting a net initial yield of 6.83%.
The transaction has been funded using both the existing NatWest revolving credit facility and proceeds from the Company's £30 million disposal strategy, which aims to generate capital from mature or non-core properties for redeployment into opportunities with more attractive returns profiles. Following this acquisition, and combined with the additional £1.3 million of annual income generated since the start of the financial year through active asset management, including lease renewals, rent reviews and new lettings, the new income added to the portfolio rent roll now exceeds in excess of £1million per annum, that was lost through the disposal programme.
The newly acquired property which has an Energy Performance Certificate rating of B has recently been comprehensively refurbished and comprises 21,852 sq ft across three floors. It is fully let on a 10 year lease, from August 2021 with a tenant break option at the end of the 5th year, to Techtronic Industries EMEA Ltd, a subsidiary of Hong Kong listed Techtronic Industries which has a market capitalisation of £26 billion, delivering an annual rent of £718,475. Two small retail units on the ground floor bring the total net income from the asset to £747,374 per annum.
The acquisition is in line with Palace Capital's disciplined investment strategy focused on good quality regional towns and city centres that are easily accessible and close to public transport, as well as the amenities that employees are keen to have near their place of work. Set in the Thames Valley between Reading and Slough, Maidenhead is in an affluent area of the south east, well connected to the UK's motorway system and Heathrow airport, making it an attractive location for international businesses looking for space close to London. Like many towns and cities outside of the capital, it has experienced a reduction of good quality office space alongside rising demand.
Neil Sinclair, Chief Executive of Palace Capital commented, "The Thames Valley is home to a host of global, blue chip companies and is a high demand location because of its accessibility; but despite this, in common with the trend we are seeing across the UK, office space availability has reduced significantly over recent years. Maidenhead is on track to benefit not only from the opening of the Elizabeth Line in 2022, with fast access to London Heathrow, the City, Canary Wharf & West End, but also the nearby Nicholson Quarter mixed use development, where construction is expected to commence in 2023.
"We are highly selective when identifying potential opportunities, particularly in this market where value is very difficult to access, and we are therefore very pleased to have been able to embark on recycling the disposal proceeds with this exciting investment."
Finn& Co acted for Palace Capital & Gerald Eve acted for the vendors.
For further information please contact:
PALACE CAPITAL PLC
Neil Sinclair, Chief Executive
Tel. 44 (0)20 3301 8331
Matthew Simpson, Chief Financial Officer
Tel. 44 (0)20 3931 9175
Heraclis Economides / Oliver Hardy
Tel: 44 (0)20 7260 1000
Arden Partners plc
Corporate Finance: Paul Shackleton / Elliot Mustoe/George Morgan
Corporate Broking: James Reed-Daunter
Tel: 44 (0)207 614 5900
Claire Turvey / Katie Hughes
Tel: 44 (0)20 3727 1000
About Palace Capital plc (www.palacecapitalplc.com)
Palace Capital plc (LSE: PCA) is a UK REIT that has a £273 million diversified portfolio of UK regional commercial property. The Company maintains a disciplined investment strategy focused on towns and cities outside of London that are characterised by thriving local economies and strengthening fundamentals. Within those locations the highly experienced management team select assets that provide opportunities to drive both capital value and long-term rental income through tailored active asset management programmes ultimately delivering attractive shareholder returns.