Hardman & Co Research: Palace Capital (PCA): Interim results: ammunition for major dividend rises
The 15 November interim results have led us to upgrade our profit and dividend forecasts modestly. Commercial property income is robust, and Hudson Quarter (HQ) residential profit margins are slightly ahead of expectations. The programme of the disposal of c.£30m-worth of properties that have achieved their asset management plans is progressing well. Disposals have all been ahead of book values, and cash raised is only modestly reducing rental income. HQ’s profitable sales also generate cash and potential for capital recycling, supporting dividend growth. We believe our maintained 18p dividend forecast for FY24 is the main value driver, but we are upgrading FY22 and FY23 forecasts.Palace Capital is a property investment company that focuses on commercial real estate outside London. Co. invests in refurbishment and capital development programmes within the existing portfolio to unlock capital growth, as well as invests in commercial real estate in the U.K. Co.'s property portfolio includes investment properties located throughout England, predominantly regional investments outside London and comprises a diverse portfolio of commercial buildings.
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