Edison Investment Research Limited
London, UK, 26 November 2020
Palace Capital (PCA): COVID-19 impacts actively managed
Palace Capital's (PCA) H121 performance was robust and ahead of our central expectations. We have slightly increased FY21 earnings forecasts and introduced FY22-23 estimates, with growth driven by Hudson Quarter completion, on track for March 2021. Significant additional reversionary potential and development/refurbishment represent significant value creation potential.
The PCA valuation remains undemanding. Our DPS forecasts represent a prospective yield of c 5.8%, ahead of the peer average (4.8%), and provide a significant premium to risk-free alternatives (10-year UK gilt yield less than 0.5%). The c 40% discount to EPRA NAV is wider than peers (c 30%).
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