Palace Capital PLC
("Palace Capital", the "Company" or the "Group")
Hedging Strategy Update
Palace Capital plc, the property investment company that focuses on commercial property predominantly outside London, announces that it has entered into further hedging facilities totalling £55.8 million in order to mitigate future interest rate risk.
The Company has now executed swaps for approximately 70 per cent. of Group drawn debt facilities, equating to £70.3 million, due to the recent increase in expectations that UK interest rates will rise in the short to medium term. The Board concluded that it was prudent to fix the interest rates on the majority of its debt facilities in order to give the Company protection against higher rates and limit its exposure to movements in LIBOR. As a result, the Group's average cost of debt, going forward, has increased from 2.9 per cent. to 3.4 per cent.
JC Rathbone Associates Limited ("Rathbone") provided hedging advice to the Board. The hedging that has been entered into requires a fair value assessment at each of the Company's future reporting dates and Rathbone will provide this to the Group.
Stephen Silvester, Finance Director, commented: "We have had one of the consistently lowest costs of debt in the sector in recent years. Given the advice from Rathbone and market expectations concerning interest rates, we agreed that locking-in the majority of our debt on fixed rates provides the Company with limited exposure to future interest rate risk whilst maintaining our relative cost of funds position and good headroom with regards to interest cover."
In relation to the proposed admission of the Company's shares to the premium listing segment of the Official List of the FCA and admission to trading on its Main Market for listed securities, a supplementary Prospectus will be published as soon as practicable and made available on the Company's website at www.palacecapitalplc.com.
Date: 7 March 2018
For further information, contact:
Palace Capital plc
Neil Sinclair, Chief Executive
Stephen Silvester, Finance Director
Tel. +44 (0)20 3301 8331
Allenby Capital Limited (Nominated Adviser and Joint Broker)
Nick Naylor / James Reeve / Asha Chotai
Tel. +44 (0)20 3328 5656
Arden Partners plc (Joint Broker)
Chris Hardie / Ciaran Walsh
Tel. +44 (0)207 614 5917
Capital Access Group (Financial PR)
Tel. +44 (0)20 3763 3400
About Palace Capital plc (www.palacecapitalplc.com):
Palace Capital is a UK property investment company admitted to trading on the AIM Market of the London Stock Exchange (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 20.0% increase in adjusted profit before tax, a 7.0% uplift in EPRA NAV per share and a 16.0% increase in dividends.