Palace Capital abandons brown office plans
Palace Capital has abandoned its new strategy to become an ESG-focused specialist just weeks after announcing the change of direction.
Three board members have decided to quit as a result.
Earlier this month the regional REIT said it would focus on refurbishing regional brown offices, alongside plans to sell off its industrial and retail warehouse properties, valued at £46.5m, as a single portfolio. Under the direction of interim executive chair Steven Owen, Palace intended to invest in regional offices with relatively low EPC ratings, refurbishing them to a B or above.
Palace Capital has abandoned its new strategy to become an ESG-focused specialist just weeks after announcing the change of direction.
Three board members have decided to quit as a result.
Earlier this month the regional REIT said it would focus on refurbishing regional brown offices, alongside plans to sell off its industrial and retail warehouse properties, valued at £46.5m, as a single portfolio. Under the direction of interim executive chair Steven Owen, Palace intended to invest in regional offices with relatively low EPC ratings, refurbishing them to a B or above.
That plan has now been abandoned in favour of returning cash to shareholders instead. In a market update this morning, Palace said: “In light of shareholder feedback following that update, it has been decided by the board that such a strategy needs amending. The board will therefore now focus on maximising cash returns to shareholders, while continuing to remain mindful of consolidation in the real estate sector as part of its considerations.”
Palace said it would still go ahead with the sale of its industrial and retail warehouse portfolio, but the net proceeds would be distributed to shareholders and not reinvested in offices. It also plans to sell off more non-core assets, again handing the proceeds to shareholders.
In light of the amended strategy, senior independent director Mickola Wilson and non-executive directors Kim Taylor-Smith and Paula Dillon “consider that now is the right time to step down from the board with immediate effect”, Palace said.
Palace has recently been the subject of action by activist investors, despite fairly strong performance. Founder Neil Sinclair stepped down as chief executive last month shortly after pushing back against shareholder criticism.
Sinclair had been fighting off criticism from investors, who said “something needs to change” at Palace to avoid “a very average performance”.
Sinclair told EG last month: “It’s a bit rich to come on now and moan about margins… Either they have a short memory or conveniently lost it.”
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