Palace Capital pauses disposal plan due to market volatility
Palace Capital has paused the “timing of significant property disposals”, as market volatility hits pricing on investments.
The REIT said in July that it planned to sell part of its holdings, including its industrial portfolio, in an effort to maximise cash returns to its shareholders. The move came after a plan to focus on refurbishing brown offices was vetoed by shareholders.
However, in a trading update released earlier today, the REIT said it had sold just £4.8m of assets between the end of March and the end of September.
Palace Capital has paused the “timing of significant property disposals”, as market volatility hits pricing on investments.
The REIT said in July that it planned to sell part of its holdings, including its industrial portfolio, in an effort to maximise cash returns to its shareholders. The move came after a plan to focus on refurbishing brown offices was vetoed by shareholders.
However, in a trading update released earlier today, the REIT said it had sold just £4.8m of assets between the end of March and the end of September.
Interim executive chair Steven Owen said: “At an operational level the company has made steady progress with its asset management activities and in reducing its level of gross debt and its cost base.
“The significant volatility and uncertainty in financial markets with the prospect of significant increases in interest rates has adversely impacted the commercial property market in relation to investment activity resulting in a re-pricing of assets compared with the position earlier in the year. Therefore, the board has decided to pause the timing of significant property disposals for the time being.”
Palace said it would “continue to sell small, individual assets which lend themselves better to private buyers and special purchasers” and reiterated that the wider strategy remained unchanged. The REIT also plans to save £1.2m by moving its offices in London from St James’s to Victoria.
“The board’s strategy is to focus on maximising cash returns to shareholders, whilst continuing to remain mindful of consolidation in the real estate sector,” stated the REIT.
“As part of its considerations, several properties, including the industrial portfolio, have been prepared and readied for sale whilst other properties are undergoing asset management initiatives in order to prepare them for sale at a future date.”
Palace’s properties are being revalued, after the REIT switched its advisers from Cushman & Wakefield to CBRE. It expects values to fall by “less than 7%”.
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