LONDON (Alliance News) - Palace Capital PLC on Wednesday said there was interest from potential tenants and buyers on nearly all its vacant properties, as it continued to improve the rental income of its portfolio.
Palace said its portfolio currently has a contractual rent roll of GBP13.7 million per annum and a net rental income of GBP11.7 million per annum, after the deduction for head rent, service charge shortfall and empty rates.
The property investor said the optimum value of its Hudson House office property, located in York, will be secured by redeveloping the entire site.
Palace said it has consent for a change of use to 139 apartments, and a resolution to grant permission to convert Hudson House to 81 apartments and 37,000 square feet of offices.
However, "notwithstanding these alternative schemes", the group said it is currently in talks in the City of York Council and expects to submit a formal planning application for the complete redevelopment of the site before the end of 2016.
Palace said it was currently bearing the cost of part of the building remaining empty, pending the outcome of the planning application, and said vacant rates will affect profit from the site in the short-term.
Since its purchase in October 2013, however, Palace said the value of Hudson has increased to GBP14.9 million as at March 2016 from GBP3.8 million.
Meanwhile in Northampton, Hampton said it was making "encouraging progress" to improve its large mixed-use leisure scheme. The group submitted a planning application to change the use of the former Gala Casino to a Class A3 usage, namely restaurant and cafes, with this application granted on Monday.
Palace said it only has a small unit unlet in its 113,000 square feet, four-year old leisure complex in Halifax, called Broad Street Plaza, and has placed a contract to install a new shopfront to make it more appealing to potential tenants.
The group said it was consulting with two marketing companies with a view to increasing footfall at the Halifax site.
Palace said it plans to place a contract to refurbish the Boluton House office property in Manchester, which it purchased in August, and plans to remodel the entrance hall and part of the exterior.
The building is currently let at "very modest rents" and demand for well-located offices in central Manchester is "robust".
Palace said it was near to completion of its GBP2.3 million conversion scheme to refurbish the vacant upper floor offices into 13 self-contained residential apartments, which it plans to offer for lettings.
"Notwithstanding the uncertainty caused by the recent EU referendum, we view the current environment as an opportunity. We have interest from potential tenants and buyers on nearly all of our vacant properties and we will continue to look for opportunities to add value," said Chief Executive Neil Sinclair.
"Looking ahead, we expect income returns to drive total shareholder returns, and we are delighted with the progress we are making to improve the rental income from our portfolio. The board is very excited with the range of opportunities in our portfolio to add further significant value to a number of our strategic assets. This will inevitably lead to both a major increase in income and thereby capital growth," Sinclair added.
Shares in Palace were up 1.4% at 360.00 pence on Wednesday morning.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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Palace Capital (PCA)