LONDON (Alliance News) - Palace Capital PLC Thursday said it is raising GBP20 million in a placing of new shares to help fund the acquisition of a mixed use leisure scheme in Northampton, East Midlands, England.
Separately, Palace Capital reported a GBP13.9 million pretax profit in the year ended March 31, compared with GBP21.2 million in the prior year, as higher revenue was more than offset by lower gains on revaluation of investment property portfolios and higher administrative expenses.
The property investor said it is acquiring O&H Northampton Ltd, the owner of mixed use leisure scheme Sol Central, for GBP1, with the fundraising to go towards cutting the acquired company's debt of GBP20.7 million.
According to O&H Group Ltd, a privately owned business established in 1982 by Frank Shahmoon & David Gabbay, Sol is part of its portfolio.
In addition, Palace Capital has agreed a deal for O&H to take a term loan facility of GBP11.4 million from lender Santander.
The fundraising, which along with the acquisition is conditional on shareholder approval, will consist of the placing of 5.6 million new shares at 360 pence each.
Sol Central is 13 years old, 190,000 square feet and the home of tenants including a hotel and cinema. It generate net rental income of GBP1.89 million per annum. Its net initial yield is calculated at 8.86%, while the weighted average unexpired lease term is 13.7 years to expiry.
"In addition to benefitting from a number of exciting developments nearby, the board is confident that the company's active management should enhance the prospects for this asset, increasing income and adding capital value," Chief Executive Neil Sinclair said in a statement.
"Alongside managing our growing portfolio, we continue to seek out further acquisition opportunities that satisfy our criteria and have the potential to produce returns that we can recommend to our shareholders," Sinclair said.
Palace Capital shares were flat at 380 pence on Thursday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Palace Capital (PCA)