Palace Capital surrenders leasehold interest at Priory House, Birmingham

(Sharecast News) - Real estate investment company Palace Capital has surrendered its short leasehold interest at Priory House, Gooch Street North, Digbeth, Birmingham for a nominal sum of £25,000, it announced on Monday, saving it around £170,000 per annum.
The AIM-traded firm acquired the leasehold interest on the 63,000 square foot office building as part of the Sequel Portfolio acquisition in October 2013, with Palace paying £100 per annum in rent until December 2027.

Priory House was let to Forensic Archive for the same lease term at a rent of £260,000 per annum exclusive, increasing on review to £322,000 per annum in December 2016.

The company announced on 7 May this year that it had accepted the surrender of the lease held by Forensic for a payment of £2.85m.

It said it had received £2.875m, less seven months holding costs of £99,000, and had effectively disposed of its entire interest for £2.78m, which was 25% above the £2.1m book value as at May.

"This is a strong example of our team's asset management skills," said chief executive Neil Sinclair.

"On 7 May, a significant sum was received from the tenant but the crucial element was then to dispose of the leasehold interest in this vacant building which was costing the company, on an annualised basis, approximately £170,000 largely in empty rates, insurance and security.

"Moreover, by removing 63,000 square feet of non-core, vacant office space, our portfolio occupancy has increased from 84% to 86%, with the remainder mostly comprising tactical vacancies as we progress our value enhancing capital expenditure strategy."

At 1040 GMT, shares in Palace Capital were up 2.83% at 298.2p.