Palace Capital Regulatory News (PCA)

PALACE CAPITAL PLC

("Palace Capital" or the "Company")

PALACE CAPITAL SIGNS SIGNIFICANT NEW LEASE WITH GERMAN AUTOMOBILE CONGLOMORATE IN COVENTRY

Palace Capital PLC, the AIM quoted property investment company, focussed on investing in the UK secondary commercial property market outside London, today announces a significant letting of an industrial unit in Coventry.

Palace has let a 75,000 sq. ft industrial unit to Brose Limited, an existing sub-tenant, on a new lease for an annual rent of £325,000. The initial term of the lease is for 5 years, with an option to renew for a further 5 years. Brose is part of a large German automobile components group that employs 22,000 people worldwide and in 2013 reported turnover of €4.7 billion. In the UK Brose is expanding in Coventry where it is launching new products for its customers, including Jaguar Land Rover and Nissan.

The industrial unit is known as Courtauld House and forms part of a complex on the Foleshill Industrial Park in Coventry, which was acquired by the Company as part of the Sequel portfolio in October 2013. The property was constructed in 1999 and was let previously to Bowater Building Products who recently exercised a break clause in their existing lease. This exercise has resulted in Bowater Building Products paying Palace a rent penalty equivalent to 4 months. As part of the existing lease agreement Bowater is complying with a Schedule of Dilapidations to be paid by them.

In addition to the industrial unit, Palace owns a modern 18,000 sq. ft office building on the same site. This office building will become vacant in August 2014, although the current tenant is liable for rent until February 2015. It is currently being refurbished by the existing tenant and marketing to new tenants will commence in early September 2014.

Neil Sinclair, Managing Director of Palace Capital said:

"We are delighted to sign a lease agreement with Brose for this large industrial unit. Coventry has a strong local economy and is a buoyant hub for the automobile industry and it is benefitting from the success of Jaguar Land Rover in particular. This lease demonstrates the active management of the portfolio which we are undertaking."

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