Palace successfully recycles capital with Newcastle investments

The purchase was partially funded by a new loan from Santander to the value of £11.5m with the balance paid for from the company's own cash reserves.

SM was the owner of several properties at St James Gate as well as the Jury's Inn, a 274-bedroom hotel located by Newcastle Railway Station, Newcastle-upon-Tyne.

The total net income from the properties was approximately £1.77m per year.

Neil Sinclair, chief executive of Palace Capital, commented: "We are delighted with this corporate purchase, which continues our strategy of acquiring high quality buildings close to transport links in major cities. We have bought the Properties on an attractive initial yield resulting in over £600k per annum in excess of the income foregone on our recent disposals and the recent administration of our tenant at Marsh Barton, Exeter. This acquisition increases the value of our portfolio to over £200m.

"This transaction demonstrates our skills at recycling our capital - we have used the proceeds of our recent sales on unencumbered properties to fund approaching 50% of the consideration."

As of BST 0915, Palace Capital shares had shown no change at 375p.