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Fprop Snapshot
Q3 2014
Fprop Investment Property Markets
GDP growth of 3.4% YoY in Q1 2014. Growth forecasts for 2015 range from 2.7%-3.6%.
Confidence - not as high as earlier in the year (May PMI = 50.3 vs Feb PMI = 55.9, a 38 month peak).
Inflation - 0.53% YoY - below target but expected to pick up.
Interest Rates - stable at 2.5%.
PLN relatively stable - trading range over past year of PLN 4.1/€ to 4.3/€.
Euro malaise - EU measures to combat threat of deflation include negative interest rates and cheap loans to banks to lend to the private sector.
Energy - Poland’s first LNG port to open in H1 2015, to reduce reliance on Russian gas imports. The port is forecast to handle half of Poland’s annual gas needs.
Commercial property transactions in H1 at c€1.1bn, broadly unchanged from H1 2013. 
Valuations - prime office and retail yields broadly unchanged Q-on-Q at c6%, Prime office rents slipping - down some 5% y-on y - as supply of offices rises.
Valuations of secondary property still largely yet to recover.
Banks well capitalised and willing to lend.
Over supply (offices and retail).
Illiquid market.

GDP growth forecasts upgraded - ONS av now 3.1% for 2014 - the fastest of any G7 economy.
Confidence - high (May PMI = 58.6, Jun = 57.5)
Inflation rose to 1.9% in June, up from 1.5% in May.

Unemployment down from 8% to 6.5%, lowest level since 2008. But wage growth not following - slowed to 0.7% in March/April/May.


Interest Rates - 10-yr Gilts stable at around 2.7%, up from their record low of 1.38% in July 2012.


Commercial Property - c60% of investment volume in Q2 was outside London.


Prime office rents in London's City and West End up by 6% and 10% YTD, but rest of UK broadly flat.


Prime retail rents in London's West End up by some 8% YTD but in rest of UK broadly flat.


Industrial rents rising more broadly. 1.1% in Q1, up 3% YoY.

Valuations rising. Gap between prime and good secondary commercial property values narrowing.
Residential - UK house prices back to 2007 peak according to Nationwide but rate of price increases moderating.
Potential ill effects of overly loose monetary policy – asset values inflated.
General Election in 2015.
  Interest rate rises.
Fprop News
FPAM is among the first 35 real estate fund managers in Europe to be granted a license under the new Alternative Investment Managers Directive (AIFMD), effective 22 July, according to industry magazine Private Equity Real Estate - see www.perenews.com.
Fprop Investment Strategies - please contact Jeremy Barkes
Investment - targeting higher yielding commercial property to generate a minimum IRR & ROE of 15% p.a. (geared).

Investment - targeting well let “good secondary” commercial property to generate a minimum dividend payment of 6% p.a. (ungeared);
Development - targeting vacant/short lease office properties for conversion to residential use.
Fprop Property Requirements
Investment Property:
Minimum 7.5%+ net initial yields;
Cities with catchments of 50,000+;
Fully or partially let offices, shopping centres, retail warehousing or mixed use/ multi-let properties;
All sectors considered;
Lot sizes of €5m+ with no ceiling. We will consider all compelling opportunities.

1. Investment Property:
Minimum 6.5% net initial yields;
Fully or partially let commercial or mixed use/ multi let properties;
Lot sizes > £2m;
All commercial sectors considered, anywhere in the UK.
2. Development Property:
Offices - vacant/ short term leases;
UK wide but ideally Greater London and the South;
Any lot size.
Fprop Diary
Contact Fprop:
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Jeremy Barkes
Director, Business Development
+44 (0) 20 7340 0270

Richard Digby

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