News snapshot and market update from First Property Group plc 
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Fprop Snapshotx
Q3 2013x
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xFprop's Commercial Investment Property Markets:


xxxPoland:

xxxUnited Kingdom:
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  • GDP growth forecast to trough in 2013 at 1.1% but to pick up from H2 2013 (2014E: 2.25%) - IMF;
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  • July Purchasing Managers Index (PMI) rose to 51.1 - strongest reading since Jan 2012;
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  • Interest rates reduced from 4.75% (Nov 2012) to 2.5% (Jul 2013);
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  • Government taking measures to boost fiscal stimulus;
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  • PLN stable at PLN 4.1/€ to 4.3/€;
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  • Commercial property transactions increasing - €1.03 billion traded in H1 2013 (+21% increase from H1 2012) - CBRE;
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  • Demand remains focused on prime properties of large lot sizes (4 properties > €100 million closed in Poland H1 2013 - JLL).
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  • Latest economic data indicates an economic recovery is underway (Q2 GDP grew by 0.6%) but it is fragile;
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  • Commercial property values appear to have levelled off – overall capital values grew by 0.3% in Q2 (CBRE). Positive total return across all major sectors;
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  • Investor demand growing for well let secondary property located outside SE England;
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  • Still possible to buy secure income streams on long leases set in 2009 or later at yields of 7% plus.
  • Concerns:
    >> Growth fails to pick up as predicted.
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    Over-development (offices and retail) just as the economy is slowing.



  • Concerns:
    >> Potential ill effects of overly loose monetary policy.
    >> Recovery of asset values not based on sustainable economic recovery.
    >> Certain Government initiatives appear designed to see through the economy until after the next election but what then...

xFprop Requirements:


xxPoland:

xxUnited Kingdom:

xxInvestment 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.
xx 1. Investment Property:
  • Minimum 6.5% net initial yields;
  • Fully or partially let commercial or mixed use/ multi let properties;
  • Lot sizes > £3m;
  • All commercial sectors considered, anywhere in the UK.

xx 2. Development Property
  • Offices - vacant/ short term leases;
  • UK wide but ideally Greater London and the South;
  • Any lot size.

xFprop Funds Open:


  • UK Sterling Income Fund - targeting minimum dividend of 6% p.a. (ungeared);
  • UK – Office to Residential Development Fund (TBC) – targeting minimum IRR & ROE of 25% p.a.;
  • Poland Fprop Opportunities plc (FOP) – targeting minimum IRR & ROE of 15% p.a. (geared).

xFprop Diary:


  • 18 Sep: iGlobal Forum's Real Estate Private Equity Summit, London (Ben Habib speaking)
  • 26 Sep: First Property Group plc AGM (at Cavalry & Guards Club)
  • 27 Sep: Final Dividend payment date (subject to approval at AGM)
  • 7-9 Oct: EXPO Real, Munich (Ben Habib & Jeremy Barkes attending)
  • Late Nov: Interim Results

xContact Fprop:


  • Contact: Jeremy Barkes, Director, Business Development
  • Phone: +44 (0) 20 7340 0270
  • Email: jeremy.barkes@fprop.com
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