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Fprop Snapshot
Q2 2015
 
 
 
 
Fprop Investment Property Markets
 
 
 
POLAND:
 
 
GDP growth - 2015 (E) = 3.3%, 2016 (E) >4%;
 
 
Beneficiary of Euro QE (indirectly);
 
 
FX - PLN 4 / €1, at high-end of 5 year range;
 
 
Disconnect between strong Polish economy and weak EUR (currency in which most commercial property rents are denominated);
 
 
Commercial property yields still HIGH – c200-300bp higher than comparable property in UK / Western Europe;
 
 
Cost of borrowing at all time lows;
 
 
High yields and low cost of borrowing = High ROE’s;
 
 
Commercial property rents - generally SUSTAINABLE, subject to location.
 
 

 
UNITED KINGDOM:
 
 
Consumer confidence at 12 year high;
 
 

Interest Rates - medium term forecast by BoE is for "new norm" of c2-3% pa. Mark Carney: "What I am telling you is that the old normal is not the new normal."
= 10 year gilts at 1.9%;

 
 

Commercial property occupier market - generally recovering;

 
 

Commercial property investor market - prime valuations pushing investors into "secondary" property and the regions;

-

All UK prime (excl central London) av yield = 4.9%;
-

All secondary av yield = 8.4%;

-


Yield gap between prime and secondary commercial property has narrowed by c450bp since 2013;


 
RESIDENTIAL - Fprop calls on new Conservative Government to extend the duration of Permitted Development Rights to convert offices to residential use, as mooted by it prior to the General Election.
 
 
 
 
 
Fprop in Poland
 
  …has been earning ROE >20% pa. for past several years;
 
 
…is ranked No. 1 vs IPD CEE universe for the annualised periods from the commencement of its operations in Poland in 2005 to the end of each of the years between Dec-2008 to Dec-2014;
 
 
…is in process of establishing a new club of investors, targeting a minimum ROE of 15% pa. For further information please contact Jeremy Barkes.
 
 
 

 
Fprop in UK:
 
 
…has delivered a dividend yield to its fund investors from ungeared good "secondary" commercial property >6% pa since 2010;
 
 
…has earned a return on equity of 53% and IRR of 98% pa for investors in its development fund, established Oct 2013;
 
 
…is currently investing a £125 million fund on behalf of Shipbuilding Industries Pension Scheme (SIPS).
 
 
 
 
 
 
Fprop Investment Strategies
 
 
 
POLAND:
 
 
Investment - targeting higher yielding commercial property to generate a minimum IRR & ROE of 15% p.a. (geared).
 
 
 

 
UNITED KINGDOM:
 
 
Investment - targeting all property classes to generate a total return of 7% p.a. (ungeared);
 
 
Development - targeting vacant/short lease offices for conversion to residential use.
 
 
 
 
 
 
Fprop Property Requirements
 
 
 
POLAND:
 
 
All sectors considered but focus on offices, retail and mixed-use;
 
 
Lot sizes of €3m+ with no ceiling;
 
 
Minimum 7.5%+ net initial yields - unless partially vacant, in which case lower;
 
 
Fully or partially let with or without asset management angles;
 
 
Cities with catchments of 50,000+.
 
 
 

 
UNITED KINGDOM:
 
 
All sectors considered - including offices, retail, leisure, industrial, logistics, residential, student accommodation, properties suited for development and redevelopment;
 
 
Lot sizes £2m - £25m;
 
 
Minimum 6% net initial yields - unless partially vacant, in which case lower;
 
 
Fully or partially let with or without asset management angles.
 
 
 
 
 
 
 
Fprop Diary
 
 
 
 
 
 
 
 
 
Contact Fprop:
 

 

Jeremy Barkes
Director, Business Development
 
+44(0)20 7340 0270
http://www.fprop.com


 
1000 Companies to inspire Britain in 2015  
     
 
IPD  
FPAM funds have ranked No.1 versus the Investment Property Databank (IPD) Central & Eastern European (CEE) universe for the annualised periods from the commencement of its operations in Poland in 2005 to the end of each of the years between 31 December 2008 to 31 December 2014.
 
 
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