News snapshot and market update from First Property Group plc 
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xQ1 2013 Fprop Snapshotx

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xxFprop's Commercial Investment Property Markets:


xxxPoland:

xxxUnited Kingdom:
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  • Second leg of credit crunch has slowed the Polish economy but it continues to grow. Forecast GDP growth for 2013: 2.1%.
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  • Debt levels at Government and consumer level remain low.
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  • Continued loose monetary policy in the West is good for the Polish Zloty, even though Poland has begun its own cycle of interest rate reductions.
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  • Banking sector tighter post the second leg of the credit crunch but debt still available at reasonable levels for good properties and borrowers.
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  • We favour discount/ value retailers and the retail warehousing market but we also like offices in major cities.
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  • Prepared to move up the risk curve in certain locations, most notably Central Business Districts of major cities and other significant conurbations.
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  • Concern: Continued Global and German economic slowdown would weigh on Poland.
  • Market remains weak with an ever increasing gap between prime and secondary yields.
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  • Very significant proportion of sales by, or motivated by, banks.
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  • Likely to remain weak until 2014, with mixed forecasts from various commentators.
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  • Prime property offers no return.
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  • We continue to favour the discount/ value retailers and the retail warehousing format – post credit crunch leases, low rents, long leases, good covenants and can be bought at attractive yields.
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  • Discount/ value retailers continue to trade well.
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  • Concern: Overly loose monetary policy (under Mark Carney) may well lead to an outbreak of inflation. This is what the policy setters secretly want but the results could be painful – hope for demand led inflation.

xxFprop Deal Flow:


xxxPoland:
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xxxUnited Kingdom:

  • Industrial facility, 19 year lease – yield 8.5%.
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  • Mixed portfolio of offices, retail and industrial – yield 10%.
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  • Retail warehouse, Warsaw – yield 7.4%.

  • Discount retailer, 15 year lease, Midlands – yield 9.25%.
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  • Major discount supermarket (sale & leaseback), new 20 year lease with fixed uplifts, Wales – yield 7.5%.
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  • Discount retailer & fast food operator, new 15 year leases with fixed uplifts, Merseyside – yield 7.25%.

xxFprop Funds Open:


  • Poland - Fprop Opportunities plc (FOP) - targeting IRR & ROE of 15% p.a. or more;
  • UK - Fprop Sterling Income Fund (FSIF) - targeting dividend of 6% p.a. or more.

xxNext Fprop News Flow:


  • April 2013: Trading update from First Property Group plc
  • May 2013: Q2 Fprop Snapshot
  • June 2013: Annual Results of First Property Group plc

xxContact Fprop:


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