News snapshot and market update from First Property Group plc 
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Fprop Snapshotx
Q4 2013x
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xFprop's Investment Property Markets:


xxxPoland:

xxxUnited Kingdom:
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  • GDP growth forecasts (IMF) revised up for 2014 to 2.4% as economy pulls out of trough year of 2013 (est. 1.3%);
  • PLN base rates still at multi year low of 2.5%. Euro base rates (currency in which most commercial property transacts) recently cut to 0.25bp;
  • PLN stable at PLN 4.1/€ to 4.3/€;
  • Commercial property transactions expected to top €3 billion in 2013, up from €2.6 billion in 2012, but still some way off 2005 high of €5.2 billion;
  • Bank debt against commercial real estate obtainable on reasonable terms;
  • Demand remains focused on prime properties of large lot sizes majority transacted by German open-ended funds and pan European opportunity funds;
  • Prime yields in at 6%, secondary yields out at 8% plus;
  • Liquidity in secondary market still very limited.
  • Recovery taking hold - GDP growth forecast (OBR collated) to be 1.4% for 2013 and 2.2% in 2014 – a substantial improvement from anaemic levels of last few years;
  • Commercial property transaction volumes up by some 17% YTD at c£28bn (vs £24bn over same period 2012);
  • Yields tighter generally by some 25bp or more across all prime and secondary commercial real estate asset classes. Tertiary commercial property remains out of favour;
  • Lending market loosening – margins falling and loan to value levels rising – particularly for well let commercial property;
  • Increased competition for assets in the regions – again mainly for well let commercial property;
  • Government stimulus boosting the residential market, in particular for lot sizes sub £600,000 (via its help to buy strategy);
  • Residential prices forecast to rise by 17-26% over next 5 years, depending on region.
  • Concerns:
    >> Illiquidity in secondary market means exits are difficult.

  • Concerns:
    >> Capital markets currently ahead of the occupier market;
    >> Potential ill effects of overly loose monetary policy.

xFprop Investment Strategies - interested investors please contact Jeremy Barkes:


  • UK – targeting well let “good secondary” commercial property, primarily retail warehousing, to generate minimum dividend of 6% p.a.; Second strategy to target vacant/short lease offices for residential development.
  • Poland – targeting higher yielding commercial property to generate minimum IRR & ROE of 15% p.a. (geared).

xFprop Property Requirements:


xxPoland:

xxUnited Kingdom:

xx1. 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.
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 Diary:


  • 27 Nov 2013: Interim Results for six months to 30 Sep 2013 - First Property Group plc
  • 18 Dec 2013: Ex-dividend date - First Property Group plc
  • 20 Dec 2013: Interim dividend record date - First Property Group plc
  • 17 Jan 2014: Interim dividend payment date - First Property Group plc

xContact Fprop:


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