Last checked at 5 Oct 2010 07:00
Date: 5 October 2010
On behalf of: First Property Group plc ("First Property" or the "Group")
Embargoed: 0700hrs
First Property Group plc
§ Launch of New Opportunity Fund
First Property Group plc (AIM: FPO), the AIM-listed property fund management group, today announces that its principal subsidiary, First Property Asset Management Limited ("FPAM"), has established a new opportunity fund, Fprop Opportunities plc ("FOP" or the "Fund") to invest in commercial property in Europe, concentrating on Poland.
First Property Group plc has committed to invest £7 million in FOP and undertaken that its investment in FOP will not fall below 7% of FOP's issued share capital. It is intended that FOP will commence business immediately with this £7 million and that over time it will raise in the region of £100 million of equity from third party investors.
FOP will also acquire properties through subsidiary vehicles, in which additional third party investors may invest (FOP Group companies). In this way the assets held by the Fund may be augmented beyond the funds raised directly into FOP.
The Fund, which will have a ten year life, will be targeting property investments which it forecasts should earn a rate of return on equity and an internal rate of return of 15% per annum or more. It is intended that all free cash accrued by the Fund will be paid out to investors as it is earned.
The Fund will concentrate its efforts on commercial investment property in Poland. In the opinion of the directors, the property market in Poland offers relatively high yielding properties compared to the U.K. market with secure and potentially growing income streams. It is also a market in which FPAM has considerable expertise. The performance of FPAM's funds under management ranked number one versus the IPD benchmarks for CEE and Poland for the four year period to 31 December 2009.
Poland is Europe's sixth largest economy and the only country not to have entered recession thus far in the credit crunch. For 2010 Poland's GDP is forecast by the European Commission to grow by 3.4%, the highest forecast growth rate within the European Union.
Ben Habib, Chief Executive of First Property Group plc, said:
"The launch of FOP represents a major step for the Group as we believe the current economic climate is ripe to exploit the buying opportunities we are seeing, particularly in Poland. We have committed a substantial proportion of our capital resources to this Fund, which we expect will perform very well. Over time, it should grow into a sizeable pool of property assets, thereby also growing our assets under management.
"Poland's positive economic fundamentals, its growing occupier demand within the property market and relatively few buyers of Polish commercial investment property at present, has created a good buying opportunity for the Fund."
For further information contact:
| First Property Group plc | Via Redleaf Communications |
| Ben Habib (Chief Executive) Jeremy Barkes (Director, FJB Capital Advisers) | www.fprop.com |
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| Arden Partners | Tel: 020 7614 5900 |
| Chris Hardie (Director Corporate Finance ) |
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| Redleaf Communications | Tel: 020 7566 6708 |
| Adam Leviton/Alicia Jennings | firstproperty@redleafpr.com |
§ Publication quality photos are available from Redleaf Communications
Notes to investors and editors
·; First Property Group plc is a commercial property fund manager with operations in the United Kingdom and Central Europe. The performance of its funds under management ranked #1 versus the IPD benchmarks for CEE and Poland for the 4 year period to 31 December 2009.
·; The principal business model of First Property Group can be summarised as follows:
o raise third party funds to invest in income producing commercial property;
o co-invest in these funds;
o earn fees for the management of these funds. Fees earned are a function of the value of assets under management as well as the performance of the funds;
o earn a return on its own capital invested in these funds.
·; It also has a 60% shareholding in a mechanical & electrical (M&E) installation and maintenance contractor, First Property Services Limited.
·; Further information about the Company and its products can be found at: www.fprop.com.