First Property Group PLC Fund established to invest in UK office property (1763L)
July 17 2017 - 2:00AM
UK Regulatory
TIDMFPO
RNS Number : 1763L
First Property Group PLC
17 July 2017
This announcement contains information which, prior to its
disclosure, was inside information for the purpose of the Market
Abuse Regulation
Date: 17 July 2017
On behalf First Property Group plc ("First
of: Property", "the Company" or the "Group")
Embargoed: 0700hrs
First Property Group plc
First Property establishes new GBP180 million fund to invest in
UK office property
First Property Group plc (AIM: FPO), the property fund manager
and investor with operations in the UK and Central Europe, is
pleased to announce that it has established a new fund - Fprop
Offices LP (the "Fund") - with eight institutional investors. The
Fund has a term of seven years and is mandated to invest in office
blocks and business parks across England.
The Fund closed its first round of funding on 14 July 2017 with
equity commitments of GBP182 million, including a commitment of
GBP3 million by First Property. A second closing with additional
equity commitments is expected later this year.
Investments by the Fund may be leveraged up to a maximum loan to
value of 30%, giving the Fund an initial total buying power of
GBP260 million.
First Property will not levy management fees for its services
but will instead share in the profits earned by the Fund as
outlined below. By sharing in the Fund's profits, First Property
believes it will earn significantly more than it would via more
traditional management fee structures. This arrangement also
naturally demonstrates First Property's confidence in the prospects
of the Fund as well as better aligning its own interests with those
of its clients.
First Property has now raised some GBP250 million of equity
commitments from third parties since the referendum on 23 June
2016, in part to take advantage of the slowdown in the UK
commercial property market since then.
Once fully invested, third party assets under management, which
currently amount to GBP323 million, are expected to nearly double
in value. Total assets under management, including Group
Properties, are therefore expected to grow from GBP477 million to
in excess of GBP750 million.
Commenting on the new fund, Ben Habib, Chief Executive,
said:
"This new fund represents major progress in the growth of our
fund management business, with third party assets under management
expected to nearly double. It will also substantially increase our
investment in UK commercial property.
"The UK's decision to leave the EU has created opportunities on
which we, as a niche fund manager, are well placed to capitalise.
Our confidence in the fund's prospects is also demonstrated by our
decision to determine our entire economic benefit from it by
reference only to the profits it earns."
Profit share arrangement
The Group will not receive management fees in return for
managing the Fund. Instead, it will share in the total profit
earned by the Fund over the life of the Fund (Profit Share).
This Profit Share shall be determined as follows:
1. 10% of total profits up to an internal rate of return (IRR) of 7.5% per annum;
2. 25% of total profits between an IRR of 7.5% and 15% per annum; and
3. 20% of total profits above an IRR of 15% per annum.
The Group will receive annual payments on account of the above
Profit Share equivalent to 10% of total profits earned, adjusted,
if necessary, each year for any overpayments made in prior
years.
-Ends-
For further information please contact:
First Property Group plc Tel: +44 (20)
7340 0270
Ben Habib (Chief Executive www.fprop.com
Officer) investor.relations@fprop.com
George Digby (Group Finance
Director)
Jeremy Barkes (Director,
Business Development)
Arden Partners (NOMAD & Broker) Tel: + 44 (20)
7614 5900
Chris Hardie (Director, Corporate
Finance)
Ben Cryer (Corporate Finance)
Redleaf Communications Tel: + 44 (20)
7382 4734
Robin Tozer firstproperty@redleafpr.com
Notes to Investors and Editors:
First Property Group plc is an award winning property fund
manager and investor with operations in the United Kingdom and
Central Europe. Around one third of the shares in the Company are
owned by management and their families.
Its focus is on higher yielding commercial property with
sustainable cash flows. The company is flexible and takes an active
approach to asset management. Its earnings are derived from:
-- Fund management - via its FCA regulated and AIFMD approved
subsidiary, First Property Asset Management Ltd (FPAM), which earns
fees from investing for third parties in property. FPAM currently
manages eleven funds which are invested across the United Kingdom,
Poland and Romania.
-- Group Properties - principal investments by the Group, to
earn a return on its own capital, usually in partnership with third
parties. Investments include ten directly held properties in Poland
and Romania (including five held by Fprop Opportunities plc [FOP],
in which the Group is currently the majority shareholder), and
interests in eight other funds managed by FPAM.
Listed on AIM the Company has offices in London and Warsaw.
Further information about the Company and its products can be found
at: www.fprop.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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