First Property Group Plc · LSE:FPO
First Property — Investor Day (February 2017)
24 slides from First Property's investor day presentation, Feb 28, 2017
Slide 1: Thinking From First Principles
THINKING FROM FIRST PRINCIPLES First Property Group plc Redleaf Capital Markets Day: “Breaking the Mould” The Shard, Floor 24, 32 London Bridge Street, SE1 9SG 28 February 2017 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270
Slide 2: Ben Habib, Group Chief Executive
First Property Group plc Ben Habib, Group Chief Executive Ben Habib, MA (Cantab) Founded First Property Group plc in 2000. Managing Director of a private property development company, JKL Property Ltd, from 1994 - 2000. Finance Director of PWS Holdings plc, a FTSE 350 Lloyds reinsurance broker
Slide 3: Investment Philosophy
First Property Group plc Investment Philosophy We typically target high yielding property: Property is illiquid – but rental income mitigates this; In the long run income, not increases in value, largely determines total returns (source: IPD); Values are better protected if investments yield
Slide 4: Investment Philosophy (continued)
First Property Group plc Investment Philosophy (continued) A fundamental approach to investing: consensus does not justify chasing a theme; Flexibility in the light of market changes; An active approach to asset management where possible. THINKING FROM FIRST PRINCIPLES! Email jeremy.barkes
Slide 5: Thinking 2001
First Property Group plc Thinking from first principles 2001 Event: Interest rates cut following 9/11 despite no economic slowdown Opportunity: Enabled development type returns to be earned from investment Fprop response: Establishment of fund management business Result: First three funds (all inves
Slide 6: Thinking 2005
First Property Group plc Thinking from first principles 2005 Event: Dramatic increase in property values from 2001. Extract from 2005 report & accounts (CEO statement): “As many shareholders will be aware, the commercial property investment market in the UK has risen sharply over the last few years
Slide 7: Thinking 2008
First Property Group plc Thinking from first principles 2008 Event: Credit crunch had not yet reached CEE Opportunity: Prepare for its arrival Fprop response: Reversed our asset management policy of waiting until lease expiry to renew leases Result: >70% (by value) of leases extended beyond 2012 wit
Slide 8: Thinking 2009
First Property Group plc Thinking from first principles 2009 Event: Nadir of credit crunch: UK commercial property values had fallen c50% Opportunity: Return to investment in UK Fprop response: To establish a new UK fund (£100m) Result: Earned resilient high income returns for our fund (happy client
Slide 9: Thinking 2013
First Property Group plc Thinking from first principles 2013 Event: Introduction of Permitted Development Rights (PDR) PLUS measures to boost demand for housing Opportunity: Capital gain from vacant office properties Fprop response: Reversed our investment policy on income and raised fund of £40 mil
Slide 10: Case Study – Planning Gain – Office park, Uxbridge
First Property Group plc Case Study – Planning Gain – Office park, Uxbridge Purchase price (Aug-2014) £7.80m Sale price (Mar-2015) £18.30m Use class B1(a) office Area (ft2) 67,743 ft2 Additional rental income £0.30m Net profit £9.20m ROE (net) 112.3% Equity multiple (net) 2.1x Aggregate net IRR of P
Slide 11: Thinking 2016
First Property Group plc Thinking from first principles 2016 Event: Brexit vote => weakness in and bifurcation of UK commercial property market Opportunity: Acquire institutional property at higher yields Fprop response: Recommended to a client to increase its investment mandate Result: Acquired c£5
Slide 12: Case study – Brexit wobble - Retail Park, Southampton
First Property Group plc Case study – Brexit wobble - Retail Park, Southampton Purchase price £23m Net initial yield (NIY) at purchase 6.6% NIY post sale of adjacent unit 6.9% Net Income* £1.48m p.a. WAULT to breaks* 15.4 yrs Gross Internal Area* 138,000 ft2 * = Post sale of adjacent unit (see value
Slide 13: Result of thinking (UK): average payback period
First Property Group plc RESULT of thinking from first principles (UK) 23 Sale of 10 properties 21 Average payback period (years) Purchase of 24 19 Lehman Brothers properties – Failure Purchase and Sale of 10 still in largely vacant acquisition 17 office mode properties for Purchase of 23 15 convers
Slide 14: Result of thinking: NAV pence per share
First Property Group plc RESULT of thinking from first principles 50 45 Adjusted NAV NAV Cash 40 35 Pence per share 30 25 20 15 10 5 0 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 14
Slide 15: Result of thinking: total dividend
First Property Group plc RESULT of thinking from first principles 1.60 Total Dividend 1.40 1.20 Pence per share 1.00 0.80 0.60 0.40 0.20 0.00 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 15
Slide 16: Result of thinking from first principles: IRR and ROE
First Property Group plc RESULT of thinking from first principles IRR pa - Actual IRR pa - Implied ROE pa - since inception ROE HY 2016/17 - on original equity 100% 95% 90% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1PT 2PT 3PT USS PDR RPT 5PT UK PPP FOP SIPS FRS FGC -5% Implied IRR calculations use NAVs a
Slide 17: Looking ahead
First Property Group plc Thinking from first principles Looking ahead Events: Interest rates to stay low Institutions remain nervous of Brexit UK economy to remain relatively robust Planning regime to remain pro-development Opportunity: Buy institutional property and offices Email jeremy
Slide 18: Why invest in Fprop plc?
First Property Group plc Why invest in Fprop plc? 1. Expertise: Experienced, nimble management team; Excellent investment track record: 24% annualised growth in net assets between Apr-2008 and Sep-2016; Ranked No.1 vs MSCI’s Investment Property Databank Central & Eastern European Benchmark.
Slide 19: Appendix
First Property Group plc Thinking from first principles Appendix Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 19
Slide 20: Fprop Company Description
First Property Group plc Fprop Company Description First Property Group plc is an award winning AIM listed co-investing property fund manager with operations in the United Kingdom and Central Europe. Around one third of its shares are owned by the management team and their families. Its focus is on
Slide 21: Awards
First Property Group plc Awards FPAM funds rank No.1 versus MSCI’s Investment Property Databank (IPD) Central & Eastern European (CEE) Benchmark for the ten years from the commencement of its operations in Poland in 2005 to 31 December 2015, and for the annualised periods from 2005 to the end of eac
Slide 22: Plc Management Team
First Property Group plc Plc Management Team Non-Executive Chairman — Alasdair Locke, MA (Oxon) Alasdair began his career in banking. In 1982 he established a Singapore-based business providing finance for and investing in shipping and offshore oil service companies, which was subsequently acquired
Slide 23: Plc Management Team
First Property Group plc Plc Management Team Group Chief Executive & FPAM Chief Investment Officer — Ben Habib, MA (Cantab) Ben founded and is CEO of First Property Group plc, an award winning commercial property fund manager with operations in the United Kingdom and Central Europe. Prior to setting
Slide 24: Disclaimer
Disclaimer This presentation has been prepared by First Property Asset Any investment to which this presentation relates is available only to Management Limited for information purposes only and does not those persons described above. Persons of any other description constitute an offer, recommendat