First Property Group Plc · LSE:FPO
First Property — FY2021 Earnings Presentation
53 slides from First Property's earnings presentation, Jun 24, 2021
Slide 1: Preliminary Results for the year ended 31 March 2021
Preliminary Results for the year ended 31 March 2021 First Property Group plc 24 June 2021 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270
Slide 2: Contents
First Property Group plc Contents Company Description and Structure 3 APPENDIX 45-52 Investment Approach 46-47 Preliminary Results 4-11 Shareholders >5% 48 Highlights 5 Share Statistics 49 Balance Sheet 6 Plc Management Team 50-51 Profit Before Tax 7 Awards 52 NAV 8-9 Dividend 10 Disclaimer 53 Outlo
Slide 3: Company Description
First Property Group plc Company Description First Property Group plc (AIM: FPO) is an award winning property fund manager and investor with operations in the United Kingdom and Central Europe. Its earnings are derived from: ➢ Fund Management - via its FCA regulated and AIFMD approved subsidiary, Fi
Slide 4: Preliminary Results
First Property Group plc Preliminary Results Preliminary Results Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 4
Slide 5: Highlights
First Property Group plc Highlights ➢ Loss before tax: £5.09 million (2020: profit before tax of £5.52 million); ➢ Value of directly owned property at market value: £41.57 million (2020: £56.30 million); ➢ Net debt: £18.85 million (2020: £57.20 million); ➢ Cash reserves: £16.24 million (2020: £7.34
Slide 6: Balance Sheet at period end
First Property Group plc Balance Sheet at period end Unaudited Audited Balance Sheet Percentage change as at 31 March 2021 as at 31 March 2020 Investment properties and Inventories at book £34.95m £47.09m -25.80% value Investment properties and Inventories at market £41.57m* £56.30m -26.20% value Ca
Slide 7: Profit Before Tax
First Property Group plc Profit Before Tax The decrease in profit before tax was mainly attributable to: ➢ Group Property in Gdynia; value of property impaired by £7.02m and rental contribution reduced to £2.85m (2020: £4.87m); ➢ Vacant space in CH8, Warsaw; requiring a rent guarantee provision of £
Slide 8: NAV per share 2007-2021
First Property Group plc NAV per share 2007-2021 (excluding any value attributable to FPAM) • NAV per share at 70 EPRA NAV book value: 33.33p 60 Book NAV Cash • EPRA NAV per 50 share: 42.80p Pence per share 40 • Cash per share: 14.71p 30 External valuers: 20 • CBRE; 10 • Koterski 0 -10 Adjusted NAV
Slide 9: Adjusted NAV Bridge
First Property Group plc Adjusted NAV Bridge Adjusted NAV breakdown 31 Mar 2020 Associates and 24.0p £27.1m Investments Cash 6.8p £7.7m Group Properties 19.7p £22.2m less loans FPAM - - Other working 4.5p £5.1m capital Total 55.0pp £62.1m Adjusted NAV breakdown 31 Mar 2021 Associates and 24.3p £27.5
Slide 10: Dividend
First Property Group plc Dividend 1.80 Proposed Final 1.60 Interim Final Total Dividend Dividend: 1.40 Nil (2020: 1.22p) 1.20 Pence per share 1.00 Total Dividend for year: 0.80 0.45p 0.60 (2020: 1.67p) 0.40 0.20 - Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Ma
Slide 11: Outlook - Why invest in Fprop plc?
First Property Group plc Outlook - Why invest in Fprop plc? 1. Expertise: ▪ Experienced, nimble management team; ▪ Excellent investment track record: 21.5% p.a. growth in adjusted net assets, including dividends paid since 2006 (12.8% p.a. since 2011). 2. Diversified earnings: ▪ From Group Propertie
Slide 12: Segmental Analysis
Segmental Analysis Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 12
Slide 13: Group Structure
First Property Group plc Group Structure Fund Management Division Group Properties Division (FPAM) ▪ AUM: £527m; 7 directly owned properties ▪ 12 funds; ▪ 68 properties; ▪ 5 in Poland, 2 in Romania; ▪ Invested across the UK, Poland and ▪ Market value: £41.6m; Romania ▪ Debt: £35.1m (£27.4m post year
Slide 14: Fund Management (FPAM)
Fund Management (FPAM) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 14
Slide 15: Fund Management Summary
Segmental Analysis: Fund Management Summary Fund • Third party AUM: £527m (2020: £567m); ➢ Revenue: £3.39m (2020: £3.90m); Management • Twelve funds invested across UK, Poland & Romania; ➢ Contribution to PBT prior to deduction of • Weighted average fund management unallocated central contract term:
Slide 16: Typical Fund Management Fees / Selection of Clients
First Property Group plc Typical Fund Management Fees / Selection of Clients Typical fees in UK: Typical fees in Poland & Romania: Selection of clients: • Management: 0.6-1% of GAV p.a.; • Management: 1% of GAV p.a.; • Outperformance: 20% of excess returns • Outperformance: 20% of excess >IRR equiva
Slide 17: Fund Management Revenue and AUM
Segmental Analysis: Fund Management Revenue and AUM 10 700 Performance Fee FPAM Revenue 3rd Party AUM 9 600 8 7 500 Annualised fee income: Revenue (£ Million) 6 £2.90m AUM (£ Million) 400 5 (2020: £3.13m) EXCLUDING performance 300 4 fees and the profit share from Fprop Offices LP. 3 200 2 100 1 - -
Slide 18: Breakdown of AUM by geography, by fund, by asset class
Segmental Analysis: Fund Management Breakdown of AUM by geography, by fund, by asset class 5PT FRS FGC 1% 0% 4% FKR 4% FCL 2% Retail/Retail POLAND OFFICES Warehousing 32% 25% FPL 17% 11% Shopping UK By Geography By Fund Offices Asset Class Centres FOP 59% 9% 66% 12% Supermarkets/ supermarket led ROM
Slide 19: Third Party funds under management
Segmental Analysis: Fund Management Third Party funds under management Assets under % of total third- Assets under Country of management at party assets management at Fund Fund expiry No of properties investment market value at 31 under market value at March 2021 management 31 March 2020 SAM & DHOW
Slide 20: Reconciliation of movement in funds under management
Segmental Analysis: Fund Management Reconciliation of movement in funds under management Funds managed for third parties (including funds in which the Group is a minority shareholder) UK CEE Total No. of prop’s £m. £m. £m. As at 1 April 2020 375.7 191.3 567.0 69 Purchases - - - - New fund mandates -
Slide 21: Split of third party funds managed by asset class
Segmental Analysis: Fund Management Split of third party funds managed by asset class UK Poland Romania TOTALS % of Total Offices £201.0m £101.8m £8.7m £311.5m 59.1% Retail warehousing £89.8m - - £89.8m 17.0% Supermarkets £50.3m £17.2m - £67.5m 12.8% Shopping centres - £49.7m - £49.7m 9.4% Industria
Slide 22: Rent collection rates during pandemic
Segmental Analysis: Fund Management Rent collection rates during pandemic UK Poland Romania 92.3% 84.7% 98.3% Rent collected as a percentage of what would have been invoiced prior to COVID related Offices Retail Offices Retail Offices Retail concessions 95.9% 88.3% 96.6% 71.7% 100% 83.7% 95.5%* 96.7
Slide 23: FPAM Track Record - Closed Funds
First Property Group plc FPAM Track Record - Closed Funds IRR pa - Actual 120% 100% 80% 60% 40% 20% 0% 1PT 2PT 3PT USS PDR RPT -20% Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 23
Slide 24: FPAM Track Record - Existing Funds
First Property Group plc FPAM Track Record - Existing Funds IRR- pa - Implied ROE pa - since inception ROE FY 2020/21 on original equity 80% 70% 60% 50% 40% 30% 20% 10% 0% 5PT UK PPP OFFICES SIPS FOP FRS FGC SPEC OPPS FKR FCL FPL -10% -20% ▪ Implied IRR’s: assumed sale price = NAVs as at 31 March 20
Slide 25: Group Properties
Group Properties Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 25
Slide 26: Group Properties Overview
Segmental Analysis: Group Properties Overview Group 1. Seven directly owned properties: ➢ Contribution to PBT prior to deduction Properties o Five in Poland valued at £35.3m; of unallocated central overheads: o Two in Romania valued at £6.3m loss of £5.14m (2020: profit of £6.24m) ▪ Gross asset valu
Slide 27: Group Properties Contribution to PBT
Segmental Analysis: Group Properties Contribution to PBT Contribution to PBT Corresponding net equity invested (prior to deduction of unallocated central overheads) 12 Directly owned properties 10 Contribution to PBT from £6.48m, 19% Group's share in FOP 8 6 4 Contribution to PBT from £ Millions NCI
Slide 28: 7 directly owned properties
7 directly owned properties Contributed a loss of £5.8m (2020: profit of £4.7m) to Group PBT (prior to the deduction of unallocated central overheads). Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 28
Slide 29: 7 directly owned properties
Segmental Analysis: Group Properties 7 directly owned properties *Contribution to *Contribution to Book value Market value No. of Group profit before Group profit before Country Sector as at 31 as at 31 properties tax year to tax year to March 2021 March 2021 31 March 2021* 31 March 2020 Poland Offi
Slide 30: Rent collection rates from directly owned properties
Segmental Analysis: Group Properties Rent collection rates from the 7 properties directly owned by the Group Poland Romania Rent collected as a percentage of what would have been invoiced 96.2% 97.9% prior to COVID related concessions Rent collected after adjustments for concessions granted due to 9
Slide 31: Directly owned properties by geography, property, asset class
Segmental Analysis: Group Properties 7 directly owned properties by geography, by property, by asset class ROMANIA Supermarkets/ 15% supermarket led 14% Gdynia, Retail/Retail Poland Blue Warehousing 33% Tower, 6% By Geography Warsaw Asset Class By Property 38% POLAND Offices Tureni, 85% 80% Romania
Slide 32: Two properties account for 71% by value
Segmental Analysis: Group Properties 7 directly owned properties ➢ Two properties (both offices) account for 71% by value (£29.5m) Gdynia, Poland Blue Tower, Warsaw (13,500 m2) (Fprop 48% share: 11,000 m2) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 32
Slide 33: The other five properties by value
Segmental Analysis: Group Properties 7 directly owned properties ➢ The other five, representing 29% by value (£12.1m), are invested in: Poland: ▪ 2 mini supermarkets, both let to Jeronimo Martins (t/a Biedronka); ▪ A mixed-use development site Wawer, Warsaw Lodz, Poland Praga, Warsaw scheduled for c
Slide 34: Directly owned properties: values and leverage
Segmental Analysis: Group Properties 7 directly owned properties: values and leverage 31 March 2021 31 March 2020 Book value £35.0m £47.1m Market value £41.6m £56.3m Gross debt (all non-recourse to Group) £35.1m* £42.0m LTV at book value % 100.4%** 89.1% LTV at market value % 84.4% 74.6% Weighted av
Slide 35: Top tenants of the directly owned properties
Segmental Analysis: Group Properties Top 10 tenants of the 7 directly owned properties Tenant Sector Jurisdiction % 1 Jeronimo Martins Polska S.A Supermarket Chain Poland 12.01% 2 HRK HR Poland 11.32% 3 Teconnex Manufacturing Romania 10.23% 4 VULPOI & TOADER MANAGEMENT SRL Professional/ Accounting S
Slide 36: Office Building, Gdynia, Poland
Segmental Analysis: Group Properties Office Building (13,500 m2), Gdynia, Poland ➢ Lease: ▪ Agreement had been reached to lease 60% of the building to the previous sole tenant but this letting failed and the tenant vacated wef 28 Jan 2021; ▪ Now 97% vacant. Cushman & Wakefield appointed to re-lease
Slide 37: Blue Tower, Warsaw
Segmental Analysis: Group Properties Blue Tower (11,000 m2), Warsaw ➢ The Group owns: ▪ 48% of the tower (15 floors) valued at €18.6m (2020: €20.6m); and ▪ 90% of Corp Sp. z o.o., the company which is constitutionally tied to manage the building. ➢ Excellent location in Warsaw’s central business dis
Slide 38: Associates and Investments
Associates and Investments (minority shareholdings in 10 of FPAM’s 12 funds) Contributed £655,000 (2020: £1.54m) to Group PBT (prior to the deduction of unallocated central overheads) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 38
Slide 39: Non-controlling interests in funds managed by FPAM
Segmental Analysis: Group Properties Non-controlling interests in 10 of the 12 funds managed by FPAM (accounted for as Associates and Investments) Group’s share Group’s share Book value Current of post-tax profits % owned by First of post-tax profits Fund of First Property’s market value earned by f
Slide 40: Associates and Investments net reduction in value
Segmental Analysis: Group Properties Associates and Investments ➢ Contributed £655,000 (2020: £1.54m) to Group PBT (prior to the deduction of unallocated central overheads); ➢ Reduction of £885,000 largely attributable to: ▪ Net reduction of £800,000 in value of the Group’s 43.8% share in FOP; ▪ Los
Slide 41: Markets
Markets Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 41
Slide 42: Investment Markets Poland
Investment Markets Poland Poland: ➢ GDP is forecast to increase to 3.7% in 2021, following a 2.7% contraction in 2020, and to return to pre- pandemic levels by end of 2021. ➢ Commercial property investment volumes in Q1 2021 amounted to €1.25 billion, 1.5% below the 5 year average for the same perio
Slide 43: Investment Markets Romania
Investment Markets Romania Romania: ➢ As in Poland, Romania is expected to return to pre-pandemic levels of economic growth by the end of 2021, also aided by its low government debt as a ratio of GDP (at around 52%). GDP growth forecasts have been revised up to 6.7% for 2021. ➢ Investment volumes fo
Slide 44: Investment Markets United Kingdom
Investment Markets United Kingdom UK: ➢ In 2020 GDP contracted by 9.9%, the largest annual fall on record. This was felt more keenly in the physical world and the hospitality, retail and office commercial property sectors in particular experienced downward pressure on rents and capital values. ➢ In
Slide 45: Appendix
Appendix Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 45
Slide 46: Investment Approach
Appendix Investment Approach ➢ Sustainable income is a priority: ▪ The yield at purchase of any property investment must ALWAYS exceed debt service costs; ▪ We assess investments with an emphasis on ROE as opposed to IRR (because IRR’s require an exit price assumption); ▪ Over the long term it is in
Slide 47: Investment Approach (cont.)
Appendix Investment Approach (cont.) ➢ Property is illiquid – but this illiquidity can be mitigated by rental income – liquidity through income; ➢ Flexibility in the light of market changes; ➢ An active approach to asset management (where possible): ▪ 2005: largely exited the UK commercial property
Slide 48: Shareholders > 5% as at 31 March 2021
Appendix Shareholders > 5% as at 31 March 2021 % held (of issued No of shares and fully paid) Ben Habib (Chief Executive Officer) 14,940,000 13.5% J C Kottler Esq 9,664,283 8.8% Alasdair Locke (Non-Executive Chairman) 8,571,990 7.8% Whitehall Associated S.A. 7,747,394 7.0% Quaero Capital Funds (Lux)
Slide 49: Share Statistics as at 31 March 2021
Appendix Share Statistics as at 31 March 2021 LSE (AIM) Symbol FPO.L Issued & Fully Paid 116,601,115 Share price 34.0p Issued (excl Treasury) 110,382,332 Market Cap £37.5 million Shares held in Treasury 6,218,783 Dividends FY2021 FY2020 Outstanding share options over Interim 2,610,000 0.45p 0.45p Or
Slide 50: Plc Management Team
Appendix 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 by Henry Ansbache
Slide 51: Plc Management Team
Appendix 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 up First Proper
Slide 52: Awards
Appendix Awards FPAM funds rank No.1 vs MSCI’s Central & Eastern European (CEE) Benchmark for the twelve years from the commencement of its operations in Poland in 2005, and for the periods from 2005 to 31 December 2008, and to the end of each of the years thereafter. In addition, FPAM’s UK Pension
Slide 53: Disclaimer
Disclaimer Certain statements made in this presentation may not be based on historical information or facts and may be "forward- looking" statements, including those relating to the Company's general business plans and strategy, its future financial condition and growth prospects, and future develop