First Property Group Plc · LSE:FPO
First Property — H1 FY2023 Earnings Presentation
65 slides from First Property's earnings presentation, Nov 29, 2022
Slide 1: Interim Results for the six months to 30 September 2022
Interim Results for the six months to 30 September 2022 First Property Group plc 29 November 2022 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270
Slide 2: Contents
First Property Group plc Contents Company Description and Structure 3-4 APPENDIX 45-52 Investment Approach 58-59 Interim Results 5-14 Shareholders >5% 60 Highlights 6-9 Share Statistics 61 NAV 10-11 Plc Management Team 62-63 Dividend 12 Awards 64 Outlook 13-14 Disclaimer 65 Segmental Analysis 15-40
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: Group Structure
First Property Group plc Group Structure Market Capitalisation at 24p per share: £26.5m Fund Management Division Group Properties Division (FPAM) 12 funds; 6 directly owned properties 59 properties; 5 in Poland, 1 in Romania; Invested across the UK, Poland & Gross assets at market value: £
Slide 5: Interim Results
First Property Group plc Preliminary Results Interim Results Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 5
Slide 6: Highlights
First Property Group plc Highlights Profit before tax: £2.39 million (30 Sept 2021: profit before tax of £6.67 million); Cash reserves: £5.98 million (31 March 2022: £6.42 million); Net debt: £23.55 million (31 March 2022: £17.24 million); Purchased additional 32% of Blue Tower, Warsaw, for
Slide 7: Highlights
First Property Group plc Highlights Third party AUM: £493 million (31 March 2022: £517 million); Total AUM: £542 million (31 March 2022: £559 million); Weighted average unexpired fund management contract term: 2 years, 9 months (31 March 2022: 3 years, 3 months); Interim dividend: 0.25 pence
Slide 8: Statement of Financial Position at period end
First Property Group plc Statement of Financial Position at period end Statement of Financial Position As at 30 September 2022 As at 31 March 2022 Percentage change Investment properties and Inventories at book £42.56m £36.20m +17.6% value Investment properties and Inventories at £48.67m £42.24m +15
Slide 9: Statement of Financial Position at period end
First Property Group plc Statement of Financial Position at period end As at 30 September Statement of Financial Position As at 31 March 2022 Percentage change 2022 Gross debt £29.53m £23.66m +24.8% Net debt £23.55m £17.24m +36.7% Gearing ratio at book value* 39.71% 34.90% - Gearing ratio at market
Slide 10: NAV per share 2007-2022
First Property Group plc NAV per share 2007-2022 (excluding any value attributable to FPAM) 70 • NAV per share at EPRA NAV book value: 40.44p Book NAV 60 (1H 2022: 40.00p) Cash 50 • EPRA NAV per Pence per share share: 48.34p 40 (1H 2022: 47.28p) 30 • Cash per share: 5.39p 20 (1H 2022: 5.81p) 10 Exte
Slide 11: Adjusted NAV Bridge
First Property Group plc Adjusted NAV Bridge Adjusted NAV breakdown 31 Mar 2022 Associates and 27.08p £30.60m Investments Cash 6.02p £6.80m 7 directly owned 15.42p £17.43m properties less loans FPAM - - Other working capital -1.24p -£1.40m Total 47.28p £53.43m Adjusted NAV breakdown 30 Sept 2022 Ass
Slide 12: Dividend History
First Property Group plc Dividend Dividend History 1.8 Interim dividend: 0.25p 1.6 (FY22: 0.25p) 1.4 1.2 Final Dividend: 1 FY22: 0.25p 0.8 Total for FY 2022: 0.6 0.50p 0.4 (FY2021: 0.45p) 0.2 0 Interim Final Total Dividend Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 12
Slide 13: CEO Comment
First Property Group plc CEO Comment Commenting on the results, Ben Habib, Chief Executive of First Property Group, said: Economies across the World are experiencing the aftershocks of lockdowns. Employment markets and supply chains were broken and fuel reserves were neglected. When economies even
Slide 14: Why invest in Fprop plc?
First Property Group plc Why invest in Fprop plc? 1. Expertise: Experienced, nimble management team; Excellent investment track record: c20% p.a. growth in adjusted net assets, including dividends paid since 2006. 2. Diversified earnings: From Group Properties and from fund management fees;
Slide 15: Segmental Analysis
Segmental Analysis Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 15
Slide 16: Fund Management (FPAM)
Fund Management (FPAM) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 16
Slide 17: Fund Management Summary
Segmental Analysis: Fund Management Summary Fund • Third party AUM: £493m Revenue: £1.66m (31 Mar 2022: £517m); (30 Sept 2021: £1.91m); Management • 12 funds invested across UK, Poland & Contribution to PBT Romania; prior to deduction of unallocated central • Weighted average fund management ove
Slide 18: 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 19: Fund Management Revenue and AUM
Segmental Analysis: Fund Management Revenue and AUM 10 800 Performance Fee FPAM Revenue 3rd Party AUM 9 Annualised fee 700 income: 8 £2.53m 600 (31 Mar 2022: 7 £2.66m) 500 Revenue (£ Million) 6 AUM (£ Million) NB. EXCLUDES 5 400 performance fees and the profit 4 300 share from Fprop 3 Offices LP. 20
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 2022 345.5 171.0 516.5 62 Purchases 5.8 - 5.8 1 Property sales
Slide 21: Third Party funds under management
Segmental Analysis: Fund Management Third Party funds under management Assets Under Assets Under % of Total Third- Management at Market Management at Fund Country of Investment Fund Expiry Value at No. of Properties Party Assets Under Market Value at Management 30 Sept 2022 31 March 2022 SAM & DHOW
Slide 22: AUM by geography, by sector, by asset class
Segmental Analysis: Fund Management AUM by geography, by sector, by asset class 5PT FGC 2% 4% FKR Supermarkets/ 4% FCL Supermarket led, 2% 11% OFFICES Shopping 27% FPL Centres, 10% Poland, 11% 34% Office, 63% By Fund By Sector By Geography UK, Retail/ Retail FOP 64% Warehousing, 14% 15% Romania, SIP
Slide 23: 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 £204.2m £96.8m £8.9m £309.9m 62.9% Retail warehousing £73.8m - - £73.8m 15.0% Supermarkets £37.7m £18.6m - £56.3m 11.4% Shopping centres - £52.9m - £52.9m 10.7% TOTALS £3
Slide 24: FPAM Track Record - Existing Funds
First Property Group plc FPAM Track Record - Existing Funds 30% IRR pa - Implied ROE pa - since inception ROE FY 2022/23 on original equity 20% 10% 0% 5PT UK PPP OFFICES SIPS FOP FGC SPEC OPPS FKR FCL FPL FUL -10% -20% -30% -40% Implied IRR’s: assumed sale price = NAVs as at 30 Sept 2022; ROE’s
Slide 25: 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 FRS -20% Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 25
Slide 26: Group Properties
Group Properties Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 26
Slide 27: Group Properties Overview
Segmental Analysis: Group Properties Overview Group 1. 6 directly owned properties (5 in Contribution to PBT prior to deduction Properties Poland valued at £45.03m, 1 in of unallocated central overheads: Romania valued at £3.64m): £2.40m o Gross asset value: £48.67m (30 Sept 2021: £8.13m) (March 2
Slide 28: Contribution to PBT from directly owned properties and Associates
Segmental Analysis: Group Properties Contribution to PBT from the 6 directly owned properties and the 10 Associates and Investments Contribution to PBT Corresponding net equity invested (prior to deduction of unallocated central overheads) 9,000 8,000 Directly owned 7,000 Properties £19.14m 6,000 £
Slide 29: 6 directly owned properties
6 directly owned properties Contributed £0.98m (30 September 2021: £7.72m) to Group PBT (prior to the deduction of unallocated central overheads). Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 29
Slide 30: 6 directly owned properties
Segmental Analysis: Group Properties 6 directly owned properties Blue Tower, Warsaw Gdynia, Poland Dr Felix Strada, Bucharest, Romania (Fprop 80% share: 23,500 m2) (14,000 m2) (2,845 m2) BV: £19.72m BV: €16m (£14.04m) BV: £2.36m E&S Estates Ltd: consolidated undertaking (88.5% shareholding) BV: £6.4
Slide 31: Directly owned properties by geography, property, asset class
Segmental Analysis: Group Properties 6 directly owned properties by geography, by property, by asset class Dr Felix, Bucharest, Romania, Wawer, Romania, 7% Poland, 7% Supermarkets/ 7% supermarket led Gdynia, 16% Nastroj/Lodz, Poland, 4% Poland, 29% Praga, Poland, 5% By Geography By Property By Secto
Slide 32: 6 directly owned properties
Segmental Analysis: Group Properties 6 directly owned properties Contributed £0.98m (30 Sept 2021: £7.72m) to Group PBT (prior to the deduction of unallocated central overheads); The contribution last year was flattered by a loan restructuring which resulted in the amount owed reducing by €9m (£
Slide 33: Sold property: Tureni warehouse
Segmental Analysis: Group Properties 1 sold property Warehouse, Tureni, near Cluj-Napoca, Romania Feb 2022: agreed 10 year lease extension with tenant; Aug 2022: sold for €3.60 million (£3.05 million); Gdynia, Poland Cash released: €706,000 (£598,000); (14,000 m2) Profit on sale: £1.06m. E
Slide 34: 6 directly owned properties
Segmental Analysis: Group Properties 6 directly owned properties Book value Market value *Contribution to *Contribution to No. of Location Asset class at 30 Sept at 30 Sept Group PBT 30 Sept Group PBT 30 Sept properties 2022 2022 2022 2021 Poland, Gdynia Offices 1 £14.04m £14.04m (£0.21m) **£7.51m P
Slide 35: Directly owned properties: LTV and borrowing cost
Segmental Analysis: Group Properties 6 directly owned properties 30 Sept 2022 31 March 2022 Book value £42.56m £36.20m Market value £48.67m £42.24m Gross debt (all non-recourse to Group) £29.53m £23.66m LTV at book value % 69.39% 65.34% LTV at market value % 60.68% 56.01% Weighted average borrowing
Slide 36: Top tenants of the directly owned properties
Segmental Analysis: Group Properties Top 10 tenants of the 6 directly owned properties Tenant Sector Jurisdiction % 1 Jeronimo Martins Polska S.A Supermarket Chain Poland 19.34% 2 Bank Polska Kasa Opieki S.A. (PKO) Financial Services Poland 16.78% 3 Vulpoi & Toader Management Professional / Accounti
Slide 37: Office Building, Gdynia, Poland
Segmental Analysis: Group Properties Office Building (13,403 m2), Gdynia, Poland Prime location in Gdynia city centre/CBD; Purchase price (and carried value): €16 million (€1,193 per m2 / £111 per ft2); Equity invested: €4 million; Leverage: Bank debt: nil Deferred consideration: €12m (d
Slide 38: Blue Tower, Warsaw
Segmental Analysis: Group Properties Blue Tower (23,550 m2), Warsaw Prime location in Warsaw’s CBD above a subway station and at the main junction of the city’s bus and tram network. The Group owns: 80.3% of the tower (23,550 m2 over 18 floors): 90% of Corp Sp. z o.o., the company which is c
Slide 39: Associates and Investments
Segmental Analysis: Group Properties Associates and Investments Associates and Investments (minority shareholdings in 10 of FPAM’s 12 funds) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 39
Slide 40: Associates and Investments
Segmental Analysis: Group Properties Associates and Investments Contributed £1,419,000 (30 September 2021: £406,000) to Group PBT (prior to the deduction of unallocated central overheads); Increase mainly attributable to receipt of £1.20 million in distributions from Fprop UK Special Opportuniti
Slide 41: Associates and Investments
Segmental Analysis: Group Properties Associates and Investments Group’s share of Group’s share of Book value of First % owned by First Current market post-tax profits post-tax profits Fund Property's share in Property Group value of holding earned by fund 30 earned by fund 30 fund Sept 2022 Sept 202
Slide 42: Minority shareholdings in 6 of FPAM's 12 funds accounted for as Associates
Segmental Analysis: Group Properties Associates and Investments Minority shareholdings in 6 of FPAM’s 12 funds accounted for as Associates (FOP, FPL, FGC, 5PT, FCL, FKL) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 42
Slide 43: Fprop Opportunities plc (FOP)
Fprop Opportunities plc (FOP) Associates & Investments Fprop Opportunities plc (FOP) BV of Group’s 45.7% share: £12.7m MV of Group’s 45.7% share: £13.2m Contribution of Group’s share to PBT (1H): £347,000 Galeria Ostrowiec Zana 39, Lublin Comments: Galeria Ostroweic: o Rent for anchor tenant
Slide 44: Fprop Phoenix Ltd
Fprop Phoenix Ltd Associates & Investments Fprop Phoenix Ltd BV of Group’s 23.4% share: £0.5m MV of Group’s 23.4% share: £3.8m Contribution of Group’s share to PBT (1H): -£435,000 Comments: 51,000 m2 office park near Kraków Airport, Poland; 14km’s from city centre; Train station on the p
Slide 45: Fprop Galeria Corso Ltd (FGC)
Fprop Galeria Corso Ltd (FGC) Associates & Investments Fprop Galeria Corso Ltd (FGC) – shopping centre in Świnoujście, Poland 10,000 m2 BV of Group’s 29.1% share: £2.89m 45 stores, 4 cinema screens, 160 parking places MV of Group’s 29.1% share: £3.17m Property value: €25.2m Contribution
Slide 46: 5th Property Trading Ltd (5PT)
5th Property Trading Ltd (5PT) Associates & Investments 5th Property Trading Ltd (5PT) Ground floor retail units, Office & Retail, Błonie, Warsaw Office, Tulipan, Poznań Mokotów, Warsaw 3 properties in Poland BV of Group’s 46.6% share: £1.55m Value: €9.1m MV of Group’s 46.6% share: £1.69m
Slide 47: Fprop Cluj Ltd
Fprop Cluj Ltd (FCR) Associates & Investments Fprop Cluj Ltd (FCL) – Class A office tower in Cluj-Napoca, Romania 7,289 m2 (9 storeys) Book value of Group’s 21.2% share: £602,000 48 underground parking places Market value of Group’s 21.2% share: £867,000 Vacancy rate: 13.9% Contribution
Slide 48: Fprop Kraków Ltd
Fprop Kraków Ltd (FKR) Associates & Investments Fprop Krakow Ltd (FKL) – Class A office tower in Krakow, Poland 10,297 m2 (13 storeys) Book value of Group’s 18.1% share: £1.58m 149 underground parking places, 26 at ground level Market value of Group’s 18.1% share: £1.64m Eco Rating: LEED P
Slide 49: Minority shareholdings in 4 of FPAM's 12 funds accounted for as Investments
Segmental Analysis: Group Properties Associates and Investments Minority shareholdings in 4 of FPAM’s 12 funds accounted for as Investments (UK PPP, Fprop Offices, Spec Opps, Fulcrum) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 49
Slide 50: UK Pension Property Portfolio LP
UK Pension Property Portfolio LP Associates & Investments UK Pension Property Portfolio (UK PPP) Book value of Group’s 0.94% share: £295,000 Market value of Group’s 0.94% share: £295,000 Contribution to PBT from Group’s share (1H): £23,000 NB. Through its 11.1% shareholding in Fprop UK Special
Slide 51: Fprop UK Spec Opps LP
Fprop UK Spec Opps LP Associates & Investments St Anne’s House, St Anthony’s House & St.Catherine’s House, Newbury Cirencester Office Park The Crown, Westerham Rightwell, House, Peterborough Fprop UK Special Opportunities LP 4 directly held properties valued at £16.9m Book value of Group’s 11.1%
Slide 52: Fprop Offices LP
Fprop Offices LP Associates & Investments Buildings A, B & D, St Mark’s Court, Horsham Imperial Place, Borehamwood Bartley Wood Business Park, Hook Fprop Offices LP 5 properties Book value of Group’s 1.64% share: £1.93m Value: £131.8m Market value of Group’s 1.64% share: £1.93m 27 tenants
Slide 53: Fprop Fulcrum LP
Fprop Fulcrum LP Associates & Investments Retail warehouse, Corum 1&2, Warmley, Bristol The Pinnacle, Crawley Bispham, Blackpool - SOLD Fprop Fulcrum LP 2 properties Book value of Group’s 2.5% share: £259,000 Value: £9.9m Market value of Group’s 2.5% share: £259,000 20 tenants Contributi
Slide 54: Markets
Markets Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 54
Slide 55: Investment Markets Poland
Investment Markets Poland Poland: GDP is forecast to grow by 4.6% in 2022, 1% in 2023 and 2% in 2024, markedly slower than in past years. Inflation: currently c18% but expected to reduce to c13% in 2023. Rental values in Poland are contractually mostly linked to inflation. Interest rates: NBP
Slide 56: Investment Markets United Kingdom
Investment Markets United Kingdom UK: The Bank of England has predicted a protracted recession. Inflation >11.1% per annum but forecast to moderate to 5-6% in 2023 and further reduce in 2024. The Bank of England’s base interest rate is at 3.0% and expected to peak at around 4.5% in 2023. Com
Slide 57: Appendix
Appendix Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 57
Slide 58: 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 59: 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 60: Shareholders > 5%
Appendix Shareholders > 5% as at 24 August 2022 % held (of issued No of shares and fully paid) Ben Habib (Chief Executive Officer) 14,940,000 13.47% Galjaden Invest AB / Peter Gyllenhammar AB 11,120,000 10.03% J C Kottler 8,769,283 7.91% Alasdair Locke (Non-Executive Chairman) 8,571,990 7.73% Whiteh
Slide 61: Share Statistics
Appendix Share Statistics as at 30 Sep 2022 LSE (AIM) Symbol FPO.L Issued & Fully Paid 116,601,115 Share price 24p Issued (excl Treasury) 110,882,332 Market Cap £27 million Shares held in Treasury 5,718,783 Dividends FY 2023 FY 2022 Interim 0.25p 0.25p Outstanding share options over 2,110,000 Ordina
Slide 62: 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 63: 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 64: 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 65: 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
First Property Group — H1 FY2023 Earnings Presentation on 6ix