First Property Group Plc · LSE:FPO

First Property — Investor Presentation (April 2016)

10 slides from First Property's investor presentation, Apr 26, 2016

  1. Slide 1: Leverage: An amoral tool

    First Property Group plc Leverage: An amoral tool 26 April 2016

  2. Slide 2: Parent Company Description

    First Property Group plc Parent Company Description First Property Group plc is a 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, First Property Asset

  3. Slide 3: Ben Habib, Group Chief Executive

    First Property Group plc Ben Habib, Group Chief Executive Chief Executive, First Property Group plc — Ben Habib, MA (Cantab) Ben founded First Property Group plc (Fprop), the award winning niche property fund manager and investor, in 2000. Fprop operates in the United Kingdom and Central Europe (pri

  4. Slide 4: Leverage

    Leverage: an amoral tool Leverage  Leverage is neither good nor bad.  Enables returns to be boosted.  Enables cash flows to pay for themselves.  The need for yield.

  5. Slide 5: Leverage: Rules

    Leverage: an amoral tool Leverage: Rules 1. Quantum of debt applied to a property should depend upon: 1. Sustainability of income that property generates – must be sufficient to cover interest and debt amortisation payments; 2. The longevity of that income - 2. Policy driven investing is flawed: 1.

  6. Slide 6: Leverage: Rules – Trip wires

    Leverage: an amoral tool Leverage: Rules Trip wires 1. LTV covenants – low enough to provide sufficient headroom to protect against adverse movements in market value of a property 2. DSCR covenants – the need for yield 3. Other covenants 4. Duration – long enough to enable early refinancing 5. Inter

  7. Slide 7: Leverage Rules: Loan Covenants

    Leverage: an amoral tool Leverage Rules  Loan Covenants:  LTV covenant > LTV at purchase.  DSCR at purchase and based on hedge > DSCR covenant.  Managing consequences of breaches: hard / soft breach.  Guarantees; cross collateralisation; additional security rights.

  8. Slide 8: Current Opportunity

    Leverage: an amoral tool Current Opportunity  QE and central bank policies have suppressed interest rates to lowest levels EVER!  Asset values in bubble territory? So where is the yield?  Applying low cost, carefully structured leverage to high yielding property = RECIPE TO MAKE MONEY!

  9. Slide 9: “The Gherkin” – 30 St.Mary’s Axe, EC3

    Leverage: An amoral tool “The Gherkin” – 30 St.Mary’s Axe, EC3 2006 - sold by Swiss Re (main tenant) for £600 million to 2x buyers in JV, financed by £396 million of senior debt (c66% LTV) from a consortium of German banks. 1x JV partner opted to denominate its debt in CHF, saving it c100bp vs GBP i

  10. Slide 10: Oxford Tower, Warsaw’s CBD

    Leverage: An amoral tool Oxford Tower, Warsaw’s CBD Purchase price Aug-2007 €41.5m Valuation Mar-2015 €49.3m +19% NOI 2007 €2.6m 2015 €4.7m +81% Equity invested €3.35m Pre-tax income return on equity €2.7m 55.9% ROE invested (p.a.) IRR (implied – at valuation) 66.6% Holding for: • High ROE; • Additi

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