At First Property we believe in investing in high yielding commercial investment property. When property values fall, yields increase and we consider buying. When property values rise, yields reduce and we consider selling.

  • Implied IRR’s: assumed sale price = NAVs as at 30-Sep-2017;
  • ROE’s since inception: calculated using average pre-tax income per FY / original equity employed;
  • ROE’s for 2017/18 HY: calculated using annualised pre-tax income for FY period / by original equity employed.

We credit our recognition of the importance of high sustainable income returns as the key reason for our market leading track record. We also recognise the need to continually monitor macro and micro changes in our markets and to adapt our asset management approach accordingly. These points are exemplified by:

2016
Capitalise on Market Opportunities
6.7%

Antelope Park, Southampton. Acquired December 2016 at net initial yield of 6.7% (£23 million). We immediately sold adjacent unit which lay just
outside the park (let to Jewsons) for a net initial yield of 5.25% – illustrating bifurcation in market following Brexit vote.

Event:

  • Bifurcation of commercial property market following Brexit vote of June 2016 – institutional investors became less active, resulting in reduced investment competition for larger lot sizes.

Opportunity:

  • To invest in institutional property.

Fprop Response:

  • To recommend to Shipbuilding Industries Pension Scheme (SIPS), for which we were investing at the time, that it increase its investment commitment to take advantage
    of reduced commercial property prices.

Result:

  • SIPS increased its commitment by £45 million, increasing its total commitment to £170 million.
2013
Capitalise on Market Opportunities
£18.3m

Union Park, West Drayton. Acquired August 2014 for £7.8 million, sold March 2015 for £18.3 million.

Event:

  • Amendment to Permitted Development Rights (PDR).

Opportunity:

  • To convert offices to residential use without the requirement to obtain formal planning consent.

Fprop Response:

  • To establish a £42 million fund to invest in offices eligible for conversion to residential use utilising PDR.

Result:

  • The fund earned a net return on equity to its investors of 53% and an IRR of 98% – all without the use of leverage. In the process it enabled the conversion of 360,000 ft2 of office space into 665 flats across the UK, worth a total of some £100 million; around a third of these properties were sold to Housing Associations.
2009
Delivering Sustainable Income
Capitalise on market Opportunities

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 (£106 million).

Result:

  • Earned recession-resilient high income returns for our fund
  • Investors have extended life of fund.
2008
2005
Remain consistently flexible

Event:

  • Dramatic increase in property values from 2001. “As many Shareholders will be aware, the commercial property investment market in the UK has risen sharply over the last few years and a large proportion of properties for sale are, in our view, overvalued. (extract from our 2005 Annual Report and Accounts).

Opportunity:

  • Sell!

Fprop Response:

  • Largely exited the UK commercial property market; commenced investment in Poland.

Result:

  • Capital preservation.
Active Approach to Asset Management

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 with rents increased by some 3% pa across our portfolio.