First Property Share Discussion Threads

[yupawiese2010] 16/12/2013 18:19

Exactly thats what you call a return on your capital employed, fingers crossed in respect of the other office block to be converted to residential use we purchased at the same time

[dashton42] 16/12/2013 07:38

Wow, that's quite a return...

[dashton42] 28/11/2013 09:35

Investors Chronicle reiterated its Buy advice on FPO yesterday, saying that the shares "...remain cheap on 12 times expected profits for this year of 2.2p a share":

[yupawiese2010] 13/11/2013 13:40

Just a reminder - The interim results are only a fortnight away ( 27th Nov )

[yupawiese2010] 12/11/2013 19:19

The full text from the I.C.

The management team at Aim-traded property fund manager First Property Group
First Property Group PLC (FPO:LSE)
WedThuFriSatSunMon24.5024.7525.0025.2525.5025.75
(FPO: 26p) announced yet an interesting property deal at the end of last week.

To recap, I advised buying shares in the company a year ago when the price was around 18p ('Hidden value', 20 November 2012). Since then, we have picked up an interim dividend of 0.33p a share and a final payout of 0.75p a share in September. Combined, this gives an annual dividend of 1.08p, so at the current price of 26p the shares still offer a decent yield of 4.2 per cent. The payout was covered twice over by EPS of 2.2p in the 12 months to end March 2013, so looks safe - especially as currency adjustments understate the true EPS figure by quite some margin.

Importantly, the investment case remains sound, so much so that I reiterated my buy advice a couple of months ago when the price was 22.5p ('Shares with hidden value', 12 August 2013). I have little reason to change that positive view.

First Property's latest deal involves the company buying a further 19.7 per cent interest in its one remaining directly owned property holding, Blue Tower, an office tower in the central business district of Warsaw. This means the company now has a 48.2 per cent interest in the property. It has proved a shrewd investment so far, rising by 52 per cent in value from $12.9m (£8m) in December 2008 to $19.5m (£12m) at the end of March this year. The property contributed pre-tax profits of £962,000 last financial year to the company, or around a quarter of group profits. First Property's board calculates that the blended pre-tax rate of return on equity of the 48.2 per cent share in Blue Tower will be an eye-catching 38 per cent.

Interestingly, First Property conservatively holds Blue Tower at cost in its accounts, which means that the net asset value of the company - £18.5m at the end of March, or 14.4p a share - understates its true worth. In fact, mark the Warsaw property to market value and First Property's book value rises by 3.3p to 17.7p a share. It's also worth noting that First Property values its interests in the funds it runs at cost. Mark these interests to market value and the carrying value of these investments adds £3m, or 2.3p a share, to book value and means that the company's net asset value is actually closer to 20p a share, rather than the 14.4p stated in the accounts.



Positive news flow

At the end of August, First Property's funds had £348m assets under management, of which around 70 per cent of the properties are located in Poland, and a further 26 per cent in the UK. The good news is that the Polish commercial real estate market is starting to improve so we can realistically expect positive newsflow on property deals there in the coming months.

First Property is also taking advantage of the improving housing market in the UK and has announced two interesting deals in the past few months. Firstly, it has formed a partnership with clients to invest in office buildings with a view to converting these to residential use. The partnership, which is closed ended, has a life until May 2018. Clients are committing £12m to the venture, with an intention to increase this to £40m within three months. First Property will commit 5 per cent of the equity raised subject to a limit of £2m and manage the partnership, but will not levy any fees for its services. It will instead be paid 20 per cent of the profits earned by the partnership, as these are earned, subject to claw back in the event of losses.

This is the second deal the company has done in this area of the property market in recent months. In July, First Property invested £3.4m of its £13m cash balance acquiring seven largely vacant offices, one in Bracknell in the Thames Valley and the others in Old W

[dashton42] 12/11/2013 12:49

FPO covered again by Simon Thompson, Investors Chronicle, today; he reiterates a price target of 29.5p:

[dashton42] 28/10/2013 17:25

Yes, essentially he feels it's undervalued, has a price target of 27.5p, but also feels it could test 29.5p.

[xlairways] 28/10/2013 14:01

Guess it's nice and positive from the mad rush at midday!

[dashton42] 28/10/2013 12:31

FPO gets the thumbs up from Simon Thompson again:

[darias] 25/10/2013 10:34

What is the situation with regard to the University Superannuation Fund and the announcement that the fund will require more readies from the universities.

[dashton42] 18/10/2013 11:27

FPO gets a positive mention in this IC article on building the ideal AIM portfolio:

[n13518] 14/8/2013 12:44

Dashton42, Planning not waived but commerical building now easier to change to residential but still has to go through Planning application process.

[dashton42] 14/8/2013 11:57

n13518 - it's probably a combination of factors. There've been some very positive articles (tips) in Investors Chronicle, there's the apparent relaxation (or waiver) of planning permission required for their commercial to domestic conversions, the housing market seems to be in bubble territory with all the government stimulus measures, AIM shares can now be held in ISAs (with the removal of stamp duty next year I think), and so it goes on.

[n13518] 13/8/2013 13:03

My post 170 said Planning laws to convert from commercial to residential and relaxed. I should know and I have Planning knowledge and have dealt with similar change from Commerical to residential.
Is this driving up the price?

[blondeamon] 12/8/2013 12:09

Just tipped by Simon Thompson in IC, it's rocketing!

His target price is 27.5p!

[yupawiese2010] 30/7/2013 20:17

dashton42

Many thanks for the reply, I openly admit I wasn`t aware that planning permission was not required, that should speed up the conversion process considerably.

[dashton42] 30/7/2013 08:35

yupawiese201, FPO was tipped in IC on 23rd July; not sure if this is what's behind recent share price moves. Property in its various guises seems to be the name of the game at the moment (partly due to the gov's Help to Buy scheme?).

Note this from the IC article:

"...The planning process for converting offices into homes has been temporarily lifted by the coalition government. Most central and inner London boroughs have successfully lobbied for exceptions, but in the vast majority of England developers can, until May 2016, turn office blocks into blocks of flats without planning permission. First Property plans to continue acquiring old offices, probably through a fund with third-party investors. "

So - no planning permission required re. the Bracknell / Old Woking conversions?

[yupawiese2010] 29/7/2013 17:34

Reference the large volume of small trades in recent days, has this been featured in the I.C or other tip sheet.

If so, was there any mention of the conversion of the office blocks to residential use.?

[darias] 23/7/2013 07:54

Topvest

Asset manager?

But those assets are clearly property and therefore as a property manager they have to make decisions to get the best return. What do you want the company to do? Put all their funds into Savils?

Whether or not the developments in Woking or Bracknell are astute moves only time will tell. I hope that they have had preliminary discussions with planners at least to see that PP is likely to be granted. It is all very well to say that government policy with regard to planning has changed but it is local worthies that make the preliminary decision and if going to appeal a strong case has to be made.

[topvest] 22/7/2013 20:46

Yes, but all a bit of a high risk change given they were focusing on being an asset manager!

[n13518] 22/7/2013 13:02

Today's announcement of Purchase of Commericial properties in Bracknell and Old Woking and conversion to Residential is an astute move. Planning Laws are more flexible and demand in M4 Corridor for residential high. Good news for the future.

[topvest] 05/6/2013 15:59

Had another look at this and decided to sell my holding. This is on the basis that they are running out of time to get new funds launched before the big one expires. More importantly, the dividend hold was quite a signal. Think there is more downside than upside over the next few months. Overall, I think it's a well run company with potential so hoping to get back in at a lower price (i.e. below NAV)!