Material reduction in lease liability

First Property Group plc

Material reduction in lease liability under rent guarantee

As previously reported, when First Property Group plc (AIM: FPO) contracted to sell Chałubińskiego 8 (CH8), in Warsaw, on 23 December 2019, it guaranteed the rent and service charge income for the vacant office and ancillary space in the building together with the fit-out costs of this space. The guarantee amounted to some €1.20 million per annum in income for five years to April 2025 and up to €1.50 million for fit-out costs.

A provision of £2.31 million for the potential cost of this guarantee was made in the financial year ended 31 March 2020 and a further provision of £1.03 million was made in the financial year ended 31 March 2021.

The Group is pleased to report that some 73% of the office space subject to the guarantee has now been leased.

The new tenant is expected to start paying rent from January 2022, following completion of its fit-out. As a result, the Group's maximum liability over the remaining life of the guarantee (until April 2025) will reduce to some €1.37 million (£1.19 million), of which some €318,000 (£277,000) has already been provided for.

Ben Habib, Chief Executive, said:

"I am pleased to announce this material reduction in the cost of the rent guarantee we provided to the new owners of CH8.

"It is a remarkable achievement to have made such inroads into this liability so shortly after the end of lockdowns in Poland. This is a testimony to the strength of the Polish economy and office market as well as our team on the ground.

"When we reported on the outlook for the Group at the time of the announcement of our annual results on 24 June, the future looked bleak. Since then activity has increased significantly and the Group is making good strides in its various endeavours.

"I expect the results for the year to 31 March 2022 to be significantly better than those for last year, in line with management expectations."

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Notes to Investors and Editors:

First Property Group plc is an award-winning property fund manager and investor with operations in the United Kingdom and Central Europe. Around one third of the shares in the Company are owned by management and their families.

Its focus is on higher yielding commercial property with sustainable cash flows. The company is flexible and takes an active approach to asset management. Its earnings are derived from:

Listed on AIM the Company has offices in London and Warsaw. Further information about the Company and its products can be found at: www.fprop.com.