12 August 2022

First Property Group plc

Further investment in Blue Tower, Warsaw

First Property Group plc (AIM: FPO), the award-winning property fund manager and investor, is pleased to report it has acquired a further 7,171 m² (or 32.1%) in Blue Tower, an office building in Warsaw, taking its ownership in the building to 17,937 m² or 80.3%.

First Property already owned 90% of the management company constitutionally tied to managing Blue Tower. The Company, therefore, now has effective total control of this landmark property. Owning these two controlling interests should result in an enhanced value for the Group's interest in the building.

The consideration for this new investment is PLN 40.4 million (£7.2 million), payable in seven instalments over a six year period. The first instalment of PLN 6.0 million has been paid and ownership of the property transferred to the Group. The remaining instalments are to be paid as set out below:

-     PLN 5.0 million by 12-08-2023;

-     PLN 5.0 million by 12-08-2024;

-     PLN 5.0 million by 12-08-2025;

-     PLN 5.0 million by 12-08-2026;

-     PLN 5.0 million by 12-08-2027; and

-     PLN 9.4 million by 12-08-2028.

Of the space being acquired, 2,012 m² is let to Pekao Bank on a lease with rolling termination provisions subject to 6 months' notice with the first such notice being served no earlier than 12 August 2023. The rent payable pursuant to the lease is PLN 55 per m² or some PLN 1.33 million per annum (£237,000 per annum).

Whilst the economic environment across Europe is challenging, the Polish economy is doing relatively well. The Company expects occupational demand and office rents in Poland to be buoyed due to a substantial increase in the cost of building (materials and labour) and a resultant decline in the construction of new office space in Warsaw.

The Company will now be embarking on a largely tenant led fitout programme, refurbishing space in the newly acquired space as and when tenants are found. The phasing of the consideration, as set out above, should enable the Company to deliver a good rate of return from this investment as the space is upgraded and leased.

Ben Habib, the Company's Chief Executive, said:

"I am excited by the Group's acquisition of a further 32.1% interest in Blue Tower, taking our total interest in the building to 80.3%. Our first investment in this office block was in 2008 and it has made a major contribution to our profits over the years. I expect this to continue and grow.

"It is a landmark building in Warsaw, centrally located, opposite the City Hall, above a metro station and at the junction of major bus and tram routes.

"There is a substantial programme of refurbishment and leasing ahead but I anticipate this should go well."

-Ends-

For further information please contact:

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. 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:

Quoted on AIM, the Company has offices in London, Warsaw and Bucharest. Around one third of the Company's shares are owned by management and their families. Further information about the Company and its properties can be found at: www.fprop.com. To receive RNS alerts by email please subscribe here.