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First Property Group Sets Up GBP180.0 Million Office Property Fund

LONDON (Alliance News) - Property fund manager First Property Group PLC said on Monday it has ...

Alliance News 17 July, 2017 | 12:02PM
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LONDON (Alliance News) - Property fund manager First Property Group PLC said on Monday it has established a new fund named Fprop Offices LP, with a term of seven years and a mandate to invest in office blocks and business parks across the UK.

The fund achieved a first close on July 14 with equity commitments of GBP182.0 million from eight unnamed institutional investors, including a GBP3.0 million commitment from First Property itself. A second closing with new commitments is expected to take place later in the year.

Investments by the fund can be leveraged to a maximum loan to value of 30%, giving the fund an initial total buying power of GBP260.0 million.

First Property will share in the profits earned by the fund, instead of levying management fees for its services, believing it will earn significantly more. The group will earn 10% of profit up to an internal rate of return of 7.5% per annum, 25% of profit between an IRR of 7.5% and 15% per annum, and 20% of profit above an IRR of 15% per annum.

Once the fund is fully invested, First Property expects its total assets under management, including Group Properties to rise in excess of GBP750.0 million from GBP477.0 million.

"This new fund represents major progress in the growth of our fund management business, with third party assets under management expected to nearly double. It will also substantially increase our investment in UK commercial property. The UK's decision to leave the EU has created opportunities on which we, as a niche fund manager, are well placed to capitalise. Our confidence in the fund's prospects is also demonstrated by our decision to determine our entire economic benefit from it by reference only to the profits it earns," said Chief Executive Ben Habib.

Shares in First Property Group were up 1.2% at 53.75% on Monday.

By Dayo Laniyan; dayolaniyan@alliancenews.com

Copyright 2017 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
First Property Group PLC 51.25 GBX 0.99 -
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