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Business park in Krakow looks an interesting addition to the portfolio  
Thursday 28 Jun 2018 Author: David Stevenson

Real estate investor First Property (FPO:AIM) is adding to its portfolio in Poland, building on a strategy of investing in undervalued markets.

The company uses a yield gap strategy to make money. This is the difference between the interest rate it can borrow money at and the yield it can earn on renting out properties.

Shares in First Property have gathered momentum after it secured a big new Polish investment on 13 June, rising 34% to 63.5p.

It acquired control of the companies that own most of the buildings in Krakow Business Park. The €47m of bank loans secured against these properties were in default.


First Property has successfully restructured this debt and has secured backing from several institutional investors to invest
€33m in the assets.

These included Willis Towers Watson Partners Fund; Christ Church, Oxford; St Catherine’s College, Oxford; and Christ’s College, Cambridge. First Property retains a 23.4% stake in the business park.

The park, which is set to be renamed Eximius Park, is situated close to Krakow International Airport and is served by its own railway station.


The company’s is move into Polish property a decade ago looks shrewd, although the bias is now shifting back towards the UK. Looking at the company’s most recent results, £390m of the company’s assets are based in the UK, or 62.3% of the total.

This also includes assets held by third parties in several of its funds managed by First Property Asset Management although these funds will also have money from First Property included as well.

The company manages 53 properties in the UK versus 17 in Poland although directly owns more in the latter. It also has a small number of properties in Romania, a market of interest to chief executive Ben Habib who tells Shares the Romanian banking system is becoming easier to work with.

First Property trades on 13.8-times 2019’s  forecast earnings and offers a prospective dividend yield of 2.7%. (DS)


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