First Property Group Expects Profits to Beat Market Expectations

First Property Group says profit will beat expectations – here’s what’s driving it

First Property Group (AIM: FPO) has served up a punchy trading update for the year ended 31 March 2026. The Board expects profit before tax (on an unadjusted basis) to come in ahead of current market expectations. That’s the headline investors wanted, especially given the “ongoing volatility” in commercial property.

There’s more colour beneath the surface. One-off gains from selling two directly owned properties – one in the UK, one in Romania – boosted the bottom line. Contributions from associates also increased. Importantly, management says that on an underlying basis, and assuming no change in property values, the Group remained profitable.

What the trading update actually says (in plain English)

• Profit before tax is set to exceed market expectations on an unadjusted basis. In other words, before any exceptional adjustments, the reported PBT will be better than analysts were forecasting (the level of those expectations is not disclosed).
• Two disposals generated one-off profits – these are helpful, but by definition not recurring.
• Associates chipped in more. Associates are stakes in companies where First Property has significant influence but not control; the Group books a share of their profits.
• Excluding valuation movements, the underlying business traded profitably.
• The balance sheet has been strengthened (no figures disclosed), positioning the Group to make opportunistic investments alongside the funds it manages.
• Full year results will be published on 25 June 2026.

Why it matters: quality of earnings and optionality

Beating expectations is always welcome, but it’s vital to parse the mix. The RNS makes clear that one-off disposal gains are a material contributor this year. That’s not a bad thing – it can be a mark of disciplined asset management – but it does mean some of the profit uplift won’t repeat.

The more reassuring line is that, even before any property revaluation swings, the business stayed in the black. In property, values can move up or down depending on yields and comparables. By stating “assuming no movement in the value of properties held”, management is signalling the core cash engine is intact. That underpins confidence through choppier market conditions.

What “unadjusted” and “underlying” mean here

• Unadjusted PBT: the raw profit before tax number, including exceptional items such as gains on asset sales.
• Underlying profitability: the recurring earnings from operations, excluding fair value movements of properties. The RNS anchors this to a scenario where valuations do not change.

The distinction matters because investors should judge both the headline result and the repeatability of those profits. This update suggests the headline will look better than expected and the base business remains profitable.

Balance sheet strength sets up dealmaking in a volatile market

First Property calls out a strengthened balance sheet and “opportunistic investments”. That’s code for having dry powder to pounce on mispriced assets. With 11 funds under management via First Property Asset Management Ltd (FPAM), the Group can co-invest alongside third-party capital and earn management fees while putting its own capital to work.

We’re not given hard numbers on cash, debt or loan-to-value – those will have to wait for June – but the tone suggests improved financial flexibility. In markets where not every owner can hold on, that optionality can create outsized returns.

Where growth is coming from: fund management plus principal investments

The business model is a mix of:

• Fund management fees from FPAM – recurring income earned for managing client capital across the UK, Poland and Romania.
• Group properties – principal investments using the Group’s own balance sheet. These include five directly held properties in Poland and non-controlling interests in nine of the eleven FPAM-managed funds.

That blend gives First Property two levers: steady fee income, and investment gains or income from its own stakes. This year, those levers were supplemented by disposal profits and stronger associate contributions.

The caveats: watch valuation sensitivity and one-offs

The update is encouraging, but there are two obvious caveats:

• One-offs: Disposal gains helped. They won’t recur every year.
• Valuations: Underlying profitability assumes no change in property values. If valuations weaken, reported earnings and net asset value could feel it. The company acknowledges the commercial property backdrop remains “challenging”.

Key numbers and dates from the RNS

What to look for on 25 June

• Headline PBT vs “underlying”: Clear split between one-off disposal gains, associate contributions and recurring operating profit.
• Fee income and margins at FPAM: Fund management is the dependable earner – how did fees and assets under management evolve?
• Balance sheet detail: Cash, debt and any loan-to-value metrics. The RNS says the balance sheet is stronger, but numbers are not disclosed.
• Valuation movements: How did independent property valuations move across the UK, Poland and Romania?
• Rent collection and occupancy: Not disclosed today, but essential indicators of cash generation.
• Capital allocation: Any guidance on further disposals, acquisitions, or co-investment alongside FPAM-managed funds.
• Dividend: No comment in this update; look for the Board’s stance at the results.

What this means for shareholders right now

Short term, the market tends to reward earnings beats, and today’s message is unequivocally positive on that score. The mix is flattered by one-offs, but the core is still profitable, which should support sentiment while the sector remains patchy.

Medium term, the strengthened balance sheet and ability to invest with client funds could be the real prize. If First Property can selectively buy high-yielding assets while competitors are constrained, fee income and investment returns may both benefit. The June numbers will tell us how much firepower is truly available.

My take: cautiously positive with an eye on repeatability

This is a tidy update in a tough market. Beating expectations is good, underlying profitability is better, and a stronger balance sheet is best of all. The combination suggests management has kept a steady hand, trimmed where sensible, and preserved optionality for the next phase.

The watch-out is earnings quality. One-off gains have done some heavy lifting. I’ll be looking for evidence in June that recurring fee income and cash-generative property operations can do more of the work in FY2027. For now, though, this reads as a net positive stepping stone towards a potentially more opportunistic year ahead.