First Property Group Reports 12.2% Profit Growth and Reinstates Dividend

So my read is simple: the improvement is real, but the quality of earnings is mixed. Better underlying trading is the bit to like. Disposal profits are welcome, but investors should not assume those repeat every year.

Debt reduction, stronger cash and dividend reinstatement: why the balance sheet matters most

The standout feature of these results is the balance sheet repair. Gross debt fell 46.7% to £12.99 million and net debt dropped 69.1% to £6.04 million. In the current property market, that is a big deal.

It lowers financial risk, gives management more room to act, and supports the return of dividends. Cash rose 44.2% to £6.95 million, or 4.70p per share, while net assets per share increased to 32.61p and adjusted net assets per share rose to 38.57p.

There is an important nuance, though. A large part of the debt reduction came from the deconsolidation of Fprop Gdynia Sp. Zoo after it was placed into administration, which removed £10.04 million of debt from the Group’s accounts. That is still helpful, but it is not the same as paying down every pound through trading cash flow.

Cash generation also deserves a closer look. Net cash from operating activities was only £242,000, down from £856,000 last year, while the big boost to cash came from asset sales. Again, not bad, but worth understanding properly.

First Property fund management division weakens as AUM and fee income fall

The soft patch is the fund management division. Third-party AUM fell to £144.08 million from £163.91 million, and revenue from this division dropped to £1.61 million from £2.26 million. Profit before unallocated central overheads and tax fell to £0.32 million from £1.04 million.

The reasons are pretty clear from the RNS. Some fund mandates expired, there was no repeat of £0.30 million of payments in lieu of management fees seen in the prior year, and one property valued at £27.50 million was lost from the managed portfolio. Three UK properties were also sold for £7.35 million.

There is one offsetting positive here. The weighted average unexpired fund management contract term improved to 4 years and 1 month, from 3 years and 4 months. That gives a bit more visibility, even if the annualised fee income at the year end still slipped to £1.30 million from £1.40 million.

For me, this is the main area to watch. A fund manager needs stable or growing fee income, and this year went the wrong way.

Blue Tower in Warsaw is carrying the property portfolio – and that cuts both ways

Blue Tower is doing a lot of the heavy lifting. The property contributed £1.35 million to Group profit before tax, up from £0.97 million, and it represented £32.31 million of the Group’s £44.98 million directly owned property market value. That is 72% of the portfolio by value.

That concentration is both the strength and the risk. The strength is obvious: improved leasing at Blue Tower helped drive the year’s better underlying result. The risk is that the Group is heavily exposed to one asset.

Across the five directly owned properties, vacancy was 2,680 square metres, or 10.6% by area. If that vacant space were fully let, the Group says net operating income would rise by about €0.43 million per annum, equivalent to £0.38 million per annum. That gives genuine upside if leasing progress continues.

The weighted average unexpired lease term, or WAULT, across the directly held portfolio was 3 years and 11 months, down from 4 years and 10 months. That is not alarming, but shorter lease cover does mean more work is needed to hold income in place.

What the reinstated First Property dividend really says about confidence

The proposed final dividend is 0.25p per share, up from nil last year. On its own, it is small, and the company has not disclosed any broader dividend policy in this announcement.

Still, symbolically it matters. Boards do not usually bring dividends back unless they feel the balance sheet is in better shape and cash resources are adequate. Payment is due on 29 September 2026, subject to shareholder approval, to investors on the register at 28 August 2026.

My verdict on First Property Group’s 2026 results and outlook

I think these results are genuinely encouraging. First Property has improved underlying profitability, materially strengthened the balance sheet, rebuilt cash, and restored the dividend. In a commercial property market that management itself describes as challenging, that is a respectable performance.

The negatives are not trivial, though. Fund management income is under pressure, AUM is lower, and the business is quite reliant on Blue Tower. Also, the jump in cash and profits was helped by disposals, so investors should be careful not to overstate the strength of recurring cash generation.

Overall, this feels like a business that is sturdier than it was a year ago and has more flexibility to take advantage of deals. Management’s outlook is positive, and on the evidence in this RNS that seems fair. The next thing investors will want to see is whether the stronger balance sheet can now be turned into more consistent fee income and recurring profit growth.