Well, colour me impressed. First Property Group has pulled off a textbook turnaround, swinging from a £4.41 million loss last year to a £3.03 million profit in FY 2025. It’s the kind of pivot that makes you sit up and take notice—especially in today’s capricious property market.
The Anatomy of a Turnaround
So, how did they do it? Three factors stand out:
- Impairment Relief: A stark reduction in property write-downs (£0.24m vs. £3.75m in FY24), particularly on their Polish assets.
- Fprop Phoenix Lift: Their 23% stake in Fprop Phoenix delivered a £1.73m valuation surge.
- Ruthless Cost-Cutting: Axing £650k in annual overheads—proof that surgical efficiency moves the needle.
The September 2024 open offer raised £2.96m (underwritten by the CEO and Chairman, no less), funding deferred payments on Warsaw’s Blue Tower and tenant incentives. Confidence or calculated gamble? Either way, it worked.
Debt, Liquidity & Leverage
First Property didn’t just grow profits—they fortified the balance sheet:
- Gross debt slashed by 12% (£24.37m), net debt down 15% (£19.55m).
- Cash nudged up to £4.82m, despite £1.97m deployed for Blue Tower liabilities.
- Gearing (at market value) dropped to 31.5% from 38.3%—breathing room secured.
One red flag: their Gdynia office faced administration post-year-end. But with debt non-recourse and asset value matching liabilities, contagion risk looks contained. Still, one to watch.
Fund Management: Shrinking AUM, Strategic Reshuffle
Third-party AUM fell to £164m (from £222m), but don’t mistake this for retreat. The decline stems from deliberate asset sales—£63.1m of UK properties liquidated across four funds. Crucially:
- Weighted fund contract terms lengthened to 3.4 years (from 1.9 years).
- Fee income stabilized at £1.2m annually, with cost cuts lifting divisional profit 27% to £1.04m.
Direct Assets: The Polish Engine
Seven directly owned properties (six in Poland, one in Romania) now valued at £56.04m. Blue Tower dominates—54% of the portfolio’s market value. Vacancy rates sit at 29.8%, but exclude Gdynia, and that drops to 9.7%. Leasing up the remaining 2,800 sqm could boost NOI by €500k annually—low-hanging fruit.
Outlook: Cautious Green Shoots
CEO Ben Habib’s tone is measured but optimistic: “We appear to be close to the bottom of the cycle.” Office markets remain battered, but Poland’s 3% GDP growth and falling interest rates (5.25% → 4.5% forecast) offer tailwinds. In the UK, he’s eyeing “interesting deals” in a buyer’s market.
No dividend (again), but that’s prudent—preserving cash for debt management and opportunistic acquisitions makes sense.
The Bottom Line
First Property’s rebound isn’t luck—it’s disciplined execution. They’ve trimmed fat, managed leverage, and played their Polish strength. The road ahead? Bumpy, but navigable. For investors, this is a story of resilience with optionality: upside if leasing accelerates or Central European sentiment improves. One for the watchlist, absolutely.
