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First Property shares surge on 'transformational' sale
27th Apr 2020 10:52
(Sharecast News) - Shares in First Property Group were well into the green on Monday morning, as it updated the market on the completion of the sale of its largest property, Chałubińskiego 8 (CH8) in Warsaw, Poland.
The AIM-traded firm said the sale price was €44m (?38m), compared to a book cost of €38.8m.
It said its profit on sale totalled €1.6m, after costs and a provision of €2.67m in respect of a rent guarantee provided to the buyer.
That profit would be recognised in the financial year ended 31 March 2020, the board said.
Cash generated on sale came in at €19.6m, taking group cash as at 14 April to around ?25m, representing about two thirds of its market value of ?37m immediately prior to the announcement.
The internal rate of return earned from the investment since its acquisition in 2014 was 63% per annum, First Property said.
Its board said the sale came at an "excellent time" for the group, given the uncertainty created by the economic shutdowns across the globe as a result of the Covid-19 coronavirus pandemic.
The "significant" cash generated by the sale underpinned the group, the directors said, and provided it with "significant" resources with which to make investments in what it said was likely to become an "interesting investment market".
It was intended for the cash to be used in partnership with clients, which should significantly increase the equity available to make investments to more than ?100m which, when coupled with bank debt, should generate buying power of over ?300m.
"The timing of the sale of CH8 as well as the returns and free cash generated by it are testimony to the agility and skill of the group's management team," said chief executive officer Ben Habib.
"This has been demonstrated repeatedly over the years since I established the business in 2000."
Habib said the cash realised by the sale both protected shareholder interest at a time of "extreme financial uncertainty", and positioned the group to make "significant" new investments at a time when the market would become "much more interesting".
"The sale is nothing less than transformational and I am delighted by it."
At 1041 BST, shares in First Property Group were up 13.43% at 38p.
The AIM-traded firm said the sale price was €44m (?38m), compared to a book cost of €38.8m.
It said its profit on sale totalled €1.6m, after costs and a provision of €2.67m in respect of a rent guarantee provided to the buyer.
That profit would be recognised in the financial year ended 31 March 2020, the board said.
Cash generated on sale came in at €19.6m, taking group cash as at 14 April to around ?25m, representing about two thirds of its market value of ?37m immediately prior to the announcement.
The internal rate of return earned from the investment since its acquisition in 2014 was 63% per annum, First Property said.
Its board said the sale came at an "excellent time" for the group, given the uncertainty created by the economic shutdowns across the globe as a result of the Covid-19 coronavirus pandemic.
The "significant" cash generated by the sale underpinned the group, the directors said, and provided it with "significant" resources with which to make investments in what it said was likely to become an "interesting investment market".
It was intended for the cash to be used in partnership with clients, which should significantly increase the equity available to make investments to more than ?100m which, when coupled with bank debt, should generate buying power of over ?300m.
"The timing of the sale of CH8 as well as the returns and free cash generated by it are testimony to the agility and skill of the group's management team," said chief executive officer Ben Habib.
"This has been demonstrated repeatedly over the years since I established the business in 2000."
Habib said the cash realised by the sale both protected shareholder interest at a time of "extreme financial uncertainty", and positioned the group to make "significant" new investments at a time when the market would become "much more interesting".
"The sale is nothing less than transformational and I am delighted by it."
At 1041 BST, shares in First Property Group were up 13.43% at 38p.