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First Property makes new investment in Poland

First Property Group has acquired the principal operating companies owning the majority of properties situated in Krakow Business Park (KBP), Poland. Krakow is the second largest city in Poland with a population in its metropolitan area of some 1.5 million.

KBP comprises four Class A office buildings with a gross leasable area of some 50,000 m2, half of which is vacant. There is room in the park for additional development. It is close to Krakow International Airport and has its own railway station.
At the time of our purchase the value of the investment was compromised by the bank loans secured on the properties, which were all in default. On 25 May 2018, after the Group’s financial year end, the bank loans were restructured so that the debt is no longer in default. The total value of the bank loans is EUR47 million.
First Property has now secured third party investor commitments from a group of investors to invest some EUR33 million of new equity in Fprop Phoenix Ltd, the holding company for KBP, with the aim of making it the best business park in and around Krakow. These investors include the Willis Towers Watson Partners Fund, Christ Church, Oxford, St Catherine’s College, Oxford and Christ’s College, Cambridge.
The Group, which is not participating in this fundraising, now owns some 23.4 per cent of the issued share capital of Fprop Phoenix Ltd. The Group’s share will be treated as an associate and, in keeping with its accounting policies, will be held at cost plus associated expenses of GBP900,000 (rather than at its market value).
In addition to earnings derived from its shareholding in KBP, the Group will earn management fees of EUR360,000 per annum.
With effect from later in June/July 2018 the Park is to be renamed Eximius Park to reflect its excellent future.
Ben Habib, Group Chief Executive, First Property, says: “We fully expect to make Eximius Park the best business park in and around Krakow. The buildings on the park provide excellent office space but we shall be expanding its facilities to make it a home away from home for its tenants. Our plans include a new sports ground, park area, additional car parking, a free bus service for all tenants, a refurbished railway station with an improved frequent service to central Krakow (some 15 minutes away), new retail facilities, top of the range restaurants, a kindergarten and much much more. And en route we expect to earn good returns for our shareholders and our investors in the Park.” 

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