First Property Group, UK and CEE-based fund manager, has launched a new fund with equity commitments of £182 mln (€206 mln), to invest in opportunities in the UK commercial property market generated in the wake of the Brexit vote.
The fund, dubbed Fprop Offices, has closed its first round of funding with eight institutional investors, including a commitment of £3 mln (€3.43 mln) by First Property. It plans to invest in office blocks and business parks across the UK.
'The UK’s decision to leave the EU has created opportunities on which we, as a niche fund manager, are well placed to capitalise,' commented Ben Habib, First Property's CEO.
A second closing with additional equity commitments is expected later this year.
According to First Property, investments by the fund may be leveraged up to a maximum loan to value of 30%, giving the fund an initial total buying power of £260 mln (€297 mln).
'This new fund represents major progress in the growth of our fund management business, with third party assets under management expected to nearly double,' Habib added. 'It will also substantially increase our investment in UK commercial property.'
First Property said it had now raised some £250 mln (€286 mln) of equity commitments from third parties since the referendum on 23 June 2016, in part to take advantage of the slowdown in the UK commercial property market since then.
Once fully invested, third party assets under management, which currently amount to £323 mln (€369 mln), are expected to nearly double in value. Total assets under management, including Group properties, are expected to grow from £477 mln (€545 mln) to in excess of £750 mln (€857 mln).
First Property will not receive management fees for the fund but pursue a profit share model.
'Our confidence in the fund’s prospects is also demonstrated by our decision to determine our entire economic benefit from it by reference only to the profits it earns,' concluded Habib.
