FPO First Property Group Plc

THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND FOR INFORMATION PURPOSES ONLY AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, AND DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN, INTO OR FROM THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION, DISTRIBUTION, OFFER OR SALE WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO PURCHASE AND/OR SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN FIRST PROPERTY GROUP PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF FIRST PROPERTY GROUP PLC.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR").

First Property Group plc

Open Offer at 8p per Open Offer Share to raise £2.96 million

First Property Group plc (AIM: FPO), the property fund manager and investor, announces an Open Offer to raise £2.96 million (before expenses) through the issue of 36,960,777 Open Offer Shares at 8p per Open Offer Share.

Under the Open Offer, all Qualifying Shareholders are entitled to subscribe for Open Offer Shares at the Issue Price on the basis of 1 Open Offer Share for every 3 Ordinary Shares held on the Record Date.

The Open Offer is underwritten by Alasdair Locke and Ben Habib (the "Underwriters"), both of whom are Directors of the Company and currently hold 7.91 per cent and 13.55 per cent of the Company's issued shares respectively. The Underwriters have agreed to subscribe, at the Issue Price, in addition to their own Open Offer Entitlements for any Open Offer Shares not otherwise taken up by Qualifying Shareholders pursuant to the Open Offer (up to the Maximum Amount). The Underwriters are not being paid an underwriting fee for providing their respective underwriting commitments.

Consequently, the gross proceeds of the Open Offer are expected to be £2.96 million. The net proceeds from the Open Offer (expected to be £2.82 million) will provide the Company with additional working capital to, inter alia, settle the deferred consideration payment due on the Blue Tower property and to complete fit-out works on Blue Tower following the signing of a new lease at the property, as announced on 25 July 2024.

The Issue Price of 8p per Open Offer Share represents a discount of approximately 52.4 per cent to the closing middle market price of 16.8p for each Ordinary Share on 2 September 2024 (the latest practicable date prior to this announcement).

The Open Offer is only conditional upon the admission of the Open Offer Shares to trading on AIM. It is expected that Admission will become effective and dealings in the Open Offer Shares will commence on 23 September 2024.

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.  The Open Offer Shares will be issued pursuant to the authority granted to the directors at the Annual General Meeting of the Company held on 27 September 2023.

The Open Offer is open for acceptance from now until 18 September 2024.  Details of the Open Offer will be set out in a circular to be sent to shareholders later today.  The Circular sets out the reasons for and further details of the Open Offer, including its terms and conditions.

Key extracts from the Circular are set out further below in the Appendix.

A copy of the circular is available on the Group's website at www.fprop.com

Related party transaction

Ben Habib and Alasdair Locke are both directors of the Company and Ben Habib is also a substantial shareholder in the Company and therefore their entering into the Underwriting Agreement with the Company is deemed to be a transaction with a related party under the AIM Rules. Ben Habib and Alasdair Locke have agreed to subscribe in cash at the Issue Price for their Open Offer Entitlements in full, being in aggregate 7,933,996 Open Offer Shares, and they have also agreed to underwrite the Open Offer by subscribing for 50 per cent. each of the Underwritten Shares, being all of the Open Offer Shares not taken up by Qualifying Shareholders under the Open Offer capped at the Maximum Amount.

The Independent Directors, being Peter Moon and Laura James, having consulted with the Company's Nominated Adviser, Allenby Capital Limited, consider that the terms of Underwriting Agreement are fair and reasonable insofar as Shareholders are concerned.

Additional update re the Group's investment in Fprop Opportunities plc ("FOP")

The Company is also pleased to announce the conditional agreement of terms by FOP to sell the shopping centre it owns in Ostrowiec. The Group has an interest of 45.7% in FOP. The sale is at an early stage and remains subject to certain conditions.  A further announcement will be made if and when the property is sold.

For further information please contact:

Expected timetable of principal events

 Notes:

1.All time references in this document are to London, UK time.

2.These dates are given on the basis of the Board's current expectations and are subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service and will be available on the Group's website at www.fprop.com.

Principal statistics of the Open Offer

KEY STATISTICS

OPEN OFFER STATISTICS

Notes:

*Assuming no further issue of Ordinary Shares prior to the issue of the Open Offer Shares

Please refer to the Appendix below for further information.

Appendix

The following is an extract from the letter from the Chairman set out in the Circular, substantially in the same form.

1.         INTRODUCTION

The Group announced today its intention to raise approximately £2.96 million, before expenses, through the Open Offer.

With its experienced Directors, management and staff, the Group is well positioned going forward to take advantage of investment opportunities that may arise.

The purpose of the Open Offer is to:

•           provide the Group with additional resources to fund investment opportunities;

•           to part settle the deferred consideration payment due on the Blue Tower property, located in Warsaw;

•           to fund its on-going working capital requirements; and

•           to fund capital expenditure incentives granted to tenants as the Group continues to lease the remaining vacant space in its portfolio.

Under the Open Offer, all Qualifying Shareholders have an opportunity to subscribe for Open Offer Shares at the Issue Price by subscribing for their respective Open Offer Entitlements which have been calculated on a pro rata basis to their holding of Existing Ordinary Shares on the Record Date. I the Group's Chairman and the Group's Chief Executive, Ben Habib, have agreed to subscribe, at the Issue Price, in addition to our own Open Offer Entitlements for any Open Offer Shares not otherwise taken up by Qualifying Shareholders pursuant to the Open Offer (up to the Maximum Amount) as explained further in paragraph 5 below.

The Open Offer is conditional upon admission of the Open Offer Shares to trading on AIM becoming effective on or before 08.00 a.m. on 23 September 2024 (or such later date and/or time as the Company may decide, being no later than 08.00 a.m. on 7 October 2024).

It is expected that Admission will become effective and dealings in the Open Offer Shares will commence on AIM on 23 September 2024. The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

2.         BACKGROUND TO FIRST PROPERTY GROUP PLC

First Property Group plc is an award-winning property fund manager and investor with operations in the United Kingdom and Central Europe. Its focus is on higher yielding commercial property with sustainable cash flows.

The Group has two primary business areas:

1.         Fund management - the Group's FCA regulated and AIFMD approved subsidiary, First Property Asset Management Ltd ("FPAM"), earns fees from investing on behalf of third parties in property. FPAM currently manages 12 funds which are invested across the United Kingdom, Poland and Romania.

2.         Group properties - these are principal investments by the Group to earn a return on its own capital, usually in partnership with third parties. Investments comprise seven directly owned properties in Poland and Romania and non-controlling interests in nine of the 12 funds managed by FPAM.

3.         BACKGROUND TO AND REASONS FOR THE OPEN OFFER AND USE OF PROCEEDS

As reported in the Group's Annual Report for the year ended 31 March 2024, the Group has net assets at book value (excluding non-controlling interests) of £39 million, however the Group's ability to grow has been constrained in recent years by adverse regulatory and market changes.

The combination of higher interest rates in the US attracting capital out of other markets (including Poland), higher interest rates generally putting pressure on property values and availability of bank debt, weaker economies and a burdensome regulatory environment with the drive to Net Zero has resulted in reduced occupancy demand, higher capital investment requirements, reduced values and a decline in institutional investors' interest in making property investments.

As a result, the capital values of the Group's properties have been under pressure and leasing activity has not been as strong as the Board would have hoped and expected. Nevertheless, the Group is managing the situation and once US interest rates begin to ease the Board expects to see a recovery in the UK and European property sector.

The Group will use part of the net proceeds of the Open Offer to settle the deferred consideration payment due on the Blue Tower property, located in Warsaw, as well as funding capital expenditure incentives for tenants as the Group continues to lease the remaining vacant space in its portfolio.

As announced on 25 July 2024, progress has been made by the Group at its Blue Tower property in Warsaw, following its entering into a 15-year lease with TV Republica for 3,100 square metres in the building. In total, this new lease will generate c.€935,000 (£800,000) per year for the Group. The total cost of the fit-out for this new lease is estimated to be €1.80 million (£1.54 million) which is to be borne by the Group.

Accordingly, the Board believes that a cash injection is necessary to enable the Group to take advantage of this new investment environment. The Open Offer is expected to raise gross proceeds of approximately £2.96 million to support the immediate working capital requirements of the Group and provide capital for any new opportunities that may arise in the current challenging property market.

In addition to the above, the Group is moving towards property trading on its own behalf and/or in conjunction with high-net-worth individuals/family offices and alternative investors (such as charities, pension schemes and investors in property assets). The proceeds of the Open Offer will strengthen the Group's ability to move quickly should the right opportunities present themselves, without the need to rely on institutional money or debt financing.

The Board has considered various options to address the need for an injection of new capital and concluded that an equity fundraising is the optimal solution, acknowledging that at the Issue Price, any placing with third parties would be significantly dilutive to Existing Shareholders. The Board also acknowledges that with the ever-increasing regulatory capital adequacy burden and Environmental, Social, Governance (ESG) targets imposed on institutions, it has become difficult for institutions to invest in commercial property strategies. Debt markets are expensive with high-interest rate margins, low loan to values being offered and increasingly onerous covenants being required by lenders.

Accordingly, the Board is undertaking the Open Offer to allow its supportive Existing Shareholders (who are also Qualifying Shareholders) the opportunity to participate in the Open Offer and minimise the dilution of their shareholding as a result of the Open Offer.

4.         PRINCIPAL TERMS OF THE OPEN OFFER

Open Offer

Subject to the fulfilment of the conditions set out below, Qualifying Shareholders may subscribe for Open Offer Shares in proportion to their holding of Existing Ordinary Shares held on the Record Date.

The Open Offer is conditional on Admission of the Open Offer Shares becoming effective on or before

8.00 a.m. on 23 September 2024 (or such later date and/or time as the Company may agree, being no later than 7 October 2024).

If this condition to the Open Offer is not satisfied, the Open Offer will lapse and will not proceed and any applications made by Qualifying Shareholders will be rejected. In these circumstances, application monies received by the Receiving Agent in respect of Open Offer Shares will be returned (at the Applicant's sole risk), without payment of interest, as soon as reasonably practicable thereafter. Lapsing of the Open Offer cannot occur after dealings in the Open Offer Shares on AIM have begun.

Under the Open Offer, 36,960,777 Open Offer Shares will be made available to Qualifying Shareholders at the Issue Price pro rata to their holdings of Existing Ordinary Shares, on the terms and subject to the conditions of the Open Offer on the basis of:

1 Open Offer Share for every 3 Existing Ordinary Shares held at the Record Date

Open Offer Entitlements will be rounded down to the nearest whole number of Ordinary Shares.

There is no excess application facility in respect of the Open Offer.

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission of the Open Offer Shares.

The Open Offer is being underwritten by myself and Ben Habib, the Group Chief Executive, each subscribing for 50 per cent. each of the Underwritten Shares on the terms of the Underwriting Agreement. No commission or fees are being paid to us by the Company for the Underwriting.

Qualifying Shareholders should note that the Open Offer is not a "rights issue". Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims. Qualifying non-CREST Shareholders should be aware that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should also be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for pursuant to the Open Offer will not be sold in the market nor will they be placed for the benefit of Qualifying Shareholders who do not apply for Open Offer Shares under the Open Offer.

Overseas Shareholders

The attention of Overseas Shareholders is drawn to the information which appears in paragraph 5 of Part 3 of this document. This document does not constitute an offer to sell or the solicitation of an offer to purchase securities in any jurisdiction in which it may be unlawful to do so, and, in those circumstances, this document must be treated as sent for information only and should not be copied or redistributed. Any Overseas Shareholders should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to receive this document. This document has been prepared to comply with English law, and the information disclosed may not be the same as that which could have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Qualifying non-CREST Shareholders

If you are a Qualifying non-CREST Shareholder you will receive an Application Form, which accompanies this document and which gives details of your Open Offer Entitlement (as shown by the number of the Open Offer Shares allocated to you). If you wish to apply for Open Offer Shares under the Open Offer you should complete the accompanying Application Form in accordance with the procedure for application set out in paragraph 1 of Part 3 of this document and on the Application Form itself. The completed Application Form and payment in full, should be returned by post or by hand (during normal business hours only) to the Receiving Agent, Link Group, Corporate Actions, Central Square, 29 Wellington Street, Leeds, LS1 4DL (who will act as Receiving Agent in relation to the Open Offer) so as to arrive as soon as possible and in any event no later than 11.00 a.m. on 18 September 2024.

Qualifying CREST Shareholders

Application will be made for the Open Offer Entitlements of Qualifying CREST Shareholders to be credited to stock accounts in CREST. It is expected that the Open Offer Entitlements will be credited to stock accounts in CREST on 4 September 2024. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. If you are a Qualifying CREST Shareholder, no Application Form is enclosed but you will receive credits to your appropriate stock account in CREST in respect of your Open Offer Entitlements. You should refer to the procedure for application set out in paragraph 2 of Part 3 of this document. The relevant CREST instruction must have settled by no later than 3.00 pm on 13 September 2024.

5.         UNDERWRITING AGREEMENT

Subject to the terms and conditions of the Underwriting Agreement, Ben Habib, the Group Chief Executive, and I, the Group Chairman, have agreed to subscribe in cash at the Issue Price for our respective Open Offer Entitlements and for 50 per cent. each of the Underwritten Shares (being all of the Open Offer Shares which remain unsubscribed by Qualifying Shareholders pursuant to the Open Offer up to the Maximum Amount).

The Underwriters respective obligations under the Underwriting Agreement are subject to certain conditions, including:

i.    the dispatch of this document to Shareholders (other than those who the Company determines are not entitled to receive copies); and

ii.    Admission.

Immediately following completion of the Open Offer, and if no Open Offer Shares are taken up by Qualifying Shareholders under the Open Offer and were subscribed for pursuant to the Underwriting Agreement (i) Ben Habib would hold 33,510,388 Ordinary Shares which equates to approximately 22.67 per cent. of the Enlarged Share Capital, and (ii) I would hold 27,252,379 Ordinary Shares which equates to approximately 18.43 per cent. of the Enlarged Share Capital.

Related Party Transactions

Ben Habib and I are both directors of the Company and Ben Habib is also a substantial shareholder in the Company and therefore our entering into the Underwriting Agreement with the Company is deemed to be a transaction with a related party under the AIM Rules. Ben Habib and I have agreed to subscribe in cash at the Issue Price for our Open Offer Entitlements in full, being in aggregate 7,933,996 Open Offer Shares, and we have also agreed to underwrite the Open Offer by subscribing for 50 per cent. each of the Underwritten Shares, being all of the Open Offer Shares not taken up by Qualifying Shareholders under the Open Offer up to the Maximum Amount.

The Independent Directors, being Peter Moon and Laura James, having consulted with the Company's Nominated Adviser, Allenby Capital Limited, consider that the terms of Underwriting Agreement are fair and reasonable insofar as Shareholders are concerned.

6.         ACTION TO BE TAKEN

In respect of the Open Offer

Qualifying non-CREST Shareholders wishing to apply for Open Offer Shares must complete the enclosed Application Form in accordance with the instructions set out in paragraph 1 of Part 3 of this document and on the accompanying Application Form. The completed Application Form and payment in full, should be returned by post or by hand (during normal business hours only) to the Receiving Agent, Link Group, Corporate Actions, Central Square, 29 Wellington Street, Leeds, LS1 4DL (who will act as Receiving Agent in relation to the Open Offer) so as to arrive as soon as possible and in any event no later than 11.00 a.m. on 18 September 2024.

If you do not wish to apply for any Open Offer Shares under the Open Offer, you should not complete or return the Application Form.

If you are a Qualifying CREST Shareholder, no Application Form will be sent to you. Qualifying CREST Shareholders will have Open Offer Entitlements credited to their stock accounts in CREST. You should refer to the procedure for application set out in paragraph 2 of Part 3 of this document. The relevant CREST instructions must have settled in accordance with the instructions in paragraph 2 of Part 3 of this document by no later than 11.00 a.m. on 18 September 2024.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer.

7.         TAXATION

Shareholders who are in any doubt as to their tax position, or who are subject to tax in any other jurisdiction, should consult their professional adviser as soon as possible.

8.         BOARD INTENTIONS

The Board believe that the Open Offer is in the best interests of the Company and its Shareholders. The Board intend to subscribe for their Open Offer Entitlements in full, which comprise:

* excluding any shares to be taken up as part of the Underwriting

** Laura James (Group Finance Director) is not a shareholder in the Company so has no Open Offer Entitlement

DEFINITIONS

Defined terms used in this document shall have the meanings set out below: