First Property Group has entered into a contract for the sale of one of its properties, a 50.3% interest in Chałubińskiego 8 (CH8), an office tower in Warsaw, Poland, at a price of €44 million. Completion of the contract is deferred until the treatment of VAT relating to the sale has been approved by the Polish tax authorities, which is expected by 31 March 2020. The name of the buyer has not been disclosed.
The building was formerly known both as Intraco II and as Oxford tower.
The sale price is at a premium of €5.2 million (13.4%) to the value at which the property is held in the accounts and a premium of €4.0 million (10.0%) to its independently assessed market value. As a condition of the sale the Group has guaranteed the rental and service charge income and fit-out costs on the residual vacant space, amounting to some €1.2 million per annum and €1.5 million respectively. After making a provision for the potential cost of this guarantee, the sale should result in a profit before tax of some £3 million at current exchange rates after accounting for the foreign exchange gains held in the foreign exchange reserve. This profit should be recognised in the financial year ending 31 March 2020.
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