Ben Habib is not a man averse to a fight. Five months ago, Reform UK’s then deputy leader was standing atop a battle bus in Wellingborough laying siege to the record of the Tories and shouting up the benefits of lower income tax and the dangers of net-zero.
The months since then have not been entirely kind. Weeks ago, he was ousted as deputy leader by Nigel Farage after failing to win a seat in parliament. He aired his own “concerns” at the party’s management in return and says he is “considering [his] position more generally”.
It may mean he has more time for the listed commercial property investor he has run since 2000, First Property Group. Unfortunately, there too, he has a scrap on his hands.
A secretive Swedish activist investor has quietly amassed a 25 per cent stake in the company and is preparing to launch a slew of demands pushing for reform, City A.M. can reveal.
Peter Gyllenhammar, whose eponymous firm describes itself as a “proactive investor”, has built stakes in scores of property firms across the UK and Sweden, including First Property, Palace Capital and AIM listed shell company, Leeds Group.
He has held a position in Habib’s investment outfit since 2021 but filings last week reveal he has now snapped up over a quarter of its issued share capital. Now, he wants change.
“Unless the board of a company such as First Property can implement a strategy that is credible, with the objective of delivering the full value to all shareholders, then they must consider other options than just going on like they are currently,” Gyllenhammar tells City A.M. over the phone.
Farage ousted Habib as deputy leader of Reform after he failed to win the seat of Wellingborough at the general election.
He says a break-up and liquidation of its assets should be on the cards if Habib is unable to narrow the discount of its shares. Currently, it has a portfolio value of £44.5m but trades at a valuation of about £21m on the London Stock Exchange’s AIM market.
More than 70 per cent of its value has been wiped out since a peak in 2018. Rising costs and a property downturn have eaten into profits, and in its full year results to the end of March, the company swung to a loss of £4.41m from a profit of £2.49m a year prior.
Two of its seven directly owned properties – office buildings in Poland – account for 71 per cent of its total portfolio value. But by its own admission, progress in finding tenants has been “slower than initially anticipated”. Its property fund management business has meanwhile seen managed assets crater to £221.8m, down nearly half from £400.4m at the same point last year.
“Obviously one such [option] is to implement an orderly breakup and not in a panic mode,” Gyllenhammar says. “They don’t have any problem of a financial nature at all, so they can allow themselves time to deliver on such a strategy.
“I think it’s the duty of the board to implement that strategy, unless, of course, they can come up with some rabbits out of their hats.”
The slide in performance is not to say everyone has been suffering, however. Since 2018, Habib has been paid £6.69m in salary and bonuses, according to analysis of its annual reports. In 2022, when First Property made £7.1m in profit, Habib raked in a total paypacket of £1.76m – £1.37m of which was a bonus.
“It’s terrible in a company that has performed so badly,” Gyllenhammar adds, describing the remuneration as “staggering”.
His gripes over pay feed into another of his complaints: governance. The UK’s corporate governance code suggests that chairs of premium listed companies should be in place for a maximum of nine years to retain their independence. While smaller firms like First Property are not required to follow the same standards, the Institute of Directors suggests the nine-year mark is an “influential benchmark across much of UK plc”.
First Property’s chair was appointed on the 25th July 2000.
“I don’t think you can claim that you’re an independent director when you’re on the board for such a long time,” Gyllenhammar says.
This is not the Swede’s first adventure against a London-listed property vehicle. After building a stake in listed London-listed REIT Palace Capital, he wrote to management in 2022 demanding it liquidate its portfolio and return the cash to shareholders, a move it resisted.
“This was not a good move, with the property market about to enter a significant downturn,” a person close to Palace said. After the REIT yesterday sold off a number more of its properties, he was quick to counter and said the company was “doing a First Class job in the best interest of all shareholders”.
The outcome and details of his campaign against Habib’s firm are yet to be seen. Gyllenhammar says he’s willing to give him the time to deliver. First Property declined to comment.
But does he think that Habib got distracted by his political career and took his eye off the ball?
“That’s possibly for you to judge.”