Full year results from UK and Central and Eastern Europe focused property fund manager First Property were slightly ahead of house broker Arden's expectations.

The broker had pencilled in £2.7m for pre-tax profit, slightly below the £2.8m First Property delivered.

"Overall, the trading outlook for the current year remains positive. Investment of the new fund will drive increased revenues at FPAM [First Property Asset Management] and Group Properties will have the benefit of an increased contribution from the larger holding in the Blue Tower management company," said Arden analyst Chris Thomas.

The broker think the shares are "very significantly undervalued" but concedes that, with the bulk of the group's earnings denominated in euros, it will face some significant currency headwinds this year and next.

"In light of the current £/€ rate of c1.2, we have cut £0.2m from our forecasts for both 2010/11 and 2011/12," the broker said.

"Polish property values, having stabilised could start to recover this year, which would drive increased fees. In addition investment of the group's cash pile would be significantly earnings enhancing. Success in raising additional investment funds would also add to revenues. Our forecasts do not assume any benefit from these factors and we therefore believe that there is upside potential to our numbers," Thomas argued.

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