First Property Group, the AIM-listed fund manager, said it is considering the launch of a UK property fund in excess of £100m by the end of the year.

The company is planning to return to the UK market after its exit in 2005 to invest in Poland and other countries in Central and Eastern Europe (CEE).

It will raise equity from seven to eight private institutional investors to buy assets through 2010 and 2011. It is looking favourably at investing in supermarkets and well-located offices with a strong covenant.

The fund will not be geared.

Ben Habib, chief executive at First Property, said: ‘We are not fussed about the asset class but are nervous about retail. We think spending in the UK is going to be under pressure for a few years.

‘We are unlikely to borrow any money to buy assets because of high interest rates. When the debt markets improve we may look to gear the fund but this will be subject to shareholder approval.’

This morning First Property announced its preliminary results for the year ended 31 March 2009.

It reported a 38.5% decline in pre tax profits to £3.86m from £6.28m in 2008.

This was largely due to a steep fall in performance fees that plummeted 90% to £589,000 compared to £5.65m in 2008.

Net assets rose 12.4% to £13.6m and assets under management increased to £310m from £290m in 2008.

This led to a 48% increase in management fees to £3.98m which is more than the year’s pre tax profit of £3.86m.

The company increased its cash balance from £6.2m in 2008 to £10.1m and announced an 8% increase in the final dividend to 0.70p taking the annual dividend to 1p.

First Property’s loan to value ratio of 70% is far from breaching its banking covenants and its earliest loan matures in late 2010.

Habib said: ‘We made the right decision to move away from the UK in 2005. Poland was, and remains, a compelling investment proposition and we will continue to invest in that country. I believe we are also right to be planning a return to investment in the UK.’

Assets managed by the company outperformed the IPDs CEE index by 4.1% in 2008.

The company recorded a total return of 4.9% against the IPD Benchmark of 0.8% and has been the top performer for three years to 31 December 2008.