Proposed Refinancing and Changes to the Articles

To: RNS

From: F&C Commercial Property Trust Limited

Date: 16 October 2014

PROPOSED REFINANCING, AMENDMENT TO THE ARTICLES AND PUBLICATION OF A CIRCULAR

Introduction and background

F&C Commercial Property Trust Limited (the "Company") is a closed-ended
Guernsey registered property investment company which is listed on the Official
List of the UK Listing Authority. The Company's investment objective is to
provide Shareholders with an attractive level of income together with the
potential for capital and income growth from investing in a diversified UK
commercial property portfolio.

At the time of the launch of the Group in March 2005 the Group issued, through
an associated company,£230 million of secured bonds (the "Bonds"). The Bonds are
due for repayment on 30 June 2015. As recently noted in the interim report for
the period ended 30 June 2014, the Board has been considering a refinancing of
the Bonds. The Group has also drawn down £30 million under the Barclays Prime
Four Facility which is due for repayment on 30 June 2015. The Board is pleased
to announce that the Group has agreed terms to refinance the Bonds and the
Barclays Prime Four Facility through a new ten year term loan facility with L&G. 
As noted below, this proposed long term loan is on attractive terms and is
expected to enhance the returns to Shareholders over the longer term.

The Articles require the Board to put to Shareholders an ordinary resolution at
the annual general meeting of the Company to be held in 2015 approving the
continuation of the Company. In the light of the proposed Refinancing, the
Board is proposing a resolution to remove the obligation in the Articles to
hold the continuation vote in 2015 andfive yearly thereafter and to replace it
with an obligation to hold a continuation vote in 2024 (i.e. prior to the
repayment date of the L&G Facility).

As noted below, the Board is also proposing to amend the Company's discount
control policies to betterreflect market conditions. The Board believes that
holding the next continuation vote in 2024 and the revised discountcontrol
arrangements are more appropriate for a listed property investment company such
as theCompany and are in line with in the wider listed REIT and property
company sector.

The Company has today sent a circular to its Shareholders (the "Circular") in
connection with the Refinancingconvening an extraordinary general meeting to
consider a special resolution toamend the Articles. The Circular also explains
why the Directors believe that these Proposals are in the best interests of
theCompany and Shareholders as a whole and recommends that Shareholders vote in
favour of theResolution.

The proposed Refinancing

F&C Commercial Property Finance Limited, an associated company of the Group,
has issued £230 million of secured bonds which have been assigned an "Aaa"
rating by Moody's. The Bond Issuer is a special purpose vehicle which is not a
member of the Group. The proceeds of the issue of the Bonds were used to
finance, pursuant to the terms of the Bond Facility Agreement, the purchase of
properties for the Group's property portfolio on its launch. The Bonds are
listed on the Official List of the UK Listing Authority and are admitted to
trading on the London Stock Exchange's main market for listed securities. The
Bonds carry interest at a fixed rate of 5.23 per cent. per annum.

The Group has also drawn down £30 million under the Barclays Prime Four
Facility to fund part of the acquisition cost of properties in Aberdeen. The
Barclays Prime Four Facility is due for repayment on 30 June 2015.

The Group expects to enter into a facility agreement with L&G substantially
reflecting the heads of terms agreed with L&G. Under the facility agreement the
Group will be entitled to draw down up to £260 million to finance the repayment
of the Bonds and the Barclays Prime Four Facility. The L&G Facility will be
conditional on certain matters including valid security being granted over the
assets of the FCPH Borrower Group. The L&G Facility will not be secured over
the remaining assets of the Group.

Interest is expected to be payable on the L&G Facility at the rate of 1.1 per
cent. per annum over therelevant ten year UK Gilt. Based on UK Gilt rates as at
the date of this announcement, it is estimated thatthe total interest rate
payableunder the L&G Facility would be approximately 3.1per cent. per annum
whichis significantly lower than the current interest rate on the Bonds. It is
estimated that the total costs forputting in place the L&G Facility and
repaying the Bonds and the Barclays Prime Four Facility (includingthe L&G
arrangement fee but excluding the early repayment penalty on the Bonds) will
amount toapproximately £2.7 million.

Based on the agreed heads of terms, the L&G Facility is expected to contain
covenants, warranties andundertakings which are customary for a term loan
facility of this nature. However, the Board is of theview that the terms of the
L&G Facility will be more flexible than the current terms of the Bonds.

The Board intends to give notice to the Bond Issuer for repayment of the Bonds
on 31December 2014.It is expected that the Group will fix the interest rate
payable, and draw down the full amount available, under the L&G Facility prior
to that date. It is expected that the Barclays Prime Four Facility will be
repaid at or around the same time. Under theterms of the Bonds the Group will
be required to pay an early repayment penalty on the Bonds basedon UK Gilt
yields on the date of repayment, which is estimated (based on UK Gilt yields at
the date of this document) at approximately £5.5 million(equating to 0.7p
perShare). The Board believes that it is in the interests of the Group to repay
the Bonds early to ensurethat the Group has certainty of available funds in
advance of the fixed repayment date of 30 June 2015and so that the Group can
take advantage of the current availability of long term borrowings from L&Gat
attractive rates of interest. There is no early repayment penalty in respect of
the Barclays Prime FourFacility but the Group will be liable for the cost of
breaking the relevant interest rate swap (such cost at 30 September 2014
isreflected in the current NAV per Share). The Group will meet the repayment
penalty and the interestrate swap breakage cost from its existing cash
resources.

In accordance with the Company's investment policy gearing, represented by
borrowings as apercentage of total assets, may not exceed 50 per cent. However,
the Board's present intention is thatthe borrowings of the Group will be
limited to a maximum of 35 per cent. of total assets at the time ofborrowing.
Following the Refinancing, the Group's borrowings will comprise the L&G
Facility and theBarclays SCP Facility and it is estimated that the weighted
average period to maturity on the Group'sdebt will be 8.8years with a weighted
average interest rate of 3.4per cent. per annum. Based on thetotal assets of
the Group as at 30 September2014, such borrowings would represent approximately
25per cent. at the time ofborrowing.

Continuation vote

The Articles require the Board to put to Shareholders an ordinary resolution at
the annual generalmeeting of the Company to be held in 2015, and five yearly
thereafter, approving the continuation of theCompany. In the light of the
proposed Refinancing, the Board is proposing a special resolution toamend the
Articles to remove the requirement to hold a continuation vote in 2015 and five
yearly thereafter.

It is also the Board's current policy, as stated in theCompany's annual report
and accounts, to convene a meeting to consider the continuation of theCompany
in the event that the Shares trade at a discount of more than 5 per cent. for
90 consecutivedealing days or more. In the light of the refinancing of the
Group with a long-term ten-year debt facilitythe Board has undertaken a review
of these policies and, in particular, has considered whether holdingperiodic
continuation votes is appropriate for a Company with illiquid underlying
assets, long-termdebt and a long term investment strategy. The Board has also
taken into account the significant costs that would be incurred by the Group in
repaying the L&G Facility early and on being forced to sell properties to fund
such repayment,as a result of the continuation vote.

Following this review the Board is proposing that, if the Resolution is passed,
the Board will be required to propose an ordinary resolution to approve the
continuation of the Company in 2024 (i.e. prior to the repayment date of the L&
G Facility). If such resolution is not passed, the Board will be required to
put forward proposals within 12 months for the winding up of the Company, or a
reconstruction providing Shareholders with the opportunity to exit their
investment in full.

The Board has also carefully considered the appropriate way to protect
Shareholders in the event of asignificant and persistent discount to the NAV
developing. At the annual general meeting held in May2014 the Board was
authorised to purchase up to 14.99 per cent. of the Shares then in issue. It is
theBoard's current policy to use this power, subject to certain conditions, to
repurchase Shares where theyhave traded at a discount of 5 per cent. or more
for a continuous period of 20 dealing days. However,the daily prices at which
the Shares trade can be significantly affected by the expectation of
valuationchanges between the quarterly valuations and by the expectation of
interest rate changes.

While the Board does not believe that this policy provides the appropriate
level of flexibility to enable itto use the share buyback authority it
recognises that Shareholders may expect some degree ofprotection. With this in
mind, if the Resolution is approved, it is the intention of the Board that,
while thecurrent policy will no longer apply for the reasons noted above, the
Board will, nonetheless, continue its commitment to limit anydiscount to the
NAV at which the Shares may trade through the application of share buybacks.
Theremoval of the formulaic policy provides the Board with more flexibility on
the timing and levels of anyshare buybacks. However, although in the future the
application of share buybacks will not be linked toany specific discount
target, the Board is aware of its responsibilities to Shareholders and its
historiccommitment to a 5 per cent. discount trigger. A discount of 5 per cent.
or more will therefore remain alevel at which the Board will formally review
its buyback implementation. The Board will maintain itspolicy of seeking to
minimise any significant and persistent discount to the NAV and, in
decidingwhether any buybackof Shares is in the best interests of Shareholders,
the Board intends to take intoaccount the level of discount, the market
environment at the time, the Group's cash position and cashrequirements and the
views of Shareholders including whether a continuation vote should be held.

Attractions of the Group and the Shares

The Directors believe that is the Proposals are in the best interests of
Shareholders for thefollowing reasons.

  * The Group has performed strongly since its launch in 2005.
   
  * The Property Portfolio is well positioned to continue to out-perform the
    wider UK commercial property market over the medium and longer term.
   
  * There are a number of asset management opportunities in the Property
    Portfolio that will assist in the performance of the Group over the
    forthcoming years.
   
  * The Company remains one of the most highly rated companies in its sector.
   
  * Following the Refinancing, the Group will have in place cost effective long
    term borrowings which are expected to enhance returns to Shareholders over
    the longer term.
   
  * Based on the current UK Gilt rates, the expected interest margin on the L&G
    Facility will significantly improve the dividend cover of the Shares.
   
Amendments to the Articles

If the Resolution is passed by Shareholders at the General Meeting, the
requirement on the Directorsto hold a continuation vote at the annual general
meeting in 2015 and every five years thereafter willbe removed from the
Articles and replaced with a requirement to hold a continuation vote in 2024.

General Meeting

The General Meeting has been convened for 9.30 a.m. on 7November 2014, to be
held at TrafalgarCourt, Les Banques, St. Peter Port, Guernsey GY1 3QL. All
Shareholders are entitled to attend andvote on the Resolution to be proposed at
the General Meeting.

If the Resolution is not passed, the Directors will consult with Shareholders
as to whether theRefinancing should proceed and will put to Shareholders an
ordinary resolution for the continuation of the Company at the annual general
meeting of the Company to be held in 2015.

Circular

A copy of the circular has been submitted to the National Storage Mechanism and
will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM.

Definitions

Terms used and not defined in this announcement have the meanings given in the
Circular.

For further information please contact:

Richard Kirby, F&C Investment Business Limited
Tel: [phone]

Graeme Caton, Winterflood Securities Limited
Tel: [phone]