Joint Venture with Saad

Berkeley Group Holdings (The) PLC
02 April 2007


FOR IMMEDIATE RELEASE                                               2 APRIL 2007


                       THE BERKELEY GROUP HOLDINGS PLC


PROPOSED INVESTMENT OF UP TO £175 MILLION IN THREE JOINT VENTURE COMPANIES WITH
                        SAAD INVESTMENTS COMPANY LIMITED


Introduction and Summary


The Berkeley Group Holdings plc (the 'Company') announces that its wholly owned
subsidiary, The Berkeley Group plc, has entered into three agreements
conditional on approval by its shareholders (the 'JV Shareholders' Agreements')
to establish three further private joint venture companies (the 'JV Companies')
with Saad Investments Company Limited ('Saad'), including an investment of up to
£175 million (the 'Proposed Transaction').


Saad and Berkeley have previously entered into joint ventures in the 1990's
including Saad Berkeley Investment Properties Limited and Berkeley Eastoak
Investments Limited, both property investment companies, and Saad Berkeley
Limited, a residential developer which is operational today. The JV Companies
will be of a similar nature to these joint ventures. The first of the JV
Companies will operate as a land fund (the 'Land Fund') to acquire new
development opportunities adding value through securing enhanced planning
consents, prior to disposal to either third parties or the second of the JV
Companies. This second company will operate as a development company (the
'Development Company') - primarily developing the land purchased by the Land
Fund, once planning permission is obtained. The third company will operate as a
property investment company (the 'Property Investment Company').


Funding of the JV Companies will be through a combination of shareholder
investment and non-recourse bank funding with a target equity to debt ratio of
30:70. Berkeley's investment in the JV Companies, in the form of both share
capital and shareholder loans, will not exceed £175 million in aggregate.
Initially, Berkeley is committed to providing loan facilities of £92 million in
aggregate. Investment is expected to occur over a 10 year period as appropriate
acquisition and investment opportunities are identified by the three JV
Companies and the respective boards request the funds from their shareholders.


In addition to being a partner in an existing joint venture, Saad is currently a
29.1 per cent. shareholder in the Company and therefore under the Listing Rules
is considered a related party by virtue of being a 'substantial shareholder'.
The Proposed Transaction is therefore a related party transaction under Chapter
11 of the Listing Rules and as such requires shareholder approval. Due to the
size of the Proposed Transaction and the fact that the exit provisions in the JV
Shareholders' Agreements mean that in certain circumstances Berkeley may be
forced to sell its stake in a JV Company without obtaining further Shareholder
approval at that time, the Proposed Transaction is required to be conditional on
the approval of Shareholders.


Further details will be published shortly in a circular to be sent to
Shareholders which will include a Notice of the Extraordinary General Meeting at
which the ordinary resolution that is required to approve the Proposed
Transaction will be tabled.


Background to and Reasons for the Proposed Transaction


Berkeley's core business is as a residential led mixed-use urban regenerator and
home builder, which acquires land for the subsequent development and sale of
completed homes. In addition, it develops and sells commercial property,
primarily as part of its mixed-use urban regeneration sites.


In its land acquisition investment appraisal, Berkeley takes account of a number
of factors in determining whether or not each opportunity is in line with the
Group's strategy. The level of financial investment and return are key elements
of this appraisal, but must be balanced with, amongst other factors, the length
of time it will take to obtain a suitable planning consent. This ensures the
most appropriate use of the Group's balance sheet and allocation of shareholder
funds, in the context of the Group's overall strategy.


The Land Fund will invest in development opportunities which cannot be
accommodated within the Company's usual acquisition criteria. These might
include land options, freehold land or land currently with commercial use with a
high capital requirement and/or relatively long planning lead time. Such
opportunities can, however, offer attractive returns and are, in the view of
Berkeley, ideally suited to joint ventures, which can utilise financial leverage
to reflect the capital intensive nature and risk profile of the sites, whilst
limiting the Group's exposure. The Land Fund will therefore be complementary to
Berkeley's core business, acquiring sites that Berkeley normally would not. Once
suitable planning permission is obtained by the Land Fund, the sites will be
sold for development, either to third parties or to the Development Company.


The Property Investment Company will acquire commercial property as
opportunities are identified by its board of directors with a view to achieving
returns primarily through capital growth. Berkeley has previously conducted such
activities through Saad Berkeley Investment Properties Limited and Berkeley
Eastoak Investments Limited, both joint ventures with Saad, and the Property
Investment Company is a continuation of this. Commercial property investment is
commonly undertaken through joint ventures or special purpose vehicles that
utilise financial leverage to maximise shareholder returns and for Berkeley this
also reflects the fact that such investment is of an opportunistic nature.


As a joint venture partner, the Directors believe Saad combines the necessary
financial strength, insight, long term outlook and willingness to take on the
commercial, planning and development risk inherent in the JV Companies. Saad is
well known to the Company in terms of outlook and operating methodology and the
Group has a good working relationship with Saad from our existing joint
ventures. Finally, as a long term and substantial shareholder, Saad's interests
are clearly aligned with the success of the Proposed Transaction and the
interests of other shareholders.


If Berkeley invests the maximum £175 million of equity in the JV Companies, it
believes that, together with Saad's investment and external bank debt, a fund of
approximately £1 billion would be available to take advantage of land
opportunities as they present themselves, be they for development or investment.


In addition to Berkeley's equity share of any profits from its role as a
shareholder in the JV Companies, Berkeley Commercial Developments Limited, a
wholly owned subsidiary of the Company, will be appointed by each of the JV
Companies to perform certain property management and advisory services on their
behalf in return for which it will receive fees at commercial rates. Furthermore
Berkeley is entitled to success fees should the returns to each shareholder in
the JV Companies exceed pre-determined levels.


Whilst the overall strategy of the JV Companies will be land acquisition with a
view to either longer term development or property investment, the proposed
period for actually making acquisitions is 10 years from the first acquisition
of land made by the joint venture, after which no further properties will be
acquired from third parties.


Information on Saad


Saad is an international investment company which, in addition to its equity
investment in the Company, has previously entered into residential and
commercial property investment in the United Kingdom through joint venture
companies with Berkeley.


Financial Effects of the Proposed Transaction


Berkeley's investment in the JV Companies will be capped at £175 million, with
initial loan facilities of £92 million being provided, and will be made
available from the Group's existing financial resources. In its results for the
six months ended 31st October 2006, Berkeley had net cash of £322 million. In
addition, Berkeley has undrawn bank facilities of £375 million as referred to in
its annual report for the year ended 30th April 2006. On 7th November 2006,
Berkeley acquired the 50 per cent. of St James Group Limited that it did not
already own for £99.5 million (including transaction expenses) and on 8th
January 2007 the Company redeemed its 2006 B shares for £242 million.


The investment in the JV Companies is expected to occur broadly evenly over the
10 year proposed acquisition period for the JV Companies. This investment is
accommodated within Berkeley's long term business plan and, as such, should not
impact on the Company's ability to meet the 2008 and 2010 B share payments to
shareholders.


The JV Companies have yet to be incorporated and there are no assets identified
for immediate acquisition, consequently there will be no immediate financial
impact on Berkeley. However, whilst returns will be achieved only over the
medium to long term, the Proposed Transaction is expected to be earnings
enhancing over that time.


In accordance with Berkeley's existing accounting policies, the JV Companies
will be accounted for under the equity method of accounting in accordance with
IAS 31.


Current Trading and Future Prospects


Since the announcement of its interim results, Berkeley has continued to
experience trading at favourable levels and your Board has confidence in the
financial and trading prospects of the Group for the current financial year.


Description of the JV Companies


The Proposed Transaction will involve the establishment of three separate
private companies, two of which will be incorporated in the Isle of Man and the
other in the UK. Following the initial subscription by Saad and Berkeley on
incorporation, which will be for a nominal amount the JV Companies will be
financed by a mixture of bank funding and shareholder loans with a target equity
to debt ratio of 30:70. The terms of both parties' investment and the
arrangements governing each of the JV Companies are set out in the JV
Shareholders' Agreements, further details of which will be set out in the
circular to be sent to Shareholders in due course.


Commenting on the new joint venture, A W Pidgley, the Group Managing Director of
Berkeley, said:


'We are delighted to be forming these new joint ventures which will continue to
put Berkeley at the forefront of the renaissance of our cities and in a position
to take forward additional opportunities which would be outside our usual
acquisition criteria. I look forward to creating with Saad a land bank of
approximately 10,000 plots and a substantial commercial portfolio over the next
10 years which creates value for all our shareholders.'


Christopher Hart, General Manager of Saad Financial Services, which advises Saad
on its holding in Berkeley described the joint ventures as an ideal partnership
to create sustainable value. Commenting, he said:


'Saad has been an investor in Berkeley for two decades, and we have a high
regard for the ability of its management to find land and develop it
successfully, both for the benefit of its investors and the communities it
regenerates. So, in looking to increase our long term investment in the UK land
sector our analysis showed we could not have found a better partner, and are
delighted to be moving forward in this way'.

                                      END


For further information please contact:


The Berkeley Group Holdings plc                              Cardew Group
A W Pidgley                                                  Tim Robertson
R C Perrins                                                  Sofia Rehman
T: 01932 868555                                              T: 0207 930 0777



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