Update re Plantation Place

RNS Number : 2227X

Invista Foundation Property Tst Ltd

01 December 2010

 



1 December 2010

INVISTA FOUNDATION PROPERTY TRUST LIMITED (the "Company")

PLANTATION PLACE, FENCHURCH STREET, LONDON EC3 - PROPOSED WAIVER OF LOAN TO VALUE COVENANT

Invista Foundation Property Trust Limited ('the 'Company') owns a 28.2% stake in the joint venture One Plantation Place Unit Trust ('OPPUT' / the 'Borrower'), which in turn owns the prime City of London office building, Plantation Place on Fenchurch Street.  As noted in the Company's interim report dated 29 November 2010, the property was valued at £456 million as at 30 September 2010 which compares with OPPUT's outstanding non-recourse off-balance sheet net securitised debt of £432.1m and a negative interest rate swap of £42.3m as at 31 October 2010.   The Company's stake in OPPUT therefore continues to be held at nil.  The property is well let and continues to cover loan interest.

Replicated below is an announcement made by REC Plantation Place Limited, the issuer of the securitised debt to the Borrower, of a Meeting of Noteholders to consider a proposal from OPPUT for a waiver of the loan to value ratio covenant for a period of up to 22 months, during which time a consensual and orderly sales process will be undertaken which may result in the sale of the property or the equity interest in OPPUT, subject to certain conditions being met.

For further information please contact:

Invista Real Estate Investment Management Duncan Owen / Nick Montgomery	020 7153 9300
Northern Trust David Sauvarin	01481 745529
Financial Dynamics Dido Laurimore/Olivia Goodall	020 7831 3113

NOTICE TO NOTEHOLDERS

REC PLANTATION PLACE LIMITED

Ogier House

The Esplanade

St Helier

Jersey JE4 9WG

(a public company incorporated in Jersey with limited liability)

(the "Issuer")

Notices of Meetings of the Noteholders of

£380,000,000 CLASS A SECURED FLOATING RATE NOTES DUE 2016

(ISIN XS0262650889)

£51,500,000 CLASS B SECURED FLOATING RATE NOTES DUE 2016

(ISIN XS0262650962)

£58,000,000 CLASS C SECURED FLOATING RATE NOTES DUE 2016

(ISIN XS0262651002)

£51,500,000 CLASS D SECURED FLOATING RATE NOTES DUE 2016

(ISIN XS0262651184)

£19,000,000 CLASS E SECURED FLOATING RATE NOTES DUE 2016

(ISIN XS0262651341)

1 December 2010

NOTICE IS HEREBY GIVEN of the following meetings (the "Notice of Meeting"):

a meeting of the Noteholders of £380,000,000 Class A Secured Floating Rate Notes due 2016 (the "Class A Notes") to be held at the offices of Clifford Chance LLP located at 10 Upper Bank Street, London E14 5JJ on 23 December 2010 at 11.00 am (London time) (the "Class A Noteholders Meeting");

a meeting of the Noteholders of £51,500,000 Class B Secured Floating Rate Notes due 2016 (the "Class B Notes") to be held at the offices of Clifford Chance LLP located at 10 Upper Bank Street, London E14 5JJ on 23 December 2010 at 11.30 am (London time) (the "Class B Noteholders Meeting");

a meeting of the Noteholders of £58,000,000 Class C Secured Floating Rate Notes due 2016 (the "Class C Notes") to be held at the offices of Clifford Chance LLP located at 10 Upper Bank Street, London E14 5JJ on 23 December 2010 at 12.00 noon (London time) (the "Class C Noteholders Meeting");

a meeting of the Noteholders of £51,500,000 Class D Secured Floating Rate Notes due 2016 (the "Class D Notes") to be held at the offices of Clifford Chance LLP located at 10 Upper Bank Street, London E14 5JJ on 23 December 2010 at 12.30 pm (London time) (the "Class D Noteholders Meeting"); and

a meeting of the Noteholders of £19,000,000 Class E Secured Floating Rate Notes due 2016 (the "Class E Notes" and together with the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes or any of them, the "Notes") to be held at the offices of Clifford Chance LLP located at 10 Upper Bank Street, London E14 5JJ on 23 December 2010 at 13.00 pm (London time) (the "Class E Noteholders Meeting").

The Class A Noteholders Meeting, the Class B Noteholders Meeting, the Class C Noteholders Meeting, the Class D Noteholders and the Class E Noteholders Meeting are referred to herein as the "Meetings" and each a "Meeting".  Each Meeting is to be held for the purpose of considering and, if thought fit, passing the Extraordinary Resolution (as defined below), the text of which is set out below and which will be proposed at each Meeting as an Extraordinary Resolution in accordance with the provisions of the trust deed dated 17 August 2006 made between the Issuer and Capita Trust Company Limited as note trustee (the "Note Trustee") (the "Trust Deed").  Unless otherwise defined herein, terms defined in the Trust Deed and the credit agreement relating to Plantation Place, 30 Fenchurch Street, London EC3 dated 17 August 2006 made between inter alios, Mourant Property Trustees Limited and Mourant & Co. Trustees Limited (in their capacity as joint trustees of One Plantation Place Unit Trust) (the "Borrowers"), and N.M. Rothschild & Sons Limited (as "Agent") (the "Credit Agreement") have the same meanings when used herein.  The holders of the Notes shall be referred to herein as the "Noteholders".

BACKGROUND

Notices have been issued by the Issuer to the Noteholders dated 6 August 2008 and on or about each Interest Payment Date thereafter which notification, in each case, provided that pursuant to Clause 15.1 (Loan to Value) of the Credit Agreement a breach of the Loan to Value Ratio and the Senior Loan to Value Ratio tests had occurred and that, for the purposes of Clause 19.5 (Breach of other undertakings), a Loan Event of Default had occurred.

As at the Interest Payment Date on 25 October 2010, the Valuation obtained by the Agent pursuant to Clause 18.5 (Valuations) of the Credit Agreement valued the Property at £456 million as at 30 September 2010.  Consequently as at the Interest Payment Date on 25 October 2010, the Senior Loan to Value Ratio exceeds the level permitted under paragraph (a) of Clause 15.1.1 of the Credit Agreement, and the Loan to Value Ratio exceeds the level permitted under paragraph (b) of Clause 15.1.1 of the Credit Agreement.  As a result, a Loan Event of Default is continuing under Clause 19.5 (Breach of other undertakings) of the Credit Agreement (the "LTV Event of Default").

PROPOSAL

Following discussions held by Brookland Partners LLP (the "Consent Solicitation Agent") with, among others, the Agent, the Junior Lender and various Noteholders, the Borrowers and the Investment Manager, are seeking a waiver of the LTV Event of Default (the "LTV Waiver").  In return for the LTV Waiver, the Borrowers and the Investment Manager propose, among other things, to use reasonable endeavours to sell the Property or the Units, subject to various conditions (the "Proposal"), as set out more fully in an explanatory letter prepared by the Borrowers (setting out the Borrowers' certain background information) attached hereto as Schedule 1 (the "Explanatory Letter") and in the waiver letter attached hereto as Schedule 2 (the "Waiver Letter").

Pursuant to Clause 33.3 (Amendments) of the Credit Agreement the Agent may, with the prior written consent of the Issuer and the Junior Lender, amend any Finance Document or grant its consent to or waive any of the requirements of any of the Finance Documents.  It is proposed by the Borrowers that the Agent will enter into the Waiver Letter, with the prior written consent of the Issuer (the "Issuer Letter of Direction", substantially in the form attached hereto as Schedule 3) and the Junior Lender, in order to give effect to the waiver that is required to be made in order to give effect to the Proposal.  The entry into the Issuer Letter of Direction by the Issuer is to be approved by the Extraordinary Resolution.

If the Extraordinary Resolution is approved, the waiver that is required to be made in order to give effect to the Proposal will be effected by, amongst other things (together, the "Waiver Documents"):

the entry into by the Issuer of the Issuer Letter of Direction; and

the entry into by the Agent, the Borrowers and the Investment Manager of the Waiver Letter.

The Waiver Documents will be entered into by the relevant parties as soon as possible after the Extraordinary Resolution is approved (the "Waiver Date").

DOCUMENTS AVAILABLE FOR INSPECTION

An explanatory letter prepared by the Borrowers is attached to this Notice of Meeting at Schedule 1.

A copy of a business presentation containing certain material information provided by the Borrowers to various Noteholders (the "Borrower Presentation" and, together with this Notice of Meeting, the Waiver Letter, the Issuer Letter of Direction and the Explanatory Letter, the "Public Information") will be published by the Borrower on Bloomberg "REC5 A mtge CF <GO>" and may also be viewed on-line at http://www.brookland.com/deal/REC5.

Please note that the Public Information will not be independently verified by any party, including the Consent Solicitation Agent, the Tabulation Agent (as defined below), the Paying Agents, the Note Trustee, the Issuer, the Loan Servicer, the Agent or their legal advisers and none of them assumes any responsibility for the accuracy or completeness of such information.

CONSENT PAYMENT

Subject to the Extraordinary Resolution being passed at each Meeting, each beneficial holder of the Notes who votes in favour of the Extraordinary Resolution (a "Consenting Noteholder") shall be eligible to receive a waiver fee from the Borrowers if the Property or the Units are sold during the Waiver Period (as such term is defined in the Waiver Letter) (the "Waiver Fee").

The Waiver Fee shall be calculated as:

if the Units or Property are sold on or between the date that the Waiver becomes effective and 25 October 2011, 0.25 per cent. of the outstanding principal amount of each of the Notes executed held by each Consenting Noteholder as at the date upon which the Waiver Letter is, and each Consenting Noteholder shall be entitled to its share of such Waiver Fee, based upon the principal amount of the Notes that it held at the date upon which the Waiver Letter is executed; and

if the Units or Property are sold between 25 October 2011 and the end of the Waiver Period, 0.50 per cent. of the outstanding principal amount of each of the Notes held by each Consenting Noteholder as at the upon which date the Waiver Letter is executed, and each Consenting Noteholder shall be entitled to its share of such Waiver Fee, based upon the principal amount of the Notes that it held at the date upon which the Waiver Letter is executed.

The amount payable in respect of the Waiver Fee shall be paid by the Borrowers or the Investment Manager to the Noteholders on the relevant date as set out above.  The obligation to pay the Waiver Fee shall be the obligation of the Borrowers and the Investment Manager only and not, for the avoidance of doubt, an obligation of any of the Issuer, the Agent, the Loan Servicer or the Note Trustee.  Noteholders should note that Consenting Noteholders will, pursuant to paragraph 3 of the Extraordinary Resolution, if the Extraordinary Resolution is passed at each Meeting, consent and authorise the relevant Clearing System to disclose each Consenting Noteholders identity, holdings, vote and Clearing Systems account details to the Issuer, the Consent Solicitation Agent and the Tabulation Agent immediately after the meeting in order to facilitate payment of the Waiver Fee.

EXTRAORDINARY RESOLUTION

The Issuer has accordingly convened the Meetings of Noteholders by the above Notice to request their agreement by Extraordinary Resolution to the matters contained in the Extraordinary Resolution.

The following is the text of the extraordinary resolution to be proposed, in accordance with paragraph 16.1.4 of Schedule 5 to the Trust Deed, at each Meeting (the "Extraordinary Resolution"):

"THAT this Meeting, duly convened by a notice dated 1 December 2010 (the "Notice") of the holders of the £380,000,000 Class A Secured Floating Rate Notes due 2016/£51,500,000 Class B Secured Floating Rate Notes due 2016/£58,000,000 Class C Secured Floating Rate Notes due 2016/£51,500,000 Class D Secured Floating Rate Notes due 2016/£19,000,000 Class E Secured Floating Rate Notes due 2016 (the "Notes") of REC PLANTATION PLACE LIMITED (the "Issuer") constituted by the trust deed dated 17 August 2006 made between the Issuer and Capita Trust Company Limited:

directs, assents and authorises the entry into of an issuer letter of direction (substantially in the form presented at the Meeting) by the Issuer whereby the Issuer will direct N. M. Rothschild & Sons Limited as agent to enter into the waiver letter (substantially in the form presented at the Meeting);

sanctions every abrogation, modification, compromise or arrangement in respect of the rights of the holders of the Notes appertaining to the Notes against the Issuer or any person involved in or resulting from the modifications referred to in paragraph (1) of this Extraordinary Resolution; and

consents and authorises the relevant clearing system to disclose the identity, holdings, vote and clearing systems account details of each beneficial holder of the Notes who votes in favour of the Extraordinary Resolution to the Issuer, the consent solicitation agent and the tabulation agent immediately after the meeting in order to facilitate payment of the Waiver Fees (as such term is defined in the Notice).

GENERAL

The attention of Noteholders is particularly drawn to the quorum required for the Meetings and for an adjourned Meeting which is set out in "Voting and Quorum" below.  Having regard to such requirements, Noteholders are strongly urged to prepare for the Meeting, as referred to below, as soon as possible.

None of the Note Trustee, Bondholder Communications Group (the "Tabulation Agent"), the Consent Solicitation Agent, the Paying Agents, the Issuer, the Loan Servicer or the Agent expresses any view as to the merits of the Proposals or the Extraordinary Resolution or whether the Noteholders would be acting in their best interests in voting for or against the Extraordinary Resolution.  However, neither the Issuer nor the Note Trustee has any objection to the Proposal and the Extraordinary Resolutions being put to Noteholders for their consideration.

Neither the Note Trustee, the Issuer nor the Tabulation Agent has been involved in formulating or negotiating the Proposal or the Extraordinary Resolution, and neither the Note Trustee, the Issuer, the Consent Solicitation Agent nor the Tabulation Agent has verified any of the statements made in this Notice and none of them, together with the Loan Servicer and the Agent makes any representation as to the accuracy or completeness of the information disclosed to the Noteholders in the Public Information.

Accordingly, each of the Note Trustee, the Consent Solicitation Agent, the Tabulation Agent, the Paying Agents, the Issuer, the Loan Servicer and the Agent recommends that Noteholders should seek their own financial and legal advice on the merits and on the consequences of voting in favour of, or against, the Extraordinary Resolution.

VOTING AND QUORUM

1.           General

The provisions governing the convening and holding of the Meetings are set out in Schedule 5 to the Trust Deed, a copy of which is available for inspection at the registered office of the Issuer.  However, as agreed by the Note Trustee and the Issuer, certain functions which are attributed to the Paying Agent in Schedule 5 to the Trust Deed will instead be carried out by the Tabulation Agent, as described below.

2.           Who is entitled to vote on the proposed Extraordinary Resolution?

The Notes are currently held in the form of a Global Note which is held by a common depositary for the accounts of Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream", and each of Euroclear and Clearstream, the "Clearing Systems" and each a "Clearing System").

A Noteholder wishing to attend and vote at a Meeting in person must produce a valid voting certificate or valid voting certificates issued by the Tabulation Agent relating to the Note(s), in respect of which it wishes to vote.

A Noteholder not wishing to attend and vote at a Meeting in person may either deliver a voting certificate to the person whom it wishes to attend and vote on its behalf or give a voting instruction electronically in accordance with the procedures of the Clearing Systems, instructing the Tabulation Agent to appoint a proxy (being an employee of the Tabulation Agent) to attend and vote at the Meeting in accordance with its instructions.

3.           Procedures for Voting

Attending and Voting at the Meeting:

An accountholder with the relevant Clearing System (an "Accountholder") who wishes to obtain a voting certificate or procure the Tabulation Agent to appoint a proxy to attend and vote at the Meeting on his behalf should not less than 48 hours before the time appointed for the holding of the Meeting and within the relevant time limit specified by the relevant Clearing System request the relevant Clearing System to block the Notes in his own account and to hold the same to the order or under the control of the Tabulation Agent.  For the avoidance of doubt, Accountholders are able to register their intention to attend and vote at a Meeting through the Clearing Systems or to deliver their instructions to vote through the Clearing Systems at any point from the positing of this notice up until 11.00 am on 21 December 2010.

An Accountholder whose Notes have been so blocked will thus be able to obtain a voting certificate from, or procure that a voting instruction is given electronically in accordance with the procedures of the relevant Clearing System to, the Tabulation Agent.

Any Note(s) so held and blocked for either of these purposes will be released to the Accountholder by the relevant Clearing System on the earliest of (i) the conclusion of the Meeting (or, if later, any adjourned Meeting) at which the Extraordinary Resolution is not passed, (ii) either (within the time limit specified by the relevant Clearing System) (A) upon the surrender to the Tabulation Agent of the voting certificate(s) and notification by the Tabulation Agent to the relevant Clearing System of such surrender or the compliance in such other manner with the rules of the relevant Clearing System, or (B) upon such Note(s) ceasing in accordance with the procedures of the relevant Clearing System and with the agreement of the Tabulation Agent to be held to its order or under its control, and (iii) upon the termination or withdrawal of the Proposal; provided, however, in the case of (ii)(B) above, that if the Tabulation Agent has caused a block voting instruction to be delivered to the Issuer in respect of such Note(s), such Note(s) will not be released to the relevant Accountholder unless and until the Tabulation Agent has notified the Issuer of the necessary revocation of or amendment to such block voting instruction.

Noteholders should note that by communicating their voting instructions and blocking their Notes in the relevant Clearing System, Noteholders will be deemed to consent to the relevant Clearing System providing details concerning the custodian's or intermediary's identity to the Tabulation Agent, the Consent Solicitation Agent and the Issuer.

4.           Quorum

The quorum required at each of the Meetings is two or more persons present in person holding the relevant class of Notes, Voting Certificates or being proxies and holding or representing in the aggregate the majority of the Principal Amount Outstanding of the outstanding Notes in the relevant class or classes.

5.           Adjourned Meeting

If within 15 minutes from the time fixed for a Meeting a quorum is not present, the Meeting shall stand adjourned for such period, not being less than 14 days nor more than 42 days, and to such time and place, as may be appointed by the Chairman of the Meeting.  At least 10 clear days' Notice for any adjourned Meeting shall be given in the same manner as the original Meeting, save that the notice shall specifically set out the quorum requirements that will apply when the Meeting resumes.  The quorum required at an adjourned Meeting is two or more persons present in person holding the relevant class of Notes, Voting Certificates or being proxies and holding or representing any Principal Amount Outstanding of the Notes then outstanding so held or represented in the relevant class or classes.

6.           Procedures at the Meeting

Every question submitted to a Meeting will be decided in the first instance by a show of hands.  Unless a poll is validly demanded before or at the time that the result is declared, the Chairman's declaration that on a show of hands a resolution has been passed, passed by a particular majority, rejected or rejected by a particular majority shall be conclusive, without proof of the number of votes cast for, or against, the resolution.

A demand for a poll shall be valid if it is made by the Chairman of the Meeting, the Issuer, the Note Trustee, or by one or more Voters representing or holding not less than one fiftieth of the aggregate principal amount of the outstanding Notes.  The poll may be taken immediately or after such adjournment as the Chairman directs, but any poll demanded on the election of the Chairman or on any question of adjournment shall be taken at the Meeting without adjournment.  A valid demand for a poll shall not prevent the continuation of the relevant Meeting for any other business as the Chairman directs.  It shall be a condition of the Chairman's appointment that a poll be demanded at the Meeting.

On a show of hands every person who is present in person and produces a Note or Voting Certificate or is a proxy shall have one vote.  On a poll every person who is so present shall have one vote in respect of each £50,000 in aggregate face amount of Note(s) represented or held by him or in respect of which he is a proxy.  ReserveCo will not be entitled to vote in respect of the Reserve Tranches of Notes which it holds, if any.

In the event of a tie, the Chairman of the Meeting shall, both on a show of hands and on a poll, have a casting vote in addition to the vote or votes (if any) which he may have as a Noteholder or as a holder of a Voting Certificate or as a proxy.

To be passed, the Extraordinary Resolution requires a majority of not less than three quarters of the votes cast to vote in favour.  No Extraordinary Resolution shall be effective unless it is sanctioned by an Extraordinary Resolution of the holders of each of the other classes of Notes then outstanding.

If passed, the Extraordinary Resolution will be binding on all the Noteholders, whether or not present at such Meeting and whether or not voting, and upon all the holders of the coupons and receipts relating to the Notes.

The Consent Solicitation Agent has been appointed by and acts for the Issuer and the Borrowers at the cost of the Borrowers to facilitate communications between (among others) the Noteholders, the Borrowers and the Issuer in relation to the Proposal.  The Consent Solicitation Agent for the Proposal is:

                Brookland Partners LLP
                73 Watling Street
                London
                EC4M 9BJ
                Contact:               Chris Lees
                Telephone:        [phone]
                Contact:               Nassar Hussain
                Telephone:        [phone]

[e-mail]

The Tabulation Agent has been appointed by and acts for the Issuer to verify Noteholder holdings, manage the Meeting voting process and facilitate communications between the Noteholders and the Issuer in relation to the Proposal.  The Tabulation Agent for the Proposal is:

Bondholder Communications Group
28 Throgmorton Street
London
EC2N 2AN
Contact:            Pamela Preston
Telephone:        [phone]
Email:               [e-mail]

This Notice is given by:

The Issuer

REC PLANTATION PLACE LIMITED

Ogier House
The Esplanade
St Helier
Jersey JE4 9WG

Schedule 1

Explanatory Letter

LETTER TO THE NOTEHOLDERS FROM

MOURANT PROPERTY TRUSTEES LIMITED AND

MOURANT & CO. TRUSTEES LIMITED

(IN THEIR CAPACITY AS TRUSTEES OF ONE PLANTATION PLACE UNIT TRUST)

1 December 2010

To:      Holders of the £380,000,000 Class A Secured Floating Rate Notes due 2016, £51,500,000 Class B Secured Floating Rate Notes due 2016, £58,000,000 Class C Secured Floating Rate Notes due 2016, £51,500,000 Class D Secured Floating Rate Notes due 2016 and £19,000,000 Class E Secured Floating Rate Notes due 2016 (each a "Note" and together, the "Notes") in each case issued by REC Plantation Place Limited (together, the "Noteholders")

Dear Noteholders,

INTRODUCTION

We are writing to set out the background to and summary terms of our proposal (the "Proposal") being tabled for your consideration at the meetings of Noteholders to be held on 23 December 2010 and as more particularly described in the agreement setting out the terms of the Proposal (the "Waiver Letter") attached as schedule 2 to the notice of meeting dated 1 December 2010 (the "Notice of Meeting").

Capitalised terms used but not defined in this letter shall, unless the context otherwise requires, have the meanings set out in the incorporated terms memorandum in connection with the issue of Secured Floating Rate Notes due 2015 by REC Plantation Place Limited (the "Issuer") dated 17 August 2006 (the "Incorporated Terms Memorandum") or the credit agreement dated 17 August 2006 between (among others) the Borrowers and the Issuer (the "Credit Agreement") as the case may be.

The Proposal is being made to address the consequences of the reduction in value of the Property that has, since July 2008, resulted in the Loan to Value ratio exceeding the Loan to Value ratio covenant level of 82.14%.  As at the 25 October 2010 Interest Payment Date, the Valuation obtained by the Agent valued the Property at £456 million and the Loan to Value ratio calculated by the Agent was 94.8%.  Consequently, despite the recent recovery in the value of the Property there is a continuing Loan Event of Default pursuant to Clause 19.5 of the Credit Agreement (the "LTV Loan Event of Default").

In April 2008 the Borrowers cured the original LTV Loan Event of Default by paying £16.8m in to the GIC Account.  Such cure payment, less amounts deducted for costs by the Servicer and the Issuer, remains in the structure for the benefit of the Lenders and, ultimately, the Noteholders.

Since July 2008 there have been a number of proposals to restructure the transaction in order to repay the existing debt, all of which have been unsuccessful, in part due to the significant hedge breakage costs which would arise on a prepayment and in part due to the conflicting interests of the various Lenders and Noteholders and their respective rights under the Transaction Documents.

SUMMARY OF THE PROPOSAL

The Proposal seeks to provide a solution to the ongoing deadlock, which would allow for either the early prepayment of all the debt through the orderly and consensual disposal of the Property (through a direct sale of the Property or via a sale of the Units but with a full refinancing of the debt, together a "Property Sale") or the prepayment of a significant proportion of the debt through a sale of the equity interest in the One Plantation Place Unit Trust (through a sale of the Units), which would leave part of the existing debt structure in place but would delever the transaction and significantly reduce the refinancing risk in advance of the Loan maturity date of 25 July 2013 (a "Unit Sale").

The Proposal will entail a waiver of the LTV Event of Default for a period of up to 22 months, during which time the Property and the Units will be marketed for sale with an obligation to complete a Property Sale or Unit Sale subject to certain conditions being met as set out in more detail below.  The Proposal, if successful will therefore have one of three outcomes at the end of the waiver period:

A Property Sale is completed, with full prepayment of all the Secured Obligations including the Senior Loan and Junior Loan, as well as all hedging break costs as a result of the prepayment;

A Unit Sale is completed with a partial prepayment of the Senior Loan and payment of the hedging break costs thereon, so that the Loan to Value ratio on the whole loan is reduced from 95% currently to 70% (which is better than the exit LTV contemplated at the time of the original financing of 79%);

No sale occurs and there is no deleveraging of the structure.  At the end of the waiver period the rights of the Lenders revert to those under the current documentation and there would be 9 months remaining until loan maturity.

The Borrowers believe that the Proposal would therefore be a positive outcome for all participants in the capital structure and that Lenders will not be in any worse position in accepting the Proposal than they are currently.

A successful outcome would deliver a strong message to the market that a mutually beneficial solution can be found for previously deadlocked deals with the co-operation of different constituents of the capital structure.

NOTEHOLDER CONSENT AND SUPPORT

In order for the Proposal to be implemented, the Borrowers require the consent of the Agent, the Senior Lender (the Issuer) and the Junior Lender pursuant to clause 33.3 of the Credit Agreement.  Prior to consenting to the Proposal and directing the Agent to enter into the Waiver Letter, the Issuer is seeking the approval of each class of Notes, by way of Extraordinary Resolutions.  The Extraordinary Resolutions require the approval of at least 75%. of Noteholders attending Meetings of each class of Notes.  The quorum for each Meeting is two or more persons holding or representing a majority of the aggregate principal amount outstanding of each class of Notes.

The Proposal has been reached through detailed discussions between the Borrowers, their advisors, the Consent Solicitation Agent, the Servicer, the Issuer and its advisors, the Junior Lender and certain Noteholders (such Noteholders being the "Consultation Group").  The Consent Solicitation Agent has been appointed by and acts for the Borrowers and the Issuer at the cost of the Borrowers to facilitate communications between the Borrowers and the Consultation Group in relation to the Proposal.

All Noteholders in the Consultation Group have indicated their in principle support for the Proposal, save for one Class A Noteholder that is continuing to further analyse the Proposal.  These Noteholders (excluding this single Class A Noteholder) represent approximately 50% of the Class A Notes in aggregate, in excess of 75% of the Class B Notes in aggregate, in excess of 70% of the Class C Notes, in excess of 75% the Class D Notes in aggregate and in excess of 75% of the Class E Notes in aggregate.

Following these discussions, the Borrowers have requested the Issuer to put the Proposal to all of the Noteholders for their formal approval at Meetings of each class of the Notes.  The Borrowers acknowledge that the Noteholders are not under any obligation to vote for or against the Proposal at their respective Meetings (or at all).

TERMS OF THE PROPOSAL

The Proposal comprises a waiver of the current and any future LTV Loan Event of Default for 22 months from the date of the waiver (the "LTV Waiver") until either the Interest Payment Date on 25 October 2012 or if an offer is accepted prior to that date, the date on which the Property or the Units are sold (the "Waiver Period").

In return for the LTV Waiver, the Borrowers and the Unitholders are committing to undertake a marketing and sales process with a view to a Property Sale or a Unit Sale during the Waiver Period.  Under a Property Sale all of the Senior Loan and Junior Loan will be repaid in full and swap break costs will be incurred on the prepayment (£42.3m at October 2010).  If a Property Sale occurs as a result of a direct sale of the property by the Borrowers, the buyer would also incur 4% Stamp Duty Land Tax.  On that basis the buyer may wish to complete the Property Sale by purchasing the Units and prepaying the debt and all hedging liabilities in full, thereby removing the need to pay SDLT.

It is also possible that purchasers may wish to avoid paying the significant break costs on the existing hedging arrangements and therefore may wish to keep the existing debt structure in place by acquiring the Units under a Unit Sale.  The Unit Sale would therefore prevent the significant value leakage that would occur while hedging costs remain high, but would become less likely (and a Property Sale would become more likely) as the swap break costs reduce by the effluxion of time or due to an increase in underlying swap rates.

In the case of a Property Sale, all the Secured Obligations (including the Senior Loan, the Junior Loan and any swap breakage costs) will have to be repaid in full, prior to any payment to the Unitholders.  In the case of a Unit Sale a minimum prepayment will have to be made (along with any swap breakage costs) to bring the Whole Loan LTV to at most 70%.  No sale will be permitted unless either of these two conditions is met.

The terms of the LTV Waiver require a sale of the Property or the Units in the event that an offer is received that results in a recovery of certain amounts of the Unitholders' original equity contribution.  From the 25 January 2011 until 25 October 2011, the recovery level at which the Unitholders will be obliged to sell will be 50% of the equity contribution.  From 25 October 2011 until the end of the Waiver Period, the recovery level will reduce to 33% of the equity contribution.  However, the Unitholders will retain the ability to accept a recovery below these levels, subject always to the Secured Obligations being repaid in full or (in the case of a sale of the Units) the minimum prepayment being made to delever the transaction such that the Loan to Value ratio will be no more than 70% LTV (at the whole loan level).

In addition to the commitment to sell the Property or the Units, the following additional terms are being proposed by the Borrowers:

Cash Trap

The Borrowers have agreed to continue to trap any excess cash flow that they would be entitled to under the pre-Loan Event of Default waterfall, subject to certain operational costs of the Borrowers and the Investment Manager being paid (such amounts being approximately £35,000 per quarter currently).  Such amounts will be paid into the GIC account (to be applied to prepay the Senior Loan).

Voluntary Prepayment from the GIC Account

Amounts standing to the credit of the GIC account will be applied to make a voluntary prepayment of the Senior Loan, subject to an amount of up to £250,000 being retained to cover Issuer, Servicer and Trustee costs in relation to the Proposal and a further £250,000 being retained in reserve to cover any unforeseen costs in the future.  The balance of the GIC account currently stands at approximately £16.5 million.

To ensure that the value leakage due to the swap break costs is reduced, the voluntary prepayment of the GIC monies will be made either when the swap breakage costs on the prepayment are less than 5% of the balance of the account or when the Property is sold.

Voluntary Prepayment Paydown Structure

To ensure that the Notes receive the benefit of any future voluntary prepayments (including the voluntary prepayment from the GIC account and any minimum voluntary prepayment arising from a sale of the Units), the Borrowers are committing to elect to make all voluntary prepayments on a sequential basis (so to the Senior Loan first), as currently permitted under the Intercreditor Agreement.  Any voluntary prepayments would then be applied as per the existing Note level priorities of payments (which we understand to be on a modified pro-rata basis as follows).

Modified Pro-rata Note Paydown Structure

Debt Class	Current Balance	50% Sequential	50% Pro-Rata	Pay down %
Class A	£286.0m	100%	67.4%	83.7%
Class B	£39.5m	0%	9.3%	4.7%
Class C	£44.4m	0%	10.5%	5.2%
Class D	£39.5m	0%	9.3%	4.7%
Class E	£14.8m	0%	3.5%	1.7%
Total Note	£424.2m	100.0%	100.0%	100.0%
Junior Loan	£24.4m	0%	0%	0%
Total Debt	£448.6m	100.0%	100.0%	100.0%

Waiver Fee

The Borrowers will pay a consent fee to all Noteholders who vote in favour of the Proposal at the Meetings (the "Waiver Fee").  The Waiver Fee will be 25bps if the sale occurs prior to 25 October 2011, rising to 50bps if the Property or Units are sold between 25 October 2011 and the end of the Waiver Period.

The amount of the Waiver Fee will be calculated on the outstanding principal balance of the Notes as at the date that the Waiver Letter is executed.  The Waiver Fee, will form part of the disposal costs arising from the sale of the Property or the Units and will only be payable upon the completion of a Property or Unit sale.

Limitation on purchasers of the Units

The Unitholders have committed to limit the parties to whom the Units will be sold to provide Noteholders with a degree of assurance as to the identity of any possible new Unitholders.  The permitted buyers are required to be (or in the case of an acquisition by an SPV, backed by):

•         A Sovereign Wealth Fund (including a stated related pension fund)

•         A recognised real estate investor or fund owning gross real estate assets in excess of £1.0 billion;

•         A fund managed by a recognised real estate fund manager with gross real estate assets under management in excess of £1.0 billion

•         A syndicate where one of the syndicate members represents no less than 25% of the interest in the Units will be one of the above

The sales process that will be undertaken will therefore be targeted at a select group of committed, experienced real estate investors.  Any potential buyer of the Units under a Unit Sale will have to make a significant financial investment (currently the costs, minimum voluntary prepayment and swap break costs on the prepayment is estimated at £134 million).  Such a commitment means that any new buyer under a Unit Sale would be heavily financially incentivised to refinance the remaining debt at loan maturity.

Summary

The Borrowers believe that the Proposal represents the best outcome for all interested parties.  The current uncertainty surrounding the Property, which is caused by the LTV Event of Default, will be addressed by the Proposal and the existing debt structure will have every chance of being repaid in full or significantly delevered.  The ratcheted sale obligation and Waiver Fee provide the Borrowers and the Unitholders with a clear economic incentive to agree a sale of the Property or the Units by 25 October 2011.

If at the end of the Waiver Period the Property or the Units have not been sold, the terms of the existing Transaction Documents that have been amended by the Waiver Letter will be reinstated (save for the sequential payment of Voluntary Prepayments) and the existing rights of the Lenders will be reinstated.

The terms of the Proposal are more fully set out in the Waiver Letter appended hereto (attached as schedule 2 to the Notice of Meeting).

SALE OF UNITS

The Borrowers wish to highlight the fact that under the existing transaction structure, the Unitholders already have the right to sell or transfer the Units, subject to the security over the existing Units being transferred to any new Unitholders and to satisfactory "Know Your Client" checks being completed.

The Unit sale in the Proposal therefore represents an existing right of the Unitholders that could be exercised irrespective of the existing LTV Loan Event of Default and has been included for the purposes of transparency under the terms of the Proposal.  However, under the Proposal, the Unitholders are providing additional concessions that are not currently required, namely:

•         The obligation to accept Unit offers above the stated levels, removing the ability to hold out for higher bids;

•         A restriction on the parties to whom the Units may be sold;

•         A commitment that under a Unit Sale the existing debt will be significantly delevered.

In the event that the LTV Waiver is not approved the existing right of the Unitholders to sell their Units will remain, but without the restrictions above.

AVAILABLE DOCUMENTS

PUBLIC NON-CONFIDENTIAL DOCUMENTS

A copy of an investor presentation (which for the avoidance of doubt has not been independently verified by the Consent Solicitation Agent, the Tabulation Agent, the Paying Agents, the Trustee, the Issuer, the Servicer or their legal advisers and none of them assumes any responsibility for the accuracy or completeness of such information) containing all the material disclosures made by the Borrowers to the Consultation Group (the "Cleansing Presentation" and, together with the Waiver Letter and the Notice of Meeting, the "Public Information") will be published on Bloomberg "REC5 A mtge CF <GO>" and available to view on-line at http://www.brookland.com/deal/REC5.

It should be noted that the Public Information will not have been independently verified by the Consent Solicitation Agent, the Tabulation Agent, the Paying Agents, the Trustee, the Issuer, the Servicer, the Instructing Agent or the Borrowers' legal advisers; accordingly, none of them will assume any responsibility for the accuracy or completeness of such information.

REQUESTED CONSENT

We have requested that the Issuer at our cost seek Noteholders' consent to the making of such amendments to the Transaction Documents as are necessary or desirable in order to permit the Agent on behalf of the Issuer and the Borrowers to enter into the Loan Amendment Documents and to take such other action as is necessary in order to implement the Loan Proposals as described in the Term Sheet.

Should the Extraordinary Resolutions be passed by the Noteholders at the Meetings, subject to conditions precedent in connection with the transactions contemplated by the Proposals having been delivered in satisfactory form and the Junior Lenders approving the Proposals, the Proposals will be implemented.

The Trustee has expressed no views to us on the Proposal or the Extraordinary Resolutions but has no objection to the Proposals or the Extraordinary Resolution being put to the Noteholders for their consideration.

VOTING AND MEETING

The Notice of Meeting explains what action you should take in order to vote in relation to the Extraordinary Resolution and the time and place of the Noteholders' meeting.

The Consent Solicitation Agent in relation to the Proposal is Brookland Partners LLP whom you should contact if you have any questions relating to the Proposal.  Contact details are as follows:

Chris Lees                                Nassar Hussain

[phone]                 [phone]

[e-mail]                  [e-mail]

The Tabulation Agent in relation to the Proposal is Bondholder Communications Group who you can contact either [phone] (contact:  Tara Fred) or by email to:  [e-mail].

Yours faithfully

MOURANT PROPERTY TRUSTEES LIMITED andMOURANT & CO. TRUSTEES LIMITED
(in their capacity as joint trustees of One Plantation Place Unit Trust)

Schedule 2

Waiver Letter

To:        N.M. Rothschild & Sons Limited (the "Agent")

            New Court, St. Swithin's Lane

            London

            EC4P 4DU

From:  Mourant Property Trustees Limited and Mourant & Co. Trustees Limited (in their capacity as joint trustees of One Plantation Place Unit Trust (the "Borrowers" or the "Trustees"))

            22 Grenville Street

            St. Helier

            Jersey

            JE4 8PX

            PP Investors Limited (the "Investment Manager" or "PPI")

            Dorey Court,

            St Peter Port,

            Guernsey,

            GY1 6HJ

[23] December 2010

Dear Sirs

Loan Event of Default Waiver Letter

Introduction

We refer to:

(a)         the £460,000,000 Credit Agreement dated 17 August 2006 between, amongst others, the Borrowers, N.M. Rothschild & Sons Limited as Agent, REC Plantation Place Limited (as "Senior Lender" and "Issuer"), Lloyds TSB Bank PLC (the "Junior Lender") and Capita Trust Company Limited as Borrower Security Trustee (the "Credit Agreement");

the Intercreditor Deed dated 17 August 2006 between, among others, the Borrowers, N.M. Rothschild & Sons Limited as Agent, the Senior Lender and the Junior Lender (the "Intercreditor Agreement");

the incorporated terms memorandum dated 17 August 2006 between, among others, the Borrowers, the Senior Lender, the Junior Lender and N.M. Rothschild & Sons Limited as Agent (the "Incorporated Terms Memorandum");

the notices issued by the Issuer in a notice to the holders of the Notes dated 6 August 2008 and on or about each Interest Payment Date thereafter which notification, in each case, provided that pursuant to Clause 15.1 (Loan to Value) of the Credit Agreement a breach of the Loan to Value Ratio and the Senior Loan to Value Ratio tests had occurred and that, for the purposes of Clause 19.5 (Breach of other undertakings) of the Credit Agreement, a Loan Event of Default had occurred;

letters addressed to the Agent from the Senior Lender and the Junior Lender giving consent to the Agent (as required pursuant to Clause 33.3 (Amendments) of the Credit Agreement) to waive the current Loan Event of Default (the "Letters of Direction");

copies of the extraordinary resolutions approved at Extraordinary General Meetings of each Class of the Notes directing the Issuer to enter into the Letter of Direction and therefore consenting to waive the current Loan Event of Default ("Extraordinary Resolutions"); and

a letter addressed to among others, the Borrowers and the Investment Manager and the Agent, dated [23] December 2010 from the Unitholders (acting severally and not jointly) contracting to undertake all actions necessary to implement the agreement contained in this Waiver Letter (the "Unitholder Side Letter").

Unless otherwise defined or the context otherwise requires, terms defined in the Incorporated Terms Memorandum and the Credit Agreement shall have the same meaning in this agreement.

The Agent and the Investment Manager hereby designate this agreement as a "Finance Document".

Continuing Loan Event of Default

As at the Interest Payment Date on 25 October 2010, the Valuation obtained by the Agent pursuant to Clause 18.5 (Valuations) of the Credit Agreement valued the Property at £456 million as at 30 September 2010.

Consequently as at the Interest Payment Date on 25 October 2010, the Senior Loan to Value Ratio exceeds the level permitted under paragraph (a) of Clause 15.1.1 of the Credit Agreement, and the Loan to Value Ratio exceeds the level permitted under paragraph (b) of Clause 15.1.1 of the Credit Agreement.  As a result, a Loan Event of Default is continuing under Clause 19.5 (Breach of other undertakings) of the Credit Agreement (the "LTV Event of Default").

Power to Waive LTV Event of Default

Pursuant to Clause 33.3 (Amendments) of the Credit Agreement the Agent, with the prior written consent of the Senior Lender and the Junior Lender, may amend any Finance Document or grant its consent to or waive any of the requirements of any of the Finance Documents.

Proposal to sell the Property or Units subject to certain conditions

The parties have agreed terms for a waiver of the LTV Event of Default (the Event of Default Waiver, as defined below).  In return for the Event of Default Waiver, the Borrowers and the Investment Manager (acting on behalf of the Unitholders) have agreed to use reasonable endeavours to sell the Property or the Units, subject to the terms set out in Clauses 7 or 8 below.

The terms on which the Lenders are being asked to grant the Event of Default Waiver require certain waivers of the terms and conditions of the Credit Agreement, which require the consent of both the Senior Lender (the Issuer) and the Junior Lender.  These consents have been provided via the Letters of Direction. 

In order for the Senior Lender to provide its Letter of Direction to the Agent, the Issuer has obtained directions in the form of Extraordinary Resolutions from each Class of the Notes to implement the waivers, modifications and amendments set out herein.

Waiver of Loan Event of Default

The Agent, acting with the consent of the Senior Lender and the Junior Lender, hereby waives, subject to the conditions set out in Clause 7 and Clause 8 below, the LTV Event of Default and any future Loan Events of Default under Clause 19.5 (Breach of other undertakings) of the Credit Agreement in relation (and limited) to any breach of the Senior Loan to Value Ratio and/or the Loan to Value Ratio covenant under Clause 15.1 (Loan to Value) of the Credit Agreement currently outstanding or that may arise from the date of this agreement (the "Event of Default Waiver") until (i) if an Appropriate Property Offer (as defined in Clause 7) or an Appropriate Units Offer (as defined in Clause 8) has been accepted by the Investment Manager on or prior to the Interest Payment Date on 25 October 2012, the date on which the sale of the Property or the Units is completed or (ii) if no Appropriate Property Offer or Appropriate Units Offer has been accepted by the Investment Manager on or before the day immediately preceding the Interest Payment Date on 25 October 2012, the day immediately preceding the Interest Payment Date on 25 October 2012 (the "Waiver Period").

The Event of Default Waiver shall not apply to other Loan Events of Default that may occur pursuant to Clause 19 (Loan Events of Default) of the Credit Agreement other than in respect of any breach of the Senior Loan to Value Ratio and/or the Loan to Value Ratio covenant under Clause 15.1 (Loan to Value) of the Credit Agreement.

Nothing in this Clause 5 will affect the rights of any Lender or the Agent in respect of any Loan Event of Default under Clause 19 (Loan Events of Default) of the Credit Agreement, subject to Clause 5.1 above that may be continuing upon or may occur following expiry of the Waiver Period, irrespective of whether or not that Loan Event of Default occurred during the Waiver Period.

Waiver of quarterly Valuation requirement

During the Waiver Period, the Agent, acting with the consent of the Senior Lender and the Junior Lender, hereby waives the requirement for the Borrowers to procure delivery to the Agent of a quarterly desktop Valuation under Clause 18.5.1 (Valuations) of the Credit Agreement (the "Quarterly Valuation Waiver" and together with the Event of Default Waiver, the "Waiver").

Notwithstanding the Quarterly Valuation Waiver, the Borrowers shall continue to be required to procure delivery of a desktop Valuation to the Agent dated as at the end of September of each year at least five Business Days prior to each Interest Payment Date falling in October of each year during the Waiver Period.  In this agreement "Business Days" means days (other than Saturdays and Sundays) upon which banks are open for general business in London, Dublin, New York, Jersey and Guernsey.

Sale of the Property and Selling Obligations

In this section, the following definitions will apply:

Appropriate Property Offermeans an offer in writing received by the Investment Manager to purchase the Property.  Such offer must, in the reasonable opinion of the Investment Manager, be from a credible purchaser, be capable of being completed within 6 months of receipt of such offer and include demonstrable proof of committed funding and not require the Investment Manager or any Unitholder to give any representation, warranty, covenant, undertaking or indemnity (or incur any other liability) to the purchaser in relation to the sale of the Property.

Net Property DisposalProceeds means the consideration received in cash by the Borrowers in relation to the sale of the Property less:

any reasonable expenses, costs and fees which are properly incurred in relation to the sale (such amounts to be approved by the Agent, acting reasonably);

the Waiver Fee; and

any tax required to be paid in relation to the sale.

Net Equity Contributionmeans the total equity invested by the Unitholders to the Unit Trust and PPI (whether by way of loan or subscription for units or shares) less any payments received by the Unitholders in the form of dividends or other distributions, such amount to be certified by the Borrowers or the Investment Manager to the Agent within 5 Business Days of the date of this agreement.

The Investment Manager will use reasonable endeavours to market the Property in a manner appropriate to the Property and the current market conditions for properties of a similar size and nature (including having regard for swap rates, and their impact on any swap breakage costs associated with any sale of the Property) during the Waiver Period with a view to maximising Net Property Disposal Proceeds, except that, in order to allow time for the Investment Manager to fully prepare for the orderly marketing of the Property, the Investment Manager shall not be obliged to commence marketing until the Interest Payment Date falling on 25 January 2011.

During the period from the Interest Period commencing on 26 January 2011 to the end of the Interest Period ending on 25 October 2011, the Investment Manager will direct the Borrowers to, and the Borrowers shall, sell the Property if it receives an Appropriate Property Offer to acquire the Property such that the Net Property Disposal Proceeds are sufficient to result in a payment to the Borrowers of at least 50 per cent. of the Net Equity Contribution, after repayment of all outstanding Secured Obligations (including all amounts due to the Interest Rate Swap Counterparty, the Senior Lender and the Junior Lender (including any swap break costs in relation to the Junior Loan)) and any costs, in accordance with Clause 8.1 (Mandatory Prepayment) of the Credit Agreement, the Borrowers Pre-Enforcement Priority of Payments and the Intercreditor Pre-Default Priority of Payments.

During the period from the Interest Period commencing on 26 October 2011 to the end of the Interest Period ending on 25 October 2012, the Investment Manager will direct the Borrowers to, and the Borrowers shall, sell the Property if it receives an Appropriate Property Offer to acquire the Property such that the Net Property Disposal Proceeds are sufficient to result in a payment to the Borrowers of at least 33.3 per cent. of the Net Equity Contribution, after repayment of all outstanding Secured Obligations (including all amounts due to the Interest Rate Swap Counterparty, the Senior Lender and the Junior Lender (including any swap break costs in relation to the Junior Loan)) and any costs, in accordance with Clause 8.1 (Mandatory Prepayment) of the Credit Agreement, the Borrowers Pre-Enforcement Priority of Payments and the Intercreditor Pre-Default Priority of Payments.

The Investment Manager will, in its absolute discretion, be entitled to direct the Borrowers to accept any Appropriate Property Offer where the Net Property Disposal Proceeds received are less than the levels set out in Clause 7.3 or 7.4, provided that the Net Property Disposal Proceeds are sufficient to repay the Secured Obligations in full (including all amounts due to the Interest Rate Swap Counterparty, the Senior Lender and the Junior Lender (including any swap break costs in relation to the Junior Loan)) and any costs1, in accordance with Clause 8.1 (Mandatory Prepayment) of the Credit Agreement, the Borrowers Pre-Enforcement Priority of Payments and the Intercreditor Pre-Default Priority of Payments.

The Investment Manager shall not be permitted to accept any offer to buy the Property that is not an Appropriate Property Offer.

Sale of Units and Selling Obligations

In this section, the following definitions will apply:

Appropriate Units Offermeans an offer in writing received by the Investment Manager (acting on behalf of the Unitholders) to purchase all but not some of the Units.  Such offer must, in the reasonable opinion of the Investment Manager, be from a Permitted Purchaser, be capable of being completed within 6 months of receipt of such offer and have demonstrable proof of committed funding and not require the Investment Manager or any Unitholder to give any representation, warranty, covenant, undertaking or indemnity (or incur any other liability) to the purchaser in relation to the sale of the Units, save for warranties given (i) as to each Unitholder's title to the Units and/or its capacity to enter into the sale documents; (ii) severally and not jointly, (iii) with a liability period not exceeding two years, and (iv) with a total liability cap not exceeding the sale price for such Units.

Net Equity Contributionmeans the total equity invested by the Unitholders to the Unit Trust and PPI (whether by way of loan or subscription for units or shares) less any payments received by the Unitholders in the form of dividends or other distributions, such amount to be certified by the Borrowers or the Investment Manager to the Agent within 5 Business Days of the date of this agreement.

Net Unit Disposal Proceeds means the consideration received in cash by the Unitholders or the Investment Manager on behalf of the Unitholders in relation to the sale of the Units less:

any reasonable expenses, costs and fees which are properly incurred in relation to the sale (such amounts to be approved by the Agent, acting reasonably);

the Waiver Fee;

any tax required to be paid in relation to the sale; and

to the extent that the Unitholders or any of their affiliates or subsidiaries retain an economic or ownership interest in the Property following a sale of the Units, certain contingent fees of the Borrowers' financial advisors.

Minimum Voluntary Prepaymentmeans a voluntary prepayment under clause 8.5 (Voluntary Prepayment) of the Credit Agreement sufficient to prepay the Senior Loan (after payment of any senior ranking costs, including any swap breakage costs) such that the Loan to Value Ratio shall not be more than 70 per cent. immediately following such Minimum Voluntary Prepayment and such that the Senior Loan to Value Ratio shall not be more than 65 per cent. immediately following such Minimum Voluntary Prepayment.  For the purposes of calculating the Loan to Value Ratio and Senior Loan to Value Ratio above, the amounts set out in Clause 13.1(c) shall be assumed to have been paid.  The Borrowers shall procure that a desktop valuation in form and substance satisfactory to the Agent, issued by the Valuer and dated on or about the date of the Appropriate Units Offer will be delivered to the Agent as soon as reasonably practicable after receipt of the Appropriate Units Offer by the Investment Manager solely for the purposes of calculating the Loan to Value Ratio and Senior Loan to Value Ratio in the context of such Minimum Voluntary Prepayment, unless such a valuation or a Valuation under Clause 6.2, has been delivered to the Agent within the previous three months of receipt of an Appropriate Units Offer, in which case such prior valuation shall be used for the purposes of calculating the Loan to Value Ratio and the Senior Loan to Value Ratio for the Minimum Voluntary Prepayment.  For the avoidance of doubt, such valuation shall not be used for the purposes of calculating the Loan to Value Ratio or Senior Loan to Value Ratio under Clause 15.1 (Loan to Value) of the Credit Agreement.

Permitted Purchasershall have the definition given to it in Schedule 1.

The Investment Manager (acting on behalf of the Unitholders) will use reasonable endeavours to market the Units in a manner appropriate to the Units, the Property, the existing debt and hedging structure (including having regard for swap rates, and their impact on any swap break costs associated with any sale of the Units) and the current market conditions during the Waiver Period with a view to maximising Net Unit Disposal Proceeds, except that, in order to allow time for the Investment Manager to fully prepare for the orderly marketing of the Units, the Investment Manager shall not be obliged to commence marketing until the day following the Interest Payment Date on 25 January 2011.

During the period between the Interest Period commencing on 26 January 2011 and the end of the Interest Period ending on 25 October 2011, the Investment Manager (acting on behalf of the Unitholders) shall be obliged to direct the Unitholders to sell all (but not less than all) the Units (and each Unitholder shall (severally and not jointly) be obliged to sell, pursuant to the Unitholder Side Letter) if it receives an Appropriate Units Offer to acquire the Units such that the Net Unit Disposal Proceeds are sufficient to result in a payment to the Unitholders (after making the Minimum Voluntary Prepayment and relevant costs ) of at least 50 per cent. of the Net Equity Contribution.

During the period from the day following the Interest Payment Date falling on 25 October 2011 to the Interest Payment Date on 25 October 2012, the Investment Manager (acting on behalf of the Unitholders) shall be obliged to direct the Unitholders to sell all (but not less than all) the Units (and each Unitholder shall (severally and not jointly) be obliged to sell, pursuant to the Unitholder Side Letter) if it receives an Appropriate Units Offer to acquire the Units such that the Net Unit Disposal Proceeds are sufficient to result in a payment to the Unitholders (after the making the Minimum Voluntary Prepayment, and payment of relevant costs) of at least 33.3 per cent. of the Net Equity Contribution.

The Investment Manager (acting on behalf of the Unitholders) shall not be permitted to direct the Unitholders to sell the Units and nor shall each Unitholder be permitted to sell all (but not less than all) of their Units (pursuant to the Unitholder Side Letter) unless the Net Unit Disposal Proceeds are sufficient to make the Minimum Voluntary Prepayment (if necessary) upon sale of the Units.  The Unitholders and/or Investment Manager (acting on behalf of the Unitholders) will, in their absolute discretion, have the option to accept any Appropriate Units Offer where the Net Unit Disposal Proceeds received are less than the levels set out in Clause 8.4 or 8.5 (as applicable), provided that the Net Unit Disposal Proceeds are sufficient to make the Minimum Voluntary Prepayment, if necessary and all Units are sold.

Neither the Investment Manager nor any Unitholder shall be permitted to accept any offer to buy the Units that is not an Appropriate Units Offer, pursuant to the Unitholder Side Letter.

The Borrowers and the Investment Manager shall procure (and each Unitholder shall (severally and not jointly) procure, pursuant to the Unitholder Side Letter) that, on the completion of the sale of all of the Units pursuant to an Appropriate Units Offer, the Minimum Voluntary Prepayment and any swap break costs arising from the Minimum Voluntary Prepayment is made out of the Net Unit Disposal Proceeds, in accordance with Clause 8.5 (Voluntary Prepayments) of the Credit Agreement, the Borrower Pre-Enforcement Priority of Payments and the Intercreditor Pre-Default Priority of Payments.

Termination of obligation to market and sell on acceptance of offer

Once an Acceptable Property Offer or an Acceptable Units Offer is accepted, for so long as the Investment Manager is working diligently to complete the transaction pursuant to such offer, it will not be required to market the Property or the Units or to consider other offers.

In the event that the Investment Manager (acting on behalf of the Borrowers) completes a sale of the Property the obligation to sell the Units under Clause 8 will be terminated.

In the event that the Investment Manager (acting on behalf of the Unitholders) completes a sale of the Units, the obligation to sell the Property under Clause 7 will be terminated.

Obligation to Notify Agent of Bids and Agent Verification

For the duration of the Waiver Period the Investment Manager shall be obliged to notify the Agent of any Appropriate Property Offer or any Appropriate Units Offer within 5 Business Days of receipt of such offer and shall (subject to the Agent entering into appropriate confidentiality undertakings) be obliged to deliver a certificate setting out the details of such Appropriate Property Offer or Appropriate Units Offer to the Agent and the Independent Verification Agent (as defined below).  Such certificate shall set out the calculation of the Net Property Disposal Proceeds or Net Unit Disposal Proceeds (as appropriate), the return on Net Equity Contribution and, in the case of an Appropriate Units Offer, the calculation of the Minimum Voluntary Prepayment.

On receipt of any Appropriate Property Offer certificate or any Appropriate Units Offer certificate pursuant to Clause 10.1, an independent auditing firm (the "Independent Verification Agent"), appointed by the Agent shall confirm the calculation of the Net Property Disposal Proceeds or Net Unit Disposal Proceeds (as applicable), the return on Net Equity Contribution and, if applicable, the Minimum Voluntary Prepayment for the purposes of Clauses 7 and 8.  Such confirmation shall be reported to the Noteholders and the Junior Lender on a quarterly basis by the Agent.

For the duration of the Waiver Period the Investment Manager shall be obliged to provide the Agent with a quarterly report setting out the progress and activity in relation to the marketing of the Property and the Units.

Payments following the Waiver

With effect from the date of this agreement, until the earliest to occur of the date on which the Property or the Units are sold or the end of the Waiver Period, the Borrowers agree to pay all amounts that are payable to it under item (j) of the Intercreditor Pre-Default Priority of Payments in the following order of priority: 

(a)         first, in or towards payment of certain operating expenses of the Trust and the Investment Manager, (such operating expenses shall be subject to the review and approval of the Agent, such approval not to be unreasonably withheld), including:

Quarterly Trust (as defined in Clause 16.2 below) administration fees up to a maximum of £50,000 per annum;

Quarterly Investment Manager administration fees up to a maximum of £50,000 per annum;

Annual audit fees of both the Trust and the Investment Manager up to a maximum of £35,000 per annum;

Statutory company fees payable in Guernsey relating to the Investment Manager up to a maximum of £5,000 per annum;

General legal and building survey advice costs of up to £2,500 per quarter;

Fees in relation to the annual Valuation and any valuation used to calculate the Minimum Valuation Prepayment set out per Clause 8.1 up to a maximum of £120,000 per annum; and

Fees and expenses associated with tenant rent reviews, and amounts required to be paid by the Borrowers under any carbon reduction commitment programmes (and which are not otherwise recovered from tenants under the terms of the relevant leases); and

second, to the GIC Account.

The Borrowers will from the date of this agreement elect to pay any voluntary prepayments (in particular the Minimum Voluntary Prepayment resulting from a sale of the Units and any voluntary prepayment pursuant to Clause 13.1 below) on a sequential basis, as permitted pursuant to Clause 11.3 (Application of voluntary prepayments) of the Intercreditor Agreement.

Waiver Fee

The Junior Lender and each Noteholder who has voted in favour of the Extraordinary Resolutions (each a "Consenting Party") shall be entitled to a fee if the Property or any of the Units are sold during the Waiver Period (the "Waiver Fee").

The Waiver Fee shall be calculated as:

if the Units or Property are sold on or between the date that the Waiver becomes effective and 25 October 2011, 0.25 per cent. of the outstanding principal amount of each of the Notes and the Junior Loan as at the date of the Waiver held by each Consenting Party, and each Consenting Party shall be entitled to its share of such Waiver Fee, based upon the principal amount of the Notes (or Junior Loan) that it held at the date of the Waiver; or

if the Units or Property are sold between 25 October 2011 and the end of the Waiver Period, 0.50 per cent. of the outstanding principal amount of each of the Notes and the Junior Loan as at the date of the Waiver held by each Consenting Party, and each Consenting Party shall be entitled to its share of such Waiver Fee, based upon the principal amount of the Notes (or Junior Loan) that it held at the date of the Waiver.

The Waiver Fee shall be paid to each Consenting Party by the Borrowers or the Investment Manager upon completion of the sale of the Property or the Units (as applicable) irrespective of whether they hold the Notes or the Junior Loan at the time the fee is payable.  The Waiver Fee will be deducted from the gross disposal proceeds of the Property or the Units in calculating Net Property Disposal Proceeds or Net Unit Disposal Proceeds (as applicable).

GIC Account Prepayment

The conditions to the release to the Borrowers of amounts under clause 15.1.4 of the Credit Agreement having been satisfied, the Borrowers hereby directs the Agent to apply all amounts standing to the credit of the GIC Account on the date that the Waiver becomes effective and all other amounts accruing in the GIC Account pursuant to Clause 11.1(b) hereof (the "GIC Amount"), as follows:

(a)         On the date that the Waiver becomes effective, the Agent shall be entitled to transfer up to £250,000 of the GIC Amount to the Tranching Account to pay the reasonable out of pocket costs of the Issuer, the Loan Servicer, the Agent, the Junior Lender and the Note Trustee in relation to the Waiver;

An amount of £250,000 to be retained in the GIC Account to pay the reasonable ongoing out of pocket expenses of the Issuer, the Loan Servicer, the Agent, the Junior Lender and the Note Trustee; and

The remainder of the GIC Amount (the "Net GIC Amount") shall be applied to make a voluntary prepayment of the Senior Loan in accordance with Clause 8.5 (Voluntary Prepayments) of the Credit Agreement and to pay any Break Costs due to the Interest Rate Swap Counterparty as a result of such voluntary prepayment on the earliest to occur of (i) the date of completion of a sale of the Property as a result of the acceptance of an Acceptable Property Offer, (ii) the Interest Payment Date immediately following the date upon which the Agent certifies to the Borrowers that the Break Costs arising as a result of the proposed voluntary prepayment will be less than 5% of the Net GIC Amount and (iii) the Final Repayment Date or the date on which the Loan is due and payable if sooner.

For the avoidance of doubt, the Agent may not use the GIC Amount for any other purpose other than that set out in this Clause 13.

Breach of Waiver Letter Conditions

In the event that the Borrowers or the Investment Manager fails to perform or comply with any undertaking assumed by it hereunder (or, as regards the Borrowers, under any Finance Document to which they are a party) and if non-performance or non-compliance is capable of remedy, it is not remedied to the satisfaction of the Agent within 10 Business Days after the Agent has given notice to the Borrowers and the Investment Manager of such non-performance or non-compliance or the date on which either the Borrowers or the Investment Manager becomes aware of such non-performance or non-compliance, the Waiver Period shall terminate and the provisions of this agreement shall no longer be operable.

Any non-performance or non-compliance of the Investment Manager set out in clause 14.1 shall be deemed to be non-performance or non-compliance of the Borrowers under this Waiver Letter.

Any non-performance or non-compliance of any Unitholder under the terms of the Unitholder Side Letter shall be deemed to be non-performance or non-compliance of the Borrowers or the Investment Manager under this Waiver Letter.

Exoneration and Indemnity

The Agent will be discharged and exonerated from all liabilities arising from or in connection with the Waiver and the associated terms and conditions set out in this agreement or their implementation (including, without limitation, any amendments agreed by any party to any of the documents for the purposes of implementing the Waiver), unless such liabilities are caused by its gross negligence, fraud or wilful default.

The Borrowers shall on demand, keep the Agent and any of its respective affiliates fully and effectually indemnified from and against all actions, losses, claims, proceedings, costs, demands and liabilities which may be suffered or incurred by any of them in connection with the Waiver and the associated terms and conditions set out in this agreement or their implementation (including, without limitation, any amendments agreed by any party to any of the documents for the purposes of implementing the Waiver).

Miscellaneous

Save as required to permit enforcement by a Consenting Party of the provisions of clause 12, no person who is not a party to this agreement shall have any right by virtue of the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this agreement.

The Trustees are entering into this agreement solely in their capacity as trustees of the One Plantation Place Unit Trust (the "Trust") and, as such, any liability on the part of the Trustees pursuant to this agreement or arising as a result of any part of this agreement is limited by the assets held on trust for the time being of the Trust which are in their possession or under their control as trustees of the Trust.  The parties hereto acknowledge that the effect of this clause is that they shall have no recourse to any assets of the Trustees other than to those assets which are in the possession and/or control of the Trustees of the Trust.

agreement may be executed in a number of counterparts, (and signature pages may be delivered by facsimile or email) which shall together constitute an agreement.  Each party to this agreement may enter into this agreement by executing a counterpart and this agreement shall not take effect until it has been executed by all parties.

Yours faithfully,

Mourant Property Trustees Limited and Mourant & Co. Trustees Limited (in their capacity as joint trustees of One Plantation Place Unit Trusts, PP Investors Limited

Signature Blocks for PPI and Borrowers

Accepted and agreed this     day of December 2010

N.M. Rothschild & Sons Limited

Signature Block for NMR

Schedule 1:  Permitted Purchaser

A Permitted Purchaser means either

(a)         a Permitted Investor; or

a Permitted Syndicate; or

a special purpose entity, sponsored by either a Permitted Investor or a Permitted Syndicate.

Permitted Investor means a person who is not a Prohibited Person (in the reasonable opinion of the Agent) and is one of the following:

A state owned or sponsored investment fund (including a state related pension fund); or

A recognised real estate investor or fund owning gross real estate assets in excess of £1.0 billion as at the date of the Appropriate Units Offer, to be certified by such investor to the Borrowers and the Agent; or

A fund managed by a recognised real estate fund manager with gross real estate assets under management in excess of £1.0 billion as at the date of the Appropriate Units Offer, to be certified by such investor to the Borrowers and the Agent.

Permitted Syndicatemeans a group of persons, none of whom is a Prohibited Person (in the reasonable opinion of the Agent) and at least one of whom is a Permitted Investor and who shall acquire not less than 25% of the Units or an interest in not less than 25% of the Units (if the Permitted Purchaser is a special purpose entity in (c) above)

Prohibited Personsmeans a person (or a person who is an Associate of a person falling within categories (II) through (VI) below) who, in the reasonable opinion of the Agent:

I.         does not have sufficient financial resources and liquidity to make the proposed investment;

II.        may use funds that are derived from illegal or illegitimate activities for such investment;

III.       is, in the good faith opinion of the Agent, of disreputable character, or has been convicted of a criminal offence punishable by (i) imprisonment of one year or more, and/or (ii) payment of a fine or penalty of fifty thousand pounds sterling (or the equivalent thereof in another currency) or more;

IV.       (i) is under investigation by any governmental authority for, or has been charged with or convicted of, money laundering, drug trafficking, terrorist-related activities, or other money laundering crimes or a violation of any bank secrecy laws or regulations; (ii) has been assessed civil penalties under these or related laws; or (iii) has had its funds or other assets seized or forfeited in an action under these or related laws;

V.       is or shall be named on the Consolidated List of Terrorists (the "Consolidated List") maintained by the Bank of England pursuant to any authorising statute, Statutory Instrument, regulation or guideline;

VI.       is otherwise in breach of (or prohibited from making the proposed investment pursuant to) any applicable law or requirements of any country or governmental authority (including any exchange control regulations applicable thereto).

Schedule 3

Issuer Letter of Direction

REC Plantation Place Limited

Ogier House

The Esplanade

St Helier

Jersey JE4 9WG

LETTER OF DIRECTION

N.M. Rothschild & Sons Limited (the "Agent")

New Court, St. Swithin's Lane

London

EC4P 4DU

[•] December 2010

Dear Sirs

Letter of Direction relating to the Credit Agreement (as defined below)

We refer to credit agreement relating to Plantation Place, 30 Fenchurch Street, London EC3 dated 17 August 2006 made between inter alios, REC Plantation Place Limited (the "Issuer"), Mourant Property Trustees Limited and Mourant & Co. Trustees Limited (in their capacity as joint trustees of One Plantation Place Unit Trust) (the "Borrowers") and the Agent (the "Credit Agreement").

Unless otherwise defined herein, terms used in this letter shall have the meanings given to them in the Credit Agreement (herein referred to as the "Issuer", "our", "us", or "we").

We further refer to:

(a)         the waiver letter to be entered into by the Agent, the Borrowers and PP Investors Limited (as Investment Manager), on or about the date hereof and substantially in the form set out in Schedule 1 hereto (the "Waiver Letter");

the extraordinary resolutions passed at meetings of Noteholders of each Class of Notes on or about the date hereof which, among other things, directs, assents and authorises the entry into of a letter of direction by the Issuer whereby the Issuer may direct the Agent to enter into the Waiver Letter (the "Extraordinary Resolution"); and

Clause 33.3.11 (Amendments, approvals, consents and actions requiring consent of all Lenders) of the Credit Agreement which requires the consent of the Issuer and the Junior Lender for the Agent to give its consent or approval to any change to the maximum Loan to Value Ratio set out in Clause 15.1 (Loan to Value) of the Credit Agreement.

In accordance with the Extraordinary Resolution and Clause 33.3.11 (Amendments, approvals, consents and actions requiring consent of all Lenders) of the Credit Agreement, we hereby give our consent to the Agent to enter into the Waiver Letter on or about the date hereof.

This letter and any non-contractual obligations arising in connection with this letter shall be governed by English law.

Yours faithfully

________________________________

REC Plantation Place Limited

 

END

 

 

MSCLLFEDFALLIII