Proposed Acquisition etc

Property & Capital Group PLC
21 January 2000


Property & Capital Group PLC ('Property & Capital')

PROPOSED ACQUISITION OF PCG RESIDENTIAL LETTINGS HOLDINGS PLC ('PCG')

REVERSE TAKEOVER; RELATED PARTY TRANSACTION

1.  THE PROPOSED ACQUISITION

Property & Capital today announces its intention, subject to approval of the
holders of the Existing Ordinary Shares at an Extraordinary General Meeting
('EGM') to be held at 10am on 8 February 2000, to acquire the whole of the
issued share capital of PCG in consideration for the issue of 28,656,876 New
Ordinary Shares ('the Proposed Acquisition').  Resolution 1 and Resolution 2
to be proposed at the EGM are set out below.  No finance is being raised or
repaid in relation to the Proposed Acquisition.

2.  GENERAL AND FINANCIAL EFFECTS AND BENEFITS OF THE PROPOSED ACQUISITION

Property & Capital Group will increase from being a group of companies with
gross assets of approximately £16 million (as stated in the Half-Yearly Report
of Property & Capital as at 31 October 1999) to a group with gross assets of
approximately £76 million (subject to sales of assets in the meantime).  

Background to the Acquisition:

During 1999, Property & Capital has acquired a number of residential property
investment companies.  The largest, in terms of gross assets, has been Raven
(Fulham) Limited (now PCG Fulham Limited) which at the date of the original
acquisition owned 29 flats in a  modern development on the north bank of the
Thames at Fulham.  This acquisition was followed by the acquisition of two
former Business Expansion Scheme ('BES') companies, the properties of which
comprised 122 flats and houses primarily in Manchester and the north of
England.  These are held by a subsidiary, PCG Residential PLC.  More recently,
34 flats and houses mainly in Glasgow are in the process of being bought by
another subsidiary, PCG Residential Lettings (No.5) Limited.  An offer for a
further BES company, Paragon Protected Growth PLC, is currently open.  Since
31 October 1999, Property & Capital has exchanged contracts for, but not
completed, the sale of 7 flats in Manchester at a price of £675,000 and has
completed the sale of one, and exchanged contracts for the sale of 27 flats in
Fulham at an aggregate price of £9.987 million.

Throughout 1999, PCG has also acquired former BES companies, namely Unchained
Growth VI PLC, Unchained Growth VII PLC and Unchained Growth VIII PLC, between
them holding 182 flats and houses, built in the 1990's and spread throughout
the United Kingdom.  The other and largest acquisition made by PCG has been
the nine 'A Priori Growth' BES companies consisting of 891 flats and houses
being a mixture of formerly repossessed properties of Britannia Building
Society and other lenders and 1990's new-build properties, again with a wide
geographical spread.  Since 8 November 1999, PCG has exchanged contracts for,
and completed, the sale of 1 property in Kingsteignton at a price of £67,950. 

The Provisional Benefits and Effects of the Proposed Acquisition to Property &
Capital:

a)  Revenue

Gross revenue of Property & Capital Group should increase by the amount of
rental achieved from the Properties.  It should be noted, however, that the
PCG Group does have substantial borrowings and interest payments require to be
met from rental payments.

b)  Overheads

The current staff number of Property & Capital are capable of managing the
combined portfolio.

c)  The Benefit of Size

The Proposed Acquisition will increase the size of the property portfolio of
Property & Capital. This has relevance in a number of areas.  To be an
important 'player' in the residential property sector, your Board believes
that it is necessary to have a property portfolio of a substantial size.  Such
a portfolio should allow Property & Capital to be seen as a major force in
this sector positioning Property & Capital to be able to take advantage of
future profitable opportunities and make acquisitions with potential uplift in
value, while at the same time allowing controlled disposals to be made - in
order to rationalise the portfolio and reduce gearing.  These would be made
from a portfolio geographically spread, thereby enabling Property & Capital to
take advantage of favourable local market conditions.  In addition, Property &
Capital will benefit from increased negotiating power with third parties. 
Considered disposals and further acquisitions will be an ongoing strategy.

3.  THE EFFECT OF THE PROPOSED ACQUISITION ON THE PROPERTY & CAPITAL
SHAREHOLDER BASE

RHK Nominees Limited, on behalf of the Adair Trusts 1984, holds 968,675
Existing Ordinary Shares (representing 24.52 per cent of the issued share
capital of Property & Capital as at the date of this announcement).  Robert
Adair, Chairman of Property & Capital, is interested in each of the Adair
Trusts 1984.  In addition, 3,750 Existing Ordinary Shares (representing 0.10
per cent of the issued share capital of Property & Capital as at the date of
this announcement) are held by Teawood Nominees Limited on behalf of the
spouse of Robert Adair, Lucy Adair.  Therefore Robert Adair and parties acting
in concert with him hold 972,425 Existing Ordinary Shares (representing 24.61
per cent of the issued share capital of Property & Capital as at the date of
this announcement).

Under the terms of the Proposed Acquisition 28,656,876 New Ordinary Shares
(representing 87.88 per cent. of the issued share capital of Property &
Capital as enlarged by the Proposed Acquisition) will be issued to Rysaffe
Nominees (C.I.) Limited, as nominee on behalf of the Adair Trusts 1994. 
Robert Adair is interested in each of the Adair Trusts 1994.  Therefore, 
Robert Adair and parties acting in concert with him will hold, if the Proposed
Acquisition is approved by the Shareholders in Property & Capital at the EGM
on 8 February 2000, 29,629,301 Shares (representing 90.87 per cent of the
issued share capital of Property & Capital as enlarged by the Proposed
Acquisition).

Any person, or group of persons acting in concert, acquiring shares carrying
30 per cent. or more of the voting rights of a public company is normally
required, pursuant to Rule 9 of the City code on Takeovers and Mergers, to
make a general offer in cash to all shareholders.  However, in this instance,
the Panel on Takeovers and Mergers has agreed to waive this requirement if
Resolution 2 to be proposed at the EGM, approving the Proposed Acquisition, is
approved by independent Shareholders on a poll at the EGM.

4.  INFORMATION ON PCG

PCG was incorporated in England and Wales on 23 June 1999 with company number
3797257 and has its registered office at No 1 Portland Place, London, W1N 3AA.
The entire issued share capital is registered in the name of Rysaffe Nominees
(C.I.) Limited (a Guernsey company) as nominee for the Adair Trusts 1994.  The
authorised share capital of the company is £50,000 divided into 50,000 shares
of £1 each, all of which are issued and fully paid.

PCG has no employees. In the past, Property & Capital has been carrying out
substantial services to PCG, for payment on commercial terms.

5.  FINANCIAL INFORMATION ON PCG

The value of the net tangible assets of PCG, arrived at from its unaudited
balance sheet at 8 November 1999, is £10.714 million.  The Properties of PCG
were independently assessed to have an aggregate open market vacant possession
value of £54.693 million at 8 November 1999.   In the period from 23 June 1999
to 8 November 1999, PCG made a loss before taxation of £70,000.

6.  INFORMATION ON ROBERT ADAIR AND PARTIES ACTING IN CONCERT

Rysaffe Nominees (C.I.) Ltd, RHK Nominees Ltd and Teawood Nominees Ltd are
nominee companies only.  The Adair Trusts are as specified in the Appendix
hereto.  The principal businesses in which Robert Adair is interested are
Terrace Hill Holdings Ltd (manufacturing heating and ventilating equipment),
Westview Group Ltd. (property development and investment), Melrose Resources
plc (oil and gas exploration and production) and PCG.  Robert Adair is also
chairman of Property & Capital.

7.  INTENTIONS IN RESPECT OF PROPERTY & CAPITAL

Property & Capital  intends to hold the PCG Group as part of an enlarged
Property & Capital Group, and to manage the Properties in conjunction with
Property & Capital's current residential property portfolio.

The Proposed Acquisition constitutes a reverse takeover in terms of the Rules
of the Alternative Investment Market of the London Stock Exchange (the 'AiM
Rules').  The intention of Robert Adair and parties acting in concert is that
Property & Capital should continue as an enlarged property group focusing on
residential property investment and management and ancillary services.  These
parties do not believe there will be any impact on employees of Property &
Capital as a result of the Proposed Acquisition nor are there likely to be any
major changes introduced to the business of Property & Capital as a result of
the Proposed Acquisition.

8.  REVERSE TAKEOVER

As the Proposed Acquisition constitutes a reverse takeover in terms of the AiM
Rules; the Proposed Acquisition requires the approval of the existing
shareholders of Property & Capital.  The EGM is being convened to obtain that
approval and is scheduled for 10am on 8 February 2000.  The Proposed
Acquisition is conditional upon independent shareholders of Property & Capital
approving Resolution 2, waiving the requirement for Robert Adair and persons
connected with him to make a mandatory cash offer for the entire issued share
capital of Property & Capital.  

9.  RELATED PARTY TRANSACTION

The Proposed Acquisition is, in terms of the AiM Rules, a related party
transaction because Robert Adair is interested in the shares of PCG.  In terms
of the AiM Rules, the following further information is given:-

a)  The business of PCG is residential property investment;
b)  The consideration is as stated above;
c)  The net tangible asset value of PCG is £10.714 million;
d)  Profit attributable to net assets of PCG:  In its unaudited consolidated
accounts for the period ended 8 November 1999, PCG made a loss before taxation
of £70,000;
e)  No finance is being raised or repaid as part of the Proposed Acquisition.

VOTING COMMITTMENTS

Robert Adair, together with parties acting in concert with him are prohibited
from voting on, and consequently have undertaken to abstain from voting on the
Resolutions.

The Independent Directors, of Property & Capital have irrevocably undertaken
to vote in favour of the Resolutions in respect of their holdings amounting to
1,028,682 Existing Ordinary Shares (representing 26.04 per of the issued share
capital of Property & Capital as at the date of this announcement).

Alastair Gordon and Anton Bilton, who are directors of subsidiaries of
Property & Capital, Raven Close Nominees Limited of which Anton Bilton is
Chairman, the Trustees of Property & Capital's Employee Share Ownership Trust
and Ian Banner, a former director of Property & Capital, have also irrevocably
undertaken to vote in favour of the Resolutions in respect of their holdings
amounting to 505,452 Existing Ordinary Shares (representing  12.79 per cent of
the issued share capital of Property & Capital at the date of this
announcement).

Accordingly, votes representing 38.83 per cent of the issued share capital of
Property & Capital have been irrevocably committed in favour of the
Resolutions.

APPENDIX

a)  Definitions:

'Adair Trusts'            the Adair Trusts 1994 and the Adair Trusts 1984     
                          together

'Adair Trusts 1984'       the RFM Adair 1984 Life Interest Settlement, the CM 
                          Adair 1984 Life Interest Settlement and the MBW     
                          Adair 1984 Life Interest Settlement  

'Adair Trusts 1994'       the RFM Adair 1994 Appointed Life Interest          
                          Settlement, the CM Adair 1994 Appointed Life        
                          Interest Settlement and the MBW                     
                          Adair 1994 Appointed Life Interest Settlement  

b)  Resolutions:

RESOLUTION 1

That the Proposed Acquisition by Property & Capital of the entire issued share
capital of PCG Residential Lettings Holdings PLC pursuant to and on the terms
of the agreement dated 6 January 2000 (the 'Agreement'), a copy of which,
initialled by one of the Independent Directors (as defined in the circular to
shareholders of Property & Capital dated 21 January 2000) for the purpose of
identification, be and is hereby approved and the Independent Directors be and
are hereby authorised to do, undertake, approve and execute all acts, things
and documents as may be necessary or desirable to complete and give effect to
the transaction and arrangements contemplated by the Agreement and to make
such minor amendments, variations, extensions and waivers of any of the terms
of the Agreement as they think necessary of desirable.

RESOLUTION 2

That the waiver, subject to the passing of this resolution, by the Panel on
Takeovers and Mergers of any requirement for Robert Adair and persons acting
in concert with him, to make a general offer under Rule 9 of the City Code on
Takeovers and Mergers which would otherwise arise by reason of the acquisition
by Property & Capital of the entire issued share capital of PCG Residential
Lettings Holdings PLC, be and is hereby approved.

The circular to shareholders and notice calling the EGM will be posted to
shareholders today and copies can be obtained from Property & Capital Group
PLC, 144 West George Street, Glasgow G2 2HG, telephone [phone].

21st January 2000