Prop Acq & Placing/Offer

UK Commercial Property Trust Ltd
09 February 2007


UK COMMERCIAL PROPERTY TRUST LIMITED


RIS ANNOUNCEMENT


9 February 2007


PROPOSED ACQUISITION AND PLACING AND OFFER


Introduction


On 14 December 2006 the Directors of UK Commercial Property Trust Limited (the
'Company') announced proposals (the 'Proposals') to acquire a portfolio of
commercial properties with an aggregate market value of £350.4 million and a
placing, offer and introduction of new Ordinary Shares. The Company has, today,
published a circular to shareholders (the 'Circular') and a prospectus (the
'Prospectus') in connection with the Proposals. Terms defined in the Prospectus
have the same meaning in this announcement unless the context requires
otherwise.


The Proposals will involve the Group acquiring a portfolio of properties which
will be funded by way of the Placing and Offer of new Ordinary Shares and the
issue of the consideration shares to the vendor. All Shareholders in the Company
will be eligible to participate in the Offer of new Ordinary Shares. Due to the
size of the property portfolio to be acquired, the fact that it will be acquired
from a related party of the Company (as defined in the Listing Rules), and that
clients of the Investment Manager may participate in the Issue, the Proposals
are subject to the approval by the Shareholders of the proposed acquisition and
the issue of the new Ordinary Shares. Further details of the Proposals are set
out below and in the Circular and Prospectus.


Benefits of the Proposals


The Board believes that the Proposals offer the opportunity for the Company to
improve the prospects for income and capital growth in the Property Portfolio,
to diversify further the Property Portfolio and to obtain the benefit of an
increase in the size of the Group. In particular, the Directors believe that, if
implemented, the Proposals will:


• enhance the overall investment characteristics of the Property Portfolio;

• broaden the sub-sector weightings of the Property Portfolio;

• strengthen the overall tenant covenant of the Property Portfolio;

• improve the medium term income profile of the Property Portfolio;

• reduce the void rate in the Property Portfolio immediately following Admission
  from 6.95 per cent. for the Existing Property Portfolio to 4.32 per cent. for
  the Combined Property Portfolio;

• increase the weighted average lease length immediately following Admission
  from 10 years and 4 months for the Existing Property Portfolio to 11 years 
  and 5 months for the Combined Property Portfolio; and

• reduce the total expense ratio of the Company.


Details of the Proposals


Acquisition of the New Property Portfolio


The Group has agreed with Phoenix Life Limited to acquire a portfolio of ten
properties, the New Property Portfolio. The New Property Portfolio is a
diversified portfolio of UK commercial properties with an aggregate market value
of £350.4 million. If the Proposals are approved by Shareholders, the New
Property Portfolio will be acquired by the Group immediately prior to Admission
for a consideration of £341,412,000. The consideration will be satisfied by the
issue to Phoenix Life Limited at the Issue Price of 253 million new Ordinary
Shares and a cash payment of £80,822,000 for the balance of the consideration.


The Existing Property Portfolio


The Existing Property Portfolio comprises 20 properties with an aggregate Market
Value of £515.2 million. The Existing Property Portfolio generates a current net
annual rent of £25.6 million (being a running income return of 4.96 per cent. on
its Market Value) and a reversionary yield, based on the Estimated Net Annual
Rent, of 5.78 per cent. on its Market Value. In addition, the Existing Property
Portfolio has a number of occupational leases which are currently in rent free
periods with a total net annual rent of £2.2 million.


The Properties comprised in the Existing Property Portfolio have been ranked in
the 10th percentile of portfolios for covenant strength in the independent IPD
IRIS. The average unexpired lease term of the occupational leases of these
Properties (weighted by current gross annual rent) is approximately 10 years and
four months and all of the rent review provisions in the occupational leases of
the Properties are upwards only or based on turnover.


The New Property Portfolio


The New Property Portfolio generates a current net annual rent of £17.6 million
(being a running income return of 5.02 per cent. on its Market Value) and a
reversionary yield, based on the Estimated Net Annual Rent, of 5.19 per cent. on
its Market Value.


The Properties comprised in the New Property Portfolio have been ranked in the
1st percentile of portfolios for covenant strength in the independent IPD IRIS.
The average unexpired lease term of the occupational leases of the Properties
(weighted by current gross annual rent) is approximately 13 years and one month
and all of the rent review provisions in occupational leases of the Properties
are upwards only.


The Combined Property Portfolio


In the event that the Proposals are approved by Shareholders, the Group will
hold the Combined Property Portfolio comprising 30 properties with an aggregate
Market Value of £865.6 million. The Combined Property Portfolio will generate a
current net annual rent of £43.2 million (being a running income return of 4.99
per cent. on its Market Value) and a reversionary yield, based on the Estimated
Net Annual Rent, of 5.54 per cent. on its Market Value.


The Properties comprised in the Combined Property Portfolio have been ranked in
the 6th percentile of portfolios for covenant strength in the independent IPD
IRIS. The average unexpired lease term of the occupational leases of these
Properties (weighted by current gross annual rent) is approximately 11 years and
five months, compared to the equivalent figure for an average commercial
property portfolio, as represented by IPD, of 9 years.


The Issue


In order to fund part of the consideration for the New Property Portfolio, it is
proposed that the Company will issue 97 million new Ordinary Shares under the
Placing and Offer. All Shareholders will be offered the opportunity to
participate in the Offer for Subscription. G&N Collective Funds Services Limited
is arranging the Placing with certain institutions, discretionary investment
managers and other financial intermediaries. Clients of the Investment Manager
may acquire up to £30 million worth of new Ordinary Shares under the Issue. The
Placing and Offer is not underwritten.


The issue price for a new Ordinary Share under the Placing and Offer will be
103p per share.


Dividends


It is intended that the second interim dividend in respect of the three month
period from 1 January 2007 to 31 March 2007, which was expected to be paid in
May 2007, will be split into a second interim dividend and a third interim
dividend both of which will be paid on the same day in May 2007. It is expected
that the second interim dividend and third interim dividend will in aggregate
amount to 1.3125p per share. Existing Shareholders will qualify for payment of
both the second and third interim dividends in respect of their existing
holdings of Ordinary Shares and the third interim dividend in respect of any
holdings of new Ordinary Shares. New Shareholders will only qualify for the
third interim dividend in respect of their holdings of new Ordinary Shares. The
respective amounts of such dividends will reflect the fact that the new Ordinary
Shares will be issued part way through the second quarter of the Company's
financial year ending 31 December 2007. On the assumption that Admission occurs
on 1 March 2007, the Directors expect that the second interim dividend will be
0.8604p per Ordinary Share and the third interim dividend will be 0.4521p per
Ordinary Share. It is expected that the record date for the second interim
dividend will be 23 February 2007. Save as referred to above, the new Ordinary
Shares will rank pari passu in all respects with the existing Ordinary Shares.
These forecasts relate to dividends only, are not profit forecasts and are based
on the Assumptions.


Net asset value and total expense ratio


As at 31 December 2006, the unaudited net asset value of an Ordinary Share
(calculated under International Financial Reporting Standards and after
providing for the proposed dividend in respect of the period to 31 December
2006) was 100.11p. This figure is 0.2p higher than the unaudited net asset value
published on 9 January 2007 as a result of a provision for costs being reduced
and the recognition of additional rental income received in the JPUT up to 31
December 2006.


On the basis of the Assumptions and after taking into account the costs of the
Proposals (including the costs of the acquisition of the New Property
Portfolio), it is expected that the acquisition of the New Property Portfolio
will not have a dilutive effect on the net asset value of an Ordinary Share. It
is estimated that, on the basis of the Assumptions and following the
Acquisition, the capital value of the Property Portfolio will need to increase
by an average rate of approximately 1.5 per cent. per annum for the published
net asset value of an Ordinary Share to equal the Issue Price of 103p in
September 2016, being the tenth anniversary of the launch of the Company. It is
estimated that, on the basis of the Assumptions and following the Acquisition,
the capital value of the Property Portfolio will need to increase by an average
rate of approximately 1.2 per cent. per annum for the published net asset value
of an Ordinary Share to equal 100p, being the issue price at launch, in
September 2006.


On the basis of the Assumptions and following the Acquisition, it is estimated
that the total expenses of the Group for the period from Admission to 31
December 2007 (excluding the Issue Costs, capital expenditure and refurbishment
and irrecoverable property running costs, but including irrecoverable VAT) will
reduce to 0.90 per cent. of the Total Assets, annualised over this period.


Extraordinary General Meeting


The Proposals are conditional, inter alia, on the approval of Shareholders. A
notice is included in the Circular convening an Extraordinary General Meeting of
the Company to be held at 11.00 a.m. on Tuesday, 27 February 2007 at Trafalgar
Court, Les Banques, St. Peter Port, Guernsey GY1 3QL at which an ordinary
resolution will be proposed:


(i) to approve the proposed acquisition by the Company of the New Property
Portfolio;

(ii) to approve the issue by the Directors of 350 million new Ordinary Shares
(representing 66 per cent. of the Company's issued share capital as at the date
of this document) in connection with the Placing and Offer and the Acquisition,
including the issue under the Issue of up to £30 million worth of new Ordinary
Shares to clients of the Investment Manager at the Issue Price; and

(iii) subject to the Proposals becoming effective, to increase the authorised
share capital of the Company to £350 million by the creation of an additional
650 million Ordinary Shares (representing 87 per cent. of the Company's
authorised share capital as at the date of this document).


Phoenix & London Assurance Limited and Phoenix Life Limited, which hold in
aggregate approximately 71 per cent. of the issued Ordinary Shares, have agreed
to abstain from voting at the Extraordinary General Meeting and have undertaken
to take all reasonable steps to ensure that their associates will not vote on
such resolution.


Dealings in new Ordinary Shares


It is expected that the new Ordinary Shares will be issued and admitted to
listing, and dealings in such shares will commence, on 1 March 2007.


Availability of Circular and Prospectus


A copy of each of the Circular and the Prospectus has been submitted to the FSA,
and will shortly be available for inspection at the FSA's Document Viewing
Facility which is situated at:


Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS

Tel: [phone]


Copies of the circular and prospectus are also available from the offices of
Resolution Asset Management, 50 Bothwell Street, Glasgow G2 6HR, Dickson Minto
W.S., Royal London House, 22/25 Finsbury Square, London EC2A 1DX and Northern
Trust International Fund Administration Services (Guernsey) Limited, Trafalgar
Court, Les Banques, St Peter Port, Guernsey GY1 3QL.


All enquiries


G&N Collective Funds Services Limited
Graeme Caton
Graham Reaves
Nigel Russell
Tel. [phone]
Fax [phone]



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