Property Investments.

On 27 th March, 2006 Gresham House plc advised the market of its intention to demerge its commercial property portfolio into a qualifying Real Estate Investment Trust company (“REIT”).

Freddie Stirling , Chairman and Managing Director of Gresham House commented:

We have been waiting for two years for the confirmation of the detailed structure of REITs and welcome the news from the Chancellor in Wednesdays Budget. We believe REITs provide a highly advantageous mechanism through which investors can gain exposure to the UK property market. We intend to commence the process of transferring our commercial property portfolio into a REIT qualifying structure to coincide with the January 2007 launch date for REITs.

Current plans are for the new REIT company to be hived down to existing shareholders in Gresham House plc. This new company would have its own quotation.

As at 31 st December, 2005 investment properties consisted of 54 individual property units covering a total of 720,729 sq. ft. at an annual rental of £2,107,872 together with approximately 289,000 sq. ft. of vacant mixed business space in Speke, Liverpool . These property units vary considerably in size and use, with the largest three units totalling 381,493 sq. ft. at a combined rental of £1,062,485 and the smallest ten units being less than 2,000 sq. ft. each at a combined rental of £41,496. The total area can be sub-divided into the following use categories:

Warehouse and associated offices 526,709 sq. ft.

Industrial and associated offices 191,720 sq. ft.

Retail, and other 2,300 sq. ft.

 

 

These categories can be further analysed as follows:

 

 

 

No. of tenants

Area sq. ft.

(i)

Warehouse

 

 

 

Food storage

2

253,852

 

Chemicals and plastic storage

1

151,224

 

Pharmaceuticals storage

1

48,166

 

Document storage

1

24,125

 

Others and vacant

5

49,342

(ii)

Industrial

 

 

 

Timber fabrication

1

41,786

 

Rubber processing

1

17,432

 

Light engineering

8

35,808

 

Heavy engineering

1

71,300

 

Others and vacant

1

25,394

(iii)

Retail, office and others

 

 

 

Nursery

1

2,300

 

The letting programme in Speke, Liverpool continues with lettings of 111,388 sq. ft at an annual rent £412,156 being achieved by 31 st December, 2005 which are included in the above analysis. Approximately 289,000 sq. ft. of mixed use business space remained vacant at 31 st December, 2005 but since that time negotiations are in hand to let a further 22,883 sq. ft.


Of the property units held at 31 st December, 2005 :

  • 4 property units were valued by Knight Frank, Chartered Surveyors, as at 31 st December, 2005 at £13,500,000;
  • 12 property units were valued by Knight Frank, Chartered Surveyors, as at 31 st December, 2005 at £5,000,000;
  • 34 property units were valued by Hurst Warne Limited, Chartered Surveyors, as at 31 st December, 2005 at £2,300,000;
  • the units at Speke, Liverpool were valued by Knight Frank, Chartered Surveyors as at 31 st December, 2005 at £11,000,000; and
  • the land at Knowsley, Liverpool was valued by Knight Frank, Chartered Surveyors as at 31 st December, 2005 at £1,450,000.

All external valuations were carried out on the basis of Open Market Value in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors.

As at 31 st December, 2005 the valuation of the whole property portfolio amounted to £34,226,000. Exactly which parts of the portfolio are to be demerged have yet to be determined as detailed regulations are not yet available from H M Revenue & Customs.