Economic Life Regulatory News (EPL)

Economic Lifestyle Property Investment Company Limited

Proposed Tender Offer

Approval for waiver of obligations under Rule 9 of the City Code on Takeovers and Mergers

and

Notice of Extraordinary General Meeting

Economic Lifestyle Property Investment Company Limited (the "Company") has today published a circular (the "Circular") providing details of a proposed tender offer and waiver of obligations under Rule 9 of the City Code on Takeovers and Mergers to be approved at an extraordinary general meeting of the Company on 24 November 2011.

Key extracts from the Circular are set out below. Shareholders will be sent a full copy of the Circular and additional copies will be available at http://www.cisx.com/listedsecuritydetail.php?secclassID=3172.

A copy of the Circular will also be submitted to the National Storage Mechanism and will be available for inspection at: www.hemscott.com/nsm.do.

Enquiries:

Matrix Corporate Capital

Paul Fincham / Robert Naylor                 Tel: 020 3206 7000

Key Extracts from the Circular

EXPECTED TIMETABLE OF EVENTS

                                                                                                                                            2011

Tender Calculation Date                                                                                                  30 April

Record Date for Tender Offer                                                               5.30 p.m. on 21 November

Closing Date: latest time and date for receipt of

Tender Forms or for settlement of TTE Instructions                              1.00 p.m. on 22 November

Latest time and date for receipt of Forms of Proxy                                                                   
or electronic proxy appointments via CREST                                       2.00 p.m. on 22 November

Extraordinary General Meeting                                                            2.00 p.m. on 24 November

Results of Tender Offer announced                                           close of business on 24 November

Settlement Date: cheques despatched and

payments through CREST made                                     as soon as practicable after 28 November

Balancing Share certificates despatched                      as soon as practicable after 28 November

PART I - LETTER FROM THE CHAIRMAN

Economic Lifestyle Property Investment Company Limited

(a closed-ended collective investment scheme incorporated as a non-cellular company limited by shares under the laws of Guernsey and registered with number 43579)

27 October 2011

Dear Shareholders

Proposed Tender Offer by Matrix Corporate Capital LLP to purchase all of the Shares in issue at the Tender Price of 18.26 pence per Share

and

Approval for waiver of obligations under Rule 9 of the City Code on Takeovers and Mergers

Introduction

In my Chairman's letter in the 2010 Audited Accounts, posted to Shareholders on 7 April 2011, I informed Shareholders that the Board had authorised a capital repayment of 12 pence per Share which could be increased to 15 pence per Share if sufficient funds were available. The Company has now made sufficient realisations to make an increased distribution to Shareholders and the Board has been looking at mechanisms to return capital to Shareholders.

In 2007, the reorganisation of the Company's share capital, approved by Shareholders, converted almost all of the Company's share capital to a distributable reserve with the intention that the Company could readily make future distributions to Shareholders as properties were sold. In my Chairman's letter in the 2011 Interim Accounts I explained that after detailed investigation by our legal and taxation advisors, including referring directly to HMRC, the Board was advised that due to recent developments to UK taxation law and practice, any such payment to Shareholders may be a distribution that is treated as an income receipt in the hands of some UK-resident Shareholders.

The Board is conscious that the prospect of waiting until the Company could be liquidated in 2013 or 2014, when, under current UK taxation rules, it should be possible to make payments which would not be treated as an income distribution in the hands of UK-resident Shareholders, is unattractive to many Shareholders. Moreover, the Board is particularly concerned that any Shareholder now needing to dispose of his Shares would only be able to do so at a market price which is significantly below the Net Asset Value of the Company as shown in the 2010 Audited Accounts and the 2011 Interim Accounts.

Nevertheless, the Board is very aware that the Company indicated its intention to make repayments of capital when it could reasonably do so and that many Shareholders will have been expecting to receive a substantial proportion of the Net Asset Value of the Company as a capital repayment in the near future. 

The Board now believes that it would be possible to make available to Shareholders, by way of the Tender Offer, 18.26 pence per Share (representing 95 per cent. of the Net Asset Value of the Company as shown in the 2011 Interim Accounts) to those Shareholders who wish to realise some or all of their investment.

Accordingly, your Board is convening an Extraordinary General Meeting to seek approval from Shareholders to implement the Tender Offer. If the Tender Offer is approved, Shareholders will be able to tender none, some or all of their Shares. The Tender Offer Resolution will be proposed as Resolution 1 at the EGM and will require the approval of a simple majority of Shareholders who are present in person or by proxy and who vote in favour in order for it to be passed. Shareholders are urged to complete and return the enclosed Form of Proxy as soon as possible but, in any event, to be received by Capita Registrars not later than 2.00 p.m. on 22 November 2011. The Directors have already received irrevocable undertakings from the holders of 23.74 per cent. of the Company's Shares confirming that they will vote in favour of the Tender Offer Resolution. The Directors intend to vote in favour of the Tender Offer Resolution in respect of their entire beneficial holding of Shares which, in aggregate, amount to 7,590,500 Shares representing approximately 32.01 per cent. of the Company's issued share capital. Further details of the Tender Offer are set out below and in Parts II and III of this document.

If there is a substantial take-up of the Tender Offer, there is a possibility that the number of Shares in issue could be reduced sufficiently such that the existing number of Shares controlled by certain Shareholders could exceed 30 per cent. of the remaining Shares in issue.  This could potentially affect Directors and other major Shareholders who do not tender their Shares in response to the Tender Offer and, in theory, trigger Rule 9 of the Code which would require that person to make a mandatory offer to all Shareholders to purchase the remaining Shares in issue.

The Waiver Resolution is proposed to seek approval from Shareholders for a waiver granted by the Panel of the obligations under Rule 9 of the Code which would otherwise apply to Mr. Emmott as the holder of 5,197,500 Shares, being 21.92 per cent. of the Shares in issue as at 25 October 2011 (the latest practicable date prior to the publication of this document). The Waiver Resolution will be proposed as Resolution 2 at the EGM and will require the approval of a simple majority of those Independent Shareholders who are present in person or by proxy and who vote in favour in order for it to be passed. Shareholders are urged to complete and return the enclosed Form of Proxy as soon as possible but, in any event, to be received by Capita Registrars not later than 2.00 p.m. on 22 November 2011. The Directors have already received irrevocable undertakings from the holders of 23.74 per cent. of the Company's Shares confirming that they will vote in favour of the Waiver Resolution. The Independent Directors intend to vote in favour of the Waiver Resolution in respect of their entire beneficial holding of Shares which, in aggregate, amounts to 2,900,000 Shares representing approximately 12.33 per cent. of the Company's issued share capital.  Accordingly, since Mr. Emmott is excluded from voting on the Waiver Resolution, the Company has received irrevocable undertakings and/or notices of intention from the holders of 46.07 per cent. of those Shares held by the Independent Shareholders that they intend to vote in favour of the Waiver Resolution.

The Tender Offer is conditional, inter alia, on the Waiver Resolution being passed.

The Tender Offer

The Board is proposing a Tender Offer for all of the Company's Shares at a price of 18.26 pence per Share, which is 95 per cent. of the unaudited Net Asset Value per Share as shown in the 2011 Interim Accounts. The most recent management accounts of the Company do not show a material change in the Net Asset Value per Share since the 2011 Interim Accounts.

Key points of the Tender Offer

The key points of the current Tender Offer are as follows:

?          the Company has 23,714,938 Shares in issue at the date of this document, which will be the maximum number of Shares that will be purchased pursuant to the Tender Offer and, accordingly, Shareholders who validly tender all of their Shares will have their tenders accepted in full;

?          Shareholders (other than Restricted Shareholders) on the Register on the Record Date will be able to tender none, some or all of their Shares;

?          none of the Directors (who, between them, hold 8,097,500 Shares) intend to tender any of their Shares;

?          Matrix, acting as principal and on its own account, has agreed to extend an offer to all Shareholders of the Company to purchase all the Shares of the Company at the Tender Price;

?          the Company has agreed to purchase all the Shares acquired by Matrix pursuant to their offer at the Tender Price of 18.26 pence per Share;

?          the Tender Price is 18.26 per Share which represents 95 per cent. of the latest published unaudited NAV per Share as at 30 April 2011, which is 21.73 per cent. above the quoted middle market price of the Shares as at 5.30 p.m. on 25 October 2011 (the latest practicable date prior to the publication of this document);

?          the Tender Price will be paid to Shareholders in Pounds Sterling and will be settled by the dispatch of cheques or the crediting of CREST accounts as appropriate; and

?          any Shares tendered and repurchased will be cancelled.

Options for Shareholders

Shareholders on the Register on the Record Date can choose:

?          to continue their full investment in the Company; or

?          save for Restricted Shareholders, to tender none, some or all of their Shares for purchase and to receive cash in consideration of such purchase.

If you tender your Shares, you must not sell them in the market as you will be required to deliver them to Matrix.  If you do not tender your Shares you are, of course, free to sell them in the market if you prefer.

Restricted Shareholders and other Overseas Shareholders

The attention of Restricted Shareholders and Overseas Shareholders is drawn to paragraph 10 of Part III. The Tender Offer is not being made to Shareholders who are resident in, or citizens of, Restricted Territories. Restricted Shareholders are being excluded from the Tender Offer to avoid infringing applicable local laws and regulations relating to the implementation of the Tender Offer. Accordingly, the Tender Form and any related documents are not being and must not be mailed or otherwise distributed in or into Restricted Territories.

It is the responsibility of all Overseas Shareholders to satisfy themselves as to the observance of any legal or regulatory requirements in their jurisdiction, including, without limitation, any relevant requirements in relation to the ability of such holders to participate in the Tender Offer.

Taxation

Shareholders who sell their Shares in the Tender Offer may, depending on their individual circumstances, incur a liability to taxation.

The attention of Shareholders is drawn to Part IV of this document which sets out a general guide to certain aspects of current UK tax law and HM Revenue & Customs published practice and Guernsey tax law and practice.

Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the UK or Guernsey should consult an appropriate professional adviser.

Further details of the Tender Offer

Shareholders (other than Restricted Shareholders) on the Register on the Record Date are invited to tender for sale some or all of their Shares to Matrix who, as principal, will purchase at the Tender Price the Shares validly tendered and, following the completion of all those purchases, sell the relevant Shares on to the Company at the Tender Price by way of a market acquisition in accordance with the terms of the Repurchase Agreement.

The Tender Offer is subject to certain conditions, and may be terminated in certain circumstances as set out in paragraphs 2 and 8 of Part III of this document.

Shareholders' attention is drawn to the letter from Matrix set out in Part II of this document and to Part III of this document and, for Shareholders who hold their Shares in certificated form, to the Tender Form which, together, constitute the terms and conditions of the Tender Offer.

Details of how Shareholders will be able to tender Shares can be found in paragraph 3 of Part III of this document.

Shareholders should note that, once tendered, Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Shareholders who are in any doubt as to the contents of this document or as to the action to be taken should immediately consult their stockbroker, bank, investment adviser, solicitor, accountant or other independent professional adviser authorised under FSMA or licensed under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended).

Waiver of requirements of the Code

If there is a substantial take-up of the Tender Offer, there is a possibility that the number of Shares in issue could be reduced sufficiently for the existing number of Shares controlled by certain Shareholders to exceed 30 per cent. of the remaining Shares in issue.  This could potentially affect Directors and other major Shareholders who do not tender their Shares in response to the Tender Offer and trigger Rule 9 of the Code.

Under Rule 9 of the Code, when any person or group of persons acting in concert individually or collectively is interested in shares which, in aggregate, carry not less than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50 per cent. of the voting rights of a company and such person or any person acting in concert with him acquires an interest in any other shares, which increases the percentage of the shares carrying voting rights in which he is interested, then that person or group of persons is normally required by the Panel to make a general offer in cash to all shareholders of that company at the highest price paid by them for any interest in shares in that company during the previous 12 months. Under Rule 37.1 of the Code, when a company purchases its own voting shares, a resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purpose of Rule 9 (although a shareholder who is neither a director nor acting in concert with a director will not normally incur an obligation to make an offer under Rule 9).

The interests of the directors as at 25 October 2011 (being the latest practicable date prior to the publication of this document) are set out in the table below:

* Includes non-beneficial interests in 507,000 Shares.

Mr. Emmott does not intend to tender any Shares.  Accordingly it is possible that, depending upon the number of Shares validly tendered by other Shareholders, his holding may increase beyond thirty per cent. of the total issued share capital.  Set out in the table below are details of the maximum percentage of the Shares carrying voting rights in which he would be interested assuming that: (i) Mr. Emmott and Mr. Walker-Robson do not tender any of their Shares; (ii) Mr. Farrell tenders sufficient Shares so that his holding remains below thirty per cent. of the total issued share capital; (iii) all other Shareholders tender their entire holding of Shares or they are subsequently bought back under the Company's Buy Back Authority; and (iv) there is no change in the issued share capital between 25 October 2011, (the latest practicable date prior to the publication of this document) and the date of the EGM.

Based on these assumptions, the Company would be required to repurchase 15,971,980 Shares, being 67.3 per cent. of the issued share capital as at 25 October 2011, the latest practicable date prior to the publication of this document) and Mr. Farrell would have to sell 354,542 Shares to ensure that his holding remained below 30 per cent. of the revised issued share capital.

Mr. Emmott's current and maximum projected holding based on the assumptions above:

* the latest practicable date prior to the publication of this document.

As indicated above, none of the Directors intend to tender any of their Shares. However, in the event that sufficient Shares are tendered which would result in Mr. Farrell's holding increasing to above thirty per cent. of the issued share capital then Mr. Farrell will tender sufficient Shares so as to remain below this threshold in order to avoid an obligation to make a mandatory offer under Rule 9 of the Code.

As a result of the Tender Offer, the increase in the percentage of Shares carrying voting rights in the Company that Mr. Emmott is interested in, would oblige him to make a general offer to all Shareholders pursuant to Rule 9 of the Code. However, the Panel has agreed, subject to the approval of the Independent Shareholders on a poll, to waive the obligation to make a general offer that would otherwise arise as a result of the Tender Offer. Accordingly, the Waiver Resolution will be proposed at the EGM, at which each of the Independent Shareholders shall have one vote for every Share held by him.

Mr Emmott is aware that the waiver granted by the Panel will be invalidated if he or any person acting in concert with him acquires any Shares between the publication of this document and the EGM and he will, therefore, refrain from making any such acquisitions in this period.

Mr Emmott has not taken part in any decision of the Independent Directors relating to the Waiver Resolution, since it is his interest in Shares which is the subject of the Waiver Resolution. Mr Emmott has irrevocably undertaken not to vote on the Waiver Resolution.

Following the completion of the Tender Offer and/or the Company completing a purchase of its own Shares pursuant to the Buy Back Authority and depending upon the number of Shares tendered by the Independent Shareholders, Mr. Emmott may hold more than 50 per cent. of the Company's issued Share capital and may, accordingly, increase his interest in Shares without incurring any obligation under Rule 9 of the Code to make a general offer.

Other Shareholders

As a result of the Tender Offer, there are additional Shareholders, Investec Asset Management Limited ("Investec") and Premier Asset Management Limited ("Premier"), whose percentage of Shares carrying voting rights in the Company may oblige either of them to make a general offer to all Shareholders pursuant to the Code. The Panel has confirmed that, pursuant to Rule 37.1 and Note 1 on Rule 37.1 of the Code, it will not require Investec or Premier to make a general offer that would otherwise arise as a result of the Tender Offer, by virtue of either Shareholder being an "innocent bystander" in relation to the Tender Offer.

Set out in the table below are details of the maximum percentage of the Shares carrying voting rights in which Investec would be interested assuming that: (i) Investec does not tender any Shares; (ii) none of the Directors tender any of his Shares; (iii) all other Shareholders tender their entire holding of Shares or they are subsequently bought back under the Company's Buy Back Authority; and (iv) there is no change in the issued share capital between 25 October 2011, (the latest practicable date prior to the publication of this document) and the date of the EGM.

Investec's current and maximum projected holding based on the assumptions above:

* the latest practicable date prior to the publication of this document.

Set out in the table below are details of the maximum percentage of the Shares carrying voting rights in which Premier would be interested assuming that: (i) Premier does not tender any Shares; (ii) none of the Directors tender any of his Shares; (iii) all other Shareholders tender their entire holding of Shares or they are subsequently bought back under the Company's Buy Back Authority; and (iv) there is no change in the issued share capital between 25 October 2011, (the latest practicable date prior to the publication of this document) and the date of the EGM.

Premier's current and maximum projected holding based on the assumptions above:

* the latest practicable date prior to the publication of this document.

It should be noted that if Investec or Premier do not tender any Shares pursuant to the Tender Offer, Mr. Emmott's maximum holding as a result of the Tender Offer will be proportionately lower than that referred to above.

Future of the Company

Mr Emmott has confirmed to the Company that he is not proposing, following any increase in his percentage interests in Shares as a result of the implementation of the Tender Offer or pursuant to the Buy Back Authority, to seek any significant change in the composition of the Board or the general nature of the Company's business. The Directors intend to continue to conduct the business of the Company in the same manner as it is currently conducted, namely to continue an orderly realisation of its assets, and there are no plans to redeploy its fixed assets or to introduce any substantial changes in the business or its management.

Independent advice

Matrix has provided advice to the Independent Directors, in accordance with the requirements of paragraph 4(a) of Appendix 1 to the Code, in relation to the granting of the Waiver. This advice was provided to the Independent Directors of the Company only and in providing such advice Matrix has taken into account the Independent Directors' commercial assessments as well as the confirmations of Mr Emmott's future intentions that he has provided to the Company as set out above.

Other factors to be taken into consideration by Shareholders

Quotation of the Company's Shares

The Company's Shares are listed on the CISX and are also traded on SETSqx, a trading platform administered by the London Stock Exchange.

If there is little or no take-up of the Tender Offer, the CISX quotation will be unaffected. However, if the Tender Offer is approved and a very substantial proportion of the Company's Shares are tendered and subsequently cancelled by the Company, this will reduce the number of Shareholders and the overall number of Shares available in the market.  The Company could be required to surrender its quotation if less than twenty five per cent. of the Shares were in public hands after the Tender Offer completed.  For these purposes, the holdings of the Directors are not deemed to be 'in public hands'.

In considering this aspect of the proposals, the Directors have taken into account the fact that the Company has been pursuing a policy of an orderly realisation of its assets since 2007 and the time will soon come when the Company owns no properties and holds only cash. At that stage it may have to surrender the quotation and I referred to this in my Chairman's statement in the latest 2011 Interim Accounts. The CISX is allowing the Company to maintain its listing at present because it is aware that it could potentially cause hardship to some Shareholders if the quote were lost.  Nevertheless, Shareholders should be aware that the issue will remain under review when the Company is a cash shell.

The Directors have concluded that, as the Company is likely in any event to be obliged to surrender its quotation in due course, the risk that the CISX quote will be lost if a very substantial proportion of the Company's Shares are tendered would not be a significant disadvantage of the proposed Tender Offer.

Authorisation by the GFSC

The Company is currently authorised as a collective investment scheme under The Authorised Closed-Ended Investment Schemes Rules 2008.  One of the considerations taken into account by the GFSC when deciding whether a vehicle fulfils the definition of a collective investment scheme is spread of risk.

If, at some time in the future, the Company does not own sufficient assets for it to be deemed that a spread of risk remains, the Company may be considered to have become an investment holding vehicle.  In that circumstance, the GFSC would expect to receive from the Company a request to cancel its authorisation.

Claim against Cluttons

In the last annual report I referred to the Company's proposed claim against Cluttons in connection with the valuation they provided for St. James's Heights and I confirm that the Company intends to proceed with this claim.  The Company's solicitors have engaged in extensive correspondence with the solicitors representing Cluttons and there has been an exchange of expert witness reports.  This has not produced any admission of liability and the Board is now anticipating that the claim form initiating the formal legal proceedings will be issued within the next six weeks.  The Directors consider that the Company has a strong case but the solicitors acting for Cluttons have indicated that they will resist the claim on every front.  The Company's solicitors anticipate that the proceedings will take between 12 and 18 months.

The Board has been advised that, whilst the Company has suffered losses in excess of £4 million, the likely level of any claim would be limited to approximately £3 million plus interest and costs.  I must emphasise, however, that it is generally accepted that there is uncertainty associated with the outcome of any legal proceedings.  Accordingly, the Directors are unable to forecast both the outcome of the claim and the level of damages (if any) that the Company may be able to recover.

Shareholders who have tendered their Shares pursuant to the Tender Offer or who have otherwise sold their Shares would not participate in the outcome of this claim.  Shareholders should note that the Company's financial statements and calculations of Net Asset Value contain an allowance for this litigation but, in accordance with standard accounting practice, no allowance has been made for any recoveries from such litigation.

The current financial position of the Company

You have already received a copy of the 2011 Interim Accounts of the Company as at 30 April 2011.  Since 30 April 2011, the Company has completed the sale of a number of flats at St. James's Heights so that the position as at the date of this letter is that the Company still owns one flat at St. James's Heights, which is currently under offer. The cash balance held by the Company has risen to £5,313,076 as at 25 October 2011 (the latest practicable date prior to the publication of this document) as a result of completing the sale of the additional flats since 30 April 2011.  There are no flats remaining for sale in developments other than St. James's Heights but the Company still holds all the freehold reversions of the blocks of flats it has sold.  Under the terms of the management agreements entered into in respect of some of these flats, the managers have pre-emptive rights to purchase the freehold reversions if the Company is selling these reversions.  This right is subject to the tenants' statutory right to buy.

I must draw Shareholders' attention to the fact that, on certain projects that it constructed, the Company has taken the equivalent of the contractor's risk on the project and, partly because of insolvencies, has no recourse to subcontractors or professionals involved with the project. Over the past year, the Directors have encountered some unexpected additional costs associated with the repair of basic construction faults that, as a result of this situation, it has been the Company's responsibility to repair.  By their nature, such costs cannot be forecast or anticipated and no provision can made for such unknown costs in the accounts.  Those Shareholders who do not accept the Tender Offer will, of course, bear the entire amount of any such costs if they arise.  Whilst the Board has no knowledge of any such contingent liabilities, if these are substantial, and there is no way in which this can be forecast, and the claim against Cluttons (described above) is not successful, the remaining Shareholders do take the risk that they could ultimately recover less on a winding-up than they would receive at the current Tender Price.

Notwithstanding the above, the Board is satisfied that the Company will retain sufficient cash at all times to satisfy its liabilities as and when they fall due.

Working capital

Assuming that the Tender Offer is accepted in full, the Directors are of the opinion, having made due and careful enquiry, taking into account the resources available to the Company, that the working capital available to the Company will be sufficient for its present requirements.

Source of finance for the Tender Offer

The Directors have made sufficient realisations of the Company's assets such that the Tender Offer will be financed from the Company's available cash resources.

Action to be taken in respect of the Tender Offer

Form of Proxy

Shareholders will find enclosed a Form of Proxy for use at the Extraordinary General Meeting. Shareholders do not need to tender their Shares in the Tender Offer in order to be able to vote at the Extraordinary General Meeting.

CREST members may also choose to utilise the CREST electronic proxy appointment service in accordance with the procedures set out in the notice convening the Extraordinary General Meeting at the end of this document.  If you hold your Shares in uncertificated form, you may appoint a proxy by completing and transmitting a CREST proxy instruction in accordance with the procedures set out in the CREST Manual so that it is received by the Registrar (under CREST participant ID RA10) by no later than 2.00 p.m. on 22 November 2011.  The time of receipt will be taken to be the time from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. 

To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, CREST messages must be received by Capita Registrars (ID number RA10) not later than 48 hours before the time appointed for holding the meeting.  For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST system) from which the issuer's agent is able to retrieve the message.

Whether or not you wish to tender your Shares under the Tender Offer and regardless of whether you intend to attend the Extraordinary General Meeting, you are requested to complete the accompanying Form of Proxy in accordance with the instructions printed thereon and return it by post or (during normal business hours only) by hand to Capita Registrars at PXS, 34 Beckenham Road, Beckenham, BR3 4TU, United Kingdom, or to submit a CREST proxy instruction as soon as possible and, in any event, not later than 2.00 p.m. on 22 November 2011.

Completion and return of a Form of Proxy or completing and returning a CREST proxy instruction will not affect your right to attend the Extraordinary General Meeting and vote in person should you so wish.

Tender Offer - Certificated Shares

Shareholders (other than Restricted Shareholders) who hold their Shares in certificated form (that is, not in CREST) who wish to participate in the Tender Offer should complete the Tender Form in accordance with the instructions set out therein and return the completed Tender Form by post or by hand (during normal business hours only) to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom to arrive as soon as possible and in any event by no later than 1.00 p.m. on 22 November 2011.

Shareholders who hold their Shares in certificated form should also return their valid Share certificate(s) and/or other documents of title in respect of the Shares tendered with their Tender Form.

Tender Offer - Uncertificated Shares

Shareholders (other than Restricted Shareholders) who hold their Shares in uncertificated form (that is, in CREST) should not return the Tender Form as described above but should arrange for the relevant Shares to be transferred to escrow by way of TTE Instruction as soon as possible and in any event so that the TTE Instruction settles by no later than 1.00 p.m. on 22 November 2011 as described in paragraph 3 of Part III of this document.

Recommendation

Shareholders should note that voting in favour of the Tender Offer Resolution and the Waiver Resolution does not oblige a Shareholder to accept the Tender Offer in respect of all or part of their own Shares. Passing the two Resolutions will enable the Tender Offer to proceed and will give those Shareholders who do wish to tender their Shares the opportunity to do so.

The Board recommends that Shareholders vote in favour of the Tender Offer Resolution as they intend to in respect of their entire beneficial holding of Shares which, in aggregate, amount to 7,590,500 Shares representing approximately 32.01 per cent. of the Company's issued share capital.

The Independent Directors, who have been so advised by Matrix, recommend that Shareholders vote in favour of the Waiver Resolution as they intend to in respect of their entire beneficial holding of Shares which, in aggregate, amounts to 2,900,000 Shares representing approximately 12.33 per cent. of the Company's issued share capital.  In providing this advice to the Independent Directors, Matrix has taken into account the Board's commercial assessment of the proposals.  Mr Emmott took no part in the Board's discussions relating to the Waiver Resolution.

The Board makes no recommendation to Shareholders as to whether or not they should tender their Shares. The extent to which Shareholders participate in the Tender Offer is a matter for each Shareholder to decide, and will be influenced by his own individual financial and tax circumstances and his investment objectives.  The Directors do not intend to tender any of their Shares.  However, as indicated above, in the event that sufficient Shares are tendered which would result in Mr. Farrell's holding increasing to above thirty per cent. of the issued share capital, Mr. Farrell will tender sufficient Shares so as to remain below this threshold in order to avoid an obligation to make a mandatory offer under Rule 9 of the Code.

Shareholders should seek advice from their own independent financial adviser authorised under FSMA or licensed under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended).

Yours faithfully,

C L Walker-Robson

Chairman

PART II - LETTER FROM MATRIX CORPORATE CAPITAL LLP

One Vine Street

London

W1J 0AH

27 October 2011

Dear Sir or Madam

Proposed Tender Offer by Matrix Corporate Capital LLP to purchase all of the Shares in issue at the Tender Price of 18.26 pence per Share

As explained in the letter from your Chairman in Part I of this document, Shareholders (other than Restricted Shareholders) on the Register on the Record Date are being given the opportunity to tender some or all of their Shares for purchase in the Tender Offer in accordance with the terms and conditions of the Tender Offer as set out below and in Part III of this document. The purpose of this letter is to set out the principal terms and conditions of the Tender Offer.

Matrix hereby invites Shareholders (other than Restricted Shareholders) on the Register on the Record Date to tender some or all of their Shares for purchase for cash at the Tender Price. Each Shareholder will be entitled to have his entire holding of Shares accepted by Matrix in the Tender Offer, provided that valid tenders are received by Matrix in accordance with the terms of the Tender Offer.

The Tender Offer is made on the terms and subject to the conditions set out in Part III of this document and, for Shareholders holding their Shares in certificated form, the Tender Form, the terms of which will be deemed to be incorporated in this document and form part of the Tender Offer.

Matrix is acting for the Company and no-one else in connection with the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Matrix nor for providing advice in relation to the Tender Offer. Matrix has given and not withdrawn its written consent to the inclusion of this letter and the references to its name in the form and context in which they are included in this document.

Procedure for tendering Shares

Shareholders (other than Restricted Shareholders) who hold their Shares in certificated form who wish to tender Shares should complete the Tender Form in accordance with the instructions set out therein and in Part III of this document and return the completed Tender Form by post or by hand (during normal business hours only) to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom to arrive as soon as possible and by no later than 1.00 p.m. on 22 November 2011.

Shareholders (other than the Restricted Shareholders) who hold their Shares in certificated form should also return the Share certificate(s) and or other document(s) of title in respect of their Shares tendered with their Tender Form.

Shareholders (other than the Restricted Shareholders) who hold their Shares in uncertificated form (that is, in CREST) will not receive a Tender Form as described above and should, therefore, arrange for their Shares to be transferred to escrow by way of TTE Instruction as soon as possible and, in any event, so that the TTE Instruction settles by no later than 1.00 p.m. on 22 November 2011 as described in paragraph 3 of Part III of this document.

Shareholders should note that, once tendered, Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Full details of the procedure for tendering Shares are set out in Part III of this document and, for Shareholders who hold their Shares in certificated form, on the Tender Form.

If you have any queries regarding the procedure for tendering please contact Capita Registrars on 0871 664 0321 or, if calling from outside the UK, on +44 208 639 3399. Calls to the Capita Registrars 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider's network extras. Calls to the Capita Registrars +44 208 639 3399 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones. Calls may be recorded and monitored randomly for security and training purposes. Capita Registrars cannot provide advice on the merits of the Tender Offer or give any financial, legal or tax advice.

Validity of tenders

The Tender Offer will close at 1.00 p.m. on 22 November 2011. Tender Forms and TTE Instructions which are received after 1.00 p.m. on 22 November 2011 may be rejected in Matrix's absolute discretion. Tender Forms or TTE Instructions which are received before that time but are incorrectly completed or are not accompanied by all the relevant documents or instructions may be rejected in Matrix's absolute discretion.

Tender Forms which are received by Capita Registrars after 1.00 p.m. on the Closing Date or which at that time are incorrectly completed or not accompanied by all relevant documents may be rejected and returned to Shareholders or their appointed agent, together with any accompanying valid Share certificate(s) and/or other document(s) of title.

Matrix reserves the right to treat as valid Tender Forms which are not entirely in order and which are not accompanied by the relevant Share certificate(s) and/or other document(s) of title or a satisfactory indemnity in lieu thereof.

Restricted Shareholders and Overseas Shareholders

The Tender Offer is not available to Shareholders with registered or mailing addresses in Restricted Territories, or who are citizens or nationals of, or resident in, any of the Restricted Territories and such Shareholders should read paragraph 10 of Part III of this document and the relevant provisions of the Tender Form.

Overseas Shareholders (not being Restricted Shareholders) who wish to accept the Tender Offer should also read paragraph 10 of Part III of this document and satisfy themselves that they have fully observed any applicable requirements under the laws and regulations of the relevant jurisdiction.

Conditions

The Tender Offer is conditional on the terms specified in paragraph 2 of Part III of this document.

Termination of the Tender Offer

The Tender Offer may be terminated in the circumstances described in paragraphs 2 and 8 of Part III of this document.

Settlement

Subject to the Tender Offer becoming unconditional, payment of the Tender Price due to Shareholders whose tenders under the Tender Offer have been accepted will be effected in Pounds Sterling by the dispatch of cheques or the crediting of CREST accounts as appropriate as soon as practicable after 28 November 2011.

Further information

Your attention is drawn to the information contained in the rest of this document including, in particular, the terms and conditions of the Tender Offer in Part III of this document.

Yours faithfully

Paul Fincham

For and on behalf of

Matrix Corporate Capital LLP

DEFINITIONS

The following definitions apply throughout this document unless the context otherwise requires:

2010 Audited Accounts                                     the annual report and audited consolidated financial statements of the Company dated 31 October 2010

2011 Unaudited Accounts                                 the interim report and unaudited consolidated financial statements of the Company dated 30 April 2011

Board or Directors                                           the directors of the Company or any duly constituted committee thereof

Business Day                                                  any day other than a Saturday, Sunday or public holiday in England and Guernsey

Buy Back Authority                                          the Company's authority pursuant to section 315 of the Law and granted by Shareholders on 6 May 2011, to make one or more market acquisitions of Shares, provided that the maximum number of Shares that the Company is authorised to acquire is 14.99 per cent. of each class of shares in issue (excluding shares held in treasury) as at 6 May 2011

Capita Registrars                                             a trading name of Capita Registrars Limited

certificated or in certificated form                    not in uncertificated form

CISX                                                                the Channel Islands Stock Exchange, LBG

Closing Date                                                    1.00 p.m. on 22 November 2011

Cluttons                                                           Cluttons LLP

Code                                                                the City Code on Takeovers and Mergers published by the Panel

Company                                                         Economic Lifestyle Property Investment Company Limited

Court                                                                the High Court of Justice in England and Wales

CREST                                                             the facilities and procedures for the time being of the relevant system of which Euroclear UK & Ireland has been approved as operator pursuant to the CREST Regulations

CREST Manual                                                 the compendium of documents entitled CREST Manual issued by Euroclear UK & Ireland from time to time and comprising the CREST Reference Manual, the CREST Central Counterparty Service Manual, the CREST International Manual, CREST Rules, CCSS Operations Manual and the CREST Glossary of Terms

CREST Regulations                                         the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)

CREST sponsor                                                a CREST participant admitted to CREST as a CREST sponsor, being a sponsoring system participant (as defined in the CREST Regulations)

EGM or Extraordinary General Meeting           the extraordinary general meeting of the Company convened for 2.00 p.m. on 24 November 2011

Euroclear UK & Ireland                                    Euroclear UK & Ireland Limited, the operator of CREST

Form of Proxy                                                the form of proxy accompanying this document for use by Shareholders at the EGM

FSMA                                                               the UK Financial Services and Markets Act 2000, as amended

GFSC                                                               the Guernsey Financial Services Commission

Independent Directors                                     the Directors other than Timothy John Emmott

Independent Shareholders                              the Shareholders other than Timothy John Emmott

Law                                                                 The Companies (Guernsey) Law, 2008, as amended

London Stock Exchange                                  the London Stock Exchange plc

Matrix                                                              Matrix Corporate Capital LLP

member account ID                                         the identification code or number attached to any member account in CREST

NAV per Share                                                 the NAV divided by the number of Shares in issue

Net Asset Value or NAV                                 the value of the assets of the Company less its liabilities as determined by the Board and calculated in accordance with the Company's usual accounting policies and practices

Overseas Shareholders                                   Shareholders who are resident in, or citizens of, territories outside the United Kingdom and not resident in, or citizens of, any of the Restricted Territories

Panel                                                               the UK Panel on Takeovers and Mergers

participant ID                                                   the identification code or membership number used in CREST to identify a particular CREST member or other CREST participant

Receiving Agent                                              Capita Registrars

Record Date                                                     5.30 p.m. on 21 November 2011

Register                                                           the register of Shareholders

Registrar                                                          Capita Registrars (Guernsey) Limited

Regulatory Information Service                     a service approved by the London Stock Exchange for the distribution to the public of announcements

Repurchase Agreement                                   the agreement dated 27 October 2011 between the Company and Matrix relating to the market acquisition by the Company of the Shares purchased by Matrix pursuant to the Tender Offer as summarised in paragraph 2.1 of Part V of this document

Resolutions                                                      the Tender Offer Resolution and the Waiver Resolution

Restricted Shareholders                                 Shareholders who are resident in, or citizens of, one of the Restricted Territories

Restricted Territories                                       any of the following territories: Australia, Canada, Japan and the United States or any other jurisdiction where the extension or acceptance of the Tender Offer would violate the relevant laws and/or regulations of that jurisdiction

SETSqx                                                            the Stock Exchange Electronic Trading Service - quotes and crosses, a trading service of the London Stock Exchange

Settlement Date                                               the date on which the consideration for Shares purchased in the Tender Offer will be settled by a CREST payment or despatched by cheque to the Shareholders entitled thereto, which is expected to be as soon as practicable after 28 November 2011

Shares                                                             ordinary shares of 0.001p in the capital of the Company

Shareholders                                                   holders of Shares

Tender Calculation Date                                  30 April 2011, the day on which the Company has calculated the Tender Price for the purposes of the Tender Offer

Tender Form                                                   the tender form accompanying this document for use, by certificated Shareholders only, in connection with the Tender Offer

Tender Offer                                                    the invitation by Matrix to Shareholders (other than Restricted Shareholders) on the Register on the Record Date to tender Shares for purchase on the terms and subject to the conditions set out in this document and, for holders of certificated Shares, in the Tender Form

Tender Offer Resolution                                  the first ordinary resolution set out in the notice of EGM at the end of this document seeking approval from Shareholders to implement the Tender Offer

Tender Price                                                    18.26 pence per Share, being a price equal to 95 per cent. of the latest published unaudited NAV per Share as at the Tender Calculation Date

TFE Instruction                                                a transfer from escrow instruction (as defined by the CREST Manual)

TTE Instruction                                                a transfer to escrow instruction (as defined by the CREST Manual)

uncertificated or in uncertificated form            a Share recorded on the Register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST

United Kingdom or UK                                     the United Kingdom of Great Britain and Northern Ireland

United States                                                   the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia

Waiver Resolution                                           the second ordinary resolution set out in the notice of EGM at the end of this document seeking approval from the Independent Shareholders for the waiver granted by the Panel in respect of Rule 9 of the Code

Unless otherwise stated in this document, all references to statute or other forms of legislation shall refer to statute or forms of legislation of the UK.