IERE.L Regulatory News (IERE)

28 May 2012

INVISTA EUROPEAN REAL ESTATE TRUST SICAF

("IERET" or the "Company')

ANNOUNCEMENT OF HALF YEARLY RESULTS AND UNAUDITED NAV

Report for the six month period ENDed 31 March 2012

Invista European Real Estate Trust SICAF today announces its results for the six month period to 31 March 2012, including its unaudited Net Asset Value ("NAV") for the last quarter, calculated using International Financial Reporting Standards and adjusted to add back the change in fair value of the warrants and deferred tax.

Highlights

·; Unaudited NAV per share decreased by 4.4% over the quarter and 11.7% over the six month period to €0.46 or 39p (30 September 2011: €0.52; 31 December 2011: €0.48), principally due to the reduction in the fair value of the properties of €16.2m (3.59%) in the first 6 months.

·; Property portfolio comprising 39 properties valued at €434.9 million on a like-for-like basis (30 September 2011: €451.1 million; 31 December 2011: €441.1 million), the fall reflecting the continued discount on non-core assets with short leases or vacancy, as well as the weakening macro-economic growth across European markets.

·; Portfolio vacancy increased to 16.3% from 10.2% at 30 September 2011 as the difficult economic environment led to a higher proportion of tenants exercising lease breaks and so putting pressure on rental income during 2012.

·; Continued focus on stabilising portfolio income and repositioning assets for sale has resulted in:

o Letting 2,270 sqm of vacant space to generate an additional €233,000 rental income pa.

o  Securing a nine year lease with an existing tenant fully occupying a 3,744 sqm office asset in Brussels, Belgium, achieving a rent above ERV.

o  Negotiating heads of terms with existing tenants representing 11.5% of portfolio income to extend those lease terms by additional average 4.4 years.

o The Commission de Surveillance du Secteur Financier ("CSSF") has acknowledged the Company's new investment strategy, under the Company's original investment policy, to pursue a structured realisation of its assets. The Company is executing this strategy and currently widely marketing an initial €60 million of assets.

Change of Investment Strategy

On 14 October 2011, an Extraordinary General Meeting ("EGM") of the Company's shareholders was held to approve a proposed new investment objective and policy which would realise the existing property portfolio owned by the Group and return capital to shareholders. This resolution was approved by shareholders subject to approval by the CSSF. The Company has now concluded discussions with the CSSF, and the CSSF has acknowledged the resolution passed at the EGM. The Company may now pursue a structured realisation of its assets in line with the resolution approved by Company's shareholders at the EGM on 14 October 2011, as an investment strategy under the Company's original investment policy.

The investment restrictions contained in the Company's prospectus dated 16 November 2009 will not apply to the extent that such restrictions are inconsistent with the Company's new investment strategy.

Tom Chandos, Chairman, commented:

"The Company has a new investment manager with strong experience of realisation strategies; sufficient cash to be able to optimise the value of key properties prior to sale and an encouraging pipeline of asset disposals. Although market conditions are likely to remain difficult and the Company needs to manage its debt position carefully over the next eighteen months, the Board remains confident that, over the medium term, the realisation strategy can be delivered."

For further information:

Ludovic Bernard

Internos Real Investors 020 7355 8800

Michael Sandler

Hudson Sandler 020 7796 4133

Invista European Real Estate Trust SICAF Interim Financial Information 2012

Company Summary

As at 31 March 2012, Invista European Real Estate Trust SICAF (the "Company") and its subsidiaries (together the "Group") held a diversified real estate portfolio comprising 39 commercial properties across six Continental European countries. The combined aggregate value of these properties was €434.9 million. The property will next be valued by an external valuer as at 30 June 2012 and the next quarterly NAV per share is expected to be published in September 2012.

The long term investment objective of the Company is to provide shareholder returns through investing in a diversified commercial real estate portfolio in Continental Europe with the potential for income and capital growth. The geographical focus of the Group is France and Germany due to the relative stability, transparency and liquidity of these markets.

The Company is now pursuing a structured realisation of its assets in line with the resolution approved by the Company's shareholders at the EGM on 14 October 2011, as an investment strategy under the Company's original investment policy.

Financial Summary

v Net Asset Value1,2 decreased during the 6 month period from €136.1 million to €120.1 million

v Loss per share of €0.055243 (September 2011: €0.045033)

Sources: Internos Real Investors Ltd; [DataStream]

1 NAV is calculated using International Financial Reporting Standards and adjusted to add back the change in fair value of the warrants and deferred tax. IFRS NAV was €118.1m on 31 March 2012 and €131.2m on 30 September 2011.

2 As at 31 March 2012, deferred tax liabilities of €21.7 million, based upon temporary differences at the time of initial recognition arising from transactions treated as asset acquisitions have not been recognised in accordance with IAS 12. The Group has deferred tax assets of €14.1 million which also have not been recognised.

3 Loss for the period divided by the weighted average number of ordinary shares in the year.

4 €:£ exchange rate used was €1.19855 as at 31 March 2012, €1.14915 as at 30 September 2011.

5 The NAV per preference share is equal to the nominal value plus accrued interest divided by the total number of preference shares.

6 Current liabilities exclude banking facilities.

7 EPRA (European Public Real Estate Association) earnings excludes capital gains / (losses) during the period.

8 EPRA NAV ignores fair value of financial instruments and deferred tax.

Chairman's Half Yearly Results Statement

Adjusted net asset value decreased by 11.7% over the six month period from €0.52 (£0.46) to a figure of €0.46 (£0.39), principally driven by a decline in property valuation of 3.59%. Despite weakening performance over the last six months, the Company has been active in mitigating increased borrowing costs and implementing asset management initiatives. The Company however has not been immune from the challenging occupational market in which tenant retention has been difficult. Portfolio vacancy increased to 16.3% on 31 March 2012 which has weakened revenues by 3.9%1 on a like for like basis. However, successful results in new lettings and lease re-gears are encouraging and have helped to mitigate further loss of rental income and decline in asset valuation.

The change of investment strategy to a structured realisation, under the Company's original investment policy, alongside the appointment of Internos as Investment Manager, mean that the Company has taken the necessary steps to ensure it can deliver upon what it considers to be the best opportunity in the current environment to optimise realisable value for shareholders.

(1 Marktkauf rental income is included, despite their vacating the property, as the tenant is contracted to pay rent until 2017 as per legal advice provided to the Company)

Property Portfolio

The Company owns a diversified portfolio of 39 commercial property investments located mainly in France and Germany. As at 31 March 2012, the Company's property portfolio was valued at €434.9 million. The fall in valuation reflects accrued pressure on income and depreciation on assets with shortening lease lengths.

During the period, the Investment Manager successfully negotiated with tenants on a number of lease extensions and new lettings, thus strategically positioning assets for disposal and mitigating the impact of other tenants vacating at break. Since the start of the financial year to date, 2,270 sqm of vacant retail and office space has been let which will benefit the portfolio in reducing vacancy cost and generating additional rental income. Despite letting success on a number of sites, portfolio vacancy level rose to 16.3% as at 31 March 2012 from 10.2% as at 30 September 2011 as occupiers in France and Germany relinquished 50,088 sqm of accommodation at lease break or expiry. 

The Company generated income return of 7.17% at 31 March 2012 down from a net initial yield of 7.53% as at 30 September 2011.

The Investment Manager is now focusing its efforts on preparing assets for sale and repositioning the portfolio ahead of December 2013 when the senior debt facility expires (€286.7 million). Four assets are now being widely marketed which are anticipated to generate €60 million of proceeds.

Results

The Company reports a decrease in the unaudited NAV per share (adjusted to add back warrants and deferred taxation) to €0.46 (38.5p), equating to a fall of 11.7% over the six month period to 31 March 2012. The decrease in NAV has arisen principally from the reduction in fair value of the properties of €16.2m (3.59%) in the first 6 months.

On 26 January 2012 the Company announced that it had used €11.3 million from its existing cash balances to make a further repayment of the senior debt facility and thus reduce its drawn down debt facilities to €286.7 million, thereby decreasing the Loan to Value ratio (LTV) to below 65% and maintaining a loan margin of 2.25%.

European Markets

The past six months has seen many European economies enter into a second recession. Despite the Fund's key markets of France and Germany being among the stronger performing Eurozone economies during 2011, with growth of 1.3% and 2.0% respectively, they have experienced a stalling in economic output over the past two quarters. The ongoing sovereign debt crisis has significantly reduced consumer and business confidence and therefore it is unsurprising that growth in economic output, retail sales and industrial production have declined over the past six months. This has been reflected in the real estate markets where occupiers have become increasingly cautious, leading to postponements of expansion plans and a focus on securing prime assets. Investors are predominantly risk-averse and are attracted to prime assets in core markets that offer long-term income stability.

With the French and German economies expected to experience low growth of 0.3% and 0.7% in 2012, we expect the pressure on occupiers and investments to remain high for the remainder of the year.

Change of Investment Strategy

On 14 October 2011, an Extraordinary General Meeting ("EGM") of the Company's shareholders was held to approve a proposed new investment objective and policy which would realise the existing property portfolio owned by the Group and return capital to shareholders. This resolution was approved by shareholders subject to approval by the Commission de Surveillance du Secteur Financier ("CSSF").

The Company has now concluded discussions with the CSSF, and the CSSF has acknowledged the resolution passed at the EGM. The Company may now pursue a structured realisation of its assets in line with the resolution approved by Company's shareholders at the EGM on 14 October 2011, as an investment strategy under the Company's original investment policy.

The investment restrictions contained in the Company's prospectus dated 16 November 2009 will not apply to the extent that such restrictions are inconsistent with the Company's new investment strategy.

Investment Manager

The Company announced on 30 June 2011 that it proposed to appoint Internos Real Limited ("Internos") as the new investment manager, subject to the satisfaction of a number of conditions. On 15 December 2011 the Company announced that all these conditions had either been met or waived and Internos, a wholly owned subsidiary of Internos Real Investors LLP, had therefore taken on the role of investment manager with effect from that date. The CSSF, the Luxembourg financial regulator, has approved the appointment of Internos as investment manager and promoter of the Company.

Structured realisation

Under the new investment strategy the Investment Manager is now focusing its efforts on preparing assets for sale and repositioning the portfolio ahead of December 2013 when the senior debt facility expires (€286.7 million). After a strategic review of the portfolio, initially four assets are being widely marketed and are anticipated to generate €60 million of proceeds. Achieving these sales over the 2012 financial year would be an encouraging step towards deleveraging the portfolio. However, given the current investment market, asset level initiatives and the impact of unrecognised deferred tax liabilities, we remain fully aware of the challenges ahead in order to further mitigate these constraints.

Outlook

Weak conditions in both the investment and occupier markets present a challenge for the Company and inevitably have an impact on the approach within which the structured realisation strategy can be pursued. In particular, the timescale for a realisation may be longer than previously expected, in order to avoid unnecessary sacrifice of value.

A thorough strategic review on an asset and corporate level basis is being undertaken to ensure the Company remains flexible to the market conditions. Ultimately, achieving the structured realisation strategy will require a disciplined and innovative management approach to improve asset liquidity and enhance earnings on sale. The key focus in the coming months is to stabilise portfolio rental income and deleverage the portfolio ahead of expiry of the current senior debt facility in December 2013. The Company has a new investment manager with strong experience of realisation strategies; sufficient cash to be able to optimise the value of key properties prior to sale and an encouraging pipeline of asset disposals. Although market conditions are likely to remain difficult and the Company needs to manage its debt position carefully over the next eighteen months, the Board remains confident that, over the medium term, the realisation strategy can be delivered.

Tom Chandos

Chairman

Invista European Real Estate Trust SICAF

21 May 2012

INVESTMENT MANAGER'S REPORT

As at 31 March 2012, the Company's property portfolio was valued at €434.9 million and comprised 39 assets (€441.1 million: 31 December 2011). On a like for like basis, the portfolio value decreased by €6.2 million or 1.41% during the quarter to 31 March 2012 and €16.2 million or 3.59% in the six months to 31 March 2012. Values have come under pressure over the first half of the financial year as economic indicators and outlook have weakened across Europe. Active asset management to secure new tenants and extend existing leases is crucial in maintaining and improving portfolio valuation.

The Company's portfolio generated a gross income of €35.4 million per annum as at 31 March 2012 from 133 individual leases and 129 tenants. The portfolio had a Gross Income Yield ("GIY") of 7.88% and a Net Initial Yield ("NIY") of 7.17%.

As previously reported, the Company recognises the risks and challenges in generating stable rental income during 2012 as a number of tenants have lease breaks or expiries during this financial year that represented 25% of the total income as of 30 September 2011. Portfolio level vacancy has increased from 10.2% on 30 September 2011 to 16.3% on 31 March 2012. The increase over the last six months reflects logistics operators in France vacating 41,409 sqm of warehouse space as well as anchor tenant, Marktkauf, vacating 8,678 sqm of retail space in a shopping centre in Roth, Germany.

As a result, over the last six months to 31 March 2012, like for like portfolio income decreased slightly by 3.9%2. The income loss was in part mitigated by leasing of vacant space and indexation on a number of leases. Nevertheless, downward pressure on portfolio income and increasing vacancy is anticipated in the coming months as tenants representing 9.4% of estimated rental value have given notice to break. The Company will remain active in discussing lettings with new and existing tenants and confident that additional income will be secured. 

(2Marktkauf rental income is included, despite their vacating the property, as the tenant is contracted to pay rent until 2017 as per legal advice provided to the Company)

As at 31 March 2012, the weighted average lease length to first break was 4.63 years and 5.74 years to lease expiry. The Company has an attractive line up of tenants with 60.9% of tenants by income classified as negligible or low risk by the Investment Property Databank's M-IRIS credit analysis system in April 2012. The total portfolio credit rating is stable at 73 out of 100, which is classified as within a "Low to Medium risk band".  As at 31 March 2012 the portfolio composition was as follows:

Sector Weightings

*Percentage of aggregate asset value as at 31 March 2012

Country Weightings

*Percentage of aggregate asset value as at 31 March 2012

Top 10 Properties

*Percentage of aggregate asset value plus cash as at 31 March 2012

Top 10 Tenants

* Percentage of aggregate gross rent as at 31 March 2012

Click or paste the following link into your web browser to view the associated PDF document. Refer to page 8 for the relevant graph or view data table below. http://www.rns-pdf.londonstockexchange.com/rns/1851E_-2012-5-25.pdf 

Break dates of lease contracts

Click or paste the following link into your web browser to view the associated PDF document. Refer to page 9 for the relevant graph or view data table below. http://www.rns-pdf.londonstockexchange.com/rns/1851E_-2012-5-25.pdf 

Expiry dates of lease contracts

Property Market Performance

Economy

The European sovereign debt crisis in second half 2011 led to a significant weakening in the economic performance and short term outlook for the majority of European countries. Eurozone industrial production contracted in January and February by 1.7% and 1.8% respectively, year on year and manufacturing confidence declined further in March and April. Consumer confidence remains significantly below the long run average which is reflected in the volume of retail sales that has contracted for both food and non-food sales on an annual basis since August 2011.

Occupier Market

In the French logistics market total take-up for Q1 2012was 373,000 sqm which was up on Q1 2011, but lower than recorded in the last two quarters in 2011 (BNP Paribas). The Paris region continued to be the favoured location for logistics occupiers with 72% of total French logistic transactions completed in this region. With a weakening outlook for manufacturing and international trade, demand from occupiers will remain focused on modern stock that meets their needs. Secondary assets are likely to require the offer of incentives to retain/attract tenants in the weakening economy, reducing the effective rental values of the assets.

In the German retail market the level of demand for prime locations remains stable with the decline in retail sales yet to influence prime rental levels. The lack of prime property available for occupiers has led to some good secondary locations experiencing stable demand from tenants either priced out or unable to find suitable locations. Tenants in poor quality secondary and tertiary assets are either vacating or negotiating more favourable lease terms with vacancy rates increasing in these locations. This is indicative of retailers rationalising their operations through focusing on the best performing locations.

Investment Market

Investors and banks have become increasingly cautious over where they are prepared to invest/lend with a trend towards prime assets located in core markets with relatively strong economies. 

Across Europe a total of €24bn was invested in Q1 2012, which represents a decline of 31% on Q4 2011 and 18% on Q1 2011 (CBRE). Investors in the European commercial market continue to reflect the prevalent risk-averse sentiment. The relative economic stability of the countries appears to have been reflected in the location preference for investment, with the UK, Germany and Nordic countries accounting for 80% of the quarterly total European investment. In fact, investment in the Nordic countries was up 49% on Q1 2011.

The region with the most significant reduction on the previous quarter was France, where €1.7bn of transactions were recorded in Q1 2012, down significantly on the €6.5bn transacted in Q4 2011 (CBRE).

The office sector remained the most popular with investors while there was a surprising decrease in the value of retail investments made across Europe. Just €3.8bn were transacted in retail investments in Q1 2012, compared to €9.9bn in Q1 2011 and €8.4bn in Q4 2011 (JLL). This may be partly due to a significant reduction in the number of large investment transactions, typically shopping centres that significantly increased the volumes in Q1 2012 and Q4 2011, and the lack of available prime investment product.

Disposals

The investment manager has undertaken a detailed business plan evaluation on both a corporate level and property by property level to determine an optimal strategy for realisation. This strategy is influenced by the challenges posed from rising vacancy at asset level, a weak debt and investment market, and unrecognised deferred tax liabilities especially on the French portfolio. The first phase of the disposal strategy is to sell down assets that can optimise and accelerate the deleveraging process while ensuring all debt covenants continue to be met. The resulting portfolio will therefore be well positioned ahead of senior debt expiry in December 2013. In achieving this strategy, the Company is executing asset management initiatives across the portfolio in order to maximise return on disposals. An initial wide marketing is underway on four assets where it is believed the Company can capitalise on completed asset management initiatives and/or opportunities in the investment market.

The Company is targeting the disposal of these four assets to generate €60 million of proceeds.

Active Asset Management

Investors' risk appetite remains low and thus assets with short leases or vacancy are being heavily discounted on the market. Therefore, the Company has continued to focus asset management on securing new and existing income to stabilise portfolio income as well as enable the Company to optimise value on disposals. Over the six months to 31 March 2012, the Company successfully secured 3.9% of portfolio income by re-gearing leases with existing tenants for average weighted lease term to break of 6.4 years. One lease extension was secured with Communauté Française, a tenant fully occupying a 3,744 sqm office asset in central Brussels, Belgium. The lease, due to expire in August 2012, has been extended for fixed nine years at a rent of €599,000 which is slightly above ERV. An additional 11.5% of portfolio income has secured heads of terms with existing tenants. This includes re-gearing the lease with DHL at Lutterberg, Germany for a fixed 10 year term until 2022 which will become effective upon sale of the asset. As a result, asset liquidity is significantly enhanced and the Company anticipates disposal of this asset within the next six months.

Vacancy in the portfolio has risen over the six months to 31 March 2012 as a number of occupiers have struggled to maintain clients for their logistics operations on sites in France. In Germany, Marktkauf, the anchor tenant in a shopping centre in Roth, vacated the site at the quarter end following a dispute over their contracted lease terms which expire in 2017. Negotiations with the tenant are ongoing. The situation presents an opportunity for the Company to restructure and improve the retail centre, thus attracting new tenants before disposing of the asset.

Frequent communication with tenants and local agents has resulted in leasing a total 2,270 sqm of vacant office and retail space to existing tenants who required additional space on assets in France, Belgium and Germany. Post quarter end, the Company agreed heads of terms with a local occupier to let a fully vacant warehouse in Chateauneuf-de-Gadagne, France. The 17,435 sqm asset is in a difficult location, has been vacant since 2008 and no longer qualifies for user health and safety permits. With a 9 year firm lease, the Company will benefit from additional income of €250,000 pa and a reduction in void costs of €46,000 pa.

The success in securing existing leases and new tenants will help reduce the impact of future income loss in the portfolio. With tenants representing 9.4% of estimated rental value having served notice to break in the next six to nine months, portfolio rental income will come under increasing pressure in the short term. Negotiations are ongoing with existing and prospective tenants to agree new lease terms. In addition, tenants occupying logistics and office accommodation in Spain and France, representing 7.0% of portfolio income have waived their upcoming break options and have thus ensured income security for an additional two to three years.

Finance

As at 31 March 2012, the Company had drawn down a total of €286.7 million of senior debt in respect of its €359.3 million facility with the Bank of Scotland. In addition, the Company had cash balances of €24.7 million (excluding tenant deposits of €4.2 million and escrow items of €2.4 million) at that date, giving a net debt position of €262 million.

The Company's gross Loan To Value ("LTV") ratio as at 31 March 2012 was 65.91% and the net debt LTV was 60.2%. As a result of the valuation decline this quarter, the Company's gross LTV under the Finance Documents with the Bank of Scotland rose to 65.91% (30 September 2011:66.1%) which still remains substantially below the LTV covenant of 80% in 2012. On 26 January 2012, the Company announced that it had used €11.3 million from its existing cash balances to make a further repayment of the senior debt facility and thus reduce its drawn debt facilities to €286.7 million, thereby decreasing the LTV to below 65% (as calculated by reference to 31st December 2011 valuation) and maintaining a loan margin of 2.25%.The bank margin is currently determined by reference to the 31 December 2011 valuation and the next semi-annual ICR covenant test will be at 30 June 2012 valuation.

All debt is fully hedged against changes in European interest rates until December 2013, giving a total interest cost of 6.45% per annum at current LTV levels.

With the senior debt facility expiry in December 2013, the Company is focusing its efforts on positioning the portfolio for refinancing. This means selling down assets and using proceeds to lower the LTV ratio while making sure ICR ratio per country stays at an attractive level. Given the current investment and occupier markets there remain challenges ahead but the Company is confident these initiatives will result in a successful outcome.

Strategy

The Investment Manager is fully committed to implementing the structured realisation strategy which the Board has recognised may be over a longer timescale than originally expected. The four assets being widely marketed are the results of a full strategic review of the portfolio both at asset and at corporate levels. These sales will be the first step towards deleveraging and ultimately returning cash to shareholders. Given the coming senior debt expiry and forecast rise in vacancy across the portfolio over the next 12 months, we remain focused on making sure the Company will be in a better position following these short term challenges. Asset management is key in maximizing income and achieving the designed sales programme. While applying this strategy and making the Company stronger with repositioned assets and a leaner balance sheet, the Company will remain open to opportunities both on a portfolio basis and at corporate level.

Ludovic Bernard

Fund Manager

Internos Real Investors

21 May 2012

Responsibility Statement

We confirm that to the best of our knowledge:

(a) the condensed consolidated interim financial statements for the six months ended 31 March 2012 have been prepared in accordance with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group;

(b) the interim Financial Information includes a fair review of:

i. important events having occurred during the six months ended 31 March 2012, together with their impact on the condensed consolidated interim financial statements;

ii. the principal risks and uncertainties for the remaining six months of the financial year; and

iii. the information relating to related parties' transactions and changes therein.

By order of the Board,

Tom Chandos Robert DeNormandie

Chairman Chairman of Audit Committee

21 May 2012 21 May 2012

CONDENSED CONSOLIDATED INCOME STATEMENT

Unaudited for the six months ended 31 March 2012

The accompanying notes 1 to 16 form an integral part of these condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Unaudited for the six months ended 31 March 2012

All items in the above statement are derived from continuing operations.

The accompanying notes 1 to 16 form an integral part of these condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited as at 31 March 2012

The condensed consolidated financial statements were approved by the Board of Directors on 21 May 2012 and signed on its behalf by:

Tom Chandos Robert DeNormandie

Chairman Chairman of Audit Committee

The accompanying notes 1 to 16 form an integral part of these condensed consolidated interim financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Unaudited for the six months ended 31 March 2012

The accompanying notes 1 to 16 form an integral part of these condensed consolidated interim financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited for the six months ended 31 March 2012

All items in the above statement are derived from continuing operations. The accompanying notes 1 to 16 form an integral part of these condensed consolidated financial statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2012

1 Reporting entity

Invista European Real Estate Trust SICAF ("the Company") was incorporated as a "société anonyme" under the laws of Luxembourg on 6 June 2005. On 17 November 2006 the Company was converted into an investment company with fixed capital "société d'investissement à capital fixe" ("SICAF"). Through its subsidiaries (together "the Group") its main activity is to evaluate, make and actively manage direct and indirect investments in real estate in Continental European countries.

The Company is a public limited liability company incorporated for an unlimited term. The registered office of the Company is established at 25C, Boulevard Royal, L-2449 Luxembourg. Information pertaining to the Company is included to the extent required by the London Stock Exchange listing rules. This information should not deem to represent statutory annual accounts, which are separately prepared in accordance with International Financial Reporting Standard (IFRS) as adopted by the European Union.

2 Basis of preparation

2.1 Statement of compliance

These condensed consolidated financial statements for the six months ended 31 March 2012 have been approved for issue by the Board of Directors on 21 May 2012 and have been prepared in accordance with IAS 34 Interim Financial Reporting.

These condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Company's annual consolidated financial statements for the year ended 30 September 2011.

2.2 Going concern

The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated financial statements.

2.3 Basis of measurement

The condensed consolidated financial statements have been prepared on the historical cost basis except for the following material items:

- Investment in properties have been revalued as at 31 March 2012 (note 4),

- Derivative financial instruments are measured at fair value as at 31 March 2012 (note 13).

The significant accounting estimates and judgment applied in the preparation of the condensed consolidated financial statements are consistent with those applied in the preparation of the Company's annual consolidated financial statements for the year ended 30 September 2011.

2.4 significant accounting policies

The accounting policies applied by the Group in these condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 September 2011.

3 Seasonality of operations

Rental income, other revenues and costs are received and incurred smoothly over the accounting period. Therefore no additional disclosures need to be made in the condensed consolidated financial statements as a result of seasonality.

All of the above investment properties have been pledged as collateral on the interest bearing loans and borrowings disclosed in note 10.

The net change in the value of the investment property also includes the valuation of assets sold:

5 Non-current assets classified as held for sale

As at 31 March 2012, no non-current assets were classified as held for sale.

Issuance of ordinary shares

The Company has an issued share capital of €25,998,091 (30 September 2011: €25,998,074; 31 March 2011: €25,997,988) consisting of 259,980,909 shares (30 September 2011: 259,980,739 shares; 31 March 2011 259,979,880 shares) without indication of nominal value all of which have been fully paid up.

The net asset value per ordinary share is based on net assets of €118 million as at 31 March 2012 (30 September 2011: €131 million; 31 March 2011: €145) and 260.0 million ordinary shares outstanding at 31 March 2012 (30 September 2011: 260.0 million; 31 March 2011: 260.0 million).

(1) €:£ exchange rate of 1.1986 as at 31 March 2012; € 1.1492 as at 30 September 2011; € 1.137 as at 31 March 2011.

(2) Exercise price of warrants of £0.29

The calculation of the basic earnings per share for the financial period ended 31 March 2012 is based on the loss attributable to ordinary shareholders of €14 million (30 September 2011: loss of €12 million; 31 March 2011: loss of €4 million), and the weighted average number of ordinary shares outstanding during the period ended 31 March 2012. The calculation of diluted earnings per share at 31 March 2012 is based on a diluted loss attributable to ordinary shareholders of €14 million (30 September 2011: loss of €12 million; 31 March 2011: loss of €4 million), and a weighted average number of ordinary shares outstanding during the period ended 31 March 2012 after the adjustment for the effect of all dilutive potential ordinary shares.

The conversion and assumed exercise of warrants to ordinary shares are ignored in the calculation of diluted loss per share since these are anti dilutive.

9 Preference shares dividend

On 30 December 2009 the Company issued 29,137,134 redeemable preference shares with one warrant attached per preference share. The preference shares confer the right to a cumulative preference share dividend payable semi-annually.

The payment dates for the preference share dividend are in the third week of June and the third week of December respectively, as changed by the Board on 23 November 2010.

Since 30 December 2009, four dividends of £0.09 per preference shares issued were paid on 28 May 2010 (€1.2 million), on 24 December 2010 (€1.7 million), on 24 June 2011 (€1.5 million) and 23 December 2011 (€1.5 million).

The Group signed a forward exchange contract with Bank of Scotland's Treasury Group to protect the Euro payment of the next four GBP dividend payments until December 2013.

10 Interest bearing loans and borrowings

This note provides information about the contractual terms of the Group's interest bearing loans and borrowings, which are measured at amortised cost.

As at 31 March 2012, the Group had €286.7 million of outstanding indebtedness with the Bank of Scotland (30 September 2011: €298.0 million). The Company's loan to value ("LTV") (gross debt divided by market value of properties) under the Bank of Scotland loan documentation at that date was 65.9% (30 September 2011: 66.1%), against a covenant of 80.0% (30 September 2011: 82.5%).

Terms and debt repayment schedule

The Company and the Group have related party transactions with its subsidiaries, shareholders and certain Directors.

There has been no material changes in the related party transactions described on page 70 of the annual report for the year ended 30 September 2011.

Directors' fees

The Directors of the Company and its subsidiaries were paid a total of €82,434 (2011 six months: €93,859) in Directors' fees during the period.

The Group also operates an inter-group trading account facility with its subsidiaries whereby it may receive income on behalf of its subsidiaries or pay expenses on their behalf. These balances are non-interest bearing and are settled on demand.

Invista Real Estate Investment Management Limited ("Invista REIM") acted as the Investment Manager of the Group until 14 December 2011. Invista REIM received Investment Management fees of €0.7 million. The conditions for payment of a performance fee to the Investment Manager were not met during the period under review and as such no provision for performance fees was made in the condensed consolidated income statement.

With effect from 15 December 2011 Internos Real Limited ("Internos") took over the management of the Group's assets and received investment management fees of €453,004. In addition the Group paid to Internos a transition fee of €84,677 as well as a fee of £60,000 (€71,900) in connection with the on boarding of the entire Invista REIM Paris team to Internos.

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

i. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

ii.Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or the liability, either directly (e.g. as prices) or indirectly (i.e. derived from prices);

iii.Level 3: inputs for the asset or liability that are not based on observable market data.

Risk and Uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 30 September 2011. A detailed explanation of the riskssummarisedbelow, together with the Group's objectives, policies and processes for measuring and managing them, can be found on pages 71 - 75 of the annual report and cover the following areas:

·; market and operational risks;

·; currency risk;

·; credit risk;

·; liquidity risk; and

·; financial risk management.

The operating segments derive their revenue primarily from rental income from lessees. All of the Group's business activities and operating segments are reported within the segments below. 

The segment information for the year ended 30 September 2011 is as follows:

Montowest litigation

In April 2010, the Court ruled in favour of Montowest, a subsidiary company of the Group, in respect of a litigation process in relation to roof damage that occurred in 2006. Total rental receivable as at 31 March 2012 was €7.4 million, representing an insurance receivable of €2 million and a tenant debt of €5.4 million. A provision of €1.1 million has been booked against the insurance receivable, leaving a net total exposure of €6.3 million (including VAT and deferred income). Rents paid by the tenant of €4.8 million are currently held in an escrow account, pending the completion of the litigation.

For the period ended 31 March 2012 there were no significant post balance sheet events.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Glossary

Adjusted gross assets is the aggregate value of all of the assets of the Group, including net distributable but undistributed income, less current liabilities of the Group (excluding from current liabilities any proportion of monies borrowed for investment whether or not treated under accounting rules as current liabilities), as shown in the consolidated accounts of the Group.

Earnings per share (EPS) is the profit after taxation divided by the weighted average number of shares in issue during the period.

Net equivalent yield is the time weighted average yield between the net initial yield and the reversionary yield.

Estimated rental value (ERV) is the Group's external valuers' reasonable opinion as to the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.

Gross rental income or gross rent is the annualised rental income receivable in the period prior to payment of non-recoverable expenditure such as ground rents, local taxes, insurance and property outgoings.

Gross initial yield (GIY) is the gross rent expressed as a percentage of the net valuation of property portfolio.

Net asset value (NAV) are shareholders' funds, plus the surplus of the open market value over the book value of both development and trading properties, adjusted to add back the change in fair value of the warrants and deferred tax.

Net initial yield (NIY) is the net rental income expressed as a percentage of the gross valuation of the property portfolio.

Net rental income or net rent is the annualised rental income receivable in the period after payment of non-recoverable expenditure items such as ground rents, local taxes, insurance and property outgoings.

Potential rent is the rent achievable if all the remaining vacant space is let at the estimated rental value and added to the current gross rental income.

Reversionary yield is the anticipated yield, which the Net initial yield will rise to once the rent reaches the estimated rental value.

RNS, Regulatory News Services (UK stock market), which is the service used by the London Stock Exchange to publish company results, share issues, changes in the board of directors and other items which may affect the price of shares

CSSF, "Commission de Surveillance du Secteur Financier", which is responsible for the prudential supervision of credit institutions, other professionals of the financial sector, undertakings for collective investment, pension funds, SICARs, securitisation undertakings issuing securities to the public on a continuous basis, regulated markets and their operators, multilateral trading facilities and payment institutions. It also supervises the securities markets, including their operators.