Thg Regulatory News (THG)

15 May 2006 10:04

Terrace Hill Group PLC15 May 2006 Terrace Hill Group PLC ("Terrace Hill") Joint Investment in £272 Million Residential Portfolio Terrace Hill Group PLC, the AIM listed property group, is pleased to announcethat further to the announcement on 10 March 2006, it has made an investmentamounting to 49% of the equity in a new company, Terrace Hill Residential PLCformed for the purpose of the arrangements set out below. The other shareholder,which is investing on the same equity terms, is a company owned by family trustsfor the benefit of Robert Adair, Terrace Hill's Chairman, and family. Thetrusts are providing collateral to allow a higher loan amount to be secured onbetter terms than might otherwise be possible. The purchase will be funded witha bank loan set at around 85% of value; the balance will be funded by equity. Terrace Hill Residential PLC has, through its subsidiary Terrace Hill Lettings,exchanged contracts to acquire the portfolio of residential property belongingto at.home Nationwide Limited, a subsidiary of Nationwide Building Society. Theat.home portfolio comprises 2253 flats and houses throughout the UK. Thepurchase price is £272.62 million. Terrace Hill had initially been approached to acquire the portfolio jointly withother parties. However, the Directors are pleased that Terrace Hill achievedits preferred position by negotiation with the Adair Trusts at a 49% equitylevel to provide significant influence but on a lower risk basis. Terrace HillResidential PLC will not be consolidated in Terrace Hill's accounts but treatedas an associate. Terrace Hill Managing Director Philip Leech said: "With house prices showingpositive progress we believe now is the right time to increase our exposure tothe residential market. We have previously sold the bulk of our own residentialproperty which amounted to around 1300 units at the height of the last growthcycle and is now under 350 units. A particular attraction of the portfolio tous is its strong concentration in two specific areas of interest to us - London(573 units valued at £105.1 million) where the recent return of house pricegrowth has been noticeable even as we have been negotiating, and our traditionalcore area of Scotland (877 units valued at £99.9 million) where notwithstandingcycles elsewhere we have continued to see regular growth over recent years andexpect this to be maintained. The majority of our own current holding ofresidential property is in Scotland. "I believe this investment provides us with an excellent opportunity to furthergrow our shareholder value. As an investment class, residential property iswell known to us and has already contributed significantly to our growth in pastyears. "We also now have the added opportunity of considering the possibility ofTerrace Hill Residential PLC and Terrace Hill Lettings being spun out as a REIT(Real Estate Investment Trust) should that market prove as attractive toinvestors as experience in other countries suggests may be possible." In the negotiations, Terrace Hill's corporate finance subsidiary, MercantileSecurities (Scotland) Limited (regulated by the Financial Services Authority),has advised, and in the future another subsidiary of Terrace Hill will providestrategic property advice under contract to the joint owner. Staff of at.homeNationwide Limited will transfer to a subsidiary of Allsop ResidentialInvestment Management Limited which will provide lettings management. TerraceHill Residential PLC will be assisting towards Allsops costs in taking onat.home staff. * * ENDS * * Contacts Philip Leech, Group Managing Director Tel: 01642 243444 Alasdair Robinson, Noble & Company Limited Tel: 0131 225 9677 Isabel Crossley, St Brides Media & Finance Ltd Tel: 020 7242 4477 Notes (1) For accounting purposes the property will be carried as the aggregateof individual vacant possession values which will show an uplift in valuereflecting the purchase discount associated with the sale of such a largeresidential portfolio. (2) Terrace Hill Group PLC - AIM-listed property group with a Triple NetAsset Value at 31st October 2005 of £89.985 million. It has two divisions,Commercial Development and Residential Investment and Development, with a totaldevelopment programme of around £900 million. Terrace Hill reported an increaseof over 20% in pro-forma Triple NAV to 48.06p per share in the year to 31October 2005, and a 40% increase in final dividend from 0.5p per share to 0.7pper share. This information is provided by RNS The company news service from the London Stock Exchange