Trafalgar Prop Regulatory News (TRAF)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014

11 April 2018

TRAFALGAR PROPERTY GROUP

("Trafalgar", the "Company" or "Group")

Memorandum of Understanding with Luxembourg Investment Fund

Trafalgar Property Group plc (AIM: TRAF), the AIM quoted developer of residential, assisted living and extra care property, announces that the Company and its wholly owned subsidiary, Trafalgar Retirement + Limited ("Trafalgar Retirement +"), have signed a memorandum of understanding ("MOU") with DIS Partners Holding Luxembourg S.à r.l. ("DIS"), a subsidiary of a Luxembourg based investment fund. The MOU, which has an effective date of 10 April 2018, establishes a framework for the provision by DIS, subject to the satisfaction of certain conditions, of funding required for the development of two potential assisted living/extra care sites, comprising circa 140 units in aggregate, which Trafalgar Retirement + holds option agreements to acquire, subject to the grant of appropriate planning permissions.

In line with the strategy set out by the Company at the time of the acquisition of Beaufort Homes Limited (subsequently renamed Trafalgar Retirement +) in February 2018, Trafalgar Retirement + intends to develop assisted living/extra care apartments for purchase by owners, who would then receive care in their own homes. DIS intends to commission the necessary due diligence, studies and surveys to evaluate whether one or both of the development sites meet DIS's investment criteria. Should DIS be satisfied that its investment criteria are met, DIS will serve notice that it intends, subject to the grant of planning permission satisfactory to DIS and which is immune from challenge, to acquire the site(s) and fund the construction projects. DIS and Trafalgar Retirement + will then prepare the relevant formal agreements for the development of the initial site(s) on the basis outlined in the MOU.

Trafalgar Retirement + will act as development manager for the projects. Whilst the final terms for the development of any sites will be subject to DIS and Trafalgar Retirement + entering into formal agreements, the MOU sets out the principal terms for the profit share on any development between the two parties. The MOU provides that, after DIS has achieved an agreed return on investment, the first £2 million of profits generated from the sale of units shall be divided as to 60% for Trafalgar Retirement + and as to 40% for DIS. The next £2 million of profits generated, and any sum in excess of £2 million, shall be divided as to 75% for Trafalgar Retirement + and as to 25% for DIS, unless DIS's funding is leveraged, when the division of profits would remain divided 60:40 subject to this calculation not creating a loss versus the percentages set out for unleveraged transactions. While DIS has committed to considering two sites initially, the MOU allows for DIS to acquire further assisted living development sites subject to their investment criteria being satisfied.

The MOU does not require DIS to proceed with the proposals outlined therein and the MOU is subject to a number of factors, including contract terms being agreed and DIS being satisfied as to due diligence, planning permission and its own investment criteria. Therefore, there can be no certainty that the MOU will lead to contracts and/or fundraising with DIS being concluded nor as to the timing or final terms of such. Further updates will be provided as soon as possible as appropriate.

Commenting on the MOU, Chris Johnson, CEO of Trafalgar, said: "The MOU is a major step for the Company and provides the basis for the necessary funding for Trafalgar Retirement + to fully develop the initial two assisted living/extra care schemes jointly with DIS, subject to securing the required planning permissions. In addition, and subject to the DIS investment criteria being met, the MOU agreement also provides the potential for DIS to acquire further sites over the ensuing four years on the same terms. We look forward to working with our partners and updating shareholders on the progress of our assisted living/extra care projects in due course."

Commenting on the MOU, Regina Durazzini, DIS representative, said: "We are happy to enter into this agreement with Trafalgar, allowing us to deploy our funds in the UK around the concept of assisted living, in which we strongly believe. We are confident that working together with such a professional team and our resources will make these first two assisted living/extra care schemes that we are considering a first step in a long chain of projects in the UK providing quality product to a growing market."

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