Final Results

RNS Number : 1640P

Invista Foundation Property Tst Ltd

12 July 2010

 



12 July 2010

Invista Foundation Property Trust Limited 

("IFPT"/ the "Company"/ "Group")

Audited Annual Report for the year ended 31 March 2010

The Invista Foundation Property Trust today announces its results for the year ended 31 March 2010.

Financial Highlights

·      Profit before tax £36m (31 March 2009: loss of £184m)

·      Net Asset Value per share up 19.6% to 52.4p (31 March 2009: 43.8 p)

·      Total property assets of £300m (31 March 2009: £304.6m)  

·      Earnings per share 10.7p (31 March 2009: loss per share of 55p)

·      Dividend declared and paid of 3.52p per share for the twelve months to 31 March 2010 resulting in an NAV total return of 29% for the period

·      Gearing further reduced: The Company's LTV ratio, net of all cash and following post year-end sales stood at 36.4% (31 March 2009: 43.2%)

Operational Highlights

Significant further progress achieved in reducing risk, strengthening balance sheet and seeking to drive income through active management of the portfolio.

·      £40m of debt repaid at par, increasing net income by approximately £2.1m per annum

·      Two high yielding acquisitions completed for a total of £25.16m, which generate rent of £2.24m per annum. A further £15m of cash is expected to be deployed into further opportunities in 2010

·      Seven disposals completed during the period for £38.75m at an average 12.8% premium to the valuation as at 31 March 2009

Commenting, Andrew Sykes, Chairman of the Board, said:

"Debt reduction, together with recent acquisitions and the successful active management of IFPT's portfolio has put the Company on a more stable footing providing it with the prospect of rising income and dividend cover over the next two years. The Board and Manager will continue to concentrate on seeking opportunities to grow the Company's earnings potential, while maintaining a sound balance sheet."

Duncan Owen, Chief Executive of the Company's Investment Manager, added:

"The strong recovery in UK commercial property values, together with our pro-active asset management strategy have contributed to a positive NAV total return over the last year.  The Company is on a sounder footing and now better placed to generate strong performance and greatly increased dividend cover over the next few years. Whilst macroeconomic risks remain evident, the Company is now well positioned and will have opportunities to utilise its cash resources to acquire fundamentally well-placed properties and actively manage existing assets to generate strong rental income growth. 

"We therefore continue to focus on driving rental and capital growth over the medium to long term, and will seek to acquire assets with strong fundamentals that are capable of generating sustainable out-performance and income and capital growth through active management."

For further information:

Duncan Owen

Invista Real Estate Investment Management                                                                      020 7153 9345

Stephanie Highett / Dido Laurimore/ Rachel Drysdale

Financial Dynamics                                                                                                                020 7831 3113

Invista Foundation Property Trust Limited

Consolidated Annual Report for the year ended

 31 March 2010

Contents	Page
Financial Summary	2
Company Summary	3
Chairman's Statement	5
Investment Manager's Report	8
Board of Directors	19
Report of the Directors	20
Statement of Directors' Responsibilities	33
Consolidated Statement of Comprehensive Income	34
Consolidated Balance Sheet	35
Consolidated Statement of Changes in Equity	36
Consolidated Cash Flow Statement	37
Notes to the Financial Statements	38
Independent Auditors' Report	56
Glossary	58
Notice of Annual General Meeting	59
Corporate Information	62

Invista Foundation Property Trust Limited aims to provide Shareholders with an attractive level of income together with the potential for income and capital growth from investing in UK commercial property.

Financial Summary

v Net Asset Value (NAV) per share increased by 19.6%

v Earnings per share of 10.7p   

v The Company has declared and paid dividends amounting to 3.52 pence per share ('pps')

v Total NAV return of 29.3%

	31 Mar 2010	31 Mar 2009	% Change
NAV1 (£000)	169,453	141,663	19.6
NAV per Ordinary Share1 (pence)	52.4	43.8	19.6
Share price (pence)	42.0	23.0	82.6
Share price discount to NAV	(19.85%)	(47.5%)
NAV total return2	29.3%	(56.9%)
FTSE All Share Index	2,910.2	1,984.2	46.7
FTSE EPRA/NAREIT UK Real Estate Index	1,107.7	710.4	55.9
Total Group assets less current liabilities (£000)	£379,128	£382,696	(0.9)
Borrowings as % of total assets less current liabilities	45.8%	55.8%	(10.0)3
Loan to value ratio net of all cash  and following post year-end sales	36.4%	43.2%	(6.8)3

Sources: Invista Real Estate Investment Management and Datastream based on returns during the period from 1 April 2009 to 31 March 2010

¹           Net Asset Value is calculated using International Financial Reporting Standards

²           Net Asset Value total return calculated by Invista Real Estate Investment Management Limited

³         Percentage point change in borrowings

COMPANY SUMMARY

Invista Foundation Property Trust Limited and its subsidiaries (the 'Company'/the 'Group') hold a diversified portfolio of UK commercial properties, which is mainly invested in three commercial property sectors: office, retail and industrial. The Group may also invest in other sectors from time to time. The Group will not invest in other listed investment companies. In pursuing the investment objective, the Investment Manager concentrates on assets with good fundamental characteristics, a diverse spread of occupational tenants and with opportunities to enhance value through active management.

Performance Summary

Reconciliation of Net Asset Value per accounts to published Net Asset Value

	31 March 2010	31 March 2009
	Total £000	Total £000
Net Asset Value as published on 28 April 2010	169,453	141,785
Adjustment of  expense	-	(122)
Net Asset Value per financial statements	169,453	141,663

Property performance

Value of Property Assets	299,975	304,579
Current annualised rental income (prior to post year end sales)	21,965	27,407
Estimated open market rental value (prior to post year end sales)	25,606	31,909
Underlying property performance (year ending)* +	18.8%	(25.4%)
IPD Quarterly Version of Balanced Monthly Index Funds (year ending 31 March 2010)*	14.7%	(24.6%)

* Source: Investment Property Databank ('IPD')

+ Direct underlying property portfolio

Summary consolidated statement of comprehensive income

	1 April 2009	1 April 2008
	to	to
	31 March 2010	31 March 2009
	£000	£000
Net rental and related income	25,013	31,903
Realised and unrealised gains/(losses) on investment property	30,784	(159,730)
Expenses	(5,560)	(7,807)
Net finance costs Share of profit/(loss) of associates and joint ventures	(17,036) 2,802	(13,584) (34,720)
Profit/(loss) before tax	36,003	(183,938)
Taxation	(1,305)	(124)
Profit/(loss) for the year	34,698	(184,062)
Other comprehensive income: Effective portion of changes in fair value of swaps	4,483	(23,886)
Total comprehensive income/(loss) for the year attributable to the equity holders of the parent	39,181	(207,948)

Earnings and dividends

Earnings per share (pence)	10.7	(55.0)
Dividends paid per share (pence)	3.52	5.135
Annualised dividend yield on 31 March share price	8.4%	15.3%

Bank borrowings

	31 March 2010	31 March 2009
On-balance sheet borrowings (£000s) (excluding liquidity facility)	173,500	213,500
On-balance sheet borrowings (excluding liquidity facility) as % of total assets less current liabilities	45.8%	55.8%
Loan to value ratio, net of all cash and following post year-end sales	36.4%	43.2%

Estimated Annualised total expense ratio

As % of total assets less current liabilities	1.47%	2.04%
As % of equity	3.28%	5.51%

 

Chairman's Statement

The UK commercial property market reached its nadir in July 2009, after a peak to trough value decline between June 2007 and July 2009 of -44% (according to Investment Property Databank 'IPD').  Since that point low interest rates, combined with relatively high income returns, have contributed to a strong recovery in capital values, and over the year to 31 March 2010 the UK commercial property market generated a total return of 17.9%. Since the end of March the market has continued to recover, with capital values to the end of May increasing by another 1.4%.  

Despite these growing signs of recovery your Board and Investment Manager remain cautious about the short term market outlook.  The market has polarised, with the recovery in values largely led by prime property where there has been low supply and strong investor demand.  In contrast there is limited demand for secondary property where some values are still falling.  The demand for prime property is largely from private investors and institutions, where demand is likely to slow, possibly coinciding with an increased supply of available properties for sale as some banks seek to dispose of assets.  In contrast with rising capital values, rental values across the market are falling and at the end of May 2010 were 10.8% below their peak in April 2008.

Results

The recovery in property values over the second half of our financial year means that in the 12 months to 31 March 2010, the Group's NAV increased by 8.6 pence per share ('pps') or 19.6% from 43.8 pps to 52.4 pps.  Shareholders have received total dividends of 3.52 pps over the period resulting in a NAV total return of 29%.  From the launch of the Company to 31 March 2010, its NAV total return has been -4.9% per annum.

Strategy

Over the last two years the Company has focused to a large extent on reducing risk, strengthening its balance sheet and seeking to drive income growth through active management of the portfolio.  Over the year to 31 March 2010 and up to today, the following events helped the Company in its achievement of these objectives:

·      £40 million of debt was repaid in January 2010 at par, increasing net income by approximately £2.1 million per annum

·      Two acquisitions totalling £25.16 million were made. These properties generate rent of £2.24 million per annum reflecting an average net initial yield of 8.42% 

·      Seven disposals totalling £38.75 million were made at an average 12.8% premium to the valuation as at 31 March 2009

·      Good progress on a number of income enhancing asset management initiatives

·      Reduction in investment management fees and other expenses

The Company had cash balances at 31 March 2010 of £57 million excluding the Liquidity Facility cash, of which £15 million is pre-committed for disbursement in August 2011 to finance one of the acquisitions listed above, being the development of an office building pre-let to BT plc and £10 million has been invested in the other recent acquisition in Sheffield.

The Company expects to deploy a further £15 million from its cash balances in additional acquisitions and other income enhancing asset management initiatives over 2010, with the remainder held to provide operational flexibility.  Assuming the cash can be deployed as planned, dividend cover should be materially enhanced by the end of 2012. 

The portfolio

Over the 12 months to 31 March 2010 the Group's directly held property portfolio produced a total return of 18.8%, compared with the IPD Benchmark of 14.7%. 

The portfolio's rental value growth outperformed the sector despite making a negative contribution to capital value growth of -3.9%, but asset management activity across the portfolio meant that the Company performed better than IPD which produced a return of -5.7%, where rental value growth made a negative contribution to capital value growth.   Since its inception in July 2004 the Company's direct property portfolio has also outperformed, producing a total return of 3.5% per annum compared with IPD's 2.0% per annum. 

The Group's portfolio continues to be well diversified with an above average weighting to the South East.  The average net initial yield across the portfolio based on the independent valuation dated 31 March 2010 (and net of purchaser's costs) is 6.6%, compared with 7.4% in March 2009. The potential reversionary income yield is 7.94%.

Through active asset management and including all lease agreements that have exchanged, the Investment Manager has maintained the average unexpired lease term at 8.8 years compared with 8.6 years in March 2009.  The portfolio vacancy rate increased slightly over the period, to 9.8% in March 2010 compared to 8.6% in March 2009.

Recent transactions have contributed to an improvement in tenant quality and an increase in the average weighted unexpired lease length.  In February the Company exchanged contracts to acquire a new high quality office development in West Bromwich which has been pre-let to BT who will on completion of the development expected in August 2011 become the Company's largest tenant replacing the real estate consultant Cushman & Wakefield.  The Company's most recent acquisition of an office building in Sheffield for £10.2 million has resulted in Norwich Union Life and Pensions becoming a new significant tenant paying £1.039 million per annum on a lease which has nine years remaining. 

Financing

In July 2009, the Company sought agreement from its bondholders to make a tender offer of up to £55 million to repurchase and cancel up to £75 million of its securitised debt at a discount to par. However a majority of noteholders responded negatively to the proposal, and it was withdrawn in August 2009.  Subsequently, in January 2010 the Company repaid £40 million of debt at face value, which resulted in increasing net income by £2.1 million per annum.  Noteholder consent was not required for debt repayment at par value and there were no prepayment fees. The Company was however obliged to terminate interest rate swaps hedging this portion of its borrowings at a cost of £3.95 million, which is reflected in the statement of comprehensive income. 

Following this repayment, the Group's borrowings now consist of a securitised facility of £173.5 million, fully hedged against interest rate movements until maturity in July 2014 at a total cost of 5.69% per annum. 

The two key covenants relating to the Company's securitised loan facility are monitored regularly by the Board.  The facility has a loan to value ratio covenant of 60%, and on the basis of the 31 March 2010 valuation, adjusted for transactions since the year end the ratio stood at 40% after all cash held by the Group is netted off against debt.  The second key covenant is the interest cover ratio ('ICR') requiring net rental income to exceed 150% of interest payable, which again compares well to current interest cover of 210% when taking into account the debtors received since the year end and adjusted for transactions since the year end.

The Group has three joint venture investments and associates which were carried at nil value at 31 March 2009 following declines in the value of the underlying property investments.  Following the recovery in capital values and asset management activity, two of these investments, Merchant Property Unit Trust and Crendon Industrial Partnership Limited have increased in value over the period, adding £2.8 million, or 1 pps, to NAV.  The third and largest original investment in Plantation Place continues to be held at nil value. The Investment Manager's report provides more detail on the three investments. 

Investment Manager review and fees

The Board reviews the Investment Manager's performance at its quarterly Board meetings.  In addition, the Board made its annual visit to the Investment Manager in April 2010 to review its capabilities in more depth.  Following this visit, the individual Directors then formally recorded their individual assessments of the performance of the Investment Manager in writing, followed by a discussion of these assessments in private session. On the basis of this review, the Board remains satisfied that the Investment Manager has the appropriate capabilities required to support the Company, and believes that the continuing appointment of the Investment Manager is in the interests of Shareholders.

As noted above, the Board and the Investment Manager have introduced a programme of measures to control costs and expenses.  As part of this strategy and in order to align the Manager's interests more closely with the interests of shareholders, the Investment Management base fee has been changed from a fee based on Gross Assets to a fee of 2% of NAV up to £150 million, plus 1.75% of NAV between £150 million and £200 million, plus 1.5% of NAV over £200 million.  The NAV based fee will be subject to a floor of £229,000 per month save that in the event that this floor is breached, the fee will then revert to being calculated on the previous basis of 0.95% per annum of the Gross Asset Value ('GAV'), until the NAV recovers to a point where the monthly NAV based fee would once again exceed £229,000.

The current NAV linked performance fee arrangement will not change as part of the new base fee arrangement and the combined new base fee and any performance fee based on the current arrangement cannot exceed 5% of the Company's total NAV during any financial year ending 31 March. 

The new fee arrangement was back-dated to 1 July 2009 and, based on the 31 March 2010 NAV and GAV, this generated a reduction in the management fee over the year to 31 March of 16% or £434,000.  

Board

The Board conducted its annual review of its own performance and skills through a formal process, in which individual Directors recorded their assessments in writing of the Board's performance against a range of criteria, followed by a private Board discussion. This review concluded that the Board was functioning satisfactorily and that, between them, the Directors had a broad range of appropriate technical and market knowledge and experience.    

Outlook

The property market's short term recovery exceeded the expectations of many forecasters, and the Company has benefited from this improvement.

Debt reduction, together with recent acquisitions and the successful active management of IFPT's portfolio has put the Company on a more stable footing providing it with the prospect of raising income and dividend cover over the next two years. The Board and Manager will continue to concentrate on seeking opportunities to grow the Company's earnings potential, while maintaining a sound balance sheet.

Andrew Sykes

Chairman

Invista Foundation Property Trust Limited

9 July 2010

Investment Manager's Report

Performance

The Chairman's Statement highlights the steps taken to strengthen the Company's balance sheet and grow good quality recurring rental income. This has required an intensively active approach in challenging and volatile market conditions.  In last year's interim report, I noted that the market had passed a point of inflection, with the low point in valuations behind us for UK commercial property markets. The subsequent recovery in the UK commercial property market has seen the sector and the Company recover some of the value falls experienced during the preceding two years.  This is evidenced in the Company's performance, with a decline of 0.9 pps or 2.1% in NAV over the first half of the financial year, followed by 9.5 pps or 22.1% increase over the second half.  This resulted in a NAV uplift over the whole period of 8.6 pps or 19.6%.  The main contributor to the increase in the NAV was an 11.7% increase in the capital value of the underlying portfolio, which compared favourably with the Company's IPD UK Benchmark which registered an uplift of 6.9%. 

Good progress has been made with income enhancing initiatives and the underlying property portfolio continues to generate an above average income yield compared with the UK's IPD peer group Benchmark.  Furthermore over the period the Company entered into a number of contractual commitments for new lettings that will materially increase income over the current financial year, and since the year end the Company has completed an acquisition offering a very attractive income return.    

Strategy

During 2008 and 2009 our strategic objectives were focused on reducing risk, stabilising the balance sheet and positioning the assets to generate additional recurring rental income and out-performance.  The Company is now entering a new phase where the focus is on growing income and dividend cover, with the longer term strategy remaining to focus on property offering strong fundamentals that will help the Company sustain long term performance. We are undertaking a number of asset management initiatives requiring capital expenditure which, if completed as planned, will have the potential to generate high returns on capital as well as additional income.  These initiatives will be accompanied by further acquisitions such as the well let offices in West Bromwich (pre-let to British Telecom) and Sheffield (let to Norwich Union) which provide high income yields with potential for capital value growth. 

The market

The pace of recovery in UK commercial property values has exceeded expectations in the second half of 2009 and into 2010, and as at 30 April 2010 the market is now 14% above its low point in July 2009.  The recovery has been notable for a number of factors, but perhaps most significant was the disconnection between lower rental values and rising capital values. According to IPD between 30 September 2009 and 31 May 2010 returns comprised a negative movement of 2.0% in rental values but an uplift of 16.2% in capital value from yield impact.  Average income yields for commercial property investments fell from 7.7% to 6.6%.  This market recovery has also concealed significant divergence across different sectors.  Looking forward the key questions are whether this recovery is sustainable and which parts of the market will now outperform.  As Invista forecast last year, prime property has generated better total returns than more secondary property.  There has also been a wide divergence of performance between sectors, with retail warehousing for example materially outperforming other retail segments. Spotting value between different types of property will therefore be important to future out performance.

This yield-led recovery has been driven by the substantial injections of liquidity into the financial system that reduced long-term interest rates and increased asset prices across global capital markets.  Over recent months however, we have seen renewed fears over sovereign default risk, accompanied by concerns about the consequences of fiscal retrenchment in the UK.  These macro economic factors mean that the prospects for average rental growth across the property market in the short term are poor.  However, there are also some supply constrained parts of the property market, such as the City of London, where we expect to see strong relative total returns driven in the medium term and so some parts of the market will offer good value.

Therefore, despite the 15% increase in capital values between July 2009 and May 2010, the market is still about 36% below its peak in June 2007. Capital values are still now at levels last seen (prior to the recent correction) in January 2000.  These factors are ensuring continued interest in the sector from a broad range of investors, albeit so far this has been exaggerated for prime, good quality property let to good tenants where demand has exceeded the limited supply of investments for sale.  Consequently, assets in differing parts of the market will now experience a divergence of future returns.  Some properties will offer attractive prospects whilst some will experience higher risk and may suffer from increasing vacancy and falling income returns. We also expect to see more bank led disposals of property portfolios which is likely to constrain the recovery in values whilst offering buying opportunities for financially sound companies.

Property portfolio

The Group's direct property portfolio was valued by Knight Frank at £304.73 million as at 31 March 2010, which increases to £314.93 million when taking account of transactions that have completed since the year end. Following these transactions the Group has 56 direct property assets with an average value of £5.62 million. The portfolio continues to be well diversified by tenant, sector and geography. Over the financial year two of the Group's three joint venture investments have recovered value and further details are set out below.

Sector weightings

Sector	Year end - 31/03/10 (incl post period transactions*)	Year end - 31/03/09
	Net weighting %	Net weighting %
Retail	25.7	25.4
Offices	44.8	45.1
Industrial	25.1	25.2
Other	4.4	4.3

Regional weightings

Region	Year end - 31/03/10 (incl post period transactions*)	Year end - 31/03/09
	Net weighting %	Net weighting %
Central London	8.1	13.2
South East excl. Central London	48.3	46.3
Rest of South	14.2	12.7
Midlands and Wales	16.4	18.4
North and Scotland	13.0	9.4

* following the disposal of Kingston and the acquisition of Sheffield

Top ten properties by value

		Value (£m)	%
1	London SE1, Minerva House	25.50	8.10
2	Brighton, Victory House	20.00	6.35
3	Salisbury, Churchill Way West	15.50	4.79
4	Uxbridge, 106 Oxford Road	14.00	4.45
5	Luton, The Galaxy	13.64	4.33
6	Wembley, Olympic Office Centre	12.35	3.92
7	Brentford, Reynards Business Park	11.25	3.57
8	Basingstoke, Churchill Way	11.20	3.56
9	Sheffield, The Portergate	10.20	3.24
10	Brentford, The Gate Centre	10.00	3.18
	Total as at 31 March 2010 (incl post period transactions)	143.64	45.49

Top ten tenants by rent per annum

		Rent per annum (£m)	%
1	Wickes Building Supplies Limited	1.09	4.5
2	Norwich Union Life and Pensions Limited	1.04	4.3
3	BUPA Insurance Services Limited	0.96	4.0
4	Synovate Limited	0.95	3.9
5	Buckinghamshire New University	0.90	3.7
6	Mott MacDonald Limited	0.79	3.3
7	Recticel SA	0.71	2.9
8	The British Broadcasting Corporation	0.70	2.9
9	Winkworth Sherwood LLP	0.66	2.7
10	Irwin Mitchell LLP	0.56	2.3
	Total as at 31 March 2010 (post transactions)	8.36	34.5

Following the transactions completed since the year end, the portfolio generates annual rental income of £21.96 million equating to a net initial income yield of 6.6% based on the independent valuation as at 31 March 2010. Rent free periods expiring by the end of December 2010 increase the rent by £0.42 million per annum up to a net initial income yield of 6.72%.  The independent valuation estimates the annual rental value of the portfolio to be £26.4 million equating to a net income yield of 7.94%. 

Transactions and asset management activity over the period will generate additional rental income of approximately £3 million per annum between now and the end of 2012. This reflects only the leases where new tenants are currently contractually committed but where the leases are currently subject to a rent free period, refurbishment or development. These lease contracts are generally with good quality tenants. Recent activity has also focussed on securing fixed or minimum uplifts in rents agreed with tenants, which provide for future income growth.  Some examples are set out below in the asset management section.

The table below shows the maturity profile of both current and contracted income on a conservative basis assuming that tenants take the earliest opportunity to break lease contracts and no rental uplifts are achieved at future rent reviews.  It is important to note that activity over the year has increased exposure to good quality tenants.

	% of Rent Passing
Years to Expiry	Earliest Termination	No Breaks
Up to 5	37.27	31.84
5 to 10	19.08	23.40
10 to 15	35.40	27.28
15 to 20	4.46	11.93
Over 20	3.79	5.55

Property portfolio performance

Investment Property Databank ('IPD') has analysed the performance of the Group's underlying direct property portfolio relative to its peer group IPD Benchmark as at 31 March 2010.  The table below shows the performance over 12 months, three years and since inception of the Company in July 2004 relative to the IPD Benchmark.

IPD Sector	IFPT total return			IPD total return			Relative
Period	One year	Three years	Since incep	One year	Three years	Since incep	One year	Three years	Since incep
All Retails	+25.8	-3.8	+5.1	+17.7	-8.3	+2.6	+6.9	+4.9	+2.4
All Offices	+17.9	-5.9	+4.9	+11.5	-9.4	+2.8	+5.7	+3.9	+2.0
All Industrials	+12.6	-8.1	+2.9	+12.8	-7.8	+3.0	-0.2	-0.3	-0.1
All Sectors	+18.8	-5.8	+4.5	+14.7	-8.3	+2.8	+3.6	+2.7	+1.7

IPD Sector	IFPT rental value growth			IPD rental value growth			Relative
Period	One year	Three years	Since incep	One year	Three years	Since incep	One year	Three years	Since incep
All Retails	-6.2	-1.1	+1.1	-5.4	-2.2	+0.2	-0.8	+1.1	+0.9
All Offices	-2.2	-0.5	+1.9	-7.6	-3.8	-0.5	+5.8	+3.4	+2.4
All Industrials	-3.7	-0.4	+0.7	-4.3	-1.8	-0.3	+0.6	+1.4	+1.0
All Sectors	-3.9	-0.6	+1.4	-5.7	-2.6	-0.1	+1.9	+2.1	+1.5

Including the performance of the Company's Crendon Industrial Partnership and Merchant Property Unit Trust joint venture and associate increases the total return for the year to 31 March 2010 from 18.8% to 19.6%.

Disposals

Since 31 March 2009 the Company has exchanged and completed seven disposals for £38.75 million and these are set out in the table below.  These disposals have been completed where asset management initiatives have been completed and we have then decided to exit the property. The average premium to the valuation as at 31 March 2009 was 12.8%. 

Address	Date	Valuation at 31/03/2009 (£m)	Sale price (£m)	Comments
Burgess Hill, Consort Way	May 2009	0.85	0.85	Recently vacated.  Sold to owner occupier.  Reduced void and void costs.
York, Parliament Street	May 2009	1.73	1.90	Removed Jessops and re-let to Vodafone at 22% higher rent.  Sold at 5.5% yield.
Manchester, Sherbert Point	September 2009	1.41	1.93	Vacant.  Sold to special purchaser.
Cannock, Watling Street	October 2009	5.90	5.60	Concern over tenant covenant and future performance.
Yeovil, Middle Street	December 2009	0.46	0.67	Extended lease from five to 10 years.  5.67% net initial yield.
London, Portman Square House (21.6% share)	March 2010	20.54	23.1	Completed asset plan.  Sold due to market conditions.
Disposals exchanged prior to the year end, but completed post year end
Kingston-upon-Thames, Monsoon	April 2010	3.45	4.7	Extended lease from 6 to 15 years.  4.5% net initial yield.
Total		34.34	38.75

As part of the disposal of National Magazine House, which exchanged contracts during the financial year ending 31 March 2009, a second additional payment was agreed to be payable to the Company resulting if an outstanding rent review was agreed at a certain level.  The potential overage payment was capped at £2 million and due to the uncertainty in the market at this time; the figure was excluded from the reported NAV as at 31 March 2009.  During the period the rent review was settled and it triggered an overage payment to the Company of £1.8 million.  This amount is shown in the NAV as at 31 March 2010 as a debtor together with £0.18 million of back-rent due from the tenant.  Subsequent to the year end both amounts have now been received.

Acquisitions

Contracts have been exchanged or completed to acquire two properties for a combined price of £25.16 million at an average initial yield of 8.4% and an average lease term, without tenant options to break, of 12.2 years. 

West Bromwich, All Saints, BT

In February 2010 the Company entered into a forward commitment to purchase a pre-let office development called All Saints in West Bromwich near Birmingham, for £14.96 million.  On completion the property will be let to BT plc on a new 15 year lease, without tenant options to break, at an initial rent of £1.2 million per annum.  The lease will benefit from fixed uplifts of 3% per annum throughout the term of the 15 year lease. The price reflected a net initial yield of 7.6%, after normal purchaser's costs. Construction works are ongoing and completion of the development is expected in August 2011.  This property offers the potential for medium to long term income and capital growth.

Sheffield, The Portergate

In June 2010 the Company completed contracts to acquire The Portergate, a modern office building in Sheffield for £10.2 million.  The property is let to Norwich Union Life and Pensions Limited for nine years, without tenant options to break, at an initial rent of £1.0 million per annum.  The price reflects a net initial yield of 9.63%.  The relatively high yield reflects the fact that the property's actual rent is over the open market rental value.  However, it offers the potential for asset management upside as well as a high income yield secured by a strong tenant.

The Company is considering further acquisitions offering a blend of secure income with the potential to add value through asset management.

Asset management

Over the period asset management activity has focused on delivering four main objectives:

Increase income

On a like for like basis, portfolio income has decreased by 3.7%, principally due to increasing voids.  With the inclusion of contracted new leases subject to rent frees and acquisitions and disposals that have exchanged or completed, the portfolio's total income has increased by 14% over the period.

Maintain low void rates and arrears

The portfolio had a void rate of 9.8% of rental value as at 31 March 2010 compared with 8.6% when the last full year report and accounts was issued in July 2009.  The void rate as at July 2010 is 11.8% compared to the IPD Benchmark of 9.5%.  The main reason for the increase since March was due to the Gate Centre in Brentford where £0.27 million of income was lost due to leases expiring in June and there is now an active management project under way that should add further future value and income from this asset with a new letting.  The accounts show rent arrears in excess of 90 days of £0.5 million as at 31 March 2010 (31 March 2009:  £0.4 million).  Since the year end £0.5 million of those arrears have been recovered.

Increase the average lease length

As at 31 March 2010 and after subsequent transactions that have exchanged or completed, the Group had 204 tenancies with an average unexpired lease length of 8.6 years calculated to the earlier of lease expiry or a tenant's lease break option. This compares to an average lease length of 8.8 years as at 31 March 2009.   The relatively small reduction in average lease length over the 12 month period was due to some longer leases being acquired and granted such as the new letting to Bupa in Brighton (described below) where new long leases have been agreed and income improved. 

Control and reduce costs wherever possible

As highlighted in the Chairman's Statement, progress has been made in reducing costs and expenses.  Most significantly, the basis for calculating Investment and Asset Management fees has been changed over the period resulting in a saving to the Company of £0.43 million as well as continuing to better align us as manager with the Shareholder's Key Performance Indicators.  Expenses are kept under constant detailed review by the Manager and where possible, agents' fees are incentivised linking the total payment to successful outcomes.

Office sector

§ 21 direct assets totalling £141.25 million (31 March 2009: £147.7 million)

§ 64 direct tenants generating £8.58 million per annum (31 March 2009: £9.96 million)

§ 10.78 years weighted lease length (31 March 2009: 8.4 years)

§ 6.71% void (31 March 2009: 7.5%)

Regional weightings of the office portfolio - post transactions

Geography	%
London	21.69
South East	34.74
Rest of South	7.01
Rest of UK	36.55

Brighton, Trafalgar Place, Victory House

In March the Company let its largest individual void by exchanging an agreement for a lease with Bupa Insurance Services Limited ('Bupa') at Victory House, Brighton.  Bupa is taking 45,000 sq ft of office space on a new fifteen year lease with a break at year ten, at a rent of £0.96 million per annum, equating to £21.50 per sq ft.  Mott MacDonald will remain in the balance of the space on a new fifteen year lease with no breaks paying £0.79 million per annum.  The Agreement for Lease with Bupa is conditional on the Company refurbishing the offices at a total cost of approximately £2.9 million.  The works are progressing well and are due to complete on schedule in July 2010.  Upon expiry of Bupa's rent free period of nineteen months, the total rent produced by the building will be £1.75 million per annum up from £1.3 million per annum before the two new lettings to Mott MacDonald and Bupa.

Retail and leisure sector

§ 20 direct assets totalling £99.09 million (31 March 2009:  £91 million)

§ 61 direct tenants generating £7.36 million per annum (31 March 2009:  £7.68 million)

§ 10.57 years weighted lease length (31 March 2009:  11.2 years)

§ 1.41% void (31 March 2009:  3.4%)

Regional weightings of the retail portfolio - post transactions

Geography	%
London	6.36
South East	34.76
Rest of South	28.08
Rest of UK	30.80

Hinckley, Coventry Road

At Hinckley, where the Company secured a 100,000 sq ft outline planning consent in 2007 for a retail warehouse development, a detailed consent for the first phase of the development (37,000 sq ft) was obtained in April 2010.  In addition, terms have been agreed in connection with two pre-lettings totalling 27,500 sq ft and there is also interest from other tenants to occupy the balance of the first phase.  The rent for these pre-lettings is likely to be in the region of £0.36 million per annum of a possible total rent for the first phase of £0.51 million.  Subject to exchanging the first two pre-lettings the Company will commence the development at a total cost of approximately £4.1 million.   The apportioned land price for the initial phase of development based on the independent valuation as at 31 March 2010 is £1 million. Subject to the initial phase being completed there is the potential for a further 40,000 sq ft of retail warehousing and 20,000 sq ft of warehouse storage on the balance of the site which already has planning consent.  This initiative potentially adds significantly to new rental income which is not currently reflected in the Knight Frank valuation or the income analysis set out above. 

Kingston-upon-Thames, Monsoon

In March 2010 the Company exchanged contracts to sell its retail property in Kingston-upon-Thames for £4.7 million, which was subsequently completed and paid for by the purchaser in April 2010.  The disposal followed the conclusion of a successful asset management strategy where the lease to the tenant (Monsoon) was extended from six years to 15 years at a new higher rent with a 14% increase.  The lease extension was secured in exchange for a three month rent free period equating to £55,000.  The disposal was undertaken to take advantage of strong private investor demand for 'fashionable' small prime retail units and the price reflected a yield of 4.5%, one of the lowest yields achieved during this cycle. 

Industrial

§ 15 direct assets totalling £79.17 million (31 March 2009:  £76.8 million)

§ 69 direct tenants generating £5.87 million per annum (31 March 2009:  £6.71 million)

§ 6.05 years weighted lease length (31 March 2009:  5.3 years)

§ 15.98% void (31 March 2009:  3.6%)

Regional weightings of the industrial portfolio - post transactions

Geography	%
London	44.52
South East	16.58
Rest of South	4.27
Rest of UK	34.63

Brentford, Reynard Business Park

Good progress is being made with the longer term asset management strategy for the 173,000 sq ft industrial estate on a 5.8 acre site in West London. The property produces rental income of £0.86 million per annum reflecting a net initial yield of 7.2% based on the valuation as at 31 March 2010 of £11.25 million. 82% of the income is paid by the British Broadcasting Corporation ('BBC') which has a tenant break option in April 2011 and vacant possession of the site could be secured by 2013. The site is surrounded by higher density and  higher value residential real estate and the strategy over 2010 is to promote the site for residential development in the forthcoming London Borough of Hounslow Allocation Development Plan Document.  A scheme has been prepared suggesting an initial capacity of over 300 residential units and whilst the site is currently zoned for employment use, we believe it could make a valuable contribution to housing supply in Hounslow.  Residential development on this site would constitute brownfield regeneration in a sustainable location that accords with all the key principles of national and local Government planning policy.  Securing a planning consent for a viable scheme also has the potential to add significant value to the site and the Company's Shareholders.               

Brentford, Gate Centre

The Gate Centre is a prominent, well located industrial estate on the A4, in West London.  At the front of the estate is a BMW car dealership on a long lease, and immediately to the rear are two terraces of modern, good quality industrial units. Since the year end the leases of four of the units immediately behind the BMW unit have expired which previously paid a rent of £273,000 per annum.  The Company is in advanced discussions to let these units, together with an adjoining existing unit at the estate.  This is a potential value and income enhancing letting that requires capital expenditure but generates good medium to long term growth possibilities as well as an improved immediate increase to the rental income from the investment.

Finance

On-balance sheet finance

£40 million of the Group's on-balance sheet securitised debt was repaid in January 2010 at par which reduced outstanding debt to £173.5 million, and followed the repayment of £50 million in October 2008.  In addition to the debt repayment the Group incurred a £3.95 million swap break cost. Repaying the debt has had a very positive effect on net income.  The repayment in January 2010 and October 2008 increase the Company's net income by approximately £2.1 million per annum. 

The table below sets out a breakdown of the Group's annual interest costs including details of the remaining interest rate swaps that fully hedge its interest payments for the duration of the loan term that matures in July 2014:

	Amount (£m)	Swap Rate (%)	Margin (%)	Total interest rate (%)	Swap Maturity	M2M* 31/03/2010 (£m)
Loan	62.5	5.099% Fixed	0.20	5.299	15/07/2014	(7.50)
Loan	111.0	5.713% Fixed	0.20	5.913	15/07/2016	(18.85)
Loan total	173.5	5.420% Fixed	0.20	5.692	N/A	(26.35)
Liquidity facility	11.2	0.54 Libor**	0.662	1.202*		N/A

*    M2M or marked to market

**    Libor as at 25 January 2010 

The Group's securitised debt facility has a Liquidity Facility of £11.2 million provided by Lloyds Banking Group ('Lloyds'). This is a standard feature designed as an on-demand loan to cover short-term income shortfalls should they occur against payments due under the terms of the loan.  The Liquidity Facility Agreement requires the provider to have a minimum Standard & Poor's ('S&P') credit rating of A-1+, which Lloyds breached in March 2009 when they were downgraded by S&P to A-1.  The breach requires the Liquidity Facility to be drawn down in full and placed in a blocked deposit account or alternatively a new provider put in place. Accordingly, on 23 September 2009 the Liquidity Facility was drawn down.  The Liquidity Facility has a neutral impact on the Group's NAV with the increase in loan off-set by an increase in cash, which is held in a blocked account.  The securitisation loan covenants exclude any amount drawn under the liquidity facility and in the event that Lloyds credit rating reverts to A-1+, the liquidity facility will be repaid. 

The Group accounts show the marked to market value of its interest rate swaps in the balance sheet. The negative impact on the NAV as at 31 March 2010 was 9.14 pps or 15.5% of the total NAV of the Company. The marked to market value will continue to change with movements in swap rates but the positive or negative value is of course only realised if debt is repaid in part or in full before maturity otherwise  they are 'wasting' assets, in that the value will always be zero at maturity.

Based on the independent valuation as at 31 March 2010 the LTV ratio in the securitised debt facility is 41%, following subsequent transactions this increases to 45%, compared with the LTV ratio covenant of 60%. In addition to the £314.9 million of property assets there is cash of £33.3 million in the security pool which is netted off the debt for the purposes of calculating the LTV ratio. The negative marked to market value of the swaps is ignored for the purposes of testing the LTV ratio covenant.

Outside the securitised debt pool the Group has further unencumbered cash of £12.8 million meaning the Group has total cash ignoring the Liquidity Facility and after the acquisition of Sheffield of £46.1 million. This results in a LTV ratio, taking account of post year-end transactions and net of all cash in the Group, of 40%. This is a reduction of approximately 3% compared with the position as at 31 March 2009 and is in line with the Board's guidance that on balance sheet net debt should not exceed 40% of on balance sheet assets.   As additional cash is deployed into  acquisitions such as the office let to BT plc in West Bromwich and other income enhancing initiatives are concluded, the net LTV may increase from the current level but this will be assessed on balance with the increased rental income and dividend cover that will arise from such activity.

The other key banking covenant is the ICR covenant of 150%, calculated as a percentage of total annual net rent over total annual interest. Net rent is the rent that the Group will receive over the twelve months following the test date, on the conservative assumption that tenants vacate at the earliest opportunity. Deducted from this number is the annualised rent for any tenancies where the tenant has rental arrears greater than 60 days and also any interest earned on cash in the security pool.  Calculating the covenant in this way results in an ICR of 200% when debtors received after the calculation date were taken into consideration, compared with the covenant of 150%. In addition it should be noted that the full annual rent payable in relation to key lettings subject to ongoing rent free periods, and the like, is not fully reflected in this calculation.

Joint ventures and associates

Good progress has been made with two of the Company's three joint ventures that have increased from nil value as at 31 March 2009 to £2.8 million as at 31 March 2010.  All three have separate, non-recourse off-balance sheet borrowings and a brief overview of each is set out below:

Merchant Property Unit Trust ('MPUT')

The Company holds a 19.5% share in MPUT valued at £2.28 million as at March 2010 which owns 32 properties let to Travis Perkins.  As at 31 March 2009 the Company's share was held at nil due to the non-recourse loan being in breach of its LTV covenant.  Over the period a lease restructuring was completed with Travis Perkins that increased the average lease term from 13 years to 21 years in return for a tenant incentive paid out of MPUTs existing cash resources.  The leases benefit from 3% per annum compound minimum fixed uplifts every five years.  The additional value created by the lease restructuring enabled the bank terms to be varied with a LTV ratio covenant of 100% which tapers down to 75% at loan maturity in 2013.  As at 31 March 2010 the MPUT property portfolio was valued at £38.45 million reflecting a net initial income yield of 6% increasing to 7% by 2013 due to the fixed rental uplifts.  The LTV of the portfolio based on the outstanding loan of £25.66 million is 67% and the interest cover ratio is 132% versus a loan covenant of 125%, with net proceeds after costs going to amortisation.  The Company's NAV as at 31 March 2010 has therefore increased albeit this was diluted by £0.55 million due a negative marked to market movement of the interest rate swap. 

Crendon Industrial Partnership Limited ('CIPL')

The Company holds a 50% share in CIPL valued at £0.53 million as at 31 March 2010 which owns a 453,000 sq ft industrial estate near Thame in Oxfordshire.  As at 31 March 2009 the Company's share was held at nil due to net liabilities exceeding assets and a breach of the LTV covenant.  Good progress in relation to the original asset management objectives and significant interest cover enabled the loan to be restructured with no LTV covenant until maturity of the loan in 2013.  As at 31 March 2010 the net LTV of the portfolio based on the outstanding loan of £26.05 million is 96%.  The ICR is 194% versus a covenant of 135%, with net proceeds after costs going to amortisation. This asset requires continuous focus but is progressing in a positive direction.

Plantation Place, London EC3

The Company holds a 28.08% share in Plantation Place, a prime City of London office building.  The NAV of the Company's share continues to be held at nil due to net liabilities exceeding assets and a breach of the LTV covenant.  The valuation of the underlying Plantation Place property as at 31 March 2010 was £425 million, an increase of £66 million or 18% compared with 31 March 2009.  The current valuation reflects a net initial yield of 6.3%.  The property is fully let for an average of 17 years assuming tenant breaks are exercised with Accenture accounting for 72% of the income on a lease expiring in 2029.  Although the valuation is now close to the net debt of £434.3 million, falling interest rates have led to an increase in the negative marked to market value of the interest rate swap from -£40 million as at 31 March 2009 to -£42.4 million as at 31 March 2010.  The Company continues to pursue a strategy to recover value from the Plantation Place investment. 

Conclusion

The strong recovery in UK commercial property values, together with our pro-active asset management strategy have contributed to a positive NAV total return over the last year.  The Company is on a sounder footing and now better placed to generate strong performance and greatly increased dividend cover over the next few years. Whilst macro economic risks remain evident, the Company is now well positioned and will have opportunities to utilise its cash resources to acquire fundamentally well-placed properties and actively manage existing assets to generate strong rental income growth. 

We therefore continue to focus on driving rental and capital growth over the medium to long term, and will seek to acquire assets with strong fundamentals that are capable of generating sustainable out-performance and income and capital growth through active management.

Duncan Owen

Chief Executive Officer, Invista Real Estate Investment Management

9 July 2010

Board of Directors

Andrew Sykes (Chairman)

Aged 52, was a director of Schroders plc from 1998 to 2004, having joined Schroders in 1978. He was responsible for the group's private banking and alternative investments businesses, including property, private equity, structured products and hedge funds. He is Chairman of Absolute Return Trust Limited, Deputy Chairman of Smith & Williamson Holdings Limited and a Non-executive Director of Schroder Exempt Property Unit Trust, JP Morgan Asian Investment Trust plc, Record plc and SVG Capital plc.

John Frederiksen

Aged 62, is chairman of the Danish Property Federation and several major Danish property and other companies as well as President of the European Property Federation. He established and was Managing Director of Bastionen A/S, one of the largest Danish property investment companies from 1986 to 2001. He was also Chairman of ASC, the largest property management company in Denmark, from 1990 to 1998.

Keith Goulborn

Aged 65, was head of Unilever's UK Property Department for 17 years. In this capacity he was responsible for the property investment activities of the Unilever Pension Fund in the UK and operational property advice to the UK group and its implementation. Prior to that, he was a partner in Debenham, Nightingale Chancellors. He is a Fellow of the Royal Institution of Chartered Surveyors.

Harry Dick-Cleland

Aged 53, is Managing Director of Cleland & Co Limited, Chartered Accountants which he founded in 2003. He was previously a Partner at Ernst & Young from 1998 to 2003, having joined their Guernsey office in 1987. He is a fellow of the Institute of Chartered Accountants in England & Wales.

David Warr

Aged 56, is a fellow of the Institute of Chartered Accountants in England & Wales with particular expertise in trust and corporate work. He is also a Non-executive Director of UK Select Trust Limited, FRM Diversified Alpha Limited, Marwyn Materials Limited and Unigestion (Guernsey) Limited.

Peter Atkinson

Aged 55, was the Senior Partner of Collas Day Advocates for 14 years where he specialised in corporate and fiduciary work. He joined Collas Day in 1980 and became Senior Partner in 1992. He is now a Non-executive  Director of a number of listed and unquoted companies. He is an Advocate of the Royal Court of Guernsey and a Solicitor of the Supreme Court of England and Wales. He is a former Chairman of the Guernsey Bar. 

Report of the Directors

The Directors of Invista Foundation Property Trust Limited ('the Company') and its subsidiaries (together 'the Group') present their report and the audited financial statements of the Group for the year ended 31 March 2010. The Company is registered in Guernsey, Channel Islands under the Companies (Guernsey) Law 2008.

Business Review

Business of the Company

The Company is a limited liability, closed-ended, Guernsey investment company managed by Invista Real Estate Investment Management Limited (the Investment Manager). A review of the business during the past year is contained in the Chairman's Statement and the Investment Manager's Report.

Investment Policy and Strategy

Investment objective

The investment objective of the Company is to provide shareholders with an attractive level of income together with the potential for income and capital growth through investing in UK commercial property. The Group will invest in three commercial property sectors: office, retail and industrial and other sectors from time to time. 

Diversification

The Board believes that in order to maximise the stability of the Group's income, the optimal strategy for the Group is to invest in a portfolio of assets which (a) is diversified by location, sector, asset size and tenant exposure and (b) has low vacancy rates and creditworthy tenants. There is a predefined limit on the value of any individual asset at the date of its acquisition, set at 15% of gross assets, and a limit of 10% on the proportion of rental income deriving from a single tenant.  From time to time the Board may also impose limits on sector, location and tenant types.  At present, the Board has not set a limit on the proportion of the portfolio that can be invested in development property.

The Company's portfolio will be invested and managed, as is currently required by the Listing Rules of the Financial Services Authority ('FSA' and 'Listing Rules' respectively), in a way which is consistent with its objectives of spreading investment risk, in accordance with the Rules of the Channel Islands Stock Exchange ('CISX') and taking into account the Company's investment objectives, policies and restrictions.

Asset allocation

The Group currently owns, and intends to continue to own, a diversified portfolio of UK commercial property. Its sector focus will be office, retail and industrial.  The Group may acquire other types of real estate including, for example residential or leisure.  At present, the Board has instructed the Investment Manager to seek to maintain the Group's exposure to the office sector at below 60% of the total value of the Group's assets. This instruction will be kept under review by the Board. Asset allocation will also be determined taking into account current Listing Rule requirements (please refer to the paragraph below headed     'Investment Restrictions'), the Rules of the CISX and the Company's investment objective, policy and restrictions.

Borrowings

As at 31 March 2010, the Group had £173.5 million of on balance sheet debt (excluding the liquidity facility). The Board has determined that on balance sheet debt should not exceed 40% of on balance sheet assets. It should be noted that the Company's Articles of Association limit its borrowings to 65% of the Group's gross assets, calculated as at the time of borrowing.  If the on balance sheet limit is breached at any time the Directors will require the Investment Manager, as a priority, to manage the Group's assets with the objective of bringing borrowings within the appropriate limit while taking due account of the interests of shareholders. Accordingly, corrective measures may not have to be taken immediately if this would be detrimental to shareholder interests. Over the year to 31 March 2010 the Investment Manager has raised significant sums through disposals.

Interest Rate Exposure

It is the Board's policy to hedge interest rate risk, either by ensuring that borrowings are on a fixed rate basis, or through the use of interest rate derivatives.  Interest rate derivatives may only be employed for hedging purposes.

Investment Strategy

In pursuing the investment objective, the Investment Manager intends to target assets with good fundamental characteristics, a diverse spread of occupational tenants and with opportunities to enhance value through active management.

The Investment Manager will adjust sector and regional weightings to access higher growth markets to maximise the potential for income and capital growth, subject to restrictions imposed by the Board from time to time.

Investment Restrictions

As the Company is a closed-ended investment fund for the purposes of the Listing Rules, the Group will adhere to the Listing Rules applicable from time to time to closed-ended investment funds.  The Company and, where relevant, its subsidiaries will observe the following restrictions applicable to closed-ended investment funds in compliance with the current Listing Rules:

 

·      Neither the Company nor any subsidiary will conduct a trading activity which is significant in the context of the Group as a whole and the Group will not invest in other listed investment companies; and

·      Where amendments are made to the Listing Rules, the restrictions applying to the Company will be amended so as to reflect the new Listing Rules.

Key Performance Indicators ('KPIs')

The Board uses two principal financial KPIs to monitor and assess the performance of the Company being (1) the absolute net asset value ('NAV') total return of the Company and (2) the performance of the Company's underlying property portfolio relative to a peer group Benchmark Index (defined below)

1.     NAV total return

For the year to 31 March 2010 the Company produced a NAV total return of 29.3%. From inception in May 2004 the Company has produced an annualised NAV total return of -4.9% per annum.

2.     Underlying property portfolio performance relative to  peer group Benchmark

The performance of the Company's property portfolio is measured against a specific benchmark defined as the Investment Property Databank Quarterly Version of Balanced Monthly Index Funds (the 'Benchmark Index'). As at 31 March 2010 the Benchmark Index comprised 62 member funds with an aggregate value of £26.8 billion. For the 12 months to 31 March 2010 the Company's underlying property portfolio produced a total return of 18.8% compared to the Benchmark Index average of 14.7%. Over the three years to 31 March 2010 the Company's underlying direct property portfolio produced a total return of -5.8% per annum compared to the Benchmark Index total return of -8.3% per annum. It should be noted that all these return calculations are undertaken on a 'like for like' basis and take account of all direct property related transaction costs. Including the Group's joint venture investments at their net asset value improves the Company's performance over the 12 months and dilutes it over three years to 31 March 2010 to 19.6% and -9.4% respectively.

The Board also monitors the level of the share price compared to the NAV. Where appropriate on investment grounds, the Company will from time to time repurchase its own shares, but the Board recognises that movements in the share price premium or discount are driven by numerous factors, including investment performance, gearing and market sentiment. Accordingly it focuses its efforts principally on addressing sources of risk and return as the most effective way of producing long term value for shareholders.

Dividend

During the year the Company has declared and paid the following interim dividends to its ordinary shareholders:

Dividend For Quarter	Date Declared	Rate
31 March 2009	6 May 2009	0.8800 pence per share
30 June 2009	22 July 2009	0.8800 pence per share
30 September 2009	4 November 2009	0.8800 pence per share
31 December 2009	3 February 2010	0.8800 pence per share

All dividends are declared and paid as interim dividends. The Directors do not therefore recommend a final dividend. A dividend for the quarter ended 31 March 2010 of 0.88 pence was declared on 28 April 2010 and paid on 19 May 2010.

Accounting, Legal and Regulatory

The Company has robust processes in place to ensure that accurate accounting records are maintained and that evidence to support the accounts is available to the auditors upon request. The Investment Manager operates established property accounting systems and has procedures in place to ensure that the quarterly NAV and Gross Asset Value are calculated properly.

In addition, the Company's property assets are valued quarterly by specialist property valuation firms who are provided with regular updates on portfolio activity by the Investment Manager.

The Administrator monitors legal requirements to ensure that adequate procedures and reminders are in place to meet the Company's legal requirements and obligations. The Investment Manager undertakes full legal due diligence with advisors when transacting and managing the Company's assets. All contracts entered into by the Company are reviewed by the Company's legal and other advisors.

Processes are in place to ensure that the Company complies with the conditions applicable to property investment companies set out in the Listing Rules and the Rules of the CISX. The Administrator attends all Board meetings to be aware of all announcements that need to be made and the Company's advisors are aware of their obligations to advise the Administrator and where relevant, the Board of any notifiable events. Finally, the Board is satisfied that the Investment Manager and Administrator have adequate procedures in place to ensure continued compliance with the regulatory requirements of the FSA, the CISX and the Guernsey Financial Services Commission.

Management

The Company has retained the services of Invista Real Estate Investment Management Limited as its Investment Manager. The Investment Manager is the largest listed real estate fund manager in the United Kingdom with Lloyds Banking Group plc holding a 55% stake. The team dealing with the Company is led by Duncan Owen, CEO of the Investment Manager who chairs their bi-monthly investment committees. The other members of that committee are Nick Montgomery and Mark Long who have been part of the investment committee since the Company's launch in 2004. The Board continues to be satisfied that the Investment Manager has sufficient resources available to deliver the investment objective.

Management and Performance Fees

The Investment Manager is entitled to a Base Fee and a Performance Fee together with reasonable expenses incurred in the performance of its duties. With effect from 1 July 2009 the basis for calculating the Base Fee has been changed. The Base Fee is payable monthly in arrears and shall be an amount equal to one twelfth of the aggregate of 2% of the NAV of the Company where the NAV is less than £150 million, 1.75% where the NAV is between £150 million and £200 million and 1.5% where the NAV is more than £200 million subject to a minimum threshold of £229,000 per month. If the base fee is less than the minimum threshold it will be re-calculated to be an amount equal to 0.95% of the gross assets of the Company.

The Investment Manager is also entitled to an annual performance fee where the total NAV return per Ordinary Share during the relevant financial period exceeds an annual rate of 10% (the 'Performance Hurdle'). Where the Performance Hurdle is met, a performance fee will be payable in an amount equal to 15% of any aggregate total return over and above the Performance Hurdle (the 'Performance Fee'). The Performance Fee will only be payable where (1) in respect of the relevant financial period, the total return of the underlying assets must meet or exceed the Benchmark Index on a like for like basis and (2) the annualised total return over the period from admission of the Company's Ordinary Shares to the end of the relevant financial period must be equal to or greater than 10% per annum.

The Base Fee and the Performance Fee are subject to a maximum cap of 5% of the NAV of the Company calculated at the Company's financial year end. To the extent that the aggregate amount of the Base Fee and the Performance Fee in any financial year exceeds 5% of the NAV of the Company (the 'Maximum Payment'), the Performance Fee will be scaled back so that the Maximum Payment is not exceeded in any financial year.  For the avoidance of doubt, any Performance Fee which is not paid by the Company to the Investment Manager as a result of the scaling back described above cannot be reclaimed by the Investment Manager in a subsequent financial period.

The Investment Management Agreement can be terminated by either party on not less than twelve months notice in writing.

Administration

The Board appointed Northern Trust International Fund Administration Services (Guernsey) Limited as the administrator to the Company (the 'Administrator') with effect from 25 July 2007. The Administrator is entitled to an annual fee equal to £120,000.

Accounting Services 

The Board appointed Invista Real Estate Investment Management Limited as the accounting agent to the Company ('the Accounting Agent') with effect from 1 April 2007. The Accounting Agent is entitled to a fee equal to five basis points of NAV subject to a minimum annual fee of £250,000.

Going Concern

The Directors have examined significant areas of possible financial risk including cash and cash requirements and the debt covenants, in particular the loan to value covenant and interest cover ratio.  They have not identified any material uncertainties which would cast significant doubt on the Group's ability to continue as a going concern for a period of not less than twelve months from the date of the approval of the financial statements. The Directors have satisfied themselves that the Group has adequate resources to continue in operational existence for the foreseeable future. After due consideration the Board believes it is appropriate to adopt the going concern basis in preparing the financial statements.

Creditor Payment Policy

It is the Group's policy to ensure settlement of supplier invoices in accordance with stated terms.

Directors

The Directors of the Company together with their beneficial interest in the Company's ordinary share capital as at the date of this report are given below:

Director	Number of Ordinary Shares	Percentage (%)
Andrew Sykes	60,292	Less than 0.1
Keith Goulborn	34,880	Less than 0.1
Harry Dick-Cleland	-	-
David Warr	150,000	Less than 0.1
Peter Atkinson	10,000	Less than 0.1
John Frederiksen	50,000	Less than 0.1

The remuneration of the Directors during each of the last three years was as follows:

Director	£
Andrew Sykes (Chairman)	37,500
Keith Goulborn	22,500
Harry Dick-Cleland*#	32,500
David Warr*	27,500
Peter Atkinson*	27,500
John Frederiksen	22,500
	170,000

^* Member of the Transaction Committee (see page 27)

^# Chairman of the Audit Committee  

None of the Directors had a service contract with the Company during the year.

Directors receive a base fee of £22,500 per annum, and the Chairman receives £37,500 per annum. The Chairman of the Audit Committee receives an additional fee of £5,000 and members of the Transaction Committee each receive an additional fee of £5,000 reflecting their additional responsibilities and workload.

Substantial Shareholdings

At 31 March 2010 the Directors were aware that the following shareholders each owned 3% or more of the issued Ordinary Shares of the Company.

	Number of Ordinary Shares	Percentage (%)
Schroder Investment Management Limited	34,092,708	12.62
Rensburg Sheppards Investment Management	37,602,711	11.62
Cazenove Capital Management (UK)	34,092,708	10.54
Legal & General Investment Management Limited	16,082,029	4.97

Disclosure of Information to Auditors

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditors are unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Independent Auditors

KPMG Channel Islands Limited have expressed their willingness to continue as auditors to the Company ('the Auditors') and resolutions proposing their reappointment and authorising the Directors to determine their remuneration for the coming year will be put to Shareholders at the annual general meeting ('AGM') of the Company.

Corporate Governance

Principles Statement

The Directors are committed to maintaining high standards of corporate governance. Insofar as the Directors believe it to be appropriate and relevant to the Company, it is their intention that the Company should comply with best practice standards for the business carried on by the Company. As a Guernsey registered company, the Company is not obliged to comply with the Combined Code on Corporate Governance, or the Code of Best Practice published by the Committee on the Financial Aspects of Corporate Governance.

It is the Board's intention to continue to comply with the Association of Investment Companies code for Corporate Governance Best Practice.

Role of the Board

The Board has determined that its role is to consider and determine the following principal matters which it considers are of strategic importance to the Company:

·          The overall objectives of the Company as described under the paragraph above headed 'Investment Policy and Strategy' and the strategy for fulfilling those objectives within an appropriate risk framework in light of market conditions prevailing from time to time

·          The capital structure of the Company including consideration of an appropriate policy for the use of borrowings both for the Company and in any joint ventures in which the Company may invest from time to time

·          The appointment of the Investment Manager, Administrator and other appropriately skilled service providers and to monitor their effectiveness through regular reports and meetings

·          The key elements of the Company's performance including NAV growth and the payment of dividends.

Board Decisions

The Board makes decisions, among other things on the principal matters set out under the paragraph above headed 'Role of the Board'. Issues associated with implementing the Company's strategy are generally considered by the Board to be non-strategic in nature and are delegated either to the Investment Manager or the Administrator, unless the Board considers there will be implementation matters significant enough to be of strategic importance to the Company and should be reserved to the Board. Generally these are defined as:

·          Large property decisions affecting 10% or more of the Company's assets;

·          Large property decisions affecting 5% or more of the Company's rental income; and

·          Decisions affecting the Company's financial borrowings.

Board performance evaluation

During the year to 31 March 2010 the Board undertook a review of its performance. This review concluded that the Board was operating effectively and that the Directors had the breadth of skills required to fulfil their role.

Non-Executive Directors, rotation of Directors and Directors' tenure

The Combined Code recommends that Directors should be appointed for a specified period. The Board has resolved in this instance that Directors' appointments need not comply with this requirement as all Directors are non-executive and their respective appointments can be terminated at any time without penalty. However the Board has also approved a policy that Directors will stand for re-election every three years. Keith Goulborn and John Frederiksen will stand for re-election during the year commencing 1 April 2010.

The Board has determined that all the Directors are independent of the Investment Manager except John Frederiksen as he is a Non-Executive Director of Invista European Real Estate Trust which is also managed by the Investment Manager. John Frederiksen is therefore considered to be a non-independent Director under the Listing Rules.

Keith Goulborn has agreed to be the Senior Independent Director.

Board Meetings

The Board meets quarterly and as required from time to time to consider specific issues reserved for the Board.

At the Board's quarterly meetings it considers papers circulated in advance including reports provided by the Investment Manager and the Administrator. The Investment Manager's report comments on the United Kingdom commercial property market, performance, strategy, transactional and asset management activities and the Group's financial position including relationships with its bankers and lenders.  

The Administrator provides a compliance report.

These reports enable the Board to assess the success with which the Group's objectives and other associated matters are being implemented and also to consider any relevant risks and how they can be properly managed. The Board also considers reports provided from time to time by its various service providers reviewing their internal controls.

The table below shows the attendance at quarterly Board and Audit Committee meetings during the year to 31 March 2010:

	Board	Audit Committee
Andrew Sykes (Chairman)	4	1
Keith Goulborn	3	1
Harry Dick-Cleland	4	2
David Warr	4	1
Peter Atkinson	2	2
John Frederiksen	4	1
No. of meetings during the year	4	2

In addition to its regular quarterly meetings, the Board met on five other occasions during the period although it was not possible for all Directors to attend these meetings. The Company maintains liability insurance for its Directors and Officers.

Committees of the Board 

The Audit Committee

The Audit Committee is chaired by Harry Dick-Cleland with Andrew Sykes, Keith Goulborn, John Frederiksen, David Warr and Peter Atkinson as members. The Board considers that Harry Dick-Cleland's experience makes him suitably qualified to chair the Audit Committee. The Audit Committee meets no less than twice a year and if required meetings can also be attended by the Investment Manager, the Administrator and the Auditors.

The Audit Committee is responsible for reviewing the half-year and annual financial statements before their submission to the Board. In addition the Audit Committee is specifically charged under its terms of reference to advise the Board on the terms and scope of the appointment of the Auditors, including their remuneration  independence and objectivity and reviewing with the Auditors the results and effectiveness of the audit.

During the year the Auditors were involved in reviewing the interim financial statements, they also provided some tax advice regarding the proposed bond buyback. Members of the Committee may also meet with the Company's valuer to discuss the scope and conclusions of their work.

Nomination Committee

The Nomination Committee is chaired by Andrew Sykes with all other Directors as members. The Nomination Committee did not meet in the course of the year.

As all the Directors are non-executive the Board has resolved that it is not appropriate to have a Remuneration Committee.

Transactions Committee

The members of the Transactions Committee are Peter Atkinson, Harry Dick-Cleland and David Warr, with the Chairman elected at each meeting. The Transactions Committee reviews transactions between regular scheduled Board meetings where a Board approval is required. All transaction proposals are circulated to all Directors in advance of meetings of the Transactions Committee, together with a recommendation and explanatory note from the Investment Manager. All Board members may comment in advance of the Transactions Committee meeting, but only those attending will consider the proposal. Transactions are noted subsequently at regular quarterly Board meetings. The members of the Transactions Committee are each paid a fee of £5,000 per annum, in addition to their fees as Directors.

Shareholder Relations

Shareholder communications are a high priority for the Board. The Investment Manager produces quarterly updates which are released to the London Stock Exchange and Channel Islands Stock Exchanges. Members of the Investment Manager's Investment Committee make themselves available at all reasonable times to meet with Shareholders and sector analysts. Feedback from these sessions is provided by the Investment Manager to quarterly Board meetings. The Company's website is www.ifpt.co.uk.

In addition, the Board is kept fully appraised by the Investment Manager and other professional advisers including the Company's brokers of all market commentary on the Company. Through this process the Board seeks to monitor the views of shareholders and to ensure an effective communication programme. The Chairman and Directors also hold meetings with Shareholders in response to invitations to do so.

Details of the resolutions to be proposed at the Annual General Meeting on 9 September 2010 can be found in the Notice of the Meeting.

Internal Control

The Combined Code requires the Directors annually to review the effectiveness of the Group's system of internal controls and to report to shareholders on their findings. Although such a system can only provide reasonable assurance and not absolute assurance against material misstatement or loss, it is designed to manage rather than eliminate the risk of failure.

The Board considers risk management and internal controls on a regular basis during the year. The key reviews conducted by the Directors are described as follows:

·          The Board arranges to meet the Investment Manager annually. This allows the Board to meet other members of the Investment Manager's team. On those occasions the Board examines the Investment Manager's processes in more detail than is possible at Board meetings and is able to gain a better understanding on the level of resource that is applied by the Investment Manager to the Company's business.

·          The Board regularly reviews the Investment Manager's Business Contingency Management and is able to discuss this and other matters with the Investment Manager's Chief Risk Officer. The Board has also reviewed a risk report prepared by the Investment Manager's risk team in relation to the Company and is satisfied that their approach is appropriate for the Group.

·          The Board meets regularly at the offices of the Administrator for its formal quarterly Board meetings and for ad-hoc Board meetings. The Board is therefore familiar with the environment in which the Administrator is operating and has the opportunity to meet the staff responsible for providing administrative services to the Company. This enables the Board to view at first hand the level of resources made available to the Company by the Administrator.

The Group's system of internal controls therefore is substantially reliant on the Investment Manager's and the Administrator's own internal controls and internal audit processes.

The key elements designed to provide effective internal controls are as follows:

·          Regular review of relevant financial data including management accounts and performance projections.

·          Contractual documentation with appropriately regulated entities which clearly describes responsibilities for the principal service providers concerned.

·          The Investment Manager's system of internal controls which is based on clear written processes, a formal investment committee, clear lines of responsibility and reporting all of which are monitored by the Investment Manager's internal risk team. The Investment Manager is regulated by the FSA.

·          The Company's strategy as authorised by the Board including regular monitoring by the Board of the Investment Manager's effectiveness in its implementation.

Corporate Social Responsibility - benefits, risks and controls

The Board agrees with the Investment Manager that corporate social responsibility remains key to long term future business success.

The Investment Manager states:

"Invista's principal objective is to deliver financial outperformance for our clients. We are committed to achieving this objective in a manner which is consistent with the FSA's Treating Customers Fairly initiative. We recognise our broader responsibilities as the Investment Manager of assets that impact the built environment and through a programme of continuous improvement, we anticipate to ensure that the assets we manage have a positive and sustainable impact on the environment and on key social and economic factors.

We believe in responsible business practice. This means having in place appropriate policies and procedures approved by the Board to ensure a consistent, fair and transparent standard that governs the manner in which we treat our customers, employees and shareholders. This same approach is applied to our service providers and suppliers as we seek to ensure we only work with companies who have closely aligned values and policies.

Corporate Social Responsibility is a strategic asset and a key differentiator and as such, is embedded as part of a continuing process for Invista to add long-term value to the company, our people and to our shareholders. We recognise the importance of CSR, and are aware that engaging in sustainable initiatives can result in significant benefits, as occupiers and investors over time increase their demand for sustainable and energy efficient buildings."

We consider that responsible and informed investment decisions should only be made with a firm understanding of sustainability issues. For this reason, Invista's Sustainability Committee has formulated the Company's Sustainability Property Investment Policy and Strategy to ensure that sustainable property management activities and investment decisions are properly integrated.

In addition we recognise this as an area of the real estate industry that is continuously evolving. We are committed to working constructively with our clients, business partners, suppliers, occupiers and local communities, as well as planning and regulatory bodies in order to achieve greater sustainability standards in property development and management. We also engage with relevant external consultants to ensure we continuously improve and update our policies and practices in this area.

In 2009, Invista participated for the fourth consecutive year, in Upstream's sustainability risk forecasting service, The Third Dimension. This survey looks at the assets of many leading institutional investors and fund managers within the UK property market. It provides investors with an awareness of their exposure in both absolute and comparative terms to certain defined risks (such as flooding, energy consumption, recycling, water usage etc.) associated with sustainability. The survey results highlight, on a relative basis, particular strengths and weaknesses and will enable us to target specific, strategic and practical issues in 2010.

Within the Company's portfolio, we had good sustainability weighted scores across the property sectors. Most notably, The Galaxy in Luton beating its benchmark by 9.3% and Solent Road Industrial Estate in Havant, which exceeded its benchmark by 7.2%.

To ensure that the third party property managers we work with integrate sustainability best practice into the day-to-day management of our properties, we have developed Invista's "Sustainability Requirements for Property Managers". These Requirements focus on collecting measurable data in relation to energy and water use, the production of waste and pollution and finally the use of transport. Using these Requirements, we have gathered performance data for the Company's largest properties in 2008 and in 2009 and can now benchmark the Company to measure our progress in the future.

Results from each participating property have been reviewed, enabling recommendations to be made for each asset, so assisting us to improve performance from a sustainability perspective. As we have become more experienced in this area, we have been able to refine our requirements so that they reflect the different degree of management control that we have with different assets and also the practical challenges presented by different property types. 

The Government regulated Carbon Reduction Commitment ("CRC") Energy Efficiency Scheme began in April 2010 and we are undertaking a comprehensive review throughout the portfolio to assess the feasibility of achieving the Government's Early Action Metric (which seeks to show Invista's commitment to CRC prior to legislation). This review will identify where carbon reduction improvements over the coming years can be made and ensure Invista is in a position to gain from future benefits resulting from the legislation.

Status for Taxation

The Income Tax Director in Guernsey has granted the Company exemption from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and the income of the Company may be distributed or accumulated without deduction of Guernsey Income Tax. Exemption under the above mentioned Ordinance entails the payment by the Company of an annual fee of £600.

During the year, the Company's properties have been held in various subsidiaries and associates, the majority of which are subject to UK Income Tax. In each instance any tax due is computed after deduction of debt financing costs and other allowances as appropriate.

THIS SECTION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt about the contents of this section of the document or the action you should take, you are recommended to seek immediately your own personal financial advice from an appropriately qualified independent adviser authorised pursuant to the Financial Services and Markets Act 2000.

If you have sold or otherwise transferred all your shares in the Company please send this document (including the Notice of AGM) and the accompanying documents at once to the purchaser, transferee, or to the stockbroker, bank or other person through whom the sale or transfer was affected for onward transmission to the purchaser or transferee. However, such documents should not be distributed, forwarded or transmitted in or into the United States, Canada, Australia or Japan or into any other jurisdiction if to do so would constitute a violation of applicable laws and regulations in such other jurisdiction.

Resolution 5 Authority to repurchase shares

The Company did not buy back any shares during the year. The Directors currently have authority to repurchase up to 14.99% of the Company's ordinary shares and will seek annual renewal of this authority from shareholders. Any repurchase of ordinary shares will be made subject to Guernsey law and within any guidelines established from time to time by the Board and the making and timing of any repurchases will be at the absolute discretion of the Board.

Purchases of ordinary shares will only be made through the market for cash at prices below the prevailing NAV of the ordinary shares (as last calculated) where the Directors believe such purchases will enhance shareholder value. Such purchases will also only be made in accordance with the Listing Rules and Rules of the CISX which provide that the price to be paid must not be more than 5 per cent above the average market value for the ordinary shares for the five business days before the ordinary shares are purchased. Any ordinary shares purchased under this authority will be cancelled.

The Board considers that the renewal of the repurchase authority is in the best interests of shareholders as a whole and unanimously recommends that shareholders vote in favour of the ordinary resolution to renew the authority to repurchase the ordinary shares of the Company, which is to be proposed at the AGM.

Resolution 6 Amendment to the Articles of Incorporation

Resolution 6 is a special resolution which seeks shareholder approval to amend the Articles of Incorporation to take into account changes made to the Listing Rules which will apply to the Company after 5 April 2011.  As a Guernsey incorporated entity, the Company is not subject to any local statutory requirements with regard to shareholder pre-emption rights for new share issues for cash.  Under the changes to the Listing Rules, the Company will be required to adopt pre-emption rights consistent with Listing Rules 9.3.11 and 9.3.12 in order to maintain its Premium Listing of Shares.  It is proposed that the Company takes the opportunity at this year's Annual General Meeting to amend the pre-emption provisions in the current Articles of Incorporation so that those provisions are consistent with the changes to the Listing Rules, as amended.  The proposed amendments to the Articles of Incorporation do not include the waiver in the current Articles where the allotment is in relation to the issue of further Ordinary Shares not exceeding 10 per cent. of the total number of Ordinary Shares in issue.  Instead, it is expected that the Company will seek an annual disapplication from shareholders,of the pre-emption provisions for allotments up to 10 per cent. of Ordinary Shares in issue, as in Resolution 7.  The adoption of the proposed Articles of Incorporation will also renew the Company's authority to issue an unlimited number of shares (subject to the pre-emption provisions) for a period of five years from the date of adoption of the new Articles of Incorporation.

A copy of the proposed Articles of Incorporation to be adopted by the Company, and amended to depict all of the changes to the existing Articles of Incorporation, will be available during normal business hours at the registered offices of the company and for at least 15 minutes before and during the Annual General Meeting. A copy of the proposed Articles of Incorporation to be adopted by the Company will also be available for inspection during normal business hours at Herbert Smith LLP, Exchange House, Primrose Street, London EC2A 2HS.

The Board considers that the proposal is in the best interests of shareholders as a whole and unanimously recommends that shareholders vote in favour of the special resolution relating to amending the Company's current Memorandum and Articles of Association which is to be proposed at the AGM.

Resolution 7 Authority to disapply pre-exemption rights

Subject to the adoption of the new Articles of Incorporation, the Directors require specific authority from shareholders before allotting new Ordinary Shares for cash (or selling shares out of treasury for cash) without first offering them to existing shareholders in proportion to their holdings. Resolution 7 is a special resolution which empowers the Directors to allot new Ordinary Shares for cash or to sell Ordinary Shares held by the Company in treasury for cash, otherwise than to existing shareholders on a pro-rata basis, up to an amount of 32,359,421 Ordinary Shares, or such other number of Ordinary Shares being equal to 10 per cent. of the Ordinary Shares in issue on 9 September 2010.

This authority will expire on the earlier of the conclusion of the AGM of the Company in 2011 or on the expiry of 15 months from the passing of Resolution 7.

The Board considers that the proposal is in the best interests of shareholders as a whole and unanimously recommends that shareholders vote in favour of the special resolution relating to disapplying pre-exemption rights which is to be proposed at the AGM.

Andrew Sykes, Chairman                  

9 July 2010            

Harry Dick-Cleland, Director

9 July 2010                                                                            

 

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. 

Company law requires the directors to prepare financial statements for each financial year.  Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards and applicable law. 

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. 

In preparing these financial statements, the directors are required to:

n select suitable accounting policies and then apply them consistently;

n make judgements and estimates that are reasonable and prudent;

n state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008.  They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. 

Responsibility Statement of the Directors' in respect of the Consolidated Annual Report

We confirm that to the best of our knowledge:

n the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole; and

n the Report of the Directors includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties it faces.

Andrew Sykes, Chairman                  

9 July 2010            

Harry Dick-Cleland, Director

9 July 2010                                                            

Consolidated Statement of Comprehensive Income

		31/03/2010	31/03/2009
	Notes	£000	£000
Rental income		25,431	30,631
Other income	4	1,444	3,096
Property operating expenses	5	(1,862)	(1,824)
Net rental and related income		25,013	31,903
Profit/(loss) on disposal of investment property		5,789	(29,202)
Net valuation profit/(loss) on investment property	12	24,995	(130,528)
Expenses
Investment management fee	3	(3,061)	(4,661)
Valuers' and other professional fees		(1,288)	(2,075)
Administrators and accounting fee	3	(370)	(370)
Auditor's remuneration	6	(126)	(193)
Directors' fees	7	(170)	(170)
Other expenses	7	(545)	(338)
Total expenses		(5,560)	(7,807)
Net operating profit/(loss) before net finance costs		50,237	(135,634)
Interest receivable		26	1,785
Finance costs payable	8	(17,062)	(15,369)
Net finance costs		(17,036)	(13,584)
Share of profit/(loss) of associates and joint ventures	13	2,802	(34,720)
Profit/(loss) before tax		36,003	(183,938)
Taxation	9	(1,305)	(124)
Profit/(loss) for the year attributable to the equity holders of the parent		34,698	(184,062)
Other comprehensive income: Effective portion of changes in fair value of swaps		4,483	(23,886)
Total comprehensive income/(loss) for the year attributable to the equity holders of the parent		39,181	(207,948)
Basic and diluted profit/(loss) per share	10	10.7p	(55.0)p

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

The accompanying notes 1 to 22form an integral part of the financial statements.

Consolidated Balance Sheet

		31/03/2010	31/03/2009
	Notes	£000	£000
Investment in associates and joint ventures	13	2,276	-
Loans to associates and joint ventures	13	526	-
Total investment and loans in associates and joint ventures		2,802	-
Investment property	12	299,975	304,579
Non-current assets		302,777	304,579
Trade and other receivables	14	15,321	39,513
Cash and cash equivalents		69,454	50,318
Current assets		84,775	89,831
Total assets		387,552	394,410
Issued capital and reserves		169,453	141,663
Equity		169,453	141,663
Interest-bearing loans and borrowings	16	182,021	210,203
Interest rate swap	16	26,347	30,830
Non-current liabilities		208,368	241,033
Trade and other payables	17	8,424	11,626
Taxation payable		1,307	88
Current liabilities		9,731	11,714
Total liabilities		218,099	252,747
Total equity and liabilities		387,552	394,410
Net Asset Value per Ordinary Share	18	52.4p	43.8p

The financial statements on pages 34 to 55 were approved at a meeting of the Board of Directors held on 9 July 2010 and signed on its behalf by:

Andrew Sykes, Chairman                                                                                                  

Harry Dick-Cleland, Director                                                                                             

The accompanying notes 1 to 22 form an integral part of the financial statements.

Consolidated Statement of Changes in Equity

		Share premium	Hedge reserve	Revenue reserve	Total
		£000	£000	£000	£000
Balance as at 31 March 2008		98,356	(6,944)	286,947	378,359
Share capital cancelled in the year		-	-	(11,405)	(11,405)
Loss on cash flow hedge		-	(24,801)	-	(24,801)
Swap break costs transfer		-	915	-	915
Loss for the year		-	-	(184,062)	(184,062)
Dividends paid	11	-	-	(17,343)	(17,343)
Balance as at 31 March 2009		98,356	(30,830)	74,137	141,663
Gain on cash flow hedge		-	533	-	533
Swap break costs transfer		-	3,950	-	3,950
Profit for the year		-	-	34,698	34,698
Dividends paid	11	-	-	(11,391)	(11,391)
Balance as at 31 March 2010		98,356	(26,347)	97,444	169,453

Share capital was issued at nil par value, see note 15 for movements in the year.

Total comprehensive income for the year was £39,181,000 (2009: expense £207,948,000).

The accompanying notes 1 to 22 form an integral part of the financial statements.

 

Consolidated Cash Flow Statement

		31/03/2010	31/03/2009
Operating activities	Notes	£000	£000
Profit/(loss) for the year		34,698	(184,062)
Adjustments for:
(Profit)/loss on disposal of investment property		(5,789)	29,202
Net valuation (profit)/loss on investment property		(24,995)	130,528
Share (profit)/loss of associates and joint ventures		(2,802)	34,720
Net finance cost		17,036	13,584
Taxation		1,305	124
Operating profit before changes in working capital and provisions		19,453	24,096
(Increase)/decrease in trade and other receivables		(738)	766
Decrease in trade and other payables		(2,798)	(3,850)
Cash generated from operations		15,917	21,012
Finance costs paid		(17,032)	(15,216)
Interest received		26	1,785
Tax paid		(126)	(160)
Cash flows from operating activities		(1,215)	7,421
Investing Activities
Proceeds from sale of investment property		65,286	71,487
Addition to investment property		(4,744)	(3,574)
Investment in associates		-	(5,492)
Cash flows from investing activities		60,542	62,421
Financing Activities
Redemption of shares		-	(11,405)
Draw down of loan facility	16	11,200	-
Repayment of existing loans	16	(40,000)	(50,000)
Dividends paid	11	(11,391)	(17,343)
Cash flows from financing activities		(40,191)	(78,748)
Net increase/(decrease) in cash and cash equivalents for the year		19,136	(8,906)
Opening cash and cash equivalents		50,318	59,224
Closing cash and cash equivalents		69,454	50,318

The accompanying notes 1 to 22 form an integral part of the financial statements.

Notes to the Financial Statements

1. Significant accounting policies

Invista Foundation Property Trust Limited ("the Company") is a closed-ended investment company registered in Guernsey. The consolidated financial statements of the Company for the year ended 31 March 2010 comprise the Company, its subsidiaries and its interests in associates and joint ventures (together referred to as the 'Group').

Statement of compliance                                                                   

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by, or adopted by, the International Accounting Standards Board (the 'IASB'), and interpretations issued by the International Financial Reporting Interpretations Committee.

The financial statements give a true and fair view and are in compliance with the Companies (Guernsey) Law, 2008, applicable legal and regulatory requirements and the Listing Rules of the UK Listing Authority.

Basis of preparation

The financial statements are presented in sterling, rounded to the nearest thousand. They are prepared on the historical cost basis except that investment property, investment property under development and derivative financial instruments are stated at their fair value.

The accounting policies have been consistently applied to the results, assets, liabilities and cash flows of the entities included in the consolidated financial statements and are consistent with those of the previous year.

Going concern

The Directors have examined significant areas of possible financial risk including cash and cash requirements and the debt covenants, in particular the loan to value covenant and interest cover ratio along with the loan repayment date of July 2014.  They have not identified any material uncertainties which would cast significant doubt on the Group's ability to continue as a going concern for a period of not less than twelve months from the date of the approval of the financial statements. The Directors have satisfied themselves that the Group has adequate resources to continue in operational existence for the foreseeable future. After due consideration the Board believes it is appropriate to adopt the going concern basis in preparing the financial statements.

Use of estimates and judgements    

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.     

The most significant judgements made in preparing these accounts relate to the carrying value of investment properties and investment properties under development which are stated at market value. The Group uses external professional valuers to determine the relevant amounts. Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are disclosed in note 19.                                          

Basis of consolidation                                       

Subsidiaries

The consolidated financial statements comprise the accounts of the Company and all of its subsidiaries drawn up to 31 March each year. Subsidiaries are those entities, including special purpose entities, controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Where properties are acquired by the Group through corporate acquisitions but the acquisition does not meet the definition of a business combination, the acquisition has been treated as an asset acquisition.                                   

Associates                                            

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group's share of the total recognised gains and losses of these entities on an equity accounted basis, from the date that significant influence commences to the date that significant influence ceases. When the Group's share of losses exceeds its interest in an entity, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or is making payments on behalf of an entity.                                            

Joint ventures                                     

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement. The consolidated financial statements include the Group's share of recognised gains and losses of jointly controlled entities on an equity accounted basis. When the Group's share of losses exceeds its interest in an entity, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or is making payments on behalf of an entity.                                              

Transactions eliminated on consolidation                                   

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group's interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.                                               

Investment property                                           

Investment property is land and buildings held to earn rental income together with the potential for capital growth.                                     

Acquisitions of investment properties are recognised on unconditional exchange of contracts and are initially recognised at cost, being the fair value of the consideration given, including transaction costs associated with the investment property.                                   

After initial recognition, investment properties are measured at fair value, with unrealised gains and losses recognised in the Statement of Comprehensive Income. Realised gains and losses on the disposal of properties are recognised in the Statement of Comprehensive Income. Fair value is based on the market valuations of the properties as provided by a firm of independent chartered surveyors, at the balance sheet date. Market valuations are carried out on a quarterly basis.                                      

As disclosed in note 20, the Group leases out all owned properties on operating leases. A property held under an operating lease is classified and accounted for as an investment property where the Group holds it to earn rentals, capital appreciation, or both. Any such property leased under an operating lease is classified as an investment property and carried at fair value.                                      

Disposals of investment properties are recognised on unconditional exchange of contracts.

Investment property under development                                       

Property that is being constructed or developed for future use as investment property is classified as investment property and is initially stated at cost. After initial recognition investment property under development is measured at fair value. Any unrealised gains are recognised directly in the Statement of Comprehensive Income of the Group. Fair value is based on the market valuations of the property under development as provided by Knight Frank LLP at various stages during the development process.                                                                                      

Financial instruments

Non-derivative financial instruments

Assets

Non-derivative financial instruments comprise trade and other receivables and cash and cash equivalents. These are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest rate method less any impairment losses.

Cash and cash equivalents              

Cash at banks and short-term deposits that are held to maturity are carried at cost. Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash in hand and short-term deposits at banks with a term of no more than three months.     

Liabilities

Non-derivative financial instruments comprise loans and borrowings and trade and other payables.

Loans and borrowings

Borrowings are recognised initially at fair value of the consideration received, less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Consolidated Income Statement over the period of the borrowings on an effective interest basis.

Trade and other payables

Trade and other payables are stated at cost.

Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to interest rate fluctuations. It is not the Group's policy to trade in derivative financial instruments.                                      

Cash flow hedges

Cash flow hedges are used to hedge the variability in cash flows of a recognised asset or liability or a highly probable forecast transaction.

Derivative financial instruments are recognised initially at fair value and are subsequently re-measured and stated at fair value. Fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date. Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the Consolidated Statement of Comprehensive Income.

On maturity or early redemption of the hedged item the realised gains or losses arising are taken to the Consolidated Statement of Comprehensive Income, with an associated transfer from the Statement of Changes in Equity in respect of unrealised gains or losses arising in the fair value of the same arrangement.

Share capital       

Ordinary shares are classified as equity.

Dividends

Dividends are recognised in the period in which they are declared.

Impairment

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the Statement of Comprehensive Income.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the Statement of Comprehensive Income.

Non-financial assets

The carrying amounts of the Group's non-financial assets, other than investment property, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income.

Provisions

A provision is recognised in the Balance Sheet when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.                                       

Rental income                                    

Rental income from investment properties is recognised on a straight-line basis over the term of ongoing leases and is shown gross of any UK income tax. Lease incentives are spread evenly over the lease term.

Finance income and expenses

Finance income comprises interest income on funds invested and gains on hedging instruments that are recognised in the Statement of Comprehensive Income. Interest income is recognised on an accruals basis.

Finance expenses comprise interest expense on borrowings, and losses on hedging instruments that are recognised in the Statement of Comprehensive Income. Attributable transaction costs incurred in establishing the Group's credit facilities are deducted from the fair value of borrowings on initial recognition and are amortised over the lifetime of the facilities through the Statement of Comprehensive Income. Finance expenses are accounted for on an effective interest basis.                           

Expenses                                              

All expenses are accounted for on an accruals basis. The investment management and administration fees and all other expenses are charged through the Statement of Comprehensive Income. 

Taxation                              

The Company and its subsidiaries are subject to UK income tax on any income arising on investment properties, after deduction of debt financing costs and other allowable expenses.                              

Income tax on the profit or loss for the year comprises current tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.                                                                                               

Segmental reporting                                         

The Directors are of the opinion that the Group is engaged in a single segment of business, being property investment business and in one geographical area, the United Kingdom.                                         

2. New standards and interpretations

The following Adopted IFRSs relevant to the Group have been applied to these financial statements for the first time in 2010 with new disclosures and comparatives presented accordingly. There is no financial impact arising from the application of these standards, only presentational changes and some additional or expanded notes to the accounts.

·     Revised IAS 1 Presentation of Financial Statements - which impacts the presentation and format of the primary statements resulting in a Statement of Comprehensive Income.

·     IFRS 8 Operating Segments - which requires segment disclosure based on the components of an entity that management monitors in making operating decisions. The directors are of the opinion that the group is engaged in a single segment of business, being property investment business and one geographical area, the United Kingdom.

·     Amendments to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments - which requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy.

·     Improvements to IFRSs (issued May 2008). This sets out minor amendments to IFRSs as part of the annual improvements process. Most amendments clarified existing practice.

The following new standards, amendments to standards, and interpretations are not yet effective for the year ended 31 March 2010 and have not been applied by the Group in preparing these financial statements. The full impact of these accounting changes is being assessed by the Group. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated.

·     IFRS 3 Business Combinations - which is applicable for annual periods commencing on or after 1 July 2009. The revised standard continues to apply the acquisition method to business combinations, however, all payments to purchase a business are to be recorded at fair value at the acquisition date, some contingent payments are subsequently re-measured at fair value through income, goodwill may be calculated based on the parent's share of net assets or it may include goodwill related to the minority interest, and all transaction costs are expensed.

·     IAS 27 Consolidated and Separate Financial Statements - which is applicable for annual periods commencing on or after 1 July 2009. Requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control; any remaining interest in an investee is re-measured to fair value in determining the gain or loss recognised in profit or loss where control over the investee is lost.

·     IFRIC 17 Distributions of Non-cash Assets to Owners - which is applicable for annual periods commencing on or after 1 July 2009. Provides accounting guidance for non-reciprocal distributions of non-cash assets to owners (and those in which owners may elect to receive a cash alternative).

·     Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items - which is applicable for annual periods commencing on or after 1 July 2009. Clarifies how the principles underlying hedge accounting should be applied in particular situations.

·     Amendments to IAS 32 Financial Instruments: Presentation - Classification of Rights Issues - which is applicable for annual periods commencing on or after 1 February 2010. Requires rights issues denominated in a currency other than the functional currency of the issuer to be classified as equity regardless of the currency in which the exercise price is denominated.

·     IFRIC 18 Transfer of Assets from Customers - which is applicable for annual periods commencing on or after 1 November 2009. Clarifies the requirements for IFRSs for agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services.

·     IFRIC 15 Agreements for the Construction of Real Estate - which is applicable for annual periods commencing on or after 1 January 2010. Standardises accounting practice across jurisdictions for the recognition of revenue by real estate developers for sales of units before construction is complete.

3. Material agreements

Invista Real Estate Investment Management Limited (Invista) has been appointed as Investment Manager to the Company.                                     

The Investment Manager is entitled to a Base Fee and a Performance Fee together with reasonable expenses incurred by it in the performance of its duties. With effect from 1 July 2009 the basis for calculating the Base Fee has been changed. The Base Fee is payable monthly in arrears and shall be an amount equal to one twelfth of the aggregate of 2% of the NAV of the Company where the NAV is less than £150 million, 1.75% where the NAV is between £150 million and £200 million and 1.5% where the NAV is more than £200 million subject to a minimum threshold of £229,000 per month. If the Base Fee is less than the minimum threshold it will be re-calculated to be an amount equal to 0.95% of the gross assets of the Company.    

In addition, and subject to the conditions below, the Investment Manager is entitled to an annual Performance Fee where the NAV total return per ordinary share during the relevant financial period exceeds an annual rate of 10 per cent (the 'performance hurdle'). Where the performance hurdle is met, a performance fee will be payable in an amount equal to 15 per cent of any aggregate total return over and above the performance hurdle. A performance fee will only be payable where: (i) in respect of the relevant financial period, the total return of the underlying assets meets or exceeds the Investment Property Databank ('IPD') Monthly Index balanced funds benchmark on a like for like basis; and (ii) the annualised total return over the period from admission of the Company's Ordinary Shares to the end of the relevant financial period is equal to or greater than 10 per cent per annum.                                            

The total charge to the Statement of Comprehensive Income during the period was £3,061,000 (2009: £4,661,000) for the base management fee. As the conditions for receipt of a performance fee were not met during the year, there was no charge to the Income Statement for the year (2009: £nil).

The Investment Management Agreement may be terminated by either the Company or the Investment Manager on not less than twelve months notice in writing.                                   

The Board appointed Invista Real Estate Investment Management Limited as the Accounting Agent to the Company from 1 April 2007. The Accounting Agent is entitled to a fee equal to 5 basis points of net asset value subject to a minimum annual fee of £250,000. The charge to the Statement of Comprehensive Income for the year was £250,000 (2009: £250,000).            

The Board appointed Northern Trust International Fund Administration Services (Guernsey) Limited as the Administrator to the Company with effect from 25 July 2007. The Administrator is entitled to an annual fee equal to £120,000. The charge to the Statement of Comprehensive Income for the year was £120,000 (2009: £120,000).      

4. Other income

		31/03/2010	31/03/2009
		£000	£000
Insurance commissions		238	275
Dilapidations		350	231
Surrender premia		502	2,192
Miscellaneous income		354	398
		1,444	3,096

Lease surrender premia have been received in respect of properties at Peterborough (£0.3 million), Fareham (£0.1 million) and York (£0.1 million).

The Group is obliged to arrange insurance on the majority of its property assets for which it receives a commission which is stated net of any fees payable to insurance brokers.

5. Property operating expenses

		31/03/2010	31/03/2009
		£000	£000
Agents' fees		140	203
Repairs and maintenance		382	85
Surrender premia		20	114
Advertising		9	16
Rates - vacant		559	573
Security		40	178
Insurance		74	111
Non-recoverable expenses		638	544
		1,862	1,824

6. Auditor's remuneration

The total expected audit fees for the year are £126,000 (2009: £193,000). Non-audit fees were paid to KPMG during the year totaling £38,000 (2009: £nil).

7. Other expenses

		31/03/2010	31/03/2009
		£000	£000
Directors' and officers' insurance premium		40	40
Regulatory costs		43	48
Marketing		25	38
Professional tax fees and related costs		181	-
Other expenses		256	212
		545	338

Directors are the only officers of the Company and its subsidiaries and there are no other key personnel.

The Directors' total remuneration for the year was £170,000 (2009: £170,000).

8. Finance costs payable

Interest payable by the Group was £11,475,000, (2009: £14,454,000). Also included in finance costs are swap break costs of £3,950,000 (2009 £915,000) and other debt fees £1,637,000 (2009: £1,001,000).

9. Taxation

		31/03/2010	31/03/2009
		£000	£000
Tax expense in year		(1,305)	(124)

Reconciliation of effective tax rate
Profit/(loss) before tax		36,003	(183,938)
Effect of:
Income tax using UK income tax rate of 20%		7,201	(36,788)
Revaluation (profit)/loss not taxable		(4,999)	26,106
Share of (profit)/loss of associates not taxable		(560)	6,944
(Profit)/loss on disposal of investment property not taxable		(1,158)	5,840
Other losses/(profits) not taxable		1,653	(1,978)
Utilisation of brought forward losses where no deferred tax was recognised		(1,012)	-
Losses for the year where no deferred tax is recognised		180	-
Current tax expense in the year		1,305	124

The Company and its Guernsey registered subsidiaries have obtained exempt company status in Guernsey under the terms of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 so that they are exempt from Guernsey taxation on income arising outside Guernsey and on bank interest receivable in Guernsey. Each company is, therefore, only liable to a fixed fee of £600 per annum. The Directors intend to conduct the Group's affairs such that they continue to remain eligible for exemption. However the Board is aware that corporate tax rates in Guernsey may be altered and will review the Group's potential liability to Guernsey tax with reference to any possible changes.

Cumulativetax losses of £17,763,000 (2009: £24,403,000) have been carried forward and are available for use against future taxable profits. This amount has not been recognised in the accounts as it is probable that it will not be utilised in the foreseeable future.

The tax treatment of two past transactions has been challenged by HM Revenue & Customs.  These challenges remain in progress and are being robustly defended by the Group. 

10. Basic and diluted loss per share

The basic and diluted profit per share for the Group is based on the net profit for the year of

£34,698,000 (2009: loss of £184,062,000) and the weighted average number of Ordinary Shares in issue during the year of 323,594,219 (2009: 334,743,462). 

11. Dividends paid

	No. of
In respect of	Ordinary	Rate	31/03/2010
	Shares	(pence)	£000
Quarter 31 March 2009 dividend paid 20 May 2009	323.59 million	0.8800	2,847
Quarter 30 June 2009 dividend paid 7 August 2009	323.59 million	0.8800	2,848
Quarter 30 September 2009 dividend paid 20 November 2009	323.59 million	0.8800	2,848
Quarter 31 December 2009 dividend paid 19 February 2010	323.59 million	0.8800	2,848
		3.5200	11,391

	No. of
In respect of	Ordinary	Rate	31/03/2009
	Shares	(pence)	£000
Quarter 31 March 2008 dividend paid 22 May 2008	350.85 million	1.6875	5,921
Quarter 30 June 2008 dividend paid 22 August 2008	336.58 million	1.6875	5,680
Quarter 30 September 2008 dividend paid 21 November 2008	329.00 million	0.8800	2,895
Quarter 31 December 2008 dividend paid 20 February 2009	323.59 million	0.8800	2,847
		5.1350	17,343

A dividend for the quarter ended 31 March 2010 of 0.88 pence (£2,847,000) was declared on 28 April 2010 and paid on 19 May 2010 (31 March 2009: 0.88 pence).

12. Investment property

	Leasehold	Freehold	Total
	£000	£000	£000
At valuation as at 31 March 2008	74,834	488,223	563,057
Reclassification	19,431	(19,431)	-
Additions	931	2,643	3,574
Disposals	-	(131,524)	(131,524)
Net valuation losses on investment property	(33,326)	(97,202)	(130,528)
At valuation as at 31 March 2009	61,870	242,709	304,579
Additions	94	4,767	4,861
Disposals	(21,941)	(12,519)	(34,460)
Net valuation gains on investment property	7,051	17,944	24,995
Amounts recognised as investment property as at 31 March 2010	47,074	252,901	299,975

Fair value of investment properties as determined by the valuers excluding lease incentives totals £304,725,000 (2009: £308,055,000).

The fair value of investment property has been determined by Knight Frank LLP, a firm of independent chartered surveyors, who are registered independent appraisers. Fair values were determined having regard to recent market transactions for similar properties in the same location as the Group's investment property.

The Group owned two non income generating sites during the year (2009: two). Direct operating expenses relating to these sites was a credit of £8,000 due to empty rates refunds (2009: £234,000).

13. Investment in associates and joint ventures

The Group has interests in three associates and joint ventures one of which is still carried at nil value following decline in the value of the underlying property.

Plantation Place - the Group has a 28.08% interest in One Plantation Place Unit Trust which is classified as an investment in an associate. This associate is currently in breach of its LTV covenant.

Crendon - the Group has a 50% interest in Crendon Industrial Partnership which is classified as a joint venture due to the Company sharing the control with another investor. The Group originally provided a loan of £2,150,000 to the Partnership which was written down following the fall in property values. £526,000 of this loan has been written back this year following an increase in the NAV.

Merchant - the Group has a 19.49% interest in Merchant Property Unit Trust which is classified as an investment in an associate due to the Company having the ability to exert significant influence through its unit-holding and the associated agreements.

The table below shows the changes in equity in joint ventures and associates.

	£000
Opening balance as at 1 April 2008	29,227
Additions	5,493
Write down	(34,720)
Closing balance as at 31 March 2009	-
Share of profits in year	2,802
Closing balance as at 31 March 2010	2,802

As at 31 March 2010	Plantation Place £000	Other joint ventures and associates     £000	Total £000
Summarised financial information not adjusted for the Group's share
Total assets	452,058	68,082	520,140
Total liabilities	509,735	55,355	565,090
Revenues for year	32,683	4,201	36,884
Profit for year	62,234	12,513	74,747
Net asset value attributable to Group	-	2,276	2,276
Loans due to Group	-	526	526
Total asset value attributable to Group	-	2,802	2,802
Total profit attributable to the Group	-	2,802	2,802

The unrecognised cumulative losses at the end of the year attributable to the joint ventures and associates is £16,196,000.

As at 31 March 2009	Plantation Place £000	Other joint ventures and associates     £000	Total £000
Summarised financial information not adjusted for the Group's share
Total assets	387,531	55,020	442,551
Total liabilities	505,813	59,565	565,378
Revenues for year	32,467	4,120	36,587
Loss for year	(173,024)	(20,201)	(193,225)
Net asset value attributable to Group	-	-	-
Loans due to Group	-	-	-
Total asset value attributable to Group	-	-	-
Loss attributable to the Group	(27,734)	(6,986)	(34,720)

The numbers included in the above table are based on accounts prepared on a going concern basis, if for any reason any of these joint ventures and associates were not classified as a going concern their assets could be valued at significantly lower amounts.

14. Trade and other receivables

		31/03/2010 £000	31/03/2009 £000
Rent receivable		2,977	4,264
Other debtors and prepayments		12,344	35,249
		15,321	39,513

Other debtors and prepayments includes £4,750,000 (2009: £3,476,000) in respect of lease incentives, £1,875,000 in respect of the overage for National Magazines House and £4,700,000 in respect of the sale of Kingston which completed subsequent to the year end.

15. Issued capital and reserves

Authorised share capital

The authorised share capital of the Company is represented by an unlimited number of Ordinary Shares of no par value.

Issued share capital

The number of issued Ordinary Shares of the Company at the start and end of the year was 323,594,219.

16. Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more information about the Group's exposure to interest rate risk, see note 19.

	31/03/2010		31/03/2009
	£000	£000	£000	£000
Non-current liabilities
Class A Secured Floating Rate Notes		62,500		102,500
Reserve Notes		111,000		111,000
Total		173,500		213,500
Less: Finance costs incurred	(5,367)		(5,367)
Add: Amortised finance costs	2,688	(2,679)	2,070	(3,297)
		170,821		210,203
Liquidity facility		11,200		-
		182,021		210,203

In March 2005 the Group entered into a £152.5 million loan repayable in July 2014 with Real Estate Capital (Foundation) Limited, a securitisation vehicle ('the facility') which was admitted to the Official List of the Irish Stock Exchange. Securitised notes were issued at a blended margin of 20.8 basis points over LIBOR and simultaneously the Company entered into an equivalent maturity swap agreement at 5.1%.

At the time of the original securitisation, an additional facility of £150 million of 'reserve notes' was arranged, £111 million of which were sold in June 2007 (leaving £39 million undrawn). These were issued at a margin of 25 basis points over LIBOR and simultaneously the Company entered into an equivalent maturity swap agreement at 5.71%.

In January 2010 the Group repaid £40 million of the original debt of the Class A secured floating rate notes. Simultaneously, as required by the Credit Agreement, an equal amount of one of the interest rate swaps was broken. The cost of breaking the swap was £3,950,000.

These interest rate swaps are classified as cash flow hedges and are stated at fair value. The counterparty is liable to pay interest at LIBOR on the loans. As at 31 March 2010 the combined fair value of the swaps was a liability of £26,347,000 (2009: liability of £30,830,000). The surplus in the year of £4,483,000 (2009: £23,886,000) is taken to the hedge reserve in equity.

Both facilities have first charge security over all the property assets in the ring fenced Security Pool (the 'Security Pool') which at 15 April 2010 contained properties valued at £305 million (2009: £308 million) together with £38.0 million cash, pre disposals in the Property account (2009: £44.1 million). Assets can be sold and bought within this Security Pool without any need to revert to the Issuer or the Rating Agents up to an annual turnover rate of 20%. Various restraints apply during the term of the loan although the facilities have been designed to provide significant operational flexibility. The principal covenants however are that the loan should not comprise more than 60% of the value of the assets in the Security Pool nor should estimated rental and other income arising from assets in the Security Pool comprise less than 150% of the interest payments (interest cover at 31 March 2010 - 170%; at 31 March 2009 - 188%. NB the interest cover increased to 174% when debtors received after the calculation date were taken into consideration).

At the same time as entering into these two facilities, the Group entered into a liquidity facility with Lloyds TSB Bank plc (Lloyds) as the Liquidity Facility Provider for £11.2 million, the intention of the facility was to provide funding for liquidity shortfalls. One of the criteria of the liquidity facility was that the Liquidity Facility Provider should have a credit rating of at least AA- (long term) by Fitch or A-1 (short term) by S&P. Recently Lloyds has been downgraded to A-1 (short term) by S&P. A consequence of this downgrade is the Group being required to drawdown the £11.2 million and place it in a blocked bank account. The drawdown can be repaid when Lloyds rating returns to at least the level set out in the agreement or the terms of the liquidity facility agreement are altered.

17. Trade and other payables

		31/03/2010 £000	31/03/2009 £000
Rent received in advance		4,837	6,275
Rental deposits		213	635
Other trade payables and accruals		3,374	4,716
		8,424	11,626

18. NAV per Ordinary Share

The NAV per Ordinary Share is based on the net assets of £169,453,000 (2009: £141,663,000) and 323,594,219 (2009: 323,594,219) Ordinary Shares in issue at the balance sheet date.

19. Financial instruments, properties and associated risks

Financial risk factors

The Group holds cash and liquid resources as well as having debtors and creditors that arise directly from its operations. The Group has entered into interest rate swap contracts which are used to limit exposure to interest rate risks, but does not have any other derivative instruments.

The main risks arising from the Group's financial instruments and properties are market price risk, credit risk, liquidity risk and interest rate risk. The Board regularly reviews and agrees policies for managing each of these risks and these are summarised below:

Market price risk

Rental income and the market value for properties are generally affected by overall conditions in the economy, such as changes in gross domestic product, employment trends, inflation and changes in interest rates. Changes in gross domestic product may also impact employment levels, which in turn may impact the demand for premises. Furthermore, movements in interest rates may also affect the cost of financing for real estate companies.

Both rental income and property values may also be affected by other factors specific to the real estate market, such as competition from other property owners, the perceptions of prospective tenants of the attractiveness, convenience and safety of properties, the inability to collect rents because of bankruptcy or the insolvency of tenants, the periodic need to renovate, repair and release space and the costs thereof, the costs of maintenance and insurance, and increased operating costs.

The Directors monitor the market value of investment properties by having independent valuations carried out quarterly by a firm of independent chartered surveyors.

Included in market price risk is interest rate risk which is discussed further below.

Credit risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Group. In the event of default by an occupational tenant, the Group will suffer a rental income shortfall and incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. The Investment Manager reviews reports prepared by Experian, or other sources to assess the credit quality of the Group's tenants and aims to ensure there is no excessive concentration of risk and that the impact of any default by a tenant is minimised.

In respect of credit risk arising from other financial assets, which comprise cash and cash equivalents, exposure to credit risk arises from default of the counterparty with a maximum exposure equal to the carrying amounts of these instruments. In order to mitigate such risks, cash is maintained with major international financial institutions. During the year and at the balance sheet date the Group maintained relationships with branches and subsidiaries of HSBC and The Royal Bank of Scotland.

The maximum exposure to credit risk for rent receivables at the reporting date by type of sector was:

	31 March 2010 Carrying amount £000	31 March 2009 Carrying amount £000
Office	1,053	1,989
Industrial	1,182	1,315
Retail	742	960
	2,977	4,264

Rent receivables which are past their due date, but which were not impaired at the reporting date were:

	31 March 2010 Carrying amount £000	31 March 2009 Carrying amount £000
0-30 days	2,289	3,343
31-60 days	9	412
61-90 days	156	130
91 days plus	523	379
	2,977	4,264

Since 31 March 2010 £468,000 of the 91 days plus arrears has been received.

An amount for bad debt provisions of £149,000 (2009: £341,000) has been included in the rent receivables.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations associated with its financial obligations.

The Group's investments comprise UK commercial property. Property and property related assets are inherently difficult to value due to the individual nature of each property. As a result, valuations are subject to substantial uncertainty. There is no assurance that the estimates resulting from the valuation process will reflect the actual sales price even where such sales occur shortly after the valuation date. Investments in property are relatively illiquid, however the Group has tried to mitigate this risk by investing in properties that it considers to be good quality.

In certain circumstances, the terms of the Group's debt facilities entitle the lender to require early repayment and in such circumstances the Group's ability to maintain dividend levels and the net asset value attributable to the Ordinary Shares could be adversely affected. The Investment Manager prepares cash flows on a rolling basis to ensure the Group can meet future liabilities as and when they fall due.

The following table indicates the maturity analysis of the financial liabilities.

As at 31 March 2010	Carrying amount £000	Expected Cash flows         £000	6 mths or less £000	6 mths-2 years £000	2-5 years £000	More than 5 years £000
Financial liabilities
Interest-bearing loans and borrowings and interest	175,505	216,900	4,440	14,610	197,850	-
Trade and other payables	1,582	1,582	1,582	-	-	-
Total financial liabilities	177,087	218,482	6,022	14,610	197,850	-

As at 31 March 2009	Carrying amount £000	Expected Cash flows         £000	6 mths or less £000	6 mths-2 years £000	2-5 years £000	More than 5 years £000
Financial liabilities
Interest-bearing loans and borrowings and interest	215,933	295,772	5,390	17,742	35,484	237,156
Trade and other payables	2,918	2,918	2,918	-	-	-
Total financial liabilities	218,851	298,690	8,308	17,742	35,484	237,156

Interest rate risk

Exposure to market risk for changes in interest rates relates primarily to the Group's long-term debt obligations and to interest earned on cash balances.

A 1% increase in short-term interest rates would improve the annual income by £695,000 based on the cash balance as at 31 March 2010. Not withstanding current low interest rates, a 1% decrease would cause income to fall by the same amount.

A change of 1% in the swap rates would have an impact on the marked to market value of £11 million.

As described in note 16 the Group has entered into an interest rate swap contract whereby the rate of the Group's long term debt facilities have an effective fixed interest rate of 5.58% per annum until maturity of the debt. 

The following table indicates the periods in which the cash flows associated with the swap are expected to occur.

As at 31/03/2010	Carrying amount £000	Expected cash flows to maturity £000	6 months or less £000	6-12 months £000	1-2 years £000	2-5 years £000	More than 5 years £000
Interest rate swap	(26,347)	(26,898)	(4,174)	(3,903)	(6,190)	(10,542)	(2,089)

As at 31/03/2009	Carrying amount £000	Expected cash flows to maturity £000	6 months or less £000	6-12 months £000	1-2 years £000	2-5 years £000	More than 5 years £000
Interest rate swap	(30,830)	(30,942)	(4,036)	(3,895)	(6,484)	(10,863)	(5,664)

Fair values

The fair values of financial assets and liabilities are not materially different from their carrying value in the financial statements.

The following summarises the main methods and assumptions used in estimating the fair values of financial instruments and investment property.

Investment property

Fair value is based on valuations provided by an independent firm of chartered surveyors and registered appraisers. These values were determined after having taken into consideration recent market transactions for similar properties in similar locations to the investment properties held by the Group.

Derivatives

Fair value for the interest rate swap uses a broker quote. This is then tested using pricing models or discounted cash flow techniques.

The fair value hierarchy of the interest rate swap is level 2.

The fair value hierarchy levels are as follows:

·      Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities

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

·      Level 3 - inputs for the assets or liability that are not based on observable market data (unobservable inputs).

Interest bearing loans and borrowings

Fair values are based on the amounts which are to be repaid, less any costs incurred in obtaining the borrowings. These costs are then amortised over the period of the borrowings.

Trade and other receivables/payables

All receivables and payables are deemed to be due within one year and as such the notional amount is considered to reflect the fair value.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

There were no changes in the Group's approach to capital management during the year.

20. Operating leases

The Group leases out its investment property under operating leases. At 31 March 2010 the future minimum lease receipts under non-cancellable leases are as follows:

	31/03/2010 £000	31/03/2009 £000
Less than one year	22,000	26,582
Between one and five years	68,464	85,072
More than five years	107,049	116,838
	197,513	228,492

The total above comprises the total contracted rent receivable as at 31 March 2010.

21. Related party transactions

Material agreements are disclosed in note 3. Transactions with Directors are disclosed in note 7. Transactions with joint ventures and associates are disclosed in note 13.

22. Capital commitments

At 31 March 2010 the Group had no capital commitments.

Independent auditor's report to the members of Invista Foundation Property Trust Limited

We have audited the group financial statements (the 'financial statements') of Invista Foundation Property Trust Limited ('the Company') for the year ended 31 March 2010 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance with section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors are responsible for preparing the financial statements which give a true and fair view and are in accordance with International Financial Reporting Standards and are in compliance with applicable Guernsey law as set out in the Statement of Directors' Responsibilities on page 33.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view, are in accordance with International Financial Reporting Standards and comply with the companies (Guernsey) law 2008. We also report to you if, in our opinion, the Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit.

We read the other information accompanying the financial statements and consider whether it is consistent with those statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

 

Opinion

In our opinion the financial statements:

·   give a true and fair view of the state of the Group's affairs as at 31 March 2010 and of the Group's profit for the year then ended;

·   are in accordance with International Financial Reporting Standards; and

·   comply with The Companies (Guernsey) Law, 2008.

E McGill on behalf of KPMG Channel Islands Limited

Chartered Accountants

9 July 2010

Glossary

Earnings per share (EPS) is the profit after taxation divided by the weighted average number of shares in issue during the period. Diluted and Adjusted EPS per share are derived as set out under NAV.

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.

Gearing is the Group's net debt as a percentage of adjusted net assets.

Group is Invista Foundation Property Trust Limited and its subsidiaries.

Initial yield is the annualised net rents generated by the portfolio expressed as a percentage of the portfolio valuation.

Interest cover is the number of times Group net interest payable is covered by Group net rental income.

IPD is the Investment Property Databank Ltd, a Company that produces an independent benchmark of property returns.

Net asset value (NAV) are shareholders' funds divided by the number of shares in issue at the period end.

NAV total return is calculated on a daily basis taking into account the timing of dividends and share buy backs and issuance.

Net rental income is the rental income receivable in the period after payment of ground rents and net property outgoings.

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

Notice of Annual General Meeting

Notice is hereby given that the fifth Annual General Meeting (the 'AGM') of Invista Foundation Property Trust Limited (the 'Company') will be held at the offices of Northern Trust, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3QL at 10.00 am on 9 September 2010 for the following purposes:

To consider and if thought fit, pass the following Ordinary Resolutions:

1.     That the accounts and the report of the Directors and of the Auditors for the year ended 31 March 2010 be received and approved.

2.     That KPMG Channel Islands Limited be reappointed as Auditors and the Directors be authorised to determine their remuneration.

3.     That Mr Keith Goulborn, who has retired in accordance with Article 74, be re-elected as a Director.

4.     That Mr John Frederiksen, who has retired in accordance with Article 74, be re-elected as a Director.

5.     That the Company be authorised, in accordance with section 315 of The Companies (Guernsey) Law 2008 (the 'Companies Law'), to make market acquisitions (within the meaning of section 316 of the Companies Law) of ordinary shares of the Company  ('Ordinary Shares'), provided that:

a)     the maximum number of Ordinary Shares hereby authorised to be purchased shall be 14.99% of the issued Ordinary Shares on the date on which this resolution is passed;

b)    the minimum price which may be paid for an Ordinary Share shall be 0.01p;

c)     the maximum price (exclusive of expenses) which may be paid for an Ordinary Share shall be 105% of the average of the middle market quotations on the relevant market where the repurchase is carried out for the Ordinary Shares for the five business days immediately preceding the date of a purchase;

d)    such authority shall expire at the annual general meeting of the Company in 2011 unless such authority is varied, revoked or renewed prior to such date by ordinary resolution of the Company in general meeting: and

e)     the Company may make a contract to purchase Ordinary Shares under such authority prior to its expiry which will or may be executed wholly or partly after its expiration and the Company may make a purchase of Ordinary Shares pursuant to any such contract.

To consider and, if thought fit, pass the following resolutions as special resolutions:

6.   That the Articles of Incorporation produced to the meeting and initialled by the Chairman of the meeting for the purposes of identification be, and are hereby, with immediate effect adopted as the Articles of Incorporation of the Company in substitution for, and to the exclusion of, the existing Articles of Incorporation.

7.   That, subject to the passing of resolution 6 above, and in substitution for all existing authorities to the extent unused, that pursuant to Article 13.7 of the Company's Articles of Incorporation the Directors of the Company be and are hereby empowered to allot equity securities (as defined in the Company's Articles of Incorporation) of the Company for cash and to sell equity securities which are held by the Company in treasury for cash as if the pre-emption provisions contained under Article 13 of the Articles of Incorporation did not apply to any such allotments and sales provided that this power shall be limited to the allotment and sales of equity securities:

a) up to an amount of 32,359,421 Ordinary Shares, or such other number of Ordinary Shares being equal to 10 per cent. of the Ordinary Shares in issue on 9 September 2010;

b) at a price of not less than the net asset value per share as close as practicable to the allotment or sale; and

c) such power shall expire on the earlier of the Annual General Meeting of the Company in 2011 or on the expiry of 15 months from the passing of this Resolution 7, except that the Company may before such expiry make offers or agreements which would or might require equity securities to be allotted or sold after such expiry and notwithstanding such expiry the Directors may allot or sell equity securities in pursuance of such offers or agreements as if the power conferred hereby had not expired.

By order of the Board

Notes:

1.     An ordinary resolution requires a simple majority of the votes cast by those shareholders voting in person or by proxy at the AGM (excluding any votes which are withheld) to be voted in favour of the resolution.

2.     A special resolution requires a majority of at least 75 per cent. of the votes cast by those shareholders voting in person or by proxy at the AGM (excluding any votes which are withheld) to be voted in favour of the resolution.

3.     A member who is entitled to attend and vote at the meeting is entitled to appoint one or more proxies to exercise all or any of their rights to attend, speak and, on a poll, vote instead of him or her. A proxy need not be a member of the Company. More than one proxy may be appointed provided that each proxy is appointed to exercise the rights attached to different shares.

4.     A form of proxy is enclosed for use at the meeting. The form of proxy should be completed and sent, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, so as to reach Computershare Investor Services (Cl) Limited, Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES not later than 10.00am on 3 September 2010.

5.     Completing and returning a form of proxy will not prevent a member from attending in person at the meeting and voting should he or she so wish.

6.     To have the right to attend and vote at the meeting (and also for the purpose of calculating how many votes a member may cast on a poll) a member must have his or her name entered on the register of members not later than 10.00am on 3 September 2010. Changes to entries in the register after that time shall be disregarded in determining the rights of any member to attend and vote at such Meeting.

 

 

Corporate information

Registered Address Trafalgar Court Les Banques St. Peter Port Guernsey GY1 3QL Directors Andrew Sykes (Chairman) Keith Goulborn John Frederiksen Harry Dick-Cleland David Warr Peter Atkinson  (All Non-Executive Directors) Investment Manager and Accounting Agent Invista Real Estate Investment Management Limited Exchequer Court	Auditor KPMG Channel Islands Limited 20 New Street St. Peter Port Guernsey GY1 4AN Property Valuers Knight Frank LLP 20 Hanover Square London W1S 1HZ Channel Islands Sponsor Ozannes Securities Limited 1 Le Marchant Street St. Peter Port Guernsey GY1 4HP
33 St Mary Axe London EC3A 8AA The Manager's Investment Committee Duncan Owen (Chairman) Nick Montgomery Mark Long Secretary and Administrator Northern Trust International Fund Administration Services (Guernsey) Limited Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL	UK Sponsor and Broker JPMorgan Cazenove Limited 20 Moorgate London EC2R 6DA Tax Advisers Deloitte & Touche LLP 180 Strand London WC2R 1BL Receiving Agent and UK Transfer/Paying Agent Computershare Investor Services PLC The Pavilions Bridgewater Road Bristol BS99 1XZ
Solicitors to the Company as to English Law; Herbert Smith Exchange House Primrose Street London EC2A 2HS	as to Guernsey Law; Ozannes 1 Le Marchant Street St. Peter Port Guernsey GY1 4HP
ISA/PEP status The Company's shares are eligible for individual Savings Accounts (ISA's) and PEP transfers and can continue to be held in existing PEP's

 

END

 

 

FR UASORROABAAR