Joint investment

Terrace Hill Group PLC
15 May 2006



                    Terrace Hill Group PLC ('Terrace Hill')


             Joint Investment in £272 Million Residential Portfolio


Terrace Hill Group PLC, the AIM listed property group, is pleased to announce
that further to the announcement on 10 March 2006, it has made an investment
amounting to 49% of the equity in a new company, Terrace Hill Residential PLC
formed for the purpose of the arrangements set out below. The other shareholder,
which is investing on the same equity terms, is a company owned by family trusts
for the benefit of Robert Adair, Terrace Hill's Chairman, and family.  The
trusts are providing collateral to allow a higher loan amount to be secured on
better terms than might otherwise be possible. The purchase will be funded with
a bank loan set at around 85% of value; the balance will be funded by equity.


Terrace Hill Residential PLC has, through its subsidiary Terrace Hill Lettings,
exchanged contracts to acquire the portfolio of residential property belonging
to at.home Nationwide Limited, a subsidiary of Nationwide Building Society.  The
at.home portfolio comprises 2253 flats and houses throughout the UK.  The
purchase price is £272.62 million.


Terrace Hill had initially been approached to acquire the portfolio jointly with
other parties.  However, the Directors are pleased that Terrace Hill achieved
its preferred position by negotiation with the Adair Trusts at a 49% equity
level to provide significant influence but on a lower risk basis.  Terrace Hill
Residential PLC will not be consolidated in Terrace Hill's accounts but treated
as an associate.


Terrace Hill Managing Director Philip Leech said: 'With house prices showing
positive progress we believe now is the right time to increase our exposure to
the residential market.  We have previously sold the bulk of our own residential
property which amounted to around 1300 units at the height of the last growth
cycle and is now under 350 units.  A particular attraction of the portfolio to
us is its strong concentration in two specific areas of interest to us - London
(573 units valued at £105.1 million) where the recent return of house price
growth has been noticeable even as we have been negotiating, and our traditional
core area of Scotland (877 units valued at £99.9 million) where notwithstanding
cycles elsewhere we have continued to see regular growth over recent years and
expect this to be maintained.  The majority of our own current holding of
residential property is in Scotland.


'I believe this investment provides us with an excellent opportunity to further
grow our shareholder value.  As an investment class, residential property is
well known to us and has already contributed significantly to our growth in past
years.


'We also now have the added opportunity of considering the possibility of
Terrace Hill Residential PLC and Terrace Hill Lettings being spun out as a REIT
(Real Estate Investment Trust) should that market prove as attractive to
investors as experience in other countries suggests may be possible.'


In the negotiations, Terrace Hill's corporate finance subsidiary, Mercantile
Securities (Scotland) Limited (regulated by the Financial Services Authority),
has advised, and in the future another subsidiary of Terrace Hill will provide
strategic property advice under contract to the joint owner.  Staff of at.home
Nationwide Limited will transfer to a subsidiary of Allsop Residential
Investment Management Limited which will provide lettings management. Terrace
Hill Residential PLC will be assisting towards Allsops costs in taking on
at.home staff.


                                  * * ENDS * *


Contacts

Philip Leech, Group Managing Director                  Tel: [phone]

Alasdair Robinson, Noble & Company Limited             Tel: [phone]

Isabel Crossley, St Brides Media & Finance Ltd         Tel: [phone]


Notes

(1)        For accounting purposes the property will be carried as the aggregate
of individual vacant possession values which will show an uplift in value
reflecting the purchase discount associated with the sale of such a large
residential portfolio.



(2)        Terrace Hill Group PLC - AIM-listed property group with a Triple Net
Asset Value at 31st October 2005 of £89.985 million.  It has two divisions,
Commercial Development and Residential Investment and Development, with a total
development programme of around £900 million.  Terrace Hill reported an increase
of over 20% in pro-forma Triple NAV to 48.06p per share in the year to 31
October 2005, and a 40% increase in final dividend from 0.5p per share to 0.7p
per share.


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