Interim Results

TR Property Investment Trust PLC 28 November 2003 27 November 2003 TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Highlights * Another strong performance by Property shares * NAV return beats the Benchmark and All-Share * Revenue per share up 24.5% * Interim dividend raised 22.2% Since the half year end: * Major share buyback made * Gearing currently 26% Alastair Ross Goobey, the Chairman of TR Property Investment Trust, commented: 'The six month period has seen strong growth in global equity prices as investors have become more confident in the scale and certainty of the world economic recovery. Your Trust's asset value per share and share price have benefited accordingly and both have risen to new all-time high levels. The Trust's revenue returns have again risen markedly.' Dividend An interim dividend of 1.10p (2002: 0.90p) per ordinary share has been declared payable on 7 January 2004 to shareholders on the register on 12 December 2003. The shares will be quoted ex-dividend on 10 December 2003. - MORE - - 2 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Financial Highlights (Unaudited) (Unaudited) % Half year ended Half year ended Change Revenue 30 September 30 September 2003 2002 Gross revenue (Â£'000) 10,711 9,850 +8.7 Net return pre-tax (Â£'000) 8,561 7,335 +16.7 Revenue return per share 1.78p 1.43p +24.5 Net dividend per share 1.10p 0.90p +22.2 (Unaudited) (Audited) % Balance Sheet As at As at Change 30 September 31 March 2003 2003 Fixed asset investments (Â£'000) 427,416 358,178 +19.3 Shareholders' funds (Â£'000) 362,329 304,127 +19.1 Shares in issue at end of period (m) 410.2 416.5 -1.5 Gearing 16% 15% Net asset value per share 88.33p 73.02p +21.0 Performance Half year ended Half year ended Assets, Benchmarks and Share Price 30 September 30 September 2003 2002 Benchmark performance (price only) 18.3% (13.0)% NAV change 21.0% (9.6)% Benchmark performance (total return)* 22.0% (10.6)% NAV total return 22.5% (8.1)% IPD Monthly Index total return** 5.6% 5.9% Total return from direct property 2.8% 3.7% Share price at 30 September 74.25p 57.25p Share price total return* 28.1% (10.1)% Market capitalisation at 30 September Â£304.6m Â£245.9m Sources: Henderson Global Investors/ *Datastream/ **IPD - MORE - - 3 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Chairman's Statement Introduction The six month period has seen strong growth in global equity prices as investors have become more confident in the scale and certainty of the world economic recovery. Your Trust's asset value per share and share price have benefited accordingly and both have risen to new all-time high levels. The Trust's revenue returns have again risen markedly. Since the half year end, the Trust has been able to take advantage of an opportunity to buy back a further 13% of the share capital. This transaction, on which I comment in more detail later in my report, has used up most of the repurchase powers granted to the board by shareholders at the last AGM. Therefore the board is calling an EGM to renew its buy-back powers and the notice of the meeting is enclosed with the interim report. I hope shareholders will support the motion. Equity Market Background and Return Performance Property company shares, which form the vast bulk of the Trust's assets, proved to be strongly defensive investments during the collapse of equity prices that ended in February 2003. It might therefore have been expected that they would underperform other sectors of the market as sentiment recovered. I am happy to report that this has not been the outcome to date. Indeed, over the six month period ending on 30 September 2003, your share price total return has been 28.1%. This compares with total returns of 22.0% from our benchmark index and of 18.9% shown by the FTSE All-Share Index. In the UK we have seen a significant reduction in the discounts to net asset value at which property shares are trading. This has been spurred by strong investor demand, by actual and potential corporate activity and by the hope that the Government might give corporation tax-free status to property shares within the next two years. In Europe property share prices have risen, but with less speed. The total returns shown by our benchmark (for UK only of 28.4% and Europe ex UK of 16.5%) illustrate this differential. The Trust's continued overweight position in the UK relative to the benchmark has therefore worked to our benefit. Revenue Results and Dividend Revenue returns per share have risen by 24.5% to 1.78 pence per share. Gross revenue rose 9% reflecting higher dividends from investee companies and a change in the timing of our income receipts. This year our managers anticipate that some two thirds of the Trust's forecast dividend income has been received in the first half of the financial year compared with five eighths of the dividend income in the same period last year. Management costs and expenses have fallen and interest costs are lower due to the reduction in debt levels made during the autumn of 2002. Returns per share have also benefited from a reduction in the number of shares outstanding. While your board does not anticipate that this rate of growth in revenue returns per share will be maintained in the full year, it has raised the interim dividend by 22% from 0.90 pence per share to 1.10 pence per share. - MORE - - 4 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Discount and Share Repurchases In my interim statement to shareholders last year I commented that, despite the outstanding record of the Trust over the past ten years, it was of concern to the board that the shares still sold at an appreciable discount to the underlying asset value. I am pleased to report that the discount has narrowed appreciably over the six month period - illustrated by the fact that the share price total return over that period has been 28.1% compared with the NAV total return of 22.5%. During the half year 6.3m shares were bought for cancellation at a total cost of Â£4.4m giving an average cost of 70p per share. These repurchases served to increase net assets per share by some Â£0.85m equivalent to 0.2p per share. At the end of October the board took the opportunity to carry out a significant on-market share repurchase exercise at a 13% discount to asset value. As a result the Trust bought back 53.8m shares or 13% of the outstanding equity. The immediate tangible benefit to remaining shareholders has been a 1.9% increase in net assets per share. Longer term, the reduction in gross assets is also expected to have positive performance implications. The Trust operates in a small sector of the market that has been shrinking for some years due to takeovers and public-to-private transactions. Your board believes that adjusting the size of the Trust relative to the benchmark will enhance the managers' ability to manoeuvre net assets and gearing ratios more effectively within the Trust's investment parameters. At the time of writing the Trust's net assets are Â£345m, compared with Â£362m at 30 September 2003. Gearing and Currencies Over the six month period the Trust's net debt rose from Â£47m to Â£60m, though the growth in the value of our assets was such that the gearing ratio rose only from 15% to 16%. The large scale share repurchase referred to in the previous paragraph was financed initially by additional short term variable rate debt. Some of this has now been repaid. The current debt level is close to Â£90m and gearing is currently 26%. Subject to market conditions this higher level of gearing is likely to be maintained in the immediate future. All of our debt continues to be denominated in Sterling and the exposure to foreign currency assets and income continues to be unhedged. During the six month period the Euro rose against Sterling by 1.5%. Board I reported to shareholders in the last Annual Report that it was my intention to retire as a director of the Trust after the AGM in 2004 when I will have served on the board for ten years. I am pleased to announce that the board has elected Peter Salsbury to be my successor. The board hopes to announce the appointment of a new non-executive director in the New Year. Outlook Across Europe we are seeing strong and sustained levels of investor interest in commercial property. Much of this interest is coming, not from traditional buyers but from funds and individuals who have never before considered the sector as a home for their money. Furthermore it is also coming at a time when tenant demand is at best modest and often closer to anaemic, and when borrowing costs have already started to rise. - MORE - - 5 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 I have spent many years preaching the advantage that investors can gain by diversifying a proportion of their assets into commercial property - more often than not preaching to deaf ears. It is exciting for those of us who have believed in the asset class to find it now coming in from the cold. The timing of this surge in investor interest may not be entirely propitious given the very mixed economic and monetary background, but the driving force behind the demand does appear to be a growing fear of future inflation and a consequent desire to diversify out of bonds and into an asset class with proven inflation protection potential. In the UK property share market, hopes are high that the Government will revise the taxation regime for UK quoted investment property companies. News on this may not come until at least the middle of 2004. In the meantime we continue to see a regular stream of actual and attempted take-overs for property companies both here and in Continental Europe. Major real estate buyers find it easier and more convenient to invest by buying an entire existing business than by piecing together a portfolio building by building and this is serving to place a floor under many property share prices. Extracts from Manager's Report Performance In absolute terms the first half total return of 22.5% was a good deal higher than I would have forecast last April. However in relative terms I am disappointed that the performance was only in line with the return from the benchmark. Our equity investments returned over 24%, and would have done better still if we had not been, as usual, seriously underweight in Canary Wharf shares which rose 86% in the period. The area of the portfolio that held back our overall performance was our direct property portfolio. This produced an ungeared return of only 2.8% after having strongly outperformed our equity investments through 2001 and 2002. I am pleased to report that absolute and relative performance since September has been strong and I am optimistic that your managers can deliver a sixth consecutive year of relative outperformance for shareholders. Distribution of Assets There has been only a slight change in the general shape of the portfolio. UK property shares have risen from 45.8% to 48.4% of gross assets, European property shares have moved from 33.7% to 34.8% while UK directly held property has dropped from 20.5% to 16.8%, principally as a result of property value growth lagging equity price appreciation. The current target distribution of the portfolio remains unaltered at 35% to 55% in UK equities, 35% to 55% in Continental equities and 10% to 30% in UK direct property. - MORE - - 6 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Property Market Background Commercial property markets across Europe are currently displaying great similarity. Almost everywhere there is a dearth of office tenant demand. Lettings are hard to negotiate, vacancy levels have doubled or trebled since 2001 and underlying rental values have generally fallen by 20% or more. By contrast retail tenant demand has been stable and so have retail rents. Vacancies in good centres are minimal. Tenant demand for industrial and distribution space has been better than we expected with smaller and medium sized businesses more active than big corporations. Rental values have generally weakened slightly but not as much as might have been expected given the state of manufacturing industry in Europe. The most unexpected and uniform trend across Europe this summer has been the great strength of the investment market. An enormous weight of money is trying to find a home in commercial property. So despite the very cautious occupational market, capital values of let retail and industrial buildings have increased while prices for office buildings have not fallen by even a quarter of the extent that might reasonably have been expected given the significant decline in office rental values. Property Share Background As the Chairman notes, property shares again outperformed the general equity market. In the UK they returned 28.4% while the FTSE All-Share Index produced a total return of 18.9%. On the Continent the picture was reversed with property shares returning 16.5% compared with 24.9% for the FTSE World Europe (ex UK) Index. In the UK there were three factors driving property share prices forward. The first was the underlying strength of property investment demand, which has raised asset value expectations. The second was corporate activity and in particular the attempted privatisation of Canary Wharf and Chelsfield. The third and most important factor was the increasing optimism that the UK Government will change the tax law and create a corporation tax free structure for UK based property companies - the so called 'UK REIT' structure (where REIT stands for Real Estate Investment Trust). Under current tax law, rental income from buildings and capital gains on investment properties sold by property companies are taxed both at the company level and at the shareholder level. This double taxation makes it more tax efficient for large investors to own their own property portfolios and for small investors to own shares or units in property funds located off-shore. This is one of the main reasons why UK quoted property companies almost always stand at discounts to their net asset value. REITs have now been introduced in all the other G7 countries and most recently in France. The UK property industry has campaigned for a tax change before with no success. The difference today is that the French system was introduced by making the property companies buy their future tax freedom through a one-off capital payment of half their inherent capital gains. The UK Government, short of tax receipts, has spotted this fund raising potential and has now stated that it is investigating the creation of a UK REIT structure. No announcement is expected until 2004 and if the Government does act it is likely to be in 2005. Nevertheless the commentators are now seeing the chances of a tax change as probable rather than possible. - MORE - - 7 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 If UK REITs are introduced in a workable format, the major impact should be on the dividend yields of the leading property companies. REIT status is likely to demand high earnings payout ratios and I expect that the dividend yields from some of the bigger property companies could rise to over 6% assuming the shares stood at asset value. The result would be that shareholders would effectively collect a dividend return at the same level or close to the yield they might expect if they owned the portfolio outright and that discounts to net asset value would diminish or even disappear. In the USA, where there are over 150 quoted REITs, the sector stands at more than a 15% premium to asset value and yields 5.8%. The Trust would clearly benefit from the arrival of UK REITs both in terms of increased dividend income and from the potential increased capital value of our shareholdings. A word of caution is valid. The Government investigation into REITs is just that, and not a guarantee that any workable system will be introduced. I think that legislation is only likely if the Treasury are satisfied that any potential diminution of the annual tax take from property companies will be more than compensated for by the value of the initial entry fee plus the ongoing additional revenue from higher dividend income paid to shareholders. This is by no means clear. Largest Equity Investments I made few changes to our major equity investments during the six months so the list of the top twenty equity investments at the end of September is very similar to the list six months earlier. (I hope shareholders won't see this lethargy as a symptom of idleness.) Though the Trust's long term investment policy tends to favour investment in small and medium sized businesses, the top twenty list is currently biased towards big companies - chiefly ones based in the UK and France. I put these holdings in place some time ago to improve the liquidity of the portfolio, and have stayed with this bias for two principal reasons. Larger property companies tend to outperform early in a bull phase of the market and big companies are seen as the major gainers from the actual introduction of REITs in France and the potential introduction of REITs in the UK. Amongst our top twenty, the best and worst performers in total return terms were St Modwen +52.1% and Cofinimmo +7.8%. Gearing Over the half year I increased the Trust's net debt level from Â£47m to Â£60m though the gearing ratio rose by only 1% to 16% because of the sharp increase in the value of our assets. As the Chairman noted, since the end of September we have borrowed to fund the majority of the Â£42m spend on repurchase and cancellation of 53.8m shares at 77.5p per share. This extra debt combined with a reduction in net assets arising from the buy-back has taken gearing to a current level of 26%. Subject to market conditions this higher level of gearing is likely to be maintained in the immediate future. Direct Property Portfolio The Trust's direct property portfolio produced a total return of only 2.8% over the half year, reflecting an income return of 2.7% and a capital value increase of 0.1%. This was a little disappointing given that the total return from the IPD Monthly Index was 5.6% (income return 3.6% and capital growth of 2.0%) during the same period, but understandable given that the portfolio is overweight in offices and holds no specialist retail buildings. - MORE - - 8 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Our returns were adversely affected by lower income and valuations at Piccadilly and Battersea. These two properties - which together represent nearly 40% of the direct portfolio by value - have planning consents for redevelopment and are therefore let in suites on short leases. To keep the buildings as full as possible we have had to reduce asking rents over the summer. Both buildings showed modest falls in value at the half year end. I hope that these valuation trends will be reversed in the not too distant future when West End office and inner London residential site values start to improve. Our strategy is to reduce the direct portfolio and switch capital into equities. The only sale completed in the half year was at Swanley, which was under offer in March. Since the half year end we have completed two further sales totalling Â£7.5m. At Southampton the price achieved was 29% ahead of the March valuation and 57% ahead of the valuation this time last year. The sale price for Tavern Quay was 10% ahead of the March valuation and 33% ahead of the valuation this time last year. Further sales are planned. At Piccadilly, we are working on the outstanding conditions attached to our planning consent and have opened negotiations with our freeholder, the Crown Estate, for a new ground lease. At the Colonnades complex in Paddington we are converting 3,600 sq ft of surplus storage space to air-conditioned offices with a new access. We are focusing on minimising voids, even where we are only able to offer tenants relatively short occupancies. The rental value of our vacant space at the end of September was 10.6% of the rental value of the entire direct property portfolio. The equivalent figure at end March 2003 was 10.4%. Almost 100% of the vacant space is accounted for by voids at the redevelopment opportunities in Battersea and Piccadilly and by a 36,000 sq ft modern warehouse at Swindon. Unquoted Investments We have made no investments in unquoted companies during the period and Controlrun, the petrol filling station owner and operator, remains the Trust's only unquoted investment. Here our strategy is to sell the portfolio. We completed two sales in the first half at prices exceeding the most recent independent valuations. The remaining two properties, both in Milton Keynes, are currently being marketed. Looking ahead to 2004 The recovery in the global economy will ensure some improvement in tenant demand for offices, however the timing and extent of this is keenly argued. The optimists (of which property markets have their fair share) believe that job growth in government, financial and service industries will be rapid through 2004 and 2005, vacancy rates will fall fast and rental values will start to rise again within the next year. The pessimists predict a much slower recovery in the demand for office space with fitful job growth following slowly in the wake of economic growth, and they point to the growing trend of moving service sector jobs to locations outside Europe. The office optimists also tend to be retail pessimists. They foresee retail sales volumes and retail tenant demand declining as base rates are increased to ward off a threatened rise in inflation. These base rate rises would hit the disposable incomes of those shoppers with high levels of credit card and mortgage debt. Such an outlook is possible, but I find it hard to visualise strong economic growth, sufficient to create a large number of new office jobs, in a period when consumer expenditure is seriously in decline. - MORE - - 9 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Property investment demand looks set to remain strong well into 2004. Pessimists predict that the level of buying interest thereafter may decline if long bond yields rise and equity markets are strong. Optimists see the current level of investment demand being so strong and the supply of investments so static that the buying interest will only wane after yields have been driven down still further. If base rate and long bonds are to rise then this is likely to be caused by a general increase in inflationary expectations, which in turn will make commercial property a more attractive asset class. My belief is that, while conditions will vary from location to location, office markets will generally take longer to recover than the optimists believe. Equally I foresee good quality retail property remaining attractive. I also expect property investment demand to remain strong through 2004. The portfolio remains overweight in the UK, reflecting the better outlook for economic growth relative to the Eurozone. The major upside here will be the introduction of UK REITs. If the Government rejects the idea, share prices will have some downside protection from potential corporate activity, and we would expect that there would continue to be a steady stream of take-overs and attempted take-overs as the portfolios of the quoted companies were carved up and taken offshore to avoid the impact of double taxation. - MORE - - 10 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Group Statement of Total Return (Incorporating the Revenue Account) for the half year ended 30 September 2003 (Unaudited) (Unaudited) (Audited) Half year ended 30 September Half year ended 30 September Year ended 31 March 2003 2002 2003 Revenue Capital Total Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Total capital gains/ - 60,162 60,162 - (36,887) (36,887) - (25,633) (25,633) (losses) from investments Repurchase of warrants - - - - (8,885) (8,885) - (8,885) (8,885) Investment income 8,705 - 8,705 7,195 - 7,195 11,529 - 11,529 Net rental income 1,889 - 1,889 2,514 - 2,514 4,938 - 4,938 ----------- --------- ---------- ----------- --------- ---------- ----------- --------- 10,594 60,162 70,756 9,709 (45,772) (36,063) 16,467 (34,518) (18,051) Interest receivable and 117 - 117 141 - 141 209 - 209 similar income ----------- --------- ---------- ----------- --------- ---------- ----------- --------- Gross revenue and 10,711 60,162 70,873 9,850 (45,772) (35,922) 16,676 (34,518) (17,842) capital gains/(losses) Management and (801) (401) (1,202) (906) (453) (1,359) (1,702) (851) (2,553) performance fees Other administrative (276) - (276) (303) - (303) (570) - (570) expenses ----------- --------- ---------- ----------- --------- ---------- ----------- --------- Net return/(loss) on 9,634 59,761 69,395 8,641 (46,225) (37,584) 14,404 (35,369) (20,965) ordinary activities before interest payable and taxation Interest payable and (1,073) (1,073) (2,146) (1,306) (1,306) (2,612) (2,433) (2,433) (4,866) similar charges ----------- --------- ---------- ----------- --------- ---------- ----------- --------- Net return/(loss) on 8,561 58,688 67,249 7,335 (47,531) (40,196) 11,971 (37,802) (25,831) ordinary activities before taxation Taxation on net return/ (1,194) 442 (752) (1,319) 347 (972) (2,237) 696 (1,541) (loss) on Ordinary activities --------- --------- ---------- ----------- --------- ---------- ----------- --------- -- Net return/(loss) on 7,367 59,130 66,497 6,016 (47,184) (41,168) 9,734 (37,106) (27,372) ordinary activities after taxation Ordinary dividends Interim of 1.10p (2002: (3,899) - (3,899) (3,823) - (3,823) (3,823) - (3,823) 0.90p) Final (year ended 31 - - - - - - (4,774) - (4,774) March 2003: 1.15p) ----------- --------- ---------- ----------- --------- ---------- ----------- --------- (3,899) - (3,899) (3,823) - (3,823) (8,597) - (8,597) ----------- --------- ---------- ----------- --------- ---------- ----------- --------- Transfer to/(from) 3,468 59,130 62,598 2,193 (47,184) (44,991) 1,137 (37,106) (35,969) reserves ====== ====== ====== ====== ====== ====== ======= ===== ====== Return/(loss) per 1.78p 14.29p 16.07p 1.43p (11.19)p (9.76)p 2.30p (8.78)p (6.48)p ordinary share (Note 1) The revenue columns of this statement represent the revenue accounts of the Group. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. - MORE - - 11 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Group Balance Sheet as at 30 September 2003 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 30 September 2003 30 September 2002 31 March 2003 Â£'000 Â£'000 Â£'000 Fixed asset investments 427,416 356,420 358,178 ----------- ----------- ----------- Current assets Debtors 574 6,149 4,267 Cash at bank and short term deposits 2,815 1,180 1,790 ----------- ----------- ----------- 3,389 7,329 6,057 Creditors - amounts falling due within one year 28,275 20,550 19,914 ----------- ----------- ----------- Net current liabilities (24,886) (13,221) (13,857) ----------- ----------- ----------- Total assets less current liabilities 402,530 343,199 344,321 Creditors - amounts falling due after more than one year 40,201 40,193 40,194 ----------- ----------- ----------- Total net assets 362,329 303,006 304,127 ======= ======= ======= Capital and reserves Called up share capital 102,549 107,367 104,124 Share premium 37,063 37,063 37,063 Other reserves 202,306 140,577 145,997 Revenue reserve 20,411 17,999 16,943 ----------- ----------- ----------- Equity shareholders' funds 362,329 303,006 304,127 ======= ======= ======= Net asset value per share 88.33p 70.55p 73.02p - MORE - - 12 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Group Cash Flow Statement for the half year ended 30 September 2003 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 30 September 2003 30 September 2002 31 March 2003 Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities 7,930 5,849 12,483 Net cash outflow from servicing of finance (2,150) (2,500) (4,806) Net tax recovered 313 124 442 Net cash (outflow)/inflow from financial (9,325) 34,386 46,360 investment Equity dividends paid (4,774) (4,166) (7,989) ----------- ----------- ----------- Net cash (outflow)/inflow before financing (8,006) 33,693 46,490 Net cash outflow from financing* (4,396) (3,369) (11,270) ----------- ----------- ----------- (Decrease)/increase in cash (12,402) 30,324 35,220 ======= ======= ======= Reconciliation of operating revenue to net cash inflow from operating activities Net revenue before interest payable and 9,634 8,641 14,404 taxation Decrease in operating debtors 468 614 1,244 (Decrease)/increase in operating creditors (646) (850) 3 Tax deducted at source (930) (793) (1,007) Scrip dividends included in investment income (195) - - Performance fees paid - (1,310) (1,310) Management fee charged to capital (401) (453) (851) ----------- ----------- ----------- 7,930 5,849 12,483 ======= ======= ======= Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash as above (12,402) 30,324 35,220 Exchange differences (76) (52) (96) Other (7) (5) (6) ----------- ----------- ----------- Movement in net debt in the period (12,485) 30,267 35,118 Net debt at the beginning of the period (47,101) (82,219) (82,219) ----------- ----------- ----------- Net debt at the end of the period (59,586) (51,952) (47,101) ======= ======= ======= Represented by: Bank balances, short term deposits and 2,599 1,180 1,790 overdrafts Debt falling due within one year (21,984) (12,939) (8,697) Debt falling due after more than one year (40,201) (40,193) (40,194) ----------- ----------- ----------- (59,586) (51,952) (47,101) ======= ======= ======= * Financing includes cash outflows from share and warrant buy-backs and inflows from the issue of new shares on conversion of warrants. - MORE - - 13 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Notes to the Accounts 1. Return per ordinary share Revenue return per ordinary share is calculated by dividing the net revenue return available for ordinary shareholders of Â£7,367,000 (half year ended 30 September 2002: Â£6,016,000 and year ended 31 March 2003: Â£9,734,000) by 413,645,046 (half year ended 30 September 2002: 421,776,535 and year ended 31 March 2003: 422,633,986) being the weighted average number of ordinary shares in issue. Capital return per ordinary share is calculated by dividing the net capital gain attributable to ordinary shareholders of Â£59,130,000 (half year ended 30 September 2002: Â£47,184,000 loss and year ended 31 March 2003: Â£37,106,000 loss) by the weighted average number of ordinary shares in issue, as shown above. 2. Changes in share capital During the period the Company made authorised market purchases for cancellation of 6,300,000 of its own issued ordinary shares of 25p. As at 30 September 2003 there were 410,194,500 ordinary shares in issue. Since 30 September 2003 a further 55,778,214 ordinary shares of 25p have been repurchased for cancellation. As at 27 November 2003 there were 354,416,286 ordinary shares in issue. 3. Interim statement The interim accounts were approved by the directors on 27 November 2003. 4. Comparative information The financial information contained in this interim statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the six months ended 30 September 2002 and 30 September 2003 has not been audited. The figures and financial information for the year ended 31 March 2003 are an extract from the latest published accounts and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors, which was unqualified and did not contain a statement under either section 237(2) or 237(3) of the Companies Act 1985. - MORE - - 14 - TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2003 Largest Quoted Investments as at 30 September 2003 Market Market Market Value Value Value Â£'000 Â£'000 Â£'000 Land Securities 34,987 Eurocommercial Properties 7,838 Quintain 3,678 (Netherlands) Rodamco Europe 22,433 Helical Bar 6,938 Inmobiliaria Colonial 3,452 (Netherlands) (Spain) Hammerson 18,530 Grainger Trust 6,825 Rugby Estates 3,132 British Land 18,260 Ashtenne 6,084 Fonciere Lyonnaise 3,085 (France) Unibail (France) 18,256 Silic (France) 6,035 Capital & Regional 3,052 Liberty International 16,867 Canary Wharf Group 4,995 Beni Stabili (Italy) 2,836 Slough Estates 16,539 Cofinimmo (Belgium) 4,834 London Merchant 2,811 St Modwen Properties 16,020 Development Securities 4,658 Pirelli Real Estates 2,730 (Italy) Castellum (Sweden) 14,551 Vastned Retail 4,565 Derwent Valley 2,703 (Netherlands) Big Yellow Group 10,958 Metrovacesa (Spain) 4,110 Bail Investissement 2,463 (France) Corio (Netherlands) 10,868 Vallehermoso (Spain) 4,081 Sophia (France) 2,331 Gecina (France) 9,065 Pillar Property Group 4,057 PSP Swiss Property 2,225 (Switzerland) Klepierre (France) 8,311 Brixton 3,853 Chelsfield 7,903 Wereldhave (Netherlands) 3,817 The above 40 largest quoted investments amount to Â£330,736,000 or 77% of total investments (convertibles and all classes of equities in any one company being treated as one investment). Principal Investment Properties as at 30 September 2003 Location Sector Tenure Size (sq ft) Value in excess of Â£5m 198/202 Piccadilly and 32/34 Jermyn Street, London West End Offices and Leasehold 65,000 W1 Retail Elizabeth House, Duke Street, Woking, Surrey Offices Freehold 54,150 The Colonnades, Bishops Bridge Road, Mixed Use Freehold 44,000 London W2 Cambridge Science Park, Cambridge Offices Leasehold 38,500 Southbank Commercial Centre, Light Industrial and Freehold 49,000 Battersea Park Road, London SW11 Offices Value between Â£2m and Â£5m The Quay, Ocean Village, Southampton Offices Virtual Freehold 23,150 Unit 3, Interface Business Park, Wootton Bassett Industrial Freehold 38,249 Ferrier Street Industrial Estate, Ferrier Street, Industrial Freehold 38,500 Wandsworth, London SW18 Tavern Quay Commercial Centre, Rope Street, London Light Industrial and Freehold 20,500 SE16 Offices Value at under Â£2m At 30 September 2003 the Group owned 3 further properties with individual values of under Â£2 million. They are located in Addlestone, London W2 and Weybridge. Their aggregate value was Â£2.6 million. - ENDS - For further information, please contact: Chris Turner, TR Property Investment Trust plc Telephone: 020 7818 4348 Stephen Westwood, Head of Investment Trusts, Henderson Global Investors Telephone: 020 7818 5517 Stephen Phillips, Associate Director, Henderson Global Investors Telephone: 020 7818 6417 Vicki Staveacre, Henderson Press Office Telephone: 020 7818 4222 This information is provided by RNS The company news service from the London Stock Exchange ND IR UBAWRONRAUAA

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