Interim Results

TR Property Investment Trust PLC 21 November 2007 21 November 2007 TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 HIGHLIGHTS * Launch of second share class - Sigma * Strong Ordinary Share revenue growth of 38.7% * Modest outperformance of the Benchmark for Ordinary Shares * Dividend per share increase of 35.3% for Ordinary Shares DIVIDEND Ordinary Shares An interim dividend of 2.30p (2006: 1.70p) per Ordinary share has been declared payable on 9 January 2008 to shareholders on the register on 7 December 2007. The shares will be quoted ex-dividend on 5 December 2007. Sigma Shares An interim dividend of 0.20p per Sigma share has been declared payable on 9 January 2008 to shareholders on the register on 7 December 2007. The shares will be quoted ex-dividend on 5 December 2007. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Financial Highlights Half year ended Half year ended 30 September 30 September 2007 (Unaudited) 2006 % Revenue (Unaudited) Change Total revenue income (Â£'000) 20,030 16,536 +21.1 Income from operations before tax (Â£'000) 15,193 11,611 +30.9 Revenue earnings per ordinary share 3.94p 2.84p +38.7 Net interim dividend per share 2.30p 1.70p +35.3 IFRS loss (earnings) per ordinary share# (55.67)p 17.12p -425.2 # Under IFRS capital returns are included in 'earnings' At At 30 September 31 March 2007 2007 % Balance Sheet (Unaudited) (Audited) Change Investments held at fair value (Â£'000) 642,063 1,082,398 -40.7 Shareholders' funds (Â£'000) 613,706 972,944 -36.9 Shares in issue at end of period (m) 262.5 334.6 -21.5 Gearing 3% 9% Net asset value per share 233.79p 290.78p -19.6 Note: At 24 July 19.0% of the Ordinary share capital (and corresponding assets and liabilities) converted to Sigma shares. Performance Half year ended Half year ended 30 September 30 September Assets and Benchmark 2007 2006 Benchmark performance (price only) -20.7% +4.7% NAV change -19.6% +6.8% Benchmark performance (total return) -19.1% +6.6% NAV total return -18.8% +7.8% IPD Monthly Index total return* +1.1% +9.0% Total return from direct property +1.9% +10.7% Half year ended Year ended 30 September 31 March % Share Price 2007 2007 Change Share price 203.0p 256.5p -20.9 Share price total return -20.0% +24.4% Market capitalisation Â£533m Â£858m -37.9 Sources: Thames River Capital/*IPD monthly, six months cumulative TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Sigma Shares - Financial Highlights Period ended 30 September 2007 (Unaudited) Revenue Total revenue income (Â£'000) 456 Income from operations before tax (Â£'000) 96 Revenue earnings per Sigma share 0.06p Net interim dividend per share 0.20p Net special dividend per share 1.10p (Loss)/earnings per Sigma share# (8.69)p A special dividend of 1.10p per share was paid on 12 October 2007 to Sigma Shareholders on the register at 5 October 2007. The special dividend arose as a result of accrued earnings of 1.67p per share included in the Calculation Date NAV for the Conversion of Ordinary shares into Sigma share on creation off the Sigma share class. The special dividend was a non-recurring payment. # Under IFRS capital returns are included in 'earnings' At At Inception 30 September 24 July 2007 2007 % Balance Sheet (Unaudited) (Unaudited) Change Investments held at fair value (Â£'000) 138,694 165,804 -16.4 Shareholders' funds (Â£'000) 150,466 161,914 -7.1 Shares in issue at end of period (m) 131.8 131.8 - Gearing 0% 3.2% Net asset value per share 114.17p 122.85p -7.1 Performance Period ended 30 September Assets and Benchmark 2007 Benchmark performance (price only) -5.9% NAV change -7.1% Benchmark performance (total return) -5.6% NAV total return -7.1% Period ended 30 September Share Price 2007 Share price 104.3p Share price total return -1.9% Market capitalisation Â£137m Source: Thames River Capital TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Chairman's Statement Introduction The six month period to the end of September 2007 has been one of increasing uncertainty in global debt and equity markets. Commercial and residential property assets have been the particular recipients of adverse investor sentiment caused by fears of rising investment yields and higher borrowing costs. Against this background Pan European property shares fell by over 20% in the six months anticipating that a sharp fall in property values will occur in 2008. As a dedicated investor in property shares the Trust could never be immune from such a decline. In the event the Ordinary share portfolio modestly outperformed its benchmark and, on a brighter note, revenue per share is sharply higher and the Board is able to make a substantial increase in the interim dividend. The major event of the period for the Trust has been the creation of the Sigma share class. Shareholders were circulated in June with details of the proposals, and these were approved at the EGM on 24 July. I am pleased to report that just under 19% of the equity elected to convert and together with Â£10m of new capital raised, Sigma began life with net assets of Â£162m. Marcus Phayre-Mudge who has been the deputy manager of the Trust for over five years and has worked with Chris Turner since 1997, is managing this share class. The report & accounts now contain the usual group financial statements together with separate income statements and balance sheets for each share class. There is a separate Manager's report for each share class. Asset and Share Price Performance Ordinary Shares Over the six month period the net asset value (NAV) per share calculated under IFRS declined by 19.6% from 290.8p to 233.8p while the share price fell by 20.9% from 256.5p to 203.0p. In the same period, the benchmark index declined by 20.7%. The total returns for the Ordinary share class were -18.8% for the NAV, -20.0% for the share price and -19.1% for the benchmark, an out-performance of 0.3%. Sigma Shares Over the short period from their introduction to the end of September, the net asset value declined by 7.1% from 122.85p to 114.17p while the share price fell by 1.9% from 106.25p to 104.25p. In the same period the benchmark index declined by 5.9%. The total returns for the Sigma share class were -6.5% for the NAV, -1.9% for the share price and -5.6% for the benchmark, an under performance of 0.9% which occurred during the first week after the creation of the new share class. The position has since improved and at the time of writing Sigma is progressively ahead of its benchmark. Revenue Results and Dividends Ordinary Shares The Ordinary share revenue return has risen sharply in the period. In my statement in the last annual report I commented that our managers were advising the Board that increase in revenue per share in the current year would be in the order of 20% to 30%. In this interim period the revenue per ordinary share was 3.94p, a 38.7% increase on the 2.84p earned in the first half of last year. Income benefited from a good level of dividend growth from our shareholdings both in the UK and on the Continent, two special dividends from our Swedish shareholdings and from higher rental income from our direct property portfolio. Finance costs declined due to lower borrowings and share repurchases meant that the higher income was divided by fewer shares. The Board has pleasure in raising the interim Ordinary share dividend by 35.3% from 1.70p per share to 2.30p per share. The dividend will be paid on 9 January 2008 to ordinary shareholders on the register on 7 December 2007. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Chairman's Statement continued Sigma Shares The Sigma shares inherited 1.67p per share of revenue accrued by the converting shares up to the date of the Sigma class creation in July 2007, and part of this revenue was paid in a special dividend of 1.10p per share to Sigma shareholders on 12 October 2007. In its short period of independence since July the Sigma share class has earned 0.06p per share. Our managers' forecasts for the Sigma share class revenue in the remaining six months of the financial year are for earnings in the order of 0.4p to 0.5p per share and on this basis the Board is paying an interim dividend per Sigma share of 0.2p per share. The dividend will be paid on 9 January 2008 to ordinary shareholders on the register on 7 December 2007. Portfolio Distribution The distribution of the portfolio shows only modest change since the end of March. Further details are given in the managers' reports. Gearing and Currencies Borrowings have been reduced further over the period. At the end of March the Trust's net debt was Â£98m (gearing of 9.2%), comprising Â£40m in debentures and Â£58m in short term bank debt. The debentures were split between the Ordinary and Sigma share classes in July (Â£32m to the Ordinary and Â£8m to Sigma). At the end of September the Ordinary share portfolio had repaid all the bank debt and held Â£11m in cash giving net debt of Â£21m (gearing of 3.5%). At the same date the Sigma share class held cash of Â£20m giving net cash of Â£12m. In the absence of unforeseen circumstances, gearing levels are expected to remain between 0% and 10% for the remainder of the financial year. All of our debt continues to be denominated in Sterling and our portfolio exposure to foreign currency assets and overseas income is unhedged. In the six month period, March to September, the Euro rose against the Sterling by 2.7% increasing the value of our Continental assets and Euro income. Discount and Share Repurchases The average discount over the period was 12.2% for the Ordinary shares and 11.5% for the Sigma share class. These figures compare with an average discount of 9.9% in the period from September 2006 to March 2007. During the half year the Trust repurchased 10.217m Ordinary shares for cancellation at a total cost of Â£23.36m (228.7p per shares). Sales of assets were made to cover these repurchases which added some Â£3.48m to shareholders funds. VAT on Management Fees Fund management fees (including performance fees) charged by third party fund managers to Investment Trust Companies have been treated as subject to VAT since 1990. Similar fees charged to Unit Trusts and OEICs are exempt from VAT. A group of Investment Trust Companies took a case to the VAT Tribunal claiming that Investment Trust Companies should be exempt from VAT, the case eventually ended up in the European Court of Justice ('ECJ'). In June of this year the ECJ delivered its judgement and supported the view that management fees charged to Investment Trusts should be exempt. Earlier this month HM Revenue & Customs confirmed that it has withdrawn from defending the appeal of this case and that UK law will be amended to include Investment Trusts within the scope of VAT exemption. VAT will therefore not apply to any future management fee invoices. In addition the investment trust is able to reclaim some of the VAT paid over to managers in the past and we are in discussion with Thames River Capital and Henderson on this matter. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Chairman's Statement continued Board Appointments I am delighted to report the appointment of Paul Spencer to the Board with effect from August 1 2007. Paul is the Chairman of National Savings & Investment (a Government funded agency), Managed Pension Funds Ltd and Sovereign Reversions plc. He also sits on the Boards of WPP Group plc (where he chairs the Audit Committee), Nipponkoa Insurance Company (Europe) Ltd, and Resolution plc. Market Outlook The Trust now has minimal on balance sheet gearing and the portfolios' see-through gearing has been sharply reduced to below that of the benchmark. Our equity portfolio is dominated by holdings in large liquid stocks with an emphasis on those with below average gearing, fixed rate long term debt and high quality tenants and leases. We have no derivative positions or exposure to debt instruments and our direct property portfolio is virtually fully leased. The turmoil in credit markets has created a heightened level of uncertainty for all asset pricing. If the turmoil develops into a full blown credit squeeze it may yet threaten world economic activity. In these uneasy circumstances the managers are concentrating on risk avoidance and on holding assets with secure cash flows and dividend profiles and husbanding resources against the future prospects of recovery and growth. My view is that the problem is about financial companies expecting Central banks to bale them out when their lack of confidence in each other causes illiquidity in each other's credit positions. Meanwhile the operational world carries on quite well - including property, retail and manufacturing. Chris Turner addresses this issue of market fundamentals at the end of his statement. Peter Salsbury Chairman TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Manager's Report Introduction Re-reading my previous manager's statement in the 2007 Annual Report is not a happy experience in the light of subsequent events. Though I was somewhat cautious, I was, with hindsight, seriously over-confident in believing that property shares and the commercial property investment markets were likely to have a soft landing after such an extended bull market. As early as mid-April the threat of rising interest rates was causing persistent daily price share price weakness in the Sector and, almost without respite, these conditions lasted throughout the entire half-year. The credit crisis in August and September only added to the weakness, resulting in an eventual decline of over 20% in share prices. These credit problems, which I did not foresee, have added a new layer of uncertainty in asset pricing. The crisis may have put an end to base rate rises, but debt has become harder and more expensive to borrow and this liquidity squeeze could now threaten to infect the wider economy. I have taken action on the Ordinary share portfolio to virtually eliminate gearing. All our bank debt has been repaid and we are holding cash against our debenture debt. Many of our share sales have been of stocks with higher levels of gearing so that our see-through gearing is, for the first time in my stewardship of the Trust, below the equivalent benchmark gearing level. We have reduced or sold entirely many of our shareholdings with significant exposure to speculative development and further reduced the portfolio exposure to residential and retail property. We have been conscious to retain liquidity in the portfolio. We have bought very little since May except the Trust's own shares, and these share repurchases have been made with the proceeds of specific asset sales and not with borrowed money. Since September we have completed the sale of our property at Slough for Â£18.5m - ahead of the March 2007 valuation. Meanwhile the remainder of our direct property portfolio is 99% occupied by a diverse range of tenants. Performance Over the half year period the net asset value total return was -18.8% and this figure compares with a total return from the EPRA benchmark of -19.1%. The benchmark was changed at the start of the period from the S&P/Citigroup European Property Index. That index showed a total return of -20.7% over the six months. The EPRA benchmark total returns were -22.5% for the UK and -16.3% for Europe ex UK, so our UK overweight hurt our performance. It hardly requires mentioning that performance would have improved if I had taken action earlier to eliminate gearing. As it is, the modest outperformance is due almost entirely to the benefit of share buybacks and the returns from our direct property portfolio. Share price falls were relatively uniform across the UK and Europe and were often exacerbated by the high redemption levels in open ended funds. The best performer in our top ten investments was Liberty International (-8%) and the worst was Segro, formally Slough Estates (why must companies choose silly names?) which fell 35%. Our best performances came from cash takeover bids for Keops and Norgani, Nanette, a Polish housebuilder which rose 25% and Kardan the Eastern European financial and property stock which rose 6%. Our worst performer overall was Capital and Regional which fell 52% over the half year, though part of the holding was sold before the major price decline. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Manager's Report continued Property Investment Market Background As the summer progressed strong UK inflation numbers led to actual and anticipated base rates increases. Leveraged buyers withdrew from the market as did some overseas investors and transaction volumes declined. By July it was clear that the market has stalled. Meanwhile the credit crisis spread its effects from the US into the UK, and by August it became clear that commercial property prices were starting to fall. Since July market activity has been at a very low level so that valuers have little immediate evidence on which to rely. Over the third quarter, the valuation based IPD Index of all UK commercial property capital values fell by 2%, but there is a consensus among market participants that this figure understates the fall and that the true average value decline may be closer to 10%, taking the IPD initial yield from 4.6% to 5.1% and the equivalent yield from 5.1% to 5.6% In the context of the heightened economic uncertainty this is a logical decline. However the market is not dead as our recent sale of the Slough property proves. On the Continent, there has been greater value growth so far in 2007, due in part to high levels of activity from leveraged buyers. With loan criteria now tightening, deals are being pulled. There has been a 25 basis point outward yield shift in prime office yields in Germany and similar moves are likely to be seen shortly in other Continental investment markets. The question is what happens next? Inactivity in the market is confusing the pundits, but we are missing two normal of the normal ingredients for a full blown property bear market - sky high interest rates and over development. Consensus forecasts and IPD Index derivative pricing suggest a 10% to 12% value decline in the next twelve months. UK property share pricing is generally discounting all this and more and points to portfolio value declines of closer to 20% over the next twelve months. Much will eventually demand on the state of tenant demand in 2008, which in turn will depend on the state of the economy and housing markets. Tenant Demand In the UK the best tenant demand remains for offices. UK average office rental growth continues to run at around 8% per annum, more in Central London and less in the provinces. The West End has been the outstanding performer with rental growth close to 25% in the last twelve months. The City has also done well, but here there is now concern that the credit crisis will lead to a decline in demand in 2008. In contrast to offices, UK retail and industrial rental growth is crawling along at between 1% and 2% per annum. On the Continent the picture is broadly similar with offices again leading with average growth of about 5% per annum and retail and industrial rental values growing at around 3% to 4% per annum. Property Share Background European property shares had a dismal summer. At the end of March UK stocks were on an average premium to asset value of 4% and Continental stocks had an average premium of 30%. Over the six months stated net asset values have risen by around 1% in the UK and 6% on the Continent. UK property shares have fallen 24% in the period and Continental shares are down by 18%, with the result that, at the end of September, average UK discounts to asset value were around 22% and average premiums on the Continent were 6%. At the end of September the average historic dividend yields were 2.45% for the UK and 3.22% for the Continental stocks. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Manager's Report continued Share prices declined steadily over the period with the benchmark index falling in five of the six monthly periods. There were very few earnings shocks, in fact results in the period were generally at or above expectations. The persistent driver of price declines was the fear of future property value declines. REIT status was no defense. Large scale redemptions in open ended property securities funds made them forced sellers and the declines became almost self feeding. Shorting was also well in evidence. A few companies made share buybacks into Treasury but these were generally desultory and of no real consequence. Some smaller stocks, notably many of those issued on AIM over 2005 and 2006, have virtually ceased to be marketable. The Trust's exposure to these stocks is mercifully very light (around 1% of the gross assets). We are watching this area however in the hope of finding some major bargains if sellers decide that they are prepared to take any price to offload the shares. In the larger stocks liquidity has been generally good. Currently the market is in that mood where almost all news is bad news. If a company produces a better than expected valuation result then it must have dozy valuers. Property share prices are Share prices declined steadily over the period with the benchmark index falling in five of the six monthly periods. There were very few earnings shocks, in fact results in the period were generally at or above expectations. The persistent driver of price declines was the fear of future property value declines. REIT status was no defense. Large scale redemptions in open ended property securities funds made them forced sellers and the declines became almost self feeding. Shorting was also well in evidence. A few companies made share buybacks into Treasury but these were generally desultory and of no real consequence. Some smaller stocks, notably many of those issued on AIM over 2005 and 2006, have virtually ceased to be marketable. The Trust's exposure to these stocks is mercifully very light (around 1% of the gross assets). We are watching this area however in the hope of finding some major bargains if sellers decide that they are prepared to take any price to offload the shares. In the larger stocks liquidity has been generally good. Currently the market is in that mood where almost all news is bad news. If a company produces a better than expected valuation result then it must have dozy valuers. Property share prices are clearly discounting substantial NAV declines over the coming months, but that is no guarantee that the stocks will not react downwards again when the NAV declines are announced. Meanwhile we welcome the decision by the board of our largest investment, Land Securities, to explore a three-way split of the business and we think that this move will enhance the company's long term returns. Investment Distribution and Activity We were more active than usual in the period, though the actual turnover figures are not fully comparable due to the effects of the creation of the Sigma share class in July. Buybacks formed almost half of our purchase activity and direct property much of the remainder. The major change in the spread of investments has been the increase in the direct property from 6.9% in March to 14.8% in September. We bought two buildings (Harlow and Milton Keynes), the equities declined by 22% and the properties by 1% over the period and lastly the Sigma share class took 21% of our equity portfolio but none of the properties. As a result of this we saw a reduction in the UK quoted shares from 55% to 47.5% while our Continental holdings remained at around the 38% level. For reference the UK component of the EPRA benchmark is 43%. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Manager's Report continued Revenue The one bright area in our results has been the sharp increase in our revenue per share. The arrival of the UK REIT regime has pushed the major UK companies into dividend increases of between 15% and 90%. On the Continent dividend growth has been strong in France as result of sharp increases in the French cost of construction index to which rents are generally indexed. We had two special dividends from Sweden which have been taken as income. Rental income also grew thanks to letting and purchases. On the cost side lower debt levels reduced our finance charges and other expenses declined. Though the notional tax charge rose slightly in percentage terms, share buybacks meant that the increased income was shared by fewer shares. I provided guidance in March that our revenue per share would grow by 20% to 30% in the current year. The growth in the first half has been 35%. One variable which is outside our control is the timing of dividends in the March and April period, but on the assumption that the timing of payments is similar to last year my guidance for the full year is now for revenue growth per share of 25% to 35% for the full year. Debt, Gearing and Debentures Reflecting the worsening market conditions, I reduced the Trust borrowings sharply from April 2007 onwards, with effect that the Ordinary share class net debt fell from Â£90m at the end of March 2007 to Â£21m at the end of September. At the end of March our debt consisted of Â£40m in two debentures with coupons of 8.125% and 11.5% repayable in 2008 and 2016 respectively and Â£50m of short term variable rate bank debt. All this bank debt has been repaid and some Â£8m of the debentures have been allocated to the Sigma share class. Against this remaining Â£32m of debenture debt we held Â£11m of cash at the end of September. As a result of these changes to our debt, and despite the fall in the asset value, on balance sheet gearing has fallen from 9% at March to 3% at the end of September. Since September we have completed the sale of our Slough office building for Â£18.5m and we are now holding cash equal to our debenture debt. As in previous reports I would draw shareholders' attention to the fact that our debenture debt had a market value higher than its nominal value. If we were to repay the debenture debt today, the cost to the Trust would be in the order of Â£45.5m compared with the face value of Â£40m. The difference represents a negative value of some 2.1p per Ordinary share, which is not deducted from the balance sheet asset value. This figure represents only 0.9% of the asset value per share. The amount of money borrowed by the Trust and invested in shares or property is one measure of our gearing, the other is the extent of the debt owed by the companies in which we hold shares. This figure - the Trust's 'see-through leverage' which adds the proportionate net debt of all our equity investments to our on balance-sheet debt - was 36.5% of our gross see-through assets at the end of September. This figure compares with 39.4% for our Benchmark at the same date, and a figure of 42.5% for our portfolio at March 2007. This is the first time this decade that the Trust's see-through gearing has been less than that of the benchmark, a fact which reflects not only the on balance sheet debt reductions, but also the deliberate sale of shares with above average leverage. Direct Property Portfolio The direct property portfolio was the best performing area of the portfolio over the six months, producing an un-geared total return of 1.91% for the period, ahead of the Investment Property Databank Monthly Index return of 1.1%. The Trust's return was made up of income return of 2.2% and a negative capital return of 0.29% compared to IPD's 2.4% income return and negative capital return of 1.3%. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Manager's Report continued In April we paid Â£13.2m including costs for Field House in Harlow, Essex which occupies a large site which may be suitable for long term redevelopment. The building is let until 2012 at a low rent. In May we bought a modern freehold office building in Milton Keynes' central business district for an all-in cost of Â£6.85 million. The current rent of Â£420,000 per annum is under review as part of ongoing lease renewal negotiations with the tenant, Exel Europe Ltd. Elsewhere, activity was focused on letting the last remaining space at Thames Central, the Trust's 62,000 sq ft office building in Slough. This was achieved during the summer. Since the half year we have completed the sale of the building for Â£18.5 million, a sum equal to the July and September 2007 valuations, ahead of the March 2007 valuation and significantly ahead of the original purchase price of Â£11 million (including acquisition costs), which the Trust paid in June 2005. The exit income yield is 5.5% At the half-year (prior to the sale of Thames Central) the direct portfolio made up 14.8% of the gross assets of the Ordinary share class. Excluding Thames Central, the direct portfolio comprised 11.6%. Shareholders may be aware that the Trust has often been prepared to buy vacant property or to hold buildings let on very short leases. Given the current uncertain outlook, I am happy to report that, at the end of September, the portfolio vacancy rate was down to only 1%. Unquoted Investments The Trust currently has no unquoted investments Outlook Significant movements in property share values tend to presage similar movements in underlying property values. So the savage decline in seen in property share prices since March is based on the assumption that there will be a very sharp fall in property values over the next twelve to eighteen months. Transaction turnover has already dropped by 75% and yields have started to rise, but only modestly. Lacking a central market place, property valuers are reluctant to make large scale write-downs purely on the basis of opinion. So we have to wait, and while we wait we are increasingly vulnerable to alarm and despondency. As investors, we feel akin to the residents of a City threatened by a hurricane. We know that there is a storm out there offshore, and the media is getting increasingly excited about all the dreadful damage that could occur. They may be right but dire predictions are good copy, and storms sometimes moderate or veer off in another direction. We batten down the hatches and, if we can, leave town, only to sneak back after the storm has passed to see that well protected property is still there and damage is generally less than predicted. The two really dreadful property share markets in my lifetime have been 1973-75 and 1989-92. Both came against the background of sky high interest rates, large scale overdevelopment and a sharp rise in unemployment which drove down rental values. We do not have overdevelopment today, no-one is forecasts sky high interest rates or a doubling of unemployment. So the fall in property values is a pricing issue. So what are property share prices discounting? This is easier to ask than to answer. We have to start from what we think 'normal' pricing should be within a REIT regime. Let's assume around a 5% discount. If the discount is currently 35% then, simplistically, the share price is assuming a 30% decline in the NAV. Adjusting for leverage that will mean a 15% to 25% decline in the value of the properties. Now the current average initial yield on the UK IPD property Index is 4.71% and the equivalent yield (which takes account of full rental values) is 5.67%. Two years ago these figures TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Manager's Report continued were 5.35% and 6.23% and, if the pricing stabilised at these levels then, allowing for a little rental growth, it would need a decline of roughly 10% in property values from current levels. But if we take yields back to their highest level this decade, at the end of 2001, they were 7.19% initial and 8.53% equivalent. To get back to these yields property values would need to fall by around 33%. If we look the other way round, and use the average property value decline of 20% implied by share prices, then the required yields are 5.7% and 6.8%. We can only guess at what yield levels transaction volumes will return to normal levels, but yields of 5.7% and 6.8% look sensible. Events, such as the recent credit crisis, can change our guesswork, bringing tighter financing and the prospect of some forced selling. A very sharp fall in residential pricing would be another negative should it occur. For the moment uncertainty prevails and markets don't like it. All news is taken as bad news. What we can say is that, short of Armageddon, we have seen the worst of the share price falls in the well run well financed property companies. I think that the point of maximum pessimism is still to be reached. An event may mark that point, but what event I cannot tell. That event could conceivably occur anytime now or it may still be twelve months away. So we wait with our hatches battened down - staying in town as an investor dedicated to property - trying not to be too brave or too pessimistic. We will search for opportunities in others' distress and look forward to the day when we can report a return to decent growth. Chris Turner Fund Manager TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Sigma Shares - Manager's Report Introduction The Chairman's statement comments on the creation of the Sigma share class and the results of the EGM and the conversion offer and placing. The Sigma share class was created for dedicated investment in smaller sized property companies across Europe. As it was largely created through the conversion of Ordinary shares, Sigma's initial portfolio comprised a pro rata share of the listed equities within the Ordinary share class portfolio (but excluding the direct property investments) together with Â£9.96 million of cash raised in the Placing. Sigma also took a pro rata share of all the debt (which included both floating rate short term debt and the debentures) totalling Â£10.26m. The initial net assets were Â£161.9million. Investment Activity & Distribution of Assets On the day of conversion, the portfolio comprised over 64% large capitalization stocks (defined as those with a market cap of over Â£1bn). As set out in the prospectus, the Sigma portfolio will be repositioned over time, however, against the backdrop of difficult market conditions, the pace of reinvestment has been slower than originally anticipated. Larger cap stocks have suffered from a liquidity 'discount', whereby in falling markets, the more liquid stocks tend to be hit harder and faster, consequently, the pace of sale and reinvestment has been deliberately cautious. At the end of September, large cap stocks accounted for 57% of the portfolio and cash for reinvestment (after netting off the debenture debt) stood at 6%. As a result, at the end of September there is still a strong resemblance to the Ordinary share portfolio, this reflects the youthfulness of Sigma's portfolio evolution; 9 weeks is not long! Given the downward trend of the market over the period, sales (Â£22.4m) have dominated purchases (Â£6.7m). We are comfortable holding cash and seeking out opportunities as they appear. As stated earlier, caution has been the watchword and purchases have been spread between adding to existing 'inherited' holdings and investing in a number of new companies. In the former category are St.Modwen and Shaftesbury (in the UK), Eurocommercial and Kardan (Netherlands listings) and Kungsleden (Sweden) which are all long term significant holdings in the Ordinary portfolio top 40. Although these businesses operate in very different markets, a common theme is the strength and continuity of longstanding management. The next group are companies which we have, over a period of time investigated, liked and subsequently made initial modest investments within the Ordinary portfolio. However, prior to the creation of Sigma, it had been difficult to build significant positions in these stocks, relative to the size of the portfolio. This was a significant driver in the rationale for the creation of the smaller Sigma class, which will enable more meaningful positions to be constructed. This group includes Local Shopping REIT and CLS (UK), Fonciere Paris France, Zueblin France and Fonciere des Murs (France), Plaza Centres (listed in the Netherlands), Wallenstam Byggnads (Sweden), Alstria and Hahn (Germany), and Sponda (Finland). Following further investment these stocks are now important components of the Sigma portfolio. The third and final group is new companies not previously held by the Trust. So far these have been relatively modest investments and were principally into two companies, a German office refurbishment business, IFM and a family run logistics developer in France, Argan. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Sigma Shares - Manager's Report continued The sales have been primarily, but not exclusively, from large caps. Two of the three non European stocks, one in India and one in Japan have been sold. In addition, the portfolio is increasingly defensively positioned with the reduction in exposure to the most leveraged companies. Gearing At launch, Sigma acquired a pro rata proportion not only of the equity portfolio, but also the debt. This included a share of the two debentures (repayable in 2008 and 2016). Given current market conditions, the strategy is to have no leverage. The short term floating rate debt was repaid almost immediately on the creation of the new share class and cash is held against the debentures, neutralizing the capital effect of the debentures. Sigma therefore effectively has no gearing. Sigma's see-through debt as a proportion of see-through asset exposure was 39.0% at the end of September, in line with the benchmark figure of 39.4%. Outlook Chris has commented in his report on our market outlook. The immediate effect of our view has been a change in the pace of the repositioning of the portfolio towards smaller cap stocks. We will continue to take this cautious approach. My primary concern is to protect value for shareholders, and I remain reluctant to switch shareholders funds from the large cap stocks, which due to their liquidity have borne the brunt of selling pressure and (particularly in the UK) are standing at significant discounts to their underlying asset values, into the less liquid smaller cap stocks standing at lower discount levels. This differential will narrow at some point, until then we ask shareholders to share our patience. On a brighter note, these conditions are revealing opportunities for the long term investor. We are very pleased with the acquisitions we have made so far and look forward to reporting on many more in due course. Marcus Phayre-Mudge Fund Manager TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Income Statement for the half year ended 30 September 2007 Half year ended 30 September Half year ended 30 September Year ended 31 March 2007 2006 2007 (Unaudited) (Unaudited ) (Audited) Revenue Capital Revenue Capital Revenue Capital Return Return Total Return Return Total Return Return Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Investment income Investment income 16,702 - 16,702 14,313 - 14,313 21,264 - 21,264 Other operating 260 - 260 40 - 40 66 - 66 income Gross rental 1,973 - 1,973 1,454 - 1,454 3,201 - 3,201 income Service charge 1,095 - 1,095 729 - 729 1,695 - 1,695 income (Losses)/ gains on investments held at fair value - (184,337) (184,337) - 50,925 50,925 - 236,669 236,669 ---------- --------- ---------- ----------- --------- ---------- ---------- --------- ---------- Total income 20,030 (184,337) (164,307) 16,536 50,925 67,461 26,226 236,669 262,895 ---------- --------- ---------- ----------- --------- ---------- ---------- --------- ---------- Expenses Management and performance fees 1,818 1,125 2,943 1,630 815 2,445 3,602 9,050 12,652 Direct property expenses, rent payable and service charge costs 1,457 - 1,457 1,147 - 1,147 2,327 - 2,327 Other expenses 178 - 178 356 - 356 561 - 561 ---------- --------- ---------- ---------- --------- ---------- ---------- --------- ---------- Total operating 3,453 1,125 4,578 3,133 815 3,948 6,490 9,050 15,540 expenses ---------- --------- ---------- ---------- --------- ---------- ---------- --------- ---------- Operating profit/ 16,577 (185,462) (168,885) 13,403 50,110 63,513 19,736 227,619 247,355 (loss) Finance costs 1,384 1,384 2,768 1,792 1,792 3,584 3,669 3,669 7,338 -------- --------- --------- --------- ---------- ---------- --------- ---------- ---------- Income from 15,193 (186,846) (171,653) 11,611 48,318 59,929 16,067 223,950 240,017 operations before tax Taxation (2,469) 940 (1,529) (1,850) 782 (1,068) (2,013) (206) (2,219) -------- --------- -------- -------- -------- -------- -------- -------- -------- Net profit/(loss) 12,724 (185,906) (173,182) 9,761 49,100 58,861 14,054 223,744 237,798 before reorganisation Transfer to Sigma (2,203) 26,806 24,603 - - - - - - shares ===== ===== ===== ===== ====== ====== ===== ====== ====== Net profit/(loss) 10,521 (159,100) (148,579) 9,761 49,100 58,861 14,054 223,744 237,798 ===== ===== ===== ===== ====== ====== ===== ====== ====== Earnings per Ordinary share (note 2) 3.94p (59.61)p (55.67)p 2.84p 14.28p 17.12p 4.09p 65.16p 69.25p The total column of this statement represents the Income Statement, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the Ordinary shareholders of the parent company. There are no minority interests. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Shares - Balance Sheet as at 30 September 2007 30 September 30 September 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) Â£'000 Â£'000 Â£'000 Non-current assets Investments held at fair value 642,063 905,218 1,082,398 Current assets Debtors 13,546 3,524 4,239 Cash and cash equivalents 11,022 64 535 --------- --------- ---------- 24,568 3,588 4,774 Current liabilities (16,069) (42,160) (70,156) ---------- ---------- ---------- Net current assets/(liabilities) 8,499 (38,572) (65,382) Total assets less current liabilities 650,562 866,646 1,017,016 Non-current liabilities (36,856) (43,725) (44,072) ---------- ---------- ---------- Net assets 613,706 822,921 972,944 ====== ====== ====== Capital and reserves Ordinary called up share capital 65,625 85,962 83,650 Share premium account 30,023 37,063 37,063 Capital redemption reserve 41,209 36,343 38,655 Retained earnings 476,849 663,553 813,576 ---------- ----------- ----------- Equity shareholders' funds 613,857 822,921 972,944 ====== ====== ====== Net asset value per Ordinary share 233.79p 239.33p 290.78p TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Sigma Shares - Income Statement Period from inception to 30 September 2007 Period from inception to 30 September 2007 (Unaudited) Revenue Capital Total Â£'000 Â£'000 Â£'000 Investment income Investment income 324 - 324 Interest receivable and similar income 132 - 132 Losses on investments held at fair value - (11,337) (11,337) ----------- --------- ---------- Total income 456 (11,337) (10,881) ----------- --------- ---------- Expenses Management and performance fees 268 134 402 Other expenses 21 - 21 ---------- --------- ---------- Total operating 289 134 423 expenses ---------- --------- ---------- Operating profit/ 167 (11,471) (11,304) (loss) Finance costs 71 71 142 ---------- ---------- ---------- Income from operations before tax 96 (11,542) (11,446) Taxation (16) 14 (2) --------- ---------- ---------- Net profit 80 (11,528) (11,448) ===== ====== ====== Earnings/loss per Sigma Share (note 2) 0.06p (8.75)p (8.69)p The total column of this statement represents the Income Statement, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the Sigma shareholders of the parent company. There are no minority interests. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Sigma Shares - Balance Sheet Period from inception to 30 September 2007 At inception 30 September 2007 24 July 2007 (Unaudited) (Unaudited) Â£'000 Â£'000 Non-current assets Investments held at fair value 138,694 165,809 Current assets Debtors 999 - Cash and cash equivalents 20,651 7,127 --------- ---------- 21,650 7,127 Current liabilities 2,284 3,428 ---------- ---------- Net current liabilities 19,366 3,699 Total assets less current liabilities 158,060 169,508 Non-current liabilities (7,594) (7,594) ---------- ---------- Net assets 150,466 161,914 ====== ====== Capital and reserves Called up share capital 16,474 16,474 Share premium account 13,142 13,142 Retained earnings 120,850 132,298 ----------- ----------- Equity shareholders' funds 150,466 161,914 ====== ====== Net asset value per Sigma share 114.17p 122.85p TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Group Income Statement for the half year ended 30 September 2007 Half year ended 30 September Half year ended 30 September Year ended 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) 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 Investment income Investment income 17,026 - 17,026 14,313 - 14,313 21,264 - 21,264 Other operating 392 - 392 40 - 40 66 - 66 income Gross rental 1,973 - 1,973 1,454 - 1,454 3,201 - 3,201 income Service charge 1,095 - 1,095 729 - 729 1,695 - 1,695 income (Losses)/gains on investments Held at fair value - (195,674) (195,674) - 50,925 50,925 - 236,669 236,669 ---------- --------- ---------- ---------- -------- ---------- ---------- --------- ---------- Total income 20,486 (195,674) (175,188) 16,536 50,925 67,461 26,226 236,669 262,895 ---------- --------- ---------- ---------- -------- ---------- ---------- --------- ---------- Expenses Management and performance Fees 2,086 1,259 3,345 1,630 815 2,445 3,602 9,050 12,652 Direct property expenses, rent payable and service charge costs 1,457 - 1,457 1,147 - 1,147 2,327 - 2,327 Other expenses 199 - 199 356 - 356 561 - 561 ---------- --------- ---------- ---------- --------- ---------- ---------- --------- ---------- Total operating 3,742 1,259 5,001 3,133 815 3,948 6,490 9,050 15,540 expenses ---------- --------- ---------- ---------- --------- ---------- ---------- --------- ---------- Operating profit/ 16,744 (196,933) (180,189) 13,403 50,110 63,513 19,736 227,619 247,355 (loss) Finance costs 1,455 1,455 2,910 1,792 1,792 3,584 3,669 3,669 7,338 ---------- ---------- ---------- -------- -------- ---------- --------- -------- -------- Income from operations before tax 15,289 (198,388) (183,099) 11,611 48,318 59,929 16,067 223,950 240,017 Taxation (2,485) 954 (1,531) (1,850) 782 (1,068) (2,013) (206) (2,219) -------- --------- --------- --------- ---------- ---------- --------- ---------- ---------- Net profit/(loss) 12,804 (197,434) (184,630) 9,761 49,100 58,861 14,054 223,744 237,798 ===== ===== ===== ===== ====== ====== ===== ====== ====== Earnings/(loss) per ordinary Share (note 2) 3.94p (59.61)p (55.67)p 2.84p 14.28p 17.12p 4.09p 65.16p 69.25p Earnings per Sigma share (note 2) 0.06p (8.75)p (8.69)p N/A N/A N/A N/A N/A N/A Transfer earnings per Sigma share 1.67p (20.34)p (18.67)p N/A N/A N/A N/A N/A N/A The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the shareholders of the parent company. There are no minority interests. The final dividend of 2.40p in respect of the year ended 31 March 2007 was declared on 23 May 2007 and paid on 31 July 2007. This can be found in the Group Statement of Changes in Equity for the half year ended 30 September 2007. *Transfer earnings per Sigma share are earnings included in the Calculation Date NAV for Ordinary shares converted into Sigma shares on creation of the Sigma share class. These earnings form part of the opening reserves in the Sigma Balance Sheet at inception. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Group Statement of Changes in Equity Share Capital Premium Redemption Retained Share Capital Account Reserve Earnings Total For the half year ended 30 September 2007 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 (Unaudited) At 31 March 2007 83,650 37,063 38,655 813,576 972,944 Net loss for the period - - - (184,630) (184,630) Ordinary shares repurchased (2,554) - 2,554 (23,360) (23,360) Sigma shares issued (net of costs) 1,003 6,102 - - 7,105 Ordinary dividends paid - - - (7,887) (7,887) ----------- --------- ---------- --------- ---------- At 30 September 2007 82,099 43,165 41,209 597,699 764,172 ====== ====== ====== ====== ====== Share Capital Share Capital Premium Redemption Retained Account Reserve Earnings Total For the half year ended 30 September 2006 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 (Unaudited) At 31 March 2006 85,962 37,063 36,343 611,225 770,593 Net profit for the period - - - 58,861 58,861 Ordinary dividends paid - - - (6,533) (6,533) ----------- --------- ---------- --------- ---------- At 30 September 2006 85,962 37,063 36,343 663,553 822,921 ====== ====== ====== ====== ====== Share Capital Share Capital Premium Redemption Retained Account Reserve Earnings Total For the year ended 31 March 2007 (Audited) Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 31 March 2006 85,962 37,063 36,343 611,225 770,593 Ordinary shares repurchased (2,312) - 2,312 (23,069) (23,069) Net profit for the period - - - 237,798 237,798 Ordinary dividends paid - - - (12,378) (12,378) ---------- --------- ---------- --------- ---------- At 31 March 2007 83,650 37,063 38,655 813,576 972,944 ====== ====== ====== ====== ====== TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Group Balance Sheet as at 30 September 2007 30 September 30 September 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) Â£'000 Â£'000 Â£'000 Non-current assets Investments held at fair value 780,757 905,218 1,082,398 Current assets Debtors 5,690 3,524 4,239 Cash and cash equivalents 31,673 64 535 --------- --------- ---------- 37,363 3,588 4,774 Current liabilities (9,498) (42,160) (70,156) ---------- ---------- ---------- Net current assets/(liabilities) 27,865 (38,572) (65,382) Total assets less current liabilities 808,622 866,646 1,017,016 Non-current liabilities (44,450) (43,725) (44,072) ---------- ---------- ---------- Net assets 764,172 822,921 972,944 ====== ====== ====== Capital and reserves Ordinary called up share capital 65,625 85,962 83,650 Sigma share capital 16,474 - - Share premium account 43,165 37,063 37,063 Capital redemption reserve 41,209 36,343 38,655 Retained earnings 597,699 663,553 813,576 ---------- ----------- ----------- Equity shareholders' funds 764,172 822,921 972,944 ====== ====== ====== Net asset value per: Ordinary share 233.79p 239.33p 290.78p Sigma share 114.17p N/A N/A TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Group Cash Flow Statement Half year ended 30 September 2007 Half year ended Half year ended Year ended 30 September 30 September 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) Â£'000 Â£'000 Â£'000 Net cash inflow/(outflow) from operating 4,102 (1,623) (1,526) activities Investing activities Purchase of investments (46,223) (36,494) (123,269) Sale of investments 150,834 62,925 159,290 ---------- ---------- ----------- Net cash inflow/(outflow) from investing 104,612 26,431 36,021 activities ---------- ---------- ----------- Net cash inflow before financing 108,714 24,808 34,495 ---------- ---------- ----------- Financing activities Issue of Sigma shares 7,106 - - Purchase of Ordinary shares (26,212) - (17,350) Equity dividends paid (7,887) (6,533) (12,378) ----------- ----------- ----------- Net cash outflow from financing (26,994) (6,533) (29,728) ----------- ----------- ----------- Increase in cash 81,720 18,275 4,767 Effect of foreign exchange rate changes 275 97 22 ----------- ----------- ----------- Change in cash and cash equivalents 81,995 18,372 4,789 Net debt at start of period (90,303) (95,092) (95,092) ----------- ----------- ----------- Net debt at end of period (8,308) (76,720) (90,303) ======= ======= ======= Reconciliation of income from operations before tax to net cash flow from operating activities Half year ended Half year ended Year ended 30 September 30 September 31 March 2007 2006 2007 (Unaudited) (Unaudited) (Audited) Â£'000 Â£'000 Â£'000 Net income from operations before tax (183,099) 59,929 240,017 Losses/(gains) on investments including 195,674 (50,925) (236,669) transaction costs Increase in operating debtors (1,372) (489) (2,609) Increase/(decrease) in operating creditors 1,258 (423) (1,161) Net tax paid (1,110) (281) (1,104) Performance fees paid (7,249) (9,434) - ---------- ---------- ---------- Net cash inflow/(outflow) from operating 4,102 (1,623) (1,526) activities ====== ====== ====== TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Notes to the Financial Statements 1. Basis of accounting The financial statements have been prepared on the basis of the accounting policies shown in the annual financial statements for the year ended 31 March 2007 and in accordance with International Financial Reporting Standards (IFRS) and pronouncements on interim reporting adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC). The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (Â£'000) except where otherwise indicated. 2. Earnings per share (a) (Loss)/ earnings per Ordinary Share The loss/earnings per Ordinary share above can be analysed between revenue and capital, as below. Half year Half year Year ended ended ended 30 September 2007 30 September 2006 31 March 2007 (Unaudited) (Unaudited) (Audited) Â£'000 Â£'000 Â£'000 Net revenue profit 10,521 9,761 14,054 Net capital (loss)/profit (159,100) 49,100 223,744 ---------- ----------- ----------- Net total (loss)/profit (148,579) 58,861 237,798 ====== ====== ====== Weighted average number of Ordinary shares in issue during the period 266,902,670 343,850,000 343,385,123 pence pence pence Revenue earnings per Ordinary share 3.94 2.84 4.09 Capital (loss)/earnings per Ordinary (59.61) 14.28 65.16 share --------- --------- --------- (Loss)/earnings per ordinary share (55.67) 17.12 69.25 ===== ===== ===== TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 2. Earnings/ (loss) per share (continued) (b) Earnings/(loss) per Sigma share The earnings/(loss) per Sigma share above can be analysed between revenue and capital, as below. Period from Inception to 30 September 2007 (Unaudited) Â£'000 Net revenue profit 80 Net capital loss (11,528) ---------- Net total loss (11,448) ====== Weighted average number of Sigma shares in issue during the period 131,795,747 pence Revenue earnings per Sigma share 0.06 Capital loss per Sigma share (8.75) --------- Loss per Sigma share (8.69) ===== 3. Changes in share capital During the half year, the Company made market purchases for cancellation of 10,216,714 Ordinary shares of 25p each. In July 2007 a second share class was introduced, mainly through the conversion of 61,883,286 of the existing Ordinary shares into 123,766,572 Sigma shares and the issue of 8,029,175 new Sigma shares. As at 30 September 2007 there were 262,500,000 Ordinary shares of 25p and 131,795,747 Sigma shares of 12.5p in issue. 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 half year ended 30 September 2006 and 30 September 2007 has not been audited. The figures and financial information for the year ended 31 March 2007 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. TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Ordinary Share Class - Largest Quoted Investments as at 30 September 2007 Market Market Market Value Value Value Â£'000 Â£'000 Â£'000 Land Securities 73,167 Gecina (France) 9,773 Shaftesbury 3,964 Unibail-Rodamco 61,970 Eurocommercial Properties 8,711 Fonciere Lyonnaise 3,783 (France) British Land 43,364 (Netherlands) (France) Big Yellow 24,987 Quintain Estates & Dev 7,215 Rugby Estates 3,780 Segro 20,230 Kardan (Netherlands) 6,820 DIC Asset (Germany) 3,447 Hammerson 17,580 IVG Immobilien (Germany) 6,481 Brixton 3,441 Fonciere des Regions 16,814 Vastned Retail (Netherlands) 6,056 Babis Vovos Internatnl 3,317 (France) Castellum (Sweden) 16,744 Kungsleden (Sweden) 5,808 (Greece) St Modwen Properties 16,301 Helical Bar 5,220 PSP Property 3,274 Liberty International 16,088 Beni Stabili (Italy) 4,864 (Switzerland) Great Portland Estates 15,776 Immoeast Immobilien 4,800 McKay Securities 3,244 Derwent London 15,084 Anlagen (Austria) Capital & Regional 3,183 Klepierre (France) 12,855 Cofinimmo (Belgium) 4,778 Sponda (Finland) 3,071 Corio (Netherlands) 10,871 Icade (France) 4,319 Deutsche Wohnen 2,856 Silic (France) 4,319 (Germany) Orco Property (France) 4,140 Wallenstam Byggnads 2,800 (Sweden) The above 40 largest quoted investments amount to Â£485,295,000 or 76% of total investments (convertibles and all classes of equities in any one company being treated as one investment). Ordinary Share Class - Principal Investment Properties as at 30 September 2007 Location Sector Tenure Size (sq ft) Value in excess of Â£10m The Colonnades, Bishops Bridge Road, London W2 Mixed Use Freehold 44,000 Thames Central, Hatfield Road, Slough Offices Freehold 62,645 Field House, Station Approach, Hatfield Offices Freehold 66,000 Value in excess of Â£5m Elizabeth House, Duke Street, Woking, Surrey Offices Freehold 54,150 Solstice House, Midsummer Bvd, Milton Keynes Offices Freehold 31,550 Cambridge Science Park, Cambridge Offices Leasehold 38,500 Ferrier Street Industrial Estate, Ferrier Street, Wandsworth, London SW18 Industrial Freehold 35,800 TR PROPERTY INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 September 2007 Sigma Share Class - Largest Quoted Investments as at 30 September 2007 Market Market Market Value Value Value Â£'000 Â£'000 Â£'000 Land Securities 15,306 Eurocommercial Properties Wallenstam Byggnads Unibail-Rodamco 13,967 (Netherlands) 2,536 (Sweden) 998 (France) British Land 11,038 Corio (Netherlands) 2,509 Sponda (Finland) 961 Big Yellow 6,712 Kardan (Netherlands) 2,264 DIC Asset (Germany) 952 Segro 5,009 Quintain Estates & Local Shopping REIT 933 St Modwen Properties 4,753 Developments 1,999 Immoeast Immobilien Castellum (Sweden) 4,573 IVG Immobilien (Germany) 1,742 Anlagen (Austria) 933 Great Portland 4,240 Kungsleden (Sweden) 1,727 McKay Securities 912 Estates Hammerson 3,793 Shaftesbury 1,675 Societe Fonciere Paris Derwent London 3,426 Vastned Retail (Netherlands) 1,628 (France) 911 Klepierre (France) 3,369 Helical Bar 1,403 Babis Vovos Fonciere des Regions Icade (France) 1,161 International (Greece) 892 (France) 3,291 Beni Stabili (Italy) 1,154 PSP Swiss Property Liberty 3,081 Rugby Estates 1,144 (Switzerland) 880 International Gecina (France) 2,627 Cofinimmo (Belgium) 1,126 Brixton 869 Orco Property (France) 1,113 Silic (France) 823 Fonciere Lyonnaise (France) 1,017 The above 40 largest quoted investments amount to Â£119,447,000 or 86% of total investments (convertibles and all classes of equity in any one company being treated as one investment). For further information, please contact: Chris Turner Marcus Phayre-Mudge TR Property Investment Trust plc TR Property Investment Trust plc Telephone: 020 7360 1332 Telephone 020 7360 1331 This information is provided by RNS The company news service from the London Stock Exchange

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