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Annual results 12 months to 31 March 2014 Contents Introduction 3 Capital Raising summary 4 Financial review 6 Portfolio review 11 Capital and rental movements Income generation and retention Projects Acquisitions Market review of


  1. Annual results 12 months to 31 March 2014

  2. Contents Introduction 3 Capital Raising summary 4 Financial review 6 Portfolio review 11 Capital and rental movements Income generation and retention Projects Acquisitions Market review of South East offices 24 Prospects 30 Appendix 31 2 MKS / MAY 2014

  3. INTRODUCTION March 2014: A strengthened platform for growth Clear focus on delivering our strategic » aim of expansion in the South East and London markets Balance sheet strength significantly » enhanced by £86.7m Capital Raising (February 2014) Active refurbishment and development » programme and acquisitions adding potential Portfolio initiatives driving strong » valuation performance and rental gains in recovering markets » Total shareholder return 54.7% 3 MKS / MAY 2014

  4. CAPITAL RAISING SUMMARY Timetable achieved: » 29 January: Announcement of Firm Placing and Placing & Open Offer of 45,879,171 new ordinary shares at £1.89 per share 14 February: Shareholder approval and announcement of results 19 February: Settlement Result: » Number of ordinary shares Firm Placing 14,131,241 Placing 25,343,688 Open Offer 6,404,245 @£1.89 = £86.71million 45,879,174 Shares in issue @ 3/13 45,879,174 Issued share capital @3/14 91,758,348 Investment of £45m of proceeds to date: » – delivery of refurbishment projects – acceleration of development projects – hedging instruments reduced – acquisitions within South East and London office and industrial markets 4 MKS / MAY 2014

  5. FINANCIAL REVIEW Adjusted profit before tax £’ million 5.42 (1.41) (0.15) (0.17) (0.48) (0.05) 3.16 March 2013 Gross rents Interest Net property costs Admin Other March 2014 • Progressive dividend: (8.3pps / 8.4pps / 8.5pps / 8.6pps) 5 MKS / MAY 2014

  6. FINANCIAL REVIEW Cashflow and net debt Dividends Disposals Acquisitions Capex Drawn Cash Capital Drawn paid debt outflow raising debt March March 2013 2014 £’ million 37.50 94.50 (1.12) 3.02 3.90 (82.20) 16.30 3.10 6 MKS / MAY 2014

  7. FINANCIAL REVIEW Loans and financing £37.5m drawn against facilities of £155.0m » No debt renewal until February 2016 » £22.6m negative mark to market for interest rate swaps » (March 2013: negative £40.6m) » £25m swap terminated early / £80m notional balance remaining Weighted average cost of debt up since Capital Raising, now reducing as funds are invested » … balance sheet strengthened 7 MKS / MAY 2014

  8. FINANCIAL REVIEW Summary Balance sheet March 2014 March 2013 Change September 2013 Change Portfolio value (1) £254.55m £212.94m 19.5% Drawn debt £37.50m £94.50m (60.3)% NAV/share 206pps 157pps 31.2% 201pps 2.5% NAV/share – EPRA (2) 227pps 238pps (4.6)% 237pps (4.2)% NNNAV/share (2) 203pps 154pps 31.8% 194pps 4.6% LTV 15% 44% (65.9)% Gearing – NAV (3) 18% 84% (78.6)% Income statement March 2014 March 2013 Change Profit/(Loss) – IFRS £38.29m £1.75m Adjusted profit before tax £3.16m £5.42m EPS (EPRA) 6.02pps 11.49pps 5.8pps 1.7% Dividend/share (Final) 5.9pps 1: Valuation movements (%) after allowing for cap-ex incurred during the period 2: Calculated in accordance with EPRA guidelines Dividend/share (Total) 8.6pps 1.2% 8.5pps 3: Debt as a percentage of EPRA adjusted net assets 8 MKS / MAY 2014

  9. FINANCIAL REVIEW EPRA NAV NNNAV 24p 3p 1p 19p 2p 24p (6)p (4)p 3p 203p 11p (6)p (4)p 238p 227p (29)p 154p Adjusted Valuation Swap Dividend Other March Capital March Adjusted Valuation Swap Dividend Other March Capital March 2013 raise profit gain cancel- 2014 profit gain cancel- 2013 raise 2014 lation lation 9 MKS / MAY 2014

  10. FINANCIAL REVIEW Drawn debt Estimated LTV 42% Drawn £155.00m Estimated Gearing 73% LTV 44% Gearing 84% Drawn £94.50m LTV 15% Gearing 18% £117.50m Drawn £37.50m £37.50m Fully March March drawn 2013 2014 10 MKS / MAY 2014

  11. PORTFOLIO REVIEW The only REIT focused on the South East and London » 37 properties 1 (March 2013: 33) Key Banbury » Portfolio rental value: Office Industrial New properties £18.94m 1 (March 2013: £16.77m) Bicester Retail Other » Portfolio capital value: £254.55m 1 (March 2013: £212.94m) » Initial yield: 6.1% 2 (March 2013: 7.1%) London Maidenhead 20% 3% Poyle Reading Bracknell 44% Staines Newbury Wimbledon Croydon Weybridge Hook Woking Leatherhead Farnborough Fleet Redhill 33% Crawley Locations (by value) South East offices 44% London offices 33% Folkestone South East industrial 20% Other 3% 11 Note: 1. As at 31 March 2014 2. On contracted rents MKS / MAY 2014

  12. PORTFOLIO REVIEW Strong valuation gains and rental growth Valuation surplus: £23.61m (10.2%) » Portfolio ERV up » – 4.4% like for like to £17.50m pa – 13.0% overall to £18.94m pa ERV of refurbishments up 27.6% » Portfolio Full year IPD (2) IPD (2) 12 months to 31 March 2014 Portfolio Full year ERV £m movement % % change % change valuation £m movement % (1) 7.96 3.0 2.8 11.7 South East offices 98.70 9.6 12.8 5.45 8.9 8.9 London offices 83.39 13.1 13.41 5.3 4.2 Total offices 182.08 11.2 12.0 3.90 1.3 1.3 South East industrial 48.74 9.7 10.5 3.19 2.2 – Other 6.58 8.4 – 1.2 3 17.50 4.4 Like for like 237.40 10.8 6.8 3 – 1.44 – Acquisitions 17.15 3.1 – 18.94 13.0 Total portfolio 254.55 10.2 1: Annual valuation movements (%) after allowing for cap-ex incurred during the period, exc acquisitions 2: IPD Monthly Index – annual movement by segment where applicable. IPD London = City segment 12 3: IPD Monthly index (All property) MKS / MAY 2014

  13. PORTFOLIO REVIEW In-house, active portfolio management Three refurbishment projects commenced (ERV up 29.6% to £1.01m pa) » 13 open market lettings secured » – £0.76m pa combined rental – 1.4% ahead of ERV – includes 5 lettings at Switchback Office Park, Maidenhead (valuation gain: 36.3%) 53% tenant retention at least break/expiry » – £1.38m pa retained (at ERV) – 59% retention excluding refurbishment expiries – includes lease restructuring at Weybridge (valuation gain: 51.0%) Total portfolio occupancy: 85.9% (March 2013: 91.4%) » – ERV £2.67m pa (165,900 sq ft) – includes development / refurbishment voids » WAULT: at 5.7 years (March 2013: 6.0 years) and 4.6 years to break (March 2013: 5.1 years) TOTAL PORTFOLIO RETURN: 15.6% (IPD: 14.0%) » 13 MKS / MAY 2014

  14. PORTFOLIO REVIEW Acquisition: Columbia House, Farnborough Purchased in July 2013 for £2.9m » with high (11.1%) initial yield Freehold distribution warehouse » (40,450 sq ft), built in 2000 High specification and close to J4/M3 » Let to May 2015 at £0.34m pa » » 5 year lease regear agreed 22.1% valuation gain » 14 MKS / MAY 2014

  15. PORTFOLIO REVIEW Acquisition: 1 Crown Square, Woking Purchased in January 2014 for £6.00m » Town centre office building (51,500 sq ft) » Initial yield 9.3% from low net rent of » £0.59m pa (£11.60psf) Asset management » – Potential to improve net income from building by renegotiating away from inclusive leases and reducing service charges – Increase rental value in building – Work on common areas to improve building offer – Review refurbishment / redevelopment post lease expiries in 2018 – ERV up 12.4% to £0.76m pa 15 MKS / MAY 2014

  16. PORTFOLIO REVIEW Acquisition: Ashcombe House, Leatherhead Pur chased in March 2014 for £4.36m » Town centre office building (17,340 sq ft), » yielding 7.4% WAULT: 8.8 years (3.8 years including break) » Potential to increase low rents » averaging £19.63 psf 16 MKS / MAY 2014

  17. PORTFOLIO REVIEW Acquisition: The Mille, Brentford Post period acquisition in April » 2014 for £19.30m (£130psf) Rental income: » £1.57m pa / Initial yield 7.7% 96,560 sq ft office building and » adjoining site Asset management » Significant potential to capitalise on the building’s prominence and the rental gains spreading from central London » Improve rents from average of £15.00psf » Improve advertising revenue » Investigate refurbishment / redevelopment alternatives 17 MKS / MAY 2014

  18. PORTFOLIO REVIEW Acquisition: 9 Greyfriars Road, Reading Post period (of f market) acquisition in May 2014 » for £5.8m 38,200 sq ft office building close to Reading Station » Recently vacated: ERV £0.57m pa (£15 psf) » Asset management » Work up and progress a comprehensive refurbishment » Benefit from Crossrail, station improvements and major Station Hill redevelopment » ERV post refurbishment: £1.01m pa (£27psf) 18 MKS / MAY 2014

  19. PORTFOLIO REVIEW Project: 66 Wilson Street, London EC2 Comprehensive office refurbishment (12,000 sq ft) in ‘tech city’ Status: Works progressing on pr ogramme Completion: June 2014 ERV on PC: £0.43m pa (£38.00 psf) 19 MKS / MAY 2014

  20. PORTFOLIO REVIEW Project: 329 Bracknell (formerly Doncastle House) Refurbishment and repositioning of early 1980s office building (33,600 sq ft) Status: Works progressing on pr ogramme Two suites pre-let Completion: June 2014 ERV on PC: £0.49m pa (£15.00 psf) 20 MKS / MAY 2014

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