Trading Statement

RNS Number:6520B
Property Fund Management plc
05 August 2004


FOR IMMEDIATE RELEASE

5th August 2004



                      Property Fund Management PLC ("PFM")


                               Trading Statement


Current trading


As indicated in the preliminary results statement of 26th May 2004, the delay in
launching the new Euroind High Income Fund ("EHI") will have a significant
impact on the results of PFM for the year ending 31st December 2004. As a
consequence the full financial effect of EHI's acquisition programme will not be
realised until the second half of the current financial year ending 31st
December 2004 and during the 12 months to 31st December 2005, rather than during
the first six months of 2004 which was originally anticipated. As a result, the
Directors expect that PFM will make a loss for the six months ended 30th June
2004.


Change in business model


As well as the delays to EHI, there has also been a significant change to PFM's
business model. In the listing particulars for PFM dated 16th May 2002, it was
stated that the requirement for "seed capital" or co-investment by PFM in its
new funds "will typically be limited to a maximum of 1 per cent. of the target
equity for the relevant fund." Since listing, the Directors believe that market
expectations have changed and typically investors in property funds now require
the manager to co-invest larger amounts which can, in some cases, represent up
to 5 per cent. of the target equity. In EHI, out of a total equity size of
approximately Euro300m (when completed), PFM will have been required to invest a
total of some Euro7.5m, representing 2.5 per cent. Additionally the recent
Industrial Investment Partnership, launched by PFM in the UK, saw a requirement
for 5 per cent. co-investment equity. The Directors believe that levels of
co-investment of this scale will generally be required in the future for new
funds.


Although PFM has funded its co-investment requirements from internal resources
to date, as a consequence of these changes it is clear that PFM requires a
stronger capital base to maximise the opportunities available to it and to
accelerate further the growth in its funds under management.


The Board is therefore considering the alternatives available for raising
further equity for PFM and discussions are in hand with third parties willing to
underwrite such an equity issue. It is the Board's intention that shareholders
will be offered the opportunity to participate fully in any such equity issue
pro rata to their existing shareholdings.


Progress on new and existing funds


At the first closing the EHI Fund attracted a group of leading European
institutional investors who committed Euro193m of equity. The fund has exchanged
contracts to acquire Euro74.5m of industrial estates for the fund, initially in
Denmark and the Netherlands, with a further Euro200m of estates under offer for
acquisition in all four target countries including Germany and France. It is
anticipated that the fund will attract total equity of Euro300m providing purchase
power of Euro700m. Demand from investors has been strong for the second closing
which it is planned will provide the balance of Euro107m of equity.



The Board is also pleased to report that heads of terms are agreed for a Central
European Industrial Fund that will invest in Poland, Hungary and the Czech
Republic, from PFM's office in Warsaw.


The fund is now planned to be Euro450m, with equity and debt, rather than Euro150m
which was originally envisaged. An initial pipeline of Euro100m of property
investments is currently under negotiation. Following the first closing, which
will be concluded with a single investor, PFM intends to open the Central
European Industrial Fund to a wider group of investors. The co-investment
requirement from PFM for this initiative is a maximum of Euro5m, representing
approximately 3 per cent. of equity.


The strength in performance of UK funds has continued with returns on equity for
the year to March 2004 at 22.7 per cent. and 22.5 per cent. respectively for
IPII and The Industrial Trust.


                                     Ends.

ENQUIRIES
Property Fund Management PLC
John Sims (Chief Executive)                          020 7535 1818
Baron Phillips Associates
Baron Phillips                                       020 7920 3161







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