RNS Number:7929S
Property Fund Management plc
03 December 2003


PROPERTY FUND MANAGEMENT PLC


PROPOSED ACQUISITION OF THE OUTSTANDING FIFTY PER CENT.
OF FRENCH JOINT VENTURE


Property Fund Management plc ("PFM" or "the Company") is pleased to announce
that it has conditionally agreed to acquire the outstanding fifty per cent. of
its French joint venture, GVio S.A.S. ("GVio"), through the acquisition of the
entire issued share capital of GVI Management S.A.S. ("GVI Management"), for a
total consideration of up to Euro6.68 million, comprising cash and the issue to the
Sellers (as defined below) of shares in PFM (the "Acquisition").


Under the Listing Rules, the Acquisition is classified as a Related Party
transaction by virtue of GVI Management and PFM being 50:50 joint venture
partners in their ownership of GVio. As a result, the Acquisition is subject to
the approval of PFM shareholders and therefore a circular will shortly be posted
to shareholders providing details of the Acquisition and convening an
Extraordinary General Meeting to be held at 9.00 a.m. on 19 December at Heron
Place, 3 George Street, London, W1U 3QG at which a resolution seeking
shareholder approval of the Acquisition will be proposed.




Terms of the Acquisition


Under the terms of the agreement relating to the Acquisition (the "Acquisition
Agreement"), the consideration for the Acquisition consists of Euro1.72 million in
cash and the issue of one million new ordinary shares ("the Consideration
Shares") on Completion (representing 4.73 per cent. of the existing issued
ordinary share capital of the Company), with a further payment by way of
deferred consideration of up to Euro2.5 million (in cash) dependent on the future
performance of GVio. The cash consideration payable at completion will be met
out of PFM's existing debt facilities.


By way of deferred consideration, PFM will pay in cash to the Sellers 50 per
cent. of the acquisition fees received by GVio (net of all third party agents'
or brokers' fees and costs paid by GVio) in respect of two existing property
projects in France, provided such acquisition fees are received by 31 December
2007. In addition, PFM will pay in cash to the Sellers the greater of 50 per
cent. of the net acquisition fees and 0.5 per cent. of the acquisition price, in
connection with any properties acquired in France by any persons advised by GVio
between 1 January 2004 and 31 December 2007. In the event that the aggregate
acquisition price of all properties acquired by persons advised by GVio prior to
31 December 2007 equals or exceeds Euro500 million, then any balance of the Euro2.5
million deferred consideration not already paid will become payable. A pro rata
payment of such balance of the deferred consideration will become payable if, as
at 31 December 2007, the aggregate acquisition price of all such properties
exceeds Euro400 million but is less than Euro500 million. In all cases, the maximum
amount of deferred consideration payable in respect of the Acquisition is Euro2.5
million.


The Sellers will also receive a payment of approximately Euro252,000 in respect of
outstanding dividends due to GVI Management from GVio which will be funded by
PFM and will be paid upon Completion.


The Consideration Shares will upon issue be identical to and rank pari passu in
all respects with existing issued PFM ordinary shares. The Consideration Shares
will be in registered form and will be capable of being held in uncertificated
form. Under the terms of the Acquisition Agreement, the Sellers have agreed
(subject to certain exceptions) not to sell any of the Consideration Shares for
a period of twelve months from the date of Completion and thereafter, for a
further period of twelve months, each Seller may dispose of up to fifty per
cent. only of the Consideration Shares held by him/it.


Application has been made to the UK Listing Authority and to the London Stock
Exchange for the Consideration Shares to be admitted to the Official List and to
trading on the London Stock Exchange's market for listed securities. It is
expected that admission will become effective and that dealings will commence in
the Consideration Shares (subject to any lock-up provisions relating to such
shares) on 23 December 2003, at which time completion of the Acquisition will
also occur.




GVI Management and GVio


PFM set up GVio in July 1999 as a 50:50 joint venture, as part of its stated
strategy of establishing joint ventures in Europe with local partners, in order
to create a visible market presence and a reputation for efficient asset
management skills at a local level. PFM was keen to pursue the opportunities
provided by introducing its expertise in managing multi-let industrial property
assets to a new audience of European institutional investors in respect of
French property. The principal business of GVio was initially to provide a
territorial acquisition and asset management service in France for The European
Industrial Partnership (a European fund launched by PFM in July 2001), with a
mandate to pursue, subsequently, further property asset management contracts.


The fifty per cent. of GVio not currently owned by PFM is held by GVI
Management, which in turn is owned by Gilles Vaissie, Jean-Marie Hubert, Laurent
Roussel and parties associated with these individuals (the "Sellers"). GVI
Management is solely a holding company for these parties interests in GVio. As
at 30 April 2003 (being the date of its last accounts), GVI Management had net
assets of Euro294,707 and made profits before tax of Euro268,875 for the financial
year then ended.


GVio is based in Paris and currently employs 20 individuals, having grown from 5
employees on its formation. The shareholder agreement relating to GVio obliges
PFM to conduct all its business undertaken in France through GVio. GVio is
obliged to pay a proportion of any acquisition and incentive fees directly to
PFM whilst GVio retains all management fees. Whilst the majority of GVio's
business is related to the contract awarded to GVio by PFM to manage French
property assets for The European Industrial Partnership, GVio has also benefited
from some smaller single client mandates which have been introduced to GVio by
PFM. In the 4 years since its formation, GVio has increased the number of
properties under its management from none to 18. In the last financial year to
31 December 2002, PFM earned a total of #520,918 from incentive and acquisition
fees paid directly to PFM by GVio and, in addition, accounted for revenues of
#896,814 and operating profit of #347,116 from its 50 per cent. share of GVio.




Purpose of the transaction


In pursuing its expansion into Europe, PFM has identified France as a key growth
area. Having established GVio to determine the potential of this market, with
reduced cost and risk to the Company, the Board has decided that it is now
appropriate to build its presence in France to meet the demand that it believes
is prevalent for the multi-let industrial property asset class. The Board
considers that the Acquisition will enable PFM to facilitate this strategy and
will ensure that the interests of the managers of GVio are fully aligned with
the interests of PFM's shareholders. Following the Acquisition it is intended
that Gilles Vaissie, the current Managing Director of GVio, will join the
Management Board of PFM.


John Sims, Chief Executive of PFM, commented:-


"The acquisition of the outstanding 50% of GVio follows the acquisition in March
2003 of the remaining stake in io BV, our Dutch operation, and demonstrates our
continued consolidation of our European Network. We are excited by the potential
opportunities that exist for PFM in France."




Enquiries:

John Sims, Chief Executive                              Tel: 020 7535 1818
Property Fund Management plc



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