New portal is here. UK Diversified Property PLC (PM)

The welcome letter below:-

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Dear Shareholder

Welcome to the UK Diversified Property plc (the “PLC”). We are very pleased to

welcome you to our website and to being a shareholder in our company.

The PLC was formed to bring together the entire portfolio of buy-to-let

properties acquired by Property Moose investors. By bringing together the

properties into a single structure, it is hoped that cost savings and efficiencies

will lead to higher shareholder returns. There are 100 properties in the portfolio,

which are currently individually owned by separate combinations of

shareholders. Significant improvements to profitability will be possible by

combining the assets into single legal entity and paying dividends accordingly.

We’re currently working with two independent valuation firms to undertake the

property valuations so that a correct purchase price can be established for the

PLC to acquire the SPVs. You will be issued one ordinary share in the PLC for

every £0.01 (one pence) of value of your current ownership of each of the

properties.

Following this, you will be contacted by Property Moose to make one final

change to your original choice between Option 1 (remain invested) and Option 2

(redeem your investment at the earliest opportunity at the current value). You

will have 5 days to respond to this vote so please do keep an eye on your

Property Moose email. Following the issue of the shares, you will be issued with

an investment certificate noting your shareholding. In the meantime, you will see

a temporary investment certificate noting the shares that you have transferred

to the PLC.

Currently, 15% of shareholders have indicated that they want to redeem their

shares at the current value. We do hope that this will reduce and more investors

will remain invested whilst the market matures as we truly believe that, as a

single portfolio, the PLC offers an exciting and rewarding opportunity. More

redemptions will result in the PLC having less funds available for future

acquisitions to re-balance the portfolio and may result in the listing being at risk.

There will be more information provided over time but we would like to share

some key details below:

• Distributions will be made quarterly on or around the last working day of

February, May, August and November (if applicable). Over the last

quarter of 2018 rental income will be used to cover costs and finish

known property improvements. Dividends are expected from February

2019 assuming that finance is secured before then and the refurbishment

program has progressed as planned (thus improving capital values and

rental returns for shareholders).

• Portfolio updates will be provided on a quarterly basis with any

exceptional reporting being made on an ad-hoc basis. All reporting will

be issued within your investor dashboard.

• The intention is to bring in bank mortgage finance at no more than 50%

LTV (Loan To Value) as soon as possible. It is likely this will be done in

tranches with the aim of, subject to bank approvals and timings, bringing

in the first tranche before the end of 2018. These funds will be used to

repay Option 2 investors. Excess funds will be used to acquire further

properties in order to increase the portfolio’s capacity to produce rental

income and capital growth. There are some very exciting projects that

have been shown via the hopeful partnership with the asset manager

below and we’ll be in touch with further details within your investor

dashboard.

• Bank finance is expected to be secured at rates that should enhance

rental yields once fully mature (indicative rates of a 3% p.a. fixed

margin), thus increasing overall returns and the dividends payable.

• The intention over the next 12 months is to list the PLC’s shares on the

London Stock Exchange. Early discussions with the exchange and our

legal advisors are very positive but it is very important that the PLC

retains as much capital as possible (i.e. Option 1 votes) to make this

successful. Once listed:

o shareholders will have daily liquidity (subject to market

conditions and trading);

o the PLC will no-longer be subject to corporation tax on buy-to-let

income, saving 19%, once registered as a REIT with HMRC and

therefore increasing returns for shareholders;

o subject to registering as a REIT, shares currently held can be

transferred to certain personal pensions. This gives up to 45% tax

relief to investors on their total investment amount. We expect

this to be a real reason for more shareholders to choose to

transfer into the PLC, since it further improves net returns and so

makes up for losses sustained in recent months; and

o subject to registering as a REIT, new investments can be made via

ISAs or personal pensions for 0% tax on returns.

• We are hoping to appoint a leading UK and EU real estate asset manager

to act as the PLC’s property manager and to provide access to their

acquisition pipeline and due diligence processes. The asset manager has

access to significant high quality opportunities so, with the help of

additional finance, we can start generating better returns for

shareholders.

We believe that the new organisation will be a considerable improvement for

investors. There will be less overheads, better revenues, more flexibility, and

once we complete the process there will be more liquidity. We believe that all

our shareholders put money into Property Moose SPVs originally because they

wanted it to be safe, secure from the effects of inflation, paying a return and

stored in property. For that reason, we hope that most are unlikely to want to

turn it back into cash prematurely when a long term secure return, invested in

property that has already been acquired is still yet to mature, is available.

We are very excited about the opportunity to grow the portfolio and deliver

strong overall returns to our investors.

Yours truly,

UK Diversified Property plc

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Disclaimer

UK Diversified Property PLC has issued this update for information purposes

only. The facts and information contained within the update are accurate to the

best of our knowledge but you should rely on your own due diligence and

investigations before relying or acting on the information. UK Diversified

Property PLC shall not be liable for any information contained in this update for

any loss, action, cost or damages (including loss of profit and special damages) in

respect of the update or any action taken as a result of the update. This does not

seek to exclude any liability for death or personal injury. This update is not a

financial promotion under the Financial Services and Markets Act 2000

I too am worried about the liquidity of the new shares. It appears they want to register with the London Stock Exchange as some sort of REIT, this would imply daily redemptions should be possible. However I note that in the email and the welcome letter that although PM/the PLC have had some positive meetings regarding the stock market listing, nothing has as yet been confirmed.

As I understand it, if I were to decline the initial ‘Option 2’, there would be no possibility to redeem the shares until the PLC is listed on the stock market. If the stock market listing were to not happen for some reason, is there a possibility to redeem shares or would I effectively be locked into my shares indefinitely?

There are plenty of REITS listed on the LSE, offered by all kinds of reputable asset managers. One could argue that this REIT is specialized as it provides exposure to Northern residential properties at the lower end of the market specifically, however I note that in the welcome letter the strategy is to diversify into city-centre properties.

The choice I face is thus between holding shares in a small REIT, with uncertain liquidity, or redeeming my shares at whatever valuation is provided, and re-investing the proceeds in one of the large, liquid, currently existing REIT’s run by a reputable asset manager with a long track record.

I believe that if my shares are valued at at least 85% of what I paid for my shares with Property Moose, I would take the loss and re-invest the proceeds elsewhere.

They lay on the whole 'please don't choose option 2' a bit thick don't they?

I agree!

When will it be listed in the stock exchange and when can we see the valuation?
I think it was me who suggested they convert to a REIT. It’s much more tax efficient and should also be more liquid eventually.
But I wonder what the discount is going to be.

Possibly. Nobody knows.

When will the trading price be known though? Once it's listed, fund managers and pension funds will have access to this investment too so whatever the assets are worth, the market will find its price.