Investment Adviser's Market and Investment Update

7 June 2012

Duet Real Estate Finance Limited

("DREF" or the "Company")

Investment Adviser's Market and Investment Update

Although activity in the real estate sector was subdued in the first quarter, we are seeing some encouraging trends in new participants such as insurance companies looking at moving into the lending position that was historically dominated by banks. These new sources of senior lending should help unlock deals that have depended solely on bank provided solutions to restructuring or refinancing. During volatile market conditions we have witnessed the banks adopting defensive postures which are designed to protect their capital and liquidity positions. Therefore, we have seen less bank activity focused on new lending or working out of existing positions, but new alternatives for senior debt will likely change this dynamic going forward.

We have always taken a patient approach and believe the lower level of bank activity so far this year will translate into a larger opportunity for the Master Fund to invest in the near future. The current macroeconomic conditions also cause us to constantly test our thinking and scrutinise underwriting assumptions to make certain they are providing the income and total return that investors expect, while maintaining a resilient risk profile.

The portfolio thus far demonstrates this philosophy, with the weighted average Loan to Value ratio of 65.7%, being at the lower end of the anticipated range at the time of the IPO, and future deals are expected to maintain this more conservative profile. The active pipeline suggests that we will continue to maintain the income and risk profile of future investments and that it will be consistent with the profile of the existing deals. As per the Company's prospectus, the Investment Period of the Master Fund can be extended to 22nd December 2012, however, we expect it to be fully invested well in advance of this date.

The Master Fund is close to completing £40m worth of deals, two of which are currently in execution phase, which, if successfully completed would result in the Master fund being 66% invested. The active pipeline stands at £230m across 10 deals, several of which are at a stage that gives us confidence that we can continue to invest in the "right" deals. We have chosen to maintain a disciplined approach to underwriting as we feel compelled more than ever to maintain the right balance of risk and reward for investors. Nevertheless, the market continues to open more broadly and we see further significant transactions resulting in the coming months.

We are also currently negotiating a new loan structure of our existing Healthcare loan as part of a broader financial reorganisation of the borrower group which will facilitate an acquisition of a large portion of the outstanding freeholds that the borrower does not already own. We believe that the new structure will result in a similar return on the investment, whilst underpinning the financial stability of the borrower.

For further information, please contact:

Cyrus Korat