Placing and Open Offer

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA OR TO US PERSONS. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. THE SECURITIES DISCUSSED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT. NO PUBLIC OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE UNITED STATES AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA.

13 April 2011

Hansteen Holdings PLC ("Hansteen" or "the Company")

PLACING AND OPEN OFFER TO RAISE £150 MILLION

Hansteen Holdings PLC (LSE: HSTN) is pleased to announce that it proposes to raise gross proceeds of approximately £150.0 million (approximately £147.0 million net of expenses) through the issue of 185,185,186 New Ordinary Shares by way of a Placing and Open Offer at a price of 81p per New Ordinary Share. The Placing and Open Offer is being carried out to allow Hansteen to take advantage of the continuing opportunities to buy predominantly industrial properties in the UK and Continental Europe. The Placing and Open Offer has been fully underwritten by Peel Hunt LLP.

Hansteen will shortly publish a Prospectus (incorporating a shareholder circular) in connection with the Placing and Open Offer and will convene a General Meeting for 10.00 a.m. on 6 May 2011 to approve certain matters necessary to implement the proposed fundraising. Peel Hunt is acting as Sponsor, Broker and Underwriter to Hansteen in relation to the Placing and Open Offer.

SUMMARY

Morgan Jones, Joint Chief Executive of Hansteen said: "A common feature of the purchases we made last year was that they would have been impossible to secure had we not had access to our own capital. The nature of these opportunities is that they were complex, confidential and in some cases needed to be concluded within aggressive timeframes.

"We believe that buyers with significant cash resources will have greater opportunities to transact with banks seeking to resolve impaired loans through off market transactions."

Ian Watson, Joint Chief Executive of Hansteen added: "The structural problems affecting much of the property world have not changed. They are particularly acute in relation to the multi-let, secondary industrial and business properties in which we specialise. For the next couple of years at least, access to capital and management expertise will be key to exploiting opportunities.

 "Many banks in the UK and Continental Europe have real estate loans in default and have little prospect of regularising them with their existing borrowers. We believe we have good relationships with a number of these banks."

ENQUIRIES:

This summary should be read in conjunction with the full text of the following announcement.

Peel Hunt LLP, which is regulated by the FSA, is acting as Sponsor, Broker and Underwriter for the Company and is not acting for any other person and will not be responsible to any other person for providing the protections afforded to clients of Peel Hunt or for providing advice in relation to the Placing and Open Offer, Admission or any other arrangements referred to herein.

This announcement has been issued by, and is the sole responsibility of, Hansteen Holdings PLC. Apart from the responsibilities and liabilities, if any, which may be imposed by FSMA, Peel Hunt nor any of its affiliates, parent undertakings, subsidiary undertakings or subsidiaries of its parent undertakings or any of its respective directors, officers, employees or advisers or any other person accepts any responsibility whatsoever and makes no representation or warranty, express or implied, for or in respect of the contents of this announcement or as to the accuracy or completeness or fairness of the information or opinions contained in this announcement and, without prejudice to the generality of the foregoing, no responsibility or liability is accepted by any of them for any such information or opinions or for any errors or omissions.

Important Notice:

This announcement does not constitute an offer to sell or an invitation or solicitation to purchase or subscribe for any securities. The Placing and Open Offer will be made solely by the Prospectus which will contain the full terms and conditions of the Placing and Open Offer, including details of how the Placing and Open Offer may be accepted. Any acceptance or other response in relation to the Placing and Open Offer should be made only on the basis of the information contained in the Prospectus.

The making of the Placing and Open Offer in jurisdictions outside the United Kingdom or to Overseas Shareholders or to nominees of or trustees for Overseas Shareholders may be prohibited or affected by the laws or regulatory requirements of the relevant overseas jurisdictions. Such Overseas Shareholders should inform themselves about and observe any applicable legal requirements of such jurisdictions. Any such Overseas Shareholder will be responsible for payment of any such issue, transfer or other taxes, duties or other requisite payments due in such jurisdiction by whomsoever payable.

Any New Ordinary Shares issued or to be issued pursuant to the Prospectus have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or any relevant securities laws of any state of the United States. Subject to certain exceptions, such New Ordinary Shares may not be offered, sold or delivered in the United States or to or for the account or benefit of U.S. persons, as such terms are defined in Regulation S under the Securities Act.

Forward-looking statements:

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and speak only as at the date of this announcement.

They appear in a number of places throughout this announcement and include statements regarding the Directors', the Company's and the Group's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, liquidity, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position of the Group, earnings, financial position, cash flows, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement.

Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. However, these forward-looking statements and other statements contained in this announcement regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved. 

Not for release, publication or distribution in whole or in part, directly or indirectly, in or into the United States, Canada, Australia or Japan or to US persons. Any failure to comply with this restriction may constitute a violation of United States, Canadian, Australian or Japanese securities laws.

PLACING AND OPEN OFFER TO RAISE £150.0 MILLION

INTRODUCTION

Hansteen is pleased to announce that it proposes to raise approximately £150.0 million (approximately £147.0 million net of expenses) to take advantage of the continuing opportunities to buy predominantly industrial properties in the UK and Continental Europe at attractive prices arising from the current financial downturn.

In June 2009, the Company identified that there were likely to be extraordinary property acquisition opportunities arising from the considerable distress in the UK and Continental European property markets. In order to take advantage of these opportunities, the Company raised approximately £194.6 million (net) through a placing and open offer.

During 2010, the Company invested the monies raised, acquiring approximately £460 million of property in ten transactions either directly or through its investment in HPUT. The Board believes that these were all opportunistic purchases at prices which reflect the distress in the sector. The Kilmartin and HBI portfolios have made double digit returns on the capital invested since acquisition and the two recent HPUT acquisitions have similar attributes indicating that they will produce comparable returns. A common feature of the purchases was that, in the Directors' opinion, they would have been impossible to secure had the Company not had access to its own capital. The nature of these opportunities is that they were complex, confidential and in some cases needed to be concluded within aggressive timeframes.

The Directors believe that the structural problems affecting much of the property world have not changed. These problems are particularly acute in relation to the multi-let, secondary industrial and business properties in which Hansteen specialises. The Directors believe that, for the next couple of years at least, access to capital and management expertise will be key to exploiting the opportunities that will arise. In the Directors' view, many banks in the UK and Continental Europe have real estate loans in default and have little prospect of regularising them with their existing borrowers. Hansteen believes it has good relationships with a number of these banks.

BUSINESS OVERVIEW

In November 2005, Hansteen, established by Ian Watson and Morgan Jones, Joint Chief Executives, was admitted to AIM to build a portfolio of industrial property in Continental Europe and, when value returned, the UK.

Prior to founding Hansteen, Ian Watson and Morgan Jones had established a strong track record in opportunistically buying, actively managing and profitably realising multi-let industrial property, predominately in the UK.

Since admission to AIM, Hansteen has carefully assembled an investment property portfolio that is now around £728 million of properties, with a combined annual rent roll of £56.6 million in Continental Europe and £3.3 million in the UK (excluding the HPUT). The portfolio comprises some 1.8 million sq. m. of space with over 1,700 tenants, low capital values and rents, a high current yield of over 8 per cent. and a reversionary yield of 10 per cent., reflecting the opportunities to add value particularly by letting the vacant space in the portfolio which currently stands at 22 per cent.

The growth and success of Hansteen's business since 2005 has been achieved with prudent levels of borrowing.

In October 2009 Hansteen moved from AIM to the Official List and converted to a REIT reflecting the growth of the Company since flotation and its business model.

Hansteen's operations are carried out through a focused and experienced in-house team assisted by a number of professional property advisers and associates located in each of the countries in which it invests.

The Directors believe that Hansteen's existing business enjoying as it does, sustainable high income returns, provides a solid platform, from which new opportunities can be exploited without the need to incur significant additional business infrastructure costs.

BACKGROUND TO AND REASONS FOR THE PLACING AND OPEN OFFER

Over the last financial year Hansteen has acquired approximately £460 million of property in ten transactions either directly or through its investment in HPUT. The ultimate driver for the majority of those purchases was a bank seeking to resolve an impaired loan. In the Directors' view, banking problems with real estate loans will continue to provide, in 2011 and 2012, very attractive investment opportunities for companies with equity resources and a good track record such as Hansteen.

Property investors with the knowledge, experience, skill and capital to take advantage of distressed property opportunities towards the bottom of the property cycle have generally made superior returns from those investments. Furthermore, the acquisitions Hansteen made directly during 2010 satisfied the majority of the characteristics that the Directors look for in a purchase, and have achieved double digit returns on the capital invested to date.

Accordingly, the Board is of the view that, although a capital raising at the level envisaged will initially be slightly dilutive to the net asset value per share of the Company, the short term dilution will be outweighed by the benefits of having the capital to take advantage of the attractive acquisition opportunities which the Directors believe will be both net asset value and earnings per share enhancing over the medium term.

USE OF PROCEEDS

The net proceeds of the Placing and Open Offer will be used to invest directly or indirectly in properties displaying similar characteristics to those acquired during 2010. Those characteristics may include:

·; Predominantly industrial property either in the UK or Continental Europe;

·; Either high yielding (8 per cent.+ net initial yield) or vacant but with low capital values (around half replacement cost);

·; Sales driven primarily by distress;

·; Sales off-market or in situations of size complexity or management challenge, which significantly reduce the potential competition; or

·; Acquisitions where the Directors' assessment of the feasibility indicates an internal rate of return over four years of at least 15 per cent. per annum.

Hansteen will look to achieve returns on investments from a combination of well priced acquisitions, building rental income through vigorous management and profitable selling.

The Directors will also continue to look at ways of increasing the leverage of the Company's capital through the formation of joint ventures and limited life funds with third party investors; participating in workouts with banks or taking strategic stakes in undervalued companies all in order to enhance returns to Hansteen.

The Company has already identified a number of distressed property situations which it has been monitoring for some time.

CURRENT TRADING AND PROSPECTS

While Hansteen's focus is on growth in income, earnings and dividends, the Board also expects the portfolio will show capital growth as the property market recovers. The Company has started 2011 in a positive position; the balance sheet is strong, the property portfolio has significant opportunities to add value and the Company has the team in place to capitalise on those opportunities.

During 2010, it became increasingly clear that throughout Europe there are substantial pools of properties and property owners which are facing significant challenges. Many of these are the high yielding, management intensive properties with vacancies in which Hansteen specialises.

The driver behind four out of five of Hansteen's major purchases during 2010 was a bank seeking to resolve an impaired loan. This enabled the Company to buy properties which fitted its acquisition criteria in terms of yields, vacancy, rent levels and capital values. It is the Directors' belief that buyers with significant cash resources will have greater opportunities to transact with banks seeking to resolve impaired loans through off market transactions.

The appetite of banks to lend on secondary property is currently very limited. Such finance is available only at very modest loan-to-value ratios and substantial margins and then only if management can demonstrate a strong track record. For the next couple of years at least, access to capital and management expertise will be the key to exploiting the undoubted opportunities which will arise. The Board believes that Hansteen is well placed in both these respects.

PORTFOLIO VALUATION

The Prospectus contains an independent valuation of the Group's property portfolio as of 31 December 2010. Excluding the properties within the HPUT, as at 31 December 2010 the Group's investment property portfolio was valued at £728 million. This corresponds to the figure shown on the Group's balance sheet dated 31 December 2010 as the line item "Investment property".

As at 31 December 2010, the properties within the HPUT were valued at £84 million. As Hansteen has a 33.3 per cent. economic interest in the HPUT, Hansteen's share of the net asset value of the HPUT as at 31 December 2010 was £30 million and is shown on the Group's balance sheet as at that date as "Investment in associates".

As at 13 April 2011, there has been no material change in the valuation of the property portfolio of the Group since 31 December 2010.

PRINCIPAL DETAILS OF THE PLACING AND OPEN OFFER

(i) Placing and Open Offer

The Company is proposing to raise approximately £150.0 million, before expenses, by way of a Placing and Open Offer of 185,185,186 New Ordinary Shares at the Issue Price of 81p per New Ordinary Share representing a discount of 4.2p (4.9 per cent.) to the closing mid market price of 85.2p per Ordinary Share prevailing on the London Stock Exchange on 12 April 2011 (the last practicable date prior to the issue of this announcement) and a discount to EPRA NAV of 5p (5.8 per cent.) per Ordinary Share. Pursuant to the Placing Agreement, Peel Hunt, as agent for the Company, has made arrangements to conditionally place the Open Offer Shares and the Firm Placed Shares at the Issue Price. The Open Offer Shares have been placed subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer. The Firm Placed Shares are not subject to clawback and do not form part of the Open Offer.

The Placing and Open Offer has been fully underwritten by Peel Hunt, subject to the conditions set out in the Placing Agreement. A summary of the principal terms of the Placing Agreement can be found in paragraph 8.2 of Part VIII of the Prospectus.

Subject to the terms and conditions set out or referred to in Part II of the Prospectus (and where relevant, the Application Form), Qualifying Shareholders are being given the opportunity to subscribe for Open Offer Shares at the Issue Price of 81p per Open Offer Share payable in full on application and free of expenses, pro rata to their existing holdings of Existing Ordinary Shares on the following basis

3 Open Offer Shares for every 11 Existing Ordinary Shares

held by them and registered in their names on the Record Date, and so in proportion to any other number of Existing Ordinary Shares then held.

The underwriting obligations of Peel Hunt pursuant to the Placing Agreement are conditional, inter alia, upon Admission.

Application has been made to the UK Listing Authority and to the London Stock Exchange for the New Ordinary Shares to be admitted to the premium segment of the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities respectively. It is expected that Admission will become effective, and that dealings will commence in the New Ordinary Shares on the London Stock Exchange, at 8.00 a.m. (London time) on 9 May 2011. Qualifying Shareholders may apply for any whole number of Open Offer Shares. Applications by Qualifying Shareholders will be satisfied in full up to the amount of their individual Open Offer Entitlement.

No application in excess of the pro rata Open Offer Entitlements of Qualifying Shareholders will be met under the Open Offer and any Qualifying Shareholder so applying will be deemed to have applied for their maximum Open Offer Entitlement.

The Open Offer is not a "rights issue". Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims. The Application Form is not a document of title and cannot be traded. Qualifying Shareholders should be aware that, in the Open Offer, unlike in the case of a rights issue, any Open Offer Shares not applied for under the Open Offer will not be sold in the market or placed for the benefit of Qualifying Shareholders, as applicable.

Details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are contained in Part II of the Prospectus and, where applicable, in the accompanying Application Form.

If you are a Qualifying non-CREST Shareholder and wish to apply for Open Offer Shares, you should complete and sign the Application Form in accordance with the instructions printed on it and return it, together with your remittance for the full amount payable for your New Ordinary Shares, either by post or by hand (during normal business hours only) to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as practicable and, in any event, so as to be received not later than 11.00 a.m. on 3 May 2011, at which time the Open Offer will close and after which time Application Forms will not be accepted.

If you are a Qualifying CREST Shareholder and wish to apply for Open Offer Shares in respect of all or some of your Open Offer Entitlements in CREST you must send (or, if you are a CREST sponsored member, procure that your CREST sponsor sends) an USE instruction to Euroclear as soon as possible and in any event by no later than 11.00 a.m. on 3 May 2011.

Qualifying Shareholders should refer to paragraph 2 of Part II of the Prospectus for the procedure to participate in the Open Offer.

(ii) General

The Placing and Open Offer is conditional, inter alia, on the following:

(A) the passing of the Resolutions (the text of which are contained in the Notice of General Meeting at the end of the Prospectus);

(B) the Placing Agreement becoming unconditional; and

(C) Admission becoming effective on or before 9.00 a.m. on 9 May 2011 (or such later date and/or time as the Company and Peel Hunt may agree, being no later than 9.00 a.m. on 23 May 2011).

It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence by 8.00 a.m. on 9 May 2011.

(iii) Structure of the Placing and Open Offer

The Placing and Open Offer has been structured in a way that is expected to have the effect of realising distributable reserves approximately equal to the gross proceeds of the Placing and Open Offer less the nominal value of the New Ordinary Shares issued by the Company. The Company and Peel Hunt have agreed to subscribe for ordinary shares in Newco. Payments from Qualifying Shareholders under the Open Offer shall be made to an account with the Receiving Agent and payments from Placees pursuant to the Placing shall be made directly to Peel Hunt. The funds from both will be used for Peel Hunt to subscribe for redeemable preference shares in Newco.

The Company will allot and issue the New Ordinary Shares to those persons entitled thereto in consideration of Peel Hunt transferring its holdings of ordinary shares and redeemable preference shares in Newco to the Company. Accordingly, instead of receiving cash as consideration for the issue of the New Ordinary Shares, immediately following Admission, the Company will own the entire issued share capital of Newco whose only asset will be its cash reserves, which will represent an amount equivalent to the gross proceeds of the Placing and Open Offer. The Company will be able to use this amount through the redemption of the redeemable preference shares it holds in Newco and, during any interim period prior to redemption, by procuring that Newco lends the amount to the Company (or one of the Company's subsidiaries).

As the Firm Placed Shares are not being allotted for a cash consideration, statutory pre-emption rights will not apply to the issue of the Firm Placed Shares under the Firm Placing. The Directors are seeking to use the structure outlined above in order to create distributable reserves and are not seeking to circumvent the statutory pre-emption rights that would otherwise have arisen. Thus although not required by the Articles of Association, the 2006 Act or the Listing Rules, the Placing and Open Offer is conditional on the Voluntary Resolution being passed as a special resolution to approve the terms of the Firm Placing.

EFFECT OF THE PLACING AND OPEN OFFER

On completion of the Placing and Open Offer, the New Ordinary Shares will represent approximately 29.0 per cent. of the Enlarged Share Capital and the Existing Ordinary Shares will represent approximately 71.0 per cent. of the Enlarged Share Capital. Even if a Qualifying Shareholder takes up his full entitlement under the Open Offer, his proportionate ownership and voting interests in the Company will be diluted by up to 9.6 per cent. by the issue of the Firm Placed Shares. If a Qualifying Shareholder does not take up any of his entitlement under the Open Offer, his proportionate ownership and voting interests in the Company will be diluted by up to 29.0 per cent. by the issue of the Firm Placed Shares and the Open Offer Shares.

If the Placing and Open Offer had been completed on 31 December 2010, it would have caused the net assets of the Group in the balance sheet set out in the financial statements of the Company for the financial year ended 31 December 2010 to increase by the amount of the net proceeds of the Placing and Open Offer as more particularly described in Part V of the Prospectus.

The Directors believe that had the Placing and Open Offer occurred at the commencement of the financial period ended 31 December 2010, and assuming the net proceeds from the Placing and Open Offer were held as cash for that period, the impact would be to decrease the net interest payable by the Company and increase the Company's net earnings. This statement should not be taken to mean that the earnings per share of the Company will match or exceed the historical earnings per share of the Company and no forecast is intended or implied.

IRREVOCABLE COMMITMENTS TO SUBSCRIBE IN THE OPEN OFFER

The Directors and their connected parties have irrevocably committed to subscribe for New Ordinary Shares in the Placing and Open Offer as follows:

GENERAL MEETING

The Prospectus will contain a notice convening the General Meeting to be held at 21 Tudor Street, London EC4Y ODJ at 10.00 a.m. on 6 May 2011 to consider and, if thought fit, pass the following resolutions to give effect to the Placing and Open Offer.

(A) Resolution 1: an ordinary resolution to authorise the allotment of the New Ordinary Shares in connection with the Placing and Open Offer;

(B) Resolution 2: a special resolution to approve the terms of the Firm Placing.

Despite there being no requirement to do so, the Company has, in the interests of good practice, voluntarily decided to propose the second resolution referred to above in order to approve the Firm Placing.

ANNUAL REPORT AND ACCOUNTS

The Company announces the publication of its Annual Report and Accounts 2010 (the "Report and Accounts"). A copy of the Report and Accounts has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do. Hard copies of the Report and Accounts will be sent to Shareholders at the same time as the Prospectus, into which they will be incorporated by reference. The Report and Accounts will also shortly be available to view on the Company's website, www.hansteen.co.uk.

PLACING AND OPEN OFFER STATISTICS

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the times and dates set out below and mentioned in this announcement and the Prospectus may be adjusted by the Company, in which event details of the new times and dates will be notified to the FSA, the London Stock Exchange and, where appropriate, Qualifying Shareholders. References to a time of day are to London time.

Questions on the procedure for acceptance and payment, should be addressed to Capita Registrars on the shareholder helpline on 0871 664 0321 (calls to this number are charged at 10p per minute from a BT landline, other telephone provider costs may vary) or, if calling from overseas, +44 20 8639 3399 (calls to this number are charged at applicable international rates) between 8.30 a.m. and 5.30 p.m. on any Business Day. Please note that Capita Registrars cannot provide financial advice on the merits of the Placing and Open Offer or as to whether or not you should take up your entitlement.

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise: