Preliminary Results

For immediate release 29 November 2011

LXB Retail Properties Plc

RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2011

LXB Retail Properties Plc, a closed-ended real estate investment company focused on edge of town and out of town retail assets, today announces results for the year ended 30 September 2011.

Highlights:

·; Continued to make further strategic acquisitions in Greenwich and Biggleswade during the year.

·; December 2010: acquired Stone Lake Retail Park in Greenwich, for £27.84m (including direct costs).

·; January 2011: exchanged contracts on a subject to planning basis to acquire a Wm Morrison Supermarkets plc led development site on the Isle of Sheppey.

·; February 2011: entered into a £25.95m investment facility arrangement with Deutsche Hypothekenbank.

·; April 2011: acquired 31 developable acres in Rushden, Northamptonshire for £4.7m (including direct costs).

·; May 2011: exchanged an agreement for lease on a subject to planning basis with J Sainsbury Plc at Bugsby's Way, Greenwich for a new store of 145,000 sq ft (gross external).

·; June 2011: raised £110m net of costs through a share placing.

·; July 2011: acquired two adjoining sites on the edge of Stafford town centre for £10.1m (including direct costs).

·; August 2011: exchanged contracts to acquire the 12 acre Prodrive Motorsport site in Banbury for £17m. On the same date acquired the former Hella factory in Banbury as a relocation site for Prodrive for £8.7m (including direct costs).

·; September 2011: acquired 118 acres at Corton, South East Ayr for £10.1m (including direct costs).

·; Cash deposits and liquid investments at 30 September 2011: £112.7m (2010: £52.5m).

·; NAV per share at 30 September 2011: 107.97p (2010: 94.19p).

·; EPRA* NAV per share at 30 September 2011: 108.19p (2010: 95.19p).

·; Earnings per share: 10.31p (2010: loss per share 1.39p).

Post year end:

·; October 2011: entered into a pay LIBOR receive fixed 1.6675% on a notional amount of £100m interest rate swap facility with the Royal Bank of Scotland Plc effective from 25 March 2013 until 25 September 2015.

·; November 2011: acquired Andrews Sykes unit in Greenwich for a net cash outflow of £1.08m (see note 19 for full details).

·; November 2011: signed pre-lets with Marks & Spencer plc on 28 November 2011, on a subject to planning basis for four new stores at Banbury, Biggleswade, Greenwich, and Stafford covering, in total, over 300,000 sq ft.

* excluding fair values of financial instruments and deferred tax.

Phil Wrigley, Chairman of LXB Retail Properties Plc commented:

"Two years on, the revaluation surplus for the year of £19.1m demonstrates that our strategy is delivering shareholder value. There is real momentum in the portfolio; since the balance sheet date we have already submitted planning applications for our Biggleswade and Stafford investments and we will submit applications for Banbury and Rushden shortly. We are also seeing that our retail investments can deliver incremental value for shareholders. For example, our investment in the retail opportunity at Ayr will unlock value in the adjacent land which is earmarked for residential uses; where appropriate we take the opportunity to capture that value for the benefit of our shareholders. Our plan continues to be the creation of a portfolio of prime institutional property investments with a high quality income stream founded on really strong covenants from some of the UK's leading retailers. Taken together with our four major pre-lets to M&S, all this activity shows we are achieving our objectives.

These are exciting times for the Group and I look forward to another year with opportunities to report further positive news for shareholders."

29 November 2011

For further information please contact:

LXB Manager LLP Tel: 020 7432 7900

Tim Walton, CEO

Brendan O'Grady, FD

Buchanan Communications Tel: 020 7466 5000

Charles Ryland / Suzanne Brocks

Forward looking statements

This document includes forward looking statements which are subject to risks and uncertainties. You are cautioned that forward looking statements are not guarantees of future performance and that if risks and uncertainties materialise, or if assumptions underlying any of these statements prove incorrect, the actual results of operations and financial condition of the Group may materially differ from those made in, or suggested by, forward looking statements. Other than in accordance with its legal or regulatory obligations, The Company undertakes no obligation to review, update or confirm expectations or estimates or to release publicly any revisions to any forward looking statements to reflect events that occur or circumstances that arise after the date of this document.

Chairman's Statement

Dear Shareholder,

I am pleased to present the Group's second Annual Report and Financial Statements, covering the year ended 30 September 2011.

We have made excellent progress in the last 12 months. Activities have included a significant share issue raising £110m net of costs, acquisitions of new sites, designing scheme layouts, preparing large scale planning applications and signing lease terms with key tenants who will occupy our investments. We launched the business just two years ago with the intention of creating a portfolio of prime out of town and edge of town retail investments offering space which meets the needs of today's trading formats, in the right locations, and at rents which are sustainable.

Since October 2010 we have made investments in sites at a number of locations including Sheppey, Rushden, Gloucester, Stafford, Banbury and Ayr, and added to our interests at Greenwich and Biggleswade. New planning permissions (or resolutions to grant planning permission) have been secured at Greenwich, Biggleswade and Sheppey, planning applications have been submitted in respect of Biggleswade (adding to the existing consent), Gloucester and Stafford and we expect to submit applications for our Banbury and Rushden sites in the near future. Assuming that we achieve the planning consents covered by these applications, the Group will have secured consent for some 1.63m sq ft of new retail space and 0.24m sq ft for other employment uses. 

The Group does not develop speculatively so, in addition to securing the planning position, we have been negotiating lease terms with key occupiers for our new investments. Thus far, we have signed Agreements for Lease with a number of major retailers including Wm Morrison Supermarkets plc ("Morrisons") and J Sainsbury Plc ("Sainsbury's"). I am delighted that yesterday we also signed four major pre-lets with Marks & Spencer plc ("M&S"). Including these, the total space covered by these Agreements for Lease amounts to 598,406 sq ft (including mezzanine space of 205,736 sq ft). Moreover, I can also report that the Group is in advanced discussions on pre-lets for another 250,000 sq ft of space with anchor tenants across a number of sites.

The Group works closely with local authorities and other stakeholders to ensure that our projects will make a positive contribution to local communities and economies. We have been fortunate to work with local authorities who understand and appreciate the benefits that our investments can bring. Additionally, we attach great importance to understanding the views of local residents; public consultations have been held in Sheppey, Biggleswade, Greenwich, Banbury, Stafford and most recently, Rushden to ensure we understand what will add greatest value to the areas in which we invest. These have been well attended and the feedback has been overwhelmingly positive; in these difficult times, it is especially pleasing that the new jobs which our investments will create have been highlighted as a key benefit by local communities.

Construction work has started on the new Wickes store at Greenwich and we expect to start on site at Sheppey and Gloucester early in 2012 with stores open for trading in the first and last quarters of 2013 respectively.

Results and financial position

The growth in Net Asset Value ("NAV") per share over the year from 94.19p to 107.97p at 30 September 2011 reflects, in part, the issue in June of 99.2m shares at 114p per share, but is substantially due to the £19.1m increase in the value of our investment properties during the year. If our major planning applications which are currently under consideration are successful, we can look forward to further contributions to NAV in the near future.

The issue of new shares which was very well supported by shareholders in June 2011 raised £110m (net of costs), bringing the total funds raised to £257.5m (net of costs). Your Board is extremely grateful for the continued support shown by shareholders in more than doubling our equity within two years of the IPO in October 2009. 

On financing, in the Group's Interim Report I commented on the £26m investment facility secured in February this year. We anticipate securing further bank borrowings to support our substantial construction projects in due course, and our Investment Manager maintains regular and close dialogue with a number of banks to ensure they are apprised of the quality and potential of our proposition. Even against the difficult economic backdrop, we continue to experience a real appetite from lenders.

Sensible levels of gearing are a key element of the Group's business plan and we have tracked the movements in swap rates which have seen record lows in recent times. In anticipation of our future borrowing needs, the Group fixed the LIBOR element of financing costs in October 2011, entering into a forward swap at 1.6675%. This covers borrowings of £100m from 31 March 2013 to 30 September 2015.

Outlook

When we launched our business back in October 2009 market conditions were very challenging. However, we believed there was a substantial opportunity to assemble a portfolio of prime out of town and edge of town retail investments. We believed that suitable sites could be acquired and all our research told us that there was real occupier demand, and that value could be created by offering retailers the space they wanted at rents they could afford. It takes considerable due diligence before your Board will invest, and it takes time to really understand what our key tenants want and can afford to pay in rent. It also takes time to design high quality schemes which will make a positive contribution to local communities and gain planning approval.

Two years on, the revaluation surplus for the year of £19.1m demonstrates that our strategy is delivering shareholder value. There is real momentum in the portfolio; since the balance sheet date we have already submitted planning applications for our Biggleswade and Stafford investments and we will submit applications for Banbury and Rushden shortly. We are also seeing that our retail investments can deliver incremental value for shareholders. For example, our investment in the retail opportunity at Ayr will unlock value in the adjacent land which is earmarked for residential uses; where appropriate we take the opportunity to capture that value for the benefit of our shareholders. Our plan continues to be the creation of a portfolio of prime institutional property investments with a high quality income stream founded on really strong covenants from some of the UK's leading retailers. Taken together with our four major pre-lets to M&S, all this activity shows we are achieving our objectives.

These are exciting times for the Group and I look forward to another year with opportunities to report further positive news for shareholders.

Phil Wrigley

Chairman

29 November 2011

Report of the Investment Manager, LXB Manager LLP

LXB Manager LLP advises LXB Retail Properties Plc and is pleased to report on the Group's Annual Report and Financial Statements for the year ended 30 September 2011.

Investment portfolio

The Group's strategy is to develop a portfolio of high quality investments delivering substantial and secure rental income. The significant progress made in the year to 30 September 2011 has continued into the first two months of the current financial year; the Group has signed some very significant Agreements for Lease at several locations, achieved a number of planning permissions (or resolutions to grant planning permission) and submitted planning applications to local authorities for various of its other sites.

Property details

Ayr

In September 2011, the Group acquired 118 acres of development land at Corton, which forms part of a wider masterplan for a comprehensive development south east of Ayr. This site benefits from a resolution to grant planning consent (subject to signing a s75 legal agreement) for a district shopping centre including a foodstore and complementary retail, a business and leisure park of up to 17 acres, and 874 private and affordable homes. Negotiations to conclude the s75 agreement are continuing and we are in discussions on terms for a pre-let with a leading foodstore operator.

Banbury

In August 2011 the Group agreed to purchase the Prodrive Motorsport site which sits prominently by junction 11 of the M40, subject to securing planning for a shopping park. Prodrive, the world leading motorsport and automotive business, has outgrown its current facilities and the Group purchased the former Hella factory in August to enable Prodrive's relocation within Banbury. Prodrive will purchase the Hella factory from the Group provided planning for retail use is achieved on their existing site.

A planning application will be submitted shortly, seeking consent for a 290,000 sq ft shopping park. The proposed scheme includes 148,000 sq ft of ground floor space with a further 142,000 sq ft at first floor mezzanine level and the planning committee's decision is anticipated in March 2012.

On 28 November 2011 M&S signed a pre-let for a 20 year lease on a 100,000 sq ft store on two floors (this will be in addition to the existing M&S store in Banbury town centre). Strong interest is also being shown by a wide variety of other retailers who are keen to secure representation at this very prominent shopping destination.

Biggleswade

This site sits alongside the A1 with direct roundabout access allowing retailers to appeal to a wide potential catchment. Seven separate land interests have been assembled over the last two years creating the opportunity to develop a major fashion led shopping park on this 14.6 acre site. One further land interest is still to be acquired but terms have already been agreed and this is expected to complete shortly.

The majority of the land already has the benefit of unrestricted A1 non food consent. A planning application has been submitted seeking consent for a 334,610 sq ft (which includes 113,342 sq ft of mezzanine floor space) retail development; a planning committee decision is expected in the first quarter of 2012.

We expect the scheme to be built in phases to allow existing tenants to continue trading; relocation terms need to be agreed with the tenants, most of whom trade well and wish to remain on site. On 28 November 2011 a pre-let was agreed with M&S for a 25 year lease (with a tenant's break option after 15 years) to occupy the scheme's 60,000 sq ft anchor unit on two floors. Provided planning and relocation discussions are successfully concluded, construction will commence in summer 2012 and the shopping park will be completed two years later. Strong interest has also been shown by other retailers for representation here.

Gloucester

Earlier this year an agreement was entered into to acquire this 17 acre site from Network Rail, conditional on obtaining a satisfactory planning consent for a mixed use development. Morrisons has agreed to take a 25 year lease (with a tenant's break option after 20 years) conditional on planning for a 71,300 sq ft foodstore. The planning application requesting detailed consent for the foodstore, together with outline permission for 164,000 sq ft of space for employment uses, 11,000 sq ft of car showrooms and 8,000 sq ft of restaurants was submitted in August 2011. The application is expected to go before the planning committee for determination on 1 December 2011. If planning permission is granted we anticipate work will start on phase one (the foodstore) in spring 2012. Interest has also been received for the restaurant and from a major cash and carry operator seeking a 60,000 sq ft unit within the scheme.

Greenwich

The Group made its first acquisition, an out of town retail investment and adjoining retail development site, in Greenwich, in January 2010. Since then the Group has accumulated significant further holdings in the Bugsby's Way area of the Greenwich Peninsula.

Good progress has been made on the original acquisition with a pre-let of the development site to Wickes for a new 21,500 sq ft retail unit in May 2011. Construction commenced in late summer and practical completion is due in April 2012.

Planning permission has been obtained to develop a new retail terrace of 50,000 sq ft of unrestricted retail space on the remainder of the original site and construction of that element is due to commence in August 2012.

The Group has also assembled a freehold site of about 12 acres bounded by Bugsby's Way, Gallions Road and Woolwich Road. A pre-let for a 25 year lease on a 145,000 sq ft foodstore to Sainsbury's was agreed in May 2011 and M&S signed a pre-let for a 20 year lease on an 80,000 sq ft store on 28 November 2011. Both lettings are conditional on achieving planning permission, the application for which is expected to be submitted in late 2011.

Planning permission has been obtained for a mixed use retail and hotel scheme on land adjacent to the proposed Sainsbury's and M&S. This provides for a 14,300 sq ft ground floor retail unit with a 120 bed hotel above and 85 car parking spaces. The Group expects to sign a pre-let to Travelodge in early 2012 with construction to commence in March 2012.

The Stone Lake Retail Park on Woolwich Road was acquired in December 2010 to facilitate relocation of tenants from the Group's nearby sites so that the new investments can be progressed. In May 2011, Dreams agreed to relocate here from their existing unit on Bugsby's Way and in September 2011, planning permission was obtained to sub-divide the existing 20,000 sq ft former MFI unit at Stone Lake to enable this. Dreams will occupy an 8,000 sq ft unit and work on the subdivision will start in early 2012, completing shortly thereafter. The remaining 12,000 sq ft unit (which has received planning consent to incorporate an 8,000 sq ft mezzanine floor) is subject to confirmed tenant interest. In November 2011, the local planning authority confirmed that the park benefited from an open A1 non food permission. Discussions are underway to utilise the consent and bring new retailers, selling an expanded range of goods, to the park.

Rushden

This 244 acre site lies alongside the A45 between the A1 and the M1 at Rushden in East Northamptonshire, opposite an existing Waitrose Food and Home store, a Wickes and a Lidl. Most of the land forms part of a Site of Special Scientific Interest ('SSSI') however it includes 31 brownfield acres which are developable. A planning application is expected to be submitted shortly for a 430,000 sq ft retail scheme, anchored by a garden centre, together with an additional 112 bed hotel and a leisure club. 1,300 car parking spaces are planned and it is estimated that the combined leisure, tourism and retail offer will attract over 3m visitors per year.

Substantial investment is proposed to integrate the SSSI with the retail scheme. The plans for the combined retail and leisure destination will include a visitors' centre, a marina and boathouse, footpaths and cycle routes through the SSSI, and access into neighbouring tourist attractions such as Stanwick Lakes. We are working closely with the Wildlife Trust who will take on long term management of the remainder of the SSSI for future generations, and with the RSPB. On completion, the Group's £50m investment should create approximately 1,500 new jobs.

The Group hopes to receive planning approval in the first quarter of next year and assuming it does, construction is expected to start in the third quarter of 2012.

M&S has agreed in principle to anchor one of the three proposed retail terraces in a 60,000 sq ft store over two floors. We are in discussions on the terms and these are ongoing. However, a high level of interest has been received from other retailers attracted by the opportunity to trade alongside M&S at Rushden. Offers have also been received from a number of retailers who typically trade well alongside garden centre operators.

Sheppey

The Group entered into an option agreement with The Crown Estate to acquire 20 acres of development land at Neats Court on the Isle of Sheppey in December 2010.

In September 2011, a resolution to grant planning permission was obtained for a 55,000 sq ft foodstore which has been pre-let to Morrisons on a 25 year lease, 40,000 sq ft of retail floor space, a drive-thru restaurant unit, and 80,000 sq ft of light industrial space.

Work is expected to commence on the first phase of the development which includes the Morrisons and the drive-thru in the first quarter of 2012 with practical completion scheduled for autumn 2012. Active discussions are being held with a number of retailers in respect of the second phase (the retail warehousing units) and the Group intends to submit an enhanced planning application for this part of the site in early 2012, seeking consent for an additional 27,500 sq ft of retail floor space.

Stafford

Long leasehold interests in two adjoining properties, together amounting to seven acres, were acquired in July 2011. The site lies on the edge of Stafford town centre, and offers the prospect to develop a sizeable retail investment in a town where there is significant retail demand.

The Group has been working with Stafford Borough Council on plans for a comprehensive retail development including approximately 200,000 sq ft of retail floor space together with 1,200 car parking spaces and following a well received public consultation in October 2011, a planning application was submitted in November. A planning committee decision is expected in early 2012 allowing a potential start on the first phase of the development in mid 2012. On 28 November 2011 M&S signed a pre-let for a 25 year lease (with a tenant's break option after 15 years) to anchor the scheme in a 65,000 sq ft two storey unit, and discussions are ongoing with other potential tenants.

The Group is also in advanced negotiations to acquire a further edge of centre development site from Stafford Borough Council, Staffordshire County Council, and others. This eight acre site, which currently comprises surface car parking, will be used for a foodstore led development. A planning application for a 71,500 sq ft foodstore, 14,000 sq ft of associated retail and 460 car parking spaces was submitted in November 2011 and the application is due to go to the planning committee in early 2012. The Group is in negotiations with Morrisons, for a pre-let over the foodstore and petrol filling station although binding legal commitments have not yet been entered into. Discussions are also ongoing with other retailers in respect of the other units.

Revaluation surplus

As described in note 9 to the Group Financial Statements, the majority of the investment properties held by the Group at 30 September 2011 were valued by independent property valuers, Jones Lang LaSalle Limited, as at that date. In their opinion, the open market value of these investment properties at that date was £182.8m, resulting in a revaluation surplus for the year of £19.1m (2010: £259,783).

Pipeline of opportunities

We continue to see plenty of opportunities to work with local authorities and the larger retailers to deliver destination retail schemes. The Group has made a number of small strategic acquisitions and secured options to purchase other sites at several locations. Discussions continue with various parties in these locations which may result in further acquisitions and pre-lets in due course.

Since the balance sheet date, the Group has spent £1.08m (including direct costs) on further acquisitions at Greenwich.

The Group monitors its equity requirements very closely and after accounting for acquisitions since the balance sheet date, the equity projected to be required to fund all of its existing investments through to practical completion equates to approximately £82.0m. This projected expenditure is largely discretionary (that is, very little of it is subject to legally binding obligations) and at the balance sheet date the Group held £112.7m of cash and cash equivalents.

General administrative expenses

The Group's running costs principally comprise the management fee payable to the Investment Manager, LXB Manager LLP, which amounted to £3.12m in the year (2010: £1.4m). Other significant components of the Group's £4.0m (2010: £2.2m) corporate administrative costs in the year were costs necessarily incurred by virtue of the Company being a listed company, including Jersey administration costs and Directors' fees.

Cash flow

The Group's operating cash flows have improved in the year mainly as a result of the Group having added to its property portfolio, thus increasing its net rental income. Projected annualised overheads are, as expected, forecast to exceed the annualised rental income in the current financial year because rental income will fall as the Group achieves vacant possession on units to facilitate the proposed developments outlined earlier in this report.

During the year, £74.3m (2010: £92.7m) of cash has been deployed in the purchase of and capital expenditure on investment properties.

Tax

The tax charge for the year is £156,241 (2010: £34,343). As explained in note 7 to the Group Financial Statements, tax is payable at a rate of 20% on the net rental surplus after deduction of interest and certain other allowable costs.

Tim Walton

On behalf of LXB Manager LLP

29 November 2011