THIRD QUARTER INTERIM MANAGEMENT STATEMENT

McKAY SECURITIES PLC

('the Group')

THIRD QUARTER INTERIM MANAGEMENT STATEMENT

ENCOURAGING PROGRESS IN KEY MARKETS AS OCCUPANCY LEVELS IMPROVE

This Interim Management Statement is issued by McKay Securities PLC, the Real Estate Investment Trust specialising in South East and central London office and industrial property, in respect of the period from 1st October 2011.

·; Portfolio void reduced to 12.9% (September 2011 - 13.5%) with eight new tenants signed up adding contracted rents of £411,500 pa

·; Refurbishment of Great Surrey House, Southwark, SE1 (21,000 sq ft) representing 20% of this void to complete in July 2012

·; Earnings enhancing acquisition of Doncastle House, Bracknell at a 12.5% initial yield

·; 80% tenant retention at lease break and lease expiry

·; Resilient quarterly income maintained

·; Increasingly limited supply of Grade A product in certain South East office submarkets supporting rental growth and investor demand

Market Overview

The Group's portfolio splits into three main sectors: South East offices 40%, London offices 29% and South East industrial 21%, (% by value as at 30th September 2011 valuation).

Within the Group's South East office market, take up in the final quarter was comparable to preceding quarters, taking the total for the year to 1.9 million sq ft. As anticipated, this was consistent with the 2.0 million sq ft achieved in 2010 and well ahead of the 1.3 million sq ft achieved in 2009. With occupiers looking to upgrade accommodation on a cost neutral basis, demand continued to be for better quality buildings and 75% of the 2011 take up was new or Grade A stock. Named occupier demand at the end of the year was 3.7 million sq ft, up 5% on the previous quarter. Even with the cautious approach being taken by occupiers, rental values have picked up in the most undersupplied Thames Valley centres due to the limited availability of new or Grade A buildings. Elsewhere, occupiers continue to have more choice and as a result there remains a considerable difference in market characteristics between centres.

Rental values in central London continue to be underpinned by a shortage of supply. Improved rental values are likely to benefit the Group's holdings in Victoria and Southwark, although City rental values have not progressed to the same degree primarily due to lower levels of occupier take up.

Investors continue to favour prime property with long secure income, particularly in central London. Investor appetite outside London continued to pick up in 2011 and two large transactions contributed to a total of £2.0 billion invested in the South East office market. This was the highest amount invested since 2006 and double the amount invested in 2010. Movements in capital values over the remainder of the financial year are likely to be influenced by lease events and active management rather than significant adjustment of market yields.

Portfolio Review

The Group acquired Doncastle House, Bracknell in November 2011 for £2.7 million, equating to £85 psf, at an initial yield of 12.5%. The office property totals 33,600 sq ft and is multi-let with low average rents in the region of £15 psf, and a 20% vacancy. It provides a number of management opportunities to increase occupancy and value within the existing building and the potential to renew and implement planning consent for an additional 12,000 sq ft when market conditions permit.

Within the portfolio, eight open market lettings were completed over the period totalling 34,500 sq ft, at a contracted rent of £411,500 pa. This was 5.5% ahead of valuation rental assumptions. These included two lettings at Portsoken House, EC3 leaving the recently refurbished building fully occupied.

At lease break and lease expiry a high tenant retention rate of 80% was maintained. Fifteen leases were renewed at a total contracted rent of £645,000 pa, which was 10.5% ahead of valuation rental assumptions.

The portfolio void (by rental value) reduced from 13.5% (30th September 2011) to 12.9%. 63% of this total portfolio void is contained within five buildings totalling 82,000 sq ft, all of which are located in good centres and are being actively marketed.

The largest void is Great Surrey House, SE1 (21,000 sq ft) with a current rental value of £500,000 pa, where the tenant exercised a break option in September 2011. A full refurbishment of this well located and prominent office building is due to commence this month and complete in July, when the upgraded property is likely to be well received in this improving area.

Rents received within seven working days of the December 2011 quarter day continued to exceed the Group's target of 90%. Tenants paying rents on a monthly basis remain low and well below 5% of rents demanded. There were no tenant insolvencies over the period.

The next external valuation of the Group's portfolio, valued at £209.3 million at 30th September 2011, will be at 31st March 2012 and will be reported within the Group's year end results at the end of May 2012.

The Group has maintained a sound financial position with £155 million of loan facilities secured until at least 2016. Interest rate hedging facilities totalling £105 million remain in place. Unless projections for long term interest rates increase from current levels, the negative value of these instruments at the year end is likely to increase. Drawn debt of £100.5 million (30th September 2011 - £98.7 million) provides undrawn facilities of £54.5 million. Of this, £9.0 million is currently identified for expenditure on existing properties and acquisitions in order to maintain continued headroom to banking covenants.

Date: 15th February 2012

For further information please contact:

McKay Securities PLC City Profile

Simon Perkins - Managing Director Simon Courtenay

Giles Salmon - Finance Director Abigail Genis

0118 950 2333 0207 448 3244