Terra Catalyst Fund

Terra Catalyst Fund is a closed-ended Cayman Islands registered, exempted company established to invest in listed property companies and funds in Europe with the objective of seeking to identify undervalued securities and actively seeking to close the valuation gap between the value at which the security is trading and its intrinsic value.

TCF has appointed Laxey Partners Ltd ('Laxey') as its Investment Manager. Laxey is a global active value investment management company that pursues one strategy: it actively promotes shareholder engagement and sound corporate governance to close the valuation gap between the share price at which an asset trades and its intrinsic value.

Investment Objective and Business

As at 31 December 2007 there were over 300 listed property companies in Western Europe with an individual market capitalisation in excess of £50 million and a collective market capitalisation of in excess of £187 billion. In addition, direct property derivatives, the majority of which are priced off commercial property, accounted for a further £14 billion of market capitalisation as at 31 December 2007. These property companies are listed on 19 different exchanges and only the larger capitalisation stocks are comprehensively researched. In contrast, some of the smaller capitalisation stocks receive comparatively little analytical coverage.

The latter half of 2007 saw a substantial re-rating in the value of listed property companies after a four year bull run. With the onset of the US sub-prime crisis and the re-pricing of funding rates for commercial property, substantial discounts to net asset value have opened up in listed property stocks.

During the course of 2008, and the first half of 2009, the discounts on almost all listed property stocks widened. Discounts have persisted on a significant number of listed property stocks throughout 2010. The manager continues to believe that the discounts do, in many cases, overstate the impact of the weakening fundamentals. The manager therefore believes that there is a compelling opportunity to purchase carefully selected European property companies at very significant discounts to their current and expected future net asset values.

The Investment Manager believes that a combination of the factors set out above allied to an activist investment approach, has the potential to extract significant value for shareholders.