RNS Number:3937T
City Lofts Group PLC
18 December 2003

Press Release                                                   18 December 2003

                         City Lofts Group PLC

          First day of dealings on the Alternative Investment Market

City Lofts Group PLC ("City Lofts" or "the Company"), the regional developer of
urban mixed-use property schemes, today announces the commencement of dealings
of its Ordinary Shares on the Alternative Investment Market ("AIM").  Collins
Stewart is the Nominated Advisor and Broker to City Lofts.


Placing Statistics

Placing Price per Ordinary Share                                            100p
Number of Ordinary Shares placed                                       7,000,000
Total proceeds from the Placing (before expenses)                          #7.0m
Number of Ordinary Shares in issue immediately following Admission    47,000,032
Market capitalisation following the Placing at the Placing Price          #47.0m



Reasons for the Admission and Placing and use of proceeds

City Lofts will use the net proceeds to fund the Company's current developments
as well as to fund the acquisition and development of sites completing in 2007.
Monies raised will also aid in contract negotiation, enhance equity returns and
strengthen the balance sheet of the Company.



Stuart Wright, Chief Executive of City Lofts Group PLC, said:  "We are delighted
the Placing has been so successful and that the Company will have a high quality
institutional shareholder base.  We look forward to reporting our progress in
the coming months."



For further information:
City Lofts Group PLC
Stuart Wright, Chief Executive Officer                 Tel: +44 (0) 1423 506 262
stuart@citylofts.co.uk                                       www.citylofts.co.uk


Collins Stewart
Paul Davies / Nick Ellis                               Tel: +44 (0) 20 7523 8309
pdavies@collins-stewart.com                              www.collins-stewart.com


Media enquiries:
Bankside                                                        www.bankside.com
Henry Harrison-Topham                                  Tel: +44 (0) 20 7444 4141
henry.ht@bankside.com
Sarah Carrell
sarah.carrell@bankside.com                             Tel: +44 (0) 113 390 6388



Background

City Lofts is a regional developer of urban mixed-use property schemes with a
primary focus on residential apartments and the regeneration of existing
Brownfield sites which are located in or close to town or city centres.  The
Company operates from its head office in Harrogate and another office in central
London.  The Business was established in 1997 when the Founding Directors
anticipated an increasing demand for city centre living in the major regional
centres in the United Kingdom.  The majority of the Group's developments are
outside London.



The Company has established itself by focusing on developing high quality urban
residential apartments, together with ancilliary offices, shops, restaurants and
leisure facilities with above-average specifications.  The Company has an
agreement with Conran and Partners Limited pursuant to which Conran will usually
be engaged to provide contemporary design services to each new City Lofts
development.  The Group has won a number of awards for its developments.



The Directors believe that City Lofts' success is based upon the quality of its
product and its knowledge of the local markets in which it operates.  These key
strengths are combined with a strategy for reducing the risk inherent in
residential property development by forward selling off-plan the majority of the
Group's residential apartments prior to the start of the construction process.



The Board's objective is for City Lofts to become a leading developer of urban
mixed-use schemes outside of London, with a high brand recognition for both
residential and commercial property.  To date, the Group has completed 9
developments with a total sales value of approximately #117 million (including
commercial space which is currently in the process of being marketed).  The 8
current developments including the commercial space of completed developments
which is currently being marketed as referred to above, are anticipated to
generate sales and rental revenues of approximately #193 million in the
financial years ending 31 March 2005 and 31 March 2006.  As at 5 December 2003,
contracts for the sale of residential apartments in these developments in
progress have been exchanged in respect of 248 units (25.7 per cent. of the
proposed units under development), representing revenue to the Group of
approximately #41.9 million.  In addition, a further 116 units (representing a
further 12.0 per cent. of the proposed units under development) are reserved or
under offer.



Key Strengths

The Directors believe that City Lofts has a strong position in the regional
market and, following the Placing, will have the capital necessary to facilitate
controlled growth.  The Directors believe that the Company has, in particular,
the following key strengths:

  * a reputation for building high quality and value for money apartments;

  * a proven ability to forward sell apartments off-plan and, frequently, prior to the
  * commencement of construction;

  * a strong development pipeline without having significant capital invested in a land bank;

  * a strong brand which is enhanced by the relationship with Conran; and

  * operates in a less onerous planning environment which is encouraged by government policy.


As a result of these key strengths, the Group has:

  * good visibility of revenue and profits;

  * a geographical spread of developments throughout the UK with a main emphasis on the regional markets and the
    regeneration of urban areas;

  * a proven ability to identify and develop profitable sites; and

  * high operating margins and returns on equity.


This is all achieved in a reduced risk environment, which, in the opinion of the
Directors, is a fundamental aspect of the operating of the Business. Risk is
reduced by:

  * selling the majority of residential units off-plan;

  * employing a low fixed cost base and using third party contractors;

  * entering into fixed price building contracts; and

  * not investing capital in a land bank and only acquiring sites with the necessary planning permissions or
    conditional upon planning being obtained.




The Market Opportunity

The Directors believe the statistics show that the current requirement for more
housing is being driven not only by an increasing population but also by
lifestyle changes.  The trend towards individuals living alone for longer has
had a significant impact on the level of demand for housing.



In particular, smaller housing units, especially aspirational high quality
apartments, are ideally suited to single living and the lifestyles associated
with such living.  This is the market upon which City Lofts is focusing.



A trend towards city centre living in the UK's regional urban centres has
developed in recent years.  This stems from the growth in local economies,
investment in urban infrastructures, change in the structure of these local
economies to service based industries and the increased siting of new office
space in such areas.  Examples include the cities of Leeds, Manchester and
Liverpool.



In addition, current government policy actively encourages urban regeneration
and the development of under-utilised Brownfield sites.  This trend will, in the
opinion of the Directors, lead to the continuing availability of suitable
Brownfield sites which is consistent with government planning policy.



Completed Developments

Centaur House, Leeds - construction completed October 1998
A conversion of a former mill building to create 42 apartments and ancilliary
leisure space.  The Group acted as development manager for fees and a profit
share on this project.  Total scheme sales value: #5.5 million.



Clare Court, Halifax - construction completed July 2000
The former Magistrates Court was converted into 29 apartments with one to one
parking provided on site.  Contracts for the sale of all residential units were
exchanged off-plan.  The Group acted as development manager for fees and a
profit share on this project.  Total scheme sales value: #2.4 million.



Grosvenor Buildings, Harrogate - construction completed September 2000
This building next to the Royal Baths in the centre of Harrogate was developed
into 33 apartments and 5 shop units which are now fully let.  The development
has won 2 awards (What House Gold Award and Civic Trust for Best Renovation).
Contracts for the sale of all residential units were exchanged off-plan.  This
development was a joint venture between the Group and Knight Properties Limited.
Total scheme sales value: #7.4 million.



25 Church Street, Manchester - construction completed September 2000
This former BT exchange was converted into 78 apartments and ancillary leisure
space.  Contracts for the sale of 60 residential apartments were exchanged
off-plan and the remaining 18 units have all been sold.  The Group acted as
development manager for fees and a profit share on this project.  Total scheme
sales value: #13.2 million.



Queens Wharf, Reading - construction completed March 2002
This former office building on the Kennet Canal has been converted into 78
apartments with ancilliary ground floor office space.  Contracts for the sale of
47 units were exchanged off-plan and the remaining units were sold following
completion of construction work.  The Group acted as development manager for
fees and a profit share on this project.  Total scheme sales value: #19.7
million.




Timber Yard, Hoxton, London - construction completed June 2003
A new build development creating 12 apartments and 27 live/work units,
ancilliary office space (split into 17 units) and 30 underground car parking
spaces.  All the residential and live/work units were sold off-plan.  The office
units are being sold on long leases and currently, of the 17 units, 5 are under
offer and interest in the remaining units is strong.  This project is owned by
the Group in a joint venture with Lehman Brothers.  Total scheme sales value:
#16.8 million.



Town Centre House, Harrogate - construction completed in September 2003
A commercial development, which encompasses the Group's head office together
with two restaurant units, which will generate, in aggregate, rents of #155,000
per annum.  This property is owned by the Group in a joint venture with Clover
Hill Properties Limited.  Total scheme sales value: #2.4 million.



Argus Lofts, Brighton - construction completed October 2003
This building, formally the Evening Argus newspaper offices, has been converted,
together with a new build, into 61 apartments, 20 "affordable" residential units
and ancillary retail, leisure and office space.  With the exception of one unit,
all of the residential units were exchanged off-plan.  The retail and leisure
space has all been let and 5 shell office units (in phase 1 of the commercial
fit out) will be sold on long leases.  Of these 5 units, two are under offer and
the remainder are being marketed following a launch in November 2003.  Phase 2
of the commercial fit out programme is likely to consist of between 8 and 10
further office units.  This project is owned by the Group in a joint venture
with Lehman Brothers.  Total scheme sales value: #21.3 million.



St. Ann's Quay, Newcastle - construction completed November 2003
A new build development with 91 apartments, 29,000 sq.ft. of office space
(pre-let to the Crown Prosecution Service) and ancillary leisure/retail space
located on the East Quayside in central Newcastle.  All but one of the
residential units were exchanged off-plan.  This project is owned by the Group
in joint venture with Lehman Brothers.  Total scheme sales value: #28.5 million.



Current Developments

38 High Street, Manchester
Construction commenced in July 2002 and completion is expected in February 2004
for a 7 storey new building, which is to provide 49 residential units and some
ancillary commercial units.  Of the 49 residential units, contracts for the sale
of 41 units have been exchanged and the remaining 8 units are currently under
offer.  This project is wholly owned by the Group.  Expected total scheme sales
value: #8.5 million.



Harrogate House, Harrogate
The conversion of a redundant 7 storey office block into 20 residential
apartments, ancillary office space and five pre-let retail units.  Contracts
have been exchanged on 10 residential units and 6 car parking spaces.
Construction commenced in May 2003 and is expected to be completed in May 2004.
This project is wholly owned by the Group.  Expected total scheme sales value:
#10.1 million.



Vantage Quay, Piccadilly Marina, Manchester
A new build canal-side 7 storey development providing 117 apartments with 81
underground secure car parking spaces.  The building work commenced in January
2003 and is anticipated to be completed in September 2004.  Contracts have been
exchanged on all of the apartments and car parking spaces.  This project is
owned by the Group in a joint venture with Lehman Brothers.  Expected total
scheme sales value: #23.2 million.



Quayside Lofts, Newcastle
The site is located in the centre of Newcastle and planning permission has been
obtained for 66 residential units, 49 underground car parking spaces and
ancillary commercial space.  Construction is expected to commence in December
2003 and be completed in January 2006.  To date, contracts for the sale of 41
apartments have been exchanged.  This project is owned by the Group in a joint
venture with Ironside Developments Limited.  Expected total scheme sales value:
#15.4 million.



Roberts Wharf, Leeds
The site is a Victorian mill on the banks of the River Aire in central Leeds.
Planning has been obtained for 184 residential apartments with 134 on-site car
parking spaces and ancillary office space.  A revised planning consent has been
submitted to amend this to 198 residential apartments and 124 car parking spaces
(together with the office space).  Construction is anticipated to commence in
November 2004 and be completed in March 2006.  As at 5 December 2003, contracts
for the sale of 39 units had been exchanged and a further 108 units are under
offer.  This project is wholly owned by the Group.  Expected total scheme sales
value: #36.8 million.



Princes Dock, Liverpool
The site is part of the Princes Dock redevelopment being undertaken by the
Mersey Harbour and Docks Corporation adjacent to the Liver Building on the River
Mersey in the centre of Liverpool.  Conditional contracts have been exchanged
between the Company and Mersey Harbour and Docks Corporation and a planning
application for a 20 storey residential tower providing 162 residential units
and 120 car parking spaces has been submitted to the local planning authority.
It is envisaged that planning consent will be granted in early 2004 with an 18
month construction process which is expected to be completed in November 2005.
This project is wholly owned by the Group.  Expected total scheme sales value:
#29.4 million.



Salford Quays, Manchester
The site is on the Huran Basin in the Salford Quays adjacent to the Lowry Centre
and benefits from an existing planning consent for 160 residential units in a
15-storey tower with one to one on site car parking.  Contracts were exchanged
for the purchase of the site in November 2003 and it is the Group's intention to
amend the planning to provide a building with the same net area but an increase
in apartment numbers to 199.  An 18 month construction process is expected to
commence in the third quarter 2004 and complete in January 2006.  This project
is wholly owned by the Group.  Expected total scheme sales value: #35.8 million.



Newport Road, Cardiff
The site is a redundant existing 15-storey office block close to the centre of
Cardiff which the Group proposes to develop into 155 residential apartments.
The development is a proposed joint venture between the Company and the
building's owners.  Planning committee approval for a residential conversion was
achieved in September 2003 but, under the proposed terms of the joint venture,
the parties will submit an amended application to comply with the local
council's affordable housing criteria.  It is envisaged that planning will be
granted in early 2004 with an 18 month construction programme commencing in mid
2004.  Expected total scheme sales value: #26.7 million.



Dividend Policy

The Ordinary Shares will rank in full for all dividends or other distributions
declared, made or paid in respect of the ordinary share capital of the Company
after Admission.  If the Company's Ordinary Shares had been trading on AIM for
the whole of the year ending 31 March 2004 and based on the management's
forecasts for the remainder of this current financial year with the capital
structure of the Company which will be in place on Admission, the Directors
would expect to recommend a dividend of 8p per Ordinary Share in respect of that
year.  This would represent a dividend yield of approximately 8.0 per cent. at 
the Placing Price.



The Directors intend that, subject to the performance of the Business, an
interim dividend will be paid in January and a final dividend will be paid in
July of each year, in the approximate proportion of one-third and two-thirds
respectively of the total annual dividend.  The Directors intend that the first
dividend paid by the Company will be a final dividend in respect of the year
ending 31 March 2004, which will be pro-rated to reflect the period from
Admission to the year end and will be payable in July 2004.



The Directors intend, having regard to earnings, cash flows and the prospects of
the Company, to adopt a progressive but prudent dividend policy.  The Company
may only pay dividends if distributable reserves are available for this purpose.
The Company currently has no existing distributable reserves.  The Company
will apply to the Court for approval of a reduction of its share premium account
which, if granted, is expected to result in the creation of a special
distributable reserve for the Company.  To the extent that dividends and
interest are distributed to the Company by its subsidiaries going forward, this
may also generate distributable reserves.



Current trading and prospects

The Company has eight developments currently in progress which, together with
the commercial space of completed developments which are currently being
marketed, are expected to generate in excess of #193 million of revenue for the
financial years ending 31 March 2005 and 31 March 2006.  The Directors have been
encouraged by the continued strength of the off-plan sales, which significantly
reduces the risk of each development.  Both the sales rate and unit prices have
remained buoyant and, to date, approximately 25.7 per cent. of the proposed 966
residential units under development are subject to exchanged contracts and 116
further units are reserved or under offer.  In addition, the Directors are being
shown an increasing number of potential sites and being contacted by land owning
joint venture partners for future larger scale developments.  Accordingly, the
Directors view the current and forthcoming financial years with confidence.



The Board

Nigel Denby, ACA, Non-Executive Chairman, aged 49
Nigel, a chartered accountant, is currently a director of a number of private
companies engaged in the investment in, and management of, residential
properties.  Between 1994 and 2001, he was Finance Director of BPT plc (Bradford
Property Trust), then a FTSE 250 company and the market leading and largest
quoted owner and landlord of residential houses and apartments in the UK private
rented sector.  An offer for BPT plc became wholly unconditional in May 2001,
valuing the group at #477 million.  Between 1991 and 1993 he was Group Finance
Director of LOG Trust

PLC, and between 1982 and 1991 was Divisional Finance Director of the building
products division of Hickson International PLC.  Nigel is currently the
independent chairman of Halos Limited, a #125 million special purpose housing
association funding vehicle.



Stuart Wright, Chief Executive, aged 41
Stuart is a Founding Director of the Group.  He trained as a barrister in London
before pursuing a career in venture capital with AIG Inc. and Johnson Fry PLC.
He was a founding shareholder of Varsity Funding a joint venture between Bankers
Trust and Unilodge, which was sold in 2001 for #110 million.  He is responsible
for project funding and business development.



Ross Mansoori-Dara, Commercial Director, aged 40
Ross is a Founding Director of the Group.  He is a qualified barrister and
American lawyer.  He worked for Willkie Farr & Gallagher between 1987 and 1990
and for Rogers & Wells between 1990 and 1994 where he worked in acquisitions and
corporate finance.  He is responsible for site origination, appraisal and
acquisition.



Anthony Brooks, Development Director, aged 42
Tony is a Founding Director of the Group.  He is a contractor and developer by
background with over 20 years' experience in the property and construction
industry.  Prior to co-founding City Lofts, Tony owned and managed his own
contracting business and house building company.  He has previously been a
member of the NHBC and the House Builders' Federation.  He is responsible for
site acquisition, planning, project management and scheme delivery.




Mark Hadcock, Finance Director, aged 40
Mark joined City Lofts in 2000.  He has previously held a number of senior
finance positions, most latterly with Daarnhower Limited (a commodity broker in
London) between 1995 and 2000 and with Anglesey Shooting and Fishing Limited
between 1991 and 1995.  Mark is responsible for all the Group's financial
administration.



Graham Berry, Non-Executive Director, aged 56
Graham has extensive experience of the construction and house building industry.
He formed the Graham Berry Partnership (the Goring Berry Partnership from
1989), a firm of Chartered Quantity Surveyors, in 1976 from which he retired in
1998.

                                    - Ends -



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