LCP Proudreed PLC - Irish Stock Exchange

LCP Proudreed PLC 

incorporated with limited liability in England and Wales 

(registered number 5528295) 

£243,800,000 Class A Secured Floating Rate Notes due 2016 

£32,200,000 Class B Secured Floating Rate Notes due 2016 

£36,800,000 Class C Secured Floating Rate Notes due 2016 

£9,200,000 Class D Secured Floating Rate Notes due 2016 

Issue Price 100% 

HSBC 

SG CORPORATE & INVESTMENT 

BANKING 

The date of this Offering Circular is 19 October 2005


incorporated with limited liability in England and Wales 

(registered number 5528295) (the ‘‘Issuer’’) 

£243,800,000 Class A Secured Floating Rate Notes due 2016, issue price: 100% 

£32,200,000 Class B Secured Floating Rate Notes due 2016, issue price: 100% 

£36,800,000 Class C Secured Floating Rate Notes due 2016, issue price: 100% 

£9,200,000 Class D Secured Floating Rate Notes due 2016, issue price: 100% 

This document constitutes a ‘‘prospectus’’ for the purposes of Directive 2003/71/EC. Application has been made to the Irish Financial 

Services Regulatory Authority, as competent authority under Directive 2003/71/EC, for this prospectus to be approved. Application has 

been made to the Irish Stock Exchange Limited (the ‘‘Irish Stock Exchange’’) for the £243,800,000 Class A Secured Floating Rate Notes 

due 2016 (the ‘‘Class A Notes’’), the £32,200,000 Class B Secured Floating Rate Notes due 2016 (the ‘‘Class B Notes’’), the £36,800,000 Class 

C Secured Floating Rate Notes due 2016 (the ‘‘Class C Notes’’) and the £9,200,000 Class D Secured Floating Rate Notes due 2016 (the 

‘‘Class D Notes’’, and, together with the Class A Notes, the Class B Notes and the Class C Notes, the ‘‘Notes’’) to be admitted to the official 

list. Such approval relates only to the Notes which are to be admitted to trading on the regulated market of the Irish Stock Exchange or 

other regulated markets for the purposes of Directive 93/22/EC or which are to be offered to the public in any member state of the 

European Economic Area. The Notes are expected to be issued on or about 25 October 2005 (or such later date as may be agreed by the 

Issuer, the Joint Lead Managers (as defined below), the Note Trustee (as defined below) and the Principal Paying Agent (as defined below)) 

(the ‘‘Closing Date’’). 

The Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’), 

and are subject to United States tax law requirements. The Notes are being offered outside the United States by HSBC Bank plc and 

Société Générale, London Branch (in their capacities as joint lead managers, the ‘‘Joint Lead Managers’’) in accordance with Regulation 

S under the Securities Act (‘‘Regulation S’’) and may not be offered, sold or delivered within the United States or to, or for the benefit 

of, US persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. 

Each class of Notes will initially be represented by a temporary global note in bearer form (each, a ‘‘Temporary Global Note’’), without 

interest coupons (‘‘Coupons’’) or talons for further Coupons (‘‘Talons’’), which will be deposited with a common depositary (the ‘‘Common 

Depositary’’) for Euroclear Bank S.A./N.V., as operator of the Euroclear System (‘‘Euroclear’’) and Clearstream Banking, société anonyme 

(‘‘Clearstream, Luxembourg’’) on the ‘‘Closing Date’’. Interests in each Temporary Global Note will be exchangeable not earlier than 40 

days after the Closing Date (and upon certification of non US beneficial ownership) for interests in a permanent global note representing 

each class of Notes (each, a ‘‘Permanent Global Note’’ and together with each Temporary Global Note, the ‘‘Global Notes’’), each in bearer 

form, without Coupons, Receipts or Talons, which will also be deposited with the Common Depositary. Save in certain limited 

circumstances, Notes in definitive form will not be issued in exchange for the Global Notes. 

Interest on the Notes is payable by reference to successive interest periods (each an ‘‘Interest Period’’). Interest will be payable quarterly 

in arrear in sterling on 25 February, 25 May, 25 August and 25 November (each, an ‘‘Interest Payment Date’’) in each year (subject to 

adjustment as specified herein for non business days and business days which fall into the next calendar month) commencing on the Interest 

Payment Date falling on 25 February 2006. The first Interest Period will commence on (and include) the Closing Date and end on (but 

exclude) 25 February 2006. 

Each successive Interest Period will commence on (and include) 25 February, 25 May, 25 August and 25 November and end on (but 

exclude) 25 May, 25 February, 25 August and 25 November respectively. The Class A Notes will bear interest at a rate equal to LIBOR 

for three month sterling deposits from time to time plus 0.26% per annum, the Class B Notes will bear interest at a rate equal to LIBOR 

for three month sterling deposits from time to time plus 0.35% per annum, the Class C Notes will bear interest at a rate equal to LIBOR 

for three month sterling deposits from time to time plus 0.60% per annum and the Class D Notes will bear interest at a rate equal to LIBOR 

for three month sterling deposits from time to time plus 0.85% per annum, in each case as further described below and as set out in 

Condition 5(c) of the terms and conditions of the Notes (the ‘‘Conditions’’) as more fully set out in the section entitled ‘‘Terms and 

Conditions of the Notes’’ on page 136 below. In the case of the first Interest Period only, each Class of Notes will bear interest at the 

equivalent rate for four month sterling deposits plus the margin applicable to the relevant Class of Notes as described above. 

The Notes will mature on the Interest Payment Date falling on 25 August 2016 unless previously redeemed. The Notes will be subject to 

mandatory redemption and/or optional redemption in whole or in part before such date in the circumstances, and subject to the conditions, 

described in the Conditions. 

If any withholding or deduction for or on account of tax is applicable to the Notes, payment of interest on, and principal and premium (if 

any) of, the Notes will be made subject to any such withholding or deduction without the Issuer being obliged to pay any additional or 

further amounts as a consequence. 

The Notes will be obligations of the Issuer only and will not be guaranteed by, or be the responsibility of, any other person or entity. It 

should be noted in particular, that the Notes will not be obligations of, and will not be guaranteed by, the Note Trustee, the Issuer Security 

Trustee, the Borrower Security Trustee, the Joint Lead Managers, the Account Bank, the Cash Manager, the Agent Bank, the Paying 

Agents, the Hedging Providers, the Liquidity Facility Provider, the Property Manager, the Issuer Corporate Services Provider, LCP Real 

Estate or Proudreed Real Estate (together, ‘‘Borrowers’’), the Parent Obligors, the LCP Covenantors or the Proudreed Covenantor or any 

of their respective affiliates but the proceeds of the issue of the Notes will be on-lent to the Borrowers and secured over all of the assets 

and undertakings of the Borrowers and shares in the Borrowers held by their parent holding companies, in each case as more particularly 

described below. 

It is expected that the Class A Notes will, when issued, be assigned an AAA rating by Fitch Ratings Ltd, (‘‘Fitch’’) and an AAA rating 

by Standard & Poor’s, a division of The McGraw Hill Companies, Inc. (‘‘S&P’’, and together with Fitch, the ‘‘Rating Agencies’’). It is 

expected that the Class B Notes will, when issued, be assigned an AA rating by Fitch and an AA rating by S&P. It is expected that the Class 

C Notes will, when issued, be assigned an A rating by Fitch and an A rating by S&P. It is expected that the Class D Notes will, when issued, 

be assigned a BBB rating by Fitch and a BBB+ rating by S&P. A credit rating, however, is not a recommendation to buy, sell or hold 

securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. 

For a discussion of certain risks and other factors that should be considered in connection with an investment in the Notes, see the section 

entitled, ‘‘Risk Factors’’ on page 33 below. 

HSBC 

SG CORPORATE & INVESTMENT BANKING 

19 October 2005

The Issuer accepts responsibility for the information contained in this Offering Circular (other than the 

information referred to below). To the best of the knowledge and belief of the Issuer (having taken all 

reasonable care to ensure that such is the case), the information (other than the LCP Information, 

Proudreed Information, HSBC Information, Société Générale Information, King Sturge Information and 

the Ernst & Young Information (as defined below)) contained in this Offering Circular is in accordance with 

the facts and does not omit anything likely to affect the import of such information. The Issuer accepts 

responsibility accordingly. The Issuer has the benefit of warranties from each of the Borrowers and (to a 

limited extent) their Parent Obligors for the information contained in this Offering Circular. 

L.C.P. Real Estate Limited accepts responsibility for the information contained in pages 13-23, 123-125 and 

paragraph 8 page 180 (together the ‘‘LCP Information’’). To the best of the knowledge and belief of L.C.P. 

Real Estate Limited (having taken all reasonable care to ensure that such is the case), the LCP Information 

is in accordance with the facts and does not omit anything likely to affect the import of the LCP Information. 

L.C.P. Real Estate Limited accepts no responsibility for any other information contained in this Offering 

Circular and has not separately verified any such other information. 

Proudreed Real Estate Limited accepts responsibility for the information contained in pages 24-29, 129-130 

and paragraph 8 page 180 (together the ‘‘Proudreed Information’’). To the best of the knowledge and belief 

of Proudreed Real Estate Limited (having taken all reasonable care to ensure that such is the case), the 

Proudreed Information is in accordance with the facts and does not omit anything likely to affect the import 

of the Proudreed Information. Proudreed Real Estate Limited accepts no responsibility for any other 

information contained in this Offering Circular and has not separately verified any such other information. 

HSBC Bank plc accepts responsibility for the information contained in paragraphs 1 to 6 on page 135 

(together the ‘‘HSBC Information’’). To the best of the knowledge and belief of HSBC Bank plc (having 

taken all reasonable care to ensure that such is the case), the HSBC Information is in accordance with the 

facts and does not omit anything likely to affect the import of the HSBC Information. HSBC Bank plc 

accepts no responsibility for any other information contained in this Offering Circular and has not 

separately verified any such other information. 

Société Générale accepts responsibility for the information contained in paragraphs 7 to 12 page 135 

(together the ‘‘Société Générale Information’’). To the best of the knowledge and belief of Société Générale 

(having taken all reasonable care to ensure that such is the case), the Société Générale Information is in 

accordance with the facts and does not omit anything likely to affect the import of the Société Générale 

Information. Société Générale accepts no responsibility for any other information contained in this Offering 


King Sturge accepts responsibility for the information contained in the Valuation Reports (pages 95-117) 

and paragraphs 2 and 6 on page 12 (together the ‘‘King Sturge Information’’). To the best of the knowledge 

and belief of King Sturge (having taken all reasonable care to ensure that such is the case), the King Sturge 

Information is in accordance with the facts and does not omit anything likely to affect the import of the King 

Sturge Information. King Sturge accepts no responsibility for any other information contained in this 

Offering Circular and has not separately verified any such other information. 

Ernst & Young accepts responsibility for the information contained in the financial report on pages 121-122 

(together the ‘‘Ernst & Young Information’’). To the best of the knowledge and belief of Ernst & Young 

(having taken all reasonable care to ensure that such is the case), the Ernst & Young Information is in 

accordance with the facts and does not omit anything likely to affect the import of the Ernst & Young 

Information. Ernst & Young accepts no responsibility for any other information contained in this Offering 


Rothman Pantall & Co. accepts responsibility for the information contained in the financial reports on pages 

126-128 and on pages 131-133 (together the ‘‘Rothman Pantall & Co. Information’’). To the best of the 

knowledge and belief of Rothman Pantall & Co. (having taken all reasonable care to ensure that such is the 

case), the Rothman Pantall & Co. Information is in accordance with the facts and does not omit anything 

likely to affect the import of the Rothman Pantall & Co. Information. Rothman Pantall & Co. accepts no 

responsibility for any other information contained in this Offering Circular and has not separately verified 

any such other information. 

No person is, or has been, authorised in connection with the issue and sale of the Notes to give information 

or to make any representation not contained in this Offering Circular and, if given or made, such 

information or representation must not be relied upon as having been authorised by, or on behalf of, the 

Note Trustee, the Issuer Security Trustee, the Borrower Security Trustee, the Joint Lead Managers, the Cash 

i

Manager, the Agent Bank, the Paying Agents, the Account Bank, the Hedging Providers, the Liquidity 

Facility Provider, the Issuer Corporate Services Provider, LCP Real Estate, the Property Manager, 

Proudreed Real Estate, the Parent Obligors, the LCP Covenantors or the Proudreed Covenantor or any of 

their respective affiliates. Neither the delivery of this Offering Circular nor any sale or allotment made in 

connection with the offering of any of the Notes shall under any circumstances constitute a representation 

or create any implication that there has been no change in the affairs of the Issuer, any Borrower or its 

Parent Obligor or in the information contained herein since the date hereof, or that the information 

contained herein is correct as at any time subsequent to the date hereof. 

The Notes have not been and will not be registered under the Securities Act, and include Notes in bearer 

form that are subject to US tax law requirements. The Notes may not be offered, sold or delivered within 

the United States or to US persons (as defined in Regulation S under the Securities Act (Regulation S)) 

except in certain transactions permitted by US tax regulations and the Securities Act. For a more complete 

description of restrictions on offers and sales and applicable US tax law requirements, see ‘‘Subscription and 

Sale’’ below. 

Other than the approval of this Offering Circular as a prospectus in accordance with the Listing and 

Admission to Trading Guidelines for Asset-backed Securities of the Irish Stock Exchange, no action has 

been, or will be, taken to permit a public offering of the Notes or the distribution of this Offering Circular 

in any jurisdiction where action for that purpose is required. The distribution of this Offering Circular and 

the offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this 

Offering Circular (or any part hereof) comes are required by the Issuer and the Joint Lead Managers to 

inform themselves about, and to observe, any such restrictions. For a further description of certain 

restrictions on offers and sales of the Notes and the distribution of this Offering Circular, see the section 

entitled, ‘‘Subscription and Sale’’ below. Neither this Offering Circular nor any part hereof constitutes an 

offer of, or an invitation by, or on behalf of, the Issuer or the Joint Lead Managers to subscribe for or 

purchase any of the Notes. Neither this Offering Circular, nor any part hereof, may be used in connection 

with an offer to, or solicitation by, any person in any jurisdiction or in any circumstances in which such offer 

or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. 

Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this Offering Circular 

nor any part hereof nor any other offering circular, prospectus, form of application, advertisement, other 

offering material or other information may be issued, distributed or published in any country or jurisdiction 

(including the United Kingdom), except in circumstances that will result in compliance with all applicable 

laws, orders, rules and regulations. 

References in this Offering Circular to ‘‘£’’, ‘‘GBP’’ or ‘‘sterling’’ are to the lawful currency for the time being 

of the United Kingdom. 

The contents of this Offering Circular should not be construed as providing legal, business, accounting or 

tax advice. Each prospective investor should consult its own legal, business, accounting and tax advisers 

prior to making a decision to invest in the Notes. 

In connection with the issue and distribution of the Notes, each of HSBC Bank plc and Société Générale, 

London Branch as a stabilising manager (the ‘‘Stabilising Managers’’) (or any person acting for a 

Stabilising Manager) may over allot (provided that the aggregate principal amount of Notes allotted does 

not exceed 105 per cent. of the aggregate principal amount of the Notes) or effect transactions with a view 

to supporting the market price of the Notes at a higher level than that which might otherwise prevail. 

However, there is no assurance that the Stabilising Managers (or persons acting on behalf of the Stabilising 

Managers) will undertake stabilisation action. Any stabilisation action may begin on or after the date on 

which adequate public disclosure of the final terms of the offer of the Notes is made and, if begun, may be 

ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 

60 days after the date of the allotment of the Notes. HSBC Bank plc will act as co-ordinating Stabilising 

Manager in respect of the issue and distribution of the Notes. 

Capitalised terms used in this Offering Circular unless otherwise indicated, have the meanings set out in this 

Offering Circular. A schedule of defined terms used appears at the back of this Offering Circular. Where 

there is a conflict between the definition of a term in the Conditions and the definition of the same term 

elsewhere in this Offering Circular, the definitions in the Conditions shall prevail. 

ii

CONTENTS 

SECTION 

PAGE 

PRINCIPAL CHARACTERISTICS OF THE NOTES ................................. 2 

PRINCIPAL CHARACTERISTICS OF THE COMMERCIAL MORTGAGE LOANS . . . 3 

DIAGRAMMATIC OVERVIEW OF PARTIES AND TRANSACTION ................ 6 

TRANSACTION OVERVIEW ..................................................... 7 

TRANSACTION PARTIES ........................................................ 9 

KEY CHARACTERISTICS OF THE PROPERTY PORTFOLIOS ..................... 12 

PRINCIPAL FEATURES OF THE NOTES .......................................... 30 

RISK FACTORS .................................................................. 33 

SUMMARY OF PRINCIPAL DOCUMENTS ........................................ 57 

RESOURCES AVAILABLE TO THE BORROWERS AND THE ISSUER ............. 82 

USE OF PROCEEDS.............................................................. 94 

VALUATION REPORTS .......................................................... 95 

THE ISSUER ..................................................................... 118 

THE BORROWERS .............................................................. 123 

THE PROPERTY MANAGER ..................................................... 134 

THE HEDGING PROVIDERS AND THE LIQUIDITY FACILITY PROVIDER ....... 135 

TERMS AND CONDITIONS OF THE NOTES ...................................... 136 

FORM OF THE NOTES ........................................................... 175 

UNITED KINGDOM TAXATION .................................................. 176 

SUBSCRIPTION AND SALE ...................................................... 178 

GENERAL INFORMATION....................................................... 180 

SCHEDULE OF DEFINED TERMS ................................................ 182 

1

PRINCIPAL CHARACTERISTICS OF THE NOTES 

The following is a brief overview of the principal characteristics of the Notes offered under this Offering 

Circular. This information is subject to and is more fully explained in the other sections of this Offering 

Circular. 

Notes 

Class A 

Notes 

Class B 

Notes 

Class C 

Notes 

Class D 

Notes 

Initial Principal Amount £243,800,000 £32,200,000 £36,800,000 £9,200,000 

Issue price 100% 100% 100% 100% 

Interest rate LIBOR + 

0.26 per cent. 

per annum 

LIBOR + 


per annum 

LIBOR + 


per annum 

LIBOR + 


per annum 

Expected Maturity Date August 2014 August 2014 August 2014 August 2014 

Final Maturity Date August 2016 August 2016 August 2016 August 2016 

Principal payments 

Prepayments 

No scheduled amortisation 

Notes may be subject to voluntary and mandatory prepayment on 

any Interest Payment Date as described herein, with prepayments 

applied to the Notes in sequential order starting with the most 

senior Class of Notes 

Day count 

Actual/365 

Frequency of payment of interest 

Quarterly 

Form of Notes 

Bearer 

Denominations £100,000 

Clearing system 

Credit enhancement (provided by 

other classes of Notes 

subordinated to the relevant class) 

Listing 

Subordination 

of the Class 

B Notes, the 

Class C 

Notes and 

the Class D 

Notes 

Euroclear and Clearstream, Luxembourg 

Subordination 

of the Class 

C Notes and 

the Class D 

Notes 

Subordination 

of the Class 

D Notes 

Irish Stock Exchange 

ISIN XS0233008936 XS0233010163 XS0233010676 XS0233011054 

Common Code 023300893 023301016 023301067 023301105 

Expected rating – Fitch AAA AA A BBB 

Expected rating – S&P AAA AA A BBB+ 

Nil 

2

PRINCIPAL CHARACTERISTICS OF THE COMMERCIAL 

MORTGAGE LOANS 

The following is a brief overview of the principal characteristics of the Commercial Mortgage Loans. This 

information is subject to and is more fully explained in the other sections of this Offering Circular. 

Commercial Mortgage Loan Agreement with 

LCP Real Estate 

Parties: 

Principal Amount: 

Initial loan to value ratio: 

The Issuer, LCP Real Estate (as Borrower), L.C.P. 

Commercial Limited (as Parent Obligor) and the 

Borrower Security Trustee. 

£274,045,000, which will be used for the purpose of 

financing the purchase of certain properties from 

other companies controlled by London and Cambridge 

Properties Limited as described below. 

70 per cent, based on the Valuation Report. 

Commercial Mortgage Loan Agreement with 

Proudreed Real Estate 

Parties: 

Principal Amount: 

Initial loan to value ratio: 

The Issuer, Proudreed Real Estate (as Borrower), 

Proudreed Limited (as Parent Obligor) and the 


£47,955,000, which will be used for the purpose of 

financing the purchase of certain properties from 

Proudreed Limited as described below. 

70 per cent, based on the Valuation Report. 

Common Terms for both Commercial Mortgage 

Loan Agreements 

Interest Rate: 

Loan Interest Periods and Loan Interest 

Payment Dates: 

The Issuer Cost of Funds, calculated as the weighted 

average interest rate payable on the Notes that 

funded the relevant Commercial Mortgage Loan 

after taking into account the hedging arrangements 

put in place by the Issuer under the Hedging 

Agreements. 

Interest will be paid quarterly on the Loan Interest 

Payment Dates falling on 25 February, 25 May, 25 

August and 25 November of each year (or if not a 

Business Day, the next succeeding Business Day 

unless such day falls in the next month, in which case 

it shall be the preceding Business Day). Each Loan 

Interest Period will commence on (and include) a 

Loan Interest Payment Date and end on (but exclude) 

the following Loan Interest Payment Date 

except that the first Loan Interest Period shall 

commence on (and include) the Closing Date and 

end on (but exclude) the Loan Interest Payment 

Date falling in February 2006 and the final Loan 

Interest Period shall commence on (and include) the 

Loan Interest Payment Date falling in May 2014 and 

end on (but exclude) the Final Repayment Date. 

Final Repayment Date: Loan Interest Payment Date falling in August 2014 

Voluntary Prepayment: 

Each Borrower is entitled to prepay its Commercial 

Mortgage Loan in whole or in part on any Loan 

3

Mandatory Prepayment: 

Financial covenants: 

LTV Ratio: 

Interest Payment Date upon giving not less than 

45 days prior written notice to the Issuer. Amounts 

prepaid may not be redrawn. 

Each Borrower must prepay its Commercial Mortgage 

Loan on the next Loan Interest Payment Date 

in the circumstances described in ‘‘Summary of the 

Principal Documents – The Commercial Mortgage 

Loan Agreements – Prepayment of the Commercial 

Mortgage Loans’’. 

Each Borrower has undertaken to ensure that the 

ratio of net rental income to interest charges (both 

for an historic calculation period of 12 months and a 

projected calculation period of three months) is not 

less than 1.2:1. If the ratio of net rental income to 

interest charges falls below 1.3:1 in respect of any 

such period, the monies not required to pay interest 

and other prior ranking expenses of the relevant 

Borrower will no longer be distributed to the Borrower 

but will instead be held in the Cash Trap 

Account, from which such monies will be applied in 

mandatory prepayment if such ratio remains below 

1.3:1 for four consecutive quarters or more until both 

the Historical ICR and the Projected ICR are equal 

to or above 1.3:1 for more than two consecutive 

quarters. If both the Historical ICR and the Projected 

ICR are equal to or above 1.5:1 for more than 

four consecutive quarters, all amounts then credited 

to the Cash Trap Account will be paid into the 

Borrower Transaction Account and applied in accordance 

with the relevant Obligor Priority of Payments. 

For further details of the financial covenants 

and the operation of the Cash Trap Account, please 

see the sections entitled ‘‘Summary of Principal 

Documents – Commercial Mortgage Loan Agreements 

– Financial Covenants’’ and ‘‘Resources available 

to the Borrowers and the Issuer – Borrower 

Accounts – Cash Trap Account’’ below. These financial 

covenants may be satisfied by, inter alia, acquiring 

additional properties or substituting existing 

properties provided the requisite criteria are satisfied, 

a satisfactory security package is put in place 

and the above ratio, as recalculated to reflect the 

additional or substitute property, would be 1.2:1 or 

above. 

Each Borrower has undertaken to ensure that, during 

the LTV Reference Period, the LTV Ratio in 

respect of its Commercial Mortgage Loan is not 

greater than 70 per cent. 

The LTV Ratio will be tested on behalf of each 

Borrower on the Loan Calculation Date falling in 

November 2012 and each Loan Calculation Date 

thereafter until the Final Repayment Date on the 

basis of the aggregate Market Value of the Secured 

Properties comprised within the relevant Borrower’s 

Property Portfolio as at such date as determined in 

the most recent Valuation Reports. Failure by a 

Borrower to maintain an LTV Ratio at or below 

4

Security: 

Insurance: 

Valuation: 

70 per cent. will not give rise to a Loan Event of 

Default but, instead, the relevant Borrower will be 

required to acquire additional properties or substitute 

existing properties, provided the requisite criteria 

are satisfied and/or deposit sufficient cash (using 

amounts otherwise available to the relevant Borrower 

and not credited to the relevant Borrower 

Accounts) into the Cash Trap Account (to be credited 

to the ‘‘LTV reserve ledger’’) such that the LTV 

Ratio, as recalculated to reflect the additional or 

substituted property and/or cash deposit, would be at 

or below 70 per cent. Pending its making an acquisition, 

substitution or deposit as described above, the 

relevant Borrower will be required to deposit 

amounts into the ‘‘LTV reserve ledger’’ of the Cash 

Trap Account on each Loan Interest Payment Date 

that the LTV Ratio in respect of its Property Portfolio 

is above 70 per cent. 

Amounts credited to the ‘‘LTV reserve ledger’’ may 

be applied in repayment or prepayment of the 

relevant Commercial Mortgage Loan if such Commercial 

Mortgage Loan is being repaid or prepaid, as 

the case may be, in full. 

For further details of the LTV Ratio see the section 

entitled ‘‘Summary of Principal Documents – Commercial 

Mortgage Loan Agreements – LTV Ratio’’ 

The Issuer, as lender under the Commercial Mortgage 

Loans to the Borrowers, will, pursuant to the 

Borrower Deed of Charge relating to the relevant 

Commercial Mortgage Loan, share in the benefit, 

inter alia, of the first fixed mortgages over, and rental 

income from, the Property Portfolio of the relevant 

Borrower, as more fully described in the section 

entitled ‘‘Summary of Principal Documents – The 

Borrower Deeds of Charge’’ below. 

Each Borrower has undertaken to maintain insurance 

(or, in some cases, procure that insurance is 

maintained) on each Secured Property on a full 

reinstatement value basis, including not less than 

three years’ loss of rent on all Occupational Leases 

together with third party liability insurance and 

insurance against subsidence and (to the extent 

available) acts of terrorism and to procure that the 

Borrower Security Trustee is named as joint loss 

payee on all relevant insurance policies. 

All insurances required under a Commercial Mortgage 

Loan Agreement must be with an insurance 

company or underwriter that has a long-term credit 

rating of at least A (or better) by Fitch and A (or 

better) by S&P. 

The affected Borrower is required to provide a full 

Valuation Report following a Loan Event of Default 

or a Potential Loan Event of Default and following 

the occurrence of any event or circumstance which, 

in the reasonable opinion of the Borrower Security 

Trustee may be materially prejudicial to Noteholders. 

5

DIAGRAMMATIC OVERVIEW OF PARTIES AND TRANSACTION 

Property Manager 

Occupational 

Tenants 

Account Bank and 

Cash Manager 

Occupational 

Lease 

Rental 

Income 

Post-Enforcement 

Call Option 

Holder 

Issuer Security 

Trustee 

Note Trustee 

6 

Parent Obligor 

L.C.P. Commercial 

Limited 

Parent Obligor 

Proudreed Limited 

Borrower 

L.C.P. Real Estate 

Limited 

Borrower 

Proudreed Real 

Estate Limited 

Commercial Mortgage Loans 

Interest 

Issuer 

Note issue proceeds 

Interest 

Noteholders 

Occupational 

Lease 

Rental 

Income 


Cash Manager 

Liquidity 

Facility Provider 

Hedging 

Providers 

Property Manager 

Occupational 

Tenants 


Cash Manager

TRANSACTION OVERVIEW 

The information in this section does not purport to be complete and is qualified in its entirety by reference 

to the detailed information appearing elsewhere in this Offering Circular. Prospective purchasers of the 

Notes are advised to read carefully, and to rely solely on, the detailed information appearing elsewhere in 

this Offering Circular in making any decision whether or not to invest in any Notes. Capitalised terms used, 

but not defined, in this section can be found elsewhere in this Offering Circular, unless otherwise stated. A 

schedule of defined terms is set out at the end of this Offering Circular. 

Issue of the Notes and advance of the Commercial Mortgage Loans 

On the Closing Date, the Issuer will issue the Notes and use the proceeds to provide a Commercial 

Mortgage Loan to each of the Borrowers, pursuant to the terms of two separate Commercial Mortgage 

Loan Agreements. 

On the Closing Date, LCP Real Estate will acquire, under a property sale and purchase agreement on 

arm’s length terms, a total of 110 properties from L&C Securities Limited, L&C Investments Limited, 

L&C Estates Limited, L.C.P. Retail Limited, L.C.P. Securities (North West) Limited, Rookman Properties 

Limited and L.C.P. Securities Limited (all of which are members of the London and Cambridge Properties 

Limited group) at their respective Market Values funded by the Commercial Mortgage Loan made to 

LCP Real Estate and by an interest-bearing subordinated loan from L.C.P. Management Limited. 

On the Closing Date, Proudreed Real Estate will acquire, under a property sale and purchase agreement 

on arm’s length terms, nine properties from Proudreed Limited at their respective Market Values funded 

by the Commercial Mortgage Loan made to Proudreed Real Estate and by an interest-bearing 

subordinated loan from Proudreed Limited. 

Upon such acquisitions, the existing third party loans and related security on such properties will be 

discharged. 

The Property Portfolios to be acquired by the Borrowers are a mix of industrial, office and retail 

properties, as described further in ‘‘Key Characteristics of the Property Portfolio’’ below. All of the 

Properties will be managed by L.C.P. Management Limited (See ‘‘The Transaction Parties’’ and 

‘‘Summary of the Principal Documents – The Property Management Agreements’’ below). 

The Issuer will use receipts of principal and interest paid to it in respect of the Commercial Mortgage 

Loans together with any Hedging Payments from the Hedging Providers and any drawings from the 

Liquidity Facility to make payments of principal and interest due in respect of the Notes. 

In order to secure its obligations under its Commercial Mortgage Loan and the other Transaction 

Documents to which it will be a party each Borrower will grant to the Borrower Security Trustee (on trust 

for itself and the other relevant Obligor Secured Creditors, including the Issuer) fixed and floating security 

over all of its interests in its Property Portfolio, an assignment of its rights to any rental income arising 

under any leases relating to the properties contained within its Property Portfolio and under any 

insurance policies relating to the properties contained within its Property Portfolio, security over its bank 

accounts and security over all its other assets and undertakings relating thereto. 

Rental and other income of each of the Borrowers will be collected in a Borrower Transaction Account 

and other charged accounts of each Borrower from which monies may be released to the relevant 

Borrower once prior ranking payments have been made (See ‘‘Resources Available to the Borrowers and 

the Issuer – Borrower Accounts’’). 

London and Cambridge Properties Limited and Proudreed Limited (as the direct or indirect holders of 

more than 75 per cent. of the shares in LCP Real Estate and Proudreed Real Estate, respectively) 

together with certain other members of both Borrower Groups (including the Transferors), will provide 

certain undertakings/indemnities in respect of, inter alia, taxes arising on a de-grouping of the respective 

Borrower. In the case of Proudreed Real Estate, Proudreed Limited will grant security over its shares in 

Proudreed Real Estate to secure such obligations. In the case of LCP Real Estate, L.C.P. Commercial 

Limited will grant such security to secure such obligations. 

In order to secure its obligations under the Notes and the other Transaction Documents to which it is a 

party the Issuer will grant to the Issuer Security Trustee (on trust for itself and the other Issuer Secured 

Creditors, including the Note Trustee) fixed and floating security over all its rights as a secured party 

under the Obligor Security Documents and any security granted pursuant thereto and all its rights under 

the Transaction Documents to which it is a party (including the Commercial Mortgage Loan Agreements 

and the Hedging Agreements), security over its bank accounts and security over all its other assets and 

undertakings relating thereto. 

7

Liquidity Facility 

On or before the Closing Date, the Issuer will enter into a 364 day revolving sterling liquidity facility 

agreement with the Liquidity Facility Provider. 

If the Cash Manager (on behalf of the Issuer) determines on the Determination Date that there will be 

a Liquidity Shortfall the Cash Manager shall (on behalf of the Issuer), on the date that is one Business 

Day prior to the relevant Interest Payment Date, deliver a drawdown request under the Liquidity Facility 

requesting a liquidity drawing to be made on the relevant Interest Payment Date. Any amounts drawn 

under the Liquidity Facility shall be repaid in accordance with the relevant Issuer Priority of Payments, 

together with interest thereon, on the next Interest Payment Date on which the Issuer has funds in the 

relevant currency available for the purpose. 

The Liquidity Facility can only be drawn to cover a Liquidity Shortfall if, after such drawing, the 

aggregate of the outstanding liquidity advances does not exceed £18,900,000 (as reduced in proportion to 

reductions in the Principal Amount Outstanding on the Notes). 

Hedging 

The Issuer will hedge the interest rates payable on the Notes through a combination of swaps and interest 

rate caps entered into with the Hedging Providers (each such transaction being a ‘‘Hedging Agreement’’). 

Under each Commercial Mortgage Loan Agreement, the relevant Borrower will be obliged to pay to the 

Issuer an amount equal to any breakage costs arising under such Hedging Agreements as a result of the 

Issuer adjusting its hedging activities to reflect the prepayment of the Notes due to a prepayment by that 

Borrower. For this purpose, the Issuer’s hedging activities shall be notionally allocated to each underlying 

Commercial Mortgage Loan in proportion to the principal amounts outstanding per Borrower under its 

Commercial Mortgage Loan. Alternatively, the Issuer may adjust its hedging activities by disposing of the 

excess hedging arrangements to the company that was the Borrower whose repayment of the relevant 

Commercial Mortgage Loan in full initiated the adjustment of such hedging. 

8

TRANSACTION PARTIES 

The Issuer 

LCP Proudreed PLC, a public company with limited liability, incorporated in England and Wales with 

registered number 5528295 and whose registered office is at c/o SPV Management Limited, Tower 42 

(Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ. 

The Borrowers 

LCP Real Estate, a limited liability company incorporated in England and Wales, was established on 

27 May 2005 with registered number 5465434. 

Proudreed Real Estate, a limited liability company incorporated in England and Wales, was established 

on 8 June 2005 with registered number 5474753. 

Each Borrower is a limited purpose entity established to hold its Property Portfolio and to borrow the 

relevant Commercial Mortgage Loan as contemplated in this Offering Circular. 

The Property Manager 

L.C.P. Management Limited is a limited liability company incorporated in England and Wales and is a 

wholly-owned subsidiary of London & Cambridge Properties Limited. The Property Manager provides 

property management services in relation to the Secured Properties located in England and Wales on 

behalf of the Borrowers, including, inter alia, monitoring and inspecting the Secured Properties to ensure 

that they are kept in good repair and that the terms of the Occupational Leases relating thereto are 

otherwise complied with (including the collection of rents from the Occupational Tenants and the 

allocation of such amounts to pay expenses relating to the Secured Properties) pursuant to the terms of 

separate Property Management Agreements with each Borrower. On the Closing Date, the Property 

Manager will enter into two separate duty of care deeds with, inter alios, the Borrower Security Trustee. 

From the Closing Date, the Property Manager will act in accordance with the terms of the Property 

Management Agreements and the Property Manager Duty of Care Deeds. For further details as to the 

Property Manager and the role it performs, see further the sections entitled ‘‘Summary of Principal 

Documents – The Property Management Agreements’’ below. 

The Note Trustee 

HSBC Trustee (C.I.) Limited will be appointed as the Note Trustee pursuant to the Note Trust Deed. The 

Note Trustee, in its capacity as trustee under the Note Trust Deed, will represent the interests of the 

Noteholders. 

The Note Trustee or any other trustee appointed under the Note Trust Deed may retire at any time upon 

giving not less than 30 Business Days’ prior written notice to the Issuer without giving any reason and 

without being responsible for any costs incurred by the Issuer as a result. The Note Trustee and any other 

trustee appointed under the Note Trust Deed may also be removed by the Noteholders. The retirement 

or removal of any trustee will not become effective until a replacement trustee is appointed. If a trustee 

gives notice of retirement or is removed by the Noteholders, the Issuer will use reasonable endeavours to 

arrange for a new trustee (being a trust corporation) to be appointed under the Note Trust Deed as soon 

as reasonably practicable. If the Issuer fails to arrange for the appointment of a new trustee by the expiry 

of the notice of retirement, the Note Trustee will use all reasonable endeavours to appoint a successor 

trustee. 

Principal Paying Agent and Agent Bank 

HSBC Bank plc, acting through its office at 8 Canada Square, London E14 5HQ, will be appointed to act 

as Principal Paying Agent and Agent Bank under the Agency Agreement. 

Irish Paying Agent 

HSBC Institutional Trust Services (Ireland) Limited, acting through its office at HSBC House, Harcourt 

Centre, Harcourt Street, Dublin 2, Ireland, will be appointed to act as paying agent in Ireland under the 

Agency Agreement. 

9

The Issuer Security Trustee 

HSBC Trustee (C.I.) Limited will be appointed as the Issuer Security Trustee pursuant to the Issuer Deed 

of Charge. The Issuer Security Trustee will hold the security granted by the Issuer under and pursuant to 

the Issuer Deed of Charge on behalf of itself, the Noteholders and the other Issuer Secured Creditors. 

The Borrower Security Trustee 

HSBC Trustee (C.I.) Limited will, pursuant to the Borrower Deed of Charge relating to each Commercial 

Mortgage Loan, be granted the benefit of certain security by the relevant Borrower to secure, inter alia, 

its obligations under the relevant Commercial Mortgage Loan Agreement. Each of L.C.P. Commercial 

Limited and Proudreed Limited will also grant certain security interests over their shares in the relevant 

Borrower as well as Security Powers of Attorney in favour of the Borrower Security Trustee to secure (to 

the extent possible), inter alia, their respective obligations under the relevant Tax Deeds of Covenant. 

The Borrower Security Trustee will hold the benefit of the Borrower Deeds of Charge as well as security 

created thereunder on behalf of itself, the Issuer and the other Obligor Secured Creditors. 

The Cash Manager 

HSBC Bank plc will be appointed by each of the Borrowers and the Borrower Security Trustee, inter alia, 

to operate and have, or appoint its duly authorised agent to operate and have, sole signing rights to the 

Borrower Accounts on behalf of that Borrower and the Borrower Security Trustee and to maintain such 

accounts in accordance with the relevant Account Bank and Cash Management Agreement and the other 

Transaction Documents. 

The Cash Manager will also operate and have, or appoint its duly authorised agent to operate and have, 

sole signing rights to the Issuer Transaction Account and the Liquidity Facility Standby Account on behalf 

of the Issuer and the Issuer Security Trustee and will maintain such accounts and the monies held therein 

(and undertake certain functions, including calculations) in accordance with the relevant Account Bank 

and Cash Management Agreement and the Transaction Documents. The Cash Manager will also provide, 

or will appoint a duly authorised delegate to provide, reporting services and will make information 

relating to the transaction available to, among others, the Noteholders. 

The Account Bank 

HSBC Bank plc will maintain certain accounts as Account Bank on behalf of the Borrowers and the 

Issuer pursuant to separate Account Bank and Cash Management Agreements. 

The Liquidity Facility Provider 

HSBC Bank plc will, on the Closing Date, provide a sterling Liquidity Facility to the Issuer pursuant to 

the Liquidity Facility Agreement. See further the section entitled ‘‘Summary of Principal Documents – 

The Liquidity Facility’’ below for a description of the Liquidity Facility and the section entitled ‘‘The 

Hedging Providers and the Liquidity Facility Provider’’ for a description of the Liquidity Facility Provider. 

The Hedging Providers 

Each of HSBC Bank plc and Société Générale will, on the Closing Date, enter into certain hedging 

arrangements (either in the form of swaps or interest rate caps or a combination thereof) with the Issuer 

pursuant to the terms of the Hedging Agreements. For a description of the Hedging Providers see the 

section entitled ‘‘The Hedging Providers and Liquidity Facility Provider’’ below and for a description of 

the terms of the various hedging arrangements see further the section entitled ‘‘Resources Available to the 

Borrowers and the Issuer – The Hedging Agreements’’ below. 

The Issuer Corporate Services Provider 

SPV Management Limited, a limited liability company incorporated in England and Wales (acting 

through its office at Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London 

EC2N 1HQ), will be appointed, on or prior to the Closing Date, as the Issuer Corporate Services Provider 

pursuant to the Issuer Corporate Services Agreement and will provide certain secretarial and administration 

services to the Issuer, subject to and in accordance with the Issuer Corporate Services Agreement. 

10

SPV Management Limited’s appointment may be terminated by the Issuer in the event of a material 

breach by the Issuer Corporate Services Provider or if the Issuer Corporate Services Provider enters into 

Insolvency Proceedings. Any termination of such appointment shall not take effect until a successor has 

been appointed in accordance with the Issuer Corporate Services Agreement. 

The Post Enforcement Call Option Holder 

L&C Proudreed Holdings Limited, a private limited company incorporated in England and Wales with 

limited liability. The issued share capital of the Post-Enforcement Call Option Holder is owned by the 

Share Trustee pursuant to a charitable declaration of trust (the ‘‘Share Declaration of Trust’’). 

The Share Trustee 

SPV Management Limited (in such capacity, the ‘‘Share Trustee’’) will hold the entire issued share capital 

of the Post-Enforcement Call Option Holder on trust for charitable purposes, pursuant to the Share 

Declaration of Trust. 

11

KEY CHARACTERISTICS OF THE PROPERTY PORTFOLIOS 

Overview 


The Property Portfolio of LCP Real Estate comprises 110 properties located in England and Wales. The 

Property Portfolio has a net internal area of approximately 4,639,282 sq ft. 

The properties making up the LCP Real Estate Property Portfolio have been valued at £391,520,000 by 

King Sturge as at 15 June 2005. The Market Value, together with a description of the methodologies used 

to derive the values, is set out in the Valuation Report contained in the section entitled ‘‘Valuation 

Report’’ below. 

For further details as to the risks associated with valuations, please see the section entitled ‘‘Risk Factors 

– reliance on valuation’’ below. 

There are approximately 777 individual tenancy agreements within the LCP Real Estate Property 

Portfolio, and the total rent per annum, as at 31 May 2005, was £28,766,013. The majority of the 

Occupational Leases are in an institutional form and provide for the tenant to be responsible for internal 

repair and to contribute to external repair, insurance and management of the subject property through a 

service charge. The top ten tenants in terms of rental income as at 31 May 2005 accounted for 

approximately 25.8 per cent. of the total rental income of the Property Portfolio. Approximately 28 units 

or properties comprising approximately 92,646 sq ft were vacant as at 31 May 2005. 


The Property Portfolio of Proudreed Real Estate comprises nine properties located in England and 

Wales. The Property Portfolio has a net internal area of approximately 585,462 sq ft. 

The properties making up the Proudreed Real Estate Property Portfolio have been valued at 68,535,000 

by King Sturge as at 15 June 2005. 

There are approximately 116 individual tenancy agreements within the Proudreed Real Estate Property 

Portfolio, and the total rent per annum, as at 31 May 2005, was £4,356,223. The majority of the 

Occupational Leases are in an institutional form and provide for the tenant to be responsible for internal 

repair and/or to contribute to external repair, insurance and management of the subject property through 

a service charge. The top ten tenants in terms of rental income as at 31 May 2005 accounted for 

approximately 68.2 per cent. of the total rental income of the Property Portfolio. Approximately four 

units or properties comprising approximately 20,285 sq ft were vacant as at 31 May 2005. 

Certificates of Title 

A Certificate of Title in respect of each property in the Property Portfolios has been given by either The 

Simkins Partnership or Lawrence Graham. 

The Certificates of Title address the quality of title of each property in the Property Portfolios and have 

been issued on the basis of The Simkins Partnership’s or Lawrence Graham’s review of the title 

documents supplied by the relevant Borrower and customary conveyancing searches and enquiries. Other 

than five of the Secured Properties (situated at Pipps Hill Industrial Estate, Basildon, Enterprise City, 

Spennymoor and Adwest Central, Eastern and Western Sites, Reading) which are the subject of a long 

form report covering similar ground, the Certificates of Title are based on the City of London Law Society 

Land Law Sub-Committee long form certificate of title, with slight amendment, which is a recognised 

standard form document used in the legal profession. The Certificates of Title do not include a review of 

all the Occupational Leases, but instead review a sample representing approximately 55 per cent. (in the 

case of LCP Real Estate) and 77 per cent. (in the case of Proudreed Real Estate), in each case of total 

gross income from the properties comprised within the Property Portfolio. 

Lawrence Graham have prepared an Overview Report of material issues in respect of the Certificates of 

Title that they prepared. Linklaters have prepared an Overview Report of material issues in respect of the 

Certificates of Title that The Simkins Partnership prepared. None of the Joint Lead Managers, the 

Borrower Security Trustee or the Note Trustee will review the Certificates of Title but will instead rely 

upon the above-mentioned Overview Reports. 

12

Statistical Analysis 

Unless stated otherwise, (a) all references in the tables below to Market Value, Estimated Rental Value, 

Vacant Possession Value, Net Initial Yield, Reversionary Yield and Net Equivalent Yield of a Property 

Portfolio are to those existing as at 15 June 2005 and are contained in the Valuation Reports, and (b) all 

references in the tables below to Passing Rent, Square Footage, Occupancy, Year Built, Year Refurbished, 

Total Net Internal Floor Area, Number of Units, Number of Tenants, Property Tenure, Ground Rent, Total 

Vacant Area and Lettable Area of a Property Portfolio are to those existing as at 31 May 2005. 


1. Summary description of the Property Portfolio 

Property Name Property Address Type Region 

Passing 

Rent 

(GBP) 

ERV 

(GBP) 

Market 

Value 

(GBP) 

Area 

(sq ft) 

Occupancy 

Wulfrun Centre Wolverhampton Retail West 

Midlands 

Arcadian Centre 

Hardshaw Centre 

Hurst Street, 

Birmingham 

St. Helens, 

Merseyside 

Retail 

Retail 

West 

Midlands 

Northwest 

England 

Butterley Park Ripley, Derbyshire. Retail East 

Midlands 

Churchill Shopping 

Centre 

Adwest Eastern Site 

Irton House 

Enterprise City 

Mill View 

Shaw Lane Ind 

Estate 

Adwest Western Site 

West Point 

Marina Drive/ 

Rivington Road 

Sturlas Way 

Dudley Retail West 

Midlands 

Headley Rd East, 

Woodley, Reading 

Worpsgrove Lane, 

Chalgrove, Oxford 

Spennymoor, Co. 

Durham 

March, 

Cambridgeshire 

Shaw Lane & 

Ogden Road, 

Doncaster 

Headley Road East, 


New Hythe Lane, 

Larkfield, Kent 

Industrial/ 

Warehouse 

Industrial/ 

Warehouse 

Industrial/ 

Warehouse 

Retail 

Industrial/ 

Warehouse 

Southeast 

England 

Southeast 

England 

North 

England 

Southeast 

England 

Yorks & 

Humber 

Warehouse/ 

Distribution Southeast 

England 

Industrial/ 

Warehouse 

Southeast 

England 

Ellesmere Port Retail Northwest 

England 

Waltham Cross, 

Hertfordshire 

Retail 

New Street Chelmsford, Essex Industrial/ 

Warehouse 

Avon Riverside 

Estate 

Victoria Road, 

Avonmouth 

Industrial/ 

Warehouse 

Southeast 

England 

Southeast 

England 

Southwest 

England 

Morton/West Way Maghull Retail Northwest 

England 

The Willows 

Downend Road, 

Downend, Bristol 

Retail 

Southwest 

England 

Front Street Arnold, Nottingham Retail East 

Midlands 

Erskine Industrial 

Estate 

Liverpool 

Industrial/ 

Warehouse 

Headley Park Woodley, Reading Industrial/ 

Warehouse 

Northwest 

England 

Southeast 

England 

Loddon Vale Centre Woodley, Reading Retail Southeast 

England 

Bridge Street/ Church 

Street 

Nuneaton Retail West 

Midlands 

Old Hall Estate Bromborough Industrial/ 

Warehouse 

Roman Way Retail 

Park 

Kingsfield Park 

Kidderminster Rd, 

Droitwich 

Gladstone Road, 

Northampton 

Retail 

Industrial/ 

Warehouse 

Northwest 

England 

West 

Midlands 

Southeast 

England 

3,154,236 3,310,134 41,920,000 194,871 99.2% 

2,320,200 2,325,964 27,740,000 117,744 100.0% 

1,616,461 1,736,104 17,730,000 143,046 100.0% 

1,281,171 1,281,149 24,230,000 75,363 100.0% 

1,116,588 1,212,873 12,560,000 213,587 91.0% 

845,000 843,500 10,635,000 241,000 100.0% 

776,000 781,124 9,500,000 173,980 100.0% 

673,919 755,776 7,100,000 305,329 93.7% 

533,696 533,696 10,090,000 33,355 100.0% 

523,960 558,764 6,695,000 169,601 95.2% 

501,090 523,045 5,410,000 135,238 99.9% 

478,240 515,911 7,195,000 80,314 100.0% 

472,912 480,222 6,980,000 36,145 100.0% 

400,000 502,237 8,600,000 34,480 100.0% 

371,500 375,279 3,230,000 81,615 100.0% 

361,368 352,550 3,660,000 74,800 100.0% 

354,040 361,889 4,800,000 37,174 100.0% 

351,238 354,988 5,400,000 36,365 100.0% 

339,250 342,160 5,385,000 50,180 100.0% 

335,920 364,404 4,150,000 77,005 100.0% 

332,259 331,398 4,350,000 46,909 100.0% 

331,634 327,015 4,370,000 36,076 95.7% 

326,740 365,735 4,220,000 27,343 94.0% 

321,452 383,330 3,950,000 110,078 87.0% 

312,050 343,250 5,185,000 31,205 100.0% 

298,000 307,876 3,900,000 78,925 100.0% 

13


Passing 

Rent 

(GBP) 

ERV 

(GBP) 

Market 

Value 

(GBP) 

Area 

(sq ft) 

Occupancy 

Caker Stream Rd Mill Lane, Alton Industrial Southeast 293,564 426,394 5,435,000 80,259 77.1% 

England 

324/326, Station Road Harrow, London Retail London 292,875 299,520 3,980,000 14,860 100.0% 

Crowne Estate 

Pimbo Industrial 

Estate 

Watlington Industrial 

Estate 

Central Trading 

Estate 

Sandon Estate 

Hungerford Trading 

Estate 

Shepton Mallet, 

Somerset 

Pitt Hay 

Place/Penrose 

Place, Skelmersdale 

Watlington Oxford 

Cole Avenue, 

Laindon Gloucester 

Sandon Way 

Liverpool 

Hungerford, Berks 

Industrial 

Industrial/ 

Warehouse 

Industrial/ 

Warehouse 

Industrial/ 

Warehouse 

Industrial/ 

Warehouse 

Industrial/ 

Warehouse 

Southwest 

England 

Northwest 

England 

Southeast 

England 

Southwest 

England 

Northwest 

England 

Southeast 

England 

Princess Street Bedminster, Bristol Warehouse/ 

Distribution Southwest 

England 

38-44 Witton Street Northwich, 

Cheshire 

Retail 

Northwest 

England 

High Street, Epping Epping Retail Southeast 

England 

King Edward Estate Liverpool Industrial/ 

Warehouse 

Southern Cross 

Trading Estate 

Trans-Pennine 

Trading Estate 

High Street, 

Orpington 

Phoenix Trading 

Estate 

No.s 88-100, The 

Paddocks 

Binley Industrial 

Estate 

Manor Park 

Industrial Estate 

Shripney Road, 

Bognor Regis, 

Sussex 

Gorrels Way, 

Rochdale 

Northwest 

England 

Warehouse/ 


England 

Industrial/ 

Warehouse 

Northwest 

England 

Orpington, Kent Retail Southeast 

England 

Bilton Road, 

Perivale 

Industrial/ 

Warehouse 

Catton, Norwich Retail Southeast 

England 

Coventry Industrial West 

Midlands 

Kettlebridge Rd, 

Sheffield 

Industrial/ 

Warehouse 

292,600 289,280 3,680,000 78,895 100.0% 

265,900 266,204 2,600,000 112,874 100.0% 

264,358 291,871 3,575,000 47,917 100.0% 

260,351 291,491 3,800,000 57,373 100.0% 

246,072 292,150 3,050,000 80,864 100.0% 

238,800 240,374 3,120,000 41,798 100.0% 

234,840 237,500 2,740,000 69,409 100.0% 

232,645 236,262 3,310,000 14,752 100.0% 

217,850 232,747 3,200,000 17,827 100.0% 

216,536 257,083 2,925,000 88,113 100.0% 

212,600 221,100 2,350,000 39,210 100.0% 

205,654 222,033 2,410,000 62,117 100.0% 

201,000 223,082 3,170,000 17,858 100.0% 

London 199,100 213,089 2,880,000 36,192 100.0% 

Yorks & 

Humber 

St. James Mill Northampton Warehouse/ 


England 

Ambrose Lloyd 

Centre 

Wrexham Street, 

Mold 

Blackdown Park Willand, Devon Warehouse/ 

Distribution Southwest 

England 

Fortune Industrial 

Estate Laindon 

Pipps Hill Industrial 

Estate 

Fortune Industrial 

Estate, Basildon 

Howard Chase, 

Basildon 

197,500 194,624 3,060,000 33,979 100.0% 

195,000 195,000 2,460,000 53,146 100.0% 

194,055 224,226 2,590,000 55,881 87.5% 

192,500 214,651 2,590,000 51,999 100.0% 

Retail Wales 187,370 197,201 2,800,000 30,383 100.0% 

Industrial/ 

Warehouse 

Southeast 

England 

Warehouse/ 


England 

185,200 213,900 2,500,000 56,342 100.0% 

180,857 180,840 2,440,000 30,140 100.0% 

180,000 179,200 2,600,000 29,867 100.0% 

1-3 Market Chambers Enfield Retail London 164,950 173,570 2,640,000 7,050 100.0% 

20/22 May Day Barnsley Retail Yorks & 159,500 168,357 2,250,000 9,742 100.0% 

Green 

Humber 

Moonhall Business 

Park 

Haverhill 

Industrial/ 

Warehouse 

Southeast 

England 

Fleet Road Fleet, Aldershot Retail Southeast 

England 

114-116 St. Aldates Oxford Retail Southeast 

England 

Church Road Bebington Retail Northwest 

England 

Princes/Woodman 

Street 

Stockport Retail Northwest 

England 

Meanwood Road Leeds Retail Yorks & 

Humber 

116/128 Birmingham 

Road 

Lichfield Retail West 

Midlands 

110/116 King Street South Shields Retail North 

England 

158,935 155,090 1,800,000 38,018 100.0% 

151,500 146,786 2,410,000 15,799 100.0% 

146,250 178,016 2,600,000 7,088 100.0% 

139,390 146,172 2,025,000 22,997 100.0% 

138,100 137,163 2,000,000 7,039 100.0% 

130,000 130,000 1,970,000 22,132 100.0% 

125,000 124,984 1,970,000 23,989 100.0% 

122,500 134,950 1,850,000 8,765 100.0% 

14


Passing 

Rent 

(GBP) 

ERV 

(GBP) 

Market 

Value 

(GBP) 

Area 

(sq ft) 

Occupancy 

Hanover Buildings 

1-9 Church Lane/3-5 

Lidget Hill 

Sealand Industrial 

Estate 

Lakes Estate 

Shopping Centre 

The Strand, 

Southampton 

Retail 

Southeast 

England 

Pudsey Retail Yorks & 

Humber 

Sealand Road, 

Chester 

Larkswood Road, 

Redcar 

Industrial 

Retail 

Northwest 

England 

North 

England 

Bradshawgate Leigh Retail Northwest 

England 

117/123 King Street, South Shields Retail North 

England 

Grain Estate 

Adwest Central Site 

Harlow Street, 

Liverpool 

Headley Road East, 


Industrial/ 

Warehouse 

Industrial 

Northwest 

England 

Southeast 

England 

Stratford Road Shirley, Birmingham Retail West 

Midlands 

116 High Street/33 

Cambray Place 

Queenborough 


Swinton Hall 


Cheltenham Retail Southwest 

England 

Isle of Sheppey Warehouse/ 


England 

Pendlebury Road 

Salford, Manchester 

Industrial/ 

Warehouse 

Northwest 

England 

High Street, Sutton Sutton Retail Southeast 

England 

Sunrise Parkway 

Linford Wood, 

Milton Keynes 

Warehouse/ 


England 

Pavillions Way Brackley, Northants Retail Southeast 

England 

Grafton Close 

Station Road 

Bradford Road 

Bordeaux Close 

Wellingborough, 

Northants 

Wiltshire Drive, 

Wallsend 

Guiseley, West 

Yorkshire 

Duston, 

Northampton 

Retail 

Retail 

Retail 

Retail 

Southeast 

England 

North 

England 

Yorks & 

Humber 

Southeast 

England 

Glenmoor Road Ferndown, Dorset Retail Southwest 

England 

Egerton Gate 

2 The Cross/1 Trinity 

Passage 

High Street 

Shenley Brook 

End,Milton Keynes 

Retail 

Southeast 

England 

Worcester Retail West 

Midlands 

Amblecote, 

Stourbridge 

Retail 

West 

Midlands 

121,750 142,178 1,955,000 14,433 91.2% 

117,375 128,054 1,565,000 7,986 100.0% 

115,000 115,000 1,500,000 19,992 100.0% 

106,200 107,720 1,150,000 44,181 100.0% 

105,850 106,184 1,500,000 4,956 100.0% 

105,340 110,750 1,560,000 6,048 100.0% 

104,805 108,748 1,100,000 48,622 100.0% 

95,016 96,233 1,210,000 25,662 100.0% 

92,000 95,041 1,375,000 11,425 100.0% 

89,550 110,800 1,730,000 6,285 100.0% 

87,495 89,867 950,000 63,038 100.0% 

86,000 92,365 1,100,000 28,420 100.0% 

81,000 95,655 1,250,000 4,071 100.0% 

73,000 82,540 990,000 8,254 100.0% 

72,475 71,488 1,175,000 8,523 100.0% 

72,375 76,020 1,130,000 6,775 100.0% 

71,500 71,500 1,100,000 34,166 100.0% 

70,000 71,500 1,060,000 13,048 100.0% 

66,900 67,129 1,035,000 8,992 100.0% 

65,850 71,327 965,000 9,731 100.0% 

64,706 62,746 1,020,000 7,579 100.0% 

63,875 65,470 975,000 6,895 100.0% 

60,000 62,664 990,000 17,904 100.0% 

Cavendish Road Balham, London Retail London 59,500 60,500 935,000 7,056 100.0% 

54-60 Clifton 

Street/35/39 

Abingdon Street 

Blackpool Retail Northwest 

England 

59,300 59,872 815,000 7,008 100.0% 

1 Thames Street Kingston Upon 

Thames 

16/20 Cloth Hall 

Street 

Holm Square 

Walworth Industrial 

Estate 

Fyfield Barrow 

Retail 

Southeast 

England 

Huddersfield Retail Yorks & 

Humber 

Holm Way, Bicester, 

Oxon 

2 North Way, 

Andover 

Walnut Tree, Milton 

Keynes 

Retail 

Industrial 

Retail 

Southeast 

England 

Southeast 

England 

Southeast 

England 

45-51 Barnet Road Potters Bar, Herts Retail Southeast 

England 

Blenheim Industrial 

Estate 

Dettingen Way, 

St.Edmunds 

Retail 

Southeast 

England 

Highgate Kendal Retail North 

England 

Copt Oak Court 

Narborough, 

Leicester 

Retail 

East 

Midlands 

57,600 57,700 1,065,000 2,790 100.0% 

56,650 56,673 760,000 6,658 100.0% 

55,275 55,527 875,000 7,642 100.0% 

55,000 59,400 500,000 11,332 100.0% 

54,250 54,252 930,000 4,783 100.0% 

52,500 52,500 825,000 10,875 100.0% 

52,000 52,000 825,000 10,897 100.0% 

51,500 51,500 780,000 6,286 100.0% 

50,900 53,260 845,000 9,496 100.0% 

15


93 Old Christchurch 

Road 

Bournemouth Retail Southwest 

England 

58/62 Regent Street Kingswood, Bristol Retail Southwest 

England 

Elder Road 

Cotbridge, 

Stoke-on-Trent 

Retail 

West 

Midlands 

6/10 Wallgate Wigan Retail Northwest 

England 

Cogges Hill Road Witney, Oxon Retail Southeast 

England 

Jubilee Street 

Ramsey Road 

Monkmoor Road 

Snow Hill, Melton 

Mowbray 

Leamington Spa, 

Warwickshire 

Shrewsbury, 

Shropshire 

Retail 

Retail 

Retail 

East 

Midlands 

West 

Midlands 

Southwest 

England 

Arkwright Road Ipswich, Suffolk Retail Southeast 

England 

Blockhouse Close Worcester Retail West 

Midlands 

Euston Street Leicester Warehouse/ 

Distribution East 

Midlands 

Elthorne Way 

Greene Park Dr, 

Newport Pagnell 

Retail 

Southeast 

England 

Passing 

Rent 

(GBP) 

ERV 

(GBP) 

Market 

Value 

(GBP) 

Area 

(sq ft) 

Occupancy 

50,375 54,863 855,000 4,104 100.0% 

50,350 63,040 870,000 4,353 100.0% 

50,000 50,250 790,000 11,043 100.0% 

49,350 66,184 900,000 4,753 100.0% 

47,850 42,083 670,000 5,432 100.0% 

43,000 45,355 710,000 9,071 100.0% 

40,375 40,379 640,000 7,902 100.0% 

40,000 41,892 660,000 11,969 100.0% 

36,300 37,589 590,000 8,325 100.0% 

35,500 35,700 560,000 8,924 100.0% 

34,750 66,700 595,000 23,000 100.0% 

33,350 34,721 575,000 6,504 100.0% 

Llandbadarn Fawr Aberystwyth Retail Wales 28,500 34,018 400,000 10,231 100.0% 


Greyfriars Place Stafford Retail West 

Midlands 

28,000 30,820 490,000 7,705 100.0% 

Millbuck Trading 

Estate 

Willenhall Industrial 

Estate 

Wolverhampton Retail West 

Midlands 

Willenhall Retail West 

Midlands 

27,000 28,395 450,000 9,465 100.0% 

26,500 28,600 460,000 8,290 100.0% 

Total 28,766,013 30,320,034 391,520,000 4,639,282 98.7% 

2. Details of the Top 10 Secured Properties (by Passing Rent) 

Property Number 1 

Property Name 

Wulfrun Centre, Wolverhampton 

Property Type 

Retail 

Region 

West Midlands 

Year Built 1967 

Year Refurbished 2000 

Total Area (sq ft) 194,871 

Occupancy Rate (%) 99% 

Market Value (GBP) 41,920,000 

Vacant Possession Value (GBP) 36,465,000 

Passing Rent (GBP) 3,154,236 

ERV (GBP) 3,310,134 

Number of Units 75 

Number of Tenants 71 

Property Tenure 

Leasehold 

Ground Rent (GBP) 180,000 

Initial Yield (%) 6.27 

Reversionary Yield (%) 6.74 

Net Equivalent Yield (%) 6.00/8.00 1 

1 

Range of Yields based on lease and covenant. 

16


Property Name 

Arcadian Centre, Birmingham 

Property Type 

Retail 

Region 

West Midlands 








ERV (GBP) 2,325,964 




Freehold 

Ground Rent (GBP) 

N/A 




2 

Range depending on lease length and covenant. 


Property Name 

Hardshaw Centre, St. Helens 

Property Type 

Retail 

Region 

Northwest England 








ERV (GBP) 1,736,104 




Leasehold 

Ground Rent (GBP) 293,000 



Net Equivalent Yield (%) 7.25 

17


Property Name 

Butterley Park, Ripley, Derbyshire 

Property Type 

Retail 

Region 

East Midlands 

Year Built 1990/2005 

Year Refurbished 

N/A 






ERV (GBP) 1,281,149 




Freehold 


N/A 





Property Name 

Churchill Shopping Centre, Dudley 

Property Type 

Retail 

Region 

West Midlands 








ERV (GBP) 1,212,873 




Freehold 


N/A 


Reversionary Yield(%) 7.89 


3 

Range based on length of lease and covenant. 

18


Property Name 

Adwest Eastern Site, Reading 

Property Type 

Industrial/Warehouse 

Region 

Southeast England 

Year Built 1930/1940s 


N/A 





Passing Rent (GBP) 845,000 

ERV (GBP) 843,500 




Freehold 


N/A 





Property Name 

Irton House, Chalgrove, Oxford 

Property Type 


Region 


Year Built 

1970s 


N/A 






ERV (GBP) 781,124 




Freehold 


N/A 




19


Property Name 

Enterprise City, Spennymoor Co. Durham 

Property Type 


Region 

North England 


Year Refurbished 1 st Floor Wing A 2002 GR/1 st Floor Wing B 2002 






ERV (GBP) 755,776 




Freehold 


N/A 





Property Name 

Mill View, March, Cambridge 

Property Type 

Retail 

Region 




N/A 






ERV (GBP) 533,696 




Freehold 


N/A 




20


Property Name 

Shaw Lane Industrial Estate, Doncaster 

Property Type 


Region 

Yorks & Humber 



N/A 






ERV (GBP) 558,764 




Freehold 


N/A 




3. Tenant Concentration (Top 10 Tenants) 

Tenant Name 

Passing 

Rent 

(GBP) 

% of 

Total 

Area (sq ft) 

% of 

Total 

Property/Properties 

Occupied 

S&P/ 

Fitch 

Sainsbury’s Supermarkets Ltd. 1,814,867 6.3% 108,718 2.3% Butterley Park, 

Ripley and Mill 

View, March 

BBB−/BBB 

Magnet Ltd. 904,175 3.1% 198,826 4.3% 17 properties NR/NR 

Somerfield Stores Ltd. 857,650 3.0% 115,781 2.5% 5 properties NR/NR 

Linpac Metal Packaging Ltd. 845,000 2.9% 241,000 5.2% Adwest Eastern Site NR/NR 


Bradford & Bingley Plc. 728,100 2.5% 39,925 0.9% 14 properties NR/NR 

Homebase Ltd. 712,050 2.5% 65,685 1.4% Roman Way R/P, 

Kidderminster Rd, 

Droitwich 

NR/NR 

Ofquest Ltd. 426,000 1.5% 108,200 2.3% Irton House, 

NR/NR 

Chalgrove, Oxford 

Littlewoods Organisation Plc. 415,000 1.4% 49,819 1.1% Wulfrun Centre, NR/NR 

Wolverhampton 

Kay-Metzeler Ltd. 371,500 1.3% 81,615 1.8% New Street, 

NR/NR 

Chelmsford, Essex 

T & S Stores 2003 Ltd. 351,256 1.2% 33,390 0.7% 9 Properties NR/NR 

Sub Total Top 10 Tenants 7,425,598 

TOTAL LCP Real Estate 28,766,013 

Ancillary Income (Car Park – £861,595 per year) representing 3.0% of Total Rent is not included in the 

Top 10 Tenants. 

21

4. Summary of Tenure 

Tenure of Properties 

Number of 

Properties 

Passing 

Rent (GBP) 

% of 

Total 

Freehold 96 21,847,285 76% 

Leasehold 11 6,129,210 21% 

Long Lease 2 732,868 3% 

Freehold/LL 1 56,650 0% 

Total 110 28,766,013 100% 

5. Summary of expiry of Occupational Leases (assuming exercise of first break option) 

The figures cited as percentages in the following table are rounded either up or down as relevant to the 

nearest tenth of a decimal. As a result, the total may not equal 100 per cent. 

Year of Expiration 

Number 

of Leases 

Passing 

Rent (GBP) 

% of Total 

Cumulative % 

of Passing Rent 

Vacant unit/Other 67 1,478,008 5.1% 5.1% 

2005 71 1,861,302 6.5% 11.6% 

2006 70 1,116,196 3.9% 15.5% 

2007 88 2,459,623 8.6% 24.0% 

2008 67 2,546,013 8.9% 32.9% 

2009 55 2,811,753 9.8% 42.7% 

2010 32 1,000,386 3.5% 46.1% 

2011 31 1,144,146 4.0% 50.1% 

2012 29 1,019,820 3.5% 53.7% 

2013 37 1,558,062 5.4% 59.1% 

2014 53 1,979,939 6.9% 66.0% 

2015 19 625,421 2.2% 68.1% 

2016 20 1,336,222 4.6% 72.8% 

2017 27 1,511,518 5.3% 78.0% 

2018 10 1,250,990 4.3% 82.4% 

After 2018 101 5,066,614 17.6% 100.0% 

Total 777 28,766,013 100% 

6. Regional Weightings 



Region 

Number of 

Properties 

Aggregate 

Property 

Value (GBP) 

% by 

Aggregate 

Property 

Value 

Lettable 

Area 

(aggregate 

sq ft) 

Passing 

Rent (GBP 

per sq ft) 

Passing 

Rent 

(GBP) 

Total 

Vacant 

Area 

(sq ft) 

East Midlands 5 31,765,000 8.1% 167,110 10.5 1,749,071 — 

London 4 10,435,000 2.7% 65,158 11.0 716,425 — 

North England 6 13,540,000 3.5% 404,775 2.8 1,130,959 19,325 

Northwest England 18 62,845,000 16.1% 905,955 5.6 5,065,387 14,364 

Southeast England 41 123,200,000 31.5% 1,609,558 5.4 8,681,975 21,329 

Southwest England 11 26,860,000 6.9% 409,626 4.8 1,981,722 — 

Wales 2 3,200,000 0.8% 40,614 5.3 215,870 — 

West Midlands 16 102,785,000 26.3% 751,438 10.6 7,973,064 22,392 

Yorks & Humber 7 16,890,000 4.3% 285,048 4.4 1,251,540 15,236 

Total 110 391,520,000 100% 4,639,282 

6.2 (weighted 

average) 28,766,013 92,646 

22

7. Property Size 



From sq ft 

To sq ft 

Number of 

Properties 

Aggregate 

Property 

Value 

(GBP) 

% by 

Aggregate 

Property 

Value 

Lettable 

Area 

(aggregate sq ft) 

Passing 

Rent (GBP 

per sq ft) 

Passing 

Rent 

(GBP) 

Total 

Vacant 

Area 

(sq ft) 

1 25,000 57 74,520,000 19.0% 578,689 8.4 4,884,281 1,275 

25,001 50,000 23 84,280,000 21.5% 827,607 6.9 5,697,610 3,184 

50,001 100,000 19 86,880,000 22.2% 1,315,638 4.6 6,069,316 25,379 

100,001 750,000 11 145,840,000 37.2% 1,917,348 6.3 12,114,806 62,808 

Total 110 391,520,000 100.0% 4,639,282 6.2 28,766,013 92,646 

8. Sectoral Weightings: (Industrial Warehouse, Retail, Office, etc) 



Sector 

Number of 

Properties 

Aggregate 

Property 

Value 

(GBP) 

% by 

Aggregate 

Property 

Value 

Lettable 

Area 

(aggregate 

sq ft) 

Passing 

Rent (GBP 

per sq ft) 

Passing 

Rent 

(GBP) 

Total 

Vacant 

Area 

(sq ft) 

Warehouse/ 

Distribution 9 20,725,000 5.3% 476,357 3.6 1,701,475 154 

Offices 0 — 0.0% — 0.0 — — 

Retail 71 258,255,000 66.0% 1,725,754 10.5 18,079,317 25,201 

Industrial/ 

Warehouse 24 97,755,000 25.0% 2,167,885 3.7 7,939,041 48,925 

Industrial 6 14,785,000 3.8% 269,286 3.9 1,046,180 18,366 

Total 110 391,520,000 100% 4,639,282 6.2 28,766,013 92,646 

23


1. Summary description of the Property Portfolio 


Brighton Hill 


Alperton House, 

Wembley 

Riverside Industrial 

Estate 

Longshot Lane 


Passing 

Rent 

(GBP) 

ERV 

(GBP) 

Market 

Value 

(GBP) 

Area 

(sq ft) 

Occupancy 

Brighton Way Retail Southeast 1,686,870 1,967,620 33,460,000 105,828 100.0% 

England 

Bridgewater Road Office London 965,516 1,254,961 13,000,000 82,554 81.4% 

Riverside Way 

Longshot Lane 

Industrial/ 

Warehouse 

Industrial/ 

Warehouse 

Southeast 

England 

Southeast 

England 

431,706 461,573 6,270,000 81,953 94.0% 

427,875 448,294 5,910,000 60,132 100.0% 

Waun-Y-Pound Ebbw Vale Industrial Wales 397,668 397,724 4,640,000 189,013 100.0% 

Acorn House, Flackwell heath Retail Southeast 133,166 137,060 1,690,000 8,157 100.0% 

Flackwell Heath 

England 

5 Dolphin Park Sittingbourne Warehouse/ 


England 

120,000 120,456 1,340,000 30,114 100.0% 

Deacon Trading 

Estate 

Knight Road, 

Strood 

Industrial/ 

Warehouse 

Southeast 

England 

87,172 83,431 1,150,000 14,056 100.0% 

22/27A The Green Stubbington Retail Southeast 106,250 124,300 1,075,000 13,655 100.0% 

England 

Total 4,356,223 4,995,419 68,535,000 585,462 95.3% 

2. Details of Top 5 Secured Properties (by Passing Rent) 


Property Name 

Brighton Hill Shopping Centre 

Property Type 

Retail 

Region 


Year Built 1980s/2003 


N/A 






ERV (GBP) 1,967,620 




Freehold 


N/A 



Net Equivalent Yield (%) 

5.25 (Asda)/6.50 (Retail Units) 

24


Property Name 

Alperton House, Wembley 

Property Type 

Office 

Region 

London 

Year Built 

1960s 







ERV (GBP) 1,254,961 




Freehold 


N/A 





Property Name 

Riverside Industrial Estate 

Property Type 


Region 



Year Refurbished Unit C 1/2 & H 1-3 — 2000 






ERV (GBP) 461,573 




Freehold 


N/A 




25


Property Name 

Longshot Lane Industrial Estate 

Property Type 


Region 


Year Built 

1980s 


N/A 






ERV (GBP) 448,294 




Freehold 


N/A 





Property Name 

Waun-Y-Pound 

Property Type 

Industrial 

Region 

Wales 



N/A 






ERV (GBP) 397,724 




Freehold 


N/A 


Reversionary Yield(%) 8.11 


26

3. Tenant Concentration (Top 10 Tenants) 

Tenant Name 

Passing 

Rent 

(GBP) 

% of 

Total 

Area 

(sq ft) 

% of 

Total Property Occupied S&P/Fitch 

Asda Stores Ltd. 1,350,000 31.0% 79,750 13.6% Brighton Hill 

NR/NR 


Insight Direct (UK) Ltd. 469,188 10.8% 36,655 6.3% Alperton House, NR/NR 

Wembley 

Continental Teves (UK) Ltd. 397,668 9.1% 189,013 32.3% Waun-Y-Pound NR/NR 

Gala Coffee & Tea Ltd. 239,450 5.5% 41,182 7.0% Riverside Industrial NR/NR 

Estate 

Lyreco UK Ltd. 129,000 3.0% 15,857 2.7% Longshot Lane NR/NR 


U.S. Eurolink Plc. 120,000 2.8% 30,114 5.1% 5 Dolphin Park NR/NR 

Tilemania Ltd. 93,000 2.1% 6,325 1.1% Alperton House, NR/NR 

Wembley 

Scanglas Ltd. 64,175 1.5% 8,445 1.4% Longshot Lane NR/NR 


Home Entertainment Corp. Plc. 55,450 1.3% 3,383 0.6% Brighton Hill 

NR/NR 


Michael Moore Coach Craft Ltd. 52,500 1.2% 6,450 1.1% Longshot Lane NR/NR 


Sub Total Top 10 Tenants 2,970,431 

TOTAL Proudreed Real Estate 4,356,223 

TOTAL Proudreed and LCP 33,122,236 

4. Summary of Tenure 

Tenure of Properties Number of Properties Passing Rent (GBP) % of Total 

Freehold 8 4,249,973 98% 

Leasehold 1 106,250 2% 

Long Lease 0 — 0% 

Freehold/LL 0 — 0% 

Total 9 4,356,223 100% 

27

5. Summary of expiry of Occupational Leases (assuming exercise of first break option) 

Year of Expiration 

Number 

of Leases 

Passing 

Rent (GBP) 

% of 

Total 

Cumulative 

% of 

Passing Rent 

Vacant unit/Other 24 96,674 2.2 2.2 

2005 8 197,968 4.5 6.8 

2006 11 139,361 3.2 10.0 

2007 12 390,412 9.0 18.9 

2008 15 334,682 7.7 26.6 

2009 15 735,438 16.9 43.5 

2010 8 401,000 9.2 52.7 

2011 2 51,000 1.2 53.9 

2012 0 0 0 53.9 

2013 2 38,250 0.9 54.7 

2014 4 415,768 9.5 64.3 

2015 1 55,450 1.3 65.6 

2016 0 0 0 65.6 

2017 1 27,870 0.6 66.2 

2018 1 19,900 0.5 66.7 

After 2018 12 1,452,450 33.3 100.0 

Total 116 4,356,223 100.0 100.0 

6. Regional Weightings 



Region 

Number of 

Properties 

Aggregate 

Property 

Value (GBP) 

% by 

Aggregate 

Property 

Value 

Lettable Area 


Passing 

Rent (GBP 

per sq ft) 

Passing 

Rent (GBP) 

Total 

Vacant 

Area 

(sq ft) 

London 1 13,000,000 19.0% 82,554 11.7 965,516 15,386 

Wales 1 4,640,000 6.8% 189,013 2.1 397,668 — 

Southeast England 7 50,895,000 74.3% 313,895 9.5 2,993,039 4,900 

Total 9 68,535,000 100% 585,462 7.4 4,356,223 20,286 

7. Property Size 



From sq ft 

To sq ft 

Number of 

Properties 

Aggregate 

Property 

Value (GBP) 

% by 

Aggregate 

Property 

Value 

Lettable 

Area 


Passing 

Rent (GBP 

per sq ft) 

Passing 

Rent 

(GBP) 

Total 

Vacant 

Area 

(feet) 

0 25,000 3 3,915,000 5.7% 35,868 9.1 326,588 — 

25,001 50,000 1 1,340,000 2.0% 30,114 4.0 120,000 — 

50,001 100,000 3 25,180,000 36.7% 224,639 8.1 1,825,097 20,286 

100,001 150,000 1 33,460,000 48.8% 105,828 15.9 1,686,870 — 

150,001 250,000 1 4,640,000 6.8% 189,013 2.1 397,668 — 

Total 9 68,535,000 100.0% 585,462 7.4 4,356,223 20,286 

28

8. Sectoral Weightings: (Industrial Warehouse, Retail, Office, etc) 



Sector 

Number of 

Properties 

Property 

Value 

(GBP) 

% by 

Aggregate 

Property 

Value 

Lettable 

Area 


Passing 

Rent (GBP 

per sq ft) 

Passing 

Rent 

(GBP) 

Total 

Vacant 

Area 

(sq ft) 

Warehouse/ 

Distribution 1 1,340,000 2.0% 30,114 4.0 120,000 — 

Office 1 13,000,000 19.0% 82,554 11.7 965,516 15,386 

Industrial/ 

Warehouse 3 13,330,000 19.4% 156,141 6.1 946,753 4,900 

Retail 3 36,225,000 52.9% 127,640 15.1 1,926,286 — 

Industrial 1 4,640,000 6.8% 189,013 2.1 397,668 — 

Total 9 68,535,000 100% 585,462 7.4 4,356,223 20,286 

29

PRINCIPAL FEATURES OF THE NOTES 

Below is a summary of the key features of the Notes. The information in this section does not purport to be 

complete and is qualified in its entirety by reference to the provisions of the Note Trust Deed, the Conditions 

of the Notes and the Issuer Deed of Charge. 

The Notes 

The Notes will be issued in accordance with the terms of the Note Trust Deed and will be direct, secured 

and unconditional obligations of the Issuer. 

Status, Form and Denomination 

As between the Notes, the Class A Notes will rank in priority to the Class B Notes, and the Class B Notes 

will rank in priority to the Class C Notes, and the Class C Notes will rank in priority to the Class D Notes, 

in point of security and as to payment of both interest and principal in accordance with the applicable 

Issuer Priority of Payments. The Notes of each Class will rank pari passu and rateably among themselves 

without any preference or priority. 

The Notes will not be obligations or responsibilities of, or guaranteed by, any person or entity other than 

the Issuer. In particular, the Notes will not be obligations or responsibilities of, or guaranteed by the Note 

Trustee, the Issuer Security Trustee, the Borrower Security Trustee, the Joint Lead Managers, the 

Account Bank, the Cash Manager, the Agent Bank, the Paying Agents, the Hedging Providers, the 

Liquidity Facility Provider, the Issuer Corporate Services Provider, the Property Manager, the Borrowers, 

the Parent Obligors, the LCP Covenantors, the Proudreed Covenantor or any of their respective affiliates. 

However, the Notes will be backed by the Commercial Mortgage Loan Agreements with the Borrowers 

(which will benefit from the security granted in favour of, inter alios, the Issuer by the Borrowers pursuant 

to relevant Borrower Deed of Charge). 

The Noteholders will be entitled to receive payments of interest on their Notes on each Interest Payment 

Date, and will be entitled to receive repayment of principal on the Final Maturity Date. Such entitlement 

will be subordinated to any liabilities ranking in priority to the relevant series of Notes including, inter 

alia, any and all amounts payable on the relevant Interest Payment Date to the Hedging Providers and 

the Liquidity Facility Provider (other than the Hedging Subordinated Amounts and the Liquidity 

Subordinated Amounts), and to the Issuer Security Trustee, the Note Trustee, the Agents, the Cash 

Manager and the Account Bank. 

The Notes will be secured pursuant to the Issuer Deed of Charge. For a more detailed description of the 

provisions of the Issuer Deed of Charge, including the priority of payments both prior and subsequent to 

the enforcement of security thereunder, see further the section entitled ‘‘Resources Available to the 

Borrowers and the Issuer – Available Funds and their Priority of Application’’ below. 

The Note Trust Deed will contain provisions requiring the Note Trustee to have regard to the interests 

of the Noteholders. For further details as to Noteholder meetings, modifications, waivers and consents by 

the Issuer Security Trustee and the Note Trustee, see further the sections entitled ‘‘Terms and Conditions 

of the Notes’’, ‘‘Summary of Principal Documents’’ and ‘‘Risk Factors’’ below. 

The Noteholders may replace the Note Trustee by an Extraordinary Resolution of all of the Noteholders 

(as long as there is a Note Trustee in place in relation to the Notes after such removal). 

The Notes and each individual Note, should definitive Notes be issued, will be in the denomination of 

£100,000, will initially be represented by separate Temporary Global Notes in bearer form, one for each 

Class of Note. Interests in the Temporary Global Notes will, upon certification as to non-US beneficial 

ownership, be exchangeable subject as provided under ‘‘Terms and Conditions of the Notes’’ below, for 

interests in the Permanent Global Notes on the Exchange Date. The Permanent Global Notes will not be 

exchangeable for definitive Notes save in certain limited circumstances (as to which see further ‘‘Form of 

the Notes’’) below. 

Interest 

Interest on the Notes is payable by reference to successive Interest Periods. Interest will be payable 

quarterly in arrear on each Interest Payment Date. Each Interest Period will commence on (and include) 

an Interest Payment Date and end on (but exclude) the immediately succeeding Interest Payment Date. 

The first Interest Period will commence on (and include) the Closing Date and end on (but exclude) the 

30

Interest Payment Date falling in February 2006. The final Interest Period will commence on (and include) 

the Interest Payment Date falling in May 2016 and end on (but exclude) the Final Maturity Date. 

Interest on the Notes will accrue at an annual rate of LIBOR for three-month Sterling deposits, plus a 

margin of 0.26 per cent. per annum (in the case of the Class A Notes), 0.35 per cent. per annum (in the 

case of the Class B Notes), 0.60 per cent. per annum (in the case of the Class C Notes), or 0.85 per cent. 

per annum (in the case of the Class D Notes). In the case of the first Interest Period only, each Class of 

Notes will bear interest at the equivalent rate for four month sterling deposits in the market plus the 

margin applicable to the relevant Class of Notes as described above. 

The Noteholders will be entitled to receive payment of interest on their respective Notes on each Interest 

Payment Date as provided in the Conditions and provided that such amounts are paid after payment of 

any liabilities ranking in priority thereto in accordance with the Issuer Pre-Enforcement Priority of 

Payments or Issuer Post-Enforcement Priority of Payments, as applicable (see further the section entitled 

‘‘Resources Available to the Borrowers and the Issuer’’ below). 

A failure by the Issuer to make quarterly payments of amounts of interest due under any Class of Notes 

will constitute a default under the Notes unless such interest arises on the portion of that Class of Notes 

to which a Principal Loss has been allocated and such interest has been deferred in accordance with 

Condition 5(h). 

Withholding Tax 

All payments of principal and interest in respect of the Notes will be made without withholding or 

deduction for or on account of tax unless such withholding or deduction is required by law. If any such 

withholding or deduction is required to be made from payments due in respect of the Notes, neither the 

Issuer nor any Paying Agent nor any other person will be obliged to pay any additional amounts to 

Noteholders or, if definitive Notes are issued, Couponholders or to otherwise compensate Noteholders or 

Couponholders for the reduction in the amounts they will receive as a result of such withholding or 

deduction. In such circumstances, and in certain other circumstances resulting from a withholding or 

deduction for or on account of tax in the context of the transaction, the Issuer will have the option (but 

not the obligation) to redeem all of the Notes at their Principal Amount Outstanding, as more particularly 

set out in Condition 6(c) (Redemption, Purchase and Cancellation – Optional Redemption for Tax 

Reasons). 

Expected and Final Redemption 

Unless previously redeemed in full or purchased and cancelled, the Notes are expected to mature at their 

respective Principal Amount Outstanding, together with accrued interest thereon, on the Interest 

Payment Date falling in August 2014, and, at the latest, will mature on the Final Maturity Date. 

Mandatory and Optional Redemption 

In the event of a mandatory or optional repayment or prepayment by a Borrower of all or part of its 

Commercial Mortgage Loan, for whatever reason, before the Final Maturity Date (see further ‘‘Summary 

of Principal Documents – The Commercial Mortgage Loan Agreements – Prepayment of the Commercial 

Mortgage Loans’’), the Issuer shall be required to apply any proceeds of such repayment or prepayment 

in redeeming all or part of the Notes on the next following Interest Payment Date (see further Condition 

(b) (Redemption, Purchase and Cancellation – Mandatory Redemption following prepayment of a 

Commercial Mortgage Loan)). 

In addition to the required repayment of the Notes on the Final Maturity Date and any mandatory 

redemption following prepayment of a Commercial Mortgage Loan, the Notes will be subject to optional 

redemption in whole before the Final Maturity Date in certain circumstances as described in Condition 

(d) (Redemption, Purchase and Cancellation – Optional Redemption). 

Security for the Notes 

The Notes will be secured pursuant to the Issuer Deed of Charge (see further the section entitled 

‘‘Summary of Principal Documents – The Issuer Deed of Charge’’ for a further description of the Issuer 

Security). 

The Note Trustee (and any receiver appointed by the Note Trustee), the Account Bank, the Agent Bank, 

the Paying Agents, the Issuer Corporate Services Provider, the Hedging Providers, the Liquidity Facility 

31

Provider, the Cash Manager and any other person acceding to the Issuer Deed of Charge as a secured 

creditor of the Issuer from time to time, will also have the benefit of the Issuer Security created under and 

pursuant to the Issuer Deed of Charge. 

The obligations of the Issuer in respect of the Notes and in respect of the other Issuer Secured Creditors 

pursuant to the Transaction Documents will rank as to payments of interest and repayment of principal, 

and in point of security, according to the relevant Issuer Priority of Payments (as to which, see the section 

entitled ‘‘Resources Available to the Borrowers and Issuer’’ below). 

Following the service of a Note Enforcement Notice, the Notes will become immediately due and 

repayable in accordance with Condition 10 (Note Events of Default). 

Ratings 

It is expected that the Class A Notes will, when issued, be assigned a rating of ‘‘AAA’’ by Fitch and a 

rating of ‘‘AAA’’ by S&P. It is expected that the Class B Notes will, when issued, be assigned a rating of 

‘‘AA’’ by Fitch and a rating of ‘‘AA’’ by S&P. It is expected that the Class C Notes will, when issued, be 

assigned a rating of ‘‘A’’ by Fitch and a rating of ‘‘A’’ by S&P. It is expected that the Class D Notes will, 

when issued, be assigned a rating of ‘‘BBB’’ by Fitch and a rating of ‘‘BBB+’’ by S&P. A credit rating is 

not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or 

withdrawal at any time by the assigning rating agency. 

Listing 

Application has been made to the Irish Stock Exchange for the Notes to be admitted to listing. 

Transfer Restrictions 

There will be no transfer restrictions in respect of the Notes, subject to applicable laws and regulations. 

However, please see the section entitled ‘‘Subscription and Sale’’ for certain restrictions on the sale of the 

Notes and the distribution of information in respect thereof. 

Further issues 

The Issuer will be entitled at its option from time to time, without the consent of the Noteholders, to issue 

further Notes (‘‘Further Notes’’) and/or new Notes (‘‘New Notes’’ and, together with any Further Notes, 

‘‘Additional Notes’’) and/or replacement notes (‘‘Replacement Notes’’) subject to satisfaction of the 

conditions for the issuance of such Additional Notes or Replacement Notes set out in Condition 20 (Issue 

of Further Notes, Replacement Notes and New Notes), including satisfaction of the Ratings Test. The 

Further Notes will form a single series with and rank pari passu with the relevant Class of Notes then 

outstanding. The New Notes will not form a single series with and may not rank senior or pari passu with 

any Class of Notes then outstanding. 

Purchase of Notes 

The Issuer will not be permitted to purchase any Notes. 

Governing Law 

The Notes will be governed by English law. 

32

RISK FACTORS 

The following is a summary of certain aspects of the Notes about which prospective Noteholders should be 

aware. This summary is not intended to be exhaustive and prospective Noteholders should also read the 

detailed information set out elsewhere in this Offering Circular and reach their own views prior to making 

any investment decision. 

1. Risks Relating to the Notes and the Issuer 

Liability under the Notes 

The Notes will be obligations of the Issuer only. The Notes will not be obligations or responsibilities of, 

or guaranteed by, any person or entity other than the Issuer. In particular, the Notes will not be obligations 

or responsibilities of, or guaranteed by, any of the Note Trustee, the Issuer Security Trustee, the Borrower 

Security Trustee, the Joint Lead Managers, the Account Bank, the Cash Manager, the Agent Bank, the 

Paying Agents, the Hedging Providers, the Issuer Corporate Services Provider, the Liquidity Facility 

Provider, the Property Manager, any of the Borrowers, the Parent Obligors, the LCP Covenantors, the 

Proudreed Covenantor or any of their respective affiliates. Furthermore, no person other than the Issuer 

will accept any liability whatsoever to Noteholders in respect of any failure by the Issuer to pay any 

amount due under the Notes. 

Limited resources of the Issuer 

The Issuer is a special purpose company and is not carrying on any business other than the issue of the 

Notes, the lending of the Commercial Mortgage Loans to the Borrowers and transactions ancillary 

thereto. The ability of the Issuer to meet its obligations under the Notes will be principally dependent on 

the receipt by it of funds from the Borrowers under the Commercial Mortgage Loans, the receipt of funds 

from the Hedging Providers under the relevant Hedging Agreements and, in the circumstances described 

in this Offering Circular, the Liquidity Facility Provider. Other than the foregoing, prior to the 

enforcement of the Issuer Security and the relevant Obligor Security, the Issuer will not have any other 

significant funds available to it to meet its obligations under the Notes and in respect of any payment 

ranking in priority to, or pari passu with, the Notes. 

Availability of the Liquidity Facility 

If there is a Liquidity Shortfall as determined by the Cash Manager on any Determination Date, the Cash 

Manager (on behalf of the Issuer) will request a drawdown of funds under the Liquidity Facility (in 

accordance with the terms of the Liquidity Facility Agreement). The maximum amount available to be 

drawn in aggregate under the Liquidity Facility is £18,900,000 (as reduced in proportion to reductions in 

the Principal Amount Outstanding on the Notes), which may not be sufficient at any given time to meet 

the Issuer’s payment obligations in full. The Liquidity Facility will only be available to provide liquidity 

and will not be a source of credit support for the Notes (please see the section entitled ‘‘Priorities and 

conflicts of interest in respect of the Notes’’ below). For further details as to the terms of the Liquidity 

Facility Agreement, see further the section entitled ‘‘Resources Available to the Borrowers and the Issuer’’. 

Obligor Security 

Upon the occurrence of a Loan Event of Default under a Commercial Mortgage Loan and following 

enforcement of the relevant Obligor Security, recourse for repayment of the relevant Commercial 

Mortgage Loan will be available only in respect of the Secured Properties comprised within the Property 

Portfolio of the relevant Borrower, the benefit of the relevant Transaction Documents and monies within 

the relevant Borrower Accounts relating to rental income, insurance proceeds and proceeds of sale (if 

any) derived from that Property Portfolio. 

Any enforcement under the Obligor Security Documents may not result in immediate realisation of the 

relevant Obligor Security Assets and a significant delay could be experienced in recovery by the Borrower 

Security Trustee of, inter alia, amounts owed under the affected Commercial Mortgage Loan. There can 

be no assurance that the Borrower Security Trustee would recover all amounts secured upon enforcement 

of the Obligor Security and, accordingly, sufficient funds may not be realised or available to make all 

required payments to the Issuer and, accordingly, the Issuer may not have sufficient funds available to 

make all required payments to the relevant Noteholders. 

In addition, each Borrower Deed of Charge will contain a provision whereby the rent receivable in respect 

of Occupational Leases by the relevant Borrower is assigned by way of security to the Borrower Security 

Trustee. So long as no receiver has been appointed and/or the Borrower Security Trustee, as mortgagee, 

33

is not in possession, no notice of the assignment to the Borrower Security Trustee under a Borrower Deed 

of Charge will be given to the Occupational Tenants. Accordingly, these assignments will take effect in 

England and Wales as equitable assignments only and will be subject to any equities or claims of third 

parties, such as rights of set-off between the relevant Borrower as landlord and the relevant Occupational 

Tenant. 

Interest Rate Risks 

Interest on the aggregate principal amount of each of the Commercial Mortgage Loans advanced on the 

Closing Date will accrue at a rate equal to the Issuer Cost of Funds, which is based on the interest rate 

on the Notes that have funded those Commercial Mortgage Loans, after taking account of any interest 

rate swaps or interest rate caps entered into by the Issuer in respect of those Notes. 

In order to address the risk borne by the Borrowers and, ultimately, the Issuer in respect of a mismatch 

between the rental income stream (the amount of which is not based on or correlated to LIBOR) 

available to the Borrowers for the payment of interest on the Commercial Mortgage Loans and the 

LIBOR-based component of interest payable on the Notes, the Issuer will enter into certain fixed/floating 

interest rate swap transactions and interest rate caps on or about the Closing Date with the Hedging 

Providers pursuant to the Hedging Agreements. 

All payments under the Hedging Agreements (including any payments due by the Issuer to the Hedging 

Providers on termination of the Hedging Agreements and related costs) other than Hedging 

Subordinated Amounts, will rank in priority to payments due to the Noteholders. 

If a Hedging Provider fails to pay the Issuer any amounts due from it under a Hedging Agreement, or if 

a Hedging Agreement is terminated, then the Issuer may have insufficient funds to make payments due 

under the Notes. 

Nonetheless, if there is a default by a Hedging Provider under a Hedging Agreement or upon the 

insolvency of a Hedging Provider or the occurrence of a Hedging Downgrade Event, it may be necessary 

to terminate the relevant Hedging Agreement. In such circumstances it is not certain that the affected 

Hedging Provider would make or be obliged to make payment of a termination sum sufficient to enable 

the Issuer to induce a suitable replacement Hedging Provider to enter into a replacement hedging 

arrangement such as would enable the Issuer to retain the same risk profile as under the affected Hedging 

Agreement, nor is it certain whether such a replacement hedging arrangement would be available at the 

time of termination of the affected Hedging Agreement. 

For further details on the Hedging Providers and the Hedging Agreements, please see the sections 

entitled ‘‘The Key Transaction Parties’’ above and ‘‘Summary of Principal Documents’’ and ‘‘Resources 

Available to the Borrowers and the Issuer’’, below. 

Absence of Market and Limited Liquidity/Yield and Prepayment Considerations 

Application has been made to the Irish Stock Exchange to list the Notes. There can be no assurance that 

a secondary market in the Notes will develop or, if developed, will be maintained or will provide 

Noteholders with liquidity of investment, or that it will continue for the life of the Notes. The market 

value of the Notes may fluctuate with changes in market perceptions of the risks associated with the 

Notes, supply and demand and other market conditions. 

The yield to maturity of the Notes of each Class will depend on, among other things, the amount and 

timing of payment of principal on the Commercial Mortgage Loans. Such yield may be adversely affected 

by a higher or lower than anticipated rate of prepayments on the Commercial Mortgage Loans. 

The rate of prepayment of Commercial Mortgage Loans cannot be predicted and is influenced by a wide 

variety of economic and other factors, including prevailing interest rates, the buoyancy of the commercial 

property market, the availability of alternative financing and local and regional economic conditions. 

Therefore, no assurances can be given as to the level of prepayment that the Commercial Mortgage Loans 

will experience. 

A prepayment by a Borrower in respect of its Commercial Mortgage Loan will result in an adjustment 

being made to the interest rate applicable to both that Borrower’s and any other Borrower’s Commercial 

Mortgage Loan, to the extent that there remain principal amounts outstanding under such Commercial 

Mortgage Loan following that prepayment. Any increase in the interest rate applicable under a 

Commercial Mortgage Loan may cause an affected Borrower to fail to meet its obligations under the 

relevant Commercial Mortgage Loan Agreement and therefore may result in a shortfall in the monies 

34

available to be applied by the Issuer in making payments of interest on the Notes as a result of the Issuer 

still being required to pay certain payments prior to any payment of interest on the Notes. The risk of 

default due to interest rate adjustments following prepayment will, in particular, be borne by the holders 

of the most junior classes of Notes then outstanding. There can be no assurance that any Borrower will 

have funds available to meet any increased interest payments due under its Commercial Mortgage Loan, 

such increased payments not corresponding to any change or improvement to its Property Portfolio. 

Ratings of the Notes/Rating Affirmations 

The ratings assigned to each Class of Notes (including any Additional Notes) by the Rating Agencies 

address the likelihood of full and timely payment to the Noteholders of all payments of interest on each 

Interest Payment Date and the likelihood of receipt of principal due on the Final Maturity Date. There 

is no assurance that any such ratings will continue for any period of time or that they will not be reviewed, 

revised, suspended or withdrawn entirely by the Rating Agencies as a result of changes in or unavailability 

of information or if, in the Rating Agencies’ judgement, circumstances so warrant. 

For the avoidance of doubt and unless the context otherwise requires any references to ‘‘ratings’’ or 

‘‘rating’’ in this Offering Circular are to ratings assigned by the Rating Agencies only. Future events, 

including events affecting the Occupational Tenants and/or any Borrower and/or circumstances relating 

to the Secured Properties and/or the property market generally, could have an adverse impact on the 

ratings of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be 

subject to revision, suspension or withdrawal at any time by the assigning Rating Agency. Any such 

revision, suspension or withdrawal may have an effect on the market value of the Notes. 

By acquiring any Note or otherwise becoming indirectly an Obligor Secured Creditor through the claims 

of the Issuer (which are assigned by way of security to the Issuer Security Trustee for the benefit of the 

Noteholders), each Noteholder acknowledges that any ratings affirmation given by a Rating Agency 

and/or any satisfaction of a Ratings Test: 

(i) only addresses the effect of any relevant event, matter or circumstance on the current ratings 

assigned by the relevant Rating Agency to the Notes; 

(ii) does not address whether any relevant event, matter or circumstance is permitted by the 

Transaction Documents; and 

(iii) does not address whether any relevant event, matter or circumstance is in the best interests of, or 

prejudicial to, some or all of the Noteholders or Obligor Secured Creditors, 

and that no person shall be entitled to assume otherwise. 

There can be no assurance that any changes to the Transaction Documents made pursuant to the 

provisions in a Commercial Mortgage Loan Agreement will be favourable to or in the interests of 

Noteholders. Such changes may be detrimental to Noteholders, despite the ratings of such Notes being 

affirmed in connection with the proposed changes. 

Refinancing Risk at Final Maturity of the Notes 

The ability of the Issuer to redeem the Notes on the Final Maturity Date will, ultimately, be dependent 

on the ability of the Borrowers to repay their Commercial Mortgage Loans in full on or before that date. 

There is no scheduled amortisation of amounts outstanding under their Commercial Mortgage Loans 

during the term of the Notes, the Commercial Mortgage Loans being repayable in full on the Final 

Repayment Date. In order to repay in full their Commercial Mortgage Loans, it will be necessary for the 

Borrowers to raise funds by, for example, selling the Secured Properties belonging to them to third parties 

or raising new finance in an amount at least equal to the principal amount outstanding on their 

Commercial Mortgage Loan. 

As at the Closing Date, the ratio (expressed as a percentage) of the principal amount outstanding on the 

Commercial Mortgage Loan to LCP Real Estate to the aggregate Market Value of the Secured Properties 

in its Property Portfolio as at the date of the relevant Valuation Report will be 70 per cent and the 

equivalent ratio (also expressed as a percentage) in respect of the Commercial Mortgage Loan to 

Proudreed Real Estate and the Secured Properties in its Property Portfolio as at the date of the relevant 

Valuation Report will be 70 per cent. A copy of each Valuation Report is included in the section entitled 

‘‘Valuation Report’’ below. 

Priorities and conflicts of interest in respect of the Notes 

Both prior to, and following, the delivery of a Note Enforcement Notice, payments of interest on the Class 

A Notes will rank ahead of payments of interest on the Class B Notes, which will rank ahead of payments 

35

of interest on the Class C Notes, which will rank ahead of payments of interest on the Class D Notes. Both 

prior to, and following, the delivery of a Note Enforcement Notice, repayments of principal on the Class 

A Notes will rank ahead of repayments of principal on the Class B Notes, which will rank ahead of 

repayments of principal on the Class C Notes, which will rank ahead of repayments of principal on the 

Class D Notes. Repayments of principal and payments of interest on the Notes will rank, both prior to and 

following enforcement of the relevant Issuer Security, after among other things, payments of fees, 

remuneration and expenses of the Note Trustee and the Issuer Security Trustee and their appointees (if 

any); the fees and expenses of the Agents and the Account Bank; amounts due to the Liquidity Facility 

Provider (other than the Liquidity Subordinated Amounts) and the Hedging Providers under the Hedging 

Agreements (other than the Hedging Subordinated Amounts). 

In performing its duties as trustee for the Noteholders, the Note Trustee will not be entitled to consider 

solely the interests of the holders of the most senior class of Notes then outstanding but will need to have 

regard to the interests of all of the Noteholders. In particular the Note Trustee may not grant its consent 

to any Basic Terms Modifications or certain waivers of the Notes, the Conditions or any of the Transaction 

Documents unless authorised to do so by the holders of each Class of Notes. 

Subject as provided above, where there is, in the Note Trustee’s opinion, a conflict between the interests 

of the holders of one Class of Notes and the holders of another Class of Notes, the Note Trustee will be 

required to have regard only to the interests of the most senior Class of Notes then outstanding. 

In certain circumstances amendments to the Transaction Documents may require the consent of other 

Issuer Secured Creditors, including the Liquidity Facility Provider and the Hedging Providers. The 

interests of these other Issuer Secured Creditors may conflict with those of the Noteholders and, 

consequently, may result in amendments being vetoed despite being potentially beneficial to all or any 

Class of Noteholders. 

Monitoring of compliance with representations, warranties and covenants and the occurrence of a Loan 

Event of Default or Potential Loan Event of Default 

The Issuer is a special purpose company, therefore it will not, nor does it possess the resources actively 

to monitor whether a Loan Event of Default or a Potential Loan Event of Default has occurred, including, 

for this purpose, the continued accuracy of the respective representations and warranties made by the 

Borrowers and compliance by the Borrowers, with their respective covenants and undertakings. 

Each Borrower Deed of Charge will provide that the Borrower Security Trustee will be entitled to 

assume, unless it is otherwise disclosed in any Investor Report or compliance certificate thereunder or the 

Borrower Security Trustee is expressly informed otherwise by the relevant Borrower, that no Loan Event 

of Default or Potential Loan Event of Default has occurred which is continuing. The Borrower Security 

Trustee will not itself monitor whether any such event has occurred but will (unless expressly informed 

to the contrary by the relevant Borrower) rely on certificates delivered under the applicable Commercial 

Mortgage Loan Agreement to determine whether a Loan Event of Default or a Potential Loan Event of 

Default has occurred. For further details concerning Loan Events of Default or Potential Loan Events of 

Default, see further the section entitled ‘‘Summary of Principal Documents – The Commercial Mortgage 

Loan Agreements’’ below. 

Each Commercial Mortgage Loan Agreement with a Borrower will require the relevant Borrower to 

inform the Issuer and the Borrower Security Trustee of the occurrence of any Loan Event of Default and 

Potential Loan Event of Default promptly upon becoming aware of the same. In addition, each Borrower 

is required to confirm in each compliance certificate delivered thereunder (each of which will be delivered 

to, among other recipients, the Borrower Security Trustee) whether or not any Loan Event of Default or 

Potential Loan Event of Default has occurred (and, if one has, what action is being or proposed to be 

taken to remedy it). 

The occurrence of a Loan Event of Default will entitle the Borrower Security Trustee to pursue any of 

the courses of action available to it in respect of the affected Borrower and its Property Portfolio, as set 

out under the sections entitled ‘‘Summary of Principal Documents – The Commercial Mortgage Loan 

Agreements’’ and ‘‘Summary of Principal Documents – The Borrower Deeds of Charge’’ below. 

Issuer Security 

If the Issuer Security is enforced, the proceeds of such enforcement may be insufficient, after payment of 

all other claims ranking in priority to amounts due under the Notes under the Issuer Deed of Charge, to 

pay in full all principal and interest (and any other amounts) due in respect of the Notes. Prior to the final 

36

maturity of the Notes, enforcement of the Issuer Security is the only remedy available for the purposes 

of recovering amounts owed in respect of the Notes. Enforcement of the Issuer Security without 

enforcement of the related Obligor Security is unlikely to lead to repayment of the Notes. 

Although the Issuer Security Trustee will hold the benefit of the Issuer Security created under the Issuer 

Deed of Charge on trust for, inter alios, the Noteholders such Issuer Security will also be held on trust for 

certain other third parties that will rank ahead of the Noteholders including, inter alios, the Liquidity 

Facility Provider and the Hedging Providers (other than in respect of the Liquidity Subordinated 

Amounts and the Hedging Subordinated Amounts) (see further the section entitled ‘‘Summary of 

Principal Documents – The Issuer Deed of Charge’’ below). Also, for restrictions relating to the Note 

Trustee’s powers of enforcement see further Condition 11 (Enforcement). 

Denominations 

The Notes will be issued in denominations of £100,000. For so long as the Notes are represented by a 

Global Note and Euroclear and Clearstream, Luxembourg so permit, the Notes shall be tradeable in 

minimum nominal amounts of £100,000 and integral multiples of £1,000 thereafter. However, if Definitive 

Notes are required to be issued, they will only be printed and issued in denominations of £100,000. 

Accordingly, if Definitive Notes are required to be issued, a Noteholder holding Notes having a nominal 

amount which cannot be represented by one or more Definitive Notes in the denomination of £100,000 

will not receive a definitive Note in respect of such Notes and will not be able to receive interest or 

principal in respect of such Note. Furthermore, at any meeting of Noteholders whilst the Notes are in 

global form, any vote cast shall only be valid if it is in respect of £100,000 in nominal amount. 

Issue of Additional Notes and Replacement Notes 

In certain circumstances and subject to certain conditions being met (as to which see Condition 20 (Issue 

of Further Notes, Replacement Notes and New Notes)), the Issuer will be entitled to issue Additional Notes 

which will, in the case of Further Notes (but not in the case of New Notes), be fungible with the existing 

Notes and will rank pari passu with the existing Notes. The New Notes will be secured by the same 

security as the existing Notes, but will rank after the existing Notes and any Further Notes. 

In addition, in certain circumstances (as to which see Condition 20 (Issue of Further Notes, Replacement 

Notes and New Notes) the Issuer will be entitled to issue Replacement Notes, which will replace existing 

Notes and will have the same priority as to security and payment of interest and principal as the Notes 

they replace. 

If any Additional Notes or Replacement Notes are issued, the Transaction Documents will be amended 

in such manner as the Note Trustee considers necessary to reflect such issue and the ranking of such 

Additional Notes or Replacement Notes in relation to the Notes. 

As a pre-condition to any issuance of Additional Notes or Replacement Notes, the Issuer will need to, 

inter alia, satisfy the Ratings Test and no Note Event of Default or Potential Event of Default can have 

occurred and be continuing (see Condition 20 (Issue of Further Notes, Replacement Notes and New 

Notes)). 

Post Enforcement Call Option 

Following the service of a Note Enforcement Notice and upon the Note Trustee determining that the 

proceeds of such enforcement are insufficient after payment of all other claims ranking in priority to the 

Class A Notes and/or the Class B Notes and/or the Class C Notes and/or the Class D Notes, as the case 

may be, to make all payments due in respect of such Notes the Post-Enforcement Call Option Holder will, 

pursuant to the Post-Enforcement Call Option have the right (but not the obligation) by serving notice 

on the Note Trustee to purchase all the Notes then outstanding in consideration for the payment of one 

penny in respect of each Note. Upon the exercise of the Post-Enforcement Call Option, the Noteholders 

will cease to have any rights against the Issuer. 

2. Risks relating to the Secured Properties 

Late Payment or Non-Payment of Rent 

If the rental payments due under any Occupational Lease are not paid on the due dates or not paid at all 

and any resultant shortfall is not otherwise compensated for from other resources a Loan Event of 

Default may occur in relation to a Commercial Mortgage Loan if the relevant Borrower fails to pay 

amounts due pursuant to a Commercial Mortgage Loan on the relevant Loan Interest Payment Date. The 

37

occurrence of a Loan Event of Default will not automatically trigger a Note Event of Default, as, in the 

event of a Liquidity Shortfall, the Issuer may draw upon the Liquidity Facility. There can be no assurance 

that any Loan Event of Default resulting from the non-payment can be cured or that the relevant 

Liquidity Facility will be of a sufficient amount to prevent a Note Event of Default eventually occurring. 

Title to the Secured Properties 

A Certificate of Title in respect of each Secured Property has been prepared by either The Simkins 

Partnership or Lawrence Graham. Lawrence Graham has also produced an Overview Report for those 

Secured Properties for which it has provided a Certificate of Title and Linklaters has produced an 

Overview Report for those Secured Properties for which The Simkins Partnership provided a Certificate 

of Title. The Certificates of Title address the quality of title of each Secured Property and have been 

issued on the basis of a review of the title documents, a review of a sample of the Occupational Leases 

and the usual conveyancing searches and enquiries. See further the section entitled ‘‘Key Characteristics 

of the Property Portfolio’’ in respect of the scope of the Certificates of Title. 

Prospective Noteholders should be aware of the following matters in relation to specific Secured 

Properties: 

Ownership 

(a) Part of the Secured Property at Bracknell (Unit 1) is subject to an option for the grant of a 995-year 

lease to Schofields Group plc. This option expires in December 2005. Such a long lease would be 

expected to be at a peppercorn rent, but a price no less than the open market value is payable by 

Schofields Group plc on the grant of such a lease by the relevant Borrower. 

Access 

(b) There is a strip of land separating the Secured Property at Potters Bar from the highway, over which 

there is currently no right of way to reach the adopted highway. The land in question belongs to 

Hertfordshire County Council, the highways authority. Whilst said land has been used to obtain 

access since 1989 without complaint, if there is no right of access over this land this may adversely 

affect the market value of the relevant Secured Property. 

Consents required 

(c) The Secured Property at Bromborough is subject to a restriction that requires consent of the 

relevant adjoining owner to certain alterations to existing buildings and/or erection for new 

buildings. Works were undertaken in 2002 without consent and there is a risk of enforcement action 

for breach of the above restrictions. There has not been, nor is it anticipated that there will be, any 

complaint from the beneficiary of the restriction, but it is possible that a claim may still be made 

which may result in damages being payable by the relevant Borrower or, in the worst case, the works 

having to be removed. 

Overhanging of public highway 

(d) The Secured Property at the Wulfrun Centre in Wolverhampton has a licence to overhang the 

highway, but it is personal, requiring consent for this licence to be assigned. Such consent has been 

sought for the transfer to the Borrower but has not yet been obtained. It is possible that the relevant 

highways authority may seek the removal of the structure, which may adversely affect the value and 

use of the Secured Property. 

Restrictions on Use 

(e) Two of the Secured Properties are subject to restrictions as to their use that are currently being 

breached and in respect of which there is no indemnity insurance. The beneficiary of the restrictive 

covenant may give notice of such breach and require that such use cease, and/or may be awarded 

damages. In addition, in circumstances where the beneficiary of the restrictive covenant requires 

that such use cease, and this enforcement prevents the relevant Occupational Tenant from using the 

relevant Secured Property (or part thereof) for the purposes intended and authorised by the 

Occupational Lease, such Occupational Tenant may seek to argue that the Occupational Lease 

should be deemed to be frustrated (as to which see below). 

Insurance and Uninsured Loss 

Each Commercial Mortgage Loan Agreement requires the relevant Borrowers (a) to keep all of the 

Secured Properties insured to full replacement cost including the total costs of demolition and debris 

38

emoval, rebuilding, reinstating and replacing the Secured Property together with architects’, surveyors’ 

and other professional fees in accordance with the terms of the Headleases and the Occupational Leases, 

(b) to maintain appropriate and adequate insurance having regard to the terms of the Occupational 

Leases in respect of each Secured Property covering not less than 3 years’ loss of rent, (c) to insure with 

reputable, regulated insurers or underwriters that satisfy the Insurer Rating Criteria against loss or 

damage by fire, lightning, explosion, subsidence, aircraft (or articles dropped from them), storm, tempest, 

flooding, earthquakes, riot and civil commotion, terrorism and burst water pipes and water tanks (where 

such cover is available in the relevant insurance market) and upon the occurrence of a Loan Event of 

Default, such other risks as the Borrower Security Trustee acting reasonably may from time to time 

specify and (d) to procure such other insurance as would be maintained in accordance with sound 

commercial practice and as is normally maintained by companies carrying on similar businesses is 

maintained with respect to the Secured Properties belonging to it, in each case in accordance with the 

terms set out in the relevant Commercial Mortgage Loan Agreement, the relevant Headleases and the 

relevant Occupational Leases. Any insurance policy entered into by the Borrowers as described above 

must be subject to renewal and for a term of no more than one year. 

On the Closing Date, all of the Secured Properties (other than four of the Occupational Leases sampled 

that are insured by the Occupational Tenants) will be insured under a policy with Assicurazioni Generali 

S.p.A., (‘‘Generali’’) expiring on 31st March 2006, that insures London and Cambridge Properties Limited 

and any declared associated and subsidiary companies (including the Borrowers) with a total sum insured 

of £1,505,932,959. If Generali (or any other insurer) ceases to meet the Insurer Rating Criteria, the 

relevant Borrower is required to put in place replacement insurances with an insurance company or 

underwriter that does meet those criteria and is otherwise acceptable to the Borrower Security Trustee 

(a) if the long-term debt obligations of the relevant insurance company or underwriter are rated at or 

above A− (or its equivalent) by both Fitch and S&P, by the date of expiry of the relevant policy, or (b) if 

the long-term debt obligations of the relevant insurance company or underwriter are rated below A− (or 

its equivalent) by Fitch or S&P or are not rated by both Fitch and S&P, by the date which is the earlier 

of the date of the expiry of the relevant policy and 90 days after the relevant downgrading. 

Since the insurance policy with Generali referred to above insures companies and properties other than 

the Borrowers and the Secured Properties, the Borrowers are required to procure that any property that 

is the subject of such insurance policy which is not a Secured Property is insured in accordance with the 

same criteria as apply to the Secured Properties so as to try to ensure that any failure to insure or under 

insurance would not adversely affect the ability fully to realise a claim in respect of any of the Secured 

Properties. If, notwithstanding these undertakings by the Borrowers (which the Borrowers are not 

themselves able to control), other properties are insured under the Generali policy on terms that are not 

consistent with the criteria required in respect of the Secured Properties, any claim by a Borrower under 

such policy may not be met in full as Generali will be entitled to reduce claims in proportion to any 

under-insurance across all the properties covered by the policy. 

In respect of the four Secured Properties where the Occupational Tenants are responsible for insuring 

such properties, the Borrowers must use all reasonable endeavours to procure that the relevant 

Occupational Tenants effect insurance comparable to that required to be effected by the Borrowers on 

the terms prescribed by the relevant Occupational Lease and to keep and maintain such insurances in the 

joint names of the relevant Obligors, the Issuer and the Borrower Security Trustee or otherwise with the 

Issuer and the Borrower Security Trustee as co-insured and named as first loss payee or with the interest 

of the Borrower Security Trustee in respect of the relevant Secured Property endorsed on the relevant 

insurance policy. 

Generally, the Occupational Leases sampled grant the parties the option, if the Secured Property is 

destroyed or damaged by an insured risk so as to make the relevant unit wholly unfit for occupation or 

use, to terminate the Occupational Lease if works necessary to make the premises fit for occupation and 

use have not been completed within a certain period (usually the period in respect of which the Borrowers 

have the benefit of loss of rent insurance). Typically, the Occupational Tenants are not required to pay the 

annual rent or pay insurance charge or service charge (or a proportion of them) after the date of 

destruction or damage until the reinstatement works have been completed or, (in some but not all 

Occupational Leases sampled) if earlier, the expiry of the period for which loss of rent insurance is 

maintained. Insurance cover has been taken out in respect of the Secured Properties to cover the shortfall 

of rent whilst such works are being carried out for a period which is currently three years. In a small 

number of Occupational Leases sampled, the tenant has a right to terminate if damage or destruction is 

caused by an uninsured risk. In respect of a small number of the Secured Properties from the sample of 

39

Occupational Leases reviewed, there is unlimited rent suspension and no right for the landlord to 

terminate the Occupational Lease, which could lead to no rent or insurance payments being made to the 

landlord, but the Occupational Lease subsisting. 

If reinstatement of the relevant Secured Property does not take place, then the proceeds of any monies 

paid out under the terms of the insurance policy effected in respect of the Secured Property will be paid 

to the relevant Borrower except in certain cases where (a) the Secured Property is subject to an 

Occupational Lease where the Occupational Tenant is responsible for insuring such property where such 

proceeds will be paid to the relevant Occupational Tenant and (b) the Occupational Tenant may be 

entitled to receive certain sums in respect of items which it has installed at its own expense but which have 

nevertheless become part of the premises as a matter of property law. 

Each Borrower must deposit all monies received under any insurance policy (other than third party 

liability or loss of rent insurance), above a de minimis threshold of £50,000 (as adjusted on an annual basis 

by reference to changes in retail prices), into the relevant Insurance Proceeds Account. Any monies so 

deposited may be withdrawn by the relevant Borrower (with the consent of the Borrower Security 

Trustee) where either (a) such monies will be applied towards replacing, restoring or reinstating the 

relevant Secured Property as required by the relevant Occupational Lease or (b) provided no Potential 

Loan Event of Default or Loan Event of Default is continuing and both the Historical ICR and the 

Projected ICR are equal to or above 1.3:1, such monies will be applied within the earlier of (i) 12 months 

of being deposited into the Insurance Proceeds Account and (ii) 36 months (or such lesser period for 

which the relevant Secured Property benefits from insurance for loss of rent) of the relevant damage or 

destruction, towards replacing, restoring or reinstating the relevant Secured Property in circumstances 

where that Secured Property is not subject to an Occupational Lease requiring such replacement, 

restoration or reinstatement. Any monies not so applied will be applied towards prepayment of the 

relevant Commercial Mortgage Loan in an amount equal to the Allocated Loan Amount of the relevant 

Secured Property multiplied by the Release Price Percentage (or if less, the amount of monies so 

deposited), with any balance, from such monies, remaining after such prepayment being paid to the 

relevant Borrower. If, in respect of any particular Secured Property, any of the above time periods are (or 

are likely to be) exceeded, the relevant Borrower will be entitled to request an extension to such time 

periods from the Borrower Security Trustee. In granting any such extension, the Borrower Security 

Trustee will be entitled to set additional conditions to be satisfied for such extension to apply. 

There is a risk that if either the relevant Borrower or the relevant party with the obligation to reinstate 

the relevant Secured Property is unable to reinstate, the proceeds of such insurance due to the relevant 

Borrower, together with the proceeds from the sale of the land, might not be sufficient to permit the 

relevant Borrower to meet its outstanding obligations under the relevant Commercial Mortgage Loan 

Agreement and therefore, ultimately, the Issuer’s ability to make payments under the Notes may be 

adversely affected. 

If a claim is made under an insurance policy, but the relevant insurer fails to make payment in respect of 

that claim, this could prejudice the ability of the relevant Borrower to meet its outstanding obligations 

under the relevant Commercial Mortgage Loan Agreement and therefore, ultimately, the Issuer’s ability 

to make payments under the Notes may be adversely affected. 

The Commercial Mortgage Loan Agreements, Headleases and Occupational Leases also contain 

provisions requiring the Borrowers to carry or procure the carrying of insurance with respect to the 

Secured Properties in accordance with the specified terms. There are, however, certain types of losses 

(such as losses resulting from war, terrorism (which, in relation to terrorism, within certain limits, is 

currently covered by the existing insurances), nuclear radiation, radioactive contamination and heave or 

settling of structures) which may be or become either uninsurable or not insurable at commercially viable 

rates or which for other reasons are not covered, or not required to be covered, by the required insurance 

policies. In addition, many of the Occupational Leases and the Headleases require the relevant Borrower 

to make up any shortfall between insurance proceeds and the actual cost of reinstatement. Each 

Borrower’s ability to meet its obligations under the relevant Commercial Mortgage Loan Agreement and 

therefore, ultimately, the Issuer’s ability to make payments under the Notes may be adversely affected if 

such an uninsured or uninsurable loss were to occur, to the extent that such loss is not the responsibility 

of the landlord pursuant to the terms of a Headlease or the Occupational Tenants pursuant to the terms 

of their Occupational Leases. 

Disposals and Same-Day Substitutions of Mortgaged Properties 

Under the terms of the Commercial Mortgage Loan Agreements, each Borrower will be entitled to 

dispose of and/or substitute Secured Properties in certain circumstances. However, there can be no 

40

assurance that a Borrower will exercise its rights under these provisions in such a way that the pattern or 

number of disposals and/or substitutions will increase the quality and value of its Property Portfolio or its 

income generating capacity. For example, a Secured Property’s value may decline significantly if it 

requires refurbishment, as may the ability of the owner to attract tenants at market rental rates. The risks 

associated with the effect of the disposal and/or same-day substitution of Secured Properties on the value 

and rental income generating capacity of each Borrower’s Property Portfolio is mitigated by the 

conditions related to disposal and same-day substitutions under the Commercial Mortgage Loan 

Agreements (as to which, see ‘‘Summary of Principal Documents – Commercial Mortgage Loan 

Agreements’’ below). 

Property Management 

While L.C.P. Management Limited as Property Manager is experienced in managing retail, industrial and 

office property and has managed the Secured Properties since they were first acquired by the Transferors 

or Proudreed Limited, as the case may be, and despite payment of the fees (as detailed below) being at 

competitive market rates, there can be no assurance that the Property Manager will continue to act in the 

future as such. The Property Manager receives a fixed management fee for the performance of its services, 

which may be subject to upward review. A management fee of up to four per cent. of the then-current 

Gross Rental Income for the relevant Property Portfolio for the period in respect of which such fees are 

payable is payable to the Property Manager senior to payments in respect of the relevant Commercial 

Mortgage Loan under the Obligor Pre-Enforcement Priority of Payments. Although any successor 

manager of a Secured Property appointed by a Borrower is required to be experienced in managing retail, 

industrial and office premises, there can be no assurance that there will not be a delay in the appointment 

of a successor, or a variation in the terms of any appointment of a successor or that the appointment of 

any successor manager of a Secured Property would not have an adverse effect on the relevant Borrower’s 

obligations to meet its obligations under the relevant Commercial Mortgage Loan Agreement and, 

therefore, ultimately, the Issuer’s ability to make payment under the Notes. 

The net cash flow realised from the Secured Properties may be affected by management decisions. The 

Property Manager will be responsible for property management pursuant to the terms of the Property 

Management Agreements. Although the Property Manager is experienced in managing retail, industrial 

and office property, there can be no assurance that decisions taken by it in the future will not adversely 

affect the value of or cashflow from the Secured Properties. 

During the course of its business activities, the Property Manager may operate, manage, acquire or sell 

properties, which are in the same markets as the Secured Properties. In such cases, the interests of the 

Property Manager or the interests of other parties for whom it performs servicing functions (which could 

include affiliates of the Borrowers) may differ from, and compete with, the interests of the Borrowers, and 

decisions made with respect to other real-estate assets managed by it or in which it may have an interest 

may adversely affect the value of the Secured Properties. However, the Property Manager Duty of Care 

Deeds provide that, if in the course of providing the services under the Property Management 

Agreements and the Property Manager Duty of Care Deeds, a conflict arises between the interests of the 

Property Manager on the one hand and the interests of the Noteholders on the other the interests of the 

Noteholders shall prevail. 

Delegation in respect of leasing etc. 

Except to the limited extent described herein, none of the Borrower Security Trustee, the Issuer Security 

Trustee or any Noteholder or any other Obligor Secured Creditor or Issuer Secured Creditor has any right 

to participate in the management or affairs of any Borrower. In particular, such parties cannot supervise 

the functions relating to the management or operation of the Secured Properties and the leasing and 

re-leasing of the space within the Secured Properties or otherwise. The Issuer and the other Obligor 

Secured Creditors will each rely upon, inter alia, the Property Manager and the other service providers 

for all asset servicing functions. Failure by any such party to perform its obligations could have an adverse 

effect on a Borrower’s ability to meet its obligations under the relevant Commercial Mortgage Loan 

Agreement and, ultimately, the Issuer’s ability to make payments on the Notes. There can be no assurance 

that, were any such party to resign or its appointment be terminated, a suitable replacement service 

provider could be found, or found in a timely manner, and engaged on the same terms applicable to the 

relevant service provider as at the Closing Date or on terms acceptable to the Borrower Security Trustee 

and/or the Issuer Security Trustee (as applicable). 

41

Dependence on Occupational Tenants and Re-letting risks 

During the term of the Commercial Mortgage Loan Agreements, a number of the existing Occupational 

Leases which are in place at the Closing Date and many new Occupational Leases granted (or to be 

granted) in the near future will expire or be determined in accordance with their respective contractual 

terms. There can be no assurance that Occupational Tenants will renew their respective Occupational 

Leases or, if they do not, that new Occupational Tenants of equivalent standing will be found to take up 

replacement Occupational Leases. This is particularly the case where a Secured Property requires 

refurbishment or redevelopment following the expiry of the Occupational Lease. Furthermore, even if 

such renewals are effected or replacement Occupational Leases are granted, there can be no assurance (in 

spite of the covenants given by each Borrower under the relevant Commercial Mortgage Loan 

Agreement in this regard) that such renewals or replacement Occupational Leases will be on terms 

(including rental levels and rent review terms) as favourable to the relevant Borrower as those which exist 

now or before such termination (particularly if there is a change in law relating to the terms of the 

Occupational Leases or some other change that is outside of any Borrower’s control), nor that the 

covenant strength of Occupational Tenants who renew their Occupational Leases or new Occupational 

Tenants who replace them will be the same as, or equivalent to, those now existing or existing before such 

termination. 

The ability of the Borrowers to attract new tenants paying rent levels sufficient to allow them to meet their 

obligations under the Transaction Documents will depend on demand for space at each relevant Secured 

Property and on the regional economy in the relevant Secured Property’s catchment area, which can be 

influenced by a number of factors. Rental levels and the affordability of rents, the size and quality of the 

building, the mix of tenants, the amenities and facilities offered, the convenience, location and local 

environment of the relevant Secured Property, the amount of competing space available, the transport 

infrastructure and the age and facilities of the building in comparison to the alternatives are all examples 

of factors which influence tenant demand. 

Similarly, changes to the infrastructure, demographics, planning regulations and economic circumstances 

relating to the surrounding areas on which the relevant Secured Property depends for its tenant base may 

adversely affect the demand for such Secured Property. 

Provision of services and recoverability of service charge 

In each Occupational Lease that is an effective full repairing and insuring lease (an ‘‘FRI Lease’’), the 

relevant Borrowers are or will be bound, inter alia, to allow the relevant Occupational Tenant ‘‘quiet 

enjoyment’’ of that part of the Secured Property which is leased to it and to perform certain specified 

obligations and/or provide certain specific services in relation to the Secured Property. A breach by the 

relevant Borrower of any of these covenants could give rise to a dispute with the relevant Occupational 

Tenant and such Occupational Tenant might seek to withhold rental payments. Certain of the 

Occupational Leases expressly exclude the Occupational Tenants’ set-off rights, but many do not do so. 

A number of the Occupational Leases are not FRI Leases in that they may provide for one or more of 

the following: 

• a fully inclusive rent (i.e. inclusive of service charge, insurance costs and/or outgoings); 

• a cap on service charge through an annual indexation or otherwise; 

• exclusion of some costs from the scope of service charge, but which the landlord must pay, such as 

the costs of remedying inherent defects or historic contamination, or complying with Headlease 

obligations; 

• a limit of the period for which the cost of loss of rent insurance is chargeable to the Occupational 

Tenant which may be less than the period for which the landlord has such insurance; and 

• a limit on the extent of the tenant’s repairing covenant, typically by reference to a schedule of 

condition of the relevant Secured Property. 

Any of these situations may lead to a shortfall in the amount of service charge and other expenditure 

recoverable from Occupational Tenants. The relevant Borrower would almost certainly have to make up 

any such shortfall. 

The level of service charges and insurance rent (being equivalent to the cost of insurance recoverable by 

the landlord) payable by Occupational Tenants under the Occupational Leases may differ, but the overall 

level of service charges and insurance rents payable by all Occupational Tenants is normally set at a level 

42

which is intended to ensure that the landlord recovers from the Occupational Tenants, overall, 

substantially all of the service costs associated with the management and operation of the relevant 

Secured Property to the extent that it does not itself make a contribution to those service costs and the 

cost of insuring the Secured Properties, for example if any lettable part of a Secured Property was not 

subject to an Occupational Lease. However, there are some items of expenditure which the landlord is not 

generally entitled to recover from the Occupational Tenants, for example, the cost of repairing any defects 

which were inherent in the Secured Property at the start of any Occupational Lease and the cost of any 

refurbishment or rebuilding (as opposed to repair) work at the Secured Property (whether or not such 

items are expressly excluded in the Occupational Leases as referred to above). 

Statutory rights of Occupational Tenants 

In certain circumstances, Occupational Tenants may have legal rights to require the relevant Borrower to 

grant them new leases, in particular pursuant to the Landlord and Tenant Act 1954. Should such a right 

arise, the Borrowers may not have their normal freedom to negotiate the terms of the new lease with the 

Occupational Tenant, such terms being imposed by the court or being the same as those under the 

previous lease of the relevant premises. While it is the general practice of the courts in England and Wales 

in renewals under the Landlord and Tenant Act 1954 to grant a new tenancy on similar terms to the 

expiring tenancy, the basic annual rent will be adjusted (upwards or downwards) in line with the then 

market rent at the relevant time but there can be no guarantee as to the terms on which any such new 

tenancy will be granted. Accordingly, such a lease may not be as favourable to the affected Borrower, 

which may affect its ability to meet its obligations under the relevant Commercial Mortgage Loan 

Agreement and therefore, ultimately, the Issuer’s ability to make payments under the Notes may be 

adversely affected. 

Administration risk in respect of Occupational Tenants 

If an Occupational Tenant which is a company incorporated in England and Wales were to enter into 

administration, the relevant Borrower would be prohibited under the Insolvency Act 1986 from taking 

any action against the Occupational Tenant for recovery of sums due or re-entry to the relevant premises. 

In addition, under paragraph 43 of Schedule B1 to the Insolvency Act 1986, the landlord requires the 

consent of the Occupational Tenant’s administrator or leave of the court (and, where a petition has been 

presented, requires leave of the court) before it is able to enforce rights against that company as tenant 

to forfeit the Occupational Tenant’s lease by peaceable re-entry on the premises. 

If the Occupational Tenant is still trading at the premises or has plans to recommence trading with a view 

to the survival of the company as a going concern, it is possible that the court would refuse to grant such 

leave to re-enter to the landlord on the grounds that to do so would frustrate the purpose of the 

administration and, furthermore, that the court would do so notwithstanding the administrator was only 

paying a reduced rent, or even no rent, under the terms of the relevant Occupational Lease. The 

restrictions and requirements described both in this paragraph and the paragraph above could impact on 

the management of the Secured Properties and could result in an increase in the number of units at the 

Secured Properties which are currently providing no or a reduced income from time to time. 

It is normal for a lease to contain provision for its forfeiture in the event of the tenant’s liquidation or 

other insolvency events. There is no standard between the Occupational Leases as to what insolvency 

events would give rise to such right to forfeit, but most contain a right to forfeit on liquidation. Three of 

the Occupational Leases sampled (Fleet Road, Aldershot; Binley Industrial Estate, Coventry; and Unit 

1 West Point, Maidstone) do not contain any such provision, only permitting forfeiture for breach of 

tenant’s covenants or non-payment of rent. 

If an Occupational Tenant were to enter into equivalent insolvency proceedings regulated by laws other 

than English law, the relevant Borrower may be subject to prohibitions similar to those described above. 

Privity of Contract 

The Landlord and Tenant (Covenants) Act 1995 (the ‘‘1995 Act’’) provides that, in relation to leases of 

property in England and Wales granted after 1 January 1996 (other than leases granted pursuant to 

agreements for lease entered into before that date), if an original tenant under such a lease assigns that 

lease (having obtained all necessary consents (including consent of the landlord if required by the lease)), 

that original tenant’s liability to the landlord, under the terms of the lease, ceases. The 1995 Act provides 

that arrangements can be entered into by which, on assignment of a lease of commercial property, the 

original tenant can be required to enter into an ‘‘authorised guarantee’’ agreement of the assignee’s 

obligations to the landlord. Such an authorised guarantee relates only to the obligations under the lease 

43

of the original assignee of the outgoing tenant providing that guarantee and not to any subsequent 

assignee of that original assignee. The same principles apply to an original assignee (and any subsequent 

assignees) if it assigns the lease. 

In respect of the Occupational Leases reviewed in the Certificates of Title to which the 1995 Act applies, 

there is a requirement that the Occupational Tenant must provide an authorised guarantee agreement 

either as an absolute pre-requisite to assignment or where reasonably required by the Borrowers. 

However, there can be no assurance that such authorised guarantee agreements will in fact be obtained 

or that any assignee of a lease of premises within any of the Secured Properties will be of a similar credit 

quality to the original tenant, or that any subsequent assignees (who in the context of a new tenancy will 

not be covered by the original tenant’s authorised guarantee) will be of a similar credit quality. Nor can 

there be any assurance that the credit quality of the party giving an authorised guarantee will be 

maintained. 

Some of the Occupational Leases as at the Closing Date were entered into before 1 January 1996 or 

pursuant to agreements for leases in existence before that date. Because the 1995 Act has no retrospective 

effect, the original tenant under such an Occupational Lease will remain liable under its lease 

notwithstanding any subsequent assignments, subject to any express releases of the tenant’s covenant on 

assignment. In such circumstances, the first and every subsequent assignee would normally covenant with 

its predecessor to pay the rent and observe the covenants in the lease and would give an appropriate 

indemnity in respect of those liabilities to his predecessor, thus creating a ‘‘chain of indemnity’’. 

Market risks on enforcement 

In the event of enforcement of any Obligor Security, it may be necessary to sell the relevant Secured 

Property. Only the proceeds from enforcement of the security in respect of Secured Properties comprised 

within the Property Portfolio relating to a particular Borrower will be available for repayment of its 

Commercial Mortgage Loan. Amounts received in respect of the Secured Properties comprised within the 

relevant Property Portfolio by way of proceeds following a sale could be insufficient to pay amounts due 

under the related Commercial Mortgage Loan, and therefore, ultimately, the Issuer’s ability to make 

payments under the Notes may be adversely affected. 

The liquidation value of any Secured Property may be adversely affected by risks generally incidental to 

interests in real property, including changes in political and economic conditions or in specific market 

sectors, declines in property rental or capital values, changes in rental terms (including tenants’ 

responsibility for service charges), variations in supply of and demand for retail, industrial or (as 

appropriate) office space, competition, the ability of the owner to provide maintenance and control costs, 

prevailing gilt yields and interest rates, declines in occupancy rates, changes in governmental rules, 

regulations and fiscal policies, terrorism, acts of God, and other factors which are beyond the control of 

the Borrowers and any other party to the transaction. 

Reliance on Valuation Reports 

There can be no assurance that the valuations set out in the Valuation Report for each of the Secured 

Properties will continue at a level equal to or in excess of such valuations. To the extent that the value of 

each of the Secured Properties fluctuates, there is no assurance that the aggregate of the value of the 

Secured Properties will continue at least equal to or greater than the unpaid principal and accrued interest 

and any other amounts due under the related Commercial Mortgage Loan Agreement. If any Secured 

Property is sold following a Loan Event of Default, there is no assurance that the net proceeds of such 

sale will be sufficient to pay in full all or any amounts due under the relevant Commercial Mortgage Loan 

Agreement. In particular, it should be noted that the Secured Properties, being, generally, large industrial 

sites and large retail shopping centres, are specialised property assets for which, in such circumstances, no 

ready market may exist. Furthermore, the value of the Secured Properties and, consequently, the 

Borrowers’ ability to pay amounts due under the Commercial Mortgage Loan Agreements and 

(ultimately) the Issuer’s ability to make payments under the Notes, are dependent on economic and real 

estate conditions in the United Kingdom and in particular the strength of the industrial and retail sectors. 

Environmental risks 

Under its Commercial Mortgage Loan Agreement, each of the Borrowers represents that it is in 

compliance in all material respects with environmental laws and regulations applicable to it as at the 

Closing Date and covenants to comply in all material respects with environmental laws and regulations 

currently applicable to it. However, there can be no assurance that a breach of environmental laws and/or 

44

egulations will not occur in the future. Sanctions for alleged or actual non-compliance with environmental 

laws and/or regulations and the costs of remedying any such breach and the effect of any unremedied 

breach could have an adverse effect on the value of Secured Properties or their rental income-generating 

capacity. 

Upon the original acquisition by the relevant Transferor and/or for previous financings of the Secured 

Properties, various Environmental Reports were commissioned from environmental investigation agencies 

and consultants. Such reports date from before 2004. No subsequent Environmental Reports have 

been commissioned. Some of these assessments were intrusive surveys and audits, but some were based 

only upon desktop research. The Secured Properties for which such Environmental Reports were 

obtained cover approximately 54 per cent. of the total value of the Secured Properties. These 

Environmental Reports were provided to King Sturge and have been taken into account in the 

preparation of the Valuation Report, however the Borrowers are not able formally to rely on them. 

Various environmental laws may require a current or previous owner, occupier or manager of property to 

investigate and/or remediate substances or releases at or from such property that cause or are likely to 

cause harm to the environment or water pollution. These owners, occupiers or managers may also be 

obliged to pay damages in legal proceedings for property damage, for investigation and clean-up costs and 

liabilities to third parties in connection with such substances. Such laws typically impose clean-up 

responsibility and liability having regard to whether the owner, occupier or operator knew of or caused 

the presence of the substances. Even if more than one person may have been responsible for the 

contamination, each person coming within the ambit of the relevant environmental laws may be held 

responsible for all of the clean-up costs incurred. 

If an environmental liability arises in relation to Secured Properties and it is not remedied, or is not 

capable of being remedied, this may result in the affected Secured Properties either being sold at a 

reduced sale price or becoming unsaleable. In addition, third parties may bring legal proceedings against 

a current or previous owner, occupier or operator of a site for damages and costs resulting from substances 

emanating from that site. These damages and costs may be substantial. In addition, the presence of 

substances on a Secured Property could result in personal injury or similar claims by private plaintiffs. 

Any environmental liability incurred by a Borrower, or by an Occupational Tenant could adversely affect 

its ability to service its debt, or, in the case of an Occupational Tenant, pay its rent, thereby reducing the 

relevant Borrower’s funds needed to service the relevant Commercial Mortgage Loan. It might also 

adversely affect the value of the security granted by such Borrower. 

If any environmental liability were to exist or arise in respect of any Secured Property, none of the 

Borrower Security Trustee, the Issuer Security Trustee or the Note Trustee should incur any such liability, 

unless it could be established that the Borrower Security Trustee, the Issuer Security Trustee or the Note 

Trustee, as applicable, had entered into possession of the relevant Secured Property(ies) or had exercised 

a significant degree of control or management of either the relevant Secured Property(ies) or the relevant 

environmental problem(s). The Borrower Security Trustee, the Issuer Security Trustee or the Note 

Trustee, if deemed to be a mortgagee in possession, or a receiver appointed by the Borrower Security 

Trustee, the Issuer Security Trustee or the Note Trustee, as applicable, could become responsible for 

environmental liabilities in respect of a Secured Property and any such liability could ultimately affect the 

amounts available to the Issuer to make payments under the Notes. If the Borrower Security Trustee, the 

Issuer Security Trustee or the Note Trustee, as applicable, unduly directed or interfered with the actions 

of the directors of the Borrower owning the affected Secured Properties or directed or interfered with the 

receiver’s actions or if a receiver’s indemnity had been given and that indemnity covered environmental 

liabilities, this could also result in a liability for the Borrower Security Trustee and/or the Issuer Security 

Trustee and/or the Note Trustee. 

The Borrowers will warrant in the Commercial Mortgage Loan Agreements on the Closing Date, in 

respect of each of the Secured Properties, as to environmental matters as summarised in ‘‘Summary of 

Principal Documents – The Commercial Mortgage Loan Agreements – Representations and Warranties’’ 

below. A breach of the environmental representation and warranty contained in a Commercial Mortgage 

Loan Agreement will constitute a Loan Event of Default in respect of the relevant Borrower unless the 

underlying circumstances are remedied within any relevant rectification period and save where the breach 

is immaterial. 

There will be no structural survey reports provided, or required to be provided, under the Commercial 

Mortgage Loan Agreements. 

45

Reports 

Apart from the Certificates of Title, the Overview Reports and the financial reports of Ernst & Young and 

the Valuation Reports reproduced herein, no new reports have been prepared specifically for the purpose 

of this Offering Circular or the transactions contemplated herein and none of the Issuer, the Joint Lead 

Managers or the Note Trustee has made any independent investigation of any of the matters stated 

therein except as disclosed in this Offering Circular. 

Compulsory purchase risks 

Any property in the United Kingdom may at any time be compulsorily acquired by a public authority 

possessing compulsory purchase powers (for instance, local authorities and beneficiaries of statutory 

undertakings (including electricity, gas, water and railway providers) in respect of their statutory 

functions) if it can demonstrate that the acquisition is required. Local authorities can acquire land 

compulsorily for carrying out development, redevelopment or improvement and can do so if they think 

that such development, redevelopment or improvement is likely to be of economic, social or environmental 

benefit to their area. 

As a general rule, if an order is made in respect of all or any part of a Secured Property, compensation 

would be payable on a basis equivalent to the market value of all the Borrowers’ and Occupational 

Tenants’ proprietary interests in the Secured Property at the time of the purchase, so far as those interests 

are included in the order, taking account of diminution in value of any retained land and other adverse 

impacts of the compulsory purchase. In England, additional compensation may be available to owners and 

tenants that have held their interest in the land for at least a year. 

There is often a delay between the compulsory purchase of a property and payment of the compensation, 

although advance interim payments of compensation may be available where the acquiring authority 

takes possession before compensation has been granted. 

As at the Closing Date, only one Secured Property is known to be affected by a compulsory purchase 

proposal: a strip of land that is part of the Secured Property at Rochdale is subject to a compulsory 

purchase order to improve the Rochdale Canal. The land affected has not yet been transferred to 

Rochdale Metropolitan Borough Council. Also, pursuant to the terms of the Commercial Mortgage Loan 

Agreements, each Borrower will be obliged, where a compulsory purchase proposal has been made 

affecting a Secured Property within its Property Portfolio and the relevant Secured Property is transferred 

pursuant to such compulsory purchase order, to prepay in whole or in part the relevant Commercial 

Mortgage Loan in accordance with the terms of the relevant Commercial Mortgage Loan Agreement. 

(For further details as to such substitutions, please see further the section entitled ‘‘Summary of Principal 

Transaction Documents – Commercial Mortgage Loan Agreements’’ below). 

It is possible that a compulsory purchase order may be made in respect of one or more of the Secured 

Properties in the future. In such event, there is no guarantee that the amount of compensation received 

in connection with any compulsory purchase order or that the substitution of a Secured Property the 

subject of a compulsory purchase order, would not have an adverse effect on the ability of the affected 

Borrower to meet its obligations under the relevant Commercial Mortgage Loan Agreement and 

therefore, ultimately, the Issuer’s ability to make payments under the Notes might be adversely affected. 

Risks relating to the Headleases 

The Borrowers will hold their interest in the whole of 14 of the Secured Properties, and in part of two of 

the Secured Properties, pursuant to a Headlease. 

Geared Rents under the Headleases 

Six of the Headleases provide that the rent payable to the landlord is not a fixed amount. Instead, the rent 

is based on a percentage of either the rental income received or the best achievable open market rents at 

these Secured Properties. 

As a result, the amount of rent payable to the landlord by the relevant Borrower may increase (although 

only if rents receivable/rental value increase). In the case of rent payable on the rental value (as opposed 

to rent receivable), this may increase even if the rents under the Occupational Leases do not also increase 

in line with such increased rental value. 

Forfeiture 

The Headleases in respect of the Secured Properties at Euston Street, Leicester (the ‘‘Leicester 

Property’’) and 22/27A The Green, Stubbington (the ‘‘Stubbington Property’’) contain a right for the 

46

landlord to forfeit the Headlease in certain events of the tenant’s (i.e. the Borrowers which will hold the 

leasehold interest in these Secured Properties) insolvency. In relation to the Leicester Property, the 

landlord’s right to forfeit is limited to the liquidation of the tenant under the Headlease, rather than all 

other insolvency events. In relation to the Stubbington Property, the right for the landlord of the 

Headlease to forfeit the Headlease (on the tenant becoming insolvent) is suspended if the Headlease is 

charged, so long as the rent payable thereunder continues to be paid and the other covenants in the 

Headlease are observed and performed. 

Further, the landlord of each Headlease also has a right to terminate the relevant Headlease by issuing 

forfeiture proceedings or re-entering if rent is not paid when due or other Headlease covenants are not 

performed. As regards payment of rent, this risk is mitigated as the Obligor Pre-Enforcement Priority of 

Payments provides for unpaid rent due under any Headlease to be paid as a senior item. 

If a Headlease were forfeited, this would also determine any Occupational Leases at the relevant Secured 

Property. Even though in England the relevant Borrower or the Borrower Security Trustee (as 

mortgagee) may apply to court for relief, there is a risk that an Occupational Tenant may not make an 

application for relief in its own right. If the Borrower Security Trustee’s application is successful and relief 

from forfeiture is granted, any derivative interest (i.e. the Occupational Leases) will only be reinstated if 

the Occupational Tenant applies for relief, otherwise the relevant Occupational Lease and associated 

income will be lost. 

Three of the Headleases are in fact underleases, and therefore there is a risk that the Headlease could be 

forfeited if the superior lease is itself the subject of forfeiture proceedings by the freeholder. The relevant 

Borrower would be entitled to apply to the court for relief from forfeiture, but this is a discretionary 

remedy and there can be no guarantee that such application would be successful. 

Consents to transfer of Secured Properties 

Six of the Headleases contain restrictions on assignment without landlord’s consent, though in each case 

such consent is not to be unreasonably withheld or delayed (subject to compliance with criteria set out in 

the Headlease in relation to any assignment). If (i) the Borrower wishes to dispose of such a Secured 

Property or (ii) the Borrower Security Trustee wishes to dispose of such a Secured Property upon 

enforcement of the Obligor Security, then such landlord’s consent would have to be obtained, and other 

restrictions on assignment and/or under-letting contained in the Headleases complied with, where 

appropriate. 

Obtaining landlord’s consents may have an impact on the time it takes for the Borrower Security Trustee 

or an administrative receiver to complete any such sale, both in terms of finding a buyer who satisfies the 

criteria set out in the Headlease, and the time taken in obtaining the landlord’s consent. 

The consents required for the transfer of the Headleases from the Transferors to the Borrowers have been 

received. 

Diversion of Rents 

There is a risk of the rents being diverted to a superior landlord by a notice under Section 6 of the Law 

of Distress Amendment Act 1908 if any Borrower fails to pay its rent under the relevant Headlease. It 

may also be diverted voluntarily by the sub-tenant upon giving an undertaking to the superior landlord 

in accordance with Section 1 of that Act. 

Frustration 

An Occupational Lease or Headlease could, in exceptional circumstances, be frustrated under English law 

with the result that the parties need not perform any obligation arising under it after the frustration has 

taken place. Frustration may occur where a supervening event so radically alters the implications of the 

continuance of a lease for a party thereto that it would be inequitable for such lease to continue. 

If an Occupational Lease granted in respect of a Secured Property were to be frustrated, then this could 

operate to have an adverse effect on the income derived from, or able to be generated by, that Secured 

Property. If a Headlease were to be frustrated, the relevant Borrower’s interest in the relevant Secured 

Property would effectively terminate. Either event could cause the affected Borrower to fail to meet its 

obligations under the relevant Commercial Mortgage Loan Agreement and therefore, ultimately, the 

Issuer’s ability to make payments under the Notes may be adversely affected. 

Rent Stop Provisions 

To avoid the waiver by a Borrower of any breach by Occupational Tenants of the covenants contained in 

the relevant Occupational Leases by virtue of the relevant Borrower or the Property Manager on their 

47

ehalf accepting payment of rent from such defaulting Occupational Tenant, a Borrower may decline 

payments of rent where an Occupational Tenant is in breach of the terms of the relevant Occupational 

Lease. Accordingly, in such circumstances, the relevant Borrower’s ability to meet its obligations under 

the relevant Commercial Mortgage Loan Agreement and therefore, ultimately, the Issuer’s ability to 

make payments under the Notes, could be affected by short-term shortfalls in rental income. 

Changes to and Enactment of the Lease Code 

The Code of Practice for commercial leases in England and Wales (2nd Edition) was launched in April 

2002 (the ‘‘Lease Code’’). The Lease Code is a non-binding guide to best practice for landlords 

negotiating leases. It also contains various recommendations on key terms of commercial leases. The 

Office of the Deputy Prime Minister issued a consultation paper announcing a period of consultation from 

1 June 2004 to 30 September 2004 and invited representations from relevant bodies in relation to options 

to deter or prohibit inflexible leasing practices, focusing on the use of upwards only rent review clauses. 

The consultation paper proposed six options ranging from doing nothing to changing the voluntary nature 

of the Lease Code to banning upwards only rent review clauses. In February 2005, the Office of the 

Deputy Prime Minister issued a report by Reading University entitled ‘‘Monitoring the 2002 Code of 

Practice for Commercial Leases’’ which, among other things, concluded that although the Lease Code is 

having very little direct impact on individual lease negotiations, there are clear signs that it has played an 

important part in the general application of pressure for change in leasing practices and has had some long 

term effect on the increasing flexibility and choice in commercial property leases. 

The Government announced on 15 March 2005 that it was not currently proposing to legislate against 

upwards only rent review but that it would continue to monitor the position. There is still a risk that 

legislation could be introduced to regulate all commercial leases which could adversely impact rental 

incomes and property values. In particular, there is a risk that the law on assignment and subletting could 

be amended in favour of tenants. There is, however, no current expectation that any resulting legislation 

would apply retrospectively to render invalid pre-existing upwards only rent review clauses or other 

potentially inconsistent provisions. 

Mortgagee in Possession Liability 

The Issuer Security Trustee (where it is directing enforcement of the Obligor Security) or the Borrower 

Security Trustee may become a mortgagee in possession if it takes possession of the secured property 

(which, in the case of any Secured Property, may be the case if there is physical entry into possession), or 

an act of control or influence which may amount, in effect, to possession. 

A mortgagee in possession has an obligation to account for the income obtained from the relevant 

property and in the case of a tenanted property will be liable to a tenant for any mismanagement of the 

relevant property. A mortgagee in possession may incur liabilities to third parties in nuisance, equity and 

negligence and, under certain statutes (including environmental legislation) can incur the liabilities of a 

Borrower. For further details as to potential liabilities under environmental legislation, see further the 

section entitled ‘‘Risk Factors – Environmental Risks’’ above. 

The Borrower Security Trustee has the absolute discretion, at any time, to refrain from taking any action 

under the Borrower Deed of Charge, including becoming a mortgagee in possession in respect of a 

Secured Property or other secured property (including the business of any of the Borrowers), unless it is 

satisfied at that time that it is adequately indemnified and/or secured to its satisfaction. Under the 

Borrower Deed of Charge, the Borrower Security Trustee ranks in point of priority of payments, both 

pre-enforcement and post-enforcement of the Obligor Security, in respect of payment of any amounts 

owed to it under its indemnity and/or security in its capacity as such, ahead of any payments due under 

the Commercial Mortgage Loans. 

The Issuer Security Trustee has the absolute discretion, at any time, to refrain from taking any action 

under the Issuer Deed of Charge, unless it is satisfied at that time that it is adequately indemnified and/or 

secured to its satisfaction. Under the terms of the Issuer Deed of Charge, the Issuer Security Trustee ranks 

first in point of priority of payments, both prior to and following enforcement of the Issuer Security, in 

respect of payment of any amounts owed to it under its indemnity and/or security. 

Planning 

There may be at any time a number of ongoing planning obligations or restrictions relating to certain 

Secured Properties. Outstanding sums due under planning obligations in England and Wales represent a 

charge on the land that may rank in priority to a first legal mortgage. 

48

3. Legal and regulatory considerations relating to the transaction structure 

Administration 

In certain circumstances an administrator may be appointed in relation to a company the effect of which 

would be that, during the period for which the administration order is in force, the affairs, business and 

property of the company will be managed by the administrator. The appointment may be made: 

(i) by the court, on the application of the company, its directors, any or all of its creditors, or in the case 

of companies registered in England and Wales the justices’ chief executive for a magistrates court, 

provided that the court is satisfied that the company is or is likely to become unable to pay its debts 

and that the administration order is reasonably likely to achieve the statutory purpose of 

administrations; or 

(ii) by the holder of a ‘‘qualifying floating charge’’ (as defined in the Insolvency Act) over the whole or 

substantially the whole of the company’s property who gives notice of its intention to appoint an 

administrator to any holder of a prior qualifying floating charge and files with the court the 

appointment in prescribed form (including a statutory declaration that the charge was enforceable 

on the date of the appointment and a statement by the proposed administrator that he believes the 

statutory purpose of administration is reasonably likely to be achieved) and such other documents 

as may be provided; or 

(iii) by the company or its directors if it or they give notice of intention to appoint an administrator to 

any person who may be entitled to appoint an administrative receiver or an administrator of the 

company, such person declines to appoint an administrative receiver or administrator (as the case 

may be) and the appointment is filed with the court in prescribed form (including a statutory 

declaration that the company is or is likely to become unable to pay its debts and a statement by the 

proposed administrator that he believes the statutory purpose of administration is reasonably likely 

to be achieved) along with such other documents as may be provided. 

An interim ‘‘moratorium’’ on enforcement action against a company will come into effect on the filing 

with the court of the application for making of an administration order by the court or the notice of 

intention to appoint an administrator out of court, or on the presentation of a petition for an 

administration order, as the case may be. During the period for which such moratorium is in force, inter 

alia, no steps may be taken to enforce any security over the property of the company or partnership except 

with the leave of the court (and subject to such terms as the court may impose). The moratorium remains 

in force where an administration application has been made and has not yet been granted or dismissed, 

or has been granted but the administration order has not yet taken effect, or where a floating charge 

holder has filed notice of intention to appoint an administrator with the court, until the appointment takes 

effect or until five business days expire with no administrator having been appointed, or where the 

directors of or the company itself have/has filed with the court notice of intention to appoint an 

administrator, until the appointment takes effect or until ten business days expire with no administrator 

having been appointed. 

During the period for which a company is in administration, inter alios, no steps may be taken to enforce 

any security over the property of the company or partnership except with the leave of the court (and 

subject to such terms as the court may impose) or the consent of the administrator. 

Accordingly, if an application is made or petition is presented for the making of an administration order 

by the court, or notice is filed with the court of the intention to appoint an administrator, or an 

administration order is made or an administrator is appointed in respect of a Borrower or any of the other 

Obligors incorporated in England and Wales (but subject always to the capital market exception 

described below), the enforcement of the Obligor Security by the Borrower Security Trustee would not 

be possible unless the leave of the court or the consent of the administrator was obtained, and would in 

any case be delayed by the need to apply to the court for leave or to the administrator for consent. 

Administrative Receivership 

Background: At any time after the Obligor Security has become enforceable, the Borrower Security 

Trustee (provided that it is indemnified and/or secured to its satisfaction) may, as directed by the Issuer 

Security Trustee, pursue a number of different remedies. One such remedy is (in relation to security held 

by the Borrower Security Trustee) the appointment of a Receiver over specific property or over all of the 

Secured Properties belonging to the relevant Borrower. 

Capital Market exception: The provisions of the Enterprise Act, amending the corporate insolvency 

provisions of the Insolvency Act, came into force on 15 September 2003. 

49

As a result of the amendments made to the Insolvency Act by the Enterprise Act, the holder of a 

‘‘qualifying floating charge’’ created on or after 15 September 2003 will be prohibited from appointing an 

administrative receiver (and consequently be unable to prevent the chargor entering into administration), 

unless the floating charge falls within one of the exceptions set out in sections 72B to 72G of the 

Insolvency Act. As the Obligor Security Documents will be entered into after 15 September 2003, the 

Borrower Security Trustee will not therefore be entitled to appoint an administrative receiver over the 

assets of the Borrowers unless the floating charges in such documents fall within the exceptions. 

The exceptions referred to above include an exception (the ‘‘capital market exception’’) in respect of, in 

certain circumstances, the appointment of an administrative receiver pursuant to an agreement which is 

or forms part of a ‘‘capital market arrangement’’ (which is broadly defined in the Insolvency Act). This 

exception will apply if a party incurs or, when the agreement in question was entered into was expected 

to incur, a debt of at least £50 million and if the arrangement involves the issue of a capital market 

investment (also defined but, generally, a rated, traded or listed bond). 

Although there is as yet no case law on how this particular exception will be interpreted, the Issuer 

considers that the exception will be applicable to the transactions described in this Offering Circular so 

far as concerns the floating charges created by the Borrowers and given to the Borrower Security Trustee 

pursuant to the Borrower Deeds of Charge (the Issuer’s rights under which, and the debts which such 

floating charges secure, having been assigned by way of security to the Issuer Security Trustee). It should 

be noted, however, that the Secretary of State may, by secondary legislation, modify the exceptions to the 

prohibition on appointing an administrative receiver and/or provide that the exception shall cease to have 

effect. No assurance can be made that any such modification or provisions in respect of the capital market 

exception will not be detrimental to the interests of the Noteholders. 

Receiver as Agent 

A receiver of a company would generally be the agent of the company until its liquidation and thus, while 

acting within his powers, only incurs liability on behalf of the company. If, however, the receiver’s 

appointer unduly directed or interfered with or influenced the receiver’s actions, a court may decide that 

the receiver was the agent of his appointer and that his appointer should be responsible for the receiver’s 

acts and omissions. 

Payments to, inter alios, the Borrower Security Trustee (which is entitled to receive remuneration, 

reimbursement for its expenses and an indemnity for its potential liabilities) will rank ahead of the interest 

and principal due to the Issuer under the Commercial Mortgage Loan Agreements with the Borrowers. 

Similarly, payments to, inter alios, the Issuer Security Trustee (which is entitled to receive remuneration, 

reimbursement for its expenses and an indemnity for potential liabilities) will rank ahead of the interest 

and principal due under the Notes. Accordingly, should the Borrower Security Trustee or Issuer Security 

Trustee become liable for the acts of such a receiver, the amount that would otherwise be ultimately 

available for payment to the Noteholders may be reduced. 

If any of the Borrowers or their related Parent Obligors goes into liquidation, then as noted above the 

receiver will cease to be its agent. At such time he will then act either as agent of his appointer or as 

principal according to the facts existing at that time. If he acts as agent of his appointer, then for the 

reasons set out in the foregoing paragraph, the amount that would otherwise be ultimately available for 

payment to Noteholders may be reduced. If a receiver appointed by the Borrower Security Trustee incurs 

a personal liability, he will have a right of indemnity out of the assets in his hands in respect of that liability 

and the amount that would otherwise have been available for payment to the Issuer and, ultimately, the 

Noteholders, would be reduced accordingly. 

Small Companies Moratorium 

Certain small companies incorporated in England and Wales, as part of the company’s voluntary 

arrangement procedure, may seek court protection from their creditors by way of a ‘‘moratorium’’ for a 

period of up to 28 days, with the option for creditors to extend this protection for up to a further two 

months (although the Secretary of State for Trade and Industry may, by order, extend or reduce the 

duration of either period). 

The position as to whether or not small companies are eligible for a moratorium may change from period 

to period, depending on its financial position and average number of employees during that particular 

period. The Secretary of State for Trade and Industry may by regulations also modify the qualifications 

for eligibility of a company for a moratorium and may also modify the present definition of a ‘‘small 

company’’. Accordingly, the Borrowers may, at any given time (subject to the exemptions referred to 

below) be eligible to seek a moratorium, in advance of a company voluntary arrangement. 

50

A company is eligible for a moratorium if, at the date of filing for moratorium, it meets two or more of 

the criteria for being a ‘‘small company’’ under Section 247(3) of the Companies Act 1985 which relate 

to the company’s balance sheet, total turnover and average number of employees in a particular period. 

During the period for which a moratorium is in force in relation to a company, amongst other things, no 

winding up may be commenced or administrator appointed to that company, no administrative receiver 

of that company may be appointed, no security created by that company over its property may be 

enforced (except with the leave of the Court) and no other proceedings or legal process may be 

commenced or continued in relation to that company (except with the leave of the Court). 

Certain companies which qualify as small companies for the purposes of these provisions may be, 

nonetheless, excluded from being so eligible for a moratorium. As at the Closing Date, companies 

excluded from eligibility for a moratorium include those which, at the time of filing for the moratorium, 

are party to a ‘‘capital market arrangement’’, under which a party has incurred, or when the agreement 

was entered into is expected to incur, a debt of at least £10 million and which involves the issue of a capital 

market investment. However, the Secretary of State may modify the criteria by reference to which a 

company otherwise eligible for a moratorium is excluded from being so eligible and/or provide that the 

exclusion shall cease to have effect. 

Accordingly, the provisions described above may limit the Borrower Security Trustee’s ability to enforce 

the Obligor Security in respect of the Borrowers, to the extent that, first, any of the Borrowers falls within 

the criteria for eligibility for a moratorium at the time a moratorium is sought, second, if any of the 

directors of the Borrowers seek a moratorium in advance of a company voluntary arrangement, and, third, 

any of the Borrowers is considered not to fall within the capital market exception (as expressed or 

modified at the relevant time) or any other applicable exception at the relevant time. 

Recharacterisation of Fixed Security Interest 

There is a possibility that a court could find that the fixed security interests expressed to be created by the 

security documents governed by English law could take effect as floating charges as the description given 

to them as fixed charges is not determinative. 

Where the chargor is free to deal with the secured assets, or any proceeds received on realisation of the 

secured assets, without the consent of the chargee, the court would be likely to hold that the security 

interest in question constitutes a floating charge, notwithstanding that it may be described as a fixed 

charge. 

Whether the fixed security interests will be upheld as fixed security interests rather than floating security 

interests will depend, inter alios, on whether the Borrower Security Trustee has the requisite degree of 

control over the chargors’ ability to deal in the relevant assets and the proceeds thereof and, if so, whether 

such control is exercised by the Borrower Security Trustee in practice. 

If the fixed security interests are recharacterised as floating security interests, the claims of (i) the 

unsecured creditors (if any) of any of the Borrowers in respect of that part of the net property of any of 

the Borrowers which is ring fenced as a result of the Enterprise Act (see ‘‘Share of Floating Charge Assets 

for Unsecured Creditors’’ below) and (ii) certain statutorily defined preferential creditors of any of the 

Borrowers may have priority over the rights of the Borrower Security Trustee, as the case may be, to the 

proceeds of enforcement of such security. 

A receiver appointed by the Borrower Security Trustee would be obliged to pay preferential creditors out 

of floating charge realisations in priority to payments to the Obligor Secured Creditors (including the 

Issuer). Following the coming into force of the Enterprise Act on 15 September 2003, the only remaining 

categories of preferential debts are certain amounts payable in respect of occupational pension schemes, 

employee remuneration and levies on coal and steel production. 

Pursuant to the covenants contained in the Commercial Mortgage Loan Agreements, neither of the 

Borrowers is permitted to have any employees and its activities are otherwise restricted. Accordingly, if 

the Borrowers comply with the covenants contained in the Commercial Mortgage Loan Agreements, it 

is unlikely that the Borrowers will have preferential creditors and is likely to have a limited number of 

unsecured creditors (which would include any Tax Authority). 

If the Borrower Security Trustee was prohibited from appointing an administrative receiver (for, inter alia, 

the reasons outlined above), or failed to exercise its right to appoint an administrative receiver within the 

relevant notice period and any of the Borrowers were to go into administration, the expenses of the 

administration would rank ahead of the claims of the Borrower Security Trustee as floating charge holder. 

51

Furthermore, in such circumstances, the administrator would be free to dispose of floating charge assets 

without the leave of the court, although the Borrower Security Trustee would have the same priority in 

respect of the property of the company representing the floating charge assets disposed of, as it would 

have had in respect of such floating charge assets. 

Share of Floating Charge Assets for Unsecured Creditors 

In addition to the amendments to the Insolvency Act effected by the Enterprise Act described under 

‘‘Administrative Receivership’’ above, the Enterprise Act also inserted a new Section 176A into the 

Insolvency Act, which provides that where a company has gone into liquidation or administration, or 

where there is a provisional liquidator or receiver, a ‘‘prescribed part’’ of the company’s net property is 

to be applied in satisfaction of unsecured debts in priority over floating charge holders. 

The amount available for unsecured creditors will depend upon the value of the company’s net property, 

being the amount of the company’s property which would otherwise be available for satisfaction of the 

claims of floating charge holders or holders of a debenture secured by a floating charge. As at the date 

of this Offering Circular, the ‘‘prescribed part’’ has been set as 50% of the first £10,000 of a company’s net 

property and 20% of the net property that exceeds £10,000 up to a maximum of £600,000. Where the 

company’s net property is less than a prescribed minimum of £10,000, the liquidator, administrator or 

receiver may disapply this rule without application to the Court in respect of a company if it believes that 

the cost of making a distribution to unsecured creditors would outweigh the benefits. If the company’s net 

property is more than the prescribed minimum, the liquidator, administrator or receiver may apply to the 

Court for an order that the rule may be disapplied on the same ground. 

Change of law 

The structure of the issue of the Notes is based on English law and United Kingdom tax, regulatory and 

administrative practice in effect as at the date of this Offering Circular and having due regard to the 

expected tax treatment of all relevant entities under such law and practice. No assurance can be given as 

to the impact of any possible change to English law and United Kingdom tax, regulatory or administrative 

practice after the date of this Offering Circular. 

No assurance can be given that the Office of Fair Trading, the Financial Services Authority or any other 

regulatory authority in any other jurisdiction will not in the future take action or that future adverse 

regulatory developments will not arise with regard to the commercial mortgage market in the United 

Kingdom generally, each Borrower’s particular sector in that market or specifically in relation to a 

Borrower. Any such action or developments may have a Material Adverse Effect on the Issuer and/or a 

Borrower and their respective businesses and operations. This may, ultimately, adversely affect the ability 

of the Issuer to make payment in full on the Notes when due. 

Changes to the Basel Capital Accord (Basel II) 

In June 2004, the Basel Committee on Banking Supervision (the ‘‘Committee’’) published Basel II, which 

will replace the 1988 Capital Accord and contains a new set of standards for determining the minimum 

capital requirements for banking organisations and places enhanced emphasis on market discipline and 

sensitivity to risk. It is the intention of the Committee that, for the most part, the new framework will be 

available for implementation by member jurisdictions by the end of 2006. However, for more advanced 

approaches to risk measurement, implementation will not occur until the end of 2007. In addition a capital 

floor may be imposed on some banks until 2009. In order for the new framework to be put into effect for 

credit and financial institutions in Europe it will need to be implemented via an EU Capital Adequacy 

Directive, proposals for which have been presented by the European Commission. Basel II may, amongst 

other things, affect the risk-weighting of the Notes in respect of certain investors if those investors are 

regulated in a manner which will be affected by the new framework. Consequently, prospective purchasers 

should consult their own advisers as to the consequences of and the effect on them of, the implementation 

of Basel II. 

European Monetary Union 

It is possible that, prior to the maturity of the Notes, the United Kingdom will become a Participating 

Member State in the Economic and Monetary Union and that therefore the euro will become the lawful 

currency of the United Kingdom. If so, (a) all amounts payable in respect of the Notes may become 

payable in euro, (b) the introduction of the euro as the lawful currency of the United Kingdom may result 

in the disappearance of published or displayed rates for deposits in sterling used to determine the rates 

of interest on the Notes or changes in the way those rates are calculated, quoted and published or 

52

displayed and (c) applicable provisions of law may allow the Issuer to redenominate the Notes into euro 

and to take additional measures in respect of the Notes in accordance with Condition 7(k) (Payments – 

Change in Currency). 

If the euro becomes the lawful currency of the United Kingdom and the Notes are outstanding at the time, 

the Issuer intends to make payments on the Notes in accordance with the then market practice for 

payments on such debts. It cannot be said with certainty what effect, if any, the adoption of the euro by 

the United Kingdom would have on investors in the Notes. The introduction of the euro could also be 

accompanied by a volatile interest rate environment which could adversely affect the Borrowers’ ability 

to repay their Commercial Mortgage Loans, although the Issuer is required to maintain certain hedging 

cover in respect of certain of the interest payments it is to receive under the Commercial Mortgage Loan 

Agreements. 

4. Risks relating to Taxation 

Secondary and Contingent Taxation Liabilities of the Borrowers and the Issuer 

Where a company fails to discharge certain taxes due and payable by it within a specified time period, UK 

tax law imposes in certain circumstances (including where that company has been sold so that it becomes 

controlled by another person) a secondary liability for those overdue taxes on other companies which are 

or have been members of the same group of companies for tax purposes or are or have been under 

common control with the company that has not discharged its primary liability to pay that tax. London 

and Cambridge Properties Limited, L.C.P. Commercial Limited, L.C.P. Management Limited and the 

Transferors (together the ‘‘LCP Covenantors’’) and LCP Real Estate, and on the other hand Proudreed 

Limited (the ‘‘Proudreed Covenantor’’) and Proudreed Real Estate, will covenant in a separate Tax Deed 

of Covenant not to do anything (and to procure that nothing is done by persons under their control) which 

would result in such a secondary liability (including a liability to VAT) arising, as appropriate, in relation 

to the relevant Borrower or the Issuer and to the extent there is a secondary liability arising the LCP 

Covenantors or Proudreed Covenantor, as the case may be, will indemnify the relevant Borrower, the 

Issuer and the Post-Enforcement Call Option Holder. 

UK Corporation Tax on Chargeable Gains and Stamp Duty Land Tax 

The Borrowers have acquired, or will on the Closing Date acquire, certain real property interests (each 

a‘‘relevant asset’’) from other companies which were or will be members of the respective groups for 

capital gains and stamp duty land tax purposes at the time of the acquisition. Consequently, the Borrowers 

may have a contingent liability for UK corporation tax on chargeable gains and stamp duty land tax. 

The contingent liability for UK corporation tax on chargeable gains will crystallise to the extent of assets 

still held by it if, broadly, a Borrower ceases to be a member of the chargeable gains group of which, in 

the case of LCP Real Estate, London and Cambridge Properties Limited is the ‘‘principal company’’ and, 

in the case of Proudreed Real Estate, Proudreed Limited is the ‘‘principal company’’ within six years of 

the date on which the relevant Borrower acquired a relevant asset. Accordingly, a degrouping could 

trigger these contingent liabilities. In general terms, the base costs for chargeable gains purposes in the 

Secured Properties are lower than the market value of the Secured Properties as at the date of the 

relevant transfers, thereby resulting in sizeable contingent liabilities. 

Broadly, the contingent liability to stamp duty land tax will crystallise in a Borrower, to the extent of assets 

still held by it, if it ceases to be a member of the same stamp duty land tax group as the relevant transferor 

either within three years of the date on which it acquired a relevant asset which is, broadly, land or an 

interest in land or pursuant to, or in connection with, arrangements made before the end of that period. 

If any such contingent tax liabilities as are mentioned above were to crystallise in a Borrower, it may have 

a primary liability to tax, discharge of which could adversely affect the amount of its post-tax income and, 

potentially, affect the relevant Borrower’s ability to pay amounts of interest and principal under its 

Commercial Mortgage Loan. The LCP Covenantors and LCP Real Estate and on the other hand the 

Proudreed Covenantor and Proudreed Real Estate will each give a covenant in the Tax Deed of Covenant 

to which they are a party not to do anything which might reasonably be expected to result in the 

crystallisation of such contingent liabilities, and the LCP Covenantors (in the case of LCP Real Estate) 

and Proudreed Covenantor (in the case of Proudreed Real Estate) have additionally agreed to indemnify 

the relevant Borrower against any tax and associated costs if such liability were to arise. In addition, the 

risk of degrouping as a result of Proudreed Limited disposing of Proudreed Real Estate will be mitigated 

by the fact that Proudreed Limited will grant an equitable mortgage over its shareholding in Proudreed 

53

Real Estate as security for certain of its undertakings under the Proudreed Tax Deed of Covenant and, 

in the case of LCP Real Estate, L.C.P. Commercial Limited will grant an equitable mortgage over its 

shareholding in LCP Real Estate as security for certain of its undertakings under the relevant Tax Deed 

of Covenant (as to which see further the sections entitled ‘‘Summary of Principal Documents – 

Commercial Mortgage Loans’’ and ‘‘Tax Deeds of Covenant’’ below). 

It is possible that further asset transfers to the Borrowers from members of their respective Borrower 

Groups (excluding the Borrowers) may take place in the future. No tax on chargeable gains or stamp duty 

land tax should arise on intra group transfers, but a subsequent degrouping of the transferee could in 

certain circumstances (as outlined above) give rise to a primary or secondary liability to tax in the 

transferee or the transferor (respectively). The Tax Deeds of Covenant will include provisions to ensure 

that the Borrowers are appropriately protected in respect of such liabilities potentially arising on further 

asset transfers. 

In addition, each Tax Deed of Covenant obliges the LCP Covenantors or Proudreed Covenantor, as the 

case may be, to provide cash collateral (save to the extent provided out of monies available to the relevant 

Borrower not standing to the credit of the relevant Borrower Accounts) if the total contingent degrouping 

charge in a Borrower on any additional transfer exceeds from time to time the difference between the 

market value of the Secured Properties in that Borrower’s Property Portfolio and the total outstanding 

obligations of that Borrower under its Commercial Mortgage Loan or if an event occurs that might 

reasonably be expected to trigger a degrouping charge. The LCP Covenantors or Proudreed Covenantor, 

as the case may be, shall be required to cash collateralise the relevant Borrower’s contingent liabilities, 

such cash being required to be deposited into the relevant Contingent Tax Security Account to pay tax 

or be held until such time as there is no reasonable prospect that such collateral will be required to meet 

the degrouping charges in the Borrower. 

The disposal of certain capital assets, including properties by the Borrowers to third parties may give rise 

to a liability for UK corporation tax on chargeable gains. Should any such tax liability arise as a result of 

a disposal, that tax liability could, indirectly, adversely affect the ability of the Issuer to meet its 

obligations under the Notes. 

These factors may mean that, should any tax liability arise on enforcement of security as described above, 

the ability of the Issuer to repay the Notes could be adversely affected to a greater extent than if there 

were a higher base cost in the securitisation estate. 

Withholding tax in respect of the Notes and the Hedging Agreements 

In the event that any withholding or deduction for or on account of tax is required to be made from 

payments due under the Notes (as to which see the section entitled ‘‘United Kingdom Taxation’’ below), 

neither the Issuer nor any Paying Agent nor any other person will be obliged to pay any additional 

amounts to Noteholders or, if Definitive Notes are issued, Couponholders or to otherwise compensate 

Noteholders or Couponholders for the reduction in the amounts they will receive as a result of such 

withholding or deduction. If such a withholding or deduction is required to be made, the Issuer will have 

the option (but not the obligation, unless the Borrowers have exercised their rights to prepay the 

Commercial Mortgage Loans in such circumstances, and in certain circumstances subject to the consent 

of the Borrowers) of redeeming all outstanding Notes in full at their Principal Amount Outstanding 

(together with accrued interest). For the avoidance of doubt, neither the Note Trustee nor Noteholders 

nor, if Definitive Notes are issued, Couponholders, will have the right to require the Issuer to redeem the 

Notes in these circumstances. 

If the Issuer or a Hedging Provider is obliged to pay such an increased amount as a result of its being 

obliged to make such a withholding or deduction (any such amounts as are payable by the Issuer forming 

part of the Hedging Subordinated Amounts, the payment of the On-going Facility Fee in respect of which 

will rank junior to payments under the relevant Commercial Mortgage Loan in the Obligor Priority of 

Payments), it may terminate the transactions under the Hedging Agreements (subject to the relevant 

Hedging Provider’s obligation to use its reasonable endeavours to transfer its rights and obligations under 

the Hedging Agreements to a third party Hedging Provider such that payments made by and to that third 

party Hedging Provider under the Hedging Agreements can be made without any withholding or 

deduction for or on account of tax and, in a case where the Issuer wishes to exercise its right to terminate 

the transactions under the Hedging Agreements, subject to the Ratings Test being satisfied notwithstanding 

such termination). If a transaction under the Hedging Agreements is terminated, the Issuer may be 

unable to meet its obligations under the Notes, with the result that the Noteholders may not receive all 

of the payments of principal and interest due to them in respect of the Notes. 

54

Withholding tax in respect of the Commercial Mortgage Loans 

In the event that any withholding or deduction for or on account of tax is required to be made from any 

payment due to the Issuer under the Commercial Mortgage Loans, the relevant Borrower making that 

payment will be obliged to gross up that payment so that the Issuer will receive the same cash amount that 

it would have received had no such withholding or deduction been required to be made. If the relevant 

Borrower is obliged to increase any sum payable by it to the Issuer as a result of that Borrower being 

required by a change in tax law to make a withholding or deduction from that payment, that Borrower 

will have the option (but not the obligation) to prepay its Commercial Mortgage Loan in full. If that 

Borrower chooses to prepay its Commercial Mortgage Loan, the Issuer will then be required to redeem 

the Notes in part (or, if that Borrower is the sole Borrower with an outstanding Commercial Mortgage 

Loan, in full). If a Borrower does not have sufficient funds to enable it to gross up payments to the Issuer, 

the Issuer’s ability to meet its payment obligations under the Notes could be adversely affected. 

Introduction of International Financial Reporting Standards 

For accounting periods beginning on or after 1 January 2005, the accounts of United Kingdom companies 

with listed debt (such as the Issuer) are required to comply with International Financial Reporting 

Standards (‘‘IFRS’’) or with new UK Financial Reporting Standards (‘‘new UK FRS’’) which are based 

on IFRS. In the following, unless otherwise stated, references to IFRS include references to new UK FRS. 

It is not clear whether the tax position of special purpose companies such as the Issuer will be the same 

under IFRS as it would have been under UK GAAP as it applied for accounting periods ending on or 

prior to 31 December 2004 (‘‘old UK GAAP’’). HMRC have indicated that, as a policy matter, they do 

not wish the tax neutrality of securitisation special purpose companies in general to be disrupted as a 

result of the transition to IFRS and that they are willing to work with the industry to identify appropriate 

means of preventing such disruption. 

As a first step, the Finance Act 2005 contains legislation creating a special interim corporation tax regime 

for ‘‘securitisation companies’’. The effect of this legislation is to allow securitisation companies to 

prepare tax computations on the basis of old UK GAAP as applicable up to 31 December 2004 for all 

accounting periods beginning on or after 1 January 2005 and ending before 1 January 2007, notwithstanding 

any requirement to prepare statutory accounts under IFRS. The Finance Act also contains a 

power to make regulations to establish a permanent regime for securitisation SPVs. 

In order for a company to qualify as a securitisation company, it is necessary for the company to satisfy 

a number of tests as at the closing of any relevant securitisation and the results of applying those tests 

therefore cannot be finally determined until the Closing Date. Provided, however, that the Notes are 

issued as envisaged in this Offering Circular, the Issuer will qualify as a ‘‘securitisation company’’ for these 

purposes. 

Assuming that the Issuer qualifies as a securitisation company for the purposes of the interim regime, this 

should allow the Issuer to avoid any impact of IFRS on its tax computations for any accounting period 

ending before 1 January 2007 (which means that the interim regime should apply to the Issuer up to and 

including its accounting period ending 31 March 2006). Further, provided that HMRC adhere to the policy 

objectives that they have indicated in this area and which they have confirmed in Budget Notice REV 13 

of 16 March 2005, it is expected that secondary legislation will be put in place pursuant to enabling 

legislation in the Finance Act 2005 to ensure that the taxation treatment of companies such as the Issuer 

does not change as a result of the introduction of IFRS so as to give rise to any incremental unfunded tax 

liabilities. If, however, such expectations are not met and the tax position of the Issuer is adversely 

affected by the introduction of IFRS, this could ultimately cause a reduction in the payments the 

Noteholders receive on the Notes. 

It is also considered that each of the Borrowers will qualify as a securitisation company for the purposes 

of the interim regime (although the secondary legislation referred to above is unlikely also to extend to 

the Borrowers). Assuming that the Borrowers qualify as securitisation companies for the purposes of the 

temporary regime, this would allow them to avoid any impact of IFRS on their tax computations for any 

accounting period ending before 1 January 2007 (which means that the interim regime should apply to the 

Borrowers up to and including their accounting periods ending 31 March 2006, in the case of LCP Real 

Estate, and ending 31 December 2006, in the case of Proudreed Real Estate). However, the Borrowers are 

expected in any event to avoid any impact of IFRS on their tax computations (provided they do not adopt 

the fair value accounting rules in the Companies Act 1985) until such time as IFRS is applied generally 

to all UK companies (which is expected to be for accounting periods beginning on or after 1 January 

2007). The tax treatment of the Borrowers is unclear in certain respects for accounting periods ending on 

55

or after 1 January 2007 and, if adversely affected by IFRS, this could ultimately lead to reductions in the 

amounts available to make payments to Noteholders. 

European Union Directive on the Taxation of Savings Income 

Directive 2003/481 EC provides for the tax authorities of Member States to provide each other with 

details of payments of interest and similar income made to individuals but permits Austria, Belgium and 

Luxembourg instead to impose a withholding tax on payments concerned for a ‘‘transitional period’’ 

(although it also provides that no such withholding tax should be levied where the beneficial owner of the 

payment authorises an exchange of information and/or where the beneficial owner presents a certificate 

from the tax authority of the Member State in which the beneficial owner is resident). The Directive does 

not preclude Member States from levying other types of withholding tax. The attention of Noteholders 

is drawn to Condition 9 (Taxation). 

Corporation Tax Reform 

In December 2004, HMRC issued a technical note entitled ‘‘Corporation tax reform’’. The document 

builds on a number of proposals contained in earlier consultation documents as to how the current 

corporation tax system might be reformed. It is not currently known whether or in precisely what form 

any changes arising from the consultation on corporation tax reform will be enacted. It is possible that, 

if these changes are enacted, they may affect the taxation treatment of the Issuer, and consequently could 

affect the ability of the Issuer to repay amounts under the Notes. The change may also affect the tax 

treatment of the Borrowers. 

The Issuer believes that the risks described above are the principal risks inherent in the transaction for 

Noteholders, but the inability of the Issuer to pay interest, principal or other amounts on or in connection 

with the Notes may occur for other reasons and the Issuer does not represent that the above statements 

regarding the risks of holding the Notes are exhaustive. Although the Issuer believes that the various 

structural elements described in this Offering Circular mitigate some of these risks for Noteholders, there can 

be no assurance that these measures will be sufficient to ensure payment to Noteholders of interest, principal 

or any other amounts on or in connection with the Notes on a timely basis or at all. 

56

SUMMARY OF PRINCIPAL DOCUMENTS 

Below is a summary of the key features of the principal Transaction Documents. The information in this 

section does not purport to be complete and is qualified in its entirety by reference to the detailed 

information appearing elsewhere in this Offering Circular. Prospective purchasers of the Notes are advised 

to read carefully and to rely, in addition, on the detailed information appearing elsewhere in this Offering 

Circular in making any decision whether or not to invest in any Notes. 

1. The Commercial Mortgage Loan Agreements 

Each Borrower will enter into a separate Commercial Mortgage Loan Agreement on the Closing Date 

between the relevant Borrower, the relevant Parent Obligor, the Issuer, the Cash Manager and the 


Initial Loans 

Pursuant to the terms of each such Commercial Mortgage Loan Agreement, the Issuer will agree, subject 

to the satisfaction of certain conditions precedent, to advance a loan to the relevant Borrower on the 

Closing Date. 

The proceeds from each Commercial Mortgage Loan will be used by the relevant Borrower on the 

Closing Date for the purpose stated in ‘‘Transaction Overview’’ above. 

Additional Loans 

Each Commercial Mortgage Loan Agreement will provide that the relevant Borrower may also at any 

time, by written notice to the Borrower Security Trustee, the Issuer and the Rating Agencies, request a 

Further Loan or a New Loan (each an Additional Loan). A Further Loan is a loan that will rank pari 

passu with the initial loan advanced under the relevant Commercial Mortgage Loan Agreement (the 

‘‘Initial Loan’’) and will have the same terms and conditions as the relevant Initial Loan. A New Loan may 

only rank below an Initial Loan. 

Each Additional Loan will be financed by the issue of Additional Notes by the Issuer and will only be 

permitted if, inter alia, the following conditions precedent are satisfied: 

(a) the relevant Borrower has delivered updated documentary conditions precedent (including 

constitutional documents, board minutes, solvency certificate and legal opinions) to the Issuer and 

the Borrower Security Trustee; 

(b) Additional Loans may only be issued in connection with the financing or refinancing of certain 

alterations to the properties within the relevant Property Portfolio or the acquisition of new 

properties and associated costs; 

(c) each Rating Agency has confirmed that: 

(i) in respect of a request for a Further Loan (which is to be financed by an issue of Further 

Notes), the Further Notes will be assigned the same rating as the then current rating of the 

Notes; and 

(ii) the then current ratings of the then existing Classes of Notes will not be adversely affected as 

a result of the proposed issue; and 

(d) no Loan Event of Default and/or Potential Loan Event of Default under the Initial Loan and any 

existing Additional Loan to the relevant Borrower has occurred and is subsisting at the time of the 

granting of the Additional Loan or will occur because of it. 

Interest on the Commercial Mortgage Loans 

The rate of interest on each Initial Loan (and each Additional Loan) in respect of any Loan Interest 

Period will be the rate determined by the Cash Manager to be the applicable Issuer Cost of Funds in 

respect of that Commercial Mortgage Loan and that Loan Interest Period. 

The rate of interest on each Commercial Mortgage Loan will be re-calculated following any prepayment 

of the Notes. 

Pursuant to the terms of each Commercial Mortgage Loan Agreement, interest will be paid by each 

Borrower quarterly in arrear on each Loan Interest Payment Date. 

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Repayment of the Commercial Mortgage Loans 

Subject to any early prepayment of a Commercial Mortgage Loan in accordance with the terms of the 

relevant Commercial Mortgage Loan Agreement, the Commercial Mortgage Loans will be repaid in full 

on 25 August 2014. 

Prepayment of the Commercial Mortgage Loans 

(a) 

Each Borrower shall (or, in the case of paragraph (vi) and (vii) below, may), if applicable upon 

giving the requisite prior written notice (as specified below) to, inter alios, the Issuer, prepay its 

Commercial Mortgage Loan: 

(i) 

(ii) 

(iii) 

(iv) 

in part on any Loan Interest Payment Date, if any interest (other than in relation to any 

Minor Disposals) in any Secured Property is disposed of, whether as a result of a compulsory 

purchase or an elected disposal as permitted pursuant to and in accordance with the terms of 

the relevant Commercial Mortgage Loan Agreement, without an Additional Secured 

Property being acquired by the Borrower within 6 months of such disposal, the Prepayment 

Amount being calculated in accordance with the terms of the relevant Commercial Mortgage 

Loan Agreement and as further described below. For further details as to permitted disposals 

of Secured Properties, see the sub-section entitled ‘‘Disposals of assets and Secured 

Properties’’ below; 

in part on any Loan Interest Payment Date, if any insurance proceeds are received in respect 

of any damage or destruction of a Secured Property and such insurance proceeds are not 

(A) used to replace, restore or reinstate such Secured Property as required by the terms of 

any applicable Occupational Lease, or (B) absent a Potential Loan Event of Default or a 

Loan Event of Default and so long as both the Historical ICR and the Projected ICR are 

equal or above 1.3:1, used to replace, restore or reinstate such Secured Property within the 

earlier of (1) 12 months of their receipt into the relevant Insurance Proceeds Account and 

(2) 36 months (or such lesser period for which the relevant Secured Property benefits from 

insurance for loss of rent) of the relevant damage or destruction, despite such replacement, 

restoration or reinstatement not being required by the terms of any applicable Occupational 

Lease. If, in respect of any Secured Property, any of the above time periods are (or are likely 

to be) exceeded, the relevant Borrower shall be entitled to request an extension to such time 

periods from (and subject to the satisfaction of any conditions set by) the Borrower Security 

Trustee. No prepayment shall be required if the insurance proceeds received in respect of a 

Secured Property are less than £50,000 (as adjusted on an annual basis by reference to 

changes in retail prices), and in all other cases the Prepayment Amount will be calculated in 

accordance with the terms of the relevant Commercial Mortgage Loan Agreement and as 

further described below; 

upon receipt of not less than 35 and not more than 60 days prior written notice from the Issuer 

(or such shorter period expiring on the latest date permitted by law), in whole (but not in 

part), if it becomes unlawful for the Issuer to make, fund or, as applicable, permit to remain 

outstanding advances made pursuant to the applicable Commercial Mortgage Loan Agreement; 

in whole or in part (depending on the principal amount of the Commercial Mortgage Loan 

then outstanding) on any Loan Interest Payment Date if: 

(1) on the relevant Loan Calculation Date immediately preceding such Loan Interest 

Payment Date, either the Historical ICR or the Projected ICR (or both) is below 1.3:1 

and either the Historical ICR or the Projected ICR (or both) was below 1.3:1 on each 

of the three immediately preceding Loan Calculation Dates, in an amount equal to the 

balance then credited to the Cash Trap Account (after taking into account any amounts 

paid into the Cash Trap Account on such Loan Interest Payment Date); or 

(2) on the immediately preceding Loan Interest Payment Date a prepayment was made in 

respect of the relevant Commercial Mortgage Loan from the Cash Trap Account 

pursuant to either sub-paragraph (1) above or this sub-paragraph (2) (unless both on 

the Loan Calculation Date in respect of the current Loan Interest Payment Date and 

58

on the two Loan Calculation Dates immediately preceding such Loan Calculation Date 

both the Historical ICR and the Project ICR are/were equal to or above 1.3:1) in an 

amount equal to the balance then credited to the Cash Trap Account (after taking into 

account any amounts paid into the Cash Trap Account on such Loan Interest Payment 

Date); 

(v) in whole upon receipt of notice from the Issuer that it intends to redeem the Notes pursuant 

to and subject to Condition 6(c) (Optional Redemption for Tax Reasons) and in accordance 

with the terms of the relevant Commercial Mortgage Loan Agreement; 

(vi) upon giving not less than 45 nor more than 60 days prior written notice, in whole but not in 

part in the event of any withholding or deduction for or on account of tax being required to 

be made from payments due under the relevant Commercial Mortgage Loan; or 

(vii) upon giving not less than 45 nor more than 60 days prior written notice, in whole or in part 

(and, if in part, in a minimum amount of £30,000,000 or any multiple of £5,000,000 above 

£30,000,000) using amounts otherwise available to the Borrower and not credited to the 

Borrower Accounts provided that if it is prepaying its Commercial Mortgage Loan in full, the 

Borrower shall be entitled to apply funds credited to the Cash Trap Account towards such 

prepayment. 

The Issuer shall, in accordance with the Issuer Pre-Enforcement Priority of Payments or the Issuer 

Post-Enforcement Priority of Payments, as applicable, apply the proceeds from the prepayment of the 

Commercial Mortgage Loans that it receives by way of prepayment from the Borrowers towards the 

prepayment of the Notes, with the prepayment being applied sequentially starting with the highest 

ranking Class of Notes. 

A Borrower may only prepay its Commercial Mortgage Loan on a Loan Interest Payment Date (or, in the 

case of prepayment as a result of illegality, on such other date as is required pursuant to the terms of the 

relevant Commercial Mortgage Loan Agreement) if the Borrower, upon any such prepayment, pays: 

(a) in the case of any prepayment in part but not in full in accordance with paragraphs (i) or (ii) above, 

the Prepayment Amount; 

(b) in the case of the prepayment in full but not in part in the circumstances described in paragraphs 

(iii), (v) or (vi) above, the then aggregate principal amount outstanding of the relevant Commercial 

Mortgage Loan; 

(c) in the case of a prepayment in accordance with paragraphs (iv) or (vii) above, the amount required 

or elected to be prepaid in accordance with such paragraph, as the case may be; 

(d) all accrued and unpaid interest then outstanding on the Commercial Mortgage Loan; and 

(e) any other amounts due and payable under the relevant Commercial Mortgage Loan Agreement, 

including any amounts owing by way of On-going Facility Fee. 

For the purposes of each Commercial Mortgage Loan Agreement, in the case of any prepayment in 

accordance with paragraphs (i) or (ii) above, the ‘‘Prepayment Amount’’ means the product of the 

Release Price Percentage and the Allocated Loan Amount in respect of the Secured Property that was 

the subject of the relevant disposal or insurance claim, provided that, if the Prepayment Amount 

calculated in accordance with the provisions of the paragraph above is greater than the then aggregate 

principal amount outstanding on the Commercial Mortgage Loan relating to the relevant Borrower, the 

Prepayment Amount shall equal the then aggregate principal amount outstanding on the Commercial 

Mortgage Loan relating to that Borrower. 

In addition, in the case of any prepayment in accordance with paragraphs (i) or (ii) above, such 

prepayment will be made on the Loan Interest Payment Date immediately following the expiry of the 

relevant time period, unless such time period expires less than 35 days prior to the relevant Loan Interest 

Payment Date, in which case such prepayment will be made on the next following Loan Interest Payment 

Date. 

Facility Fees 

Pursuant to the terms of each Commercial Mortgage Loan Agreement and in consideration of the 

Commercial Mortgage Loans being made available, each Borrower will pay to the Issuer: 

(a) on the Closing Date, its proportionate share of an amount equal to all the fees, costs and expenses 

incurred by the Issuer (together with any VAT) on or before the Closing Date in connection with 

the issue of the Notes, the making of the Commercial Mortgage Loans and the negotiation, 

preparation and execution of each Issuer Transaction Document (the ‘‘Initial Facility Fee’’); and 

59

(b) on each Loan Interest Payment Date, a further fee (exclusive of VAT) in an amount equal to the 

aggregate of (i) its proportionate share of such amounts as are then necessary to enable the Issuer 

to pay or provide for all amounts (other than any payments of interest on, and repayments of 

principal in respect of, the Notes that are due to be paid on the next Interest Payment Date) falling 

due in accordance with the terms of the Issuer Transaction Documents to be paid or provided for 

by the Issuer on or shortly after such date, (ii) such amounts as are then necessary to enable the 

Issuer to pay any breakage costs under the Hedging Agreements arising as a result of the Issuer 

adjusting its hedging activities to reflect a prepayment by that particular Borrower and (iii) such 

amounts as are then necessary to enable the Issuer to pay any amounts owing to the Liquidity 

Facility Provider by reason of that particular Borrower failing to make or being late in making a 

payment under its Commercial Mortgage Loan (the ‘‘On-going Facility Fee’’ and together with the 

Initial Facility Fee, the ‘‘Issuer Facility Fees’’). 

Each Borrower’s proportionate share of such fees shall be based on the respective principal amount 

outstanding on the Commercial Mortgage Loans, after taking account of any principal losses on such loans. 

Withholding tax 

All payments made to the Issuer under a Commercial Mortgage Loan Agreement will be made free and 

clear of, and without withholding or deduction for, any tax unless such withholding or deduction is 

required by law. If any such withholding or deduction is so required, the amount of the payment due to 

the Issuer will be increased to the extent necessary to ensure that, after that withholding or deduction has 

been made, the amount ultimately received by the Issuer is equal to the amount that it would have 

received had that withholding or deduction not been required to be made. 

Representations and Warranties 

No independent investigation with respect to the matters warranted in any Commercial Mortgage Loan 

Agreement will be made by the Issuer, the Note Trustee or the Borrower Security Trustee other than a 

search made on the Closing Date on behalf of, inter alios, the Note Trustee and the Borrower Security 

Trustee against each Borrower and the relevant Parent Obligor in the relevant file held by the Registrar 

of Companies and at the Companies Court in respect of winding-up petitions and searches against the 

properties then comprising the Property Portfolios at the Land Registry. Apart from such searches, in 

relation to such matters, the above parties will (in addition to the Certificates of Title and Overview 

Reports) rely entirely on the representations and warranties to be given by the relevant Borrower and/or 

the relevant Parent Obligor, if applicable, pursuant to the terms of the relevant Commercial Mortgage 

Loan Agreement. 

These include representations and warranties, which may be limited by certain materiality qualifications 

and/or subject to the contents of the Certificates of Title and Overview Reports in certain circumstances, 

as to the following and other matters to be given by the Borrowers and (only in certain cases) the relevant 

Parent Obligors: 

• due incorporation, establishment, ownership and power and authority; 

• as at the Closing Date, the relevant Borrower having not traded since its date of incorporation 

and having no employees; 

• the relevant Borrower being the sole legal and beneficial owner of each Secured Property and 

having good and marketable title to that interest; 

• no security interest existing over all or any of the relevant Borrower’s present or future 

revenues or assets other than certain permitted security interests; 

• each of the Transaction Documents to which it is a party constituting its legal, valid and 

binding obligations and being enforceable in accordance with their terms (subject to due 

registration of security interests and certain other reservations); 

• no Loan Event of Default or Potential Loan Event of Default in respect of the relevant 

Commercial Mortgage Loan having occurred and continuing; 

• the relevant Borrower’s compliance with all applicable environmental laws and environmental 

licences relating to and material to any of the Secured Properties in its Property Portfolio; 

• ensuring all necessary governmental and other consents, approvals, licences, registrations, 

filings, payments of duties or taxes, notarisations required and other approvals and authorisations 

necessary to own its property and assets and for the conduct of its business 

60

substantially as it has been conducted with effect from the Closing Date, the absence of which 

would have a Material Adverse Effect, have been or when required will be obtained, are in 

full force and effect and, so far as it is aware, have not been revoked or otherwise terminated 

and their terms and conditions have been complied with; 

• no conflict existing between the Transaction Documents to which it is a party and applicable 

laws, regulations and its constitutional documents; 

• no material adverse change in its financial condition since the date on which the final version 

of the Information was produced or distributed, as the case may be; 

• no litigation, arbitration, administrative proceedings or governmental or regulatory investigations 

or proceedings or disputes being current or to its knowledge threatened or pending 

which, if adversely determined against it, would be reasonably expected to have a Material 

Adverse Effect; 

• subject to the Certificate of Title and Overview Reports, no Section 106 agreements or 

compulsory purchase orders relating to any Secured Property in the relevant Borrower’s 

Property Portfolio; 

• no deduction or withholding for or on account of any tax being required to be made from any 

payment it may make under the Transaction Documents; 

• the accuracy of the information provided to, inter alios, the solicitors who prepared the 

Certificates of Title relating to Secured Properties in the relevant Borrower’s Property 

Portfolio, the Approved Valuers who prepared the relevant Valuation Report, the relevant 

Auditors and the insurance brokers who arranged the Insurance Policy; 

• its most recent audited financial statements (to the extent that such financial statements have 

been prepared) having been prepared in accordance with generally accepted accounting 

principles in the country of its incorporation and giving a true and fair view of the financial 

condition of the company; and 

• it is able to pay its debts as and when they fall due and it is solvent. 

The above representations and warranties will also be repeated on each date on which any Additional 

Loan is made to a Borrower and certain of the above representations and warranties will be repeated on 

each Loan Interest Payment Date, by reference to the facts and circumstances then existing. 

Information Covenants 

Each of the Borrowers covenants that it shall: 

• obtain and provide to the Borrower Security Trustee, at the cost of the relevant Borrower, 

upon it becoming available, a copy of any Valuation Report prepared in respect of the 

Secured Properties in its Property Portfolio, provided that during the LTV Reference Period 

a full Valuation Report shall be provided in respect of each Secured Property during the first 

calendar year of the LTV Reference Period and a desktop Valuation Report shall be provided 

in respect of each Secured Property at least once a year thereafter (as taken from the date of 

the last Valuation Report), in each case together with a summary of any such report to be 

provided to the Noteholders. 

• provide to the Borrower Security Trustee, on each Loan Interest Payment Date, a quarterly 

certificate specifying: 

• the tenancy schedule for each Secured Property in its Property Portfolio showing, inter alia, 

the Occupational Tenants, the relevant unit occupied, the total rent payable and the amount 

(if any) which is in arrears, the lease start date and end date, any early termination options, 

the next rent review date, the rent review basis, the Estimated Rental Value of each unit 

and identifying the changes from the last tenancy schedule provided; 

• details of the Property Manager fees and any sub-contractor fees; 

• details of the amount of any service charge shortfall, in excess of £15,000 per annum in 

respect of any Secured Property in its Property Portfolio; 

• details of any steps being taken to recover any due but unpaid rental income under any 

Occupational Lease, where such due but unpaid rental income exceeds £25,000; 

61

• a copy of the relevant extract of the minutes of any property management meetings 

relating to material matters with respect to the Secured Property in its Property 

Portfolio held during that quarter; 

• a summary of any rent reviews and lease renewals in progress or agreed during that 

quarter; 

• copies of all material correspondence with insurance brokers and insurers handling the 

insurance of any Secured Property in its Property Portfolio, in respect of claims or 

liabilities where the potential liabilities or claims exceed £250,000; 

• details of any potential occupational tenant of any Secured Property in its Property 

Portfolio if the value of the annual rent is in excess of £100,000 per annum and any 

potential buyer of any Secured Property in its Property Portfolio; 

• details of any proposed Minor Development the cost (excluding VAT) of which is 

estimated to be, when aggregated with the cost (excluding VAT) of all other Minor 

Developments in respect of the relevant Borrower’s Property Portfolio, in excess of 

4 per cent. (in the case of LCP Real Estate) or 9 per cent. (in the case of Proudreed Real 

Estate) of the applicable Reference Amount in respect of the relevant Borrower’s 

Property Portfolio in any Reference Period; 

• details of any proposed Development the cost (excluding VAT) of which is estimated to 

be in excess of the greater of £250,000 and 10 per cent. of the Estimated Rental Value 

of the relevant Secured Property; 

• details of situations where it has become entitled to serve any notice on any former 

tenant of any Occupational Lease; and 

• the aggregate amount of due but outstanding payments relating to Secured Properties 

within its Property Portfolio; 

• if a Loan Event of Default or a Potential Loan Event of Default has occurred and is 

continuing, obtain a full Valuation Report of the Secured Properties at the cost of the 

Borrower, from an Approved Valuer appointed by the Borrower Security Trustee; 

• forward to the Borrower Security Trustee written confirmation from the relevant insurer or 

underwriter (or any broker acting for the relevant Borrower in connection with such 

insurance) of any renewal of any Insurance Policy within one month of such renewal; 

• supply to, inter alios, the Issuer, the Rating Agencies, the Liquidity Facility Provider, the 

Hedging Providers and the Borrower Security Trustee, ongoing updated financial statements 

and certain other information with respect to itself; and 

• in the event that an Information Meeting is held, if requested and subject to appropriate 

reasonable prior notice, send one or more representatives to that Information Meeting, 

provided that it shall not be required to send any representatives to more than one meeting 

per calendar year. 

Each set of accounts, financial documents and certain other documents to be delivered by or on behalf of 

the Borrowers as described above will also be delivered to, inter alios, the Rating Agencies, the Hedging 

Providers, the Liquidity Facility Provider and (if so requested) the Issuer Security Trustee. 

Financial Covenants 

Pursuant to the terms of the relevant Commercial Mortgage Loan Agreement, each Borrower will 

covenant and undertake to ensure that, from and including the Closing Date, in respect of the Historical 

Calculation Period ended on the immediately preceding Loan Calculation Date or the Forward-Looking 

Calculation Period beginning on the immediately preceding Loan Calculation Date, as the case may be, 

neither the Historical ICR nor the Projected ICR is less than 1.2:1. 

The Financial Covenants will be tested by or on behalf of each Borrower on each Loan Calculation Date 

(and the results will be notified to, inter alios, the Borrower Security Trustee on the same day), 

commencing on the Loan Calculation Date falling in February 2006, by reference to the financial 

information delivered by the relevant Borrower. 

62

A breach of a Financial Covenant may be remedied by one or more of the following: 

(i) the deposit of an amount into the Borrower Transaction Account which is sufficient to 

generate an amount of income which, if such income had been available on the first day 

of the Historical Calculation Period, or Forward-Looking Calculation Period, by 

reference to which either the Historical ICR or Projected ICR, respectively, was 

calculated; 

(ii) the substitution of Secured Properties, so long as the requirements described in the 

sub-sections entitled ‘‘Same-Day Substitution of the Secured Properties’’ and ‘‘Disposals 

of Assets and Secured Properties’’ are satisfied; and/or 

(iii) the addition of Additional Secured Properties, so long as requirements described in the 

sub-section entitled ‘‘Acquisition of Additional Properties’’ are satisfied, 

(or any combination of the foregoing) in each case as would have ensured that such breach would not 

have occurred had the Financial Covenants been calculated as if such remedy had been implemented on 

the first day of the relevant Historical Calculation Period or Forward-Looking Calculation Period, as the 

case may be. If not so remedied, a breach of a Financial Covenant will be capable of constituting a Loan 

Event of Default in respect of the relevant Commercial Mortgage Loan. 

In addition, any breach of the Financial Covenants may be remedied through any remedial action which 

the Rating Agencies confirm to the Issuer Security Trustee and the Borrower Security Trustee will not 

lead to a downgrade of the then-current rating applicable to the Notes. 

LTV Ratio 

Pursuant to the terms of each Commercial Mortgage Loan Agreement, each Borrower will covenant and 

undertake to ensure that, during the LTV Reference Period, the LTV Ratio in respect of its Commercial 

Mortgage Loan is not greater than 70 per cent. 

The LTV Ratio will be tested by or on behalf of each Borrower on each Loan Calculation Date during 

the LTV Reference Period commencing on the Loan Calculation Date falling in November 2012 on the 

basis of the aggregate Market Value of the Secured Properties comprised within the relevant Borrowers’ 

Property Portfolio as at such date as determined in the most recent Valuation Reports. 

If, on a Loan Calculation Date during the LTV Reference Period, the LTV Ratio in respect of a Borrower 

is greater than 70 per cent., the relevant Borrower will be required to remedy the same by (a) the 

acquisition or substitution of Secured Properties, so long as the requirements described in the sub-sections 

entitled ‘‘Acquisitions of Additional Properties’’, ‘‘Same-Day Substitution of the Secured Properties’’ and 

‘‘Disposals of Assets and Secured Properties’’ are satisfied and/or the deposit of an amount into the 

relevant Cash Trap Account (to be credited to the ‘‘LTV reserve ledger’’ of such account), in each case 

as would have ensured that the LTV Ratio would have been at or below 70 per cent. had the relevant LTV 

Ratio been calculated as if such Secured Properties and/or cash had been so acquired, substituted or 

deposited, as the case may be, on the relevant Loan Calculation Date. 

Pending its making an acquisition of an Additional Secured Property, a Same-Day Substitution Disposal 

or deposit of cash into the Cash Trap Account as described above, the relevant Borrower will be required 

in accordance with item (i) of the Obligor Pre-Enforcement Priority of Payments to deposit all sums then 

standing to the credit of the relevant Borrower Transaction Account (after deducting amounts necessary 

to pay items (a) to (h) of the Obligor Pre-Enforcement Priority of Payments) into the relevant Cash Trap 

Account on the immediately following Loan Interest Payment Date (such amounts to be credit to the 

‘‘LTV reserve ledger’’ of such account) up to a maximum aggregate amount equal to the amount required 

to be so credited in order for the relevant LTV Ratio, when recalculated to take account of such deposit, 

to be at or below 70 per cent. (the ‘‘LTV Required Amount’’). 

If, in respect of a Loan Calculation Date falling within the LTV Reference Period, either the Historical 

ICR or Projected ICR or both are at such level as the relevant Borrower is already required in accordance 

with item (i) of the Obligor Pre-Enforcement Priority of Payments to make a deposit into the relevant 

Cash Trap Account, the relevant Borrower (or the Cash Manager on its behalf) will, from the total sum 

credited to the Cash Trap Account on the relevant Loan Interest Payment Date, first credit an amount 

required to maintain the balance of sums credited to the ‘‘LTV reserve ledger’’ at the LTV Required 

Amount to the ‘‘LTV reserve ledger’’ of the relevant Cash Trap Account, with the balance to remain as 

a general credit to the relevant Cash Trap Account. If, on a subsequent Loan Calculation Date, the LTV 

Ratio in respect of a Borrower that has amounts credited to its ‘‘LTV reserve ledger’’ is such as to be at 

63

or below 70 per cent. without having regard to some or all of the amounts so credited, the applicable LTV 

Required Amount will be reduced accordingly and the Cash Manager will be obliged to transfer any 

amounts standing to the credit of the ‘‘LTV reserve ledger’’ in excess of the LTV Required Amount to the 

relevant Borrower Transaction Account on the immediately following Loan Interest Payment Date. 

A failure by a Borrower to maintain its LTV Ratio at or below 70 per cent. during the LTV Reference 

Period is not capable of constituting a Loan Event of Default. 

General Covenants 

Pursuant to the terms of each Commercial Mortgage Loan Agreement, the Borrowers, and only in certain 

cases the Parent Obligors, will give certain covenants (which may be limited by certain materiality 

qualifications) including, without limitation: 

• to take such steps as appropriate with a view to ensuring that a tenant keeps and maintains, 

in good and substantial repair and condition (fair wear and tear excepted), the Secured 

Properties and, upon the failure by a tenant to so do, to keep and maintain, in good and 

substantial repair and condition (fair wear and tear excepted), the Secured Properties; 

• to take such steps as are appropriate with a view to ensuring that a tenant complies in all 

material respects with laws and regulations relating to or affecting the Secured Properties 

(including in relation to environmental and planning laws and regulations) and, upon the 

failure by a tenant to so do, to comply in all material respects with laws and regulations 

relating to or affecting the Secured Properties (including in relation to environmental and 

planning laws and regulations); 

• to ensure that all new Occupational Leases are entered into on terms which in all the 

circumstances a reasonably prudent owner of commercial property of the type owned by the 

relevant Borrower (having regard to, inter alia, the Secured Property, the market conditions 

at the time and the interests of good estate management) would accept and to maintain the 

quality, rental income and value of the Secured Properties (taking into account any rent 

guarantees or surety given on account of rent) by reference to all Secured Properties 

belonging to the relevant Borrower as a whole and, except in the case of a replacement 

Occupational Lease entered into following a surrender of an existing Occupational Lease, 

having regard to the market conditions as at such time; 

• to ensure that all rent reviews carried out for an Occupational Lease existing in respect of a 

Secured Property are carried out on arm’s length terms and to maintain the quality, rental 

income and value of the Secured Properties (by reference to all Secured Properties belonging 

to the relevant Borrower as a whole); 

• to maintain insurance and/or procure that the relevant tenants maintain insurance in respect 

of the Secured Properties in accordance with the terms of the Transaction Documents; 

• to notify, inter alios, the Issuer, the Liquidity Facility Provider, the Hedging Providers, the 

Borrower Security Trustee and the Note Trustee of any occurrence of a Loan Event of 

Default or Potential Loan Event of Default; 

• if the Property Manager breaches or fails to observe or perform any material obligation or 

undertaking under the Property Management Agreement or if there is a change of control of 

the Property Manager such that it is no longer a subsidiary of London and Cambridge 

Properties Limited (unless each of the Rating Agencies has confirmed that such change of 

control will not have an adverse effect on the ratings of the Notes) and the Borrower is 

entitled to terminate the Property Management Agreement then, if the Borrower Security 

Trustee so requires, the Borrower shall as soon as reasonably practicable and, in any event, 

within 60 days of such date appoint a replacement Property Manager satisfactory to the 

Borrower Security Trustee and the Rating Agencies on substantially the same terms; 

• not to acquire any assets or subsidiaries or business unless in accordance with and pursuant 

to the terms of the Transaction Documents; 

• not to make any substantial change to the general nature of its business from that carried on 

at the Closing Date; 

• not to enter into any amalgamation, demerger, merger or corporate reconstruction or make 

any alterations to its group structure such as would affect the relevant Borrower without the 

prior written consent of the Borrower Security Trustee unless each of the Rating Agencies has 

confirmed that such amalgamation, demerger, merger or corporate reconstruction will not 

have an adverse effect on the rating of the Notes; 

64

• not to carry out and/or agree to any Development unless (a) the proposed Development is 

permitted by the terms of the relevant Headlease and Occupational Lease and the 

Transaction Documents, (b) if the proposed Development is a Minor Development, the sum 

of (i) the cost of the proposed Development (as reasonably estimated and documented by the 

relevant Borrower) that will be incurred during any Reference Period and (ii) the cost already 

incurred or that will be incurred (in the case of the latter, as reasonably estimated and 

documented by the relevant Borrower) during any Reference Period in respect of all other 

Minor Developments will not exceed 5 per cent. (in the case of LCP Real Estate) or 10 per 

cent. (in the case of Proudreed Real Estate), in each case, of the applicable Reference 

Amount in respect of the relevant Borrower’s Property Portfolio, (c) if the proposed 

Development is a Major Development, it is a Permitted Development and the relevant 

Borrower has issued and delivered a certificate to the Borrower Security Trustee confirming 

the same and (d) if the estimated cost of the proposed Development (as reasonably estimated 

and documented by the relevant Borrower) is in excess of £1,500,000, each of the Rating 

Agencies have confirmed in writing (addressed or copied) to the Borrower Security Trustee 

that the rating of the existing Notes will not be downgraded, placed on ‘‘credit watch’’ with 

negative implications or withdrawn as a result of the proposed Development, provided that 

the requirements set out in (b) will not apply to any proposed Minor Development in respect 

of a damaged or destroyed Secured Property to be financed from amounts standing to the 

credit of the relevant Borrower’s Insurance Proceeds Account in accordance with the terms 

of the relevant Commercial Mortgage Loan Agreement and all references to ‘‘cost’’ are to 

cost excluding VAT; 

• not to create (or agree to create) or permit to subsist any Encumbrance (unless arising by 

operation of law) or enter into any arrangement having a similar effect to an Encumbrance 

(whether by way of finance lease, or otherwise) whatsoever over all or any of its present or 

future revenues or assets (including any uncalled capital) or its undertaking of which it is the 

legal owner or has an interest, other than a Permitted Encumbrance or save as provided for 

in the Obligor Security Documents (if applicable to it); 

• not to make or permit any sale, transfer, lease, parting with possession, sharing of occupation 

or other disposal whatsoever other than by way of a Permitted Disposal or an Occupational 

Lease that is a Permitted Occupational Lease without the prior written consent of the 

Borrower Security Trustee; 

• not to terminate any Occupational Lease or consent to or permit an amendment, assignment, 

assignation or surrender of an Occupational Lease, save to the extent such Occupational Lease 

imposes an obligation not to unreasonably withhold consent to the same or, if assigned, save to the 

extent that the relevant Occupational Lease would (upon and following such assignment) be such 

as should satisfy the requirements for new Occupational Leases under the relevant Commercial 

Mortgage Loan Agreement provided that each Borrower will be permitted within any 12 month 

period to permit the surrender of Occupational Leases up to an aggregate Estimated Rental Value 

of 5 per cent. of the total Estimated Rental Value of all the Secured Properties belonging to the 

relevant Borrower as at the Closing Date. Where an Occupational Lease is so surrendered and a 

replacement Occupational Lease with an Occupational Tenant of similar quality to the original 

Occupational Tenant is entered into contemporaneously with such surrender by the Borrower in 

respect of the whole of the affected Secured Property, such surrendered Occupational Lease shall 

not count towards such 5 per cent. limit if such replacement Occupational Lease, inter alia, (i) is 

on substantially the same terms as the original Occupational Lease (in particular as to term and 

type of lease), and (ii) does not reduce the aggregate Gross Rental Income receivable in respect 

of the Secured Properties belonging to the relevant Borrower; 

• not to enter into any contract, transaction or other arrangement, save as permitted by the 

Transaction Documents; 

• not to incur any additional financial indebtedness unless such indebtedness is in accordance 

with the terms of the Transaction Documents; and 

• not to employ any person or persons or set up a pension fund in respect of any such person 

or persons. 

65

Loan Events of Default 

Each Commercial Mortgage Loan Agreement will contain events (each, a ‘‘Loan Event of Default’’) that 

may lead to a default and acceleration of any amounts outstanding under that Commercial Mortgage 

Loan Agreement (but not the other Commercial Mortgage Loan Agreement) as follows: 

(a) any Obligor fails to pay on the due date any amount payable pursuant to the Transaction 

Documents unless its failure to pay is caused by an administrative or technical error and payment 

is made within three Business Days of its due date (or in the case of interest, costs and expenses 

only) payment is made within five Business Days of its due date; 

(b) any Obligor fails to comply with any of the obligations applicable to it under the Transaction 

Documents (other than those referred to in (a) above and those relating to its LTV Ratio) and such 

non compliance, if capable of remedy, is not remedied promptly and in any event within 10 Business 

Days of the earlier of (i) the date on which the relevant Obligor ought reasonably to have been 

aware of its failure to comply with such obligation and (ii) the date it was notified of its failure to 

comply with such obligation; 

(c) any representation, warranty or statement made or deemed to be made by an Obligor in the 

Transaction Documents or any other document delivered by or on behalf of any Obligor under or 

in connection with any Transaction Document is or shall prove to have been incorrect or misleading 

in any respect when made or deemed to be made; 

(d) (i) any Financial Indebtedness of the relevant Borrower is not paid when due nor within any 

originally applicable grace period and the obligation to pay is not being disputed in good 

faith; 

(ii) any Financial Indebtedness of the relevant Borrower or, in the case of the Commercial 

Mortgage Loan to LCP Real Estate only, London and Cambridge Properties Limited is 

declared to be or otherwise becomes due and payable or is placed on demand prior to its 

specified maturity as a result of an event of default (however described); 

(iii) any commitment for any Financial Indebtedness of the relevant Borrower is cancelled or 

suspended by a creditor of the relevant Borrower as a result of an event of default 

(however described unless such commitment has been repudiated by the relevant 

creditor); 

(iv) any creditor of any of the relevant Borrower or, in the case of the Commercial Mortgage 

Loan to LCP Real Estate only, London and Cambridge Properties Limited becomes 

entitled to declare any Financial Indebtedness of such entities due and payable prior to its 

specified maturity as a result of an event of default (however described); 

(v) an event of default howsoever described occurs under any documents relating to Financial 

Indebtedness of the relevant Borrower unless that Financial Indebtedness is discharged or 

that event of default is cured or remedied within any originally applicable grace period; 

(vi) paragraphs (i) to (v) above shall not apply except in respect of any Financial Indebtedness 

which in aggregate is equal to or in excess of £100,000 in respect of the relevant Borrower 

and £500,000 in respect of London and Cambridge Properties Limited; 

(vii) any Encumbrance securing Financial Indebtedness of the relevant Borrower over an asset 

of the relevant Borrower becomes enforceable and is enforced or steps are taken to 

enforce the same; 

(e) (i) an Obligor is unable or admits inability to pay its debts as they fall due or is deemed to be 

insolvent, suspends making payments on any of its debts, or commences negotiations with 

one or more of its creditors with a view to rescheduling or readjusting any of its 

indebtedness (other than a solvent reorganisation or a reorganisation which has been 

recommended by the Obligor’s advisers and which is approved by the Borrower Security 

Trustee); 

(ii) the value of the assets of any of the Obligors is less than its liabilities (taking into account 

contingent and prospective liabilities at such time as they fall due and also taking into 

account any indemnity express or implied, which the relevant Obligor has the benefit of in 

respect of such liabilities); 

(iii) a moratorium is declared in respect of any indebtedness of an Obligor; 

66

(f) 

(g) 

(h) 

(i) 

(j) 

(k) 

(l) 

(m) 

(n) 

(o) 

any corporate action, legal proceedings or other procedure or step is taken including, without 

limitation, by the directors of the relevant Obligor (or, in each case, any analogous procedure is 

taken in any jurisdiction) in relation to: 

(i) the suspension of payments, a moratorium of any indebtedness, winding up, dissolution 

administration or reorganisation (by way of voluntary arrangement, scheme of arrangement 

or otherwise) of any Obligor; 

(ii) a composition, assignment or arrangement with any creditor of any Obligors (other than 

a solvent reorganisation, or a reorganisation which has been recommended by the 

Obligors’ advisers and which is approved by the Borrower Security Trustee); 

(iii) the appointment of a liquidator, receiver, administrator, administrative receiver or other 

similar officer in respect of any Obligor or any of their assets; 

(iv) enforcement of any Security over any assets of any Obligor; 

any expropriation, attachment, sequestration, distress, diligence or execution affects any asset or 

assets of any of the relevant Borrower where such assets have an aggregate value in excess of 

£100,000; 

it is or shall become unlawful for an Obligor to perform any of its obligations under the Transaction 

Documents or any consent required to enable an Obligor to perform its obligations under a 

Transaction Document ceases to have effect and the relevant Obligor has not applied to renew such 

consent or, having made such application, such consent has not been received within 14 days of it 

originally ceasing to have effect, in each case where an absence of such consent would have a 

Material Adverse Effect; 

an Obligor repudiates a Transaction Document or evidences an intention to repudiate a Transaction 

Document to which it is a party; 

any licence, authority, permit, consent, agreement or contract of any Obligor from time to time is 

terminated, withheld or modified such as would have a Material Adverse Effect; 

in the opinion of the Borrower Security Trustee (based upon the reports, opinions and/or advice of 

its advisers) at any time after the Closing Date: 

(i) there is a risk of liability under Environmental Law arising directly or indirectly in 

connection with the Transaction Documents such as would have a Material Adverse 

Effect; or 

(ii) the relevant Borrower does not comply with regulations or the law applicable to its 

business, or with Environmental Law or Environmental Approvals relating to the Secured 

Properties where such non compliance would, in the reasonable opinion of the Borrower 

Security Trustee, have a Material Adverse Effect; 

any Transaction Document and any related document thereto is not, or is alleged by an Obligor not 

to be, binding on or enforceable against that Obligor or, in the case of any Security Document, 

effective to create the security intended to be created by it save for those claims which are preferred 

solely by any bankruptcy, insolvency or other similar laws of general application to preferential 

creditors; 

the Property Manager breaches or fails to observe or perform any material obligation or 

undertaking under the Property Management Agreement or there is a change of control of the 

Property Manager, such that it ceases to be a subsidiary of London and Cambridge Properties 

Limited (unless each of the Rating Agencies has confirmed that such change of control will not have 

an adverse effect on the rating of the Notes) and the Property Manager is not replaced by a person 

(and on terms) satisfactory to the Borrower Security Trustee and the Rating Agencies within 

60 days; 

any circumstance or event occurs or arises which could be reasonably expected to have a Material 

Adverse Effect; 

an Obligor or any other party to a Tax Deed of Covenant other than the Borrower Security Trustee, 

the Issuer Security Trustee and the Note Trustee fails duly to perform or comply with any of its 

covenants under the Tax Deed of Covenant or any of its representations or warranties in the Tax 

Deed of Covenant is or proves to have been incorrect or misleading in any respect when made if 

67

the foregoing has, or is reasonably expected to have, a Material Adverse Effect, provided that, in 

any case, either such failure or breach is not capable of remedy or such failure or breach is not 

remedied within a period of 90 days following (i) receipt by the relevant party and the relevant 

Borrower of notification of such failure or breach from the Borrower Security Trustee or (ii) if 

earlier, the date on which any Obligor or such other party became aware of such failure or breach; 

(p) the landlord under a Headlease or any lease superior thereto commences forfeiture proceedings 

with respect to that Headlease and the Borrower Security Trustee considers, based on a legal 

opinion from leading counsel, that the relevant lessee would be unlikely to be granted relief by a 

court for such forfeiture; and 

(q) the relevant Borrower is not or ceases to be a subsidiary of the relevant Parent Obligor. 

Disposals of assets and Secured Properties 

Each Borrower shall be entitled to dispose of any asset and of its beneficial interest in any Secured 

Property provided that: 

(a) the whole, or part of, the relevant Disposal Property is to be disposed of as a CPO Disposal in 

connection with a compulsory purchase order in respect of that Disposal Property; or 

(b) the whole, or part of, the relevant Disposal Property is to be disposed of as an Elected Disposal; or 

(c) the relevant Disposal Property is to be disposed of as a Same Day Substitution Disposal made in 

accordance with and pursuant to the sub-section entitled ‘‘Same Day Substitution of the Secured 

Properties’’ below; or 

(d) the relevant asset or Disposal Property is to be disposed of as a Minor Disposal, 

(each of a CPO Disposal, an Elected Disposal, a Same-Day Substitution Disposal and a Minor Disposal 

being a ‘‘Permitted Disposal’’) and provided further that: 

(i) two directors of the relevant Borrower have certified in writing to the Borrower Security Trustee 

(aa) that the relevant disposal is a Permitted Disposal and (bb) the type of Permitted Disposal. 

In the case of an Elected Disposal or a CPO Disposal only, such directors will make such 

certification at least 35 and no more than 60 days prior to the date of the proposed Elected Disposal 

or CPO Disposal, as the case may be. In the case of a Same-Day Substitution Disposal only, such 

directors will make such certifications at least thirty days prior to the date of the proposed 

substitution. In the case of a Minor Disposal, such directors will make such certifications at least ten 

days prior to the date of the proposed Minor Disposal but need not provide such a certificate in 

respect of a Minor Disposal unless such Minor Disposal is in respect of a Disposal Property and is 

for a value (on an arm’s length, after tax basis) equal to or greater than £50,000 per annum; 

(ii) in the case of a Minor Disposal, an Elected Disposal or a Same-Day Substitution Disposal, no Loan 

Event of Default or Potential Loan Event of Default has occurred and is continuing (and has not 

been waived) at the time of the relevant disposal or will occur as a result of such disposal, but 

provided that a Borrower may prepay the relevant Commercial Mortgage Loan from the proceeds 

of the relevant Disposal Property upon making an Elected Disposal or Minor Disposal if such 

prepayment, or any disposal giving rise to such prepayment, would cure a Loan Event of Default 

or Potential Loan Event of Default (but only prior to the service of a Loan Enforcement Notice); 

(iii) in the case of an Elected Disposal, the proposed disposal is, or is part of, a transaction which is on 

arm’s length commercial terms and the full amount of the consideration payable in respect of such 

Elected Disposal will be paid in cash immediately upon completion of such disposal; 

(iv) in the case of an Elected Disposal, the Net Cash Proceeds will not be less than the Release Price 

Percentage of the Allocated Loan Amount of the relevant Disposal Property; 

(v) in the case of any Elected Disposal or Same-Day Substitution Disposal, the Borrower shall have 

procured in its own favour: 

(a) an indemnity from the purchaser in respect of the future performance of title covenants; 

and 

(b) a release from all of the Borrower’s liabilities (whether existing or future) arising out of 

any documentation between it and the Occupational Tenants relating to the relevant 

Disposal Property or, to the extent unable to procure such a release by reason of 

applicable law, an indemnity from the purchaser in respect of such liabilities; and 

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(vi) 

in the case of Same-Day Substitution Disposals all the Substitution Criteria are satisfied. 

The Borrower Security Trustee must notify the relevant Borrower and the Property Manager no later 

than five Business Days before the proposed Disposal Date whether the relevant conditions set out above 

have been satisfied. Subject to delivery of such a notice to the effect that such conditions have been 

satisfied, the Borrower Security Trustee will be required to release all the Encumbrances granted in 

respect of the relevant Disposal Property and all related Occupational Leases at the relevant time on the 

relevant Disposal Date. 

The Borrower, or (for so long as it is so appointed) the Property Manager on behalf of the Borrower, will 

instruct the relevant purchaser, excluding those Secured Properties disposed of as part of a Same-Day 

Substitution Disposal (in respect of which there will be no Gross Cash Proceeds), to pay the Gross Cash 

Proceeds in relation to any disposal of any Disposal Property into the Disposal Proceeds Account. An 

amount equal to the Allocated Loan Amount in respect of the relevant Disposal Property multiplied by 

the Release Percentage will be credited to the ‘‘debt ledger’’ maintained in respect of the Disposal 

Proceeds Account and an amount equal to the Net Cash Proceeds less the amount credited to the ‘‘debt 

ledger’’ will be credited to the ‘‘equity ledger’’. The proceeds of sale in respect of any assets other than 

Disposal Property that are disposed of by way of a Minor Disposal will be paid into the Borrower 

Transaction Account. 

The relevant Borrower, or the Property Manager on behalf of the relevant Borrower, shall ensure that an 

amount equal to the Disposal Expenses for which that Borrower is liable as a result of the disposal of a 

Disposal Property shall be paid or, if appropriate, provided for from the Gross Cash Proceeds, at the time 

of the payment of the Gross Cash Proceeds into the Disposal Proceeds Account. To the extent that any 

Disposal Expenses are unpaid but are to be provided for, an amount equal to such Disposal Expenses 

shall be paid from the Gross Cash Proceeds into the Borrower Distribution Account with the Net Cash 

Proceeds remaining credited to the Disposal Proceeds Account. 

The relevant Borrower shall be entitled to apply or procure the application of the Net Cash Proceeds for 

any or a combination of the following purposes: 

(a) 

(b) 

(c) 

to finance, in whole or in part, the acquisition of another property, subject to and in accordance with 

the conditions specified in the sub-section entitled ‘‘Acquisitions of Additional Properties’’ below; 

to prepay, in whole or in part, the relevant Commercial Mortgage Loan, together with any interest 

and all other amounts payable under the relevant Commercial Mortgage Loan as a result of such 

prepayment (including any penalties in respect of any termination sums payable by the Issuer under 

any Hedging Agreement) such prepayment and other amounts to be applied in accordance with (a) 

to (c) of the paragraph below; or 

in payment of an amount equal to the Net Cash Proceeds, less an aggregate amount equal to the 

sum of (i) any interest and all other amounts that would be payable were a prepayment to be made 

under the relevant Commercial Mortgage Loan as at the date of such payment (including any 

penalties in respect of any termination sums payable by the Issuer under any Hedging Agreement) 

and (ii) the Allocated Loan Amount of the relevant Disposal Property multiplied by the Release 

Price Percentage, to the relevant Borrower Distribution Account. 

Any Net Cash Proceeds (if not applied within 6 months from the date they are first credited to the 

Disposal Proceeds Account) shall be applied by the relevant Borrower or at its direction as follows: 

(a) 

(b) 

first, an amount equal to the applicable Prepayment Amount towards prepayment (in whole or in 

part) of the relevant Commercial Mortgage Loan on the immediately following Loan Interest 

Payment Date (or, if the period between the expiry of the 6 month period referred to above and the 

immediately following Loan Interest Payment Date is less than 35 days, the next following Loan 

Interest Payment Date); 

second, in payment of any interest and all other amounts payable under the relevant Commercial 

Mortgage Loan as a result of the prepayment of the relevant Commercial Mortgage Loan or part 

thereof referred to under paragraph (a) above (including any penalties in respect of any termination 

sums payable by the Issuer under any Hedging Agreement) and, following such payment, the Cash 

Manager will immediately debit the ‘‘equity’’ ledger of the Disposal Proceeds Account by the 

aggregate amount of all such payments; and 

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(c) third, in payment of an amount equal to the Net Cash Proceeds, less an amount equal to the 

amounts payable under paragraphs (a) and (b) above, to the Borrower Distribution Account (but 

only after all payments at items (a) and (b) above have been paid in full), pending application of 

the relevant Net Cash Proceeds to which the above applies the Net Cash Proceeds shall remain 

credited to the relevant Disposal Proceeds Account and unavailable for drawing by the relevant 

Borrower. 

Acquisition of additional properties 

Each Borrower shall be permitted to acquire Additional Secured Properties provided that the following 

conditions are satisfied: 

(a) a certificate is provided by the relevant Borrower to the Borrower Security Trustee confirming that: 

(i) the relevant Borrower has complied with the Due Diligence Criteria (as set out below) and 

has acted in a manner which would be adopted by a reasonably prudent purchaser of 

property of a similar type to the relevant property to be acquired; 

(ii) the Acquisition Consideration paid by the relevant Borrower does not exceed the Market 

Value (calculated on an arm’s length basis) of that Additional Secured Property (as 

determined by reference to the Valuation Report of that Additional Secured Property 

delivered to the Borrower Security Trustee pursuant to paragraph (f) below); 

(iii) all stamp duty, stamp duty land tax or similar transfer or registration tax and any 

irrecoverable VAT and all other related costs and expenses (if any) which are or might 

reasonably be expected to be or become payable by the relevant Borrower (as the new 

beneficial owner) in connection with such acquisition will be paid or provided for in cash 

on the date of acquisition by or on behalf of the Borrower (provided that if a satisfactory 

tax opinion in relation to any such stamp duty, stamp duty land tax or similar transfer or 

registration tax is delivered to the Borrower Security Trustee then no provision needs to 

be made); 

(iv) if the Additional Secured Property is leasehold, the terms of the lease are on terms which 

a reasonably prudent owner of commercial property of the type owned by the relevant 

Borrower would accept and are suitable for security purposes for a third party debt 

financing; and 

(v) the Additional Secured Property is freehold or long leasehold, is a property within at least 

one of the industrial, retail or office sectors and is located in England, Wales or Scotland; 

(b) a copy of all reviews and reports completed as part of the Due Diligence Criteria is delivered to the 

Borrower Security Trustee in form and substance satisfactory to the Borrower Security Trustee and 

which the Borrower Security Trustee may rely on as delivered by the Property Manager or the 

relevant Borrower; 

(c) the proposed acquisition and holding structure of such Additional Secured Property is in a form and 

substance that is acceptable to the Borrower Security Trustee (acting reasonably); 

(d) an Agreed Form of Security Document in relation to such Additional Secured Property duly 

executed by the relevant Borrower is entered into and delivered to the Borrower Security Trustee 

on the date of acquisition in favour of the Borrower Security Trustee together with (if the relevant 

Additional Secured Property is located in Scotland) confirmation that any Occupational Tenants in 

respect of such Secured Property have been duly given proper notice of the relevant acquisition and 

the security interest of the Borrower Security Trustee; 

(e) an Agreed Form of Certificate of Title in respect of the relevant Additional Secured Property from 

an Approved Firm, issued no more than one week (or such longer period as may be agreed between 

the Borrower Security Trustee) prior to the date of the relevant Borrower’s certificate, is addressed 

to and delivered to Borrower Security Trustee; 

(f) a copy of the most recent Valuation Report for such Additional Secured Property which (i) is 

addressed and delivered to the Borrower Security Trustee, such Valuation Report to be prepared 

by an Approved Valuer appointed by the Property Manager following consultation with the 

Borrower Security Trustee (ii) was issued no more than one month prior to the date of the relevant 

Borrower’s certificate (or such longer period as may be agreed in writing by the Borrower Security 

Trustee) and (iii) confirms that the reports (if any) on environmental and (if required in the opinion 

70

of the Approved Valuer) structural due diligence carried out in respect of such property, and any 

deficiencies in the title to such property (in each case of which the Approved Valuer has been 

notified prior to the date of such Valuation Report), have been taken into account by the Valuers 

in reaching their determination of the Market Value of such property; 

(g) a certificate is provided by the relevant Borrower to the Borrower Security Trustee on the date of 

acquisition in respect of the relevant Additional Secured Property confirming that the relevant 

Borrower is, was or will be solvent on the date on which it grants the security referred to in 

paragraph (d) and that the Borrower has taken all necessary action to authorise its entry into, 

performance and delivery of the relevant Agreed Form of Security Document and that phase one 

environmental searches in respect of such property were carried out and complied with such 

recommendations for any further investigations made by the relevant environmental consultant 

which accord with principles of good estate management practice applicable to a property of a type 

similar to the Additional Secured Property; 

(h) the Borrower Security Trustee has, or its advisers have, received by the proposed acquisition date, 

all necessary information and documents relating to such acquisition in form and substance 

satisfactory to the Borrower Security Trustee; 

(i) an Agreed Form of Legal Opinion (addressed to the Borrower Security Trustee) from an Approved 

Firm confirming: (i) that the security created by the Agreed Form of Security Document in respect 

of such Additional Secured Property as referred to in (d) above is legal, valid, binding and 

enforceable under its governing law and that no further steps (other than those steps which such 

Approved Firm undertakes to carry out within any applicable time limits, which shall include 

submitting necessary applications for registration within appropriate priority periods) are required 

to be taken for the attachment and perfection of such security under such law; (ii) that the relevant 

Borrower has the capacity to enter into and has duly authorised the execution and entry into of such 

Agreed Form of Security Document; (iii) that such Approved Firm has requested a director or 

other authorised officer of the relevant Borrower to confirm whether the granting of security over 

the Additional Secured Property has any connection with the acquisition of any shares in any 

company and has either: (A) considered any such connection notified to it by such director or 

authorised officer and opined, based on the matters so notified to it and on the assumption that all 

factual statements made to it are correct, that such granting of security does not breach any 

applicable legal prohibition of the giving of financial assistance in connection with such acquisition; 

or (B) been advised by such director or other authorised officer that no such connection exists; and 

(iv) as to such other matters as the Borrower Security Trustee shall reasonably request; 

(j) (i) both the Historical ICR and Projected ICR as at the Loan Calculation Date immediately 

prior to such acquisition were equal to or greater than 1.2:1; and 

(ii) the Projected ICR will not be reduced below the level of Projected ICR as at such Loan 

Calculation Date as a result of the proposed acquisition; 

(k) either 

(i) the aggregate Initial Valuation of all Secured Properties in respect of the relevant 

Borrower which are the subject of an acquisition or a Same-Day Substitution Disposal 

does not exceed, in any consecutive 12 month period beginning on and including, a 

Loan Interest Payment Date and ending on, but including, the Loan Interest Payment 

Date falling in the same month in the following calendar year, 5 per cent. of the lesser 

of the aggregate Initial Valuation and the aggregate Market Value of all Secured 

Properties in respect of the relevant Borrower taken as at the start of such period; and 

(ii) the aggregate Initial Valuation of all Secured Properties in respect of the relevant 

Borrower which are the subject of an acquisition or a Same-Day Substitution 

Disposal, from and including the Closing Date, does not exceed 15 per cent. of the 

aggregate Initial Valuation of all Secured Properties in respect of the relevant 

Borrower taken as at the Closing Date; 

or 

(iii) each of the Rating Agencies have confirmed in writing (addressed or copied) to the 

Borrower Security Trustee that the rating of the existing Notes will not be downgraded, 

placed on ‘‘credit watch’’ with negative implications or withdrawn as a result 

of the proposed acquisition; 

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(l) immediately prior to such acquisition and immediately after such acquisition no Loan Event of 

Default or Potential Loan Event of Default has occurred and is continuing; 

(m) the Acquisition Consideration is financed by: 

(i) using amounts then standing to the credit of the Disposal Proceeds Account in respect of 

a Disposal Property; 

(ii) using amounts advanced to the relevant Borrower by way of Permitted Subordinated Debt 

that satisfies the requirements for Permitted Financial Indebtedness; or 

(iii) using amounts otherwise available to the relevant Borrower and not credited to the 

relevant Borrower Accounts, 

or any combination of the above; and 

(n) in respect of Additional Secured Properties the Acquisition Consideration of which is financed (in 

whole or in part) using amounts standing to the credit of the Disposal Proceeds Account in respect 

of a Disposal Property, the total amount withdrawn from the Disposal Proceeds Account 

representing amounts debited from the ‘‘debt ledger’’ minus an amount equal to the difference 

between such total amount and an amount equal to such total amount divided by the Release Price 

Percentage (which difference shall be deemed to constitute Borrower’s equity) is equal to or less 

than 70 per cent. of the Acquisition Consideration. 

The Borrower Security Trustee will notify the Borrower and the Property Manager no later than five 

Business Days before the proposed acquisition date whether the relevant conditions as detailed above 

have been satisfied. 

The ‘‘Due Diligence Criteria’’ referred to above shall consist of the following: 

(a) a review of full tenancy schedules for each proposed Additional Secured Property including, inter 

alia, the name of each Occupational Tenant, the relevant unit occupied, the total rent payable, the 

rent per square foot/metre (as appropriate), the lease start date and end date, any early termination 

options, the next rent review date, the rent renewal basis and the estimated rental value of each unit 

so far as they are available; 

(b) a review of the last three years of rental income for each current Occupational Tenant so far as they 

are available; 

(c) a review of the last two years of financial statements and projected budget for each proposed 

Additional Secured Property, including a review of how the rental income and service charges are 

treated, if available; 

(d) a review of rates in relation to each proposed Additional Secured Property, including reviewing 

copies of current rates demands and details of payments being made by instalments plus 

confirmation that the local authority will be notified on completion and issue refunds for 

overpayment, if available; 

(e) a review of accounting information, including details of Occupational Tenants paying by standing 

order/bank transfer, any cash handling on site and details of periodic charges, if any; 

(f) a review of all insurance policies, including details of any claims outstanding and pending, details of 

insurers and policy numbers for the last five years, if available, and details of apportionment of 

premium and method of recovery; 

(g) a review of the environmental, structural, mechanical and engineering reports and fire certificates 

in place in respect of the relevant property at the relevant time; and 

(h) such additional reviews and tests as may be requested by the Borrower Security Trustee for the 

purposes of any proposed acquisition. 

Same-Day Substitution of the Secured Properties 

If the relevant Borrower elects to effect a Same-Day Substitution Disposal of a Secured Property for 

another property owned by another member of the relevant Borrower Group, the Borrower shall identify 

a property which is available to be substituted on the same day for the relevant Secured Property and give 

notice of it to the Issuer and the Borrower Security Trustee. 

A Same-Day Substitution Disposal shall only be permitted if the following criteria (the Substitution 

Criteria) are satisfied, and if so satisfied, the Borrower Security Trustee shall permit the Same-Day 

Substitution Disposal: 

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(a) a certificate is provided by the relevant Borrower to the Borrower Security Trustee confirming that: 

(i) the Investment Value (calculated on an arm’s length basis) of the Incoming Property, at the 

relevant time is at least the same as the Investment Value (calculated on an arm’s length 

basis) of the Outgoing Property; 

(ii) all stamp duty, stamp duty land tax or similar transfer or registration tax and any 

irrecoverable VAT and all other related costs and expenses (if any) which are or might 

reasonably be expected to be or become payable by the relevant Borrower in connection 

with such Incoming Property and/or substitution will be paid or provided for in cash on the 

date of substitution by or on behalf of the Borrower (provided that if a satisfactory tax 

opinion in relation to any such stamp duty, stamp duty land tax or similar transfer or 

registration tax is delivered to the Borrower Security Trustee then no provision needs to 

be made); 

(iii) all Disposal Expenses in connection with the Outgoing Property will be paid or provided 

for in cash on the date of substitution by or on behalf of the Borrower; and 

(iv) each of the requirements for the certificate to be provided by the relevant Borrower in 

respect of an acquisition of an Additional Secured Property as set out in sub-paragraphs 

(a)(i), (a)(iv) and (a)(v) of the section entitled ‘‘Acquisition of additional properties’’ above 

(with references to ‘‘acquisition’’ being replaced by ‘‘substitution’’ and references to 

‘‘Additional Secured Property’’ being replaced by ‘‘Incoming Property’’) are satisfied; 

(b) each of the requirements for the acquisition of an Additional Secured Property as set out in 

sub-paragraphs (b) to (i), (k) and (l) of the section entitled ‘‘Acquisition of additional properties’’ 

above (with references to ‘‘acquisition’’ being replaced by ‘‘substitution’’ and references to 

‘‘Additional Secured Property’’ being replaced by ‘‘Incoming Property’’) are satisfied; 

(c) (i) the Historical ICR and the Projected ICR as at the Loan Calculation Date immediately 

prior to such substitution were equal to or greater than 1.2:1; 

(ii) based upon the relevant Borrower Group’s records in respect of the Incoming Property, 

the Historical ICR would have been equal to or greater than the level of Historical ICR 

as at such Loan Calculation Date had such Incoming Property been included in the 

calculations of Historical ICR on such date; and 

(iii) the Projected ICR will not be reduced below the level of Projected ICR as at such Loan 

Calculation Date as a result of the proposed substitution; 

If the above conditions are not satisfied then the Same-Day Substitution Disposal shall require the prior 

written consent of the Borrower Security Trustee, which consent shall be provided if each of the Ratings 

Agencies have confirmed in writing (addressed or copied) to the Borrower Security Trustee that the rating 

of the existing Notes will not be downgraded, placed on ‘‘credit watch’’ with negative implications or 

withdrawn as a result of the proposed Same-Day Substitution Disposal. 

Governing law 

Each Commercial Mortgage Loan Agreement will be governed by English law. 

2. The Borrower Deeds of Charge 

General 

The obligations of each Borrower under the Commercial Mortgage Loan Agreement and the other 

Transaction Documents to which it is a party will be secured, inter alia, by the assets and undertaking of 

the Borrower pursuant to a Borrower Deed of Charge to be entered into by, inter alios, the relevant 

Borrower and the Borrower Security Trustee on the Closing Date (the ‘‘Borrower Deed of Charge’’) 

under and pursuant to which: 

(a) certain covenants to pay will be given by the Borrower to the Borrower Security Trustee; 

(b) fixed and floating security will be granted by the Borrower to the Borrower Security Trustee; 

(c) the claims of the Obligor Secured Creditors against the Borrower and the rights of priority and of 

enforcement in respect of the Obligor Secured Creditors’ rights under the Transaction Documents 

will be regulated; and 

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(d) requirements relating to (i) the exercise by the Borrower Security Trustee of its rights, powers and 

discretions, (ii) the making of modifications to, granting consent under or granting of waivers in 

respect of any breach or proposed breach of the Transaction Documents, (iii) the giving of any Loan 

Enforcement Notice or acceleration of any Obligor Secured Obligation, and (iv) the release from 

the Obligor Security will be set out. 

Fixed and floating security granted by the Borrower 

Pursuant to the Borrower Deeds of Charge, each Borrower shall grant to the Borrower Security Trustee, 

as security for the Obligor Secured Obligations, the following security interests over its present and future 

assets including, to the extent applicable to such Borrower and such assets: 

(i) a first charge by way of legal mortgage over any of the Secured Properties belonging to it; 

(ii) a first fixed charge over any Secured Properties belonging to it and not included in (i); 

(iii) a first fixed charge over all plant, machinery and other chattels owned by it and situated in or at the 

Secured Properties; 

(iv) a first fixed charge over its Borrower Accounts; 

(v) an assignment by way of security of all its rights to and in all Gross Rental Income (including all its 

rights under any guarantee of Gross Rental Income contained in or relating to any Occupational 

Leases and any rental deposits made in connection therewith) derived from the Secured Properties 

belonging to it; 

(vi) an assignment by way of security of all proceeds receivable by the Borrower under the Insurance 

Policies and of all related rights in respect of those Insurance Policies; 

(vii) an assignment over its rights under the relevant Sale and Purchase Agreement and any agreement 

relating to the purchase of any Additional Secured Properties; 

(viii) a first fixed charge over all rights, title and interest, present and future, in Intellectual Property used 

by it in connection with its Secured Properties; 

(ix) a first fixed charge over any Eligible Investments held by it; 

(x) a first fixed charge over all of its goodwill; 

(xi) a first fixed charge over all of its uncalled share capital; 

(xii) a first fixed charge over all its book debts and other monetary claims and all related rights; 

(xiii) an assignment by way of security of its rights, title and interest in the Transaction Documents to 

which it is a party; 

(xiv) an assignment by way of security of its rights, title and interest in the reports prepared at the time 

of acquisition of each Secured Property in its Property Portfolio as at the Closing Date to which it 

was an addressee; and 

(xv) a first floating charge over the whole of its undertaking, assets, property and rights whatsoever and 

wheresoever, present and future (save to the extent covered by (i) to (xiv) above). 

In addition, each Borrower will covenant and undertake to execute, at the Borrower Security Trustee’s 

request, further security by way of legal mortgage over any Secured Property subsequently acquired by 

it and such Secured Property will be brought into the relevant Borrower’s Property Portfolio in 

accordance with the conditions set out in the applicable Commercial Mortgage Loan Agreement and 

upon execution of further security. 

Prohibition against assignments 

The Borrower Deeds of Charge shall provide that the Borrowers are prohibited from assigning or 

purporting to assign to any person other than the Borrower Security Trustee the rights, title, interest or 

benefit of any Borrower Account, any Transaction Document to which it is a party, any Occupational 

Lease or any rights arising thereunder (including as to Gross Rental Income) or any Insurance Policy. 

Trust for Obligor Secured Creditors 

The Borrower Security Trustee will hold the benefit of all the security created in its favour and the 

covenants to pay on trust for the benefit of itself and the other Obligor Secured Creditors. 

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Floating charges held by the Borrower Security Trustee 

Pursuant to the Borrower Deeds of Charge, the Borrower Security Trustee will hold the security granted 

by each Borrower by way of floating charge on trust for the benefit of itself and the other Obligor Secured 

Creditors. 

The floating charge security will be deferred in point of priority to all fixed security validly created by the 

Borrowers under the relevant Obligor Security Documents. 

Enforceability of the floating charges: The Borrower Deeds of Charge shall provide that the security 

granted by way of floating charge shall (as in the case of the other Obligor Security held by the Borrower 

Security Trustee) become enforceable upon the delivery of a Loan Enforcement Notice by the Borrower 

Security Trustee. 

Appointment of an administrative receiver: The Borrower Deeds of Charge shall provide that the 

Borrower Security Trustee shall enforce the floating charges in respect of any Borrower, by appointing an 

administrative receiver, if it has actual notice of (a) an application for the appointment of an 

administrator, (b) the giving of a notice of intention to appoint an administrator, or (c) the filing of 

documents with the court or registrar for administration (whether in court or otherwise) in respect of such 

Borrower, either: 

(i) within four business days of receipt or presentation of the application for the appointment of an 

administrator or receipt of the notice of intention to appoint an administrator; or 

(ii) within one business day of receipt of written notice of appointment of an administrator pursuant to 

Section 15 of Schedule B1 of the Insolvency Act 1986, and in each case, if the applicant has abridged 

the time for making the application, within such abridged time. 

In either case, the Borrower Security Trustee shall not be liable for any failure to appoint, save in the case 

of its own negligence, wilful default or fraud. 

Indemnity of the Borrower Security Trustee: The Borrower Security Trustee shall not be obliged to 

appoint an administrative receiver unless it is indemnified and/or secured to its satisfaction. 

Proceeds: The Borrower Deeds of Charge will provide that the proceeds of enforcement of the security 

given by way of floating charge by the Borrower Security Trustee (or any administrative receiver 

appointed by it) will be applied, together with any proceeds of enforcement of the other Obligor Security 

by the Borrower Security Trustee (or any Receiver appointed by it), in accordance with the relevant 

Obligor Post-Enforcement Priority of Payments. 

Undertakings of the Obligor Secured Creditors 

Pursuant to the terms of the Borrower Deeds of Charge, each Obligor Secured Creditor (other than the 

Borrower Security Trustee) will undertake not to: 

(i) permit or require any Obligor to discharge any of the Obligor Secured Obligations owed to it, save 

to the extent and in the manner permitted by the relevant Commercial Mortgage Loan Agreement 

and Borrower Deed of Charge (including the Obligor Priority of Payments); 

(ii) permit or require any Obligor to accelerate, pay, prepay (by way of prepayment or otherwise), 

repay, redeem, purchase or otherwise acquire any of the Obligor Secured Obligations owed by such 

Obligor save to the extent and in the manner permitted by the relevant Commercial Mortgage Loan 

Agreement and Borrower Deed of Charge (including pursuant to the provisions regulating the 

mandatory prepayment of the Commercial Mortgage Loan); 

(iii) take, accept or receive the benefit of any Encumbrance, guarantee, indemnity or other assurance 

against financial loss from any of the Obligors in respect of any of the Obligor Secured Obligations 

owed to it, unless it is given pursuant to the terms of the Transaction Documents; 

(iv) take, receive or recover from any of the Obligors by cash receipt, set-off, any right of combination 

of accounts, proceedings of any kind or in any other manner whatsoever the whole or any part of 

the Obligor Secured Obligations owed to it, save to the extent expressly permitted by the relevant 

Commercial Mortgage Loan Agreement and Borrower Deed of Charge; 

(v) except as permitted by the relevant Commercial Mortgage Loan Agreement and Borrower Deed of 

Charge, agree to any modification to, any consent under or any waiver in respect of any breach or 

proposed breach of, any Transaction Document to which it is a party; or 

75

(vi) take any enforcement action in respect of the Obligor Security except in accordance with the 

provisions of the relevant Borrower Deed of Charge and the other Obligor Security Documents. 

Each Obligor will undertake in the relevant Borrower Deed of Charge that it will not do or agree to do 

any act whereby an Obligor Secured Creditor would be in breach of any of (i) to (vi) above. 

Exercise of Borrower Security Trustee’s rights and discretions 

The Borrower Security Trustee shall, in exercising its powers, trusts, authorities, duties and discretions in 

respect of the Obligor Security Assets have regard to the interests of the Obligor Secured Creditors 

generally provided that for so long as there are any Issuer Secured Obligations outstanding the Borrower 

Security Trustee shall only act in accordance with the directions of the Issuer Security Trustee. 

Modifications, consents or waivers 

The Borrower Deeds of Charge will provide, notwithstanding the above, that the Borrower Security 

Trustee may in its discretion, without the consent of, or consultation with, any Obligor Secured Creditor, 

the Note Trustee or any Noteholder, concur in making any other modification to, give any other consent 

under, or grant any other waiver in respect of any breach or proposed breach of any Transaction 

Document if: 

(a) 

(b) 

(c) 

in its opinion, it is required to correct a manifest error or it is of a formal, minor, administrative or 

technical nature, or is necessary or desirable for the purposes of clarification; 

such modification, consent or waiver is not, in the opinion of the Borrower Security Trustee, 

materially prejudicial to the interests of the Obligor Secured Creditors (taken as a whole) or the 

Noteholders (as to the latter of which the Borrower Security Trustee shall be entitled to rely on any 

confirmation from the Rating Agencies or, in the absence of such confirmation, shall rely upon the 

direction of the Issuer Security Trustee who will in turn act in accordance with the direction of the 

Note Trustee); or 

such consent or release is expressly contemplated in the relevant Commercial Mortgage Loan 

Agreement or Borrower Deed of Charge and the relevant Obligor has complied with all necessary 

procedures (if any) set out in the relevant Commercial Mortgage Loan Agreement or Borrower 

Deed of Charge for obtaining such consent, waiver or modification and provides any necessary 

documentation and, to the extent applicable, satisfies any other requirements, whether imposed 

under the Transaction Documents or by law or regulation. 

Enforcement action 

Each Obligor Secured Creditor will agree, save as provided below, not to declare a Loan Event of Default 

or declare that any Obligor Secured Obligation is payable on demand, and only the Borrower Security 

Trustee or any Receiver appointed by the Borrower Security Trustee may take enforcement action against 

any Obligor. The Borrower Security Trustee shall not be obliged to do any of the above unless it is 

indemnified and/or secured to its satisfaction and (so long as there are any Issuer Secured Obligations 

outstanding) will only exercise any such rights on the instructions of the Issuer Security Trustee. The 

Issuer Security Trustee shall not be obliged to provide any such instruction unless it is instructed in 

accordance with the Issuer Deed of Charge. 

Governing law 

The Borrower Deeds of Charge will be governed by English law. 

3. The Account Bank and Cash Management Agreements 

Each Borrower and the Issuer (each, an ‘‘Accountholder’’) will enter into a separate Account Bank and 

Cash Management Agreement with the Account Bank with whom their accounts are to be held, pursuant 

to which the Cash Manager will be appointed, as agent of the Accountholder and, as the case may be, the 

Borrower Security Trustee or Issuer Security Trustee, to (i) act as cash manager in respect of amounts 

standing from time to time to the credit of the relevant Accounts; (ii) invest monies standing to the credit 

from time to time of the relevant Accounts in Eligible Investments and (iii) in the case of the Issuer, 

calculate the Issuer Cost of Funds, Liquidity Shortfall and any Principal Loss, act as agent of the Issuer 

in connection with the Liquidity Facility Agreement and inter alia, provide the information described 

below to the Noteholders. In each Account Bank and Cash Management Agreement, the Account Bank 

will waive all rights of set-off in relation to the Accounts subject to that agreement. 

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Each Accountholder will pay to each of the Cash Manager and the Account Bank an agreed fee (exclusive 

of any applicable VAT). Payment of the fees due to the Cash Manager and the Account Bank by an 

Accountholder will rank senior to payments in respect of the Commercial Mortgage Loan and the Notes 

(as the case may be). 

The Cash Manager will be permitted to sub-contract or delegate the performance of any of its obligations 

provided that it uses all reasonable skill and care in the selection of its appointee and forthwith upon 

making the appointment gives notice of such appointment to the relevant Borrower and the Borrower 

Security Trustee or the Issuer and the Issuer Security Trustee, as the case may be, depending on the 

Accountholder. The Account Bank will give certain representations, including that it satisfies the Ratings 

Criteria. The Cash Manager will covenant, among other things, that it will allocate or procure that 

sufficient resources are allocated to enable it to perform its obligations under the relevant Account Bank 

and Cash Management Agreement. 

An Accountholder may not withdraw any monies from the relevant Accounts otherwise than in 

accordance with the provisions of the relevant Security created over those Accounts and the applicable 

Account Bank and Cash Management Agreement. 

Each Account Bank and Cash Management Agreement will contain provisions, inter alia, for the transfers 

of amounts between, and withdrawal of funds from, the relevant Accounts. 

Details concerning the Borrower Accounts, the Issuer Accounts, the Issuer Pre-Enforcement Priority of 

Payments, the Obligor Pre-Enforcement Priority of Payments, the Issuer Post-Enforcement Priority of 

Payments and the Obligor Post-Enforcement Priority of Payments are described further in the section 

entitled ‘‘Resources Available to the Borrowers and the Issuer’’ below. 

Under each Account Bank and Cash Management Agreement, all accounts established and/or maintained 

pursuant to the relevant Account Bank and Cash Management Agreement must be maintained 

with a bank that has a rating of at least ‘‘F1’’ by Fitch and ‘‘A-1+’’ by S&P, in each case in respect of its 

short-term debt obligations (the ‘‘Rating Criteria’’). 

If at any time the Account Bank ceases to satisfy the Rating Criteria, then as soon as reasonably 

practicable and in any event within 30 days of such time, the relevant Borrower or the Issuer (as the case 

may be) will procure the transfer of the relevant accounts to another bank or banks approved by the 

Borrower Security Trustee and/or the Issuer Security Trustee, as applicable, that satisfies the Rating 

Criteria and each of the Account Bank and the Cash Manager shall provide such assistance as is necessary 

in effecting such transfer. 

In addition, appointments of the Cash Manager and the Account Bank may be terminated by the relevant 

Accountholder (with the consent of the Borrower Security Trustee or Issuer Security Trustee, as the case 

may be) or by the Borrower Security Trustee or Issuer Security Trustee, as the case may be, following 

certain events including, in the case of the Cash Manager, a failure by the Cash Manager to perform its 

duties under the applicable Account Bank and Cash Management Agreement and an insolvency-related 

event in relation to the Cash Manager. 

Each Accountholder, with the approval of the Borrower Security Trustee or Issuer Security Trustee, as the 

case may be, shall appoint a replacement Cash Manager or Account Bank in the event that the 

appointment of the Cash Manager or Account Bank is terminated. The termination of the appointment 

of the Cash Manager or Account Bank shall not be effective until a replacement has been appointed. 

Under the Issuer Account Bank and Cash Management Agreement, the Cash Manager will agree, inter 

alia, (but subject always to any confidentiality restrictions imposed by applicable law) to provide certain 

information and reports to the Noteholders, or the Note Trustee on behalf of the Noteholders, in relation 

to the Notes, the Issuer, the Commercial Mortgage Loans, the Borrowers and the Property Portfolios, 

such reports to include the Investor Reports. 

The Investor Reports will be prepared quarterly, will include the following information and will be made 

available to Noteholders on www.ctslink.com or such other website as may be notified to them in accordance 

with Condition 19 (Notices and Information) (such websites do not form part of this offering circular): 

• details of interest, Pool Factor and principal paid and payable on each class of Notes; 

• details of the Commercial Mortgage Loans (including any covenant testing); 

• the latest Market Value of the Property Portfolios (based upon the most recent Valuation 

Report); 

• details of each Property Portfolio by reference to property type and region; 

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• details of the top 10 Occupational Tenants (by rental income generated) for each Property 

Portfolio; 

• details of any disposals, acquisitions and substitutions in respect of each Property Portfolio; 

• total Gross Rental Income and the Estimated Rental Value for each Property Portfolio; and 

• details of any proposed Development the cost (excluding VAT) of which is estimated to be in 

excess of the greater of £250,000 and 10 per cent. of the Estimated Rental Value of the 

relevant Secured Property. 

Each Account Bank and Cash Management Agreement will be governed by English law. 

4. The Issuer Deed of Charge 

The Issuer and, inter alios, the Note Trustee will enter into the Issuer Deed of Charge on the Closing Date. 

Under the Issuer Deed of Charge, the Issuer will grant the following security in favour of the relevant 

Issuer Secured Creditors over all of its property, assets and undertaking (the ‘‘Issuer Charged Property’’): 

(a) first priority fixed charges or, as the case may be, assignments by way of security over: 

(i) the Issuer’s rights as a secured party under the Obligor Security Documents and any 

security granted pursuant thereto; 

(ii) the Issuer’s rights under the Transaction Documents to which it is a party; 

(iii) the Issuer’s rights in respect of the Issuer Accounts and any related rights; and 

(iv) any Eligible Investments made from time to time by or on behalf of the Issuer; 

(b) a floating charge over all of its present and future assets and undertaking, which shall be deferred 

in point of priority to all fixed security validly and effectively created by it and as described in 

paragraph (a) above, 

(such security together, the ‘‘Issuer Security’’). 

The proceeds of enforcement of the Issuer Security constituted by the Issuer Deed of Charge will be 

applied in accordance with the order of application of payments specified in the Issuer Post-Enforcement 

Priority of Payments. 

The Issuer Deed of Charge will be governed by English law. 

5. The Property Management Agreements 

Each Borrower and L.C.P. Management Limited will enter into a separate Property Management 

Agreement pursuant to which the Property Manager will be appointed as the Property Manager in 

relation to the Secured Properties owned by the relevant Borrower. 

Pursuant to the terms of the Property Management Agreements, the Property Manager will be 

responsible for, inter alia: 

(i) 

(ii) 

(iii) 

(iv) 

the collection of rental income on behalf of the relevant Borrower; 

monitoring the tenants’ procurement of operational services, including all requisite repairs and 

maintenance and monitoring the payment and administration of associated third party costs and 

expenses; 

advising each relevant Borrower in relation to leasehold property and overseeing the negotiation 

and completion of new or renewed leases; 

providing all reasonably required information on a timely basis, including the following: 

(A) the tenancy schedule for each Secured Property showing, inter alia, the Occupational 

Tenants, the relevant unit occupied, the total rent payable and the amount (if any) 

which is in arrears, the lease start date and end date, any early termination options, the 

next rent review date, the rent review basis and the Estimated Rented Value of each 

unit and identifying the change from the last tenancy schedule provided; 

(B) details of the Property Manager fees and any sub-contractor fees; 

(C) details of the amount of any service charge shortfall in excess of £15,000 per annum in 

respect of any Secured Property; 

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(D) details of any steps being taken to recover any due but unpaid rental income under any 

Occupational Lease, where such due but unpaid rental income exceeds £25,000; 

(E) a copy of the relevant extract of the minutes of any property management meetings 

relating to material matters with respect to the Secured Properties held during a 

quarter; 

(F) a summary of any rent reviews and lease renewals in progress or agreed during a 

quarter; 

(G) copies of all material correspondence with insurance brokers and insurers handling the 

insurance of any Secured Property, in respect of claims or liabilities where the potential 

liabilities or claims exceed £250,000; 

(H) details of any potential Occupational Tenant of a Secured Property if the value of the 

annual rent is in excess of £100,000 per annum and any potential buyer of a Secured 

Property; 

(I) details of any proposed Minor Development the cost (excluding VAT) of which is 

estimated to be, when aggregated with the cost (excluding VAT) of all other Minor 

Developments in respect of the relevant Borrower’s Property Portfolio, in excess of 

4 per cent. (in the case of LCP Real Estate) or 9 per cent. (in the case of Proudreed Real 

Estate) of the applicable Reference Amount in respect of the relevant Borrower’s 

Property Portfolio in any Reference Period; 

(J) details of any proposed Development the cost (excluding VAT) of which is estimated to 

be in excess of the greater of £250,000 and 10 per cent. of the Estimated Rental Value 

of the relevant Secured Property; 

(K) details of situations where it has become entitled to serve any notice on any former 

tenant of any Occupational Lease; and 

(L) the aggregate amount of due but outstanding payments relating to Secured Properties 

within the relevant Borrower’s Property Portfolio 

(v) complying with all applicable laws and regulations; and 

(vi) maintaining all licenses, approvals and authorisations necessary to act in its capacity as Property 

Manager. 

The Property Management Agreements will contain certain termination events which entitle the 

appointment of the relevant Property Manager to be terminated upon notice (including but not limited 

to): 

(i) any breach of the Property Manager’s obligations which is not corrected in accordance with the 

underlying agreements (including the relevant Duty of Care Agreement); 

(ii) insolvency of the Property Manager; and 

(iii) material adverse change in the Property Manager’s abilities to act as a property manager. 

However, the termination of the appointment of the Property Manager will not be effective until a 

replacement Property Manager (approved by the Borrower Security Trustee and the Rating Agencies) 

has been appointed in accordance with the Property Management Agreement. 

The Property Manager will produce quarterly reports on the performance of the Secured Properties that 

it manages or sub-contracts the management of. 

The Property Management Agreements will be governed by English law. 

6. The Property Manager Duty of Care Deeds 

On or before the Closing Date, the Property Manager, each Borrower and the Borrower Security Trustee 

will enter into a separate Property Manager Duty of Care Deed pursuant to which, inter alia, the Property 

Manager will give certain limited covenants and representations and warranties to the Borrower Security 

Trustee and confirm that, in the performance of its duties under the Property Management Agreement to 

which it is a party, it owes a contractual duty of care to the Borrower Security Trustee. 

Pursuant to the terms of the Property Manager Duty of Care Deeds, the Property Manager undertakes, 

inter alia: 

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(i) to collect rental income on behalf of the relevant Borrower and to direct the tenants to pay rental 

income directly into the relevant Borrower Transaction Account (held with a bank which satisfies 

the Rating Criteria); 

(ii) to maintain systems sufficient to identify all the cash-flows and collateral applicable to the relevant 

Commercial Mortgage Loans; 

(iii) to notify the Borrower Security Trustee within 10 Business Days of any uncured payment default 

exceeding in the case of any individual lease £50,000 per quarter (in the case of LCP Real Estate) 

and £15,000 per quarter (in the case of Proudreed Real Estate), or significant tenant default in any 

case when the cumulative uncured payment default of any particular tenant exceeds £100,000 per 

quarter (in the case of LCP Real Estate) and £50,000 per quarter (in the case of Proudreed Real 

Estate). 

Certain termination events will each entitle the appointment of the Property Manager to be terminated 

upon notice (including, but not limited to, recurrent breach of financial covenants by the Borrower in the 

relevant Commercial Loan Agreement). 

The Property Manager Duty of Care Deeds will be governed by English Law. 

7. The Liquidity Facility Agreement 

Under the terms of the Liquidity Facility Agreement, the Liquidity Facility Provider will provide the 

Issuer a 364 day committed revolving sterling liquidity facility (the ‘‘Liquidity Facility’’) to permit 

drawings to be made in an aggregate of up to £18,900,000 (the ‘‘Liquidity Facility Maximum Amount’’) 

on any Interest Payment Date, in circumstances where there is a shortfall between amounts which will be 

received by the Issuer on or before such Interest Payment Date in respect of the related Interest Period 

and the Issuer’s senior expenses (being those set out in (a) to (d) of the Issuer’s Pre-Enforcement Priority 

of Payments as set out in the section entitled ‘‘Resources available to the Borrowers and the Issuer – Issuer 

Pre-Enforcement Priority of Payments’’) and interest on each Class of Notes, other than any interest due 

on any portion of the Notes to which any Principal Loss has been allocated in accordance with Condition 

6(e) (Note Principal Payments, Principal Amount Outstanding, Adjusted Principal Amount Outstanding 

and Pool Factor) (a‘‘Liquidity Shortfall’’), to be determined by the Cash Manager on the immediately 

preceding Determination Date. Drawings under the Liquidity Facility may be requested for so long as a 

Note Enforcement Notice has not been served, certain other events have not occurred in respect of the 

Issuer and various warranties of the Issuer therein remain true in all material respects. 

The Liquidity Facility Maximum Amount will reduce in proportion to prepayments of principal on the 

Notes. 

For further details relating to the Liquidity Facility please see the section entitled ‘‘Resources available to 

the Borrowers and the Issuer – The Liquidity Facility’’ below. 

The Liquidity Facility Agreement will be governed by English Law. 

8. The Hedging Agreements 

On or before the Closing Date, the Issuer will enter into fixed/floating interest rate swap transactions and 

interest rate caps with the Hedging Providers, each under an International Swaps and Derivatives 

Association Inc. 1992 Master Agreement (Multicurrency-Cross Border Version) in order to address 

certain risks arising as a result of the Borrowers paying to the Issuer a fixed rate of interest on the 

Commercial Mortgage Loans and the Issuer paying a floating rate of interest under the Notes. 

The Hedging Agreements further provide that in the event that a ‘‘Hedging Downgrade Event’’, (as 

defined in the Hedging Agreements but equating to the relevant Hedging Provider ceasing to have a 

short-term debt rating of at least A-1 by S&P and a combined short-term rating of at least F1 and 

long-term rating of at least A by Fitch and, in either case, the then-current rating of the outstanding Notes 

is as a result downgraded or placed under review for a possible downgrade) has occurred, the relevant 

Hedging Provider will be required within 30 days, at its own expense, to do one of the following: 

(i) to procure another person who satisfies the requisite ratings criteria to become a co-obligor or to 

guarantee the obligations of the Hedging Provider; 

(ii) to transfer its obligations under the Hedging Agreements to a replacement hedging provider who 

satisfies the requisite ratings criteria; 

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(iii) to provide collateral to secure its obligations under the relevant Hedging Agreement in an amount 

sufficient to satisfy the then current requirements of the Rating Agencies, such collateral to be 

provided in accordance with the relevant Hedging Credit Support Document and to be credited to 

the ‘‘swap collateral ledger’’ of the Issuer Transaction Account; or 

(iv) to take such other action as it may agree with the relevant Rating Agency. 

If the relevant Hedging Provider ceases to have a short-term debt rating of at least A-3 by S&P or F-2 

by Fitch, the Hedging Provider will be required to take one of certain further remedial measures which 

may include transferring its obligations under the relevant Hedging Agreement to a replacement hedging 

provider who satisfies the requisite ratings criteria, or procuring another person who satisfies the requisite 

ratings criteria to guarantee the obligations of the Hedging Provider or such other action as S&P and Fitch 

may agree (such that the then current ratings of the Notes would not be adversely affected). 

If the relevant Hedging Provider fails to do so, the Issuer will in such circumstances be entitled (but not 

obliged) to terminate the relevant Hedging Agreement. 

Each Hedging Agreement will be governed by English law. 

For a further description of the Hedging Providers, see the section entitled ‘‘The Key Transaction Parties’’ 

above. For a further description of the Hedging Agreements, see the section entitled ‘‘Resources Available 

to the Borrowers and the Issuer’’ below. 

9. Tax Deeds of Covenant 

The obligations of the Borrowers under the Transaction Documents will be supported by a separate deed 

of covenant in respect of each Borrower (the ‘‘Tax Deeds of Covenant’’) to be entered into on or about 

the Closing Date under which, inter alia, each Borrower will give certain representations, warranties and 

covenants in relation to its tax affairs and the LCP Covenantors or the Proudreed Covenantors, as the 

case may be, will give certain representations, warranties and covenants in relation to the tax affairs of the 

relevant Borrower, in each case for the benefit of the Issuer and the Borrower Security Trustee. 

The Tax Deeds of Covenant will be governed by English law. 

10. Equitable Mortgage over Shares 

The relevant Parent Obligor shall grant, under a separate security document (each an ‘‘Equitable 

Mortgage over Shares’’) a first ranking fixed charge by way of equitable mortgage over the entire issued 

share capital held by it in the relevant Borrower and all dividends, interest and other monies receivable 

by it in respect of such share capital (including redemption, any bonus or any rights arising under any 

preference, option, substitution or conversion relating to such share capital) as security for the obligations 

of itself, or (in the case of L.C.P. Commercial Limited) London and Cambridge Properties Limited, under 

the Tax Deed of Covenant to which it is a party. 

Each Equitable Mortgage over Shares will be governed by English law. 

11. The Subordinated Loan Agreements 

Under each Subordinated Loan Agreement, L.C.P. Management Limited and Proudreed Limited 

respectively, will provide a committed facility to LCP Real Estate and Proudreed Real Estate, 

respectively, on or before the Closing Date in an amount sufficient (together with the proceeds advanced 

under the respective Commercial Mortgage Loan Agreements) for LCP Real Estate and Proudreed Real 

Estate respectively to satisfy the consideration due in connection with the acquisition of the Properties 

and the related expenses. 

LCP Real Estate and Proudreed Real Estate, respectively, will pay interest and principal on each 

Subordinated Loan on each Loan Interest Payment Date, to the extent that there are funds available to 

do so in the Borrower Distribution Account. Any amounts of interest which have fallen due but which are 

not paid, will remain outstanding and shall themselves bear interest at the same rate. Any principal and 

interest not previously repaid will become repayable on LCP Real Estate or Proudreed Real Estate, 

respectively, commencing liquidation, subject to the subordination described below. 

Each of L.C.P. Management Limited and Proudreed Limited will agree that all of its rights under their 

Subordinated Loan Agreement will be subordinated to the rights of the Issuer against the relevant Borrower 

under the Commercial Mortgage Loan Agreement and each Subordinated Loan Agreement will include a 

non-petition provision in respect of the relevant Borrower and a provision restricting the use of set-off. 

Each Subordinated Loan Agreement will be governed by English law. 

81

RESOURCES AVAILABLE TO THE BORROWERS AND THE ISSUER 

Below is a summary of the resources available to the Borrowers and the Issuer to enable them to meet their 

payment obligations in respect of the Commercial Mortgage Loans and the Notes, respectively. The 

information in this section does not purport to be complete and is qualified in its entirety by reference to the 

detailed information appearing in the relevant Transaction Documents and summarised elsewhere in this 

Offering Circular. Prospective purchasers of the Notes are advised to read carefully and to rely, in addition, 

on the detailed information appearing elsewhere in this Offering Circular in making any decision whether 

or not to invest in any Notes. 

1. Borrower Accounts 

The description of the operation of each Borrower Transaction Account, Disposal Proceeds Account, 

Insurance Proceeds Account, Cash Trap Account and Contingent Tax Security Account (all such 

accounts, being, in respect of each Borrower, the ‘‘Borrower Accounts’’) as well as each Borrower 

Distribution Account in this section will only apply prior to the enforcement of the relevant Obligor 

Security. Following the enforcement of the relevant Obligor Security, the relevant Borrower Accounts as 

well as the Borrower Distribution Account will operate in accordance with the instructions of the 

Borrower Security Trustee or, as the case may be, any Receiver appointed under the Borrower Deeds of 

Charge. Any amounts standing to the credit of a Contingent Tax Security Account will not be available 

to the Obligor Secured Creditors generally but will be applied in making payments in respect of Tax 

liabilities of the Borrower for which such amounts have been reserved, if any, and any excess amounts 

following payment of such Tax liabilities shall be repaid to the relevant Borrower (if contributed by it) or 

LCP Covenantor or Proudreed Covenantor, as the case may be. 

Under each Account Bank and Cash Management Agreement, all accounts established and/or maintained 

pursuant to the relevant Account Bank and Cash Management Agreement must be maintained 

with a bank that satisfies the Rating Criteria. 

The Borrower Transaction Account 

As at the Closing Date, each Borrower will have instructed the Property Manager to ensure that all 

amounts received by way of rental and service charge income are paid into the relevant account in the 

name of the Borrower maintained with the Account Bank (each such account being, in respect of the 

relevant Borrower, the ‘‘Borrower Transaction Account’’). Pursuant to the terms of the relevant 

Commercial Mortgage Loan Agreement and the relevant Account Bank and Cash Management 

Agreement, the Borrowers will covenant that they will ensure that, for so long as the relevant Commercial 

Mortgage Loan remains outstanding, all such amounts received will be paid into the relevant Borrower 

Transaction Account. On the Closing Date each Borrower will pay, from the proceeds of its Commercial 

Mortgage Loan, into the relevant Borrower Transaction Account an amount calculated by the relevant 

Borrower as being sufficient to enable it to make payments in respect of any costs and taxes expected to 

become due and payable by that Borrower in the period from the Closing Date to the first Loan Interest 

Payment Date. 

Pursuant to each Account Bank and Cash Management Agreement, monies standing to the credit of a 

Borrower Transaction Account may not be used for any purpose other than: 

(i) making Eligible Investments; and 

(ii) making payments due on each Loan Interest Payment Date in accordance with the relevant 

Account Bank and Cash Management Agreement and the Borrower Deed of Charge; and 

(iii) making payments in respect of any costs and taxes arising that have been provided for on a 

preceding Loan Interest Payment Date or, if there is no such preceding Loan Interest Payment 

Date, on the Closing Date in accordance with the relevant Account Bank and Cash 

Management Agreement and the Borrower Deed of Charge. 

Disposal Proceeds Account 

Pursuant to each Account Bank and Cash Management Agreement, each Borrower will establish and 

maintain a disposal proceeds account (each such account being, with respect to the relevant Borrower, the 

‘‘Disposal Proceeds Account’’) with the Account Bank to which the gross proceeds of disposals of 

Secured Properties will be credited. Amounts credited to a Disposal Proceeds Account may only be used 

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in the prepayment of the Commercial Mortgage Loan, acquisition of Additional Secured Properties or 

such other purposes as permitted by the Commercial Mortgage Loan Agreement, as more particularly 

described in the section entitled ‘‘Summary of Principal Documents – The Commercial Mortgage Loan 

Agreements’’ above. 

Insurance Proceeds Account 

Pursuant to each Account Bank and Cash Management Agreement, each Borrower will establish an 

insurance proceeds account (an ‘‘Insurance Proceeds Account’’) with the Account Bank to which any 

insurance proceeds in excess of £50,000 (as adjusted on an annual basis by reference to changes in retail 

prices) paid to the Borrower or to the Borrower Security Trustee (as loss payee) in respect of damage to 

or destruction of a Secured Property will be credited. 

Amounts credited to an Insurance Proceeds Account may only be used in accordance with the 

Transaction Documents (subject to the consent of the Borrower Security Trustee) either (a) to replace, 

restore or reinstate the relevant Secured Property if required by the applicable Occupational Lease, or 

(b) absent a Potential Loan Event of Default or a Loan Event of Default and so long as both the 

Historical ICR and the Projected ICR are equal to or above 1.3:1 to replace, repair or reinstate the 

relevant Secured Property within the earlier of (i) 12 months of being credited to the relevant Insurance 

Proceeds Account and (ii) 36 months (or such lesser period for which the relevant Secured Property 

benefits from insurance for loss of rent) of the relevant damage or destruction, despite such replacement, 

restoration or reinstatement not being required by the terms of any applicable Occupational Lease. If, in 

respect of any Secured Property, any of the above time periods are (or are likely to be) exceeded, the 

relevant Borrower shall be entitled to request an extension to such time periods from (and subject to the 

satisfaction of any conditions set by) the Borrower Security Trustee. Any amounts credited to an 

Insurance Proceeds Account that are not used in accordance with (a) or (b) shall be used to prepay the 

relevant Commercial Mortgage Loan to the extent of the applicable Prepayment Amount with any 

balance from such monies remaining after such prepayment being paid to the relevant Borrower. After 

a Potential Loan Event of Default or a Loan Event of Default has occurred and while it is continuing 

unwaived and for as long as either the Historical ICR or the Projected ICR is below 1.3:1, all amounts 

credited to the Insurance Proceeds Account in respect of Secured Properties not subject to an 

Occupational Lease requiring repairs or reinstatement will be used to prepay the relevant Commercial 

Mortgage Loan to the extent of the applicable Prepayment Amount in accordance with the relevant 

Commercial Mortgage Loan Agreement. 

Cash Trap Account 

Pursuant to each Account Bank and Cash Management Agreement, each Borrower will on or before the 

Closing Date, establish and maintain a cash trap account (in respect of each Borrower, the ‘‘Cash Trap 

Account’’) with the Account Bank. 

If, on the relevant Loan Calculation Date in respect of any Loan Interest Payment Date, (a) either the 

Historical ICR or the Projected ICR (or both) is below 1.3:1 or (b) if the relevant Loan Calculation Date 

falls within the LTV Reference Period, the LTV Ratio is above 70 per cent., the affected Borrower will 

be required at item (i) of the Obligor Pre-Enforcement Priority of Payments to transfer all sums then 

standing to the credit of the Borrower Transaction Account (after deducting amounts necessary to pay 

items at (a) to (h) in the Obligor Pre-Enforcement Priority of Payments) into the Cash Trap Account 

provided that if, in respect of a Loan Calculation Date during the Reference Period, the LTV Ratio in 

respect of the relevant Borrower is greater than 70 per cent. but both the Historical ICR and the Projected 

ICR are equal to or above 1.3:1, the amount required to be deposited into the Cash Trap Account shall 

be limited to the amount required to maintain the balance of sums credited to the ‘‘LTV reserve ledger’’ 

at the LTV Required Amount. 

If, on the relevant Loan Calculation Date in respect of a subsequent Loan Interest Payment Date, both 

the Historical ICR and the Projected ICR are equal to or above 1.5:1 and were equal to or above 1.5:1 

on each of the four immediately preceding Loan Calculation Dates and no Event of Default is then 

outstanding, the Cash Manager shall on the relevant Loan Interest Payment Date be obliged to transfer 

all amounts then standing to the credit of the Cash Trap Account (excepting for these purposes any 

amounts credited to the ‘‘LTV reserve ledger’’ of the relevant account) to the Borrower Transaction 

Account. Amounts standing to the credit of the ‘‘LTV reserve ledger’’ may be released in the 

circumstances described in the section entitled ‘‘Summary of Principal Documents – The Commercial 

83

Mortgage Loan Agreements – The LTV Ratio’’ above and/or applied towards a prepayment or repayment 

in full by the relevant Borrower of its Commercial Mortgage Loan in accordance with the relevant 

Commercial Mortgage Loan Agreement. 

In addition, if, on the relevant Loan Calculation Date in respect of any Loan Interest Payment Date, 

either the Historical ICR or the Projected ICR (or both) is below 1.3:1 and either the Historical ICR or 

the Projected ICR (or both) was below 1.3:1 on each of the three immediately preceding Loan Calculation 

Dates, the Borrower, acting through the agency of the Cash Manager, will be required on the relevant 

Loan Interest Payment Date to apply all sums then standing to the credit of the Cash Trap Account (after 

taking into account any sums paid into such Cash Trap Account on the relevant Loan Interest Payment 

Date at item (i) of the Obligor Pre-Enforcement Priority of Payments) in making a prepayment under the 

relevant Commercial Mortgage Loan on the relevant Loan Interest Payment Date (a ‘‘Cash Trap 

Prepayment’’). 

On each Loan Interest Payment Date immediately following the making of a Cash Trap Prepayment, the 

relevant Borrower shall be required to apply all sums then standing to the credit of the Cash Trap Account 

(after taking into account any sums paid into such Cash Trap Account on the relevant Loan Interest 

Payment Date at item (i) of the Obligor Pre-Enforcement Priority of Payments) in making a further Cash 

Trap Prepayment unless, both on the Loan Calculation Date in respect of such Loan Interest Payment 

Date and on the two Loan Calculation Dates immediately preceding such Loan Calculation Date both the 

Historical ICR and the Projected ICR are/were equal to or above 1.3:1. 

Amounts standing to the credit of the Cash Trap Account will not be taken into account in calculating the 

Financial Covenants. 

Contingent Tax Security Account 

Pursuant to each Account Bank and Cash Management Agreement and each Tax Deed of Covenant, each 

Borrower will be required to establish and maintain a contingent tax liabilities account (in respect of each 

Borrower, the ‘‘Contingent Tax Security Account’’) with the Account Bank. 

Upon the occurrence of certain events relating to its contingent tax liabilities as discussed in the section 

entitled ‘‘Risk Factors – Relating to Taxation – UK Corporation Tax on Chargeable Gains and Stamp Duty 

Land Tax’’ above, the relevant Borrower (from amounts credited to its Borrower Distribution Account) 

and/or the LCP Covenantors or the Proudreed Covenantors, as the case may be, will be required to 

deposit, or procure the deposit of, monies into such account, in each case in an amount determined by 

reference to, and in accordance with, the relevant Tax Deed of Covenant. 

Amounts standing to the credit of the Contingent Tax Security Account will not be for the benefit of the 

Obligor Secured Creditors generally either before or following the service of a Loan Enforcement Notice. 

Accordingly, interest accrued on such amounts shall remain credited to the Contingent Tax Security 

Account and shall be applied in the same manner as such amounts in accordance with the relevant Tax 

Deed of Covenant. Following application of amounts standing to the credit of the Contingent Tax Security 

Account, or any reduction of the level of amounts required to be so held, any excess will be repaid to the 

contributor of such amounts (whether it be the relevant Borrower or an LCP Covenantor or Proudreed 

Covenantor, as the case may be) in all cases in accordance with the relevant Tax Deed of Covenant. 

Borrower Distribution Account 

Pursuant to each Account Bank and Cash Management Agreement, all amounts payable to a Borrower 

under item (m) of the Obligor Pre-Enforcement Priority of Payments or the equivalent item of the 

Obligor Post-Enforcement Priority of Payments may be transferred to the relevant Borrower Distribution 

Account (the ‘‘Borrower Distribution Account’’). Amounts credited to a Borrower Distribution Account 

will be under the control of the relevant Borrower and may be dealt with as that Borrower may elect. 

Each Borrower Distribution Account will be subject only to a floating charge under the terms of the 

relevant Borrower Deed of Charge. 

Eligible Investments 

Pursuant to each Account Bank and Cash Management Agreement, amounts held in the Borrower 

Accounts may be invested from time to time in Eligible Investments at the direction of the Cash Manager 

(or any delegate of the Cash Manager) on behalf of the relevant Borrower. The Cash Manager will follow 

a prudent low-risk investment strategy by investing in Eligible Investments that are readily realisable with 

84

a view to achieving a reasonable return on the monies invested. The Cash Manager will not actively 

manage such investments with a view to achieving the highest possible returns. 

2. Available Funds and their Priority of Application 

On each Determination Date prior to a Loan Enforcement Notice being served, the Cash Manager will 

determine: 

(a) the amount of cash then standing to the credit of the relevant Borrower Transaction Account 

(including any interest thereon and any proceeds from any Eligible Investments); 

(b) the aggregate of the payments specified in items (a) to (l) (inclusive) in the relevant Obligor 

Pre-Enforcement Priority of Payments or the equivalent items of the relevant Obligor Post- 

Enforcement Priority of Payments, as then applicable, required to be made on the next Loan Interest 

Payment Date (the ‘‘Borrower Debt Service Required Amount’’); 

(c) the amount (if any) that will be standing to the credit of the relevant Borrower Transaction Account 

after the Borrower Debt Service Required Amount is paid, which is to be transferred to the relevant 

Borrower Distribution Account in satisfaction of the payment due to the Borrower under item (m) 

of the relevant Obligor Pre-Enforcement Priority of Payments or the equivalent item of the relevant 

Obligor Post-Enforcement Priority of Payments. 

Obligor Pre-Enforcement Priority of Payments 

Prior to the serving of a Loan Enforcement Notice, on each Loan Interest Payment Date, monies then 

standing to the credit of the relevant Borrower Transaction Account (including (i) any interest credited 

thereto from the Cash Trap Account, the Insurance Proceeds Account and the Disposal Proceeds 

Account, (ii) if, on the five immediately preceding Loan Calculation Dates, both the Historical ICR and 

the Projected ICR are equal to or greater than 1.5:1, any amounts then standing to the credit of the Cash 

Trap Account (excluding for these purposes amounts credited to the ‘‘LTV reserve ledger’’ of such 

account) and (iii) any amounts standing to the credit of the ‘‘LTV reserve ledger’’ of the Cash Trap 

Account in excess of the relevant LTV Required Amount) shall be applied by the Cash Manager in 

accordance with the following Obligor Pre-Enforcement Priority of Payments, in each case only to the 

extent that preceding items have been paid in full and the relevant payment does not cause the relevant 

Borrower Transaction Account to become overdrawn: 

(a) first, in or towards satisfaction, of the fees and other remuneration and indemnity payments (if any) 

then payable to the Borrower Security Trustee or any appointee of the Borrower Security Trustee and 

any loss, costs, charges, liabilities, indemnity claims and expenses (including, in respect of Taxes, 

duties and other charges and including any VAT or similar Tax and legal fees and expenses in full to 

the extent that such amounts are due from the Borrower under any Obligor Transaction Document) 

then properly incurred by the Borrower Security Trustee or any appointee of the Borrower Security 

Trustee and any other amounts payable to the Borrower Security Trustee or any appointee of the 

Borrower Security Trustee under the relevant Borrower Deed of Charge or any other Obligor 

Transaction Document, together with interest thereon as provided for in the relevant Borrower Deed 

of Charge or other Obligor Transaction Document; 

(b) second, in or towards satisfaction of any amounts payable by the Borrower to the Issuer by way of 

On-going Facility Fee under the Commercial Mortgage Loan Agreement in respect of amounts 

described in sub-paragraph (a) of the definition of On-going Facility Fee, after deducting from such 

On-going Facility Fee an amount equal to any interest standing to the credit of the Issuer Transaction 

Account on the relevant Loan Interest Payment Date; 

(c) third, in or towards satisfaction, pro rata and pari passu according to the respective amounts due or 

to become due prior to the immediately following Loan Interest Payment Date in respect of: 

(i) any amounts to be paid or provided for by the Borrower in respect of United Kingdom 

corporation tax or group relief payments (or similar payments) in accordance with the relevant 

Tax Deed of Covenant; 

(ii) any other amounts for which the Borrower is required to account to a UK Tax Authority 

(including any VAT); and 

(iii) any amount due in respect of any ground rent or other sum due under any Headlease of a 

Secured Property (including any amounts in respect of VAT); 

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(d) fourth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of: 

(i) any amounts payable by the Borrower in respect of operating expenses incurred by the 

Borrower in the course of the Borrower’s business (other than as provided elsewhere in this 

priority of payments), including to the Property Manager in respect of fees (up to a maximum 

of 4 per cent. of the then-current Estimated Rental Value of the relevant Property Portfolio for 

the period in respect of which such fees are payable) and other amounts payable to the 

Property Manager pursuant to the Property Management Agreement; 

(ii) any amounts payable by or on behalf of the Borrower to the Issuer by way of On-going Facility 

Fee under the Commercial Mortgage Loan Agreement, in respect of amounts described in 

sub-paragraphs (b) to (e) and sub-paragraph (j) of the definition of On-going Facility Fees after 

deducting from such On going Facility Fee an amount equal to any interest standing to the 

credit of the Issuer Transaction Account on the relevant Loan Interest Payment Date to the 

extent not already deducted in respect of item (b) above; 

(iii) any amounts payable by or on behalf of the Borrower to the Account Bank and the Cash 

Manager under the terms of the Account Bank and Cash Management Agreement, respectively, 

in respect of the Fees and Expenses of the Account Bank and the Cash Manager; and 

(iv) any amounts payable by or on behalf of the Borrower to the Approved Valuers in respect of 

any Valuation Report, as prepared from time to time in respect of its Property Portfolio in 

accordance with the Commercial Mortgage Loan Agreement. 

(e) fifth, in or towards satisfaction of any amount due and payable by the Borrower to the Issuer by way 

of On-going Facility Fee under the relevant Commercial Mortgage Loan Agreement in respect of the 

amount described in sub paragraphs (f) and (k) of the definition of On-going Facility Fee; 

(f) sixth, in or towards satisfaction of all amounts of interest due and payable to the Issuer in respect of 

the Commercial Mortgage Loan; 

(g) seventh, in or towards satisfaction of any amounts payable by the Borrower to the Issuer by way of 


described in sub-paragraph (g) of the definition of On-going Facility Fee; 

(h) eighth, in or towards provision for any amounts to become due prior to the immediately following 

Loan Interest Period in respect of operating expenses incurred by the Borrower in the course of 

Borrower’s business (other than as provided elsewhere in this priority of payments) and payable by 

the Borrower; 

(i) ninth, if, on the immediately preceding Loan Calculation Date: 

(i) either the Historical ICR or the Projected ICR is less than 1.3:1; or 

(ii) if the relevant Loan Calculation Date falls in the LTV Reference Period, the LTV Ratio is 

above 70 per cent; 

all remaining sums standing to the credit of the Borrower Transaction Account, to be deposited into 

the Cash Trap Account provided that if both the Historical ICR and the Projected ICR are equal to 

or above 1.3:1, the amount required to be so deposited shall be limited to the amount required to 

maintain the balance of sums credited to the ‘‘LTV reserve ledger’’ at the applicable LTV Required 

Amount; 

(j) tenth,in or towards satisfaction of any amounts due and payable by the Borrower to the Issuer by way 

of On-going Facility Fee under the Commercial Mortgage Loan Agreement in respect of amounts 

described in sub-paragraph (h) of the definition of On-going Facility Fee; 

(k) eleventh, in or towards satisfaction of any amounts due and payable by the Borrower to the Issuer by 

way of On-going Facility Fee under the Commercial Mortgage Loan Agreement in respect of 

amounts described in sub-paragraph (i) of the definition of On-going Facility Fee; 

(l) twelfth, in or towards satisfaction of amounts payable by the Borrower to the Property Manager in 

respect of fees and other amounts payable to the Property Manager pursuant to the Property 

Management Agreement, to the extent not covered by item (d)(i) above; 

(m) thirteenth, in payment of any excess to the Borrower by way of a deposit into the Borrower 

Distribution Account. 

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Where amounts are to be provided for in accordance with the above Obligor Pre-Enforcement Priority 

of Payments prior to their becoming due and payable by the relevant Borrower such amounts shall remain 

credited to the relevant Borrower Transaction Account and shall be paid by the Cash Manager to the 

relevant creditor on the applicable due date. Such amount shall not be affected by any subsequent 

decrease in either the Historical ICR or the Projected ICR giving rise to payments being required to be 

made to the Cash Trap Account under item (i) above. 

Obligor Post-Enforcement Priority of Payments 

Upon delivery of a Loan Enforcement Notice, all monies standing to the credit of the relevant Borrower 

Accounts will be paid into the relevant Borrower Transaction Account excluding, for these purposes only, 

any amounts standing to the credit of the relevant Contingent Tax Security Account (which are to be 

applied in meeting certain Tax liabilities and/or repaid to either the relevant Borrower or the relevant 

LCP Covenantor or Proudreed Covenantor, as the case may be, in each case in accordance with the 

relevant Tax Deed of Covenant). All monies received into the relevant Borrower Transaction Account 

following delivery of a Loan Enforcement Notice (including any gross sale proceeds derived from the sale 

of Secured Properties within the Borrower’s Property Portfolio or otherwise from the enforcement of any 

of the Obligor Security) will be applied in accordance with the Obligor Post-Enforcement Priority of 

Payments set out below, in each case only to the extent that the preceding items have been paid in full 

and the relevant payment does not cause the relevant Borrower Transaction Account to become 

overdrawn: 

(a) first, in or towards satisfaction, of the fees and other remuneration and indemnity payments (if any) 

then payable to the Borrower Security Trustee or any appointee of the Borrower Security Trustee and 

any loss, costs, charges, liabilities, indemnity claims and expenses (including, in respect of Taxes, 

duties and other charges and including any VAT or similar Tax and legal fees and expenses in full to 

the extent that such amounts are due from the Borrower under any Obligor Transaction Document) 

then properly incurred by the Borrower Security Trustee or any appointee of the Borrower Security 

Trustee and any other amounts payable to the Borrower Security Trustee or any appointee of the 

Borrower Security Trustee under the relevant Borrower Deed of Charge or any other Obligor 

Transaction Document, together with interest thereon as provided for in the relevant Borrower Deed 

of Charge or other Obligor Transaction Document; 

(b) second, in or towards satisfaction of any amounts payable by the Borrower to the Issuer by way of 


described in sub-paragraph (a) of the definition of On-going Facility Fee, after deducting from such 

On-going Facility Fee an amount equal to any interest then standing to the credit of the Issuer 

Transaction Account; 

(c) third, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of: 

(i) any amounts payable by the Borrower to the Account Bank and the Cash Manager under the 

terms of the Account Bank and Cash Management Agreement in respect of any Fees and 

Expenses of the Account Bank and the Cash Manager respectively; and 

(ii) any amounts payable by the Borrower to the Issuer by way of On-going Facility Fee under the 

Commercial Mortgage Loan Agreement, in respect of amounts described in sub-paragraphs 

(b)(iii), (b)(iv), (d), (e) and (j) of the definition of On-going Facility Fee (such amounts to be 

treated separately for the purpose of any pro rata allocation), after deducting from such 

On-going Facility Fee an amount equal to any interest then standing to the credit of the Issuer 

Transaction Account to the extent not already deducted in respect of item (b); 

(d) fourth, in or towards satisfaction of any amounts due and payable by the Borrower to the Issuer by 

way of On-going Facility Fee under the Commercial Mortgage Loan Agreement in respect of 

amounts described in sub-paragraphs (f) and (k) of the definition of On-going Facility Fee; 

(e) fifth, in or towards satisfaction of interest due on the Commercial Mortgage Loan; 

(f) sixth, in or towards satisfaction of principal due on the Commercial Mortgage Loan; 

(g) seventh, in or towards satisfaction of any amounts payable by the Borrower to the Issuer by way of 


described in sub-paragraph (g) of the definition of On-going Facility Fee; 

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(h) eighth, in or towards satisfaction of any amounts payable by the Borrower to the Issuer by way of 


described in sub-paragraph (h) of the definition of On-going Facility Fee; 

(i) ninth, in or towards satisfaction of any amounts payable by the Borrower to the Issuer by way of 


described in sub-paragraph (i) of the definition of On-going Facility Fee; 

(j) tenth, in or towards satisfaction of any amounts for which the Borrower is required to account to a UK 

Tax Authority (including any VAT); and 

(k) eleventh, in payment of any excess to the Borrower by way of a deposit into the Borrower Distribution 

Account. 

3. Monies available to the Issuer 

Prior to a Note Enforcement Notice being served, the Cash Manager will determine the monies which the 

Issuer has available to it to enable it to perform its obligations under or in respect of the Notes on each 

Interest Payment Date which will comprise: 

(i) monies received by the Issuer from the Borrowers under the Commercial Mortgage Loan 

Agreements; 

(ii) money received from the Hedging Providers under the Hedging Agreements; 

(iii) the earnings and proceeds from the making of Eligible Investments; and 

(iv) all other amounts standing to the credit of the Issuer Transaction Account. 

The Cash Manager will also determine the extent of any Liquidity Shortfall (to which extent it will 

provide a notice of drawdown to the Liquidity Facility Provider pursuant to the Liquidity Facility 

Agreement). 

Issuer Accounts 

As at the Closing Date, the Issuer will have established the Issuer Transaction Account and the Liquidity 

Facility Standby Account to be managed by the Cash Manager pursuant to the Issuer Account Bank and 

Cash Management Agreement. The Issuer Transaction Account will be held with the Account Bank. 

The description of the operation of the Issuer Transaction Account in this section will only apply prior to 

the enforcement of the Issuer Security and any amounts standing to the credit of the Liquidity Facility 

Standby Account will not be available to the Issuer Secured Creditors generally (but only as security in 

respect of the obligations to the Liquidity Facility Provider) and will be repaid to the Liquidity Facility 

Provider (as described in ‘‘The Liquidity Facility’’ below). Following the enforcement of the Issuer 

Security, the Issuer Transaction Account will operate in accordance with the instructions of the Issuer 

Security Trustee or, as the case may be, any Receiver appointed under the Issuer Deed of Charge. 

Pursuant to the Issuer Account Bank and Cash Management Agreement, any amounts held in the Issuer 

Transaction Account may be invested from time to time in Eligible Investments at the direction of the 

Cash Manager (or any delegate thereof) on behalf of the Issuer. 

Prior to the service of a Note Enforcement Notice, the Issuer will be entitled to declare a dividend, 

payable from the Issuer Transaction Account on the immediately following Interest Payment Date (each 

such dividend a ‘‘Set-up Dividend’’) provided that the aggregate of all amounts paid or payable by the 

Issuer by way of Set-up Dividend shall not exceed £13,500. 

Issuer Pre Enforcement Priority of Payments 

Prior to service of a Note Enforcement Notice, amounts standing to the credit of the Issuer Transaction 

Account, other than any amounts credited to the ‘‘swap collateral ledger’’ of the Issuer Transaction 

Account following the occurrence of a Hedging Downgrade Event in respect of that Hedging Provider 

(which are to be applied in returning collateral to, or in satisfaction of amounts owing by, the relevant 

Hedging Provider in accordance with the relevant Hedging Agreement and the relevant Hedging Credit 

Support Document) will be applied by the Cash Manager on behalf of the Issuer in accordance with the 

following Issuer Pre-Enforcement Priority of Payments on each Interest Payment Date, in each case only 

to the extent that preceding items have been paid in full and the relevant payment does not cause the 

Issuer Transaction Account to become overdrawn: 

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(a) first, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of the fees and other remuneration and indemnity payments (if any) then payable to the 

Issuer Security Trustee or the Note Trustee or any appointee of the Issuer Security Trustee or the 

Note Trustee and any loss, costs, charges, liabilities, indemnity claims and expenses (including, in 

respect of Taxes, duties and other charges and including any VAT or similar Tax and legal fees and 

expenses in full to the extent that such amounts are due from the Issuer under any Transaction 

Document) then properly incurred by the Issuer Security Trustee or the Note Trustee or any 

appointee of the Issuer Security Trustee or the Note Trustee and any other amounts payable to the 

Issuer Security Trustee or the Note Trustee or any appointee of the Issuer Security Trustee or the 

Note Trustee under the Issuer Deed of Charge or any other Transaction Document, together with 

interest thereon as provided for in the Issuer Deed of Charge or other Transaction Document; 

(b) second, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of: 

(i) any amounts payable by the Issuer in respect of the Issuer’s operating expenses incurred in the 

course of the Issuer’s business (other than as provided elsewhere in this priority of payments) 

that have become due and payable, including: 

(1) any amounts payable by the Issuer to the Issuer Corporate Services Provider in respect of 

any Fees and Expenses pursuant to the Issuer Corporate Services Agreement; 

(2) any amounts payable by the Issuer to third parties in respect of the establishment, 

maintenance and good standing of the Issuer or otherwise payable for the on going 

existence or maintenance of its business and which are not otherwise specified or provided 

for in items (a) to (l) (inclusive); 

(3) any amounts payable by the Issuer in respect of any Fees and Expenses of the Paying 

Agents and the Agent Bank incurred under the provisions of the Agency Agreement; 

(4) any amounts payable by the Issuer in respect of any Fees and Expenses of the Account 

Bank and the Cash Manager, respectively, under the Issuer Account Bank and Cash 

Management Agreement; 

(5) any amounts payable by the Issuer in respect of any Fees and Expenses of the Liquidity 

Facility Provider; and 

(6) any amounts payable by way of Set-up Dividend; 

(ii) any amounts to be paid or provided for by the Issuer in respect of all United Kingdom 

corporation tax for which the Issuer is primarily liable; 

(iii) any other amounts for which the Issuer is required to account to a UK Tax Authority (including 

VAT); and 

(iv) any amounts payable by the Issuer to the Rating Agencies in respect of any Fees and Expenses 

and the Irish Stock Exchange in respect of any fees that, in each case, they may reasonably 

incur on an ongoing basis in connection with the rating or listing of the Notes, as the case may 

be; 

(c) third, in or towards satisfaction, of any amounts payable to the Liquidity Facility Provider under the 

Liquidity Facility Agreement (including, for the avoidance of doubt, following any Liquidity Facility 

Standby Drawing), other than the Liquidity Subordinated Amounts; 

(d) fourth, in or towards satisfaction of any amounts payable to the Hedging Providers under the Hedging 

Agreements, including Hedging Termination Payments in respect of the Hedging Agreements but 

excluding any Hedging Subordinated Amounts; 

(e) fifth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any interest payable (including any deferred interest payable, such interest having been 

deferred upon allocation of a Principal Loss) in respect of the Class A Notes; 

(f) sixth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any interest payable (including any deferred interest payable) in respect of the Class B 

Notes; 

(g) seventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts due 

in respect of any interest payable (including any deferred interest payable) in respect of the Class C 

Notes; 

89

(h) eighth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any interest payable (including any deferred interest payable) in respect of the Class D 

Notes; 

(i) ninth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any principal payable in respect of the Class A Notes; 

(j) tenth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any principal payable in respect of the Class B Notes; 

(k) eleventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts due 

in respect of any principal payable in respect of the Class C Notes; 

(l) twelfth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any principal payable in respect of the Class D Notes; 

(m) thirteenth, in or towards satisfaction of any amounts payable to the Liquidity Facility Provider under 

the Liquidity Facility Agreement in respect of Liquidity Subordinated Amounts; 

(n) fourteenth, in or towards satisfaction of any amounts payable in respect of amounts due to the 

Hedging Providers under the Hedging Agreements in respect of Hedging Subordinated Amounts; 

and 

(o) fifteenth, in or towards satisfaction of any amounts due to the Borrowers under the Commercial 

Mortgage Loan Agreements; and 

(p) sixteenth, the surplus (if any) to the Issuer or any other persons entitled thereto. 

Issuer Post-Enforcement Priority of Payments 

All monies received by the Issuer Security Trustee following the enforcement of the Issuer Security, other 

than (i) amounts standing to the credit of the Liquidity Facility Standby Account (which are to be paid 

directly and only to the Liquidity Facility Provider) and (ii) any amounts standing to the credit of the 

‘‘swap collateral ledger’’ of the Issuer Transaction Account representing amounts attributable to assets 

transferred as collateral by a Hedging Provider following the occurrence of a Hedging Downgrade Event 

in respect of that Hedging Provider (which are to be applied only in returning collateral to, or in 

satisfaction of amounts owing by, the relevant Hedging Provider in accordance with the relevant Hedging 

Agreement and the relevant Hedging Credit Support Document), will be applied in accordance with the 

Issuer Post-Enforcement Priority of Payments, in each case only to the extent that preceding items have 

been paid in full and the relevant payment does not cause the Issuer Transaction Account to become 

overdrawn: 

(a) first, in or towards satisfaction, pari passu and pro rata according to the respective amounts thereof, 

of the amounts due in respect of the fees and other remuneration and indemnity payments (if any) 

then payable to the Issuer Security Trustee or the Note Trustee or any appointee of the Issuer 

Security Trustee or the Note Trustee and any loss, costs, charges, liabilities, indemnity claims and 

expenses (including, in respect of Taxes, duties and other charges and including any VAT or similar 

Tax and legal fees and expenses in full to the extent that such amounts are due from the Issuer under 

any Transaction Document) then properly incurred by the Issuer Security Trustee or the Note Trustee 

or any appointee of the Issuer Security Trustee or the Note Trustee and any other amounts payable 

to the Issuer Security Trustee or the Note Trustee or any appointee of the Issuer Security Trustee or 

the Note Trustee under the Issuer Deed of Charge or any other Transaction Document, together with 

interest thereon as provided for in the Issuer Deed of Charge or other Transaction Document; 

(b) second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts due 

in respect of: 

(i) any amounts payable by the Issuer in respect of any Fees and Expenses of the Paying Agents 

and the Agent Bank incurred under the provisions of the Agency Agreement; 

(ii) any amounts payable by the Issuer in respect of any Fees and Expenses of the Account Bank 

and the Cash Manager under the Issuer Account Bank and Cash Management Agreement; and 

(iii) any amounts payable by the Issuer to the Issuer Corporate Services Provider in respect of any 

Fees and Expenses pursuant to the Issuer Corporate Services Agreement; 

(c) third, in or towards satisfaction, of any amounts payable to the Liquidity Facility Provider under the 

Liquidity Facility Agreement other than the Liquidity Subordinated Amounts; 

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(d) fourth, in or towards satisfaction of any amounts payable to the Hedging Providers under the Hedging 

Agreements including Hedging Termination Payments but excluding any Hedging Subordinated 

Amounts; 

(e) fifth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any interest payable (including any deferred interest payable, such interest having been 

deferred upon allocation of a Principal Loss) in respect of the Class A Notes; 

(f) sixth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any principal payable in respect of the Class A Notes; 

(g) seventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts due 

in respect of any interest payable (including any deferred interest payable) in respect of the Class B 

Notes; 

(h) eighth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any principal payable in respect of the Class B Notes; 

(i) ninth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any interest payable (including any deferred interest payable) in respect of the Class C 

Notes; 

(j) tenth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any principal payable in respect of the Class C Notes; 

(k) eleventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts due 

in respect of any interest payable (including any deferred interest payable) in respect of the Class D 

Notes; 

(l) twelfth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due in 

respect of any principal payable in respect of the Class D Notes; 

(m) thirteenth, in or towards satisfaction of any amounts payable to the Liquidity Facility Provider under 

the Liquidity Facility Agreement in respect of Liquidity Subordinated Amounts; 

(n) fourteenth, in or towards satisfaction of any amounts payable in respect of amounts due to the 

Hedging Providers under the Hedging Agreements in respect of Hedging Subordinated Amounts; 

(o) fifteenth, in or towards satisfaction of any amounts due to the Borrowers under the Commercial 

Mortgage Loan Agreements; and 

(p) sixteenth, the surplus (if any) to the Issuer or any other persons entitled thereto. 

4. The Liquidity Facility 

The Issuer Deed of Charge will contain a covenant from the Issuer to the Issuer Security Trustee requiring 

the Issuer to maintain, save as described below, a liquidity facility provided by a bank with the Liquidity 

Requisite Ratings on terms acceptable to the Rating Agencies. 

The maximum amount available for drawdown under the Liquidity Facility will be equal to £18,900,000 

(the ‘‘Liquidity Facility Maximum Amount’’). The Liquidity Facility Maximum Amount will reduce in 

proportion to prepayments of principal on the Notes. 

The Issuer will pay a commitment fee to the Liquidity Facility Provider that will rank senior to the Notes 

in the Issuer Priority of Payments. 

Under the terms of the Liquidity Facility Agreement to be entered into on the Closing Date, the Issuer 

may request the Liquidity Facility Provider to provide the Issuer with Advances up to the Liquidity 

Facility Maximum Amount less any outstanding Advances (the ‘‘Available Commitment’’)onorbefore 

each Interest Payment Date in circumstances where the Issuer will have a Liquidity Shortfall on any 

Interest Payment Date (as calculated by the Cash Manager on the immediately preceding Determination 

Date). Drawings under the Liquidity Facility may be requested for so long as a Note Enforcement Notice 

has not been served, certain other events have not occurred in respect of the Issuer and various warranties 

of the Issuer remain true in all material respects. 

The interest rate on Liquidity Drawings under the Liquidity Facility Agreement will be the sum of the 

LIBOR for sterling deposits for the appropriate period plus a specified margin (plus, as applicable, any 

permitted additions to the interest rate to compensate the Liquidity Facility Provider for the cost of 

91

egulatory compliance from time to time, pursuant to the terms of the Liquidity Facility Agreement). 

Interest will accrue on each Liquidity Drawing under the Liquidity Facility from the date of the drawing 

to but excluding the next succeeding Interest Payment Date. The Issuer will be obliged to repay the 

outstanding balance of any drawings on each Interest Payment Date in accordance with the relevant 

Issuer Priority of Payments. Amounts repaid may, subject to certain conditions, be redrawn. 

Provided that the Liquidity Facility Provider meets certain requirements, if any amounts are required to 

be deducted or withheld for or on account of Tax from any payment made by the Issuer to the Liquidity 

Facility Provider under the Liquidity Facility Agreement, the amount of any payment due from the Issuer 

to the Liquidity Facility Provider will be increased to the extent necessary to ensure that, after such 

deduction or withholding has been made, the amount received by the Liquidity Facility Provider is equal 

to the amount that it would have received had no such withholding or deduction been required to be 

made. Such increased amounts will form part of the Liquidity Subordinated Amounts, payments of the 

On-going Facility Fee in respect of which will rank junior to the payments under the Commercial 

Mortgage Loans in the Obligor Priority of Payments. 

The Liquidity Facility will be for a term of 364 days, renewable at the option of the parties. 

The Liquidity Facility Agreement will provide that (a) if the Liquidity Facility Provider declines to renew 

the Commitment Period of the Liquidity Facility and/or (b) the Liquidity Facility Provider’s short term 

unsecured, unsubordinated and unguaranteed debt obligations cease to be rated at least A-1+ by S&P and 

F-1byFitch(the‘‘Liquidity Requisite Ratings’’) (each a ‘‘Liquidity Event’’), then, by no later than 

5 Business Days prior to the expiry of the then current Commitment Period or 30 Business Days of the 

relevant downgrade, as the case may be, the Liquidity Facility Provider shall assign, novate or transfer its 

rights and obligations to another liquidity facility provider that has the Liquidity Requisite Ratings and 

meets certain other criteria or other arrangements shall be made for the Issuer to enter into a new 

liquidity facility with a replacement party that, amongst other things, has the Liquidity Requisite Ratings. 

If any one of such steps is not completed within the required time, the Liquidity Facility Provider will 

advance a drawing (a ‘‘Liquidity Facility Standby Drawing’’) of the total commitment under the Liquidity 

Facility Agreement then available for drawing under the Liquidity Facility and the Liquidity Facility 

Provider shall pay such Liquidity Facility Standby Drawing into a designated bank account of the Issuer 

(the ‘‘Liquidity Facility Standby Account’’) maintained with the Liquidity Facility Provider (for so long 

as it satisfies the Rating Criteria) or the Account Bank or any other bank, the short term, unsecured, 

unsubordinated and unguaranteed debt obligations of which satisfy the Rating Criteria (the ‘‘Standby 

Deposit’’). 

The rate of interest applicable to a Standby Drawing shall be an amount equal to the interest rate on 

Liquidity Drawings under the Liquidity Facility Agreement. The Issuer will receive interest on the 

amount of any Standby Deposit at a rate equal to the then prevailing rate for deposits at the Liquidity 

Facility Provider, Account Bank or other bank where the Liquidity Facility Standby Account is 

maintained, as the case may be, such interest to be credited to the Issuer Transaction Account. 

Interest accrued in respect of Liquidity Facility Drawings will be paid in accordance with the Issuer 

Pre-enforcement Priority of Payments. 

Amounts standing to the credit of the Liquidity Facility Standby Account, will, subject to the terms of the 

Liquidity Facility Agreement (including the conditions described above as to availability of Drawings), be 

available to the Issuer by way of Liquidity Drawing in the event of there being a Liquidity Shortfall. Such 

a Liquidity Drawing will accrue interest and be repayable as described above, except that, until the 

Liquidity Facility Provider is replaced or the Liquidity Event that gave rise to the Liquidity Facility 

Standby Drawing is remedied, repayment will be made into the Liquidity Facility Standby Account. Any 

costs incurred in obtaining a replacement liquidity facility or in utilising the Liquidity Facility will be 

borne by the Issuer. 

On enforcement of the Issuer Security, all indebtedness outstanding to the Liquidity Facility Provider 

under the Liquidity Facility Agreement (other than the Liquidity Subordinated Amounts) will rank in 

priority to repayments of principal and payments of interest under the Notes and amounts then standing 

to the credit of the Liquidity Facility Standby Account which represent the Liquidity Facility Standby 

Drawing will not be available to the Issuer Secured Creditors generally (but will instead be repaid to the 

Liquidity Facility Provider). 

While the foregoing is a description of the Liquidity Facility Agreement entered into on the Closing Date, 

it is possible that in the future it will only be possible to renew or replace it on terms which differ from 

those described above. 

92

5. The Hedging Agreements 

For a further description of the Hedging Providers, see the section entitled ‘‘The Hedging Providers and 

the Liquidity Facility Provider’’ below. 

The Hedging Agreements may be terminated in whole or in part in certain limited circumstances, some 

of which are more particularly described below. Any such termination may oblige the Issuer or the 

Hedging Providers to make a termination payment. Any payment due to the Hedging Provider(s) from 

a replacement Hedging Provider or following termination of the Hedging Agreement will be paid to the 

Hedging Provider(s) and will not be made available to the Issuer Secured Creditors. 

If any Commercial Mortgage Loan and the corresponding Notes are prepaid in part or in full other than 

in accordance with their stated maturity, a corresponding proportion of the notional amount of the 

swap(s) and/or cap(s) made pursuant to the Hedging Agreements will terminate or the notional amount 

of the swap(s) and/or cap(s) will be reduced in such other way as to reflect a corresponding reduction in 

such notional amount, in each case as more specifically set out in the Hedging Agreements. 

If the Issuer does not satisfy its payment obligations under a Hedging Agreement, this will constitute a 

default by the Issuer thereunder and will entitle the relevant Hedging Provider to terminate the relevant 

Hedging Agreement. 

Upon the service of a Note Enforcement Notice, the Hedging Providers will have the right to terminate 

the Hedging Agreements. 

The Issuer’s obligations to the Hedging Providers under the Hedging Agreements will be secured under 

the Issuer Deed of Charge. In the event of the Issuer Security being enforced thereunder, such obligations 

(other than the Hedging Subordinated Amounts) will rank ahead of the Notes. 

All payments to be made by either party under the Hedging Agreement are to be made without 

withholding or deduction for or on account of any Tax unless such withholding or deduction is required 

by applicable law (as modified by the practice of any relevant Tax Authority). Each of the Issuer and the 

Hedging Providers will represent, on entering into the Hedging Agreements, that it is not obliged to make 

any such deduction or withholding under current taxation law and practice. If, as a result of a change in 

law (or the application or official interpretation thereof), one party is required to make such a withholding 

or deduction from any payment to be made to the other party under a Hedging Agreement, the party 

making that payment will be obliged to pay additional amounts to the other party in respect of the 

amounts so required to be withheld or deducted. If such additional amounts are payable by the Issuer they 

will form part of the Hedging Subordinated Amounts, payments of the On-going Facility Fee in respect 

of which will rank junior to payments under the Commercial Mortgage Loans in the Obligor Priority of 

Payments. The party making an increased payment will have the right to terminate the relevant Hedging 

Agreement (subject, in the case of the Hedging Providers only, to the Hedging Provider’s obligation to use 

reasonable efforts (provided that such efforts shall not cause significant economic hardship to the relevant 

Hedging Provider) to transfer its rights and obligations under the relevant Hedging Agreement to another 

of its offices or affiliates or a suitably rated third party such that payments made by or to that office or 

affiliate or third party under the relevant Hedging Agreement can be made without any withholding or 

deduction for or on account of Tax). 

93

USE OF PROCEEDS 

The gross proceeds from the issue of the Notes will be £322,000,000. 

On the Closing Date, the Issuer will, subject to and in accordance with two separate Commercial 

Mortgage Loan Agreements as described in the section entitled ‘‘Summary of Principal Documents – The 

Commercial Mortgage Loan Agreements’’ above, apply the proceeds of the issue of the Notes to make two 

separate Commercial Mortgage Loans to the Borrowers in an aggregate principal amount of £322,000,000. 

On the Closing Date, each Borrower will pay an Initial Facility Fee to the Issuer which will be an amount 

equal to all fees, commissions, costs and expenses properly and reasonably incurred by the Issuer on or 

before the Closing Date in connection with the issue of the Notes and the negotiation, preparation and 

execution of the Transaction Documents relating thereto (including those fees and commissions payable 

to the Joint Lead Managers and detailed in the section entitled ‘‘Subscription and Sale’’ below and any 

up-front payments due in respect of any Hedging Agreement). 

94

VALUATION REPORTS 

London & Cambridge Properties Limited and L.C.P. Real Estate Limited 

(L.C.P. Real Estate Limited in its capacity as Borrower) 

LCP House 

The Pensnett Estate 

Kingswinford 

West Midlands 

DY6 7NA 

HSBC Bank plc 

(in its capacity as Joint Lead Manager, Liquidity Facility Provider and Hedging Provider) 

Level 3 

8 Canada Square 

London E14 5HQ 

HSBC Trustee (C.I.) Limited (in its capacity as Borrower Security Trustee, Issuer Security Trustee and 

Note Trustee) 

1 Grenville Street 

St Helier 

Jersey 

Channel Islands JE4 9PF 

Société Générale, London Branch 

(in its capacity as Joint Lead Manager) 

SG House 

41 Tower Hill 

London EC3N 4SG 

Société Générale 

(in its capacity as Hedging Provider) 

Tours S.G. 

17 Cours Valmy 

97472 Paris La Défense 


(in its capacity as Issuer) 

c/o SPV Management Limited 

Tower 42 (Level 11) 

International Financial Centre 

25 Old Broad Street 

London EC2N 1HQ 

Dear Sirs 

VALUATION OF ASSETS OWNED BY LONDON & CAMBRIDGE PROPERTIES LIMITED 

AND ITS SUBSIDIARIES (‘‘LCP’’) AS AT 15 JUNE 2005 

1.0 INSTRUCTIONS 

1.1 Instruction: In accordance with instructions contained within the letter received from L.C.P. 

Management Limited (‘‘LCPM’’) with instruction effective from 5th May 2005, we have inspected the 

properties (the ‘‘Properties’’) shown in Appendix 1, in order to advise you of our opinion of the 

Market Value (as defined in paragraph 3.2) as at 15th June 2005 (the ‘‘Valuation Date’’)ofthe 

freehold or long leasehold interests (as appropriate) in each of the Properties in connection with the 

issue by the Issuer of £243,800,000 Class A Notes due 2016, £32,200,000 Class B Notes due 2016, 

£36,800,000 Class C Notes due 2016 and £9,200,000 Class D Notes due 2016 as described in an 

offering circular (the ‘‘Offering Circular’’) dated on or about the date hereof. This report is dated 19 

October 2005. 

1.2 Inspections: We have inspected all the Properties within the last 6 months. However, as requested 

we have relied upon areas provided to us by LCPM in respect of the majority of the Properties and 

have specifically measured only certain Properties as requested by LCPM. We have assumed that the 

areas provided to us to have been measured in accordance with the Code of Measuring Practice 

95

issued by the Royal Institution of Chartered Surveyors and the Incorporated Society of Valuers and 

Auctioneers. The Properties for which you have requested specific measurement (please see the 

attached list in Appendix 2) have either been measured expressly for the purposes of this valuation 

or measured previously by King Sturge in accordance with the RICS guidelines and in these instances 

we have verified that there has been no change to the premises in the intervening period. 

1.3 Compliance with Appraisal and Valuation Standards and the Listing and Admission to Trading 

Guidelines for Asset-backed Securities: We confirm that the valuations have been made in 

accordance with the appropriate sections of both the current Practice Statements (‘‘PS’’), and United 

Kingdom Practice Statements (‘‘UKPS’’) contained within the RICS Appraisal and Valuation 

Standards, 5th Edition (the ‘‘Red Book’’) as well as the Listing and Admission to Trading Guidelines 

for Asset-backed Securities published by the Irish Financial Services Regulatory Authority. We 

would confirm that we have valued each Property as a whole in accordance with market practice. 

1.4 Status of valuer and conflicts of interests: The Properties have been valued by external valuers 

qualified for the purposes of the valuation. We can confirm that these surveyors have relevant 

experience in this type of property and in these locations. The valuation has been overseen by 

J.P.Asquith BSc FRICS who also has extensive experience in valuing portfolios of this type. We 

confirm that King Sturge do not have any conflict of interest in regard to this matter and have derived 

no agency fees from this transaction. We also confirm that in the year to 30 April 2005 the proportion 

of total fees payable by LCP and its group companies to King Sturge’s total fee income was less than 

5%, and this position is not expected to change in the current year. King Sturge has historically valued 

from time to time the property assets of both LCP and its associated companies and also undertaken 

full valuation reports of a number of properties for certain of the companies’ banks, including HSBC 

Bank plc. 

1.5 As requested we have attached hereto an executive summary, a tenancy schedule in the format 

requested and reports on each individual Property. 

2.0 OPINION OF VALUE 

2.1 In accordance with the facts and assumptions set out in this Valuation Certificate, we are of the 

opinion that the total Market Value of the various freehold and long leasehold interests of the 

Properties listed below, as at 15 June 2005, is in the sum total of £391,520,000 (Three Hundred and 

Ninety One Million Five Hundred and Twenty Thousand Pounds). According to tenure the 

aggregate values are: 

Freehold £307,280,000 

Part freehold / part leasehold £ 4,660,000 

Long leasehold £ 79,580,000 

2.2 A schedule showing the individual Market Values and Current Rents is attached at Appendix 1. The 

total Market Value is the aggregate of the individual Market Values. 

3.0 BASIS OF VALUATION 

3.1 The value of each of the Properties has been assessed in accordance with the relevant parts of the 

current RICS Appraisal and Valuation Standards. In particular we have assessed Market Value in 

accordance with PS 3.2. Under these provisions, the term Market Value means an opinion of ‘‘the 

estimated amount for which a property should exchange on the date of valuation between a willing 

buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties 

have each acted knowledgeably, prudently and without compulsion’’. The RICS considers that the 

application of the Market Value definition provides the same result as Open Market Value, a basis 

of value supported by previous editions of the Red Book. 

3.2 Our valuations exclude any expenses which would be incurred on a realisation or disposal and any 

liabilities due to taxation on disposal such as Capital Gains Tax or Value Added Tax, but have been 

adjusted to reflect assumed normal purchaser’s costs. These will be 5.75% in respect of assets valued 

in excess of £500,000 and 4.75% in respect of those of lower value. 

3.3 Our valuations reflect plant and machinery on the Properties in so far as it does not form part of any 

manufacturing process carried on therein, but would be regarded by the open market as an integral 

part of the land and buildings for letting or sale purposes. 

96

4.0 VALUATION ASSUMPTIONS 

4.1 SOURCES OF INFORMATION 

4.1.1 Third parties have provided us with such information as details of tenure, use, town planning 

consents and the like. Where appropriate, LCP has confirmed that our assumptions are correct 

so far as they are aware. 

4.1.2 We have relied upon the tenancy details provided to us by LCP Real Estate as at 15 June 2005. 

We have been provided by The Simkins Partnership and Lawrence Graham with certificates 

of title (including sample lease reports) in respect of each of the Properties, and we confirm 

we have taken these into account in our valuations. We have assumed that all occupational 

leases have been drawn on a full repairing and insuring basis unless advised to the contrary. 

4.1.3 We have not effected official searches and for the purposes of the valuations we have assumed 

that, unless advised to the contrary, full planning consent exists for the existing use of the 

Properties, or established use rights are available for the existing buildings and present uses 

and the Properties are not adversely affected by town planning or road proposals. 

4.1.4 We have not inspected the title deeds or other legal documents pertaining to the Properties 

and our valuations are based upon the assumption that, save as disclosed in the certificates of 

title dated 16 September 2005, there are no unusually onerous restrictions or obligations 

attaching to the Properties and that they enjoy good and marketable title. 

4.2 STRUCTURAL SURVEYS AND DELETERIOUS MATERIALS 

4.2.1 We have not carried out structural surveys nor have we inspected those parts of the Properties 

which are covered, unexposed or inaccessible and such parts have been assumed to be in good 

repair and condition. We cannot express an opinion about, or advise upon the condition of 

uninspected parts and this certificate should not be taken as making any implied representation 

or statement about such parts. We have had regard to the general condition of the 

Properties as observed in the course of our inspection for valuation purposes. 

4.2.2 We have not arranged for any investigation to be carried out to determine whether or not high 

alumina cement, calcium chloride additive or any other potentially deleterious material has 

been used in the construction of the Properties and we are therefore unable to report that the 

Properties are free from risk in this respect. For the purpose of this valuation we have assumed 

that such investigations would not disclose the presence of any such material in any adverse 

condition. 

4.2.3 No specialist tests have been carried out on any of the services systems and for the purposes 

of this valuation we have assumed that all are in reasonable working order and in compliance 

with any relevant statutory or Bye-Law regulations. 

4.2.4 No allowance has been made in our valuation in respect of rights, obligations or liabilities 

arising under the Defective Premises Act 1972. 

4.2.5 Assuming an ongoing programme of maintenance on the unlet buildings and a rigorous 

enforcement of the repairing liabilities on the let units we consider that the vast majority of 

the buildings could have a useful economic life of at least 20 years. 

4.2.6 You have also asked for our opinion of the reinstatement value of the Properties. In the case, 

particularly, of the retail properties we will not have any information as to the gross areas and 

the figures noted should be treated with extreme caution. 

4.3 SITE CONDITIONS AND CONTAMINATION 

4.3.1 No load bearing tests have been carried out by us and we cannot offer any opinion either as 

to the suitability of the sites for existing or proposed developments nor the condition of or 

potential liability for any embankment and river, wharf or retaining wall. 

4.3.2 We are aware of the content of certain environmental audits, which have been carried out 

previously on the Properties and we can confirm we have taken these into account in our 

valuations. We have set out at Appendix 3 a schedule of those Properties where we have 

previously seen environmental reports. However, we are not aware of any subsequent 

contamination which may have taken place at any of the sites and therefore have not reflected 

this in our figures. For the purposes of this valuation we have assumed that there are no such 

issues of contamination associated with any of the sites. 

97

5.0 CONFIDENTIALITY 

5.1 This Valuation Certificate is provided for the use only of the party to whom it is addressed and no 

responsibility is accepted to any third party for the whole or any part of its content. 

5.2 Neither the whole nor any part of this Valuation Certificate nor any reference thereto may be 

included in any published document, circular or statement, nor published in any way without our 

written approval of the form and context in which it may appear, save that we agree to this Report 

being included in the Offering Circular. 

Yours faithfully 

J P ASQUITH BSc FRICS 

KING STURGE 

98

APPENDIX 1 

Ref 

No Property Description & Tenure Terms of Tenants Leases 

29 Churchill Shopping Centre 

DUDLEY 

31 Sealand Road 

CHESTER 

Town centre retail scheme, 

constructed in three phases 

during the 1960s, with a 

department store built in the 

early 1980s, substantially 

refurbished in 1993, totalling 

19,842 m 2 (213,587 ft 2 )) in 59 

units. 

Freehold. 

Two industrial / warehouse units 

totalling 1,857 m 2 (19,992 ft 2 ), 

constructed in the early 1990s, 

together with a site of 0.77ha (1.9 

acres). 

Freehold. 

Forty seven full repairing and 

insuring leases for terms expiring 

between 2005 and 2020 subject to 5 

yearly reviews. Nine of the leases 

have a tenant’s break option. Two of 

the larger stores are let to James 

Beattie Ltd and Kwik Save on leases 

expiring in 2066 and 2080 

respectively subject to 33 and 5 

yearly reviews. There is also 

additional income from various kiosk 

licences. Ten units are vacant. 

Three full repairing and insuring 

leases for terms expiring between 

2014 and 2017 subject to five yearly 

reviews. One of the leases has a 

tenant’s break option in 2011. 

Current Net 

Rents 

Receivable – 

£pa 

Capital 

Value as at 

15 June 2005 

–£ 

948,675 12,560,000 

115,000 1,500,000 

32 Old Hall Estate 

BROMBOROUGH 

25 industrial / warehouse units 

totalling 10,226 m 2 (110,078 ft 2 ), 

partly constructed in the 1950s 

and partly in the 1980s. 

Freehold. 

Fourteen full repairing and insuring 


2005 and 2018 subject to 3,4 or 5 

yearly reviews. One of the leases has 

a tenant’s break option in 2008. 

Three of the units are vacant. 

Twelve full repairing and insuring 


2006 and 2025 subject to 5 yearly 

reviews. Three of the leases have a 

tenant’s break option. Seven of the 

units, totalling 3,468 m 2 (37,335 ft 2 ), 

have been sold on long leases. 

321,452 3,950,000 

33 King Edward Estate 

LIVERPOOL 


totalling 8,185 m 2 (88,113 ft 2 ), 

constructed in the 1980s. 

Freehold. 

216,536 2,925,000 

34 Sandon Industrial Estate 

LIVERPOOL 


totalling 7,512 m 2 (80,864 ft 2 ), 


Freehold. 

Sixteen full repairing and insuring 


2005 and 2021 subject to 3,4 or 5 

yearly reviews. Three of the leases 

have a tenant’s break option. Three 

of the units, totalling 1,711 m 2 

(18,420 ft 2 ), have been sold on long 

leases. 

Fourteen full repairing and insuring 


2006 and 2016 subject to 3 or 5 

yearly reviews. Two of the leases 

have a tenant’s break option. One of 

the units, totalling 325 m 2 (3,495 ft 2 ), 

has been sold on a long lease. 

205,897 3,050,000 

35 Erskine Industrial Estate 

LIVERPOOL 


totalling 7,154 m 2 (77,005 ft 2 ), 


Freehold. 

335,920 4,150,000 

36 Grain Industrial Estate 

LIVERPOOL 


totalling 4,517 m 2 (48,622 ft 2 ), 


Freehold. 

Five full repairing and insuring 



reviews. All of the leases have a 

tenant’s break option between 2006 

and 2015. 

Thirteen full repairing and insuring 



reviews. Three of the leases have a 

tenant’s break option in 2006 or 

2008. One of the units is let for a 

term expiring 2076, subject to 20 

yearly reviews. One unit is vacant. 

104,110 1,100,000 

38 Shaw Lane Industrial 

Estate 

DONCASTER 


totalling 14,100 m 2 (158,236 ft 2 ), 

constructed in the 1970s and 

1980s. 

Freehold. 

538,387 6,695,000 

41 Hardshaw Centre 

ST HELENS 

Town centre retail scheme of 16 

retail units, four stores and three 

kiosks constructed in 1982, 

totalling 10,103 m 2 (108,750 ft 2 ), 

together with rooftop car 

parking. 

Leasehold for a term expiring 

2106 at a ground rent of 

£293,000, geared to 18.5% net 

rents receivable, calculated on a 

quarterly basis. 

Twenty four full repairing and 



yearly reviews. There is also 

additional income from various mall 

barrow licences. 

1,323,640 17,730,000 

99

Ref 


43 Crowne Trading Estate 

SHEPTON MALLET 


totalling 7,329 m 2 (78,895 ft 2 ), 

constructed in the 1980s, together 

with a separate yard area and a 

further unit sold on a 999 year 

ground lease. 

Freehold. 

Seven full repairing and insuring 



reviews. One of the leases has a 


Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

292,600 3,680,000 

44 Wulfrun Centre 

WOLVERHAMPTON 

Town centre retail precinct 


refurbished in the early 2000s, 

providing 69 units totalling 18,103 

m 2 (194,868 ft 2 ), together with a 

574 space car park. 


2138 at a ground rent of 

£180,000, geared to 6% net rents 

receivable, calculated annually. 

Sixty six full repairing and insuring 



reviews. One store let to Littlewoods 

Organisation Plc until 2093, subject 

to 21 yearly reviews. Five units are 

vacant. 

2,779,459 41,920,000 

65 Irton House 

CHALGROVE 

A single industrial / warehouse 

unit totalling 16,240 m 2 (174,807 

ft 2 ), constructed in the 1970s. 

Freehold. 

Two full repairing and insuring 

leases to Ofquest and Graham 

Packaging for terms expiring in 2010 

and 2016 subject to 5 yearly reviews. 

The shorter lease has a tenant’s 

break option in 2008. 

776,000 9,500,000 

82 Adwest Central Site 

Woodley 

READING 

A single industrial / warehouse 

unit with ancillary offices, 

totalling 2,284.1 m 2 (25,662 ft 2 ), 


Freehold. 

One full repairing and insuring lease 

to Dura Holdings Plc expiring in 

2021 and subject to 5 yearly rent 

reviews. The lease has a tenant’s 


95,016 1,210,000 

83 Adwest Eastern Site 

Woodley 

READING 


with ancillary offices, totalling 

22,389 m 2 (241,000 ft 2 ), 


1940s. 

Freehold. 


to Linpac Metal Packaging Ltd 

expiring in 2009 and subject to 5 

yearly rent reviews. 

845,000 10,635,000 

84 Adwest Western Site 

Woodley 

READING 

3 industrial / warehouse 

properties and 1 multi-let office 

building totalling 12,500.7 m 2 

(134,561ft 2 ), constructed in 1930s, 

1950s and 1970s. 

Freehold. 

Twenty-three full repairing and 



yearly reviews. Two leases to 

Fieldmouse Ltd and one to Orange 

PCS Ltd have tenant’s break options 

in 2005. 

477,085 5,410,000 

86 Headley Park 9 

Woodley 

READING 


totalling 4330 m 2 (46,609 ft 2 ), 

constructed in the late 1970s. 

Freehold. 

Seven full repairing and 

tenant-insuring leases for terms 

expiring between 2007 and 2017. 

Two of the leases have tenant breaks 

options in 2007 and 2008. All leases 

are subject to 5 yearly reviews with 

units 2,3 and 5 having provision for 

fixed uplifts. 

332,259 4,350,000 

88 Loddon Vale Centre 

Woodley 

READING 

25 units comprising retail, offices 

and residential uses, totalling 

2,668 m 2 ( 28718 ft 2 ) excluding 

the residential units, constructed 

in the 1980s. 

Freehold. 

Ten residential ground leases 

expiring in 2086 and subject to rent 

review in 2020. 14 commercial leases 

on full repairing and insuring terms, 

the majority of which either expire 

or are subject to a tenant’s break 

option in the next 1-3 years. One 

vacant unit. 

331,634 4,370,000 

89 Blackdown Park 

WILLAND 


totalling 5,274 m 2 (56,775 ft 2 ), 

constructed in about 1990. 

Freehold. 

Two full repairing and 

tenant-insuring leases to Trillium for 

terms expiring in 2013 subject to 5 

yearly reviews. 

185,200 2,500,000 

103 Princess Street 

Bedminster 

BRISTOL 


totalling 5,784 m 2 (62,260 ft 2 ), 

constructed in the late 1960s, 

together with a further unit sold 

on a 999 year ground lease. 

Freehold. 

Four full repairing and insuring 

leases for terms expiring in 2008 and 

2013 (with a tenants break in 2008) 

subject to 5 yearly reviews. One unit 

sold on a 999 year ground lease. 

234,840 2,740,000 

100

Ref 


107 Sunrise Parkway 

Linford Wood 

MILTON KEYNES 

109 Caker Stream Road 

Mill Lane 

ALTON 

2 ‘hi-tech’ units totalling 767 m 2 

(8,254 ft 2 ), constructed in the mid 

1980s. 

Freehold. 


totalling 7,456 m 2 (80,259 ft 2 ), 


Freehold. 


leases for terms expiring in 2012 

subject to 5 yearly reviews. 

Six full repairing and insuring leases 

for terms expiring between 2013 and 

2015 (with tenants break options in 

2008, 2009 and 2010) subject to 5 

yearly reviews. Two units are vacant. 

Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

73,000 990,000 

293,564 5,435,000 

111 Euston Street 

LEICESTER 

Detached industrial / warehouse 


ft 2 ), constructed in the early 

1970s. 


2078 at a rent of £10,000p.a. 

subject to 5 yearly reviews to 

14.925% rental value. 

Single full repairing and insuring 

lease to British Red Cross Society, 

for a term of 10 years from 2004 

subject to a rent review and tenants 


59,500 595,000 

121 Howards Chase 

Pipps Hill Estate 

BASILDON 

Detached warehouse unit 

totalling 2,774 m 2 (29,867 ft 2 ), 


refurbished in 2001 to provide a 

self storage unit. 

Freehold. 


lease to Safestore Plc, for a term of 

25 years from 2001 subject to five 


180,000 2,600,000 

128 North Way 

Walworth Industrial Estate 

ANDOVER 

129 The Hemmells 

Fortune Industrial Estate 

Laindon 

BASILDON 

131 Cole Avenue 

Central Trading Estate 

GLOUCESTER 

132 Bilton Road 

Phoenix Trading Estate 

PERIVALE 

136 Parkway Link 

Manor Park Industrial 

Estate 

SHEFFIELD 

139 Enterprise City 

SPENNYMOOR 

143 324-326 Station Road 

HARROW 

Detached industrial / warehouse 




2105 at a rent of £2,850p.a. 

subject to 5 yearly reviews to 

5.5% rental value. 


totalling 2,800 m 2 (30,140 ft 2 ), 


substantially refurbished in 2004. 

Freehold. 


totalling 5,331 m 2 (57,372 ft 2 ), 


Freehold. 


totalling 3,362 m 2 (36,192 ft 2 ), 

constructed in the mid 1980s. 

Freehold. 


totalling 5,191 m 2 (55,881 ft 2 ), 

constructed in the 1970s.. 


2079 at a fixed rent of £25 p.a. 

Industrial estate comprising 48 

industrial / warehouse units and a 

two-storey office block in 

aggregate totalling 28,365 m 2 

(305,329 ft 2 ), constructed in 1960 

and substantially refurbished in 

1989. 

Freehold. 

5 retail units with two floors of 

offices over, totalling 1,380 m 2 

(14,860 ft 2 ), believed to have 

been constructed in the 1950s. 

Freehold. 


lease to BAE Systems Electronic 

Ltd, for a term expiring in October 

2005. 


leases to Boiling Investments Ltd 

and Barnardos for terms expiring in 


reviews. Both units have tenants 

options to break in 2009. 

Eight full repairing and insuring 



reviews. Six of the leases have 

tenant’s break options between 2007 

and 2011. 




reviews. Two of the leases have 

tenant’s break options in 2008. One 

unit totalling 535 m 2 (5,765 ft 2 ), has 

been sold on a long lease. 



2012 subject to 5 yearly reviews. Two 

of the leases have tenant’s break 

options in 2005 and 2008. One unit 

is vacant. 

43 full repairing and insuring leases 


2015 subject to 5 yearly reviews. 29 


options between 2005 and 2012. One 

unit, totalling 443 m 2 (4,775 ft 2 ), has 

been sold on a long lease. Five units 

are vacant. 



2013 subject to 5 yearly reviews. 

One of the leases has a tenant’s 


52,150 500,000 

180,857 2,440,000 

260,351 3,800,000 

199,100 2,880,000 

194,030 2,590,000 

667,850 7,100,000 

292,875 3,980,000 

101

Ref 


144 Watlington Industrial 

Estate 

OXFORD 

154 1/33 Marina Drive & 1/3 

Rivington Road 

ELLESMERE PORT 

158 33/39 Bradshawgate 

LEIGH 


totalling 4,451 m 2 (47,917 ft 2 ), 

constructed in 1980. 


2105 at a rent of £1,000 p.a. 

reviewable in 2010 to 1% total 

rents received. There is an option 

to purchase the freehold at any 

time after 2010. 

14 retail units with ancillary 

accommodation above, totalling 

3,235 m 2 (34,819 ft 2 ), believed to 

have been constructed in the late 

1950s. 

Freehold. 

4 retail units, totalling 460 m 2 

(4,965 ft 2 ), constructed in about 

1960. 

Freehold. 

Seven full repairing and insuring 



reviews. Seven of the leases have 

tenant’s break options between 2007 

and 2010. 



2024 subject to 5 yearly reviews, two 

full repairing and insuring leases to 

Yorkshire Bank and Lloyds Bank 

expiring 2041 subject to review in 

2020. One of the leases has a 


Five full repairing and insuring 



reviews. 

Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

266,358 3,575,000 

472,912 6,980,000 

105,850 1,500,000 

160 187/197 High Street 

ORPINGTON 



1,165 m 2 (12,563 ft 2 ), believed to 

have been constructed in the 

1950s. 

Freehold. 

Single retail unit totalling 1,061 

m 2 (11,425 ft 2 ) constructed in the 

1960’s. 

Freehold 


leases expiring 2013 subject to 5 


201,000 3,170,000 

161 267/271 Stratford Road 

SHIRLEY 


lease to Iceland Frozen Foods, for a 

term of 25 years from 1987 subject 

to five yearly reviews. 

92,000 1,375,000 

163 60/64 Princes Street & 4/6 

Woodman Street 

STOCKPORT 



654 m 2 (7,039 ft 2 ), constructed in 

the late 1960s / early 1970s. 

Freehold. 

Warehouse building with 

ancillary showroom, constructed 

in the 1960s, totalling 734 m 2 

(7,902 ft 2 ). 

Freehold. 



in the 1970s, totalling 1,026 m 2 

(11,044 ft 2 ). 

Freehold. 



in the late 1970s, totalling 843 m 2 

(9,071 ft 2 ). 

Freehold. 




(11,969 ft 2 ). 

Freehold. 



in the early 1970s, totalling 829 

m 2 (8,924 ft 2 ). 

Freehold. 




(8,290 ft 2 ). 

Freehold. 



in the early 1970s, totalling 879 

m 2 (9,465 ft 2 ). 

Freehold. 


leases expiring between 2006 and 


138,100 2,000,000 

193 Ramsey Road 

LEAMINGTON SPA 


lease to Magnet Limited, for a term 

of 25 years from 1999 subject to five 


40,375 640,000 

194 Elder Road 

Cobridge Industrial Estate 

STOKE ON TRENT 





50,000 790,000 

195 Jubilee Street 

MELTON MOWBRAY 





43,000 710,000 

196 264 Monkmoor Road 

SHREWSBURY 





40,000 660,000 

197 Blockhouse Close 

WORCESTER 





35,500 560,000 

198 Rose Hill 

WILLENHALL 





26,500 460,000 

199 Shaw Road 

Millbuck Trading Estate 

WOLVERHAMPTON 





27,000 450,000 

102

Ref 


200 Birmingham Road 

LICHFIELD 

201 Greyfriars Place, 

STAFFORD 

202 97-100 High Street 

Amblecote 

STOURBRIDGE 

203 Meanwood Road 

LEEDS 

204 Arkwright Road 

IPSWICH 

205 45-51 Barnet Road 

POTTERS BAR 

206 Bradford Road 

GUISELEY 

207 254 Cavendish Road 

Balham 

LONDON SW12 

208 Dettinggen Way 

Blenheim Industrial Estate 

BURY ST EDMUNDS 

209 Llanbadarn Fawr 


ABERYSTWYTH 


SUTTON 




(23,989 ft 2 ). 

Freehold. 




(7,705 ft 2 ). 

Freehold. 




(17,904 ft 2 ). 

Freehold. 




(22,132 ft 2 ). 

Freehold. 




(8,325 ft 2 ). 

Freehold. 




(10,872 ft 2 ). 

Freehold. 




(13,309 ft 2 ). 

Freehold. 




(7,302 ft 2 ). 

Freehold. 




(10,897 ft 2 ). 

Freehold. 



between 1950 and 1980, totalling 

950 m 2 (10,231 ft 2 ). 

Freehold. 




the 1930s. 

Freehold. 










































leases expiring 2006 and 2008 with 

one review outstanding from 2003. 

Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

125,000 1,970,000 

28,000 490,000 

60,000 990,000 

130,000 1,970,000 

36,300 590,000 

52,500 825,000 

71,500 1,060,000 

60,500 935,000 

52,000 825,000 

34,018 400,000 

81,000 1,250,000 


EPPING 

7 retail units with ancillary office 

and residential accommodation, 

totalling 1,656 m 2 (17,827 ft 2 ), 

originally constructed in the 19 th 

century and converted to its 

present use in the 1960s. 

Freehold. 

Ten full repairing and insuring leases 




options in 2007. 

217,550 3,200,000 

266 11/20 Bridge Street & 

43/47 Church Street 

NUNEATON 


accommodation, totalling 2,540 

m 2 (27,343 ft 2 ), constructed in the 

1970s. 

Freehold. 





options in 2005 and 2010. One unit 

is vacant. 

326,740 4,220,000 

103

Ref 


268 38/44 Witton Street 

NORTHWICH 




1960s. 

Freehold. 


for terms expiring in 2009 and 2010 


Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

231,145 3,310,000 

270 110/116 King Street 

SOUTH SHIELDS 


accommodation, totalling 814 m 2 

(8,765 ft 2 ), constructed in 1965. 

Freehold. 



(6,048 ft 2 ), constructed in 1965. 

Freehold. 




125,500 1,850,000 

271 117/123 King Street 

SOUTH SHIELDS 




105,340 1,560,000 

273 156/162 Fleet Road 

FLEET 

279 Queenborough Industrial 

Estate 

QUEENBOROUGH 




1950s. 

Freehold. 

5 warehouse units totalling 3,036 


mid 1970s. 

Freehold 





lease to AF Warehousing Limited, 

for a term expiring in 2007 subject to 

a tenant’s break option as at 

September 2005. 

151,500 2,410,000 

87,495 950,000 

280 Sainsburys 

Nottingham Road 

RIPLEY 

Supermarket totalling 7,001 m 2 

(75,362 ft 2 ) originally built in the 

late 1990s, with an extension due 

for completion in August 2005. 

Freehold. 

Two full repairing and 

tenant-insuring leases to Sainsburys 

Supermarkets expiring in 2034 

subject to five yearly reviews. 

1,281,171 24,230,000 

281 Sainsburys 

Mill View 

MARCH 

Supermarket totalling 2,999 m 2 

(32,286 ft 2 ) built in 1996. 

Freehold. 

Single full repairing and 

tenant-insuring lease to Sainsburys 

Supermarkets, for a term of 35 years 

from 1999 subject to five yearly 

reviews. 

533,696 10,090,000 

282 Front Street 

ARNOLD 



m 2 (50,180 ft 2 ), constructed as a 

supermarket in the 1970’s and 

converted to its current format in 

1999. 

Freehold. 




339,250 5,385,000 

295 Swinton Hall Industrial 

Estate 

SWINTON 


totalling 2,640 m 2 (28,420 ft 2 ), 



2992 at a fixed ground rent of 

£1p.a. 

Single over-riding full repairing and 

insuring lease to Salford Council, for 

a term expiring in 2007. 

86,000 1,100,000 

345 Station Road 

WALLSEND 

Two supermarkets totalling 3,174 

m 2 (34,166 ft 2 ) built in 1992. 

Freehold. 


to Aldi Stores Ltd expiring 2017 

subject to 5 yearly rent reviews; one 

groundlease to Somerfield Property 

Company for a term of 999 years 

from 1995. 

71,500 1,100,000 

346 Lakes Estate Centre 

West Dyke Road 

REDCAR 

Two supermarkets and a public 

house totalling 4,104 m 2 (44,181 

ft 2 ) built in 1992 and 1980. 


2079 at £32,500 p.a. subject to 

five yearly reviews. 


to Aldi Stores Ltd expiring 2017 

subject to 5 yearly rent reviews; two 

groundleases to Somerfield Property 

Company and Enterprise Pubs Four 

for terms expiring in 2079 subject to 

5 yearly geared reviews. 



2023 subject to 5 yearly reviews, and 

two ground leases expiring 2125 

subject to 25 yearly fixed uplifts. 

One of the leases has a tenants 


73,700 1,150,000 

348 Glenmoor Road 

FERNDOWN 

6 retail units with ancillary, 

mainly residential, 


(9,731 ft 2 ), constructed in the 

1970s. 

Freehold. 

65,850 965,000 

104

Ref 


349 Holm Square 

BICESTER 

A convenience store and 3 retail 

units with ancillary, mainly 

residential, accommodation, 

totalling 714 m 2 (7,683 ft 2 ), 

constructed in the early 1990s. 

Freehold. 



subject to 4 or 5 yearly reviews, and 

four ground leases expiring between 



Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

55,275 875,000 

350 Pavilions Way 

BRACKLEY 


units with ancillary residential 



1990s. 

Freehold. 



subject to 4 yearly reviews, and two 

ground leases expiring in 2120 and 

2125 subject to 25 yearly fixed 

uplifts. 

72,475 1,175,000 

351 Bordeaux Close 

Alsace Park 

DUSTON 

A convenience store, 3 retail 

units and a nursery with ancillary 

residential accommodation, 

totalling 781 m 2 (8,408 ft 2 ), 

constructed in the early 1990s. 

Freehold. 



2016 subject to 4 yearly reviews, and 

two ground leases expiring in 2124 

subject to 25 yearly fixed uplifts. 

66,900 1,035,000 

352 Walnut Tree Centre 

Fyfield Barrow 

MILTON KEYNES 

A convenience store with 

ancillary residential 



early 1990s. 


2992 at a peppercorn ground 

rent. 


for a term expiring in 2014 subject to 

4 yearly reviews. 

54,250 930,000 

353 Cogges Hill Road 

WITNEY 





early 1990s. 

Freehold. 


for terms expiring in 2014 subject to 

4 or 5 yearly reviews; one ground 

lease expiring in 2120 subject to 25 

yearly fixed uplifts. 

48,400 670,000 

354 Grafton Close 

WELLINGBOROUGH 




(6,775 ft 2 ), constructed in the late 

1980s. 

Freehold. 



2014 subject to 4 or 5 yearly reviews. 

72,375 1,130,000 

355 Elthorne Way 

NEWPORT PAGNELL 

A convenience store, doctors 

surgery and 2 retail units with 

ancillary accommodation, 

totalling 604 m 2 (6,504 ft 2 ), 

constructed in the late 1980s / 

early 1990s. 

Freehold. 



subject to 4 yearly reviews, and two 

ground leases expiring in 2115 and 

2117 subject to 25 or 33 yearly fixed 

uplifts. 

33,350 575,000 

356 Copt Oak Court 

NARBOROUGH 





early 1990s. 

Freehold. 



subject to 4 or 5 yearly reviews, and 

one tenants break option in 2009; 

and 5 ground leases expiring 


or 35 yearly fixed uplifts. 

50,900 845,000 

357 Egerton Gate 

Shenley Brook End 

MILTON KEYNES 




(6,784 ft 2 ), constructed in the mid 

1990s. 

Freehold. 



2018 subject to 4 or 5 yearly reviews, 

and one ground lease expiring in 

2122 subject to 33 yearly fixed 

uplifts. 

64,706 1,020,000 

358 Moonhall Business Park 

HAVERHILL 


totalling 3,532 m 2 (38,018 ft 2 ), 


Freehold. 



2014 subject to 4 or 5 yearly reviews. 

The tenant of two of the units is 

understood to be in Administration. 

158,935 1,800,000 

105

Ref 


361 2 Church Road 

BEBINGTON 

A supermarket and 3 retail units 

with first floor offices, totalling 

2,128 m 2 (22,908 ft 2 ), constructed 

in the 1970s. 

Freehold. 




Three of the leases have tenants 

break options in 2006 and 2018. 

Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

141,140 2,025,000 

364 Willows Centre 

Downend Road 

Downend 

BRISTOL 


with ancillary accommodation, 

totalling 3,395 m 2 (36,545 ft 2 ), 


Freehold. 




of the leases have tenants break 

options in 2008 and 2018. 

351,238 5,400,000 

365 1 Stafford Moreton Way 

MAGHULL 

A supermarket and 11 retail 

units with ancillary 



early 1980s. 

Freehold. 




Three of the leases have tenants 

break options in 2006, 2010 and 

2018. 

354,040 4,800,000 

555 St James Mill Road 

NORTHAMPTON 


totalling 4,779 m 2 (51,430 ft 2 ), 


Freehold. 



subject to 5 yearly reviews and 

tenant’s break options in 2007 and 

2008. 

192,500 2,590,000 

556 3 & 5/9 Gorrells Way 

ROCHDALE 


totalling 5,709 m 2 (61,447 ft 2 ), 


Freehold. 






204,129 2,410,000 

559 20-22 May Day Green 

BARNSLEY 

Retail unit with two floors of 

office accommodation over, 

totalling 905 m 2 (9,742 ft 2 ), 


Freehold. 




of the leases have tenants break 


159,500 2,250,000 

560 58-62 Regent Street 

Kingswood 

BRISTOL 

A period retail unit with two 

floors of office accommodation 

over, totalling 403 m 2 (4,339 ft 2 ). 

Freehold. 






50,350 870,000 

561 1/3 Market Chambers, 5a 

Church Street & 4a 

Market Place 

ENFIELD 

2 retail units with ancillary offices 

and a snooker hall over, totalling 


the 1930s. 

Freehold. 




164,950 2,640,000 

562 16/20 Cloth Hall Street 

HUDDERSFIELD 

Retail units with ancillary offices 

over, totalling 618 m 2 (6,658 ft 2 ), 



2908 at a fixed rent of £9.20 p.a. 






56,641 760,000 

563 1 Thames Street 

KINGSTON-UPON- 

THAMES 

Retail unit with residential 

accommodation over, totalling 


the 1700s. 

Freehold. 


expiring in 2017 subject to 5 yearly 

reviews, and one ground lease 



57,600 1,065,000 

564 114/116 St Aldates 

OXFORD 

A period retail unit with three 

floors of office accommodation 

over, totalling 658 m 2 (7,088 ft 2 ). 

Freehold. 



reviews. Two of the leases have 

tenants break options in 2007. 

146,250 2,600,000 

566 2 The Cross/1 Trinity 

Passage 

WORCESTER 

A period retail unit with office 

accommodation over, understood 

to have been built in the early 

1800s, totalling 655 m 2 (7,048 ft 2 ). 

Freehold. 


expiring between 2005 and 2017 

subject to 3 or 5 yearly reviews. One 

of the leases has a tenants break 

option in 2007. 

63,875 975,000 

106

Ref 


567 Kingsfield Business Park 

Gladstone Road 

NORTHAMPTON 


totalling 7,332 m 2 (78,925 ft 2 ), 


1998. 

Part freehold and part (unit 2) 

leasehold for a term expiring 

2055 at £25p.a. subject to 14 

yearly fixed uplifts. 



subject to 5 yearly reviews. Two of 

the leases have tenants break 


Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

297,975 3,900,000 

568 Avon Riverside Industrial 

Estate 

AVONMOUTH 


totalling 6,949 m 2 (74,800 ft 2 ), 

constructed in 1980. 


2116 at £44,000 p.a. reviewable to 

15% open market rental value. 






317,368 3,660,000 

569 New Street 

CHELMSFORD 

A self contained industrial / 

warehouse unit totalling 7,340 m 2 

(79,006 ft 2 ), constructed in 1970 

and extended in the 1980s. 


2078 at £112,500 p.a. subject to 5 

yearly reviews to 25% rental 

value. 


lease to Kay-Metzeler Limited, for a 

term of 15 years from 2002 subject 

to five yearly reviews. 

259,000 3,230,000 

570 Southern Cross Trading 

Estate 

BOGNOR REGIS 

571 West Point 

Larkfield 

MAIDSTONE 

574 Arcadian Centre 

Hurst Street 

BIRMINGHAM 


totalling 3,643 m 2 (39,210 ft 2 ), 


Freehold. 


totalling 7,461 m 2 (80,315 ft 2 ), 

constructed in the mid 1990s and 

2003. 

Freehold. 

A mixed retail, commercial, 

leisure and residential complex 

totalling 10,938 m 2 (117,744 ft 2 ), 

together with a former cinema, 

hotel and multi-storey car park, 


Freehold. 

Three full repairing and insuring 

leases to John Wiley & Sons 

Limited, for a term expiring in 2012 

subject to tenants break options and 

rent reviews in 2007. 


expiring in 2016 and 2018 subject to 

5 yearly reviews. Four of the leases 

have tenants break options in 2009 

and 2013. 



mainly subject to 5 yearly reviews; 2 

ground leases expiring in 2113; and a 

management agreement in respect of 

the car park. 11 of the leases have 

tenant’s options to break between 

2005 and 2011. 

212,600 2,350,000 

486,740 7,195,000 

(following 

expiry of 

rentfree 

period at 31 st 

August 2005) 

2,042,577 27,740,000 

575 Pimbo Industrial Estate 

SKELMERSDALE 


totalling 10,486 m 2 (112,874 ft 2 ), 

constructed in the late 1970s with 

an extension in 1989. 

Leasehold for a term expiring in 

2996 at a peppercorn rent. 



subject to 5 yearly reviews. One of 

the leases has a tenants break option 

in 2006. 

265,900 2,600,000 

576 Progress Way 

Binley Industrial Estate 

COVENTRY 

A self contained industrial / 

warehouse unit totalling 4,906 m 2 


1970s 

Freehold. 

Single full repairing and 

tenant-insuring lease to Solaglas 

Limited, for a term expiring in 2013 

subject to five yearly reviews. 

195,000 2,460,000 

577 Hungerford Trading Estate 

HUNGERFORD 


totalling 3,877 m 2 (41,731 ft 2 ), 

constructed in the late 1970s and 

refurbished and subdivided in the 

mid 1990s. 

Freehold 



subject to 5 yearly reviews. One of 

the leases has a tenants break option 

in 2007. 

238,800 3,120,000 

578 54/60 Clifton Street & 

35/39 Abingdon Street 

BLACKPOOL 

2 retail units with office 

accommodation over, understood 

to have been built about 1900, 

totalling 651 m 2 (7,008 ft 2 ). 

Freehold. 




59,300 815,000 

579 93 Old Christchurch Road 

BOURNEMOUTH 

Retail unit with ancillary office 

and residential accommodation 

over, totalling 381 m 2 (4,104 ft 2 ), 

originally constructed in the 

1900s. 

Freehold. 

1 full repairing and insuring lease for 

a term expiring in 2017 subject to 

five yearly reviews; 3 groundleases 

for terms expiring 2101 subject to 

ten yearly fixed increases. 

50,375 855,000 

107

Ref 


580 114/116 High Street & 33 

Cambray Place 

CHELTENHAM 

581 3 Highgate 

KENDAL 

2 period retail units with ancillary 

accommodation over, totalling 

584 m 2 (6,286 ft 2 ). 

Freehold. 

Period retail unit with ancillary 

accommodation over, constructed 

in the latter part of the 19 th 

Century, totalling 584 m 2 (6,286 

ft 2 ). 

Freehold. 






5 yearly reviews. One of the leases 

has a tenants break option in 2006. 

Current Net 

Rents 


£pa 

Capital 

Value as at 

15 June 2005 

–£ 

89,550 1,730,000 

51,500 780,000 

582 3-5 Lidget Hill & 3-9 

Church Lane 

PUDSEY 




1970s. 

Freehold. 





options in 2007/8. 

117,375 1,565,000 

583 8/18 Hanover Buildings & 

1/3 The Strand 

SOUTHAMPTON 


accommodation and a public 

house, totalling 969 m 2 (10,433 

ft 2 ), excluding the area sold off 

on a ground lease, constructed in 

the 1970s. 

Freehold. 



2017 subject to five yearly reviews 

and one tenant’s option to break in 

2010; 2 leases for terms expiring 

2064, with 21 yearly reviews, and 

3002, subject to 25 yearly fixed 

increases. One unit vacant. 

121,750 1,955,000 

584 6/10 Wallgate 

WIGAN 

A period retail unit with ancillary 

office accommodation over, 

totalling 441 m 2 (4,753 ft 2 ), 


Freehold. 



5 yearly reviews. 

49,350 900,000 

586 88/100 The Paddocks 

Catton 

NORWICH 


with ancillary accommodation, 

totalling 3,160 m 2 (34,016 ft 2 ), 

constructed in 1979 / 1980. 

Freehold. 



subject to 5 yearly reviews. Four of 


options between 2006 and 2018. 

197,500 3,060,000 

587 Ambrose Lloyd Centre & 

23 Wrexham Street 

MOLD 

A supermarket and retail unit 

together with ancillary office 



1980s. 

Freehold. 





options in 2009 and 2018. One 

ground lease expiring 2994 at a 

peppercorn rent. 

187,370 2,800,000 

589 Homebase 

Roman Way Retail Park 

Kidderminster Road 

DROITWICH 

Retail warehouse totalling 2,899 

m 2 (31,205 ft 2 ) built in the early 

1980s. 

Freehold. 


lease to Homebase, for a term 

expiring in 2020 subject to five 

yearly reviews 

312,050 5,185,000 

590 Homebase 

Sturlas Way 

WALTHAM CROSS 

Retail warehouse totalling 3,203 

m 2 (34,480 ft 2 ) built in the mid 

1980s. 

Freehold. 


lease to Homebase, for a term 

expiring in 2020 subject to five 

yearly reviews 

400,000 8,600,000 

108

APPENDIX 2 

Properties Requiring Measurement 

281, 280 The Sainsbury’s Supermarkets at March and Ripley. 

83 Linpac Metal Packaging, Adwest Eastern Site 

65 Ofquest Ltd, Chalgrove 

44 Littlewoods Organisation plc, The Wulfrun Centre, Wolverhampton 

589, 590 The Homebase Stores at Droitwich and Waltham Cross. 

569 Kay-metzeler Ltd., Chelmsford 

65 Graham Packaging Plastics Ltd., Charlgrove 

361, 364, 365, 

586, 587 

The Somerfield Stores at Bebington, Downend, Maghull, Catton and Mold. 

44 National Car Parks Ltd., The Wulfrun Centre, Wolverhampton. 

571 Grafham Holdings Ltd., West Point, Larkfield 

193 – 209 The Magnet Stores at Leamington Spa, Stoke, Melton Mowbray, Shrewsbury, 

Worcester, Willenhall, Wolverhampton, Lichfield, Stafford, Amblecote, Leeds, 

Arkwright Road, Potters Bar, Guiseley, Balham, Bury St. Edmunds and 

Aberystwyth 

109

APPENDIX 3 

Properties For Which Environmental Reports Seen 

29 DUDLEY, Churchill Shopping Precinct 

38 DONCASTER, Shaw Lane Industrial Estate 

41 ST.HELENS, Hardshaw Centre 

43 SHEPTON MALLET, Crowne Estate 

44 WOLVERHAMPTON, Wolfrun Centre 

65 OXFORD, Chalgrove 

86 READING, Headley Park 9 

88 READING, Loddon Vale 

89 WILLAND, Blackdown Park 

103 BEDMINSTER, Princess Street 

109 ALTON, Mill Lane Ind Estate 

111 LEICESTER, Euston Street 

121 BASILDON, Howard Chase 

128 ANDOVER, 2 North Way 

129 BASILDON, The Hemmells 

131 GLOUCESTER, Cole Avenue 

132 PERIVALE, Phoenix Trading Estate 

136 SHEFFIELD, Manor Park Industrial Estate 

139 SPENNYMOOR, Enterprise City 

143 HARROW, Station Road 

144 OXFORD, Watlington Ind Estate 

158 LEIGH, 33/39 Bradshawgate 

193 LEAMINGTON, Sydenham Ind Estate 

194 STOKE-ON-TRENT, Elder Road, Cobridge I.E. 

195 MELTON MOWBRAY, Jubilee Street 

196 SHREWSBURY, 264 Monkmoor Road 

197 WORCESTER, Blockhouse Close 

198 WILLENHALL, Rose Hill 

199 WOLVERHAMPTON, Millbuck T.E. 

258 SUTTON, 193/195 High Street 

266 NUNEATON, 11/20 Bridge Street & 43/47 Church Street 

268 NORTHWICH, 38/44 Witton Street 

270 SOUTH SHIELDS, 110/116 King Street 

271 SOUTH SHIELDS, 117/123 King Street 

273 FLEET, 156/162 Fleet Road 

279 QUEENBOROUGH, Queenborough Industrial Estate 

281 MARCH, Mill View 

282 ARNOLD, Front Street 

110

295 SWINTON, Swinton Hall Industrial Estate 

345 WALLSEND, Station Road 

358 HAVERHILL, Moonhall Business Park 

555 NORTHAMPTON, St James Mill Road 

556 ROCHDALE, 3 & 5/9 Gorrells Way 

570 BOGNOR REGIS, Southern Cross Trading Estate 

571 MAIDSTONE, West Point 

574 BIRMINGHAM, Arcadian Centre 

575 SKELMERSDALE, Pimbo Industrial Estate 

576 COVENTRY, Binley Industrial Estate 

577 HUNGERFORD, Hungerford Trading Estate 

590 WALTHAM CROSS, Homebase 

111

Proudreed Limited and Proudreed Real Estate Limited 

(Proudreed Real Estate Limited in its capacity as Borrower) 

16 Carlton Crescent 

Southampton 

Hampshire 

SO15 2ES 

HSBC Bank plc 

(in its capacity as Joint Lead Manager, Liquidity 

Facility Provider and Hedging Provider) 

Level 3 



HSBC Trustee (C.I.) Limited 

(in its capacity as Borrower Security Trustee, 

Issuer Security Trustee and Note Trustee) 


St Helier 

Jersey 



(in its capacity as Joint Lead Manager) 

SG House 

41 Tower Hill 



(in its capacity as Hedging Provider) 

Tour S.G. 

17 Cours Valmy 

97972 Paris La Défense 


(in its capacity as Issuer) 






Dear Sirs 

VALUATION OF ASSETS OWNED BY PROUDREED LIMITED AND ITS SUBSIDIARIES 

(‘‘PROUDREED’’) AS AT 15 JUNE 2005 

1.0 INSTRUCTIONS 

1.1 Instruction: In accordance with instructions contained within the letter received from L.C.P. 

Management Limited (‘‘LCPM’’) with instruction effective from 5th May 2005, we have inspected 

the properties (the ‘‘Properties’’) shown in Appendix 1, in order to advise you of our opinion of the 

Market Value (as defined in paragraph 3.2) as at 15th June 2005 (the ‘‘Valuation Date’’)ofthe 

freehold or long leasehold interests (as appropriate) in each of the Properties in connection with the 

issue by the Issuer of £243,800,000 Class A Notes due 2016, £32,200,000 Class B Notes due 2016, 

£36,800,000 Class C Notes due 2016 and £9,200,000 Class D Notes due 2016 as described in an 

offering circular (the ‘‘Offering Circular’’) dated on or about the date hereof. This report is dated 

19 October 2005. 

1.2 Inspections: We have inspected all the Properties within the last 6 months. However, as requested 

we have relied upon areas provided to us by LCPM in respect of the majority of the Properties and 

have specifically measured only certain Properties as requested by LCPM. We have assumed that the 

areas provided to us to have been measured in accordance with the Code of Measuring Practice 

112

issued by the Royal Institution of Chartered Surveyors and the Incorporated Society of Valuers and 

Auctioneers. The Properties for which you have requested specific measurement (please see the 

attached list in Appendix 2) have either been measured expressly for the purposes of this valuation 

or measured previously by King Sturge in accordance with the RICS guidelines and in these 

instances we have verified that there has been no change to the premises in the intervening period. 

1.3 Compliance with Appraisal and Valuation Standards and the Listing and Admission to Trading 

Guidelines for Asset-backed Securities: We confirm that the valuations have been made in 

accordance with the appropriate sections of both the current Practice Statements (‘‘PS’’), and 

United Kingdom Practice Statements (‘‘UKPS’’) contained within the RICS Appraisal and 

Valuation Standards, 5th Edition (the ‘‘Red Book’’) as well as the Listing and Admission to Trading 

Guidelines for Asset-backed Securities published by the Irish Financial Services Regulatory 

Authority. We would confirm that we have valued each Property as a whole in accordance with 

market practice. 

1.4 Status of valuer and conflicts of interests: The Properties have been valued by external valuers 

qualified for the purposes of the valuation. We can confirm that these surveyors have relevant 

experience in this type of property and in these locations. The valuation has been overseen by 

J.P.Asquith BSc FRICS who also has extensive experience in valuing portfolios of this type. We 

confirm that King Sturge do not have any conflict of interest in regard to this matter and have 

derived no agency fees from this transaction. We also confirm that in the year to 30 April 2005 the 

proportion of total fees payable by Proudreed to King Sturge’s total fee income was less than 5%, 

and this position is not expected to change in the current year. King Sturge has historically valued 

from time to time the property assets of both Proudreed and its associated companies and also 

undertaken full valuation reports of a number of properties for certain of the companies’ banks. 

1.5 As requested we have attached hereto an executive summary, a tenancy schedule in the format 

requested and reports on each individual Property. 

2.0 OPINION OF VALUE 

2.1 In accordance with the facts and assumptions set out in this Valuation Certificate, we are of the 

opinion that the total Market Value of the various freehold and long leasehold interests of the 

Properties listed below, as at 15 June 2005, isinthesumtotalof£68,535,000 (Sixty Eight Million 

Five Hundred and Thirty Five Thousand Pounds). According to tenure the aggregate values are: 

Freehold £67,460,000 

Part freehold / part leasehold 

£nil 

Long leasehold £1,075,000 

2.2 A schedule showing the individual Market Values and Current Rents is attached at Appendix 1. The 

total Market Value is the aggregate of the individual Market Values. 

3.0 BASIS OF VALUATION 

3.1 The value of each of the Properties has been assessed in accordance with the relevant parts of the 

current RICS Appraisal and Valuation Standards. In particular we have assessed Market Value in 

accordance with PS 3.2. Under these provisions, the term Market Value means an opinion of ‘‘the 

estimated amount for which a property should exchange on the date of valuation between a willing 

buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties 

have each acted knowledgeably, prudently and without compulsion’’. The RICS considers that the 

application of the Market Value definition provides the same result as Open Market Value, a basis 

of value supported by previous editions of the Red Book. 

3.2 Our valuations exclude any expenses which would be incurred on a realisation or disposal and any 

liabilities due to taxation on disposal such as Capital Gains Tax or Value Added Tax, but have been 

adjusted to reflect assumed normal purchaser’s costs. These will be 5.75% in respect of assets valued 

in excess of £500,000 and 4.75% in respect of those of lower value. 

3.3 Our valuations reflect plant and machinery on the Properties in so far as it does not form part of any 

manufacturing process carried on therein, but would be regarded by the open market as an integral 

part of the land and buildings for letting or sale purposes. 

113

4.0 VALUATION ASSUMPTIONS 

4.1 SOURCES OF INFORMATION 

4.1.1 Third parties have provided us with such information as details of tenure, use, town planning 

consents and the like. Where appropriate, LCP has confirmed that our assumptions are correct 

so far as they are aware. 

4.1.2 We have relied upon the tenancy details provided to us by Proudreed Real Estate as at 15 June 

2005. We have been provided by The Simkins Partnership and Lawrence Graham with 

certificates of title (including sample lease reports) in respect of each of the Properties, and we 

confirm we have taken these into account in our valuations. We have assumed that all 

occupational leases have been drawn on a full repairing and insuring basis unless advised to the 

contrary. 

4.1.3 We have not effected official searches and for the purposes of the valuations we have assumed 

that, unless advised to the contrary, full planning consent exists for the existing use of the 

Properties, or established use rights are available for the existing buildings and present uses 

and the Properties are not adversely affected by town planning or road proposals. 

4.1.4 We have not inspected the title deeds or other legal documents pertaining to the Properties 

and our valuations are based upon the assumption that, save as disclosed in the certificates of 

title dated 16 September 2005, there are no unusually onerous restrictions or obligations 

attaching to the Properties and that they enjoy good and marketable title. 

4.2 STRUCTURAL SURVEYS AND DELETERIOUS MATERIALS 

4.2.1 We have not carried out structural surveys nor have we inspected those parts of the Properties 

which are covered, unexposed or inaccessible and such parts have been assumed to be in good 

repair and condition. We cannot express an opinion about, or advise upon the condition of 

uninspected parts and this certificate should not be taken as making any implied representation 

or statement about such parts. We have had regard to the general condition of the Properties 

as observed in the course of our inspection for valuation purposes. 

4.2.2 We have not arranged for any investigation to be carried out to determine whether or not high 

alumina cement, calcium chloride additive or any other potentially deleterious material has 

been used in the construction of the Properties and we are therefore unable to report that the 

Properties are free from risk in this respect. For the purpose of this valuation we have assumed 

that such investigations would not disclose the presence of any such material in any adverse 

condition. 

4.2.3 No specialist tests have been carried out on any of the services systems and for the purposes 

of this valuation we have assumed that all are in reasonable working order and in compliance 

with any relevant statutory or Bye-Law regulations. 

4.2.4 No allowance has been made in our valuation in respect of rights, obligations or liabilities 

arising under the Defective Premises Act 1972. 

4.2.5 Assuming an ongoing programme of maintenance on the unlet buildings and a rigorous 

enforcement of the repairing liabilities on the let units we consider that the vast majority of the 

buildings could have a useful economic life of at least 20 years. 

4.2.6 You have also asked for our opinion of the reinstatement value of the Properties. In the case, 

particularly, of the retail properties we will not have any information as to the gross areas and 

the figures noted should be treated with extreme caution. 

4.3 SITE CONDITIONS AND CONTAMINATION 

4.3.1 No load bearing tests have been carried out by us and we cannot offer any opinion either as 

to the suitability of the sites for existing or proposed developments nor the condition of or 

potential liability for any embankment and river, wharf or retaining wall. 

4.3.2 We are aware of the content of certain environmental audits, which have been carried out 

previously on the Properties and we can confirm we have taken these into account in our 

valuations. We have set out at Appendix 3 a schedule of those Properties where we have 

114

previously seen environmental reports. However, we are not aware of any subsequent 

contamination which may have taken place at any of the sites and therefore have not reflected 

this in our figures. For the purposes of this valuation we have assumed that there are no such 

issues of contamination associated with any of the sites. 

5.0 CONFIDENTIALITY 

5.1 This Valuation Certificate is provided for the use only of the party to whom it is addressed and no 

responsibility is accepted to any third party for the whole or any part of its content. 

5.2 Neither the whole nor any part of this Valuation Certificate nor any reference thereto may be 

included in any published document, circular or statement, nor published in any way without our 

written approval of the form and context in which it may appear, save that we agree to this Report 

being included in the Offering Circular. 


J P ASQUITH BSc FRICS 

KING STURGE 

115

APPENDIX 1 

Ref 


373 Longshot Lane 


BRACKNELL 

374 Riverside Industrial 

Estate 

DARTFORD 

375 Deacon Trading Estate 

STROOD 

376 22/27a The Green 

STUBBINGTON 

377 Acorn House 

Flackwell Heath 

HIGH WYCOMBE 

378 5 Dolphin Park 

SITTINGBOURNE 

379 Brighton Hill Shopping 

Centre 

BASINGSTOKE 

380 Alperton House 

WEMBLEY 

9 industrial / warehouse units totalling 

5,110 m 2 (55,005 ft 2 ), excluding unit 43 

sold on a ground lease, constructed in the 

early 1980s. 

Freehold. 


6,985 m 2 (75,190 ft 2 ), excluding 3 units 

sold on ground leases, constructed in the 

early 1960s / 1970s. 

Freehold. 


1,306 m 2 (14,056 ft 2 ), constructed in the 

early 1980s. 

Freehold. 

6 retail units together with a first floor 

snooker hall, totalling 1,229 m 2 (13,225 


Leasehold for a term expiring 2124 at a 

current rent of £20,850p.a., subject to 7 

yearly reviews to 6/29 th rental value. 

6 retail units together with first floor 

offices totalling 758 m 2 (8,157 ft 2 ), 

constructed in the mid 1980s. 

Freehold. 

A self contained warehouse unit totalling 

2,798 m 2 (30,114 ft 2 ), constructed in the 

1970s 

Freehold. 

A supermarket and 13 retail units with 

residential and office accommodation 

over, totalling 9,832 m 2 (105,828 ft 2 ), 

constructed in the 1980s and, in the case 

of the supermarket, 2003. 

Freehold. 

6 storey office building, totalling 7,668 m 2 

(82,544 ft 2 ), constructed in the 1960s and 

recently partly refurbished. 

Freehold. 


expiring between 2009 and 2014 subject 

to 5 yearly reviews. Three of the leases 

have tenants break options in 2005, 2008 

and 2009. One ground lease expiring 2982 

at a peppercorn rent. 



to 5 yearly reviews. Three 999 year ground 

leases at a peppercorn rent. One unit 

vacant. 


expiring in 2007 and 2008 subject to 5 



expiring in 2009 and 2010 subject to 5 




to 5 yearly reviews. Four of the leases 

have tenants break options in 2006, 2007 

and 2010. 

Single full repairing and insuring lease to 

US Eurolink Plc, for a term expiring in 

2007. 

Supermarket let to Asda Stores for 35 

years from May 2003, subject to a tenants 

break option in 2029 and to five yearly 

reviews, the first three of which are to a 

minimum 3%p.a. compound. Residential 

units let on a ground lease expiring 2121. 

Remainder let on 14 full repairing and 

insuring leases expiring between 2007 and 

2023 subject to 5 yearly reviews. Three of 

the leases have tenants break options in 

2009 and 2015. 

43 full repairing and insuring leases and 

short term licences and tenancy 

agreements expiring between 2005 and 

2022 subject to reviews and tenants break 

options between 2005 and 2008. 

Current 

Net Rents 

Receivable 

-£pa 

Capital 

Value 

as at 

15 June 

2005 

-£ 

427,875 5,910,000 

431,706 6,270,000 

87,172 1,150,000 

85,400 1,075,000 

136,016 1,690,000 

120,000 1,340,000 

1,686,870 33,460,000 

959,750 13,000,000 

381 Waun-y-Pound 


EBBW VALE 

Industrial complex totalling 17,560 m 2 

(189,013 ft 2 ), constructed in phases 

between the 1970s and 1990s. 

Freehold. 

3 full repairing and insuring leases to 

Continental Teves (UK) Ltd expiring in 

2014 subject to a fixed rental increase in 

2009. 

397,668 4,640,000 

116

APPENDIX 2 

Properties Requiring Measurement 

None 

APPENDIX 3 

Properties For Which Environmental Reports Seen 

378 SITTINGBOURNE, 5 Dolphin Park 

381 EBBW VALE, Waun-Y-Pound 

117

THE ISSUER 


Introduction 

The Issuer was incorporated in England and Wales on 4 August 2005 (registered number 5528295) as a 

public limited company under the Companies Act 1985 under the name LCP Proudreed PLC. The 

registered office of the Issuer is at c/o SPV Management Limited, Tower 42 (Level 11), International 

Financial Centre, 25 Old Broad Street, London EC2N 1HQ, telephone +44 (0) 207 614 1111. 

The principal objects of the Issuer are set out in its memorandum of association and are, inter alia,tolend 

money and give credit, secured or unsecured, to borrow or raise money and secure the payment of money, 

and to grant security over its property for the performance of its obligations or the payment of money. The 

Issuer was established for the limited purposes of the issue of the Notes, to lend money, to open accounts, 

to create security and receive interest in respect thereof, and to enter into certain related transactions 

described elsewhere in this Offering Circular. 

The Issuer has not engaged, since its incorporation, in any material activities other than those incidental 

to its incorporation and registration as a public company under the Companies Act 1985 and to the 

proposed issue of the Notes and the authorisation of the other Transaction Documents referred to in this 

Offering Circular to which it is a party and other matters which are incidental or ancillary to the foregoing. 

The Issuer’s issued share capital is £50,000 divided into 50,000 ordinary shares of £1 two of which are fully 

paid up and 49,998 are one quarter paid up. 49,999 shares are held by the Post-Enforcement Call Option 

Holder and one is held by SPV Management Limited as trustee for the benefit of the Post-Enforcement 

Call Option Holder. 

The Post-Enforcement Call Option Holder 

The Post Enforcement Call Option Holder was incorporated in England and Wales on 4 August 2005 

(registered number 5528298) as a limited company under the Companies Act 1985 under the name L&C 

Proudreed Holdings Limited. The registered office of the Post-Enforcement Call Option Holder is at c/o 

SPV Management Limited, Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, 

London EC2N 1HQ. 

The Post-Enforcement Call Option Holder’s entire share capital is held by the Share Trustee on trust for 

general charitable purposes. 

118

Directors and Secretary 

The directors of the Issuer and their respective business addresses and other principal activities are: 

Name Business Address Other Principal Activities 

Mark Howard Filer 




25 Old Broad Street, London 

EC2N 1HQ 

Director 

SPV Management Limited 

Robin Baker 

Ruth Thomas 

SPV Management Limited 




EC2N 1HQ 





EC2N 1HQ 





EC2N 1HQ 

Management of Special 

Purpose Companies 

General Manager 

Manager 

Martin McDermott has been appointed as an alternate director for Ruth Thomas. 

The company secretary of the Issuer is SPV Management Limited whose business address is Tower 42 

(Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ. 

The Issuer has no employees or non-executive directors. 

The Directors of SPV Management Limited and their principal activities are as follows:- 

Name Function Principal Activities 

Martin McDermott Managing Director/Chief Executive Company Director 

Mark Filer Executive Director Company Director 

James Fairrie Managing Director/Sales and Marketing Company Director 

Nicolas Patch Executive Director Company Director 

Anthony Raikes Non-Executive Director Company Director 

David Dupert Non-Executive Chairman Banker 

David Roulston Non-Executive Director Banker 

William Farrell II Non-Executive Deputy Chairman Banker 

The company secretary of SPV Management Limited is Clifford Chance Secretaries (CCA) Limited. 

119

Capitalisation and Indebtedness 

The estimated unaudited capitalisation and indebtedness of the Issuer as at 19 October 2005, adjusted for 

the issue of the Notes is as follows: 

Share capital 

Authorised: 

50,000 Ordinary Shares of £1 each £50,000 

Issued 

50,000 Ordinary Shares of £1 each, 

49,998 of which are quarter paid and two of which are fully paid £12,501.50 

Borrowings 

Notes £322,000,000 

Total capitalisation and indebtedness £322,012,501.50 

All loan capital is secured over the assets of the Issuer. The loan capital of the Issuer is not guaranteed. 

As of the date of this Offering Circular, the Issuer has no loan capital outstanding or created but unissued, 

no term loans outstanding and no other borrowings or indebtedness in the nature of borrowings nor any 

contingent liabilities or guarantees. 

The current financial period of the Issuer will end on 31 March 2006. 

Accountants’ Report 

The following is the text of a report received by the directors of the Issuer from Ernst & Young, the 

reporting accountants to the Issuer. The financial information contained therein does not comprise the 

Issuer’s statutory accounts. No statutory accounts have been prepared or delivered to the Registrar of 

Companies in England and Wales since incorporation. The Issuer’s accounting reference date is 31 March 

with the first statutory accounts being drawn up to 31 March 2006. 

120

Accountants Report to the Members of LCP Proudreed PLC 

The Directors 19 October 2005 




International Financial Centre Direct Line: 020 7951 3247 

25 Old Broad Street Direct Fax: 020 7951 1693 


e-mail: pwallace2@uk.ey.com 

Dear Sirs 

We report on the financial information in respect of LCP Proudreed PLC (‘‘the Issuer’’) as set out below. 

This financial information has been prepared for inclusion on pages 121 to 122 of the Offering Circular 

dated 19 October 2005 (the ‘‘Offering Circular’’) of the Issuer on the basis of the accounting policies set 

out in note 1 of the financial information. 

The Issuer’s activities will principally be the issue of the Notes. 

The Issuer was incorporated on 4 August 2005. 

Basis of preparation 

The financial information set out below is based on the audited non-statutory financial statements of the 

Issuer to which no adjustment was considered necessary. 

Responsibilities 

The Directors of the Issuer are responsible for preparing the financial information on the basis of 

preparation set out in Note 1 to the financial information. 

It is our responsibility to form an opinion as to whether the financial information gives a true and fair view, 

for the purposes of the Offering Circular, and to report our opinion to you. 

Basis of opinion 

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards 

issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of 

evidence relevant to the amounts and disclosures in the financial information. It also included an 

assessment of significant estimates and judgments made by those responsible for the preparation of the 

financial statements underlying the financial information and whether the accounting policies are 

appropriate to the entity’s circumstances, consistently applied and adequately disclosed. 

We planned and performed our work so as to obtain all the information and explanations which we 

considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the 

financial information is free from material misstatement whether caused by fraud or other irregularity or 

error. 

Opinion 

In our opinion the financial information gives, for the purposes of the Offering Circular, a true and fair 

view of the state of affairs of the Issuer as at 19 October 2005 in accordance with the basis of preparation 

set out below. 

121

Balance Sheet as at 19 October 2005 

Current Assets 

Amounts owed by subscribers £12,501.5 

Total Net Assets £12,501.5 

Capital and Reserves 

Called up share capital £12,501.5 

Total Capital and Reserves £12,501.5 

Notes 

1. Accounting Policies 

The non-statutory financial statements contained in this report have been prepared in accordance with 

accounting standards applicable in the United Kingdom under the historical cost convention. A summary 

of the principal accounting policies, which have been applied consistently for the period covered by this 

report, is set out below. 

2. Cash flow statement 

The company is exempt from the requirement to prepare a cash flow statement on the grounds that it is 

a small company. 

3. Principal activity 

The Issuer was incorporated on 4 August 2005. The Issuer has not yet commenced business, no audited 

financial statements have been made up and no dividends have been declared or paid since the date of 

incorporation. 

4. Trading Activity 

The Issuer was incorporated on 4 August 2005. The Issuer has not yet commenced business, no audited 

financial statements have been made up and no dividends have been declared or paid since the date of 

incorporation. 

5. Share Capital 

The Issuer was incorporated and registered as a limited company on 4 August 2005, with the name of LCP 

Proudreed PLC. 

On incorporation, the authorised share capital of the Issuer was divided into 50,000 ordinary shares of £1 

each. Hackwood Directors Limited and Hackwood Secretaries Limited subscribed for 1 share each on 4 

August 2005 to form the initial share capital. On 5 August 2005 these shares were transferred to L&C 

Proudreed Holdings Limited and SPV Management Limited respectively. 

L&C Proudreed Holdings Limited subscribed for a further 49,998 shares on 5 August 2005. The issued 

share capital of the Issuer currently consists of 50,000 ordinary shares, 49,998 shares paid to £0.25 and 2 

shares which formed the initial share capital of the Issuer. 

Declaration 

For the purposes of paragraphs 1.1 and 1.2 of Annex VII and paragraphs 1.1 and 1.2 of Annex XIII of 

the Commission Regulation (EC/809/2004), we are responsible for this report as part of the Offering 

Circular and declare that we have taken all reasonable care to ensure that the information contained in 

this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely 

to affect its import. 


Ernst & Young LLP 

London 

122

THE BORROWERS 

L.C.P. Real Estate Limited 

General 

LCP Real Estate was incorporated in England and Wales on 27 May 2005 under the name of L&C Europe 

Limited (registered number 5465434) as a private company with limited liability under the Companies Act 

1985. Its name was subsequently changed to L.C.P. Real Estate Limited on 16 June 2005. The registered 

office of LCP Real Estate is at L.C.P. House, The Pensnett Estate, Kingswinford, West Midlands 

DY6 7NA, telephone +44 (0) 1384 400123. The authorised share capital of LCP Real Estate is £100, 

divided into 100 ordinary shares of £1 each, all of which are fully paid up and are held by L.C.P. 

Commercial Limited. 

Principal Activities 

The principal objects of LCP Real Estate are set out in Article 3 of its Memorandum of Association, 

which provides that the objects of the company include, inter alia: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

purchasing, leasing or otherwise dealing with property and purchasing, exchanging or otherwise 

dealing in, inter alia, debentures and securities and making advances upon the security of land or 

house or other property or any interest therein; 

carrying on all or any business relating to, inter alia, land estate and property development; 

carrying on any other trade or business of any description which may seem capable of being 

advantageously carried on in connection with or ancillary to the other objects; 

purchasing, selling, exchanging, improving, renting, letting on lease, hiring, surrendering, licensing, 

accepting surrenders of and otherwise acquiring, dealing with and holding any estate or interest in 

any lands, buildings, easements, rights, privileges, or other property, chattels and effects or any 

interest or right in relation thereto; 

erecting, pulling down, repairing, developing, constructing, laying down, enlarging and maintaining 

or otherwise dealing with, inter alia, any buildings, plant and machinery, and works necessary or 

convenient for the business and contributing to the performance of any of the above; 

purchasing or otherwise acquiring the business or assets or any person, firm or company, carrying on 

any business which LCP Real Estate is authorised to carry on or possessed of property suitable to 

the purpose of LCP Real Estate and undertaking any obligations relating to the business or property 

so purchased or acquired; 

selling, improving, letting, licencing, developing, managing or otherwise dealing with or disposing of 

the property and assets for the time being; 

borrowing, raising or securing the payment of money for the purposes of or in connection with its 

trade or business, charged upon all or any of its undertaking or property; 

mortgaging and charging the undertaking and all or any of the real and personal property and assets, 

present and future, of LCP Real Estate; and 

doing all such other things as are incidental or conducive to the attainment of the above objects or 

any of them. 

LCP Real Estate has not engaged, since its incorporation, in any activities other than those incidental to 

its incorporation and registration as a private limited company under the Companies Act 1985, the change 

of its name, the authorisation of the documents and matters referred to or contemplated in this Offering 

Circular to which it is or will be a party (including but not limited to the Commercial Mortgage Loan 

Agreement and the granting of security for repayment of the Commercial Mortgage Loan Agreement) 

and matters which are incidental or ancillary to the foregoing (including the investment of its initial capital 

in gilts and/or bank accounts). Other than as described in the foregoing sentence, LCP Real Estate has 

not, since its incorporation, engaged in any activities. 

123


The directors of LCP Real Estate and their respective business addresses and other principal activities 

are: 


N.J. Burgess 

S.W. Carlin 

J.D. Chandris 

M.D. Chandris 

J.C. Davis 

J.A. Fife 

D.M. Hopkins 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

C. MacDonald-Hall L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

S.J. Massey 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

Director of L.C.P. 

Commercial Limited 



Director of London & 

Cambridge Properties 

Limited and L.C.P. 






















124


A. Tomazos L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

E.A. Tomazos 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 

C.W. Tranter 

L.C.P. House 


Kingswinford 

West Midlands 

DY6 7NA 









None 

The company secretary of LCP Real Estate is S.J. Massey whose business address is at L.C.P. House, The 

Pensnett Estate, Kingswinford, West Midlands DY6 7NA. 

LCP Real Estate has no employees. 

There are no potential conflicts of interest between any duties of the directors to LCP Real Estate and 

the directors’ private interests or other duties. 

Capitalisation and Indebtedness Statement 

It is estimated that the capitalisation of LCP Real Estate on or about the Closing Date will be as follows: 

Share Capital: 

Authorised: 

100 ordinary shares of £1 each £100 

Issued: 

100 ordinary shares of £1 each, all of which are fully paid up £100 

Loan Capital: 

Commercial Mortgage Loan (to be advanced on or about the Closing Date) £274,045,000 

Subordinated loan provided by L.C.P. Management Limited £117,475,000 

Total capitalisation and indebtedness: £391,520,100 

Save for the foregoing, at the date of this Offering Circular, LCP Real Estate has no borrowings or 

indebtedness in the nature of borrowings (including loan capital issued, or created but unissued), term 

loans, liabilities under acceptances or acceptance credits, mortgages, charges or guarantees or other 

contingent liabilities. All loan capital is secured over the assets of LCP Real Estate. The loan capital of 

LCP Real Estate is not guaranteed. 

Auditors’ Report 

The following is the text of a report received by the directors of LCP Real Estate from Rothman Pantall 

& Co., the registered auditors of LCP Real Estate. The financial information contained therein does not 

comprise the LCP Real Estate’s statutory accounts. No statutory accounts have been prepared or 

delivered to the Registrar of Companies in England and Wales since incorporation. LCP Real Estate’s 

accounting reference date is 31 March with the first statutory accounts being drawn up to 31 March 2006. 

125

Independent Auditors’ Report to the Members of LCP Real Estate Limited 

We have audited the non-statutory financial statements of LCP Real Estate Limited (the ‘‘Company’’) for 

the period ended 19 October 2005 which comprise the balance sheet and the related notes 1 to 5. These 

non-statutory financial statements have been prepared on the basis of accounting policies set out therein 

for inclusion in the Offering Circular dated 19 October 2005 of LCP Proudreed PLC (the ‘‘Offering 

Circular’’). 

This report is made solely to the Company’s members as a body, in accordance with their instructions. Our 

audit work has been undertaken so that we might state to the Company’s members those matters we are 

required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted 

by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s 

members as a body, for our audit work, for this report, or for the opinions we have formed. 

Respective responsibilities of directors and auditors 

The Company’s directors are responsible for the preparation of the non-statutory financial statements in 

accordance with applicable accounting standards. 

Our responsibility is to audit the non-statutory financial statements in accordance with relevant UK 

Auditing Standards. We report to you our opinion as to whether the non-statutory financial statements 

give a true and fair view. 

Basis of audit opinion 

We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. 

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the 

financial statements. It also includes an assessment of the significant estimates and judgments made by the 

directors in the preparation of the financial statements and of whether the accounting policies are 

appropriate to the company’s circumstances, consistently applies and adequately disclosed. 

We planned and performed our audit so as to obtain all the information and explanations which we 


non-statutory financial statements are free from material misstatement, whether caused by fraud or other 

irregularity or error. 

Opinion 

In our opinion, the non-statutory financial statements give, for the purposes of the Offering Circular, a 

true and fair view of the state of affairs of the Company as at 19 October 2005. 

Rothman Pantall & Co. 

Registered Auditors 

Havant 

Balance Sheet 

As at 19 October 2005 

Notes 

FIXED ASSETS 2 £391,520,000 

CURRENT ASSETS 

Investments £100 

£391,520,100 

LIABILITIES DUE AFTER MORE THAN ONE YEAR 3 (£391,520,000) 

£100 

CAPITAL AND RESERVES 

Share Capital 4 £100 

TOTAL CAPITAL AND RESERVES £100 

Approved by the board of directors and signed on its behalf by: 

S J Massey, Director: 

Date: 

126

The accompanying notes are an integral part of this balance sheet 

Notes to the Financial Statements 








In preparing these non-statutory financial statements, the directors have assumed that the Commercial 

Mortgage Loan Agreement and property acquisition transaction referred to in the offering circular dated 

19 October 2005 have been executed. 

Cash flow statement 



Principal activity 

The Company was incorporated on 27 May 2005. The Company has not yet commenced business, no 

audited financial statements have been made up and no dividends have been declared or paid since the 

date of incorporation. 

2. Fixed Assets 

Investment 

Properties 

Additions, and as at 19 October 2005 £391,520,000 

The investment properties are stated at acquisition cost. 

3. Liabilities – amounts falling due after more than one year 

Commercial Mortgage Loan £274,045,000 

Subordinated Group Loan £117,475,000 

£391,520,000 

The commercial mortgage loan is secured on the investment properties. 


Authorised 

Ordinary shares of £1 each £100 

Allotted, called up and paid 

No. 

Ordinary shares of £1 fully paid 100 £100 

The Company was incorporated and registered as a limited company on 27 May 2005, with the name of 

L & C Europe Limited. 

On incorporation, the authorised share capital of the Company was divided into 100 ordinary shares. On 

incorporation L & A Formations Limited subscribed for 1 fully paid share which was subsequently 

transferred to LCP Commercial Limited on 2 June 2005. LCP Commercial Limited subscribed for 1 

further share on 2 June 2005 and the remaining 98 shares on 11 July 2005 which were all allocated and 

paidinfull. 

127

5. Reconciliation of Shareholders’ Funds and Movement in Reserves 

Total 

Shareholders’ 

Funds 

At incorporation — 

Proceeds from issue of shares £100 

At 19 October 2005 

£100 

128

Proudreed Real Estate Limited 

Introduction 

Proudreed Real Estate was incorporated in England and Wales on 8 June 2005 (registered number 

5474753) as a private company with limited liability under the Companies Act 1985. The registered office 

of Proudreed Real Estate is at 16 Carlton Crescent, Southampton, Hampshire SO15 2ES, telephone 

+44 (0) 2380 332400. The authorised share capital of Proudreed Real Estate is £100, divided into 

100 ordinary shares of £1 each, all of which are fully paid up and are held by Proudreed Limited. 

Principal Activities 

The principal objects of Proudreed Real Estate are set out in Article 3 of its Memorandum of Association, 

which provides that the objects of the company include, inter alia: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

purchasing, leasing or otherwise dealing with property and purchasing, exchanging or otherwise 

dealing in, inter alia, debentures and securities and making advances upon the security of land or 

house or other property or any interest therein; 

carrying on all or any business relating to, inter alia, land estate and property development; 

carrying on any other trade or business of any description which may seem capable of being 

advantageously carried on in connection with or ancillary to the other objects; 

purchasing, selling, exchanging, improving, renting, letting on lease, hiring, surrendering, licensing, 

accepting surrenders of and otherwise acquiring, dealing with and holding any estate or interest in 

any lands, buildings, easements, rights, privileges, or other property, chattels and effects or any 

interest or right in relation thereto; 

erecting, pulling down, repairing, developing, constructing, laying down, enlarging and maintaining 

or otherwise dealing with, inter alia, any buildings, plant and machinery, and works necessary or 

convenient for the business and contributing to the performance of any of the above; 

purchasing or otherwise acquiring the business or assets or any person, firm or company, carrying on 

any business which Proudreed Real Estate is authorised to carry on or possessed of property suitable 

to the purpose of Proudreed Real Estate and undertaking any obligations relating to the business 

or property so purchased or acquired; 

selling, improving, letting, licencing, developing, managing or otherwise dealing with or disposing of 

the property and assets for the time being; 

borrowing, raising or securing the payment of money for the purposes of or in connection with its 

trade or business, charged upon all or any of its undertaking or property; 

mortgaging and charging the undertaking and all or any of the real and personal property and assets, 

present and future, of Proudreed Real Estate; and 

doing all such other things as are incidental or conducive to the attainment of the above objects or 

any of them. 

Proudreed Real Estate has not engaged, since its incorporation, in any activities other than those 

incidental to its incorporation and registration as a private limited company under the Companies Act 

1985, the change of its name, the authorisation of the documents and matters referred to or contemplated 

in this Offering Circular to which it is or will be a party (including but not limited to the Commercial 

Mortgage Loan Agreement and the granting of security for repayment of the Commercial Mortgage Loan 

Agreement) and matters which are incidental or ancillary to the foregoing (including the investment of 

its initial capital in gilts and/or bank accounts). Other than as described in the foregoing sentence, 

Proudreed Real Estate has not, since its incorporation, engaged in any activities. 

129


The directors of Proudreed Real Estate and their respective business addresses and other principal 

activities are: 


J. A. Fife L.C.P. House 


Kingswinsford 

West Midlands 

DY6 7NA 

C. MacDonald-Hall L.C.P. House 


Kingswinsford 

West Midlands 

DY6 7NA 

J. C. Smith 16 Carlton Crescent 

Southampton 

Hampshire 

SO15 2ES 







Executive Chairman of AIM 

Group plc 

The company secretary of Proudreed Real Estate is Rachel Louise Edwards whose business address is at 

16 Carlton Crescent, Southampton, Hampshire SO15 2ES. 

Proudreed Real Estate has no employees. 

There are no potential conflicts of interest between any duties of the directors to Proudreed Real Estate 

and the directors’ private interests or other duties. 

Capitalisation and Indebtedness Statement 

It is estimated that the capitalisation of Proudreed Real Estate on or about the Closing Date will be as 

follows: 

Share Capital: 

Authorised: 

100 ordinary shares of £1 each £100 

Issued: 

100 ordinary shares of £1 each, all of which are fully paid up £100 

Loan Capital: 

Commercial Mortgage Loan (to be advanced on or about the Closing Date) £47,955,000 

Subordinated loan provided by Proudreed Limited £20,580,000 

Total capitalisation and indebtedness: £68,535,100 

Save for the foregoing, at the date of this Offering Circular, Proudreed Real Estate has no borrowings or 

indebtedness in the nature of borrowings (including loan capital issued, or created but unissued), term 

loans, liabilities under acceptances or acceptance credits, mortgages, charges or guarantees or other 

contingent liabilities. All loan capital is secured over the assets of Proudreed Real Estate. The loan capital 

of Proudreed Real Estate is not guaranteed. 

Auditors’ Report 

The following is the text of a report received by the directors of Proudeed Real Estate from Rothman 

Pantall & Co., the registered auditors of Proudeed Real Estate. The financial information contained 

therein does not comprise the Proudeed Real Estate’s statutory accounts. No statutory accounts have 

been prepared or delivered to the Registrar of Companies in England and Wales since incorporation. 

Proudreed Real Estate’s accounting reference date is 31 December with the first statutory accounts being 

drawn up to 31 December 2005. 

130

Independent Auditors’ Report to the Members of Proudreed Real Estate Limited 

We have audited the non-statutory financial statements of Proudreed Real Estate Limited (the 

‘‘Company’’) for the period ended 19 October 2005 which comprise the balance sheet and the related 

notes 1 to 5. These non-statutory financial statements have been prepared on the basis of accounting 

policies set out therein for inclusion in the Offering Circular dated 19 October 2005 of LCP Proudreed 

PLC (the ‘‘Offering Circular’’). 

This report is made solely to the Company’s members as a body, in accordance with their instructions. Our 

audit work has been undertaken so that we might state to the Company’s members those matters we are 

required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted 

by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s 

members as a body, for our audit work, for this report, or for the opinions we have formed. 

Respective responsibilities of directors and auditors 

The Company’s directors are responsible for the preparation of the non-statutory financial statements in 

accordance with applicable accounting standards. 

Our responsibility is to audit the non-statutory financial statements in accordance with relevant UK 

Auditing Standards. We report to you our opinion as to whether the non-statutory financial statements 

give a true and fair view. 

Basis of audit opinion 

We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. 

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the 

financial statements. It also includes an assessment of the significant estimates and judgements made by 

the directors in the preparation of the financial statements and of whether the accounting policies are 

appropriate to the company’s circumstances, consistently applies and adequately disclosed. 

We planned and performed our audit so as to obtain all the information and explanations which we 


non-statutory financial statements are free from material misstatement, whether caused by fraud or other 

irregularity or error. 

Opinion 

In our opinion, the non-statutory financial statements give, for the purposes of the Offering Circular, a 

true and fair view of the state of affairs of the Company as at 19 October 2005. 


Registered Auditor 

Havant 

Balance Sheet 


Notes 

FIXED ASSETS 2 £68,535,000 

CURRENT ASSETS 

Investments £100 

£68,535,100 

LIABILITIES DUE AFTER MORE THAN ONE YEAR 3 (£68,535,000) 

£100 

CAPITAL AND RESERVES 

Share Capital 4 £100 

TOTAL CAPITAL AND RESERVES £100 

Approved by the board of directors and signed on its behalf by: 

J C Smith, Director: 

Date: 

131

The accompanying notes are an integral part of this balance sheet 

Notes to the Financial Statements 








In preparing these non-statutory financial statements, the directors have assumed that the Commercial 

Mortgage Loan Agreement and property acquisition transaction referred to in the offering circular dated 

19 October 2005 have been executed. 

Cash flow statement 



Principal activity 

The Company was incorporated on 8 June 2005. The Company has not yet commenced business, no 

audited financial statements have been made up and no dividends have been declared or paid since the 

date of incorporation. 

2. Fixed Assets 

Investment 

Properties 

Additions, and as at 19 October 2005 £68,535,000 

The investment properties are stated at acquisition cost. 

3. Liabilities – amounts falling due after more than one year 

Commercial Mortgage Loan £47,955,000 

Subordinated Group Loan £20,580,000 

£68,535,000 

The commercial mortgage loan is secured on the investment properties. 


Authorised 

Ordinary shares of £1 each £100 

Allotted, called up and paid 

No. 

Ordinary shares of £1 fully paid 100 £100 

The Company was incorporated and registered as a limited company on 8 June 2005. 

On incorporation, the authorised share capital of the Company was divided into 100 ordinary shares. On 

incorporation K Dungate subscribed for 1 fully paid share which was subsequently transferred to 

Proudreed Limited on 20 June 2005. Proudreed Limited subscribed for the remaining 99 shares on 20 June 

2005 which were allocated and paid in full. 

132

5. Reconciliation of Shareholders’ Funds and Movement in Reserves 

Total 

Shareholders’ 

Funds 

At incorporation — 

Proceeds from issue of shares £100 

At 19 October 2005 

£100 

133

THE PROPERTY MANAGER 

L.C.P. Management Limited 

L.C.P. Management Limited was incorporated in England and Wales on 20 November 1987 (registered 

number 2196600) as a private company with limited liability under the Companies Act 1985. The 

registered office of L.C.P. Management Limited is at L.C.P. House, The Pensnett Estate, Kingswinford, 

West Midlands DY6 7NA (telephone +44 (0) 1384 400 123). L.C.P. Management Limited will be 

appointed as Property Manager pursuant to the terms of the Property Management Agreements (as to 

which see the section entitled ‘‘Summary of Principal Documents – The Property Management Agreements’’ 

above). 

Principal Activity 

The Property Manager provides property management services in relation to the Secured Properties 

including, inter alia, monitoring and inspecting the Secured Properties to ensure they are in good repair, 

negotiating the operation of any rent review under any lease, conducting negotiations with any 

Occupational Tenants including surrenders of leases, the granting of new tenancies and renewals of 

existing tenancies, collection of rental income and other monies due under the Occupational Leases, 

including, without limitation, any taxes, insurance proceeds and service charges. 

Management 

The directors of the Property Manager and their respective titles are: 

NAME 

TITLE 

C. MacDonald-Hall Chairman 

S.W. Carlin 

Retail Director 

D.M. Hopkins 

Marketing Director-Industrial 

J.C. Davis 

Managing Director 

S.J. Massey 

Group Financial Director 

The company secretary of the Property Manager is S.J. Massey. 

Appointment as Property Manager 

The Property Manager will be appointed by LCP Real Estate on or around the Closing Date and by 

Proudreed Real Estate on or around the Closing Date, in each case pursuant to a Property Management 

Agreement between the Property Manager and the relevant Borrower, to be the property manager of the 

relevant Borrower with full power and authority to act as property manager of the relevant Borrower and 

exercise all the powers expressed to be granted to the Property Manager pursuant to the relevant 

Property Management Agreement. 

Share Capital 

As at 19 October 2005, the Property Manager had an authorised share capital of £100 comprising 100 

ordinary shares of £1.00 each of which 100 shares have been issued. 

134

THE HEDGING PROVIDERS AND THE LIQUIDITY FACILITY PROVIDER 

HSBC Bank plc 

HSBC Bank plc and its subsidiaries form a UK-based group providing a comprehensive range of banking 

and related financial services. 

HSBC Bank plc (formerly Midland Bank plc) was formed in England in 1836 and subsequently registered 

as a limited company in 1880. In 1923, the company adopted the name of Midland Bank Limited which 

it held until 1982 when the name was changed to Midland Bank plc. 

During the year ended 31 December 1992, Midland Bank plc became a wholly-owned subsidiary 

undertaking of HSBC Holdings plc, whose Group Head Office is at 8 Canada Square, London E14 5HQ. 

HSBC Bank plc adopted its current name, changing from Midland Bank plc, in the year ended 

31 December 1999. 

The HSBC Group is one of the largest banking and financial services organisations in the world, with over 

9,800 offices in 77 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle 

East and Africa. Its total assets at 31 December 2004 were US$1,266 billion. HSBC Bank plc is the HSBC 

Group’s principal operating subsidiary undertaking in Europe. 

The short-term unsecured obligations of HSBC Bank plc are currently rated A-1+, P-1, F1+ by S&P, 

Moody’s and Fitch, respectively, and the long-term obligations of HSBC Bank plc are currently rated Aa2, 

AA−, AA by Moody’s, S&P and Fitch respectively. 

The information contained in this Offering Circular with respect to HSBC Bank plc relates to and has 

been obtained from it. The delivery of this Offering Circular shall not create any implication that there 

has been no change in the affairs of HSBC Bank plc since the date of this Offering Circular, or that the 

information contained or referred to in it is correct as of any time subsequent to its date. 


Société Générale is a French limited liability company (Société Anonyme) having the status of a bank and 

is registered in France in the Commercial Register under number 552120222. It has its registered office 

at 29 Boulevard Haussman, 75009 Paris and its head office at Tour S.G., 17 Cours Valmy, 97972 Paris La 

Defense. 

Société Générale was incorporated by deed approved by the decree of 4th May 1864. It was then 

nationalised in 1945, but returned to the private sector in July 1987 as a ‘‘Société Anonyme’’ under the laws 

of the Republic of France. Its existence has been extended to December 31st, 2047. 

The purpose of the Société Générale Group (the ‘‘SG Group’’) is to engage in banking, finance, insurance 

brokerage and credit operations in France and outside France with all persons, corporate entities, public 

and local authorities in accordance with the regulations applicable to ‘‘Etablissements de Crédit’’ (Credit 

Institutions). 

At December 31st, 2004, the SG Group had total assets of Euro 601.1 billion, total customer loans of Euro 

198.9 billion, and total customer deposits of Euro 174.5 billion. At December 31st, 2004, SG Group 

shareholders’ equity was Euro 18.6 billion. The SG Group employed, at December 31st, 2004, more than 

93,000 employees and is present in 80 countries in Europe, the Asia-Pacific region, the Americas, the 

Middle East and Africa. 

The short-term unsecured obligations of Société Générale are rated A-1+, P-1 and F1+ by S&P, Moody’s 

and Fitch, respectively, and the long-term obligations are rated AA−, Aa2 and AA− by S&P, Moody’s and 

Fitch, respectively . 

The information contained in this Offering Circular with respect to Société Générale relates to and has 

been obtained from it. The delivery of this Offering Circular shall not create any implication that there 

has been no change in the affairs of Société Générale since the date of this Offering Circular, or that the 

information contained or referred to in it is correct as of any time subsequent to its date. 

135

TERMS AND CONDITIONS OF THE NOTES 

The following are the terms and conditions of the Notes in the form (subject to completion and amendment) 

in which they will be set out in the Note Trust Deed. They will be incorporated by reference into the Notes 

in global form and will be endorsed on the Notes in definitive form (if any) issued in exchange for the 

Permanent Global Notes. These terms and conditions include summaries of, and are subject to, the detailed 

provisions of, the Note Trust Deed, the Issuer Deed of Charge, the Agency Agreement and the other 

Transaction Documents (each as defined below). 

The original £243,800,000 Class A Secured Floating Rate Notes due 2016 (the ‘‘Original Class A Notes’’), 

the original £32,200,000 Class B Secured Floating Rate Notes due 2016 (the ‘‘Original Class B Notes’’), 

the original £36,800,000 Class C Secured Floating Rate Notes due 2016 (the ‘‘Original Class C Notes’’) and 

the original £9,200,000 Class D Secured Floating Rate Notes due 2016 (the ‘‘Original Class D Notes’’ and, 

together with the Original Class A Notes, the Original Class B Notes and the Original Class C Notes, the 

‘‘Original Notes’’) of LCP Proudreed PLC (the ‘‘Issuer’’) are created by a trust deed dated 25 October 

2005 or such later date as may be agreed (the ‘‘Closing Date’’) between the Issuer and the Note Trustee 

(the ‘‘Note Trust Deed’’) between the Issuer and HSBC Trustee (C.I.) Limited (in this capacity, the ‘‘Note 

Trustee’’) as trustee for the holders for the time being of the Notes (the ‘‘Noteholders’’), the holders for 

the time being of the Coupons (the ‘‘Couponholders’’) and the holders for the time being of the Talons 

(the ‘‘Talonholders’’) and are subject to these terms and conditions (the ‘‘Conditions’’). 

The expressions ‘‘Class A Notes’’, ‘‘Class B Notes’’, ‘‘Class C Notes’’, ‘‘Class D Notes’’ and ‘‘Notes’’ shall 

in these Conditions, unless the context otherwise requires, include the Original Notes as well as any 

Further Notes (as defined below) issued pursuant to Condition 20 (Issue of Further Notes, Replacement 

Notes and New Notes). Any Further Notes which are issued shall form a single class with the Original 

Class A Notes, the Original Class B Notes, the Original Class C Notes or the Original Class D Notes (as 

the case may be). 

Under an agency agreement dated the Closing Date (the ‘‘Agency Agreement’’) between the Issuer, the 

Note Trustee, HSBC Trustee (C.I.) Limited as security trustee (in this capacity, the ‘‘Issuer Security 

Trustee’’), HSBC Bank plc as principal paying agent (the ‘‘Principal Paying Agent’’), HSBC Institutional 

Trust Services (Ireland) Limited as Irish paying agent (the ‘‘Irish Paying Agent’’ and together with the 

Principal Paying Agent, the Irish Paying Agent and any other paying agents appointed from time to time 

in respect of the Notes under the Agency Agreement, the ‘‘Paying Agents’’), and HSBC Bank plc as agent 

bank (the ‘‘Agent Bank’’ and, together with the Paying Agents, the ‘‘Agents’’) among other things, the 

Issuer will appoint the Paying Agents to make payments of principal, interest and other amounts (if any) 

in respect of the Notes on its behalf and will appoint the Agent Bank to make certain calculations in 

respect of the Notes. 

The Notes are secured obligations of the Issuer and security for the Notes is created by a deed of charge 

(the ‘‘Issuer Deed of Charge’’) dated the Closing Date between the Issuer and the Issuer Security Trustee. 

These Conditions include summaries of, and are subject to, the detailed provisions of, the Note Trust 

Deed, the Issuer Deed of Charge, the Agency Agreement and the other Transaction Documents. 

If there is any conflict between these Conditions and the Note Trust Deed, these Conditions shall prevail. 

If there is any conflict between these Conditions and the Issuer Deed of Charge, the Issuer Deed of 

Charge shall prevail. 

The Noteholders, the Couponholders, the Talonholders and all persons claiming through them or under 

the Notes, Coupons and Talons are entitled to the benefit of, and are bound by, the Note Trust Deed, the 

Issuer Deed of Charge, the Agency Agreement and the other Transaction Documents, copies of which are 

available for inspection at the specified office of the Principal Paying Agent and the Irish Paying Agent. 

The issue of the Notes was authorised by resolution of the Board of Directors of the Issuer passed on 

17 October 2005. 

136

1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 

Definitions 

(a) In these Conditions: 

‘‘Account Bank’’ means, as at the Closing Date, HSBC Bank plc, acting through its office at 8 

Canada Square, London, E14 5HQ; 

‘‘Account Bank and Cash Management Agreement’’ means (1) the account bank and cash 

management agreement dated on or about the Closing Date between LCP Real Estate, the Cash 

Manager, the Account Bank and the Borrower Security Trustee, and/or (2) the account bank and 

cash management agreement dated on or about the Closing Date between Proudreed Real Estate, 

the Cash Manager, the Account Bank and the Borrower Security Trustee; and/or (3) the account 

bank and cash management agreement dated on or about the Closing Date between the Issuer, the 

Cash Manager, the Account Bank and the Issuer Security Trustee, or all of them as the context 

requires; 

‘‘Additional Notes’’ means any Further Notes and/or any New Notes; 

‘‘Adjusted Principal Amount Outstanding’’ means, on any date in relation to a Note, the Principal 

Amount Outstanding of that Note after deducting the Principal Losses allocated to that Note in 

accordance with Condition 6(e) on or prior to that date; 

‘‘Administrator’’ means any person (being a licensed insolvency practitioner), who is appointed by 

the Issuer Security Trustee (whether out of court or otherwise) to act jointly, or jointly and severally, 

as an administrator of the Issuer or of all or any part of the Issuer Charged Property; 

‘‘Agency Agreement’’ means an agency agreement dated on or about the Closing Date and made 

between, inter alios, the Issuer, the Issuer Security Trustee and the Agents pursuant to which 

provision is made for, inter alia, the payment of interest and repayment of principal in respect of the 

Notes; 

‘‘Agent Bank’’ means, as at the Closing Date, HSBC Bank plc, acting through its office at 8 Canada 

Square, London, E14 5HQ; 

‘‘Agents’’ means the Paying Agents and the Agent Bank or, where the context requires, any of them; 

‘‘Assigned Contractual Rights’’ means the right, title, interest and benefit of the Issuer under each 

of the Transaction Documents to which it is a party or in respect of which it has the benefit; 

‘‘Basic Terms Modification’’ means: 

(i) any modification which would have the effect, in respect of any Class of Notes, of 

(A) postponing or altering any day for the payment of interest, (B) reducing, cancelling or 

rescheduling the amount of principal or the Rate of Interest payable or any fees, (C) altering 

the priority of payment of interest or principal or other amounts payable on the Notes under 

the Conditions, (D) altering the currency of payment (other than pursuant to Condition 7(k) 

(Payments – Change in Currency) or (E) altering the Final Maturity Date; or 

(ii) any modification to the Issuer Security in any manner not expressly contemplated by the 

Transaction Documents unless in the Note Trustee’s opinion it is not materially prejudicial to 

the interests of the Noteholders of any Class; or 

(iii) removing or replacing the Note Trustee or the Issuer Security Trustee; or 

(iv) an alteration of (A) the definition of ‘‘Basic Terms Modification’’, (B) the quorum required to 

pass an Extraordinary Resolution, (C) the majority required to pass an Extraordinary 

Resolution or (D) the majority required to pass a Written Resolution, 

provided that any modification which is made by the Note Trustee to correct a manifest error or is 

of a formal, minor or technical nature shall not constitute a ‘‘Basic Terms Modification’’; 

‘‘Borrower’’ means each of L.C.P. Real Estate Limited, whose registered office is at L.C.P. House, 

The Pensnett Estate, Kingswinford, West Midlands DY6 7NA and Proudreed Real Estate Limited, 

whose registered office is at 16 Carlton Crescent, Southampton SO15 2ES, respectively in its 

capacity as borrower of a Commercial Mortgage Loan; 

‘‘Borrower Group’’ means, in respect of L.C.P. Real Estate Limited, London and Cambridge 

Properties Limited and its subsidiaries and, in respect of Proudreed Real Estate Limited, Proudreed 

Limited and its subsidiaries; 

137

‘‘Borrower Security Trustee’’ means, as at the Closing Date, HSBC Trustee (C.I.) Limited, acting 

through its principal office at 1 Grenville Street, St. Helier, Jersey, Channel islands JE4 9PF; 

‘‘Business Day’’ means a day (other than a Saturday or a Sunday) on which commercial banks are 

open for general business in London and Dublin; 

‘‘Calculation Date’’ means, in relation to any Interest Payment Date, the day falling on the fifth 

Business Day prior to such Interest Payment Date; 

‘‘Cash Manager’’ means, as at the Closing Date, HSBC Bank plc acting through its office at 8 Canada 

Square, London, E14 5HQ; 

‘‘Cash Trap Account’’ means the account held with the Account Bank in the name of the relevant 

Borrower with account number 59426424 (in the case of L.C.P. Real Estate Limited) or account 

number 59427007 (in the case of Proudreed Real Estate Limited); 

‘‘Class’’ means the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes or 

any combination of them; 

‘‘Class A Noteholders’’ means the holders of the Class A Notes; 

‘‘Class A Notes’’ means the Original Class A Notes and, where the context requires, any Further 

Class A Notes; 

‘‘Class B Noteholders’’ means the holders of the Class B Notes; 

‘‘Class B Notes’’ means the Original Class B Notes and, where the context requires, any Further 

Class B Notes; 

‘‘Class C Noteholders’’ means the holders of the Class C Notes; 

‘‘Class C Notes’’ means the Original Class C Notes and, where the context requires, any Further 

Class C Notes; 

‘‘Class D Noteholders’’ means the holders of the Class D Notes; 

‘‘Class D Notes’’ means the Original Class D Notes and, where the context requires, any Further 

Class D Notes; 

‘‘Clearstream, Luxembourg’’ means Clearstream Banking, société anonyme; 

‘‘Closing Date’’ means 25 October 2005 or such later date as may be agreed between the Issuer, the 

Borrowers and the Joint Lead Managers; 

‘‘Commercial Mortgage Loan’’ means each or any of the secured commercial mortgage loans made 

by the Issuer to a Borrower in accordance with the relevant Commercial Mortgage Loan 

Agreement; 

‘‘Commercial Mortgage Loan Agreement’’ means (1) the loan agreement between inter alios, L.C.P. 

Real Estate Limited and the Issuer dated the Closing Date; and/or (2) the loan agreement between, 

inter alios, Proudreed Real Estate Limited and the Issuer dated the Closing Date, or both as the 

context requires; 

‘‘Common Depositary’’ means HSBC Bank plc, as common depositary on behalf of Euroclear and 

Clearstream, Luxembourg; 

‘‘Conditions’’ means these terms and conditions; 

‘‘Couponholders’’ means the holders from time to time of the Coupons; 

‘‘Coupons’’ means the bearer interest coupons in, or substantially in, the form set out in Schedule 4 

(Form of Coupon) to the Note Trust Deed and for the time being outstanding or, where the context 

requires, a specific number of them and includes (where applicable) the Talons in respect of such 

Coupons; 

‘‘Coupon Sheet’’ has the meaning given to it in Condition 7(i) (Payments – Exchange of Talons); 

‘‘Declaration of Trust’’ means a declaration of trust deed dated on or about the Closing Date and 

made by SPV Advisors Limited; 

‘‘Defaulting Party’’ has the meaning given to it in the 2000 ISDA Definitions; 

138

‘‘Definitive Note’’ means in respect of each Class of Notes, each bearer note issued or to be issued 

in definitive form for that Class in, or substantially in, the form set out in Schedule 3 (Form of 

Definitive Note) to the Note Trust Deed; 

‘‘Eligible Investments’’ means sterling gilt edged securities and sterling demand or time deposits, 

cash, certificates of deposit and short term debt obligations (including commercial paper), provided 

that in all cases such investments have a maturity date falling no later than the Business Day 

preceding the next following Interest Payment Date and either (i) the short term unsecured, 

unguaranteed and unsubordinated debt obligations of the issuing or guaranteeing entity or the entity 

with which the demand or time deposits are made (being an authorised bank under the FSMA) are 

rated A1+ by S&P and F-1 (if the relevant investments have a maturity of no more than 30 days) 

or F-1+ (in all other cases) by Fitch or higher (or such other credit rating as may be approved by the 

Rating Agencies from time to time) or (ii) such investments are made in money market funds that 

are rated ‘‘AAAm’’ or ‘‘AAAm-G’’ by S&P and ‘‘AAA/V1+’’ by Fitch (or have such other credit 

rating as may be approved by the Rating Agencies from time to time); 

‘‘Encumbrance’’ includes any mortgage, charge (whether legal or equitable), assignation in security, 

pledge, lien, hypothecation or other encumbrance securing any obligation of any person (including, 

without limitation, title transfer and retention arrangements (other than those entered into in the 

ordinary course of business), sale and leaseback, sale and repurchase arrangements or any other 

agreement, trust or arrangement having the effect of providing security). For the avoidance of 

doubt, ‘‘Encumbrance’’ shall not include (a) a right of counterclaim or (b) a right of set-off arising 

by contract or operation of law not constituting a mortgage or charge under applicable law; 

‘‘Euroclear’’ means Euroclear Bank S.A./N.V., as operator of the Euroclear system; 

‘‘Exchange Date’’ means with respect to a Note a date not earlier than 40 days after the Closing Date 

or the Further Issue Date, as applicable, on which the Temporary Global Note will be exchangeable 

in whole or in part for interests in a Permanent Global Note; 

‘‘Exchange Event’’ means: 

(i) both Euroclear and Clearstream, Luxembourg are closed for business for a continuous period 

of 14 days (other than by reason of holiday, statutory or otherwise) or announce an intention 

permanently to cease business and in fact do so cease business and no other clearing system 

approved by the Note Trustee is available; or 

(ii) as a result of any amendment to, or change in the laws or regulations of England and Wales 

(or any political sub-division thereof) or of any authority therein or thereof having power to 

tax or in the interpretation by a revenue authority or a court or in the administration of such 

laws or regulations which becomes effective on or after the Closing Date, the Issuer or any 

Paying Agent is or will be required to make any withholding or deduction from any payment 

in respect of the Notes which would not be required if the Notes were in definitive form; 

‘‘Extraordinary Resolution’’ means a resolution passed at a Meeting duly convened and held in 

accordance with the Provisions for Meetings of Noteholders by a majority of not less than 

75 per cent. of the votes cast, whether on a show of hands or a poll; 

‘‘Fees and Expenses’’ means any fees, costs and expenses, other remuneration and indemnity 

payment which are due and payable; 

‘‘Final Maturity Date’’ means the Interest Payment Date falling in August 2016; 

‘‘Financial Indebtedness’’ means any indebtedness for or in respect of: 

(a) monies borrowed or raised and includes capitalised interest; 

(b) any amount raised by acceptance under any acceptance credit facility or by documentary 

credits or discounted instruments; 

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, 

debentures, loan stock or any similar debt instrument; 

(d) the amount of any liability in respect of any lease or hire purchase contract which would, in 

accordance with the Applicable Accounting Principles, be treated as a finance or capital lease; 

(e) receivables sold or discounted (other than any receivables to the extent they are sold or 

discounted on a non-recourse basis); 

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(f) any amount raised under any other transaction (including any forward sale or purchase 

agreement) having the commercial effect of a borrowing; 

(g) any derivative transaction entered into in connection with protection against or benefit from 

fluctuation in any rate or price (and, when calculating the value of any derivative transaction, 

only the marked to market value shall be taken into account); 

(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or 

documentary letter of credit or any other instrument issued by a bank or financial institution; 

and 

(i) the amount of any liability in respect of any guarantee or indemnity for any of the items 

referred to in paragraphs (a) to (h) above; 

‘‘Fitch’’ means Fitch Ratings Ltd. or any successor to its rating business; 

‘‘Further Class A Notes’’ has the meaning given to it in Condition 20(a) (Issue of Further Notes – 

Issue); 

‘‘Further Class B Notes’’ has the meaning given to it in Condition 20(a) (Issue of Further Notes – 

Issue); 

‘‘Further Class C Notes’’ has the meaning given to it in Condition 20(a) (Issue of Further Notes – 

Issue); 

‘‘Further Class D Notes’’ has the meaning given to it in Condition 20(a) (Issue of Further Notes – 

Issue); 

‘‘Further Issue’’ means the issue of Further Notes; 

‘‘Further Issue Date’’ means the date on which Additional Notes are issued; 

‘‘Further Notes’’ means any further Notes issued pursuant to Condition 20 (Issue of Further Notes, 

Replacement Notes and New Notes); 

‘‘Further Permanent Global Note’’ means, in respect of each Class of Further Notes, the bearer 

permanent global note for that Class of Further Note in or substantially in the form scheduled to the 

Note Trust Deed; 

‘‘Further Temporary Global Note’’ means, in respect of each Class of Further Notes, the bearer 

temporary global note for that Class of Note in or substantially in the form scheduled to the Note 

Trust Deed; 

‘‘Global Notes’’ means the Permanent Global Note and the Temporary Global Note or, where the 

context requires, any of them, plus any Further Permanent Global Notes, any Further Temporary 

Global Notes, any New Permanent Global Notes and any New Temporary Global Notes, if issued; 

‘‘Hedging Agreement’’ means each ISDA Master Agreement (1992 Multi-currency Cross-border 

Version), the schedule thereto and each confirmation, each dated on or before the Closing Date 

between the Issuer and each Hedging Provider and the transactions effected thereunder, together 

the ‘‘Hedging Agreements’’; 

‘‘Hedging Credit Support Document’’ means, in respect of each Hedging Agreement and Hedging 

Provider, the 1995 ISDA Credit Support Annex (Bilateral Form-Transfer) or such other collateral 

agreement as may be entered into between the Issuer and the relevant Hedging Provider in relation 

to the relevant Hedging Agreement; 

‘‘Hedging Providers’’ means, as at the Closing Date, HSBC Bank plc and Société Générale , acting 

through their offices at 8 Canada Square, London, E14 5HQ and Tour S.G., 17 Cours Valmy, 97972 

Paris La Defense respectively (or such other replacement parties as may be appointed by the Issuer 

in accordance with the Transaction Documents); 

‘‘HMRC’’ means Her Majesty’s Revenue & Customs; 

‘‘Information Meeting’’ has the meaning given to it in Condition 19(h) (Information Meeting); 

‘‘Insolvency Event’’in respect of a company means: 

(i) the initiation of or consent to Insolvency Proceedings by such company or any other person or 

the presentation of a petition for the making of an administration order (other than in the case 

of the Issuer) and, in the opinion of the Note Trustee, such proceedings not being disputed in 

good faith with a reasonable prospect of success; or 

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(ii) the making of an administration order in relation to such company; or 

(iii) an encumbrancer (excluding, in relation to the Issuer, the Issuer Security Trustee or any 

receiver or manager appointed by the Issuer Security Trustee) taking possession of the whole 

or any substantial part of the undertaking or assets of such company; or 

(iv) a distress, diligence, execution or other process being levied or enforced upon or sued out 

against the whole or any substantial part of the undertaking or assets of such company 

(excluding, in relation to the Issuer, by the Issuer Security Trustee or any receiver appointed 

by the Issuer Security Trustee) and such order, appointment, possession or process (as the case 

may be) not being discharged or otherwise ceasing to apply within 14 days; or 

(v) the making of an arrangement, composition, reorganisation with or conveyance to or 

assignment for the creditors of such company generally or the making of an application to a 

court of competent jurisdiction for protection from the creditors of such company generally; or 

(vi) the passing by such company of an effective resolution or the making of an order by a court 

of competent jurisdiction for the winding up or dissolution of such company (except, in the 

case of the Issuer, a winding up for the purpose of a merger, reorganisation or amalgamation 

the terms of which have previously been approved either in writing by the Note Trustee or by 

an Extraordinary Resolution); or 

(vii) the appointment of an Insolvency Official in relation to such company or in relation to the 

whole or any substantial part of the undertaking or assets of such company (excluding, in 

relation to the Issuer, an administrative receiver or other receiver or manager appointed by the 

Issuer Security Trustee pursuant to the Issuer Deed of Charge); 

‘‘Insolvency Official’’ means a liquidator, provisional liquidator, administrator (whether appointed 

by the court or otherwise), administrative receiver, receiver or manager, nominee, supervisor, trustee 

in bankruptcy, conservator, guardian or other similar official in respect of a company or partnership 

or in respect of all (or substantially all) of the company’s or partnership’s assets or in respect of any 

arrangement or composition with creditors; 

‘‘Insolvency Proceedings’’ means the winding-up, dissolution, company voluntary arrangement or 

administration of a company or corporation and shall be construed so as to include any equivalent 

or analogous proceedings under the law of the jurisdiction in which such company or corporation is 

incorporated or of any jurisdiction in which such company or corporation carries on business 

including the seeking of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, 

adjustment, protection or relief from creditors or the appointment of an Insolvency Official; 

‘‘Insolvency Regulation’’ means Council Regulation (EC) No. 1346/2000 of 29 May 2000; 

‘‘Interest Amount’’ has the meaning given to it in Condition 5(d) (Interest – Determination of Rates 

of Interest and Calculation of Interest Amounts); 

‘‘Interest Determination Date’’ means the day on which each Interest Period commences or in the 

case of the first Interest Period, the Closing Date; 

‘‘Interest Payment Date’’ means the 25th day of February, May, August and November in each year, 

except if such day is not a Business Day, in which case it shall be the next succeeding Business Day 

unless such day falls in the next month, in which case it shall be the preceding Business Day, on 

which interest will be paid in respect of the Notes; 

‘‘Interest Period’’ means each period from (and including) an Interest Payment Date and ending on 

(but excluding) the next Interest Payment Date provided that the first Interest Period shall be the 

period from (and including) the Closing Date and ending on (but excluding) the Interest Payment 

Date falling in February 2006 and the last Interest Period shall be the period from (and including) 

the Interest Payment Date falling in May 2016 and ending on (but excluding) the Final Maturity 

Date; 

‘‘Investor Report’’ means the report to be prepared quarterly by or on behalf of the Issuer based 

upon information provided by or on behalf of each Borrower; 

‘‘Irish Paying Agent’’ means HSBC Institutional Trust Services (Ireland) Limited acting through its 

office at HSBC House, Harcourt Centre, Harcourt Street, Dublin 2, Ireland; 

‘‘Irish Stock Exchange’’ means the Irish Stock Exchange Limited; 

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‘‘Issuer’’ means LCP Proudreed PLC, whose registered office is c/o SPV Management Limited, 

Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ, as 

issuer of the Notes; 

‘‘Issuer Account Bank and Cash Management Agreement’’ means the Account Bank and Cash 

Management Agreement to which the Issuer is a party; 

‘‘Issuer Accounts’’ means the Issuer Transaction Account and the Liquidity Facility Standby 

Account; 

‘‘Issuer Charged Property’’ means the whole of the right, title, benefit and interest of the Issuer in 

the property, assets and rights of the Issuer charged by or pursuant to the Issuer Deed of Charge, 

including the Assigned Contractual Rights; 

‘‘Issuer Corporate Services Agreement’’ means the agreement between the Issuer and the Issuer 

Corporate Services Provider and dated on or about the Closing Date; 

‘‘Issuer Corporate Services Provider’’ means SPV Management Limited acting through their office 

at Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ; 

‘‘Issuer Deed of Charge’’ means a deed of charge entered into by the Issuer and, inter alios, the 

Issuer Security Trustee on the Closing Date; 

‘‘Issuer Post-Enforcement Priority of Payments’’ means the order of the Issuer’s priority of payment 

post enforcement of the Notes as set out in Condition 3(j) (Status, Priority and Security – Issuer 

Priority of Payments Following Enforcement); 

‘‘Issuer Pre-Enforcement Priority of Payments’’ means the order of the Issuer’s priority of payment 

prior to enforcement of the Notes as set out in Condition 3(i) (Status, Priority and Security – Issuer 

Priority of Payments Prior to Enforcement); 

‘‘Issuer Priority of Payments’’ means the Issuer Pre-Enforcement Priority of Payments and the 

Issuer Post-Enforcement Priority of Payments; 

‘‘Issuer Secured Creditors’’ means the Noteholders, the Couponholders, the Issuer Security Trustee 

(and any receiver appointed by the Issuer Security Trustee), the Note Trustee (and any receiver 

appointed by the Note Trustee), the Cash Manager, the Account Bank, the Agent Bank and the 

Paying Agents, the Issuer Corporate Services Provider, the Hedging Providers, the Liquidity Facility 

Provider and any other person acceding to the Issuer Deed of Charge as a secured creditor of the 

Issuer from time to time; 

‘‘Issuer Secured Obligations’’ means all monies, liabilities and obligations whatsoever, present and 

future and whether actual or contingent, which from time to time become due, owing or payable by 

the Issuer: 

(i) to the Issuer Security Trustee and/or any Receiver under the Issuer Deed of Charge or any 

other documents evidencing or securing any such liabilities; 

(ii) to, or to the order of, the Note Trustee under the Note Trust Deed; 

(iii) to the Noteholders and the Couponholders under or in respect of the Notes and the Coupons; 

and 

(iv) to each of the other Issuer Secured Creditors in accordance with each of the other Transaction 

Documents to which it is a party; 

‘‘Issuer Security’’ means the security created by or pursuant to the Issuer Deed of Charge over the 

Issuer Charged Property in favour of the Issuer Security Trustee; 

‘‘Issuer Security Documents’’ means the Issuer Deed of Charge and the Security Powers of Attorney 

or, where the context requires, either of them; 

‘‘Issuer Security Trustee’’ means, as at the Closing Date, HSBC Trustee (C.I.) Limited acting 

through its principal office at 1 Grenville Street, St Helier, Jersey, Channel Islands JE4 9PF; 

‘‘Issuer Transaction Account’’ means the general transaction account held in the name of the Issuer 

with the Account Bank with account number GBP 59427133; 

‘‘Issuer Transaction Documents’’ means the Subscription Agreement, Note Trust Deed, the Agency 

Agreement, the Liquidity Facility Agreement, the Hedging Agreements, the Issuer Deed of Charge, 

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the Issuer Account Bank and Cash Management Agreement, the Post Enforcement Call Option 

Deed, the Notes, the relevant Security Power of Attorney, the Master Definitions and Framework 

Deed, the Issuer Corporate Services Agreement, the relevant Declaration of Trust and any other 

document entered into by one or more Transaction Parties which is designated as an ‘‘Issuer 

Transaction Document’’ with the consent of the Issuer Security Trustee and the Issuer; 

‘‘Joint Lead Managers’’ means HSBC Bank plc and Société Générale, London Branch as joint lead 

managers of the issuance of the Notes; 

‘‘LIBOR’’ means: 

(i) the British Bankers Association Interest Settlement Rate for three-month sterling deposits 

offered to prime banks in the London inter-bank market which appears on the appropriate 

page of the Reuters Screen (or such replacement page on that service that displays such 

information or if that service ceases to display such information, such page as displays such 

information on an equivalent service (or, if more than one, that one which is approved in 

writing by the Note Trustee for such purpose) at or about 11.00 a.m. (London time) on the 

Interest Determination Date (the ‘‘Screen Rate’’); or in the case of the first Interest Period 

only, the equivalent rate for four month sterling deposits in the market; or 

(ii) if the Screen Rate is unavailable at such time, then the rate for the relevant Interest Period 

shall be the arithmetic mean (rounded to four decimal places with the mid-point rounded up) 

of the rates notified to the Agent Bank at its request by each of the Reference Banks as the 

rate at which three-month sterling deposits or in the case of the first Interest Period only, four 

month sterling deposits in a representative amount are offered by that Reference Bank to 

prime banks in the London inter-bank market at or about 11.00 a.m. (London time) on the 

Interest Determination Date. If on any such Interest Determination Date, at least two of the 

Reference Banks provide such offered quotations to the Agent Bank, the relevant rate shall 

be determined, as aforesaid, on the basis of the offered quotations of those Reference Banks 

providing such quotations. If, on any such Interest Determination Date, only one of the 

Reference Banks provides the Agent Bank with such an offered quotation, the Agent Bank 

shall immediately consult with the Note Trustee and the Issuer for the purposes of agreeing 

one additional bank to provide such a quotation or quotations to the Agent Bank (which bank 

is in the opinion of the Note Trustee suitable for such purpose) and the Rate of Interest for the 

Interest Period in question shall be determined, as aforesaid, on the basis of the offered 

quotations of such banks as so agreed. If no such bank or banks is or are so agreed or such 

bank or banks as so agreed does not or do not provide such a quotation or quotations, then the 

rate for the relevant Interest Period other than the first Interest Period shall be the rate in 

effect as at the last preceding Interest Determination Date to which paragraph (i) of this 

definition shall have applied and in respect of the first Interest Period shall be the arithmetic 

mean of the rates quoted by such other prime banks selected by the Agent Bank and approved 

by the Note Trustee on the relevant Interest Determination Date; 

‘‘Liquidity Event’’ means the occurrence of: 

(i) the Liquidity Facility Provider ceasing to have the Liquidity Requisite Ratings; and/or 

(ii) the Liquidity Facility Provider declining to renew the commitment period of the Liquidity 

Facility; 

‘‘Liquidity Facility’’ means a 364 day revolving liquidity facility provided by the Liquidity Facility 

Provider pursuant to the Liquidity Facility Agreement to permit drawings to be made of up to the 

Liquidity Facility Maximum Amount as reduced or cancelled from time to time under the Liquidity 

Facility Agreement; 

‘‘Liquidity Facility Agreement’’ means a facility agreement entered into on the Closing Date 

between the Issuer, the Liquidity Facility Provider and the Issuer Security Trustee in relation to the 

Liquidity Facility; 

‘‘Liquidity Facility Maximum Amount’’ means £18,900,000, being the maximum amount available 

for drawdown under the Liquidity Facility, as the same may be reduced from time to time in 

accordance with the Liquidity Facility Agreement; 

‘‘Liquidity Facility Provider’’ means HSBC Bank plc acting through its office at 8th Floor Exchange 

Buildings, 8 Stephenson Place, Birmingham B2 4NH or such other entity or entities appointed as 

liquidity facility provider from time to time, subject to and in accordance with the terms of the 

Liquidity Facility Agreement; 

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‘‘Liquidity Facility Standby Account’’ means the account held in the name of the Issuer for the 

deposit of Liquidity Facility Standby Drawings (if any) with the Liquidity Facility Provider (for so 

long as it satisfies the Rating Criteria) or the Account Bank (with account number 59427125) or 

(subject to the written approval of the Liquidity Facility Provider, such approval not to be 

unreasonably delayed or withheld) any other bank, the short term, unsecured, unsubordinated and 

unguaranteed debt obligations of which satisfy the Rating Criteria; 

‘‘Liquidity Facility Standby Drawing’’ means a drawing following a Liquidity Event or the principal 

amount of that drawing outstanding at a particular time, where the context requires; 

‘‘Liquidity Requisite Ratings’’ means the Liquidity Facility Provider’s short term unsecured, 

unsubordinated and unguaranteed debt obligations of at least A-1+ by S&P and F-1 by Fitch; 

‘‘Liquidity Subordinated Amounts’’ means the amount by which any payment made to the Liquidity 

Facility Provider under the Liquidity Facility Agreement is increased as a consequence of an amount 

for or on account of Tax being required to be withheld or deducted from that payment; 

‘‘Master Definitions and Framework Deed’’ means the framework deed dated the Closing Date 

between, among others, the Issuer, the Note Trustee and the Issuer Security Trustee; 

‘‘Meeting’’ means a meeting of the Noteholders or of any one or more Classes of Noteholders and, 

except where the context otherwise requires, includes a meeting resumed following an adjournment; 

‘‘Most Senior Class’’ means, at any time: 

(i) the Class A Notes; 

(ii) if no Class A Notes are then outstanding, the Class B Notes (if at that time any Class B Notes 

are then outstanding); 

(iii) if no Class A Notes or Class B Notes are then outstanding, the Class C Notes (if at that time 

any Class C Notes are then outstanding); or 

(iv) if no Class A Notes or Class B Notes or Class C Notes are then outstanding, the Class D Notes 

(if at that time any Class D Notes are then outstanding); 

‘‘New Notes’’ has the meaning given to it in Condition 20 (Issue of Further Notes, Replacement Notes 

and New Notes); 

‘‘No Material Prejudice Test’’ has the meaning given to it in Condition 3 (Status, Priority and 

Security – Status and Relationship between the Notes); 

‘‘Note Enforcement Notice’’ means a notice delivered by the Note Trustee to the Issuer in 

accordance with Condition 10 (Note Events of Default); 

‘‘Note Event of Default’’ means any event that would lead to a default under the Conditions; 

‘‘Note Principal Payment’’ has the meaning given to it in Condition 6(e) (Redemption, Purchase and 

Cancellation – Note Principal Payments, Principal Amount Outstanding and Pool Factor); 

‘‘Note Trust Deed’’ means the trust deed entered into on the Closing Date between the Issuer and 

the Note Trustee in relation to which the Notes will be constituted (as modified from time to time 

in accordance with the provisions therein contained and any deed or other document expressed to 

be supplemental thereto); 

‘‘Note Trustee’’ means, as at the Closing Date, HSBC Trustee (C.I.) Limited, acting through its 

principal office at 1 Grenville Street, St Helier, Jersey, Channel Islands JE4 9PF; 

‘‘Noteholders’’ means: 

(i) in relation to any Notes represented by a Global Note, each person (other than Euroclear or 

Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or 

Clearstream, Luxembourg or any other person the Note Trustee considers appropriate as the 

holder of a particular Principal Amount Outstanding of those Notes, for which purpose any 

certificate or letter of confirmation (or any other form of record made by any of them) as to 

the Principal Amount Outstanding of Notes standing to the account of any person shall be 

conclusive and binding on the basis that that person shall be treated by the Issuer, the Note 

Trustee and all other persons as the holder of that Principal Amount Outstanding of those 

Notes for all purposes other than the right to payments in respect of those Notes which shall 

be vested, as against the Issuer, solely in the bearer of the relevant Global Note, who shall be 

regarded as the ‘‘Noteholder’’ for that purpose; and 

144

(ii) in relation to any Definitive Notes issued under Condition 2(e) (Form, Denomination and Title 

– Issue of Definitive Notes), the bearers of those Definitive Notes, 

and related expressions shall be construed accordingly; 

‘‘Notes’’ means the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes, the 

New Notes, the Replacement Notes, if any or, where the context requires, any of them and includes 

the Definitive Notes and the Global Notes or, where the context requires, any of them; 

‘‘Obligor Security Assets’’ means, in respect of each Borrower Group, the property, rights and assets 

of the relevant Obligors which are the subject of security interests created by the relevant Borrower 

and the other relevant Obligors in favour of the Borrower Security Trustee under or pursuant to the 

Obligor Security Documents relating to that Borrower Group; 

‘‘Obligor Security Documents’’ means, in respect of each Borrower Group, any document or 

instrument granted in favour of the Borrower Security Trustee creating or evidencing security for all 

or any part of the obligations and liabilities of the relevant Obligors or any of them under any of the 

Obligor Transaction Documents, relating to that Borrower Group, whether by way of personal 

covenant, charge, security interest, mortgage, pledge or otherwise, and Obligor Security Document 

shall be construed accordingly; 

‘‘Obligor Transaction Documents’’ means, in respect of each Borrower Group, the relevant Obligor 

Security Documents, the relevant Commercial Mortgage Loan Agreement, the relevant Account 

Bank and Cash Management Agreement, the relevant Property Management Agreement, the 

relevant Property Manager Duty of Care Deed, the relevant Tax Deed of Covenant, the relevant 

Subordinated Loan Agreement(s), the relevant Declaration of Trust, the Master Definitions and 

Framework Deed and any other document entered into by one or more Transaction Parties which 

is designated an ‘‘Obligor Transaction Document’’ with the consent of the Borrower Security 

Trustee and the relevant Borrower; 

‘‘Obligors’’ means, in respect of each Borrower Group, the relevant Borrower and Parent Obligor 

and, solely for the purposes of certain provisions of the Subscription Agreement, London and 

Cambridge Properties Limited; 

‘‘Offering Circular’’ means the offering circular dated 19 October 2005 relating to the issue and 

offering of the Notes; 

‘‘Original Class A Notes’’ means the £243,800,000 Class A Secured Floating Rate Notes due 2016 

issued on the Closing Date; 

‘‘Original Class B Notes’’ means the £32,200,000 Class B Secured Floating Rate Notes due 2016 


‘‘Original Class C Notes’’ means the £36,800,000 Class C Secured Floating Rate Notes due 2016 


‘‘Original Class D Notes’’ means the £9,200,000 Class D Secured Floating Rate Notes due 2016 


‘‘Original Notes’’ means the Original Class A Notes, the Original Class B Notes, the Original Class 

C Notes and the Original Class D Notes or, where the context so requires, any of them; 

‘‘Original Permanent Global Note’’ means, in respect of each Class of Original Notes, the bearer 

permanent global note for that Class in, or substantially in, the form set out in Schedule 2 (Form of 

Permanent Global Note) to the Note Trust Deed; 

‘‘Original Temporary Global Note’’ means, in respect of each Class of Original Notes, the bearer 

temporary global note for that Class in, or substantially in, the form set out in Schedule 1 (Form of 

Temporary Global Note) to the Note Trust Deed; 

‘‘outstanding’’ means, in relation to the Notes, all the Notes other than: 

(i) those which have been redeemed in full in accordance with the Conditions; 

(ii) those in respect of which the date for redemption in accordance with the Conditions has 

occurred and for which the redemption monies (including all interest and other amounts (if 

any) accrued thereon to such date for redemption) have been duly paid to the Principal Paying 

Agent or the Note Trustee in accordance with the Agency Agreement (and, where appropriate, 

notice to that effect has been given to the Noteholders in accordance with Condition 19 

(Notices and Information)) and remain available for payment in accordance with the 

Conditions; 

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(iii) those which have become void under Condition 8 (Prescription); 

(iv) those mutilated or defaced Notes which have been surrendered or cancelled and in respect of 

which replacement Notes have been issued pursuant to Condition 18 (Replacement of Notes, 

Coupons and Talons); 

(v) the Temporary Global Note of any Class, to the extent interests in it shall have been exchanged 

for interests in the Permanent Global Note of that Class, or the Permanent Global Note of any 

Class, to the extent that it shall have been exchanged for Definitive Notes of that Class or, in 

the case of an Original Permanent Global Note, for a Further Permanent Global Note of that 

Class; and 

(vi) (for the purpose only of ascertaining how many Notes are outstanding and without prejudice 

to their status for any other purpose) those Notes which are alleged to have been lost, stolen 

or destroyed and in respect of which replacements have been issued pursuant to Condition 18 

(Replacement of Notes, Coupons and Talons), 

provided that for each of the following purposes: 

(A) the right to attend andvote at any Meeting or for the purpose of any Written Resolution; 

(B) the determination of how many and which Notes are for the time being outstanding for 

the purposes of Clauses 9.1 (Note Trustee’s right to give a Note Enforcement Notice), 9.3 

(Limit on Noteholder action), 19 (Waiver of Breach) and Schedule 7 (Provisions for 

Meetings of Noteholders) of the Note Trust Deed, Conditions 10 (Note Events of Default), 

12 (Noteholder Action) and 13 (Meetings of Noteholders); and 

(C) the exercise by the Note Trustee of any trusts, powers, authorities, duties, discretions and 

obligations, whether contained in the Note Trust Deed or provided by law in, or by 

reference to, the interests of the Noteholders or any of them, 

those Notes (if any) which are for the time being held by, or by any person for the benefit of, the 

Issuer, any Borrower or any member of the Borrower Group shall (unless and until they cease to be 

so held) be deemed not to remain outstanding; 

‘‘Parent Obligor’’ means L.C.P. Commercial Limited (with respect to L.C.P. Real Estate Limited) 

and Proudreed Limited (with respect to Proudreed Real Estate Limited), in each case in their 

capacity as the immediate holding company of the relevant Borrower; 

‘‘Paying Agents’’ means the Principal Paying Agent together with the Irish Paying Agent and any 

successor or additional paying agents appointed from time to time in connection with the Notes 

under the Agency Agreement and ‘‘Paying Agent’’ means any one of them; 

‘‘Permanent Global Note’’ means, in respect of each Class of Note, the bearer permanent global 

note for that Class in, or substantially in, the form set out in Schedule 2 (Form of Permanent Global 

Note) to the Note Trust Deed; 

‘‘Pool Factor’’ has the meaning given to it in Condition 6(e) (Redemption, Purchase and Cancellation 

– Note Principal Payments, Principal Amount Outstanding, Adjusted Principal Amount Outstanding 

and Pool Factor); 

‘‘Post-Enforcement Call Option Deed’’ means the deed dated the Closing Date between the Note 

Trustee and the Post-Enforcement Call Option Holder; 

‘‘Post-Enforcement Call Option Holder’’ means L&C Proudreed Holdings Limited, a private 

limited company incorporated in England and Wales with limited liability; 

‘‘Potential Note Event of Default’’ means any event which, with the giving of notice or 

determination of materiality or the fulfilment of any applicable conditions or the lapse of time, or 

a combination of the foregoing, would constitute a Note Event of Default; 

‘‘Principal Amount Outstanding’’ means, on any date in relation to a Note, the principal amount 

outstanding of that Note as at the Closing Date (in the case of an Original Note) or Further Issue 

Date (in the case of a Further Note and/or a New Note and/or a Replacement Note) less the 

aggregate of all Note Principal Payments that have been made by the Issuer in respect of that Note 

on or prior to that date; 

‘‘Principal Loss’’ means, on any Calculation Date, the amount determined by the Cash Manager to 

be the amount that has not been recovered on all the Commercial Mortgage Loans following the 

default by a Borrower and the completion of the enforcement of the security for the relevant 

Commercial Mortgage Loans; 

146

‘‘Principal Paying Agent’’ means HSBC Bank plc, acting through its office at 8 Canada Square, 

London, E14 5HQ; 

‘‘Property Management Agreement’’ means (1) the agreement dated the Closing Date (as amended 

and restated from time to time) between the Property Manager and LCP Real Estate; and/or (2) the 

agreement dated the Closing Date (as amended and restated from time to time) between the 

Property Manager and Proudreed Real Estate, or both as the context requires; 

‘‘Property Manager Duty of Care Deed’’ means (1) the duty of care deed dated on or about the 

Closing Date between the Property Manager, the Borrower Security Trustee and LCP Real Estate; 

and/or (2) the duty of care deed dated on or about the Closing Date between the Property Manager, 

the Borrower Security Trustee and Proudreed Real Estate, or both as the context requires; 

‘‘Provisions for Meetings of Noteholders’’ means the provisions contained in Schedule 7 (Provisions 

for Meetings of Noteholders) to the Note Trust Deed; 

‘‘Rate of Interest’’ has the meaning given to it in Condition 5(c) (Interest – Rate of Interest); 

‘‘Rating Agencies’’ means Fitch and S&P or, where the context requires, either of them. If at any 

time Fitch and S&P is replaced as a Rating Agency, then references to its rating categories shall be 

deemed instead to be references to the equivalent rating categories of the entity which replaces it 

as a Rating Agency; 

‘‘Rating Downgrade Event’’ means written notification from the Rating Agencies to the Note 

Trustee and the Borrower Security Trustee, confirming that the then current ratings of the Notes will 

be adversely affected by the relevant event or matter; 

‘‘Ratings Test’’ means receipt by the Note Trustee, the Issuer Security Trustee and the Borrower 

Security Trustee of a confirmation from each of the Rating Agencies (or, if at any time there is only 

one Rating Agency, that Rating Agency) that, in respect of any event or matter in respect of which 

such confirmation is required or sought, either: 

(a) no Rating Downgrade Event in respect of such Rating Agency has or will occur as a result of 

the relevant event or matter; or 

(b) that Rating Agency will not downgrade any of the Notes as a result of the relevant event or 

matter; 

‘‘Receiver’’ means any person (being a licensed insolvency practitioner), who is appointed by the 

Borrower Security Trustee or the Issuer Security Trustee (as applicable) to be a receiver or an 

administrative receiver (as the case may be) of the Obligor Security Assets or Issuer Charged 

Property, respectively, to act jointly, or jointly and severally, as the Borrower Security Trustee or the 

Issuer Security Trustee (as applicable) shall determine; 

‘‘Reference Banks’’ means the principal London office of four major banks in the London interbank 

market selected by the Agent Bank at the relevant time; 

‘‘Relevant Classes’’ has the meaning given to it in Condition 13(b) (Meetings of Noteholders – 

Extraordinary Resolutions and Basic Terms Modification); 

‘‘Relevant Date’’ means, for the purposes of Condition 8 (Prescription), in respect of any payment 

in relation to the Notes, whichever is the later of: 

(i) the date on which the payment in question first becomes due; and 

(ii) if the full amount payable has not been received by the Principal Paying Agent or the Note 

Trustee on or prior to that date, the date on which (the full amount having been so received) 

notice to that effect has been given to the Noteholders in accordance with Condition 19 

(Notices and Information); 

‘‘Relevant Margin’’ has the meaning given to it in Condition 5(c) (Interest – Rate of Interest); 

‘‘Replacement Notes’’ means any replacement Notes issued pursuant to Condition 20 (Issue of 

Further Notes, Replacement Notes and New Notes); 

‘‘Security Power of Attorney’’ means the security power of attorney granted on the Closing Date by 

(1) the Issuer in favour of the Issuer Security Trustee in, or substantially in, the form set out in 

Schedule 1 (Issuer Power of Attorney) of the Issuer Deed of Charge; and/or (2) a Borrower in favour 

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of the Borrower Security Trustee in, or substantially in, the form set out in Schedule 6 (Borrower 

Power of Attorney) of a Borrower Deed of Charge; and/or (3) a Parent Obligor in favour of the 

Borrower Security Trustee pursuant to Clause 8 (Power of Attorney) of an Equitable Mortgage Over 

Shares, or all of them as the context requires; 

‘‘Set-up Dividend’’ means each and any dividend declared by the Issuer, and payable to L&C 

Proudreed Holdings Limited on the Interest Payment Date next following such declaration, the 

aggregate amounts payable by the Issuer by way of Set-up Dividend being limited to £13,500; 

‘‘specified office’’ means with respect to the Paying Agents the offices listed at the end of these 

Conditions or such other offices as may from time to time be duly notified pursuant to Condition 19 

(Notices and Information); 

‘‘S&P’’ means Standard & Poor’s Ratings Services, a division of the McGraw Hill Companies Inc. 

or any successor to its rating business; 

‘‘Sterling’’ means the lawful currency of the United Kingdom; 

‘‘Subordinated Loan Agreement’’ means (1) the committed facility agreement between L.C.P. 

Management Limited and LCP Real Estate and/or (2) the committed facility agreement between 

Proudreed Limited and Proudreed Real Estate, or both as the context requires; 

‘‘Subscription Agreement’’ means the subscription agreement dated 19 October 2005 entered into 

between, inter alios, the Issuer and the Joint Lead Managers pursuant to which the Joint Lead 

Managers have agreed to jointly and severally subscribe and pay for the Notes on the Closing Date; 

‘‘Talonholders’’ means the holders from time to time of the Talons; 

‘‘Talons’’ means the bearer talons in, or substantially in, the form set out in Schedule 5 (Form of 

Talon) to the Note Trust Deed and exchangeable in accordance with the Conditions for further 

Coupons and/or talons or, where the context requires, a specific number of them; 

‘‘Tax Authority’’ means any government, state, municipality or any local, federal or other fiscal, 

revenue, customs or excise authority, body or official anywhere in the world including, in the United 

Kingdom, HMRC and any successor thereof, in each case having power to tax; 

‘‘Tax Deeds of Covenant’’ means the two separate deeds of covenant (one in respect of each 

Borrower), entered into on or about the Closing Date, supporting the obligations of the Issuer and 

the Borrowers under the Transaction Documents under which, inter alia, each Borrower and each 

of the LCP Covenantors or the Proudreed Covenantors, as the case may be, will give certain 

representations, warranties and covenants in relation to its tax affairs; 

‘‘Tax Event’’ has the meaning given to it in Condition 6(c) (Redemption, Purchase and Cancellation 

– Optional Redemption for Tax Reasons); 

‘‘Temporary Global Note’’ means, in respect of each Class of Notes, the bearer temporary global 

note for that Class in, or substantially in, the form set out in Schedule 1 (Form of Temporary Global 

Note) of the Note Trust Deed 

‘‘Transaction Documents’’ means the Issuer Transaction Documents and the Obligor Transaction 

Documents and any other agreement, instrument, deed or other document entered into in respect 

of the issue of the Notes by the Issuer; 

‘‘Transaction Party’’ means the Borrowers, the Issuer, the Parent Obligors, the Borrower Security 

Trustee, the Issuer Security Trustee, the Note Trustee, Liquidity Facility Provider, the Hedging 

Providers, the Property Manager, the Cash Manager, the Account Bank, the Principal Paying Agent, 

the Irish Paying Agent, the Agent Bank, the Issuer Corporate Services Provider and the 

Post-Enforcement Call Option Holder; 

‘‘Written Resolution’’ means a resolution in writing signed by or on behalf of 90 per cent. of the 

holders of Notes or 90 per cent. of the holders of Notes of a particular Class who, in accordance with 

the Provisions for Meetings of Noteholders, would be entitled to attend and vote at a meeting of 

Noteholders or, if applicable, Noteholders of that Class, whether contained in one document or 

several documents in the same form, each signed by or on behalf of one or more such holders of the 

Notes. 

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General Interpretation 

(b) In these Conditions any reference to: 

(i) ‘‘continuing’’, in respect of a Note Event of Default, shall be construed as a reference to a Note 

Event of Default which has not been waived in accordance with the Conditions and the Note 

Trust Deed; 

(ii) ‘‘Euroclear’’ and/or ‘‘Clearstream, Luxembourg’’ shall, wherever the context so admits, be 

deemed to include reference to any additional or alternative clearing system approved by the 

Issuer and the Note Trustee in relation to the Notes; 

(iii) ‘‘including’’ shall be construed as a reference to ‘‘including without limitation’’, so that any list 

of items or matters appearing after the word ‘‘including’’ shall be deemed not to be an 

exhaustive list, but shall be deemed rather to be a representative list, of those items or matters 

forming a part of the category described prior to the word ‘‘including’’; 

(iv) a person shall be construed as being ‘‘insolvent’’ if such person goes into administration, 

bankruptcy, liquidation, dissolution, receivership or winding-up or such person is unable to pay 

its debts as they fall due or such person’s liabilities exceed its assets; 

(v) a ‘‘law’’ shall be construed as any law (including common or customary law), statute, 

constitution, decree, judgment, treaty, regulation, directive, by-law, order or any other 

legislative measure of any government, supranation, local government, statutory or regulatory 

body or court; 

(vi) a ‘‘person’’ means, any individual, firm, company, corporation, government, state or agency of 

a state or any association or partnership, limited liability company, trustee or statutory business 

trust (whether or not having separate legal personality) of two or more of the foregoing; 

(vii) ‘‘repay’’, ‘‘redeem’’ and ‘‘pay’’ shall each include both of the others and ‘‘repayable’’, 

‘‘repayment’’ and ‘‘repaid’’ and ‘‘redeemable’’, ‘‘redemption’’ and ‘‘redeemed’’ and ‘‘payable’’, 

‘‘payment’’ and ‘‘paid’’ shall be construed accordingly; 

(viii) a ‘‘subsidiary’’ of a company or corporation shall be construed as a reference to any company 

or corporation (A) which is controlled, directly or indirectly, by the first-mentioned company 

or corporation; or (B) more than half the issued share capital of which is beneficially owned, 

directly or indirectly, by the first mentioned company or corporation; or (C) which is a 

subsidiary of another subsidiary of the first-mentioned company or corporation and for these 

purposes a company or corporation shall be treated as being controlled by another if that other 

company or corporation is able to direct its affairs and/or to control the composition of its 

board of directors or equivalent body; 

(ix) ‘‘tax’’ means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding 

of any nature whatsoever (including any penalty or interest payable in connection with any 

failure to pay or any delay in paying any of the same) imposed or levied at any time by any Tax 

Authority and ‘‘Tax’’, ‘‘Taxes’’, ‘‘taxation’’, ‘‘taxable’’ and comparable expressions shall be 

construed accordingly; 

(x) any ‘‘Transaction Party’’ includes its successors, transferees and assignees and, in the case of 

the Note Trustee and the Issuer Security Trustee, includes any additional or replacement 

trustee, separate trustee or co-trustee appointed under the Note Trust Deed and the Issuer 

Deed of Charge, respectively; and 

(xi) ‘‘VAT’’ shall be construed as a reference to value added tax or any other tax of a similar fiscal 

nature imposed by the laws of any jurisdiction. 

Headings and Clauses 

(c) The headings in these Conditions shall not affect their interpretation. References to Clauses, 

Schedules, Exhibits, paragraphs and Articles in any Transaction Document shall, unless its context 

otherwise requires, be construed as references to the Clauses of, Schedules to, Exhibits to, 

paragraphs of, and Articles of, such document. 

Singular and Plural 

(d) Unless the context otherwise requires: 

(i) words denoting the singular number only include the plural number also and vice versa; 

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(ii) 

(iii) 

(iv) 

a defined term in the plural which refers to a number of different items or matters may be used 

in the singular or plural to refer to any (or any set) of those items or matters, as the context 

requires; 

words denoting one gender only include the other genders; and 

words denoting persons only include firms, corporations and other organised entities, whether 

separate legal entities or otherwise, and vice versa. 

Agreements and Statutes 

(e) Unless the context otherwise requires, any reference in these Conditions to: 

(i) the Note Trust Deed, the Issuer Deed of Charge, the Agency Agreement, any other 

Transaction Document or any other agreement, deed or document shall be construed as a 

reference to the relevant agreement, deed or document as the same may have been, or may 

from time to time be, replaced, extended, amended, varied, novated, supplemented or 

superseded in accordance with its terms and includes any agreement, deed or other document 

expressed to be supplemental to it, as from time to time so extended, amended, varied or 

novated; and 

(ii) any statutory provision or legislative enactment shall be deemed also to refer to any 

re-enactment, modification or replacement thereof and any statutory instrument, order or 

regulation made thereunder or under any such re-enactment. 

Different Capacities 

(f) Where any Transaction Party from time to time acts in more than one capacity hereunder, the 

provisions of these Conditions shall apply to such Transaction Party as though it were a separate 

party in each such capacity except insofar as they may require such party in one capacity to give any 

notice or information to itself in another capacity. 

2. FORM, DENOMINATION AND TITLE 

Denominations 

(a) The Notes will be issued in minimum denominations of £100,000 each. 

Form of Temporary Global Notes 

(b) Each Class of Notes will be issued in bearer form and will initially be represented by a Temporary 

Global Note, without Coupons or Talons attached, in the aggregate principal amount on issue of 

£243,800,000 for the Class A Notes, £32,200,000 for the Class B Notes, £36,800,000 for the Class C 

Notes and £9,200,000 for the Class D Notes. 

Exchange for interests in Permanent Global Notes 

(c) Interests in each Temporary Global Note are exchangeable on or after the Exchange Date, upon 

certification of non-US beneficial ownership, for interests in a Permanent Global Note, without 

Coupons or Talons attached, representing the same Class of Notes. 

Title to Global Notes 

(d) Title to the Global Notes will pass by delivery. Interests in Notes represented by a Global Note will 

be transferable only in accordance with the rules and procedures for the time being of Euroclear or 

Clearstream, Luxembourg, as appropriate. The holder of any Global Note may (except as ordered 

by a court of competent jurisdiction or otherwise required by law) be treated at all times by the 

Issuer, the Note Trustee, the Issuer Security Trustee and the Paying Agents as the absolute owner 

of that Global Note for the purposes of making payments thereon (regardless of any notice of 

ownership, trust or other interest therein, any writing thereon or any notice of any previous loss or 

theft thereof) and none of the Issuer, the Note Trustee, the Issuer Security Trustee and the Paying 

Agents shall be liable for so treating such holder. 

Issue of Definitive Notes 

(e) If, while any Notes are represented by a Permanent Global Note an Exchange Event occurs, the 

Issuer will deliver Definitive Notes with, where applicable, Coupons and Talons attached on issue. 

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Form of Definitive Notes 

(f) Definitive Notes, if issued, will be serially numbered and in bearer form with, at the date of issue, 

Coupons falling due after the date of issue and Talons for further Coupons attached. The Definitive 

Notes, Coupons and Talons will be security printed in accordance with applicable legal and stock 

exchange requirements and shall be endorsed with these Conditions. 

Title to Definitive Notes 

(g) Title to the Definitive Notes, Coupons and Talons will pass by delivery. The holder of any Definitive 

Note, Coupon or Talon may (except as ordered by a court of competent jurisdiction or otherwise 

required by law) be treated at all times, by all persons and for all purposes, including the making of 

any payments in respect of the Notes, as the absolute owner of that Definitive Note, Coupon or 

Talon (regardless of any notice of ownership, trust or other interest therein, any writing thereon or 

any notice of any previous loss or theft thereof and no person shall be liable for so treating such 

holder). Each Couponholder and Talonholder (whether or not the Coupon or Talon is attached to 

the relevant Definitive Note) in his capacity as such shall be subject to and bound by all the 

provisions contained in the relevant Definitive Note. 

3. STATUS, PRIORITY AND SECURITY 

Status and Relationship between the Notes 

(a) The Notes and the Coupons constitute direct and, upon issue, unconditional obligations of the Issuer 

subject to the terms of the Note Trust Deed and these Conditions and are secured by the Issuer 

Security. 

(b) The Notes and the Coupons are obligations solely of the Issuer and are not obligations of, or 

guaranteed by, any of the other parties to the Transaction Documents. 

(c) The Notes of each Class rank pari passu without preference or priority amongst themselves. The 

Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes rank as among 

themselves in accordance with the Issuer Priority of Payments set out in this Condition 3 (Status, 

Priority and Security). Certain other obligations of the Issuer rank in priority to the Notes in 

accordance with the applicable Issuer Priority of Payments. 

(d) The Note Trust Deed contains provisions requiring the Note Trustee (except where expressly 

provided otherwise) to have regard to the interests of the Noteholders as a whole as regards the 

exercise or performance of each of its trusts, powers, authorities, duties, discretions and obligations 

under the Note Trust Deed and the other Transaction Documents. If, in relation to the exercise or 

performance of any of those trusts, powers, authorities, duties, discretions and obligations, in the 

Note Trustee’s opinion there is or may be a conflict: 

(i) between the interests of (A) the Class A Noteholders and (B) the other Noteholders, the Note 

Trustee shall, to the extent permitted by applicable law, have regard only to the interests of the 

Class A Noteholders; 

(ii) if there are no Class A Notes outstanding, between the interests of (A) the Class B 

Noteholders and (B) the Class C Noteholders and the Class D Noteholders, the Note Trustee 

shall, to the extent permitted by applicable law, have regard only to the interests of the Class 

B Noteholders; and 

(iii) if there are no Class A Notes or Class B Notes outstanding, between the interests of (A) the 

Class C Noteholders and (B) the Class D Noteholders, the Note Trustee shall, to the extent 

permitted by applicable law, have regard only to the interests of the Class C Noteholders, 

provided that in relation to (x) any determination made by the Note Trustee pursuant to clause (ii) 

of the definition of ‘‘Basic Terms Modification’’ and (y) any waiver of breach pursuant to Condition 

14(b) (Modification and Waiver of Breach – Waiver of Breach), the Note Trustee shall have regard 

to the interests of the Noteholders as a whole irrespective of any conflict between the interests of 

the different Classes of Noteholders. 

(e) The Issuer Deed of Charge contains provisions requiring the Issuer Security Trustee (except where 

expressly provided otherwise) to have regard to the interests of the Issuer Secured Creditors as a 

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whole as regards the exercise or performance of each of its trusts, powers, authorities, duties, 

discretions and obligations in respect of the Issuer Security under the Issuer Deed of Charge and 

each of the other Transaction Documents or the rights or benefits which are comprised in the Issuer 

Security. If, in relation to the exercise or performance of any of those trusts, powers, authorities, 

duties, discretions and obligations, in the Issuer Security Trustee’s opinion there is or may be a 

conflict: 

(i) between the interests of (A) the Class A Noteholders and (B) the other Issuer Secured 

Creditors, the Issuer Security Trustee shall, to the extent permitted by applicable law, have 

regard only to the interests of the Class A Noteholders; 

(ii) if there are no Class A Notes outstanding, between the interests of (A) the Class B 

Noteholders and (B) the other Issuer Secured Creditors, the Issuer Security Trustee shall, to 

the extent permitted by applicable law, have regard only to the interests of the Class B 

Noteholders; 

(iii) if there are no Class A Notes or Class B Notes outstanding, between the interests of (A) the 

Class C Noteholders and (B) the other Issuer Secured Creditors, the Issuer Security Trustee 

shall, to the extent permitted by applicable law, have regard only to the interests of the Class 

C Noteholders; and 

(iv) if there are no Class A Notes or Class B Notes or Class C Notes outstanding, between the 

interests of (A) the Class D Noteholders and (B) the other Issuer Secured Creditors, the Issuer 

Security Trustee shall, to the extent permitted by applicable law, have regard only to the 

interests of the Class D Noteholders. 

(f) The Note Trustee in considering whether any event or any action taken or to be taken is materially 

prejudicial to the interests of any Class of Noteholders (the ‘‘No Material Prejudice Test’’)shallbe 

entitled to take into account whether or not the Ratings Test has been satisfied; provided that the 

Note Trustee shall continue to be responsible for taking into account all other matters which would 

be relevant to the No Material Prejudice Test; 

(g) The Note Trustee may, in its absolute discretion, at any time and without prejudice to Conditions 

3(d) (Status, Priority and Security – Status and Relationship between the Notes), or 13(b) (Meetings 

of Noteholders – Extraordinary Resolutions and Basic Terms Modifications), and having regard to 

the particular circumstances then applicable, convene a Meeting or Meetings of the Noteholders or 

of a specific Class or Classes of Noteholders. 

Security 

(h) As security for the Issuer Secured Obligations, the Issuer has created the following security pursuant 

to the Issuer Deed of Charge: 

(i) a first fixed charge over the Issuer’s right, title, interest and benefit in the Obligor Security 

Assets; 

(ii) an assignment by way of first fixed security over the Issuer’s rights in the Assigned Contractual 

Rights; 

(iii) an assignment by way of first fixed security of the interest of the Issuer under each Issuer 

Transaction Document (other than the Note Trust Deed and the Issuer Deed of Charge); 

(iv) a first fixed charge over the Issuer’s rights to the Eligible Investments (which may take effect 

as a floating charge and so rank behind the claims of any preferential creditors of the Issuer); 

(v) a first fixed charge over the Issuer’s rights in the Issuer Accounts and the debts represented 

thereby (which may take effect as a floating charge and so rank behind the claims of any 

preferential creditors of the Issuer); and 

(vi) a floating charge over all the present and future property, assets and undertaking of the Issuer 

not subject to the fixed charges or assignments by way of security described above, which shall 

be deferred in point of priority to all fixed security validly and effectively created by it and as 

described in paragraphs (i) to (v) above. 

Issuer Priority of Payments Prior to Enforcement 

(i) Prior to the delivery of a Note Enforcement Noticein accordance with Condition 10 (Note Events of 

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Default), the Cash Manager shall on each Interest Payment Date make payments from amounts 

standing to the credit of the Issuer Transaction Account other than any amounts credited to the 

‘‘swap collateral ledger’’ of the Issuer Transaction Account following the occurrence of a Hedging 

Downgrade Event in respect of that Hedging Provider (which are to be applied in returning 

collateral to, or in satisfaction of amounts owing by, the relevant Hedging Provider in accordance 

with the relevant Hedging Agreement and the relevant Hedging Credit Support Document), to be 

applied in paying or providing for the payment of the following amounts (in each case, together with 

any interest and any VAT thereon, as provided for in the relevant Transaction Documents) in the 

following order of priority (the ‘‘Issuer Pre-Enforcement Priority of Payments’’) (in each case only 

if and to the extent that payments or provisions of a higher order of priority have been made in full), 

in accordance with and as more fully set out in the Issuer Deed of Charge: 

(i) 

(ii) 

(iii) 

first, in or towards satisfaction, pro rata and pari passu according to the respective amounts due 

in respect of the fees and other remuneration and indemnity payments (if any) then payable 

to the Issuer Security Trustee or the Note Trustee or any appointee of the Issuer Security 

Trustee or the Note Trustee and any loss, costs, charges, liabilities, indemnity claims and 

expenses (including, in respect of Taxes, duties and other charges and including any VAT or 

similar Tax and legal fees and expenses in full to the extent that such amounts are due from 

the Issuer under any Transaction Document) then properly incurred by the Issuer Security 

Trustee or the Note Trustee or any appointee of the Issuer Security Trustee or the Note 

Trustee and any other amounts payable to the Issuer Security Trustee or the Note Trustee or 

any appointee of the Issuer Security Trustee or the Note Trustee under the Issuer Deed of 

Charge or any other Transaction Document, together with interest thereon as provided for in 

the Issuer Deed of Charge or other Transaction Document; 

second, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of: 

(A) any amounts payable by the Issuer in respect of the Issuer’s operating expenses incurred 

in the course of the Issuer’s business (other than as provided elsewhere in this priority of 

payments) that have become due and payable, including: 

(I) any amounts payable by the Issuer to the Issuer Corporate Services Provider in 

respect of any Fees and Expenses pursuant to the Issuer Corporate Services 

Agreement; 

(II) any amounts payable by the Issuer to third parties in respect of the establishment, 

maintenance and good standing of the Issuer or otherwise payable for the on going 

existence or maintenance of its business and which are not otherwise specified or 

provided for in items (i) to (xii) (inclusive); 

(III) any amounts payable by the Issuer in respect of any Fees and Expenses of the 

Paying Agents and the Agent Bank incurred under the provisions of the Agency 

Agreement; 

(IV) any amounts payable by the Issuer in respect of any Fees and Expenses of the 

Account Bank and the Cash Manager respectively under the Issuer Account Bank 

and Cash Management Agreement; 

(V) any amounts payable by the Issuer in respect of any Fees and Expenses of the 

Liquidity Facility Provider; and 

(VI) any amounts payable by way of Set-up Dividend; 

(B) any amounts to be paid or provided for by the Issuer in respect of all United Kingdom 

corporation tax for which the Issuer is primarily liable; 

(C) any other amounts for which the Issuer is required to account to a UK Tax Authority 

(including VAT); and 

(D) any amounts payable by the Issuer to the Rating Agencies in respect of any Fees and 

Expenses and the Irish Stock Exchange in respect of any fees that, in each case, they may 

reasonably incur on an ongoing basis in connection with the rating or listing of the Notes, 

as the case may be; 

third, in or towards satisfaction, of any amounts payable to the Liquidity Facility Provider 

under the Liquidity Facility Agreement (including, for the avoidance of doubt, following any 

Liquidity Facility Standby Drawing) other than the Liquidity Subordinated Amounts; 

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(iv) 

(v) 

fourth, in or towards satisfaction of any amounts payable to the Hedging Providers under the 

Hedging Agreements including Hedging Termination Payments in respect of the Hedging 

Agreements but excluding any Hedging Subordinated Amounts; 

fifth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due 

in respect of any interest payable (including any deferred interest payable, such interest having 

been deferred upon allocation of a Principal Loss) in respect of the Class A Notes; 

(vi) sixth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any interest payable (including any deferred interest payable) in respect of 

the Class B Notes; 

(vii) seventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts 


the Class C Notes; 

(viii) eighth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 


the Class D Notes; 

(ix) 

(x) 

ninth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class A Notes; 

tenth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class B Notes; 

(xi) eleventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class C Notes; 

(xii) twelfth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class D Notes; 

(xiii) thirteenth, in or towards satisfaction of any amounts payable to the Liquidity Facility Provider 

under the Liquidity Facility Agreement in respect of Liquidity Subordinated Amounts; 

(xiv) fourteenth, any amounts payable in respect of amounts due to the Hedging Providers under the 

Hedging Agreements in respect of Hedging Subordinated Amounts; and 

(xv) fifteenth, in or towards satisfaction of any amounts due to the Borrowers under the 

Commercial Mortgage Loan Agreements; and 

(xvi) sixteenth, the surplus (if any) to the Issuer or any other persons entitled thereto. 

Issuer Priority of Payments Following Enforcement 

(j) All monies received or recovered (excepting, for these purposes, (i) any amounts received into the 

Liquidity Facility Standby Account and (ii) any amounts standing to the credit of the ‘‘swap 

collateral ledger’’ of the Issuer Transaction Account representing amounts attributable to assets 

transferred as collateral by a Hedging Provider following the occurrence of a Hedging Downgrade 

Event in respect of that Hedging Provider (which are to be applied only in returning collateral to, 

or in satisfaction of amounts owing by, the relevant Hedging Provider in accordance with the 

relevant Hedging Agreement and the relevant Hedging Credit Support Document) by the Issuer 

Security Trustee or the Receiver in respect of the Issuer Secured Obligations following the delivery 

of a Note Enforcement Notice in accordance with Condition 10 (Note Events of Default) shallbe 

applied in paying or providing for the payment of the following amounts (in each case, together with 

any interest and any VAT thereon, as provided for in the relevant Transaction Documents) in the 

following order of priority (the ‘‘Issuer Post-Enforcement Priority of Payments’’) (and in each case 

only if and to the extent that payments of a higher order of priority have been made in full), in 

accordance with and as more fully set out in the Issuer Deed of Charge: 

(i) first, in or towards satisfaction, pari passu and pro rata according to the respective amounts 

thereof, of the amounts due in respect of the fees and other remuneration and indemnity 

payments (if any) then payable to the Issuer Security Trustee or the Note Trustee or any 

appointee of the Issuer Security Trustee or the Note Trustee and any loss, costs, charges, 

liabilities, indemnity claims and expenses (including, in respect of Taxes, duties and other 

charges and including any VAT or similar Tax and legal fees and expenses in full to the extent 

154

(ii) 

(iii) 

(iv) 

(v) 

that such amounts are due from the Issuer under any Transaction Document) then properly 

incurred by the Issuer Security Trustee or the Note Trustee or any appointee of the Issuer 

Security Trustee or the Note Trustee and any other amounts payable to the Issuer Security 

Trustee or the Note Trustee or any appointee of the Issuer Security Trustee or the Note 

Trustee under this Deed or any other Transaction Document, together with interest thereon as 

provided for in the Issuer Deed of Charge or other Transaction Document; 

second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts 

due in respect of: 

(A) any amounts payable by the Issuer in respect of any Fees and Expenses of the Paying 

Agents and the Agent Bank incurred under the provisions of the Agency Agreement; 

(B) any amounts payable by the Issuer in respect of any Fees and Expenses of the Account 

Bank and the Cash Manager under the Issuer Account Bank and Cash Management 

Agreement; and 

(C) any amounts payable by the Issuer to the Issuer Corporate Services Provider in respect 

of any Fees and Expenses pursuant to the Issuer Corporate Services Agreement; 

third, in or towards satisfaction, of any amounts payable to the Liquidity Facility Provider 

under the Liquidity Facility Agreement other than the Liquidity Subordinated Amounts; 

fourth, in or towards satisfaction of any amounts payable to the Hedging Providers under the 

Hedging Agreements including Hedging Termination Payments but excluding any Hedging 

Subordinated Amounts; 

fifth, in or towards satisfaction, pro rata and pari passu according to the respective amounts due 

in respect of any interest payable (including any deferred interest payable, such interest having 

been deferred upon allocation of a Principal Loss) in respect of the Class A Notes; 

(vi) sixth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class A Notes; 

(vii) seventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts 


the Class B Notes; 

(viii) eighth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class B Notes; 

(ix) 

(x) 

ninth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 


the Class C Notes; 

tenth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class C Notes; 

(xi) eleventh, in or towards satisfaction, pro rata and pari passu according to the respective amounts 


the Class D Notes; 

(xii) twelfth, in or towards satisfaction, pro rata and pari passu according to the respective amounts 

due in respect of any principal payable in respect of the Class D Notes; 

(xiii) thirteenth, in or towards satisfaction of any amounts payable to the Liquidity Facility Provider 

under the Liquidity Facility Agreement in respect of Liquidity Subordinated Amounts; 

(xiv) fourteenth, in or towards satisfaction of any amounts payable in respect of amounts due to the 

Hedging Providers under the Hedging Agreements in respect of Hedging Subordinated 

Amounts; 

(xv) fifteenth, in or towards satisfaction of any amounts due to the Borrowers under the 

Commercial Mortgage Loan Agreements; and 

(xvi) sixteenth, the surplus (if any) to the Issuer or any other persons entitled thereto. 

4. COVENANTS 

The Issuer has given certain covenants to the Note Trustee and the Issuer Security Trustee pursuant to 

the Note Trust Deed and the Issuer Deed of Charge, respectively. In particular, except with the prior 

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written consent of the Note Trustee and the Issuer Security Trustee or as expressly provided in these 

Conditions or any of the other Transaction Documents, the Issuer shall not, so long as any Note remains 

outstanding: 

Negative Pledge 

(a) create or permit to subsist any Encumbrance over the whole or any part of its present or future 

assets, revenues or undertaking; 

Restrictions on Activities 

(b) carry on any business other than as described in the Offering Circular and, in respect of that 

business, shall not engage in any activity or do anything whatsoever except that the Issuer shall be 

entitled to: 

(i) enter into the Transaction Documents to which it is a party and preserve, exercise and/or 

enforce any of its rights and perform and observe its obligations under and pursuant to the 

Transaction Documents to which it is a party and any modifications or supplements thereto; 

(ii) issue the Notes; 

(iii) perform any act, incidental to or necessary in connection with any of the above; and 

(iv) engage in those activities necessary for its continued existence and proper management; 

Disposal of Assets 

(c) transfer, sell, lend, part with or otherwise dispose of, or deal with, or grant any option or present or 

future right to acquire, any of its assets, revenues or undertaking or any interest, right or benefit in 

respect of any of them or agree or purport to do so; 

Indebtedness 

(d) create, incur or permit to subsist any Financial Indebtedness or give any guarantee or indemnity in 

respect of Financial Indebtedness or of any other obligation of any person; 

Dividends, Distributions and Shares 

(e) pay any dividend or make any other distribution to its shareholders or issue any further shares, 

warrants or options or securities exchangeable into shares; 

Subsidiaries, Employees and Premises 

(f) have or form or cause to be formed, any subsidiaries or subsidiary undertakings of any other nature 

or have any employees or premises; 

Merger 

(g) amalgamate, consolidate or merge with any other person or transfer its assets, revenues or 

undertaking to any other person; 

No Variation or Waiver 

(h) permit: 

(i) any of the Transaction Documents to which it is a party to become invalid or ineffective; 

(ii) the priority of the Issuer Security to be altered, released, postponed or discharged or consent 

to any amendment to, or exercise any powers of consent or waiver pursuant to the terms of, 

any of those Transaction Documents; or 

(iii) any party to any of those Transaction Documents or any other person whose obligations form 

part of the Issuer Security to be released from its obligations; 

Bank Accounts 

(i) have an interest in any bank account other than the Issuer Accounts, unless that account or interest 

is charged to the Issuer Security Trustee on terms acceptable to the Issuer Security Trustee; 

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Separateness 

(k) permit or consent to any of the following occurring: 

(i) its books and records being maintained with or co-mingled with those of any other person or 

entity; 

(ii) its bank accounts and the debts represented thereby being co-mingled with those of any other 

person or entity; 

(iii) its assets or revenues being co-mingled with those of any other person or entity; or 

(iv) its business being conducted other than in its own name, 

and, in addition to the above, the Issuer shall or shall procure that, with respect to itself: 

(A) separate financial statements in relation to its financial affairs are maintained; 

(B) all corporate formalities with respect to its affairs are observed; 

(C) separate stationery, invoices and cheques are used; 

(D) it always holds itself out as a separate entity; and 

(E) any known misunderstandings regarding its separate identity are corrected as soon as 

possible; 

Tax Residence 

(l) do any act or thing, the effect of which would be to make the Issuer resident for tax purposes in any 

jurisdiction other than the United Kingdom or which would lead to it having a permanent 

establishment in a jurisdiction outside the United Kingdom save in the event of a permitted 

substitution pursuant to Condition 15 (Substitution of Principal Debtor); 

VAT 

(m) unless required to do so by law, apply to become part of any group for the purposes of Section 43 

of the Value Added Tax Act 1994 with any other company or group of companies or for the purpose 

of any act, regulation, order, statutory instrument or directive which may, from time to time, 

re-enact, replace, amend, vary, codify, consolidate or repeal the Value Added Tax Act 1994; 

Group payment arrangements 

(n) enter into arrangements with respect of the payment of UK corporation tax pursuant to section 36 

of the Finance Act 1998; 

COMI 

(o) (A) maintain its registered office in the jurisdiction of its incorporation and (B) maintain its ‘‘centre 

of main interests’’ for the purposes of the Insolvency Regulation in the jurisdiction of its 

incorporation; or 

Establishment 

(p) not maintain an ‘‘establishment’’ (as that expression is used in the Insolvency Regulation) in any 

jurisdiction other than the jurisdiction of its incorporation. 

5. INTEREST 

Period of Accrual 

(a) Each Note bears interest on its Principal Amount Outstanding from (and including) the Closing 

Date. Each Note (or in the case of the redemption of part only of a Note, that part only of that Note) 

shall cease to bear interest from and including its due date for redemption, unless, upon due 

presentation of the Note, payment of the relevant amount of principal or any part of it is improperly 

withheld or refused. In that event, interest will continue to accrue on that unpaid amount (before 

and after the date of any judgment) at the rate from time to time applicable to that Note up to (but 

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excluding) the date on which, on further presentation of that Note, payment of the relevant amount 

of principal is made in full or (if earlier, and provided that payment is made in full when the Note 

is subsequently presented) the seventh day after notice is given by the Principal Paying Agent to the 

relevant Noteholder in accordance with Condition 19 (Notices and Information) that, upon 

presentation of that Note being duly made, such payment will be made. 

Interest Payment Dates and Interest Periods 

(b) Interest on each Note is, subject to Condition 5(h) (Interest Deferral and Accrual), payable quarterly 

in arrear on each Interest Payment Date in respect of the Interest Period ending on (but excluding) 

that Interest Payment Date. 

Rate of Interest 

(c) (i) The rate of interest payable from time to time in respect of each Class of Notes (the ‘‘Rate of 

Interest’’) will be determined by the Agent Bank in accordance with this Condition 5 (Interest). 

(ii) The Rate of Interest in respect of each Class of Notes for each Interest Period shall be the 

aggregate of: 

(A) the Relevant Margin; and 

(B) LIBOR. 

(iii) For the purposes of these Conditions, the ‘‘Relevant Margin’’ shall be: 

(A) for the Class A Notes, 0.26 per cent. per annum; 

(B) for the Class B Notes, 0.35 per cent. per annum; 

(C) for the Class C Notes, 0.60 per cent. per annum; and 

(D) for the Class D Notes, 0.85 per cent. per annum. 

Determination of Rates of Interest and Calculation of Interest Amounts 

(d) The Agent Bank shall, on each Interest Determination Date, determine and as soon as practicable 

after 11.00 a.m. (London time) notify to the Issuer, the Cash Manager, the Note Trustee, the Paying 

Agents, Liquidity Provider and the Hedging Providers in respect of each Class of Notes: 

(i) the Rate of Interest applicable to the relevant Interest Period; and 

(ii) the aggregate amount of interest due on each Note of each Class for the relevant Interest 

Period which shall be an amount equal to the product of: 

(A) an amount equal to the product of (aa) the Rate of Interest for that Class of Note and 

(bb) the Principal Amount Outstanding of such Note on the first day of the relevant 

Interest Period (after giving effect to any Note Principal Payments made by the Issuer on 

that date); and 

(B) an amount equal to the quotient of (aa) the actual number of days in the relevant Interest 

Period and (bb) 365 days (the ‘‘Interest Amount’’). The resulting figure shall be rounded 

down to the nearest penny. 

Publication of Rate of Interest, Interest Amounts 

(e) As soon as practicable after making the determination pursuant to Condition 5(d) (Interest – 

Determination of Rates of Interest and Calculation of Interest Amounts), the Agent Bank shall cause 

the Rate of Interest and the Interest Amount applicable to each Class of Notes for the relevant 

Interest Period and the Interest Payment Date on which that Interest Period will end to be notified 

to the Irish Stock Exchange (for so long as the Notes are listed on the Irish Stock Exchange) and 

will cause the same to be published in accordance with Condition 19 (Notices and Information). The 

Interest Amounts and Interest Payment Date so notified may subsequently be amended (or 

appropriate alternative arrangements made by way of adjustment) without notice if the Interest 

Period is extended or shortened. 

Determination or Calculation by Note Trustee 

(f) If the Agent Bank does not at any time for any reason determine the Rate of Interest and/or 

calculate the Interest Amount for any Class of Notes for any Interest Period in accordance with this 

Condition 5 (Interest), the Note Trustee shall: 

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(i) determine the Rate of Interest for the Notes of each Class in the manner specified in this 

Condition 5 (Interest); and/or 

(ii) calculate the Interest Amount for the Notes of each Class in the manner specified in this 

Condition 5 (Interest). 

Any such determination and/or calculation by the Note Trustee shall be deemed to have been made by 

the Agent Bank and the Agent Bank shall be liable as if it had made that determination and/or 

calculation. In making any such determination, the Note Trustee shall apply the provisions of this 

Condition 5 (Interest), with any necessary consequential amendments, to the extent that, in its opinion, it 

can do so, and in all other respects it shall do so in such manner as it considers fair and reasonable in all 

the circumstances. 

Agent Bank 

(g) The Issuer shall ensure that, for so long as any of the Notes remains outstanding, there will at all 

times be an Agent Bank. If the Agent Bank resigns under the Agency Agreement the Issuer may 

(with the prior written approval of the Note Trustee) or, if the Issuer fails to do so, the Agent Bank 

may (with the prior approval of the Note Trustee and the Issuer), appoint a successor Agent Bank. 

If the Agent Bank resigns, its resignation will not take effect until a successor has been appointed 

and notice of such appointment has been given to the Noteholders by the outgoing Agent Bank in 

accordance with Condition 19 (Notices and Information). 

Interest Deferral and Accrual 

(h) Payments of interest on each Class of Notes, other than the Most Senior Class of Notes then 

outstanding, will be subject to deferral to the extent that there are insufficient funds standing to the 

credit of the Issuer Transaction Account (after taking into account any amount available for drawing 

under the Liquidity Facility Agreement) on any Interest Payment Date to pay in full the amount of 

interest that would otherwise be payable on that Class of Notes in accordance with the Issuer 

Pre-Enforcement Priority of Payments, provided that this provision shall cease to apply upon the 

Class D Notes becoming the Most Senior Class of Notes outstanding. 

In addition, payments of interest on each Class of Notes to which a Principal Loss has been allocated 

in accordance with Condition 6(e) (Note Principal Payments, Principal Amount Outstanding, 

Adjusted Principal Amount Outstanding and Pool Factor) will, insofar as such interest relates to any 

amount by which the Principal Amount Outstanding of that Class of Notes exceeds the Adjusted 

Principal Amount Outstanding of that Class of Notes, be subject to deferral to the extent that there 

are insufficient amounts standing to the credit of the Issuer Transaction Account on any Interest 

Payment Date to pay in full in accordance with the Issuer Pre-Enforcement Priority of Payments the 

amount of interest which would otherwise be payable on that Class of Notes. Amounts may not be 

drawn under the Liquidity Facility Agreement to cover any such shortall. 

The amount by which the aggregate amount of interest paid on any Class of Notes on any Interest 

Payment Date in accordance with this Condition 5 (Interest) falls short of the aggregate amount of 

interest which otherwise would be payable on the relevant Notes on that date, shall accrue interest 

while it remains outstanding at the Rate of Interest for that Class of Note and shall be aggregated 

with the amount of, and treated for the purposes of, this Condition 5 (Interest) as if it were interest 

due on each such Class of Notes and, subject as provided in this condition, shall be payable on the 

next succeeding Interest Payment Date. 

If, on the Final Maturity Date (or on any earlier redemption of the relevant Class of Notes in full), 

there remains any such shortfall, the amount of such shortfall will become due and payable on the 

Final Maturity Date (or, in the case of any earlier redemption of the relevant Class of Notes in full, 

on the date of such earlier redemption). 

6. REDEMPTION, PURCHASE AND CANCELLATION 

Final Redemption 

(a) Subject to Condition 6(h) (Redemption, Purchase and Cancellation – Post-Enforcement Call 

Option), unless previously redeemed in full and cancelled, the Notes will be redeemed at their 

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Principal Amount Outstanding on the Final Maturity Date together with interest and other amounts 

(if any) accrued to the Final Maturity Date. The Class A Notes will be redeemed in full in priority 

to the Class B Notes, the Class B Notes will be redeemed in full in priority to the Class C Notes, and 

the Class C Notes will be redeemed in full in priority to the Class D Notes. 

Mandatory Redemption following prepayment or repayment of a Commercial Mortgage Loan 

(b) If a Borrower prepays or repays its Commercial Mortgage Loan, for whatever reason, the Issuer 

shall, upon giving not more than 60 nor less than 30 days’ notice of redemption (unless the relevant 

Borrower is prepaying its Commercial Mortgage Loan by way of mandatory prepayment from its 

Cash Trap Account, in which case the Issuer may give no less than five Business Days’ notice of 

redemption) to the Note Trustee and the Noteholders in accordance with Condition 19 (Notices and 

Information), redeem all Classes of Notes, where all the Commercial Mortgage Loans have been 

prepaid or repaid in full, or, if only one Commercial Mortgage Loan has been repaid in full or one 

or more Commercial Mortgage Loans have been prepaid or repaid only in part, each Class of Note 

in accordance with the applicable Issuer Priority of Payments to the extent of the amount repaid or 

prepaid on the Interest Payment Date at the relevant Class of Notes’ then Principal Amount 

Outstanding, together with interest and other amounts accrued to that Interest Payment Date. 

Optional Redemption for Tax Reasons 

(c) If the Issuer at any time satisfies the Note Trustee immediately prior to the giving of the notice 

referred to below that: 

(i) a Tax Event has occurred; and 

(ii) despite, in a case where arranging a substitution as principal debtor in respect of the Notes 

might reasonably be expected to solve the problem, using all reasonable endeavours to arrange 

a substitution as principal debtor in respect of the Notes in accordance with Condition 15 

(Substitution of Principal Debtor) and the Note Trust Deed of a company having its tax 

residency in another jurisdiction approved in writing by the Note Trustee, the Liquidity 

Facility Provider and the Hedging Provider, it has been unable to do so, 

then the Issuer may redeem all, but not some only, of the Notes on the Interest Payment Date 

specified in the notice referred to in sub-paragraph (A) below at their Principal Amount 

Outstanding together with interest and other amounts (if any) accrued to that Interest Payment 

Date, provided that: 

(A) the Issuer has given not more than 60 nor less than 30 days’ notice of redemption to the 

Note Trustee and the Noteholders in accordance with Condition 19 (Notices and 

Information); and 

(B) the Issuer has delivered to the Note Trustee prior to the giving of the notice referred to 

it sub-paragraph (A) a certificate signed by two directors of the Issuer to the effect that 

it will have available, not subject to the interest of any other person, the funds required 

to discharge the amount payable to Noteholders on redemption of the Notes together 

with any amounts required under the Issuer Pre-Enforcement Priority of Payments to be 

paid in priority to, or pari passu with, the Notes. 

The occurrence of any of the following events shall be a ‘‘Tax Event’’: 

(i) by reason of a change in the Tax law (or the application or official interpretation thereof), 

which change becomes effective on or after the Closing Date, the Issuer would be required to 

deduct or withhold from any payment of principal or interest on the Notes (although the Issuer 

will not have any obligation to pay additional amounts in respect of such withholding or 

deduction) any amount for or on account of any Taxes imposed, levied, collected, withheld or 

assessed by any United Kingdom Tax Authority (other than by reason of the relevant 

Noteholder or Couponholder having some connection with the United Kingdom in addition to 

the holding of the Notes or related Coupons); 

(ii) by reason of a change in Tax law (or the application or official interpretation thereof), which 

change becomes effective on or after the Closing Date, the Issuer or any Hedging Provider (or 

any other Hedging Provider with which the Issuer may enter into a Hedging Agreement) 

would be required to deduct or withhold from any payments in respect of a Hedging 

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(iii) 

(iv) 

Agreement or such other Hedging Agreement (whether or not the Issuer or the relevant 

Hedging Provider has an obligation to pay additional amounts in respect of such withholding 

or deduction) any amount for or on account of any Taxes imposed, levied, collected, withheld 

or assessed by any Tax Authority; 

by reason of a change of law (or the application or official interpretation thereof), which 

change becomes effective on or after the Closing Date, the amounts payable to the Issuer in 

respect of principal, interest or other sums payable under the Commercial Mortgage Loan 

Agreements cease to be receivable in full on the dates on which they are due to be paid unless 

adequately compensated for by gross-up provisions in such Commercial Mortgage Loan 

Agreements; or 

the Issuer, by reason of a change in or expiry of Tax law (or in the application or official 

interpretation of any Tax law), would not be entitled to relief for Tax purposes for any amount 

which it is obliged to pay under the Notes or under any Hedging Agreement, or would be taxed 

by reference to an amount which it was not entitled to receive under any Hedging Agreement. 

Optional Redemption 

(d) (i) On giving not more than 60 nor less than 30 days prior notice to the Note Trustee and to 

relevant Class of Noteholders in accordance with Condition 19 (Notices and information) and 

provided that (A) on the Interest Payment Date on which such notice expires, no Note 

Enforcement Notice has been served and (B) the Issuer has, prior to giving such notice, 

certified to the Note Trustee and provided evidence acceptable to the Note Trustee to the 

effect that it will have the necessary funds to discharge any amounts required under the Issuer 

Deed of Charge to be paid on such Interest Payment Date, the Issuer may redeem all of any 

Class of Notes on any Interest Payment Date. The aggregate payment to be made in respect 

of the Notes to be redeemed is hereafter referred to as the ‘‘Redemption Amount’’. 

(ii) The Issuer shall, on exercise of its option to redeem pursuant to Condition 6(d)(i), redeem the 

Notes of that Class pro rata. 

(iii) The Redemption Amount in respect of any Notes redeemed pursuant to Condition 6(d)(i) will 

be an amount equal to the Principal Amount Outstanding of the relevant Notes together with 

accrued but unpaid interest on the Principal Amount Outstanding of the relevant Notes up to 

and including the date of redemption. 

Note Principal Payments, Principal Amount Outstanding, Adjusted Principal Amount Outstanding and 

Pool Factor 

(e) If as a result of the application of the proceeds of any repayment or prepayment of a Commercial 

Mortgage Loan pursuant to Condition 6(b) (Redemption, Purchase and Cancellation – Mandatory 

Redemption) in accordance with the Issuer Pre-Enforcement Priority of Payments any amount is to 

be applied to redeem Notes of any Class, each Note of that Class will be redeemed in an amount (the 

‘‘Note Principal Payment’’) equal to the lesser of (i) the funds remaining credited to the Issuer 

Transaction Account and available for payment of principal in respect of that Class and (ii) the 

aggregate Principal Amount Outstanding in respect of that Class, divided by the number of Notes 

of that Class and rounded down to the nearest pound. 

If any Principal Loss occurs, on the next Calculation Date such Principal Loss will be allocated to 

a particular Class of Notes (and pro rata to the Notes within that Class), in each case rounded down 

to the nearest pound, as follows: 

(i) first, to the Class D Notes, until the Adjusted Principal Amount Outstanding of such Notes is 

zero; 

(ii) second, to the Class C Notes, until the Adjusted Principal Amount Outstanding of such Notes 

is zero; 

(iii) third, to the Class B Notes, until the Adjusted Principal Amount Outstanding of such Notes 

is zero; 

(iv) fourth, to the Class A Notes, until the Adjusted Principal Amount Outstanding of such Notes 

is zero. 

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With respect to each Class on (or as soon as practicable after) each Calculation Date relating to an 

Interest Payment Date on which such a redemption will take place or such a Principal Loss will be 

allocated, the Agent Bank shall: 

(i) determine the amount of the Note Principal Payment (if any) due on the Interest Payment 

Date next following such Calculation Date in respect of each Note of that Class; 

(ii) determine the Principal Amount Outstanding of each Note of that Class after deducting the 

amount redeemable; 

(iii) determine the Adjusted Principal Amount Outstanding of each Note of the relevant Class to 

which a Principal Loss has been allocated; and 

(iv) determine the fraction expressed as a decimal to the sixth point (the ‘‘Pool Factor’’), of which 

the numerator is the Adjusted Principal Amount Outstanding of a Note of that Class referred 

to in sub-paragraph (iii) and the denominator is £100,000. 

The Agent Bank will cause each determination of a Note Principal Payment, Principal Amount 

Outstanding, Adjusted Principal Amount Outstanding and Pool Factor to be notified not less than 

three Business Days prior to the relevant Interest Payment Date to the Issuer, the Note Trustee, the 

Paying Agents and (for so long as the Notes are listed on the Irish Stock Exchange) the Irish Stock 

Exchange, and will cause notice of each such determination to be given in accordance with 

Condition 19 (Notices and Information) not less than three Business Days prior to the relevant 

Interest Payment Date. 

If the Agent Bank does not at any time for any reason determine a Note Principal Payment, the 

Principal Amount Outstanding, Adjusted Principal Amount Outstanding or the Pool Factor for any 

Class of Notes in accordance with this Condition 6 (Redemption, Purchase and Cancellation), the 

Note Trustee shall do so. 

Any such determination by the Note Trustee shall be deemed to have been made by the Agent Bank 

and the Agent Bank shall be liable as if it had made that determination. In making any such 

determination, the Note Trustee shall apply the provisions of this Condition 6(e) (Redemption, 

Purchase and Cancellation – Note Principal Payments, Principal Amount Outstanding, Adjusted 

Principal Amount Outstanding and Pool Factor), with any necessary consequential amendments, to 

the extent that, in its opinion, it can do so, and in all other respects it shall do so in such manner as 

it considers fair and reasonable in all the circumstances. 

Notice of Redemption Irrevocable 

(f) A notice of redemption under Condition 6(c) (Redemption, Purchase and Cancellation – Optional 

Redemption for Tax Reasons), or Condition 6(e) (Redemption, Purchase and Cancellation – Note 

Principal Payments, Principal Amount Outstanding and Pool Factor) shall be irrevocable and the 

Issuer shall be bound to redeem the relevant Notes in accordance with these Conditions on the 

Interest Payment Date specified in the notice. 

Cancellation 

(g) All Notes redeemed in full under this Condition or otherwise surrendered under Condition 18 

(Replacement of Notes, Coupons and Talons) will be cancelled upon redemption or surrender, 

together with any unmatured Coupons and any Talons relating to them which are attached to them 

or surrendered with them, and may not be resold or re-issued. 

Post-Enforcement Call Option 

(h) The Class A Noteholders, Class B Noteholders, Class C Noteholders and Class D Noteholders shall 

be required at the request of the Post-Enforcement Call Option Holder, to sell all (but not some 

only) of their holdings of the Class A Notes, the Class B Notes, the Class C Notes or the Class D 

Notes (as the case may be) to the Post-Enforcement Call Option Holder pursuant to the option 

granted to the Post-Enforcement Call Option Holder by the Note Trustee (on behalf of such 

Noteholders) pursuant to the Post-Enforcement Call Option Deed to acquire all (but not some only) 

of the Class A Notes, the Class B Notes, the Class C Notes and/or the Class D Notes, for the 

consideration of one penny per Note outstanding on the date following any enforcement of the 

Issuer Security on which the Note Trustee determines that the proceeds of such enforcement are 

162

insufficient after payment of all other claims ranking in priority to the Class A Notes, the Class B 

Notes, the Class C Notes and/or the Class D Notes (as the case may be) to make payment of all 

amounts due on such Notes in full. After the application of any such proceeds of enforcement 

towards payment of amounts due under the Class A Notes, the Class B Notes, the Class C Notes 

and/or the Class D Notes (as the case may be) in accordance with the Issuer Deed of Charge, any 

further principal, interest and other amounts (if any) whatsoever due in respect of the Class A 

Notes, the Class B Notes, the Class C Notes and/or the Class D Notes (as the case may be) shall be 

due and payable to the Post-Enforcement Call Option Holder. 

Each of the Class A Noteholders Class B Noteholders, Class C Noteholders and Class D 

Noteholders acknowledges and undertakes that, by subscribing for or purchasing the Class A Notes, 

Class B Notes, Class C Notes or the Class D Notes (as the case may be), they shall upon subscription 

or purchase be deemed to have agreed to be bound by, and to the extent necessary to have ratified, 

the Note Trustee’s entry into the Post-Enforcement Call Option Deed. 

No Purchase by Issuer 

(i) The Issuer will not be permitted to purchase any of the Notes. 

7. PAYMENTS 

Payments in respect of Global Notes 

(a) Payments of interest on the Temporary Global Notes will only be made upon certification of non-US 

beneficial ownership unless such certification has already been made. 

On and after the Exchange Date, no payment will be made on any Temporary Global Note unless 

exchange for an interest in the corresponding Permanent Global Note has been improperly withheld 

or refused. Payments of principal, interest and other amounts (if any) in respect of Notes 

represented by a Global Note will be made against presentation for endorsement and, if no further 

payment falls to be made in respect of the Notes, surrender of such Global Note to the order of the 

Principal Paying Agent. A record of each payment made will be endorsed on the appropriate 

schedule to the relevant Global Note by the Issuer (or by the Principal Paying Agent on its behalf). 

Such endorsement shall be prima facie evidence that such payment has been made in respect of the 

Global Note. 

Payments of Principal in respect of Definitive Notes 

(b) Payments of principal in respect of the Definitive Notes will be made against presentation and (in 

the case of final redemption, provided that payment is made in full) surrender of the Definitive 

Notes at the specified office of any Paying Agent. 

Payments of Interest in respect of Definitive Notes 

(c) Payments of interest in respect of the Definitive Notes will (subject as provided in Condition 7(f) 

(Payments - Unmatured Coupons and Talons Void) and Condition 7(g) (Payments – Payment of 

Interest on Withheld Amounts) below) be made against presentation and (provided that payment is 

made in full) surrender of the relevant Coupons at the specified office of any Paying Agent. 

Currency of Payment 

(d) Payments in respect of the Notes will be made in Sterling by cheque drawn on a bank in the United 

Kingdom or, at the option of the Noteholder, by transfer to a Sterling account maintained by the 

payee. 

Payments subject to the Issuer Deed of Charge and all Fiscal Laws 

(e) Payments of principal, interest and other amounts (if any) in respect of the Notes are subject in all 

cases to the applicable Issuer Priority of Payments and the Issuer Deed of Charge and to any fiscal 

or other laws and regulations applicable thereto. 

Unmatured Coupons and Talons Void 

(f) On the date on which any Definitive Note becomes due and payable in full, unmatured Coupons and 

163

Talons appertaining thereto (whether or not attached to such Definitive Note) shall become void 

and no payment or, as the case may be, exchange shall be made in respect thereof. If the due date 

for redemption for any Definitive Note is not an Interest Payment Date, accrued interest will be paid 

only against presentation and surrender of the relevant Definitive Note. As used herein, unmatured 

Coupons includes any Talon insofar as it relates entirely to unmatured Coupons. 

Payment of Interest on Withheld Amounts 

(g) If payment of principal is improperly withheld or refused on or in respect of any Note or part 

thereof, or any payment of interest is deferred pursuant to Condition 5(h) (Interest – Interest 

Deferral and Accrual), the interest which continues to accrue in respect of such Note in accordance 

with Condition 5(a) (Interest – Period of Accrual) or in respect of such deferred amount in 

accordance with Condition 5(h) (Interest- Interest Deferral and Accrual) (as the case may be) will 

become due and payable on the date on which the payment of such principal or such deferred 

amount (as the case may be) becomes due and payable and such interest will be paid against 

presentation of such Note, at the specified office of any Paying Agent in accordance with this 

Condition 7 (Payments). 

Paying Agents 

(h) The initial Principal Paying Agent and the other Paying Agents and their respective initial specified 

offices are listed at the end of these Conditions. The Issuer reserves the right, subject to the prior 

written approval of the Note Trustee, at any time to vary or terminate the appointment of the 

Principal Paying Agent and/or the other Paying Agents and to appoint additional or other paying 

agents. For so long as the Notes are listed on the Irish Stock Exchange the Issuer will at all times 

maintain a paying agent with a specified office in Ireland. The relevant Agent shall at its own 

expense on behalf of the Issuer not less than 14 days prior to the date on which any change in its 

specified office or any change in or addition to the Paying Agents is to take effect give notice of such 

change to the Noteholders in accordance with Condition 19 (Notices and Information). For so long 

as any Note is outstanding, the Issuer agrees that there will at all times be a Paying Agent in a 

member state of the European Union that will not be obliged to withhold or deduct tax pursuant to 

European Council Directive 2003/48/EC or any law implementing or complying with, or introduced 

in order to conform to such Directive. 

Exchange of Talons 

(i) On or after the Interest Payment Date of the final Coupon which is (or was at the time of issue) part 

of any coupon sheet relating to the Notes (each a ‘‘Coupon Sheet’’), the Talon which is (or was at 

the time of issue) part of such Coupon Sheet may be surrendered at the specified office of any of the 

Paying Agents in exchange for a further Coupon Sheet (including a further Talon, if applicable, but 

excluding any Coupons which shall have become void). Upon the due date for redemption in full of 

any Definitive Note, any unmatured Talon relating to it shall become void and no Coupons will be 

delivered in respect of such Talon. 

Payments on Business Days 

(j) If any Note or Coupon is presented for payment on a day which is not a business day in the place 

of presentation, then the holder shall not be entitled to payment in such place until the next 

succeeding business day in such place and no further payment or additional amount by way of 

interest, principal or otherwise shall be due in respect of such Coupon or, as the case may be, such 

Note. 

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Change in Currency 

(k) (i) If at any time there is a change in the currency of the United Kingdom such that the Bank of 

England recognises a different currency or currency unit as the lawful currency of the United 

Kingdom, then references in, and obligations arising under, the Notes and Coupons outstanding 

at the time of any such change and which are expressed in Sterling shall be converted into, 

and/or any amount becoming payable under the Notes and Coupons thereafter as specified in 

these Conditions shall be paid in, the currency or currency unit of the United Kingdom, and 

in the manner designated by the Principal Paying Agent. Any such conversion shall be made 

at the official rate of exchange recognised for that purpose by the Bank of England. 

(ii) Where such a change in currency occurs, the Notes and Coupons then outstanding and the 

Conditions shall be amended in the manner agreed by the Issuer, the Note Trustee and the 

Principal Paying Agent so as to reflect that change and, so far as is practicable, to place the 

Issuer, the Noteholders and the Couponholders in the same position they would have been in 

had no change in currency occurred (such amendments to include changes required to reflect 

any modification to business day or other conventions arising in connection with such change 

in currency). 

All amendments made pursuant to this Condition 7(k) (Payments – Change in Currency) shallbe 

binding upon the Noteholders, the Couponholders and the Talonholders and none of the Issuer, the 

Note Trustee, the Issuer Security Trustee and the Paying Agents shall be liable to any Noteholder, 

Couponholder, Talonholder or other person for any costs, losses or expenses in relation to or 

resulting from the credit or transfer of such other currency or currency unit or any currency 

conversion or rounding effected in connection therewith. 

8. PRESCRIPTION 

General 

(a) After the date on which a Note or Coupon becomes void in its entirety, no claim may be made in 

respect of it. 

Principal 

(b) Claims for payment of principal in respect of Notes shall become void unless the relevant Notes are 

presented for payment within ten years of the appropriate Relevant Date. 

Interest 

(c) Claims for interest in respect of Notes shall become void unless the relevant Coupons are, or while 

any Notes are represented by a Global Note, the relevant Global Note is, presented for payment 

within five years of the appropriate Relevant Date. 

9. TAXATION 

All payments in respect of the Notes and the Coupons will be made without withholding or deduction for 

or on account of any present or future taxes, duties or charges of whatsoever nature unless the Issuer or 

the relevant Paying Agent (as applicable) is required by the law of the jurisdiction of the tax residency 

of the Issuer to make any payment in respect of the Notes subject to any withholding or deduction for or 

on account of any such taxes, duties or charges. In that event, the Issuer or the relevant Paying Agent (as 

the case may be) shall make such payment after such withholding or deduction has been made and shall 

account to the relevant authorities for the amount so withheld or deducted. Neither the Issuer nor the 

Paying Agents will be obliged to make any additional payments to the Noteholders or Couponholders in 

respect of such withholding or deduction. 

10. NOTE EVENTS OF DEFAULT 

Determination of a Note Event of Default 

(a) The Note Trustee: 

(i) may, in its absolute discretion; or 

165

(ii) shall, if: 

(A) it has been directed to do so in writing by the holders of at least 25 per cent. of the 

Principal Amount Outstanding of the Most Senior Class of Notes then outstanding; or 

(B) it has been directed to do so by an Extraordinary Resolution of the holders of the Most 

Senior Class of Notes then outstanding; and 

(iii) subject, in each case, to being indemnified or otherwise secured to its satisfaction in accordance 

with the Note Trust Deed, 

giveanotice(a‘‘Note Enforcement Notice’’) to the Issuer declaring the Notes to be due and 

repayable at any time after the occurrence of any of the events specified in Condition 10(b) (Note 

Events of Default – Events). 

Events 

(b) The occurrence of any of the following events shall be a ‘‘Note Event of Default’’: 

(i) default being made in the payment of any amount on any Class of Notes when due, subject to 

Condition 5(h) (Interest Deferral and Accrual), unless such default is caused by an administrative 

or technical error and payment is made within three Business Days of its due date or 

(in the case of payments of interest, cost and expenses only) payment is made within five 

Business Days of its due date; or 

(ii) the Issuer failing duly to perform or observe any other obligation binding upon it under the 

Notes, the Note Trust Deed, the Issuer Deed of Charge or any of the other Transaction 

Documents and such failure (A) being in the opinion of the Note Trustee (or, in the case of the 

Issuer Deed of Charge, the Issuer Security Trustee) incapable of remedy or (B) being a failure 

which is, in the opinion of the Note Trustee (or, in the case of the Issuer Deed of Charge, the 

Issuer Security Trustee), capable of remedy, but which remains unremedied for a period of 

21 days following the giving by the Note Trustee (or the Issuer Security Trustee, as applicable), 

to the Issuer of notice requiring the same to be remedied and, in either case, provided that the 

Note Trustee shall have determined that such event is, in its opinion, materially prejudicial to 

the interests of any Class of Noteholders; or 

(iii) the Issuer, otherwise than for the purposes of such amalgamation or reconstruction as is 

referred to in sub-paragraph (iv) below, ceasing or, through an official action of the Board of 

Directors of the Issuer, threatening to cease to carry on business; or 

(iv) any of the following occurs with respect to the Issuer: 

(A) it is, or is deemed for the purposes of any law to be, unable to pay its debts or insolvent; 

(B) it admits its inability to pay its debts as they fall due; or it suspends making payments on 

any of its debts or announces an intention to do so; or 

(C) an Insolvency Event occurs with respect to the Issuer; or 

(v) any event occurs which under any applicable laws has an analogous effect to any of the events 

referred to in sub-paragraphs (ii), (iii) and (iv) above; or 

(vi) the Issuer Security (or any part thereof) is repudiated or is or becomes void, illegal, invalid or 

unenforceable or any person is entitled to terminate, rescind or avoid all of or any material 

provision of any Transaction Document after the expiry of any period allowed by the 

Transaction Document for the mitigation thereof. 

Acceleration 

(c) Upon delivery of a Note Enforcement Notice, the Notes shall immediately become due and 

repayable at their Principal Amount Outstanding together with accrued interest up to (but 

excluding) the earlier of (i) the date on which all principal, interest and other amounts (if any) are 

paid in full and (ii) the seventh day after notice has been given to the Noteholders in accordance 

with Condition 19 (Notices and Information) that the full amount has been received by the Principal 

Paying Agent or the Note Trustee. 

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11. ENFORCEMENT 

(a) 

(b) 

At any time after a Note Enforcement Notice has been given to the Issuer, the Note Trustee: 

(i) may, in its absolute discretion; or 

(ii) shall, if: 

(A) it has been directed to do so in writing by the holders of at least 25 per cent. of the 

Principal Amount Outstanding of the Most Senior Class of Notes then outstanding; or 

(B) it has been directed to do so by an Extraordinary Resolution of the holders of the Most 

Senior Class of Notes then outstanding; and 

(iii) subject, in each case, to being indemnified or otherwise secured to its satisfaction in accordance 

with the Note Trust Deed, 

instruct the Issuer Security Trustee to take enforcement steps in relation to the Issuer Security. 

Under the terms of the Issuer Deed of Charge, if the Note Trustee provides the Issuer Security 

Trustee with a copy of a Note Enforcement Notice given to the Issuer and instructs it to take 

enforcement steps in relation to the Issuer Security, then the whole of the Issuer Security shall be 

enforceable. 

12. NOTEHOLDER ACTION 

General Prohibition 

(a) Subject to Condition 12(b) (Noteholder Action – Permitted Noteholder Action), no Noteholder, 

Couponholder or Talonholder shall be entitled to take any proceedings or other action directly 

against the Issuer. 

Exceptions 

(b) If the Note Trustee having become bound (i) to give a Note Enforcement Notice to the Issuer or (ii) 

to instruct the Issuer Security Trustee to take enforcement steps in accordance with Condition 11(b) 

(Enforcement) fails to do so within a reasonable time and that failure is continuing, the holders of 

not less than 25 per cent. in aggregate of the Principal Amount Outstanding of the Most Senior Class 

of Notes then outstanding may (A) sign and give a Note Enforcement Notice to the Issuer in 

accordance with Condition 10 (Note Events of Default) and/or (B) instruct the Issuer Security 

Trustee to take enforcement steps in accordance with Condition 11 (Enforcement); or 

Limit on Noteholder Action 

(c) Except as expressly permitted to do in this Condition 12 (Noteholder Action), the Noteholders shall 

not be entitled to take any steps: 

(i) to direct the Note Trustee to instruct the Issuer Security Trustee to enforce the Issuer Security; 

or 

(ii) to take or join any person in taking steps against the Issuer for the purpose of obtaining 

payment of any amount due from the Issuer to it; or 

(iii) to initiate or join any person in initiating any Insolvency Proceedings in relation to the Issuer 

or the appointment of an Insolvency Official in relation to the Issuer or in relation to the whole 

or any part of the undertakings or assets of the Issuer; or 

(iv) to take any steps or proceedings that would result in the applicable Issuer Priority of Payments 

in the Issuer Deed of Charge not being observed. 

13. MEETINGS OF NOTEHOLDERS 

Convening 

(a) The Note Trust Deed contains provisions for convening Meetings of Noteholders or of any one or 

more Classes of Noteholder to consider any matter affecting their interests, including the 

167

modification of any provision of these Conditions, the Note Trust Deed or the other Transaction 

Documents and the waiver of any breach or proposed breach by the Issuer of its obligations under 

the Note Trust Deed, the Notes or the other Transaction Documents. Subject to Condition 13(b) 

(Meeting of Noteholders – Extraordinary Resolutions and Basic Terms Modifications), any such 

modification or waiver may be made if sanctioned by an Extraordinary Resolution. 

Extraordinary Resolutions and Basic Terms Modifications 

(b) Any Basic Terms Modification must be approved by an Extraordinary Resolution of the holders of 

each Class of Notes. 

An Extraordinary Resolution to approve any matter other than a Basic Terms Modification passed 

at any meeting of the Class A Noteholders, shall be binding on all Class B Noteholders, Class C 

Noteholders and Class D Noteholders irrespective of the effect upon them. 

An Extraordinary Resolution of the holders of any Class of Notes to approve any matter other than 

a Basic Terms Modification shall be binding on the holders of each Class of Notes ranking junior to 

such Class but shall not be binding on the holders of each Class of Notes ranking equally or senior 

to such Class and remaining outstanding (the ‘‘Relevant Classes’’) unless either (x) approved by an 

Extraordinary Resolution of the holders of Notes of the Relevant Classes or (y) the Note Trustee 

has determined that such matter is not materially prejudicial to the holders of Notes of the relevant 

Classes. For this purpose the Classes rank in the following order: 

(i) first, the Class A Notes; 

(ii) second, the Class B Notes; 

(iii) third, the Class C Notes; and 

(iv) fourth, the Class D Notes. 

Quorum 

(c) The quorum at any meeting originally convened or adjourned and reconvened except for want of a 

quorum shall be at least two voters representing the proportion of the Notes for the time being 

outstanding of the relevant Class shown by the table below: 

To pass an Extraordinary Resolution 

involving a Basic Terms Modification: 

To pass any other 

Extraordinary Resolution: 

Any other purpose: 

75 per cent. 

More than 50 per cent. 

10 per cent. 

The quorum at any meeting adjourned for want of a quorum and reconvened shall be at least two 

voters representing the proportion of the Notes for the time being outstanding of the relevant Class 

shown by the table below: 

To pass an Extraordinary Resolution 

involving a Basic Terms Modification: 

To pass any other 

Extraordinary Resolution: 

Any other purpose: 

33 1 ⁄3 per cent. 

No minimum proportion 

No minimum proportion 

So long as any Class of Notes are: 

(i) represented by a Global Note, a person appointed in relation thereto or being the holder of the 

Class of Notes represented thereby; or 

(ii) in definitive form, where the entire Class of Notes are held by a single Noteholder, 

a person appointed in relation thereto or being the holder of the entire Class of Notes represented 

thereby shall be deemed to be two persons for the purpose of forming a quorum.. 

The majority required for an Extraordinary Resolution shall be a majority of not less than 75 per 

cent. of the votes cast, whether on a show of hands or a poll. 

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Separate meetings of different Classes of Notes 

(d) The following provisions shall apply where any matter, including the passing or rejection of any 

Extraordinary Resolution, falls to be considered where more than one Class of Notes is outstanding: 

(i) matters which the Note Trustee in its absolute discretion determines affect the Noteholders of 

only one Class of Notes shall be transacted at a separate meeting of the Noteholders of such 

Class; 

(ii) matters which the Note Trustee in its absolute discretion determines affect the Noteholders of 

more than one Class of Notes but do not give rise to an actual or potential conflict of interest 

between the Noteholders of one such Class of Notes and the Noteholders of any other Class 

of Notes shall be transacted either at separate meetings of the Noteholders of each such Class 

of Notes or transacted at a single meeting of the Noteholders of all affected Classes of Notes 

as the Note Trustee shall determine in its absolute discretion; and 

(iii) matters which the Note Trustee in its absolute discretion determines affect the Noteholders of 

more than one Class of Notes and give rise to an actual or potential conflict of interest between 

the Noteholders of one such Class of Notes and the Noteholders of any other Class of Notes 

shall be transacted at separate meetings of the Noteholders of each such Class. 

Resolutions in Writing 

(e) Any reference to an action being approved by an Extraordinary Resolution of Noteholders of any 

one or more Classes of Noteholders shall be deemed to include a reference to that matter being 

approved by a Written Resolution of the Noteholders of that Class or of those Classes. 

14. MODIFICATION AND WAIVER OF BREACH 

Modification 

(a) The Note Trustee may, without the consent of the Noteholders, the Couponholders or the 

Talonholders, agree to any modification (other than a Basic Terms Modification) to the Note Trust 

Deed, the Notes, the Coupons, the Talons or any of the other Transaction Documents if, in the Note 

Trustee’s opinion: 

(i) it is not materially prejudicial to the interests of the Noteholders of any Class; or 

(ii) it is to correct a manifest error or is of a formal, minor or technical nature. 

Waiver of Breach 

(b) The Note Trustee may also, without the consent of the Noteholders, the Couponholders or the 

Talonholders, if in its opinion it will not be materially prejudicial to the interests of the Noteholders 

of any Class: 

(i) authorise or waive, on any terms and subject to any conditions which it considers appropriate, 

any proposed breach or breach of the Conditions, the Note Trust Deed or any other 

Transaction Document; 

(ii) authorise or waive, on any terms and subject to any conditions which it considers appropriate, 

any proposed breach or breach of any other Transaction Document in respect of which the 

Issuer Security Trustee requests directions; or 

(iii) determine that any event that would otherwise constitute a Note Event of Default or Potential 

Note Event of Default shall not, or shall not subject to any conditions which it considers 

appropriate, be treated as such for the purposes of the Note Trust Deed and these Conditions. 

The Note Trustee shall not exercise any powers conferred on it by this Condition 14(b) 

(Modification and Waiver - Waiver of Breach): 

(i) so as to authorise or waive any proposed breach or breach relating to any term the 

modification of which would be a Basic Terms Modification (which shall be approved by the 

holders of each Class of Notes in accordance with the Provisions for Meetings of Noteholders); 

or 

169

(ii) 

in contravention of any express direction by an Extraordinary Resolution or of a request in 

writing made by the holders of not less than 25 per cent. in aggregate Principal Amount 

Outstanding of the Most Senior Class of Notes then outstanding. 

Notice 

(c) Unless the Note Trustee agrees otherwise, any such modification, waiver, authorisation or 

determination shall be notified to the Noteholders as soon as practicable thereafter in accordance 

with Condition 19 (Notices and Information). 

15. SUBSTITUTION OF PRINCIPAL DEBTOR 

The Note Trust Deed contains provisions permitting the Note Trustee, without the consent of the 

Noteholders, the Couponholders or the Talonholders, but subject to such amendment of the Note Trust 

Deed and such other conditions as the Note Trustee may require and the approval of the Irish Stock 

Exchange, to agree to the substitution pursuant to Condition 6(c) (Redemption, Purchase and Cancellation 

– Optional Redemption for Tax Reasons) of another body corporate in place of the Issuer (or of any 

previous substitute) as principal debtor in respect of the Note Trust Deed, the Notes, the Coupons and 

the Talons and in connection with any proposed substitution, to a change of the law governing the Notes, 

the Coupons, the Talons, the Note Trust Deed and/or any of the other Transaction Documents if, among 

other things, any change in governing law will not in the Note Trustee’s opinion, be materially prejudicial 

to the interests of the holders of the Most Senior Class of Notes and the Ratings Test is satisfied. Any such 

body corporate shall be a newly formed single purpose company which, among other things, undertakes 

to be bound by the provisions in the Note Trust Deed, the Notes, the Coupons, the Talons and the other 

Transaction Documents which are binding on the Issuer (or any previous substitute). 

16. NOTE TRUSTEE AND ISSUER SECURITY TRUSTEE 

Determinations Binding 

(a) Any modification, waiver, authorisation, determination or calculation made by the Note Trustee or 

the Issuer Security Trustee shall be binding on the Noteholders, the Couponholders and the 

Talonholders, provided that any determination or calculation made by the Note Trustee pursuant to 

Conditions 5(f) (Interest – Determination or Calculation by Note Trustee) or 6(d) (Redemption, 

Purchase and Cancellation – Note Principal Payments, Principal Amount Outstanding and Pool 

Factor) shall only be binding in the absence of manifest error. 

Note Trustee’s and Issuer Security Trustee’s Limitation of Liability and Right to Indemnity 

(b) The Note Trust Deed and the Issuer Deed of Charge contain provisions: 

(i) giving various powers, authorities and discretions to the Note Trustee and the Issuer Security 

Trustee in addition to those conferred by law including those referred to elsewhere in these 

Conditions; 

(ii) specifying various matters in respect of which the Note Trustee or, as applicable, the Issuer 

Security Trustee is to have (A) no duty or responsibility to make any investigation and (B) no 

liability or responsibility to the Noteholders, Couponholders or Talonholders in the absence of 

wilful default, negligence or fraud or, in the case of certain matters, in any circumstances; and 

(iii) entitling the Note Trustee or, as applicable, the Issuer Security Trustee to indemnification or 

providing that it is not obliged to take any action at the direction of any person unless it has 

been indemnified or otherwise secured to its satisfaction. 

Note Trustee, Issuer Security Trustee and Issuer Security 

(c) Neither the Note Trustee nor the Issuer Security Trustee shall be responsible for matters relating to 

the Issuer Security or the Issuer Charged Property including: 

(i) the nature, value, collectability or enforceability of the Issuer Charged Property; 

(ii) the registration, perfection or priority of the Issuer Security; or 

(iii) the Issuer’s title to the Issuer Charged Property. 

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Removal and Replacement of Note Trustee and Issuer Security Trustee 

(d) There shall at all times be a Note Trustee and a Issuer Security Trustee and the Note Trust Deed and 

the Issuer Deed of Charge provide that the retirement or removal of any Note Trustee or Issuer 

Security Trustee shall not become effective unless and until a replacement Note Trustee or Issuer 

Security Trustee (as the case may be) is appointed. 

17. AGENTS 

Paying Agents and Agent Bank Solely Agents of Issuer 

(a) In acting under the Agency Agreement and in connection with the Notes, the Coupons or the 

Talons, the Paying Agents and the Agent Bank act solely as agents of the Issuer and (to the extent 

provided in the Agency Agreement) the Note Trustee and neither the Paying Agents nor the Agent 

Bank shall be under any fiduciary duty or other obligation towards, or have any relationship of 

agency or trust for or with, any of the Noteholders, Couponholders or Talonholders. 

Determinations Binding 

(b) Any determination or calculation made by the Agent Bank shall be binding on the Noteholders, the 

Couponholders and the Talonholders in the absence of manifest error, breach of contract or 

negligence. 

18. REPLACEMENT OF NOTES, COUPONS AND TALONS 

If any Note, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at 

the specified office of any of the Paying Agents upon payment by the claimant of the costs and 

expenses incurred in connection with such replacement and on such terms as to evidence, security, 

indemnity and otherwise as the Issuer and/or the relevant Paying Agent may reasonably require. 

Mutilated or defaced Notes, Coupons or Talons must be surrendered before replacements will be 

issued. 

19. NOTICES AND INFORMATION 

Valid Notices 

(a) Any notice to Noteholders shall be validly given if it is published in a leading English language daily 

newspaper having general circulation in London (which is expected to be the Financial Times) or, 

if this is not practicable, in another leading English language newspaper as the Note Trustee shall 

approve having general circulation in London. Any such notice shall be deemed to have been given 

to Noteholders on the date of such publication or, if published more than once or on different dates, 

on the first date on which publication is made in the manner required in the newspaper referred to 

above. 

Notices While Notes in Global Form 

(b) For so long as any of the Notes are represented by a Global Note and such Global Note is held on 

behalf of Euroclear and/or Clearstream, Luxembourg, notices to Noteholders may be given by 

delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg (as the case may be) 

for communication to the relevant accountholders rather than by publication as required by 

Condition 19(a) (Notices and Information – Valid Notices). Any notice delivered to Euroclear and/or 

Clearstream, Luxembourg shall be deemed to have been given to Noteholders on the date on which 

such notice is delivered to Euroclear and/or Clearstream, Luxembourg (as the case may be). So long 

as the Notes are listed on the Irish Stock Exchange and the rules of that exchange so require, notices 

will also be published in a leading English language daily newspaper having general circulation in 

the United Kingdom (which is expected to be the Financial Times). 

Notices on Screen Page 

(c) Any notice specifying an Interest Payment Date, a Rate of Interest, an Interest Amount, a Note 

Principal Payment, a Principal Amount Outstanding or a Pool Factor or specifying that a Note 

171

Enforcement Notice has been given shall also appear on such page of the Reuters service or the 

Bloomberg service or such other medium for the electronic display of data approved by the Note 

Trustee and notified to the Noteholders in accordance with Condition 19(a) (Notices and 

Information – Valid Notices) or Condition 19(b) (Notices and Information – Notices While Notes in 

Global Form). 

Other Methods for Notice 

(d) The Note Trustee may approve any other method of giving notice to Noteholders which is, in its 

opinion, reasonable having regard to market practice then prevailing and to the requirements of the 

stock exchange on which the Notes are then listed. 

Copy of Notices 

(e) A copy of each notice given in accordance with this Condition 19 (Notices and Information) shallbe 

provided to the Rating Agencies and, for so long as the Notes are listed on the Irish Stock Exchange 

and its rules so require, the Irish Stock Exchange. 

Couponholders and Talonholders deemed to have notice 

(f) The Couponholders and Talonholders will be deemed for all purposes to have notice of the contents 

of any notice given to the Noteholders in accordance with this Condition 19 (Notices and 

Information). 

Noteholder Information 

(g) The Issuer shall provide the Note Trustee, the Liquidity Facility Provider and the Hedging Providers 

and each of the Paying Agents with copies of: 

(i) its audited annual financial statements (including balance sheet, profit and loss and cashflow 

statements) as soon as they become publicly available (together with the related auditors’ 

report) and in any case within 120 Business Days of year end or such other ones as required 

by law; and 

(ii) by no later than 5pm on the first Business Day following each Interest Payment Date, the 

Investor Report. 

The audited annual financial statements (together with the related auditors’ report) and the Investor 

Report shall be available for inspection by the Noteholders on any business day at the specified 

office for the time being of each of the Paying Agents and, in the case of the Investor Report, on 

www.ctslink.com or such other website as may be notified to them in accordance with this Condition. 

Information Meeting 

(h) The Issuer shall at the request of the Note Trustee, or if requested in writing by Noteholders holding 

not less than 10 per cent. in aggregate of the Principal Amount Outstanding of the outstanding 

Notes, on 21 days notice to the Noteholders, given in accordance with Condition 19, convene an 

information meeting for the benefit of all Noteholders, although the Issuer shall not be obliged to 

convene more than one such meeting in any calendar year (each, an ‘‘Information Meeting’’). 

Persons entitled to attend and speak at an Information Meeting will include: 

(i) the Issuer; 

(ii) the Borrowers; 

(iii) the Note Trustee; 

(iv) the Issuer Security Trustee; 

(vi) any holder of one or more Notes of any Class; 

(vii) such other person as the Note Trustee shall deem fit to attend and, if applicable, speak at such 

an Information Meeting; and 

(viii) any duly authorised nominee of any of the above. 

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Although a Meeting of Noteholders convened in accordance with Condition 13 (Meetings of Noteholders) 

may be held on the same date as any Information Meeting, such Information Meeting shall for all 

purposes be a separate meeting and the provisions of Condition 13 (Meetings of Noteholders) shall apply 

in full force to the relevant Meeting of Noteholders, with the Meeting of Noteholders taking place 

following the conclusion of the relevant Information Meeting. 

20. ISSUE OF FURTHER NOTES, REPLACEMENT NOTES AND NEW NOTES 

Issue 

(a) The Issuer may from time to time on any date without the consent of the Noteholders, the 

Couponholders or the Talonholders, but subject always to the provisions of these Conditions and the 

Note Trust Deed, raise further funds by: 

(i) the creation and issue of further Class A Notes (the ‘‘Further Class A Notes’’) in bearer form 

having the same terms and conditions (except in relation to the issue date, the first Interest 

Period, the first Interest Payment Date and the amount to be paid in respect of the first 

payment of interest) as, and so that they shall be consolidated and form a single series and rank 

pari passu with, the Class A Notes; and/or 

(ii) the creation and issue of further Class B Notes (the ‘‘Further Class B Notes’’) in bearer form 




pari passu with, the Class B Notes; and/or 

(iii) the creation and issue of further Class C Notes (the ‘‘Further Class C Notes’’ in bearer form 




pari passu with, the Class C Notes; and/or 

(iv) the creation and issue of further Class D Notes (the ‘‘Further Class D Notes’’ in bearer form 




pari passu with, the Class D Notes, provided that: 

(A) any Further Notes to be issued are assigned the same ratings as are then applicable to the 

corresponding Class of Notes then outstanding; 

(B) the aggregate principal amount of each Class of Further Notes to be issued on a 

particular date is not less than £50,000,000; 

(C) the proceeds of the issue of the Further Notes are to be applied by the Issuer in making 

further Commercial Mortgage Loans to the one or more Borrowers in accordance with 

the relevant Commercial Mortgage Loan Agreement; 

(D) the Ratings Test is satisfied; and 

(E) no Note Event of Default or Potential Note Event of Default has occurred and is 

continuing. 

(v) the creation and issue of replacement notes (the ‘‘Replacement Notes’’) if the Issuer exercises 

its option to redeem in whole one or more classes of Notes pursuant to Condition 6(d) 

(Optional Redemption) each class of which shall carry the same terms and conditions in all 

respects (except in relation to the rate of interest applicable to the Replacement Notes (which 

must be lower than the rate of interest applicable to the Class of Notes which it replaces)) as 

the Class of Notes which it replaces and shall on issue be in a principal amount which in 

aggregate does not exceed the aggregate Principal Amount Outstanding of the Class of Notes 

which it replaces, provided that the class or classes of Notes to be replaced are redeemed in full 

in accordance with Condition 6(d) (Optional Redemption) and: 

(A) any Replacement Notes to be issued are assigned the same ratings as are then applicable 

to the corresponding Class of Notes then outstanding; 

173

(vi) 

(B) the Note Trustee is satisfied that the interests of the then existing Noteholders will not be 

materially prejudiced by the issue of Replacement Notes; 

(C) the Note Trustee is satisfied that the terms of the Replacement Notes and their variation 

of the Transaction Documents will not be materially prejudicial to the interests of the 

then existing Noteholders; 

(D) the Ratings Test is satisfied with respect to any Class of Notes not redeemed pursuant to 

Condition 6(d) (Optional Redemption); and 


continuing. 

the creation and issue of additional notes of a new class which will be in bearer form and which 

may rank pari passu with or after any Notes then in issue (‘‘New Notes’’) and may carry terms 

that differ from any of the Notes and do not form a single series with them provided that in 

respect of any issue of New Notes: 

(A) the proceeds of the issue of the New Notes are to be applied by the Issuer in making 

further Commercial Mortgage Loans to one or more Borrowers in accordance with the 

relevant Commercial Mortgage Loan Agreement; 

(B) the Note Trustee is satisfied that the interests of the then existing Noteholders will not be 

materially prejudiced by the issue of New Notes; 

(C) the Note Trustee is satisfied that the terms of the New Notes and their variation of the 

Transaction Documents will not be materially prejudicial to the interests of the then 

existing Noteholders; 

(D) the Ratings Test is satisfied; and 


continuing. 

Supplemental Note Trust Deeds and Issuer Security 

(b) Any Further Notes and/or Replacement Notes and/or New Notes shall be created by a further deed 

or deeds supplemental to the Note Trust Deed and have the benefit of the Issuer Security. 

21. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 

No person shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of 

the terms or conditions of the Notes. 

22. GOVERNING LAW 

The Note Trust Deed, the Notes, the Coupons, the Talons and the Issuer Deed of Charge and the 

relationship between (a) the parties to those documents, (b) the Noteholders and the Note Trustee and 

(c) the Noteholders and the Issuer Security Trustee shall be governed by, and interpreted in accordance 

with, English law. 

PRINCIPAL PAYING AGENT 

HSBC Bank plc 



United Kingdom 

IRISH PAYING AGENT 

HSBC Institutional Trust Services (Ireland) Limited 

HSBC House 

Harcourt Street 

Dublin 2 

Ireland 

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FORM OF THE NOTES 

General 

The Notes will initially be represented by four separate Temporary Global Notes (one for each Class of 

Notes) without Coupons or Talons. 

On the Closing Date the Temporary Global Notes will be deposited on behalf of the subscribers of the 

relevant Notes with the Common Depositary for Euroclear and Clearstream, Luxembourg. Upon deposit 

of the Temporary Global Notes, Euroclear or Clearstream, Luxembourg (as the case may be) will credit 

each subscriber of Notes with the principal amount of the relevant Notes for which it has subscribed and 

paid. 

Interests in each Temporary Global Note will be exchangeable not earlier than the Exchange Date, for 

interests in a Permanent Global Note relating to those Notes without Coupons or Talons attached to the 

extent that certification (in a form to be provided) to the effect that the beneficial owners of interests in 

such Notes are not US persons or persons who have purchased such interests for resale to any US person, 

as required by US Treasury regulations, has been received by Euroclear and/or Clearstream, Luxembourg 

and Euroclear and/or Clearstream, Luxembourg (as the case may be) has given an equivalent certification 

(based on the certifications it has received) to the Principal Paying Agent. On the first exchange of an 

interest in a Temporary Global Note for a Permanent Global Note of the same Class, that Permanent 

Global Note will be deposited with the Common Depositary. 

Issue of Notes in definitive form 

The Permanent Global Notes will be exchangeable in whole but not in part (free of charge to the holder) 

for Notes in definitive form if either of the following Exchange Events occurs): 

(i) both Euroclear and Clearstream, Luxembourg are closed for business for a continuous period of 

14 days (other than by reason of holiday, statutory or otherwise) or announce an intention 

permanently to cease business and do so cease business and no alternative clearing system 

satisfactory to the Note Trustee is available; or 

(ii) as a result of any amendment to, or change in the laws or regulation of the United Kingdom (or any 

political sub-division thereof) or of any Tax Authority thereof or in the interpretation by a United 

Kingdom Tax Authority or a court or in the administration of such laws or regulations which 

becomes effective on or after the Closing Date, the Issuer or any Paying Agent is or will be required 

to make any withholding or deduction from any payment in respect of the Notes which would not 

be required if the Notes were in definitive form, 

in which case the Issuer will deliver definitive Notes with (where applicable) Coupons and Talons attached 

on issue. Such definitive Notes will be issued to the holder of the relevant Permanent Global Note against 

its surrender at the specified office of the Principal Paying Agent within 30 days of the occurrence of the 

relevant Exchange Event. 

Legend 

The Notes, Coupons and Talons will bear the following legend: 

‘‘Any United States Person (as defined in the Internal Revenue Code of the United States of America) 

who holds this obligation will be subject to limitations under the United States income tax laws, 

including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code of the 

United States of America’’. 

The sections referred to in the legend provide that United States holders will not, with certain exceptions, 

be permitted to deduct any loss and will not be eligible for favourable capital gains treatment with respect 

to any gain realised on a sale, exchange or redemption of any Note, Coupon or Talon. 

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UNITED KINGDOM TAXATION 

The following, which applies only to persons who are the absolute beneficial owners of the Notes and who 

hold the Notes as investments, is a summary of the Issuer’s understanding of the law and published practice 

in the United Kingdom as at the date of this Offering Circular in relation to certain aspects of the United 

Kingdom taxation of payments in respect of, and of the issue and transfers of, the Notes. The comments do 

not deal with all United Kingdom tax aspects of acquiring, holding or disposing of the Notes. Special rules 

may apply to certain classes of taxpayer (such as dealers). The comments are made on the assumption that 

there will be no substitution of the Issuer and do not consider the tax consequences of any such substitution. 

Prospective Noteholders who are in any doubt as to their tax position or who may be subject to Tax in a 

jurisdiction other than the United Kingdom are particularly advised to seek their own professional advice. 

United Kingdom Withholding Tax on payments of interest on the Notes 

The Notes will constitute ‘‘quoted Eurobonds’’ within the meaning of section 349 of the Income and 

Corporation Taxes Act 1988 provided they are and continue to be listed on a recognised stock exchange 

within the meaning of section 841 Income and Corporation Taxes Act 1988. On the basis of HMRC’s 

published interpretation of the relevant legislation, the Irish Stock Exchange is a recognised stock 

exchange for these purposes. Accordingly, payments of interest on the Notes may be made without 

withholding or deduction for or on account of United Kingdom income tax provided the Notes remain so 

listed at the time of payment. 

In all other cases an amount must be withheld on account of income tax at the lower rate (currently 20%), 

subject to any direction to the contrary by HMRC under an applicable double taxation treaty, and except 

that the withholding obligation is disapplied in respect of payments to Noteholders who the Issuer 

reasonably believes are either a UK resident company or a non-UK resident company carrying on a trade 

in the UK through a permanent establishment which is within the charge to corporation tax, or fall within 

various categories enjoying a special tax status (including charities and pension funds), or are partnerships 

consisting of such persons (unless HMRC directs otherwise). 

Interest on the Notes constitutes UK source income for tax purposes and, as such, may be subject to 

income tax by direct assessment even where paid without withholding. However, interest with a UK 

source received without deduction or withholding on account of UK tax will not be chargeable to UK tax 

in the hands of a Noteholder who is not resident for tax purposes in the UK unless that Noteholder: 

(i) carries on a trade, profession or vocation in the UK through a UK branch or agency or, if that 

Noteholder is a company, through a UK permanent establishment, in connection with which the interest 

is received or to which the Notes are attributable; or (ii) is a trustee of a trust with a UK beneficiary. There 

are exemptions for interest received by certain categories of agent (such as some brokers and investment 

managers). The provisions of any applicable double taxation treaty may also be relevant for such 

Noteholders. 

Provision of Information 

Any Paying Agent or other person by or through whom interest is paid to, or by whom interest is received 

on behalf of, an individual (whether resident in the UK or elsewhere) may be required to provide 

information in relation to the payment and the individual concerned to HMRC. HMRC may communicate 

information to the tax authorities of other jurisdictions. 

European Union Directive on the Taxation of Savings Income 

Directive 2003/481 EC provides for the tax authorities of Member States to provide each other with 

details of payments of interest and similar income made to individuals but permits Austria, Belgium and 

Luxembourg instead to impose a withholding tax on payments concerned for a ‘‘transitional period’’ 

(although it also provides that no such withholding tax should be levied where the beneficial owner of the 

payment authorises an exchange of information and/or where the beneficial owner presents a certificate 

from the tax authority of the Member State in which the beneficial owner is resident). The Directive does 

not preclude Member States from levying other types of withholding tax. The attention of Noteholders 

is drawn to Condition 9 (Taxation). 

Transfer of the Notes 

UK corporation taxpayers 

In general, Noteholders which are within the charge to UK corporation tax (other than investment trusts, 

venture capital trusts, authorised unit trusts and open-ended investment companies) will be treated for tax 

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purposes as realising profits, gains or losses (including exchange gains and losses) in respect of the Notes 

on a basis which is broadly in accordance with their statutory accounting treatment so long as the 

accounting treatment is in accordance with, for accounting periods beginning on or before 31 December 

2004, a mark-to-market basis or an accruals basis which is authorised for tax purposes or, for accounting 

periods beginning on or after 1 January 2005, generally accepted accounting practice as that term is 

defined for tax purposes. Such profits, gains and losses (or, where the Noteholder’s functional currency is 

not sterling, then the sterling equivalent of such profits, gains and losses as computed in the Noteholder’s 

functional currency) will be taken into account in computing taxable income for corporation tax purposes. 

Noteholders that are investment trusts, venture capital trusts, authorised unit trusts or open ended 

investment companies will be subject to the same taxation treatment in respect of the Notes as other 

Noteholders that are within the charge to UK corporation tax, other than with respect to profits, gains or 

losses carried to or sustained by a capital reserve in the case of investment trusts and venture capital trusts, 

and other than with respect to profits, gains or losses which fall to be dealt with under certain headings 

for gains/losses in the statement of total return for the accounting period in respect of the Notes in the 

case of authorised unit trusts and open-ended investment companies (or for those investment trusts, 

venture capital trusts, authorised unit trusts or open-ended investment companies preparing accounts in 

accordance with international accounting standards, profits, gains or losses specified by order made by the 

Treasury). Such capital profits, gains or losses will not be brought into charge to corporation tax. 

Other UK taxpayers 

Taxation of chargeable gains 

The Notes may not be treated by HMRC as constituting ‘‘qualifying corporate bonds’’ within the meaning 

of section 117 of the Taxation of Chargeable Gains Act 1992 because there is a provision for the Notes 

to be redeemed in or redenominated in euros. Therefore a disposal (including a redemption) of a Note 

by a Noteholder who is resident or ordinarily resident in the UK or who carries on a trade in the UK 

through a branch or agency to which the Note is attributable and who is not subject to UK corporation 

tax in respect of the Note may give rise to a chargeable gain or an allowable loss for the purposes of UK 

taxation of chargeable gains. 

Accrued Income Scheme 

The provisions of the accrued income scheme as set out in Chapter II of Part XVII of the Income and 

Corporation Taxes Act 1988 may apply in relation to a transfer of the Notes by certain Noteholders who 

are not subject to United Kingdom corporation tax. If such a transfer is made with accrued interest, the 

scheme usually applies to deem the transferor to receive an amount of income equal to the accrued 

interest. Generally, persons who: (i) are neither resident nor ordinarily resident in the United Kingdom; 

and (ii) do not carry on a trade in the United Kingdom through a branch or agency to which the Notes 

are attributable, will not be subject to the provisions of the scheme. 

Stamp Duty and Stamp Duty Reserve Tax 

No stamp duty or stamp duty reserve tax is payable on the issue of the Notes or on the transfer by delivery 

of a Note. 

177

SUBSCRIPTION AND SALE 

HSBC Bank plc whose principal offices are located at 8 Canada Square, London E14 5HQ, United 

Kingdom and Société Générale, London Branch whose principal offices are located at SG House, 41 

Tower Hill, London, EC3N 4SG, United Kingdom (the ‘‘Joint Lead Managers’’) have, pursuant to a 

subscription agreement dated the date of this Offering Circular between, among others, the Joint Lead 

Managers and the Issuer (the ‘‘Subscription Agreement’’), agreed (subject to certain conditions) with the 

Issuer to subscribe and pay for the Notes at the issue price of 100 per cent of their initial principal amount. 

The Issuer has agreed to reimburse each of the Joint Lead Managers for certain of its costs and expenses 

in connection with the issue of the Notes. Each Joint Lead Manager is entitled to be released and 

discharged from its obligations under the Subscription Agreement in certain circumstances prior to 

payment for the Notes to the Issuer. The Issuer has agreed to indemnify the Joint Lead Managers against 

certain liabilities in connection with the issue of the Notes. 

EEA Standard Selling Restriction 

In relation to each Member State of the European Economic Area which has implemented the Prospectus 

Directive (each, a ‘‘Relevant Member State’’), each Joint Lead Manager has represented and agreed that 

with effect from and including the date on which the Prospectus Directive is implemented in that Relevant 

Member State (the ‘‘Relevant Implementation Date’’) it has not made and will not make an offer of Notes 

to the public in that Relevant Member State prior to the publication of a prospectus in relation to the 

Notes which has been approved by the competent authority in that Relevant Member State or, where 

appropriate, approved in another Relevant Member State and notified to the competent authority in that 

Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect 

from and including the Relevant Implementation Date, make an offer of Notes to the public in that 

Relevant Member State at any time: 

(i) to legal entities which are authorised or regulated to operate in the financial markets or, if not so 

authorised or regulated, whose corporate purpose is solely to invest in securities; 

(ii) to any legal entity which has two or more of (1) an average of at least 250 employees during the last 

financial year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an annual net turnover 

of more than Euro 50,000,000, as shown in its last annual or consolidated accounts; or 

(iii) in any other circumstances which do not require the publication by the Issuer of a prospectus 

pursuant to Article 3 of the Prospectus Directive. 

For the purposes of this provision, the expression an ‘‘offer of Notes to the public’’ in relation to any Notes 

in any Relevant Member State means the communication in any form and by any means of sufficient 

information on the terms of the offer and the Notes to be offered so as to enable an investor to decide 

to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure 

implementing the Prospectus Directive in that Member State and the expression ‘‘Prospectus Directive’’ 

means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member 

State. 

United States of America 

The Notes have not been and will not be registered under the Securities Act and may not be offered or 

sold within the United States or to, or for the account or benefit of, US persons except in certain 

transactions exempt from the registration requirements of the Securities Act. Terms used in this 

paragraph have the meanings given to them by Regulation S. 

The Notes are in bearer form and are subject to US tax law requirements and may not be offered, sold 

or delivered within the United States or its possessions or to a United States person, except in certain 

transactions permitted by US tax regulations. Terms used in this paragraph have the meanings given to 

them by the US Internal Revenue Code of 1986 and regulations thereunder. 

Each Joint Lead Manager has agreed that it will not offer or sell the Notes, (i) as part of its distribution 

at any time and (ii) otherwise until 40 days after the later of the commencement of the offering or the 

Closing Date, within the United States or to, or for the account or benefit of, US persons, and it will have 

sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration to 

which it sells Notes during the distribution compliance period (as defined in Regulation S) a confirmation 

or other notice setting forth the restrictions on offers and sales of the Notes within the United States or 

to, or for the account or benefit of, US persons. 

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In addition, until 40 days after the commencement of the offering, an offer or sale of Notes within the 

United States by a dealer (whether or not participating in the offering) may violate the registration 

requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an 

available exemption from registration under the Securities Act. 


Each of the Joint Lead Managers has further represented and agreed that: 

(a) it has only communicated or caused to be communicated and will only communicate or cause to be 

communicated an invitation or inducement to engage in investment activity (within the meaning of 

Section 21 of the FSMA) received by it in connection with the issue or sale of the Notes in 

circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and 

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything 

done by it in relation to the Notes in, from or otherwise involving the United Kingdom. 

France 

Each Joint Lead Manager has represented and agreed that it has not offered or sold, and will not offer 

or sell, directly, or indirectly, the Notes to the public in France and that offers and sales of the Notes in 

France will be made only to qualified investors (investisseurs qualifiés) and/or a restricted circle of 

investors (cercle restreint d’investisseurs), provided that such investors are acting for their own account as 

defined and in accordance with Article L. 411-2 of the French Code monétaire et financier and decree no. 

98-880 dated 1 October 1998. The Notes will not be subject to any approval by or registration (visa) with 

the French Autorité des Marchés Financiers. 

In addition, each Joint Lead Manager has represented and agreed that it has not distributed or caused to 

be distributed and will not distribute or cause to be distributed in France this Offering Circular or any 

other offering material relating to the Notes other than to investors to whom offers and sales of the Notes 

in France may be made as described above. 

General 

Each Joint Lead Manager acknowledges that, save for having obtained the approval of the Offering 

Circulars by the Irish Stock Exchange no action has been or will be taken in any jurisdiction by any Joint 

Lead Manager that would permit an offer of the Notes to the public, or possession or distribution of the 

Offering Circulars or any other offering material, in any country or jurisdiction where action for that 

purpose is required. 

Each of the Joint Lead Managers undertakes that it will not, directly or indirectly, offer or sell any Notes, 

or distribute the Offering Circulars or any other material relating to the Notes in or from any country or 

jurisdiction except in circumstances that will result in compliance with applicable laws, orders, rules and 

regulations. 

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GENERAL INFORMATION 

1. The issue of the Notes has been authorised by resolution of the Board of Directors of the Issuer 

passed on 17 October 2005. 

2. It is expected that the admission of the Notes to listing on the Irish Stock Exchange’s market for 

listed securities will be granted on or about the Closing Date, subject only to issue of the Temporary 

Global Notes. The listing of the Notes will be cancelled if the Temporary Global Notes are not 

issued. Transactions will normally be effected for settlement in sterling and for delivery on the third 

working day after the day of the transaction. Prior to official listing and admission to trading, 

however, dealings in the Notes will be permitted by the Irish Stock Exchange in accordance with its 

rules. 

3. It is expected that the Notes will be accepted for clearance through Euroclear and Clearstream, 

Luxembourg. 

Notes Common Code ISIN 

Class A 023300893 XS0233008936 

Class B 023301016 XS0233010163 

Class C 023301067 XS0233010676 

Class D 023301105 XS0233011054 

4. So long as the Notes are admitted to listing on the Irish Stock Exchange’s market for listed securities, 

the most recently published audited annual accounts of the Issuer will be available for a period of 

at least 14 days from the Closing Date at the specified offices of the Issuer, the Irish Paying Agent 

and the Principal Paying Agent. The Issuer does not publish interim accounts. 

5. Neither of the Issuer nor any Borrower is nor has been involved in any governmental, legal or 

arbitration proceedings which may have, or have had, since the date of its incorporation, in the case 

of the Issuer, or, in the twelve months preceding the date of this Offering Circular, in the case of the 

Borrowers, a significant effect on its financial position, nor is the Issuer or any Borrower aware that 

any such proceedings are pending or threatened. 

6. Since the date of its incorporation, other than entering into the Subscription Agreement in respect 

of the Notes, the Issuer has not commenced operations and no statutory or non-statutory accounts 

in respect of the Issuer have been prepared. 

7. King Sturge, Ernst & Young and Rothman Pantall & Co. have given and not withdrawn their written 

consent to, as the case may be, the inclusion in this Offering Circular of their reports or to, reference 

to their reports in this Offering Circular and references to their respective names in the form and 

context in which they are included and have authorised the contents of those parts of this 

prospectus. 

8. Save as disclosed herein, (a) since 4 August 2005, there has been no material adverse change in the 

financial position or prospects of the Issuer (b) since 27 May 2005, there has been no material 

adverse change in the financial position or prospects of LCP Real Estate and (c) since 8 June 2005, 

there has been no material adverse change in the financial position or prospects of Proudreed Real 

Estate. 

9. English company law combined with the holding structure of the Issuer, covenants made by the 

Issuer in the Transaction Documents and the role of the Note Trustee and the Issuer Security 

Trustee are together intended to prevent any abuse of control of the Issuer. English company law 

combined with the holding structure of each Borrower, covenants made by each Borrower in the 

Transaction Documents and the role of the Borrower Security Trustee are together intended to 

prevent any abuse of control of the Borrowers. 

10. Save as disclosed in this Offering Circular, the Issuer has no outstanding loan capital, borrowings, 

indebtedness or contingent liabilities, nor has the Issuer created any mortgages, charges or given any 

guarantees. 

11. Copies of the following documents may be inspected in physical form during usual business hours 

on any week day (excluding Saturdays and public holidays) at the registered offices of the Irish 

Paying Agent (for so long as any of the Notes are listed on the Irish Stock Exchange) and the Issuer 

for so long as any Notes remain outstanding from the date of this Offering Circular: 

(a) the Memorandum and Articles of Association of the Issuer and each Borrower; 

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(b) the Valuation Reports; 

(c) the Financial Reports of Ernst & Young; 

(d) the Financial Reports of Rothman Pantall; 

(e) the Note Trust Deed; and 

(f) the Agency Agreement. 

12. There are no restrictions on the Joint Lead Managers, inter alios, acquiring Notes and/or providing 

investment advice and/or financing to or for third parties. Consequently conflicts of interest may 

exist or may arise as a result of the Joint Lead Managers having different roles in this transaction 

and/or carrying out transactions for third parties. 

13. A copy of this Offering Circular will be delivered to the Registrar of Companies in Ireland. 

14. The total expenses relating to the admission to trading of the Notes are estimated at £1,393,000. 

181

SCHEDULE OF DEFINED TERMS 

The following terms apply throughout this Offering Circular unless the context otherwise requires. 

1995 Act means the Landlord and Tenant (Covenants) Act 1995; 

Account Bank means, as at the Closing Date, HSBC Bank plc acting through its office at 8 Canada Square, 


Account Bank and Cash Management Agreement means (1) the account bank and cash management 

agreement dated on or about the Closing Date between LCP Real Estate, the Cash Manager, the Account 

Bank and the Borrower Security Trustee, and/or (2) the account bank and cash management agreement 

dated on or about the Closing Date between Proudreed Real Estate, the Cash Manager, the Account 

Bank and the Borrower Security Trustee, and/or (3) the account bank and cash management agreement 

dated on or about the Closing Date between the Issuer, the Cash Manager, the Account Bank and the 

Issuer Security Trustee, or all of them as the context requires; 

Accountholder means each Borrower and the Issuer; 

Accounting Standards Board means the Accounting Standards Board of the United Kingdom or such 

replacement body as is from time to time recognised under the Companies Act 1985 for the purpose of 

issuing accounting standards; 

Accounts means the Borrower Accounts or the Issuer Accounts or both, as the context requires; 

Acquisition Consideration means the consideration payable in respect of an Additional Secured Property, 

excluding all associated costs, taxes (including VAT) and expenses incurred by the relevant Borrower; 

Additional Loan means a Further Loan and/or a New Loan; 

Additional Notes means any Further Notes and/or any New Notes; 

Additional Secured Property means any new freehold or long leasehold property within one or more of the 

retail, industrial and office sectors located in England, Wales or Scotland which the Borrowers may 

acquire from time to time using monies credited to the Disposal Proceeds Account and/or other sums 

available to the Borrowers and which can be used for such purpose or any combination thereof and which, 

in any such case, complies with the criteria set out in the relevant Commercial Mortgage Loan Agreement 

and which has not been subsequently disposed of in accordance with the relevant Commercial Mortgage 

Loan Agreement; 

Adjusted Principal Amount Outstanding means, on any date in relation to a Note, the Principal Amount 

Outstanding of that Note after deducting the Principal Losses allocated to that Note in accordance with 

Condition 6(e) on or prior to that date; 

Administrator means any person (being a licensed insolvency practitioner), who is appointed by the Issuer 

Security Trustee (whether out of court or otherwise) to act jointly, or jointly and severally, as an 

administrator of the Issuer or of all or any part of the Issuer Charged Property; 

Advance means the aggregate principal amount of all Liquidity Drawings and any Liquidity Facility 

Standby Drawings for the time being outstanding; 

Agency Agreement means an agency agreement dated on or about the Closing Date and made between, 

inter alios, the Issuer, the Issuer Security Trustee and the Agents pursuant to which provision is made for, 

inter alia, the payment of interest and repayment of principal in respect of the Notes; 

Agent Bank means, as at the Closing Date, HSBC Bank plc, acting through its office at 8 Canada Square, 


Agents means the Paying Agents and the Agent Bank or, where the context requires, any of them; 

Agreed Form of Certificate of Title means the City of London Law Society Land Law Sub-Committee Long 

Form Certificate of Title (5 th Edition or any subsequent updated edition); 

Agreed Form of Security means: 

(a) in the case of real estate situated in England and Wales, a first-ranking charge by way of a legal 

mortgage; 

(b) in the case of property situated outside England and Wales, such other form of security as may be 

agreed from time to time between the Borrowers and the Borrower Security Trustee as being 

equivalent in all material respects to a first-ranking charge by way of a legal mortgage over property 

situated in England and Wales; 

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(c) in the case of shares, such form of security as (in the case of shares in companies incorporated in 

England and Wales) is customarily used to create a first ranking fixed charge or (in the case of shares 

in any other companies) as may be agreed from time to time between the Borrowers and the 

Borrower Security Trustee as being equivalent in all material respects to a first ranking fixed charge 

over shares in companies incorporated in England and Wales; or 

(d) in the case of any other form of property, right or interest, such other form of security as may be 

agreed from time to time between the Borrowers and the Borrower Security Trustee; 

Agreed Form of Security Document means a document which creates an Agreed Form of Security and 

which is in a form agreed between the relevant Obligors and as shall be satisfactory to the Borrower 

Security Trustee from time to time; 

Allocated Loan Amount means, in relation to each Secured Property, the Initial Valuation of the relevant 

Secured Property multiplied by 70 per cent.; 

Ancillary Income means, inter alia, any sums paid or payable in respect of cash takings from car parks 

situated at the Secured Properties, insurance rebates receivable, mall income and barrow rental in respect 

of the Secured Properties, any other monies paid or payable in respect of occupation and/or usage of any 

part of that Secured Property and any fixture or fitting on that Secured Property including any fixture or 

fitting on that Secured Property for display or advertisement, on licence or otherwise and any 

administration facilities provided at the Secured Properties; 

Applicable Accounting Principles means: 

(a) the accounting principles, standards, conventions and practices, from time to time and at any time 

generally accepted in the United Kingdom and which have been approved by the Accounting 

Standards Board, and which implement the requirements of the Companies Act 1985 (as amended 

by the Companies Act 1989) and of any other legislation or regulation, compliance with which is 

required by law in connection with the preparation of accounts by companies incorporated with 

limited liability, or compliance with which is generally adopted and practised by such companies in 

the United Kingdom in effect from time to time and consistently applied; or 

(b) the Proposed Accounting Principles; 

Approved Firm means in relation to a required legal opinion, a firm of lawyers from the panel of lawyers 

chosen by the relevant Borrower, as shall be satisfactory to the Borrower Security Trustee from time to 

time, the firm proposed by the Obligors in respect of that legal opinion to be specifically approved for that 

purpose by the Borrower Security Trustee in advance; for these purposes the initial agreed panel is 

Freshfields Bruckhaus Deringer, Linklaters and Lovells, in each case including successors to these firms 

or any firm arising as a result of a merger entered into by one or more of these firms; 

Approved Valuer means King Sturge, including any successors arising as a result of a merger entered into 

by it or such other international or other leading United Kingdom or international real estate valuer 

instructed by the Borrowers as may have been approved by the Borrower Security Trustee from time to 

time; 

Assigned Contractual Rights means the right, title, interest and benefit of the Issuer under each of the 

Transaction Documents to which it is a party or in respect of which it has the benefit; 

Auditor’s Report means the report from (1) Rothman Pantall & Co. in relation to the financial statements 

of either LCP Real Estate or Proudreed Real Estate, or (2) Ernst & Young in relation to the financial 

statements of the Issuer, as the context requires; 

Available Commitment means, at any time, the Liquidity Facility Maximum Amount less the outstanding 

Advances at that time; 

Basel II means the new capital adequacy framework, published by the Basel Committee on Banking 

Supervision, on the Bank for International Settlements’ web-site entitled: the International Convergence 

of Capital Measurement and Capital Standards: a Revised Framework; 

Basic Terms Modification means: 

(a) any modification which would have the effect, in respect of any Class of Notes, of (i) postponing or 

altering any day for the payment of interest, (ii) reducing, cancelling or rescheduling the amount of 

principal or the Rate of Interest payable or any fees, (iii) altering the priority of payment of interest 

or principal or other amounts payable on the Notes under the Conditions, (iv) altering the currency 

of payment (other than pursuant to Condition 7(k) (Payments – Change in Currency) or (v) altering 

the Final Maturity Date; or 

183

(b) any modification to the Issuer Security in any manner not expressly contemplated by the Transaction 

Documents unless in the Note Trustee’s opinion it is not materially prejudicial to the interests of the 

Noteholders of any Class; or 

(c) removing or replacing the Note Trustee or the Issuer Security Trustee; or 

(d) an alteration of (A) the definition of Basic Terms Modification, (B) the quorum required to pass an 

Extraordinary Resolution, (C) the majority required to pass an Extraordinary Resolution or (D) the 

majority required to pass a Written Resolution, 

(e) provided that any modification which is made by the Note Trustee to correct a manifest error or is 

of a formal, minor or technical nature shall not constitute a Basic Terms Modification; 

Borrower Accounts means, in respect of any Borrower, the Borrower Transaction Account, the Disposal 

Proceeds Account, the Insurance Proceeds Account, the Cash Trap Account and the Contingent Tax 

Security Account maintained in the name of that Borrower with the Account Bank; 

Borrower Debt Service Required Amount has the meaning given in the section entitled ‘‘Resources 

available to the Borrowers and the Issuer – Available Funds and their Priority of Application’’; 

Borrower Deed of Charge means (1) the deed of charge between, inter alios, LCP Real Estate and the 

Borrower Security Trustee dated at the Closing Date and (2) the deed of charge dated the Closing Date 

between, inter alios, Proudreed Real Estate and the Borrower Security Trustee as the context requires, 

together the Borrower Deeds of Charge; 

Borrower Distribution Account means the general account held in the name of the relevant Borrower (1) 

with HSBC Bank plc with account number 72806614, sort code 40-11-18 (in the case of LCP Real Estate), 

or (2) with National Westminster Bank with account number 39183718, sort code 60-00-01 (in the case of 

Proudreed Real Estate); 

Borrower Group means, in respect of LCP Real Estate, London and Cambridge Properties Limited and 

its subsidiaries and, in respect of Proudreed Real Estate, Proudreed Limited and its subsidiaries; 

Borrower Security Trustee means, as at the Closing Date, HSBC Trustee (C.I.) Limited, acting through its 

principal office at 1 Grenville Street, St. Helier, Jersey, Channel islands JE4 9PF; 

Borrower Shares means, in respect of each Parent Obligor and each Borrower, all shares specified in the 

relevant Equitable Mortgage Over Shares relating to the relevant Commercial Mortgage Loan Agreement; 

Borrower Transaction Account means the general transaction account held with the Account Bank in the 

name of the relevant Borrower with account number 59426416 (in the case of LCP Real Estate) or 

account number 59427015 (in the case of Proudreed Real Estate); 

Borrowers means LCP Real Estate and Proudreed Real Estate and Borrower means either such company, 

as the context requires; 

Business Day means a day (other than a Saturday or a Sunday) on which commercial banks are open for 

general business in London and Dublin; 

Calculation Date means, in relation to any Interest Payment Date, the day falling on the fifth Business 

Day prior to such Interest Payment Date; 

Calendar Quarter Dates means 31 March, 30 June, 30 September and 31 December; 

Cash Manager means, as at the Closing Date, HSBC Bank plc acting through its office at 8 Canada Square, 


Cash Trap Account means the account held with the Account Bank in the name of the relevant Borrower 

with account number 59426424 (in the case of LCP Real Estate) or account number 59427007 (in the case 

of Proudreed Real Estate); 

Certificates of Title means a certificate of title in respect of each Secured Property given on 16 September 

2005, as the same may be updated on the Closing Date, by either The Simkins Partnership or Lawrence 

Graham, as the case may be; 

Class means the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes or any 

combination of them; 

Class A Noteholders means the holders of the Class A Notes; 

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Class A Notes means the Original Class A Notes and, where the context requires, any Further Class A 

Notes; 

Class B Noteholders means the holders of the Class B Notes; 

Class B Notes means the Original Class B Notes and, where the context requires, any Further Class B 

Notes; 

Class C Noteholders means the holders of the Class C Notes; 

Class C Notes means the Original Class C Notes and, where the context requires, any Further Class C 

Notes; 

Class D Noteholders means the holders of the Class D Notes; 

Class D Notes means the Original Class D Notes and, where the context requires, any Further Class D 

Notes; 

Clearstream, Luxembourg means Clearstream Banking, société anonyme; 

Closing Date means 25 October 2005 or such later date as may be agreed between the Issuer, the 

Borrowers and the Joint Lead Managers; 

Commercial Mortgage Loan means each or any of the secured commercial mortgage loans made by the 

Issuer to a Borrower in accordance with the relevant Commercial Mortgage Loan Agreement; 

Commercial Mortgage Loan Agreement means (1) the loan agreement between, inter alios, LCP Real 

Estate and the Issuer dated the Closing Date; and/or (2) the loan agreement between, inter alios, 

Proudreed Real Estate and the Issuer dated the Closing Date, or both as the context requires; 

Commitment Period means the period commencing on the Closing Date and concluding on the day which 

is 364 days after the Closing Date (including, for the purpose of counting such number of days, the Closing 

Date) or such other date which may be the last day of any new Commitment Period agreed pursuant to 

the terms of the Liquidity Facility Agreement; 

Committee means the Basel Committee on Banking Supervision; 

Common Depositary means HSBC Bank plc, as common depositary on behalf of Euroclear and 

Clearstream, Luxembourg; 

Companies Court means the UK court undertaking work in connection with, among other things, the 

winding up of companies that was established under the Companies (Winding up) Act 1890; 

Conditions means the terms and conditions applicable to the Notes, as set out in the Note Trust Deed and 

as may be modified in accordance with the Note Trust Deed and any reference to a particular numbered 

Condition shall be construed accordingly and references in the Conditions to paragraphs shall be 

construed as paragraphs of such Conditions; 

Contingent Tax Security Account means the deposit account held with the Account Bank in the name of 

the relevant Borrower, with account number 59430541 (in the case of LCP Real Estate) or account 

number 59429922 (in the case of Proudreed Real Estate), in each case established and maintained in 

accordance with the relevant Tax Deed of Covenant; 

Couponholders means the holders from time to time of the Coupons; 

Coupon Sheet has the meaning given to it in Condition 7(i) (Payments – Exchange of Talons); 

Coupons means the bearer interest coupons in, or substantially in, the form set out in Schedule 4 (Form 

of Coupon) to the Note Trust Deed and for the time being outstanding or, where the context requires, a 

specific number of them and includes (where applicable) the Talons in respect of such Coupons; 

CPO Disposal means a disposal of the whole or part of a Disposal Property in connection with a 

compulsory purchase order; 

Dangerous Substance means any controlled, hazardous, special, toxic, radioactive or other dangerous 

emissions or waste and any natural or artificial substance in any form (whether alone or in combination 

with any other emission or substance) which is capable of causing material harm to humans or any other 

living organism or damaging the Environment or public health or welfare; 

Declaration of Trust means a declaration of trust deed dated on or about the Closing Date and made by 

the Share Trustee; 

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Defaulting Party has the meaning given to it in the 2000 ISDA Definitions; 

Definitive Note means in respect of each Class of Notes, each bearer note issued or to be issued in 

definitive form for that Class in, or substantially in, the form set out in Schedule 3 (Form of Definitive 


Determination Date means the date that is three Business Days prior to any Interest Payment Date; 

Development means any development, extension, refurbishment and/or alteration to a Secured Property; 

Disposal Date means the date on which the disposal, transfer or conveyance of a Disposal Property take 

place; 

Disposal Expenses means (a) any VAT, stamp duty or stamp duty land tax for which any Borrower is or 

becomes liable as a result of the Permitted Disposal or in respect of which any Borrower has a contingent 

liability under arrangements made in relation thereto, and (b) any corporation tax, including corporation 

tax on chargeable gains or any other tax present or future for which any Borrower is liable as a result of 

the Permitted Disposal (and/or if the corporation tax otherwise payable is to be sheltered by a surrender 

to the Borrower of group relief or pursuant to a Section 171A election in accordance with the relevant 

Tax Deed of Covenant or pursuant to a Section 179A election in accordance with the relevant Tax Deed 

of Covenant, to include, for the avoidance of doubt, any payment for group relief or pursuant to a Section 

171A election in accordance with the relevant Tax Deed of Covenant or pursuant to a Section 179A 

election in accordance with the relevant Tax Deed of Covenant), and (c) all reasonable third party costs, 

fees and expenses incurred in connection with a Permitted Disposal; 

Disposal Proceeds Account means the deposit account held with the Account Bank in the name of the 

relevant Borrower with account number 59426408 (in the case of LCP Real Estate) or account number 

59426990 (in the case of Proudreed Real Estate); 

Disposal Property means a Secured Property which a Borrower may be entitled to dispose of subject to 

compliance with the conditions set out in the relevant Commercial Mortgage Loan Agreement; 

Drawing means a Liquidity Drawing or a Liquidity Facility Standby Drawing; 

Due Diligence Criteria means the criteria for the due diligence which must be carried out as part of 

acquiring an Additional Secured Property as set out in the section entitled ‘‘Summary of Principal 

Documents’’ ‘‘The Commercial Mortgage Loan Agreements’’ ‘‘Acquisition of Additional Properties’’; 

Due Diligence Reports means the Auditors Reports, Certificates of Title, Environmental Reports, 

Overview Reports and Valuation Reports; 

Elected Disposal means a voluntary disposal by any Borrower of a Disposal Property for any reason; 

Eligible Investments means sterling gilt edged securities and sterling demand or time deposits, cash, 

certificates of deposit and short term debt obligations (including commercial paper), provided that in all 

cases such investments have a maturity date falling no later than the Business Day preceding the next 

following Loan Interest Payment Date or Interest Payment Date, as the case may be, depending on 

whether the investment is made with sums standing to the credit of a Borrower Account or an Issuer 

Account, respectively, and either (i) the short term unsecured, unguaranteed and unsubordinated debt 

obligations of the issuing or guaranteeing entity or the entity with which the demand or time deposits are 

made (being an authorised bank under the FSMA) are rated A-1+ by S&P and F-1 (if the relevant 

investments have a maturity of no more than 30 days) or F-1+ (in all other cases) by Fitch or higher (or 

such other credit rating as may be approved by the Rating Agencies from time to time) or (ii) such 

investments are made in money market funds that are rated ‘‘AAAm’’ or ‘‘AAAm-G’’ by S&P and 

‘‘AAA/V1+’’ by Fitch (or have such other credit rating as may be approved by the Rating Agencies from 

time to time); 

Encumbrance includes any mortgage, charge (whether legal or equitable), assignation in security, pledge, 

lien, hypothecation or other encumbrance securing any obligation of any person (including, without 

limitation, title transfer and retention arrangements (other than those entered into in the ordinary course 

of business), sale and leaseback, sale and repurchase arrangements or any other agreement, trust or 

arrangement having the effect of providing security). For the avoidance of doubt, Encumbrance shall not 

include (a) a right of counterclaim or (b) a right of set-off arising by contract or operation of law not 

constituting a mortgage or charge under applicable law; 

Enterprise Act means the Enterprise Act 2002; 

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Environment means all or any of the following media: air (including air within buildings or other structures 

and whether above or below ground), land (including buildings and any other structures or erections in, 

on or under it and any soil and anything below the surface of land), land covered with water and water 

(including sea, ground, drinking surface water and waters in drains and sewers) and any living organism 

or ecological systems supported by any one or more such media; 

Environmental Approvals means any permit, approval, identification number, consent, licence or other 

authorisation required under any applicable Environmental Laws; 

Environmental Law means all laws and regulations of any relevant jurisdiction concerning pollution or the 

protection of human health or welfare of the Environment or the conditions of the workplace, including 

fire protection and electrical safety systems or the generation, transportation, storage, treatment or 

disposal of Dangerous Substances or the clean-up or remediation of any of the same that arises as a result 

of the presence or release, emission, leakage, or spillage of any Dangerous Substances at or from any 

Secured Property at any time owned or occupied or used by the relevant Borrower(s); 

Environmental Reports means the environmental risk assessment reports prepared in respect of a sample 

of the Secured Properties and any similar reports prepared in respect of Additional Secured Properties; 

Equitable Mortgage Over Shares means (1) the equitable mortgage over shares in LCP Real Estate 

between, inter alios, L.C.P. Commercial Limited and the Borrower Security Trustee dated the Closing 

Date or (2) the equitable mortgage over shares in Proudreed Real Estate between, inter alios, Proudreed 

Limited and the Borrower Security Trustee dated the Closing Date, or both as the context requires; 

Ernst & Young means Ernst & Young LLP (registered number OC300001) whose registered office is at 

1 More London Place, London, SE1 2AF and who is a member of the Institute of Chartered Accountants; 

Estimated Rental Value means market rent within the meaning of the RICS Appraisal and Valuation 

Standards together with any guidance notes issued from time to time current at the time of the valuation 

(or, failing that, any comparable replacement standard as approved by the Borrower Security Trustee 

defining generally accepted valuation terms, requirements and practices) assuming: 

(a) a lease on the terms of the relevant Occupational Leases is in force (other than the amount of rent 

but including the provisions as to rent escalation); 

(b) that no premium passed and that any rent free period is in respect of the time which would have 

been needed by the incoming Occupational Tenant to make the property fit for occupation (the 

benefit of which the incoming Occupational Tenant has received); 

(c) that the obligations on the part of the Occupational Tenants in the Occupational Leases have been 

observed and performed; 

(d) that any building on the relevant Secured Property has been constructed to a shell finish, but 

includes any completed alterations funded by the Borrower; and 

(e) if the property has been destroyed or damaged, that the property has been fully reinstated as at the 

valuation date; 

Euroclear means Euroclear Bank S.A./N.V., as operator of the Euroclear system; 

Exchange Date means with respect to a Note a date not earlier than 40 days after the Closing Date or the 

Further Issue Date, as applicable, on which the Temporary Global Note will be exchangeable in whole or 

in part for interests in a Permanent Global Note; 

Exchange Event means: 

(a) both Euroclear and Clearstream, Luxembourg are closed for business for a continuous period of 

14 days (other than by reason of holiday, statutory or otherwise) or announce an intention 

permanently to cease business and in fact do so cease business and no other clearing system 

approved by the Note Trustee is available; or 

(b) as a result of any amendment to, or change in the laws or regulations of England and Wales (or any 

political sub-division thereof) or of any authority therein or thereof having power to tax or in the 

interpretation by a revenue authority or a court or in the administration of such laws or regulations 

which becomes effective on or after the Closing Date, the Issuer or any Paying Agent is or will be 

required to make any withholding or deduction from any payment in respect of the Notes which 

would not be required if the Notes were in definitive form; 

187

Extraordinary Resolution means a resolution passed at a Meeting duly convened and held in accordance 

with the Provisions for Meetings of Noteholders by a majority of not less than 75 per cent. of the votes 

cast, whether on a show of hands or a poll; 

Fees and Expenses means any fees, costs and expenses, other remuneration and indemnity payment which 

are due and payable; 

Final Maturity Date means the Interest Payment Date falling in August 2016; 

Final Offering Circular means the offering circular dated 19 October 2005 relating to the issue of the 

Notes; 

Final Repayment Date means the Loan Interest Payment Date falling in August 2014; 

Financial Covenants means the financial covenants of the Borrower in respect of the Historical ICR and 

the Projected ICR; 

Financial Indebtedness means any indebtedness for or in respect of: 

(a) monies borrowed or raised and includes capitalised interest; 

(b) any amount raised by acceptance under any acceptance credit facility or by documentary credits or 

discounted instruments; 

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, 

loan stock or any similar debt instrument; 

(d) the amount of any liability in respect of any lease or hire purchase contract which would, in 

accordance with the Applicable Accounting Principles, be treated as a finance or capital lease; 

(e) receivables sold or discounted (other than any receivables to the extent they are sold or discounted 

on a non-recourse basis); 

(f) any amount raised under any other transaction (including any forward sale or purchase agreement) 

having the commercial effect of a borrowing; 

(g) any derivative transaction entered into in connection with protection against or benefit from 

fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only 

the marked to market value shall be taken into account); 

(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary 

letter of credit or any other instrument issued by a bank or financial institution; and 

(i) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to 

in paragraphs (a) to (h) above; 

Financial Information means the audited, pro forma, financial statements of the relevant Borrower Group 

for the last three complete financial years (to the extent available in respect of any particular member of 

the relevant Borrower Group); 

Financial Regulator means the Irish Financial Services Regulatory Authority; 

Fitch means Fitch Ratings Ltd. or any successor to its rating business; 

Fixtures means, in relation to any Secured Property, all fixtures and fittings (including trade fixtures and 

fittings) and fixed plant, machinery and equipment owned by the Borrower from time to time on or 

forming part of such property; 

Forward-Looking Calculation Period means, in respect of any Loan Calculation Date, the period of three 

months which begins on (and excludes) the Calendar Quarter Date immediately preceding such Loan 

Calculation Date (or, in respect of the first Forward-Looking Calculation Period, the later of such 

Calendar Quarter Date and the Closing Date) and ends on (and includes) the next following Calendar 

Quarter Date. 

FRI Lease means a full repairing and insuring lease; 

FSMA means the Financial Services and Markets Act 2000; 

Further Class A Notes has the meaning given to it in Condition 20(a) (Issue of Further Notes – Issue); 

Further Class B Notes has the meaning given to it in Condition 20(a) (Issue of Further Notes – Issue); 

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Further Class C Notes has the meaning given to it in Condition 20(a) (Issue of Further Notes – Issue); 

Further Class D Notes has the meaning given to it in Condition 20(a) (Issue of Further Notes – Issue); 

Further Issue means the issue of Further Notes; 

Further Issue Date means the date on which Additional Notes are issued; 

Further Loan means a further loan requested by a Borrower, pursuant to the relevant Commercial 

Mortgage Loan Agreement, by written notice to the Issuer, the Borrower Security Trustee and the Rating 

Agencies and funded by an issue of Further Notes; 

Further Notes means any further Notes issued pursuant to Condition 20 (Issue of Further Notes, 


Further Permanent Global Note means, in respect of each Class of Further Notes, the bearer permanent 

global note for that Class of Further Note in or substantially in the form set out in Schedule 2 (Form of 

Permanent Global Note) to the Note Trust Deed; 

Further Temporary Global Note means, in respect of each Class of Further Notes, the bearer temporary 

global note for that Class of Note in or substantially in the form set out in Schedule 1 (Form of Temporary 

Global Note) to the Note Trust Deed; 

GAAP means generally accepted accounting principles in the United Kingdom; 

Global Notes means the Permanent Global Note and the Temporary Global Note or, where the context 

requires, any of them, plus any Further Permanent Global Notes, any Further Temporary Global Notes, 

any New Permanent Global Notes and any New Temporary Global Notes, if issued; 

Gross Cash Proceeds means in the case of any Permitted Disposal, the total consideration received by the 

relevant Borrower in connection with such disposal; 

Gross Rental Income means, for any given time period, the aggregate of all amounts paid or payable (as 

applicable) (together with any amounts attributable to VAT) to or for the account of the relevant 

Borrower in connection with the letting or use of any Secured Property, including each of the following 

amounts (without double counting): 

(a) rent, licence fees and any amounts applied from any security deposit held for performance of an 

Occupational Tenant’s obligations, in payment of such obligations; 

(b) a sum equal to any apportionment of rent allowed in favour of the Borrower; 

(c) any Ancillary Income; 

(d) any sum paid or payable under any policy of insurance in respect of loss of rent or interest on rent; 

(e) any sum paid or payable, or the value of any consideration given, for the surrender or variation of 

any Occupational Lease; 

(f) any sum paid or payable by any guarantor of any Occupational Tenant under any Occupational 

Lease; 

(g) any interest paid or payable on, and any damages, compensation or settlement paid or payable in 

respect of, any sum referred to above less any related fees and expenses incurred (which have not 

been reimbursed by another person) by the Borrower; 

(h) proceeds paid by way of reimbursement of or provision for Service Charge Expenses; 

(i) any contribution to a sinking fund by an Occupational Tenant; and 

(j) any contribution by an Occupational Tenant towards ground rent or any other sum due under a 

Headlease; 

Headlease means any lease, letting, underlease or sublease pursuant to which the relevant Borrower 

derives its estate or interest in the Leasehold Secured Properties; 

Hedging Agreement means each ISDA Master Agreement (1992 Multi-currency Cross-border Version), 

the schedule thereto and each confirmation, each dated on or before the Closing Date between the Issuer 

and each Hedging Provider and the transactions effected thereunder, together the Hedging Agreements; 

Hedging Credit Support Document means, in respect of each Hedging Agreement and Hedging Provider, 

the 1995 ISDA Credit Support Annex (Bilateral Form-Transfer) or such other collateral agreement as 

may be entered into between the Issuer and the relevant Hedging Provider in relation to the relevant 

Hedging Agreement; 

189

Hedging Downgrade Event has the meaning given in the Hedging Agreements but, in any event, equating 

to the Hedging Providers ceasing to have a short term debt rating of A-1 by S&P and a combined short 

term rating of at least F1 and long term rating of at least A by Fitch and, in either case, the then current 

rating of the outstanding Notes is as a result downgraded or placed under review for a possible 

downgrade; 

Hedging Payments means those payments due from the Hedging Providers under the Hedging Agreements; 

Hedging Providers means, as at the Closing Date, HSBC Bank plc and Société Générale, acting through 

their offices at 8 Canada Square, London, E14 5HQ and Tour S.G., 17 Cours Valmy, 97972 Paris La 

Defense respectively (or such other replacement parties as may be appointed by the Issuer in accordance 

with the Transaction Documents); 

Hedging Subordinated Amounts means any amounts due to the Hedging Providers under the Hedging 

Agreements (other than any amounts attributed to the return of collateral to such Hedging Provider) 

either (a) due to the occurrence of an Event of Default (as defined under the Hedging Agreements) where 

the Hedging Provider is the Defaulting Party (as defined in the Hedging Agreements) or a Hedging 

Downgrade Event under such Hedging Agreement in respect of which the Hedging Provider is the 

defaulting or affected party or (b) in respect of amounts by which any payment made to the relevant 

Hedging Provider under the relevant Hedging Agreement is increased as a consequence of an amount for 

or on account of Tax being required to be withheld or deducted from that payment; 

Hedging Termination Payments means any amounts due to the Hedging Providers under the Hedging 

Agreements (to the extent not funded by payments of interest in respect of the Commercial Mortgage 

Loans) including any amounts due to a Hedging Provider under a Hedging Agreement on termination of 

such Hedging Agreement but excluding any Hedging Subordinated Amounts; 

Historical Calculation Period means, in respect of a Loan Calculation Date, the period of twelve months 

(or less in respect of the first twelve months after the Closing Date), which begins on (and excludes) a 

Calendar Quarter Date falling on or after the Closing Date and ends on (and includes) the Calendar 

Quarter Date preceding such Loan Calculation Date provided that any such calculations required for an 

Historical Calculation Period that contains fewer than four complete financial quarters will be done in 

each case only on the basis of taking the actual figures for any complete quarters contained in such 

Historical Calculation Period; 

Historical ICR means, as of any Loan Calculation Date, the ratio of the Historical Net Rental Income to 

the Historical Interest Charges in respect of the Historical Calculation Period in respect of such Loan 

Calculation Date; 

Historical Interest Charges means, in relation to an Historical Calculation Period, without double 

counting, the accrued cost of interest for the relevant Borrower under the relevant Commercial Mortgage 

Loan Agreement during such Historical Calculation Period; 

Historical Net Rental Income means, in respect of any Historical Calculation Period, the sum of: 

(a) the aggregate amount of Gross Rental Income (excluding any amounts attributable to VAT), as 

reported in the relevant quarterly financial statements in accordance with the then-current 

Applicable Accounting Principles (including as to the treatment of any non-cash entries relating to 

rent free periods or tenants’ incentives and any premium or other consideration paid to a Borrower 

in connection with the surrender of an Occupational Lease); 

(b) plus, without double counting, any interest receivable by the relevant Borrower from a third party 

over the relevant Historical Calculation Period; 

(c) minus any amounts under items (h) to (j) of the definition of Gross Rental Income in respect of the 

relevant Historical Calculation Period; and 

(d) minus any amounts of Gross Rental Income (excluding for these purposes any items already 

excluded by (c) above) arising in respect of the Secured Properties since the Closing Date and 

recognised as being bad or doubtful in the relevant Historical Calculation Period; 

less the sum of: 

(i) fees payable to the Property Manager (or its agents), to the extent not recoverable from 

Occupational Tenants; 

190

(ii) any fees and expenses payable by the Borrower to the Borrower Security Trustee and its 

appointees (if any) under the provisions of any Obligor Transaction Document; 

(iii) any amounts payable by the Borrower to the Issuer by way of On-going Facility Fee under the 

Commercial Mortgage Loan Agreement in respect of amounts described in sub-paragraphs 

(a) to (f) and sub-paragraphs (j) and (k) of the definition of On-going Facility Fee, after 

deducting from such On-going Facility Fee an amount equal to any interest standing to the 

credit of the Issuer Transaction Account on the current Loan Calculation Date; 

(iv) any amount payable by or on behalf of the Borrower to the Account Bank and the Cash 

Manager under the terms of the relevant Account Bank and Cash Management Agreement in 

respect of the Fees and Expenses of the Account Bank and the Cash Manager, respectively; 

(v) any amount due in respect of any ground rent or other sum due from the Borrower under a 

Headlease, to the extent not recoverable from Occupational Tenants; 

(vi) (without double counting in respect of items already included in (i) to (v) above) the aggregate 

amount as reported in the relevant quarterly financial statements of all Service Charge 

Expenses incurred by the relevant Borrower, to the extent not recoverable from Occupational 

Tenants; and 

(vii) any amounts of irrecoverable VAT on amounts paid or payable under (i) to (vi) above, 

in each case, in respect of the relevant Historical Calculation Period; 

HMRC means Her Majesty’s Revenue & Customs; 

Incoming Property means a property which is available to be substituted for the relevant Secured Property 

within the Property Portfolio and which has been selected by the Borrower; 

Information means, together, the Investor Presentation Materials, the Tenancy Schedules, the Due 

Diligence Reports, the Model Information, the Investor Reports, the Financial Information and the 

Offering Circulars and such other information as may be or have been provided to the Rating Agencies 

from time to time; 

Information Meeting has the meaning given to it in Condition 19(h) (Information Meeting); 

Initial Facility Fee means an amount equal to all the fees, costs and expenses properly and reasonably 

incurred by the Issuer on or before the Closing Date in connection with the issue of the Notes, the making 

of the Commercial Mortgage Loans and the negotiation, preparation and execution of each Issuer 

Transaction Document. As between the Borrowers and the Issuer, Initial Facility Fee means that 

Borrower’s proportionate share (divided as between the Borrowers by reference to the Principal amounts 

advanced under their respective Commercial Mortgage Loans) of all amounts making up such fee; 

Initial Loan means in respect of each Borrower, the term loan facility advanced by the Issuer to such 

Borrower pursuant to the relevant Commercial Mortgage Loan Agreement on the Closing Date; 

Initial Valuation means the value of the Secured Property as at the Closing Date or, in respect of an 

Additional Secured Property, the date it was acquired; 

Insolvency Act means the Insolvency Act 1986; 

Insolvency Event in respect of a company means: 

(a) the initiation of or consent to Insolvency Proceedings by such company or any other person or the 

presentation of a petition for the making of an administration order (other than in the case of the 

Issuer) and, in the opinion of the Note Trustee, such proceedings not being disputed in good faith 

with a reasonable prospect of success; or 

(b) the making of an administration order in relation to such company; or 

(c) an encumbrancer (excluding, in relation to the Issuer, the Issuer Security Trustee or any receiver or 

manager appointed by the Issuer Security Trustee) taking possession of the whole or any substantial 

part of the undertaking or assets of such company; or 

(d) a distress, diligence, execution or other process being levied or enforced upon or sued out against 

the whole or any substantial part of the undertaking or assets of such company (excluding, in 

relation to the Issuer, by the Issuer Security Trustee or any receiver appointed by the Issuer Security 

Trustee) and such order, appointment, possession or process (as the case may be) not being 

discharged or otherwise ceasing to apply within 14 days; or 

191

(e) the making of an arrangement, composition, reorganisation with or conveyance to or assignment for 

the creditors of such company generally or the making of an application to a court of competent 

jurisdiction for protection from the creditors of such company generally; or 

(f) the passing by such company of an effective resolution or the making of an order by a court of 

competent jurisdiction for the winding up or dissolution of such company (except, in the case of the 

Issuer, a winding up for the purpose of a merger, reorganisation or amalgamation the terms of which 

have previously been approved either in writing by the Note Trustee or by an Extraordinary 

Resolution); or 

(g) the appointment of an Insolvency Official in relation to such company or in relation to the whole or 

any substantial part of the undertaking or assets of such company (excluding, in relation to the 

Issuer, an administrative receiver or other receiver or manager appointed by the Issuer Security 

Trustee pursuant to the Issuer Deed of Charge); 

Insolvency Official means a liquidator, provisional liquidator, administrator (whether appointed by the 

court or otherwise), administrative receiver, receiver or manager, nominee, supervisor, trustee in 

bankruptcy, conservator, guardian or other similar official in respect of a company or partnership or in 

respect of all (or substantially all) of the company’s or partnership’s assets or in respect of any 

arrangement or composition with creditors; 

Insolvency Proceedings means the winding-up, dissolution, company voluntary arrangement or administration 

of a company or corporation and shall be construed so as to include any equivalent or analogous 

proceedings under the law of the jurisdiction in which such company or corporation is incorporated or of 

any jurisdiction in which such company or corporation carries on business including the seeking of 

liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection 

or relief from creditors or the appointment of an Insolvency Official; 

Insolvency Regulation means Council Regulation (EC) No. 1346/2000 of 29 May 2000; 

Insurance Policy means, in respect of any Borrower, each of the policies of insurance set out in the 

Borrower Deed of Charge relating to the relevant Commercial Mortgage Loan Agreement and any 

policies of insurance (other than the policies of life assurance or life insurance) taken out by or on behalf 

of any Borrower (including any insurances taken out by landlords or Occupational Tenants) and any 

replacement policies thereof, in which any Borrower may now or hereafter have an interest; 

Insurance Proceeds Account means the deposit account held with the Account Bank in the name of the 

relevant Borrower with account number 59426381 (in the case of LCP Real Estate) or account number 

59427023 (in the case of Proudreed Real Estate); 

Insurer Rating Criteria means a rating of ‘‘A’’ or its equivalent (or better) for long term debt obligations 

from both Fitch and S&P; 

Intellectual Property means all rights to patents, trademarks, business names, know-how and other 

intellectual property rights whether arising through ownership, licence or use and whether registered, 

subject to registration or otherwise; 

Interest Amount has the meaning given to it in Condition 5(d) (Interest – Determination of Rates of Interest 

and Calculation of Interest Amounts); 

Interest Determination Date means the day on which each Interest Period commences or in the case of the 

first Interest Period, the Closing Date; 

Interest Payment Date means the 25th day of February, May, August and November in each year, except 

if such day is not a Business Day, in which case it shall be the next succeeding Business Day unless such 

day falls in the next month, in which case it shall be the preceding Business Day, on which interest will 

be paid in respect of the Notes; 

Interest Period means each period from (and including) an Interest Payment Date and ending on (but 

excluding) the next Interest Payment Date provided that the first Interest Period shall be the period from 

(and including) the Closing Date and ending on (but excluding) the Interest Payment Date falling in 

February 2006 and the last Interest Period shall be the period from (and including) the Interest Payment 

Date falling in May 2016 and ending on (but excluding) the Final Maturity Date; 

Investment Value means the Market Value of the applicable property subject to the terms of the relevant 

Occupational Leases (which are assumed to exist when valuing an Incoming Property); 

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Investor Presentation Materials means: 

a) the combined investor presentation dated October 2005; 

b) the UK specific investor presentation dated October 2005; 

c) the datatape setting out the tenancy schedules for the Property Portfolios dated October 2005; and 

d) the term sheet relating to the issue of the Notes dated October 2005, 

in each case as signed for identification purposes by Freshfields Bruckhaus Deringer and Linklaters, 

together with all other materials, including slides, prepared by the Joint Lead Managers with the approval 

of the Borrowers (such approval not to be unreasonably withheld or delayed) or provided by any of the 

Borrowers, in each case in connection with the marketing of the Notes and the credit rating thereof; 

Investor Report means the report to be prepared quarterly by or on behalf of the Issuer based upon 

information provided by or on behalf of each Borrower; 

Irish Paying Agent means HSBC Institutional Trust Services (Ireland) Limited acting through its office at 

HSBC House, Harcourt Centre, Harcourt Street, Dublin 2, Ireland; 

Irish Stock Exchange means the Irish Stock Exchange Limited; 

Issuer means LCP Proudreed PLC, whose registered office is c/o SPV Management Limited, Tower 42 

(Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ, as issuer of the 

Notes; 

Issuer Account Bank and Cash Management Agreement means the Account Bank and Cash Management 

Agreement to which the Issuer is a party; 

Issuer Accounts means the Issuer Transaction Account and the Liquidity Facility Standby Account; 

Issuer Charged Property means the whole of the right, title, benefit and interest of the Issuer in the 

property, assets and rights of the Issuer charged by or pursuant to the Issuer Deed of Charge, including 

the Assigned Contractual Rights; 

Issuer Corporate Services Agreement means the agreement between the Issuer and the Issuer Corporate 

Services Provider and dated on or about the Closing Date; 

Issuer Corporate Services Provider means SPV Management Limited acting through their office at Tower 

42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ; 

Issuer Cost of Funds means, in relation to the Issuer and the relevant Commercial Mortgage Loan, the 

amount determined by the Cash Manager on or before the first day of each Loan Interest Period as being 

equal to: 

i x 365/x, where 

i is the aggregate amount of interest payable by the Issuer on all the Notes that the Cash Manager 

determines have contributed to the funding of the relevant Commercial Mortgage Loan (with the Original 

Notes being treated as contributing to the funding of the Initial Loan and any Additional Note(s) being 

treated as contributing to the funding of the related Additional Loan(s) advanced at time of such issue) 

during the next Interest Period for such Notes, after taking account of any interest rate swaps or interest 

rate cap transactions effected by the Issuer that the Cash Manager determines relate to the interest 

payable on such Notes, divided by the Principal Amount Outstanding on all such Notes; and 

x is the number of days in the relevant Interest Period; 

Issuer Debt Service Required Amount means, in respect of any Interest Payment Date, the amount 

required to pay the Issuer’s outstanding obligations under items (i) to (viii) of the Issuer Pre-Enforcement 

Priority of Payments on such Interest Payment Date, other than any interest due on any portion of the 

Notes to which any Principal Loss has been allocated in accordance with Condition 6(e) (Note Principal 

Payments, Principal Amount Outstanding, Adjusted Principal Amount Outstanding and Pool Factor); 

Issuer Deed of Charge means a deed of charge entered into by the Issuer and, inter alios, the Issuer 

Security Trustee on the Closing Date; 

Issuer Facility Fees means the Initial Facility Fee together with the Ongoing Facility Fee; 

Issuer Post-Enforcement Priority of Payments means the order of the Issuer’s priority of payment post 

enforcement of the Notes as set out in Condition 3(j) (Status, Priority and Security – Issuer Priority of 

Payments Following Enforcement); 

193

Issuer Pre-Enforcement Priority of Payments means the order of the Issuer’s priority of payment prior to 

enforcement of the Notes as set out in Condition 3(i) (Status, Priority and Security – Issuer Priority of 

Payments Prior to Enforcement); 

Issuer Priority of Payments means the Issuer Pre-Enforcement Priority of Payments and the Issuer 

Post-Enforcement Priority of Payments; 

Issuer Secured Creditors means the Noteholders, the Couponholders, the Issuer Security Trustee (and any 

receiver appointed by the Issuer Security Trustee), the Note Trustee (and any receiver appointed by the 

Note Trustee), the Cash Manager, the Account Bank, the Agent Bank and the Paying Agents, the Issuer 

Corporate Services Provider, the Hedging Providers, the Liquidity Facility Provider and any other person 

acceding to the Issuer Deed of Charge as a secured creditor of the Issuer from time to time; 

Issuer Secured Obligations means all monies, liabilities and obligations whatsoever, present and future and 

whether actual or contingent, which from time to time become due, owing or payable by the Issuer: 

(a) to the Issuer Security Trustee and/or any Receiver under the Issuer Deed of Charge or any other 

documents evidencing or securing any such liabilities; 

(b) to, or to the order of, the Note Trustee under the Note Trust Deed; 

(c) to the Noteholders and the Couponholders under or in respect of the Notes and the Coupons; and 

(d) to each of the other Issuer Secured Creditors in accordance with each of the other Transaction 

Documents to which it is a party; 

Issuer Security means the security created by or pursuant to the Issuer Deed of Charge over the Issuer 

Charged Property in favour of the Issuer Security Trustee; 

Issuer Security Documents means the Issuer Deed of Charge and the Security Powers of Attorney or, 

where the context requires, either of them; 

Issuer Security Trustee means, as at the Closing Date, HSBC Trustee (C.I.) Limited acting through its 

principal office at 1 Grenville Street, St Helier, Jersey, Channel Islands JE4 9PF; 

Issuer Transaction Account means the general transaction account held in the name of the Issuer with the 

Account Bank with account number 59427133; 

Issuer Transaction Documents means the Subscription Agreement, Note Trust Deed, the Agency 

Agreement, the Liquidity Facility Agreement, the Hedging Agreements, the Issuer Deed of Charge, the 

Issuer Account Bank and Cash Management Agreement, the Post Enforcement Call Option Deed, the 

Notes, the relevant Security Power of Attorney, the Master Definitions and Framework Deed, the Issuer 

Corporate Services Agreement, the relevant Declaration of Trust and any other document entered into 

by one or more Transaction Parties which is designated as an ‘‘Issuer Transaction Document’’ with the 

consent of the Issuer Security Trustee and the Issuer; 

Joint Lead Managers means HSBC Bank plc and Société Générale, London Branch as joint lead managers 

of the issuance of the Notes; 

King Sturge means King Sturge LLP (registered number OC311501) whose registered office is at 

7 Stratford Place, London, WC1 1ST. 

Land Registry means Her Majesty’s Land Registry; 

LCP Covenantors means London and Cambridge Properties Limited, L.C.P. Commercial Limited, L.C.P. 

Management Limited and the Transferors; 

LCP Real Estate means L.C.P. Real Estate Limited; 

Lease Code means The Code of Practice for commercial leases in England and Wales (2 nd Edition), as the 

same may be revised from time to time; 

Leasehold Secured Properties means any of the Secured Properties in which the relevant Borrower holds 

a leasehold interest; 

Legal Opinions means the legal opinions delivered, or to be delivered, in accordance with the Commercial 

Mortgage Loan Agreements; 

LIBOR means: 

(a) the British Bankers Association Interest Settlement Rate for three-month sterling deposits offered 

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to prime banks in the London inter-bank market which appears on the appropriate page of the 

Reuters Screen (or such replacement page on that service that displays such information or if that 

service ceases to display such information, such page as displays such information on an equivalent 

service (or, if more than one, that one which is approved in writing by the Note Trustee for such 

purpose) at or about 11.00 a.m. (London time) on the Interest Determination Date (the Screen 

Rate); or in the case of the first Interest Period only, the equivalent rate for four month sterling 

deposits; or 

(b) if the Screen Rate is unavailable at such time, then the rate for the relevant Interest Period shall be 

the arithmetic mean (rounded to four decimal places with the mid-point rounded up) of the rates 

notified to the Agent Bank at its request by each of the Reference Banks as the rate at which 

three-month sterling deposits or in the case of the first Interest Period only, four month sterling 

deposits in a representative amount are offered by that Reference Bank to prime banks in the 

London inter-bank market at or about 11.00 a.m. (London time) on the Interest Determination 

Date. If on any such Interest Determination Date, at least two of the Reference Banks provide such 

offered quotations to the Agent Bank, the relevant rate shall be determined, as aforesaid, on the 

basis of the offered quotations of those Reference Banks providing such quotations. If, on any such 

Interest Determination Date, only one of the Reference Banks provides the Agent Bank with such 

an offered quotation, the Agent Bank shall immediately consult with the Note Trustee and the 

Issuer for the purposes of agreeing one additional bank to provide such a quotation or quotations 

to the Agent Bank (which bank is in the opinion of the Note Trustee suitable for such purpose) and 

the Rate of Interest for the Interest Period in question shall be determined, as aforesaid, on the basis 

of the offered quotations of such banks as so agreed. If no such bank or banks is or are so agreed 

or such bank or banks as so agreed does not or do not provide such a quotation or quotations, then 

the rate for the relevant Interest Period other than the first Interest Period shall be the rate in effect 

as at the last preceding Interest Determination Date to which paragraph (i) of this definition shall 

have applied and in respect of the first Interest Period shall be the arithmetic mean of the rates 

quoted by such other prime banks selected by the Agent Bank and approved by the Note Trustee 

on the relevant Interest Determination Date; 

Liquidity Drawing means a loan made or to be made under the Liquidity Facility; 

Liquidity Event means the occurrence of: (i) the Liquidity Facility Provider ceasing to have the Liquidity 

Requisite Ratings; and/or (ii) the Liquidity Facility Provider declining to renew the Commitment Period 

of the Liquidity Facility; 

Liquidity Facility means a 364 day revolving liquidity facility provided by the Liquidity Facility Provider 

pursuant to the Liquidity Facility Agreement to permit drawings to be made of up to the Liquidity Facility 

Maximum Amount as reduced or cancelled from time to time under the Liquidity Facility Agreement; 

Liquidity Facility Agreement means a facility agreement entered into on the Closing Date between the 

Issuer, the Liquidity Facility Provider and the Issuer Security Trustee in relation to the Liquidity Facility; 

Liquidity Facility Maximum Amount means £18,900,000, being the maximum amount available for 

drawdown under the Liquidity Facility, as the same may be reduced from time to time in accordance with 

the Liquidity Facility Agreement; 

Liquidity Facility Provider means HSBC Bank plc acting through its office at 8th Floor Exchange 

Buildings, 8 Stephenson Place, Birmingham B2 4NH or such other entity or entities appointed as liquidity 

facility provider from time to time, subject to and in accordance with the terms of the Liquidity Facility 

Agreement; 

Liquidity Facility Standby Account means the account held in the name of the Issuer for the deposit of 

Liquidity Facility Standby Drawings (if any) with the Liquidity Facility Provider (for so long as it satisfies 

the Rating Criteria) or the Account Bank (with account number 59427125) or (subject to the written 

approval of the Liquidity Facility Provider, such approval not to be unreasonably delayed or withheld) 

any other bank, the short term, unsecured, unsubordinated and unguaranteed debt obligations of which 

satisfy the Rating Criteria; 

Liquidity Facility Standby Drawing means a drawing following a Liquidity Event or the principal amount 

of that drawing outstanding at a particular time, where the context requires; 

Liquidity Requisite Ratings means the Liquidity Facility Provider’s short term unsecured, unsubordinated 

and unguaranteed debt obligations of at least A-1+ by S&P and F-1 by Fitch; 

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Liquidity Shortfall means in relation to an Interest Payment Date a shortfall between (i) all amounts 

which will be received by the Issuer on or by such Interest Payment Date in respect of the related Interest 

Period and (ii) the Issuer Debt Service Required Amount determined in respect of the related Interest 

Payment Date; 

Liquidity Subordinated Amounts means the amount by which any payment made to the Liquidity Facility 

Provider under the Liquidity Facility Agreement is increased as a consequence of an amount for or on 

account of Tax being required to be withheld or deducted from that payment; 

Loan Calculation Date means the day falling five Business Days prior to the relevant Loan Interest 

Payment Date, upon which the Borrower is required to calculate the Financial Covenants; 

Loan Enforcement Notice means a notice delivered by the Borrower Security Trustee to the relevant 

Obligors in accordance with the terms of a Commercial Mortgage Loan Agreement; 

Loan Event of Default means each of the events described in the section entitled ‘‘Summary of Principal 

Documents – The Commercial Mortgage Loan Agreements – Loan Events of Default’’, as more specifically 

set out in the Commercial Mortgage Loan Agreements; 

Loan Interest Payment Date means the 25th day of February, May, August and November in each year, 

except if such day is not a Business Day, in which case it shall be the next succeeding Business Day unless 

such day falls in the next month, in which case it shall be the preceding Business Day, on which interest 

will be paid in respect of the Commercial Mortgage Loans; 

Loan Interest Period means each period from (and including) a Loan Interest Payment Date and ending 

on (but excluding) the next Loan Interest Payment Date provided that the first Loan Interest Period shall 

be the period from (and including) the Closing Date and ending on (but excluding) the Loan Interest 

Payment Date falling in February 2006 and the last Loan Interest Period shall be the period from (and 

including) the Loan Interest Payment Date falling in May 2014 and ending on (but excluding) the Final 

Repayment Date; 

LTV Ratio means, as of any Loan Calculation Date during the LTV Reference Period and in respect of 

each Borrower, the ratio (expressed as a percentage) of (i) the total amount outstanding in respect of its 

Commercial Mortgage Loan(s) (taking into account any repayments made on such date), less the sum of 

all amounts standing to the credit of the ‘‘LTV reserve ledger’’ of the relevant Cash Trap Account to 

(ii) the aggregate Market Value of all Secured Properties comprised within its Property Portfolio as at 

such date; 

LTV Reference Period means the period beginning on (and including) the Loan Calculation Date falling 

in November 2012 and ending on the Final Repayment Date; 

LTV Required Amount means, as of any date, the amount of cash required to be held to the credit of the 

‘‘LTV reserve ledger’’ of the relevant Cash Trap Account for the relevant Borrower’s LTV Ratio, when 

recalculated to take account of such amounts and taking into account any acquisition of Additional 

Secured Properties or Same-Day Substitution Disposals made since the relevant LTV Ratio was last 

calculated, to be at or below 70 per cent; 

Major Development means any Development, the estimated cost (excluding VAT) of which (as reasonably 

estimated and documented by the Borrower) is in excess of the greater of (A) £250,000 and (B) 10 per 

cent. of the Estimated Rental Value for the relevant Secured Property; 

Market Value in respect of a property, has the meaning given to that term in the RICS Appraisal and 

Valuation Standards together with any guidance notes issued from time to time at the time of the 

valuation (or, failing that, any comparable replacement standard as approved by the Borrower Security 

Trustee defining generally accepted valuation terms, requirements and practices); 

Master Definitions and Framework Deed means the framework deed dated the Closing Date between, 

among others, the Issuer, the Note Trustee and the Issuer Security Trustee; 

Material Adverse Effect means: 

(a) a material and adverse effect on the ability of the relevant Borrower to perform its payment 

obligations under the Transaction Documents; or 

(b) a material and adverse effect on the legality, binding nature, validity or enforceability of the Security 

relating to that Borrower or its Parent Obligor; or 

(c) a material and adverse effect on the legality, binding nature, validity or enforceability of the relevant 

Borrower’s entitlement to the Gross Rental Income on the Secured Properties in which it has an 

interest, 

196

provided that, in determining whether or not a material adverse effect has occurred, there shall be 

disregarded in respect of sub-paragraphs (b) and (c) above, the consequences of any matters of law (but 

not matters of fact) to the extent qualifications have been made as to such matters of law in legal opinions 

delivered under the relevant Commercial Mortgage Loan Agreement at or before the Closing Date; 

Meeting means a meeting of the Noteholders or of any one or more Classes of Noteholders and, except 

where the context otherwise requires, includes a meeting resumed following an adjournment; 

Minor Development means any Development, the estimated cost (excluding VAT) of which (as reasonably 

estimated and documented by the Borrower) is less than or equal to the greater of (A) £250,000 and (B) 

10 per cent. of the Estimated Rental Value for the relevant Secured Property; 

Minor Disposal means a disposal of: 

(a) any asset, where the book value of such asset prior to disposal was less than or equal to £150,000; 

(b) any asset, including any Eligible Investment, not being a Secured Property in accordance with the 

Transaction Documents; and 

(c) a Disposal Property which does not adversely affect the Market Value of the remaining Secured 

Property(ies) after such disposal, as certified by the Property Manager to the Borrower Security 

Trustee; and is effected by the grant of an easement, licence or wayleave necessary to a third party 

to enable the laying in, under or over such Secured Property(ies) of conduits for gas, electricity, 

telecommunications, water, drainage and the like; 

Model Information means the information provided by any of the Obligors to the Joint Lead Managers 

and/or the Rating Agencies for the purposes of preparing financial models to be used in the context of the 

Note issuance; 

Most Senior Class means, at any time: 

(a) the Class A Notes; 

(b) if no Class A Notes are then outstanding, the Class B Notes (if at that time any Class B Notes are 

then outstanding); 

(c) if no Class A Notes or Class B Notes are then outstanding, the Class C Notes (if at that time any 

Class C Notes are then outstanding); or 

(d) if no Class A Notes or Class B Notes or Class C Notes are then outstanding, the Class D Notes (if 

at that time any Class D Notes are then outstanding); 

Net Cash Proceeds means, in the case of a Permitted Disposal, the Gross Cash Proceeds of that Permitted 

Disposal less the Disposal Expenses relating to that Permitted Disposal; 

New Loan means an additional loan requested by the Borrower, pursuant to the Commercial Mortgage 

Loan Agreement, by written notice to the Issuer, the Borrower Security Trustee and the Rating Agencies 

and advanced as a result of an issue of New Notes; 

New Notes has the meaning given to it in Condition 20 (Issue of Further Notes, Replacement Notes and 

New Notes); 

New Permanent Global Note means, in respect of each Class of New Notes, the bearer permanent global 

note for that Class of New Note in or substantially in the form set out in the supplemental deed to the 

Note Trust Deed establishing the New Notes; 

New Temporary Global Note means, in respect of each Class of New Notes, the bearer temporary global 

note for that Class of New Note in or substantially in the form set out in the supplemental deed to the 

Note Trust Deed establishing the New Notes; 

No Material Prejudice Test has the meaning given to it in Condition 3 (Status, Priority and Security – Status 

and Relationship between the Notes); 

Note Enforcement Notice means a notice delivered by the Note Trustee to the Issuer in accordance with 

Condition 10 (Note Events of Default); 

Note Event of Default means any event that would lead to a default under the Conditions; 

Note Principal Payment has the meaning given to it in Condition 6(e) (Redemption, Purchase and 

Cancellation – Note Principal Payments, Principal Amount Outstanding and Pool Factor); 

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Note Trust Deed means the trust deed entered into on the Closing Date between the Issuer and the Note 

Trustee in relation to which the Notes will be constituted (as modified from time to time in accordance 

with the provisions therein contained and any deed or other document expressed to be supplemental 

thereto); 

Note Trustee means, as at the Closing Date, HSBC Trustee (C.I.) Limited, acting through its principal 

office at 1 Grenville Street, St Helier, Jersey, Channel Islands JE4 9PF; 

Noteholders means: 

(a) in relation to any Notes represented by a Global Note, each person (other than Euroclear or 

Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or 

Clearstream, Luxembourg or any other person the Note Trustee considers appropriate as the holder 

of a particular Principal Amount Outstanding of those Notes, for which purpose any certificate or 

letter of confirmation (or any other form of record made by any of them) as to the Principal Amount 

Outstanding of Notes standing to the account of any person shall be conclusive and binding on the 

basis that that person shall be treated by the Issuer, the Note Trustee and all other persons as the 

holder of that Principal Amount Outstanding of those Notes for all purposes other than the right to 

payments in respect of those Notes which shall be vested, as against the Issuer, solely in the bearer 

of the relevant Global Note, who shall be regarded as the ‘‘Noteholder’’ for that purpose; and 

(b) in relation to any Definitive Notes issued under Condition 2(e) (Form, Denomination and Title – 

Issue of Definitive Notes), the bearers of those Definitive Notes, 

and related expressions shall be construed accordingly; 

Notes means the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes, the New 

Notes, the Replacement Notes, if any or, where the context requires, any of them and includes the 

Definitive Notes and the Global Notes or, where the context requires, any of them; 

Obligor Post-Enforcement Priority of Payments means the order of the relevant Borrower’s priority of 

payments post enforcement of the relevant Commercial Mortgage Loan as set out in the section entitled 

‘‘Resources available to the Borrowers and the Issuer – Available Funds and their Priority of Application’’ 

and in the relevant Borrower Deed of Charge; 

Obligor Pre-Enforcement Priority of Payments means the order of the relevant Borrower’s priority of 

payments prior to enforcement of the relevant Commercial Mortgage Loan as set out in the section 

entitled ‘‘Resources available to the Borrowers and the Issuer – Available Funds and their Priority of 

Application’’ and in the relevant Borrower Deed of Charge; 

Obligor Priority of Payments means, in respect of any Borrower, the applicable Obligor Pre-Enforcement 

Priority of Payments and the applicable Obligor Post-Enforcement Priority of Payments; 

Obligor Secured Creditor means, in respect of each Borrower Group, the Borrower Security Trustee, any 

Receiver of any relevant Obligor, the Issuer, the Cash Manager, the Account Bank and any other entity 

that in due course becomes a secured creditor of the relevant Obligors and accedes to the Obligor Security 

Documents relating to that Borrower Group, as relevant; 

Obligor Secured Obligation means, in respect of each Borrower Group, all monies, liabilities and 

obligations whatsoever, present and future and whether actual or contingent, which from time to time 

become due, owing or payable by the relevant Obligors to each of or all of the relevant Obligor Secured 

Creditors or any of them under or relating to the Obligor Transaction Documents relating to that 

Borrower Group; 

Obligor Security means the security created by or pursuant to the Obligor Security Documents relating to 

that Borrower Group over the Obligor Security Assets; 

Obligor Security Assets means, in respect of each Borrower Group, the property, rights and assets of the 

relevant Obligors which are the subject of security interests created by the relevant Borrower and the 

other relevant Obligors in favour of the Borrower Security Trustee under or pursuant to the Obligor 

Security Documents relating to that Borrower Group; 

Obligor Security Documents means, in respect of each Borrower Group, any document or instrument 

granted in favour of the Borrower Security Trustee creating or evidencing security for all or any part of 

the obligations and liabilities of the relevant Obligors or any of them under any of the Obligor Transaction 

Documents, relating to that Borrower Group, whether by way of personal covenant, charge, security 

interest, mortgage, pledge or otherwise, and Obligor Security Document shall be construed accordingly; 

198

Obligor Transaction Documents means, in respect of each Borrower Group, the relevant Obligor Security 

Documents, the relevant Commercial Mortgage Loan Agreement, the relevant Account Bank and Cash 

Management Agreement, the relevant Property Management Agreement, the relevant Property Manager 

Duty of Care Deed, the relevant Tax Deed of Covenant, the relevant Subordinated Loan Agreement(s), 

the relevant Declaration of Trust, the Master Definitions and Framework Deed and any other document 

entered into by one or more Transaction Parties which is designated an ‘‘Obligor Transaction Document’’ 

with the consent of the Borrower Security Trustee and the relevant Borrower; 

Obligors means, in respect of each Borrower Group, the relevant Borrower and Parent Obligor and, 

solely for the purposes of certain provisions of the Subscription Agreement and the Loan Events of 

Default in items (e) and (f) of ‘‘Summary of Principal Documents – The Commercial Mortgage Loans – 

Loan Events of Default’’ in respect of the Commercial Mortgage Loan to L.C.P. Real Estate Limited, 

London and Cambridge Properties Limited; 

Occupational Lease means any present or future lease, underlease, sublease, licence, tenancy or right to 

possession, occupation or use and any agreement for any of them relating to any whole or part of a 

Secured Property to which a Borrower’s interest in a Secured Property may be subject from to time; 

Occupational Tenants means the primary tenants under the Occupational Leases; 

Offering Circulars means the Preliminary Offering Circular and the Final Offering Circular; 

On-going Facility Fee means, in respect of the Issuer, a further fee to enable the Issuer to pay or provide 

for all amounts (other than any payments of interest on, and repayments of principal in respect of, the 

Notes that are due to be paid on the immediately following Interest Payment Date) required, in 

accordance with the terms of the Issuer Transaction Documents, to be paid or provided for by the Issuer 

on or shortly after the immediately following Interest Payment Date; as between the Borrowers and the 

Issuer, On-going Facility Fee means the aggregate of (i) that Borrower’s proportionate share (divided as 

between the Borrowers by reference to the principal amounts then outstanding under their respective 

Commercial Mortgage Loans after taking account of any principal losses on such Loans) of all amounts 

making up such fee other than those amounts arising in respect of items (j) and (k) below, and (ii) any 

amounts arising in respect of that Borrower in respect of items (j) and/or (k) below. The On-going Facility 

Fee will include: 

(a) in respect of any Fees and Expenses payable to the Note Trustee and the Issuer Security Trustee and 

their appointees (if any) under the provisions of the Issuer Transaction Documents; 

(b) any amounts payable in respect of the Issuer’s operating expenses incurred in the course of the 

Issuer’s business (other than as provided elsewhere in this priority of payments) that have become 

due and payable, including: 

(i) any amounts payable by the Issuer to the Issuer Corporate Services Provider in respect of any 

Fees and Expenses pursuant to the Issuer Corporate Services Agreement; 

(ii) any amounts payable by the Issuer to third parties in respect of the establishment, maintenance 

and good standing of the Issuer or otherwise payable for the ongoing existence or maintenance 

of its business; 

(iii) any amounts payable by the Issuer in respect of any Fees and Expenses of the Paying Agents 

and the Agent Bank incurred under the provisions of the Agency Agreement; and 

(iv) any amounts payable by the Issuer in respect of any Fees and Expenses of the Account Bank 

and the Cash Manager under the Account Bank and Cash Management Agreement; 

(c) any amounts to be paid or provided for in respect of all United Kingdom corporation tax for which 

the Issuer is primarily liable; 

(d) any amounts payable by the Issuer to the Rating Agencies in respect of any Fees and Expenses and 

to the Irish Stock Exchange in respect of any fees that, in each case, they may reasonably incur 

through the duration of the Transaction; 

(e) any amounts payable to the Liquidity Facility Provider under the Liquidity Facility Agreement 

other than amounts falling within (j) below and the Liquidity Subordinated Amounts; 

(f) any amounts payable to the Hedging Providers under the Hedging Agreements excluding Hedging 

Termination Payments in respect of the Hedging Agreements falling within (k) below, any Hedging 

Subordinated Amounts and any amounts already constituting the applicable Issuer Cost of Funds; 

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(g) an amount in respect of profit to the Issuer equal to the sum of (i) 0.01 per cent. of all interest and 

other amounts (including in respect of other elements of the On-going Facility Fee) received or 

receivable by the Issuer on the relevant Loan Interest Payment Date and (ii) £13,500 (to be reduced 

pro tanto with any payment made in respect of this item (g)(ii) on any preceding Loan Interest 

Payment Date); 

(h) any amounts payable in respect of Liquidity Subordinated Amounts due to the Liquidity Facility 

Provider under the Liquidity Facility Agreement; 

(i) any amounts payable in respect of Hedging Subordinated Amounts due to the Hedging Providers 

under the Hedging Agreements; 

(j) any amounts of interest and principal payable to the Liquidity Facility Provider under the Liquidity 

Facility Agreement by reason of the Issuer drawing advances under the Liquidity Facility 

Agreement to meet a Liquidity Shortfall arising due to a Borrower not making payment in full of 

all amounts owed under its Commercial Mortgage Loan on the due date for such payments; and 

(k) any amounts payable to the Hedging Providers by way of Hedging Termination Payments in respect 

of the Hedging Agreements arising as a result of the Issuer adjusting its hedging activities to reflect 

a prepayment by a Borrower under its Commercial Mortgage Loan; 

Original Class A Notes means the £243,800,000 Class A Secured Floating Rate Notes due 2016 issued on 

the Closing Date; 

Original Class B Notes means the £32,200,000 Class B Secured Floating Rate Notes due 2016 issued on 


Original Class C Notes means the £36,800,000 Class C Secured Floating Rate Notes due 2016 issued on 


Original Class D Notes means the £9,200,000 Class D Secured Floating Rate Notes due 2016 issued on the 

Closing Date; 

Original Notes means the Original Class A Notes, the Original Class B Notes, the Original Class C Notes 

and the Original Class D Notes or, where the context so requires, any of them; 

Original Permanent Global Note means, in respect of each Class of Original Notes, the bearer permanent 

global note for that Class in, or substantially in, the form set out in Schedule 2 (Form of Permanent Global 


Original Temporary Global Note means, in respect of each Class of Original Notes, the bearer temporary 

global note for that Class in, or substantially in, the form set out in Schedule 1 (Form of Temporary Global 


Outgoing Property means a Secured Property to be substituted by an Incoming Property; 

outstanding means, in relation to the Notes, all the Notes other than: 

(a) those which have been redeemed in full in accordance with the Conditions; 

(b) those in respect of which the date for redemption in accordance with the Conditions has occurred 

and for which the redemption monies (including all interest and other amounts (if any) accrued 

thereon to such date for redemption) have been duly paid to the Principal Paying Agent or the Note 

Trustee in accordance with the Agency Agreement (and, where appropriate, notice to that effect has 

been given to the Noteholders in accordance with Condition 19 (Notices and Information)) and 

remain available for payment in accordance with the Conditions; 

(c) those which have become void under Condition 8 (Prescription); 

(d) those mutilated or defaced Notes which have been surrendered or cancelled and in respect of which 

replacement Notes have been issued pursuant to Condition 18 (Replacement of Notes, Coupons and 

Talons); 

(e) the Temporary Global Note of any Class, to the extent interests in it shall have been exchanged for 

interests in the Permanent Global Note of that Class, or the Permanent Global Note of any Class, 

to the extent that it shall have been exchanged for Definitive Notes of that Class or, in the case of 

an Original Permanent Global Note, for a Further Permanent Global Note of that Class; and 

(f) (for the purpose only of ascertaining how many Notes are outstanding and without prejudice to their 

status for any other purpose) those Notes which are alleged to have been lost, stolen or destroyed 

and in respect of which replacements have been issued pursuant to Condition 18 (Replacement of 

Notes, Coupons and Talons), 

200

provided that for each of the following purposes: 

(a) the right to attend and vote at any Meeting or for the purpose of any Written Resolution; 

(b) the determination of how many and which Notes are for the time being outstanding for the purposes 

of Clauses 9.1 (Note Trustee’s right to give a Note Enforcement Notice), 9.3 (Limit on Noteholder 

action), 19 (Waiver of Breach) and Schedule 7 (Provisions for Meetings of Noteholders) of the Note 

Trust Deed, Conditions 10 (Note Events of Default), 12 (Noteholder Action) and 13 (Meetings of 

Noteholders); and 

(c) the exercise by the Note Trustee of any trusts, powers, authorities, duties, discretions and 

obligations, whether contained in the Note Trust Deed or provided by law in, or by reference to, the 

interests of the Noteholders or any of them, 

those Notes (if any) which are for the time being held by, or by any person for the benefit of, the Issuer, 

any Borrower or any member of the Borrower Group shall (unless and until they cease to be so held) be 

deemed not to remain outstanding; 

Overview Report means a report of material issues prepared by Linklaters or Lawrence Graham in respect 

of the Secured Properties given on the date of this Offering Circular, including its review of a sample of 

Occupational Leases then in effect in respect of such Secured Properties; 

Parent Obligor means L.C.P. Commercial Limited (with respect to LCP Real Estate) and Proudreed 

Limited (with respect to Proudreed Real Estate), in each case in their capacity as the immediate holding 

company of the relevant Borrower; 

Participating Member State means a member state of the European Union that has adopted the Euro as 

its lawful currency; 

Paying Agents means the Principal Paying Agent together with the Irish Paying Agent and any successor 

or additional paying agents appointed from time to time in connection with the Notes under the Agency 

Agreement and Paying Agent means any one of them; 

Permanent Global Note means, in respect of each Class of Note, the bearer permanent global note for that 

Class in, or substantially in, the form set out in Schedule 2 (Form of Permanent Global Note) to the Note 

Trust Deed; 

Permitted Development means any Development that satisfies each of the following criteria: 

(a) the relevant Borrower does not believe (acting reasonably) that the undertaking or completion of 

the relevant Development will be likely to result in a reduction in the aggregate Market Value of the 

Secured Properties within its Property Portfolio; 

(b) the relevant Borrower has demonstrated to the satisfaction of the Borrower Security Trustee (acting 

reasonably) that it has available to it, whether in cash deposited in an account maintained in its name 

or to its order, an amount equal to at least 110 per cent. of the estimated cost (excluding VAT) of 

the relevant Development; 

(c) the relevant Development is to be carried out by reputable contractors having and maintaining (if 

available) an institutionally acceptable level of professional indemnity cover; 

(d) the contracts or appointments for each main contractor and consultant involved in the relevant 

Development are in institutionally acceptable form and provide, amongst other things, that the 

relevant Development will be carried out and completed (i) in a good and workmanlike manner, (ii) 

with good quality materials, (iii) in compliance in all material respects with the details on which any 

Valuation Report or other valuation in respect of the relevant Secured Property was based, (iv) in 

accordance with all applicable statutes and (v) free from any goods or products not in accordance 

with relevant British standards and codes of practice or otherwise generally known or suspected to 

be potentially harmful to health and safety or to the durability of the relevant Development; 

(e) any necessary permissions or consents required for the carrying out of the relevant Development 

have been obtained; 

(f) if required, notice of the commencement of the relevant Development has been given to the insurers 

of the relevant Secured Property and the requirements of such insurers regarding the relevant 

Development have been complied with; 

(g) the relevant Development is being carried out in accordance with current codes of building practice; 

and 

201

(h) when commenced, the relevant Development is scheduled for completion within 36 months; 

Permitted Disposal means any one of a CPO Disposal, a Minor Disposal, a Same-Day Substitution 

Disposal and an Elected Disposal; 

Permitted Encumbrances means: 

(a) liens or hypothecs arising solely by operation of law (or by agreement having substantially the same 

effect) and in the ordinary course of any Obligor’s business and, in the case of the Borrowers, 

securing obligations not more than six months overdue; 

(b) rights of set off existing in the ordinary course of business between any Obligor and the 

Occupational Tenants or existing suppliers; 

(c) an Encumbrance arising under the applicable Obligor Security Documents; 

(d) an Encumbrance over the interest of any Occupational Tenant in any Secured Property; and 

(e) any other Encumbrance created with the prior written consent of the Issuer Security Trustee or the 

Borrower Security Trustee; 

Permitted Financial Indebtedness means, without limitation, indebtedness incurred by a Borrower with the 

consent of the Borrower Security Trustee and indebtedness incurred under the relevant Commercial 

Mortgage Loan Agreement; 

Permitted Occupational Lease means an Occupational Lease which: 

(a) (i) is a lease with a term of less than 35 years or (ii) is a licence with a term of less than five years 

or terminable at will or on reasonable notice and which does not attract security of tenure; 

(b) is a single transaction and not part of a series of transactions; 

(c) is of part or the whole of a Secured Property to an occupational tenant or licensee; 

(d) is granted in the ordinary course of the relevant Borrower’s business; 

(e) is not a finance lease and is not entered into in order to raise capital; and 

(f) is on arms length terms with a third party Occupational Tenant that is not a member of its Borrower 

Group; 

Permitted Subordinated Debt means fully subordinated, unsecured debt (including, for the avoidance of 

doubt, any subordinated, unsecured intercompany debt) existing as at the Closing Date or incurred in 

order to enable the relevant Borrower to fund an acquisition of Additional Secured Property made in 

accordance with the relevant Commercial Mortgage Loan Agreement, or fund any development, 

alteration or refurbishment of a Secured Property permitted under the applicable Obligor Transaction 

Documents or incurred in accordance with the Tax Deeds of Covenant, in each case subject to a valid 

non-petition restriction and, to the extent permitted by applicable law, an exclusion of rights of set-off; 

Pool Factor has the meaning given to it in Condition 6(e) (Redemption, Purchase and Cancellation – Note 

Principal Payments, Principal Amount Outstanding, Adjusted Principal Amount Outstanding and Pool 

Factor); 

Post-Enforcement Call Option means the option created by the Note Trustee (on behalf of the 

Noteholders) in favour of the Post-Enforcement Call Option Holder pursuant to the terms of the 

Post-Enforcement Call Option; 

Post-Enforcement Call Option Deed means the deed dated the Closing Date between the Note Trustee 

and the Post-Enforcement Call Option Holder; 

Post-Enforcement Call Option Holder means L&C Proudreed Holdings Limited, a private limited 

company incorporated in England and Wales with limited liability; 

Potential Loan Event of Default means any event which, with the giving of notice or determination of 

materiality or the fulfilment of any applicable conditions or the lapse of time, or a combination of the 

foregoing, would constitute a Loan Event of Default; 

Potential Note Event of Default means any event which, with the giving of notice or determination of 

materiality or the fulfilment of any applicable conditions or the lapse of time, or a combination of the 

foregoing, would constitute a Note Event of Default; 

202

Preliminary Offering Circular means the offering circular dated 26 September 2005, issued by the Issuer 

in connection with the Notes; 

Prepayment Amount has the meaning set out in the section entitled ‘‘Summary of Principal Documents – 

the Commercial Mortgage Loan Agreements’’; 

Principal Amount Outstanding means, on any date in relation to a Note, the principal amount outstanding 

of that Note as at the Closing Date (in the case of an Original Note) or Further Issue Date (in the case 

of a Further Note and/or a New Note and/or a Replacement Note) less the aggregate of all Note Principal 

Payments that have been made by the Issuer in respect of that Note on or prior to that date; 

Principal Loss means, on any Calculation Date, the amount determined by the Cash Manager to be the 

amount that has not been recovered on all the Commercial Mortgage Loans following the default by a 

Borrower and the completion of the enforcement of the security for the relevant Commercial Mortgage 

Loans; 

Principal Paying Agent means HSBC Bank plc acting through its office at 8 Canada Square, London, 

E14 5HQ; 

Projected ICR means, in respect of any Forward-Looking Calculation Period, the ratio of the Projected 

Net Rental Income to the Projected Interest Charges each in respect of such Forward-Looking 

Calculation Period; 

Projected Interest Charges means, in relation to a Forward-Looking Calculation Period, without 

double-counting, the projected accrued cost of interest due and payable by the relevant Borrower under 

the relevant Commercial Mortgage Loan Agreement during such Forward-Looking Calculation Period 

calculated on an accruals basis and using an estimate provided by the Agent Bank on or before the 

relevant Loan Calculation Date of the interest rate(s) applicable to the relevant Commercial Mortgage 

Loan in respect of the Loan Interest Period commencing on the immediately following Loan Interest 

Payment Date; 

Projected Net Rental Income means, in respect of any Forward-Looking Calculation Period, the sum of: 

(a) the aggregate amount of Gross Rental Income (excluding any amounts attributable to VAT) 

contracted to be due and payable to the relevant Borrower during the relevant Forward-Looking 

Calculation Period, adjusted in accordance with the then-current Applicable Accounting Principles 

(including as to the treatment of premium or other consideration payable to the Borrower in 

connection with the surrender of an Occupational Lease and any sum payable under any policy of 

insurance in respect of loss of rent or interest on rent); 

(b) minus any amounts under items (h) to (j) of the definition of Gross Rental Income in respect of the 

relevant Forward-Looking Calculation Period; and 

(c) minus any amounts of Gross Rental Income (excluding for these purposes any items already 

excluded by (b) above) relating to (i) such part of such Forward-Looking Calculation Period after 

which any Occupational Leases will either terminate during such period (where notice of 

termination has already been served by the relevant Borrower or by the relevant Occupational 

Tenants) or for which the relevant Occupational Tenant has an option to terminate during such 

period upon notice that may take effect during that period, (ii) any Occupational Tenant that is 

subject to any Insolvency Proceedings and (iii) any Occupational Tenant that is more than three 

months in arrears on its payment obligations under any Occupational Lease at the start of such 

Forward-Looking Calculation Period; 

less the sum of: 

(i) fees payable to the Property Manager (or its agents), to the extent not recoverable from 

Occupational Tenants; 

(ii) any fees and expenses payable by the Borrower to the Borrower Security Trustee and its 

appointees (if any) under the provisions of any Obligor Transaction Document; 

(iii) any amounts payable by the Borrower to the Issuer by way of On-going Facility Fee under the 

Commercial Mortgage Loan Agreement in respect of amounts described in sub-paragraphs 

(a) to (f) and sub-paragraphs (j) and (k) of the definition of On-going Facility Fee; 

(iv) any amount payable by or on behalf of the Borrower to the Account Bank and the Cash 

Manager under the terms of the relevant Account Bank and Cash Management Agreement in 

respect of the Fees and Expenses of the Account Bank and the Cash Manager, respectively; 

203

(v) any amount becoming due in respect of any ground rent or other sum due from the Borrower 

under a Headlease, to the extent not recoverable from Occupational Tenants; 

(vi) (without double counting in respect of items already included in (i) to (v) above) the aggregate 

amount of all Service Charge Expenses to be incurred by the relevant Borrower, to the extent 

not recoverable from Occupational Tenants; and 

(vii) any amounts of irrecoverable VAT on amounts payable under (i) to (vi) above, 

in each case, as estimated by the Borrower (or the Property Manager on behalf of the Borrower) acting 

reasonably, in respect of the relevant Forward-Looking Calculation Period; 

Property Management Agreement means (1) the agreement dated the Closing Date (as amended and 

restated from time to time) between the Property Manager and LCP Real Estate; and/or (2) the 

agreement dated the Closing Date (as amended and restated from time to time) between the Property 

Manager and Proudreed Real Estate, or both as the context requires; 

Property Manager means L.C.P. Management Limited in its capacity as property manager under the 

relevant Property Management Agreement; 

Property Manager Duty of Care Deed means (1) the duty of care deed dated on or about the Closing Date 

between the Property Manager, the Borrower Security Trustee and LCP Real Estate; and/or (2) the duty 

of care deed dated on or about the Closing Date between the Property Manager, the Borrower Security 

Trustee and Proudreed Real Estate, or both as the context requires; 

Property Portfolio means with respect to a Borrower the portfolio of Secured Properties (including any 

Additional Secured Properties) belonging to the relevant Borrower from time to time, and Property 

Portfolios shall mean the aggregate of both such portfolios from time to time; 

Proposed Accounting Principles means the accounting principles, standards, conventions and practices 

connected to other accounting principles including but not limited to the International Accounting 

Standards and International Financial Reporting Standards; 

Proudreed Covenantor means Proudreed Limited; 

Proudreed Real Estate means Proudreed Real Estate Limited; 

Provisions for Meetings of Noteholders means the provisions contained in Schedule 7 (Provisions for 

Meetings of Noteholders) to the Note Trust Deed; 

Rate of Interest has the meaning given to it in Condition 5(c) (Interest – Rate of Interest); 

Rating Agencies means Fitch and S&P or, where the context requires, either of them. If at any time Fitch 

and S&P is replaced as a Rating Agency, then references to its rating categories shall be deemed instead 

to be references to the equivalent rating categories of the entity which replaces it as a Rating Agency; 

Rating Criteria means, in respect of a bank, a rating of at least A-1+ by S&P and F1 by Fitch, in each case 

in respect of its short-term debt obligations; 

Rating Downgrade Event means written notification from the Rating Agencies to the Note Trustee and the 

Borrower Security Trustee, confirming that the then current ratings of the Notes will be adversely affected 

by the relevant event or matter; 

Ratings Test means receipt by the Note Trustee, the Issuer Security Trustee and the Borrower Security 

Trustee of a confirmation from each of the Rating Agencies (or, if at any time there is only one Rating 

Agency, that Rating Agency) that, in respect of any event or matter in respect of which such confirmation 

is required or sought, either: 

(a) no Rating Downgrade Event in respect of such Rating Agency has or will occur as a result of the 

relevant event or matter; or 

(b) that Rating Agency will not downgrade any of the Notes as a result of the relevant event or matter; 

Receiver means any person (being a licensed insolvency practitioner), who is appointed by the Borrower 

Security Trustee or the Issuer Security Trustee (as applicable) to be a receiver or an administrative 

receiver (as the case may be) of the Obligor Security Assets or Issuer Charged Property, respectively, to 

act jointly, or jointly and severally, as the Borrower Security Trustee or the Issuer Security Trustee (as 

applicable) shall determine; 

Reference Amount means, in respect of any Reference Period, an amount equal to the Historical Net 

Rental Income for the preceding Reference Period, provided that (a) in respect of the first Reference 

204

Period, the Reference Amount will be equal to £27,700,603 (in the case of LCP Real Estate) and 

£4,246,193 (in the case of Proudreed Real Estate), and (b) in respect of the final Reference Period, the 

Reference Amount will be equal to the Historical Net Rental Income for the preceding Reference Period 

divided by 365 and multiplied by the number of days in the final Reference Period; 

Reference Banks means the principal London office of four major banks in the London interbank market 

selected by the Agent Bank at the relevant time; 

Reference Period means the period starting on (and including) 25 October and ending on (but excluding) 

25 October of each year, provided that the first Reference Period will start on (and include) the Closing 

Date and the final Reference Period will end on (but exclude) the Final Repayment Date; 

Regulation S means Regulation S under the Securities Act; 

Release Price Percentage means 110 per cent.; 

Relevant Classes has the meaning given to it in Condition 13(b) (Meetings of Noteholders – Extraordinary 

Resolutions and Basic Terms Modification); 

Relevant Date means, for the purposes of Condition 8 (Prescription), in respect of any payment in relation 

to the Notes, whichever is the later of: 

(a) the date on which the payment in question first becomes due; and 

(b) if the full amount payable has not been received by the Principal Paying Agent or the Note Trustee 

on or prior to that date, the date on which (the full amount having been so received) notice to that 

effect has been given to the Noteholders in accordance with Condition 19 (Notices and Information); 

Relevant Margin has the meaning given to it in Condition 5(c) (Interest – Rate of Interest); 

Replacement Notes means any replacement Notes issued pursuant to Condition 20 (Issue of Further Notes, 


Reservations or reservations means the qualifications as to matters of law contained in the Legal Opinions, 

including, without limitation, the principle that equitable remedies may be granted or refused at the 

discretion of a court, the limitation of enforcement by laws relating to bankruptcy, insolvency, liquidation, 

reorganisation, court schemes, moratoria, administration and other laws generally affecting the rights of 

creditors, the time barring of claims, the possibility that an undertaking to assume liability for or to 

indemnify a person against non payment of UK stamp duty may be void and defences of set off or 

counterclaim and similar principles; 

Restricted Period means 40 days after the later of the commencement of the offering of the Notes and the 

Closing Date; 

RICS means the Royal Institution of Chartered Surveyors; 

Rothman Pantall & Co. means Rothman Pantall & Co. (registered number 2338240) whose registered 

office is at Avebury House, St Peter Street, Winchester, Hants, SO23 8BN and who is a member of the 

Institute of Chartered Accountants; 

S&P means Standard & Poor’s Ratings Services, a division of the McGraw Hill Companies, Inc. or any 

successor to its rating business; 

Sale and Purchase Agreement means (1) the property sale and purchase agreement dated on or about the 

Closing Date between the Transferors and LCP Real Estate in relation to the Secured Properties in its 

Property Portfolio, and/or (2) the property sale and purchase agreement dated on or about the Closing 

Date between Proudreed Limited and Proudreed Real Estate in relation to the Secured Properties in its 

Property Portfolio, or both as the context requires; 

Same-Day Substitution Disposal means a disposal of a relevant Disposal Property as substituted on the 

same day by another Secured Property in accordance with the Commercial Mortgage Loan Agreements; 

Section 106 Agreement means an agreement made under Section 106 of the Town and Country Planning 

Act 1990; 

Secured Properties means, with respect to each Borrower, the properties listed in the table set out in the 

Borrower Deed of Charge relating to the relevant Commercial Mortgage Loan Agreement and any 

Additional Secured Properties acquired by that Borrower (and shall include all estate rights and interests 

in such properties and all buildings, structures and fixtures on such properties); 

205

Securities Act means the United States Securities Act of 1933, as amended; 

Security means, together, the Issuer Security and the Obligor Security; 

Security Power of Attorney means the security power of attorney granted on the Closing Date by (1) the 

Issuer in favour of the Issuer Security Trustee in, or substantially in, the form set out in Schedule 1 (Issuer 

Power of Attorney) of the Issuer Deed of Charge; and/or (2) a Borrower in favour of the Borrower 

Security Trustee in, or substantially in, the form set out in Schedule 6 (Borrower Power of Attorney) of 

a Borrower Deed of Charge; and/or (3) a Parent Obligor in favour of the Borrower Security Trustee 

pursuant to Clause 8 (Power of Attorney) of an Equitable Mortgage Over Shares, or all of them as the 

context requires; 

Service Charge Expenses means expenses incurred or to be incurred by or on behalf of the relevant 

Borrower in the day-to-day operation, management, maintenance or repair of, or the provision of services 

in respect of, any Secured Property, each as specified in the relevant Occupational Lease and the payment 

of any insurance premia and the cost of any insurance valuation for that Secured Property; 

Set-up Dividend means each and any dividend declared by the Issuer, and payable to L&C Proudreed 

Holdings Limited on the Interest Payment Date next following such declaration, the aggregate amounts 

payable by the Issuer by way of Set-up Dividend being limited to £13,500; 

Share Trustee means SPV Management Limited whose registered office is at Tower 42 (Level 11), 

International Financial Centre, 25 Old Broad Street, London EC2N 1HQ; 

specified office means with respect to the Paying Agents the offices listed at the end of the Conditions or 

such other offices as may from time to time be duly notified pursuant to Condition 19 (Notices and 

Information); 

Stabilising Managers means HSBC Bank plc acting through its office at 8 Canada Square, London 

E14 5HQ and Société Générale, London Branch acting through its office at SG House, 41 Tower Hill, 

London EC3N 4SG; 

Standby Deposit means the amount standing to the credit of the Liquidity Facility Standby Account from 

time to time together with interest on such deposit; 

Sterling means the lawful currency of the United Kingdom; 

Subordinated Loan means each or any of the subordinated loans made by either L.C.P. Management 

Limited or Proudreed Limited, as the case may be, to the relevant Borrower under a Subordinated Loan 

Agreement; 

Subordinated Loan Agreement means (1) the committed facility agreement between L.C.P. Management 

Limited and LCP Real Estate and/or (2) the committed facility agreement between Proudreed Limited 

and Proudreed Real Estate, or both as the context requires; 

Subscription Agreement means the subscription agreement dated 19 October 2005 entered into between, 

inter alios, the Issuer and the Joint Lead Managers pursuant to which the Joint Lead Managers have 

agreed to jointly and severally subscribe and pay for the Notes on the Closing Date; 

Substitution Criteria means the criteria set out in the section entitled ‘‘Summary of Principal Documents 

– Commercial Mortgage Loans - Same-Day Substitution of the Secured Properties’’ by which an Incoming 

Property may substitute an Outgoing Property, as the same are more expressly set out in the Commercial 

Mortgage Loan Agreements; 

Talonholders means the holders from time to time of the Talons; 

Talons means the bearer talons in, or substantially in, the form set out in Schedule 5 (Form of Talon) to 

the Note Trust Deed and exchangeable in accordance with the Conditions for further Coupons and/or 

talons or, where the context requires, a specific number of them; 

Tax means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any 

nature whatsoever (including any penalty or interest payable in connection with any failure to pay or any 

delay in paying any of the same) imposed or levied at any time by any Tax Authority, and tax, taxes, 

taxation, taxable and comparable expressions shall be construed accordingly; 

Tax Authority means any government, state, municipality or any local, federal or other fiscal, revenue, 

customs or excise authority, body or official anywhere in the world including, in the United Kingdom, 

HMRC and any successor thereof, in each case having power to tax; 

206

Tax Deeds of Covenant means the two separate deeds of covenant (one in respect of each Borrower), 

entered into on or about the Closing Date, supporting the obligations of the Issuer and the Borrowers 

under the Transaction Documents under which, inter alia, each Borrower and each of the LCP 

Covenantors or the Proudreed Covenantors, as the case may be, will give certain representations, 

warranties and covenants in relation to its tax affairs; 

Tax Event has the meaning given to it in Condition 6(c) (Redemption, Purchase and Cancellation – 

Optional Redemption for Tax Reasons); 

Temporary Global Note means, in respect of each Class of Notes, the bearer temporary global note for 

that Class in, or substantially in, the form set out in Schedule 1 (Form of Temporary Global Note) ofthe 

Note Trust Deed; 

Tenancy Schedules means the tenancy schedules provided to the Borrower Security Trustee; 

Transaction Documents means the Issuer Transaction Documents and the Obligor Transaction Documents 

and any other agreement, instrument, deed or other document entered into in respect of the issue of the 

Notes by the Issuer; 

Transaction Party means the Borrowers, the Issuer, the Parent Obligors, the Borrower Security Trustee, 

the Issuer Security Trustee, the Note Trustee, Liquidity Facility Provider, the Hedging Providers, the 

Property Manager, the Cash Manager, the Account Bank, the Principal Paying Agent, the Irish Paying 

Agent, the Agent Bank, the Issuer Corporate Services Provider and the Post-Enforcement Call Option 

Holder; 

Transferors means, collectively, L&C Securities Limited, L&C Investments Limited, L&C Estates 

Limited, L.C.P. Retail Limited, L.C.P. Securities (North West) Limited, Rookman Properties Limited and 

L.C.P. Securities Limited; 

Valuation Reports means the valuation reports dated 19 October 2005 prepared by King Sturge and such 

other valuation reports by Approved Valuers as are prepared from time to time in relation to Secured 

Properties and copies of which are delivered to the Borrower Security Trustee in accordance with the 

covenants in the Commercial Mortgage Loan Agreements; 

VAT or Value Added Tax means value added tax imposed by the United Kingdom as referred to in the 

Value Added Tax Act 1994 and legislation (whether delegated or otherwise) supplemental thereto or in 

any primary or subordinate legislation promulgated by the European Union or any official body or agency 

thereof, and any similar turnover tax replacing or introduced in addition to any of the same; and 

Written Resolution means a resolution in writing signed by or on behalf of 90 per cent. of the holders of 

Notes or 90 per cent. of the holders of Notes of a particular Class who, in accordance with the Provisions 

for Meetings of Noteholders, would be entitled to attend and vote at a meeting of Noteholders or, if 

applicable, Noteholders of that Class, whether contained in one document or several documents in the 

same form, each signed by or on behalf of one or more such holders of the Notes. 

207

JOINT ARRANGERS AND JOINT LEAD MANAGERS 

HSBC Bank plc 





SG House 

41 Tower Hill 



REGISTERED AND HEAD OFFICE OF THE ISSUER 








ISSUER SECURITY TRUSTEE 



St Helier 

Jersey 


To the Issuer and the Borrowers 

as to English law 

Linklaters 

One Silk Street 

London EC2Y 8HQ 


NOTE TRUSTEE 



St Helier 

Jersey 


LEGAL ADVISERS 

BORROWER SECURITY TRUSTEE 



St Helier 

Jersey 


To the Joint Arrangers and the Joint Lead 

Managers, as to English Law 

Freshfields Bruckhaus Deringer 

65 Fleet Street 

London EC4Y 1HS 


To the Note Trustee, the Issuer Security Trustee and the Borrower Security Trustee as to English Law 

Lovells 

Atlantic House 

Holborn Viaduct 

London, EC1A 2FG 


AGENT BANK AND PRINCIPAL PAYING AGENT 

HSBC Bank plc 




IRISH PAYING AGENT 

HSBC Institutional Trust Services (Ireland) 

Limited 

HSBC House 

Harcourt Centre 

Harcourt Street 

Dublin 2 

Ireland 

To the Borrowers 


4 Prince George Street 

Havant 

Hampshire PO9 1BG 


AUDITORS 

To the Issuer 

Ernst & Young LLP 

1 More London Place 

London SE1 2AF 


LISTING AGENT 

Goodbody Stockbrokers 

Ballsbridge Park 

Dublin 4 

Ireland 

VALUERS 

King Sturge 

7 Stratford Place 

London W1C 1ST 

United Kingdom

Capital Printing Systems (UK) Limited 30392

LCP Proudreed PLC - Irish Stock Exchange

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