18 May 2012

Tamar European Industrial Fund ("Company"/ "Fund'' / "Group")

Interim Management Statement

and Announcement of Net Asset Value

TAMAR ACHEIVES FURTHER SUCCESS WITH NORDIC SALES PROGRAMME

Tamar European Industrial Fund, a Guernsey registered closed-ended investment company focusing on industrial property assets in Western Europe, today announces its Interim Management Statement ('IMS') for the period from 1 January 2012 to 31 March 2012.  Unless otherwise specified, the IMS contains information that covers this period and up to the date of its publication.

Giles Weaver, Chairman, commented:

"The Board is pleased with the progress being made on the disposal of the Nordic assets that started last year. Four Nordic assets were sold in the quarter and a further sale was completed after the period end.  A further three Nordic assets are currently under offer.  The sales completed to date represent 45% of the Nordic portfolio.  The debt markets remain challenging for investors in the secondary sector.  Nevertheless, as the Fund has demonstrated, transactions are possible with local investors who are still able to source debt finance.  These sales are generally relatively small in size, with discounts being applied to any larger secondary assets or portfolios which do not have long-term secured income.

"Leasing activityremains patchy but, despite the general poor economic news, new leases are still being signed and renewals being agreed, reflecting the Investment Manager's strong local presence."

Net Asset Value

The Company's Net Asset Value ('NAV') at 31 March 2012, adjusted to add back deferred tax, was 70.9 pence per share.  This represents a decrease of 3.9% over the equivalent NAV at 31 December 2011.

The table below sets out the movement in the adjusted NAV in the quarter:

After deducting all deferred tax, whether recognised on the balance sheet or not, NAV at 31 March 2012 was 52.1 pence per share (52.2 pence at 31 December 2011).

Portfolio

Occupancy by area as at 31 March 2012 decreased by 1.59% to 77.51% and by 1.24% to 84.03% by ERV. Total new leases signed during the period represented 1.91% of the Fund's gross income (11,980 sqm of total area) and total tenants vacating represented 2.45% of the Fund's gross income (17,422 sqm). Tenants retained in the period through lease renewals represented 11.77% of the Fund's gross income (32,734 sqm).

During the quarter, the Company sold three assets in Norway for £18,288,358 (NOK 167,078,000), one asset in Finland for £1,334,672 (€1,600,000) and two units in Belgium for £646,503 (€775,025).

The value of the portfolio as at 31 March 2012 (excluding the impact of acquisitions, disposals and exchange rate movements) decreased over the quarter by 1.06% to £206.2m (€247.2m). The total number of assets held in the Fund's portfolio as at 31 March 2012 was 53.

Portfolio Summary

Geographical Analysis

The geographic spread by value of the Fund's portfolio at 31 March 2012 is:

Dividend

An interim dividend of 0.75 pence per share was announced in the quarter and paid on 30 April 2012.

Financing

As at 31 March 2012, the Fund had debt levels, representing gearing, on its total property value of 58.2%.  If all free cash balances within the Fund were to be applied to reduce the drawn debt facilities it would reduce gearing to 48.9%.   The loan to value covenants on the Company's banking facilities currently range from 70% to 90% (averaging 74.4% based on debt drawn).

The Company has interest rate swaps and caps in place for 98% of its drawn debt for a weighted average period of 2.2 years. The blended cost of money based on debt drawn at the quarter end is 2.30% (5.92% including margin). 

As a result of property sales and regular amortisation, debt totalling £16.4m was repaid in the period.

Market Review

Overall investment volumes fell by 38% during the first quarter and by 24% compared to the first quarter of 2011, with the focus being very much on prime sectors, as investors continue to demonstrate risk-aversion and debt remains very scarce in the secondary markets.  The industrial investment market saw a 51% decline compared to the fourth quarter and a 40% fall compared to the equivalent period in 2011.  The Jones Lang LaSalle (JLL) European prime warehousing yield index was stable at 7.4% for the fourth consecutive quarter and prime light industrial yields also remained unchanged.

The first quarter saw weakening levels of industrial occupier activity, with total take-up down by 35% over the quarter and by 16% compared to the first quarter of 2011.  Given the uncertain economic outlook, occupiers are taking longer to make decisions over space requirements and are reluctant to commit to significant expenditure unless justified by supply chain efficiencies or network optimizations.  The JLL weighted prime warehousing rental index contracted for the second quarter running, with an overall decline of 0.5%.

The Fund remains focused on maximising income in challenging local markets whilst continuing to dispose of its assets in the Nordics.

-ENDS-

For further information:

Rob Brook, Tamar Financial Services Limited

Tel: +44 (0)20 3178 7750

Stephanie Highett/Dido Laurimore/Olivia Goodall, FTI Consulting

Tel: +44 (0)20 7831 3113

www.tamareif.com