Press Release: LONDON 13 November 2006

Kandahar Group enters into £500m joint venture with Morgan Stanley Real Estate

LONDON, 13 November 2006 - The Kandahar Group, the London-based private property investment and asset management business, and Morgan Stanley Real Estate's MSREF V International today announce a new £500 million, 50:50 joint venture to be called Kandahar Real Estate Limited (“Kandahar”), to focus on UK retail and leisure schemes.

Kandahar's initial portfolio will include the 560,000-square-foot Drake Circus, Plymouth's first covered shopping centre, which opened on 5 October 2006 and was developed for Morgan Stanley Real Estate by P&O Estates Limited; and the Kandahar Group's 1,000,000-square-foot UK High Street property portfolio, valued at £243 million. The joint venture will provide Kandahar with enhanced resources to significantly increase the value of its property portfolio, by focusing on schemes with significant development opportunities.

The Kandahar Group is 100% owned by the Kandahar Trust, which was founded by David Ross. Kandahar's executive team will comprise Martin McGann, Amanda Hill and Mike Tyler.

Commenting, Martin McGann said: “The Kandahar team has extensive knowledge of the UK High Street and this joint venture with Morgan Stanley Real Estate will enable us to capitalise on a significant number of new opportunities to create value.”

Toby Phelps, Executive Director, Morgan Stanley Real Estate, said: “We are excited at the prospects of working with David and the Kandahar team. Their combined knowledge of UK retailing and retail investment provides us with the perfect partner as we look to build a market-leading retail investment business.”

About The Kandahar Group

Kandahar is a specialist property group focusing on strategic investments in the UK retail and leisure sector. The Group is 100 per cent owned by the Kandahar Trust, which was founded by David Ross.

Kandahar is led by a management team consisting of Martin McGann, Amanda Hill and Mike Tyler. Martin McGann was formerly Finance Director at Pillar Property PLC, where he worked with Mike Tyler who was responsible for asset management within the Hercules Portfolio. As Head of Property at The Carphone Warehouse Amanda Hill was responsible for the growth of the store portfolio from 20 to 600 stores. Collectively they have extensive knowledge of acquisition and asset management within the retail sector.

Having made its first investment in 2003, Kandahar Group has income in excess of £12m, and its investments consist of 13 UK retail schemes, including Tower Ramparts in Ipswich and Jackson Square, Bishops Stortford, and the Academy portfolio which comprises 22 UK High Street leisure and retail units with a focus on restaurant and licensed uses.

About Morgan Stanley Real Estate

Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking, and Lending. Since 1991, Morgan Stanley has acquired $91.6 billion of real estate assets worldwide and currently manages $53.9 billion in real estate assets on behalf of its clients. In addition, Morgan Stanley Real Estate provides a complete range of market-leading investment banking services to its clients including advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. Morgan Stanley is also a global leader in real estate lending and, using its own capital, originated approximately $28 billion in commercial mortgages in 2005. For more information about Morgan Stanley Real Estate, go to www.morganstanley.com/realestate.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management, wealth management and credit services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 30 countries. For further information about Morgan Stanley, please visit www.morganstanley.com.

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Enquiries:

Kandahar Group
Martin McGann
Tel: 020 7534 1551

Gavin Anderson & Company
Richard Constant / Alexandra Westberg
Tel: 020 7554 1400

Morgan Stanley Real Estate
Carlos Melville, Corporate Communications
Tel: 020 7425 8955

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