British Land a Flagship for UK Reits

British Land A Flagship for UK REITs

Stephen Hester, Chief Executive – 6 September 2007 We are real estate investors and create value by actively managing, financing and developing prime commercial property to provide the environment in which modern business can thrive. The Broadgate Tower

British Land A Flagship for UK REITs Contents Introduction to British Land Demand Flows from London’s Competitive Strengths 21 What We Are 1 London Rents Affordable 22 Portfolio Focus – Out of Town Retail and London Offices 2 Vacancy Rates 23 Activist Strategy, Focused on Delivering Outperformance 3 Assessing Market Balance 24 Financial Overview 4 British Land - £7.5bn Leadership in London Offices 25 Strong Record of Outperformance 5 Investment in Canary Wharf 26 UK Property Market Development UK Real Estate’s Main Attractions 6 Development Strategy 27 Market Size and Ownership 7 Carefully Timed & Customer Focused Development 28 Uniquely Favourable Lease Structure 8 Prospective Unbooked Development Profits 29 British Land’s Long Leases & High Occupancy 9 UK REITs The UK Property Sectors 16 UK REITs with Total Market Capitalisation £31bn 30 UK Commercial Property Market 10 UK REITs Overview 31 Assessing Customer Trends 11 REIT Opportunity 32 UK Property Returns & Rental Growth 12 Investment Return Considerations British Land’s Sectoral Moves & Rationale 13 Property Return Prospects 33 Retail Net Asset Value 34 Retail Market Overview 14 British Land’s Investment Case Retail Sales and Sector Demand 15 Record of Value Creation 35 Retail Space 16 Portfolio Positioned for Rental Growth 36 Supply & Demand Dynamics Favour Out of Town 17 Value Creation from £4bn Development Programme 37 British Land - £13.8bn Leadership on Retail 18 Extra Performance from Pro-active Asset Management 38 Added European Out of Town Retail Dimension 19 Cheap to NAV 39 Offices Summary Office Market Overview 20 British Land – A Flagship for UK REITs 40

British Land A Flagship for UK REITs Introduction to British Land

What We Are

Largest European REIT by assets (£16.3bn) –3rd largest Global REIT by assets –8th largest by equity market capitalisation £6.5bn1 – Total assets under management £20.4bn

Market leadership in Office & Retail – Focus on growth sectors – Out of Town retail and London Offices

High quality assets (96% in the UK)

Pro-active management style – Driven by customer needs

Attractive upside from development & asset management

Strong record of outperformance

We are real estate investors and create value by actively managing, financing and developing prime commercial property to provide the environment in which modern business can thrive.

British Land 1 As at close 31 August 2007 A Flagship for UK REITs 1 Introduction to British Land

Portfolio Focus – Out of Town Retail & London Offices 55% Retail1 42% Offices1 80% Out of Town 97% London

Retail Warehouses (23%)

Central London 45% Offices (41%) Superstores (13%)

10%

Meadowhall (9%) Business Parks & Provincial (1%) Other (3%) In Town High Shopping Department Stores (5%) Street Centres (4%) (2%)

Concentration on markets where we have or can build competitive advantage

British Land 1 Proforma for committed developments (classified by end use) at external valuers’ estimated end value at completion A Flagship for UK REITs 2 Introduction to British Land

Activist Strategy Focused on Delivering Outperformance

Building the business around customer needs and so capturing superior, cash flow driven “total return” arising from high occupancy and rental growth

Seeking to “add-value” at each level of the business

– Sector and market selection – Asset selection and creation – Asset management – Balance sheet management – Deal-doing

Concentrating on markets where we have or can build competitive advantage

British Land A Flagship for UK REITs 3 Introduction to British Land

Financial Overview 1 Net asset value per share (p)

Secure & attractive income/risk profile

– Long average leases (14.6 years to break) 1730 1682 1486 and High occupancy rates (98.6%)

– Gearing 43% LTV3 1128 975 867 Average interest rate submarket at 5.3%

Interest profile 100% fixed rate with average

debt maturity of 13.1 years 2003 2004 2005 2006 2007 Q1 2007 Underlying profit before tax2 (£m)

Returns enhanced by rental growth

– Like for like rental income growth 3.5% 257 228 ahead of market (IPD) at 2.5%

– Estimated rental value (ERV) growth of 6.9% 181 149 147 like for like (IPD 4.3%) to drive future rental

income growth 76 – Mark to market rental growth potential of 20%

2003 2004 2005 2006 2007 Q1 2007

1 EPRA (European Public Real Estate Association) basis British Land 2 Underlying pre-tax profit and EPS excludes gains on property revaluations and disposals, intangible asset movements, refinancing charges, A Flagship for UK REITs £13m of administrative expenses relating to REIT conversion and £33m special Songbird dividend 3 Debt to property and investments – 2007 Proforma for payment of REIT conversion charge in July 2007 4 Introduction to British Land

Strong Record of Outperformance

Earnings Growth1 Total Shareholder Return2 Total Return3

25% 60% 30% 1

1 50% 25% 2 20% 2 40% 20% 1 15%

30% 15% 1 2 10% 2 1 20% 10%

5% 10% 5%

0% 0% 0% 5 YRS 3 YRS 1 YR 5 YRS 3 YRS 1 YR 5 YRS 3 YRS 1 YR British Land Major Peers4 FTSE Real Estate Index

British Land 1 Adjusted, diluted earnings per share (excluding exceptional items, profits on asset disposals and revaluation gains) 2 Total shareholder return represents the growth in share price plus dividends per share (assuming reinvested)

A Flagship for UK REITs 3 Total return (pre-exceptional) represents the growth in adjusted, diluted net asset value per share plus dividends per share 4 Average of major peers - Land Securities, Hammerson, Liberty and SEGRO (some differences in year ends) 5 Based on financial period ends - Number represents British Land’s ranking compared to our major peers UK Property Market

British Land A Flagship for UK REITs UK Property Market

UK Real Estate’s Main Attractions

Density and population growth drive values UK Population density create supply/demand imbalances1

– UK 8 times denser than the US Growth2

– Restrictive planning regime leads to Japan -0.1% limited availability of land

Highly transparent asset valuation UK +2.1%

– Property valued regularly by external professionals according to a ‘Red Book’

– Valuations constantly market-tested Europe +1.4%

Landlord-friendly lease structure

– Typically 10-25 year terms - upward-only USA +5.0% with mark-to-market every 5 years

– Tenant fully liable for repairing and insuring

Australia +5.2%

– High degree of control with landlords – limited break options and conditions for assignment 0 50 100 150 200 250 300 350 – Arbitration procedures Population per km2

British Land 1 United Nations Population Division 2 United Nations Population Division – estimated population growth 2005-2010 A Flagship for UK REITs 6 UK Property Market

Market Size and Ownership

Major Global Real Estate Markets1 UK Property Market Ownership3

Total Real Investable Real Listed Real Other UK Private Estate Estate2 Estate Investors Investors 3% 5% $bn $bn $bn Estates & UK Institutions Charities 5% 28% US 5,616 3,097 510 Limited Partnerships 7%

Europe 5,050 2,343 293 Unlisted & Pooled Funds 8%

Japan 2,024 874 188 UK Unlisted Property UK 1,251 582 123 Companies 15% Overseas Investors 15% Australia 311 148 120

Total 14,252 7,044 1,234 UK Listed Property

Companies 14%

British Land 1 UBS Global Real Estate Analyzer, June 2007 2 Real Estate held for investment purposes A Flagship for UK REITs 3 Investment Property Forum (IPF), July 2005 7 UK Property Market

Uniquely Favourable Lease Structure Typical Lease Rent Review Rent Review Length (yrs) Basis Frequency Europe UK 5-25 Open market 5 yrs France 9-15 Index Annual Germany 5-10 Index Annual/Index Change Spain 5 CPI Annual Poland 3-7 US/Eurozone CPI Annual Americas United States 5-10 Fixed/CPI 1, 3 or 5 yrs Brazil 3-5 Annual inflation/Open market Annual Asia Pacific Australia 3-5 Open market rent or Fixed Annual Japan 2 Open market Renewal Hong Kong 3-6 Open market Renewal or 3yrs Singapore 3 Open market Renewal China 2-3 Open market Renewal India 2-5 Fixed 3 yrs

British Land Source: Jones Lang LaSalle A Flagship for UK REITs 8 UK Property Market

British Land’s Long Leases & High Occupancy

Average lease term to first break, years Occupancy Rate1 % Total Portfolio 14.6 98.6

Retail Warehouses 13.4 99.2

Superstores 20.4 100.0

Shopping Centres 12.8 97.2

Department Stores 29.8 100.0

High Street 10.0 99.5

All Retail 16.3 98.8

City Offices 11.0 98.3

West End Offices 10.1 97.6

Business Parks & Provincial 12.2 88.8

All Offices 10.9 97.8

British Land 1 Underlying occupancy rate including asset management initiatives and units under offer A Flagship for UK REITs 9 The UK Property Sectors

British Land A Flagship for UK REITs The UK Property Sectors

UK Commercial Property Market

UK Investable Real Estate Market Breakdown1 Other 4% Industrial 15% Retail 47%

Total Value c.£300bn2

Offices

34%

British Land 1 Based on IPD 2 Jones Lang LaSalle A Flagship for UK REITs 10 The UK Property Sectors

Assessing Customer Trends

1 Output and Spending Relative to UK GDP Growth Office

150 – Service industries are fastest growing sector

140 – London has a unique global competitive strength as a F&BS Output 130 service centre

– Market in cyclical upswing

120 Retail Sales

Retail

110 – Long-term fundamental growth prospects

100 – Greater asset management potential

– Retail spending growth resilient

Industrial 1996 UK GDP Growth = 100 1996 UK GDP Growth – Weaker occupier trends and

70 Industrial Output limited supply constraints

60 Ability to pick between

50 sectors a key performance

1996 1999 2002 2005 2008 2011 advantage for BL

British Land 1 PMA and Verdict A Flagship for UK REITs 11 The UK Property Sectors

UK Property Returns & Rental Growth

Retail Office Industrial

3.7 (22% of total) -1.3 (-9% of total) 1.2 (8% of total) Last 5 years1 16.7 12.5 15.0

Next 5 years 2.6 (34% of total) 3.3 (38% of total) 1.1 (15% of total) (assuming yields constant2) 7.6 8.7 7.3

0 5 10 15 20 -5 0 5 10 15 20 0 5 10 15 20 Estimated Rental Growth % pa Total Property Return % pa

In the “Post Yield Shift” environment, occupier appeal and rental growth prospects will be the key driver for future property returns

British Land 1 PMA 2 Equivalent Yield plus PMA average ERV Growth (next 5 years) A Flagship for UK REITs 12 The UK Property Sectors

British Land’s Sectoral Moves & Rationale

Disciplined asset reviews to improve risk Last 2 financial Disposals Acquisitions Development Net adjusted growth prospects years (2005-07) Spend Investment1 – Sharpen sectoral focus £m £m £m £m – Recycling capital within ‘advantaged’ sectors Out of Town Retail (1,144) 2,390 11 1,257 – Expand ‘new initiatives’; Europe & Indexed leases2 European Out of

- 384 15 399 Town Retail Retail activity – Built dominant position in Out of Town In Town Retail (660) 209 1 (450) retail – UK and Europe

– Repositioning In Town portfolio All Retail (1,804) 2,983 27 1,206

Office activity London Offices (1,669) 659 372 (638) – Concentration on London’s service industries Business Parks & (166) 40 18 (108) – Sale of “mature” assets and Provincial Offices recycling capital into development

All Offices (1,835) 699 390 (746) Disposals from weaker rental growth markets: high street, provincial offices, Residential (300) 35 - (265) industrial Other (232) 130 22 (80)

Over £1.6bn of sales and £419m Total (4,171) 3,847 439 115 purchases agreed since year end

British Land 1 Net property investment – 1 April 2005 to 31 March 2007 2 Indexed-linked portfolio is valued at £1.6bn, principally high street retail, superstores and leisure A Flagship for UK REITs 13 Retail

British Land A Flagship for UK REITs Retail

Retail Market Overview

Investment market mixed, adjusting Average Town Centre store size 2,100 sq ft

to reflect relative growth prospects.

Occupier market remains resilient

1 Retail sales up 3.8% year on year ;

forecast to grow at 2.9% pa over

next 5 years2 – OOT sales expected to grow 3.4% pa2 vs In Town 1.1% pa2 Average Out of Town Retail store size 21,000 sq ft2

Retailers are net acquirers of space.

Good demand continues for Open A1

retail parks and superstores

BL leadership in Open A1 Out of

Town Retail positioned to reflect

customer demand

British Land 1 ONS – Total sales volume in the 3 months to June 2007 compared to the 3 months to June 2006 2 Verdict A Flagship for UK REITs 14 Retail

Retail Sales and Sector Demand Retail Sales positive1 Out of Town Share Increasing1 6% 60%

5% 50% 50% 42% 4% 40% 32% 3% 30% 26%

Growth % pa % Growth 2% 20% 19% 15% 1% 10% 5% 11%

0% 0% 1997 1999 2001 2003 2005 2007 2009 2011 1997 1999 2001 2003 2005 2007 2009 2011 Total Retail Sales Neighbourhood Town Centre Out-of-town Non-store

Out of Town appeal growing with larger and more flexible units sizes, convenience

of comparison shopping and lower overall costs of occupation

British Land 1 Verdict A Flagship for UK REITs 15 Retail

Retail Space

Out of Town 32% of UK retail space1 and Limited supply of new space being created Out of Town2 only 3% of the total number of retail stores1 14

12 N’hood

(83m sq ft) 10 Out of Town 8 (180m sq ft)

High Street m sq ft 6 Shops

(137m sq ft) 4 Shopping 2 Centres

(170m sq ft) 0

2007 2008 2009 2010 2011

Out of Town Shopping Centre

Increasingly constrained supply of new space in Out of Town locations – In Town shopping centre development expected to be more than double Out of Town

British Land 1 Verdict 2 Verdict and Colliers CRE A Flagship for UK REITs 16 Retail

Supply & Demand Dynamics Favour Out of Town Rental Growth - Last 5 years1 PMA Forecast Rental Growth – Next 5 years1 Average Average Retail Parks Retail Parks

Solus Units Solus Units

Superstores Superstores

Big Shopping Centres Big Shopping Centres

Secondary Shopping Centres Secondary Shopping Centres

High Street Shops High Street Shops

0 1 2 3 4 5 6 0 1 2 3 4 5 6 Average ERV Growth % pa (last 5 years) Average ERV Growth % pa (next 5 years)

Expect lower sector growth rates overall – future rental growth likely to be more discriminating depending on retailer and location appeal

British Land 1 PMA A Flagship for UK REITs 17 Retail

British Land - £13.8bn1 Leadership in Retail British Land Retail Assets1 Distinctive portfolio of over 30m sq ft with leadership positions in – Retail parks In Town – Superstores Retail – Department stores £1.9bn (20%)

80% of retail assets located Out of Town Out of Town – 85%+ with Open A1 use2 Retail

£8.0bn (80%) £20 psf average retail rent – Retail warehouses £20 psf – Superstores £21 psf – Department stores £9 psf

Retail Warehouses £4.1bn (41%) – Shopping centres £35 psf

Superstores £2.3bn (22%)

14% reversionary

Meadowhall £1.6bn (17%)

In Town Shopping Centres £0.7bn (7%) Average lease length 16 years

Department Stores £0.9bn (10%) 3 High occupancy rate of 98.8%

High Street Shops £0.3bn (3%)

British Land 1 Properties owned and managed. Proforma for committed developments at external valuers’ estimated end value at completion 2 Including Open Restricted A Flagship for UK REITs 3 Underlying retail occupancy rate including asset management initiatives and units under offer 18 Retail

Added European Out of Town Retail Dimension

1 2 Assets now owned or managed total €1.7bn Retail Warehouse Parks Under-represented in Europe 20 ShoppingShopping Centres – Attractive capital value of £163 psf, gross initial <5% RetailRetail Warehouses Warehouses yield to BL of 6.6% and low average ERV of £8 psf 15 58% <5% % of which Retail Parks

Logical extension of UK market leadership 10 m sq m m sq

Under provision of “out of town” shopping in many 5 57% 27% 3% 18% 36%

Eurozone markets 0

UK Attractive supply/demand dynamics, similar to UK, Italy Spain France however much less mature Poland Belgium Portugal Germany

Good value compared with “in town” shopping Lots of Scope for Rental Growth ‘Out of Town’3 2 – Retail warehouse rents on average 85-90% 3,000 less than rents In Town and c.50%2 less than 2,500 2,000 UK fashion park Average 1,500 UK €psm pa €psm

Export UK intellectual capital and ‘know how’ 1,000 Fashion Park – BL European team now 18 people 500 0

Whilst competition strengthening, still not as strong UK Italy Spain France Poland

as in the UK Belgium Portugal Germany Retail Warehouses Shopping Centres High Street British Land 1 Estimated end capital value when complete (including assets contracted) 2 Cushman & Wakefield: Shopping Centre versus Retail Warehouse Stock A Flagship for UK REITs 3 Cushman & Wakefield: Indicative European Retail Rents Rental values (on overall basis) refer to absolute prime property for each-sector (except UK and France high street rents which are averages 19 of the top ten locations to avoid direct comparison with exceptionally high rents of London West End and Paris Champs Elysees) Offices

British Land A Flagship for UK REITs Offices

Office Market Overview

Investment market healthy. Favourable

rental growth expectations keeping yields City Offices 88m sq ft

low

London’s international service industry Docklands 18m sq ft

strength driving occupancy and rents

Strong City take up of 2.1m sq ft in Q2 2007;28% higher than long-term average1 – Vacancy rates reduced to 5.5%, Grade A 2.7%1

1 8.8m sq ft of speculative supply currently under construction in London between now and 2009, but with good occupier demand, no sign yet of cycle peaking

BL leadership in London offices a key asset, and leveraging cycle well through West End Offices 102m sq ft development

British Land 1 Jones Lang LaSalle A Flagship for UK REITs 20 Offices

Demand Flows from London’s Competitive Strengths Financial & Business Services set to outperform1 F&BS employment to grow by 150,000 jobs by 20101 6% 10% 8% 5% 6% 4% 4% 3% 2% 0% 2% -2% 1% -4% 0% -6% 1999 2001 2003 2005 2007 2009 1999 2001 2003 2005 2007 2009 UK GDP London F&BS GDP UK Employment London F&BS Employment

Cyclical upturn in London offices is underway with good occupier demand – London economy strong with GDP growth outstripping the UK average and employment continuing to rise, led by Financial and Business Services sectors

British Land 1 CEBR and PMA A Flagship for UK REITs 21 Offices

London Rents Affordable Nominal vs Real London Office Rents1 Rents vs Salaries2

90 200

80 180

70 160

140

120

100

Rent £ psf Rent 80

20 100 1990 = to Indexed 40 10 20 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 1990 1993 1996 1999 2002 2005 Nominal Real West End City Salaries

London rents affordable - both in historical terms and compared to other costs

British Land 1 Jones Lang LaSalle 2 PMA A Flagship for UK REITs 22 Offices

Vacancy Rates City vacancy now 5.5% (Grade A 2.7%)1 West End vacancy now 3.2% (Grade A 1.8%)1 16 16 14 14

12 12

10 10

8 8

6 6 Vacancy Rate % VacancyRate %

4 4 2 2 0 0 1994 1996 1998 2000 2002 2004 2006 1994 1996 1998 2000 2002 2004 2006 All City Grade A All West End Grade A

London Grade A vacancy rates now at lowest levels for 6 years

British Land 1 Jones Lang LaSalle A Flagship for UK REITs 23 Offices

Assessing Market Balance 6.8m sq ft of speculative supply currently under Average Agents’ forecast City rental growth 4.6% pa construction between now and 2009 in the City1 and West End 7% pa over next 5 years2 16 80 130 14 120 12 70 110 100 10 60 90 8 80 m sq ft 6 50 70 4 60 40 50 2 40 0 30 30 2007 2008 2009 2010 2011 1996 1998 2000 2002 2004 2006 2008 2010 Under construction Likely to proceed Pre-let City (LHS) West End (RHS) Requiring pre-let Possible

Key judgement is with what pace new supply is delivered to meet or exceed demand

in the coming years – but forecasts partially self-regulating and economics

challenging with high existing land use values and construction cost inflation

British Land 1 Jones Lang LaSalle 2 Jones Lang LaSalle historic and Agent’s consensus forecasts A Flagship for UK REITs 24 Offices

1 British Land - £7.5bn Leadership in London Offices British Land Office Assets1 11m sq ft London portfolio – 6.4m sq ft of prime London office investments – 3.2m sq ft developments – 0.8m sq ft ‘look-through’ in Canary Wharf (10.8%) London Offices

Positive rental growth outlook £7.3bn (97%)

2 £44 psf average London rent

– Headline ERV now £46 psf

Average lease length 11 years City Offices £5.9bn (79%)

West End Offices £1.4bn (18%) 3 High occupancy rate of 97.8%

Business Parks & Provincial £0.2bn (3%)

Continuing intensification of asset management and focus on customer demand

British Land 1 Proforma for committed developments at external valuers’ estimated end value at completion 2 Average contracted passing rent (post expiry of rent free periods) A Flagship for UK REITs 3 Underlying office occupancy rate including asset management initiatives and units under offer 25 Offices

Investment in Canary Wharf

17.8% ownership of Songbird Canary Wharf – 10 office buildings and – 10.8% of Canary Wharf plc 6 retail properties totalling 8m sq ft – £6.7bn of office and retail properties – High occupancy rate of 95.6%, leased to high quality tenants – 4 new buildings (1.3m sq ft) under construction

£98m initial investment – Already received £113m in dividends – Independently valued at £225m – Current market value c.£280m

245% return on investment to date

British Land A Flagship for UK REITs 26 Development

British Land A Flagship for UK REITs Development

Development Strategy

Understand occupier needs – Location: transport, infrastructure and environment The Leadenhall Building – existing building will be more than tripled in size and height to create

– Quality of specification a new 601,000 sq ft (736ft high) City office tower

– Space requirements: size, configuration and flexibility

– Architecture: developing quality buildings with profile

– Cost: whole cost of occupancy

– Timing: ability to deliver when market requires

Develop highly specified and flexible buildings that meet occupiers’ needs

Develop in a controlled manner

Current development programme 5.0m sq ft

– Focused on London offices and European

out of town retail

– Further 3.3m sq ft of prospective developments

British Land A Flagship for UK REITs 27 Development

Carefully Timed & Customer Focused Development

York House The Willis 35 Basinghall Ludgate The Broadgate Ropemaker Regent’s The Regent’s

(137,000 sq ft) Building & One West Tower & 201 (593,000 sq ft) Place - Leadenhall Place - (491,000 sq ft) Coleman (127,000 sq ft) Bishopsgate Osnaburgh Building North East Street (822,000 sq ft) Street (612,000 sq ft) Quadrant (379,000 sq ft) (490,000 sq ft) (508,000 sq ft)1 39% Completed Under and Fully Offer2 Pre-let 69% Under 100% Let Euston Offer2 or Under Station Completed 2 Both Offer & with 89% Pre-sold Broadgate Let or Under 2020 offer2

2006 2007 2008 2009 2011 (0.1m sq ft) (1.0m sq ft) (0.8m sq ft) (1.1m sq ft) (1.1m sq ft)

British Land 1 Planning application submitted 2 Based on office space only (includes space under option) A Flagship for UK REITs 28 Development

Prospective Unbooked Development Profits

Developments £m Illustrative sensitivity of potential development surpluses6 to yield shift and rental growth (£m) March 2007 Valuation1 1,037 Average valuation yield %

Costs to Complete2 1,957 £m +25bp 5.27% -25bp -50bp

Tenant Incentives 301 -5% 344 506 684 880 Estimated Current Headline Rent 207 £207m 523 693 880 1,087 Development Yield3 6.3%

+5% 702 880 1,077 1,294 Estimated End Value4 3,988 Estimated headline rent £m pa Valuers’ Estimated Future Profit 6935 +10% 880 1,067 1,273 1,501

1 £868m of the valuation is cost and £169m is profit booked to date 5 Of which London Office development prospective returns represent British Land 2 Including notional interest £579m, based on average valuation yield of 5.16% & ERV of £154m pa A Flagship for UK REITs 3 Yield on current valuation plus costs to complete, notional interest 6 Estimated remaining valuation surpluses on committed and to PC and tenant incentives prospective developments (excluding residential, Blythe Valley, 4 29 4 Net of purchasers’ costs and including developments (or parts) Broadgate, Euston & Canada Water), based on external valuers to be sold March 2007 assumptions (sensitised for movements in yields & headline rents) UK REITs

British Land A Flagship for UK REITs UK REITs

16 UK REITS with Total Market Capitalisation £31bn

… of which, 8 UK REITs have a Market Capitalisation of more than £1bn

Market Portfolio Sectors Discount Dividend Company Capitalisation Size to NAV Yield £bn £bn % % Land Securities 8.2 14.8 Retail/Office 24 3.9 British Land 6.5 16.3 Retail/Office 26 2.8 Liberty International 4.0 8.2 Retail/Office 19 3.3 Hammerson 3.7 6.7 Retail/Office 15 2.1 SEGRO 2.2 5.1 Industrial 34 4.5 Derwent London 1.7 1.7 Office 4 1.3 Great Portland Estates 1.1 1.7 Retail/Office -6 1.8 Brixton 1.0 2.1 Industrial 28 4.0 8 UK REITs with Market Cap >£1bn 2.9 4.1 Mixed 14 3.1 31.3 60.7 18 3.0

British Land Source: UBS, August 2007 A Flagship for UK REITs 30 UK REITs

UK REITs Overview

British Land became a REIT on 1 Jan 2007 – UK rental income & capital profits now largely tax free – Dividends to be paid quarterly – first full year REIT dividend will total 35p, 106% increase on 2005/6 – REIT entry charge of £325m, releasing £1.6bn deferred tax liability1

UK REITs are a tax election with light regulation – Restore competitive fiscal position of UK quoted companies in the property market – Provide investor reassurance on dividends, gearing and business focus without constraining existing business models – NPV positive for shareholders in tax terms – May improve industry capital efficiency as asset buy/sell decisions freer of fiscal distortion

The UK REIT regime does not: – Discriminate between types of real estate – Place limits on development – Substantially change the way investors will make money – Remove responsibility from management and investors to design and pursue ‘real estate based’ value creation

British Land 1 Net of goodwill A Flagship for UK REITs 31 UK REITs

REIT Opportunity

Expect investors to re-look at: – Allocations to property, and quoted vs unquoted/direct holdings – Valuations relative to NAV, free of historic fiscal drag and with higher dividend payouts

Opportunity to: – Buy/sell where previously inhibited by tax – Increase dividends with capital growth reducing as yield shift ends

But, freed of tax distortion, companies have an unchanged

goal – to make money for shareholders out of real estate

REITs support British Land’s ‘property led’ strategy, focused on ‘total return’ underpinned by secure, growing cash flows

British Land A Flagship for UK REITs 32 Investment Return Considerations

British Land A Flagship for UK REITs Investment Return Considerations

Property Return Prospects 1

Return Prospects - Property Return Prospects – Indexed Gilts Return Prospects - UK Equities Market Equivalent Yield2 5.2% 5 7 Market Rental Growth3 2.7% Yield 1.6% Dividend Yield 2.9% Asset Total 7.9%

+ gearing, development & + + 6 8 asset management Growth Prospects 3.4% Dividend Growth 6.6% - expenses & depreciation - Company Total ? Total 5.0% Total 9.5%

British Land Weighted Average Real estate’s growing cash flows and strong downside Cost of Capital (WACC)4 protection position it between bonds and equities in Cost of Equity 8.7% hierarchy of total return prospects. Plus added benefits Cost of Debt 6.0% of active management, development and gearing to produce good value equity returns WACC 7.4%

British Land 1 This is not a forecast and is for illustrative purposes only, with 4 UBS - CAPM approach based on market risk premium of 5.29% no change in required returns assumed (no yield shift) and beta of 0.66 at June 2007 A Flagship for UK REITs 2 IPD Quarterly Index to June 2007 All Property Net Nominal 5 20 year Indexed Gilt Equivalent Yield 6 As implied from 20 year Inflation Swap Rate 33 3 PMA forecast average ERV growth pa (next 5 years) 7 FTSE 100 Dividend Yield 8 Dividend growth forecast by UBS (average of 2007/2008) Investment Return Considerations

Net Asset Values

Properties valued quarterly by external professionals according to the Red Book

Valuations mark assets to market – Quality of the asset and possible alternative uses – Quality of the tenant, security of income and lease length – Local area, catchment, competing schemes and planning – Current market sentiment, weight of money and similar transactions

Valuations provide proxies for property risk characteristics

UK NAVs provide a starting point upon which investors can apply their own perceptions of the market; return expectations; and views of the company’s strategy & prospects

British Land A Flagship for UK REITs 34 British Land’s Investment Case

British Land A Flagship for UK REITs British Land’s Investment Case

Record of Value Creation

Earnings Growth1 Total Shareholder Return2 Total Return3

25% 60% 30% 1

1 50% 25% 2 20% 2 40% 20% 1 15%

30% 15% 1 2 10% 2 1 20% 10%

5% 10% 5%

0% 0% 0% 5 YRS 3 YRS 1 YR 5 YRS 3 YRS 1 YR 5 YRS 3 YRS 1 YR British Land Major Peers4 FTSE Real Estate Index

A Flagship for UK REITs 3 Total return (pre-exceptional) represents the growth in adjusted, diluted net asset value per share plus dividends per share 4 Average of major peers - Land Securities, Hammerson, Liberty and SEGRO (some differences in year ends) 35 Based on financial period ends - Number represents British Land’s ranking compared to our major peers British Land’s Investment Case

Portfolio Positioned for Rental Growth

1 1 55% Retail 42% Offices PMA Forecast Market ERV Growth pa2

80% Out of Town 97% London Retail Warehouses

Retail Superstores Warehouses Central London (23%) Offices (41%) Shopping Centres

High Street

Superstores 45% London Offices (13%) Provincial Offices 10% Industrial Meadowhall (9%) Business Parks & Provincial (1%) All Property In Town High Other (3%) Shopping Street Department 0 1 2 3 4 Centres Stores (5%) (2%) (4%) Forecast ERV Growth % pa - next 5 years As well as capturing ‘mark to market’ rental growth potential of £124m3

British Land 1 Proforma for committed developments (classified by end use) at external valuers’ estimated end value at completion 2 PMA A Flagship for UK REITs 3 Includes rent reviews and lease break/expiry and letting of vacant space at current ERV (as determined by external valuers) within 5 years, plus expiry of rent free periods 36 British Land’s Investment Case

Value Creation from £4bn Development Programme

Projects include …

A key differentiator 201 Bishopsgate & The Puerto Venecia, Zaragoza Broadgate Tower (0.8m sq ft) (2.2m sq ft)

Over 10m sq ft of developments – Of which 5.2m sq ft committed

Excellent progress to date – Construction & costs on plan

– Capturing customer demand as expected –

1.9m sq ft of committed developments

already let/under offer The Leadenhall Ropemaker (0.6m sq ft) Building (0.6m sq ft)

Potential for highly profitable development programme – Current development yield of 6.3%1 – Base case unbooked profits of £693m2, even with

no rental growth and conservative 5.27% yield

– Profits highly geared to rents and end yield – e.g. at current yields3 potential profit +57% (c.£1bn)

British Land 1 Yield on current valuation plus costs to complete, notional interest to PC and tenant incentives 2 Valuers’ current estimates A Flagship for UK REITs 3 Assumes blended yield on completion of 4.77% 37 British Land’s Investment Case

Extra Performance from Pro-active Asset Management

£10bn of asset turnover since March 2005 refocusing portfolio to concentrate on markets

where we have or can build competitive advantage

3.6m sq ft of new lettings and renewals adding £47m of new rent since March 2005

Like for like ERV Growth 6.9% ahead of Market (IPD) 4.3% in 2006/7 – Lead by retail warehouses and London offices – ERV growth of 2.2% in the 3 months to June 2007, ahead of market (IPD) 1.1%

HUT ERV growth of 4.2% in the year, New high rents agreed at Broadgate York House completed Q1 2007 – ahead of IPD benchmark (2.2%) – average ERV up 13% in 12 months already 89% let or under offer1

British Land 1 c.40,000 sq ft occupied by British Land as new Head Office A Flagship for UK REITs 38 British Land’s Investment Case

Cheap to NAV

Shares currently at 26% discount to NAV Average Premium/(Discount) to NAV – Global REITs1 – Investor concerns on the macro-environment are reflected in industry stock prices but not, Japan 45 to date, in actual business results

Australia 33

£250m share buyback programme announced and underway (£84m to date) Europe 15 – Current price ‘too gloomy’ in its implied view of British Land’s future prospects US -13 Company’s resilience excellent with exceptional occupancy rates, UK -18 lease lengths and balance sheet

-50 -40 -30 -20 -10 0 10 20 30 40 50 strength %

British Land 1 UBS, August 2007 A Flagship for UK REITs 39 Summary

British Land A Flagship for UK REITs Summary

British Land – A Flagship for UK REITs

British Land UK Property Market

Distinctive leadership in the two sectors UK most landlord-friendly market most favoured for growth over next 5

years Occupier markets strongest in London offices and Out of Town Retail – London Offices

– Out of Town “Open A1” Retail Macro concerns reflected in industry stock prices but not in actual business

Outstanding development programme to date

Greatest downside protection in the market Issues around interest rate outlook and impact on property important going – Longest leases, most prime, advantaged portfolio forward

Company resilience excellent with high

Leveraging OOT Retail expertise in Europe occupancy rates and long leases

British Land A Flagship for UK REITs 40 Disclaimer

The information contained in this presentation has been extracted largely from the First Quarter Results Announcement for the three months ended 30 June 2007 and the Preliminary Results Announcement for the year ended 31 March 2007. General property market data has been extracted from Jones Lang LaSalle, PMA, Verdict and other agents’ reports (please note that their definitions may differ slightly).

Data includes share of Funds and Joint Ventures, unless otherwise stated. ‘Group’ excludes share of Funds and Joint Ventures. Underlying profit and EPS principally exclude gains on disposal of assets and revaluations. EPRA NAV excludes the deferred tax on revaluations and mark to market on effective cash flow hedges and related debt adjustments.

This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. British Land does not undertake to update forward-looking statements to reflect any changes in British Land’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

This presentation is made only to investment professionals as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ('the FP Order'). The content of this presentation has not been approved by a person authorised under the Financial Services and Markets Act 2000 (“FSMA”). Accordingly, this presentation may only be communicated in the UK with the benefit of an exemption set out in the FP Order. An investment professional includes: (i) a person who is authorised or exempt under FSMA; and (ii) a person who invests, or can reasonably be expected to invest, on a professional basis for the purposes of a business carried on by him; and (iii) a government, local authority (whether in the United Kingdom or elsewhere) or an international organisation; and (iv) any director, officer, executive or employee of any such person when acting in that capacity.

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The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. This presentation has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this presentation had been prepared in accordance with the laws of jurisdictions outside the UK.

All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.

British Land A Flagship for UK REITs