innovation
respect
excellence
integrity
customer service
Francis Salway
Group Chief Executive
Presentation to UKSA
19 January 2005
Focused business model
Retail
London
offices
Property
outsourcing
…with scope for opportunism
Urban
community
development
Three core businesses
(1)
Retail
London offices
Property outsourcing
£4.8bn assets
£257m net income
£3.3bn assets
£200m net income
£1.9bn operating properties
£196m operating profit(1)
Six months to 30 September 2004 annualised, excluding profit on sales of properties
Market leading positions
Strategic focus on value creation
Aiming to deliver enhanced financial returns
Active management £m
of balance sheet
£m
2004
2003
2002
2001
2000
1999
1998
1000
500
0
-500
Telereal disposals
Property investment expenditure
Effective
recycling
of capital
Disposals
LS Trillium acquisitions
-1000
Capital returns
Corporate acquisitions
Recycling capital to achieve higher returns
-1500
Experienced management team
Francis Salway (47)
Group Chief Executive
Andrew Macfarlane (48)
Group Finance Director
Mark Collins (48)
Chief Operating Officer
Richard Akers (43)
Managing Director, Retail
Ian Ellis (49)
Property Outsourcing
Mike Hussey (39)
Managing Director, London
Leading a group of 1,950 employees
The last 12 months
2004

Organisational restructuring
 Exit from industrial

Debt restructuring
 Innovative financing solution

Retail
 Scottish Real Estate Limited Partnership – joint venture with British Land
 Metro Shopping Fund Limited – joint venture with Delancey
 Asset swap with Slough Estates
 Successful anchor tenant lettings for shopping centre developments in
Exeter and Cardiff
High level of activity
The last 12 months
2004

London office
 Let, disposed or agreed terms for letting for over 145,000m2 of our London
office development programme
 Landflex roll-out

LS Trillium
 3 new contract wins – Employment Services, Norwich Union and Barlcays
Bank
 Strong profit and loss contribution
High level of activity
Financial highlights
6 months to 30 September 2004
Key statistics
Pre-tax profit
£196.6m
8.2%
Revenue profit (pre-tax) (1)
£189.3m
13.4%
Adjusted diluted earnings per share (2)
28.56p
11.8%
Dividend per share
10.40p
5.1%
£445.7m
5.3%
1443p
8.4%
Property investment business valuation change
Adjusted diluted NAV per share(3)(4)
(1)
(2)
(3)
(4)
Excludes FRS3 profits and exceptional items.
Based on revenue profits. Excludes deferred tax on investment properties.
Adds back deferred tax on investment properties and Telereal deficit
Compared to 31 March 2004
Strong growth in adjusted EPS and NAV
Retail
Investment
 Active management creating value
 Shopping centres
+6.2%(1)
 Retail warehouses
+7.3%(1)
 Innovative asset acquisitions
 18 shopping centres, 25 retail parks
 Over one million m2 of retail
accommodation
 Nearly 300 million shopper visits per year
Development
 Meeting targets on development lettings
 Planning consent for over 100,000m2 of
retail development(2)
 Estimated future development spend of
c.£531m(2)(3)
(1)
(2)
Retail
(3)
Valuation change for six months to 30 September 2004
LS share
Excludes land costs and capitalised interest
Vision of long term, dominant assets
Scottish Retail Property Limited Partnership

Joint venture with British Land created in
March 2004

Over 130,000m2 of retail space, valued at
circa £500m

Assets:



Aberdeen - Bon Accord Centre and St
Nicholas Centre

East Kilbride – Princes Mall, Olympia,
Plaza Centre and Centre West
Roles:

Land Securities – asset and property
management

British Land – administration
Rationale

Coordinated asset management and
tenant mix strategies

Future development opportunities
Centre West, East Kilbride
Maximise long-term value of centres
Assets acquired through Slough Estates swap
• Freehold
• 50% interest with
Henderson
• £6.4m p.a. rental
income
• Long leasehold at
peppercorn
• 32,500m2
• £8.3m p.a. rental
income (LS share)
• 55,750m2
Buchanan Galleries, Glasgow
Lewisham Centre, Lewisham
• Long leasehold at
peppercorn
• Freehold
• £1.9m p.a. rental
income
• £3.8m p.a. rental
income
•
Howard Centre, Welwyn
• 9,500m2
21,350m2
Bishop Centre, Taplow
Asset management and development opportunities
Retail developments
Whitefriars, Canterbury
37,100m2 retail
St David’s 2, Cardiff(1)
70,000m2 retail
Princesshay, Exeter
37,500m2 retail
Broadmead, Bristol(1)
88,750m2 retail
One of the largest development pipelines
Central London office
Investment
 Disposal of ‘ex-growth’ assets
 Valuation increase(1)
 Like-for-like portfolio(2):
 Average passing rent
 Average estimated
rental value
 Current income yield
+4.4%
£358 per m2
£321 per m2
7.1%
 Over 810,000m2 of office accommodation
 More than 50,000 people work in offices owned
by us
Development
 Strong progress on development lettings
 Potential to develop 500,000m2 of commercial
and residential space over next 10 years
 Estimated future development spend of
c.£581m(3)
(1)
(2)
Retail
(3)
for six months to 30 September 2004
As at 30 September 2004
Excludes land costs and capitalised interest
Poised for market recovery phase
London investment portfolio opportunities
Property A – long lease
Property B – short leases
110
110
100
100
90
90
80
80
70
70
60
Mar-01
60
Mar-01
Mar-02
Mar-03
Mar-04
Capital value
Mar-02
Mar-03
Mar-04
Rental value
London offices (like-for-like portfolio) as at 30 September 2004:
 Current income yield
 Mean lease length
9.0years
 Gross nominal equivalent yield
 Gross reversionary potential
7.8%
 Average passing rent per m2
 Over-rented income
(14.3)%
 Average ERV per m2
Positioned for capital growth
7.1%
7.1%
£358
£321
Office developments
Eastbourne Terrace, W2
New Street Square, EC4
120 Cheapside, EC2
Bankside 123, SE1
Cardinal Place, SW1
Can satisfy major occupiers’ property requirements
Landflex
Higher earnings from
capital invested
Increased renewal rates
Improved IRRs
Land
Securities
Menu of lease lengths
Indexed rent increases
Inclusive charges
No dilapidations
Additional services
Budget certainty
Client
Building
Office space
Status
7 Soho Square, W1
41,000m2
Let
Empress State, SW6
5,720m2
Let
Eastbourne Terrace, W2
7,640m2
Under
development
Product innovation matched to market trends
Property outsourcing
Freehold asset transfer
Leasehold liability transfer
Unitary charge
LS
Trillium
Client
Capital value payment/release
Integrated property services
Occupational flexibility
Price certainty
 More than 250,000 people work in offices
managed by LS Trillium

2.6m m2 =
1,700 buildings

0.4m m2 =
76 buildings

5.3m m2 =
6,700 buildings

0.1m m2 =
19 buildings
Property outsourcing: risk transfer, price certainty, customer service
Property outsourcing
6 months to
30/09/03
£m
31/03/04
£m
30/09/04
£m
PRIME (including amortisation of goodwill)
27.6
29.6
29.1
ES
(1.8)
(4.4)
17.2
BBC
(3.4)
10.0
10.5
-
2.9
Segment profit including profit on sales
Norwich Union
-
Bid costs
(1.7)
(4.5)
(0.7)
Central costs
(3.2)
(4.1)
(1.9)
Segment profit
17.5
26.6
57.1
Telereal profit before tax
16.4
13.9
37.7
746.7
889.6
960.0
89.0
(47.9)
(52.6)
Net assets(1)
Investment in Telereal joint venture
(1)
Including £36m Norwich Union assets defined as finance leases
Strong growth from new contracts
LS Trillium - new business pipeline
Drivers:
Balance sheet
Consolidation
Government efficiency review
Flexibility
Cost reduction
£30 billion asset disposals
Corporates
Public Sector
Marketing and pre-proposal
5
7
2
1
1
2
1
0
Outline proposal
Final proposal
Final close
Mobilisation
Growing private sector interest within pipeline
Urban community development
Kent Thameside, south-east England
(1) Eastern Quarry
4

79% ownership

Outline planning application submitted

7,250 homes, 267,250m2 commercial and
community accommodation
(2) Ebbsfleet
2
1

42.5% ownership

Outline planning consent obtained

3
(3) Springhead, Ebbsfleet phase I

Brentwood
London
Thurrock
Kent Thameside
Bexley
Sevenoaks
Maidstone
789,500m2 commercial and residential floorspace
42.5% ownership

Quarter Master approval secured

600 homes and 50,000m2 offices
(4) Swanscombe Peninsula

Development management role

Outline planning application to be submitted

1,700 residential units, 25,000m2 offices and
6,000m2 retail and community accommodation
Exciting opportunity – delivering profits over 20 years
Effect of debt refinancing
Based on final pricing
Before
After
£1.80bn debentures and bonds
£2.30bn secured bonds

weighted average interest rate:

A/A- rating (bonds only)
8.51%

weighted average interest rate:

AA/AA rating
5.35%
£1.55bn committed unsecured facilities expiring 2005
& 2006.
New £1.5bn committed bank facility expiring late
2009. Bank debt has migrated
At 30 September 2004 :
At 30 September 2004 pro-forma for
transaction(1):
(1)
Gearing (net debt/equity)
40.7%
Gearing
54.7%
Adjusted diluted NAV
1443p
Adjusted diluted NAV
1342p
NNNAV
1228p
NNNAV
1223p
Group weighted average cost of debt
7.64%
Group weighted average cost of debt
5.52%
As if refinancing had happened at 30 September 2004 but based on final prices
Improved flexibility with lower future funding costs
Summary

Sharper focus to range of activities

More efficient debt structure – earnings enhancing

London portfolio well positioned for recovery phase:
 short average lease lengths
 development pipeline

Retail portfolio strengthened through organic growth

Increasing interest in property outsourcing from private sector
A strategy delivering growing returns
Contacts
Emma Denne
Director of Corporate Communication
Tel:
+44 (0) 20 7024 5460
Fax: +44 (0) 20 7024 5011
Email: emma.denne@landsecurities.com
Jennifer van der Eem
Investor Relations Manager
Tel:
+44 (0) 20 7024 5185
Fax: +44 (0) 20 7024 5011
Email: jennifer.vandereem@landsecurities.com
www.landsecurities.com
Land Securities Group PLC, 5 Strand, London, WC2N 5AF
innovation
respect
excellence
integrity
customer service
Robert Heskett
Head of Asset Management, Central London portfolio
UKSA Central London Tour
19 January 2005
One New Change, EC4

Description
The building comprises 385,000ft2 of
offices and 26,000ft2 of retail held on a
long lease from the Corporation of London.
The majority of the office building is let to
Allen & Overy, who will occupy the
premises until 2006. The retail
accommodation is let to a mixture of
tenants, including Lloyds Bank and Boots.

Comment
Land Securities purchased New Change
from the Bank of England during 2000 and
provides the opportunity to develop a
substantial landmark building adjacent to
St Paul’s, with the ability to create the first
major shopping complex on the City’s most
prime retail frontage.
30 Gresham Street, EC2

Description
Gresham Street is one of the City’s largest
buildings providing approximately
390,000ft2 net of offices with floor plates up
to 49,220ft2, offering exceptional levels of
flexibility to high density occupiers. In
addition, the scheme will provide
approximately 14,000ft2 net of retail
accommodation.

Comment
The scheme was completed in December
2003. The property stands on an island
site providing a high profile frontage onto
Gresham Street. The building was
recently let in its entirety to DrKW, thus
releasing their Fenchurch Street site to
Land Securities.
Red Lion Court, SE1

Description
This is a 128,325ft2 building of high quality
specification with full air-conditioning and
raised floors. The building is wholly let to
Lloyds TSB Bank PLC for a term of 25
years from June 1990, expiring June 2015,
on FRI terms and five yearly rent reviews.

Comment
Land Securities purchased the property in
December 2004. The building is let off a
rent of £35ft2 and rental growth prospects
are good, bearing in mind the
improvements in the South Bank area.
The value is underpinned by the possibility
of a residential development in a popular
riverside location.
Bankside 123, SE1

Description
A mixed use development providing
approximately 750,000ft2 net of offices,
110,000ft2 net retail and health and fitness,
arranged over 3 buildings. Bankside
neighbours the Tate Modern and is well
connected to a number of transport hubs
providing access to the City, West End and
Docklands.

Comment
The building has been demolished and, as
a result of the early pre-letting campaign,
Bankside 1 has been pre-sold to IPC.
Tenants are being sought for the
remainder of the space before construction
starts.
Hill House, 1 Little New Street, EC4

Description
This is a building comprising 133,260ft2
plus car parking let in its entirety to
Deloittes. The terms of the lease is 35
years from 1983, expiring in 2018 at a rent
of c. £38ft2 per annum exclusive.

Comment
Land Securities purchased the freehold
interest in this building in July 2004. The
attractive running yield of 6.5% made this
an attractive acquisition adjacent to the
company’s existing holdings in New Street
Square and based on a first class
covenant.
New Street Square, EC4

Description
Planning permission for a 700,000ft2
scheme on the site of New Fetter Lane
was submitted in 2004.

Comment
After carefully considering current market
trends, Land Securities has now made a
planning application for the site which will
involve 3-4 buildings of between 150,000ft2
and 400,000ft2 each. A pre-letting
marketing campaign is underway and
Heads of Terms have been agreed with
Deloittes to take over 200,000ft2, although
it is not yet documented.
Greater London House, NW1

Description
This is a landmark 335,000ft2 building
between Camden and the West End.
Major occupiers include Book Club
Associates, Young & Rubicam and TUI.
The building is fully occupied with most
leases expiring in 2013.

Comment
Land Securities purchased the freehold
interest in this building in July 2004.
Average rents are c. £23ft2 and the rental
growth prospects are strong for this
popular building.
6-17 Tottenham Court Road, W1

Description
A development completed in 1999 and
comprising 56,500ft2 of retail space
currently divided into six large units let to a
variety of tenants, including Sainsbury’s,
Boots the Chemist and Specsavers. There
is also a restaurant and some offices.

Comment
A new development providing good quality
retail space, which is in short supply
generally in the West End. The parade
shows good rental growth prospects which
should be reflected in the rent reviews in
2004, which are being progressed at
present.
Piccadilly Circus, W1

Description
Seven advertising screens let to
international brands, such as Coca-Cola,
McDonald’s and TDK. Two large ground
floor retail/restaurant units let to Boots the
Chemist and Burger King.

Comment
A multi-let building in the heart of the West
End. The signs have attracted household
names for almost a century and the block
continues to be popular with retailers and
advertisers.