Interim Results - Part 1

British Land Co PLC
24 November 2004


                                                                24 November 2004

                          PRELIMINARY ANNOUNCEMENT BY
                          THE BRITISH LAND COMPANY PLC

INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2004

   • Net asset value per share increased 8.6% to 1049 pence*
     (March 2004: 966 pence*), 20.7% higher than at September 2003.

   • Net assets up £450 million to £5,485 million* (March 2004: £5,035
     million*).

     Shareholders' funds are £5,265 million (March 2004: £4,669 million).

   • Portfolio valuation up £400 million, 3.8%, to £11,065.9 million.

     Total assets under management now £12.3 billion.

   • Net rents increased by 5.6% to £265.1 million (2003: £251.0 million).

   • Underlying profit before tax up 15.1% to £74.8 million

     (2003: £65.0 million+), before gains on assets disposals.
     Profit before tax is £80.1 million after gains on asset disposals of
     £5.3 million (2003: £86.9 million+; £21.9 million).

   • Total return (adjusted diluted net asset value per share growth plus
     dividend) for the half year is 9.1%.

   • Interim dividend up 8.4% to 4.8 pence (2003: 4.43 pence) per share,
     maintaining 23 years of progressive dividend growth.

   • 775,700 sq ft of new lettings in Central London during the year to date,
     including 465,000 sq ft pre-let signed with leading risk management and
     insurance intermediaries Willis Group.

John Ritblat, Chairman:
"Commercial property is a highly desirable investment class, with enduring
defensive qualities against the downside and plenty of upside potential. The
long overdue market correction to property yields began in our last financial
year and has been transformed through our gearing to deliver, over the last 12
months, an impressive 195 pence per share or 22.4% total return to our
shareholders, lifting adjusted diluted net assets from 869 pence to 1049 pence
per share."

Stephen Hester, Chief Executive:
"I am very pleased to have been selected by the Board to succeed John Ritblat as
Chief Executive of the company. British Land is in great shape, and it is my aim
to help the company build on its fine and distinctive record for the future."

* adjusted to exclude the capital allowance effects of FRS19 and to include, in
calculating NAV, the external valuation surplus on development and trading
properties and, in calculating the number of shares, diluted for all potential
share issues including, at March 2004 only, the potential conversion of the
Convertible Bonds (Note 16)
+ restated for FRS17 Retirement Benefits (Note 1)

All figures include British Land's share of joint ventures unless stated
otherwise.

                    STATEMENT BY THE CHAIRMAN, JOHN RITBLAT

Before reporting on the events of the past half-year, I am delighted to welcome
Stephen Hester, who succeeds me as Chief Executive of British Land. We have
split the roles and I am remaining as Chairman of the Company.

He takes over at a time when the Company is enjoying strong performance. The Net
Asset Value per share has risen over the six months to 1049p on an adjusted
diluted basis, an increase of 8.6%. The 3.8% portfolio improvement has added
£400 million to lift fully diluted net assets to £5.48 billion. Retail
warehouses were the star performers, up 9%, alone representing £125.9 million of
the increase in net assets. City of London offices were up 3.2%, contributing
£110 million, largely deriving from the success of our developments there.

Profits before tax were £80.1 million, reduced from the previous year only
through less trading and fixed asset disposals. Underlying Profits stemming
mainly from rents were up satisfactorily by over 15% at £74.8 million. We are
raising the Interim Dividend by 8.4% to 4.8p per share.

Leases and leases

The flavour since 31 March, and indeed the main business feature on which I
report, has been demand for our new developments, mainly in the City.

For our development at 51 Lime Street, London EC3, we now have a binding
agreement to lease with Willis, the risk management and insurance
intermediaries, who are taking 465,000 sq ft for 25 years without break. We
already have planning consent for the site, demolition has begun, and we have
submitted a detailed planning application for an amended scheme to meet the
tenant's needs. The innovative design by Foster and Partners will be a striking
addition to the London scene.

At Plantation Place, 30 Fenchurch Street, London EC3, Accenture had a pre-let of
375,000 sq ft. Royal & SunAlliance has taken 34,000 sq ft for their new group
head offices, the Aspen Re insurance company 49,000 sq ft, and Wachovia Bank the
remaining 49,000 sq ft to complete the letting of the office space there. We are
making good progress, too, with leasing the 30,000 sq ft of shops, with the
majority of units under offer.

At the new 10 Exchange Square, Broadgate, London EC2, Herbert Smith has taken
43,500 sq ft, and an additional 25,000 sq ft is now under offer to another
tenant.

Elsewhere at Broadgate we are fully leased, having entirely refitted an office
floor at 155 Bishopsgate which has been let to HBOS (38,600 sq ft). At 6
Broadgate, 12,600 sq ft have been leased to the U.S. company Ambac for its new
London head offices. UBS Global Asset Management has taken the entire 70,000 sq
ft of 3 Finsbury Avenue. At Exchange House, F&C Management have taken 20,500 sq
ft.

In the West End the office space at 350 Euston Road, Regent's Place, London NW1
is fully let, following recent leases to the General Medical Council (48,000 sq
ft) and Balfour Beatty (15,500 sq ft). Not merely 350 Euston Road, but all the
Regent's Place office space is leased, and we are moving forward to the next two
phases there, totalling 1.2 million sq ft, on which we are already engaged in
the planning process.

In Ireland the leading fashion retailers, H&M, have taken 14,000 sq ft for their
Dublin flagship store at the ILAC Centre in the rapidly improving Henry Street
area. This venture with Irish Life is managed by our Irish subsidiary.

Development

Completed developments since 31 March have added over 1.1 million sq ft to the
portfolio, mainly in the City of London, and are already 68% let. We continue to
push forward with the programme, and our exciting proposal for a 601,000 sq ft,
47 storey tower at 122 Leadenhall Street, London EC3 has received a Resolution
to Grant detailed planning consent from the Corporation of the City of London.

Portfolio Activity

As ever, activity within the portfolio has been substantial, much of it taking
place after 30 September, with sales since 31 March, including those in joint
ventures, amounting to £321 million, and purchases involving £644 million.

The main items among the sales were 100 New Bridge Street, Watling House, Cannon
Street and Standard House, Bonhill Street, in the City of London and the Swiss
Centre in Leicester Square, London W1.

A major purchase was the 500,000 sq ft Queensmere and Observatory Shopping
Centres with 1,600 car spaces and 65,000 sq ft of offices in the centre of
Slough. We already own the linking 80,000 sq ft Allders store and we see
considerable scope for management initiatives to increase the value of the
entire investment. Much of our £5.8 billion retail portfolio is located in the
most sought-after out-of-town sectors, but we also have a significant in-town
presence, and add to it when interesting opportunities like this arise.

Following our successful partnership with Scottish & Newcastle, during which we
profitably sold 328 of the 330 pubs we jointly owned (with only two remaining),
we have acquired a new portfolio of 65 high quality pubs from Spirit Group.
There were in addition numerous smaller transactions, buys and sells, forming
part of our continuing active management.

Finance

In financing we have added or renewed £730 million in banking facilities, with
availability now standing at £1.2 billion and further financing lines in course.
Our new borrowing covenant gives the Company great flexibility to choose between
secured and unsecured elements in structuring its debt, as it sets a 70% maximum
ratio for unsecured debt to unencumbered assets. It also provides equality of
treatment for all unsecured lenders.
Conversion of the 6% Subordinated Irredeemable Convertible Bonds into 30 million
new Ordinary Shares has been accomplished. 84% of the Group's debt was fixed or
capped, the weighted average rate was 6.51% and the average maturity was 13.8
years.

Other Topics

More and more investors recognise the long-term attractions of investing in
property. As I have indicated previously, this return to the sector was sure to
follow the stock market shakeout from its bubble at the start of the new
millennium. Commercial property is a highly desirable investment class, with
enduring defensive qualities against the downside and plenty of upside
potential. The long overdue market correction to property yields began in our
last financial year and has been transformed through our gearing to deliver,
over the last 12 months, an impressive 195 pence per share or 22.4% total return
to our shareholders, lifting adjusted diluted net assets from 869 pence to 1049
pence per share.

The perceptive investor knows that strategic patience is an important attribute
for making money in our business, where timing is all-important. The Swiss
Centre sale, where we gradually increased our ownership over time before
selling, is one obvious example: another is Plantation Place, where it took a
good few years to assemble the site and achieve vacant possession of the
principal property on a timely basis and on sensible terms. While we expanded
the site, we retained income from the existing buildings for as long as possible
until demolition, thus financing holding costs. Throughout this long process we
secured a series of progressively improved planning consents to take advantage
of changing conditions and maximise value for shareholders. More haste can often
mean less profit in the property business.

We are waiting to hear the outcome on two major Government topics at the moment.
Real Estate Investment Trusts are now available in numerous countries with
well-developed and sophisticated property markets, and we hope that we will
shortly hear that Britain will join them. We are quick on our feet if it suits
and will turn on a dime to adapt to new circumstances as they arise.

The other topic is the upward only rent review clause. Some of the statistical
analysis has been revised and the revision shows that there are plenty of
choices for tenants. We know that there are also plenty of negotiating skills
among the tenants, who are certainly not patsies. Research findings on the
increase both in the availability of short-term leases and in the large
proportion of leases that have no rent review clauses at all, show that there is
a level playing field in this currently free and constantly adapting market.

Prospects

The property market has prospered in recent years for those who are doing the
right things in the right places, but it is no longer possible to assume that
mere ownership of real estate will suffice. Tenants are now much more
sophisticated and therefore more demanding, so a market may have substantial
availability yet not meet tenants' needs. The first requirement for tenants is
the location of their choice in new and well designed modern buildings, which
can secure good rents in spite of an apparent overhang of non-competitive space.

Stringent portfolio selection, with ever greater awareness of ever changing
tenant needs, must be the way forward. Management's skill is to have properties
of high quality in the locations and sectors when and where they will be wanted,
bringing the rewards of growth to our shareholders, who benefit also from the
liquidity in the stock market which a company of British Land's size can
provide.

We have a strong all-round property team, seasoned in investment and
development, management, leasing and finance.


                              FINANCIAL HIGHLIGHTS

Profit and Loss Account              Six months to      Six months to
                                 30 September 2004 30 September 2003+

Net rental income                          £265.1m            £251.0m
Net rental income (Group)                  £231.9m            £209.4m

Net interest payable                       £171.7m            £163.9m
Profit on property trading and               £5.3m             £21.9m
disposal of fixed assets
Underlying profit before                    £74.8m             £65.0m
taxation*

Profit before taxation                      £80.1m             £86.9m
Tax charge                                  £14.0m             £11.4m

Adjusted diluted earnings per           12.9 pence         15.4 pence
share
Diluted earnings per share              12.7 pence         15.2 pence
Dividend per share                      4.80 pence         4.43 pence

* profit before taxation less profit on property trading and disposal of fixed
assets
+ restated for FRS 17 Retirement Benefits

Balance Sheet                       30 September 2004   31 March 2004

Total properties*                          £11,065.9m      £10,639.4m

Adjusted net assets+                        £5,461.5m       £4,877.3m
Net assets                                  £5,265.0m       £4,669.4m
Adjusted diluted net asset value           1049 pence       966 pence
per share+ o
Diluted net asset value per shareo         1027 pence       944 pence

Group:
Debt / equity ratio                               90%            100%
Mortgage ratio (debt / property &                 46%             48%
investments)

* pre adjustments for UITF 28 (note 7)
+ adjusted to exclude the capital allowance effects of FRS 19 and to include the
external valuation surplus on
development and trading properties
o diluted for outstanding share options and share awards (and, at March 2004,
for the potential conversion of the
Convertible Bonds)

Total Return (adjusted diluted net asset value per share growth plus dividend)
for the six months 9.1% (2003: 1.7%).

Financing statistics (Group)          30 September 2004 31 March 2004

Net debt                                      £4,936.4m     £4,866.8m
Weighted average debt maturity               13.8 years    16.9 years
Weighted average interest rate                    6.51%         6.38%
% of net debt at fixed / capped                     84%           84%
interest rates
% of gross debt ringfenced with no                  64%           64%
recourse to other Group companies/
assets

Interest cover (net rents / net                   1.51x         1.55x
interest)

Cash and available committed                  £2,364.9m     £2,149.6m
facilities                                    £1,200.8m     £1,011.0m
- of which drawn

All figures include British Land's share of joint ventures unless stated
otherwise.

FINANCIAL REVIEW


Financial Highlights

Adjusted diluted net assets per share rose 8.6% in the six months to 1049 pence
primarily as a result of the underlying 3.8% uplift in the portfolio value,
which contributed to NAV growth due to the effect of gearing.

Underlying profits rose 15.1% as new lettings and increased rents at review
added £7.2 million.

Our financial risks have been well contained over this period with our 85% fixed
/capped hedging strategy limiting the impact of interest rate rises and our
conservative approach to speculative development limiting the impact of empty
space. Our letting success in Central London, particularly at Plantation Place,
will immediately contribute in the second half of this year.

The dividend is up 8.4% to 4.8 pence per share.

Financial Results

The principal transactions impacting the shape of the profit and loss account
and balance sheet included the buy out of GUS plc's interest in BL Universal,
taking control of BVP Developments, the formation of The Scottish Retail
Property Limited Partnership and the investment in Songbird Estates PLC.

Gross rental income for the six months to September 2004, including our share of
joint ventures, increased by 6.4% to £288.0 million (2003: £270.6 million).
Group gross rents increased £25.5 million (11.3%), whereas our share of joint
ventures gross rents declined by £8.1 million (18.4%). Group net rental income
for the period rose 10.7% to £231.9 million (2003: £209.4 million) principally
due to the buyout of GUS PLC's interest in BL Universal (£20.1 million) and new
lettings and rent reviews (£7.2 million).

British Land's share of joint venture operating profits reduced by 13.6% to
£33.8 million (2003: £39.1 million), reflecting the changes in ownership of
joint ventures described above.

Administrative expenses for the half year of £22.4 million (2003: £21.2 million)
include the expense of the Group's stock option and share incentive plans. On an
annualised basis we continue to operate efficiently with administration costs at
only 0.4% (2003: 0.4%) of the portfolio value.

Profit before tax is £80.1 million (2003: £86.9 million). Profits on sale of
fixed assets in the six months amounted to £4.7 million (2003: £15.9 million)
and trading profits £0.6 million (2003: £6.0 million). Underlying profit before
tax, excluding these items, increased by 15.1% to £74.8 million (2003: £65.0
million).

The tax charge for the six months is £14.0 million, an effective rate of 17.5%
(2003: £11.4 million, 13.1%).

Adjusted diluted earnings per share is 12.9 pence (2003: 15.4 pence). Earnings
per share is 13.2 pence (2003: 15.5 pence).

Adjusted diluted net assets per share increased by 8.6% to 1049 pence, from 966
pence at 31 March 2004. Revaluation of properties and investments contributed
76.4 pence per share and retained earnings 7.4 pence per share. Diluted net
assets per share is 1027 pence (31 March 2004: 944 pence).

Financing and Capital Structure

Approximately 50% of the Group's property value is financed by borrowings from a
diverse variety of sources and with a spread of maturity dates. The Group's
financial risk management policy is to maintain approximately 85% of debt at
fixed and capped rates with debt taken out under a range of maturities,
including long-term facilities in order to balance the Group's income profile
from its long lease lengths. These policies concentrate economic exposure to the
property market and our portfolio's performance, and minimise exposure to short
to medium-term interest rate movements. The Group borrows using fixed and
floating rate debt and uses derivatives to produce the desired interest rate
profile for the Group's finances.

At 30 September 2004 Group net debt is £4,936.4 million (31 March 2004: £4,866.8
million). Securitisations account for 58% of net debt and are non-recourse to
the Group. Net debt including our share of joint ventures debt is £5,371.5
million (31 March 2004: £5,396.6 million). The joint ventures are separately
financed with no recourse to British Land.

The Group's mortgage ratio is 46% (31 March 2004: 48%). The mortgage ratio
including the Group's share of joint venture debt is 48% (31 March 2004: 51%).

The Group's weighted average interest cost is 6.51%, of which 84% is at fixed or
capped rates of interest, with a weighted average debt maturity of 13.8 years
(31 March 2004: 16.9 years). The reduction in weighted average debt maturity is
mainly the result of the conversion of the 6% Subordinated Irredeemable
Convertible Bonds.

At 30 September 2004 the market value of net debt and interest rate derivatives
is £427.5 million more than their book values. Much of the decrease of £56.8
million from 31 March 2004 (£484.3 million) is a result of the conversion of the
£150 million 6% Subordinated Irredeemable Convertible Bonds into ordinary
shares.

Financing Statistics (Group)               30 Sep 2004     31 Mar 2004

Net debt                                   £4,936.4        £4,866.8m
Weighted average debt maturity             13.8 years      16.9 years
Weighted average interest rate             6.51%           6.38%
% of net debt at fixed/capped interest     84%             84%
rates                                      
% of gross debt ringfenced with no
recourse to other Group companies/assets   64%             64%
Interest cover (net rents/net interest)    1.51x           1.55x
Mortgage ratio (debt / property &          46%             48%
investments)                               £2,364.9m       £2,149.6m
Cash and available committed bank          £1,200.8m       £1,011.0m
facilities,
of which drawn
Financing Statistics (Group & share of     30 Sep 2004     31 Mar 2004
JVs)

Net debt                                   £5,371.5m       £5,396.6m
Weighted average debt maturity             13.0 years      15.7 years
Mortgage ratio                             48%             51%

Securitisations

On 20 September 2004 Exchange House was released from the security pool that
supports the Broadgate securitisation. The release of Exchange House adds over
£300 million to the Group's unencumbered assets.


6% Subordinated Irredeemable Convertible Bonds

Following the Group's announcement on 10 June 2004 that it planned to redeem, at
par, its £150 million 6% Subordinated Irredeemable Convertible Bonds, all the
bonds converted into ordinary shares. This led to the issue of 30 million new
ordinary shares. As a result, the final dividend for the year ended 31 March
2004 increased by £2.5 million. The interest saving from 1 April 2004 is
£9 million per annum.

Dividend

The directors declare an interim dividend of 4.8 pence per share payable on 18
February 2005. This represents an increase of 8.4% over the 2003 interim
dividend of 4.43 pence per share and is in line with our policy of progressive
dividend growth.


Cash Flow

Profits after interest, tax and working capital movements generated a positive
operating cash flow for the six months of £65.2 million (2003: £65.9 million).
The Group has been a significant net investor during the half year with property
acquisitions, developments and investment expenditure amounting to £236.5
million. Property and investment disposals by the Group realised cash of £16.4
million.

Canary Wharf

During the six month period the Group acquired a 15.8% interest in the AIM
listed Songbird Estates PLC ("Songbird") for a consideration of £97.1 million.
Songbird acquired 66.3% of the Canary Wharf Group PLC in a leveraged takeover.
Songbird's first financial reports are scheduled to be for the period to 31
December 2004. Songbird is shown as an investment and is valued at £97.1 million
at 30 September 2004. The Group has yet to receive any dividend income.


Subsequent Transactions

Since 30 September 2004 the Group has completed a number of significant
transactions. The Queensmere and Observatory Shopping Centres in Slough were
acquired for £192 million, 65 high quality pubs were purchased for £174 million
from Spirit Group who will continue to occupy and operate these pubs on a 30
year lease. The Swiss Centre was sold for a price of £47 million, some £12
million in excess of its 31 March 2004 book value.

Accounting Policies

At 31 March 2004 the Group fully adopted Financial Reporting Standard (FRS 17)
'Retirement Benefits' and Financial Reporting Standard (FRS 20) 'Share-based
payment'. The 2003 comparative amounts in this interim statement have been
restated to reflect these changes.

The adoption of FRS 17 has no impact on profit for the half year (2003: decrease
£0.1 million). The Group has recorded a net pension asset of £0.1 million (31
March 2004: £0.1 million) which represents only 0.002% of the Group's adjusted
net assets, reflecting the Group's small employee numbers and payroll costs.

The impact of FRS 20 is immaterial and hence no prior year adjustment is
necessary.

International Accounting Standards

International Accounting Standards (IAS) will be applied, as required for all
European Union listed companies, for our financial year ending 31 March 2006.
Whilst of course the Group's cash flows will be unaffected by the introduction
of IAS, the new standards will represent a fundamental change in accounting and
reporting. The Group has been working towards the implementation of IAS for some
two years and is well advanced in its plans to meet the challenges of IAS
implementation. Work performed to date includes the ongoing detailed assessment
of the impact of IAS, training of staff on IAS and updating of systems and
methodologies to ensure IAS compliance.

The Group intends to provide guidance as to the accounting impact of IAS at a
seminar for analysts to be held on 25 January 2005. The materials from this
seminar will be available on the Group's website www.britishland.com immediately
thereafter. The Group will present its 31 March 2005 results under IAS next
summer following publication of the Group's 31 March 2005 UK GAAP annual
results. The principal areas where IAS differs from UK GAAP, affecting the
Group's results are shown below.

Property Accounting

Property valuation movements are recorded in the profit and loss account under
IAS rather than the UK GAAP treatment where such movements are accounted as
movements in reserves. This will lead to an increased volatility in reported
profits.

The treatment of lease incentives under IAS is different in that such incentives
are spread in the profit and loss account to the earlier of the first lease
break or the end of the lease whereas under UK GAAP they are spread to the first
open market rent review. This will lead to different phasing of recognition of
gross rental income, to recognise income earlier than currently and to amortise
costs over a longer period.

In the case of head leases on the Group's leasehold properties, IAS will require
a financial liability and corresponding asset to be recognised in the balance
sheet. Currently the financial effect of head leases is reflected by our valuers
as a deduction from their valuations. The net asset effect of this change is not
expected to be material.

The definitions of finance and operating leases are different between UK GAAP
and IAS. Where a lease is classified as a finance lease it will be shown as a
financial asset rather than as a property. Buildings subject to such leases will
not be revalued and an element of the rents paid by tenants will be accounted
for as repayment of loans rather than income. The Group expects that virtually
all its leases will be operating leases.

Deferred Tax Accounting

UK GAAP does not permit deferred tax to be recognised where a business is not
obliged to pay more tax at a future date. IAS on the other hand requires
provision for all taxable and deductible differences between book values for tax
purposes and accounting book values that are not 'permanent' timing differences.
The effect of this change will be to reduce net assets.

The most significant such difference for British Land is between the base costs
for tax purposes of its properties and its share of properties held by joint
ventures, and the accounting book values which include material revaluation
adjustments. Tax payments will arise only if British Land sells those assets and
the amount of tax crystallised will reflect the price received at the time, the
structure of the transaction, any tax benefits available such as loss relief and
benefits derived from the tax position of the purchaser or of the Group at that
time. None of these mitigating factors are accurately quantifiable where no
transaction is in contemplation or negotiation, accordingly the provision to be
booked under IAS will not represent an amount which the company expects to pay.
Substantial deferred tax movements will appear in the profit and loss account,
reflecting deferred tax arising on valuation changes.

Derivatives

British Land uses derivatives to manage its interest rate risk. In accordance
with UK GAAP British Land's derivatives are not valued when they are hedges and
any income or costs are recognised in the profit and loss account consistently
with the underlying hedged transaction. IAS requires all derivatives, whether
cash flow hedges or fair value hedges, to be carried at their fair values in the
balance sheet. The disclosures in note 14 to the interim statement shows the
fair values of the Group's derivatives. The hedge accounting provisions of IAS
39 reduce the sensitivity of the profit and loss account to movements in the
fair values of cash flow hedge derivatives. IAS prescribes a number of stringent
tests to determine whether or not derivatives qualify as effective hedges. The
Group expects to account for its current portfolio of interest rate derivatives
as effective hedges.

Dividends

Unlike UK GAAP which requires proposed final dividends to be accrued, IAS only
permits recognition of the liability to pay a final dividend when this has been
approved by the shareholders. This will lead to a one off increase in net asset
value by the net cost of the proposed dividend.

                              PORTFOLIO HIGHLIGHTS

Portfolio Valuation by     Group     JVs+     Total Portfolio  Uplift*
Use                           £m       £m        £m         %        %

Offices                  
City                     3,470.1     98.9   3,569.0      32.3      3.2
West End                   683.4     38.7     722.1       6.5      3.6
Business parks &           240.1      8.8     248.9       2.2      3.0
Provincial
Development                226.2      3.2     229.4       2.1      7.5

All offices              4,619.8    149.6   4,769.4      43.1      3.4


Retail

Shopping centres         1,748.2    397.0   2,145.2      19.4      3.3

Superstores              1,263.8    181.0   1,444.8      13.1      0.7

Retail warehouses        1,258.5    262.0   1,520.5      13.7      9.0

High street                466.9    158.3     625.2       5.6      5.7

Development                 17.0      2.2      19.2       0.2      1.1


All retail               4,754.4  1,000.5   5,754.9      52.0      4.3


Industrial and             156.0     30.9     186.9       1.7      2.1
distribution

Residential                254.6      2.0     256.6       2.3      0.2

Leisure                     59.6     12.7      72.3       0.7      9.5

Other development                    25.8      25.8       0.2     14.1


Total                    9,844.4  1,221.5  11,065.9       100      3.8

+ British Land's share
* including valuation movement in developments, purchases and capital
expenditure, and excluding sales

Total assets under management £12.3 billion, including partners' shares of joint
ventures.

Current Reversions      Annualised Reversionary   Current Reversionary
                         Net Rents       income     yield        yield
(excluding                      £m (5 years) £m         %  (5 years) %
developments)

Offices
City                         177.4         59.2       5.0          6.6
West End                      39.4          5.2       5.5          6.2
Business parks &              18.7         -0.3       7.5          7.4
Provincial

All offices                  235.5         64.1       5.2          6.6


Retail

Shopping centres             112.0         15.1       5.2          5.9

Superstores                   79.4          3.2       5.5          5.7

Retail warehouses             75.3         10.6       5.0          5.7

High street                   33.6          4.3       5.4          6.1


All retail                   300.3         33.2       5.2          5.8


Industrial and                10.4          1.9       5.6          6.6
distribution

Residential                   14.2          0.1       5.5          5.5

Leisure                        4.6          0.4       6.4          6.9


Total                        565.0        99.7+       5.2          6.2

+ £55.7 million contracted under expiry of rent free periods and minimum rental
increases.

Long Lease Profile               Weighted average lease term, years  Vacancy rate
(excluding residential* &               to expiry    to first break             %  
developments)

Offices
City                                        14.4           12.7             10.0+
West End                                    13.8           11.5               3.0
Business parks &                            12.4            7.5               2.0
Provincial

All offices                                 14.2           12.2               8.3+


Retail

Shopping centres                            15.3           14.8               3.2

Superstores                                 22.0           22.0               0.0

Retail warehouses                           16.8           16.4               1.1

High street                                 26.2           23.5               1.7


All retail                                  18.8           18.2               1.8


Industrial and                              14.8           13.6               9.9
distribution

Leisure                                     43.3           42.2               2.4


Total                                       16.9           15.7               4.6+

includes joint ventures
* predominantly let on short leases

+ lettings achieved since 30 September 2004 at recently completed developments
have
reduced the City offices vacancy rate to 7.7% and the total vacancy rate to 3.9%

Security of Income                   % of income remaining at:
                                                       
(from 30 September 2004)              expiry     first break

5 years                               93.5            88.1

10 years                              79.1            69.2

15 years                              54.8            48.4

includes joint ventures
assumes no re-letting after first break or expiry

Tenant Risk Profile: 89% of rental income is rated at negligible, low and low/
medium risk, by IPD using Experian Stress Score.

Development Programme
                              Net Area     Rent Construction   Cost to
                                  sq m (est) pa         cost  Complete

Completed    Total             104,070   £42.6m      £321.1m         -
             British Land                £41.6m      £316.6m         -
             Share

Committed    Total              49,040   £22.4m      £175.2m   £166.3m
             British Land                £22.4m      £175.2m   £166.3m
             Share
Development  Total             586,980  £161.3m    £1,276.8m £1,245.3m
prospects
             British Land               £157.0m    £1,250.4m £1,219.0m
             Share

                                PROPERTY REVIEW

Property is continuing to be an attractive investment class, combining a regular
income flow from committed rents with longer term capital appreciation from
rental growth and/or tightening of yields. Institutional and private investor
demand has increased substantially across all property sectors.

Valuation: up 3.8%, adding £400 million

The external valuation of the British Land portfolio, including its share of
joint ventures at 30 September 2004 was £11,065.9 million, an increase in the
six months since 31 March 2004 of 3.8% (£400 million: including the valuation
movement in developments, purchases and capital expenditure, and excluding
sales).

Values have increased in every sector of the portfolio. Our retail assets have
risen by 4.3% in the six months: retail warehouses continue to outperform, ahead
9% and high street shops are up 5.7%. The office portfolio increased in value by
3.4%, with the City, despite a testing letting market, putting on 3.2% primarily
due to the quality of the properties and the successful letting of the
developments.

Details of the valuation by use and data for the portfolio's long lease profile
and current reversions are shown on the tables at the front of this section. Due
to negotiation of new long leases and active management, the weighted average
lease term has been maintained at 16.9 years (15.7 years to first break).

The majority of the property valuations were carried out by ATIS REAL
Weatheralls, whose commentary on the commercial property market follows this
review.

Activity: investment in preferred sectors

Purchases of £153 million, including joint venture properties, were completed
during the six months to September 2004, and acquisitions of a further £491
million of property were completed in October 2004. Principal transactions were:

   • the investment of £97.1 million in Songbird Estates plc, representing
    15.8% of the consortium which acquired 66.3% of Canary Wharf Group PLC;

   • the Queensmere and Observatory Shopping Centres, two adjacent freehold
    covered malls forming the major part of the retail centre in Slough,
    purchased in October for £192 million. The Centres provide 52,490 sq m
    (565,000 sq ft) of prime shopping with an office element, plus two car parks
    with 1,600 spaces. Tenants include Littlewoods, Woolworths, New Look, Top
    Shop, Primark, TK Maxx and Argos. The major Marks & Spencer store links to
    Queensmere and has a return frontage to the scheme. British Land already
    owns the 7,430 sq m (80,000 sq ft) Allders anchor department store which
    also links to Queensmere. We believe there is considerable scope for
    improvement of these investments through asset management initiatives;

   • 65 freehold public houses were acquired from Spirit Group for £174
    million. Spirit, the largest and leading managed pub operator in the UK,
    will continue to occupy the properties on a 30 year lease with minimum
    annual rental uplifts for 20 years, but with a landlord's option to revert
    to open market rents from year 15. This purchase adds to the leisure
    portfolio good quality public houses, with a higher average lot size than
    our previous pub investments and offers asset management opportunities to
    enhance value;

   • 223 residential units purchased during the year to date for £35 million.
    These are in the main forward purchases of developments acquired at a
    discount to final retail prices;

   • the joint venture BL Davidson Limited acquired the 50% interest it did
    not already own in four high quality retail parks and a new industrial/
    warehouse development, together valued at £122 million.

Sales of £274 million, including joint venture properties, completed in the six
months to September at £15 million above valuation, with a further £47 million
completed in October, also significantly above March valuation. Principal
transactions were:

   • the joint venture BL West Limited sold the City office properties at 100
    New Bridge Street and Watling House, Cannon Street, London EC2 for £151
    million. We considered these two particular properties had medium term risk
    to capital value due to their lease and rent profiles. Accordingly, these
    sales were based on stock selection criteria and do not reflect any change
    in strategy; we remain confident in the City office market;

   • the joint venture BL Davidson Limited sold offices at Bonhill Street,
    EC2 and smaller office properties in EC1, SE1 and W1 for a total of £59
    million. These secondary properties achieved £8.8 million above valuation;

   • 32 residential units sold for £11 million;

   • 17 public houses sold for £22 million from the remaining portfolio held
    by the joint venture with Scottish & Newcastle plc;

   • The Swiss Centre, Leicester Square, London W1 was sold in October for
    £47 million. This mixed use freehold property in a prime position on
    Leicester Square was acquired by British Land in phases, reaching 100%
    ownership in 1999. Since then, our asset management strategy has been to
    'empty' the building, including the relocation of the Swiss Tourism Office,
    in order to be able to offer effective vacant possession to potential
    purchasers. Income in the meantime was generated by short term lettings. The
    sale price realised £12 million in excess of the March valuation.

Developments: letting success

The projects in progress at March 2004 have all completed, on time and within
budget. In what has been a testing market, we have achieved considerable letting
success at these high quality office developments.

Plantation Place, 30 Fenchurch Street, EC3 was launched in July 2004 and all the
office space has already let at headline rents of £46-54 per sq ft: Accenture
had a pre-letting of 34,840 sq m (375,000 sq ft); Royal and SunAlliance has
taken 3,160 sq m (34,000 sq ft) as new group head offices; 4,550 sq m (49,000 sq
ft) is let to Aspen Re, an international insurance company and 4,550 sq m
(49,000 sq ft) is let to Wachovia, a major US bank.

Following the success of Plantation Place, marketing has commenced for
Plantation Place South, 60 Great Tower Street, EC3. At the recently completed
building at 10 Exchange Square, Broadgate, EC2, following the letting of 4,000
sq m (43,500 sq ft) to Herbert Smith, solicitors, the remaining 11,180 sq m
(119,000 sq ft) of new offices has been launched to the market and currently a
further 2,320 sq m (25,000 sq ft) is under offer.


Completed Projects, since 31 March 2004
                                       Rent, pa
Project           Prime Use       Size         total  of which    Cost1
                                  sq m     estimated       let
Plantation Place  Offices       50,170        £27.0m    £26.0m  £198.7m
Plantation Place  Offices       14,950         £6.7m     £0.1m   £60.2m
South
10 Exchange       Offices       15,180         £7.0m     £2.0m   £53.2m
Square
Thatcham, Berks2  Distribution  23,770         £1.9m              £9.0m
                               104,070        £42.6m   £28.1m3  £321.1m
British Land share:                           £41.6m    £28.1m  £316.6m
1 Construction cost
2 BL Gazeley joint venture
3 further lettings under offer at £1.8 million pa

We are pleased to have reached agreement for a pre-let with Willis Group, the
leading risk management and insurance intermediaries, for a new development at
51 Lime Street, EC3. An application has been made to amend the existing planning
consent and customise the buildings to meet the requirements of the tenant, with
a target date for first completion at the end of 2006. The development will
provide Willis with 43,200 sq m (465,000 sq ft) of high quality accommodation
under a 25 year lease (without break). There are no take backs of property
vacated by Willis nor any put backs should their space requirements change.


Committed Projects

Project          Prime      Size    Rent   Cost1      PC2      Pre-lettings
                 Use        sq m   (est)            (est)      (sq m)
                                      pa
51 Lime Street,  Offices  44,120  £21.4m £166.8m  Q4 2006       Willis
EC3                                                           (43,200)
Blythe Valley    Business  4,920   £1.0m   £8.4m  Q4 2005
Park, Solihull   Park
                          49,040  £22.4m £175.2m               £21.0m pa (94%)

Cost to complete:                        £166.3m

1 Construction cost
2 Practical completion of construction

Development prospects, as shown on the table below, are those sites and
properties where we have identified opportunities and are progressing with
design, planning applications and site preparation. At Ludgate, EC4, demolition
has been completed and substructure works commenced. At York House, W1,
demolition is in progress in preparation for an office and residential scheme.

A Resolution to Grant detailed planning consent was made by the City of London
Corporation for the new 47 storey tower at 122 Leadenhall Street, EC3, a
spectacular but practical design by Richard Rogers to provide 55,870 sq m
(601,000 sq ft) of office accommodation. The existing building on that site is
presently held as an income producing investment and a decision to proceed with
redevelopment will only be taken when circumstances are favourable. Although we
have planning consent for 201 Bishopsgate, EC2 we intend to seek a revised
consent for a larger development of a tower building together with a low rise
building centred around a new piazza.

Development prospects, as at 30 September 2004

Project                     Principal Use       Size Planning status
                                                sq m
Ludgate West, EC4           Offices           11,670 Detailed
York House, W1              Offices           12,830 Detailed
201 Bishopsgate, EC2        Offices           69,360 Detailed
122 Leadenhall Street, EC3  Offices           55,870 Resolution to
                                                     Grant
Regent's Place, NW1         Offices/          56,500 Pending
(North-East quadrant)       Residential       50,720 Pending
(Osnaburgh Street site)     Offices/
                            Residential
Daventry, East and Central1 Distribution     123,530 Outline/Detailed
Blythe Valley Park,         Business Park     69,390 Outline/Detailed
Solihull
Theale, Reading2            Residential       26,260 Pending
Redditch, Worcestershire3   Distribution      34,890 Outline/Detailed
Meadowhall Casino Complex   Leisure           40,240 Pending
Dumbarton                   Retail             1,860 Detailed
New Century Park, Coventry  Offices           33,860 Outline
                                             586,980
Total:             Rent     £161.3m            Cost4 £1,276.8m
                   (est)
British Land                £157.0m                  £1,250.4m
share:
1 BL Rosemound joint venture (DIRFT - Daventry International Rail Freight
Terminal)
2 Countryside Properties has a participation through a Development Agreement
3 BL Gazeley joint venture
4 Construction cost

Property asset management: more new lettings

In addition to the significant lettings of the recently completed developments,
we have agreed new leases at Broadgate, EC2: an entire refitted floor of 3,590
sq m (38,600 sq ft) in 155 Bishopsgate has been let to HBOS; 1,900 sq m (20,500
sq ft) in Exchange House has been let to F&C Management; and 1,170 sq m (12,600
sq ft) at 6 Broadgate has been refitted and let to Ambac, a major US financial
group, for its new London head offices. Broadgate offices (apart from the newly
completed 10 Exchange Square), comprising 355,000 sq m (almost 4 million sq ft),
are fully let.

At Regent's Place, NW1 we have completed leases at 350 Euston Road of 4,500 sq m
(48,000 sq ft) to the General Medical Council and 1,440 sq m (15,500 sq ft) to
Balfour Beatty, resulting in all office space at Regent's Place being fully let.

In the six months to 30 September, across the entire portfolio (including joint
ventures) a total of 86 rent reviews produced an increase in rents of some £4.5
million pa, up 18% overall on the previous passing rents. Lease renewals and new
leases, a total of 130 transactions, will increase rent by £33.9 million pa over
the next three years.

At the ILAC Shopping Centre, Dublin, owned in conjunction with Irish Life, we
entered into an agreement to lease 1,300 sq m (14,000 sq ft) on two trading
levels to provide a flagship store for H&M, one of Europe's leading fashion
retailers. This transaction involves the remodelling of the principal Mary
Street entrance, being the first element of the proposed phased refurbishment of
the Centre.

Tenant mix has been improved and rental income increased as a result of asset
management initiatives at the Peacocks Centre, Woking. The food court has been
modernised and the customer facilities upgraded, together with the creation of
additional retail space. A new unit of some 650 sq m (7,000 sq ft) has been
formed by the amalgamation of three units, significantly increasing footfall and
improving this area of the scheme. A new 1,300 sq m (14,000 sq ft) unit is being
constructed and is pre-let to Tesco to trade as a Metro store.

At Meadowhall, following on from the completed refurbishment and extension of
the Oasis, we are now upgrading The Lanes with new ceilings, lighting and
flooring. We are planning further enhancements including remodelling of
balconies, renewal of ceiling finishes, improved lighting, decoration and air
handling of the whole Centre, to create a better shopping environment. These
works will be phased over the next three years to allow uninterrupted trading.

Within the next five years, further rents of £99.7 million pa are expected from
the existing investment portfolio, of which £55.7 million pa is already
contracted, resulting from the expiry of rent free periods and minimum rental
increases. Additional income will be generated from the development programme,
outlined above.

Further rent                                  Total          of which
                                                 £m        contracted
                                                                   £m

Annualised net rents, 30                      565.0             565.0
September 2004
Reversion*, 5 years                            99.7              55.7
Committed developments                         22.4              21.0
Development prospects                         157.0
Total                                         844.1             641.7

* includes rent reviews, expiry of rent free periods, lease break/expiry and
letting of vacant space at ERV (as determined by independent valuers)

Portfolio sectors: 52% retail, 43% offices

Out of town retail represents 77% of the retail portfolio, with the balance
being in selected good high street locations and main provincial town centre
shopping schemes, where we consider the long term investment prospects are
sound. Out of town shopping is continuing to achieve an increasing share of
total retail spend (although growing at a lower pace recently). Our retail
warehouses have performed well. Retailers are keen to take space in these
locations and this demand, together with potential to improve the properties
through asset management initiatives coupled with a restrictive planning regime,
offers good prospects for growth in rents and values.

The superstores, where we calculate that we are one of the largest owners in the
UK, other than the operators themselves, are also in demand from retailers who
continue to require more and larger stores, where a wider range of goods can be
sold, particularly clothes and household goods where profit margins are higher.
Our superstore portfolio is well positioned in this trend with an average size
of 6,500 sq m (70,000 sq ft) and 81% of the stores are over 3,700 sq m
(40,000 sq ft).

Central London offices form 94% of the office sector of the portfolio, with high
quality buildings in the best locations, let on long leases with contracted
rents from strong covenants. The notable successes in achieving lettings in what
has been a difficult market are, in the main, due to the quality and location of
our product, designed to meet the needs of the modern tenant. These lettings
will contribute significant additional rental income and are an encouraging
confirmation of the improving take up in the market and increasing tenant demand
for the best quality office space. We consider that these factors, coupled with
very limited new supply, should result in vacancy rates (which have already
started to fall) continuing to decline through 2005 and 2006, so we should see
the beginnings of rental growth at the turn of 2005 into 2006.

Outlook

With retail expenditure still forecast to grow at above the rate of inflation
over the next few years, we can anticipate further growth in retail investment
values through rent increases and tighter yields.

The outlook in the short to medium term for Central London offices is positive,
with the combination of improved demand and reducing availability of the
required accommodation expected to produce rising rental values, and
consequently capital growth.

The British Land portfolio is well placed to benefit from these trends. The
focus is, as it has been for some considerable time, on the principal preferred
sectors of Central London offices and Retail, with the emphasis on out of town
but still with a strong selective presence in town through high street shops and
shopping centres. We are also ready and able to be flexible in investing in
additional areas where we see opportunities for growth. We will continue with
our development programme with commitments to construction taken when we
consider the circumstances to be favourable.

ATIS REAL WEATHERALLS -

COMMERCIAL PROPERTY MARKET COMMENTARY

The comments below reflect our views as at 30 September 2004 and underlie our
approach to the valuation of the portfolio. They reflect conditions up to the
valuation date only.

The commentary focuses on the prime commercial property markets where the
Company has significant holdings.

General


Commercial property continues to prove a popular investment class. Properties
across all sectors have risen in value due to yields being bid lower. Buyers,
attracted by the combination of income security, growth potential, and the
opportunities for active asset enhancement, far outnumber potential sellers.


This imbalance looks set to continue. Cash rich funds seeking property
investments have been joined by a number of new vehicles aimed at the private
investor. The situation is only likely to be exacerbated with the expected
introduction of new tax transparent property investment vehicles.

Although occupier markets do not all share the same buoyancy, rental growth
remains strong in many retail markets and is anticipated elsewhere by many
investors and developers.

Meanwhile, conditions in the bond and equity markets remain subdued. We
therefore see little prospect of demand for property subsiding in the short
term.

Central London Offices

Investor demand, as for all sectors, is strong. Whilst long let, well secured
buildings such as those at Broadgate, remain popular, the price differential
obtainable on shorter income streams has narrowed. This is because many
purchasers anticipate that rents will increase in the medium term.

Indeed recent months have seen increased City occupier take-up; a good
proportion of it at buildings held by British Land.

In general, occupational demand has mostly been from 'support' functions such as
legal and insurance companies. Investors and developers are therefore looking
for signs of a structural shift in demand from the City's traditional tenant
base, in order to generate positive rental growth.

The West End has a more diverse occupational base. Leasing transactions at prime
buildings at figures close to previous 'highs' have encouraged those who
anticipate that this will have a corresponding effect upon the rest of the
market. The vacancy rate is relatively low and there is very little good quality
stock either available or in the immediate development pipeline.

Investors therefore anticipate earlier rental growth here, which has in turn
increased the prices paid during the past six months for virtually all buildings
irrespective of income quality and lease length.

Out of Town Retail

Supply remains finite from both the occupiers' and the investors' points of
view. The planning environment is becoming even more restrictive including the
proposal to bring the construction of mezzanine floors under planning control.

Meanwhile, occupational demand continues to grow. As a result rents have shown
strong growth and are forecast to continue to do so. These factors have all
combined to produce a very competitive investment market.

A notable trend has been the increased demand from investors for older schemes
benefiting from relatively open A1 planning consents. These can be refurbished,
established tenants relocated, and new fashion or other high street tenants
substituted, often producing dramatic uplift in rents.

Out of town food stores have also continued to see good rental growth;
particularly from favourable rent review settlements. Accordingly, investors are
prepared to accept low initial yields, even for shorter income streams, as there
is ample evidence that traders are willing to renew or extend leases in good
trading locations.

Shopping Centres and High Street Retail

Retailers continue to experience mixed fortunes. Although there are few signs of
consumers reducing their expenditure, retailer margins remain under pressure.

However yields have sharpened, reflecting the strength of demand for property
and, in the case of centres, the scope for enhancing returns through asset
management.

As with all sectors, yield compression has occurred such that the difference
between prime and secondary or even tertiary schemes has narrowed. Consequently,
some investors who purchased one or two years ago are now realising profits.

ATIS REAL Weatheralls Limited

Norfolk House
31 St James's Square
London SW1Y 4JR




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