Expansion of Junction Fund

Capital & Regional PLC
03 October 2002


                                                                  3 October 2002


                         Expansion of The Junction Fund

                    through injection of Hermes retail parks

Capital & Regional plc, the specialist co-investing property asset manager, and
Morley Fund Management, one of the largest property fund management businesses
in the UK, are pleased to announce that Hermes, on behalf of the British Telecom
Pension Scheme, has become an investor in The Junction Fund ("the Fund") through
the injection of two retail parks valued at £66.85 million. This increases the
Fund's portfolio to 16 parks with a value of £513 million.

The parks are the Reading Retail Park and the Ocean Retail Park in Portsmouth,
together with an adjoining industrial estate. These parks satisfy the Fund's
investment criteria by offering considerable potential to create prime
destination retail parks. Currently, the total floor area of the two parks is
approximately 288,000 sq ft of retail and 64,000 sq ft of industrial.

The injection of property as equity by Hermes represents an important milestone
in the implementation of the Fund's expansion plans. Following completion of the
transaction, Capital & Regional's interest in the Fund will fall from 35% to
28%. The dilution of Capital & Regional's holding is in line with the strategy
to grow the Fund's assets to in excess of £1 billion by bringing in additional
investors.

The Junction Limited Partnership, created with Morley Fund Management Limited,
was launched on 3 January 2002 with initial gross assets of £322 million
comprising eleven retail parks. In July 2002, Commercial Union Life Assurance
Company Limited invested £71 million into the fund, to provide equity for the
acquisition of four retail parks, valued at £145 million, from Burford Holdings
Ltd. Simultaneously, one of the smaller retail parks was sold.

Martin Barber, Chief Executive of Capital & Regional plc, said: "We are pleased
to announce Hermes as an external investor in the Fund. Our success in
attracting such a respected investor provides a larger asset base over which to
gear our expertise to create value. It also reflects the strength of our
specialist retail park management team who have developed the innovative and
futuristic 'Pod' concept."

Ian Womack, Head of Property at Morley Fund Management, said: "Property is an
attractive asset class and we are extremely pleased with The Junction's
performance to date. We are delighted with the investment from an organisation
such as Hermes which will help to further develop the fund as an attractive
investment vehicle."

Andrew Martin, Director - Retail Group at Hermes Property Asset Management,
said: "We are very pleased to become involved in the Junction Fund, which
enables the British Telecom Pension Scheme to gain exposure to a diverse
portfolio of retail parks with considerable development potential. We look
forward to working with both Capital & Regional and Morley to further the Fund's
expansion plans. "

                                    - ends -

Enquiries:

Martin Barber, Chief Executive, Capital & Regional plc     Tel: [phone]

Andrew Lewis-Pratt, Chief Executive, The Junction          Tel: [phone]

Andrew Hayes/Wendy Baker, Hudson Sandler                   Tel: [phone]

Fiona Baker, Head of Corporate Communications,

Morley Fund Management Ltd                                 Tel: [phone]

Andrew Martin, Director - Retail Group,

Hermes Property Asset Management                           Tel: [phone]

Notes to Editors:

Capital & Regional plc is a specialist co-investing property asset manager. It
generates value by leveraging its expertise and capital across retail property
assets. For further information - www.capreg.com

The Mall Limited fund and The Junction Partnership and were created in February
2002 and November 2001 respectively. Both funds were initially owned jointly by
Capital & Regional plc and clients of Morley Fund Management, Morley is the Fund
Manager and Capital & Regional is the Property Asset Manager:

  • For further information - www.themall.co.uk.
  • For further information: www.thejunction.co.uk
  • For further information: www.morleyfm.com
  •

Capital & Regional plc is also the asset manager and brand owner of Xscape
retail and leisure entertainment destinations. The first destination, in Milton
Keynes, opened in June

2000. The second Xscape destination complex is due to open in Castleford, Leeds
in Autumn 2003.


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