Final Results

Capital & Regional PLC
20 March 2001

PART 1
                                                               20th March 2001



                           2000 PRELIMINARY RESULTS

Capital & Regional plc, the specialist retail and leisure property company,
today announces its preliminary results for the year ended 25th December 2000.

Highlights


  * Pre-tax profit up 5% to £13.4m (1999: £12.8m)

  * Net rental income up 25% to £57m (1999: £45.5m)

  * Earnings per share increased by 10% to 13.4p (1999: 12.2p)

  * Fully diluted net assets per share decreased by 4% to 360p (1999: 376p)

  * Dividends per share up 10% to 5.5p (1999: 5.0p)

  * Disposals to date of £246m

  * £62m of trading and investment assets during year, including CenterPoint
    shares (£25m).

  * £184m since year end including industrial portfolio (£89.6m), Westway
    Shopping Park (£43.1m), St Andrew House (£19.6m), Sauchiehall Centre (£
    31m).

  * Capital & Regional's management approach led to its shopping centre
    portfolio achieving 13.3% income and 5.2% rental value growth during year.

  * Retail park portfolio in transitional phase focused on creating
    significant 'destination' schemes of over 150,000 sq ft which attract Big
    Box anchor tenants requiring major units of up to 130,000 sq ft. Lettings
    of 750,000 sq ft, including 10 destination stores were agreed at year end.

Commenting on the results, Martin Barber, Chief Executive of Capital &
Regional said:

'Despite adverse sentiment towards the retail sector over the past fifteen
months, Capital & Regional has demonstrated a strong income performance within
our shopping centre portfolio. This has been driven forward by our management
intensive approach and ability to generate market share for our retailers.

Our retail park operations are transforming secondary schemes into prime
destination parks anchored by 'Big Box' anchor retailers. This year's
temporary reduction in value, should be seen as an investment in the
substantial growth, which will be created over the next few years.

The opening of our first Xscape in Milton Keynes has been extremely successful
and we look forward to our future UK and European projects.

We are confident of maintaining satisfactory and sustainable returns to
shareholders over the years to come.'

                                   - ends -

For further information please contact:

Martin Barber, Chief Executive, Capital & Regional        020 7932 8000

Lynda Coral, Financial Director, Capital & Regional        020 7932 8000

Sarah Carrell, Corporate Communications, Capital & Regional 020 7932 8000

A copy of this statement and the analyst/institutional presentation will be
available on our corporate website - www.capreg.com.







CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW

Results and Dividend

Profit before tax increased by 5% to £13.4m (1999: £12.8m). Fully diluted net
assets per share decreased by 4% to 360p from 376p. Fully diluted net assets
per share, after adjustments for deferred tax and debt valuation, are 323p
against 330p last year. Earnings per share increased by 10% to 13.4p (1999:
12.2p). A final dividend of 3.25p is proposed, making a total for the year of
5.5p per share (1999: 5.0p), an increase of 10%. Over the past five years,
Capital & Regional has achieved compound net asset value growth of 14% per
annum.

Overview

Over the past fifteen months, we have completed the disposal of £246m of
non-core assets. During the year, £62m of trading and investment assets were
sold, including CenterPoint Trust shares and a further £184m of properties
have been disposed of since the year end. This has almost completed our
strategy to transform Capital & Regional from a generalist property company,
to one which is entirely focused on the retail and leisure sectors, namely
shopping centres, retail parks and Xscape.

Capital & Regional owns properties, which attract consumer visits and
spending. We are in the process of creating 'destinations', to become
recognised brands and offer more than just shopping, but also leisure and
entertainment; an 'experience' for the consumer. Our focus on the retail and
leisure sectors capitalises on our specialist skills and strong relationships
with our tenants. We understand their requirements and are working with them
to maximise opportunities and profitability.

Shopping Centres

Within our shopping centre portfolio, we have achieved a 13.3% income growth
and 5.2% growth in estimated rental value. The centres are benefiting from our
management approach, which is to work in partnership with our retailers to
generate increased footfall and sales. Our properties are of a substantial
size and are covered to provide a controlled environment. They are either
dominant in a good catchment, or a good second centre in a major metropolitan
area. We are able to increase market share for our retailers through creative
and innovative marketing and promotion.

At our centres, vacancies are at an all time low. We are achieving good income
and rental value growth and tenant demand is strong. It is therefore
disappointing that valuation yields have moved up and adversely effected
capital values this year. However, Capital & Regional strongly believes that
the long-term benefits of investing in this sector outweigh the short-term
fluctuations in the investment market.

Retail Parks

We have assembled a substantial portfolio of retail parks, originally
developed when a more relaxed planning environment existed. Now, with strong
tenant demand and a planning regime that restricts further out-of-town
development, we are exploiting our parks' planning consents to provide the
latest store formats required by retailers. The portfolio of approximately
1.4m sq ft is generating many opportunities for redevelopment to include Big
Box formats, thereby creating significant destination parks.

This redevelopment includes complex planning consents or amendments to
planning, lease surrenders and land acquisition. This held back financial
performance and adversely influenced values last year. On completion of this
transitional phase, we envisage significant value creation over the next two
years.

Our experienced out-of-town management team is also proving successful, not
only in achieving planning consent on our existing parks, but also identifying
and obtaining control of sites where planning can be gained. Examples of these
are at Oldbury and Auchinlea in Glasgow, where major development schemes are
being progressed.

 Xscape

The opening of Xscape at Milton Keynes was one of the highlights of the
Company's year. Around an exciting 'real snow' ski slope, a vibrant retail and
leisure offer has been built, including a 16 screen multiplex cinema, family
entertainment centre, ten-pin bowling, climbing walls and a mix of restaurants
and bars. Initial trading from our tenants has been most encouraging and we
are pursuing three further projects in the UK and Continental Europe.

Capital Strategy

The disposal programme already outlined has also allowed us to reduce our
level of gearing on a fully diluted basis from 134% at 25th December 1999
(159% at December 2000) to 110%, even after purchasing 10% of the Company's
issued share capital, representing 9,541,500 ordinary shares.

We continue to note the disparity between the valuation on our shares and the
market value of the underlying assets. Therefore, at an Extraordinary General
Meeting on 15th March 2001, shareholder approval was granted to purchase, for
cancellation, a further 13,221,458 ordinary shares, representing 14.9% of the
outstanding share capital. The Board will continue to review the Company's
share purchases in light of the share price and level of gearing for the
long-term interests of shareholders.

We are convinced that joint ownership is attractive for investors and Capital
& Regional. Investor partners can harness our skills in these
management-intensive sectors of the property investment and development
market. Using this approach, Capital & Regional leverages its equity and
management to produce higher returns for shareholders. Over the years, Capital
& Regional has had highly successful partnerships.

We still believe there is a strong rationale for a specialist UK shopping
centre operator of scale, working closely with occupiers to create exciting
and lively places to visit, shop and be entertained. The Company will continue
to explore opportunities to establish partnerships in this area. Our Xscape
scheme in Milton Keynes is a joint venture project and we are pursuing
partnership opportunities for the further schemes anticipated.

Three joint venture partnerships for single properties have been entered into
recently. We have acquired, in equal partnership with Hermes Property Unit
Trust, the Maybird Centre Retail Park and adjoining Regal Road Industrial
Estate in Stratford-upon-Avon. The Company has also entered into a 50:50 joint
venture with Stannifer, the investment and development group, to re-develop
the Sauchiehall Centre in Glasgow. In addition, we have entered into an
exclusivity agreement to form a 50:50 joint partnership with Capital Shopping
Centres, the leading regional shopping centre business, to fund and develop
the Xscape concept at Braehead, Glasgow, subject to the fulfilment of a number
of conditions, including planning.

Management

Capital & Regional has created strength and depth within its operating teams.
Our people come from asset management, construction, development, marketing
and retail backgrounds. They are using their expertise to drive the long term
value of our properties forward in a dynamic and innovative way, treating the
constant changes in the market as opportunities to enhance the quality and
rental income from our assets.

On behalf of the Board and all our shareholders, we would like to express our
sincere thanks to all our management and staff for their excellent
contribution to the Company during this year.

Outlook

Capital & Regional is confident that our concentration on re-shaping and
re-positioning our properties, and following that process with intensive
business management to attract consumers and operators, is building
significant value.

With both private buyers and institutional investors beginning to show
interest again in shopping centre investments, we would not expect yields this
coming year to move out any further. We anticipate further rental growth
within our portfolio with positive value increases.

As far as our retail park portfolio is concerned, the temporary reduction in
values is largely of a transitional nature and we expect significant value
creation over the next two years.



Viscount Chandos                                   Martin Barber

Chairman                                          Chief Executive

OPERATING REVIEW

Our Market

The year 2000 has been a year of mixed fortunes. During the first half of the
year, the market experienced virtual hysteria about internet retail and its
impact on the traditional retail environment. By the year end, sentiment had
reversed due to the well publicised e-tailer failures.

Simultaneously during the period, many established retail groups had
difficulties. The combination of these factors caused nervousness amongst
investors resulting in an adverse yield shift across the High Street and
shopping centre investment market.

Within our shopping centre portfolio, revenues rose significantly, with
underlying rental values increasing by over 5%. This demonstrates Capital &
Regional's ability to drive forward growth for the retailers in our
well-managed centres, through taking market share from the High Street and
surrounding properties.

On the retail parks, values have polarised between the smaller parks and the
larger destination parks where there is greater potential for rental growth.

Many of our existing properties have the potential to fulfill tenant
requirements for larger stores. These parks should not be judged on one year's
financial performance as they are in a transitional phase of achieving
possession, planning and land assembly.

We have contracts and options on sites where we are actively progressing town
planning, with significant success already achieved. These have not been
re-valued for balance sheet purposes and have considerable latent value.

Our Xscape scheme in Milton Keynes is proving a tremendous success with the
public and leisure and specialist lifestyle retailers. This unique and
exciting destination can be replicated to our mutual benefit. We have
identified other locations in the UK and Continental Europe, where we believe
there is a substantial market for this concept.

Our Portfolio

At 20th March 2001, Capital & Regional's wholly owned investment portfolio of
£738m, plus its half share of properties in joint ventures of £74m totalled
approximately £812m. This comprises ten shopping centres (60%), twelve retail
parks (27%) Xscape, Milton Keynes (5%), industrial and other (8%), totalling
over four million sq ft with approximately three million sq ft of future
developments.

The following reviews for shopping centres, retail parks and Xscape outline in
detail the progress in these three business areas.

OPERATING REVIEW

SHOPPING CENTRES

Overview

The year 2000 saw further positive results from our revenue growth strategies
applied across our shopping centre portfolio. Net income increased by 13.3%
over the year by £4.6m to £39.2m, producing a net income return of 6.3%.
Capital expenditure for the year was £17.5m. Estimated rental value increased
by a further 5.2% to almost £47m.

Adverse market sentiment to retail property portfolios resulted in a shift in
valuation yields producing a negative capital return of 3.4%.

The year was very active, with Capital & Regional's management team working
closely with retailers to provide solutions to their requirements in the ever
changing retail environment, to maximise mutual profitability. Excluding rent
reviews, there were 176 transactions, representing £8.77m of annual income
across the portfolio of 497 units. Of this, approximately £4.27m were new
lettings or renewals, £2.88m vacations, and £1.62m reconfigurations. The void
level fell by 1.4% to 3.8% of estimated rental value.

This level of activity is bringing us ever closer to our retailer base,
assisting us in the understanding of both their problems and opportunities. We
intend to build on this mutual understanding to further develop both the
effectiveness of our management franchise and revenue streams.

Ancillary income grew by 20.7% in 2000, representing approximately 4% of net
rent level. Our average weekly footfalls increased by 2%, (up by 50,000
visits) to 2.4 million visits per week, despite major re-development at
Shopping City, Wood Green and the demolition of the Bull Ring adjacent to our
Pallasades Shopping Centre in Birmingham which has temporarily depressed
footfall.

We are committed to a 'fully serviced' offer for both retailers and shoppers.
We are able to produce clean, secure, lively shopping environments at
competitive costs. Our average budgeted 2001 service charge per square foot is
20% less than the relevant JLL Oscar benchmark, excluding marketing where we
plan to spend some 19% more than this peer group. In this way, we hope to
continue to grow relevant footfall within our malls, giving our retailers
increasing profit opportunity at cost effective, value for money, occupational
costs. Our five year Environmental Statement for the centres, targets energy
consumption savings of 15% over the period to 2004. During 2000, consumption
reductions of 8% and 21% were made on electricity and gas respectively.

Our average Zone A rents across the portfolio remain at discounts to the
principal competition. This combined with our business management and
partnership approach to our assets augers well for continued revenue growth.

Last year saw our Community Mall concept taking shape, both locally and
nationally. Portfolio-wide initiatives like supporting Breast Cancer Awareness
Month, raised £20,000 in the malls and The Giving Tree at Christmas providing
4,950 toys for local needy children. These were complemented by scores of
projects to benefit local community groups such as schools and charitable
organisations.

These efforts are enthusiastically supported by both our retailers and
shoppers alike, and when aligned to an attractive, accessible and vibrant
retail experience, place our malls at the heart of their local communities.
Our recently announced agreement with NTL to enable unhindered mobile
telephone use within the centres and our planned mall based website programme
are designed to reinforce this position.



Portfolio Review

The Pallasades, Birmingham

The Pallasades continues to perform well, given its increasing position as a
pivotal 'gateway' to New Street Station and central Birmingham. Negotiations
with Railtrack for the major refurbishment and integration of the retail and
station facilities have not yet progressed to conclusion. We are therefore
continuing to both actively manage the existing centre, whilst re-designing
our proposals to accommodate a first-phase retail development.

Shopping City, Wood Green

The opening of the 12 screen CineWorld multiplex cinema with associated
restaurants and mall improvements have confirmed Shopping City as a major
shopping and leisure destination in its catchment. Next, HMV, TK Maxx,
Peacocks, Woolworths and MFI, together with several local independent
retailers, have all been attracted during 2000. Works are scheduled to
complete in Easter 2001, with further restaurants opening by the Summer.

The Ashley Centre, Epsom

At The Ashley Centre, Epsom, a number of strategic surrenders have been
negotiated. In the main, the units have been re-let to Starbucks, Body Shop,
Phones 4 U and the dominant local photographic retailer, Epsom Photographic.
Works have also started on a pre-let, two-level catering area introducing
McDonald's to the scheme together with an expansion of local coffee shop
operator, Cafe la Mocha.

Pre-let discussions continue with both existing and new retailers for a
refurbishment and extension to West Square. Sunday trading has continued post
Christmas and is increasing in popularity.

The Howgate Centre, Falkirk

The improvements completed in late 1999 to revitalise the Marks & Spencer
atrium, resulted in the desired letting activity to MVC, First Sport,
Cardwarehouse and the Bank of Scotland. We have progressed both dwell time and
rent by approximately 40%, in what was previously a quieter area of the
Centre. Initial curiosity visits to the newly opened competition at Stirling
and Livingstone appear to be stabilising and we continue to work to satisfy
demand from major retail groups. Net car park income increased by 14.5%, as a
result of the installation of a pay-on-foot management system.

Selborne Walk, Walthamstow

At Selborne Walk, new lettings to Boots, Timpson's and Blue Inc have been
concluded, with Thomas Cook in solicitor's hands. Occupier pre-let discussions
continue for a planned retail and leisure extension.

The Trinity Centre, Aberdeen

The Trinity Centre remained fully let throughout 2000, which has held back
performance. We are in negotiations with adjacent owners to expand the Centre.

Sauchiehall Centre, Glasgow

Capital & Regional has entered into a 50:50 joint venture with Stannifer to
re-develop the Sauchiehall Centre and increase the retail space by 10% to
200,000 sq ft, in large unit format. The majority of the newly created space
will be taken by Primark and will be the fashion retailer's first store in
Glasgow City centre. Existing tenants, TK Maxx, Superdrug and WH Smith will be
extending their units.

Liberty 2, Romford

The town's retail attraction is to be boosted by the imminent opening of the
Brewery retail and leisure scheme and Hammerson's refurbishment proposals for
the adjacent Liberty 1.

Our contribution to this renaissance is the acquisition of the adjacent '
Dolphin' site and the associated planning application for a mixed-use scheme
comprising residential, hotel and 60,000 sq ft of retail.

The Alhambra Centre, Barnsley

The acquisition of the former Co-op 'Living' Department store and its
subsequent conversion for major occupiers Primark and TK Maxx, materially
boosted the Centre's local popularity and has proved the catalyst for further
letting interest. Government funding was secured to contribute to the cost of
car park refurbishment.

 RETAIL PARKS

Strategic Objectives

Our strategic objectives should be considered against the background of the
current structural changes taking place in the evolving retail warehouse
market.

The Evolution of Retail Parks

Since the origins of the retail warehouse market in the early 1980s, we have
seen a number of changes. The converted warehouse on an industrial estate, the
purpose built retail warehouse unit and eventually the retail park. The boom
of the late 1980s led to a considerable number of retail parks being developed
in an ad-hoc fashion all over the country. This was largely as a result of the
government's laissez-faire planning attitude and the consumers' positive
response to car-borne shopping.

The last two years have seen a period of intense consolidation amongst the
retail warehouse operators. The advent of Big Box destination stores, has led
to a small number of retailers dominating sub-sectors of the market.

B&Q and Homebase dominate the DIY market, with units of between 80,000 and
130,000 sq ft. B&Q alone require a further one hundred stores in this size
range. Comet and Dixons, through their Currys and PC World brands, dominate
the electrical market in units of between 20,000 and 45,000 sq ft. Comet
requires a further 20 units per annum in this size range over the next five to
ten years. The furniture market is dominated by Ikea, MFI and DFS. Ikea has
recently announced an aggressive expansion campaign, and DFS remain as
expansive as ever.

The discount clothing market is dominated by Matalan. They are actively
seeking units from between 30,000-45,000 sq ft.

A new general merchandise category has emerged with the entry of Woolworths
through their Big W format and anticipated Asda Wal-Mart, retailing from units
of between 90,000 and 100,000 sq ft. Big W has stated that they require at
least 60 stores within the next five years. Sports retail is dominated by JJB
Sports and Sports Soccer in units of between 10,000 and 15,000 sq ft.

The above retailers spend considerable amounts on advertising and publicity,
either through TV and press campaigns and/or through catalogues. Smaller
complementary retailers in each of the subsections are attracted to the
destination retailer and are prepared to pay significant rents to be
represented alongside them.

The above factors have led to the advent of the destination retail park.

The Destination Retail Park

A destination park can be defined as a retail park of over 150,000 sq ft,
located in a town with a population of in excess of 50,000. It is our belief
that where a town currently has two, three or more retail parks of between
70,000 and 120,000 sq ft, these will be replaced by one or two parks of
between 150,000 and 250,000 sq ft. These will accommodate destination Big Box
retailers with complementary retailers being 'forced' to relocate alongside.

Our future success will be derived from fulfilling the requirements of these
destination Big Box retailers, either by transforming our existing portfolio
or through new development to create retail parks in excess of 150,000 sq ft.
According to Verdict Research, 'where the Big Box retailers come together,
they will create 'power nodes' on the retail landscape that act as a regional
draw for consumers. The impact of these 'power nodes' will be as significant
on existing retail parks out-of-town, as it has been in the high street.'

Existing Portfolio

Our existing retail park portfolio currently comprises of 1.4m sq ft. During
the year and to date, we sold two retail parks, which did not fulfil our
destination park criteria and will continue to review our portfolio to ensure
its meets our criteria.

The existing retail park portfolio comprises the following:
                                         Existing Sq Ft          Proposed Sq Ft
Aylesbury                                        95,000                 200,000
Beckton                                         140,000                 190,000
Hull                                            180,000                 255,000
Renfrew                                         230,000                 250,000
Stratford                                       155,000                 230,000
Swansea                                          80,000                 160,000
Wembley                                         230,000                 230,000
Other (smaller parks)                           330,000                 330,000
Total                                         1,440,000               1,845,000

To date, agreements to lease have been concluded for 620,000 sq ft of retail
floor space, including nine destination stores. £7.0m per annum of rent has
been committed, of which £3.3m has been committed unconditionally.

Planning consents have been obtained for 200,000 sq ft of the 405,000 sq ft
required.

We are close to completing the successful transition of three of our existing
larger retail parks into destination parks at Beckton, Hull and Swansea, with
the dominant anchors being B&Q or Big W and will shortly commence the
transition of Wembley with a new 100,000 sq ft Homebase.

Portfolio Review

Aylesbury

We have now entered into conditional contracts to acquire the majority of the
land required to undertake this 200,000 sq ft redevelopment. We are currently
negotiating for our anchor DIY pre-lets, and intend submitting a planning
application during the second quarter. The site has already been allocated and
adopted by the local planning authority for retail warehouse use.

Beckton

This 190,000 sq ft scheme is now completely pre-let to retailers including Big
W and Matalan and the necessary vacant possession has been achieved. A
technical amendment to a planning consent is required, before development can
commence, which we envisage will be in the second quarter of the year.

Hull

Construction of a 130,000 sq ft B&Q and garden centre has commenced. Further
pre-lets to destination furniture and electrical stores, DFS and Comet have
also been achieved. A small revision to the existing planning consent is
anticipated during the second quarter, and the refurbishment of the balance of
the existing retail park should then commence. Further phases of retail and
leisure on this 50 acre site are proposed.

Renfrew, Glasgow

We anticipate submitting a planning application during the first half of the
year for an extension to our existing 224,000 sq ft retail park of a further
26,000 sq ft of retail and leisure space. We also intend to refurbish a
further 45,000 sq ft.

Stratford-upon-Avon

Our joint ownership of this 155,000 sq ft park with Hermes Property Unit Trust
has commenced well. This scheme is capable of an extension of up to 230,000 sq
ft. Terms have been agreed with Matalan to extend their existing 30,000 sq ft
store to 42,000 sq ft and further lettings are under negotiation.

Swansea

Pre-lets for 137,000 sq ft of our proposed 160,000 sq ft scheme have been
achieved with our destination retailer being Big W. Planning consent has also
been achieved. Upon completion of further legal agreements, redevelopment is
planned to commence during the second quarter.

New Developments

Despite the Government's clampdown on out-of-town retail schemes, over the
last two years, we have successfully assembled a development portfolio
comprising approximately one million sq ft, which we believe to be unequalled
in this sector in the UK.

The availability of an undeveloped large site with planning consents for a
destination retail park is extremely difficult to achieve. In order to be in a
position to carry out the development at Oldbury, we have been involved in a
complicated procedure of land assembly, involving 22 separate legal interests.
We have obtained planning consent for 250,000 sq ft of retail and leisure
space, with proposals for a further 140,000 sq ft.

At Auchinlea, Glasgow, we have worked closely with both the Glasgow City
Council and the Scottish Executive in devising an urban regeneration scheme,
which has helped us successfully obtain the planning consent for 600,000 sq ft
of retail and leisure floor space. We also have proposals for a further
140,000 sq ft.



Auchinlea/Junction 10, Glasgow

Our aim is to create Scotland's premier destination retail and leisure park.
Initial response from occupiers to our proposed scheme involving 300,000 sq ft
of A1 non-food, 130,000 sq ft food store, 170,000 sq ft of leisure including
bars, a restaurant and hotel, has been encouraging.

Oldbury

A detailed planning consent has been obtained for 250,000 sq ft of retail and
leisure. A pre-let has been exchanged with Homebase for 130,000 sq ft. We now
propose to develop this site in two phases, and remain hopeful of obtaining
the balance of the planning consent during the second half of the year.

Overview

Our retail park investments are currently in the process of transition from a
diverse secondary portfolio into a focused, prime destination parks.

Whilst in this transitional phase, during December 2000, the capital value of
our retail park investment properties decreased by 5.5%. A number of factors
led to what we believe to be this temporary fall in value.

Strategic vacancies of £2.7m per annum have significantly contributed to our
high level of voids, currently 23% of estimated rental value. The equivalent
yield on our existing portfolio at the year end was 7.1%, with an adverse
yield shift on our smaller parks of 0.6%.

There have been delays in obtaining new or revised planning consents at
Swansea and Beckton. Since the year end, we have obtained an open non-food
planning consent at Swansea, and anticipate obtaining consent at Beckton
during the second quarter of 2001.

Our aim is to create destination parks where retailers 'have to be there'.
This will lead to significant future rental growth. Also, the ever increasing
restriction in obtaining further planning consents will improve the value of
the major parks.

Upon completion of our programme of extensive refurbishment, extensions and
new development, we estimate receiving additional income in the region of £23m
per annum, following anticipated capital expenditure of approximately £239m.

Capital & Regional believes that there are in excess of a hundred towns and/or
cities in the UK which satisfy the criteria for a destination retail park, and
it is our aim to obtain as many opportunities as possible.

We are of the opinion that the acquisition and funding of further investments
and developments capable of being transformed into a destination park, can
also be achieved through joint ownership. Many pension funds and institutions,
who already own the properties could benefit from our specialised management
capabilities. We announced our first joint ownership, with Hermes Property
Unit Trust for a park at Stratford-upon-Avon.

We also believe that additional non-property income value can be obtained
through the branding of destination parks. We have been researching this for
some eighteen months, and will shortly announce our proposals in respect of
our destination parks.

Capital & Regional has the specialist expertise and entrepreneurial management
skills at the forefront of this sector and are well placed to maximise on the
structural changes taking place.

XSCAPE

Overview

The year 2000 saw the successful opening of our first Xscape at Milton Keynes.
This unique entertainment centre was developed jointly with funds managed by
PRICOA Property Investment Management. The scheme is now 97% let.

Xscape has proven very popular with the consumer, with over three million
visitors already enjoying this unique mix of snow centre, multi-screen cinema,
family entertainment centre, indoor rock climbing, numerous restaurants, bars
and urban lifestyle retailing. The committed income at December 2000 was £3.8m
with £5.5m expected by December 2001. The estimated income value is £6.6m.

As a result of the success of Milton Keynes, we are actively seeking to
selectively roll-out the concept both in the UK and Continental Europe.
Significant progress has already been made on the development programme.

Development Programme

Castleford

At Castleford, on the M62 adjacent to the Freeport factory outlet centre, we
have the benefit of an option to acquire 22 acres of land with planning
consent for a 330,000 net sq ft Xscape. Cine-UK has already exchanged
Agreements to Lease for the anchor multiplex cinema and terms agreed with
occupiers for a further 30% of the floor space. We hope to commence
construction of this second Xscape during the second half of 2001.

Braehead

Since the year end, Capital & Regional has announced that it has entered into
an exclusivity agreement with Capital Shopping Centres, to form a 50:50 joint
partnership to fund and develop the Xscape concept at Braehead, Glasgow,
subject to the fulfilment of a number of conditions, including planning. The
scheme will comprise of approximately 400,000 net sq ft and is situated
adjacent to their existing and successful regional shopping centre.

A number of operators at Milton Keynes have confirmed their intention to
locate with us in Braehead. We are excited at the prospect of working with
Capital Shopping Centres, in order to create what will be our third Xscape
project in the UK.

Castrop-Rauxel (the Ruhr), Germany

At our first continental Europe scheme at Castrop-Rauxel, significant progress
has been made in our endeavours to obtain planning consent for a scheme
comprising of up to 1,000,000 net sq ft on a site of 35 acres. We anticipate
receiving planning zoning approval during the Summer, with a view to detailed
planning consent being granted during early 2002.

Although we have yet to market the scheme, preliminary interest from a number
of anchor tenants to operate the snow, family entertainment centre and major
sports facilities has been strong. Pathe has formally agreed to lease a
120,000 sq ft, 5,000 seat mulitplex cinema which will be the largest in
Germany.

Summary

These opportunities that exist in our portfolio and in the market as a whole
offer us tremendous scope for the future. We will continue to work with our
tenancy base to explore opportunities for them to trade profitably in our
shopping centres, retail parks and Xscapes.

Looking at the current year, we are optimistic that good tenant demand will
remain for our properties. In addition, investor sentiment should have
steadied as a consequence of improved retailer performance, a more reasoned
approach to e-commerce, reduced medium to long-term interest rates and
alternative investment markets looking fragile.

At re-adjusted yield levels, retail and leisure properties are attractive
investments. Private buyers and institutional investors are showing an
increasing interest, attracted by the strong cash flows and the ability to
drive income upwards.


Xavier Pullen             Andrew Lewis-Pratt             Kenneth Ford
Deputy Chief Executive    Managing Director              Managing Director

                          Retail Parks and Xscape        Shopping Centres





FINANCIAL REVIEW

FINANCIAL STATEMENTS

Profit and Loss Account

Results for the year

Profit before tax has increased to £13.4m (1999: £12.8m) which includes gains
of £4.1m (£1999: £2.1m) on investment sales. Profit in the second half of the
year is £3.4m compared to £10.0m in the first half, which included all of the
investment gains and trading property profits of £1.0m. In addition, following
the sale of the Group's shareholding in CenterPoint in the first half, income
from listed investments of £0.7m did not arise in the last six months.

Rental Income

Group rental income increased by 24% to £66.7m as shown in the table below.
Also shown is the effect of the changes during 2000 on gross passing rent to
arrive at £53.4m after disposals since the year end.


                                                                 2000      2000

                                                                Group     Gross

                                                               Rental   Passing

                                                               Income      Rent
                                                                   £m        £m

Year ended 25th December 1999                                    53.6      62.3

Full year effect of acquisitions and disposals in 1999            6.5        --

Properties acquired in 2000                                       0.6       1.1

Properties sold in 2000                                         (0.8)     (1.9)

Net new lettings                                                  3.1       7.4

Leases surrendered                                              (0.2)     (3.5)

Surrender premiums                                                2.4        --

Rent increases including reviews                                  1.5       2.4

Year ended 25th December 2000                                    66.7      67.8

Disposals since the year end                                             (14.4)

                                                                           53.4

The gross passing rent at the end of 2000 does not include £6.5m (1999: £5.4m)
of rent under agreements for lease executed on the investment portfolio.
Including the effect of disposals since the year end, the current level of
rents net of property costs is approximately £50m.

Costs and expenses

Net property costs have increased by £1.6m compared to the previous year
primarily due to the full year effect of acquisitions made in 1999 and bad
debts of £0.8m that have offset the reduction in void costs.

Performance related bonus payments to employees totalled £0.8m (1999 £1.7m).
There are no bonuses for executive directors this year.

Profits on sale of assets

An accounting profit of £4.4m is recognised in the profit and loss account on
disposals whereas, including further sales since the year end, realisations in
the last 15 months have produced profits on a historical cost basis of over £
47m as shown below.




                          Net sale   Book  Profit on  Revaluation   Historical

                          Proceeds  Value       Sale      Surplus  Cost Profit
Trading properties            35.4   35.1        0.3           --          0.3
Investment properties          1.6    1.4        0.2          0.1          0.3
CenterPoint                   25.0   21.1        3.9         18.1         22.0
Year ended 25th December      62.0   57.6        4.4         18.2         22.6
Post year end sales          183.9  183.9         --         24.6         24.6
                             245.9  241.5        4.4         42.8         47.2

Net interest payable

Net interest costs have increased by £9.5m during the year reflecting the
financing of acquisitions, refurbishment and development expenditure by
additional bank debt. Approximately £2.7m (1999: £2.0m) of interest has been
capitalised during the year, principally in relation to Shopping City, Wood
Green and Xscape, Milton Keynes.

Taxation

There is no taxation charge on profit due to the utilisation of capital
allowances. Tax of £6.5m on realisation of gains on sales of investments and
investment properties is recognised in reserves. The establishment of new
claims on refurbishment and development expenditure has replaced allowances
utilised of over £14m in the year. As a result the tax written down value of
assets subject to capital allowance claims is unchanged at approximately £38m.
Unutilised losses carried forward are £2.4m (1999: £228,000), providing
additional tax shelter for the future.

Earnings and dividends per share

Profit attributable to shareholders increased from £12.0m in 1999 to £13.0m
this year and earnings per share rose to 13.4p from 12.2p. The total dividend
of 5.5p per share is more than twice covered by profit attributable to
shareholders.

Balance sheet

Net Asset Value

The table below analyses the movement in fully diluted shareholders funds and
net asset value per share during the year.

                                                                Pence per share

                                              £m
At 25th December 1999                      416.6                          376.4
Revaluation                               (33.7)                         (33.4)
Tax on disposals                           (6.5)                          (6.5)
Retained profit                              8.0                            8.0
Share repurchases                         (20.7)                           15.1
At 25th December 2000                      363.7                          359.6



As the significant level of disposals has crystallised tax on revaluation
surpluses it is useful to review the movement in net asset value per share
after contingent liabilities. The calculation of net asset value per share
after contingent deferred tax on accumulated revaluation surpluses and fair
value adjustment of fixed rate debt instruments to market value is set out
below.

                                                                2000       1999

                                                               pence      pence
Diluted net assets per share                                   359.6      376.4
Deferred tax                                                  (34.4)     (47.1)
                                                               325.2      329.3
Fair value adjustment on fixed rate debt                       (2.4)        0.9
                                                               322.8      330.2

Property assets

The table below summaries the movement in the Company's total property
portfolio during the year.
                                                                Current

                      Investment      Properties under   Head    property
                      properties      construction       office  assets   Total
                           £m                 £m           £m       £m      £m
At 25th December 1999      903.6                  29.5   13.1        34.7 980.9
Acquisitions                20.9                    --     --         4.7  25.6
Refurbishment and           25.0                  17.3    0.1        14.0  56.4
development
Disposals                  (2.0)                    --     --      (34.0) (36.0)
Amortisation               (0.2)                    --     --          -- (0.2)
Reclassification             8.5                (47.0)     --          -- (38.5)
Revaluation               (34.1)                   0.2    0.5          -- (33.4)
At 25th December 2000      921.7                    --   13.7        19.4 954.8
Disposals since year     (183.9)                    --     --          --(183.9)
end
Pro-forma                  737.8                    --   13.7        19.4 770.9

Joint ventures

Following the reclassification of Xscape Milton Keynes Partnership the Group's
total investment in joint ventures is shown in the table below:
                                                                 2000      1999

                                       Investment   Debtors     Total     Total

                                               £m        £m        £m        £m
Xscape Milton Keynes Partnership             10.0        --      10.0        --
Capital Hill Partnership                     17.6        --      17.6        --
Easter Holdings Limited                       1.1       4.5       5.6       5.9
Other                                         1.0       0.4       1.4       1.1
Total                                        29.7       4.9      34.6       7.0



Investment in joint ventures includes £5.9m of revaluation surpluses.

Minority interests

Minority interests at the end of 2000 and the prior year represents the
participation by Peter Taylor and his associates in Easter Capital Investment
Holdings Limited.

Accounting developments

A number of proposals issued or in the pipeline will have an impact on the
Group's future financial results. Financial Reporting Standard ('FRS') No.19
(Deferred Tax) requires full provision for contingent tax excluding
revaluation adjustments and is effective from 2002. Abstract 28 (operating
lease incentives) recently issued by the Urgent Issues Task Force is effective
from 2001 and requires tenant incentives to be treated as a reduction of
rental income by allocation of the cost in the profit and loss account over
the period of the market rent.

New projects on Financial Instruments, Leases and Reporting Financial
Performance will result in significant changes to the content and presentation
of financial statements and will be closely monitored for the effect on the
Group.

Xscape Milton Keynes Partnership has been re-classified as a joint venture.
The gross equity method of accounting is therefore adopted at the year end
rather than including the Group's proportion of assets, liabilities, income
and expenditure. Joint venture accounting is also applicable to partnerships
newly formed, namely Capital Hill Partnership and Sauchiehall Centre Limited.

FINANCE

Summary

The Group's borrowings at 25th December 2000 were £615.6m (1999: £603.0m)
including £24.6m (1999: £24.6m) of Convertible Subordinated Unsecured Loan
Stock (CULS). Total borrowings by joint ventures were an additional £50.4m
(1999: £5.3m). Net cash balances were £6.1m (1999: £7.4m) and the Group had
approximately £10.3m (1999: £21.5m) of undrawn secured facilities that has
increased to £51.5m as a result of sales since the year end.

During the year borrowings increased by £35.2m to finance acquisitions,
refurbishment and development net of funds raised from disposals. As a result
of the reclassification of Xscape Milton Keynes Partnership as a joint
venture, the Group's £22.6m share of related bank debt is no longer included
in Group borrowings.

As shown in the pro-forma balance sheet in Note 9, disposals completed since
the year end have reduced net debt to £427.7m.

The fully diluted level of gearing at 159% (1999: 134%) has been reduced
substantially by disposals since the year end to 110%.

The anticipated capital expenditure of £239m in respect of retail parks, which
is projected to produce additional income of approximately £23m, will be
financed through both existing banking relationships and project finance for
the larger schemes. The value creation as a result of this expenditure should
not have an adverse effect on the gearing of the Group.

Financing Strategy

The Group has a financing strategy with banks that, in the opinion of the
Directors, have experienced property teams and long-term commitment to the UK
property market. The Group's strategy is to enter into extendable secured
revolving credit facilities with broadly similar terms and covenants. These
facilities provide the group with the flexibility to draw down and repay
borrowings within the covenant parameters, and provide a cost efficient
structure which allows for the addition and disposal of properties as
security.

Project loan finance is separately arranged as required for specific
developments and joint ventures.

Interest Rate Hedging Strategy

The Group's strategy is to enter into mainly five year interest rate swaps on
a rolling basis, which provides for both protection against any sudden rise in
interest rates and scope to take advantage of fluctuating rates on expiring
swaps and unhedged borrowings. The balance between borrowing on floating and
hedged interest rates is continually reviewed in the light of market
conditions and business requirements.

Fixed and swapped interest rates at 25th December 2000 applied to borrowings
of £244.4m (1999: £272.4m) with the balance of £371.2m (1999: £330.6m) being
at variable interest rates based on three month LIBOR. The weighted average
interest rate cost for fixed and swapped borrowings at 25th December 2000, was
7.6% (1999: 7.8%) and for variable rates 6.9% (1999: 6.9%).

The weighted average interest rate cost of total borrowings at the year end
has reduced to 7.2% compared to 7.3% at the end of 1999. The weighted average
period for which interest rates are fixed on Group bank borrowings is 1.88
years (1999: 2.64) and 3.22 years including CULS (1999: 3.89).

Debt Valuation

A valuation was carried out by J C Rathbone Associates Limited as at 25th
December 2000 and 25th December 1999, to calculate the market value of fixed
rate debt instruments on a replacement basis and the expiry profile of the
resulting fair value adjustment.

The following table shows the market value of fixed rate debt instruments, and
reflects the difference between the interest rate yield curve as at 25th
December 2000 and the rates historically committed; namely the fair value
adjustment.
                                      Book       Notional    Market  Fair Value
                                     Value      Principal     Value
Fixed Rate Debt Instrument                                           Adjustment
                                                                     2000  1999
                                       £ m            £ m       £ m   £ m   £ m
CULS                                  24.6            n/a      24.6    --    --
Bank borrowings                       15.3            n/a      15.6 (0.3)    --
Interest rate swaps                    n/a          204.5     207.7 (3.2)   1.5
                                      39.9          204.5     247.9 (3.5)   1.5
Minority Interests                                                   0.1     --
Fair Value Adjustment                                               (3.4)   1.5
Attributable to Group

Net of tax at 30% (1999: 30%)                                       (2.4)   1.1

The fair value adjustment at 25th December 2000 would have a negative effect
on net asset value of £3.4m compared to a positive effect of £1.5m at 25th
December 1999.

The fair value adjustment for financial instruments in joint ventures total £
195,000 (1999: £607,000 positive). The Group's share is not included in the
table above.

The expiry profile of the fair value adjustment is as follows:-

                                                    2000                   1999

                                   Fair Value Adjustment             Fair Value

                                                                     Adjustment
2000                                                  --                    1.4
2001                                               (1.7)                    2.2
2002                                               (1.5)                   (1.2)
2003                                               (0.3)                   (0.9)
Total                                              (3.5)                    1.5



The fair value adjustment represents approximately 0.57% (1999: 0.25%) of
Group borrowings and has a notional adverse effect on net asset value per
share of 2.4p at 25th December 2000 (1999: beneficial 1.0p)

Debt Maturity

The table below shows the maturity profile of Group borrowings and undrawn
secured facilities at 25th December 2000. Over 86% (1999: 93%) of bank
borrowings had the benefit of 'evergreen' arrangements which we expect will
extend maturity dates beyond the earliest repayment date shown. The evergreen
arrangements provide a minimum of two years' notice of repayment.

                                           Drawn                 Undrawn
Repayment                          Earliest    'Evergreen' Earliest 'Evergreen'

                                         £m             £m       £m          £m
2001                                                    --       --          --

2002                                  58.35             --       --          --

2003                                   0.20         420.25     3.75        3.75

2004                                 420.45          90.00     6.50        6.50

2006                                 102.95             --       --          --

2009                                   0.20             --       --          --

                                       8.80
          Bank borrowings            590.95         510.25    10.25       10.25
2006/16   Convertible loan stock      24.64             --       --          --
                                     615.59         510.25    10.25       10.25

Gearing

Net debt to capital employed has risen to 178% at the year end (1999: 149%)
and reduces to 159% (1999: 134%) assuming the conversion of the loan stock to
equity. Disposals since the year end have reduced gearing to 125% or 110% on a
fully diluted basis.

Rental income as a ratio to net interest payable including capitalised
interest is 1.5 times for 2000 (1999: 1.6 times) times when calculated
excluding non-recurring income. The margin by which rental income exceeds
total net interest payable has increased to £23m (1999: £20m) for the year
ended 25th December 2000. Following the disposals since the year end, the
margin by which net rental income exceeds interest is approximately £19m.

Lynda Coral                              Roger Boyland

Financial Director                        Corporate Finance Director



CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 25th December 2000

Unaudited
                                                          Notes    2000    1999

                                                                   £000    £000

Turnover: group rental income and share of joint                 78,686  60,211
ventures' turnover
                                                              
Less: share of joint ventures' turnover                       5 (11,982) (6,614)

Group rental income                                              66,704  53,597

Net property costs                                              (9,687) (8,085)
Net rental income                                             1  57,017  45,512

Profit on the sale of trading and development properties            306   1,646
Administrative expenses                                          57,323  47,158

                                                                (7,955) (7,163)
Other operating income                                           49,368  39,995

                                                                    502     955
Group operating profit                                        5  49,870  40,950

Share of operating profit in joint ventures and                     581     694
associates
                                                                 50,451  41,644
Profit on sale of investment properties and investments       1   4,092   2,143
Profit on ordinary activities before interest                    54,543  43,787
Income from listed investments                                      659   1,337

Interest receivable and similar income                        2     824     719

Interest payable and similar charges                            (42,667)(33,005)
Profit on ordinary activities before taxation                    13,359  12,838

Taxation                                                             59   (409)
Profit on ordinary activities after taxation                     13,418  12,429

Equity minority interests                                         (391)   (426)
Profit attributable to the shareholders of the Company           13,027  12,003

Equity dividends paid and payable                               (5,070) (4,913)
Profit retained in the year                                       7,957   7,090
Earnings per share                                            3   13.4p   12.2p
Earnings per share - diluted                                  3   13.4p   12.2p



The results of the Group for the year related entirely to continuing
operations within the meaning of Financial Reporting Standard No. 3.

MORE TO FOLLOW