Final Results - Part 2

Land Securities PLC
23 May 2001


PART 2

DEVELOPMENT

We aim to be the UK's recognised leader in creating value through commercial
development projects, demonstrating quality and innovation as well as economic
and environmental sustainability.  We are continuing with our policy of
focusing on major developments where we enjoy a competitive advantage as a
result of our balance sheet strength.

Land Securities Development's team, which now includes the staff of Whitecliff
Properties, comprises a group of enthusiastic and skilled executives dedicated
to developing and project managing our £2bn programme. Our objective is to
embrace the latest technological and environmental advances as well as to
design our buildings to satisfy the requirements of today's commercial
occupier, while respecting the need for sustainability.

Central London offices

In central London there continues to be a shortage of supply of new offices
relative to demand, despite the economic slowdown.  Our schemes are due to be
completed over a number of years and will only be implemented if we are
confident that economic conditions are favourable at the time. The proportion
of speculative development which we will undertake at any one time is
carefully monitored in the light of anticipated occupier demand.  In the
meantime we continue to benefit from income from many of those properties
which we are proposing to redevelop.

The redevelopment of Portman House W1 is due for completion in September 2001
and we have already agreed to let 25% of the 9,430 m2 of office space, subject
to completion of legal documentation. Based on the rents that have been agreed
we anticipate that this development will provide an income return of 10.4% on
the total development cost.

At 30 Gresham Street EC2, following receipt of planning permission for 34,840
m2 of offices and 1,250 m2 of retail, we have demolished all of the original
properties except for 1-6 Milk Street and an archaeological investigation is
being undertaken.  A building contract will be awarded shortly and work is due
to start in August 2001 with completion programmed for August 2003.

Following extensive discussions with the Corporation of London, we have
modified our proposed scheme at New Fetter Lane EC4 and submitted revised
plans which will provide 65,310 m2 of offices and 8,180 m2 of retail/leisure.
We hope to receive planning permission shortly.

Our proposals for a major scheme at Esso and Glen Houses in Victoria Street
SW1 which comprise 47,190 m2 of offices and 10,780 m2 of retail were reviewed
by Westminster's Planning Committee last November.  Since then we have made a
number of adjustments to reflect their comments and have submitted revised
plans.  We are hoping for an early resolution of our planning application.

We have consulted Southwark Council and other interested groups about our
plans for the possible redevelopment of St Christopher House in Southwark
Street SE1.  We are developing proposals for an office-led mixed-use scheme
and intend to submit a planning application by the autumn.

Working in close collaboration with the Group's other business units we are
progressing proposals for the refurbishment of Empress State Building for our
new LandFlex concept.

Retail

We continue to implement our urban regeneration programme, which is being
driven by the social, technological and economic changes that affect us all.
In response to these drivers we are working in close partnership with local
authorities and communities to shape our towns and cities to attract new
businesses, create employment and the right climate for continued economic
growth.  Our metropolitan centres must be vibrant and enjoyable places in
which people choose to live, work and play in comfort and safety.

We are concentrating our retail development programme on dominant town and
city centres which we believe will provide the best returns in this sector.
The nature of these schemes inevitably involves complex and sensitive planning
issues which can have an adverse impact on the timing for this type of
project.

Where we consider it to be appropriate, we will enter into partnerships to
share both the risks and the rewards for major mixed-use urban regeneration
projects.

Last August we opened the extension to The Bridges shopping centre at
Sunderland with only one small unit unlet.  We completed the redevelopment of
18/32 Market Square in January and started work on 6/16 Market Square in
December. When these are completed our holdings in Sunderland will provide a
combined total of 51,140 m2 of retail space situated adjacent to the town's
two key public transport hubs.

The 26,790 m2 Designer Outlet Shopping Centre at Livingston was opened last
October and some 83% of the anticipated base rent roll had been secured by the
year end. Working in conjunction with our partner BAA McArthur Glen, we
continue to market the remaining units by targeting specific occupiers to
ensure we achieve our preferred tenant mix.

At Canterbury, work on the early phases of the Whitefriars shopping centre is
progressing to programme.  The site for the new department store was handed
over to Fenwick.  This development is being built in phases to accommodate a
major archaeological dig and to maximise the continuing income flow, with
final completion of the scheme due in the summer of 2006.

Following the strategic decision to defer the planning inquiry for our
proposed development at Exeter, we have carried out further extensive research
and consultation with all interested local and national bodies.  We now intend
to appoint new design consultants to prepare a revised planning application.

At Coppergate York, despite 'minded to grant' approval from the local
authority and support from English Heritage for our revised plans, the
Secretary of State has called in our planning application.  Also in York, at
Hungate, we are progressing the masterplan in a joint venture with Evans of
Leeds.  The scheme is predominantly residential and we are developing our
proposals in collaboration with a leading UK residential developer.

The Birmingham Alliance, a partnership with Hammerson plc and Henderson Global
Investors, is making significant progress on two major retail-led urban
renaissance schemes in the heart of the City.

At Martineau Place the 1,980 m2 Sainsbury's unit opened for trade on
programme. The remaining 14,740 m2 of retail units are due for completion this
autumn.  85% of the rent roll of this scheme is now either committed or agreed
subject to completion of legal documentation.

At the New Bull Ring, the indoor covered market opened last October and
demolition of the old shopping centre was completed in March this year.
Construction of the 111,480 m2 centre, which includes department stores for
Selfridges and Debenhams, is underway and already 37% of the anticipated
income is secured or is in solicitors' hands. The centre is due to open for
Christmas trading in 2003.

Last October we announced our intention to form a partnership, called the
Bristol Alliance, with Morley Fund Management, Hammerson plc and Henderson
Global Investors, to redevelop the Broadmead area of Bristol. The plans for
this mixed-use scheme, which are at a very early stage, include approximately
83,610 m2 of retail space anchored by a new department store together with
restaurants, leisure facilities, new homes and some offices.

Retail warehouses and food superstores

At Almondvale South, Livingston, we have planning permission for a 8,360 m2
store for Homebase with a second phase of 9,380 m2 standard retail warehouse
units and a restaurant.  Development will start in early June.

At Dundee we have received planning permission to create a regional park of
29,730 m2 and anticipate a start on site in June.  Over 47% of the new space
is pre-let or agreed to be pre-let subject to completion of lease
documentation.  Tesco will build a 9,290 m2 'Extra' store as an integral part
of the development.

Leisure

Construction of 'The Gate', our 17,500 m2 city centre leisure scheme at
Newcastle Upon Tyne, started last November and is due for completion in July
2002.  The multiplex cinema is pre-let to Odeon Cinemas and a further 4,120 m2
has been let or is in solicitors' hands, securing a total of 47% of the
anticipated income.

Warehouses and industrial

At Cobbett Park in Guildford we acquired a 60 year leasehold interest on the
former cattle market site.  We then agreed terms to restructure our interest
to a 150-year ground lease at a peppercorn rent and obtained planning consent
for redevelopment.  We will shortly start construction of a 11,610 m2 scheme
arranged in 10 units which is due for completion in March 2002.

We have two schemes at Basildon.  At Juniper the refurbishment of the existing
complex is underway to create 21,510 m2 of new warehouse/industrial space in
three units with a 2,920 m2 office building.  Terms have been agreed to let
the office building.  We have planning permission for a further phase of
11,980 m2.  At Zenith, we are working in conjunction with the previous site
owner to allow development on the majority of the site while they continue in
occupation of part on a short term basis. This development will provide 15,090
m2 of industrial and warehouse accommodation in eight units.

We have obtained detailed planning consent for a 23,230 m2 scheme at Horizon
Point, Hemel Hempstead.  Phase 1 will commence in June.  In Cardiff we
completed the construction of Phase 1 of our development of three units at
Ocean Park totalling 5,760 m2, one of which is pre-let.  At Welwyn Garden City
we completed the construction of a 12,960 m2 warehouse in January 2001 which
was pre-let to W T Foods who have now taken occupation.  We are well advanced
with pre-letting negotiations on the remaining one hectare site, with
construction of 3,860 m2 expected to start in June 2001.

Kent Thames-side

With the acquisition of Whitecliff Properties from Blue Circle Industries, we
have secured 290 hectares of land, in key locations at Kent Thames-side,
together with a joint venture agreement to develop 330 hectares in the same
area, at Ebbsfleet and Swanscombe.

Kent Thames-side is one of two key development areas in Thames Gateway,
formerly known as the East Thames Corridor.  The acquisition will create a new
urban district with direct access to the Channel Tunnel rail link which will
provide high speed rail connections direct to London and mainland Europe when
the link is completed in 2007.  The whole area recently received a significant
endorsement when the Deputy Prime Minister confirmed the Government's
commitment to the second phase of the rail link.

The acquisition also included development schemes at Crossways and Stonecastle
in the same area and a mixed-use leisure and industrial scheme at Cambridge.

Development schedule

During the year under review we completed some 71,590 m2 of the development
programme.  The most significant projects were Phase II of the Bridges,
Sunderland, which produced a development surplus of £21.3m and an income
return of just over 9% on total development cost and the Designer Outlet
Shopping Centre in Livingston which produced a development surplus of £5.2m
and, when fully let, we anticipate an income return of 8.7%.  Developments
completed during the year produced a total surplus of £32.4m over the period
of development and developments currently in progress have so far provided a £
33.9m surplus.

Last year we reported a development programme with an estimated capital cost
of £l.65bn exclusive of interest and the book value of those properties in our
portfolio prior to assembling the programme.  This included £128m in respect
of projects completed in the year ended 31 March 2000.  After excluding those
projects, the estimated capital cost of the programme set out on the schedule
below is approximately £2bn of which £94.3m relates to the completed projects
listed in the first section of the schedule and £576.5m to those in progress
listed in the second section.  The balance of £1.3bn relates to expenditure on
the proposed developments.  The outstanding expenditure of some £1.58bn
required to complete the programme will be spread over a number of years.

Including our share of joint developments, the programme set out in the
following schedule would provide approximately 735,240 m2 of which 179,310 m2
is in progress and 497,730 m2 is proposed.

The wholly owned schemes set out in the following schedule would produce in
total over:

144,190 m2 of new shopping development

24,620 m2 of shopping centre refurbishment

249,670 m2 of central London offices

4,020 m2 of regional offices

19,660 m2 of leisure

61,430 m2 of retail warehouses

114,360 m2 of warehouses and industrial

In addition, we have a one third interest in the Birmingham Alliance projects
of 248,970 m2, a half interest in the 26,790 m2 Designer Outlet Shopping
Centre in Livingston and a quarter interest in the Bristol Alliance project of
83,610 m2.

Many of the schemes are at the feasibility stage and will only proceed when
detailed design work and site assembly are complete, consents obtained and
viability confirmed.

Development Schedule

DEVELOPMENTS COMPLETED DURING THE YEAR ENDED 31 MARCH 2001

- ) DESIGNER OUTLET SHOPPING AND LEISURE CENTRE, LIVINGSTON
18,910m2 retail and 7880m2 leisure, including multiplex cinema (joint
ownership with BAA McArthurGlen).
Completed October 2000.  £41.2m

- * THE BRIDGES, SUNDERLAND PHASE II
24,620m2 retail.
Completed August 2000.  £41.5m

- * 18/32 MARKET SQUARE, SUNDERLAND PHASE I
1,460m2 retail.
Completed January 2001.  £2.1m

- ) NEPTUNE POINT, OCEAN PARK, CARDIFF PHASE I
5,760m2 industrial/distribution warehousing.
Completed September 2000.  £4.3m

- * WELWYN GARDEN CITY SITE A
12,960m2 industrial/distribution warehousing.
Completed January 2001.  £5.2m


DEVELOPMENTS IN PROGRESS AT 31 MARCH 2001

- ) PORTMAN HOUSE W1 (FORMERLY GULF HOUSE)
9,430m2 air conditioned offices and 1,860m2 additional retail.
Completion due September 2001.  £40.3m

- 30 GRESHAM STREET, EC2
34,840m2 air conditioned offices (shell and core) and 1,250m2 retail.
Completion due August 2003.  £204.6m

- THE BIRMINGHAM ALLIANCE
(limited partnerships with Hammerson plc and Henderson Global Investors):-

  ) MARTINEAU PLACE, BIRMINGHAM
    16,720m2 retail development.
   Completion due October 2001.  £14.6m
   ) NEW BULL RING, BIRMINGHAM
   111,480m2 retail development.
   Completion due September 2003.  £136.9m

- ) WHITEFRIARS, CANTERBURY
35,770m2 retail development with some residential accommodation.
Phased completion to June 2006.  £87.6m

- ) 6/16 MARKET SQUARE, SUNDERLAND PHASE II
1,840m2  retail.
Completion due February 2002.  £2.6m

- ) THE GATE ,NEWCASTLE UPON TYNE
17,500m2 leisure complex, including multiplex cinema.
Completion due July 2002.  £63.2m

- * AINTREE RACECOURSE RETAIL PARK, LIVERPOOL
9,660m2 retail warehousing.
Completion due September 2001.  £9.7m

- )% JUNIPER PHASE I, BASILDON - REFURBISHMENT
21,510m2  industrial/distribution and 2,920m2 offices.
Completion due June 2001.  £17.0m

PROPOSED FUTURE DEVELOPMENTS

- NEW FETTER LANE, EC4
65,310m2 air conditioned offices and 8,180m2 retail/leisure.

- % ST CHRISTOPHER HOUSE, BANKSIDE
65,030m2 air-conditioned offices and 4,650m2 retail.

- ESSO HOUSE/GLEN HOUSE (INCLUDING16 PALACE, STREET) SW1
47,190m2 air conditioned offices and 10,780m2  retail.

- % EMPRESS STATE BUILDING
27,870m2 air-conditioned offices.

- CAXTONGATE PHASE III, NEW STREET, BIRMINGHAM
6,500m2 retail with some residential accommodation.

- THE BIRMINGHAM ALLIANCE (limited partnerships with Hammerson plc and
Henderson Global Investors):-
    MARTINEAU GALLERIES, BIRMINGHAM
    Up to 120,770m2 retail and leisure development.

- THE BRISTOL ALLIANCE
(partnership with Hammerson plc, Henderson Global Investors and Morley Fund
Management)

   % BROADMEAD, BRISTOL
    Up to 83,610m2  retail, and leisure development with some offices and
    residential accommodation.

- PRINCESSHAY, EXETER
44,590m2 retail development with some residential  accommodation.

- % PLYMOUTH
3,050m2 retail development.

- COPPERGATE CENTRE, YORK PHASE II
24,260m2 retail, 2,160m2 leisure and 1,100m2 offices with some residential
accommodation.

- +) KINGSWAY RETAIL PARK, DUNDEE
20,440m2 partial redevelopment and extension to retail warehouse park.

- ALMONDVALE RETAIL PARK, LIVINGSTON
 +* Phase I - 8,360m2 retail warehousing.

Phase  II - 9,380m2 retail warehousing.
- +* CHEETHAM HILL, (FORMERLY QUEENS ROAD RETAIL PARK) MANCHESTER
9,270m2 retail warehousing.

- + LAKESIDE RETAIL PARK, THURROCK
4,320m2 extension to retail warehouse park.

- +% ZENITH, BASILDON
15,090m2 industrial/distribution warehousing.

- +% JUNIPER PHASE II, BASILDON
11,980m2  industrial/distribution  warehousing.

- + NEPTUNE POINT, OCEAN PARK, CARDIFF PHASE II
8,360m2 industrial/distribution  warehousing.

- % COBBETT PARK, GUILDFORD
11,610m2 industrial/distribution warehousing.

- +) HORIZON POINT, HEMEL HEMPSTEAD
23,230m2 industrial/distribution warehousing.

- + WELWYN GARDEN CITY SITE B
3,860m2 industrial/distribution warehousing.

*   Fully let or agreed to be let
)   Part let or agreed to be let
£m  refers to estimated capital expenditure
%   Added to or significantly changed during 2000/2001
+   Included in capital commitments


TOTAL PROPERTY SERVICES

For corporate occupiers the benefits of partnering Land Securities Trillium
are unrivalled.  The creation of Land Securities Trillium, through combining
the long-standing reputation of Land Securities as a leader in property
investment and development and its balance sheet strength and integrity,
together with Trillium's service-oriented culture and infrastructure, should
make us the partner of choice for occupiers who are considering their long
term property requirements.

Our approach to total property outsourcing is based upon achieving the highest
possible standards of service and a commitment to aligning our business
interests with those of our customers to create mutual commercial benefit.

Total property outsourcing combines owning, managing and maintaining property
in addition to procuring services such as catering, cleaning and security.

Once a customer has transferred the risks associated with owning, occupying
and managing accommodation to us, it is free to focus on its core business. By
procuring accommodation in the same way that it purchases other goods and
services, property becomes more accountable and generates greater value for
money.

In the face of the drivers for change we are taking advantage of the need to
offer a total property outsourcing solution to occupiers, where we can work in
partnership with our customers, as an alternative to the more traditional
landlord and tenant relationship.

Property outsourcing may not be the preferred route for all occupiers but the
need for greater flexibility to meet changing accommodation needs as well as
certainty of property costs means that many organisations are examining the
benefits of a single supplier for all of their property requirements.  Our
objective is to become the leading provider of this alternative property
solution.

Managing the risks of owning clients' properties

Land Securities Trillium releases its customers from the operating risks
associated with owning and using property, including risks relating to rental
growth, flexibility, leasehold liabilities, maintenance and replacement,
facilities management and office services.  Understanding and managing these
risks is a core competency.

We have developed a comprehensive, analytically based approach to the
assessment of risks and opportunities. The objective of this process is to
ensure that the transfer of risk will satisfy the occupier's objectives and
that it is priced at an optimum level.

Risks arising from increases in our rental liability and operating cost base
are addressed through the contractual indexation of income using a number of
different indices.  The existence of a significant freehold property estate
provides a hedge against increasing property rental values.

Risk is also managed through arrangements tailored to individual occupiers to
achieve a flexibility allowance appropriate to their needs.  This achieves
equilibrium of pricing and value between the occupier and Land Securities
Trillium.  This can include designation of core buildings, agreeing maximum
annual flexibility allowances and option pricing of vacation.

The PRIME contract

The first property outsourcing transaction was concluded between the
Department of Social Security (DSS) and Trillium in 1997.  The Private sector
Resource Initiative for the Management of the Estate, known as PRIME, involved
the transfer of 650 properties totalling 1.64m m2 for a payment of £250m,
which was supported by the value of the properties.  The 20-year PRIME
agreement began operating on 1 April 1998.

The National Audit Office review of the PRIME procurement exercise estimated
savings of £560m over the life of the agreement.  To date the agreement has
saved the DSS £13.8m through renegotiating contributions in lieu of rates and
over £1m through procuring energy from new suppliers.  The DSS has also
received £1.5m in development gains and £10m following a lease restructuring
transaction.

More details in respect of the financial aspects of PRIME are referred to
within the Financial Review.

Payments to landlords of leased properties are under occupational leases of
varying lease terms.  We are responsible for any increases through rent
reviews which were factored into the original contract pricing.  In respect of
those leasehold properties that the DSS can vacate we have estimated the
maximum potential post vacation lease obligations to be in the region of £135m
which have been priced into the income receivable from the DSS, while
mitigation will also be achieved by subletting revenue and disposals.

Maintenance of the properties is carried out in accordance with an agreed
programme of work over the 20 year contract with the objective of bringing the
PRIME property estate up to an agreed specification.

Land Securities Trillium structure

The Land Securities Trillium team is highly focused, enthusiastic, motivated
and structured into distinct operating units.

The Portfolio Management Group aims to reduce the amount of surplus
accommodation space in clients' property portfolios, consolidate and
accelerate the move to less space, and reduce the cost and risk of capital
projects.  The group works closely with the client to deliver a property
strategy that is driven by business requirements.  It also refurbishes and
remarkets vacated surplus space. Its technical business managers are
responsible for programming works to maintain and upgrade the standard of the
accommodation.

The Services Group, through its own national network of facilities managers,
manages and co-ordinates the day-to-day operation and servicing of buildings
occupied by the client, creating an efficient working environment.  Services
are wide-ranging and include building maintenance, catering, cleaning,
landscaping, security and waste management. We deliver the services in
association with seven leading specialist service partners.  This approach
replaces a network of contracts with one point of contact for the client,
increasing service standards and accountability.

We have set up a Customer Service Centre and a regional network of facilities
managers, which co-ordinate all requests for work.  Currently 95,000 DSS
employees and 5,000 staff from other government departments based in DSS
buildings can call Land Securities Trillium on one dedicated telephone number
with a job request.  The service centre takes on average 30,000 calls a month.

The substantial investment made to date in setting up the infrastructure
required to serve and manage an occupier's estate creates a strong barrier to
entry for others who may be considering competing in this market.

Land Securities Trillium future potential

In March 2001 we were named preferred bidder for the BBC property partnership
agreement which will run for a 30-year term.  Initially, this would involve
acquiring the White City offices and developing in partnership with the BBC a
further 50,860 m2 of offices at White City for their occupation.  It would
also include the provision of facilities management services to the London and
Scottish estates, and construction management services throughout the UK.  A
second phase would see further major developments in Glasgow and at
Broadcasting House, and the transfer of responsibility for capital works to
maintain accommodation standards in London and Scotland.

Land Securities Trillium, in a 50:50 joint venture, was also named as the
preferred bidder for the BT property contract in April 2001.  While this
transaction is still under negotiation and details are subject to
confidentiality agreements, it will involve the proposed divestment of the
majority of the BT estate totalling 5.8m m2 and the ongoing management of the
property portfolio.

We are currently assessing more opportunities for property outsourcing deals
from potential corporate and central and local government occupiers.  We also
believe that there are benefits to be accrued by developing our service
offering to the Group's existing customer base under the property services
umbrella.  One such project which we are participating in, with the other Land
Securities business units, is the refurbishment of the Empress State Building.

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