RECOMMENDED ACQUISITION FOR PILLAR PROPERTY PLC

Transcription

1 3 RECOMMENDED ACQUISITION FOR PILLAR PROPERTY PLC 23 rd May 2005 The attached announcement was released by Morgan Stanley & Co. Limited on behalf of the Company this morning, 23 rd May. Press Release Contacts: The British Land Company PLC Stephen Hester John Weston Smith Finsbury: Edward Orlebar Cornwall Terrace Regent s Park London NW1 4QP T +44 (0) F +44 (0) W Registered Office at business address Reg No England Established 1856

2 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO OR FROM CANADA, AUSTRALIA OR JAPAN. FOR IMMEDIATE RELEASE RECOMMENDED ACQUISITION 23 May 2005 by THE BRITISH LAND COMPANY PLC for all the issued and to be issued share capital of PILLAR PROPERTY PLC to be effected by means of a Scheme of Arrangement under section 425 of the Companies Act 1985 Summary The boards of The British Land Company PLC ( British Land ) and Pillar Property PLC ("Pillar") are pleased to announce the terms of recommended Proposals under which British Land will acquire the entire issued and to be issued ordinary share capital of Pillar. The Proposals It is intended that the Acquisition is to be implemented by way of a Court sanctioned Scheme of Arrangement under section 425 of the Companies Act. The terms of the Acquisition will enable all Pillar Shareholders to receive 855 pence in cash in respect of each Pillar Share held by them, valuing the entire issued and to be issued ordinary share capital of Pillar at approximately million. There will be no final dividend paid. The Acquisition price represents a premium of: per cent. to the fully diluted net asset value of 780 pence per Pillar share as at 31 March 2005;

3 - 7.5 per cent. to the closing price of 795 pence per Pillar Share as of 19 May 2005, the day prior to announcement that Pillar was in discussions with a possible offeror. The Pillar Directors, who have been so advised by Credit Suisse First Boston and JPMorgan Cazenove, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Pillar Directors, Credit Suisse First Boston and JPMorgan Cazenove have taken into account the commercial assessments of the Pillar Directors. The Pillar Directors are unanimously recommending Pillar Shareholders to vote in favour of the Scheme as they intend to do in respect of their own holdings of Pillar Shares. The Acquisition of Pillar is consistent with British Land's strategic evolution, to be more fully presented with its preliminary results for the year ended 31 March 2005 on Wednesday, 25 May. This builds on the bedrock of British Land s existing focus on UK real estate offering growth, quality and security. The aim is to further intensify British Land s asset management and its portfolio management, as well as to build and renew its talent base. The principal benefits of the transaction include: The transaction, together with existing assets, gives British Land a unique and distinctive leadership position in the highest performing retail asset class. Pillar (directly and indirectly) owns approximately 1.3 billion of high quality property assets and manages an attractive portfolio of some of the largest out of town retail parks in the UK valued at approximately 2.7 billion. Retail warehousing has been and is expected to remain one of the most attractive asset classes with strong prospects. Following the Acquisition, British Land will own or manage in excess of 10 billion of retail assets. This is expected to create management synergies and further strategic options if UK REITs are successfully implemented. The acquisition of Pillar s fund management operations creates an additional revenue stream which is expected to grow. This is a logical and attractive extension of British Land s distinctive track record in property partnerships with third parties. Additionally, this fund management expertise may be useful in considering future options around British Land s existing assets. British Land will also welcome Pillar's high quality management team which has a track record of generating growth from active property management with a strong performance orientation. They will intensify and add to the property management skills of British Land's existing team.

4 British Land has today acquired from GE Pension Trust its holding of 19,335,710 Pillar shares representing approximately 21.5 per cent. of the existing issued ordinary share capital of Pillar. Irrevocable undertakings to vote in favour of the Scheme have been received from the Pillar Directors in respect of a total of 4,093,617 Pillar Shares representing approximately 4.5 per cent. of the existing issued ordinary share capital of Pillar. These irrevocable undertakings will only cease to be binding in the event that the Scheme lapses or is withdrawn. An irrevocable undertaking has also been received from the trustee of the Employee Share Option Trust (ESOT) in respect of a total of 1,166,762 Pillar Shares representing approximately 1.3 per cent. of the existing issued ordinary share capital of Pillar. This irrevocable undertaking will only cease to be binding in the event that the Scheme lapses or is withdrawn. Morgan Stanley & Co. Limited and UBS Investment Bank are acting as joint financial advisers and corporate brokers to British Land in relation to the Acquisition. Credit Suisse First Boston and JPMorgan Cazenove are acting as joint financial advisers to Pillar and JPMorgan Cazenove is acting as sole corporate broker to Pillar. Commenting on the Acquisition, Stephen Hester, Chief Executive of British Land, said: "The acquisition of Pillar provides British Land with an attractive opportunity to accelerate our stated strategy. We are reshaping the portfolio towards growth assets and intensifying property asset management activity. By adding over 3 billion of fund assets under management, a valuable new avenue of income growth also opens up. Commenting on the Acquisition, Raymond Mould, Chairman of Pillar, said: "Since its flotation, Pillar has generated high returns for its shareholders. The Board of Pillar believes that British Land will be a good steward for the preservation and development of the existing funds and that the total Acquisition value of 855 pence per share provides ordinary shareholders with an attractive exit price." This summary should be read in conjunction with the full text of the attached announcement.

5 British Land will be holding an analysts' presentation today, Monday 23 May 2005 at 11am at the Conference Centre of UBS, 1 Finsbury Avenue, London EC2M 2PP. A live conference call will be available through the following dial-ins: and Passcode: British Land The details will be on the company s website An archive copy will then be available at the same address later today. ENQUIRIES: The British Land Company PLC Stephen Hester John Weston Smith UBS Investment Bank Joint Financial Adviser and Corporate Broker to British Land Simon Warshaw Tim Guest Mihiri Jayaweera Morgan Stanley & Co. Limited Joint Financial Adviser and Corporate Broker to British Land Jonathan Lane Mark Warham Paul Baker Finsbury Public relations adviser to British Land Edward Orlebar Pillar Property PLC Raymond Mould Patrick Vaughan Credit Suisse First Boston Financial Adviser to Pillar Andrew Christie Ian Marcus Ian Brown JPMorgan Cazenove Financial Adviser and Corporate Broker to Pillar Richard Cotton Bronson Albery Roger Clarke

6 Gavin Anderson Public relations adviser to Pillar Charlotte Stone Richard Constant Morgan Stanley & Co. Limited and UBS Investment Bank are acting for British Land and no one else in relation to the Acquisition and the matters referred to in this announcement and will not be responsible to any person other than British Land for providing the protections afforded to clients of Morgan Stanley & Co. Limited and UBS Investment Bank nor for providing advice in relation to the Acquisition or any other matters referred to in this announcement. Credit Suisse First Boston and JPMorgan Cazenove are acting for Pillar and no one else in connection with the Acquisition and the matters referred to herein and will not be responsible to any other person for providing the protections offered to clients of Credit Suisse First Boston and JPMorgan Cazenove or for providing advice in relation to the Acquisition or any other matters referred to in this announcement. The distribution of this announcement in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the UK. The Proposals will not be made, directly or indirectly, in, into or from or by the use of mail or any means or instrumentality (including, without limitation, telephone, facsimile or other forms of electronic transmission) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of Canada, Australia or Japan. Accordingly, neither this announcement nor the Scheme Document or accompanying documents (or any copy thereof) is being, and must not be, mailed or otherwise forwarded, distributed or sent in, into or from Canada, Australia or Japan. All Shareholders or other persons (including nominees, trustees and custodians) who would otherwise intend to, or may have a contractual or legal obligation to, forward this announcement or the Scheme Document and accompanying documents to any jurisdiction outside the United Kingdom should refrain from doing so and seek appropriate professional advice before taking any action.

7 The Loan Notes to be issued pursuant to the Loan Note Alternative have not been, and will not be, registered under the Securities Act 1933 or under any relevant securities laws of any states or other jurisdiction of the United States, nor have the relevant clearances been, nor will they be, obtained from the securities law of any province or territory of Canada, nor has a prospectus in relation to the Loan Notes been, nor will one be, lodged with or registered by the Australian Securities and Investments Commission nor have any steps been taken, nor will any steps be taken, to enable the Loan Notes to be offered in compliance with applicable securities law of Japan. Accordingly, unless an exception under the Securities Act 1933 or such securities laws is available, the Loan Note Alternative is not being made available in, and the Loan Notes may not be offered, sold, resold or delivered, directly or indirectly, in, into or from, the United States, Canada, Australia or Japan, or any other jurisdiction in which an offer of Loan Notes would constitute a violation of relevant laws or require registration thereof, or to or for the account or benefit of any US Person or resident of Canada, Australia or Japan. The Directors of British Land accept responsibility for the information contained in this announcement, other than that relating to Pillar, the Pillar Group, the Directors of Pillar and members of their immediate families, related trusts and persons connected with them (within the meaning of Section 346 of the Companies Act) and information relating to the recommendation of voting in favour of the Proposals and the recommendation itself. To the best of the knowledge and belief of the Directors of British Land (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. The Directors of Pillar accept responsibility for the information contained in this announcement relating to Pillar, the Pillar Group, the Directors of Pillar and members of their immediate families, related trusts and persons connected with them (within the meaning of Section 346 of the Companies Act) and information relating to the recommendation of voting in favour of the Proposals and the recommendation itself. To the best of the knowledge and belief of the Directors of Pillar (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. This announcement does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor a

8 solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law. Any person who, alone or acting together with any other person(s) pursuant to an agreement or understanding (whether formal or informal) to acquire or control securities of Pillar, owns or controls, or becomes the owner or controller, directly or indirectly, of one per cent. or more of any class of securities of Pillar is generally required under the provisions of Rule 8 of the City Code to notify a Regulatory Information Service and the Panel by not later than noon (London time) on the business day following the date of the relevant transaction in such securities during the period from the date of this announcement to the date of the Meetings. Please consult your independent financial adviser authorised under the Financial Services and Markets Act 2000 immediately if you believe this Rule may be applicable to you or consult the Panel's website at or contact the Panel on +44 (0)

9 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO OR FROM CANADA, AUSTRALIA OR JAPAN. FOR IMMEDIATE RELEASE RECOMMENDED ACQUISITION by THE BRITISH LAND COMPANY PLC for all the issued and to be issued share capital of PILLAR PROPERTY PLC to be effected by means of a Scheme of Arrangement under section 425 of the Companies Act May Introduction The boards of British Land and Pillar are pleased to announce they have reached agreement on the terms of the recommended Proposals under which British Land will acquire the entire issued and to be issued ordinary share capital of Pillar. The Pillar Directors, who have been so advised by Credit Suisse First Boston and JPMorgan Cazenove, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Pillar Directors, Credit Suisse First Boston and JPMorgan Cazenove have taken into account the commercial assessments of the Pillar Directors. 2. The Acquisition It is intended that the Acquisition is to be implemented by way of a Court sanctioned Scheme of Arrangement under section 425 of the Companies Act, which will be subject to the conditions and further terms set out in Appendix I to this announcement and to the further terms to be set out in the Scheme Document. Pillar Shareholders other than those who validly elect for the Loan Note Alternative will receive: for each Pillar Share 855 pence in cash

10 The Acquisition values the entire issued and to be issued ordinary share capital of Pillar at approximately million. The Acquisition price represents a premium of: per cent. to the fully diluted net asset value of 780 pence per Pillar share as at 31 March 2005; per cent. to the closing price of 795 pence per Pillar Share as of 19 May 2005, the day prior to announcement that Pillar was in discussions with a possible offeror. The Acquisition will be made by British Land or, at its option, a wholly owned subsidiary of British Land. Definitions of certain expressions used in this announcement are contained in Appendix III. 3. Loan Note Alternative Pillar Shareholders (other than certain Overseas Persons) may elect to receive Loan Notes to be issued by British Land (or a wholly owned subsidiary of British Land) as an alternative to receiving any or all of the cash consideration which they would otherwise receive under the Acquisition on the following basis: For every 1 of cash consideration under the Scheme, 1 nominal value of Loan Notes. The Loan Notes will be unsecured obligations of British Land (or, if relevant, the wholly owned subsidiary of British Land) and will be issued, credited as fully paid, in amounts and integral multiples of 1 in nominal value. The obligation to pay the principal sum under the Loan Notes will be irrevocably and unconditionally guaranteed for three years from the date of the instrument creating the Loan Notes. The Loan Notes will not be transferable other than in certain limited circumstances. All fractional entitlements will be disregarded and not paid. The Loan Notes will be governed by English Law. The Loan Notes will bear interest (from the date of issue) payable to the relevant holder of Loan Notes (subject to any requirement to deduct tax thereon) semi-annually in arrears on 31 December and 30 June at the rate of 0.55 per cent. below LIBOR. The first interest payment will be made on 31 December 2005 in respect of the period from and

11 including the date of issue of the relevant Loan Notes up to (but excluding) that date. The Loan Note Alternative will be conditional upon the Scheme becoming effective, and valid elections having been received by such time for at least 5 million in nominal value of Loan Notes. The Loan Notes will have a term of 10 years and holders of Loan Notes will have the opportunity to redeem them on each interest payment date falling on or after 30 September 2006, provided that any Loan Notes issued after 30 September 2005 will be redeemable only from the first interest payment date falling after the first anniversary of the issue of such Loan Notes. British Land will be entitled to redeem all outstanding Loan Notes if the aggregate nominal value of outstanding Loan Notes is below 5 million at any time during their term. The aggregate principal amount of the Loan Note is limited to 200 million. If valid elections are received from holders of Scheme Shares in excess of this amount, elections will be scaled back on a pro-rata basis so that the aggregate principal amount of Loan Notes issued shall not exceed 200 million. Further details of the Loan Note Alternative will be set out in the Scheme Document. 4. Recommendation, irrevocable undertakings and share purchase The Pillar Directors, who have been so advised by Credit Suisse First Boston and JPMorgan Cazenove, consider the terms of the Proposals to be fair and reasonable. In providing advice to the Pillar Directors, Credit Suisse First Boston and JPMorgan Cazenove have taken into account the commercial assessments of the Pillar Directors. The Pillar Directors are unanimously recommending Pillar Shareholders to vote in favour of the Scheme. The Directors of Pillar have irrevocably undertaken to vote in favour of the Proposals in respect of a total of 4,093,617 Pillar Shares representing, approximately 4.5 per cent. of the existing issued ordinary share capital of Pillar. These irrevocable undertakings will only cease to be binding in the event that the Scheme lapses or is withdrawn. An irrevocable undertaking has also been received from the trustee of the Employee Share Option Trust (ESOT) in respect of a total of 1,166,762 Pillar Shares representing approximately 1.3 per cent. of the existing issued ordinary share capital of Pillar. This irrevocable undertaking will only cease to be binding in the event that the Scheme lapses or is withdrawn.

12 British Land has today acquired from GE Pension Trust its holding of 19,335,710 Pillar shares representing approximately 21.5 per cent. of the existing issued ordinary share capital of Pillar. 5. Background to and reasons for the Acquisition The Acquisition of Pillar is consistent with British Land's strategic evolution, to be more fully presented with its preliminary results for the year ended 31 March 2005 on Wednesday, 25 May This builds on the bedrock of British Land s existing focus on UK real estate offering growth, quality and security. The aim is to further intensify British Land s asset management and its portfolio management, as well as to build and renew its talent base. The principal benefits of the transaction include: The transaction, together with existing assets, gives British Land a unique and distinctive leadership position in the highest performing retail asset class. Pillar (directly and indirectly) owns approximately 1.3 billion of high quality property assets and manages an attractive portfolio of some of the largest out of town retail parks in the UK valued at approximately 2.7 billion. Retail warehousing has been and is expected to remain one of the most attractive asset classes with strong prospects. British Land believes that retail warehousing continues to be an attractive asset class and British Land expects demand to continue to grow, while restrictions on planning consents are expected to limit further supply of this asset class. With approximately 77 per cent. of the Hercules Unit Trust ( HUT ) portfolio consisting of retail parks with open A1 consent, Pillar offers a unique opportunity to obtain exposure to such a high quality portfolio of this type and of such a large size. Through a 36.4 per cent. ownership in PREF, this transaction will also give British Land exposure to a high quality growth market in Continental Europe which fits well with the core UK competencies of the combined company following the Acquisition. Following the Acquisition, British Land will own or manage in excess of 10 billion in retail assets. This is expected to create management synergies and further strategic options if UK REITs are successfully implemented. The acquisition of Pillar s fund management operation creates an additional revenue stream which is expected to grow. This is a logical and attractive extension of British Land s distinctive track record in property partnerships with third parties. Additionally, this fund management expertise may be useful in considering future options around British Land s existing assets.

13 British Land will also welcome Pillar's high quality management team which has a track record of generating growth from active property management with a strong performance orientation. They will intensify and add to the property management skills of British Land's existing team. 6. Financial effects of the Acquisition From an earnings and total return perspective, Pillar will primarily be reflected in British Land s accounts from the second half of the 2005/6 financial year. British Land expects attractive growth in total returns from Pillar to make the acquisition value enhancing for British Land. Inter alia, Pillar s profits are expected to benefit from strong rental reversions, ongoing rental increases, significant interest and administration cost savings on integration and the revised fee arrangements expected to be agreed with HUT unit holders at the HUT EGM. Additionally there remain attractive prospective development profits in the Pillar portfolio for realisation over the next three years. The timing of these effects will determine whether or not there will be any modest initial cash earnings dilution. British Land also believes that there may be additional attractive synergies in the Group as a whole from management of the combined retail portfolio and performance of the enlarged property management team. On a pro-forma basis, the acquisition of Pillar would have increased British Land s Loan to Value Ratio by approximately 5 percentage points. British Land s financial position remains strong with interest payments well covered by income. The enlarged asset portfolio enjoys a unique and substantial level of income security (long leases, low voids) and a secure debt structure. 7. Information on British Land British Land is the largest UK property investment company by assets and a prominent constituent of the FTSE 100 Index. The company invests in, manages and develops prime, modern properties principally in the Retail and London Office Sectors. Properties under management at 30 September 2004 totalled 12.3 billion: the majority is directly owned; the balance is held in joint ventures and partnerships, of which British Land s share was valued at 1.2 billion. British Land s investment approach is biased towards high quality, long lease assets with strong long-term income growth in prospect. A key

14 criterion is a property s enduring attraction to occupiers because of its business suitability, location and efficiency. The portfolio focuses on areas where the trends of supply and demand are favourable over the long term. Approximately 55 per cent. is invested in retail properties (37 per cent. out-of-town), including Meadowhall Shopping Centre (one of only six regional centres in the UK), 71 superstores, 40 retail warehouse parks and 39 prime department stores. A further 37 per cent. is invested in Central London offices, including Broadgate, the premier City office estate. The company blends its leasing, development, asset and liability management skills in a single integrated approach. Efficient capital structures and strong risk management disciplines are an integral part of that approach. British Land s management of its high quality properties, balanced portfolio and efficient capital structure has produced total returns of 10.1 per cent. per annum for shareholders over the 10 years to 31 March 2004 plus 9.1 per cent. during the 6 months to the last reported results at 30 September British Land generated profit before tax of 80.1 million for the six months ended 30 September 2004 ( million for the year ended 31 March 2004), Group gross rental income of million for the six months ended 30 September 2004 ( 486.7m for the year ended 31 March 2004). Net assets were 5,265.0 million at 30 September 2004 ( 4,669.4 million at 31 March 2004) and adjusted diluted net asset value per share was 1,049 pence at 30 September 2004 (966 pence at 31 March 2004). Net debt was 4,936.4 million at 30 September 2004 ( 4,866.8 million at 31 March 2004) with a Loan to Value ratio of 46 per cent. (48 per cent. at 31 March 2004). British Land aims to manage its business and assets to achieve a Loan to Value range of per cent. This process also underlines British Land s commitment to improving shareholder returns through active portfolio management. 8. Information on Pillar Pillar is a listed property company active in both UK and European commercial property markets. Its principal investments are focussed on UK retail parks and City of London offices. In addition as property adviser to both HUT, the largest retail park unit trust investing in the UK, and City of London Office Unit Trust ( CLOUT ),

15 which specialises in City of London offices, Pillar Retail Europark Fund ( PREF ), a European retail park fund and Hercules Income Fund ( HIF ), a UK smaller retail parks fund, Pillar manages property with a gross value of over 3 billion. Pillar receives management fees on the trust portfolios and performance fees dependent upon trust investment performance exceeding certain benchmarks. In addition, Pillar develops retail schemes which will be offered to HUT. New fee arrangements have recently been put to the unit holders of HUT which would, if approved, provide an increase in base management fees and a revised HUT performance fee for the future. The majority of Pillar's investments are in the form of units in HUT and CLOUT. As at 28 April 2005, HUT had a gross property value of 2.5 billion of which Pillar owned 34.4 per cent. and CLOUT had a gross property value of 582 million of which Pillar owned 35.9 per cent. HUT was created in September 2000 as a closed-ended Jersey property unit trust to invest in properties in major warehouse or shopping park locations in the United Kingdom. The objective of HUT is to creatively and actively manage the retail park assets to achieve rental and capital growth above benchmarked targets whilst not exposing itself to speculative risk. Pillar had Net Assets of million at 31 March 2005 compared with million as at 31 March Pillar generated profit before tax of 21.7million for the year ended 31 March 2005 compared with 20.9 million for the year ended 31 March The Structure of the Acquisition The Proposals will be effected by means of a Scheme of Arrangement between Pillar and Scheme Shareholders under section 425 of the Companies Act. The Acquisition by British Land of the whole of the issued and to be issued share capital of Pillar is to be achieved by the cancellation of the Cancellation Shares and the application of the reserve arising from such cancellation in paying up in full a number of New Pillar Shares (which is equal to the number of Cancellation Shares) and issuing the same to British Land and/or its nominees in consideration for which holders of Cancellation Shares will receive consideration on the basis set out in the introduction and in paragraph 2 of this announcement. Scheme Shares acquired under the Loan Note Alternative will be transferred to British Land in exchange for the issue of the Loan Notes to holders of Scheme Shares who elect for the Loan Note Alternative.

16 It is expected that the Scheme Document will be posted in June and that the Scheme will become effective in August 2005, subject to the satisfaction or waiver of all the Conditions set out in Appendix I to this announcement. The Scheme requires approval of the Pillar Shareholders (other than the British Land Shareholder) by passing a resolution at the Court Meeting. In order to become effective, the Scheme must be approved by a majority in number representing at least 75 per cent. in value of the Pillar Shares that are voted at the Court Meeting. In addition, a special resolution approving any alteration of Pillar's articles of association and sanctioning the related Capital Reduction must be passed by Pillar Shareholders representing 75 per cent. of the votes cast at the Extraordinary General Meeting. Following the Meetings, the Scheme and the related Capital Reduction must be sanctioned and confirmed by the Court and will only become effective on delivery to and registration by the Registrar of Companies of: (i) a copy of the Court Order sanctioning the Scheme and approving the Capital Reduction ; and (ii) a copy of the Scheme Document. The British Land Shareholder will give an undertaking to the Court to be bound by the Scheme. If the Scheme becomes effective, it will be binding on all Pillar Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Extraordinary General Meeting. The Scheme will (subject to the passing of the resolution at the Extraordinary General Meeting) extend to any Pillar Shares issued under the Pillar Share Schemes or otherwise before the record date for the Scheme. The Scheme will not extend to Pillar Shares issued after that date. Further details of the Scheme will be contained in the Scheme Document. 10. Implementation Agreement Pillar and British Land have entered into the Implementation Agreement which governs their relationship during the period until the Scheme becomes effective or the Proposals lapse. Amongst other

17 things, the parties have agreed to cooperate with regard to the process to implement the Scheme and Pillar has undertaken to conduct the business in the ordinary course prior to the date the Scheme becomes effective. Under the Implementation Agreement British Land has reserved the right to effect the Acquisition to by way of a takeover offer for Pillar. Pillar has agreed to pay an inducement fee to British Land of 3.1 million if: (a) the Acquisition subsequently lapses or is withdrawn or (with the consent of the Panel) is not made and before this time an Independent Competing Offer for Pillar is announced (whether or not a preconditional basis), and that Independent Competing Offer or other Independent Competing Offer subsequently becomes or is declared unconditional in all respects or is otherwise completed; or (b) the Pillar Directors (or any committee of the board) withdraw or adversely modify for whatever reason their recommendation of the Proposals or agree to resolve to recommend an Independent Competing Offer. (c) the Panel allows British Land to withdraw its support for the Scheme by reason of a breach of any of the conditions (other than those set out in paragraphs 2(a)-(e) and 2(g) where such breach arose as a result of an act or omission of Pillar) or because the Implementation Agreement is terminated for breach of certain covenants relating to the conduct of Pillar s business prior to the Effective Date of the Acquisition and obligations to be performed by Pillar if the circumstances are of such material significance to British Land that the Panel permits the Scheme to be withdrawn, provided that (if the breach is remediable within the timeframe contemplated for effecting the Scheme) Pillar has been given such period as is reasonable in the light of that timetable (not exceeding 15 days) to remedy the same and has not so remedied it within such time. Pillar has further agreed that it shall not (i) solicit, initiate or otherwise seek to procure any Independent Competing Offer or (ii) enter into or continue any discussions, negotiations, correspondence or arrangement relating to any Independent Competing Offer other than in accordance with obligations imposed under the terms of the City Code and (save to the extent that the Pillar Directors (having taken appropriate legal advice) reasonably consider that they would be in breach of their fiduciary duties not to do so).

18 Pillar has also agreed to notify British Land if it receives a serious approach from a third party and an Independent Competing Offer is capable of being implemented. Save insofar as is not consistent with Pillar s Directors fiduciary duties or duties owed to the Court with regard to the process relating to the Scheme, if an Independent Competing Offer is announced for Pillar, Pillar has undertaken that it will not withdraw the Scheme for a period of 72 hours from the time of that announcement and if, within that time, British Land communicates to Pillar a revision to the terms of the Acquisition, so that the terms of the Acquisition, as so revised, provide for a price in cash per Pillar Share at not less than 5 per cent. more than the price per Pillar Share offered under the Independent Competing Offer, the Pillar Directors will continue to recommend the Scheme and withdraw any recommendation of the Independent Competing Offer. 11. Financing of the Acquisition The cash consideration payable by British Land to Pillar Shareholders under the terms of the Scheme will be provided by British Land from existing resources. 12. Management and employees The British Land Directors have given assurances to Pillar that, if the Scheme becomes effective, the existing employment rights, including pension rights, of all Pillar management and employees will be fully safeguarded. If the Scheme becomes effective, British Land will be pleased to welcome key members of Pillar s executive management team to important roles in the combined company at closing. It is intended that Patrick Vaughan will join British Land as an Executive Director for a transitional period expected to be around one year to oversee the smooth integration of Pillar and the successful continuance of the fund management business. Andrew Jones will join British Land s Executive Committee as Co-Head of Asset Management, together with Tim Roberts, currently Joint Head of Asset Management at British Land, who is being promoted into the same role. The two of them represent the talented younger generation of property managers that British Land is committed to promoting. The other key senior members of Pillar s property team will continue in their existing roles. British Land is committed to the expansion of Pillar s fund management business to the benefit of all unit holders. Additionally as a sign of its

19 commitment, British Land expects to remain the largest unit holder overall. To ensure continuity of management, it is anticipated that the fund management business within the combined group will appoint Andrew Jones as its managing director. Stephen Hester, Chief Executive of British Land will chair the fund management board and its other Directors will include Valentine Beresford and Mark Stirling. 13. Pillar Employee Share Schemes Appropriate proposals will be made to participants in the Pillar Employee Share Schemes in due course. Details of these proposals will be set out in the Scheme Document. 14. Delisting and Cancellation of trading It is intended that application will be made to the UK Listing Authority for the listing of the Pillar Shares to be cancelled and to the London Stock Exchange for them to cease to be admitted to trading with effect from the Effective Date. 15. General The Acquisition will be subject to the applicable requirements of the City Code. The Scheme Document containing the full terms and conditions of the Acquisition will be posted to Pillar Shareholders (other than to any Pillar Shareholders with addresses in Canada, Australia or Japan) in due course. In deciding whether or not to vote in favour of the Scheme in respect of their Pillar Shares, Pillar Shareholders should rely on the information contained in, and follow the procedures described in, the Scheme Document and accompanying documents. Save in respect of the irrevocable undertakings and the purchase of the GE stake referred to in paragraph 4 above neither British Land nor any of the British Land Directors, nor, so far as British Land is aware, any party acting in concert with it, owns or controls any Pillar Shares or holds any options to purchase Pillar Shares or has entered into any derivative referenced to securities of Pillar which remain outstanding. British Land reserves the right to change the structure of making the Acquisition to a takeover offer. ENQUIRIES:

20 The British Land Company PLC Stephen Hester John Weston Smith Morgan Stanley & Co. Limited Joint Financial Adviser and Corporate Broker to British Land Jonathan Lane Mark Warham Paul Baker UBS Investment Bank Joint Financial Adviser and Corporate Broker to British Land Simon Warshaw Tim Guest Mihiri Jayaweera Finsbury Public relations adviser to British Land Edward Orlebar Pillar Property PLC Raymond Mould Patrick Vaughan Credit Suisse First Boston Financial Adviser to Pillar Andrew Christie Ian Marcus Ian Brown JPMorgan Cazenove Financial Adviser and Corporate Broker to Pillar Richard Cotton Bronson Albery Roger Clarke Gavin Anderson Public relations adviser to Pillar Charlotte Stone Richard Constant UBS Investment Bank and Morgan Stanley & Co. Limited are acting for British Land and no one else in relation to the Acquisition and the matters referred to in this announcement and will not be responsible to any person other than British Land for providing the protections afforded to customers of UBS Investment Bank and Morgan Stanley & Co. Limited nor for providing advice in relation to the Acquisition or any other matters referred to in this announcement.

21 Credit Suisse First Boston and JPMorgan are acting for Pillar and no one else in connection with the Acquisition and the matters referred to herein and will not be responsible to any other person for providing the protections offered to clients of Credit Suisse First Boston and JPMorgan Cazenove or for providing advice in relation to the Acquisition or any other matters referred to in this announcement. The distribution of this announcement in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the UK. The Proposals will not be made, directly or indirectly, in, into or from or by the use of mail or any means or instrumentality (including, without limitation, telephone, facsimile or other forms of electronic transmission) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of Canada, Australia or Japan. Accordingly, neither this announcement nor the Scheme Document or accompanying documents (or any copy thereof) is being, and must not be, mailed or otherwise forwarded, distributed or sent in, into or from Canada, Australia or Japan. All Shareholders or other persons (including nominees, trustees and custodians) who would otherwise intend to, or may have a contractual or legal obligation to, forward this announcement or the Scheme Document and accompanying documents to any jurisdiction outside the United Kingdom should refrain from doing so and seek appropriate professional advice before taking any action. The Loan Notes to be issued pursuant to the Loan Note Alternative have not been, and will not be, registered under the Securities Act 1933 or under any relevant securities laws of any states or other jurisdiction of the United States, nor have the relevant clearances been, nor will they be, obtained from the securities law of any province or territory of Canada, nor has a prospectus in relation to the Loan Notes been, nor will one be, lodged with or registered by the Australian Securities and Investments Commission nor have any steps been taken, nor will any steps be taken, to enable the Loan Notes to be offered in compliance with applicable securities law of Japan. Accordingly, unless an exception under the Securities Act 1933 or such securities laws is available, the Loan Note Alternative is not being made available in, and the Loan Notes may not be offered, sold, resold or delivered,

22 directly or indirectly, in, into or from, the United States, Canada, Australia or Japan, or any other jurisdiction in which an offer of Loan Notes would constitute a violation of relevant laws or require registration thereof, or to or for the account or benefit of any US Person or resident of Canada, Australia or Japan. The Directors of British Land accept responsibility for the information contained in this announcement, other than that relating to Pillar, the Pillar Group, the Directors of Pillar and members of their immediate families, related trusts and persons connected with them (within the meaning of Section 346 of the Companies Act) and information relating to the recommendation of voting in favour of the Proposals and the recommendation itself. To the best of the knowledge and belief of the Directors of British Land (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. The Directors of Pillar accept responsibility for the information contained in this announcement relating to Pillar, the Pillar Group, the Directors of Pillar and members of their immediate families, related trusts and persons connected with them (within the meaning of Section 346 of the Companies Act) and information relating to the recommendation of voting in favour of the Proposals and the recommendation itself. To the best of the knowledge and belief of the Directors of Pillar (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. This announcement does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law. Any person who, alone or acting together with any other person(s) pursuant to an agreement or understanding (whether formal or informal) to acquire or control securities of Pillar, owns or controls, or becomes the owner or controller, directly or indirectly, of one per cent. or more of any class of securities of Pillar is generally required under the provisions of Rule 8 of the City Code to notify a Regulatory Information Service and the Panel by not later than noon (London time) on the business day following the date of the relevant transaction in such securities during the period from the date of this announcement to the

23 date of the Meetings. Please consult your independent financial adviser authorised under the Financial Services and Markets Act 2000 immediately if you believe this Rule may be applicable to you or consult the Panel's website at or contact the Panel on +44 (0)

24 Appendix I CONDITIONS OF THE SCHEME The Scheme will comply with the rules and regulations of the UK Listing Authority, the London Stock Exchange and the City Code. The Scheme will be governed by English law and will be subject to the jurisdiction of the English courts and to the terms and conditions set out below and to the further terms set out in the Scheme Document. (1) The Proposals will be conditional upon the Scheme becoming unconditional and becoming effective by no later than 31 October 2005 or such later date (if any) as British Land and Pillar may agree and (if required) the Court shall approve. (2) The Scheme is conditional upon: (a) approval of the Scheme by a majority in number representing 75 per cent. or more in value of Pillar Shareholders (other than the British Land Shareholder) present and voting, either in person or by proxy, at the Court Meeting or at any adjournment of that meeting; (b) the resolution(s) in connection with or required to approve and implement the Scheme being duly passed by the requisite majority at the Extraordinary General Meeting or at any adjournment of that meeting; (c) the sanction of the Scheme and the confirmation of the Capital Reduction involved therein by the Court (in either case, with or without modifications on terms acceptable to Pillar and British Land) and the delivery of an office copy of the Court Order and the minute of such reduction attached thereto to the Registrar of Companies in England and Wales and the registration, in relation to the Capital Reduction, of such Court Order by him. (d) the earlier of: i. the Financial Services Authority (FSA) notifying British Land of its approval, being given on terms reasonably satisfactory to British Land, of the proposed acquisition by British Land of control of each Pillar entity regulated by it; or ii. the expiry of a period of three months beginning with the date on which the FSA received the notice of control (as defined in section 178(5) of the Financial Services and Markets Act 2000 (FSMA)) relating to the proposed acquisition by

25 British Land of control of each Pillar entity regulated by it, in circumstances where the FSA has neither: (i) approved the acquisition by British Land of such control; nor (ii) served a warning notice on British Land pursuant to sub-sections 183(3) or 185(3) of FSMA, (e) the Luxembourg Commission de Surveillance du Secteur Financier notifying British Land of its approval, being given on terms reasonably satisfactory to British Land, of the proposed acquisition by British Land of control of Pillar and each Pillar entity regulated by it; (f) no Third Party having intervened and there not continuing to be outstanding any statute, regulation or order of any Third Party in each case which is or is likely to be material in the context of the Pillar Group and which would or might reasonably be expected to: (i) make the Scheme, its implementation or the acquisition or proposed acquisition by British Land or any member of the Wider British Land Group of any shares or other securities in, or control or management of, Pillar or any member of the Wider Pillar Group void, illegal or unenforceable in any relevant jurisdiction, or otherwise directly or indirectly restrain, prevent, prohibit, restrict or delay the same or impose additional adverse conditions or obligations with respect to the Scheme or such acquisition, or otherwise impede, challenge or interfere with the Scheme or such acquisition, or require material amendment to the terms of the Scheme or the acquisition or proposed acquisition of any Pillar Shares or the acquisition of control or management of Pillar or the Wider Pillar Group by British Land or any member of the British Land Group; (ii) impose any material limitations on, or result in a material delay in the ability of any member of the British Land Group or any member of the Wider Pillar Group to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership in respect of shares or other securities in, or to exercise voting or management control over, any member of the Wider Pillar Group or any member of the British Land Group; (iii) require, prevent or delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the Wider British Land Group or by any member of the Wider Pillar Group of all or any portion of their