UBS Global Real Estate Conference. Offices: Bullish Times Ahead?

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1 UBS Global Real Estate Conference Stephen Hester, Chief Executive We are real estate investors and create value by actively managing, financing and developing prime commercial property to provide the environment in which modern business can thrive.

2 Company Highlights British Land at a Glance 20bn assets owned & under management Strong Performance Record Profits Growth Total Shareholder Total Return 3 Return 2 Market leader in Office & Retail (4m sq ft) 30% 60% London Offices Out-of-Town Retail 20% 40% REIT status from Jan % 50% 94% dividend increase 2 paid quarterly 0% 20% Growth from 5% 0% Advantaged Portfolio Capital Recycling 0% 0% Intense Asset 5 Management MTHS 5 Development Programme British Land Major 5 Peers 4 Deal-making 30% 5 YRS 3 YRS YR Last 6 5 YRS 3 YRS YR 5 35% 30% 25% 20% 5% 0% 5% 0% Last 6 5 YRS 3 YRS YR 5 Last 6 MTHS 5 MTHS 5 FTSE Real Estate Index 3 Underlying profits excludes exceptional items, profits on asset disposals and revaluation gains 2 Total shareholder return represents the growth in share price plus dividends per share (assuming reinvested) 3 Total return represents the growth in adjusted, diluted net asset value per share plus dividends per share 4 Average of major peers - Land Securities, Hammerson, Liberty and Slough (some differences in year ends) 5 IFRS (previously numbers based on UK GAAP) Based on financial period ends - Number represents British Land s ranking compared to our major peers

3 35% Offices 97% Central London 5.6bn Leadership Position in London Offices British Land Office Assets 6m sq ft of prime London office investments in City & West End 4m sq ft London office development programme London Offices 5.4bn (97%) City Offices 3.6bn (64%) West End Offices 0.8bn (4%) 0.6bn (0.8m sq ft) lookthrough investment in Canary Wharf (0%) Positive outlook for rental growth and performance 4.80 psf average rent well placed to grow Average lease length to first break of 0 years Office Developments.0bn (9%) Business Parks & Provincial 0.2bn (3%) Continuing intensification of asset management and focus on customer services Average contracted passing rent (post expiry of rent free periods) 2

4 London Market Outlook Demand Flows from London s Competitive Strengths London GDP Finance & Business Services Finance & Business Services 4 7 Output 375 Employment Growth Growth pa % 53 2 Growth pa % 4 3 Number '000s Number '000s London GDP National GDP 200/5 2006/0 Finance Business Services Total Services Finance (LHS) Business Services (RHS) Cyclical upturn in London offices is under way with good customer demand - London economy strong with GDP growth outstripping the UK average and employment continuing to rise, led by financial and business services cebr s October 2006 Quarterly Business Forecasts - London 3

5 m sq ft Assessing Supply London Market Outlook City Office Speculative excluding schemes not expected City Planning Permissions vs Development Pipeline to commence without a pre-let of the Construction Starts 2 whole or a major part development development 4 completions 2 4 completions 2 m sq ft Average Average 0 6 speculative speculative is Completed Under Construction Likely to proceed Possible Unlikely Under Construction Permitted not Commenced Key judgement is with what pace new supply delivered to meet m sq ft Jun-99 Jun-00 Jun-0 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 or exceed demand in coming years i.e. the length and trajectory of the current Office property cycle Knight Frank 2 Jones Lang LaSalle 4

6 London Market Outlook London Rents Affordable Nominal vs Real London Office Rents Rents vs Salaries Indexed to 990 = Rent psf Q West End City Salaries Nominal - West End Real - West End Nominal - City Real - City London rents affordable - both in historical terms and compared to other costs Jones Lang LaSalle 2 PMA 5

7 London Market Outlook City Rental Growth Summary, Incentives & Initial Yields Forecasts Headline Incentives Initial Yield psf Growth pa % Months % DTZ Forecasts September

8 Office Strategy & Activity Last 6 Months Strategy focused on 5 themes Concentration on supply/ demand imbalances - Focus on London offices Customer focus - providing space to meet today s needs Pro-active asset management Active recycling of capital British Land Taking advantage of strong investment market to sell properties with low or riskier growth profiles 363m disposals ( 286m net), 29% above valuation Recycling capital into 2.6bn London office development programme Committed to 490,000 sq ft development of Osnaburgh Street, Regent s Place following purchase of the Crown s freehold interest for 55m Agreed take back of over 6,000 sq ft for re-letting to establish new rental levels at Broadgate & Regent s Place Profitable take back of 66,000 sq ft at 6 Broadgate and back to back letting to UBS at headline rent of 45 psf Carefully timed and customer focused development programme Letting progress confirms increased rental levels in London First 50 psf headline new letting in Broadgate this cycle 73,000 sq ft let or under offer at Plantation Place South, with latest letting agreed at 48 psf. Asking terms on remaining 28,000 sq ft increased to psf Broadgate 2020 master planning exercise to establish future development potential Potential total uplift in building area of over.2m sq ft Committed and prospective London office projects - current valuation plus costs to complete (including notional interest) 7

9 British Land Carefully Timed & Customer Focused Development The York Building (38,00 sq ft) The Willis Building (475,000 sq ft) 35 Basinghall Street (99,000 sq ft) One Coleman Street (80,000 sq ft) Ludgate West (27,000 sq ft) The Broadgate Tower & 20 Bishopsgate (822,000 sq ft) Ropemaker Place (590,000 sq ft) Regent s Place - Osnaburgh Street (380,500 sq ft) The Leadenhall Building (60,000 sq ft) Pre-let Pre-sold Pre-sold (0.m sq ft) (.0m sq ft) (0.8m sq ft) (.0m sq ft) (0.6m sq ft) 8

10 Summary London Office markets in cyclical upswing Driven by London s competitive strengths in international services Supply response increasing cycle may peak 200? Investment market already pricing in rental growth Development may provide better returns for some British Land well positioned Exceptional growth prospects from development and rent reviews Downside protection from prime assets and defensive leases 9

11 Disclaimer This presentation may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. British Land does not undertake to update forward-looking statements to reflect any changes in British Land s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. This presentation is made only to investment professionals as defined in Article 9 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ('the FP Order'). The content of this presentation has not been approved by a person authorised under the Financial Services and Markets Act 2000 ( FSMA ). Accordingly, this presentation may only be communicated in the UK with the benefit of an exemption set out in the FP Order. An investment professional includes: (i) a person who is authorised or exempt under FSMA; and (ii) a person who invests, or can reasonably be expected to invest, on a professional basis for the purposes of a business carried on by him; and (iii) a government, local authority (whether in the United Kingdom or elsewhere) or an international organisation; and (iv) any director, officer, executive or employee of any such person when acting in that capacity. This presentation is published solely for information purposes. This presentation 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 presentation in any jurisdiction in contravention of applicable law. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. The distribution of this presentation 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 presentation 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 presentation had been prepared in accordance with the laws of jurisdictions outside the UK. All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.