Final Results - Part 1

British Land Co PLC
30 May 2001


PART 1

Preliminary Announcement by The British Land Company PLC
of final results for the year ended 31 March 2001


HIGHLIGHTS


 - NET ASSETS PER SHARE UP 15.6% at 802p, FULLY DILUTED UP 13.7% at 774p.
       
A strong performance from City of London offices, up 19.7%, with the Broadgate
Estate rising 22.4% to £2.9 billion.
The residential portfolio rose 9.9% driven by the half share in London &
Henley Holdings Limited purchased in December 2000.
Meadowhall Shopping Centre's value maintained at £1.28 billion with rents up
33.3% since acquisition in November 1999. 
       
 - PROFITS BEFORE TAX and pre-exceptional charge up 8.1% at £169.1 million
(2000 - £156.4 million).

      -  Exceptional charge of £83.6 million, arising from £300 million bond
         repurchase, will cut yearly interest charge by £5 million.
      -  Profits pre-tax but after the exceptional charge were £85.5 million
      -  Net rents at £370.5 million up 6.6% (2000 - £347.5 million).
      -  Disposals of fixed assets produced £32.1 million capital profits 
         (2000 - £3.3 million).  
       
 - TOTAL RETURN pre-exceptional 19.3% (2000 - 11.9%).

 - FINAL DIVIDEND UP 5.3% AT 7.9p PER SHARE (2000 - 7.5p).
   With the Interim already paid of 3.6p per share (2000 - 3.4p) the total    
   distribution for the year is up 5.5% at 11.5p (2000 - 10.9p).

STOP PRESS
-----------

 - SECURITISATION ANNOUNCED
British Land announced on 29 May 2001 the securitisation, expected to raise
£550 - £600 million, of 35 supermarkets owned by the Group and leased to
Sainsbury's.
 
Commenting on the results, John Ritblat, Chairman, said:

'It has been a successful year for British Land.  Driven by a strong
performance at Broadgate, net assets per share are up by 15.6% to 802p and we
have successfully completed a number of initiatives which will underpin future
growth.  Not only has it been a year of active portfolio management and
development, but we have also reduced our average cost of debt by bond
repurchases.  We will continue to apply our consistent approach to value
creation, taking full advantage of the benefits of scale, and we look forward
to future growth with confidence.' 

 - NET ASSETS rose 15.6% to £4,154 million (2000 - £3,593 million).

 - TAX CHARGE £10.2 million, a rate of 11.9% (2000 - £27.6 million, rate      
   17.6%).
 - TOTAL PROPERTIES, including British Land's share of joint ventures, rise to
   £8.9 billion. 

 - TOTAL FUNDS under British Land property management, including partners'    
   shares of joint ventures, now up to £10.5 billion.

FINANCE
---------


 - WEIGHTED AVERAGE DEBT MATURITY currently 16.1 years (2000 - 18.4 years).
    Sainsbury securitisation expected to raise average to about 18 years.

 - WEIGHTED AVERAGE INTEREST RATE currently 6.6% (2000 - 7.05%).
    Sainsbury securitisation expected to raise rate to around 6.8%, still     
    below previous year's.

- UNUSED BANK FACILITIES and cash of £840 million today (2000 - £1,360.3      
    million).  Proceeds of the Sainsbury securitisation will increase this    
    amount.  

At the year-end the British Land debt book was 83% fixed, 6% capped and 11%
variable.  
The joint ventures' borrowings were 100% fixed.
No derivative transactions of a speculative nature are undertaken and all
foreign exchange assets and liabilities are hedged fully into Sterling.


FINANCIAL RATIOS FOR THE BRITISH LAND COMPANY PLC
--------------------------------------------------

 - MORTGAGE RATIO (DEBT/PROPERTY & INVESTMENTS) 46%  (2000 - 49%).

 - DEBT/EQUITY 89% (2000 - 105%).

FINANCIAL RATIOS FOR BRITISH LAND INCORPORATING ITS SHARE OF JOINT VENTURES
---------------------------------------------------------------------------

 - DEBT/PROPERTY & INVESTMENTS 50% (2000 - 52%).

 - DEBT/EQUITY 107% (2000 - 122%).
   The amount of debt guaranteed by British Land is £33 million. 

 - 83% of the property portfolio was bought within the last ten years.

 - ANNUALISED NET RENTS £492.9 million (2000 - £462.5 million) of which share 
   of joint venture net rents £97 million.

 - WEIGHTED AVERAGE LEASE LENGTH 19 years (2000 - 19.9 years).
 - CURRENT NET YIELD on the portfolio is 5.9% (2000 - 5.9%).

 - 83.8% of rental income is secured until 31 March 2011

 - REVERSIONARY NET YIELD is 7.3% (2000 - 7.1%) on current rental values.  
   Reversionary income over £113 million.

 - PROPERTY PURCHASES £132.9 million (British Land portfolio).       
       
 - PROPERTY SALES in year £439.5 million (British Land portfolio).

 - DEVELOPMENT EXPENDITURE £112.5 million (British Land portfolio).
   (Separate reports on each of the joint ventures see below).

PROPERTY VALUATION (BRITISH LAND PORTFOLIO INCLUDING SHARE OF JOINT VENTURES)
-----------------------------------------------------------------------------

 - After adjustment for purchases, properties awaiting development, sales and 
   other expenditures, the growth was 6.7% (2000 + 3.9%).

                                      2001       2000       
City offices                         +19.7%       +1.4%
West End offices                     +4.2%        +10.0%
Other offices                        +2.0%        +1.1%
                                     ------       ------
All offices                          +16.7%       +2.4%
                                     ======       ======
Shops                                -5.7%       +2.2%
Retail warehousing                   +2.2%       +8.4%
Supermarkets                         -1.1%       +2.3%
Shopping centres                     -0.7%       +8.3%
                                     ------      ------
All retail                           -1.0%       +5.9%
                                     ======      ======
Residential                           +9.9%       -
Industrial and distribution           +3.0%       +6.3%
Leisure and other                     +1.9%       +2.2%       


Use (percentage by value)              2001       2000
-------------------------             -----       -----
       
Offices:       
       City                           38.2%       35.5%
       West End                        5.2%        5.4%
       Other                           2.2%        2.5%
                                      ------      ------
       All offices                    45.6%       43.4%
       ------------                   ======      ======

Retail:
       Shops                           4.7%        5.7%
       Retail warehouses               6.3%        6.4%
       Supermarkets                   11.4%       12.2%
       Shopping centres               20.0%       21.6%
                                      ------      ------ 
       All retail                     42.4%       45.9%
                                      ======      ======

Industrial & Distribution:             1.0%        1.2%
Leisure and other:                     3.0%        4.2%
Development:                           6.4%        5.3%
Residential                            1.6%         -        
                                      ------      ------
Total:                                 100%        100%

Location                              2001       2000

London:
       City                           41.0%       38.7%
       West End                        7.0%        6.5%
       Greater London                  4.1%        4.5%
South East England:                    9.2%        8.7%
Wales & South West England:            4.5%        5.0%
Midlands & East Anglia:                7.5%        7.8%
North of England:                     21.4%       23.0%
Scotland & Northern Ireland:           3.5%        3.9%
Republic of Ireland:                   1.8%        1.9%
                                      ------       ------
Total:                                 100%        100%       


FINANCINGS
=============

£640 million in unsecured bilateral and syndicated revolving bank facilities.
£490 million in term bank loans for joint ventures.

DEVELOPMENT PROGRAMME
=====================

At 31 March 2001 the development programme (including joint ventures)
represented development costs of £1.64 billion and total prospective ERV of
£175 million, of which the Group's shares are £1.2 billion and £132 million
respectively.

Some 148,000 sq. m. in seven projects is currently under construction
representing committed costs of £305 million.  The Group's share of ERV
attributable to these projects is £25.6 million per annum.  The remaining
programme comprising some 596,000 sq. m. is developable over a period of five
to seven years. 

Of the projects included in the development programme as at 31 March 2000,
eight buildings (including six office units at Blythe Valley Park and a unit
for Asda at Dumbarton) comprising some 20,000 sq. m. in total have been
completed, representing construction costs of some £31.5 million and total ERV
of £3.4 million.  These buildings are no longer included within the
development programme figures.


CONTACTS

The British Land Company PLC
John Ritblat, Chairman                      020 7467 2831/2829
John Weston Smith, Finance Director         020 7467 2899

Finsbury Limited
Edward Orlebar       020 7251 3801
Faeth Finnemore      



BRITISH LAND'S CORPORATE STRATEGY

British Land's opportunistic but risk averse strategy seeks to achieve
long-term growth in shareholder value by:

    focusing primarily on leading, quality assets in the office, retail and   
    development areas, which provide exceptional long-term investments,

    creating a high quality, modern portfolio with growth potential, coupled  
    with covenant quality and a long lease profile,

    recycling capital and enhancing returns through acquiring assets which    
    offer the scope to add value through active management,

    maximising equity returns through innovative financing and joint ventures.

The key to the maximisation of returns is flexibility, both in terms of the
business organisation and financing to take advantage of shifts in the
property market.



Statement by the Chairman, Mr. John Ritblat
============================================

We are in the business of buying and developing properties which will add to
net asset value and thus total return.  We finance this expenditure cheaply
and limit our exposure to variable interest rates.  We control debt to be
roughly the same amount as our shareholders' funds, enabling us to deliver
double any increase in value which the portfolio achieves, a particularly
useful attribute in a time of low inflation.

Our strategy has proved its worth.  The rise in net assets this year is 15.6%
by 108p to 802p per share, and is based on a portfolio rise of 6.7%.

Pre-tax profits were £169.1 million, a record.  After the exceptional charge
in respect of the repurchase of the £300 million Unsecured 12.5% Bonds 2016
and 8 7/8% Bonds 2023, pre-tax profits were  £85.5 million.  We timed the
repurchase of these Bonds to a point when we were able to negotiate favourable
terms, which reduce the tax charge and will provide interest savings of some
£5 million per annum, pulling our weighted average cost of debt down to 6.6%. 


The pre-exceptional total return for the year was 19.3%.  The tax rate was
11.9%.

The Board is recommending a final dividend of 7.9p per share, an increase of
5.3%.
 
Our Approach
-------------

Our policy remains to buy first class modern property in good locations,
preferably with long leases to high quality tenants.

A profitable development programme is important to the Group.  These
developments often derive from investment purchases, Plantation Place,
Regent's Place and East Kilbride being typical examples of replacing older
properties or adding to existing investments.

In recent years we have used Joint Venturing to broaden our approach.  Through
joint ventures we secure properties off market, spread risk and procure
additional financing with like-minded top quality partners.  We earn fees as
we are able to manage ventures to satisfy both our own and our partners'
standards.  We now have 15 ventures with a total asset value of £3 billion,
financed to the extent of £1.6 billion with minimal recourse to British Land
or its partners.  Joint ventured developments include 201 Bishopsgate with
Railtrack, Cherrywood in Ireland with Dunloe Ewart and Dun Laoghaire Rathdown
County Council, and Blythe Valley Park with ProLogis in Solihull.  In 2001 we
have added new development ventures with Gazeley Properties and Countryside
Properties.

Our strategy is to anticipate financing needs.  We raise funding when and
where it is available rather than when it is required.  Instantly accessible
resources are essential to an active investor, for example in choosing the
moment to redeem funding when it is advantageous - as with the Unsecured
Bonds.

Our investment is always opportunistic - it is the nature of our business. 
Sellers are not waiting for us, nor is there a conveyor-belt of good
properties on a predetermined basis.  When, for instance, owners want to get
out - provided that their properties qualify under our criteria - we will be
buyers, and if the market is a bit queasy at the time, so much the better our
bargaining position.  Our major City holding, Broadgate, which has shown such
good growth this year, was purchased initially through corporate venturing in
1995/6.  In late 1998 and early 1999 we added to our holdings at a counter
cyclical point when the market was over-depressed by overseas worries, and we
were able to buy at a yield over 1% higher than the interest rate we pay on
the £1.54 billion securitisation we completed in May 1999.

With Meadowhall too we grasped the moment to buy when it arose.  It has shown
its quality as rents there have already risen from £45 million to over £60
million in the eighteen months we have owned it, and this during a severe
retail shakeout.

Opportunism is tempered by our aversion to risk, exemplified by
- long leases with good covenants
- a diversified, largely freehold and modern portfolio
- long finance and low exposure to variable interest rates
- wariness in starting on major developments speculatively.

You are halfway to making money if you avoid losing any.   

Scale - an advantage for British Land shareholders 
---------------------------------------------------

Size brings many advantages.  By owning a big portfolio British Land enjoys an
annualised rent roll of £493 million, enabling it to carry development sites
until it is opportune to start with no significant impact on profits.  The
Company's size makes it one of the limited number of contenders for mega
investments and developments.  Size also means that it can attract and engage
with major corporations, such as Tesco, GUS and Scottish & Newcastle, in joint
ventures which have proved extremely fruitful for British Land.  Its mix of
investment, primarily in offices and retail, spreads risk as these sectors
tend to perform disparately.

Operationally, with £10.5 billion of assets under management, there are
economies of scale in administrative costs.  Professional fees are
proportionally lower on large transactions.  A wide range of deals is offered
to British Land because of its size and activity, keeping it in daily touch
with the property market.  Over the last five years purchases amount to £2.5
billion and sales to £1.8 billion at a profit.  We do not hang on to
non-performing assets.    

Access to funding sources is much wider and cheaper for a large property
company, and our £2.1 billion unsecured bank book is all available on one
standard borrowing document.  Our purchasers know we can pay, our tenants know
their landlord has substance to care for the properties and alter them to meet
new needs.  And shareholders know that a significant market capitalisation
makes for a wider universe of investors and greater liquidity in the stock
market.   

Another advantage of size is access to the best corporate advice, and we
review and re-review all the possibilities as a matter of course.  For
example, given our covenants and lease terms, we can operate with a highly
leveraged balance sheet in order to optimise equity returns from portfolio
growth.  As such share buy-backs are not generally on our agenda.  However, if
at any time gearing were to become sub-optimal and we could foresee no value
creating investment opportunities, then of course we would consider share
buy-backs.  That is why we have shareholder approval in place to do so.

The Way Ahead
--------------

British Land earned its corn last year, emphasising once again that there is
no substitute for buying the right assets.  The rewards - rises in rents and
hence values - do not appear instantly but take time to come through in a
long-term business like property investment, and then are not on a wholly
predictable timescale.  

We have made money from residential property over many years and we will
continue to do so.  A recent  purchase was the 50% interest in London & Henley
Holdings Limited acquired in December 2000 for £18 million net, after
non-recourse debt.  Our half interest in this £170 million portfolio of 758
apartments, mostly in the Central London area, together with our other
residential interests, are showing a 9.9% rise in value.

We are confident that the acquisition of 22 Homebase stores with 865,000 sq ft
of retail space, announced on 9 April 2001, will be a good money-spinner too.

The excitements of e-commerce, overly expensive a year ago, now offer much
more realistic prospects for profit than before.  We have established
www.vicinitee.com, a community and building management website to serve
tenants at Broadgate and four other locations, and are offering it elsewhere. 
There are also encouraging indications of  sales  for vicinitee outside the
Group.  At Meadowhall we are currently installing a fibre optic loop, and we
are progressing a service centre for retailers and customers.  Our latest
website there gets 34,000 hits per day.

Non-core business involving new technologies and techniques will play an
increasing part, and we have established a management team to select and
pursue the most promising opportunities.  In this rapidly changing field the
hardest task is to avoid the latest fad without missing the bus.  We have
applied effort and ingenuity rather than significant capital to our new
economy initiatives, but we are already earning from them.  We continue to
believe that following fashion is much less important than adding profits,
value and service to tenants.     

In Broadgate Estates Limited we have our own homegrown building and estate 
management team, 87 strong, which now has built up its business so that more
than half of its revenue derives from managing  assets outside the  British
Land Group.  It has a sustained profit record.

The Outlook
-------------

Property's overall ability to deliver geared income and capital growth make it
a particularly attractive medium to long-term investment in the current
economic climate.  Our combination of prime City and West End of London
offices, coupled with our mainly  out-of-town retail assets, is well
positioned for market conditions.  The portfolio can be expected to provide
added growth in the future for shareholders, reinforced in this low
inflationary era by our financing structure.

Prosperity in our industry at large requires a stable regulatory climate,
meaning no interference in commercial lease terms and no more stealth stealing
through Stamp Duty, which has already deducted £350 million from shareholders'
value.
 
The Board
---------------

Last July we welcomed to the Board two new non-executive directors.  Derek
Higgs who is Chairman of Partnerships U.K. plc, a senior adviser to UBS
Warburg, a Non-Executive Director of Allied Irish Banks PLC, egg plc and Jones
Lang LaSalle Inc., has joined us and been appointed Deputy Chairman.  Lord
Burns is a Non-Executive Director of Legal & General Group plc and Pearson plc
and Chairman of the Lottery Commission.    

We suffered a grievous loss this February in the death of Shen Adam and we
extend our sympathy to his wife, Barbara, and their family.  Shen Adam was
Managing Director of Broadgate Properties Plc which we took over in 1996, and
so quickly made his mark with us that he was appointed to the British Land
Board in April 1998.  We miss him a lot.

My colleagues, our executives and staff have earned my thanks for their
successful efforts in a very active year.  They remain as vigorous as ever,
and more than most!  We have appointed eight new directors to the Board of The
British Land Corporation, our principal managing and operating company for the
whole Group, so that we are well set up for the future with a blend of
experience and plenty of candidates for promotion.  

I thank also the dedicated and sparky management teams at Broadgate and
Meadowhall, and our agents and professional advisers.


FINANCIAL REVIEW

Profit and Loss Account                                   
-------------------------      
                                                         2001         2000    
                                                          £m           £m


Gross rental income (including share of joint ventures)  472.9         443.7
                                                        ------        ------  
Net rental income                                        370.5          347.5
Share of operating profits of joint ventures              75.8           68.9
Other income                                              27.5            5.3
Administrative expenses                                  (28.6)         (26.7)
Profit before disposal of assets and interest            445.2          395.0
                     
Disposals of fixed assets and property trading            35.2           44.3
Net interest payable (before exceptional item)          (311.3)        (282.9)
                                                        ------         ------
Profit before exceptional item and taxation              169.1          156.4
                     
Exceptional item                                         (83.6)            -
Taxation                                                 (10.2)        (27.6)
                                                        ------         ------
Profit after taxation                                     75.3         128.8
                                                        ======         ======
               
Earnings per share before exceptional item                28.7p         24.8p
                                                        ======         ====== 


Gross rental income rose by 6.6% to £472.9 million in the year ended 31 March
2001, including the Group's share of joint ventures (2000 - £443.7 million).  

In the same period, profits before tax, and before the exceptional charge of
£83.6 million relating to the offer to repurchase the unsecured bonds,
increased by 8.1% to £169.1 million (2000 - £156.4 million).

Earnings per share, excluding the exceptional charge, rose by 15.7% to 28.7
pence per share (2000 - 24.8 pence).

Profits after tax, and post the exceptional charge were £75.3 million compared
to £128.8 million in the prior year.

Net Rental Income

The main contribution to profits is from Group net rents.  Net rental income
is up 6.6% in the year to £370.5 million (2000 - £347.5 million), largely due
to the impact of a full year of Meadowhall together with rent reviews at
Meadowhall, Broadgate and elsewhere.

Our joint ventures contributed £78.8 million of net rental income (2000 -
£71.0 million).  

The annualised net rental income including our share of joint ventures
increased by £30.4 million to £492.9 million at 31 March 2001 (2000 - £462.5
million).

This rental income is supported by very long leases to good covenants with
upward only rent reviews. The average unexpired lease term within the
portfolio is 19 years with 83.8% of the current rent roll secured until 31
March 2011.  At 31 March 2001, income quality has been measured using a Dun &
Bradstreet credit rating, showing 72% of our rent roll as derived from
negligible and low risk covenants with less than 1% from high risk covenants. 
 

The Group's direct property costs were reduced by £3.2 million to £17.6
million, representing only 4.5% of gross rents (2000 - £20.8 million, 5.6%),
reflecting non-recurring irrecoverable costs in 2000 relating to the
acquisition of Meadowhall.

Share of operating profits of joint ventures

The rise in joint venture's operating profits in 2001 to £75.8 million (2000 -
£68.9 million) was largely due to the impact of new joint ventures established
during the year.

Other income

Income derived from other sources contributed £27.5 million compared with £5.3
million in 2000.  The increase primarily reflects £15.3 million capital profit
net of costs negotiated as compensation from Standard Bank of South Africa and
related parties when Liberty International PLC purchased the 29.7% stake for a
higher price.

Disposals of fixed assets and property trading

The Group had another active year in terms of disposals of property and other
assets, realising substantial gains in the year of £35.2 million. This
compares to an exceptional contribution of £44.3 million from property sales
in the prior year.  

Portfolio activity has continued with profits of £14.2 million achieved from
trading and investment property sales, including our share of joint ventures. 
The main contributors were the disposal of the four City properties to the BL
West joint venture and from disposals by BL Universal. 

The Group also disposed of its stake in Selfridges, realising a profit of
£14.6 million.  

Interest

Net interest costs including share of joint ventures rose from £282.9 million
in 2000 to £311.3 million.  

Group net interest payable increased by 6.7% to £249.6 million (2000 - £234.0
million) which is largely due to a full year's effect of the acquisition of
Meadowhall.  Interest capitalised on developments was minimal at £4.0 million
(2000 - £1.4 million).

The core recurring interest cover of 1.5 times group net rents to group net
interest was at the same level as 2000.

Share of joint ventures net interest payable was £61.7 million compared to
£48.9 million in 2000.  This reflects new external borrowings raised by joint
ventures recently established, which are largely without recourse to British
Land or its partners.

Tax

The tax charge for the year is £10.2 million, an effective rate of 11.9% (2000
- £27.6 million, a rate of 17.6%), which is achieved by the availability of
capital allowances, prior year items, and the exceptional charge.

Based upon the latest property valuation, there is an estimated potential
capital gains tax liability of £630 million.

Dividends

The Directors propose a final dividend of 7.9 pence per share, making a total
dividend of 11.5 pence per share in the year, an increase of 5.5%.



Balance Sheet
-----------------

                                                      2001           2000
                                                       £m             £m 
                                                    ------          ------  
 
Group properties                                    7,334.0         6,971.2
Investments in joint ventures                         731.8           590.3
Other investments                                      73.7           150.4
Net debt                                           (3,716.8)       (3,762.3)
Other net current liabilities                        (268.3)         (356.1)
                                                     ------          ------ 
Net assets                                          4,154.4         3,593.5
                                                     =======        =======
                   
Net Asset Value                     
 - basic per share                                     802p            694p
 - fully diluted per share                             774p            681p
                                                     =======         ======= 
           
Mortgage ratio (debt/property & investments)            46%             49%
Debt/equity ratio                                       89%            105%
                                                     =======         ======= 

The above include the external valuation surplus on development and trading
properties.


Net Assets

In 2001, net asset value rose by 15.6% to £4,154.4 million compared with
£3,593.5 million at 31 March 2000.  This rise was largely due to the
revaluation of the property portfolio, which increased by £545.1 million,
reflecting an overall rise of 6.7% during the year.  Retained profits were
£15.7 million, after the £74.6 million exceptional charge post tax. 

As a consequence, net assets per share increased from 694 pence to 802 pence
per share.  On a fully diluted basis the increase was 13.7% from 681 pence to
774 pence per share.    

The total return was 17.2%, and excluding the exceptional charge was 19.3%
(2000 - 11.9%).

Group Properties

The value of British Land's properties is now £7,334.0 million (2000 -
£6,971.2 million).  During the year, £132.9 million was spent on over 10
investment acquisitions and £112.5 million was incurred on the development
programme.  In the same period, sales of around 28 properties were achieved
realising aggregate total proceeds of £439.5 million.

Investments in Joint Ventures

Net investment in joint ventures, increased by £141.5 million to £731.8
million at the year end (2000 - £590.3 million).  During the year, three new
joint ventures have been established, and we now have 15 joint ventures and
partnerships owning a total share of £1,525.9 million of properties. 
Including our partners' share of joint ventures, total assets under management
are £10.5 billion.

Other Investments

The fall in other investments was due to the disposal of Selfridges shares for
£65.4 million, realising a profit of £14.6 million.  

Net Debt

Net debt of £3,716.8 million at the year end was marginally lower than at the
end of 2000 of £3,762.3 million.  The mortgage ratio declined to 46% at 31
March 2001 (2000 - 49%) due largely to the revaluation surplus.  At 31 March
2001 the market values of net debt were £232.0 million more than their book
values. This compares to £178.8 million last year, and reflects the underlying
fall in interest rates over the year.  After notional tax relief of 30%, the
adjustment to net assets would be 31.4 pence per share (2000 - 24.2 pence).

Two new unsecured bank syndications were achieved during the year, which
together with new bilateral bank facilities provide an additional £640 million
of committed undrawn facilities for the Group.  

Our share of joint venture net debt at 31 March 2001 is £727.0 million, which
is largely without recourse to British Land.  

Outlook

In terms of future prospects, the key drivers of growth in profits, cash flows
and net asset value will be rent reversions on review or re-let, and new
developments.  There has been significant rental value growth during the year,
increasing the reversionary potential from the portfolio to £112.7 million
from £90.0 million in 2000.  The expanded development programme similarly
offers strong growth potential for rental income with an estimated rental
value of £131.8 million per annum in aggregate when complete

A feature of the results was the further reduction in the weighted average
interest rate to 6.6% currently from 7.05% in 2000 and 7.3% in 1999.  This
reflects the successful redemption of two higher interest bearing bonds, which
lower the on-going interest charge.  The securitisation of the Sainsbury
supermarkets is expected marginally to increase the current rate.

Financing policy and financial risk management

The Group finances its activities with a mixture of equity, public and private
debt issues, securitisations, convertible bonds and bank borrowings.  Through
a balance of debt and equity finance, together with a wide variety of debt
sources, the Group minimises its cost of capital.  Most joint ventures have
their own financing, details of which are provided in the report on each joint
venture.

The Group's financing policy is to leverage equity returns through strategic
gearing.  The mortgage ratio of debt to assets, the relevant gearing measure,
is maintained at or around 50% subject to the Board's view of the market, the
future growth prospects of the property portfolio and recurring cash flows.

The Group's income principally derives from rents secured on long leases,
which are subject to upward only review.  The Group manages downside risk by
controlling its recurring interest cover and available liquidity against
current and projected levels of gearing.  

At 31 March 2001, the Group had gross debt of £3,811.0 million and cash of
£94.2 million, giving net debt of £3,716.8 million, compared with £3,762.3
million at the end of 2000. 
 
Objectives 

The aim of British Land's liability management is to fund the Group
appropriately to service its constantly evolving business strategy and needs
from time to time.  

The principal objectives are to ensure that:

 -  Significant committed undrawn facilities are available to support current
and future business requirements.

 - The Group's debt is supported by recurring, committed income.

 - The Group's cost of capital is minimised.

Liability Management

Liability management is not a profit centre and no speculative transactions
are undertaken.  The Group's debt and derivative positions are continuously
reviewed in combination with constant updating of information on likely and
potential transactions.

The Group maintains a balance between longer term (over ten years) and shorter
term (under ten years) financing.  The latter provide flexibility of repayment
at no penalty.  Acquisitions are often funded initially by shorter term
revolving credit facilities and then refinanced with longer term funding when
market conditions are favourable.  

Short term financing is principally raised through bilateral and syndicated
revolving bank facilities, which can be repaid at will and redrawn again when
the need arises.  All bank facilities are unsecured and on standard terms to
maintain operational flexibility.  85% of the group's borrowings are on an
unsecured basis at 31 March 2001.

Medium to longer term financing comprises public and private bond issues and
securitisations.  British Land's property portfolio is well placed to take
advantage of new asset specific and cash flow borrowing financing structures. 


Funding risk is spread by using a range of banks and a variety of sources of
finance.  The maturity profile of debt is managed by spreading the repayment
dates and extending and expanding bank facility terms. 

Weighted average debt maturity at 31 March 2001 is 17.8 years.  Less than 8%
of gross debt matures in the next twelve months and some 55% of gross debt
falls due for repayment in more than ten years.
 
The Group has lowered its weighted average cost of debt to 6.9% at 31 March
2001 which has since been further reduced to 6.6%, following the repurchase of
the two unsecured bonds. This compares with 7.05% in 2000 and 7.3% in 1999.   


Interest Rate Management

The Group borrows principally in Sterling at both fixed and floating rates of
interest, then uses derivatives to generate the desired interest rate profile
and manage the Group's exposure to interest rate fluctuations.  

Under normal circumstances, the Group maintains around 85% of debt (subject to
a 5% tolerance) at fixed rates to establish certainty over long term cash
flows.  The time horizon for this policy is a rolling 3-5 year view.  

At 31 March 2001, 83% of net debt is at fixed rates, 6% is capped and 11% is
at variable rates.  

In order to achieve the Group's objectives, the use of derivatives is managed
and reviewed by the Board of British Land Financing Limited and its Derivative
Sub-Committee, which includes three executive directors.  

The proportion of debt held at variable interest rates is reviewed as new
transactions (whether corporate, direct property or financing) emerge, to
gauge their likely impact on the overall mix.  Paying off redundant
derivatives can be expensive (or profitable), as can being unprotected against
rising interest rates.

The Group's exposure to each swap counterparty is monitored on a regular
basis, including an update of individual credit ratings.

Foreign Currency Management

To manage the impact of foreign exchange movements, the Group borrows in
currencies other than Sterling, principally Irish punts, as well as using
currency swaps, in order to match foreign currency assets with foreign
currency liabilities.  

On occasion, the Group borrows in freely available currencies other than
Sterling when attractive terms are available to do so.  The Group hedges its
foreign currency risk on such borrowings through derivatives.
 
The Group has no material unhedged net assets or liabilities denominated in
foreign currencies. 

Liquidity and cash management

Revolving bank facilities lubricate the Group's financing.  Undrawn committed
facilities at the year end totalled £1,228.7 million and available cash was
£94.2 million.

In addition to maintaining a high level of undrawn facilities, new financing
structures such as securitisations are employed.  The property portfolio is
stringently reviewed to identify appropriate properties for sale, with a view
to converting non-cash assets into cash if required.  Commitment to investment
or development expenditure can be restricted to maintain a prudent level of
liquidity.

Cash levels are monitored to ensure that the right level of resources is
available to meet the Group's operational requirements.  Deposits are placed
having regard to the standing of the counterparty and optimising the rate of
return.

Profit and loss account and balance sheet management

The Group monitors the current and projected financial position using several
key internally generated reports: cash flow, borrowing, debt maturity and
derivatives schedules.  The Group also undertakes sensitivity analysis to
assess the impact of proposed transactions and movement in interest rates on
the key balance sheet, liquidity and profitability ratios.  

At the Group's option, the £146.6 million 6% Irredeemable Convertible Bond can
be converted into preference shares, augmenting equity.  These preference
shares can also be switched back to Bonds.


PROPERTY REVIEW

Valuation

The valuation of all properties in the British Land portfolio and situated in
the United Kingdom (but excluding Tesco British Land Property Partnership and
Tesco BL Holdings) was undertaken by Chartered Surveyors, Weatherall Green and
Smith.  An extract from their certificate appears below.  They have also
produced separate certificates in respect of each of the joint ventures valued
by them. 

The meaningful increases in the rental values has resulted in our properties
in the City and West End of London increasing in value by 19.7% and 4.2%
respectively.  Values of other office properties saw more modest increases in
value of 2.0%.

The performance of the Retail portfolio has been mixed.  Values of the retail
warehouse investments have improved by 2.2%, values of the high street
properties have fallen by 5.7%, and shopping centres have fallen by 0.7%.  Our
supermarket portfolio has fallen by 1.1%.  This valuation outcome reflects how
property investors have seen what has been a very difficult year for many
retailers.

The values of our Leisure and similar properties increased by 1.9% and those
in the residential sector increased by 9.9%.

Extract from Weatherall Green & Smith valuation certificate

'The Company's holdings have moved again towards higher quality, larger lot
sizes with scope for adding meaningful value and, with the stronger covenant
of such occupiers, the ability to create value by more innovative financing.

The general economic environment has remained benign although, particularly in
the period following the valuation date, concerns about economic slowdown
emanating from the U.S. have become more prevalent.  The U.K. property
investment market has remained broadly stable, returns comfortably exceeding
those achieved from either gilts or equities.

In accordance with RICS 'Red Book' guidance we continue to report valuation
figures calculated net of stamp duty and the usual purchase costs.  These
amount to a total of about £350 million, of which approximately £167 million
is in respect of stamp duty alone at Broadgate and Meadowhall.  In practice,
as stamp rates have risen such property assets are now more typically
transferred within a corporate structure.

We have also carried out a number of discounted cash-flow appraisals.  Our
view is that an overall discount rate of about 8.50% is appropriate,
reflecting the required return of an investor from such a portfolio. 
Individually assessed rental growth rates and exit yields have been applied to
all investment properties within the portfolio.  The results of this approach
support our traditional investment approach.  Whilst the results are dependent
upon the various parameters adopted, what is evident from this exercise is the
remarkable solidity and longevity of the company's income stream; even some
seventeen years into the cash-flow around 67% of rents remain well secured.

City of London and Mid-Town

With continuing restricted supply the City of London office rental market has
finally begun to show steep rental increases.  Within the Broadgate complex
itself rent reviews with effective dates some three months prior to the
valuation date have been settled at figures in excess of £54 per sq ft.  This
compares with our typical rental value as at the previous valuation in
September 2000 of £48.50 per sq ft.

By the valuation date, rents in excess of £60 per sq ft had been achieved and
many of these relate to properties which are inferior to Broadgate, in terms
of floor plate, day lighting, prominence and location.

The Broadgate reviews already settled were in line with the best achieved
elsewhere at that time.  It is therefore logical that the surveyors acting on
the more recent reviews, which remain outstanding at later effective dates,
will be seeking to improve upon these levels.  We have, however, adopted more
cautious estimates in our valuation.

Whilst the majority of straightforward investment sales within the City have
continued to reflect the returns sought by debt-financed purchases, there have
been some institutional purchases.  More importantly we consider that the
scale of potential returns to be made from the Broadgate Estate would generate
substantial interest from investors worldwide.  Such returns would be enhanced
by the more aggressive margins that could be negotiated with debt providers,
given the scale and security of the underlying income stream.  Aside from the
profit from the in-built reversionary potential of some £30 million per annum
within the next four years, at present rental values, there are numerous other
opportunities.  They include re-negotiation of lease terms, taking back space
to refurbish and in the longer term prospects for substantially increasing the
floor space across this 30 acre site.

The West End of London

Although rentals for the upper end of the spectrum have stabilised, levels for
more affordable space continue to increase.

It appears that the majority of tenants consider that rentals between 50% and
80% of prime levels to be acceptable.  This provides good prospects for
Regent's Place, offering top quality accommodation in a prestigious immediate
environment yet, still offering substantial discounts from peak rental levels.
 Other West End holdings with scope for refurbishment or redevelopment are
also well placed to benefit from this.

Longer term, although there may be competition from areas such as Paddington,
we believe the more diverse tenant base of the West End, combined with the
restricted supply of sizeable amounts of new Grade A quality space, bode well
for future rental and capital performance.  The desire to hold West End
property has been amply demonstrated by the very aggressive bidding which took
place for the Berkeley Square Estate recently.

Shopping Centres, Retail and Retail Warehousing

Retailers in the U.K. are currently reappraising their market as consumer
preferences have polarised between 'value' and 'niche' purchases.  As less
responsive or well-managed retailers have failed to react quickly enough there
have been a number of casualties.  The effect of this has been twofold. 
Retail property investors' sentiment towards retail property investments has
been adversely affected.  Secondly, the availability of accommodation created
by vacating retailers, for example C&A, has allowed the more successful
retailers to expand without pressure on rentals.

As soon as retailers have completed this period of readjustment, a new group
of more efficient traders will continue to expand, resulting in the return of
rental growth.

Conversely, there is more encouraging activity in the out of town sector where
we consider the long term growth prospects to be good.  Investment demand for
parks or clusters where 'active management' can be more readily pursued,
remains as strong as ever and there has been an improvement in the market for
solus units, especially those which benefit from open A1 planning consents.

The number of shopping centre transactions has declined since our last
valuation.  However, levels of value have remained broadly constant.  Again,
the majority of the activity has been at the more secondary level.

Leisure

Little has changed.  A number of properties within the Public House portfolio
have been disposed in excess of our previous valuation figures.  The Great
Eastern Hotel, Broadgate, has shown higher levels of trading than previously
anticipated following its start up period, with a corresponding improvement in
capital value.

Department Stores

Latent value remains based upon the relatively low capital prices per sq ft. 
Rents achieved amongst the larger units at Meadowhall, for example, suggest
there is scope for improvement in such rental values.

The House of Fraser Joint Venture offers relatively generous reversionary
yields based upon the guaranteed minimum reversions which in due course may
offer profitable re-financing opportunities.

Supermarkets

There have been a number of encouraging investment sales including an Asda in
the West Midlands at a yield below 6 3/4%.  These reflect demand for long
leases, good covenant strength combined with scope for exploiting the secure
income and underlying trading potential of the sites in a variety of ways.

Provincial Offices

Yields have remained broadly static.  Cities such as Manchester still have
essentially local occupiers, although take up, for example, at Two Moorfields,
Liverpool, has been favourable.  In the Western corridor, after a period of
rapid rental growth, there is now a lessening in those technology, media and
telecoms occupiers' growth rates.  This will lead to rents stabilising for the
time being.

Industrial

Activity, and indeed holdings, are generally concentrated in Greater London. 
Long term real rental growth is most sustainable here, with a restricted land
supply coupled with the Government's preference in planning terms for
redevelopment of 'brown field' sites.  Elsewhere, real growth properties must
be constrained by the potential for new supply, although larger distribution
units close to major transport links still find favour with institutional
buyers, offering sound long term covenant income combined with possible rental
movement, or favourable yield shift in the future.'

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