Interim Results - Part 1

British Land Co PLC
27 November 2002



                                                                27 November 2002

                          PRELIMINARY ANNOUNCEMENT BY
                          THE BRITISH LAND COMPANY PLC

            INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2002

HIGHLIGHTS

•    Net Rents up 7.9% to £249.2 million, including share of joint ventures
     (2001: £230.9 million).

•    Net Asset Value per share adjusted and fully diluted increased 2.4% to 822 
     pence* (March 2002: 803 pence).

•    Portfolio Valuation up 0.15% (on a like for like basis) to £9.376 billion.

•    Profits before tax of £65.3 million (2001: £80 million).
     There were no property trading profits in the half-year.  Underlying 
     profits are up 7.4% to £62.2 million.

•    Earnings per share adjusted and fully diluted are 10.5 pence 
     (2001: 12.6 pence).

•    Interim Dividend up 7.9% to 4.1 pence (2001: 3.8 pence) per share.

•    Continued Portfolio Management with profitable sales of £350 million, 
     purchases of £74 million and development and other capital expenditure of 
     £146 million, including the joint ventures.

* NAV adjusted to exclude the capital allowance effects of FRS 19.


New Non-Executive Directors

The Board is very pleased to welcome two new non-executive directors, who have
accepted invitations to join us with effect from 1 January 2003.

Christopher Gibson-Smith, aged 57, is Chairman of National Air Traffic Services
and a non-executive director of Lloyds TSB Bank plc.  Formerly he was Group
Managing Director of BP plc.

David Michels, aged 55, is Chief Executive of Hilton Group plc.  He is a
non-executive director of Hilton Hotels Corporation and, until recently, was a
non-executive director of Arcadia Group plc.

CONTACTS

The British Land Company PLC
John Ritblat, Chairman                       ) 020 7467 2831/2829
Graham Roberts, Finance Director             ) 020 7467 2948

Finsbury Limited
Edward Orlebar       ) 020 7251 3801
Faeth Birch          )



           EXTRACTS FROM THE STATEMENT BY THE CHAIRMAN, JOHN RITBLAT

"This is a time for especially intensive management and since 31 March, as part
of our continual review and selection processes, we have sold (including joint
ventures) 69 properties, realising £350 million.  It is an encouraging
reflection of the portfolio's strength that these sales comfortably exceeded the
31 March valuation of these properties, and that a good few of these sales were
recent.  The valuation process, carried out by external professional valuers, is
cross-checked by the result of these sales."

"As our sales figures show, we have been able to make plenty of profitable
disposals and we have also continued to attract tenants, particularly in retail.
The rent review process at Meadowhall has now increased the rent roll to £65.3
million per annum with further reviews to come in the near term and is predicted
to lift rents to £68 million."

"In uncertain times, well-selected property as an asset class continues to offer
a relative haven, combined with an attractive income, when compared with other
types of investment.  Good locations do not change rapidly: strong tenants pay
their rents: long lease terms ride the business cycle.  British Land offers also
diversity, which more than offsets the decline in some sectors of the market
with rises elsewhere.  As a large company, we can carry incipient developments
until prospects for them improve.  Meanwhile there are always opportunities for
management initiatives in squeezing the best from our buildings and from hunting
out new transactions."


                  British Land's Corporate Strategy

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

•         focusing on prime assets in the office and retail sectors;

•         creating exceptional long-term investments with strong covenants, long
          lease profiles and growth potential;

•         enhancing property returns through active management and development;
          and

•         maximising equity returns through optimal financing and joint 
          ventures.

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



PORTFOLIO HIGHLIGHTS

Portfolio Valuation by Use             Group         JVs+        Total    Portfolio      Change*
                                          £m           £m           £m            %            %

Offices
City                                 2,950.1        249.1      3,199.2         34.1         -3.6
West End                               617.8         39.7        657.5          7.0          1.4
Business parks & Provincial            116.8         74.0        190.8          2.1         -0.8

All offices                          3,684.7        362.8      4,047.5         43.2         -2.7


Retail

Shopping centres                     1,637.7        108.1      1,745.8         18.6          0.9
Supermarkets                           953.3        191.3      1,144.6         12.2          4.6
Retail warehouses                      688.0        310.2        998.2         10.7          4.8
Shops                                   88.2        289.1        377.3          4.0          4.7

All retail                           3,367.2        898.7      4,265.9         45.5          3.1

Industrial and distribution            133.5         46.0        179.5          1.9          4.3
Residential                             34.9         83.5        118.4          1.3          7.6
Leisure                                 74.7         87.2        161.9          1.7          3.6
Development                            516.0         86.4        602.4          6.4         -4.1

Total                                7,811.0      1,564.6      9,375.6        100.0         0.15


+ British Land's share

* after adjustment for purchases, properties awaiting development, sales and
  other expenditure.


Total funds under British Land property management, including partners' shares
of joint ventures, now £11 billion.


Portfolio Valuation by Location                                                        Portfolio
                                                                           £m                  %


London:

City                                                                  3,644.0               38.9
West End                                                                713.1                7.6
Greater London                                                          471.3                5.0

Total London                                                          4,828.4               51.5

South East England                                                      859.8                9.2

Wales & South West England                                              479.6                5.1

Midlands & East Anglia                                                  741.2                7.9
North of England                                                      2,028.9               21.6
Scotland & Northern Ireland                                             328.2                3.5
Republic of Ireland                                                     109.5                1.2


Total                                                                 9,375.6              100.0


Location: 60.7% of the portfolio is located in London and South East England.



Long Lease Profile                                     Weighted average         Vacancy rate
                                                      lease term, years
                                                                                           %

(excluding residential+ & developments)

                                         to expiry       to first break

Offices

City                                          14.7                 11.3                  0.6
West End                                      12.4                 10.3                  9.7
Business parks & Provincial                   13.1                  8.8                  0.3

All offices                                   14.3                 11.0                  2.0



Retail

Shopping centres                              17.3                 17.1                  3.8
Supermarkets                                  21.9                 21.9                  0.0
Retail warehouses                             17.8                 17.6                  1.8
Shops                                         25.8                 23.1                  0.5

All retail                                    20.0                 19.5                  2.1


Industrial and distribution                   16.8                 15.9                  1.8
Leisure                                       27.4                  26.8                 0.5


Total                                         17.5                  15.7                2.0*


+ predominantly let on short leases



*Effective vacancy rate: 1.3% where tenants are being sought (0.5% under offer
and 0.2% taken back under asset management).  For West End offices, 9.2% vacancy
rate arises on practical completion of the development at 350 Euston Road, NW1.




Security of Income                                     % of income remaining at:
(from 30 Sept 2002)
                                                      expiry         first break

1 year                                                  98.6                97.2

2 years                                                 97.7                95.0

3 years                                                 96.2                92.8

4 years                                                 95.3                91.6

5 years                                                 94.5                87.3

10 years                                                82.3                69.6

15 years                                                62.2                54.6

20 years                                                33.0                29.8

includes joint ventures

assumes no re-letting after first break or expiry




Tenant Risk Profile:                             British Land              TICCS
Dun & Bradstreet Stress Score                               %       Benchmark %*



Rental income rated:

Negligible, low and low / medium risk                    84.5               76.2

Medium / high risk                                       10.2               16.0
High risk                                                 2.3                4.1
Unmatched                                                 3.0                3.7


Total                                                   100.0              100.0

* Tenant Income Credit rating Covenant Strength (IPD)



                                  Annualised Net      Reversionary      Current     Reversionary
Current Reversions                      Rents £m            income    net yield        net yield
                                                      (5 years) £m            %      (5 years) %
(excluding developments)

Offices
City                                       194.1              20.0          6.1              6.7
West End                                    30.6              17.1          4.7              7.3
Business parks & Provincial                 17.2               0.4          9.0              9.2

All offices                                241.9              37.5          6.0              6.9



Retail

Shopping centres                            97.3              15.5          5.6              6.5
Supermarkets                                75.9               1.2          6.6              6.7
Retail warehouses                           59.8              11.7          6.0              7.2
Shops                                       23.6               4.6          6.2              7.5

All retail                                 256.6              33.0          6.0              6.8



Industrial and distribution                  8.9               4.3          5.0              7.4
Residential                                  7.2               0.2          6.1              6.2

Leisure                                     11.4               0.7          7.1              7.5



Total                                      526.0              75.7          6.0              6.9


Reversionary income: of the £75.7 million per annum expected to be realised
within 5 years, £13.9 million per annum is already contracted.  Further
reversions at dates after 5 years account for an additional £5.5 million per
annum.








Development Programme                Size          Estimated       Construction          Cost to
                                                rental value        cost (est.)         complete
                                     sq m                 £m                 £m               £m

Committed projects                135,230               53.5              394.7            269.8

Development prospects             416,340              100.7              671.3            618.1



Total                             551,570              154.2            1,066.0            887.9



Pre-let: 50% by area of committed projects is pre-let/sold at 30 September 2002,
representing £21.2 million rent per annum.




FINANCIAL HIGHLIGHTS


Profit and Loss Account                                    Six months to           Six months to
                                                       30 September 2002       30 September 2001

Net rental income                                                £249.2m                 £230.9m
Net rental income - Group                                        £200.1m                 £187.5m

Net interest payable                                             £164.8m                 £157.4m
Profits on property trading and
disposal of fixed assets                                           £3.1m                  £17.3m

Profit before taxation                                            £65.3m                  £80.0m
Tax charge                                                        £12.8m                  £16.7m

Adjusted diluted earnings per share                           10.5 pence              12.6 pence
Dividend per share                                             4.1 pence               3.8 pence





Balance Sheet                                            30 September 2002         31 March 2002

Total properties*                                                £9,375.6m             £9,300.3m

Adjusted:+
Net assets                                                       £4,362.0m             £4,320.8m
Net asset value per share (fully diluted)                             822p                  803p

Debt / equity ratio (Group)                                            91%                   89%
Mortgage ratio (debt / property & investments)                         46%                   46%

* Pre adjustments for UITF 28

+ Adjusted to include the external valuation surplus on development and trading
properties and to exclude the capital allowance effects of FRS 19



Total Return (fully diluted adjusted net asset value per share growth and
dividend) for the six months 2.9%.




                                                           30 September 2002      31 March 2002
Financing statistics (Group)


Net debt                                                             £3,967m            £3,840m
- Weighted average debt maturity                                  19.9 years         19.8 years
- Weighted average interest rate                                       6.50%              6.62%
- % of net debt at fixed / capped interest rates                         91%                95%
- % of debt ringfenced with no recourse to
  other Group companies/assets                                           71%                69%

Interest cover (net rents / net interest)                              1.54x              1.53x

Undrawn committed bank facilities, cash and deposits                 £1,482m            £2,046m



All figures include British Land's share of joint ventures unless stated as
Group.


                    STATEMENT BY THE CHAIRMAN, JOHN RITBLAT



British Land's long-term business model proved its mettle in the six months
ended 30 September 2002.  High quality properties in a diversified portfolio,
occupied by strong tenants on long leases, have safeguarded our committed cash
flow.  Gross rents, including our share of joint ventures, rose by £18.6 million
to £266 million, up 7.5%.  An efficient capital structure, coupled to a largely
fixed interest rate debt book, also ensures that the Company prospers in these
uncertain economic times.



This resilience in our property portfolio, together with the buy-back of the
£323 million 6.5% Convertible, have enabled fully diluted net assets per share
to rise by 2.4% to 822p per share.



Profits before tax for the half-year were £65 million.  At the last year-end we
stated that we expected to sustain a higher rate of growth of dividend, and at
the interim stage we are lifting the payout by 7.9% to 4.1p per share (2001:
3.8p).



This is a time for especially intensive management and since 31 March, as part
of our continual review and selection processes, we have sold (including joint
ventures) 69 properties, realising £350 million.  It is an encouraging
reflection of the portfolio's strength that these sales comfortably exceeded the
31 March valuation of these properties, and that a good few of these sales were
recent.  The valuation process, carried out by external professional valuers, is
cross-checked by the result of these sales.



A side benefit of our securitisations, and a further external validation of
tenant quality, is that three separate independent rating agencies, having
reviewed our tenancies at Broadgate, Meadowhall and the Sainsbury's superstores,
have assigned "AAA" status to £1,372 million of this debt, "AA" status to a
further £448 million and "A" status to another £842 million.



The valuation is overall up 0.15%.  Our retail holdings are up 3.1%, with our
supermarkets (up 4.6%) and retail warehouses (up 4.8%) performing particularly
well.  There is encouraging news on a recent supermarket rent review - £23.15
per sq ft has been achieved at Chiswick.  City offices are down 3.6%, but in the
West End, where Abbey National is in occupation and 350 Euston Road is now
part-let, our offices are up 1.4%.  Leisure, now largely pubs, is up 3.6% and I
must make special mention of our residential holdings which, with dedicated
specialist management, are up 7.6%.  It is still possible for a big property
company to make money, economically, on small units, if the judgments are sound.




Property purchases for British Land and the joint ventures involved three
properties and amounted to £74 million, while development and other capital
expenditures were £146 million.



We have tailored our immediate development programme to the current letting
climate.  In the half-year British Land and its joint ventures completed just
under half a million square feet of space at a cost of £29.5 million, already
95% let, yielding £5 million a year when fully let.  Committed projects in
course are primarily Plantation Place with a pre-let to Accenture, Centre West
at East Kilbride which is largely let or under offer, and 10 Exchange Square at
Broadgate, a 163,000 sq ft office building which has already attracted tenant
interest.  The current committed programme will provide 1,456,000 sq ft at a
cost of £402 million, of which £125 million has already been expended, with an
estimated rental value of £54.2 million.



Next stage projects, where planning consent has been obtained in almost every
case, can be activated as soon as we judge the moment right, and will provide
4.48 million sq ft and an estimated rent of £111 million.  Sites currently
non-earning make only a modest impact, with under £230 million of capital tied
up.



With a large diversified portfolio under management, we are able to take a broad
view of the property market.  As our sales figures show, we have been able to
make plenty of profitable disposals and we have also continued to attract
tenants, particularly in retail.  The rent review process at Meadowhall has now
increased the rent roll to £65.3 million per annum with further reviews to come
in the near term and is predicted to lift rents to £68 million.



Here I must point out a sea change in retail practice which is bringing us
higher income but to some extent eroding the traditional basis of Zone A rents
as the sole arbiter of performance.  Major retailers in all our shopping centres
now want much larger spaces than the traditional 20 ft frontage, 100 ft deep
standard units, and they are prepared to pay higher rents per sq ft on these
larger spaces.  At Meadowhall, through mezzanines and extensions we have
increased the Centre's size by 79,000 sq ft.  We have also lifted the average
rent from £40 when we bought the Centre to £51.70 per sq ft now.



We are offering the new Lease Code to prospective tenants but are finding only
subdued interest in the variants.  As ever, free market forces prevail - a
constant surprise to Government but not to those in the market.



Financing



The weighted average debt maturity has moved out to 20 years and the weighted
average interest rate is down again, as forecast, to 6.5% as a result of our
treasury initiatives.  91% of debt is fixed or capped as to interest rate.



During the half-year we bought back £323 million 6.5% Convertible Bonds 2007 at
par.  This repurchase removed the dilutive potential of an issue of 48.1 million
shares had conversion taken place, and lifted net assets fully diluted by 11p
per share, and also reduced interest costs by £5 million per annum.



We remain on the look-out for opportunities to buy back shares when it is
advantageous and when the cash demands of the business, particularly on the
development side, permit.  So far this year we have bought back 600,000 shares
at an average price of 430.5p per share.



I have referred before to the impact on property companies from the progressive
rises in Stamp Duty.  Without Stamp Duty, currently at 4% on the vast majority
of our portfolio, net assets would be £375 million higher, and net assets per
share would be up 72p.



Now there is a new "pincer movement" in prospect.  Impending adoption of current
international accounting standards would require movements in valuations to pass
through the profit and loss account, even though the gains and losses are
unrealised.  How this will help investors to assess a company's operations has
not been explained, as separate information on revaluations is already provided
in our Accounts.  Hot on the heels of this unhappy proposal, H.M. Treasury is
proposing significant corporation tax reforms which will adversely affect
property companies.



What a depressing pair of twins!



The Outlook



In uncertain times, well-selected property as an asset class continues to offer
a relative haven, combined with an attractive income, when compared with other
types of investment.  Good locations do not change rapidly: strong tenants pay
their rents: long lease terms ride the business cycle.  British Land offers also
diversity, which more than offsets the decline in some sectors of the market
with rises elsewhere.  As a large company, we can carry incipient developments
until prospects for them improve.  Meanwhile there are always opportunities for
management initiatives in squeezing the best from our buildings and from hunting
out new transactions.



The Board



The Board is very pleased to welcome two new non-executive directors, who have
accepted invitations to join us with effect from 1 January 2003.  Christopher
Gibson-Smith is Chairman of National Air Traffic Services and a non-executive
director of Lloyds TSB Bank plc.  Formerly he was Group Managing Director of BP
plc.  David Michels is Chief Executive of Hilton Group plc.  He is a
non-executive director of Hilton Hotels Corporation and, until recently, was a
non-executive director of Arcadia Group plc.


                                BUSINESS REVIEW



FINANCIAL REVIEW



Gross rental income for the six months to 30 September 2002, including our share
of joint ventures, rose by 7.5% (£18.6 million) to £266.2 million (2001: £247.6
million).  The joint ventures contributed £6.4 million of the increase, where
our share of gross rents grew to £53.3 million (2001: £46.9 million).



Group net rental income for the six months rose 6.7% to £200.1 million (2001:
£187.5 million), mainly as a result of £18.3 million of increased rents,
achieved from rent reviews and new lettings, including additional income from
Broadgate of £8.9 million, less reductions in rental income due mainly to
disposals.



British Land's share of joint venture operating profits rose 6.3% to £45.5
million (2001: £42.8 million) including a £7.0 million contribution from the BL
Davidson joint venture, which was acquired in September 2001.



Profit before tax is £65.3 million compared to £80.0 million. Profits for the 6
months to September 2001 included property trading profits of £6.3 million and a
dividend from our investment at that time in Haslemere N.V., of £4.8 million.
In addition, disposals above valuation in the current period were £3.1 million
compared to £11 million in 2001.  Before the Haslemere dividend and profits on
disposals, underlying profits increased by £4.3 million (7.4%).



The tax charge for the six months is £12.8 million, an effective rate of 19.6%
(2001: £16.7 million, 20.9%).  Adjusted diluted earnings per share were 10.5
pence (2001: 12.6 pence).



Adjusted diluted net assets per share rose since 31 March 2002 by 2.4% from 803
pence to 822 pence. Of this increase, the revaluation surplus contributed 1.8
pence, retained profits 5.7 pence, and share repurchases and the redemption of
the convertible bonds 11.9 pence.



Income and Finance



British Land is structured to provide shareholders with a low risk profile on
the two key elements of operating cash flow: net rental income and interest
payable.  In a cyclical property market with high transaction costs and low
liquidity, this structure delivers to shareholders a steady cash flow, to fund
the business through the peaks and troughs in the market, to provide a strong
balance sheet for investing and to fund dividends on a progressive basis.



Income



Current annualised net rents, including our share of joint ventures, amount to
£526 million.  This rental income is supported by long leases to good covenants
with regular upward only rent reviews.



•                     The average unexpired lease term within the portfolio is
17.5 years with 82% of the current rent roll remaining in place at 30 September
2012 (10 years).  Assuming break clauses are exercised at the earliest date this
average is still 15.7 years with 70% of the current rent roll remaining in place
in 10 years time.



•                     At 30 September 2002, income quality has been measured
using a Dun & Bradstreet credit rating, showing 84.5% of our rent roll is
derived from negligible, low and low/medium risk covenants with only 2.3% from
high risk covenants.



•                     Reversionary income from investment properties and rental
income from committed developments are currently estimated at a further £129.2
million within 5 years, of which £35.1 million is contracted through pre-lets or
the expiry of rent-free periods and minimum rental uplifts.



Finance



Approximately 50% of the investment property value is financed by debt.  The
structure of our debt has varied over time to reflect opportunities to refinance
more cheaply and effectively in the debt markets.  We currently have 71% of our
debt in securitisations, which are non-recourse to the rest of the Group.  The
financial risk management policy is to maintain approximately 85% of debt at
fixed rates.  In addition debt is taken out for the long term rather than the
short term, matching the underlying lease lengths.



As a result of these policies, we concentrate shareholders' economic exposure to
the property market and to our portfolio's performance and minimise exposure to
short to medium term interest rate movements.



At 30 September 2002, net debt is £3,967.1 million (March 2002: £3,840.4
million), of which securitised debt of £2,901.8 million is ringfenced with no
recourse to other Group companies or assets.  The mortgage ratio remains
unchanged at 46%.



The Group's weighted average interest cost is 6.5%, of which 91% is at fixed or
capped rates of interest, with a weighted average debt maturity of 19.9 years
(March 2002: 19.8 years).



At 30 September 2002 the market values of net debt and interest rate derivatives
were £511.6 million more than their book values.  The increase from March 2002
of £207.7 million reflects the significant downward shift in the Sterling yield
curve.



Cash and available committed bank facilities were £1.5 billion (March 2002: £2.0
billion).



Dividend



The Directors declare an interim dividend of 4.1 pence per share payable on 21
February 2003.  This represents an increase of 7.9% over the 2001 interim
dividend of 3.8 pence per share and is in line with our policy of progressive
dividend growth.



Cash flow



Profits after interest, tax and working capital movements, generated a positive
operating net cash flow for the six months ended 30 September 2002 of £20.3
million, compared to £31.0 million in 2001.



Property disposals by the Group and joint ventures realised cash of £73.1
million.  Advances to joint ventures, property acquisitions and development
expenditure absorbed £138.7 million.



Cash and existing bank facilities were used to fund the £323 million redemption
of the 6.5% Convertible Bond 2007.



Accounting Policies



There have been no Accounting Standard changes affecting the Group in this
period.



There are proposed changes to Accounting Standards in respect of employee costs
arising from recent external events: the fall in equity markets affecting
pension schemes and the controversy over accounting for share schemes.  In
respect to our pension scheme, which was fully funded at 31 March 2002, the
pension liabilities at that time were 0.6% of adjusted net assets as our
employee numbers and payroll are small.  In addition, share awards under the
current long-term incentive plan are already expensed through the profit and
loss account.




Conclusion



Our business has recurring long-term income committed from a blended portfolio
of low risk tenants in high quality properties, primarily in the office and
retail sectors.  The business is well financed for the long-term at 6.5% with
debt maturity on average at 19.9 years and with a high percentage (currently
91%) at fixed/capped rates.







PROPERTY REVIEW



Sales



As a result of our continuing portfolio management, since 31 March 2002 we have
been net disinvestors, taking the opportunity of a buoyant investment market.
During the six months, while we acquired properties for £74 million, we have
completed sales of £300 million and exchanged contracts for the sale of a
further £50 million, including joint ventures and involving 69 properties
(excluding residential units).  Total sales prices of £350 million exceeded the
relevant March 2002 Valuations.



Included among the disposals were:



•                     the BL Rank portfolio, comprising six bingo clubs, three
leisure parks, one cinema and three multi leisure centres at £109 million, which
concludes our sale programme from this joint venture and significantly reduces
our exposure to the leisure sector,



•                     residential property totalling some £36 million, mainly
from the London & Henley joint venture and our own portfolio, taking advantage
of the exceptional prices in Central London's residential market,



•                     26 retail units with total sales prices of £53 million,
predominantly in high street locations from both our own portfolio and that of
the BLU joint venture, to capitalise on a buoyant market for these investments,



•                     sales by BL Davidson of 3 retail parks totalling £43
million.



We have also completed the sale of 2 distribution units at Nursling, Southampton
of 29,730 sq m (320,000 sq ft) for £36.7 million, let to Tesco and Christian
Salvesen.  The price reflected a yield shift in favour of this sector, which
occurred despite the fact that rental growth forecasts are limited.



Since the half-year end, further sales completed included the 33,060 sq m
(356,000 sq ft) distribution unit at Thatcham for £38.5 million, where
construction has completed and the property pre-let to Scottish & Newcastle Plc.
  This sale created significant development surplus over cost.



Purchases



We continue to invest in the retail sector, in particular out of town retail
parks.  The Meadowbank Retail Park, Edinburgh, which totals 13,950 sq m (150,000
sq ft) and is anchored by a Sainsbury's Superstore of 4,050 sq m (43,800 sq ft)
was purchased in July 2002 for £31 million.  The average rent for the park is
£12.54 per sq ft, which is reversionary.



During the restructuring of Railtrack to form Network Rail, we took the
opportunity of buying out Railtrack Development Limited's 50% interest in the
joint venture that we had with them in respect of the 68,470 sq m (737,000 sq
ft) proposed development at 201 Bishopsgate, London EC2.  The raft over the
railway line had already been completed by the joint venture company, thus
eventual construction costs are limited to the structure above ground.



Property Asset Management



During the half-year we have negotiated 168 rent reviews and lease renewals,
resulting in an increase in rental income of £15.8 million per annum.  In
particular, 2 rent reviews involving a total of 46,000 sq m (490,000 sq ft)
office and ancillary space at Broadgate have been settled, resulting in
increases in rent of £6.7 million.



In the supermarket portfolio we have continued to progress with rent reviews;
all those due prior to March 2002 have been settled, resulting in significant
increases in passing rents.  Since September, we have agreed a rent review at a
record level of £23.15 per sq ft at Chiswick.  We have continued to meet the
supermarket operators' desire for increased trading floor areas by carrying out
four extensions, amounting to a total of 6,600 sq m (71,000 sq ft) and
generating additional rents of over £1 million per annum.



Voids in the portfolio represent a very low total of 2.0% by rental value; 0.5%
is under offer and 0.2% is the subject of asset management initiatives, so just
1.3% is vacant where tenants are being sought.



Reversionary income from the current investment portfolio is anticipated to
increase rents by £81.2 million per annum; of this £75.7 million is expected to
be achieved in the next 5 years, including £13.9 million already committed upon
the expiry of rent free periods and minimum rental uplifts.  Further income will
be generated from the development programme (commented on below) of which £21.2
million (British Land's share) is committed under pre-lets.


Further income

                                           Contracted    Not Contracted    Total
                                                   £m                £m       £m
Next 5 years:
Annualised net rents, 30 September 2002         526.0                      526.0
Reversions                                       13.9              61.8     75.7
Committed developments                           21.2              32.3     53.5

Total, within 5 years                           561.1              94.1    655.2

Reversions, after 5 years                                           5.5      5.5

Development prospects                                                      100.7

Total                                                                      761.4





Offices



Offices represent 43% of the total portfolio and of this, 95% is in Central
London.  Whereas it is clear that there is a fall off in demand for Central
London offices, in the current market this is not coupled with an excessive over
supply.  Vacancy overall is currently approaching 10% of City office space;
Grade A vacancies are approximately 4%.  While vacancy levels are expected to be
higher over the next 2 years as a result of new supply and release by tenants of
existing space, the new supply to the market is expected to reduce to minimal
levels by 2005.  Given average take-up continuing at existing (albeit low)
levels, by late 2005 the market should return to equilibrium and we can expect
rental growth.



Rental values have softened in the last six months.  However, our Central London
portfolio income has the benefit of long leases with committed income streams
from good covenants; the weighted average lease length of the office portfolio
is 14.3 years (11 years on the assumption that break options are exercised).




Retail



Retail represents 46% of the portfolio, 80% of this is out of town and 20% is in
town centres and shopping schemes.



Total UK retail sales continue to increase, currently at the rate of 5.1% per
annum in the year to October 2002.  This has shown through to an improvement in
rents, particularly out of town with its continued strong consumer preference
and limited supply, and where our investment is primarily focused.



Our department store portfolio is also performing well.  We have recently
completed a transaction with House of Fraser, whereby we paid some £8 million
for internal structural alteration and major fixtures and fittings as part of
their refurbishment programme of the Rackhams store in Birmingham, in return for
an increase in rental payment.



We have had considerable success in the Meadowhall Shopping Centre, where we
have enhanced the tenant mix with significant lettings of 930 sq m (10,000 sq
ft) to the Spanish fashion retailer, Zara and 3,160 sq m (34,000 sq ft) to
Sports Soccer, with fashion retailer USC moving into the vacated 810 sq m (8,700
sq ft) Sports Soccer unit.  Rents achieved on reviews and lettings have been in
line with our expectations and total income has increased by over £3 million per
annum.



Development



During the six months we have completed developments totalling 45,410 sq m
(488,800 sq ft), 95% being pre-let.  Significant completions were at Thatcham,
33,060 sq m (356,000 sq ft) pre-let to Scottish & Newcastle, and subsequently
sold, and 5,110 sq m (55,000 sq ft) at Enfield pre-let to MacFarlane Packaging.



Committed developments total 135,230 sq m (1,456,000 sq ft) of which 50% by area
is pre-let/sold.  Two projects in the City are under construction: 1 and 2
Plantation Place, 65,000 sq m (700,000 sq ft) and 10 Exchange Square
(Broadgate), 15,100 sq m (163,400 sq ft).  The new building of 18,600 sq m
(200,000 sq ft) at Regent's Place, 2/3 Triton Square pre-let to Abbey National,
was handed over in April 2002, let on a lease for 20 years.  At 350 Euston Road,
where 12,000 sq m (130,000 sq ft) offices has been recently completed, we have
let or put under offer 4,370 sq m (47,000 sq ft) and are in discussions with
further tenants.



Concerning development prospects, we have notification of resolutions to grant
planning consents for 11,730 sq m (126,000 sq ft) at Ludgate West and 49,630 sq
m (534,000 sq ft) at Lime Street, both in the City, and for 12,860 sq m (138,400
sq ft) at York House in the West End.



These projects, when committed, will continue our development strategy of adding
high quality assets and income to the investment portfolio.  However, we will
continue to review and undertake the development programme in controlled stages,
with construction commitments made either on pre-lets or on the basis of
anticipated market demand.






Controlled Development Programme



                                           Net Area         ERV    Construction        Cost to
As at 30 September 2002                        sq m          pa            cost       Complete

Completed       Total                        45,410       £5.0m           £29.5m             -
                British Land Share                        £3.2m           £19.9m             -

Committed       Total                       135,230      £54.2m          £401.6m       £276.3m
                British Land Share                       £53.5m          £394.7m       £269.8m
Development
prospects
                Total                       416,340     £110.5m          £750.6m       £693.7m
                British Land Share                      £100.7m          £671.3m       £618.1m


Total                                       551,570     £164.7m        £1,152.2m       £970.0m
British Land Share                                      £154.2m        £1,066.0m       £887.9m









Committed Projects, as at 30 September 2002




Project        Prime Use            Size         ERV       Cost *         PC +   Pre-lettings
                                    sq m                                (est.)   (sq m if part)

1 Plantation   Office             50,520      £27.9m      £205.3m      Q2 2004   Accenture
  Place                                                                          (34,840)
2 Plantation   Office             14,930       £8.6m       £56.4m      Q2 2004
  Place
Centre West,   Retail             26,760       £6.4m       £67.8m      Q1 2003   Tenants incl:
  East                                                                           Debenhams, Next,
  Kilbride                                                                       River Island
                                                                                 (14,520)
10 Exchange    Office             15,180       £8.8m       £53.2m      Q2 2004
   Square
Enfield        Distribution
(BL Gazeley)                                                                     Warburtons
Unit 7                            10,500       £0.7m        £7.7m      Q2 2003   (Forward sale)
Unit 6                             6,780       £0.6m        £4.1m      Q2 2003   Southern Syringe
Unit 8                             1,530       £0.1m        £0.9m      Q2 2003
Feltham        Distrib-
Phase 3        ution               8,460       £1.0m        £5.1m      Q3 2003
Cambridge
(BL Universal) Retail                570       £0.1m        £1.1m      Q4 2002   MultiYork

Total                            135,230      £54.2m      £401.6m                67,210

* Construction cost
+ Practical completion




Valuation



Valuation of all property in the British Land Portfolio and situated in the
United Kingdom (excluding Tesco British Land Property Partnership, Tesco BL
Holdings, London & Henley Holdings Limited and BL Davidson Limited which were
separately externally valued) was undertaken by Chartered Surveyors, ATIS REAL
Weatheralls, as at 30 September 2002.  Their commentary on the market at the
valuation date appears later in this report.



The Portfolio, including British Land's share of joint ventures was valued at
£9.376 billion.  On a like-for-like basis (after adjustment for purchases,
properties awaiting development, sales and other expenditure), the Portfolio
showed a small increase in value of 0.15% for the first six months.



While the office investments decreased in value by 2.7%, this is
counter-balanced by our retail portfolio which was up by 3.1%.  Retail warehouse
investments increased by 4.8%, shopping centres increased by 0.9%, supermarkets
and shops rose by 4.6% and 4.7% respectively.



Our interests in leisure and industrial/distribution also increased in value, by
3.6% and 4.3% respectively.  The residential investments, including our 50% in
the London & Henley joint venture, now total £118 million, showing a 7.6%
increase in value for the six months.



Strategy



The investment market for UK property continues overall to be strong, with
investment from UK corporates and institutions coupled with substantial
investment from overseas.  This has caused yields to harden, particularly for
long lease income flows.  The main drivers for this increased investment is the
weakness of the equities market coupled with low interest rates and low
inflation prospects.



We will continue to invest in quality properties, let to strong covenants on
good length leases, with the concentration being on the out of town retail
sector and Central London offices.  It is pleasing to be able to report that
this strategy has held up well; the improvement in the valuation of our retail
portfolio has more than outweighed the small decline in the Central London
office portfolio value, resulting in a modest overall portfolio uplift.



We will take advantage of market conditions within this overall strategy and
seek out opportunities where our asset management or development expertise can
achieve advances in capital value.





           ATIS REAL WEATHERALLS - COMMERCIAL PROPERTY MARKET SUMMARY



The comments below reflect our views as at 30 September 2002 and underlie our
approach to the valuation of the portfolio.



General



With stockmarket uncertainty and further interest rate reductions being factored
into many investors' considerations, commercial property has continued to
attract considerable funds.  Would-be investors range from institutional funds
to individuals, both cash and debt financed.  Consequently yields have hardened
across virtually the entire spectrum, particularly for properties offering long
term income streams from good covenants, as typically found in the British Land
portfolio.



Although some rental values are under pressure, the low returns elsewhere mean
that property yields are unlikely to rise whilst current conditions prevail.
Moreover, the impact of falling rental values on the capital value of British
Land's substantial holdings at Broadgate has been largely mitigated by the
generally long leases to strong covenants with upward only reviews.  Likewise
the Company's other significant Central London scheme at Regent's Place.



Across the Group, any adverse movements that have occurred in respect of offices
have been offset by retail increases.  Investor sentiment there is as keen as
ever and values are forecast to rise still further as anticipated rental growth
manifests itself.



Offices



In the City, reflecting more uncertain reversionary prospects, we have revised
the emphasis of our approach to the valuation of the Broadgate Estate from an
equivalent yield to a more initial yield led basis.  We factored in more
conservative reversions reflecting market sentiment, although firm evidence of a
rental decline was not widely available.



However, in terms of initial yields, sales within the City and the West End
suggest the investment market for well-let Central London offices is strong.
Recent transactions include 50 Stratton Street, sold at an initial yield of
5.65% and 111 Old Broad Street in the City at 6.03%.



City developments have typically been marked down in value.  This is as a
consequence of our assuming that development activity will be phased to coincide
with rental recovery.  Our demand and supply forecasts lead us to anticipate
that this will be in 2005.  Meanwhile our view is that the next couple of years
will be volatile in terms of rental movements.  History suggests that City
occupiers tend to revise their attitude very rapidly, with consequent increases
in rental values, as soon as optimism returns.



Equally strong investor sentiment in the West End was amply demonstrated prior
to our valuation by the sale of both phases of the Mayfair Place/Stratton Street
scheme.  Moreover, supply is constrained by the physical boundaries of the
traditional West End and more restrictive planning policies.



Again, although rental values have fallen, capital values have been maintained
due to the quality and length of the main leases at the Company's substantial
West End holding - Regent's Place.  Letting levels at 350 Euston Road have held
up well and, medium term, we consider state of the art accommodation, such as at
Regent's Place, will continue to appeal to a wider tenant base.



Whilst the Company's holdings in Provincial offices are not currently
significant, centres such as Birmingham have shown renewed confidence as
evidenced by the sale of 55 Colmore Row at 6.5%.



Retail



Retail Warehousing has outperformed virtually all other investment classes.
Nearly all locations still offer considerable scope for rental growth.  The
logistical benefits to retailers will continue to support this and restrictive
planning has served to enhance values.



A number of investment deals, including Hendersons' purchase of Kew Retail Park,
indicate that low initial yields do not deter investors.  The expectation is
that reversions, when they arrive, will often be in excess of current provable
levels.



The weight of money and covenant strength factors have also improved values for
supermarkets.  Funds have demonstrated their appetite for such investments which
also provide strong underlying residual values and profitable alternative retail
uses.  More recently demand from private investors has been even keener.  We are
aware of several transactions including the sale of a Waitrose store in Surrey
at just over 5.25% initial yield with many years before the next rent review.



Department stores have also benefited from covenant led yield improvements and
offer relatively cheap capital values per square foot.



Funds have returned in force to High Street shops but there are few investments
available. In some towns investors are now factoring rental growth into their
calculations where previously initial or very near reversionary yield was key.
Small lot sizes continue to attract aggressive bids from a range of private
investors.  Prime yields have moved in by around 25 basis points.



Retailers themselves still face mixed fortunes so underlying strength of
location and rent affordability remain key considerations.



Shopping Centre values have generally improved, in line with the High Street.
At the Company's Peacocks Centre, Woking, provable rentals have increased by
around 20%.  Progress continues at Centre West (adjoining the Plaza Centre at
East Kilbride) where 13 tenants have been secured so far including Next and
Debenhams, with a further 9 units already under offer.  At Meadowhall active
management intitiatives have continued, incorporating a number of strategic
tenant relocations within the centre.  Reversions and income have remained
broadly in line with expectations.



Other Sectors



Aside from the substantial Clifton Moor Estate in York, the Company's industrial
holdings are predominantly found within the BL Gazeley joint venture, where
activity has focused largely on distribution buildings in Greater London.  Here
significant profits have been generated from development activity.  Yields and
rents are both ahead of original expectations.



The Public Houses have also benefited from the yield covenant shift, especially
in the case of smaller lot sizes in the active private buyer auction market.
Where there are alternative uses that can be exploited, purchasers can easily
justify bids down to a 6% initial yield level, an adequate holding yield with
the initial cost amortising over the lease term, effectively providing a "free
option" in respect of any added value at the lease expiration.






ATIS REAL Weatheralls
Norfolk House
31 St James's Square
London   SW1Y 4JR


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