Announcement re: Rights Issue

RNS Number : 5645N

Land Securities Group Plc

19 February 2009

 



THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

19 February 2009 (Embargoed until 7.00a.m.)

Press Release 

LAND SECURITIES GROUP PLC

PROPOSED RIGHTS ISSUE TO RAISE NET PROCEEDS OF APPROXIMATELY £755.7 MILLION

The Board of Land Securities today announces a fully underwritten 5 for 8 Rights Issue at a price of 270 pence per share to raise net proceeds of approximately £755.7 million, through the issue of 290,773,925 New Ordinary Shares. The Rights Issue is subject to approval by shareholders at a General Meeting to be held on 9 March 2009.

The Rights Issue will:

• strengthen the Company's balance sheet 

• help protect against the downside 

• provide the Group flexibility to react quickly to pricing and timing opportunities  

Commenting, Francis Salway, Group Chief Executive said:

'We have a good track record of creating value for shareholders through the property cycle and have decided to seek further capital at this stage to ensure that the Company's balance sheet is appropriately structured. This will help protect the business against the downside risk of further falls in property values and thereafter position the business to exploit attractive market opportunities. At a time of raising fresh capital, the Board has determined that it would be prudent to reset its current dividend to a level that we believe is sustainable and provides the potential for future growth.'

Background to the Rights Issue

Land Securities identified the change in market conditions in 2007 and has since taken actions to protect shareholder value including: 

• the sale of over £3.4 billion of assets

• the deferral of potential development projects to reduce short-term capital expenditure requirements

• the arrangement of £1.7 billion of new debt facilities and extension of £0.8 billion of existing facilities

• the reduction of its cost base with a reduction in employee numbers of more than 10%

Focus on ensuring a sustainable and resilient business

Land Securities benefits from a diversified business model with high quality teams in the two largest sectors of the UK commercial property market: London offices and retail. Based on total announced shareholder returns (as reported by Datastream), Land Securities has performed well, relative to its main competitors, in recent financial periods. Land Securities has a well positioned asset portfolio across both development and investment properties. It also benefits from a resilient income stream owing to the long-term nature and diversity of its tenancy arrangements, with central government being its largest single tenant (accounting for 9% of the income of the Group as at 31 January 2009).

Reasons for the Rights Issue

Land Securities' objective is to navigate a prudent course through the current downturn and market volatility to avoid moving the Company into a more restrictive operating environment under its principal financing arrangements and to position itself to take advantage of future opportunities.  Land Securities has prioritised balance sheet management by, for example, its disposals of Trillium (excluding the Accor portfolio) and over £250 million of property assets in the last four months in order to strengthen its balance sheet and maintain resilience in the business.  Furthermore, the Company borrowed a further £1,130 million from its existing committed facilities to ensure cash availability as values continue to fall. However, Land Securities' aim is, when prudent to do so in light of market conditions, to return to a level of Loan to Value (or 'LTV') at which Land Securities' financing arrangements would allow greater access to the debt markets.  

Whilst the Company is maintaining a strong focus on the business actions which are within its control, a number of factors affecting the market in which Land Securities operates are beyond the Company's control. The pace of valuation decline has, in recent months, exceeded the pace at which assets can be sold to counteract the impact of falling values on the Group's balance sheet position, and this represents an ongoing risk. 

Benefits of the Rights Issue 

Given the current market conditions and the Group's existing financing arrangements, the Rights Issue will strengthen the Group's balance sheet and is expected to allow it to minimise the impact of the risk of prolonged falls in property values. Without mitigating this potential downside to the business, for example if the Company had decided not pursue this capital raising, it would not be possible for Land Securities to take advantage of the opportunities that are expected to arise.  Land Securities believes strongly in the need to be able to respond quickly to the turning point in the cycle, particularly in relation to the acquisition of assets and the commencement of development opportunities, and that flexibility on the timing of doing so is key to the creation of value. The Rights Issue will also strengthen Land Securities' prospects of accessing the debt markets.  

Land Securities therefore expects the principal benefits of the Rights Issue to be as summarised below:

• reducing the risk of entering a more restrictive operating environment under its principal financing arrangements and operating under the more stringent operating restrictions that it would impose;

• reducing refinancing risks for debt facilities maturing in the Group's 2010/11 financial year;

• extending the Group's flexibility in managing the delivery of its development pipeline; and 

• improving the Group's ability to take advantage of acquisition and other opportunities that will emerge during the current market conditions, if prudent to do so.

The Rights Issue

The New Ordinary Shares will be offered to Qualifying Shareholders (other than Excluded Territory Shareholders) by way of rights on the following basis:

5 New Ordinary Shares at 270 pence each for every 8 Existing Ordinary Shares

held and registered in the name of the Qualifying Shareholder at the Record Time. The Issue Price of 270 pence per New Ordinary Share represents a 51.0% discount to the Closing Price of an Existing Ordinary Share of 568 pence on 18 February 2009, adjusted for the Third Quarter Interim Dividend of 16.5 pence for the three months to 31 December 2008 which will not be paid on the New Ordinary Shares, and a 39.1% discount to the theoretical ex-rights price based on that Closing Price, also adjusted for the Third Quarter Interim Dividend. 

Entitlements to New Ordinary Shares will be rounded down to the nearest whole number. Any fractional entitlements will not be allotted to Shareholders, but aggregated and sold in the market for the benefit of the Company. The New Ordinary Shares will rank pari passu with the Existing Ordinary Shares in all respects except that they will not carry the right to receive the Third Quarter Interim Dividend. Application will be made to the UK Listing Authority and to the London Stock Exchange for the New Ordinary Shares to be admitted to the Official List and to trading on the main market of the London Stock Exchange.  

Citi, JPMorgan Cazenove and UBS Investment Bank are acting as joint bookrunners and joint sponsors for the Rights Issue. The Rights Issue is fully underwritten by Citi, on behalf of its affiliate JPMorgan Cazenove by J.P. Morgan Securities and by UBS Investment Bank as joint underwriters; and by BNP Paribas, HSBC Bank plc and RBS Hoare Govett Limited who are acting as co-lead managers for the Rights Issue.

Albright Investments Limited, a wholly-owned subsidiary of Peel Holdings Limited, which holds approximately 5.8% of Land Securities' issued ordinary share capital as at 18 February 2009, has irrevocably committed to take up its full rights entitlement. 

Certain shareholder approvals in relation to the Rights Issue will be sought at the General Meeting expected to be held on 9 March 2009. The Circular in relation to the Rights Issue is being posted to Shareholders today. 

Further details of the Rights Issue are contained in the Prospectus, which Shareholders should read in full before deciding whether to participate in the Rights Issue. The Prospectus will not be posted to Shareholders but will be published on the Company's website at www.landsecurities.com. Copies of the Prospectus are also available on request from the Company's Receiving Agent, Equiniti Limited or by telephoning the Shareholder Helpline (details of which are set out in the Circular and on the Company's website). The Prospectus will not be available (whether through the website or otherwise) to Excluded Territory Shareholders.

Dividend policy

The Company intends to continue to pursue a progressive dividend policy over the long term. The level of future dividends in respect of Ordinary Shares will continue to reflect the Group's performance and growth and will depend, amongst other things, on prevailing property market conditions and expected future earnings.

In light of the Rights Issue, the Board believes it is now an appropriate time to reposition the current level of dividend, particularly given the recent sale of Trillium (excluding the Accor portfolio) as well as the challenging market conditions facing the Group. The Board has also carefully considered the fact that underlying earnings for property companies tend to exceed underlying cash flows due to portfolio refurbishment expenditure. 

Taking these factors into consideration and allowing for some weakening in occupational markets, the Board believes a strong dividend cover is desirable and intends to reset the dividend going forward at a level which it believes is robust and from which it can deliver future growth. After adjusting for the effects of the Rights Issue, the Board expects in due course to declare a dividend in respect of the final quarter of the period ending 31 March 2009 of 7 pence per Ordinary Share, and expects the same level of quarterly payment to be distributed for the coming financial year ending 31 March 2010, subject in each case to the Company's results.  On an annualised basis, this would represent a dividend of 28 pence per Ordinary Share, equivalent to £212 million which compares with the current level of £307 million.

The New Ordinary Shares will not rank for any dividend or distribution with a record date falling before the date of allotment of the New Ordinary Shares.

Current trading, trends and prospects 

Land Securities continues to focus on its near-term priorities of balance sheet management and leasing in a market which has experienced an accelerated deterioration since 30 September 2008.

Land Securities' combined investment property portfolio has been valued at £9,967.0 million as at 31 January 2009, which compares with a value of £12,530.3 million as at 30 September 2008. After adjustments for property investments, disposals and capital expenditure the valuation deficit over the four-month period is £2,446.2 million, representing a valuation decline of 20.1% in the period.

The valuation deficit was attributable in part to a further movement in equivalent yields. In addition, rental values on the like-for-like portfolio have declined by 5.4% since 30 September 2008. 

Whilst progress has been made on lettings across both the London and Retail portfolios, the Company believes that the current challenging conditions seen across the lettings market will remain for the foreseeable future, and until there is some improvement in the economic environment. Similarly, voids on the overall portfolio have increased, together with the number of tenants being placed into administration, and the Company expects these trends to continue whilst the economy remains in a recession. 

This summary should be read in conjunction with the full text of this announcement.

Capitalised terms used in this announcement have the same meaning as defined in the Appendix to this announcement. 

Land Securities will be holding a presentation for analysts and investors today at 09.30 GMT and a live webcast will be available at www.landsecurities.com. The presentation will be held at:

The Ground Floor Conference Centre

UBS Investment Bank

1 Finsbury Avenue
London, EC2M 2PP

In addition to the webcast there will be a conference call facility, the details are:

Dial in number:  [phone]

Conference ID number:   86679336

For further information, please contact:

Land Securities Group Plc   Francis Salway Donal McCabe	[phone]
Tulchan Communications   Andrew Grant  John Sunnucks	[phone]
Citigroup Global Markets Limited David Wormsley  Michael Lavelle Charlie Lytle	[phone]
JPMorgan Cazenove Limited   Richard Cotton Robert Fowlds Ian Hannam Jonathan Wilcox	[phone]
UBS Investment Bank Nick Reid Christopher Smith	[phone]

Background to and Reasons for the Rights Issue

(a) Current market environment and Land Securities' response

The current economic and financial environment has resulted in a significant downward repricing of commercial property assets in the UK. By way of illustration, between 30 June 2007 and 31 December 2008 the Investment Property Databank UK All Property Monthly Index, which is the principal benchmark index used for the analysis of property performance in the UK market, showed a reduction in capital values of approximately 36%, including the largest fall on record in a single calendar year.

Land Securities was quick to react to the change in market conditions it identified in 2007 and has sold over £3.4 billion of assets since April 2007. Land Securities had also sized its London development programme to minimise the amount of space coming to market in the financial years 2008/9 to 2010/11 and has since deferred other potential projects beyond these timescales to reduce short-term capital expenditure requirements. In addition, since that time it has also arranged £1.7 billion of new debt facilities and extended £0.8 billion of existing facilities. It has also adjusted its cost base with a reduction in employee numbers of more than 10%.

Land Securities benefits from a diversified business model with high quality teams in the two largest sectors of the UK commercial property market: London offices and retail. Based on total announced shareholder returns (as reported by Datastream), Land Securities has performed well, relative to its main competitors, in recent financial periods. Land Securities has a well positioned asset portfolio across both development and investment properties. It also benefits from a resilient income stream owing to the long-term nature and diversity of its tenancy arrangements, with central government being its largest single tenant (accounting for 9% of income of the Group as at 31 January 2009).

(b) Principal financing arrangements

Land Securities' principal financing arrangements utilise the credit support of a ring-fenced group of assets (the ''Security Group'') that comprises the majority of the Group's investment property portfolio. This structure has key operational benefits for the Group. It is flexible in nature and allows property acquisitions, disposals and developments to occur with relative freedom. Moreover, no financial covenant default is triggered until the applicable Loan to Value (or ''LTV'') ratio exceeds 100% or the Interest Cover Ratio (or ''ICR'') is less than 1.0x. These arrangements have also historically enabled Land Securities to achieve a relatively low cost of debt. None of the Group's financing facilities or issued debt instruments have an expected repayment date prior to 31 March 2010 and those having an expected repayment date in 2010, totalling £940 million, have term-out options for a further year.

Land Securities' principal financing arrangements provide for different operating environments which apply in ''tiers'' determined by LTV and ICR. The least restrictive operating environment is Tier 1 which applies where LTV is 55% or less and ICR is greater than 1.85x. Tier 2 applies where LTV is more than 55% but not more than 65% or ICR is between 1.85x and 1.45x and (other than certain liquidity requirements) does not impose any significant additional operational restrictions. If the LTV is between 65% and 80% or the ICR is between 1.20x and 1.45x, Initial Tier 3 applies. Initial Tier 3 is a more restrictive environment as described below. The most restrictive regime is Final Tier 3 which applies where LTV is greater than 80% or ICR is less than 1.2x. In Final Tier 3, there would be restrictions on payments being made out of the Security Group (including dividends) which could in turn restrict the Company's ability to fund dividends to shareholders. Final Tier 3 would also restrict developments with a value of greater than £50 million. Further information about these ''tiers'' and their associated operating restrictions is set out in the Prospectus.

A scheduled calculation of LTV and ICR for the purposes of these financing arrangements was undertaken at 30 September 2008. At that time, the reported LTV for the Security Group was 53.4% and the ICR was 3.97x. At these ratios, the Company was operating in Tier 1 and benefited from maximum operational flexibility.

The LTV ratio of the Security Group can be influenced not only by changes in property valuations but also by the Company's actions in using proceeds from the sale of assets to reduce borrowings or through the injection of cash or properties from outside the Security Group. 

(c) More restrictive operating environment expected

In January 2009, the Group borrowed a further £1,130 million from its existing committed facilities, having taken the view that under the terms of its principal financing arrangements the continuing fall in property values might, at some stage in the future, push the Security Group into Initial Tier 3 and restrict the availability of these facilities. Borrowing this amount moved the Security Group into Tier 2. Its existing general corporate facilities are now drawn in full. As at 31 January 2009, approximately £1,125 million of cash and short-term deposits was held by the Group (unaudited). This cash will be applied within the business and, if further falls in property values are experienced, may also be used to maintain LTV at less than 80% to the extent necessary to prevent the Security Group entering Final Tier 3. Land Securities has not carried out a formal property valuation for the purpose of calculating LTV since 30 September 2008. However, in connection with the Rights Issue, Land Securities' combined investment portfolio was revalued at 31 January 2009 by Knight Frank LLP. If the LTV of the Security Group were calculated based on the 31 January 2009 property values (as set out in the Property Valuation Report at Part X (Property Valuation Report) of the Prospectus) and indebtedness as at 31 January 2009 (as set out in Section 6 of Part VIII (Operating and Financial Review) of that document), the LTV would be 77.3% and the ICR would be 3.69x (unaudited), irrespective of the Rights Issue. Land Securities expects that, when the next six monthly scheduled calculation of LTV and ICR for the purposes of its financing arrangements is performed as at 31 March 2009, the Security Group will move from Tier 2 into Initial Tier 3, but not into Final Tier 3. It should also be emphasised that the entry into a more restrictive environment under these financing arrangements does not constitute a default.

Land Securities expects to operate within Initial Tier 3 in the short- to medium-term (irrespective of the Rights Issue). Operating in Initial Tier 3 would not affect the Group's ability to use Security Group operating cash flows to fund day to day business and finance expenses. It would, however, be more restrictive than the Group's current operating regime. In particular, it would require the amortisation of debt over an agreed 25 year period and would restrict the use of asset disposal proceeds to limited purposes (including development expenditure), although it would not be as limited as Final Tier 3.

(d) Land Securities' objectives

Land Securities' objective is to navigate a prudent course through the current downturn and market volatility to avoid moving into Final Tier 3 and to position itself for future opportunity. Land Securities has prioritised balance sheet management by, for example, its disposals of Trillium (excluding the Accor portfolio) and over £250 million of property assets in the last four months in order to strengthen its balance sheet and maintain resilience in the business. Land Securities' aim over the medium term is, when prudent to do so in light of market conditions, to return to a LTV of less than 65%, a level at which Land Securities' financing arrangements would allow greater access to the debt markets, so as to position the Group for future opportunities.

Whilst the Company is maintaining a strong focus on the business actions which are within its control, a number of factors affecting the market in which Land Securities operates are beyond the Company's control. The pace of valuation decline has, in recent months, exceeded the pace at which assets can be sold to counteract the impact of falling values on the Group's balance sheet position, and this represents an ongoing risk.

(e) Benefits of the Rights Issue

Given the current market conditions and the Group's existing financing arrangements, the Rights Issue will improve Land Securities' ability to preserve and create shareholder value through the downturn and into the next cycle by helping to protect against the downside and giving the Group flexibility to react quickly to pricing and timing opportunities. The additional capital raised by the Rights Issue will strengthen the Group's balance sheet and is expected to allow it to minimise the impact of the risk of prolonged falls in property values. Without mitigating this potential downside to the business, for example if the Rights Issue did not proceed, it would not be possible for Land Securities to take advantage of the opportunities that are expected to arise. Land Securities believes strongly in the need to be able to respond quickly to the turning point in the cycle, particularly in relation to the acquisition of assets and the commencement of development opportunities, and that flexibility on the timing of doing so is key to the creation of value. The Rights Issue will also strengthen Land Securities' position in refinancing those of its debt facilities which have an expected repayment date in 2010, before one year term-out options.

The Board has sized the Rights Issue to reflect its view of the appropriate level of proceeds needed to position the Company to achieve the aims described above, in a range of scenarios. These scenarios are based on a number of factors and underlying assumptions (including that the Group will continue to sell some assets, broadly to meet its expenditure on developments). These assumptions are by their nature uncertain and, in current market conditions in particular, unpredictable. As a result, the Board is not in a position to predict with any certainty future movements in the market value of UK commercial property but, by way of illustration only, the Board expects that:

• if the 'peak to trough' falls in the property market were between 45% and 50%, the proceeds of the Rights Issue should be sufficient to enable the Group to reduce LTV to less than 65% in order to be able to return to Tier 1 or Tier 2 and thereby allow greater access to the debt markets, if it is prudent to do so at the time; and

• if the 'peak to trough' falls were between 55% and 60%, the proceeds of the Rights Issue should be sufficient to enable the Group to meet its commitments (including debt maturities) and avoid entering Final Tier 3.

Whilst, without the Rights Issue and depending on the extent of further declines in property values, Land Securities expects to be able to avoid entering Final Tier 3 in the short- to medium-term, it would have less protection against the impact of further falls in property values. In particular, it may not have the flexibility to be able to return to Tier 1 or Tier 2 in the medium-term and this would limit its ability to take advantage of future opportunities as the cycle turns. Whilst the LTV ratio of the Security Group can be influenced by a range of factors, not just property valuations (as explained above), it is possible that Land Securities could enter Final Tier 3 in the medium term if future falls in property values were more extreme than indicated above.

Land Securities therefore expects the principal benefits of the Rights Issue to be as summarised below:

• reducing the risk of entering Final Tier 3 and operating under the more stringent operating restrictions that it would impose (including restrictions on the making of payments out of the Security Group), and increasing the likelihood of returning to Tier 1 or Tier 2 in the medium term;

• reducing refinancing risks for debt facilities maturing in the Group's 2010/11 financial year;

• extending the Group's flexibility in managing the delivery of its development pipeline; and

• improving the Group's ability to take advantage of acquisition and other opportunities that will emerge during the current market conditions, if prudent to do so.

Use of Proceeds

The Directors intend that the full amount of the net proceeds of the proposed Rights Issue will initially be held as cash on deposit. The cash will be held outside of the Security Group to ensure certainty of access to the funds and will provide valuable liquidity in the current financial environment. If further falls in property values are experienced, some of the proceeds will be progressively allocated to the Security Group to the extent necessary to ensure that the Group avoids entering Final Tier 3 (at greater than 80% LTV). As property values stabilise, Land Securities intends to use the remaining proceeds either to reduce net debt within the Security Group or to acquire assets for injection into the Security Group in order to reduce LTV.

Dividend policy

The Company intends to continue to pursue a progressive dividend policy over the long term. The level of future dividends in respect of Ordinary Shares will continue to reflect the Group's performance and growth and will depend, amongst other things, on prevailing property market conditions and expected future earnings.

In light of the Rights Issue, the Board believes it is now an appropriate time to reposition the current level of dividend, particularly given the recent sale of Trillium (excluding the Accor portfolio) as well as the challenging market conditions facing the Group. The Board has also carefully considered the fact that underlying earnings for property companies tend to exceed underlying cash flows due to portfolio refurbishment expenditure. 

Taking these factors into consideration and allowing for some weakening in occupational markets, the Board believes a strong dividend cover is desirable and intends to reset the dividend going forward at a level which it believes is robust and from which it can deliver future growth. After adjusting for the effects of the Rights Issue, the Board expects in due course to declare a dividend in respect of the final quarter of the period ending 31 March 2009 of 7 pence per Ordinary Share, and expects the same level of quarterly payment to be distributed for the coming financial year ending 31 March 2010, subject in each case to the Company's results. On an annualised basis, this would represent a dividend of 28 pence per Ordinary Share, equivalent to £212 million which compares with the current level of £307 million.

The New Ordinary Shares will not rank for any dividend or distribution with a record date falling before the date of allotment of the New Ordinary Shares.

Expected timetable of principal events 

The expected timetable of principle Rights Issue events is set out below:

Record Time for entitlement under the Rights Issue for Qualifying CREST Shareholders and Qualifying Non-CREST Shareholders	5.00 p.m., 5 March 2009
Latest time and date for receipt of General Meeting Proxy Forms	10.00 a.m., 7 March 2009
General Meeting	10.00 a.m., 9 March 2009
Dealings in New Ordinary Shares, nil paid, commence on the London Stock Exchange	8.00 a.m., 10 March 2009
Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters	11.00 a.m., 24 March 2009
Dealings in New Ordinary Shares, fully paid, commence on the London Stock Exchange	8.00 a.m., 25 March 2009

General Meeting

The General Meeting will be held on Monday 9 March 2009 at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY. The purpose of the General Meeting is to consider and, if thought fit, to pass certain Resolutions necessary to authorise and carry out the Rights Issue.

The first resolution is an ordinary resolution to increase the authorised share capital of the Company and authorise the Directors to allot relevant securities under the Rights Issue and retain sufficient authority to allot Ordinary Shares for general purposes. The second resolution empowers the Directors to allot (or in the case of Treasury Shares, sell) equity securities for cash without the need to first offer such securities to existing Shareholders.

Shareholders should read the full text of the Resolutions contained in the General Meeting Notice in the Circular. The second resolution will only be proposed if the first resolution is passed.

Directors' intentions

Each of the Directors intends to take up in full his or her rights to subscribe for New Ordinary Shares under the Rights Issue in respect of his or her direct registered holdings.

This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction.

This announcement is an advertisement and does not constitute a prospectus. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any Nil Paid Rights, Fully Paid Rights and/or New Ordinary Shares must be made only on the basis of the information contained in and incorporated by reference into the Prospectus. Copies of the Prospectus will be available on publication from the Company's website at www.landsecurities.com, provided that the Prospectus will not be available (whether through the website or otherwise) to Excluded Territory Shareholders.

This announcement and any materials distributed in connection with this announcement are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation which would require any registration or licensing within such jurisdiction. The nil paid rights, the fully paid rights, the Euroclear subscription rights, the New Ordinary Shares and the provisional allotment letters if and when issued in connection with the Rights Issue have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the 'Securities Act'), or under the securities legislation of any state or territory or jurisdiction of the United States and may not be offered, sold taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with state securities laws. There will be no public offer of the securities mentioned herein in the United States. Neither this announcement (including and any materials distributed in connection with this announcement) nor any part or copy of it may be transmitted into the United States territories or possessions or distributed, directly or indirectly, in the United States, its territories or possessions. Neither this announcement nor any copy of it may be taken or transmitted into United States, Australia, Canada, Japan or South Africa or any other such jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. Any failure to comply with this restriction may constitute a violation of the securities laws of the United States, Australia, Canada, Japan or South Africa. The distribution of this announcement in other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. The Ordinary Shares (including Existing Ordinary Shares and New Ordinary Shares) have not been and will not be registered under the applicable securities laws of the United States, Australia, Canada, Japan or South Africa and, subject to certain exemptions, may not be offered or sold within the United States, Australia, Canada, Japan or South Africa.

This announcement and any materials distributed in connection with this announcement may include forward-looking statements. These forward-looking statements are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the Prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. Actual future results may differ materially from those expressed in or implied by these statements. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials. No reliance may be placed, for any purposes whatsoever, on the information contained in this announcement or on its completeness (including, without limitation, on the fairness, accuracy, completeness of the information or opinions contained herein) and this announcement should not be considered a recommendation by the Company, the Banks or any of their respective directors, officers, employees, advisers or any of their respective affiliates in relation to any purchase of or subscription for securities. No representation or warranty, express or implied, is given by or on behalf of the Company, the Banks or any of their respective directors, officers, employees, advisers or any of their respective affiliates, or any other person, as to the accuracy, fairness or sufficiency or completeness of the information or opinions or beliefs contained in this announcement (or any part hereof). None of the information contained in this announcement has been independently verified or approved by the Banks or any other person. Recipients of this presentation and/or the Prospectus who are Relevant Persons should conduct their own investigation, evaluation and analysis of the business, data and property described in this presentation and/or, if and when published, in the Prospectus. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement.

Citigroup Global Markets Limited, Citigroup Global Markets U.K. Equity Limited, JPMorgan Cazenove Limited, J.P. Morgan Securities Ltd, UBS Limited, BNP Paribas, HSBC Bank plc and RBS Hoare Govett Limited (together, the 'Banks') are acting each exclusively for the Company and for no one else in relation to the Rights Issue and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Rights Issue and will not be responsible to any other person for providing the protections afforded to their respective clients nor for providing advice in connection with the Rights Issue, or any other matters referred to in this announcement.  

The Banks are acting exclusively for Land Securities and no one else in connection with the Rights Issue and the listing of the New Ordinary Shares and will not be responsible to anyone other than Land Securities for providing the protections afforded to their respective clients for providing advice in connection with the Rights Issue, the listing of the New Ordinary Shares or the contents of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Banks by FSMA or the regulatory regime established thereunder, none of the Banks accept any responsibility whatsoever, and they make no representation or warranty, express or implied, for the contents of this document including its accuracy, completeness or verification or for any other statement made or purported to be made by any of them, or on behalf of them, in connection with the Company, the New Ordinary Shares or the Rights Issue and nothing in this document shall be relied upon as a promise or representation in this respect, whether as to the past or the future. Each of the Banks accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which any of them might otherwise have in respect of this document or any such statement.

APPENDIX - DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

''Board''	means the board of directors of Land Securities from time to time;
''Circular''	means the document being sent to Shareholders today setting out the details of the Rights Issue and the Resolutions;
''Closing Price''	means the closing, middle-market quotation in Pounds Sterling of an Existing Ordinary Share, as published in the Daily Official List adjusted for the Third Quarter Interim Dividend of 16.5 pence which will not be paid on the New Ordinary Shares;
''Companies Act''	means the Companies Act 1985 or, where applicable, the Companies Act 2006, as such acts may be amended, modified or re-enacted from time to time;
''Company''	means Land Securities;
''CREST''	means the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CREST Regulations operated by Euroclear;
''CREST Shareholders''	means Shareholders holding Ordinary Shares in CREST in uncertificated form;
''Daily Official List''	means the daily official list of the London Stock Exchange;
''Directors''	means the directors of Land Securities whose names are set out in the Prospectus (and ''Director'' means any one of them);
''Disclosure and Transparency Rules''	means the disclosure and transparency rules made by the UK Listing Authority under Part VI of FSMA, as amended from time to time;
''Euroclear''	means Euroclear UK & Ireland Limited;
''Excluded Territories''	means the United States, South Africa and any other jurisdiction where the extension or availability of the Rights Issue (and any other transaction contemplated thereby and any activity carried out in connection therewith) would breach any applicable law, each an ''Excluded Territory'';
''Excluded Territory Shareholder''	means, subject to certain exceptions, a Qualifying Shareholder who has a registered address, or who is resident or located, in any Excluded Territory;
''Existing Ordinary Shares''	means the Ordinary Shares at the date of the Prospectus;
''Final Tier 3''	means the covenant regime that will apply under the Securitised Debt Arrangements if, subject to certain exceptions and the terms of the Securitised Debt Arrangements, the Loan to Value is greater than 80% or the Interest Cover Ratio is less than 1.20x;
''FSA'' or ''Financial Services Authority''	means the Financial Services Authority of the United Kingdom;
''FSMA''	means the Financial Services and Markets Act 2000, as amended from time to time;
''Fully Paid Rights''	means rights to acquire New Ordinary Shares, fully paid;
''General Meeting''	means the general meeting of Land Securities to be held on 9 March 2009 at the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY for the consideration of the Resolutions, notice of which is set out in the General Meeting Notice;
''General Meeting Notice''	means the notice of the General Meeting set out at the end of this document;
''Group''	means Land Securities and its subsidiaries (as defined in the Companies Act);
''Initial Tier 3''	means the covenant regime that will apply under the Securitised Debt Arrangements if, subject to certain exceptions and the terms of the Securitised Debt Arrangements, the Loan to Value is greater than 65% but equal to or less than 80% or the Interest Cover Ratio is less than 1.45x but equal to or greater than 1.20x;
''Interest Cover Ratio'' or ''ICR''	means the applicable interest cover ratio as calculated pursuant to and in accordance with the terms of the Group's financing arrangements for a relevant period, broadly being the ratio of the (projected or historical, as the case may be) consolidated operating profit of the Security Group for the relevant period (subject to certain exclusions and adjustments) to the (projected or historical, as the case may be) accrued cost of net interest on the debt owed by the Security Group (subject to certain exclusions and adjustments) for the relevant period;
''Issue Price''	means 270 pence per New Ordinary Share;
''Land Securities''	means Land Securities Group PLC, of 5 Strand, London WC2N 5AF, a company incorporated in England and Wales with registered number 4369054;
''Loan to Value'' or ''LTV''	means the applicable loan to value ratio as calculated pursuant to and in accordance with the terms of the Group's Securitised Debt Arrangements, being broadly the ratio of net debt owed by the members of the Security Group under those financing arrangements divided by the value of the assets secured by the members of the Security Group as collateral for that debt, expressed as a percentage;
''London Stock Exchange''	means London Stock Exchange PLC or its successor(s);
''New Ordinary Shares''	means the Ordinary Shares to be issued by the Company pursuant to the Rights Issue, and ''New Ordinary Share'' shall be construed accordingly;
''Nil Paid Rights''	means New Ordinary Shares in nil paid form provisionally allotted to Qualifying Shareholders pursuant to the Rights Issue;
''Official List''	means the official list of the UK Listing Authority;
''Ordinary Shares''	means ordinary shares of 10 pence each in the capital of the Company;
''Pounds'' or ''£'' or ''Pounds Sterling''	means the lawful currency of the United Kingdom;
''Prospectus'';	means the prospectus dated on or about the date of this announcement to be issued by the Company in connection with the Rights Issue;
''Provisional Allotment Letter''	means the provisional allotment letter to be issued to Qualifying Non-CREST Shareholders (other than those who are Excluded Territory Shareholders);
''Proxy Form''	means the proxy appointment form accompanying this Circular allowing Shareholders to appoint a proxy to vote at the General Meeting;
''Qualifying CREST Shareholders''	means Qualifying Shareholders holding Ordinary Shares in uncertificated form;
''Qualifying Non-CREST Shareholders''	means Qualifying Shareholders holding Ordinary Shares in certificated form;
''Qualifying Shareholders''	means holders of Existing Ordinary Shares on the register of members of the Company at the Record Time;
''Receiving Agent''	means Equiniti Limited of Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA;
''Record Time''	means 5.00 p.m. on 5 March 2009;
''Registrars''	means Equiniti Limited of Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA;
''REIT''	means a real estate investment trust;
''Resolutions''	means the resolutions to be proposed at the General Meeting in connection with the Rights Issue;
''Rights''	means rights to the New Ordinary Shares pursuant to the Rights Issue;
''Rights Issue''	means the offer by way of rights to Qualifying Shareholders (other than Excluded Territory Shareholders) to acquire New Ordinary Shares, on the terms and conditions set out in this document and, in the case of Qualifying Non-CREST Shareholders only (other than Excluded Territory Shareholders), the Provisional Allotment Letter;
''Securitised Debt Arrangements''	means the £6,000,000,000 multicurrency programme of Land Securities Capital Markets PLC for the issuance of notes, the notes issued thereunder, certain secured and approved credit facilities with credit providers and associated arrangements;
''Security Group''	means the sub-group comprising subsidiaries of the Company which are obligors under the Group's Securitised Debt Arrangements;
''Shareholder''	means a holder of Ordinary Shares;
''Third Quarter Interim Dividend''	means the third quarterly dividend payment by the Company of 16.5 pence per Existing Ordinary Share announced by the Company on 20 January 2009 and payable on 24 April 2009 to Shareholders on the Company's register on 20 March 2009 (and which will not be paid in respect of any New Ordinary Shares);
''Tier 1''	means the covenant regime that will apply under the Securitised Debt Arrangements if, subject to certain exceptions and the terms of the Securitised Debt Arrangements, the Loan to Value is 55% or less and the Interest Cover Ratio is greater than or equal to 1.85x;
''Tier 2''	means the covenant regime that will apply under the Securitised Debt Arrangements if, subject to certain exceptions and the terms of the Securitised Debt Arrangements, the Loan to Value is greater than 55% but equal to or less than 65% or the Interest Cover Ratio is less than 1.85x but equal to or greater than 1.45x;
''Treasury Shares''	means Ordinary Shares held by the Company in treasury pursuant to the provisions of Chapter VII of the Companies Act 1985;
''UK'' or ''United Kingdom''	means the United Kingdom of Great Britain and Northern Ireland;
''UK Listing Authority''	means the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of FSMA and in the exercise of its functions in respect of the admission of securities to the Official List other than in accordance with Part VI of FSMA;
''uncertificated'' or ''in uncertificated form''	means recorded on the relevant register of the relevant company for the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
''US'', ''USA'' or ''United States''	means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction; and
''US Securities Act''	means the US Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder.

 

END

 

 

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