Capital Reorganisation

Land Securities PLC
15 July 2002




    For immediate release

    15 July 2002

    RECOMMENDED PROPOSALS FOR THE RETURN OF CAPITAL TO SHAREHOLDERS

    On 22 May 2002, Land Securities PLC ('Land Securities' or the 'Company')
    announced its intention to return surplus capital of approximately £500
    million to Shareholders.

    Today Land Securities announces the details of the return to Shareholders.
    It is proposed that the Return will be achieved via a Court-approved scheme
    of arrangement and subsequent reduction of capital, through the introduction
    of a new holding company, Land Securities Group PLC ('Land Securities Group
    or the 'New Company').

    HIGHLIGHTS


  • Land Securities is proposing to return £541 million of surplus capital to
    its shareholders.

  • The return of capital represents the equivalent of 102 pence per existing
    ordinary share.

  • The return is being structured in such a way as to allow all shareholders
    to be treated equally, as well as creating additional distributable
    reserves.

  • The return is conditional upon the approval of the shareholders of Land
    Securities and the High Court.

  • For every 8 existing ordinary shares held at 5.00pm on 5 September 2002
    shareholders will receive 7 new ordinary shares and 8 B shares.

  • Shareholders can choose to have their B shares repaid shortly after the
    Scheme of Arrangement becomes effective for 102 pence each in cash and it is
    expected that cash will be despatched by 19 September 2002. The next
    opportunity to have the B Shares repaid will be 17 April 2003.

  • Alternatively they can keep the B shares and receive a dividend at a rate
    per annum equal to 70 per cent. of 6 months' LIBOR payable twice yearly.

  • Shareholder helpline available from 8:00am to 8:00pm, Monday to Friday (UK
    time).


    Commenting on the announcement Peter G Birch, Chairman said

    'The proposed arrangement for returning capital offers a number of clear
    advantages. It ensures our Shareholders are treated equally and have a
    choice when to receive their cash. At the same time, it creates additional
    distributable reserves which will give Land Securities Group greater ongoing
    flexibility as we pursue our strategy to secure enhanced returns from
    property while remaining conservatively financed.'



    For further information please contact


    Land Securities                           Tel: [phone]
    Emma Denne

    Cazenove & Co. Ltd                        Tel: [phone]
    Duncan Hunter
    Richard Cotton
    Emma John

    UBS Warburg                               Tel: [phone]
    Tim Guest



    Financial Dynamics                        Tel: [phone]
    Steve Jacobs
    Stephanie Highett

    Shareholder helpline                      Tel: [phone] (Freephone)
    8:00am to 8:00pm, Monday to Friday        Tel: [phone] (outside UK)
    (UK time)

    Website address                            www.landsecurities.com




    This announcement has been approved for the purposes of section 21 of the
    Financial Services and Markets Act 2000 by Cazenove & Co. Ltd of 12
    Tokenhouse Yard, London, EC2R 7AN.

    Cazenove & Co. Ltd are acting as financial adviser and joint broker to Land
    Securities PLC and sponsor and joint broker to Land Securities Group PLC.
    UBS Warburg are acting as joint broker.

    Notes to Editors

    Land Securities is the UK's largest quoted provider of commercial property
    and associated property services with investment assets of £7.8 billion as
    at 31 March 2002. The Company's investment portfolio is focused on four
    areas of the UK property market; Central London shops and offices, shopping
    centres, retail warehousing and industrial premises.

    In its results for the year to 31 March 2002, Land Securities reported gross
    property income of £1.03 billion and a pre-tax profit of £363.5 million.





    BACKGROUND

    Over two years ago Land Securities set out a clear strategy aimed at
    securing enhanced returns from commercial property. Since that time, the
    Group has made significant progress towards implementing this strategy by
    refocusing the investment portfolio, expanding the development programme,
    acquiring Trillium and subsequently winning new property outsourcing
    contracts.

    Land Securities' performance, like that of other asset-backed businesses, is
    inextricably linked to its capital structure and Land Securities has been
    reviewing this closely. As part of this review, Land Securities concluded
    that, notwithstanding the future capital required to fund the development
    programme, and a desire to invest significant further sums in Land
    Securities Trillium, the Group has more equity capital than it currently
    requires. The Board reached this conclusion after taking into account the
    Group's credit rating and its desire to maintain a progressive dividend
    policy. Land Securities believes that the Group's financial strength will be
    an important factor in its ability to win property outsourcing contracts in
    the future.

    While the Company has in the past bought back shares in the market, and
    renewed its authority to do so at this year's AGM, the Board has decided
    that the proposed return of capital should be done in such a way as to
    create future financial flexibility for the Company and allow the £541
    million to be returned to Shareholders without reducing current
    distributable reserves.

    The Board also wants to create additional distributable reserves which,
    among other things, will be available for future distribution to Land
    Securities Group Shareholders or to facilitate future transactions at the
    discretion of the directors of Land Securities Group.

    It is expected that Shareholders will be sent a circular on or by 17 July
    2002 setting out details of how this return of capital will be achieved. The
    return is dependent on shareholder approval at a Court Meeting and an
    Extraordinary General Meeting both of which will be held on the 9 August
    2002.

    Copies of Listing Particulars relating to Land Securities Group, once
    approved by the UK Listing Authority and filed at Companies House, will be
    available free of charge by contacting the Shareholder helpline (number
    below), or alternatively by downloading them from Land Securities' website
    (www.landsecurities.com). They will also be available from Land Securities'
    registered office and will be available, for inspection only, during normal
    business hours at the Document Viewing Facility at the Financial Services
    Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

    The Company has established a helpline to answer Shareholder questions on
    the telephone number freephone 0800 035 2771 ([phone] if calling
    from outside the UK) from 8.00am to 8.00pm (UK time), Monday to Friday. For
    legal reasons the helpline will not be able to provide advice on the merits
    of the proposals or to provide legal, financial or taxation advice.

    Further details of the return to Shareholders and key dates in the proposed
    timetable are attached.

    DETAILS OF THE PROPOSED RETURN OF CAPITAL TO SHAREHOLDERS

    In order to implement the proposals, Land Securities must go through a Court
    approved Scheme of Arrangement. This will result in the creation of a new
    listed holding company, Land Securities Group, which will become the new
    parent company of Land Securities. Following the Scheme of Arrangement, Land
    Securities Group will go through a Court approved reduction of capital.

    A proportion of the share capital of Land Securities Group will be in the
    form of B Shares which Shareholders can elect to have repaid for cash. It is
    through the B Shares that the Board intends to return £541 million to
    Shareholders, equivalent to 102p per Existing Ordinary Share.

    While Shareholders will become shareholders in the new holding company, Land
    Securities Group, the new group will have the same business, management team
    and strategy as Land Securities currently has.

    The Scheme

    Under this Court approved scheme, Land Securities Group will be introduced
    as the new holding company of Land Securities. As a result of the Scheme,
    Shareholders will receive, in exchange for the Existing Ordinary Shares held
    at the Scheme Record Time (expected to be 5.00 p.m. on 5 September 2002),
    New Ordinary Shares and B Shares on the following basis:

    for every 8 Existing Ordinary Shares 7 New Ordinary Shares and 8 B Shares

    These New Ordinary Shares and B Shares are in the new holding company, Land
    Securities Group.

    Application has been made for the New Ordinary Shares and the B Shares to be
    admitted to the Official List and to be traded on the London Stock Exchange.
    Each Shareholder will own the same proportion of Land Securities Group,
    subject to adjustments for fractional entitlements, in the form of New
    Ordinary Shares as they do with their Existing Ordinary Shares in Land
    Securities.

    Fractional entitlements to New Ordinary Shares will not be allotted to
    Shareholders but will be aggregated and sold on their behalf. It is expected
    that the proceeds of sale will be sent to them by cheque by 19 September
    2002.

    Timing of cash proceeds

    The mechanism for the return has been structured so that Shareholders have
    two choices as to when they receive the cash to which their B Shares entitle
    them (provided that both Shareholders and the Court approve the proposals).

    Under Choice 1, B Shares will be repaid shortly after the Scheme becomes
    effective (which is expected to be in September 2002). If Shareholders elect
    for Choice 2, they will not receive their cash until they choose to have
    their B Shares repaid but, in the meantime, they will receive dividends on
    their B Shares.

    In summary, the choices available to Shareholders are:

    Choice 1: Initial Cash Repayment

    to have Land Securities Group repay the B Shares for 102p per B Share in
    September 2002 and have the cash sent to them by 19 September 2002; or

    Choice 2: Deferred Repayment for Cash

    to keep the B Shares and receive a continuing non-cumulative dividend at a
    rate per annum equal to 70 per cent. of 6 months' LIBOR* payable
    twice-yearly in arrears on the nominal amount of 102p per B Share. Under
    Choice 2, Shareholders will have the opportunity to have their B Shares
    repaid by Land Securities Group at least twice a year at 102p per B Share.
    The next opportunity to have the B Shares repaid will be 17 April 2003.

    * LIBOR is the variable interest rate at which banks in London lend to each
    other and which may change for reasons beyond Land Securities Group's
    control. The LIBOR rate will be taken at the start of the period to which
    the dividend relates.

    Land Securities Group retains the right to repay all of the B Shares at any
    time after the third anniversary of the Scheme Effective Date, or if
    earlier, after the number of B Shares remaining in issue falls below 25 per
    cent. of the number originally issued.

    Reduction of Capital

    Shareholder approval is also being sought for a Court approved reduction of
    capital of Land Securities Group which is required to implement the
    proposals. Under this proposal, the share capital of Land Securities Group
    will be reduced by repaying 102p on each B Share held by Shareholders who
    elect for Initial Cash Repayment (Choice 1). All B Shares repaid under the
    Initial Cash Repayment will be cancelled and will not be re-issued.

    In addition, the share capital of Land Securities Group will be further
    reduced to create distributable reserves of approximately £3.1 billion by
    decreasing the nominal amount of each New Ordinary Share issued pursuant to
    the Scheme from 683 pence to 10 pence. These reserves will be available,
    first, to enable the New Company to fulfil its obligations in relation to
    the B Shares held by the Shareholders who elect for Deferred Repayment for
    Cash (Choice 2) without using any of Land Securities' existing distributable
    reserves. The balance of these reserves will give Land Securities Group
    additional financial flexibility and will be available, among other things,
    for future distributions to Land Securities Group Shareholders or to
    facilitate future transactions at the discretion of the directors of Land
    Securities Group.

    Approvals for the proposals

    In order to be able to effect the proposals, Shareholder approval for the
    Scheme of Arrangement is required. Shareholder approval is needed at both a
    Shareholder meeting convened by the Court ('Court Meeting') and at the EGM.
    The Scheme also requires the sanction of the Court.

    Forms of Proxy will be sent to all Shareholders to enable them to vote.
    Alternatively they can vote using the internet.

    The Board unanimously recommends Shareholders to vote in favour of
    resolutions to be proposed at the Court Meeting and the EGM as the Directors
    intend to do so in respect of their beneficial holdings.

    The Court Meeting and the EGM will be held on 9 August 2002 at 10:00am and
    10:15am respectively at One Silk Street, London EC2Y 8HQ.

    Dividend Policy

    The directors of Land Securities Group intend to follow a progressive
    dividend policy for the New Ordinary Shares that is in line with that
    pursued by Land Securities, provided that this remains consistent with the
    New Group's ability to fund its medium term business plans.

    Current Trading

    Land Securities' trading performance since 31 March 2002 has been in line
    with expectations. On 22 May 2002, the Company called the Group's
    convertible bonds for redemption and it bought £196.8 million nominal of
    those bonds in the market for cancellation in the period from 22 May to 20
    June 2002. The premium to book value net of tax, will be included as a loss
    in the accounts for the year ending 31 March 2003. The Company continues to
    seek further opportunities to buy and sell its investment portfolio assets,
    taking into account its longer term aim of increasing the relative
    contribution of the Total Property Outsourcing and Development business
    units.

    Taxation

    In summary, the Directors have been advised, for Shareholders resident, or
    in the case of individuals, ordinarily resident, in the United Kingdom for
    tax purposes holding their shares beneficially and as an investment, that:


 a. to the extent that a Shareholder's Existing Ordinary Shares are cancelled in
    return for the issue to such Shareholder of New Ordinary Shares and B
    Shares, that should generally not be treated as a disposal by the
    Shareholder for the purposes of United Kingdom taxation of chargeable gains;

 b. the payment of 102p per B Share pursuant to the Initial Cash Repayment will
    be treated in the hands of a Shareholder as the proceeds of a disposal for
    the purposes of United Kingdom taxation of chargeable gains and such
    repayment may give rise to a liability to capital gains tax (or corporation
    tax); and

 c. the payment of the dividend on the B Shares in the hands of a Shareholder
    will generally be treated in the same way as any other dividend paid by Land
    Securities Group. The subsequent disposal or repayment of B Shares may give
    rise to a liability to capital gains tax (or corporation tax).


    Share dealing facility

    Land Securities Group is proposing to offer its certificated shareholders,
    who are resident in the United Kingdom and who hold a limited number of New
    Ordinary Shares, a low-cost share dealing facility for a fixed period after
    the Scheme becomes effective. This will enable those Shareholders to sell
    their New Ordinary Shares or buy more at a low commission rate per
    transaction. Details will be provided to those Shareholders with their New
    Ordinary Share certificates.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS
                                                                                                                   2002


    Posting of documents to Shareholders                                                               on or by 17 July


    Latest time for receipt of PINK Form of Proxy for the Court Meeting(i)                       10.00 a.m. on 7 August


    Latest time for receipt of BLUE Form of Proxy for the EGM                                    10.15 a.m. on 7 August


    Voting Record Time for the Court Meeting(ii)                                                  6.00 p.m. on 7 August


    Voting Record Time for the EGM(ii)                                                            6.00 p.m. on 7 August


    Court Meeting                                                                                10.00 a.m. on 9 August


    EGM(iii)                                                                                     10.15 a.m. on 9 August


    Court Hearing of the petition to sanction the Scheme                                                    5 September


    Last day of dealings in Existing Ordinary Shares(iv)                                                    5 September


    Scheme Record Time(iv)                                                                     5.00 p.m. on 5 September


    Scheme Effective Date(iv)                                                                               6 September


    Dealings in New Ordinary Shares and B Shares commence on the London Stock                  8.00 a.m. on 6 September
    Exchange(iv)


    Crediting of New Ordinary Shares and B Shares to CREST accounts(v)                                      6 September


    Last time for receipt of USE instructions from CREST Shareholders(v)                      4.30 p.m. on 13 September


    Last time for receipt of Forms of Election(v)                                             6.00 p.m. on 13 September


    Court Hearing of the petition to confirm the Land Securities Group                                     16 September
    Reduction of Capital(v)


    Land Securities Group Reduction of Capital becomes effective(vi)                                       17 September


    Despatch of cheques and proceeds credited to CREST accounts in respect of                           By 19 September
    B Shares for those electing for Initial Cash Repayment (Choice 1) (vi)


    Despatch of share certificates for New Ordinary Shares(vi)                                          By 19 September


    Despatch of cheques in respect of the sale of fractional entitlements to                            By 19 September
    New Ordinary Shares(vi)


    Despatch of share certificates in respect of B Shares for those electing                            By 20 September
    for Deferred Repayment for Cash (Choice 2) (vi)







    Notes


 i. If the PINK Form of Proxy for the Court Meeting is not returned by this time,
    it may be handed to the Chairman of the Court Meeting at that meeting.

ii. If either the Court Meeting or the EGM is adjourned, the Voting Record Time
    for the adjourned meeting will be 6.00 p.m. on the day which is two days
    before the date of the adjourned meeting.

iii. To begin at the time fixed or, if later, immediately following the end, or
    adjournment, of the Court Meeting.

iv. These dates are indicative only and will depend, among other things, on the
    date on which the Court sanctions the Scheme and when the order is
    registered at Companies House.

 v. These dates are indicative only and will depend, among other things, on the
    date on which the Scheme becomes effective.

vi. These dates will depend, among other things, on the date on which the Scheme
    becomes effective and the date on which the Court confirms the Land
    Securities Group Reduction of Capital and when the order is registered at
    Companies House.


    All references to time in this announcement are to London time unless
    otherwise stated.

    The dates and times given are based on Land Securities' current expectation
    and may be subject to change.

                                      - Ends -







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