Disposal

Land Securities Group Plc
05 September 2005





5 September 2005



Land Securities Group PLC ('Land Securities' or the 'Company')

Proposed £300m disposal of investment in Telereal and agreements for ongoing
outsourcing role



Land Securities announces that Land Securities Trillium Limited ('LS Trillium'),
its property outsourcing business, has agreed, subject to shareholder approval,
to dispose of its 50% share in Telereal to subsidiaries of its joint venture
partners, Pears Trusts Group and William Pears Family Holdings Limited,
(together 'Pears Group'), for a consideration of £300.0m.  At the same time LS
Trillium will enter into agreements maintaining its relationship with Telereal
on an ongoing basis.



Telereal was formed as a stand-alone business in 2001, when it purchased the BT
property portfolio with LS Trillium and Pears making an initial equity
investment of £146.0m each.  Since its formation Telereal has provided strong
returns for the Company.  These returns have arisen from the disposal of surplus
property vacated by BT, rental income, the disposal of an investment portfolio
and debt refinancing.  For the year ended 31 March 2005, the Company's share of
Telereal's profit, which included net pre-tax profit of £29.9m arising from the
sale of vacant property, was £63.4m on a pre-tax basis and £42.2m on a post-tax
basis.



In the 2005 Annual Report, the Land Securities Board reported that it did not
expect the significant profits from Telereal to continue at the same levels as
in previous years, since it anticipated a considerable reduction in profits
potentially available from the disposal of surplus property.  As a result the
Board believes that the disposal now by LS Trillium of its interest in Telereal
provides Land Securities with an opportunity to crystallise a significant
surplus over the carrying value of the investment, approaching 80 pence per
share, while LS Trillium agreements with Telereal will provide a continued
income stream lasting until at least 31 March 2010.



The £300.0m consideration represents a £371.1 m surplus over Land Securities'
carrying value of Telereal which was shown as a net liability of £71.1m in Land
Securities' balance sheet as at 31 March 2005, at which time the Company's 50%
share of Telereal's gross assets was £1,065.9m and its share of Telereal's
liabilities was £1,137.0m.  With the cash received on completion of the sale,
the Company will continue to invest in its core markets of retail, London
offices and new property outsourcing contracts through LS Trillium, including
potential investment in the multi-billion pound Ministry of Defence and
government-funded Building Schools for the Future programmes.




LS Trillium agreements with Telereal



The LS Trillium agreements with Telereal involve the management of part of BT's
leasehold estate and the provision of other services and enables LS Trillium to
maintain an ongoing relationship with Telereal.  The agreement in relation to
the leasehold estate runs until the end of 2031 (although both LS Trillium and
Telereal have the option to terminate the agreement at any time on or after 31
March 2010 with not less than three months' notice).  Under these new agreements
LS Trillium will receive annual revenues of approximately £50.0m which will lead
to anticipated pre-tax profits of some £14.0m per annum.  Income from this
contract has only been included in the Company's business plan until 31 March
2010.



Future gain share



The sale agreement provides for payments to be made by Pears Group to LS
Trillium in the event that, within three years following completion, additional
value is realised in certain circumstances.   LS Trillium will be entitled to
50% of the excess gain above a value threshold of £750.0m in the event of a
disposal or listing and 50% of the benefit of any new debt raised in excess of
£500.0m.



Commenting on the disposal, Ian Ellis, Chief Executive of LS Trillium, said: '
Over the past four years we have worked with BT on the delivery of its property
strategy.  During this time we have considerably reduced the surplus property
estate and realised profit shares for BT and excellent returns for the joint
venture partners.  This deal enables us to benefit from an ongoing income stream
from Telereal while realising the value of our shareholding and thereby enabling
us to demonstrate the value inherent in LS Trillium as the UK's market leading
property outsourcing business.  We continue to see great opportunities in the
outsourcing market and will continue to invest in new contracts for LS Trillium,
building upon our position of strength.'



Commenting on the transaction, Graham Edwards, Chief Executive designate of
Telereal, said: 'Telereal is a strong service-orientated business.   We have now
established a long term ownership structure which allows us to build on our
success to date.  It has been a great pleasure working with Land Securities over
the past five years.  We now look forward to further strengthening our property
partnership with BT, and to using the skills and abilities of our team to the
full.'



Adam Dakin, Chief Operating Officer of Telereal, added 'For us it is business as
usual.  We have a strong team of 350 people who are committed to providing an
excellent service to BT and our other major client O2.  Following this deal
nothing changes, our people stay the same, our clients stay the same and our
commitment to service excellence stays the same.'



Extraordinary General Meeting and notice



LS Trillium is a wholly-owned subsidiary of the Company and also Pears Group's
joint venture partner in Telereal.  As a result Pears Group is a related party
of the Company under the Listing Rules, and therefore this disposal to Pears
Group is subject to approval by the Company's shareholders.  A circular
convening an extraordinary general meeting will be sent to shareholders shortly.



Equity analyst and investor conference call

Land Securities is holding a conference call for equity analysts and investors
at 10.00 a.m. today.

The call is to be hosted by:

Francis Salway, Group Chief Executive, Land Securities
Ian Ellis, Chief Executive of LS Trillium.

A live audio webcast of the conference call will be available on the company's
website (www.landsecurities.com).  An archive copy will then be available at the
same address later today.

                                    - ends -

Enquiries


Land Securities                                      Financial Dynamics
Francis Salway                                       Stephanie Highett
Emma Denne                                           020 7269 7160
020 7024 5460

Land Securities Trillium                             Telereal
Ian Ellis                                            Adam Dakin
020 7796 5500                                        020 7710 4208

Telereal/Pears Group
Graham Edwards
020 7433 3333








                      This information is provided by RNS
            The company news service from the London Stock Exchange