British Land : Earnings Document

The Directors

The British Land Company PLC

York House

45 Seymour Street

London W1H 7LX

09 June 2021

Dear Sirs

The British Land Company PLC

Valuation as at 31 March 2021

1. Basis of Instruction
2. In accordance with the terms of our appointment as External Valuers to The British Land Company PLC, we have valued the freehold and leasehold properties detailed below, as at 31 March 2021, for balance sheet purposes and inclusion in your financial accounts. The properties are predominantly held for investment and in some instances held for development or in the course of development or occupied by the company.
3. We have included within this Report those properties held by way of Joint Ventures or through Limited Partnership arrangements.
4. This valuation has been undertaken in accordance with the current editions of RICS Valuation - Global Standards, which incorporate the International Valuation Standards, and the RICS UK National Supplement. References to the "Red Book" refer to either or both of these documents, as applicable.

1. Compliance and Independence
2. We can confirm that:

• Knight Frank LLP is appointed by the Directors of The British Land Company PLC as External Valuers, as defined by the RICS Valuation - Global Standards.

• Knight Frank LLP was appointed in the role as valuer in September 2005.

Knight Frank

55 Baker Street, London, W1U 8AN

[phone]

knightfrank.co.uk

Knight Frank is the trading name of Knight Frank LLP. Knight Frank LLP is a limited liability partnership registered in England and Wales with registered number OC305934. Our registered office is at 55 Baker Street, London W1U 8AN where you may look at a list of members' names. If we use the term 'partner' when referring to one of our representatives, that person will either be a member, employee, worker or consultant of Knight Frank LLP and not a partner in a partnership.

1. • These valuations have been undertaken under the overall supervision of the joint signatories.
   • In relation to Knight Frank LLP's preceding financial year, the proportion of the total fees paid by The British Land Company PLC ("the Company") and its joint venture partners to the total fee income of Knight Frank LLP was substantially less than 5%.
   • We recognise and support the RICS Rules of Conduct and have established procedures for identifying conflicts of interest.
   • In accordance with VPS3 of the RICS Valuation - Global Standards, the valuers, on behalf of Knight Frank LLP, with responsibility for this report are Simon Gillespie MRICS (signatory since December 2017) and Alistair Johnstone MRICS, both Registered Valuers. Parts of this valuation have been undertaken by additional valuers as listed on our file. We confirm that the valuers and additional valuers meet the requirements of RICS Valuation - Global Standards, having sufficient knowledge of the particular market and the skills and understanding to undertake the valuation competently.
2. Valuation
3. The Properties have been valued individually on the basis of Fair Value, in accordance with the RICS Valuation - Professional Standards which adopt the definition of Fair Value adopted by the International Accounting Standards Board. This is an internationally recognised basis and is defined as:
   "The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date."
4. No allowance has been made for expenses of realisation or for any taxation which might arise, and our valuations are expressed exclusive of any Value Added Tax that may become chargeable.
5. Our valuations reflect appropriate deductions in respect of purchaser's costs and, in particular, full liability for UK Stamp Duty as applicable at the valuation date.
6. The properties have been valued individually and not as part of a portfolio and no account has been taken of any discount or premium that may be negotiated in the market if all or part of the portfolio was to be marketed simultaneously, either in lots or as a whole.
7. We are of the opinion that the aggregate Fair Values of your interests in the properties, as at 31 March 2021 (the measurement date), was £1,415,075,000 (One Billion, Four Hundred and Fifteen Million, and Seventy-Five Thousand Pounds).

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The valuations are categorised as follows:

		Freehold	Long	Short	Total Fair
			Leasehold	Leasehold	Value
A)	Held as	£1,095,250,000	£75,825,000	-	£1,171,075,000
	investments /
	owner occupied
B)	Held for	£124,000,000	-	-	£124,000,000
	development
C) In the course of	-	£120,000,000	-	£120,000,000
	development
	Total Value	£1,219,250,000	£195,825,000	-	£1,415,075,000

1. Certain properties are held on very long leases, for terms of approximately 999 years at fixed peppercorn or nominal rents. For categorisation purposes these have been included in the freehold categories. Short leasehold properties are classified as having less than 50 years unexpired.
2. The Valuer's opinion of Fair Value was primarily derived using recent market transactions on arm's length terms, where available, and appropriate valuation techniques (the Investment Method).
3. We would refer you to our General Terms of Business for Valuations, a copy of which we attach at Appendix I.
4. The above figures are an aggregate of the values attributable to each individual Property, and should not be regarded as a valuation of the portfolio in the context of a sale as a single lot. We have, as instructed, valued the Properties on the assumption that the Portfolio will remain in existing ownership. As a result we have made no reduction or additions to the valuations to reflect possible effect of flooding the market were the portfolio, or a substantial number of Properties within it, to be placed on the market at the same time. Similarly in undertaking our valuation, we have allotted together certain individual Properties to form a separate Property in the manner we consider most likely to be adopted in the case of an actual sale. We consider that allotting the Properties together would allow a purchaser to capitalise on the estate management advantages and opportunities available from such a comprehensive ownership.

1. Market conditions explanatory note: Novel Coronavirus (COVID-19)
2. The outbreak of COVID-19, declared by the World Health Organisation as a "Global Pandemic" on the 11th March 2020, has and continues to impact many aspects of daily life and the global economy
   - with some real estate markets having experienced lower levels of transactional activity and liquidity. Travel, movement and operational restrictions have been implemented by many countries. In some cases, "lockdowns" have been applied to varying degrees and to reflect further "waves" of COVID-19; although these may imply a new stage of the crisis, they are not unprecedented in the same way as the initial impact.

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1. The pandemic and the measures taken to tackle COVID-19 continue to affect economies and real estate markets globally. Nevertheless, as at the valuation date some property markets have started to function again, with transaction volumes and other relevant evidence at levels where an adequate quantum of market evidence exists upon which to base opinions of value. Accordingly, and for the avoidance of doubt, our valuation is not reported as being subject to 'material valuation uncertainty' as defined by VPS 3 and VPGA 10 of the RICS Valuation - Global Standards.
2. For the avoidance of doubt this explanatory note has been included to ensure transparency and to provide further insight as to the market context under which the valuation opinion was prepared. In recognition of the potential for market conditions to move rapidly in response to changes in the control or future spread of COVID-19 we highlight the importance of the valuation date.

1. Valuation Procedures and Assumptions
2. The properties were inspected during the last twelve months.
3. As agreed with the Company, our valuations are based on information provided by them, upon which we have relied, and which has not been verified by us. Our assumptions (as defined in the RICS Red Book) relating to this information are set out below.
4. As agreed, our valuations are based on measurements which have been provided by the Company and which were carried out in accordance with The Royal Institution of Chartered Surveyors Code of Measuring Practice. In some cases the areas provided are as agreed with the tenants following rent review or letting.
5. The adoption of IPMS (International Property Measurement Standards), for the office sector, became mandatory with effect from 1st January 2016 for all RICS members replacing NIA (Net Internal Area) as set out under the current Code of Measurement Practice (Sixth Edition). It has been agreed with you that until the new definition of measurement has become established within the office leasing market, rental analysis for the office sector will continue to be shown on a net internal area basis. As or when buildings are re-measured, we will present our analysis on a dual basis, namely IPMS and NIA.
6. Our valuations assume that the properties have good and marketable titles and are free of any undisclosed onerous burdens, outgoings or restrictions. We have not seen planning consents and, except where advised to the contrary, have assumed that the properties have been erected and are being occupied and used in accordance with all requisite consents and that there are no outstanding statutory notices.
7. As stated in our General Terms of Business for Valuations, we do not undertake searches or inspections of any kind (including web based searches) for title or price paid information in any publicly available land registers, including the Land Registry for England & Wales, Registers of Scotland and Land & Property Services in Northern Ireland.
8. We have not read all documents of title or leases and, for the purpose of our valuations, have accepted the details of tenure, tenancies and all other relevant information with which we have been supplied by the Company. When considering the covenant strength of individual tenants we have not carried out credit enquiries but have reflected in our valuations our general understanding of

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purchasers' likely perceptions of tenants' financial status. We have, in addition, discussed with the Company any bad debts or material arrears of rent and have considered this information in arriving at our valuations.

1. We were not instructed to carry out structural surveys of the properties, nor to test the services, but have reflected in our valuations, where necessary, any defects, items of disrepair or outstanding works of alteration or improvement which we noted during the course of our inspections or of which we have been advised. Our valuations assume the buildings contain no deleterious materials and that the sites are unaffected by adverse soil conditions, except where we have been notified to the contrary.
2. We have not carried out any investigation into past or present uses of either the properties or any neighbouring land to establish whether there is any potential for contamination from these uses or sites to the subject properties. We understand that the Company has established procedures for the inspection of newly acquired properties to be carried out with particular reference to environmental matters, and that any such matters identified receive appropriate attention. Unless we have been provided with information to the contrary, we have assumed that the properties are not, nor are likely to be, affected by land contamination and that there are no ground conditions which would affect the present or future uses of the properties.
3. Our valuations assume that the properties would, in all respects, be insurable against all usual risks including terrorism, flooding and rising water table at normal, commercially acceptable premiums.
4. For properties in the course of development, we have reflected the stage reached in construction and the costs remaining to be spent at the date of valuation. We have had regard to the contractual liabilities of the parties involved in the developments and any cost estimates that have been provided by professional advisors to the projects. For recently completed developments we have, as instructed, made deductions in our valuations for retention monies and any outstanding development costs, fees, or other expenditure for which there may be a liability and of which we have been notified.

1. General Conditions
2. This Report and our valuations therein have been prepared on the basis that there has been full disclosure of all relevant information and facts which may affect them.
3. IFRS 13 imposes a duty on Directors and Auditors to make certain disclosures regarding property valuations in their accounts. Estimating Fair Value of a property asset inevitably requires a significant range of methodologies, inputs, and adjustments to reflect the wide range of factors which contribute towards the value of property e.g. location, condition, tenure, tenancies, development potential, etc.
   Consequently, even in the most transparent and liquid markets it is likely that valuers will use one or more significant unobservable inputs or make at least one significant adjustment to an observable input.
   Therefore, in terms of the hierarchy of information, the valuations contained within this Report can be categorised as Level 3 being principally based upon unobservable inputs.

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