Review of business structure

Trillium has grown by 57% in the last year in terms of floorspace under management, and it now manages more floorspace than the London and Retail divisions combined. Land Securities’ brand and balance sheet have been important to the development of Trillium to date. However, Trillium now has the size and track record to operate independently of Land Securities. Having regard to the different characteristics of Trillium’s business and its valuation metrics, the Board considers that the creation of long-term shareholder value is best achieved by demerger.

For the Retail and London divisions, the Board also believes that, over the longer term, the development of each business and the needs of investors will be better served by a separation of the two. Specifically,

• They operate in market segments with different characteristics and they will be able to adopt a capital structure best suited to their respective sectors’ outlook;
• They will, in future, each have an acquisition currency that should be valued in line with the assets or businesses they may wish to acquire at any point in their respective cycles. As a combined group, the market rating of London and Retail will tend to reflect an average of the less favoured sector and the more favoured sector, reducing its effectiveness as a potential acquisition currency; and
• The full benefit of successful investment decisions will be more visible and have greater financial impact in separate focused entities.