legal & general investments

Matt Jarvis - Fund Manager

CITYWIRE WEALTH MANAGER CONFERENCE AND AWARDSMarch 2013

Legal & General UK Property Trust

This is not a consumer advertisement. It is intended for professional financial advisers and should not be relied uponby private investors or any other persons.

March 2013 CITYWIRE WEALTH MANAGER CONFERENCE ANDAWARDS

2CITYWIRE WEALTH MANAGER CONFERENCE AND AWARDS

UK Commercial Property MarketOccupational markets and forecasts

For a choice of other images – pleasesee the Presentation divider slide

presentation available from the LGIMmenu



Source: IPD UK Monthly Index

IPD All Property Return - 1 month

Capital values declining for secondary stock and short income

-6

-4

-2

0

2

4

Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12

%, 1

Mon

th

Rental Growth Yield Impact Total return



Some easing in commercial real estate credit conditions

Commercial Property Lending Standards(positive indicates easing)

-100-80-60-40-20

02040

Nov-02

Nov-03

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09

Nov-10

Nov-11

Nov-12

ba

lanc

e of

resp

ond

ents

ea

sing

less

thos

etig

hten

ing

Uk Past 3 mthsUK Next 3 mthsUS Past 3 mths

Source: Bank of England, Federal Reserve

• Lending standards easing

• New originators- Debt funds

- US / emerging market banks

- Insurers

- Non-performing loan specialists

• Regulatory pressure on banks easing- Introduction of slotting being reworked

- Upside surprise on Basel III rules

• But let’s not get ahead of ourselves…



Walsall

Croydon

Swansea / Swindon

Doncaster

Hanley

BirminghamWolverhampton

Solihull / Cambridge

PlymouthDerbyNottingham

Glasgow

OxfordNorwich Reading

Stockport

Guildford

Kingston

Preston

BlackpoolIpswich

BournemouthHull

Bradford

Bolton

Sheffield

C. London York

Richmond

Cardiff

Coventry

Liverpool

Shrewsbury

Milton K.

Exeter

Manchester

The wide variation in town centre vacancy rates

% Increase from ’05 low

Latest town centre vacancy rate (%) Source: PMA



Office supply

• Overall London office vacancy rates are 5.5% comparedwith a 10yr average of 6.6%

• Equity targeting London will turn to development

• Regionally, overall vacancy remains inflated at 12.6%but selective Grade A shortages

• Regional development very Low: 1.75 million sq ftacross the UK, of which 1 million sq ft is pre-let

• Obsolescence to increase: ‘natural’ rate of vacancystructurally higher?

London:5.5%

WesternCorridor 14.8%

Bristol:11.3%

Cardiff:9.0%

Manchester:10.7%

Leeds:10.1%

Edinburgh:7.3%

Glasgow:11.8%

Birmingham:17.1%

Source: Legal & General Property



Supply - Industrial estates and distribution warehouses

• Second hand space increasing, while pockets ofunder supply for the best space

• Construction activity justified for the best andbiggest logistics sheds…

• ….Meanwhile demand looks toward design andbuild

• Yorkshire and Humber ‘unfairly’ inflating UKvacancy rates

ERV in voids as % of ERV: Industrials

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

StandardIndustrials

London Inner SouthEastern

Outer SouthEastern

Rest of UK DistributionWarehouses

%

2012 Q3 2007Q4




Legal & General Property central case all property projection – 6% overfive years

-2

0

2

4

6

8

10

2013 2014 2015 2016 2017

Income Rental Growth Yield Impact Depreciation Added Value / Lease Effects Total




Value in the derivatives curve?

0

2

4

6

8

10

2013 2014 2015 2016 2017

% pa LGP Jan-13 Derivatives Pricing Jan-13PMA Dec-12 IPF Concensus Nov-12

Source: Legal & General Property / RBS / PMA / IPF



Market outlook for 2013

• Risk 1 – Economy disappoints expectations

- Continued focus on lettability / angles which do not rely on market recovery

• Risk 2 – Inflation significantly overshoots

- Index-linked leases

• Risk 3 – Risk free rates rise

- Underweighting ‘bond-style’ assets with limited growth potential

• Risk 4 – UK exit from the EU

- Low probability but high impact risk. Could shock sentiment. Monitor.

• Growing optimism, but little in the way of new development

• Banks maintain an increasingly pro-active stance to exit underperforming loanpositions

• Debt availability easing with UK institutions to play a larger part

• Good assets continue to outperform, due to selective occupiers and investors

• Selective opportunities to buy secondary at deep discounts

Resilience to key risks?




Legal & General UK Property TrustPerformance and recent activity





Fund profileAs at 31 December 2012Objective: To provide an attractive income yield

and potential for income and capitalgrowth through a diversified portfolioof UK Commercial Property assets

Fund value: £728m in assets

£154m in cash (21%)

No. of direct properties: 64

Av. lease length: 9.3 years

(IPD Universe 10.2 years)

Vacancy rate: 2.1%

(IPD Monthly Index 10.3%)

Property initial yield: 6% (IPD Monthly at 6.32%)

Other assets: 2% REIT holding

0% Derivatives

Sector Weighting

11%

1%

12%

13%

14%13%

2%

6%

22%

4%2%

Retail High Street Retail Shopping CentreOffice - London Office - RegionalIndustrial Retail WarehouseLeisure OtherCash REITSReserved Cash (Developments)

Source: IPD / Legal & General Property



Legal & General UK Property Trust:Annualised Performance Over 1, 3 and 5 Years

1.6%

4.6%

-1.6%

2.1%1.5%

7.4% 7.2%

0.8%

-0.5%

0.3%

-0.3%

2.8%

-5%

0%

5%

10%

L&G(1yr)

LipperPeers(1yr)

L&G(3yr)

LipperPeers(3yr)

. L&G(5yr)

LipperPeers(5yr)

. L&G(1yr)

IPD(1yr)

L&G(3yr)

IPD(3yr)

L&G(5yr)

IPD(5yr)

Ann

ualis

ed R

etur

n (%

)

Source: IPD Monthly December 2012Lipper Property IMA December 2012

*Note: Lipper Peers are key comparable UK funds thatprimarily invest directly in UK property assets: mean, annualised.

Past performance is not a guide to future performance, and may not be repeated

Outperformance against Lipper Peers and IPD Monthly



Income focus – Ptarmigan distribution warehouse portfolioPortfolio of four distribution warehouses

High income yield of 9.5% – secure tenants, but shorter leases.

• Banbury – adjacent to M40 and Let to DHL for 5 years.

• Birmingham – Nexus – close to M6 let to Corporate Expressfor 5 years.

• Northampton – Brackmills – close to M1 and let to John Lewisfor 5 years.

• Manchester – Stakehill – between M60 and M62 and let toAldi for 3 years.




Development funding - long RPI or fixed increase leasesGreenwich - Waitrose supermarket funding

• Retail element of a residential development by Galliard Homes

• £15.6m funding of supermarket pre-let to Waitrose for 25 years withannual fixed increases of 2.5% pa.

• Development Funding interest to charge during development at 5%

• Site purchase with payments linked to completion of wider 980 unitresidential scheme fronting Thames (right).

Stirling – Burghmuir Retail Park Development Funding

• Supermarket and retail park development with Stirling DevelopmentAgency

• £18.5m funding of new retail park with A1 planning consent.

• 65% pre-let to Waitrose at £17.50 per sq.ft for 25 years with fixedincreases of 2.5% pa every 5 years. First Waitrose outside ofEdinburgh / Glasgow.

• 25% pre-let to TK Maxx at £20 per sq.ft for a minimum of 10 years.

• Development Funding interest to charge during development at 5.5%.

• Final payments linked to success of letting Unit 3 (10%).Source: Legal & General Property



Future asset management and development opportunities

67 Tufton Street, London SW1

• Located in Victoria within walking distance of Housesof Parliament.

• Let to April 2017 (tenant break) to Secretary of Stateat a rent of £45 per sq.ft, but is only occupied by askeleton staff.

• Opportunity to convert to residential, subject toplanning and vacant possession.

• Purchased in November 2013 for £16 millionreflecting 5.75% Net Initial Yield.

• Development team appointed and plans drawn up fora 22 unit residential scheme.

• Terms agreed in principle with the occupier andadjoining owner.

• Residential market remains attractive for core CentralLondon product from developers and occupiers alike.




Summary

• Performance track record remains very strong over 1, 3 and5 years despite growth handicap.

• Success on asset management expected in H1 for 2013.

• Cash position under control despite significant inflows.

• C.20% of all lease income benefits from either fixed or RPIlinked increases.

• Low void level maintained through the life of the fund.




AppendixSupporting Slides





Michael BarrieDirector and Lead Fund Manager

Recent Career• Joined Legal & General Property Ltd as Director in

November 2005.• Currently responsible for UK balanced funds with

specific focus as Fund Manager of the UK PropertyTrust.

• Previously a Director with Foreign & Colonial PropertyAsset Management.

• Chartered Surveyor.• Degree in Urban Land Economics from Sheffield

Hallam University and a post graduate Diploma inProperty Investment from Reading University.

Matt JarvisFund Manager

Recent Career• Joined Legal & General Property Ltd as Asset

Manager in November 2004.• Currently responsible for UK Property Trust.• Previously a Commercial Valuer with Jones Lang

LaSalle.• Chartered Surveyor.• Degree in Land Management from Reading University.• Diploma in Property Investment from Cambridge

University.

UK Property Trust




Diversified property and tenant risk

2.3%MWB Business Exchange Centres Ltd8

4.6%British Airways Plc4

4.7%The Malmaison Hotel (Manchester) Ltd3

2.1%Everything Everywhere Ltd10

2.2%Homebase Ltd9

2.4%Conexant Systems UK Limited7

3.2%National Westminster Bank Plc6

4.0%BMI Healthcare Ltd5

4.6%Amgen Ltd2

8.0%Tesco Stores Ltd1

%Rent

Top 10 Tenants

5.6%Cambridge Science. Pk – Amgen1

2.6%Darlington – Woodlands Hospital6

3.6%Islington – Upper Street3

2.0%Leeds – Whitehall One10

2.2%Manchester – Royal Buildings9

2.3%London – Walter House, Strand8

2.4%Ludlow – Tesco7

2.8%Market Deeping – Tesco5

3.0%Manchester – Malmaison Hotel4

3.7%Hayes – Bulls Bridge I/E2

%WholeFund

Top 10 Properties




Void management

0

2

4

6

8

10

12

14

End2005

Mid2006

End2006

Mid2007

End2007

Mid2008

End2008

Mid2009

End2009

Mid2010

End2010

Mid2011

End2011

Mid2012

End2012

% pa

IPD Monthly Index Vacancy Rate Fund Vacancy Rate (%)

Source: Legal & General Property/IPD



Asset management – other recent highlights

St.Stephen’s Place, Trowbridge

• Purchased in June 2010 as part of CastlePlace Shopping Centre. Attributed price £1m.

• Planning application obtained in Q1 2012 tobuild a leisure park and provide sorely neededfacilities for the town’s residents.

• Seven screen cinema pre-let to Odeon for 25years at £14 per sq.ft. First two rent reviews tobe RPI linked (2%-4%).

• 80 bed hotel pre-let to Premier Inn for 20 yearsminimum at £4,100 per room. Rent reviews toCPI (0%-5%).

• Six family restaurants and a café pod –currently on the market and attracting goodinterest.

• Contractors appointed with PracticalCompletion anticipated Q3 2013.




Powerful combination of sector expertise and corporate depth

BMW UK Portfolio

Experienced Fund Team

Real Estate Research Team

RetailShoppingCentres

RetailWarehouses Offices Multi-let

IndustrialsLogistics

Planning,Development

&Transactions

Macro Economic view Corporate Relationships Tenant Credit Analysis

Legal & General Investment Management

Sector Specialists

LeisureDerivatives

andREITS

UK Property Trust Team – Use our platform reach



KEY FACTS

Managing Director: Bill Hughes

Number of Funds: 18

AUM: £10.4bn (US$16.7bn)

Number of Properties: 430

Number of Tenants: c.2200

Total Staff: 81

Note: All information as at Dec 2010

£1,251

£648

£521

£2,292 £2,546

£2,494

Retail

Office

Industrial

Logistics

Other

Cash/Derivs/Unlisted

All Figures in £million

Scotland

3%

North

10%

East

10%

Midlands

11%

South East

29%

London

28%

West

9%

Legal & General Property

7

Entirely UK focussed businessSource: Legal & General Property



• Legal & General Property has a strong and long-termcommitment to sustainability and adopting orinvesting in pioneering solutions. We believe thatthrough the adoption of sustainable practices, we willdeliver enhanced returns to our investors over themedium to long term.

• We are working in partnership with UpstreamStrategies, the UK Green Building Council and theBetter Buildings Partnership to formulate strategies,targets and action plans for the sustainablemanagement of all our property portfolios.

• We understand that each of our properties hassocial, economic and environmental effects on thecommunity in which it is built. We aim to understandthis triple bottom line of sustainability through trainingall staff in the fundamentals of Sustainability in RealEstate Investment.

Sustainability commitment




DisclaimerImportant information

This presentation, and any information it contains, has been produced for use by professional investors andfinancial advisers only and should not be distributed without the permission of Legal & General (Unit TrustManagers) Limited.

Legal & General UK Property Trust is an authorised unit trust, managed by Legal & General (Unit TrustManagers) Limited. Unit Trust funds are managed by Legal & General Property on behalf of internal andexternal clients of Legal & General.

The Fund is designed to be held for the medium to long term of at least five years.

The value of property is generally a matter of valuer’s opinion rather than fact. Details of the specific andgeneral risks associated with the fund mentioned are contained within the Key Investor Information Document.

The risks associated with the Fund are set out in the Prospectus and this should be understood before makingany investment decisions. Additional information in relation to the Risk Management process is available onrequest. A copy of the Prospectus can be obtained from: Legal & General (Unit Trust Managers) Limited.

The value of investments and any income from them can fall as well as rise and is not guaranteed andinvestors may get back less than they invest. The views expressed within this document are those of Legal &General Investment Management Limited, who may or may not have acted upon them. Past performance isnot a guide to future performance.

Issued by Legal & General (Unit Trust Managers) Limited. This document should not be taken as an invitationto deal in Legal & General investments or any of the stated investments.

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