Page 1

Interim Results for the Six Months

ended 31st March 2004

15 June 2004

Page 2

Contents

• Corporate Introduction

• Highlights

• Financial – Summary Profit and Loss Account

– Market Value Balance Sheet

– NAV Movements

– Diluted NAV

– Cashflow

– Debt Cost– Debt Maturity

• Tenanted Residential – Commentary

– Key Features

– Key Performance Facts

– Portfolio Analyses

• Development and trading – Commentary

– Commentary on sites with end development value >£20m

• Opportunities

• Appendices

Page 3

Corporate Introduction

• Grainger is the UK’s largest quoted residential property investor and trader.

• Grainger specialises in regulated and life tenancies and owns a residential portfolio of circa 11,600 units.

• Total value of property owned is £1.2 billion.

• Grainger has two further divisions:-

– Residential/mixed use development

– Fund and property management

Page 4

Financial Highlights

• Profit before tax and exceptional items £35.1m +57%

• Earnings per share pre exceptional items 85.8p +61%

• Dividend per share 4.04p +15%

• Tenanted residential sales of £74m exceeded VP values by 8.9%

• Portfolio comprises 11,613 units– Investment value of £1,124m– VP value of £1,596m

• Development and trading division rationalised +180%– £17m operating profits

Page 5

Summary Profit and Loss Account

31 March 2004 31 March 2003£m £m

Tenanted residential 41.7 20.4

Development and trading 17.0 6.1

Joint venture contribution (net of interest) - 12.6

58.7 39.1

Administrative expenses (3.9) (2.2)

Interest payable:

normal (19.7) (14.5)

exceptional (3.7) -

(23.4) (14.5)

Profit before tax 31.4 22.4

Six Months Ended

Page 6

Market Value Balance Sheet

31 March 2004 30 September 2003£m £m

Properties

Tenanted residential 1,124 1,164

Development and trading 92 130

Total properties 1,216 1,294

Cash, investments, other 105 94

Total assets 1,321 1,388

Debt (736) (761)Net current liabilities and deferred tax (53) (84)

(789) (845)

Net assets 532 543

NB no revaluation of assets at 31 March 2004

Page 7

NAV Movements

£/Share £m

Opening 1 October 2003 21.94 543

Retained earnings 0.71 18

Valuation movements (0.97) (24)

Goodwill/other movements (0.21) (5)

Closing NAV 31 March 2004 21.47 532

Note:-

If residential assets were revalued upwards by 8.9% NAV would be £25.50 per share

Page 8

Diluted NAV

£/Share £m

NAV 21.47 532

FRS 13 (0.15) (4)

Contingent tax (7.21) (178)

NNNAV 14.11 350

Discounted, taxed reversionary surplus 4.72 117

Grainger NAV at 31 March 2004 18.83 467

Grainger NAV at 1st October 2003 18.40 456

Page 9

Cashflow

31 March 2004 31 March 2003£m £m

Income

Net rents 5 6

Property sales 131 45

Working capital movements (27) (8)

109 43

Purchase of subsidiary - (2)Interest, tax, dividends (39) (15)

Net operating income 70 26

JV receipts - 52

Net loan repayment (29) (11)

Available for property spend 41 67

Tenanted residential acquisitions (17) (45)Development and trading (12) (8)Other (1) (1)

(30) (54)

Movement in cash 11 13

Six Months Ended

Page 10

Debt Cost

Variable/Under One Year Hedged Fixed over one year Fixed to termination

Gross Debt£736m £761m

Hedging Level80% 80%

Blended Interest Rate5.9% 5.9%

Gearing Level121% 125%

LTV52.5% 52.9%

£231m5.4%

£150m5.0%

£292m 6.4%

£63m7.2%

£235m 4.8%

£150m 4.9%

£298m 6.6%

£78m 8.1%

31 March 2004 30 September 2003

Page 11

Debt Maturity

Over year or less Between 1 and 2 years Between 2 and 5 years Between 5 and 10 years

£48m 5.1%

£150m 4.9%

Over 10 years

£359m48.8%

£101m13.7%

£96m13.1%

£65m8.8%

£115m15.6%

£359m47.2%

£76m10.0%

£47m 6.2%

£69m 9.1%

£210m27.5%

Gross Debt£736m £761m

Cash£93m £82m

Net Debt£643m £679m

Average maturity 5.7 years 5.9 years

31 March 2004 30 September 2003

Page 12

Divisional Highlights

• Tenanted Residential - Strong sales

- Limited acquisitions

• Trading & Development - Kennel Farm sales

- Disposal of Commercial

- New divisional structure

• Fund Management - Integration

- Systems and reporting

- PIF consultation

Page 13

Tenanted Residential - Highlights

• Total sales 7% higher at £74m from 14% fewer units sold

• Average sales price of £109K

• Average increase over Sept. 2003 VP values of 8.9% (normal sales)

• High sales margin of 38%

• Current portfolio stands at VP value of approximately £1.6 billion

• Life tenancies - regulation

Page 14

Tenanted Residential - Key Performance Facts

31 March 2004 31 March 2003

No. of sales in period 676 784

Average sales price £109K £89K

Total sales £74m £69m

Trading Profits (excluding goodwill release) £28m £22m

Net rents and other income £10m £9m

Return (no valuation uplift) £38m £31m

Acquisitions £17m £45m

Six Months Ended

(GT + 50% BPT)

Page 15

Tenanted Residential - Commentary

• Good sales performance, September VP’s exceed by 8.9%

• Acquisitions analysis

• Total reversionary surplus on residential portfolio £472m

No £m VP £m as %VP

Regulated 111 12.8 17.7 72

Life Tenancies 62 4.2 9.0 47

AST, others 6 0.5 0.7 71

179 17.5 27.4 64

Page 16

Tenanted Residential - Portfolio Analysis by Investment Value

Regulated£842m72.3%

APT

£87m 7.5%

£134m11.5%

Vacant£51m 4.4%

Other£23m 2.0%

£27m 2.3%

Total units11,613

Total VP

Investment value£1,124m

Reversionary surplus£472m

£1,596m

Reversionary surplus per share£19.03

Regulated£820m73.0%

APT £41m 3.6%

£68m 6.0%

£138m12.3%

Vacant£40m 3.6%

Other£17m 1.5%

12,030

£1,164m

£484m

£19.55

£1,648m

31 March 2004 30 September 2003

LifeTenancies/Reversions

LifeTenancies/Reversions

Assured Assured

Page 17

Tenanted Residential - Portfolio Analysis by VP value

Total VP = £1,618m

(other interests of £30m omitted)

£0-£50K£63m 3.9%

£241m14.9%£241m14.9%

£613m37.9%£613m37.9%

£246m15.2%£246m15.2%

£500K +£32m 2.0%

£423m26.1%£423m26.1%

£0-£50K£59m 3.7%

£234m14.9%£234m14.9%

£594m37.7%£594m37.7%

£241m15.3%£241m15.3%

£500K +£32m 2.0%

£415m26.4%£415m26.4%

Total VP = £1,575m

(other interests of £21m omitted)

£250-£500K

£50-£100K

£100K-£175K

£100K-£175K

£175-£250K

£175-£250

£250-£500K

£50-£100K

31 March 2004 30 September 2003

Page 18

Tenanted Residential - Portfolio Analysis By Number of Units

£250-£500K756 6.3%

£500K +50 0.4%

Total units = 12,030

3,10625.8%3,10625.8%

4,43436.9%4,43436.9%

2,04517.0%2,04517.0%

1,63913.6%

3,01025.9%3,01025.9%

4,30037.0%4,30037.0%

£250-£500K742 6.4%

2,00817.3%2,00817.3%

1,50513.0%

£500K +48 0.4%

Total units = 11,613

£0-£50K

£50-£100K £50-£100K

£100K-£175K £100K-£175K

£175-£250K £175-£250K

£0-£50K

31 March 2004 30 September 2003

Page 19

Tenanted Residential – Regional Analysis

• 6.8% of our properties are valued above £350K (vacant possession)• 40.3% of our properties are valued below £150K (vacant possession)

Number IV VPof units £m £m%

01 Central London 575 127 17111.3%01 Inner London 1,207 187 25116.6%01 Outer London 1,403 167 23614.9%02 South East 1,954 210 30518.7%03 South West 811 64 1005.7%04 East 964 80 1227.1%05 East Midlands 669 34 533.0%06 West Midlands 1,178 111 1509.9%07 Wales 78 5 80.4%08 Yorkshire 737 34 503.0%09 North West 1,648 86 1237.7%10 North East 204 12 181.1%11 Scotland 185 7 90.6%

11,613 1,124 1,596100.0%

%

10.7%15.7%14.8%19.1%

6.3%7.6%3.3%9.4%0.5%3.2%7.7%1.1%0.6%

100.0%

Page 20

Development and Trading - Commentary

• Operating profit up to £17.0m from £6.1m

• 12.4 acres of land at Kennel Farm sold for £14.2m

• £19.0m of commercial investment property sold at £2.8m above 30 September 2003 values

• Focus on residential and mixed use developments

- Land & Regeneration

- Housebuilding

- Urban and Mixed Use

Page 21

Commentary on Sites with End Development £20m+

Property Description StatusSlough Mixed use development Hotel sold to Travelodge

(office element 69,000 sq. ft) Leisure unit let to LA Fitness Retail units under offer

Office available to let

Pimlico SW1 79 unit residential scheme Practical completion due endJune 2004Contracts Exchanged on saleof 66 units, 5 units reserved, 8 available

Former South 77 residential units above a new Construction commenced

London Hospital Tesco foodstore Completion June 2006Clapham, SW4

Macaulay Road, 110,000 sq. ft. mixed use scheme Application submitted Clapham. SW4 Anticipate decision late 2004

Hornsey Road Public/private partnership mixed use Anticipate exchange of Bath & Barnsbury scheme, 350 residential units, 43,000 contracts on purchase with Complex, Islington sq. ft. Council office and community use London Borough of Islington in

July 2004

Page 22

Opportunities

• Focus on core regulated tenancy market

• Expand life tenancy business – to be regulated in due course

• Ensure maximum advantage taken of any PIF structure

• Look at opportunities in Europe – controlled risk approach

• Development and trading business focus on residential or mixed use

Page 23

Appendices

• Summary of tenancy types

• Detailed Profit and Loss Account

• Tenanted Residential - Stock Analysis

• Tenanted Residential - Return by Region

Page 24

Summary of Tenancy Types

Regulated by

Security of tenure

Other characteristics

RegulatedAssured Periodic

AssuredLife Tenancies

Rent Act 1977

Yes - with succession rights

Since 1988 no new regulated thereforedeclining stock

Housing Act 1988

Yes

Housing Act 1988

Yes

-

Yes

Tenants transfer ownership in return for rent-free occupation and lump sum

Assured Shorthold

Housing Act 1988

No

Rent Market rent Market rent Market rent Usually no rent

Tenancy arises as a result of succession from regulated

Tenant has the right to renew tenancy

Landlord may get possession if appropriate notice is served

Set by rent officer every two years.Increases capped at RPI + 2.5% per annum.

Page 25

Detailed Profit and Loss Account

Develop- Develop-Property Sales & ment Property Sales & ment

Manag- Acqu- and Manag- Acqu- and

ment istions Trading Total ment istions Trading Total Bromley Total

£m £m £m £m £m £m £m £m £m £m

Turnover 19.7 64.1 38.1 121.9 8.4 36.1 12.7 57.2 26.3 83.5

Gross rents and other income 19.7 - 2.0 21.7 8.4 - 2.8 11.2 5.9 17.1

Property expenses (6.0) - (1.0) (7.0) (3.3) - (0.5) (3.8) (1.5) (5.3)

Net rents 13.7 - 1.0 14.7 5.1 - 2.3 7.4 4.4 11.8

Trading profits - 28.5 13.7 42.2 - 16.7 4.5 21.2 9.0 30.2

Release of negative goodwill - 3.2 - 3.2 - - - - - -

13.7 31.7 14.7 60.1 5.1 16.7 6.8 28.6 13.4 42.0Division Admin costs (4.0) (0.9) (0.5) (5.4) (0.5) (1.0) (0.8) (2.3) - (2.3)Group Admin costs - - - (3.9) - - - (2.2) (2.3) (4.5)

Operating profits 9.7 30.8 14.2 50.8 4.6 15.7 6.0 24.1 11.1 35.2

Capital profits 4.0 0.2 1.5 1.7

Operating contribution 54.8 24.3 12.6 36.9

Interest payable (21.7) (6.5) (9.2) (15.7)

Interest receivable 2.0 0.6 0.6 1.2

Total interest (19.7) (5.9) (8.6) (14.5)

Net profit before tax and exceptional items 35.1 18.4 4.0 22.4

Exceptional interest (3.7) - - -

Net profit before tax 31.4 18.4 4.0 22.4

31 March 200331 March 2004Tenanted Residential Tenanted Residential

Page 26

Tenanted Residential - Stock Analysis

VacantPossession

Invest-No. of Market ment Current

Residential Cost Value Value Value GrossUnits £m £m £m % age Rent

Regulated 7,854 614 820 1,131 73 30Assured periodic 456 29 41 51 80 2Assured shorthold 568 60 68 78 87 4Life tenancies/reversions 2,377 122 138 271 51 -Vacant 358 26 40 44 91 -

11,613 851 1,107 1,575 70 36

Other interests - 13 17 21 - 1 11,613 864 1,124 1,596 - 37

30 September 2003 12,030 892 1,164 1,648 71 38

Page 27

Tenanted Residential - Return By Region

Net Rents Trading Total P & L

£m £m £m

01 Central London 0.8 2.8 3.6

01 Inner London 1.1 4.5 5.6

01 Outer London 1.7 5.8 7.5

02 South East 1.8 3.9 5.7

03 South West 0.4 2.9 3.3

04 East 0.7 3.0 3.7

05 East Midlands 0.2 1.0 1.2

06 West Midlands 1.2 1.7 2.9

07 Wales - 0.2 0.208 Yorkshire 0.4 1.1 1.509 North West 1.2 3.6 4.810 North East 0.1 1.0 1.111 Scotland 0.1 0.2 0.3

9.7 31.7 41.4

Page 28

Interim Results for the Six Months

ended 31st March 2004

15 June 2004