Klépierre

annual repport 2004 223 shopping centers owned 340 shopping centers managed Klépierre, the leading player in shopping centers in Continental Europe.

A Continental European specialist in shopping center real estate. In a little more than five years, Klépierre has produced an exemplary real-estate business model for its core shopping center markets in Continental Europe, where the Group has become a player of the first rank. Klépierre leads the market in France, Spain, Italy and Hungary, and owns more than 220 shopping centers in 9 countries, covering 1700000 square meters of total leasable floor area. Its real-estate assets are valued at €6 billion, of which €5 billion for shopping centers and €1 billion for office properties. focus An integrated European shopping center management network. The driving force behind Klépierre’s success in the shopping center segment is Ségécé’s unrivaled management expertise in Europe. Ségécé, which is 75% owned by Klépierre, manages more than 340 centers through a network of 8 local subsidiaries.

Clear visibility ahead. Klépierre’s positioning in markets with high growth potential – in terms of both new developments and extensions of existing malls – as well as the quality of its holdings and management capability support the Group’s target of steady, double-digit growth in net current cash flow over the medium term.

A non-core but opportunistic office property business. Thanks to the stability of its core busi- ness, which offers Klépierre ongoing opportunities to reinvest regularly generated cash flows, the Group is able to leverage its acquired expertise in the Paris office market to take full advantage of this highly liquid segment during upside periods.

A stock which combines growth and value. Since it opted for SIIC status (Sociétés d’Investissements Immobiliers Cotées) in 2003, Klépierre has been able to offer its Shareholders a favorable tax environment as well. Listed on the Eurolist by Euronext and included in a number of benchmark indices – SBF 120, Euronext 100 and DJ Stoxx 600 – Klépierre’s market capitalization has more than doubled in 5 years, surpassing the €3 billion mark. Over the same period, the average annual performance of the share (coupon reinvested) was 18.8%. Its primary Shareholder, the BNP Paribas group, owns 53.5% of Klépierre’s equity capital. 1

2 a word from management 4 executive board 5 message from the chairman of the supervisory board 6 supervisory board 7 committees

8 strategic strenghts 10 Klépierre’s business model 12 financing and dividend distribution policy 14 stock market

16 business and operations 18 key figures 20 highlights 22 shopping centers 32 offices holdings

38 properties

44 responsible development 46 introduction 48 shareholders 50 employees 52 risk management 54 clients, suppliers and community 56 the environment

58 financial report 60 management report contents 84 consolidated financial statements 124 corporate financial statements 142 draft resolutions 153 general and legal information From left to right: Claude Lobjoie, Member of the Board Michel Clair, Chairman Éric Ranjard, Vice-Chairman

a wo rd from management

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or Klépierre, 2004 was once again a year of high performance. Net current cash flow per share rose by 16.8%, and revalued net assets per share, including duties after deferred taxes on capital Fgains, by 12.7%. In fact, the economic backdrop to this performance was not particularly favorable. The office rental business was very mediocre throughout the year, and the recovery in consumer spending – sluggish in 2003 – was mixed at best in Continental Europe. We owe our highly satisfying results – for the fourth year in a row – to two factors: business conditions and “Today, Klépierre’s the strategy we have followed since 2000. real domestic market In terms of business conditions, two factors in particular had a positive impact on Klépierre’s performance. is Europe.” Klépierre took advantage of historically low interest rates to finance its investments at reasonable cost and restructure its debt coverage ratio under positive terms. In addition, strong index-linked rental adjustments, particularly in France, boosted the efforts of Ségécé and its subsidiaries, as well as those of Klégestion. The final result was solid growth in rents.

In terms of strategy, the wisdom of our decision to focus on the shopping center segment is being demon- strated year after year. The combination of three factors – containment of commercial supply, organized under various forms throughout Europe; very long-term leases on commercial property; and the uninter- rupted albeit if irregular growth in consumption – ensures a moderate risk profile for Klépierre and low revenue volatility.

Today, Klépierre’s real domestic market is Europe. We have a portfolio of identified projects for the next five years worth 2.7 billion euros. With lasting and profitable growth in our real-estate holdings and revenues now at hand, Klépierre intends to confirm its reputation as a growth and value stock in 2005 by maintaining its target of two-digit growth in results.

Michel Clair Éric Ranjard Chairman Vice-Chairman executive Michel Clair Chairman board (58) A graduate of ENA, Mr. Clair was appointed to the Klépierre Board of Directors in 1996, and was appointed its Chairman in 1997. Since July 28, 1998, he has served as Chairman of the Klépierre Executive Board. From 1975 to 1991, Mr. Clair worked in government, first as an auditor and then as a commissioner for the French Government Accounting Office. During this period, Mr. Clair held a variety of positions with the French Planning Office and the Industrial Affairs Office, and served as chief of staff for the Vice-Minister of Finance and Economy in charge of Commerce, Crafts and Services from 1986 to 1988. In 1991, he joined Compagnie Bancaire, where he was Corporate Secretary and a member of the Executive Board. After the Paribas-Compagnie Bancaire merger, he was appointed to the Paribas Executive Committee as the senior executive in charge of real estate and pooled corporate services. Éric Ranjard Claude Lobjoie Vice-Chairman

(59) An engineering graduate of ESTP, Mr. Ranjard (56) An engineering graduate from INSA LYON, has spent most of his professional career with Mr. Lobjoie joined Compagnie Bancaire in 1970, Ségécé. He was appointed Chairman of Ségécé in where he served as Corporate Secretary of UCB 1999. Since 1998, he has been a member of the (1991-1996) and then Chief Real Estate Officer (1996- Klépierre Executive Board, in charge of development 1998). He has been a member of the Klépierre and the Shopping Center Division. He also holds a Executive Board since 1998, and is head of the number of chairmanships or vice-chairmanships in Office Property Division and Corporate Secretary. Klépierre subsidiaries. An expert for the Adminis- He is also President of Klégestion. Claude Lobjoie trative Court of Paris, he was elected President of the was appointed Chairman of Klépierre Services Conseil National des Centres Commerciaux in 2003. on January 1, 2002.

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“The Supervisory Board ensures that growth is achieved under the best possible conditions message of security.” he strides we have made in the last sidiaries – introduce certain execution risks. It is from the chairman five years – during which I have had the responsibility of the Supervisory Board to of the supervisory board the honor of serving as Chairman of ensure that management allocates the resources the Supervisory Board – are a legiti- needed to ensure that the best possible condi- Tmate source of pride for everyone who has tions of security accompany growth. played a role in bringing them about. The Board was involved in a number of projects Our success is first and foremost the result of our in 2004. Its members met on 17 different occa- strategic decision to acquire expertise in shop- sions, in both plenary work sessions and spe- ping centers at the European level. For the cialized committee meetings. The Board focused investor, shopping centers offer two undeniable on several key issues in 2004. It authorized near- advantages: low sensitivity to economic cycles ly €700 million in investments; approved a and steady revenue growth. Our presence in nine €600 million bond issue in June; and validated European countries allows us to fully capitalize the decision to restructure interest-rate hedging on new development opportunities in countries instruments in December. The Board also made with varying rates of shopping center penetra- several accounting decisions prior to the adop- tion and growth. Europe offers Klépierre a vast tion of the new IFRS, and followed closely the field for development and improves the spread completion of the business processes that now of its risks. guide operations. For a company developing at a sustained pace, Klépierre successfully surmounted the inevitable all of these factors – a change in scale, the multi- challenges that go with rapid development. The plication of ownership and management struc- Company now has the human, financial and tures, a substantial increase in the workforce, organizational resources it needs to carry out an and the creation of a global network of sub- ambitious strategic plan.

Vivien Lévy-Garboua Chairman of the Supervisory Board tion but also in consumption patterns. Jean NUNEZ (44) was elected to the April 7, 2005. He will continue to serve as a supervisory Supervisory Board on July 21, 1998. He is member of the Board. The Supervisory Bertrand de FEYDEAU* (56) was also head of Finance and Control for the Board will be convened immediately after board elected to the Supervisory Board on July 21, Banque de Financement et d’Investisse- the annual meeting of the shareholders and 1998. He is also Senior Executive Vice Pres- ment of BNP Paribas. Mr. Nunez is a special- asked to elect Dominique Hoenn as its new ident of Economic Affairs for the Archdio- ist in real estate and finance. chairman. cese of Paris. Mr. de Feydeau is a recognized expert in European corporate real estate Laurent TRECA (57) was elected to the In accordance with its internal policies and and real-estate financing. Supervisory Board on April 12, 2001. He is procedures, the Supervisory Board meets also a member of the Executive Committee at least four times each year. The Supervi- Vivien LÉVY-GARBOUA (57) was Dominique HOENN (64) was elected of BNP Paribas, where he is head of devel- sory Board has granted its Chairman the elected Chairman of the Supervisory Board to the Supervisory Board on April 8, 2004. opment. An investment banker by training, power to independently authorize the on April 12, 2000. He is also a member of He is also Senior Advisor for BNP Paribas Mr. Treca has a great deal of experience in Executive Board to carry out the following the Executive Committee of BNP Paribas. and a member of the Collège de l’Autorité assessing investment opportunities. transactions, provided that no single trans- The guardian of the Group’s long-term and des Marchés Financiers. Mr. Hoenn offers action exceeds €46 million or the equiva- profitability objectives, Mr. Lévy-Garboua the Group extensive experience in equity The Executive Board will recommend that lent amount in another currency: is particularly attentive to changes in inter- markets, interest rates and corporate debt. the shareholders appoint two new members buy and sell any stake in any company nal control and compliance issues. to the Supervisory Board at their annual (no restriction on related party transac- Bertrand JACQUILLAT* (60) was meeting on April 7, 2005. If elected, the two tions); Christian MANSET (63) has served as elected to the Supervisory Board on April new members would replace Jean Nunez acquire or dispose of any properties (no Vice-Chairman of the Supervisory Board 12, 2001. He is also Chairman and CEO of and Laurent Treca, whose terms of office restriction on related party transactions); since July 21, 1998. He is also Chairman of Associés en Finance and a member of the expire at the close of the annual meeting: in the event of a dispute, enter into Compagnie Financière Ottomane. Mr. Manset faculty of Institut d’études politiques de François Demon (36), Head of Financial agreements or transactions and accept has extensive experience in corporate Paris. A financial theorist, Mr. Jacquillat has Management for BNP Paribas; compromise settlements. administration as well as expertise in finance, in-depth knowledge of equity market valu- Alain Papiasse (49), Member of the BNP The Supervisory Board met eight times in organization and corporate governance. ation techniques. Paribas Executive Committee and head of 2004, and the overall attendance rate was the Asset Management and Services division. 83%. As set forth in the Company bylaws, Jérôme BÉDIER* (49) has served on Bertrand LETAMENDIA* (58) was only half of the annual compensation of the Supervisory Board since April 8, 2004. elected to the Supervisory Board on July 21, Vivien Lévy-Garboua has announced his members of the Supervisory Board is fixed. He is Chairman of the Fédération des Entre- 1998. He is Chief Real Estate Officer of AGF intention of resigning from his position as The variable portion of their compensation prises du Commerce et de la Distribution, Group and a recognized real-estate investment Chairman of the Supervisory Board at the is contingent on attendance at Supervisory and a specialist not only in retail distribu- specialist in the Paris financial marketplace. close of the annual general meeting on Board meetings. * Definition of independent director:“A director is independent if he has no relationship with the Company, its Group, or its officers that may interfere with his independent judgment.”

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with investment strategy. The Committee Audit Committee members: ber of 2003, and approved the action plan focuses primarily on monitoring the Christian Manset – Chairman for 2005. committees value creation of planned or completed Bertrand Jacquillat* investments. This information is used to Bertrand Letamendia* Selection and Compensation weigh decisions relating to the acquisi- Vivien Lévy-Garboua Committee members: tion, disposal or retention of assets. In Jean Nunez Vivien Lévy-Garboua – Chairman addition, financing hypotheses have Laurent Treca Bertrand de Feydeau* been developed for all future invest- Dominique Hoenn ments. The Committee met four times in The role of the Audit Committee is to eval- Bertrand Letamendia* 2004 and the overall attendance rate was uate the major accounting decisions, finan- 85%. In particular, the Committee was cial disclosures and procedures. The Compensation Committee issues Initially set up in 1998, called on to issue an opinion on the two The Committee met four times in 2004 and recommendations on the compensation of Klépierre’s corporate gover- major development opportunities of the the overall attendance rate was 68%. The directors and officers of the Company and nance structures were designed year: the acquisition of 12 shopping principal issues submitted to the Commit- stock option plans. During its meeting on to ensure that independent centers in Hungary and two shopping tee in 2004 include: April 8, 2004, the Supervisory Board moved specialists assess the merits malls juxtaposing Leclerc hypermarkets. the application of IFRS, including follow- to expand the purview of the Compensa- of the Company’s strategic The Committee studied the Hungarian up on the work of the 18 task forces formed tion Committee to include Executive Board decisions. market in detail, including local legisla- and validation of the options chosen, such level appointments. The name of the tion and the competitive environment, as the historical cost method for investment Committee was changed accordingly. The and ensured adequate due diligence on properties; Selection and Compensation Committee the technical and social aspects of the the accounting treatment of acquisitions met once in 2004. All of its members Investment committee acquisition of a 50% interest in a local completed during the period; attended. members: management company. The Committee accounting cut-off procedures for each Vivien Lévy-Garboua – Chairman is also the guardian of Klépierre’s reporting period. Independent auditors – Jérôme Bédier* commitment to cultivating co-investment The Committee also approved the fees incumbents: Bertrand de Feydeau* partnerships. budgeted for the independent auditors in Ernst & Young Audit Dominique Hoenn 2005, the content of the audit assignments, Mazars et Guérard Christian Manset The Supervisory Board may delegate and the distribution of these assignments investment authority as follows: between the two audit firms. The Commit- Independent auditors – The Investment Committee studies the Executive Board, up to €8 million; tee was also kept informed of changes alternates: terms and conditions of potential acqui- Chairman of the Supervisory Board, acting made during the year to the internal Christian MOUILLON sitions to ensure that they are in line on behalf of the Board, up to €46 million. control procedures submitted in Decem- Patrick de CAMBOURG strateggic strenggths

strategic strengths Klépierre’s business model

A constant and successful focus on value creation €682 million Klépierre has been able to deliver a consistent financial performance, in particular steady cash flow growth, by continuously enhancing the value of its assets and invested in 2004 by going after external expansion opportunities in Europe.

A model adapted tries account for 25% of total Group revenues, to Continental Europe versus 65% for France. Klépierre’s business development model is Between 2001 and 2003, Klépierre also invested in centered on owning and managing shopping Greece, Portugal, Slovakia and the Czech Republic. centers across Continental Europe. The coun- In 2004, the Group made major acquisitions in tries in which Klépierre invests share certain key Hungary – 12 shopping centers representing a total characteristics: stringent legislative limitations investment of €275 million – securing leadership on supply, rapid convergence in consumption in the domestic market. and distribution patterns, and the pan-European Consistent with its growth strategy, the Group’s development strategy of the major retail shopping center management subsidiary Ségécé anchors. continued to methodically build an extensive network of local subsidiaries to ensure the A policy of sustained growth enhancement of the acquired properties. Ségécé After developing in France, Klépierre invested in acquired full ownership of its Spanish subsidiary eight other European countries, beginning with Centros Shopping Gestion, as well as a 50% stake Spain and Italy, which today offer considerable in PCM, a Hungarian management company with potential for expansion. Together, these two coun- several years of experience in its local market. In

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Greece, Ségécé founded Ségégé Hellas, a local revenues (excluding development business) of subsidiary, to manage the growing number of 12%, ascribable to a lower level of fee income from holdings in the country. third-party business. The project portfolio – for shopping center acqui- After deduction of management expenses, oper- sitions, extensions and developments – expanded ating cash flow increased by 12%. As a result of the again in 2004. Estimated at €2.7 billion between leverage procured through debt financing, only 2005 and 2009, these projects represent approx- the group share in increases is relevant: on this imately €210 million in lease income. Over the basis, pre-tax current cash flow increased by medium term, the program should enable 14.5%. Net current cash flow increased by 16.8%, Klépierre to continue to invest at a sustained rate well above the target of 10%. in this segment of the real-estate market, where opportunities are scarce and competition is Outlook for 2005 intense. Klépierre has announced an investment objective for 2005 of around €600 million, and a target Double-digit growth target increase in net current cash flow per share of at The Group’s financial performance is primarily least 10%. driven by its ability to increase net current cash flow. The Group is targeting a double-digit rise in this key performance indicator over the medium term, by leveraging a combination of organic and external sources of growth. The key internal driv- ers are the quasi-automatic impact of index-linked adjustments, rental reversion on leases that come up for renewal, and the re-letting of vacated space. The primary external driver is new investments, principally financed out of free cash flow, the proceeds of divestitures and the reasonable use of debt financing. €600 million: Results attest to the vitality of the business model 2005 investment In 2004, the internal increase in rents was 3.7%. objective The impact of acquisitions provided an additional 8.9%, including the full-year effect of acquisitions and disposals made in 2003. Overall, rents increased by 12.6%, compared with a rise in strategic strengths financing and dividend distribution policy

A financing policy that serves long-term strategy 10%

Debt financing that is adapted to the risk profile contributes minimum annual significantly to global performance. growth in dividend over the medium term

A balanced financing structure Liquidity management Klépierre’s investment capacity and steady To ensure the continuity of its resources, growth in cash flow offer excellent visibility on Klépierre is attentive to refinancing its long-term its evolving debt profile. investments while maintaining a balanced debt schedule and diversified sources of financing. To maintain a balanced financial structure and In late 2004, bond debentures accounted for 44% competitive financing costs, Klépierre monitors of corporate debt (versus 27% at year-end 2003). its debt to ensure compliance with two thresh- The average debt maturity is 5 years and bank olds: ratio of corporate debt to the fair market borrowings were divided among several instru- value of holdings of 50%, and EBITDA equal to at ments (syndicated loans, mortgage loans, etc.) least 2.5 times interest expense. and 14 counterparties. Its policy of gradually and pragmatically strengthening Shareholders’ equity (redemp- Market risk management tion of convertible bonds in 2002 and stock To maintain the margin between the return on its dividend payments in 2004) also contributes to investments and the cost of its financing, Klépierre this objective. limits its exposure to interest rate fluctuations by ensuring that at least 70% of its debt is either

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Change in dividend 2.70

1.75 1.55 1.38 1.25 +15.0% +70.9% +12.9% +12.7% +10.0% 0.83 0.92 1.03 1.17 2.00 2.30

1999 2000 2001 2002 2003 2004

Net dividend Gross dividend Dividend

fixed-rate or covered by fixed-rate hedges (77% at The dividend distributed in 2004 was €2, an year-end 2004, thanks to the average maturity of increase of 70% over the prior year. In subsequent 6 years on its swap portfolio). Klépierre also exer- years, the dividend should increase in tandem with cises strict control over its counterparty risk by improvements in the Group’s key performance contracting swaps exclusively with banks whose indicators: current cash flow and revalued net Return on investment(1) financial condition is excellent and by limiting its assets per share. At the annual general meeting on (dividend reinvested) short-term cash investments to the most secure April 7, 2005, Shareholders will be asked to approve investments (money market funds and govern- a dividend payout of €2.30, a 15% increase over 1997 1998 1999 2000 2001 2002 2003 2004 ment bonds). Its foreign exchange exposure is the prior year. The dividend will be available for structurally limited by two factors: only 6.6% of payment on April 15, 2005. 21.3% 22.6% 17.9% 18.8% 21.9% 26.0% 27.3% 42.3% Klépierre’s holdings are outside the Eurozone and Based on the foregoing, the estimated distribution all rents are invoiced in euros. in 2005 is equal to 104% of consolidated net income (1) Average annual increase assuming ownership as of January 1 of each year. and 60% of net current cash flow. Excellent return on investment Combined with the annual appreciation of its stock, After adopting SIIC (Sociétés d’Investissements the dividend has offered Klépierre shareholders Immobiliers Cotées) tax status in 2003, Klépierre one of the best returns on investment in the indus- aligned its dividend distribution policy accordingly. try in recent years. strategic strengths stock market

Klépierre stock performance

1999 2000 2001 2002 2003 2004 Closing price (1) 32 33.4 35.8 43 47.7 65.2 % change 10.5% 4.3% 7.2% 20.3% 10.8% 36.6% Change in CAC 40 51.1% -0.7% -22.0% -33.7% 16.1% 7.4%

(1) 1999-2002 stock price rastated to reflect the impact of the stock split in 2003.

Klépierre stock turns in a remarkable performance

Moderate growth EuroZone index: +38%) and high dividend in the equity markets payouts, real-estate stocks earned the reputa- After rebounding in 2003 (+16%), the CAC 40 tion of offering both growth and value. finished the year 2004 up by 7.4%. Three factors combined to support equity markets: strong global Significant increase economic growth, solid corporate earnings guid- in Klépierre stock price ance and historically low interest rates. In line with its industry peers, the Klépierre stock But in the face of soaring oil prices, a weak made significant gains in 2004, ending the year dollar and geopolitical tension (due to the up by 36.6% at €65.1. conflict in Iraq), investors anticipated a slow- After gaining 17.8% in the first half of the year, the down in growth and decided to adopt a cautious stock price retreated slightly in September and stance. then rebounded in the last quarter on positive news flow related to new rules for SIICs. Real-estate stocks Combining price gains and the dividend payout retain their appeal in 2004, the Klépierre stock offered an annual Against this backdrop, European real-estate return of 41.8%. Liquidity was also enhanced, stocks were highly sought-after investments. with an average daily trading volume of nearly Thanks to sustained annual appreciation (EPRA 50,000 shares exchanged (+10%).

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Klépierre stock performance Investors favor stock dividends Klépierre offered its Shareholders the option of 150 a cash or stock dividend in respect of 2003, in the € Klépierre amount of 2 per share. 140 EPRA EuroZone Response to this proposal was overwhelmingly SBF 120 positive: 78.7% of Klépierre’s Shareholders CAC 40 opted for the stock dividend, based on a price 130 of €49 per share – an attractive 10% discount. This vote of confidence strengthened Share- 120 holders’ equity by €68.8 million.

110

100

90

January 2004Febuary March April May June July August SeptemberOctober November December January 2005Febuary Daily trading volumes (weekly average)

331932 202419

100000

50000

0

January 2004Febuary March April May June July August SeptemberOctober November December January 2005Febuary business and operations

business and operations key figures key figures

Real-estate holdings and business 2000 2001 2002 2003 2004 Appraised values, incl. transfer duties at 12/31 (total share) 2 645.4 4 123.3 4 708.7 5 225.2 5 993.2 Lease income (group share) 133.9 233.7 267.8 309.4 347.2 Revenues (total share) o/w 248.3 326.0 345.0 386.2 431.3 - Shopping centers 163.5 236.9 262.7 311.9 366.3 - Offices 84.8 89.1 82.3 74.3 65.0 in € millions

Lease income (in € millions)

81.2 74.2 64.5

230.7 279.0 333.1 2002 2003 2004

Appraised value, total share including transfer duties (in € millions)

1 174.3 1 009.2 956.0

Shopping centers 3 534.4 4 216 5 037.2 Offices 2002 total: 2003 total: 2004 total: € 4708.7 M € 5225.2 M € 5993.2 M

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Change in dividend Change in net current (in € per share) (2) cash flow (in € per share) (2)

Gross dividend Net dividend Dividend

2.70 (1)

1.75 (1)

1.17 2.00 2.30 2.7 3.4 3.9 2002 2003 2004 2002 2003 2004 (1) Assuming a 50% “avoir fiscal” tax credit. (2) Data adjusted to reflect the tripling of stock float in April of 2003 (the two-for-one stock split and the free allotment of one new share).

Revalued net assets Workforce including transfer duties after deferred (year-end) taxes on capital gains (in € per share) (2)

45.8 51.1 57.6 637 707 870 2002 (3) 2003 2004 2002 2003 2004 (3) At January 1, 2003. highlights 12 shopping centers acquired in Hungary in July of 2004

January July Disposal of the office buildings located at Debt refinancing via a €600 million bond issue 105, rue Anatole-France in Levallois and “Les and a €250 million syndicated bank loan. Miroirs,” 18, avenue d’Alsace in La Défense. Acquisition of 12 shopping centers in Hungary Acquisition of the Reims Tinqueux center in from Plaza Centers and a 50% stake in Plaza France from Carrefour. Centers Management (PCM) for a total investment of €280 million. March Acquisition of the El Alisal shopping center in Disposal of the Maille Nord 4 office building in Santander, Spain. Marne-la-Vallée, bringing total divestitures in the Disposal of office building located at 8/10, rue first quarter of the year to €31.6 million. Ledru-Rollin in Paris.

May 78.7% of Klépierre’s Shareholders opt for the payment of a stock dividend.

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September Centros Shopping Gestion becomes a wholly- owned subsidiary of Ségécé following the acquisi- tion of Carrefour’s 50% interest.

October Establishment of Ségécé Hellas in Greece, bring- ing the number of Ségécé’s foreign affiliates to 7.

November Acquisition in France of the Blagnac and St-Orens (Toulouse region) shopping malls juxtaposing Leclerc hypermarkets. Delivery of a permit by the Commission Départe- mentale d’Équipement Commercial, authorizing 2 Ségécé to create the Bonsecours shopping center in Nancy. new subsidiaries Disposal of the building at 52 bis, avenue Iéna added to the European in Paris. management network in 2004 December Acquisition of the Los Angeles shopping center in Madrid, Spain, from Carrefour; commitment given to acquire the future Vallecas shopping mall devel- oped by Carrefour, also in Madrid. €65.6 million Pursuit of the partnership with Finiper in Italy with the acquisition of the Serravalle shopping center (Genoa) and the acquisition of an additional in office 10% stake in IGC, bringing Klépierre’s total equity properties sold in 2004 interest to 50%. Disposal of the warehouse in Massy-Palaiseau, bringing the amount of office property divestitures for the year to €65.6 million. “Euro consumer” demands converge

While consumption patterns in Europe still vary to some degree from one region to the next, the relative lack of disparity suggests that the notion of the Euro consumer is gaining currency. In particular, consumer expectations in Eastern Europe generally follow the same pattern as those found in the rest of Europe. The observed divergences are more likely attributable to the local history of retail distribution than to cultural differences. It appears that the region’s consumers are in the process of rapidly adopting a Western shopping profile.

While the functional aspects of purchasing tend to According to a recent trade study conducted by unify European consumers, the persistence of local Cetelem, the transformation of Eastern Europe, differences demonstrates the emotional role of con- combined with the gradual extension of the single sumption.The pleasure/necessity dichotomy suggests currency and the replication of retail distribution that need tends to dominate attitudes toward pur- concepts beyond national borders, is helping to create chasing at both the global and regional levels. the concept of the European consumer. However, a look at individual countries reveals that pleasure shopping is above all a national pastime. Italian and French consumers are its most advanced practitioners.

Extract from L’observateur Cetelem 2005. shopping centers business and operations shopping centers

Shopping centers: an ever-changing story 600

The history of shopping centers in France closely parallels that shopping centers in of Ségécé, the leading shopping center developer and manager France, covering 13.3 million sq.m. in Continental Europe and a subsidiary of Klépierre.

A new retail concept accompanies cities) or urban hubs, with the shopping malls urban development in the 1950s often hosting fresh retail concepts well before In 1956, Ségécé was established to implement the they gained currency in the best arteries servic- then budding concept of the shopping center. ing the French capital. The shopping center Against a backdrop of sprawling urban growth, concept was also rolled out in the provinces, the shopping center was expected to fulfill a dual taking the form of inter-municipal retail devel- purpose – that of providing retail service spaces opments combining a hypermarket with a few to the new urban areas and animating them. dozen specialized retailers. Three years later, France inaugurated its first local convenience shopping center in Rueil-Malmai- Downtown shopping centers: son, built around a supermarket anchor. The idea culture and entertainment of creating shopping centers in the Greater Paris New retail centers began to spring up on the Area was born in 1965. Between 1969 and 1987, periphery of cities. Generally easy to access, they 11 such centers were completed, including three also diversify their retail mix from one year to the developed by Ségécé: Créteil Soleil, Belle-Épine next. Conversely, the retail landscape in down- and Noisy Arcades. This marked the first step town areas began to suffer due to access prob- toward the elaboration of villes nouvelles (new lems, the exodus of local inhabitants, insufficient

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447 shopping centers in Spain A shopper’s paradise that meets & the needs of all consumers Originally created to meet consumer needs at 420 attractive prices, the shopping center has gradu- in Italy ally morphed into a place that people stroll through for the sheer pleasure of it. New gener- ation shopping centers – such as Val d’Europe or les Passages de l’Hôtel de Ville in Boulogne-Billan- court – were designed as places to meet and mingle while also satisfying the needs of all types of consumers. Shoppers have become the visi- tors for whom services and entertainment are rotation of strong anchors, and a general lack offered. Shopping centers have become of vitality. consumer paradises, where purchases may be Enhancing the appeal of city centers became crit- dictated by pleasure alone. ical. But ideas that worked in peripheral loca- France’s shopping center history attests to the tions could not simply be transplanted down- extraordinary ability of these magnets to adapt town. A new retail concept had to be created, to changes in consumer patterns and retail around strong anchors in the fields of culture concepts. This is probably why shoppers in and entertainment, two themes that the public Southern and Central Europe – countries that for spontaneously associates with urban shopping. a long time had low shopping center penetration In the last three decades, Ségécé – France’s lead- rates compared with Northern Europe – are ing specialist in historical downtown areas – has attracted to them. So much so that, in recent completed 30 projects of this type. years, the gap has begun to close. business and operations shopping centers Analysis of variable rents earned in 2004

No.leases with No.tenants with variable rent clauses/ variable rent clauses(1)/ total no.leases total no.leases France 72.9% 10.2% Spain 71.4% 2.4% Enhancing the value Grece 63.2% - Hungary 34.2% 0.3% of acquired holdings Italy 83.4% 12.1% Portugal 90.1% 4.2% Czech Rep. 91.4% 9.2% Klépierre made the strategic decision to invest in shopping centers, Slovakia 90.5% 2.4% assets that show little sensitivity to real-estate market cycles. Total Europe 69.3% 6.8% Through its subsidiary Ségécé, Klépierre has become Europe’s (1) Definition: the number of tenants (lessees) generating variable rents refers leading shopping center manager and developer. Its source to lessees whose 2003 sales revenues generate variable rents over and above of value creation is twofold: enhance the value of acquired the 2004 guaranteed contractual rents. holdings and pursue growth.

Specific lease agreement The ICC cost of construction index, published In 2004, shopping center lease income grew by quarterly, is used in France. The “anniversary” 19.4%, to €333.1 million. Organic growth quarter of the lease determines the actual reading contributed 4.4% to this increase, reflecting on which adjustments are based. The ICC index for indexed rent adjustments and rental upside. The the second quarter of 2004 (published in October) structure of the lease supports this growth, with was 5.41%. It will impact 70% of 2005 rents for terms ranging from 5 years in Spain to 12 years Klépierre holdings in France. in France. Italy offers a mixed system of 5 and In Spain, the consumer price index (CPI) is 12-year terms. The lease agreement sets forth published on January 1 of each year. the terms and conditions for setting and index- In Italy, lease income is pegged to the ISTAT ing the rent. consumer price indices (retail consumption of wage earners excluding tobacco). But index adjustment Indexing rates specific is more complicated: the ISTAT index is applied at to each country the rate of 75%, or the industry benchmark index The minimum guaranteed rent is subject to an is fully applied. annual adjustment based on an index that varies In Portugal, rents are pegged to the consumer with each country. price index (CPI) excluding real estate.

26 27 3.3%

variable rents as a percentage of shopping center rents.

In Greece, rents are pegged to the official in the minimum guaranteed rent due to index consumer price index (CPI). adjustments is also subtracted. In Central Europe, the IPCUM index, published Mainly applied to leases for holdings in France and by Eurostat, is based on consumer prices in the Italy which were acquired prior to the Carrefour 12 EMU countries. agreement, the variable rent clause is gradually being included as leases come up for renewal or Minimum guaranteed rent renegotiation. and variable rent However, variable rents only contribute 3.3% to A reasonable Determined on an annual basis, lease income is shopping center lease income. If only rents gener- occupancy cost ratio comprised of a percentage of the sales revenue ated in France are considered, the percentage generated by the tenant in a given calendar year. rises to 3.9%. Variable rents tend to be used in Rent (including charges) is comprised of a The rate applied depends on the tenant’s busi- leases for Culture/Entertainment and Health/ percentage of the tenant’s sales revenue, ness activity. This binary rent (fixed and variable) Beauty tenants. referred to as the occupancy cost ratio.This cannot be less than the minimum guaranteed Occupancy cost ratio (1) is a key performance indicator. A good rent. The minimum guaranteed rent is index at 12/31/2004 occupancy cost ratio allows the owner (les- adjusted each year. France sor) to be adequately compensated with- The variable component of rent changes gradu- Total Centers – Downtown area 8.1% out jeopardizing the ability of the occu- ally over the term of the lease. The consolidation Total Centers – Inter-municipal 8.5% pant to stay in business. of all or part of variable rent in the minimum guar- Total Centers – Regional 9.1% The moderate occupancy cost ratio applied anteed rent is determined when the lease comes Spain 11.4% by Klépierre offers three advantages: up for renewal. Variable rent is often brought back Italy 8.6% it helps malls to weather economic down- to zero when the lease expires (every 5 to 12 (1) Occupancy cost ratio = (rents, excluding taxes + expenses, turns; years, as the case may be). Each year, the increase excluding taxes)/sales revenue earned by the tenant (excluding taxes). it increases the appeal of malls; it enhances rental reversion potential. business and operations shopping centers

Growth and renewal: the key drivers of a thriving shopping center

A successful shopping center is able to attract a consistently high number of daily shoppers by maintaining its appeal over time.

Anticipating and meeting serves as a genuine partner in international devel- consumer expectations opment for its retail anchors, offering the possibil- Consumer tastes are constantly evolving. Shopping ity of opening outlets in 10 countries on the Euro- A successfully restructured centers must adapt to these changes – or better yet, pean continent. Ségécé’s international sales office project near Orange anticipate them. Consumers seek novelty and began in Spain, where retailers with innovative expect quick responses to their new retail aspira- concepts or products were identified – particularly In a shopping center near Orange in the South of tions and consumption patterns. Therefore, it is in the areas of home decoration and fashion acces- France, a medium-sized sporting goods retailer necessary to constantly renew the retail mix and sories, two leading sectors in the Spanish and wanted to increase its space by relocating to premis- regularly introduce new and differentiating Portuguese markets. The Portuguese retailer, Parfois es on the parking lot. The 630 sq.m. that were vacat- concepts. The 340 centers managed by Ségécé (which sells leather goods and fashion accessories), ed were then divided into three small retail outlets to provide an exceptional pool of new ideas and opened its first store in France in Les Arcades mall diversify the mall’s retail mix. concepts. in Noisy-le-Grand. French Health/Beauty and The project was initiated in June 2003, and the new Personal Products retailers have followed suit, space was inaugurated in October 2004. For a mod- Increasingly international retail recently opening outlets in Italy, Greece and the est cost price (€95,000), the restructuring generates anchors as a source of synergy Czech Republic as Klépierre has developed in a rental capital gain in excess of €121,000, which is Ségécé actively supports local retailers that oper- these countries. equal to 15% of the center’s total rent. Accordingly, ate outside their domestic borders. In so doing, it In 2005, Ségécé will continue to explore options in a positive impact on the appraisal value is expected for the June 30, 2005 reporting date.

28 29

Advantages of shopping centers for advertisers:

a high volume of visitors: 500 million per year for properties managed the Italian market. Although the sales divisions of activities to include multimedia and events. Galae by Ségécé in France; its affiliates in various countries are just beginning uses its expertise in relational marketing trends to build synergies, the future looks very promising. to help shopping centers develop effective local shopping; communications vehicles (such as video screens Restructuring to add value and voice servers). Galae uses interactive and a full array of promotional resources: While retail restructuring is less noticeable than an tactical media, often referred to as the seventh digital and conventional media extension, it is of equal interest from a value medium. This approach responds to the prefer- (screens, magazines, etc.) and enhancement standpoint. Through restructuring, ence shown in recent years by shopping center non-media (Street Marketing, tenants can increase their floor space and offer new professionals for communications within centers event marketing etc.). merchandise for their clients. rather than via the more expensive conventional Such projects are conducted as part of the daily media, such as radio and television. Today, management of Klépierre’s shopping malls. customer relationship management (CRM) makes Within 12 months, 4 restructuring projects will be use of new relational marketing tools, including completed in France, covering a total 5,000 square computer terminals, cards, video screens and the meters and representing an estimated rental Internet. capital gain of €0.7 million. Abroad, restructuring projects are generally coupled In October of 2004, Galae installed an integrated with extensions. Over the next two years, 6 shop- network of more than 1,000 plasma screens in ping centers will be restructured in Spain and Italy, 70 French shopping centers (including 24 regional covering roughly 10,000 square meters. These proj- centers). The network was set up in partnership ects are expected to generate a rental capital gain with the operator, Media Pixel, and the advertising of €1.5 million. resource, Médiavista. It reaches some 6 million regular visitors during their 400 million annual Better communication visits. More economic than displays and flyers, it is to attract and retain also more environmentally friendly. A subsidiary of Klépierre and Ségécé, Galae was established in 2001 to offer expertise in new infor- In 2004, Galae extended its expertise to event mation and communications technologies (NICT). marketing. It makes mall space available to adver- Initially set up to create websites for Klépierre’s tisers for launching or promoting new products and shopping centers, Galae has since extended its services. business and operations shopping centers

Investment potential, 2005-2009

GLA in sq. m Total estimated Estimated outlay investment not yet disbursed Consistent and highly in € millions in € millions 1 - Developed by Ségécé (France) sustained development Developed by Ségécé (France) 200 090 555.3 534.6 New centers 89 270 180.4 175.2 for the Group Total 1 289 360 735.7 709.8

2 - Developed in partnership with an outside developer In five years, Klépierre’s holdings have more than tripled, Existing centers 29 304 72.2 72.2 reaching €6 billion on December 31, 2004. Shopping centers (balance – Carrefour agreement) accounted for €5 billion of this total, of which €3.5 billion from - France 15 230 48.1 48.1 shopping mall acquisitions. Holdings also include extensions, - Spain 14 074 24.1 24.1

often with attractive expected profitability. Existing centers 27 740 136.8 136.8 (outside Carrefour agreement) - France 27 740 136.8 136.8

Extensions: an under-tapped icant value creation potential, especially for Projects 357 930 1 255.2 1 137.8 source of value creation properties recently acquired from Carrefour and - Spain 46 430 228.0 183.0 Thanks to its structure, Klépierre’s portfolio offers Finiper. In fact, extensions account for more than - Italy 173 880 675.3 664.1 several possibilities for extension. To date, it 30% of Klépierre’s development potential for the - Belgium 41 620 137.3 76.1 includes 47% of inter-municipal shopping centers, 2005-2009 period (a total of €2.7 billion). These - Portugal 49 450 83.0 83.0 which generally include a large hypermarket, a projects, which are mainly located in France - Greece 29 750 104.1 104.1 medium-sized mall and an adjacent area of mid- (143,000 sq.m.), Spain (197,000 sq.m.) and Italy - Czech Republic 16 800 27.5 27.5 sized specialty shops. Often, the catchment area (25,000 sq.m.), are expected to generate addi- itself merits expansion, which is facilitated by their tional €65 million in rents. Extensions 292 690 729.5 719.6 peripheral location, where land is available in - France 54 270 174.6 174.0 greater supply. Moreover, extension permits are Montebello: extension project - Spain 196 620 413.2 413.2 generally easier to obtain than construction doubles floor space - Italy 23 800 101.6 92.3 permits. The Italian shopping center Montebello, located - Hungary 18 000 40.0 40.0 Many of the properties Klépierre acquired between Pavie and Genoa, was acquired from Finiper before the Carrefour agreement have already in July 2002. It includes an 8,083 square-meter mall Total 2 707 664 2 193.7 2 066.3 been expanded (Créteil Soleil, for example). (32 small retail shops) and a 15,921 square-meter Nonetheless, extension projects still offer signif- hypermarket. This vibrant shopping center needed Grand total (1+2) 997 024 2 929.3 2 776.1

30 31 Montebello: a high performing extension

Before €2.7 billion

in estimated investments for 2005-2009

15,921 sq.m. hypermarket Unmatched development potential Today, Klépierre has a very large and constantly refreshed development portfolio. Its first foray 8,083 sq.m. shopping mall, Cafeteria 32 retail outlets outside of France occurred in 1998 with the acqui- sition of the Rondinelle shopping center in Bres- cia, Italy. Klépierre has continued to develop Mid-size retail units Shopping mall abroad, and now has shopping center properties in 9 Continental European countries. Partnerships are key to the Group’s expansion a fuller retail mix to raise its profile and take full advan- strategy. Agreements with large retail distributors, tage of its high-potential catchment area. The addi- such as Carrefour and Finiper, and with develop- tional 7,967 square meters currently being added to ers, including Finim, Eiffage, Nexity and Plaza After the center should open in September 2005, less than Centers Europe, provide a steady source of new two years after the initial talks. The mall will feature projects, especially abroad. 7,967 sq.m. extension; 25 to 30 new small retail shops, and new international For its development in France, Klépierre relies on 25 to 30 additional retail outlets retailers such as Zara and H & M. Ségécé, which is the leading developer in the The extension is expected to generate an addi- domestic market. tional €2 million in rents as soon as it opens. More- over, the impact on lease renewals and lease-ups For the next 5 years, Klépierre has an invest- should be positive given the enhanced appeal of ment potential of €2.7 billion, representing the center and the renovation of existing space that nearly 1 million square meters of gross 15,921 sq.m. is being completed in parallel. leasable area. France, which benefits from a Cafeteria hypermarket The Montebello extension project also has signif- favorable tax environment, accounts for icant valuation potential, as evidenced by its roughly €1 billion of this total (38%). opening capitalization rate, 70 basis points lower Klépierre’s positioning in Italy and Spain, than that of the existing mall on the date of the last which account for 27% and 22% of this devel- appraisal. opment potential, will be enhanced. Mid-size retail units Shopping mall

Extension Mid-size retail units Retail outlet extension Since 1998, Klépierre has taken a pro-active approach to its office property holdings, most of which are located in Paris.In recent years, this strategy of timing transac- tions with the real-estate cycle has paid off, resulting in large disposals and comfortable profits. Although it is the Group’s second line of business, the office property portfolio will remain relatively minor: even in a buyer’s market, these assets should not exceed 20% of Klépierre’s total holdings. The recently passed Marini amendment to the 2005 Finance Act, pertaining to the tax treatment of assets contributed by businesses that have opted for SIIC status, could lead to new acquisition opportunities. Within the office property market, Klépierre’s focus is on high quality properties in prime locations that combine rental upside potential with the capacity to weather cyclical downturns. office holdings business and operations office holdings

An opportunistic strategy timed with the real-estate cycle

Thanks to the dynamic and discerning management of its office property holdings, Klépierre has proven its ability to create value in this particular segment since 1998.

A Parisian focus In a rental market that has troughed, the Ile-de-France In the Office property sector, Klépierre has opted vacancy rate has been falling slowly since March 2004, for a specific position and strategy. All of its hold- approaching its 6% equilibrium threshold. In Paris, ings are concentrated in Paris and the so-called the vacancy rate declined in 2004 (5.8% for the Couronne Ouest that lies immediately to the west Paris CBD), while the vacancy rate for La Défense of the capital. Within this perimeter, Klépierre’s once again took a turn for the worse. Nevertheless, strategy is opportunistic, timed to coincide with the the market remains relatively healthy overall. real-estate cycle. Both immediate and future supply levels are stable – with no sign that the real-estate bubble Market slightly out of synch conditions of the early 1990s are building up. In 2004, the paradoxical trend already visible in the The rent adjustment phase continued in Paris, lead- office property market persisted and was accentu- ing to virtual stabilization for Paris CBD, particularly ated, within a cycle that was very different from the for new premises, and slight declines in the capi- previous one. Rental values declined while invest- tal’s other districts and for second-hand properties. ment activity remained brisk, with the result that Lessors stepped up tenant support efforts, offering the market resembled that of 2003 in both volume rent holidays, partial payment of leasehold and price terms. improvements and other incentives, and the return

34 35

edly one of the defining characteristics of 2004, although the market continues to attract foreign investors – German, North American and British in €10.3 billion particular. Deliberately restrained invested in French office activity commercial office To obtain full leverage from Klépierre’s opportunistic property. arbitrage strategy, two conditions must be met: - office property is and remains complementary to the Group’s principal shopping center business, which combines recurrence and growth. Conse- quently, the question of reemployment of freed-up of large transactions was confirmed: 40% of all funds is eliminated. Hence the flexible application transactions involving more than 5,000 square of Klépierre’s strategy; meters were reported in the 4th quarter of 2004. - positions are taken in a market with adequate Finally, the appeal of Paris as a business hub was supply that offers real opportunities. Paris, which confirmed. Several leases were signed with major is Europe’s largest and most liquid market, fits the banks and financial services institutions, particu- bill perfectly. larly in the Paris Rive Gauche district. Source: Atisreal Auguste-Thouard A highly profitable sector By “playing the cycle”, significant capital gains can French investors return be harvested provided that the office property The investment market set a new record – with market’s profitability is sufficiently high to match 10.3 billion euros invested in commercial office that of the shopping center market. This policy finds property – confirming the ongoing appeal of the support in Klépierre’s decision to opt for SIIC tax French market in general and the Paris market in status, which eliminates tax friction. particular. Strong demand weighed on yields, and The internal rate of return on asset disposals in the was more in evidence for second-hand properties. last 6 years (€660 million) stands at 12.6%, while The return of French investors (37%) was undoubt- the return on equity is 18.9%. business and operations office holdings

Active management at the 56% service of prestigious holdings of Klépierre’s commercial office After 5 years of sustained disposals, Klépierre’s office holdings are holdings are located now concentrated in the Paris central business districts (CBD) and in the Paris CBD the capital’s Couronne Ouest lying to the west. The portfolio is made up of centrally-located, prestigious properties of quality that are well serviced by urban transportation systems.

A dedicated staff, close to tenants Well-maintained holdings Klépierre manages its office rental properties via means peace of mind for tenants its subsidiary Klégestion. Klégestion’s staff of Klépierre takes particular care to preserve the 15 strives to provide local and personalized tenant value and quality of its holdings by ensuring that care over the long term. Klégestion ensures the maintenance work is conducted on a regular basis. quality of the commercial properties and related In addition, leasehold improvements are also services while keeping costs under control and carried out selectively where they create genuine taking tenant requests and needs into account. value. Klégestion employees share strong core values: the importance of tenant relationships, knowledge To ensure that its tenants enjoy a high quality of the market and products, budgetary discipline, workplace and surrounding environment at all ability to anticipate and commitment. times, Klépierre seeks to anticipate regulatory By maintaining regular contact with tenants, Kléges- requirements in the areas of personal health and tion employees are able to detect future opportu- safety. The adoption of workplace scorecards nities related to lease renewals or renegotiations. attests to the strength of this commitment.

36 37

30

prestigious office properties comprise the portfolio properties Shopping centers If Klépierre’s shopping center holdings had to be summed up in two words,they would be quality and diversity. Geographic diversity – with properties in 9 European countries – and formal diversity, offer- ing a sufficient range of size and type to ensure a balanced portfolio and an adequate risk spread. These assets are located in city centers (17%),outly- ing areas (31%) and in urban and peri-urban hubs. Nearly half of the shopping centers in the portfolio (46%) offer a gross leasable area from 20,000 to 60,000 sq.m. Ten properties exceed 60,000 sq.m: 6 in France, 2 in Portugal, 1 in Hungary and 1 in the Czech Republic. In the last 15 years, 36% of Klépierre’s shopping center holdings have been renovated, restructured or expanded. Today, renovation or extension plans are being developed for more than 40% of them. properties shopping centers

1670121sq.m.(1)

France: 848799 sq.m. Spain: 275020 sq.m. Italy: 222461 sq.m.

(1) Excluding miscellaneous retail facilities.

95

78 93 Czech Republic 92 77 94 Slovakia Ile-de-France France 91 Hungary

Italy

Spain

Portugal Balearic Islands Greece Canary Islands

Klépierre holdings year-end 2003 Holdings acquired in 2004 properties shopping centers

France Region City, Center Dpt Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Alsace Illzach (Mulhouse), Ile Napoléon 68 1999 [R/E] 2001 Carrefour, 56 units 31852 10236 83% Strasbourg, La Vigie 67 1996 [R] 1990 Conforama, 12 units 16205 16205 37.50% Aquitaine Bègles, Rives d’Arcins 33 1995 1996 Carrefour, 83 units 64786 30734 50% Bordeaux, Saint-Christoly 33 2004 [R] 1995 Monoprix, 31 units 9068 8774 100% Libourne, Verdet 33 1973 2001 14 units 19 200 2 648 83% Lormont, Rive Droite 33 1997 [R] 2002 Carrefour, 8 units 29851 1835 83% Auvergne Clermont-Ferrand, 63 1990 [R] 1990 C&A, Fnac, 50860 44233 100% Jaude Cinémas Pathé, 74 units Moulins 03 1978 2001 Carrefour, 7 units 14515 1340 83% Lower Caen, Paul Doumer 14 2004 [R/E] 1990 Fnac, 19 units 5736 5736 100% Normandy Condé-sur-Sarthe (Alençon) 61 1999 [R] 2001 Carrefour, 27 units 15301 3917 83% SCU: Gross leasable Hérouville, Saint-Clair 14 1995 [R/E] 2001 Carrefour, 24 units 40469 14022 83% area, meaning the sum of all retail areas, Bourgogne Beaune, Saint-Jacques 21 1975 2003 Champion, 22 units 9872 3762 83% including hyper- markets, space for Marzy (Nevers) 58 1999 [R] 2001 Carrefour, 38 units 24742 7802 83% circulation and other Quétigny (Dijon), common areas. SCUL: Rentable Grand marché 21 1992 [E] 2001 Carrefour, 22 units 28700 3580 83% floor area, i.e. gross Brest, Iroise 29 1969 2001 Carrefour, 42 units 33000 8401 83% leasable area owned Brittany by Klépierre and Guingamp 22 1974 2001 Carrefour, 10 units 11836 1532 83% on which Klépierre collects rent. Langueux (St-Brieuc) 22 1998 [R/E] 2001 Carrefour, 31 units 25009 5997 83% Klépierre share: Lorient, K2 56 1981 2001 Carrefour, 26 units 17007 4396 83% ownership percent- age applied to Paimpol 22 1978 2001 Carrefour, 7 units 10349 3066 83% rentable floor area.

Quimper, Kerdrezec 29 1978 2002 Carrefour, 35 units 21026 5129 83% Opening: the date of inauguration Vannes, Le Fourchêne 56 1969 2002 Carrefour, 57 units 22657 11309 83% of the center, its renovation [R] Centre Bourges 18 1969 2001 Carrefour, 17 units 21834 1672 83% or its extension [E], whichever is most Chartres, La Madeleine 28 1967 2001 Carrefour, 18 units 22959 6996 83% recent. properties shopping centers

France Region City, Center Dpt Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Châteauroux 36 1995 2001 Carrefour, 19 units 18901 3470 83% Saran (Orléans) 45 1971 2001 Carrefour, 15 units 26600 2315 83% Tours, Galerie Nationale 37 1990 1990 Fnac, Zara, 37 units 8259 8259 75% Champagne- Cernay (Reims) 51 1981 2001 Carrefour, 8 units 18100 1399 83% Ardenne Charleville-Mézières, La Croisette 08 1985 2001 Carrefour, 19 units 18707 2599 83% Reims (Tinqueux), Mont Saint-Pierre 51 1969 2004 Carrefour, 16 units 23800 5764 83% St-André-Les-Vergers (Troyes) 10 1975 2001 Carrefour, 5 units 13000 890 83% Upper Guichainville (Evreux) 27 1970 2001 Carrefour, 17 units 20853 1956 83% Normandy Le Havre, Espace Coty 76 1999 2000 Monoprix, 78 units 27000 18081 50% Rouen, rue de la Champsmeslé 76 1999 1999 Eurodif, 8 units 2848 2848 100% Ile-de-France Athis-Mons 91 1999 [R] 2001 Carrefour, 24 units 26498 3628 83% Boulogne-Billancourt, Passages de l’Hôtel de Ville 92 2001 2001 Inno, 58 units 22996 23086 50% Champs-sur-Marne 77 1981 2001 Carrefour, 16 units 14748 1756 83% Claye-Souilly 77 1992 2001 Carrefour, 75 units 49843 18829 83% Créteil, Créteil Soleil 94 2000 [R/E] 1991 Carrefour, Cinémas UGC, 216 units 130063 72953 80% Flins 78 1973 2001 Carrefour, 17 units 41200 1646 83% Melun, Boissénart 77 1996 [R] 1995 Auchan, 34 units 22331 5391 100% Montesson 78 1999 [R/E] 2001 Carrefour, 48 units 40276 8468 83% Noisy-le-Grand, Arcades 93 1992 [R] 1996 Carrefour, 137 units 53346 38575 100% Paris 6e, Marché St-Germain 75 1995 1998 21 units 3164 3164 100% Pontault-Combault 77 1993 [R/E] 2001 Carrefour, 66 units 40496 17337 83% Rambouillet, Bel Air 78 1976 2001 Carrefour, 26 units 19431 2563 83% properties shopping centers

France Region City, Center Dpt Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Sartrouville, Le Plateau 78 1999 [E] 2001 Carrefour, 33 units 27071 3621 83% Serris, Val d’Europe 77 2003 [E] 2000 Auchan, 133 units 64046 54470 40% Sevran, Beau Sevran 93 1973 2003 Carrefour, 50 units 41030 19704 83% Stains 93 1972 2001 Carrefour, 21 units 20120 1897 83% Villejuif 94 1980 2001 Carrefour, 20 units 12862 1534 83% Villiers-en-Bière 77 1990 2001 Carrefour, 89 units 70727 30055 83% Languedoc- Claira (Perpignan) 66 1997 [R/E] 2002 Carrefour, 24 units 24985 2866 83% Roussillon Lattes, Grand Sud 34 1993 [R/E] 2002 Carrefour, 66 units 37650 14133 83% Nîmes Ouest, Grand Nîmes 30 1997 [R] 2001 Carrefour, 29 units 22305 2843 83% Nîmes Sud, Porte de Camargue 30 1980 2002 Carrefour, 18 units 19655 1798 83% St-Jean-de-Védas (Montpellier) 34 1986 2001 Carrefour, 28 units 16442 2338 83% Lorraine Jeuxey (Épinal) 88 1983 2001 Carrefour, 12 units 21209 1917 83% Midi- Portet-sur-Garonne 31 1990 [R/E] 2001 Carrefour, 104 units 60611 22636 83% Pyrénées Toulouse, Blagnac 31 1993 2004 Leclerc, 62 units 26150 11850 100% Toulouse, Saint-Orens 31 1991 2004 Leclerc, 51 units 26810 12210 100% Nord- Aire-sur-la-Lys, Val de Lys 62 1977 2001 Carrefour, 20 units 11899 2361 83% Pas-de- Auchy-les-Mines, Calais Porte de Flandres 62 1993 2001 Carrefour, 16 units 8681 1383 83% Aulnoy-les-Valenciennes, La Briquette 59 1972 2001 Carrefour, 27 units 20456 5488 83% Calais, Mivoix 62 1973 2001 Carrefour, 21 units 17576 4311 83% Denain, Jean Bart 59 1979 2003 Carrefour, 4 units 14037 387 83% Flers-en-Escribieux (Douai) 59 1983 2002 Carrefour, 36 units 27606 7399 83% Fourmies 59 1985 2001 Carrefour, 14 units 11000 1837 83% properties shopping centers

France Region City, Center Dpt Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Hazebrouck 59 1983 2001 Carrefour, 15 units 8799 1306 83% Lille, Flandres Gambetta 59 1996 2001 Champion, 12 units 6678 859 83% Lomme 59 1984 2001 Carrefour, 33 units 30204 7457 83% St-Martin-au-Laërt 62 1991 2001 Carrefour, 10 units 8452 891 83% PACA Aix-les-Milles, La Pioline 13 1997 [R] 2001 Carrefour, 31 units 29617 4713 83% Antibes 06 1973 2001 Carrefour, 32 units 28949 4092 83% Châteauneuf-les-Martigues 13 1975 2001 Carrefour, 20 units 29469 10530 83% Marseille, Bourse 13 1997 [R] 1990 Nouvelles Galeries, Fnac, 60 units 29245 17275 50% Marseille, Le Merlan 13 1976 2003 Carrefour, 59 units 28977 7074 100% Nice, Lingostiere 06 1998 [R] 2001 Carrefour, 49 units 37133 6909 83% Orange 84 1996 [R] 2001 Carrefour, 35 units 13886 3737 83% Puget-sur-Argens 83 1991 2001 Carrefour, 41 units 20000 738 83% Trans-en-Provence (Draguignan) 83 1993 [R] 2001 Carrefour, 26 units 15926 3771 83% Vitrolles, Grand Vitrolles 13 1970 2001 Carrefour, 82 units 61111 22021 83% Pays- Angers, Saint-Serge 49 1969 2001 Carrefour, 20 units 20086 2341 83% de-la-Loire Cholet 49 1970 2001 Carrefour, 24 units 11406 1933 83% La Roche-sur-Yon 85 1973 2001 Carrefour, 5 units 9114 476 83% Le Mans, Centre Sud 72 1968 2003 Carrefour, 18 units 25659 1984 83% Nantes, La Beaujoire 44 1972 2001 Carrefour, 31 units 28662 3464 83% St-Herblain (Nantes) 44 1969 2001 Carrefour, 9 units 15067 641 83% Picardie Amiens 80 1973 2001 Carrefour, 19 units 20434 3193 83% Château-Thierry 02 1972 2001 Carrefour, 9 units 11102 644 83% Laon 02 1990 2001 Carrefour, 29 units 15136 3056 83% Venette (Compiègne) 60 1974 2001 Carrefour, 35 units 28476 5033 83% properties shopping centers

France Region City, Center Dpt Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Poitou- Angoulins 17 1973 2002 Carrefour, 30 units 23679 4009 83% Charentes Poitiers, Cordeliers 86 2001 2001 Monoprix, 40 units 13000 8852 50% Rhône-Alpes Annecy, Courier 74 2001 2001 Inno, 39 units 19098 13581 100% Bassens (Chambéry) 73 1972 2001 Carrefour, 21 units 19749 2451 83% Bourg-en-Bresse Site de Brou 01 1977 2003 Carrefour, 26 units 15725 2293 83% Échirolles (Grenoble) 38 1969 2001 Carrefour, 33 units 28905 4803 83% Écully, Grand Ouest 69 1997 [R/E] 2001 Carrefour, 76 units 47261 12810 83% Givors, Deux Vallées 69 1997 [R] 2001 Carrefour, 38 units 32528 19378 83% Meylan (Grenoble) 38 1972 2001 Carrefour, 12 units 19751 1417 83% St-Egrève (Grenoble) 38 1985 2001 Carrefour, 26 units 19260 2889 83% Vaux-en-Velin, Les Sept Chemins 69 1988 2001 Carrefour, 36 units 22772 3848 83% Vénissieux 69 2000 [R/E] 2002 Carrefour, 16 units 35913 2993 83% properties shopping centers

Spain Region City, Center Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Andalucìa Algeciras I, Los Barrios 1980 2001 Carrefour, 31 units 16852 1748 83% Alméría 1987 2000 Carrefour, 25 units 15346 985 83% Córdoue, Zahira 1977 2002 Carrefour, 17 units 10608 937 83% La Linea de la Concepción, Gran Sur 1991 2001 Carrefour, 64 units 31530 6564 83% Granada 1990 2000 Carrefour, 32 units 19642 2026 83% Huelva 1985 2000 Carrefour, 21 units 16490 1602 83% Jerez de la Frontera, Jerez Norte 1997 2000 Carrefour, 46 units 23886 6950 83% Jerez de la Frontera, Jerez Sur 1989 2000 Carrefour, 34 units 24169 3286 83% Lucena 2002 2003 Carrefour, 16 units 10000 784 83% Málaga I, Alameda 1987 2000 Carrefour, 37 units 22171 7458 83% Málaga II, Los Patios 1975 2001 Carrefour, 57 units 28302 4350 83% Séville I, San Pablo 1979 2000 Carrefour, 34 units 21180 2407 83% Séville II, Aljarafe 1985 2001 Carrefour, 48 units 16000 4223 83% Séville III, Macarena 1992 2000 Carrefour, 29 units 18363 1883 83% Séville IV, Dos Hermanas 1993 2001 Carrefour, 22 units 15744 1465 83% Séville V, Montequinto 1999 2003 Carrefour, 15 units 11000 594 83% Aragon Saragosse I, Augusta 1995 2000 Carrefour, 114 units 54501 24448 83% Saragosse II, Actur 1990 2000 Carrefour, 31 units 27192 5073 83% Asturias Albacete, Los Llanos 1990 2003 Carrefour, 41 units 19724 5479 83% Lugones, Azabache 1977 2003 Carrefour, 38 units 16600 4034 83% Oviedo, Los Prados 2002 2003 Carrefour, 90 units 39200 24700 83% Balearic Palma de Mallorca, Islands General Riera 1977 2000 Carrefour, 25 units 15134 592 83% Canary Santa Cruz de Tenerife, Islands Meridiano 2003 2003 Carrefour, 116 units 44650 27319 83% Cantabria Santander, El Alisal 2004 2004 Carrefour, 36 units 25338 14459 83% properties shopping centers

Spain Region City, Center Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Santander, Peñacastillo 1982 2001 Carrefour, 60 units 19000 10203 83% Torrelavega 1996 2000 Carrefour, 16 units 18697 901 83% Castilla León 1990 2003 Carrefour, 26 units 13012 2466 83% y León Salamanca 1989 2000 Carrefour, 15 units 16534 794 83% Valladolid I, Parquesol 1981 2002 Carrefour, 32 units 20200 3209 83% Valladolid II 1995 2000 Carrefour, 22 units 24133 3388 83% Cataluña Cabrera del Mar, Cabrera 1980 2001 Carrefour, 32 units 27582 5912 83% Lérida 1986 2000 Carrefour, 17 units 12935 374 83% Reus 1991 2000 Carrefour, 30 units 19315 2932 83% Tarragona 1975 2000 Carrefour, 20 units 22661 1199 83% Extremadura Badajoz, La Granadilla 1990 2000 Carrefour, 20 units 19386 889 83% Badajoz, Mérida 1992 2000 Carrefour, 21 units 13927 1048 83% Badajoz, Valverde 1996 2000 Carrefour, 35 units 17599 2095 83% Badajoz, Villanueva de la Serena 1995 2000 Carrefour, 14 units 9095 647 83% Cáceres 1993 2000 Carrefour, 17 units 18967 1396 83% Cáceres, Plasencia 1998 2000 Carrefour, 13 units 10979 815 83% Galicia Lugo 1993 2000 Carrefour, 24 units 19874 1412 83% Orense 1995 2003 Carrefour, 22 units 10539 1034 83% Pontevedra 1998 2003 Carrefour, 50 units 10600 1094 83% Madrid Alcalá de Henares 2001 2001 Carrefour, 26 units 9600 1667 83% Alcobendas 1982 2001 Carrefour, 50 units 25632 3570 83% El Pinar de Las Rozas, El Pinar 1981 2000 Carrefour, 39 units 24779 2177 83% Los Angeles 1999 [R] 2004 Carrefour, 53 units 10781 5635 83% Móstoles 1992 2000 Carrefour, 33 units 19552 2601 83% Pozuelo, Ciudad de la Imagen 1995 2000 Carrefour, 27 units 20278 1936 83% Rivas Vaciamadrid, Parque Rivas 1999 2002 Carrefour, 57 units 31744 1518 83% San Sebastian de los Reyes 2001 2001 Carrefour, 24 units 12600 1455 83% properties shopping centers

Spain Region City, Center Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Murcia Cartagena II, Alfonso XIII 1988 2000 Carrefour, 23 units 25665 11216 83% Murcia II, Zaraiche 1985 2000 Carrefour, 28 units 22400 1644 83% Basque Bilbao II, Sestao 1994 2000 Carrefour, 24 units 24738 1325 83% Country Oyarzun, San Sebastian 1979 2000 Carrefour, 19 units 19132 745 83% Valencia Alfafar 1976 2000 Carrefour, 40 units 32070 7026 83% Alicante, Puerta de Alicante 2002 2002 Carrefour, 81 units 34500 20812 83% Alzira 1991 2000 Carrefour, 25 units 30232 1031 83% Benidorm 1989 2000 Carrefour, 24 units 17979 1627 83% Campanar 1987 2000 Carrefour, 35 units 23979 2501 83% Castellón 1985 2000 Carrefour, 26 units 15356 821 83% Elche 1983 2000 Carrefour, 19 units 14167 790 83% Elda-Petrel 1989 2001 Carrefour, 35 units 13000 3429 83% Gandía 1994 2000 Carrefour, 25 units 17594 1460 83% Paterna 1979 2002 Carrefour, 21 units 11486 1016 83% Sagunto 1989 2000 Carrefour, 15 units 12130 981 83% Torrevieja 1994 2000 Carrefour, 22 units 16129 1094 83% Villarreal 1995 2000 Carrefour, 18 units 14800 905 83% Vinaroz 2003 2003 Carrefour, 12 units 10000 864 100% Italy Abruzzo Citta S. Angelo, Pescara Nord 1995 2002 IPER, Media World, 26000 9948 83% 41 units Val Vibrata, Colonnella 2000 2002 IPER, 35 units 30000 15685 50% Basilicata Matera 1999 2003 Carrefour, 8 units 10600 1415 100% Campania Capodrise, I Giardini de I Sole 1992 2002 Carrefour, 21 units 22000 6342 83% Emilia- Savignagno s. Rubincone, 1992 2002 IPER, Media World, 32000 12324 50% Romagna Romagna Center 54 units properties shopping centers

Italy Region City, Center Inaugurated Acquired by Facilities Total Rentable Equity Klépierre usable Floor interest floor area area

Latium Rome, La Romanina 1992 2002 Carrefour, Media World, 32700 14438 83% 91 units Tuscany Massa 1995 2002 Carrefour, 37 units 19251 7144 83% Lombardy Brembate 1977 2002 IPER, 15 units 12000 2148 50% Cremone, Cremona 2 1985 2002 IPER, 28 units 24000 6570 50% Giussano 1997 2002 Carrefour, 25 units 17600 2847 83% Grandate 1999 2002 IPER, 14 units 14600 2207 50% Montebello Della Battaglia, 2000 [R/E] 2002 IPER, Media World, 24000 8083 50% Montebello 32 units Novate, Metropoli 1999 1999 Ipercoop, Media World, 80 u. 31 000 16 612 85% Paderno Dugnano, Brianza 1995 [R/E] 2002 Carrefour, 66 units 39000 14190 83% Roncadelle, Le Rondinelle 1995 1998 Auchan, 77 units 34000 13644 85% Seriate, Alle Valli 2001 [R/E] 2002 IPER, 32 units 21900 7082 50% Settimo 1995 1999 Coop, 31 units 9000 9745 85% Solbiate, Le Bettule 2002 2003 IPER, 20 units 17200 4800 100% Varese 1988 2002 IPER, 20 units 24800 4782 50% Vignate, Acquario Center 2002 2003 Ipercoop, Media World, 32400 20030 85% 56 units Marches Pesaro, Rossini Center 2000 2002 IPER, Oviesse, 30 units 19800 8597 50% Piedmont Burolo 1995 2002 Carrefour, Autogrill, 11 units 10 800 959 83% Collegno 2003 2003 Carrefour, 42 units 20900 6306 100% Moncalieri 2000 [R/E] 2002 Carrefour, 27 units 11885 7357 83% Serravalle 2003 2004 IPER, Conbipel, 20 units 21875 8063 100% Turin, Montecucco 1980 2002 Carrefour, 11 units 7611 1122 83% Vercelli 1987 2002 Carrefour, Autogrill, 23 units 12 700 1 746 83% Apulia Bari 1997 2003 Carrefour, 21 units 17500 2573 100% Venezia Thiene 1993 2002 Carrefour, 38 units 21800 5702 83% properties shopping centers

Greece City, Center Inaugurated Acquired Facilities Total Rentable Equity by Klépierre usable floor interest floor area area

Athens, Athinon 2002 2003 Carrefour, Koukou, 13 units 13600 1609 83% Patras 2002 2003 Carrefour, Intersport, Koukou, 25 units 16400 8040 83% Thessalonique, Efkarpia 1995 2003 Carrefour, 15 units 12200 801 83% Thessalonique, Makédonia 2000 2001 Carrefour, Ster Century, bowling, 34 units 29000 11887 83% Hungary Budapest, Csepsel Plaza 2004 2004 Match, Cinémas City, 95 units 19550 13654 100% Budapest, Duna Plaza 1996 2004 Match, Marks & Spencer, Hollywood Multiplex, 100000 35900 100% 239 units Debrecen, Debrecen Plaza 1999 2004 Match, Cinémas City, 97 units 33823 14665 100% Gyor, Gyor Plaza 1998 2004 Match, Cinémas City, 100 units 19885 14996 100% Kaposvar, Kaposvar Plaza 2000 2004 Match, Hollywood Multiplex, 55 units 12097 8291 100% Miskolc, Miskolc Plaza 2000 2004 Match, Cinémas City, 200 units 35451 14964 100% Nagykanizsa, Kanisza Plaza 2000 2004 Match, La Halle, Hollywood Multiplex, 48 units 10652 7547 100% Nyiregyhaza, Nyir Plaza 2000 2004 Hollywood Multiplex, 81 units 19813 13635 100% Szeged, Szeged Plaza 2000 2004 ITI Cinema, La Halle, 101 units 20967 15491 100% Székesfehérvar, Alba Plaza 1999 2004 Match, La Halle, Cinémas City, 105 units 20252 14995 100% Szolnok, Szolnok Plaza 2001 2004 Cinema City, Nike, 52 units 15052 7051 100% Zalaegerszeg, Zala Plaza 1998 2004 Cinema City, Fun City, Fun Casino, Bowling, 10126 7256 100% 48 units Portugal Gondomar, Parque Nascente 2003 2003 Jumbo, Leroy Merlin, cinéma, 155 units 63500 46503 50% Loures 2002 2002 Carrefour, Aki, Décathlon, Radio popular, 83600 17369 100% 71 units Telheiras 1990 2003 Carrefour, Aki, Décathlon, Radio popular, 33 units 40 888 13 617 100% Villa Nova de Gaïa 1990 2003 Carrefour, Aki, 34 units 23391 5179 100% properties shopping centers

Slovakia City, Center Inaugurated Acquired Facilities Total Rentable Equity by Klépierre usable floor interest floor area area

Bratislava, Danubia 2000 2001 Carrefour, 48 units 30000 12314 100%

Czech Republic Prague, Novy Smichov 2001 2003 Carrefour, H & M, La Halle, 158 units 60000 38077 100%

Miscellaneous recreational, restaurant and retail facilities France

Region City Dept Facilities Total Rentable Equity usable floor interest floor area area

Aquitaine Mérignac 33 Darty, Flunch, Mac Donald’s 7591 7591 83% Bretagne Saint-Malo 35 Casino 975 975 83% Wasquehal 59 Feu Vert 818 818 83% Côte d’Azur Toulon, Grand Var 83 Feu Vert 1302 1302 83% Ile-de-France Paris 19e 75 BHV rue de Flandres 7752 7752 100% Paris Rive Gauche - 13e 75 Truffaut 3606 3606 100% Drancy 93 Feu Vert 1 220 1 220 83% Nord- Pas-de-Calais Berck-sur-Mer 62 Technicien du sport 840 840 83%

Belgium

Louvain-la-Neuve Movie theaters and restaurants, 3 units 15119 15119 100% Offices Concentrated in the best business districts of Paris and the Première Couronne Ouest lying immedi- ately to the west of the capital, Klépierre’s office holdings are a well-balanced blend of modern office buildings and restructured and fully func- tional Haussmanian style buildings of various sizes. The average floor area is 6,000 sq.m. Their location, architectural quality, high mainte- nance and amenity standards have attracted a broad range of commercial tenants active in many different business areas. 163752 sq.m. Val-d’Oise 95 Paris and Hauts-de-Seine Hauts- Seine-Saint-Denis de-Seine 93 21265 sq.m. Yvelines 92 78 Paris region Val-de-Marne 94

Seine-et-Marne 77 Essonne 91

La Défense Levallois-Perret

18e

Neuilly-sur-Seine 17e 19e

e 9 10e 8e 2e Paris region 1e 3e 20e 11e 4e 7e 16e 6e 12e e Boulogne 5 15e 185017 sq.m. 14e 13e

(1) Issy-les-Moulineaux Total holdings Paris and Hauts-de-Seine

(1) Excluding warehouses. properties offices

France Paris and greater Paris area

City Location Surface Description area

Paris Paris (2e) 46, rue Notre-Dame- 8159 sq.m. Seven-story building plus two floors below ground. Located in the heart of the financial district, Central des-Victoires opposit the Paris Bourse. Completed in 1991, it offers high-quality facility management services. Business Paris (7e) 280/282, bd Saint-Germain 7898 sq.m. Beautiful office and residential building located near the Assemblée Nationale. District Eight stories plus one basement floor. (CBD) Paris (8e) 5, rue de Turin 2596 sq.m. Building with seven floors above ground and five floors below, near the Saint-Lazare train station. Fully air-conditioned. 23/25, rue de Marignan 8 561 sq.m. A prestigious complex composed of three cut-stone buildings. Completely restructured in 1999. 38, rue Marbeuf This complex offers high-quality amenities (air-conditioning, elevated flooring, parking on two levels). 36, rue Marbeuf 3351 sq.m. Building with seven floors above ground and four floors below, built in the 1970s (air-conditioning, parking on two levels). Acquired in 2001. Paris (15e) 25, rue Leblanc 3467 sq.m. A section of the “Le Ponant” building built in 1988. A eight-story building plus two floors below ground. It is air-conditioned and features a company restaurant. 141, rue de Javel 6860 sq.m. Complex comprised of two buildings of seven and five stories, respectively, plus two floors below ground. Completed in 1993, it is fully air-conditioned. 43, quai de Grenelle 12750 sq.m. Built in 1969 and renovated in 1995. Fully air-conditioned. 1, bd Victor - Le Barjac 7316 sq.m. Building with seven floors above ground plus four floors below, with an inter-company restaurant. Completed in 1993, this building offers quality facility management services. Acquired in 2001. Paris (16e) 18/20, rue La Pérouse 3286 sq.m. Building delivered in late 1998. Next to the Arc de Triomphe, this building offers outstanding technical facilities. 21, rue La Pérouse 2159 sq.m. A beautiful, five-story building plus three floors below ground. Entirely restructured in 1999. 23/25, avenue Kléber 9 866 sq.m. Restructured in 1999, this building is located 150 meters from the Etoile. Eight stories, plus five floors below ground, high-quality building services to meet the needs of the most demanding users. 21, avenue Kléber 1914 sq.m. Near the Etoile, this five-story building (plus basement) erected in 1900 was partly restructured in 1999. 43/45, avenue Kléber 3507 sq.m. Cut-stone building acquired under undividend ownership terms (80%). Very well located, party air-conditioned and recently renovated. properties offices

France Paris and greater Paris area

City Location Surface Description area

Paris (17e) 140/144, bd Malesherbes 7156 sq.m. Near the Lycée Carnot, this eleven-story building was constructed in 1963 and renovated in 1997. It has three floors below ground and is fully air-conditioned. Others Paris (12e) 5 bis, bd Diderot 6872 sq.m. Built in 1990, the building has seven stories plus two floors below ground. Air-conditioning was installed in 1999. Paris Paris (4e) 10, impasse Guéménée 1059 sq.m. Five-story building adjacent to the Place des Vosges acquired in 1994. Business Boulogne (92) 9/9 bis, rue Henri-Martin - 3766 sq.m. Complex of two buildings of two and six stories plus two floors below. centers Les Jardins des Princes Built in 1996 and fully air-conditioned. Acquired in 2001. La Défense (92) Collines de l’Arche 2500 sq.m. Undivided ownership terms (30.44%), nine stories plus four floors below ground. Built in 1990. Levallois (92) Front de Paris - Ilôt 5 19979 sq.m. Four buildings of eight and nine stories. A recent complex featuring modern design and good quality facilities. Undivided ownership (78.5%), completed in 1989. 11/11 bis, place du Gal-Leclerc 5819 sq.m. Located 100 meters from the town hall, this seven-story building with four additional floors below ground was completed in 1997. 105, rue Anatole-France 3080 sq.m. Built in 1992. Seven stories plus four floors below ground. Air-conditioned. Under undivided ownership terms (50%). Neuilly (92) 192, av. Charles- de-Gaulle 12906 sq.m. Recently built luxury condominium complex featuring modern facilities. Issy-les- 16, rue Jean-Jacques- 1894 sq.m. Five-story building with two floors below ground built in 1997. Acquired in 2001. Moulineaux (92) Rousseau - Le Florentin 46, rue Camille-Desmoulins 17031 sq.m. Two buildings of seven stories with four floors below ground. - ZAC Forum Seine Delivered on 12/06/2002 and 06/08/2004. Greater Montigny-le- 6, avenue J.-P. Timbaud 2942 sq.m. Complex with four principal two-story building wings. Paris area Bretonneux (78) Velizy (78) 8/10, rue des Frères-Caudron 993 sq.m. Two-story building completed in 1984. Located near the shopping center. Acquired under undivided ownership terms (50%). Champlan (91) 16 bis, rue de Paris 880 sq.m. Two-story building constructed in 1976, partially air-conditioned. Under undivided ownership terms (50%). Villepinte (93) ZI Paris Nord 2 - 6605 sq.m. Near the Paris Regional transit line (RER B), a four-story building with two additional floors below Place des Nymphéas ground. Completed in 1992, it is air-conditioned. Saint-Maurice (94) 3/5, av. du Chemin-de-Presles 9845 sq.m. Four-story building plus two floors below ground, completed in 1994. Offers high-quality technical facilities. Warehouses Strasbourg (67) rue du Rheinfeld 15600 sq.m. responsible development

responsible development introduction

A socially-responsible enterprise committed to sustainable development at the local and European level

As it has grown into its European role, Klépierre has moved from a natural, intuitive and domestic view of sustainable development to a more structured and unifying policy that underpins the key messages conveyed to internal and external audiences.

A European approach local relationship of this kind implies. For this In the last five years, Klépierre has experienced reason, local success and how its actions are sustained development. Today, it has reached crit- perceived in the local communities where its ical mass in the real-estate business, and even shopping centers are located are important stronger positioning in its core shopping center issues. Doing business in ways that support segment. In gradually extending the Group’s responsible development is one of Klépierre’s presence to 9 European countries, Klépierre has core values, along with expertise, partnership and also acquired a multicultural outlook. durability.

An ethical and responsible Sustainable development approach guidelines Through its three shopping center businesses In late 2002, Klépierre set up a task force to (ownership, design-production and manage- complete an inventory of the Group’s best prac- ment), Klépierre participates in the daily life of tices in the area of corporate social and environ- consumers within the diversified urban land- mental responsibility. Its work was pursued scape. As a long-term investor, Klépierre is aware throughout 2003 and 2004. of the responsibilities and obligations that a close The Executive Board aligned the Group’s sustain-

46 47

Vigeo social rating 2003 2004

Human Resources + + Environment = = Clients and Suppliers + + Corporate Governance = = Community and Society = + Human Rights n. a. + Scale of - - to ++

able development policy with its strategy and culture as a set of formal guidelines based on this policy was rolled out. This process, which was conducted in close cooperation with all of Klépierre’s operating departments, will culminate in the publication of the guidelines within the first six months of 2005. Sam Research rating Klépierre Klépierre’s approach to sustainable development Industry average is one of continuous improvement. Accordingly, Economic dimension operational objectives will be defined and report- 47 ing intensified in 2005. In addition, Klépierre would 37 like to develop tools for evaluating its sustainable

Environmental dimension development policies and practices. The Group’s efforts have already raised its profile 33 2005 in the marketplace. It was rated by Vigeo in Novem- 23 ber 2003 and 2004, and by SAM Research ratings in publication Social dimension September 2004. of sustainable 55 Klépierre is also included in a number of major development socially responsible investment stock indices: guidelines 30 • Dow Jones SI World (13 French companies out of 318), Total score • Dow Jones SI Stoxx (18 French companies out of 170), 45 • Aspi Eurozone. 29 responsible development shareholders

Clear and complete financial disclosure

Klépierre seeks to provide all of its Shareholders with clear, complete and reliable information that meets the highest industry standards Log on to the Klépierre and best practices and that is compliant with regulations in force. website for more information: Klépierre also publishes key indicators established using stable methods www.klepierre.com so that investors can easily understand and assess its performance.

Klépierre’s senior managers meet with financial the most recent Shareholders’ meeting. The site analysts and institutional investors twice a year, also publishes stock market information, includ- when interim and annual earnings are released. ing Klépierre’s price and key performance indi- During annual meetings, shareholders receive cators. Contact details are also provided to detailed information on the Group’s perform- encourage communications between Klépierre ance, strategy and growth outlook. Throughout and its Shareholders. the year, Klépierre representatives take part in a number of special-topic and regional meet- Dividend regularly enhanced ings that address the needs of individual Klépierre management is particularly attentive investors. to ensuring steady dividend growth over the long period, even though Klépierre is more a Information available on the Web growth than a value stock. Valuation is equally These ongoing communications are published on sustained, with an annual average performance Klépierre’s corporate website (www.klepierre.com). of 18.8% over 5 years (including dividend Visitors to the site may view or download press reinvestment). releases, slideshow presentations, annual reports, interim financial statements and the minutes of

48 49

9,477

Shareholders as of 12/31/2004

Compliance and ethics: Heightened vigilance 2005 earnings more formal guidelines At Klépierre, efforts are being made to raise and revenue disclosures To respond effectively to a more stringent and employee awareness of such key issues as money- complex regulatory environment, Klépierre laundering, corruption and the financing of terror- Jan. 26, 2005 2004 annual revenues * established a Group Compliance Office. Report- ism, with training provided as needed. A set of Feb. 14, 2005 2004 annual earnings * ing directly to the Chairman of the Executive special in-house procedures and computerized Feb. 15, 2005 Presentation of annual earnings Board, the office ensures full compliance with all monitoring equipment, developed to help and press conference relevant legislation and regulations in force. employees familiarize themselves with Group Mar. 31, 2005 Publication of the impact Internal processes, methods and tools have also clients, are made available through its “Know Your of the adoption of IFRS * been improved to address new requirements. Customer program”. The system ensures compli- April 7, 2005 Annual general meeting In addition, a system of internal control has been ance with the Tracfin requirement of reporting of Shareholders set up within Klépierre to ensure that Shareholder suspected cases of money-laundering. In addi- April 15, 2005 Dividend payout interests are safeguarded at all times, and that tion, the system for monitoring transactions April 20, 2005 2005 first-quarter revenues * disclosures are complete and accurate. completed by directors and officers involving the July 28, 2005 2005 interim earnings * Company’s securities has been extended to all July 29, 2005 Presentation of interim earnings Group employees whose access to information on and press conference the job gives them permanent insider status. Oct. 26, 2005 2005 third-quarter revenues * * Press release available after the close of stock market business. responsible development employees

An active people policy with future implications

As part of its commitment to responsible development, Klépierre pays particular attention to people management. Designed to satisfy and retain employees, Klépierre’s approach to human resources also embraces the challenges of career mobility and cultural diversity.

Guarantees given to employees ple. In addition, the Group is committed to offering annual performance appraisal with their direct Klépierre’s sustainable development objectives equal pay for equal work, as well as equal access manager. Annual adjustments to compensation and also encompass people management. While France to training, to higher accountability and to promo- performance-related bonuses in France also help has been the primary arena of action to date, tion – pursuant to local legislation and regulations. to retain employees over the long term. sustainable people management practices will In fact, more than half of Klépierre’s top managers eventually apply to all of the Group’s affiliates. Beefed-up training and development have spent the bulk of their professional career These practices are based on a set of core princi- A special training program for future shopping with the Group (more than 15 years of continuous ples: compensation that inspires performance; center managers is being rolled out in 2005. Offered service), and the rate of voluntary attrition is partic- support for career and personal development aspi- in Paris, the program is one of many continuing ularly low (9% on average in the last three years). rations; the development of skills and competen- education opportunities that already exist: language These leading practices will be adapted to local cies; access to positions of greater responsibility. training, courses on evolving professional practice circumstances where needed and gradually and regulations, and various aspects of people extended to other locations. Equal opportunity for all management. To this end, Klépierre hires, trains and promotes A high satisfaction index employees on the basis of clearly defined criteria: An attractive employer Klépierre endeavors to meet its temporary education and (or) prior experience; ability to In addition to opportunities for training, Klépierre staffing needs responsibly: more than one-third work and lead; ability to lead highly-trained peo- ensures that all of its employees complete an of its fixed-term employment contracts, initially

50 51 Composition of the Klépierre Group workforce by gender 2002 2003 2004

Men Women Total Men Women Total Men Women Total Ségécé(1) 137 156 293 139 158 297 147 175 322 Klépierre Services 24 56 80 30 60 90 39 61 100 Klégestion 5101541216 41115

France CB Pierre 314 123 123 Subtotal France 169 223 392 174 232 406 191 249 440 CSG 49 48 97 56 53 109 52 56 108 870 PSG 34 14 48 45 35 80 53 39 92 Effe Kappa - - - 156 246 Devimo 30 38 68 32 44 76 34 43 77 employees working FMC 6162251621 31619 in 9 Continental Sogecaec --- 459 81018 European countries Ségécé Hellas ------224

International PCM ------4858106 Subtotal International 119 116 235 143 158 301 202 228 430 Grand total 288 339 627 317 390 707 393 477 870 (1) Including French subsidiaries.

entered into to meet temporary staffing require- A forward-looking approach ments, were transformed into open-ended Including all of the Group’s local affiliates in this employment contracts in 2002, 2003 and 2004. In process, and obtaining buy-in from employees of addition, Klépierre makes limited use of interim different cultural backgrounds and nationalities, employees: for an average workforce in France of are two of the major challenges Klépierre faces 427 employees, the equivalent of 7.7 full-time going into the future. To this end, data on workers was under interim contract (1.8% of the employer obligations and practices has already workforce). been collected for Spain, Portugal, the Czech Republic and Hungary. In France, the opportunities for career advance- Klépierre must also detect particularly high- ment across functional and geographic boundaries performing employees as well as those willing have expanded considerably. Judging from key and able to expatriate within Europe. They will performance indicators, such as employee satis- form a large portion of the pool of future talents faction (very high) and absenteeism (a very low that the Group will need in increasing numbers 1.4%, excluding maternity leave and sick leave to pursue and consolidate its development. for periods longer than 6 months), these efforts have paid off. responsible development risk management

Managing inherent business risks

Klépierre has identified the greatest potential sources of risk facing its operating environment and its core businesses. Procedures for managing the related risks have been developed.

Real-estate development risk Foreign development risk Klépierre does not engage in office real-estate Klépierre limits its foreign development projects development activities. Its shopping center devel- to Continental Europe. Within the Eurozone, opment business is restricted to France. Klépierre has established a network of local part- Two major development risks have been identi- ners, and has secured the resources needed to fied: identify, insofar as possible, local market trends cost of construction. Where possible, Klépierre and practices. In Continental Europe, Klépierre gives preference to development contracts that has a highly selective investment policy. It seeks call for the use of specialized contractors work- to acquire assets that offer adequate return to ing for a pre-defined price; cover any risks, in particular related to foreign commercial risk. The success of shopping currency exchange rates. centers and the regulatory and zoning restric- tions placed on building new complexes make Interest-rate risk them highly attractive to large retailers. Most Klépierre’s corporate debt has increased signif- large and mid-sized development projects are icantly in recent years. In the interest of preserv- fully leased up when construction work ing the margin between return on investment commences. and the cost of financing, Klépierre’s policy is to

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limit its exposure to interest rates by ensuring Shopping centers major renovations that it undertakes. Klégestion that 70% of its debt is fixed rate or hedged by In 2004, Klépierre harmonized its program is insured under a professional third-party liabil- fixed-rate instruments. Klépierre also strictly insurance. Consequently, all of its facilities, both ity policy for its management business. controls its counterparty risk by conducting in France and abroad, are protected under prop- Klépierre was able to obtain a 10% decrease in its swaps only with banks whose financial strength erty-casualty insurance policies that provide insurance premium payments when these poli- is excellent, and by limiting its short-term cash full replacement, coverage for business inter- cies came up for renewal. All insurance premiums investments to instruments with the lowest risk ruption due to property damage (generally up are reinvoiced to tenants as part of building profiles (e.g. monetary mutual funds, govern- to two years of rent), and third-party liability. In operating costs. ment loans). order to optimize these covers, specialized firms conduct regular appraisals of property values Tenant insolvency risk Insurance in France and abroad. Environmental impair- The tenant insolvency risk for Klépierre’s office Klépierre has contracted insurance coverage ment coverage under Assurpol, which insures properties is adequately spread. Its ten largest designed to protect the equity capital and revenue classified sites (service stations, automobile tenants only account for roughly 50% of full-year capacity of each of its core business segments. centers, etc.), was renewed. The process of rents, and its leading tenant for less than 10%. The inventorying and harmonizing separate covers default rate for 2004 remains low (0.2%). contracted by Ségécé and its affiliates is being For shopping center properties, the insolvency continued in 2005. risk is even more spread. The largest tenant repre- In connection with the annual renewal of its insur- sents less than 2% of minimum-guaranteed rents. ance coverage, Klépierre was able to obtain a signif- The default rate at one month remains low, equal icant decrease in premiums for globally improved to 1.1% of invoiced rents at December 31, 2004 risks. Homeowner’s coverage (excluding loss of (excluding Hungary). rent) and third party liability insurance premiums are reinvoiced to tenants as part of building oper- Legal intelligence ating costs. For construction and renovation proj- Klépierre’s legal department and support depart- ects, insurance is contracted on a one-off basis. ments work in partnership with outside consult- ants to ensure that information on new laws and Offices regulations that could have a material impact on Properties in Klépierre’s portfolio are covered the Group’s financial condition and its business under a fleet policy that includes replacement cost development is captured, processed and dissem- cover for property and compensation for rental inated throughout the Group. This intelligence- income interruption due to the occurrence of an gathering extends to legislation and regulations insured loss (three years). Klépierre may from time in every country in which the Group has equity to time take out special construction coverage for interests. responsible development clients, suppliers and community

A company that cares about the local community, la Lampe society and its clients Magique: As a responsible corporate citizen, Klépierre takes an active interest in the local economic and social life of the communities a partnership initiated in which it operates, and strives to satisfy the needs of its various two years ago stakeholders. www.lalampemagique.fr.st

Getting involved in the community ment is responsible for finding suitable candidates As an owner and manager of shopping centers, for future positions. Klépierre is an economic agent with a stake in the local community. The decision to locate a shopping Supporting worthy social causes center in a particular place has implications for the As part of their ongoing commitment to civil society, surrounding community: it can help to create a Klépierre and Ségécé pursued their partnership sense of shared affiliation or revitalize a deterio- with La Lampe Magique, a non-profit organiza- rating neighborhood. tion that provides musical instruments, toys In addition, when developing new retail facilities and books to entertain and educate hospital- or extending existing centers, Klépierre gives pref- ized children. The organization’s most recent erence to hiring locals. At Quétigny, near Dijon, achievement was to equip a new pediatric unit where an extension of more than 8,500 sq.m is that occupies three floors in the inter-munici- scheduled to open in late October 2005, an Acting pal hospital of Créteil. for Jobs (“agir pour l’emploi”) partnership was established with the municipal government to Ségécé was also a participating sponsor of the encourage the recruitment of local workers. Under 2004 Telethon. At 8 shopping centers under its the terms of the partnership, the municipal govern- management, a tree was installed with lights that

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1,000

plasma screens donated to raise awareness of muscular 36 centers were audited by a “mystery shopper” dystrophy. during three annual visits. The findings led to improvements in the maintenance of interior mall and footfall areas. In 2005, 40 centers will be visited five times each. The focus of this audit will be on public toilets and were illuminated progressively, as donations came exterior grounds. in from clients and retailers. In addition, Galae donated the use of its network of 1,000 plasma Ségécé commissioned an image survey to deter- screens in 70 shopping centers to the French mine how it is perceived by its various stakehold- Muscular Distrophy Association during a public ers – retailers, local governments and developers. awareness campaign. According to the survey, Ségécé’s strengths include its ability to maintain good relationships, listen and Measuring customer satisfaction get involved in projects, as well as its clear “part- Klépierre must respond to the needs and expecta- nership” focus and “good business sense” as a tions of two types of clients: the retail anchors that manager. Sources of improvement include the rent space in its shopping centers and the shop- perception of its new international scale. pers who visit its malls. To gauge their respective levels of satisfaction, two types of surveys were Maintaining good relations conducted in 2004. Nearly two years ago, a set of rules was developed A method for controlling the quality of the hospi- to guide Group employees in the conduct of their tality and services offered to consumers was devel- relations with suppliers and clients. In particular, the oped in 2003 and rolled out in France in 2004. guide focuses on issues related to business ethics. responsible development the environment

Making daily efforts to preserve the environment Change in consumption patterns in French and reduce risks shopping centers between 2003 and 2004 Committed to compliance with European environmental regulations, (national average) Klépierre is also aware that this is one of its principal sources Waste -3.7% Cardboard +2.5% of improvement going forward. Electricity -3.7% Gas/Heating -3.0% Water -9.4%

Vast scope of action concept of “green construction projects” and envi- Klépierre is involved in real-estate development ronmental quality standards will be added to these in France and, via Ségécé and its subsidiaries, specifications when the guide is updated. handles the day-to-day management of properties Intended for use by Klépierre’s development and located in 9 countries, covering a total of 1900000 construction partners, the guide will cover the square meters. following issues: construction site noise and distur- bance; waste and material recycling; architectural Environmentally friendly integration; green spaces; thermal and acoustic shopping centers comfort; energy savings; access for the disabled In the five years ahead, Klépierre’s real-estate (motor, sight impaired, etc.). development business represents close to 290000 Further down the road, Klépierre plans to consider square meters, i.e. more than 25% of its estimated how and if this guide can be applied to new projects investment outlays for the period. Hence the need abroad, both under way and under development. to update its shopping center programming guide. For each project, this document sets forth the tech- Decontaminating the Bègles center nical constraints and features that govern both In connection with the enlargement of the Bègles construction and operations. A section on the Rives d’Arcins shopping center to include a BHV

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department store, Ségécé plans to decontaminate Reducing water and energy consumption between the Claye-Souilly shopping center and the the site. As part of this effort, some 50,000 square Using the system set up in 2004 to monitor shop- city in which it is located to enable the use of the meters of ground soil will be filtered so that 10,000 ping center energy and water, an initial assessment municipal evacuation system for the center’s waste- cubic meters of waste can be recovered for incin- was made for 32 of Klépierre’s French holdings. water. eration or storage at an approved dump site. The During the year, another 11 shopping centers were project will cost a total of €1.4 million. added to the database. Waste management In 2005, Klépierre expects to monitor 65 of its All of Klépierre’s French shopping centers have Daily efforts French shopping center holdings (60% of its total adopted selective waste collection and manage- Klépierre’s commitment to the environment is also shopping center holdings in France). Reporting on ment, a process that is being extended to other expressed in a number of day-to-day goals that water and energy use will also be extended to other countries, such as Spain. The improvement in include establishing and maintaining open lines of countries in which the Group operates. selective sorting has led to a reduction in waste communication with tenants, and making efforts to Four regional shopping centers are already using (-3.7% for the centers monitored) and an increase change behaviors through education and infor- renewable sources of energy exclusively to meet in the quantity of cardboard recycled (+2.5%). mation. their daily power needs. Choosing ISO 14001 certified service providers In its Le Ponant office building, Klépierre replaced (such as La Providence) for facility maintenance 500 down lights with new generation fluorescent is fundamental. Since they share Klépierre’s lighting for a cost of €15,000. In addition to produc- commitment to reducing environmental impacts, ing excessive heat, the previous lighting system was it is easier to ensure compliance with the sustain- electricity intensive. able development clause of contracts for outsourced services. Pollution risks Every year, Klépierre updates the health and safety Preventing flood-related risks scorecard of its offices and shopping centers. Two One of Klépierre’s ongoing concerns is to expand of the key aspects of the scorecard concern identi- the coverage of risks to which its holdings are fying and monitoring legionella and asbestos risks. exposed. In connection with the plan for prevent- In compliance with regulations in force, all of ing damage due to flooding, which was developed Klépierre’s shopping centers and the 5 office prop- in light of the threat of centennial flooding in Paris, erties equipped with air cooling towers are Klépierre performed an audit on ten of its office inspected on a regular basis. In Spain, Klépierre is property holdings in 2004. Technical recommen- installing a video and alarm system designed to dations were drawn up accordingly, and building protect drinking water treatment facilities against tenants will be informed of the possible impact of terrorist attempts of all kinds. flooding on their premises and what preventive An agreement is currently being worked out steps can be taken. financial report

financial report management report

executive board’s management report supervisory board meeting held on February 11, 2005 to review the company’s business in 2004

A – Business analysis by 3.2% in Europe, with brisk business Revenues declined by 6.6% in December, and commentary reported in all countries. Sales rose by 2.8% due in part to changes in tenant mix, but in France and by 1.1% in Italy. Momentum mainly to a general business slump that hit I – Shopping centers was stronger in Spain (+6.5%), Portugal, large specialized retail outlets particularly Greece and the Czech Republic. hard. Sales in the Culture/Entertainment Consumer spending in 2004 All business segments reported growth, led segment rose by 3.5% and in Health/Beauty The Eurozone in general, and France in partic- by Health/Beauty (+6.5%) and Culture/ by 3.8%. However, Restaurant/Food and ular, reaped some of the benefits of the Entertainment (+3.9%). In France, shopping Personal Product sales lagged slightly. robust economic environment that prevailed center revenues increased by 2.8% in 2004, Shopping center revenues rose by 6.5% in 2004. With GDP growth of 2.3%, France peaking in the fourth quarter (+5%). Based on the year in Spain, with comparable outperformed Europe as a whole (+1.8%), as on Banque de France data, sales rose by performances from both the regional and did Greece (+3.8%), Spain (+2.6%), Belgium 1.4% overall in 2004 compared with the inter-communal shopping centers under (+2.7%), the Czech Republic (+3.9%), Slova- corresponding prior period. Klépierre’s ownership. The Culture/Enter- kia (+4.9%) and Hungary (+3.9%). GDP grew Downtown shopping centers posted the tainment, Health/Beauty and Personal slightly in both Italy and Portugal as well, after highest growth (+5.0%). For regional and Product segments recorded growth of sluggish business conditions in 2003. Growth inter-communal centers, revenues grew by 6.8%, 6.4% and 6.5%, respectively. Household in consumer spending – still one of the main 2.0% and 2.6%, respectively. Equipment was the only segment to see drivers of economic expansion – outpaced The Health/Beauty and Culture/Entertain- sales fall (-2.1%). In Portugal, revenues from GDP growth. The outlook for both consumer ment segments turned in the best perform- shopping malls grew by 8.4%, again boosted spending and GDP in 2005 has improved, ances (+6.1% and +3.5%). Personal Product by the Health/Beauty and Culture/Enter- with forecasts showing comparable or supe- retailers pulled off an impressive turn- tainment segments (+18.4% and +14.2%, rior performances versus 2004 virtually around, with sales up 2.1% against a defla- respectively). In Central Europe, revenues across the board. (Source: OECD) tionary price backdrop. from the Novy Smichov shopping center in Despite a difficult economic environment, Prague, now in its fourth year of operation, Change in Klépierre’s shopping center revenues in Italy rose by rose by 13.7% in 2004. All segments reported shopping center revenues 1.1% in 2004, although weakness was double-digit growth except Culture/Enter- Revenues generated by Klépierre’s shop- observed in the second half of the year, tainment and Restaurant/Food. Revenue ping center retail anchors in 2004 ticked up especially in December. growth was flat at the Danubia mall in

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Slovakia. In Greece, shopping center sales France Bègles Rives d’Arcins shopping center in (2.6%), Etam (2.5%), Camaïeu (2.0%), Zara shot up by 13.2% in 2004 (based on revenue Lease income grew by 6% (4.4% on a 2003, and the Fnac and Sephora stores in (1.9%) and Vivarte (1.7%). Eram, Afflelou and disclosures provided by 69% of tenants), constant portfolio basis) to €190 million, of Aulnay-sous-Bois in 2004; Grandvision fall between 1.4% and 1.5%. with all segments posting double-digit which €7.4 million was attributable to vari- –changes in tenant mix in the Saint-Chris- growth except Household Equipment (-0.6%) able rents. On a constant portfolio basis, toly mall in Bordeaux: the mid-sized Fnac Spain and Restaurant/Food (-0.7%). The Makédo- this increase primarily reflects: and Go Sport outlets left the center in July Lease income from Spanish shopping malls nia center, which accounts for 54.8% of sales –A high number of leasehold modifications 2003 and were replaced in part by Mono- totaled €51.2 million, up 28.4% (+3.2% on a from Klépierre’s Greek malls, reported in 2004: 235 leases changed hands, prix in March 2004 and Loisirs & Création constant portfolio basis). outstanding sales growth of 32.7%. 216 leases were renewed (+20.3% and in August 2004. Two mid-sized units of 700 This constant portfolio increase mainly +21.4%, respectively, compared with previ- and 800 square meters are in the process reflects: Rental business ous terms and conditions) and 27 vacant of being let to new tenants. –index-linked rent adjustments (+2.4%); Klépierre’s rental management business premises were leased up for €3.3 million. –the reconfiguration of the Marché Saint- – a strong rise in variable rents (+48.3%), continued to grow, collecting €333.1 million – Rents pegged to the Insee cost of Germain in Paris, impacting 18% of the total which account for 0.7% of total lease income; in rents for 2004, versus €279 million in construction index (ICC), which rose by retail floor area; –29 new leased-up spaces, 77 changes in 2003 (+19.4%). Acquisitions accounted for 3.4%. The second quarter 2003 index, which – rents collected from recently acquired tenant mix, and 229 lease renewals, which 15% of the total rise, while remaining 4.4% impacts 75% of guaranteed rents, climbed malls (Sevran, Blagnac, Saint-Orens and generated €638 000 of additional lease reflects constant portfolio growth. 3.35%, and the first quarter 2004 index, Reims Tinqueux). income, a 13.8% increase compared with which affects 22% of rents, increased by previous terms and conditions (of which 3.55%. Unpaid rents declined considerably (to 7.8% on renewals). Among the factors that mitigated this 0.5% of total rents invoiced, versus 1.1% The financial occupancy rate was steady at increase in lease income was the decline on December 31, 2003). The financial 96.7%. The tenant default rate was also in variable rents (-14.5%), from €8.6 million occupancy rate climbed to 99.2%, up by 1% stable in 2004 (1.1%). in 2003 to €7.4 million in 2004, due to the over 2003. The top 10 retail anchors account for less high rate of index-linked rent adjustments The average occupancy cost ratio is reason- than 30% of the total minimum guaranteed and active lease renewal programs whose ably low at 8.6%, enhancing Klépierre’s rent. The Inditex group (Zara) leads with aim is to consolidate variable rents into rental upside potential when leases are 6%, followed by Zena (5.6%) and Yelmo minimum guaranteed rents. Consequently, renewed or space is re-let. cinemas (2.9%). guaranteed rents alone rose by 5.4%. Sources of rent remain diversified, helping On a current portfolio basis, the net change to reduce the portfolio’s tenant risk. The Italy in rents reflects: Auchan group (Décathlon, Flunch, Phildar, Rents invoiced for Italian shopping centers –the sale of equity interests in the Usines Jules, Leroy Merlin and Brice) represents totaled €48.9 million, up 19%. Center mall in Gonesse and half of the 3.9%, followed by Fnac (3.1%), Go Sport On a constant portfolio basis, the 4.9% financial report management report

increase reflects the combined impact was €662 000. The first figures in for Czech Republic and Slovakia Klépierre’s portfolio in Greece, sources of of index-linked rent adjustments (+2.4%), Klépierre’s shopping center portfolio in Lease income for Czech and Slovakian rent are fairly concentrated. The top 5 46 changes in tenant mix and 78 lease Hungary show a financial occupancy rate shopping centers totaled €10.4 million, up tenants account for 51% of the total (20% for renewals (+23.7% and +32% compared with of 96.8% and a tenant default rate of 7.4%. 6.4% (+6.7% for the Czech Republic and the Ster Century movie theaters). previous lease terms), and 10 lease-ups, +4.9% for Slovakia). which generated €704 000 of additional Portugal This overall rise reflects the impact of Outlook for 2005 lease income. Lease income from shopping center prop- index-linked rent adjustments (+2.1%), step- European leases coming up for renewal Variable rents totaled €1.6 million, virtu- erties in Portugal increased by 6.4% on a up rents and the impact of rental reversion, before the end of 2005 represent 9.5% of ally stable compared with 2003. The tenant constant portfolio basis. Of this increase, which can be broken down as follows: Klépierre’s guaranteed contract rents. Many default rate improved (to 2.6% versus 4.2% 1.3% reflects index-linked rent adjust- 10 rental enhancements in Slovakia, of them concern holdings in Hungary, one year prior). The financial occupancy ments. generating a rental gain of €63 000, and where 18% of all leases will come up for rate rose from 97.8% in 2003 to 98.2% for The entire portfolio underwent substantial 14 enhancements in the Czech Republic, renewal by the end of this year. In Spain, 2004. lease modifications in 2004: 6 changes in generating a rental gain of €211 000. Finan- leases expiring this year account for 9.4% of The increase on a current portfolio basis tenant mix (+ 3.3% on a constant portfolio cial occupancy rates increased in 2004, to all contractual rents; in Italy, 6.3%. In France, reflects: basis), and 10 lease renewals/9 changes in 98.6% for the Czech Republic (from 97.8% only 5.1% of all leases in the portfolio will –Klépierre’s purchase of an additional 10% tenant mix (+5.6% and +7.1%, respectively) in 2003) and to 98.5% for Slovakia (versus come up for renewal in 2005. stake in IGC; for the 2 shopping centers acquired at the 96.8% in 2003). Considering the number of lease renewals –the acquisition of Serravalle (Genoa); end of 2003. Tenant default rates also improved, falling and assuming an average targeted increase –the extension of the Settimo mall (Milan). The financial occupancy rate for 2004 was to 1% in the Czech Republic (1.1% at end- of 15% for guaranteed minimum rents, the stable (99.44%), while the tenant default rate 2003) and 10.4% in Slovakia (from 11.2% rental upside potential on Klépierre’s shop- Hungary improved (5.7% at end-2004, versus 7% at end-2003). ping center properties is significant. Rents invoiced since July 1, 2004 totaled end-2003). €14.1 million. Variable rents accounted Greece Transactions carried out for €112 000 of this total. Since July 2004, Rents totaled €5.5 million. On a constant in Klépierre’s principal countries when Klépierre acquired the 12 Hungarian portfolio basis, lease income rose by 3.8%, of investment in 2004 shopping centers, numerous lease modi- primarily due to index-linked rent adjust- Shopping centers are a highly sought-after fications have enabled rent enhancements ments (+3.3%). investment in Europe, where supply for nearly all properties. As many as 188 leases 5 leases changed hands, representing an remains limited. Consequently, initial yields have been modified since the acquisition. 8.3% increase. continue to decline. In 2004, French Among these, 45 vacant premises were The tenant default rate was 3%, for a finan- investors placed €585 million in shopping leased up, nudging the financial occupancy cial occupancy rate of 99.6%. centers, a 26% increase compared with rate up by 0.85 point. The total rental gain Considering the relatively modest size of 2003. Yields are close to 5.5% for the best

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products. In Spain, investments declined acquired. An international perspective a privileged tax environment, Klépierre Rome (Italy), City Gate Thessalonica by 26% in 2004, reaching a level that continues to drive growth, with nearly acquired 3 shopping centers: Reims (Greece), the Valenciennes city-center proj- puts them roughly on a par with France 2/3 of investments now made outside of Tinqueux, Blagnac, and Saint-Orens. The ect and the extension of Quétigny Dijon (€590 million). France. In the interest of increasing control latter two malls are located in the Greater (France). Its latest commitment to acquire Transaction volume remains high in Italy, over the environment that surrounds its Toulouse Area adjacent to Leclerc hyper- is the future Vallecas (Spain) shopping where €730 million was invested last year shopping centers, Klépierre is also explor- markets. center, located 11 kilometers to the south- – despite a 27% decline versus 2003. Italy ing opportunities to acquire mid-sized Klépierre also purchased a portfolio of east of downtown Madrid. The center is continues to appeal to investors, and will outlets juxtaposing its assets and retail 25 mid-size retail outlets from Carrefour, scheduled to open in 2008. host the largest development program in parks. mainly outlets flying the Feu Vert, Quick or Europe over the next two years, with The asset management expertise acquired McDonald’s banner. Most of these border Given the number of projects currently roughly 900 000 sq.m of properties slated via Ségécé and its subsidiaries plays an Group-owned shopping centers and serve under construction and scheduled to open for construction. integral role in the Group’s growth model. to enhance Klépierre’s existing assets. within the next two years, combined with In Portugal and the Czech Republic, trans- Klépierre, which has become a pivotal A highlight of the year was Klépierre’s planned extensions for centers in opera- actions totaled €375 million and €605 European player, can offer high-quality €280 million investment in Hungary: tion and development projects in France million, respectively. solutions both in terms of asset holdings 12 downtown shopping centers and a 50% initiated by Ségécé, Klépierre is reasonably Investor interest in the shopping center and management. Klépierre seized a rare stake in PCM, the Hungarian firm that confident in the Group’s ability to generate property market is building. Among the opportunity in Hungary that met its invest- manages the malls. The Group thereby growth in 2005 and thereafter. most active investors are Klépierre, ING, ment criteria: to reach critical mass in one attained critical mass and market leader- Rodamco and German investment funds. transaction in the Hungarian market with a ship in both management and ownership. portfolio of high-quality downtown malls In Spain, Klépierre took over two shopping Klépierre’s investment strategy and the management expertise of experi- centers from Carrefour: Santander El Alisal, The ambitious investment program enced local teams in an EU country and which opened its doors in May 2004, and launched in 2004 for shopping centers future member of the Eurozone. the existing mall in Los Angeles (Madrid). attests to the success of Klépierre’s strategy. Under its ongoing agreements with Finiper Partnering with investors, real-estate devel- Investments completed in 2004 in Italy, Klépierre acquired the Serravalle opers, and major retailers is one of the main In 2004, Klépierre added 18 shopping shopping center located near Genoa and pillars of this strategy. In fact, Klépierre’s centers to its portfolio, giving priority to exercised its option of raising its equity ongoing goal is to enhance the benefits of strengthening its position in its key target interest in IGC from 40% to 50%. existing agreements while seeking out new markets – France, Spain and Italy. Klépierre In addition, Klépierre has undertaken the partners. Portfolio diversification is also a also expanded its European reach by acquisition or development of a number of key aim, in terms of geographic spread as entering the Hungarian market. new projects, including Louvain-la-Neuve well as the type of shopping center assets In France, where the market benefits from (Belgium), Assago Milan and Tor Vegata financial report management report

Investments completed in 2004 Total o/w down payments2004 Development business floor area Property made beforeinvestment Future outlay (outlay and commitments) in sq.m € 01/01/2004 (inoutlay (in €M) € value in M €M) (in M) Klépierre’s investment potential over the Acquisitions with immediate effect and shopping center inaugurations completed by Ségécé next 5 years exceeds €2.7 billion, a sum France 63 274 240.9 7.7roughly equivalent 227.2 to 1 million 5.9 square Reims Tinqueux (5 874 sq.m), Blagnac (11 850 sq.m), Saint-Orens (12 210 sq.m), 25 mid-sized outside outlets (32,941 sq.m) meters. This potential was generated by Spain 25 407 47.8 27.3 20.5 three factors: development projects led by Los Angeles (5 671 sq.m), Santander (14 500 sq.m) Italy 8 063 43.1 0.0Ségécé, partnerships 36.9 with retail 63 distribu- Serravalle (8 063 sq.m), IGC (an additional 10%) tors and real-estate developers, and the Portugal 70 160 135.9 129.0Group’s position 6.8 as a leading 0.2 European Hungary 168 445 274.5 0.0player. Two-thirds 274.5 of these investments are Alba (14 995 sq.m), Csepel (13 654 sq.m), Debrecen (14 964 sq.m), Duna (35 900 sq.m), Gyor (14 996 sq.m), Kanizsa (7 547 sq.m), Kaposvar (8 291 sq.m), being made abroad, with the remaining Miskolc (14 964 sq.m), Nyir (13 635 sq.m), Szeged (15 491 sq.m), Szolnok (7 051 sq.m), Zalaegerszeg (7 256 sq.m) one-third located in France. Subtotal 334 196 742.3 164.0 565.9 12.4 Opportunities to acquire centers in opera- Acquisitions with delayed effect France 11 600 39.7 0.6tion are likely 0.0 to become increasingly 39.1 rare Quétigny extension (11 600 sq.m) in the years to come, and will mainly Belgium 37 348 121.5 34.9involve properties 26.3 in France 60.3 – a market Louvain-la-Neuve (37 348 sq.m) with a privileged tax environment in which Spain 45 639 225.9 0.0Klépierre continues 45.0 to expand. 180.9 Vallecas (45639 sq.m) Extensions, which to date have involved Italy 53 738 243.6 9.3 11.3 223.1 only a few of Klépierre’s historical assets, Milan Assago (25 000 sq.m) Greece 20 987 74.1 0.0will become 0.0a significant source 74.1 of growth City Gate (20 987 sq.m) going forward, especially in the most Subtotal 169 312 704.9 44.8mature markets 82.6 in Klépierre’s 577.5 portfolio, Expenses related to projects under assembly or development in 2004 108.3 22.5such as France 15.0 and Spain. An 70.8 additional –of which projects 68.7 21.7 6.2 40.7 145 000 square meters of gross leasable – of which extensions 39.6 0.8 8.8 30.0 area (GLA) will be built in France. In Spain, Subtotal property acquisitions in 2004 503 508 1 555.5 231.3 663.5 660.7 extensions will offer an additional 200 000 Discontinued operations 14 220 -52.5 5.3 -5.3 square meters of GLA. In Italy, where the Total property acquisitions in 2004 503 508 1 503.0 236.5 658.3 660.7 Acquisitions of service provider subsidiaries 14.6 14.6 potential for extensions is less significant, PCM (Hungary) 50%; Centros Shopping Gestion (Spain) 50% 25 000 square meters of GLA have been identified. One such project is under TOTAL FOR 2004 503 308 1 517.6 236.5consideration 672.9 in Hungary. 660.7In all, an invest-

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ment of more than €900 million is expected 2005 is expected to be another year of rapid projects initiated in previous years (Valen- to Ségécé, which then became the sole on these extensions. growth for the Group, with targeted acqui- ciennes and Louvain-la-Neuve). Some of the owner. The principal avenue of growth in France will sitions of over €600 million, of which development projects in France and abroad At the December 31, 2004 reporting date, also be offered by Ségécé’s newly developed roughly 80% outside of France. currently under consideration are sched- Centros Shopping Gestion handled rental shopping centers. Major new construction uled for completion in 2005. and property management for 90 shopping projects have been launched, including the Service business centers (of which 69 on behalf of the downtown malls in Angoulême, Valenci- Ségécé/Ségécar merger a success Klépierre group) and employed 108 people. ennes and Vannes, the Saint-Lazare and Ségécé strengthens its position Ségécé – having become the sole owner of Gare de Lyon train stations in Paris, the future in Europe its subsidiary Ségécar at the end of 2003 – PSG manages the Italian shopping malls in Aubervilliers, Besançon, In 2004, Ségécé consolidated its position in merged with Ségécar, with retroactive effect and Croatian holdings Clermont-Ferrand (Jaude II), Nancy and Europe with the acquisition of an equity from January 1, 2004. The new business PSG is a subsidiary under joint and equal Rennes, and the Cité du Meuble in Cesson. interest in the number-one Hungarian combination then began to restructure its ownership by Ségécé and the Finim group. These projects, which cover 200 000 square management company and the establish- core rental management and property At the December 31, 2004 reporting date, it meters of total GLA, will be completed for the ment of a subsidiary in Greece. At December management businesses. provided rental and property management most part starting in 2008. They add up to an 31, 2004, the Ségécé network managed a total services to 61 shopping centers, 3 of investment of €555 million and account for of 344 shopping centers – of which 223 are Galae extends its reach in Europe which are located in Croatia. The Croatian 20% of Klépierre’s acquisition program for owned by Klépierre. Ségécé and its Galae was established in January 2001 to management company, SCM (Shopping the next 5 years. subsidiaries employ a total of 749 people provide assistance in multimedia and infor- Center Management), is a wholly owned Acquisitions of new malls outside France based in 10 Continental European countries. mation technologies to the Group’s shop- subsidiary of PSG. mainly involved Italy, with €665 million for In light of the substantial growth of Ségécé’s ping centers. Galae continued to create 175 000 square meters of GLA (including network, efforts are under way to harmo- websites for malls (26 to date, including one Equity stake in Hungary the Milan Assago center), and Spain, with nize methods and processes based by iden- in Portugal). After having installed more than At end-July 2004, Ségécé acquired a 50% €210 million for 60 000 square meters of tifying best practices. 1,000 plasma screens in 70 French shopping stake in PCM (Plaza Centers Management), GLA (primarily the Vallecas mall). In centers, it will extend its services to event the company that manages Klépierre’s Belgium, the Louvain-la-Neuve center will Sustained business in France communications in 2005. shopping center assets in Hungary. PCM be acquired in 2005, and Klépierre is The rental management business generated was established in June 1999 and currently expected to complete the acquisition of the €20.1 million in fee income in 2004, a slight Majority stake manages 16 malls and 1 429 leases. PCM’s City Gate mall in Thessalonica (Greece) in increase over 2003. With €9.8 million of in Centros Shopping Gestion total workforce was 106 employees at the the first half of the same year. fees invoiced, 2004 was a brisk year for Centros Shopping Gestion was formed in end of 2004. In all, Klépierre’s holdings outside of France development projects, due to acquisitions July 2001 as a joint and equal venture The management methods applied by PCM will grow by 370 000 square meters of GLA (12 Hungarian malls, Toulouse Blagnac and between Ségécé and Carrefour. and Ségécé, which differ significantly in for a €1.1 billion investment. Saint-Orens) and the completion of major In September 2004, Carrefour sold its stake some respects, will be harmonized in 2005. financial report management report

Leader in Belgium with Devimo Ségécé Hellas established Ségécé owns a 35% equity interest in In July 2004, Ségécé established Ségécé Devimo, the leading shopping center Hellas, a Greek subsidiary in which it manager in Belgium, and also chairs the owns a 99.95% interest. Ségécé Hellas is company. Devimo manages 20 centers in taking over the rental management of Belgium, most of which rank among the Klépierre’s Greek holdings (4 centers) as country’s largest shopping centers: Woluwé, of January 2005, and the City Gate center Westland, City 2, and Waasland SC. as of 2005. Devimo continues to lease up its Louvain- la-Neuve center, which is scheduled to The Ségécé group Fee income Net income No of centers No of square open in 2005. in figures Companies Workforce ( €M) net ( €M) managed No of leasesmeters managed% ownership Country FMC in Central Europe France (1) Ségécé306 51.8 14.6 146 5158 1210845 75% Based in Prague, First Management Company Galae 13 0.7 - 1 – – – 100% manages the Novy Smichov and Danubia Ségécé LT 3 0.5 0.2 – – – 100% shopping centers. This subsidiary is jointly Spain CSG 108 10 2.4 90 3173 665817 100% owned by Ségécé (75%) and the Italian Finim Italy(2) PSG 98 8.9 1.5 61 1369 323806 50% group (25%). Portugal Sogecaec 18 1.3 0.4 6 321 82051 100% Czech Republic & Slovakia FMC 19 1 - 0.2 2 194 48312 75% Sogecaec continues to develop Belgium Devimo 77 7 1.1(3) 2035% 968 387297 at a fast pace Hungary PCM 106 0.9 0.1 16 1429 211377 50% Sogecaec, a wholly owned subsidiary of Greece SGC Hellas 4 – - 0.1 4 87 – 99.95% Ségécé, was formed in April 2003 to manage TOTAL 752 82.2 19.1 345 12 699 2 929 505 Klépierre’s shopping centers in Portugal. (1) Including Ségécar • (2) Including Croatia • (3) Including vacant premises and common area. Since the beginning of 2004, it has been managing 6 malls, 4 of which on behalf of Klépierre. Sogecaec actively seeks out new properties to manage, and was selected to manage the Amoreiras Plaza mall (Lisbon) in 2004.

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II – Office properties gered a significant fall-off in market rents. and the average rate for the investor was Rental business The investment market set a new record, 6.9%. A building with undivided ownership The office property market with €10.3 billion in commercial property terms (3 507 square meters of weighted Concentrated and high-quality assets in Ile-de-France transactions recorded. Although foreign usable floor area) under MOA at the end of In light of the recent divestitures, Klépierre’s investors (German, North American and December 2004 was also sold in January office property assets are now concentrated 2004 British) were again predominant, 2004 saw 2005 for €21 million. within Paris and its immediate outlying The commercial property rental market was the return of French investors (37%). Strong In addition, the extension to the Camille area, the so-called première couronne boosted by improved business conditions demand placed pressure on yields and Desmoulins property in Issy-les-Moulin- (96%). The high quality of Klépierre’s hold- in 2004. However, despite the increase in revived interest in secondhand property. eaux (with a cost price of €22.4 million, of ings attracts such first-rank tenants as Stéria, both the number of transactions and the which €9.4 million outlaid in 2004) was Alstom, Hachette Livre, Linklater’s & Paines, speed with which they are completed, Arbitrage policy delivered on June 8, 2004. This extension, EDF, Dim, Arts & Techniques du Progrès, rental prices are declining in this market. offering 4 204 square meters of weighted Juris Classeur, the French Ministry of A total of 1 900 000 square meters was Moderation in disposals usable floor area, generated additional Finance, and Philip Morris. These top taken up, a 13% increase over 2003. A high Klépierre pursued its opportunistic office rents of €0.6 million in 2004 (full-year rents 10 tenants alone account for nearly 52% of of 580 000 square meters was taken up in property arbitrage program in 2004. The of €1.6 million). total lease income (the 5 largest tenants the 4th quarter, the best figure since 1999. Group sold five buildings and one undi- In 2005, Klépierre will pursue its arbitrage generate more than 38% of total rents). Space immediately available remained vided share, which together measured program, making opportunistic disposals Of the 32 properties comprising Klépierre’s relatively stable at 3 000 000 square meters. 34 785 square meters in weighted usable while searching for new investments. portfolio, 10 generate 70% of total lease Vacancy rates were also similar to 2003 floor area (1), for a total of €65.6 million income. Six of the 10 properties are located figures, at 6.3% in the Ile-de-France region and (versus €175.9 million in 2003). within the city limits of Paris (46% of total 5.8% in central and western Paris. Available The average price on these disposals was rents). supply within one year logged in at roughly 3.8% higher than their appraised values, 4 000 000 square meters, of which 28% repre- Rental prices maintain their momentum sented new or restructured buildings. Klégestion continues to work actively to Office property divestitures in 2004 Square meterskeep tenants in its buildings and recruit Rental prices continue to fall Levallois-Perret (92) – 105, rue Anatole-Francenew ones. During 2004, 197 the Group signed On average, rents for prime office proper- La Défense (92) – CB 20 Les Miroirs35 leases (of which 616021 new leases) cover- ties fell by 3% in the Paris Central Business Marne-la-Vallée (77) – Maille Nord 4ing 36,832 square 6196 meters of weighted District and by 10% in La Défense. All Paris 12e – 6 bis/10, rue Ledru-Rollin 4147 districts combined, a decline in rental prices Paris 16e – 52, avenue d’Iéna (1) Weighted usable floor 772area: to calculate the global rental price per square meter, spaces are assigned and an increase in incentives (rent abate- Massy-Palaiseau (91) – 12/16, rue Baudot 17315 weightings on the basis of type (office, archive, parking, ment, step rent, tenant improvement) trig- Six assets sold for a total of €65.6 million restaurant). financial report management report

usable floor area. Altogether, these leases significantly reduced by increases in the At 0.2%, the tenant default rate is very low, generated the equivalent of €10.7 million ICC index (2) and declining market rental reflecting the credit worthiness of Klépierre’s in lease income on a full year basis, a 7.8% prices. Over the medium term, a total of tenants and the efficiency of its collection increase compared with previous terms 33 leases (26% of total rents) will come up methods. and conditions. At the December 31, 2004 for renewal between now and the end of reporting date, the weighted average term 2007, representing upside potential of Klégestion of the new leases negotiated over a firm nearly 9% (a complete schedule of lease An office asset and property management letting period was 4.8 years. Significant renewals is available on the Klépierre specialist, Klégestion is a wholly owned leasehold improvement work totaling website under Offices/Activity). subsidiary of Klépierre. In 2004, Klégestion €3 million was required, especially for After gradually freeing up the building at pursued its divestment program with changes in tenant, and performed in 2004. 25, avenue Kléber in Paris, Alstom (the the sale of 6 properties bearing a total These improvements affected two build- tenant) notified Klépierre in December price tag of €65.6 million. The sale of a 7th ings in particular: 46, rue Notre-Dame-des- 2004 of its intention to terminate its lease building in January 2005 brought the total Victoires in Paris’ 2nd arrondissement, for as of the end of July 2005. Alstom is amount of transactions initiated in 2004 to €1.3 million, and 3/5, avenue du Chemin- required to fulfill its lease obligations until €86.6 million. des-Presles in Saint-Maurice (94), also for that date. Several renowned businesses Klégestion provided revenues of €3.9 million €1.3 million. have already expressed interest in renting in 2004, a 15% decrease from the previous Due to difficult business conditions and the the building, attesting to the high quality of year attributable to the loss of building sale of recently re-let properties in line with the premises. management fees for the properties sold Klépierre’s policy, the financial occupancy in 2003 and 2004. Revenues include rate for office properties fell from 97.3% on Growth in rents impacted by vacancies €2.5 million in building management fees December 31, 2003 to 93.4%. The average On a constant portfolio basis, rents were and €1.4 million in commissions on sales and annual rate was 93.6% for 2004 versus 98.3% stable in 2004 compared with 2003 (+0.6%). acquisitions. for 2003. Index-linked rent adjustments (+2.9%) Total payroll was €1.6 million in 2004 for a generated €1.7 million of additional lease workforce of 15 people. Significant rental reversion potential income and changes in tenant mix an addi- Net earnings in 2004 were €1.5 million. Under current market conditions, Klépierre’s tional €1.2 million, partially offset by the holdings offer rental upside potential of higher vacancy rate (- €2.6 million). On a over 14%, primarily reflecting the future current portfolio basis, lease income fell by lease-up of vacant premises. 13.1%, attributable to the impact of dispos- In fact, any rental reversion potential from als made in 2003 and 2004, which reduced the future renewal of leases has been total lease income base by €10.0 million. (2) Insee cost of construction index.

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III – Equity investments (€34.9 million for Klépierre). This amount 71 183 shares for €2.0 million from UCB Mermoz SAS is the direct owner of Aurora and transactions involving equity was recorded as a reduction in the cost Locabail Immobilier. and indirectly owns Noble Galerie, Noble investment securities with an price of the securities. Cafétéria, Noble Restauration and Orengal. impact on Klépierre SA’s corporate Establishment of Klétransaction SAS financial statements Klécar Europe Sud SCS capital increase In tandem with LP7 company, Klépierre Sale of Solorec SC securities During their extraordinary meeting on established Klétransaction, a company On February 16, 2004, Klépierre sold The principal transactions involving equity June 1, 2004, the Klécar Europe Sud’s with registered capital stock of €1 600 Solorec securities to Assurbail and Assure- securities in 2004 are listed below: Shareholders authorized the company to (160 company shares with a par value cureuil Pierre, reducing its interest from increase capital by €10.6 million through of €10). Klépierre owns 159 shares. 58.05% to 49.28%. Marseille le Merlan SAS the issue of 698 360 new company shares capital increase at €30.5 each (an issue premium of €15.25). Establishment Zobel BV company wound up At their extraordinary meeting on Febru- Klépierre subscribed 579 639 shares, total- of the Klépierre Vallecas SA On May 24, 2004, the shareholders of Zobel ary 2, 2004, the Shareholders authorized ing €17.7 million. Klépierre established Klépierre Vallecas, a resolved to wind up this Dutch company. the company to increase capital by As per the extraordinary meeting pf the Spanish company with registered capital €8.7 million through the issue of 870 000 shareholders on September 20, 2004, the stock of €60 200 (602 shares with a par The following companies were new shares with a par value of €10, at €20 company again increased capital through value of €100). Klépierre owns 602 shares. discontinued using a simplified per share. the issue of 173 768 new shares totaling of procedure that does not require LP7 company expressly waived its right to €2.6 million accompanied by an issue Establishment of Toulouse the liquidation of assets: subscribe the newly issued shares, which premium of €2.6 million. Klépierre Mermoz SAS and capital increase SCI 8 rue du Sentier, SCI Chaptal Alun, were therefore wholly subscribed by subscribed shares equal to its 83% owner- With its partner LP7 company, Klépierre SAS Oise Cergy and SNC Couperin Klépierre, the only other shareholder. ship, a total of €4.4 million. established Toulouse Mermoz, a company Foncière. with registered capital stock of €37 000 Novate Srl capital increase Klécar Participation Italie SAS (3 700 shares with a par value of €10). At their meeting on March 16, 2004, Share- The company redeemed an issue premium Klépierre owns 3 699 shares in Toulouse holders authorized Novate Srl to increase of €39.9 million and bought back shares Mermoz SAS. its capital by €48.5 million. The capital worth €24.5 million. As authorized by the shareholders at their increase was entirely subscribed by extraordinary meeting of December 27, Klépierre, the sole shareholder. SAS Suffren Paris 15/ 2004, Toulouse Mermoz increased its capi- At their February 17, 2004 meeting, Share- SAS Louis David merger tal by €10 million through the issuance of holders resolved that the company distrib- 1 000 000 new shares priced at €10 each, ute an issue premium to Shareholders Acquisition of shares in Oise Cergy SAS fully subscribed by Klépierre. based on their percentage of ownership On May 6, 2004, Klépierre purchased Since November 15, 2004, Toulouse financial report management report

Statement of income, IV – Income and current cash flow Other operating expenses include building cash flows and ratios 2004 2003 % 2002 expenses and general operating expenses. Operating income 437.9 390.9 +Commentary 12.0% on the 350.9 statement Building expenses rose by €2.8 million, Payroll - 43.5 - 39.3 +of 10.4% income - 32.7 a 13.7% increase, to €23.2 million. Of this Other operating income - 46.6 - 40.8 +Klépierre 14.2% generated - 38.4 revenues of €431.3 amount, €2.4 million is attributable to Operating cash flow 347.8 310.8 +million 11.9% in 2004, an 279.811.8% increase over the non-recurring improvement work carried Depreciation and amortization - 105.1 - 96.6 previous + 8.8% year. Lease - 88.5 income totaled out in the office buildings at 46, rue Accrued liabilities + 0.9 - 0.2 €397.5 Ns million, of which - 2.5 €333.1 million Notre-Dame-des-Victoires in Paris and Financial results - 122.0 - 110.5 +from 10.4% shopping centers - 98.5 and €64.5 million Les Ellipses in Saint-Maurice. Expenses Pre-tax results from operations 121.6 103.4 +from 17.5% office properties. 90.3 Shopping center increased by €1.5 million, half of which is Non-recurring results 15.5 31.2 lease - 50.3% income rose by 63.2 19.4% over 2003 on attributable to shopping centers acquired Amortization of goodwill - 1.4 - 0.5 a current Ns basis and by - 0.7 4.4% on a constant from Carrefour in France and €0.3 million Corporate income tax - 13,6 - 26.8 portfolio - 50.7% basis, while - 54.5 office property rents to Spanish shopping centers. General Share in net income of equity method investees 0.5 0.4 +decreased 25.0% by 13.1% on 0.4 a current basis (due operating expenses totaled €23.3 million, Net income 122.6 107.7 + 13.9%to asset disposals) 98.7and increased by 3.1% up 14.2% from 2003. This significant Minority interest in net income - 20.5 - 19.4 on + 5.7%a constant portfolio - 17.6 basis. increase reflects higher taxes due to unre- Group share in net income 102.1 88.3 + 15.6%Properties located 81.1 outside of France coverable VAT, mainly in Hungary. Other Pre-tax current cash flow 227.5 201.2 +generated 13.1% 34.8% 180.7of total revenues, general operating expenses increased Pre-tax results from operations (group share) 95.4 79.3 +compared 20.3% with 27.6% 66.2 in 2003. Other oper- by €2.1 million, with €0.9 million due to Pre-tax current cash flow (group share) 188.7 164.7 +ating 14.5% income includes 143.3 work re-invoiced to the decision to discontinue projects under Net current cash flow (group share) 175.8 147.6 tenants, +19.1% entry fees received 121.9 and miscella- consideration, and €1.0 million related to Ratios per share neous income. moving costs and cost overruns incurred Number of shares(1) 4565770044759763 44759763Payroll expense amounted to €43.5 million, by new operating sites. The operating cost Net earnings/share (€) 2.2 2.0 versus €39.3 million 1.8one year prior. This ratio (total operating income/total operat- Increase versus prior period + 13.4% + 8.9%€4.2 million increase + 18.9% reflects the purchase ing expense) was 20.6%, unchanged over Pre-tax results from operations (€) 2.1 1.8 of 50% of Centros Shopping1.5 Gestion and the last two years. Increase versus prior period + 17.9% + 19.7%the integration of + 24.0%Effe Kappa and Plaza Surplus cash flow from operations Pre-tax current cash flow/share (€) 4.1 3.7 Centers Management.3.2 It also includes totaled €347.8 million, up 11.9% over Increase versus prior period + 12.3% + 14.9%€2.1 million from + 11.1% the outsourcing of 2003. Net current cash flow/share (€) 3.9 3.3 executive retirement2.7 contracts, an Increase versus prior period + 16.8% + 21.1%expense that was + offset 12.8% by the release of Depreciation and amortization expense (1) Average number of shares in €M. in € millions a reserve. for the period increased by 8.8% to €105.1

70 71 financial report management report

million, primarily reflecting the impact of Shopping centers Offices new acquisitions (€13 million), only 2004 2003 % 2004 2003 % partially offset by property disposals Operating earnings 372.4 315.8 + 17.9% 65.5 75.1 - 12.8% (€3.1 million). Building - 16.4 - 15.9 + 3.1% - 6.9 - 4.5 + 53.3% Payroll - 40.6 - 36.5 + 11.2% - 2.9 - 2.8 + 3.5% Operating earnings for each segment are Other general operating expenses - 21.1 - 18.7 + 12.8% - 2.1 - 1.7 + 23.5% broken down in the table opposite. Amortization-provisions - 86.9 - 76.4 + 13.7% - 17.3 - 20.4 - 15.2% Financial results were a loss of €122.0 Operating results 207.4 168.2 + 23.3% 36.3 45.7 - 20.8% million, versus a loss of €110.5 million in in € millions 2003. This decline reflects a rise in Klépierre’s debt, mainly in the second half, an undivided 50% share in the Bourse – foreign companies. amortizations, a tax gain of €4.7 million of nearly €500 million. The global cost of shopping center in Marseille. €5 million when deferred tax liabilities were recalcu- debt for 2004 was 5.3%. After Klépierre reflect capital gains on the sale of Klépierre’s At the December 31, 2004 reporting date, lated in light of the legal reorganization of restructured its interest rate hedging 10% stake in Solorec (Créteil Soleil owner). these segments recorded total tax expense Italian companies, and €3 million provided instruments, the estimated average cost of Klépierre’s total divestitures for 2004 of €13.6 million: by the capitalization of tax losses; debt based on the financial structure at reached €106.8 million (€65.6 million in €0.3 million for the SIIC segment; €2.1 million in non-recurring tax. The December 31, 2004 was 4.2%. The second- office properties and €41.2 million in €4.3 million for non-SIIC companies in revised Finance Act for 2004 ended the half restructuring of the hedging instru- shopping centers). Furthermore, Klépierre France. €5.8 million of effective tax expense obligation to hold a special reserve for long- ment portfolio required a €94.1 million generated a capital gain of €2.1 million for the period, of which €2.8 million attrib- term capital gains. Accordingly, this reserve cash payment, net of tax, spread over the on the sale of treasury shares. utable to the limited partners Ségécé was transferred to other reserves and a remaining term of the cancelled swaps. Since Klépierre adopted SIIC tax status, and Klécar Europe Sud. A deferred tax one-off €2.5% tax was levied on the The impact of this expense in 2004 was it categorizes its business into three liability of €22.7 million was provisioned amount transferred. €0.5 million. segments, for tax purposes. in preparation of the planned adoption of Pre-tax results from operations was – the tax-exempt SIIC segment, which SIIC status by the companies that own Tax expense amounts to €18.4 million in €121.6 million, up 17.5% over 2003. includes Klépierre and eligible French the recently acquired malls in Toulouse current taxes due, including €4.0 million in real-estate subsidiaries. Some of these and the company Secmarne. The latter deferred tax and a non-recurring tax gain Non-recurring results were €15.5 million, companies maintain some business that also released €25.7 million in provisions of €4.8 million, including a net release of a sharp decrease versus 2003 (€31.2 million). is subject to corporate income tax at the that were set aside for deferred tax deferred tax totaling €6.9 million. They include €10.8 million in capital gains prevailing rate; liabilities; generated from the sale of 6 office buildings, – french companies not eligible for SIIC €6.7 million for foreign companies, includ- Consolidated net earnings totaled €122.6 million the Annecy Brogny mall, an undivided status and subject to corporate income tax ing €7.9 million in payable tax expense, in 2004, versus €107.7 million in 2003, a share of the Aulnay shopping center, and at the prevailing rate; €7.0 million in deferred tax expense on 13.9% increase. financial report management report

Minority share in earnings was €20.5 million, revealed that the following standards are method. In carrying out this project, Its impact on Klépierre’s Shareholders’ provided exclusively by the shopping center most likely to impact the Group: Klépierre used the property revaluations equity on January 1, 2005 or its statement segment, bringing the group share in net 1. IAS 40 (Investment Property), which completed in 2003 in connection with the of income is slight. earnings to €102.1 million, up 15.6%. allows businesses to choose between a adoption of SIIC tax status as well as the As for IAS 19, a review of all plan benefits fair value model and a cost model for recommendations issued by the Fédéra- for the Group’s employees revealed no Change in current cash flow accounting purposes; tion des Sociétés Immobilières et Foncières. significant impact. Pre-tax current cash flow totaled €227.5 million 2.IAS 32 and IAS 39 (Financial Instruments: Built construction line items were broken The application of IAS 12 requires in 2004, up 13.1% from 2003. Group share Recognition and Measurement); down by parts, and new amortization Klépierre to modify the methods it uses of pre-tax current cash flow logged in at 3.IAS 17 (Leases); schedules were established for each part. to assess deferred tax on certain assets €188.7 million, or €4.1 per share, an 11.3% 4.IAS 19 (Employee Benefits); In preparation for the application of IAS 32, outside the scope of SIIC. The impact on increase versus one year prior. 5.IAS 12 (Taxes). the shareholders’ agreements between Shareholders’ equity in the opening Net current cash flow totaled €208.9 million. Due to the asset revaluations performed in Klépierre, CNP Assurances and Écureuil Vie balance sheet is negative. Group share of the amount accounted for 2003, the decision to use the fair value in the companies they jointly own were On March 31, 2005, Klépierre will disclose €175.8 million, or €3.9 per share, up 16.8% method would not have a material impact amended by a rider signed on December the impact of IFRS on its 2004 financial from 2003. on opening Shareholders’ equity, but, 30, 2004, eliminating Klépierre’s liquidity statements and its opening balance sheet unlike the cost method, would significantly commitments with respect to its partners. at January 1, 2005, particularly the impact B – Adoption of IFRS alter the structure and evolution of earn- The restructuring of the near totality of of IAS 32 and 39. ings. Consequently, on May 26, 2004, the Klépierre’s interest rate hedging instru- Pursuant to Regulation No. 1606/2002 of the Supervisory Board ratified the adoption of ments at the end of 2004 should limit the C – Revalued net assets European Council and Parliament on the IAS 40 and the cost model for Klépierre’s future impact of IAS 39 on Klépierre’s adoption of international accounting stan- investment property. As required by the income statements, since the new swaps At the December 31, 2004 reporting date, dards, approved in July 2002 and published standard, Klépierre will provide informa- set up meet the standard’s description of revalued net assets (RNA) per share includ- in September 2002, all publicly traded Euro- tion on changes in fair value in a note to “efficient.” The restructuring did, however, ing transfer duties and after deferred taxes pean companies must prepare their consol- the financial statements. require a cash payment of €94 million, on capital gains increased by 12.7% to idated financial statements for accounting The Supervisory Board reasoned that which, after taxes, will translate into a €57.6 (€51.1 at December 31, 2003). periods starting on or after January 1, 2005 avoiding earnings volatility was both more €80 million decrease in the Shareholders’ Restated for the impact of the aforemen- in accordance with the international conservative and better aligned with the equity recorded in the opening balance tioned cash payment on swaps, revalued accounting standards approved for this Group’s general objective of delivering sheet at January 1, 2005. net assets were €55.8 per share, up by purpose by the European Community. steady and long-term growth in its key IAS 17 on the accounting treatment of lease 12.2% from one year prior. performance indicators. income required certain changes to infor- Net assets including transfer duties were Klépierre began to prepare for the adop- Implementing the cost model requires mation systems in order to restate rent €6.0 billion (total share) and €5.3 billion tion of IFRS in 2002. A thorough analysis the application of the so-called “parts” abatements, step rent, and so on. (group share). On a constant portfolio

72 73 financial report management report

basis, office assets increased in value by 37% of the total estimated value), est rate hedging instruments at end- term of the cancelled hedging instruments, 1.3% in 2004, while the value of shopping 68 have values ranging from €15 million December 2004, most existing instruments a decrease of €1.70 per share would center assets grew by 6.9% over the same to €75 million, and 156 have values below were cancelled and replaced by new result. period. €5 million. instruments at going market rates. The Office properties wholly earned by cash payment to be made in respect of Valuation of holdings Klépierre are valued at €954.4 million. these transactions was spread over the For several years, Klépierre has entrusted 4 have an estimated unit value that is remaining period of the cancelled the task of assessing the value of its hold- greater than €75 million (they account for contracts. For information, the immediate ings to the same appraisers. For office and 36.9% of the total estimated value for this deduction of the full cash payment, net of warehouse holdings, Foncier Expertise and segment). 16 have values ranging from tax, would result in a decrease of €1.70 Coextim jointly perform this task. Retail €15 million to €75 million; 11 have values per share. Consulting Group values shopping center below €15 million. None of the warehouse holdings. The terms of appointment for properties is valued above €10 million. Revalued net assets up 13.6% these experts comply with the recommen- in 2004 dation issued by the COB “Barthès de Valuation of the Ségécé group At the December 31, 2004 reporting date, Ruyter” Workgroup. The methodology In 2003, Ségécé was valued using a method the revalued worth of Klépierre’s net used is described in a note to the financial previously defined by an independent assets (RNA) inclusive of property trans- statements. expert and updated in-house. Under this fer duties and prior to the dividend method, Ségécé’s subsidiaries were carried distribution in respect of 2004 is Analysis of holdings at their cost price. In a change of practice, €2 704.4 million (€58.6 per share). At the December 31, 2004 reporting date, Klépierre entrusted the task of valuing the RNA including transfer duties and after Klépierre’s real-estate holdings encom- Ségécé group as a whole to the independ- deferred taxes on capital gains was passed all or part of 271 real-estate assets: ent firm Dôme Close Brothers Fairness in €57.6 per share, up €12.7%. 239 retail complexes, 31 office buildings December 2004. The valuation method RNA excluding transfer duties was and one warehouse. The total value used is described in more detail in the €2 495.7 million (€54.1 per share). (including transfer duties) of these hold- section on methodology, page 167. RNA excluding transfer duties and after ings was €5993.2 million and (group share, deferred taxes on capital gains was €5311.1 million). Valuation of interest rate €53 per share, versus €46.9 at Decem- The value of shopping center properties hedging instruments ber 31, 2003. totaled €5037.2 million (€4355.1 million, The Group did not revalue its consoli- If the cash payment on interest-rate swaps group share). 15 have a unit value that is dated debt. It should be noted, however, was booked immediately for the full greater than €75 million (they account for that following the restructuring of inter- amount, rather than amortized over the financial report management report

D – Debt financing maturity was 5 years, and bank borrowings provide the optimal solution for financing of the value of real-estate holdings were divided among various instruments requirements which were higher than the (compared with a maximum of 50%) and A financing policy that serves (e.g. syndicated and mortgage loans) and prior year (roughly €475 million, versus net current cash flow was 7.4% of debt the Group’s long-term strategy 14 counterparties. €330 million in 2003, mainly due to a (versus a minimum of 7%). higher rate of investment). From a longer Basic principles Market risk management term perspective, Klépierre also sought to A reinforced financial structure To ensure that the margin between the take advantage of favorable market condi- Klépierre has been working to enhance Financing structure profitability of its investments and the cost tions to complete several financial trans- both its Shareholders’ equity and its debt Thanks to its significant investment capac- of its financing is maintained, Klépierre actions designed to ensure the continuity profile. In May 2004, the overwhelmingly ity and steady cash flow growth, Klépierre’s limits its exposure to interest rate risk while of its sources of financing while diminish- positive response to its proposal to Share- visibility with respect to its future debt is ensuring that at least 70% of its long-term ing the cost. holders of stock dividends (by 78.7% of excellent. debt is either hedged or fixed rate (77% Klépierre’s key financial ratios are consis- Shareholders) enabled the Group to To maintain a balanced financial structure at the end of 2004, thanks to a portfolio tent with its objectives and the require- increase its capital by €68.8 million. and competitive cost of capital, Klépierre of swaps with an average maturity of six ments of the rating agency Standard and Over the summer, Klépierre took advan- strives to ensure that, after any increase in years). Poor’s to maintain its BBB+ rating: EBITDA tage of favorable credit market conditions debt, the net debt/revalued assets ratio Klépierre also strictly controls its counter- was equal to 2.9 times its interest expense to refinance its bank borrowings falling remains under the limit of 50%, and that party risk by conducting swaps only with (versus a minimum of 2.5), debt was 46.9% due in the short term. Klépierre thus EBITDA is at least 2.5 times interest banks whose financial strength is excellent, repaid a €670 million syndicated loan expense. Its pragmatic policy of gradually and by limiting its short-term cash invest- Breakdown of sources of financing (due in 2006) and a €225 million bridge increasing Shareholders’ equity (convert- ments to instruments with the least risk (drawn at 12/31/2004) loan (due in 2007), thanks to a new five- ible bonds converted in 2002, stock divi- (e.g. monetary mutual funds or government year bank loan of €250 million and a dends paid in 2004) responds to this same loans). 7-year bond issue of €600 million. The objective. Lastly, exposure to foreign exchange risk is bank credit facility was syndicated among structurally limited since assets located in three banks, and the bond issue was taken Liquidity countries outside the Eurozone account for up by 55 investors in 10 different countries. To ensure the continuity of its resources, only 6.6% of Klépierre’s holdings. Further- In December 2004, two bilateral loans due Klépierre is careful to refinance its long- more, Klépierre bills for rent in euros. in March 2010 were contracted by Klépierre term investments while maintaining a Capital leases 1% (€135 million) and Klépierre in Hungary balanced debt schedule and diversified An active debt financing Commercial paper 8% (€165 million). Syndicated loans 24% sources of financing. Thus, at the end of program in 2004 At the December 31, 2004 reporting date, Bond market 44% 2004, bond issues accounted for 44% Klépierre’s debt financing policy for 2004 Conventional bank borrowings 15% the average due date on outstanding debt (versus 27% at end-2003), the average debt focused on two major objectives. First, to Mortgage loans 8% was five years (versus 4.4 years one year

74 75 financial report management report

Description of principal Declining global cost of debt A stable credit rating financing instruments Total In 2004, Klépierre’s historical cost of debt The agency Standard and Poor’s attributed Type authorized credit limit (authorizations at 12/31/2004) of rate Due date Hedging (ratio of interest expense to average the following ratings to Klépierre: Securities issued and principal loans contracted outstanding debt) was 5.3% (down from 6.125% bonds fixed 600 Jul.5.5% 2008 in 2003). no Short term Long term Outlook 4.625% bonds fixed 600 Jul.Forecast 2011 on the basis yes of the financial struc- A-2 BBB+ stable Syndicated loan 2003 floating 500(1) Mar.ture 2009 and interest rates yes at December 31 Syndicated loan 2004 floating 250 Jul.2004, 2009 the cost of debt yes was 4.2%, reflecting Klépierre loan fixed 135 Mar.the 2010 impact of swap restructuring no hedging Klépierre Hongrie loan fixed 165 Mar.instruments. 2010 A 100 basis no point increase in Mortgage loan – Italy floating 126 Jun.the 2015 Euribor would increase yes the global cost Back-up facility for commercial paper floating 270 Mar.of 2005debt by 0.2% – which yes translates into a Overdrafts floating 73 revolving€6.4 million fall in nopre-tax current cash (1) Fixed rate transformed to floating rate. in € millions flow. prior) – excluding the back-up facility for bilateral borrowings by Klépierre and commercial paper (due in March 2005) – Klépierre in Hungary (€300 million). Consolidated balance sheet at 12/31/2004 and undrawn credit lines totaled approxi- This restructuring enabled Klépierre to ASSETS LIABILITIES mately €195 million. cancel instruments that would have raised the exposure of Klépierre’s future earnings NBV – Shareholders’ More “effective” and less to potentially volatile changes in fair value 1921 equity expensive interest-rate hedging following the application of IAS 39.

In connection with the adoption of IFRS, As a result of these changes, Klépierre’s NBV – Shopping 4279 centers 784 UCG – Shareholders’ Klépierre took advantage of historically low interest-rate hedge is now composed equity long-term interest rates to restructure its exclusively of pure swaps. The portion of 402 NBV – Minority interests 165 UCG – Minority interests interest-rate hedging instruments. its long-term debt that is either hedged or 1200 Bonds Accordingly, in December 2004, most exist- fixed rate remains close to 77%, and the ing instruments were cancelled against average duration of its hedge has risen UCG – Shopping centers 758 a cash payment of €94.1 million (excluding from 4.4 years to 6 years. 1374 Bank borrowings NBV – Offices 856 accrued interest). Concomitantly, new In 2005, a €14 million reduction in inter- UCG – Offices NBV – Services 100 Commercial paper instruments were set up for a total of est expense is expected as a result of these UCG – Services 86 34 220 47 Net balance of assets/liabilities €1,190 million, in addition to two fixed-rate operations. NBV: Net book value • UCG: Unrealized capital gains financial report management report

E – Human resources training agenda in the years to come. group as a whole, as well as the perform- step in the direction of strengthening the Planned programs include beginning and ance indicators specific to each company. shared corporate identity among its Klépierre’s human resources policy is based advanced foreign language courses, semi- Consequently, after company policies and diverse companies. on three core values: creativity, commitment nars on working in an intercultural envi- procedures and agreements on the and responsiveness. Social rating agencies ronment, and efforts to identify and reduced workweek were harmonized in have rewarded Klépierre with an evalua- prepare individuals for expatriation and 2003, the Klépierre group took another tion that squarely places the Group in the inter-subsidiary exchanges. Indeed, the top percentile of companies in its industry Group’s changing and increasingly inter- Workforce in terms of social responsibility. This recog- national profile led to the development of At December 31, 2004 nition, along with the questions and sugges- a formal expatriation policy in the summer Ségécé 306 tions that were issued with it, offers encour- of 2004. SAS Ségécé Loisirs & Transactions 3 agement for Klépierre to further develop The integration of teams from Immobilière SNC Galae 13 the best practices on which its career Carrefour was completed in 2004 as SAS CB Pierre 3 management processes and employer- regional divisions were being set up to SAS Klégestion 15 employee dialogue are based. manage the “network” of shopping centers. GIE Klépierre Services 100 Klépierre’s headquarter staff moved to new Centros Shopping Gestion 108 In 2004, Klépierre continued to build its offices in the Etoile district. Despite heavy Devimo Consult 77 teams, both in France and abroad. In France, demands across the board, Klépierre PSG 92 71 people were recruited, including employees met the challenge without fail. FMC 19 5 advanced degree-holders. Klépierre’s In France, 279 employees received 3041 hours SARL Effe Kappa 6 other European subsidiaries also saw a rise of training. The rate of access to training Plaza Centers Management 106 in their staffing levels, in response to was 64%, for an average workforce of Sogecaec 18 organic growth – especially for Sogecaec in 433 people. Ségécé Hellas 4 Portugal and PSG in Italy – and due to the In the fall of 2004, employee representa- Klépierre Group 870 integration of the Hungarian subsidiary tive groups (workers’ council, staff repre- PCM into the Group, with its 106 employ- sentatives, occupational health and safety Office properties 34 ees. At the end of 2004, the number of committee) were re-elected when their Shopping centers 836 people employed by Klépierre outside of two-year terms of office expired. Prior to Klépierre Group 870 France (430) was nearly equal to its work- this re-election, new profit-sharing agree- force in France (440). ments were signed. The amount of profits France 440 This new identity, more European than to be distributed is determined on the Abroad 430 French, will guide a portion of Klépierre’s basis of the earnings of the Klépierre Klépierre Group 870

76 77 financial report management report

Composition of the Group’s centers falling within the scope of its new country without ensuring that local cial environment, Management is confi- workforce by gender at 12/31/2004 agreement with Carrefour. During the three teams are in place, capable of handling dent in the Group’s ability to once again years that followed, the Group invested new projects, improving the merchandis- deliver double-digit growth in net current more than 500 million euros annually in ing mix, leasing up premises, and ensur- cash flow per share in 2005. shopping centers. With projects totaling ing rental and property management. All Men Women 2.7 billion euros already identified for the of these skills are currently united in the 45% 55% next five years, Klépierre expects to main- nine countries in which the Group owns tain at least the same pace of growth in the real-estate assets. Its growth policy is future. France accounts for one-third of guided by a commitment to sustainable these projects, with extensions planned development and to integrating assets for many existing centers and new malls successfully into the surrounding commu- F – Outlook currently being developed by Ségécé. nity. Its revenue growth is tied to the satis- However, the bulk of Klépierre’s shopping faction of tenants, customers and the Over the past seven years, Klépierre has center investments will take place in other employees who work locally to manage followed a stepped-up growth strategy for European countries. Indeed, Spain and the assets entrusted to their care. its shopping center business, which Italy are each expected to account for 15% The concern for sustainable growth entails expanding its scope to all coun- of Klépierre’s holdings in the near future. underpins Klépierre’s debt financing tries in the Eurozone. This strategy, and As demonstrated by the Hungarian acqui- policy, which is both characterized by the determination with which it has been sitions in 2004, Central Europe is the other conservative debt ratios and adapted to executed, have proved profitable for all most promising region. It offers high the recurring nature of income. Favorable Shareholders. By pursuing it in the years consumer growth potential, moderate interest rates allow Klépierre to lengthen ahead, Klépierre intends to become a retail density and an attractive profitabil- its average debt maturity at a cost that is dominant player in the European shop- ity to risk ratio. significantly lower that the yield of its ping center ownership and management The capacity to develop assets is not the assets. Klépierre thus benefits from a business. only factor that drives lasting value valuable source of leverage that greatly Klépierre’s access to a significant volume creation. Quality management of acquired contributes to the profitability of its of potential projects, combined with a assets is equally important. Klégestion’s equity capital, which will not require an dense network of management companies expertise in office property management, increase, except in the case of a major – thanks to Ségécé and its subsidiaries – and that of Ségécé and its subsidiaries in acquisition. and ample resources to fund growth will shopping center management, is vital to In light of Klépierre’s steady rental support the Group in this bid. the Group’s success. The Group would be enhancement, combined with a sustained In 2001, Klépierre acquired most of the unable to contemplate operations in a development policy in a favorable finan- financial report management report

five-year financial summary

Klépierre SA 2004 2003 2002 2001 2000

Capital at the end of the period

A) Capital stock 184656916 179039052 119359368 107068456 98700486

B) Number of outstanding common shares 46164229 44759763 14919921 13383557 12948655

Operations and results of fiscal periods

A) Revenues (excluding taxes) 15638864 19307053 21366600 19723678 18628880 B) Income before taxes, employee profit-sharing

and depreciation and amortization 74944756 308448916 57603109 58980051 42686711

C) Income tax - 277475 - 5961605 - 3531913 - 7219508 5344860 D) Income after taxes, employee profit-sharing

and depreciation and amortization 77792605 305275354 51799156 64956994 28040477

E) Distributed profit 106177727 89519526 52219724 41489027 35608801

Earnings per share A) Income after taxes and employee profit-sharing

before depreciation and amortization 1.63 7.02 4.10 4.95 2.88 B) Income after taxes, employee profit-sharing

and depreciation and amortization 1.69 6.82 3.47 4.85 2.17

C) Net dividend attributable per share 2.30 2 3.50 3.10 2.75

Workforce

A) Average number of salaried employees during the fiscal period

B) Payroll for the fiscal year 000015245

C) Employee benefits 00000 in €

78 79 financial report management report

report by the supervisory board

Report of the Supervisory Committee, the Audit Committee and the Board to the Annual General Compensation Committee. Meeting of the Shareholders called to approve the financial After examining the Executive Board report statements for the year and the earnings for the year ended Decem- ended December 31, 2004 ber 31, 2004, we have no particular obser- vations to make, and ask that you approve To the Shareholders, the financial statements and resolutions submitted today, with the exception of the In accordance with the provisions of Arti- seventeenth resolution. cle L. 225-68 of the French Commercial Code (Code de commerce), we hereby The Supervisory Board would like to thank submit our opinions on the Executive Board the Executive Board and all employees of report that was just presented to you, and the Klépierre Group for their hard work and on the corporate and consolidated finan- accomplishments in 2004. cial statements for the year ended Decem- ber 31, 2004. The Supervisory Board

The Executive Board kept the Supervisory Board informed of the Group’s business and operations on a regular basis through- out the year. In accordance with its stated purpose, the Supervisory Board conducted the necessary checks and controls.

The Supervisory Board has set up special sub-committees to assist in the perform- ance of its duties. They are the Investment financial report management report

report of the chairman of the supervisory board

Report of the Chairman of buy or sell any real-estate property; ment that may compromise their objectivity. In 2004, the Board and its sub-committees the Supervisory Board to in the event of a dispute, conclude any deal Three special sub-committees assist the met on a regular basis: the Shareholders, prepared in or transaction and accept any compromise. Board in the performance of its duties: Supervisory Board: 8 times compliance with Article L.225-68 However, the Supervisory Board delegated Investment Committee; Investment Committee: 4 times of the French Commercial to its Chairman the power to authorize the Audit Committee; Audit Committee: 4 times Code (Code de commerce) Executive Board to carry out these opera- Selection and Compensation Committee Selection and Compensation Committee: tions, provided that each individual oper- The makeup, purview, and operating proce- once. Pursuant to Article L. 225-68 of the French ation does not involve the payment of more dures of these committees are described in Commercial Code, this report describes how than €46 million or its equivalent in a the Corporate Governance section of the II – Internal control the work of the Supervisory Board is prepared foreign currency. The Supervisory Board annual report. The work and recommen- Klépierre is governed by an Executive and organized, as well as the Klépierre also delegated authority to the Executive dations of these committees are reported Board and Supervisory Board, and its Group’s internal control procedures. Board to carry out these operations to the Supervisory Board at its meetings. majority Shareholder is a leading banking provided that each individual operation The work of the Supervisory Board and its group. This legal framework was a decisive I – Preparation and organization of does not involve the payment of more than special sub-committees is prepared and factor in determining the features of its the work of the Supervisory Board €8 million or its equivalent in a foreign organized by their respective chairmen, system of internal control. The Supervisory Board’s primary role is to currency. Both the Chairman of the Super- who are the Chairman or Vice Chairman of In fact, pursuant to the French Companies exercise ongoing supervision of the Execu- visory Board and the Executive Board must the Board, as the case may be, assisted by Act, the Supervisory Board’s primary role is tive Board. To fulfill this mission, it conducts report to the Supervisory Board in the event the Board Secretary or the relevant sub- to exercise ongoing supervision of the work various verifications and controls and of the use of these authorizations. committee Secretary. of the Executive Board. Klépierre is included requests information on an as-needed The Supervisory Board executes its functions The Supervisory Board makes decisions in the scope of the internal control proce- basis. The Executive Board must provide in accordance with the Company’s internal following a debate during which each dures of BNP Paribas, which are imple- the Supervisory Board with a management control procedures, which include, in partic- member may freely express his opinion or mented on a consolidated basis, in compli- report at least once each quarter, and must ular, the abovementioned delegations granted request further information. In general, ance with banking industry regulations. In submit the financial statements for verifi- to its Chairman and the Executive Board. members of the Supervisory Board who light of the bank’s rank as a major global cation and control. In addition, the Super- Four of the Supervisory Board’s nine cannot attend the meeting may designate financial institution and the diversity and visory Board authorizes the Executive members are independent, meaning that another member to represent them and scope of its business in France and abroad, Board to carry out the following operations: they have no other relationship whatsoever provide this proxy with instructions, espe- these procedures are extensively structured. buy or sell equity interests in any company; with the Company, the Group, or its manage- cially if a vote is to take place. Klépierre’s internal control system is

80 81 financial report management report

derived from and coherent with that of group, in France and abroad. No Klépierre the first level of control is performed by of the Klépierre group, who are fully inde- BNP Paribas. As a reminder, internal control subsidiary is excluded from its scope. each employee on transactions and tasks pendent from operations. The role of the is the organizer of “processes and controls a foundation formed by three interde- that he or she completes in accordance with audit team is to provide the Company’s implemented by the Executive Board to pendent pillars: the operating procedures in force; governing boards with assurances that oper- ensure the global control of risks and –effective company organization, meaning the second level of control is exercised ations are properly controlled and to recom- provide reasonable assurance that the a set of processes designed to achieve fixed by management, which is responsible for mend improvements. In compliance with a strategic objectives set will be reached.” objectives while controlling cost, the relevance of policies and procedures in specific benchmark, the audit team works This organization is, in particular, based on: – a system of control, force and compliance therewith, as well as in accordance with an audit plan, the aim of the effectiveness and efficiency of the – reliable and relevant information. for monitoring business and legislative which is to ensure that periodic checks are Company’s internal operations; Each of these pillars encompasses a set of changes. The second level of control may be conducted in the main areas of risk and to the reliability of internal and external procedures and standards. These sets, or performed by auditors through specialized assess the effectiveness and efficiency of the information; repositories, include procedures that directly controls, such as “Ethics and Compliance”, overall systems of internal control. The audit compliance with laws, regulations and and specifically relate to internal control. to assess compliance with ethical and plan is founded on risk mapping. The audit internal policies. The purpose of internal control procedures professional codes of conduct and the fight team has direct access to the Executive The internal control system is built on the are: against money laundering, and “Operational Board. Its findings are submitted to the Audit following key principles: to ensure that the Company’s business Risk Management”. Audit findings are Committee and serve as the basis for reports, the primary responsibility of operational transactions and operations, as well as the submitted directly to the Executive Board recommendations, and implementation teams to meet a defined set of objectives behavior of its employees, comply with the and the Audit Committee. In connection plans. The audit team verifies this imple- and control risks. The attainment of objec- guidelines set forth by its governing boards, with the first and second levels of control mentation and informs the Executive Board tives generates the financial performances laws and regulations in force, and its values, and in compliance with applicable stan- and the Audit Committee. described, in particular, in the management standards and internal policies and proce- dards, a structured project was launched to The internal control system implemented report by the Executive Board; the risks to be dure; implement a full set of risk monitoring tools, by the BNP Paribas group includes a fourth controlled by Klépierre are described in the to verify that accounting, financial and designed to improve the risk management level of control, exercised by the General General and Legal Information section of the management information communicated function. Detailed risk mapping is a part of Inspection unit. These audits are initiated annual report. The Supervisory Board is to the Company’s governing boards accu- this process, from which a set of FSP (funda- by senior executive management or the unit particularly attentive to the risks related to rately reflects the Company’s business mental surveillance points) is being imple- itself. In Klépierre’s specific case, the Exec- the market, the Company’s image, and ethics; operations and financial conditions. mented. In addition, the best tools available utive Board or Supervisory Board can the separation of executive power between The Supervisory Board has enacted formal for analyzing operating incidents are being submit its organization and procedures to those who exercise control or supervision and internal audit guidelines that define a rolled out, and the recommendations that a review by the General Inspection unit of those involved in operations; three-tier system of control designed to have emerged from internal audit work are the BNP Paribas Group. The conclusions the universality of internal control proce- ensure the overall security of the internal being applied; and recommendations of two audits of this dures, which are applied across the Klépierre audit system: the third level is exercised by the auditors type, performed in the spring of 2003 and financial report management report

the spring of 2004, were submitted to the times per year to define Group-level rules income, payroll expense, general operating to accommodate its rapid growth and fast- Executive Board and the Supervisory Board. applicable to all subsidiaries. Klépierre also costs and other expenses. Operating changing regulations. The Boards are monitoring implementation. calls on the services of external experts, departments are asked to provide an expla- Significant changes in banking industry The third pillar of the internal control proce- primarily for tax planning advice. nation whenever an unusual change is regulations on internal control (amended dures mainly concerns financial and The “Accounting procedures and controls detected. Naturally, this control procedure Regulation 97-02 by the Comité de la accounting information. The clarity of finan- in France and abroad” department handles was adapted upon the introduction of the Réglementation Bancaire) were introduced cial information and the relevance of the implementation and updating of new IFRS. in 2004; more are expected in 2005. These accounting methods are monitored by the accounting control procedures. New proce- The Group’s financial position, cash flow amendments, which aim to reinforce inter- Audit Committee, in liaison with the inde- dures governing the establishment of work forecasts and interest-rate risk management nal control procedures and will have signif- pendent auditors. Acting under the respon- records and other supporting documents are analyzed weekly by the treasury unit icant impact on Klépierre, are set forth sibility of the Chief Financial Officer, were set up during the year. and then directly reported to the Chief below: Klépierre’s accounting department and A second level of control ensures that docu- Financial Officer and the Chairman. The business continuity plans, meaning all consolidation department prepare the ments supporting accounting cut-offs exist, same unit prepares for decisions related to measures designed to maintain the Group’s corporate and consolidated finan- are complete, and are reliable. This applies financing, investments and interest-rate Company’s essential services and ensure cial statements. in particular to documents pertaining to hedging. The most critical decisions are business recovery; Accounting records and work for French rental income and expense, depreciation submitted to the Supervisory Board. All a clear separation between ongoing subsidiaries are centralized at Klépierre and amortization, interest income and accounting and financial information is control, which is preventive and conducted headquarters on a shared information expense, accrued non-matured interest on managed in accordance with recommended throughout operations, and periodic system. The consolidation department is loans, current accounts and interest-rate IT procedures that include daily backups control, which is carried out after-the-fact responsible for ensuring that the accounting hedging instruments. and the remote, off-premise storage of the via periodic investigations; data submitted by subsidiaries in France and A third level of control, in the form of inter- backup media. A data recovery test run was a compliance unit in charge of control- abroad is correctly reused, and analyzes all nal management audits, is performed on successfully completed in the 4th quarter ling the risk related to non-compliance with restatements and reclassifications made for financial statements and intermediate of 2004. All units were able to retrieve their legal and regulatory provisions, profes- the purposes of consolidation pursuant to balances to test for consistency and reason- data from the Group’s backup site. sional standards and ethics, or instructions the provisions of CRC 99-02. A correspon- ableness. In particular: More generally, a project for updating from management; dent is appointed in the accounting depart- income statement balances are compared and/or drafting procedures is in progress. subcontracting, which must be subject to ment of each foreign company and reports with those of the prior period and with At the end of the year, 82% of procedures a specific set of controls. to the consolidation manager. A statement budget forecasts; had been validated and disseminated to Klépierre’s internal control procedures will of off-balance sheet commitments is central- rental income and expenses are exam- personnel. be adapted to reflect these changes in 2005. ized and validated by each department ined and analyzed in detail; Klépierre will continue extending its inter- head. particular attention is paid to changes nal control procedures to all of its foreign An accounting committee meets several and trends in various line items – other subsidiaries and will adapt them as needed

82 83 financial report management report

report of the statutory auditors on the report of the chairman of the supervisory board

Financial Year ended ized and of internal control procedures in given concerning Company internal control December 31, 2004 place within the Company. procedures relating to the preparation and It is our responsibility to provide you with processing of accounting and financial Report of the statutory auditors, our observations on the information and information, as set out in the report of the prepared in accordance with the last statements set out in the Chairman’s report Chairman of the Supervisory Board, which paragraph of Article L. 225-235 of the on the internal control procedures relating was prepared in accordance with the last French Commercial Code, on the basis of to the preparation and processing of finan- paragraph of Article L. 225-68 of the French the report of the Chairman of the Super- cial and accounting information. Commercial Code. visory Board of Klépierre, as regards the We carried out our work in accordance with internal control procedures relating to professional standards that are applicable Paris-La-Défense, February 21, 2005 the preparation and processing of in France. This requires audits to be carried accounting and financial information. out in order to assess the reliability of the The Statutory Auditors information given in the Chairman’s report Mazars & Guérard: Odile Coulaud To the Shareholders of Klépierre, with respect to internal control procedures Ernst & Young Audit: Luc Valverde concerning the preparation and processing In our capacity as Statutory Auditors of of accounting and financial information. Translation of the French original Klépierre, and in accordance with the last These audits involved, in particular: for information purposes only. paragraph of Article L. 225-235 of the French reviewing the goals and general organi- Commercial Code, we hereby report to you sation of internal control, as well as inter- on the report of the Chairman of your nal control procedures concerning the Company’s Supervisory Board, in accor- preparation and processing of accounting dance with Article L. 225-68 of the French and financial information, as presented in Commercial Code, for the financial year the Chairman’s report; ended December 31, 2004. reviewing the work underlying the infor- It is the Chairman’s responsibility to give mation given in the report. an account, in his report, in particular of the conditions under which the work of On the basis of this work, we have nothing Supervisory Board is prepared and organ- to report with respect to the information consolidated financial statements

Consolidated statements of income at December 31, 2004 p. 85 Consolidated balance sheets at December 31, 2004 p. 86 Consolidated statements of cash flow at December 31, 2004 p. 88 Statement of income by business at December 31, 2004 p. 89 Notes to the consolidaded financial statements p. 90 Report of the Statutory Auditors on the consolidated financial statements p. 122 85 financial report consolidated financial statements

consolidated statements of income

At December 31 2004 2003 2002 Lease income 397 545 353 193 311891 Lease income from management and administration 33744 32637 31541 Proceeds from sales of projects under development – 335 1529 Other income from operations 6590 4736 5961 TOTAL INCOME FROM OPERATIONS (note 18) 437879 390901 350922

Cost price for projects under development – - 285 - 1276 Other operating expenses (note 19) - 44058 - 39577 - 36212 Taxes and duties - 2436 - 934 - 926 Payroll expense (note 23) - 40307 - 36829 - 30670 Employee profit-sharing and expense - 3230 - 2514 - 2025 Depreciation and amortization (note 19) - 105108 - 96598 - 88456 Net balance of allowances to and releases of reserves 863 - 213 - 2511 Results of operations 243 603 213 951 188 846

Interest income 14780 94522 92754 Interest expense - 136829 - 205024 - 191269 Financial results (note 20) - 122 049 - 110 502 - 98 515

Pre-tax results of operations 121 554 103 449 90 331

Non-recurring results (note 21) 15474 31191 63248 Corporate income tax (note 22) - 13548 - 26844 - 54500 Net earnings of consolidated companies 123 481 107 796 99 079

Share in net income of equity method investees 454 396 356 Allowance to goodwill amortization (note 21) - 1353 - 539 - 717

NET EARNINGS OF CONSOLIDATED GROUP 122 582 107 653 98 718 Attributable to minority interests - 20448 - 19358 - 17619

NET INCOME, GROUP SHARE 102 134 88 295 81 099 in € thousands Earnings per share Number of shares (undiluted basis) 46164229 44759763 14919921 Net income, group share (in € thousands) 102134 88295 81099 net income, group share per share (in €) (1) 2,2 2,0 5,4 (1) Based on the number of shares at the end of the period. in € financial report consolidated financial statements

consolidated balance sheets

Depreciation & Assets at December 31 Gross amortization Net Net Net 2004 2003 2002

Fixed assets 5 463 852 205 541 5 258 311 4 849 667 3 559 486

Intangible fixed assets (notes 2.2 to 2.4) 49750 11445 38305 37728 52278

Purchase goodwill (note 2.1) 35963 7239 28724 13778 12396

Tangible fixed assets (notes 2.2 to 2.4) 5297204 185589 5111615 4709673 3416362

– Land 2530524 2530524 2265912 1544316

– Buildings and improvements 2741773 180997 2560776 2441904 1869897

– Other tangible fixed assets 24907 4592 20315 1857 2149

Long-term financial assets (note 2.5) 77526 1268 76258 86586 77808

Equity securities in equity method investees (note 2.6) 3409 3409 1902 642

Current assets 310 378 4 804 305 574 308 685 323 743

Inventory of projects under development (note 3) 7253 7253 3837 3302

Trade notes and accounts receivable (note 4) 37259 4732 32527 19183 16827

Miscellaneous receivables (note 5) 141678 72 141606 176824 193310

Marketable securities (note 6) 64300 64300 43191 65802

Cash and cash equivalents 59888 59888 65650 44502

Deferred income tax assets (note 10) 7 762 7 762 7305 53178

Adjustment accounts (note 7) 161 356 161 356 20 695 18 431

TOTAL ASSETS 5 943 348 210 345 5 733 003 5 186 352 3 954 838 in € thousands

86 87 financial report consolidated financial statements

Liabilities at December 31 2004 2003 2002

Shareholders’ equity (note 8) 1922016 1839126 1124141

Share capital 184658 179040 119360

Additional paid-in capital 743325 680124 680107

Legal reserve 17904 12513 11284

Consolidated reserves 873995 879154 232291

Earnings for the period 102134 88295 81099

Minority interest (note 9) 402 335 416 677 357 670

Deferred income tax liabilities (note 10) 93 389 110 652 95 566

Provisions for contingencies and losses (note 11) 12 644 14 705 17 241

Debt 3 238 917 2 793 469 2 349 822

Borrowings and financing debt (note 12) 2925765 2427426 2103950

Trade notes and accounts payable (note 13) 48630 33498 34187

Other debt (note 14) 264522 332545 211685

Adjustment accounts (note 15) 63 702 11 723 10 398

TOTAL LIABILITIES 5 733 003 5 186 352 3 954 838 in € thousands financial report consolidated financial statements

consolidated statements of cash flow

At December 31 2004 2003 2002 Cash flow from operating activities Net income of consolidated companies 122582 107653 98718 Elimination of expenses and income with no material impact on cash flow – Amortization and depreciation 115259 105448 101085 – Capital gains/losses on sales of assets, net of taxes and deferred taxes - 17281 - 17350 - 55948 Cash flow of consolidated companies 220560 195743 143855 Change in working capital requirements - 51119 - 58523 - 13185 Net cash flow from operating activities 169 441 137 220 130 670

Cash flow from investment activities Acquisition of fixed assets - 227763 - 399347 - 275342 Disposal of fixed assets 217709 282951 182359 Impact of change in scope - 504185 - 61912 - 349957 Net cash flow from investment activities - 514 239 - 178 308 - 442 940

Cash flow from financing activities Dividends paid to shareholders of the parent(1) company - 19820 - 51507 - 40858 Dividends paid to minority interests in consolidated companies - 12751 - 13107 - 17083 Change in net financial condition – 32266 147200 Issue premium repayment - 1947 Sale/acquisition of treasury shares - 2131 New borrowings and financing debt 1427038 189002 338572 Cash payments on financial instrument restructuring - 90995 Repayment of borrowings and financing debt - 1257189 - 379765 - 187646 Impact of changes in scope of consolidation 335681 249605 23375 Net cash flow from financing activities 377 886 26 494 263 560

Change in cash flow 33 088 - 14 594 - 48 710 in € thousands Cash flow at the beginning of the period 31773 46367 95077 Cash flow at the end of the period 64861 31773 46367 (1) Dividends paid to shareholders of the parent company on June 30, 2004 amounted to €88639000. €68819000 was paid in shares and €19820000 was paid in cash.

88 89 financial report consolidated financial statements

statement of income by business

Offices Shopping Centers At December 31 Ownership and management activitiesDevelopment activities Ownership and management activitiesTotal shopping center business 2004 2003 2002 % 04/032004 2003 2002 % 04/032004 2003 2002 % 04/032004 2003 2002 % 04/03

Lease income 64496 74198 81230 - 13.1% – 3333 333049 278995 227328 19.4% 333049 278995 230661 19.4%

Income from management and administration 454 156 1139 191.0% 1 33290 32481 30401 2.5% 33290 32481 30402 2.5%

Proceeds from sales of projects under development – – – – 263 654 – – 72 875 – – 335 1529 –

Other income from operations 547 790 190 - 30.8% 79 10 6043 3867 5761 56.3% 6043 3946 5771 53.1%

Total income from operations 65497 75144 82559 - 12.8% – 342 3998 372382 315415 264365 18.1% 372382 315757 268363 17.9%

Cost price of projects under development – – – – - 232 - 617 – – - 53 - 659 – – - 285 - 1276 _

Other operating expenses - 8867 - 6068 - 6766 46.1% - 908 - 1452 - 35191 - 32601 - 27994 7.9% - 35191 - 33509 - 29446 5.0%

Taxes and duties - 138 - 125 - 185 10.4% - 8 - 12 - 2298 - 801 - 729 186.9% - 2298 - 809 - 741 184.1%

Payroll expense - 2738 - 2610 - 3088 4.9% - 23 - 37569 - 34219 - 27559 9.8% - 37569 - 34219 - 27582 9.8%

Employee profit-sharing and incentives - 177 - 210 - 222 - 15.7% - 1 - 3053 - 2304 - 1802 32.5% - 3053 - 2304 - 1803 32.5%

Depreciation and amortization of long-term assets - 18365 - 21648 - 21381 - 15.2% - 788 - 852 - 86743 - 74162 - 66223 17.0% - 86743 - 74950 - 67075 15.7%

Net balance of allowances to and releases of reserves 1019 1246 2860 – - 1323 457 - 156 - 136 - 5828 – - 156 - 1459 - 5371 –

RESULTS OF OPERATIONS 36231 45729 53777 - 20.8% – - 2917 1498 207372 171139 133571 21.2% 207372 168222 135069 23.3% in € thousands COMMENTS - DECEMBER 2004 – Ségécé and its subsidiaries are included under Shopping Center Ownership. – Klégestion financial data is distributed based on actual activities under Offices and Management Fees and Shared Expenses. – Management Fees and Shared Expenses include expenses from Klégestion, then Klépierre Conseil, and Klépierre SA, itemized in proportion to the lease income earned from the period in the Office and Shopping Center segments. financial report consolidated financial statements

notes to the consolidaded financial statements

1 – Significant events in 2004 of €19.4 million, Créteil Soleil became the of 9 shopping centers, from 40% to 50%, Debt restructuring and the two previous years owner of the UGC multiplex cinema adja- representing a total investment of In July 2004, Klépierre decided to refinance cent to the mall. €11.5 million. its existing debt with a €600 million bond 2004 On July 30th, Klépierre acquired twelve In early December, Klefin Italia acquired issue, maturing in July 2011, offering a shopping centers in Hungary, an investment 100% of the share capital of Serravalle, 4.625% coupon. It also set up a new five- Stock in lieu of cash dividend totaling €279.7 million (effective July 1st). the owner of a shopping mall near Genoa. year “club deal” totaling €250 million. The At their annual meeting on April 8, 2004, At the same time, via Ségécé, it took up a On December 24, 2004, the company SC proceeds raised were used for the early the Shareholders of Klépierre approved the 50% equity interest in Plaza Centers Bourse traded its 50% joint share of repayment of €895 million in existing debt, payment of a net dividend of €2 per share, Management, a Hungarian company whose the Marseille Bourse shopping center for including a €670 million syndicated loan payable in cash or shares. principal business is shopping center €30.9 million (excluding transaction fees) due January 2006 and a €225 million 78.7% of Klépierre’s shareholders opted management. in exchange for 25.19% of the equity inter- bridge loan due February 2007. for the stock dividend. As a result, equity Klépierre continued to develop its presence est of Secmarne, the company that owns was raised by €68.8 million and the in Spain, with the acquisition of the the Noisy Arcades mall. At the same time, Restructured interest-rate 1,404,466 new shares, listed on May 12, 2004. Santander El Alisal shopping center (end- the group acquired the remainder of the hedging program A total of €19.8 million was paid out in July) and Los Angeles mall outside of Secmarne stock held by minority share- In December 2004, Klépierre restructured the form of cash dividends. Madrid (December 2004), for a total of holders for €16 million. its interest-rate hedging instruments. Most €38.2 million. At the end of December 2004, for €24.8 existing instruments (in particular optional Change in scale of the group’s holdings In the beginning of October, Ségécé upped million, Klépierre acquired 25 mid-sized instruments) were cancelled against a cash In early 2004, Klécar France acquired its equity interest in the Spanish manage- retail outlets from Carrefour, mainly the payment of 94.1 million euros (excluding the Reims-Tinqueux shopping mall for ment company Centros Shopping Gestion anchors Feu Vert, Quick and McDonald’s, accrued interest). Concomitantly, new hedg- €10.4 million. (CSG), from 50% to 100%, representing a situated next to shopping malls owned by ing instruments were set up at going market In February, Klépierre sold an 8.76% inter- €9.4 million investment. Klépierre. rates for a total of €1,190 million (of which est in Créteil Soleil (owned by Solorec), On November 9th, Klépierre acquired The disposal of six office properties and €1 100 million for Klépierre SA and bringing the group’s equity interest in this two shopping malls in the Greater Toulouse two shopping malls generated a net €90 million for Klécar Italia), in addition company down from 88.76% to 80%. Capi- Area – Blagnac and Saint-Orens – for capital gain of €5.8 million. The sale of to a new fixed-rate bank borrowing of tal gains totaling €5 million were earned €107 million. Klépierre’s 50% share of the Marseille €300 million, shared by Klépierre SA from the sale of these securities. On November 29th, the group opted to Bourse mall brought in another (€135 million) and Klépierre Hongrie On June 28, 2004, for the acquisition price raise its equity interest in IGC, the owner €5 million. (€165 million).

90 91 financial report consolidated financial statements

Significant events subsequent 2003 Restructuring in connection Italy to December 31, 2004 with the new SIIC tax status Klépierre acquired an 85% equity interest On January 13, 2005, Klépierre SA and The new tax status for listed real-estate To optimize the effects of this tax status, in the Vignate property in Milan through Klétransactions sold respectively 8.87% investment companies (SIICs) Klépierre began a restructuring program Novate. and 13.14% of their shares in Secmarne to At their meeting on September 26, 2003, in July 2003. The program primarily The Italian company CG Collegno Srl BNP Assurances for a total of €29.6 million the Shareholders of Klépierre approved concerned Klécentres, in which Klépierre acquired the Collegno mall in Turin. excluding transfer duties. the adoption of the new SIIC tax status. The acquired full ownership in exchange for Bari and Matera were acquired by Kléfin On January 18, 2005, Klépierre sold its office decision was retroactive from January 1, granting exiting minority shareholders Italia and Novate, respectively. property located at 43/45 Avenue Kléber 2003. full ownership of Gonesses Usine Center The value of the four acquired properties in Paris, for €21 million. The main features of the SIIC status and (Center Villepinte); 50% ownership of was €117.1 million. Klépierre paid a complementary price of methods for calculating the exit tax Bègles Arcins, owner of the Rives €4.2 millions to acquire the shopping malls are described in paragraph 3.8. d’Arcins center; and 11.24% of Solorec, Spain of Blagnac and Saint-Orens in March 2005. owner of the Créteil Soleil center. Klécar Foncier España acquired the Revaluation of tangible In September 2003, Klécentres and Klébu- Tenerife shopping mall, which opened and financial assets reaux, two wholly owned subsidiaries of for business in June 2003, as well as the In line with its decision to adopt the new the Klépierre group, transferred their assets Oviedo, Azabache, Albacete and Leon SIIC tax status, Klépierre revalued the tangi- and liabilities to the holding company malls. ble and financial fixed assets in its consol- under the terms of a procedure in France Klécar Foncier Iberica acquired the Lucena, idated balance sheet. Pursuant to opinion known as a TUP (transmission universelle Pontevedra, Orense and Sevilla V malls. No. 2003-C issued on June 11, 2003 by the de patrimoine). The Spanish company Vinaza (a wholly- French National Accounting Board (Conseil owned subsidiary of Klépierre) acquired National de la Comptabilité), Klépierre In 2003, the group acquired 28 additional the Vinaroz center. recorded gross revaluation reserves (for shopping malls in operation, The 10 malls in Spain represented a total excess of restated assets over historical of which 21 are located abroad investment of €113.2 million. cost) of €784.6 million for eligible assets France on its opening balance sheet, subject to an Six shopping malls (Beaune, Bourg en Portugal exit tax of €119.4 million. Assets not eligi- Bresse, Le Mans, Denain, Sevran and Three shopping malls were acquired in ble for the new status were revalued in the Marseille Le Merlan) and three retail Portugal for a total of €91.6 million: consolidated balance sheet. The resulting outlets in Mérignac were acquired in – Gondomar: Inaugurated in Porto in €130.6 million in revaluation reserves, net France for €71.1 million. September of 2003, the center includes a of deferred taxes, was also recorded as shopping mall and a Leroy-Merlin home shareholders’ equity. improvement store. financial report consolidated financial statements

– Villa Nova de Gaïa and Lisbonne Office property disposals 2002 Portugal Telheiras, acquired in connection with the Six office properties in Paris and its In December 2002, Klépierre Portugal Carrefour agreement. Première Couronne were sold, generating Acquisition of malls in France (a wholly-owned subsidiary of Klépierre) a pre-tax capital gain of €11.4 million. In February and July of 2002, Klécar France acquired the Lourès shopping center, Greece and its subsidiary KC5 integrated nine located in the suburbs of Lisbon, for In December 2003, Klépierre acquired Klépierre triples its stock float shopping malls. All were included in the €37.5 million. three shopping malls, EfKarpia, Patras and At their meeting on April 4, 2003, the share- memorandum of agreement with Carrefour. Athinon, for a total acquisition price of holders ratified two extraordinary resolu- Other operations €16,4 million. tions that contributed to multiplying Acquisition of malls abroad Bond conversion Klépierre’s stock float threefold. Italy On July 23, 2002, Klépierre elected to Eastern Europe – Par value halved: The par value of In late June, Klépierre acquired 11 Italian exercise its option of early retirement on Capucines BV, a wholly owned Klépierre SA 14 919 921 shares representing the share shopping malls from Carrefour with a net all outstanding 3% convertible bonds subsidiary, acquired a 99% equity interest capital was reduced from €8 to €4 per book value of €224 million. Klécar Italia, issued in 1998 and due in 2006. A total in Delcis CR, the Czech company that owns share. Par value was reduced by issuing two a wholly owned subsidiary of Klécar 745763 bonds were presented for conver- the Novy Smichov shopping mall inaugu- new shares with a par value of €4 each, Participations in Italy, owns the malls. sion in 2002, resulting in the issue of rated in Prague in September 2001. The mall earning dividends as from January 1, 2003, On July 18, 2002, Klépierre entered into 1 536 364 new shares and raising equity is valued at €85.8 million. in exchange for each existing share with a an agreement with the Italian group capital by €147.2 million. par value of €8. Finiper, under the terms of which Projects under development – Two-for-one stock split: Stated equity Klépierre acquired a 40% equity interest Office property disposals Louvain-la-Neuve in Belgium: The project, capital was increased by capitalizing in IGC, a subsidiary of Finiper that owns Eleven office and warehouse properties completed by the Belgian company reserves totaling €59 679 684 and issuing nine shopping centers, most of which are were sold, generating a pre-tax capital gain Wilhem & Co and valued at €130 million, 14919921 new shares, freely allotting one located in northern Italy. The nine malls of €67.5 million. was acquired by the Belgian company Coim- new share for every two shares issued with were acquired for a total of €59.4 million. bra, a wholly owned Klépierre subsidiary. a par value of €4. The mall, which is scheduled to open in On December 31, 2003, Klépierre’s stated Spain 2005, includes a multi-screen movie theater capital of €179 039 052 represented Klécar Europe Sud and its two Spanish complex that is already in operation. 44759763 fully paid-up shares, each with subsidiaries completed the acquisition Valenciennes: the €50 million project a par value of €4. of four shopping malls for a total of completed by Ségécé, was acquired by €18.6 million and made a down payment Sodevac. It includes a shopping mall in the of €52.1 million toward the acquisition heart of the City of Valenciennes, which is of the Oviedo shopping center. scheduled to open in 2006.

92 93 financial report consolidated financial statements

2 – Principles and methods 2.3 – Fiscal year reporting date 2.6 – Methods for converting 3 – Significant accounting of consolidation The accounting cut-off date for all of foreign companies and valuation policies Klépierre’s consolidated subsidiaries is Monetary and non-monetary assets and 2.1 – Regulatory framework December 31, 2004. liabilities of foreign companies stated in 3.1 – Tangible and financial assets Since January 1, 2000, the Klépierre group’s non-euro currencies are converted in accor- consolidated financial statements are 2.4 – Reciprocal accounts dance with the applicable exchange rate on Fixed assets acquired before January 1, prepared in compliance with the provisions and related party transactions the balance sheet closing date. The variance 2003, and revalued following the of CRC Regulation No. 99-02. Reciprocal accounts and gains from inter- resulting from the difference between the adoption of the new SIIC tax status company transactions are eliminated in valuation of earnings items according to the Revaluation methods 2.2 – Basis and methods consolidation. However, development sales average exchange rate during the period The accounting impacts of opting for the of consolidation fees and acquisition costs are not elimi- and earnings stated according to the clos- new SIIC status are defined in Opinion All companies in which Klépierre exercises nated in cases where the purchasing ing rate is classified as forex exchange and No. 2003-C issued on June 11, 2003 follow- direct or indirect controlling influence, as company has included this income in the is carried as consolidated shareholders’ ing an emergency meeting of the Conseil well as those in which it exercises signifi- cost price of long-term assets or inventory. equity. National de la Comptabilité. Using the cant influence, are consolidated. Interest that is payable by development provisions available to companies opting All exclusively controlled companies are companies and recorded as inventory in 2.7 – Treasury shares held for the new tax status, Klépierre conducted fully consolidated, regardless of their busi- their accounts is not eliminated. by the company a revaluation of its tangible and financial ness purpose or legal form. Shares of common stock that Klépierre assets in its consolidated balance sheet on Exclusive control is presumed when 2.5 – Purchase goodwill issues and holds for subsequent grants to January 1, 2003, and recorded the resulting Klépierre directly or indirectly owns 40% of The difference between the acquisition its employees are classified as marketable revaluation reserve net of the exit tax under the voting rights and when no other share- price and the share in net assets of newly securities and carried at their acquisition shareholders’ equity. holder owns more than 40% of such rights. acquired companies is analyzed and allo- price. An impairment allowance is estab- Klépierre revalued each of its holdings Companies in which Klépierre and other cated to the carrying values of various line lished as needed to reflect the difference recorded in the consolidated balance sheet shareholders have agreed to exercise joint items of the consolidated entity’s assets between the acquisition price and the exer- on the basis of its appraised value, exclud- controlling influence are proportionately and liabilities. For each type of asset or cise price on the corresponding option to ing rights, on January 1, 2003. consolidated. liability, the corresponding valuation purchase granted to employees. The appraised values were allocated The equity method is used for companies method is used. For acquired companies Shares held to stabilize the stock price are between land and buildings based on the in which the group holds at least 20% of that own real-estate complexes, all related classified as marketable securities and are appraisal methods used, namely: voting rights. differences before tax are allocated to land carried at their acquisition price. An impair- –land/buildings rates for office properties; Companies that are non-significant with and buildings. Any remaining differences ment allowance is established whenever –comparison with the cost of construction respect to their total assets, equity and are recorded as goodwill, which is subject their market value is lower than their acqui- for shopping centers. earnings are not consolidated. to amortization over 15 years. sition value. A depreciation rate was applied to the cost financial report consolidated financial statements

of replacement plus replacement expenses. other-than- temporary difference exists can opt for the components method; 3.2 – Inventory of projects The amortization schedules for buildings between the appraised value (transfer – with respect to secondary expenses, or under development were recalculated based on the adjusted duties included) and the net book value. expenses that concern multi-year programs These inventories reflect the incurred cost values. New amortization schedules were Such differences are deemed material for major repairs, companies must (as of of projects under development at the fixed by the appraisers based on the type when they exceed 10% of the net book fiscal periods which begin after January 1, financial statement reporting date. of building and remaining useful life, value. 2003) either establish reserves for major This cost includes the purchase price and approximately 40 years for office proper- In addition, the appraised value does not repairs and revisions or use the compo- related costs of acquiring land, as well as ties and 20 to 30 years for shopping centers. include transfer duties when the real-estate nents method. construction costs, interest expense and asset in question is being held for sale in fees. It does not, however, include fees Adjusting the revalued values the near term. At the January 1, 2003 reporting date, incurred to initially lease up rental prem- at the close of the first period following Klépierre revalued the assets in its finan- ises. Such fees are expensed over the first the adoption of the new status CRC 2002.10 relative to impaired assets cial statements on the basis of appraised three years of the corresponding leases (see Pursuant to Opinion No. 2003-C, the The set of transitional measures set forth values at December 31, 2002, taking into paragraph 3.6). decreases in the values of eligible assets in Regulation 2002.10 of the French account the degree of depreciation for Items comprising this inventory may be sold can be charged against the revaluation Accounting Regulations Committee each property. Consequently, no addi- to third parties prior to completion of the reserve that was initially recorded until the (Comité de la Réglementation Comptable) tional reserves are required. In addition, projects under development. In such cases, close the first full year following election stipulates that businesses are required to shopping center leases generally include related selling costs are – net of advances of SIIC status. set up reserves for major repairs or use clauses that transfer maintenance and received – recorded under miscellaneous the so-called “components” method to repair costs to tenants. The balance of debtors, offset by an entry in a prepaid Fixed assets acquired determine amortization schedules and such expenses borne by the owner is not income account. after January 1, 2003 bases for major repairs and various material. Fixed assets acquired after January 1, 2003 types of long-term assets for periods that 3.3 – Start-up and contribution and extensions and renovation of reval- begin after January 1, 2003 and through CRC 2004-06 pertaining to the definition, costs and acquisition costs ued fixed assets are recorded on the December 31, 2004. accounting treatment and valuation of for securities and property balance sheet at their acquisition cost Following the publication of Regulation assets. The start-up and contribution costs capi- and amortized over periods ranging from CRC 2003.07 issued on December 12, 2003, The Group elected not to early adopt the talized in subsidiary balance sheets are 25 to 40 years. these transition measures provide: aforementioned CRC standard issued on recorded in the consolidated financial – with respect to primary expenses, or November 23, 2004 pertaining to the defi- statements. Valuation allowances expenses incurred to replace all or part of nition, accounting treatment and meas- Costs incurred by Klépierre in connection for real-estate assets assets, companies that have not yet estab- urement of assets (enforceable as of with mergers and business combinations are Valuation allowances are established for lished reserves for major repairs and revi- January 1, 2005 with possible early adop- charged against additional paid-in capital. real-estate assets whenever a material, sions should not do so. In any case, they tion as of January 1, 2004). Acquisition costs relative to securities and

94 95 financial report consolidated financial statements

property purchased are recoded as assets. the employer before an employee has 3.5 – Entry fees and indemnities business. Consequently, their inclusion Property acquisition costs are spread over reached the age of 65 is considered to be Entry fees received are considered as addi- would have an adverse impact on the the amortization period for the related asset. either a voluntary departure or dismissal. tional lease income and recorded as comparability of financial statements and Bond issue costs are carried as expenses to As such, the related end-of-service prepaid income, spread over the term of operations. amortize on a prorated basis over the allowance is subject to social contributions. the related lease. scheduled maturity of the bond. At December 31, 2003, the Klépierre Group Eviction indemnities paid to tenants are Klépierre records as non-recurring items: declined the preferred accounting method recorded as deferred expenses and amor- –capital gains on the sale of property, net 3.4 – Accrued retirement liabilities recommended by the Conseil National de tized over three years. of disposal fees; la Comptabilité at its emergency meeting of Termination indemnities collected from –capital gains on the sale of equity inter- France January 21, 2004, in favor of the alternate tenants are immediately recognized as ests and treasury sales. The retirement obligations of Klépierre method. It recorded €0.8 million in income. primarily include end-of-service allowances, expenses incurred by the change in tax 3.8 – Tax payable and tax deferred complementary retirement plans, early status in its income statement for 2003. 3.6 – Sales fees retirement plans, and health insurance plans Sales and lease-up fees related to the open- Tax status for listed real estate for both active and retired employees. Abroad ing of new shopping centers and extensions investment companies Recommendation CNC 2003 R 01 dated to existing ones are recorded as expenses April 1, 2003, and applicable as of January 1, Italy to be amortized over three years on a pro- Main features of SIIC tax status 2004, sets forth the methods to be used In Italy, company obligations consist of end- rated basis, as of the date on which the Article 11 of the French Budget Act for 2003 to calculate retirement obligations. At of-service allowances (Trattamento di Fine shopping center or extension opens for and the decree of July 11, 2003 offer a new December 31, 2004, the Klépierre Group Rapporto). The amount due by the employer business. tax-exempt status to real-estate investment did not follow this recommendation, main- upon termination of an employment companies (Sociétés d’Investissements taining earlier accounting practices: i.e. the contract (resignation, layoff, retirement) is Fees earned in connection with changes in Immobiliers Cotées - SIIC) listed on a regu- projected unit credit method; annual calculated by applying an annual coefficient tenant or renegotiations of leases are lated market in France, provided that they income statement recording of all changes to each year of service. The allowance may recorded as expenses to amortize on a have minimum share capital of €15 million in employer obligations, including those not exceed the equivalent of the corre- prorated basis over the first firm period of and that their principal corporate purpose related to actuarial variances; accounting sponding year’s wages divided by 13.5. the lease as of the date on which the lease is to acquire and build properties for rental of accrued retirement obligations net of goes into effect. The period of amortization or to directly or indirectly own shares in hedging results. Spain may not exceed three years. companies having this corporate purpose. In addition, Act 2003-775 dated August 21, In Spain, retirement liabilities are estab- The option is irrevocable. Subsidiaries 2003 (the so-called “Fillon Act”) changed lished on the basis of collective agreements 3.7 – Non-recurring items subject to corporate income tax in which the conditions governing employee retire- in force. The Group’s Spanish affiliates are Non-recurring income and losses result the company holds at least a 95% equity ment, such that separation at the option of not concerned by these agreements. from events that are unrelated to Klépierre’s interest can also elect the new status. financial report consolidated financial statements

Companies that opt for the SIIC status in determined using appraised values includ- Klépierre SA is split up into a SIIC segment, sale of equity interests, since it is most turn agree to distribute 85% of rental ing duties, adjusted as follows: exempt from tax on rental income and probable that the sale will involve equity income, 50% of the proceeds from the sale – the fair market value of properties is proceeds from the sale of real-estate assets, and not real property. Given the negligible of real-estate assets and all of the dividends calculated applying a 6% discount for and a taxable non-SIIC segment for other tax basis, no deferred tax was recorded. received from non tax-exempt subsidiaries. expenses and duties; activities. Tax for Galeria Parque Nascente (Portugal) These companies are liable for an imme- –the fair market value of SCIs and SNCs is The corporate income tax for companies is not included, since the Group intends to diate 16.5% exit tax on their unrealized capi- equal to RNA, discounted by 4.80% for that are not eligible for SIIC tax status is limit its holding to three years. Tax-exempt tal gains derived from property and secu- transfer duties. calculated on the basis of prevailing rates. status is allowed if the sale occurs at this rities in tax-exempt partnerships. The first time. 25% of the exit tax is payable on December The exit tax is recorded: Deferred taxes 15 of the year in which the company opts –against the revaluation reserve recorded 3.9 – Risk management instruments for the new status, and the balance is as shareholders’ equity, equal to the capi- Non-SIIC status As the holding company of a group of payable over the next three years. tal gain calculated on the difference Observed differences between the values companies, Klépierre centralizes the between the appraised value and the used in consolidation and the taxable management of group financing needs and Calculating and recording the exit tax consolidated net book value; values of assets and liabilities, as well as interest and exchange rate exposures. for companies that opt for SIIC status – under taxes in the statement of income, the differences resulting from timing Under the terms of this financing policy, The up-front exit tax is payable by compa- equal to the capital gain, if applicable, differences and losses carried forward, are Klépierre makes available the financial nies formerly subject to corporate income calculated on the difference between the recorded as deferred tax assets or liabili- resources needed to fund group activity tax. Fiscally transparent companies that do tax value and the consolidated net book ties using the accrual method. Klépierre and sets up the related hedging programs. not opt for corporate income tax are consol- value prior to revaluation. applies the tax rate applicable to building Gains and losses related to interest or idated through their parent companies that sales. exchange rate swaps are prorated over the have opted for SIIC status and that are Thirty-three companies in 2003 and four Provisions for depreciation of deferred tax period and reflected in the income state- liable for the exit tax calculated on the basis companies in 2004 opted for SIIC status and assets are set aside whenever earnings ment. of the capital gain on SCI or SNC partner- are liable for an exit tax of €119.7 million and forecasts at the balance sheet closing date Unrealized gains and losses resulting from ship units they hold. €0.8 million, respectively. Some of these do not confirm that assets will be recov- the difference between the estimated fair companies maintain taxable activities. In ered. market value of such contracts at year-end For each company, the exit tax is deter- such cases, the corporate income tax was Deferred taxes are calculated using local and their nominal value are not recorded. mined on the basis of the difference calculated on the basis of prevailing rates. rates in force as of the balance sheet In the event of a cash settlement, this cash between the fair market value excluding closing date. The rates applied are as payment is spread over the remaining term transfer duties and the tax value of fixed Corporate income tax applicable to follows: 34.93% in France, 35% in Spain of the cancelled contract. assets or shares in companies. companies not eligible for SIIC tax status and 33% in Italy. Fair market values excluding duties are Since adopting of the new status in 2003, Tax was calculated for IGC (Italy) on the

96 97 financial report consolidated financial statements

4 – Scope of consolidation

Note1 % ownership % control Consolidation Company SIREN No. Headquarters at 2004(1) 2004 2003 2004 2003 SA Klépierre 780152914 Paris FC 100.00% 100.00% 100.00% 100.00%

OFFICES

SC Antin Vendôme 313781668 Paris-La-Défense PC 50.00% 50.00% 50.00% 50.00%

SAS Klépierre Finance 433613312 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS LP7 428782486 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 43 Kléber 398966812 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Issy Desmoulins 398968677 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Baudot Massy 398963850 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Concorde Puteaux 400098364 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Suffren Paris 15 400098448 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Kléber Levallois 400098356 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Leblanc Paris 15 400110235 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 21 Kléber 582017273 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS CB Pierre 343146932 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 21 La Pérouse 389519158 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 46 Rue Notre Dame des Victoires 392655395 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 192 Avenue Charles de Gaulle 392654505 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 23 Avenue Marignan 392663670 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 43 Grenelle 393438742 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS 5 Turin 398969014 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Espace Kléber 419057823 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Espace Dumont d’Urville 419057922 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Général Leclerc n° 11 Levallois 381986363 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Jardins des Princes 391237716 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Maille Nord 349572891 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Barjac Victor 390123057 Paris FC 100.00% 100.00% 100.00% 100.00% financial report consolidated financial statements

% ownership % control Consolidation Company SIREN No. Headquarters at 2004(1) 2004 2003 2004 2003 SHOPPING CENTERS - France

SNC Kléber La Pérouse 388724361 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS KLE 1* 389217746 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Saint André Pey Berland 377563978 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Secmarne 309660504 Paris FC 100.00% 61.67% 100.00% 61.67%

SNC Klécar France 433496965 Paris FC 83.00% 83.00% 83.00% 83.00%

SNC KC1 433816501 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC2 433816444 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC3 433816725 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC4 433816774 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC5 433817269 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC6 433842549 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC7 433842515 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC8 433842564 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC9 433816246 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC10 433816220 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC11 433894243 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC12 433894102 Paris FC 83.00% 83.00% 100.00% 100.00%

SNC KC20 449054949 Paris FC 83.00% 83.00% 100.00% 100.00%

SAS Marseille Le Merlan 451355861 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Opale 398968735 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Centre Jaude Clermont 398960963 Paris FC 99.99% 99.99% 99.99% 99.99%

SAS Doumer Caen 398969113 Paris FC 99.96% 99.96% 99.96% 99.96%

SAS Strasbourg La Vigie 399181635 Paris FC 99.85% 99.85% 99.85% 99.85%

SCS Klécar Europe Sud 428864268 Paris FC 83.00% 83.00% 83.00% 83.00%

SAS Socoseine 389287871 Paris FC 93.75% 93.75% 100.00% 100.00%

SC Solorec 320217391 Paris FC 80.00% 88.76% 80.00% 88.76%

SC Centre Bourse 300985462 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Tours Nationale 393439062 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Melun Saints-Pères 402668792 Paris FC 99.98% 99.98% 99.98% 99.98% * Formerly SAS Klépierre Transaction.

98 99 financial report consolidated financial statements

% ownership % control Consolidation Company SIREN No. Headquarters at 2004(1) 2004 2003 2004 2003 SCS Bègles Arcins 404357535 Paris PC 50.00% 50.00% 50.00% 50.00%

SNC Soccendre 319814075 Paris FC 75.25% 75.25% 100.00% 100.00%

SCI Sécovalde 405362682 Paris FC 40.00% 40.00% 40.00% 40.00%

SNC Klétransactions 479087942 Paris FC 100.00% – 100.00% –

SCI Bègles Papin 449389956 Paris FC 100.00% – 100.00% –

SAS Le Havre Tourneville 407799493 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Cécoville 409547015 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Le Havre Capelet 410336564 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Poitiers Aliénor 410245757 Paris FC 100.00% 100.00% 100.00% 100.00%

SA à conseil d’adm. Brescia 419297163 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Foncière Saint-Germain 378668875 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Soaval 419620075 Paris PC 37.50% 37.50% 50.00% 50.00%

SAS Klémurs 419711833 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Cécobil 408175966 Paris PC 50.00% 50.00% 50.00% 50.00%

SNC Espace Cordeliers 421101882 Paris PC 50.00% 50.00% 50.00% 50.00%

SAS Flandre 423012004 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Candé 423012376 Paris FC 99.99% 99.99% 100.00% 100.00%

SCI du Bassin Nord 422733402 La Plaine-St-Denis PC 50.00% 50.00% 50.00% 50.00%

SNC Le Havre Vauban 420307704 Paris PC 50.00% 50.00% 50.00% 50.00%

SNC Le Havre Lafayette 420292047 Paris PC 50.00% 50.00% 50.00% 50.00%

SCI Tour Marcel Brot 428810287 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Sodevac 388233298 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Odysseum Place de France 428788525 Paris FC 70.00% 70.00% 70.00% 70.00%

SAS Klécar Participations Italie 442229175 Paris FC 83.00% 83.00% 83.00% 83.00%

SAS Holding Gondomar 1 438568545 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Holding Gondomar 3 438570129 Paris FC 100.00% 100.00% 100.00% 100.00%

SAS Klépierre Hongrie 442692315 Paris FC 100.00% – 100.00% –

SAS Toulouse Mermoz 479015323 Paris FC 100.00% – 100.00% –

SCI Noble Galerie 388231987 Paris FC 100.00% – 100.00% –

SCI Noble Cafétéria 389308396 Paris FC 100.00% – 100.00% – financial report consolidated financial statements

% ownership % control Consolidation Company SIREN No. Headquarters at 2004(1) 2004 2003 2004 2003 SC Noble Restauration 389308255 Paris FC 100.00% – 100.00% –

SCI Aurora 348410465 Paris FC 100.00% – 100.00% –

SC Orengal 403464100 Paris FC 100.00% – 100.00% –

SERVICES - France

SCS Ségécé 562100214 Paris FC 75.00% 75.00% 75.00% 75.00%

SNC Klégestion 398058149 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Ségécé Loisirs et Transactions 421220252 Paris FC 75.00% 75.00% 100.00% 100.00%

SNC Klépierre Conseil 398967000 Paris FC 100.00% 100.00% 100.00% 100.00%

SNC Galae 433909165 Paris FC 87.25% 87.25% 100.00% 100.00%

Gie Klépierre Services 435194725 Paris FC 87.75% 87.75% 100.00% 100.00%

% ownership % control Consolidation Company Country Headquarters at 2004(1) 2004 2003 2004 2003 SHOPPING CENTERS - Abroad

Srl Immobiliare Magnolia Italy Milan FC 85.00% 85.00% 85.00% 85.00%

Akciova Spolocnost ARCOL Slovaquie Bratislava FC 100.00% 100.00% 100.00% 100.00%

SA Klécar Foncier Iberica Spain Madrid Alcobendas FC 83.00% 83.00% 100.00% 100.00%

SA Klécar Foncier España Spain Madrid Alcobendas FC 83.00% 83.00% 100.00% 100.00%

SA Klépierre Vinaza Spain Madrid Alcobendas FC 100.00% 100.00% 100.00% 100.00%

Spa ICD Italy Milan FC 85.00% 85.00% 85.00% 85.00%

SA Delcis Cr Czech Republic Prague FC 99.00% 99.00% 99.00% 99.00%

SA Klépierre Nea Efkarpia Greece Athènes FC 83.00% 83.00% 100.00% 100.00%

SA Klépierre Foncier Makédonia Greece Athènes FC 83.01% 83.01% 100.00% 100.00%

Spa IGC Italy Milan PC 50.00% 40.00% 50.00% 40.00%

SA Klélou-Immobiliare Portugal Carnaxide FC 100.00% 100.00% 100.00% 100.00%

Spa Klécar Italia Italy Milan FC 83.00% 83.00% 100.00% 100.00%

SA Coimbra Belgium Bruxelles FC 100.00% 100.00% 100.00% 100.00%

Srl Novate Italy Milan FC 85.00% 100.00% 85.00% 100.00%

SA Klépierre Athinon A.E. Greece Athènes FC 83.00% 83.00% 100.00% 100.00%

100 101 financial report consolidated financial statements

% ownership % control Consolidation Company Country Headquarters at 2004(1) 2004 2003 2004 2003 SA Klépierre Peribola Patras Greece Neo Psyhiko FC 83.00% 83.00% 100.00% 100.00%

Besloten vennootschap Capucine BV Netherlands Amsterdam FC 100.00% 100.00% 100.00% 100.00%

Spa Klefin Italia Italy Milan FC 100.00% 100.00% 100.00% 100.00%

SA Foncière de Louvain-la-Neuve Belgium Bruxelles FC 100.00% 100.00% 100.00% 100.00%

SA Klépierre Portugal SGPS SA Portugal Carnaxide FC 100.00% 100.00% 100.00% 100.00%

SA Cinémas de l’Esplanade Belgium Bruxelles FC 100.00% 100.00% 100.00% 100.00%

SA Galeria Parque Nascente Portugal Lisbonne PC 50.00% 50.00% 50.00% 50.00%

SA Gondobrico Portugal Lisbonne PC 50.00% 50.00% 50.00% 50.00%

SA Klénord Imobiliaria Portugal Carnaxide FC 100.00% 100.00% 100.00% 100.00%

SA Klétel Imobiliaria Portugal Carnaxide FC 100.00% 100.00% 100.00% 100.00%

Srl Collegno Italy Milan FC 100.00% 100.00% 100.00% 100.00%

SARL Assago Italy Milan EM 20.00% – 20.00% –

Spa Serravalle Italy Milan FC 100.00% – 100.00% –

SA Klépierre Vallecas Spain Madrid Alcobendas FC 100.00% – 100.00% –

Sarl Szeged Plaza Hungary Budapest FC 100.00% – 100.00% –

Sarl Szolnok Plaza Hungary Budapest FC 100.00% – 100.00% –

Sarl Zalaegerszeg Plaza Hungary Budapest FC 100.00% – 100.00% –

Sarl Nyiregyhaza Plaza Hungary Budapest FC 100.00% – 100.00% –

SA Duna Plaza Hungary Budapest FC 100.00% – 100.00% –

Sarl CSPL 2002 (Cespel) Hungary Budapest FC 100.00% – 100.00% –

Sarl GYR 2002 (Gyor) Hungary Budapest FC 100.00% – 100.00% –

Sarl Debrecen 2002 Hungary Budapest FC 100.00% – 100.00% –

Sarl Uj Alba 2002 Hungary Budapest FC 100.00% – 100.00% –

Sarl Miskolc 2002 Hungary Budapest FC 100.00% – 100.00% –

Sarl Kanizsa 2002 Hungary Budapest FC 100.00% – 100.00% –

Sarl KPSVR 2002 (Kaposvar) Hungary Budapest FC 100.00% – 100.00% –

SERVICES - Abroad

SL Centros Shopping Gestion Spain Madrid Alcobendas FC 75.00% 37.50% 75.00% 50.00%

SA Devimo Consult Belgium Bruxelles EM 26.25% 26.25% 35.00% 35.00% financial report consolidated financial statements

% ownership % control At year-end 2004, 141 companies of the Consolidation Company Country Headquarters at 2004(1) 2004 2003 2004 2003 Klépierre group were consolidated, Srl Effe Kappa Italy Milan PC 50.00%compared – with 124 50.00% as of December 31, 2003. – Srl PSG Italy Milan PC 37.50% 37.50% 50.00% 50.00% Sro FMC Central Europe Czech Republic Prague FC 56.25% 56.25%26 companies 75.00%were consolidated 75.00% SA Sogecaec Portugal Carnaxide FC 75.00% 75.00%for the first time 100.00% in 2004 100.00% Sarl Plaza Center Management Kft Hungary Budapest PC 50.00%Of – the newly 50.00% consolidated companies, – 14 are consolidated as of July 1 following

% ownership % control acquisitions in Hungary carried out by Consolidation Company SIREN No. Headquarters at 2004(1) 2004 2003 2004 2003 Klépierre Hongrie, a wholly owned COMPANIES NO LONGER CONSOLIDATED AS OF THE END OF THE ASSANTING PERIOD subsidiary of Klépierre that is governed by France French law. This holding company owns a SAS Ségécar 434290599 NC – 75.00%96.6% direct equity interest – in Szeged, 100.00% Szol- SCI 8 rue du Sentier 352503403 NC – 100.00%nok, Zalaegerszeg, Nyiregyhaza, – 100.00% Csepel, SAS Oise Cergy 398965111 NC – 50.00%Gyor, Debrecen, Uj Alba, – Miskolc, 50.00% Kanizsa SCI Chaptal Alun 428295521 NC – 100.00%and Kaposvar (the remaining – 3.40% 100.00% inter- SAS Louis David 350288643 NC – 100.00%est is held by the LP7 – company) 100.00% and a 99.5% direct equity interest in the Duna Abroad shopping mall (the remaining 0.5% inter- Zobel Investment BV Netherlands NC – 100.00%est is held by LP7). Klépierre – Hongrie 100.00% and Belarcol Belgium NC – 100.00%its 12 subsidiaries are – fully consolidated. 100.00% Cienneo SRL Italy NC – 85.00%The Hungarian rental – management 85.00% Vignate Italy NC – 85.00%company Plaza Centers – Management, 85.00% in (1) FC: Fully consolidated. • PC: Partially consolidated. • EM: Equity method. • NC: No longer consolidated as of December 31, 2004. which Ségécé holds a 50% equity interest, is proportionally consolidated. The price paid to acquire the real estate owning companies was €99 million, and that paid to acquire the property manage- ment company was €5.2 million. Including the cost of acquiring the securities, purchase goodwill totaled €4.7 million, of which €3.6 million was allocated to Plaza

102 103 financial report consolidated financial statements

Centers Management, a rental management year-end reporting date, for a debt of Vignate and Cienno, companies governed David (also a simplified joint stock company. €51 million). When the mall opens, Klefin by the laws of Italy in which Novate owned company) was merged with and into This goodwill is being amortized over Italia’s equity interest will be increased to an 85% equity interest. The merger was SAS Paris Suffren at the end of the year. 15 years. 100%. made retroactive to January 1, 2004. The The Blagnac shopping mall is carried by A wholly owned subsidiary of Klefin Finim group exchanged the minority inter- Other changes in percentage Noble Galerie, Noble Restauration and Italia, GC Serravalle owns the Serravalle est it held in Vignate and Cienneo for a 15% of ownership Noble Cafétaria, held in equal proportions shopping center. It is fully consolidated. equity interest in Novate. Novate, Cienneo In the first quarter of 2004, Klépierre sold by Aurora and Toulouse Mermoz. The Purchase goodwill of €2.8 million was allo- and Vignate then merged, with Novate as an 8.76% interest in Solorec (Créteil Soleil) Saint-Orens shopping mall is carried by the cated to the property. the surviving entity. As provided for under to that entity’s minority shareholders. Orengal company, a subsidiary jointly A wholly owned subsidiary set up by Italian law, the gross book values of the The group increased its equity interest owned by Aurora (49%) and Toulouse Klépierre to acquire the future Vallecas underlying assets were revalued in of 61.67% to 100% in Secmarne (the Mermoz (51%). A directly and wholly shopping center in Spain, CG Vallecas is connection with the merger. company that owns the Noisy Arcades owned subsidiary of Klépierre, Toulouze fully consolidated. shopping center). Subsequently, 25.19% Mermoz owns all of the Aurora’s equity. Klétransactions and SCI Bègles Papin are Zobel and Belarcol was acquired by SC Bourse in exchange for All of these companies are fully consoli- wholly owned by Klépierre. Klétransactions Zobel and Belarcol, companies with no real an indivisible 50% interest in the Marseille dated. Purchase goodwill of €78.3 million is a real estate agency that owns the Feu Vert estate or financial assets, were removed Bourse shopping center. Klétransactions was allocated to the properties in question. banner acquired from Carrefour. Bègles from consolidation and are in the process acquired 13.14% in return for the cash Effe Kappa, a company governed by the Papin is a real estate owning company. of being dissolved and wound up. payment of €16 million. Related purchase laws of Italy, is a jointly owned subsidiary goodwill totals €1.8 million. of Klépierre (50%) and Finim (50%), an 9 companies were removed SCI Sentier, Oise Cergy, SCI Chaptal Klefin Italia’s equity interest in IGC was Italian group. Its business purpose is to from consolidation Alum and SAS Louis David raised from 40% to 50%, with no impact on handle administrative management for The first three companies, which do no consolidation (the latter is and remains companies that own or manage real Ségécar merged with and into Ségécé business, are disappearing after their proportionally consolidated). The trans- estate. As of January 1, 2004, it is propor- On March 8, 2004, Ségécé absorbed its assets and liabilities were transferred to action generated purchase goodwill of tionally consolidated. subsidiary Ségécar, after having acquired Klépierre, their holding company (a proce- €0.8 million. GC Assago, a subsidiary in which Klefin an additional 50% equity interest that made dure known in France as TUP – Transmis- As a result of the acquisition of a 50% Italia owns 20%, is accounted for by the it the sole owner as of December 31, 2003. sion Universelle de Patrimoine). The group equity interest in Centros Shopping equity method. It was set up to complete bought the 50% interest in Oise Cergy from Gestion by Ségécé, Centros is now fully the project of extending the Milan Assago Vignate and Cienneo merged with minority shareholders in the first half of consolidated as of October 1, 2004. It was mall. Purchase goodwill of €0.9 million and into Novate 2004, giving it full ownership of this entity. proportionally consolidated at the 2003 was allocated to fixed assets in progress On May 26, 2004, Novate, a wholly owned Sold by Klépierre to SAS Paris Suffren (a year-end reporting date. Purchase good- (€53 million at the December 31, 2004 subsidiary of Klépierre in Italy absorbed simplified joint stock company), SAS Louis will of €11.9 million was recorded. financial report consolidated financial statements

5 – Additional information with €20.1 million recorded for the year Note 2.2 –Net tangible and intangible •Vallecas (€45 million); relative to balance sheet and ended December 31, 2003. The €15.8 million fixed assets •Santander 2 (€5.8 million); off-balance sheet commitments change primarily reflects goodwill on Net tangible and intangible fixed assets •Guissamo (€10,6 million); Centros Shopping Gestion and the acquisi- increased by €402.5 million, primarily • Montebello at IGC (€4 million); 5.1 – Notes on consolidated assets tions in Hungary. Goodwill recorded in 2003 attributable to the following: •Tor Vergata (€2,3 million); on the buyback of a 50% equity interest in • Valenciennes (€1.4 million). Note 2.1 – Purchase goodwill Ségécar by Ségécé was reclassified as a Changes in the scope of consolidation: Gross goodwill was €35.9 million, compared business asset on December 31, 2004. €432 million –Extensions and price additions Including: the Hungarian shopping malls A number of extensions and renovations Other Allocations Note 2.1 2003 Increases changes and decreases 2004 (€284.9 million), Saint-Orens and Blagnac were continued or completed: The most Gross goodwill 20061 19325 37 -( €3460104.6 million), CG35963 Serravalle (€21.5 million) significant extensions were Issy Desmoulins Centros Shopping Gestion 11977 and IGC (€17 million). 11977 (€2.3 million), Villiers en Bière SNC Ségécé 11334 11334 KC10 (€4.1 million), Zara at Secmarne Hungary-Plaza Centers Management 3577 A global investment 3577 of €204.3 million, (€4 million), Pey Berland (€2 million), Go Ségécar 2478 including:- 2478 – Sport at SNC KC4 (€1.7 million) and Devimo 2169 –Direct acquisitions2169 of shopping malls Paul Doumer (€1.8 million), and Lourès Secmarne 1816 •Mid-sized retail outlets1816 Feu vert, (€1.3 million). Hungary - real estate owning companies 1147 37 Quick and McDonalds 1184 (€25,2 million); ICD (Brescia) 1137 • Cinéma UGC, Créteil 1137 (€19.4 million); – Investments in operating fixed assets IGC 808 • Reims Tinqueux shopping808 mall (Klépierre Services): €1.9 million PSG 1002 (€10.6 million); 1002 Other goodwill 1942 •Los - 982 Angeles mall in Spain 960 (€14.5 million); Amortization - 6283 - 1353 – •Santander 397 Alisal - 7239mall (€6.3 million): Centros Shopping Gestion - 200 a down payment of -€ 20017.3 million was Ségécé - 4699 - 756 made in 2003); - 5455 Hungary - Plaza Centers Management - 80 • Bègles Papin (€3.5 million). - 80 Devimo - 580 - 145 - 725 ICD (Brescia) - 228 - 76 –Projects under way - 304 PSG - 100 - 67 •Coimbra, with an increase - 167 in fixed assets Other goodwill - 676 - 29 in progress 397 in relation - 308 to the Louvain La NET GOODWILL 13778 17972 37 -Neuve 3063 (Belgium) 28724sale on the basis of plans in € thousands drafted (€30.2 million);

104 105 financial report consolidated financial statements

Property disposals: €98 million Acquisitions, Decreases Other Changes creations (divestitures, changes, The following real-estate assets were sold: in scope of and removal line item consolidationcontributionsfrom service) transfers –Les Miroirs à la Défense; Note 2.2 2003 2004 –Maille Nord 4 à Marne la Vallée; INTANGIBLE ASSETS –105 rue Anatole-France à Levallois Building lease 18913 - 756 18157 (partial sale); Goodwill 12344 2719 - 11512 3551 –12/16 rue Baudot à Massy-Palaiseau; Computer software 7899 557 1114 9570 –8/10 avenue Ledru Rollin à Paris 12th; Other intangible assets 9650 344 1423 - 7 7062 18472 –52 bis avenue d’Iéna à Paris 16th; TOTAL 48806 3063 1980 - 763 - 3336 49750 –Galerie de Marseille Bourse (partial sale); –Galerie d’Aulnay sous Bois; TANGIBLE FIXED ASSETS –Galerie d’Annecy Brogny. Land – Financial leasing 303 303 Allowance for depreciation and amor- – Lease purchase 2265609 173270 90226 - 42921 44037 2530221 tization: €104.7 million. Buildings and improvements – Financial leasing 2403 2403

– Lease purchase 2354364 239202 50539 - 68077 19844 2595872

Improvements 53039 4043 4398 - 4834 - 8721 47925

Buildings in progress 129045 239 52836 - 86547 95573

Furnishings, equipment and fixtures 2675 17897 3601 - 171 905 24907

TOTAL 4807438 434651 201600 - 116003 - 30482 5297204

TOTAL GROSS FIXED ASSETS 4 856 244 437 714 203 580 - 116 766 - 33 818 5 346 954 in € thousands financial report consolidated financial statements

Changes Decreases in scope of and other The net change recorded under other consolidation changes Note 2.3 2003 Increases 2004 changes reflects the reclassification of INTANGIBLE ASSETS €30 million of buildings in progress to Building lease 1217 off-balance258 sheet- commitments. 254 1221 Computer software 4232 1601 33 5866 Other intangible assets 5629 - 65 1775 - 2981 4358 TOTAL 11078 - 65 3634 - 3202 11445

TANGIBLE ASSETS Buildings and improvements 87487 239 90573 - 9704 168595 Improvements 9460 – 7644 - 4702 12402 Furnishings, equipment and fixtures 818 32 2809 933 4592 TOTAL 97765 271 101026 - 13473 185589 Total amortizations 108 843 206 104 660 - 16 675 197 034

NET FIXED ASSETS 4 747 401 437 508 98 920 - 133 909 5 149 920 Net goodwill (see note 2.1) 13778 19045 - 4099 28724 Financial assets (see note 2.5) 86586 50352 13473 - 74152 76259 Securities in equity method investees (see note 2.6) 1902 1333 174 – 3409

FIXED ASSETS 4 849 667 5 258 312 in € thousands

Land, buildings under con- FurnishingsTotal tangible Note 2.4 – Tangible and intangible struction and Intangible and and intangible improvementsequipment fixed assets fixed assets by business segment Note 2.4 fixed assets Offices 22 889084 646 889752 The table below shows the distribution Shopping centers 45152 4383008 23632 4451792 of tangible and intangible fixed assets for Services 4576 205 629 5410 GROSS FIXED ASSETS 49 750 5 272 297 24 907 5 346 954 the office, shopping center and service divisions: Offices 1 30960 344 31305 Shopping centers 9664 150005 3863 163532 Services 1780 32 385 2197 Amortization 11 445 180 997 4 592 197 034

NET FIXED ASSETS 38 305 5 091 300 20 315 5 149 920 in € thousands

106 107 financial report consolidated financial statements

Additions to Increases Decreases Notes 2.5 – Financial assets the scope of and other consolidation changes Long-term financial assets primarily Note 2.5 2003 2004 include advances and loans to non- Equity investment securities (B) 2225 - 134 785 - 948 1928 consolidated subsidiaries and propor- Advances to non-consolidated or proportionally-consolidated companies (A) 50655 50227 11330 - 71054 41158 tionately consolidated subsidiaries. Loans 18524 240 - 1514 17250 Other long-term securities 179 9 188 Security deposits 5423 250 1774 - 245 7202 Other financial assets 10351 50 - 601 9800 GROSS VALUES 87 357 50 352 14 179 - 74362 77 526

Allowances for impairment 771 706 - 210 1267 NET TOTAL 86 586 50 352 13 473 - 74152 76 259 in € thousands

Additions Decreases to the scope of and other consolidation changes The largest advances were granted to the Note 2.5 (A) 2003 Increases 2004 companies listed below in Note 2.5 (A): SCI Antin Vendôme 6295 581 - 6876 – SCI du Bassin Nord 3121 622 - 812 2931 SAS Cecobil 16232 713 - 1653 15292 Galeria Parque Nascente SA 14329 451 - 2488 12292 Gondrobrico SA 1622 189 - 50 1761 Other advances 9056 50227 8774 - 59176 8881 TOTAL 50 655 50 227 11 330 - 71054 41 158 in € thousands

Shareholders’ equity at Income at Gross value Net value Dec. 31, 2004 Non-consolidated equity interest securities Note 2.5 (B) Dec. 31, 2004% ownershipof securitiesof securities are listed below in Note 2.5 (B): Principal values 1 781 695 SAS Sovaly 410 - 35 100,00% 572 344 SAS Nancy Bonsecours 113 - 38 99,96% 535 74 SKF Spa nc nc 50,00% 245 – SAS Pasteur 107 - 20 100,00% 202 77 Ségécé Grèce nc nc 99,95% 200 200 SAS Opave - 22 - 15 70,00% 27 – Other equity investment securities 147 147

TOTAL 1 928 842 in € thousands financial report consolidated financial statements

Note 2.6 – Change in investments The change in scope of consolidation Note 2.6 in equity method investees reflects the application of the equity Securities in equity method investees at December 31, 2003 1 902 method to the GC Assago company. Differences due to changes in scope of consolidation 1333 Share of 2004 income of companies accounted for by the equity method 454

Dividends received from equity method investees - 280

Other changes

SECURITIES IN EQUITY METHOD INVESTEES AT DECEMBER 31, 2004 3 409 in € thousands

Note 3 – Inventory of projects Development inventory primarily includes Note 3 2004 2003 2002 under development expenditures related to projects under Group share 6174 3053 2555 consideration and retail space intended Share of external partners 1079 784 747 for resale. TOTAL 7 253 3 837 3 302 in € thousands

Shopping Total Total Note 4 – Analysis of accounts The increase in receivables mainly reflects Note 4 Offices centers Services 2004 2003 receivable/accrued liabilities the contribution of new companies Receivables 1292 32166 3802 37259 23293 by business segment (€13.5 million). Accrued liabilities - 184 - 4412 - 136 - 4732 - 4110 TOTAL 1 109 27 754 3 666 32 528 19 183 in € thousands

Note 5 – Miscellaneous receivables Miscellaneous debtors primarily include Note 5 2004 2003 2002 VAT includes recoverable VAT on the the following receivables: Government acquisition of shopping malls in Portugal – €57.3 million in receivables relating to – Corporate income tax 5014 9882 18221 (€8.2 million), Italy (€8.4 million), real-estate management activities (calls for –VAT 48685 51049 32722 Spain (€17.8 million), and Valenciennes funds to owners); Miscellaneous debtors 87907 115893 142367 (€7.9 million), and the UGC cinema in –€13.5 million in accrued interest on inter- TOTAL 141 606 176 824 193 310 the Créteil Soleil mall (€1.7 million). est rate swaps; in € thousands – €2.6 million in prepaids on extensions to malls and buildings.

108 109 financial report consolidated financial statements

Note 6 – Marketable securities Note 7 – Adjustment accounts (assets) Note 7 2004 2003 2002 Marketable securities include 233900 treas- Amortization of cash payments on swaps Convertible bond issue premium 5864 2073 2531 ury shares with an acquisition value of reflects the cancellation of hedging instru- Bond issue cost and fees 6377 5931 4112 €8.96 million. Treasury stock represents ments totaling €1 190 million, which Amortization of cash payments on swaps 135657 – – 0.51% of total equity issued, which was generated a negative cash payment of Expenses to amortize 11739 10353 10308 503,865 shares at December 31, 2003. €136.4 million euros and a positive cash Pre-paid expenses 1719 2338 1480 The shares of treasury stock are allocated payment of €42.3 million recorded under TOTAL 161 356 20 695 18 431 as follows: adjustment accounts (liabilities). in € thousands – 93 217 shares to the stock option plan Expenses to be amortized are lease-up fees established for Klépierre Group employ- and eviction indemnities. ees, approved by the Executive Board on June 14, 1999, of which 107 821 options were exercised between June 24 and December 31, 2004; –11773 shares which may be used to stabi- lize the stock price; – 128 910 shares for the stock repurchase program. A total of 89403 shares, not including stock options, were sold in 2004, generating a gross capital gain of €1.8 million.

Other marketable securities include: –Money market funds: €45.3 million –Spanish treasury bills: €10.1 million.

The decrease of 10% shares of Klépierre should not have effect on the result, because those shares are owned by Klépierre in order to stabilize the stock price. financial report consolidated financial statements

5.2 – Notes on consolidated balance sheet liabilities Note 8 – Change in group shareholders’ equity Legal reserve Additional and Other consolidated reserves Total consolidated The €5.6 million share capital increase and Share paid-in Earnings Excess of restat-Shareholders’ shareholders’ capital reserves equity Note 8 capital for the perioded assets over equity Total €63.2 million of additional paid-in capital December 2002 119 360 680 107 243 576 81 099 immediately followed– the proposal 1 124 141 made Change in share capital of consolidating company 59680 - 59680 to Klépierre’s shareholders – to receive stock – Sale/acquisition of treasury shares dividends. As a result,– 1 404 466 new– Impact of revaluations shares were issued. A total– of €19.2 million– Consolidated earnings for the period 88295 was paid out in the form – of cash dividends. 88295 Dividends paid by the consolidating company 17 29575 -81099 The proceeds from the – sale of - treasury51507 Change in unrealized forex translation gains and losses - 174 shares attached to –unallocated - 174stock 2003 revaluation net of tax 685404 options, totaling685404 €2.1 million net685404 of tax, Change in accounting methods was reclassified under– shareholders’– Change in scope of consolidation and% interest - 7597 equity for Klépierre SA. – - 7597 Other changes 564 Impact of revaluations – includes restate- 564 December 2003 179 040 680 124 206 264 88 295 685 404 ments – for the revalued 685 404 properties 1 839 sold 126 in Change in share capital of consolidating company 2003 and the diminishment– of value– Sale/acquisition of treasury shares observed2131 at December2131 31st 2004 for2131 two Impact of revaluations 3605 - 4883 assets, a total of € - 48831.3 million. - 1278 Consolidated earnings for the period 102134 – 102134 Appropiation of the previous year’s consolidated earnings Note 9 – Change in minority– interests– Dividends paid by the consolidating company 5618 63201 - 344 - 88295 « Others changes » includes – a €11,3 - 19820 million, Change in unrealized forex translation gains and losses - 293 which is the impact of – the issue premium - 293 Change in accounting methods repayment followed by– the share repur-– Change in scope of consolidation and% interest chase of Klépierre Participations– Italie.– Other changes 16 – 16

December 2004 184 658 743 325 209 248 102 134 680 521 2 131 682 652 1 922 016 in € thousands

110 111 financial report consolidated financial statements

Note 9 the Blagnac and Saint-Orens malls, already a €-1.2 million change in reserves offset December 2002 accounted for in357 2004: 670 by €1.3 million recorded as income. Advances on dividends and dividends paid to minority interestsa €22.7 million -provision 13107 was made for The change in earnings is mainly attributa- Impact of change in scope of consolidation on minority interests deferred tax liability; ble to a €7 million expense calculated for – Klécar Europe Sud 22 015 – Delcis provisions for Secmarne’s269 deferred tax revalued amortization and cash payment – Vignate liabilities were fully released.4774 Following the on swaps, income of €3 million relating – Restructuring of Klécentres and othersacquisition of a 38.33% - 78927 interest in Secmarne to tax loss carry-backs, and income of 2003 revaluation net of taxes 104626 in December 2004, the release of provisions €4.7 million following the tax-free merger Earnings for the period 19 357 December 2003 was recorded in416 the income 677 statement for of Novate, Cienneo and Vignate. Advances on dividends and dividends paid to minority intereststhe group share (€ - 25.712751 million) and under The change in shareholders’ equity Impact of change in scope of consolidation on minority interests shareholders’ equity for the minority inter- reflects the integration of GC Serravalle – Acquisition of 8.76% interest in Créteil Soleilests sold (€15.9 million). 17872 (€0.9 million) and Hungarian companies – Disposal of 38.33% interest in Secmarne - 30175 (€0.3 million). – Klecar Europe Sud equity increase 4522 – Disposal of 50% interest in Oise CergyForeign companies - 2106 Other changes Deferred tax liabilities- 12152 for foreign compa- Earnings for the period nies remained stable20448 at €63 million, with December 2004 402 335 in € thousands Change Other Note 10 2003 in earnings changes 2004 Note 10 – Deferred taxes Espace Cordeliers, which was transferred Buildings - 110939 6912 13439 - 90588 The group’s net deferred tax liabilities to the non SIIC segment, France, at Decem- Debt – – Other items 287 - 932 - 2156 - 2801 diminished by €17.7 million. ber 31, 2003. Following the decision by the Total deferred tax liabilities - 110 652 5 980 11 283 - 93 389 Poitiers Aliénor company to opt for SIIC o/w – SIIC status 2829 - 2829 – Companies that opted for SIIC status status, the provision was restored on – non-SIIC status, France - 46467 2456 18752 - 25259 – Foreign companies - 64185 695 - 4640 - 68130 (SIIC segment) December 31, 2004. Buildings 1808 - 1736 72 Deferred tax for the SIIC segment decreased Debt 251 251 by €2.7 million. This change reflects the Other French companies Other items 5497 - 1244 3186 7439 revaluation of taxes deferred because of (non SIIC segment, France) Total deferred tax assets 7 305 - 2 980 3 437 7 762 o/w timing differences affecting Klépierre’s Deferred tax liabilities for the non SIIC – SIIC status 2765 - 2653 112 – non-SIIC status, France 3454 - 970 2484 taxable income (€-0.8 million) and the segment, France, slid to €20.2 million. This – Foreign companies 1086 643 3437 5166 cancellation of a €1.8 million provision for change mainly reflects the impact of the NET POSITION - 103 347 3 000 14 720 - 85 627 in € thousands deferred tax assets. This provision was upcoming adoption of SIIC status by made in connection with the Poitiers mall, Secmarne and the companies that own financial report consolidated financial statements

Line-item Change in scope Note 11 – Provisions for contingencies Note 11 2003 Increases Releases Use transfers of consolidation2004 and losses Accrued retirement liabilities 7859 53 - 2380 - 280 5252 A portion of the provisions for retirement Building management expenses 543 1055 - 235 1363 liabilities was used to pay a premium on a Other provisions for contingencies and losses 5718 562 - 486 - 615 850 6029 complementary retirement plan. Net goodwill liabilities 585 - 585 – Other provisions for contingencies and TOTAL 14 705 1 670 - 486 - 3 230 - 280 265 12 644 losses mainly provide for litigation risk o/w – Operating 1644 - 486 - 3230 in € thousands – Financial (€0.8 million). – Extraordinary 26

Note 12 – Borrowings €180 million one year earlier) and the Note 12 2004 2003 2002 and financing debt second loan was totally drawn down; Bond debentures 1230461 617620 617620 In 2004, free cash flows generated by –a bilateral loan of €135 million arranged – Principal amount 1200000 600000 600000 the operation and sale of assets swelled in 2004 by Klépierre; – Accrued interest 30461 17620 17620 borrowings and financing debt by –a bilateral loan of €165 million arranged Bank borrowings 1515322 1626893 1139591 €498.3 million. A €94.1 million cash in 2004 by Klépierre Hongrie; – Principal amount of borrowings 1242896 1344602 923409 payment made in connection with the –loans contracted by subsidiaries in Italy – Commercial paper 220000 220000 171000 swap portfolio restructuring increased (€123 million for Klecar Italia), Belgium – Accrued interest 1928 1754 1467 Klépierre’s need for financing. Outstand- (€ 27 million) and Portugal (€60 million – Bank overdraft facilities 50498 60537 43715 ing debt totaled €2,926 million at the for Klépierre Portugal); Miscellaneous borrowings and financing debt 179982 182913 346739 December 31, 2004 reporting date. The –commercial paper issued for €220 million, – Equity loans – – 153298 principal financing arrangements are unchanged from the December 31, 2003 – Other borrowings 42213 40634 44609 outlined below: reporting date. – Advances from group and partners 137769 142279 148832 – two €600 million bonds: one issued in TOTAL 2 925 765 2 427 426 2 103 950 July 2001 with 6.125% gross yield to matu- The new bond issue and the new syndi- in € thousands rity, due on July 10, 2008, and one issued cated loans described above were set up in July 2004 with 4.625% gross yield to in July 2004. At the same time, Klépierre – EBITDA/Net interest expense: between to Klépierre carry the following provisos. maturity, due on July 15, 2011; reimbursed a bridge loan of €225 million 2.5 and 3; Failure to comply would result in early – two syndicated loans, set up in 2003 and a €670 million syndicated loan. – Net corporate debt/Fair market value of payment of the financing in question: and 2004 for the maximum amounts of holdings (Loan to Value): ≤ 50%; €500 million and €250 million, respec- Maintenance of Standard and Poor’s rating –Net current cash flow/Net corporate debt tively. A total of €415 million was drawn of BBB+ with stable outlook is subject to ≥ 7%. from the first loan at year-end 2004 (versus compliance with the following ratios: In addition, the principal loans extended

112 113 financial report consolidated financial statements

Bond issue: – Net corporate debt/Fair market value of Note 13 – Trade notes – early redemption in the event that one- holdings (Loan to Value): ≤ 52%. and accounts payable third of the voting rights change hands, Syndicated loan set up in 2004: Trade notes and accounts payable totaled resulting in a downgrade of Standard and –EBITDA/Net interest expense ≥ 2.5; €48.6 million, versus €33.5 million at Poor’s rating to below BBB- ; –Secured financial debt/Fair market value December 31 2003. –ceiling on assets pledged to third parties, of holdings ≤ 15%; set at 50% of revalued net assets. – Net corporate debt/Fair market value of Note 14 – Other liabilities Syndicated loan set up in 2003: holdings (Loan to Value): ≤ 52%. The increase in other liabilities between totaled €60.5 million on December 31, –EBITDA/Net interest expense ≥ 2.5; the December 31, 2002 and December 31, 2004. –Net corporate debt/Consolidated share- The table below analyzes financing debt 2003 reporting dates was primarily due to Security deposits and guarantees received holders’ equity (Gearing): ≤ 125%; by due date: the rise in government income tax and advances received from tenants total payables, namely the exit tax payable in €75.2 million and €46.2 million, respectively, installments over a period of four years and are recorded under client creditors. Less than More than December 2004 by due date Total 1 year 1-5 years 5 years (December 15 of the year in which SIIC The decline in payables to fixed asset Other bonds and notes 1230461 30461 600000status is elected 600000 and the three following suppliers reflects the transfer off-balance – Principal amount 1200000 600000years). The remaining 600000 unpaid balance sheet of one building in progress. – Accrued interest 30461 30461 Bank borrowings 1515322 289008 760026Note 14 466288 2004 2003 2002 – Principal amount of borrowings 1242896 16582 760026Payroll and sub-accounts 466288 9767 7209 6966

– Commercial paper 220000 220000 Social security and other 3211 3655 2371

– Accrued interest 1928 1928 Government

– Bank overdraft facilities 50498 50498 – Corporate income tax 68864 98483 5458

Miscellaneous borrowings and financing debt 179982 – – VAT – 179982 7345 8980 4722

– Equity loans – Other taxes and duties 767 787 1223

– Other borrowings 42213 Client creditors 42213 122404 120699 116136

– Advances from group and partners 137769 Payables to fixed 137769asset suppliers 4067 48515 41027

TOTAL 2 925 765 319 469 1 360Other 026 liabilities 1 246 270 48097 44217 33782

in € thousands TOTAL 264 522 332 545 211 685 in € thousands financial report consolidated financial statements

Note 15 – Adjustment accounts Note 15 2004 2003 2002 (liabilities) Pre-paid income 11614 5904 4901 Klépierre restructured its swap portfolio Amortization of cash payment on swaps 50711 3314 4046 in December 2004, generating a positive Other adjustment accounts (liabilities) 1377 2505 1451 cash payment of €42.3 million spread over TOTAL 63 702 11 723 10 398 the term remaining on the cancelled in € thousands swaps. Amortization of cash payment on swaps also includes a cash payment of €6.5 million for the swap linked to the July 2004 bond issue. Pre-paid income consists of entry fees spread over the terms of the corresponding leases.

5.3 – Off-balance sheet At the December 31, 2004 reporting date, Note 16 – Binding transactions 2004 2003 2002 commitments financial instruments included €24.1 million Fixed-rate payer Klépierre - Variable-rate payer BNP Paribas 1100 1968 1768 in unrealized gains, compared with a Fixed-rate payer BNP Paribas - Variable-rate payer Klépierre 600 600 600 Note 16 – Reciprocal obligations on €66.7 million net unrealized loss at Decem- Fixed-rate payer Klécar Italia Spa - Variable-rate payer BNP Paribas 90 90 90 interest-rate hedging instruments ber 31, 2003. Restructuring of interest-rate in € millions Klépierre’s portfolio of interest-rate hedg- hedging instruments at year-end 2004 reac- Note 16 – Impact on results 2004 ing instruments at the December 31, 2004 tivated the unrealized capital gains and (reference capital of 1 to 10 years) Income Expenses reporting date is detailed below. This port- losses on hedging instruments, which Fixed-rate payer Klépierre - Variable-rate payer BNP Paribas 39 85 folio was set up for the purpose of cover- were cancelled against a cash payment Fixed-rate payer BNP Paribas - Variable-rate payer Klépierre 49 28 ing the interest-rate risk on a portion of the of €94.1 million. Fixed-rate payer Klécar Italia Spa - Variable-rate payer BNP Paribas 2 3 current and future corporate debt based in € millions on estimates of Klépierre’s global needs Note 16 – December 2004 and the due dates of various financing by due date 2005 2006 2007 2008 2009 2010 2011 Total arrangements. Fixed-rate payer Klépierre 100 300 200 500 1100 Variable-rate payer Klépierre 600 600

Fixed-rate payer Klécar Italia 90 90

TOTAL – – – 100 300 290 1 100 1 790 in € millions

114 115 financial report consolidated financial statements

Note 17 – Commitments granted – the sale of assets to a third party with the Commitments received and granted purchase of the securities is expected to and received payment of discount by Klépierre if the – Commitments to purchase concern the take place when the project is completed offer is less than the revalued net assets acquisition of shopping malls in connec- in the third quarter of 2005. Agreement between the shareholders value. tion with the agreement signed with – Guarantees, deposits, pledges and collat- of Klécar France, Klécar Europe Sud, Carrefour (€84.3 million) and the acquisi- eral reflects collateral of €123 million given Solorec and Klécar Participations Italie Agreement with AXA France Vie in the tion of land for the Tor Vergata develop- by Klécar Italia on a €128 million loan it Klépierre, CNP Assurances and Ecureuil Vie event of sale of units comprising the ment project (€52 million) and the Valle- contracted and a bank guarantee given by signed a rider to their shareholders’ agree- share capital of Ségécé cas development project (€45 million). The Klépierre to cover a €165 million borrow- ments on December 30, 2004, which elimi- The following provisions apply in cases Group also agreed to purchase all of ing for Klépierre Hongrie. nates Klépierre’s liquidity commitments where the sale of such units is not consid- the equity interests in the company that As we know, there is no omission of signif- with respect to its partners. ered to be a free sale, and grant AXA France owns the City Gate Thessalonique mall icant commitments in the off-balance sheet, The agreement provides for the usual Vie the following: (€74 million) and an 80% equity interest nor those which can become significant in protections of minority interests: pre- – Klépierre is obliged to repurchase from in GC Assago, the company carrying out the future according to current accounting emptive rights, joint exit rights and AXA France Vie all units held in Ségécé a development project in the outskirts norms. decision-making processes that must whenever a sale at the behest of AXA of Milan, valued at €142 million. The actual be complied with when investments or France Vie is not in conformity with Article divestments are considered. 8 of Ségécé’s bylaws; Note 17 2004 2003 2002 – Compensation for the 4.80% registration Commitments granted The agreement also provides for the follow- tax that AXA France Vie may be liable for – Guarantees on loans granted to employees 6785 4854 4683 ing two protections: in the event of such sale. – Surety, guarantees and mortgages 457673 618759 229338 at the option of Klépierre: joint manda- – Purchase commitments 485280 138468 412661 tory exit of minority interests at the request Options relating to IGC shares TOTAL 949 738 762 081 646 682 of Klépierre, in the event that Klécar assets Following its decision to exercise the right Commitments received are sold to a third party; to acquire an additional 10% equity stake – Guarantees received in connection with real-estate at the option of minority interests: in IGC in November 2004 – which increased management and transactions 227004 182966 89206 process which enables minority interests its ownership in the company to 50% – – Security deposits received from tenants 27791 19672 18332 to arrange exit options (I) in 2011, 2016 and Klépierre no longer has commitments with – Commitments to finance received from credit institutions 167408 412133 439134 2017 for Italian companies; and (II) in 2010, respect to this company. The option which – Guarantees received to cover amounts paid – – – 2014 and 2015 for other malls: granted Finiper the right to sell a 10% equity TOTAL 422 203 614 771 546 672 – the sharing or sale of assets, stake in IGC was extinguished. in € thousands – the repurchase of minority interests by Klépierre (without obligation for Klépierre), financial report consolidated financial statements

As a rule, the Group finances its acquisi- NBV Total of assets balance Corresponding pledged sheet item tions through equity or via debt contracted Assets pledged at December 31, 2004 Start date End date % by the holding company, without pledging On intangible assets nil 38 305 assets. A portion of the financing debt is On tangible fixed assets 306180 5111615 6,0% subject to certain limitations, which are Novate (Cienneo) April 16, 1999 Dec. 15, 2013 50781 described in Note 12. Immobiliare Magnolia Sept. 08, 1999 July 15, 2011 12807 Oct. 18, 2002 July 15, 2011

ICD June 30, 1996 May 11, 2011 23023

Klecar Italia June 25, 2003 June 25, 2015 216132

IGC April 3, 1997 Dec. 31, 2006 1046

Coimbra July 17, 2003 May 31, 2006 2391

On long-term financial assets nil 76259

TOTAL BALANCE SHEET ITEM 306 180 5 183 823 5,9% in € thousands

6 – Notes relative to the consol- At December 31, 2004, revenues totaled prior period. The increase is primarily idated statement of income €431.3 million, an increase of 11.8% over attributable to acquisitions in Hungary. the corresponding prior period. Note 18 – Operating income Lease income totaled €397.5 million, of Note 18 – Analysis of revenue Lease income Management and sales Group revenues include the following: which €333.1 million from shopping centers by geographic region income Total –Lease income, which includes rents from and €64.5 million from office properties. France 254450 26919 281369 properties and shopping centers, and Shopping center rents increased 19.4% Southern Europe 117772 6733 124505 related or equivalent income such as park- versus the corresponding period in 2003. – Italy 48918 2095 51013 ing rental fees and eviction indemnities; On a constant structural basis, the increase – Spain 51276 3914 55190 – Management and administrative fees with respect to the corresponding period – Other 17578 724 18302 earned by its service companies; was 4.4% for shopping centers and 0.6% for Central Europe 25323 92 25415 –Proceeds from the sale of projects under offices. TOTAL 397 545 33 744 431289 development. All businesses combined, Klépierre in € thousands Other operating income includes work generated 35.9% of revenues abroad at re-invoiced to tenants, entry fees received the December 31, 2004 reporting date, and miscellaneous income. compared with 27.6% for the corresponding

116 117 financial report consolidated financial statements

Notes 19 – Other operating expenses Note 19 – Other operating expenses 2004 2003 2002 and depreciation and amortization Building expenses 23291 22544 16752 Building expenses are shown net of re- – Offices 6918 4986 5572 invoicing to tenants, and include only – Shopping centers 16373 17558 11180 expenses for which the owner is liable and General expenses 20767 17033 19460 expenses on unleased premises. – Offices 1949 1082 1194 Other operating expenses include the – Shopping centers 18818 15951 18266 general expenses of management compa- TOTAL 44 058 39 577 36 212 nies and amortization of capitalized in € thousands expenses, with the exception of fixed asset acquisition costs, which are recorded as Note 19 – Depreciation and amortization 2004 2003 2002 allowances for building amortization. Intangible assets 3634 3770 4149 The increase in building expenses Real-estate leasing 84 255 109 between December 2003 and December Tangible fixed assets 97180 87508 80038 2004 is primarily attributable to renovation Fixed asset acquisition costs 4210 5065 4160 work completed on office properties. TOTAL 105 108 96 598 88 456 Depreciation and amortization expense – Offices 18365 21648 21381 increased by €8.5 million compared with – Shopping centers 86743 74950 67075 December 31, 2003, and reflects: in € thousands – €13 million in additional impairment allowance for the acquisitions completed Note 20 – Financial results Note 20 – Financial results - during the period (€5.9 million for Financial and investment results for the interest income 2004 2003 2002 Hungary, €2.1 million for Portugal, year ended December 31, 2004 were a loss Gains on the sale of marketable securities 951 611 1729 €1.7 million for Spain, €1.7 million for of €122.1 million, compared with a loss of Gains on interest-rate(1) swaps – 83666 80822 France and €0.9 million for Italy); €110.5 million for the corresponding prior Interest on advances to Group and partners 4441 4057 3013 –a €3.1 million decrease in depreciation period. Miscellaneous interest received 1299 3912 6515 expense, due to the property disposals Financial and investment income and Other interest income 802 1010 489 completed in 2004. expense are summarized in the following Forex gains 4894 1246 186 table: Release of interest expense allowance 210 20 – TOTAL INTEREST INCOME 12 597 94 522 92 754 (1) As of 2004, offsetting accounting entries are made for interest income and expense on swaps. in € thousands financial report consolidated financial statements

Note 20 – Interest expense 2004 2003 2002 on the cancelled hedging instruments. Interest on bonds 49639 Impairment 36750 allowances 36789 for the period Interest on bank borrowings 37809 totaled 37466 €0.8 million, 41781 Other bank interest 1155 –a 3770 €42.3 million cash 9656 payment received, Interest expense on swaps 24553 108496recorded under pre-paid 89326 income. Cash payment on the cancellation of swaps 136589 Interest expense on Group and partner advances 7545 Note 11927 21 – Non-recurring 8561 results properties and three shopping centers, Other interest expense 6763 and 6839 amortization 2758of goodwill including the Marseille Bourse mall – in Transfer of interest expense - 138274 Non-recurring - 3924 results - 77 include gains or which Klépierre sold its 50% joint share. Forex losses 4541 losses 1712 on the sale of consolidated 22 assets, Capital gains on the sale of equity securi- Allowance to fund convertible bond redemption premium 2858 as 1310well as one-off 1822items recorded in the ties include a €5 million capital gain on Interest expense allowance 1468 period. 678 631 the sale of securities in Créteil Soleil, and TOTAL INTEREST EXPENSE 134 646 205Details 024 are given 191 in the 269 table below. a €2.1 million capital gain on the sale of in € thousands Capital gains on the sale of tangible fixed treasury shares. assets reflect the disposal of six office Goodwill amortization totaled €1.3 million. This €11,5 million increase, net of interest hedges, which was constant at approxi- expense, is primarily attributable to the mately €24.5 million. In the first half of Note 21 2004 2003 2002 increase in corporate debt between 2004, Klépierre was adversely impacted Capital gains/losses on the sale of tangible fixed assets 10844 11666 67523 December 2003 and December 2004, and by the increase in the average outstand- Capital gains/losses on the sale of equity securities 7038 20486 99 reflects the following changes in the ing debt between 2003 and 2004 and by Other non-recurring items - 2443 - 115 - 273 carrying cost of interest-rate hedges the fall in interest rates, since it receives Allowances net of releases 35 - 846 - 4100 and interest expense on borrowings: variable rates on most of its hedges. In the TOTAL 15 474 31 191 63 249 The increase in interest on bonds, attrib- second half of the year, Klépierre in € thousands utable to the €600 million bond issued in contracted new coverage for the fixed-rate July 2004; borrowing (July 2004). Interest on bank borrowings, which Restructuring of interest-rate hedging was constant, reflecting an increase in the instruments against a net cash payment of average outstanding debt, which was offset €94.1 million, broken down as follows: by the decrease in the variable rate to –a €136.4 million cash payment, trans- which it is indexed (Euribor 3 month). ferred to the adjustment account (assets). The cost of carrying interest-rate It will be spread over the term remaining

118 119 financial report consolidated financial statements

Note 22 – Corporate income tax reporting date. The corresponding Europe Sud and on the cash payment on deferred income tax liabilities, €22.7 interest-rate hedging instruments for Note 22 2004 2003 2002 million were provisioned and deferred Klecar Italia; Income tax payable 16524 income 12631 tax liabilities 30718 for Secmarne were –a €4.7 million tax credit from the Deferred income tax - 2976 released 14213 (€25.7 million). 23782 discounting to present value of the provi- TOTAL 13 548 26 844 54 500 sion for deferred tax liabilities for the in € thousands €6.6 million for foreign companies, Cienneo and Vignate malls following including: restructuring operations; Klépierre differentiates between three one-time 2.5% tax, after taking into account – €7.9 million in income tax payable; –a €3.0 million gain from the capitaliza- different tax segments: a deduction of €0.5 million. –€7 million in deferred income tax, calcu- tion of tax losses. –the SIIC segment that includes Klépierre This tax, which was provisioned in 2004, lated on revalued depreciation and amor- and eligible French real-estate subsidiaries. amounted to €2.1 million for the Group. tization expense and amortization of Total tax expense, broken down into Some of the latter maintain business that acquisition costs for Klecar Foncier Iber- current tax and non-recurring tax, is item- is subject to income tax at the prevailing Income tax for the SIIC segment, ica, Klecar Foncier Espana and Klecar ized below: rate; which includes: Current Non-recurring –non-SIIC companies in France; –a €0.5 million tax credit, resulting from Analysis at December 31, 2004 tax tax Total –foreign companies. four new companies adopting SIIC status Income tax payable 14420 2104 16524 in 2004; Deferred income tax 3975 - 6951 - 2976 At the December 31, 2004, these segments –a €0.8 million tax expense on taxable TOTAL 18 395 - 4847 13 548 had a total tax expense of €13,5 million, earnings for the segment. in € thousands which reflects: €4.3 million for non SIIC companies in Changes in the status of long-term France, including: capital gains imposed by amended finance – €2.8 million for limited partners of act published on December 30, 2004 Ségécé and Klécar Europe Sud; The obligation to set up a special reserve –a €3.0 million effective tax expense for for capital gains realized on or after Janu- the period for non SIIC companies; ary 1, 2004 is repealed. This reserve will be – the impact of the imminent adoption of transferred to another reserve account SIIC status by Secmarne and the compa- following the approval of the Sharehold- nies carrying the centers in Toulouse ers. Amounts recorded in the long-term acquired during the period, which was capital gains reserve will be subject to a accounted for at the December 31, 2004 financial report consolidated financial statements

The explanation of the transition from the Tax expense verification SIIC segment Tax non-SIIC, Foreign theoretical corporate income tax (34.93%) at December 31, 2004 exempt Taxable Total France companies Total to the actual tax expense is provided in the Earnings integrated before tax 93101 - 14473 78628 40082 18319 137029 following table: Theoretical tax expense (34.93%) - 32 520 5 055 - 27 465 - 14 001 - 6 399 - 47 864

Exempt

Exit tax and cancellation of deferred tax liabilities 206 206 206

Tax-exempt earnings for SIIC sector 32520 32520 32520

Taxable

Impact of permanent lags - 8480 - 8480 8271 - 763 - 972

Untaxed consolidation reclassifications 967 967 - 428 - 2010 - 1471

Impact of non-capitalized tax losses – - 1700 - 1980 - 3680

Allocation of non-capitalized tax losses 2543 2543 677 159 3379

Exit tax special long-term capital gain reserve - 2111 - 2111 - 2111

Change in tax regulations 3043 3043

Discounting of deferred income tax post restructuring 4750 4750

Other tax - 712 - 712 - 212 - 1070 - 1994

Differences in forex rates 648 648

Effective tax expense 206 - 2 738 - 2 532 - 4 350 - 6 665 - 13 548 in € thousands

120 121 financial report consolidated financial statements

Note 23 – Workforce Note 23 – Payroll expense 2004 2003 2002 Note 27 – Consolidating company and payroll expense Offices 2738 At2610 December 31, 2004,3088 Klépierre was fully Employees abroad account for 14.4% of Shopping centers 37569 consolidated 34219 by the 27582 BNP Paribas group, total payroll expenses, compared with TOTAL 40 307 36which 829 owns a 53.52%30 670 interest in Klépierre. 13.3% at December 31, 2003. in € thousands The average workforce of proportionately Note 28 – Capital and stock market consolidated companies is calculated on Note 23 – Workforce 2004 2003 2002 Klépierre’s shares are listed on the the basis of percentage of consolidation. Offices 30 Deferred33 Settlement Service40 (SRD) of the The workforce of companies accounted Shopping centers 657 Euronext 497 Premier Marché. 455 for by the equity method is not included TOTAL 687 530 495 in the total.

Shopping Note 24 – Transition table: corporate Note 24 Offices Centers Services Total earnings to consolidated earnings Corporate statutory earnings net of temporary variances 114647 149408 18759 282814

Reversal of released depreciation allowances - 2208 - 2296 – - 4504

Property amortization - 182 37033 – 36852 Note 25 – Compensation paid to senior Sale of buildings - 14523 - 25465 – - 39988 officers and directors Impact of changes in scope of consolidation 8036 - 4194 156 3998 At the December 31, 2004 reporting date, Group dividends - 119342 - 27635 - 4265 - 151242 directors’ fees paid to the members of the Taxes - 1787 7533 128 5874 Supervisory Board totaled €150 thousand. Goodwill amortization – - 246 - 1103 - 1349 Compensation paid to Executive Board Other eliminations/restatements - 5364 - 3850 - 1113 Ségécé -and 10327Klégestion members amounted to €1,11 million. Net earnings of consolidated companies - 20 723 130 288 12 562Ségécé and 122 Klégestion 128 corporate Income of companies accounted for under financial statements are available Note 26 – Related parties the equity method 60 394 on the Klépierre454 website The share of BNP Paribas in bank borrow- Net earnings of consolidated group - 20 723 130 349 12 956 www.klepierre.com 122 582 under ings authorized at the year-end 2004 Group share - 20723 112253 10603 102134 Publications/Reports. Minority share – 18095 2353 20448 reporting date was €764 million, of which in € thousands €708 million had been drawn down, out of €1 0720 million and €1 524 million, respectively. financial report consolidated financial statements

report of the statutory auditors on the consolidated financial statements

Financial Year Ended An audit also includes assessing the ate in light of French accounting rules and financial statements as a whole, and there- December 31, 2004 accounting principles used and significant principles. fore contributed to us issuing an unquali- estimates made by management in prepar- As stated in Note 3.1 to the financial fied opinion, as set out in the first part of To the Shareholders of Klépierre, ing the financial statements, as well as eval- statements, valuation procedures were this report. uating the overall financial statement pres- carried out by independent real estate In our capacity as Statutory Auditors entation. We believe that our reviews appraisers with respect to real estate assets. III. Specific verification appointed by your general meeting, we provide a reasonable basis for our opinion. We ensured that that sufficient provisions We have also reviewed the information have audited the accompanying consoli- In our opinion, the consolidated financial were set aside using the Group’s account- relating to the Group contained in the Exec- dated financial statements of Klépierre for statements present fairly, in all material ing principles, based on the external utive Board report, in accordance with the the financial year ended December 31, 2004. respects, the financial position and assets appraisals. professional standards that are applicable These consolidated financial statements and liabilities of the Group as of December Within the scope of the application of in France. have been prepared by the Executive 31, 2004 and the results of the Group’s oper- the transitional provisions of Regulation We have nothing to report with respect to Board. Our responsibility is to express an ations included in the consolidation for the No. 2002-10 of the French Accounting the fairness of this information and its opinion on these financial statements year then ended, in accordance with French Regulations Committee (Comité de la consistency with the consolidated financial based on our audit. accounting principles and standards. Réglementation Comptable) relating to statements. the amortization, depreciation and I. Opinion on the consolidated II. Justification of our assessments impairment of assets, as amended by Paris-La-Défense, February 21, 2005 financial statements In accordance with the provisions of Arti- Regulation No. 2003-07 of this Commit- We conducted our audit in accordance with cle L.225-235 of the French Commercial tee, the Group chose not to apply in The Statutory Auditors the professional standards that are appli- Code relating to the justification of our advance the component method and did Mazars & Guérard: Odile Coulaud cable in France. These standards require assessments, we bring the following matters not set aside provisions for major main- Ernst & Young Audit: Luc Valverde that we plan and perform the audit to to your attention: tenance for the reasons set out in Note 3.1 obtain reasonable assurance that the As stated in paragraph and Notes 7 and to the financial statements. We have Free translation of the French original. consolidated financial statements are free 15 to the financial statements, in Decem- ensured that the reasons presented in from material misstatement. An audit ber 2004 Klépierre restructured instru- such Note are pertinent. includes examining, on a test basis, ments used for interest rate hedging. We evidence supporting the amounts and have ensured that the accounting treat- The assessments thus made fall within the disclosures in these financial statements. ment of these transactions was appropri- scope of our audit of the consolidated

122 corporate financial statements

Statement of income at december 31, 2004 p. 125 Balance sheet at december 31, 2004 p. 126 Simplified notes p. 128 General report of the Statutory Auditors p. 136 Statutory Auditors’ special report p. 137 Report of the Statutory Auditors on the reduction in capital p. 138 Report of the Statutory Auditors on the issuing of shares or securities that grant access to capital p. 139 Report of the Statutory Auditors on the increase in capital p. 140 Report of the Statutory Auditors on the free granting of existing shares or shares to be issued p. 141 125 financial report corporate financial statements

At December 31 statement 2004 2003 2002 Operating income Lease income 15635 19124 21367 of income – Rents 14518 17861 19921 – Reimbursement of expenses 1063 1258 1446 – Other 54 5 – Other services provided 54 188 320 Release of reserves 28 4369 4154 Expense transfers 817 1282 102 Total I 16534 24963 25943 Operating expenses External purchases and expenses - 8787 - 11781 - 8828 Taxes, duties and equivalent - 902 - 1190 - 1402 Payroll expense - 1 – – Depreciation and amortization of intangible fixed assets, acquisition costs and expenses to amortize - 1 645 - 1 458 - 968 Depreciation and amortization of intangible fixed assets - 4657 - 5796 - 6520 Allowance for doubtful accounts - 78 - 2 - 1 Provisions for contingencies and losses - 310 - 113 - 101 Other expenses - 154 - 115 - 600 Total II - 16534 - 20455 - 18420 OPERATING EARNINGS (I - II) – 4 508 7 523 Net results of joint operations Income attributed or losses transferred – Total III 94570 41750 32722 Losses borne or income transferred – Total IV - 1535 - 3282 - 1507 Interest and dividends – Total V 233422 226305 174832 Interest expense – Total VI - 252851 - 197519 - 179001 FINANCIAL RESULTS (V - VI) - 19 429 28 786 - 4 169 PRE-TAX OPERATING EARNINGS (I - II + III - IV + V - VI) 73 606 71 762 34 569 Non-recurring gains On operations 258 377 374 On capital transactions 45883 242376 35686 Release of provisions 2912 894 309 Expense transfers – – – Total VII 49053 243647 36369 Non-recurring losses On operations - 1539 - 782 - 610 On capital transactions - 43579 - 15161 - 21039 Depreciation and amortization - 25 - 152 - 1021 Total VIII - 45143 - 16095 - 22670 NON-RECURRING RESULTS (VII - VIII) 3 910 227 552 13 699 Employee profit-sharing – Total IX – – – Corporate income tax – Total X 277 5961 3531 TOTAL INCOME (I + III + V + VII) 393 579 536 665 269 866 TOTAL EXPENSE (II + IV + VI + VIII + IX + X) - 315 786 - 231 390 - 218 067 NET EARNINGS FOR THE YEAR 77 793 305 275 51 799 in € thousands financial report corporate financial statements

balance sheet

Depreciation and Asset at December 31 Gross amortization Net Net Net 2004 2003 2002 Fixed assets INTANGIBLE FIXED ASSETS 20 – 20 20 2 TANGIBLE FIXED ASSETS 165016 70520 94496 105204 119666 Land 44255 44255 47124 52618 Buildings and improvements 120615 70415 50200 58033 67000 Installations in progress 4 4 4 – Other tangible fixed assets 142 105 37 43 48 LONG-TERM FINANCIAL ASSETS 3722349 8108 3714241 3452368 2755733 Equity investment securities 2275463 7929 2267534 2319519 2083173 Receivables from equity interests 1412198 – 1412198 1095790 631526 Other long-term securities 179 179 – – – Loans 34500 34500 37050 41025 Security deposits 9 9 9 9 TOTAL I 3887385 78628 3808757 3557592 2875401 Current assets DOWN PAYMENTS TO SUPPLIERS 4 – 4 13 23251 TRADE NOTES AND ACCOUNTS RECEIVABLE 623 117 506 895 1358 Ordinary accounts 451 – 451 884 1338 Doubtful accounts 172 117 55 11 20 MISCELLANEOUS RECEIVABLES 17402 – 17402 29722 53296 Government 290 290 229 16918 Other receivables 17112 17112 29493 36378 MARKETABLE SECURITIES 10869 – 10869 27744 26379 Treasury stock 8821 8821 16529 18525 Other securities 2048 2048 11215 7854 CASH AND NEAR CASH 3895 3895 – 1528 Adjustment accounts PRE-PAID EXPENSES 353 353 275 960 TOTAL II 33146 117 33029 58649 106772 EXPENSES TO AMORTIZE OVER SEVERAL PERIODS – TOTAL III 139741 139741 7211 5620 BOND REDEMPTION PREMIUMS – TOTAL IV 5864 5864 2072 2531 TOTAL ASSETS (I + II + III + IV) 4 066 136 78 745 3 987 391 3 625 524 2 990 324 in € thousands OFF-BALANCE SHEET - COMMITMENTS RECEIVED Security deposits received from tenants 198 798 1422 Commitments to finance received from banking institutions 167408 411601 307487 Commitments to purchase securities – – 23000 Commitments for the sale of buildings ––236 TOTAL ––167606 412399 332145 in € thousands

126 127 financial report corporate financial statements

Liabilities at December 31 2004 2003 2002 Shareholders’ equity Share capital 184657 179039 119359 Additional paid-in capital 629430 566389 566389 Gains on cancelled shares in acquired companies 113736 113736 113736 Legal reserve 17904 11936 10707 Other reserves 179399 161629 221309 Retained earnings 220157 29369 30308 Earnings for the year 77 793 305 275 51 799 Investment provisions – 26 64 TOTAL I 1423076 1367399 1113671 PROVISIONS FOR CONTINGENCIES AND LOSSES– TOTAL II 1309 3879 39530 Debt BONDS AND NOTES 1230461 617620 617620 BANK BORROWINGS 827615 1105192 860117 MISCELLANEOUS BORROWINGS AND FINANCING DEBT 396880 325137 219439 TRADE NOTES AND ACCOUNTS PAYABLE 655 203 312 Prepaids 549 41 – Rental costs provision 106 162 312 TRADE NOTES AND ACCOUNTS PAYABLE 1275 4582 2004 Other liabilities 178 2957 1134 Accrued liabilities 1097 1625 870 TAX AND SOCIAL LIABILITIES 38937 56980 145 Government, taxes and duties 38936 56980 145 PAYABLES TO FIXED ASSET SUPPLIERS AND SUB-ACCOUNTS 106 111 281 Other liabilities 16367 141084 133113 Adjustment accounts PRE-PAID INCOME 50711 3337 4092 TOTAL III 2563006 2254246 1837123 TOTAL LIABILITIES (I + II + III) 3 987 391 3 625 524 2 990 324 in € thousands Off-balance sheet - commitments granted Commitments to purchase securities and shopping malls 49245 63377 292532 Commitments to sell 19008 – – Commitments to finance granted to lending institutions 268807 163002 24913 Other commitments granted – – 21 Interest rate hedging instruments 1700000 2467918 2367918 TOTAL 2037060 2694297 2685384 in € thousands financial report corporate financial statements

simplified notes

1 – Significant events in 2004 8 Sentier SCI (decision ratified on July Restructured interest-rate 29, 2004); hedging program Stock dividend payout Chaptal Alun SCI (decision ratified on In December 2004, Klépierre restructured At their annual meeting on April 8, 2004, September 24, 2004); its interest-rate hedging instruments. Most the shareholders approved the payment Couperin Foncière SNC (decision rati- existing instruments (in particular optional of a net dividend for 2003 of €2.0 per fied on September 22, 2004). instruments) were cancelled against a cash share, payable in cash or shares. payment of 91,9 million euros (excluding 78.7% of Klépierre’s shareholders opted These transactions qualify for the pref- accrued interest). Concomitantly, new for the stock dividend. erential tax status provided for under hedging instruments were set up at going As a result, equity was raised by Article 210 of the French General Tax market rates for €1,100 million, in addition €68 818 834 and 1 404 466 new shares Code (CGI). to a new fixed-rate bank borrowing of were issued. €135 million. A total of €19.8 million was paid out in Debt restructuring The restructuring of the swap portfolio the form of cash dividends. Taking advantage of favorable market resulted in the cancellation of 26 existing conditions, Klépierre refinanced exist- instruments, in particular, all swaps with Transfer of assets and liabilities ing debts totaling €895. €600 million knock-out barriers, and the setup of 4 new to holding company (TUP) were raised in the bond market over instruments. Using a process in France known as Trans- seven years. Klépierre also set up a new Cancelled swaps are recorded as follows: mission Universelle de Patrimoine (TUP), five-year club deal totaling €250 million. a portion of the cash payments is under which all of the assets and liabili- The proceeds raised, complemented by used to pay accrued interest as of ties of a company can be transferred to a commercial paper issue, enabled the December 22, 2004 (effective cancella- the company holding all the securities early repayment of €895 million in tion date); representing its capital, Klépierre SA existing debt, namely, a €670 million the balance of the cash payments decided to wind up without liquidating syndicated loan due January 2006 and reflects the market value of the cancelled the following companies with a tax a €225 million bridge loan due Febru- instruments, inventoried and spread over retroactive effect on January 1, 2004: ary 2007. the remaining period of each cancelled Oise Cergy SAS (decision ratified on July swap. 29, 2004);

128 129 financial report corporate financial statements

Sale of office properties Provisions for major repairs and securities The transitional measures of CRC Regula- Klépierre SA pursued its arbitrage policy tion 2002.10 stipulate that businesses are with the sale of the following assets: required to either set up provisions for Office properties: CB 20 – Les Miroirs at major repairs, or use the so-called “compo- La Défense (covering 22,344 square nents” method for major repair and meters), 52 bis Avenue d’Iena in Paris replacement expenses for accounting peri- (covering 880 square meters); ods that began after January 1, 2003 and 15% of the equity interest in Solorec that end before December 31, 2004. (Créteil Soleil) held by Klépierre SA. According to CRC Regulation 2003.07 issued on December 12, 2003, these transitional 2 – Significant accounting measures provide that: and valuation policies with respect to expenses of the first type (i.e. those incurred to replace all or some The annual financial statements for the part of an asset), businesses that have not year ended December 31, 2004 were already set up provisions for major main- prepared in accordance with the general tenance or overhauls must not do so now; accounting principles in France. in any case, they may opt for the compo- The accounting policies applied to prepare nents method. the 2004 corporate financial statements are with respect to expenses of the second unchanged from previous years. type (i.e. expenses that are incurred in connection with multi-year major mainte- Klépierre SA decides not to apply in nance or overhaul programs), businesses advance the CRC Regulatory n° 2004 – 06 must either set up provisions for major issued on November 23, 2004, relative to maintenance or begin using the compo- the definition, accounting and valuation nents methods, for all accounting periods of assets. (applicable to financial year beginning with January 1, 2003. beginning on January 1, 2005, but also For the year ended December 31, 2004, no applicable to financial year which begins provisions of the second type were set up, on January 1, 2004.) due to the insignificant level of expenses relating to major repairs in connection with major maintenance or overhaul programs. financial report corporate financial statements

3 – Notes on 3.1 – Long-term Shareholders’ balance sheet assets financial assets equity excluding Deposits share capital Income Gross Net and Loans and earnings (loss) book book guarantees and Share % Revenues granted Dividends capital ownershipat 12/31/04(before tax) value value advances received Subsidiaries and equity interests

1. Subsidiaries (more than 50% owned)

192 Charles de Gaulle SAS 30566 45691 100 4001 5706 50665 50665 3208

21 Kléber SAS 305 7522 100 364 765 6146 6146 2091 300

21 La Pérouse SAS 3011 8546 100 842 1328 7411 7411 3248 849

23 Marignan SAS 21190 26183 100 2423 5801 37629 37629 30922 2363

43Financial Grenelle information SAS – 17722 40659 100 2061 4525 41229 41229 1744

43 Kléber SAS 6822 13488 100 641 1369 17527 17527 694

46 Notre Dame des Victoires SAS 25993 21809 100 1123 945 36578 36578

5 Turin SAS 3468 7855 100 471 839 6936 6936 296

86 Anatole France SNC 551 0 1006000 9

Angoumars SNC 2 0 99 - 43022 916

Barjac Victor SNC 2 0 100 633 2740 1336 1336 30686

Baudot Massy SAS 3891 4843 100 396 947 7612 7612

Bègles Papin SCI 2 99 - 18020 4275

Brescia SA 9033 7304 100 1221 1311 39741 39741 970

Capucine BV 2400 2668 100 - 983 0 7200 7200 85273

CB Pierre SAS 48000 7601 100 5687 7878 22389 22389 15392 2400

Cécoville SAS 38 100 1512 3924 143 143 25945 670

Centre Bourse SC 3813 0 100 32128 5131 47419 47419 623

Clermont Jaude SAS 21686 7150 100 4181 6911 83804 83804

Combault SCI 2 0 99 - 13011 187

Concorde Puteaux SAS 8292 8196 100 643 969 10856 10856 359

Doumer Caen SAS 4993 9024 100 892 1334 15110 15110 782 524

Espace Dumont d’Urville SAS 1138 2816 100 77 1413 2076 2076 18422 89

Espace Kléber SAS 2716 8445 100 1054 5641 6076 6076 68570

Foncière de Louvain-la-Neuve SA 100 61 61 63629

Foncière Saint Germain SNC 152 0 100 470 1873 324 324 18167 in € thousands

130 131 financial report corporate financial statements

3.1 – Long-term Shareholders’ financial assets (cont’d) equity excluding Deposits share capital Income Gross Net and Loans Financial information – and earnings (loss) book book guarantees and Share % Revenues granted Dividends capital ownershipat 12/31/04(before tax) value value advances received Subsidiaries and equity interests

Général Leclerc SNC 2368 0 100 624 1751 0 0 19946

Godefroy Puteaux SNC 586 2 100 - 76 0 0 0 50

H1 SAS 38 - 1265 100 - 1254 0 8134 8134 39448

H3 SAS 38 - 194 100 - 189 0 0 0 4949

Immobiliare Magnolia SRL 520 322 85 213 1906 4904 4904 3789 180

Issy Desmoulins SAS 2020 - 1500 100 - 189 5426 4040 4040 80849

Jardin des Princes SNC 2 0 99 - 118 728 1542 1542 11293

Kléber La Pérouse SNC 4118 - 1997 100 1345 0 11471 11471 83552

Klp Bis SNC 2 - 3 100 - 1 0 1 0 5

Kléber Levallois SAS 8409 8624 100 492 812 13020 13020 331

Klécar Europe Sud SCS 315260 305801 83 30003 0 523247 523247 319

Klécar France SNC 500881 500880 83 49763 46406 831462 831462 41

Klécar participations Italie SAS 30546 0 83 - 9583 0 25958 25958 54844 8719

Kléfin Italia SPA 4250 7011 100 - 3903 800 13625 13625 125819

Klégestion SNC 640 72 100 1567 3954 876 876 1767

Klémurs SAS 150 - 80 100 296 219 150 150 19373

Klépierre Conseil SAS 38 71 100 9 8025 1391 110 4613

Klépierre Finance SAS 38 14 100 208 0 38 38 124

Klépierre Hongrie SAS 65 62 100 - 2662 0 130 130 165000 130299

Klépierre Portugal SA 250 6000 100 1427 0 6250 6250 60000 11500

KLE 1 SAS 38 - 3270 100 2843 116 76 76 69474

Klépierre Vallecas SA 60 0 100 - 100 0 60 60 59501

Klépierre Vinaza 60 -9 100 -108 143 60 60 2586

Klétransactions SNC 2 0 99 - 19 0 2 2 19339

Le Havre Capelet SAS 229 - 36 100 - 240 0 267 267 231

Le Havre Tourneville SAS 229 - 592 100 - 774 0 267 267 1667

Leblanc Paris 15 SAS 2324 2387 100 54 282 3824 3824 160 in € thousands financial report corporate financial statements

3.1 – Long-term Shareholders’ financial assets (cont’d) equity excluding Deposits share capital Income Gross Net and Loans Financial information – and earnings (loss) book book guarantees and Share % Revenues granted Dividends capital ownershipat 12/31/04(before tax) value value advances received Subsidiaries and equity interests

Liège 25 Parise SNC 8 89- 9100- 12000

LP 7 SAS 39 55 100 - 58 0 192 38 2437

Maille Nord SNC 2 0 99 733 172 1 1 74

Marseille Le Merlan SAS 8737 8737 100 702 2295 17474 17474 7095

Melun Saint Pères SAS 8080 14856 100 1602 2011 23102 23102 1325

Nancy Bonsecours SAS 39 74 100 - 38 0 535 74 19

Novate SRL 16893 9546 85 366 11142 27248 27248 44496

Odysseum Place de Venise SAS 38 - 60 70 - 15 0 27 0 37

Odysseum Place de France SAS 53 28 70 - 27 58 195 38 611

Odysseum Place d’Alexandrie SAS 38 - 154 100 - 41 74 0 628

Pasteur SAS 39 68 100 - 20 0 202 76 42

Poitiers Aliénor SAS 229 4 100 - 92 0 267 267

Saint André Pey Berland SAS 10671 14733 100 274 1559 19491 14724 3737 504

Secmarne SAS 2594 260 67 4854 10792 45478 45478 17506 3161

Ségécé SCS 1600 9691 75 14637 56837 28428 28428 330

Sodévac SNC 2 0 99 - 200113369714134

Sovaly SAS 448 - 38 100 - 35 0 572 345 485

Strasbourg La Vigie SAS 1309 2603 100 287 639 4467 4467 202

Suffren Paris XV SAS 12070 9537 100 767 13484 13484

Toulouse Mermoz SAS 10037 0 100 - 608 0 10037 10037 110456

Tour Marcel Brot SCI 1 0 99 - 644 265 0 0 8748

Tours Nationale SAS 6728 17618 100 1244 1808 18325 18325 3 574

Université Paris 7 SNC 47 9 100 - 14000

TOTAL I 153 240 219 496 2 108 668 2 101 391 258 697 1 322 754 32 221 in € thousands

132 133 financial report corporate financial statements

3.1 – Long-term Shareholders’ financial assets (end) equity excluding Deposits share capital Income Gross Net and Loans Financial information – and earnings (loss) book book guarantees and Share % Revenues granted Dividends capital ownershipat 12/31/04(before tax) value value advances received Subsidiaries and equity interests

2. Equity interests (10 - 50% owned)

Antin Vendôme SCI 15 0 50 16425 1752 8 8

Bassin Nord SCI 2 0 50 - 374 0 1 1 5864

Bègles d’Arcins SCS 26679 18819 50 3902 7053 41837 41837

Effe Kappa SRL 50 6 6 18

Galae SNC 330 1 49 - 987 738 490 162 415

La Plaine du Moulin à Vent SCI 10 0 50 - 1 0 5 5

Socoseine SAS 38 110 25 - 67 0 99 20 270

Solorec SC 4869 2768 49 15997 22844 124104 124104 21353

Sviluppo Klépierre Finim SPA 50 245 0 37

TOTAL II 34 895 32 387 166 795 166 143 0 27 939 18

3. Miscellaneous 86

TOTAL III 00000860

TOTAL GENERAL I + II + III 188 135 251 883 2 275 463 2 267 534 258 697 1 350 779 32 239 in € thousands financial report corporate financial statements

3.2 – Marketable securities 3.3 – Expenses to be amortized a €220 million commercial paper issue reaux in 2003 totaled €74.7 million. Marketable securities include 233,900 over several years (with a €270 million back-up facility). Release of interest expense allowance shares of treasury stock with a purchase Amortization of cash payments on swaps primarily reflects the release of interest value of €8.8 million, equal to 0.51% of reflects the cancellation of hedging instru- 4.2 – Tax and social liabilities expenses allowances for the securities of the total equity capital. ments totaling €1 100 million, which Corporate income tax liabilities amounted the four companies involved in a TUP in generated a negative cash payment of to €36.5 million, broken down as follows: 2004: SAS Oise Cergy, SCI 8 rue du Sentier, These shares include: €134.3 million and a positive cash a €37.1 million exit tax expense result- SCI Chaptal Alun and SNC Couperin 93 217 shares set aside for the payment of €42.4 million (see adjustment ing from the adoption of the tax status Foncière. Klépierre group employee stock option accounts – liabilities), a negative net referred to in Article 11 of the Finance Act Transfer of interest expenses includes the plan, approved by the Executive Board impact of €91.9 million. of December 30, 2002; amortization of: on June 14, 1999. A total of 107821 options an account receivable of €0.5 million – cash payments on restructured swaps were exercised between June 24, 2004 4 – Notes on balance for corporate income tax advances trans- totaling €134.2 million; and December 31, 2004; sheet liabilities mitted by the dissolved companies – bank fees related to the bond issue in 11773 shares acquired in connection (through the transmission universelle de July 2004. with the market-making agreement to 4.1 – Miscellaneous borrowings patrimoine procedure); In 2004, Klécar Participation Italie reduced stabilize the stock price; and financing debt a €0.1 million tax credit. its share capital by repurchasing shares and 128 910 shares purchased through At the December 31, 2004 reporting date, held by Klépierre SA. Pursuant to the provi- the share buyback program. Klépierre’s borrowings primarily consisted 5 – Notes on the statement sions of tax legislation pertaining to this of the following: of income type of operation, the difference between 188365 treasury shares were sold in 2004, a €600 million bond issued in July of the repurchase price and the book cost of which 98 962 were non-allocated stock 2001 with a €6.125% gross yield to 5.1 – Financial results price was recorded under interest income options. These transactions generated a maturity; For the year ended December 31, 2004 and dividends. gross capital gain of €5.2 million. a €600 million bond issued in July 2004 financial results were a loss of €19.4 million Other shares are short-term investments with a 4.625% gross yield to maturity; versus a profit of €28.8 million for the At December 31, 2004, interest expense of €2 million. a syndicated loan contracted in 2003, of previous year. mainly reflects: No provisions for depreciation were set which €415 million has been drawn The decrease in interest income, income aside for 2004. (authorized maximum of €500 million); from equity investment securities in partic- Interest on bank borrowings: a club deal club deal contracted in ular, is mainly attributable to the transfer €20.5 million in interest on syndicated July 2004, of which €250 million was drawn of assets and liabilities from Klébureaux to loans; (authorized maximum of €250 million); Klépierre through the procedure known in €3.7 million in interest on the bridge loan; a bilateral loan of €135 million issued France as TUP (Transmission Universelle €4.3 million in interest on commercial in December 2004; de Patrimoine). The contribution of Klébu- paper.

134 135 financial report corporate financial statements

The increase in interest expense on swaps sale of 15% of Klépierre’s Solorec equity mainly reflects the restructuring of inter- interest. est-rate swaps, due to the spread of the €134.25 million cash payment. 5.3 – Corporate income tax Interest on current accounts and positive Klépierre’s earnings for the period ended deposit balances: December 31, 2004, totaled €77992 605.04. €4.5 million in interest on centrally Taxable income from the rental business managed cash; amounted to €20 874 423.45. Net capital €2.5 millions in interest on partners’ gains from the sale of assets was current accounts; €5049 900.83. €0.5 million in interest on bank over- Taxable earnings from the taxable segment draft facilities. totaled €7 858 190, from which are Other interest expense is primarily attrib- deducted €7280038 of available deficits. utable to fees on syndicated loans, which Income tax at the regular rates for 2004 are expense transferred and spread ratably totaled €198 500. over the maturity of the underlying loans. 6 – Other information Interest expense allowances mainly reflect provisions for depreciation of equity inter- 6.1 – Distribution obligation est securities totaling €2.2 million. The minimum distribution obligation amounted to €42 097 909: 5.2 – Non-recurring results €17743259 for the rental business; Non-recurring results of €3.9 million €7764671 for capital gains (€5239721 mainly reflect losses upon liquidation (TUP for 2003 and €2 524 950 for 2004); process), of which: €16 589 977 for SIIC dividends earned. €2.3 million from Couperin Foncière SNC; €0.2 million from Oise Cergy SAS; 6.2 – Consolidation The complete corporate financial €12.2 million from 8 Sentier SCI. Klépierre’s corporate financial statements statements are available on are fully consolidated by BNP Paribas. the Klépierre corporate website, The net capital gain of €10.3 million is under Publications/Reports. primarily attributable to the disposal of the Les Miroirs and 52 Iena properties and the financial report corporate financial statements

general report of the statutory auditors on the annual financial statements

Financial Year to the re-evaluated net asset value of theIII – Specific procedures and disclosures ended December 31, 2004 subsidiaries, is less than their purchase price. OnWe also carried out, in accordance with the assessing the accounting principles used and the basis of information available to date, ourprofessional standards that are applicable in assessment of these accounting estimates is basedFrance, the specific procedures prescribed by To the Shareholders of Klépierre, significant estimates made by management in preparing the financial statements, as well as on the process implemented by the Company inFrench law. order to determine the market value of itsWe have nothing to report with respect to the fair- In our capacity as Statutory Auditorsevaluating appointed the overall financial statement pres- subsidiaries. Our work included, in particular, inness of information contained in the Executive by your Shareholder’s meeting, we presententation. below We believe that our audit provides a light of expert evaluations, assessing the data usedBoard report and its consistency with the annual our report for the financial year endedreasonable Decem- basis for our opinion. by the Company in order to determine the valuefinancial statements and other information ber 31, 2004, on: In our opinion, the annual financial statements of the real property held by the subsidiaries. Wepresented to shareholders concerning the finan- the audit of the accompanying annualpresent finan- fairly, in all material respects, the finan- have ensured that the level of any provisions setcial position and statutory financial statements. cial statements of Klépierre; cial position and assets and liabilities of the aside was correct. Pursuant to French law, we have ensured that the justification for our assessments;Company as of December 31, 2004 and the Within the scope of the application of the tran-the various information relating to the acquisi- the specific procedures and disclosuresresults of its operations for the year then ended, sitional provisions of Regulation No. 2002-10 oftion of shares and controlling interests, and the prescribed by law. in accordance with French accounting principles the French Accounting Regulations Committeelist of holders of shares in the capital and voting These financial statements have beenand prepared standards. (Comité de la Réglementation Comptable) relat-rights were provided to you in the Executive by the Executive Board. Our responsibility is to ing to the amortization, depreciation and impair-Board report. express an opinion on these financialII statements – Justification of our assessments ment of assets, as amended by Regulation No. based on our audit. Pursuant to the provisions of Article L. 225-235 of the French Commercial Code relating to the justi- 2003-07 of this Committee, the Group chose not to apply in advance the component method and I – Opinion on the annual financial statementsfication of our assessments, we bring the follow- did not set aside provisions for major mainte- We conducted our audit in accordanceing with matters the to your attention: Paris-La-Défense, February 21, 2005 nance for the reasons set out in Note 2.9 to the professional standards that are applicableAs stated in in Note 1 and Note 8 of the Notes to the financial statements. We have ensured that the France. These standards require thatfinancial plan and statements, in December 2004 Klépierre The Statutory Auditors reasons presented in such Note are pertinent. perform the audit to obtain reasonablerestructured assur- instruments used for interest rate hedg- Mazars & Guérard: Odile Coulaud The assessments thus made fall within the scope ance that the annual financial statementsing. Weare havefree ensured that the accounting treatment Ernst & Young Audit: Luc Valverde of our audit of the annual financial statements as from material misstatement. An auditof includesthese transactions was appropriate in light of a whole, and therefore contributed to us issuing examining, on a test basis, evidence Frenchsupporting accounting rules and principles. Translation of the French original an unqualified opinion, as set out in the first part the amounts and disclosures containedAs in stated the in Note 2.2 of the Notes to the finan- for information purposes only. of this report. financial statements. An audit alsocial includes statements, a provision for depreciation is set aside by your Company when the inventory value of investment securities, determined with respect

136 137 financial report corporate financial statements

statutory auditors’ special report on regulated agreements with related parties

Financial Year Ended that the information provided to us is II – With BNP Paribas Securities III – With Natio Vie 31 December 2004 consistent with the source documents from Services (BNP Paribas Assurances) which it is taken. To the Shareholders of Klépierre, Member of the Supervisory Board Member of the Supervisory Board I – With BNP Paribas, a corporate concerned: Mr. Vivien Lévy-Garboua. concerned: Mr. Vivien Lévy-Garboua. In our capacity as Statutory Auditors of Shareholder which holds more This is also an agreement in which BNP This is also an agreement in which BNP your Company, we hereby present to you than 10 % of the voting rights Paribas, a corporate Shareholder which Paribas, a corporate Shareholder which our report on regulated agreements with in your Company holds more than 10% of the voting rights in holds more than 10% of the voting rights in related parties. your Company, is indirectly involved. your Company, is indirectly involved. Pursuant to Article L. 225-88 of the French Nature and purpose: On May 26, 2004, your Nature and purpose: On May 26, 2004, Nature and purpose: On December 16, 2004, Commercial Code, we have been advised Supervisory Board approved a bond issue your Supervisory Board approved a bond your Supervisory Board authorised the sale of agreements that were previously in euros. Within the scope of this issue, on issue in euros. Within the scope of this to Natio Vie (BNP Paribas Assurances) of approved by your Supervisory Board. July 9, 2004 your Company signed a contract issue, on July 15, 2004, your Company between 20 and 22% of Secmarne, the land We are not required to search for the exis- entitled “Subscription Agreement”. Under signed a contract entitled “Fiscal Agency owner of the Noisy Arcades shopping centre. tence of such agreements but to inform you, this contract, your Company undertakes to Agreement”. This “Fiscal Agency Agree- Terms and conditions: This authorised agree- on the basis of the information provided to issue the bonds and the banking syndicate ment” is a financial services contract, ment was only entered into on January 13, us, of the essential terms and conditions of of which BNP Paribas is the lead bank, under- which organises relations between the 2005, and therefore has no impact on the those agreements brought to our attention, takes to subscribe to the bonds. issuer, the principal payment agent, any 2004 financial year. without having to express an opinion on Terms and conditions: Within the scope other payment agents and the agent their usefulness or appropriateness. of the “Subscription Agreement”, the remu- known as the “Covenant and Put Agent”. IV – With S.A.S. Klépierre Conseil Pursuant to Article 117 of the French Decree neration of members of the syndicate is Terms and conditions: Within the scope of March 23, 1967, it is your responsibility to ensured by a total commission of 0.325% of of the “Fiscal Agency Agreement”, the Member of the Supervisory Board assess the Company’s interest in entering into the nominal value of the loan that the agent’s remuneration will be approxi- concerned: Mr. Claude Lobjoie. these agreements in view of their approval. members of the syndicate are sharing in mately €12000 for the full issue, exclusive Nature and purpose: On October 7, 2004, We conducted our audit in accordance with proportion to their respective contributions. of any expenses linked to possible imple- your Supervisory Board authorised the sig- the professional standards that are appli- The remuneration received by BNP Paribas mentation of the “Put” clause. nature of a third supplemental agreement to cable in France. These standards require in this respect amounts to €1 560 000 for a services agreement entered into between that we plan and perform the audit to verify the 2004 financial year. your Company and S.A.S. Klépierre Conseil financial report corporate financial statements

on January 2, 2002. report of the statutory auditors Terms and conditions: Within the scope of on the reduction in capital through the cancellation of purchased shares this services agreement, the invoices issued by S.A.S. Klépierre Conseil for the 2004 financial year amount to €2800000, exclusive of tax. Extraordinary general Commercial Code. This purchase authori- meeting of Shareholders zation is also submitted to you for approval V –With S.A.S.Klécar Participations Italie of April 7, 2005 under the ninth resolution and will be given for a period of eighteen months. Member of the Supervisory Board To the Shareholders of Klépierre, Your Executive Board is requesting that you concerned: Mr. Michel Clair grant it, for a period of twenty-four months, with Nature and purpose: On December 16, 2004, In our capacity as Statutory Auditors of respect to the implementation of the authori- your Supervisory Board authorised the buy- Klépierre, S.A. and pursuant to the assign- sation for your Company to purchase its own back by S.A.S. Klécar Participations Italie, of ment provided for in Article L.225-209, shares, full powers to cancel the shares thus part of the shares your Company holds in paragraph 4 of the French Commercial Code purchased, within a limit of 10% of Company the capital of this Company, following which in the event of a reduction in capital capital, by twenty-four month period. these shares were cancelled. through the cancellation of purchased We have nothing to report on the reasons Terms and conditions: S.A.S. Klécar Partic- shares, we hereby report to you on our for and conditions governing the contem- ipations Italie bought back 1539951 shares assessment of the reasons for and condi- plated reduction in capital, it being speci- that your Company held in its capital, then tions governing the reduction in capital fied that this reduction may only be cancelled these shares. This buy-back was proposed under the tenth resolution. completed if you grant prior approval for carried out in consideration for a unit price We have reviewed the proposed reduction your Company to purchase its own shares. of €15.90 per share and generated profit in capital in accordance with the professional of €8718673 for your Company. standards that are applicable in France. These Paris-La-Défense, February 21, 2005 standards require that we perform reviews Paris-La-Défense, February 21, 2005 to determine whether or not the reasons for The Statutory Auditors and conditions governing the contemplated Mazars & Guérard: Odile Coulaud The Statutory Auditors reduction in capital are compliant. Ernst & Young Audit: Luc Valverde Mazars & Guérard: Odile Coulaud This transaction involves the purchase by Ernst & Young Audit: Luc Valverde your Company of its own shares, repre- Free translation of the French original. senting an amount limited to 10% of its total Translation of the French original capital, under the conditions provided for for information purposes only. Article L. 225-209, paragraph 4 of the French

138 139 financial report corporate financial statements

report of the statutory auditors on the issuing of shares or securities that grant access to capital, with and without preferential subscription rights

Extraordinary meeting of The maximum increase in capital that in capital to be issued will be determined. Shareholders of April 7, 2005 would result from these issues would As the issue price for the shares in capital (11th,12th,13th and 14th resolutions) amount to €60 million. If debt securities to be issued has not yet been determined, are issued, the debt resulting therefrom we do not express an opinion on the final To the Shareholders of Klépierre, would amount to a maximum nominal conditions under which the shares would amount of €1200 million or the equivalent be issued, and, consequently, on the In our capacity as Statutory Auditors of value on the date of the decision to issue. proposed cancellation of preferential your Company and in accordance with the Your Executive Board is proposing, on the subscription rights; the principal of which assignment provided for under Articles basis of its report, to grant it authorisation is however, inherent to the operation L.225-129-2, L. 225-136 and L. 228-92 of the to decide on and draw up the terms and submitted for your approval. French Commercial Code, we hereby report conditions of these transactions and possi- In accordance with Article 155-2 of the to you on the plan to issue shares (exclud- bly to cancel your preferential subscription French Decree dated March 23, 1967, we will ing preference shares) or securities that right with respect to the shares in capital to issue a supplementary report once your grant access to capital, with or without pref- be issued. Executive Board has carried out the share erential subscription rights, on which you We conducted our audit in accordance with issues. are being asked to vote. the professional standards that are appli- The securities that grant access to capital cable in France. These standards require Paris-La-Défense, February 21, 2005 and which are issued by the Company, may that we plan and perform the audit to verify grant access to its capital or that of a the terms and conditions for setting the The Statutory Auditors company which holds, either directly or issue price of the shares in capital to be Mazars & Guérard: Odile Coulaud indirectly, more than one-half of the issued. Ernst & Young Audit: Luc Valverde Company’s capital or with respect to which The report drawn up by your Executive the Company holds, either directly or indi- Board calls for the following comment on Free translation of the French original. rectly, more than one-half of the capital. It our part: this report does not include the is specified that these issues must have information provided for in Article D. 155 been authorised by the Company within paragraph 2 1° concerning the method which the rights will be exercised. according to which the price of the shares financial report corporate financial statements

report of the statutory auditors on the increase in capital with cancellation of preferential subscription rights, reserved for participants in a company savings plan

General meeting of Your Executive Board proposes, on the capital and, consequently, on the proposed Shareholders of April 7, 2005 basis of its report, that it be empowered to cancellation of preferential subscription decide on the increase in capital and to rights, the principal of which is, however, To the Shareholders of Klépierre, determine its terms and conditions, and inherent to the operation submitted for proposes to cancel your preferential your approval. In our capacity as Statutory Auditors of your subscription rights. In accordance with Article 155-2 of the Company, and in accordance with Article We have reviewed the proposed Decree of March 23, 1967, we will issue a L. 225-138 of the French Commercial Code, we increase in capital in accordance with supplementary report when the increase hereby report to you on the proposed increase the professional standards that are in capital has been performed by your in capital in a maximum nominal amount of applicable in France. These standards Executive Board. €3000000, which is reserved for participants require that we perform a review of the in one or more company savings plans imple- methods used to determine the amount Paris-La-Défense, February 21, 2005 mented within the Klépierre Group, which is of exercise price. made up of the Company and French or Subject to a subsequent review of the The Statutory Auditors foreign companies that are part of the conditions for the proposed increase in Mazars & Guérard: Odile Coulaud Company’s consolidated or combined group. capital, we have nothing to report on the Ernst & Young Audit: Luc Valverde You are called to vote on this transaction under methods used to determine the amount of the seventeenth resolution. exercise price provided in the Executive Translation of the French original This increase in capital is submitted for your Board report. for information purposes only. approval in accordance with Articles L. 225-129-6 As the exercise price has not yet been of the French Commercial Code and L. 443-5 determined, we do not express an opinion of the French Employment Code. on the final conditions for the increase in

140 141 financial report corporate financial statements

report of the statutory auditors on the free granting of existing shares or shares to be issued, to members of salaried personnel and corporate officers

General meeting of Your Executive Board is proposing that it be We have no observations to make on the Shareholders of April 7, 2005 empowered to freely grant existing shares information given in the Executive Board’s or shares to be issued. It is the Executive report on the contemplated transaction To the Shareholders of Klépierre, Board’s responsibility to draw up a report involving the free granting of shares. on this transaction, which the Board plans In our capacity as Statutory Auditors of on implementing. We are responsible for Paris-La-Défense, February 21, 2005 your Company and in accordance with the providing you with our observations, if any, assignment provided for under Article on the information given to you in this The Statutory Auditors L. 225-197-1 of the French Commercial report on the contemplated transaction. Mazars & Guérard: Odile Coulaud Code, we hereby report to you on the plan As there are no professional standards that Ernst & Young Audit: Luc Valverde to freely grant existing shares, or shares to are applicable to this transaction, which be issued, to members of the salaried person- results from a statutory provision of Translation of the French original nel and corporate officers of Klépierre and December 30, 2004, we have carried out for information purposes only. the companies and economic interest the audits we deemed necessary in order groupings that are affiliated to it, within the to ensure that the contemplated terms and meaning of Article L. 225-197-2 of the conditions fall within the limits of the French Commercial Code. provisions fixed by law. financial report draft resolutions

draft resolutions

Ordinary resolutions holders, and having read the Executive ment in accordance with Article L. 225-88 and a net dividend per share of €2.30. Board Report, the Supervisory Board of the Code. The shareholders, having fulfilled the First resolution Report, and the Report of the Auditors quorum and majority requirements The purpose of this resolution is to approve on the consolidated financial statements Fourth resolution pertaining to ordinary meetings of share- the 2004 financial statements. for the year ended December 31, 2004, The purpose of this resolution is to author- holders, resolve to appropriate the year’s The shareholders, having fulfilled the hereby approve said financial statements ize the transfer of the long-term capital earnings of €77792605.04 as follows: quorum and majority requirements as presented in the aforementioned docu- gains reserve to an ordinary reserve Earnings for the period €77 792 605.04 pertaining to ordinary meetings of share- ments, showing a profit for the period of account. Appropriation holders, and having read the Executive 122582000 euros. The shareholders, having fulfilled the to legal reserves €561 786.40 Board Report, the Supervisory Board The shareholders also approve the trans- quorum and majority requirements pertain------Report, and the Report of the Auditors on actions reflected in the financial state- ing to ordinary meetings of shareholders, Balance €77 230 818.64 the annual financial statements for the ments or summarized in the aforemen- pursuant to Article 39 of the revised Finance To which is added prior earnings of year ended December 31, 2004, hereby tioned reports. Act for 2004 dated December 30, 2004, (of which €2 111029 for approve said financial statements as hereby authorize: the exceptional tax) €222 268 423.70 presented in the aforementioned docu- Third resolution 1. the transfer of the amount of Available for dividend distribution ments, showing a profit for the period The purpose of this resolution is to approve 84 941 157.08 euros from the long-term to shareholders €299 499 242.34 of 77 792 605.04 euros. the transactions and agreements referred capital gains reserve to an ordinary For distributed earnings of The shareholders also approve the trans- to in Article L. 225-86 of the French reserve account, €106 177 726.70 actions reflected in the financial state- Commercial Code. 2. the deduction of 2 111029 euros from (i.e. a €2.30 dividend per share) ments or summarized in the aforemen- The shareholders, having fulfilled the this amount, representing the one-off Total retained earnings tioned reports. quorum and majority requirements tax payable pursuant to Article 39 of €193 321 515.64 pertaining to ordinary meetings of share- the revised Finance Act for 2004, Second resolution holders, having duly noted the terms of charged to retained earnings on the The shareholders resolve that, pursuant The purpose of this resolution is to approve the Independent Auditors’ Special Report December 31, 2004 reporting date. to Article L. 225-210 of the French the 2004 consolidated financial statements. on the agreements referred to in Article Commercial Code, the dividend distrib- The shareholders, having fulfilled the L. 225-86 of the French Commercial Code, Fifth resolution utable in respect of treasury shares quorum and majority requirements hereby approve each of the agreements The purpose of this resolution is to deter- owned on the date of payment, and any pertaining to ordinary meetings of share- presented in the aforementioned docu- mine the appropriation of 2004 earnings amounts that the shareholders have

142 143 financial report draft resolutions

agreed to waive, shall be appropriated to ance of the appointment, and has indi- re-elect Mr. Jérôme BÉDIER for a term of empower the Company to trade in its own retained earnings. cated that he is not barred, by a court of three years expiring at the close of the shares, in accordance with the provisions The dividend shall be paid on April 15, 2005. law or because of other positions or offices annual shareholders’ meeting called in referred to hereinabove and the recom- As a reminder, the following dividends held, from serving on the Board. 2008 to approve the financial statements mendations and regulations issued by the were paid out in respect of the three prior for the year ending December 31, 2007. AMF, for the purpose of: fiscal periods (the two-for-one stock split Seventh resolution implementing any Company stock option and the free allotment of one share for two The shareholders, having fulfilled the Mr. Jérôme BÉDIER has signaled his accept- plan pursuant to Articles L. 225-177 and old shares occurred in April 2003): quorum and majority requirements ance of re-election, and has indicated that following of the French Commercial Code; In respect of 2001: €3.10 plus a 50% tax pertaining to ordinary meetings of share- he is not barred, by a court of law or or credit of €1.55, a total of €4.65. holders, hereby appoint Mr. François DEMON because of other positions or offices held, implementing any Company-sponsored In respect of 2002: €3.50 plus a 50% tax to the Supervisory Board for a term of three from serving on the Board. employee savings plan as provided by law, credit €1.75, a total of €5.25. years expiring at the close of the annual in particular, Articles L. 443-1 and follow- In respect of 2003: €2 of which €1.40 shareholders’ meeting called in 2008 to Ninth resolution ing of the French Commercial Code; with a €0.70 tax credit, and €0.60 without, approve the financial statements for the The purpose of this resolution is to author- or due to SIIC tax status. year ending December 31, 2007. ize the Executive Board to trade in the freely allotting shares pursuant to Arti- Company’s shares. cles L. 225-197-1 and following of the Sixth and seventh resolutions Mr. François DEMON has signaled his The shareholders, having fulfilled the French Commercial Code; The purpose of these resolutions is to acceptance of the appointment, and has quorum and majority requirements or appoint two new members of the Supervi- indicated that he is not barred, by a court pertaining to ordinary meetings of share- reducing equity by canceling some or sory board for a three-year term. of law or because of other positions or holders, and having reviewed the Execu- all of these shares by virtue of the tenth offices held, from serving on the Board. tive Board Report and the information resolution hereafter; Sixth resolution contained in the condensed registration or The shareholders, having fulfilled the Eighth resolution statement that received the visa of the remitting shares as tender in acquisi- quorum and majority requirements The purpose of these resolutions is to re- Autorité des Marchés Financiers (AMF), tions (in exchange, as payment, or other); pertaining to ordinary meetings of share- elect one member of the Supervisory Board hereby authorize the Executive Board to or holders, hereby appoint Mr. Alain PAPIASSE for a three-year term. purchase shares of the Company, in remitting shares in connection with to the Supervisory Board for a term of three The shareholders, having fulfilled the compliance with Article L. 225-209 of the rights attached to securities with a claim to years expiring at the close of the annual quorum and majority requirements French Commercial Code, Title IV, Book II the equity capital of the Company at matu- shareholders’ meeting called in 2008 to pertaining to ordinary meetings of share- of the General Regulations of the AMF, and rity, through redemption, conversion, approve the financial statements for the holders, duly note that the term of Commission Regulation (EC) No. 2273/2003 exchange, upon presentation of a warrant year ending December 31, 2007. Mr. Jérôme BÉDIER, Supervisory Board of December 22, 2003. or by any other means; Mr. Alain PAPIASSE has signaled his accept- member, expires on this day, and hereby The purpose of this authorization is to or financial report draft resolutions

purchasing, selling, converting, assign- allotment of shares, as well as in the event authority pursuant to applicable law, for a Company, with preferential subscription ing, transferring, lending or temporarily of either a stock split or a bundling of period of twenty-four months to: rights maintained. transferring shares in connection with a shares, the aforementioned prices shall be Cancel, in one or more transactions, The shareholders, having fulfilled the liquidity agreement with an investment adjusted by a factor equal to the number Company shares purchased by virtue of quorum and majority requirements services provider, in particular, to stimu- of shares that make up the Company’s the authorization granted by the share- pertaining to extraordinary meetings of late the market for shares or to effect trans- equity capital before the transaction holders in the ninth ordinary resolution shareholders, having read the Executive actions to counter adverse market trends. divided by the number of shares after the hereinabove, up to a maximum of ten Board Report and the Special Report of the The acquisition, sale or transfer of these transaction. percent of the equity capital per 24-month Independent Auditors, and pursuant to shares of stock may be completed at any This authorization is valid for a maximum period (it being understood that the equity Articles L. 225-129 and following of the time (including during the period of public period of eighteen months. It renders null capital used to determine this percentage French Commercial Code, in particular, offering) and by all appropriate means, and void the unused portion of the author- may be adjusted to reflect the impact of Article L. 225-129-2 and Articles L. 228-92 either through public stock market trans- ization granted by the shareholders under operations on equity capital subsequent and following of the Code: actions or private contracts, including the eighteenth resolution, ratified at the to this meeting of the shareholders) and 1. hereby authorize the Executive Board, acquisition or sale of stock in blocks (with April 8, 2004 annual meeting. The Execu- reduce equity capital accordingly by charg- subject to the prior approval of the no limit to the number of shares that are tive Board is granted all necessary powers ing the difference between the purchase Supervisory Board and pursuant to Arti- repurchased by this means), the use of to implement this authorization and the value of the cancelled securities and their cle 16-3 of the bylaws, to increase share options or other financial futures traded option of delegating such powers within par value to additional paid-in capital and capital, in one or more offerings, in such in public or private markets, or the the limits of applicable law. reserves; amounts and at such time as it shall issuance of securities with a claim to the Amend the bylaws accordingly and choose, in France or abroad, in euros or equity capital of the Company at maturity Extraordinary resolutions accomplish all required formalities. any other currency or monetary unit through conversion, exchange or redemp- established with reference to several tion, upon presentation of a warrant, or by Tenth resolution This authorization renders null and void currencies, through the issue of shares any other means allowed by law. The purpose of this resolution is to author- as of the date of this meeting any non- (excluding preferred stock) or securities The shareholders hereby resolve to set the ize the Executive Board to reduce share utilized portions of prior authorizations with a claim to the equity capital of the par value at 4 euros, the maximum capital by canceling shares. granted to the Executive Board to reduce Company, payable in cash or freely allot- purchase price per share at 100 euros and The shareholders, having fulfilled the share capital by canceling treasury shares. ted, under the conditions set forth in the total number of shares that may be quorum and majority requirements Articles L. 225-149 and following and acquired to ten percent of the Company’s pertaining to extraordinary meetings of Eleventh resolution Articles L. 228-91 and following of the equity capital (4616422 shares for a maxi- shareholders, and having reviewed the The purpose of this resolution is to author- French Commercial Code. It is under- mum amount of 416642200 euros). Executive Board Report and the Report of ize the Executive Board to increase capital stood that some or all of these shares In the event of a capital increase through the Auditors, authorize the Executive through the issue of shares and/or securi- and securities may be payable in cash, the capitalization of reserves and a free Board, with the power to delegate its ties with a claim to the equity capital of the by offsetting a debt, or through the capi-

144 145 financial report draft resolutions

talization of reserves, retained earnings established with reference to several other of the following options: set the amount of the capital increase, or additional paid-in capital; currencies); – limit the issuance to the amount of the issue price and the amount of any 2. resolve that the share capital to which 4. resolve that the authorization granted subscriptions received, provided that additional paid-in capital required at the bearers of securities issued by the by virtue of this resolution shall be valid this amount equals at least three quar- the time of issue; Company are entitled may be the share for twenty-six months, as from the close ters of the proposed capital increase; determine the dates, terms and condi- capital of a company that owns, directly of this meeting; – freely allot all or a portion of the tions of the capital increase and the or indirectly, more than half of the equity 5. in the event that the Executive Board shares or the securities with a claim to nature and characteristics of the securi- of the Company, or in which the makes use this authorization: equity capital proposed for issue by the ties to be issued; determine, in the event Company owns, directly or indirectly, resolve that the right of first refusal Executive Board but not subscribed; of an issue of bonds or other debt secu- more than half of the equity. It is under- on new shares shall be granted to exist- – offer all or a portion of non-subscribed rities (including the securities referred stood that the company in which these ing shareholders, who are entitled to shares or non-subscribed securities with to in Article L. 228-91 of the French rights will be exercised must approve the apply as of right for new shares and/or a claim to equity capital, on the French Commercial Code, entitling their bear- issue of these securities; securities in proportion to the number market, foreign markets, and/or the ers to an allotment of debt securities), 3. resolve to set the maximum amounts by of shares already held at that date; international market; whether the securities shall be subor- which the Executive Board is authorized duly note that the Executive Board resolve that stock purchase warrants dinated (and, if applicable, the rank of to increase capital by virtue of this may grant shareholders the right to with a claim to the equity capital of the subordination, in accordance with Arti- authorization: apply for excess shares; Company may be offered for subscrip- cle L. 228-97 of the French Commercial the maximum principal amount of duly note that this authorization tion or freely allotted to owners of exist- Code), the interest rate (in particular, immediate or future capital increases automatically entails, in favor of the ing shares; fixed, variable, zero-coupon or index- effected by virtue of this authorization holders of the securities issued with a resolve that in the event that unat- linked), the term to maturity (fixed or is set at 60 million euros. To this amount claim to the Company’s equity capital, tached stock purchase warrants are open) and the other terms and condi- shall be added, if applicable, the prin- the waiver by shareholders of their freely allotted, the Executive Board has tions governing issuance (including any cipal amount of any additional shares preferential subscription rights to said the power to decide that odd lots are not guarantee or warranties) and amortiza- issued through new financial operations, capital to which the holders of the secu- negotiable and that the corresponding tion (including redemption in the form to protect the rights of holders of secu- rities are entitled immediately or upon securities shall be sold; of an allotment of Company assets). rities with a claim to equity capital; maturity ; 6. Grant the Executive Board full authority, These securities may be issued with the maximum total principal amount duly note that in the event that the with the power to delegate its authority warrants entitling the bearer to the allot- of debt securities issued with a claim to shares subscribed as of right and not as pursuant to applicable law, to give effect ment, purchase or subscription of bonds the equity capital of the Company may of right do not absorb the capital to this resolution, in particular, to: or other debt securities, or consist of not exceed 1 200 million euros (or an increase in full, the Executive Board may, resolve to increase capital and complex bonds as defined by the stock equivalent amount, on the issue date, in as provided by law and in the order that determine the type of securities to be exchange regulators (for example, on the any other currency or monetary unit it shall determine, exercise one and or issued; basis of their redemption or interest- financial report draft resolutions

bearing terms or other rights such as in compliance with applicable laws; in general, conclude all agreements quorum and majority requirements indexing or the exercise of options). The determine the conditions under in the furtherance of issues undertaken pertaining to extraordinary meetings of Executive Board is also granted all which the Executive Board may suspend by virtue of this authorization, take all shareholders, having read the Executive powers to modify the terms and condi- the exercise of rights attached to these measures and undertake all formalities Board Report and the Special Report of the tions referred to hereinabove, during the securities, in compliance with applica- required for the issue, listing, and financ- Independent Auditors, and pursuant to term of said securities and in compli- ble laws and regulations; ing of the securities issued and the exer- Article L. 225-129 and following of the ance with all applicable formalities; at its sole option, use additional paid- cise of the rights attached thereto. French Commercial Code, in particular, determine the method of payment for in capital from capital increases to pay 7. duly note that this authorization renders Article L. 225-129-2 and Articles L. 228-92 stock or securities entitling the bearer any fees incurred in respect of these null and void as of the date of this meet- and following of said Code: to equity immediately or upon maturity; transactions and to bring the legal ing any non-utilized portions of prior 1. hereby authorize the Executive Board, determine, as required, the conditions reserve to the required one-tenth of the authorizations with a similar purpose, subject to the prior approval of the governing the exercise of rights attached new total equity capital after each capi- namely, all general authorizations to Supervisory Board and pursuant to Arti- to stock or securities issued with a claim tal increase; increase share capital, including through cle 16-3 of the bylaws, to increase share to the equity capital to be issued and, in determine and make all adjustments the issue of securities and the operations capital, in one or more public offerings particular, the date, which may be required to accurately reflect the impact referred to in this resolution, with pref- on the French market, foreign markets or retroactive, from which the new shares of operations on the Company’s share erential subscription rights maintained; the international market, in such shall earn dividends, the conditions capital, in particular, modifications of 8. duly note that in the event that the Exec- amounts and at such time as it shall governing the exercise of any rights to the par value of the share, capital utive Board utilizes the authorization choose, in euros or any other currency the conversion, exchange, redemption, increases through the capitalization of granted by virtue of this resolution, the or monetary unit established with refer- including in the form of an allotment of reserves, the free allotment of shares, Board will report use it has made of said ence to several currencies, through the Company assets, such as securities stock splits or stock consolidations, the authorization, in accordance with the issue of shares (excluding preferred already issued by the Company, and all distribution of reserves or any other laws and regulations in force, at the next stock) or securities with a claim to the other terms and conditions under which assets, the amortization of equity capi- general meeting of the shareholders. equity capital of the Company, payable the capital increase shall be effected; tal, or any other operation involving in cash or freely allotted, under the as applicable, determine the terms shareholders’ equity, and determine the Twelfth resolution conditions set forth in Articles L. 225-149 and conditions under which the means by which the rights of holders of The purpose of this resolution is to author- and following and Articles L. 228-91 and Company may make a public purchase securities with a claim to the equity ize the Executive Board to increase capital following of the French Commercial or exchange offer, at any time or during capital of the Company will be protected through the issue of shares and/or securi- Code. It is understood that some or all defined periods, to buy back securities and maintained; ties with a claim to the equity capital of the of these shares and securities may be already issued or to be issued immedi- duly note the new total equity capi- Company, with preferential subscription payable in cash, by offsetting a debt, ately or upon maturity, for the purpose tal following each capital increase and rights waived. through the capitalization of reserves, of canceling or owning said securities, amend the bylaws accordingly; The shareholders, having fulfilled the retained earnings, additional paid-in

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capital, or in kind. In particular, securi- more than half of the equity. It is under- waived. However, as provided for in ential subscription rights to said capital ties may be issued consideration for stood that the company in which these Paragraph 2, Article L. 225-135, the Exec- to which the holders of the securities are shares tendered in a public offer of rights will be exercised must approve the utive Board has the power to grant entitled; exchange effected in France or abroad, issue of these securities; shareholders pre-emptive rights, during 9. duly note that, in compliance with Item 1, in compliance with local regulations, for 4. resolve to set the maximum amounts by the period and under the terms that it Paragraph 1, Article L. 225-136, of the shares described in Article L. 225-148 of which the Executive Board is authorized shall define in accordance with appli- French Commercial Code, the amount the French Commercial Code; to increase capital by virtue of this cable laws and regulations, to subscribe paid to, or due to, the Company for each 2. hereby authorize the Executive Board to authorization: some or all of the securities issued, with- share issued by virtue of the aforemen- issue shares or securities with a claim to the maximum principal amount of out giving rise to the creation of nego- tioned authorization, taking into account the equity capital of the Company to be immediate or future capital increases tiable rights. Pre-emptive rights are the issue price of unattached stock issued following the issue, by companies effected by virtue of this authorization granted in proportion to the number of subscription warrants, if issued, shall be in which the Company owns directly or is €60 million. To this amount shall be existing shares held by each share- determined in accordance with the laws indirectly more half the equity, securi- added, if applicable, the principal holder. Shareholders may be granted the and regulations in force on the date of ties with a claim to the equity capital of amount of any additional shares issued right to apply for excess shares, it being the issue; the Company. through new financial operations to understood that non-subscribed secu- 10. hereby grant the Executive Board full This authorization entails, in favor of the protect the rights of holders of securities rities shall be publicly sold on the authority to give effect to this resolution, holders of the shares and securities that with a claim to equity capital; French market, foreign markets or the with the power to delegate its authority may be issued by other companies in the maximum total principal amount international market; pursuant to applicable law, in particu- the group of the Company, the waiver by of debt securities issued with a claim to 7. duly note that in the event that the lar: the Company’s shareholders of their the equity capital of the Company may subscriptions, including, as the case may resolve to increase capital and deter- preferential subscription rights to the not exceed €1200 million (or an equiv- be, those by shareholders, do not absorb mine the type of securities to be issued; shares or securities entitling their bearer alent amount, on the issue date, in any the capital increase in full, the Executive set the amount of the capital increase, to a portion of the Company’s share other currency or monetary unit estab- Board may limit the operation to the the issue price and the amount of any capital, to which the holders of said lished with reference to several curren- amount of subscriptions received, additional paid-in capital required at securities have a claim; cies); provided that this amount equals at least the time of issue; 3. resolve that the share capital to which 5. resolve that the authorization granted three quarters of the proposed capital determine the dates, terms and condi- are entitled the bearers of securities by virtue of this resolution shall be valid increase; tions of the capital increase and the issued by the Company may be the for twenty-six months, as from the close 8. duly note that this authorization auto- nature and characteristics of the securi- share capital of a company that owns, of this meeting; matically entails, in favor of the holders ties to be issued; determine, in the event directly or indirectly, more than half of 6. resolve that the preferential subscrip- of securities with a claim to the equity of an issue of bonds or other debt secu- the equity of the Company, or in which tion rights of shareholders on the shares capital of the Company, the express rities (including the securities referred the Company owns, directly or indirectly, referred to in this resolution shall be waiver by shareholders of their prefer- to in Article L. 228-91 of the French financial report draft resolutions

Commercial Code, entitling their bear- governing the exercise of rights attached the list of securities tendered in tal, or any other operation involving ers to an allotment of debt securities), to stock or securities issued with a claim exchange, set the issue terms and condi- shareholders’ equity, and determine the whether the securities shall be subor- to the equity capital to be issued and, in tions, the exchange ratio, and, if appli- means by which the rights of holders of dinated (and, if applicable, the rank of particular, the date, which may be cable, the amount of the cash payment securities with a claim to the equity subordination, in accordance with Arti- retroactive, as from which the new to be made, and set issue terms and capital of the Company will be protected cle L. 228-97 of the French Commercial shares shall earn dividends, the condi- conditions for a public offer of and maintained; Code), the interest rate (in particular, tions governing the exercise of any rights exchange, an alternative offer of duly note the new total equity capi- fixed, variable, zero-coupon or indexed to the conversion, exchange, redemp- purchase or exchange, a single offer to tal following each capital increase and interest), the term to maturity (fixed or tion, including in the form of an allot- purchase or exchange said securities for amend the bylaws accordingly; open) and the other terms and condi- ment of Company assets, such as secu- consideration in cash and securities, a in general, conclude all agreements tions governing issuance (including any rities already issued by the Company, principal takeover bid or public offer of in the furtherance of issues undertaken guarantees or warranties) and amorti- and all other terms and conditions exchange, combined with a secondary by virtue of this authorization, take all zation (including redemption in the under which the capital increase shall offer of exchange or takeover bid, or any measures and undertake all formalities form of an allotment of Company assets). be effected; other type of public offer in compliance required for the issue, listing, and financ- These securities may be issued with as applicable, determine the terms with applicable laws and regulations; ing of the securities issued and the exer- warrants entitling the bearer to the allot- and conditions under which the at its sole option, use additional paid- cise of the rights attached thereto; ment, purchase or subscription of bonds Company may make a public purchase in capital from capital increases to pay 11. duly note that this authorization or other debt securities, or consist of or exchange offer, at any time or any fees incurred in respect of these renders null and void as of the date of complex bonds as defined by the stock between defined dates, to buy back transactions and to bring the legal this meeting any non-utilized portions exchange authorities (for example, due securities already issued or to be issued reserve to the required one-tenth of the of prior authorizations with a similar to terms governing redemption or immediately or upon maturity, for the new total equity capital after each capi- purpose, in general, all authorizations payment of interest or other rights such purpose of canceling or owning said tal increase; to increase share capital, in general, with as indexing or the exercise of options). securities, in compliance with applica- determine and make all adjustments preferential subscription rights main- The Executive Board is also granted all ble laws; required to accurately reflect the impact tained, including through the issue of powers to modify, during the term of determine the conditions under of operations on the Company’s share securities and the operations referred said securities, the terms and conditions which the Executive Board may suspend capital, in particular, modifications of to in this resolution; referred to hereinabove, in compliance the exercise of rights attached to the the par value of the share, capital 12. duly note that in the event that the with all applicable requirements; securities issued, in compliance with increases through the capitalization of Executive Board utilizes the authori- determine the method of payment for applicable laws and regulations; reserves, the free allotment of shares, zation granted by virtue of this resolu- stock or securities entitling the bearer in the event that securities are issued stock splits or stock consolidations, the tion, the Board will report use it has to equity immediately or upon maturity; in consideration for securities tendered distribution of reserves or any other made of said authorization, in accor- determine, as required, the conditions in a public offer of exchange, draw up assets, the amortization of equity capi- dance with the laws and regulations in

148 149 financial report draft resolutions

force, at the next general meeting of the unattached stock subscription warrants, if shares and/or securities issued by virtue with a claim to equity capital not admitted shareholders. issued, must equal at least 85 percent of of this resolution shall be included in the for trading on the regulated market. the weighted average share price for the maximum principal amount defined in The shareholders hereby grant the Execu- Thirteenth resolution three trading days preceding the determi- Item 3 of the eleventh and Item 4 of the tive Board full authority, with the power to The purpose of this resolution is to author- nation of the issue procedures. twelfth resolution. delegate its authority pursuant to applica- ize the Executive Board to set the issue price This authorization is valid for twenty-six ble law, to approve the assessment of of shares and/or securities with a claim to Fourteenth resolution months, the same period as those granted contributions in kind, duly note the new equity capital under certain conditions, in The purpose of this resolution is grant in the eleventh, twelfth, and thirteenth equity capital, use additional paid-in capi- the event of a capital increase through the authority to the Executive Board to increase resolutions. tal, where applicable, to pay any fees issue of shares with preferential subscrip- the amount of issues of shares and/or secu- incurred by the capital increase and bring tion rights waived. The total price of said rities with a claim to equity capital, with Fifteenth resolution the legal reserve to the required level, and shares may not exceed ten percent of share preferential subscription rights maintained The purpose of this resolution is to author- amend the bylaws accordingly. capital per 12-month period. or waived. ize the Executive Board to issue shares with This authorization is granted for a period The shareholders, having fulfilled the The shareholders, having fulfilled the preferential subscription rights waived in of twenty-six months. quorum and majority requirements pertain- quorum and majority requirements consideration for contributions in kind in ing to extraordinary meetings of share- pertaining to extraordinary meetings of the form of capital shares or securities with Sixteenth resolution holders, having reviewed the Executive shareholders, having reviewed the Execu- a claim to equity capital. The purpose of this resolution is to author- Board Report and the Report of the Audi- tive Board Report, and pursuant to Article The shareholders, having fulfilled the ize the Executive Board to increase capital tors, and pursuant to Article L. 225-129-2 L. 225-135-1 of the French Commercial quorum and majority requirements through the capitalization of reserves, and Paragraph 1, Item 2 of Article L. 225-136 Code: pertaining to extraordinary meetings of retained earnings, additional paid-in capi- of the French Commercial Code, hereby hereby authorize the Executive Board to shareholders, having reviewed the Execu- tal and contributions. authorize the Executive Board, subject to increase the number of shares issued in tive Board Report, and pursuant to Article The Shareholders, having fulfilled the the prior approval of the Supervisory Board the event of a capital increase by virtue of L. 225-147 item 6 of the French Commercial quorum and majority requirements pursuant to Article 16-3 of the bylaws, to the eleventh and twelfth resolutions, with Code, hereby grant the Executive Board, pertaining to extraordinary meetings of set the issue price under the following preferential subscription rights maintained subject to the prior approval of the Super- shareholders, having reviewed the Execu- conditions, up to a maximum of ten percent or waived. The number of new shares may visory Board and pursuant to Article 16-3 tive Board Report and subject to the prior of share capital (as at April 7, 2005, namely, not exceed the percentage of the initial of the bylaws, the authority required to approval of the Supervisory Board, 4,616,422 shares) within a 12-month period: issue provided for by the laws and regula- increase capital, in one or more offerings, pursuant to Article 16-3 of the bylaws, resolve that the amount paid to, or due to, tions in force on the date of issue. It is up to a maximum of ten percent of the authorize the Executive Board to increase the Company for each share issued by understood that the issue price shall be the share capital, in consideration for contri- share capital, in one or more offerings, virtue of the aforementioned authoriza- price approved for the initial issue. butions in kind tendered to the Company up to the maximum principal amount of tion, taking into account the issue price of The principal amount of the additional in the form of capital shares or securities €60 million, through the successive or financial report draft resolutions

simultaneous capitalization of all or a Seventeenth resolution 2. resolve that the authorization to issue zation within the limits and under the portion of reserves, retained earnings or The purpose of this resolution is to author- granted by virtue of this resolution shall conditions described hereinabove, in additional paid-in capital, and the issue ize the Executive Board, subject to the prior be valid for twenty-six months, as from particular: and free allotment of shares and/or an approval of the Supervisory Board, to the close of this meeting; draw up, as provided by law, the list increase in the par value of shares. increase share capital by up to €3000000, 3. resolve that the subscription price for of companies whose employees, pre- The Shareholders hereby resolve that odd with pre-emptive subscription rights shares or securities with a claim to retirees and retirees may apply for the lots shall not be negotiable and that the waived, for the purpose of issuing shares equity capital may not exceed the aver- shares issued and be eligible for shares corresponding shares shall be sold; the of stock to employees. age opening price of the Company’s or securities with a claim to the free proceeds from such sales shall be allo- The Shareholders, having fulfilled the share on Eurolist by Euronext for the allotment of shares, if applicable; cated to holders of rights as provided for quorum and majority requirements pertain- twenty trading days preceding the date decide whether or not eligible by applicable laws and regulations. ing to extraordinary meetings of share- on which the subscription launch date employees may acquire shares directly, The Shareholders hereby grant full author- holders, having read the Executive Board is determined, or be less than this aver- via an employee savings fund (fonds ity to the Executive Board, with the power Report and the Special Report of the Inde- age by more than 20% (30% when the commun de placement d’entreprise, to delegate its authority pursuant to appli- pendent Auditors, in accordance with Arti- lock-up period for the plan, pursuant to FCPE), or other structures permitted by cable law, to determine, as the case may cles L 225-129-6 and L 225-138-1 of the French Article L. 443-6, is ten years or more). applicable laws and regulations; be, issue dates and terms, define the Commercial Code and Articles L 443-1 and The Shareholders expressly authorize determine the conditions, especially amounts to be issued, resolve that any new following of the French Labor Code: the Executive Board, at its discretion, to the length of service, which beneficiar- shares allotted on the basis of existing 1. hereby authorize the Executive Board to reduce or cancel the aforementioned ies of the capital increases must satisfy; shares with double voting rights shall increase Company share capital, subject discounts, within the limits defined by set the opening and closing dates for confer these rights on the holder as from to the prior approval of the Supervisory applicable laws and regulations, includ- subscription; the date of issue and, more generally, take Board pursuant to Article 16-3 of the ing, but not limited to, legal, accounting, determine the amounts of the issues all measures in furtherance of the issues, bylaws, by a maximum principal amount tax and employment regulations applied effected by virtue of this agreement and, undertake all formalities and fulfill all of 3,000,000 euros, in one or offerings, locally; in particular, the issue prices, dates, peri- requirements to render the corresponding through the issue of shares reserved for 4. resolve that the preferential subscrip- ods, the terms and conditions of capital increases definitive, and amend the employees enrolled in one or more tion rights of shareholders on the shares subscription, payment, delivery and bylaws accordingly. employer-sponsored company savings issued by virtue of this resolution shall dividend entitlement (which may be This authorization is granted for 26 months plans offered by the Klépierre group, be waived in favor of the aforemen- retroactive) and all other issue terms as from the date of this meeting. which includes the company and the tioned beneficiaries; and conditions, within the legal and French and foreign companies included 5. resolve that the Executive Board shall be regulatory limits in force; in the same scope of consolidation or granted full authority, with the power to duly note the number of new shares combination of accounts, pursuant to delegate its authority pursuant to appli- subscribed, by virtue of this authoriza- Article L. 444-3 of the French Labor Code; cable law, to give effect to this authori- tion (after any reductions effected due

150 151 financial report draft resolutions

to an oversubscription), individually, via capital through the issue of shares of the equity capital or voting rights are said shares and the simultaneous waiver an employee savings fund or via another reserved for employees enrolled in an held, directly or indirectly, by the by shareholders in favor of said benefi- structure permitted by applicable laws employer-sponsored company savings Company, ciaries of the capitalized portion of and regulations, and the new total plan, with preferential subscription it being understood that the Executive reserves, retained earnings and addi- equity capital; rights waived in favor of said employees. Board shall identify the beneficiaries of tional paid-in capital; where applicable, use additional freely allotted shares as well as the share resolve that this authorization shall be paid-in capital from capital increases to Eighteenth resolution allotment conditions and, if applicable, valid for twenty-six months, as from the pay any fees incurred in respect of these The purpose of this resolution is to author- criteria; date of this meeting. transactions and bring the legal reserve ize the Executive Board to freely allot shares resolve that the total number of The Shareholders grant full authority to the to the required one-tenth of the new to employees and directors and officers of shares freely allotted, whether existing Executive Board, with the power to dele- total equity capital after each capital the Company or the Group. or to be issued, may not exceed ten gate its authority pursuant to applicable increase; The Shareholders, having fulfilled the percent of the company’s share capital, law, to give effect to this authorization: to conclude all agreements, complete all quorum and majority requirements calculated at the close of this meeting. act, as needed, to protect and maintain the transactions and requirements either pertaining to extraordinary meetings of The allotted shares shall not be consid- rights of the beneficiaries; adjust the directly or indirectly, by proxy, including shareholders, having read the Executive ered as definitively granted to their number of freely allotted shares to reflect all formalities following capital increases Board Report and the Special Report of the beneficiaries until a minimum acquisi- the impact of any operations on the and all amendments to bylaws reflect- Independent Auditors, in accordance with tion period of two years has expired. The Company’s share capital; determine, in the ing changes; Articles L 225-127-1 and following of the Shareholders set the mandatory lock-up event of the issue of shares to be allotted, in general, enter into all agreements French Commercial Code, subject to the period during which the beneficiaries the amount and type of reserves, retained in the furtherance of issues undertaken prior approval of the Supervisory Board are required to hold the shares at a mini- earnings and additional paid-in capital to by virtue of this authorization, take all and pursuant to Article 16-3 of the bylaws: mum of two years from the end of the be capitalized; duly note the number of measures, make all decisions and hereby authorize the Executive Board to acquisition period. The Executive Board new shares issued by virtue of this author- undertake all formalities required for freely allot, in one or more transactions, at shall have the authority to extend the ization; amend bylaws accordingly; and, in the issue, listing, and financing of the its option, existing shares of the Company, length of the acquisition and holding general, take all measures required. securities issued and the exercise of following the buyback of said shares, or periods; rights granted immediately or subse- newly issued shares, to: duly note that in the event that new Nineteenth resolution quent to the capital increases; – salaried employees and directors and shares are freely allotted, this authoriza- The purpose of this resolution is to set a 7. duly note that this authorization renders officers of the Company, tion shall entail, upon expiration of the global ceiling to be applied to authoriza- null and void as of the date of this meet- – salaried employees, directors and offi- acquisition period, a capital increase tions to issue shares or securities with a ing any non-utilized portions of prior cers of companies and inter-company through the capitalization of reserves, claim to equity capital. authorizations granted to the Executive partnerships (groupements d’intérêt retained earnings or additional paid-in The Shareholders, having read the Execu- Board to increase the Company’s share économique) of which at least ten percent capital, in favor of the beneficiaries of tive Board Report, and as a result of the financial report draft resolutions

adoption of the eleventh, twelfth, thir- teenth, fifteenth, sixteenth, seventeenth, and eighteenth resolutions hereinabove, resolve to set the maximum principal amount of immediate or future capital increases effected by virtue of the author- izations granted in the aforementioned resolutions to 70 million euros. It is under- stood that to this amount shall be added, if applicable, the principal amount of any additional shares issued to protect the rights of holders of securities with a claim to equity capital, in accordance with appli- cable law. Subsequent to the adoption of the eleventh, twelfth, and thirteenth resolu- tions hereinabove, the Shareholders also resolve to set the maximum principal amount of debt securities issued with a claim to equity capital at €1 200 million.

Twentieth resolution The Shareholders hereby grant full author- ity to the bearer of an original, a copy or an excerpt of these minutes for the purpose of complying with all formal publication and filing requirements required by law.

152 general and legal information financial report general and legal information

general and legal information

History position in its core investment sectors. the acquisition of 11 Carrefour shopping d’Investissements Immobiliers Cotées Klépierre was formed at the end of 1990 On July 17, 2000, Klépierre and Carrefour malls; (SIIC) tax status. from the breakup of Locabail-Immobilier, entered into an agreement whereby the formation, in partnership with Finim, Throughout 2004, the Group pursued whose ordinary rental properties it main- Klépierre would acquire 160 shopping of PSG, the leading shopping center development in France, Italy and Spain tained. Since that time, Klépierre has exer- malls adjacent to Carrefour hypermarkets. manager in Italy; with the acquisition of 6 shopping cised two core businesses: the holding and Under the terms of this agreement, a strategic agreement with the Finiper centers. Klépierre also acquired a strate- management of high-quality office build- Klépierre and Carrefour, a leading retailer, group to acquire a 40% interest in IGC, gic holding in Hungary through the ings in Paris and the Greater Paris Area, and also became management and develop- which owns 9 of Finiper’s shopping purchase of 12 shopping centers and the the holding and management of shopping ment partners. The estimated total amount centers. The deal also lays the foundation acquisition through Ségécé of a 50% stake centers in France and Europe. of this investment exceeds €1.6 billion. In for Klépierre and Finiper to develop new in Plaza Centers Management, a local At the end of 1998, Klépierre made a strate- addition to the 47 Spanish shopping malls shopping centers in Italy. management company. In late November gic bid to become a major player in the acquired in late 2000, Klépierre purchased In 2003, Klépierre acquired a total 28 shop- 2004, Klépierre’s interest in IGC was development of new shopping centers in 74 malls in 2001 (mainly located in France), ping centers, increasing its holdings in increased from 40% to 50%. Europe, acquiring its first property in Italy. 15 malls in 2002, and another 14 malls in France, Spain, Italy and Greece. The Group Ségécé strengthened its management Via Ségécé, Klépierre develops its own proj- 2003. By the end of 2004, Klépierre had also acquired a foothold in Portugal, with network in Europe, establishing Ségécé ects in France. acquired 151 shopping malls, primarily the purchase of 3 shopping centers Hellas (Greece) and acquiring full At the time, Klépierre’s major Shareholder located in France and Spain and completed (including Porto Gondomar, a 50/50 joint ownership of Centros Shopping Gestion was Compagnie Bancaire (which had a 51% more than 96% of the acquisitions called purchase from Eiffage with Prédica). With (Spain). stake). The merger of the latter with and for under the agreement. a total of 4 malls under ownership, A market leader in France, Spain, Italy, into Paribas in May of 1998 provided an In late 2001, Klépierre began implementing Klépierre had reached critical mass in Hungary and Belgium, Klépierre is now opportunity for Klépierre to serve as the the second phase of the agreement with Portugal. Also in 2003, Klépierre began the 2nd largest owner and the leading pivot for aligning certain business activi- Carrefour, which gave Klépierre priority on investing in the Czech Republic, acquiring manager of shopping centers in Conti- ties, involving notably the merger by the purchase of new projects developed by the Novy Smichov mall in Prague. nental Europe, through Ségécé and its absorption of Compagnie Foncière and the Carrefour in Continental Europe, acquiring In addition, Klépierre extended its network network of management companies. As contribution of all of the business and five new malls in Spain (late 2001) and the of management subsidiaries with the of December 31, 2004, the Group owned assets of Foncière Chaptal. Loures mall in Portugal (2002). establishment of Sogecaec in Portugal. 223 shopping malls and managed 345. These acquisitions radically changed the In 2002, Klépierre strengthened its position 2003 was also the year in which Klépierre size of the Company, strengthening its in Italy through: affiliates in France opted for Sociétés

154 155 financial report general and legal information

General information Corporate purpose Trade and Company Register called to approve the financial statements The Company’s purpose is: 780152914 RCS PARIS may grant each Shareholder the option of Corporate name to acquire any land, real-estate rights or NAF 702 C receiving the dividend in cash or in shares, Klépierre properties located in France or abroad, as for all or a portion of the distributed divi- well as all properties or rights that may Documents pertaining dend. This option may also be granted for Registered principal office constitute an addition or annex to such to the Company are available interim dividends. 21, avenue Kléber – 75116 Paris properties; for consultation at: to construct buildings and engage in all 21, avenue Kléber – 75116 Paris General meetings Legal form operations directly or indirectly related to Phone: 33 (0) 1 40 67 30 01 of the Shareholders Klépierre was formed as a société the construction of these buildings; General meetings of the Shareholders are anonyme à Conseil d’administration to operate and enhance property value Fiscal year called by the Executive Board or the (French corporation or public limited by leasing such properties or otherwise; The fiscal year begins on January 1 and Supervisory Board, and conduct business company governed by a Board of Direc- to enter into any lease agreement, in ends on December 31. in accordance with prevailing legislation tors) under the terms of a private writing France or abroad; and regulations. Shareholders may attend executed in Paris on October 4, 1968. to acquire direct or indirect equity inter- Statutory distribution of profits Shareholder meetings provided that they The Company’s Shareholders subse- ests in the legal persons indicated in Arti- At least 5% of profits for the fiscal year, less have held their registered share(s) for at quently agreed to change the form of cle 8 and in paragraphs 1, 2 and 3 of Arti- any prior losses, are set aside to establish the least five days prior to the meeting, with- corporate governance, replacing the board cle 206 of the French General Tax Code legally required reserve fund, until such fund out having to complete any preliminary of directors with an Executive Board and and, more generally, to acquire equity equals one-tenth of the capital stock. formalities. a Supervisory Board. The decision was interests in any company whose purpose The balance and any retained earnings At least five days before the scheduled formally approved at an extraordinary is to operate rental properties; constitute distributable profit, from which meeting date and at the venue indicated meeting of the Shareholders held on July incidentally, to acquire an equity inter- is deducted any amounts that the Share- in the notice of meeting, holders of bearer 21, 1998. est or ownership in any company or enter- holders, acting on the recommendation of shares wishing to attend a meeting of the The Company is governed by French laws prise operating in the real-estate sector; the Executive Board and subject to the shareholders must file a certificate issued applicable to sociétés anonymes, in more generally, to engage in all types of approval of the Supervisory Board, decide by an authorized intermediary attesting particular Articles L. 225-57 to L. 225-93 civil, commercial, financial, investment to appropriate to one or more optional, to the non-assignability of their shares of French Commercial Code, and by and real-estate transactions directly ordinary or extraordinary funds, with or until the date of such meeting. its own bylaws and articles of incorpora- related to the aforementioned purpose or without special appropriation, or to carry The Executive Board may, at its option, tion. in the furtherance thereof, in particular, forward as retained earnings. adopt a general measure that shortens the borrowing and the constitution of any The remaining balance is apportioned time requirements set forth in the preced- Life of the Company guarantees or pledges required in relation among the shares. ing paragraph. 99 years, beginning on October 4, 1968. thereto. The annual meeting of the Shareholders Shareholders may vote at all Shareholder financial report general and legal information

meetings by mail as provided for by law. below any of the thresholds referred to uted in the fiscal year following that in General information To be counted, votes must be received by hereinabove. which they were earned. on equity capital the Company at least three days before the meeting. Tax status Litigation Share capital – Type of shares Pursuant to the second extraordinary reso- To the best of the Company’s knowledge, At December 31, 2004, equity capital Statutory disclosure of thresholds lution of the meeting of the Shareholders no exceptional event or litigation of which totaled 184 656 916 euros, divided into Any natural or legal person, acting alone held on September 26, 2003, Klépierre has it is aware to date is likely to have a mate- 46 164 229 fully paid-up shares, each with or in concert, who directly or indirectly opted for the SIIC (Sociétés d’Investisse- rial impact on its business, assets, finan- a par value of 4 euros. acquires more than 2% of the share capi- ments Immobiliers Cotées) tax status for cial condition or earnings. These shares may be in registered or tal or any multiple thereof, is required to which real-estate investment companies bearer form, at the option of the Share- notify the Company of the total number of are eligible under Article 208-C of the holder. shares held, within five trading days of French General Tax Code. Consequently, having surpassed one of the aforemen- and as of January 1, 2003, Klépierre is Authorization to issue new equity tioned thresholds, by certified letter return exempt from corporate income tax on: By virtue of the extraordinary resolutions receipt requested. rental income, provided that 85% of said passed by the Shareholders at their annual For the portion of share ownership income is distributed to Shareholders meeting held on April 8, 2004, the Execu- surpassing the percentage for which such prior to the end of the fiscal year follow- tive Board is currently granted the follow- notification should have been made, fail- ing that in which the income was earned; ing authorizations: ure to comply with this requirement as capital gains from the disposal of real Maximum indicated above shall entail the forfeiture estate, equity interests in real-estate part- amount of new equity issue of voting rights at all meetings of the share- nerships (sociétés de personnes) or in Authorization Term holders, if such failure to comply is noted subsidiaries that have opted for the new The issuance of shares or common stock, with or without warrants, at the time of such meeting and if one or SIIC status, provided that 50% of these and other MS with a claim to the Company’s capital, with or without PSR 60000000 euros 26 months more Shareholders together holding at capital gains are distributed to Share- Abbreviations: PSR – Pre-emptive subscription rights; MS – Marketable securities. For the aforementioned authorizations, the maximum increase in equity capital is €60 000 000, and the maximum least 2% of the share capital so request, holders prior to the end of the second increase in MS (debt instruments with a claim to the Company’s capital) is €950 000 000. These authorizations cancel and replace the unused portions of all prior authorizations of the same nature. and this for a period of two years of the fiscal year following that in which the date on which the Shareholder in ques- capital gains were realized; tion has made such notification. dividends distributed by subsidiaries Such persons are also required to inform that have opted for SIIC status and paid the Company, as per the aforementioned out from the income and capital gains that procedures and within the stated dead- are tax-exempt by virtue of this status, lines, when their share ownership falls provided that said dividends are distrib-

156 157 financial report general and legal information

Maximum At the Annual General Meeting of April 7, 2005, amount of new equity issue the Executive Board will ask the Share- Delegations/authorizations Term holders to grant the following delega- Issuances of shares of common stock, with or without warrants,(1) and other MS tions/authorizations: with a claim to the Company’s capital, with or without PSR €60000000 26 months Capitalization of earnings, reserves or additional paid-in capital €60000000 26 months

Issuances of shares in exchange for contributions in kind in the form (1)ofwith capital a claim shares to capital or MS 10% of share capital 26 months

Capital increase reserved for employees €3000000 26 months

Free allotment of shares, either outstanding or to be issued 10% of share capital 26 months (1) MS – Marketable securities. For the aforementioned delegations/authorizations, the maximum increase in equity is €70,000,000 and the maximum increase in MS with a claim to capital is €1200000000.

Number of Equity shares issued capital Five-year summary of changes Date Type of increase Premium in share capital January 24, 2000(1)– COB BondVisa no. conversion 98-850 209 – FF647287250 January 30, 2001(1)– COB BondVisa no. conversion 98-850 2910 – FF647432750

June 5, 2001 Conversion of equity capital into euros – COB Visa no. 98-850€103589240 – –

January 15, 2002(1)– COB BondVisa no. conversion 98-850 434902€107068456 –

December 3, 2002(1)–COB Visa Bond no. conversion 98-850 1536364€119359368 –

April 4, 2003 Reduction€ 8in to par€ 4 value per14919921 share from – €119359368

April 4, 2003 Capital increase through capitalization of reserves€179 039 052 14919921 –

May 6, 2004 Payment of the dividend in shares€184656916 1404466 –

(1) November 1998 – Convertible bond, initially evidenced by 970681 bonds with a face value of FF 1295.

Dividends after the original date of payment become The table opposite lists dividend payouts the property of the French government. made in the last five years.

(1) No interim dividends were granted during Year of distribution 2000 2001 2002 2003 2004 this period. Number of shares 12945745 12948655 13383557 14919921 44759763 At their meeting on April 8, 2004, the Net dividend €2.50 €2.75 €3.10 €3.50 €2 Shareholders passed a resolution giving 50% tax credit €1.25 €1.37 €1.55 €1.75 €0.70 Shareholders the choice of receiving a Total distribution €3.75 €4.12 €4.65 €5.25 €2.70 dividend in cash or in shares. Net dividend payout €32 364 362.50€35 608 801.25€41 489 026.70€52 219 723.50€89 519 526.00 Dividends that are unclaimed five years (1) After shares number was tripled in 2003 following the two-for-one stock split and the free allotment of one new share for two shares held. financial report general and legal information

Capital and voting rights Votes % % Number Total Capital Voting ownership rights Principal shareholders of shares votes Single Double Analysis of capital and voting power OGDI 6180445 12118519 242371 5938074 13.39% 17.40% Share capital consists of 46 164 229 fully FONCIÈRE DE LA COMPAGNIE BANCAIRE 8341460 16355804 327116 8014344 18.07% 23.48% paid-up shares with a par value of €4. SAS KLÉFINANCES 3171466 6218560 124372 3047094 6.87% 8.93% Shareholders or their designated proxies BNP PARIBAS 3935295 7715595 154995 3780300 8.52% 11.08% are entitled to two votes for each share CARDIF 102 204 0 102 ns ns held at ordinary or extraordinary meet- COMPAGNIE FINANCIÈRE OTTOMANE 2948878 5798878 98878 2850000 6.39% 8.33% ings of the Shareholders, provided that SETIC 103660 103660 103660 0 0.22% 0.15% their shares are fully paid up and have UCB BAIL 420 840 0 420 ns ns been registered in their name as owner of SOCIÉTÉ CENTRALE D’INVESTISSEMENTS 23787 23955 23619 168 0.05% 0.03% record for at least two years, or come from Total BNP PARIBAS group 24 705 513 48 336 015 1 075 011 23 630 502 53.51% 69.40%

a pool of fully paid-up shares, all of which Float 21224816 21315967 21133665 91151 45.98% 30.60% – of which FFB 79941 156747 3135 76806 0.17% 0.23% have been registered in the name of their – of which ABP (1) 2177934 2177934 2177934 – 4.72% 3.13% – of which Crédit Agricole (1) 1904500 1904500 1904500 – 4.13% 2.73% owners for at least two years. – of which AXA (1) 1272271 1272271 1272271 – 2.76% 1.83% All shares converted to bearer shares (or Treasury shares 233900 – – – 0.51% 0.00% whose ownership is transferred) forfeit TOTAL 46 164 229 69 651 982 22 208 676 23 721 653 100% 100% the right to a double vote. However, assign- (1) Source: Euroclear, Shares with Identifiable Bearers, as of December 31, 2004. To the best of the Company’s knowledge, none of the legal thresholds were surpassed in 2004. ment through inheritance, liquidation of community property between spouses, or December 31, 2002 December 31, 2003 % % % % donations inter vivos to a spouse or rela- Two-year analysis of equity capital No. sharesownershipvoting rights No. sharesownershipvoting rights tive entitled to inherit do not result in the Capital ownership loss of acquired voting rights. Total BNP Paribas group 7918447 53.07% 69.78% 23755341 53.07% 69.71% As of December 31, 2004, there were Float 6810971 45.65% 30.22% 20500557 45.80% 30.29% 69 651 982 voting rights, including 23 721 653 Treasury shares 190503 1.28% – 503865 1.13% – double voting rights.

The table opposite shows the principal senting 0.51% of equity share capital. tal and 69.40% of the voting rights. Shareholders of 46 164 229 shares (as of To the best of the Company’s knowledge, To the best of the Company’s knowledge, December 31, 2004). the members of the Supervisory Board no Shareholder, private or group agree- As of December 31, 2004, the Company hold, either directly or through the group ments exist involving persons who exercise owned 233 900 treasury shares, repre- to which they belong, 53.51% of the capi- or could exercise control over the Company.

158 159 financial report general and legal information

Authorization to trade At the annual meeting of Shareholders on Such options have a vesting period of in shares and, if necessary, April 7, 2005, the Executive Board will 5 to 10 years. to cancel such shares recommend that this authorization be As of December 31, 2004, 70,600 options In accordance with Article L. 225-209 of the extended for a period of 18 months. The had been granted on June 24, 1999. French Commercial Code, the Shareholders terms and conditions will be substantially Taking into account the two-for-one stock passed an ordinary resolution on April 4, 2004 the same, except that the maximum split and the free allotment of one share authorizing the Executive Board to purchase purchase price will be €100 for each share for two old shares in April 2003, the exer- the Company’s shares. with a par value of €4. cise of these options would result in the The maximum purchase price per share is This authorization will be subject to a new issue of 211 841 shares. €65 and the minimum selling price is €38 information memorandum to be filed with At the December 31, 2004 reporting date, per share. the Autorité des marchés financiers. 93 217 options had not yet been exercised. This authorization is valid for a period of 18 months. Stock options Stock Share purchase Stock payback options program The Executive Board may also cancel treas- At their meeting on April 28, 1999, the Treasury shares repurchase Total ury shares held in connection with stock Shareholders granted a four-year author- At December 31, 2003 300 000 180 353 23 512 503 865 purchase authorizations, for a period of ization to the Executive Board to grant Reallocation of options not granted - 88200 88200 0 two years and up to a maximum of 10% of options, in one or more grants, to Reallocation of cancelled options the equity capital per 24-month period, subscribe to new Company shares or to (Beneficiaries who have resigned) - 10762 10762 0 for the purpose of reducing share capital purchase existing Company shares from Options exercised during the year - 107821 - 107821 by charging the difference between the purchases made by the Company Purchases 1557 24664 26221 purchase value of the cancelled securities pursuant to applicable law. Sales - 151962 - 36403 - 188365 and their par value to premiums and avail- The total number of shares that are At December 31, 2004 93 217 128 910 11 773 233 900 able reserves. subscribed to or purchased by virtue of As a percentage of share capital (46 16 229 shares) 0.20% 0.28% 0.03% 0.51% This authorization was the subject of a the options granted may not exceed 3% of new information memorandum filed with the share capital. the Autorité des marchés financiers (AMF) on March 16, 2004 under number 04-162. As of January 1, 2004, Klépierre owned 203 865 treasury shares. Based on purchases and disposals during the year, 140683 shares were held on December 31, 2004. financial report general and legal information

Capital and Stock Market Shares 2000 2001 2002 2003 2004 Market capitalization€millions) (in (1) 1297 1436 1927 2135 3008 Shares Number of securities traded All equity securities are listed on the – Daily average volume 24153 24444 35187 44853 49474 Eurolist by Euronext. Share price – High 34.7 37.0 44.9 48.9 66.0 – Low 30.0 31.7 36.1 38.3 47.1

– Close 33.4 35.8 43.0 47.7 65.2 (1) Last quotation of the year.

Trading volume over the last 18 months Trading volume over last 18 months (in number of shares and amount of equity Volume (in number of shares Amount Price Price No. of traded (in € millions) traded). and amount of equity traded) (High) (Low) shares traded 2003 September 46.90 44.02 978362 45.0

October 48.00 45.30 795990 37.4

November 48.40 46.15 599299 28.4

December 48.90 46.50 544414 26.1

2004 January 50.40 47.13 701836 34.4

February 54.95 48.50 811380 42.0

March 58.25 54.60 1251392 70.3

April 57.00 50.65 3191244 173.1

May 56.70 50.20 1025596 55.6

June 57.50 54.30 912648 50.7

July 56.60 54.30 736821 40.8

August 59.40 55.05 548433 31.4

September 64.10 56.45 985381 59.3

October 60.65 56.70 870031 51.0

November 64.40 59.40 756495 47.0

December 66.00 62.95 1022469 66.3

2005 January 67.75 60.60 1369273 87.5

February 74.90 65.65 1554083 110.7

160 161 financial report general and legal information

July 2008 bonds

Description Principal amount of the issue €600 million Issue price 99.557% for a principal amount of €500 million

99.006% for a principal amount€100 million of

Due date July 10, 2008

Coupon 6.125%

Sicovam code FR0000486516

Quotation Luxembourg Stock Exchange

A prospectus dated July 9, 2001 is available from the Company.

July 2011 bonds

Description Principal amount of the issue €600 million

Issue price 99.241%

Due date July 15, 2011

Coupon 4.625%

Sicovam code FR0010099226

Quotation Luxembourg Stock Exchange

A prospectus dated July 9, 2004 is available from the Company. financial report general and legal information

Rodamco Euro- Klépierre’s principal Klépierre(1) Unibail(1) Corio(2) Europe(2) commercial(3) competitors Market capitalisation as of December€M) 31, 2004 ( 3008 5253 2899 5235 821 Value of consolidated portfolio€M) ( 5993 6974 3806 7268 1306

EPRA free float band 40% 100% 100% 75% 100%

Rodamco Euro- Geographic analysis of consolidated rents Klépierre(4) Unibail(4) Corio(5) Europe(5) commercial(6) France 255 503 71 84 34

Spain 51 – 22 76 –

Italy 49 – 27 – 40

Netherlands – – 183 185 8

Other 43 – 1 152 12

Total consolidated rents 398 503 305 497 93

Non-rental income 3414–––

Total consolidated turnover 431 517 305 497 93

in € millions

Rodamco Euro- Analysis of consolidated rents by business Klépierre(4) Unibail(4) Corio(5) Europe(5) commercial(6) Shopping centres and retail 333 187 212 404 80

Offices 65 208 93 69 9

Other –108– 244

Total 398 503 305 497 93

Non-rental income 3414–––

Total consolidated turnover 431 517 305 497 93 (1) Value of portfolio as of December 31, 2004. • (2) Value of porfolio as of September 30, 2004. • (3) Value of porfolio as of June 30, 2004. in € millions (4) 2004 figures. • (5) 2003 figures. • (6) 2004 figures (year-end June 30). Source: Goldman Sachs, February 2005.

162 163 financial report general and legal information

Supervisory Board* for the year ended December 31, 2007. Laurent TRECA (1) Loans and guarantees granted Member of the Supervisory Board – shares to members of the Executive Vivien LÉVY-GARBOUA (1) (2) (3) Bertrand de FEYDEAU (2) (3) held: 60. End of term: Annual meeting of Share- and Supervisory Board Chairman of the Supervisory Board – Member of the Supervisory Board – shares holders called to approve the financial state- None. shares held: 600. End of term: annual meet- held: 313. End of term: Annual meeting of Share- ments for the year ended December 31, 2004. ing of Shareholders called to approve the holders called to approve the financial state- Pursuant to COB regulation 2002-01, the financial statements for the year ended ments for the year ended December 31, 2006. Alain PAPIASSE members of the Company’s Supervisory and December 31, 2006. Member of the Supervisory Board – Proposed Executive Boards are required to disclose Vivien Lévy-Garboua has disclosed his inten- Dominique HOENN (2) (3) election at the annual meeting of April 7, 2005. their trades in the Company’s securities, and tion of resigning from his position as Chair- Member of the Supervisory Board – shares are prohibited from making any personal man of the Supervisory Board following the held: 100. End of term: Annual meeting of Share- François DEMON transactions during the following periods: annual general meeting on April 7, 2005. He holders called to approve the financial state- Member of the Supervisory Board – Proposed from the first day of each calendar quar- plans to continue serving on the Board as one ments for the year ended December 31, 2006. election at the annual meeting of April 7, 2005. ter to the date of publication of Klépierre’s of its member. The Supervisory Board will be consolidated earnings occurring during the convened immediately after the annual Bertrand JACQUILLAT (1) Compensation paid to members quarter in question; meeting of the Shareholders and asked to Member of the Supervisory Board – shares of the Supervisory Board from the first day of each calendar quar- elect Dominique Hoenn as its new Chairman. held: 625. End of term: Annual meeting of Share- The amount of directors’ fees paid to Super- ter to the date of publication of Klépierre’s holders called to approve the financial state- visory Board members in 2004 amounted annual or half-year consolidated financial Christian MANSET (1) (3) ments for the year ended December 31, 2005. to €149,994 euros. statements occurring during the half-year Vice-Chairman of the Supervisory Board – in question; shares held: 429. End of term: Annual meet- Bertrand LETAMENDIA (1) (2) Supervisory Board meetings from the date on which Klépierre acquires ing of Shareholders called to approve the Member of the Supervisory Board – shares The Supervisory Board met eight times in 2004. information that, if publicly disclosed, could financial statements for the year ended held: 312. End of term: Annual meeting of Share- have a material impact on the value of the December 31, 2005. holders called to approve the financial state- Executive Board securities of the Company, to the date on ments for the year ended December 31, 2005. which this information is made public. Jérôme BÉDIER (3) Chairman: Michel CLAIR – shares held: 9,307 Member of the Supervisory Board – shares Jean NUNEZ (1) Vice-Chairman: Éric RANJARD – shares held: 621 Klépierre requires the same conduct from held: 100. Shareholders will be asked to Member of the Supervisory Board – shares Member: Claude LOBJOIE – shares held: 625 all employees considered to be permanent consider his re-election at their annual held: 346. End of term: Annual meeting of insiders. The terms under which these rules meeting held on April 7, 2005. End of new Shareholders called to approve the finan- Executive Board meetings apply are set forth in an internal practice term: annual meeting of Shareholders cial statements for the year ended Decem- The Executive Board meets weekly. notice, which is regularly updated by the called to approve the financial statements ber 31, 2004. compliance unit of the Klépierre group.

* Each member is required to hold at least 60 shares while in office. (1) Member of the Audit Committee • (2) Member of the Selection and Compensation Committee. During their meeting on April 8, 2004, the members of the Supervisory Board moved to extend the purview of the Compensation Committee to include the appointment of Executive Board members and, accordingly, to change the name of the committee to the Selection and Compensation Committee. • (3) Member of the Investment Committee. financial report general and legal information

Compensation and benefits of directors Senior officers Gross salary Directors’ Benefits Total and directors Fixed Variable fees in kind compensation

Executive Board

Michel CLAIR 282990 85000 3050 371040

Éric RANJARD 267621 215000 3050 485671

Claude LOBJOIE 182849 71500 3050 257399

Supervisory Board

Vivien LÉVY-GARBOUA 24107 24107

Jérôme BÉDIER 15033 15033

Bertrand de FEYDEAU 17239 17239

Dominique HOENN 16739 16739

Bertrand JACQUILLAT 15283 15283

Bertrand LETAMENDIA 17489 17489

Christian MANSET 26063 26063

Jean NUNEZ 9871 9871

Laurent TRECA 8166 8166 in euros

Stock options Number Strike No.options Options Date of options price exercised not yet granted (in euros) in 2004 exercised Executive Board granted (1) Vesting period Michel CLAIR(2) June18 24, 004 1999 June 25, 2004 to June 24, 2007 36.66 5100 12904

Éric RANJARD June 24, 1999 (2) 10502 36.66 – 10502 June 25, 2004 to June 24, 2007 7 501 28.33 – 7 501

Claude LOBJOIE June 24, 1999 (2) 10502 36.66 – 10502 June 25, 2004 to June 24, 2007 7501 28.33 5 625 1 876 (1) Adjusted for the tripling in the number of shares in 2003 (two-for-one stock split and the free allotment of one share). (2) Extraordinary resolution passed by shareholders on April 28, 1999.

164 165 financial report general and legal information

Fees paid to independent Auditors

2004 2003 Ernst & Young Mazars & Guérard Ernst & Young Mazars & Guérard Paid in 2003 and 2004 Amount % Amount % Amount % Amount %

Audit(1)

– Independent audit and certification of financial statements,

review of individual and consolidated accounts 438 59.75 435 55.92 402 42.41 404 36.56

– Related assignments 295 40.25 203 26.09 546 57.59 701 63.44

Sub-total 733 100.00 638 82.01 948 100.00 1105 100.00

Other services provided

– Legal, tax, employment related – 140 17.99

TOTAL 733 100.00 778 100.00 948 100.00 1 105 100.00 (1) Includes services provided by independent appraisers or members of the audit network, at the request of the independent auditors in € thousands and in connection with their certifications. financial report general and legal information

methodology for revaluing net assets

Klépierre calculates adjusted net assets and this figure is used to calculate reval- calculated individually using the rates set between appraised values excluding per share on December 31 and June 30 of ued net assets. forth below. Duties on shopping centers transfer duties and net book values. each year. The valuation method entails In 2003, the valuation of Ségécé was based are calculated property by property for adding unrealized capital gains to the on an internal updating of a method that companies that own several real-estate Accounting for the cost of book value of consolidated Shareholders’ had been defined earlier by an inde- assets, or on the basis of revalued securi- restructuring interest-rate hedging equity. These unrealized gains reflect the pendent appraiser, and its subsidiaries ties if the company owns only one prop- instruments difference between estimated market were valued strictly at cost. Conversely, in erty asset. This approach was considered The Group’s consolidated debt is not values and net values recorded in the December of 2004, Klépierre commis- to be the most relevant considering that revalued as part of this process. However, consolidated financial statements. sioned Dôme Close Brothers Fairness to investors are more likely to acquire shares following the restructuring of interest-rate adjust the values for Ségécé and its in companies that own shopping centers hedging instruments in late December RNA including transfer duties subsidiaries using a method described in and that Klépierre generally is more likely 2004, a significant portion of existing and before taxation on unrealized more detail below. to seek other backers for its projects than instruments were cancelled and replaced capital gains Equity interests in other service to sell full ownership in shopping centers. by new contracts, set up at going market The valuation of properties is initially subsidiaries, such as Klégestion or Naturally, transfer duties are calculated on rates. The negative cash payment gener- presented inclusive of property transfer Klépierre Conseil, were not revalued. For the basis of applicable local tax regula- ated in connection with this transaction duties. Properties that are held for sale the purpose of establishing revalued net tions. was spread over the remaining period of under a firm commitment on the date of assets, they are carried at their historical the cancelled contracts. For information the valuation are valued at their probable acquisition cost, less any goodwill amor- RNA “excluding transfer duties purposes, the immediate deduction of the selling price, less related fees and taxes. tization. and after taxes on unrealized cash payment, net of tax, is a negative For properties acquired less than six This initial calculation provides revalued capital gains” impact of €1.70 per share. months before the date of the calculation, net assets “including transfer duties and A third calculation is made to establish acquisition prices are used. before taxation on unrealized capital revalued net assets excluding transfer Klépierre does not adjust the values of gains.” duties and after taxes on unrealized capi- shopping centers under development, tal gains. This entails calculating, using the even in cases where building permits have ANR “excluding transfer duties” same methods as those used to determine been granted. Until these shopping A second calculation is made to establish such values excluding transfer duties, and centers open, they are carried in the revalued net assets excluding transfer in accordance with applicable domestic consolidated financial statements at cost, duties. Duties on office properties are tax rates, deferred taxes on the differences

166 167 financial report general and legal information

Valuation of holdings value, until the next possible date of termi- applying this rate to the yield (determined applied to determine fair market value. For several years, Klépierre has entrusted nation offered to the lessee. as explained above), the appraisers Gross rent includes minimum guaranteed the task of assessing the value of its hold- If lease income is lower than market value, decided to exclude transfer duties from rent, variable rent and the market price of ings to the same appraisers. For office and the valuation takes into account the sched- their valuation of office properties. The any vacant premises. Net rent is determined warehouse holdings, Foncier Expertise and uled term of the corresponding lease, at valuation of Klépierre’s holdings is by deducting all charges from the gross rent, Coextim jointly perform this task. The which time the rental price will be aligned presented inclusive of property transfer including management fees, expenses Retail Consulting Group values its shop- with going rates. Pursuant to the French duties, i.e. the cost of replacing or recon- borne by the owner and not passed on to ping center holdings. All of these contracts decree of September 30, 1953, the rental stituting all the assets of the company or tenants, and charges paid on vacant prem- are awarded on the basis of the COB’s prices of properties that are used solely the price that an informed arm’s length ises. The appraiser determines the capital- “Barthès de Ruyter Work Group” recom- as office premises are automatically buyer would be willing to pay, all fees ization rate on the basis of many factors, mendation. aligned with market rates when the leases included, to acquire them. This approach including retail sales area, layout, compe- in question come up for renewal. The provides a more accurate estimate of the tition, type and percentage of ownership, Offices office property market undergoes signifi- value of the Company’s holdings, since it rental reversion and extension potential, The appraisers combine two approaches: cant fluctuations. Klépierre’s valuation assumes going concern. and comparability with recent transactions. the first entails a direct comparison with specialists have estimated that the hori- Transfer duties were appraised on the As for rental reversion potential, the similar transactions completed in the zon of visibility in this market is approxi- basis of Afrexim recommendations – 6% appraiser determines the market rental market during the period, while the mately three years. Consequently, they in cases where the transaction is subject value for the shopping center in its present second involves capitalizing individual drew a distinction between leases sched- to registration fees and 1.5% when the state on the basis of the shopping center’s yields. uled for renewal after December 31, 2007, building is subject to VAT. location and the revenues generated by its An analysis of these yields reveals that and those renewed prior. Leases that tenants. The shopping center’s develop- one of three situations prevails: lease expire after December 31, 2007 were Shopping centers ment potential is determined by calculat- income is substantially equal to, higher valued at the current rents, while leases To determine the fair market value of a ing the difference between the market than, or lower than market value. scheduled for renewal prior were valued shopping center, appraisers apply a capi- rental value and the current rents. If lease income and market value are at their market rental value. In the latter talization rate to net annual lease income An internal rate of return is also calculated substantially equal, the lease income used case, a capital loss was deducted from the for leased-up premises, and to net market using a method that involves discounting a in the valuation is the actual lease income derived value, equal to the discounted price for vacant properties. The capital- series of cash flows, generally to 10 years. earned on the property. If lease income is value (at the rate of 5.5%) of the difference ization rate is applied after deduction of The estimated resale value at the end of this higher than market value, the valuation between actual lease income and market the net present value of all reductions or period is generally calculated using the uses market value and takes into account price until the lease expires. rebates on leases with minimum guaran- same capitalization rate as that initially a capital gain calculated from the The capitalization rate was derived by teed rents and the net present value of all applied to the net end of period rent, discounted value of the difference observing transactions completed by expenses on vacant premises. The discount barring any compelling circumstances that between actual lease income and market actual investors on the market. After rate used is equal to the capitalization rate justify making an exception. financial report general and legal information

In sum, the appraiser determines: particular risk that is not already integrated Change in net capitalization rate of Shopping Center assets the capitalization rate that applies in the cash flows). The third and last step (comparison on a constant structural basis) under prevailing market conditions; consists of determining the value of the the current annual rent and the shop- company’s own equity by extracting net

ping center’s reversionary potential to financial debt on the date of valuation from 12.74% maximum rate average rate derive a current value. He then verifies the portfolio’s total value and, where appli- minimum rate 11.45% 11.00% that the internal rate of return derived by cable, the estimated value of minority inter- 10.50% 12% calculating IRR is consistent. ests on that same date. 9.01% 9.50% 9.24% 9.00% The range of estimates derived using the 9.00% 8.75% 8.53% 8.04% DCF method are cross-checked with valu- Appraisal of the Ségécé group 9% 7.15% 7.15% 6.98% 6.82% 6.90% 6.82% 7.75% This appraisal is primarily based on a range ation multiples for listed companies in the 7.25% 6.33% 6.21% 5.90% of estimates obtained using the Discounted same segment. 6.30% 6.30% 6.10% 6.10% 6.00% 6.00% 5.75% Cash Flow (DCF) method. The DCF method 6% 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 consists of estimating the future cash flows France France Spain Italy Other Ile-de-France Province of current business in the company’s port- folio before the explicit or implicit cost of financing is taken into account. In the second step, which seeks to estimate the value of the business portfolio, these cash Change in gross capitalization rate of Office Property assets

flows and the estimated12% future value of the (comparison on a constant structural basis) portfolio of business at the end of the projected period (terminal value) are 12.67% 12.63% 12.67% discounted using9% a reasonable discount maximum rate 12.63% average rate rate. This discount rate, which is derived on minimum rate 11.47% 11.81% the basis of the Modèle d’Équilibre Des 6% 9.84% 9.87% Actifs Financiers (MEDAF) formula, is the 2003 2004 2003 20048.62% 2003 2004 2003 20049.58% 2003 2004 Offices Paris West Offices Paris East Offices 1 8.47% 9.14% sum of the following three factors: the risk- 8.09% 7.94% 7.95% 7.74% 7.12% 7.16% 7.14% 7.07% free interest rate, the systematic risk 6.80% 6.80% 6.98% 7.01% 7.02% 7.08% premium (average expected market risk 6.76% 6.77% premium times the beta coefficient of the 6.09% 6.06% 6.09% 6.06% business portfolio) and the specific risk 2003 2004 premium (to account for that portion of the stoutlying area Officesndoutlying 2 area Warehouses Total

168 169 financial report general and legal information

appraised values and unrealized capital gains

Net book value, Appraised value, including including acquisition costs transfer duties Unrealized Group share at 12.31.2004 % % capital gains % Offices and warehouses 856080 18.6% 956006 18.0% 99926 13.9% Paris CBD 478106 10.4% 531282 10.0% 53175 7.4% Other Paris 41560 0.9% 47647 0.9% 6087 0.8% 1st outlying area 301648 6.6% 337043 6.3% 35395 4.9% 2ndoutlying area 31706 0.7% 37378 0.7% 5673 0.8% Total Province 1034 0.0% 1034 0.0% 0 – Total Warehouses 2025 0.0% 1622 0.0% - 403 – Shopping centers 3737307 81.4% 4355129 82.0% 617822 86.1% France 1983039 43.2% 2402398 45.2% 419359 58.4% Italy 532780 11.6% 592855 11.2% 60076 8.4% Spain 593224 12.9% 680089 12.8% 86865 12.1% Hungary 277926 6.1% 277926 5.2% – – Others 350339 7.6% 401861 7.6% 51522 7.2% Total Klépierre assets 4 593 387 100.0% 5 311 135 100.0% 717 748 100.0% in € thousands Total share at December 31, 2004 Offices and warehouses 856080 16.7% 956006 15.9% 99926 11.6% Paris CBD 478106 9.3% 531282 8.9% 53175 6.2% Other Paris 41560 0.8% 47647 0.8% 6087 0.7% 1st outlying area 301648 5.9% 337043 5.6% 35395 4.1% 2ndoutlying area 31706 0.7% 37378 0.6% 5673 0.6% Total Province 1034 0 1034 0 0 – Total Warehouses 2025 0 1622 0 - 403 – Shopping centers 4279078 83.3% 5037236 84.1% 758158 88.4% France 2330366 45.4% 2860453 47.7% 530087 61.8% Italy 605756 11.8% 675145 11.3% 69389 8.1% Spain 705114 13.7% 809786 13.6% 104672 12.2% Hungary 277926 5.4% 277926 4.6% – – Others 359917 7.0% 413926 6.9% 54009 6.3% Total actifs Klépierre 5 135 158 100.0% 5 993 242 100.0% 858 084 100.0% in € thousands financial report general and legal information

positions and offices held by Klépierre’s directors and senior officers on December 31, 2004

Positions and offices held Trustee: SA Klépierre Portugal SGPS (Portugal) Socando 3 by directors and senior officers SNC Kléber La Pérouse SA de Klétel-Imobiliaria (Portugal) Rue Nationale GYR 2002 SA Sogecaec (Portugal) Siclem EXECUTIVE BOARD Acts as a representative of Klépierre: Arcol (Slovakia) Serec Brescia SA Delcis CR (Czech Republic) Sorafe Michel CLAIR Vice-Chairman of the Board of Directors: CSPL 2002 (Hungary) Chairman and CEO of Klépierre Éric RANJARD Spa IGC (Italy) Co-trustee of Bassin Nord Member of the SCS Ségécé Vice-Chairman of the Klépierre ICD (Italy) Supervisory Board Executive Board Srl Immobiliare Magnolia (Italy) Claude LOBJOIE Member of the Executive Board Trustee of SCS Ségécé Supervisory Board member: Member of the Klépierre Executive of Duna Plaza Chairman of the Conseil National SCS Ségécé Board Chairman of SAS Valéry Développement des Centres Commerciaux Plaza Centers Management Kft Trustee of SNC Klégestion Chairman of Groupement Auxiliaire Chairman of the Board of Directors: (Hungary) Sole director of GIE Klépierre Services de Moyens SAS Soaval Amac Sro (Slovakia) Chairman of SAS CB Pierre Chairman of the Board of Directors SA Les Cinémas de l’Esplanade AMC Prague Sro (Czech Republic) Member of the SCS Ségécé of Klépierre Foncier Makédonia (Belgium) FMC Central Europe Sro (Czech Republic) Supervisory Board Chairman of the Board of Directors SA Coimbra (Belgium) Board member: Board member: of Klépierre Athinon A.E. Foncière de Louvain-la-Neuve Project Bureau Progresso SA (Belgium) Klépierre Foncier Makédonia Chairman of the Board of Directors (Belgium) Devimo-Sud SA (Belgium) Klépierre Athinon A.E. of Klépierre NEA Efkarpia Centros Shopping Gestion (Spain) Devimo-Consult SA (Belgium) Klépierre NEA Efkarpia Chairman of the Board of Directors Ségécé Hellas (Greece) Srl Novate (Italy) Klépierre Peribola Patras of Péribola Patras Spa Klécar Italia (Italy) Srl Effe Kappa (Italy) Non-voting board member: Board member: Spa Klefin Italia (Italy) Srl PSG (Italy) SAS Comadim Régie Immobilière de la Ville de Paris Collegno (Italy) Trustee: Trustee: Les Trois Vallées Galeria Parque Nascente (Portugal) SC Centre Bourse Debrecen 2002 ( Hungary) Groupement d’Études et de Prestations GIE Gondobrico (Portugal) SC Solorec GIE Apec 1% SA Klélou-Imobiliaria (Portugal) Sogemu SA Klénord Imobiliaria (Portugal) Soreset

170 171 financial report general and legal information

Positions and offices held Non-voting board member: Chairman of SAS Société Foncière Bertrand de FEYDEAU by directors and senior officers BNP Paribas Assurances Européenne Member of the Klépierre Chairman of SAS Société de Négociations Supervisory Board SUPERVISORY BOARD Christian MANSET Immobilières et Mobilières Maleville Senior Executive Vice-Chairman Vice-Chairman of the Klépierre (SONIMM) of Economic Affairs for the Paris Vivien LÉVY-GARBOUA Supervisory Board Chairman of Vernon SAS Archdiocese Chairman of the Klépierre Chairman of the Compagnie Board member: Chairman and CEO of AXA Immobilier Supervisory Board Financière Ottomane SA (Luxembourg) Gecina SAS Member of the BNP Paribas Board member: Sogeprom Board member: Executive Board Finaxa Trustee: AXA Aedificandi “Cœur Défense” Director of Compliance and Internal Compagnie Financière de Paris SNC AIP (sicav) Control, BNP Paribas SNC Allianz Bercy Bail Investissement Chairman of BNP Paribas Bank, Paris Bertrand LETAMENDIA Allianz France SARL Gecina Vice-Chairman of the Supervisory Member of the Klépierre Allianz Immo 3 EURL Société Beaujon SAS Board of BNP Paribas Securities Supervisory Board EURL 20/22 rue Le Peletier SITC SAS Services Trustee of SNC AGF Immobilier SCI Centre et Paris Ahorro Familiar Member of the Supervisory Board Trustee of SNC Phenix Immobilier SCI Clichassur Non-voting board member: of SAS Meunier Promotion Chairman of SAS Établissements SCI 16/18 avenue George V Affine Member of the Supervisory Board Paindavoine SCCV 48-50 Henri Barbusse Sefri Cime of Presses Universitaires de France Chairman of SAS Étoile Foncière SCCV 33 rue La Fayette Chairman of BNP Paribas SA et Immobilière Société de Construction et de Gestion Jean NUNEZ (Luxembourg) Chairman of SAS Financière Cogedim Immobilière des Mesoyers Member of the Klépierre Chairman of UEB Genève (Switzerland) Laennec SCI Remaupin Supervisory Board Board member: Chairman of SAS INVCO SCI 3 route de la Wantzenau Chief Operating Officer for Cortal Consors Chairman of SAS Kléber Lamartine “Les Portes de l’Europe” the Banque de Financement BNP Paribas Immobilier SAS Chairman of SAS Kléber Longchamp SC Prelloyd Immobilier et d’Investissement BNP Paribas BNP Paribas (GB) Chairman of SAS Madeleine Opéra SCI VI Jaurès BNP Paribas SA (Switzerland) Chairman of SAS Kléber Passy SCI Via Pierre 1 BNP Paribas Private Bank (Switzerland) Chairman of SAS 48 Notre Dame SCI du 18 rue Vivienne - Vivienne 18 Ségécé des Victoires Fischer Francis Trees & Watts Chairman of SAS Société Commerciale (New York) Vernet financial report general and legal information

Positions and offices held Consors Discount Broker AG (Germany) Non-voting board member of Stock options by directors and senior officers Arval Belgium (Belgium) the Board of Directors Director: d’Eco-emballages No stock options were granted in 2004. Laurent TRECA Gestion et Location Holding SAS Member of the Klépierre Arval PHH Holding SAS Dominique HOENN Supervisory Board Member of the Klépierre Member of the Executive Committee of Bertrand JACQUILLAT Supervisory Board the SFDI Division of the BNP Paribas Group Member of the Klépierre Senior Advisor, BNP Paribas Chairman and CEO of Arval Service Supervisory Board Chairman of the Board of Directors Lease SA Chairman and CEO of Associés en Finance of Paribas International Chairman of Arius SA Board member: Chairman of the Board of Directors Chairman of Arius Finance SA Total SA of BNP Private Equity Chairman of Truck Management Artegy SA Vice-Chairman of the Supervisory Chairman of BNP Paribas Fleet Jérôme BÉDIER Board of Euronext N.V. (Amsterdam) Holdings Ltd (United Kingdom) Member of the Klépierre Member of the Collège de l’Autorité Chairman of Arval PHH Holdings (UK) Supervisory Board des Marchés Financiers Ltd (United Kingdom) Member of the Supervisory Board Board member: Chairman of Arval PHH Holdings of Générale de Santé BNP Paribas Securities Services Limited (United Kingdom) Member of the Suupervisory Board BNP Paribas Luxembourg SA Chairman of Arval PHH Ltd of Salon de l’Alimentation (SIAL) Cobepa (Brussels) (United Kingdom) Chairman of the Fédération des Clearstream International Chairman of PHH Holdings Ltd Entreprises du Commerce (Luxembourg) (United Kingdom) et de la Distribution LCH Clearnet (London) Chairman of Arval PHH Business Vice-Chairman of Medef Solutions Ltd (United Kingdom) Member of the Board of Directors of Vice-Chairman of Arval Service Lease Agence française de sécurité sanitaire Italia Spa (Italy) des aliments Board member: Member of the Conseil Général Cortal Consors SA de l’Institut National Agronomique Cetelem SA de Paris-Grignon UCI SA (Union de Creditos Chairman of the Board of Directors of Immobiliarios) (Spain) the Fondation de la Croix Saint-Simon

172 173 financial report general and legal information – organization chart

Real estate Development Services Property and rental management Multimedia

SNC Kléber SA Ségécé Galae SNC Klécar France 83 La Pérouse 100 75 50 49 France Special purpose real-estate companies

SAS Klécar Europe Sud 83 Spain SA Centros Shopping centers 100 Klécar España 100 Klécar Iberica 100 Shopping Gestion

Klécar Business support services Participations Italie 83 IGC 50 Italy 33 Special purpose 100 Klécar Italia 50 PSG Klépierre Services 34 real-estate companies 33

Hungary Special purpose Klépierre Hongrie 100 real-estate companies

Portugal Special purpose Sogecaec Klépierre Portugal 100 real-estate companies 100

Greece Special purpose 100 real-estate companies 100 Ségécé Hellas

Belgium Foncière Louvain-la-Neuve 100 35 SA Devimo Consult

Delcis Czech Republic 100 Key Others 75 FMC Czech Republic Arcol Slovakia 100 Klépierre SA’s direct ownership % percentage.

Direct ownership percentage of one 100 group subsidiary France by another subsidiary. SAS CB Pierre 100 SAS Klégestion 100 Offices financial report general and legal information

analysis of intra-group services

Klépierre PME Ségécé Klécar Galae CSG –Klécar Effe PSG Klécar IGC Ségécé Klécar Sogecaec Klépierre FMC PCM Klépierre Arcol Devimo Foncière de Klégestion CB Pierre Other/ Klépierre France(1) Europe KappaItalia Hellas Europe Portugal République Hongrie Hongrie Slovaquie Louvain- external Services and Sud Sud tchèque la-Neuve subsidiaries –Klécar Iberica –Klécar > Service recipient

Service provider España

Klépierre Financing Financing Financing Financing Financing Financing Financing Financing Financing Financing Financing Financing Financing GIE SF HRM CAM HRM CAM CAM CAM CAM CAM HRM CAM Klépierre CAM AM FM AM FM FM FM FM FM AM FM Services FM SF AM SF SF AM

AM SF Ségécé DVPT LM Financing Financing LPM Financing CAA CAA Financing Financing CAA Financing Financing CAA Financing LPM CAA CAA LOP CAA LOP LOP LOP LOP LOP DVPT

France LPM CAA Klécar France Property Property and subsidiaries Galae MM MM WSD MM CSG LPM LPM CAA CAA <

– Klécar Property> Property Europe Sud – Klécar Iberica – Klécar

España Spain Effe CAM Kappa (1) FM AM PSG LPM LPM LPM <

> CAA CAA CAA – Klécar Italia Property Property – IGC Italy Ségécé Hellas LPM <

> Klécar Property Europe Sud Sogecaec LPM LPM LPM Greece CAA CAA AM = AccountingCAA Management > Klépierre Property CAA = Consultancy and Portugal Assistance on Acquisitions FMC LPMCAM = Company LPM Portugal Rép. tchèque Administrative

< Management

>< >< PCM LPM LPM DVPT= Development Hongrie CAAFM = Financial Management CAA Klépierre Property HRM = Human Resources Hongrie Management LM = Lease Management Arcol Property Europe LOP = Leasing of Personnel Slovaquie LPM = Lease and Property Devimo CAA Management LPM

Eastern MM= Multimedia CAA PM = Property Management Foncière de Property SF = Support Functions < <

> Louvain-la-Neuve WSD = Web Site Design

Klégestion LPM LPM PM (1) Effe Kappa is jointly owned CAA by Klépierre and Finim. CAA

Belgium CB Pierre Property ><

174 France < 175 financial report general and legal information

persons responsible for audits and financial disclosures

Persons responsible Person responsible for audits for financial disclosures

Incumbent auditors Alternate auditors Jean-Michel GAULT ERNST & YOUNG AUDIT Christian Mouillon Chief Financial Officer Tour Ernst & Young Tour Ernst & Young Phone: 33 (0) 1 40 67 35 05 92037 Paris La Défense Cedex 92037 Paris La Défense Cedex Luc Valverde End of term: Fiscal year 2009. First appointed: Annual meeting of November 4, 1968. Patrick de Cambourg End of term: Fiscal year 2009. Le Vinci – 4, allée de l’Arche 92075 Paris La Défense Cedex MAZARS & GUÉRARD End of term: Fiscal year 2009. Le Vinci – 4, allée de l’Arche 92075 Paris La Défense Cedex Odile COULAUD First appointed: Annual meeting of November 4, 1968. End of term: Fiscal year 2009. financial report general and legal information

shelf registration document

AMF correspondence table

Chapter II – Person responsible for the document and for auditing financial statements Person responsible for the document IFRS book Statement IFRS book Persons responsible for auditing financial statements page 175 Independent auditors’ opinion pages 83-122-136-141 - IFRS book Financial disclosures page 175 Chapter III – Information concerning the issuer and its share capital General information pages 154 to 156 Information concerning the share capital pages 156 to 159 Capital ownership page 158 Market in Company securities pages 14 and 15 - 160 and 161 Dividends pages 13 - 15 - 19 - 48 - 78 - 142 and 143 - 157 Chapter IV – Information concerning the issuer’s business Presentation of the Company and the Group pages: inside front cover - 10 and 11 - 18 and 19 - 173 Litigation page 156 Workforce pages 19 - 51 - 66 - 76 - 121 Investment policy pages 10 and 11 - 30 and 31 - 35 - 52 and 53 - 62 to 65 - 67 - 77 - 80 to 82 Risk management pages 52 and 53 - 80 to 82 Chapter V – Information concerning the issuer’s assets, financial position and earnings Issuer’s financial statements pages 70 to 72 - 78 - 84 to 141 - IFRS book Assets pages 18 - 36 - 38 to 43 - 53 - 63 and 64 - 67 - 73 and 74 - 166 to 169 Chapter VI – Corporate governance Interests of officers in the share capital of the issuer page 163 Compensation page 164 Positions and offices held pages 170 to 172 Stock options pages 164 - 172 Chapter VII – Recent developments and outlook Recent developments page 91 Outlook pages 3 – 11 – 29 to 31 - 49 - 62 – 64 and 65 - 77 176 “This shelf registration document (document de référence) was filed with 21, avenue Kléber the French Autorité des Marchés Financiers 75116 Paris (AMF) on April 1, 2005, in compliance with Tel: 33 (0)1 40 67 57 40 Articles 211-1 to 211-42 of AMF regulations. Fax: 33 (0)1 40 67 55 62 It may be used in connection A French corporation (société anonyme) with a financial transaction only with an Executive Board and a Supervisory Board if accompanied by a transaction Registered capital stock memorandum registered with of €184656916 Paris Trade and the Autorité des Marchés Financiers.” www.klepierre.com Companies Register (RCS) No. 780 152 914