This Unofficial English Language Translation Of

THIS UNOFFICIAL ENGLISH LANGUAGE TRANSLATION OF THE ORIGINAL ITALIAN PROSPECTUS PREPARED IN ACCORDANCE WITH APPLICABLE ITALIAN LAW IN THE ITALIAN LANGUAGE FOR PURPOSES OF THE OFFERING BY PIRELLI & C. REAL ESTATE S.P.A. (THE “COMPANY”) OF ITS NEW ORDINARY SHARES, PURSUANT TO TRANSFERABLE PRE-EMPTIVE SUBSCRIPTION RIGHTS GRANTED TO EXISTING SHAREHOLDERS, IS FOR INFORMATION PURPOSES ONLY AND FOR EASE OF REFERENCE AND SHOULD NOT BE RELIED UPON. THE ITALIAN PROSPECTUS CONTAINS INFORMATION ABOUT THE COMPANY AND THE OFFERING. IN THE EVENT OF ANY AMBIGUITY ABOUT THE MEANING OF CERTAIN TRANSLATED TERMS OR OF ANY DISCREPANCIES BETWEEN THE ITALIAN PROSPECTUS AND THIS TRANSLATION, THE ITALIAN PROSPECTUS (A COPY OF WHICH ACCOMPANIES THIS DOCUMENT OR, IF A COPY DOES NOT ACCOMPANY THIS DOCUMENT, WHICH YOU ARE REQUIRED TO OBTAIN FROM THE COMPANY) SHALL PREVAIL. THIS TRANSLATION HAS NOT BEEN AND WILL NOT BE SUBMITTED TO THE CLEARANCE PROCEDURES OF THE COMMISSIONE NAZIONALE PER LE SOCIETÀ E LA BORSA, CONSOB, THE ITALIAN SECURITIES EXCHANGE COMMISSION AND ACCORDINGLY MAY NOT BE DISTRIBUTED TO THE PUBLIC IN ITALY OR USED IN CONNECTION WITH ANY OFFER TO PURCHASE OR SELL ANY RIGHTS OR SHARES OF THE COMPANY TO THE PUBLIC IN ITALY. ANY PURCHASE OR INVESTMENT DECISION SHOULD BE BASED SOLELY ON THE ITALIAN PROSPECTUS. THIS DOCUMENT IS STRICTLY PRIVATE AND CONFIDENTIAL AND SHOULD NOT BE COPIED OR PASSED TO ANY THIRD PARTY.

THE COMPANY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE FAIRNESS, ACCURACY, COMPLETENESS OR CORRECTNESS OF THE TRANSLATION, AND NONE OF THE COMPANY OR NOR ANY OF ITS DIRECTORS, MEMBERS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES ACCEPTS ANY RESPONSIBILITY WHATSOEVER (IN NEGLIGENCE OR OTHERWISE) FOR ANY LOSS HOWEVER ARISING FROM ANY USE OF THE TRANSLATION OR ITS CONTENTS OTHER THAN FOR WILLFUL DEFAULT.

THIS DOCUMENT, THE ITALIAN PROSPECTUS AND ANY OTHER SUCH MATERIAL IS NOT AN OFFER OR INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES OF THE COMPANY IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE DISTRIBUTION OF THIS DOCUMENT, THE ITALIAN PROSPECTUS AND ANY OTHER SUCH MATERIAL AND THE OFFERING OR SALE OF THE SHARES IN CERTAIN JURISDICTIONS IS RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THIS DOCUMENT, THE ITALIAN PROSPECTUS OR ANY OTHER SUCH MATERIAL, MAY COME ARE REQUIRED BY THE COMPANY TO INFORM THEMSELVES OF AND TO OBSERVE ANY SUCH RESTRICTIONS. THIS DOCUMENT, THE ITALIAN PROSPECTUS AND ANY OTHER SUCH MATERIAL MAY NOT BE USED FOR, OR IN CONNECTION WITH, ANY OFFER TO, OR SOLICITATION BY, ANYONE IN ANY JURISDICTION OR IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IS UNLAWFUL.

THIS TRANSLATION IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA. THIS TRANSLATION IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE CORRESPONDING REGULATIONS IN FORCE IN CANADA, JAPAN, AUSTRALIA OR OTHER COUNTRIES AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA.

THESE MATERIALS MAY NOT BE PUBLISHED, DISTRIBUTED OR TRANSMITTED IN THE UNITED STATES. THESE MATERIALS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES DISCUSSED HEREIN. THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

Pirelli & C. Real Estate S.p.A.

Registered Office in Milan (Italy), Via Gaetano Negri, No. 10 Share capital Euro 21,298,616.00 fully-paid up Register of Enterprises of Milan No. 02473170153 Tax and VAT No. 02473170153 Pirelli & C. Group - Control and Coordination of Pirelli & C. SpA

PROSPECTUS FOR RIGHTS OFFERING TO EXISTING SHAREHOLDERS AND LISTING OF THE ORDINARY SHARES OF PIRELLI & C. REAL ESTATE S.P.A. ON THE ITALIAN AUTOMATED SCREEN-BASED TRADING SYSTEM MANAGED BY BORSA ITALIANA S.P.A.

Prospectus filed with Consob on 12 June 2009, following notification of the approval by Consob of its publication on 10 June 2009, protocol No. 9054579. The publication of the Prospectus does not represent an opinion by Consob on the opportunity of the proposed investment and the merit of the data and information relating thereto. The Prospectus is available at the Issuer’s registered office (Via Gaetano Negri, No. 10, Milan), at Borsa Italiana S.p.A. (Piazza degli Affari, No. 6, Milan), and on the Issuer’s website (www.pirellire.com).

TABLE OF CONTENTS DEFINITIONS...... 12 GLOSSARY ...... 16 SUMMARY ...... 20 NOTICE ...... 20 A. RISK FACTORS ...... 20 B. THE ISSUER AND THE GROUP, ITS BUSINESS AND PRODUCTS ...... 22 C. SELECTED FINANCIAL DATA ...... 29 D. INFORMATION CONCERNING THE RIGHTS OFFERING ...... 36 E. DOCUMENTS AVAILABLE TO THE PUBLIC ...... 41 SECTION ONE ...... 42 REGISTRATION DOCUMENT ...... 42 1. PERSONS RESPONSIBLE ...... 43 1.1 INDIVIDUALS RESPONSIBLE FOR THE PROSPECTUS...... 43 1.2 DECLARATION OF RESPONSIBILITY ...... 43 2. INDEPENDENT AUDITORS OF THE ACCOUNTS...... 44 2.1 ISSUERS’S INDEPENDENT AUDITORS OF THE ACCOUNTS ...... 44 2.2 INFORMATION ON RELATIONSHIP WITH THE INDEPENDENT AUDITORS ...... 45 3. SELECTED FINANCIAL INFORMATION ...... 46 3.1 PIRELLI RE GROUP SELECTED ECONOMIC INFORMATION ...... 47 3.2 PIRELLI RE GROUP SELECTED BALANCE SHEET INFORMATION ...... 48 3.3 PIRELLI RE GROUP SELECTED FINANCIAL INFORMATION ...... 50 3.4 PIRELLI RE GROUP PER-SHARE INFORMATION ...... 51 4. RISK FACTORS ...... 52 4.1 RISK FACTORS RELATING TO THE BUSINESS OF THE ISSUER AND THE GROUP ...... 52 4.1.1 Risks relating to financial indebtedness ...... 52 4.1.2 Risks relating to failure to comply with financial covenants...... 53 4.1.3 Risks relating to change of control clauses ...... 53 4.1.4 Risks relating to fluctuations of interest rates ...... 54 4.1.5 Risks relating to the negative trend in Pirelli RE Group’s results for the year ended 31 December 2008 and the period ended 31 March 2009...... 54 4.1.6 Risks relating to the failure to implement the 2009 – 2011 Business Plan, to profit projections and estimates and to priority declarations and forecast information concerning developments in the reference market ...... 55 4.1.7 Risks relating to litigation proceedings involving Pirelli RE and its controlled companies ...... 56 4.1.8 Risks relating to change of control clauses concerning use of the Pirelli trademark ...... 57 4.1.9 Risks relating to devaluations of real estate assets of the Group and potential negative results from the impairment test on intangible fixed assets ...... 57 4.1.10 Transactions with related parties ...... 58 4.1.11 Risks relating to investments in funds/companies in which significant minority interests are held ...... 59 4.1.12 Risks relating to the corporate governance structure of investment vehicles ...... 60 4.1.13 Risks relating to the presence of financial covenants in the loan agreements entered into by the real estate funds and by the investment vehicles ...... 60 4.1.14 Risks relating to litigation procedure involving controlled companies and joint ventures ...... 61 4.1.15 Risks relating to the concentration of lessees ...... 61 4.1.16 Risks connected to the financial situation of the Arcandor group ...... 62 4.2 RISKS RELATING TO THE ISSUER’S BUSINESS SECTOR ...... 62 4.2.1 Risks relating to the performance of the real estate market ...... 62 4.2.2 Concentration of business in Italy and Germany ...... 62 4.3 RISKS RELATING TO THE RIGHTS OFFERING AND TO THE COMPANY’S FINANCIAL INSTRUMENTS ...... 63 4.3.1 Risks relating to the maximum dilution of the Issuer’s capital if the Rights are not exercised ...... 63 4.3.2 Risks relating to the volatility of the price of the Issuer’s shares ...... 63 5

4.3.3 Risks relating to the markets in which the Offering is prohibited without authorization from the competent authorities ...... 63 4.3.4 Risks relating to the possible delisting of the Issuer’s shares from the MTA ...... 64 4.3.5 Risks relating to general liquidity problems in the markets and specific to the Company’s shares ...... 64 5. INFORMATION ON ISSUER ...... 65 5.1 HISTORY AND DEVELOPMENT OF THE ISSUER’S BUSINESS ...... 65 5.1.1 Issuer’s registered and trading name ...... 65 5.1.2 Details of registration with the Register of Enterprises ...... 65 5.1.3 Incorporation date and duration of the Issuer ...... 65 5.1.4 Domicile, corporate form, laws under which the Issuer operates, country of incorporation and registered office ...... 65 5.1.5 Key developments in the business of the Issuer and the Group ...... 65 5.2 PRIMARY INVESTMENTS ...... 72 5.2.1 Investments made over the last three years ...... 72 5.2.2 Investments in progress ...... 76 5.2.3 Future investments ...... 76 6. BUSINESS OVERVIEW ...... 77 6.1 GROUP’S PRINCIPAL ACTIVITIES ...... 77 6.1.1 The real estate sector ...... 77 6.1.2 The non performing loans sector ...... 80 6.1.3 General Management Italy ...... 82 6.1.4 General Management Germany - Poland ...... 93 6.1.5 Non performing Loans Division ...... 104 6.1.6 Future plans and strategies ...... 107 6.2 KEY MARKETS ...... 109 6.2.1 The European real estate market ...... 109 6.2.2 The Italian real estate market ...... 109 6.2.3 The real estate market in Germany ...... 114 6.3 EXTRAORDINARY FACTORS...... 115 6.4 THE ISSUER'S DEPENDENCE ON PATENTS OR LICENCES, INDUSTRIAL, COMMERCIAL OR FINANCIAL AGREEMENTS, OR NEW MANUFACTURING PROCEDURES ...... 116 6.4.1 Patents and licences ...... 116 6.4.2 Suppliers ...... 116 6.4.3 Financial backers ...... 116 6.4.4 Tenants ...... 116 6.5 COMPETITIVE POSITION ...... 117 7. CORPORATE STRUCTURE ...... 119 7.1 DESCRIPTION OF THE GROUP TO WHICH THE ISSUER BELONGS ...... 119 7.2 COMPANIES CONTROLLED BY THE ISSUER ...... 120 8. PROPERTY, PLANT AND EQUIPMENT ...... 123 8.1 PROPERTY, PLANT AND EQUIPMENT ...... 123 8.1.1 Owned property assets ...... 123 8.1.2 Leased property assets ...... 123 8.2 ENVIRONMENTAL ISSUES THAT COULD HAVE AN EFFECT ON THE USE OF PROPERTY, PLANT AND EQUIPMENT ...... 125 9. OPERATING AND FINANCIAL REVIEW ...... 126 9.1 TREND ANALYSIS FOR THE MAIN OPERATING DATA ...... 127 9.1.1 Operating trend report for the first quarter of 2009 and 2008 redetermined ...... 128 9.1.2 Operating trend report for the years ended 31 December 2008 and 2007 (redetermined) ...... 132 9.1.3 Operating trend report for the years ended 31 December 2007 and 2006 ...... 143 9.2 REPORT ON THE EQUITY AND FINANCIAL SITUATION ...... 153 9.2.1 Report on the equity and financial situation as of 31 March 2009 ...... 154 9.2.2 Report on the equity and financial situation as of 31 December 2008 and 2007 ...... 155 9.2.3 Report on operating and financial situation as of 31 December 2007 and 2006 ...... 156

6 9.3 OTHER INFORMATION ...... 158 9.4 INFORMATION REGARDING POLICIES OR FACTORS OF A GOVERNMENTAL, ECONOMIC, FISCAL, MONETARY OR POLITICAL NATURE THAT HAVE, OR COULD HAVE, SIGNIFICANT DIRECT OR INDIRECT REPERCUSSIONS ON THE ISSUER'S BUSINESS ...... 164 10. FINANCIAL RESOURCES OF THE ISSUER, INVESTMENT NEEDS AND FINANCING STRUCTURE ...... 165 10.1 ANALYSIS OF THE PIRELLI RE GROUP'S FINANCIAL RESOURCES AS OF 31 MARCH 2009 ...... 166 10.2 ANALYSIS OF THE PIRELLI RE GROUP'S FINANCIAL RESOURCES AS OF 31 DECEMBER 2008, 2007 AND 2006 ...... 169 10.2.1 Pro-rata Financial Position of funds and vehicles ...... 174 10.3 ANALYSIS OF CASH FLOWS AS OF 31 MARCH 2009 AND AS OF 31 MARCH 2008 ...... 175 10.4 ANALYSIS OF CASH FLOWS AS OF 31 DECEMBER 2008, 2007 AND 2006 ...... 176 10.4.1 Analysis of cash flows as of and for the years ended 31 December 2008 and 31 December 2007 Redetermined ...... 176 10.4.2 Analysis of cash flows as of and for the years ended 31 December 2007 and 2006 ...... 176 10.5 LIMITATIONS ON THE USE OF FINANCIAL RESOURCES ...... 177 10.5.1 Loans granted to Pirelli RE ...... 177 10.5.2 Loans granted to associates and joint ventures ...... 177 10.6 FINANCIAL RISK MANAGEMENT POLICY ...... 179 11. RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES ...... 183 11.1 RESEARCH AND DEVELOPMENT ...... 183 11.2 BRANDS, PATENTS, CONCESSIONS AND LICENCES ...... 183 11.2.1 Brands ...... 183 11.2.2 Patents ...... 184 11.2.3 Concessions ...... 184 11.2.4 Licences ...... 184 12. TREND NFORMATION ...... 186 12.1 SIGNIFICANT TRENDS IN THE ISSUER’S BUSINESS FROM THE CLOSE OF THE LAST PERIOD AND TO THE PROSPECTUS DATE ...... 186 12.2 INFORMATION ON ANY KNOWN TRENDS, UNCERTANITIES, DEMANDS, COMMITMENTS OR EVENTS THAT ARE REASONABLY LIKELY TO HAVE A MATERIAL EFFECT ON THE ISSUER’S PROSPECTUSES FOR AT LEAST THE CURRENT FINANCIAL YEAR...... 186 13. PROFIT FORECASTS OR ESTIMATES ...... 187 13.1 MAIN ASSUMPTIONS OF PROFIT FORECASTS OR ESTIMATES ...... 187 13.1.1 Introduction ...... 187 13.1.2 Market scenario ...... 187 13.1.3 The real estate market in Germany ...... 189 13.2 2009 – 2011 BUSINESS PLAN ...... 190 13.2.1 Introduction and assumptions ...... 190 13.2.2 Strategic guidelines of the 2009 - 2011 Business Plan ...... 192 13.2.3 Main forecast data in the 2009 - 2011 Business Plan ...... 195 13.2.4 Other information and targets in the 2009 - 2011 Business Plan ...... 197 13.3 AUDITORS' REPORT ON PROFIT FORECASTS OR ESTIMATES ...... 198 13.4 BASIS FOR GENERATING PROFIT FORECASTS OR ESTIMATES ...... 198 13.5 PROFIT FORECASTS PUBLISHED IN OTHER PROSPECTUSES ...... 198 14. ADMINISTRATIVE, MANAGEMENT OR AUDITING BODIES AND SENIOR MANAGERS ...... 199 14.1 NAME, ADDRESS AND FUNCTIONS OF MEMBERS OF THE ISSUER'S BOARD OF DIRECTORS AND BOARD OF STATUTORY AUDITORS AND SENIOR MANAGERS ...... 199 14.1.1 Board of Directors ...... 199 14.1.2 Board of Statutory Auditors ...... 204 14.1.3 Senior Management ...... 205 14.1.4 Family relationships...... 206 14.1.5 Other activities of members of the Board of Directors and Board of Statutory Auditors and of

Senior Managers ...... 206 14.1.6 Judicial and disciplinary proceedings involving members of the Board of Directors and Board of Statutory Auditors and Senior Managers of the Issuer ...... 228 14.2 CONFLICTS OF INTEREST OF MEMBERS OF THE BOARD OF DIRECTORS AND BOARD OF STATUTORY AUDITORS AND OF THE SENIOR MANAGERS ...... 230 15. REMUNERATIONS AND BENEFITS ...... 231 15.1 COMPENSATIONS AND BENEFITS FOR MEMBERS OF THE BOARD OF DIRECTORS, BOARD OF STATUTORY AUDITORS AND SENIOR MANAGERS OF THE ISSUER ...... 231 15.2 AMOUNTS SET ASIDE OR ACCUMULATED BY THE ISSUER OR OTHER GROUP COMPANIES FOR THE PAYMENT OF PENSIONS, SEVERANCE INDEMNITY PAYMENTS OR OTHER SIMILAR BENEFITS ...... 233 16. PRACTICES OF THE BOARD OF DIRECTORS ...... 235 16.1 TERM OF OFFICE OF MEMBERS OF THE BOARD OF DIRECTORS AND OF MEMBERS OF THE BOARD OF STATUTORY AUDITORS ...... 235 16.1.1 Board of Directors ...... 235 16.1.2 Board of Statutory Auditors ...... 235 16.2 EMPLOYMENT AGREEMENTS ENTERED INTO BY THE MEMBERS OF THE BOARD OF DIRECTORS AND THE MEMBERS OF THE BOARD OF STATUTORY AUDITORS WITH THE ISSUER OR WITH OTHER GROUP COMPANIES WHICH PROVIDE FOR SEVERANCE INDEMNITY PAYMENTS ...... 236 16.3 INFORMATION ON THE INTERNAL AUDIT AND CORPORATE GOVERNANCE COMMITTEE AND THE REMUNERATION COMMITTEE ...... 236 16.3.1 Internal Audit and Corporate Governance Committee ...... 236 16.3.2 Remuneration Committee ...... 237 16.4 OBSERVANCE OF CORPORATE GOVERNANCE REGULATIONS ...... 238 17. EMPLOYEES ...... 240 17.1 NUMBER OF EMPLOYEES ...... 240 17.2 EQUITY INVESTMENTS AND STOCK OPTIONS OF MEMBERS OF THE BOARD OF DIRECTORS, STATUTORY AUDITORS AND/OR SENIOR MANAGERS OF THE ISSUER ...... 240 17.3 EMPLOYEE EQUITY INVESTMENT AGREEMENTS ...... 243 18. PRINCIPAL SHAREHOLDERS ...... 244 18.1 SHAREHOLDERS IN POSSESSION OF FINANCIAL INSTRUMENTS REPRESENTING MORE THAN 2% OF THE ISSUER'S SHARE CAPITAL ...... 244 18.2 OTHER VOTING RIGHTS OF THE ISSUER'S PRINCIPAL SHAREHOLDERS ...... 244 18.3 INDIVIDUALS AND LEGAL ENTITIES WHICH EXERCISE CONTROL OVER THE ISSUER ...... 245 18.4 SHAREHOLDERS' AGREEMENTS ...... 245 19. RELATED PARTY TRANSACTIONS ...... 246 19.1 INTRA-GROUP RELATIONS ...... 248 19.1.1 Commercial transactions ...... 248 19.1.2 Financial transactions ...... 248 19.1.3 Transfers of interests ...... 252 19.1.4 Business transactions ...... 254 19.1.5 Other transactions ...... 257 19.2 TRANSACTIONS WITH OTHER RELATED PARTIES ...... 257 19.2.1 Commercial transactions ...... 257 19.2.2 Financial transactions ...... 258 19.2.3 Transfers of interests ...... 261 19.2.4 Business transactions ...... 262 19.2.5 Transfer of real estate portfolios or individual real estate properties ...... 263 19.2.6 Agreements with associated companies; other relations ...... 264 20. FINANCIAL INFORMATION CONCERNING THE ISSUER'S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES ...... 266 20.1 ECONOMIC, BUSINESS AND FINANCIAL INFORMATION AS OF AND FOR THE YEARS ENDED 31 DECEMBER 2008, 2007 AND 2006, AND FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2009 ...... 266 20.2 CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2008, 2007 AND 2006 ...... 267 20.3 STATEMENTS OF PROFIT AND LOSS FOR THE YEARS ENDED 31 DECEMBER 2008, 2007 AND 2006 ...... 269

8 20.4 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEARS ENDED 31 DECEMBER 2008, 2007 AND 2006 ...... 270 20.5 STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY FOR THE YEARS ENDED 31 DECEMBER 2008, 2007 AND 2006 ...... 271 20.6 PRO FORMA FINANCIAL INFORMATION ON THE ISSUER...... 273 20.6.1 Consolidated pro forma balance sheet as of 31 December 2008 ...... 275 20.6.2 Consolidated pro forma income statement for the year ended 31 December 2008 ...... 276 20.6.3 Information on the pro forma adjustments ...... 276 20.6.4 Purpose of the presentation of the Consolidated Pro Forma Data ...... 277 20.6.5 Assumptions made in drafting the Consolidated Pro Forma Data ...... 277 20.6.6 Report of the Independent Auditors concerning the audit of the Consolidated Pro Forma Data ...... 278 20.7 AUDITING OF THE ANNUAL FINANCIAL REPORTS RELATING TO PREVIOUS YEARS ...... 278 20.7.1 Statement of auditing of financial reports of previous years ...... 278 20.7.2 Other information included in the registration document reviewed by the auditors ...... 278 20.7.3 Data derived from sources other than the financial statements of the Issuer ...... 278 20.7.4 Date of the latest financial information ...... 279 20.8 INFRA-ANNUAL FINANCIAL INFORMATION AND OTHER FINANCIAL INFORMATION ...... 279 20.8.1 Dividend policy ...... 282 20.8.2 Legal and arbitration proceedings ...... 283 21. SUPPLEMENTAL INFORMATION ...... 288 21.1 SHARE CAPITAL...... 288 21.1.1 Subscribed and paid-up share capital ...... 288 21.1.2 Existence of any investment instruments not in the form of capital ...... 288 21.1.3 Number, book value and nominal value of shares held by the Issuer or on its behalf or by controlled companies of the Issuer ...... 288 21.1.4 Amount of convertible securities, exchangeable securities or those with warrants, with information on the terms and procedures for conversion, exchange or subscription ...... 288 21.1.5 Existence of rights and/or obligations to acquire authorised but unissued capital or of commitments to increase capital ...... 288 21.1.6 Information regarding the share capital of any members of the Group offered as options and description of the options with an indication of the entities to which they refer ...... 289 21.1.7 Changes in share capital in the last three financial years ...... 289 21.2 ARTICLES OF INCORPORATION AND BY-LAWS ...... 289 21.2.1 Company’s purpose ...... 289 21.2.2 Provisions of By-laws regarding members of the Boards of Directors, management and monitoring ...... 289 21.2.3 Rights, privileges and restrictions associated with each class of existing shares ...... 294 21.2.4 Methods for the amendment of shareholders' rights ...... 294 21.2.5 Provisions of the By-laws concerning ordinary and extraordinary Shareholders' Meetings of the Issuer ...... 294 21.2.6 Provisions of the By-laws that could delay, defer or prevent a change in the Issuer's controlling structure ...... 295 21.2.7 Provisions of the By-laws governing the ownership threshold above which there is an obligation to notify the public of the shares held ...... 295 21.2.8 Provisions of the By-laws governing changes in the share capital ...... 296 22. MATERIAL CONTRACTS ...... 297 22.1 AGREEMENTS OTHER THAN THOSE ENTERED INTO DURING THE ORDINARY COURSE OF BUSINESS IN THE TWO-YEAR PERIOD PRIOR TO THE PROSPECTUS DATE ...... 297 22.1.1 Transfer of Pirelli RE Integrated Facility Management ...... 297 22.2 AGREEMENTS ENTERED INTO DURING THE ORDINARY COURSE OF BUSINESS HAVING MAJOR SIGNIFICANCE FOR THE ISSUER ...... 297 22.2.1 Financing agreements providing for Pirelli RE or companies of Pirelli RE Group ...... 297 22.2.2 Securitisation transactions ...... 299 22.2.3 Highstreet acquisition ...... 300 22.2.4 Baubecon Acquisition ...... 301 22.2.5 DGAG Acquisition ...... 302 9

22.2.6 Rationalisation of the non performing loans sector ...... 303 22.2.7 Other agreements ...... 304 23. INFORMATION ORIGINATING FROM THIRD PARTIES, EXPERT OPINIONS AND DECLARATIONS OF INTEREST ...... 306 23.1 EXPERT REPORTS AND OPINIONS ...... 306 23.2 INFORMATION PROVIDED BY THIRD PARTIES ...... 306 24. DOCUMENTS AVAILABLE TO THE PUBLIC ...... 307 25. INFORMATION ON HOLDINGS ...... 308 SECTION TWO ...... 309 EXPLANATORY NOTES ...... 309 1. INDIVIDUAL RESPONSIBILITY FOR THE PROSPECTUS ...... 310 1.1 INDIVIDUALS RESPONSIBLE FOR THE PROSPECTUS ...... 310 1.2 DECLARATION OF RESPONSIBILITY...... 310 2. RISK FACTORS ...... 311 3. ESSENTIAL INFORMATION ...... 312 3.1 STATEMENT ON NET WORKING CAPITAL ...... 312 3.2 DIRECT FUNDING AND DEBTS ...... 312 3.2.1 Direct funding ...... 312 3.3 NET FINANCIAL INDEBTEDNESS ...... 313 3.4 INTERESTS OF INDIVIDUALS AND LEGAL ENTITIES PARTICIPATING IN THE OFFERING ...... 313 3.5 MOTIVATION OF THE OFFERING AND USE OF PROCEEDS ...... 313 4. INFORMATION CONCERNING THE FINANCIAL INSTRUMENTS TO BE OFFERED ...... 316 4.1 DESCRIPTION OF SHARES ...... 316 4.2 LAWS PERMITTING SHARES TO BE ISSUED ...... 316 4.3 FORM OF SHARES ...... 316 4.4 CURRENCY OF SHARES ...... 316 4.5 DESCRIPTION OF RIGHTS CONNECTED TO SHARES ...... 316 4.6 INFORMATION ON RESOLUTION PURSUANT TO WHICH SHARES WILL BE ISSUED ...... 316 4.7 DATE FOR THE ISSUE OF THE SHARES ...... 317 4.8 LIMITATIONS ON FREE TRANSFER OF SHARES ...... 317 4.9 DESCRIPTION OF REGULATIONS CONCERNING THE OBLIGATION TO MAKE RESIDUAL OFFERS TO THE PUBLIC FOR THE PURCHASE AND/OR THE PURCHASE AND SALE OF SHARES ...... 317 4.10 PREVIOUS PUBLIC OFFERS TO PURCHASE SHARES ...... 317 4.11 TAXATION ...... 318 4.11.1 Definitions ...... 318 4.11.2 Dividends ...... 318 4.11.3 Distribution of reserves ...... 321 4.11.4 Capital gains deriving from the transfer of shares ...... 322 4.11.5 Tax on stock exchange contracts ...... 326 4.11.6 Inheritance and gifts ...... 327 5. TERMS OF THE OFFERING ...... 328 5.1 TERMS AND STATISTICS RELATED TO THE OFFERING, PROJECTED TIMETABLE AND PROCEDURE FOR SUBSCRIBING ...... 328 5.1.1 Conditions on which the Offering depends ...... 328 5.1.2 Total amount of the Offering ...... 328 5.1.3 Validity period of the Offering and subscription procedure ...... 329 5.1.4 Information concerning the suspension and/or termination of the Offering ...... 329 5.1.5 Reduction of subscriptions and methods of repayment ...... 330 5.1.6 Amount of subscription...... 330 5.1.7 Withdrawal of acceptance ...... 330 5.1.8 Procedures and final terms for payment and delivery of Shares ...... 330

10 5.1.9 Publication of results of the Offering ...... 330 5.1.10 Procedure for the exercise of any pre-emptive rights, for trading of subscription rights and for the processing of unexercised subscription rights ...... 331 5.2 DISTRIBUTION AND ALLOCATION PLAN ...... 331 5.2.1 Offer recipients and markets ...... 331 5.2.2 Commitments to subscribe the Issuer's Shares ...... 332 5.2.3 Information to be provided before allocation ...... 332 5.2.4 Procedure for communicating allocations to subscribers ...... 332 5.2.5 Over Allotment and Greenshoe Option ...... 332 5.3 SETTING OF THE SUBSCRIPTION PRICE ...... 332 5.3.1 Subscription Price and expenses payable by subscribers ...... 332 5.3.2 Notification of the Subscription Price ...... 332 5.3.3 Limitations of rights ...... 332 5.3.4 Difference between the Subscription Price and the price paid for shares during the previous year or to be paid by members of the Board of Directors, members of the Board of Statutory Auditors and senior managers ...... 333 5.4 PLACEMENT AND SUBSCRIPTION ...... 333 5.4.1 Information on parties responsible for placement of the Offering and dealers ...... 333 5.4.2 Name and address of organisations appointed to perform financial services and depositary agents in each country...... 333 5.4.3 Subscription and underwriting commitments ...... 333 6. AUTHORIZATION FOR TRADING AND TRADING PROCEDURES ...... 334 6.1 LISTING MARKETS ...... 334 6.2 OTHER REGULATED MARKETS ...... 334 6.3 OTHER TRANSACTIONS RELATING TO THE SHARES FOR WHICH ADMISSION TO A REGULATED MARKET IS REQUIRED ...... 334 6.4 INTERMEDIARIES IN SECONDARY MARKET TRANSACTIONS ...... 334 6.5 STABILISATION ...... 334 7. HOLDERS OF FINANCIAL INSTRUMENTS INTENDING TO SELL ...... 335 7.1 INFORMATION REGARDING THE ENTITY OFFERING SHARES FOR SALE ...... 335 7.2 NUMBER AND CLASS OF FINANCIAL INSTRUMENTS OFFERED BY EACH OF THE HOLDERS OF FINANCIAL INSTRUMENTS INTENDING TO SELL ...... 335 7.3 LOCK-UP AGREEMENTS ...... 335 8. OFFERING-RELATED EXPENSES ...... 336 8.1 TOTAL NET PROCEEDS AND ESTIMATE OF TOTAL OFFERING-RELATED EXPENSES ...... 336 9. DILUTION ...... 337 9.1 AMOUNT AND PERCENTAGE OF IMMEDIATE DILUTION RESULTING FROM THE OFFERING ...... 337 9.2 DILUTION EFFECTS IN THE CASE OF NOT EXERCISING RIGHTS ...... 337 10. ADDITIONAL INFORMATION ...... 338 10.1 CONSULTANTS MENTIONED IN SECTION TWO...... 338 10.2 INDICATION OF INFORMATION CONTAINED IN SECTION TWO THAT WAS SUBJECT TO FULL OR PARTIAL AUDIT BY THE INDEPENDENT AUDITORS ...... 338 10.3 OPINIONS OR REPORTS PREPARED BY EXPERTS CONTAINED IN SECTION TWO ...... 338 10.4 INFORMATION PROVIDED BY THIRD PARTIES WITH INFORMATION ON SOURCES ...... 338 REPORT OF THE INDEPENDENT AUDITORS ON THE 2009 – 2011 BUSINESS PLAN ...... 339 REPORT OF THE INDEPENDENT AUDITORS ON THE PRO FORMA FINANCIAL STATEMENTS ...... 342

DEFINITIONS The following is a list of the terms and definitions used in the Prospectus. Unless otherwise indicated, these definitions and terms have the meaning described below. Shareholders’ Meeting The Shareholders’ Meeting of the Company. Capital Increase The divisible paid capital increase with pre-emptive rights to be offered to existing shareholders approved on 17 April 2009 by the Extraordinary Shareholders’ Meeting pursuant to Article 2441 of the Italian Civil Code. The capital increase is up to a maximum amount of Euro 400,000,000.00, including any share premium. The above mentioned Extraordinary Shareholders’ Meeting granted the Board of Directors the powers to set the issue price per share, resolving that the price shall be determined applying a discount (which will be determined taking into account the prevailing market conditions at the time the transaction will be actually launched, the trading price of Pirelli RE’s ordinary shares and market practices for similar transactions) to the theoretical ex right price (TERP) of the Pirelli RE’s ordinary shares. The TERP is calculated using current methods based on the arithmetic average of the official prices recorded over a period of at least 3 trading-days prior to the date of determination of the issue price. All the foregoing in compliance with applicable law. Shares Pirelli & C. Real Estate S.p.A.’s 798,574,564 ordinary shares (ISIN code IT 0003270615), each with a par value of Euro 0.50 and with the same characteristics as those listed as of the Prospectus Date, resulting from the Capital Increase covered by the Offer. Borsa Italiana Borsa Italiana S.p.A., with registered office at Piazza degli Affari, No. 6, Milan. Corporate Governance Code Corporate Governance Code of listed companies prepared by the Committee for Corporate Governance of Listed Companies and promoted by Borsa Italiana as approved in March 2006. Board of Statutory Auditors The Company’s Board of Statutory Auditors. Board of Directors The Company’s Board of Directors. Consob Commissione Nazionale per le Società e la Borsa, the Italian securities and stock exchange commission, with registered office at Via G. B. Martini, No. 3, Rome. Prospectus Date The date this Prospectus was filed with Consob. Directive 2003/71/EC Directive 2003/71/EC of the European Parliament and the Council dated 4 November 2003 relating to the prospectus to be published in connection with a public offer or admission to listing.

Rights Transferable pre-emptive subscription rights granted to existing holders of ordinary shares. Group or Pirelli RE Group The Issuer and its controlled companies in accordance with Article 93 of the Italian Finance Act as of the Prospectus Date. Pirelli Group Pirelli & C. and its controlled companies in accordance with Article 93 of the Italian Finance Act as of the Prospectus Date. Authorized Financial Intermediaries Authorized financial intermediaries holding accounts with Monte Titoli. IFRS The International Financial Reporting Standards (IFRS)/International Accounting Standards (IAS) as adopted by the European Commission pursuant to the procedure set forth under Regulation (EC) No. 1606/2002 and the interpretations provided by the International Financial Reporting Interpretations Committee (IFRIC). Qualified Investors Individuals or legal entities indicated in Article 1(1)(h) of Italian Ministerial Decree No. 228 of 1999 and the Regulation of the Bank of Italy dated 14 April 2005, and in particular: (i) investment companies, banks, stockbrokers, Italian asset management companies (SGR, società di gestione del risparmio), Italian open-end investment companies (SICAV, società di investimento a capitale variabile), pension funds, insurance companies, financial holding companies of banking groups and entities registered in the list kept by the Bank of Italy under Articles 106, 107 and 113 of the Italian Banking Act; (ii) foreign entities authorized – as provided by the regulations in force in their country of origin – to carry out the same activities carried out by the entities described under point (i) above; (iii) banking foundations; and (iv) individuals or legal entities and any other entities with specific expertise and experience in transactions involving financial instruments explicitly declared in writing by the individual or legal representative of the relevant legal entity or any other entity. Automated Screen-based Trading The Italian automated screen-based trading system System or MTA (Mercato Telematico managed by Borsa Italiana. Azionario) Automated Funds Market or MTF Segment of the Automated Screen-based Trading System (Mercato Telematico Fondi) dedicated, among others, to trading closed-end securities and real estate UCITS.

Monte Titoli Monte Titoli S.p.A., with registered office at Via Mantegna, No. 6, Milan. Rights Auction The offering period on the MTA of Rights not exercised during the Offering Period, pursuant to Article 2441(3) of the Italian Civil Code. Rights Offering or Offering The Rights offering to Pirelli RE existing shareholders. Subscription Period The period of acceptance of the Offering starting on 15 June 2009 and ending on 3 July 2009. 2009 – 2011 Business Plan Pirelli RE business plan for the three-year period from 2009 to 2011 as described in detail in Section One, Chapter XIII of the Prospectus. Pirelli & C. Pirelli & C. S.p.A., with registered office at Via Gaetano Negri, No. 10, Milan and registered with the Register of Enterprises of Milan No. 00860340157. Pirelli RE or Company or Issuer Pirelli & C. Real Estate S.p.A., with registered office at Via Gaetano Negri, No. 10, Milan and registered with the Register of Enterprises of Milan No. 02473170153. Pirelli RE Agency Pirelli & C. Real Estate Agency S.p.A., with registered office at Viale Piero e Alberto Pirelli, No. 21, Milan and registered with the Register of Enterprises of Milan No. 03258390156. Pirelli RE Property Management Pirelli & C. Real Estate Property Management S.p.A., with registered office at Viale Piero e Alberto Pirelli, No. 21, Milan and registered with the Register of Enterprises of Milan No. 10754940152. Pirelli RE SGR Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A., with registered office at Via Gaetano Negri, No. 10, Milan and registered with the Register of Enterprises of Milan No. 13465930157, authorized to provide collective asset management services by a Bank of Italy resolution (which registered the Company as No. 132 in the register of asset management companies). Subscription Price The price of Euro 0.50 at which each Share is offered to Pirelli RE shareholders, as resolved by the Issuer’s Board of Directors on 11 June 2009 applying the criteria set forth and approved by the Issuer’s extraordinary Shareholders’ Meeting on 17 April 2009. Prospectus This Prospectus. Regulation 809/2004/EC Regulation 809/2004/EC of the European Commission dated 29 April 2004 implementing Directive 2003/71/EC on the information contained in prospectuses, the prospectus model, inclusion of information by reference, the publication of prospectuses and the distribution of promotional messages.

Stock Exchange Regulations Regulations for markets organized and managed by Borsa Italiana S.p.A., approved by the shareholders’ meeting of Borsa Italiana S.p.A. on 6 June 2008, and approved by Consob with resolution No. 16615 of 9 September 2008, as amended. Regulation on Issuers The regulation on issuers implementing the Italian Finance Act as approved by Consob with resolution No. 11971 of 14 May 1999, as amended. Markets Regulations The regulation on the markets implementing the Italian Finance Act as approved by Consob with resolution No. 16191 of 29 October 2007, as amended. Independent Auditors Reconta Ernst & Young S.p.A. with registered offices at Via Romagnosi, No. 18/A, Rome and registered as No. 2 in the Consob Special Register pursuant to Article 161 of the Italian Finance Act. By-laws The Company’s By-laws as of the Prospectus Date. TERP Theoretical ex right price – The theoretical price of a share after a capital increase. From an algebraic perspective, the TERP is expressed as follows: TERP = [(P cum effective X SH old) + (P issuing X SH new)]: (SH old + SH new). Where (with reference to the above mentioned definitions): P cum effective: means the average price of the share before rights are traded; SH old: means the number of shares before the capital increase; P issuing: means the issue price of the new shares; SH new: means the number of newly issued shares. Italian Banking Act Legislative Decree No. 385 of 1 September 1993. Italian Finance Act or TUF (Testo Legislative Decree No. 58 of 24 February 1998, as Unico della Finanza) amended.

GLOSSARY The following is a list of technical terms used in the Prospectus. Unless otherwise indicated, the terms have the meaning described below.

Agency (or agency services) For the residential sector, agency means the real-estate brokerage services specifically connected to assessing and marketing real estate residential properties. For the tertiary sector, agency means the consulting services connected to selling, purchasing, assessing and leasing real estate properties mainly for office, business or commercial use. Asset backed securities Financial instruments issued in connection with securitizations of existing and future receivables or other activities exclusively aimed at satisfying the rights incorporated in such financial instruments and potentially cover the costs related to the securitisation. Asset under management Real estate assets and non performing loans under management. The value of such real estate assets is based on the market value as of the closing date, according to the assessments of independent experts; the value of the non performing loans is based on their book value. The pro-rata of such values (market or book value, as applicable) states the Group’s stake in the market value of the real estate assets and in the book value of the non performing loans under management. Notice of Publication of The notice published pursuant to Article 31 of Regulation Prospectus 809/2004/EC and Articles 8(2), 56(2) and 84(1) of the Regulation on Issuers. Net working capital Amount of resources representing the operating activity of a business. This indicator is used to check the short- term financial balance. This amount comprises all the short-term assets and liabilities of a non-financial nature and is calculated net of the junior notes recorded in the item Investments in real estate funds and investment companies. Credit servicing Judicial and extra-judicial management of non performing loans, mainly backed by mortgages on real estate assets, through assessment, monitoring of the analysis of trends of in court and out of court actions and management of the data and information flows concerning securitised portfolios. Corporate Governance Set of rules and systems and the Company’s management and control bodies. Facility management Planning, supply and control of all services involving real estate users aimed at improving the quality of such services by optimizing costs and increasing efficiency and flexibility.

Fund and asset management The identification, purchasing, development and active management of real estate assets in the different market segments (asset management) through investment companies or real estate funds (fund management). Gearing (including shareholders’ Amount indicating the Group’s ability to satisfy the needs loans) of its business with its own resources rather than with third-party financing. Gearing, including shareholders’ loans, is calculated as the ratio between adjusted net financial position (stated gross of shareholders’ loans of controlled companies in which minority interests are held) and net equity. Impairment test Test to verify the loss in value of assets through which the Company determines the recoverable value of its balance- sheet assets. The recoverable value is the greater of the fair value of an asset or of a cash generating unit, net of sales costs and usage value. If the book value of an asset is greater than its recoverable value, such asset has undergone impairment and is subsequently devaluated to its recoverable value. Joint venture Companies in which, based on a contractual or statutory agreement, two or more parties undertake a business subject to joint control, as defined by IAS 31. Gross operating margin or Economic amount used by the Group (in addition to EBITDA EBIT) as a target for internal (business plans) and external (for analysts and investors) presentations, which is a unit of measurement to assess the overall operating performance of the Group and of the individual sectors of activity. The Gross Operating Margin is an intermediate economic amount derived from EBIT, which excludes the depreciation of tangible and intangible fixed assets. Net asset value or NAV An amount which quantifies the unrealized implicit capital gain in the real estate portfolio managed and participated by the Group. The pro-rata Net Asset Value is calculated as the difference between the share of assets’ market value and the related value of the debt, including shareholders’ loans granted to controlled companies in which minority interests are held. The determination of Net Asset Value does not include the fiscal impact on the implicit capital gain of participated assets, as not material for the Group. Non performing loans Non performing bank loans mainly backed by mortgages on real estate properties. Financial expenses Amount including the following items from the financial statements: (i) Financial income, net of interest income from financial receivables from associates and joint ventures, and of income from securities classified in the item Financial income from equity interests, and income from real estate funds and capital gains on disposal of financial

assets (classified in Net income from investments), (ii) Financial charges, net of impairment of junior notes and (iii) Change in fair value of financial assets, net of the impairment of the other financial assets carried at fair value. Investments in real estate funds Amount including investments in associates and joint and investment companies ventures, closed-end real estate funds and investments in other companies (reported in Other financial assets in the balance sheet) and junior notes classified in Other receivables in the balance sheet. Passing rent Indicator corresponding to rents annualised on the basis of contracts existing at the end of the period for assets belonging to a specific fund/company; it is an indicator of the annual volume of rents. Passing yield Indicator of profitability expressed in term of rent from assets belonging to a specific fund/company. Such indicator is calculated as the ratio between the book value of the company/fund’s assets to the corresponding amount of passing rent. Net financial position or NFP Amount representing the gross financial debt less cash, other cash equivalents and other interest-bearing financial receivables. Such amount is an indicator of the ability to meet financial obligations. Project management Organization of the process to build new real estate complexes starting from urban promotion, and going through planning and coordinating the initiative, obtaining the necessary building occupation authorizations and delivering the complexes to the final user. Property management Coordination, through a single management process of the administrative, technical, legal and commercial activities relating to real estate assets or specific buildings, with the purpose of maximising profitability within the process of optimization by the owner or the manager. Financial income from Amount comprising interest from financial receivables investments with associates and joint ventures and income from securities (both classified in financial income). It is stated net of impairment of junior notes. Residential Sector Segment of the real estate market represented by urban, residential buildings. Return on equity or ROE Indicator of the results for the period relative to shareholders’ equity, determined as the ratio between consolidated net income for the year and the average of opening and closing net equity. Pro-rata aggregate revenues Indicator stating the Group’s turnover obtained by adding its consolidated revenues with the Group’s share of the revenues of associates, joint ventures and real estate funds in which the Group has invested, without making the necessary eliminations in the event of proportional

consolidation. However, this item includes eliminations of disposals of buildings and areas between companies within the same aggregate. Net income from investments Amount consisting of the net profit share deriving from investments in associates and joint ventures, income from real estate funds, capital gains from disposal of financial assets (both classified in Financial income) and the decrease in the value of other financial assets recorded at their fair value in the statement of profit or loss (included under the item Change in fair value of financial assets) and dividends. EBIT before restructuring costs Value determined as EBIT plus the net profit share and property writedowns / deriving from associates and joint ventures, income from revaluations real estate funds, capital gains on disposal of financial assets, decrease in the value of other financial assets recorded at their fair value in the statement of profit or loss, and from dividends net of restructuring costs and dividends net of restructuring costs and property writedowns. EBIT including net income from This is the most significant trend indicator of the Group’s investments results based on its business model and type of business. This item consists of EBIT and all effects recorded in the statement of profit or loss deriving from non- consolidated investments using the line-by-line method, i.e. dividends, net profit share of companies evaluated using the net equity method, the decrease in the value of other financial assets and capital gains/losses on the disposal of financial assets available for sale. Fair value movements of the financial assets available for sale are excluded and directly recorded in net asset value. EBIT including net income from This amount is calculated by subtracting the impact for investments before restructuring the period of the restructuring charges and real estate costs and property writedowns / writedowns/revaluations from EBIT, which includes net revaluations income from investments. Development Segment of the real estate market represented by the identification and acquisition of areas requiring upgrading or not yet built up and by the subsequent construction of new buildings. Tertiary Sector Segment of the real estate market represented by non- residential buildings. Net earnings (loss) per share Indicator of the remuneration per share from results in the period. It is calculated as the ratio between the consolidated net income (loss) for the period and the number of shares issued and certified at the end of the year. Vacancy It refers to the portion of real estate properties that does not generate income in the form of rent. Vacancy is calculated as the ratio of vacant floor space to total floor space.

SUMMARY

NOTICE This Summary, prepared in accordance with Regulation 809/2004/EC and Directive 2003/71/EC, summarises the risks and main characteristics of the Issuer, of the Pirelli RE Group and of the Shares. In order to make a proper assessment of the investment, investors are asked to evaluate the information contained in this Summary together with the other information contained in the Prospectus. Please note that the Summary will not be published nor distributed to the public separately from the other Sections of the Prospectus. In particular, note that: (i) The Summary should be read as an introduction to the Prospectus; (ii) Any decision to invest in the Shares must be based on the investor’s review of the entire Prospectus; (iii) If a lawsuit is filed with a court based on the information contained in the Prospectus, the plaintiff investor, in accordance with the national law of the Member State, could be required to bear the cost of translating the Prospectus prior to the beginning of the proceeding; and (iv) Civil liability rests with the individuals or legal entities that prepared the Summary, including any translation, only if the Summary is found to be misleading, inaccurate or inconsistent if read together with the other parts of the Prospectus. Capitalized terms are defined in the “Definitions” section or body of the Prospectus. References to Sections, Chapters and Paragraphs refer to Sections, Chapters and Paragraphs of this Prospectus.

A. RISK FACTORS The transaction described in the Prospectus presents the typical elements of risk of an equity investment. In order to properly assess the investment, investors are invited to evaluate the specific risk factors (whose titles are indicated hereinafter) relating to the Issuer and to the business sector in which it operates, and to the financial instruments offered. For further information on the risk factors connected to the investment, see Section One, Chapter IV.

1. RISKS RELATING TO THE ISSUER AND THE GROUP

A) RISKS CONNECTED TO THE ISSUER’S FINANCIAL STRUCTURE

1.1 Risks connected to financial indebtedness

1.2 Risks relating to the failure to comply with financial covenants

1.3 Risks connected to the existence of change of control clauses

1.4 Risks connected to the fluctuation of interest rates

B) RISKS CONNECTED TO THE ISSUER’S BUSINESS

1.5 Risks relating to the negative trend in Pirelli RE Group’s results for the year ended 31 December 2008 and for the period ended 31 March 2009

1.6 Risks connected to the failure to implement the 2009 – 2011 Business Plan, to the forecasts and estimated profit and to the priority disclosures and forecast information concerning the evolution of the relevant market

1.7 Risks relating to litigation proceedings involving Pirelli RE and its controlled companies

1.8 Risks relating to the existence of change of control clauses concerning use of the Pirelli trademark

1.9 Risks connected to writedowns of the Group’s real estate assets and negative results of the impairment test on intangible fixed assets

1.10 Transactions with related parties

C) RISKS INHERENT IN FUNDS/COMPANIES IN WHICH THE PIRELLI RE GROUP HOLDS SIGNIFICANT MINORITY INTERESTS

1.11 Risks connected to qualified minority interests in investment initiatives

1.12 Risks relating to the corporate governance structure of investment vehicles

1.13 Risks relating to the presence of financial covenants in loan agreements entered into by the real estate funds and investment vehicles

1.14 Risks relating to litigation proceedings involving controlled companies and joint ventures

1.15 Risks relating to the concentration of tenants

1.16 Risks connected to the financial situation of the Arcandor group

2. RISKS RELATING TO THE BUSINESS SECTOR IN WHICH THE ISSUER OPERATES

2.1 Risks connected to the trend of the real estate market

2.2 Concentration of business in Italy and Germany

3. RISKS RELATING TO THE RIGHTS OFFERING AND ISSUER’S FINANCIAL INSTRUMENTS

3.1 Risks connected to the dilutive effect on the Issue’s share capital in the event the Rights are not exercised

3.2 Risks connected to the volatility of the Issuer’s share price

3.3 Risks connected to the markets in which the Offer is prohibited without authorization from the competent authorities

3.4 Risks connected to the possible delisting of the Issuer’s shares from the MTA

3.5 Risks connected to general liquidity problems in the markets and specific to the Company’s shares

B. THE ISSUER AND THE GROUP, ITS BUSINESS AND PRODUCTS 1. The Issuer Pirelli RE is a joint stock corporation and operates pursuant to Italian law. Pirelli RE has its registered office in Milan at Via Gaetano Negri, No. 10. It is registered with the Register of Enterprises of Milan No. 02473170153 and its Tax and VAT identification number is 02473170153. For further information, see Section One, Chapter V, Paragraph 5.1. Outstanding share capital The Issuer’s share capital was fully subscribed and paid up as of the Prospectus Date, and was equal to Euro 21,298,616.00, divided in 42,597,232 ordinary shares with a nominal value of Euro 0.50 each. For further information, see Section One, Chapter XXI, Paragraph 21.1. Purpose of the Company and duration Pursuant to Article 4 of its By-laws, the corporate purposes of the Company are: (i) promoting and participating in transactions and investments in the real estate sector; (ii) coordinating and managing transactions and investments in the real estate sector; (iii) purchasing interests in other companies or legal entities, whether in Italy or abroad; (iv) funding and technically and financially coordinating the companies or legal entities in which it holds interests. The following specific activities are also part of the purposes of the Company: purchasing, selling, exchanging and renting buildings of all types and sizes; planning, building, demolishing and maintaining buildings in general; planning and performing works involving reclamation and urbanisation, entering into contracts for the aforementioned activities; and providing services in the real estate sector. The Company may also perform all commercial, business, securities and real estate transactions necessary or useful to pursue the foregoing purposes (including issuing personal or collateral guarantees, whether or not for the benefit of third parties, and obligating itself under mortgages and loans), with the strict exclusion of public financial activities and all other activities which are restricted pursuant to applicable regulations. The Issuer’s term of incorporation is due to end on 31 December 2100. For further information, see Section One, Chapter XXI, Paragraph 21.2. The Issuer and Group’s history The beginning of the Company’s business dates back to the late ‘80s when a series of business combinations and reorganizations of companies operating in the real estate sector led to the establishment of Milano Centrale S.p.A. (now Pirelli & C. Real Estate S.p.A.). In the early ‘90s, the Issuer also started performing its business for unaffiliated entities, initially by providing agency and project management services, and subsequently by providing property and

facility management services. Starting in 1997, the Issuer began signing agreements with leading international operators, thus anticipating the recovery of the Italian real estate market. These agreements included the Issuer’s first partnership with a strategic investor, The Morgan Stanley Real Estate Fund III International, a real estate fund managed by the Morgan Stanley group. As the purpose of this agreement was to optimize real estate portfolios for the commercial (office) market, it enabled the Issuer to become familiar with in operating methods used in the most advanced markets, which it then applied in the residential market in Italy. Thanks also to this knowledge, the Issuer laid the foundation of the operational model it used up until 2008, which over time, led Pirelli RE to become a successful manager of real estate companies, real estate funds, real estate portfolios and non performing loans (in which it co- invested with minority interests) and the provider – both for the investments in which it held an interest and for third parties - of specialized real estate services (agency, project management, property management, facility management and credit servicing). Important transactions were carried out in collaboration with international and national institutional investors from 1999 to 2002. These included the public tender offer made for all Unione Immobiliare S.p.A. shares (2000), the purchase of several real estate portfolios of Edilnord 2000 S.p.A. and several companies of the Edilnord group which provided specialized property management (project management and real estate brokerage services - 2002), the purchase of the non-strategic assets of the Banca di Roma and RAS groups (2002) and the so- called Progetto Tiglio, which mainly consisted of integrating a building complex and area (owned by the Issuer, Pirelli & C., Olivetti S.p.A., Olivetti Multiservices S.p.A., Telecom Italia S.p.A., Telecom Italia Mobile S.p.A., SEAT Pagine Gialle S.p.A. and by two The Morgan Stanley controlled companies in which Pirelli RE held an interest), and services performed by several of the relevant entities (2002). In 2002, the Company started operating in the non performing loans sector by purchasing financial intermediary Milano Centrale Altofim S.p.A. (now Pirelli RE Credit Servicing S.p.A.) registered in the special register pursuant to Article 107 of the Italian Banking Act and specialized in structured finance connected to the asset backed securities securitisation market. In June 2002, the Issuer’s shares were listed on the MTA. In the years following the listing, the Issuer acquired minority interests in various real estate portfolios to which it also provided management and specialized services. Specifically, the Issuer concentrated on the following main policies: (i) Real estate funds: In 2003, the Issuer purchased an asset management company from the Lazard group and renamed it Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A.. This company focused on forming, promoting and managing closed-end real estate funds targeted to both retail investors and Qualified Investors. In 2005, this business was expanded also to closed- end real estate opportunity funds. As of 31 December 2008, Pirelli RE SGR managed 18 active real estate funds with total assets of Euro 5.9 billion. (ii) Non performing loans: The Issuer also focused on growth in the non performing loans sector by participating (with minority interests) in the acquisition of non performing loan portfolios mainly backed by mortgages, and by offering management services in relation thereto. To this end, in 2004, the Issuer entered into a strategic agreement with Morgan Stanley Real Estate Funds which was subsequently replaced in 2006 by an agreement with Calyon S.A. following the Morgan Stanley group's decision to exit the mortgage-backed non performing loans market in Europe. (iii) Foreign markets: The Issuer expanded its radius of action towards selected foreign markets through acquisitions in Austria (2006), Poland (2006), and Germany (2006, 2007 and 2008). The

principal transactions in this area included the acquisition of Deutsche Grundvermogen AG (DGAG – one of the leading real estate platforms in Germany), Highstreet Holding GbR (a company which, among other things, owns 81 department stores in Germany) and the BauBeCon Group (the owner of a large residential real estate portfolio in Germany, see Section One, Chapter XXII, Paragraphs 22.2.3, 22.2.4, and 22.2.5). Each of the foregoing transactions has been carried out in partnership with leading international investors, based on Pirelli RE’s standard business model. (iv) Offering of specialized services: The Issuer perfected and expanded its offering of specialized services provided both to affiliated and third party companies and real estate funds. On this basis, in 2007 it was purchased, from the Fiat group, Ingest S.p.A., an operator in the facility management sector. In the light of the changed macroeconomic scenario and the crisis that generally hit the financial markets and specifically the real estate sector in the second half of 2008, Pirelli RE commenced a strategic review of the Group’s structure. On this basis, the Issuer sold its equity interest in Pirelli RE Integrated Facility Management B.V. (representing 50% of the share capital - see Section One, Chapter XXII, Paragraph 22.1.1) and approved the 2009 - 2011 Business Plan, which provides for the Capital Increase described in the Prospectus. On 26 May 2009 an agreement was entered into with DGAD International S.à. r.l. (a company wholly controlled by Calyon S.A.) relating to non performing loans (see Section One, Chapter XXII, Paragraph 22.2.6). For further information, see Section One, Chapter V, Paragraph 5.1.5.

2. Information on Issuer and the Group’s Business The Pirelli RE Group is one of the leading operators in the Italian and European real estate business, and promotes and manages investments involving the formation and management of real estate funds and investment vehicles (fund and asset management activities). Pirelli RE holds minority interests in these types of initiatives and aligns its interests with those of the other investors. To these initiatives, which are generally developed together with leading national and international investors and also other customers, the Pirelli RE Group offers specialized real estate services (agency, property management and, in foreign markets, facility and project management services). Starting from 2002, the Pirelli RE Group began to expand its business to the sector of non performing loans (mainly real estate bank mortgages). In this sector, Pirelli RE operates in full compliance with its business model developed for the real estate sector. The real estate sector In the real estate sector, the Pirelli RE Group operates through: (i) investments in funds and vehicle companies and (ii) management activities. (i) Investments in funds and vehicle companies. Pursuant to its operational model, the Issuer typically makes investments in the real estate sector together with specialized financial partners (generally leading investment banks and institutional investors) by creating real estate funds or investment vehicle companies which are used to purchase, improve and subsequently sell assets with homogeneous features in terms of market sectors, risk profile and profitability and in which the Company holds qualified minority interests, generally between 20% and 40% (as of 31 March 2009, the average equity interest was equal to approximately 25%). (ii) Management activities. Management activities, to be intended as the management of real estate assets owned by initiatives of the Pirelli RE Group or by third parties according to the strategic directions indicated in the business plans defined by the parties involved in the various

investments, relying on the experience and specific know-how of the Pirelli RE Group companies. They take two main forms: (a) fund and asset management, and (b) the supply of specialized real estate services. Fund and asset management. The Pirelli RE Group constantly monitors the various geographic markets in which it operates (mainly Italy, Germany and Poland) and the various sectors of the real estate market (residential, tertiary and development). Once an investment opportunity has been identified in these areas, the Pirelli RE Group analyzes its potential, selects the methods to realize it and finally proposes the initiative to potential investors identified based on the risk profile/targeted yield of the initiative and the market sector. If the initiative is actually pursued, the Pirelli RE Group carries out its realization and management in accordance with the strategic directives and optimization plans agreed with the investors. This management activity, which generate revenues in the form of fees proportionate to the services provided and the returns received by investors (if they exceed preset thresholds), are characterized as asset management when they are carried out for the benefit of vehicle companies, and as fund management when Pirelli RE SGR provides such services to the real estate funds it has instituted. Specialized real estate services. Among other management activities, the Pirelli RE Group provides – both for initiatives in which it invests and for third-party customers - specialized real estate services (mainly agency), property management and, with regard to the German and Polish markets, facility management and project management services. The aforementioned business model was developed starting in 1997, when Pirelli RE entered into an investment agreement with the Morgan Stanley group for initiatives in Italy in the tertiary/offices sector. Over the years, similar agreements have been executed with funds managed by the Deutsche Bank group (RREEF) in the commercial sector, with funds managed by Soros Real Estate and Cypress Grove International in the business sector and also with other leading investors. The non performing loans sector Starting in 2002, the Pirelli RE Group expanded its business to the non performing loans sector (mainly real estate bank mortgages). Pursuant to its business model, the Pirelli RE Group invests in this sector with qualified minority interests (see Section One, Chapter VI, Paragraph 6.1.5) and provides administrative management and debt collection services for these initiatives, remunerated through the payment of fees. An important partner in the non performing loans sector is Calyon S.A., with which Pirelli RE entered into a strategic agreement in 2006. The aforementioned business model has allowed the Pirelli RE Group to obtain positive results, starting from its listing and continuing through the year ended 31 December 2007. The crisis that hit the financial markets in general, and specifically the real estate sector, has had a negative influence on the year ended 31 December 2008, which resulted in an attributable consolidated loss of Euro 195.0 million (of which Euro 99.9 million pertained to Pirelli RE). Real estate properties writedowns of Euro 135.8 million and restructuring costs of Euro 44.2 million (consolidated data) had a negative impact on these results. In order to respond effectively to this changed context, Pirelli RE fine-tuned its organization during the second half of 2008; its real estate sector is now divided in two General Management divisions, which are identified based on the pertinent geographical areas: Italy and Germany – Poland. Business units operate within the respective General Management business units and are specialized by product type (residential, tertiary and development). Particular importance is attributed to the role of Pirelli RE SGR and its decision-making autonomy has been further strengthened. It is the legal entity within the Group that performs fund management business in Italy and is responsible for the functional competencies required for real estate fund management. Finally, a specific Management business unit presides over the non performing

loans sector. The diagram below describes the Pirelli RE Group’s organizational structure as of the Prospectus Date.

The table below shows the assets managed (that is managed by implementing the strategic directives defined in the various business plans) by the Pirelli RE Group as of 31 December 2008 and 31 March 2009. The amount of assets managed is a significant figure for the Issuer as it generates income in the form of management fees, commensurate with the value of the volumes administered.

In billions of Euro 31 December 2008 31 March 2009 Assets managed by the Pirelli RE Group 17.3(1) 17.0(2) of which real estate 15.4(3) 15.2(5) of which non performing loans 1.9(4) 1.8(6) Interest pertaining to Pirelli RE Group 4.4 4.4 of which real estate 3.8(3) 3.8(5) of which non performing loans 0.6(4) 0.6(6) (1) Located 50% in Italy, 49% in Germany and the remaining 1% in Poland. (2) Located 49% in Italy, 50% in Germany and the remaining 1% in Poland. (3) Valued with reference to their market value as of 31 December 2008, as indicated by the independent experts appointed for their evaluation. (4) Valued on the basis of their book value as of 31 December 2008. (5) Valued with reference to their market value as of 31 March 2009, as indicated by the independent experts appointed for their evaluation. (6) Valued on the basis of their book value as of 31 March 2009.

For further information, see Section One, Chapter VI.

3. Company bodies and shareholding structure Board of Directors The Board of Directors is composed of 15 members as of the Prospectus Date. The Board members in office as of the Prospectus Date will remain in office until the Ordinary Shareholders’ Meeting to be called to approve the annual financial statements for the year ending 31 December 2010, with the exception of Giulio Malfatto, who was co-opted by the Board of 26

Directors on 8 April 2009 to replace Executive Deputy Chairman Carlo Alessandro Puri Negri, whose appointment shall be confirmed by the Ordinary Shareholders’ Meeting at the first available opportunity. The table below sets forth the names of the members of the Board Directors in office as of the Prospectus Date.

Office Name Place and date of birth Chairman Marco Tronchetti Provera(1) Milan (Italy), 18 January 1948 Chief Executive Officer Giulio Malfatto(1)(2) Leghorn (Italy), 8 June 1955 Chief Financial Officer Claudio De Conto(1) Milan (Italy), 16 September 1962 Chief Technical Officer Emilio Biffi Milan (Italy), 20 October 1940 Director Paolo Massimiliano Bottelli Milan (Italy), 2 December 1969 Olivier Yves Marie de Poulpiquet De Nice Alpes – Maritime (France), Director Brescanvel(1) 11 December 1965 Director Jacopo Franzan Milan (Italy), 9 June 1961 Frankfurt am Main (Germany), 14 March Director Wolfgang Weinschrod 1949 Independent Director Reginald Bartholomew(3) Portland (U.S.A.), 17 February 1936 Independent Director David Michael Brush New York (U.S.A.), 2 March 1960 Independent Director Carlo Emilio Croce(3) Genoa (Italy), 9 September 1945 Independent Director William Dale Crist(4) Kansas (U.S.A.), 29 November 1938 Independent Director Valter Lazzari(4)(5) Piacenza (Italy), 15 April 1963 Independent Director Claudio Recchi(1)(3) Turin (Italy), 20 March 1955 Independent Director Dario Trevisan(4)(6) Milan (Italy), 4 May 1964 (1) Member of the Investment Committee. The commitee was instituted by the Board of Directors on 14 April 2008 with delegated powers over investments, loans and securities up to a maximum of Euro 150 million. (2) Co-opted on 8 April 2009 to replace Executive Deputy Chairman Carlo Alessandro Puri Negri. (3) Member of the Remuneration Committee. (4) Member of the Audit and Corporate Governance Committee. (5) Co-opted on 5 March 2009 to replace Dolly Predovic and confirmed by the Ordinary Shareholders’ Meeting on 17 April 2009. (6) He is also the Lead Independent Director. The members of the Board of Directors are all domiciled for purposes of their office at the registered office of the Company. For further information, see Section One, Chapter XIV, Paragraph 14.1.1. Board of Statutory Auditors The Company’s Board of Statutory Auditors is composed of three Statutory Auditors and two Alternate Auditors. The Ordinary Shareholders’ Meeting held on 20 April 2007 appointed the Board of Statutory Auditors for the three-year term 2007 – 2009. The Auditors in office as of the Prospectus Date will remain in office until the Ordinary Shareholders’ Meeting to be called to approve the financial statements for the year ending 31 December 2009. The table below sets forth the names of the members of the Board of Statutory Auditors in office as of the Prospectus Date.

Office Name Place and date of birth Chairman Roberto Luigi Maria Bracchetti Milan (Italy), 23 May 1939 Statutory Auditor Paolo Carrara Nembro (Italy), 26 May 1934 Statutory Auditor Gianfranco Polerani Milan (Italy), 28 May 1925 Alternate Auditor Franco Ghiringhelli Varese (Italy), 12 March 1949 Alternate Auditor Paola Giudici Varese (Italy), 9 September 1967 The members of the Board of Statutory Auditors are all domiciled for the purposes of their office at their respective business addresses. For further information, see Section One, Chapter XIV, Paragraph 14.1.2. General Managers The table below sets forth information on the Issuer’s General Managers, with the exception of the General Manager for Germany and Poland, Paolo Massimiliano Bottelli, who is also a member of the Board of Directors of the Issuer and whose personal information is indicated in the related table. Name Place and date of birth Office Gerardo Benuzzi Milan (Italy), 19 August 1960 General Manager of Finance & Advisory Rodolfo Petrosino Milan (Italy), 18 October 1963 General Manager Italy For further information, see Section One, Chapter XIV, Paragraph 14.1.3. Independent Auditors The Independent Auditors are appointed to carry out: (i) an audit of the Issuer’s financial statements and consolidated financial statements, (ii) a limited audit of the Issuer’s consolidated interim reports, (iii) an assessment of accuracy of the Issuer’s accounting books and records, (iv) a verification of the consistency of the Directors’ Report with the financial statements and consolidated financial statements, and (v) audits connected with the Issuer’s tax returns, for the financial years 2008 – 2016, is Reconta Ernst & Young S.p.A., with registered office at Via Romagnosi, No. 18/A, 00196 Rome and registered as No. 2 in the Consob Special Register pursuant to Article 161 of the TUF. For further information, see Section One, Chapter II, Paragraph 2.1. Principal shareholders The table below sets forth the persons who, based on the data available for the Company, directly or indirectly hold 2% or more of the Company’s share capital with voting rights.

No. of Shares as of the % of voting share capital Shareholder Prospectus Date Pirelli & C. S.p.A. 24,046,432 56,451 Alony Hetz Properties & Investments 1,565,600 3,675 Ltd. Threadneedle Asset Management Holdings 990,164 2,324 Ltd. Pirelli RE owns 1,189,662 treasury shares equal to 2.793% of its share capital.

For further information, see Section One, Chapter XVIII, Paragraph 18.1.

C. SELECTED FINANCIAL DATA Key information concerning selected financial data This Summary provides selected financial information for the Issuer as of and for the years ended 31 December 2008, 2007 and 2006 and as of and for the three-month period ended 31 March 2009. This information are derived from: • The Pirelli RE Group unaudited interim financial statements as of and for the three-month period ended 31 March 2009; • The Company’s consolidated financial statements as of and for the years ended 31 December 2008 (audited by the Independent Auditors) and 2007 and 2006 (audited by PricewaterhouseCoopers S.p.A.) prepared in accordance with IFRS. Such information and documents, if not included in this Prospectus, are incorporated by reference pursuant to Article 11(2) of Directive 2003/71/EC and Article 28 of Regulation 809/2004/EC. These documents are available to the public at the Issuer’s registered office and on its website www.pirellire.com under the section Investor Relations. The financial statements for all periods presented have been derived from the consolidated financial statements available to the public and are also presented in Section One, Chapter XX. We note that the income statement for the year ended 31 December 2007, included for comparative purposes in the consolidated financial statements for the year ended 31 December 2008, was redetermined with respect to the income statement included in the consolidated financial statements for the year ended 31 December 2007, mainly due to reclassifications required to comply with International Financial Reporting Standards IFRS 5, in relation to the disposal of Integrated Facility Management business unit, to represent the economic results of the disposed assets during 2008. Such income statement is indicated as redetermined in the following tables. In particular, a reclassification has been performed for each item on the 2007 consolidated income statement interested by a contribution of the assets relating to Integrated Facility Management. The amounts in question have been reclassified into a single item named Net income(loss) from discontinued operations, with no change in terms of net consolidated income for the period. The methods used to re-determine the income statement have been examined by the Independent Auditors for the purposes of expressing their opinion on the consolidated financial statements as of and for the period ended 31 December 2008. We also note that due to and for the same reasons, the Company also redetermined the data relating to the income statement for the quarter ended 31 March 2008, included for comparative purposes in the Pirelli RE Group interim financial statements as of and for the three-month period ended 31 March 2009. The following financial data highlight several measures used by Company’s management to monitor and evaluate its and the Group’s operations and financial performance. Such measures are not identified as accounting measures under the IFRS, and therefore should not be considered an alternative measure to evaluate the financial position. The Issuer deems the financial information hereinafter indicated to be an important parameter for measuring the Group’s performance as it enables analyzing the Group’s economic, equity and financial trends. However, as the determination of these measures is not regulated by relevant accounting principles, the calculation methods used by the Company may not be homogenous with those implemented by similar companies and therefore these measures may not be comparable. For further information, see Section One, Chapter IX, Paragraph 9.3.

The Issuer has decided not to include the selected financial information relating to the Company’s individual financial statement data believing that such information does not provide any additional, relevant elements with respect to the Group’s consolidated data. The following selected financial information must be read together with Chapters III, IX, X and XX in Section One. Selected economic data The following are the Pirelli RE Group principal economic data for the quarters ended 31 March 2009 and 2008.

Quarter ended 31 March 2008 (In millions of Euro) 2009 Redetermined Operating Revenues(1) 61.5 128.6 Operating Costs(1) (63.7) (108.2) EBIT (2.2) 20.4 Financial income 9.3 12.4 Financial expenses (11.6) (12.0) Change in fair value of financial assets 3.0 (1.4) Net profit share from investments in associates and joint ventures (13.0) (1.7) Result before income taxes (14.5) 17.7 Income taxes (2.1) (5.4) Net income (loss) from continuing operations (16.6) 12.3 Net income (loss) from discontinued operations - 0.7 Net income (loss) for the period (16.6) 13.0 attributable to minority interests (0.8) 1.4 Consolidated net income (loss) for the period (15.8) 11.6 (1) We note that the items Operating revenues and Operating costs, were referred to as Total production value and Total production costs respectively in the income statements tables of the Pirelli RE Group interim financial statements as of and for the three-month period ended 31 March 2008. These items have been renamed to make the tables used in this Chapter consistent with those used by the Issuer in the three-month period ended 31 March 2009. As announced to the market on 20 April 2009, in view of the Capital Increase and to provide all shareholders with the most complete information possible, the Company has asked independent experts for an extraordinary update of the reports of the real estate assets managed as of 31 March 2009. Such reports show that the market values as of 31 March 2009 indicate a variation of -0.5% on an homogeneous basis compared with the same assets as of 31 December 2008, equal to a negative impact of approximately Euro 6.6 million, in line with the range of values disclosed to the market, on the book value of the real estate assets reflected in the interim consolidated financial statements of the Pirelli RE Group as of 31 March 2009, already approved and published on the date the reports were updated. This impact, which would result in a reduction of net equity for the period of approximately 2% (from Euro 317.1 million to Euro 310.6 million) and an increase in the net consolidated loss for the first quarter of 2009 (from Euro 15.8 million to Euro 22.3 million) will be recognised in the half-yearly financial statements as of and for the period ending 30 June 2009 of the Pirelli RE Group. The following are the Group’s main economic data for the Pirelli RE Group for the years ended 31 December 2008, 2007 and 2006.

Year ended 31 December (In millions of Euro) 2007 2008 2007 2006 Redetermined Operating Revenues(1) 412.4 1,805.8 2,242.1 739.6 Operating Costs(1) (483.6) (1,772.7) (2,191.7) (635.9) EBIT (71.2) 33.1 50.4 103.7 Profit from investment sales - 11.2 55.9 - Financial income 49.4 46.3 46.7 29.8 Financial expenses (71.1) (87.0) (91.4) (27.0) Dividends received 0.4 2.2 2.2 4.0 Change in fair value of financial assets 3.8 14.2 14.2 (0.8) Net profit share from investments in associates and joint (177.0) 115.0 117.0 101.6 ventures Result before income taxes (265.7) 135.0 195.0 211.3 Income taxes (1.9) (23.6) (34.1) (49.3) Net income (loss) from continuing operations (267.6) 111.4 160.9 162.0 Net income (loss) from discontinued operations 74.6 49.5 0.0 0.0 Net income (loss) for the period (193.0) 160.9 160.9 162.0 - attributable to minority interests 2.0 9.8 9.8 2.5 Consolidated net income (loss) for the period (195.0) 151.1 151.1 159.5 (1) We note that the items Operating revenues and Operating costs were referred to as Total production value and Total production costs respectively in the income statements tables of the consolidated financial statements as of and for the years ended 31 December 2007 and 2006. These items have been renamed to make the tables used herein consistent with those used by the Issuer in the financial statements as of and for the year ended 31 December 2008. The following are the principal income statement amounts used by Company management to monitor and evaluate the Group’s operations performance. Such measures are not identified as accounting measures under IFRS, and therefore should not be considered an alternative measure to evaluate the Group’s economic trends and the related economic and financial position.

Year ended 31 December 2007 (In millions of Euro) 2008 Redetermined 2007 2006 Pro-rata aggregate revenues(1) 775.6 1,043.7 1,543.1 1,560.0 Consolidated revenues(2) 365.1 428.8 853.1 702.0 EBIT before restructuring costs and property writedowns/revaluations (17.7) 33.4 50.7 104.6 Net income from investments before property writedowns/revaluations (42.0) 71.6 118.4 101.9 EBIT including income from equity investments before restructuring costs and property writedowns/revaluations (59.7) 105.1 169.0 206.5 Restructuring costs (44.2) - - - Property writedowns/revaluations (135.8) 67.5 67.5 7.9 EBIT including net income from investments(3) (239.7) 172.6 236.5 214.4 Financial income from equity interests 23.0 24.1 24.2 22.6 EBIT including financial and net income from investments (216.7) 196.7 260.7 237.0 Financial expenses (49.0) (61.6) (65.8) (25.7) Result before income taxes (265.7) 135.0 195.0 211.3 Income taxes (1.9) (23.6) (34.1) (49.3) Net profit (loss) before discontinued operations (267.6) 111.4 160.9 162.0 Discontinued operations 74.6 49.5 - - Net profit (loss) (193.0) 160.9 160.9 162.0 Third-party interests (2.0) (9.8) (9.8) (2.5) Consolidated net income for the year (195.0) 151.1 151.1 159.5 (1) Pro-rata aggregate revenues state the Group’s total business volume and are determined by adding the pro-rata revenues of the associates, joint ventures and real estate funds in which the Issuer holds minority stakes to consolidated revenues. (2) The value as of December 2007 is indicated net of the sales (at cost), due to share transfer, of real estate properties owned by company DGAG to the joint ventures with RREEF and MSREF equal to Euro 1,295.6 million. (3) EBIT including net income from investments as of 31 December 2008 indicates the trend of the Group’s results and is composed of EBIT (Euro -71.2 million) plus the net profit share of companies valued at equity (Euro -177 million), dividends from affiliates and dividends and income from real estate funds (for a total of Euro 2.9 million), in addition to the capital gains on the disposal of shares of real estate funds (Euro 5.6 million) classified in the Financial income and Change in fair value of financial assets items in the consolidated income statement table enclosed to the notes to the consolidated financial statements as of 31 December 2008.

Selected balance sheet and financial data The following are the Issuer’s principal balance sheet and financial data as of 31 March 2009 and 31 December 2008, 2007 and 2006 respectively.

31 March 31 December 31 December 31 December (In millions of Euro) 2009 2008 2007(1) 2006(1) Fixed assets 555.9 589.1 879.6 581.3 of which investments in real estate funds and investment companies 374.4 405.7 594.8 426.8 of which goodwill 137.8 137.8 218.4 93.4 Net working capital 139.4 133.1 190.5 283.3 Net invested capital 695.3 722.2 1,070.1 864.6 Net equity 320.1 366.4 720.1 708.7 of which attributable to Group net equity 317.1 361.7 715.7 700.3 Funds 65.9 66.3 60.3 59.5 Net financial position 309.3 289.5 289.7 96.4 of which receivables for shareholders loans (589.1) (572.3) (526.4) (334.1) Total covering net invested capital 695.3 722.2 1,070.1 864.6 Net financial position excluding receivables for shareholders loans 898.4 861.8 816.1 430.5 Net invested capital net of receivables for shareholders loans 1,284.4 1,294.5 1,596.5 1,198.7 (1) The foregoing table differs from the table included in the Directors’ Report included in the Issuer’s financial statements as of and for the years ended 31 December 2007 and 2006 due to a reclassification of the provision for future risks on investments valued at equity (which was previously classified in the line Funds) to reduce the value of the investments in real estate funds and investment companies. This reclassification was performed to make this table consistent with the table set forth in the Directors’ Report included in the Issuer’s financial statements as of and for the year ended 31 December 2008. With regard to the effects of the extraordinary reports requested by Pirelli RE from the real estate experts, completed after the date of publication of the Pirelli RE Group’s interim consolidated financial statements as of 31 March 2009, see the paragraph on Selected Financial Data in this Summary. The following is the detailed breakdown of the Pirelli RE Group’s net financial position as of 31 March 2009, as compared with 31 December 2008, 31 December 2007 and 31 December 2006.

31 March 31 December 31 December 31 December (In millions of Euro) 2009 2008 2007 2006 Current financial assets Financial receivables 19.3 17.1 19.6 1.7 Securities held for trading - - 0.5 - Cash and cash equivalents 30.2 35.7 115.7 59.9 Total current financial assets – (A) 49.4 52.8 135.8 61.6 Current financial liabilities Bank borrowings(1) (337.7) (187.4) (81.2) (452.6) Payables to other financial institutions (498.4) (498.0) (630.7) (12.3) Total current financial liabilities – (B) (836.1) (685.4) (711.9) (464.9) Non-current financial liabilities Bank borrowings(1) (109.9) (227.4) (235.1) (10.9) Payables to other financial institutions (1.8) (1.8) (4.9) (16.3) Total non-current financial liabilities – (C) (111.7) (229.2) (240.0) (27.2) Net financial position excluding receivables for shareholders’ loans -(D) = (A+B+C) (898.4) (861.8) (816.1) (430.5) Non-current financial assets Financial receivables 589.1 572.3 526.4 334.1 Total non-current financial assets – (E) 589.1 572.3 526.4 334.1 NET FINANCIAL POSITION (DEBT) – (F) = (D+E) (309.3) (289.5) (289.7) (96.4) (1) The data for 2007 shown in the table reflect a reclassification, of 117.1 million euro, between the current and the non-current portions of bank borrowings: this reclassification was included in the comparative data of the financial statements as of 31 December 2008 for comparison’s uniformity reasons.

The table below sets forth the cash flows for the years ended 31 December 2008, 31 December 2007 and 31 December 2006.

Year ended 31 December 2007 2008 2007 2006 (In millions of Euro) Redetermined Net cash flow generated / (absorbed) by operating activities (A) 66.7 256.6 255.2 153.4 Net cash flow generated / (absorbed) by investing activities (B) 53.2 (669.0) (667.6) (224.5) Net cash flow generated / (absorbed) by financing activities (C) (196.3) 471.3 471.3 106.4 TOTAL NET CASH FLOW (D=A+B+C) (76.4) 58.9 58.9 35.3 Cash and cash equivalents at the beginning of the period (E) 112.1 53.2 53.2 17.9 Cash and cash equivalents at the end of the period (F=D+E) 35.7 112.1 112.1 53.2 of which: - cash and cash equivalents 35.7 115.7 115.7 59.9 - bank overdrafts - (3.6) (3.6) (6.7) Per-share information The table below sets forth the Issuer’s basic net earnings per share for the years ended 31 December 2008, 2007 and 2006.

Year ended 31 December 2007 2008 Redetermined 2007 2006 Weighted average number of shares outstanding for the calculation of earnings (loss) per share: - basic (A) 41,371,151 41,810,420 41,810,420 40,735,594 - diluted (B) - - - 41,549,973 Group net income (loss) for the period from continuing operations (in millions of Euro) (C) (268.4) 104.8 151.1 159.5 Earnings (loss) per share (Euro): - basic (A/C) (6.5) 2.5 3.6 3.9 Group net income (loss) for the period from discontinued operations (in millions of Euro) (D) 73.4 46.3 - - Earnings (loss) per share (Euro) for discontinued operations: - basic (D/A) 1.8 1.1 n.a. n.a. Group net income (loss) for the period (in millions of Euro) (E) (195.0) 151.1 151.1 159.5 Earnings (loss) per share (Euro): - basic (E/A) (4.7) 3.6 3.6 3.9 - basic (E/B) -- -3.8

D. INFORMATION CONCERNING THE RIGHTS OFFERING

1. Features of the Rights Offering The Shares subject to the Offering derive from the Capital Increase resolved by the Issuer’s Extraordinary Shareholders’ Meeting held on 17 April 2009. The Issuer’s Extraordinary Shareholders’ Meeting resolved to: (i) increase the share capital, by means of a divisible capital increase, up to a maximum amount of Euro 400,000,000.00 (including of any share premium) through the issue of a maximum amount of 800,000,000 ordinary shares having a par value of Euro 0.50 each, with regular dividend entitlement, to be offered to the existing shareholders at a price equal to the theoretical ex-rights price (TERP) of the Pirelli RE ordinary share. The above mentioned price is to be calculated using current methods based on the arithmetic average of the official prices recorded over a period of at least three trading days prior to determination of the issue price and discounted - within the legal limits - in a measure that will determined by the Board of Directors taking into account the prevailing market conditions at the time the transaction will be actually launched, the trading price of the Pirelli RE’s ordinary shares, and market practices for similar operations. As set forth by the applicable laws, the issue price of the new shares should be no lower than their nominal value, of Euro 0.50; (ii) grant the Board of Directors with any and all powers to: • determine the issue price, based on the criteria indicated under (i) above; • determine, depending on the fixed issue price, the maximum number of newly issued shares; • determine the ratio pursuant to which newly issued shares will be offered to the Company’s existing shareholders, taking into account the fact that treasury shares are excluded from this calculation; • determine the timeline for implementing the capital increase resolution, within and no later than 31 December 2009. (iii) grant the Board of Directors - and on its behalf the Chairman, the Chief Executive Officer and the Chief Financial Officer, severally – with all the powers needed to execute the resolved capital increase, also by converting financial receivables owed to the Company, in accordance with the characteristics determined under (i) and (ii) above, with all the authority needed to complete any necessary or related deed and with the express authority to take every necessary or appropriate action to implement this resolution and specifically: • to set the terms of the Rights Auction of unexercised rights, pursuant to Article 2441(3) of the Italian Civil Code, and to place, including to the benefit of third parties, the ordinary shares of Pirelli RE which will remain unsubscribed even after such Rights Auction; • to prepare and present any document required for the purposes of this transaction, including the Rights Offering prospectus; (iv) to amend accordingly Article 5 of the By-laws; (v) to establish that, if within the final term of 31 December 2009, the Capital Increase has not been fully subscribed, the share capital will be increased by an amount corresponding to the collected subscriptions. On 11 June 2009, the Board of Directors of the Company resolved to issue up to a maximum of 798,574,564 newly issued ordinary shares, each having the same characteristics as those outstanding, to be offered to shareholders at a price of Euro 0.50 per share at a ratio of 135

newly issued share for any 7 ordinary shares owned, for a maximum total countervalue of Euro 399,287,282.00. The Offering is not subject to any condition. For further information, see Section Two, Chapter V, Paragraph 5.1. 2. Recipients and modalities of acceptance The Shares will be offered as pre-emption rights to the Issuer’s existing shareholders. The Offering is promoted exclusively in Italy based on the Prospectus. The Offering is addressed indistinctly, under the same conditions, to all the Issuer’s existing shareholders, but is not directly or indirectly promoted in the United States of America, Canada, Japan and Australia or in any other Country in which the Offering is not allowed in the absence of specific authorization in accordance with the legal provisions applicable in each of such countries, or in derogation of such provisions (collectively Other Countries). Any application for participation that, directly or indirectly, originates from the United States of America, Canada, Japan and Australia or from Other Countries, or through services in any regulated market of the United States of America, Canada, Japan and Australia, or of Other Countries in which such applications are in violation of local laws, shall not be accepted. The Shares and Rights are not, and shall not, be registered pursuant to the United States Securities Act of 1933 as subsequently amended, nor pursuant to the corresponding rules in force in Canada, Japan or Australia or Other Countries, and as a result they cannot be offered or, in any way delivered, whether directly or indirectly, to the United States of America, Canada, Japan, Australia or to Other Countries. The Rights may be exercised during the Subscription Period from 15 June 2009 to 3 July 2009 inclusive, submitting the appropriate request through the Authorized Financial Intermediaries who are account holders with Monte Titoli. Any Rights not exercised will be forfeited by the holders thereof without compensation. The Rights to subscribe for the Shares will be traded on the stock market from 15 June 2009 to 26 June 2009 inclusive. The Rights have the ISIN code IT 0004490576. Subscription of the Offering will take place by signing subscription forms prepared by Authorized Financial Intermediaries who are account holders with Monte Titoli. Each Issuer’s existing shareholder whose shares have been registered with an Authorized Financial Intermediary and placed as book entries in the Monte Titoli centralized management system may exercise their Rights. The Offering shall become irrevocable as of the date of filing of the relevant notice with the Register of Enterprises, pursuant to Article 2441(2) of the Italian Civil Code. In the event the Offering is not executed within the terms provided for in this Prospectus, notice thereof shall be given to the market and to Consob by the trading day prior to the scheduled Subscription Period starting date by means of a communication pursuant to Articles 114 of the TUF and 66 of the Regulation on Issuers, and a specific notice published in a national daily newspaper and sent simultaneously to Consob. Rights not exercised during the Subscription Period shall be offered on the stock market pursuant to Article 2441(3) of the Italian Civil Code. The Shares have the ISIN code IT 0003270615.

For further information, see Section Two, Chapter V, Paragraphs 5.1.3 and 5.2. 3. Payment for and delivery of the Shares Full payment of Shares will be made at the time of their subscription to the Authorized Financial Intermediary where the request to subscribe by exercising the Rights has been submitted. The Issuer will not charge the applicant any additional cost or expense. The Shares will be made available in the accounts of the Authorized Financial Intermediaries in the centralized Monte Titoli system on the same date, beginning on 6 July 2009, on which the amounts paid for the exercise of said shares are made available in the Company’s account, subject to any delays for reasons beyond the Company’s control and, in any event, the shares will be made available within the tenth trading day after the end of the Subscription Period. The Shares subscribed by the end of the Rights Auction will be made available to the beneficiaries through Authorized Financial Intermediaries who are account holders with Monte Titoli by the tenth trading day after the end of the Rights Auction. For further information, see Section Two, Chapter V, Paragraph 5.1.8. 4. Timetable of and information on the Offering

The following table summarizes the projected timetable for the Offering.

Events Date Subscription Period commences 15 June 2009 Trading of Rights commences 15 June 2009 Trading of Rights ceases 26 June 2009 Subscription Period ceases 3 July 2009 Communication of results of the Offering at the end of Within 5 days from the end of the Subscription Period the Subscription Period

The table below summarizes the key information for the Offering.

Key information Number of Shares offered as pre-emptive subscription rights 798,574,564 Option ratio No. 135 shares for any no. 7 ordinary shares owned Subscription Price per Share Euro 0.50 Total countervalue of the Capital Increase(1) Euro 399,287,282.00 Total number of shares comprising the share capital of Pirelli RE post-Offering(1) 841,171,796 Share capital of Pirelli RE post-Offering(1) Euro 420,585,898.00 Percentage of Shares out of the share capital of Pirelli RE post-Offering(1) 94.9% (1) Assuming that the Offering is fully subscribed.

Note that the timetable for the transaction is indicative and may be subject to change if events and circumstances outside of the Company’s control occur, including particularly volatile conditions on the financial markets, which could jeopardise a successful outcome of the Offering. Any changes to the Subscription Period will be announced to the public by means of a special notice to be published with the same modalities applicable for the disclosure of the Prospectus. For further information, see Section Two, Chapter V, Paragraph 5.1.3.

5. Subscription commitments and guarantee of success of the Offering The Issuer’s controlling shareholder Pirelli & C. has assumed an irrevocable commitment to the Company to exercise all the Rights it is entitled to as owner of 56.45% of the Company’s share capital prior to the Capital Increase. Pirelli & C. has likewise expressed its availability to subscribe all newly issued shares that will remain unsubscribed at the end of the Subscription Period and the possible Rights Auction, but has given no undertaking in this regard. In light of the above, Pirelli RE has decided not to set up an underwriting syndicate, but has reserved the right to do so if needed. In such a case, details will be given in the Notice of Publication of Prospectus. For further information, see Section Two, Chapter V, Paragraphs 5.2.2 and 5.4.3. 6. Dilutive effects of the Capital Increase As this involves an increase in capital by rights offering, there are no dilutive effects in terms of capital interest quotas with respect to Pirelli RE’s existing shareholders who exercise their Rights. In the event of failure to exercise their Rights, following the issue of the Shares, existing shareholders will suffer a maximum dilution of their interests, in terms of percentage of share capital, of 94.94%. 7. Reasons for the Offering, estimate of net proceeds and their allocation The Capital Increase is part of the 2009 – 2011 Business Plan aimed at boosting the Company as a result of the changed context (see Section One, Chapter XIII). In particular, the Capital Increase is aimed at allowing Pirelli RE – through a stronger organization adjusted to the special market conditions following the crisis generally involving the financial markets and specifically the real estate business – to support the actions set forth in the Plan and to strengthen its capital structure, thereby reducing its leverage. With regard to the use of the proceeds of the Capital Increase, the facts described in Section Two, Chapter V, Paragraph 5.4.3 must first be taken into account, namely: • the fact that the Shareholders’ Meeting held on 17 April 2009 granted the Board of Directors a with the powers to execute the Capital Increase, also by capitalizing loans owed by the Company; • the commitment of the controlling shareholder Pirelli & C. to subscribe the Rights to which it is entitled, and its availability to subscribe any newly issued shares which will remain unsubscribed at the end of the offering process provided for by applicable laws; However, Pirelli & C. has given no undertaking in relation to this last aspect; • the willingness expressed by Pirelli & C. to fulfil these commitments by converting into equity part of Pirelli RE’s borrowings under the revolving financing agreement entered into on 6 November 2008 for a maximum amount of Euro 750 million, of which Euro 490.0 million had been drawn down as of 31 March 2009, and to use the same subscription method in the event that it intends to follow up its declaration of willingness to subscribe any newly issued shares which may remain unsubscribed at the end of the offering process as provided for by applicable laws. In consideration of the above, Pirelli RE intends to allocate all the proceeds from the subscription of the newly issued shares (including those deriving from subscription of Shares to which shareholders other than Pirelli & C. have a right) to reinforcing equity through the reduction of debt, in accordance with the programmes set forth in the 2009 - 2011 Business Plan (see Section One, Chapter XIII, Paragraph 13.2.1). We note that such proceeds will amount to a maximum of approximately Euro 394.8 million, in consideration of the amount of the Capital

Increase (Euro 399.3 million), and the costs connected to its execution (estimated Euro 6.2 million) and the fiscal effect (estimated Euro 1.7 million). Of this amount, approximately Euro 167.4 million will derive from cash subscriptions if, at the end of the subscription period, all the shares offered under the Capital Increase are subscribed (meaning that Pirelli & C. subscribes only the proportion to which it is entitled). Clearly, this amount will decrease proportionately if Pirelli & C. also subscribes shares that remain unsubscribed at the end of the subscription period. The table below shows a numerical representation of the situation described above by assuming the subscription of the entire Capital Increase and indicating the total proceeds therefrom (Euro 399.3 million) net of the related costs (Euro 6.2 million) and net of the related tax effect (Euro 1.7 million).

(In millions of Euro) Unexercised percentage 0% 50% 100% Amount pertaining to Pirelli & C.(1) 231.9 231.9 231.9 Amount subscribed by the market 167.4 83.70 - Amount possibly subscribed by Pirelli & C. for unexercised - 83.70 167.4 rights(3) Total including accessory expenses 399.3 399.3 399.3 Accessory expenses, net of fiscal effect (4.5) (4.5) (4.5) Total Net Capital Increase 394.8 394.8 394.8 Residual financial debt owed by Pirelli RE to Pirelli & C.(2) 258.1 174.4 90.7 Cash raised by Capital Increase 167.4 83.70 - (1) The rights pertaining to Pirelli & C. take account of the add-back for the 1,189,662 treasury shares held by Pirelli RE (corresponding to approximately 2.79% of share capital). As indicated, Pirelli & C. intends to fulfil these commitments by converting into equity part of Pirelli RE’s borrowings under the revolving financing agreement entered into on 6 November 2008 for a maximum amount of Euro 750 million, of which Euro 490.0 million had been drawn down as of 31 March 2009. (2) Debt of Euro 490.0 million as of 31 March 2009, as reduced for the rights to which Pirelli & C. is entitled and possibly subscribed by Pirelli & C. for any unsubscribed rights. The information given refers to the situation after the Capital Increase but prior to use of the related income. (3) If Pirelli & C. decides to cover any unexercised shares, the newly issued shares will be subscribed by means of convertion into equity of the financial receivables referred to in (1) above. 8. Expenses The total amount of the expenses associated with the Offering is estimated at approximately Euro 6.2 million.

E. DOCUMENTS AVAILABLE TO THE PUBLIC The Prospectus is available to the public during the Subscription Period at the Issuer’s registered office (Via Gaetano Negri, No. 10, Milan), and Borsa Italiana S.p.A. (Piazza degli Affari, No. 6, Milan) and on the Issuer’s website www.pirellire.com, together with the following documents: (i) Issuer’s By-laws; (ii) individual and consolidated financial statements of the Issuer as of and for the years ended 31 December 2008, 2007 and 2006, complete with related reports by the independent auditors; (iii) half-yearly reports as of 30 June 2008 and 30 June 2007; (iv) consolidated interim financial statements as of and for the three-month period ended 31 March 2009 and 30 September 2008; (v) information document published by the Issuer on 7 January 2009 relating to the sale of its 50% interest in Pirelli & C. Real Estate Integrated Facility Management B.V. to Manutencoop FM S.p.A..

SECTION ONE

REGISTRATION DOCUMENT

42 Section I Registration Document

1. PERSONS RESPONSIBLE

1.1 Individuals responsible for the Prospectus The Issuer assumes responsibility for the truthfulness and completeness of the data and information contained in the Prospectus.

1.2 Declaration of responsibility The Prospectus conforms with the model filed at Consob 12 June 2009 following Consob’s approval for publication pursuant to Article 94-bis of the Italian Finance Act. The Issuer, responsible for the drafting of the Prospectus, declares that, having exercised all reasonable due diligence for such purpose, the information contained herein is, to the best of its knowledge, true to the facts and does not contain omissions such as would alter the import thereof.

43 Section I Registration Document

2. INDEPENDENT AUDITORS OF THE ACCOUNTS

2.1 Issuers’s Independent auditors of the accounts The consolidated financial statements as of and for the years ended 31 December 2007 and 2006 of the Issuer (see Section One, Chapter XX) were audited by PricewaterhouseCoopers S.p.A., a company with its registered office at Via Monterosa, No. 91, 20149 Milan, and registered as No. 43 in the Consob Special Register pursuant to Article 161 of the Italian Finance Act, which issued audit reports on 27 March 2008 and 4 April 2007 respectively. There have been no objections or refusals of certification by PricewaterhouseCoopers S.p.A. with respect to above mentioned financial statements of the Issuer. PricewaterhouseCoopers S.p.A. also carried out audits to ensure that the company accounts were being kept correctly and that operational events were being duly posted in the Issuer’s accounting records for the years ended 31 December 2007 and 2006 under Article 155(1)(a) of the Italian Finance Act. The three-year certification mandate conferred on the independent auditors PricewaterhouseCoopers S.p.A. expired on the date of approval of the financial statements as of and for the year ended 31 December 2007. In accordance with applicable law, this appointment could not be further renewed, and a new appointment was therefore conferred on the independent auditors Reconta Ernst & Young S.p.A. (the “Independent Auditors”), with registered office at Via Romagnosi, No. 18/A, 00196 Rome and registered as No. 2 in the Consob Special Register pursuant to Article 161 of the Italian Finance Act. Reconta Ernst & Young S.p.A. was appointed by the Shareholders’ Meeting of the Issuer held on 14 April 2008 under the terms of and in accordance with Article 159(1) of the Italian Finance Act: (i) to audit the financial statements and consolidated financial statements of the Issuer – pursuant to Articles 156 and 165 of the Italian Finance Act – for each of the nine years ended from 31 December 2008 to 31 December 2016; (ii) to carry out audits pursuant to Article 155(1)(a) of the Italian Finance Act; (iii) to verify the correspondence between the Directors’ report and the financial statements and consolidated financial statements pursuant to Article 156(4-bis)(d) of the Italian Finance Act; (iv) to perform limited auditing of the condensed interim consolidated financial statements for each of the nine interim periods ending from 30 June 2008 to 30 June 2016; (v) audits connected with signing tax returns (Unified Tax Return or Modello Unico and simplified, ordinary Tax Return 770 or Modello 770) for the financial years 2007 – 2015. The Issuer’s consolidated financial statements for the year ended 31 December 2008 (see Section One, Chapter XX) were audited by Reconta Ernst & Young S.p.A., which issued its audit report on 30 March 2009 without any objections or refusals of certification. The Independent Auditors also: (a) carried out checks to ensure that the company accounts were being kept correctly and that the operational events were being duly posted in the Issuer’s accounting records for the periods analyzed under Article 155(1)(a) of the Italian Finance Act. (b) issued a report, attached hereto, on the procedures carried out and the appropriateness of the statements concerning the consolidated forecast or estimated consolidated profit of the

44 Section I Registration Document

Issuer contained in Section One, Chapter XIII.

2.2 Information on relationship with the independent auditors During the period to which the financial information contained in the Prospectus refers, PricewaterhouseCoopers S.p.A. and Reconta Ernst & Young S.p.A. for their respective periods of responsibility, did not resign nor were they relieved of their duties, nor was their mandate revoked.

45 Section I Registration Document

3. SELECTED FINANCIAL INFORMATION Introduction This Chapter provides selected financial information as of and for the years ended 31 December 2008, 2007 and 2006 and as of and for the three-month period ended 31 March 2009. This information is derived from: • The Pirelli RE Group unaudited interim financial statements as of and for the three-month period ended 31 March 2009; • The Company’s consolidated financial statements as of and for the years ended 31 December 2008 (audited by the Independent Auditors), 2007 and 2006 (audited by PricewaterhouseCoopers S.p.A) prepared in accordance with IFRS. Such information and documents, if not included in this Prospectus, are incorporated by reference pursuant to Article 11(2) of Directive 2003/71/EC and Article 28 of Regulation 809/2004/EC. These documents are available to the public at the Issuer’s registered office and on its website www.pirellire.com under the section Investor Relations. The financial statements for all periods presented have been derived from the consolidated financial statements available to the public and are also presented in Section One, Chapter XX. We note that the income statement for the period ended 31 December 2007, included for comparative purposes in the consolidated financial statements for the period ended 31 December 2008 was redetermined with respect to the income statement included in the consolidated financial statements for the period ended 31 December 2007, mainly due to reclassifications required to comply with International Financial Reporting Standards IFRS 5, in relation to the disposal of the Integrated Facility Management business unit, to represent the economic results of the disposed assets during 2008. Such income statement is indicated as “redetermined” in the following tables. In particular, a reclassification has been performed for each item on the 2007 consolidated income statement subject to a contribution of the assets relating to Integrated Facility Management. Such amounts have been reclassified into a single item named Net income(loss) from discontinued operations, with no change in terms of net consolidated income for the period. The methods used to re-determine the income statements have been examined by the Independent Auditors for the purposes of expressing their opinion on the consolidated financial statements as of and for the year ended 31 December 2008. We also note that consequently and for the same reasons, the Company also redetermined the data relating to the income statement for the quarter ended 31 March 2008, included for comparative purposes in the Pirelli RE Group interim financial statements as of and for the three-month period ended 31 March 2009. The following financial data illustrate several measures used by Company’s management to monitor and evaluate its and the Group’s operations and financial performance. Such measures are not identified as accounting measures under IFRS, and therefore should not be considered an alternative measure to evaluate the Group’s economic trends and the related economic and financial position. The Issuer believes that the following financial information is an important parameter for measuring the Group’s performance as it enables analyzing the Group’s economic, patrimonial and financial trends. Since the determination of these measures is not regulated by relevant accounting principles, the calculation methods used by the Company may not be homogenous with those implemented by similar companies and therefore these measures may not be comparable. For further information, see Section One, Chapter IX, Paragraph 9.3. The Issuer has decided not to include the selected financial information relating to the Company’s individual financial statements data believing that this information does not provide

46 Section I Registration Document any additional relevant elements with respect to the Group’s consolidated data. The following selected financial information shall be read together with Chapters IX, X and XX of Section One.

3.1 Pirelli RE Group selected economic information The following are the Group’s principal economic data for the quarter ended 31 March 2009 compared with the redetermined quarter ended 31 March 2008. We note that the standard vertical-format of the income statement in the interim financial statements is presented in Section One, Chapter IX, Paragraph 9.3.

Quarter ended 31 March 2008 (In millions of Euro) 2009 Redetermined Operating Revenues(1) 61.5 128.6 Operating Costs(1) (63.7) (108.2) EBIT (2.2) 20.4 Financial income 9.3 12.4 Financial expenses (11.6) (12.0) Change in fair value of financial assets 3.0 (1.4) Net profit share from investments in associates and joint ventures (13.0) (1.7) Result before income taxes (14.5) 17.7 Income tax (2.1) (5.4) Net income (loss) from continuing operations (16.6) 12.3 Net income (loss) from discontinued operations - 0.7 Net income (loss) for the period (16.6) 13.0 - attributable to minority interests (0.8) 1.4 Consolidated net income (loss) for the period (15.8) 11.6 (1) We note that the items Operating revenues and Operating costs, were referred to as Total production value and Total production costs respectively in the income statement tables included in the Pirelli RE Group interim financial statements as of and for the three-month period ended of 31 March 2008. The names were changed in this Chapter to standardise the schedules herein with those used by the Issuer in the three-month period ended 31 March 2009. As announced to the market on 20 April 2009, in view of the Capital Increase and to provide all shareholders with the most complete information possible, the Company has asked independent experts for an extraordinary update of the reports of the real estate assets managed as of 31 March 2009. Such reports show that the market values as of 31 March 2009 indicate a variation of -0.5% on an homogeneous basis compared with the same assets as of 31 December 2008, equal to a negative impact of approximately Euro 6.6 million, in line with the range of values disclosed to the market, on the book value of the real estate assets reflected in the interim consolidated financial statements of the Pirelli RE Group as of 31 March 2009, already approved and published on the date the reports were updated. This impact, which would result in a reduction of net equity for the period of approximately 2% (from Euro 317.1 million to Euro 310.6 million) and an increase in the net consolidated loss for the first quarter of 2009 (from Euro 15.8 million to Euro 22.3 million) will be recognised in the half-yearly financial statements as of and for the period ending 30 June 2009 of the Pirelli RE Group. The following are the Group's main economic data for the years ended 31 December 2008, 2007 and 2006.

47 Section I Registration Document

Year ended 31 December 2007 (in millions Euro) 2008 Redetermined 2007 2006 Operating Revenues(1) 412.4 1,805.8 2,242.1 739.6 Operating Costs(1) (483.6) (1,772.7) (2,191.7) (635.9) EBIT (71.2) 33.1 50.4 103.7 Profit from investment sales - 11.2 55.9 - Financial income 49.4 46.3 46.7 29.8 Financial expenses (71.1) (87.0) (91.4) (27.0) Dividends received 0.4 2.2 2.2 4.0 Change in fair value of financial assets 3.8 14.2 14.2 (0.8) Net profit share from investments in associates and joint ventures (177.0) 115.0 117.0 101.6 Result before income taxes (265.7) 135.0 195.0 211.3 Income taxes (1.9) (23.6) (34.1) (49.3) Net income (loss) from continuing operations (267.6) 111.4 160.9 162.0 Net income (loss) from discontinued operations 74.6 49.5 - - Net income (loss) for the period (193.0) 160.9 160.9 162.0 - attributable to minority interests 2.0 9.8 9.8 2.5 Consolidated net income (loss) for the period (195.0) 151.1 151.1 159.5 (1) We note that the items Operating revenues and Operating costs, were referred to as Total production value and Total production costs respectively in the income statements tables of the consolidated financial statements as of and for the years ended 31 December 2007 and 2006. These items have been renamed to make the table used in this Chapter consistent with those used by the Issuer in the financial statements as of and for the year ended 31 December 2008.

3.2 Pirelli RE Group selected balance sheet information The following are the Group’s principal balance sheet data as of 31 March 2009, 31 December 2008, 2007 and 2006.

31 March 31 December 31 December 31 December (In millions of Euro) 2009 2008 2007 2006 Assets Non-current assets Property, plant and equipment 22.2 22.8 39.1 35.3 Intangible assets 159.4 160.6 245.6 119.3 Investments in associates and joint ventures 353.7 357.9 480.3 285.8 Other financial assets 72.8 75.2 109.7 47.2 Deferred tax assets 28.7 28.5 35.3 38.7 Other receivables 620.4 600.4 541.1 431.3 Tax receivables 0.1 0.1 0.1 - Total non-current assets 1,257.3 1,245.5 1,451.2 957.6

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Current Assets Inventories 92.6 93.4 114.3 120.6 Trade receivables 161.7 181.7 411.7 334.3 Other receivables 79.8 82.9 91.1 208.2 Securities held for trading - - 0.5 - Cash and cash equivalents 30.2 35.7 115.7 59.9 Tax receivables 41.5 36.7 56.0 38.4 Derivative financial instruments - - 2.2 1.6 Total current assets 405.8 430.4 791.5 763.0 Total assets 1,663.1 1,675.9 2,242.7 1,720.6

31 March 31 December 31 December 31 December Liabilities 2009 2008 2007 2006 Group net equity Share capital 20.7 20.7 20.6 21.2 Other reserves 131.2 159.6 186.9 231.9 Retained earnings 181.0 376.4 357.1 287.7 Net income/(loss) for the year (15.8) (195.0) 151.1 159.5 Total Group net equity 317.1 361.7 715.7 700.3 Minority interests 3.0 4.7 4.4 8.4 Total net equity 320.1 366.4 720.1 708.7 Non-current liabilities Bank borrowings and payables to other financial institutions(1) 111.7 229.2 240.0 27.2 Other payables 18.7 30.1 1.4 79.8 Provisions for future risks and expenses 26.0 25.4 21.4 26.5 Deferred tax provision - 0.1 3.2 1.2 Employee benefit obligations 16.0 17.3 28.8 20.4 Total non-current liabilities 172.4 302.1 294.8 155.1 Current liabilities Bank borrowings and payables to other financial institutions(1) 836.1 685.4 711.9 464.9 Trade payables 123.3 139.0 343.3 193.0 Other payables 81.4 86.9 132.5 150.5 Provisions for future risks and expenses 97.6 72.2 13.3 11.7 Tax payables 31.1 23.6 26.8 36.7 Derivative financial instruments 1.0 0.3 - - Total current liabilities 1,170.5 1,007.4 1,227.8 856.8 Total liabilities 1,343.0 1,309.5 1,522.6 1,011.9 Total liabilities and net equity 1,663.1 1,675.9 2,242.7 1,720.6 (1) The data for 2007 shown in the table reflect a reclassification, of 117.1 million euro, between the current and the non-current portions of bank borrowings: such reclassification was included in the comparative data of the financial statements as of 31 December 2008 for comparison’s uniformity reasons.

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With regard to the effects of the extraordinary reports requested by Pirelli RE from the real estate experts, completed after the date of publication of the Pirelli RE Group’s interim consolidated financial statements as of 31 March 2009, see Section One, Chapter III, Paragraph 3.1.

3.3 Pirelli RE Group selected financial information The following is a breakdown of the Group’s net financial position as of 31 March 2009, 31 December 2008, 2007 and 2006.

31 March 31 December 31 December 31 December (In millions of Euro) 2009 2008 2007 2006 Current financial assets Financial receivables 19.2 17.1 19.6 1.7 Securities held for trading - -0.5- Cash and cash equivalents 30.2 35.7 115.7 59.9 Total current financial assets – (A) 49.4 52.8 135.8 61.6 Current financial liabilities Bank borrowings(1) (337.7) (187.4) (81.2) (452.6) Payables to other financial institutions (498.4) (498.0) (630.7) (12.3) Total current financial liabilities – (B) (836.1) (685.4) (711.9) (464.9) Non-current financial liabilities Bank borrowings(1) (109.9) (227.4) (235.1) (10.9) Payables to other financial institutions (1.8) (1.8) (4.9) (16.3) Total non-current financial liabilities – (C) (111.7) (229.2) (240.0) (27.2) Net Financial Position excluding receivables for shareholders’ loans - (D) =(A+B+C) (898.4) (861.8) (816.1) (430.5) Non-current financial assets Financial receivables 589.1 572.3 526.4 334.1 Total non-current financial assets – (E) 589.1 572.3 526.4 334.1 NET FINANCIAL POSITION (DEBT) (F) = (D+E) (309.3) (289.5) (289.7) (96.4) (1) The data for 2007 shown in the table reflect a reclassification, of 117.1 million euro, between the current and the non-current portions of bank borrowings: such reclassification was included in the comparative data of the financial statements as of 31 December 2008 for comparison’s uniformity reasons.

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The table below sets forth the main cash flows for the years ended 31 December 2008, 2007 and 2006.

Year ending 31 December

2007 (In millions of Euro) 2008 Redetermined 2007 2006 Net cash flow generated / (absorbed) by operating activities (A) 66.7 256.6 255.2 153.4 Net cash flow generated / (absorbed) by investing activities (B) 53.2 (669.0) (667.6) (224.5) Net cash flow generated / (absorbed) by financing activities (C) (196.3) 471.3 471.3 106.4 TOTAL NET CASH FLOW (D=A+B+C) (76.4) 58.9 58.9 35.3 Cash and cash equivalents at the beginning of the period (E) 112.1 53.2 53.2 17.9 Cash and cash equivalents at the end of the period (F=D+E) 35.7 112.1 112.1 53.2 of which: - cash and cash equivalents 35.7 115.7 115.7 59.9 - bank overdrafts - (3.6) (3.6) (6.7)

3.4 Pirelli RE Group per-share information The table below sets forth the Issuer’s basic earnings per share for the years ending 31 December 2008, 2007 and 2006.

Year ended 31 December 2007 2008 Redetermined 2007 2006 Weighted average number of shares outstanding for the calculation of earnings (loss) per share: - basic (A) 41,371,151 41,810,420 41,810,420 40,735,594 - diluted (B) - - - 41,549,973 Group net income (loss) for the period from continuing operations (in millions of Euro) (C) (268.4) 104.8 151.1 159.5 Earnings (loss) per share (Euro): - basic (B/A) (6.5) 2.5 3.6 3.9 Group net income (loss) for the period from discontinued operations (in millions of Euro) (D) 73.4 46.3 - - Earnings (loss) per share (Euro) for discontinued operations: - basic (D/A) 1.8 1.1 n.a. n.a. Group net income (loss) for the period (in millions of Euro) (E) (195.0) 151.1 151.1 159.5 Earnings (loss) per share (Euro): - basic (E/A) (4.7) 3.6 3.6 3.9 - diluted (E/B) -- - 3.8

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4. RISK FACTORS The transaction described in Prospectus involves the typical risk of an investment in listed shares. To properly assess the investment, investors should consider carefully the specific risk factors relating to the Issuer, the Group and the business segment in which they operate and those relating to the securities offered. In the risk factors below, the risks concerning Pirelli RE and/or its controlled companies are presented separately from those involving companies, or ventures in which companies that are part of the Pirelli RE Group hold significant minority interests (associates and joint ventures). Such presentation is intended to reflect that adverse changes affecting the latter would have an adverse effect on the Issuer’s economic, business and financial situation primarily relating to: (i) its shareholding in the entity involved; (ii) the likelihood of recovering the credits for shareholders’ loans (including interest) and for services provided; (iii) the return on investments and (iv) potential decreases in revenues deriving from specialized real estate services.

4.1 Risk factors relating to the business of the Issuer and the Group A) Risks relating to the Issuer’s financial structure

4.1.1 Risks relating to financial indebtedness

Pirelli RE’s consolidated net financial position as of 31 March 2009, excluding shareholders’ loans (i.e. loans granted by Pirelli RE and its controlled companies to affiliated companies and joint ventures), is Euro -898.4 million. Shareholders’ loans as of the same date amount to Euro 589.1 million. As a result, its consolidated net financial position as of 31 March 2009, including shareholders’ loans, amounts to Euro 309.3 million. The table below shows such amounts as of 31 March 2009 compared to 31 December 2008.

(In millions of Euro) 31 March 2009 31 December 2008 Total Net Financial Position 309.3 289.5 Shareholders’ loans 589.1 572.3 Net financial indebtedness (NFP excluding shareholders’ loans) 898.4 861.8 As of 31 March 2009, bank borrowings amounted to Euro 447.6 and took the form of eight credit facilities with a total commitment of Euro 380.0 million. For a description of the main characteristics of the above credit facilities, see Section One, Chapter XXII, Paragraph 22.1.1. Added to these are revocable credit facilities totalling Euro 63.0 million. The average residual duration as of 31 March 2009 was eleven months. The table below shows the expiration dates of bank borrowings as of 31 March 2009.

(In millions of Euro) Up to 1 year From 1 to 2 From 2 to 5 More than 5 Total years years years Bank borrowings 337.7 59.9 50.0 - 447.6 The Issuer is negotiating with the lending banks to reschedule the expiry dates of the loans. If such negotiations are unsuccessful, the Issuer will consider the following alternatives: (i) acceleration of the initiatives provided for in the 2009 – 2011 Business Plan, primarily of the total or partial disposal of non-strategic assets, of the strategic alliance programme in the real estate funds management sector and, as for non performing loans, the reduction of the net invested capital and assessment of possible partnerships in the management of non performing 52 RISK FACTORS Section I Registration Document loans and/or (ii) refinancing with other financial institutions. For further details, see Section One, Chapter X, Paragraphs 10.1, 10.2, 10.3 and 10.4.

4.1.2 Risks relating to failure to comply with financial covenants Certain loan agreements entered into by the Company contain cross default clauses, which are usual for this type of contract and require compliance with certain financial indicators (so-called covenants). Specifically: (i) the Euro 50 million revolving credit facility expiring in December 2009 granted by The Royal Bank of Scotland PLC (Milan branch) requires maintaining on a consolidated basis, an amount of net tangible assets (defined as the difference between total net equity and the sum of intangible assets and any negative balance of deferred tax credits or losses) of no less than Euro 330 million and assets not subject to covenants of no less than Euro 300 million; (ii) the Euro 50 million revolving credit facility expiring in May 2011 granted by West LB AG (Milan branch) requires maintaining, on a consolidated basis, net equity of no less than Euro 550 million; (iii) the Euro 100 million term loan and revolving credit facility expiring in January 2010 granted by Unicredit Corporate Banking S.p.A. requires maintaining, on a consolidated basis, net equity of no less than Euro 575 million. Net Tangible Assets, as of 31 December 2008, amounted to Euro 177.3 million (Euro 131.9 million as of 31 March 2009), while consolidated net equity amounted to Euro 361.7 million (Euro 317.1 million as of 31 March 2009). Therefore, on the above dates, the indicators relating to the financial covenants linked to these parameters had not been complied with. In the Company’s opinion, this is not an event of default since the Capital Increase described in this Prospectus will ensure compliance with the above parameters. However, the total or partial failure of this transaction would entail a need to renegotiate the above mentioned covenants with the lending banks. For further details, see Section One, Chapter XXII, Paragraph 22.2.

4.1.3 Risks relating to change of control clauses Certain loan agreements provide for specific consequences in the event that Pirelli & C. ceases to control Pirelli RE. Specifically: (i) the agreements with The Royal Bank of Scotland PLC and West LB AG for two revolving credit facilities each of Euro 50 million contain clauses, pursuant to which, if Pirelli & C. loses control over Pirelli RE, in the first case, there is an acceleration clause under which any amount outstanding must be repaid and in the second case, the bank has the right to withdraw; (ii) two agreements with UniCredit Corporate Banking S.p.A. for two revolving credit facilities of Euro 50 million and Euro 100 million respectively, contain clauses in the event that Pirelli & C. ceases to control Pirelli RE, providing for: (a) in the first case, an acceleration clause under which any amount outstanding must be repaid, and (b) in the second case, mandatory early repayment, whereby any amount outstanding (under the second loan) must be repaid and/or the credit facility itself may be cancelled; (iii) an agreement with Intesa Sanpaolo S.p.A. for a Euro 30 million credit facility, which includes a mandatory early repayment clause, whereby if Pirelli & C. loses control over Pirelli RE, the credit currently outstanding must be repaid;

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(iv) an agreement with Pirelli & C. for a Euro 750 million uncommitted revolving credit facility contains a clause pursuant to which Pirelli & C. has the right to early repayment of any outstanding amount in the event that Pirelli & C. loses control over Pirelli RE. As of Prospectus date Pirelli & C. owns 56.45% of the Issuer’s share capital. This percentage will not be diluted by the Capital Increase as Pirelli & C. has undertaken to exercise in full its rights. However, any loss of control by Pirelli & C. over Pirelli RE would allow the above lenders to request repayment of the amounts outstanding under the loans, with material adverse effect on the Issuer’s business and financial condition. For further details, see Section One, Chapter XXII, Paragraph 22.2.

4.1.4 Risks relating to fluctuations of interest rates Pirelli RE Group is exposed to the risk of fluctuations of interest rates as its financial indebtedness is characterized by floating-rate transactions. The Company has a hedging strategy for risk relating to fluctuations of interest rates, in accordance with which, on one side, it has floating-rate financial receivables offsetting such risk, and on the other, has entered into derivative contracts. As of 31 December 2008 hedging calculated on total consolidated debt provides for an overall coverage protection of approximately 46% of the total debt (44% as of 31 March 2009). Over the last few months, interest rates have been characterized by significant volatility. It cannot be ruled out that fluctuating market interest rates may result in a material adverse effect on the business, financial condition and results of the operations of the Issuer and the Group. For further details, see Section One, Chapter X, Paragraphs 10.1, 10.2 and 10.6. B) Risks relating to the Issuer’s business

4.1.5 Risks relating to the negative trend in Pirelli RE Group’s results for the year ended 31 December 2008 and the period ended 31 March 2009 The crisis involving the financial markets in general, and specifically the real estate sector, had a negative impact on Pirelli RE Group’s results for the year ended 31 December 2008. In fact, after years of positive results, 2008 ended with a consolidated net loss pertaining to the Group of Euro 195.0 million, affected by write-offs of Euro 135.8 million. The following table shows some of the indicators of the Group’s performance for the years ended 31 December 2008, 2007 and 2006.

(In millions of Euro) 2008 2007 2006 Income data EBIT including net income from investments(1) (239.7) 172.6 214.4 Net income (loss) pertaining to the Group(1) (195.0) 151.1 159.5 Balance sheet data Net equity 366.4 720.1 708.7 of which Group net equity 361.7 715.7 700.3 Net financial position 289.5 289.7 96.4 Net financial position excluding shareholders’ loans 861.8 816.1 430.5 (1) The amount as of 31 December 2007 is redetermined. The trend in the first quarter of 2009, although still negative, is improving as compared to the last quarter of 2008. The following table shows the indicators presented in the previous table in relation to the first quarters of the years 2009 and 2008 from the data taken from the income statement, and as compared to 31 December 2008 for the data taken from the balance.

54 RISK FACTORS Section I Registration Document

(In millions of Euro) 31 March 2009 31 March 2008 Income data EBIT including net income from investments (14.7) 20.2 Net income (loss) pertaining to the Group (15.8) 11.6 Balance sheet data 31 March 2009 31 December 2008 Shareholders’ Equity 320.1 366.4 of which Group net equity 317.1 361.7 Net financial position 309.3 289.5 Net financial position excluding shareholders’ loans 898.4 861.8 For further details, see Section One, Chapter XX. As a response to the changed market conditions, Pirelli RE optimized the elements in its business model and started implementing the actions provided for in its 2009 – 2011 Business Plan. Concerning the uncertainties relating to the achievement of the goals indicated in the above plan, see Section One, Chapter IV, Paragraph 4.1.6. Also as a result of these uncertainties and of the possible continuation of the crisis which has affected the sector, Pirelli RE could again record negative results in future years, which would make it unable to distribute dividends and would cause its economic and financial structure to be gradually weakened. For further details, see Section One, Chapter VI, Paragraph 6.1 and Section One, Chapter XIII.

4.1.6 Risks relating to the failure to implement the 2009 – 2011 Business Plan, to profit projections and estimates and to priority declarations and forecast information concerning developments in the reference market On 10 February 2009, the Company’s Board of Directors approved the 2009 – 2011 Business Plan containing the strategic guidelines and goals for the Group’s economic, business and financial growth over the next three years. The Plan was subsequently examined by the Board of Directors on 26 May 2009. When approving the strategic proposal to maintain the full ownership of Pirelli RE SGR and to carry out further actions designed to rationalise and recover efficiency at Group level, the Board also confirmed the economic targets to the end of 2011. The 2009 – 2011 Business Plan is based on general assumptions as to the external scenario and on assumptions as to the effects of the Company’s initiatives and actions, including: (i) the positive completion of the Capital Increase, reflected in the projections to reduce net financial indebtedness for the year 2009, to strengthen the capital structure and sustain the revised business model, (ii) the substantial stability of the real estate market over the three-year period, as compared to the situation at the end of 2008, to complete the planned sales of real estate assets at the prices and for the volumes indicated in the 2009 – 2011 Business Plan and also to substantially ensure that the valuation of the Group’s property portfolio remains unchanged, (iii) the substantial stability of the financial markets, which will allow for application of the financial management assumptions set out in the 2009 – 2011 Business Plan, (iv) the opportunity for the investment vehicles to autonomously obtain, through the disposal of property or bank borrowing, the necessary additional financial resources with respect to the amount covered by shareholders, and therefore, reflected for the part pertaining in the net financial position forecast for the three-year period 2009 – 2011, (v) the realization of strategic partnerships based on the terms set out by the 2009 – 2011 Business Plan both in reference to Pirelli RE SGR and to the other vehicles through which the Group intends to operate, (vi) the substantial stability of the portfolio of assets under management by means of acquiring the management of new real estate portfolios, mainly located in Italy, in order to increase the weight of Italy compared to the total managed volumes, and in general terms, to offset the reduction due to the sales planned, and (vii)

55 Section I RISK FACTORS Registration Document the assumption of obtaining financing to replace the loans expiring during the three-year period. As the assumptions in the 2009 – 2011 Business Plan are subjective, if one or more of them is not fulfilled, or is only fulfilled in part, in relation to events that cannot currently be foreseen or quantified regarding external factors or the Group’s business, the Company may not achieve the targets set and the Group’s results may differ, even significantly, from the forecasts of the 2009 - 2011 Business Plan, resulting in adverse effects on the business, financial conditions and results of the operations of Pirelli RE and of the Group. The Independent Auditors issued a report attached to this Prospectus concerning the procedures carried out in relation to the 2009 - 2011 forecast data for the Issuer, indicated in Section One, Chapter XIII. This Prospectus also contains certain estimates by the Issuer of the Group’s business performance for the years 2009 – 2011 taken from the 2009 – 2011 Business Plan and forecasts concerning trends in the sector in which Pirelli RE operates. These statements are based on the Company’s experience and knowledge and on the data available in relation to such market. Finally, the Prospectus contains priority declarations and indications concerning the competitive position of the Issuer and the Group formulated by Pirelli RE based on the data available and its knowledge of the sector in which it operates. These assessments were made taking into account the lack of certain and homogeneous data pertaining to the sector elaborated by market researchers on companies and enterprises comparable with Pirelli RE. Estimates and forecasts are generally subject to risks, uncertainties and assumptions, and therefore, the results of the Pirelli RE Group and the trends in the sector it operates in may significantly differ from those set out in such declarations owing to known and unknown risks, uncertainties and other factors explained also in the present section on risk factors and in other sections of this Prospectus. For further details, see Section One, Chapter VI, Paragraphs 6.2 and 6.5, and Section One, Chapter XIII.

4.1.7 Risks relating to litigation proceedings involving Pirelli RE and its controlled companies As of the Prospectus Date, Pirelli RE and other Pirelli RE Group companies are parties, in their role as defendants, in litigation proceedings (both civil and administrative), mainly brought by: (i) tenants for the alleged violation, during the sale of real estate properties which were part of the real estate assets of Unione Immobiliare S.p.A., of rights of first refusal (for some of these litigation proceedings, which mainly involve companies in which Pirelli RE holds significant minority interests, Pirelli RE is also a defendant), and (ii) pension/welfare agencies in relation to management services provided by Edilnord Gestioni S.r.l. (in liquidation). In relation to the litigation proceedings, arbitration procedures and disputes pending as of 31 December 2008, the Company has allocated a total of Euro 6.4 million in its provision for risks in the relevant consolidated financial statements. The Company does not consider that the current litigation proceedings will have a significant adverse effect on its business, its financial position or its results of operations. As of the Prospectus Date, Pirelli RE and companies of the Pirelli RE Group have received notices of assessment for a total of Euro 3.7 million of taxes (excluding fines and interest) and payment orders for approximately Euro 0.3 million. The Company, following the advice of its consultants, all professional experts of high standing, considers that the disputed situations may have a favourable outcome for the entities which received dispute notices.

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However, there is no guarantee that the litigation proceedings and disputes indicated will be concluded as deemed probable by the Company; any outcomes other than those expected may have negative repercussions on its economic and financial position. As of the Prospectus Date, Pirelli RE and Servizi Amministrativi Real Estate S.p.A. are subject to a tax inspection by Milan Tax Police aimed at assessing the tax periods from 2006 to 21 January 2009. As of the Prospectus Date no formal allegations have been brought against to the Company. For further details, see Section One, Chapter XX, Paragraph 20.8.

4.1.8 Risks relating to change of control clauses concerning use of the Pirelli trademark The non-exclusive licensing agreement with Pirelli & C. for Pirelli RE to use the “Pirelli” trademark in all countries in the world in the real estate sector, with the exclusion of facility management, grants to the licensor the right to terminate the contract for serious breaches thereof by the Company (such as use of the trademark not in compliance with the provisions of the contract or a delay of more than 6 months in payment of the consideration) or if Pirelli RE ceases to be directly or indirectly controlled by Pirellli & C.. The impossibility of using the “Pirelli” trademark could have an adverse effect on the activities of the Company and the Group, and therefore, could reflect negatively on their economic and financial position. For further details, see Section One, Chapter XI, Paragraph 11.2.3.

4.1.9 Risks relating to devaluations of real estate assets of the Group and potential negative results from the impairment test on intangible fixed assets Pirelli RE Group’s real estate assets, as those of companies in which Group companies hold interests or the real estate funds in which they invest, are mainly subject to six-monthly valuation by real estate experts: CB Richard Ellis Professional Services S.p.A., REAG, Cushman & Wakefield, Scenari Immobiliari S.p.A. and Knight Frank (see Section One, Chapter XXIII, Paragraph 23.2). The crisis that hit the sector led the above mentioned valuers to make a conservative revision of the valuations performed before 31 December 2008; this resulted in devaluations with a negative impact of Euro 135.8 million on Pirelli RE’s consolidated financial statements as of and for the period ended 31 December 2008. As announced to the market on 20 April 2009, in view of the Capital Increase and to provide all shareholders with the most complete information possible, the Company has asked the independent experts mentioned above for an extraordinary update of the reports of the real estate assets managed as of 31 March 2009. Such reports show that the market values as of 31 March 2009 indicate a variation of -0.5% on an homogeneus basis compared with the same assets as of 31 December 2008, equal to a negative impact of approximately Euro 6.6 million, in line with the range of values disclosed to the market, on the book value of the real estate assets reflected in the interim consolidated financial statements of the Pirelli RE Group as of and for the period ended 31 March 2009, already approved and published on the date the reports were updated. This impact, which would result in a reduction of net equity for the period of approximately 2% (from Euro 317.1 million to Euro 310.6 million) and an increase in the net consolidated loss for the first quarter of 2009 (from Euro 15.8 million to Euro 22.3 million) will be recognised in the half-yearly financial statements as of and for the period ending 30 June 2009 of the Pirelli RE Group. If the economic crisis worsens, or negative factors possibly involving the property portfolios owned by Pirelli RE’s controlled companies or by vehicle companies (or real estate funds) in

57 Section I RISK FACTORS Registration Document which Pirelli RE Group companies invest (such as for example, decreased income from rent, a decrease of possible realization values, a slowdown in sales or a further worsening of the conditions on the reference markets), the valuers may adjust their assessments downward, with negative consequences on the Pirelli RE Group’s income statement and balance sheet. As of 31 December 2008, the Pirelli RE Group recorded among its assets goodwill of Euro 137.8 million, mainly from acquisitions made over time. These assets are subject to an annual impairment test and, in any event, at any time that indicators point to a loss in value. As of 31 December 2008 the Impairment Test produced a favourable result and therefore no value adjustments were made. The valuation process on which the Impairment Test is based is highly influenced by the basic assumptions made to estimate future cash flows and the related discount rates: if these vary significantly, resulting in the loss of the recoverable values estimated as of 31 December 2008, the goodwill entered in the financial statements as of and for the period ended 31 December 2008 may be impaired. This could have a negative effect on the income statement and therefore on the Group net equity. For further information, see Section One, Chapter IX, Paragraph 9.3.

4.1.10 Transactions with related parties For the year ended 31 December 2008, the Pirelli RE Group: (i) recorded operating revenues from related party transactions (mainly associates and joint ventures) of Euro 129.5 million (31.4% of total operating revenues for the same period); of these, Euro 0.8 million were from transactions with Pirelli & C. and its controlled companies not part of the Pirelli RE Group, (ii) sustained operating costs from related party transactions of Euro 47.9 million (9.9% of the operating costs sustained during the same period); of these, Euro 7.8 million were from transactions with Pirelli & C. and its controlled companies not part of the Pirelli RE Group and were mainly referable to payment of rent for offices at Via Negri in Milan and to royalties for the use of the Pirelli trademark, (iii) entered financial income from related party transactions of Euro 34.1 million (69.0% of total financial income recorded for the same period), and (iv) sustained financial expenses from related party transactions of Euro 33.2 million (or 46.8% of total financial expenses sustained for the same period); of these, Euro 32.9 million was from transactions with Pirelli &C. and referred to interest on the revolving credit facility of Euro 750 million, of which, as of 31 December 2008, Euro 491.3 million was drawn. For an indication of the effect of related-party transactions from 1 January – 31 March 2009 on the above items, see Section One, Chapter XIX. Pirelli RE considers that the existing related party transactions are carried out under market terms. Nevertheless, on this point, there is no guarantee that if the related party transactions above were entered into with third parties, these parties would have negotiated and signed the related agreements, or executed the above transactions, at the same terms and conditions. For further information, see Section One, Chapter XIX. C) Risks inherent in funds/companies in which the Pirelli RE Group holds significant minority interests As specified in Section One, Chapter VI, Paragraph 6.1, Pirelli RE, when investing in funds and investment vehicles generally does so with qualified minority interests. For this reason, the investment vehicles (affiliated companies and joint ventures) are not included in the consolidation area and their results are reflected in the consolidated financial statements of the Issuer, according to the net equity method. Consequently, negative events occurring in relation to these investments would have an adverse effect on the Issuer’s economic, business and financial situation primarily relating to: (i) its shareholding in the entity involved; (ii) the likelihood of 58 RISK FACTORS Section I Registration Document recovering the credits for shareholders’ loans (including interest) and for services provided; (iii) the return on investments and (iv) potential decreases in revenues deriving from specialized real estate services. The Issuer therefore considers that specific situations relating to affiliates and joint ventures should be highlighted in consideration of the importance of the results generated by these entities for its own financial statements.

4.1.11 Risks relating to investments in funds/companies in which significant minority interests are held The Pirelli RE Group performs its activities as fund and asset manager using different methods, which can be summarized as follows: (a) through Pirelli RE SGR in favour of real estate funds instituted and managed by the company; (b) through Pirelli RE and its controlled companies in favour of specifically-constituted investment vehicles. Real estate funds – and specifically those reserved for Qualified Investors and opportunity funds – and investment vehicles are generally utilized to acquire real estate assets, development initiatives or non performing loan portfolios. The Pirelli RE Group holds significant minority interests in these acquisitions generally from 20% to 40% (as of 31 March 2009, the average equity interest was approximately 25%), together with international investment funds and Italian operators in the sector. The acquisitions are generally financed, for approximately one third of the entire requirements, through risk capital and shareholders’ loans, and for the remainder, almost entirely by non recourse bank debt (that is without a shareholders’ guarantee), but with a guarantee on the assets owned by the various funds/companies and, when disbursement is in favour of investment vehicles, also on their capital. As of 31 March 2009, the net financial position excluding shareholders’ loans of the funds and vehicles in which Pirelli RE held a stake was a negative figure of Euro 12.8 billion (of which Euro 11.2 billion for bank debt and Euro 1.6 billion for debts for shareholders’ loans), of which Euro 1.6 billion refer to the indebtedness of vehicles used in the non performing loans sector. The net financial position above excluding non performing loans therefore totalled Euro 11.2 billion (Euro 10.0 billion of bank debt and Euro 1.2 billion of shareholders’ loans). Pirelli RE’s share of the net financial position of the real estate funds and vehicle companies in which it held an interest amounted, as of 31 March 2009, to Euro 3.6 billion (of which Euro 0.4 billion for shareholders’ loans related to real estate assets and Euro 0.2 billion of shareholders’ loans related to non performing loans). Bank borrowing, equal to Euro 3.0 billion, is broken down into Euro 2.6 billion of commitments in the real estate sector and Euro 0.4 billion in the non performing loans sector. The main features of pro-rata bank debt of the real estate funds and vehicle companies in which an equity interest is held, are: (i) a very limited number of recourse guarantees (Euro 39 million), (ii) a high proportion of interest rate risk hedging, and (iii) an average expiry, with reference to 31 March 2009, of approximately 3.4 years. Average bank leverage is equal to 68% of the market value of the assets. As of 31 March 2009, the investment vehicles and real estate funds in which Pirelli RE Group companies held a stake, owned assets valued, by the various experts appointed for the reports, at Euro 16.6 billion, of which Euro 14.8 billion in real estate funds/companies and Euro 1.8 billion in the non performing loans sector. Negative events in relation to the funds/companies in which the Pirelli Group RE companies hold minority interests (associates and joint ventures) would have an adverse effect on the Issuer’s

59 Section I RISK FACTORS Registration Document economic and equity position essentially in terms of: (i) its shareholding in the entity involved (as of 31 March 2009 the net capital invested in associates and joint ventures amounted to Euro 0.9 billion, of which Euro 0.7 billion was in real estate projects and Euro 0.2 billion in the non performing loans sector), (ii) the likelihood of recovering the receivables for shareholders’ loans (including interest) and for services provided; (iii) the return on investments and (iv) potential decreases in revenues deriving from specialized real estate services. For further information, see Section One, Chapter X, Paragraphs 10.1. and 10.3.

4.1.12 Risks relating to the corporate governance structure of investment vehicles The Company has entered into shareholders’ agreements with the other shareholders of investment vehicles used to make the various investments in order to regulate the corporate governance thereof. Among other things, these agreements include rules for the composition of the corporate bodies and envisage rights of veto for all participants in relation with the more strategic decisions concerning management and extraordinary transactions (i.e. approving the business plan, entering into agreements with shareholders, extraordinary financing transactions, disposing of company assets, acquiring loans, capital increases and the issue of guarantees). While mechanisms exist (such as reciprocal buy and/or sell options) to resolve any disputes between the parties in such shareholders agreements related to management or situations in which the decision-making process has come to a standstill, it cannot be excluded that the occurrence of such events could result in significant restrictions for the investment vehicles when performing their respective activities and for the Company in pursuing its investment goals. These restrictions would have negative repercussions on the economic, business and financial position of the investment vehicles and consequently, on the position of the Issuer. For further information, see Section One, Chapter VI, Paragraph 6.1 and Section One, Chapter XXII, Paragraph 22.2.

4.1.13 Risks relating to the presence of financial covenants in the loan agreements entered into by the real estate funds and by the investment vehicles The loan agreements entered into by the real estate funds (through the asset management company) and investment vehicles in which Pirelli RE or Pirelli RE Group companies invest, generally require compliance with specific financial covenants, mainly linked to the LTV (loan to value, i.e. the relationship between: (a) bank debt and (b) the accounting value of the real estate portfolio), LTC (loan to cost, i.e. the relationship between: (a) bank debt and (b) the assessed value of the real estate portfolio), ISCR (interest service cover ratio, i.e. the relationship between: (a) revenues from rent net of management costs, and (b) financial expenses) and DSCR (debt service cover ratio, i.e. the relationship between: (a) revenues from rent and sales net of management costs, and (b) financial expenses and repayments to capital account). As of 31 March 2009 certain real estate funds and investment vehicles in which Pirelli RE holds a qualified minority interest had covenants which were not in line with those required under the relevant contracts (see Section One, Chapter X, Paragraph 10.5.2.). Failure to comply with the covenants, when not remedied within the deadlines contractually agreed upon each time with the lender, generally allows the latter to request early repayment of the loan granted (with the exception of the loan granted to the companies holding units in the real estate fund Raissa, which only envisages the obligation to use all revenues to repay the debt). In the event of a breach of contract, the lending institutions may start foreclosure procedures on the real estate assets of the funds/companies financed, which are generally mortgaged. The borrowers are negotiating with the lending banks solutions concerning the situations listed above; according to Pirelli RE, which in any event has not issued any guarantees related to the

60 RISK FACTORS Section I Registration Document loans above and which is therefore not bound by contractual obligations, for Pirelli RE the resolution of such situations could result in the issue of new equity in an amount estimated at approximately Euro 25 million. For further details, see Section One, Chapter X, Paragraph 10.3.

4.1.14 Risks relating to litigation procedure involving controlled companies and joint ventures As of the Prospectus Date, Pirelli RE and other funds/companies in which Pirelli RE or other Pirelli RE Group companies held minority interests, were parties, in their role as defendants, to litigation proceedings (both civil and administrative), mainly brought by: (i) securitisation companies and pension/welfare entities for services provided for the securitisation of the real estate portfolios of the latter, and (ii) assigns in buying and selling transactions. The Company does not consider that the litigation proceedings in being will have a significant adverse effect on the assets or on the financial position or on the results of the operations of the entities involved. As of the Prospectus Date, several funds/companies in which Pirelli RE or other Pirelli RE Group companies hold minority interests received assessment notices following tax inspections (and, to a lesser degree, tax assessments) for taxes of approximately Euro 352.4 million euro (excluding fines and interest) and payment orders for approximately Euro 1.9 million. The Companies involved in the above litigation proceedings, according to the advice of their consultants, all professional experts of high standing, consider that the disputed situations may have a favourable outcome for the entities in receipt of the dispute notices. However, there is no guarantee that the litigation proceedings and disputes will conclude as considered likely by the companies involved. Any outcomes other than those expected may have negative repercussions on the economic and financial position of the companies involved. Consequently, these adverse effects may have an impact on the Issuer. For further details, see Section One, Chapter XX, Paragraph 20.8.2

4.1.15 Risks relating to the concentration of lessees As of 31 March 2009, the real estate portfolio in which the Pirelli RE Group has an interest had a market value of Euro 11.9 billion (of which Euro 2.9 billion pertaining to Pirelli RE) and a book value at the same date of Euro 11.4 billion (of which Euro 2.8 billion pertaining to Pirelli RE) and passing rent equal to Euro 750 million, Euro 181.4 million of which pertaining to Pirelli RE. The 12 principal tenants, representing 44% of the revenues as of 31 March 2009, are as follows: Arcandor, Telecom Italia, La Rinascente, Regione Sicilia, Conforama Italia, Valtur, Prada, Fintecna, Enel, Eni, Vodafone and Editoriale L’Espresso. On the same date, 17.2% of the rent pertaining is attributable to Arcandor, which is renting the portfolio owned by the Group headed by Highstreet Holding GbR, a company in which a consortium in which Pirelli RE holds a 24.66% interest holds 49% (see Section One, Chapter IV, Paragraph 4.1.16). Any breaches of contract by these tenants would have an adverse effect on the economic, business and financial results of the funds/companies in which Pirelli RE holds a stake, and consequently on the results of the Group headed by Pirelli RE. For further details, see Section One, Chapter VI, Paragraph 6.4.4 and Section One, Chapter XXII, Paragraph 22.2.3.

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4.1.16 Risks connected to the financial situation of the Arcandor group The group headed by Arcandor AG is in serious financial difficulty which led, on 9 June 2009, to the filing of a request for bankruptcy protection. The Arcandor AG Group is the sole tenant of the Highstreet portfolio which includes 164 retail real estate properties throughout Germany owned by Highstreet Holding GbR. Highstreet Holding GBR is 51%-owned by the Whitehall funds, managed by the Goldman Sachs Group and 49%-owned by Sigma RE B.V., a company in which Pirelli RE has an indirect interest with a stake of 24.66%. The Arcandor Group did not pay the rental instalments due for May 2009. Failure to pay further rental instalments, and the occurrence of events that make it unlikely for the companies financed to honour the commitments they have given to the lending banks, constitutes an event of default under the terms of the non recourse financing obtained by Highstreet Holding GbR and its controlled companies, of which approximately Euro 3.5 billion had been used as of 31 March 2009. The occurrence of an event of default, if not remedied within the contractual deadline, would entitle the lenders to demand repayment of the sums disbursed. If the borrower were unable to reimburse the above sums, the lenders would be entitled to call on the guarantees over the real estate portfolio, and if these guarantees were insufficient, they could petition for the winding-up of the company. The above events could entail for Pirelli RE: (i) the loss of all or part of the net capital invested in the project (amounting to Euro 60.5 million as of 31 March 2009, to which Euro 2.4 million of capitalization subsequent to that date must be added), (ii) a failure to collect receivables for services (of approximately Euro 0.7 million), (iii) recognition in the income statement of a negative net equity reserve estimated at approximately Euro 8.0 million arising from transactions to hedge the risk of interest rate fluctuations, (iv) a failure to achieve the expected income from the management and development of the Highstreet portfolio, and (v) a devaluation of the portfolio itself. For further details, see Section One, Chapter VI, Paragraph 6.4.4 and Chapter XIII, Paragraph 13.2.2.

4.2 Risks relating to the Issuer’s business sector

4.2.1 Risks relating to the performance of the real estate market The real estate market experiences a cyclical trend and is influenced by a series of variables, such as general market conditions, fluctuating interest rates, the inflation trend, tax regime and market liquidity. In 2008, the real estate market also experienced a significant slowdown in the countries in which the Pirelli RE Group operates, resulting in decreased real estate values, and also reflected in the measurements of market value at the end of 2008. Likewise, insufficient market liquidity had a negative effect on the number of transactions and completion times. The continuation of the current situation or, even the further worsening thereof, would have an adverse effect on the Pirelli RE Group’s results and on its economic, business and financial results. For further details, see Section One, Chapter VI, Paragraph 6.2.1.

4.2.2 Concentration of business in Italy and Germany The Pirelli RE Group mainly operates in the Italian and German markets and the real estate assets held by real estate funds and investment vehicles in which Pirelli RE and Group companies hold significant minority interests are for the most part located in these countries. Consequently, the results of these funds/companies may be adversely affected by a worsening of the economic cycle in these countries. For further details, see Section One, Chapter VI, Paragraph 6.1.

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4.3 Risks relating to the rights offering and to the Company’s financial instruments

4.3.1 Risks relating to the maximum dilution of the Issuer’s capital if the Rights are not exercised Considering that the Capital Increase is offered to existing shareholders, there are no dilutive effects in terms of the interest in the share capital of the Issuer for shareholders that fully subscribe their rights. In terms of the percentage stake in the share capital, the Capital Increase will have dilutive effects to the extent that a shareholder exercises none or only part of the rights. The maximum percentage dilution following full execution of the Capital Increase is 94.9%. For further details, see Section One, Chapter IX, Paragraph 9.2.

4.3.2 Risks relating to the volatility of the price of the Issuer’s shares The Company’s shares present the typical elements of risk of any investment in listed shares of the same kind. The holders of the Company’s shares can liquidate their investment on the MTA. The rights relating to newly issued shares from the Capital Increase will only be tradable on the MTA for the period from 15 June 2009 to 26 June 2009, inclusive. Sales requests during this period may not encounter adequate and timely corresponding purchase offers owing to developments in negotiations on rights and to a lack of sufficient liquidity. The trading price of the rights will also depend on the development of the price of outstanding Pirelli RE shares and may be subject to greater volatility with respect to the market price of such shares. Factors such as changes in economic, financial, business and earning position of the Company or its competitors, changes in the general conditions of the sector in which the Company operates, in the general economy and on financial markets, and amendments to legislation and regulations may result in substantial fluctuations in the price of Pirelli RE shares, and consequently, of the rights. For further details, see Section Two, Chapter V.

4.3.3 Risks relating to the markets in which the Offering is prohibited without authorization from the competent authorities This Prospectus does not constitute an offering of securities in the United States of America or in any other country in which the offering is not permitted in the absence of specific authorizations by the competent authorities (the “Other Countries”). No securities can be offered or sold in the United States of America or in Other Countries in the absence of specific authorization issued in accordance with the legal provisions applicable in each of such Countries, or under an exception to such provisions. Newly issued shares will not be registered under the U.S. Securities Act of 1933, as subsequently amended, nor under corresponding regulations in force in Other Countries. As a result, such shares cannot be offered or, in any way delivered, whether directly or indirectly, in the United States of America or in the Other Countries. Pirelli RE shareholders who are not residents of Italy may not be able to sell the Rights related to the newly issued shares and/or to exercise such Rights under the terms of the foreign legislation applicable to them. Therefore, we recommend shareholders obtain specific advice on this matter before taking any action. If the Issuer becomes aware that the exercise of Rights relating to the newly issued shares violates laws or regulations in the Other Countries, it reserves the right to prevent them from being exercised. For further details, see Section Two, Chapter V, Paragraph 5.2.

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4.3.4 Risks relating to the possible delisting of the Issuer’s shares from the MTA Considering the commitment given by Pirelli & C. to subscribe in full its portion of newly issued shares as holder of 56.45% of the Issuer’s share capital, and its willingness to subscribe for any Shares still unsubscribed at the end of the Subscription Period, Pirelli & C. might end up with an interest in excess of 90% of the Issuer’s share capital. In such circumstances, in accordance with Article 108(2) of the Italian Finance Act, Pirelli & C. will be obliged to purchase the remaining Pirelli RE shares from anyone requesting it does so, if it has not stated that within ninety days it will restore a sufficient float to ensure normal trading. As of the Prospectus Date, Pirelli & C. has not taken any decision regarding the possibility of reinstating the necessary float in the event that the above situation occurs, as this decision is influenced by the level of subscription to the Capital Increase and the market conditions during the period after the end of the Rights Auction. If Pirelli & C. decides not to reinstate the necessary float and therefore makes such a purchase, pursuant to Article 2.5.1(8) of the Regulations of the Italian Stock Market, the Company’s shares will be delisted starting from the first trading day following the conclusion of the procedure to fulfil the purchase obligation pursuant to the above mentioned Article 108(2) of the Italian Finance Act. Therefore, following completion of such purchase obligation, the owners of the Issuer’s shares that have not requested Pirelli & C. to purchase the remaining shares pursuant to Article 108(2) of the Italian Finance Act will be the owners of financial instruments not traded on any regulated market, making it difficult for them to liquidate their investment in the future. For further details, see Section One, Chapter XVIII, Paragraph 18.1.

4.3.5 Risks relating to general liquidity problems in the markets and specific to the Company’s shares If, following subscription of the Capital Increase, take-up is poor and the Company’s float is small, this insufficient float may be reflected in a significant risk of volatility of the price of the Issuer’s shares, with possible difficulties for the shareholders to divest their investment at market prices when a sales order is issued. For further details, see Section Two, Chapter V.

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5. INFORMATION ON ISSUER

5.1 History and development of the Issuer’s business

5.1.1 Issuer’s registered and trading name The Issuer is named “Pirelli & C. Real Estate S.p.A.”.

5.1.2 Details of registration with the Register of Enterprises The Issuer is registered with the Register of Enterprises of Milan as No. 02473170153.

5.1.3 Incorporation date and duration of the Issuer The Issuer was incorporated in a deed before the Notary Giovanni Ricci, in file No. 7358/1313 on 13 October 1961, as a joint stock corporation (società per azioni) whose corporate name was Iniziative Agricole Commerciali Italiane S.p.A., later changed to Milano Centrale S.p.A.. The Issuer assumed the name Pirelli & C. Real Estate S.p.A. on 19 February 2001 following the resolution of the Extraordinary Shareholders’ Meeting before the Notary Piergaetano Marchetti, file No. 16312. The duration of the Issuer is until 31 December 2100.

5.1.4 Domicile, corporate form, laws under which the Issuer operates, country of incorporation and registered office The Issuer was incorporated under the laws of Italy as a joint-stock corporation (società per azioni); it operates under Italian law. The Issuer has its registered office in Milan at Via Gaetano Negri, No. 10 (telephone number +39 0285351).

5.1.5 Key developments in the business of the Issuer and the Group The origin of the Issuer’s business dates back late 1980s when a series of transactions involving business combinations and the reorganization of companies operating in the real estate sector led to the incorporation of Milano Centrale S.p.A. (now named Pirelli & C. Real Estate S.p.A.). In the early ‘90s, the Issuer also started performing its business for non-associated entities, to which it initially offered agency and project management services, followed by property and facility management services. Starting from 1997, the Issuer finalized important agreements with leading international operators, thus anticipating the recovery of the Italian real estate market. This was also the year of its first partnership with a strategic investor, Morgan Stanley Real Estate Fund III International, a real estate fund managed by the group Morgan Stanley. Such agreement was aimed at optimizing real estate portfolios for office purposes and enabled the Issuer to come into contact with the business methods used in the most advanced markets, which were then brought home to the domestic market. Thanks also to this knowledge, the Issuer laid the foundation of the business model used up until 2008, which over time, led Pirelli RE to become the successful manager of real estate companies, real estate funds and non performing loan portfolios (in which it co-invested with minority interests, thus aligning its interests with those of investors) and the provider – both for investments in which it held a stake and for third parties - of specialized real estate services (agency, project management, property management, facility management and credit servicing). Relevant transactions were made in collaboration with international and national institutional investors from 1999 to 2002. These included: (i) the acquisition of a real estate portfolio from

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Compart S.p.A. (1999), (ii) the public tender offer of all Unione Immobiliare S.p.A. shares (2000), (iii) the purchase of a significant portion of residential real estate assets from Società pel Risanamento di Napoli S.p.A. (2000), (iv) the purchase of several real estate portfolios of Edilnord 2000 S.p.A. and several companies in the Edilnord Group, which provide specialized services (property management, project management and real estate brokerage – 2002), (v) the purchase of the non-strategic assets from the group Banca di Roma (2002), (vi) the acquisition of the non-instrumental real estate assets of RAS S.p.A. (2002), and (vii) the so-called Progetto Tiglio, which mainly consisted of integrating a real estate complex and area (owned by the Issuer, Pirelli & C., Olivetti S.p.A., Olivetti Multiservices S.p.A., Telecom Italia S.p.A., Telecom Italia Mobile S.p.A., SEAT Pagine Gialle S.p.A. and by two companies controlled by Morgan Stanley Real Estate Funds in which Pirelli RE held an interest), and services provided by several of the above mentioned entities (2002). In 2002, the Company also started operating in the non performing loans sector by purchasing the financial intermediary Milano Centrale Altofim S.p.A. (now Pirelli RE Credit Servicing S.p.A.) operating in structured finance associated with the asset backed securities securitisation market. In June 2002, the Company shares were admitted to listing on the MTA. In the years following the listing, the purchasing (with significant minority interests) and managing real estate portfolios and providing specialized services activity was strengthened and concentrated on the following main areas: (i) Real estate funds. In 2003, the Issuer purchased an asset management company from the Lazard Group, and under the name Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A., began operations to set up, promote and manage closed-end real estate funds reserved for both Qualified Investors and the retail investors. In 2005, this business was combined with setting up, promoting and managing closed-end real estate opportunity funds, which was pursued by Pirelli RE Opportunities Società di Gestione del Risparmio S.p.A., and later merged with Pirelli RE SGR after the amendments to legislation allowing this management company to manage retail funds, funds reserved for Qualified Investors and opportunity funds. (ii) Non performing loans. The Issuer also pursued its own business model in the non performing loans sector by participating (with minority interests) in the purchase of non performing loan portfolios and by offering management services thereof. To this end, in 2004, it finalized a strategic agreement with Morgan Stanley Real Estate Funds, subsequently replaced in 2006 by a strategic agreement with Calyon S.A. following the Morgan Stanley group's decision to abandon the market of mortgage-backed non performing loans in Europe. (iii) Foreign markets. The Issuer expanded its radius of action towards foreign markets deemed strategic and with elevated growth potential. On this basis, it finalized acquisitions in Austria (2006), Poland (2006) and Germany (2006, 2007 and 2008). (iv) Offering of specialized services. The Issuer perfected and expanded its offering of specialized services provided both to companies and real estate funds in which the Group invested with minority interests, and to third parties. The following table summarizes the most significant transactions following the listing of the Company shares on the MTA.

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Company involved or Year Description subject of the agreement 2003 Pirelli RE Agency S.p.A. Pirelli RE Agency S.p.A. was created upon the completion of an internal rationalization process with the purpose of providing complete services including consulting and real estate brokerage both in the residential and tertiary sectors. Pirelli RE Facility Also Pirelli RE Facility Management S.p.A. was created based on Management S.p.A. the completion of an internal rationalization process. The company provides to real estate property users the integrated management of all the services connected with building (from operating systems to ordinary and extraordinary maintenance), people (from catering to archive management) and areas (space planning). Pirelli RE Franchising A real estate franchising project is commenced throughout Italy S.p.A. with the goal of providing agency services to an increasingly broad public. Localto S.p.A. (65% of A portfolio of non performing loans whose nominal value is equity held by Citigroup approximately Euro 520 million is purchased from Deutsche Bank and 35% by Pirelli RE) for a total price of approximately Euro 96 million. 2004 Pirelli RE SGR The process is completed to incorporate and place the first privately contributed fund, Tecla Fondo Uffici, listed on the Automated Funds Market, whose assets include 65 buildings mainly for tertiary/office use with a market value of Euro 926 million. Solaris S.r.l. (20% of equity A real estate portfolio included in the assets of the Assicurazioni held by Generali Properties Generali Group is purchased for approximately Euro 272 million. S.p.A., 20% by Pirelli RE and 20% by the Lehman Brothers Group) Pirelli RE SGR Completion of the process to incorporate and place Cloe Fondo Uffici with Qualified Investors. Its assets include 39 buildings mainly for tertiary/office use with a market value of Euro 877.5 million. Pirelli RE holds an 18.3% interest in the fund. Aida S.r.l. (67% of equity Aida S.r.l. enters into an agreement to optimise a portion of the indirectly owned by Morgan UniCredit Group’s non-strategic real estate assets. The transaction Stanley Real Estate Funds also involves real estate properties owned by MSMC Immobiliare 4 and 33% by Pirelli RE) S.r.l. and Aida S.r.l. for a total value exceeding Euro 1 billion. ICR8 S.r.l. (51% of equity A non performing loan portfolio with a nominal value of held by Morgan Stanley approximately Euro 430 million is purchased from Banca Nazionale Real Estate Funds and 49% del Lavoro S.p.A. for a total price of approximately Euro 80 million by Pirelli RE) Pirelli RE SGR Completion of the process to incorporate and place the real estate fund Olinda Fondo Shops, listed on the Automated Funds Market, whose assets include 42 buildings, mainly shops, commercial buildings and entertainment centres with a market value of approximately Euro 562 million. Pirelli RE SGR Completion of the process to incorporate and place the real estate fund Clarice Light Industrial with Qualified Investors. It is specialized in tertiary buildings and its assets include 70 real estate properties with a market value of approximately Euro 221 million. The fund units are all placed with third parties. 2005 Joint venture with funds The Issuer entered into an exclusive agreement with funds managed managed by the Deutsche by Deutsche Bank group to establish a joint venture (65% of the Bank Group funds are managed by the group Deutsche Bank and 35% by Pirelli RE) for initiatives in the retail and entertainment real estate sector. Alceo B.V. (67% of equity A real estate portfolio consisting mainly of office buildings is 67 Section I Registration Document

Company involved or Year Description subject of the agreement held by Morgan Stanley purchased from Glenbrook Operae S.r.l. for a total amount of Real Estate Funds and 33% approximately Euro 255 million. by Pirelli RE) Pirelli RE SGR Completion of the process to incorporate and place the real estate fund Berenice Fondo Uffici, listed on the Automated Funds Market, whose assets include 54 buildings mainly for tertiary/office use with a market value of approximately Euro 860 million. Management of this fund will be transferred - in 2008, following the public purchase offer by Zwinger Opco 6 B.V. – to First Atlantic Real Estate SGR S.p.A. and, on this occasion, the fund will be re-named Fondo Atlantic 2 Berenice. Consortium formed by The operational activities and real estate assets of Rinascente S.p.A. Investitori Associati SGR (which combines Grandi Magazzini La Rinascente and UPIM) are S.p.A. (46%), DB Real purchased for an amount of approximately Euro 888 million. Estate Global Opportunities IB L.P. (30%), Pirelli RE (20%) and Gruppo Borletti (4%). Mistral S.r.l. merged by The non-instrumental assets of the BPU Banca Group are incorporation into Castello purchased for Euro 150 million. S.r.l. effect 23 December 2005 (49.1% of equity held by Pirelli RE, 35.9% by Serico Luxembourg S.à r.l, 7.5% by ROEV Italia S.p.A. and 7.5% by BB 222 S.r.l.) Pirelli RE SGR Incorporation of the real estate fund Diomira, reserved for Qualified Investors, and to which ENPAM contributed real estate properties mainly for residential use of an aggregate value of approximately Euro 149 million. Pirelli RE holds a 32% interest in the fund. P&K Real Estate GmbH The Issuer and the Kronberg Group (a private operator specialized in the German market) constitute a joint venture to invest in Germany. The joint venture, in which Pirelli RE holds a 60% interest and the Kronberg Group holds the remaining 40%, envisages exclusive rights for the residential sector. In 2006, Pirelli RE purchases the equity interest held by the Kronberg Group. Pirelli RE SGR Incorporation of the real estate fund Raissa, reserved for Qualified Investors, to which Olivetti Multiservices S.p.A. contributed, in several tranches, approximately 900 buildings mainly for office use of an aggregate value of approximately Euro 790 million The fund units are owned by companies in which Morgan Stanley Real Estate Funds holds a 65% interest and Pirelli RE holds the remaining 35%. Pirelli RE Opportunities Incorporation of the real estate fund Spazio Industriale, reserved Società di Gestione del for Qualified Investors, to which Olivetti Multiservices S.p.A. Risparmio S.p.A. contributed, in several tranches, approximately 400 buildings mainly for industrial/logistics use of an aggregate value of approximately Euro 300 million The fund shares are owned by Spazio Investment N.V., a company listed on the Alternative Investment Market of the London Stock Exchange (AIM) since 2006. ICR8 S.r.l. (51% of equity A non performing loans portfolio with a nominal value of held by Morgan Stanley and approximately Euro 927 million is purchased from Banca Nazionale 49% by Pirelli RE) del Lavoro S.p.A. for a total price of approximately Euro 345 million.

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Company involved or Year Description subject of the agreement 2006 Joint venture with Bank The Issuer enters into an agreement to constitute Pirelli Pekao Real Pekao S.A. Estate Sp.z o.o., in which Pirelli RE holds a 75% interest and Bank Pekao S.A. (UniCredit Group) holds the remaining 25%, with the purpose of leading in the Polish residential market. Pirelli RE Opportunities Incorporation of the Hospitality & Leisure opportunity fund, to Società di Gestione del which Valtur S.p.A. contributed four tourist complexes of an Risparmio S.p.A. aggregate value of approximately Euro 103 million. Pirelli RE holds a 35% interest in the fund. LSF Italian Finance A non performing loan portfolio with a nominal value of Company S.r.l. (67% of approximately Euro 195 million is purchased from Banco Popolare equity held by Calyon S.A. di Verona e Novara for a total price of approximately Euro 112 and 33% by Pirelli RE) million. P&K Real Estate GmbH P&K Real Estate GmbH participates, with a 33% interest, in the purchase by the Allianz Group of a portfolio of 78 buildings in Austria of an aggregate value of approximately Euro 225 million. Pirelli RE Pirelli RE is awarded the non performing loan portfolio of two securitization vehicles of Banco di Sicilia S.p.A. with a net value of approximately Euro 550 million. The transaction involves an overall investment of approximately Euro 160 million, approximately Euro 80 million of which paid by Pirelli RE. Joint venture with Calyon The Issuer and Calyon S.A., Crédit Agricole group, enter into a S.A. in the non performing binding agreement to constitute a joint venture to invest in non loans sector performing loans in Italy and Europe. The agreement envisages purchasing non performing mortgage loan portfolios; Calyon will participate in such purchases with a interest of 67% and Pirelli RE with the remaining 33%. Polish Investments RE Cypress Grover International and Pirelli RE enter into an Holding B.V. (60% of agreement to jointly invest in the residential sector in Poland. The equity held by Cypress agreement envisages investments of approximately 53% by Cypress Grove International and Grover International, approximately 35.3% by Pirelli RE and 11.7% 40% by Pirelli RE) by Bank Pekao S.A.. Listing of Spazio Spazio Investment N.V., a Dutch company that holds 100% of the Investment N.V. units of the closed-end real estate fund Spazio Industriale, reserved for Qualified Investors and managed by Pirelli RE SGR, is listed on the Alternative Investment Market of the London Stock Exchange (AIM). 2007 Pirelli RE The Issuer purchases the German company Deutsche Grundvermogen AG (DGAG), one of the leading real estate platforms in Germany with offices in Hamburg and Kiel. The transaction, which entails a valuation of the company purchased of about Euro 465 million, involves, among other things, the subsequent transfer of the residential portfolio to the joint venture held (65%) by the RREEF real estate funds (managed by the Deutsche Bank Group) and by Pirelli RE (35%), and the office portfolio to the joint venture held by the real estate funds managed by the group Morgan Stanley (65%) and by Pirelli RE (35%) (see Section One, Chapter XXII, Paragraph 22.2.5). In 2009 Pirelli RE increased to 40% its stake in the joint venture in which the RREEF real estate funds (managed by the Deutsche Bank Group) hold an interest. Pirelli RE Facility Pirelli RE Facility Management S.p.A. purchases Ingest Facility Management S.p.A. S.p.A., a company operating in the facility management sector, from the Fiat Group for approximately Euro 50 million. Vesta Finance S.r.l. (65% of A non performing mortgage and corporate loan portfolio with a equity held by General nominal value of approximately Euro 1.0 billion is purchased from

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Company involved or Year Description subject of the agreement Electric and 35% by Pirelli Banca Antonveneta S.p.A. and Interbanca S.p.A. for approximately RE) Euro 300 million. Pirelli RE SGR Incorporation of Fondo Immobiliare Pubblico Regione Siciliana, to which Regione Sicilia (Region of Sicily) contributed for 34 instrumental buildings mainly for office use with approximately Euro 263 million. Pirelli RE holds a 22% interest in the fund. Gamma RE B.V. Gamma RE B.V. (in which Morgan Stanley Special Situations Fund holds a 51% interest and Pirelli RE, indirectly, the remaining 49%) promotes two voluntary tender offers on all the units of the real estate funds Tecla Fondo Uffici and Berenice Fondo Uffici, both listed on the Automated Funds Market and managed by Pirelli RE SGR. The tender offer for the units of the Tecla Fund is successfully completed (as of Prospectus Date, Gamma RE B.V. owns approximately 87.8% of the units in the Tecla Fund), while the tender offer for the units of the Berenice Fund is not completed due to the failure to reach the required minimum number of subscriptions. Pirelli RE Integrated Pirelli RE and Intesa Sanpaolo S.p.A. enter into an agreement Facility Management B.V. pursuant to which Intesa Sanpaolo S.p.A. purchases 49% (later increased to 50%) from Pirelli RE of Pirelli RE Integrated Facility Management B.V., a company combining facility and project management activities carried out by the Pirelli RE Group in Italy and Poland. Pirelli RE Opportunities Incorporation of the Social & Public Initiatives opportunity fund, Società di Gestione del to which ENPAM contributed 29 buildings for various uses of an Risparmio S.p.A. aggregate value of approximately Euro 305 million. Pirelli RE holds a 35% interest in the fund. Aida RE B.V. and Nabucco Aida RE B.V. and Nabucco RE B.V. purchase - for approximately RE B.V. (60% of equity Euro 350 million - the BauBeCon Group, an important German held by the RREEF funds real estate group whose assets include more than 27,000 real estate managed by the group properties mainly for residential use and located in the cities of Deutsche Bank and 40% by Berlin, Hannover and Magdeburg. The agreement also envisages Pirelli RE) the purchase by Pirelli RE of the platform which manages approximately 52,000 real estate properties, with approximately 260 employees and an enterprise value of approximately Euro 43 million (see Section One, Chapter XXII, Paragraph 22.2.4). Pirelli RE Asset Pirelli RE sells 20% of Pirelli RE Asset Management GmbH to Management GmbH HSH Real Estate AG (a company belonging to the group controlled by HSH Nordbank) for approximately Euro 14 million. Elipso S.r.l. (50% of equity Elipso S.r.l. purchases a non performing loan portfolio from Banca held by group General Antonveneta S.p.A. and Interbanca S.p.A. with a nominal value of Electric and 50% by the approximately Euro 2.6 billion, for approximately Euro 530 million joint venture between (see Section One, Chapter XXII, Paragraph 22.2.2). Calyon S.A. and Pirelli RE) Pirelli RE Opportunities Incorporation of the Opportunity fund Fondo Immobiliare Città di Società di Gestione del Torino, to which 18 buildings for various uses of an aggregate value Risparmio S.p.A. of approximately Euro 131 million are contributed by the Municipality of Turin. Pirelli RE holds a 36% interest in the fund. Pirelli RE Pirelli RE launches Ecobuilding, an integrated program concerning the application of eco-sustainable criteria both to the construction of new buildings and to the management of real estate assets. 2008 Acquisition of Highstreet A consortium set up by the RREEF funds (managed by the Deutsche Bank Group, which holds a 48.4% interest), GREF (Generali Group, which holds a 22.34% interest), Pirelli RE (which holds a 24.66% interest) and the Borletti Group (which holds a

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Company involved or Year Description subject of the agreement 4.6% interest), purchases 49% of Highstreet Holding GbR (an investment company with 164 buildings located throughout Germany, including 81 department stores) from Karstadt Quelle AG (Arcandor Group). The enterprise value is assessed at approximately Euro 4.56 billion (see Section One, Chapter XXII, Paragraph 22.2.3). Pirelli RE SGR Incorporation of the Vivaldi opportunity fund, dedicated to the project involving the construction of a service centre in the areas formerly occupied by CAM Immobiliare in the new Rho-Pero Trade Fair Centre. The area, which was purchased in September 2008, as of Prospectus Date is predominantly industrial and dismantled; the project involves redefinition for tertiary/commercial use coordinated by the Sempione Consortium which, in addition to the Vivaldi Fund, is made up of other important partners such as ENI Servizi S.p.A. and the Fondazione Ente Autonomo Fiera Internazionale di Milano. Pirelli RE holds a 50% interest in the fund. Pirelli RE Integrated Pirelli RE and Intesa Sanpaolo S.p.A. sell their respective interests Facility Management B.V. in Pirelli RE Integrated Facility Management B.V. to Manutencoop FM S.p.A. for a total countervalue of approximately Euro 137.5 million (see Section One, Chapter XXII, Paragraph 22.1.1). 2009 European NPL S.à r.l. As part of the measures to rationalise the sector of non (67%-owned by DGAD performing loans, Pirelli RE and DGAD International S.à r.l. (a International S.à r.l. and company wholly controlled by Calyon S.A.) entered into an 33%-owned by Pirelli RE) agreement under which: (i) Pirelli RE reduced its financial and Pirelli RE Credit commitments in the investment platform European NPL S.à r.l., Servicing S.p.A. and (ii) DGAD International S.à r.l., by subscribing to a reserved capital increase, acquired 20% of Pirelli RE Credit Servicing S.p.A.. This transaction is expected to be completed prior to 30 June 2009. It has a positive impact on the net financial position, including the shareholder loan of Pirelli RE of approximately Euro 89 million (see Section One, Chapter XXII, Paragraph 22.2.6). The sale of Pirelli RE Integrated Facility Management B.V. and the rationalisation of the non performing loans sector should be seen as part of the Group’s reorganization process started in 2008 in light of the changed reference business scenario and the crisis that had hit the financial markets and the real estate sector. This process, which led to the preparation of the business plan described in Section One, Chapter VI, is intended to focus our business on high-added- value management activities and real estate property services for property owners (fund/asset management, property management and agency work). For a description of other transactions closed in 2008, see Section One, Chapter IX, Paragraph 9.1.2 in the Prospectus. On 8 April 2009, the Board of Directors acknowledged the resignation of Carlo Alessandro Puri Negri from his role as Director and consequently, from his office of Executive Deputy Chairman. The resignation was handed in early with respect to the natural expiry of the appointment – envisaged for April 2011 – upon the approval of the financial statements as of 31 December 2010 (see Section One, Chapter XIV, Paragraph 14.1 and Chapter XV, Paragraph 15.2). During the same meeting, the Board of Directors co-opted Giulio Malfatto, appointing him as Chief Executive Officer.

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5.2 Primary Investments

5.2.1 Investments made over the last three years The following table illustrates the investments made in property, plant and equipment, in intangible fixed assets and in associates and joint ventures by the Pirelli RE Group during the years ended 31 December 2008, 2007 and 2006, with the exclusion of those deriving from changes in the consolidation area. Investments in fixed assets for the three-year period under review mainly concerned the item Investments in associates and joint ventures. These equity investments are vehicles/funds that own the real estate assets of the Pirelli RE Group.

Year ended 31 December (In millions of Euro) 2008(1) 2007 2006

Investments in property, plant and equipment 6.1 6.5 12.5 Investments in intangible assets 8.8 137.6 47.0 Investments in associates and joint ventures 105.1 245.2 104.3 Total investments 120.0 389.3 163.8 (1) The data provided for the 2008 financial year are net of investments in assets sold. Investments in property, plant and equipment and intangible assets made throughout the financial years ended 31 December 2008, 2007 and 2006 grouped by geographic area are as follows.

Investments in property, plant and equipment Year ended 31 December (in millions of Euro) 2008 2007 2006 Italy 4.8 6.2 12.5 Germany 0.8 - - Rest of Europe 0.5 0.3 - Total 6.1 6.5 12.5

Investments in intangible assets Year ended 31 December (millions of Euro) 2008 2007 2006 Italy 3.1 65.0 47.0 Germany 5.7 72.6 - Rest of Europe -- - Total 8.8 137.6 47.0 The table showing the breakdown of Investments in associates and joint ventures by geographical area is not presented here, as the division by geographical area based on the location of the registered offices of each target company does not represent the actual location of the investment made. The following tables provide an analysis of the investments grouped by type.

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Investments in property, plant and equipment Year ended 31 December (millions of Euro) 2008 2007 2006 Land - 0.4 - Buildings 2.1 2.7 5.8 Plant and machinery 0.3 1.2 4.4 Industrial and commercial equipment 0.2 - - Motor vehicles 0.1 0.2 - Furniture, office machines, and other 3.5 2.0 2.1 Total 6.1 6.5 12.5

Breakdown of investments in intangible assets by type Year ended 31 December (millions of Euro) 2008 2007 2006 Concessions/licenses/trademarks 0.1 2.4 4.0 Applications software 4.4 2.9 2.4 Goodwill 4.3 127.7 40.6 Other -4.6 - Total 8.8 137.6 47.0

Investments in associates and joint ventures Year ended 31 December (millions of Euro) 2008 2007 2006 Associates 12.0 20.5 26.1 Joint ventures 93.2 224.7 78.2 Total 105.2 245.2 104.3 Illustrated below are the main investments made by the Pirelli RE Group for the years ended 31 December 2008, 2007 and 2006. Financial year ended 31 December 2008 Investments in property, plant and equipment The increase in the item Buildings during the year ended 31 December 2008, of Euro 2.0 million, mainly relates to the costs incurred for works done at the Group’s offices, and in connection with the restructuring of the former industrial building called the “Bicocca Hangar” for use as a permanent exhibition centre for the organization of events, in particular contemporary art exhibitions and cultural initiatives. Investments in associates Investments in associates mainly relate to the following transactions. The equity investment in Orione Immobiliare Prima S.p.A. increased by Euro 4.0 million after Pirelli RE’s decision, taken on 30 June 2008, to forgive a shareholders’ loan, in order to sustain the process of disposal of the remaining real estate property portfolio, which is highly fragmented throughout the country.

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During 2008, Pirelli RE Netherlands B.V. purchased shares representing 1.89% of the capital of Spazio Investment N.V. for approximately Euro 5.0 million, bringing its total interest to 18.42% of the share capital. During 2008, Pirelli RE subscribed capital contributions in favour of the company Turismo & Immobiliare S.p.A. for a total of Euro 2.5 million. Investments in joint ventures Investments in joint ventures mainly concern the following types. In 2008, the investment in Alceo B.V. was increased by Euro 4.9 million following the Pirelli RE’s decision to forgive its shareholders’ loan. During the same period Finprema S.r.l. received a capital contribution from Pirelli RE of Euro 2.7 million in connection with the acquisition of the equity interest in Residenziale Immobiliare 2004 S.r.l. On 25 June 2008, Polish Investments Real Estate Holding II B.V. received capital contribution of Euro 2.7 million from Pirelli RE for investments made in companies operating in the Polish market. The increased equity interest in Riva dei Ronchi S.r.l. is due to the decision to forgive a shareholders’ loan of Euro 1.4 million. In 2008, Sigma RE B.V. received capital contributions for a total of Euro 60.2 million from Pirelli RE Netherlands B.V. relating to the purchase of 49% of Highstreet, an investment in buildings rented to German department store Karstadt. The increased equity interest in Trixia S.r.l. is due to the merger by incorporation of Immobiliare Prizia S.r.l. (Euro 5.9 million) and to capital contributions of Pirelli RE (Euro 1.4 million). During the period under review, Pirelli RE Netherlands B.V. purchased for Euro 9.1 million 50% of the shares of Vivaldi; a real estate investment fund developing an area located in the Municipality of Rho – Pero (Milan). Financial year ended 31 December 2007 Investments in property, plant and equipment Investments in Land and Buildings for a total of Euro 3.1 million relate mainly to: (i) Euro 1.9 million for the controlling company Pirelli & C. to purchase a building (Euro 1.5 million) and related land (Euro 0.4 million) to be used for the Pirelli Group history museum, (ii) Euro 0.4 million for costs incurred for works done at the Group’s offices, and (iii) Euro 0.5 million for costs incurred in connection with the restructuring of the former industrial building called the “Bicocca Hangar” for use as a permanent exhibition centre for the organization of events, in particular contemporary art exhibitions and cultural initiatives. Investments in Plant and Machinery, of Euro 1.2 million, concern mainly the construction of cogeneration plants in Pozzuoli (Italy) by Pirelli & C. Real Estate Facility Management S.p.A. Investments in intangible assets The increase in Goodwill, of Euro 127.7 million, refers to the purchase of equity interests in Ingest Facility S.p.A. by Business Solutions (Fiat Group) finalized on 28 February 2007, and the purchase of the German platform achieved through the acquisition of the DGAG Group (Deutsche Grundvermogen AG). Investments relating to Other intangible assets, of Euro 4.6 million, refer mainly to the order book for Euro 1.0 million and to customer relationships for Euro 3.2 million.

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Investments in associates Investments in associates, of Euro 20.5 million, include the acquisition by Pirelli RE Netherlands B.V. of 5.05% of the capital of Spazio Investment N.V. for Euro 15.5 million, bringing its total equity interest to 16.53% of the share capital. Investments in joint ventures The following were the most significant investments in joint ventures, which amounted to Euro 224.7 million: • investment of Euro 105.9 million in Gamma RE B.V., a company constituted by Pirelli RE Netherlands B.V., 51%; such shares were later sold to third parties. This investment was made as a public tender offer for the units of the investment funds Tecla Fondo Uffici and Berenice Fondo Uffici; • investment of a total of Euro 24.9 million in Nabucco RE B.V., a company set up by Pirelli RE Netherlands B.V., 60%; such shares were later sold to third parties. On 21 December 2007, Pirelli RE Netherlands B.V. transferred its remaining equity interest (40%) to Theta RE B.V.; • investment of Euro 19.3 million in Landgesellschaft Schleswig Holstein mbH; • investment of Euro 17.2 million in Mistral Real Estate B.V., a company incorporated during the year, 65% of such shares were later sold to third parties. This investment is part of the process of deconsolidation of the German real estate group Deutsche Grundvermogen AG (DGAG); • investment of Euro 12.5 million in Fondo Immobiliare Città di Torino (formerly Fondo Patrimonio Casa), 36.23% of such shares belong to Pirelli RE Netherlands B.V. This investment is related to the purchase of real estate assets for mixed use located in the city of Turin (Italy); • investment in European NPL S.A. of Euro 9.9 million to purchase non performing loan portfolios from Banca Antonveneta and from the BNL – BNL Paribas Group; • investment of Euro 6.2 million in Aida RE B.V., a company constituted by Pirelli RE Netherlands B.V., mainly for capital contribution payments required to purchase the German real estate group BauBeCon. Financial year ended 31 December 2006 Investments in property, plant and equipment Investments in Buildings of Euro 5.8 million, relate to the redemption of a leased building located in Bologna for Euro 5.0 million, and to the capitalization of improvements made to third-party buildings, specifically to works done at the offices in Milan and Rome Tor Marancia, for Euro 0.8 million. Investments in Plant and Machinery of Euro 4.4 million concern mainly cogeneration plants under construction, owned by Pirelli & C. Real Estate Facility Management S.p.A.. Investments in intangible assets The increase in Goodwill, of Euro 40.6 million, is essentially due to: (i) the purchase of 12.7% of Pirelli RE SGR’s share capital for Euro 27.3 million, mainly from REP Fondi S.r.l. after the latter exercised its option to sell, (ii) the purchase of 52.63% of Pirelli RE Credit Servicing S.p.A.’s share capital for Euro 5.2 million, (iii) the purchase of 75% of Pekao Development Sp.z o.o. by Bank Pekao S.A. for Euro 3.3 million, and (iv) the purchase of P&K Real Estate GmbH shares from the shareholder Kronberg Partecipazioni Immobiliari S.r.l. for Euro 3.1 million.

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Investments in associates Investments in associates, of Euro 26.1 million, relate to the investment in Spazio Investment N.V. for Euro 25.2 million. Investments in joint ventures The following are the most significant investments in joint ventures, which totalled Euro 78.2 million: • investment of Euro 35.2 million to purchase 49% of the capital of Espelha - Serviços de Consultadoria L.d.A., and subsequent capital contribution; • investment of Euro 10.0 million by Pirelli RE in European NPL S.A. as result of the incorporation and pro-rata subscription of the subsequent capital increase; • investment of Euro 6.7 million in Resident Berlin 1 P&K GmbH mainly for capital contributions; • investment of Euro 6.1 million in Spazio Industriale II B.V., mainly for capital contributions.

5.2.2 Investments in progress Investments in progress in property, plant and equipment and intangible assets are not of a significant amount. For details of investments in associates and joint ventures, see the description in Section One, Chapter XIII.

5.2.3 Future investments For details of future investments in tangible and intangible fixed assets and associates and joint ventures, see the description in Section One, Chapter XIII.

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6. BUSINESS OVERVIEW

6.1 Group’s principal activities The Pirelli RE Group is one of the primary operators in the Italian and European real estate sector, and promotes and manages investments involving the establishment and management of real estate funds or vehicle companies (fund and asset management activities). Pirelli RE holds qualified minority interests in such ventures, so to align its interests with those of the other investors. The Pirelli RE Group, in addition to this line of business, generally developed together with national and international investors and with third-party customers, also offers specialized real estate services (agency, property management and, in foreign markets, facility/project management). Starting in 2002 (the year when the Company’s shares were listed on the MTA), the Pirelli RE Group extended its business to the non performing loans sector (mainly real estate bank mortgages). The following paragraphs describe the activities of Pirelli RE Group in the real estate and non performing loans sector.

6.1.1 The real estate sector In the real estate sector, the Pirelli RE Group operates through: (i) investments in funds and vehicle companies and (ii) management activities. (i) Investments in funds and vehicle companies Pursuant to the operational model of Pirelli RE, investments in the real estate sector are typically made together with specialized financial partners (generally leading investment banks and institutional investors) by creating real estate funds investment vehicle companies which are used to purchase, improve and subsequently sell assets with homogeneous features in terms of market sectors, risk profile and profitability and in which the Company holds qualified minority interests, generally between 20% and 40% (as of 31 March 2009, the average equity interest was equal to approximately 25%). When carrying out investments on the Italian market, the real estate fund is the form normally used, given the specific expertise acquired by Pirelli RE SGR (the only company in the Group to offer real estate fund management services), the efficiency of this form, and its transparency. Concerning the types of property fund used, Pirelli RE SGR establishes and manages (depending on the risk profile / return of the initiative and the level of financial leverage used) funds destined for the retail market, funds reserved for Qualified Investors and opportunity funds. The vehicle company is preferred for investments in foreign markets. As of 31 March 2009, the real estate assets managed by Pirelli RE SGR totalled Euro 5.8 billion at market value (38% of the total real estate assets managed by the Pirelli RE Group on the same date). Two-thirds of the requirements of each fund or vehicle company are normally financed by banks, with the remaining third being provided by the investors. Generally speaking, bank loans are without recourse (i.e. not backed by guarantees from the investors), at floating rates, and provide for specific guarantees to be given to the lenders (mainly mortgages on the properties or pledges, in the case of payments to vehicle companies, on interests in the capital). The investors participate with shareholder loans which are generally paid out in proportion to the interest in the investment, and with risk capital. Concerning the governance of each investment, Pirelli RE enters into agreements with the other investors. The term of these agreements is usually five years (or linked to the duration of the investment) and they normally grant the investors the right to appoint members of the executive

77 Section I Registration Document bodies depending on their interest in the investment. These agreements also provide for qualified majorities which grant investors the right of veto in relation to decisions including the following: (i) approval of the business plan or strategic directives to manage the investment, decided jointly by the various investors, (ii) contracts with related parties, (iii) extraordinary transactions (capital increases, mergers, demergers, contributions, acquisitions and disposals of investments), (iv) loans and the issue of guarantees, (v) management activities of particular importance (determination of reserve cash levels, the disposal of assets of more than a certain amount, decisions involving changes to the business plan which are higher than preset values, the conclusion of agreements for amounts above a threshold agreed by the parties, the granting of consultancy mandates), (vi) amendments to the by-laws or regulations. The covenants also provide for the following: (a) restrictions on the transfer of investments held in the vehicle companies, which are generally only granted to companies controlled by the assignor and only after the relevant shareholders’ agreements have been signed, and (b) mechanisms designed to resolve situations of deadlock on decisions which generally consist of the shareholders’ right to formulate a bid to purchase the share of the investment (in terms of capital and shareholder loans) held by the other shareholders. The other shareholders may decide whether or not to accept the bid, or to purchase the shares of the other investors under the same terms and conditions. Finally, the agreements do not provide for obligations of the investors to capitalize entities in the event of losses or of funding needs in excess of those initially estimated; the shareholders will also be entitled to agree any further capitalizations (see Section One, Chapter XXII, Paragraph 22.2.2). These elements, together with the substantial absence of recourse guarantees (which as of 31 March 2009 totalled Euro 39 million for Pirelli RE, out of a total of Euro 12.5 billion in loans granted by the banks to the initiatives of the Pirelli RE Group companies), ensure that any negative events occurring in relation to the funds or vehicles in which the Pirelli RE Group holds qualified minority interests do not directly involve Pirelli RE or its controlled companies. Nevertheless such events have negative effects on the Issuer's economic and financial situation, essentially with regard to: (i) its shareholding in the entity involved; (ii) the likelihood of recovering receivables for shareholders’ loans (including interest) and for services provided; (iii) the return on investments and (iv) potential decreases in revenues deriving from specialized real estate services. (ii) Management activities Management activities, to be intended as the management of real estate assets owned by initiatives of the Pirelli RE Group or by third parties, according to the strategic directions indicated in the business plans defined by the investors, relying on the experience and specific knowledge of Pirelli RE Group companies. They consist of two main forms: (a) fund and asset management, and (b) the supply of specialized real estate services. Fund and asset management The Pirelli RE Group constantly monitors the various geographic markets in which it operates (mainly Italy, Germany and Poland) and the various sectors of the real estate market (residential, tertiary and development). Once an investment opportunity has been identified in these areas, the Pirelli RE Group (i) analyzes its potential, (ii) selects the methods to realize it and (iii) proposes the initiative to potential investors identified based on the risk profile/targeted yield of the initiative and the market sector. If the initiative is actually pursued, the Pirelli RE Group carries out its realization and management pursuant to strategic directives and optimization plans agreed with the investors. These management activities, which generate revenues in the form of fees proportionate to the services provided and the returns (if they exceed preset thresholds) received by investors, are characterized as asset management when carried out for the benefit of vehicle companies, and as fund management when carried out in favour of real estate funds. The

78 Section I Registration Document table below shows the main Pirelli RE Group companies which carry out fund and asset management activities.

Company Pirelli RE interest Activities Geographical performed market Pirelli RE SGR 100% Fund management Italy Pirelli RE - Asset management Italy Pirelli RE Asset Management Deutschland GmbH 80% Asset management Germany Pirelli RE Development Deutschland GmbH 100% Asset management Germany Pirelli Pekao Real Estate S.p z.o.o. 75% Asset management Poland In the years ended 31 December 2008 and 2007, fund and asset management activities generated income of Euro 83.3 million and Euro 83.9 million, respectively. Specialized real estate services Amongs other management activities, the Pirelli RE Group provides – both for initiatives in which it invests and for third-party customers - specialized real estate (mainly agency) services, property management and, with regard to the German and Polish markets, facility management and project management services. Agency. This involves the supply of services aimed at the commercial development of real estate assets such as advice on sales and purchases, valuations, leases and operational marketing. These activities, remunerated through the payment of fees which are proportionate to the value of the real estate property (or to the rent paid in the case of agency fees for lettings), are mainly performed by the companies shown in the table below.

Company Pirelli RE interest Geographical market Pirelli RE Agency S.p.A. 100% Italy Pirelli RE Agency Deutschland GmbH 100% Germany Pirelli Pekao Real Estate S.p z.o.o. 75% Poland Property management. This consists mainly of the coordination, through a single management process, of leases agreements management, and the supply of due diligence services, sales support and the management of real estate databases relating to a whole portfolio or individual real estate properties, with the purpose of maximising profitability within the process of optimization by the owner or the manager. These activities, remunerated through commission calculated on the rents charged, are mainly performed by the companies shown in the table below.

Company Pirelli RE interest Geographical market Pirelli & C. Real Estate Property Management S.p.A. 100% Italy Pirelli RE Property Management Deutschland GmbH 100% Germany BBC Treuhand GmbH 100% Germany Pirelli Pekao Real Estate S.pz o.o. 75% Poland Facility and project management. The planning, supply and control of all services aimed at tenants, with the aim of improving the quality of the real estate properties rented, optimising costs and increasing efficiency and flexibility. The project management element consists of organising the process of building new real estate complexes starting from urban promotion, through to planning and coordinating the initiative, obtaining the necessary building occupation permits and delivering the complexes to the final user. These activities, remunerated through fees calculated on the operating costs of the real estate property in question, or its cost of construction, are

79 Section I Registration Document mainly performed by the companies shown in the table below.

Company Pirelli RE interest Geographical market Pirelli RE Management Services Deutschland GmbH 100% Germany Pirelli RE Hausmeister Service Deutschland GmbH 100% Germany Pirelli RE Facility Management Deutschland GmbH 100% Germany Pirelli Pekao Real Estate S.pz o.o. 75% Poland In the years ended 31 December 2008 and 2007, specialized property services generated income of Euro 115.3 million and Euro 121.6 million, respectively. The aforementioned business model was developed starting in 1997, when Pirelli RE entered into an investment agreement with the Morgan Stanley group for initiatives in Italy in the tertiary/offices sector. Over the years, similar agreements have been executed with funds managed by the Deutsche Bank Group (RREEF) in the residential and retail sectors, with funds managed by Soros Real Estate and Cypress Grove International in the industrial sector and also with other leading investors.

6.1.2 The non performing loans sector Starting in 2002, the Pirelli RE Group extended its business to the non performing loans sector (mainly real estate bank mortgages). Pursuant to its business model, the Pirelli RE Group invested in this sector with minority interests - see Section One, Chapter VI, Paragraph 6.1.5) and offers administration management and debt collection services to the initiatives launched in this way, through Pirelli RE Credit Servicing S.p.A., of which Pirelli RE holds 80% of the share capital. Added to these services, remunerated through the payment of commission, are the asset management non performing loans activities performed directly by Pirelli RE. An important partner in the non performing loans sector is Calyon S.A., with whom Pirelli RE entered into a strategic agreement in 2006. In the years ended 31 December 2008 and 2007, asset management and credit servicing generated income of Euro 34.8 million and Euro 45.5 million, respectively. The results of investment in the funds and vehicles in which Pirelli RE holds an interest, in both the real estate sector and the sector of non performing loans, are reflected in the consolidated financial statements according to the net equity method, and are recognised in the item Net profit share from investments in associates and joint ventures. In the years ended 31 December 2008 and 2007, the item Net profit share from investments in associates and joint ventures contributed to the consolidated financial statements of Pirelli RE of Euro –177.0 million and Euro +115.01 million, respectively. Recent developments The above-mentioned business model has allowed the Pirelli RE Group to obtain positive results, starting as of its IPO and continuing through the year ended 31 December 2007. The crisis that hit the financial markets in general, and the real estate sector in particular, has had a adverse effect on the year ended 31 December 2008, which resulted in a consolidated loss for the period of Euro 195.0 million (of which Euro 99.9 million pertaining to Pirelli RE). This negative results was largely due to real estate property write-offs of Euro 135.8 million and restructuring costs of Euro 44.2 million (consolidated data) (see Section One, Chapter XX). In order to respond to this changed reference scenario, Pirelli RE fine-tuned its organization during the second half of 2008, splitting its real estate business activity into two General Management divisions, to be identified on the basis of the relevant geographical areas: Italy and

1 2007 Redetermined 80 Section I Registration Document

Germany-Poland. Business units operate within the respective General Management divisions, specializing in different product types (residential, tertiary and development). The role of Pirelli RE SGR has gained specific importance and its decision-making and management autonomy has been further strengthened. Pirelli RE SGR is the legal entity within the Group that carries on the fund management business in Italy where lies the expertise of the group real estate fund management. Lastly, a specific Management division presides over the non performing loans segment. Under this structure, Pirelli RE intends to focus on: (i) a streamlined, efficient organization that can count on the operational experience of a high- profile management team and a coverage of its costs through current revenues and decreased portfolio turnover; (ii) managing the assets in the portfolio with the goal of maximising their value. The diagram below shows the Pirelli RE Group’s organizational structure as of the Prospectus Date.

The table below shows the assets managed (that is managed by implementing the strategic directives defined in the various business plans) by the Pirelli RE Group as of 31 December 2008 and 31 March 2009. The amount of managed assets is a significant figure for the Issuer as it generates income in the form of management fees, commensurate with the value of the volumes managed.

In billions of Euro 31 December 2008 31 March 2009 Assets managed by Pirelli RE Group 17.3(1) 17.0(2) of which real estate 15.4(3) 15.2(5) of which non performing loans 1.9(4) 1.8(6) Share pertaining to Pirelli RE Group 4.4 4.4 of which real estate 3.8(3) 3.8(5) of which non performing loans 0.6(4) 0.6(6) (1) Located 50% in Italy, 49% in Germany and the remaining 1% in Poland. (2) Located 50% in Italy, 49% in Germany and the remaining 1% in Poland. (3) Valued with reference to their market value as of 31 December 2008, as indicated by the independent valuers. (4) Valued on the basis of their book value as of 31 December 2008. (5) Valued with reference to their market value as of 31 March 2009, as indicated by the independent valuers. (6) Valued on the basis of their book value as of 31 March 2009. The following paragraphs describe the two General Management divisions (Italy and Germany- Poland) into which the Pirelli RE Group’s real estate business is split and the Management division devoted to non performing loans. 81 Section I Registration Document

6.1.3 General Management Italy As of 31 March 2009, real estate assets managed in Italy – the main market for the Pirelli RE Group in termins of net invested capital – amounted to Euro 7.5 billion (measured with reference to the market value of the buildings, as indicated by independent experts appointed to value them), equal to 49% of the total portfolio managed. Of this amount, Euro 7.1 billion was held by initiatives – real estate funds and vehicle companies – in which the Pirelli RE Group holds qualified minority interests. In the Italian market, the Pirelli RE Group: (i) invests in all segments of the real estate market: residential (or civil buildings for residential purposes), tertiary (buildings for non-residential purposes) and development (or the identification and purchase of areas requiring regeneration and, less often due to their limited availability, undeveloped, and the subsequent construction of new buildings); (ii) management activities. Pirelli RE SGR plays a significant role in this sector. The asset management company mainly sets up and manages seeded real estate funds to which homogenous real estate portfolios (in terms of intended use and risk profile) are allocated. More precisely, Pirelli RE SGR creates and manages real estate funds for the retail investor (and therefore listed on the Automated Funds Market), for Qualified Investors and opportunity real estate funds. As of 31 March 2009, Pirelli RE SGR managed a real estate portfolio worth Euro 5.8 billion, divided into 18 operating funds, including 2 listed on the Automated Funds Market (Tecla Fondo Uffici and Olinda Fondo Shops), 5 reserved for Qualified Investors (Cloe, Armilla, Clarice, Spazio Industriale and Fondo Immobiliare Pubblico Regione Siciliana) and 11 opportunity funds (Raissa, Patrimonio Uffici, Progetto Uffici, Retail & Entertainment, Diomira, Portafogli Misti, Social and Public Initiatives, Fondo Immobiliare Città di Torino, Progetti Residenza, Vivaldi and Hospitality & Leisure). Additionally, there were 2 non-operating funds: one opportunity fund (Hospitality & Leisure II) and one reserved for Qualified Investors (Fedora). Among other management activities in Italy, the Pirelli RE Group also provides specialized agency and property management services. For real estate properties located in Italy the agency work is performed mainly by Pirelli RE Agency, which has a network of over 460 franchised real estate agencies operating all over the country. Again for real estate properties located in Italy, the property management work is instead performed by Pirelli RE Property Management. The facility management and project management services are instead mainly provided by Altair IFM S.p.A. (former Pirelli RE Integrated Facility Management S.p.A.), a company controlled by Integra FM B.V. (former Pirelli RE Integrated Facility Management B.V.), which was sold to Manutencoop FM S.p.A. at the end of 2008. Beginning at the end of 2008, Pirelli RE started a process of internal reorganization to affirm and further strengthen Pirelli RE SGR as an independent and autonomous manager of real estate funds in Italy. This is because the Pirelli RE Group believes that, despite the difficult short-term context, fund management will become increasingly important. The process– which is due to be completed this year– is predominantly based on the following elements: (i) further strengthening of the management autonomy of Pirelli RE SGR by providing it with powers for the management of real estate funds, some of which are held, as of the Prospectus Date, by the Issuer, and (ii) strengthening of its decision-making autonomy both by appointing a Board of Directors with a majority of independent Directors (including the Chairman), and by concentrating management powers with the General Manager, who is not connected through any subordinate or employment relationship with Pirelli RE Group companies other than Pirelli RE SGR.

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The following tables show the investments managed by Pirelli RE Group and in which it holds an interest as of 31 December 2008 and 31 March 2009. The data refer to 100% of the relevant entities. The market value is derived from respectively the evaluations of independent experts as of 31 December 2008 and 31 March 2009.

31 December 2008 (in thousands Net financial of Euro) position Pirelli Pro-rata Pro-rata Pro-rata Of which Passing excluding RE Passing Vacancy Book Market net bank Yield receivables for stake Rent Value Value debt(17) shareholders’ loans Commercial Core(1) 88,565 5.7% 9.3% 1,558,466 1,760,280 1,118,980 1,086,016 Tecla Fondo Uffici(2) 45.0% 38,959 5.3% 8.5% 737,840 737,840 511,862 511,862 Cloe Fund(3) 18.3% 28,083 6.4% 9.1% 406,664 521,900 229,343 229,343 Retail & Entertainment Fund(4) 31.6% 21,522 5.2% 13.1% 413,961 500,540 377,776 344,812 Commercial Yielding(5) 183,552 7.0% 5.3% 2,622,487 2,873,223 1,484,548 1,397,742 Immobili Pubblici Regione Siciliana Fund(6) 22.0% 21,053 8.1% 0.0% 259,289 302,570 207,751 194,244 Tiglio 1 S.r.l.(7) 12.9% 16,943 7.1% 26.2% 238,193 276,170 134,677 134,677 Raissa Fund(8) 35.0% 26,098 6.7% 0.0% 388,897 403,520 235,151 206,204 Olinda Fondo Shops(9) 11.8% 38,258 6.6% 3.1% 579,265 653,440 300,774 300,774 Gromis S.r.l. (formerly Dolcetto Tre S.r.l.)(10) 33.0% 1,426 10.4% 0.0% 13,675 21,050 7,838 7,838 Progetto Perugia S.r.l.(11) 100.0% 1,587 4.8% 1.7% 33,253 33,600 - - Armilla Fund(12) 2.3% 16,469 7.3% 0.0% 224,970 239,400 134,385 134,385 Spazio Industriale Fund (Portfolio)(13) 18.5% 42,800 7.2% 3.5% 592,675 627,540 290,190 287,235 Hospitality & Leisure Fund(14) 35.0% 8,919 8.2% 0.0% 108,429 115,790 105,121 84,147 Italia Turismo S.p.A.(15) 16.3% 9,998 5.4% 0.0% 183,840 200,143 68,661 48,238 Total income portfolio 272,116 6.5% 6.0% 4,180,952 4,633,503 2,603,528 2,483,758 Residential and Small Office House Office(16) 22,754 n.a. n.a. 1,188,169 1,395,577 1,018,957 825,354 Development 2,888 1,114,163 1,191,919 932,886 714,421 Total 297,759 6,483,285 7,220,999 4,555,371 4,023,553

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(1) Commercial real estate portfolios mainly including prestigious buildings located in major Italian cities. (2) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for tertiary/office use. (3) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for tertiary/office use. (4) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of a real estate portfolio mainly for shops leased to La Rinascente S.p.A. (5) Commercial real estate portfolios. (6) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for office use. (7) Vehicle company, owner of a real estate fund mainly for commercial use mostly including offices. (8) Closed-end real estate opportunity fund managed by Pirelli RE SGR owner of a real estate portfolio mainly for tertiary/office use. (9) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for shop/multicenter use. (10) Vehicle company, owner of a commercial building located in Rieti (Italy) and leased to Conforama. (11) Vehicle company, owner of an entertainment centre located near Perugia (Italy) including shops, movie theatres, gyms and restaurants. (12) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for use as offices and telephone exchanges. (13) Spazio Industriale is a closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for industrial use. All fund units are held by Spazio Investment N.V., a company listed on the Alternative Investment Market of the London Stock Exchange. Pirelli RE holds an 18.5% interest in this company. (14) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of four tourist complexes leased to Valtur S.p.A. (15) Company in which Turismo & Immobiliare S.p.A. (of which the Issuer holds 33.3%) holds an equity interest. Turismo & Immobiliare S.p.A. owns 49% of Italia Turismo S.p.A., owner of tourist complexes located in Southern Italy and leased to industry operators. (16) These are mainly individual residential units and individual real estate properties for commercial use to be sold without undergoing any further optimization. (17) The data refer to the total bank debt of the investment.

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31 March 2009 (in thousands of Net financial Euro) position Pro- Pirelli Pro-rata Pro-rata excluding Of which rata Passing RE Vacancy Book Market receivables net bank Passing Yield stake Value Value for debt(18) Rent shareholders’ loans Commercial Core(1) 90,843 5.9% 9.0% 1,550,453 1,754,770 1,131,945 1,099,285 Tecla Fondo Uffici(2) 45.0% 39,542 5.4% 8.4% 734,980 734,980 507,387 507,387 Cloe Fund(3) 18.6%(4) 28,001 6.9% 8.2% 405,821 520,380 225,735 225,735 Retail & Entertainment Fund(5) 31.6% 23,300 5.7% 13.1% 409,652 499,410 398,823 366,163 Commercial Yielding(6) 181,898 7.0% 5.0% 2,592,656 2,810,567 1,455,539 1,383,724 Immobili Pubblici Regione Siciliana Fund(7) 22.0% 21,119 8.1% 0.0% 259,259 304,300 200,856 187,183 Tiglio 1 S.r.l.(8) 12.9% 14,987 7.2% 27.4% 208,048 235,130 97,931 97,931 Raissa Fund(9) 35.0% 25,543 6.7% 0.0% 379,447 393,030 222,522 193,215 Olinda Fondo Shops(10) 11.8% 38,227 6.6% 3.1% 579,009 647,250 297,867 297,867 Gromis S.r.l. (formerly Dolcetto Tre S.r.l.)(11) 33.0% 1,426 10.4% 0.0% 13,675 20,770 10,370 10,370 Progetto Perugia S.r.l.(12) 100.0% 1,587 4.8% 1.7% 33,191 33,700 - - Armilla Fund(13) 2.3% 16,790 7.5% 0.0% 224,970 238,900 133,704 133,704 Spazio Industriale Fund (Portfolio)(14) 22.1% 43,136 7.3% 2.1% 590,505 623,300 321,967 318,967 Hospitality & Leisure Fund(15) 35.0% 9,084 8.4% 0.0% 108,491 115,530 106,471 85,215 Italia Turismo S.p.A.(16) 16.3% 9,998 5.1% 0.0% 196,060 198,657 63,852 59,272 Total income portfolio 272,741 6.6% 5.7% 4,143,109 4,565,337 2,587,485 2,483,009 Residential and Small Office House Office(17) 22,830 n.a. n.a. 1,119,265 1,299,856 960,459 767,651 Development 2,401 1,117,275 1,201,610 906,011 688,143 Total 297,792 6,379,649 7,066,803 4,453,955 3,938,803

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(1) Commercial real estate portfolios mainly including prestigious buildings located in major Italian cities. (2) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for tertiary/office use. (3) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for tertiary/office use. (4) The interest held by the Pirelli RE Group has grown during the quarter, increasing from 18.3% as of 31 December 2008 to 18.6% on 31 March 2009. (5) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of a real estate portfolio mainly for shops leased to La Rinascente S.p.A. (6) Commercial real estate portfolios. (7) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for office use. (8) Vehicle company, owner of a real estate fund mainly for commercial use mostly including offices. (9) Closed-end real estate opportunity fund managed by Pirelli RE SGR owner of a real estate portfolio mainly for tertiary/office use. (10) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for shop/multicenter use. (11) Vehicle company, owner of a commercial building located in Rieti (Italy) and leased to Conforama. (12) Vehicle company, owner of an entertainment centre located near Perugia (Italy) including shops, movie theatres, gyms and restaurants. (13) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for use as offices and telephone exchanges. (14) Spazio Industriale is a closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for industrial use. All fund units are held by Spazio Investment N.V., a company listed on the Alternative Investment Market of the London Stock Exchange. Pirelli RE holds a 22,1% interest in this company (a percentage that increased compared with 31 December 2008 as a result of the purchase of by Spazio Investment N.V. of its treasury shares). (15) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of four tourist complexes leased to Valtur S.p.A. (16) Company in which Turismo & Immobiliare S.p.A. (of which the Issuer holds 33.3%) holds an equity interest. Turismo & Immobiliare S.p.A. owns 49% of Italia Turismo S.p.A., owner of tourist complexes located in Southern Italy and leased to industry operators. (17) These are mainly individual residential units and individual real estate properties for commercial use to be sold without undergoing any further optimization. (18) The data refer to the total bank debt of the investment.

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The tables below provide the same data contained in the tables above, related only to the proportion pertaining to the Pirelli RE Group.

31 December 2008 (in thousands of Net financial Euro) position Pirelli Pro-rata Pro-rata Pro-rata excluding Of which Passing RE Passing Vacancy Book Market receivables net bank Yield stake Rent Value Value for debt(17) shareholders’ loans Commercial Core(1) 29,472 5.5% 9.0% 537,259 585,706 404,297 386,991 Tecla Fondo Uffici(2) 45.0% 17,532 5.3% 8.5% 332,028 332,028 237,520 237,520 Cloe Fund(3) 18.3% 5,139 6.4% 9.1% 74,420 95,508 41,694 41,694 Retail & Entertainment Fund(4) 31.6% 6,801 5.2% 13.1% 130,812 158,170 125,082 107,777 Commercial Yielding(5) 35,537 6.9% 3.7% 512,259 555,317 305,007 281,495 Immobili Pubblici Regione Siciliana Fund(6) 22.0% 4,632 8.1% 0.0% 57,044 66,565 55,847 50,545 Tiglio 1 S.r.l.(7) 12.9% 2,184 7.1% 26.2% 30,703 35,598 17,370 17,370 Raissa Fund(8) 35.0% 9,134 6.7% 0.0% 136,114 141,232 82,303 72,170 Olinda Fondo Shops(9) 11.8% 4,514 6.6% 3.1% 68,353 77,106 35,552 35,552 Gromis S.r.l. (formerly Dolcetto Tre S.r.l.)(10) 33.0% 471 10.4% 0.0% 4,513 6,947 2,587 2,587 Progetto Perugia S.r.l.(11) 100.0% 1,587 4.8% 1.7% 33,253 33,600 - - Armilla Fund(12) 2.3% 379 7.3% 0.0% 5,174 5,506 3,037 3,037 Spazio Industriale Fund (Portfolio)(13) 18.5% 7,884 7.2% 3.5% 109,171 115,593 53,668 52,932 Hospitality & Leisure Fund(14) 35.0% 3,122 8.2% 0.0% 37,950 40,527 36,792 29,451 Italia Turismo S.p.A.(15) 16.3% 1,631 5.4% 0.0% 29,984 32,643 17,852 17,852 Total income portfolio 65,009 6.2% 5.2% 1,049,519 1,141,023 709,304 668,487 Residential and Small Office House Office(16) 7,351 n.a. n.a. 387,230 461,547 332,483 263,940 Development 722 378,082 404,564 329,647 243,520 Total 73,082 1,814,831 2,007,134 1,371,434 1,175,947

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(1) Commercial real estate portfolios mainly including prestigious buildings located in major Italian cities. (2) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for tertiary/office use. (3) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for tertiary/office use. (4) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of a real estate portfolio mainly for shops leased to La Rinascente S.p.A. (5) Commercial real estate portfolios. (6) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for office use. (7) Vehicle company, owner of a real estate fund mainly for commercial use mostly including offices. (8) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of a real estate portfolio mainly for tertiary/office use. (9) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for shop/multicenter use. (10) Vehicle company, owner of a commercial building leased to Conforama. (11) Vehicle company, owner of an entertainment centre located near Perugia (Italy). (12) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for use as offices and telephone exchanges. (13) Spazio Industriale is a closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for industrial use. All fund units are held by Spazio Investment N.V., a company listed on the Alternative Investment Market of the London Stock Exchange. Pirelli RE holds an 18.5% interest in this company. (14) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of four tourist complexes leased to Valtur S.p.A. (15) Company in which Turismo & Immobiliare S.p.A. (of which the Issuer holds 33.3%) holds an equity interest. Turismo & Immobiliare S.p.A. owns 49% of Italia Turismo S.p.A., owner of tourist complexes located in Southern Italy and leased to industry operators. (16) These are mainly individual residential units and individual real estate properties for commercial use to be sold without undergoing any further optimization. (17) The data refer to the total bank debt of the investment.

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31 March 2009 (in thousands of Net financial Euro) position Pirelli Pro-rata Pro-rata Pro-rata Of which Passing excluding RE Passing Vacancy Book Market net bank Yield receivables for stake Rent Value Value debt(18) shareholders’ loans Commercial Core(1) 30,365 5.7% 8.9% 535,674 585,345 409,136 396,517 Tecla Fondo Uffici(2) 45.0% 17,794 5.4% 8.4% 330,741 330,741 235,346 235,346 Cloe Fund(3) 18.6%(4) 5,208 6.9% 8.5% 75,483 96,791 45,293 45,293 Retail & Entertainment Fund(5) 31.6% 7,363 5.7% 13.1% 129,450 157,814 128,498 115,878 Commercial Yielding(6) 36,824 7.0% 3.3% 528,431 567,949 312,123 287,459 Immobili Pubblici Regione Siciliana Fund(7) 22.0% 4,646 8.1% 0.0% 57,037 66,946 54,272 48,802 Tiglio 1 S.r.l.(8) 12.9% 1,932 7.2% 27.4% 26,817 30,308 12,851 12,851 Raissa Fund(9) 35.0% 8,940 6.7% 0.0% 132,806 137,561 77,883 67,625 Olinda Fondo Shops(10) 11.8% 4,511 6.6% 3.1% 68,323 76,376 35,214 35,214 Gromis S.r.l. (formerly Dolcetto Tre S.r.l.)(11) 33.0% 471 10.4% 0.0% 4,513 6,854 3,422 3,422 Progetto Perugia S.r.l.(12) 100.0% 1,587 4.8% 1.7% 33,191 33,700 - - Armilla Fund(13) 2.3% 386 7.5% 0.0% 5,174 5,495 3,022 3,022 Spazio Industriale Fund (Portfolio)(14) 22.1% 9,542 7.3% 2.1% 130,620 137,874 71,165 70,415 Hospitality & Leisure Fund(15) 35.0% 3,179 8.4% 0.0% 37,972 40,436 37,265 29,825 Italia Turismo S.p.A.(16) 16.3% 1,631 5.1% 0.0% 31,977 32,401 17,030 16,283 Total income portfolio 67,189 6.3% 4.8% 1,064,105 1,153,295 721,259 683,976 Residential and Small Office House Office(17) 7,429 n.a. n.a. 368,007 433,231 317,595 250,008 Development 600 383,074 411,429 322,928 216,804 Total 75,218 1,815,186 1,997,955 1,361,782 1,150,788

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(1) Commercial real estate portfolios mainly including prestigious buildings located in leading Italian cities. (2) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for tertiary/office use. (3) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for tertiary/office use. (4) The interest held by the Pirelli RE Group has grown during the quarter, increasing from 18.3% as of 31 December 2008 to 18.6% on 31 March 2009. (5) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of a real estate portfolio mainly for shops leased to La Rinascente S.p.A. (6) Commercial real estate portfolios. (7) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for office use. (8) Vehicle company, owner of a real estate fund mainly for commercial use mostly including offices. (9) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of a real estate portfolio mainly for tertiary/office use. (10) Closed-end real estate fund managed by Pirelli RE SGR listed on the Automated Funds Market, owner of a real estate portfolio mainly for shop/multicenter use. (11) Vehicle company, owner of a commercial building leased to Conforama. (12) Vehicle company, owner of an entertainment centre located near Perugia (Italy). (13) Closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for use as offices and telephone exchanges. (14) Spazio Industriale is a closed-end real estate fund managed by Pirelli RE SGR reserved for Qualified Investors, owner of a real estate portfolio mainly for industrial use. All fund units are held by Spazio Investment N.V., a company listed on the Alternative Investment Market of the London Stock Exchange. Pirelli RE holds an 22.1% interest in this company (percentuale che si è incrementata rispetto al 31 dicembre 2008 per effetto dell’acquisto di azioni proprie da parte di Spazio Investment N.V.). (15) Closed-end real estate opportunity fund managed by Pirelli RE SGR, owner of four tourist complexes leased to Valtur S.p.A. (16) Company in which Turismo & Immobiliare S.p.A. (of which the Issuer holds 33.3%) holds an equity interest. Turismo & Immobiliare S.p.A. owns 49% of Italia Turismo S.p.A., owner of tourist complexes located in Southern Italy and leased to industry operators. (17) These are mainly individual residential units and individual real estate properties for commercial use to be sold without undergoing any further optimization. (18) The data refer to the total bank debt of the investment. Giving priority to the disclosure requirements pursuant to Consob Recommendation DEM/9017965 of 26 February 2009, the following table indicates the evaluation as of 31 December 2008 of the real estate portfolio in which Pirelli RE holds an interest at both book value and market value grouped by property type and accounting method. The market value is derived from the valuations of independent experts as of 31 December 2008.

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Book Category Pro-rata Accounting Market Pro-rata value Book Value method Value 100% Market Value (in thousands of Euro) 100% Development projects 1,114,163 378,082 ias2(1) 1,191,919 404,564 of which Commercial 369,885 104,956 422,076 117,633 of which Residential 563,171 215,795 584,243 228,183 of which Other 181,107 57,332 185,600 58,749 Real estate investments 1,983,318 652,416 ias40(2) 2,068,940 674,244 of which Commercial 1,719,440 577,317 1,768,900 588,853 of which Residential/Soho 263,878 75,100 300,040 85,391 of which Other -- - - Properties for Trading 3,385,804 784,332 ias2(1) 3,960,140 928,325 of which Commercial 2,461,512 472,202 2,864,603 552,170 of which Residential/Soho 924,291 312,130 1,095,537 376,156 of which Other -- - - Total 6,483,285 1,814,831 7,220,999 2,007,134 (1) Recorded at purchase cost. (2) Recorded at market value as determined by the valuations of independent experts as of 31 December 2008. The table below shows the same data as of 31 March 2009, also showing the report date.

Book Pro-rata Pro-rata Report Category Accounting Market value Book Market date method Value 100% (in thousands of Euro) 100% Value Value Development projects 1,117,275 383,074 ias2(1) 1,201,610 411,429 31 March 2009 of which Commercial 374,290 109,660 429,835 123,388 of which Residential 565,330 217,253 588,034 229,886 of which Other 177,655 56,161 183,741 58,155 Real estate investments 1,942,409 661,753 ias40(2) 2,023,540 683,652 31 March 2009 of which Commercial 1,704,932 594,167 1,751,310 606,175 of which Residential/Soho 237,477 67,586 272,230 77,477 of which Other - - - - Properties for Trading 3,319,965 770,359 ias2(1) 3,841,653 902,875 31 March 2009 of which Commercial 2,438,177 469,937 2,814,027 547,119 of which Residential/Soho 881,788 300,421 1,027,626 355,755 of which Other - - - - Total 6,379,649 1,815,186 7,066,803 1,997,956 (1) Recorded at purchase cost. (2) Recorded at market value as determined by the valuations of independent experts as of 31 March 2009.

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The table below shows the economic performance of General Management Italy for the period ended 31 December 2008 grouped by investments in funds and vehicle companies and management activities.

(In millions of Euro) Management(3) Fund and Funds Services asset Total and Platform Agency Property management vehicles(2) Total Fees (B) (C) (A+B+C) (A) Pro-rata aggregate revenues(1) 428.5 298.0 130.6 65.5 24.0 41.1 Consolidated revenues 206.5 75.9 130.6 65.5 24.0 41.1 Total costs (201.7) (82.4) (119.3) (48.1) (37.7) (33.5) EBIT from operations before restructuring costs and asset devaluations/revaluations 4.8 (6.5) 11.3 17.4 (13.6) 7.5 EBIT from investments before restructuring costs and asset devaluations/revaluations (23.9) (23.9) - - - - EBIT including net income from investments before restructuring costs and property devaluations/revaluations (19.2) (30.4) 11.3 17.4 (13.6) 7.5 Financial income from investments 11.6 11.6 - - - - EBIT including net income and financial income from investments before restructuring costs and property devaluations/revaluations (7.6) (18.8) 11.3 17.4 (13.6) 7.5 (1) Pro-rata aggregate revenues indicate the Group’s total turnover and are determined by adding the pro-rata revenues of associates, joint ventures and real estate funds in which the Issuer holds minority interests to consolidated revenues. (2) Investments in funds and vehicles means the pro-rata income generated by assets held, directly or indirectly, by Pirelli RE; this income is generated largely by sales and rents. (3) Management refers to the income generated through fund and asset management operations and the provision of specialist real estate (agency and property) services.

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The table below shows the economic performance of General Management Italy for the three- month period 1 January - 31 March 2009. (In millions of Euro) Management(2) Fund and Funds Services asset Total and Platform Agency Property management vehicles(1) Total Fees (B) (C) (A+B+C) (A) Consolidated revenues 31.3 5.1 26.2 11.1 5.0 10.0 Total costs (28.8) (7.6) (21.3) (7.8) (6.6) (6.9) EBIT before restructuring costs 2.4 (2.5) 4.9 3.3 (1.6) 3.2 Net income from investments (8.2) (8.2) - - - - EBIT & net income from investments before restructuring costs (5.7) (10.7) 4.9 3.3 (1.6) 3.2 Financial income from investments 2.5 2.5 - - - - EBIT including net income and financial income from investments (3.3) (8.2) 4.9 3.3 (1.6) 3.2 (1) Investments in funds and vehicles means the pro-rata income generated by assets held, directly or indirectly, by Pirelli RE; this income is generated largely by sales and rents. (2) Management refers to the income generated through fund and asset management operations and the provision of specialist real estate (agency and property) services.

6.1.4 General Management Germany - Poland Germany Starting from 2006, the Pirelli RE Group exported its business model to Germany, first of all with the incorporation of P&K Real Estate S.p.A. and then with the creation of Pirelli & C. Real Estate Deutschland GmbH, a company wholly controlled by Pirelli RE, which carries on an asset management activities and supplies specialist services in the German market, also through its controlled companies. As of 31 March 2009, the value of assets managed in Germany by the Pirelli RE Group (second largest market in terms of net invested capital) amounted to Euro 7.5 billion, equal to 50% of the total of the managed portfolio. In this market, the Pirelli RE Group carries out the following: (i) investment in all segments of the real estate market, that is residential, tertiary and development; (ii) management activities. Management activities are carried out through the platform Pirelli & C. Real Estate Deutschland GmbH which operates for the vehicles in which the Pirelli RE Group holds a significant minority interest. Fund management activities which, as stated, are carried out in Italy by Pirelli RE SGR, are not present. Amongst other management activities, Pirelli RE Group provides specialist agency and property management real estate services (as for the Italian market) and facility management services. The following tables indicate the investments in Germany in which the Pirelli RE Group holds interests and managed by the Group as of 31 December 2008 and 31 March 2009. The data relate to 100% of the initiatives. The market value is derived from, respectively, the valuations of independent experts as of 31 December 2008 and 31 March 2009.

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31 December 2008 (in thousands of Net financial Of Euro) Pirelli position Passing Passing Book Market which RE Vacancy excluding Rent Yield Value Value net bank quota shareholders’ debt(9) loans Commercial Core(1) 119,000 6.0% 0.0% 1,997,936 2,018,612 1,430,236 1,335,430 Mistral Real Estate B.V.(2) 35.0% 9,500 6.3% 0.1% 150,804 160,000 116,956 113,824 Highstreet Holding GbR(3) 12.1% 109,500 5.9% 0.0% 1,847,132 1,858,612 1,313,280 1,221,606 Commercial(4) 168,114 6.6% 2.1% 2,550,579 2,576,578 2,538,471 2,414,798 Highstreet Holding GbR(3) 12.1% 163,167 6.7% 1.5% 2,449,629 2,471,388 2,439,588 2,318,012 Mistral Real Estate B.V.(2) 35.0% 4,947 4.9% 9.9% 100,950 105,190 98,883 96,786 Residential Yielding(5) 190,760 6.9% 6.3% 2,744,961 2,810,976 2,633,457 2,295,963 Residenza DGAG(6) 35.0% 71,690 7.9% 3.4% 909,991 942,749 884,543 772,255 Residenza BauBeCon(7) 40.0% 100,652 6.4% 7.9% 1,565,913 1,570,157 1,501,589 1,316,723 Small Deal(8) 40.0% 18,418 6.8% 9.3% 269,052 298,070 247,324 206,984 Total income portfolio 477,875 6.6% 4.4% 7,293,476 7,406,166 6,602,164 6,046,191 Development 5,639 n.a. n.a. 147,229 169,210 35,137 34,285 Total 483,514 7,440,705 7,575,376 6,637,301 6,080,476 (1) Commercial real estate portfolio mainly including prestigious buildings located in major German cities. (2) Company which owns tertiary real estate portfolio acquired through the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (3) Company which owns real estate buildings located throughout Germany including real estate properties leased as warehouses to the large department store Karstadt. (4) Portfolio of commercial real estate properties available for sale. (5) Portfolio of residential yielding real estate properties. (6) Residential real estate portfolio acquired trough the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (7) Residential real estate portfolio acquired through the operation which led to the acquisition of control over the German real estate company BauBeCon (see Section One, Chapter XXII, Paragraph 22.2.4). (8) Portfolio of smaller residential real estate properties acquired through several transactions. (9) The data refer to the total bank debt of the investment.

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31 March 2009 (in thousands Net financial of Euro) position Of excluding Pirelli Passing Passing Book Market which Vacancy receivables RE quota Rent Yield Value Value net bank for debt(10) shareholders’ loans Commercial Core(1) 118,690 5.9% 0.0% 1,998,137 2,019,842 1,430,850 1,333,364 Mistral Real Estate B.V.(2) 35.0% 9,500 6.3% 0.5% 151,004 161,230 117,569 115,268 Highstreet Holding GbR(3) 12.1% 109,190 5.9% 0.0% 1,847,132 1,858,612 1,313,280 1,218,096 Commercial(4) 167,556 6.6% 1.7% 2,546,046 2,568,058 2,524,775 2,397,175 Highstreet Holding GbR(3) 12.1% 162,571 6.6% 1.5% 2,446,356 2,465,388 2,425,374 2,299,311 Mistral Real Estate B.V.(2) 35.0% 4,984 5.0% 8.6% 99,690 102,670 99,401 97,864 Residential Yielding(5) 190,910 7.0% 5.8% 2,720,841 2,773,007 2,638,464 2,295,074 Residenza DGAG(6) 40.0%(7) 71,901 8.0% 3.4% 900,761 916,724 881,999 768,078 Residenza BauBeCon(8) 40.0% 100,545 6.5% 7.0% 1,555,319 1,561,183 1,509,460 1,318,882 Small Deal(9) 40.0% 18,464 7.0% 8.7% 264,762 295,100 247,005 208,114 Total income portfolio 477,156 6.6% 4.0% 7,265,024 7,360,907 6,594,089 6,025,613 Development 7,307 148,765 181,100 35,321 33,048 Total 484,463 7,413,789 7,542,007 6,629,410 6,058,661 (1) Commercial real estate portfolio mainly including prestigious buildings located in leading German cities. (2) Company which owns tertiary real estate portfolio acquired through the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (3) Company which owns real estate properties located throughout Germany including real estate properties leased as warehouses to the large department store Karstadt. (4) Portfolio of commercial real estate properties available for sale. (5) Portfolio of residential yielding real estate properties. (6) Residential real estate portfolio acquired through the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (7) The interest held by the Pirelli RE Group has grown during the quarter, increasing from 35.0% as of 31 December 2008 to 40.0% on 31 March 2009. (8) Residential real estate portfolio acquired through the operation which led to the acquisition of control over German real estate company BauBeCon (see Section One, Chapter XXII, Paragraph 22.2.4). (9) Portfolio of smaller primarily residential real estate properties acquired through several transactions. (10) The data refer to the total bank debt of the investment.

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The tables below show the same data included in the tables above, relating only to the proportion pertaining to the Pirelli RE Group.

31 December 2008 (in thousands of Net financial Euro) position Pro- Of Pirelli Pro-rata Pro-rata excluding rata Passing which RE Vacancy Book Market receivables Passing Yield net bank quota Value Value for Rent debt(9) shareholders’ loans Commercial Core(1) 16,575 6.0% 0.0% 276,284 280,892 225,172 170,205 Mistral Real Estate B.V.(2) 35.0% 3,325 6.3% 0.1% 52,781 56,000 30,936 28,557 Highstreet Holding GbR(3) 12.1% 13,250 5.9% 0.0% 223,503 224,892 194,236 141,649 Commercial(4) 21,475 6.5% 3.1% 331,737 335,854 315,530 313,966 Highstreet Holding GbR(3) 12.1% 19,743 6.7% 1.5% 296,405 299,038 295,190 295,190 Mistral Real Estate B.V.(2) 35.0% 1,731 4.9% 9.9% 35,332 36,817 20,340 18,776 Residential Yielding(5) 72,720 6.9% 6.4% 1,051,375 1,075,931 1,008,866 869,989 Residenza DGAG(6) 35.0% 25,092 7.9% 3.4% 317,452 328,640 309,301 258,762 Residenza BauBeCon(7) 40.0% 40,261 6.4% 7.9% 626,848 628,006 600,636 528,044 Small Deal(8) 40.0% 7,367 6.8% 9.3% 107,556 119,228 98,930 83,182 Total income portfolio 110,769 6.7% 5.7% 1,659,397 1,692,677 1,549,569 1,354,160 Development - 33,616 37,805 20,903 19,295 Total 110,769 1,693,013 1,730,483 1,570,472 1,373,455 (1) Commercial real estate portfolio mainly including prestigious buildings located in leading German cities. (2) Company which owns tertiary real estate portfolio acquired through the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (3) Company which owns real estate properties located throughout Germany including real estate properties leased as warehouses to the large department store Karstadt. (4) Portfolio of commercial real estate properties available for sale. (5) Portfolio of residential yielding real estate properties. (6) Residential real estate portfolio acquired through the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (7) Residential real estate portfolio acquired through the operation which led to the acquisition of control over the German real estate company BauBeCon (see Section One, Chapter XXII, Paragraph 22.2.4). (8) Portfolio of smaller residential real estate properties acquired through several transactions. (9) The data refer to the total bank debt of the investment.

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31 March 2009 (in thousands Net financial of Euro) position Pro- Of Pirelli Pro-rata Pro-rata excluding rata Passing which RE Vacancy Book Market receivables Passing Yield net bank quota Value Value for Rent debt(10) shareholders’ loans Commercial Core(1) 16,452 6.0% 0.0% 275,007 279,884 225,233 200,955 Mistral Real Estate B.V.(2) 35.0% 3,240 6.3% 0.5% 51,504 54,992 30,997 30,192 Highstreet Holding GbR(3) 12.1% 13,212 5.9% 0.0% 223,503 224,892 194,236 170,763 Commercial(4) 21,462 6.5% 3.1% 331,369 334,706 315,539 283,914 Highstreet Holding GbR(3) 12.1% 19,671 6.6% 1.5% 296,009 298,312 295,158 264,071 Mistral Real Estate B.V.(2) 35.0% 1,790 5.1% 8.6% 35,359 36,394 20,380 19,842 Residential Yielding(5) 76,364 7.0% 5.8% 1,088,337 1,109,203 1,054,431 917,562 Residenza DGAG(6) 40.0%(7) 28,760 8.0% 3.4% 360,304 366.690 351,986 306,418 Residenza BauBeCon(8) 40.0% 40,218 6.5% 7.0% 622,127 624.473 603,784 527,553 Small Deal(9) 40.0% 7,386 7.0% 8.7% 105,905 118.040 98,661 83,591 Total income portfolio 114,278 6.7% 5.2% 1,694,712 1,723,793 1,595,203 1,402,431 Development 1,511 34,111 40,141 20,945 20,149 Total 115,789 1,728,823 1,763,934 1,616,148 1,422,580 (1) Commercial real estate portfolio mainly including prestigious buildings located in leading German cities. (2) Company which owns tertiary real estate portfolio acquired through the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (3) Company which owns real estate located throughout Germany including real estate properties leased as warehouses to the large department store Karstadt. (4) Portfolio of commercial real estate properties available for sale. (5) Portfolio of residential yielding real estate properties. (6) Residential real estate portfolio acquired through the operation which led to the acquisition of control over Deutsche Grundvermogen AG (see Section One, Chapter XXII, Paragraph 22.2.5). (7) The interest held by the Pirelli RE Group has grown during the quarter, increasing from 35.0% as of 31 December 2008 to 40.0% as of 31 March 2009. (8) Residential real estate portfolio acquired through the operation which led to the acquisition of control over the German real estate company BauBeCon (see Section One, Chapter XXII, Paragraph 22.2.4). (9) Portfolio of smaller residential real estate properties acquired through several transactions. (10) The data refer to the total bank debt of the investment. Giving priority to the disclosure requirements pursuant to Consob Recommendation DEM/9017965 of 26 February 2009, the following table shows the Pirelli RE real estate portfolio as of 31 December 2008 at both book value and market value grouped by property type and accounting method. The market value is derived from the valuations of independent experts as of 31 December 2008.

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Book Category Pro-rata Accounting Market Pro-rata value Book Value method Value 100% Market Value (in thousands of Euro) 100% Development projects 147,229 33,616 ias2(1) 169,210 37,805 of which Commercial 147,229 33,616 169,210 37,805 of which Residential - - - - of which Other - - - - Real estate investments - - - - of which Commercial - - - - of which Residential/Soho - - - - of which Other - - - - Properties for Trading 7,293,476 1,659,397 ias2(1) 7,406,166 1,692,677 of which Commercial 4,548,515 608,023 4,595,190 616,746 of which Residential/Soho 2,744,961 1,051,375 2,810,976 1,075,931 of which Other - - - - Total 7,440,705 1,693,013 7,575,376 1,730,482 (1) Recorded at purchase cost. The table below shows the same data as of 31 March 2009, also showing the date of the report.

Book Pro-rata Market Pro-rata Report Category Accounting value Book Value Market date method (in thousand of Euro) 100% Value 100% Value Development projects 148,765 34,111 ias2(1) 181,100 40,141 31 March 2009 of which Commercial 148,765 34,111 181,100 40,141 of which Residential - - - - of which Other - - - - Real estate investments - - ias40(2) -- 31 March 2009 of which Commercial - - - - of which Residential/Soho - - - - of which Other - - - - Real esate properties for 7,265,024 1,694,712 ias2(1) 7,360,907 1,723,793 31 March Trading 2009 of which Commercial 4,544,183 606,375 4,587,900 614,590 of which Residential/Soho 2,720,841 1,088,337 2,773,007 1,109,203 of which Other - - - - Total 7,413,789 1,728,823 7,542,007 1,763,933 (1) Recorded at purchase cost. (2) Recorded at market value as determined by the reports of independent experts as of 31 March 2009.

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The table below shows the economic performance of the activities carried out by General Management Germany - Poland in Germany for the period ended 31 December 2008 grouped by investments in funds and vehicle companies and management activities.

(In millions of Euro) Management(3) Funds Services Fund and Platform asset Total and Agency Facility Property (2) Total management vehicles (B) (C) (D) (A)+(B)+ Fees (C)+(D) (A) Pro-rata aggregate revenues(1) 225.8 164.7 61.1 15.0 4.4 15.6 26.2 Consolidated revenues 62.2 1.0 61.1 15.0 4.4 15.6 26.2 Total costs (72.2) 0.1 (72.2) (19.9) (5.4) (18.1) (28.8) EBIT from operations before restructuring costs and asset devaluations/revaluations (10.0) 1.1 (11.1) (5.0) (1.0) (2.5) (2.6) EBIT from investments before restructuring costs and asset devaluations/revaluations (25.3) (26.7) 1.4 - (0.1) - 1.4 EBIT including net income from investments before restructuring costs and property devaluations/revaluations (35.3) (25.5) (9.7) (5.0) (1.1) (2.5) (1.2) Financial income from investments 11.1 11.1 - - - - - EBIT including net income and financial income from investments before restructuring costs and property devaluations/revaluations (24.2) (14.4) (9.7) (5.0) (1.1) (2.5) (1.2) (1) Pro-rata aggregate revenues represent the Group’s total turnover and are determined by adding the pro-rata revenues of the associates, joint ventures and real estate funds in which the Issuer holds minority stakes to consolidated revenues. (2) Investments in funds and vehicles means the pro-rata income generated by assets held, directly or indirectly, by Pirelli RE; this income is generated largely by sales and rents. (3) Management refers to the income generated through fund and asset management operations and the provision of specialist real estate (agency, facility and property) services. The table below shows the economic performance of the business carried out by General Management Germany - Poland in Germany for the three-month period 1 January - 31 March 2009.

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(In millions of Euro) Management(2) Funds Fund and Services Platform asset Total and Agency Facility Property (1) Total management vehicles (B) (C) (D) (A)+(B)+(C)+(D) Fees (A) Consolidated revenues 13.5 - 13.5 3.4 0.6 3.1 6.4 Total costs (11.2) 1.0 (12.2) (1.3) (0.8) (3.3) (6.8) EBIT before restructuring costs 2.3 1.0 1.3 2.2 (0.2) (0.2) (0.4) Net income from investments (7.1) (7.1) - - - - - EBIT & net income from investments before restructuring costs (4.8) (6.1) 1.3 2.2 (0.2) (0.2) (0.4) Financial income from investments 3.7 3.7 - - - - - EBIT including net income and financial income from investments (1.0) (2.3) 1.3 2.2 (0.2) (0.2) (0.4) (1) Investments in funds and vehicles means the pro-rata income generated by assets held, directly or indirectly, by Pirelli RE; this income is generated largely by sales and rents. (2) Management refers to the income generated through fund and asset management operations and the provision of specialist real estate (agency, facility and property) services. Poland Operations in Poland began in 2006 with the acquisition of a 75% interest in what is now Pirelli Pekao Real Estate Sp.z o.o., a company in which Bank Pekao (UniCredit group) holds the remaining 25%. In Poland, the Pirelli RE Group uses the same business model used in the other markets only with regard to the residential development segment, the only sector in which Pirelli RE operates in such country. As in Germany, the services offered include asset management, agency work and facilities management, plus project management. As of 31 March 2009, the value of assets managed in Poland amounted to Euro 0.2 billion, equal to 1% of the total of the managed portfolio. The following tables indicate the investments in Poland in which the Pirelli RE Group holds interests and managed by the Group and as of 31 December 2008 and 31 March 2009. The data relate to 100% of the initiatives. The market value is derived from the valuations of independent experts as of 31 December 2008 and 31 March 2009.

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31 December 2008 (in thousands of Net Euro) financial Of position Pirelli which Passing Passing Book Market excluding RE Vacancy net Rent Yield Value Value receivables quota bank for debt shareholders loans Development -(1) 675 n.a. n.a. 139,446 225,658 127,434 66,451 (1) Pirelli RE Group’s interest in the funds/companies in Poland varies from 34% to 40%.

31 March 2009 (in thousands of Net Euro) financial Of position Pirelli which Passing Passing Book Market excluding RE Vacancy net Rent Yield Value Value receivables quota bank for debt shareholders loans Development -(1) 176 n.a. n.a. 135,526 182,949 113,599 57,578 (1) Pirelli RE Group’s interest in the funds/companies in Poland varies from 34% to 40%. The tables below provide the same data contained in tables above, related only to the proportion pertaining to the Pirelli RE Group.

31 December 2008 (in thousands of Net Euro) financial Of Pro- Pro- Pro- position Pirelli which rata Passing rata rata excluding RE Vacancy net Passing Yield Book Market receivables quota bank Rent Value Value for debt shareholders loans Development -(1) 352 n.a. n.a. 53,677 86,150 50,973 26,560 (1) Pirelli RE Group’s interest in the funds/companies in Poland varies from 34% to 40%.

31 March 2009 (in thousands of Net Of Euro) Pro- Pro- Pro- financial Pirelli which rata Passing rata rata position RE Vacancy net Passing Yield Book Market excluding quota bank Rent Value Value shareholders debt loans Development -(1) 60 n.a. n.a. 52,326 69,708 45,538 23,130 (1) Pirelli RE Group’s interest in the Poland funds/companies varies from 34% to 40%.

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Giving priority to the disclosure requirements pursuant to Consob Recommendation DEM/9017965 of 26 February 2009, the following table shows the Pirelli RE real estate portfolio at both book value and market value grouped by property type and accounting method. The market value is derived from the valuations of independent experts as of 31 December 2008.

Category Book value Pro-rata Accounting Market Pro-rata (in thousands of Euro) 100% Book Value method Value 100% Market Value Development projects 139,446 53,677 IAS2(1) 225,658 86,150 of which Commercial - - - - of which Residential 139,446 53,677 225,658 86,150 (1) Recorded at purchase cost. The table below shows the same data as of 31 March 2009, also showing the report date.

Book Pro-rata Pro-rata Report Category Accounting Market value Book Market date method Value 100% (in thousands of Euro) 100% Value Value Development projects 135,526 52,326 IAS2(1) 182,949 69,708 31 March 2009 of which Commercial - - - - of which Residential 135,526 52,326 182,949 69,708

(1) Recorded at purchase cost. The table below shows the economic performance of the business carried out by General Management Germany Poland in Poland for the period ended 31 December 2008 grouped by investments in funds and vehicle companies and management activities.

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(In millions of Euro) Management(3) Funds Services Fund and Total and Platform asset Agency Facility (2) vehicles Total management (B) (C) (A)+(B)+(C) Fees (A) Pro-rata aggregate revenues(1) 86.7 79.9 6.8 2.8 1.3 2.7 Consolidated revenues 66.4 59.6 6.8 2.8 1.3 2.7 Total costs (50.0) (41.2) (8.8) (4.7) (1.6) (2.6) EBIT from operations before restructuring costs and asset devaluations/revaluations 16.4 18.4 (2.0) (1.9) (0.2) 0.1 EBIT from investments before restructuring costs and asset devaluations/revaluations 1.8 1.8 - - - - EBIT including net income from investments before restructuring costs and property devaluations/revaluations 18.2 20.1 (2.0) (1.9) (0.2) 0.1 Financial income from investments 1.6 1.6 - - - - EBIT including net income and financial income from investments before restructuring costs and property devaluations/revaluations 19.8 21.7 (2.0) (1.9) (0.2) 0.1 (1) Pro-rata aggregate revenues state the Group’s total turnover and are determined by adding the pro-rata revenues of associates, joint ventures and real estate funds in which the Issuer holds minority stakes to consolidated revenues. (2) Investments in funds and vehicles means the pro-rata income generated by assets held, directly or indirectly, by Pirelli RE; this income is generated largely by sales and rents. (3) Management refers to the income generated through fund and asset management operations and the provision of specialist real estate (agency, facility and property) services.

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The table below shows the economic performance of the business carried out by General Management Germany - Poland in Poland for the three-month period 1 January - 31 March 2009.

(In millions of Euro) Management(2) Funds Services Fund and Total and Platform asset Agency Facility (1) vehicles Total management (B) (C) (A)+(B)+(C) Fees (A) Consolidated revenues 2.3 0.1 2.1 0.5 0.4 1.2 Total costs (1.8) (0.1) (1.7) (0.9) (0.4) (0.4) EBIT before restructuring costs 0.5 - 0.5 (0.3) - 0.8 Net income from investments 0.2 0.2 - - - - EBIT & net income from investments before restructuring costs 0.6 0.2 0.5 (0.3) - 0.8 Financial income from investments 0.5 0.5 - - - - EBIT including net income and financial income from investments 1.1 0.7 0.5 (0.3) - 0.8 (1) Investments in funds and vehicles means the pro-rata income generated by assets held, directly or indirectly, by Pirelli RE; this income is generated largely by sales and rents. (2) Management refers to the income generated through fund and asset management operations and the provision of specialist real estate (agency, facility and property) services.

6.1.5 Non performing Loans Division The Pirelli RE Group began operations in the acquisition and management of non performing loans in 2002. Initially the company entered into a framework agreement with the funds managed by Morgan Stanley (2004), which was replaced during 2006 by an agreement with Calyon S.A.. Pursuant to such agreement, each investment is carried out providing allowing other partner to join the investment. In the non performing loans segment – that is acquiring and managing impaired portfolios of loans from banks, mainly backed by real estate mortgages – the Pirelli RE Group also applies a business model in line with that used in the segments related to real estate. In fact, also in this field Pirelli RE works through: (i) investment activities. Pirelli RE, directly or through companies in which it has an interest, subscribes financial instruments (primarily junior notes) issued by securitisation companies incorporated for the realisation of specific investments. The redemption of such junior notes (securities which, in practice, enable distribution of gains made by the securitization companies, understood as the difference between (a) the amounts recovered through collection of the securitized receivables, and (b) the price paid to purchase them, plus the costs incurred for arrangement of the transaction and for credit recovery, and financial charges) is subject to repayment of the senior debt (represented by senior notes) issued by the same vehicles and mainly subscribed by banks or other institutional investors. Generally the ratio of junior notes (which offer a higher return than offered by the senior notes given their higher level of risk, which makes them basically equivalent to an equity investment) to senior notes, is 40/60. In the non performing loan segment, relations between the various investors are governed by agreements that generally regulate the composition of the management bodies and attribute rights of veto over the more significant issues such as an example, the approval of business plans and the execution of extraordinary transactions. There are also restrictions on the transfer of the interests held in vehicle companies, which are generally only permitted to the benefit of companies controlled by the assignor and only after the relevant shareholders’ agreements have

104 Section I Registration Document been signed by the beneficiary. The agreements do not provide for obligations of the participants to capitalize entities in the event of losses or of funding needs in excess of those initially estimated; (ii) management activities. In this segment, Pirelli RE Group monitors the market looking for potential investments, analyses them in terms of risk and potential return and compiles an initial business plan in consideration of the required investment, the portfolio purchase price, ancillary expenses and anticipated recovery value). In the event the analysis has a positive outcome, Pirelli RE Group structures the transaction, generally with its specific partner, negotiates with the owner of the portfolio it intends to acquire (generally banks or financial intermediaries) and creates a securitisation vehicle, in accordance with Law 130/99 which regulates securitisations. Once the securitisation vehicle has completed the acquisition, the process continues with the securitisation of the non performing loans, that is the offering of the senior notes to institutional investors and the subscription of the junior notes by Pirelli RE and its partners. Redemption of the financial instruments issued by the securitisation vehicles is exclusively dependent on the proceeds deriving from the repayment of the loans acquired, or in the case of prolonged default by the various debtors, enforcement of the guarantees (and therefore, in the case of a mortgage guarantee, forced sale of the real estate assets). The management of these portfolios is carried out by Pirelli RE Credit Servicing S.p.A., (an intermediary registered with the special register pursuant to Article 107 of the Italian Banking Act. The capital of this company is 80%-owned by Pirelli RE with the remaining 20% held by DGAD International S.à r.l. (a company wholly controlled by Calyon S.A. - see Section One, Chapter XXII, Paragraph 22.2.6), a company engaged in the management and monitoring of in-court and out-of-court actions with regard to the loans acquired, their valuation, and the master servicing pursuant to Article 2 of the above mentioned Law 130/99 (primarily management of the flow of data and information). In 2008 Pirelli RE Credit Servicing S.p.A. was awarded a “strong” rating by Standard & Poor's, thus achieving the highest rating in the category. As of 31 March 2009, Pirelli RE Group was managing non performing loans, primarily mortgages, with a book value of Euro 1.8 billion. The tables below show the main investments held and managed by Pirelli RE Group in the non performing loans sector as of 31 December 2008 and 31 March 2009. The data refer to 100% of the relevant initiatives.

31 December 2008 (In millions of Euro) Pirelli RE Book Net financial position excluding Of which net quota Value receivables for shareholders loans bank debt Sagrantino B.V. 33% 1,394.7 1,359.8 1,025.3 Espelha - Servicos de Consultadoria L.d.A. 49% 203.5 192.5 119.8 Total 1,598.2 1,552.3 1,145.1

31 March 2009 (In millions of Euro) Pirelli RE Book Net financial position excluding Of which net quota Value receivables for shareholders loans bank debt Sagrantino B.V. 33% 1,354.4 1,314.9 980.9 Espelha - Servicos de Consultadoria L.d.A. 49% 198.8 192.9 108.4 Total 1,553.2 1,507.8 1,089.3

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The following table shows the same data included in the tables above, reporting only the portion pertaining to the Pirelli RE Group.

31 December 2008 (In millions of Euro) Pirelli RE Pro-rata Net financial position excluding Of which net quota Book Value receivables for shareholders loans bank debt Sagrantino B.V. 33%(1) 385.1 403.9 293.6 Espelha - Servicos de Consultadoria L.d.A. 49% 99.7 94.3 58.7 Total 484.8 498.2 352.3 (1) The pro-rata values do not correspond precisely to 33%, as Sagrantino B.V. owns respectively 29.7% and 16.5% of the two portfolios (Calliope and Elipso). 31 March 2009 (In millions of Euro) Pirelli RE Pro-rata Book Net financial position excluding Of which net quota Value receivables for shareholders loans bank debt Sagrantino B.V. 33%(1) 374.6 391.6 281.4 Espelha - Servicos de Consultadoria L.d.A. 49% 97.4 94.5 53.1 Total 472.0 486.1 334.5 (1) The pro-rata values do not correspond precisely to 33%, as Sagrantino B.V. owns respectively 29.7% and 16.5% of two portfolios (Calliope and Elispo). The table below sets forth the economic performance of the Non performing Loans Division for the period ended 31 December 2008 grouped by investment and management activities.

(In millions of Euro) Management(3) Fund and Services Investment asset Credit Total Platform Activities(2) management servicing Total Fees (B) (A)+(B) (A) Pro-rata aggregate revenues(1) 40.2 5.4 34.8 7.5 27.3 Consolidated revenues 39.1 4.3 34.8 7.5 27.3 Total costs (34.3) (3.2) (31.1) (4.3) (26.8) EBIT from operations before restructuring costs and asset devaluations/revaluations 4.8 1.1 3.7 3.2 0.5 EBIT from investments before restructuring costs and asset devaluations/revaluations 5.3 5.3 - - - EBIT including net income from investments before restructuring costs and property devaluations/revaluations 10.1 6.4 3.7 3.2 0.5 Financial income from investments (2.1) (2.1) - - - EBIT including net income and financial income from investments before restructuring costs and property devaluations/revaluations 8.0 4.3 3.7 3.2 0.5

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(1) Pro-rata aggregate revenues state the Group’s total turnover and are determined by adding the pro-rata revenues of associates, joint ventures and real estate funds in which the Issuer holds minority interests to consolidated revenues. (2) Investment activities refer to the pro-rata figure generated by entities in which Pirelli RE has a direct or indirect interest. (3) Management refers to the income generated through asset management operations and the provision of specialist credit servicing services. The table below shows the economic performance of the Non performing Loans Division for the three-month period 1 January - 31 March 2009.

(In millions of Euro) Management(2) Fund and Services Investment asset Credit Total Platform Activities(1) management servicing Total Fees (B) (A)+(B) (A) Consolidated revenues 4.6 0.9 3.6 0.8 2.9 Total costs (6.9) (0.3) (6.6) (0.7) (5.9) EBIT before restructuring costs (2.3) 0.6 (2.9) 0.1 (3.0) Net income from investments 2.6 2.6 - - - EBIT & net income from investments before restructuring costs 0.3 3.2 (2.9) 0.1 (3.0) Financial income from investments 1.7 1.7 - - - EBIT including net income and financial income from investments 2.0 4.9 (2.9) 0.1 (3.0) (1) Investment activities refer to the pro-rata figure generated by entities in which Pirelli RE has a direct or indirect interest. (2) Management refers to the income generated through asset management operations and the provision of specialist credit servicing services. Pursuing the objectives announced in the 2009 - 2011 Business Plan (see Section One, Chapter XIII), on 26 May 2009 an agreement was entered into with DGAD International S.à r.l. (a company wholly controlled by Calyon S.A.) intended to rationalise the sector of non performing loans (see Section One, Chapter XXII, Paragraph 22.2.6). The transaction has a positive impact of approximately Euro 89 million on Pirelli RE’s net financial position, including shareholders' loans, and one of its objectives is the acquisition of management mandates for portfolios of non performing loans for third parties, in line with the increasing focus of the Pirelli RE Group on the services sector.

6.1.6 Future plans and strategies Over the past few years, the activities of the Pirelli RE Group focused on investments in funds and vehicle companies. Until the crisis hit the financial markets and the real estate property sector in particular, these investments had generated positive results deriving mainly from trading operations carried out by associates and joint ventures. These activities enabled, among other things, the creation of a real estate portfolio through the various funds and investment companies. This portfolio includes prestigious real estate properties located in major Italian and German cities. Strategic agreements have also been entered into with leading operators in the business. In order to respond to the changed market, on 10 February 2009, the Board of Directors of Pirelli RE approved the 2009 - 2011 Business Plan. On 26 May 2009, the Board of Directors

107 Section I Registration Document confirmed the economic targets for 2011 as set out in the Plan, while revising certain strategic decisions mainly related to the willingness of the Group to focus on its core business and generate recurring income. The Pirelli RE Group intends to improve its market position, drawing on the distinctive expertise which helped to establish its reputation during the years immediately after its listing. This expertise covers fund management and the provision of specialized real estate services (mainly agency and property management), together with credit servicing, precisely because this work can generate recurring income. In this context, the Board of Directors decided to modify its original development plans by selling a significant share of Pirelli RE SGR, preferring to continue to benefit as far as possible from the income generated by this company in the form of management fees. Likewise, the original idea of transferring the specialized real estate services to Pirelli RE SGR was also reconsidered. These services will therefore remain in their current configuration within the Group, to revitalize this area and boost their position in the market for services to third parties. Finally, a further initiative designed to rationalise and recover efficiency at Group level was also approved. The strategic directives of the 2009 - 2011 Business Plan, defined with the aim of optimizing the components of the revised business model, respond to the changed market and can be summarised as follows: • by focusing on the activities which established the reputation of the Pirelli RE Group as a leading operator during the years after its listing. In this context, the Pirelli RE Group intends to draw on its distinctive expertise in terms of fund management in Italy (a sector in which Pirelli RE SGR has a leadership role), asset management in Germany and Poland and also the supply of specialized real estate services (mainly agency and property management) and credit servicing. It will therefore shift its focus to activities able to generate recurring income; • the reduction of risks inherent in the business model adopted recently, through: (i) a reduction in borrowing, intended to give the Company more efficiency and flexibility, (ii) optimisation of the real estate portfolio through the disposal of non-strategic assets, a focus on the management of quality real estate assets, a gradual shift from an approach characterised by rapid turnover of the real estate portfolio (“trading”) towards a “hold” approach and selective management of real estate development projects, (iii) a reduction of net invested capital through the gradual reduction in the interests held in each investment, from an average of approximately 25% to approximately 19%; • a streamlined, efficient organization based on the experience of a high-profile management team, further cuts in the number of employees compared to the restructuring plan launched last year, and the limiting of other fixed costs by rationalising the ways in which investments are carried out (in terms of reducing the number of associates and joint ventures); • confirmation of the central importance of the Italian market, and in this context the role of Pirelli RE SGR as the founder and manager of real estate funds. By drawing on its leading position in terms of assets managed, the company intends to obtain the management of new portfolios, both through overall growth and by creating strategic partnerships through which new managed assets will be obtained; • pursuing strategic partnerships in the German and Polish markets, with reference to both investment and management activities; • maintenance of a substantially stable real estate portfolio over the next three years. For further details on the assumptions made for the 2009 - 2011 Business Plan and on the guidelines for the three-year period 2009 - 2011, see Section One, Chapter XIII.

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6.2 Key markets

6.2.1 The European real estate market During 2008 the creation of wealth fell significantly all over the world, putting the brakes on the entire global economy. Forecasts for 2009, regularly revised downward, remain very negative both worldwide and for Europe, where the ECB estimates GDP will contract between 2.2% and 3.2%, while the OECD is anticipating a sharp fall of GDP in the euro area, of -4.1%. The weakening of the pact of trust that links families, banks, businesses and institutions has frozen demand (consumption, international trade, investment, etc). Relaunching this pact of trust between commercial and financial market operators, altering their expectations, is the strategy that the authorities are pursuing both locally and on an international level. In recent months the banking institutions and governments have adopted monetary, economic and fiscal measures in order to inject more liquidity into the system. The fall in interest rates (the latest cut by the ECB was on 7 May 2009 and brought the level of rates to 1%, the lowest level since the introduction of the Euro), and fiscal initiatives are attempting to reactivate demand. The economic crisis born out of the credit crisis has had a huge impact on the real estate market. During the course of 2008 worldwide real estate investment decreased of an amount of 59%, from the record 1,000 billion dollars in 2007 to the current level of 435 billion dollars. For 2009, the forecasts are suggesting a further fall of volumes of approximately 5%, with a persisting tendency for concentration on the smaller transactions. However, in international equilibrium, Europe is in first place for investments in real estate (41% of total volumes), taking into account that activity in the United States has dropped by more than 70%2. Despite representing the relative majority of real estate investment flows, Europe recorded a massive annual reduction in investments of 53% as a result of the credit squeeze, falling back to the Euro 117 billion recorded in 20043. The shock wave of falling investment volumes hit the whole Europe, but was particularly felt in the United Kingdom, Germany and France where volumes fell by 60%, down to an amount of approximately Euro 60 billion4. It is important to stress that different markets react in different times. The slowdown of activity was in fact felt more strongly in western European countries with more mature markets, while certain smaller markets in western Europe, have maintained relatively stable levels thanks to a number of transactions completed in the first half of the year involving significant real estate portfolios. In central and eastern Europe a lack of stock and the suspension of activities by certain German open-ended funds led to a slowdown in investment, in particular in the second half of the year. As a result of the fall of their capital value, markets are going through a period of transition towards greater equity, beginning to generate acquisition opportunities again during 20095. The real possibility of acquiring high quality product at a reasonably acceptable price is beginning to act as a catalyst in certain markets.

6.2.2 The Italian real estate market Italy is the main market for the Pirelli RE Group, both in terms of net invested capital which amounted to Euro 0.8 billion for the real estate sector as of 31 March 2009 (to which should be added Euro 0.2 billion for the non performing loans sector) out of a total of Euro 1.3 billion,

2 Cushman & Wakefield 2008. 3 CB Richard Ellis Global View Point 2008. 4 Jones Lang La Salle 2008. 5 Jones Lang La Salle 2008. 109 Section I Registration Document and also in terms of consolidated revenues. As of 31 March 2009, consolidated revenues totalled Euro 31.3 million, to which should be added Euro 4.6 from the non performing loans sector, equal to 66.7% of total consolidated revenues). Within the euro area, Italy is the economy that recorded the poorest performance in 2008 (negative GDP of -1.0%)6 and is expected to have a poorer result than the European average in 2009, -4.3% according to the latest OECD predictions, before stabilising at approximately -0.4% in 2010. Positive growth in the Italian economy continues to feel the effect of the doubt over the actual depth of the crisis in certain emerging economies, which still provide important support to the trends in international trade. These risks are partially counterbalanced by the possibility that economic activities will benefit, to a greater extent than previously estimated, both from the expansion of consumption through the fall of prices of raw materials, and from the full implementation of the demand stimulus plans defined and currently being defined internationally. Uncertainty is tending to push inflation downwards, combined with the possibility of a continuing fall in the prices of raw materials and a further reinforcement of the Euro7. The crisis on the financial markets has created a reversal of the trend within the Italian real estate sector after years of sustained growth. This has led to a fall in real estate values, again after a long period of growth. 2008 was a year of decline in the following key property market indicators: number of transactions, average time to completion of rentals, sales and lending transactions. In particular in 2008, the number of real estate sales in Italy fell by 15.1% in the residential segment, 15.5% in the office segment, 11.7% in the commercial segment and 8.7% in the industrial segment. The contraction in fourth quarter 2008 was more significant than the one recorded in the first quarter of the same year and in particular for assets to be used for business purposes. This acceleration of the downturn in the property market in the fourth quarter of 2008 continued into the early months of 2009. From an analysis of the early forecasts for 2009 a progressive trend emerges towards falling values particularly in the residential and office segments, with the annual rate of change falling well below zero, while the commercial segment should be less affected by the declining growth rates, but still in negative territory. For 2010 it is anticipated that we shall have passed the most deepest trough of the recession, not least as a result of the Italian government's measures on the building industry and housing policies (Piano Casa), which should be showing their effects. In 2010 better growth rates than those of 2009 are anticipated, with substantial stability of average prices in the residential and office segments, and positive growth rates in the commercial segment8. Offsetting the downturn of the general picture, there are however both structural and economic/financial aspects that characterise the Italian real estate sector and which, unlike in other European countries, could help revive the market: • a still stable demand for high quality real estate located in the major Italian cities, mainly for office use; • the low rate of indebtedness of Italian families compared with those of other countries, which makes the Italian banking system more solid, should contribute to sustaining the

6 Italian National Statistics, Quarterly Financial Accounts March 2009. 7 Bank of Italy: Financial Bulletin January 2009. 8 Nomisma: Observatory on the Real Estate Market- November 2008 and March 2009. 110 Section I Registration Document

propensity to consume and, therefore, the sustainability of rents for commercial businesses; • investment in real estate is perceived as inherently defensive and less risky, in particular during periods of economic uncertainty. As a result, some quiet interest has been detected in this market from new institutional investors with available capital that prefer bricks to paper, such as Welfare Funds, Pension Funds and Foundations. A. Residential9 During 2008 the residential segment showed clear signs of a slowdown, with a significant fall in demand and in total turnover, lengthening transaction times, increasing discounting and falling prices. According to data published by the Land Registry, the number of transactions in the residential segment fell during 2008 by 123 thousand, a year-on-year fall of -15.1%. This decline in the number of transactions corresponded to a drop in total turnover in the residential segment, that the Land Registry estimated at 12.1%. For 2009 the falling trend in the number of sales is estimated by the Land Registry to reach approximately 20% on an annual basis, while turnover should by down by approximately 25% compared with 2008. There was not a significant drop in prices corresponding to the contraction in the number of sales as there was in the other main European countries, where the price slump was quite significant. For Italy, where house prices in the last property cycle increased much less than in other countries, a number of different factors are important. On the one hand, Italy did not experience the phenomenon of excessive construction of residential buildings, as happened in Spain, where in recent years the construction of new homes was more than twice that in Italy, and on the other the indebtedness of Italian families is less than in other western European countries. These two aspects translate into a less rapid slump owing to less excess supply, at least during 2008. Prices fell in 2008 by approximately 2.4% net of inflation, on an annual basis, with peaks of 7.7% in Bologna and 5.6% in Milan, while the high-end residential market remained largely stable. For 2009 it is estimated that prices of homes will fall approximately -8.5%, while by the end of 2010 the rate of change in prices should be in the region of -0.3%, which indicates substantial stability in current prices, but a decrease in real terms, although less than expected at the end of 2009. B. Office buildings10 During 2008 the office buildings sector also experienced a slowdown: both demand and the number of transactions declined. According to the Land Registry data the number of transactions decreased, in fact, by approximately -15.5% in comparison with the previous year. However, the tertiary segment of the Italian property market has not shown signs of being particularly over-supplied. Indeed, there are certain areas of the country that have undergone rapid processes of deindustrialization and a gradual shift towards the tertiary sector, which is leading to a shortage of office buildings. The difficulties experienced in 2008 by the tertiary market have resulted in a lengthening of average selling times, which has reached 7.2 months (in comparison with the 6.2 months in 2007)

9 Nomisma: Observatory on the Real Estate Market- November 2008 and March 2009. 10 Nomisma: Observatory on the Real Estate Market- November 2008 and March 2009. 111 Section I Registration Document and discounts at the time of the transaction (13%). The average sale price is practically frozen in real terms (+3.3% nominal, equal to -0.3% in real terms). Forecasts for 2009 signal a trend towards reduced prices which, by the end of the year, should reveal a marked drop in growth rates to approximately -6.9%, while for 2010 there should be an annual rate of change of approximately -0.3%. C. Retail premises11 The collapse of consumption, created by the economic crisis, had immediate effects on the commercial segment of the Italian property market, which saw a more significant deterioration of demand and sales during 2008. According to the Land Registry data the number of transactions in 2008 fell by 11.7% in comparison with the previous year. This segment of the real estate market also shared the same trends as were recorded in the residential and office segments: longer average selling times (close to 6.4 months compared with 5.7 months of the previous year) and discounts applied at the moment of sale (12.2% against 11.4% the previous year). Sales and renting prices remained largely unchanged in nominal terms (+0.4% annually) but were negative when considering inflation. The estimates for 2009 are for a fall in average prices of -3%, while for 2010 there is expected to be a turnaround for the commercial segment with average prices rising by 3%, meaning a positive change in real terms. D. Industrial segment12 The Italian industrial property market is currently the second largest in Europe in terms of surface area, with more than 475 million sqm, second only to Germany, with an estimated 784 million sqm13. However the Italian market is characterized by a lower supply of class A buildings, which form a little less than 10% of the total stock against an average of approximately 20% in the main European countries (France, Spain and Germany and the United Kingdom)14. The industrial warehouse segment also saw a downturn in terms of market indicators during 2008, recording a fall in demand and in the volume of transactions, even if to a much smaller degree than the other real estate market segments. According to the Land Registry data the number of transactions in 2008 experienced a -8.7% fall in comparison with the previous year. The supply of industrial premises was on a rising trend, which was reflected in the average time on the market (7.6 months compared with 7.2 months in the previous year) and discounts applied at the moment of the transaction (12% compared with 11.7% in the previous year). Prices slowed down, recording growth however of 0.3% year-on- year in real terms and 4% in nominal terms. No forecasts are available for 2009 and 2010 for the industrial real estate segment, so we can only refer to the opinions of market operators on demand, supply and volume of transactions. According to their sentiments, demand for industrial real estate properties will continue to fall into 2009, with a consequent increase in supply, the number of transactions will also slow down significantly15. Besides the economic scenario, it is worth noting that the industrial real estate market in recent years has seen significant construction of buildings for logistics purposes. This segment of the

11 Nomisma: Observatory on the Real Estate Market- November 2008 and March 2009. 12 Nomisma: Observatory on the Real Estate Market- November 2008 and March 2009. 13 Scenari Immobiliari: Outlook 2009. 14 Ibid. 15 Nomisma: Observatory on the Real Estate Market - March 2009. 112 Section I Registration Document market has expanded considerably and in fact there are many projects planned nationally, concentrated mainly in northern and central Italy, although developments of new logistic hubs are planned also in the South. In Italy, according to the most expert analysts, the logistics real estate market has a greater development potential than the other European countries thanks to the strategic position of the Italian peninsula, which provides excellent connections for the flow of goods to and from Europe and the South (Corridor 1), the East (Corridor 5) and the North (the corridor of the two seas and the Brenner axis)16. E. The mortgage market Until the recent past the low cost of mortgages was a fundamental driver for the real estate market, so the expected recovery of this sector – boosted by interest rate policy interventions – will not come as a surprise. There have, in fact, been some unusually drastic cuts in the cost of money, with the ECB rate going from 4.25% to 1% in a few months; decisions taken in an attempt to respond to a crisis of extraordinary proportions, thereby stimulating production and consumption. However, these actions have been strongly attenuated by the rising spreads applied by banks, which are only partly attributable to an actual increase in risk. On the side of demand, the economic recession, associated with the correction of real estate values, has led potential purchasers to defer their investments. The higher costs of entry lead inevitably to a waiting game even for those investments that are traditionally considered safe, such as real estate. This phenomenon, which it is believed will recede when confidence returns, together with the broad expectations for further falls in real estate property prices, in the short term will certainly continue to feed the current downturn. On the offer side lending institutions are clearly being much more selective in their management of property financing, with lower ratios between amounts loaned and property values (loan to value) and average terms of loans. The reduced amount of support that the credit system provides and far lower demand than in the past have had a strong negative effect on the Italian real estate market17. F. The real estate fund market18 The Italian real estate fund industry continued on its positive cycle, even in the second half of 2008. Despite the severity of the crisis affecting the financial system, the Italian real estate fund sector strengthened further, with positive flows of funding, a growing number of funds and an increase in the values of assets owned and managed. Net assets went up from Euro 20 billion in the first half of the year to Euro 20.2 billion at the end of 2008, an increase of 6.1% in one year (0.5% in the half-year period). At the end of the year the number of real estate funds in operation amounted to 135, of which 110 reserved and 25 retail. The total value of retail funds was approximately Euro 6.4 billion, just less than 32% of the total. For reserved funds the total value amounted to Euro 13.8 billion. At the end of 2008 assets amounted to more than Euro 34.6 billion, an increase in the last six months of 4.2% and 10.7% on an annual basis. The results were also affected by the use of leverage by 83% of the funds. The level of the use of leverage is greater for reserved funds, which have 77% indebtedness, while retail funds have a level of indebtedness which is 58% of the permitted amount. With regard to the composition of the assets, the main investment for both types of fund is still

16 Jones Lang La Salle: The logistics real estate market - March 2009. 17 Jones Lang La Salle 2008. 18 Assogestioni - Report on Real Estate Funds - April 2009. 113 Section I Registration Document real estate. Reserved funds invest 88.5% in real estate properties, compared with 83.8% for the retail funds. With regard to the asset allocation by intended use, investments in the property sector are primarily towards office buildings (51.6%), representing 58.3% of investments for retail funds and 49.1% for reserved funds. The second type chosen by both categories is commercial real estate (17%): 23.4% of the total investment of retail funds and 14.6% for reserved funds. The third type for retail funds is the logistics segment (6.4%), while for reserved funds third place is held by ‘Other’ types (mainly telephone exchanges and land) in which they invest 13.9% of their funds. From the point of view of geographical asset allocation, the North West and Central Italy are the areas attracting the main investments. The relevant amounts are 46.2% and 31.3% respectively. Reserved funds invest 47% of their resources in the North West (39% at the beginning of 2008). Exposure is declining gradually in the area of the South and the Islands, where in particular for reserved funds the proportion of investment fell by 2%, to 9.8%. During the second half of the year foreign investment also fell from 3% at the end of the first half of the year to 2.2% at the end of the year.

6.2.3 The real estate market in Germany Germany is the second-largest market for the Pirelli RE Group in terms of net invested capital, which amounted to Euro 0.3 billion as of 31 March 2009, out of a total of Euro 1.3 billion. Consolidated revenues for the German real estate market amounted to Euro 13.5 million as of 31 March 2009, equal to 25.1% of the total. After two years of significant economic growth, German GDP fell -1.6% in the fourth quarter of 200819. According to the predictions of the more noteworthy economic research institutes in Germany, GDP will contract by more than 4% in 2009. The German research organisation DIW lowered its estimates, from -4% to -5%, while the RWI research centre predicted -4.3% and IMK's figure was -5%. Although all segments of the German real estate market have directly felt the effects of the sharp downturn in the growth of the country's economy and of the consequent financial and credit crisis, the change in the real estate trend is not comparable to the deep crisis experienced by the real estate markets of other major European countries (Spain, France, Great Britain) and of the U.S.. Germany has the largest real estate assets of the five leading European countries, which in percentage terms represent 29.5% of the total, compared to 16.2% of Spain, 16.3% of France, 18% of Italy and 20.1% of Great Britain20. In 2008 Germany recorded real estate turnover of more than Euro 182 billion, up 0.5% on an annual basis, while average turnover in the five main European countries fell 0.4% during the year. For 2009 growth of real estate turnover is estimated to be approximately 2% in Germany against an average for the five main European countries of 0.5%21. In spite of the intensity with which the country has been hit by the economic crisis, Germany remains the country with one of the most stable residential property markets in the world. In 2008 the residential property market recorded good progress in the number of sales while prices

19 Eurostat 2009. 20 Scenari Immobiliari - Outlook 2009. 21 Ibid. 114 Section I Registration Document remained stable: +0.7% in real terms, which is +2.4% in nominal terms22. A significant difference can be observed in the trend of house prices depending on the type of property: prices of new houses in fact grew by approximately 4.1% in nominal terms and 2% in real terms, while prices of used homes grew by 0.4% nominally and fell by 1% in real terms23. A particular feature of the German residential property market, in comparison with the other continental European countries, is the large percentage of families that rent their homes. Although this percentage has fallen slightly, from 58% in 1990 to the current 54%, it still remains a record worldwide. Over the course of 2008, rents have increased on average by 3%24. The quality of office spaces in Germany in recent years has seen a clear improvement: the cities in the eastern part of the country are still very slow, although they are recovering gradually thanks to the recent completion of numerous high profile projects. German executive stock is composed of 20% Class A offices, 33.4% of Class B offices and 46.6% of class C offices25. The trend in this market segment differs in different areas of the country. The cities in the eastern part of the country have seen stable demand, although certain areas have an excess supply due to intense building work in recent years. In Berlin the market is showing signs of dynamism, while Frankfurt has seen a drop in business, attributable to the scarcity of good quality product. Prices of real estate for tertiary use have suffered a substantial downturn, with an annual change of 1.4% in 2008; according to the estimates, prices will continue to fall over the course of 2009, while this trend should be reversed from 2010 onwards26. Despite the difficult economic situation, rents in the commercial segment are increasing for class A buildings, while class B ones have not changed and those of class C have registered a general downturn.

6.3 Extraordinary factors The macroeconomic scenario that began to emerge in the second half of 2008 (see Section One, Chapter VI, Paragraph 6.2) had a dual negative effect on the results of both the Company and the Group. The first aspect, of a general nature, was the credit crunch. The difficulties seen in the banking sector - nationally and on an international level - led to a serious reduction in the willingness of banks to granting loans, in particular for large amounts. This factor had a negative effect on Pirelli RE’s business in terms of disposals and acquisitions: in fact, on the one hand, it made it impossible to maintain the planned level of divestment owing to a lack of purchasers, who on their part were having difficulties in obtaining the necessary resources and, on the other hand, it was very difficult to acquire the necessary resources to make acquisitions of real estate portfolios. The second aspect concerned the specific crisis in the sector in which Pirelli RE operates. It is well known that the crisis affected the real estate industry in all of its areas: residential, commercial and development real estate properties. The reduction in consumption and the abovementioned difficulties in obtaining finance led businesses and families to revise their

22 Hypoport A.G 2008. 23 Hypoport A.G 2008. 24 Bulwein Gesa Ag 2008. 25 Scenari Immobiliari - Outlook 2009. 26 Ibid. 115 Section I Registration Document propensity for investment and spending downwards. This led to a significant reduction in the number of transactions, with a consequent lengthening of real estate portfolio turnover times and/or a decrease in selling prices. The combination of these elements had a negative effect on Pirelli RE operations and consequently, on the results for 2008 both at the Group level and at the individual company level.

6.4 The Issuer's dependence on patents or licences, industrial, commercial or financial agreements, or new manufacturing procedures

6.4.1 Patents and licences The Issuer uses the Pirelli trademark pursuant to a license agreement entered into with Pirelli & C. (see Section One, Chapter XI, Paragraph 11.2.3. Such agreement prescribes, among other things, that Pirelli & C. has the right to terminate the agreement in the event that the Issuer ceases to be controlled by Pirelli & C..

6.4.2 Suppliers Pirelli RE operations and those of its Group do not give rise to any dependence on suppliers. In fact real estate portfolios and non performing loans are acquired from a large number of various entities, determining the absence of any dependence scenarios. Similar considerations apply to the provision of services.

6.4.3 Financial backers For details of current borrowings, see Section One, Chapter XXII, Paragraph 22.2.1. Considering the number of lenders, Pirelli RE does not consider that it is dependent on a single entity. As for the loan granted by the controlling shareholder Pirelli & C., of which Euro 490.0 million had been used as of 31 March 2009, it should be noted that Pirelli & C. has assumed an irrevocable commitment to the Company to exercise all the Rights it is entitled to as owner of 56.45% of the Company’s share capital prior to the Capital Increase. Pirelli & C. has likewise indicated its willingness to subscribe all newly issued shares that will remain unsubscribed at the end of the possible Rights Auction, but has given no undertaking in this regard (see Section Two, Chapter V, Paragraph 5.4.3).

6.4.4 Tenants As of 31 December 2008, the real estate portfolio in which the Pirelli RE Group has an interest had a market value of Euro 12.0 billion (of which Euro 2.8 billion pertaining to Pirelli RE) and a book value as of the same date of Euro 11.5 billion (of which Euro 2.7 billion pertaining to Pirelli RE) and passing rent equal to Euro 750 million, Euro 175.8 million of which pertaining to Pirelli RE. As of 31 March 2009, the real estate portfolio in which the Pirelli RE Group has an interest had a market value of Euro 11.9 billion (of which Euro 2.9 billion pertaining to Pirelli RE) and a book value as of the same date of Euro 11.4 billion (of which Euro 2.8 billion pertaining to Pirelli RE) and passing rent equal to Euro 750 million, Euro 181.4 million of which pertaining to Pirelli RE. The 12 principal tenants, representing 44% of the revenues, are: Arcandor, Telecom Italia, La Rinascente, the Region of Sicily, Conforama Italia, Valtur, Prada, Fintecna, Enel, Eni, Vodafone and Editoriale L’Espresso. Out of all the rents, 17.2% are referable to Arcandor, which rents the portfolio owned by the Group headed by Highstreet Holding GbR, a company 49% owned by a consortium in which Pirelli RE holds a 24.66% interest (see Section One, Chapter XXII,

116 Section I Registration Document

Paragraph 22.2.3). The group headed by Arcandor AG is in serious financial difficulty which led, on 9 June 2009, to the filing of a request for bankruptcy protection. The Arcandor Group did not pay the rental instalments for May 2009. Failure to pay further rental instalments, and the occurrence of events that make it unlikely for the companies financed to honour the commitments they have given to the lending banks, constitutes an event of default under the terms of the non recourse financing obtained by Highstreet Holding GbR and its controlled companies, of which approximately Euro 3.5 billion had been used as of 31 March 2009. The occurrence of an event of default, if not remedied within the contractual deadline, would entitle the lenders to demand repayment of the sums disbursed. If the borrower were unable to reimburse the above sums, the lenders would be entitled to call on the guarantees over the real estate portfolio, and if these guarantees were insufficient, they could petition for the winding-up of the company. 6.5 Competitive position The business model of Pirelli RE, which works as a sponsor and manager of co-investment initiatives realised through the establishment and management of real estate funds or vehicle companies, and as a supplier of specialist services, has features that make a comparison with other real estate companies, both Italian and foreign, not so much relevant. Subject to the above mentioned limits, the Company considers that its main competitors are those listed below. Italy Real estate and rental management Competitors operating in real estate and rental management are Beni Stabili S.p.A., Aedes S.p.A. and I.G.D. S.p.A., which operate mainly in office properties sector and in the shopping centres and large-scale retail trade sector. Incorporation and management of real estate funds Pirelli RE SGR is the market leader in Italy in the incorporation and management of real estate funds business in terms of value of assets managed. Other investment management companies operate in the same sector; most of them belong to listed groups such as Beni Stabili and Aedes. A large number of investment management companies owned by financial institutions such as banks and insurance companies also operate within this segment (BNL Fondi Immobiliari - BNP Paribas Group, Investire Immobiliare - Finnat Euramerica Group, Generali Properties - Assicurazioni Generali Group) and others companies privately participated (Fimit, Fabrica Immobiliare). Development operations In the real estate development sector Pirelli RE has maintained a selective approach with a particular focus on the major Italian cities. In this sector Pirelli RE considers that its main competitors are Risanamento S.p.A. and Brioschi Sviluppo Immobiliare S.p.A., companies that operate, although with different characteristics, primarily in real estate development sector. Germany/Poland Pirelli RE operations in Germany are primarily focused on two segments, residential and retail sectors, while operations in Poland are focused exclusively on the development of residential projects. Residential Sector The business carried out focuses primarily on the management and development of real estate units aimed at improving the quality of real estate properties offered to tenants. Pirelli RE has

117 Section I Registration Document identified the following listed companies as its principal competitors: Gagfhah, Deutsche Wohnen and Colonia Real Estate. Retail complexes In the retail sector, the main competitor, although with a broader geographical diversification, is Deutsche EuroShop. Poland Pirelli RE operations are only focused on the development of residential real estate units in the main cities of the country (in particular Warsaw). There are no listed companies of particular significance in this sector; in fact the market is very fragmented with local small and medium- sized companies.

118 Section I Registration Document

7. CORPORATE STRUCTURE

7.1 Description of the group to which the Issuer belongs The Company belongs to the group controlled by Pirelli & C.: the parent company, in fact, holds 56.45% of the share capital of the Issuer, therefore exercising control over Pirelli RE pursuant to Article 93 of the Italian Finance Act. Pirelli & C. is an investment holding company, operating in the tyre industry through Pirelli Tyre S.p.A. and in the real estate sector through Pirelli RE. Pirelli & C. also operates in broadband access systems sector through Pirelli Broadband Solutions S.p.A. (a company that plans, develops and markets broadband solutions for broadband connected homes and small offices), in the environmental sector through Pirelli & C. Ambiente S.p.A. (a company operating in photovoltaic power plants, renewable energies and environmental remediation) and in technologies for controlling emissions sector through Pirelli & C. Eco Technology S.p.A. (a company producing low environmental-impact fuel GecamTM and particulate filters). In the period from 2004 to 2008, the Board of Directors of the Issuer and of Pirelli & C., acknowledging the above mentioned right of control, but considering certain specific elements, assessed that Pirelli RE was not subject to management and co-ordination and therefore the presumption pursuant to Article 2497-sexies of the Italian Civil Code was no longer valid. The outcome of the assessments made and the reasons for them were then notified to the public, most recently, in the annual corporate governance report for the year ended 31 December 2007 of both the Company and of Pirelli & C. The measures taken by Pirelli & C. regarding the Pirelli RE corporate framework (including through the assumption by Claudio De Conto, the Pirelli & C. Chief Operating Officer, of the role of Pirelli RE Chief Financial Officer) and the process that led to the preparation of the 2009 - 2011 Business Plan modified the situation described above, revealing significant integration and co-ordination of activities and functions between the Issuer and the parent company Pirelli & C. In particular, we note that, as a result of the changes described above, Pirelli & C. plays a decisive role in the following: (i) the definition of multi-year strategic plans and the annual budget, including with reference to the preparation and approval of the business plan; (ii) in the assessments and decisions taken with regard to financing and the use venture capital resources; (iii) in the determination of the Group's key management policies, including those for the purchase of goods and services on the market; (iv) in the coordination of business initiatives and actions in the various sectors in which the Company operates, including by means of its controlled companies, and in the relative decisions for investment and divestment. In light of the above, the Pirelli & C. and Pirelli RE Boards of Directors considered the facts which had determined the exception to the presumption envisaged by Article 2497-sexies of the Italian Civil Code to be no longer valid. Therefore, considering that, in accordance with Article 93 of the Italian Finance Act, Pirelli & C. exercises control over Pirelli RE and consolidates its balance sheets, taking into account the absence of factors that would enable an exemption to the presumption under Article 2497-sexies of the Italian Civil Code, it is concluded that as of the Prospectus Date the Issuer is subject to the management and co-ordination of Pirelli & C.. For this reason, the communication due

119 Section I Registration Document pursuant to Article 2497-bis of the Italian Civil Code was sent to the Register of Enterprises. We note that, as of the Prospectus Date, none of the conditions which prevent the listing of shares of companies subject to the management and co-ordination of other companies, pursuant to Article 37 of the Market Regulations, apply to this case.

7.2 Companies controlled by the Issuer The table below sets forth certain information relating to the companies controlled, directly or indirectly, by the Issuer as of 31 December 2008. For details of the main companies within the Pirelli RE Group that provide fund management, asset management¸ agency, property management, facility/project management services and credit servicing, see Section One, Chapter VI, Paragraph 6.1.1.

% stake Business Registered Share and Corporate name Direct parent segment Office capital voting rights(1) Acquario S.r.l. (in liquidation) Real Estate Pirelli & C. Real Estate S.p.A. Genoa (Italy) 255,000 100.00% Alfa S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 2,600,000 100.00% BauBeCon Asset Management Real Estate Pirelli RE Agency Deutschland GmbH Hanover 125,000 100.00% GmbH(2) (Germany) BaubeCon Corporate Services Real Estate Pirelli & C. Real Estate Deutschland Hanover 125,000 100.00% GmbH(2) GmbH (Germany) BauBeCon Treuhand GmbH(2) Real Estate Pirelli RE Property Management Hanover 530,000 100.00% Deutschland GmbH (Germany) BauBeCon Wohnen GmbH(2) Real Estate Pirelli RE Property Management Hanover 1,000,000 100.00% Deutschland GmbH (Germany) Beta S.r.l. NPL Pirelli & C. Real Estate S.p.A. Milan (Italy) 26,000 100.00% Botticino S.r.l. (in liquidation) Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 10,000 100.00% Casaclick S.p.A. Real Estate Pirelli & C. R.E. Agency S.p.A. Milan (Italy) 298,999 100.00% Centrale Immobiliare S.p.A. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 5,200,000 100.00% CFT Finanziaria S.p.A. NPL Pirelli & C. Real Estate S.p.A. Milan (Italy) 20,110,324 100.00% DGAG Grundstückbeteiligung Real Estate Pirelli & C. Real Estate Deutschland Kiel (Germany) 25,000 100.00% GmbH GmbH ECOI - Immobiliare GmbH (in Real Estate Pirelli RE Residential Investments Vienna (Austria) 35,000 100.00% liquidation)(3) GmbH Edilnord Gestioni S.r.l. (in Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 517,000 100.00% liquidation)(4) Elle Dieci Società consortile a r.l.(5) Real Estate Edilnord Gestioni S.r.l. (in liquidation) Milan (Italy) 100,000 100.00% Elle Tre Società consortile a r.l.(5) Real Estate Edilnord Gestioni S.r.l. (in liquidation) Milan (Italy) 100,000 100.00% Elle Uno Società consortile a r.l. (in Real Estate Edilnord Gestioni S.r.l. (in liquidation) Milan (Italy) 100,000 100.00% liquidation)(6) Erato Finance S.r.l. (in liquidation)(7) Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 600,000 53.85% Geolidro S.p.A. Real Estate Centrale Immobiliare S.p.A. Naples (Italy) 3,099,096 100.00% Iniziative Immobiliari 3 B.V. Real Estate Pirelli & C. Real Estate S.p.A. Amsterdam 4,500,000 100.00% (Netherlands) Iniziative Immobiliari 3 S.r.l. Real Estate Iniziative Immobiliari 3 B.V. Milan (Italy) 10,400 100.00% Kappa S.r.l.(8) Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 10,400 100.00% Lambda S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 578,760 100.00% Mistral RE S.à r.l. Real Estate Pirelli & C. Real Estate S.p.A. Luxembourg 12,500 100.00% NewCo RE 1 S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 30,000 100.00% NewCo RE 4 S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 10,000 100.00% NewCo RE 5 S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 40,000 100.00% NewCo RE 6 S.r.l. NPL Pirelli & C. Real Estate S.p.A. Milan (Italy) 40,000 100.00% NewCo RE 8 S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 40,000 100.00% NewCo RE 9 S.r.l. NPL Pirelli & C. Real Estate S.p.A. Milan (Italy) 40,000 100.00% Parcheggi Bicocca S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 1,500,00 75.00% P.B.S. Società consortile a r.l. Real Estate Pirelli & C. R.E. Property Management Milan (Italy) 100,000 60.00% S.p.A. Pirelli & C. Opere Generali S.p.A. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 104,000 100.00% Pirelli & C. Real Estate Agency Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 1,000,000 100.00% S.p.A.(9) Pirelli & C. Real Estate Deutschland Real Estate Pirelli & C. Real Estate S.p.A. Hamburg 5,000,000 100.00% GmbH(10) (Germany) Pirelli & C. Real Estate Finance Real Estate Pirelli & C. R.E. Agency S.p.A Milan (Italy) 120,000 100.00% S.p.A.(9) Pirelli & C. Real Estate Property Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 114,400 100.00% Management S.p.A. Pirelli & C. Real Estate Società di Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 24,458,763 100.00% Gestione del Risparmio S.p.A.(11) Pirelli RE Agency Deutschland Real Estate Pirelli & C. Real Estate Deutschland Hamburg 25,000 100.00% 120 Section I Registration Document

GmbH GmbH (Germany) Pirelli RE Agency Netherlands Real Estate Pirelli RE Netherlands B.V. Amsterdam 18,000 100.00% B.V.(12) (Netherlands) Pirelli RE Asset Management Real Estate Pirelli & C. Real Estate Deutschland Frankfurt 25,000 80.00% Deutschland GmbH(13) GmbH (Germany) Pirelli RE AM NPL Deutschland Real Estate Pirelli & C. Real Estate Deutschland Berlin (Germany) 25,000 100.00% GmbH(14) GmbH Pirelli RE Bulgaria AD Real Estate Pirelli RE Netherlands B.V. Sofia (Bulgaria) 50,000(15) 75.00% Pirelli RE Credit Servicing S.p.A. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 1,809,500 100.00% Pirelli RE Development Deutschland Real Estate Pirelli & C. Real Estate Deutschland Hamburg 153,400 100.00% GmbH(16) GmbH (Germany) Pirelli RE Facility Management Real Estate Pirelli & C. Real Estate Deutschland Hamburg 25,600 100.00% Deutschland GmbH(17) GmbH (Germany) Pirelli RE Hausmeister Service Real Estate Pirelli & C. Facility Management Kiel (Germany) 25,000 100.00% Deutschland GmbH(18) Deutschland GmbH Pirelli RE Management Services Real Estate Pirelli & C. Real Estate Deutschland Hamburg 25,000 100.00% Deutschland GmbH GmbH (Germany) Pirelli RE Netherlands B.V. Real Estate Pirelli & C. Real Estate S.p.A. Amsterdam 21,000 100.00% (Netherlands) Pirelli RE Property Management Real Estate Pirelli & C. Real Estate Deutschland Hamburg 25,000 100.00% Deutschland GmbH(19) GmbH (Germany) Pirelli RE Property Management Real Estate Pirelli & C. Real Estate S.p.A. Amsterdam 18,000 100.00% Netherlands B.V. (Netherlands) Pirelli RE Residential Investments Real Estate Pirelli & C. Real Estate S.p.A. Hamburg 570,000 100.00% GmbH (Germany) Pirelli RE Romania S.A. Real Estate Pirelli RE Netherlands B.V. Bucharest 100,000(20) 80.00% (Romania) Pirelli Pekao Real Estate Sp.z o.o. Real Estate Pirelli & C. Real Estate S.p.A. Warsaw (Poland) 35,430,000(21) 75.00% Progetto Bicocca Università S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 50,360 50.50% Progetto Perugia S.r.l. Real Estate Pirelli & C. Real Estate S.p.A. Perugia (Italy) 100,000 100.00% Progetto Vallata S.r.l.(22) Real Estate Pirelli & C. Real Estate S.p.A. Milan (Italy) 1,500,000 80.00% Projekt Bahnhof Hamburg-Altona Real Estate Projektentwicklung Bahnhof Hamburg- Hamburg 25,000 100.00% Verwaltungs GmbH Altona GmbH & Co. KG (Germany) Projektentwicklung Bahnhof Real Estate Pirelli & C. Real Estate Deutschland Hamburg 8,000,000 74.90% Hamburg-Altona GmbH & Co. KG GmbH (Germany) Servizi Amministrativi Real Estate Other Pirelli & C. Real Estate S.p.A. Milan (Italy) 520,000 100.00% S.p.A. SIB S.r.l. Real Estate Pirelli RE Credit Servicing S.p.A. Milan (Italy) 10,100 100.00% Sigma RE S.à r.l. Real Estate Pirelli RE Netherlands B.V. Luxembourg 12,500 100.00% (1) The percentages indicated refer to the proportion of interest held by the direct parent company, considering also any treasury shares held. (2) On 3 April 2008 the companies BauBeCon Holding 1 GmbH and Nabucco RE B.V. transferred 80.76% and 19.24% of the company BauBeCon Asset Management GmbH to Pirelli RE Agency Netherlands B.V., which on 12 December 2008, in turn transferred the entire amount of the stock it held to Pirelli RE Agency Deutschland GmbH. On 29 December 2008 a deed of merger was signed for the incorporation of BauBeCon Asset Management GmbH into Pirelli RE Agency Deutschland GmbH. (3) On 10 March 2008 the resolution to wind up the company Ecoi - Immobilien GmbH was entered in the Registry of the Vienna Chamber of Commerce; with effect from 31 January 2008 the corporate name changed to ECOI - Immobilien GmbH (in liquidation). (4) On 1 October 2008 the shareholders' meeting of Edilnord Gestioni S.p.A. resolved to modify the corporate form of the company, making it a limited liability company, and placing it in liquidation. (5) On 29 April and on 11 June 2008 Pirelli & C. Real Estate Property Management S.p.A. acquired a further 10% of the share capital of Elle Tre Consortile a r.l. and Elle Dieci Consortile a r.l. respectively. On 30 July 2008 it subsequently transferred the entire amount of quotas held to Edilnord Gestioni S.r.l. (in liquidation). Following these transactions on 31 December 2008 the above companies were consolidated using the line-by-line method. (6) On 18 March 2008 Edilnord Gestioni S.r.l. (in liquidation) acquired from third parties an additional 20% of the share capital of Elle Uno S.c.a.r.l. taking its stake to 100% of the share capital. On 15 April 2008 the company was placed in liquidation. (7) On 9 January 2008 the resolution to wind up the company Erato Finance S.r.l. was filed with the Register of Enterprises of Milan. (8) On 25 March 2008 the company Max B.V. transferred its entire interest in Kappa S.r.l. to Pirelli & C. Real Estate S.p.A. (9) The administrative, accounting and fiscal effects of the merger by incorporation of Pirelli & C. Real Estate Franchising S.p.A. and Pirelli & C. Real Estate Franchising Holding S.r.l. into Pirelli & C. Real Estate Agency S.p.A., entered into on 18 December 2007, run from 1 January 2008. After this transaction the interest in the company Pirelli & C. R.E. Servizi Finanziari S.r.l., held by Pirelli & C. R.E. Franchising S.p.A. is now held by Pirelli & C. R.E. Agency S.p.A.. On 1 December 2008 the shareholders' meeting of Pirelli & C. Real Estate Franchising Servizi Finanziari S.r.l. resolved to change its corporate name to Pirelli & C. Real Estate Finance S.p.A. and to change its corporate form into a joint- stock company with effect from 16 December 2008. (10) On 28 March 2008 the deed of merger was signed for the merger of DGAG Wohnungsbau GmbH, Sechste Kajen 12 Verwaltungsgesellschaft mbH & Co. and XENDA Vermögensverwaltungsgesellschaft into Pirelli & C. Real Estate Deutschland GmbH. (11) On 26 September 2008 the merger of Pirelli RE Opportunities Società di Gestione del Risparmio S.p.A. into Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A. was formalised. The administrative effects of the merger run from 1 October 2008; the fiscal and accounting effects from 1 January 2008. (12) On 31 March 2008 Pirelli & C. Real Estate S.p.A. transferred its entire stock in the company Pirelli RE Agency Netherlands B.V. to Pirelli RE Netherlands B.V.. (13) On 12 December 2008 Pirelli RE Netherlands B.V. transferred its entire interest in the company Pirelli RE Asset Management Deutschland GmbH, representing 80% of the share capital, to Pirelli & C. Real Estate Deutschland GmbH. During the course of the financial year came into effect the change of the corporate name of Mertus Achtunddreißigste GmbH into Pirelli RE Asset Management Deutschland GmbH. (14) The change of the corporate name of Pirelli RE AM NPL Deutschland GmbH, formerly Pirelli RE Asset Management GmbH came into effect from 30 January 2008. (15) In Bulgarian levs. (16) The change of the corporate name of DGAG Shopping Immobilien GmbH into Pirelli RE Development Deutschland GmbH came into effect from 10 July 2008. 121 Section I Registration Document

(17) The change of name of PSG Parkhause Service GmbH into Pirelli RE Facility Management Deutschland GmbH came into effect from 21 January 2008. (18) Pirelli & C. Real Estate Deutschland GmbH conferred its entire interest in the company Pirelli RE Hausmeister Service Deutschland GmbH to Pirelli RE Facility Management Deutschland GmbH (formerly PSG Parkhaus Service GmbH) with effect from 1 January 2008. (19) The deed of merger of DGAG Immobilien Management GmbH into the company Pirelli RE Property Management Deutschland GmbH was signed on 28 March 2008. (20) In Romanian lei. (21) In Polish zloty (22) Pirelli & C. Real Estate S.p.A. transferred 1% and 50% of its stock in Pirelli RE Integrated Facility Management B.V. to third parties on 30 June 2008 and 23 December 2008 respectively. Following these transactions the 9% interest in Progetto Vallata S.r.l. was deconsolidated.

122 Section I Registration Document

8. PROPERTY, PLANT AND EQUIPMENT

8.1 Property, plant and equipment

8.1.1 Owned property assets The table below shows the Pirelli RE Group real estate property fixed assets as of the Prospectus Date.

Surface Covered Owner company Location Intended Use(1) area(2) area(2) Pirelli & C. Real Estate S.p.A. Via Chiese, No. 2 - Milan Contemporary art exhibition 12,000 12,000 space (granted on licence to Fondazione Hangar Bicocca)(3) Pirelli & C. Real Estate S.p.A. Viale Sarca, No. 222 - Pirelli Foundation historic 900 450 Milan archive (1) The Intended Use column provides a brief description of the use made of the real estate property. (2) In square meters. (3) Private real estate property restricted to public use. With the exception of the public use of the real estate property at Via Chiese, No. 2, Milan, there are no encumbrances on the real estate properties referred to in this Paragraph 8.1.1.

8.1.2 Leased property assets The table below shows the main rented or leased real estate properties currently used by Pirelli RE Group, as of the Prospectus Date.

Tenant company Lessor Location Intended Use(1) Surface area(2) Pirelli & C. Real Estate Pioneer Investment Via Piero e Alberto Pirelli, Offices 17,600 S.p.A.(3) Management SGR p.A No. 21 - Milan Pirelli & C. Real Estate Pirelli & C. S.p.A.(5) Via G. Negri, No. 10 - Registered office 3,160 S.p.A.(4) Milan of Pirelli & C. Real Estate S.p.A. and offices SIB S.r.l. IVG Institutional Funds Via Piero e Alberto Pirelli, Offices 2,560 GmbH No. 6 - Milan P.B.S. Società consortile Fibre Ottiche Sud - FOS Viale Sarca, No. 336 - Offices 340 a r.l.(6) S.p.A. Milan P.B.S. Società consortile Fibre Ottiche Sud - FOS Viale Sarca, No. 336 - Laboratories 140 a r.l.(7) S.p.A. Milan Servizi Amministrativi Pirelli & C. S.p.A.(8) Viale Sarca, No. 222 - Offices 557 Real Estate S.p.A.(4) Milan Pirelli & C. Real Estate Gruppo Caltagirone Via Bissolati, No. 76 - Offices 965 S.p.A. Rome Pirelli & C. Real Estate Aci Progei S.p.A. Viale Tormarancia, No. 4 – Offices 5,900 S.p.A.(9) Rome Pirelli RE Credit Alven Investimenti Via Nuova Marina, No. 5 – Offices 850 Servicing S.p.A. S.p.A. Naples Pirelli RE Credit Immobiliare Aliseo S.r.l. Largo Alinari, No. 4 - Offices n.a. Servicing S.p.A. Florence

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Tenant company Lessor Location Intended Use(1) Surface area(2) SIB S.r.l. Union C S.r.l. Via De Gemmis, No. 45 - Offices n.a. Bari SIB S.r.l. Certain natural persons Via Vaccarini, No. 1 – Offices 1,345 Palermo Pirelli RE Credit Bank of Italy Piazza della Repubblica, Offices n.a. Servicing S.p.A. No. 50 – Catania Pirelli & C. Real Estate Astrim S.p.A. - Bank of Galleria Umberto/Via San Offices 180 S.p.A. Italy Carlo, No. 16 - Naples Pirelli & C. Real Estate VBV Sodtk - Berlin (Germany) Offices 475 Deutschland GmbH Versicherungsmakler und Beteiligungsverwaltung GmbH Pirelli RE Property BauBeCon Immobilien Kleine - Braunschweig Offices 463 Management GmbH (Germany) Deutschland GmbH Pirelli & C. Real Estate Albert Büll, Cornelius Große - Hamburg Offices 1,119 Deutschland GmbH Liedtke in GbR (Germany) Holzhafen Pirelli & C. Real Estate Hamburg-Mannheimer Übers - Hamburg Offices 4,459 Deutschland GmbH Versicherungs-AG (Germany) Pirelli & C. Real Estate Catella Real Estate AG Fabrik - Kiel (Germania) Offices 6,502 Deutschland GmbH Kapitalanlagegesellschaft Sondervermögen - Focus Nordic Cities Pirelli & C. Real Estate BauBeCon Hochbau Gletsch - Leipzig Offices 698 Deutschland GmbH GmbH (Germany) Pirelli & C. Real Estate Pirelli RE Lira RE Elisab - Lübeck (Germany) Offices 1,049 Deutschland GmbH GmbH & Co. KG Pirelli RE Netherlands Verwelius Vestgoed I Dam 7F - Amsterdam Offices 514 B.V. BV (Netherlands) Pirelli Pekao RE Sp.z Nowe Ogrody Sp.z o.o. Warsaw (Poland) Offices 2,152 o.o. (1) The Intended Use column provides a brief description of the use made of the real estate property. (2) In square meters. (3) Sub-lessor of Pirelli & C. Real Estate Property Management S.p.A., Pirelli & C. Real Estate Agency S.p.A. and Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A.. (4) As a sub-tenant. (5) Tenant under a leasing contract entered into with Cassa Italiana di Previdenza e Assistenza Geometri Liberi Professionisti. (6) Sub-lessor of Pirelli & C. Real Estate S.p.A.. (7) Sub-lessor of Pirelli & C. Real Agency S.p.A.. (8) Tenant under a leasing contract entered into with Fondo Meag Munich Ergo Kapitalanlagegesellschaft MBH. (9) Sub-tenant of Pirelli & C. Real Estate Property Management S.p.A. and Pirelli & C. Real Estate Agency S.p.A.. The Issuer is not aware of any encumbrances on leased real estate properties which could have an adverse effect on their use by tenants.

124 Section I Registration Document

8.2 Environmental issues that could have an effect on the use of property, plant and equipment As of the Prospectus Date the Issuer is not aware of any environmental issues that could have a material effect on use of the property, plant and equipment.

125 Section I Registration Document

9. OPERATING AND FINANCIAL REVIEW Introduction This Chapter provides analyses of the Group's economic trends for the years ended 31 December 2008, 2007 and 2006, and for the three-month period ended 31 March 2009. The information in this Chapter of the Prospectus is derived from: • The Pirelli RE Group unaudited interim financial statements as of and for the three-month period ended 31 March 2009; • The Company’s consolidated financial statements as of and for the years ended 31 December 2008 (audited by the Independent Auditors), and 2007 and 2006 (audited by PricewaterhouseCoopers S.p.A.) prepared in accordance with IFRS. Such information and documents, if not included in this Prospectus, are incorporated by reference pursuant to Article 11(2) of Directive 2003/71/EC and Article 28 of Regulation 809/2004/EC. These documents are available to the public at the Issuer’s registered office and on its website www.pirellire.com, under the section Investor Relations. The financial statements for all the described periods are derived from the consolidated financial statements available to the public and are also presented in Section One, Chapter XX. We note that the income statement for the year ended 31 December 2007, included for comparative purposes in the consolidated financial statements for the year ended 31 December 2008, was redetermined with respect to the income statement included in the consolidated financial statements for the year ended 31 December 2007, mainly due to reclassifications required to comply with IFRS 5, in relation to the disposal of the Integrated Facility Management business unit, to represent the economic results of the disposed assets during 2008. Such income statement is indicated as “redetermined” in the following tables. In particular, a reclassification has been performed for each item on the 2007 consolidated income statement subject to a contribution of the assets relating to Integrated Facility Management. The amounts in question have been reclassified into a single item named Net income(loss) from discontinued operations, with no change in terms of net consolidated income for the period. The methods used to re-determine the income statement have been examined by the Independent Auditors for the purposes of expressing their opinion on the consolidated financial statements as of and for the year ended 31 December 2008. We also note that due to and for the same reasons, the Company also redetermined the data relating to the income statement for the quarter ended 31 March 2008, included for comparative purposes in the Pirelli RE Group interim financial statements as of and for the three-month period ended 31 March 2009. The following financial data illustrate several measures used by Company’s management to monitor and evaluate its and the Group’s operations and financial performance. Such measures are not identified as accounting measures under IFRS, and therefore should not be considered an alternative measure to evaluate the Group’s economic trends and the related economic and financial position. The Issuer believes that the following financial information is an important parameter for measuring the Group’s performance as it enables analyzing the Group’s economic, patrimonial and financial trends. Since the determination of these measures is not regulated by relevant accounting principles, the calculation methods used by the Company may not be homogenous with those implemented by similar companies and therefore these measures may not be comparable. For further information, see Section One, Chapter IX, Paragraph 9.3. The Issuer has decided not to include the selected financial information relating to the Company’s individual financial statements data believing that such information does not provide

126 Section I Registration Document any additional, relevant elements with respect to the Group’s consolidated data. The following financial information shall be read together with Chapters III, X and XX in Section One. With reference to each period, the numeric information given in this Chapter and the relative comments made are intended to give a description of the Pirelli RE Group's equity, economic and financial situation, of the relative variations and of the results from the Group's activity in each period specified, along with any significant events occurring on occasion that influence the result for the period.

9.1 Trend analysis for the main operating data The following are the Pirelli RE Group's main economic data for the three-month periods ended 31 March 2009 and 2008 (redetermined).

Quarter ended 31 March 2008 2009 (In millions of Euro) Redetermined Operating revenues(1) 61.5 128.6 Operating costs(1) (63.7) (108.2) EBIT (2.2) 20.4 Financial income 9.3 12.4 Financial expenses (11.6) (12.0) Change in fair value of financial assets 3.0 (1.4) Net profit share from investments in associates and joint ventures (13.0) (1.7) Result before income taxes (14.5) 17.7 Income taxes (2.1) (5.4) Net income (loss) from continuing operations (16.6) 12.3 Net income (loss) from discontinued operations - 0.7 Net income (loss) for the period (16.6) 13.0 - attributable to minority interests (0.8) 1.4 Consolidated net income (loss) for the period (15.8) 11.6 (1) We note that the items Operating revenues and Operating costs, were referred to as Total production value and Total production costs respectively in the income statement tables included in the Pirelli RE Group interim financial statements as of and for the three-month period ended on 31 March 2008. These items have been renamed to make the tables used in this Chapter consistent with those used by the Issuer in the three-month period ended 31 March 2009. As announced to the market on 20 April 2009, in view of the Capital Increase and to provide all shareholders with the most complete information possible, the Company has asked independent experts for an extraordinary update of the reports of the real estate assets managed as of 31 March 2009. Such reports show that the market values as of 31 March 2009 indicate a variation of -0.5% on an homogeneus basis compared with the same assets as of 31 December 2008, equal to a negative impact of approximately Euro 6.6 million, in line with the range of values disclosed to the market, on the book value of the real estate assets reflected in the interim consolidated financial statements of the Pirelli RE Group as of 31 March 2009, already approved and published on the date the reports were updated. This impact, which would result in a reduction of net equity for the period of approximately 2% (from Euro 317.1 million to Euro 310.6 million) and an increase in the net consolidated loss for the first quarter of 2009 (from Euro 15.8 million to Euro 22.3 million) will be recognised in the half-yearly financial statements as of and for the period ending 30 June 2009 of the Pirelli RE Group.

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The following are the Group's main economic data for the years ended 31 December 2008, 2007 and 2006.

Year ended 31 December 2007 2008 2007 2006 (In millions of Euro) Redetermined Operating revenues(1) 412.4 1.805.8 2.242.1 739.6 Operating costs(1) (483.6) (1.772.7) (2.191.7) (635.9) EBIT (71.2) 33.1 50.4 103.7 Profit from investment sales - 11.2 55.9 - Financial income 49.4 46.3 46.7 29.8 Financial expenses (71.1) (87.0) (91.4) (27.0) Dividends received 0.4 2.2 2.2 4.0 Change in fair value of financial assets 3.8 14.2 14.2 (0.8) Net profit share from investments in associates and joint ventures (177.0) 115.0 117.0 101.6 Result before income taxes (265.7) 135.0 195.0 211.3 Income taxes (1.9) (23.6) (34.1) (49.3) Net income (loss) from continuing operations (267.6) 111.4 160.9 162.0 Net income (loss) from discontinued operations 74.6 49.5 - - Net income (loss) for the period (193.0) 160.9 160.9 162.0 - attributable to minority interests 2.0 9.8 9.8 2.5 Consolidated net income (loss) for the period (195.0) 151.1 151.1 159.5 (1) We note that the items Operating revenues and Operating costs were referred to as Total production value and Total production costs respectively in the income statements tables of the consolidated financial statements as of and for the years ended 31 December 2007 and 2006. These items have been renamed to make the table used in this Chapter consistent with those used by the Issuer in the financial statements as of and for the year ended 31 December 2008. Operating revenues and operating costs in 2007 include Euro 1,295.6 millions related to the transfer of DGAG’s real estate properties, carried out by means of the sale of units, to the joint ventures with RREEF and MSREF.

9.1.1 Operating trend report for the first quarter of 2009 and 2008 redetermined Introduction In the first quarter of 2009, the real estate sector has been affected by the international crisis begun during 2008; therefore comparisons with the data derived from the first quarter of 2008 shall be read in consideration of the effects of the crisis. The operating result, including profits from investments, showed losses of Euro 14.7 million compared to profits of Euro 20.2 million in March 2008, the latter includes Euro 2.3 million of restructuring costs which were not incurred in March 2009. During the first quarter of 2009, 100% Pirelli RE's sales regarded real estate properties for a total amount of Euro 174.8 million (Euro 50.5 million pro-rata) compared to Euro 199.8 million for the first quarter of 2008 (Euro 66.9 million pro-rata). The profit margin on sales was 17% (26% in the first quarter of 2008). Revenues from non performing loans at 100% in the first quarter of 2009 totalled Euro 81.7 million (Euro 23.8 million pro-rata) compared to Euro 111.4 million for the first quarter of 2008 (Euro 33.4 million pro-rata). Total rents as of 31 March 2009 totalled Euro 201.5 million, in line with expectations (Euro 47.3

128 Section I Registration Document million pro-rata) compared to Euro 143.1 million as of 31 March 2008 (Euro 38.1 million pro-rata), with an aggregate not including the Highstreet portfolio. Economic data This paragraph reports on the operating trends for the quarter ended 31 March 2009 compared with 31 March 2008 redetermined. The comments provided below refer to the comparison between the consolidated economic data from the first quarter of 2009 and those from the first quarter of 2008 redetermined, all prepared in accordance with the IFRS. The main income data for the quarters ended 31 March 2009 and 2008 redetermined are shown in the following table.

Quarter ended 31 March Change 2008 2009 % % Absolute % (In millions of Euro) Redetermined Total Operating revenues(1) 61.5 100% 128.6 100% (67.2) -52% Total Operating costs(1) (63.7) -104% (108.2) -84% 44.5 -41% EBIT (2.2) -4% 20.4 16% (22.6) -111% Financial income 9.3 15% 12.4 10% (3.1) -25% Financial expenses (11.6) -19% (12.0) -9% 0.4 -3% Change in fair value of financial assets 3.0 5% (1.4) -1% 4.5 -306% Net profit share from investments in associates and joint ventures (13.0) -21% (1.7) -1% (11.3) 670% Result before income taxes and minority interests (14.5) -24% 17.7 14% (32.2) -182% Income taxes (2.1) -3% (5.4) -4% 3.4 -61% Net income (loss) from continuing operations (16.6) -27% 12.3 9% (28.8) -236% Net income (loss) from discontinued operations - 0% 0.7 1% (0.7) -100% Net income (loss) for the year before minority interests (16.6) -27% 13.0 10% (29.5) -229% Minority interests (0.8) -1% 1.4 1% (2.2) -156% Consolidated net income (loss) for the year (15.8) -26% 11.6 9% (27.4) -237% (1) We note that the items Operating revenues and Operating costs were referred to as Total production value and Total production costs respectively in the income statements tables of the Pirelli RE Group interim financial statements as of and for the three-month period ended 31 March 2008. These items have been renamed to make the tables used in this Chapter consistent with those used by the Issuer in the interim financial statements as of and for the three-month period ended 31 December 2009. Operating revenues Details of the revenues for the quarters ended 31 March 2009 and 2008 redetermined are illustrated in the table below.

Quarter ended 31 March Change 2008 Redet ermin (In millions of Euro) 2009 % ed % Absolute % Revenues from sales and services 53.8 89% 74.7 95% (20.9) -28% Change in inventories of work in progress, semi-finished and finished products (0.5) 0% 28.0 1% (28.5) -102% Other income 8.2 11% 26.0 4% (17.8) -68% Total revenues 61.5 100% 128.7 100% (67.2) -52%

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Revenues from sales and services Revenues from sales and services amount to Euro 53.8 million compared to Euro 74.7 million as of 31 March 2008 and are broken down as follows.

Quarter ended 31 March Change 2008 (In millions of Euro) 2009 % Redetermined % Absolute % Revenues from contracts 4.0 7% 1.2 2% 2.8 233% Revenues from sales 0.7 1% 12.1 16% -11.4 -93% of which: - sales of land for development to Pirelli RE Group companies 0.1 0% - 0% 0.1 n.a. - sales of residential property 0.5 1% 12.1 16% -11.6 -96% - sales of commercial property 0.2 0% - 0% 0.2 n.a. Revenues from services 49.1 91% 61.4 82% -12.3 -20% Total revenues from sales and services 53.8 100% 74.7 100% (20.9) -28% Details of revenues from sales and services by geographic area for the quarter ended 31 March 2009 and 2008 redetermined are illustrated in the table below.

Quarter ended 31 December Change 2008 (In millions of Euro) 2009 % Redetermined % Absolute % Italy 31.2 58% 50.3 67% (19.1) -38% Germany 13.4 25% 13.3 18% 0.1 2% Poland 2.3 4% 12.9 17% (10.6) -82% Non performing loans 4.6 9% 13.9 19% (9.3) -67% Other and intragroup eliminations 2.3 4% (15.7) -21% 18.0 -115% Total revenues from sales and services 53.8 100% 74.7 100% (20.9) -28% Revenues from contracts This item amounts to Euro 4.0 million, compared to Euro 1.2 million as of 31 March 2008 and mainly includes revenues from Iniziative Immobiliari 3 S.r.l. (Euro 3.9 million) for works related to the construction of a second management headquarters for Pirelli RE in Bicocca, Milan. Revenues from sales - Sales of residential property Sales carried out during the year are mainly those related to the sale of residential units by Geolidro S.p.A. for Euro 0.5 million. In the first quarter of 2008, Pirelli Pekao Real Estate Sp.z o.o. reported residential real estate properties sales of Euro 10.6 million. - Revenues from services Revenues deriving from the supply of services is broken down as follows.

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Quarter ended 31 March Change 2008 (In millions of Euro) 2009 % Redetermined % Absolute % Revenues from services to third parties 24.4 50% 32.5 53% (8.1) -25% Revenues from services to Pirelli & C. 0.1 0% 0.2 0% (0.1) -50% Revenues from services to associates 1.8 4% 2.2 4% (0.5) -23% Revenues from services to joint ventures and other Pirelli RE Group companies 22.7 46% 26.4 43% (3.7) -14% Revenues from services to other Pirelli & C. Group companies 0.1 0% 0.1 0% - 0% Total revenues from sales and services 49.1 100% 61.4 100% (12.3) -20% In the first quarter of 2009, the real estate sector suffers the effects of international crisis began during 2008; therefore comparisons with the data derived from the first quarter of 2008 shall be read in consideration of the effects of the crisis. Change in inventories of work in progress, semi-finished and finished products The change in inventories of work in progress for the first quarter of 2009 resulted in a loss of Euro 0.5 million compared to a profit of Euro 28.0 million recorded during the corresponding period in 2008. Changes recorded in the period are mainly attributable to the data on revenues described above. Operating costs Operating costs are broken down as follows.

Quarter ended 31 March Change 2008 (In millions of Euro) 2009 % Redetermined % Absolute % Raw and consumable materials used, of which: 0.3 0% 33.3 31% (33.0) -99% a) Assets purchased 0.2 0% 24.8 23% (24.6) -99% b) Change in inventories of trading properties, raw and miscellaneous materials 0.1 0% 8.6 8% (8.5) -99% Personnel costs 23.6 37% 28.2 26% (4.6) -16% Depreciation, amortisation and impairment 1.7 3% 1.9 2% (0.2) -11% Other costs 38.1 60% 44.8 41% (6.7) -15% Total 63.7 100% 108.2 100% (44.5) -41% Operating costs total Euro 63.7 million compared to Euro 108.2 million as of 31 March 2008. Raw and consumable materials used The item Assets purchased equal to Euro 0.2 million in the first quarter of 2009 refers to the purchase of other consumables. This item in the first quarter of 2008 amounted to Euro 24.8 million and referred mainly to the purchase of real estate properties from third parties through the purchase of quotas (Euro 24.5 million) resulting in the purchase of interest in Kappa S.r.l. on 25 March 2008. In this period, the item Change in inventories of trading properties, raw and miscellaneous materials saw a profit of Euro 0.1 million compared to a profit of Euro 8.6 million from the corresponding period in 2008.

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Changes recorded in the period in object are mainly attributable to the events described under the item Revenues from sales and Purchased assets to which reference should be made.

9.1.2 Operating trend report for the years ended 31 December 2008 and 2007 (redetermined) Introduction The real estate market suffered from a year blighted by deep international crisis. The fall in prices, the downturn of transactions and the dwindling availability of credit have affected all companies in the sector. To tackle such scenario, Pirelli RE announced at the end of last year a cost reduction and reorganisation process focused on the two regional macro areas of Italy and Germany/Poland which were less exposed to the volatility of the real estate market, aiming to revitalise business and increase the quality of portfolio assets. Consolidating net income for the year was Euro -195.0 million compared to a profit of Euro 151.1 million in 2007. In reading the data attention should be paid on the fact that the Integrated Facility Management activities, rendered over the course of the year, are considered "discontinued operations" and are therefore only calculated under net profit. For purposes of homogeneity, the comparison with the 2007 data was made on a like-for-like basis. Significant events in 2008 Following the organisational review process undertaken to tackle the new market conditions deriving from the significant phase of crisis in the real estate sector in Europe which made more selective the activities of the different involved competitors, Pirelli RE reshaped its structure in order to make processes more efficient and guarantee a greater accountability, shifting from vertical services to "service governance" within the relevant business units. At the end of last year, Pirelli RE announced a cost reduction and reorganisation process focused on the two regional macro areas of Italy and Germany/Poland which were less exposed to the volatility of the real estate sector, aiming to revitalise business and increase the quality of portfolio assets. The goal of Pirelli RE, to be achieved through its restructuring process, is to make portfolio asset management more efficient, reduce costs, and reshuffle internal organisation to cope with the new scenario in the real estate sector, accelerating the business turnaround that is now underway. This restructuring, the benefits of which shall be seen from 2009, aims to simplify intermediate organisational levels and to reduce operating costs through personnel redundancy and a strong simplification of corporate structures. Over the course of 2008, the Pirelli RE Group, despite the unfavourable conditions mentioned above, still managed to complete a number of important operations, including in particular: • As part of the expansion strategy in the European markets, in Poland (Warsaw) Pirelli RE concentrated on two important development projects. The first involved the construction of a residential complex and commercial services covering an area of approximately 150,000 sqm on Ostrobramska Street, one of the city’s main arteries. Within the scope of this project, the fourth quarter of 2008 saw the sale of 435 residential real estate units for a total of Euro 50.3 million. The second project, in the "Huta" area which is located approximately 6 km from the city centre, consisted of a building site of 720,000 sqm (Pirelli RE holds 34% of the initiative in partnership with Grove International Partners at 51% and the Lucchini Family at 15% through the company Lusigest); • On 28 July 2008, in a consortium with RREEF, Generali and Borletti, Pirelli RE purchased 49% of Highstreet, an investment company which owns and leases real estate properties to the large German department store named Karstadt. Highstreet benefits of a real estate properties portfolio throughout Germany with a total surface area of 3.2 million sqm

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(retail surface area of 2.1 million sqm). The enterprise value as of the date of purchase was equal to approximately Euro 4.6 million, with approximately Euro 3.5 million of financing guaranteed by real estate properties (see Section One, Chapter XXII, Paragraph 22.2.3); • On 6 August 2008, the "Fondo Vivaldi" started its activity dedicated to a project which involves the construction of a service centre spanning 108,960 sqm in the area formerly occupied by CAM Immobiliare in the new Rho-Pero Trade Fair Centre. The area, which was bought in September 2008 at a cost of Euro 40 million, today is predominantly industrial and dismantled, but is due to be redefined for tertiary/commercial use coordinated by the Sempione Consortium which, in addition to the “Fondo Vivaldi”, is made up of other important partners such as ENI Servizi and the Fondazione Ente Autonomo Fiera Internazionale (international autonomous trade fair organisation) of Milan. Support was also given to the property fund management: as of 31 December 2008, Pirelli RE was responsible for 18 operative and two non-operative shared property investment funds; • With regard to non performing loans, after the significant investment activity carried out during 2007 with some of the largest players in the sector, Pirelli RE gained the recognition and trust from the specialist economic community through Standard & Poor's upgrade of Pirelli RE Credit Servicing, as special servicer in Italy, to the ranking of “strong” in the category; • On 22 October 2008, the Municipality of Milan, the Lombardy Region and the University of "Bicocca" signed, with the support of Pirelli RE in representation of the promoters of the "Grande Bicocca" Project (real estate funds participated by foreign investors and the cooperatives system), the new Program Agreement which foresees, with the planning of approximately 142,000 sqm of Gross Floor Area, the complete reclassification of the area covering a total of 810,000 sqm GFA. This will include the construction of residences with open and agreed fees, extension of the university, commercial and hospitality functions, public facilities (social housing for less privileged sectors of society and for students, Hangar Bicocca), in addition to approximately 60,000 sqm of green spaces; • In retail and entertainment, on 12 November 2008 the Borgonovo Entertainment Center was opened near Perugia. Owned by Pirelli RE through its subsidiary Progetto Perugia S.r.l., the complex includes the Giometti Multiplex Cinema with 10 state-of-the-art screens covering approximately 14,000 sqm GFA within a total area of 38,000 sqm; • On 5 November 2008, the Board of Directors of Pirelli RE approved the terms and conditions of the transfer agreement to Manutencoop Facility Management of its 50% interest in Pirelli RE Integrated Facility Management B.V., a joint venture with Intesa Sangallo which operates, through its subsidiaries, in the providing project management and facility management services. The transaction was completed and disclosed to the market on 23 December 2008 after the fulfilment of all the conditions precedent applicable to the transfer and the obtaining of the necessary authorisation from the antitrust authority. The transfer price for 100% of Pirelli RE Integrated Facility Management B.V., including the equal participatory share of Intesa Sanpaolo, was Euro 137.5 million equally divided among the two sellers Pirelli RE and Intesa Sanpaolo, holding an enterprise value of Euro 270 million. For the Pirelli RE Group, the impact on its net financial position, excluding Pirelli RE shareholders’ loans, of the transfer of the 50% interest, resulted in a profit of approximately Euro 91 million (see Section One, Chapter XXII, Paragraph 22.1.1). The transfer of facility and project management activities is therefore considered within the Pirelli RE Group's structural development process focusing on management activities and property services with a high level of added value aimed at fund/asset management,

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property management and agencies. Economic data This Paragraph illustrates the operating trends for the year ended 31 December 2008 compared with 31 December 2007 redetermined. The comments provided below refer to the comparison between the consolidated economic data from 2008 and those from 2007, all prepared in compliance with the IFRS. The main income data for the years ended 31 December 2008 and 2007 redetermined are shown in the following table.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Operating revenues(1) 412.4 100% 1.805.8 100% (1.393.4) -77% Operating costs(1) (483.6) -117% (1.772.7) -98% 1.289.0 -73% EBIT (71.2) -17% 33.1 2% (104.3) -315% Profit from investment sales - 0% 11.2 1% (11.2) -100% Financial income 49.4 12% 46.3 2% 3.1 7% Financial expenses (71.1) -17% (87.0) -5% 15.9 -18% Dividends received 0.4 0% 2.2 0% (1.7) -77% Change in fair value of financial assets 3.8 1% 14.2 1% (10.4) -73% Net profit share from investments in associates and joint ventures (177.0) -43% 115.0 6% (292.0) -254% Result before income taxes and minority interests (265.7) -64% 135.0 7% (400.7) -297% Income taxes (1.9) 0% (23.6) -1% 21.7 -92% Net income (loss) from continuing operations (267.6) -65% 111.4 6% (379.0) -340% Net income (loss) from discontinued operations 74.6 18% 49.5 3% 25.1 51% Net income (loss) for the year before minority interests (193.0) -47% 160.9 9% (353.9) -220% of which minority interests 2.0 0% 9.8 1% (7.8) -80% Consolidated net income (loss) for the year (195.0) -47% 151.1 8% (346.1) -229% (1) We note that the items Operating revenues and Operating costs were referred to as Total production value and Total production costs respectively in the income statements tables of the consolidated financial statements as of and for the years ended 31 December 2007 and 2006. These items have been renamed to make the tables used in this Chapter consistent with those used by the Issuer in the financial statements as of and for the year ended 31 December 2008. Operating revenues and operating costs in 2007 include Euro 1,295.6 million related to the transfer of DGAG’s real estate properties, carried out by means of the sale of units, to the joint ventures with RREEF and MSREF. Operating revenues Details of the revenues for the years ended 31 December 2008 and 2007 redetermined are set forth in the table below.

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Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Revenues from sales and services 365.1 89% 1,724.4 95% (1,359.3)-79% Change in inventories of work in progress, semi- finished and finished products (1.7) 0% 16.9 1% (18.6) -109% Other income 49.0 11% 64.5 4% (15.5) -24% Total 412.4 100% 1,805.8 100% (1,393.4) -77% Revenues from sales and services Details of the revenues derived from sales and services are set forth in the table below.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Revenues from contracts 13.0 4% 0.6 0% 12.4 2067% Revenues from sales: - sales of land for development 59.0 16% 43.3 3% 15.7 36% - sales of land for development to Pirelli RE Group companies 0.2 0% 1.5 0% (1.3) -87% - sales of residential property 16.1 4% 42.3 2% (26.2) -62% - sales of commercial property 0.4 0% 0.2 0% 0.2 100% - sales of land/property through sale of shares 48.1 13% 1,313.7 76% (1,265.6) -96% Revenues from sales 123.8 34% 1,401.0 81% (1,277.2) -91% Revenues from services: - revenues from services to third parties 102.3 28% 215.6 13% (113.3) -53% - revenues from services to Pirelli & C. 0.4 0% 0.2 0% 0.2 100% - revenues from services to associates 8.5 2% 8.2 0% 0.3 4% - revenues from services to joint ventures 116.8 32% 98.6 6% 18.2 18% - revenues from services to other Pirelli & C. Group companies 0.3 0% 0.2 0% 0.1 50% Revenues from services 228.3 63% 322.8 19% (94.5) -29% Total 365.1 100% 1.724.4 100% (1,359.3) -79% Revenues from sales and services as of 31 December 2008 amounted to Euro 365.1 million, compared to Euro 1,724.4 million as of 31 December 2007 redetermined. Revenues from contracts This item amounts to 13 million, compared to Euro 0.6 million for the previous period and mainly includes revenues from Iniziative Immobiliari 3 S.r.l. (Euro 12 million) for works relating to the construction of a second management headquarters for Pirelli RE in Bicocca, Milan. Revenues from sales With reference to the Sales of land for development, the amount of Euro 23.7 million reflects sales to third parties by the company Iniziative Immobiliari 3 S.r.l. of two building sites located in the Municipality of Lainate (Euro 7.5 million) and the Municipality of Pioltello (Euro 16.2 million) respectively, and Euro 25.9 deriving from the sale by Kappa S.r.l. of the area formerly occupied by Ansaldo in Bicocca, Milan. Sales of residential property completed during 2008 relate to the sale of residential units by various

135 Section I Registration Document companies of the group including Pirelli Pekao Real Estate Sp.z o.o. (Euro 11.4 million), Centrale Immobiliare S.p.A. (Euro 1.8 million) and Geolidro S.p.A. (Euro 2.9 million). Sales of commercial property reflect the sale of certain real estate properties located in the province of Turin and in Teramo owned by Beta S.r.l.. The item Sales of land/property through sale of shares relates to the deconsolidation of Polish companies Coimpex Sp.z o.o. and Relco Sp.z o.o. sold during the period in object by parent company Pirelli RE. The final 2007 amount is mainly attributable to the deconsolidation of companies belonging to the DGAG group. Revenues from services The variation, besides reflecting the progressive deconsolidation of the DGAG group over the course of 2007, is attributable to the drop in sales and to the loss of commissions due to the slump in transactions, events that are consequential to the current international crisis which has heavily affected the real estate sector. Revenues by primary segment / geographic area Details of revenues by geographic area are set forth in the table below.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Italy 239.9 66% 270.8 16% (30.9) -11% Germany 62.1 17% 1,415.5 82% (1,353.4) -96% Rest of Europe 66.3 18% 39.7 2% 26.6 67% Intragroup eliminations (3.2) -1% (1.6) 0% (1.6) 100% Total 365.1 100% 1,724.4 100% (1,359.3) 60% The geographic sector (primary segment) is a distinctly identifiable part of the Group that provides a single product or service or a set of connected products and services, and which is subject to risks and benefits different from those related to components which operate in other economic environments. We note that, in order to cope as well as possible during the current phase of the real estate cycle, ensuring the necessary business governance is provided, the Pirelli RE Group introduced a business reorganisation process focused particularly on the regional component. The present organisational structure of the Group is in fact based in Italy, Germany and the rest of Europe - and in business units integrating asset management and property services, specialised by product type, allowing the Group to combine its knowledge of geographic markets with its specialist know-how in the different segments. As of 31 December 2008, Group activities were divided based on the following business sectors (secondary segment): • Real Estate; • Non Performing Loans; • Other. Change in inventories of work in progress, semi-finished and finished products The change in inventories as of 31 December 2008 showed a general loss of Euro 1.6 million

136 Section I Registration Document compared with a profit of Euro 16.9 million recorded in 2007. Changes recorded in the period in object are mainly attributable to the events described under the item Revenues from sales and Purchased assets which are to be used as reference. Other income This item is broken down as follows.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Recoveries, reimbursements and other income 45.6 93% 54.0 84% (8.4) -16% Other income from Pirelli & C. 0.4 1% 0.3 0% 0.1 33% Other income from associates 0.1 0% 0.1 0% - 0% Other income from joint ventures 2.6 6% 9.8 16% (7.2) -73% Other income from other Pirelli RE Group companies 0.1 0% - 0% 0.1 - Other income from other Pirelli & C. Group companies 0.2 0% 0.3 0% (0.1) -33% Total 49.0 100% 64.5 100% (15.5) -24% Other income raised down by Euro 15.6 million, from Euro 64.5 million in 2007 redetermined to Euro 49 million in 2008. Recoveries, reimbursements and other income relates mainly to tenant charges for the management of owned real estate properties or real estate properties managed on behalf of third parties; in the latter case, such charges predominantly relate to real estate property management activities. The item also includes use of funds set aside from previous periods. The item includes an income of Euro 17 million related to the payment (classified as a non- recurring event) received from Pirelli RE SGR from the transfer to the other SGR of management of the "Fondo Berenice", which in fact represents an advance of commissions due to mature in the subsequent periods. This had a final impact on the item of 34.7%. Operating costs Operating costs are broken down as follows.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Raw and consumable materials used (net of change in inventories) of which: 84.9 18% 1,357.3 76% (1,272.4) -94% a) Assets purchased 69.5 14% 1,369.5 77% (1,300.0) -95% b) Change in inventories of trading properties, raw materials 15.4 3% (12.2) -1% 27.6 -226% Personnel costs 158.9 33% 125.8 7% 33.1 26% Depreciation, amortisation and impairment 9.5 2% 11.5 1% (2.0) -17% Other costs 230.4 47% 278.1 16% (47.7) -17% Total 483.7 100% 1,772.7 100% (1,289.0) -73% Operating costs total Euro 483.7 million compared to Euro 1,772.7 million from 2007 redetermined. We note that in 2007, the data of Euro 1,772.7 million was significantly influenced by the

137 Section I Registration Document purchase of the DGAG Group. Raw and consumable materials used (net of change in inventories) The item Assets purchased refers to: • Purchase of third party real estate properties (Euro 1.8 million as of 31 December 2008 compared to Euro 7.2 million from the previous period redetermined): this refers to the bids won for two real estate properties located in Crotone by subsidiaries NewcoRE 9 S.r.l. (Euro 1.3 million) and Dolcetto Sei S.r.l. (Euro 0.5 million); • Purchase of land / real estate property by Pirelli RE Group companies (Euro 8.8 million as of 31 December 2008 compared with Euro 16.6 million) refers to the purchase by Iniziative Immobiliari 3 S.r.l. of an area located in the Municipality of Pioltello from the joint venture Trixia S.r.l.; • Purchase of real estate properties by third parties through acquisition of shares (Euro 57.6 million compared with Euro 1,339.1 million), related to the increase in inventories deriving from the purchase of shares by joint venture Max B.V. in Kappa S.r.l. on 25 March 2008 and in Polish companies Coimpex Sp.z o.o. and Relco Sp.z o.o. by Pirelli RE, companies subsequently deconsolidated following the sale of shares to Polish Investments Real Estate Holding II B.V.; • Other purchases (Euro 1.3 million compared to Euro 0.6 million) refers mainly to the purchase of fuel and other consumables. In the period in object, the item Change in inventories of trading properties, raw and miscellaneous materials saw a loss of Euro 15.4 million compared to a profit of Euro 12.2 million from 2007 redetermined. Changes recorded in the period in question are mainly attributable to the events described under the item Revenues from sales and Purchased assets which are to be used for reference. Personnel costs Personnel costs total Euro 158.9 million compared to Euro 125.8 million from 2007 redetermined. This item is broken down as follows.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Wages and salaries 129.2 82% 95.1 76% 34.1 36% Social security contributions 20.9 13% 22.8 18% (1.9) -8% Employee leaving indemnity 0.6 0% 1.3 1% (0.7) -54% Costs for defined contribution pension funds / Other costs 8.2 5% 6.6 5% 1.6 24% Total 158.9 100% 125.8 100% 33.1 26% This item includes costs related to extraordinary lay-off expenses of certain companies of the Group (Euro 41.2 million) and Euro 0.9 million related to the new stock option plan 2008-2010. The item in question also includes a profit of Euro 1.6 million following the failure to meet the internal performance targets for the second portion of the stock option plan 2006-2008. The breakdown of personnel employed over the course of the year is set forth as follows.

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End-of-period number Mid-period number 2008 2007 2008 2007 Executives 142 216 171 211 Junior managers 225 402 250 395 White collar 1,017 1,518 1,465 1,513 Blue collar /Auxiliary staff(1) 89 522 93 483 Total (2) 1,473 2,658 1,979 2,602 (1) Personnel variable in relation to activities associated with contracts managed. (2) Including staff on temporary contracts at end of 2008 the total number amounts to 1,558 units compared to 2,692 from December 2007. Moreover, at the end of 2007, including the 298 staff from the BauBeCon group, the total number of personnel amounted to 2,990. This reduction is primarily attributable to the deconsolidation of the INTEGRA FM B.V. Group (former Pirelli RE Integrated Facility Management B.V.). Depreciation, amortisation and impairment Details of depreciation, amortisation and impairment for the years ended 31 December 2008 and 2007 redetermined are set forth in the table below.

Year ended 31 December Change 2007 2008 Absolute % (In millions of Euro) Redetermined Property, plant and equipment amortisations 4.0 3.9 0.1 3% Intangible assets amortisations 5.4 3.7 1.7 46% Other depreciations 0.1 3.9 (3.8) -97% Total 9.5 11.5 (2.0) -17% Other costs As of 31 December 2008 this amounted to Euro 230.4 million compared to Euro 278.1 million from 2007 redetermined.

Year ended 31 December Change 2007 2008 % Redetermine % Absolute % (In millions of Euro) d Other costs charged by Pirelli & C. 7.8 3% 10.9 4% (3.1) -28% Other costs charged by associates 4.8 2% 5.7 2% (0.9) -16% Other costs charged by joint ventures 10.3 5% 4.1 1% 6.2 151% Other costs charged by other Pirelli & C. Group companies 8.9 4% 7.8 3% 1.1 14% Other costs charged by third parties 198.6 86% 249.6 90% (51.0) -20% Total 230.4 100% 278.1 100% (47.7) -17%

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This item is broken down as follows.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Services 166.1 73% 212.8 77% (46.7) -22% Lease and rental costs 24.3 11% 21.8 8% 2.5 11% Impairment of receivables 4.3 2% 11.4 4% (7.1) -62% Provision for risks 9.2 4% 8.5 3% 0.7 8% Other operating expenses 26.5 12% 23.6 8% 2.9 12% Total 230.4 100% 278.1 100% (47.7) -17% Services Services amount to Euro 166.1 million compared to Euro 212.8 million from 2007 redetermined. Services mainly consist of construction and maintenance costs, expenses from the managing third- party assets, commissions for liabilities and charges and consultancy and professional fees. Please note that payments to directors and to the Supervisory Board amounted to Euro 4.3 million compared to Euro 8.7 million as of 31 December 2007 redetermined, and that payments owed to auditors of consolidated companies totalled Euro 0.5 million against Euro 0.6 million from 2007 redetermined. Lease and rental costs This item amounts to Euro 24.3 million against a final value of Euro 21.8 million from 2007 redetermined, and refers almost exclusively to the leasing of head-office buildings and real estate properties used for storage, to the use of the trademark granted by the ultimate parent company Pirelli & C. and also to the leasing and rental of motor vehicles. The item also includes Euro 0.5 million for the leasing of the offices of Amburgo and Kiel, fully paid up over the course of 2008. Impairment of receivables Impairment of receivables (Euro 4.3 million as of 31 December 2008, compared to Euro 11.4 million as of 31 December 2007 redetermined) refers to potential risks of debtor insolvency and losses on receivables during the period in question. Provisions for risks and charges As of 31 December 2008, the company set aside Provisions for risks and charges totalling Euro 9.2 million compared to Euro 8.5 million from the previous year redetermined. The 2008 item includes provisions against future charges from contractual obligations (in particular regarding previous town planning commitments with the Municipality of Milan for the construction of a car park in the Milan-Bicocca area), possible risks deriving from disputes put forward by certain clients, litigation with suppliers, labour litigation with personnel and restructuring costs. The item includes a lump sum of Euro 1.3 million related to a cost-based contract for the Amburgo office paid in 2008, which had an impact on the item equal to 14%. Other operating expenses This amounts to Euro 26.5 million against Euro 23.6 million from 2007 redetermined. The item includes Euro 2.6 million of stamp duty and other taxes, mainly consisting of ICI (Local Property Tax), registration taxes and non-recoverable VAT from financial transactions, and

140 Section I Registration Document also Euro 4.8 million from contractual early termination penalties. Financial income Financial income as of 31 December 2008 amounts to Euro 49.4 million, compared with Euro 46.3 million from the previous year redetermined, and is broken down as follows.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Interest income from non-current assets 33.3 67% 23.0 50% 10.3 45% Interest income from current assets 4.2 9% 12.2 26% (8.0) -66% Other financial income from non-current assets 11.1 22% 7.6 17% 3.5 46% Other financial income from current assets - 0% 0.1 0% (0.1) -100% Others / miscellaneous 0.5 1% 2.8 6% (2.4) -86% Exchange gains 0.3 1% 0.6 1% (0.3) -50% Total 49.4 100% 46.3 100% 3.1 7% Changes in interest income mainly reflect the changes in financial receivables from Group companies and also in inter-company current accounts held with associated companies or joint ventures. Income from long-term securities derives from account records entered at the amortised cost of portfolio junior securities. Income from real estate funds consist of revenue distributed to the group from the Armilla (Euro 0.2 million), Berenice (Euro 0.5 million), Cloe (Euro 0.4 million), Olinda (Euro 2.3 million) and Tecla (Euro 0.6 million) funds. Income from non-current financial assets include capital gains related to the sale of shares in "Berenice Fondo Uffici - Fondo Immobiliare" closed-end real estate fund held by subsidiary Pirelli RE SGR. Exchange gains refers mainly to the shareholders’ loans in Polish zloty granted to the joint ventures Polish Investments Real Estate Holding B.V. and Polish Investments Real Estate Holding II B.V. and are offset by matching expenses arising from the exchange rate hedges taken out. Financial expenses These amount to Euro 71.1 million, compared to a final value of Euro 87 million as of 31 December 2007 redetermined, and are broken down as follows.

Year ended 31 December Change 2007 2008 % % Absolute % (In millions of Euro) Redetermined Interest due to banks 18.0 25% 60.3 70% (42.3) -70% Interest due to Pirelli & C. 32.9 47% 4.2 5% 28.7 683% Interest due to other Pirelli & C. Group companies 0.2 0% 0.2 0% - 0% Interest due to joint ventures 0.2 0% 4.4 5% (4.2) -95% Interest due to others 0.6 1% 13.3 15% (12.7) -95% Other financial expenses 14.3 20% 4.5 5% 9.8 218% Exchange losses 4.9 7% 0.1 0% 4.8 4800% Total 71.1 100% 87.0 100% (15.9) -18% Interest due to banks refers to loans obtained from credit institutions for the everyday management of the business. The decrease of Euro 42.3 million on the prior year redetermined is primarily

141 Section I Registration Document due to the deconsolidation of companies in the Integra FM B.V. Group. This effect was partly offset by the Euro 28.6 million increase in interest payable to parent company Pirelli & C. on drawdowns of revolving credit facilities granted to the Group. Other financial expenses include Euro 11.4 million related to the impairment of junior notes after their book value was discounted to the present value of their future value cash flows using the original effective interest rate. Exchange losses amount to Euro 4.9 million, compared with Euro 0.1 million as of 31 December 2007 redetermined, and mostly refer to the evaluation of outstanding shareholders' loans in Polish currency as of 31 December 2008. The higher amount of losses reflects greater exchange rate volatility than in the prior year redetermined. This amount has been offset by income from currency hedges taken out during the year, as reported in the following paragraph (Change in fair value of financial assets). Change in fair value of financial assets This item, showing a profit of Euro 3.8 million (against a profit of Euro 14.2 million as of 31 December 2007 redetermined), includes the impact deriving mainly from the evaluation at fair value of certain derivative instruments (Euro 5.4 million) partially offset by the reduction in the value of shares held in "Cloe Fondo Uffici" - an unlisted, reserved closed-end real estate investment fund (at a loss of Euro 1.6 million), whose fair value has been estimated based on the year-end value of similar traded securities. The item in question particularly refers to the Euro 4.3 million impact of certain exchange rate risk hedging instruments recorded at fair value and to the gains and losses related to such instruments realized in the year. Net profit share from investments in associates and joint ventures This item, showing a loss of Euro 177 million, compared with a profit of Euro 115 million over the course of the previous year redetermined, is made up of profits from shares valued using the net equity method, which reflect writedowns in owned real estate portfolios. Profits/losses on shares valued at net equity refer to income/charges deriving from the share value adjustment based on the fraction of net equity of associates or joint ventures. The fair value of property investments held by Fondi Patrimonio Uffici, Raissa, Tecla and Spazio Industriale is assimilated through the evaluation at net equity of joint ventures and associates holding the relative shares. Income taxes The item Income taxes relates to current, advance and deferred taxes, calculated based on current tax rates. Note that Pirelli RE and its subsidiaries have adopted the national tax consolidation system under parent company Pirelli & C.. This item is broken down as follows.

Year ended 31 December Change 2007 (In millions of Euro) 2008 Redetermined Absolute % Current taxes 21.1 31.1 (10.0) -32% Deferred tax assets (18.9) (7.6) (11.3) 149% Deferred tax provisions (0.3) 0.1 (0.4) -400% Total 1.9 23.6 (21.7) -92%

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9.1.3 Operating trend report for the years ended 31 December 2007 and 2006 Significant events in 2007 In 2007, the Pirelli RE Group carried out a number of important transactions, in particular: • its strategy of expansion into European markets with the most promising prospective growth was strengthened through the purchase of the Germany-based BauBeCon real estate property portfolio in July, for a value of approximately Euro 1,650 million; • in Italy, it reinforced its position in the management of real estate funds, with the number of funds under its control increased from 16 in 2006 to 20 in 2007. During the period, the company set up the "Fondo Immobiliare Città di Torino", "Fondo Immobiliare Pubblico Regione Siciliana" - FIPRS, Retail & Entertainment, and Fedora, while on 1 July was terminated the management of FIP - "Fondo Immobili Pubblici" - managed on behalf of Investire Immobiliare SGR. With the launch of the FIPRS fund, which included the Sicily Region real estate portfolio, followed by the Fondo Immobiliare Città di Torino, real estate property owner originating from the City of Turin, the Pirelli RE Group sought to become a significant partner of public entities with regard to the valorisation of their real estate assets. With Retail & Entertainment, formed by real estate properties in which the commercial activity of Rinascente/Upim is carried out, it however improve the valorisation of real estate equity in the retail sector, implemented in 2004 with the management of Olinda Fondo Shops. In its strategy of identifying property investments for retail and entertainment use, over the course of 2007 Olinda Fondo Shops purchased from the Pirelli RE and RREFF joint venture a retail real estate portfolio worth Euro 60 million. During the period, it also set up the "Social and Public Initiatives" fund through an initial contribution of real estate properties for mixed use deriving from "Fondazione Enpam" (Ente Nazionale di Previdenza ed Assistenza dei Medici e degli Odontoiatri). • there was the successful outcome of the tender offer of shares in Tecla Fondo Uffici, launched by the joint venture between Morgan Stanley Real Estate Special Situations Fund (51%) and Pirelli RE (49%). Also in 2007, accepting the tender offer on the Berenice fund set up by Zwinger Opco 6 B.V., the same joint venture produced a gross capital gain of Euro 17.7 million; • as part of development projects for regenerating the local area, in December 2007, Pirelli RE, together with the Municipality of Milan and the Lombardy Region, representing the promoters of the Grande Bicocca project, signed a memorandum of understanding which amends and supplements the 2003 Program Agreement. The Grande Bicocca project involves the construction of new open- and agreed-use residential units, new commercial units for optimising the Bicocca Village, increasing the Hangar Bicocca contemporary art space, and a project for the expansion of the University of Milan; • in the non performing loans sector, Pirelli RE consolidated its position in Italy, continuing its investment through new joint ventures with some of the largest players in the sector: it in fact bought a total of nine portfolios totalling approximately Euro 844 million. In particular, the joint venture between Pirelli RE and Calyon completed the 50% purchase of a non performing loans portfolio from Banca Antonveneta and from subsidiary Interbanca with a gross book value of approximately Euro 2.6 billion, completing the award of the tender held in the previous year; • in the service sector, the period saw the completion of the joint venture between Pirelli RE and Intesa Sanpaolo, which bought from Pirelli RE 49% of Pirelli RE Integrated Facility Management which in turn took over from Pirelli RE 100% of Pirelli RE Facility Management, which operates in Italy in the service sector, and on the Polish market

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through Ingest Facility Polska. Economic data The following table gives a breakdown of the economic data of the Pirelli RE Group for the years ended 31 December 2007 and 2006.

Years ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Operating revenues(1) 2,242.1 100% 739.6 100% 1,502.5 203% Operating costs(1) (2,191.7) -98% (635.9) -86% (1,555.8) -245% EBIT 50.4 2% 103.7 14% (53.3) -51% Profit from investment sales 55.9 3% - 0% 55.9 n.a. Financial income 46.7 2% 29.8 4% 16.9 57% Financial expenses (91.4) -4% (27.0) -4% (64.4) 239% Dividends received 2.2 0% 4.0 1% (1.8) -45% Change in fair value of financial assets 14.2 1% (0.8) 0% 15.0 -1875% Net profit share from investments in associates and joint ventures 117.0 5% 101.6 14% 15.4 15% Result before income taxes and minority interests 195.0 9% 211.3 29% (16.3) (8%) Income taxes (34.1) -2% (49.3) -7% 15.2 -31% Net income (loss) from continuing operations 160.9 7% 162.0 22% (1.1) (1%) Profit for the period 160.9 7% 162.0 22% (1.1) (1%) of which minority interests 9.8 0% 2.5 0% 7.3 288% Consolidated net profit for the year 151.1 7% 159.5 22% (8.4) (5%) (1) We note that the items Operating revenues and Operating costs were referred to as Total production value and Total production costs respectively in the income statements tables of the consolidated financial statements as of and for the years ended 31 December 2007 and 2006. These items have been renamed to make the tables used in this Chapter consistent with those used by the Issuer in the financial statements as of and for the year ended 31 December 2008. Illustrated below is the recorded trend for the main items of the income statement in the years ended 31 December 2007 and 2006. Operating revenues The following table shows details of the Operating revenues for the years ended 2007 and 2006.

Years ended 31 December Change

(In millions of Euro) 2007 % 2006 % Absolute % Revenues from sales and services 2,148.6 96% 702.0 95% 1,446.6 206% Change in inventories of work in progress, semi- finished and finished products 16.9 1% (4.3) -1% 21.2 -493% Own work capitalized 0.9 0% 3.6 1% (2.7) -75% Other income 75.7 3% 38.3 5% 37.4 98% Total 2,242.1 100% 739.6 100% 1,502.5 203% Revenues from sales and services The following table shows details of the Revenues from sales and services for the years ended 2007 and 2006.

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Year ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Revenues from contracts 10.0 1% 6.0 1% 4 67% Revenues from sales: Sales of land/property through sale of shares 1,313.7 61% 58.8 8% 1,254.9 2,134% Sales of land for development 43.3 2% 50.6 7% -7.3 -14% Sales of land for development to Pirelli RE Group companies 1.5 0% 21.7 3% -20.2 -93% Sales of residential property 42.3 2% 62.5 9% -20.2 -32% Sales of commercial property 0.2 0% 25.5 4% -25.3 -99% Other sales 0.4 0% - 0% 0.4 n.a. Revenues from sales 1,401.4 65% 219.1 31% 1,182.3 540% Revenues from services: Revenues from services to third parties 546.6 25% 274.5 39% 272.1 99% Revenues from services to Pirelli & C. 2.3 0% 2.1 0% 0.2 10% Revenues from services to associates 11.5 1% 21.3 3% -9.8 -46% Revenues from services to joint ventures 168.0 8% 170.3 25% -2.3 -1% Revenues from services to other Pirelli & C. Group companies 8.8 0% 8.7 1% 0.1 1% Revenues from services 737.2 34% 476.9 68% 260.3 55% Revenues from sales and services 2,148.6 100% 702.0 100% 1,446.6 206% Revenues from sales and services recorded a significant increase in 2007, rising from Euro 702.0 million to Euro 2,148.6 million, mainly resulting from the increase in sales of land and property through the sale of shares. This revenue item for the 2007 period, totalling Euro 1,313.7 million, includes: • the transfer to third parties, for Euro 1,295.6 million, of 65% of shares in Solaia Real Estate, Mistral Real Estate, and Jamesmail B.V. of the DGAG Group, whose shareholding was bought by the Pirelli RE Group in January 2007; • the transfer, for Euro 11.2 million, of the entire share held in the company Resident Berlin Zwei P&K GmbH to joint venture S.I.G. RE B.V.; • the transfer, for Euro 7.0 million, to joint venture S.I.G. RE B.V. and to subsidiary Pirelli RE Netherlands B.V. of the share held in Resident Sachsen P&K GmbH. Revenues from sales of land/property through the sale of shares in 2006, totalling Euro 58.8 million, amount to Euro 45.4 million from the entire sale of shares in Nowe Ogrody Sp.z o.o. and to Euro 13.4 million from the sale of 60% shareholding in Resident Berlin 1 P&K GmbH. Revenues from services rose Euro 260.3 million from Euro 476.9 million in 2006 to Euro 737.2 million in 2007, resulting mainly from the significant increase in integrated facility activity deriving almost entirely from the purchase of Ingest Facility S.p.A. in February 2007. Revenues from contracts rose by Euro 4.0 million, increasing from Euro 6.0 million in 2006 to Euro 10.0 million in 2007. In 2007, these revenues were substantially generated from the entry into the area of consolidation of Ingest Facility S.p.A.. In 2006, revenues on contracts mainly included contracts managed by Pirelli & C. Opere Generali S.p.A. related to development initiatives in the Bicocca and Pioltello areas of Milan. The larger revenues from the transactions described above were partially offset by:

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• the reduction of revenues from sales of land for development to third parties and to companies of the Pirelli RE Group, for values of Euro 7.3 million and Euro 20.2 million respectively. In 2007, the main sale operations carried out by the Pirelli RE Group include: (i) the sale to Cloe Fondo Uffici of an area located in Bicocca, Milan intended for the construction of a second head office for Pirelli RE costing Euro 25.0 million, (ii) the sale to third party companies of 7 building sites in Nadarzyn and Warsaw, Poland, for Euro 10.1 million, and (iii) the sale of an area with planning permission in the Ansaldo area of Milan for Euro 0.9 million. The 2006 balance mainly includes: (i) the sale to third parties of an area in Bicocca (Milan) for Euro 40.0 million, (ii) the sale to third parties of the area in Pero-Molino Dorino (Milan) for a cost of Euro 10.2 million, (iii) the sale to Pirelli RE Group joint ventures of different lands located in Golfo Aranci for Euro 8.5 million, and (iv) the sale of building permission for an area in Bicocca for Euro 0.5 million; • the reduction of revenues from sales of residential and commercial real estate properties for Euro 20.2 million and Euro 25.3 million respectively. Revenues by primary segment / geographical area With reference to revenues by geographical area, we note that in 2006 almost all Group activity was carried out in Italy; therefore it was not necessary to provide such information. As of 2007, the Pirelli RE Group began a process of internationalisation, making significant investments in Germany-based companies DGAG and BauBeCon. As such, starting in 2007, the management deemed it appropriate to provide information on revenues by geographical area, as shown below following a criteria according to country of activity.

Year ended 31 December (In millions of Euro) 2007 % Germany 1,415.5 66% Italy 650.2 30% Rest of Europe 84.5 4% Intragroup eliminations (1.6) 0% Total 2,148.6 100% Operating revenues in Germany in 2007 include Euro 1,295.6 million related to the sale of shares in DGAG’s real estate properties and to joint ventures with RREEF and MSREF. Revenues from the Rest of Europe mainly refer to sales of building sites and residential property units construction in Poland. Change in inventories of work in progress, semi-finished and finished products The item Change in inventories of work in progress, semi-finished and finished products shows an increase of Euro 21.2 million, rising from Euro 4.3 million in 2006 to a positive balance of Euro 16.9 million in 2007. In particular, changes in stocks by real estate properties under construction rose by Euro 44.0 million and changes in stocks by building / real estate properties for restoration recorded a reduction of Euro 22.8 million.

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Other income The table below shows details of Other income for the years ended 31 December 2007 and 2006.

Years ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Recoveries, reimbursements and other income 57.5 76% 27.8 73% 29.7 107% Other income from Pirelli & C. 0.3 0% 5.1 13% (4.8) -94% Other income from associates 0.2 0% 0.4 1% (0.2) -50% Other income from joint ventures 17.4 24% 4.6 12% 12.8 278% Other income from other Pirelli & C. Group companies 0.3 0% 0.4 1% (0.1) -25% Total 75.7 100% 38.3 100% 37.4 98% Other income rose by Euro 37.4 million from Euro 38.3 million in 2006 to Euro 75.7 million in 2007, in particular as a consequence of: • the increase in revenues from recoveries, reimbursements and other income of Euro 29.7 million. Such proceeds refer mainly to tenant charges for the management of owned real estate properties or real estate properties managed on behalf of third parties. The change in this item against the 2006 period derives largely from the entry of DGAG into the area of consolidation; • the increase in Other income from joint ventures of Euro 12.8 million, mainly through the repayment of costs from planning and feasibility studies to Pirelli & C. Real Estate Facility Management S.p.A. by S.A.N.CO. Soc. coop. a r.l., a company dedicated to the construction of the S. Anna di Como hospital. Operating costs The following table shows details of the Operating costs for the years 2007 and 2006.

Years ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Raw and consumable materials used 1,374.8 63% 150.1 24% 1,224.7 816% Personnel costs 178.8 8% 128.4 20% 50.4 39% Depreciation, amortisation and impairment 15.2 1% 9.4 1% 5.8 63% Other costs 622.9 28% 348.0 55% 274.9 79% Total 2,191.7 100% 635.8 100% 1,555.8 245% Raw and consumable materials used The following table shows details of the item Raw and consumable materials used for the years ended 31 December 2007 and 2006.

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Years ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Property/land purchased from third parties through acquisition of shares 1,339.1 97% 89.0 59% 1,250.1 1405% Property/land purchased from Pirelli RE Group companies 16.6 2% - 0% 16.6 n.a. Property/land purchased from Pirelli & C. 5.9 0% - 0% 5.9 n.a. Property purchased from third parties 7.2 1% 26.0 17% (18.8) -72% Land purchased from third parties 0.1 0% 35.2 24% (35.1) -100% Property purchased 1,368.9 100% 150.2 100% 1,218.7 811% Other purchases 17.0 1% 10.7 7% 6.3 59% Change in inventories of trading properties, raw and miscellaneous materials (11.1) -1% (10.8) -7% (0.3) 3% Total 1,374.8 100% 150.1 100% 1,224.7 816% The item Raw and consumable materials used increased, as an absolute value, by Euro 1,224.7 million from Euro 150.1 million for the year ended 31 December 2006 to Euro 1,374.8 million for the year ended 31 December 2007. This fluctuation derives mainly from the trend of real estate properties acquisitions through the purchase of shares which, in 2007, rose Euro 1250.1 million against the previous year. In particular, the significant increase in this last item derives mainly from the acquisition of real estate properties in 2007 through acquisition of shares in the DGAG group for Euro 1,330.3 million and in Progetto Linate S.r.l. (in liquidation) for Euro 8.8 million. In 2006, this item mainly included purchases from the Poland-based Pekao real estate portfolio for Euro 64.5 million and from Geolidro S.p.A. for Euro 24.0 million. In 2007, property/land purchased from companies in which the Pirelli RE Group holds an interest, totalling Euro 16.6 million, and property/land purchased from Pirelli & C., totalling Euro 5.9 million, refers respectively to the purchase from Progetto Corsico S.r.l. (49% shareholder in the Pirelli RE Group) of an area located in Corsico and to the purchase of a building with planning permission in Viale Sarca, Milan. In 2006, property purchased from third parties, which reached Euro 26.0 million, refers mainly to certain real estate properties located in Berlin for Euro 19.6 million and to other real estate properties located in different German cities for a total of Euro 6.3 million. In the same year, land purchased from third parties, which totalled Euro 35.2 million, mainly includes the purchase of an area for development in Ostrobramska (Warsaw) for Euro 27.7 million and of several residential development plots in Golfo Aranci for Euro 7.5 million. The item of other assets mainly relates to purchases of fuel and combustibles used for maintenance procedures in relation to facility management. Personnel costs The following table details the personnel costs for the years ended 31 December 2007 and 2006.

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Year ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Wages and salaries 131.9 74% 88.2 68% 43.7 50% Stock option costs 1.3 1% 5.8 5% (4.5) -78% Social security contributions 34.3 19% 27.1 21% 7.2 27% Employee leaving indemnity 1.7 1% 3.9 3% (2.2) -56% Costs for defined contribution pension funds / Other costs 9.6 5% 3.4 3% 6.2 182% Total 178.8 100% 128.4 100% 50.4 39% The number of Pirelli RE Group employees according to category is as follows:

End-of-period number Mid-period number 2007 2006 2007 2006 Executives 216 194 211 180 Junior managers 402 324 395 294 White collar 1,518 1,061 1,513 914 Blue collar/Auxiliary staff(1) 522 269 483 278 Total (2) 2,658 1,848 2,602 1,666 (1) Personnel variable in relation to activities associated with contracts managed. (2) Including staff on temporary contracts at end of 2007 the total number amounts to 2,692 units compared to 1,864 from December 2006. Moreover, at the end of 2007, including the 298 staff from the BauBeCon group, the total number of personnel amounted to 2,990. Personnel costs rose by Euro 50.4 million from 128.4 million in 2006 to Euro 178.8 million in 2007. The change in absolute value depends mainly on the entry into the area of consolidation of the group Pirelli & C. Real Estate Deutschland and of Ingest Facility S.p.A. Depreciation, amortisation and impairment Details of Depreciation, amortisation and impairment for the years ended 31 December 2007 and 2006 are indicated in the table which follows.

Year ended 31 December Change (In millions of Euro) 2007 2006 Absolute % Property, plant and equipment amortisations 6.1 5.7 0.4 7% Intangible assets amortisations 5.3 3.7 1.6 43% Other depreciations 3.8 - 3.8 n.a. Total 15.2 9.4 5.8 62%

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Other costs The following tables give details of Other costs for the years ended 31 December 2007 and 2006.

Years ended 31 December Changes (In millions of Euro) 2007 % 2006 % Absolute % Other costs charged by Pirelli & C. 11.8 2% 8.0 2% 3.8 48% Other costs charged by associates 5.8 1% 3.2 1% 2.6 81% Other costs charged by joint ventures 20.3 3% 6.9 2% 13.4 194% Other costs charged by other Pirelli & C. Group companies 8.1 1% 7.9 2% 0.2 3% Other costs charged by third parties 576.9 93% 322.0 93% 254.9 79% Total 622.9 100% 348.0 100% 274.9 79% This item is broken down as follows.

Year ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Services 542.2 87% 288.9 83% 253.3 88% Lease and rental costs 33.8 6% 19.6 6% 14.2 72% Impairment of receivables 11.7 2% 6.3 2% 5.4 86% Provisions for risks 8.9 1% 18.9 5% -10.0 -53% Other operating expenses 26.3 4% 14.3 4% 12.0 84% Total 622.9 100% 348.0 100% 274.9 79% The item Other costs increased, in its absolute value, by Euro 274.9 million from Euro 348.0 million for the year ended 31 December 2006 to Euro 622.9 million for the year ended 31 December 2007. Services Services, deriving mainly from construction and maintenance costs, expenses from the managing of third party assets, commissions for liabilities and charges and consultancy and professional fees, rose from Euro 288.9 million in 2006 to Euro 542.2 million in 2007. This change is attributable to the consolidation of the Ingest Facility group and to the entry into the area of consolidation of the DGAG group which was progressively deconsolidated over the year following the sale of shares. Lease and rental costs Lease and rental costs rose from Euro 19.6 million to Euro 33.8 million. This item mainly refers to the leasing of head-office buildings and a few real estate properties used for storage, the costs of the use of the trademark granted by the ultimate parent company Pirelli & C., but also to the costs of the leasing and rental of motor vehicles. Provisions for risks This item decreased by Euro 10.0 million from Euro 18.9 million in 2006 to Euro 8.9 million in 2007. The 2006 amount includes provisions for contractual obligations assumed with reference to the execution of extraordinary maintenance works on certain assigned real estate properties. Other operating expenses Other operating expenses rose from Euro 14.3 million to Euro 26.3 million. This difference is attributable, apart from to the aforementioned change in the perimeter of consolidation, to the

150 Section I Registration Document entry of costs from the resolution of litigation between the Istituto Nazionale di Previdenza dei Dipendenti della Amministrazione Pubblica and the Raggruppamenti Temporanei di Imprese (“RTI”) and also to the introduction of non-deductible pro-rata VAT through the fiscal reform (see "Manovra Visco") for the sale of residential real estate properties. Profit from investment sales The Profit from investment sales for the year ended 31 December 2007, of Euro 55.9 million, includes Euro 44.7 million of capital gains from the sale to Intesa Sanpaolo of 49% of Pirelli RE Integrated Facility Management B.V. and Euro 11.2 million of capital gains generated by Pirelli RE Netherlands B.V. through the sale of 20% of German firm Mertus AchtunddreiBigste GmbH (now Pirelli RE Asset Management Deutschland GmbH) to HSH Real Estate AG. Financial income The table below gives details of the Financial income for the years ended 31 December 2007 and 2006.

Year ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Interest income from non-current assets 23.1 49% 17.0 57% 6.1 36% Interest income from current assets 12.5 27% 0.5 2% 12.0 2400% Other financial income from non-current assets 7.6 17% 9.0 29% (1.4) -16% Other financial income from current assets 0.1 0% 2.0 7% (1.9) -95% Other / miscellaneous 2.8 6% 0.8 3% 2.0 250% Exchange gains 0.6 1% 0.5 2% 0.1 20% Total 46.7 100% 29.8 100% 16.9 57% Financial income rose by Euro 16.9 million from Euro 29.8 million in 2006 to Euro 46.7 million in 2007. In particular, Interest income from non-current assets increased from Euro 17.0 million in 2006 to Euro 23.1 million in 2007, mainly due to the increase in interest income from financial receivables from joint ventures and associates, referring to the profit of Euro 201.6 million recorded in financial receivables from new companies holding real estate assets in Germany. Interest income from current assets recorded an increase of Euro 12.0 million, of which: • Euro 7.1 million was generated from interests receivable from joint ventures, referring to financial loans provided over the year by the Pirelli RE Group to joint ventures, and • Euro 4.9 million was generated from the increase in other interests, resulting from the profit from bank and postal deposits.

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Financial expenses The table below gives details of the Financial expenses for the years ended 31 December 2007 and 2006.

Year ended 31 December Change (In millions of Euro) 2007 % 2006 % Absolute % Interest due to banks 64.5 71% 19.1 71% 45.4 238% Interest due to others 13.3 15% 4.3 17% 9.0 209% Other financial expenses 4.6 4% 3.0 11% 1.6 53% Interest due to joint ventures 4.5 5% - 0% 4.5 n.a. Interest due to Pirelli & C. 4.2 5% - 0% 4.2 n.a. Interest due to other Pirelli & C. Group companies 0.2 0% 0.2 0% 0.0 0% Exchange losses 0.1 0% 0.4 1% -0.3 -75% Total 91.4 100% 27.0 100% 64.4 239% Financial expenses recorded an increase of Euro 64.4 million, rising from Euro 27.0 million in 2006 to Euro 91.4 million in 2007 as a result of the increase in Interest due to banks. The increase in Interest due to banks is due both to an increase in short-term market rates and to an increase in average financial indebtedness, attributable mainly to the acquisition of DGAG at the beginning of 2007. The recorded increase of the item Interest due to Pirelli & C. of Euro 4.2 million refers to the interest matured on the use of revolving credit lines taken out over the course of 2007 between the Issuer and parent company Pirelli & C.. Change in fair value of financial assets The Change in fair value of financial assets went from a loss of Euro 0.8 million in 2006 to a profit of Euro 14.2 million in 2007. In 2007, the item mainly includes the impact of the fair value evaluation of derivative instruments at Euro 9.6 million and of the shares held in "Cloe Fondo Uffici" - an unlisted, reserved closed-end real estate investment fund, valued at Euro 4.5 million. Net profit share from investments in associates and joint ventures The item Net profit share from investments in associates and joint ventures includes income and charges deriving from the adjustment of share values based on the fraction of net equity of the associate or joint venture.

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Income taxes The table below gives details of Income taxes for the years ended 31 December 2007 and 2006.

Year ended 31 December Change (In millions of Euro) 2007 2006 Absolute % Current taxes 37.6 62.9 (25.3) -40% Deferred tax assets (3.9) (12.4) 8.5 -69% Deferred tax provisions 0.4 (1.2) 1.6 -133% Total 34.1 49.3 (15.2) -31% Income taxes rose from Euro 49.3 million in 2006 to Euro 34.1 million in 2007, with an impact on profit, before taxes and before the profit share of associates and joint ventures (totalling Euro 78.0 million in 2007 and Euro 109.7 million in 2006), which fell from 46.7% to 43.8%. This reduction is mainly due to the capital gains generated from the sale of 49% of Pirelli RE Integrated Facility Management B.V., by participation exemption, partially offset by the effect of the redefinition of deferred taxes following the introduction of the new IRES/IRAP rates by the 2008 Budget Law. Note that following the adoption by Pirelli RE and its subsidiaries of the national tax consolidation system under parent company Pirelli & C., the item Income taxes includes charges and income deriving from this acceptance.

9.2 Report on the equity and financial situation The following are the Issuer’s main balance sheet and financial data as of 31 March 2009 and 31 December 2008, 2007 and 2006 respectively.

31 March 31 December 31 December 31 December (In millions of Euro) 2009 2008 2007(1) 2006(1) Fixed assets 555.9 589.1 879.6 581.3 of which investments in real estate funds and investment companies 374.4 405.7 594.8 426.8 of which goodwill 137.8 137.8 218.4 93.4 Net working capital 139.4 133.1 190.5 283.3 Net invested capital 695.3 722.2 1,070.1 864.6 Net equity 320.1 366.4 720.1 708.7 of which Group net equity 317.1 361.7 715.7 700.3 Funds 65.9 66.3 60.3 59.5 Net financial position 309.3 289.5 289.7 96.4 of which shareholders loans (589.1) (572.3) (526.4) (334.1) Total covering net invested capital 695.3 722.2 1,070.1 864.6 Net financial position excluding shareholders loans 898.4 861.8 816.1 430.5 Net invested capital excluding shareholders loans 1,284.4 1,294.5 1,596.5 1,198.7 (1) We note that the table indicating balance sheet data differs from the one included in the Directors’ Report included in the financial statements for the years ended 31 December 2007 and 2006 due to the reclassification of the provision for future risks on investments valued at equity (previously classified in the line Funds and in this table, used to reduce the value of the Investments in real estate funds and investment companies). This reclassification was carried out to make this table consistent with the table set forth in the Directors’ Report included in the Issuer’s financial statements for the year ended 31 December 2008.

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9.2.1 Report on the equity and financial situation as of 31 March 2009 The following information shows the trends of the Group's main equity and financial indicators as of 31 March 2009 compared with 31 December 2008.

31 March 31 December (In millions of Euro) 2009 2008 Change Change % Fixed assets 555.9 589.1 (33.2) -6% of which investments in real estate funds and investment companies 374.4 405.7 (31.3) -8% of which goodwill 137.8 137.8 - 0% Net working capital 139.4 133.1 6.3 5% Net invested capital 695.3 722.2 (26.9) -4% Net equity 320.1 366.4 (46.3) -13% of which Group net equity 317.1 361.7 (44.6) -12% Funds 65.9 66.3 (0.4) -1% Net financial position 309.3 289.5 19.8 7% of which shareholders loans (589.1) (572.3) (16.8) 3% Total covering net invested capital 695.3 722.2 (26.9) -4%

Net financial position excluding shareholders loans 898.4 861.8 36.6 4%

Net invested capital excluding shareholders loans 1,284.4 1,294.5 (10.1) -1% Fixed assets amount to Euro 555.9 million compared to Euro 589.1 million as of 31 December 2008, showing a reduction of Euro 33.2 million due to a fall in the value of Investments in real estate funds and investment companies. Net working capital stands at Euro 139.4 million and is for the most part consistent with that recorded as of 31 December 2008. Group net equity amounts to Euro 317.1 million against Euro 361.7 million from 31 December 2008. This decline of Euro 44.6 million is mainly attributable to the net result (Euro -15.8 million) and to the change during the period in provisions for instruments for interest rate hedging (Euro -25.1 million). The total Net invested capital of Pirelli RE amounts to Euro 1.3 billion, of which Euro 0.2 billion consists of non performing loans and Euro 1.1 billion lies in real estate assets (of which 73% are in Italy and 27% are in Germany). The Net financial position excluding shareholders loans is negative by Euro 898.4 million compared to a liability of Euro 861.8 million at the end of December 2008. The variation for the period of Euro 36.6 million is made up of Euro 10.9 million from the contribution of equity and shareholders loans to vehicles, Euro 7.7 million of investments in financial assets, Euro 6.8 million from the payment of restructuring charges incurred over 2008, Euro 5.7 million from payments of non performing loans and Euro 5.5 million from other operations carried out during the quarter.

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9.2.2 Report on the equity and financial situation as of 31 December 2008 and 2007 The following information shows the trends of the Group's main equity and financial indicators as of 31 December 2008 and 2007. The main balance sheet and financial data as of 31 December 2008 and 2007 is indicated in the table below.

31 December 31 December (In millions of Euro) 2008 2007(1) Change % Change Fixed assets 589.1 879.6 (290.5) -33% of which investments in real estate funds and investment companies 405.7 594.8 (189.1) -32% of which goodwill 137.8 218.4 (80.6) -37% Net working capital 133.1 190.5 (57.4) -30% Net invested capital 722.2 1,070.1 (347.9) -33% Net equity 366.4 720.1 (353.7) -49% of which Group net equity 361.7 715.7 (354.0) -49% Funds 66.3 60.3 6.0 10% Net financial position 289.5 289.7 (0.2) 0% of which shareholders loans (572.3) (526.4) (45.9) 9% Total covering net invested capital 722.2 1,070.1 (347.9) -33% Net financial position excluding shareholders loans 861.8 816.1 45.7 6% Net invested capital excluding shareholders loans 1,294.5 1,596.5 (302.0) -19% (1) We note that the table indicating balance sheet data differs from the one included in the Directors’ Report included in the financial statements as of and for the year ended 31 December 2007 due to the reclassification of the provision for future risks on investments valued at equity (previously classified under the item Funds and, in this table, used to reduce the value of the Investments in real estate funds and investment companies). This reclassification was performed to make this table consistent with the table set forth in the Directors’ Report included in the Issuer’s financial statements for the year ended 31 December 2008. Fixed assets are determined as the sum of Property, plant and equipment, Intangible assets, Investments in associates and joint ventures, Other financial assets, and Junior notes (recorded under Other receivables at Euro 21.3 million as of 31 December 2008 and Euro 11.3 million as of 31 December 2007), net of Provisions for future risks on investments (Euro 48.7 million as of 31 December 2008 and Euro 6.5 million as of 31 December 2007). Fixed assets amount to Euro 589.1 million compared to Euro 879.6 million as of 31 December 2007, showing a reduction of Euro 290.5 million mainly due to a reduction in the value of Investment in real estate funds and investment companies (Euro -189.1 million) and to a reduction in Property, plant and equipment and Intangible assets largely attributable to the deconsolidation of Pirelli RE Integrated Facility Management B.V., now Integra FM B.V. (Euro - 85.0 million).

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The following table shows details on the item Investments in real estate funds and investment companies as of 31 December 2008 and as of 31 December 2007.

31 December 31 December (In millions of Euro) 2008 2007 Change % Change Investments in associates and joint ventures 357.9 480.3 (122.4) -25% Other financial assets 75.2 109.7 (34.5) -31% Junior notes receivables 21.3 11.3 10.0 88% Provision for future risks on investments (48.7) (6.5) (42.2) 649% Total investments in real estate funds and investment companies 405.7 594.8 (189.1) -32% The item Investments in real estate funds and investment companies includes Investments in associates, joint ventures and other shares (Euro 318.3 million), Investments in real estate funds (Euro 66.1 million included under the item Other financial assets in the consolidated balance sheet) and junior notes (Euro 21.3 million included in the item Other loans in the balance sheet). The 2008 and 2007 values include Provisions for future risks on investments at Euro 48.7 million and Euro 6.5 million respectively. Net working capital amounts to Euro 133.1 million compared to Euro 190.5 million as of 31 December 2007 (Euro -57.4 million). This change is mainly attributable to the combined effect of the reduction in inventories and receivables from associates and joint ventures.

31 December 31 December (In millions of Euro) 2008 2007 Change % Change Trade receivables 181.6 411.7 (230.1) -56% Receivables from deferred tax assets 28.6 35.3 (6.7) -19% Tax receivables 36.8 56.0 (19.2) -34% Inventories 93.4 114.3 (20.9) -18% Due to suppliers (139.0) (343.3) 204.3 -60% Tax payables (23.6) (26.8) 3.2 -12% Other current assets (liabilities) (44.7) (56.7) 12.0 -21% Net working capital 133.1 190.5 (57.4) -30% Group net equity amounts to Euro 361.7 million against Euro 715.7 million as of 31 December 2007, showing a decline mainly attributable to the Net result (Euro -195.0 million), to the distribution of dividends (Euro -85.1 million) and to the change during the period of the reserve for instruments for interest rate hedging (Euro -54.4 million). Net financial position as of 31 December 2008 is negative by Euro 289.5 million, in line with the Euro 289.7 million at the end of 2007. The Net financial position excludes receivables for shareholders loans and is negative by Euro 861.8 million compared to Euro 816.1 million as of 31 December 2007. For further information on net financial indebtedness see Section One, Chapter X.

9.2.3 Report on operating and financial situation as of 31 December 2007 and 2006 This Paragraph shows the trends of Pirelli RE Group main operating and financial indicators as of 31 December 2007 and 2006. The main balance sheet and financial data as of 31 December 2007 and 2006 are shown in the following table.

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31 December 31 December Change % Change (In millions of Euro) 2007(1) 2006(1) Fixed assets 879.6 581.3 298.3 51% of which investments in real estate funds and investment companies 594.8 426.8 168.0 39% of which goodwill 218.4 93.4 125.0 134% Net working capital 190.5 283.3 (92.8) -33% Net invested capital 1,070.1 864.6 205.5 24% Net equity 720.1 708.7 11.4 2% of which Group net equity 715.7 700.3 15.4 2% Provisions 60.3 59.5 0.8 1% Net financial position 289.7 96.4 193.3 201% of which shareholders’ loans (526.4) (334.1) (192.3) 58% Total covering net invested capital 1,070.1 864.6 205.5 24% Net financial position excluding shareholders’ loans 816.1 430.5 385.6 90% Net invested capital excluding shareholders’ loans 1,596.5 1,198.7 397.8 33% (1) We note that the table indicating balance sheet data differs from the one included in the Directors’ Report included in the financial statements as of and for the years ended 31 December 2007 and 2006 due to the reclassification of the provision for future risks on investments valued at equity (previously classified under the item Funds and, in this table, used to reduce the value of the Investments in real estate funds and investment companies). This reclassification was performed to make this table consistent with the table set forth in the Directors’ Report included in the Issuer’s financial statements for the year ended 31 December 2008. Fixed assets are determined as the sum of Property, plant and equipment, Intangible assets, Investments in associates and joint ventures, Other financial assets, and Junior notes (this last item, totalling Euro 11.3 million as of 31 December 2007 and Euro 94.2 million as of 31 December 2006, is included in the item Other receivables of the balance sheet), net of Provisions for future risks on investments (Euro 6.5 million as of 31 December 2007 and Euro 0.4 million as of 31 December 2006). Fixed assets amounted to Euro 879.6 million as of 31 December 2007 against Euro 581.3 million as of 31 December 2006, an increase of Euro 298.3 million, due mainly to the effect of investments on the Ingest Facility and DGAG service platforms (Euro 126.9 million) and to the net increase in the value of Investments in associates, joint ventures and funds (Euro 257.3 million), partly offset by the sale, under non performing loans, of the securities resulting from the Banco di Sicilia transaction (Euro 83.1 million) to the joint venture between Pirelli RE and Calyon. The following table shows details on the item Investments in real estate funds and investment companies as of 31 December 2007 and as of 31 December 2006.

31 December 31 December Change % Change (In millions of Euro) 2007 2006 Investments in associates and joint ventures 480.3 285.8 194.5 68% Other financial assets 109.7 47.2 62.5 132% Junior notes 11.3 94.2 (82.9) -88% Provisions for future risks on investments (6.5) (0.4) (6.1) 1525% Total investments in real estate funds and investment companies 594.8 426.8 168.0 39% Net working capital amounted to Euro 190.5 million as of 31 December 2007 compared with Euro 283.3 million as of 31 December 2006 (Euro -92.8 million). This change is attributable for Euro

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58.5 million to the settlement of the advance payment for the purchase of DGAG paid during the period and to the debt deriving from Banco di Sicilia non performing loans. The inclusion within the consolidation area of Ingest Facility further reduced working capital by approximately Euro 12 million. The following table shows the Net working capital as of 31 December 2007 and 2006.

31 December (In millions of Euro) 31 December 2006 Change % Change 2007 Trade receivables 411.7 334.3 77.4 23% Receivables from deferred tax 35.3 38.7 (3.4) -9% assets Tax receivables 56.0 38.4 17.6 46% Inventories 114.3 120.6 (6.3) -5% Due to suppliers (343.3) (193.0) (150.3) 78% Tax payables (26.8) (36.7) 9.9 -27% Other current assets (liabilities) (56.7) (19.0) (37.7) 198% Net working capital 190.5 283.3 (92.8) -33% Group net equity amounts to Euro 715.7 million as of 31 December 2007 compared with Euro 700.3 million as of December 2006, showing an increase of Euro 15.4 million. This change takes into account the profit for the period (Euro 151.1 million), the payment of dividends (Euro -87.0 million) and other changes in the assets (an overall loss of Euro 48.7 million), mainly related to the purchase of treasury shares. The Net financial position increased from Euro 96.4 million as of 31 December 2006 to Euro 289.7 million as of 31 December 2007 (Euro +193.3 million). The Net financial position excluding shareholders’ loans increased from Euro 430.5 million as of 31 December 2006 to Euro 816.1 million as of 31 December 2007 (Euro +385.6 million).

9.3 Other information The following financial data highlight several measurements used by the management of the Company to monitor and evaluate its and the Group’s operations and financial performance. Such measures are not identified as accounting measures under the IFRS, and therefore should not be considered an alternative measure to evaluate the Group’s economic performance and the related economic and financial position. The Issuer deems the financial information provided below to be an important parameter for measuring the Group’s performance as it enables an analysis of the Group’s income, equity and financial performance. However, as the determination of these measures is not regulated by relevant accounting principles, the calculation methods used by the Company may not be homogenous with those implemented by similar companies and therefore these measures may not be comparable. These measures are as follows: • Pro-rata aggregate revenues: this item represents an indicator of Pirelli RE Group’s turnover and is obtained by adding to its consolidated revenues the pro-rata revenues of associates, joint ventures and real estate funds in which the Group holds an interest, without making the necessary eliminations in the event of proportional consolidation. However, this item includes eliminations of transfers of buildings and areas between companies within the same aggregate; • EBIT before restructuring costs and devaluations/revaluations of real estate properties: determined as EBIT net of restructuring costs and real estate properties devaluations;

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• Net income from investments: determined by the pro-rata net profit deriving from investments in associates and joint ventures, income from real estate funds, capital gains from disposal of financial assets, the loss in value of other financial assets carried at fair value in the income statement, and dividends; • EBIT including net income from investments before restructuring costs and devaluations/revaluations of real estate: value determined as EBIT plus the pro-rata net profit deriving from associates and joint ventures, income from real estate funds, capital gains on disposal of financial assets, loss in value of other financial assets carried at fair value in the income statement, and from dividends net of restructuring costs and real estate property devaluations; • Gross Operating Margin (EBITDA): an economic amount used by the Group (in addition to EBIT) as a target for internal presentations (business plans) and external presentations (to analysts and investors), which is a unit of measurement to assess the overall operating performance of the Group and of the individual sectors of activity. The Gross Operating Margin is an intermediate economic amount deriving from EBIT, but excluding depreciation and amortization of tangible and intangible fixed assets; • Financial income from investments: amount represented by the interests income from financial receivables with associates and joint ventures and income from securities (both classified as financial income); it is expressed net of impairment of junior notes; • Financial expenses: this amount includes the following accounting items: Financial income, net of interest income from financial receivables with associates and joint ventures, and of income from securities classified in the item Financial income from investments, and income from real estate funds and capital gains on disposal of financial assets (classified in Net income from investments), Financial expenses, net of impairment of junior notes, Change in fair value of financial assets, net of the impairment of the other financial assets carried at fair value. • Investments in real estate funds and real estate investment companies: this amount includes investments in associates and joint ventures, closed-end real estate funds and investments in other companies (under Other financial assets in the balance sheet) and junior notes classified under Other receivables in the balance sheet; • Net working capital: this is the amount of resources that constitutes the operating activity of a business and is an indicator used to verify its short-term financial equilibrium. This amount is composed of all non-financial short-term assets and liabilities and is calculated net of the Junior notes recorded in the item Investments in real estate funds and investment companies; • Provisions: this amount, which is the sum of the balance sheet items Provisions for future risks and expenses (current and non-current), Employee benefit obligations and Provisions for deferred taxes, is indicated net of provisions for risks on investments valued at net equity which are included in the item Investments in real estate funds and investment companies; • Net financial position: this amount is an indicator of the capability to meet financial obligations. Net financial position represents the gross financial debt less cash, other cash equivalents and other interest-bearing financial receivables. The Notes to the Consolidated Financial Statements include a table indicating the balance sheet data used to determine this amount. • Return on equity (ROE): indicator of the results of the period relating to equity, determined as the ratio between consolidated net income for the period and the average of net equity at the beginning and the end of the period.

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• Gearing (including shareholders’ loans): this amount indicates the Group’s ability to satisfy the needs of its business with its own resources rather than with third-party financing. Gearing, including shareholders’ loans, is calculated as the ratio between adjusted net financial position (stated gross of shareholders’ loans of controlled companies in which minority interests are held) and net equity. The consolidated income statements for the periods ended 31 March 2009 and 2008 are set forth in the table below; they have been reclassified, highlighting the main income statement amounts used by company management to monitor and evaluate the Group's performance.

Quarter ended 31 March 2008 2009 (In millions of Euro) Redetermined Consolidated revenues 53.8 74.7 EBIT before restructuring costs (2.2) 22.7 Net income from investments (12.5) (0.2) EBIT & net income from investments before restructuring costs (14.7) 22.5 Restructuring costs - (2.3) EBIT including net income from investments(1) (14.7) (20.2) Financial income from investments 8.5 7.5 EBIT including net income and financial income from investments (6.2) 27.7 Financial expenses (8.3) (10.0) Profit (loss) before income taxes (14.5) 17.7 Income taxes (2.1) (5.4) Net income (loss) before discontinued operations (16.6) 12.3 Discontinued operations -0.7 Net income (loss) (16.6) 13.0 Minority interests 0.8 (1.4) Consolidated net income (loss) (15.8) 11.6 (1) EBIT including net income from investments as of 31 March 2009 indicates the trend of the Group’s results and is determined by EBIT (Euro -2.2 million) plus the net profit share of companies valued at equity (Euro -13 million), dividends and income from real estate funds (for a total of Euro 0.3 million) recorded under Financial income and a Euro 0.2 million increase in the value of other financial assets recorded at their fair value in the income statement in the line Change in fair value of financial assets in the summary consolidated income statement annexed to the notes to the consolidated financial statements as of and for the period ended 31 March 2009. The following table shows the reconcilement of the above mentioned main amounts with the book values.

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(In millions of Euro) 31 March 2009 31 March 2008 EBIT before restructuring costs and devaluations/revaluations of real estate EBIT (2.2) 20.4 Restructuring costs - 2.3 Devaluations of controlled company real estate - - Total (2.2) 22.7 Net income from investments before devaluations/revaluations of real estate Net profit share from investments in associates and joint ventures (13.0) (1.7) Income from real estate funds(1) 0.2 1.9 Other financial income - 1.3 Income (losses) from real estate funds carried at fair value in the income statement(2) 0.3 (1.7) Net income from investments (12.5) (0.2) Total (12.5) (0.2) EBIT including net income from investments before restructuring costs and devaluations/revaluations of real estate EBIT (2.2) 20.4 Net profit share from investments in associates and joint ventures (13.0) (1.7) Income from real estate funds(1) 0.3 1.9 Other financial income - 1.3 Income (losses) from real estate funds carried at fair value in the income statement(2) 0.2 (1.7) EBIT including net income from investments (14.7) 20.2 Restructuring costs - 2.3 Total (14.7) 22.5 Financial income from investments Interest income from financial receivables with associates(1) 0.3 0.3 Interest income from financial receivables with joint ventures(1) 8.0 7.0 Income from securities(1) 0.2 0.2 Total 8.5 7.5 Financial expenses Financial expenses (11.6) (12.0) Financial income 9.3 12.4 Net income from financial assets carried at fair value 3.0 (1.4) Financial income from investments (8.5) (7.5) Income from real estate funds(1) (0.3) (1.9) Other financial income - (1.3) Income (losses) from real estate funds carried at fair value in the income statement(2) (0.2) 1.7 Total (8.3) (10.0) (1) Included in the accounting item Financial income. (2) Included in the accounting item Change in fair value of financial assets.

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The consolidated income statements as of and for the years ended 31 December 2008, 2007 and 2006 are indicated below; they have been redetermined to highlight the main income statement amounts used by company management to monitor and evaluate the Group's performance.

Year ended 31 December 2007 2008 2007 2006 (In millions of Euro) Redetermined Pro-rata aggregate revenues(1) 775.6 1,043.7 1,543.1 1,560.0 Consolidated revenues(2) 365.1 428.8 853.1 702.0 EBIT before restructuring costs and devaluations/revaluations of real estate (17.7) 33.4 50.7 104.6 Net income from investments before devaluations/revaluations of real estate (42.0) 71.6 118.4 101.9 EBIT including income from investments before restructuring costs and devaluations/revaluations of real estate (59.7) 105.1 169.0 206.5 Restructuring costs (44.2) - - - Devaluations/revaluations of real estate (135.8) 67.5 67.5 7.9 EBIT including net income from investments(3) (239.7) 172.6 236.5 214.4 Financial income from investments 23.0 24.1 24.2 22.6 EBIT including net income and financial income from investments (216.7) 196.7 260.7 237.0 Financial expenses (49.0) (61.6) (65.8) (25.7) Result before income taxes (265.7) 135.0 195.0 211.3 Income tax (1.9) (23.6) (34.1) (49.3) Net income (loss) before discontinued operations (267.6) 111.4 160.9 162.0 Discontinued operations 74.6 49.5 - - Net income (loss) (193.0) 160.9 160.9 162.0 Minority interests (2.0) (9.8) (9.8) (2.5) Net income for the year pertaining to the Group (195.0) 151.1 151.1 159.5 (1) The Pro-rata aggregate revenues indicate the Group’s total turnover and are determined by adding the pro-rata revenues of the associates, joint ventures and real estate funds in which the Group holds an interest to the consolidated revenues. The value as of December 2007 is indicated net of the sales (at book value) through the transfer of units, of real estate properties owned by company DGAG to the joint ventures with RREEF and MSREF for Euro 1,295.6 million. (2) The value as of December 2007 is indicated net of the sales (at cost), through the transfer of units, of real estate properties owned by company DGAG to the joint ventures with RREEF and MSREF for Euro 1,295.6 million. (3) EBIT including net income from investments as of 31 December 2008 indicates the trend of the Group’s results and is composed of EBIT (Euro -71.2 million) plus the net profit share of companies valued at equity (Euro - 177 million), dividends from affiliates and dividends and income from real estate funds (for a total of Euro 2.9 million), in addition to the capital gains on the disposal of shares of real estate funds (Euro 5.6 million) classified in the Financial income and Change in fair value of financial assets items in the consolidated income statement table enclosed to the notes to the consolidated financial statements as of 31 December 2008.

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The following table shows the reconcilement of the above mentioned main amounts with the book values.

2007 (In millions of Euro) 2008 2007 2006 Redetermined EBIT before restructuring costs and devaluations/revaluations of real estate EBIT (71.2) 33.1 50.4 103.7 Restructuring costs(1) 44.2 - - - Devaluations of controlled company real estate 9.3 0.3 0.3 0.9 Total (17.7) 33.4 50.7 104.6 Net income from investments before devaluations/revaluations of 2007 2008 2007 2006 real estate Redetermined Net profit share from investments in associates and joint ventures (177.0) 115.0 117.0 101.6 Income from real estate funds(2) 4.0 6.2 6.3 5.1 Profit from investment sales - 11.2 55.9 - Capital gains from disposal of financial assets(2) 5.6 0.3 0.3 - Income (losses) from real estate funds recognized at fair value in the (1.6) 4.5 4.5 - income statement(3) Dividends 0.5 2.2 2.2 4.0 Net income from investments (168.5) 139.4 186.2 110.7 Devaluations/revaluations of real estate of affiliates and joint ventures(4) 126.5 (67.8) (67.8) (8.8) Total (42.0) 71.6 118.4 101.9 EBIT including net income from investments before restructuring 2007 2008 2007 2006 costs and devaluations/revaluations of real estate Redetermined EBIT (71.2) 33.1 50.4 103.7 Net profit share from investments in associates and joint ventures (177.0) 115.0 117.0 101.6 Income from real estate funds(2) 4.0 6.2 6.3 5.1 Profit from investment sales - 11.2 55.9 - Capital gains from disposal of financial assets(2) 5.6 0.3 0.3 - Income (losses) from real estate funds recognized at fair value in the income statement(3) (1.6) 4.5 4.5 - Dividends 0.5 2.2 2.2 4.0 EBIT including net income from investments (239.7) 172.6 236.5 214.4 Restructuring costs(1) 44.2 - - - Devaluations/revaluations of real estate 135.8 (67.5) (67.5) (7.9) Total (59.7) 105.1 169.0 206.5 2007 Financial income from investments 2008 2007 2006 Redetermined Interest income from financial receivables with associates(2) 1.3 1.6 1.6 2.7 Interest income from financial receivables with joint ventures(2) 31.6 21.4 21.5 14.2 Income from securities(2) 1.5 1.1 1.1 3.9 Net result of valuation of junior notes (5) (11.4) - - 1.8 Total 23.0 24.1 24.2 22.6

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2007 Financial expenses 2008 2007 2006 Redetermined Financial expenses (71.1) (87.0) (91.4) (27.0) Financial income 49.4 46.3 46.7 29.8 Net income from financial assets carried at fair value 3.7 14.2 14.2 (0.8) Financial income from investments (23.0) (24.1) (24.2) (22.6) Income from real estate funds(2) (4.0) (6.2) (6.3) (5.1) Capital gains from disposal of financial assets(2) (5.6) (0.3) (0.3) - Income (losses) from real estate funds recognized at fair value in the 1.6 (4.5) (4.5) - income statement(3) Total (49.0) (61.6) (65.8) (25.7) (1) Included under Personnel costs (Euro 41.2 million), Other costs (Euro 3 million). (2) Included under Financial income. (3) Included under Change in fair value of financial assets. (4) Included under Share of net profit from investments in associates and joint ventures. (5) Included under Financial expenses.

9.4 Information regarding policies or factors of a governmental, economic, fiscal, monetary or political nature that have, or could have, significant direct or indirect repercussions on the Issuer's business In addition to the information provided on risk factors in Section One, Chapter IV to which reference should be made for further information, the Issuer is unaware of any information on external factors that have had or could have significant direct or indirect repercussions on the Group's business.

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10. FINANCIAL RESOURCES OF THE ISSUER, INVESTMENT NEEDS AND FINANCING STRUCTURE Introduction This Chapter provides analyses of the Pirelli RE Group's financial trends for the years ended 31 December 2008, 2007 and 2006, and for the three-month period ended 31 March 2009. The information in this Chapter of the Prospectus is derived from: • The Pirelli RE Group unaudited interim financial statements as of and for the three-month period ended 31 March 2009; • The Company’s consolidated financial statements as of and for the years ended 31 December 2008 (audited by the Independent Auditors), and 2007 and 2006 (audited by PricewaterhouseCoopers S.p.A) prepared in accordance with IFRS. Such information and documents, if not included in this Prospectus, are incorporated by reference pursuant to Article 11(2) of Directive 2003/71/EC and Article 28 of Regulation 809/2004/EC. These documents are available to the public at the registered office of the Issuer and on the Issuer’s website www.pirellire.com under the section Investor Relations. The financial statements for all the described periods are derived from the consolidated financial statements available to the public and are also presented in Section One, Chapter XX. The following financial data illustrate several measures used by Company’s management to monitor and evaluate its and the Group’s operations and financial performance. Such measures are not identified as accounting measures under IFRS, and therefore should not be considered an alternative measure to evaluate the Group’s economic trends and the related economic and financial position. The Issuer believes that the following financial information is an important parameter for measuring the Group’s performance as it enables analyzing the Group’s economic, patrimonial and financial trends. Since the determination of these measures is not regulated by relevant accounting principles, the calculation methods used by the Company may not be homogenous with those implemented by similar companies and therefore these measures may not be comparable. For further information, see Section One, Chapter IX, Paragraph 9.3. The financial information set forth in this Chapter in relation to consolidated net financial indebtedness is analysed in detail with regard to the most recent statements as of 31 December 2008 and 31 December 2007; therefore, a breakdown of net financial debt as of 31 December 2006 is not presented and analysed in depth. The following financial information shall be read together with Chapters III, IX and XX in Section One. With reference to each period, the numeric information given in this Chapter and the relative comments made are intended to provide a view of the Group's equity, economic and financial situation, of the changes in them from one period to the next, and of the significant events that occurred from time to time affecting the result for the year. Treasury management is centralized and takes place on two levels, Pirelli RE and Pirelli & C. Servizi Finanziari S.p.A. (Pisefi), wholly controlled by Pirelli & C.. The Italian companies in the Pirelli RE Group have entered into a treasury management agreement with Pisefi, through which a mandate is granted for the collection and payment of commercial accounts. Under specific cash pooling contracts, the balance of each current bank account is also transferred daily to Pisefi (zero balance cash-pooling). The net balance of the Pirelli RE Group towards Pisefi is constantly monitored in advance, and a debit balance may not exceed a certain threshold. If the cash requirements exceeds the threshold, Pirelli RE draws on its own bank credit facilities or the facility agreed with Pirelli & C.

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With regard to foreign controlled companies, a similar system of zero balance cash-pooling exists between Pirelli RE Deutschland and its subsidiaries. The net cash surpluses/deficits generated in this way are monitored and, if necessary, transferred or financed by the Italian treasury unit of Pirelli RE. Treasury management in Poland is autonomous and not centralized.

10.1 Analysis of the Pirelli RE Group's financial resources as of 31 March 2009 The following is a breakdown of the Group’s net financial position as of 31 March 2009 compared with 31 December 2008.

(In millions of Euro) 31 March 2009 31 December 2008 Current financial assets Financial receivables 19.2 17.1 Cash and cash equivalents 30.2 35.7 Total Current financial assets (A) 49.4 52.8 Current financial liabilities Bank borrowings (337.7) (187.4) Payables to other financial institutions (498.4) (498.0) Total Current financial liabilities (B) (836.1) (685.4) Non-current financial liabilities Bank borrowings (109.9) (227.4) Payables to other financial institutions (1.8) (1.8) Total Non-current financial liabilities (C) (111.7) (229.2) Net Financial Position excluding shareholders’ loans (D) = (A+B+C)(1) (898.4) (861.8) (1) Pursuant to Consob Communication of 28 July 2006 and in compliance with CESR Guidelines of 10 February 2005: Guidelines For the Consistent Implementation of the European Commission Regulations on Prospectus. Non-current financial assets Financial receivables 589.1 572.3 Total Non-current financial assets (E) 589.1 572.3 Net Financial Position (DEBT) (F) = (D+E) (309.3) (289.5) Financial receivables As of 31 March 2009, non-current Financial receivables amount to Euro 589.1 million showing a net increase of Euro 16.8 million compared with 31 December 2008, while current Financial receivables amount to Euro 19.2 million compared with a value of Euro 17.1 million as of 31 December 2008. These are broken down as follows:

31 March 2009 31 December 2008 (In millions of Euro) Total non-current current Total non-current current Receivables from associates 19.4 19.4 - 20.4 20.4 - Receivables from joint ventures 574.6 555.6 19.0 560.8 543.8 16.9 Other receivables 14.3 14.1 0.2 8.2 8.0 0.2 Total 608.3 589.1 19.2 589.4 572.3 17.1 Non-current receivables are classified as such on the basis of time to collection, in relation to the plans for the disposal of real estate assets held directly or indirectly by the companies, which are realized over a time period of between two and six years. All loans are granted at market

166 Section I Registration Document conditions, with the exception of non-interest-bearing shareholders’ loans. The increase in receivables from joint ventures is largely attributable to new loans granted to the companies Espelha-Serviços de Consultadoria L.d.a., Aida RE B.V., Nabucco RE B.V., and Rinascente/Upim S.r.l.. As of 31 March 2009, the discounting of non-interest-bearing shareholders’ loans, net of interest accrued, led to a reduction in the receivable of Euro 1.6 million. Cash and cash equivalents Cash and cash equivalents include bank and postal deposits and cash and valuables on hand. These are mainly invested in short-term deposits with leading banks at interest rates in line with the predominant market conditions. These can be broken down as follows.

(In millions of Euro) 31 March 2009 31 December 2008 Bank and postal deposits 29.7 35.6 Cheques 0.4 - Cash on hand 0.1 0.1 Total 30.2 35.7 of which tied 0.1 0.1 The item refers to temporary deposits of available cash with the exception of Euro 0.1 million that Pirelli RE has deposited at Mediobanca to guarantee an endorsement loan for the exercise of the right provided for by Article 111 of the Italian Finance Act (squeeze out) in relation to the Unim tender offer, expiring in June 2010. Bank borrowings and payables to other financial institutions Bank borrowings and payables to other financial institutions are broken down as follows.

31 March 2009 31 December 2008 non- non- (In millions of Euro) Total current current Total current current Bank borrowings 447.6 109.9 337.7 414.8 227.4 187.4 Payables to other financial institutions 0.7 0.7 - 0.7 0.7 - Other financial payables 1.1 1.1 - 1.1 1.1 - Financial payables to Pirelli & C. 491.6 - 491.6 491.3 - 491.3 Financial payables to joint ventures 5.1 - 5.1 5.2 - 5.2 Financial payables to other Pirelli & C. Group companies 1.7 - 1.7 1.5 - 1.5 Total 947.8 111.7 836.1 914.6 229.2 685.4 For current and non-current payables, the book value is considered approximate to the fair value. A breakdown of payables by interest rate and by initial currency of the debt as of 31 March 2009 is presented below.

(In millions of Euro) Total Fixed rate Floating rate Current payables 836.1 120.0 14% 716.1 86% Non-current payables 111.7 1.8 2% 109.9 98% Total 947.8 121.8 13% 826.0 87% A breakdown of payables by interest rate and by initial currency of the debt as of 31 December

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2008 is presented below.

(In millions of Euro) Total Fixed rate Floating rate Current payables 685.4 120.0 18% 565.4 82% Non-current payables 229.2 1.8 1% 227.4 99% Total 914.6 121.8 13% 792.8 87% The value of fixed-rate payables indicated above includes those contractually agreed at a fixed rate and those contractually agreed at a floating rate which have been hedged. The percentage of exposure to interest rate volatility falls to 56% considering the natural hedging provided by floating rate financial receivables (Euro 307.0 million as of 31 March 2009). Bank borrowings As of 31 March 2009, indebtedness to the banking system amounted to a total of Euro 447.6 million, an increase of Euro 32.8 million with respect to 31 December 2008. This item can be broken down as follows.

31 March 2009 31 December 2008 (In millions of Euro) Total non-current current Total non-current current Non-recourse loans 10.6 7.9 2.7 10.5 7.9 2.6 Fixed-term credit facilities 371.5 102.0 269.5 369.5 219.5 150.0 Uncommitted credit facilities 63.0 - 63.0 33.0 - 33.0 Current account overdrafts 0.3 - 0.3 - - - Interest on credit facilities 2.2 - 2.2 1.8 - 1.8 Total 447.6 109.9 337.7 414.8 227.4 187.4 The item Fixed-term credit facilities refers to the use of revolving credit facilities granted by seven leading Italian and foreign banks for a total of Euro 380 million, which have an average residual duration, with respect to 31 March 2009, of approximately 11 months. Uncommitted credit facilities are granted by four leading Italian banks for a total of Euro 63 million (three banks for a total facility of 43 million euro as of 31 December 2008). Other financial payables These include security deposits held by consolidated companies. Financial payables to Pirelli & C. These amount to Euro 491.6 million and relate to the use of a revolving credit facility agreed during the course of 2007 and renewed for a further 18 months in 2008, between Pirelli RE and the parent company Pirelli & C.. This uncommitted credit facility allows for a maximum drawdown of Euro 750 million.

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Financial payables to other Pirelli & C. Group companies The item, equal to Euro 1.7 million as of 31 March 2009, refers to the negative balance of the intra-group current account held with Pirelli Servizi Finanziari S.p.A., the Group’s financial services provider. Other information As of 31 December 2009, the item Derivative financial instruments classified under current liabilities amounted to Euro 1.0 million, compared with a value of Euro 0.3 million recorded as of 31 December 2008. The item includes the valuation of the "plain vanilla" interest rate collar derivative purchased in 2006 to hedge against an increase in interest rates on a notional value of Euro 120 million. For accounting purposes, the hedge accounting set forth by IAS 39 was implemented. Such hedge accounting is applied only to the intrinsic value, while the delta time value is indicated in the income statement. Over the course of the first quarter of 2009, the amount recorded in net equity was a negative Euro 0.8 million (a negative Euro 2 million as of 31 December 2008), while the amount recorded in the income statement was a positive Euro 0.1 million. The table below shows details of the derivative financial instruments as of 31 March 2009.

Type of instrument Interest rate collar Interest rate collar Interest rate collar (in millions of Euro) Counterparty SoGen Barclays Morgan Stanley Notional value 40 40 40 Premium paid 0,4 0,3 0,4 Start date 30 January 2006 27 January 2006 31 January 2006 End date 3 August 2010 3 August 2010 3 August 2010 Interest rate cap 3.75% 3.75% 3.75% Interest rate floor 2.20% 2.20% 2.20% Fair value as of 31 March 2009 (0.3) (0.3) (0.3)

10.2 Analysis of the Pirelli RE Group's financial resources as of 31 December 2008, 2007 and 2006 The following is a breakdown of the Group’s net financial position as of 31 December 2008, 2007 and 2006.

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31 December 31 December 31 December (In millions of Euro) 2008 2007 2006 Current financial assets Financial receivables 17.1 19.6 1.7 Securities held for trading -0.5 - Cash and cash equivalents 35.7 115.7 59.9 Total current financial assets – (A) 52.8 135.8 61.6 Current financial liabilities Bank borrowings(2) (187.4) (81.2) (452.6) Payables to other financial institutions (498.0) (630.7) (12.3) Total Current financial liabilities – (B) (685.4) (711.9) (464.9) Non-current financial liabilities Bank borrowings(2) (227.4) (235.1) (10.9) Payables to other financial institutions (1.8) (4.9) (16.3) Total Non-current financial liabilities – (C) (229.2) (240.0) (27.2) Net financial position excluding shareholders’ loans (D) = (A+B+C)(1) (861.8) (816.1) (430.5) (1) Pursuant to Consob Communication of 28 July 2006 and in compliance with CESR Guidelines of 10 February 2005: Guidelines For the Consistent Implementation of the European Commission Regulations on Prospectus. Non-current financial assets Financial receivables 572.3 526.4 334.1 Total non-current financial assets – (E) 572.3 526.4 334.1 Net financial position (DEBT) (F) = (D+E) (289.5) (289.7) (96.4) (2) The data for 2007 shown in the table reflect a reclassification, of 117.1 million euro, between the current and the non-current portions of bank borrowings: this reclassification was included in the comparative data of the financial statements as of 31 December 2008 for comparison’s uniformity reasons. As described in the introduction, shown below is the breakdown as of 31 December 2008 compared with that as of 31 December 2007. Financial receivables As of 31 December 2008, non-current Financial receivables amount to Euro 572.3 million showing a net increase of Euro 45.9 million compared with 31 December 2007, while current Financial receivables amount to Euro 17.1 million compared with a value of Euro 19.6 million as of 31 December 2007. These are broken down as follows.

31 December 2008 31 December 2007 (In millions of Euro) Total non-current current Total non-current current Receivables from associates 20.4 20.4 - 27.7 27.7 - Receivables from joint ventures 560.8 543.8 16.9 508.0 492.1 15.9 Receivables from other Pirelli & C. Group companies ---0.2- 0.2 Other receivables 8.2 8.1 0.2 10.1 6.6 3.5 Total 589.4 572.3 17.1 546.0 526.4 19.6 Non-current receivables are classified as such on the basis of time to collection, in relation to the plans for the disposal of real estate assets held directly or indirectly by the companies, which are

170 Section I Registration Document realized over a time period of between two and six years. All receivables are disbursed at market conditions, with the exception of non-interest-bearing shareholders’ loans. The increase in Receivables from joint ventures is largely attributable to new loans provided to the companies Omicron RE B.V. and Finprema S.p.A., and also to the Polish firm Polish Investments Real Estate Holding II B.V. This item includes the receivable of Euro 14.7 million owed to Pirelli RE Netherlands B.V. by the joint venture Nabucco RE B.V. relating to the renegotiation and subsequent purchase by third parties of the vendor notes originally subscribed by Nabucco RE B.V. for the acquisition of the companies of the German property group BauBeCon. The reductions include Euro 28.2 million for the change of the area of consolidation due to the growth of the INTEGRA FM B.V. Group (now Pirelli RE Integrated Facility Management B.V.). As of 31 December 2008, the discounting of non-interest-bearing shareholders’ loans, net of interest accrued, led to a reduction in the receivable of Euro 14.3 million. Cash and cash equivalents Cash and cash equivalents include bank and postal deposits, money and cash securities. These are used essentially on the market for short-term maturity deposits with leading banking counterparties at interest rates in line with the predominant market terms. These can be broken down as follows.

(In millions of Euro) 31 December 2008 31 December 2007 Bank and postal deposits 35.6 114.7 Cheques - 0.7 Cash on hand 0.1 0.3 Total 35.7 115.7 of which tied 0.1 19.7 The item includes temporary stocks of cash and cash equivalents with the exception of Euro 0.1 million in time deposits held at Mediobanca by Pirelli RE in guarantee of an endorsement loan for the exercise of the right provided for by Article 111 of the Italian Finance Act (squeeze out) in relation to the Unim tender offer. For the statement of changes in financial position, the Cash and cash equivalents balance is indicated net of the value of bank overdrafts of Euro 3.6 million as of 31 December 2007. As of 31 December 2008, the above mentioned current accounts showed a zero balance. Bank borrowings and payables to other financial institutions We note that the breakdown of payables as of 31 December 2007 reflects a reclassification, of 117.1 million euro, between current and non-current portions of bank borrowings: this reclassification was included in the comparative data of the financial statements as of 31 December 2008 comparison’s uniformity reasons.

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Bank borrowings and payables to other financial institutions are broken down as follows.

31 December 2008 31 December 2007 non- non- (In millions of Euro) Total current current Total current current Bank borrowings 414.8 227.4 187.4 316.3 235.1 81.2 Payables to other financial institutions 0.7 0.7 - 2.9 2.9 - Payables for financial leasing - - - 1.1 1.1 - Other financial payables 1.1 1.1 - 0.9 0.9 - Financial payables to Pirelli & C. 491.3 - 491.3 627.8 - 627.8 Financial payables to joint ventures 5.2 - 5.2 2.9 - 2.9 Financial payables to other Pirelli & C. Group companies 1.5 - 1.5 - - - Total 914.6 229.2 685.4 951.9 240.0 711.9 For current and non-current payables, the book value is considered approximate to the fair value. A breakdown of payables, by interest rate and by initial currency of the debt as of 31 December 2008, is presented below.

(In millions of Euro) Total Fixed rate Floating rate Current payables 685.4 120.0 18% 565.4 82% Non-current payables 229.2 1.8 1% 227.4 99% Total 914.6 121.8 13% 792.8 87% A breakdown of payables by interest rate and by initial currency of the debt as of 31 December 2007 is presented below.

(In millions of Euro) Total Fixed rate Floating rate Current payables 709.0 120.0 17% 589.0 83% Non-current payables 242.9 3.9 2% 239.0 98% Total 951.9 123.9 13% 828.0 87% The value of fixed-rate payables indicated above includes those determined by contract as fixed rate payables and those determined by contract as floating rate payables to offset which hedging derivatives have been put in place. The percentage of exposure to interest rate volatility declined to 53% considering the natural hedging provided by floating rate financial receivables (Euro 308.6 million as of 31 December 2008). Bank borrowings As of 31 December, 2008, indebtedness to the banking system amounted to a total of Euro 414.8 million, an increase of Euro 98.5 million with respect to 31 December 2007.

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This item can be broken down as follows.

31 December 2008 31 December 2007 (In millions of Euro) Total non-current current Total non-current current Non-recourse loans 10.5 7.9 2.6 129.1 118.0 11.1 Fixed-term credit facilities 369.5 219.5 150 182.0 117.1 64.9 Uncommitted credit facilities 33.0 - 33.0 - - - Current account overdrafts ---3.6 - 3.6 Interest on credit facilities 1.8 - 1.8 1.6 - 1.6 Total 414.8 227.4 187.4 316.3 235.1 81.2 The decline in Non-recourse loans is mainly attributable to deconsolidation of the INTEGRA FM B.V. Group (now Pirelli RE Integrated Facility Management B.V.). The item Fixed-term credit facilities refers to the use of revolving credit facilities granted by seven leading Italian and foreign banks for a total of Euro 380 million, which have an average residual duration, with respect to 31 December 2008, of approximately 13 months. Payables to other financial institutions The reduction in this item is attributable for Euro 1.3 million to deconsolidation of the INTEGRA FM B.V. Group (now Pirelli RE Integrated Facility Management B.V.) and for Euro 0.5 million to the repayment of third-party loans by certain group companies. Other financial payables These include guarantee deposits paid to consolidated companies. Financial payables to Pirelli & C. Financial payables to Pirelli & C. amount to Euro 491.3 million, compared with Euro 627.8 million as of 31 December 2007, and relate to the use of a revolving credit facility agreed during the course of 2007 and renewed between Pirelli RE and the parent company Pirelli & C. for an additional 18 months. This credit facility envisages a maximum use of up to Euro 750 million. Financial payables to other Pirelli & C. Group companies The item, equal to Euro 1.5 million as of 31 December 2008, refers to the debit balance of the intra-group current account held with Pirelli Servizi Finanziari S.p.A., the finance company of the Pirelli Group. Other information As of 31 December 2008, the item Derivative financial instruments included under current liabilities amounted to Euro 0.3 million, compared with a value of Euro 2.2 million recorded as of 31 December 2007 under current activity. The item includes the valuation of the "plain vanilla" interest rate collar derivative purchased in 2006 as a countermeasure against an increase in interest rates on a notional value of Euro 120 million. For accounting purposes, the hedge accounting pursuant to IAS 39 was implemented. This hedge accounting is applied only to the intrinsic value, while the delta time value is indicated in the income statement. Over the course of 2008, the loss recorded in net equity was Euro 2 million (gain of Euro 0.9 million as of 31 December 2007), while the loss recorded in the income statement was Euro 0.4 million.

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The following table shows details of the derivative financial instruments as of 31 December 2008.

Type of instrument Interest rate Interest rate Interest rate (in millions of Euro) collar collar collar Counterparty SoGen Barclays Morgan Stanley Notional amount for the period from 31 Dec. 2008 to 31 March 2009 40 40 40 Premium paid 0.4 0.3 0.4 Start date 30 January 2006 27 January 2006 31 January 2006 End date 3 August 2010 3 August 2010 3 August 2010 Interest rate cap 3.75% 3.75% 3.75% Interest rate floor 2.20% 2.20% 2.20% Fair value as of 31 December 2008 (0.1) (0.1) (0.1)

10.2.1 Pro-rata Financial Position of funds and vehicles The pro-rata bank debt of the real estate funds and vehicle companies in which Pirelli RE or its controlled companies have invested, is characterised by an extremely limited number of recourse guarantees (Euro 39 million) of Pirelli RE which would therefore not be liable for any defaults with the exception of those indicated above. Consequently, negative events occurring in relation to these investments would have an adverse effect on the Issuer’s economic, business and financial situation primarily relating to: (i) its shareholding in the entity involved; (ii) the likelihood of recovering the credits for shareholders’ loans (including interest) and for services provided; (iii) the return on investments and (iv) potential decreases in revenues deriving from specialized real estate services. The Net Financial Position of funds and vehicles in which Pirelli RE holds an interest as of 31 December 2008 amounted to Euro 13 billion (Euro 11.3 billion of bank debt and Euro 1.7 billion of shareholders’ loans) of which Euro 1.7 billion relates to non performing loans. The above mentioned Net Financial Position, considering only the real estate business, totalled Euro 11.3 billion (Euro 10.1 billion of bank debt and Euro 1.2 billion of shareholders’ loans). Pirelli RE’s total share of the net financial position of the funds and vehicles amounted to Euro 3.6 billion (of which Euro 0.4 billion for shareholders’ loans related to real estate assets and Euro 0.2 billion of shareholders’ loans related to non performing loans). Bank debt, equal to Euro 3 billion, is composed of Euro 2.6 billion of commitments in the real estate sector and Euro 0.4 billion in the non performing loans sector. The main features of the pro-rata bank borrowings of participated vehicles and funds (including non performing loans) of Euro 3 billion, are the very limited presence of recourse guarantees (Euro 39 million), the high degree of hedging of interest rate risk and an average maturity, with respect to 31 December 2008, of approximately 3.6 years. Of the total debt (bank and non-bank-related) of investee vehicles, 81% is protected against interest rate fluctuations either by fixed rate loans or by recourse to hedging-derivatives. The average bank leverage is 67% of the market value of the assets (loan to value), which allows for safety margins in regard to existing covenants. Loans expiring in 2009 amount to Euro 154 million pro-rata and, in the two-year period 2010- 2011, to Euro 954 million (excluding repayment instalments).

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31 December 2008

(In millions of Euro) 100% Pro-rata

Of NFP excl. Of which NFP excl. Maturity which Type of bank shareholders’ net bank shareholders’ in net bank finance loans debt loans years(1) debt

Commercial Core Italy 1,119.0 1,086.0 404.3 387.0 Mortgage Loan(2) 4.3 Commercial Yielding Italy 1,484.5 1,397.7 305.0 281.4 Mortgage Loan(2) 4.3 Commercial Core Germany 1,430.2 1,335.4 225.2 170.2 Mortgage Loan 2.9 Trading Commercial Germany 2,538.5 2,414.8 315.5 314.0 Mortgage Loan 2.5 Residential Yielding Germany 2,633.5 2,296.0 1,008.9 870.0 Mortgage Loan 4.5 Yielding Portfolio 9,205.7 8,529.9 2,258.9 2,022.6 Residential Small Office House Office ITA 1,019.0 825.4 332.5 263.9 Mortgage Loan(2) 2.6 Development ITA 932.9 714.4 329.6 243.5 Mortgage Loan 3.5 Development Germany 35.1 34.3 20.9 19.3 Mortgage Loan 0.8 Development Poland 127.4 66.5 51.0 26.6 Mortgage Loan 3.4 Other Portfolio 2,114.4 1,640.6 734.0 553.3 Grand Total 11,320.1 10,170.5 2,992.9 2,576.0 3.6 (1) Average maturity is calculated on the basis of the gross bank debt of each project. (2) Loans secured by mortgages account for over 90% of the total, while the remainder are loans for purchasing units in funds or long-term unsecured loans.

10.3 Analysis of cash flows as of 31 March 2009 and as of 31 March 2008 The following are the main cash flows as of and for the three-month periods ended 31 March 2009 and 31 March 2008.

Quarter ended 31 March 2008 2009 (In millions of Euro) Redetermined Net cash flow generated/(absorbed) by operating activities (A) (7.6) (0.2) Net cash flow generated/(absorbed) by investing activities (B) (8.9) (8.0) Net cash flow generated/(absorbed) by financing activities (C) 11.0 (3.9) TOTAL NET CASH FLOW (D=A+B+C) (5.5) (12.1) Cash and cash equivalents at the beginning of the period (E) 35.7 112.1 Cash and cash equivalents at the end of the period (F=D+E) 30.2 100.0 In relation to the cash flows of the Pirelli RE Group for the period ended 31 March 2009 compared to 31 March 2008 (redetermined), we note that the net cash flow absorbed by operations increased during 2009, mainly as a result of the reduced dividend flow from associates and joint ventures (Euro 0.5 million as of 31 March 2009 compared with Euro 18.6 million as of 31 March 2008). The cash flow absorbed by investment activities essentially derives from the contributions made to the interests in associates and joint ventures during the period. The cash

175 Section I Registration Document flow generated by financing activities essentially derives from the combined effect of the increase in financial receivables for new disbursements to associates and joint ventures and from the increase in financial debts of the parent company.

10.4 Analysis of cash flows as of 31 December 2008, 2007 and 2006 The following are the main cash flows as of and for the years ended 31 December 2008, 2007 and 2006.

(In millions of Euro) Year ended 31 December 2007 2008 2007 2006 Redetermined Net cash flow generated/(absorbed) by operating activities (A) 66.7 256.6 255.2 153.4 Net cash flow generated/(absorbed) by investing activities (B) 53.2 (669.0) (667.6) (224.5) Net cash flow generated/(absorbed) by financing activities (C) (196.3) 471.3 471.3 106.4 TOTAL NET CASH FLOW (D=A+B+C) (76.4) 58.9 58.9 35.3 Cash and cash equivalents at the beginning of the period (E) 112.1 53.2 53.2 17.9 Cash and cash equivalents at the end of the period (F=D+E) 35.7 112.1 112.1 53.2 of which: - cash and cash equivalents 35.7 115.7 115.7 59.9 - bank overdrafts - (3.6) (3.6) (6.7)

10.4.1 Analysis of cash flows as of and for the years ended 31 December 2008 and 31 December 2007 Redetermined With regard to the cash flows of the Pirelli RE Group for the year ended 31 December 2008 compared with the redetermined amounts as of 31 December 2007, we note that the net flow generated by operating activities fell in 2008 owing mainly to the reduced flow of dividends paid by associates and joint ventures (Euro 29.5 million in 2008 against Euro 162.9 million in 2007). The cash flow generated by investment activity benefited from the sale of the Integra FM B.V. Group. The cash flow absorbed by financial activity derives both from the payment of dividends totalling Euro 85.1 million, and from the combined effect of the increase in financial loans for new disbursements to associates and joint ventures and from the reduction in financial debts resulting from the consolidation of the Integra FM B.V. Group.

10.4.2 Analysis of cash flows as of and for the years ended 31 December 2007 and 2006 Cash flows deriving from the operating activities of the Pirelli RE Group for the year ended 31 December 2007 increased against the previous period by Euro 101.8 million, mainly as an effect of the increased flow of dividends paid by associates and joint ventures (Euro 162.9 million in 2007 compared with Euro 85.6 million in 2006) and from the inclusion of Ingest Facility S.p.A. within the area of consolidation. The cash flow absorbed by investment activity recorded a significant increase in 2007, against 2006, of Euro 443.1 million. This change derives substantially from the acquisition of the DGAG group and Ingest Facility S.p.A. and from numerous purchases of shares in associates, joint ventures and real estate funds. The increase in cash flows generated from financing activity, of Euro 364.9 million, is primarily due to the use of the revolving credit facility obtained over the course of 2007 by Pirelli & C. to finance part of the acquisitions described above, partially offset by the increase in loans provided to joint ventures holding real estate assets in Germany.

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10.5 Limitations on the use of financial resources

10.5.1 Loans granted to Pirelli RE The main terms and conditions of the financing agreements in favour of Pirelli RE or Group companies are described in Section One, Chapter XXII, Paragraph 22.2.1. With reference to financial covenants, three revolving credit facilities are described below. • The Royal Bank of Scotland PLC, for an amount of Euro 50 million, used in full and with a maturity of December 2009, for which, with reference to its consolidated financial statements, Pirelli RE is obliged, among other things, to maintain a specific amount of Net Tangible Assets (defined as the difference between total net equity and the value resulting from the sum of intangible fixed assets and any positive balance between deferred tax liabilities and assets); • West LB AG, for an amount of Euro 50 million, used in full and with a maturity of May 2011, for which Pirelli RE is obliged to maintain a certain amount of net equity at the consolidated level; • Unicredit Corporate Banking S.p.A., for an amount of Euro 100 million, used in full and with a maturity of January 2010, renewable, if necessary, for further 18 months, for which Pirelli RE is obliged to maintain a certain amount of net equity at the consolidated level. Net Tangible Assets, as of 31 December 2008, amounted to Euro 177.3 million (Euro 131.9 million as of 31 March 2009), while consolidated net equity amounted to Euro 361.7 million (Euro 317.1 million as of 31 March 2009). Therefore, as of the above dates, the indicators relating to the financial covenants linked to these parameters had not been achieved. In the Company’s opinion, this is not an event of default since the Capital Increase described in the Prospectus will ensure compliance with the above parameters.

10.5.2 Loans granted to associates and joint ventures The covenants of existing loans on the vehicles/funds in which Pirelli RE holds an interest are monitored on a quarterly basis, at the balance sheet dates and irrespective of the actual disclosure obligations required by the relevant financing agreement. The main financial covenants applicable to funds and vehicles are the following: • LTV (Loan To Value): ratio between: (i) bank debt and (ii) value of the real estate portfolio; • LTC (Loan To Cost): ratio between: (i) bank debt and (ii) book value of the real estate portfolio; • ISCR (Interest Service Cover Ratio): ratio between: (i) revenues from rent net of management costs, and (ii) financial expenses; • DSCR (Debt Service Cover Ratio): ratio between: (i) revenues from rent and sales net of management costs, and (ii) financial expenses and repayments of principal. As of 31 March 2009, the covenants had not been complied with in relation to the following loans: (i) loan drawn for Euro 59.7 million granted to the real estate fund Diomira, a fund that owns a real estate portfolio in Italy mainly for residential use and small offices (of which Pirelli RE holds a 32% stake) expiring in July 2010; (ii) loan drawn for Euro 123.3 million granted to Lupicaia S.r.l., a company that owns a real estate portfolio in Italy mainly for office use (in which Pirelli RE holds a 33% stake) expiring in April 2010;

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(iii) loan drawn for Euro 9.5 million granted to Orione Immobiliare Prima S.r.l., a company that owns a real estate portfolio in Italy mainly for residential and small office use (in which Pirelli RE holds a 40% stake) expiring in December 2010; (iv) loan drawn for Euro 40.3 million granted to Resident West GmbH, a company that owns a real estate portfolio in Germany mainly for residential use (in which Pirelli RE holds a 40% stake) expiring in June 2011; (v) loan drawn for Euro 179.7 million granted to La Rinascente / UPIM S.r.l. (a company in which Pirelli RE holds a 20% stake) expiring in December 2010; (vi) loan drawn for Euro 37.8 million granted to companies holding the units of real estate fund Raissa, the owner of a real estate portfolio in Italy mainly for tertiary/office use, in which Pirelli RE holds a 35% stake, expiring in December 2011; (vii) loan drawn for Euro 28.4 million granted to Nowe Ogrody, a company developing a residential project in Poland (in which Pirelli RE holds a 40% stake) expiring in June 2012; (viii) loan drawn for Euro 5.1 million granted to Nowe Ogrody 2, a company developing a residential project in Poland (in which Pirelli RE holds a 40% stake) expiring in September 2012; (ix) loan drawn for Euro 86.4 million granted to Hospitality & Leisure, a real estate fund that owns four tourist complexes operated by Valtur S.p.A. (in which Pirelli RE holds a 35% stake) expiring in June 2011. The situation was remedied on 24 April 2009; (x) loan drawn for Euro 56.2 million granted to Riva dei Ronchi S.r.l., a company that owns an area being developed in the Italian province of Massa Carrara (in which Pirelli RE holds a 35% stake) expiring in November 2015; (xi) loan drawn for Euro 5.0 million granted to Maro S.r.l., a company that owns a real estate trading portfolio mainly for residential use (in which Pirelli RE holds a 25% stake) expiring in March 2010; (xii) loan drawn for Euro 24.2 million granted to Roca S.r.l., a company that owns a real estate trading portfolio mainly for residential use (in which Pirelli RE holds a 25% stake) expiring in March 2010. For the Raissa fund (quotaholders), failure to respect the covenant has the sole consequence of making profit distribution impossible. Failure to comply with the covenants, when not remedied within the deadlines contractually agreed upon each time with the lender, generally allows the latter to request early repayment of the loan granted (with the exception of the loan granted to the companies holding units in the real estate fund Raissa, which only envisages the obligation to use all revenues to repay the debt). In the event of a breach of contract, the lending institutions may start foreclosure procedures on the real estate assets of the funds/companies financed, which are generally mortgaged. As of the Prospectus Date, negotiations are taking place with financing banks aimed at defining possible solutions to the above situations. According to Pirelli RE, which in any event has not issued any guarantees related to the loans above and which is therefore not bound by contractual obligations, the definition of such solutions could result, for Pirelli RE, in the issue of new equity of an amount estimated at approximately Euro 25 million. We note that, in light of the above, Pirelli RE will consider the possibility of injecting liquidity into vehicles and funds in which it holds interests, for restructuring operations and/or greater protection of real estate assets, for a total amount in the order of Euro 100 million.

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10.6 Financial risk management policy Financial risk management is an integral part of management of the business of the Pirelli RE Group. It is carried out centrally on the basis of guidelines set forth by the Central Finance and Advisory Department. According to these guidelines, the group uses derivative contracts exclusively in relation to underlying financial assets or liabilities or to future transactions. Financial risk management is centralised at the Central Treasury, whose role is evaluating risks and enacting the relevant hedges. The Central Treasury acts directly on the market on behalf of controlled companies and associates and, where it cannot operate directly due to external factors, it coordinates the activity of such companies. Types of financial risks Transaction exchange rate risk The Group is active internationally in Europe and has minimal exposure to transaction exchange rate risk arising from exposure in currencies other than the Euro, mainly the Polish Zloty. This risk is managed by the Group Treasury and relates exclusively to receivables for shareholders’ loans owed by joint ventures for real estate initiatives in Poland. Closed-term contracts are entered into in order to manage risks, but are not designated as hedging instruments in accordance with IAS 39. Translation exchange rate risk The Pirelli RE Group has few controlling interests in companies which prepare their financial statements in a currency other than the Euro, which is the currency mainly used by the Group. This exposes the Group to a limited translation exchange rate risk, generated by fluctuations in certain exchange rates against the consolidation currency (Euro) which may produce changes in the value of consolidated net equity. The main exposures to translation exchange rate risk are monitored carefully and so far the Group decided not to hedge itself against such exposure. Total consolidated net equity is essentially expressed in Euro; therefore a hypothetical appreciation/depreciation of such currencies against the Euro would not produce significant effects on the total consolidated net equity. Interest rate risk The policy of the Pirelli RE Group is aimed at maintaining an appropriate relationship between fixed and variable interest rates. Since the debt is almost all at a floating rate, the Group manages the risk of interest rate increases by means of offsets with floating rate financial loans and using derivative contracts. Although such derivatives are exclusively for hedging purposes, the designation of such derivatives as hedging instruments according to IAS 39 is decided case by case and is authorised by the Central Finance and Advisory Department. The table below shows the effects on net income and on total net equity deriving from an increase or decrease of 0.50% for one year in the level of interest rates to which the Pirelli RE Group is exposed – all other conditions being equal.

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0.50% -0.50% 31 December 31 December 31 December 31 December (In millions of Euro) 2008 2007 2008 2007 Impact on net income - companies consolidated line-by-line (2.5) (1.4) 1.3 1.4 - companies valued using net equity method (1.5) 7.1 3.0 0.7 Total impact on net income (4.0) 5.7 4.3 2.1 Impact on net equity - companies consolidated line-by-line (2.4) (0.5) 1.1 0.6 - companies valued using net equity method 7.0 16.0 (5.7) (8.5) Total impact on net equity 4.6 15.5 (4.6) (7.9) These changes include the effect on (i) financial income/expenses of borrowing and lending at a floating rate, (ii) income/expenses from interest rate derivatives, (iii) changes in fair value of interest rate derivatives; they are calculated at the level of net income both for controlled companies and for revenues from investments in associates and joint ventures. These effects relate not only to companies wholly consolidated but also to those accounted using the net equity method. Price risk The Pirelli RE Group is exposed to price risk as a consequence only of the volatility of participated real estate funds listed on the Milan stock exchange and on unlisted closed-end real estate funds classified in the consolidated financial statements as financial assets available for sale, whose change in fair value is recorded in net equity and as other financial assets carried at fair value in the income statement, for the valuation of which reference is made to recent transactions carried out on the market. Assuming all other conditions remain equal, a hypothetical 5% increase in the above parameters would have led to an increase in Group net equity of Euro 2.9 million (Euro 4.4 million as of 31 December 2007), of which Euro 1.5 million in net income. A 5% decrease in the above parameters would have led to a decrease in Group net equity by Euro 2.9 million (Euro 4.4 million as of 31 December 2007), of which Euro 1.5 million in net income. Tenant risk With reference to rental revenues largely received by companies consolidated at net equity mainly in relation to real estate properties classified as real estate investments, given the existence of binding multiple-year contracts, there is a limited risk of any significant increase in the non- occupation rate in the near future. Credit risk Credit risk refers to the Pirelli RE Group's exposure to potential losses deriving from the non fulfilment of obligations undertaken by both trade and financial counterparties. In order to limit this risk where trade counterparties are concerned, the Group has procedures for evaluating its customers' potential and financial solidity, for monitoring expected receipts and for recovering credit. Such procedure are aimed at establishing limits to lines of credits available for customers which, when exceeded, usually result in a suspension of further sales. With regard to financial counterparties used for managing resources temporary in excess or for

180 Section I Registration Document trading of derivatives, the Group only used high credit-rated operators. Receivables relating to shareholders’ loans are assessed together with the capital invested in the specific company, by analysing the cash flows generated by the related underlying real estate projects. The book value of junior notes and non performing loans is adjusted whenever there is a change in the estimate of expected discounted cash flows. In the event of impairment, book value is written down through a specific provision. Under certain circumstances, some customers are requested to provide guarantees; such guarantees mostly consist of bank guarantees issued by major institutions, personal guarantees or mortgages. Impairment losses on receivables are calculated on the basis of counterparty default risk, determined using available information on the counterparty's solvency and track record. The book value of receivables is reduced indirectly by setting up a provision. Individual significant positions, for which there is objective evidence of partial or total non- recoverability, are individually written down. The devaluation amount takes into account the estimated future recoverable amounts and the related collection date, recovery costs and the fair value of any guarantees. Positions which are not subject to individual devaluation are placed together in groups with similar characteristics in terms of credit risk, and are written down collectively on the basis of rising percentages according to the past due dates. The collective writedown procedure also applies to receivables that are not past due. Devaluation percentages are determined on the basis of past experience and statistics. The Group does not have significant concentrations of credit risk. Liquidity Risk Liquidity risk is the risk that the financial resources available will not be not sufficient to meet the Group's financial and trade obligations in accordance with the agreed terms and deadlines. The principal instruments used by the Group for managing liquidity risk are three-year and annual financial plans and treasury plans, which allow cash inflows and outflows to be fully and properly identified and measured. Any differences between the actual data and the plans are subject to constant analysis. A safe management of liquidity risk entails the maintenance of an adequate level of cash and/or easily liquidated short-term securities, the availability of funds obtainable by means of adequate committed lines of credit and/or the possibility of closing out market positions. Given the dynamic nature of the business in which it operates, the Pirelli RE Group prefers flexibility in raising funds by means of committed credit facilities. As of 31 December 2008, the existing committed credit facilities were fully drawn down. For the purpose of optimising financial resource management and hence limiting liquidity risk, the Group has implemented a centralised system for managing collection and payment flows which complies with local currency and tax regulations. Banking relationships are negotiated and managed centrally in order to ensure that all short and medium-term financial needs are satisfied at the lowest possible cost. The raising of medium/long-term funds on capital markets is also optimised through centralised management.

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Financial liabilities as of 31 December 2008 can be broken down by due date as follows.

from 1 to 2 from 2 to 5 more than 5 (In millions of Euro) up to 1 year years years years total Bank borrowings and payables to other financial institutions 685.4 178.1 51.1 - 914.6 Trade payables 139.0 - - - 139.0 Other payables 86.8 29.0 0.2 1.0 117.0 Total 911.2 207.1 51.3 1.0 1,170.6 Financial liabilities as of 31 December 2007 can be broken down by due date as follows.

from 1 to 2 from 2 to 5 more than 5 (In millions of Euro) up to 1 year years years years total Bank borrowings and payables to other financial institutions 711.9 15.3 119.6 105.1 951.9 Trade payables 343.3 - - - 343.3 Other payables 132.5 0.2 0.2 1.0 133.9 Total 1,187.7 15.5 119.8 106.1 1,429.1

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11. RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES

11.1 Research and development The Pirelli RE Group does not carry out specific research and development activities as they are not an essential part of its business.

11.2 Brands, patents, concessions and licences

11.2.1 Brands The following table shows the main brands owned by the Pirelli RE Group.

Brand Type(1) Use(2) Geographical area Registration class Identifying brand of the Centova Italy 03, 09, 14, 18, 25, 28, 35, BORGONOVO Graphical Entertainment 41, 43, 44 Centre (near Perugia) Identifying brand of projects inspired by the Italy, EU, Russia, ECOBUILDING Graphical Eco-Building Turkey 35, 36, 37 guidelines on eco-sustainable construction In the area of event planning, in particular concerts, FRANCHISING Graphical organised for or 41 ORCHESTRA directly by Italy affiliates of the franchising network Identifying brand of a development MANIFATTURE Graphical project located at 36, 37, 43 MILANO Italy Viale Fulvio Testi, Milan Used in the performance of financial brokerage FSC Graphical Italy 36 activities carried out by Pirelli & C. Real Estate Finance S.p.A. Brand used by the Polish companies of the PEKAO group for real DEVELOPMENT In letters and estate services, Real Estate Spółka z o.o., Warszawa, graphical building project Poland Polska development, planning and hotel services.

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Brand Type(1) Use(2) Geographical area Registration class Brand used by the Polish PEKAO companies of the DEVELOPMENT group for real In letters and Spółka z ograniczoną estate services, Real Estate graphical odpowiedzialnością, building project Poland Warszawa, Polska development, planning and hotel services. DGA In letters Brand not in use Germany Real Estate DGAG In letters Brand not in use Germany Real Estate DGAG Deutsche In letters Brand not in use Germany Real Estate Grundvermögen AG Neue Heimat In letters Brand not in use European Union Real Estate Niedersachsen Neue Heimat In letters Brand not in use Germany Real Estate Niedersachsen In letters and Wobau Brand not in use Germany Real Estate graphical (1) Type means graphical or in letters. (2) Use refers to the method with which the brand is used.

11.2.2 Patents The Issuer and its controlled companies do not own any material patent. The Pirelli RE Group does not use patents owned by third parties.

11.2.3 Concessions As of the Prospectus Date the Pirelli RE Group holds municipal concessions, recorded in the financial statements of Parcheggi Bicocca S.r.l. (in which the Issuer holds a 75% interest). The main purpose of the company Parcheggi Bicocca S.r.l. is the management of municipal concessions for spaces and infrastructures used as car parks in the area of Bicocca (Milan), while their operational management is outsourced. The residual value of the concessions as of 31 December 2008, totalling Euro 16,506,000, contractually refers to car parks P7 and P8, located respectively at Via dell’Innovazione and Via Padre Beccaro, Milan. These parking areas were consigned until 2003 and were licensed to the company Parcheggi Bicocca S.r.l. by Municipality of Milan for 30 years. Both parking areas are close to the Teatro degli Arcimboldi, which was opened in December 2002. The maximum rates applicable are established by the Municipality of Milan and all related revenues are collected solely by the company Parcheggi Bicocca S.r.l..

11.2.4 Licences The "Pirelli" brand On 19 February 2001, the Issuer entered into a licence agreement with Pirelli & C. pursuant to which the Company was granted a non-exclusive licence to use worldwide the "Pirelli" brand in the real estate sector, with the exclusion of facility management activities. This agreement, subject to partial amendments and additions in recent years, grants the Issuer the

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right to sublicense the "Pirelli" brand to its controlled companies and also the right to sublicense, with the consent of Pirelli & C., to third parties on behalf of the Issuer and of companies controlled thereby. In the event of sublicensing, the Issuer in any case undertakes to obligate sublicensed companies with provisions substantially similar to those set forth in the licence agreement entered into with Pirelli & C., notwithstanding the fact that the Issuer remains fully responsible to Pirelli & C. for any non-performance by sublicensed companies of the obligations pursuant to the relative sublicensing agreements which may cause prejudice to Pirelli & C. and/or to its "Pirelli" brand rights. The licence agreement requires the Issuer to pay Pirelli & C. an annual royalty fee proportionate to: (i) the consolidated turnover of the Company, net of the item "Changes in inventories", achieved through the provision of services in the real estate sector (with the exception of facility management), and the total production value (net of the item "Changes in inventories") of companies controlled by the Issuer having been granted a sublicense, provided that such production value is not already included in the Company's consolidated turnover; and (ii) the sum of net income from the Company's consolidated investments and net income from the investments of Issuer’s controlled companies which have been granted with a sublicense, provided such net income from investments is not already included in the Company's consolidated turnover. The licence agreement will expire on 31 December 2023 and is subject to automatic annual renewals, unless either party notifies the other party of its intention not to renew with 60 days prior notice. Pirelli & C. has the right to terminate the agreement in advance as a result of a material breach by the Company (including a non-authorized use of the brand or a delay of more than six months in the payment of the fee) or in the event that the Issuer ceases to be a controlled, either directly or indirectly, by Pirelli & C.

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12. TREND NFORMATION

12.1 Significant trends in the Issuer’s business from the close of the last period and to the Prospectus Date Pirelli RE intends to follow the strategic guidelines in the 2009 - 2011 Business Plan, designed to render portfolio asset management more efficient, to reduce costs and to adapt the internal organisation to the new framework of reference, in order to obtain: • a gradual reduction in indebtedness; • achievement of economic and financial equilibrium in real estate management through a more effective balancing between recurring income and structural costs; • a gradual transition from an approach based on a rapid portfolio turnover to one more focused on keeping high-quality and high-performance assets in the portfolio; • selective management of real estate development projects, on the basis of trends in demand. since the date of the publication of the most recent audited financial statements (31 December 2008) and up to the Prospectus Date, there has been no trend in the business of Pirelli RE or in its reference market, which could jeopardize the implementation of the targets set out in Section One, Chapter XIII, Paragraph 13.2 of the 2009 – 2011 Business Plan.

12.2 Information on any known trends, uncertanities, demands, commitments or events that are reasonably likely to have a material effect on the Issuer’s prospectuses for at least the current financial year. A gradual change in the characteristics of the real estate market as compared to the last expansive cycle, could be recorded in 2009. The use of financial leverage will be significantly more limited and greater rewards given to the generation of real estate revenue and to reliability in the management of initiatives. Furthermore, fast trading will continue to undergo significant resizing. As of the Prospectus Date, except for those indicated in the Prospectus (particularly in Section One, Chapter IV), the Issuer has no knowledge of any trends, uncertainties, demands, commitments or events that could have material adverse effect during the current financial year.

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13. PROFIT FORECASTS OR ESTIMATES

13.1 Main assumptions of profit forecasts or estimates

13.1.1 Introduction The serious international economic crisis currently under way has also involved the real estate sector. Price reductions, transaction delays and especially difficulties in obtaining credit have affected all companies in the industry. To respond to the altered market conditions, at the end of 2008 the Issuer announced a process of cost reduction and reorganisation focused on the two geographical macro-areas of Italy and Germany-Poland, which are less exposed to the volatility of the real estate market, aiming to stimulate business and to optimise high-quality portfolio assets. In summary, the objective of Pirelli RE to cope with the new situation in the real estate sector is: (i) to return to a management strategy based on giving priority to recurrent revenues by concentrating on activities closely related to its core business (in particular fund management, leveraging Pirelli RE SGR’s predominant position in the sector in Italy, and other specialist services both in the real estate sector and in that of management of nonperforming loans), (ii) to reduce the risks inherent in the business model adopted in the recent past (mainly through a reduction of debt and of net invested capital), and (iii) to reduce costs further through improvements in the internal and corporate organization.

13.1.2 Market scenario The European real estate market During 2008, the production of wealth significantly slowed down in all countries around the world, registering a downturn in the global economy. Forecasts for 2009, which undergo periodic downward reviews, remain firmly negative both at a global level and in Europe, where the ECB estimates a contraction in GDP of between 2.2% and 3.2%, while OECD expectations for 2009 focus on a sharp reduction of GDP in the Euro area of -4.1%. The economic crisis, stemming from a credit crisis, has heavily affected the real estate market. In 2008, global real estate investments fell by 59%27, from the record USD 1 trillion in 2007 to the current USD 435 billion. For 2009, forecasts suggest a further reduction in business volume of approximately 5%, with a continuing concentration on smaller transactions. However, in international terms, Europe is first for investments in real estate (41% of total volumes), taking into account that activity in the United States has dropped by more than 70%. As a result of the credit crunch, Europe, despite representing the relative majority of real estate investment flows, recorded a massive annual reduction in investments of 53%, going back to the Euro 117 billion recorded in 2004. The Italian real estate market28 The crisis of the financial markets produced a downturn in the Italian real estate sector after years of sustained growth. This has led to a fall in real estate values, after a long expansive cycle. During 2008, there has been a reduction in the main real estate market indicators: number of transactions successfully closed, average time to completion for rentals, sales and the associated

27 Cushman & Wakefield 2008. 28 Nomisma: Observatory on the Real Estate Market- November 2008 and March 2009. 187 Section I Registration Document financing operations, etc.. The initial forecasts for 2009 predict a gradual trend towards reduced real estate values with particular reference to the residential and executive segments, with annual rates of change falling well below zero, while the commercial segment should experience less of the downward trend in growth rates but still registering a negative change. For 2010, the industry is expected to come through the worst of the crisis, partly thanks to proposed government action on building and housing policies which could breathe new life into the sector. In 2010, the forecasts point to decidedly higher growth rates as compared to those of 2009, with a substantial stabilisation of the current average prices in the residential and executive segments and higher interest rates for the commercial segment. To offset the downturn of the general picture, there are however both structural and economic/financial aspects that characterise the Italian real estate sector and which, unlike in other European countries, could help revive the market: • a still stable demand for high-quality real estate assets located in the main Italian locations; • the low rate of debt of Italian families, compared with those of other countries, which makes the Italian credit system more solid, should contribute to sustaining the propensity to consume and, therefore, the sustainability of rents for commercial businesses; • the propensity to consider real estate investment during periods of crisis as a defensive and less risky investment compared with other forms of investment, as proven by the growing interest in the market by new investors with available capital such as Social Security Funds, Pension Funds and Foundations. In regard to individual sectors, the forecasts point to the following: • Residential For 2009, the number of transactions in the residential sector is estimated by the Land Registry to see an annual reduction of approximately 20%, while sales figures are likely to decrease by approximately 25% on an annual basis. For 2009, the forecasts show a reduction in house prices of approximately -8.5%, while by the end of 2010 prices the rate of decline is likely to be approximately -0.3%, implying a substantial stabilisation of the current prices, but a contraction in real terms, although less than at the end of 2009. • Offices The forecasts for 2009 signal a trend towards reduced office prices which, by the end of the year, should reveal a marked decrease in growth rates of approximately -6.9%, while for 2010 there should be an annual rate of change of approximately -0.3%. • Shops Forecasts for 2009 are for a decrease in the average rate of growth of shop prices of -3%, while for 2010 there is expected to be a turnaround for the commercial segment with average prices rising by 3%, meaning a positive change also in real terms. • Industrial Although no forecasts are available for 2009, leading businesses expect further decline in demand for industrial real estate property over the course of 2009, with a consequent growth in supply, and a significant reduction in transaction numbers.

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• Funds As of 31 December 2008 the total value of the assets owned by real estate funds in Italy amounted to 34.6 billion euro29, data that the Company believes could increase considerably over the next three years.

13.1.3 The real estate market in Germany After two years of significant economic growth, the German gross domestic product in the last qaurter of 2008 fell by -1.6%30. According to estimates made by leading German institutes for economic studies, in 2009, GDP will contract by more than 4%31. Although all segments of the German real estate market have been directly affected by the sharp downturn in the growth of the country's economy and the consequent financial and credit crisis, the slowdown in the real estate dynamic is not comparable to the deep crisis experienced by the real estate markets of other large European countries (Spain, France, Great Britain) and of the U.S.. Germany has the largest real estate assets of the five leading European countries, which in percentage terms represents 29.5% of the total, compared with 16.2% of Spain, 16.3% of France, 18% of Italy and 20.1% of Great Britain32. In 2008, Germany recorded real estate turnover of more than Euro 182 billion, representing annual increase of 0.5%, while the average turnover of the five leading European countries contracted over the year by -0.4%. For 2009, forecasts predict real estate growth of 2% compared with an average of the five leading European countries of -0.5%33. In regard to individual sectors, note the following: • Residential Despite the intensity with which it has been affected by the economic crisis, Germany remains the country with one of the most stable residential real estate markets in the world. In 2008, the German residential real estate property market recorded a positive trend in the number of sales and house prices remained substantially stable, with an actual rise of +0.7% equal to +2.4% in nominal terms34. A significant difference has been recorded in the trend of house prices according to product type: new house prices have in fact grown by 4.1% in nominal terms and by 2% in real terms, while used house prices have grown by 0.4% on a nominal basis and have fallen -1% on a real basis35. A particular feature of the residential real estate market in Germany, in comparison to the markets of other European countries, is the high percentage of families living in rented homes. Although this percentage decreased slightly from 58% in 1990 to the current 54%, this still represents a world record.

29 Assofondi 2008. 30 Eurostat 2009. 31 Istituti di ricerca DIW, RWI e IMK. 32 Scenari Immobiliari - Outlook 2009. 33 Ibidem. 34 Hypoport A.G 2008. 35 Hypoport A.G 2008.

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In 2008, rents have grown on average by 3%36. • Offices / Tertiary In Germany, the quality of executive office space has seen a net improvement in recent years: cities located in the east of the country are still largely underdeveloped, although they are gradually recovering thanks to the recent implementation of numerous high standard projects. German executive stock is made up of 20% Class A offices (i.e. with the best technical quality standards), 33.4% of Class B offices and, of the remainder, 46.6% class C offices37. The trend of this market segment differs according to the different areas of the country. In cities towards the east demand is sustained, although some areas are feeling the effect of an excess supply due to intense building activity in recent years. In Berlin, the market shows signs of dynamism, while Frankfurt has recorded a slowdown in activity due to the lack of high quality product. Prices of real estate for tertiary use have suffered a substantial slowdown, with an annual change of 1.4% in 2008; according to estimates, prices will continue to decrease over the course of 2009, while this trend should be reversed as of 201038. Despite the difficult economic situation, rents in the commercial segment are increasing for class A products, while class B real estate properties have not changed and those of class C have registered a general downturn.

13.2 2009 – 2011 Business Plan

13.2.1 Introduction and assumptions On 10 February 2009, the Pirelli RE Board of Directors approved the 2009 - 2011 Business Plan, which sets out guidelines for the period in line with the work already done in 2008 with the aim of improving the efficiency of portfolio asset management, reducing costs and simplifying internal organisation to cope with the new scenario of the real estate sector, accelerating the turnaround of the business which is already underway. On 26 May 2009, the Board of Directors of Pirelli RE confirmed the economic targets up to 2011, revising also certain strategic decisions mainly related to a perceived need for the Group to focus on its core business and on activities capable of generating recurring income. In so doing the Pirelli RE Group intends to improve its market position, drawing on the specific expertise which helped to establish its reputation during the years immediately after its listing. This expertise covers fund management and the provision of specialized real estate services (mainly agency and property management), together with credit servicing, precisely because this work can generate recurring income. In this context, the Board of Directors approved the new management’s proposal to keep full ownership of Pirelli RE SGR (of which it had previously been decided to sell a significant proportion), preferring to continue to benefit as far as possible from the income generated by this company in the form of management fees. Likewise, the original idea of transferring the specialized real estate services to Pirelli RE SGR was also reconsidered. These services will therefore remain in their current configuration within the Group, to revitalize this area and boost their position in the market for services to third parties. Finally, a further initiative designed to rationalise and recover efficiency at the Group level was

36 Bulwein Gesa Ag 2008. 37 Scenari Immobiliari Outlook 2009. 38 Ibidem.

190 Section I Registration Document also approved. The 2009 - 2011 Business Plan was prepared on the basis of estimates of the main income, balance sheet and financial data as of 31 December 2008, which were largely confirmed by the consolidated financial statements of the same date, approved by the Pirelli RE Board of Directors on 5 March 2009. The 2009 - 2011 Business Plan is based on certain assumptions about trends in the economy, drawn up on the basis of information made available by leading centres for study and research on real estate markets, and on the development trends of the reference market. The administration and management have no influence on such market development assumptions. Forecast data for the 2009 - 2011 Business Plan period have been drawn up with reference to the IFRS accounting standards used by the Pirelli RE Group in preparing the Group's consolidated financial statements as of 31 December 2008. Forecast data on operations and on the expected results of the Pirelli RE Group are based on assumptions regarding future events, subject to uncertainties such as those which characterise the anticipated macroeconomic scenario and the performance of financial markets. More specifically, the forecast data are based on a set of assumptions on the occurrence of future events and on actions to be taken by the Company's directors. Those set forth in the 2009 - 2011 Business Plan also include hypothetical assumptions relating to future events and actions over which directors and management have little, if any, influence, regarding trends in the main balance sheet and income amounts or in other factors which affect their development. In the current economic and financial situation, characterised by the worst recession and significant uncertainties in recent history, the 2009 - 2011 Business Plan, with its guidelines updated by the Board of Directors on 26 May 2009, envisages the following main assumptions: (i) the positive completion of the Capital Increase, reflected in the projections to reduce net financial indebtedness for the year 2009, to strengthen the capital structure and sustain the revised business model, (ii) the substantial stability of the real estate market over the three-year period, as compared to the situation at the end of 2008, to complete the planned sales of real estate assets at the prices and for the volumes indicated in the 2009 – 2011 Business Plan and to substantially ensure that the valuation of the Group’s property portfolio remains unchanged, (iii) the substantial stability of the financial markets, which will allow for application of the financial management assumptions set out in the 2009 – 2011 Business Plan, (iv) the opportunity for the investment vehicles to autonomously obtain, through the disposal of property or bank borrowing, the necessary additional financial resources with respect to the amount covered by shareholders, and therefore, reflected for the part pertaining in the net financial position forecast for the three-year period 2009 – 2011, (v) the realization of strategic partnerships based on the terms set out by the 2009 – 2011 Business Plan both in reference to Pirelli RE SGR and to the other vehicles through which the Group intends to operate, (vi) the substantial stability of the assets under management through obtaining the management of new real estate portfolios, mainly located in Italy, in order to increase the weight of Italy with respect to the total managed volumes, and in general terms, to offset the reduction due to the sales planned, and (vii) the assumption of obtaining financing to replace the loans expiring during the three-year period. The proceeds of the Capital Increase will be used to reduce the financial indebtedness with the parent company Pirelli & C. through the conversion, of the part to be subscribed by Pirelli & C., of debt into equity. The remainder, if subscribed in cash, will be used to reduce financial indebtedness pro-rata (that is, in proportion to total existing loans), allowing for greater flexibility in the achievement of targets set out in the 2009 - 2011 Business Plan guidelines, it being understood that in terms of 2009 - 2011 Business Plan targets and of the time needed to accomplish them, the Company has not specifically set aside financial resources deriving from the

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Capital Increase. The majority of costs and investments foreseen in the 2009 - 2011 Business Plan are in fact financed by the Issuer's operating cash flows and sustained by the proposed operating cost reduction and effective management plan and by cash flows deriving from the disposal of the real estate property portfolio favouring the sale of non-strategic and non-core assets. Net proceeds deriving from the Capital Increase will be used by the Issuer primarily to maintain an adequate capital flexibility during the 2009 - 2011 Business Plan time period in order to cope with any risks related to the market trends. The main effect on the 2009 - 2011 Business Plan in the event the Capital Increase is, in part or entirely, unsuccessful would be a reduction in financial resources, in terms of both own means and borrowings.

13.2.2 Strategic guidelines of the 2009 - 2011 Business Plan The strategic guidelines for the continued optimisation of the components of the revised business model for the following three years, in response to the new economic situation, can be summarised as follows: • a focus on the activities which established the reputation of the Pirelli RE Group as a leading operator during the years after its listing. In this context, the Pirelli RE Group intends to draw on its distinctive expertise in terms of fund management in Italy (a sector in which Pirelli RE SGR has a leadership role) and asset management in Germany and Poland, and also on the provision of specialized real estate services (mainly agency and property management), and credit servicing. It will therefore shift its focus to activities able to generate recurring income; • the reduction of risks inherent in the business model adopted recently, through: (i) a reduction in borrowing, intended to give the Company more efficiency and flexibility, (ii) optimisation of the real estate portfolio through the disposal of non-strategic assets, a focus on the management of quality real estate assets, a gradual shift from an approach characterised by rapid turnover of the real estate portfolio (“trading”) towards a “hold” approach and selective management of real estate development projects, (iii) a reduction of net invested capital through the gradual reduction in the interests held in each investment, from an average of 25% to approximately 19%; • a streamlined, efficient organization based on the experience of a high-profile management team, further cuts in the number of employees compared to the restructuring plan launched last year, and the limiting of other fixed costs by rationalising the ways in which investments are conducted (in terms of reducing the number of associates and joint ventures); • confirmation of the central importance of the Italian market, and in this context the role of Pirelli RE SGR as the founder and manager of real estate funds. By taking advantage of its leading position in terms of assets managed, the company intends to acquire the management of new portfolios, both through overall growth and by creating strategic partnerships through which new managed assets will be acquired; • the pursuance of strategic partnerships in the German and Polish markets, with reference to both investment and management activities; • the maintenance of a substantially stable real estate portfolio over the next three years. The 2009 - 2011 Business Plan reflects the following main assumptions expressed by the Issuer for the purpose of meeting the targets set out below.

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Reorganisation and reorientation of the business Pirelli RE will move forward with the restructuring and rationalisation actions already underway in 2008 with a new organisational structure, based on two territorial areas: Italy and Germany- Poland. The aim of the restructuring of the real estate businesses, the benefits of which will be felt starting in 2009, is to rationalise intermediate organisational levels and to reduce operating costs through staff downsizing, (with estimated further lay-off expenses of approximately Euro 8 million, with respect to those already communicated - see Section One, Chapter XV, Paragraph 15.2), reducing vehicle companies and cutting other fixed costs. These measures are expected to generate estimated savings of approximately Euro 50 million already in 2009 and a further Euro 10 million already in 2010. Pirelli RE intends to strengthen the leadership of Pirelli RE SGR as a manager of real estate funds in Italy both by taking advantage of the opportunities that may be found on the market – in this area Pirelli RE attributes importance, among other things, to the planned measures to improve the real estate property assets of regions, provinces and municipalities, and of other local entities envisaged by Law 133/2008 (the 2008 Italian Budget Law) and to the opportunities offered by the reform of the pensions system – and through strategic partnerships to capitalize on the fragmentation of the market of managers of real estate funds characterized, in Italy, by a significant presence of small operators. As far as investments in non performing loans are concerned, on the basis of an agreement entered into on 26 May 2009 Pirelli RE reduced its financial commitment to the investment platform European NPL S.à r.l. (67% DGAD International S.à r.l. – a company wholly controlled by Calyon S.A. - 33% Pirelli RE) thanks to the refinancing of 250 million euro disbursed by DGAD International S.à r.l. which enables Pirelli RE to repay its shareholders’ loan. As part of this operation DGAD International S.à r.l. became a shareholder of Pirelli RE Credit Servicing S.p.A. with a 20% interest (see Section One, Chapter XXII, Paragraph 22.2.6). As a result of the above Pirelli RE recorded a positive change in its net financial position, including shareholder’s loans, of approximately Euro 89 million. The objectives of the operation include the acquisition of mandates for the management of non performing loan portfolios for third parties, in line with the stronger focus of the Pirelli RE Group on the services sector. Reduction of net financial indebtedness The 2009 - 2011 Business Plan envisages a gradual reduction in net financial indebtedness, excluding receivables for shareholders’ loans to vehicle companies, from a total of Euro 862 million as of 31 December 2008 to approximately Euro 420 million at the end of 2009 and approximately Euro 270 million at the end of 2011. This trend reflects the following main assumptions: • the successful completion of the Capital Increase; • real estate sales in 2009 of approximately Euro 1 billion out of total assets managed, with no significant acquisitions, and stability in the real estate portfolio over subsequent years, and positive recurrent flows from ordinary operations over the three-year period; • sales of non-strategic assets and reduction of the capital invested in non performing loan portfolios; • the coverage of the refinancing needs of vehicles for the proportion of equity held by the Group, primarily related to the restructuring of debt, through shareholders’ loans or capital increases, reflected in the 2009 - 2011 Business Plan, assuming the opportunity for the vehicles to obtain the necessary additional financial resources autonomously over the 2009 -

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2011 three-year period, in addition to the amount covered by shareholders, respectively for a total (Pirelli RE share) of Euro 141 million in 2009, Euro 198 million in 2010 and Euro 762 million in 2011, through sales of real estate or bank debt; • the obtainment of loans to replace those expiring in the three-year period. Italy During the second half of 2008, the Italian real estate market recorded a significant decrease in transactions with a consequent decrease in prices. Nevertheless, according to Pirelli RE this market presents certain characteristics which make it more defensive than other international markets, particularly highlighting the persistent lack of high-quality (or so-called class A) buildings; at present, of the total stock of commercial real estate available such buildings make up only approximately 11%, compared to 18% in Spain, 25% in France and 27% in the United Kingdom. In particular, the lack of quality buildings is seen primarily in the larger Italian cities, such as Milan and Rome, where demand from buyers/tenants is greater and where Pirelli RE holds approximately 80% of its core commercial real estate property portfolio. Is also important to point out that the level of debt of Italian families - is significantly lower than the average of Europe's 15 largest countries, making them less vulnerable to the current economic crisis. As already mentioned, in Italy, Pirelli RE intends to strengthen the role of Pirelli RE SGR as a creator and manager of real estate funds in which both Pirelli RE Group companies and third parties hold interests, seeking to confirm it as the leading real estate manager in Italy. These objectives will also be pursued through strategic partnerships. Rationalisation of the business also entails the partial or total disposal of non-strategic assets; with regard to investments in non performing loans, the company plans a reduction in net invested capital without expecting any significant economic effects. With regard to income trends, Italy aims to: • be present efficiently in all phases of the chain of value, meeting the demand for services in the various sectors that compose the real estate market; • increase the real estate property portfolio over the three-year period from a book value of Euro 6.8 billion in 2008 to approximately Euro 9.0 billion mainly as a result of acquisitions of third-party portfolio management. In fact, during 2009 no acquisitions are planned, while disposals should amount to approximately Euro 600 million; • focus the business on the following activities: o management of real estate portfolios taking advantage of the leadership position of Pirelli RE SGR including partnerships with public and private entities to manage large real estate portfolios, as already experimented in Sicily and Turin; o the almost total sale, over the three years, of non-strategic real estate properties (SOHO Small Office/Home Office) and of the current residential portfolio, with limited but at least positive total margins, maintaining, in principle, interests where real estate properties remain; o increasing profitability in the tertiary sector, improving key indicators over the three- year period, pushing rented real estate occupation rates to over 95% by 2011 and improving real estate property performance indicators (such as the Rent Yield, i.e. the ratio between the rent and the cost of the investment and Net Operating Income -

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N.O.I., the balance between gross income from the real estate property and management costs). With regard to yielding assets, the purpose is to increase the real estate portfolio to Euro 4.6 billion with a target rent yield for 2011 of approximately 7.2%; o selective development of real estate initiatives in the residential sector, building real estate properties with distinctive characteristics such as eco-compatibility, at sustainable prices. Germany The German real estate market has shown substantial stability over the course of 2008 (the office occupation rate even increased in the area of Frankfurt and Hamburg). As for other countries, 2009 presents more of a challenge, but, like Italy, Germany shows more defensive characteristics than other European countries. For example, home ownership stands at approximately 46% compared with 84% in Spain, 79% in Italy, 55% in France and 69% in the United Kingdom. Moreover, purchase prices per metre square are significantly lower than the European average and in some cases even below the costs of construction. In the commercial sector too - particularly shopping centres - Germany has a lower level of development than other leading European countries. The German real estate portfolio is set to decline through significant disposals of commercial and trading assets. There are no purchases planned for 2009, and only very selective purchases within the next three years. In the residential sector, the Company intends to sell off selected units and real estate properties in order to focus on improving portfolio performance; in the commercial sector it plans trading portfolio disposals for a total of Euro 1.5 billion in three years. Poland In Poland, the residential segment of the real estate market is characterized by a lack of quality first homes (quality standards are in fact below the European average). Over the last few years there has also been constant growth in the percentage of apartment ownership, rising from 48% to 60% in 20 years thanks to continuous and constant growth of GDP and household income.

13.2.3 Main forecast data in the 2009 - 2011 Business Plan The primary objectives behind the Group's 2009 - 2011 Business Plan are explained below. These objectives envisage achievement of the following targets:

2008(1) 2009 2011 Net financial indebtedness (in millions of Euro) 862 420 270 Assets Under Management (book value, in billions of Euro) 14.4 slight decrease stable EBIT including net income from investments valued at equity (in millions of Euro)(2) (60) 25/35 100(3) (1) Historical data. (2) Before restructuring costs and devaluations/revaluations of real estate. (3) Of which 50 million euro deriving from the recurring business of management and services. In 2009, EBIT including net income from investments is expected to be negative by approximately Euro 25/35 million, as opposed to the loss of Euro 60 million in 2008 (excluding lay-off costs and real estate property devaluations). The difference with respect to the data disclosed to the market on 11 February 2009 – an expected positive EBIT including net income from investments of approximately Euro 20/30 million – is due to a missing component of

195 Section I Registration Document extraordinary results of Euro 40 million connected to the planned sale of a minority interest in Pirelli RE SGR (a financial effect of approximately Euro -70 million), due to the change in the strategic orientation of the management, and to the consideration of potential risks associated with the completion of a number of real estate transactions within the current period, estimated at approximately Euro 15 million. The improvement with respect to the 2008 result can mainly be attributed to the following factors: • the process of corporate reorganization, which already in 2009 should lead to a reduction in operating costs of approximately Euro 50 million; • a reduction in the perimeter of companies both in Italy and Germany; • a slight increase in sales compared with 2008, for a total turnover of approximately Euro 1 billion out of the total of assets managed; • pursuit of strategic partnerships in relation to Pirelli RE SGR with the goal of increasing the managed portfolio. In the period 2009 - 2011, the main objective is associated with a reduction in the net financial position from Euro 862 million as of 31 December 2008 to approximately Euro 420 million in 2009, and then a continuation of the improvement over the subsequent two year period. The significant decline in 2009 is mainly attributable to the Capital Increase (approximately Euro 400 million), to the partial or total disposal of non-strategic assets and, with regard to investments in non performing loans, to the reduction in net invested capital without noticing any significant economic effects. Over the three-year period, the Group will evaluate the possibility of injecting cash into vehicles and funds in which it holds interests with a view to possible operations for the restructuring and/or enhanced protection of real estate assets for a total amount in the order of Euro 100 million, providing that the vehicles are autonomously able to obtain the necessary financial resources to replace all expiring loans. The Group has set itself the following objectives on its investments in Germany and Poland: • to decrease real estate exposure on the market, reducing its real estate property portfolio from Euro 7.4 billion at book value in 2008 to approximately Euro 5.3 billion in 2011. This target will be pursued by seeking out strategic alliances, also with the aim of reducing invested capital, and through a gradual reduction of predominantly commercial assets (partially offset by purchases planned in such period) and of the residential component; • to focus the business on the following activities: o improving real estate management in the residential sector in Germany, where Pirelli RE owns approximately 50 thousand apartments and manages a further 25 thousand on behalf of third parties; the aim is to improve asset profitability by increasing asset and real estate property management and concentrating agency services on the sale of individual units; o improving real estate management in the commercial sector in Germany, to be implemented through asset and development management and the enhancement of part of its real estate properties included in the Karstadt portfolio (Arcandor group); again, the aim is to increase profitability through the development of assets in shopping centre management; o upgrading assets in Poland, where Pirelli RE is only present in the residential sector, to be implemented by focusing its development projects in the larger cities such as

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Warsaw and Cracow, where the majority of its investments are based (of the 1 million square metres it owns, approximately 0.9 million are in the capital, where there is a much greater demand for new units thanks to the "migratory" flow of the population from rural areas and secondary towns with poor accessibility and few services).

13.2.4 Other information and targets in the 2009 - 2011 Business Plan With regard to real estate activity in Italy, the 2009 - 2011 Business Plan envisages the achievement of the following key indicators within the three-year period.

Core Assets (100%) 2009 2011 Total assets (in millions of Euro) 1,700 1,900 Rent yield 5.6% 6.3% Occupation rate 93% 95%

Yielding Assets (100%) 2009 2011 Total assets (in millions of Euro) 2,800 4,600 Rent yield 7.0% 7.2% Occupation rate 97% 99% Solely by way of comparison, the table below shows the same amounts taken from the financial statements as of 31 December 2008.

Core Assets (100%) 2008 Total assets (in millions of Euro) 1,600 Rent yield 5.7% Occupation rate 91%

Yielding Assets (100%) 2008 Total assets (in millions of Euro) 2,600 Rent yield 7.0% Occupation rate 95% With regard to real estate activity in Germany, the 2009 - 2011 Business Plan envisages the attainment of the following key indicators within the three-year period.

Residential real estate properties (100%) 2009 2011 Total assets (in millions of Euro) 2,700 2,000 Gross yield 6.8% 7.1% Occupation rate 94.9% 96.5%

Commercial real estate properties (100%) 2009 2011 Total assets (in millions of Euro) 4,400 3,000 Gross yield 6.7% 6.8% Occupation rate 99% 100% Solely by way of comparison, the table below shows the same amounts taken from the financial statements as of 31 December 2008.

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Residential real estate properties (100%) 2008 Total assets (in millions of Euro) 2,700 Gross yield 6.6%(1) Occupation rate 94% (1) Calculated at book value including the effect of subsidised loans.

Commercial real estate properties (100%) 2008 Total assets (in millions of Euro) 4,600 Gross yield 6.4% Occupation rate 99%

13.3 Auditors' report on profit forecasts or estimates The Independent Auditors have issued a report on the procedures carried out in relation to the Issuer's 2009-2011 budget data indicated in this Chapter. A copy of this report is attached to the Prospectus.

13.4 Basis for generating profit forecasts or estimates The accounting standards adopted for generating forecast data are the same those used for the consolidated financial statements as of and for the year ended 31 December 2008, drawn up in accordance with IFRS adopted by the European Union.

13.5 Profit forecasts published in other prospectuses As of the Prospectus Date, there are no other valid prospectuses which contain forecasts regarding the Issuer’s profits.

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14. ADMINISTRATIVE, MANAGEMENT OR AUDITING BODIES AND SENIOR MANAGERS

14.1 Name, address and functions of members of the Issuer's Board of Directors and Board of Statutory Auditors and senior managers

14.1.1 Board of Directors Pursuant to Article 12 of the By-laws, the Company is managed by a Board of Directors composed of no fewer than five and no more than 19 members. The Ordinary Shareholders' Meeting of 14 April 2008 appointed the Board of Directors for the 2008-2010 three-year period, establishing a total of 15 members. Following the resignation of director Dolly Predovic on 21 November 2008, the Board of Directors, on 5 March 2009, based on an evaluation and follow-up proposal from the Audit and Corporate Governance Committee, appointed as a substitute Valter Lazzari, after having assessed the requirements of independence and his qualification as expert consultant in accounting and finance. At the same meeting, the appointment was approved by the Board of Statutory Auditors and was later confirmed by the Ordinary Shareholders' Meeting held on 17 April 2009. On 8 April 2009, the Board of Directors accepted the resignation of Executive Deputy Chairman Carlo Puri Negri and, based on an evaluation and follow-up proposal from the Audit and Corporate Governance Committee, appointed, as a substitute, Giulio Malfatto for the office of Chief Executive Officer. At the same meeting, the appointment was approved by the Board of Statutory Auditors. Therefore, the directors in office as of the Prospectus Date will remain in office until the Ordinary Shareholders’ Meeting to be called to approve the annual financial statements for the year ending 31 December 2010, with the exception of Giulio Malfatto, whose appointment has to be confirmed by the Shareholders’ Meeting at the first available opportunity. The table below shows the names of the members of the Board of Directors in office as of the Prospectus Date.

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(1) Member of the Investment Committee. This committee was instituted by the Board of Directors on 14 April 2008 and was granted with delegated powers over investments, loans and guarantees up to a maximum of Euro 150 million. (2) Co-opted on 8 April 2009 to replace Executive Deputy Chairman Carlo Alessandro Puri Negri. (3) Member of the Remuneration Committee. (4) Member of the Audit and Corporate Governance Committee. (5) Co-opted on 5 March 2009 to replace Dolly Predovic and confirmed by the Ordinary Shareholders’ Meeting on 17 April 2009. (6) He is also the Lead Independent Director.

A brief resume for each member of the Board of Directors, indicating their skills and experience in corporate management, is set forth below. Marco Tronchetti Provera. Born in Milan, on 18 January 1948. After graduating in Economy and Business Administration from the Bocconi University of Milan, he started working for his family business in the early seventies, developing specific skills in the shipping sector. Entered the Pirelli Group in 1986 and took control of operations in 1992. Chairman of Il Sole 24 Ore S.p.A. from December 1996 to September 2001 and Board Member of the Milan-based Teatro alla Scala Foundation from October 2001 to September 2005. Chairman of Telecom Italia S.p.A. from September 2001 to September 2006. Currently Chairman of Pirelli, Pirelli RE, Pirelli Tyre S.p.A. and Camfin S.p.A. which is the principal shareholder of Pirelli & C. and of the Silvio Tronchetti Provera Foundation, whose mission is to promote scientific and technological research in Italy. Also holds the position of Vice Chairman of Confindustria, Italian Chairman of the Council for Relations between Italy and the United States, and Member of the Board of Directors of the Bocconi University of Milan and of F.C. Internazionale Milano S.p.A. Part of the Italian Group of the Trilateral Commission and member of the Steering Committee of Assonime, of the International Advisory Board of Allianz, of the International Council of J.P. Morgan and of the Libyan Investment Authority Advisory Committee. Also member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Giulio Malfatto. After graduating in civil engineering in 1980, he started his professional career at Vetromeccanica Italiana S.p.A. as a designer. In 1982, joined the S.C.I. Group where he worked as Strategic Marketing Director and General Manager. In 1995 he joined the Pirelli RE Group, where he was responsible for coordinating the main investment operations and business acquisitions and for developing specialist services, in the office of General Manager from 1990 to 2001 and General Manager of Services and Corporate Development from 2001 to 2003. Also with the Pirelli RE Group, he set-up the fund management structure as Chief Executive Officer of Pirelli RE SGR. In 2003 he left the Pirelli RE Group and, together with three other shareholders, formed the real estate fund and asset management boutique Realty Partners Group. In 2006 he founded Zero Società di Gestione del Risparmio S.p.A. of which he was Director. He served as Chief Executive Officer of Pirelli RE since 8 April 2009. Also a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Emilio Biffi. Born in Milan on 20 October, 1940. He obtained a degree in Civil Engineering, construction division, from Milan Polytechnic and a degree in Architecture from Milan Polytechnic in 1976. He is a member of the Order of Engineers of the Province of Milan. After acquiring experience in Italy and abroad in the field of industrial building design and special foundation work, since 1972 he has been involved in the design and construction of commercial buildings. He has managed technical – real estate projects for the major Italian large distribution companies (Coin, Standa, La Rinascente) and for the ENI group (textile business sector). On behalf of the companies for which he has worked, he has been a member of the Rassemblement

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International des Magasins à Prix Unique and the International Group of Department Stores. From 1987 to 1992 he worked with the Pirelli Group as Technical Director and in the same year he joined Pirelli RE as Director of Professional Services. From 1997 to 2001 he served as Director of Commercial and Area Asset Management. From October 2001 to January 2004 he served as General Manager of Commercial and Area Asset Management and later in January 2006 he served as Managing Director and General Manager of Areas and Development. Since January 2006 he has been the Chief Technical Officer of Pirelli RE. He is a member of the Italian Geotechnical Association and the International Society for Rock Mechanics, and is also a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Claudio De Conto. Born in Milan on 16 September 1962. Obtained a degree in Business Economics in 1986 from the Bocconi University of Milan, after which he joined Ernst & Whinney in the UK. Has worked for the Pirelli Group since 1988. After five years in the Group's Treasury Department, in 1993 he began a period of international experience in the Administration, Finance and Audit areas of the Group's tyre subsidiaries in Brazil, Spain and Germany. Between 1996 and 2000 he served as Chief Financial Officer of Pirelli Neumaticos S.A. (Spain) and later Chief Financial Officer of Pirelli Deutschland A.G. (Germany). In 2000 he became Director of the Administration, Planning and Audit Unit of Pirelli S.p.A.. In 2001 he was appointed General Manager of the Administration and Audit Unit of Pirelli S.p.A., a role he retained in the holding company Pirelli & C. following the merger with Pirelli S.p.A. in August 2003. In November 2006 he was appointed Chief Operating Officer of Pirelli & C. Since 2002 he has been a member of the International Financial Reporting Interpretation Committee (IFRIC) set up within the International Accounting Standards Board (IASB). He currently serves as Chief Financial Officer of Pirelli RE, and is also a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Olivier Yves Marie de Poulpiquet De Brescanvel. Born in Nice Alpes-Maritime (France) on 11 december 1965. After obtaining an MBA from Columbia Business School in 1994, he joined the Investment Banking Division of Morgan Stanley. He managed Real Estate Investments for Morgan Stanley Real Estate Funds and in 2003 was appointed as Executive Director and Co- Manager of European Real Estate Investment Group. In 2004 he joined Pirelli RE where he was appointed General Manager for Commercial and Non performing Loans. In 2006, he became General Manager of Investment & Asset Management. On 27 May 2008 he was appointed Managing Director of the Investment & Fund Raising Sector, a position which was revoked on 8 April 2009 following the decision to postpone fund raising activity due to the current situation of the markets (see Section One, Chapter XIV, Paragraph 14.1.5). Paolo Massimiliano Bottelli. Born in Milan on 2 December 1969. Graduated with a degree in Political Science from the State University of Milan. In 1991, he started his professional career with ILC Finanziaria S.p.A. in the real estate leasing sector. In 1992 he joined Milano Centrale Leasing S.p.A. (a subsidiary of Milano Centrale S.p.A., today Pirelli & C. Real Estate S.p.A.), again working in real estate leasing. He gained specific experience in the real estate valuation sector at Pirelli RE and worked in the investment real estate sales sector at the London office of Knight Frank. Since 1996, he served in various positions in the business and technical services area of the Pirelli RE Group, including Vice General Manager of Services for Pirelli RE. He is currently a member of the management bodies of Pirelli RE Agency Netherlands B.V., Pirelli RE Property Management Netherlands B.V., Pirelli Pekao Real Estate Sp.z o.o. and Pirelli & C. Real Estate Deutschland GmbH. He is also Vice Chairman of Assofranchising and a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Jacopo Franzan. Born in Milan on 9 June 1961. He obtained a degree in Economics with a specialization in monetary economics from the London School of Economics and Political

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Science, and also an MBA from INSEAD, Fontainebleau (France). After he graduated he was involved in his family business, primarily in the real estate sector. From 1988 to 1990 he was an Associate in the Mergers and Acquisitions and Debt Leveraged Buy-Outs sector at Bankers Trust, Milan. Since 1991 he has been a member of the Board of Directors of SCI-ROEV Texas Partners L.P, Chief Executive Officer of ROEV Italia S.p.A., Managing Director of DEAR S.p.A. and member of the Board of Directors and of the Executive Committee of E.C.L.A. S.P.A., where he still serves as Chief Executive Officer. Since 1993 he has been Co-Chairman of the Board of Directors of SCI-ROEV Realty Group L.P. Since 2000 he has been a member of the Board of Directors and Executive Committee of Cinecitta’ Studios S.p.A. Since 2003 he has been a member of the Board of Directors of Cinecittà Entertainment S.p.A. Since 2005 he has been a member of the Consulting Committee of the Diomira Real Estate Fund. He is also currently a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Wolfgang Weinschrod. Born in Frankfurt am Mein (Germany) on 14 March, 1949. From 1969 to 1979 he worked for Diners Club, with responsibilities for the formation and local management of the department for the handling of personal data in Germany and as a consultant in Austria, the former Yugoslavia, Benelux and Switzerland. In 1979 he founded a consulting company, serving first as the Managing Director and Trustee for a group of private real estate investors. From 1984, he worked on behalf of banks with the Underberg Company, serving as a consultant for a consortium of German banks, among them Berliner Bank. In 1987 he founded the CFS Card Finanz Systeme AG. CFS, the leading company for the processing of private trademark credit cards in Germany, was sold in 1989 to Barclays Bank PLC. After the sale, he continued to serve as Managing Director until 1992, providing consulting services to the Board of Directors until 1993. In 1992 he founded telephone card provider Telenational Communications Deutschland. As a result of the sale of the company to ACC/USA in 1997, he became the Managing Director for Germany, with general responsibilities for ACC Telekommunication GmbH, a subsidiary of AT&T USA. From 1998 to December 2004, he served as the CEO of AVW Albrecht Vermögensverwaltungs Aktiengesellschaft, where he was also appointed Vice Chairman in 2001 and Managing Director in January 2004. He was also the Managing Director of investment management and real estate operations companies in the group. From 2005 to 2007 he was a member of the Board of Directors of DGAG Deutsche Grundvermögen AG. Since 2007 he has been Managing Director and Country Manager in Germany for Pirelli & C. Real Estate Deutschland and for Baubecon Holding 1 GmbH. He is also a member of the Consulting Committee of Provinzial Nord Brandkasse Aktiengesellschaft and the Supervisory Board of DSK Deutsche Stadt-und Grundstücksentwicklungs-Gesellschaft and is also a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Reginald Bartholomew. Born in Portland (USA) on 17 February 1936. U.S. Undersecretary of State for Foreign Political and Military Affairs from 1979-1981. U.S. Ambassador to Lebanon from 1983 to 1986. U.S. Ambassador to Spain from 1986 to 1989. U.S. Undersecretary of State for International Security Affairs from 1989 to 1992. U.S. Ambassador to NATO in 1992 - 1993. U.S. Ambassador to Italy from 1993 to 1997. In 1997 he became part of Senior Management of Merrill Lynch Europe as Vice Chairman; he has served as Chairman of Merrill Lynch Italia since 1998. Member of the Board of Directors of the Benetton Group S.p.A. from 1999 to 2005. In 2002 he was appointed to the Board of Directors of Pirelli RE. He is also a member of the Board of Directors of the Atlantic Council, the Advisory Council of the Bologna Center of Johns Hopkins University Nitze School of Advanced International Studies, and the US Council on Foreign Relations. He is also currently a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). David Michael Brush. Born in New York (USA) on 2 March 1960. He obtained a degree in

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Economics and International Relations from the University of Pennsylvania in 1982. In 1987 he began his career in the real estate banking group Bankers Trust as an associate in the New York office. From 1989 to 1994 he was Vice President of the Los Angeles (USA) office, before returning to the New York office where he worked as Managing Director from 1994 to 1998. From 1998 to 2008 he was Managing Director of the London office of Bankers Trust/Deutsche Bank. He was head of Real Estate Opportunities Funds and Europe of REEF, the real estate and infrastructure investments management going concern of the Deutsche Bank Group, for which as of the Prospectus Date he serves as a consultant. He is also currently a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Carlo Emilio Croce. Born in Genoa on 9 September 1945. He obtained a degree in Political Science in 1969 and another in 1970 in Business and Economics from the University of Genoa, and has spent most of his professional career working in the real estate sector. From 1970 to 1985, he served as the Director of Lloyd Italico and Ancora S.p.A., managing the company’s large real estate holdings. He was a member of the Board of Directors of Pria S.p.A., a real estate trading and development company. Since 1995 he has been a member of the Board of Directors of Sistemi S.r.l., a company operating in real estate development and brokerage. He is the Chairman of the Genoa Italian Yacht Club. He is also currently a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). William Dale Crist. Born in Kansas (USA) on 29 November 1938. Obtained a degree in Business Administration, a Masters in Business and Economics and a Ph.D. in Economics from the University of Nebraska. He is Professor Emeritus of Economics at California State University - Stanislaus. From 1969 to 2003 he was Professor of Economics at California State University – Stanislaus, where he served as Chairman of the Department of Economics from 1986 to 1990. From 1987 to 2003 he was a member of the Board of Directors of the California Public Employees’ Retirement System (CalPERS). From 1992 to 2003 he was Chairman of CalPERS, where he carried out activities for all Board permanent commissions. He was Co- Chairman of the US Council of Institutional Investors and a member of the Executive Committee. He was Chairman of the FTSE/ISS Global Corporate Governance Index Advisory Committee and Chairman of the Board of Directors of Pacific Pension Institute. He is currently Executive Deputy Chairman of Governance for Owners USA, Inc., a subsidiary of Governance for Owners Group LLP. He is also currently a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Valter Lazzari. Born in Piacenza on 15 April 1963. He obtained a Degree in Economics from Bocconi University of Milan in 1987, an MA in Economics in 1990 and a Ph.D. in Economics at University of Washington (USA) in 1993. He began his professional career in the academic world working as a lecturer in Economics at the University of Washington, Seattle (USA) from 1989 to 1992. He then became a research associate at the Bocconi University of Milan from 1994 to 1998, where he worked as an associate professor from 1998 to 2000 and where he later founded and coordinated the Ph.D. in Economics and Business and the Master in Quantitative Finance and Insurance. He is currently a full professor in Economia degli Intermediari Finanziari (Market Economy and Brokerage) and Chairman of the Department of Economics, Università Cattaneo, Castellanza (VA) and a Senior Lecturer in Banking and Finance and Director of Studies for the Master in Business Administration (MBA) at SDA Bocconi, Milan. He was an Independent Director of RAS Asset Management SGR (Allianz Group) and he served as Economic Advisor on corporate governance and structure of equity markets for Assonime. He is a member of the Investment Committee of Pioneer Alternative Investment SGR, Banca Leonardo and the Allianz Global Investors SGR private equity funds. He is currently a Director of RAS Alternative Asset Management SGR (see Section One, Chapter XIV, Paragraph 14.1.5). Claudio Recchi. Born in Turin on 20 March 1955. He obtained a Degree in Business and

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Economics from the University of Turin in 1981. He has served on the Boards of Directors of various listed companies, such as: Olivetti, Mondadori, Buitoni, Tecnost and Acquedotto De Ferrari. He was Chairman of the Comitato Nazionale Imprese Generali [National Committee on Corporations] and Vice President of the Associazione Nazionale Costruttori Edili [National Builders Association] (ANCE). He is President of the Recchi Group, which operates in the infrastructure building and engineering sectors in Italy and worldwide. He is also currently a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5). Dario Trevisan. Born in Milan on 4 May 1964. He holds a degree in Law and works as a professional attorney specialising in business, finance, banking, EU and international law. In particular, his professional practice is oriented towards providing legal consultancy and assistance to Italian issuers and private and institutional investors both in Italy and abroad, while also dealing with aspects related to the structure of issuer governance. From 1996 to 2003, he served as member of the Board of Directors and of the Auditing Committee of Olivetti S.p.A. (now Telecom Italia S.p.A.). In 1999, he served as a member of the Board of Directors of SNIA S.p.A. where he was also a member of the Remuneration Committee. Since May 2000 he has been the common representative of investing shareholders at Banca Nazionale dell'Agricoltura. In 2005, he was common representative of investing shareholders at Valentino S.p.A.. Since 2007, he has been the common representative of convertible investment shareholders at Marzotto & Figli S.p.A.. He is an honorary international member of the Council of Institutional Investors, an association of American institutional investors and pension funds with offices in Washington (USA), and of the International Corporate Governance Network, an association of major institutional investors, where he has also served on the management committee. Since 2003 he has been a member of the Board of Directors of Pirelli RE, and Chairman of the Internal Audit and Corporate Governance Committee and of the Supervisory Board. He is also currently a member of the management bodies of other companies (see Section One, Chapter XIV, Paragraph 14.1.5).

14.1.2 Board of Statutory Auditors Pursuant to Article 22 of the By-laws, the Company's Board of Statutory Auditors is composed of three statutory auditors and two alternate auditors. The Ordinary Shareholders' Meeting of 20 April 2007 appointed the Board of Statutory Auditors for the 2007-2009 three-year period. Therefore the auditors in office as of the Prospectus Date will remain in office until the date of the Shareholders’ Meeting that will be called to approve the annual financial statements for the year ending 31 December 2009. The table below shows the names of the members of the Board of Statutory Auditors in office as of the Prospectus Date.

Office Name Place and date of birth Chairman Roberto Luigi Maria Bracchetti Milan (Italy), 23 May 1939 Statutory Auditor Paolo Carrara Nembro (Bergamo - Italy), 26 May 1934 Statutory Auditor Gianfranco Polerani Milan (Italy), 28 May 1925 Alternate Auditor Franco Ghiringhelli Varese (Italy), 12 March 1949 Alternate Auditor Paola Giudici Varese, 9 September 1967 A brief resume for each member of the Board of Statutory Auditors is set forth below. Roberto Luigi Maria Bracchetti. Born in Milan on 23 May, 1939. A qualified auditor and chartered accountant, he provides fiscal and legal advice mainly in relation to corporations and

204 Section I Registration Document bankruptcy and in business reorganisation transactions. He is an associate member of the professional group ACBGroup - Società Italiana dei Consulenti Economico Aziendali S.p.A.. He has been a member of the Committee of the Order of Chartered Accountants and for the Ruling of Accounting Principles. He has held roles as trustee, receiver and liquidator in various proceedings at the Court of Milan. He is also a member of the audit committee of numerous other companies (see Section One, Chapter XIV, Paragraph 14.1.5) Paolo Carrara. Born in Nembro (Province of Bergamo) on 26 May 1934. From 1963 to 1964 he worked in the Audit Department of Edison S.p.A.. In 1964 he joined the professional studio of Dr. Franco Jorio. A qualified auditor and chartered accountant, he began his own professional practice in 1974 working mainly in corporate and tax affairs, and has collaborated with non-profit organisations. He is also a member of the Supervisory Board of numerous other companies (see Section One, Chapter XIV, Paragraph 14.1.5) Gianfranco Polerani. Born in Milan on 28 May 1925. A qualified auditor and chartered accountant, he practises his profession focusing mainly on corporate, tax and bankruptcy affairs and also in relation to business restructuring and/or liquidation procedures. He is also a member of the audit committee of numerous other companies (see Section One, Chapter XIV, Paragraph 14.1.5) Franco Ghiringhelli. Born in Varese on 12 March 1949. From 1972 to 1987, after a brief period working for FIDES Unione Fiduciaria S.p.A., he joined the professional studio of Dr. Franco Jorio. A qualified auditor and public accountant, he has practiced his profession since 1988 focusing mainly on corporate, tax and bankruptcy affairs and also in relation to business restructuring and/or liquidation procedures. He is also a member of the Supervisory Board of numerous other companies (see Section One, Chapter XIV, Paragraph 14.1.5) Paola Giudici. Born in Varese on 9 September 1967. A qualified auditor and public accountant, she practises her profession focusing mainly on corporate and bankruptcy affairs and also in problems related to business restructuring and/or liquidation. She is also a member of the Supervisory Board of numerous other companies (see Section One, Chapter XIV, Paragraph 14.1.5)

14.1.3 Senior Management The following table contains information on the Group's Senior Managers who are not members of the Issuer's Board of Directors, specifying the date they commenced their office. Name Place and date of birth Office Year of first appointment Milan (Italy), 19 August General Manager, Finance Gerardo Benuzzi 27 January 2007 1960 & Advisory Milan (Italy), 18 October Rodolfo Petrosino General Manager Italy 16 December 2008 1963 A short resume of the Group's Senior Managers, indicating their skills and experience gained in relation to business management, is presented below. Gerardo Benuzzi, born in Milan on 19 August 1960. Graduated in Political Economics, specialising in International Economics, from the Bocconi University of Milan. In September 1985 he became a researcher for the Department of Economic Studies of the Istituto Bancario Italiano (Cariplo Group). In September 1987, he began his professional career at Pirelli Coordinamento Pneumatici S.p.A., working as assistant to the strategic and economic planning manager. In April 1991, he was responsible for planning and reporting at the Management Planning and Reporting Office of the same firm. In June 1995, he was responsible for the Management Planning and Reporting Office of Pirelli Pneus S.A., a Brazilian subsidiary from the

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Tyre Sector with headquarters in Santo André. In December 1997 he was appointed General Manager of Administration and Reporting for Milano Centrale S.p.A. (now Pirelli & C. Real Estate S.p.A.), where he served as Chief Financial Officer in January 2005 and became General Manager and Chief Financial & Human Resources Officer in 2007. On 20 April 2009, the Board of Directors resolved to amend his position to General Finance & Advisory Manager. In May 2007, he was appointed Manager Responsible for Corporate Financial Reporting by the company's Board of Directors and confirmed in April 2008, a role pursuant to Article 154-bis of the Italian Finance Act. Rodolfo Petrosino, born in Milan on 18 October 1963. Graduated in architecture from the Polytechnic of Milan. Completed specialisation courses in real estate operation financing at the Bocconi University of Milan. He began his professional career in 1986 working for Progetto Bicocca, part of the Pirelli Group, as assistant to the Project Manager. In September 1989 he joined the architectural firm Dante Benini & Ingex S.r.l. where he worked as an architect. In December 1991, he started working at the Beretta/Hamilton Associate practice as an architect and project manager. In September 1993 he joined the company Milano Centrale Immobiliare S.p.A. as manager of professional and town planning services. In July 1995, he served as Construction/Maintenance Manager for Blockbuster Italia S.p.A.. In September 1997 became Manager of Real Estate Investments for Deutsche Bank Fondi Immobiliari S.p.A.. In August 1999 he joined Morgan Stanley Real Estate Fund as Executive Director of the Investment Bank Division. In July 2003 he joined Pirelli RE, where he was appointed General Manager of Commercial Asset Management; he became the company's Deputy General Manager in March 2005. In May 2008 he was appointed General Manager of Asset Management and Commercial Services and in December 2008 he was made General Manager for Italy. Paolo Massimiliano Bottelli, General Manager for Germany and Poland, holds the position of Director of the Issuer. For a brief resume see Section One, Chapter XIV, Paragraph 14.1.1.

14.1.4 Family relationships No member of the Issuer's Board of Directors has any family relationship with any other member of the Board of Directors or of the Board of Statutory Auditors or with the General Managers of the Company. There is a relationship of affinity between the Chairman Marco Tronchetti Provera and the Executive Board Member Paolo Massimiliano Bottelli.

14.1.5 Other activities of members of the Board of Directors and Board of Statutory Auditors and of Senior Managers The following tables show the companies in which members of the Board of Directors and of the Board of Statutory Auditors have been members of the administrative, management or auditing bodies, or shareholders, in the last five years; the tables also indicate their status as of the Prospectus Date.

Board of Directors Name Company Office Status Marco Tronchetti Provera CAM Finanziaria S.p.A. Chairman Ongoing Gruppo Partecipazioni Industriali Chairman Ongoing S.p.A. Marco Tronchetti Provera & C. S.a.p.A. General Partner Ongoing Pirelli & C. S.p.A. Chairman Ongoing Pirelli Tyre S.p.A. Chairman Ongoing Mediobanca - Banca di Credito Deputy Ongoing Finanziario S.p.A. Chairman

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Board of Directors Name Company Office Status F.C. Internazionale Milano S.p.A. Director Ongoing Pirelli & C. Ambiente S.p.A. Director Ongoing Pirelli Labs S.p.A. Chairman Ongoing Pirelli & C. Eco Techonology S.p.A. Chairman Ongoing Libyan Investment Authority (Lia) Member of the Ongoing Advisory Committee Alitalia – Compagnia Aerea Italiana Director Ongoing S.p.A. Progetto Italia S.p.A. Honorary Ceased Chairman Bigli società semplice Partner Ceased Pirelli & C. Ambiente Renewable Chairman Ceased Energy S.p.A. Telecom Italia S.p.A. Chairman Ceased Olimpia S.p.A. Chairman Ceased GPM società semplice Managing Partner Ongoing MGPM società semplice Managing Partner Ongoing La Nuova Comuna S.r.l. Partner Ongoing Tiflosystem S.p.A. Partner Ongoing EMMEPI S.a.S. di Giovanni Antonio Partner Ongoing Rizzi & C. Laboratorio Italiano S.r.l. in liquidation Partner Ongoing Giulio Malfatto Crossfingers S.r.l. Chairman and Ongoing Partner Pirelli Pekao Real Estate S.p.z o.o. Chairman of the Ongoing Supervisory Board Realty Partners S.r.l. Chairman Ceased Realty Holding S.r.l. Chairman Ongoing Rep Sicily Holding S.r.l. Director Ceased Quma S.r.l. Sole Director Ongoing Quma S.r.l. Partner Ceased Zero Società di Gestione del Risparmio Director Ceased S.p.A. Rep Agency S.r.l. Director Ceased Rep Consulting S.r.l. Chairman Ceased Rep Management S.r.l. Chairman Ceased Rep Fondi S.r.l. Chairman Ceased Emilio Biffi S.A.C.R.A. S.p.A. Chief Executive Ongoing Officer Pirelli & C. Ambiente Site Remediation Chairman Ongoing S.p.A. Borsa Immobiliare S.p.A. Director Ongoing Lambda S.r.l. Chairman Ongoing

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Board of Directors Name Company Office Status Pirelli & C. Opere Generali S.p.A. Chairman Ongoing Alfa S.r.l. Chairman Ongoing Kappa S.r.l. Chairman Ongoing Pirelli & C. Ambiente S.p.A. Director Ongoing M.S.M.C. Immobiliare Due S.r.l. Chairman Ongoing Parcheggi Bicocca S.r.l. Chairman Ongoing Iniziativa Immobiliare Due S.r.l. Chairman Ongoing Progetto Corsico S.r.l. Chairman Ongoing Induxia S.r.l. Director Ongoing Le Case di Capalbio S.r.l. Chairman Ongoing Aree Urbane S.r.l. Director Ongoing Iniziative Retail S.r.l. Director Ongoing Consorzio Sempione Member of the Ongoing Executive Committee Progetto Perugia S.r.l. Chairman Ongoing Eurostazioni S.p.A. Director Ceased Trixia S.r.l. Director Ceased Progetto Bicocca Il Centro S.r.l. Chairman Ceased Edilnord Progetti S.p.A. Chairman Ceased Progetto Salute Bollate S.r.l. Director Ceased Progetto Grande Bicocca S.r.l. Chairman Ceased Pirelli & C. Real Estate Project Chairman Ceased Management S.p.A. Progetto Moncalieri S.r.l. Chairman Ceased M.S.M.C. Immobiliare 4 S.r.l. Chairman Ceased Dolcetto S.r.l. Director Ceased Dolcetto Due S.r.l. Chairman Ceased Nabucco S.r.l. Director Ceased Moncalieri Center S.r.l. Chairman Ceased Bicocca Center S.r.l. Chairman Ceased Immobiliare San Babila S.p.A. Director Ceased Iniziative Retail S.r.l. Director Ceased Tiglio II S.r.l. Director Ceased Alfa Due S.r.l. in liquidation Chairman Ceased Pirelli & C. Ambiente Renewable Director Ceased Energy S.p.A. Progetto Grande Bicocca Multisala Chairman Ceased S.r.l. in liquidation Tiglio I S.r.l. Director Ceased Progetto Lainate S.r.l. in liquidation Chairman Ceased Progetto Fontana S.r.l. in liquidation Chairman Ceased Spazio Industriale 1 S.r.l. Director Ceased

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Board of Directors Name Company Office Status Pirelli & C. Real Estate Opportunities Director Ceased SGR S.p.A. Telegono S.r.l. in liquidation Chairman Ceased IM.SER S.p.A. Chairman Ceased Claudio De Conto Pirelli Tyre S.p.A. Director Ongoing Pirelli & C. Ambiente S.p.A. Director Ongoing Pirelli Broadband Solutions S.p.A. Chairman Ongoing Pirelli Labs S.p.A. Director Ongoing Pirelli Servizi Finanziari S.p.A. Chairman Ongoing Emittenti Titoli S.p.A. Director Ongoing RCS Mediagroup S.p.A. Director Ongoing Efibanca Palladio Finanziaria S.p.A. Director Ongoing Centro Servizi Amministrativi Pirelli Chairman Ongoing S.r.l. Pirelli Cultura S.p.A. Chairman Ongoing PZERO S.r.l. Chairman Ongoing Pirelli Sistemi Informativi S.r.l. Chairman Ongoing Pirelli & C. Eco Technology S.p.A. Director Ongoing Speed S.p.A. Chairman Ceased Pegaso S.r.l. Director Ceased Holinvest S.p.A. Director Ceased Sarca 222 S.r.l. Sole Director Ceased Prysmian Treasury S.r.l. Director Ceased Telecom Italia S.p.A. Director Ceased Pirelli Cavi e Sistemi Energia S.r.l. Deputy Ceased Chairman Pirelli Cavi e Sistemi Telecom S.r.l. Deputy Ceased Chairman Perseo S.r.l. Director Ceased PGR Photonics S.p.A. Chairman Ceased Eurofly Service S.p.A. Director Ceased Pirelli Deutschland GmbH Director Ongoing Pirelli International Limited Managing Director Ongoing Valle delle Ginestre S.r.l. Partner Ongoing Olivier Yves Marie de Poulpiquet De Pirelli RE Credit Servicing S.p.A. Chairman Ceased Brescanvel CFT Finanziaria S.p.A. Chairman Ceased International Credit Recovery S.r.l. Director Ceased New Credit Servicing S.p.A. Director Ceased Partecipazioni Real Estate S.p.A. Director Ceased Asset Management NPL S.r.l. Chairman Ceased Immobiliare San Babila S.p.A. Director Ceased Tiglio II S.r.l. Director Ceased Beta S.r.l. Chairman Ceased

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Board of Directors Name Company Office Status Tiglio I S.r.l. Director Ceased Dolcetto Quattro S.r.l. Director Ceased Induxia S.r.l. Director Ceased Aree Urbane S.r.l. Director Ceased Erice S.r.l. Chairman Ceased Lupicaia S.r.l. Director Ceased Pirelli & C. Real Estate Opportunities Director Ceased SGR S.p.A. Turismo e Immobiliare S.p.A. Director Ceased Lamaione S.r.l. Director Ceased Masseto 1 B.V. Managing Ceased Director Masseto 2 B.V. Managing Ceased Director Mirandia Trading & Consultoria LdA Manager Ceased MSMC Italy Sub-Holding B.V. Director Ceased Pirelli DGAG Deutsche Vice Chairman Ceased Grundvermoegen GmbH Pirelli & C. Real Estate Deutschland Managing Ceased GmbH Director Pirelli Pekao Real Estate Sp.z o.o. Member of the Ceased Supervisory Board Pirelli RE Bulgaria AD Member of the Ceased Supervisory Board DGAG Deutsche Grundvermoegen Director Ceased AG Pirelli RE Netherlands B.V. Managing Ceased Director Pirelli RE Romania S.A. Member of the Ceased Supervisory Board Polish Investment Real Estate B.V. Director Ceased Polish Investment Real Estate Holding Director Ceased II B.V. Popoy Holding B.V. Managing Ceased Director Robino Holding Amsterdam B.V. Director Ceased SI Real Estate Holding B.V. Vice Chairman Ceased Spazio Investment N.V. Vice Chairman Ceased Tronador – Consultoria Economica Manager Ceased LDA

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Board of Directors Name Company Office Status Paolo Massimiliano Bottelli Pirelli & C. Real Estate Agency S.p.A. Chairman and Ceased Chief Executive Officer Solaris S.r.l. Chairman Ceased Centrale Immobiliare S.r.l. Chairman Ceased Casaclick S.p.A. Chairman Ceased Continuum S.r.l. Chairman Ceased Iniziative Immobiliari S.r.l. Chairman Ceased Residenziale Immobiliare 2004 S.p.A. Chief Executive Ongoing Officer Manifatture Milano S.p.A. Chief Executive Ceased Officer Pirelli & C. Real Estate Deutschland Director Ongoing GmbH Pirelli Pekao Real Estate Sp.z o.o. Member of the Ongoing Supervisory Board Pirelli RE Agency Netherland B.V. Director Ongoing Pirelli RE Asset Management Member of the Ongoing Deutschland GmbH Advisory Board Pirelli RE Property Management Director Ongoing Netherlands B.V. Polish Investments Real Estate B.V. Director Ongoing Polish Investments Real Estate Holding Director Ongoing II B.V. Resident Berlin 1 P&K GmbH Member of the Ongoing Supervisory Board S.I.G. RE B.V. Director Ongoing Tizian Wohnen 1 GmbH Member of the Ongoing Advisory Board Tizian Wohnen 2 GmbH Member of the Ongoing Advisory Board Orione Immobiliare Prima S.p.A. Chairman Ceased Aponeo S.r.l. Sole Director Ceased FIM Fabbrica Italiana di Mediazione Chairman and Ceased S.r.l. Chief Executive Officer Pirelli & C. Real Estate Facility Chairman Ceased Management S.p.A. Pirelli & C. Real Estate Franchising Chairman Ceased S.p.A. Pirelli & C. Real Estate Franchising Chairman Ceased Holding S.r.l. Edilnord Gestioni S.r.l. in liquidation Chairman Ceased Pirelli & C. Real Estate Property Chairman Ceased Management S.p.A. New Credit Servicing S.p.A. Director Ceased

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Board of Directors Name Company Office Status Pirelli & C. Real Estate Finance S.p.A. Chairman Ceased Altair IFM S.p.A. Chairman Ceased Progetto Nuovo Sant’Anna S.r.l. Director Ceased Ingest Facility S.p.A. Deputy Ceased Chairman Tunari Real Estate Partner Ceased Reginald Bartholomew Merrill Lynch Europe Deputy Ongoing Chairman Merrill Lynch Italia Chairman Ongoing Benetton Group S.p.A. Director Ceased David Michael Brush Globe Trade Center Kardan RE Director Ongoing Bankers Trust/Deutsche Bank Managing Director Ceased Abico Inc. Director Ceased DB Real Estate Opportunities Group Director Ceased Advisors (UK) Limited DBRE Global Real Estate Director Ceased Management LA, Ltd DBRE Global Real Estate Director Ceased Management LB, Ltd FIC Globe B.V. Director Ceased Giftbeat Ltd Director Ceased GTC International B.V. Group Director Ceased International Operator Ltd Director Ceased Linton No.1 Limited Director Ceased Linton No. 2 Ltd Director Ceased Milltip Ltd Director Ceased Arrow Property Investment Limited Director Ceased Allied London Clydeway Ltd. Director Ceased Hotel De La Villa Olimpica, S.A. Director Ceased TG Office Spain S.A. Director Ceased Traplaya S.L. Sociedad Unipersonal Director Ceased ISM Director Ceased QPL Lux Sarl Director Ceased Felting SGPS Director Ceased Sociedad Serviços de Consultadoria Director Ceased S.A. Cesar Park Hotel Portugal S.A. Director Ceased SAFRAN Director Ceased SELEC Director Ceased RREEF America LLC Director Ceased RREEF Global Advisors Limited Director Ceased RREEF Ltd Director Ceased

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Board of Directors Name Company Office Status Shopeready Ltd Director Ceased Tapeorder Ltd Director Ceased Upwood No.1 Ltd Director Ceased Upwood No. 2 Ltd Director Ceased Regus Business Centres Plc Director Ceased Filo Director Ceased ISM Director Ceased Dynasec Inc. Shareholder Ongoing Chalcott Property Partners Partner Ongoing William Dale Crist Governance for Owners Group LLP Chairman Ongoing Governance for Owners Group LLP Partner Ongoing Carlo Emilio Croce Elvstrom S.r.l. Chief Executive Ongoing Officer and Partner Nikon di Paola Raggio & C. S.n.c. Managing Partner Ongoing Sistemi S.r.l. Director and Ongoing Partner Croma S.a.S. di Mannoni Nello & C. Limited Partner Ongoing Passo dell’Acquedotto s.s. Partner Ongoing Nuova Merope S.r.l. Chairman and Ongoing Partner Pria S.p.A. Director and Ceased Partner Altair S.r.l. Chairman Ongoing Merope S.r.l. Chairman Ceased Orione Immobiliare Prima S.p.A. Director Ceased Verdi S.r.l. in liquidation Director Ceased Asterope S.r.l. Partner Ceased Jacopo Franzan Intermedia Holding – Finanziaria di Director Ongoing Investimenti Partecipazioni e Consulenza S.p.A. Camas Energy S.r.l. Chairman Ongoing Trazzani Energy S.r.l. Chief Executive Ongoing Officer Orione Immobiliare Prima S.p.A. Director Ongoing Industrie Riunite S.r.l. Sole Director Ongoing E.C.L.A. – Ente per Concessioni ai Chief Executive Ongoing Lavoratori Aziendali S.p.A. Officer ROEV Italia S.p.A Chief Executive Ongoing Officer DEAR S.p.A. Director Ongoing Cinecittà Studios S.p.A. Director Ongoing Adar Holding S.p.A. Chief Executive Ongoing Officer Cinecittà Entertainment S.p.A. Director Ongoing

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Board of Directors Name Company Office Status Edige S.r.l. Chief Executive Ongoing Officer Rovimmobiliare S.r.l. Director Ongoing Evrogest S.r.l. Chairman Ongoing Magazzini Generali S.r.l. Chairman Ongoing Aree Urbane Roma S.r.l. Director Ongoing Casello S.r.l. Chairman Ongoing W3 S.r.l. Chairman and Ongoing Partner Paradiso S.r.l. Chief Executive Ongoing Officer Italian Entertainment Group S.p.A. Director Ongoing Immobiliare Mazzini S.n.c. di Benedetta Managing Partner Ongoing Cibrario & C. Franzan Rifinizione Tessuti S.a.s. di Limited Partner Ongoing Franzan Francesco & C. Immobiliare Ruggero Settimo S.r.l. Chairman Ceased Mistral S.r.l. Director Ceased Dear Immobiliare S.p.A. Director Ceased Dear Multimedia Communications S.r.l. Director and Ceased Partner Nizzan S.r.l. Deputy Ceased Chairman and Chief Executive Officer Delta S.p.A. Director Ceased Verdi S.r.l. in liquidation Director Ceased Castello S.r.l. in liquidation Director Ceased Settima S.r.l. Director Ceased Schiavonetti S.r.l. Director Ceased Dear Films S.r.l. in liquidation Chairman Ceased Ital-China Leather S.p.A. in liquidation Director Ceased Società Agricola Oliro S.s. Partner Ongoing GI.BE. S.r.l. Partner Ongoing Pontina Tre Immobiliare S.r.l. Partner Ongoing Laura Cibrario S.r.l. Partner Ongoing Plan B Communication S.r.l. Partner Ongoing Valter Lazzari RAS Alternative Asset Management Director Ongoing SGR COGEME SET S.p.A. Director Ongoing Allianz Global Investors Italia SGR Director Ceased S.p.A. Claudio Recchi Proger S.p.A. Chairman Ongoing AON Italia S.p.A. Director Ongoing Banca Albertini SYZ & C. S.p.A. Director Ongoing

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Board of Directors Name Company Office Status CIR S.p.A. – Compagnie Industriali Director Ongoing Riunite Recchi Ingegneria e Partecipazioni Chairman and Ongoing S.p.A. Partner Avalon Real Estate S.p.A. Director Ongoing Altair S.r.l. Director Ongoing Proger S.p.A. Chairman Ongoing Recchi Informatica S.p.A. Director Ongoing Pininfarina Recchi Buildingdesign S.r.l. Director Ongoing Dasit s.s. Managing Partner Ceased Monteventotto s.s. Partner Ceased Security Package S.r.l. Director Ceased Nexenti S.r.l. Director Ceased Recim S.r.l. Chairman and Ceased Partner Calaviva S.r.l. Partner Ongoing Albatros S.r.l. in liquidation Partner Ongoing Retel Chemie S.r.l. in liquidation Partner Ongoing Safe S.p.A. Partner Ongoing Esair Handling S.r.l. Partner Ongoing Dario Trevisan Italmobiliare S.p.A. Shareholder Ongoing Representative Cooperativa Edificatrice Groane Soc. Liquidator Ongoing coop. a r.l. Manifatture Lane Gaetano Marzotto & Shareholder Ceased Figli S.p.A. Representative G.P.S.C. Italia S.a.s. di J.C.F. Lufkin & Limited Partner Ongoing C. Ginori Real Estate S.p.A. Director Ceased Valentino Fashion Group S.p.A. Shareholder Ceased Representative Itelco Industry S.r.l. Sole Director Ceased Itelco Marketing S.r.l. Sole Director Ceased Intra Private Bank S.p.A. (Gruppo Chairman Ceased Bancario Popolare di Intra) Wolfgang Weinschrod Baubecon Holding 1 GmbH Managing Director Ongoing Pirelli & C. Real Estate Deutschland Director Ongoing GmbH Pirelli DGAG Deutsche Director Ongoing Grundvermogen GmbH Pirelli RE Management Services Director Ongoing Deutschland GmbH Pirelli RE AM NPL Deutschland Managing Director Ongoing GmbH Pirelli RE Asset Management Member of the Ongoing Deutschland GmbH Advisory Board

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Board of Directors Name Company Office Status Verwaltung Buero und Lichtspielhaus Director Ongoing Hansaallee GmbH AVW Assekuranzvermittlung der Member of the Ongoing Wohnungswirtschaft GmbH & Co. KG Advisory Board Landgesellschaft Schleswig-Holstein Member of the Ceased mbH Advisory Board LEG Entwicklung GmbH Director Ceased Pirelli RE Agency Deutschland GmbH Director Ceased DGAG Deutsche Grundvermoegen Director Ceased AG B&L Beteiligungsgesellschaft mbH Director Ceased LEG Beteiligungs GmbH Director Ceased VBV Versicherungsmarkler und Member of the Ceased Beteiligungsverwaltung GmbH Supervisory Board Baubecon Sanierungstraeger GmbH Director Ceased Provinzial Nord Brandkasse Member of the Ongoing Aktiengesellschaft Advisory Committee DSK Deutsche Stadt-und Member of the Ongoing Grundstuecksentwicklungs- Supervisory Gesellschaft Board Wolfgang Weinschrod GmbH Sole Partner and Ongoing Managing Director

Board of Statutory Auditors Name Company Office Status Roberto Luigi Maria Bracchetti ABB S.p.A. Statutory Auditor Ongoing Actelios S.p.A. Chairman of the Ongoing Board of Statutory Auditors Ongoing Member of the Supervisory Board Alsco Italia S.p.A. Chairman of the Ongoing Board of Statutory Auditors Alstom Power Italia S.p.A. Statutory Auditor Ongoing Alstom S.p.A. Statutory Auditor Ongoing Borgo Antico S.r.l. Chairman of the Ongoing Board of Statutory Auditors Coface Assicurazioni S.p.A. Statutory Auditor Ongoing Member of the Ongoing Supervisory Board Coface Factoring Italia S.p.A. Statutory Auditor Ongoing Coface Service S.p.A. Statutory Auditor Ongoing

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Board of Statutory Auditors Name Company Office Status Ecosesto S.p.A. Chairman of the Ongoing Board of Statutory Auditors Energia Holding S.p.A. Statutory Auditor Ongoing Energia Italiana S.p.A. Statutory Auditor Ongoing Energia Molise S.p.A. Statutory Auditor Ongoing Frullo Energia Ambiente S.p.A. Chairman of the Ongoing Board of Statutory Auditors Immobiliare Fondiaria s.s. di Roberto Managing Partner Ongoing Bracchetti Immobiliare Larino s.s. Managing Partner Ongoing Iniziative Immobiliari S.r.l. Statutory Auditor Ongoing Iniziative Retail S.r.l. Statutory Auditor Ongoing La Rinascente S.r.l. Statutory Auditor Ongoing Pirelli & C. Ambiente S.p.A. Chairman of the Ongoing Board of Statutory Auditors Pirelli & C. Ambiente Site Remediation Chairman of the Ongoing S.p.A. Board of Statutory Auditors Pirelli Tyre S.p.A. Statutory Auditor Ongoing Prima S.r.l. Chairman of the Ongoing Board of Statutory Auditors RRL Immobiliare S.p.A. Chairman of the Ongoing Board of Statutory Auditors SIM S.p.A Chairman of the Ongoing Board of Statutory Auditors Sir.Tess Tessitura di Rogeno S.p.A. Statutory Auditor Ongoing Sorgenia S.p.A. Statutory Auditor Ongoing Sorgenia Holding S.p.A. Statutory Auditor Ongoing Verbund Italia S.p.A. Member of the Ongoing Supervisory Board Biochimici PSN S.p.A. Chairman of the Ceased Board of Statutory Auditors Intesa Fiduciaria Società di Statutory Auditor Ceased Intermediazione Immobiliare S.p.A. Edilnord Progetti S.p.A. Chairman of the Ceased Board of Statutory Auditors FAG Italia S.p.A. Chairman of the Ceased Board of Statutory Auditors Gestioni Tessili Cantoni S.p.A. Chairman of the Ceased Board of Statutory

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Board of Statutory Auditors Name Company Office Status Auditors Rottapharm S.r.l. Chairman of the Ceased Board of Statutory Auditors Lanificio di Carignano S.r.l. Statutory Auditor Ceased Confai Filatori Alta Italia S.p.A. in Statutory Auditor Ceased liquidazione Pirelli & C. Ambiente Renewable Energy Chairman of the Ceased S.p.A. Board of Statutory Auditors Landinvest S.r.l. Statutory Auditor Ceased La Viscontea Immobiliare S.r.l. Statutory Auditor Ceased Rinascente/Upim S.p.A. Statutory Auditor Ceased PSN Group S.p.A. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Project Chairman of the Ceased Management S.p.A. Board of Statutory Auditors Roma Colonna Immobiliare 2005 S.p.A. Statutory Auditor Ceased Pharma Ventures S.r.l. Chairman of the Ceased Board of Statutory Auditors Sadelmi S.r.l. Statutory Auditor Ceased Saraflex S.r.l. Statutory Auditor Ceased Esse S.p.A. Statutory Auditor Ceased Ratti S.p.A. Chairman of the Ceased Board of Statutory Auditors Collezioni Grandi Firme S.p.A. Alternate Auditor Ceased Fabbrica Velluti Alfredo Redaelli S.p.A. Statutory Auditor Ceased Pirelli & C. S.p.A. Statutory Auditor Ceased Cantoni ITC S.p.A. Chairman of the Ceased Board of Statutory Auditors Magazzini Generali Aurelio Mecozzi Chairman of the Ceased S.p.A. Board of Statutory Auditors Immobiliare Gavazzi S.p.A. Statutory Auditor Ceased Elba S.p.A. Chairman of the Ceased Board of Statutory Auditors Mediolanum Farmaceutici S.p.A. Statutory Auditor Ceased Jean Cacharel S.r.l. Chairman of the Ceased Board of Statutory Auditors Bruno Sforni S.p.A. Chairman of the Ceased Board of Statutory Auditors

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Board of Statutory Auditors Name Company Office Status Coronet S.p.A. Statutory Auditor Ceased Luceplan S.p.A. Chairman of the Ceased Board of Statutory Auditors Sopaf S.p.A. Chairman of the Ceased Board of Statutory Auditors MSI S.r.l. in liquidation Chairman of the Ceased Board of Statutory Auditors Radarchirm S.p.A. Chairman of the Ceased Board of Statutory Auditors Spencerstuart Italia S.r.l. Chairman of the Ceased Board of Statutory Auditors Fidim S.r.l. Chairman of the Ceased Board of Statutory Auditors Alstom Power Flowsystem S.r.l. Statutory Auditor Ceased Durkopp Adler Italia S.r.l. Chairman of the Ceased Board of Statutory Auditors Corporate Finance Associati S.p.A. Statutory Auditor Ceased Tiglio I S.r.l. Statutory Auditor Ceased ACB Group S.p.A. Statutory Auditor Ceased Supervisory Ceased Director Pirelli & C. Real Estate SGR S.p.A. Chairman of the Ceased Board of Statutory Auditors Olimpia S.p.A. Chairman of the Ceased Board of Statutory Auditors Sadelmi S.p.A. Statutory Auditor Ceased IMPAR Immobili e Partecipazioni S.r.l. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Opportunities Chairman of the Ceased SGR S.p.A. Board of Statutory Auditors Tamerice Immobiliare S.r.l. Statutory Auditor Ceased Upim S.r.l. Statutory Auditor Ceased Masaccio S.r.l. Chairman of the Ceased Board of Statutory Auditors Speed S.p.A. Chairman of the Ceased Board of Statutory Auditors Isringhausen S.p.A. Statutory Auditor Ceased

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Board of Statutory Auditors Name Company Office Status BG Fiduciaria SIM S.p.A. Statutory Auditor Ceased Verbund Italia S.p.A. Chairman of the Ceased Board of Statutory Auditors Dipharma S.p.A. Alternate Auditor Ceased Immobiliare Fondiaria s.s. di Roberto Partner Ongoing Bracchetti CO. GI. CA. S.r.l. in liquidation Partner Ceased Paolo Carrara Pirelli & C. Real Estate Property Chairman of the Ongoing Management S.p.A. Board of Statutory Auditors Erco Illuminazione S.r.l. Statutory Auditor Ongoing PEG PEREGO S.p.A. Chairman of the Ongoing Board of Statutory Auditors Pepper+Fuchs Elcon S.r.l. Chairman of the Ongoing Board of Statutory Auditors Pepper+Fuchs FA Italia S.r.l. Chairman of the Ongoing Board of Statutory Auditors San Vittore – Società Immobiliare di Chairman of the Ongoing Servizi S.r.l. Board of Statutory Auditors Trixia S.r.l. Statutory Auditor Ongoing Zurich Investment Life S.p.A. Statutory Auditor Ongoing Zurich SIM S.p.A. Chairman of the Ongoing Board of Statutory Auditors Zuritel S.p.A. Statutory Auditor Ongoing Pirelli RE Finance S.p.A. Alternate Auditor Ongoing Edilnord Gestioni S.r.l. (in liquidation) Chairman of the Ceased Board of Statutory Auditors Città del Sole Soc. coop. a r.l. Director Ceased Edilnord Progetti S.p.A. Alternate Auditor Ceased Pirelli & C. Real Estate Franchising S.p.A. Alternate Auditor Ceased Borgolecco Iniziative S.p.A. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Project Alternate Auditor Ceased Management S.p.A. Lavorazioni Termoplastiche Ponte Chairman of the Ceased Curone S.r.l. Board of Statutory Auditors Rosenthal Italia S.r.l. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Agency S.p.A. Statutory Auditor Ceased

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Board of Statutory Auditors Name Company Office Status SMS Italia S.r.l. Chairman of the Ceased Board of Statutory Auditors Plastam S.p.A. Chairman of the Ceased Board of Statutory Auditors Knorr Bremse Sistemi per Autoveicoli Chairman of the Ceased Commerciali S.p.A. Board of Statutory Auditors Progetto Grande Bicocca S.r.l. Statutory Auditor Ceased New Credit Servicing S.p.A. Statutory Auditor Ceased Rosenthal Italia Retail S.r.l. Chairman of the Ceased Board of Statutory Auditors Partecipazioni Real Estate S.p.A. Statutory Auditor Ceased Servizi Amministrativi Real Estate S.p.A. Statutory Auditor Ceased Società Italiana Distribuzione Automatica Chairman of the Ceased – SIDA S.r.l. Board of Statutory Auditors SIB S.r.l. Alternate Auditor Ceased PMG Servizi Ambientali S.r.l. Partner Ceased Gianfranco Polerani De Lorenzo S.p.A. Chairman of the Ongoing Board of Statutory Auditors Dolcedrago S.p.A. Alternate Auditor Ongoing Fidimpresa Soc. coop. a r.l. Chairman of the Ongoing Board of Statutory Auditors Holding Italiana Ottava S.p.A. Statutory Auditor Ongoing Holding Italiana Prima S.p.A. Statutory Auditor Ongoing Holding Italiana Quarta S.p.A. Statutory Auditor Ongoing Holding Italiana Quattordicesima S.p.A. Statutory Auditor Ongoing Holding Italiana Quinta S.p.A. Statutory Auditor Ongoing Holding Italiana Seconda S.p.A. Statutory Auditor Ongoing Holding Italiana Terza S.p.A. Statutory Auditor Ongoing Immobiliare L. Galbiati S.r.l. Chairman of the Ongoing Board of Statutory Auditors Immobiliare Idra S.p.A. Statutory Auditor Ongoing Malaspina Energy società consorziale a Chairman of the Ongoing r.l. Board of Statutory Auditors Maro S.r.l. Statutory Auditor Ongoing Pirelli & C. Opere Generali S.p.A. Chairman of the Ongoing Board of Statutory Auditors Radio e Reti S.r.l. Chairman of the Ongoing Board of Statutory

221 Section I Registration Document

Board of Statutory Auditors Name Company Office Status Auditors Roca S.r.l. Statutory Auditor Ongoing Smapp S.p.A. Chairman of the Ongoing Board of Statutory Auditors Vacanze Italia S.p.A. Statutory Auditor Ongoing Parcheggi Bicocca S.r.l. Statutory Auditor Ongoing Servizi Amministrativi Real Estate S.p.A. Statutory Auditor Ongoing Pirelli RE Finance S.p.A. Statutory Auditor Ongoing Cinematext Media Italia S.r.l. Alternate Auditor Ongoing Progetto Vallata S.r.l. Chairman of the Ongoing Board of Statutory Auditors Immobiliare Carbonolo S.p.A. Chairman of the Ceased Board of Statutory Auditors Holding Italiana Diciottesima S.p.A. Statutory Auditor Ceased Holding Italiana Diciannovesima S.p.A. Statutory Auditor Ceased Holding Italiana Ventiduesima S.p.A. Statutory Auditor Ceased Holding Italiana Nona S.p.A. Statutory Auditor Ceased Holding Italiana Decima S.p.A. Statutory Auditor Ceased Holding Italiana Undicesima S.p.A. Statutory Auditor Ceased Holding Italiana Dodicesima S.p.A. Statutory Auditor Ceased Holding Italiana Tredicesima S.p.A. Statutory Auditor Ceased Holding Italiana Quindicesima S.p.A. Statutory Auditor Ceased Holding Italiana Sedicesima S.p.A. Statutory Auditor Ceased Holding Italiana Diciassettesima S.p.A. Statutory Auditor Ceased Holding Italiana Ventesima S.p.A. Statutory Auditor Ceased Holding Italiana Ventunesima S.p.A. Statutory Auditor Ceased Delta S.p.A. Statutory Auditor Ceased Mercurio Fincom S.p.A. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Franchising S.p.A. Statutory Auditor Ceased Pirelli & C. Real Estate Franchising Chairman Ceased Holding S.p.A. Verdi S.r.l. in liquidation Statutory Auditor Ceased Building Support S.r.l. Chairman of the Ceased Board of Statutory Auditors Eurinvest Finanza Stabile S.p.A. Alternate Auditor Ceased Associazione Calcio Milan S.p.A. Statutory Auditor Ceased Mediolanum Vita S.p.A. Alternate Auditor Ceased Elettronica Industriale S.p.A. Alternate Auditor Ceased Mediolanum Assicurazioni S.p.A. Alternate Auditor Ceased Decox S.p.A. Alternate Auditor Ceased

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Board of Statutory Auditors Name Company Office Status Rancè e C. S.r.l. Chairman of the Ceased Board of Statutory Auditors EIS S.p.A. in liquidation Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Agency S.p.A. Chairman of the Ceased Board of Statutory Auditors Edilnord Progetti S.p.A. Statutory Auditor Ceased Il Teatro Manzoni S.p.A. Statutory Auditor Ceased Edilnord Gestioni S.r.l. in liquidation Statutory Auditor Ceased Arcus Immobiliare S.p.A. Alternate Auditor Ceased CO-STA S.p.A. Alternate Auditor Ceased Videotime S.p.A. Statutory Auditor Ceased Duemme Servizi Fiduciari S.p.A. Statutory Auditor Ceased Digitalia 08 S.r.l. Statutory Auditor Ceased Minerva Finanziaria S.r.l. Statutory Auditor Ceased Mediaset S.p.A. Alternate Auditor Ceased Pirelli & C. Real Estate Facility Chairman of the Ceased Management S.p.A. Board of Statutory Auditors Fondamenta SGR S.p.A. Statutory Auditor Ceased Interinvest S.r.l. Statutory Auditor Ceased Orione Immobiliare Prima S.p.A. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Property Statutory Auditor Ceased Management S.p.A. Plasti-Ape S.p.A. Statutory Auditor Ceased Fin.vi. S.r.l. Statutory Auditor Ceased New Credit Servicing S.p.A. Chairman of the Ceased Board of Statutory Auditors PI Distribuzione S.p.A. Statutory Auditor Ceased Partecipazioni Real Estate S.p.A. Chairman of the Ceased Board of Statutory Auditors Centrale Immobiliare S.r.l. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Project Statutory Auditor Ceased Management S.p.A. Fininvest Sviluppi Immobiliari S.p.A. Alternate Auditor Ceased Galbiati Group S.r.l. Chairman of the Ceased Board of Statutory Auditors Finanziaria Il Poggio S.r.l. Alternate Auditor Ceased

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Board of Statutory Auditors Name Company Office Status MP Facility S.p.A. Chairman of the Ceased Board of Statutory Auditors Video due S.r.l. Alternate Auditor Ceased Reti Televisive Italiane S.p.A. Alternate Auditor Ceased Vacanze Italia S.p.A. Statutory Auditor Ceased Medusa Cinema S.p.A. Alternate Auditor Ceased X-Content S.r.l. in liquidation Chairman of the Ceased Board of Statutory Auditors Franco Ghiringhelli ACI Mondadori S.p.A. Statutory Auditor Ongoing Cam Finanziaria S.p.A. Statutory Auditor Ongoing Casaclick S.r.l. Statutory Auditor Ongoing Cemit Interactive Media S.p.A. Statutory Auditor Ongoing Edilnord Gestioni S.r.l. in liquidation Statutory Auditor Ongoing Edizioni Piemme S.p.A. Chairman of the Ongoing Board of Statutory Auditors Finmeravigli 16 S.p.A. Statutory Auditor Ongoing Hearst Mondadori Editoriale S.r.l. Statutory Auditor Ongoing I.D.E.A. Granda Soc. coop. a r.l. Alternate Auditor Ongoing I Grandi Viaggi S.p.A. Statutory Auditor Ongoing Jas Engineering Italia S.r.l. in liquidation Internal Liquidator Ongoing Mondadori Electa S.p.A. Statutory Auditor Ongoing Mondadori Franchising S.p.A. Statutory Auditor Ongoing Mondadori Pubblicità S.p.A. Chairman of the Ongoing Board of Statutory Auditors Mondadori Rodale S.r.l. Statutory Auditor Ongoing Orione Immobiliare Prima S.p.A. Chairman of the Ongoing Board of Statutory Auditors P. A . S G R S. p. A. Statutory Auditor Ongoing Pirelli & C. Eco Technology S.p.A. Statutory Auditor Ongoing Pirelli & C. Real Estate Agency S.p.A. Statutory Auditor Ongoing Pirelli & C. Real Estate Finance S.p.A. Statutory Auditor Ongoing Pirelli & C. Real Estate Property Statutory Auditor Ongoing Management S.p.A. Sampieri S.r.l. Chairman of the Ongoing Board of Statutory Auditors Servizi Amministrativi Real Estate S.p.A. Statutory Auditor Ongoing Società Europea Edizioni S.p.A. Statutory Auditor Ongoing Tau S.r.l. Chairman of the Ongoing Board of Statutory Auditors Venexiana S.r.l. Sole Director Ongoing

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Board of Statutory Auditors Name Company Office Status CFT Finanziaria S.p.A. Statutory Auditor Ceased Pirelli & C. S.p.A. Alternate Auditor Ongoing Fied S.p.A. Alternate Auditor Ongoing Nuova Q.E.M. S.p.A. in liquidation Alternate Auditor Ongoing Pirelli & C. Opere Generali S.p.A. Alternate Auditor Ongoing Agenzia Lombarda Distribuzione Alternate Auditor Ongoing Giornali e riviste S.r.l. Kappa S.r.l. Alternate Auditor Ongoing Pirelli & C. Ambiente Site Remediation Alternate Auditor Ongoing S.p.A. Padana Superiore S.p.A. Alternate Auditor Ongoing Mondadori Education S.p.A. Alternate Auditor Ongoing PBS Soc. coop. a r.l. Alternate Auditor Ongoing Monradio S.r.l. Alternate Auditor Ongoing Cam Partecipazioni S.p.A. Alternate Auditor Ongoing Progetto Vallata S.r.l. Alternate Auditor Ongoing Tericam S.r.l. Official Receiver Ongoing G.L.G. Gruppo Lombardo Giocattoli Official Receiver Ongoing S.r.l. in liquidation Limited S.r.l. in liquidation Official Receiver Ongoing Town Italia S.r.l. Dental Division in Official Receiver Ongoing liquidation Confezioni Vera S.r.l. Official Receiver Ongoing Grifogest SGR S.p.A. Statutory Auditor Ceased Progetto Bicocca Esplanade S.p.A. Statutory Auditor Ceased Edilnord Progetti S.p.A. Statutory Auditor Ceased Delta S.p.A. Chairman of the Ceased Board of Statutory Auditors IOTA S.r.l. Statutory Auditor Ceased Pirelli & C. Ambiente Renewable Energy Alternate Auditor Ceased S.p.A. Pirelli & C. Real Estate Facility Statutory Auditor Ceased Management S.p.A. Pirelli & C. Ambiente Eco Technology Statutory Auditor Ceased S.p.A. Progetto Grande Bicocca S.r.l. Statutory Auditor Ceased Pirelli RE Franchising S.p.A. Statutory Auditor Ceased Partecipazioni Real Estate S.p.A. Chairman of the Ceased Board of Statutory Auditors Pirelli & C. Real Estate Project Statutory Auditor Ceased Management S.p.A. Mondadori Informatica – E.Bis Media Statutory Auditor Ceased S.r.l. in liquidation REPEG Italian Finance S.r.l. Statutory Auditor Ceased

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Board of Statutory Auditors Name Company Office Status C.E.R.E.S. Centro Editoriale Ricerca e Liquidator Ceased Sviluppo S.r.l. TEXTO S.p.A. Alternate Auditor Ceased Verdi S.r.l. in liquidation Alternate Auditor Ceased Ganimede S.r.l. in liquidation Liquidator Ceased Immobiliare Le Ghirlande S.r.l. in Liquidator Ceased liquidation Asset Management NPL S.r.l. Statutory Auditor Ceased Electa Napoli S.p.A. Chairman of the Ceased Board of Statutory Auditors Crefer S.p.A. Alternate Auditor Ceased CEE – Europromoter S.r.l. in liquidation Official Receiver Ceased P. E. OL. S.r. l. Alternate Auditor Ceased Sperling & Kupfer Editori S.p.A. Statutory Auditor Ceased Labor S.r.l. Liquidator Ceased C.O.M.P. Ranzini S.r.l. Liquidator Ceased Società S.T.D. Trasporti Depositi S.r.l. Liquidator Ceased S.I.M.E. S.r.l. Alternate Auditor Ceased Santander Private Bank S.p.A. Alternate Auditor Ceased Alfa S.r.l. Statutory Auditor Ceased Mondadori Retail S.p.A. Statutory Auditor Ceased Localto S.p.A. Chairman of the Ceased Board of Statutory Auditors New Credit Servicing S.p.A. Statutory Auditor Ceased Gruppo S.I.M.E. Statutory Auditor Ceased Mondadori Printing S.p.A. Alternate Auditor Ceased Elle Nove Soc. coop. a r.l. Chairman of the Ceased Board of Statutory Auditors Elle Uno Scarl in liquidation Chairman of the Ceased Board of Statutory Auditors Altair IFM S.p.A. Chairman of the Ceased Board of Statutory Auditors CFT Finanziaria S.p.A. Chairman of the Ceased Board of Statutory Auditors I.S.I. S.r.l. Sole Director Ceased Fattoria Medicea S.r.l. Chairman of the Ceased Board of Statutory Auditors Agied S.r.l. Statutory Auditor Ceased Le Scienze S.p.A. Chairman of the Ceased Board of Statutory Auditors

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Board of Statutory Auditors Name Company Office Status Giulio Einaudi Editori S.p.A. Alternate Auditor Ceased Ingest Facility S.p.A. Statutory Auditor Ceased I.V.I.C. S.A.S. di Lanzillotti Teodoro & C. Official Receiver Ceased in liquidation Delta Partecipazioni S.r.l. in liquidation Partner Ongoing Paola Giudici Beata S.r.l. Sole Director Ongoing CFT Finanziaria S.p.A. Statutory Auditor Ongoing Immoterziario S.r.l. Sole Director Ongoing I.S.I. S.r.l. Statutory Auditor Ongoing Nuova QEM Quadri Elettrici Milano Liquidator Ongoing S.p.A. in liquidation Padana Superiore S.p.A. Statutory Auditor Ongoing Pirelli & C. Real Estate Agency S.p.A. Alternate Auditor Ongoing Edilnord Gestioni S.r.l. in liquidation Alternate Auditor Ceased Alfa S.r.l. Alternate Auditor Ongoing Tau S.r.l. Alternate Auditor Ongoing Pirelli & C. Real Estate Property Statutory Auditor Ongoing Management S.p.A. Kappa S.r.l. Alternate Auditor Ongoing Centrale Immobiliare S.r.l. Alternate Auditor Ongoing Pirelli & C. Real Estate Finance S.p.A. Alternate Auditor Ongoing PBS Soc. coop. a r.l. Statutory Auditor Ongoing Servizi Amministrativi Real Estate S.p.A. Statutory Auditor Ongoing Janus S.r.l. Sole Director Ongoing Immoterziario S.r.l. Sole Director Ongoing Solar Utility S.p.A. Alternate Auditor Ongoing Pirelli & C. Eco Technology S.p.A. Alternate Auditor Ongoing P. A . S G R S. p. A. Alternate Auditor Ongoing Sampieri S.r.l. Alternate Auditor Ongoing LA.ME. Engineering Valves S.r.l. Official Receiver Ongoing HL Project S.r.l. Official Receiver Ongoing MCR Multimedia S.p.A. in liquidazione Liquidator Ceased Alfa Due S.r.l. in liquidation Alternate Auditor Ceased Progetto Bicocca Esplanade S.p.A. Alternate Auditor Ceased Edilnord Progetti S.p.A. Alternate Auditor Ceased AGIED S.r.l. Alternate Auditor Ceased IOTA S.r.l. Alternate Auditor Ceased Delta S.p.A. Alternate Auditor Ceased Progetto Grande Bicocca Multisala S.r.l. Alternate Auditor Ceased in liquidation Pirelli & C. Ambiente Eco Technology Alternate Auditor Ceased S.p.A. Progetto Grande Bicocca S.r.l. Alternate Auditor Ceased Pirelli & C. Real Estate Franchising S.p.A. Alternate Auditor Ceased

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Board of Statutory Auditors Name Company Office Status Partecipazioni Real Estate S.p.A. Alternate Auditor Ceased Pirelli & C. Real Estate Project Alternate Auditor Ongoing Management S.p.A. REPEG Italian Finance S.r.l. Alternate Auditor Ceased Verdi S.r.l. in liquidation Liquidator Ceased Esedra S.r.l. Alternate Auditor Ceased Agorà S.r.l. in liquidation Liquidator Ceased Erato Finance S.r.l. Liquidator Ceased Asset Management NPL S.r.l. Alternate Auditor Ceased Building Support S.r.l. Alternate Auditor Ceased CREFER S.p.A. Alternate Auditor Ceased PE.OL. S.r.l. Statutory Auditor Ceased S.I.M.E. S.r.l. Statutory Auditor Ceased Immobiliare Cernusco S.r.l. Statutory Auditor Ceased Venexiana S.r.l. Alternate Auditor Ceased Servizi Amministrativi Real Estate S.p.A. Alternate Auditor Ceased Elle Nove Soc. coop. a r.l. Alternate Auditor Ceased Elle Uno Soc. coop. a r.l. in liquidation Statutory Auditor Ceased Crefer S.r.l. Alternate Auditor Ceased I.P.A. Impiallacciatura Placcaggio ed Statutory Auditor Ceased Affini S.r.l. Fattoria Medicea S.r.l. Alternate Auditor Ceased Agied S.r.l. Alternate Auditor Ceased Ingest Facility S.p.A. Alternate Auditor Ceased Multi-Top S.r.l. Official Receiver Ceased Studio Gorini S.A.S. di Limited Partner Ceased Moroni Ornella & C.

14.1.6 Judicial and disciplinary proceedings involving members of the Board of Directors and Board of Statutory Auditors and Senior Managers of the Issuer On 22 May 2007, Gamma RE B.V. - a company in which the Issuer holds a 49% interest through Pirelli RE Netherlands B.V. - presented two different tender offers on the shares of real estate investment funds "Tecla - Fondo Uffici" and "Berenice - Fondo Uffici", set up and managed by Pirelli RE SGR, a company wholly controlled by the Issuer (the “Tender Offers”). Consob, following monitoring and inspection procedures carried out at the offices of the Issuer and Pirelli RE SGR for the purpose of identifying possible infringements of the legislative and regulatory provisions applicable to the Tender Offers, decided to commence disciplinary proceedings against the management of the Issuer and of Pirelli RE SGR. Following such proceeding, with Order No. 16791 and Order No. 16798, issued on 12 February 2009 and 19 February 2009 respectively, Consob imposed fines on certain members of the Issuer's Board of Directors and Board of Statutory Auditors. In particular, according to Consob: Order 16798

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• Carlo Alessandro Puri Negri and Olivier Yves Marie de Poulpiquet De Brescanvel were alleged to have violated Article 102(1) of the Italian Finance Act, due to lack of information found in offer documents relating to units in the real estate investment mutual funds "Tecla - Fondo Uffici" and "Berenice - Fondo Uffici" in relation to the description of the reasons and future programs of the issuer. For this they were fined Euro 160,000.00 and Euro 110,000.00, respectively; • Carlo Alessandro Puri Negri and Olivier Yves Marie de Poulpiquet De Brescanvel were alleged to have violated Article 102(1) of the Italian Finance Act, due to lack of information found in offer documents relating to units in the real estate investment mutual fund "Berenice - Fondo Uffici", with specific regard to the indication of criteria for determining the price offered. For this they were fined Euro 80,000.00 and Euro 50,000.00, respectively; • Carlo Alessandro Puri Negri was alleged to have violated the obligation of correctness set forth by the combined provisions of Article 103(4)(b) of the Italian Finance Act and Article 42(1) of the Regulation on Issuers, with regard to notifications of the issuer relating to offers on the real estate investment mutual funds "Tecla - Fondo Uffici" and "Berenice - Fondo Uffici", for having facilitated and/or approved the numerous interferences of the bidder occurred during the process of valuation of the offers. For this he was fined Euro 450,000.00; • Olivier Yves Marie de Poulpiquet De Brescanvel was alleged to have violated the obligation of correctness set forth by the combined provisions of Article 103(4)(b) of the Italian Finance Act and Article 42(1) of the Regulation on Issuers, with reference to notifications of the issuer regarding offers on the real estate investment mutual funds "Tecla - Fondo Uffici" and "Berenice - Fondo Uffici", for having interfered in the activity of the issuer Pirelli RE SGR. For this he was fined Euro 300,000.00; Order 16791 According to Consob, Pirelli RE SGR did not take the necessary measures to prevent, or at least to minimise, the negative effects on the holders of units in the real estate investment mutual funds "Tecla - Fondo Uffici" and "Berenice - Fondo Uffici" deriving from the conflict of interests which existed in relations between Pirelli RE SGR itself and the parent company Pirelli RE in regard to the Tender Offers. For this reason, it imposed on the members of the Issuer's Board of Directors and Board of Statutory Auditors, the following fines: • Carlo Alessandro Puri Negri: Euro 120,000.00; • Olivier Yves Marie de Poulpiquet De Brescanvel: Euro 77,000.00; • Roberto Bracchetti: Euro 98,500.00. On 23 March 2009, the individuals who had been fined, objecting to the conclusions reached by Consob and, convinced of the legitimacy of their respective behaviour, lodged an appeal with the Appeals Court of Milan. Without prejudice to the above, to the best of the Company’s knowledge, in the five years prior to the Prospectus Date none of the members of the Board of Directors, Board of Statutory Auditors and senior managers: (i) has been found guilty of fraud; (ii) has been the subject of bankruptcy or, for reasons of the position held, involved in any way in crimes of fraudulent bankruptcy, controlled receivership or liquidation procedures; (iii) has been charged officially and/or sanctioned by public or regulatory authorities (including designated professional associations), and/or banned by a court from serving as a member of administrative, management or auditing bodies of the Issuer or from performing the work of corporate

229 Section I Registration Document management or administration.

14.2 Conflicts of interest of members of the Board of Directors and Board of Statutory Auditors and of the Senior Managers To the best of knowledge of the Issuer, no member of the Board of Directors, no member of the Board of Statutory Auditors, and none of the Senior Managers of the Issuer, in office as of the Prospectus Date, has any private interests in conflict with their obligations deriving from their office. The members o of the Board of Directors were appointed by the Company's ordinary Shareholders' Meeting held on 14 April 2008, with the exception of: (i) Valter Lazzari, appointed by the Board of Directors on 5 March 2009 to replace the resigning director Dolly Predovic and confirmed by the Ordinary Shareholders' Meeting held on 17 April 2009, and (ii) Giulio Malfatto, appointed by the Board of Directors of 8 April 2009 to replace the resigning Executive Deputy Chairman Carlo Puri Negri. Therefore all directors, with the exception of Giulio Malfatto whose appointment is to be confirmed by the Shareholders’ Meeting by the first available opportunity, will remain in office until the date of the Shareholders’ Meeting that will be called to approve the annual financial statements for the year ending 31 December 2010. The members of the Board of Statutory Auditors were appointed by the Company's Ordinary Shareholders' Meeting on 20 April 2007. The Company’s shareholders approved this appointment in the absence of agreements or understandings of any nature with customers, suppliers and other subjects. As regards the positions held by the Chairman of the Board of Directors and by the Chief Financial Officer in the Parent Company Pirelli & C., see Section One, Chapter XIV, Paragraph 14.1.

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15. REMUNERATIONS AND BENEFITS

15.1 Compensations and benefits for members of the Board of Directors, Board of Statutory Auditors and Senior Managers of the Issuer The table shows the compensation paid to members of the Board of Directors, Board of Statutory Auditors and to General Managers for the year ended 31 December 2008: Board of Directors Non- Bonuses Other Name Office Compensation monetary and other emoluments benefits incentives Marco Tronchetti Chairman of the Board of 435,000 - - - Provera(1) Directors Chairman of the Executive Committee Carlo Alessandro Puri Executive Deputy Chairman(2) 2,045,000 4,562 - 30,000 Negri(1) Member of the Executive Committee Emilio Biffi(1) Chief Technical Officer 530,000 3,392 -(3) 333,333 Claudio De Conto(1) Chief Financial Officer(4) 45,000 - - - Member of the Executive Committee Olivier Yves Marie de Chief Executive for Investment & 220,000 111,293 -(3) 700,699 Poulpiquet De Fund Raising(5) Brescanvel(1) Member of the Executive Committee Paolo Massimiliano Director 30,000 8,965 100,000(3)(10) 469,231 Bottelli(1) General Manager Germany and Poland(6) Jacopo Franzan(7) Director 22,500 - - - Wolfgang Weinschrod(7) Director 22,500 - - 318,800 Reginald Bartholomew(1) Non-Executive Director 45,000 - - - Member of the Remuneration Committee David Michael Brush(7) Non-Executive Director 22,500 - - - William Dale Crist(1) Non-Executive Director 45,000 - - - Member of the Audit Committee Carlo Emilio Croce(1) Non-Executive Director 41,250 - - - Member of the Remuneration Committee(8) Claudio Recchi(1) Non-Executive Director 60,000 - - - Chairman of the Remuneration Committee Member of the Executive Committee Dario Trevisan(1) Non-Executive Director 45,000 - - 15,000 Chairman of the Audit Committee Dolly Predovic(9) Non-Executive Director 26,250 - - - Roberto Bracchetti(1) Chairman of the Board of 60,000 - - 44,873 Statutory Auditors Paolo Carrara(1) Statutory Auditor 40,000 - - 7,619

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Board of Directors Non- Bonuses Other Name Office Compensation monetary and other emoluments benefits incentives Gianfranco Polerani(1) Statutory Auditor 40,000 - - 20,504 Franco Ghiringhelli(1) Alternate Auditor - - - 49,260 Paola Giudici(1) Alternate Auditor - - - 3,362 Gerardo Benuzzi(1) General Finance and Advisory - 4,239 80,000(3)(10) 407,692 Manager(11) Rodolfo Petrosino(1) General Manager Italy(6) - 51,532 100,000(3)(10) 469,231 (1) Office held from 1 January 2008 to 31 December 2008. (2) Appointed by the Board of Directors on 27 May 2008. Formerly Deputy Chairman and Chief Executive Officer. Carlo Alessandro Puri Negri resigned from the office on 8 April 2009. (3) Beneficiary of the Stock Grant Plan 2008 described in Section One, Chapter XVII, Paragraph 17.2. (4) Appointed by the Board of Directors on 16 December 2008. Formerly Director. (5) Appointed by the Board of Directors on 27 May 2008, formerly Director. This office was revoked on 8 April 2009. (6) Appointed by the Board of Directors on 16 December 2008. (7) Office held from 14 April 2008, date of latest appointment of the Board of Directors, to 31 December 2008. (8) Appointed member of the Remuneration Committee on 14 April 2008. (9) Appointed member of the Board of Directors and of the Audit Committee on 14 April 2008. Resigned on 21 November 2008. (10) This is the first tranche of the three-year retention plan. (11) Position renamed on 20 April 2009. Bonus Pool plan for Top Management and Executives In 2008, a new variable remuneration and bonus plan for Executives and Top Management was adopted, introducing a bonus system (Bonus Pool 2008) to replace the traditional MBO (Management by Objectives) and LTI (Long-Term Incentive) plans, along with a retention bonus plan for Executives and certain key Top Managers. The Bonus Pool 2008 plan applies to the Executive Deputy Chairman, Executives and Top Managers and replaces both the MBO and LTI plans previously used for such offices. The main features of the system, aimed at providing further incentives to boost profits, include: (i) an entitlement threshold; failure to achieve a certain net profit means the Bonus Pool amount is zero, and (ii) the use of percentage rates, which determine the amount of the Bonus Pool and which rise in proportion to the results. With regard to the entitlement level, we note that this has been introduced also for the Executive Deputy Chairman, amending the previous system whereby the Executive Deputy Chairman received a fixed percentage of the Consolidated Net Profit, with no thresholds. Under the new plan, the bonus is calculated on an yearly basis according to the following criteria: (i) the bonus matures annually depending on the achievement of certain performance targets and represents part of the net profit generated in the relevant financial year by the Pirelli RE Group; (ii) those performing "Linea" roles receive a proportionate bonus higher than Staff resources and, within both Linea and Staff bonuses, there are different quota levels (the system includes four different quota levels); (iii) part of the matured bonus (75%) is paid annually in cash; (iv) cash payment of the remaining matured bonus is deferred to the end of the three-year period and; (v) for any consolidated net profit performance that exceeds the target set, the Company may issue further quotas based on the bonus matured and related to the higher profit generated. In 2008, since the defined performance targets were not achieved, the total Bonus Pool 2008 obtained was zero and, as a result, beneficiaries of the plan will not receive any bonuses. Retention bonus

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Considering the primary purpose of retaining key employees of the Pirelli RE Group, a retention bonus scheme was introduced that rewards permanence in office, in the belief that this instrument is capable of strengthening their loyalty and contributing more to the new three-year cycle with a solid and reliable top management team. Operation of the retention scheme provides for: (i) coverage of the 2008-2010 three-year period; (ii) bonus payments based on permanence in the Pirelli RE Group for three years, up to May 2011; (iii) if any person is no longer in the Pirelli RE Group before the deadline of May 2011, the return of any bonus payments already received. Pirelli RE incentive plans (MBO and LTI) Employees who do not participate in the Bonus Pool 2008 plan but who are considered key data for the Pirelli RE Group (managers, General Managers’ assistants, specific significant and key positions, and commercial staff with direct responsibility for the economic result) are entitled to benefit from the Management by Objectives system (MBO). The MBO system works as follows: (i) bonus payments are subject to the achievement of "On/Off" restrictions; (ii) the bonus amount is determined on the basis of an overall assessment of individual performance; (iii) there is no automatic relation between the overall performance rating and the bonus percentage reached: the scheme is defined according to a performance assessment form submitted to each beneficiary specifying the targets assigned to each person; (iv) evaluation by the hierarchical superior and other assessors (functional manager, project manager, internal clients, etc. as specified upon issue of the form) who must indicate an overall assessment which takes into account both achievement of the targets and an evaluation of the skills of the beneficiary; (v) the bonus is calculated as a percentage of gross annual salary. Since the performance targets defined were not achieved, the total MBO bonus obtained for 2008 was zero and, as a result, beneficiaries of the system will not receive any bonuses. We can note that, in 2008, for certain key resources not participating in the Bonus Pool 2008 plan, the Remuneration Committee had approved an LTI 2008-2010 (Long Term Incentive) scheme related to the 2008-2010 Three-Year Plan. However, this plan has never been approved, and therefore the LTI system was not implemented. An LTI system for the new 2009-2011 Three-Year Plan will be studied by the Remuneration Committee in the final quarter of 2009.

15.2 Amounts set aside or accumulated by the Issuer or other Group companies for the payment of pensions, severance indemnity payments or other similar benefits For the payment of severance indemnities or similar benefits to the senior managers of the Group specified in Paragraph 15.1 above, the Issuer has set aside for the year ended 31 December 2008 a total of Euro 261 thousand. Carlo Alessandro Puri Negri, in relation to the position held with Pirelli RE up to 20 April 2009, in addition to the TFM (retirement benefit), equivalent to the TFR (severance indemnity payment), is granted an additional annual portion of TFM pursuant to Article 17 (1), letter c) of Presidential Decree No. 917/1986 (TUIR), starting from 62 years of age (with the possibility of advanced redemption) or as a death bonus, deriving from policies with leading insurance companies, with a premium paid out by the Company. This premium corresponds to the amounts which would be payable by the Company to Social Security Institutions or Pension Funds if the interested party were a Manager of the Company. On 8 April 2009, the Board of Directors – acknowledging the resignation of Carlo Alessandro Puri Negri from Board of Directors and, consequently, from his role as Executive Deputy Chairman, prior to the natural expiry of his mandate, set at April 2011, on approval of the

233 Section I Registration Document financial statements for the year ended 31 December 2010 – agreed to pay Carlo Alessandro Puri Negri the following post-employment benefits: (i) a total amount of Euro 9.4 million as indemnity for early termination of his mandate as director, with the consequent waiver of any claims, requests or actions for any reason whatsoever against the Company, (ii) an amount of Euro 3.0 million, to be paid over the course of 2009-2010, in exchange for signing a one-year non-compete agreement and a two-year "non-solicitation" agreement covering employees of the Pirelli RE Group. Pirelli RE has also entered into a two-year consultancy agreement with Carlo Alessandro Puri Negri in the real estate sector for an annual gross payment of Euro 0.8 million. The abovementioned payment was determined on the basis of the applicable regulations and in accordance with the relevant best practices, and was examined by the Remuneration Committee, which is exclusively composed of Independent Directors. In making its assessments, the Remuneration Committee has been advised by a firm specialised in the field of top management remuneration and by a legal adviser.

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16. PRACTICES OF THE BOARD OF DIRECTORS

16.1 Term of office of members of the Board of Directors and of members of the Board of Statutory Auditors

16.1.1 Board of Directors All directors in office as of the Prospectus Date, with the exception of Giulio Malfatto, whose appointment will be confirmed by a Shareholders’ Meeting at the first available opportunity, will expire on the date of the Shareholders’ Meeting that will be called upon to approve the financial statements as of and for the year ending 31 December 2010. The following table shows the date each director was first appointed as a member of the Company's Board of Directors.

Board of Directors Office Name Date of first appointment Chairman Marco Tronchetti Provera 16 May 1991 Chief Executive Officer Giulio Malfatto 8 April 2009(1) Chief Financial Officer Claudio De Conto 23 January 2007 Chief Technical Officer Emilio Biffi 27 February 1997 Director Paolo Massimiliano Bottelli 23 January 2007 Olivier Yves Marie de Poulpiquet De Director 27 April 2005 Brescanvel Director Jacopo Franzan 14 April 2008 Director Wolfgang Weinschrod 14 April 2008 Independent Director Reginald Bartholomew 3 May 2002 Independent Director David Michael Brush 14 April 2008 Independent Director Carlo Emilio Croce 25 January 2006 Independent Director William Dale Crist 6 May 2003 Independent Director Valter Lazzari 5 March 2009 Independent Director Claudio Recchi 3 May 2002 Independent Director Dario Trevisan 6 May 2003 (1) The Chief Executive Officer Giulio Malfatto was a Director of the Issuer from 30 May 2001 to 10 May 2004.

16.1.2 Board of Statutory Auditors The Auditors in office as of the Prospectus Date will remain in office until the date of the Shareholders’ Meeting that will be called to approve the financial statements as of and for the year ending 31 December 2009.

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The following table shows the date each auditor was first appointed as a member of the Company's Board of Statutory Auditors.

Board of Statutory Auditors Office Name Date of first appointment Chairman Roberto Luigi Maria Bracchetti 30 April 1998 Statutory Auditor Paolo Carrara 4 April 1984 Statutory Auditor Gianfranco Polerani 4 April 1984 Alternate Auditor Franco Ghiringhelli 22 April 1992 Alternate Auditor Paola Giudici 30 April 1998

16.2 Employment agreements entered into by the members of the Board of Directors and the members of the Board of Statutory Auditors with the Issuer or with other Group companies which provide for severance indemnity payments As of the Prospectus Date, the Director Paolo Massimiliano Bottelli is bound to the Company, as General Manager Germany and Poland, by an employment agreement drafted on the basis of the collective bargaining agreement for the managers of production and services companies which provides for the payment of severance indemnity pursuant to the applicable laws. For the office of Executive Deputy Chairman Carlo Alessandro Puri Negri, see Section One, Chapter XV, Paragraph 15.2. With the exception of those indicated above, there are no employment agreements entered into between Pirelli RE, or any other Group companies, and any members of the Board of Directors or of the Board of Statutory Auditors of the Issuer.

16.3 Information on the Internal Audit and Corporate Governance Committee and the Remuneration Committee In accordance with the rules on corporate governance laid down by the Italian Stock Exchange, the Company's Board of Directors, pursuant to Articles 8.P.4 and 7.P.3 of the Self-Governance Code, has constituted (i) the Internal Audit and Corporate Governance Committee and (ii) the Remuneration Committee. On 14 April 2008, the Company's Board of Directors approved the respective organisational rules and regulations of these committees. On 9 March 2006, the Board of Directors also introduced the charge of Lead Independent Director, in order to enhance the role of Independent Directors, anticipating the indication later contained in Article 2.C.3. of the Self-Governance Code. This charge, identified as the Chairman of the Internal Audit and Corporate Governance Committee, Dario Trevisan, manages and coordinates all the requests and contributions of Independent Directors.

16.3.1 Internal Audit and Corporate Governance Committee As of the Prospectus Date, the Internal Audit and Corporate Governance Committee was composed, pursuant to Article 8.P.4 of the Self-Governance Code, of the Independent Directors Dario Trevisan, William Dale Crist and Valter Lazzari. The latter – a university lecturer and Head of the Faculty of Economics of the University of Castellanza – has sufficient experience in accounting and finance, as assessed as of the time of his appointment by the Board of Directors on 5 March 2009, by virtue of his specific professional experience and principal positions held. The Internal Audit and Corporate Governance Committee has the following informative and consultative duties: (i) it assists the Board of Directors and (limited to only the first of the following points), upon request, the Deputy Chairman and Chief Executive Officer:

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(a) in laying down guidelines for the internal audit system, ensuring that the main risks affecting the Company and its controlled companies are correctly identified and adequately measured, managed and monitored, setting out additional criteria as to the compatibility of such risks with solid and correct company management; (b) in identifying an executive director (normally one of the managing directors) with the duty of overseeing the operation of the internal audit system; (c) in evaluating, at least on an annual basis, the adequacy, effectiveness and actual performance of the internal audit system; (d) in describing, in a corporate governance report, the essential elements of the internal audit system, expressing its own assessment of the overall adequacy of the system; (ii) it expresses an opinion on proposals for the appointment, revocation and grant of powers relating to the internal audit manager and the manager responsible for corporate financial reporting; (iii) together with the manager responsible for corporate financial reporting and the independent auditors, it assesses the correct use of the accounting standards and their proper application within the Group in the preparation of the consolidated financial statements; (iv) at the request of the executive director, it expresses its opinion on specific aspects related to identification of the main business risks and to the design, creation and management of the internal audit system; (v) it examines the work schedule and all regular reports prepared by the internal audit managers; (vi) it evaluates the proposals formulated by independent auditors for the award of the appointment, the work schedule prepared for the auditing work and the results set out in the report and in any accompanying letter of recommendations; (vii) it monitors the effectiveness of the auditing process; (viii) it monitors observance of the principles for the execution of transactions with related parties that the Company has set out; (ix) it carries out any further tasks assigned to it by the Board of Directors, including monitoring procedural correctness and the substantial fairness of operations. The Committee is assigned the task of proposing to the Board of Directors candidates for co- option in the event of replacement of any of the Independent Directors, or, in general, for the co-option of directors; (x) it monitors observance and regular updating of the rules on corporate governance and compliance with any codes of conduct adopted by the Company and by its controlled companies. It is also responsible for proposing methods and timing for preparation of the Board of Directors' annual self-assessment.

16.3.2 Remuneration Committee As of the Prospectus Date, the Remuneration Committee is composed of directors Claudio Recchi, Reginald Bartholomew and Carlo Emilio Croce, all independent. The Remuneration Committee carries out the following tasks: (i) it formulates proposals to the Board of Directors for the remuneration of chief executive officers and of persons appointed to particular positions, in order to ensure that they are in

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line with the aim of medium/long-term value creation for shareholders, assessing their application in a final report; (ii) it periodically assesses criteria for the remuneration of the Company's top management and, following the instructions of the Deputy Chairman and Chief Executive Officer, it formulates proposals and recommendations on this subject, with particular reference to the adoption of any stock option or other share incentive plans, assessing their application in a final report; (iii) it monitors the application of decisions made by the competent bodies and of corporate policies in regard to the compensation of top management.

16.4 Observance of corporate governance regulations The Company has adopted a structure of corporate governance characterised by a set of rules, behaviours and processes aimed at maintaining an efficient and transparent corporate governance system. The Company's corporate governance system is based on the principles and application criteria laid down in the Self-Governance Code, which the Company has followed since 2002, the year in which it was listed on the MTA. After this, with a resolution passed by the Board of Directors on 6 November 2006, the Company adopted the Self-Governance Code in its March 2006 version. In particular: (i) the powers exercised by the Board of Directors – including in its work of strategic guidance, oversight and control of the company business, as provided for in the By-laws and implemented in corporate practices – are consistent with the principles and application criteria pursuant to Article 1 of the Self-Governance Code; (ii) the Board of Directors set up internally the Internal Audit and Corporate Governance Committee and the Remuneration Committee; (iii) the Executive Deputy Chairman, in agreement with the Board of Directors, constituted a specific internal auditing unit and appointed to manage it Maurizio Bonzi, the Internal Audit Manager of Pirelli & C.; (iv) the Board of Directors appointed Chief Executive Officer Giulio Malfatto as Executive Director in charge of Overseeing the Operation of the Internal Audit System, in accordance with the provisions of Article 8.C.1. of the Self-Governance Code; (v) the Company adopted a procedure for the processing of privileged information in accordance with the indications of the Self-Governance Code; (vi) the Independent Directors in office as of the Prospectus Date satisfy the requirements of independence in accordance with the principles and application criteria pursuant to Article 3 of the Self-Governance Code; (vii) the Company appointed a manager with specific responsibility for all activities relating to the area of institutional investors and with all other shareholders (the Investor Relator). As of the Prospectus Date, the Investor Relator is Dario Fumagalli; (viii) the Company established principles of conduct for the execution of transactions with related parties, including those within the group, and of real estate transactions. These principles are designed to ensure substantial and procedural fairness and transparency, in accordance with Article 9.P.1. of the Self-Governance Code; (ix) implementing Article 115-bis of the Italian Finance Act, the Company set up a register of persons who, as a result of their work or professional activity or the roles they perform, have access to privileged information;

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(x) the Company appointed Gerardo Benuzzi to oversee the preparation of the company's accounting documents; (xi) the Company adopted the organisational model provided for in Legislative Decree 231/2001 whereby Pirelli RE Group companies may have administrative liability for offences perpetrated by top managers in the interest or to the advantage of such companies. In accordance with the above, a Supervisory Board was created which will be responsible for supervising the effectiveness, appropriateness and observance of the Model. For further information on the corporate governance system adopted by the Company and on the level of compliance, see the Company's Annual Corporate Governance Report, which can be viewed on the Company’s website (www.pirellire.com) and on the website of the Italian Stock Exchange (www.borsaitaliana.it).

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17. EMPLOYEES

17.1 Number of employees The following table shows changes in the number of employees of the Pirelli RE Group as of 31 December 2006, 2007 and 2008, divided on the basis of the main professional categories and geographical distribution.

2006 2007 2008 Executives 194 216 143 In Italy 194 195 118 Abroad -2125 Middle managers 324 402 225 In Italy 324 398 225 Abroad -4 - White collar 1,061 1,518 1,016 In Italy 1,013 1,070 483 Abroad 48 448 533 Blue collar/Auxiliary staff(1) 269 522 89 In Italy 269 425 1 Abroad -9788 Total 1,848 2,658 1,473 + 16 temporary workers + 34 temporary workers + 85 temporary workers Total including temporary workers 1,864 2,692(2) 1,558 (1) Staff numbers variable in relation to activities associated with contracts managed. (2) Considering also personnel employed by the German platform BauBeCon, the 2007 total would be 2,956. With regard to the number of employees at the end of 2008, a significant reduction can be seen compared to the previous year. This change is due to deconsolidation of the Integra FM B.V. Group (now Pirelli RE Integrated Facility Management B.V.) and to the restructuring plan implemented in the second half of 2008.

17.2 Equity investments and stock options of members of the Board of Directors, statutory auditors and/or senior managers of the Issuer On 6 March 2008, based on the proposal of the Remuneration Committee, the Board of Directors approved the guidelines for two financial instrument-based payment plans (jointly the Plans): – a stock option plan, whereby beneficiaries are given options to purchase Pirelli RE shares (Stock Option Plan 2008 - 2010); – a stock grant plan, whereby beneficiaries are assigned Pirelli RE shares free of charge (Stock Grant Plan 2008 or SGP 2008). On 14 April 2008, the Shareholders' Meeting approved the Plans, issuing a mandate to the Board of Directors to adopt the relative regulations and granting the Board with all powers necessary and appropriate for their implementation. On 8 May 2008, the Board of Directors, based on the proposal of the Remuneration Committee

240 Section I Registration Document and in accordance with the guidelines approved by the Shareholders’ Meeting and with the powers granted thereby, proceeded to implement the Plans, adopting the associated regulations. Subsequently, on 27 May 2008, at the proposal of the Remuneration Committee and following a number of changes made to simplify and adjust the organisational structure to the new requirements of growth and corporate development, the Board of Directors approved a number of changes with reference to the options assigned to beneficiaries of the Stock Option Plan 2008 - 2010, in compliance with the guidelines approved by the Shareholders’ Meeting and with the powers granted thereby. The abovementioned date of 27 May 2008 therefore represents a new assignment date for the options related to the Stock Option Plan 2008-2010 for certain identified beneficiaries. More detailed information on the Plans is given below.

Stock Option Plan 2008-2010 Characteristics of the plan Assignment of non-transferrable options to purchase ordinary shares in Pirelli RE held by the Company (treasury shares). Recipients as of 31 December 2008 51 resources (directors, managers and other key persons) of Pirelli RE and its controlled companies. Originally, on the date of approval of the plan, there were 58. Two assignments were carried out, on 8 May 2008 (1,240,000 options) and 27 May 2008 (193,500 options). Conditions for exercise of options (a) Maintenance of employment relationship or position of director within Pirelli RE Group companies; (b) attainment/surpassing, at the moment of exercise, of a minimum market price for Pirelli RE securities of not less than Euro 26.00; (c) achievement by Pirelli RE of the performance targets set by the Board of Directors on approval of the 2008-2010 Three-Year Plan. Unit price for subscription/ Each option assigned gives the beneficiary the right to subscribe/purchase purchase of shares one Pirelli RE ordinary share at the price of Euro 21.23 for options assigned on 8 May 2008 and at the price of Euro 18.88 for options assigned on 27 May 2008, which is the "normal value" of the share on the date of offering; this price may vary in the event of share capital operations or other extraordinary operations, but beneficiaries are in any case guaranteed rights equivalent to those to which they were entitled prior to such operations. Vesting period Options may be partially exercised (40%) from 1 May 2010 to 31 December 2011 (first tranche) and the remaining (60%) from 1 May 2011 to 31 December 2011 (second tranche) and, in any case, not later than 31 December 2011. Beneficiaries may be entitled to early exercise of options, in the event of "change of control" and, thus, if Pirelli & C. ceases to be the controlling shareholder of the Company, without prejudice to the validity of the market and operational constraints, with predetermined application criteria in relation to the exercise of options if such an event occurs. Maximum number of options with 1,379,500 options, equal to approximately 0.03% of the total outstanding pending offers as of 31 December ordinary shares as of the Prospectus Date. 2008 Options expired in 2008 for 54,000. persons who have left the Group Shares issued in the period None.

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Stock Grant Plan 2008 Characteristics of the plan Assignment of stock grants resulting from the mutual consent agreement on early termination of the Long Term Incentive 2006-2008 (LTI) plan, equal to the total amount potentially payable to beneficiaries accrued in 2006, divided among the beneficiaries according to the amount to which each is entitled. The amount payable to beneficiaries in cash was paid in shares. Recipients as of 31 December 2008 55 resources (directors, managers and other key figures) of Pirelli RE and its controlled companies. The number of shares assigned was 109,860 as of 8 May 2008. Lock-Up period Participation in the Stock Grant Plan 2008 implies the assumption, by each beneficiary, of commitment to a lock-up period which expired on 30 April 2009. Call option In the event of resignation or dismissal with just cause and/or severance of employment as director during the lock-up period, the Company may exercise a call option to repurchase the shares of the beneficiary. The following table specifies the number of stock options assigned to members of the Board of Directors and to General Managers under the Stock Option Plan 2008-2010.

Options expired/ Options assigned during financial Options exercised during Options held at end of Prices in Euro invalidated in year 2008 financial year 2008 financial year 2008 financial year 2008 Name No. of Avge. Maturity No. of Avge. Average No. of No. of Avge. Options Exercise options Exercise Market Options Options Exercise Price Price Price at Price Exercise Carlo Alessandro 300,000 21.23 31/12/2011 - - - - 300,000 21.23 Puri Negri(1) Emilio Biffi 30,000 21.23 31/12/2011 - - - - 30,000 21.23 Olivier de 200,000 21.23 31/12/2011 - - - - 200,000 21.23 Poulpiquet Paolo Bottelli 140,000 21.23 31/12/2011 - - - - 140,000 21.23 33,500 18.88 31/12/2011 33,500 18.88 Wolfgang 15,000 21.23 31/12/2011 - - - - 15,000 21.23 Weinschrod Rodolfo Petrosino 140,000 21.23 31/12/2011 - - - - 140,000 21.23 33,500 18.88 31/12/2011 33,500 18.88 Gerardo Benuzzi 65,000 21.23 31/12/2011 - - - - 65,000 21.23 12,500 18.88 31/12/2011 12,500 18.88 (1) Options expired on 8 April 2009 as a result of termination of office of Director of Pirelli RE and of some of its controlled companies. The following table specifies the number of Pirelli RE shares assigned to members of the Board of Directors and to General Managers under the Stock Grant Plan 2008.

Average Market Price Name Shares granted during the 2008 period on grant date (in Euro) Emilio Biffi 5,203 19.37 Olivier de Poulpiquet 16,283 19.37 Paolo Bottelli 7,400 19.37 Rodolfo Petrosino 7,400 19.37 Gerardo Benuzzi 4,607 19.37 The following table shows the equity investments in the Issuer's share capital held, directly or

242 Section I Registration Document indirectly, by members of the Board of Directors and of the Board of Statutory Auditors and by General Managers as of 31 December 2008, along with any variations over the course of the year.

Number of Number of Number of Number of shares held as shares shares held as Name shares sold of 31 December purchased of 31 in 2008 2007 in 2008 December 2008 Carlo Alessandro Puri Negri 1,026,500 - - 1,026,500 Emilio Biffi 133,000 - - 138,203 Paolo Massimiliano Bottelli 10,500 - - 17,900 Carlo Croce 600 - - 600 Olivier de Poulpiquet 107,500 - - 123,783 Gerardo Benuzzi 6,500 - - 11,107 Rodolfo Petrosino 14,350 - - 21,750 As of 31 December 2008, Giulio Malfatto holds 5,908 shares.

17.3 Employee equity investment agreements Without prejudice to that described under Paragraph 17.2 above, as of the Prospectus Date there are no agreements for employee shareholdings in the Issuer's share capital.

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18. PRINCIPAL SHAREHOLDERS

18.1 Shareholders in possession of financial instruments representing more than 2% of the Issuer's share capital The table below shows the persons who, based on the data available to the Company, directly or indirectly, hold 2% or more of the Company’s share capital having voting rights.

No. of Shares % of voting share capital Shareholder as of the Prospectus Date Pirelli & C. S.p.A. 24,046,432 56.451 Alony Hetz Properties & Investments Ltd. 1,565,600 3.675 Threadneedle Asset Management Holdings 990,164 2.324 Ltd.

As of the Prospectus Date, the Company held 1,189,662 treasury shares, equal to 2.793% of its share capital. The Issuer's Ordinary Shareholders' Meeting held on 17 April 2009 resolved to authorise the Board of Directors, in accordance with Article 2357 of the Italian Civil Code, to purchase, within the date on which the Shareholders’ Meeting will be called for approval of the financial statements as of and for the year ending 31 December 2009, ordinary shares of the Issuer, taking into account the treasury shares already held by the Company and any held by controlled companies, up to a maximum amount equal to 10% of the share capital and in compliance with the applicable law, at a price not lower and not higher than 15% with respect to the weighted average of the official stock market prices recorded in the three trading days preceding each transaction. The relevant purchase plan was duly communicated to the market, in compliance with the applicable law, on 17 April 2009. The Shareholders’ Meeting also resolved to authorise, with no time limits, the full or partial disposal of the treasury shares held by the Company or purchased in accordance with the resolution described in the previous paragraph, also prior to the full exercise of the authorisation to purchase treasury shares. The sale may be made on one or more tranches and at any time, including through an offering to the public, to shareholders, on the market, or through any extraordinary operations or through an offering to employees and/or directors and/or other resources of the Company or of its controlled companies, as part of the stock option plans or other financial instrument-based payment plans or through other forms of remuneration of such persons. The shares may be disposed of in combination with bonds or warrants for their exercise and, in any case, in compliance with the applicable law, at the discretion of the Board of Directors. Treasury shares may be disposed of at the price or according to the terms and criteria determined by the Board of Directors, with regard to the implementation procedures used, to the share price trend during the preceding period and to the best interests of the Company, in accordance with the applicable legislation in force at the time, and at the discretion of the Board of Directors.

18.2 Other voting rights of the Issuer's principal shareholders As of the Prospectus Date, the Company has issued only ordinary shares and there are no voting shares other than the ordinary shares.

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18.3 Individuals and legal entities which exercise control over the Issuer As of the Prospectus Date, Pirelli & C. holds 56.45% of Pirelli RE share capital and exercises control over the Company pursuant to Article 93 of the Italian Finance Act (see Section One, Chapter VII, Paragraph 7.1 also with regard to the management and co-ordination by the parent company). To the Issuer's knowledge, there are no individuals or legal entities capable of exercising control over Pirelli & C., a company listed on the MTA, pursuant to Article 93 of the Italian Finance Act. We note the existence of a block shareholders' agreement covering 2,418,590,510 ordinary shares, equal to 46.22% of the voting capital. Such agreement has been notified to Consob and published pursuant to Article 122 of the Italian Finance Act and Articles 129 et seq. of the Regulation on Issuers.

18.4 Shareholders' agreements There are no shareholders’ agreements which could result in a change of control over the Issuer.

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19. RELATED PARTY TRANSACTIONS Pirelli RE has, in the past, entered into, and continues to enter into, a range of commercial and financial dealings with related parties, as defined by the International Accounting Standard IAS 24, adopted according to the procedure set forth by Article 6 of Regulation (EC) No. 1606/02 on disclosure in the financial statements of related party transactions. To ensure transparency and substantial correctness in the execution of transactions with related parties and, where necessary, the full joint responsibility of the Board of Directors, the Company has adopted specific standards for tracing operating processes and for identifying the related decision-making responsibilities. In accordance with the provisions of Article 18 of the By-laws and pursuant to Article 150(1) of the Italian Finance Act, the Company has also adopted a specific procedure whereby the Board of Directors and the Board of Statutory Auditors shall be duly informed, at least on a quarterly basis, of all the activity carried out, of the general performance, of foreseeable future developments and of the most significant economic, financial and equity-related transactions carried out by the Company and its controlled companies, and of any unusual or irregular transactions with related parties or, in any case, which may lead to a conflict of interest, through the illustration of all elements necessary for the appraisal of such transactions. In particular, this procedure establishes that: (i) with regard to transactions with related parties, including intra-group transactions, quarterly information shall be provided regarding underlying interests, group reasoning and the assessment procedures followed; (ii) with regard to intra-group transactions, all transactions of a value exceeding Euro 50 million or, if of a lesser value, transactions completed at non-standard terms, shall be disclosed; (iii) with regard to related transactions other than those within the group, all transactions of a value exceeding Euro 500,000 or, if of a lesser value, transactions completed in non- standard conditions, will be reported. Furthermore, the Company has adopted certain Principles of conduct for the execution of transactions with related parties, including intra-group and real estate transactions, aimed at guaranteeing effective substantial and procedural correctness and transparency and to encourage - whether necessary - the assumption of full joint responsibility by the Board of Directors in its related decisions. Referring for further details to the content of the code of conduct published on the Company's website, we note in particular that the Board is called to give prior approval – following an appraisal of the Internal Audit and Corporate Governance Committee – of transactions with related parties including intra-group transactions, with the exception of typical or regular transactions completed under standard terms.

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The tables below show the economic and financial relations with related parties in the periods 1 January – 31 December 2008, and 1 January – 31 March 2009. In millions of Euro 1 January 2008 / % 1 January 2007 / 31 % 31 December 2008 impact(1) December 2007 impact Redetermined (1) Operating revenues 129.5 31.4% 126.2 7.0% Operating expenses (47.9) 9.9% (64.8) 3.7% Financial income 34.1 69.0% 31.2 67.5% Financial expenses (33.3) 46.8% (8.9) 10.2% Change in fair value of financial assets (0.2) -6.1% - - Net profit share from investments in (177.0) 100.0% 115.0 100.0% associates and joint ventures Income taxes 2.5 -130.7% (3.3) 14.0% (1) The percentage impact is calculated with reference to the total accounting item.

In millions of Euro 31 December 2008 31 December 2007 Total % non- current Total % non- current impact(1) current impact(1) current Trade receivables 74.1 40.8% - 74.1 132.2 32.1% - 132.2 Other receivables of which: 589.8 86.3% 565.2 24.6 556.8 88.1% 520.8 36.0 - financial 581.2 98.6% 564.3 16.9 536.0 98.2% 519.9 16.1 Tax receivables 20.8 56.4% - 20.8 38.8 69.3% - 38.8 Trade payables 26.3 18.9% - 26.3 32.6 9.5% - 32.6 Other payables 11.6 9.9% - 11.6 19.8 14.9% - 19.8 Tax payables 17.3 73.3% - 17.3 18.1 67.5% - 18.1 Bank borrowings and payables to other financial institutions 498.0 54.4% - 498.0 630.7 88.6% - 630.7 (1) The percentage impact is calculated with reference to the total accounting item.

In millions of Euro 1 January 2009 / 31 % impact(1) 1 January 2008 / % impact(1) March 2009 31 March 2008 Operating revenues 25.3 41.1% 29.5 22.9% Operating expenses (5.2) 8.2% (5.9) 5.5% Financial income 8.3 89.6% 7.5 61.0% Financial expenses (4.4) 37.5% (7.4) 61.7% Change in fair value of financial assets (0.2) -5.8% - - Net profit share from investments in (13.0) 100.0% (1.7) 100.0% associates and joint ventures Income taxes - - (4.0) 73.9% (1) The percentage impact is calculated with reference to the total accounting item.

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In millions of Euro 31 March 2009 31 December 2008 Total % non- current Total % non- current impact(1) current impact(1) current Trade receivables 67.5 41.7% - 67.5 74.1 40.8% - 74.1 Other receivables of which: 601.8 86.0% 575.7 26.1 589.8 86.3% 565,2 24.6 - financial 594.1 97.7% 575.0 19.1 581.2 98.6% 564,3 16.9 Tax receivables 23.5 56.5% - 23.5 20.8 56.4% - 20.8 Trade payables 24.1 19.6% - 24.1 26.3 18.9% - 26.3 Other payables 7.2 7.2% - 7.2 11.6 9.9% - 11.6 Tax payables 19.8 63.5% - 19.8 17.3 73.3% - 17.3 Bank borrowings and payables to other financial institutions 498.4 52.6% - 498.4 498.0 54.4% - 498.0 (1) The percentage impact is calculated with reference to the total accounting item. The following paragraphs describe the main transactions with related parties completed during the years ended 31 December 2006, 2007 and 2008, distinguishing between intra-group transactions and transactions with other related parties.

19.1 Intra-group relations During the last three years, between Pirelli RE and its controlled companies, and among the controlled companies themselves, Pirelli RE has entered into a range of commercial and financial dealings within the normal business of the Group and settled at market terms.

19.1.1 Commercial transactions Commercial transactions entered into between Pirelli RE and its controlled companies, and among the controlled companies themselves, are referable to the Group's ordinary management and are settled at market terms. Such transactions mainly relate to services provided by companies of the Pirelli RE Group to Pirelli RE or to other controlled companies.

19.1.2 Financial transactions Intra-group financial relationships between Pirelli RE and its controlled companies, and among the controlled companies themselves, are referable to the Issuer's ordinary management and are settled at market terms. The intra-group loans granted in the last three financial years are listed below:

Year of Amount Lender Borrower Maturity Interest Notes Reference (Euro/thousands) Pirelli RE Pirelli & C. Real 2008 10,000 Uncommitted 3-month Development Estate Euribor + Deutschland GmbH Deutschland 120 bps GmbH Pirelli RE Property Pirelli & C. Real 2008 12,500 Uncommitted 3-month Management Estate Euribor + Deutschland GmbH Deutschland 120 bps GmbH Pirelli RE Facility Pirelli & C. Real 2008 2,000 Uncommitted 3-month Management Estate Euribor + Deutschland GmbH Deutschland 120 bps GmbH

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Year of Amount Lender Borrower Maturity Interest Notes Reference (Euro/thousands) DGAG Pirelli & C. Real 2008 50,000 Uncommitted 3-month Grundstücksbeteiligung Estate Euribor + GmbH Deutschland 120 bps GmbH Pirelli RE Hausmeister Pirelli & C. Real 2008 1,000 Uncommitted 3-month Service Deutschland Estate Euribor + GmbH Deutschland 120 bps GmbH Pirelli RE Pirelli & C. Real 2008 4,844 31.12.2012 3-month Estate Euribor + Deutschland 75 bps GmbH

Pirelli & C. Real Estate Pirelli RE AM 2008 1,000 Uncommitted 3-month Deutschland GmbH NPL Euribor + Deutschland 120 bps GmbH

Pirelli & C. Real Estate Pirelli RE Facility 2008 5,000 Uncommitted 3-month Deutschland GmbH Management Euribor + Deutschland 120 bps GmbH Pirelli & C. Real Estate Pirelli RE 2008 10,000 Uncommitted 3-month Deutschland GmbH Management Euribor + Services 120 bps Deutschland GmbH Pirelli & C. Real Estate Pirelli RE 2008 5,000 Uncommitted 3-month Deutschland GmbH Property Euribor + Management 120 bps Deutschland GmbH Pirelli & C. Real Estate Pirelli RE Agency 2008 3,000 Uncommitted 3-month Deutschland GmbH Deutschland Euribor + GmbH 120 bps

Pirelli & C. Real Estate BauBeCon 2008 10,000 Uncommitted 3-month Deutschland GmbH Corporate Euribor + Services GmbH 120 bps Pirelli & C. Real Estate Projekt 2006 21,925 29.12.2012 3-month Disbursement Deutschland GmbH Northwind Euribor + of first GmbH & Co. 150 bps tranche 7,200 KG (thousand)

The following tables show changes in financial loans granted by Pirelli RE to its controlled companies in the years ended 31 December 2008, 2007 and 2006.

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Financial year 2008 Disbursements Repayments 31 December Waivers for 31 December (In millions of Euro) / Other / Other Other 2007 recapitalizations 2008 increases reductions Non-current financial 111.6 214.1 (28.8) (0.8) (34.6) 261.5 loans Current financial loans 131.0 47.5 (49.0) - - 129.5 Total 242.6 261.6 (77.8) (0.8) (34.6) 391.0

Financial year 2007 Disbursements Repayments 31 December Waivers for 31 December (In millions of Euro) / Other / Other Other 2006 recapitalizations 2007 increases reductions Non-current financial 176.6 167.5 (58.9) (16.8) (156.8) 111.6 loans Current financial loans 145.2 73.9 (88.1) - - 131.0 Total 321.8 241.4 (147.0) (16.8) (156.8) 242.6

Financial year 2006 Disbursements Repayments 31 December Waivers for 31 December (In millions of Euro) / Other / Other Other 2005 recapitalizations 2006 increases reductions Non-current financial 19.7 162.6 (60.2) (1.8) 56.3 176.6 loans Current financial loans 178.0 38.2 (71.0) - - 145.2 Total 197.7 200.8 (131.2) (1.8) 56.3 321.8 Existing current account relationships between Pirelli RE and its controlled companies, which are included among current financial loans, entail interest on positive balances for the counterparty companies calculated at the Euribor rate less 0.125%, while interest on negative balances is calculated at the Euribor rate plus 0.75%. As of 1 April 2009, the spread on negative balances was increased to 1.5%.

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The table below shows changes in equity interests in controlled companies held by Pirelli RE in the years ended 31 December 2008, 2007 and 2006.

(In millions of Euro) 2008 2007 2006 Opening balance 619.5 298.6 168.5 Contribution on merging with Pirelli RE - (0.2) (22.5) Share capital Acquisitions/Changes and provisions 105.0 454.2 144.1 Distribution of reserves (71.4) (74.1) (8.0) Disposals / Liquidations (38.7) (49.0) (7.6) Mergers / Demergers / Other operations - - 9.8 Impairments (80.7) (9.6) (1.2) Change of provisions for risks on equity investments 0.1 0.1 0.2 Reclassifications (33.8) (0.5) 15.3 Closing balance 500.0 619.5 298.6 The guarantees issued by Pirelli RE in the interests of its controlled companies in the last three financial years are described below: - on 27 August 2007, Pirelli RE issued a guarantee to HSH Nordbank in favour of Pirelli RE Deutschland GmbH (100% owned by Pirelli RE) for an amount of Euro 6.5 million covering the credit facility granted to the company for the issue of commercial and financial sureties; - on 12 December 2007, Pirelli RE issued a guarantee to HSH Nordbank in favour of Pirelli RE Deutschland GmbH (100% owned by Pirelli RE) for an amount of Euro 26.3 million covering the credit facility granted to the company for the issue of a surety to the German public pension fund VBL; The sureties issued by Pirelli RE in the interests of its controlled companies in the last three financial years are described below: - on 6 March 2007, within the context of the acquisition of the Region of Sicily real estate portfolio, RAS S.p.A. issued an insurance surety in favour of Pirelli RE SGR (100% owned by Pirelli RE) for an amount of Euro 26.3 million, with a 10-year term, to the Region of Sicily, guaranteeing the obligations undertaken pursuant to the agreement entered into with the Region. The surety – which was reduced to an amount of Euro 2.0 million on 31 March 2007 following the signing of deeds of contribution and sale provided for in the abovementioned agreement – has been counter-secured by Pirelli RE; - in 2007, within the context of the joint venture agreements signed with Intesa Sanpaolo S.p.A., by which the latter purchased from Pirelli RE 49% of Pirelli RE Integrated Facility Management B.V., Pirelli RE undertook to maintain valid sureties – already issued to third parties on 27 June 2007 - in the interest of Pirelli RE Facility Management S.p.A. for an amount of approximately Euro 40 million. These sureties, which as of the Prospectus Date amount to Euro 16.1 million, have been counter-secured by Manutencoop Facility Management S.p.A. as part of the sale transaction described in Section One, Chapter XXII, Paragraph 22.1.1; - in the fourth quarter of 2008, Pirelli RE issued bank sureties of a total value of Euro 10.3 million. We note in particular: (a) the issue of four bank sureties in favour of Barclays Bank in relation to the purchase of the BauBeCon Group for a total pro-rata amount of Euro 2.6 million, and (b) two bank sureties for an amount of Euro 5.7 million issued in relation to the merger of Pirelli RE Franchising Holding S.p.A. and Pirelli RE Franchising S.p.A. into Pirelli RE Agency.

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19.1.3 Transfers of interests The following table shows the intra-group transactions carried out over the last three financial years regarding the transfers of interests.

Sale value Seller Purchaser Equity interest sold % interest sold Year (Euro/thousands) Edilnord Gestioni Pirelli RE PB S.c.a.r.l. 60% 60 2007 S.p.A. Property Management S.p.A. Pirelli DGAG Pirelli RE Verwaltung Mercado 30% 6 2007 Deutsche Netherlands B.V. Ottenses Grundvermoegen Grundstueckeesgesellschaft GmbH mbH Consorzio Stabile Pirelli RE Facility Progetto Nuovo Sant’Anna 49.5% 1,485 2007 Pirelli RE Servizi(1) Management S.r.l. S.p.A. Pirelli RE Pirelli RE Facility Ita NewCo RE S.r.l. (former 100% 35 2007 Management NewCo RE 2 S.r.l.) Netherlands B.V. Pirelli DGAG Pirelli RE Sechste Kajen 100% 1 2007 Deutsche Deutschland Verwaltungsgellachaft mbH Grundvermoegen GmbH GmbH Pirelli DGAG Pirelli RE Moller & Company GmbH 40% 6 2007 Deutsche Deutschland & Co. KG Grundvermoegen GmbH GmbH Pirelli DGAG Pirelli RE Moller & Company 40% 10 2007 Deutsche Deutschland Verwaltungsgellachaft mbH Grundvermoegen GmbH GmbH Pirelli DGAG Pirelli RE AVW 0.23% 1 2007 Deutsche Deutschland Assekuranzvermittlung del Grundvermoegen GmbH Wohungswirtschaft GmbH GmbH & Co. KG Pirelli DGAG Pirelli RE Stadtmarketing Konstanz 7% 4 2007 Deutsche Deutschland GmbH Grundvermoegen GmbH GmbH Pirelli DGAG Pirelli RE VerwaltungCity Center 41.18% 11 2007 Deutsche Deutschland Muelheim Grundvermoegen GmbH Grundsteckgesellschaft GmbH mbH DGAG Beteiligung GmbH & Co. KG Pirelli DGAG Mistral Real Verwaltung 50% 6 2007 Deutsche Estate B.V. Projektentwicklung Grundvermoegen Wilstofer Strasse GmbH GmbH Pirelli DGAG Mistral Real DGAG Beteiligung GmbH 94.90% 7,518 2007 Deutsche Estate B.V. & Co. KG Grundvermoegen GmbH

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Sale value Seller Purchaser Equity interest sold % interest sold Year (Euro/thousands) Pirelli DGAG Mistral Real DGAG Beteiligungsholding 100% 25 2007 Deutsche Estate B.V. GmbH Grundvermoegen GmbH Pirelli DGAG Mistral Real Projektentwicklung 50% 1,111 2007 Deutsche Estate B.V. Grubdsteucksgesellschaft Grundvermoegen Wilstorfer Strasse mbH & GmbH Co. KG Pirelli DGAG Mistral Real DGAG Nordpartner 94% 7,063 2007 Deutsche Estate B.V. GmbH & Co. KG Grundvermoegen GmbH Pirelli DGAG Mistral Real DGAG Bautraeger GmbH 100% 225 2007 Deutsche Estate B.V. Grundvermoegen GmbH Pirelli DGAG Mistral Real Mercado Ottesen 60% 39,019 2007 Deutsche Estate B.V. Grundstucksgesellschaft Grundvermoegen mbH & Co. KG GmbH Pirelli DGAG Mistral Real Verwaltung Mercado 60% 11 2007 Deutsche Estate B.V. Ottesen Grundvermoegen Grundstucksgesellschaft GmbH mbH & Co. KG Pirelli DGAG Mistral Real Landgesellschaft Schleswig- 0.62% 635 2007 Deutsche Estate B.V. Holstein mbH Grundvermoegen GmbH

MAX B.V. Pirelli RE Kappa S.r.l. 100% 11,017 2008 Pirelli RE Sigma RE B.V. Omicron RE B.V. 100% 12 2008 Netherlands B.V. Pirelli RE Pirelli RE NewCo RE 7 S.r.l. 100% 34 2008 Integrated Facility S.p.A. Pirelli RE Property Edilnord Elle Tre S.c.a.r.l. 100% 100 2008 Management Gestione S.p.A. Pirelli RE Property Edilnord Elle Dieci S.c.a.r.l. 100% 100 2008 Management Gestione S.p.A. Pirelli RE Pirelli RE BauBeCon Wohen GmbH 100% 5 2008 Netherlands B.V. Property Management Deutschland GmbH Pirelli RE Pirelli RE Pirelli RE Asset 80% 200 2008 Netherlands B.V. Deutschland Management Deutschland GmbH GmbH Pirelli RE Agency Pirelli RE BauBeCon Asset 100% 4,025 2008 Netherlands B.V. Agency Management GmbH Deutschland GmbH

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Sale value Seller Purchaser Equity interest sold % interest sold Year (Euro/thousands) Pirelli DGAG Pirelli & C. Real DGAG Wohnimmobilien 100% 13,306 2007 Deutsche Estate Gmbh Grundvermoegen Deutschland GmbH GmbH Pirelli DGAG Pirelli & C. Real DGAG Hausmeister Service 100% 4,742 2007 Deutsche Estate GmbH Grundvermoegen Deutschland GmbH GmbH Pirelli DGAG Pirelli & C. Real DGAG Deutsche 100% 861 2007 Deutsche Estate Grundvermögen Grundvermoegen Deutschland Management Services GmbH GmbH GmbH Pirelli DGAG Pirelli & C. Real DGAG Immobilien 94.90% 11,377 2007 Deutsche Estate Management GmbH 5.10% 611 Grundvermoegen Deutschland GmbH GmbH DGAG Beteiligung GmbH & Co. KG Pirelli DGAG Pirelli & C. Real DGAG 100% 49,900 2007 Deutsche Estate Grundstucksbeteiligung Grundvermoegen Deutschland GmbH GmbH GmbH Pirelli DGAG Pirelli & C. Real DGAG Shopping 100% 28,172 2007 Deutsche Estate Immobilien GmbH Grundvermoegen Deutschland GmbH GmbH Pirelli DGAG Pirelli & C. Real PSG Parkhaus Service 100% 9,724 2007 Deutsche Estate GmbH Grundvermoegen Deutschland GmbH GmbH Pirelli DGAG Pirelli & C. Real WOBAU 100% 5,793 2007 Deutsche Estate Wohnnungsverwaltung Grundvermoegen Deutschland GmbH GmbH GmbH (1) On 4 August 2008, as a result of its liquidation, Consorzio Stabile Pirelli RE Servizi à r.l. was removed from the Register of Enterprises of Milan.

19.1.4 Business transactions In the last three financial years, the Pirelli RE Group completed a number of business transactions through mergers, demergers and contributions, all aimed at rationalising its structure, as described below: - on 27 September 2006, the Boards of Directors of CFT Finanziaria S.p.A. (100% owned by Pirelli RE) and Repeg Italian Finance S.r.l. (100% owned by Pirelli RE through Partecipazioni Real Estate S.p.A.) approved the plan of merger by incorporation of Repeg Italian Finance S.r.l. into CFT Finanziaria S.p.A.. The deed of merger was signed on 13 December 2006; - on 27 October 2006, the deed of merger of Altofim S.r.l. and Rofau S.r.l. (both 100% owned by Pirelli RE through Beta S.r.l.) into Beta S.r.l. (100% owned by Pirelli RE) was signed; - on 30 November 2006, the deed of merger of Partecipazioni Real Estate S.p.A. (100%

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owned by Pirelli RE) into Pirelli RE was signed; - on 11 December 2006, the deed of partial proportionate demerger of the "Back Office" going concern of Pirelli RE Agency (100% owned by Pirelli RE) in favour of Pirelli RE Property Management (100% owned by Pirelli RE) was signed; - on 11 December 2006, the deed of partial proportionate demerger of the "Renegotiations" going concern of Pirelli RE Property Management (100% owned by Pirelli RE) in favour of Pirelli RE Agency (100% owned by Pirelli RE) was signed; - on 11 December 2006, the deed of partial proportionate demerger of the "Building Managers" going concern of Pirelli RE Property Management in favour of Pirelli RE Facility Management S.p.A. (both 100% owned by Pirelli RE) was signed; - on 11 December 2006, the deed of merger of Aponeo S.r.l., Pirelli RE Project Management and Somogi S.r.l. (all 100% owned by Pirelli RE through Pirelli RE Facility Management S.p.A.) into Pirelli RE Facility Management S.p.A. (100% owned by Pirelli RE) was signed; - on 11 December 2006, the deed of merger of FIM – Fabbrica Italiana di Mediazione S.r.l. into Pirelli RE Agency (100% Pirelli RE) was signed; - on 13 December 2006, the deed of merger of Bernini Immobiliare S.r.l. and Esedra S.r.l. (both 100% owned by Pirelli RE) into Centrale Immobiliare S.p.A. (100% owned by Pirelli RE) was signed; - on 7 March 2007, the Boards of Directors of Pirelli RE Agency and Pirelli RE Property Management (both 100% owned by Pirelli RE) approved the plan of partial proportionate demerger of Pirelli RE Agency into Pirelli RE Property Management. The demerger became effective on 1 June 2007; - on 3 April 2007, the plan of merger of Asset Management NPL S.r.l. (100% owned by Pirelli RE) into the parent company Pirelli RE was registered at the Register of Enterprises; - on 28 September 2007, the merger between Pirelli RE SGR and Pirelli RE Opportunities SGR (both 100% owned by Pirelli RE) was resolved, which became effective on 26 September 2008; - on 8 October 2007, the deed of partial proportionate demerger of the "Public Administrations" going concern of Edilnord Gestioni S.p.A. in favour of Pirelli RE Property Management (as of that date both 100% owned by Pirelli RE) was signed, which took effect as of 15 October 2007; - on 8 October 2007, the deed of partial proportionate demerger of the "Valuations" going concern of Pirelli RE Credit Servicing S.p.A. in favour of Pirelli RE Property Management (both 100% owned by Pirelli RE) was signed, which became effective as of 1 November 2007; - on 13 December 2007, the deed of merger of Asset Management NPL S.r.l. (100% owned by Pirelli RE) into Pirelli RE was signed, with administrative effects as of 31 December 2007 and accounting and fiscal effects as of 30 September 2007; - on 18 December 2007, the deed of merger of Pirelli RE Facility Management S.p.A. into NewCo RE 2 S.r.l. (both 51% owned by Pirelli RE, through Pirelli RE Integrated Facility Management B.V.) was signed, with effect from 18 December 2007. After the merger, the incorporating company assumed the corporate form of a joint-stock corporation and changed its corporate name into Pirelli RE Facility Management S.p.A.; - on 18 December 2007, the deed of merger of Pirelli RE Franchising Holding S.r.l. and

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Pirelli RE Franchising S.p.A. (100% Pirelli RE) into Pirelli RE Agency (also 100% owned by Pirelli RE) was signed, with effect from 1 January 2008; - on 20 December 2007, Pirelli RE Deutschland GmbH (100% owned by Pirelli RE) transferred to Pirelli RE Facility Management Deutschland GmbH (now PSG Parkhaus Service GmbH and 100% owned by Pirelli RE) the entire share capital of Pirelli RE Hausmeister Service Deutschland GmbH, with effect from 1 January 2008; - on 27 December 2007, the deed of merger of Vindex S.r.l. (100% owned by Pirelli RE, 68% of which through CFT Finanziaria S.p.A.) into CFT Finanziaria S.p.A. (100% owned by Pirelli RE) was signed, with effect from 1 January 2007; - during the first quarter of 2008, deeds of merger were signed involving several German companies controlled by Pirelli RE. In particular: (a) Pirelli RE Property Management Deutschland GmbH (100% owned by Pirelli RE through Pirelli RE Deutschland) incorporated DGAG Immobilien Management GmbH (100% owned) and (b) Pirelli RE Deutschland GmbH (100% owned by Pirelli RE) incorporated the controlled companies Sechste Kajen 12 Verwaltungsgesellchaft mbH, Xenda Vermoegensverwaltungsgesellchaft mbH, DGAG Wohnungsbau GmbH, Northwind 1. Beteiligungsgesellschaft GmbH, Northwind 2. Beteiligungsgesellschaft GmbH, Northwind 3. Beteiligungsgesellschaft mbH, Northwind 4. Beteiligungsgesellschaft GmbH and Northwind 5. Beteiligungsgesellschaft GmbH; - on 30 October 2008, the "Facility" going concern was transferred by Servizi Amministrativi Real Estate S.p.A. (100% owned Pirelli RE) to Pirelli & C. Real Estate Integrated Facility Management S.p.A., with effect from 1 November 2008; - on 1 October 2008, the shareholders' meeting of Edilnord Gestioni S.p.A. (100% owned by Pirelli RE) resolved to proceed with early dissolution of the company and the appointment of liquidators; on the same occasion, it was resolved to change the company's status from joint-stock corporation to limited liability company and to reduce its share capital to a nominal Euro 100,000, with effect from 5 January 2009; - on 11 December 2008, the deed of merger of the companies Elle Tre S.c.a r.l. and Elle Dieci S.c.a r.l. (100% indirectly owned by Pirelli RE) into their parent company Edilnord Gestioni S.r.l. (in liquidation and 100% owned by Pirelli RE) was signed, with effect from 1 January 2009; - on 24 December 2008, the deed of merger into Pirelli RE Netherlands B.V. (100% owned by Pirelli RE) of Valeratofin B.V. (already 100% owned by Pirelli RE Netherlands B.V.) was signed, with effect from 25 December 2008; - during the fourth quarter of 2008, deeds of merger were signed involving several German companies of the Pirelli RE Group. In particular: (a) Pirelli RE Agency Deutschland GmbH (100% Pirelli RE through Pirelli RE Deutschland GmbH) incorporated BauBeCon Asset Management GmbH (already 100% owned); (b) Pirelli RE Management Services Deutschland GmbH (100% Pirelli RE through Pirelli RE Deutschland GmbH) incorporated BauBeCon Corporate Services (also 100% Pirelli RE Deutschland GmbH); (c) Pirelli RE Property Management Deutschland GmbH (100% Pirelli RE through Pirelli RE Deutschland GmbH) incorporated BauBeCon Wohnen GmbH (already 100% owned); (d) Pirelli DGAG Deutsche Grundvermögen GmbH (49.29% owned by Pirelli RE, through Solaia RE S.à r.l. and Jamesmail B.V.) incorporated Pirelli RE Sagittarius Real Estate GmbH (already 100% owned).

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19.1.5 Other transactions In addition to the intra-group transactions described above, (i) on 10 March 2006, Pirelli RE purchased from Lambda S.r.l. the Bicocca Hangar property for Euro 5.1 million, (ii) on 30 December 2006, Centrale Immobiliare S.p.A. (100% owned by Pirelli RE) sold to Golfo Aranci S.p.A. (50% indirectly owned by Pirelli RE) a number of plots of building sites, located in Golfo Aranci, for a total of Euro 8.7 million.

19.2 Transactions with other related parties Transactions with related parties executed in the last three financial years between Pirelli RE Group companies and associated companies are referable to the Group's ordinary management, are settled at market terms and involve mainly commercial and financial transactions, transfers of interests, and disposals of real estate portfolios or individual real estate properties. Pursuant to the Company's procedure currently in force, transactions with related parties include, other than intra-group transactions, all transactions executed by Pirelli RE or its controlled companies with parties directly or indirectly related to Pirelli RE.

19.2.1 Commercial transactions Commercial transactions mainly refer to the providing of specialist real estate services (agency, project management, property management, facility management and credit servicing) for initiatives in which Pirelli RE holds qualified minority interests. Over the course of the financial years ended 31 December 2008, 2007 and 2006, the revenues generated from such services amounted respectively to the Euro 126.0 million, Euro 190.5 million (Euro 107.1 million excluding revenues generated from the facility management business sold during the year) and Euro 202.3 million, equal to 34.5%, 22.3% (25.0% excluding income generated from the facility management business sold during the year) and 28.8% of total consolidated revenues.

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19.2.2 Financial transactions Loans with related parties agreed in the last three financial years are shown below. Year of Amount Lender Borrower Maturity Interest Notes Reference (Euro/thousands) Partecipazioni Real LSF Italian Finance 2006 9,200(1) 25.03.2025 3-month Estate S.p.A. Company S.r.l. Euribor plus 75 bps P&k Real Estate Resident Sachsen 2006 6,000 27.06.2007 3-month GmbH P&K GmbH Euribor plus 200 bps Pirelli RE Delamain S.à r.l. 2007 23,100 31.12.2011 3-month Disbursement Euribor plus of first a 2% spread tranche Euro 22,800 (thousand) Pirelli & C. Real Resident West 2008 500 Uncommitted 3-month Estate Deutschland GmbH Euribor + GmbH 120 bps Pirelli & C. Real Resident Baltic 2008 500 Uncommitted 3-month Estate Deutschland GmbH Euribor + GmbH 120 bps Pirelli RE Omicron B.V.(2) 2008 49,300 25.11.2011 15% Netherlands B.V. (1) Amount loaned for the acquisition of loan portfolios, from the former Banca Akros and the former Banca Popolare di Intra, intended for securitisation. (2) Loan transferred to Omicron B.V. with contribution from Sigma RE B.V. to Omicron B.V. of the equity interests in the Group company headed by Highstreet Holding GbR. Sigma RE B.V. remains, however, entirely responsible for performance of the obligation.

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The following tables show changes in financial loans involving companies in which Pirelli RE Group companies hold equity interests and Pirelli & C. Group companies in the years ended 31 December 2008, 2007 and 2006.

Financial year 2008 31 Disbursements Repayments 31 Waivers for (In millions of Euro) December / Other / Other Other December recapitalizations 2007 increases reductions 2008 Non-current financial loans 354.9 98.6 (88.3) (11.0) 16.5 370.7 Current financial loans 0.2 - (0.2) - - - Total 355.1 98.6 (88.5) (11.0) 16.5 370.7

Financial year 2007 31 Disbursements Repayments 31 Waivers for (In millions of Euro) December / Other / Other Other December recapitalizations 2006 increases reductions 2007 Non-current financial loans 310.4 196.0 (299.6) (8.8) 156.9 354.9 Current financial loans - 0.2 - - - 0.2 Total 310.4 196.2 (299.6) (8.8) 156.9 355.1

Financial year 2006 31 Disbursements Repayments 31 Waivers for (In millions of Euro) December / Other / Other Other December recapitalizations 2005 increases reductions 2006 Non-current financial loans 238.1 304.3 (186.5) (1.0) (44.5) 310.4 Current financial loans ------Total 238.1 304.3 (186.5) (1.0) (44.5) 310.4 The following table shows changes in equity interests in associated companies and joint ventures headed by Pirelli RE in the years ended 31 December 2008, 2007 and 2006.

(In millions of Euro) 2008 2007 2006 Opening balance 151.6 159.8 171.2 Contribution on merging with Pirelli RE - - 2.4 Share capital Acquisitions/Changes and provisions 31.8 55.6 76.1 Distribution of reserves (3.6) (47.9) (13.5) Disposals / Liquidations (34.9) (1.3) (42.6) Mergers / Demergers / Other extraordinary - - (9.8) operations Impairments (48.8) (13.0) (8.7) Change of provisions for risks on equity investments 7.4 0.3 - Reclassifications 33.8 (1.9) (15.3) Closing balance 137.3 151.6 159.8 The guarantees issued by Pirelli RE during the last three financial years in the interests of related parties, other than intra-group guarantees, are as follows:

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- on 28 June 2006, within the context of a purchase by the Allianz Group of real estate portfolio in Austria, Pirelli RE issued to the benefit of ECO Business Immobilien A.G. and Conwert Immobilien Invest A.G. (both of which with a 33.33% stake in the initiative) two bank counter-sureties of a unit value of approximately Euro 10.4 million. These counter-sureties were granted as a result of the sureties issued by ECO Business Immobilien A.G. and Conwert Immobilien Invest A.G. to the bank Euro Hypo A.G. to cover the loan of Euro 168.0 million agreed by the latter for completion of the transaction; - in the first quarter of 2007, as part of the restructuring and deconsolidation of the DGAG Group, Pirelli RE issued specific guarantees for a total amount of Euro 14.6 million in replacement of the preceding guarantees issued by DGAG, primarily related to bank loans granted to vehicle companies. Pirelli RE also issued guarantees to cover any costs that exceed the budget agreed for development projects not so significant in which Pirelli RE holds an interest through vehicle companies. Finally, on 31 March 2007, MSREF, part of the Morgan Stanley Group, counter-guaranteed, for an amount of Euro 97.6 million – equal to 70% of the total guaranteed amount – guarantees covering development projects in which MSREF is involved as a partner in the operation; - on 16 April 2007, as part of the sale of former Banco di Sicilia junior notes to Sagrantino B.V. together with the remaining purchase debt of Euro 76.9 million, Pirelli RE issued to the benefit of Banco di Sicilia a guarantee for the performance by European NPL S.A. (33% owned by Pirelli RE) and Sagrantino B.V. (33% owned by Pirelli RE through European NPL S.A.) and the fulfilment of the obligation to pay the above debt. Following the issue by Calyon S.A. of a counter-surety equal to 67% of the total amount of Euro 51.6 million, the remaining pro-rata obligation of Pirelli RE amounts to Euro 25.3 million. With regard to Sagrantino B.V. it we note that, on 20 December 2007, the company subscribed: (a) for a nominal value of Euro 85.3 million, a portion of the senior and junior notes issued by Island Refinancing S.r.l. following its purchase of two non performing loans from the former Banco di Sicilia (total net asset value of Euro 474.0 million and gross book value of Euro 2.1 billion), and (b) for a nominal value of Euro 148.0 million, a portion of the junior notes issued by the securitisation firm Sagrantino Italy S.r.l. following repayment of the bridging loan granted for the purchase, at the end of 2006, of non performing loans from ICR 5, ICR 6, ICR 123, LSF S.r.l. and Barclays Bank; - on 21 December 2007, Pirelli RE issued a guarantee in favour of Alimede Luxembourg S.à.r.l. (35% owned by Pirelli RE), whereby Pirelli RE undertakes to provide financial support to the beneficiary for a maximum amount of Euro 7.0 million, covering obligations deriving from the cash subscription of new shares in the Social & Public Initiatives fund assumed by Alimede Luxembourg S.à r.l. towards the fund manager Pirelli RE Opportunities SGR S.p.A.; - as of 31 December 2007, a guarantee issued by Pirelli RE to Hypo Real Estate Bank in the interest of Mistral RE B.V., Jamesmail B.V. and Solaia RE B.V. (each 35% owned by Pirelli RE) is in effect for a total amount of Euro 25.0 million. All sureties exceeding the amount of Euro 10 million issued by Pirelli RE over the last three financial years to related parties, other than intra-group guarantees, are described below: - on 23 June 2006, Pirelli RE issued a guarantee to Banca Intesa S.p.A. in the interest of Aree Urbane S.r.l. (34.6% owned by Pirelli RE) for a total amount of Euro 44.4 million, covering the new bank loan of Euro 78.8 million granted to Aree Urbane S.r.l. This guarantee was issued in replacement of an earlier one, for Euro 44.7 million, related to the bank loan granted by Banca Intesa/WestLB, which had expired; - in the second quarter of 2007, Pirelli RE issued bank sureties for a total amount of Euro

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94.0 million including, in particular: (a) the issue of a bank surety to Banca Nazionale del Lavoro S.p.A. in the interest of Calliope S.r.l. for an amount of Euro 79.5 million as a pro- rata guarantee covering deferred payment of the purchase price of a non performing loan portfolio, and (b) the issue of bank sureties for Euro 11.5 million as part of the demerger of the Pirelli RE Agency "Valuations" going concern; - during the third quarter of 2007, Pirelli RE issued bank sureties for a total amount of Euro 47.4 million, among which we note in particular: (a) the issue of a bank surety by Unicredit Banca d’Impresa for an amount of Euro 12.3 million in favour of Fintecna Immobiliare, relating to the participation in the Pentagramma tender announced by Fintecna Immobiliare on four major real estate assets located in Rome with a high yield potential, and (b) the issue of a bank surety for an amount of Euro 12.4 million to Investitionbank des Lanes Brandeburg, the main financing bank of BauBeCon. This surety was 60% counter-guaranteed, pro-rata, with patronage from the real estate fund RREEF, managed by the Deutsche Bank Group and partner of Pirelli RE in a number of investment initiatives.

19.2.3 Transfers of interests The table below shows the transactions with related parties in connection with the buying and selling of equity interests, carried out over the last three financial years.

Equity Equity interest interest Sale value Seller Buyer Year transferred transferred (Euro/thousands) (%) Pirelli Pirelli RE Centro Servizi 33% 28 2006 Amministrativi Pirelli S.r.l. Pirelli Beta S.r.l. Altofim S.r.l. 100% 71 2006 Centrale Immobiliare Pirelli RE and Dolcetto Otto S.r.l. 50% 18 2006 S.p.A. MI.NO.TER S.p.A. (50% each) Pirelli Pekao Real Estate Polish Investments Nowe Ogrody Sp.z o.o. 100% 13 2006 Sp.z o.o. Real Estate Holding B.V. Alceo B.V. Pirelli RE Dolcetto 5 S.r.l. 25% 5 2006 Tiglio I S.r.l. Pirelli RE MSMC Immobiliare 3 25% 8 2006 S.r.l. (now Maro S.r.l.) Tiglio I S.r.l. Pirelli RE MSMC Immobiliare 6 25% 8 2006 S.r.l. (now Roca S.r.l.) Dolcetto S.r.l. Pirelli RE Dolcetto Sei S.r.l. 100% 27 2006 Pirelli RE Jamesmail B.V. Pirelli RE Deutschland 100% 161 2006 GmbH (now Pirelli RE Residential GmbH) Pirelli RE Pirelli RE Pirelli RE Agency 100% 13 2008 Netherlands B.V. Netherlands Pirelli RE Lusigest S.p.A. Relco Sp.z o.o. 15% 27,885 2008 Polish Investments 85% Real Estate Holding II B.V. Pirelli RE Lusigest S.p.A. Coimpex Sp.z o.o. 15% 35,219 2008 Polish Investments 85% Real Estate Holding II B.V.

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Equity Equity interest interest Sale value Seller Buyer Year transferred transferred (Euro/thousands) (%) Expansion 1 S.A. S.I.G. RE B.V. Resident Sachsen P&K 5.00% 78 2007 Kronberg Real Estate GmbH 5.00% 78 Service GmbH 5.00% 78 G RE S.r.l. 79.80% 1,237 P&K Real Estate GmbH P&K Real Estate GmbH S.I.G. RE B.V. Resident Baltic GmbH 90.00% 3,645 2007 Kronberg Real Estate 4.80% 194 Service GmbH P&K Real Estate GmbH Pirelli RE Resident Sachsen P&K 5.20% 81 2007 Netherlands B.V. GmbH Mistral Real Estate B.V. Solaia Real Estate Auster Real Estate 100% 28 2007 B.V. GmbH Mistral Real Estate B.V. Solaia Real Estate Etesian Real Estate 100% 28 2007 B.V. GmbH Mistral Real Estate B.V. Solaia Real Estate Leste Real Estate 100% 28 2007 B.V. GmbH

19.2.4 Business transactions Over the last three financial years, the Pirelli RE Group carried out a number of business transactions with related parties, other than intra-group business combinations, through mergers, demergers and contributions, all aimed at rationalising structures, as described below: • on 4 October 2006, Spazio Industriale II B.V. (35% owned by Pirelli RE) was split into Pirelli RE Netherlands B.V. (fully owned by Pirelli RE) and Moabar B.V. (5% owned by Pirelli RE Netherlands B.V.). Following the transaction, the existing shareholders’ loan between Pirelli RE and Spazio Industriale II B.V., for an amount of Euro 14.7 million, was entirely granted to Pirelli RE Netherlands B.V.; • on 21 December 2007, Pirelli RE Netherlands (100% owned by Pirelli RE) conferred to Theta RE B.V. (40% owned by Pirelli RE through Pirelli RE Netherlands) its equity interest in Nabucco RE B.V. (equal to 40% of its share capital) in exchange of the issue of new shares of the beneficiary company; • on 28 December 2007, Pirelli RE conferred to Solaia RE S.à r.l. (35% owned by Pirelli RE) its equity interests in Jamesmail B.V. and Solaia RE B.V.; • on 30 June 2008, the deed of merger of Resident Brandeburg GmbH into Resident West GmbH (both 39.9% owned by Pirelli RE Netherlands and S.I.G. RE B.V.) was signed, having administrative effect from 24 July 2008; • during the fourth quarter of 2008, deeds of merger were signed involving several German companies controlled by, and associated with, Pirelli RE: (a) Pirelli RE Aries Real Estate GmbH (35% owned by Pirelli RE through Solaia RE S.à r.l. and Solaia Real Estate B.V.) incorporated Pirelli RE Phönix Real Estate GmbH (also 35% owned by Pirelli RE through Solaia RE S.à r.l. and Solaia Real Estate B.V.) and (b) Pirelli RE Andromeda Real Estate GmbH (35% owned by Pirelli RE through Solaia RE S.à r.l. and Solaia Real Estate B.V.) incorporated Pirelli RE Gemini Real Estate GmbH (also 35% owned by Pirelli RE through Solaia RE S.à r.l. and Solaia Real Estate B.V.); • on 14 August 2008, the deed of merger of Rohaco B.V. (now 100% owned by SI Real

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Estate B.V.) into SI Real Estate Holding B.V. (25% owned by Pirelli RE) was signed, taking administrative effect as of 15 August 2008; • on 30 October 2008, the "Polo Coge" going concern was transferred by Servizi Amministrativi Real Estate S.p.A. (100% owned Pirelli RE) to Centro Servizi Amministrativi Pirelli (33% owned by Pirelli RE), with effect from 1 November 2008; • on 30 October 2008, the "CSAP - Facility" going concern was transferred by Centro Servizi Amministrativi Pirelli (33% owned by Pirelli RE) to Altair IFM S.p.A. (now Pirelli & C. Real Estate Integrated Facility Management S.p.A., then 50% owned by Pirelli RE through Integra FM B.V.), with effect from 1 November 2008; • on 23 December 2008, the deed of merger of Immobiliare Prizia S.r.l. (36% owned by Pirelli RE) into Trixia S.r.l. (36% owned by Pirelli RE) was signed, with effect from 31 December 2008.

19.2.5 Transfer of real estate portfolios or individual real estate properties Transactions for the sale of real estate portfolios or individual real estate properties between related parties, other than intra-group operations, completed over the last three financial years are described below: • 29 March 2006, 29 June 2006 and 14 December 2006, respectively, saw completion of the second, third and fourth contributions of real estate properties by Olivetti Multiservices (part of the Telecom Italia Group) to Raissa, a fund only contributed by Qualified Investors, for a total, together with the contribution made in 2005, of 852 real estate properties worth approximately Euro 720.0 million. In particular: (a) on 29 March 2006, the contribution included 201 real estate properties worth Euro 158.1 million; (b) on 29 June 2006, 57 real estate properties worth approximately Euro 47.0 million, and (c) on 14 December 2006, 33 real estate properties worth Euro 29.7 million; • on 24 March 2006, MSPRE Luxembourg NPL S.à r.l. (indirectly controlled through Partecipazioni Real Estate S.p.A.) sold part of its real estate portfolio (formerly belonging to BNL) to Espelha Serviços de Consultadoria L.d.A. (49% owned by Pirelli RE); • 30 March 2006, 26 February 2006 and 20 December 2006, respectively, saw the second, third and fourth contributions of real estate properties by Olivetti Multiservices (part of the Telecom Italia Group) to the closed-end speculative real estate investment fund Spazio Industriale, for a total, together with the contribution made in 2005, of 427 real estate properties worth approximately Euro 292.0 million. In particular: (a) on 30 March 2006, the contribution involved real estate properties worth Euro 70.8 million; (b) on 26 June 2006, real estate properties worth Euro 42.0 million, and (c) on 20 December 2006, real estate properties worth Euro 2.7 million; • on 5 May 2006, Partecipazioni Real Estate S.p.A. (100% owned by Pirelli RE) purchased from Espelha Serviços de Consultadoria L.d.A. (49% owned by Pirelli RE), by exercising a call option, class A and B senior notes from the former BNL portfolio, for a value of Euro 49.8 million. The purchase price was settled through the waiver of a shareholders' loan of an equal amount granted by Partecipazioni Real Estate S.p.A. to Espelha Serviços de Consultadoria L.d.A.; • on 20 December 2006, Continuum S.r.l. (40% owned by Pirelli RE) sold to Solaris S.r.l. (40% owned) several residential and commercial units located mainly in Milan for a countervalue of Euro 19.0 million; • on 6 August 2008, Fondo Vivaldi, a speculative closed-end real estate investment trust

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managed by Pirelli RE SGR, purchased for an amount of Euro 40.3 million an area located in the towns of Rho and Pero from Cam Immobiliare S.p.A. (entirely owned by Camfin S.p.A. which, in turn, owns approximately 25% of Pirelli & C.). We note that, in accordance with the code of conduct for the execution of transactions with related parties adopted by the Company and in line with the Consob guidelines concerning related parties, an independent advisor, Prof. Armando Borghi, appointed by Independent Directors with no interests in the transaction and coordinated by the Lead Independent Director, verified the congruity of the economic terms of the proposed investment. After the assessment by the independent advisor, who concluded that the price agreed was congruous and consistent with market terms, the transaction was approved by the Board of Directors; • on 25 October 2007, Pirelli RE and Pirelli & C. signed a deed for the purchase of Building 134 in Milan, to be used for the Pirelli Group Archive and Museum for a price of Euro 1.9 million, which was found to be congruent in a specific independent report; • on 27 December 2007, Iniziative Immobiliari 3 S.r.l. (100% owned by Pirelli RE through Iniziative Immobiliari 3 B.V.) sold to Pirelli RE Office Fund – Cloe – a closed-end real estate investment trust, Building 334 and the surrounding area, intended for the construction of HQ2, at a price of Euro 25.0 million. • on 2 April 2009 the shareholders of Orione Immobiliare Prima S.p.A. – a company of which Pirelli RE holds 40.1% of the share capital and with a 29.3% stake held by Gruppo Partecipazioni Industriali S.p.A. (a company in which the Chairman of Pirelli RE and its former Executive Deputy Chairman, Carlo Alessandro Puri Negri, hold interests) – entered into an agreement for the allocation to shareholders of the real estate assets held by Orione Immobiliare Prima S.p.A.. This agreement provides for the acquisition, by shareholders other than Pirelli RE, of parts of the above portfolio, in proportion to their respective interests of share capital, and the transfer of the shares held by the latter in Orione Immobiliare Prima S.p.A. to Pirelli RE. After this transaction, Pirelli RE will therefore hold 100% of the share capital of Orione Immobiliare Prima S.p.A.. Both these transactions have been supported by reports issued by independent experts.

19.2.6 Agreements with associated companies; other relations Pirelli RE undertook to guarantee pro-rata any negative difference between revenues deriving from rental income and interest expense owed by Tiglio I S.r.l. (12.9% indirectly owned by Pirelli RE) to financing banks whose credit facilities expire in 2009. As of the Prospectus Date, on the basis of the available information, the expected revenue flow exceeds the estimated interest expense. Pirelli RE has issued guarantees and patronages to companies in which it holds interests, and in particular: joint insurance obligations to various types of third parties for a total amount of Euro 15.8 million and guarantees issued primarily for the fulfilment by the company International Credit Recovery 8 S.r.l. of the obligation to pay the purchase price of Euro 13.8 million of a non performing loan portfolio. Described below are certain obligations for the purchase of equity interests and/or fund units, undertaken by companies of the Pirelli RE Group: • Pirelli RE SGR undertook to subscribe units of the Abitare Sociale 1 Fund – a closed-end real estate ethical investment trust reserved for qualified investors, for a total countervalue of Euro 1.9 million; • Pirelli RE undertook to subscribe, through Alimede Luxembourg S.à r.l., units of the Social & Public Initiatives Fund – a closed-end real estate investment trust, up to a maximum

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amount of Euro 7.0 million; • Pirelli RE Netherlands B.V. undertook to subscribe units of the Vivaldi Fund – a closed- end real estate investment trust, up to a maximum amount of Euro 3.0 million. Pirelli RE assumed obligations to purchase any unsold real estate properties owned by Imser 60 S.r.l. for a maximum amount of Euro 288.6 million. The purchase price of such properties is defined by contract as a proportion of their market value. This option may be exercised by the counterparty in the period from 12 November 2021 to 31 May 2022. On 13 May 2009, a settlement agreement was entered into for the payment of Euro 1.25 million by Pirelli RE to Le Case di Capalbio S.r.l., with regard to all the claims made by this company in connection with a dispute that arose in 2003. The object of the dispute was the provision of services by Pirelli RE and companies within its Group in connection with the development of a real estate complex named “Le Case di Capalbio”, in the town of Capalbio (Le Case di Capalbio S.r.l. is 20%-owned by Pirelli RE and 80%-owned by S.A.C.R.A. S.p.A., which in turn is 29%- owned by Fratelli Puri Negri S.a.p.a., a company connected with Carlo Alessandro Puri Negri, the former Executive Deputy Chairman of Pirelli RE. The other shareholders of S.A.C.R.A. S.p.A. are not connected with the Pirelli RE Group).

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20. FINANCIAL INFORMATION CONCERNING THE ISSUER'S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES

20.1 Economic, business and financial information as of and for the years ended 31 December 2008, 2007 and 2006, and for the three-month period ended 31 March 2009 The information in this Chapter of the Prospectus is derived from: y The Pirelli RE Group unaudited interim financial statements as of and for the three-month period ended 31 March 2009; y The Company’s consolidated financial statements as of and for the years ended 31 December 2008 (audited by the Independent Auditors), and 2007 and 2006 (audited by PricewaterhouseCoopers S.p.A.) prepared in accordance with IFRS. Such information and documents, if not included in this Prospectus, are incorporated by reference pursuant to Article 11(2) of Directive 2003/71/EC and Article 28 of Regulation 809/2004/EC. These documents are available to the public at the registered office of the Issuer and on the Issuer’s website www.pirellire.com under the section Investor Relations. We note that the income statement for the year ended 31 December 2007, included for comparative purposes in the consolidated financial statements for the year ended 31 December 2008, was redetermined with respect to the income statement included in the consolidated financial statements for the year ended 31 December 2007, mainly due to reclassifications required to comply with International Financial Reporting Standards IFRS 5, in relation to the disposal of the Integrated Facility Management business unit, to represent the economic results of the disposed assets during 2008. Such income statement is indicated as “redetermined” in the following tables. In particular, a reclassification has been performed for each item on the 2007 consolidated income statement subject to a contribution of the assets relating to Integrated Facility Management. The amounts in question have been reclassified into a single item named Net income(loss) from discontinued operations, with no change in terms of net consolidated income for the period. The methods used to re-determine the income statement have been examined by the Independent Auditors for the purposes of expressing their opinion on the consolidated financial statements as of and for the period ended 31 December 2008. We also note that due to and for the same reasons, the Company also redetermined the data relating to the income statement for the quarter ended 31 March 2008, included for comparative purposes in the Pirelli RE Group interim financial statements as of and for the three-month period ended 31 March 2009.

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20.2 Consolidated balance sheet as of 31 December 2008, 2007 and 2006

31 December 31 December 31 December (in thousands of Euro) 2008 2007 2006 Assets Non-current assets Property, plant and equipment 22,805 39,161 35,260 Intangible assets 160,601 245,613 119,260 Investments in associates and joint ventures 357,867 480,341 285,781 Other financial assets 75,237 109,646 47,185 Deferred tax assets 28,564 35,308 38,697 Other receivables 600,379 541,132 431,369 Tax receivables 68 70 68 Total non-current assets 1,245,521 1,451,271 957,620 Current Assets Inventories 93,379 114,291 120,641 Trade receivables 181,644 411,652 334,297 Other receivables 82,909 91,156 208,158 Securities held for trading - 504 - Cash and cash equivalents 35,702 115,634 59,858 Tax receivables 36,730 56,022 38,383 Derivative financial instruments - 2,210 1,661 Total current assets 430,364 791,469 762,998 Total assets 1,675,885 2,242,740 1,720,618

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31 December 31 December 31 December 2008 2007 2006 Liabilities Group net equity Share capital 20,704 20,649 21,180 Other reserves 159,621 186,916 231,873 Retained earnings 376,352 357,034 287,754 Net income (loss) for the year (194,985) 151,137 159,460 Total Group net equity 361,692 715,736 700,267 Minority interests 4,673 4,424 8,450 Total net equity 366,365 720,160 708,717 Non-current liabilities Bank borrowings and payables to other financial institutions(1) 229,238 239,997 27,221 Other payables 30,081 1,369 79,762 Provisions for future risks and expenses 25,415 21,397 26,457 Deferred tax provision 120 3,237 1,203 Employee benefit obligations 17,268 28,760 20,428 Total non-current liabilities 302,122 294,760 155,071 Current Liabilities Bank borrowings and payables to other financial institutions(1) 685,384 711,902 464,924 Trade payables 138,980 343,295 192,976 Other payables 86,920 132,489 150,470 Provisions for future risks and expenses 72,231 13,379 11,742 Tax payables 23,619 26,755 36,718 Derivative financial instruments 264 - - Total current liabilities 1,007,398 1,227,820 856,830 Total liabilities 1,309,520 1,522,580 1,011,901 Total liabilities and net equity 1,675,885 2,242,740 1,720,618 (1) The data for 2007 shown in the table reflect a reclassification, of 117.1 million euro, between the current and the non-current portions of bank borrowings: this reclassification was included in the comparative data of the financial statements as of 31 December 2008 for comparison’s uniformity reasons.

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20.3 Statements of profit and loss for the years ended 31 December 2008, 2007 and 2006

Year ended 31 December 2007 (in thousands of Euro) 2008 Redetermined 2007 2006 Revenues from sales and services 365,098 1,724,375 2,148,645 701,964 Changes in inventories of work in progress, semifinished and finished products (1,629) 16,893 16,893 (4,287) Own work capitalized - - 901 3,604 Other income 48,979 64,528 75,683 38,275 Total operating revenues 412,448 1,805,796 2,242,122 739,556 Raw and consumable materials used (net of change in inventories) (84,916) (1,357,324) (1,374,831) (150,095) Personnel costs (158,943) (125,797) (178,755) (128,396) Depreciation, amortisation and impairment (9,475) (11,469) (15,257) (9,371) Other costs (230,351) (278,086) (622,886) (347,976) Total operating costs (483,685) (1,772,676) (2,191,729) (635,838) EBIT (71,237) 33,120 50,393 103,718 Profit from investment sales - 11,234 55,901 - Financial income 49,413 46,247 46,699 29,762 Financial expenses (71,115) (86,963) (91,408) (26,986) Dividends received 519 2,180 2,180 4,029 Change in fair value of financial assets 3,758 14,243 14,161 (784) Net profit share from investments in associates and joint ventures (177,019) 114,977 117,042 101,570 Result before income taxes (265,681) 135,038 194,968 211,309 Income taxes (1,913) (23,630) (34,105) (49,344) Net income (loss) from continuing operations (267,594) 111,408 160,863 161,965 Net income (loss) from discontinued operations 74,628 49,455 - - Net income (loss) for the year (192,966) 160,863 160,863 161,965 attributable to minority interests 2,019 9,726 9,726 2,505 Consolidated net income for the year (194,985) 151,137 151,137 159,460

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20.4 Consolidated cash flow statement for the years ended 31 December 2008, 2007 and 2006

Year ended 31 December 2007 (in thousands of Euro) 2008 Redetermined 2007 2006 Result before income taxes and minority interests (265,681) 135,038 151,137 159,460 Net income (loss) from discontinued operations 74,628 49,455 - - Depreciation, amortisation and impairment reversal on intangible assets & property, plant & equipment 11,155 15,257 15,257 9,371 Impairment of receivables 4,700 11,726 11,726 6,221 Gains/losses on sale of property, plant and equipment and investment property (21) 68 68 39 Gain realised on discontinued operations (71,371) (41,417) - - Profit from investment sales - (11,234) (55,901) - Financial expenses 75,495 91,408 91,408 27,080 Financial income (49,738) (46,699) (46,699) (29,762) Net profit share from investments in associates valued at equity, net of dividends received 204,745 45,845 45,845 (15,952) Change in inventories 20,912 92,593 92,593 8,127 Change in trade receivables/payables 22,242 (191,629) (191,629) (22,993) Change in other receivables/payables (27,987) 135,160 122,282 (6,611) Change in derivative financial instruments 1,925 (6,578) (12,988) (611) Change in employee benefit obligations and other provisions 45,747 (15,933) (15,933) 21,438 Reimbursed (paid) taxes 12,901 (47,720) - - Other changes 7,109 41,309 48,073 (2,414) Net cash flow generated/(absorbed) by operating activities (A) 66,761 256,649 255,239 153,393 Purchase of property, plant and equipment (7,052) (10,195) (10,195) (10,462) Disposal of property, plant and equipment 18,800 666 666 837 Purchase of intangible assets (7,261) (8,963) (8,963) (48,008) Disposal of intangible assets 93,340 2,660 2,660 65 Purchase of investments in associates and joint ventures (157,606) (271,063) (264,653) (31,660) Disposal of investments in associates and joint ventures 30,841 23,650 23,650 1,315 Purchase of other financial assets (2,363) (59,323) (59,323) 3,428 Disposal of other financial assets 16,211 1,378 1,378 - Net cash flow from disposal of discontinued operations 69,600 38,075 - - Net acquisition/disposal of business combinations (1,338) (385,933) (352,858) (140,000) Net cash flow generated/(absorbed) by investing activities (B) 53,172 (669,048) (667,638) (224,485)

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Change in share capital and share premium reserve 1,814 7,499 7,499 27,072 Other changes in net equity (3,416) 2,006 2,006 4,213 Purchase/disposal of treasury shares - (53,999) (53,999) 48,498 Changes in financial receivables (42,865) (463,441) (463,441) (71,599) Changes in financial payables (40,997) 1,110,922 1,110,922 172,860 Financial income 49,738 46,699 46,699 29,762 Financial expenses (75,495) (91,408) (91,408) (27,080) Dividends paid (85,073) (86,976) (86,976) (77,309) Net cash flow generated/(absorbed) by financing activities (C) (196,294) 471,302 471,302 106,417 Cash flow generated/(absorbed) in the period (D=A+B+C) (76,361) 58,903 58,903 35,325 Cash and cash equivalents + bank overdrafts at the beginning of the period (E) 112,063 53,160 53,160 17,835 Cash and cash equivalents + bank overdrafts at the end of the period (D + E) 35,702 112,063 112,063 53,160

20.5 Statement of changes in consolidated net equity for the years ended 31 December 2008, 2007 and 2006

Net Share Currency income Share Revaluation Legal Other Retained Group net Minority premium translation (loss) for Total capital reserves reserve reserves earnings equity interests reserve reserve the period Net equity as of 31 December 2005 20,149 128,007 15 4,160 - 20,337 217,326 145,408 535,402 16,695 552,097 - adjustments of fair value measurement of financial assets available for sale - - - - - 1,435 - - 1,435 - 1,435 - cash flow hedges - - - - - 648 - - 648 - 648 - adjustments for actuarial gains/(losses) - - - - - 571 - - 571 - 571 - currency translation reserve - - - -455 - - - 455 152 607 Total profits (losses) for the period recognized in net equity - - - - 455 2,654 - - 3,109 152 3,261 Changes in treasury shares 535 47,963 ------48,498 - 48,498 Allocation of 2005 result - - - 105 - - 67,994 (145,408) (77,309) - (77,309) Capital increase for the exercise of 2002 stock option plan 261 13,319 ------13,580 - 13,580 Use of treasury shares for 2004 stock option plan 235 13,257 ------13,492 - 13,492 Costs of equity transactions - - - - - (443) - - (443) - (443) Equity-settled stock options - - - -- 3,770 - - 3,770 - 3,770 Other changes - - - - - (1,726) 2,434 - 708 (10,902) (10,194) Net income (loss) for the period ------159,460 159,460 2,505 161,965 Net equity as of 31 December 2006 21,180 202,546 15 4,265 455 24,592 287,754 159,460 700,267 8,450 708,717 - adjustments of fair value measurement of financial assets available for sale - - - - - 4,703 - - 4,703 - 4,703

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- profits/losses transferred to the statement of profit and loss, previously recognized directly in net equity - - - - - (221) - - (221) - (221) - cash flow hedges - - - - (5,253) - - (5,253) - (5,253) - adjustments for actuarial gains/(losses) - - - - - 1,730 1,730 298 2,028 - currency translation reserve - - - 979 -- - 979 369 1,348 Total profits (losses) for the period recognized in net equity - - - - 979 (771)1,730 - 1,938 667 2,605 Changes in treasury shares (651) (53,348) ------(53,999) - (53,999) Allocation of 2006 result ------72,484 (159,460) (86,976) - (86,976) Use of treasury shares for 2004 stock option plan 120 7,379 ------7,499 - 7,499 Costs of equity transactions - - - - - (177) - - (177) - (177) Equity-settled stock options - - - - - 1,048 - - 1,048 - 1,048 Other changes - - - - (21) (46) (4,934) - (5,001) (14,419) (19,420) Net income (loss) for the period ------151,137 151,137 9,726 160,863 Net equity as of 31 December 2007 20,649 156,577 15 4,265 1,413 24,646 357,034 151,137 715,136 4,424 720,160 - adjustments of fair value measurement of financial assets available for sale - - - - - (14,464) - - (14,464) - (14,464) - profits/losses transferred to the statement of profit and loss, previously recognized directly in net equity relating to the fair value of financial assets available for sale - - - - - (2,463) - - (2,463) - (2,463) - cash flow hedges - - - - - (56,241) - - (56,241) 1,079 (55,162) - gains/losses transferred to the statement of profit and loss, previously recognized directly in net equity, relating to cash flow hedges - - - - - 1,848 - - 1,848 - 1,848 - adjustments for actuarial gains/(losses) - - - - - (298) - (298) 96 (202) - currency translation reserve - - - - (2,874) -- - (2,874) (868) (3,742) Total profits/(losses) for the period recognized directly in net equity - - - - (2,874) (71,320) (298) - (74,492) 307 (74,185) Allocation of 2007 result ------66,064 (151,137) (85,073) - (85,073) Costs of equity transactions - - - - - 14 - - 14 - 14 Equity-settled stock options - - - - - (542) - (542) - (542) Use of treasury shares to service 2008 stock grant plan 55 1,759 ------1,814 - 1,814 Other changes - - - - (219) 45,570 (46,131) - (780) (2,077) (2,857) Net income (loss) for the period ------(194,985) (194,985) 2,019 (192,966) Net equity as of 31 December 2008 20,704 158,336 15 4,265 (1,680) (1,632) 376,669 (194,985) 361,692 4,673 366,365

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20.6 Pro forma financial information on the Issuer Introduction The consolidated pro forma balance sheet and statement of profit and loss of Pirelli RE for the year ended 31 December 2008 (the "Consolidated Pro Forma Financial Statements") are illustrated below. These financial statements have been prepared to show retrospectively the financial effects of the paid capital increase up to a maximum amount of Euro 400 million including any share premium resolved by the Shareholders' Meeting of 17 April 2009. This capital increase will be carried out by issuing a maximum amount of 800,000,000 ordinary shares with regular benefits, having a nominal value of Euro 0.50 each, with pre-emptive rights to be offered to existing shareholders at a price equal to the theoretical ex right price (TERP) of the Pirelli RE’s ordinary shares, calculated using the current methods based on the arithmetic average of official prices recorded over a period of at least three trading days prior to the determination of the issue price and discounted - in compliance with applicable law - in the measure set by the Board of Directors based on prevailing market conditions at the time the transaction will be actually launched, the trading price of Pirelli RE’s ordinary shares and market practices for similar transactions. As provided by the applicable legislation, the issue price of the new shares shall be no lower than their nominal value of 0.50 Euro. The Consolidated Pro Forma Financial Statements are derived from Pirelli RE Group consolidated financial statements for the year ended 31 December 2008, and applying pro forma adjustments related to the Capital Increase, as described below. The Pirelli RE Group consolidated financial statements as of 31 December 2008, prepared in accordance with IFRS and presented in the first column of the Consolidated Pro Forma Financial Statements attached hereto, have been audited by Reconta Ernst & Young S.p.A. which issued its audit report on 30 March 2009. The consolidated pro forma data were obtained by applying suitable pro forma adjustments to the above-described historical data retrospectively to reflect the significant effects of the Capital Increase. In particular, these effects have been reflected retrospectively in the consolidated pro forma balance sheet, in accordance with Consob communication No. DEM/1052803 of 5 July 2001, as if this transaction was put into effect on 31 December 2008 and, for the consolidated pro forma statement of profit and loss, as if it was put into effect on 1 January 2008. With regard to the accounting principles adopted by Pirelli RE Group for the preparation of historical consolidated data, please refer to the notes to the consolidated financial statements as of 31 December 2008 prepared by the Issuer in compliance with the IFRS adopted by the European Union. The consolidated pro forma balance sheet and statement of profit and loss reflect the tables used for the Pirelli RE Group consolidated financial statements as of 31 December 2008 and are provided in summary form. The provided Consolidated Pro Forma Financial Statements attached hereto illustrate the following: (i) the Pirelli RE Group consolidated financial statements as of 31 December 2008 in the first column; (ii) the second column, named as “Pro forma adjustments”, provides the effects of the Capital Increase on cash flow, economic and financial conditions including the effects connected to the predicted use of the financing resources it is assumed will be returned by the transaction. For a correct interpretation of the information provided by the pro forma data, it is necessary to consider the following: 273 Section I Registration Document

(i) as they are theoretical representations, if the Capital Increase and the relative financial transactions were actually carried out on the dates taken as a reference for the pro forma data, rather than the effective date, the historical data would not necessarily have been the same as the pro forma data; (ii) the pro forma data do not reflect forward-looking data as they were provided in such a way as to represent only the effects of the Capital Increase that can be isolated and objectively measured and the financial, operational transactions related thereto and without taking into account of the potential effects due to changes of management policies and operating decisions as a result of the transaction itself. Furthermore, in consideration of the different purposes of the pro forma data compared to the historical data and the different methods used for the calculation of the effects of the Capital Increase on the balance sheet and the statement of profit and loss, the consolidated pro forma financial statements should be read and interpreted separately, without making any connection from an accounting perspective between the two documents. As described in greater detail in other chapters of the Prospectus, on 23 December 2008 Pirelli RE completed the transfer of the 50% interest in Pirelli & C. Real Estate Integrated Facility Management B.V. to Manutencoop FM S.p.A. With regard to this transaction, an information document was published by the Issuer on 7 January 2009, including the related consolidated pro forma financial statements as of 30 June 2008 and for the six-month period ended on the same date, pursuant to Article 71 of the Regulations on Issuers. This transfer was already reflected in the Pirelli RE Group consolidated balance sheet as of 31 December 2008, since executed before the end of the fiscal year. In the consolidated statement of profit and loss for 2008, the effects of this transfer are represented in a single line named as “Net income (loss) from the disposal of discontinued operations”, as all transactions put into effect by the group under Pirelli & C. Real Estate Integrated Facility Management B.V. and the corresponding revenue were accounted for in accordance with the provisions of IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations.

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20.6.1 Consolidated pro forma balance sheet as of 31 December 2008

Pirelli RE Pirelli RE Pro forma (in thousands of Euro) Group Notes Group adjustments historical data Pro Forma Assets Property, plant and equipment 22,805 - 22,805 Intangible assets 160,601 - 160,601 Investments in associates and joint ventures 357,867 - 357,867 Other financial assets 75,237 - 75,237 Deferred tax assets 28,564 - 28,564 Other receivables 600,379 - 600,379 Tax receivables 68 - 68 Total non-current assets 1,245,521 - 1,245,521 Inventories 93,379 - 93,379 Trade receivables 181,644 - 181,644 Other receivables 82,909 - 82,909 Cash and cash equivalents 35,702 - 35,702 Tax receivables 36,730 - 36,730 Total current assets 430,364 - 430,364 Total assets 1,675,885 - 1,675,885 Liabilities and net equity - Group net equity 361,692 395,500 (A) 757,192 Minority interests 4,673 - 4,673 Total net equity 366,365 395,500 761,865 Bank borrowings and payables to other financial 229,238 - 229,238 institutions Other payables 30,081 - 30,081 Provision for future risks and expenses 25,415 - 25,415 Deferred tax provision 120 - 120 Employee benefit obligations 17,268 - 17,268 Total non-current liabilities 302,122 - 302,122 Bank borrowings and payables to other financial 685,384 (400,000) (B) 285,384 institutions Trade payables 138,980 6,200 (C) 145,180 Other payables 86,920 - 86,920 Provision for future risks and expenses 72,231 - 72,231 Tax payables 23,619 (1,700) (C) 21,919 Financial instruments 264 - 264 Total current liabilities 1,007,398 (395,500) 611,898 Total liabilities and net equity 1,675,885 - 1,675,885

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20.6.2 Consolidated pro forma income statement for the year ended 31 December 2008

Pirelli RE Pirelli RE Group Pro forma Group (in thousands of Euro) Notes historical adjustments Pro Forma data 2008 Revenues from sales and services 365,098 - 365,098 Changes in inventories of work in progress, semi-finished (1,629) (1,629) and finished products - Own work capitalized - - - Other income 48,979 - 48,979 Total operating revenues 412,448 - 412,448 Raw materials and consumables (84,916) - (84,916) Personnel cost (158,943) - (158,943) Depreciation, amortisation and impairment (9,475) - (9,475) Other costs (230,351) - (230,351) Total operating costs (483,685) - (483,685) EBIT (71,237) - (71,237) Financial income 49,413 - 49,413 Financial expenses (71,115) 19,955 (D) (51,160) Dividends received 519 - 519 Change in fair value of financial assets 3,758 - 3,758 Net profit share from investments in associates and joint (177,019) (177,019) ventures - Result before income taxes (265,681) 19,955 (245,726) Income taxes (1,913) (962) (D) (2,875) Net income (loss) from continuing operations (267,594) 18,993 (248,601) Net income (loss) from discontinued operations 74,628 - 74,628 Net income (loss) for the year (192,966) 18,993 (173,973) attributable to minority interests 2,019 - 2,019 Consolidated net income for the year (194,985) 18,993 (175,992)

20.6.3 Information on the pro forma adjustments A) Capital Increase For the purposes of drafting the Consolidated Pro Forma Financial Statements we assumed that the Capital Increase would have been entirely subscribed. Therefore, for the pro forma adjustments, an increase of Euro 395.5 million in the Net Equity of Pirelli RE Group has been considered, equal to the Capital Increase deliberated less an estimate aggregate amount for costs and other expenses for the completion of the operation of Euro 4.5 million net of tax. B) Use of the financial resources received through the Capital Increase The write-down of the bank borrowings and payables to other financial institutions in current liabilities, amounting to Euro 400.0 million, is due to the anticipated use of the financial resources received by means of the Capital Increase, and more specifically: (i) through the commitment shown by the controlling shareholder Pirelli & C. to subscribe all the 276 Section I Registration Document shares to which it is entitled in the context of the Capital Increase, for a total amount of Euro 232.3 million; the controlling shareholders expressed its intention to subscribe the shares by converting part of its credit towards the Issuer into equity. This receivables is related to a revolving financing agreement for a maximum amount of Euro 750.0 million entered into on 6 November 2008. Therefore, in drafting the Consolidated Pro Forma Financial Statements, a corresponding reduction of the item bank borrowings and payables to other financial institutions in current liabilities has been considered; (ii) assuming the financial resources received by means of the exercise of the Rights by the other shareholders to be allocated for an amount of Euro 167.7 million (including the costs connected to the operation), to reduce indebtedness. C) Other adjustments The write-up of trade payables, by an amount of Euro 6.2 million, is referred to an initial estimate of the costs and other expenses for the completion of the Capital Increase. These expenses mainly include advisory and placement fees paid to banks and financial intermediaries, consulting, legal, notary public services and other costs directly connected to the transaction. The write-down of the tax payables, by an amount of Euro 1.7 million, was determined from the recognition of the fiscal effects on such charges. We note that the preliminary estimate of the accessory expenses does not include potential costs relating to the formation of an underwriting syndicate as the Issuer decided not to form one, in the light of the intention expressed by the controlling shareholder Pirelli & C. to exercise its Rights completely and to subscribe all the shares that will remain unsubscribed at the end of the Rights Auction (without giving any undertaking in this regard). Pirelli RE therefore reserves the right to form an underwriting syndicate should it perceive the need to do so. In such a case, details will be given in the Notice of Publication of the Prospectus. D) Financial effects from the use of the financial resources raised through the Capital Increase The adjustments applied to the Consolidated Pro Forma Income Statement reflect the benefit in terms of reduced interest payments as result of the anticipated repayment of bank borrowings and payables to other financial institutions, referred to in the above paragraph; financial expenses reduced by a total amount of Euro 20.0 million. The fiscal effects resulting from this adjustment amount to an increase income taxes by Euro 1.0 million.

20.6.4 Purpose of the presentation of the Consolidated Pro Forma Data The purpose of the presentation of the Consolidated Pro Forma data is to retrospectively reflect the significant outcomes of the Capital Increase and the related financial transactions, applying the appropriate Pro Forma adjustments to the historical consolidated data. Specifically, as described above, the outcomes of the Capital Increase and the related financial transactions have been retrospectively reflected in the Consolidated Pro Forma Balance Sheet as if these transactions were put into effect on 31 December 2008, and in the Consolidated Pro Forma Income Statement, as if the transactions were put into effect on 1 January 2008.

20.6.5 Assumptions made in drafting the Consolidated Pro Forma Data The accounting principles adopted for the preparation of the Consolidated Pro Forma Financial Statements are the same as those used for the drafting of the consolidated financial statements as of 31 December 2008 for Pirelli RE Group, that is the IFRS made by the European Union. The Pro Forma adjustments described above were applied by adopting the general rule under which transactions/balances relating to the balance sheet are assumed as occurred as of the reporting date, while the profit and loss transactions are assumed as occurred at the beginning of the same period. The following specific assumptions were also adopted:

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(i) that the approved Capital Increase would be fully subscribed; (ii) the allocation of the financial resources raised through the exercise of Rights by the minority shareholders, for an amount of Euro 167.7 million (gross of the costs connected to the transaction), to reduce indebtedness; (iii) the benefit in terms of reduced financial expenses connected to the anticipated reduction of bank borrowings and payables to other financial institutions was calculated using an interest rate of approximately 5.0%, a rate that reflects the average cost of short term debt during the reporting period; (iv) the rate used for the calculation of the fiscal effects for the Pro Forma adjustments was 27.5% for IRES (corporate income tax) and 4.8% for IRAP (regional tax on production activities). With regard to the fiscal effects on financial expenses, under the Pro Forma adjustments no impact for IRES purposes was taken into account as in this specific case it is not applicable under tax legislation regarding interest payments being deductible. Again with reference to financial expenses the IRAP effect was however calculated as, as far as the Issuer is concerned, interest payments are deductible for this tax under the tax legislation applicable to industrial holdings; (v) for the purposes of drafting the Consolidated Pro Forma Financial Statements, consideration was given to the estimated costs of advisory and placement fees to be paid to banks and financial intermediaries, while the costs of formation of an underwriting syndicate were not taken into account. This is because the Issuer decided not to form one, in light of the intention expressed by the controlling shareholder Pirelli & C. to exercise its Rights completely, and to subscribe all the shares that will remain unsubscribed at the end of the Rights Auction, but without giving any undertaking in this regard.

20.6.6 Report of the Independent Auditors concerning the audit of the Consolidated Pro Forma Data The report of the Independent Auditors Reconta Ernst & Young S.p.A. on the audit of the consolidated pro forma financial information, is included in this Prospectus, and refers to (i) the appropriateness of the assumptions made in the calculation of the pro forma data, (ii) the correct application of the methodology used and (iii) the accuracy in the use of the accounting principles in connection with the drafting of the pro forma data.

20.7 Auditing of the annual financial reports relating to previous years

20.7.1 Statement of auditing of financial reports of previous years The financial statements for the year and the consolidated financial statements of the Company have been audited by the Independent Auditors for the financial year ended 31 December 2008, and by PricewaterhouseCoopers S.p.A. for the financial years ended 31 December 2007 and 2006. The Independent Auditors and PricewaterhouseCoopers S.p.A. have not expressed any significant findings in their audit reports.

20.7.2 Other information included in the registration document reviewed by the auditors The Prospectus does not contain any information subject to auditing which are different from those derived by the financial statements referred to in Paragraph 20.1.

20.7.3 Data derived from sources other than the financial statements of the Issuer The Prospectus only contains financial information derived from the financial statements of the Issuer, which are subject to audit.

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20.7.4 Date of the latest financial information The latest financial information included in this Prospectus relate to the year ended 31 December 2008.

20.8 Infra-annual financial information and other financial information On 20 April 2009, the Pirelli RE Board of Directors approved and published the Pirelli RE Group interim financial statements as of and for the three-month period ended 31 March 2009, not subject to audit, prepared in accordance with Article 154-ter(5) of the Italian Finance Act (the "Interim Report on Operations") As announced to the market on 20 April 2009, in view of the Capital Increase and to provide all shareholders with the most complete information possible, the Company has asked independent experts for an extraordinary update of the reports of the real estate assets managed as of 31 March 2009. Such reports show that the market values as of 31 March 2009 indicate a variation of -0.5% on an homogeneous basis compared with the same assets as of 31 December 2008, equal to a negative impact of approximately Euro 6.6 million, in line with the range of values disclosed to the market, on the book value of the real estate assets reflected in the interim consolidated financial statements of the Pirelli RE Group as of 31 March 2009, already approved and published on the date the reports were updated. This impact, which would result in a reduction of net equity for the period of approximately 2% (from Euro 317.1 million to Euro 310.6 million) and an increase in the net consolidated loss for the first quarter of 2009 (from Euro 15.8 million to Euro 22.3 million) will be recognised in the half-yearly financial statements as of and for the period ending 30 June 2009 of the Pirelli RE Group. Data derived from the consolidated interim report on operations as of 31 March 2009 are set forth in the table below.

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- Consolidated balance sheet as of 31 March 2009

(In thousands of Euro) 31 March 2009 31 December 2008 Assets Non-current assets Property, plant and equipment 22,186 22,805 Intangible assets 159,385 160,601 Investments in associates and joint ventures 353,686 357,867 Other financial assets 72,792 75,237 Deferred tax assets 28,777 28,564 Other receivables 620,392 600,379 Tax receivables 68 68 Total non-current assets 1,257,286 1,245,521 Current Assets Inventories 92,589 93,379 Trade receivables 161,741 181,644 Other receivables 79,795 82,909 Cash and cash equivalents 30,193 35,702 Tax receivables 41,468 36,730 Total current assets 405,786 430,364 Total assets 1,663,072 1,675,885 Liabilities Group net equity Share capital 20,704 20,704 Other reserves 131,193 159,304 Retained earnings 181,043 376,669 Net income/(loss) for the year -15,828 -194,985 Total Group Net equity 317,112 361,692 Minority interests 2,965 4,673 Total net equity 320,077 366,365 Non-current liabilities Bank borrowings and payables to other financial institutions 111,727 229,238 Other payables 18,772 30,081 Provisions for future risks and expenses 25,961 25,415 Deferred tax provision 13 120 Employee benefit obligations 15,973 17,268 Total non-current liabilities 172,446 302,122

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Current Liabilities Bank borrowings and payables to other financial institutions 836,084 685,384 Trade payables 123,299 138,980 Other payables 81,398 86,920 Provisions for future risks and expenses 97,627 72,231 Tax payables 31,112 23,619 Derivative financial instruments 1,029 264 Total current liabilities 1,170,549 1,007,398 Total liabilities 1,342,995 1,309,520 Total liabilities and net equity 1,663,072 1,675,885 Quarterly consolidated income statement as of 31 March 2009 and 31 March 2008

Quarter ended 31 March (In thousands of Euro) 2009 2008 Operating Revenues 61,539 128,684 Operating Costs (63,742) (108,247) EBIT (2,203) 20,437 Financial income 9,288 12,363 Financial expenses (11,628) (11,965) Change in fair value of financial assets 3,044 (1,457) Net profit share from investments in associates and joint ventures (12,955) (1,683) Result before income taxes (14,454) 17,695 Income taxes (2,139) (5,473) Net income (loss) from continuing operations (16,593) 12,222 Net income (loss) from discontinued operations - 724 Net income (loss) for the period (16,593) 12,946 - attributable to minority interests (765) 1,371 Consolidated net income (loss) for the period (15,828) 11,575

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Consolidated statement of changes in net equity for the quarter ended 31 March 2009

Net Share Currency income (In thousands Share Revaluation Legal Other Retained Group Minority premium translation (loss) for Total of Euro) capital reserves reserve reserves earnings net equity interests reserve reserve the period Net equity as of 31 December 2008 20,704 158,336 15 4,265 (1,680) (1,632) 376,669 (194,985) 361,692 4,673 366,365 - adjustments of fair value measurement of financial assets available for sale - - - - - (2,101) - - (2,101) - (2,101) - cash flow hedges - - - - - (26,120) - - (26,120) - (26,120) - gains/losses transferred to the statement of profit and loss, previously recognized directly in net equity, relating to cash flow hedges - - - - - 1,019 - - 1,019 - 1,019 - currency translation reserve - - - - (1,195) - - - (1,195) (399) (1,594) Total profits (losses) for the period recognized in net equity - - - - (1,195)(27,202) - - (28,397) (399) (28,796) Allocation of 2008 result ------(194,985) 194,985 - - - Costs of equity transactions - - - - - 54 - - 54 - 54 Equity-settled stock options - - - - - 232 - - 232 - 232 Other changes ------(640) - (640) (544) (1,184) Net income (loss) for the period ------(15,828) (15,828) (765) (16,593) Net equity as of 31 December 2009 20,704 158,336 15 4,265 (2,875) (28,548) 181,044 (15,828) 317,113 2,965 320,078

20.8.1 Dividend policy As of the Prospectus Date no policies have been approved regarding the distribution of dividends. Pursuant to Article 24 of the By-laws, 5% of net profits must be allocated to the legal reserve until such reserve is equal to 1/5 of the share capital, the residual net profits are distributed to the shareholders proportionally with their interests, unless otherwise voted by the Shareholders' Meeting. Dividends not collected within a period of five years from the date they become payable, will be forfeited in favour of the Company. The Company, whether permitted by applicable laws, may distribute interim dividends.

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With regard to the year ended 31 December 2008, the Issuer's Shareholders' Meeting held on 17 April 2009, acknowledged a loss for the period (of Euro 99.9 million), and voted to carry the loss over. Consequently no dividend distribution was voted.

20.8.2 Legal and arbitration proceedings Civil and administrative proceedings As of the Prospectus Date the Company, certain controlled companies and certain companies in which Pirelli RE, or its controlled companies, hold qualified minority interests (associates and joint ventures), are parties to civil proceedings. The following paragraphs describe the disputed amounts, providing summaries of the most significant issues. Pirelli RE and companies within the perimeter of consolidation Pre-emption right. (i) With reference to certain real estate units which are part of the assets of the former INA, (acquired by Unim S.p.A., subsequently merged into Pirelli RE, transferred to Auriga Immobiliare S.r.l., now Iniziative Immobiliare S.r.l.) filed legal actions against certain tenants aimed at establishing the alleged violation of the pre-emption right pursuant to Article 3(109) of Law 662/1996. As of the Prospectus Date, the first degree proceedings have been settled and, only with regard to three actions brought by certain tenants, the Issuer has been condemned by the same judge who ordered the defendant companies (including Pirelli RE) to pay damages for an amount of approximately Euro 8.2 million. Pirelli RE appealed this decision, obtaining the suspension of the effects of the above final decisions, for almost the entire amount of the damages. As of the Prospectus Date, the second degree of the proceeding is still pending. In light of the positive outcome of the first degree of most of the filed legal actions, the Issuer considers it likely that it will be successful. Edilnord Gestioni S.r.l.. Edilnord Gestioni S.r.l. in liquidation, a company that manages the assets of INPDAP, is both a plaintiff and a defendant in certain legal proceedings regarding such assets, Among other things, INPDAP is claiming having suffered losses as a result of certain contracts entered into with Edilnord Gestioni S.r.l. in representation of INPDAP and breaches of certain contractual obligations. With regard to the more significant legal proceedings, Edilnord Gestioni S.r.l. is asked to pay a total amount of approximately Euro 20.4 million. The Issuer considers it unlikely that the above cited proceedings may result in a significant damage also considering the fact that, in the context of the acquisition of Edilnord, the assignor issued a contractual guarantee to cover any potential liabilities. Other disputes. Pursuant to a leasing contract, Tiglio I S.r.l., Pirelli RE and Iniziative Immobliliari S.r.l. have been impleaded by a tenant for not having rendered the real estate properties, rented to the plaintiff, suitable for the agreed use, due to the malfunction of the air-conditioning system, with a consequent claim for damages for an amount of approximately Euro 3.7 million. The first degree of the proceeding ended with the rejection of the counterparty's claim for damages and with the acceptance of the counterclaim filed by Tiglio I S.r.l. for the payment of unpaid leasing fees. As of the Prospectus Date, the second degree of the proceedings is still pending. With reference to certain service agreements, the Issuer has been impleaded in an arbitration proceeding for the breach of certain contractual obligations and the consequent payment of damages for an amount of approximately Euro 5.4 million. The sole arbiter, for the purposes of facilitating a settlement of the dispute, suggested the possibility of a settlement in favour of the plaintiff for a total amount comprised between Euro 1.0 and 1.5 million. On 13 May 2009 the parties therefore entered into a settlement agreement proving for the payment to the plaintiff of Euro 1.25 million.

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In opposition to an injunctive decree filed by Tiglio I S.r.l. against the purchaser of a real estate property sold by the same for the payments of the consideration of certain restructuring works, the defendant filed a counterclaim against Tiglio I S.r.l. and Pirelli & C. Real Estate Project Management S.p.A. asking for the damages caused by the alleged failure to execute "to standard" certain works that they were required to carry out pursuant to the purchase agreement. These damages would amount to approximately Euro 7.2 million. As of the Prospectus Date the proceeding is still pending in the first degree and the date of the hearing has been fixed for the examination of the official expert witness report ordered by the Judge. In a proceeding commenced by a purchaser of a real estate property transferred by a securitisation vehicle company for an alleged late cancellation of a mortgage, the plaintiff claimed from the vehicle - and jointly, from Pirelli RE Credit Servicing S.p.A. - damages for Euro 2.7 million. The first degree proceeding is still pending and the relevant conclusions have been specified. The Company considers that the above cited proceedings should not have a significant effect on the Pirelli RE and Group's assets, financial position or cash flow. Associate companies and joint ventures Purchase of real estate properties. (i) Ganimede Due S.r,l, (in which Pirelli RE indirectly holds a 25% interest) has been impleaded in certain proceedings commenced by companies within the Fondiaria SAI Group, claiming the failure to pay part of the sale price (amounting to Euro 10.0 million) of certain real estate properties. As of the Prospectus Date, the first degree of the civil proceeding is still pending while for the arbitration proceeding the findings of the expert witnesses are still awaited. (ii) Aida S.r.l. (in which Pirelli RE holds a 33% interest) has been impleaded in a proceeding commenced by a purchaser of a real estate property claiming for defects in the sold item and breaches of certain contractual terms set forth in the sale and purchase agreement and damages for an amount of approximately Euro 6.7 million. As of the Prospectus Date the first degree of the proceeding is still pending. Consorzio G6 Advisor. Consorzio G6 Advisor, which is providing management activities for the divestment of certain real estate portfolios subject to securitisation, (in which Pirelli RE Agency holds a 42.3% interest), is currently party to a number of legal, civil and administrative proceedings, including the following: (i) a proceeding commenced against the assignor securitisation company, and another defendant, for establishing the obligation of the defendants to transfer the real estate property in compliance with the pre-emption right agreed with the plaintiff. In such proceeding, Consorzio G6 Advisor appeared to contest the admissibility of the plaintiff's claim. As of the Prospectus Date, the first degree of the proceeding is still pending and the hearing for the final decision has been already scheduled; (ii) a proceeding commenced by the assignor securitisation company against the purchasers of a real estate complex, in order to ascertain the failure to execute the payment of the price agreed in the sale and purchase agreement and obtain an order against the defendant companies to return the real estate property and to pay the relevant damages. The plaintiff filed a legal action against Consorzio G6 Advisor, who raised the following exceptions: (a) the inadmissibility and groundless of the claim for indemnity and (b) having fulfilled all its contractual obligations. As of the Prospectus Date, the first degree of the proceeding is still pending and it is in its initial phase; (iii) a proceeding commenced by a company that is claiming, against the securitisation company and another defendant, the breach of the contractual obligation to sign the final sale and

284 Section I Registration Document purchase agreement for a real estate property that had been awarded. The defendant companies appeared before the Court claiming for the rejection of the plaintiff's claim (and, among other things, damages of Euro 2.7 million) and, consequently, to be indemnified and hold harmless by Consorzio G6 Advisor. Consorzio G6 Advisor appeared claiming the rejection of the claim for recourse. As of the Prospectus Date, the first degree of the proceeding is still pending; (iv) a proceeding commenced against the securitisation company, and another defendant, in order to establish the alleged breach of the pre-emption right pursuant to Article 38 Law 392/78 and legitimacy of the recourse action. The defendants, with the intervention in the proceeding of Consorzio G6 Advisor, asked the claim to be rejected. As of the Prospectus Date, the first degree of the proceeding is still pending; (v) a proceeding commenced by a pension legal entity against Consorzio G6 Advisor aimed at indemnifying and holding harmless the plaintiff from any liability relating to legal action filed against the plaintiff, and against the securitisation company, in relation to the alleged breach of the obligation to transfer a certain real estate property, and asking the consequential damages (approximately Euro 1.2 million). As of the Prospectus Date, the first degree of the proceeding is still pending; (vi) a proceeding commenced by a pension legal entity against Consorzio G6 Advisor aimed at establishing liability tort under Article 2043 of the Italian Civil Code and asking the consequential damages for an amount of approximately Euro 9.9 million, deriving from the above mentioned impossibility to dispose of certain parts of a real estate property, and a further amount of Euro 0.7 million for the omitted collection of due leasing fees. As of the Prospectus Date, the first degree of the proceeding is still pending; (vii) a proceeding commenced by the Corte dei Conti (Italian State’s Auditors Court), which originates from the investigations carried out by the local tax authority of Cagliari in the context of securitisations of real estate within the assets of such pension legal entities. The proceeding in object regards the transfer of a real estate property located in Cagliari. According to the reconstruction of events made by the Prosecutor, Consorzio G6 Advisor sold the real estate property, without the expert’s report, at a price lower than that calculated based on the criteria set forth by the applicable regulation, causing, through this conduct, losses for an amount of approximately Euro 10.0 million. The Corte dei Conti requested a joint payment from all defendants. Among these defendants the Issuer has been impleaded by mistake instead of Pirelli RE Agency. As of the Prospectus Date, the Issuer and Consorzio G6 Advisor filed their defensive deductions. The Company believes it is unlikely that the in court proceedings will have a material adverse effect on the assets or on the financial position or on the revenues of the entities which are parties to such proceedings. Tax litigation As of the Prospectus Date the Company, certain controlled companies and certain companies in which Pirelli RE, or its controlled companies hold qualified minority interests (associates and joint ventures), received certain allegations from the tax authorities having jurisdiction. The paragraphs which follow illustrate the amounts under dispute, providing summaries of the most significant issues. Pirelli RE and companies within the perimeter of consolidation As of the Prospectus Date: (i) Pirelli RE and its controlled companies have received tax assessments reports for a total amount of approximately Euro 3.7 million (excluding fines and interests);

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(ii) Pirelli RE controlled companies have received collection notices for a total amount of approximately Euro 0.3 million. As of the Prospectus Date, on the basis of the advice from its consultants, all noteworthy professional experts, and the available information, the Company believes that the allegations received by the tax authorities may be concluded in favour of the entities to which such assessments were addressed or that, in any event, such proceedings may be settled with the relevant Authorities for amounts significantly lower than those claimed. As of the Prospectus Date, Pirelli RE and Servizi Amministrativi Real Estate S.p.A. (a company wholly controlled by Pirelli RE) are subject to a tax inspection by Milan Tax Police aimed at assessing the tax periods from 2006 to 21 January 2009. As of the Prospectus Date no formal allegations have been brought against the Company. Associate companies and joint ventures As of the Prospectus Date, Pirelli RE associated companies and joint ventures: (i) have received contestation notices based on tax inspections (and, to a lesser extent, assessment notices) for a total amount of approximately Euro 352.4 million (excluding fines and interests). The more relevant situations relate to the following companies: (a) Tamerice Immobiliare S.r.l., in which Pirelli RE holds a 20% interest. Under a tax inspection carried out during 2008, the deductibility for tax purposes of a capital loss on the transfer of an interest carried out during the 2005 fiscal year, was contested by the Tax Police According to the alleged contestation, this fact gives rise to due taxes for an amount of Euro 257.8 million (excluding fines and interests), (b) Solaris S.r.l., in which Pirelli RE holds a 40% interest. Within the context of a tax inspection carried out by the Tax Police during 2008, a sale of real estate properties relating to the 2004 fiscal year, subject to VAT, has been requalified as a transfer of going concern. With reference to the 2005 and 2006 fiscal years, the tax inspectors contested the sale price of certain real estate properties as being lower than the amounts of the loans taken out by the purchasers. According to the indications included in the contestation notice, these facts give rise to taxes owed (corporate income tax, regional tax on production activities, VAT, registration fee, mortgage and land registry taxes) for an amount of Euro 57.7 million (excluding fines and interests), (c) Iniziative Immobiliari S.r.l., in which Pirelli RE holds a 49.46% interest. Within the context of a tax inspection carried out during 2008 by the Tax Police, the merger of Auriga Immobiliare S.r.l. and Iniziative Immobliliari S.r.l. put into effect in 2003 was considered to be in avoidance of tax, for the 2004 – 2008 fiscal years. Based on the indications included in the contestation notice, this would give rise to taxes owed for an amount of Euro 17.2 million (excluding fines and interests), (d) Aida S.r.l., in which Pirelli RE holds a 33% interest. Within the context of a tax inspection carried out during 2007, the Revenue Department (Agenzia delle Entrate) alleged the omitted application of ordinary withholding tax on dividends distributed during 2004. According to the indications included in the contestation notice, this would give rise to taxes owed for an amount of Euro 8.2 million (excluding fines and interests), (e) B&L Beteiligungsgesellschaft GmbH, a company merged into 1454 Pirelli DGAG Deutsche Grundvermögen GmbH, in which Pirelli RE holds a 42.8% interest. During the course of a tax inspection commenced in 2007 and completed in 2008, the German tax authorities contested the deductibility for tax purposes of certain earlier losses, which would give rise to taxes owed for an amount of Euro 2.7 million; (ii) have received tax collection notices for an amount of approximately Euro 1.9 million. On the basis of advice from its consultants, all noteworthy professional experts, and the available information as of the Prospectus Date, the Company considers that the situations contested by the tax authorities having jurisdiction should have a favourable outcome for the entities to which such contestation notices were addressed. In each case, the Company considers that the amounts due in the event of being found liable or in the case of a settlement agreement, they would not

286 Section I Registration Document be such as to have a significant negative effect on the economic, financial or operational situation. As of the Prospectus Date, Ganimede Due S.r.l. (a company in which Pirelli RE holds an indirect stake of 25%), Tiglio I S.r.l. (a company in which Pirelli RE holds an indirect stake of 12.5%) and Aida S.r.l. (a company in which Pirelli RE holds an indirect stake of 33%) are subject to a tax inspection by Milan Tax Police aimed at assessing the tax periods of 2005, 2005-2006 and 2004 - 30 June 2008. As of the Prospectus Date no formal allegations have been brought against the above Companies. Significant changes in the financial or commercial situation of the Issuer. After 31 December 2008 no significant changes have been occurred in the financial or commercial situation of the Issuer, with the exception of what is indicated in the First Section, Chapter XII, Paragraph 12.1.

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21. SUPPLEMENTAL INFORMATION

21.1 Share capital

21.1.1 Subscribed and paid-up share capital The Issuer’s share capital was fully subscribed and paid up as of the Prospectus Date, and was equal to Euro 21,298,616.00, divided in 42,597,232 ordinary shares with a nominal value of Euro 0.50 each. The Extraordinary Shareholders' Meeting held on 17 April 2009 resolved to increase the share capital, by means of a divisible capital increase, up to a maximum payment of Euro 400,000,000.00 (inclusive of any share premium) through the issue of a maximum amount of 800,000,000 ordinary shares having a nominal value of Euro 0.50 each, with regular benefits. The same Extraordinary Shareholders’ Meeting resolved to authorise the Board of Directors to determine the issue price of the new shares based on the theoretical ex right price (TERP) of Pirelli RE ordinary shares. This price is to be calculated using current methods based on the arithmetic average of the official prices recorded over a period of at least three trading days prior to the date of determination of the issue price and discounted - within the legal limits - in a measure that will be determined by the Board of Directors taking into account the prevailing market conditions at the time the transaction is actually launched, the trading price of Pirelli RE’s ordinary shares, and market practices for similar transactions.

21.1.2 Existence of any investment instruments not in the form of capital As of the Prospectus Date, the Company has not issued financial instruments that are not representative of share capital.

21.1.3 Number, book value and nominal value of shares held by the Issuer or on its behalf or by controlled companies of the Issuer As of the Prospectus Date, the Company held 1,189,662 treasury shares of a nominal value of Euro 0.50 each, representing 2.793% of the share capital. As of 31 December 2008, the unitary book value of these shares amounted to Euro 40.32. The accounting value of the treasury shares, in accordance with IAS accounting standards, was recalculated in the consolidated balance sheet and in the separate Pirelli RE balance sheet in reduction of net equity.

21.1.4 Amount of convertible securities, exchangeable securities or those with warrants, with information on the terms and procedures for conversion, exchange or subscription As of the Prospectus Date, the Company has no convertible securities, exchangeable securities or securities with warrants issued.

21.1.5 Existence of rights and/or obligations to acquire authorised but unissued capital or of commitments to increase capital With the exception of those deriving from the subscription commitments described in the Section Two, Chapter V, Paragraph 5.4.3 and from the stock option plan in effect as of the Prospectus Date (see Section One, Chapter XVII, Paragraph 17.2) there are no rights and/or obligations to acquire the capital of the Issuer.

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21.1.6 Information regarding the share capital of any members of the Group offered as options and description of the options with an indication of the entities to which they refer Subject to the indications of Section One, Chapter XVII, Paragraph 17.2, there are no other instruments representing the capital offered to members of the Group.

21.1.7 Changes in share capital in the last three financial years As of 1 January 2006 the voted share capital was equal to Euro 22,402,491.00 while the share capital subscribed and paid-in amounted to 21,037,491.00. Subsequently the share capital was modified owing to the effect of subscription by beneficiaries of the stock option plans, as shown in the table below.

Share Capital (in Euro) Settlement Date 21,039,178.50 31 January 2006 21,042,053.50 3 March 2006 21,258,053.50 16 March 2006 21,274,678.50 10 May 2006 21,298,616.00 27 July 2006

21.2 Articles of Incorporation and By-laws

21.2.1 Company’s purpose Pursuant to Article 4 of its By-laws, the corporate purposes of the Company are: (i) promoting and participating in transactions and investments in the real estate sector; (ii) coordinating and managing transactions and investments in the real estate sector; (iii) purchasing interests in other companies or legal entities, whether in Italy or abroad; (iv) funding and coordinating, both technically and financially, the companies or legal entities in which it holds interests. The following specific activities are also part of the purposes of the Company: purchasing, selling, exchanging and renting buildings of all types and sizes; planning, building, demolishing and maintaining buildings in general; planning and performing works involving reclamation and urbanisation, entering into contracts for the above mentioned activities; and providing services in the real estate sector. The Company may also perform all commercial, business, securities and real estate transactions necessary or useful to pursue the foregoing purposes (including issuing personal or collateral guarantees, whether or not to the benefit of third parties, and obligating itself under mortgages and loans), with the strict exclusion of public financial activities and all other activities which are restricted pursuant to applicable regulations.

21.2.2 Provisions of By-laws regarding members of the Boards of Directors, management and monitoring The main provisions of the By-laws regarding members of the Board of Directors and members of the Board of Statutory Auditors of the Issuer are summarised below. For further information please refer to the Issuer's By-laws, which are publicly available at the registered offices and on the Company's website. Board of Directors Pursuant to Article 12 of the By-laws, the Company is administered by a Board of Directors

289 Section I Registration Document composed of no fewer than 5 and no more than 19 members who remain in office for three financial years (unless a lesser period is resolved by the Shareholders' Meeting upon appointment) and may be re-elected. The Shareholders' General Meeting determines the number of members of the Board of Directors, a number that is maintained unless resolved otherwise. The members of the Board of Directors are appointed by means of voting by list, based on lists presented by the shareholders on which candidates are listed with a progressive number. Shareholders may only present lists when, alone or together with other shareholders they hold a total amount of shares representing at least 2% of the share capital with voting rights or a lesser amount set forth in the regulations issued by Consob, with the obligation of proving title to the number of shares required to present lists within the term for the submission of the lists. The lists submitted by shareholders, and signed by those presenting them, shall be filed at the Company's registered office, and be available to whoever might request them, at least 15 days prior to the date set for the Shareholders' Meeting in the first call. Each shareholder may submit or contribute to the submission of one list only and each candidate may appear on one list only under penalty of inelegibility. Together with the list, candidates shall submit their acceptance and statements attesting, under their responsibility, the absence of causes of ineligibility and the existence of all the requirements set forth for such position. With such declaration each candidate shall submit a resume of their personal characteristics and professional experience and an indication of administrative roles held with other companies and suitability of their candidacy as independent, under the strict criteria set forth in applicable laws and/or regulations and by the Company. Each entitled person is only allowed to vote one list. The election of the Board of Directors shall proceed as follows: (i) 4/5 of the directors to be elected, rounded down in the case of an odd number, shall be elected from the list obtaining the majority of shareholder votes, in the progressive order they appear on the list itself; (ii) the remaining directors are drawn from the other lists. To this end, votes obtained by other lists are subsequently divided by one, two, three, four and so on, according to the number of directors still to be elected. Quotients thus obtained are assigned progressively to the candidates of these lists, in the order they fall on the list. The quotients assigned to the candidates of the various lists are arranged in descending order. The remaining directors are elected from those who obtained the highest quotients. In the event multiple candidates obtain the same quotient, the candidate from the list that has not yet provided any directors or has provided the least number of directors will be elected. In the event none of these lists have yet elected a director or have elected the same number of directors, the candidate who obtained the greatest number of votes on such lists will be elected. If there is a tie in terms of both list voting and quotient, the entire Shareholders' Meeting shall vote again, electing the candidate who obtains a simple majority of votes. If the list voting mechanism does not guarantee the minimum number of independent directors required by applicable laws and/or regulations, the non-independent candidate with the highest progressive number on the list that received the greatest number of votes will be replaced by the first unelected independent candidate from the same list with the next highest number of votes

290 Section I Registration Document and so on, list by list, until the minimum number of independent directors is met. For the appointment of directors who were not appointed through the above mentioned procedure, the Shareholders' Meeting shall vote with the majorities set forth in applicable laws. If during the course of the relevant financial year one or more directors resign or otherwise cease to be directors, Article 2386 of the Italian Civil Code shall apply. The loss of the requirements of independence by a director does not constitute a reason for termination if the Board of Directors maintains the minimum number of members - as provided by regulations and/or law - having the requirements of independence. If more than half of the members of the Board of Directors resign or otherwise cease to be directors the entire Board of Directors shall be considered to have lapsed from the appointment of the new Board of Directors. Unless voted otherwise by the Shareholders' Meeting the directors are not bound by the prohibition set forth in Article 2390 of the Italian Civil Code. Pursuant to Article 13 of the By-laws, the Board of Directors shall appoint a Chairman, if the Shareholders' Meeting has not already done so, and if appropriate, one or more Deputy Chairmen. In the event of the Chairman's absence, a Deputy Chairman shall assume the chair, followed in his or her absence by a Chief Executive Officer, if appointed, then by a Deputy Chairman or by a Chief Executive Officer; if there are two or more Deputy Chairmen or Chief Executive Officers the chair is assigned to the older of these. The Board of Directors shall appoint a secretary, who need not be a member of the board. Pursuant to Article 14 of the By-laws, the Board of Directors is convened on the Chairman's initiative or by any acting Chairman, at the Company’s registered office or in another place set out in the notice of call, any time it is in the company's interest, or when requested in writing by one of the directors or by one fifth of the directors in office. The Board of Directors may also be convened by the Board of Statutory Auditors, or by any Statutory Auditor, upon notification to the Chairman of the Board. The Chairman must notify the items to be discussed at the meeting in advance and shall provide all directors with adequate information on such items, in consideration of the circumstances of the case. Notices of call shall be made by registered mail, telegram, fax or e-mail sent at least five days in advance (or, in the case of emergency, at least six hours in advance) of the meeting, to each Director and Statutory Auditor. The Board of Directors may, however, validly resolve in the absence of formal call, if all of the members and all of the Statutory Auditors in office are present. Participation in board meetings - or those of the executive committee, where appointed - may take place, if the Chairman or acting Chairman considers it necessary, by means of telecommunications that enable participation in the discussion and an equal distribution of information to all those taking part. The meeting of the Board of Directors - or of the Executive Committee, where appointed - shall be considered held where the Chairman and the Secretary are simultaneously present. Pursuant to Article 16 of the By-laws, meetings of the Board of Directors are legitimately held when the majority of the directors in office may take part, and resolutions are passed with the majority of the votes cast.

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In the case of a tied vote the Chairman's vote will prevail. Pursuant to Article 18 of the By-laws, the Board of Directors has the broadest powers for the ordinary and extraordinary management of the Company, including the right to execute, without any limitation, all deeds considered appropriate for the implementation and achievement of the Company’s purpose, excluding only those that the law and the By-laws reserve strictly for the Shareholders' Meeting. Within the limits set forth in applicable laws, the Board of Directors is granted powers to resolve on mergers or demergers, reduction of share capital in the case of the withdrawal of a shareholder, amendment of the By-laws in order to ensure compliance with applicable laws, transfer of the Company offices within the country and the opening or closing of secondary offices. The Board of Directors and the Board of Statutory Auditors shall be kept informed, also by the delegated bodies, on the status and progress of the management activity, the most significant economic, financial or security transactions carried out by the company or by its controlled companies. More specifically the delegated bodies shall report on operations in which they have an interest, on their own behalf or on behalf of third parties, or that are influenced by the entity that manages and coordinates them, if applicable. Information shall be provided promptly and in any event at least quarterly at the meetings, or in writing. Pursuant to Article 19 of the By-laws, for corporate management the Board of Directors is authorised to delegate its powers to one or more of its members, up to the level of Chief Executive Officer, and to grant them, severally or jointly, the power to sign in the name of the company The board may also delegate its powers to an Executive Committee composed of certain of its members, the remuneration being voted by the Shareholders' Meeting. It may also appoint one or more Committees with consulting and proposing functions, also for the purposes of modifying the corporate governance structure to comply with the indications of the competent authorities. The Board of Directors shall appoint the manager responsible for corporate financial reporting, subject to the approval of the Board of Statutory Auditors. Unless terminated for just cause, subject to the advise of the Board of Statutory Auditors, the manager responsible for corporate financial reporting shall remain in office until the Board of Directors by which he or she has been appointed comes to the end of its term. As of the Prospectus Date this role is held by Gerardo Benuzzi, General Manager of Group Finance & Advisory. In accordance with Article 20 of the By-laws, the Company is represented vis-à-vis third parties and in court severally by the Chairman of the Board of Directors and, if appointed, the Deputy Chairmen, and by the Directors, within the limits of the powers granted to them by the Board of Directors. The Board of Directors and, within the limits of the powers granted to them by the Board of Directors, the Chairman and, if appointed, the Deputy Chairmen, and the Chief Executive Officers, are authorised to delegate the representation of the Company vis-à-vis third parties and in court to Managers and employees in general and, if appropriate, to third parties. Board of Statutory Auditors Pursuant to Article 22 of the By-laws, the Board of Statutory Auditors is composed of three Statutory Auditors and two Alternate Auditors who satisfy the requirements set forth in applicable laws and regulations.

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The ordinary Shareholders' meeting appoints the Board of Statutory Auditors and determines the remuneration of its members. The minority shall appoint one Statutory Auditor and one Alternate Auditor. The Board of Statutory Auditors is usually appointed - in compliance with applicable laws and/or regulations - on the basis of lists submitted by shareholders in which candidates are listed with a progressive number. Each list should include a number of candidates not exceeding the number of members to be elected. Shareholders who, alone or together with other shareholders, represent at least 2% of the shares having voting rights in the ordinary Shareholders' Meetings, or the lower minimum amount required by Consob’s current rules on the submission of lists of candidates for the appointment of Boards of Directors, with an obligation to prove the title relating to the number of shares necessary for submission of the lists of candidate auditors within the terms set forth in current laws and/or regulations. Each shareholder may submit, or take part in the submission of one list only. The lists submitted by shareholders, signed by those presenting them, shall be filed at the Company's registered office, and be available to whoever might request them, at least 15 days prior to the date set for the Shareholders' Meeting in the first call, unless such term is prorogued by applicable laws and/or regulations. Along with any additional documentation required by applicable laws and/or regulations, an outline of the professional experience and personal characteristics of the individuals appointed shall be attached to the lists with an indication of the administrative roles held with other companies, and declarations by which the individual candidates: (i) accept their candidature and; (ii) affirm, under their own responsibility, the absence of causes of ineligibility and the existence of all the requirements set forth in the By-laws and regulations for such position. Each candidate may be included in one list only, under penalty of ineligibility. The lists are divided into two sections: one for candidates for the office of Statutory Auditor and the other for candidates for the office of Alternate Auditor. The first candidate of each section shall be registered with the Register of Accounting Auditors and have served as legal auditor of accounts for a period of not less than three years. Each person entitled to vote may vote only one list. The appointment of the Board of Statutory Auditors shall proceed as follows: (i) two statutory auditors and one alternate auditor are drawn, pursuant to the progressive number, from the list that obtained the majority of votes (the majority list); (ii) the remaining statutory auditor and the other alternate auditor are drawn, pursuant to the progressive number, from the list that obtained the second greatest number of votes (the minority list). In the event of multiple lists having the same number of votes, a second ballot will be held to vote on such lists by all the shareholders present at the Shareholders' Meeting, with candidates being appointed from the list that obtains a simple majority of votes. The Board of Statutory Auditors shall be chaired by the statutory auditor indicated as the first candidate in the minority list. In the event of the death, resignation or termination of an Auditor, he shall be replaced by the alternate auditor belonging to the same list. In the event of replacement of the Chairman of the

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Board of Statutory Auditors, the chair shall be assumed by the candidate from the list from which the terminated Chairman was appointed in accordance with the order set forth in the list. Should it not be possible to proceed with the replacement in accordance with the above criteria, a Shareholders’ Meeting shall be called for the completion of the Board of Statutory Auditors, which shall be decided with a majority vote. When the Shareholders' Meeting, pursuant to the By-laws or pursuant to applicable laws, is required to appoint the Statutory Auditors and/or Alternate Auditors necessary to complete the Board of Statutory Auditors, it shall proceed as follows: (i) if it is necessary to replace Auditors appointed from the majority list, the appointment is made through a relative majority without any constraint as to which list they were originally appointed on; (ii) if, however it is necessary to replace Auditors elected from the minority list, the Shareholders' Meeting shall replace them by relative majority, selecting them where possible from among candidates indicated on the list that the Auditor to be replaced was on or at least in accordance with the principle of the necessary representation of minorities. If only a single list was submitted, the Shareholders' Meeting will vote on this. If the list obtains a relative majority, the statutory and alternate auditors will be elected from the candidates indicated in the respective section of that list. The Board of Statutory Auditors shall be chaired by the person on that list with the highest number of votes. For the appointment of any Auditors not appointed for any reason through the process described above, the Shareholders' Meeting shall vote with the legal majorities. Outgoing auditors may be re-elected.

21.2.3 Rights, privileges and restrictions associated with each class of existing shares As of the Prospectus Date, all shares of the Issuer are ordinary shares of the same class and grant the same rights. Pursuant to Article 6 of the By-laws, the shares are ordinary and nominal. The Company may increase the share capital also through contribution in kind and may issue classes of shares having specific rights, as permitted by applicable laws and regulations. Pursuant to Article 8 of the By-laws, each shareholder has the right to one vote per share held at the Shareholders' Meeting. Pursuant to Article 24 of the By-laws, profits for the period, less the 5% allocation to the legal reserve, up to 1/5 of the share capital, are divided among the shareholders in proportion to their holdings, unless otherwise decided by the Shareholders' Meeting. If legally permitted, the Company may distribute interim dividends.

21.2.4 Methods for the amendment of shareholders' rights The Issuer's By-laws do not prescribe methods for amending shareholders' rights other than those envisaged by law. Please note moreover that, pursuant to Article 6 of the By-laws, the introduction or removal of constraints on the circulation of shares does not entitle shareholders that did not participate in the approval of the relevant resolution to withdraw.

21.2.5 Provisions of the By-laws concerning ordinary and extraordinary Shareholders' Meetings of the Issuer Pursuant to Article 7 of the By-laws, the calling of the Shareholders' Meeting, which may take place in Italy, including in a place other than the Company’s registered office, the right to intervene and representation at the Shareholders' Meeting are governed by law and by the By- 294 Section I Registration Document laws. The notice of call may provide for a third call in the case of an extraordinary Shareholders' Meeting. Shareholders from whom the Company has received the communication envisaged by Article 2370 (2), of the Italian Civil Code, at least two days before the date of the Shareholders' Meeting are entitled to intervene. The ordinary Shareholders' Meeting must be called, at the latest, 120 days after the end of the financial year. Requests for additional items to be added to the agenda of the Shareholders' Meeting made by shareholders in accordance with the law, must be accompanied by a report prepared by such shareholders to be lodged at the Company’s registered office in good time to be made available to shareholders at least 10 days before the date set for the meeting in first call. In accordance with Article 9 of the By-laws, the validity of the Shareholders' Meeting and of its resolutions is governed by law. The proceedings at Shareholders' Meetings are governed by the law and By-laws and by specific Regulations, which were approved by the Company's ordinary Shareholders' Meeting and which are available on the Company's website (www.pirellire.com). In accordance with Article 10 of the By-laws, the Shareholders’ Meeting is chaired in this order: by the Chairman of the Board of Directors, by the Deputy Chairman and Chief Executive Officer, if appointed, by a Deputy Chairman or a Chief Executive Officer; if there are two or more Deputy Chairmen or Chief Executive Officers the meeting shall be chaired by the oldest of these. In the event of the absence of the individuals indicated above, the meeting shall be chaired by another person selected by the Shareholders' Meeting with a resolution passed by the majority of the capital represented at the Shareholders’s Meeting. The Chairman of the Shareholders' Meeting is assisted by a secretary – who need not be a shareholder – appointed by the shareholders with a majority vote of the capital represented at the Shareholders’ Meeting. The assistance of the Secretary is not necessary when the minutes of the meeting are taken by a notary public. The Chairman presides over the Shareholders' Meeting and, in accordance with the law and the By-laws, governs the proceedings. For this purpose, the Chairman - among other things - verifies that the meeting is properly constituted; ascertains the identity of those present and their right to take part, including by proxy; ascertains the quorum for resolutions; controls the proceedings, including by setting a different order of discussion of the items on the agenda set out in the notice of call. The Chairman shall also adopt the appropriate measures to ensure orderly discussion and voting, defining the methods and ascertaining the results.

21.2.6 Provisions of the By-laws that could delay, defer or prevent a change in the Issuer's controlling structure The Company's By-laws have no provisions that could delay, defer or prevent changes to the Issuer's controlling structure.

21.2.7 Provisions of the By-laws governing the ownership threshold above which there is an obligation to notify the public of the shares held The Company's By-laws do not prescribe a specific ownership threshold in the Issuer’s share

295 Section I Registration Document capital. The threshold above which there is an obligation to notify the public of the amount of shares held is that provided for by law.

21.2.8 Provisions of the By-laws governing changes in the share capital The Issuer's Company By-laws do not prescribe greater constraints on changes in the share capital compared with the constraints prescribed by law. Please note moreover that, in accordance with Article 5 of the By-laws, in resolutions for a paid capital increase, rights may be excluded up to a maximum of 10% of the existing share capital, provided that the issue price corresponds to the market value of the shares and that this is confirmed in a specific report by the independent auditors. Lastly, in accordance with Article 18 of the By-laws, the Board of Directors is granted power to determine a reduction of the share capital in the event of the withdrawal of a shareholder.

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22. MATERIAL CONTRACTS

22.1 Agreements other than those entered into during the ordinary course of business in the two-year period prior to the Prospectus Date

22.1.1 Transfer of Pirelli RE Integrated Facility Management In June 2007, the Issuer established a joint-venture in the facilities and project management segment with Intesa Sanpaolo S.p.A., contributing to the joint-venture 49% of the share capital of Pirelli RE Integrated Facility Management B.V. (PREIFM BV), owner of 100% of Pirelli & C. Real Estate Integrated Facility Management S.p.A. (PREIFM SPA) and subsequently contributing a further 1% interest in PREIFM BV to the joint venture. On 5 November 2008, the Issuer and Intesa Sanpaolo S.p.A. (the Sellers) entered into an agreement regarding the sale of their respective interests (50%) in PREIFM BV to Manutencoop Facility Management S.p.A. (respectively the Agreement and the Purchaser ), on 23 December 2008 (the Closing Date) (see Section One, Chapter V, Paragraph 5.1.5). The consideration under the Agreement was Euro 136 million plus an additional Euro 1.5 million. This further amount corresponds to the sum received by PREIFM SPA as an indemnity for the settlement of all the claims raised in connection with the sale and purchase agreement entered into with Business Solutions S.p.A. on 14 December 2006 for the acquisition of Ingest Facility S.p.A.. The Issuer, together with its interest in PREIFM BV, transferred to the Purchaser the shareholders’ loans granted to PREIFM SPA on 27 June 2007, for an amount of Euro 20 million plus interest, which as of the Closing Date, amounted to Euro 2.8 million. The Vendors have severally given representation and warranties, customary for similar transactions with indemnity up to Euro 15 million (Euro 7.50 million for each Vendor). Lastly, the Agreement prescribed that, within four months following the Closing Date, the Purchaser has an obligation to cause the discontinuance of any use of the "Pirelli" brand and trading name by all of the companies forming part of PREIFM BV.

22.2 Agreements entered into during the ordinary course of business having major significance for the Issuer

22.2.1 Financing agreements providing for Pirelli RE or companies of Pirelli RE Group The following table provides a summary description of the terms and conditions of the credit lines granted to the Issuer for its financing requirements for corporate purposes (corporate credit lines).

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Date Bank Amount Notes Maturity 1 June 2005 The Royal Euro 50 The agreement, as amended on 6 May 2008 and 21 April 2009 provides for the 1 December Bank of million following key conditions: (i) termination under Article 1456 of the Italian Civil 2009 Scotland Plc - revolving Code on violation of the obligation to: (a) maintain on the consolidated balance Milan branch sheet, a surplus not subject to encumbrances whether mortgages or liens not lower than Euro 300 million and, (b) with reference to the consolidated balance sheet, to maintain a value of net tangible assets (meaning the difference between total net equity and the value resulting from the sum of the intangible assets and any positive balance of deferred tax assets and liabilities) not lower than Euro 330 million; (ii) termination of the facility in the following cases: (a) occurrence of an event that, if applicable, could be but is not remedied within 25 business days, and that materially affects the Issuer's ability to repay, (b) termination of the facility, withdrawal or cancellation for breaches of the agreements with third parties such as to materially affect the Issuer's ability to repay, (c) failure to pay on time all or some of the amounts of principal owed for lending or financial obligations taken on with third parties of more than Euro 50 million, (d) Pirelli & C. ceases to exercise control over the Issuer. Interest Rate: Euribor plus a spread of 199 basis points. 24 July 2006 Banca Euro 20 Among other things, the agreement provides for termination of the facility in 24 July 2009 Popolare di million the event of significant events or changes that have a substantial and negative Sondrio - revolving effect on the economic, financial and operational situation such as to jeopardize Società the ability to repay. Cooperativa Interest Rate: one-month Euribor with a spread of 45 basis points. per Azioni 9 February Monte dei Euro 50 Interest Rate: Euribor calculated over the reference interest-rate period plus a 7 December 2007 Paschi di million spread of 45 basis points. Under the agreement, the Company declares the 2010 Siena revolving absence of any events which would constitute a breach of the terms of any contracts or agreements to which it is a party, that would jeopardize its ability to repay the loan or would otherwise damage its economic, financial or operational situation. 24 April 2008 Unicredit Euro 50 The agreement provides for termination in the event that Pirelli & C. loses legal 23 October Banca million and actual control over the Issuer under Article 2359 of the Italian Civil Code. 2009 d’Impresa revolving Interest Rate: Euribor calculated over the reference interest-rate period plus a spread of 75 basis points. 24 July 2008 Unicredit Euro Among other things the agreement provides for: (i) mandatory early repayment 23 January Corporate 100 in the event that Pirelli & C. loses control over the Issuer, under Article 2359 of 2010 Banking million, Italian Civil Code, (ii) a commitment to maintaining assets free from real including guarantees for a total value of at least Euro 300 million and a consolidated net Euro 50 equity greater than Euro 575 million, (iii) termination of the facility and/or million withdrawal and/or cancellation, in relation to financial indebtedness of the revolving Issuer or a significant controlled company (i.e. having an EBIT representing at least 5% of the Group's consolidated EBIT) in the following cases: (a) failure to pay or failure to comply with the financial parameters or a substantially prejudicial event that gives rise to termination of the facility or withdrawal or cancellation, if the reference financial indebtedness is greater than Euro 30 million; (b) early termination owing to default (however defined) if the reference financial indebtedness is greater than Euro 5 million. The agreement also contains an acceleration clause and/or provides for termination or cancellation in the event that the obligation under (ii) is not met or is not remedied within the contractual deadline. Interest Rate: Euribor with a margin of 85 basis points or 100 basis points in the event that the following option is exercised. In such circumstances, the agreement provides for an extension for a period of a further 18 months less one-day. 7 May 2008 WestLB, Euro 50 Among other things, the agreement provides for: (i) the obligation to maintain a 7 May 2011 Milan branch million consolidated net equity greater than Euro 550 million (in the event that the said revolving covenant is breached, the lender is entitled to terminate the agreement pursuant to Article 1456 of the Italian Civil Code), (ii) the lending bank’s withdrawal in the event of the following: (a) an change in the corporate structure whereby Pirelli & C. loses control of the Issuer under Article 2359 of the Italian Civil Code, (b) termination of the facility or withdrawal or cancellation requiring immediate repayment or the early termination of financing agreements with third parties for amounts greater than Euro 25 million. Interest Rate: Euribor plus a spread that varies between 35 and 65 basis points depending on the term of the agreement.

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Date Bank Amount Notes Maturity 6 November Pirelli & C. Euro Among other things the agreement provides for the possibility for the lenders to 5 May 2010 2008 and Pirelli 750 cancel the credit line and demand repayment of all sums owed with seven Finance million business days' advance notice. If Pirelli & C. ceases to have control over the (Luxembourg) revolving Issuer (under Article 2359(1)(1) of the Italian Civil Code) the same company S.A. may terminate the agreement and request repayment of all sums owed. Interest Rate: Euribor plus a spread of 130 basis points. 16 December Banca Euro 30 Among other things the agreement provides for termination of the facility in the 21 June 2010 2008 Popolare di million event of a failure to notify any substantial negative changes in the capital, Milano revolving revenues or financial position of Pirelli RE and the Group compared with the latest financial statements published on the website www.pirellire.com that seriously affects the ability to repay the amounts currently drawn down. Interest Rate: 3-month Euribor with a spread of 180 basis points. 22 January Intesa Euro 30 Among other things the agreement provides for: (i) mandatory early repayment 30 April 2009 Sanpaolo million in the event of: (a) change of control, if Pirelli & C. ceases to hold the interest 2010 revolving required to ensure effective control over the Issuer, (b) transfer of the assets outside of ordinary operations and not at arm’s length terms for an annual aggregate market value of Euro 15 million (with certain exceptions); (ii) the cancellation and/or withdrawal and/or termination of the facility in the event of: (a) an amount of at least Euro 10 million falls due through non-fulfilment of pecuniary or financial obligations, (b) an amount of at least Euro 2 million falls due through non-fulfilment in any form, (c) an event or a series of events occurs that could have a significant negative effect on the Issuer's capital, financial or operational position, on its ability to fulfil the payment obligations provided for in the financial documents or their validity and effectiveness. Interest Rate: Euribor calculated over the reference interest-rate period plus a spread of 150 basis points. An additional revolving credit line can be added to the agreements described in the above table, granted by a pool of banks coordinated, among others, by HSBC Bank PLC and governed by an agreement entered into by the Issuer on 3 August 2005. This credit line amounts to a total of Euro 750 million. On 29 July 2008, at the same time as repaying all sums owed up to that point, the Issuer signed a deed of suspension with an option for reinstatement, conditional on the observance of certain parameters, which may be exercised up to 15 May 2009. The credit line was cancelled on 12 May 2009.

22.2.2 Securitisation transactions In the context of its investment operations in the non performing loans business segment (see Section One, Chapter VI, Paragraph 6.1.3), the Issuer owns a 33% interest in European NPL S.à r.l. (European NPL) which in turn holds 100% of the share capital of Sagrantino B.V. (Sagrantino). Through Sagrantino, the Issuer is involved, primarily as a junior investor, in securitisation transactions pursuant to Law No. 130 of 30 April 1999, regulating the securitisation of loans. The following paragraphs contain a summary of the two most recent and significant securitisation transactions involving Sagrantino. Calliope In the context of a securitisation transaction completed in May 2008 by Calliope S.r.l. (Calliope) with the issue of asset backed securities initially worth Euro 247.6 million to finance the acquisition by Calliope of a portfolio of loans granted by a major Italian banking institution, Sagrantino subscribed a portion of the junior notes issued by Calliope, for amount of Euro 47.9 million. Pirelli RE Credit Servicing S.p.A., a company in which the Issuer holds a 80% interest, is responsible on behalf of Calliope for debt collection for this portfolio, while Servizi Amministrativi Real Estate S.p.A., a wholly controlled subsidiary of the Issuer, provides accounting support services to Calliope. In addition the Issuer was appointed as representative of the junior investors.

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Elipso In the context of a securitisation transaction completed in October 2008 by Elipso Finance S.r.l. (Elipso) through the issue of asset backed securities worth Euro 470.2 million to finance the acquisition by Elipso of four sub-portfolios of debt receivables of two major Italian banking institutions, Sagrantino subscribed a portion of the junior notes issued, for amount of Euro 92.7 million. Pirelli RE Credit Servicing S.p.A. is responsible on behalf of Elipso for debt collection for these sub-portfolios, while Servizi Amministrativi Real Estate S.p.A. provides accounting support services to Elipso. In addition, the Issuer was appointed as representative of the junior investors.

22.2.3 Highstreet acquisition In March 2008, the Issuer (through the subsidiary Pirelli RE Netherlands B.V.), RREEF Alternative Investment, the Generali Group and the Borletti Group (the Shareholders) acquired, through controlled companies, a 49% interest in a real estate portfolio comprising 164 real estate properties located throughout Germany, including real estate properties leased to the Karstadt department stores (the Portfolio) (see Section One, Chapter V, Paragraph 5.1.5). The remaining 51% is owned by Whitehall, the Goldman Sachs real estate fund with which the Shareholders entered into a joint venture agreement. Furthermore, in March 2008, indirectly through Pirelli RE Asset Management Deutschland GmbH, the Issuer entered into service agreements under which it acts as asset manager of the Portfolio together with Whitehall. The following paragraphs contain a summary of the major agreements entered into in connection with the acquisition described above. Shareholders agreement On 19 March 2008, Pirelli RE Netherlands B.V. (Pirelli RE Netherlands) and the Shareholders entered into a Shareholders’ agreement (the Shareholders’ Agreement) which sets forth the rules governing the vehicle company used for the acquisition. In line with the business model adopted by Pirelli RE, the Shareholders’ Agreement set forth the rules for composition of the corporate bodies (attributing to the Shareholders an almost proportional right of representation ) and provides for rights of veto on the most critical issues (including approval of the business plan, extraordinary transactions, amendments to the by-laws, etc.). The Shareholders Agreement sets forth specific resolutions mechanisms for dead-lock situation. The Shareholders’ Agreement also provides a lock-up for three years from the closing date. After this lock-up period, the Shareholders may transfer their respective interests subject to their mutual pre-emptive rights. The Shareholders’ Agreement regulates mutual rights and obligations of co-sale and prescribes that certain specific events concerning individual Shareholders, such as insolvency or change of control, must be promptly notified by the Shareholder concerned to the other Shareholders, which will be entitled to acquire the shares held by such shareholder on a pro-rata basis. The Shareholders’ Agreement expires when all shares of the vehicle are held by a single entity, Shareholder or non-Shareholder; and may be terminated with the unanimous agreement of the Shareholders. Lastly, the Shareholders’ Agreement provides for a preferential distribution of profits in favour of RREEF and Pirelli RE Netherlands, upon reaching certain rates of return for the Shareholders. Highstreet purchase agreement The acquisition agreement concerns 49% of Highstreet Holding GbR (Highstreet Holding) owned by KQ Joint Venture GmbH & Co KG, an Arcandor AG Group company (the Seller). The consideration under the purchase agreement amounts to 49% of the total equity value of the target companies. The total equity value of the target companies is equal to approximately Euro 300 Section I Registration Document

1.06 billion. Under the purchase agreement, the Sellers issue declarations and guarantees typical of similar transactions. The maximum indemnity that may be requested in the case of violation of the declarations and guarantees issued shall not exceed the total amount of approximately Euro 230 million. Highstreet Joint Venture Agreement On 19 March 2008, the purchasers entered into a joint venture agreement with Whitehall for the purpose of regulating the co-management of the Highstreet Holding group (the Highstreet Joint Venture). The Highstreet Joint Venture agreement provides for an initial lock-up period of three years, subject to an extension on achievement of certain financial targets at the end of the this term. After the lock-up period, the parties are free to transfer their interests subject to their mutual pre- emption right. The Highstreet Joint Venture agreement also states that specific events concerning individual investors, such as the start of bankruptcy proceedings or a change of control, must be promptly notified by the investor concerned to the other investor, which will be entitled to acquire the shares held by the former or to terminate the Highstreet Joint Venture. The Highstreet Joint Venture has a term until the earliest of: (i) 31 December 2025, and (ii) the end of the year in which all the assets in the Portfolio have been transferred. The Highstreet Joint Venture may be terminated with the consent of all the investors.

22.2.4 Baubecon Acquisition In July 2007, the Issuer, as joint venture partner of RREEF Global Opportunities Fund II, LLC (RREEF), acquired the German real estate group Baubecon (the Baubecon Group) from the private equity fund Cerberus (the Seller) (see Section One, Chapter V, Paragraph 5.1.5). The purchase was based on an enterprise value of approximately Euro 1.69 billion and was financed by the Issuer and RREEF for approximately Euro 350 million and the remainder through facility agreements entered into with leading banking institutions. The agreements between the Issuer and RREEF also provide for the transfer to the Issuer of the companies of the Baubecon Group which offer real estate services (both for real estate properties owned by the Baubecon Group and for real estate properties owned by third parties), for a total amount of approximately Euro 19 million. The following paragraph contains a summary of the major agreements entered into in connection with the acquisition described above. Agreement for the purchase of the Baubecon Group On 17 July 2007, Nabucco RE B.V. and Aida RE B.V., a company owned 60% by RREEF and 40% by the Issuer indirectly (the Purchasers), entered into an agreement with certain companies belonging to the Seller (the Selling Companies), for the purchase of the share capital of a series of companies owning the real estate assets of the Baubecon Group (the Baubecon Holdings). The parties closed the transaction under this agreement on 27 July 2007. Under the agreement, the Selling Companies gave representations and warranties to the Purchasers. Upon violation of such representations and warranties, the Vendor Companies (or the individual Baubecon Holding responsible for the violation) will have an obligation to repay the Purchasers in kind or, if repayment in kind is not applicable to the specific case, by means of cash payment.

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The maximum limit of such indemnity is set forth in the agreement.

22.2.5 DGAG Acquisition In January 2007, the Issuer completed the acquisition through its controlled companies: (i) an interest amounting in total to 99.2% of the share capital of B&L Immobilien AG (now DGAG Deutsche Grundvermogen AG) (B&L), a company which directly or indirectly holds 62% of the share capital of DGAG Deutsche Grundvermogen AG (now Pirelli DGAG Deutsche Grundvermogen GmbH) (DGAG), and (ii) an additional interest of 38% of the share capital of DGAG (see Section One, Chapter V, Paragraph 5.1.5). The following paragraphs contain a summary of the major agreements entered into in connection with the acquisition described above. B&L and DGAG purchase agreement Under this purchase agreement, the Vendors give representations and warranties customary for such transactions. The total purchase price, subject to adjustment, was approximately Euro 465 million. Following the price adjustment procedure, the final total price amounted to Euro 499 million (excluding the costs directly connected to the acquisition) against an enterprise value of approximately Euro 1.4 billion. DGAG Restructuring Plan After completing the acquisition, the Issuer started a comprehensive restructuring process for DGAG and its group aimed at implementing the Issuer’s business model and in particular at maintaining control of the individual service companies and a qualified minority interest in the real estate operating companies (the Restructuring). The Restructuring took place by the transfer of the following: (i) the residential portfolio, estimated to be worth approximately Euro 1.04 billion, to Jamesmail B.V. and Solaia Real Estate B.V., companies incorporated as joint ventures with RREEF Global Opportunities Fund II, LLC (RREEF); (ii) the tertiary portfolio, estimated to be worth approximately Euro 275 million, to Mistral Real Estate B.V. a company incorporated as a joint venture with MSREF VI Pascha B.V. (MSREF); and (iii) the asset management and service provider operations to Pirelli RE Deutschland, an indirectly wholly owned subsidiary of the Issuer. Joint venture agreement relating to the management of the DGAG residential portfolio In the context of the implementation of a framework agreement, entered into on 2 October 2006, setting forth the principles for potential investments in the Italian and German residential sector, the Issuer and RREEF entered into an additional agreement regulating the management of the vehicle company used for the acquisition of the DGAG residential portfolio (RREEF JVA). In line with the business model used by Pirelli RE, the RREEF JVA lays down the rules for the composition of the corporate bodies (attributing an almost proportional right of representation ) and provides for rights of veto on the most critical issues (including approval of the business plan, extraordinary transactions, amendments to the by-laws, etc.). The RREEF JVA sets forth specific resolution mechanisms for deadlock situations and regulates the issues of distribution, payments, lock-up periods, pre-emptive rights, rights and obligations of co-sale, procedures in the case of deadlock and changes of control. In this regard, a change of control event occurs when one of the parties comes under the control of a competitor of the other party, and as result a change in the senior management or a significant change in the strategy and business plan is implemented. When such an event occurs,

302 Section I Registration Document the party subject to the change of control must notify the event to the other party and shall, within 30 business days, formulate an offer regarding its interest and any shareholder loans. The party receiving the offer shall decide whether to accept it or whether to purchase the interest (and the shareholder loans) of the offering party. In this case, the party for which the change of control has occurred will be obliged to sell in accordance with the terms set out in the notification. It is envisaged that RREEF JVA will be in force until the complete disposal of the residential portfolio or until the sale or liquidation of Jamesmail B.V. and Solaia Real Estate B.V.. The agreement can be terminated with the parties' mutual consent or in the case of material default that could be but is not remedied within the deadline indicated. Joint venture agreement relating to the management of the DGAG tertiary portfolio With effect from 2 October 2006, the Issuer entered into a preliminary joint venture agreement (MSREF JVA) with MSREF VI Pascha B.V. (MSREF) (later approved in the form of a definitive agreement on 22 December 2006) to regulate investment in the company Mistral Real Estate B.V. to which, pursuant to the Restructuring, the tertiary portfolio acquired from the DGAG group is transferred. In line with the business model adopted by the Issuer, the MSREF JVA sets forth the rules for composition of the corporate bodies (attributing an almost proportional right of representation ) and provides for rights of veto on the most critical issues (including the approval of the business plan, extraordinary transactions, amendments to the by-laws, etc.). The MSREF JVA establishes specific resolution mechanisms for deadlock situations and also regulates the issues of distribution, payments, lock-up periods, pre-emptive rights, rights and obligations of co-sale and changes of control. In this regard, a change of control event occurs when one of the parties comes under the control of a competitor of the other party. In this case, the party over which the change of control has occurred must notify the event to the other party, which shall formulate, within 60 days under penalty of default, an offer for the entire interest. The MSREF JVA may be terminated, with six months’ advance notice, at the end of each calendar year starting from 31 December 2013. Pursuant to the MSREF JVA, MSREF has the right to exercise an option to sell six development projects to Pirelli RE. As of the Prospectus Date, MSREF has exercised this option to sell three of the projects, which have resulted in a change of approximately Euro 11.5 million in terms of NFP. The right of MSREF to exercise the option to sell the remaining projects may be exercised until 30 November 2009. If it does so, and the sales of the other three projects have not been completed as planned, Pirelli RE will see a further change of Euro 67.5 million in NFP.

22.2.6 Rationalisation of the non performing loans sector On 26 May 2009, Pirelli RE entered into an agreement with DGAD International S.à. r.l. (a company wholly controlled by Calyon S.A.) aimed at reducing the Group’s financial commitments in the sector of non performing loans announced in the 2009 - 2011 Business Plan. The agreement, which is expected to be executed prior to 30 June 2009 and the effect of which is subject to the conditions precedent which are usual for similar transactions, essentially provides for the following:

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(i) the entry of DGAD International S.à r.l. into the capital of Pirelli RE Credit Servicing S.p.A. through a reserved capital increase of Euro 6.6 million, with a measurement of the company's enterprise value, after the capital increase, of approximately Euro 36 million. Following the subscription of the above capital increase (which creates a gross capital gain for Pirelli RE of approximately Euro 3 million), Pirelli RE Credit Servicing S.p.A. will be owned 80% by Pirelli RE and 20% by DGAD International S.à r.l.; (ii) governance of the agreements between the shareholders of Pirelli RE Credit Servicing S.p.A. under the terms of which DGAD International S.à r.l. will be entitled to appoint one member of the Board of Directors of Pirelli RE Credit Servicing S.p.A. and the latter (or DGAD International S.à r.l. itself, if the matter is subject to approval by the Shareholders’ Meeting) will have a right of veto on certain matters of extraordinary management or specific decisions relating to investments in which DGAD International S.à r.l. is involved. The same company is also granted a call option on 80% of the capital of Pirelli RE Credit Servicing S.p.A. owned by Pirelli RE which can be exercised in the following cases, among others: (1) significant under- performance in relation to the accrued portfolio income compared to the business plan approved by the shareholders, (2) a declaration in which Pirelli RE reports that the management of non performing loans is no longer a core activity of the Pirelli RE Group. The agreements also provides for a call option in favour of either party, should one of the following circumstances arise (among others): (a) a change of control relating, respectively, to DGAD International S.à r.l. or Pirelli RE, (b) serious breach of contract or insolvency of the other party, and (c) failure to settle, on a pro-rata basis, any losses realized; (iii) renewal of the joint venture agreement executed in 2006 with the creation of the investment platform European NPL S.à r.l. (67%-owned by DGAD International S.à r.l. and 33%-owned by Pirelli RE) for five years, and the granting of a Euro 250 million loan disbursed by DGAD International S.à r.l.. Payment of this loan will enable Pirelli RE to obtain a reimbursement of Euro 82.5 million of the shareholders' loan granted to European NPL S.à r.l.. The operation has a positive impact on Pirelli RE’s net financial position, including shareholders' loans, of approximately Euro 89 million – between subscription of the capital increase reserved for DGAD International S.à r.l. as per the previous point (i) and the refund of the shareholders’ loans as per the previous point (iii) - and one of its objectives is the acquisition of mandates for the management for third parties of portfolios of non performing loans, in line with the increasing focus of the Pirelli RE Group on the services sector.

22.2.7 Other agreements In February 2005, Pirelli RE, Capitalia and a number of companies belonging to the group of the same name entered into certain agreements under which Pirelli RE - directly or through companies belonging to the Pirelli RE Group - undertook to provide Capitalia with services relating to the acquisition, management and disposal of real estate properties owned by real estate companies belonging to the Capitalia group. Under these agreements, it is envisaged that, if the real estate properties have not been sold on the market 30 months after the transfer deed date, Pirelli RE will be obliged to pay Capitalia an indemnity amounting to the fees received with respect to the above properties, plus the fees paid to Pirelli RE or, alternatively Pirelli RE will have the right to acquire the real estate properties at a significant discount, by paying a fee amounting to the above indemnity, plus 15%. Capitalia is also required to pay a success fee earned on the basis of the performance of the service companies belonging to the Pirelli RE Group. On 31 July 2006 after the dissolution of the joint-venture in the non performing loans segment in force between them, Pirelli RE and MSREF entered into an agreement in which they undertook to incorporate two property companies, Maro S.r.l. and Roca S.r.l., 75% owned by

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MSREF and 25% by Pirelli RE. These companies would acquire the real estate properties owned by the property companies operating in the above joint-venture and involved in the securitisation transactions subject to dissolution that at this point had not been sold to third parties or become subject to purchase proposals by third parties. This commitment was renewed by the parties on 26 February 2009. The maximum amount payable by Pirelli RE in relation to this transaction amounted to approximately Euro 3.2 million, to which should be added approximately Euro 1.0 million in property management costs, making a total of approximately Euro 4.2 million.

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23. INFORMATION ORIGINATING FROM THIRD PARTIES, EXPERT OPINIONS AND DECLARATIONS OF INTEREST

23.1 Expert reports and opinions The Prospectus does not contain any expert reports or opinions.

23.2 Information provided by third parties Where indicated, the information contained in the Prospectus originates from third party sources. The Company confirms that this information has been faithfully reproduced and that, as far as the Issuer is aware, based on information published by the third parties in question, no facts have been omitted that would make this information inexact or deceptive. The Pirelli RE Group’s real estate assets, as also those of companies in which Group companies hold a stake or the real estate funds in which they invest, are mainly subject to six-monthly valuation by real estate experts. More specifically, the property portfolio indicated above was valued as of 31 December 2008 by CB Richard Ellis Professional Services S.p.A., with the exception of: (i) the real estate assets owned by the real estate funds Armilla and Fondo Portafogli Misti, and by companies belonging to the group forming part of DGAG Deutsche Grundvermogen AG and the BauBeCon Group, which were valued by REAG; (ii) the real estate assets of the companies belonging to the group headed by Highstreet Holding GbR, valued by Cushman & Wakefield; (iii) the real estate assets owned by Fondo Immobiliare Pubblico Regione Sicilia, valued by Scenari Immobiliari S.p.A.; (iv) the real estate portfolio owned by Nowe Ogrody 4, valued by Knight Frank.

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24. DOCUMENTS AVAILABLE TO THE PUBLIC The Prospectus is available to the public during the Subscription Period at the Issuer’s registered office (Via Gaetano Negri, No. 10, Milan), and Borsa Italiana S.p.A. (Piazza degli Affari, No. 6, Milan) and on the Issuer’s website www.pirellire.com, together with the following documents: (i) Issuer’s By-laws; (ii) individual and consolidated financial statements of the Issuer as of and for the years ended 31 December 2008, 2007 and 2006, complete with related reports by the independent auditors; (iii) half-yearly reports as of 30 June 2008 and 30 June 2007; (iv) consolidated interim financial statements as of and for the three-month periods ended 31 March 2009 and 30 September 2008; (v) information document published by the Issuer on 7 January 2009 relating to the sale of its 50% interest in Pirelli & C. Real Estate Integrated Facility Management B.V. to Manutencoop FM S.p.A..

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25. INFORMATION ON HOLDINGS See Section One, Chapter VII, Paragraph 7.2.

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SECTION TWO

EXPLANATORY NOTES

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1. INDIVIDUAL RESPONSIBILITY FOR THE PROSPECTUS

1.1 Individuals responsible for the Prospectus See Section One, Chapter I, Paragraph 1.1.

1.2 Declaration of responsibility See Section One, Chapter I, Paragraph 1.2.

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2. RISK FACTORS For a description of the Risk Factors relating to the Rights Offering, please refer to the Risk Factors Section at the beginning of the Prospectus.

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3. ESSENTIAL INFORMATION

3.1 Statement on net working capital Pursuant to Regulation 809/2004/EC and based on the definition of net working capital - as the means through which the Pirelli RE Group accesses cash and other available liquid resources in order to meet its liabilities as they fall due - contained in the CESR (Committee of European Securities Regulators) Guidelines for the Consistent Implementation of the European Commission's Regulation on Prospectus, the Issuer believes that the Group's net working capital for the 12 months following the Prospectus Date is sufficient for its needs. For information on the use of the proceeds of the Capital Increase please see Paragraph 3.5 of the present Chapter III. For information on the Issuer's financial resources, please see Section One, Chapters IX and X.

3.2 Direct funding and debts

3.2.1 Direct funding The table below summarises the situation of Pirelli RE Group's direct funding as of 31 March 2009 and 31 December 2008.

(In millions of Euro) 31 March 2009 31 December 2008 Share capital 20.7 20.7 Share premium reserve 158.3 158.3 Other reserves (27.1) 1.0 Retained earnings 181.0 376.7 Profit (Loss) for the period (15.8) (195.0) Group net equity 317.1 361.7 Capital and reserves 3.7 2.7 Profit (Loss) for the period (0.8) 2.0 Minority interests 3.0 4.7 Total net equity 320.1 366.4

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3.3 Net financial indebtedness The table below summarises Pirelli RE Group’s net financial position (excluding shareholders’ loans) as of 31 March 2009 and 31 December 2008.

(In millions of Euro) 31 March 2009 31 December 2008

Current financial assets Financial receivables 19.3 17.1 Cash and cash equivalents 30.2 35.7 Total current financial assets – (A) 49.4 52.8 Current financial liabilities Bank borrowings (337.7) (187.4) Payables to other financial institutions (498.4) (498.0) Total current financial liabilities – (B) (836.1) (685.4) Non-current financial liabilities Bank borrowings (109.9) (227.4) Payables to other financial institutions (1.8) (1.8) Total non-current financial liabilities – (C) (111.7) (229.2) Net Financial Position excluding shareholders’ loans - (D) =(A+B+C)(1) (898.4) (861.8) (1) Pursuant to Consob Communication of 28 July 2006 and in compliance with the CESR Guidelines of 10 February 2005: Guidelines For the Consistent Implementation of the European Commission’s Regulations on Prospectuses. Non-current financial assets Financial receivables 589.1 572.3 Total non-current financial assets – (E) 589.1 572.3 NET FINANCIAL POSITION (DEBT) – (F) = (D+E) (309.3) (289.5) For information on the Group and Company's direct funding and debts and related guarantees please see Section One, Chapters X, XX and XXII.

3.4 Interests of individuals and legal entities participating in the Offering Without prejudice to the indications in Section Two, Chapter V, Paragraph 5.4.3, the Company is not aware of any significant interest of legal entities and individuals in the Offering.

3.5 Motivation of the Offering and use of proceeds The Capital Increase is part of the 2009 – 2011 Business Plan and aims at boosting the Company as a result of the changed context (see Section One, Chapter XIII). In particular, the Capital Increase is aimed at allowing Pirelli RE – through a stronger organization adjusted to the special market conditions following the crisis generally involving the financial markets and specifically the real estate business – to support the actions set forth in the Plan and to strengthen its capital structure, thereby reducing its leverage. With regard to the use of the proceeds of the Capital Increase, the facts described in Section Two, Chapter V, Paragraph 5.4.3 must first be taken into account, namely: y the fact that the Shareholders’ Meeting held on 17 April 2009 granted the Board of Directors powers to execute the Capital Increase, also by capitalizing loans owed by the Company;

313 Sezione II Explanatory Notes y the commitment given by the controlling shareholder Pirelli & C. to subscribe the Rights to which it is entitled, and its willingness to subscribe any newly issued shares which remain unsubscribed at the end of the offering process, and to use the same subscription method in the event that it intends to follow up its declaration of willingness to subscribe any newly issued shares which may remain unsubscribed at the end of the offering process as provided for by applicable laws. However, Pirelli & C. has given no undertaking in relation to this last aspect; y the willingness expressed by Pirelli & C. to fulfil these commitments by converting into equity part of Pirelli RE’s borrowings under the revolving financing agreement entered into on 6 November 2008 for a maximum amount of Euro 750 million, of which Euro 490.0 million had been drawn down as of 31 March 2009 and to use the same subscription method in the event that it intends to follow up its declaration of willingness to subscribe any newly issued shares which may remain unsubscribed at the end of the offering process as provided for by law. In consideration of the above, Pirelli RE intends to allocate the proceeds from the subscription of the newly issued shares (including those deriving from the subscription of the Shares to which shareholders other than Pirelli & C. are entitled) to the reinforcement of its capital and financial structure through the reduction of financial debt, in accordance with the programmes set forth in the 2009 – 2011 Business Plan (see Section One, Chapter XIII, Paragraph 13.2.1). We note that such proceeds will amount to a maximum of approximately Euro 394.8 million, in consideration of the amount of the Capital Increase (Euro 399.3 million), and the costs connected to its execution (estimated at Euro 6.2 million) and the fiscal effect (estimated Euro 1.7 million). Of this amount, approximately Euro 167.4 million would derive from cash subscriptions if, at the end of the subscription period, all the shares offered under the Capital Increase were subscribed (meaning that Pirelli & C. subscribed only the share to which is entitled). Clearly, this amount will decrease proportionately if Pirelli & C. decides to subscribe the shares that remain unsubscribed at the end of the subscription period. The following table provides a numerical representation of the situation described above by assuming the subscription of the entire Capital Increase and indicating the total proceeds therefrom (Euro 399.3 million) net of the related costs (Euro 6.2 million) and net of the related tax effect (Euro 1.7 million).

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(In millions of Euro) Unexercised percentage 0% 50% 100% Amount pertaining to Pirelli & C.(1) 231.9 231.9 231.9 Amount subscribed by the market 167.4 83.70 - Amount possibly subscribed by Pirelli & C. for unexercised rights(3) - 83.70 167.4 Total inclusive of accessory expenses 399.3 399.3 399.3 Accessory expenses, net of fiscal effect (4.5) (4.5) (4.5) Total Net Capital Increase 394.8 394.8 394.8 Residual financial debt owed by Pirelli RE to Pirelli & C.(2) 258.1 174.4 90.7 Cash raised by Capital Increase 167.4 83.70 - (1) The rights pertaining to Pirelli & C. take account of the add-back for the 1,189,662 treasury shares held by Pirelli RE (corresponding to approximately 2.79% of share capital). As indicated, Pirelli & C. intends to fulfil these commitments by converting into equity part of Pirelli RE’s borrowings under the revolving financing agreement entered into on 6 November 2008 for a maximum amount of Euro 750 million, of which Euro 490.0 million had been drawn down as of 31 March 2009. (2) Debt of Euro 490.0 million as of 31 March 2009, as reduced for the rights pertaining to Pirelli & C. and possibly subscribed by Pirelli & C. for any unexercised rights. The information given refers to the situation after the Capital Increase but prior to use of the related income. (3) If Pirelli & C. decides to cover any unexercised shares, the newly issued shares will be subscribed by means of conversion into equity of the receivable referred to in (1) above.

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4. INFORMATION CONCERNING THE FINANCIAL INSTRUMENTS TO BE OFFERED

4.1 Description of Shares The Shares subject to the Rights Offering are Pirelli & C. Real Estate S.p.A.’s ordinary shares, each with a par value of Euro 0.50, regular benefits and the same characteristics as those listed as of the Prospectus Date. The rights for the subscription of the Shares have been assigned the ISIN code IT 0004490576. The Pirelli & C. Real Estate S.p.A. MTA listed shares have the ISIN code IT 0003270615. The Shares will be issued with coupon No. 8.

4.2 Laws permitting Shares to be issued The Shares have been issued in accordance with Italian law.

4.3 Form of Shares The Shares are nominal, indivisible, transferable, and placed in the book entry system subject to Legislative Decree No. 213 of 24 June 1998 and issued in the Monte Titoli centralised management system.

4.4 Currency of Shares The Shares are denominated in Euro.

4.5 Description of rights connected to Shares The Shares shall have the same characteristics and shall confer the same rights as the Pirelli & C. Real Estate S.p.A. ordinary shares listed on the MTA as of the Prospectus Date (see Section One, Chapter XXI, Paragraph 21.2.3).

4.6 Information on Resolution pursuant to which Shares will be issued The Shares subject to the Offering derive from the Capital Increase resolved by the Issuer’s Extraordinary Shareholders’ Meeting held on 17 April 2009. The Issuer’s Extraordinary Shareholders’ Meeting resolved to: (i) increase the share capital, by means of a divisible capital increase, up to a maximum amount of Euro 400,000,000.00 (including any share premium) through the issue of a maximum number of 800,000,000 ordinary shares with a par value of Euro 0.50 each, having regular benefits, to be offered to the existing shareholders at a price equal to the theoretical ex right price (TERP) of the Pirelli RE ordinary share. The above mentioned price is to be calculated using current methods based on the arithmetic mean of the official prices recorded over a period of at least three trading days prior to the date of determination of the issue price and discounted - within the legal limits - in a measure that will be determined by the Board of Directors taking into account the prevailing market conditions at the time the transaction is actually launched, the trading price of Pirelli RE’s ordinary shares, and market practices for similar transactions. As prescribed by the applicable legislation, the issue price of the new shares should be no lower than their nominal value, of Euro 0.50; (ii) grant the Board of Directors all the widest powers to: • determine the issue price, based on the criteria indicated under (i) above;

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• determine, depending on the fixed issue price, the maximum number of newly issued shares; • determine the ratio pursuant to which newly issued shares will be offered to the Company’s existing shareholders, taking into account the fact that treasury shares are excluded from this calculation; • determine the timeline for implementing the resolution for the capital increase to be completed not later than 31 December 2009. (iii) grant the Board of Directors - and on its behalf the Chairman, the Chief Executive Officer and the Chief Financial Officer, severally – all powers needed to execute the capital increase resolved, also by offsetting financial credits owed by the Company, in accordance with the characteristics determined under (i) and (ii) above, with all the authority needed to complete any necessary or related deed and with the express authority to take every necessary or appropriate action to implement this resolution and specifically: • to set the terms of the auction of unexercised rights, pursuant to Article 2441(3) of the Italian Civil Code, and to place, including to the benefit of third parties, the ordinary shares of Pirelli RE which remain unsubscribed even after such rights auction; • to prepare and present any document required for the purposes of this transaction, including the Rights Offering prospectus; (iv) to amend accordingly Article 5 of the By-laws; (v) to establish that, if not later than 31 December 2009, the Capital Increase has not been fully subscribed, the share capital will be increased by an amount corresponding to the subscriptions collected. On 11 June 2009, the Board of Directors of the Company resolved to issue up to a maximum of 798,574,564 newly issued ordinary Shares, each having the same characteristics as those currently listed, to be offered to shareholders at a price of Euro 0.50 per Share at a ratio of 135 newly issued Shares for any 7 ordinary shares owned, for a maximum total countervalue of Euro 399,287,282.00.

4.7 Date for the issue of the Shares The Shares will be made available to beneficiaries by the authorized financial intermediaries which have accounts with the centralized management system managed by Monte Titoli by the tenth trading day after the end of the Subscription Period.

4.8 Limitations on free transfer of Shares There are no limitations on free transfer of the Shares.

4.9 Description of regulations concerning the obligation to make residual offers to the public for the purchase and/or the purchase and sale of Shares The Shares will be subject to the rules laid down in the Italian Finance Act and the applicable regulations, and in particular the Regulation on Issuers, with specific reference to the provisions regarding public offerings for purchase and sale.

4.10 Previous public offers to purchase Shares The Issuer's shares have never been subject to any public offering for purchase or exchange during the present or previous trading period.

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4.11 Taxation The information below summarizes the current tax regime applicable to the purchase, holding and transfer of shares of companies incorporated and registered in Italy (such as the Issuer), listed on a regulated market and settled on the Monte Titoli centralized management system. The following is not intended to be an exhaustive analysis of all the tax consequences connected to the purchase, holding or transfer of the Shares. The tax regime may be subject to changes that could also operate retroactively. In particular, changes may be made to the rates of withholding on investment income or other financial income or to the measure of substitute taxes on such income. Therefore, the approval of any law amending the current regulations could have an effect on the tax regime applicable to the Company’s Shares as described below. In this case, Pirelli RE will not update this Section to reflect such changes even if, as a result, the information in this Section is no longer valid. We therefore recommend that investors consult their own advisers with respect to the tax implications of the purchase, holding and transfer of the shares and to determine the nature and source of the amounts received under any distribution (of dividends or reserves) relating to the Company’s shares.

4.11.1 Definitions To facilitate the reading of this Paragraph 4.11, it is must first be noted that the applicable tax regime varies according to whether the equity investments generating the dividends and/or capital gains (or losses) are classified as qualified or non-qualified investments. In particular, equity investments in listed companies are classified as: • "Qualified Participation": ownership of the shares in listed companies, other than savings shares, and any other interest in the share capital, representing overall more than 2% of the voting rights exercisable at ordinary Shareholders' Meetings or more than 5% of the share capital, or securities or rights entitling the holder to purchase shares that constitute a Qualified Participation; and • "Non-qualified Participation": ownership of ordinary shares in listed companies not exceeding the above thresholds for voting rights or stakes in the share capital, and savings shares.

4.11.2 Dividends Under the terms of Legislative Decree No. 213 of 24 June 1998, starting from 1 January 1999 shares in Italian companies traded on regulated markets must be admitted as book entries to the Monte Titoli centralized deposit system. In this regard, in accordance with Article 27-ter of Presidential Decree No. 600 of 29 September 1973, gains deriving from dematerialized shares, instead of being subject to the ordinary withholding tax, are subject to a substitute tax, with the same rates and under the same terms as the withholding tax. The substitute tax is withheld by share depositaries which hold accounts with the centralized system, or by non-resident depositaries which, directly or indirectly through foreign central depositaries, hold accounts with the aforesaid centralized system. If the securities are deposited with such non-resident entities, the tax requirements associated with the application of the

318 Sezione II Explanatory Notes substitute tax must be assigned to a tax representative in Italy, appointed by the said entities under the terms of Article 27-ter (8) of Presidential Decree No. 600 of 29 September 1973, which perform their duties in the same way and with the same responsibilities provided for resident entities. As a general rule, the substitute tax is charged at the following rates: • dividends paid to individuals who are resident in Italy for tax purposes in connection with a Non-qualified Participation, provided that such participation is not in connection with an enterprise pursuant to Article 65 of Presidential Decree No. 917 of 22 December 1986 (TUIR – Italian Income Tax Act): substitute tax at 12.50%; • dividends paid to entities resident in Italy for tax purposes and exempt from corporate income tax (IRES): substitute tax at 27%; • dividends received by persons who are not resident in Italy for tax purposes and who do not have a permanent establishment within the Italian territory, other than the companies and entities indicated in Paragraph 3-ter of Article 27, Presidential Decree No. 600/1973: substitute tax at 27%. The rate of this substitute tax is reduced to 12.50% if dividends are paid to holders of savings shares. Non-resident persons, other than holders of savings shares and companies and entities set forth under Paragraph 3-ter of Article 27, are entitled to a refund of up to 4/9 of the substitute tax levied in Italy on the final tax that they can prove they have paid abroad on the same profits, upon presentation of the certification by the foreign country’s tax office to the competent Italian tax authorities. The residents of countries with which Italy has concluded a double taxation treaty may request the application of the substitute tax at the (reduced) rate provided for by the applicable rate. For this purpose, the entities required to charge substitute tax must obtain: (i) a statement from the non-resident person that it is the beneficial owner of the dividends, also certifying the fulfilment of all conditions for the application of the reduced rate under the treaty, and any additional information that may be necessary to determine the tax rate applicable pursuant to the treaty; and (ii) a certification from the competent tax authority of the country of residence of the beneficial owner, proving residence for tax purposes in that country. This certification must be effective until 31 March of the year following the one in which it is submitted. The benefits provided for in the conventions are in alternative to the refund of 4/9 of the substitute tax described above; • dividends received by persons, other than individuals, who are subject to corporate income tax in a member of the European Union or the European Economic Area, included in the list to be issued by a decree of the Ministry of Economy and Finance pursuant to Article 168-bis of the TUIR, and resident therein, provided that the participation is not held through a permanent establishment in Italy: substitute tax at 1.375%. Until this ministerial decree is issued, signatory countries of the European Economic Area Agreement to which the substitute tax at the above rate of 1.375% applies are those included in the list published in the Decree of the Ministry of Finance of 4 September 1996, as amended. This regime applies to dividends formed in financial years subsequent to that ending on 31 December 2007. Dividends paid to individuals who are resident in Italy for tax purposes on Shares which are held in connection with a business activity or, Shares representing a Qualified Participation, are not subject to any withholding tax or to substitute tax, subject to the beneficiaries declaring at the time of the receipt that the profits collected are related to a business activity or to a Qualified Participation. In both cases, the taxable portion is 49.72% for dividends arising out of profits generated starting from the tax year following the current one as of 31 December 2007, pursuant to Article 1, Paragraph 1, of Ministerial Decree of 2 April 2008, published in the Official

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Gazzette No. 90 dated 16 April 2008. The taxable portion is 40% for dividends arising out of profits generated up to the tax year ongoing as of 31 December 2007. To facilitate the transition to the new regime, Article 1, Paragraph 2 of such decree has introduced a transitory regime pursuant to which with effect from the resolution for the distribution of dividends following the one relating to the profit for the period ongoing as of 31 December 2007, for the recipient's taxation purposes, dividends are deemed to be formed, with priority, by profits generated by the company until such date (and therefore the taxable portion is 40%). In addition, the substitute tax does not apply in situations where the recipient is: a. a resident company or a permanent establishment in Italy of a non-resident company. In this case dividends paid are included in the taxable profits of the recipient for an amount corresponding to 5%. Dividends paid to companies that prepare financial statements in accordance with the international accounting standards, deriving from participations held for trading are fully taxable; b. a non-commercial entity resident in Italy for tax purposes. In this case 95% of dividends are not included in the taxable profits. The 5% taxable amount is subject to the corporate income tax (IRES); c. a resident partnership (general collective and limited partnerships and similar bodies), excluding informal partnerships. The taxable portion for dividends arising out of profits generated starting from the tax year following the current one as of 31 December 2007 is 49.72%, pursuant to Article 1, Paragraph 1 of Ministerial Decree of 2 April 2008, published in the Official Gazzette No. 90 dated 16 April 2008. The taxable portion is 40% for dividends arising out of profits generated up to the tax year ongoing as of 31 December 2007, for the recepient’s taxation purposes, dividends are deemed to be formed, with priority, by profits generated by the Company until such date (and therefore the taxable portion is 40%). d. a company resident in a member state of the European Union for tax purposes without being considered, pursuant to a double tax treaty, resident outside the European Union, incorporated in one of the forms provided for in an annex to Directive No. 435/90/EC of the Council of 23 July 1990, which is subject in its country of residence, to one of the taxes envisaged under such directive without benefiting from optional rules or exemptions (unless these are limited in terms of territory and/or time) and which holds a direct equity investment of no less than 10% for at least one year without interruptions. A certification issued by the tax authority of the country of residence must be produced providing the fulfilment of all subjective conditions and such certification must be accompanied by a statement of the beneficiary company confirming the minimum investment held for the period required by the above rules. If the beneficiary company is directly or indirectly controlled by entities not residing in any country of the European Union, the regime above may be applied provided that the company can prove that it does not hold the investment exclusively for the purpose of benefiting from this preferential tax regime; e. an individual or entity that has opted, with respect to the Non-qualified Participation to which such dividends pertain, for the application of the managed savings regime. In this case, dividends received are included in the taxable profits and as result subject to the substitute tax at a rate of 12.50% (please see the tax rules on capital gains deriving from the transfer of shares); f. an Italian Undertaking for Collective Investment in Transferable Securities (UCITS) (investment funds, SICAVs). In this case dividends received are included in the overall yearly profit,

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which is subject to substitute tax at a rate of 12.50%, collected by the management company, without prejudice to the effects of specific tax regulations; g. a pension fund as referred to in Legislative Decree No. 252, of 5 December 2005. In this case dividends received are included in the overall yearly profit, which is subject to substitute tax at a rate of 11%; h. a real estate investment fund as referred to in Law Decree No. 351, of 25 September 2001. Real estate investment funds are not subject to income tax or regional business tax and they are also not subject to any substitute tax on the net book value of the fund. However, following the amendments introduced by Law Decree No. 112 of 25 June 2008, converted into Law No. 133 of 6 August 2008, closely held real estate funds, as defined under Article 37 of the Italian Finance Act, under certain conditions, may be subject to a 1% net worth tax. Profits deriving from investments in such funds are subject to a withholding tax at a rate of 20% at the moment of payment of the profits to fund holders.

4.11.3 Distribution of reserves The information provided in this paragraph summarises the tax regime applicable to the distribution by the Company - on occasions other than the reduction of excess capital, withdrawal, exclusion, redemption or liquidation - of equity reserves referred to in Article 47, Paragraph 5 of the TUIR, which includes reserves or other funds created with: share premiums, adjustment interest paid by subscribers, non recoverable capital contributions or capital account payments made by shareholders and tax-exempt monetary reserves ("Capital Reserves"). Individuals resident in Italy for tax purposes Pursuant to Article 47, Paragraph 1 of the TUIR, regardless of the decision contained in the shareholders' resolutions, for tax purposes it is assumed that priority of distribution is granted to all net profits and to reserves generated by profits (for that part not appropriated in a tax suspension regime). The sums received and classified for tax purposes as profits in accordance with the assumption above are subject to the same tax regime as dividends, depending on whether or not they are Non-qualified Participations and/or not held in connection with a business activity. Sums received as a result of a distribution of Capital Reserves, net of any amount classifiable as profit in accordance with the assumption above, do not constitute profits but reduce by the same amount the cost of the investment recorded for tax purposes. In any subsequent transfer, the capital gain is calculated on the difference between the transfer price and the cost recorded for tax purposes to the investment reduced by an amount equal to the sums received as result of the distribution of Capital Reserves (net of any amount classified as profit). According to the interpretation of the Italian Tax Authorities for participations not held in connection with a business activity, the amounts received as distribution of Capital Reserves, for the part exceeding the cost of the investment for tax purposes, constitute profits and, as such, are subject to the tax regime provided for dividends. In case of Non-qualified Participations which are held not in connection with a business activity if the beneficiary does not communicate the value of the investment recorded for tax purposes, substitute tax at a rate of 12.5% applies to all the amounts paid.

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Resident general partnerships, limited and similar partnerships, companies and entities carrying out business activities For general partnerships, limited partnerships and similar bodies (excluding informal partnerships) as referred to in Article 5 of the TUIR, and companies and entities as referred to in Article 73, Paragraph 1, letters a) and b) of the TUIR (i.e. companies and entities carrying out business activities), resident of Italy for tax purposes, sums received as result of a distribution of Capital Reserves, classified for tax purposes as profits in accordance with the assumption above, are subject to the same tax regime provided for dividends. Any sums received as result of a distribution of Capital Reserves, net of the amount that may qualify as profit, reduce the cost of the investment recorded for tax purposes and any excess is treated as a capital gain and subject to the tax regime of capital gains deriving from the transfer of shares. Italian pension funds and UCITS (investment funds, SICAVs) Sums received as result of distributions of Capital Reserves are included in the final assets of the fund at the end of the management period together with the value, at the same date, of the investments related to the distribution. The net annual operating results for the tax year in which the distribution took place will be subject to substitute tax of 12.5% (11% in the case of pension funds). A substitute tax of 12.5% (11% in the case of pension funds) will be applied to the net earnings accruing in the year. Non-resident persons not acting through a permanent establishment in Italy Distribution of Capital Reserves received by persons (whether individuals or entities) not resident in Italy for tax purposes and without a permanent establishment in Italy to which the holding is attributable, are subject to the same characterization for tax purposes as applicable to resident individuals for participations held not in connection with a business activity. Amounts classified as profits are subject to the same tax regime provided for dividends. In case of distribution of Capital Reserves for an amount that exceeds the cost of the investment recorded for tax purposes, such persons are also required to communicate the value of the investment recorded for tax purposes to avoid withholdings being applied on the entire amount received. Non-resident persons acting through a permanent establishment in Italy Sums received by non-resident persons holding their participation through a permanent establishment in Italy, are included in the income of the permanent establishment on the basis of the same tax regime provided for resident companies and entities pursuant to Article 73, Paragraph 1, letters a) and b) of the TUIR.

4.11.4 Capital gains deriving from the transfer of shares Individuals resident in Italy for tax purposes not engaged in a business activity (a) Transfer of Non-qualified Participation Capital gains, other than those realised in connection with carrying out a business activity realised by individuals resident in Italy for tax purposes through the disposal of a Non-qualified Participations for a consideration and through the disposal of securities and rights through which such participations can be acquired, are subject to substitute tax at a rate of 12.50%. In order to determine whether the participations disposed of constitute a Qualified Participation or a Non-qualified Participation at the time of a given disposal, all the disposals made in the preceding 12 month period are taken into account. This rule applies only from the date on which the participations, securities or rights, exceed the statutory thresholds of voting rights or an interest to be qualified as a Qualified Participation.

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In the event of a transfer of rights or securities through which participations can be acquired, in order to determine the percentage disposed of, the percentage of voting and ownership rights potentially referable to such participations are taken into account. With respect to the application of the substitute tax, in addition to the ordinary regime consisting of indicating the capital gains in the tax returns, the taxpayer may opt for two alternative regimes: such regimes are known as the administered savings regime and the managed savings regime. • Ordinary regime The taxpayer must indicate in the tax return the capital gains and capital losses made during the tax year. For the purposes of application of the substitute tax of 12.50%, capital gains realised during the tax year are added algebraically to the relevant capital losses belonging to the same category. If the total amount of losses exceeds the gains, the excess, calculated for each category of loss, can be deducted, up to the total amount, from the gains realized in subsequent tax years, up to one fourth, provided that this excess was indicated in the tax return relating to the tax period in which the losses were incurred. The substitute tax must be paid by the deadline and in accordance with the methods for payment of the balance of income tax based on the tax return. • Administered savings regime The taxpayer can opt for application of substitute tax at a rate of 12.50%, on each individual transfer, provided that the shares held are deposited with qualified intermediaries (for example, banks and investment firms). The choice is made by the taxpayer with a written notice at the same time as the engagement of the intermediary and the opening of a deposit or current account. For ongoing relationships, the option must be prior to before the beginning of the tax period or at any time during the year, but in this case it comes into effect from the subsequent tax period. The option is valid for the entire tax period and for subsequent tax periods. It can be revoked before the end of each calendar year, with effect from the subsequent tax period. Capital losses incurred are deductible, up to the amount of the gains realised in subsequent transactions in the course of the same relationship, in the same tax period and in subsequent years, but not beyond the fourth. The substitute tax is paid directly by the qualified intermediary, withholding the amount on any income realised or receiving funds directly from the taxpayer, by the 15th day of the second month following the one in which the tax is levied. Taxpayers are consequently not required to include the above capital gains and/or losses in their tax returns. If the custody or administration relationship is terminated, any capital losses can be deducted, no later than the fourth tax period following the one in which the loss was incurred, from the capital gains realised in another administered investment relationship in the name of the same subjects as the original relationship, or can be deducted on filing the tax return. • Managed savings regime This regime is available only if the shares are deposited in an individual management portfolio held by a financial intermediary qualified to provide this type of service. Under such a regime, the substitute tax, withheld by the intermediary, is 12.50% on the accrued increase in the value of the assets under management, which is the difference between the value of the assets managed at the end of each calendar year and the value of the same assets at the beginning of the year. More specifically, the value of the assets managed at the end of each calendar year is calculated gross of the substitute tax – increased by the withholdings and reduced by the deposits made during the year – and of the profits accrued during the period and subject to withholding tax, of the profits forming the taxpayer's total income, of profits exempt or at least not subject to tax for the period, and of income deriving from units of collective investment undertakings subject to substitute tax and from units in mutual real-estate investment funds. The result is calculated net of expenses and fees associated with the assets managed. Any

323 Sezione II Explanatory Notes management losses incurred in a year can be deducted from the management profits of subsequent tax periods, but not beyond the fourth year, for the entire amount available. Taxpayers are not required to include these profits in their annual tax returns. In the case of the termination of the management relationship, the management losses incurred (as certified by the intermediary) can be deducted, for no more than four tax periods following the one in which the losses were incurred, from gains realised in another relationship to which the managed savings regime is applicable, or used (for the entire amount available) in another relationship for which the managed savings regime has been chosen, provided that the relationship or deposit in question is in the name of the same persons as the original relationship or deposit, or can be deducted by the same persons in their tax returns, in accordance with the same rules applicable to the excess capital losses (see Ordinary Regime). (b) Transfer of Qualified Participations Capital gains on Qualified Participations realized and with effect from 1 January 2009 onwards by individuals resident, not engaged in business activities, are included in the taxable income of the alienator up to 49.72% of their amount and are subject to personal income tax at the ordinary progressive rates. Capital losses belonging to the same category are deducted in the same proportion. If the capital losses exceed are more than the gains, the excess is deducted, up to the total taxable amount of gains in subsequent tax periods, but for no more than four periods, provided that the excess is indicated in the tax return for the tax period in which the losses were incurred. Non resident persons With respect to non-resident persons, not acting through a permanent establishment in Italy, under the terms of Article 23 of the TUIR, the capital gains realised by means of the disposal for consideration of participations in resident companies in principle are taxable in Italy. Gains realised by the same persons through the sale disposal for consideration of Non Qualified Participations, relating to shares or securities traded on regulated markets, wherever they are held, are instead excluded from taxation in Italy, as they are not considered produced there. For shareholders not resident for tax purposes in Italy that have opted for the administered or managed savings regime illustrated in the above paragraphs, the benefit of the exemption is subject to the presentation of self-certification attesting non-residence for tax purposes in Italy. The taxable portion for capital gains on Qualified Participations realised by non-resident subjects, with no permanent establishment in Italy, is 49.72% of their amount. Capital losses belonging to the same category are deducted in the same proportion. If the capital losses are more than the gains, the excess is deducted, up to the total taxable amount of gains in subsequent tax periods, but for no more than four periods, provided that the excess is indicated in the tax return for the tax period in which the losses were incurred. However, the regime provided for by international treaties against double taxation is still applicable. With respect to non-resident persons holding a participation through a permanent establishment in Italy, these sums are included in the income of the permanent establishment in accordance with the tax regime provided for capital gains realized by companies and entities pursuant to Article 73, Paragraph 1, letters a) and b) of the TUIR, resident for tax purposes in Italy. Resident companies and other entities carrying out business activities Capital gains and losses realised by the companies and entities pursuant to Article 73, Paragraph 1, letters a) and b) of the TUIR through the disposal for a consideration of shares are included, for their entire amount, in the income of the company or the entity.

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However, 95% of the capital gains realised by companies and entities pursuant to Article 73, Paragraph 1, letters a) and b) of the TUIR are exempt from taxation when all the following conditions are met: a) the equity participation disposed of has been held without interruption since the first day of the 12th month before the sale occurred, shares purchased more recently being considered sold first; b) the equity participation sold was recorded in the category of financial fixed assets in the first balance sheet closed during the period of ownership. For entities that prepare financial statements in accordance with the international accounting standards, financial fixed assets are financial instruments other than those held for trading; c) the investee company is resident for tax purposes in Italy or in a country or territory other than those with preferential tax regimes identified by the ministerial decree issued pursuant to Article 167, Paragraph 4 of the TUIR or, alternatively, it has been ascertained, through enquiries to the Tax Authorities, that it has no taxable income in such States or territories; d) the investee company carries on a commercial business in accordance with the definition in Article 55 of the TUIR. This requirement is automatically considered met if the equity participation relates to a company whose shares are traded on regulated markets. The requirements of points c) and d) must have been met continuously, at the moment of realisation of the capital gains, at least since the beginning of the third tax period prior to such realisation. If at the moment of disposal even only one of the above requirements is not met, the capital gains are included entirely in the taxable income in the period in which they were realised or, at the taxpayer's discretion, may be divided evenly over that period and subsequent periods up to the fourth, if the participations were recorded as financial fixed assets in the last three balance sheets. Disposal of shares or units classified as financial fixed assets and floating assets are considered separately for each category. If the requirements under points a), b), c) and d) are met, capital losses realized on the sale of participations held without interruptions since the first day of the twelfth month prior to the month in which the sale took place may not be deducted from the business profits, as shares acquired more recently are considered the first to be sold. Capital losses and negative differences between the profits and costs relating to shares that do not meet the requirements for exemption are not included in the total non-taxable amount of the dividends or dividend advances, received in the 36 months prior to their realisation. This rules applies with reference to shares acquired in the 36 months prior to the realisation, again where the conditions of points c) and d) above are met. The rules does not apply to entities that prepare balance sheets in accordance with the international accounting standards. With respect to capital losses deductible from business profits, however, pursuant to Article 5- quinquies, Paragraph 3 of Law Decree No. 203 of 30 September 2005, converted with amendments into Law No. 248 of 2 December 2005, if the amount of the capital losses exceeds Euro 50,000, including as a result of multiple transactions, the taxpayer should communicate to the Tax Authorities details of the transaction. Such details required in the communication, but also the terms and procedural conditions of such communication, are contained in the Tax Authority’s Order dated 29 March 2007 (published in Official Gazzette No. 86 of 13 April 2007). In the event of inaccurate, incomplete or false communication, the capital losses incurred will not be deductible for tax purposes.

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For certain types of company and under certain conditions, capital gains realised by the aforesaid entities through the disposal of shares are taken into account for the calculation of the net value of production, which is subject to regional business tax (IRAP). Resident partnerships and individual enterprises The capital gains realised by resident individual entrepreneurs, and by general, limited and equivalent partnerships under Article 5 of the TUIR, excluding general partnerships, through the disposal of shares for a consideration are included in their entirety in the taxable business earnings, which are subject to taxation in Italy under the ordinary regime. However, where conditions a), b), c) and d) are met, as illustrated with reference to the exemption for capital gains realised by resident joint-stock companies and commercial entities, 49.72% of capital gains are taxable as business earnings. Out of total cpital losses incurred on participations that have the same requisites, 49.72% will be deductible from business earnings. If one of the above requirements is not met, the capital gains are included in their entirety in the taxable income in the period in which they were realised or, at the taxpayer's discretion, may be divided equally over that period and the subsequent ones up to the fourth, if the participations were recorded as financial fixed assets in the last three balance sheets. Pension funds, real estate investment funds and UCITS (investment funds, SICAVs) Capital gains realised by Italian collective investment undertakings (investment funds and SICAVs), pension funds under Legislative Decree No. 252 of 5 December 2005 and real estate funds under Law Decree No. 351 of 25 September 2001 are subject to the same tax regime provided for dividends received, in terms of the taxation of company profits. Resident non-commercial entities Capital losses realised, in non-business operations, by resident non-commercial entities, are subject to taxation under the same rules provided for capital losses incurred by individuals on non-business participations.

4.11.5 Tax on stock exchange contracts Article 37 of Law Decree No. 248 of 31 December 2007 (converted into Law No. 31 of 28 February 2008) provides for the abolition of the tax on stock exchange contracts and the express abolition of the rules governing its application (Royal Decree No. 3278 of 30 December 1923 and Legislative Decree No. 435 of 21 November 1997). The tax on stock exchange contracts applied to contracts for shares, units or participations in companies of all kinds. Following abolition of the tax on stock exchange contracts with effect from 31 December 2007, the above contracts are subject to registration tax and stamp duty as follows. Under the terms of Article 11 of the Tariff, Part One, annexed to the TUIR, a fixed amount of registration tax of Euro 168 is charged on contracts for the trading of securities, in the form of either a public deed or an authenticated written private agreement. On the contrary, under the terms of Article 2 of the Tariff, Part two, of the TUIR, contracts for the trading of securities consisting of unauthenticated private agreements are subject to registration tax only in the case of “use” or voluntary registration. “Use” means filing the deed with a public authority or a judicial authority providing administrative services. The obligation to register arises also if the content of the deed is referred to in a deed subject to registration and entered into at least between the same parties (“enunciation”). On the occurrence of one of these cases, registration tax is payable at a fixed amount of Euro 168.

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With respect to stamp duty, Law Decree No. 248 of 31 December 2007 amended Article 7 of Table A, Appendix B of Presidential Decree No. 642 of 26 October 1972, providing for an exemption from this tax for deeds required for the trading of securities.

4.11.6 Inheritance and gifts Article 13, Paragraph 1, of Law No. 383 of 18 October 2001 provided, among other things, for the abolition of taxation on inheritance and gifts. However, Article 2 of Law Decree No. 262 of 3 October 2006, converted into Law No. 286 of 24 November 2006, reintroduced taxation on inheritance and gifts of shares. Subsequent amendments on the subject were introduced in Law No. 296 of 27 December 2006. Following these legislative changes, transfers of shares owing to death or donations:

- to spouses and direct descendants and ancestors are taxed at a rate of 4% on the amount exceeding Euro 1,000,000 for each beneficiary; - to brothers and sisters are taxed at a rate of 6% on the amount exceeding Euro 100,000 for each beneficiary; - to relatives up to the fourth degree, lineal kin and collateral kin up to the third degree are subject to taxation at a rate of 6%; - to other individuals, are taxed at a rate of 8%. In any case, if the beneficiary of the transfer owing to death or donation is a person with severe disabilities pursuant to severely handicapped as defined by Law No. 104 of 5 February 1992, the tax rate applies only on the portion in excess of Euro 1,500,000.

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5. TERMS OF THE OFFERING

5.1 Terms and statistics related to the Offering, projected timetable and procedure for subscribing

5.1.1 Conditions on which the Offering depends The Offering is not subject to any conditions.

5.1.2 Total amount of the Offering The Shares subject to the Offering derive from the Capital Increase resolved by the Issuer’s Extraordinary Shareholders’ Meeting held on 17 April 2009. The Issuer’s Extraordinary Shareholders’ Meeting resolved to: (i) increase the share capital, by means of a divisible capital increase, up to a maximum amount of Euro 400,000,000.00 (including of any share premium) through the issue of a maximum amount of 800,000,000 ordinary shares having a par value of Euro 0.50 each, with regular dividend entitlement, to be offered to the existing shareholders at a price equal to the theoretical ex-rights price (TERP) of the Pirelli RE ordinary share. The above mentioned price is to be calculated using current methods based on the arithmetic average of the official prices recorded over a period of at least three trading days prior to determination of the issue price and discounted - within the legal limits - in a measure that will determined by the Board of Directors taking into account the prevailing market conditions at the time the transaction will be actually launched, the trading price of the Pirelli RE’s ordinary shares, and market practices for similar operations. As prescribed by the applicable legislation, the issue price of the new shares should be no lower than their nominal value, of Euro 0.50; (ii) grant the Board of Directors with any and all powers to: • determine the issue price, based on the criteria indicated under (i) above; • determine, depending on the fixed issue price, the maximum number of newly issued shares; • determine the ratio pursuant to which newly issued shares will be offered to the Company’s existing shareholders, taking into account of the fact that treasury shares are excluded from this calculation; • determine the timeline for implementing the capital increase resolution, within and no later than 31 December 2009. (iii) grant the Board of Directors - and on its behalf the Chairman, the Chief Executive Officer and the Chief Financial Officer, severally – with all the powers needed to execute the resolved capital increase, also by converting financial receivables owed to the Company, in accordance with the characteristics determined under (i) and (ii) above, with all the authority needed to complete any necessary or related deed and with the express authority to take every necessary or appropriate action to implement this resolution and specifically: • to set the terms of the Rights Auction of unexercised rights, pursuant to Article 2441(3) of the Italian Civil Code, and to place, including to the benefit of third parties, the ordinary shares of Pirelli RE which will remain unsubscribed even after such rights auction; • to prepare and present any document required for the purposes of this transaction,

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including the Rights Offering prospectus; (iv) to amend accordingly Article 5 of the By-laws; (v) to establish that, if within the final term of 31 December 2009, the Capital Increase has not been fully subscribed, the share capital will be increased by an amount corresponding to the collected subscriptions. On 11 June 2009, the Board of Directors of the Company resolved to issue up to a maximum of 798,574,564 newly issued ordinary Shares, each having the same characteristics as those outstanding, to be offered to shareholders at a price of Euro 0.50 per Share at a ratio of 135 newly issued Share for any 7 ordinary shares owned, for a maximum total countervalue of Euro 399,287,282.00.

5.1.3 Validity period of the Offering and subscription procedure The Rights shall be exercised during the Subscription Period from 15 June 2009 to 3 July 2009 inclusive, submitting the appropriate request through the Authorized Financial Intermediaries who are account holders with Monte Titoli. Any Rights not exercised will be forfeited by the holders thereof without compensation. The Rights to subscribe for the Shares will be traded on the stock market from 15 June 2009 to 26 June 2009 inclusive. The Rights have the ISIN code IT 0004490576. We note that the timetable for the transaction is indicative and may be subject to change if events and circumstances outside of the Company’s control occur, including particularly volatile conditions on the financial markets, which could jeopardise a successful outcome of the Offering. Any changes to the Subscription Period will be announced to the public by means of a special notice to be published with the same modalities applicable for the disclosure of the Prospectus. The Offering can be subscribed by signing subscription forms prepared by the Authorised Financial Intermediaries, which will contain at least the details of the Rights Offering, in characters that are easy to read, and the following information: (i) a notice that the subscriber can receive a copy of the Prospectus free of charge; (ii) mention of the Risk Factors contained in the Prospectus. Existing shareholders of the Issuer whose shares have been registered with an Authorized Financial Intermediary and placed in the book entry system in the Monte Titoli centralized management system may exercise their Rights. The Company cannot be held liable for any delays caused by the Authorised Financial Intermediaries in the execution of orders of applicants in relation to the subscription of the Offering. The Authorised Financial Intermediaries will be responsible for verifying the accuracy and correctness of the submitted applications. Rights not exercised by 3 July 2009 inclusive shall be subject to a Rights Auction pursuant to Article 2441(3) of the Italian Civil Code.

5.1.4 Information concerning the suspension and/or termination of the Offering The Offering will become irrevocable on the date of filing of the respective notice at the Register of Enterprises of Milan, pursuant to Article 2441(2) of the Italian Civil Code. If the Offering is not executed within the terms provided for in this Prospectus, notice thereof will be given to the public and to Consob by the day prior to the scheduled Subscription Period date by means of

329 Sezione II Explanatory Notes communication pursuant to Article 114 of the Italian Finance Act and Article 66 of the Regulation on Issuers, and a special notice published in a daily newspaper with national circulation and sent simultaneously to Consob.

5.1.5 Reduction of subscriptions and methods of repayment Subscribers will have no right to reduce their subscriptions, even partially, and no refund of amounts paid for such purpose is envisaged.

5.1.6 Amount of subscription The Offering is reserved for the existing shareholders of the Issuer, without any quantitative limitation, at a ratio of 135 Shares for any 7 ordinary shares owned.

5.1.7 Withdrawal of acceptance Acceptance of the Offering is irrevocable except in the cases provided for by law and may not be subject to any conditions.

5.1.8 Procedures and final terms for payment and delivery of Shares Full payment of the Shares shall be made at the time of their subscription to the Authorized Financial Intermediary to which the subscription request by exercising the Rights has been submitted. The Issuer will not charge the applicant for any additional cost or expense. The Shares will be made available in the accounts of the Authorized Financial Intermediaries in the centralized Monte Titoli system on the same date, beginning on 6 July 2009, on which the amounts paid for the exercise of said shares are made available in the Company's account, subject to any delays for reasons beyond the Company's control and, in any event, the shares will be made available within the tenth trading day after the end of the Subscription Period. The Shares subscribed by the end of the Rights Auction will be made available to the beneficiaries through Authorized Financial Intermediaries who are account holders with Monte Titoli by the tenth trading day after the end of the Rights Auction.

5.1.9 Publication of results of the Offering Since this is a rights offering, the Issuer is the party required to disclose the results of the Offering to the public and to Consob. The results of the Offering will be notified within 5 calendar days after the end of the Subscription Period, through a special notice. Within the end of month which follows the expiration of the Subscription Period, pursuant to Article 2441(3) of the Italian Civil Code, the Company will offer on the stock market any Rights which will remain unexercised. A notice indicating the number of unexercised Rights to be offered for sale on the stock exchange pursuant to Article 2441(3) of the Italian Civil Code and the dates of the sessions during which the offering will be made shall be published in a daily newspaper with national circulation the day before the commencement of the Rights Auction. Pursuant to Article 2441(3) of the Italian Civil Code, the final results of the Offering shall be disclosed within five days after the subscription of the Shares at the end of the subscription period for the unexercised Rights, by means of a special notice.

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5.1.10 Procedure for the exercise of any pre-emptive rights, for trading of subscription rights and for the processing of unexercised subscription rights The Issuer's By-laws do not provide for any pre-emptive rights over the Shares.

5.2 Distribution and allocation plan

5.2.1 Offer recipients and markets The Shares will be offered as pre-emption subscription rights to the Issuer’s existing shareholders. The Offering is being made exclusively in Italy in accordance with the Prospectus. The Rights Offering does not constitute, directly or indirectly, an offering of financial instruments in the United States of America, Canada, Japan and Australia or in any other Country in which the Offering is not permitted without specific authorization in accordance with applicable laws or by way of exception to such provisions (collectively Other Countries). In particular, the Offering is not made, directly or indirectly, and may not be accepted, directly or indirectly, in or from the United States of America, Canada, Japan and Australia, and in or from the Other Countries, by means of the services of any regulated market of the United States of America, Canada, Japan and Australia, and those of the Other Countries, either by means of postal services or any other means of communication or national or international commerce regarding the United States of America, Canada, Japan and Australia, and the Other Countries (including, as an example, the postal network, fax, telex, e-mail, telephone, Internet and/or any other means or computer technology). Accordingly, subscriptions made through the above mentioned services, means or instruments will not be accepted. Neither the Prospectus nor any other document relating to the Offering is delivered and shall not be delivered or otherwise forwarded, made available, distributed or sent to or from the United States of America, Canada, Japan and Australia, or to or from the Other Countries. This restriction also applies to Pirelli & C. Real Estate S.p.A. shareholders whose address is in the United States of America, Canada, Japan and Australia, or in the Other Countries, or to persons that Pirelli RE or its representatives know to be fiduciaries, proxy-holders or depositaries in possession of shares of the Issuer on behalf of such shareholders. Persons who receive such documents (including fiduciaries, proxy-holders and depositaries) shall not distribute, send or deliver any such document to or from the United States of America, Canada, Japan and Australia, and to or from the Other Countries, either by means of the postal services or any other means of communication or national or international commerce relating to the United States of America, Canada, Japan and Australia, or to the Other Countries (including, as an example, the postal network, fax, telex, e-mail, telephone, Internet and/or any other means or computer technology). The distribution, sending or delivery of such documents to or from the United States of America, Canada, Japan and Australia, and to or from the Other Countries, or by means of the services of any regulated market in the United States of America, Canada, Japan and Australia, and those of the Other Countries, by means of postal services or any other means of communication or national or international commerce regarding the United States of America, Canada, Japan and Australia, and the Other Countries (including as an example, the postal network, fax, telex, e-mail, telephone, Internet and/or any other means or computer technology) will not constitute a valid subscription to the Offering. The Shares and the Rights have not been and will not be registered pursuant to the United States

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Securities Act of 1933 as amended, or pursuant to the corresponding regulations in force in Canada, Japan or Australia or Other Countries, and as a result they cannot be offered or, in any way delivered, whether directly or indirectly, to the United States of America, Canada, Japan, Australia or to the Other Countries.

5.2.2 Commitments to subscribe the Issuer's Shares The Issuer's controlling shareholder, Pirelli & C., made an irrevocable commitment to the Company to exercise all the Rights to which it is entitled, as owner of 56.45% of the Company's share capital prior to the Capital Increase, and has also indicated its willingness to subscribe any newly issued shares which will remain unsubscribed at the end of the Rights Auction (if applicable) but has not given any undertaking in this regard. Without prejudice to what stated above, as of the Prospectus Date, as far as the Issuer is aware, no shareholder – other than Pirelli & C. – nor any member of the Board of Directors and the Board of Statutory Auditors have expressed any intention regarding the subscription of the Shares to which they have rights.

5.2.3 Information to be provided before allocation Considering the nature of the Offering, no notices to subscribers are required prior to the allocation of the Shares.

5.2.4 Procedure for communicating allocations to subscribers The final allocation of the Shares will be communicated by the Authorised Financial Intermediaries to their respective customers.

5.2.5 Over Allotment and Greenshoe Option Not applicable to this Offering.

5.3 Setting of the Subscription Price

5.3.1 Subscription Price and expenses payable by subscribers On 11 June 2009, the Company's Board of Directors determined the Subscription Price at Euro 0.50 per Share, for a maximum total countervalue of the Capital Increase equal to Euro 399,287,282.00. In determining the Subscription Price, the Board of Directors applied the criteria approved by the Extraordinary Shareholders' Meeting on 17 April 2009 (see Section Two, Chapter V, Paragraph 5.1.2). The Issuer will not charge subscribers for any additional cost or expense.

5.3.2 Notification of the Subscription Price The Subscription Price was notified to the market by means of a press release at the end of the meeting of the Board of Directors held on 11 June 2009 and is reported in the Prospectus.

5.3.3 Limitations of rights The Shares are offered as pre-emptive subscription rights to the existing shareholders pursuant to Article 2441(1) of the Italian Civil Code and therefore no limitations to the Rights are envisaged.

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5.3.4 Difference between the Subscription Price and the price paid for shares during the previous year or to be paid by members of the Board of Directors, members of the Board of Statutory Auditors and senior managers Except for purchases made and disclosed to the market in compliance with current laws and regulations (for additional information visit the Issuer’s website www.pirellire.com), as far as the Issuer is aware, members of the administration, management and auditing bodies and the General Managers or persons closely associated with them have not purchased shares of the Company at a price lower than the Subscription Price.

5.4 Placement and subscription

5.4.1 Information on parties responsible for placement of the Offering and dealers Since this is a rights offering pursuant to Article 2441(1) of the Italian Civil Code, there is no party responsible for placement.

5.4.2 Name and address of organisations appointed to perform financial services and depositary agents in each country Subscriptions to the Offering will be made through the Authorised Financial Intermediaries.

5.4.3 Subscription and underwriting commitments The Issuer’s controlling shareholder Pirelli & C. undertook an irrevocable commitment to the Company to exercise all the Rights to which it is entitled as owner of 56.45% of the Company’s share capital prior to the Capital Increase. Pirelli & C. has likewise expressed its availability to subscribe all newly issued shares that will remain unsubscribed at the end of the possible Rights Auction, but has given no undertaking in this regard. Accordingly, Pirelli RE has decided not to set up an underwriting syndicate, but has reserved the right to do so if needed. In such a case, details will be given in the Notice of Publication of Prospectus.

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6. AUTHORIZATION FOR TRADING AND TRADING PROCEDURES

6.1 Listing markets Pirelli RE ordinary shares are officially listed on the MTA. The Shares will be admitted to listing on the MTA, as the currently listed Pirelli RE shares. The Capital Increase provides for the issue of up to a maximum number of 798,574,564 Shares, which represent an amount greater than 10% of the number of Company shares of the same class already admitted for trading. Therefore, pursuant to Article 57(1)(a) of the Regulation on Issuers, this Prospectus is also a listing prospectus for the Shares.

6.2 Other regulated markets As of the Prospectus Date, the shares of the Company are exclusively traded on the MTA.

6.3 Other transactions relating to the Shares for which admission to a regulated market is required No other operations for the subscription or private placement of financial instruments of the same class as those of the Offering are planned to be carried out in the imminence of the Capital Increase.

6.4 Intermediaries in secondary market transactions Not applicable to this Offering.

6.5 Stabilisation No stabilisation activities by the Issuer or by parties appointed by it are planned.

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7. HOLDERS OF FINANCIAL INSTRUMENTS INTENDING TO SELL

7.1 Information regarding the entity offering Shares for sale The Shares are offered directly by the Issuer and, therefore, for all information regarding the Company and the Group, please refer to the data and information already provided in the Summary and in Section One.

7.2 Number and class of financial instruments offered by each of the holders of financial instruments intending to sell The Offering does not provide for the sale of existing shares of the Company as the Offering is for newly issued shares.

7.3 Lock-up agreements No lock-up agreements have been entered into.

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8. OFFERING-RELATED EXPENSES

8.1 Total net proceeds and estimate of total Offering-related expenses The net proceeds deriving from the Capital Increase (assuming full subscription), net of the total amount of expenses associated with the Offering (approximately Euro 6.2 million) and the tax effect (approximately Euro 1.7 million), is estimated to be approximately Euro 395.5 million. The total amount of the expenses related to the Offering is estimated at approximately Euro 6.2 million.

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9. DILUTION

9.1 Amount and percentage of immediate dilution resulting from the Offering Since it is a capital increase with transferable pre-emptive subscription rights granted to existing shareholders, there are no dilution effects in terms of percentage of share capital held with respect to Pirelli RE’s existing shareholders who exercise their Rights.

9.2 Dilution effects in the case of not exercising Rights In the event of failure to exercise their Rights, following the issue of the Shares, existing shareholders will be affected by a maximum dilution of their interests, in terms of percentage of share capital, of 94.9%.

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10. ADDITIONAL INFORMATION

10.1 Consultants mentioned in Section Two Section Two makes no mention of legal consultants associated with the Offering process.

10.2 Indication of information contained in Section Two that was subject to full or partial audit by the Independent Auditors There is no information in Section Two that was subject to full or partial audit by the Independent Auditors.

10.3 Opinions or reports prepared by experts contained in Section Two There are no opinions or reports attributable to expert consultants in Section Two.

10.4 Information provided by third parties with information on sources There is no information provided by third parties in Section Two.

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