Annual Report 2004 Vastned Industrial/Offices

Annual Report 2004 Report Annual Offices/Industrial VastNed

VastNed Offices / Industrial N.V. Annual Report 2004 Key figures Key figures property portfolio (in operation) 2004 2003 2002 2001 2000 ______Netherlands Belgium France Total Results (x € 1 million) ______Gross rental income 94.0 108.2 117.8 111.3 83.6 Semi- Semi- Semi- Offices industrial Offices industrial industrial Direct investment result 40.8 48.6 52.6 52.2 48.2 ______Indirect investment result (37.7) (31.5) (37.8) (8.2) 6.1 ______Number of tenants 325 120 188 44 1 678 Investment result 3.1 17.1 14.8 44.0 54.3 Theoretical annual rental income (x € 1 million) 39.8 17.0 40.5 12.7 0.3 110.3 Market rent (x € 1 million) 38.2 16.1 36.7 11.5 0.3 102.8 Balance sheet (x € 1 million) Over/under-rent (in %) 104 106 110 111 127 107 Investments in property 1,165.6 1,262.6 1,323.1 1,271.3 1,131.7 Group equity 601.3 631.3 669.5 646.1 553.0 Average occupancy rate (in %) 86.0 84.0 79.4 93.0 100.0 84.2 Shareholders’ equity 466.4 509.0 540.6 570.4 547.1 Occupancy rate at year-end (in %) 87.7 74.8 79.8 93.5 100.0 83.5 Long-term liabilities 387.9 420.1 400.3 324.0 190.0 Rent-free periods / rent discounts (in %) 1.0 1.5 1.9 6.4 – 1.0

Composition property portfolio (in %) Number of properties 100 36 26 18 1 181 Netherlands 53 53 56 67 84 Investments (x € 1 million) 409.6 154.2 416.6 129.5 2.4 1,112.3 Belgium 47 45 42 31 13 Investments (as % of total) 37 14.0 37 12 < 1 100 France < 1 2 2 2 3 Ten largest properties (in %) 23 78 71 80 100 30 Average size of property (x € 1 million) 4.1 4.3 15.4 7.2 2.4 6.1 Offices 74 72 71 71 63 Logistics centres and industrial premises 26 28 29 29 36 Lettable floor space (in sqm) 307,412 300,640 286,320 254,509 11,753 1,160,634 Retail properties – – – – 1 Lettable floor space (as % of total) 26 26 25 22 1 100

Average number of ordinary shares in issue 19,143,124 18,742,694 18,274,314 17,824,369 17,143,413 Gross return (in %) 9.7 11.0 9.7 9.8 14.5 9.9 Number of ordinary shares in issue (at year-end) 19,273,904 18,894,020 18,437,541 17,948,295 17,611,959 Net return (in %) 7.6 9.3 9.3 9.7 12.5 8.6

Per share (x € 1) Average rent per sqm (x € 1) 1) 2) Shareholders’ equity per share at beginning of year Large cities 140 91 – – – 114 (including dividend) 26.94 29.32 31.78 31.06 32.25 Medium-sized cities 127 42 135 – – 93 Final dividend previous financial year (2.80) (3.10) (3.16) (1.65) (2.90) Small cities 106 59 147 51 – 86 Shareholders’ equity per share ______at beginning of year (excluding dividend) 24.14 26.22 28.62 29.41 29.35 Regional spread (in %) Large cities 49 30 6 11 – 26 Direct investment result 2.13 2.59 2.88 2.93 2.82 Medium-sized cities 38 31 39 8 100 34 Indirect investment result (1.97) (1.68) (2.07) (0.46) 0.35 Small cities 13 39 55 81 – 40 Other movements (0.10) (0.19) (0.11) (0.10) (0.08) ______Industry spread (in %) Investment result 0.06 0.72 0.70 2.37 3.09 Financial services 13 9 4 – – 8 Interim dividend – – – – (1.38) Business services 33 34 55 18 – 39 Shareholders’ equity per share at year-end ______Technology, media, telecoms 12 12 17 – – 13 (including dividend) 24.20 26.94 29.32 31.78 31.06 Government 27 6 15 – – 16 Other 15 39 9 82 100 24 Share price (at year-end) 22.80 20.50 21.50 25.25 28.80 1) Parking spaces included in rent. Dividend in cash 2.13 2.80 3.10 3.16 3.03 2) Average is only calculated if the number of properties in the category is over 5. or in cash 1.88 2.25 2.30 2.20 1.83 and in shares charged to the share premium reserve 1) 2.86% 4.35% 3.85% 5.50% shareholders’ equity at beginning of year (excluding dividend) 8.8 10.7 10.8 10.7 10.3

Ratio group equity/ investments in property (in %) 51.6 50.0 50.6 50.8 48.9 Ratio long-term loan capital/ short-term loan capital (in %) 65/35 63/37 52/48 56/44 69/31

1) A percentage in shares yet to be determined charged to the share premium reserve. As from January 1, 2004 the costs of asset management are brought to the charge of the direct investment result. The comparative figures have been adjusted accordingly. Key figures Key figures property portfolio (in operation) 2004 2003 2002 2001 2000 ______Netherlands Belgium France Total Results (x € 1 million) ______Gross rental income 94.0 108.2 117.8 111.3 83.6 Semi- Semi- Semi- Offices industrial Offices industrial industrial Direct investment result 40.8 48.6 52.6 52.2 48.2 ______Indirect investment result (37.7) (31.5) (37.8) (8.2) 6.1 ______Number of tenants 325 120 188 44 1 678 Investment result 3.1 17.1 14.8 44.0 54.3 Theoretical annual rental income (x € 1 million) 39.8 17.0 40.5 12.7 0.3 110.3 Market rent (x € 1 million) 38.2 16.1 36.7 11.5 0.3 102.8 Balance sheet (x € 1 million) Over/under-rent (in %) 104 106 110 111 127 107 Investments in property 1,165.6 1,262.6 1,323.1 1,271.3 1,131.7 Group equity 601.3 631.3 669.5 646.1 553.0 Average occupancy rate (in %) 86.0 84.0 79.4 93.0 100.0 84.2 Shareholders’ equity 466.4 509.0 540.6 570.4 547.1 Occupancy rate at year-end (in %) 87.7 74.8 79.8 93.5 100.0 83.5 Long-term liabilities 387.9 420.1 400.3 324.0 190.0 Rent-free periods / rent discounts (in %) 1.0 1.5 1.9 6.4 – 1.0

Ratio group equity/ investments in property (in %) 51.6 50.0 50.6 50.8 48.9 Ratio long-term loan capital/ short-term loan capital (in %) 65/35 63/37 52/48 56/44 69/31

1) A percentage in shares yet to be determined charged to the share premium reserve. As from January 1, 2004 the costs of asset management are brought to the charge of the direct investment result. The comparative figures have been adjusted accordingly. Annual Report 2004 VastNed Offices/Industrial N.V. VastNed Offices/Industrial N.V. Financial calendar 2005 Max Euwelaan 1, 3062 MA Rotterdam PO box 4444, 3006 AK Rotterdam Tuesday April 5, 2005 Telephone +31 10 24 24 300 General meeting of shareholders Fax +31 10 24 24 333 www.vastned.nl Thursday April 7, 2005 [email protected] Ex dividend quotation

Supervisory board Tuesday May 3, 2005 W. Nijman, chairman Payment date of dividend N.J. Westdijk*, vice-chairman*** D. van den Bos** Wednesday May 18, 2005 R.K. Jacobson (as from April 6, 2004) First three months’ results (before trading)* F.W. Mulder P.M. Verboom (as from April 6, 2004) Wednesday August 10, 2005 * Chairman remuneration committee Semi-annual results 2005 (before trading)* ** Chairman audit committee *** Vice-chairman as from Apil 6, 2004 Wednesday November 9, 2005 First nine months’ results 2005 (before trading)* Board of management –––––––––––––––– VastNed Management B.V. Wednesday February 22, 2006 Represented by: Annual results 2005 (before trading)* R.A. van Gerrevink, CEO T.M. de Witte, CFO * Followed by webcast via www.vastned.nl J. Pars, CIO (as from July 1, 2004) Share VastNed Offices/Industrial

This is an English language version of the 2004 Dutch annual report. Quotation: Euronext Amsterdam In case of inconsistencies, the latter shall prevail. ISIN: NL0000288934 Ticker: VNOI.NL Preface CEO

Dear readers of this annual report, In the past year, as I said, much attention has been devoted to (re)letting. Some experienced staff have The year 2004, as the year before, was marked by a been recruited in this context for further battle against difficult market conditions. Despite all strengthening of our Rotterdam office team. our efforts, it proved not to be possible to maintain While in 2004 in the Netherlands, vacancy could vacancy at the end of 2003 level. This picture was potentially have risen to approximately 34%, ‘spot’ shared across the entire property sector. New projects vacancy remained limited to 19.5%. This means that we continue to enter the market, which further push up have managed to eliminate almost 15% of potential the already enlarged stock. On the demand side vacancy. This year that potential vacancy is somewhat (letting), however, there is some light at the end of the lower, at approximately 29% (expiring rent contracts tunnel. The letting market shows more movement including existing vacancy). We are confident that at than in 2003, and this concerns particularly the end of 2005 we will have reduced that percentage ‘replacement demand’ (demand for space elsewhere, in considerably once more. One of the ways in which we order to obtain better housing at better conditions). try to do that, is by selling completely or partly vacant Business is still regaining itself, and even if things are buildings. This ‘dead’ capital costs interest, operating – a little – better, ‘solutions’ are found internally, expenses, and value decreases (indirect result). We have before expansion is pursued. This situation is not previously been successful in selling some nearly expected to change fundamentally during the present vacant properties; this market is clearly increasing. financial year. The economy must see a structural Due to sales and letting efforts in January 2005, the upswing before the office market can reap the benefits. Dutch vacancy rate has fallen to 16.5% as at February 1, ‘Fundamentals’ such as for instance turnover of 2005. temping agencies, indicate that business is coming out of its shell. Partly due to the TriNovium project in Nieuwegein, the direct investment result for 2005 will be considerably lower than in 2004; part of this decrease is directly due to this project, which no longer allows interest to be capitalised (almost F 0.20 per share annually). In 2004 a provision for doubtful debtors was Preface CEO All in all, we expect that we have our work cut out for us in 2005, focusing almost exclusively on (re)letting our properties and on mitigating vacancy.

released of approximately F 0.06 per share. This was a At the end of 2004 the discount of the VastNed Offices/ one-off income. The rest of the decrease of the direct Industrial share amounted to 6%, compared to 24% at investment result per share was largely due to year-end 2003. Apparently the market assumes that the increased vacancy and especially to sales realised. On office market in general and VastNed Offices/ the one hand the funds from these sales will put us in Industrial in particular have gradually reached the a better position for when market conditions improve, bottom of the slump. The dividend return has fallen and on the other hand because we expect a further from well over 10% to well under that figure, but write-down of the full property portfolio this year and continues to be considerably higher than among the because we consider a solvency of at least 50% desirable. other property funds.

In Belgium there is no structural improvement either. All in all, we expect that we have our work cut out for While the economy is doing somewhat better than in us in 2005, focusing almost exclusively on (re)letting the Netherlands, our peripheral (mostly Brussels) our properties and on mitigating vacancy. During property portfolio has hardly benefited. We did manage discussions at the end of last year about the strategy last year to (re)let a large project, which reduced the for the next three years, this has been given absolute vacancy in the logistics part of the portfolio to under priority. At the same time it was indicated that in 6%. The offices, however, continue to experience some markets we are looking for new investments and considerable vacancy. The property portfolio itself is for responsible growth. Further research will be relatively young, and that in itself should put us in a necessary. We have an adequate research apparatus, relatively good position to reduce vacancy as soon as which has experience with research in (international) demand increases. The wait is for this moment(um), market segments. In 2005 we will investigate other which we initially predicted for the end of last year. European markets with a ‘healthy’ letting structure Our office team in Belgium has also been strengthened, further for opportunities, while at the same time not so that we can intensify our letting efforts. closing our eyes to more investments in the Netherlands. We are investigating the possibility of investing in the slump of the market instead of contracting further. For that we focus on the Netherlands itself and on other European countries, such as Spain, where the structure of the rent contracts is relatively ‘clean’ and where at times a rising market can be exploited. Reinier A. van Gerrevink

In my previous preface I wrote that ‘this is not a time for undue optimism’. At present we feel much more optimistic about the future, keeping in mind that we do need a helping hand from economic development in general and in the Netherlands and Belgium in particular. Without promising too much, I do want to let you know that we believe we are almost there, and that we expect that after this year the worst will be behind us.

Yours sincerely, Reinier A. van Gerrevink, CEO List of terms

Bevak (Belgian) investment company with fixed capital CEO Chief Executive Officer CFO Chief Financial Officer CIO Chief Investment Officer Code The Dutch corporate governance code EPRA European Public Real Estate Association IFRS International Financial Reporting Standards IRS Interest Rate Swap IVBN (Dutch) Association of institutional property investors SIIC Société d’Investissements Immobiliers Cotées Contents

Key figures Corporate governance 51 Preface CEO 3 Introduction 51 Profile and strategy 10 Deviations from the Code 51 Major changes to corporate governance structure in 2004 52 Report of the supervisory board 13 Organisational structure of VastNed Group 53 Introduction 13 Board of management 54 Annual accounts 2004 13 Supervisory board 61 Dividend and reserving policy 13 Stichting Prioriteit VastNed Offices/Industrial Dividend proposal 13 and protection measures 66 IFRS 14 General meeting of shareholders and voting rights 66 Changes on the board of management 14 Financial reporting and the external auditor 66 Composition of the supervisory board 14 Code of conduct and whistleblower’s code 66 Corporate governance 16 Committees of the supervisory board 16 The share and stock exchange listing 67 Changes on the supervisory board 17 Profile of the supervisory board 17 Annual accounts 2004 69 Retirement schedule 17 Consolidated balance sheet 70 Appointments and reappointments 18 Consolidated profit and loss account 71 Staff 18 Direct and indirect investment result 72 Movements in shareholders’ equity 73 Report of the board of management 19 Consolidated cash flow statement 74 Economy and markets in general 19 Notes to the consolidated annual accounts 75 Netherlands 24 Company balance sheet 88 Belgium 25 Company profit and loss account 89 The property portfolio 26 Notes to the company annual accounts 89 Staff and organisation 32 Other information 90 Sustainability 32 Financial results 32 Property portfolio 2004 93 Dividend proposal 38 Property in operation 94 Risk management 38 Property not in operation 100 IFRS 46 Outlook for 2005 49 Checklist Dutch corporate governance code 101 Key figures property portfolio By responding dynamically to the cyclical office market, rent and value increases can be profited from in a upward market. In a downward market the aim will be to limit investors’ exposure to this. Amsterdam, 282 Oudezijds Voorburgwal

8 9 Profile and strategy

History Mission and strategic objective

VastNed Offices/Industrial N.V., founded in 1984, is a VastNed Offices/Industrial offers an investment (closed-end) property investment company with product to private and institutional shareholders variable capital which makes long-term investments which primarily concentrates on offices, logistics in a well-let property portfolio which consists of centres and industrial premises. By responding offices, logistics centres and industrial premises in dynamically to the cyclical office market, one can the eurozone. benefit from rent and value increases in an upward The issuing and purchasing of shares takes place at market. In a downward market the aim will be to the decision of the board of management subject to limit investors’ exposure to this. approval by the supervisory board. By active management, including an active buying The shares have been listed on Euronext Amsterdam and selling policy, VastNed Offices/Industrial wants since 1989. VastNed Offices/Industrial is part of the to play the office market cycle in order to achieve a VastNed Group. relatively high investment result over the entire duration of the office market cycle. Vision Investment product and investment The office market is a market in which tenants methodology generally are not very dependent on a specific location for their enterprise. As a result various office VastNed Offices/Industrial pursues its objective by locations are in competition with each other for the focusing on the following investment product and housing of enterprises. In addition, demand for by using the following investment methodology: office space is strongly determined by economic – a mix of office and industrial property (logistics developments and the degree of supply of office centres and industrial premises). The aim is to keep space. This supply and demand vary considerably the proportion of office property between 75% and through the years. This results in a cyclical office 100% and that of industrial property between 0% and market, in which investment results fluctuate. 20% of the invested capital;

10 Profile and strategy VastNed Offices/Industrial’s property portfolio at year-end 2004 represented a value of € 1,166 million, and at that time was constituted as follows: – 74% offices; – 26% logistics centres and industrial premises.

– investing in large-scale liquid office markets; In Belgium virtually all investments have been – investments in office markets in a legal framework subsumed in the property Bevak Intervest Offices, which is favourable to the lessor; which is also exempt from corporate income tax. For – opportunistic investments in logistics centres and investment selection, an attractive fiscal climate is industrial premises; an important factor. – a balanced return risk profile of the investments; – limitation of the investment risk in the downward Financing policy phase of the market cycle by active management of the office portfolio, among which an active buying Our starting point is that the financing of the and selling policy; property portfolio with loan capital remains limited – focusing on an optimum spread within the property to approximately 40 to 45% of the market value of the portfolio. Spread criteria are: countries, regions, property. This principle can temporarily be deviated cities, number of tenants, number of properties, from should interesting buying or selling spread across categories, limitation of the size of opportunities present themselves, assuming interest property and the size of individual tenants. rates that are favourable for the investment result. In an upward office market a choice might be made Size for financing the property portfolio with a relatively high ratio of loan capital, and in a downward market VastNed Offices/Industrial’s property portfolio at with a relatively low ratio of loan capital. year-end 2004 represented a value of F 1,166 million, In this context VastNed Offices/Industrial will and at that time was constituted as follows: always stay within the financing limits as meant in – 74% offices; article 28 of the Netherlands Corporate Income Tax – 26% logistics centres and industrial premises. Act 1969. Also, a balance is aimed for between financing with short-term and long-term fixed Fiscal structure interest periods.

VastNed Offices/Industrial qualifies as a fiscal In times when the VastNed Offices/Industrial share investment institution as meant in article 28 of the price shows a premium on the stock exchange Netherlands Corporate Income Tax Act 1969. compared to net asset value, it may be attractive to This means that no corporate income tax is due in issue new shares. The starting point for this is that the Netherlands. In view of its status as a fiscal the issuing of new shares will only take place if in investment institution, VastNed Offices/Industrial the foreseeable future there are investment does not engage in property development. opportunities.

11 Profile and strategy VastNed Offices/Industrial’s dividend policy is aimed at putting the direct investment result fully at the disposal of the shareholders.

Currency policy Management has no profit objective, but facilitates the funds with directory board and management. VastNed Offices/Industrial aims to avoid currency A cost distribution agreement operates in the risks by investing primarily in the eurozone. collaboration between VastNed Retail, VastNed Offices/Industrial and VastNed Management. Costs Dividend policy incurred are charged on, without mark-up for profit, based on causation (proportionally to their Dutch VastNed Offices/Industrial’s dividend policy is property portfolios). 67% of the shares in VastNed aimed at putting the direct investment result fully Management are held by VastNed Retail, and 33% at the disposal of the shareholders. In order to by VastNed Offices/Industrial. Independent comply with the fiscal conditions for investment management is the best condition for optimum institutions, at least the fiscal result must be paid letting to creditworthy tenants and for maintaining out in cash. the state in which the properties are kept.

Risk management Carrying out commercial and administrative management ourselves as much as possible, makes VastNed Offices/Industrial pursues an active policy for direct contact with the tenants and the property in the area of charting of and if necessary taking market, so that market developments can be alertly appropriate action regarding the risks that are responded to and operating costs can be responsibly associated with investing in property. In this controlled. Technical management is largely context, a distinction is made between strategic subcontracted to local specialists. By maintenance, risks, operational risks, financial risks, reporting renovation and sale of properties that no longer fit in risks and compliance risks. the property portfolio, an optimum state and value of the property is secured in relation to the return for Organisation shareholders.

VastNed Offices/Industrial pursues an active The Dutch and Belgian property markets are subject management of its property portfolio; in the to local legislation and regulations. A local network countries in which it operates or will operate, it aims as well as know-how in the area of financing and of to have its own fully fledged local management. local culture provide a headstart in terms of With approximately 78 employees in total, VastNed operating the property. VastNed Offices/Industrial Management in Rotterdam, VastNed Management strives to undertake these efforts from within the España in Madrid, VastNed Management France in country itself where possible. Paris, Intervest Retail and Intervest Offices, both in Antwerp, manage the investments of VastNed Offices/Industrial and VastNed Retail. VastNed

12 Report of the supervisory board

Introduction Annual accounts 2004

The supervisory board of VastNed Offices/Industrial The annual report drawn up by the board of met seven times in 2004. The members of the board management includes the 2004 annual accounts of management took part in these meetings. In audited by Deloitte Accountants. We are in addition, the supervisory board met in the absence of agreement with this report and with the annual the board of management. accounts. We recommend that you adopt the annual The topics which were discussed at the meetings accounts in the form as presented. included the state of affairs and risks in the property portfolio, the strategy and risks of the company as Dividend and reserving policy a whole as well as aspects of it, the financial results as well as their reporting in press releases, interim In line with previous years, VastNed Offices/ report and annual report, changes in the board of Industrial will pay out the direct investment result management and the supervisory board, the fully to its shareholders. Part of the dividend can be supervisory board’s own functioning and the paid out to the shareholders as stock dividend to the functioning of the board of management, the charge of the share premium reserve. This in fact supervisory board’s remuneration and the adds part of the direct investment result to the other remuneration of the board of management, reserves. corporate governance and the functioning of the subcommittees of the supervisory board, including Dividend proposal the reporting by these committees. The supervisory board has at all times been provided with adequate We are in agreement with the proposal of the board information by the board of management, so that of management to pay out a dividend per share of the supervisory board has been able to fulfil its F 5.- nominal value as follows: supervisory role in the best possible way. None of the – 5% in cash on the priority shares; members of the board was frequently absent. – an optional dividend on the ordinary shares of: – F 1.88 in cash plus a percentage in shares yet to be determined, depending on the share price, charged to the share premium reserve, or – F 2.13 in cash.

13 Report of the supervisory board In the course of 2004 further steps were taken in order to improve the corporate governance structure, and it was decided to lay down major aspects of this structure in the articles of association.

IFRS Other positions: member of the supervisory board of VastNed Retail As from the 2005 financial year, VastNed Offices/ Education: Business economics, Erasmus University Industrial’s reporting will comply with the Rotterdam International Financial Reporting Standards (IFRS). In this context the supervisory board has discussed N.J. Westdijk (June 20, 1941) the consequences of the implementation with the Nationality: Dutch board of management and the external auditor. The Present position: retired principal consequences of the introduction of IFRS Appointment: April 19, 2000; vice-chairman since on the reporting are described in the report of the April 6, 2004 board of management. Previous positions: – chairman of the board of management of Changes on the board of management Koninklijke Pakhoed; – president of Connexxion Holding. Mr J. Pars was appointed as CIO of VastNed Offices/ Other positions: Industrial as of July 1, 2004 as successor to Mr H.K.M. – member of the supervisory board of VastNed Retail; Roovers. The supervisory board is deeply grateful to – non-executive member of the board of management Mr Roovers for his contributions and his efforts of Fortis; during his many years with the company. – member of the supervisory board of WoltersKluwer; – member of the supervisory board of Connexxion Composition of the supervisory board Holding and; – chairman of the supervisory board of Eneco Energie. The supervisory board is composed as follows: Education: Dutch law, university of Utrecht and MBA, University of Chicago. W. Nijman (September 21, 1946), chairman Nationality: Dutch D. van den Bos (January 17, 1940) Present position: retired Nationality: Dutch Appointment: January 1, 1996; chairman since May 1, 2003 Present position: retired Previous positions: Appointment: April 18, 2001 – various financial positions with Douwe Egberts; Previous positions: – financial director International Flavors & Fragrances; – Hollandsche Beton Groep, inter alia responsible for – financial director Bestfoods Benelux and later senior project development activities and; director finance and ICT Bestfoods Europe and; – PGGM, director of property, also associate director – vice-president finance BFO/treasurer Parent & investments. Holding Unilever. Other positions: – member of the supervisory board of VastNed Retail;

14 Breda –> Mechelen –> Strombeek-Bever –> Rosmalen –> Moerdijk –> Meer

– member of the supervisory board of Amvest (until – member of the board of management of the Stichting January 1, 2005) and; Beheer Faciliteiten NijSmellinghe (hospital); – chairman of the Anlageausschuss GIREF, Germany – member of the board of management of Devereux (until January 1, 2005). Capital Holding Stichting, Amsterdam; Education: Economics, Erasmus University Rotterdam – director of Citrosuco Europa, which is part of Citrosuco Paulista, Matao, Brazil and; R.K. Jacobson (October 2, 1946) – director of Congeltec, part of Irving & Johnson Ltd, Nationality: Dutch Capetown, South Africa. Present position: Senior vice-president chairman’s Education: Dutch law, University of Leiden. office Unilever Appointment: April 6, 2004 P.M. Verboom (April 20, 1950) Previous positions: Various management positions Nationality: Dutch with Unilever Present position: CFO Schiphol Group Other positions: member of the supervisory board of Appointment: April 6, 2004 VastNed Retail Previous positions: Education: Economics and accountancy, Erasmus – lecturer Erasmus university Rotterdam and; University Rotterdam – various management positions with Philips, inter alia CFO of the board of management of Philips in F.W. Mulder (May 31, 1940) Argentina, Hong Kong and the Far East. Nationality: Dutch Other positions: Present position: retired – member of the supervisory board of VastNed Retail; Appointment: March 3, 1988 – member of the supervisory board of SADC; Previous positions: – member of the supervisory board of Schiphol – management positions with Koninklijke Telematics; Wegenbouw Stevin and; – member of the supervisory board of Dartagnan; – with Avéro Verzekeringen. – non-executive member of the board of directors of Other positions: Brisbane Airport Corporation; – member of the supervisory board of VastNed Retail; – member of the board of Deltametropool and; – member of the supervisory board of De Hypothekers – member of the board forum and member of the Associatie; board of supervision of the Stichting Nationaal – member of the supervisory board of Bartels Luchtvaartthemapark Aviodrome. Engineering; Education: Bsc and PhD in econometrics, Erasmus – member of the supervisory board of the Nassau Bergen University Rotterdam hotel; – member of the board of management of the Stichting Preferente Aandelen Arcadis;

15 Report of the supervisory board The general meeting has appointed Messrs R.K. Jacobson and P.M. Verboom to the supervisory board as per April 6, 2004. We are pleased that with these new members new knowledge and experience have been obtained and the vacancies that had emerged were filled.

Corporate governance Committees of the supervisory board

Adoption The supervisory board has three active committees. The audit committee and the remuneration In the 2003 financial year, extra attention was already committee each have three members. The selection devoted to VastNed Offices/Industrial’s corporate and appointment committee is formed by the entire governance structure. External investigation has supervisory board. indicated that this structure has been significantly improved, and that VastNed Offices/Industrial is in Audit committee the vanguard of Euronext Amsterdam in this area. The audit committee is comprised of Messrs D. Van Articles of association den Bos (chairman), F.W. Mulder and W. Nijman. In 2004 the audit committee met on four occasions. In the course of 2004 further steps were taken in It is the task of the audit committee to advise the order to improve the corporate governance structure, supervisory board in the area of finance. Topics that and it was decided to lay down major aspects of this were addressed included financial reporting, structure in the articles of association. These changes budgetting, the role of the external auditor and the concerned the reduction of majority and quorum replacement of the actual person of the auditor, tax requirements for decisions at the general meeting of law, compliance (inter alia with the Autoriteit shareholders, a limitation of the term of Financiële Markten), International Financial Reporting (re)appointment of a member of the supervisory Standards (IFRS), financing, internal control, IT board to three terms of four years, the structure and systems and the follow-up of recommendations of the composition of the agenda of the general meeting of external auditor, as well as the findings of the audit by shareholders, introduction of a registration date for the external auditor. All audit committee reports have the exercise of voting and meeting rights, the right been made available to all members of the supervisory of approval of the general meeting of shareholders of board and were discussed at the subsequent meeting of decisions of the board of management concerning a the supervisory board. major change to the identity or the character of the company or enterprise, and the right of setting Remuneration committee agenda items for minority shareholders, meaning that a shareholder who holds, either jointly or not, The remuneration committee is comprised of at least 1% of the share capital in issue, can have Mr N.J. Westdijk (chairman), Mr F.W. Mulder and items put on the agenda of the general meeting of Mr W. Nijman. It is the task of the remuneration shareholders. committee to advise the supervisory board in the area of the remuneration policy to be pursued. This committee has met on six occasions in 2004.

16 Leiden –> Amsterdam –> Eindhoven

The remuneration committee has drawn up a supervisory board. Thus, his valuable knowledge and proposal regarding the remuneration policy to be experience have been retained for VastNed Offices/ pursued which was discussed and approved by the Industrial. In 2004 we said goodbye to Mrs A.L. general meeting of shareholders. Furthermore, the Deriga. From 1996 she held the position of vice- committee has formulated proposals concerning chairman of the supervisory board of VastNed the remuneration of the individual members of the Offices/Industrial. The supervisory board is deeply board of management. grateful to Mrs Deriga for her contributions during her long service. Selection and appointment committee Profile of the supervisory board As stated earlier, the selection and appointment committee is comprised of the entire supervisory The supervisory board profile guarantees that the board. The supervisory board (incomplete) has met supervisory board is composed properly, meaning eight times for discussions in the area of selection and that based on available knowledge and experience appointments. The selection and appointment effective supervision can be exerted on the board of committee has advised to appoint Mr J. Pars as CIO of management of the company. This profile can be VastNed Offics/Industrial. This appointment by referred to on the website of the company; copies can VastNed Management, director of VastNed Offics/ be obtained at the office of the company. The Industrial, took effect on July 1, 2004. The selection supervisory board certifies that all its members are and appointment committee has also advised on the independent as meant in the the Dutch corporate (re)appointment of Mr N.J. Westdijk and on the governance code. nomination of new supervisory board members. The supervisory board has also made proposals to the Retirement schedule holders of priority shares concerning (re)appointment of Mr D. van den Bos as a member of the supervisory The retirement schedule for the next few years is board. as follows: – D. van den Bos, 2005 (eligible for re-election) Changes on the supervisory board – W. Nijman, 2006 (not eligible for re-election) – F.W. Mulder, 2007 (not eligible for re-election) The general meeting has appointed Messrs R.K. – R.K. Jacobson, 2008 (eligible for re-election) Jacobson and P.M. Verboom to the supervisory board – P.M. Verboom, 2008 (eligible for re-election) as per April 6, 2004. We are pleased that with these – N.J. Westdijk, 2008 (eligible for re-election) new members new knowledge and experience have been obtained and the vacancies that had emerged were filled. Also on the abovementioned date Mr N.J. Westdijk was (re)appointed as member of the

17 Amsterdam –> Kortenberg –> Amsterdam –> Eindhoven –> Ridderkerk –> Diegem

As mentioned before, the articles of association stipulate a term which is limited to three terms of four years. In that context it has been decided that Messrs W. Nijman and F.W. Mulder will not be eligible for re-election when their current term ends. Thus, VastNed Offices/Industrial acts in the spirit of best practice principle III.3.5 of the Code. Appointments and reappointments

In accordance with the retirement schedule, Mr D. van den Bos retires and is available for re-election for a four-year term. Staff

The supervisory board is grateful to the board of management and the company’s employees for their efforts, loyalty and the results realised in difficult market conditions during the year under review.

Rotterdam, February 22, 2005

For the supervisory board, W. Nijman, chairman

18 Real growth of GDP (in %) Eurozone Source: Consensus Forecasts World

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Report of the board of management

Economy and markets in general inflation rate. The rise of public tariffs and the increase of indirect taxation in 2004 also turned out Economy high as a result of measures to limit government budget deficits in the eurozone. The interest rate The economy of the eurozone is marked by low stayed at a historic low inter alia due to the strong economic growth. A major cause of that is the slow euro or perhaps rather the weak dollar. High deficits adaptation of the region to the phenomenon of on the US balance of trade and in the US domestic globalisation. The European Union aims to be a budget as well as limited domestic budget cuts were leading and competitive economy. There is, however, responsible for this. a lack of political will to take the necessary steps to The recovery of economic growth in the eurozone is realise that stated aim. In 2004 economic growth fragile and surrounded with many risks. In spite of once again lagged behind that of the global economy this, economists anticipate a stabilisation of and such growth as was realised, was mainly due to economic growth in the eurozone in 2005 and 2006, the dynamism of that global economy. In the year while the growth of the global economy will slow under review it was predominantly export which down. Recovery of domestic demand will be the most fuelled the motor of growth in the eurozone. important driver of this growth. Consumptive growth was the missing link, as a result of caps put on wages growth, poor growth of Risks employment and reduced consumer confidence. A significant positive element of economic growth in In 2004 the dollar was a weak currency. Deficits on 2004 was the strong recovery of company profits. In the government budget and the balance of trade in tandem with the current favourable interest climate, the US as well as the high burden of debt among this will stabilise the economic recovery in the consumers impact confidence in the dollar. A further eurozone and make it less dependent on exports. rise of the euro compared to the dollar in 2005 may Companies are expected to increase their significantly slow down economic growth in the investments in 2005. eurozone. Inflation will also come under pressure, which will have a depressing impact on the Inflation decreased less rapidly in 2004 than many indexation of rent contracts. On the positive side, the had expected. The rise of oil prices, but also of other interest rate market continues to favour the property raw materials such as metals, adversely impacted the market.

19 Report of the board of management

Total annual return (in %) GPR 250 Europe Source: Global Property Research (GPR), Bloomberg GPR 250 The Netherlands VastNed Offices/Industrial

0 1year 3years 5years 10years 15years

The price of oil in 2004 showed a strong increase to supply. A normally functioning office market has a levels, measured in dollars, not observed before. supply of one or two times the average take-up. For The supply/demand situation in the oil market is supply to decrease, tenants must take up more space out of balance. On the one hand there is increasing than they vacate. In the present market this is not demand from the Asian countries and on the other the case. A significant economic recovery is needed hand exploration activity is low, as in recent years for this to come about. the oil price was at a relatively low level. The fact that large oil reserves are located in politically very The office market cycle is a widely discussed sensitive regions adds to this imbalance. There is a phenomenon. Demand for office space is elastic, fair chance that the oil price in 2005 will rise further while supply is inelastic. The present situation in the due to the abovementioned imbalance in the supply/ office market is that construction activity of new demand situation, which will fuel inflation in the offices has dramatically decreased, but that the total eurozone. The present stability of the interest rate planned capacity continues to be considerable. These and of inflation levels may be disturbed, which plans will in large majority be postponed as the would have a depressing effect on economic growth. authorities and/or investors are now setting considerable preletting requirements. This has led to Office market the shelving of speculative developments, but demand continues to be limited. Vacancy will only The office markets in the Netherlands and Belgium decrease when net demand for office space recovers. are going through difficult times. In the past few This demand is linked to the recovery of economic years demand dropped, just as supply became growth, but is time-lagged and dependent on the abundant. As a result of economic lean years, when a degree of growth recovery. company moves, on average less office floor space is taken up than was vacated. The high availability of Letting activity in the larger office markets is more office space has increased competition in the dynamic than in the smaller office markets, where letting market. Dominant trends are that big cities this activity on occasion even came to a complete outperform satellite cities, new office space stop. In a number of office markets tenants are in outperforms old office space, and that the good shape again and manage, in addition to a low functionality of the office space, available parking rent, to negotiate additional secondary rent facilities and accessibility are important factors for conditions, which may consist of contributions to tenants. moving costs, rent discounts or rent-free periods. Some segments of the office market are The supply of office space varies across the various outperforming others, because they are better market segments from three to six times the average adapted to customer demands. annual office space take-up. That is an abundant

20 Report of the board of management Dutch property funds

Development premium (discount) (in %)

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There is a considerable risk that outdated office space vacancy, which is indicative of increasing confidence will be hit by structural vacancy. That part of the among some of the developers in the office market as office market is not considered by potential tenants. a whole. This situation has marred the industrial premises market for some years. Total vacancy in that market Industrial premises market was and is still high, but is distorted by structural vacancy in outdated industrial premises on often Supply in the industrial premises market reflects outdated industrial areas. This has led to a the aging of the stock of buildings in this market. segmentation in that market. The situation has worsened due to the slowdown of economic growth, and has increased the pressure on Segmentation of the office market will reveal over politics to redevelop outdated industrial areas. The the next few years whether in certain segments of Dutch province of Noord-Brabant, for instance, has the office market or in certain cities the situation is announced that it will take steps in this direction. less grave than it would at present appear to be for The allocation of industrial areas has decreased the total market. strongly in the past few years due to low economic growth and a lack of sufficient land. A recovery of the office markets will have a significant impact on traffic flows. The odds are that The logistics part of the industrial premises market road congestion will rise further and that employers shows strong demand. This demand is concentrated are forced to look for alternative solutions. on large logistical distribution hubs such as the Stimulating a spreading of working hours and the ports of Rotterdam and Antwerp and the airports of strong increase of flexible working solutions is very Amsterdam and Brussels. Junctions on through likely to come about, leading to a different use of roads, too, are popular. The eastward expansion of offices. the European Union makes it possible that over a number of years the focal point of the logistics In the investment market there is considerable market will move to the east. demand for commercial property as well as for offices. This demand is prevalent among both Distribution centres are strongly in demand with all institutional and private investors, both categories of investors, and are preferred above all international and national. This demand is other types of property. The interest for this type of predominantly selective and is aimed at well-let and property is expected to continue for some time yet well-located properties. The prices of offices as a because of good historical total returns. Prices of result continue to be relatively high for this phase of logistics properties have risen significantly and are the office market cycle. In spite of this, part of the high in historical terms. demand is also aimed at properties with high

21 The recovery of economic growth in the eurozone is fragile and surrounded with many risks. In spite of this, economists anticipate a stabilisation of economic growth in the eurozone in 2005 and 2006, while the growth of the global economy will slow down. Amsterdam, 65 Karel du Jardinstraat

Report of the board of management VastNed Offices/Industrial Industry spread Sector spread total property portfolio (in %) total property portfolio (in %)

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Stock exchange considering a similar structure for property funds. This development is advantageous for the listed The quotations of listed property funds on Euronext property fund sector in Europe. Amsterdam through the years have experienced fluctuations of premiums and discounts in relation Netherlands to net asset value. If the premium or discount in the stock exchange listing is a measure of confidence in Economy the property market, the conclusion must be that at the beginning of an economic upswing investors The recovery of the Dutch economy was instigated in have a great deal of confidence in the property 2003 by the upswing of export volume. market (the share price shows a premium), and that The competitiveness of the Dutch economy has at the top of the economic cycle this confidence decreased strongly since 1999, and export is now decreases (the share price shows a discount). The being hampered by that. While much has been done current premium situation in the share market for to rectify this situation, it will be a number of years property funds is mainly caused by high investor before the competitiveness of the nineties is fully demand for property funds with a focus on retail restored. A particularly positive point is the strong investments. growth of the port of Rotterdam as a result of the The abovementioned premium situation does not greater role that Asia (particularly China and India) (yet) apply to all property funds on the Amsterdam are playing in the world market. This growth is stock exchange, and reflects an average. Among expected to continue and strengthen the logistics private investors this demand is due to the attractive sector in the Dutch economy. dividend returns that property funds offer. Demand Meanwhile in 2004 the economic engine has once among institutional investors is due to an increased more gained momentum and the Dutch economy is allocation of resources to property investments. growing to some degree. There are clear signs that the service economy is picking up on this growth, The share price history of closed-end property funds which is important for job creation in this sector and on the Amsterdam stock exchange is relatively short, consequently for the growth of office bound places since before the nineties the open-end structure was of work. customary for property funds. The recent past shows that situations of premiums and discounts can last a Property market number of years. Internationally, the popularity of the tax-free In the Dutch office market approximately 6 million structure of property funds is increasing. France now sqm of office space is being offered at a total stock of has the SIIC status, which is comparable to the over 40 million sqm; some 15% of offices is therefore Dutch fiscal investment institution. Countries as the vacant. The supply is diverse and consists of newly United Kingdom and Germany are actively built offices, offices vacated after relocation and

24 Report of the board of management Netherlands

Industry spread (in %) Sector spread (in %)

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offices being offered for subletting. These latter The industrial premises market is more stable than offices do have a rent contract, but at the conclusion the office market. Older industrial premises in of the contract the tenant’s prognosis for growth of outdated industrial areas are marked by structural the number of employees was too optimistic. Among vacancy, but the better buildings are generally well the four biggest cities, Amsterdam has the highest let. New construction usually takes place based on vacancy of between 15 and 20%, depending on the preletting. source used. Rotterdam and Utrecht have a vacancy of around 10%, with The Hague slightly below that. Belgium The satellite cities around these towns show a high vacancy of around 20%. In the rest of the Netherlands Economy there are major differences from city to city, but vacancy has risen everywhere. The share of new office Compared to 2003, economic growth is not only buildings in the vacancy is decreasing. stronger, but also more balanced. The most important change is in export, which clearly The office supply is more than four times the average contributed to the growth of the Belgian economy take-up of office space in the Netherlands. A normal and which was the driving force behind the situation would be one or two times the average acceleration of growth. Company investments also take-up. The quality of the supply is decreasing contributed to growth and that makes the economic because newly built but still vacant offices are picture healthy. currently very attractive to tenants. Newly built offices are now estimated to make up one third of the Compared to the Dutch economy, the Belgian supply; a year ago that was still half. Competition economy at present is in better shape, even though from newly built offices is decreasing rapidly. one has to keep in mind that the Belgian economy in The total planned office capacity continues to be general is early-cyclical. considerable, but authorities and/or investors are setting stringent preletting demands. The port of Antwerp is profiting from the strongly The municipality of Amsterdam currently sets a increased flows of goods, as observed earlier with preletting requirement of 70%. This municipality is reference to the port of Rotterdam. In the wake of the also actively pursuing conversion of outdated offices strongly increased activity the logistics sector will to for instance housing. The policy is aimed at also benefit. A stable element in the growth of the limiting supply and at qualitative improvement. Belgian economy is the capital Brussels. Other municipalities are pursuing a similar policy. The activities of the European Union continue to Everyone is waiting for economic growth to become grow and received extra momentum by the stronger, so that demand for office space can substantial expansion of the European Union with increase. 11 countries. An enlarged European Union will lend

25 Report of the board of management Belgium

Industry spread (in %) Sector spread (in %)

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yet more stability to growth, as it may be expected The industrial premises market is more stable than that the budget of the European Union will for some the office market. Older industrial premises show time show more growth than the national budgets. structural vacancy, but the better buildings are generally well let. New construction largely takes Property market place based on preletting.

The most important Belgian office markets are on the The property portfolio axis Antwerp, Mechelen and Brussels; Brussels having far and away the largest office market. With an office The 2004 financial year was characterised by a battle stock of 1.5 million sqm, the office market in the against difficult market conditions in the office and Brussels periphery is almost equal in size to the office industrial premises markets of the Netherlands and market in all of Antwerp, which has 1.8 million sqm in Belgium. These efforts were focused primarily in the total. Mechelen has a small, but fast growing office areas of letting and of improving the average risk market and can be regarded as a new market for return profile of the property portfolio. In this companies who wish to establish themselves along the context, a large number of sales took place, among axis mentioned before. The availability of office space which virtually the entire French property portfolio, in these markets is high. The total planned capacity is which in view of its size and character was of no still considerable, but stringent preletting strategic interest. Furthermore, sales were realised in requirements are in place. As a result construction the Netherlands and Belgium. These were concluded activity has seen a major decrease and supply will on average above the latest appraisal value. This stabilise. confirms the board of management in its view that net asset value as published is realistic. Vacancy in Antwerp is at around 10%, in Mechelen around 15%, while the Brussels periphery has a vacancy In terms of the reporting on property, this annual rate of close to 20%. These percentages are similar to report conforms to the best practice principles as those in the Netherlands. Letting in Antwerp had an formulated by the sector organisations IVBN and exceptional year, equalling 1999 letting. Letting did EPRA. VastNed Offices/Industrial subscribes to the include two large preletting transactions. initiative to formulate such principles, as they Take-up in Mechelen rose in 2004, as this city is contribute to better mutual comparability of increasingly regarded as an alternative to Antwerp and property funds and to transparency of reporting in Brussels. In the Brussels periphery, letting continues general. to be slow. Newly built offices are generally more competitive than existing buildings. Gradually the quality of vacancy is decreasing. The same trend can be observed in other office markets.

26 Report of the board of management VastNed Offices/Industrial Ten largest tenants Percentage of theoretical rental income as per December 31, 2004

PricewaterhouseCoopers 4.0 Deloitte Accountants 2.4 Tibotec 2.1 Fiege Kalf 2.0 EDS 2.0 Dutch Government 1.7 Exel 1.3 Brico 1.1 Rexel 1.0 Municipality of Amsterdam 0.9

Total 18.5

Properties Tenants

The property portfolio consists largely of medium-sized VastNed Offices/Industrial lets its properties to a offices and industrial properties. The latter group can large number of tenants. The total number of be broken down into industrial premises and logistics tenants is 678. A list of the ten largest tenants is centres. Our holdings are spread across the Netherlands presented in the above table. None of the tenants has and Belgium and have a total lettable floor space of such a dominant position that the size of the rental 1,160,634 sqm. income from these tenants could be a considered a risk to VastNed Offices/Industrial. The size of the property portfolio in operation at year- end 2004 amounted to F 1,112 million. Including Market rents property not in operation, the size is F 1,166 million. This is less than the size at year-end 2003, which is On average, VastNed Offices/Industrial’s property due to significant sales. portfolio is let at 7.1% above market rent. This holds the risk that at the expiry or renegotiation Letting and occupancy rate of a rent contract a lower rent is negotiated. This aspect is being monitored closely by the board of In the year under review, the property portfolio was management. once again under pressure from a difficult letting market, which has impacted the occupancy rate. Rent developments The average occupancy rate was a 84.2% (2003: 89.2%). In 2004, this average occupancy rate was impacted In view of the reduction of the property portfolio due negatively, in addition to the difficult letting to sales, it is fruitless to compare this year’s rental market, by a number of properties that, having been income with last year’s. There is more sense in renovated, were taken into operation in the middle considering the organic development of gross rental of 2004 and at that time had not yet been let. income. This development is marked by a number of aspects which merit attention. Increased vacancy has The rent-free periods and rent discounts increased to been commented upon elsewhere. Indexation shows a 2.0% (2003: 0.5%). This was due to an observable positive amount, while new rent contracts and rent general trend towards providing tenants with renewals show a slightly lower rental income. incentives. The average percentages are not yet at an The chart on the next page includes an overview alarming level. charting the evolution of gross rental income during 2004.

27 Report of the board of management VastNed Offices/Industrial

Development gross rental income (in %) Expiry dates rent contracts total property portfolio (in %) 5 Expiry dates and extension dates of rent contracts with the option of rent adjustment 0 (weighted for gross rental income) Average duration is 3.6 years -5 30 -10 20 -15 10

Total 0 Pipeline Vacancy – Indexation Rent discounts Rent 2005 2006 2007 2008 2009 2010 2011 2012 New rent contracts rent New Other rental income rental Other Acquisitions and sales and Acquisitions

Expiry dates of rent contracts On balance the appraisals, including value movements of properties not in operation, led to VastNed Offices/Industrial is active in three countries an unrealised value movement of F 51.3 million with different kinds of rent agreements and negative. differences in contract duration based on local regulations and customs. The chart above shows the Appraisal methodology expiry dates of the entire property portfolio. The average duration is 3.6 years. VastNed Offices/ VastNed Offices/Industrial’s property portfolio is Industrial is aware that the relatively high number of appraised once a year by independent appraisers. A rent contracts that expires in 2005 and 2006 carries a representative half is appraised as at June 30 and the risk for the company, but as stated earlier the board of remaining part as at December 31. The appraisals are management has taken the necessary measures to carried out by reputable international appraisers limit vacancy as much as possible. (please refer to the overview ‘Property portfolio 2004’ included in this annual report) using an Acquisitions internationally accepted appraisal methodology. VastNed Offices/Industrial ensures that the During 2004 some acquisitions were made in appraisers have access to all relevant information Belgium, which were incumbent on obligations needed to arrive at a well-considered assessment. As entered into previously. from the 2005 financial year, the property portfolio will be appraised quarterly. Sales The Netherlands A large number of sales took place in 2004. This concerned sales in the Netherlands, Belgium and Properties France. Properties were sold for F 77.6 million The Dutch property portfolio (in operation) at year- in total. The sales result compared to the latest end 2004 comprised 51% of VastNed Offices/ appraisal value was F 2.3 million positive. Industrial’s total property portfolio. The Dutch property portfolio is characterised by a great number Unrealised value movements of properties (136, of which 100 offices and 36 semi- industrial properties). As at December 31, 2004 the Appraisals by independent appraisers on the one number of tenants was 445. In terms of value, 67% of hand reflect the difficult letting market, and on the the property portfolio consists of offices and 33% of other hand positive value movements are being semi-industrial properties. awarded to properties on long-term rent contracts in view of the large demand for property investments.

28 Report of the board of management Netherlands

Ten largest tenants Expiry dates rent contracts (in %) Percentage of theoretical rental income Expiry dates and extension dates of as per December 31, 2004 rent contracts with the option of rent adjustment (weighted for gross rental income) Dutch Government 3.3 Average duration is 2.8 years Rexel 1.9 Municipality of Amsterdam 1.8 CWI 1.8 Dienst Wegverkeer 1.6 30 Ex Logis Europe 1.6 ROC Amsterdam 1.3 20 Shell 1.1 Interxion Carrier Hotel 1.0 10 SNT 1.0

0 – Total 16.4 2005 2006 2007 2008 2009 2010 2011 2012

Letting and occupancy rate increase. After rent renewals and at new lettings, In 2004, too, VastNed Offices/Industrial actively rent in general was lower than before. The provision endeavoured to attract new tenants and retain of rent-free periods is still limited in the Dutch existing ones. In spite of this, the occupancy rate property portfolio, and in 2004 amounted to 1.2% of decreased during 2004, with an average of 85.2% gross rental income, compared to 0.8% in 2003. In compared to 90.5% in 2003. Part of that figure can be spite of this, the provision of rent-free periods and put down to the fact that a number of projects that rent discounts can be characterised as a trend in the was under renovation and was categorized as property market. ‘property not in operation’, was taken into operation in the middle of 2004. This concerned the properties The rent level can be characterised as above market 28-32 Catharijnesingel in Utrecht, 8-10 Antwerpseweg level. Theoretical rental income as at year-end 2004 in Gouda, and 37001-37003 Roermondstraat in was 4.5% above the market rent as determined by the Deventer, all in the Netherlands. Since these independent appraiser. When concluding new rent properties were not let, this resulted in additional contracts, it’s possible that lower rents must be pressure on the occupancy rate of 2.2 percentage taken into account. points. At year-end 2004, the occupancy rate amounted to 80.5%. The property portfolio not in operation largely concerns the TriNovium project. This project is part After the conclusion of the financial year a number of the estate of a bankrupted company. VastNed of properties showing vacancy was sold. Taking these Offices/Industrial’s interests as a creditor of this sales and the lettings in January 2005 into account, company have been secured as it can be characterised the occupancy rate as at February 1, 2005 was 83.5%. as a separatist. If as from today no further letting is achieved, the occupancy rate in 2005 based on the present property Expiry dates of rent contracts portfolio cannot run below 75.9%. The chance that as Rent contracts in the Netherlands are generaly from February 1, 2005 not a single new letting is concluded for a period of five years, with the achieved, is considered to be minimal by VastNed possibility of cancellation by the lessor or the tenant. Offices/Industrial. In addition, VastNed Offices/ Other durations are also in use. The above chart Industrial will focus its sales policy on properties presents an overview of the existing rent contracts at which are marred by (future) structural vacancy. year-end 2004.

The organic development of rents, not taking the decrease of the occupancy rate into account, was slightly positive. This may be explained by a number of factors. The indexation of rent contracts led to an

29 Verslag van de directie

Woluwe –> Mechelen

Acquisitions Belgium No acquisitions were made during 2004. Properties Sales The Belgian property portfolio at year-end 2004 During 2004 a large number of properties were sold. amounted to 49% of VastNed Offices/Industrial’s The reason for these sales was that by selling the total property portfolio in operation. This property properties listed below the risk return profile of the portfolio consists of 44 properties, of which 26 are Dutch property portfolio could be improved. Some offices and 18 are semi-industrial properties. properties knew considerable vacancy. By selling As at December 31, 2004 the number of tenants was such properties, vacancy could be limited. 232. In terms of value, 76% of the property portfolio The following properties were sold: consisted of offices and 24% of semi-industrial – Ede, 7 and 9 Galvanistraat; properties. – Hoofddorp, 8 Debbemeerstraat; – Rijswijk, 492 Huis te Landelaan; Letting and occupancy rate – Tilburg, 9-11 Gesworenhoekseweg; In 2004 much effort was concentrated on reletting – Veenendaal, 50 Wageningselaan and; the property portfolio. In spite of this, the average – Zaltbommel, 11 Hogeweg. occupancy rate decreased during 2004. On average, it amounted to 82.6% compared to 87.1% in 2003. During These sales were concluded for F 44.8 million in 2004 the pressure on the occupancy rate remained total. These properties were sold for F 1.4 million relatively limited. A major cause of this was the above the latest appraisal value. This indicates that improvement of the industrial part of the Belgian the appraisal value is a good reflection of the market property portfolio, which at year-end 2004 had an value of these properties. occupancy rate of 93.5%. At year-end 2004, the occupancy rate of the total Belgian property portfolio Unrealised value movements was 81.5%. During 2004, unrealised value movements amounted to F 25.0 million negative (2003: F 23.6 million The organic development of the rents was negative negative), being approximately 3.7% of the value as at on balance. Rent indexation was fractionally the beginning of 2004. positive. However, the market rent which could be realised when reletting was lower than the rental income received previously, so that organic development came out negative on balance.

Providing rent-free period is becoming ever more customary in Belgium. While in 2003 the rent-free

30 Report of the board of management Belgium

Ten largest tenants Expiry dates rent contracts (in %) Percentage of theoretical rental income Expiry dates and extension dates of as per December 31, 2004 rent contracts with the option of rent adjustment (weighted for gross rental income) PricewaterhouseCoopers 8.3 Average duration is 4.9 years Deloitte Accountants 4.9 Tibotec 4.4 Fiege Kalf 4.1 30 EDS 4.1 Exel 2.6 20 Brico 2.2 JVC 1.9 10 European Union 1.7 Borealis 1.7 0

– Total 35.9 2005 2006 2007 2008 2009 2010 2011 2012

periods and rent discounts remained limited at 0.2% Sales of the theoretical rental income, in 2004 this During 2004 two properties were sold. percentage increased to 3.0%. We believe that this This concerned the following properties: trend will continue for some time. – Putte, 15 Klein Boom, and; – Rumst, 35 Mechelsesteenweg. The rent level as at December 31, 2004 was above These sales took place at a price of F 6.1 million in market level. Theoretical rental income at year-end total. On balance, these properties were sold at 2004 was 9.0% above the market rent as determined F 0.2 million above their appraisal value. This by the independent appraiser. When concluding new indicates that the appraisal value of the properties is rent contracts, lower rents must be taken into a good reflection of their market value. account. Also, VastNed Offices/Industrial reduced its interest Expiry dates of rent contracts in its subsidiary Intervest Offices to 51.3% (December Rent contracts in Belgium are generally concluded 31, 2003: 58.8%). Thus a sales profit of F 2.1 million according to the so-called 3-6-9 regime. With respect was realised. to the expiry dates of rent contracts, the first possible cancellation date for the tenant is always taken into Unrealised value movements account for calculations. In most cases the contract During 2004, the unrealised value movements will continue unchanged. However, VastNed Offices/ amounted to F 26.3 million negative (2003: F 13.5 Industrial believes that in view of current market million negative), being approximately 4.7% conditions, it behooves us to be conservative in our compared to the value as at the beginning of 2004. reporting. The above chart presents the expiry dates of the existing rent contracts as at year-end 2004. France

Acquisitions Properties In 2004 two properties were acquired in the context The French property portfolio is not part of the of further expansion of our position in Mechelen strategic core countries. In the context of focusing on Campus. This concerns the G and H buildings in the the core countries, the divestment of a property in Schaliënhoevedreef in Mechelen. This expansion Meaux is still being sought. concerned a sum of F 18.9 million. Theoretical rental income of these properties amounts to F 1.4 million Sales annually. In 2004 the properties in Roissy and Lomme were sold for F 26.7 million. The sale took place at F 0.9 million above the latest appraisal value.

31 Amersfoort –> Sint Niklaas –> Mechelen –> Groningen –> Sint Agatha-Berchem

Staff and organisation Sustainability

VastNed Offices/Industrial attaches great VastNed Offices/Industrial aims for sustainability in importance to a balanced personnel policy. In this its operations. In that context attention is devoted context the company devotes attention to good to labour relations, the environment and ethical matching of abilities and tasks for its employees. conduct in business. As stated under Staff and Employees are assessed once a year, based on which organisation, VastNed Offices/Industrial attaches objectives are formulated for the next year in mutual great importance to a balanced personnel policy. discussions and if necessary a training scheme is Environmental aspects are carefully assessed during set up. the execution of the investment policy. Before acquiring investment properties, environmental As from 2003 a number of organisational changes aspects are charted during the due diligence have been carried through aimed at increasing the investigation. As a guideline for ethical conduct of local responsibilities of the country teams; these business, VastNed Offices/Industrial has drawn up must, however, emanate from a clear ‘VastNed a code of conduct. Group spirit’. The country teams are composed, either or not supported by headquarters, of a Financial results country manager, portfolio management, property management, financial administration, acquisition Adjustment of accounting principles: adjusted and sales and (technical) project management. In Guideline for Annual Reporting 2004 a number of staff changes took place. In the context of the adjustments of the Guideline In September, Mr Raymond Beaujean was recruited 615 Investment Institutions of the Annual as Chief Offices Netherlands. Under his leadership in Reporting Council (the Guideline) that became the second half of 2004 the property department was definitive at the end of 2003, in contrast to previous split into portfolio management, property financial years, as from the 2004 financial year both management and sales and acquisitions. In addition, realised and unrealised value movements are the portfolio management department was recognised in the profit and loss account. This also strengthened with an additional portfolio manager applies to the movements in the provision for in order to be able to better respond to the difficult deferred taxes and the costs of asset management. market conditions in the office market. An internal As from the 2004 financial year, these latter costs company lawyer was also recruited, and the research are no longer charged to the indirect investment department was enlarged with an extra employee. result, but are part of the direct investment result. The comparative figures have been adjusted accordingly. The impact of this on the direct

32 Mechelen –> Merksem –> Amsterdam –> Zoetermeer –> Zoetermeer –> Amsterdam

investment result of 2003 amounts to F 3.9 million Gross rental income negative, which is equal to F 0.21 negative per share. The indirect investment result for 2003 Total gross rental income fell from F 108.2 million in obviously increases with the same amount, so that 2003 to F 94.0 million in 2004. Approximately F 10.0 the impact on the total investment result for 2003 million of this decrease was due to sales realised in is nil. 2003 and 2004. More than half of this amount Due to the abovementioned adjustment of the concerns sales realised in the Dutch portfolio. The Guideline, the direct and indirect investment result remaining decrease of approximately F 4.2 million can no longer be directly read from the profit and was largely due to increased vacancy (F 4.9 million) loss account as prescribed by the Council. However, and increased rent discounts and rent-free periods in view of the importance attached to this (F 1.7 million). This was offset by an increase of distinction by investors, VastNed Offices/Industrial rental income due to investments and indexations in will in the future continue to separate the 2003 and 2004 of approximately F 2.4 million. investment result as included in the profit and loss Vacancy increased at more or less the same rate in account into the direct and indirect result as a the Netherlands and Belgium, while the increase of supplement to the prescribed model. rent discounts particularly concerned the Belgian portfolio. The average financial occupancy rate fell Investment result from 89.2% in 2003 to 84.2% in 2004.

The investment result decreased from F 17.1 million Operating expenses in 2003 to F 3.1 million in 2004. The 2004 investment result consists of a direct investment result of Operating expenses expressed as a percentage of F 40.8 million and an indirect investment result of gross rental income fell in 2004 from 14.0% to 12.7% or F 37.7 million negative. F 11.9 million (2003: F 15.1 million). This decrease was particularly due to the receipt in 2004 post due Direct investment result date of receivables from bankrupted or doubtful debtors which had been anticipated at year-end 2003. The direct investment result decreased by 16.1% from This resulted in an additional allocation to the F 48.6 million in 2003 to F 40.8 million in 2004. provision for doubtful debtors in 2003 of This decrease is the result of sales realised in 2003 and approximately F 1.7 million. In 2004 this provision 2004, to increased vacancy in the office portfolio as a was released to operating expenses. result of difficult conditions in the office market, and Corrected for this effect, operating expenses to no longer capitalising the interest on the expressed as a percentage of gross rental income TriNovium project in Nieuwegein as from July 1, 2004. effectively showed a relative rise. Particularly in the Netherlands this rise was connected to increased

33 Total gross rental income fell from € 108.2 million in 2003 to € 94.0 million in 2004. Approximately € 10.0 million of this decrease was due to sales realised in 2003 and 2004. Amsterdam, 1 Anthony Fokkerweg

Report of the board of management VastNed Offices/Industrial keeps a close watch on limiting rent arrears.

maintenance and letting costs, which are associated Indirect investment result with the efforts aimed at improving the occupancy rate. The indirect investment result decreased from F 31.5 million negative in 2003 to F 37.7 million Interest, general expenses and tax on income negative in 2004. The indirect investment result is composed of negative unrealised value movements Net interest expenses fell from F 24.6 million in 2003 to in the property portfolio of F 51.4 million (2003: F 22.8 million in 2004. This decrease is obviously the F 36.6 million negative), realised value movements result of the decrease of the interest bearing debts, compared to the latest reported appraisal value of particularly due to sales realised in 2003 and 2004. F 4.6 million positive (2003: F 2.0 million positive), In view of the decrease of the interest bearing debts this less allocations to the provision for deferred taxes decrease was limited, since as from July 1, 2004 the of F 0.3 million (2003: F 0.5 million). The share of interest relating to the TriNovium project in minority shareholders in the indirect investment Nieuwegein is no longer capitalised. result of F 9.4 million positive (2003: F 3.6 million General expenses decreased by 13.8% to F 5.6 million positive) was then deducted from this. (2003: F 6.5 million). This was mainly due to a decrease in pension costs. In 2003, incidental back service Value movements of investments liabilities were taken into account. The unrealised value movements in the Netherlands Tax on income decreased from F 1.1 million in 2003 to amounted to F 25.0 million negative (2003: F 23.6 F 0.8 million in 2004. This decrease was particularly due million negative). This includes an extraordinary to the sale of the French properties in the first half of write-down of F 4.1 million on the TriNovium 2004, which were held by a taxable subsidiary. project. The unrealised value movements in Belgium were F 26.3 million negative (2003: F 13.5 million Minority interests direct investment result negative). This includes an extraordinary write- down of F 3.7 million concerning acquisition costs The share of the direct investment result due to relating to the properties in Mechelen purchased in third parties fell from F 12.3 million in 2003 to November 2004 by a wholly owned subsidiary of F 12.0 million in 2004. The minority interest mostly VastNed Offices/Industrial. concerns VastNed Offices/Industrial’s interest in The realised value movements of F 4.6 million Intervest Offices. This interest decreased in 2004 positive (2003: F 2.0 million positive) consists of a from 58.8% at year-end 2003 to 51.3% at year-end 2004. positive result of F 1.4 million (2003: F 1.5 million positive) on sales in the Netherlands, a positive result of F 2.3 million (2003: F 0.5 million positive) concerning sales in Belgium, and F 0.9 million positive (2003: nil) on sales in France. The positive

36 Report of the board of management VastNed Offices/Industrial

Interest risk long-term loans Loan portfolio (x € 1 million) (year-end 2004)

Amount of loan Average Fixed Variable % of (x € 1 million) interest rate (in %) interest interest Total total

2005 36.2 3.41 Long-term 355.1 32.8 387.9 68.8 2006 217.8 5.02 Short-term 2.8 173.4 176.2 31.2 2007 45.0 5.72 2008 51.7 5.15 Total 357.9 206.2 564.1 100.0 2009 – 37.2 5.00 % of total 63.4 36.6 100.0

sales result in Belgium includes a book profit of The ratio between long-term loan capital (longer F 2.1 million relating to the sale of Intervest Offices than one year) and short-term loan capital (shorter shares. than one year) changed from 63/37 at year-end 2003 to 65/35 at year-end 2004. The loan portfolio Movements provision for deferred tax liabilities decreased in 2004 to F 564.1 million (year-end 2003: F 638.2 million), largely as a result of sales realised The decrease of the allocation to the provision for in 2004. The loan portfolio is comprised of F 387.9 deferred tax liabilities from F 0.5 million in 2003 to million in loans with terms of more than one year F 0.3 million in 2004 is connected to the sales realised (year-end 2003: F 420.1 million) and of F 176.2 million in France. in loans with terms of less than one year (year-end 2003: F 218.0 million). The average term of the long- Minority interest indirect investment result term loans was 2.3 years. The average fixed interest period fell from 3.6 to 2.2 years. The share of the indirect investment result due to minority shareholders in 2004 amounted to F 9.4 The average interest percentages, the years of million positive (2003: F 3.6 million positive). interest review and the expiry dates of the total This mostly concerns the share of Intervest Offices amount of long-term loans (excluding the part minority shareholders (year-end 2004: 48.7%) in entered under short-term liabilities) of F 387.9 the negative unrealised value movements. million as entered in the balance sheet, are presented above. Financing with shareholders’ equity and loan capital The average interest rate on the long-term loans in In the context of the optional dividend offered to 2004 amounted to 4.96% (2003: 4.93%). The short-term shareholders for the 2003 financial year of F 2.80 fully loans in 2004 had an average interest rate of 2.87% in cash or F 2.25 in cash and 1 new share per 35 (2003: 3.17%). existing shares to the charge of the share premium reserve, during the 2004 financial year 379,884 shares Results and shareholders’ equity per share were issued as stock dividend. Holders of 70.4% of the number of shares in issue (2003: 56.9%) opted for The direct investment result per share came to F 2.13 stock dividend. Group equity expressed as a per share (2003: F 2.59). This decrease was due in percentage of invested capital rose from 50.0% at particular to the reduced size of the property year-end 2003 to 51.6% at year-end 2004. This rise was portfolio compared to year-end 2003 and the reduced realised through the sales programme that was occupancy rate of the portfolio. The indirect initiated, which offset value decreases in the investment result per share fell from F 1.68 negative portfolio. in 2003 to F 1.97 negative in 2004. As mentioned

37 Report of the board of management In accordance with VastNed Offices/Industrial’s dividend policy, it will be proposed to the general meeting of shareholders to be held on April 5, 2005 to declare a dividend of € 2.13 per ordinary share.

earlier, this was due in particular to negative value Risk management movements of the property portfolio. The total investment result per share, taking the other Dutch corporate governance code and risk movements into account, thus decreased from F 0.72 management in 2003 to F 0.06 per share in 2004. Shareholders’ equity per share, including the investment result, The Dutch corporate governance code (the Code), fell to F 24.20 per share (year-end 2003: F 26.94). which became definitive on December 9, 2003, has focused extra attention, especially among listed Dividend proposal companies, on risk management. The Code stipulates that the board of management of a company should VastNed Offices/Industrial’s dividend policy is report on the adequacy and effectiveness of the aimed in principle at paying out the direct internal risk management and control systems. investment result to the shareholders in full. However, the Code does not contain guidelines or In line with previous years, an optional dividend is assistance about how and in how much detail this proposed to the shareholders, in which the should be done. shareholders are given the option of receiving the Various media reports as well as discussions with the dividend either fully in cash or partly in cash and other Dutch property investment funds about this partly in stock dividend, to the charge of the share reporting on internal risk management lead to the premium reserve. In order to fulfil the fiscal conclusion that there is no generally accepted conditions for fiscal investment institutions, at least framework of standards for consistent and the fiscal result must be paid out in cash. transparent reporting. As a result, it is generally In accordance with the dividend policy described unclear which requirements must be met in order to above, it will be proposed to the general meeting of comply with the Code. The principal point of shareholders to be held on April 5, 2005 to declare a discussion concerns the way in which a company can dividend of F 2.13 per ordinary share. Taking into demonstrate (afterwards) that its internal risk account the fiscal distribution obligation and the management and control systems are or have been share price at that time, it will be possible to receive effective. the dividend either fully in cash or F 1.88 in cash and a percentage in VastNed Offices/Industrial VastNed Offices/Industrial, too, feels a need for a shares yet to be determined, to the charge of the generally accepted framework of standards. The topic share premium reserve. The dividend will be made of risk management has been a frequent topic of payable on May 3, 2005. discussion in 2004, both for the board of management as well as in the meetings of the audit committee and the supervisory board. This has resulted inter alia in a plan of action in which over the course of the year a number of major risks will be addressed in a

38 Woluwe

structured way, with particular focus on the – Choice of country: a choice has been made in structure and functioning of the associated risk principle for investments in the Netherlands and management measures. Belgium. These countries are part of the eurozone, so that currency risks are excluded. In addition, these With the aid of the so-called COSO (The Committee countries have a relatively stable economic and of Sponsoring Organisations of the Treadway political climate. By choosing a limited number of Commission) risk management framework, risks are core countries, we believe we are capable, based on broken down into: strategic risks, operational risks, our own research and with the knowledge of local financial risks, reporting risks and compliance risks. organisations, to stay abreast of local developments in these countries. In the strategy, research is Below, all the significant risks in each risk category considered to be an important factor for being able are presented and how VastNed Offices/Industrial to successfully assess risks and opportunities. If in endeavours to control those risks. the future it is considered expedient to increase the number of countries in which VastNed Offices/ Strategic risks Industrial is active, the choice will predominantly These risks are determined to an important degree be determined by locally applicable rent legislation by the strategic choices VastNed Offices/Industrial (contract duration) and the availability of liquid has made to limit its sensitivity to external factors. office investments in that country. Examples are risks associated with the development – Type of property: a choice has been made in principle of local economies, among which growth estimates, for investments in the office sector, striving, in order inflation, interest rate development and currency to respond as best as possible to the office cycle, for a fluctuations, the political climate, possible changes minimum percentage of office investments in liquid to legislation and regulations (permit policies, property markets, a maximum exposure of environmental standards, and rent and fiscal investments in a certain city/region, a maximum legislation and regulations). The extent of these risks relative risk return profile, maximising the extent of is determined to a high degree by the strategic the risk to a certain level. In addition to investing in choices with regard to the investment policy. This offices, there is the option of opportunistic concerns the question in which countries/regions investments in well-let industrial premises. VastNed Offices/Industrial intends to invest at – Critical size per country: a certain minimum size of which moment and to what amount (spreading and the property portfolio per country is aimed for, so leverage) in a particular type of property. that an adequate local organisation can be set up which disposes of sufficient local knowledge of the In 2004 a strategic plan was drawn up containing a country, the developments in the property sector, number of criteria concerning investment and legislation and regulations and so on. At such a size, financing policy, which are aimed at limiting these the risk of dependence on a number of key employees risks as much as possible: is limited.

39 Woluwe

– Time of investment: based on (local) knowledge of based on thorough market research, accurate the economic and property cycles efforts are made to prognosis of future returns, inter alia by evaluating take advantage of them. In this context the starting investments by way of an internal rate of return point is to extend the terms of rent contracts (to be model, screening of tenants, studying local agreed) during upward cycle phases in the office regulations, maintenance standards, environmental market cycle, so that a downward part of the cycle and safety standards, permit requirements and such, can be bridged. During a downward cycle, in evaluation of possible fiscal risks, following set contrast, efforts are made to negotiate short contract approval procedures for making investments, durations, so that an upward cycle can be exploited. checking whether the investment is in line with the Also, before the downturn the percentage of strategic framework and whether all required shareholders’ equity compared to invested capital procedures have been followed. An internal checklist should rise to approximately 60-70%, so that there is has been drawn up for making investments in order an adequate buffer to absorb possible value decreases to guarantee that all points of attention are being due to the downward cycle. During an upward cycle, sufficiently taken into account. in contract, this percentage can be lowered to a minimum of 50%, so that the value increases in times Letting risks of an upward office market cycle can be maximally An important factor in this risk is the nature and exploited. location of the property, the degree to which it has to compete with adjacent properties, the quality of The strategic risks associated with interest rate the property (state of maintenance, obsolescence), fluctuations are discussed under ‘Financial risks’. the quality of the tenant and the rent contract. A financially weak tenant can after all negatively Operational risks impact cash flow and eventually lead to vacancy as These risks follow from everyday transactions and the property cannot be relet, which can also have a (external) events which are effected within the negative impact on the value of the property. strategic framework. Examples are investment risks, letting risks, cost control risks, debtor risks, legal VastNed Offices/Industrial continuously assesses the and financial risks, catastrophe risks and IT risks. development of the abovementioned factors during the period of investment in the property. Based on Investment risks the best possible evaluation of these risk factors VastNed Offices/Industrial has taken internal (based on own local knowledge, data from the administrative and organisational measures to limit research department and data from external the risk of incorrect investment decisions. These appraisers and such), a risk profile is drawn up for measures are to guarantee careful investment every property at least once a year. Depending on the analysis: careful evaluation of the risk return profile risk profile, a certain return must be realised over a

40 Report of the board of management Based on an internal rate of return model, a timely analysis is made as to which properties need additional investment, where the tenant mix should be adjusted and which properties are candidates for divestment.

certain period. This is set off against the expected VastNed Offices/Industrial keeps a close watch on return based on the internal rate of return model. limiting rent arrears. Based on that, a timely analysis is made as to which properties need additional investment, where the Legal and fiscal risks tenant mix should be adjusted and which properties If complexity requires it, contracts to be agreed with are candidates for divestment. In addition, at least third parties are checked by an internal company once a quarter reports are drawn up on vacancy and lawyer, if necessary supported by external the vacancy risk, taking the rent contract expiry consultants, in order to limit the risk of financial calender into account. Within the margins of loss and reputation damage resulting from applicable rent legislation, a balanced spread is qualitatively inadequate contracts. Furthermore, aimed for of the terms of the rent contracts, attuned VastNed Offices/Industrial is insured for liability to the current phase of the office market cycle. In arising from its activities or its investments. this way the developments in the office market cycle can be responded to alertly. Tax law is of great importance when investing in property. Examples are corporate income tax, Cost control risk transfer tax, turnover tax and local levies. These There is a risk that the net return on property is financial risks are continuously being assessed by negatively impacted by high operating expenses or an internal tax lawyer, if necessary supported by investments. Various administrative and external consultants. organisational measures are in place at VastNed Offices/Industrial which are to limit this risk, such Corporate income tax: VastNed Offices/Industrial is a as periodical confrontation of maintenance budgets fiscal investment institution, so that under certain with the realisation and approval procedures conditions it is not liable for corporate income tax on concerning taking on maintenance and investment the result realised in the Netherlands. A comparable obligations. structure applies to the larger part of Belgian property portfolio (Bevak). Debtor risk VastNed Offices/Industrial has clear guidelines in There is a risk that VastNed Offices/Industrial or place regarding the screening of tenants before Intervest Offices can no longer meet the conditions concluding new rent contracts. Furthermore, at the for a fiscal investment institution, so that they conclusion of rent contracts guarantee deposits or would become liable for corporate income tax on bank guarantees are generally provided. In addition, both their direct and indirect results. The conditions administrative and organisational procedures have mainly concern the composition of the shareholder been drawn up in order to guarantee timely base, the fiscal financing ratios and the fiscal collection of rent receivables and to ensure that rent distribution obligation. arrears are reported timely.

41 Report of the board of management VastNed Offices/Industrial’s IT infrastructure is centralised in Rotterdam. In 2003 and 2004 considerable investments were made in the IT infrastructure, focusing particularly on guaranteeing continuity and information system security.

VastNed Offices/Industrial limits this risk by regular Financial risks and careful monitoring of the fulfilment of the The principal financial risks are (re)financing risks, conditions mentioned above by the board of both relating to shareholders’ equity and to loan capital, management and the supervisory board, assisted by liquidity risks, interest rate risks and currency risks. expert internal and external tax lawyers. (Re)financing risk Transfer tax: particularly when purchasing property, The property portfolio can be financed partly by the transfer can be structured in such a way that the shareholders’ equity and partly by loan capital. transfer tax or comparable levies due will be limited. A relative increase of loan capital compared to It is possible that the tax authorities take the shareholders’ equity can result in higher return (the position that transfer tax or a comparable levy is due. so-called leverage), but also carries an increased risk. VastNed Offices/Industrial aims to limit these risks When returns from property fall and when value by prior careful analysis of the fiscal risks by the decreases, a high degree of leverage carries the risk board of management, assisted by expert internal that interest and repayment obligations on loan and external tax lawyers. In some cases, guarantees capital and other liabilities can no longer be met. can also be sought from the (creditworthy) seller of Financing with new loan capital then cannot be the property. obtained or only at very unfavourable conditions. In order to continue to be able to meet the payment Catastrophe risks obligations, property must then be sold, which The portfolios are locally insured against carries the risk that this cannot be achieved at the reinstatement value and loss of rent. With regard to most favourable conditions. The value development inter alia flooding, storm and earthquakes, the of the office portfolio is determined to a high degree coverage is limited. Since the events of September 11, by the development of the office cycle. VastNed 2001, insurers have adjusted the coverage for damage Offices/Industrial aims to actively exploit this cycle, as a result of terrorism. inter alia by way of the ratio at which the property is financed with shareholders’ equity and loan capital. IT risks VastNed Offices/Industrial’s starting point in this VastNed Offices/Industrial’s IT infrastructure is context is that before the downturn the percentage centralised in Rotterdam. In 2003 and 2004 of shareholders’ equity compared to invested capital considerable investments have been made in the can rise to a maximum of approximately 60-70%, so IT infrastructure, focusing particularly on that there is an adequate buffer to absorb possible guaranteeing continuity and information system value decreases due to the cyclical downturn. In an security. upward cycle, in contrast, this percentage can be lowered to a minimum of 50%, so that the value increases during the upward phase of the office market cycle can be maximally exploited.

42 Mechelen –> The Hague

In addition, VastNed Offices/Industrial aims to be temporarily deviated from. Furthermore, within secure access to the capital market through the long-term loan capital portfolio a balanced transparent information provision, regular contacts spread of the interest review dates is sought. At least with financiers and (potential) shareholders, and by once a quarter a report is drawn up on the interest increasing the liquidity of the VastNed Offices/ and refinancing risks. As an indication of the Industrial share. Finally, with regard to long term sensitivity to the interest rate, an increase of the financing, a balanced spread of refinancing dates is variable interest of 1% as per January 1, 2005, would aimed for. increase VastNed Offices/Industrial’s interest expenses for 2005 by F 1.7 million. Liquidity risk VastNed Offices/Industrial must generate sufficient Currency risk cash flow in order to be able to meet its daily In principle, currency risks are excluded as a result of payment obligations. This risk is limited on the one the strategic choice of investing primarily in the hand by the measures stated under operational risks, eurozone. which limit the risk of cash flow disruption due to for instance vacancy or tenant bankruptcy. On the Reporting risks other hand VastNed Offices/Industrial must dispose This risk concerns late reporting or reporting of of sufficient credit facilities to compensate incorrect information, as a result of which incorrect fluctuations in liquidity needs. To this end, cash decisions are taken or external parties are flow prognoses are made daily. In addition, VastNed misinformed. VastNed Offices/Industrial has a Offices/Industrial has obtained sufficient credit comprehensive package of internal control measures facilities from its financiers to be able to absorb and administrative and organisational measures in fluctuations. In order to make use of those credit place for limiting this risk as much as possible. These facilities, the conditions of the credit facilities must measures and procedures are laid down in the constantly be met. Compliance with these conditions Administrative Organisation manual. The quality of is carefully monitored, and is reported once a the reporting, most of which is drawn up once a quarter. quarter, is guaranteed by extensive analyses from inter alia the Control department and the periodical Interest risk business report meetings, in which the contents of Due to the financing with loan capital, the return the reports is discussed in detail with the board of also becomes dependent on the developments of the management. interest rate. In order to limit this risk, in the composition of the loan portfolio a ratio of one third Compliance risks short-term loan capital and two thirds long-term These include the risks that legislation and loan capital is strived for. Dependent on the regulations are not or incompletely complied with developments of the interest rate, this principle can and that employees do not act with integrity.

43 In principle, currency risks are excluded as a result of the strategic choice of investing primarily in the eurozone. Mechelen, 20 Schaliënhoevedreef

Report of the board of management The board of management is therefore of the opinion that the organisation of our risk management and control systems is adequate and effective, and that in terms of the Code this constitutes a ‘comply’.

VastNed Offices/Industrial endeavours to limit this that the organisation of our risk management and risk by creating sufficient awareness of this risk control systems is adequate and effective, and that in among employees within the organisation and by terms of the Code this constitutes a ‘comply’. having sufficient knowledge of the changes in Of course, such a system is in constant motion, and applicable legislation and regulations, with in need of constant tuning and improvement. assistance from an internal company lawyer and With the possible arrival of a clearer framework of external legal advisors. In addition, VastNed Offices/ standards, VastNed Offices/Industrial will in the Industrial performs annual checks, inter alia by future be better placed to account for this further. using a self-assessment form as included in the contribution model of the Autoriteit Financiële IFRS Markten (AFM) regarding compliace with relevant legislation and regulations. As a listed company VastNed Offices/Industrial will, In order to guarantee an company culture of in accordance with the European regulation, as from integrity, VastNed Offices/Industrial has an internal the 2005 financial year draw up its annual accounts code of conduct in place and has drawn up a based on International Financial Reporting whistleblowers’ code. Employees must indicate Standards (IFRS). In anticipation of this transition to annually whether they have complied with this code IFRS, VastNed Offices/Industrial has identified the of conduct. The aspect of integrity is also part of the most important changes compared to the currently procedure concerning recruitment of staff. applied Dutch valuation principles and internally As indicated before, VastNed Offices/Industrial drawn up a (provisional) IFRS opening balance sheet devotes a great deal of attention to risk management. as per January 1, 2004. As a fund listed on the ‘Next However, VastNed Offices/Industrial is an Prime’ segment of Euronext, VastNed Offices/ organisation of limited size, which is spread across Industrial has in its interim report 2004 for the first various countries. Activities in the areas of financing, time included a list of effects to be expected as per cash management, taxation, legal affairs, IT, that date of the implementation of IFRS on the research, budgetting and budgetary control are opening balance sheet as per January 1, 2004 and on executed at group level in Rotterdam, which also the 2004 semi-annual result. benefits the local country organisations. As a result, VastNed Offices/Industrial does not have a separate In the past 18 months, VastNed Offices/Industrial audit department and in everyday practice the has been closely involved, jointly with other informal character of the organisation is being relied property funds and representatives of interested on. In view of the limited complexity of daily parties in the property sector (such as EPRA), transactions and the short internal communication in the evaluation of the consequences of the lines, we consider this to be acceptable from the view implementation of IFRS on the annual reporting of of risk management. property funds. The purpose of these discussions was The board of management is therefore of the opinion to arrive at as uniform as possible an application of

46 Breda

IFRS standards in the property sector. Based on these the nominal tax rate is taken into account. In discussions, the effects as published in the interim conjunction with the majority of the Dutch property report have been adjusted somewhat as a result of funds, VastNed Offices/Industrial is of the opinion advancing knowledge. However, there is as yet no that IFRS should be interpreted in such a way that in certainty, either among other property funds or the abovementioned cases the provision for deferred among external auditors about the interpretation of tax liabilities is valued based on (usually) 50% of the certain IFRS standards. As a result, the IFRS nominal tax rate. This corresponds with the information as stated below may still change when valuation methodology which is currently applicable the 2005 results are published. according to current accounting principles. The provision for deferred tax liabilities as included Below an overview is given of the principal changes in the opening balance sheet as per January 1, 2004 is as a result of the introduction of IFRS compared to related to some properties in France and Belgium. the current Dutch accounting principles and its VastNed Offices/Industrial’s company structure impact on shareholders’ equity as per January 1, 2004, allows property sales in these countries to be the 2004 investement result and on shareholders’ structured in the abovementioned way. Since equity as per December 31, 2004. according to current accounting principles in these countries the provision for deferred tax liabilities is Provision for deferred tax liabilities already valued in this way, no change is expected when IFRS is applied. As has been stated earlier, there There is as yet no certainty, either among property is as yet no certainty on an international level funds or among auditors, about the way in which concerning the valuation of the provison for deferred the provision for deferred tax liabilities should be tax liabilities. VastNed Offices/Industrial will valued under IFRS. Some parties are of the opinion eventually implement the valuation methodology that based on IFRS the provision for deferred tax applied by the majority of the Dutch property funds. liabilities should be valued based on 100% of the If this should result in a valuation based on 100% of applicable tax rate. VastNed Offices/Industrial as the normal tax rate, this would have an additional well as the majority of the Dutch listed property negative effect on shareholders’ equity at year-end funds are of the opinion that this interpretation is 2004 of F 1.6 million. not correct in all cases. If there is an intention to sell property through the Rent discounts, rent-free periods, key money and sale of the shares of the (taxable) company which is rent incentives in possession of the relevant property, no corporate income tax is due. The transfer of the deferred tax Based on IFRS, income and expenses should be allocated liability to the seller will in that case often take place to the period to which they relate. In view of this, the through a reduction of the sales price of the shares, entries mentioned above must be spread over the term for which (usually) a deferred tax liability of 50% of of the rent contract (straight-lining). Under application

47 Haarlemmermeer –> Zoetermeer

of the current accounting principles, these entries are fully recognised in the period in which they are VastNed Management’s present pension scheme is incurred. As a result, under application of IFRS the regarded as ‘defined benefit’ under IFRS. On that basis, direct investment result for 2004 will increase. an estimate must be made of future pension costs, In contrast to what was published in the interim report, taking future salary rises, average employment this will not affect shareholders’ equity as at January 1, duration, inflation and such into account. In this 2004 or December 31, 2004. Based on advancing context, VastNed Management has commissioned an knowledge, the majority of the property funds and actuarial report by an independent actuary, taking the auditors is of the opinion that the higher direct present pension scheme into account. Based on this investment result does not result in an additional asset report, VastNed Management should make a provision entry on the balance sheet, but that this should be of F 1.2 million based on the current pension scheme as absorbed in the value movements of the property and at January 1, 2004. Of this provision, F 0.7 million therefore results in an equal opposite correction of the should be allocated to VastNed Offices/Industrial, so indirect investment result. VastNed Offices/Industrial that shareholders’ equity decreases by the same amount subscribes to this recognition method, so that when as per January 1, 2004. The impact on the 2004 direct IFRS is applied, in addition to the positive effect on the investment result is marginally positive (F 0.1 million), 2004 direct investment result, an equal negative effect due to a limited release of the provision made as at on the indirect investment result will be taken into January 1, 2004 to the benefit of the 2004 pension costs as account. recognised under the current accounting principles. Consequently, shareholders’ equity will decrease by Letting fees F 0.6 million as at year-end 2004.

Beased on the interpretation of IAS 17 (leasing) as Financial instruments published during 2004, letting fees paid at the conclusion of a new rent contract may be capitalised IAS 32 and IAS 39 concern the valuation of and notes and spread over the term of the new rent contract. to financial instruments. These standards only took However, it would seem still to be allowed, as it is effect on January 1, 2005, but can be applied earlier. under present accounting principles, to charge these VastNed Offices/Industrial does not choose for letting fees directly to the investment result. For earlier application of these standards to 2004. As a reasons of prudence, VastNed Offices/Industrial result, this does not yet impact shareholders’ equity prefers to apply the latter recognition method, as at January 1, 2004, the 2004 direct investment and therefore for the time being assumes that the result or shareholders’ equity as at year-end 2004. currently applied recognition method will be Implementation of these standards as from maintained after implementation of IFRS. January 1, 2005 will have the following effects for VastNed Offices/Industrial: Pensions – under the current valuation principles, commissions

48 Amsterdam –> Zaventem –> Vilvoorde –> Mechelen –> Wommelgem

possibly due on money loans are charged directly to 2004 investment result decreases by the same amount. the investment result. Under IFRS, such loans must be withdrawn at so-called ‘amortised cost’ (the VastNed Offices/Industrial’s share in this effect will nominal amount of the loan as withdrawn minus then be as follows: an increase of shareholders’ written-off handling charges), the handling fees equity as per January 1, 2004 with F 2.3 million, a being written off based on the calculated effective decrease of the 2004 indirect investment result of interest rate. Based on its own internal calculations, F 0.8 million, leading to a F 1.4 million increase in VastNed Offices/Industrial is of the opinion that shareholders’ equity as per year-end 2004. application of this principle does not result in a material change compared to the present valuation Outlook for 2005 principle. – so far, VastNed Offices/Industrial has made only very While the recovery of the economic growth of the limited use of financial interest derivatives. These eurozone at this time is still fragile, the tentative are currently only recognised in the annual accounts economic growth is expected to stabilise in 2005 and as liabilities not included in the annual accounts. In 2006. In view of the currently large supply of offices view of the limited use of interest derivatives so far, and industrial premises in both the Netherlands and the impact of these financial interest derivatives on Belgium, this recovery is not expected in 2005 to result shareholders’ equity at year-end 2004 will be limited in a structural improvement of the offices and should IAS 32 and IAS 39 be applied earlier. VastNed industrial premises market. The fact that the supply Offices/Industrial will, however, not opt for earlier of office space has not increased over the past year, application, so that the impact of this on however, is a positive element, prompting more and shareholders’ equity at year-end 2004 and on the 2004 more parties to indicate that the bottom of the result is nil. downward office cycle of the past years appears to have been reached. Predictions of the time when a Provision for maintenance Intervest Offices structural recovery will come about vary from the second half of 2006 to 2010. In the past, at the acquisition of a property portfolio, VastNed Offices/Industrial anticipates that in 2005, Intervest Offices also took over a provision for too, both occupancy rate and rent levels will continue maintenance and renovation activities from the to be under pressure. For the coming year, therefore, seller. This provision amounted to F 3.9 million as at all efforts will be concentrated on further controlling January 1, 2004. Under IFRS, this provision cannot be vacancy. The changes to the organisation incepted in withdrawn and will therefore be released at the 2004 must bear fruit in 2005. In addition, the sales implementation of IFRS to the benefit of Intervest programme will be aimed at improving the return Offices shareholders’ equity as per January 1, 2004. In risk profile of the portfolio as a whole and thus to 2004 F 1.5 million was charged to this provision, so limit the letting risk of the property portfolio as a that on the implementation of IFRS Intervest Offices’ whole. Also, solutions will be sought for the situation

49 Amsterdam –> Rotterdam –> Houten

that has resulted from the bankruptcy of the developer of the TriNovium project.

Interest is expected to rise in 2005, but will continue to be at a historically relatively low level. Interest expenses will be negatively impacted compared to 2004 due to the fact that as from July 1, 2004 the interest on the TriNovium project is no longer capitalised. This has a negative impact on the direct investment result of approximately F 0.08 per share compared to the 2004 direct investment result per share. Finally, the extraordinary income in 2004 due to the release of the provision for doubtful debtors must be taken into account, which in 2005 will have a negative impact on the direct investment result of F 0.06 per share in comparison to the 2004 direct investment result.

On the basis of the abovementioned developments, and barring exceptional circumstances, including global tensions and the corresponding unpredictable economic consequences, for 2005, partly depending on the number of shareholders opting for stock dividend, on balance a significant decrease of the direct investment result per share is forecast.

Rotterdam, February 22, 2005 The board of management

50 Corporate governance

Introduction annually in a separate chapter of the annual report, and the changes that have taken place and that are In the 2003 annual report, VastNed Offices/Industrial being proposed shall be discussed. already devoted much attention to the topic of corporate governance. Without any obligation, the Deviations from the Code company made a start with the implementation of the Dutch corporate governance code (the Code). In At present VastNed Offices/Industrial deviates from June 2004 Robeco’s IRIS research instituted published the principles and best practice principles as its report ‘corporate governance: Een sprong formulated in the Code on two points. These are vooruit’. In this survey, VastNed Offices/Industrial the following: came in 11th place (equal with VastNed Retail) of the – Appointment of members of the board of Dutch listed companies surveyed, with a score of 8.8 management for a term of four years (II 1.1): out of 10. In addition, it was named as the fastest Explain: all current members of the board of climber in the area of corporate governance management were appointed before the publication compared to the previous year’s survey. The board of of the (draft) Code. All existing employment management is very pleased with this score, and contracts have an indefinite term. considers it as an encouragement in its striving – Limitation of dismissal pay to a maximum of one towards more transparency both in the area of year’s salary (II 2.7): operational affairs and of corporate governance Explain: all current members of the board of structure. management were appointed before the publication of the (draft) Code. When concluding these contracts, The Code has become law in 2004. Partly in this dismissal schemes were agreed which took account context, steps have been taken towards further of the employment duration with previous improvement of the corporate governance structure. employers. These schemes can result in At present, VastNed Offices/Industrial complies with compensation of more than one year’s salary. 111 of the 113 best practice principles of the Code. Please refer to the Dutch corporate governance chccklist included in this annual report. The corporate governance structure shall be explained

51 Corporate governance At present, VastNed Offices/Industrial complies with 111 of the 113 best practice principles of the Code.

Major changes to corporate governance – the placing of certain items on the agenda of the structure in 2004 annual general meeting of shareholders, such as the reserving and dividend policy. Please refer to In the course of 2004 a number of changes were article 20 sub 1 of the articles of association made to the corporate governance structure. The (www.vastned.nl); majority of these were made following decisions – setting a registration date for the exercise of voting taken during the general meeting of shareholders and meeting rights; of April 6, 2004 and were laid down in VastNed – if a serious offer on a business unit or a participation Offices/Industrial’s articles of association. The is published of which the value exceeds the limit changes concerned: stated in article 2:107a of the Dutch civil code, the – reducing the majority and quorum requirements board of management will announce its motivated for decisions to annul the binding character of a position as soon as possible, and; nomination for appointment of a member of the – the right of setting agenda items for minority board of management or supervisory board and/or shareholders, meaning that a shareholder who, a decision to dismiss a member of the board of either jointly or not, holds 1% of the share capital management or supervisory board. This means that in issue, can have items of his preference placed on a member of the board of management or the agenda. supervisory board can be dismissed or suspended by the general meeting based on a decision taken Other changes with an absolute majority, which majority must represent at least one third of the capital in issue. In the context of communication with shareholders If not at least one third was represented, but an and investors in general, as from the publication of absolute majority of votes is cast for suspension or the 2004 semi-annual figures an audio webcast is dismissal, a new meeting is called in which the produced. This offers every interested party the decision can be taken independently of the part of opportunity to follow the meeting or conference the capital represented at the meeting. Please refer call with financial analysts, and to ask questions. to article 14 of the articles of association (www.vastned.nl); Taking the abovementioned changes into account, – the term of (re)appointment of a member of the VastNed Offices/Industrial complies with 111 of the supervisory board is limited to three terms of four 113 best practice principles of the Code. years. In this context is has been decided not to nominate Messrs W. Nijman and F.W. Mulder for reappointment after their current term ends. They will therefore retire in 2006 and 2007 respectively. VastNed Offices/Industrial believes that this satisfies best practice principle III.3.5 of the Code;

52 Mechelen –> Dilbeek –> Eindhoven –> Antwerp –> Meaux –> Amsterdam

Organisational structure VastNed Group VastNed Management

VastNed Offices/Industrial is part of the VastNed VastNed Management has no profit objective and Group. The VastNed Group consists of VastNed has entered into an agreement with VastNed Offices/ Offices/Industrial, VastNed Retail and their Industrial and VastNed Retail for a distribution of respective subsidiaries. Management, as well as asset costs (cost allocation agreement). Costs relating management and property management, are carried directly to the company or the property of the out by VastNed Management. The shares in this company or its subsidiaries are recognised there. company are held by VastNed Offices/Industrial and Other costs that cannot be allocated directly are VastNed Retail. As a result of this joint management borne by VastNed Management and charged on to cost benefits can be realised and synergic knowledge VastNed Offices/Industrial and VastNed Retail based exchange takes place. on actual work (proportionally to the Dutch property portfolio). Legal structure The shares in VastNed Management are held for one- The legal structure of the VastNed Group consists of third by VastNed Offices/Industrial and for two- two publicly listed investment institutions which thirds by VastNed Retail. This proportion originates have the status of investment companies with in the size of the property portfolios at the time variable capital pursuant to article 2:76a of the Dutch when the cost allocation agreement was entered into Civil Code. in January 1996. The agreement has a 10-year term An investment company with variable capital is a and has been extended by a period of five years. The public limited company: cost allocation agreement includes specific change of – which has the exclusive objective of investing its control clauses, meaning that in case of a public offer capital in such a way that the risks are spread, in on VastNed Retail, VastNed Offices/Industrial’s order to allow its shareholders to share in the functioning is not affected, and vice versa. returns; – whose management has the authority pursuant to VastNed Offices/Industrial and the articles of association to issue, acquire and its subsidiaries dispose of shares in its capital; – whose shares, with the exception of shares to which The legal structure of VastNed Offices/Industrial, its the articles of association grant extraordinary rights major subsidiaries and participations is presented regarding authority in the company, are included in below. the price list of a stock exchange and; – whose articles of association stipulate that the VastNed Offices/Industrial company is an investment company with variable VastNed Offices/Industrial is a publicly listed capital. company (Euronext Amsterdam), which has direct

53 Kortenberg –> Mechelen –> The Hague –> Hoofddorp

ownership of the Dutch office portfolio, and which VastNed Offices Belgium acts as a holding company. A number of properties in the Belgian property portfolio are held via VastNed Offices Belgium. VastNed Industrial This company does not have the status of a Bevak. This private limited company holds the Dutch semi- Profits from this company are subject to corporate industrial properties. income tax.

VastProduct Board of management VastNed Offices/Industrial has a 90% interest in VastProduct CV. Due to the fiscally transparent Introduction structure of this limited partnership, the income from this interest is subject to the regime of the VastNed Management is statutory and sole director fiscal investment institution. of VastNed Offices/Industrial. This company is represented by its statutory board of management. Intervest Offices The board of management carries out the daily As per December 31, 2004, VastNed Offices/Industrial management of the company within margins had a 51.3% interest in the Bevak Intervest Offices, agreed with the supervisory board. The board of which is listed on the Brussels stock exchange. One management puts the operational and financial year earlier, this interest amounted to 58.8%. VastNed objectives, the strategy and the margins to be Offices/Industrial has sold Intervest Offices shares via observed to the supervisory board for approval. Euronext Brussels in order to improve its solvency. A Bevak materially has a tax-free status and as such is The statutory board of management, its special comparable to a Dutch fiscal investment institution. projects advisor and the company secretary jointly On behalf of VastNed Offices/Industrial, Mr R.A. van make up the management team. This management Gerrevink and Mr H.K.M. Roovers, in addition to three team as a rule meets every fortnight. The board of independent members, are on the board of management is responsible for having at its disposal management of Intervest Offices. VastNed Offices/ full and correct information. Industrial consolidates this subsidiary fully and recognises the minority interest as group equity. As from January 1, 2004, Intervest Offices carries out its own asset and property management. This means that all employees have an employment contract with Intervest Offices without the intervention of a joint management company. The members of the board of management perform their duties through the intervention of a separate company.

54 Corporate governance The directors of VastNed Management receive for their activities a remuneration of a level and structure that are such that qualified and expert directors can be attracted and retained.

Curricula vitae of the management team members – director Southern Europe VastNed Retail. Education: building and architecture, Technical Reinier A. van Gerrevink (March 3, 1950) University of Eindhoven, real estate, University of Nationality: Dutch Amsterdam Position: Statutory director, CEO Joined the company: July 1, 2002 Huub K.M. Roovers (November 20, 1943) Appointed as CEO: September 1, 2002 Nationality: Dutch Previous positions: various management positions Position: Adviser special projects with: Joined the company: June 1, 1989 – ABN AMRO; Previous positions: – Rodamco and; – various management positions with Blauwhoed; – Robeco (Weiss Peck & Greer). – various management positions with Rodamco and; Other positions: member of the supervisory board of – CIO of VastNed Offices/Industrial and VastNed Retail. the foundation Stadsherstel Rotterdam Education: Dutch law, University of Utrecht Arnaud G.H. du Pont (May 25, 1966) Nationality: Dutch Tom M. de Witte, (September 7, 1966) Position: Company secretary and investor relations Nationality: Dutch officer Position: Statutory director, CFO Joined the company: January 1, 2000 Joined the company: June 16, 2003 Previous positions: Appointed as CFO: June 16, 2003 – tax adviser BDO and; Previous positions: auditor with Deloitte Accountants – tax adviser PricewaterhouseCoopers (formerly Arthur Andersen) Education: fiscal law, Erasmus University Rotterdam. Education: business economics, Dutch law and accountancy, Erasmus University Rotterdam All members of the board of management have reported their major other positions. None are J. (Hans) Pars (August 16, 1962) members of the supervisory board of any other Nationality: Dutch publicly listed company. Acceptance of such a Position: Statutory director, CIO position would require approval from the Joined the company: June 1, 2003 supervisory board. Appointed as CIO: July 1, 2004 Previous positions: various management positions Remuneration of the board of management with: – Zadelvast Beheer; The directors of VastNed Management receive for – Stichting Pensioenfonds Hoogovens; their activities a remuneration of a level and structure – Rodamco Europe and; that are such that qualified and expert directors can be

55 Hoofddorp

attracted and retained. The fixed salary contains a Bonus related to the investment result pension component. On the remainder of the fixed The bonus related to the investment result provides salary no pension rights are built up. The general for a bonus of F 2,500 (F 5,000 for the CEO) for every meeting of shareholders of April 6, 2004 has approved 0.1 percentage point increase of the direct the remuneration policy proposed by the supervisory investment result per share above the average board and drawn up by the remuneration committee. weighted inflation in the countries in which This policy also contains regulations for the build-up VastNed Offices/Industrial invests. This bonus has a of the variable part of the remuneration. In the build- maximum of F 37,500 (CEO F 75,000). This bonus is up of the variable part of the remuneration a link is awarded conditionally in the form of VastNed sought between performance and short-term and Offices/Industrial shares. The contingent condition long-term objectives. These objectives will be of this bonus is cancelled if two years after the award determined in advance; they are measurable and the of the bonus the direct investment result per share is directors have influence on their realisation. less than at the time of the award of the shares. After two years the board member is entitled to sell 50% of Bonus structure statutory directors the shares awarded to him. The proceeds can be used to pay the income tax due as per that date on the Next to the fixed annual salary, a bonus can be awarding of the shares becoming unconditional. The awarded to a maximum of F 100,000 for each member other shares must be held for an additional period of of the statutory direction and F 200,000 for the at least three years. With this system VastNed chairman of the board (CEO). These sums apply to Offices/Industrial acts in accordance with best the activities on behalf of VastNed Offices/Industrial practice principle II.2.3. For further details, please and VastNed Retail jointly. The bonus consists of a refer to the remuneration report on www.vastned.nl. bonus related to the investment result and a personal bonus.

Remuneration 2004 annualised Years of service Pension Non-pension Personal component component bonus –––––––––––––––– –––––––––––––––– –––––––––––––––– –––––––––––––––– R.A. van Gerrevink 3 318,000 106,000 35,000 T.M. de Witte 2 135,000 25,000 20,000 J. Pars 2 175,000 25,000 17,500 –––––––––––––––– –––––––––––––––– –––––––––––––––– Total 628,000 156,000 72,500

56 ’s- Hertogenbosch –> The Hague –> IJsselstein

Personal bonus These arrangements were stipulated at the The personal bonus provides for a maximum sum conclusion of the employment contract. Mr Van of F 25,000 (F 50,000 for the CEO). This bonus is Gerrevink was appointed for an indefinite period. awarded based on an assessment by the supervisory Mr Van Gerrevink’s retirement age is 63. His pension board of VastNed Offices/Industrial of the personal is determined in accordance with the so-called ‘final functioning of the director concerned. This pay formula’, with the principle that the pension assessment will be based on the degree to which the will amount to at least F 160,000, price-index linked, director concerned has realised qualitative and/or at the age of 63, related to the pension component at quantitative objectives defined previously. This the time of the conclusion of the employment bonus is paid out in cash. contract of F 300,000. Should the basic salary be raised, the pension will be raised accordingly. For Overview remuneration this arrangement there is no employee’s Below, an overview is presented of the annual contribution. remuneration of the statutory direction of VastNed Management. In accordance with the advice as Tom M. de Witte presented by the remuneration committee, the Mr De Witte is entitled to a fixed annual salary of supervisory board has set the abovementioned F 160,000 (level 2004), of which the pension personal bonuses for the direction for the 2004 component is F 135,000. Mr De Witte joined VastNed financial year. The annual accounts include an Management and was appointed as CFO on June 16, overview of the remuneration as recognised in the 2003. Mr De Witte’s retirement age is 65. His pension result. is premium free. Mr De Witte’s pension is determined in accordance with the so-called ‘final Summary of employment contracts of the board pay formula’. In case of involuntary dismissal, of management Mr De Witte is entitled to a compensation to be determined in accordance with the Reinier A. Van Gerrevink ‘kantonrechtersformule’ system, taking account of Mr Van Gerrevink is entitled to a fixed annual salary of his 12 years of service at the time of appointment. F 424,000 (level 2004), of which the pension component These arrangements were stipulated at the is F 318,000. Mr Van Gerrevink joined VastNed conclusion of the employment contract. If in case of a Management on July 1, 2002. In case of involuntary merger or take-over of one of the VastNed funds on dismissal by the general meeting of shareholders of the initiative of VastNed Management, the VastNed Management, Mr Van Gerrevink is entitled to employment contract is terminated, an indemnity a compensation of F 600,000. If the employment fee of 15 months’ salary will be paid. contract is terminated due to a merger or take-over, a Mr De Witte was appointed for an indefinite period. compensation of F 800,000 will be paid.

57 AndereThe supervisory foto board of VastNed Offices/Industrial consists of the same members as the supervisory board of VastNed Retail and VastNed Management. They are a personal union. Rotterdam, 1 Max Euwelaan

Rotterdam

Hans Pars Share ownership Mr Pars was appointed as a statutory director and CIO on July 1, 2004. He was already employed by Overview of share ownership of the members of the board VastNed Management as director Southern Europe of management since June 1, 2003. Mr Pars’ employment contract has R.A. van Gerrevink a basic salary of F 200,000 (level 2004), with a pension Number of shares as at January 1, 2004 3,339 component of F 175,000. His retirement age is 65. Movements – During a period of 10 years after his appointment, –––––––––––––––– VastNed management will annually pay an Number of shares as at December 31, 2004 3,339 additional pension contribution of F 7,000 over and above the normal contribution. The pension is Mr Van Gerrevink has acquired all shares at his own premium free. cost. VastNed Offices/Industrial has not provided any guarantees with regard to these shares. Mr Pars’ pension is determined in accordance with The above shareholding has been reported to the the so-called ‘final pay formula’. In case of Autoriteit Financiële Markten and can be referred to involuntary dismissal, Mr Pars is entitled to a fee to on www.afm.nl. The other directors did not hold any be determined in accordance with the shares in VastNed Offices/Industrial during 2004. ‘kantonrechtersformule’ system, taking account of his 10 years of service at the time of appointment. VastNed Offices/Industrial has drawn up regulations This arrangement was stipulated at the conclusion as meant in Article 46d of the Netherlands Act on the of the employment contract. If in case of a merger or Supervision of the Securities Trade 1995. These take-over of one of the VastNed funds on the regulations determine during which periods the initiative of VastNed Management the employment members of the supervisory board, members of the contract is terminated within two years of his board of management and employees of VastNed joining the company, an indemnity fee of 15 months’ Management can trade shares of VastNed Offices/ salary will be paid. Mr Pars was appointed for an Industrial (open periods). The closed periods, in indefinite period. which trade is not permitted, concern the periods preceding the publication of the financial reports. The maximum dismissal pay can, in view of the The full text can be viewed on www.vastned.nl. above, amount to more than one year’s salary. VastNed Management will hold to the employment VastNed Offices/Industrial has also drawn up rules contracts agreed with the members of the board of regulating the trade in Dutch listed shares. management and the dismissal schemes included therein.

60 The Dutch team headed by Raymond Beaujean (third from right) The Belgian team headed by Gert Cowé (second from left)

Other information Loans to members of the board of management VastNed Offices/Industrial has not provided loans Transactions of members of the board of directors to the members of its management board, nor have VastNed Offices/Industrial has not entered into any the members provided loans to VastNed Offices/ transactions with any of the members of the board of Industrial. management other than those that result from their employment contract. Country boards of management

Conflicting interests of members of the board of The Netherlands management In addition to the management team, which from None of the members of the board of management the Netherlands exerts central control of and has entered into competition with VastNed Offices/ coordination for the various country portfolios, the Industrial in any way. No donations by VastNed Dutch team of property specialists is directly headed Offices/Industrial to members of the board of by Mr Raymond Beaujean. The team consists of 10 management or their family members have taken employees. These activities are performed from the place, no members of the board of management has Rotterdam head office. provided unjustified benefits to third parties nor provided business opportunities from VastNed Belgium Offices/Industrial to either himself or his family. The Belgian activities, subsumed under Intervest In the context of the corporate governance pursued Offices in Antwerp, are under daily management by by VastNed Offices/Industrial, the directors declare Mr Gert Cowé (CEO) and Mr Jean-Paul Sols (CIO). to operate in conformity with the Code in all The Belgian team consists of 13 employees. Mr Van abovementioned cases. Gerrevink and Mr Roovers, in addition to three independent directors, are on the board of No (potential) conflicts of interest have occurred. management of Intervest Offices. The activities are If such should occur, the respective member of the performed from the Antwerp office. board of management reports it to the chairman of the supervisory board and will refrain from Supervisory board participation in the discussion of and decision on the matter in which the member has a conflict of Introduction interest. In addition, transactions with a conflict of interest will be agreed under conditions that are The supervisory board of VastNed Offices/Industrial customary in the industry. consists of the same members as the supervisory board of VastNed Retail and VastNed Management.

61 Houten –> Puurs –> Amersfoort –> Heerlen

They are a personal union. The supervisory board the board of directors of VastNed Management supervises the daily policy of the board of (henceforth: board), the proposal for the adoption by management of VastNed Offices/Industrial and the general meeting of shareholders of VastNed provides the board with advice. In the fulfilment of Offices/Industrial of the remuneration policy for its task, the supervisory board considers the interests members of the board, the determination of the of VastNed Offices/Industrial. In that, the board remuneration (taking account of the stated weighs all relevant interests of all stakeholders in remuneration policy) and the contractual VastNed Offices/Industrial (including the employment conditions of the members of the shareholders). The supervisory board carries board; responsibility for the quality of its own functioning. – the selection of the members of the supervisory VastNed Offices/Industrial provides the supervisory board and the proposal regarding the remuneration board with the necessary means for the execution of of its members to be adopted by the general meeting; its task. In case his functioning should be – the evaluation and assessment of the functioning of inadequate, structural incompatibility of interests the board of management and the supervisory board and other problems, a supervisory board member as well as their individual members (including an will offer his resignation. assessment of the profile of the supervisory board The tasks of the supervisory board include: and the introduction, education and training – supervision and monitoring of, and advising the programme); board of management on: – the handling of and decisions regarding reported – the realisation of the objectives of the company, potential conflicts of interest between VastNed – the strategy and the risks associated with the Offices/Industrial on the one hand and members of business operations, the board of management, the external auditor and – the set-up and functioning of the internal risk the shareholder(s) on the other hand and; management and control systems, – the handling of and decisions regarding reported – the financial reporting process, and supposed irregularities that concern the functioning – compliance with legislation and regulations; of members of the board of management. – the publication of, compliance with and upholding of the corporate governance structure of the The supervisory board will annually draw up and company; publish a report after the conclusion of the financial – the approval of the annual accounts and the approval year on the functioning and the activities of the of the annual budget and important investments supervisory board and its committees in that and divestments of the company; financial year. For a full overview of the tasks of the – the selection and nomination of the external auditor supervisory board, reference is made to the of the company; regulations drawn up by the supervisory board, – the selection of the board of management, at present which can be viewed on www.vastned.nl. VastNed Management, including the members of

62 Supervisory board: F.W. Mulder, D. van den Bos, R.K. Jacobson, P.M. Verboom, W. Nijman and N.J. Westdijk

Chairman of the supervisory board Audit committee

The chairman of the supervisory board has a Tasks coordinating task. The chairman ensures compliance The audit committee is charged with supervising the with the requirements of best practice principle III.4.1 financial affairs of VastNed Offices/Industrial in the of the Code. He is supported in this by the company broadest sense of the word. For a complete overview secretary. The company secretary is appointed and of the tasks of the audit committee, you are referred dismissed by the board of management, either on the to www.vastned.nl. initiative of the supervisory board or not, subject to supervisory board approval. The chairman is neither Procedural tasks a former member of the board of management nor a Four times a year the audit committee draws up former employee of VastNed Offices/Industrial or minutes of its deliberations and findings. At least one of its subsidiaries. once a year the committee will report on the developments in the relation with the external Profile of the supervisory board auditor. Once every four years a thorough assessment is made of the functioning of the external The profile of the supervisory board of VastNed auditor. The external auditor receives the financial Offices/Industrial, VastNed Retail and VastNed information on which the quarterly and semi- Management is part of the regulations of the annual figures are based and is given the supervisory board, and can be viewed on opportunity to respond to it. The audit committee is www.vastned.nl. the first point of contact for the external auditor when irregularities are observed. The committee Composition of the supervisory board decides whether members of the board of management and the external auditor are present at – W. Nijman, chairman its meetings. The committee meets at least once a – N.J. Westdijk, vice-chairman year with the external auditor in the absence of the – D. van den Bos members of the board of management. – R.K. Jacobson – F.W. Mulder Composition – P.M. Verboom The audit committee consists of three independent members. Mr Van den Bos is chairman. Mr Mulder The curricula vitae of the supervisory board and Mr Nijman are members of the audit committee. members and the retirement roster are included in Mr Nijman can be characterised as a financial expert. the report of the supervisory board.

63 Amsterdam –> Woerden –> Leiden –> Schelle –> Maastricht

Remuneration committee Tasks and composition The tasks of the selection and appointment Tasks committee include drawing up selection and The remuneration committee is charged with appointment criteria, the periodical assessment of advising the supervisory board on the remuneration the size and composition of the supervisory board policy in the broadest sense of the word. For a and the board of management as well as the complete overview of the tasks of the remuneration functioning of the members of the supervisory board committee, you are referred to www.vastned.nl. Its and the board of management, supervising the board tasks include making a proposal to the supervisory of management concerning the appointment of board regarding the remuneration policy to be senior management and taking concrete decisions pursued for members of the management board to with regard to selection and appointment. be adopted by the general meeting of shareholders, The supervisory board receives reports of the and the same for individual members of the board meetings of the three committees. of management. Remuneration of the members of the supervisory Procedural tasks board In addition, the remuneration committee draws up the remuneration report to be adopted by the The members of the supervisory board receive a fee supervisory board. The remuneration report of the of F 24,000 annually. The chairman receives a fee of supervisory board is placed on the website of the F 30,000 annually. In view of the labour intensive company and contains information as meant in the character, members of the audit committee receive best practice principles II.2.10 and II.2.12 of the Code. an additional remuneration of F 3,000 annually. This additional remuneration does not apply to Composition Mr Nijman, chairman of the supervisory board. The remuneration committee consists of three His remuneration is limited to F 30,000 annually. independent members. None of them are members All members of the supervisory board are also of the board of management of another Dutch members of the supervisory boards of VastNed publicly listed company. Mr Westdijk is chairman. Management and VastNed Retail. The fee for their Mr Mulder and Mr Nijman are members. membership of the supervisory board also covers the membership of the supervisory board of VastNed Selection and appointment committee Retail. For the membership of the supervisory board of VastNed Management, no separate compensation VastNed Offices/Industrial’s selection and is paid. The members do not receive further appointment committee has the same composition compensation in addition to those mentioned, other as the supervisory board. than a fee for costs as incurred.

64 Corporate governance VastNed Offices/Industrial has not granted loans to any member of the supervisory board, nor has any member of the supervisory board supplied loans to VastNed Offices/Industrial.

Share ownership which the member has a conflicting interest. In addition, transactions with a conflicting interest will Overview of share ownership of the supervisory board be agreed under the conditions as customary in the W. Nijman industry. Number of shares as per January 1, 2004 1,490 Decisions on entering into transactions with major Movements – shareholders, i.e. shareholders holding more than –––––––––––––––– 10% of the share capital in issue must be approved by Number of shares as per December 31, 2004 1,490 the supervisory board and shall be entered into under the conditions as customary in the industry. Statement share ownership VastNed Offices/Industrial at present does not have a Members of the supervisory board hold shares in delegated supervisory board member. When VastNed Offices/Industrial only for long-term applicable, the supervisory board shall confirm the investment; the shares have been purchased at their best practice principles III.6.6 and III.6.7. own cost. When purchasing and selling shares, they shall act in accordance with the regulations adopted Loans to members of the supervisory board by the company as meant in article 46d the Netherlands Act on the Supervision of the Securities VastNed Offices/Industrial has not granted loans to Trade 1995. Transactions are also reported to the any member of the supervisory board, nor has any Autoriteit Financiële Markten (www.afm.nl) in member of the supervisory board supplied loans to accordance with the regulations drawn up to that VastNed Offices/Industrial. end. VastNed Offices/Industrial has also drawn up regulations to regulate trading in publicly listed Independence securities. Transactions are reported quarterly to the compliance officer of VastNed Offices/Industrial. None of the members of the supervisory board is or has been a director or employee of VastNed Offices/ Conflicting interests of members of the supervisory Industrial or of any company associated with it. board Neither has any member received fees other than for his membership of the supervisory board, nor has A member of the supervisory board reports a any member had a major business relationship with material conflicting interest to the chairman of the VastNed Offices/Industrial or any company supervisory board. In the context of the corporate associated with it during one year preceding his governance pursued by VastNed Offices/Industrial, appointment. None of the directors is a shareholder, the members of the supervisory board state that they director or supervisory board member of a company shall act in accordance with the Code and the that holds at least 10% of the shares in VastNed respective member shall refrain from participation Offices/Industrial. The above also applies to the in the discussion of and decisions of the matter in direct family members of the respective member.

65 Corporate governance The external auditor will attend the general meeting of shareholders and can be asked to comment on the correctness of the annual accounts.

A delegated member of the supervisory board remains nl. In these announcements, inter alia the ultimate a member of the supervisory board, and a member of registration date is given for exercising voting rights the supervisory board who takes on directory duties, on the share. The minutes of the general meeting of will step back from the supervisory board. shareholders will be made available at the latest three months after the meeting pursuant to best Stichting Prioriteit VastNed Offices/Industrial practice principles IV.3.8. and protection measures Financial reporting and the external auditor The Stichting Prioriteit VastNed Offices/Industrial holds the priority shares and has specific authority Financial reports are drawn up in accordance with regarding the appointment of members of the internal procedures. The board of management is supervisory board and the board of management, as responsible for the correctness, completeness and well as regarding extraordinary decisions such as timeliness of the financial reports. The external changes to the articles of association, the winding up auditor is also involved in the content and or liquidation of VastNed Offices/Industrial. On the publication of the financial reports other than the board of the Stichting are the members of the annual accounts. The external auditor will attend supervisory board and the board of management of the general meeting of shareholders and can be asked VastNed Management. to comment on the correctness of the annual accounts. The external auditor will in any case General meeting of shareholders and attend the meetings of the supervisory board and of voting rights the audit committee in which the annual accounts are discussed. At the general meeting of shareholders in VastNed Offices/Industrial, the state of affairs is commented Code of conduct and whistleblower’s code upon and the general meeting is asked for approval of subjects determined in the law and in the articles VastNed Offices/Industrial has drawn up a code of of association. The board of management and the conduct which applies to all employees including supervisory board supply the general meeting of the board of management. A whistleblower’s code shareholders with all information required unless a has also been implemented, which allows employees material interest opposes that. and members of the board to report abuses within VastNed Offices/Industrial will announce the the company without fear for their own meeting by placing an announcement in the employment. The texts of these regulations have Officiële Prijscourant of Euronext and at least one been published on www.vastned.nl. Dutch nationwide daily newspaper. Agenda and shareholders’ circular are available at the offices of Rotterdam, February 22, 2005 VastNed Offices/Industrial and from www.vastned. The board of management

66 Closing prices VastNed Offices/Industrial 2004 (in €)

��

The share and stock exchange listing

Listing on Euronext Share price

The VastNed Offices/Industrial share is listed on The share price during 2004 moved below net asset Euronext Amsterdam. Daily average turnover in 2003 value (discount). During 2004 the share price was 32,404 shares. In 2004 this increased to 38,378 gradually increased. However, it remained below the shares daily on average. level of shareholders’ equity per share, including the investment result, which fell from F 26.94 to F 24.20 VastNed Offices/Industrial makes use of various as at year-end 2004. On balance, the discount fell liquidity providers. These guarantee the continuous from 23.9% as at December 31, 2003 to 5.8% as at liquidity of the share. In 2004 Kempen & Co and December 31, 2004 (expressed as a percentage of ABN AMRO acted as liquidity providers for VastNed shareholders’ equity per share at year-end 2004). Offices/Industrial, with Kempen & Co acting as paid This increased interest in property funds on the liquidity provider. stock exchange among many other European property funds even led to a premium. Return Market capitalisation based on the share price as at VastNed Offices/Industrial realised the following December 31, 2004 amounted to F 439.4 million return (expressed in F and as a percentage of the 2003 compared to F 387.3 million at year-end 2003. closing price of F 20.50). The lowest share price of F 18.80 was listed on May 21, 2004, while the highest share price of F 23.25 Closing price 2004 22.80 was listed on April 6, 2004. Closing price 2003 20.50 As far as VastNed Offices/Industrial is aware, no –––––––––––––––– shareholders can be characterised as major investors Movement share price 2.30 11.2% (> 25%). Dividend 2.80 13.7% –––––––––––––––– –––––––––––––––– Investor relations Total return 5.10 24.9% VastNed Offices/Industrial pursues an active investor relations policy, which brings the fund to the attention of institutional and private investors in various ways. In 2004 in the context of roadshows, discussions were held with a large number of

67 The share and stock exchange listing

international institutional investors, both domestically and abroad. Price sensitive information is always divulged to the general public by way of press releases, and placed on the company’s website (www.vastned.nl). Published information is commented upon in contacts with the press, with individual investors and analysts.

At the publication of annual and semi-annual figures, VastNed Offices/Industrial holds an analysts’ meeting. At the publication of the first quarter results and nine months’ results, a conference call is used to comment on these results to analysts. Both the analysts’ meetings and the conference calls can be followed via the webcast on www.vastned.nl.

Briefly before the publication of the financial information, no analysts’ meetings, presentations to or direct meetings with investors will take place. Analysts’ reports are not evaluated in advance nor corrected other than for factual correctness. VastNed Offices/Industrial does not provide fees to any party for the drawing up of analysts’ reports.

68 Annual accounts 2004 Consolidated balance sheet as at December 31 Before profit appropriation (x € 1,000.-)

Note 2004 2003 ______Assets

Investments

Property in operation 1 1,112,282 1,180,809 Property not in operation 2 53,271 81,774 ______1,165,553 1,262,583

Receivables 3 18,715 42,597

Other assets 15,865 1,867 ______Total assets 1,200,133 1,307,047

Liabilities

Shareholders’ equity

Capital paid-up and called 5 96,370 94,470 Share premium reserve 6 298,385 300,328 Other reserve 7 68,571 97,041 Investment result 8 3,115 17,121 ______Total shareholders’ equity 466,441 508,960

Minority interests 134,852 122,292 ______Group equity 601,293 631,252

Provisions 10 1,528 2,860

Long-term liabilities 11 387,868 420,149

Short-term liabilities 12 209,444 252,786 ______Total liabilities 1,200,133 1,307,047

70 Consolidated profit and loss account (x € 1,000.-)

Note 2004 2003 ______Investment income

Gross rental income 1 93,984 108,159 Operating expenses 1 (11,908) (15,134) ______Net rental income 82,076 93,025

Value movements

Realised value movements 2 4,636 1,953 Unrealised value movements 2 (51,349) (36,547) ______Total value movements (46,713) (34,594)

Total investment income 35,363 58,431

Expenditure

Interest 3 (22,826) (24,580) General expenses 4 (5,649) (6,498) ______(28,475) (31,078)

Investment result before tax 6,888 27,353

Tax on income 5 (1,096) (1,615) ______Investment result after tax 5,792 25,738

Minority interests (2,677) (8,617) ______Investment result 3,115 17,121

71 Direct and indirect investment result (x € 1,000.-)

2004 2003 ______Direct investment result

Investment income

Gross rental income 93,984 108,159 Operating expenses (11,908) (15,134) ______Net rental income 82,076 93,025

Expenditure

Interest (22,826) (24,580) General expenses (5,649) (6,498) ______(28,475) (31,078)

Direct investment result before tax 53,601 61,947

Tax on income (796) (1,088) ______Direct investment result after tax 52,805 60,859

Minority interests (12,035) (12,270) ______Direct investment result 40,770 48,589

Indirect investment result

Realised value movements 4,398 1,953 Unrealised value movements (41,753) (32,894) Movements deferred taxes (300) (527) ______Indirect investment result (37,655) (31,468)

Investment result 3,115 17,121

72 Movements in shareholders’ equity (x € 1,000.-)

2004 2003 ______

Shareholders’ equity as at January 1 508,960 540,643

Direct investment result 40,770 48,589

Indirect investment result

Realised value movements 4,398 1,953 Unrealised value movements (41,753) (32,894) Movements deferred taxes (300) (527) ______(37,655) (31,468)

Dividend paid (45,591) (48,757)

Other movements (43) (47) ______Shareholders’ equity as at December 31 466,441 508,960

73 Consolidated cash flow statement (x € 1,000.-)

2004 2003 ______Cash flow from operating activities

Direct investment result 40,770 48,589

Movement in receivables 4,502 13,503 Movement in short-term liabilities (2,442) (785) Movement in provisions (1,332) (775) Other movements in the other reserve 9,296 5,577 ______Cash flow from operating activities 50,794 66,109

Cash flow from investment activities

Property acquisitions and investments in existing properties (28,713) (58,331) Property disposals 99,066 139,823 ______Cash flow from property 70,353 81,492 Movements in minority interests 12,560 (6,554) ______Cash flow from investment activities 82,913 74,938

Cash flow from financing activities

Costs of stock dividend (43) (47)

Dividend paid (45,591) (48,757)

Long-term borrowings drawn down – 52,000 Long-term borrowings redeemed (34,157) (32,114) ______(34,157) 19,886 ______Cash flow from financing activities (79,791) (28,918)

Net cash flow 53,916 112,129

Payable to cash and bank as at January 1 (210,314) (322,443) Payable to cash and bank as at December 31 (156,398) (210,314) ______Movement in cash and bank balances 53,916 112,129

74 Notes to the consolidated annual accounts (x € 1,000.-)

General

Licence pursuant to the Netherlands Act on the Supervision of Investment Institutions

The licence as referred to in Article 5, subsection 1(a) of the Netherlands Act on the Supervision of Investment Institutions was granted to the company on October 25, 1991.

Fiscal status

VastNed Offices/Industrial N.V. has the fiscal status of an investment institution as referred to in Section 28 of the Netherlands Corporate Income Tax Act 1969. This implies that conditional on compliance with specific conditions, the company is exempted from the obligation to pay corporate income tax. These conditions mainly concern the composition of the company’s assets and the distribution of the fiscal result in the form of a cash dividend. Some participating interests do not have the fiscal status of investment institutions.

Principles of consolidation

Consolidated are all the participations in which the company, either alone or together with subsidiaries, has a controlling interest. This means that in the case of integral consolidation the part of the equity and the result due to third parties is classified under ‘Minority interests’.

Adjustment of the principles for the valuation and determination of assets and liabilities and the determination of the result

In the context of the adjustments of the Guideline 615 Investment Institutions of the Annual Reporting Council that became definitive at the end of 2003, as from the 2004 financial year both realised and unrealised value movements must be recognised in the profit and loss account. The same applies to the movements in the provision for deferred taxes and the costs of asset management. As from the 2004 financial year, these latter costs are no longer charged to the indirect investment result, but are part of the direct investment result. This adjustment of the principles for the determination of the result do not lead to a change in shareholders’ equity, but only to an adjustment of the presentation of the profit and loss account. The comparative figures have been adjusted accordingly. Due to the abovementioned adjustments of the Guideline, the direct and indirect investment result can no longer be directly read from the profit and loss account as prescribed by the Annual Reporting Council. However, in view of the importance attached to this distinction, VastNed Offices/Industrial will in the future continue to separate the total investment result as included in the profit and loss account into the direct and indirect result as a supplement to the prescribed model.

75 Notes to the consolidated annual accounts

Principles for the valuation and determination of assets and liabilities

General

Unless indicated otherwise, all assets and liabilities have been stated at nominal value, while all amounts are in thousands of euros.

Investments

Property in operation The valuation of the property in operation is at market value excluding sales-related costs. Market value is taken to mean the value realised in a private sale of the property concerned in a fully let state.

Factors taken into consideration when determining a property’s market value include the differences between market and contractual rent, operating expenses, vacancy, maintenance status and future developments. The market value is appraised annually by independent chartered property surveyors. In order that the best possible match is made with market value throughout the year, half the property portfolio is appraised as at June 30 and the remainder as at December 31. The former portion of the portfolio is not adjusted as at December 31, unless specific conditions prevail warranting premature adjustment on the basis of internal appraisals.

Movements in value compared with the appraisal as at the year-end of the previous financial year are recognised under ‘Unrealised value movements’ in the profit and loss account, taking into account investments and acquisitions (including acquisition costs) during the year under review. Results realised on the disposal of properties compared with these properties’ most recent appraisal value are recognised under ‘Realised value movements’ in the profit and loss account.

Property not in operation The valuation of property not in operation is effected at the lower of cost or estimated market value. The cost price includes costs for work contracted but not yet performed and capitalised interest. Estimated negative discrepancies at such time are recognised under ‘Unrealised value movements’ in the profit and loss account. Property not in operation is transferred to the item ‘Property in operation’ with effect from the date on which such properties are handed over.

Receivables

Receivables are stated at nominal value less a provision for bad debts.

Other assets

Cash at bank and in hand This item concerns cash at banks and in hand including deposits, call money and bank account credit balances.

76 Notes to the consolidated annual accounts

Shareholders’ equity

Share premium reserve Capital tax payable on issue of shares and other issue-related costs are deducted from the share premium reserve. Allowance is made in the issue price of shares for the estimated profit from operations in the current financial year until the issue date and for the appreciation in value of the property calculated up to the issue date. The profit component for the financial year included in the issue price and the remuneration for the share in value appreciation are both taken into the share premium reserve.

Provision for deferred tax liabilities

The provision for deferred tax liabilities is included for the net present value of the potential liabilities for the payment of tax resulting from differences between fiscal and commercial valuations. Where possible, offsettable losses are taken into account.

Accounting principles for the determination of the result

Investment income

Gross rental income Gross rental income relates to rents charged to tenants during the year under review.

Operating expenses Operating expenses include all costs relating directly to the operation of properties, such as maintenance costs, costs of property management, insurance costs and property tax.

Expenditure

Interest Interest relates to the interest on borrowings and debts attributable to the year under review less capitalised interest. Unless agreed otherwise, the interest rate for capitalised interest is the prevailing average interest rate for short-term loans.

General expenses General expenses include inter alia personnel costs, housing costs, publicity costs and costs of consultants. Costs relating to internal commercial, technical and administrative property management are taken into operating expenses.

Tax on income

This concerns taxes on the profit of the companies that are not fiscal investment institutions.

77 Notes to the consolidated annual accounts

Direct investment result

The direct investment result comprises of net rental income less interest, general expenses, tax on income due on the period under review, less the share of these income and expenses due to third parties.

Indirect investment result

The indirect investment result comprises of realised and unrealised movements in the value of the investments, movements in deferred taxes, less the share of these movements due to third parties.

Cash flow statement

The cash flow statement has been prepared using the indirect method. The funds included in the statement consist of cash and the short-term portion of amounts payable to banks. Interest income and expenditure have been stated under cash flow from operating activities. Dividend expenditure is stated under cash flow from financing activities.

78 Notes to the consolidated annual accounts

Notes to the consolidated balance sheet

Investments 2004 2003 ______1 Property in operation Position as at January 1 1,180,809 1,255,532 Acquisitions 18,932 40,021 Investment in existing properties 8,109 1,360 Taken into operation 19,267 6,713 Transferred to property not in operation – (14,500) Disposals (73,788) (69,319) ______1,153,329 1,219,807 Value movements (41,047) (38,998) ______Position as at December 31 1,112,282 1,180,809

Analysis by country Netherlands 563,775 598,777 Belgium 546,147 553,912 France 2,360 28,120 ______1,112,282 1,180,809

Specific portions of the property portfolio serve as security for the loans contracted. Reference is made to the property overview ‘Property portfolio 2004’ included elsewhere in this annual report with respect to details of properties.

2004 2003 ______2 Property not in operation Position as at January 1 81,774 67,531 Acquisitions and investments 2,566 7,354 Transferred from property in operation – 14,500 ______84,340 89,385 Taken into operation (19,267) (6,713) Disposals (1,500) (898) Value movements (10,302) – ______Position as at December 31 53,271 81,774

Analysis by country Netherlands 47,521 73,440 Belgium 5,750 8,334 ______53,271 81,774

79 Notes to the consolidated annual accounts

3 Receivables 2004 2003 ______Accounts receivable 2,303 3,332 Taxes 357 1,697 To be received from disposals 6,214 25,594 Other receivables and prepayments 9,841 11,974 ______18,715 42,597

The item ‘Receivables’ includes items having a term in excess of one year with a total of € 3.9 million (2003: € 4.2 million).

Shareholders’ equity

4 Authorised share capital The authorised share capital totals € 400.0 million, and is divided into 79,999,900 ordinary shares with a nominal value of € 5.- and 100 priority shares of € 5.-. For an explanation of the rights vested in priority shares, reference is made to ‘Other information’ as given elsewhere in this annual report.

5 Capital paid-up and called 2004 2003 ______Number Amount Number Amount ______Position as at January 1 18,894,120 94,470 18,437,641 92,188 Stock dividend 379,884 1,900 456,479 2,282 ______Position as at December 31 19,274,004 96,370 18,894,120 94,470

The number of ordinary shares and priority shares in issue as at December 31, 2004 totalled 19,273,904 and 100 respectively.

6 Share premium reserve 2004 2003 ______Position as at January 1 300,328 302,657 Stock dividend (1,900) (2,282) Costs of stock dividend (43) (47) ______Position as at December 31 298,385 300,328

An amount of € 289.0 million of the share premium reserve as at December 31, 2004 has been granted fiscal recognition.

80 Notes to the consolidated annual accounts

7 Other reserve 2004 2003 ______Position as at January 1 97,041 131,021 Addition relating to stock dividend 2,998 3,813 Indirect investment result previous financial year (31,468) (37,793) ______Position as at December 31 68,571 97,041

8 Investment result 2004 2003 ______Position as at January 1 17,121 14,777 Profit appropriation: – Dividend paid (45,591) (48,757) – Indirect investment result previous financial year 31,468 37,793 – Addition to other reserve relating to stock dividend (2,998) (3,813) Direct investment result 40,770 48,589 Indirect investment result (37,655) (31,468) ______Position as at December 31 3,115 17,121

9 Net asset value per share 2004 2003 2002 ______Number of ordinary shares in issue as at December 31 19,273,904 18,894,020 18,437,541 Shareholders’ equity (before profit appropriation) as at December 31 466,441 508,960 540,643 Shareholders’ equity per ordinary share (before profit appropriation) as at December 31 (in €) 24.20 26.94 29.32

10 Provisions

This item concerns provisions for deferred tax liabilities. The provisions amount to € 3.1 million (2003: € 5.0 million) nominally, and may largely be characterised as long-term.

81 Notes to the consolidated annual accounts

11 Long-term liabilities

Long-term liabilities are made up entirely of loans drawn down and mortgage loans with terms ranging from 1 to 17 years and bearing interest at percentages from 2.769 to 8.250. Of the residual principal € 2.3 million (2003: € 277.1 million) has a remaining term in excess of five years. Mortgage rights have been granted on a number of properties. A positive/negative mortgage covenant has been issued in respect of the mortgage loans. As at December 31, 2004, 8.5% of the loans have a variable interest rate and 91.5% of the loans have a fixed interest rate. The outstanding loans with a fixed interest rate bear interest at an average of 5.14 % (2003: 5.18%) as at December 31, 2004. The average interest rate is calculated as the weighted average interest rate on the residual principals with a term of more than one year until the next interest rate revision date.

Movements in long-term liabilities were as follows during the year under review:

2004 2003 ______Position as at January 1 420,149 400,263 Short-term portion as at January 1 5,840 6,747 ______425,989 407,010 Drawn down – 52,000 Redemptions (34,157) (33,021) ______Residual principal 391,832 425,989

Less: short-term portion as at December 31 (3,964) (5,840) ______Position as at December 31 387,868 420,149

12 Short-term liabilities 2004 2003 ______Payable to banks 172,263 212,181 Investment creditors 2,993 2,099 Accounts payable 2,826 5,421 Dividend 591 417 Redemption of long-term liabilities 3,964 5,840 Taxes 857 815 Prepaid rent 12,200 10,838 Interest 3,280 3,923 Operating expenses 3,470 3,676 Guarantee deposits 897 902 Other liabilities and accruals 6,103 6,674 ______209,444 252,786

Payable to banks Payable to banks relate to short-term credits and cash loans. The total credit facility as at December 31, 2004 amounted to € 338.3 million, of which € 166.0 million remained undrawn as at December 31, 2004. By way of security for the credit facilities, it has been agreed with the lenders that property will only be mortgaged on behalf of third parties subject to the lender’s approval.

82 Notes to the consolidated annual accounts

13 Rights and liabilities not included in the balance sheet

A long-term alliance exists between VastNed Offices/Industrial, VastNed Retail and VastNed Management, as well as a long-term agreement for the allocation of expenses. The mutual rights and obligations are laid down in these agreements.

Provided the seller has met certain conditions, VastNed Offices/Industrial has obligations with regard to the acquisition of property in Belgium. The total acquisition obligation, of which the delivery dates are spread over 2005 and 2006, is expected to amount to approximately € 77.0 million.

The tax authorities have served VastNed Offices/Industrial with additional transfer tax assessments as well as corporate income tax assessments concerning alleged tax obligations of property companies acquired by VastNed Offices/Industrial in the past. VastNed Offices/Industrial has appealed against those assessments. The outcome of the procedure is not yet known. In addition, the seller has given guarantees. Therefore, VastNed Offices/Industrial has deemed it unnecessary to provide for these tax claims.

The Belgian subsidiary Intervest Offices has a difference of opinion with the Belgian tax authorities concerning tax assessments of the so-called ‘exit-tax’. The difference of opinion concerns the determination of the taxable base of the exit-tax at the merger of a company with a property bevak. Intervest Offices has appealed against these assessments. The Belgian tax authorities have meanwhile published a letter in which it accepts that the exit-tax must be calculated on the tax base as maintained by Intervest Offices. The letter took immediate effect, so that a large part of the pending dispute is expected to be resolved in practice. Also, some previous owners have given guarantees. VastNed Offices/Industrial and its advisors are of the opinion that there is a substantial chance that the company will win the case and therefore no provision for these tax claims has been made.

VastNed Offices/Industrial is a party in a number of non-fiscal disputes. The outcome of the individual disputes is uncertain and there is a reasonable possibility that the settlement of some of the disputes will go against VastNed Offices/Industrial. While the total amount of the conditional liabilities relating to the disputes cannot be estimated with a reasonable degree of certainty, the board of management of VastNed Offices/Industrial is of the opinion that the consequent obligations, such as may ensue, will not significantly affect the consolidated financial position or the operations of the company.

In order to control the interest risk on the loans taken out by Intervest Offices, an Interest Rate Swap (IRS) contract has been concluded for a sum of € 52.0 million. The expiry date of this contract is December 27, 2006.

83 Notes to the consolidated annual accounts

Notes to the consolidated profit and loss account

1 Net rental income Gross rental income Operating expenses Net rental income ______2004 2003 2004 2003 2004 2003 ______Netherlands 50,986 57,955 9,904 9,951 41,082 48,004 Belgium 41,903 47,290 1,851 4,890 40,052 42,400 France _____1,095 _____2,914 _____153 _____293 _____942 _____2,621 93,984 108,159 11,908 15,134 82,076 93,025

Operating expenses 2004 2003 ______Maintenance 4,584 3,585 Administrative and commercial management1) 2,820 3,245 Insurance 390 328 Property tax 1,637 1,828 Other expenses 2,477 6,148 ______11,908 15,134

Other expenses includes inter alia the allocation to the provision for doubtful debtors, non recoverable service costs, and letting expenses.

1) 3% of gross rental income, consisting of external expenses and general expenses, is allocated to operating expenses.

2 Value movements Realised value movements Unrealised value movements Total ______2004 2003 2004 2003 2004 2003 ______Netherlands 1,417 1,497 (25,041) (23,559) (23,624) (22,062) Belgium 2,303 456 (26,261) (13,503) (23,958) (13,047) France _____916 _____– _____(47) _____ 515 _____869 _____ 515 4,636 1,953 (51,349) (36,547) (46,713) (34,594)

3 Interest 2004 2003 ______Interest 25,253 28,971 Capitalised interest (2,427) (4,391) ______22,826 24,580

84 Notes to the consolidated annual accounts

4 General expenses 2004 2003 ______Personnel costs 4,298 3,997 Remuneration supervisory board 76 63 Consultancy and audit costs 1,269 1,174 Appraisal costs 412 438 Other expenses 1,616 1,488 ______7,671 7,160 Allocated to operating expenses (2,022) (662) ______5,649 6,498

Other costs include inter alia publicity costs and housing and office costs.

During 2004 on average 78 (2003: 73) people (full-time equivalents) were employed by VastNed Group. Personnel costs of the employees in the Netherlands have been allocated to VastNed Offices/Industrial based on actual work done. VastNed Offices/Industrial has no employees. In Belgium, staff are employed by Intervest Offices. In the year under review VastNed Offices/Industrial accounted for wages and salaries € 3.0 million (2003: € 3.4 million), for social security charges € 0.2 million (2003: € 0.3 million) and for pension premiums € 0.4 million (2003: € 1.1 million).

5 Tax on income Tax on income due on reporting period Movements deferred taxes Total ______2004 2003 2004 2003 2004 2003 ______Netherlands 559 562 – – 559 562 Belgium 65 116 (175) 370 (110) 486 France _____172 _____410 _____475 _____ 157 _____647 _____ 567 796 1,088 300 527 1,096 1,615

85 Notes to the consolidated annual accounts

6 Remuneration of the statutory directors in 2004 Salaries (incl. social Pension Shareholdings security charges) Bonus premiums Total year-end 2004 ______R.A. van Gerrevink 428 35 127 590 3,339 T.M. de Witte 165 20 49 234 _ H.K.M. Roovers (until July 1, 2004) 121 – – 121 N/a J. Pars (as from July 1, 2004) 103 18 38 159 ______817 73 214 1,104 3,339 of which allocated to VastNed Retail _____(366) _____ (33) _____ (96) _____ (495) 451 40 118 609

7 Remuneration of the supervisory board Shareholding Remuneration 2004 year-end 2004 ______W. Nijman 30 1,490 A.L. Deriga (until April 7, 2004) 8 N/a N.J. Westdijk 24 – D. van den Bos 27 – R.K. Jacobson (as from April 6, 2004) 18 – F.W. Mulder 27 – P.M. Verboom (as from April 6, 2004) 18 – ______152 1,490 of which allocated to VastNed Retail _____(76) 76

No option rights have been granted to the statutory directors and the supervisory board. Neither have loans or advances been provided to them nor guarantees given on their behalf.

8 Expense ratio

The expense ratio for 2004 amounted to 7.23% (2003: 7.89%). The expense ratio is calculated by dividing the total expenses of the reporting period by the average shareholders’ equity. Total expenses include operating expenses, interest, general expenses, tax on income, and the allocation to the provision for deferred tax liabilities. These expenses are corrected for the part of these expenses due to third parties.

86 Notes to the consolidated annual accounts

9 Specification indirect investment result

Realised Unrealised Movements in value movements value movements deferred taxes Total ______

2004 2003 2004 2003 2004 2003 2004 2003 ______Netherlands 1,417 1,497 (25,041) (23,559) – – (23,624) (22,062) Belgium 2,303 456 (26,261) (13,503) 175 (370) (23,783) (13,417) France 916 – (47) 515 (475) (157) 394 358 ______4,636 1,953 (51,349) (36,547) (300) (527) (47,013) (35,121) of which due to third parties (238) – 9,596 3,653 – – 9,358 3,653 ______4,398 1,953 (41,753) (32,894) (300) (527) (37,655) (31,468)

87 Company balance sheet as at December 31 Before profit appropriation (x € 1,000.-)

2004 2003 ______Assets

Investments

Property in operation 415,150 427,627 Property not in operation 47,521 68,662 Participations in group companies 226,757 273,819 ______689,428 770,108

Receivables

Accounts receivable 100 3,823 Group companies 64,585 93,536 Other receivables and prepayments 10,490 5,682 Cash at bank 1,859 1,243 ______77,034 104,284 ______Total assets 766,462 874,392

Liabilities

Shareholders’ equity

Capital paid-up and called 96,370 94,470 Share premium reserve 298,385 300,328 Other reserve 68,571 97,041 Investment result 3,115 17,121 ______Total shareholders’ equity 466,441 508,960

Long-term liabilities 198,436 218,558

Short-term liabilities

Payable to banks 79,134 122,147 Group companies 4,679 4,316 Investment creditors 596 121 Accounts payable 1,985 3,874 Other liabilities and accruals 15,191 16,416 ______101,585 146,874 ______Total liabilities 766,462 874,392

88 Company profit and loss account (x € 1,000.-)

2004 2003 ______Company result (6,663) 2,607 Result of participations in group companies 9,778 14,514 ______Investment result 3,115 17,121

Notes to the company annual accounts

General

The company profit and loss account has been rendered in abbreviated form pursuant to Article 402 of Book 2 of the Netherlands Civil Code. The company has availed itself of the provisions of Article 379, subsection 5 of Book 2 of the Netherlands Civil Code. The list as referred to in this Article has been filed at the offices of the Commercial Register in Rotterdam. The company has issued certificates of guarantee for a number of group companies in accordance with Article 403, Book 2 of the Netherlands Civil Code.

Principles for the valuation of assets and liabilities and the determination of the result

The valuation principles for assets and liabilities and the method of determining the result are identical to those used in the consolidated annual accounts, and reference is therefore made to the Notes thereto. The participating interests in group companies have been stated at net asset value.

Participations in group companies 2004 2003 ______Position as at January 1 273,819 239,777 Acquisitions and capital paid-up and called – 38,724 Share in investment result 9,778 14,514 Disposals (33,095) (121) Payments received (23,745) (19,075) ______Position as at December 31 226,757 273,819

Rotterdam, February 22, 2005 The board of management

89 Other information

Special controlling rights

The company’s articles of association confer special controlling rights on the priority shares. The priority shares have been placed at par with the Stichting Prioriteit VastNed Offices/Industrial. The objective of this foundation is to acquire ownership of the priority shares in the company’s capital and to exercise all rights vested in such shares, including the voting right, the receipt of dividend and other distributions and all that which is related thereto in the broadest sense. The board of management of the Stichting Prioriteit VastNed Offices/Industrial consists of the members of the board of management and of the supervisory board of VastNed Offices/Industrial; they are the directors A and directors B respectively of the Stichting Prioriteit VastNed Offices/ Industrial. The articles of association do not entitle directors A to cast more votes than directors B. Thus the requirements of appendix X, article 10 of the Stock Exchange Regulations are complied with.

Profit distribution

The company’s articles of association stipulate that a dividend is paid out on the priority shares insofar as they have been issued. A dividend of 5% of the nominal value is paid on the priority shares. The remaining profit is placed at the disposal of the general meeting of shareholders. The company may only make distributions to shareholders insofar as shareholders’ equity exceeds the sum of the capital paid-up and called augmented by the reserves required by law to be maintained. In order to retain its fiscal status as an investment institution, the company must distribute the fiscal profit, after making permitted reservations, within eight months after the end of the reporting year.

Profit appropriation

The board of management proposes to distribute the investment result as follows (x € 1,000.-): Investment result 3,115 Allocation of indirect investment result to the other reserve 37,655 ______Available for dividend payment 40,770

The board of management proposes to pay out the dividend as follows: – 5% in cash on the priority shares; – an optional dividend on the ordinary shares of: – € 1.88 in cash, augmented by a percentage in shares yet to be determined, depending on the share price, to the debit of the share premium reserve, or – € 2.13 in cash;

and to add the remainder of the distributable profit to the other reserves. Shareholders opting for distribution in cash plus shares must ensure that this is effected prior to May 3, 2005. As from this date, they can only claim the cash dividend within the parameters laid down in the articles of association.

90 Other information

Transactions with directly interested parties

During the 2004 financial year, the members of the supervisory board and the board of management of VastNed Offices/Industrial N.V. had no personal interest in any investments made by the company. To the company’s best knowledge, no property transactions were effected during the year under review involving persons or institutions that could be regarded as having a direct interest in its company.

Interests of major investors

To the best of the company’s knowledge, no parties can be regarded as major investors in the sense of the Royal Decree on the Netherlands Investment Institutions Supervision.

91 Other information

Auditor’s report

Introduction

We have audited the financial statements of VastNed Offices/Industrial N.V., Rotterdam for the year 2004. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally accepted in the Netherlands. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 2004 and the result for the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in Part 9 of Book 2 of the Netherlands Civil Code and the Royal Decree on the Netherlands Investment Institution Supervision.

Rotterdam, February 22, 2005 Deloitte Accountants B.V.

92 Property portfolio 2004 Property portfolio 2004

Property in operation

floor space (sqm) Number of tenants Number of Country City Location Type of property Year of acquisition of construction/ Year renovation Lettable parking spaces Theoretical rental income (x € 1,000.-) ______

Netherlands

Almere Antennestraat 2-26 Office 1995 1990 4,762 13 82 364 Beemsterweg 19 Industrial premises 1998 98/03 10,926 1 103 656 Amersfoort Beeldschermweg 3 1) Office 1998 1991 1,912 1 68 152 Hardwareweg 15 1) Industrial premises 1998 1991 5,693 1 68 453 Amsterdam Anthony Fokkerweg 1 Office 1997 1990 5,329 10 59 790 Burg. Stramanweg 102-103 Office 1997 1989 3,714 10 74 720 Burg. Stramanweg 107-108 Office 1997 1989 3,714 10 75 560 Donauweg 8c and 8e Office 1997 1990 1,245 4 14 188 Herengracht 105-107 Office 1997 1952 1,510 3 – 207 Hettenheuvelweg 12 2) Office 1997 1988 2,371 1 70 325 Hettenheuvelweg 14 2) Office 1997 1988 2,361 1 80 348 Hettenheuvelweg 37-39 2) Office 1997 1987 2,517 6 78 367 Hettenheuvelweg 41-43 2) Office 1997 1988 2,501 3 74 337 Hogehilweg 12 Office 1997 1985 3,129 6 62 553 Hogehilweg 14 Office 1997 1989 3,129 25 63 542 Karel du Jardinstraat 65 Office 1997 1900 7,576 1 28 1,025 Klokkenbergweg 29 2) Industrial premises 1997 1991 1,836 1 100 269 Koningin Wilhelminaplein 18 2) Office 1997 1995 5,474 1 25 735 Leidsegracht 101-107 Office 1997 1900 2,514 5 15 387 Osdorperban 1-33 2) Office 1997 1990 3,353 15 105 563 Oudezijds Voorburgwal 282 Office 1997 1980 1,000 1 – 172 Paasheuvelweg 15 Office 1989 1989 2,049 7 37 289 Strekkerweg 79 2) Office 1998 1990 1,310 1 32 151 Tijnmuiden 5 and 73 2) Industrial premises 1999 1997 1,975 1 5 182 Arnhem Mr. E.N. van Kleffensstraat 10 Office 1997 1997 3,303 1 70 428 Barendrecht Zuideinde 10 Industrial premises 1995 1986 1,340 1 16 78 Bergen op Zoom Zuid-Oostsingel 25a Office 1990 1990 1,014 1 17 178 Breda Cosunpark 1-5 Office 2000 1975 4,528 4 86 601 Cosunpark 20-24 Office 2002 2002 2,244 3 48 344 Franse Akker 15 Industrial premises 1995 1983 1,100 1 6 49 Lage Mosten 1-11 Office 2000 2000 3,188 4 52 502 Lage Mosten 13-23 Office 2000 2000 3,830 2 59 596 Paardeweide 3 Office 1997 1991 2,151 2 44 278 Paardeweide 5 Office 1989 1989 1,747 5 47 223 Zinkstraat 1-11 Office 1992 1999 3,952 4 84 297 Capelle a/d IJssel Derde Riviumstraat / Rivium Boulevard 41 Office 1997 1992 3,169 1 40 618 Hoofdweg 22-26 Office 1991 1990 4,098 3 77 396

Property portfolio 2004

The Hague Bezuidenhoutseweg 2 Office 1996 1986 1,878 1 18 372 Laan Copes van Cattenburch 48-52 Office 1996 1989 1,813 3 20 266 Prinsessegracht 19 Office 1996 1988 802 3 6 127 Verlengde Tolweg 2 Office 1991 1920 857 5 3 128 Deventer Roermondstraat 37001-37003 / Deventerweg Industrial premises 1997 2004 10,064 3 – 323 Diemen Weesperstraat 114-118 / Visseringweg 23 Office 1998 1985 9,704 2 60 513 Eindhoven Fellenoord 310-370 Office 1996 1987 5,133 4 75 627 Larixplein 5-7 Office 1997 1997 4,388 3 71 528 Luchthavenweg 34 Office 1999 1991 1,865 1 78 251 Parklaan 81 Office 1988 1930 762 1 24 107 Parklaan 81a Office 1988 1988 647 1 20 104 Enschede Hoedemakerplein 2 Office 1991 1991 2,171 1 15 330 Piet Heinstraat 4-6 Office 1989 1989 1,377 1 6 239 Goes Stationsplein 21 1) Office 1998 1992 5,271 2 91 781 Gorinchem Edisonweg 21 Office 1998 1991 3,940 – 73 253 Gouda Antwerpseweg 8-10 Industrial premises 1990 1991 7,135 – 40 285 Deventerweg 1-9, 2-6 / Doesburgweg 2-6 / Elburgweg 3, 7, 4-12 / Kampenringweg 2-28 / Muidenweg 1-5, 2-6 Logistics centre 1998 1978 39,064 13 – 2,009 Hanzeweg 5 Office 1997 1992 5,965 2 132 733 Groningen Hereweg 93-95 Office 1990 1990 2,545 4 34 356 Sylviuslaan 6 1) Office 1998 1992 966 2 28 122 Sylviuslaan 8 Office 1989 1989 664 1 27 79 Van Ketwich Verschuurlaan 100 Office 1991 1986 1,575 1 43 166 Verlengde Bremenweg 14 Logistics centre 2003 2004 1,100 1 15 90 Haarlem Emrikweg 11 Industrial premises 1991 1989 712 1 8 53 Leidsevaart 574 Office 1997 1997 3,384 1 36 420 Haarlemmermeer Cessnalaan 1-33 Industrial premises 1999 1991 6,719 2 65 718 Heemstede Herenweg 103a Office 1989 1989 1,025 5 20 146 Heerlen Geerstraat 105-111 Office 1994 1992 3,600 2 48 441 ’s-Hertogenbosch Europalaan 22-26 3) Office 1991 1991 6,707 1 116 345 Europalaan 28 Office 1997 1990 7,900 3 184 1,239 Hoofddorp Antareslaan 10-26 Office 1998 1998 3,441 5 80 634 Antareslaan 65-81 Office 1998 1998 3,441 4 64 640 Kruisweg 765 and 765a Industrial premises 1989 1989 1,720 1 15 112 Neptunusstraat 15-37 Office 1991 1991 5,400 10 57 765 Wijkermeerstraat 31 / Debbemeerstraat 4 Industrial premises 1997 1975 1,625 – 23 97

Property portfolio 2004

Houten De Molen 82-92 Office 1992 1992 2,421 6 72 305 Kokermolen 10-16 Office 1997 1991 2,623 1 55 373 Peppelkade 62-64 1) Office 1998 1990 3,302 3 67 383 Leeuwarden Tadingastraat 1 Office 1991 1988 1,195 – 16 111 Leiden Archimedesweg 17 2) Office 2001 2001 2,502 3 65 409 Schipholweg 68 1) Office 1998 1991 2,383 4 41 381 Leusden Plesmanstraat 2 Office 1999 1997 1,360 4 22 195 Maarssenbroek Sterrebaan 14 Industrial premises 1988 1988 3,082 1 22 217 Maastricht Adelbert van Scharnlaan 170-180 Office 1997 1977 3,977 9 38 513 Moerdijk Distriboulevard 25 Logistics centre 1999 1999 21,800 – 52 1,056 Nieuwegein Archimedesbaan 8 Industrial premises 1988 1986 1,323 – 12 68 Archimedesbaan 10 Industrial premises 1990 1990 1,100 2 12 76 Groningenhaven 18-20 Office 1998 1993 5,200 1 75 392 Krijtwal 1-15 Office 1990 1990 4,317 2 17 526 Marconibaan 42-42o 1) Industrial premises 1998 1990 4,790 12 70 346 Ravenswade 5 Industrial premises 1995 1987 1,822 1 15 108 Ravenswade 134 Industrial premises 1988 1979 955 1 12 61 Ravenwade parcels B and K Industrial premises 1999 69/89 54,272 3 – 1,262 Nijmegen Meijhorst 6001 Office 1989 1989 2,300 1 60 256 Purmerend Slenkstraat 60-70 / Waterlandlaan 78-92 1) Office 1998 1991 3,070 10 46 374 Ridderkerk Glasblazerstraat 13 Office 1999 1996 775 1 22 83 Ridderhaven 1-54 Logistics centre 1999 1993 54,645 29 400 3,112 Rietdekkerstraat 12 Office 1999 1999 1,073 1 29 141 Touwslagerstraat 17 Office 1991 1991 1,811 1 25 212 Rijswijk Handelskade 68-72 Office 1990 1989 880 1 5 109 Treubstraat 17 Office 1997 1976 5,828 6 109 574 Volmerlaan 7 Office 1996 1982 5,358 1 72 641 Rosmalen Graafsebaan 109-111 / Eikenburglaan 3-11 Industrial premises 1997 88/02 5,884 13 19 382 Rotterdam Albert Plesmanweg 161 Office 1997 1991 2,058 1 62 279 Caïrostraat 2-4 Industrial premises 1991 1991 2,515 2 18 167 Klompenmakerstraat 29 2) Industrial premises 1999 1998 1,240 1 5 159 Marconistraat 2 Office 1997 1967 7,219 1 – 586 Marten Meesweg 8-10 2) Office 1996 1997 6,401 5 116 1,014 Max Euwelaan 1 2) Office 2000 2000 2,653 1 63 488 Schuttevaerweg 5 Industrial premises 1997 1989 1,300 1 8 115 Veerhaven 16-18 Office 1996 1990 1,725 1 9 351 Son en Breugel Ekkersrijt 4404 Industrial premises 1995 1990 1,648 1 8 92

Property portfolio 2004

Tilburg Dr. Hub van Doorneweg 81, 85 and 89 Office 1997 2001 2,758 2 88 382 Uithoorn Amsterdamseweg 15 Industrial premises 1997 1977 5,670 4 54 346 Utrecht Catharijnesingel 28-32 Office 1990 2004 4,696 – 30 773 Kanaalweg 14-19 Industrial premises 1998 1990 30,800 15 466 3,165 Savannahweg 59 Industrial premises 1988 1982 2,018 1 19 133 Veenendaal Fokkerstraat 36 / Wiltonstraat 1 Office 1999 1995 1,610 2 11 125 Generatorstraat 9a / Turbinestraat 10 Industrial premises 1997 1980 2,876 2 13 112 Plesmanstraat 58-60 1) Office 1998 1992 3,308 7 73 315 Velp Arnhemsestraatweg 348 Office 1988 1995 2,404 1 69 227 Venlo Prinsessesingel 20-26 1) Office 1998 1994 1,498 2 30 207 Prinsessesingel 30 1) Office 1998 1994 2,280 1 35 329 Weesp Pampuslaan 141-145 Industrial premises 1997 1970 2,500 1 24 112 Van Houten Industriepark 23 Office 1988 1989 1,389 1 30 188 Woerden Edisonweg 10 Industrial premises 1997 1965 3,141 1 10 165 Pelmolenlaan 1 1) Office 1998 1992 2,339 6 58 307 Zaagmolenlaan 12 Office 1988 1985 1,663 1 40 183 IJsselstein Anthonie van Leeuwenhoekweg 5 1) Industrial premises 1998 1991 5,364 1 34 349 Zeist Montaubanstraat 1 / Utrechtseweg 135 Office 1989 1989 1,614 5 28 255 Zoetermeer Eleanor Rooseveltlaan 3-25 Office 1997 1991 3,856 1 75 562 Eleanor Rooseveltlaan 29-51 Office 1997 1992 3,856 1 75 496 Europaweg 205 Office 1997 1991 7,169 1 112 925 Koraalrood 33 1) Office 1998 1991 2,070 1 32 206 Koraalrood 50 1) Office 1998 1991 2,464 1 47 357 Kryptonstraat 21 Industrial premises 1999 1997 885 1 12 91 Plein van de Verenigde Naties 15 Office 1991 1990 3,788 1 51 511 Zwolle Doctor Stolteweg 17-23 Office 1999 1980 2,100 2 34 260 Obrechtstraat 28 Office 1997 1989 4,205 2 78 522 ______Total property in operation Netherlands 608,052 445 6,925 56,842

Belgium4)

Aartselaar Dijkstraat 1 A Logistics centre 2002 1994 8,062 1 – 344 Kontichsesteenweg 54 Office 2001 2000 4,000 1 100 479 Antwerp Brusselstraat 59 Office 2001 1994 11,318 3 155 1,520 Kaaien 218-220 Logistics centre 2002 1997 5,500 1 – 143 Uitbreidingstraat 66 Office 2001 1988 5,700 8 101 698 Boom Industrieweg 18 Logistics centre 2002 2000 24,363 1 – 1,016

Property portfolio 2004

Diegem Berkenlaan 6 Office 2001 1990 3,664 – 79 458 Berkenlaan 8a Office 2001 2000 7,787 1 190 1,231 Berkenlaan 8b Office 2002 2002 8,729 1 181 1,371 Woluwelaan 148-150 Office 2001 2000 8,903 1 167 1,083 Dilbeek (Groot-Bijgaarden) Pontbeekstraat 2 and 4 Office 2001 2000 6,869 8 106 984 Duffel Stocletlaan 23 Logistics centre 2002 1998 23,675 3 – 941 Walemstraat 94 Logistics centre 2002 1995 9,111 1 – 463 Edegem Prins Boudewijnlaan 45-49 Office 2001 1997 7,424 2 153 1,004 Ghent Xavier de Cocklaan 68-72 Office 2000 1993 5,350 9 148 515 Hoeilaart Terhulpsesteenweg 6 A Office 2001 1994 2,801 2 80 432 Kortenberg Arthur de Coninckstraat 3 Logistics centre 2001 2001 14,069 1 83 1,275 Leuven Interleuvenlaan 15 Office 2000 1999 21,940 21 525 2,829 Mechelen Blarenberglaan 2c Office 2001 2001 12,917 1 391 2,148 Dellingstraat 57 Logistics centre 2002 1998 4,614 1 20 322 Generaal de Wittelaan 9-21 Office 2000 93/00 42,112 45 1,048 5,216 Oude Baan 12 Logistics centre 2002 1999 15,252 1 – 676 Schaliënhoevedreef 20 Office 02/03 02/03 29,116 27 918 3,974 Schaliënhoevedreef 20 (gebouw E) 5) Office 2003 2002 4,763 10 226 639 Schaliënhoevedreef 20 (gebouw G) 5) Office 2004 2004 5,446 1 298 868 Schaliënhoevedreef 20 (gebouw H) 5) Office 2004 2004 4,887 7 106 604 Meer Riyadhstraat 21/23 Logistics centre 2002 1990 7,619 1 – 228 Merchtem Preenakker 20 Logistics centre 2002 1992 7,285 1 – 453 Merksem Oostkaai 25 / Griffinstraat 1-13 / Glasstraat 15-29 Logistics centre 2002 1989 15,256 14 – 666 Puurs Veurtstraat 91 Logistics centre 2002 2001 43,490 1 – 2,181 Schelle Molenberglei 8 Logistics centre 2002 1993 8,000 4 – 423 Sint-Agatha-Berchem Technologiestraat 11, 15, 51, 55, 61 and 65 Logistics centre 2002 1992 6,463 5 84 609 Sint-Niklaas Eigenlostraat 23-27a Logistics centre 2002 1993 7,863 5 – 321 Strombeek-Bever Nijverheidslaan 1 5) Office 2003 2000 5,383 6 103 773 Nijverheidslaan 3 Office 2001 1999 4,889 2 105 698 Vilvoorde Luchthavenlaan 1-3 5) Office 2001 2001 2,338 3 26 341 Luchthavenlaan 25 Office 2000 1998 8,757 3 232 1,162 Wilrijk Boomsesteenweg 801-803 Logistics centre 2002 1986 12,584 1 – 578 Kernenergiestraat 70 / Geleenweg 1-7 Logistics centre 2002 1989 16,584 1 – 705

Property portfolio 2004

Woluwe Woluwedal 18-22 Office 2001 2000 25,074 2 923 4,829 Wommelgem Koralenhoeve 25 Logistics centre 2002 1998 24,719 1 – 1,377 Zaventem Imperiastraat 12 Office 2001 1990 3,888 1 75 443 Lozenberg 15 and 18-23 Office 2001 1989 29,118 12 699 4,319 Weiveldlaan 41 Office 2001 88/94 13,147 11 382 1,821 ______Total property in operation Belgium 540,829 232 7,704 53,160

France

Meaux Avenue des Sablons Bouillantes 42 Logistics centre 2000 1966 11,753 1 50 342 ______Total property in operation France 11,753 1 50 342 ______Total property in operation 1,160,634 678 14,679 110,344

1) VastNed Offices/Industrial holds a 90% interest through VastProduct C.V. 2) Land on long lease. 3) VastNed Offices/Industrial holds a 62.5% interest. 4) At year-end 2004, VastNed Offices/Industrial holds a 51.3% interest in Intervest Offices.. 5) These properties are held through intervention of the wholly owned subsidiary VastNed Offices Belgium.

Notes to the property portfolio in operation

– Theoretical rental income as at December 31, 2004 relates to full occupancy. – In the Netherlands, virtually all rent contracts are concluded for a five-year period, granting the tenant the option of renewing the lease by another five years. Annual rent increases are based on the cost of living index. Unsurrendered ground lease, where applicable, is paid annually; – In Belgium rent contracts are normally concluded for a period of 3, 6 or 9 years, with a mutual termination option after 3 and 6 years. Annual rent increases are based on the index of the cost of living; – In France, rent contracts are normally concluded for a period of 9 or 12 years, the tenant having the option of renewing the lease every 3 years. Annual rent increases take place based on the rise of the construction cost index, unless agreed otherwise.

Appraisers

– C.B. Richard Ellis in Amsterdam – Cushman & Wakefield Healey & Baker in Brussels – De Crombrugghe & Partners in Brussels – DTZ Zadelhoff Taxaties in Utrecht – DTZ Winssinger Tieu Leung in Brussels and Paris – Jones Lang LaSalle in Amsterdam – R.S.P./Van Boxtel en Partners Taxaties in Eindhoven

99 Property portfolio 2004 Property not in operation

floor space (sqm) Number of Country City Location property of Type Lettable parking spaces ______

Netherlands

Breda Cosunpark 4 Office 2,225 45 Cosunpark 5 Office 3,100 62 Nieuwegein TriNovium 1.1 Office/Industrial premises 6,484 104 TriNovium 1.2 Office/Industrial premises 12,602 223 TriNovium Site – –

Belgium

Vilvoorde Luchthavenlaan (Cocoon Park) Site – –

100 VastNed Offices/Industrial jaarrekening 2003 Checklist Dutch corporate governance code

101 Checklist Dutch corporate governance code

Best practice Short description Page Comply/ principle explain ______

Compliance with and enforcement of the code I.1 Broad outline of the corporate governance structure in 51 Comply separate chapter of the annual report. I.2 Substantial changes in the corporate governance structure 51 Comply shall be submitted to the general meeting of shareholders (AGM).

Management board (MB) II.1.1 MB members appointed for 4 years 51 Explain II.1.2 Financial reporting by MB to supervisory board (SB) 54 Comply II.1.3.a Risk analyses of objectives of the company 38 Comply II.1.3.b Code of conduct 66 Comply II.1.3.c Manual for financial administration 66 Comply II.1.3.d. Internal reporting system 46 Comply II.1.4 Explanation of internal risk management and control 46 Comply system II.1.5 Analysis of sensitivity 43 Comply II.1.6 Protection of whistleblower 66 Comply II.1.7 Test supervisory board membership of MB members 55 Comply

Remuneration II.2.1 Contingent condition share options N /a Comply II.2.2 Performance criteria share options N /a Comply II.2.3 Lock-up shares from share regulations 56 Comply II.2.4 Minimum exercise price N /a Comply II.2.5 No modification of option conditions N /a Comply II.2.6 SB securities transaction regulations different from those 65 Comply in ‘own’ company II.2.7 Dismissal fee no more than 1 (or 2) times fixed annual 51 Explain salary II.2.8 No loans to MB and SB members 61 Comply

Determination and disclosure of remuneration II.2.9 Remuneration report including overview of policy for next 17 Comply few years II.2.10 Information requirements remuneration report Website Comply II.2.11 Immediate publication of important elements of MB 57 Comply member employment contract at appointment II.2.12 Explanation of special remuneration in remuneration report Website Comply II.2.13 Remuneration report on website 64 Comply II.2.14 Value of share options of MB and personnel in notes to the N /a Comply annual accounts

Conflicting interests II.3.1.a MB member does not enter into competition with the 61 Comply company II.3.1.b MB member does not make material gifts to family 61 Comply members II.3.1.c MB member does not provide unjustified benefits to third 61 Comply parties II.3.1.d MB member does not provide business opportunities to 61 Comply himself or his family II.3.2 Reporting arrangement conflicting interests 61 Comply II.3.3 Not participate in decisions regarding situations with 61 Comply conflicting interest

102 Checklist Dutch corporate governance code

Best practice Short description Page Comply/ principle explain ______II.3.4 Conflicting interest situations handled as customary in 61 Comply industry

Supervisory board Duties and procedure III.1.1 Division of duties SB in regulations placed on website 62 Comply III.1.2 Inclusion of SB report in annual report 13 Comply III.1.3 Personal information members SB 14 Comply III.1.4 Policy interim retirement members SB 62 Comply III.1.5 Report of absence of SB members 13 Comply III.1.6 Supervising duties SB 62 Comply III.1.7 General committee SB 13 Comply III.1.8 SB meeting strategy 13 Comply III.1.9 Provision of means SB for performing its duties 62 Comply

Independence III.2.1. No more than one SB member does not have to comply N /a Comply with provision III.2.2 III.2.2.a SB member has not been director or employee of the N /a Comply company in last 5 years III.2.2.b SB member does not receive other fee than for SB 64 Comply membership III.2.2.c SB member has not had business relationship with the 65 Comply company before appointment III.2.2.d SB member is not MB member of a company of which a 55 Comply director of the company is SB member III.2.2.e SB member does not have interest of at least 10 percent in 65 Comply company III.2.2.f SB member is not director or SB member of a legal entity 65 Comply that has at least a 10% interest in company III.2.2.g SB member has not been temporary director of the 65 Comply company in last 12 months III.2.3 Statement of independence 17 Comply

Expertise and composition III.3.1 Profile SB 63 Comply III.3.2 Presence of financial expert 63 Comply III.3.3 Presence of introduction programme 62 Comply III.3.4 Number of SB memberships of SB members 14 Comply III.3.5 Maximum term SB members of 3 times 4 years 52 Comply III.3.6 Retirement schedule 17 Comply

Chairman SB and company secretary III.4.1.a Supervision of following introduction programme 62 Comply III.4.1.b Supervision of timely receipt of information 62 Comply III.4.1.c Supervision of sufficient time for discussion 62 Comply III.4.1.d Supervision of functioning SB committees 62 Comply III.4.1.e Supervision of assessment SB and MB members 62 Comply III.4.1.f Supervision of SB choosing vice-chairman 62 Comply III.4.1.g Guarantee contacts SB and MB with works council N /a Comply III.4.2 Chairman SB is not former MB member of company 63 Comply III.4.3 Guarantee of supervision by company secretary. Secretary 63 Comply is appointed and dismissed by MB after SB approval

103 Checklist Dutch corporate governance code

Best practice Short description Page Comply/ principle explain ______

Composition and duties three core committees of SB III.5.1 SB draws up regulations for each committee 63 Comply III.5.2 SB report states composition committees, number of 16 Comply meetings and topics discussed III.5.3 SB receives committee reports 16 Comply Audit committee (AC) III.5.4.a Supervision of risk control and IT systems 63 Comply III.5.4.b Supervision of financial information provision 63 Comply III.5.4.c Supervision of follow-up recommendations external auditor 63 Comply III.5.4.d Supervision of internal audit service N /a Comply III.5.4.e Supervision of tax planning 63 Comply III.5.4.f Supervision of relationship with external auditor 63 Comply III.5.4.g Financing of company 63 Comply III.5.4.h IT applications 63 Comply III.5.5 AC is first point of contact for external auditor 63 Comply III.5.6 Chairman AC is not chairman SB or former MB member of 14 Comply company III.5.7 AC has at least one financial expert 63 Comply III.5.8 AC decides who is present at its meetings 63 Comply III.5.9 AC meets at least once a year in absence of MB 63 Comply Remuneration committee (RC) III.5.10.a RC makes proposal to SB about remuneration policy to be 64 Comply pursued III.5.10.b RC makes proposal to SB about remuneration of individual 64 Comply MB members III.5.10.c RC draws up remuneration report in accordance with best 64 Comply practice principle II.2.9 III.5.11 Chairman RC is not chairman SB, former MB member of 14 Comply company or MB member of other listed company III.5.12 No more than 1 RC member is MB member of another 14 Comply Dutch listed company Appointment committee / SB III.5.13.a Draw up selection criteria and appointment procedures SB 64 Comply and MB members III.5.13.b Evaluation size and composition SB and MB 64 Comply III.5.13.c Assessment of functioning of SB and MB members 64 Comply III.5.13.d Proposals for (re)appointments 17 Comply III.5.13.e Supervision of MB policy concerning appointment 64 Comply procedures senior management

Conflicting interests III.6.1 SB member reports conflicting interest immediately to 65 Comply chairman SB III.6.2 Respective SB member does not participate in discussion 65 Comply and decision making concerning conflicting interest III.6.3 Conflicting interest transactions made on conditions 65 Comply customary in industry III.6.4 Transactions with shareholders of at least 10% of shares in 65 Comply company made on conditions customary in industry and require SB approval III.6.5 SB regulations contain regulations on conflicting interests 62 Comply III.6.6 Delegated SB member has no more rights than SB member 65 Comply III.6.7 SB member who takes on management duties retires 65 Comply from SB

104 Checklist Dutch corporate governance code

Best practice Short description Page Comply/ principle explain ______

Remuneration III.7.1 SB member has no options on shares in the company N /a Comply III.7.2 Shareholding in the company is long-term investment 65 Comply III.7.3 SB sets regulations for ownership and transactions in 65 Comply securities by SB members other than in ‘own’ shares III.7.4 Company does not provide personal loans to SB members 65 Comply

One tier board structure III.8.1 The chairman of the MB is not and has not been an N /a Comply executive director III.8.2 The chairman of the MB checks composition and N /a Comply functioning of MB III.8.3 MB implements III.5 of this code N /a Comply III.8.4 Majority of MB members is charged with daily affairs N /a Comply

Shareholders IV.1.1 Amplified majority requirement binding nomination of SB or 52 Comply MB member can be annulled by second meeting of shareholders IV.1.2 Voting rights attaching to financing preference shares N /a Comply based on the real value of the capital contribution IV.1.3 Publication of position of MB if private bid is made for 52 Comply substantial part of the business IV.1.4 Dividend policy shall be separate item on the agenda 52 Comply IV.1.5 Proposal to pay dividend shall be separate item on the 52 Comply agenda IV.1.6 Discharge of MB and SB shall be separate items on the 52 Comply agenda IV.1.7 Company sets registration date for voting rights and 52 Comply access to general meeting

Depositary receipts for shares IV.2.1 Trust office has the confidence of depositary receipt N /a Comply holders and is independent of the company IV.2.2 The board of the trust office shall be appointed by the N /a Comply board of the trust office IV.2.3 Maximum term for appointment of board members is 3 N /a Comply times 4 years IV.2.4 Board of trust office shall be present at AGM N /a Comply IV.2.5 Company does not provide non-public information to trust N /a Comply office IV.2.5 In exercising its voting rights, the trust office shall be N /a Comply guided primarily by the interests of the depositary receipt holders IV.2.6 Trust office reports on its activities N /a Comply IV.2.7 Report must fulfil a number of requirements N /a Comply IV.2.8 The trust office shall issue proxies to depositary receipt N /a Comply holders who so request

105 Checklist Dutch corporate governance code

Best practice Short description Page Comply/ principle explain ______

Information provision / logistics AGM IV.3.1 Analysts’ meetings and press conference are announced 52 Comply in advance and can be followed via webcasting or conference call IV.3.2 Assessment of analysts’ report only on factual 68 Comply inaccuracies IV.3.3 Company pays no fees for preparation of analysts’ reports 68 Comply IV.3.4 No analysts’ meetings and such shortly before publication 68 Comply of regular financial information IV.3.5 SB and MB provide AGM with all information unless 66 Comply contrary to interests of company IV.3.6 The company shall place all information, which it is Website Comply required to publish pursuant to company and securities laws, on a separate part of its website, or uses hyperlinks to that end IV.3.7 Shareholders’ circular of all facts and circumstances Agenda Comply relevant to approval requested from shareholders IV.3.8 AGM minutes are published within three months after the Website Comply AGM IV.3.9 MB gives overview of protection measures and states 66 Comply under which conditions these would be implemented

Responsibility of institutional investors (II’s) IV.4.1 II’s annually publish voting right policy on website N /a Comply IV.4.2 II’s annually reports on voting right policy on website N /a Comply IV.4.3 II’s quarterly report on their website how they voted at N /a Comply AGMs in concrete cases

Audit of the financial reporting and the position of the external auditor

Financial reporting V.1.1 SB supervises procedures concerning preparation and 62 Comply publication of financial reports V.1.2 AC assesses how auditor is involved in financial reporting 63 Comply V.1.3 MB carries responsibility for internal procedures securing 54 Comply timely provision of full and correct information

Appointment, remuneration and assessment of external auditor V.2.1 External auditor is present at AGM and can be questioned 66 Comply V.2.2 MB and AC report annually to SB on relation with external 63 Comply auditor V.2.3 MB and AC assess external auditor once every 4 years 63 Comply

Internal audit function V.3.1 External auditor and AC prepare the work schedule of the N /a Comply internal auditor

106 Checklist Dutch corporate governance code

Best practice Short description Page Comply/ principle explain ______

Relation and communication of external auditor with company organs V.4.1 The external auditor is present at SB meeting in which the 66 Comply report of the audit of the annual accounts and its approval are discussed V.4.2 Chairman of AC can request external auditor to attend AC 63 Comply meeting V.4.3.A Lay-out demands 2:393 subsection 4 the Netherlands Civil 92 Comply Code concerning audit V.4.3.B Lay-out demands 2:393 subsection 4 the Netherlands Civil 92 Comply Code concerning financial figures V.4.3.C Lay-out demands 2:393 subsection 4 the Netherlands Civil 92 Comply Code concerning internal risk management and control systems

107 Design: Studio Bau Winkel, The Hague Photography cover and inside (double pages): Dieter Schutte, Rotterdam Lithography and printing: Ando, The Hague