Annexes

INVESTOR PRESENTATION March 2010

Agenda

Annexes A guide to better understand our numbers

3

Details by country

8

Economic results details by country

20

Additional Information

29

MARCH 2010

2

A Guide to better understand our P&L

MARCH 2010

3

A guide to better understand our numbers INDICATORS

DIRVERS  Sales of consolidated assets  Offer of specialised services (listed below)

 Revenues

 Asset & Fund Mgmt.: Active Management. Blended average fee 0.5 % on Book Value. Additional fees in case of Success fees in case of performances exceeding targets  Agency: Blended avg. fees 1.5-2% on Assets rotations. Expected ROS 20-25%  Property: Various Service related to the portfolio. ~ 2%of total rents collected . ROS approx. 15%  Credit Servicing: 5% Gross Fees on credit collections

 Ebit from services platform

 Ebit from consolidated investment activities

 Disposal of consolidated assets/activities

 Pro Quota net income from sales of minority investments (funds/  Income from equity participations

vehicles)  Capital gain on participation disposals

MARCH 2010

4

Business Model Contribution to Profitability Recurring income SERVICE PLATFORM

G&A

(€20.5mln)

EBIT* €7.8mln

SERVICES

CO-INVESTMENTS

NPLs

€28.2mln

REAL ESTATE

(€9.5mln)

FUNDS and ASSETS MGMT €28.2mln

FUND MGMT (SGR)

AGENCY (€1.4mln)

PROPERTY €5.4mln

FACILITY

CREDIT SERVICING

€0mln

(€4.0mln)

OTHER ASSET MGMT

(€14.4mln)

(€4.9mln)

2008

2009

365.1 (31.9) 1.6

271.7 (5.7) 13.5

A) EBIT* Services

(30.3)

7.8

B) EBIT consolidated inv. activities C) IEP investments Interest income from participations

14.2 (43.6) 23.0

1.2 (35.1) 19.5

(6.4)

(14.4)

EBIT*

(36.7)

(6.6)

EBIT incl. IEP (A+B+C)

(59.7)

(26.1)

Revenues EBIT consolidated services IEP services

EBIT* Investments * EBIT including income from equity participations before restructuring costs, writedowns/revaluations and including interest income from participations

MARCH 2010

5

A distinctive and refocused Business Model A lower risk profile approach - based on increasing recurring income from the service platform - for more predictable results

Trend: growth

EXPECTED CONTRIBUTION TO P&L

Trend: reduction

Income from equity participations

Recurring income

TRENDS CO-INVESTED PORTFOLIO

SERVICE PLATFORM *

(CAPTIVE)

management  Agency  Property Management  Development Management  Credit Servicing (NPLs) * Facility Mgm only in Germany & Poland

MARCH 2010

6

SERVICES

 Funds and assets

 Real Estate Funds  Real Estate SPVs  NPLs THIRD PARTIES PORTFOLIO (NON CAPTIVE)

Pirelli RE Services: Overview TECHNICAL SERVICES

ACTIVITIES

PROPERTY

 Valuations  Due Diligence  Lease contract administration  Document Management

ITALY

COMMERCIAL SERVICES

DEVELOPMENT MANAGEMENT

 Integrated valuation:  From feasibility study to completion  From technical, economical, financial to environmental aspects ITALY, POLAND, GERMANY

MARCH 2010

7

AGENCY

   

Acquisitions Sales Leasing Financial Services

ITALY, POLAND, GERMANY

CREDIT SERVICING

 NPL Management  Loan Portfolio Enhancement  Monitoring of legal actions  Property auctions

ITALY

Details by country

MARCH 2010

8

Italy: Real Estate Portfolio Key Data as of Dec. 2009 (EUR MM)

Mkt.Value 100% 1)

Mkt. Value PRE 28% avera ge

BV Quota PRE

UCG Quota PRE

Net Debt Quota PRE

LTV

NAV Quota PRE 2)

NIC Quota PRE

COMMERCIAL YIELDING & CORE

TRADING & SOHO

DEVELOPMENT

4,317

1,087

1,043

44

627

58%

460

416

1,007

351

298

53

204

58%

147

71

1,429

455

416

39

259

57%

196

126

Italy

1) 2)

€ 6.8 Bn Partecipated € 0.4 Bn Not Partecipated

AUM participated NOTE: The differences between NAV and UCG + NIC (equal to 54 €/mln) is due to other assets and liabilities not included into calculation of real estate NAV.

€ 7.2 Bn AUM

MARCH 2010

9

Development 21% Residential & trading 15%

Commercial Yielding & Core 64%

Pirelli RE SGR: leader in the Italian fund management industry  Italian leader with 18% market share  Strategic partnership with Intesa San Paolo bank to exploit market opportunities

 Track record in the performance of the funds under management and in product innovation

 Fully integrated offer: From Fund Mgmt to specialised services (agency, property)

Fund Mgm market only segment in the real estate market expected to growth

1) Source: Semestral Report Fondi Immobiliari Italiani - Assogestioni, June 2009

MARCH 2010

10

Pirelli RE’s Service Platform will capture organic and consolidation growth opportunities ‘Structural room for growth’… (NAV of RE funds and REITs / Value of the existing RE stock)*

…and short-medium term growth possibilities (€bn, AuM)

37.3%

result in a consolidation opportunity 120%

48-64%

46 - 51

15 - 20

39%

100%

23 smaller SGRs

Total

100% 80%

31 19.1%

60%

12.3%

40%

61%

42%

20% 19% 0%

France

Germany

Italy

AuM 31-Dec-08

*All data exclude residential assets (2007 data) Source: Scenari Immobiliari, Cushman Wakefield

Expected AuM increase propelled by the launch of new products

AuM 31-Dec-11

(PRE)

Top 5 SGRs

 42% includes:  Investire Immobiliare SGR  BNP REIM SGR  Fimit SGR  First Atlantic SGR Source: Assogestioni

 Capture third party AuM without additional equity investment through leveraging on leading market

position and the development of new investment products  Consolidation opportunities offered by highly fragmented Italian SGR market Source: analysis and estimations of Value Partners based on data from Prometeia, Scenari Immobiliari, Inrev, AIFI, Pirelli RE

MARCH 2010

11

Organic growth – new business from existing funds and development of new products Funds

Description

Funds for Public Entities and Pension Funds

 Casse and Enti di Previdenza  Other Public Entities (INAIL, INPS, etc.)  First Generation Pension Funds  New Generation Pension Funds

 Development of new Funds (through contribution of assets and blind pools of equity) in order to rationalize and efficiently manage the real estate assets of Public Entities and Savings Associations (so called Casse).  Funds which can invest up to 20% of the total assets in RE. The other real estate assets in these funds can be transferred to specialized real estate funds through contribution.  The 2006 pension fund reform gives the possibility to allocate to investment funds the Severance Indemnity Fund (TFR); the reform has unlocked the potential for significant flows into real estate funds.

Government Programs

 Sales programs from public entities  Social housing

 Funds targeting disposals by national and local / public entities.  Funds targeting social housing developments with high standards and energy saving in urban areas with a high population density.

Distressed Portfolios

 Transfer to Funds of distressed assets  Equity restructuring in distressed Funds through issue of new privileged units

 Funds which target distressed assets: use of speculative reserved real estate fund as a tool for executing debt restructurings among: i) debtor, owner of a real estate portfolio with high debt level; ii) banks, owners of real estate financing mortgages; iii) SGR with mandate for management and creation of the fund.

Specialized Funds

 International Investors  Family officers

 Funds created through contribution of existing assets and/or blind pools of equity targeting value added and opportunistic investments

Core Funds and Foreign Investors

 Foreign Investors  Sovereign Wealth Funds  German Open-Ended Funds

 Funds investing in core assets with a “hold” strategy (i.e. Trophy Fund), in primary locations and leased to tenants of high credit standing on long-term contracts.

    

 Funds which gain real estate exposure through investments in mezzanine financing.  Funds which target opportunities dedicated to the senior/retired people (over 65) through direct acquisition of residential real estate and conversion or development of senior housing facilities which is later leased to the target market generating an yield.

New Products

Fund of funds Alternative funds (distressed debt) Mezzanine funds Alternative energy funds (i.e. photovoltaic) Senior housing

MARCH 2010

12

Pirelli RE Non Performing portfolio: snapshot Breakdown by Geography(*)

Breakdown by typology(*)

Total porfolio AUM 1.6 €/bln Net Book Value Strategy

 PRE Credit Servicing (PRECS)

received from Standard & Poor’s an evaluation of “strong” reaching the top of the ranking  Leading Company with approx. 200 employees and 6 branches across Italy

 Improving the performance of the existing Investments

PRE as been selected by Calyon as a preferred partner in Italy  Pirelli Re investments are done thought minority stake (****)  Major Partner: Calyon  Other partners: Morgan Stanley / General Electric  Total invested capital 104 €mln in 12 portfolios  Net Book Value(****) € 1.6bln, Gross Book Value € 9.5bln

Services

Services

Investments

Key Information

portfolios to maximize the return on invested capital

 No further co-investments in new portfolios  Targeting yearly 350-400 €/mln collections  Efficiently managing the existing portfolio  Acquiring third parties mandates thanks to:  Strong partners  Unique skills in managing the entire

(*) Based on Gross Book Value corresponding to the nominal face value of the loans (**) In June 2009 Calyon signed a partnership with PRE acquiring 20% stake in credit Servicing (PCRS) (***) CFT portfolio is the only investment done at 100% by PRE (****) Net Book Value is the residual purchase price of the loans

MARCH 2010

13

process (from acquisition to financial and operating structuring)

Pirelli RE in Germany : snapshot

Germany AUM 7.0 €/Bln

(*)

Portfolio Main Characteristics

  

Limited net invested capital in real estate € 233m ( total € 866m) Exposure in residential and retail sectors Approx. 75.000 units managed (3.130.000 m²)  o/w approx. 50.00 owned (in joint venture) and 25.000 of third parties

  

Commercial Portfolio: Assets with 3.3 mln m² Gross Leasable Area 6 Commercial development projects: 90.000 m² (Hamburg & Dresden) Shopping center management: Property Management of 6 centers in Hamburg, Konstanz, Mülheim and Krefeld

(*) Development areas are areas where a buyer has already being identified and signed a preliminary contract

MARCH 2010

14

Germany : Real Estate Portfolio Key Data as of Dec. 2009

(€ mln)

DGAG (Residential)

BAUBECON (Residential)

HIGHSTREET (Commercial)

Other

1) 2)

Mkt.Value 100% 1)

Mkt. Value PRE 25% average

BV Quota PRE

UCG Quota PRE

Net Debt Quota PRE

LTV

NAV Quota PRE 2)

NIC Quota PRE

928

380

372

8

264

69%

116

87

1,566

626

619

7

529

84%

97

42

3,992

483

476

7

423

87%

60

35

550

234

226

8

153

65%

81

68

AUM participated NOTE: The differences between NAV and UCG + NIC (equal to 100 €/mln) is due to other assets and liabilities not included into calculation of real estate NAV.

MARCH 2010

15

Residential Portfolio: a snapshot      

Total Asset Under Management at Market Value € 2.8 bln The portfolio in JV focused in North (59%) followed by Middle (19%) and East (18%) Units under management 49.000 Overall Vacancy rate 4% Annual estimated Net Contracted Rent € 185 mln Yield on MV approx. 6.7% Hannover 14%

Kiel 24%

Sudwest 4% Magdeburg 5%

Berlin 18%

Hamburg 20% Lubeck 15% The figures are estimated at December 31, 2009

MARCH 2010

16

Residential Portfolio key data BauBecon  Starting date: 2007  Numbers of units: 25.900  (of which 3.400 resricted)  Rented SQM: 1.6 mln

 Main cities: Berlin, Hannover Magdeburg  NCR Monthly: € 8.3 mln  Vacancy (units): 5.0%  Yield on MV app. 6.4%

DGAG  Starting date: 2007  Numbers of units: 18.600  (of which 7.600 restricted)  Rented SQM: 1.1 mln

Vacancy - DGAG 4.0%

 Main cities (Kiel, Lubeck)  NCR Monthly: € 5.5 mln  Vacancy (units): 2.4%  Yield on MV app. 7.3%

3.5%

3.3%

2.9%

3.0%

3.0%

2.5%

2.4%

2.0% Dec-07

SMALL DEALS  Starting date: 2006  Numbers of units: 4.500  (of which 400 restricted)  Rented SQM: 0.3 mln

3.6%

 Main cities Berlin, Rostock, Dresden, Dusseldorf  NCR Monthly: € 1.6 mln  Vacancy (units): 4.9%  Yield on MV app: 6.4%

MARCH 2010

17

Dec-08

Jun-09

Dec-09

Vacancy - SMALL DEAL 9.0% 8.0%

8.3%

8.2% 7.0%

7.2%

7.0% 6.0% 5.0%

4.9%

4.0% Dec-07

The figures are estimated at December 31, 2009

Jun-08

Jun-08

Dec-08

Jun-09

Dec-09

Commercial Portfolio: Key data Total Asset Under Management at Market Value € 4.1 bln Total annual passing rent ca € 277 mln Highstreet n.157 assets almost fully let to Karstadt and passing rent € 271 mln Mistral: 6 trading assets and 4 development projects to be completed in 2010 MISTRAL Development

HIGHSTREET  Sale and lease back 16.50 year lease

 N. 4 Development project in Hamburg

 Starting date: 2008

 Starting date: 2007

 Assets:ca 157 throughout Germany

 Surface: 41.000 SQM

 Lettable area SQM 2.1 mln  Main assets: KaDeWe Berlin, Munchen Oberpollinger  Portfolio almost fully let to Karstadt

Breakdown of total area by use Office 2,5%

 Passing rent (estimated): € 6.7 mln  Vacancy Rate: 16.0%

 Gross yearly rents ca € 269 mil

Sporting goods stores 2,5% Logistics 3,4%

 Potential rent: € 8.1 mln

Other 2,2%

MISTRAL Trading  N. 6 Trading assets  Starting date: 2007  Surface: 58.000 SQM

Department Stores 83,7%

Parking 5,7%

 Potential rent: € 7.3  Passing rent 6.6 mln  Vacancy Rate: 11.5%

The figures are estimated at December 31, 2009

MARCH 2010

18

Pirelli RE in Poland: snapshot Poland AUM 0.2 €/Bln

Residential 100%

Portfolio Main Characteristics   

Leading operator in the residential development Exposure only in major cities like Warsaw and Gdansk Working on obtaining the building permit for a large scheme in Warsaw (1mln sqm /GLA)

(€ mln)

Development (Poland)

Mkt. Value 00% 1)

Mkt. Value PRE 25% average

BV Quota PRE

UCG Quota PRE

Net Debt Quota PRE

LTV

NAV Quota PRE 2)

NIC Quota PRE

190

72

57

15

28

39%

44

20

MARCH 2010

19

Economic Results by country

MARCH 2010

20

Economic Results Total Pirelli RE (€/mln)

DECEMBER 2009

SEPTEMBER 2009

DECEMBER 2008

187,3 13,4 200,7

137,4 7,9 145,3

224,3 1,6 225,9

7,8

(0,5)

(30,3)

Result from vehicles & funds Shareholders’ loans interests

(33,9) 19,5

(29,7) 21,3

(29,4) 23,0

Vehicles & Funds Result (**)

(14,4)

(8,4)

(6,4)

TOTAL RESULT (**)

(6,6)

(8,9)

(36,7)

Service Platform/G&A Consolidated revenues Other (*) Total revenues Service Platform/G&A Result (**) Vehicles & Funds

(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest

MARCH 2010

21

Economic Results Italy (€/mln)

DECEMBER 2009

SEPTEMBER 2009

DECEMBER 2008

Consolidated revenues Other (*) Total revenues

99,7 11,7 111,3

73,9 6,1 80,0

113,6 17,0 130,6

Service Platform Result (**)

32,0

19,5

11,3

Result from vehicles & funds Shareholders’ loans interests

(10,8) 7,5

(21,0) 5,9

(30,4) 11,6

Vehicles & Funds Result (**)

(3,3)

(15,1)

(18,8)

Total Italy (**)

28,7

4,3

(7,6)

Service Platform

Vehicles & Funds

(**)

(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest

MARCH 2010

22

Economic Results Service Platform Italy DECEMBER 2009

SEPTEMBER 2009

DECEMBER 2008

Consolidated revenues Other (*) Total revenues

43.5 11.7 55.2

32.1 6.1 38.2

48.5 17.0 65.5

Result Fund & AM Fee(**)

26.1

16.4

17.4

Consolidated revenues Other (*) Total revenues

27.4

17.9

24.0

27.4

17.9

24.0

Result Agency(**)

(1.8)

(3.7)

(13.6)

Consolidated revenues Other (*) Total revenues

28.8

23.9

41.1

28.8

23.9

41.1

Result Property(**)

7.7

6.8

7.5

Consolidated revenues Other (*) Total revenues

99.7 11.7 111.3

73.9 6.1 80.0

113.6 17.0 130.6

Result (**)

32.0

19.5

11.3

(€/mln)

Fund & AM Fee

Agency

Property

Service platform

(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest

MARCH 2010

23

Economic Results Germany (€/mln)

DECEMBER 2009

SEPTEMBER 2009

DECEMBER 2008

Consolidated revenues Other (*) Total revenues

58,6 0,0 58,6

44,4 0,0 44,4

61,1 1,4 62,5

Result (**)

1,3

2,2

(9,7)

Result from vehicles & funds Shareholders’ loans interests

(18,6) 15,8

(14,9) 12,3

(25,5) 11,1

Result (**)

(2,8)

(2,6)

(14,5)

Total Germany (**)

(1,4)

(0,4)

(24,2)

Service Platform

Vehicles & funds

(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest

MARCH 2010

24

Economic Results Service Platform Germany DECEMBER 2009

(€/mln) Fund & AM Fee Consolidated revenues Other (*) Total revenues

SEPTEMBER 2009

DECEMBER 2008

14,2

10,3

15,0

14,2

10,3

15,0

3,2

3,1

(5,0)

3,9

3,4

3,9

3,4

4,4 (0,1) 4,4

0,4

0,2

(1,1)

Consolidated revenues Other (*) Total revenues

26,8

20,2

26,8

20,2

26,2 1,4 27,6

Result Property (**)

(2,3)

(1,2)

(1,2)

Consolidated revenues Other (*) Total revenues

13,6

10,6

13,6

10,6

15,6 0,0 15,6

0,1

0,1

(2,5)

Service platform Consolidated revenues Other (*) Total revenues

58,6 0,0 58,6

44,4 0,0 44,4

61,1 1,4 62,5

Result (**)

1,3

2,2

(9,7)

Result Fund & AM Fee (**) Agency Consolidated revenues Other (*) Total revenues Result Agency (**) Property

Facility

Result Facility (**)

(9,7) (*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest

MARCH 2010

25

Economic Results Poland (€/mln)

DECEMBER 2009

SEPTEMBER 2009

5,3 0,0 5,3

4,0 0,0 4,0

6,8 0,0 6,8

Result (**)

(1,1)

(1,1)

(2,0)

Result from vehicles & funds Shareholders’ loans interests

(1,1) 2,2

0,3 1,7

20,1 1,6

Result (**)

1,2

2,0

21,8 (***)

Total Poland (**)

0,1

0,9

19,8

Service Platform Consolidated revenues Other (*) Total revenues

DECEMBER 2008

Vehicles & funds

(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) 'Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interests (***) Including result from Lucchini sale

MARCH 2010

26

Economic Results Service Platform Poland DECEMBER 2009

SEPTEMBER 2009

1,8

1,6

2,8

1,8

1,6

2,8

(1,1)

(0,9)

(1,9)

Consolidated revenues Other (*) Total revenues

1,2

0,7

1,3

1,2

0,7

1,3

Result (**)

0,1

(0,4)

(0,2)

Consolidated revenues Other (*) Total revenues

2,3

1,7

2,7

2,3

1,7

2,7

(0,1)

0,2

0,1

5,3 0,0 5,3

4,0 0,0 4,0

6,8 0,0 6,8

(1,1)

(1,1)

(2,0)

(€/mln)

DECEMBER 2008

Fund & AM Fee Consolidated revenues Other (*) Total revenues Result (**) Agency

Facility

Result (**)

Service platform Consolidated revenues Other (*) Total revenues Result (**)

(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest

MARCH 2010

27

Economic Results NPLs (€/mln)

DECEMBER 2009

SEPTEMBER 2009

DECEMBER 2008

Consolidated revenues Other (*) Total revenues

18,8 1,8 20,6

12,1 1,8 14,0

34,8 0,0 34,8

Result (**)

(4,0)

(5,2)

3,7

Result from vehicles & funds Shareholders’ loans interests

(3,5) (6,0)

6,0 1,3

6,4 (2,1)

Result (**)

(9,5)

7,3

4,3

Total NPL (**)

(13,5)

2,1

8,0

Service platform

Vehicles & funds

(**)

(*) Includes success fees, promote and capital gain from quota disposals of service companies (**) ‘Result' represents EBIT including income from equity participations before restructuring costs, writedowns/revaluations, including shareholders’ loans interest

MARCH 2010

28

Additional Information

MARCH 2010

29

Consolidated income statement 100% YoY trend €/mln

Total Real Estate Dec.2009

Total Italy

Total Germany

Total Poland

Total Real Estate Dec.2008

Total Italy

Total Germany

Total Poland

Sales

1,031.4

613.5

380.1

37.8

860.9(*)

566.5

184.6

109.9

Rents capital gain sales fees other costs Capitalized Financial Charges Other Capitalized Costs EBITDA Depreciations Revaluations/Writedown EBIT Interest expenses/revenues bank loans Interest expenses/revenues SHL Derivatives PBT Income taxes Net Income 100%

782.8 143.0 (16.0) (477.4) 29.0 172.6 634.0 (1.9) (316.0) 316.3 (522.6) (78.5) (28.0) (312.8) 29.9 (283.0)

294.7 66.7 (10.7) (273.9) 23.2 122.9 223.0 (1.7) (45.2) 176.1 (171.0) (20.6) (12.3) (27.8) 2.8 (24.9)

487.6 68.3 (3.9) (185.2) 0.0 36.3 403.2 (0.1) (268.9) 134.2 (345.2) (52.4) (15.8) (279.2) 27.0 (252.2)

0.4 8.0 (1.5) (18.3) 5.8 13.4 7.8 (0.1) (2.0) 5.9 (6.3) (5.6) 0.1 (5.9) 0.1 (5.8)

669.2 171.2 (11.5) (415.4) 41.0 139.5 593.9 (50.5) (598.6) (55.2) (525.9) (83.6) (58.2) (722.9) (27.5) (750.4)

336.9 108.3 (8.2) (213.5) 29.0 48.8 301.1 (49.3) (198.6) 53.2 (262.9) (40.7) (26.1) (276.7) (11.6) (288.3)

331.8 28.8 (1.5) (161.6) 2.2 55.8 255.6 (1.1) (396.4) (142.0) (256.7) (36.8) (31.2) (466.7) (14.5) (481.2)

0.5 34.2 (1.8) (40.3) 9.8 34.8 37.2 (0.1) (3.5) 33.6 (6.2) (6.1) (0.9) 20.4 (1.3) 19.1

Operating result incl. income from equity part. and writedown/revaluations

(61.7)

(27.1)

(32.8)

(1.9)

(171.6)

(96.4)

(94.0)

18.7

Writedown/Revaluations

(31.4)

(16.4)

(14.2)

(0.8)

(135.8)

(65.9)

(68.5)

(1.4)

Operating result incl. income from equity part. before writedown/revaluations

(30.4)

(10.8)

(18.6)

(1.1)

(35.8)

(30.4)

(25.6)

20.1

interest income from shareholders’ loans

25.6

7.5

15.8

2.2

24.3

11.6

11.1

1.6

Operating result incl. income from equity part. and Shareholders’ loans

(4.9)

(3.3)

(2.8)

1.2

(11.6)

(18.8)

(14.5)

21.8

(*) 2008 figure don’t include the sale of REOCO (NPLs) for approx. 4 €/mln

MARCH 2010

30

Consolidated income statement 100% - December 2009 €/mln

Total Real Estate Dec.2009

Total Italy

Sales

1,031.4

Rents capital gain

Italy

Total Poland

Yielding residential

Development

380.1

196.9

105.7

77.5

37.8

5.5 19.4 (0.2) (87.9) 13.0 61.4 11.2 (0.9) (35.0) (24.8) (26.1) (8.3) 0.0 (59.2) 0.7 (58.5)

487.6 68.3 (3.9) (185.2) 0.0 36.3 403.2 (0.1) (268.9) 134.2 (345.2) (52.4) (15.8) (279.2) 27.0 (252.2)

287.6 32.7 (1.0) (74.1) 0.0 0.1 245.4 0.0 (339.5) (94.1) (207.2) (35.2) (5.7) (342.2) 46.7 (295.5)

188.3 14.5 (2.8) (80.5) 0.0 10.7 130.2 (0.1) 74.6 204.7 (131.3) (15.7) (10.1) 47.6 (11.6) 35.9

11.7 21..1 0.0 (30.6) 0.0 25.5 27.6 0.0 (4.0) 23.6 (6.7) (1.5) 0.0 15.4 (8.1) 7.3

0.4 8.0 (1.5) (18.3) 5.8 13.4 7.8 (0.1) (2.0) 5.9 (6.3) (5.6) 0.1 (5.9) 0.1 (5.8)

(40.0)

(20.6)

(32.8)

(44.2)

11.0

0.5

(1.9)

23.8

(22.0)

(18.2)

(14.2)

(45.2)

30.0

(2.6)

(0.8)

(10.8)

9.8

(18.0)

(2.4)

(18.6)

1.0

(19.0)

3.1

(1.1)

25.6

7.5

1.9

2.6

2.9

15.8

9.5

6.3

0.0

2.2

(4.9)

(3.3)

11.7

(15.4)

0.5

(2.8)

10.5

(12.7)

3.1

1.2

Yeilding

Development

613.5

288.5

249.0

75.9

782.8 143.0 (16.0) (477.4) 29.0 172.6 634.0 (1.9) (316.0) 316.3 (522.6) (78.5) (28.0) (312.8) 29.9 (283.0)

294.7 66.7 (10.7) (273.9) 23.2 122.9 223.0 (1.7) (45.2) 176.1 (171.0) (20.6) (12.3) (27.8) 2.8 (24.9)

268.0 25.8 (5.0) (155.5) 5.9 59.8 199.0 0.0 61.1 260.1 (109.8) (5.0) (12.1) 133.2 3.4 136.5

21.2 21.7 (5.5) (30.5) 4.3 1.7 12.9 (0.8) (71.2) (59.1) (35.1) (7.2) (0.2) (101.7) (1.2) (102.9)

Operating result incl. income from equity part. and writedown/revaluations

(61.7)

(27.1)

33.6

Writedown/Revaluations

(31.4)

(16.4)

Operating result incl. income from equity part. before writedown/revaluations

(30.4)

interest income from shareholders’ loans Operating result incl. income from equity part. and Shareholders’ loans

Other Capitalized Costs EBITDA Depreciations Revaluations/Writedown EBIT Interest expenses/revenues bank loans Interest expenses/revenues SHL Derivatives PBT Income taxes Net Income 100%

Germany Yeilding commercial

Trading & SOHO

sales fees other costs Capitalized Financial Charges

Total Germany

MARCH 2010

31

Consolidated income statement 100% - December 2008 €/mln

Total Real Estate

Total Italy

Sales

860.9(*)

Rents capital gain

Italy

Total Germany

Yeilding

Trading & SOHO

Development

566.5

234.0

189.3

143.1

0.0

184.6

669.2

336.9

294.4

26.1

3.4

12.9

171.2

108.3

30.9

48.8

28.5

0.0

Non strategic

Germany Yeilding commercial

Poland

Yielding residential

Development

48.9

34.5

101.2

331.8

136.4

189.0

6.4

0.5

28.8

9.3

5.2

14.2

34.2

109.9

sales fees

(11.5)

(8.2)

(3.7)

(3.1)

(1.4)

0.0

(1.5)

(0.2)

(1.3)

(0.1)

(1.8)

other costs

(415.4)

(213.5)

(116.4)

(40.3)

(83.3)

26.5

(161.6)

(16.4)

(117.7)

(27.5)

(40.3)

Capitalized Financial Charges

41.0

29.0

0.6

5.5

22.8

0.0

2.2

0.0

0.0

2.2

9.8

Other Capitalized Costs

139.5

48.8

0.0

(0.9)

49.8

0.0

55.8

0.2

35.1

20.6

34.8

EBITDA

593.9

301.1

205.9

36.0

19.8

39.4

255.6

129.3

110.4

15.9

37.2

Depreciations

(50.5)

(49.3)

0.0

(0.5)

0.0

(48.8)

(1.1)

0.0

(1.1)

0.0

(0.1)

Revaluations/Writedown

(598.6)

(198.6)

(78.1)

(74.6)

(35.9)

(10.0)

(396.4)

(316.8)

(79.6)

0.0

(3.5)

EBIT

(55.2)

53.2

127.8

(39.1)

(16.1)

(19.4)

(142.0)

(187.5)

29.7

15.9

33.6

Interest expenses/revenues bank loans

(525.9)

(262.9)

(155.4)

(53.3)

(36.1)

(18.1)

(256.7)

(113.1)

(136.3)

(7.4)

(6.2)

Interest expenses/revenues SHL

(83.6)

(40.7)

(7.1)

(22.8)

(10.8)

0.0

(36.8)

(13.3)

(23.5)

0.0

(6.1)

Derivatives

(58.2)

(26.1)

(20.2)

(1.6)

(4.3)

0.0

(31.2)

(18.7)

(12.6)

0.0

(0.9)

PBT

(722.9)

(276.7)

(55.0)

(116.9)

(67.3)

(37.5)

(466.7)

(332.5)

(142.7)

8.5

20.4

Income taxes

(27.5)

(11.6)

(1.4)

(6.9)

(3.4)

0.1

(14.5)

(9.0)

(5.5)

0.0

(1.3)

Net Income 100%

(750.4)

(288.3)

(56.4)

(123.8)

(70.7)

(37.4)

(481.2)

(341.5)

(148.2)

8.5

19.1

Operating result incl. Income from equity part. and writedown/revaluation

(171.6)

(96.4)

(19.6)

(40.7)

(29.1)

(6.9)

(94.0)

(43.0)

(53.1)

2.0

18.7

Writedown/Revaluation

(135.8)

(65.9)

(22.4)

(27.1)

(15.5)

(1.0)

(68.5)

(38.8)

(29.7)

0.0

(1.4)

Operating result incl. Income from equity part. before writedown/revaluation

(35.8)

(30.4)

2.8

(13.6)

(13.7)

(5.9)

(25.6)

(4.2)

(23.4)

2.0

20.1

24.3

11.6

3.2

4.3

4.0

0.0

11.1

3.7

7.4

0.0

1.6

(11.6)

(18.8)

5.9

(9.3)

(9.6)

(5.9)

(14.5)

(0.5)

(16.0)

2.0

21.8

interest income from shareholders’ loans

Operating result incl. income from equity part. and Shareholders’ loans

(*) 2008 figure don’t include the sale of REOCO (NPLs) for approx. 4 €/mln

MARCH 2010

32

Consolidated Net Cash Flow

(€/mln)

Dec-09

Dec-08

(26.1)

(59.7)

7.4

9.5

(101.2)

2.6

Change in other fixed assets

(9.9)

(16.8)

Change in NWC, funds and other

41.7

(2.5)

(88.1)

(67.0)

Ebit + IEP before restructuring costs, reval. / deval. Depreciation Change in investments 1)

Free cash flow Impact from Facility Mgmt disposal Restructuring costs Interest income /expenses and taxes Cash flow before dividends

171.2 (40.4) (22.7)

(12.4) (6.5)

(151.1)

85.3 (85.1)

Dividend paid (151.1)

Net cash flow Capital increase

0.2

399.3

Treasury shares purchase/sales Total net cash flow

1)

Change in investment is impacted by 114.8 of Shareholders’ Loans (SHL) / participation reclassification

MARCH 2010

33

248.2

0.2

Real Estate Portfolio: Sales, Rents and Acquitions by Country €/mln

SALES

RENTS

ACQUISITIONS

1,031.4

4,968.7

37.8

782.8

34.4

0.4

207.7

864.9(*) 380.1

669.2 0.5

109.9

4.635.0

487.6

184.5

331.8 527.6

613.5 336.9

570.5 294.7

December 2009 Italy

December 2008 Germany

December 2009 Poland

(*) 2008 figure includes the sale of REOCO (NPLs) for approx. 4 €/mln

MARCH 2010

34

294.9 3.0 291.9

December 2008

527.6

299.3

December December 2009 2008

AUM Real Estate Evolution “like for like” (Market Value) €/bln

Capex Acquisitions & other

Sales

Devaluations

+ 0.4 - 1.0 - 0.4 15.0 14.0

2008

2009

 The valuation of the Real Estate portfolio assessed by experts shows a 2.8% decrease on a “like for like” basis vs. the previous year  The Italian, German and Polish portfolios mask a -1.9%, -3.3% and -8.7%, respectively.

MARCH 2010

35

Real Estate Writedowns and Revaluations P&L Impact Italy

(€/mln)

Revaluations

Total

Revaluations Regione Sicilia Fund

8.6

Trophy assets Fund R&E

27.2

(52.3)

(16.5)

Various investment

67.4 Writedowns

(31.4) Germany and Poland

Revaluations Small Deal DGAG

1)

6.6

25.7

(14.9) Writedowns (46.6)

Highstreet for (40.8)

Writedowns 1)

Includes -0.2 €/mln related to Baubecon Investment as the difference between revaluations and writedowns (IAS 40/IAS2)

MARCH 2010

36

Real Estate Sales and NPL Recoveries (€/mln)

NPL RECOVERIES

REAL ESTATE SALES 100%

Pro quota

100%

Pro quota

1,031.4 864.9(*) 514.2 372.3

361.8

160.7

322.7 98.8

December 2009

December 2008

December 2009

December 2008

December 2009

 Gross Margin on sales is about 14% as of December 2009  Sales price for full year 2009 in line with market value  Achieved total sales target communicated to the market (1 € bln) (*) 2008 figure includes the sale of REOCO (NPLs) for approx. 4 €/mln

MARCH 2010

37

December 2008

December 2009

December 2008

Participated Real Estate Assets under Management 100% Passing Yield

Vacancy

Book Value

Market Value

90,431.6

5.6%

10.2%

1,620,665.3

1,745,250

1,092,581.6

38,838.1 29,657.9 21,935.6

5.5% 6.7% 4.7%

9.4% 10.7% 13.1%

708,290.0 442,053.4 470,321.9

708,290 546,080 490,880

481,846.1 262,341.4 348,394.1

171,376.9

7.0%

6.7%

2,452,688.5

2,572,163

1,215,297.8

21,290.0 13,943.0 22,216.9 35,064.1 1,426.0 1,586.6 16,878.3 39,963.5 9,010.5 9,998.0

7.1% 7.4% 6.8% 6.8% 10.4% 4.8% 7.5% 7.2% 8.3% 5.4%

298,789.0 189,574.0 329,089.2 517,197.0 13,675.4 32,986.8 224,970.0 553,888.0 108,956.7 183,562.5

303,920 215,820 334,000 568,160 19,930 33,900 237,900 562,290 112,680 183,563

193,834.8 115,573.6 136,135.7 226,931.3 10,163.4

261,808.5

6.4%

7.4%

4,073,353.8

4,317,413

2,307,879.4

277,772.4

6.9%

1.1%

4,039,089.9

4,099,275

3,474,364.3

6,606.2 271,166.1

6.3% 6.9%

11.5% 0.8%

104,982.0 3,934,107.9

106,910 3,992,365

60,185.4 3,414,178.9

186,919.0

6.8%

4.7%

2,741,124.5

2,784,114

2,186,245.4

66,385.5 101,851.0 18,682.6

7.3% 6.6% 6.5%

2.4% 4.9% 5.0%

908,185.8 1,547,445.2 285,493.6

928,058 1,566,097 289,959

661,152.0 1,322,865.0 202,228.4

TOTAL Germany

464,691.4

6.9%

3.2%

6,780,214.4

6,883,389

5,660,609.7

TOTAL YIELDING PORTFOLIO

726,499.9

6.7%

4.7%

10,853,568.2

11,200,802

7,968,489.2

Quota PRE

Passing Rent

€/mln Commercial Core Italy Fondo TECLA Fondo Cloe FONDO RETAIL & ENTERTAINMENT

44.8% 18.1% 31.6%

Commercial Yieding Italy Fondo FIRPS TIGLIO 1 Fondo Raissa Fondo Olinda Dolcetto Tre S.r.l. PROGETTO PERUGIAsrl Fondo Armilla FONDO SPAZIO INDUSTRIALE FONDO HOSPITALITY & LEASURE ITALIA TURISMO S.p.a.

22.0% 12.9% 35.0% 11.3% 33.0% 100.0% 2.3% 22.1% 35.0% 16.3%

TOTAL Italy Commercial Germany Mistral Properties Highstreet

35.0% 12.1%

Residential Yielding Germany DGAG - Residential+Special Properties BIB Small Deal

40.0% 40.0% 49.9%

37.3% 3.1% 1.7% 2.8%

Net Debt

134,078.6 266,101.0 79,027.4 53,452.2

16,659.8

n.m.

n.m.

864,876.8

1,006,546

614,335.7

Development ITA

2,401.0

n.m.

n.m.

1,323,401.9

1,429,446

915,634.3

Development Germany

6,751.0

n.m.

n.m.

140,881.5

152,740

87,007.7

404.4

n.m.

n.m.

148,439.2

189,557

68,922.5

26,216.2

2,477,599.4

2,778,289

1,685,900.2

752,716.0

13,331,167.6

13,979,090

9,654,389.4

Residential Small Office House Office ITA

Development Poland

OTHER PORTFOLIO

GRAND TOTAL REAL ESTATE 1)

Vacancy calculated on units

MARCH 2010

38

Pro-quota Real Estate Assets under Management Quota PRE €/mln

29,699.2

Commercial Core Italy Fondo TECLA Fondo Cloe FONDO RETAIL & ENTERTAINMENT

44.8% 18.1% 31.6%

Commercial Yieding Italy Fondo FIRPS TIGLIO 1 Fondo Raissa Fondo Olinda Dolcetto Tre S.r.l. PROGETTO PERUGIAsrl Fondo Armilla FONDO SPAZIO INDUSTRIALE FONDO HOSPITALITY & LEASURE ITALIA TURISMO S.p.a.

TOTAL Italy 35.0% 12.1%

Residential Yielding Germany DGAG - Residential+Special Properties BIB Small Deal

17,399.4 5,368.1 6,931.6

34,280.3 22.0% 12.9% 35.0% 11.3% 33.0% 100.0% 2.3% 22.1% 35.0% 16.3%

Commercial Germany Mistral Properties Highstreet

Passing Rent Pro-quota

5.4% 5.5% 6.7% 4.7%

6.9%

4,675.3 1,797.3 7,775.9 3,962.2 470.6 1,586.6

7.1% 7.4% 6.8% 6.8% 10.4% 4.8%

388.2 8,839.9 3,153.7 1,630.7

7.5% 7.2% 8.3% 5.4%

63,979.5

6.1%

35,541.8

6.8%

2,730.7 32,811.1

75,559.1 40.0% 40.0% 49.9%

Passing Yield

26,554.2 40,740.4 8,264.5

6.1% 6.9%

6.8% 7.1% 6.6% 6.5%

Vacancy

Book Value Pro-quota

Market Value Pro-quota

9.9%

545,947.3

571,272.5

380,221.5

9.4% 10.7% 13.1%

317,313.9 80,011.7 148,621.7

317,313.9 98,840.5 155,118.1

222,679.6 47,475.9 110,066.0

4.5%

496,942.5

515,366.3

246,921.6

65,614.1 24,436.1 115,181.2 58,443.3 4,512.9 32,986.8

66,740.8 27,819.2 116,900.0 64,202.1 6,576.9 33,900.0

50,334.3 15,148.4 47,647.5 25,647.8 3,353.9

5,174.3 122,520.0 38,134.8 29,939.0

5,471.7 124,378.5 39,438.0 29,939.0

3,030.2 58,759.3 27,659.6 15,340.6

37.3% 3.1% 1.7% 2.8%

6.0%

Net Debt Pro-quota

1,042,889.8

1,086,638.8

627,143.1

1.7%

520,653.1

528,376.1

448,136.8

11.5% 0.8%

44,626.0 476,027.1

45,300.0 483,076.1

25,597.7 422,539.1

4.7%

1,117,486.6

2.4% 4.9% 5.0%

372,265.1 618,978.1 126,243.4

380,213.8 626,439.0 128,285.0

264,460.8 529,146.0 90,282.8

883,889.6

TOTAL Germany

111,100.9

6.8%

4.2%

1,638,139.6

1,663,313.9

1,332,026.4

TOTAL YIELDING PORTFOLIO

175,080.4

6.5%

4.8%

2,681,029.5

2,749,952.7

1,959,169.5

n.m

5,634.9

Residential Small Office House Office ITA Development ITA Development Germany Development Poland

OTHER PORTFOLIO

GRAND TOTAL REAL ESTATE 1)

Vacancy calculated on units

MARCH 2010

39

297,982.7

350,973.3

204,466.5

600.3

n.m

416,461.7

455,492.2

258,824.5

2,163.4

55,198.9

60,107.9

37,005.6

149.3

56,962.3

71,747.7

27,620.4

8,547.9

826,605.5

938,321.1

527,917.0

183,628.3

3,507,635.0

3,688,273.8

2,487,086.5

Structural growth in Pirelli RE ’s recurring margin (€m)

2004A(c)

2005A

2006A

2007A

2008A

233.3 59.5 68.2 105.6

245.5 73.4 56.2 115.9

249.9 74.7 60.2 115.0

216.1 73.5 67.3 29.7 27.3 18.3 17.3

2011 Target

Revenues Total recurring revenues - Asset & Fund Mgmt. - Property - Agency - Credit servicing - Facility (Germany & Poland) Promote / Success fees Other income Total revenues Total Costs Op. result service platform(a) Investment Results(b)

13.5

22.7

17.7

238.3 81.5 50.8 66.9 35.0 4.1 24.5

6.1

4.1

2.0

11.4(e)

1.6

252.9

272.3

269.6

274.2

235.0(*)

254

(201.2)

(192.3)

(213.3)

(244.8)

(265.2)

(204)

51.7

80.1

56.3

29.4

(30.2)

50

110.9

105.7

164.6

99.8

(6.4)

60

67.5

(135.8)

Revaluation/devaluation Total core activity

254

162.7

185.9

221.0

196.7

(172.4)

110

NFP (adjusted) 245.2 AuM Real Estate (market value) €bn 9.5 NPL (Book Value) €bn 1.3 Pro-quota NAV Real Estate Adj. €bn(f) 1.3

292.5 11.7 1.3 1.2

430.5 11.2(d) 1.9 1.0

816.1 12.6 2.4 1.3

861.8 15.4 1.9 1.2

Stable Stable

(a) (b) (c) (d) (e) (f) Note: (*)

Operating result from service platform includes recurring results from Asset & Fund Management, Property, Agency, Credit Servicing, Facility (Germany & Poland), Holding & others Investment Results is the total of Operating Result from Investments and Interest from Shareholders’ Loans. In 2011 the expected interest on shareholders’ loans amounts to €10m Italian GAAP Includes DGAG portfolio valuation; signing in December 2006 / closing January 2007 Includes €11.2m capital gain on German platform’s minority disposal Pro-quota NAV Real Estate Adjusted is calculated as Real Estate Market Value less net bank debt Pro-forma results excluding Italian Facility Management platform sold in 2008. 2008 figures are presented before lay off expenses Not including revenues from G&A

MARCH 2010

40

Pirelli RE shareholders’ structure Market capitalization as of 10 March 2010 approx. 380 €/mln

BEFORE CAP INCREASE

AFTER CAP INCREASE Retail 12%

Retail Tresury shares 6.0% 2.8%

Institutional 30% Pirelli & C SpA 56.5%

Institutional 34.7%

Pirelli & C SpA 58%

 International institutional investors (Italy 40%, USA 30%, Switzerland 20%, UK 5%)  Growing presence of investors with a long term approach  Retail investors reached approx 12% of the free float

MARCH 2010

41