Enrico Parazzini is the new Managing Director Finance

Pirelli & C. Real Estate’s Board of Directors also co-opted and appointed Enrico Parazzini to act as Managing Director Finance following the resignation of Claudio De Conto, who held the same position, which the Board acknowledged during today’s session.

The Board of Directors, the Chairman Marco Tronchetti Provera and the entire management team thank Claudio De Conto for the work done and the results achieved while in Pirelli RE – specifically the successful contribution he made to the Company’s turnaround and restructuring  – as well as for his long professional career as part of the Pirelli Group begun in 1988.

The experience and expertise of Enrico Parazzini, who will be joining top management to work alongside the Chief Executive Officer Giulio Malfatto, will ensure continuity in Pirelli RE’s financial management and the necessary support in the implementation of the business plan. Enrico Parazzini’s curriculum vitae can be found on the website, www.pirellire.com.

Prelios: Pirelli RE’s new name

The new name was conceived as a blend of the company’s roots and its vision of the future.  The three initial letters “Pre” recall the concept of  premium, the Latin roots of which make it recognizable in all the primary European languages (Pre is also a reminder of the acronym that was part of the company’s former name).

The future is represented by the use of the word “helios”, a Greek term which refers to the sun.  The choice of this universal symbol, which in different cultures has always been associated with  values like vitality, transparency and optimism, stands for the beginning of a new phase, the centrality of the company in its sector and the idea of sustainability, a competitive element essential to creating value over time.

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IN LIGHT OF PROGRESSIVE IMPROVEMENT IN RESULTS OF PIRELLI RE, WHICH CONFIRMS THE VALIDITY OF THE STRATEGY ADOPTED, LENDING BANKS HAVE CONFIRMED THEIR SUPPORT FOR THE TRANSACTIONS

IN THE CONTEXT OF FURTHER STRENGTHENING OF THE SHAREHOLDING STRUCTURE, THE BOARD OF DIRECTORS PROPOSES GRANTING THE POWER TO APPROVE A RESERVED CAPITAL INCREASE OF UP TO 10% OF THE SHARE CAPITAL: MEDIOBANCA AND UNICREDIT AVAILABLE FOR FUTURE UNDERWRITING FOR AN AGGREGATE AMOUNT EQUAL TO 20 MILLION EUROS

IN ORDER TO FAVOR BETTER TRADING OF THE STOCK, THE BOARD OF DIRECTORS OF PIRELLI & C. ALSO PROPOSES TO CANCEL NOMINAL VALUE OF THE SHARES OF PIRELLI & C. AND TO REVERSE SPLIT SUCH SHARES IN A RATIO OF 1 NEW SHARE FOR EVERY 11 SHARES HELD

EXTRAORDINARY SHAREHOLDERS’ MEETINGS TO BE HELD BY THE END OF JULY FOR APPROVAL OF THE TRANSACTIONS. SEPARATION OF PIRELLI RE EXPECTED TO BE CONCLUDED IN THE SECOND HALF OF THE YEAR

Milan, 4 May 2010 – The Board of Directors of Pirelli & C., which met today, resolved upon a plan for separation of Pirelli RE. Such separation will occur through assignment of nearly all Pirelli RE shares held by Pirelli & C. to ordinary and savings shareholders of Pirelli & C., and, therefore, via voluntary reduction of the corporate capital of Pirelli & C. for an amount equal to the value of the Pirelli RE stake being assigned.

The separation of Pirelli RE, occurring in the context of the operating rationalization and optimization plan begun in 2008, which continued in 2009, aims to focus the company on its core industrial activities in the tyre industry as delineated in the strategies of the 2009-2011 industrial plan. The transaction will improve the equity and financial structure of the Pirelli Group, will simplify the corporate structure of Pirelli & C., and will allow for a more immediate reading of the industrial strategy and the economic and financial data of the Pirelli Group by the market, with potentially positive returns in terms of further reduction of the holding company discount.

Within the context of the separation of Pirelli RE, the lending banks, whose loan agreements include clauses for reimbursement in advance should Pirelli RE fall outside the perimeter of the Pirelli Group, have given their full support to the transaction. Pirelli RE’s stand-alone sustainability has been judged positively, on the basis of the assumptions underlying the industrial plan to 2011, presented to the financial market at the time of the capital increase carried out last June, the progressive improvement of all economic indicators compared with last year’s, confirming the validity of the change in strategy implemented, which aims to increase prospective recurring profits, and the track record achieved to date in reduction of fixed costs.

The Board of Directors of Pirelli RE, which met following that of Pirelli & C., favorably acknowledged the plan for separation approved by Pirelli & C. As a consequence of the transaction being finalized, Pirelli RE will proceed to modify its name, to be reviewed at a future Board meeting.

Thanks to the transaction, Pirelli RE will have a wider shareholder base and will be more appealing to possible takeover bids, with potential benefits for its market value. The transaction will also determine favorable conditions for creation of a more flexible platform for potential future partnerships.

The Board of Directors of Pirelli RE, for its part, approved the proposal – to be subsequently submitted to the Shareholders’ meeting – to grant the Board proxy to call for a paid-in capital increase of Pirelli RE within one year of the date of the Shareholders’ meeting, up to a maximum amount equal to 10% of the existing share capital, by issuing ordinary shares with exclusion of the option right pertaining to the shareholders. The issue price for the new shares will be determined by the Board of Directors according to the criteria to be defined by the same Board, such that the resulting price corresponds to the market value at the time of exercise of the proxy. Granting of this proxy will allow the Board of Directors to have a rapid and flexible instrument in order to further strengthen and stabilize the shareholding structure. In this context, Mediobanca and UniCredit have confirmed their availability to underwrite a capital increase for a total amount of 20 million euros, equally divided between them, on the basis of terms and conditions to agree on closer to the date of the separation.

In order to guarantee stability of Pirelli RE’s shareholder base, some of the members of the Pirelli & C. shareholders’ agreement expressed their intention to enter into, as future new sharheolders of Pirelli RE, a shareholders’ agreement that would involve less than 30% of the share capital, without, therefore, triggering a public tender offer requirement on the shares of Pirelli RE. Among the others, Mediobanca (for the Pirelli Re shares it obtains following the separation of Pirelli RE from the Pirelli Group) and Unicredit (also for the Pirelli RE shares obtained from possibly underwriting the above-mentioned capital increase) have expressed their availability to enter into such shareholders’ agreement.

In order to favor better trading of its stock, Pirelli & C. will proceed, prior to the assignment of shares, to cancel the nominal value of its ordinary and savings shares and to carry out a reverse stock split on the ordinary and savings shares of Pirelli & C. in the ratio of 1 new share for every 11 shares held, in a reverse stock split. Consequently, the ratio of assignment of Pirelli RE shares to ordinary and savings shareholders of Pirelli & C. will be 1 to 1.

The Board of Directors of Pirelli & C. and the Board of Directors of Pirelli RE granted a mandate to the Chairman to call the respective extraordinary shareholders’ meetings to adopt the required resolutions related to the transactions. These shareholders’ meetings are expected to take place by the end of July 2010 while the separation of Pirelli RE is expected to be completed in the second half of this year.

DETAILS ON THE TRANSACTIONS

1. CANCELLATION OF NOMINAL VALUE AND REVERSE STOCK SPLIT OF PIRELLI & C. SHARES

The Board of Directors of Pirelli & C. resolved to propose to the extraordinary Shareholders’ meeting to be called, the cancellation of the nominal value of the ordinary and savings shares and, afterwards, a reverse stock split grouping the shares in a ratio of 1 new ordinary share or 1 new savings share for every 11 shares in the same category. As an effect of the cancellation of the nominal value of the shares and the subsequent reverse stock split, the share capital of Pirelli & C., equal to 1,556,692,865.28 euros, will consist of 487,991,493 shares – of which 475,740,182 ordinary shares and 12,251,311 savings shares – with no nominal value. The implied book value of each ordinary and savings share post-reverse stock split will be equal to 3.19 euros.

Caution will be adopted in order to preserve unchanged the characteristics and measures of privileges attached to the savings shares of Pirelli & C. In any case the above transactions will not bring about a change in the rights attached to savings shares and will therefore not need to be submitted for approval of extraordinary shareholders’ meetings, neither will they trigger any right of withdrawal.

The terms and the timing of the reverse stock split transactions will be determined together with competent authorities and, in particular, with Italian stock market authority Borsa Italiana S.p.A., by giving appropriate notice to the market.

2. ASSIGNMENT OF PIRELLI RE SHARES

The separation of Pirelli RE from the Pirelli Group is expected to occur through assignment to ordinary and savings shareholders of Pirelli & C. of nearly all the Pirelli RE ordinary shares held by Pirelli & C., equal to about 58% of the corporate capital (487,798,972 ordinary shares); in order to carry out such assignment, a reduction of the share capital is expected for an amount corresponding to the value of the stake being assigned to the shareholders. The actual amount of the reduction of the share capital will be determined on the date of the extraordinary Shareholders’ meeting, in a measure equivalent to the value of the Pirelli RE stake being assigned, on the basis of the price of Pirelli RE shares on the open stock exchange day preceding the date of the Shareholders’ meeting.

The share capital reduction, should it be approved, will be carried out after cancellation of the nominal value of the shares and the reverse stock split through proportional assignment to Pirelli & C. shareholders of 487,231,561 shares of Pirelli RE, equivalent to nearly all the Pirelli RE shares in its portfolio. The decision not to assign all the shares held (487,798,972) is only due to the necessity to determine an assignment ratio that does not leave fractions. As for the Treasury shares held by Pirelli & C. (3,867,500 ordinary shares and 4,491,769 savings shares), these shares will not benefit from the right of assignment, which will be attributed proportionally to ordinary and savings shareholders of Pirelli & C. in the ratio of assignment of 1 Pirelli RE share for each ordinary and savings Pirelli & C. share held, after the reverse stock split. Thus, as an effect of the assignment ratio indicated above and the number of shares to be assigned, at the end of the transaction Pirelli & C. will remain in possession of 567,411 shares of Pirelli RE, or 0.1% of the share capital.

The proposal for reduction of the share capital will be preceded by an amendment to Article 5 of the By-laws of Pirelli & C., in order to expressly provide for the possibility to reduce share capital through distribution in kind to shareholders. In this case as well, the modalities for execution of the transaction will not trigger any change in the rights attached to the relevant shares.

Existing committed credit lines confirmed

The lending banks confirmed to Pirelli RE its committed credit lines for an aggregate amount equal to 430 million euros with an average maturity of about 24 months, in addition to an already existing credit line granted by Pirelli & C. for 150 million euros. The Pirelli & C. credit line, originally amounting to 750 million euros and later reduced to 150 million euros, is therefore confirmed, in part as suggested by the banks, in order to support the stand-alone activities of Pirelli RE. The terms and conditions of the credit line, including the provisions related to its remuneration, will be aligned to those of the loan of 320 million euros granted to Pirelli RE by a pool of banks in July 2009, and the credit of Pirelli & C. will therefore no longer be subordinated with respect to the other creditors of Pirelli RE (so-called “pari passu” clause). The expiration of the credit line has also been calibrated on the loan granted by the banks, and, therefore, extended to July 2012 or to February 2013 if, upon the occurrence of certain circumstances, the expiration of the loan granted by the banks is postponed. The credit line may also be postponed until 31 July 2015 or 31 July 2017 in case of non-compliance with certain financial covenants and/or should Pirelli RE fail to reach certain economic and financial targets.

Conference call

The transactions described in this press release will be illustrated tomorrow, 5 May 2010, at 12 p.m., in a conference call in which the Chairman of Pirelli & C. SpA, Marco Tronchetti Provera, and the top management of the Group will intervene. Journalists will be able to follow the presentation by telephone, without the possibility to ask questions, by calling the number +39.06.3348.5042. The presentation will also be available via webcast – in real time – on the website www.pirelli.com in the Investor Relations section, where it will be possible to consult the slides.

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Milan, 18 March 2010. – Pirelli & C. Real Estate S.p.A. announces that today the notice calling the Shareholders’ meeting for approval of 2009 financial statements, to be held on 19 April 2010 (upon first call) or 20 April 2010 (upon second call), has been published in the Official Gazzette of the Italian Republic.

Shareholders will be called on to resolve upon, in addition to approval of 2009 financial statements, appointment of three members of the Board of Statutory Auditors and/or reduction of their number and appointment, via list vote.

At the meeting there will also be a proposal for renewal of the authorization for purchase and disposition of Treasury shares and adoption of incentive plans for directors and employees.

In an extraordinary session, certain proposals to amend the By-laws will be submitted to shareholders, relating to articles 7 (Shareholders’ meeting) and 22 (Board of Statutory Auditors), as well as the numbering in single paragraphs of the articles of the By-laws.

The draft financial statements as of 31 December 2009, the consolidated financial statements and the directors’ reports concerning all the items on the meeting’s agenda, will be made available to the public at the company’s headquarters and at Borsa Italia SpA by the end of the day on 2 April 2010. Together with the aforementioned documentation, the annual report on governance and ownership structure will also be made available to the public. The Board of Statutory Auditors’report and the report of the auditing company will be made available to the public in the same way according to law.

The documentation for the meeting will also be made available, on the same terms, on the company’s website, www.pirellire.com. On the same website, the notice of call of the meeting is also available.

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• THIRD QUARTER CLOSES WITH EBIT, INCLUDING NET INCOME FROM INVESTMENTS BEFORE RESTRUCTURING COSTS AND WRITEDOWNS/ REVALUATIONS, UP ON PREVIOUS TWO QUARTERS. TARGET EBIT FOR 2009 CONFIRMED AT BETWEEN -€25 AND -€35 MILLION

• NET FINANCIAL POSITION, EXCLUDING SHAREHOLDER LOANS GRANTED: -€447.4 MILLION (-€861.8 MILLION AT DECEMBER 31ST, 2008) THANKS TO CAPITAL INCREASE COMPLETED AT THE START OF JULY

Milan, November 4th, 2009 – At today’s meeting, the Board of Directors of Pirelli & C. Real Estate examined and approved the Interim Management Statement at September 30th, 2009.

The Company continues to work on completing the turnaround announced in its three-year plan for 2009/2011. In fact, internal reorganization is proceeding, as is the cost-saving plan, started in 2008 in the face of the new market conditions. The Company is also focusing on its recurring revenues from real estate management and specialized services and on reducing debt and net invested capital.

In keeping with the announced strategy, the sale of 5% of Pirelli RE SGR to institutional partner Intesa Sanpaolo during the third quarter, is designed to support growth in the assets managed by the fund manager and hence in fund management activities, both of which are core elements of the development strategy contained in the 2009-2011 business plan, with the goal of increasing recurring profits from real estate management activities, as well as making potential 2 partnerships with other sector operators.

The Company is also continuing to implement the cost-saving plan started in 2008, with the savings of €47 million achieved in the period to September 30th close to the original full-year target for 2009 of €50 million; the annual target has been revised up accordingly to around €65 million in total savings.

As far as the Company’s capital and financial strengthening is concerned, the capital increase was completed successfully and a committed credit line has been obtained from eight leading financial institutions which is more appropriate to the Company’s new requirements not only in terms of amount (€320 million) but also in terms of maturity (July 2012).

Despite the impact of the international crisis, which is still affecting results, Pirelli RE closed the third quarter with a negative EBIT, inclusive of net income from investments before restructuring costs and writedowns/revaluations, of €7.3 million although better than the previous two quarters (-€14.7 million in the first quarter and -€8.2 million in the second quarter). Management activities (fund & asset management) and real estate services (property management, agency) inclusive of headquarter costs reported considerably better results (-€0.5 million, versus -€5.2 million in 2008 which included €17.0 million in indemnity received upon replacing Pirelli RE SGR as the manager of the Berenice fund) thanks to the steps taken to cut costs. The current year’s result includes the gain on selling 5% of Pirelli RE SGR (€6.1 million).

Performance in the first nine months of 2009**

Real estate sales amounted to €657.6 million at September 30th, 2009 (€714.5 million at September 30th, 2008). Sales margin was 12% (19% in the first nine months of 2008). The Company confirms that it will be able to meet its year-end sales target of €1 billion.

Consolidated revenues were €199.2 million at September 30th, 2009 (€296.5 million at September 30th, 2008). Worth remembering is that the 2008 figure benefited from around €49 million in revenues from the sale of just one asset in Poland.

EBIT, including net income from investments before restructuring costs and asset writedowns/revaluations, came to -€30.2 million compared with €22.4 million in the first nine months of 2008. The Company confirms its EBIT target for 2009 at between -€25 and -€35 million, as previously announced.

Part of the difference in EBIT relative to September 2008 (-€52.6 million) is due to more than €30 million of non-recurring income from which the company benefited in the prior period on the sale of just one asset in Poland and indemnity received upon replacing Pirelli RE SGR as the manager of the Berenice fund. In addition, the fair value measurement of hedging derivatives had a positive impact of €2.8 million on the income statement in the first nine months of 2008, but a negative one of €9.9 million in the first nine months of 2009 due to movements in interest rates.

When EBIT including net income from investments before restructuring costs and writedowns/revaluations is summed with interest income from shareholder loans, EBIT shows a loss of €8.9 million in the first nine months of 2009 and a profit of €0.3 million in the third quarter.

Of the loss at September 30th, 2009, €8.4 million is attributable to the results of funds and vehicle companies, while €0.5 million is attributable to the service business, including headquarter costs.

The net balance of revaluations and writedowns is a negative €11.9 million at September 30th, 2009 (-€1.4 million in the first nine months of 2008).

Consolidated net income (loss) is -€57.9 million at September 30th, 2009 (-€12.9 million in the first nine months of 2008).

Group net equity is €679.9 million at September 30th, 2009 (€361.7 million at December 31st, 2008).

The net financial position reports net cash of €43.5 million at September 30th, 2009 compared with net debt of €289.5 million at December 31st, 2008. The net financial position, excluding shareholder loans granted , reports net debt of €447.4 million, representing a major reduction from €861.8 million at December 31st, 2008 primarily thanks to the capital increase.

Gearing (given as the ratio between net financial position, excluding shareholder loans granted, and net equity) is 0.65 at the end of September compared with 2.35 at December 31st, 2008.

Divisional performance

ITALY

Real estate sales amounted to €356.4 million in the first nine months of 2009 compared with €480.5 million in the first nine months of the previous year.

EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations, came to €4.3 million at September 30th, 2009 compared with €28.1 million at September 30th, 2008. EBIT comprises €19.5 million in income from services (an improvement of €18.9 million on 2008 and €15.1 million in losses from real estate funds and vehicle companies (€9.2 million in 2008).

GERMANY

Real estate sales amounted to €274.9 million in the first nine months of 2009 compared with €173.7 million in the first nine months of the previous year.

EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations, came to -€0.4 million at September 30th, 2009 compared with -€3.6 million at September 30th, 2008. EBIT comprises €2.2 million in income from services (-€6.4 million in losses in 2008) and -€2.6 million in losses from real estate vehicle companies (€2.8 million in income in 2008).

POLAND

Real estate sales amounted to €26.3 million at September 30th, 2009 compared with €60.3 million in the first nine months of the previous year.

EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations came to €0.9 million at September 30th, 2009 compared with €18 million at September 30th, 2008 when this figure benefited from a nonrecurring disposal of a major asset. EBIT comprises €1.1 million in net losses from services (- €0.4 million in 2008) and €2 million in income from real estate vehicle companies (€18.5 million in 2008).

NPL

Collections of non performing loans amounted to €226.7 million in the first nine months of 2009 compared with €321.3 million in the first nine months of last year.

EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations, came to €2.1 million at September 30th, 2009 compared with €21 million at September 30th, 2008. EBIT comprises €5.2 million in losses from services (income of €0.2 million in 2008) and €7.3 million in income from vehicle companies (income of €20.8 million in 2008).

Expected outlook for the business in 2009

The Company confirms its previously announced target level for full-year EBIT including net income from investments before restructuring costs and property writedowns/revaluations (between -€25 and -€35 million). It is well to recall that such projections for 2009 could be heavily influenced by exogenous factors beyond the Company’s control, such as changes in the macroeconomic scenario, the trend in the real estate market, movements in interest rates and the terms of access to credit.

INTESA SANPAOLO WILL INCREASE ITS HOLDING IN THE FUND MANAGER TO 10% BY THE END OF 2009, AFTER RECEIVING THE REQUIRED CLEARANCE

THE PARTNERSHIP WITH INTESA SANPAOLO STRENGTHENS THE COMPANY’S ASSET MANAGEMENT GROWTH STATEGY, IN KEEPING WITH THE GOAL OF BOOSTING RECURRING PROFITS FROM SERVICES

Pirelli RE announces that today it has sold Intesa Sanpaolo 5% of its subsidiary Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A., Italy’s leading real estate fund manager, for €10 million.

The agreement allows Intesa Sanpaolo to buy another 5% of Pirelli RE SGR by the end of 2009 once the required clearance has been obtained from the competent authorities.

The purpose of admitting an institutional partner like Intesa Sanpaolo as a shareholder is to increase the SGR’s assets and so develop its fund management activities, both of which are key elements of the development strategy contained in the 2009-2011 Business Plan, with the goal of boosting recurring profits from real estate management activities.

Pirelli RE SGR will augment its business through internal growth, thanks to the projected development of real estate funds in Italy and the launch of new products specially for institutional investors (social security institutions, pension funds and the public administration).

Pirelli RE SGR will also be able to take up external growth opportunities resulting from sector consolidation by merging with other fund managers that operate on the Italian real estate market. Potential new partnerships would produce economies through growth in the volumes managed, reduction in operating costs and expansion of the real estate fund distribution channels.

Pirelli RE SGR is Italy’s leading manager of real estate funds, with some €5.7 billion in assets under management in 18 real estate investment funds (of which 5 are ordinary reserved funds, 2 ordinary funds listed on the Milan Stock Exchange and 11 speculative funds).

Following the close of the first half, Pirelli RE also concluded a capital increase of approximately €400 million which was totally subscribed by the market and which made it possible to strengthen the capital structure and increase the flexibility needed to achieve the targets indicated in the 2006 Industrial Plan. As part of the strengthening of the capital structure, the company also reached an agreement with a pool of eight leading financial institutions for the provision of a credit facility for a total of €320 million expiring in July 2012 which will make €470 million in committed credit facilities whose average residual duration will increase from the current level of 9 months to 29 months available.

Performance in the first half of 2009**



Assets under management had a market value of €16.8 billion†† at June 30th, 2009, of which €15.1 billion in real estate (€15.4 billion at December 31st, 2008) and €1.7 billion in non performing loans (€1.9 billion at December 31st, 2008).
Real estate sales amounted to €351.9 million in the half year (€527.6 million in the first half of 2008).
Sales margin was 15% (20.7% in the first half of 2008). Taking account of contracts already exchanged, offers received and negotiations in progress, Pirelli RE confirms the target of €1 billion in asset sales by the end of 2009, involving receipt of its related share of benefit.
Consolidated revenues were €115.8 million (€192.8 million in the first half of 2008): the 2008 figure benefited from around €49 million in revenues from the sale of just one asset in Poland.
EBIT, including net income from investments but before restructuring costs and asset
writedowns/revaluations, reported an improvement in the second quarter on the first quarter (-€8.2 million versus -€14.7 million). Despite this improvement, the overall first-half figure is a negative €22.9 million compared with a positive €37.7 million in the first half of 2008, representing a shortfall of €60.6 million.
Part of this difference is due to more than €30 million in non-recurring income from which the company benefited in 2008 on the sale of just one asset in Poland and for indemnity received upon replacing Pirelli RE SGR as the manager of the Berenice fund. In addition, the fair value measurement of hedging derivatives had a positive impact of €10.9 million on the income statement in the first half of 2008, but a negative one of €7.4 million in the first half of 2009 due to movements in interest rates.
When EBIT including net income from investments before restructuring costs and writedowns/revaluations is summed with income from shareholder loans, first-half EBIT comes down to a loss of €9.2 million. Twothirds of this loss is attributable to the results of funds and vehicle companies (-€6 million), while one-third is attributable to the service business (-€3.2 million, including holding company costs): net of the nonrecurring income mentioned earlier, the latter business improved its results by more than €12 million on the first half of 2008 thanks to cuts in overheads.
The net balance of revaluations and writedowns is a negative €4.8 million in the first half of the year.
The revaluations are the result of formalizing the “hold” strategy already announced for most of the
residential real estate in Germany and for selected prestige assets in Italy, involving their medium-term retention in the portfolio: the carrying amount of these assets has been revalued under IAS 40 with a positive economic impact of €45.5 million. However, these revaluations have been more than offset by writedowns of €50.3 million against other portfolios (of which €28.1 million relating to the investment in the German Highstreet portfolio).

Consolidated net income (loss) was -€42.3 million (+€9 million in the first half of 2008, when
discontinued operations contributed a positive €4.4 million), after booking gross losses of €16.3 million for restructuring costs and the negative balance for revaluations/writedowns.
Real estate NAV amounts to €1.2 billion, staying in line with the figure at December 31st, 2008: this value is the difference between the Pirelli RE share of the market value of participated assets (€3.9 billion) and its share of the net bank debt of funds and vehicle companies (€2.7 billion).
Group net equity is €302.3 million at June 30th, 2009 compared with €317.1 million at March 31st, 2009 (€361.7 million at December 31st, 2008). Taking account of the capital increase completed at the start of July, the half-year figure would increase to €701.6 million.
The net financial position reports net debt of €337.3 million at June 30th, 2009 compared with €309.3 million at March 31st, 2009 and €289.5 million at December 31st, 2008. The net financial position, excluding shareholder loans granted, reports net debt of €828.5 million compared with €898.4 million at March 31st, 2009 and €861.8 million at December 31st, 2008. Taking account of the capital increase completed at the start of July, the half-year figure would come down to -€429.2 million.
Gearing (given as the ratio between net financial position, excluding shareholder loans granted, and net equity) is 2.69 at the end of June compared with 2.81 at March 31st, 2009 (2.35 at December 31st, 2008).
Taking account of the capital increase completed at the start of July, the half-year figure would come down to 0.61.

Divisional performance



ITALY


Real estate sales amounted to €273.3 million at June 30th, 2009 compared with €372.4 million in the first half of the previous year.
EBIT, including net income and financial income from investments before restructuring costs and writedowns, was a negative €3.6 million at June 30th, 2009 compared with a positive €26.2 million at June 30th, 2008. EBIT comprises €6.7 million in income from services (an improvement of €6.8 million on 2008 net of the non-recurring income mentioned earlier), and -€10.3 million in losses from real estate vehicle companies and funds (€9.3 million in income in 2008).

GERMANY

Real estate sales amounted to €55.1 million at June 30th, 2009 compared with €95.6 million in the first half of the previous year.
EBIT, including net income and financial income from investments before restructuring costs and writedowns, was a positive €1.8 million at June 30th, 2009 compared with €3.8 million at June 30th, 2008. EBIT comprises €2.7 million in income from services (-€2.3 million in losses in 2008) and -€0.9 million in losses from real estate vehicle companies (€6.1 million in income in 2008).

POLAND


Real estate sales amounted to €23.5 million at June 30th, 2009 compared with €59.5 million in the first half of the previous year.
EBIT, including net income and financial income from investments before restructuring costs and writedowns, was a positive €1.6 million at June 30th, 2009 compared with €19.2 million at June 30th, 2008. EBIT comprises €0.1 million in losses from services (income of €0.6 million in 2008) and €1.7 million in income from real estate vehicle companies (€18.7 million in 2008).

NPL


Collections of non performing loans amounted to €175.8 million at June 30th, 2009 compared with €235.0 million in the first half of last year.
EBIT, including net income and financial income from investments before restructuring costs and writedowns, was a positive €1.0 million at June 30th, 2009 compared with €18.2 million at June 30th, 2008. EBIT comprises €2.4 million in losses from services (income of €2.3 million in 2008) and €3.4 million in income from vehicle companies (€15.8 million in 2008).

Events subsequent to June 30th, 2009



• Pirelli RE’s cash call, resolved by the extraordinary shareholders’ meeting on April 17th, 2009, came to a successful conclusion on July 23rd, 2009. All the 798,574,545 new-issue ordinary shares were subscribed, corresponding to a total value of €399,287,272.50. The proceeds of the capital increase will be used to reduce net debt, ensuring the necessary flexibility for achieving the business plan’s objectives. Pirelli RE’s new share capital is €420,585,888.50, divided into 841,171,777 ordinary shares with a par value of €0.50 each. At the close of the capital increase, Pirelli & C. therefore owns 487,798,972 shares, corresponding to around 57.99% of Pirelli RE’s share capital.
• As part of measures to redefine the structure of the Company’s financing, the Board of Directors has approved the terms of an agreement with a pool of eight leading financial institutions for the provision of a credit facility for a total of €320 million expiring in July 2012. Once this agreement is finalized, Pirelli RE will have available €470 million in committed credit facilities compared with a current level of €380 million, with an average residual duration that will increase from the current 9 months to 29 months.
• The Company informs that Mr. Rodolfo Petrosino has left the Company and the office of General Manager Italy.

Expected outlook for the business in 2009

Committed to turnaround, the Company confirms its previously announced target level for full-year EBIT including net income from investments before restructuring costs and property revaluations/writedowns (- €25/-35 million).
It is well to recall that such projections for 2009 could be heavily influenced by exogenous factors beyond the Company’s control, such as changes in the macroeconomic scenario, the trend on the real estate market, movements in interest rates and the terms of access to credit.
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This press release contains references to the following alternative performance indicators for the
purposes of better evaluating the Pirelli RE Group’s results; EBIT including net income from investmentsis calculated as EBIT plus income from investments, reported in “EBIT” and “Income from investments” respectively in the consolidated income statement accompanying the explanatory notes to the half-year condensed financial statements; net financial position, which is represented by gross financial debt less cash and other cash equivalents and other financial receivables.
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Gerardo Benuzzi, Pirelli RE’s Financial Reporting Officer, attests – pursuant to para. 2, article 154-bis of the Financial Markets Consolidation Act (Decree 58/1998) – that the accounting information contained in this press release corresponds to the company’s underlying documentary records, books of account and accounting entries.
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Reclassified, condensed versions of the consolidated income statement, balance sheet and cash flow statement are all appended to this press release. In compliance with CONSOB Communication 6064291of July 28th, 2006, you are advised that these tables have not been audited by the independent auditors Ernst & Young S.p.A..

Pirelli RE announces the successful close of the divisible capital increase for cash approved by the extraordinary shareholders’ meeting on April 17th, 2009. In fact, at the close of the stockmarket auction, held in accordance with art. 2441.3 of the Italian Civil Code, all the unexercised rights had been placed on the market. The capital increase subsequently closed with the full subscription of the remaining 5,106,240 ordinary shares offered under option at the price of €0.50 per share, corresponding to a total value of €2,553,120.

The capital increase has therefore ended with subscription to all the 798,574,545 new-issue ordinary shares, corresponding to a total value of €399,287,272.50 before costs.

Pirelli RE’s new share capital, which will be registered with the Companies Register, therefore amounts to €420,585,888.50, divided into 841,171,777 ordinary shares with a par value of €0.50 each.

You are reminded that in compliance with the undertakings given and as stated in the prospectus, Pirelli & C. S.p.A., Pirelli RE’s controlling shareholder, has exercised all its rights by subscribing to 463,752,540 Pirelli RE new ordinary shares, corresponding to around 58.07% of the shares offered, with a value of some €231,876,270.00, by converting part of its loans to Pirelli RE into capital. As a result, Pirelli & C. owns 487,798,972 shares, corresponding to around 57.99% of Pirelli RE’s new share capital.

Milan, July 7th, 2009 – Pirelli RE announces the success of the rights issue closing on July 3rd, 2009 of Pirelli RE ordinary shares under the divisible capital increase against payment approved by the extraordinary shareholders’ meeting on April 17th, 2009.
During the offer period, commencing on June 15th, 2009 and closed on July 3rd, 2009, a total of 41.142.801 rights were exercised, meaning that 793.468.305 new Pirelli RE ordinary shares have been subscribed, corresponding to approximately 99,361% of the total shares offered, with an overall value of approximately € 396,7 million.
At the end of the offer period, there are therefore 264.768 unexercised rights to subscribe to a total of 5.106.240 new Pirelli RE ordinary shares, with a value of approximately € 2,6 million.

In compliance with the commitments made and as stated in the prospectus the controlling shareholder, Pirelli & C. S.p.A., has exercised all its rights by subscribing to 463,752,540 new Pirelli RE ordinary shares, corresponding to around 58.07% of the shares offered, with a value of some €231.9 million.

Pursuant to art. 2441.3 of the Italian Civil Code, the unexercised rights will be offered on the market by Banca IMI S.p.A. in the trading sessions of July 13th, 14th, 15th, 16th and 17th, 2009.
These rights can be used to subscribe to new Pirelli RE ordinary shares, par value of €0.50, with dividend rights as of January 1st, 2009, at the price of €0.50 per share, in the ratio of 135 new shares for every 7 rights. The new Pirelli RE ordinary shares must be subscribed at an authorized intermediary belonging to the centralized management system of Monte Titoli S.p.A. by July 20th, 2009 at the latest, otherwise the rights will be invalid.

Given the commitment made by Pirelli & C. S.p.A. to exercise in full its rights and the willingness of Pirelli & C. S.p.A. to subscribe the new shares which are unsubscribed at the end of the offer process conducted in accordance with art. 2441.3 of the Italian Civil Code, Pirelli RE has decided not to set up an underwriting syndicate.
The capital increase has allowed Pirelli RE to strengthen its capital structure. Based on the latest quarterly results at 31.03.09 the debt/equity ratio come in 0.7 compared to the 2.8 reported at the same date.

As already announced, Pirelli & C S.p.A. has subscribed its share of the capital increase by converting part of its financial receivables from the Company into capital.
subscribed by the market (equal to 98,475% of its shares for a total value of approx. 164,9 million euro) will be used to further reduce debt allowing greater flexibility in achieving the business plan’s objectives.

The offer prospectus can be obtained from Pirelli RE’s registered office (Via G. Negri 10, Milan) and from Borsa Italiana S.p.A. (Piazza degli Affari 6, Milan) and from the Pirelli RE website (www.pirellire.com).
Deutsche Bank, Banca IMI, Morgan Stanley and Unicredit acted as the placement agents.
Pirelli RE’s legal advisors were Bonelli, Erede, Pappalardo and Shearman & Sterling LLP.