PIRELLI RE WILL APPLY ITS OWN BUSINESS MODEL AND LEVERAGE ON ALLIANCE WITH UNICREDIT BULBANK TO BECOME A LEADER IN THE BULGARIAN MARKET

THE JV’S MAIN OBJECTIVES:

• DEVELOP LOCAL ASSET MANAGEMENT PLATFORMS AND SPECIALIZED SERVICES PLATFORM

• ATTRACT INVESTMENT CAPITAL FROM PRIMARY FOREIGN PLAYERS IN ORDER TO CO-INVEST IN THE DIFFERENT REAL ESTATE SECTORS, WITH A PARTICULAR FOCUS ON RESIDENTIAL DEVELOPMENT PROJECTS

Sofia, July 19th, 2007 – Pirelli RE, the leading player in the real estate industry in Italy and one of the most important companies in Europe, continues to expand in Central and Eastern Europe with the launch of an activity in Bulgaria in partnership with the UniCredit Group and its local UniCredit Bulbank, strengthened also by the growth of Pirelli Pekao Real Estate (75% Pirelli RE and 25% Bank Pekao) in the Polish market (in just over a year of operations the company has more than 80 employees and approximately 300,000 square meters of residential development projects under management). UniCredit Bulbank, is the main financing institution within the country, with total assets of about €3.8 billion, over 1 million clients and with about 300 branches.

The joint venture agreement for the establishment of Pirelli RE Bulgaria, 75% Pirelli RE and 25% UniCredit Bulbank, was signed today.

The joint venture will focus, on the one hand, on the development of local asset management platforms and specialized services and, on the other, on attracting investment capital from primary foreign financial players in order to co-invest in the different real estate sectors with a particular focus on residential development projects. The investment of both Pirelli RE and UniCredit Bulbank in the real estate projects and the asset management activities will guarantee aligned interests.

Pirelli RE Bulgaria will manage and develop areas and properties, supplying also specialized services to both its own portfolios and those of third party clients. The clients of Pirelli RE Bulgaria will also be able to benefit from the banking products of UniCredit Bulbank.

“Through the implementation of our own business model and alliance with UniCredit Bulbank, we aim to become a leader on the Bulgarian market, offering quality, design oriented and eco-sustainable real estate products. We are very delighted to collaborate with UniCredit Bulbank, one of the most important banks in the country and we are sure that we will bring value on the local real estate market due to our extensive experience in the sector and local top management know-how.” declared Carlo A. Puri Negri, CEO of Pirelli RE.

"The fact that one of the leading players in the European real estate industry Pirelli RE in partnership with the strongest Bulgarian bank UniCredit Bulbank enters the Bulgarian market shows our confidence that the real estate market in the country has a big potential for further growth. Moreover, this step opens the Bulgarian real estate market for one of the first serious international players, which will bring additional interest towards our market from abroad", said Levon Hampartzoumian, CEO and Chairman of UniCredit Bulbank.

Pirelli RE Bulgaria’s strategy will be defined and implemented by a Supervisory Board comprised of 5 members: Pirelli RE Bulgaria’s Board will be comprised of Carlo A. Puri Negri, Olivier de Poulpiquet and Enrico Signori of Pirelli RE as well as Levon Hampartzoumian, CEO and Chairman of the MB and Andrea Casini, Chief Business Officer of UniCredit Bulbank.

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The Bulgarian real estate market also features interesting growth prospective thanks to both the country’s improved economic situation and the fact that it is now part of the European Union.

Supply in the residential sector has increased over the past few years, though not enough to satisfy demand. Mid-range apartments are particularly sought after. Housing prices in Sofia vary from €430 to €980 per square meter and in the case of newly built homes in the city center prices reach €3,000 per square meter.

In the commercial sector, the office and retail segments have the most growth potential; the first is lacking in quality product while the demand is very high, particularly in Sofia where multi-nationals are in the process of setting up country operations. In terms of the retail sector it is likely that a number of supermarkets and shopping centres will be built along with stores on the city’s main streets.

Pirelli RE (PRE) is the leading player in the real estate industry in Italy and one of the most important in Europe, with assets under management exceeding €14.5bn. Pirelli RE is a management company which manages special purpose funds and investment vehicles owner of real estate and of non performing loans portfolios, investing through minority stakes (investment & asset management activity) and providing these and other clients with a full range of real estate specialist services (service provider activity), both directly than in Italy with the franchising distribution network. An innovative business model, high standards, flexible organizational structure and constant improving of the key competences are the factors that contributed to the achievement of its leading position in the real estate industry.

Pirelli RE intends to replicate its business model, which has been very successful in Italy, primarily in Central and Eastern European countries, where the expected economic growth is above European average, with a relatively low risk. The Group started its internalization process in 2006 entering Poland - with Pirelli Pekao Real Estate, participated by Bank Pekao - and Germany - where it acquired DGAG and BauBeCon. Over 25% of real estate assets are already invested outside of Italy.

Pirelli RE operates throughout Italy, with headquarters in Milan, Rome and Naples, in Germany and in Poland with more than 2,500 employees. Listed on the Italian Stock Exchange since June 2002, the company is controlled by Pirelli & C. SpA with a 50.3% stake and it is the first Italian real estate company by market cap, higher than €2 billion.

UniCredit Bulbank is the undisputed leader on the Bulgarian banking market and is serving over one million active clients – big local and international companies, small business, private and individual clients, budget enterprises; the bank has about 300 branches. The bank is the main financing institution within the country with total assets of over BGN 7.5 billion (about 3.8 billion euro) and is expanding dynamically its position on the market of mortgage loans and partnerships with the SMEs. UniCredit Bulbank is especially strong also in project and structured financing and real estate consulting.

UniCredit Bulbank is part of one of the largest banking and financial services organizations in Europe, UniCredit Group. The Group has a network of 7,200 branches and strong local roots in 20 countries. Its international network is made of branches, representative offices and small banking subsidiaries in other 40 countries worldwide. In Europe UniCredit Group is one of the leaders in terms of business size and leverages on a unique strategic positioning.