Half-year earnings show clear rise, acquisition program for 2004 stepped up.

Revenues continue steady rise in first half of 2004
Revenues for the period totaled 207.9 million euros, a 9.6% increase. It reflects sustained rental growth for Klépierre´s shopping center holdings, the driving group development, both inside France and abroad.

Shopping centers: +16.4%
As the figures for the first half of 2004 attest, Klépierre’s shopping portfolio is well balanced geographically as well as in terms of property type. They also demonstrate the low sensitivity of this business to negative cycle phases.
Indeed, while retail anchors in malls managed by Klépierre in Italy and to an even greater extent in Spain reported substantial growth, the rise in France was a more modest 1.8%, led by a strong performance in June. Shopping center performance differed by type as well, with city center malls substantially out-performing
(+6.3%) regional and inter-communal centers (+0.8% and +1.2%, respectively).
Thanks to this healthy balance and Klépierre´s ongoing shopping center acquisition plan, rents for this segment rose by 16.4%, with lease income reaching 156.6 million euros for the period. They now contribute nearly 82% of the Group´s total rents. Business outside of France now provides 33.3% of total rents and 40.7% of shopping center rents, compared with 25.4% and 32.7%, respectively, for the corresponding period in 2003.

Thanks to active management, the constant portfolio rise in rents was 4.4%, while the index-linked rent adjustment was +3.0% for France, +2.4% for Spain and +2.6% for Italy. Some 472 leases were renegotiated during the first half of 2004, an increase of 17.8% on average. Over the same period, the default rate continued to decline, falling to 1.5% at the June 30, 2004 reporting date (compared with 1.7% six months earlier). Acquisitions made over the preceding 12 months, most of them in late 2003, generated a total of 20 million euros in additional rent.
The financial occupancy rate rose to 98.2%, from 97.9% at year-end 2003.

In an office rental market that shows signs of stabilizing, rents for the first six months of 2004 totaled 34.8 million euros and accounted for 18.2% of total rents. On a current tructural basis, they fell by 10.7% principally reflecting disposals made since January 1, 2003, which led to the elimination of 4.6 million euros in lease income. On a constant portfolio basis, rents rose by 1.4%, as the positive impact of index-linked rent
adjustment (+2.4%) and 25 renegotiated lease terms (+3.6%) more than offset the impact of the higher vacancy rate (-4.5%). The financial occupancy rate was 95.1% on June 30, 2004, as opposed to 97.3% at year-end 2003. The default rate was 0.6%, an improvement compared with year-end 2003 (1.1%).

Ambitious acquisition program exceeds initial objectives
Klépierre continued to execute its investment plan throughout the first half of the year.
A total of 60 million euros was invested in the first six months of 2004 (53 million euros, group share), on the purchase of the Reims Tinqueux shopping center from Carrefour as well as on extension and restructuring projects (Movie theater in Créteil Soleil and Bordeaux Saint-Christoly, respectively).
In addition, Klépierre began to acquire or develop several new projects scheduled to open in the next two years. They include Louvain

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