ANNUAL REPORT 2004 - Breevast

ANNUAL REPORT 2004

ANNUAL REPORT 2004

RIJKSADMINISTRATIEFCENTRUM (RAC) ANDFINANCIETORENIN BRUSSELS, BELGIUM

TA BLE OF C ONTENTS4PROFILE4 STRATEGY5 KEY FIGURES8 EXECUTIVES11 NOTICE OF THESUPERVISORY BOARDBREEVAST ANNUAL REPORT 20043MANAGEMENT REPORT14 Strategy and development of real estate activities17 Legal action17 Result and shareholders’ equity19 Outlook19 Personnel and organizationFINANCIAL STATEMENTS22 Accounting policies for consolidation, valuation and determination of results24 Consolidated balance sheet as of December 31, 200425 Consolidated profit and loss account26 Consolidated cash flow statement27 Notes to the consolidated balance sheet33 Notes to the consolidated profit and loss account36 Company balance sheet as of December 31, 200437 Company profit and loss account37 Notes to the company balance sheet40 Group companies and participating interests44 OTHER INFORMATIONThis English copy of the original Annual Report 2004 is published for the convenience of English speakingreaders. In cases of differences in interpretation, only the Dutch copy of the Annual Report is valid.All measures are based on the metric system: 1 square meter (m 2 ) = 10,764 square feet.

K EY FI GURES(x EUR 1,000)INVESTMENTS31-12-200431-12-200331-12-2002BREEVAST ANNUAL REPORT 20045Properties under managementconsolidated companiesour share in subsidiariesRental incomeconsolidated companiesour share in subsidiariesProperties under developmentconsolidated companiesour share in subsidiariesRESULTSincome from investmentsrealized changes in value on investmentsunrealized changes in value on investmentsother operating incomeoperating costsresult before corporate income taxcorporate income taxresult after corporate income taxLONG-TERM FINANCING668,133173,511841,64452,35717,32269,679115,298-115,29850,70438327,3524,684(35,292)47,831(21,560)26,271723,397180,869904,26652,74817,48370,23126,27220,62446,89651,9064,97812,3418,029(44,555)32,699(5,114)27,585654,932218,253873,18542,18117,63559,81613,70523,89137,59635,4903,00217,79510,355(29,614)37,028(11,494)25,534issued and fully paid share capitalreservesshareholders’ equityprovisionsminority interestslong-term liabilitiestotal long-term financing85,827229,166314,99331,8233,156432,576782,54885,827203,705289,53215,3791,547420,274726,73285,827189,260275,08715,501604393,942685,134RATIOSsolvency (shareholders’ equity*: total liabilities in %)solvency (shareholders’ equity**: total liabilities in %)413737353836* group equity in accordance with the balance sheet, including provisions.** group equity in accordance with the balance sheet, excluding provisions.

BUILDINGS AVENUE LOUISEIN BRUSSELS, BELGIUM

MOLENPOORT SHOPPINGMALL IN NIJMEGEN,THE NETHERLANDS

E XECUTIVESSUPERVISORY BOARDW. Brounts (68)Chairman of the Supervisory Board since 1999, re-elected in2003. Until 1998, Mr. Brounts held the position of Directorof General Risk Management at ABN Amro Bank N.V.in Amsterdam.BREEVAST ANNUAL REPORT 20048E.A. de Mol van Otterloo (68)Member of the Supervisory Board since 1999, re-elected in2003. Mr. de Mol van Otterloo is one of the founders andpartner in the U.S. investment management firm Grantham,Mayo, Van Otterloo & Co, LLC (GMO) in Boston, UnitedStates.Th.F.A. Uffing (48)Member of the Supervisory Board since 2000, re-electedin 2004. Mr. Uffing is a former lawyer in Utrecht and’s-Hertogenbosch, and is currently a director of Z.B.G.Services N.V. in Antwerp, Belgium.MANAGEMENTH.G. Brouwer MRE (43)Statutory director of Breevast B.V. Mr. Brouwer joined Breevastin 1993 and held the position of financial director until 1999.Since 1999 Mr. Brouwer has been statutory director.GRAVENSTRAAT / NIEUWENDIJKIN AMSTERDAM, THE NETHERLANDS,REALIZATION OF 16 CITY CENTREAPARTMENTS

NO TICE OF THE SUPERVISORY BOARDTO THE GENERAL MEETING OFSHAREHOLDERSWe herewith offer the Breevast B.V. Annual Report for 2004as prepared by Management, which includes the Managementreport, the Financial statements, and Other information.BREEVAST ANNUAL REPORT 200411PricewaterhouseCoopers Accountants N.V., the company’sauditor, has audited these financial statements and issuedan unqualified auditor’s report. At the annual meeting withPricewaterhouseCoopers Accountants N.V., the SupervisoryBoard discussed the auditor’s findings that resulted fromthe audit of the financial statements. We propose that theshareholders approve the financial statements as presentedby Management. Adopting the financial statements meansallocating the 2004 result to the other reserves. This proposedprofit appropriation is explained as a separate itemin the shareholders’ equity.The Supervisory Board met frequently throughout the yearunder review. In these meetings attention was paid to structurallyrecurring issues such as the strategy, the developmentof results and equity, the developments in the rentaland investment markets, the investment and disinvestmentpolicy, the financing, foreign exchange and dividend policy,tax matters, financial accounting, the organizational structure,Management and personnel affairs and the valuationstandards.The Supervisory Board wishes to express its appreciationto all those who contributed to the positive developmentof the company throughout the year under review.Amsterdam, 7 March 2005Supervisory BoardW. Brounts, chairmanE.A. de Mol van OtterlooTh.F.A. UffingTANFORAN PARKSHOPPING CENTERIN SAN FRANCISCO,UNITED STATES

FREDERIKSPLEIN/UTRECHTSESTRAATIN AMSTERDAM, THE NETHERLANDS,OFFICES

MA NAGEMENT RE PORTStrategy and development of real estate activitiesBREEVAST ANNUAL REPORT 200414In accordance with that stipulated in Article 26 of the Articlesof Association, we herewith present the Annual Report for2004, the company’s forty-first business year.STRATEGY AND DEVELOPMENT OF REALESTATE ACTIVITIESThe company’s real estate activities in the Netherlands,Belgium and North America comprise three strategicsegments, i.e.:1. The development of the existing real estateportfolio, while further improving its quality.Besides acquiring (portfolios of) properties to which valuecan be added, Breevast also purchases optimized premises.In this way, an attempt is made to enlarge and renew thereal estate management portfolio. A close eye is kept onthe general quality of a property, including the location,the flow of rent and the type of debtor.2. The maintenance of a revolving real estateportfolio to foster the dynamics of the company.Breevast B.V. is interested in the acquisition of large portfoliosof listed real estate funds, either with or without partners.On account of the large transaction volume, such portfolioscan be purchased at a discount. The aim is to retain some ofthe properties for a short period and then to sell them.3. The development of commercial real estate primarilyfor the company’s own portfolio.Higher initial returns are created by means of the developmentof real estate projects under the company’s owndirection. This is possible because Breevast B.V. employsa very stringent budget discipline and limits risks byensuring that a substantial portion is rented beforeconstruction begins. Furthermore, by also operating inthe development field, market-relevant expertise is retainedwithin the company. After completion, such new and easilymarketable real estate is generally added to the real estatemanagement portfolio.The NetherlandsDuring the year under review, a small number of acquisitionstotaling EUR 50.9 million were made in the Randstadurban conurbation. One acquisition in this respect was thepurchase of the second part of the so-called IBM Campus inZoetermeer, the first part of which was already acquired in2003. In the coming years, this approximately 14-hectare sitewith its existing buildings will be redeveloped with furtheroffices and housing. The former office building on the PrinsesIrenestraat on the Zuidas in Amsterdam in which NautaDutilh was established was also delivered to Breevast duringthe financial year. The purchase of these premises was alsoalready agreed in 2003. Business premises in the Westelijkhavengebied in Amsterdam was acquired by means of a saleand lease back transaction with Vendex KBB. Finally, thecompany entered into an unconditional purchase commitmentwith respect to a large-scale distribution complex, alsosituated in the Westelijk havengebied. The purchase of thisproperty will take place at the end of March 2005.The sale of the real estate properties under managementduring the year under review included the furnishing of fivebuildings situated in Weesp, Nieuwegein, Houten, Rotterdamand Raamsdonksveer to a fund related to iOG. Agreementon this sales transaction was already reached in 2003. Therealization of the development and renovation of office andindustrial premises in Eindhoven with a total floor area ofabout 23,000 m2, which commenced in 2003, was successfullycompleted in the first quarter of the year underreview. The premises that were leased for 15 years afterdelivery was disposed of to a firm during the year underreview. In December of the financial year, a retail propertyin Amsterdam Noord was sold and delivered to a fund ofAchmea Vastgoed. The total sales of the properties undermanagement amounted to EUR 49.9 million.Some of the properties from the revolving real estate port foliowere disposed of during the year under review. Breevast’sshare in this amounted to approximately EUR 9.7 million.

MANAGEMENT REPORTStrategy and development of real estate activitiesBREEVAST ANNUAL REPORT 200415The currently remaining portfolio will be broken up in 2005and the joint venture in which the properties were acquiredwill be dissolved. In 2005, however, the company willcontinue to explore the possibilities of purchasing suchportfolios.The renovation an approximately 7,225 m2 shopping mallin Zoetermeer was started in the year under review, withthe expectation that the mall together with the accompanyingoffices will be delivered in the second half of 2005. Thedevelopment of houses and apartments near to Meppel inthe province of Drente advanced rapidly during the yearunder review with the building of 19 houses, all of whichwere already sold in 2003. Preparations were also made therefor the development of apartments; a start is expected to bemade with these in mid-2005. The realization of sixteen apartmentson Nieuwendijk in the centre of Amsterdam, a stone’sthrow from Dam Square, commenced during the year underreview. Finally, a start was made with the renovation of theoffice villa in Amsterdam Zuid that was acquired in 2003.After completion, the company will occupy part of this propertyfor its own use.BelgiumThe company’s activities in Belgium during the year underreview were focused to a great extent on the ‘Financietoren’,acquired in 2001, and on the Rijksadministratief Centrum(RAC) in Brussels that was also acquired in 2003 from theBelgium Federal government in cooperation with Z.B.G. Thetwo properties have a combined total floor area of approximately350,000 m2. At the beginning of year under review,50% of the holding in the RAC was sold to Dexia Bank andImmobel.Where the ‘Financietoren’ is concerned, the financial yearwas dominated by the preparations for the renovation of thisproperty. The building permit for the renovation of the towersthat was applied for in 2003 was issued in June of the yearunder review. In addition, the main contractor Interbuild, awholly-owned subsidiary of BAM, started in the first few daysof January 2005 with the demolition and renovation activitiesin Brussels. The renovation will take at least three years.After completion in 2008, the towers will accommodate about4,600 civil servants; the towers will then be leased by theBelgian Federal government for a period of 27 years.The project activities are coordinated from the Brussels officeof Breevast Belgium N.V., a wholly-owned subsidiary of thecompany.The ‘Ninia’ residential and shopping center in Ninove, developedunder the company’s own management, was sold toFortis in 2004. Together with the sale of a number of propertiesin Belgium and northern France from the existing realestate management portfolio, the transaction value of thesesales was approximately EUR 40.5 million.With respect to the purchase of real estate in Belgium, anumber of historic, partly protected buildings were acquiredin Brussels; a number of these are situated on the famousLouizalaan and in the imposing Notredame aux Neigesdistrict. These properties will be redeveloped and rented outin the coming years.North AmericaIn North America, Breevast B.V. mainly focuses on creatingadditional added value through the (re)development of realestate for its own portfolio with a completion time of 2 to 5years by means of its 51% interest in Wattson Breevast, LLC.In California, the year under review was mainly dominatedby the renovation of the Tanforan Park Shopping Center.This regional mall is centrally situated between the airport,the Bay area and San Francisco. After the BART (Bay AreaRapid Transport) metro line close to the shopping center wascompleted in 2002, the legal action against BART was completedduring the year under review. Following the agreementreached between Breevast and its partner at the end of 2003to entirely buy out the partner in the project in 2004, thistook place during the year under review. On February 8, 2004,the renovation, which will take 18 months, was symbolicallystarted with the sinking of the first pile. The approximately100,000 m2 shopping mall will open in October 2005.

MANAGEMENT REPORTStrategy and development of real estate activitiesIn line with the company’s disinvestment program in NorthAmerica that was initiated in 2003, three properties were soldto third parties during the year under review. In addition,the year saw the signing of a contract of sale for the ParkMcArthur property with delivery taking place in 2005. Thetotal transaction value of these four sales is approximatelyEUR 38 million.A number of projects and portfolios were examined in theUnited States, but this did not lead to any acquisitions duringthe year under review.Geographic distribution of portfolio (including thenon-consolidated subsidiaries as of December 31, 2004)on the basis of fair valuesThe Netherlands 66.7%Belgium 21.6%United States 11.5%Netherlands Antilles 0.2%BREEVAST ANNUAL REPORT 200416CuracaoA number of building lots in Plan Zuurzak on Curacao weresold during the year, but sales are still lagging behind theoriginal prognosis.GENERAL INFORMATIONIn the year under review, Breevast B.V. purchased real estatewith a value of EUR 68.9 million. The real estate sales hada total value of EUR 128.3 million. Based on the theoreticalannual rents, the gross rental rate of return of Breevast’s realestate management portfolio (after revaluation) amounted to9.1% (2003: 9%), with an occupancy rate of 86.9%(2003: 91%).The Breevast B.V. real estate management portfolio (includingthe share of non-consolidated subsidiaries) amounts to EUR842 million at the end of the year under review. The developmentportfolio amounts to EUR 115 million, so that the totalvalue of the real estate portfolio (including the share in subsidiaries)amounts to EUR 957 million on the basis of thecurrent value. The Breevast B.V. real estate portfolio is valuedon average at 11.03 (2003: 11.07) times the net rental rate ofreturn. The valuation is based on fair values; to verify this,25% of the consolidated Dutch portfolio was valued externallyin 2004. Valuations have also taken place abroad within thescope of planned sales.Distribution of stores / offices / industrial buildings(including the non-consolidated subsidiaries as ofDecember 31, 2004)Based on gross annual rentOffices 60.9%Industrial 19.2%Stores 15.5%Other 4.4%Based on fair valuesOffices 59.5%Industrial 17.0%Stores 18.6%Other 4.9%Based on gross floor areaOffices 44.4%Industrial 36.2%Stores 13.3%Other 6.1%

MANAGEMENT REPORTLegal action / Result and shareholders’ equityBREEVAST ANNUAL REPORT 200417LEGAL ACTIONDutch Government claimIt was alleged that with the sale of several corporations in1983, Breevast B.V. and its former partner FGH Bank N.V.should not in fairness have assumed that they were dealingwith a bona fide buyer and should have taken measuresto safeguard the interests of the tax authorities. At the endof 1996, the court in Utrecht established in an interlocutorydecree that the Dutch Government had failed to providesufficient proof for its position in the proceedings that wereinitiated in 1992. The Dutch Government appealed thisdecision to the Court of Appeal in Amsterdam. The judgmentof the court was that Breevast B.V. and FGH Bank N.V.did not act contrary to any rules of law with the sale in 1983and it rejected the claim of the Dutch Government and theInternal Revenue Service. The Dutch Government and theInternal Revenue Service then appealed the judgment of theCourt of Appeal in Amsterdam. In its ruling on February 1,2002, the Supreme Court of the Netherlands referred thejudgment to the Court of The Hague. The burden of proofin this case thus once again lies with the Dutch Governmentand the Internal Revenue Service.On February 2, 2005, a writ was served on the DutchGovernment and the Internal Revenue Service demandingthat the action be discontinued at both the Court ofThe Hague and the Court in Utrecht, as more than threeyears had elapsed since the last act of procedure. The DutchGovernment and the Internal Revenue Service contest this intheir memorandum of reply of February 17, 2005.RESULT AND SHAREHOLDERS’ EQUITYThe income from investments, particularly from propertiesunder management, decreased slightly in 2004 due toa minor slimming down of the portfolio. As at the balancesheet date, the vacancy rate was 13.1% (2003: 9%) of thetheoretical annual rents, including the empty Apollo officebuilding in Diemen and the office building on the PrinsesIrenestraat, Zuidas, in Amsterdam. Excluding these emptybuildings, the vacancy rate was 5.0% of the theoretical annualrents (2003: 4.5%).The results of the subsidiaries lagged behind expectations.The revolving real estate in a joint venture will be disposed ofentirely in 2005.The net profit before taxation increased by more than 46%from EUR 32.7 million to more than EUR 47.8 million.The adjustment from unrealized to realized changes in valueamounted to more than EUR 18 million. On balance, the netresult for 2004 after taxation fell in comparison to 2003 as aconsequence of a corporate income tax item of approximatelyEUR 21.5 million.The currency translation deficit of EUR 810,000 has beendebited directly from the shareholders’ equity under ‘otherreserves’. Including the result and after incorporation ofthe currency translation result, the shareholders’ equity onDecember 31, 2004 amounts to EUR 315 million(2003: EUR 289.5 million).Breevast B.V. acted in good faith when it sold the com paniesin 1983 and has always disputed the claim of the DutchGovernment. Breevast B.V. is holding the Dutch Governmentliable for any negative consequences from its claim.The outcome of further proceedings continues to be viewedwith confidence by the company.

MANAGEMENT REPORTOutlook / Personnel en OrganizationOUTLOOKThe Management continues to strive for an increase in thequality of the real estate portfolio, in part by maintaining agood relationship with tenants, so that the vacancy rates inthe portfolio are kept to a minimum. Furthermore, it keepsa sharp eye on the general and management expenses. Withthese measures, it expects to be able to safeguard the returnon shareholders’ equity. In this connection, the portfolio willbe examined critically with respect to retention and disinvestments.Besides the development of interest rates, close tabsshould also be kept on the quality of tenants, particularlythose in the office segment.BREEVAST ANNUAL REPORT 200419The slight improvement in the economic conditions in theareas of activity of the Netherlands and Belgium that isexpected in 2005 may have repercussions on the developmentof the company’s results. It appears that the economy inthe United States will recover sooner. The Management ismoderately confident about the prospects for 2005.Based on current market forecasts, and barring unforeseencircumstances, Management expects pre-tax earnings for 2005to be in line with those realized in the previous years.PERSONNEL AND ORGANIZATIONThe company averaged a staff of 41 in 2004 (2003: 37).Measured in FTEs, the number of staff at year-end 2004was 37.5 (2003: 36). This figure includes the 9 (2003: 10) USemployees in 8.5 FTEs (2003: 9.5) of Wattson Breevast,LLC (51% of which is owned by Breevast B.V.) and itssubsidiaries as well as the 14 (2003: 9) employees in 12 FTEs(2003: 9) of Innara Invest N.V. and its group companies inBrussels, Belgium.The Management of Breevast B.V. would like to thank its stafffor their commitment and effort during the year 2004.Amsterdam, March 7, 2005ManagementH.G. Brouwer MRENIEUWE PASSAGESHOPPING MALLIN SCHIEDAM,THE NETHERLANDS

NIEUWE PASSAGE SHOPPING MALLIN SCHIEDAM, THE NETHERLANDS

FI NANCIAL STATEMENTS 2004Accounting policies for consolidation, valuation and determination of resultsBREEVAST ANNUAL REPORT 200422GENERALThe 2004 financial statements include both the financialstatements of the company and the consolidated financialstatements. The accounting policies and the method fordetermining the results of the consolidated financial statementsand the company financial statements are identical.Consequently, the shareholders’ equity and the result of thefinancial statements of the company are the same as theconsolidated figures. All amounts included in this annualreport are in thousands of euros unless otherwise stated.CONSOLIDATION POLICYThe companies in which Breevast B.V. has direct or indirectfinal control have been fully included in the consolidatedfinancial statements.Third-party shares in the group equity are stated separately.A summary of group companies and subsidiaries is includedon pages 40 and 41. For the company financial statements,the opportunity afforded by Article 402, Book 2 of theNetherlands Civil Code has been employed to prepare asummary profit and loss account.Newly acquired participating interests are included in theconsolidation from the moment that Breevast B.V. has gainedcontrol. In the fourth quarter of 2004, control has beengained of Tanforan Park Shopping Center, LLC due to thebuy-out of a joint shareholder. Therefore, the balance sheetand profit and loss account of this company are included inthe consolidated figures with effect from the fourth quarterof 2004.The results denominated in foreign currency are translatedon the basis of the average exchange rate for the year underreview.ACCOUNTING POLICIES FOR THEVALUATION OF ASSETS AND LIABILITIESProperties under management and properties under developmentare carried at fair value. The fair value of real estate isdetermined by means of external and internal appraisals atthe market value minus the sales costs. Each year, 25% ofthe portfolio is valued externally on a rotational basis.The contractual annual rent prevails as the basis for thedetermination of the market value. In addition, vacantproperty, the state of repair, long lease, and differencesbetween the market rent and the contractual rent are takeninto account.In the case of property under development that will not becompleted or sold in the near future, the determination ofa fair value will be accompanied by a high degree of uncertainty.In these cases, valuation is based on the historicalcost.Changes in the fair value of the properties under managementand under development are incorporated in the profitand loss account under the unrealized capital gains oninvestments item. The ensuing deferred taxes are added tothe provisions via the profit and loss account.Subsidiaries are stated at net asset value, determined inaccordance with the relevant policies prevailing atBreevast B.V.FOREIGN CURRENCIESAssets and liabilities denominated in foreign currencies aretranslated into the prevailing exchange rates on the balancesheet date. The differences emanating from this are eithercredited or debited directly to the other reserves. In the caseof conversion, the exchange difference originating from thiswill be either to the credit or debit of the shareholders’ equity.Receivables are carried at face value, less any provisionsdeemed necessary. This item includes receivables that areexpected to be collected within one year.Other tangible fixed assets are carried at purchase price lessdepreciation on a time-weighted basis.

FINANCIAL STATEMENTS 2004Accounting policies for consolidation, valuation and determination of resultsOther financial fixed assets are carried at face value, less anyprovisions deemed necessary. This item includes receivablesthat are expected to be outstanding for more than one year.Corporate income tax is calculated on the result, taking intoconsideration exempt profit components and possibilities fortax-loss carry-forwards.BREEVAST ANNUAL REPORT 200423Cash and cash equivalents are carried at face value. These arefreely available, unless otherwise stated.Deferred tax liabilities refer to the obligations result fromthe difference in the valuation of assets and liabilities inthe financial statements and their fiscal valuation. As is thiscase with the tax-deductible losses, these are included at theprevailing tax rate, with account being taken of the discountedterm.Insofar as not stated otherwise, assets and liabilities areshown at nominal value.ACCOUNTING POLICIES FOR THEDETERMINATION OF RESULTSIncome from investments includes the rental of propertiesunder management less the operating costs and the resultsof subsidiaries.Operating costs are the costs related to the property undermanagement insofar as they have not led to a capital gainand insofar as they are not borne by the tenants.ACCOUNTING POLICIES FOR THEDETERMINATION OF STATEMENTOF CASHFLOWThe statement of cashflow has been prepared using theindirect method. The funds in the statement of cashflowconsist of the cash and cash equivalents. Cashflows in foreigncurrencies have been translated at the average exchange rate.Interest received and paid, dividend received and tax onprofits are included under the cashflow from operations.Dividend paid is included under the cashflow from financialactivities.The difference between selling price and the book value basedon fair value is accounted for under realized changes in valueon investments. Sales revenues are allocated to the respectiveyears on the basis of the final documentation available for thecompilation of the financial statements.Unrealized changes in value on investments relate to thechanges in the fair value of investments during the financialyear. The associated deferred tax liability is incorporated underthe corporate income tax item.Depreciation is based on the economic life, and calculatedusing a fixed percentage of either the purchase price or thedevelopment cost.

FINANCIAL STATEMENTS 2004Consolidated balance sheet as of December 31, 2004 (before profit appropriation)(x EUR 1,000)ASSETS31-12-200431-12-20031. INVESTMENTSProperties under managementProperties under developmentSubsidiaries668,133115,29833,123816,554723,39726,27245,648795,3172. RECEIVABLES15,60813,345BREEVAST ANNUAL REPORT 2004243. OTHER ASSETSOther tangible fixed assetsOther financial fixed assets4. CASH AND CASH EQUIVALENTSTOTAL ASSETSLIABILITIES5. GROUP EQUITYShareholders’ equityThird-party minority interest4836,298314,9933,1566,78122,275861,21831-12-2004318,1491,3946,091289,5321,5477,48513,018829,16531-12-2003291,0796. PROVISIONS31,82315,3797. LONG-TERM LIABILITIESMortgagesOther422,13310,443432,576405,43914,835420,2748. CURRENT LIABILITIES78,670102,433TOTAL LIABILITIES861,218829,165

FINANCIAL STATEMENTS 2004Consolidated profit and loss account(x EUR 1,000)1. INVESTMENT INCOMEProperties under managementOperating costsSubsidiaries52,357(9,524)7,871200450,70452,748(7,482)6,640200351,9062. REALIZED CHANGES IN VALUEON INVESTMENTSIn properties under managementIn properties under development - -383-3834,978-4,978BREEVAST ANNUAL REPORT 2004253. UNREALIZED CHANGES IN VALUEON INVESTMENTSIn properties under managementIn properties under developmentIn subsidiaries4. OTHER OPERATING INCOMETOTAL OPERATING INCOME5. TOTAL OPERATING EXPENSESManagement costsInterest expensesThird-party minority interestOther operating expenses11,00416,218130(8,355)(22,686)(386)(3,865)27,3524,68483,123(35,292)14,789(2,060)(388)(7,225)(26,020)(806)(10,504)12,3418,02977,254(44,555)PRE-TAX NET RESULTS47,83132,6996. CORPORATE INCOME TAX(21,560)(5,114)OPERATING RESULTS AFTER TAXES26,27127,585TOTAL CHANGES IN THE OTHER RESERVES-/- Exchange differences-/- Dividend25,461810-14,44512,844296OPERATING RESULTS AFTER TAXES26,27127,585

FINANCIAL STATEMENTS 2004Consolidated statements of cashflow(x EUR 1,000)BREEVAST ANNUAL REPORT 200426CASH FLOW FROM INVESTMENT ACTIVITIESNet profitDepreciation of other tangible fixed assetsUnrealized changes in value on investmentsResult of subsidiariesMovement in receivables and other financial fixed assetsChange in minority interestMovement in other current liabilitiesMovement in provisionsInvestments in properties, inventory and projectsInvestments in other tangible fixed assetsDisinvestments in investmentsDisinvestments in other tangible fixed assetsDividend receivedCASH FLOW FROM FINANCIAL ACTIVITIESDividend paidPayments to short-term financiersRepayment of short-term financeReceived from long-term liabilitiesRepayment of long-term liabilitiesINCREASED / (DECREASED) CASH200426,271240(27,352)(7,871)9791,60924,00916,444(140,439)(249)146,7699201,79943,129--(47,772)115,633(101,733)(33,872)9,257200327,585242(12,205)(6,640)59,786943(12,852)(122)(179,507)(1,324)70,243-250(53,601)(296)26,646(487)163,901(127,292)62,4728,871

FINANCIAL STATEMENTS 2004Notes to the consolidated balance sheet(x EUR 1,000)1. INVESTMENTS20042003BREEVAST ANNUAL REPORT 200427Properties under managementThe movements are as follows:Balance as of January 1AcquisitionsIncrease due to consolidationInvestments(To)/from properties under developmentDisinvestmentsUnrealized changes in valueExchange rate differencesNet book value as of December 31723,39753,709-1,266(8,401)(111,009)11,004(1,833)668,133654,93245,04892,2151,8271,519(69,170)14,653(17,627)723,397With respect to several investment properties, Breevast has a combined book value of EUR 62.1 million (2003: EUR 85.5 million)long leaseholds. The acquisitions item includes an unconditional purchase commitment for a property valued at EUR 21.2 million.The geographical spread of the properties under management is: The Netherlands EUR 592 million (2003: EUR 575 million);the United States EUR 20 million (2003: EUR 53 million) and Belgium EUR 56 million (2003: EUR 95 million).Properties under developmentThe movements are as follows:Balance as of January 1Increase due to consolidationInvestmentsFrom/(to) properties under managementDisinvestmentsUnrealized changes in valueExchange rate differencesNet book value as of December 31200426,27252,32431,1588,401(17,320)16,218(1,755)115,298200313,7056,61112,032(1,519)(1,072)(2,060)(1,425)26,272Properties under development includes the ASM site in Arnhem located in the washlands of the Rhine. The company is neitherthe economic nor the legal owner, and therefore not liable for the soil contamination that has been discovered. In 2001, a requestfor compensation for loss was directed to the Netherlands Department of Housing, Regional Development and the Environmentas a result of the policy relating to river-related claims, whereby housing is no longer permitted at this ‘Vinex’ urban expansionlocation. During the year under review, the Committee charged with the policy relating to river-related claims advised the Ministerfor Housing, Regional Development and the Environment not to honor the request and it was subsequently rejected by theMinister. A notice of objection was then lodged against this rejection; this was taken up by the Department of Housing,Regional Development and the Environment at the end of 2004. The geographical spread of the properties under development is:The Netherlands EUR 21 million (2003: EUR 16 million); the United States EUR 76 million (2003: EUR 1 million); Belgium EUR16 million (2003: EUR 7 million) and Curacao EUR 2 million (2003: EUR 2 million). The unrealized changes in valuerelate to three projects in the United States that will be sold or developed in 2005.

FINANCIAL STATEMENTS 2004Notes to the consolidated balance sheet(x EUR 1,000)SubsidiariesThe movements are as follows:Balance as of JanuaryInvestments in the Netherlands and BelgiumInvestments in the United StatesAnnual result(Dividend) paymentsUnrealized changes in valueChange due to consolidation (Exchange rate differencesNet book value as of December 31200445,6481,982-7,871(1,799)130(18,440)(2,269)33,123200320,89211,5459,7176,640(250)(388)512(3,020)45,648BREEVAST ANNUAL REPORT 200428The breakdown of Breevast B.V.’s share of property in the subsidiaries of EUR 173 million is as follows:• In the Netherlands: approximately EUR 25 million (2003: EUR 35 million); of which approximatelyEUR 16 million (2003: EUR 28 million) in property that will be retained for a period of 0-2 years andapproximately EUR 9 million (2003: EUR 7 million) in property retained for a period of 0-5 years;• In Belgium: approximately EUR 135 million (2003: EUR 134 million) purchased for a long period;• In the United States: approximately EUR 13 million (2003: EUR 32 million) of which EUR 13 millionin property that will be retained for a period of 0-2 years (2003: EUR 5 million).The majority of the property held by the subsidiaries is mortgaged.2. RECEIVABLESRent receivablesOther debtorsReceivables from non-consolidated subsidiariesAccrued income and prepaid expensesOther receivables31-12-20041,4301,8589512,5928,77715,60831-12-20033,8016443,6252,5822,69313,345The other receivables item includes a current account balance of EUR 3.9 million with a related party.

FINANCIAL STATEMENTS 2004Notes to the consolidated balance sheet(x EUR 1,000)3. OTHER ASSETS31-12-200431-12-2003Other tangible fixed assetsAcquisition costCumulative depreciationBook value1,151(668)4831,856(462)1,394BREEVAST ANNUAL REPORT 200429The movements are as follows:Balance as of January 1InvestmentsDisinvestments -Change due to consolidation -DepreciationNet book value as of December 31Other financial fixed assetsLoans to tenantsLoan to non-consolidated subsidiaries4. CASH AND CASH EQUIVALENTS1,394249(920)-(240)4831,7714,5276,298No repayment provisions have been agreed with respect to the loan to a non-consolidated subsidiary;the interest rate is 7% in 2004 (2003: 5.8%).31-12-2004312321-1,003(242)1,3941,1524,9396,09131-12-2003The NetherlandsUnited StatesBelgiumCuracaoCanada3,64515,9952,123512-22,2752,9748,3401,5791101513,0185. GROUP EQUITYPage 38 of this report contains details of the changes that have occurred with respect to shareholders’equity during the year under review.

FINANCIAL STATEMENTS 2004Notes to the consolidated balance sheet(x EUR 1,000)6. PROVISIONSThe movements are as follows:Balance on January 1Change due to consolidationAdditionReleaseBalance on December 31Deferredtax liabilities13,72047215,935(3,670)26,457Other1,659-4,023(316)5,366Total200415,37947219,958(3,986)31,823Total200315,501(3,862)5,699(1,959)15,379BREEVAST ANNUAL REPORT 200430The deferred tax liabilities pertain to the obligations emanating from the difference in the valuation of assets andliabilities in the financial statements and their fiscal valuation. For the deferred tax liabilities, Breevast employs apresent value rate of 12.5%, unless there is an indication that the differences will be settled in the short term.The addition to the provision for deferred tax liabilities is on the one hand caused by a recalculation of the cumulativedepreciation charge on the portfolio in the Netherlands and the balance of the fiscal reinvestment reserve up until theend of 2004. In addition, a tax rate of 40% is employed for a number of expected profits on sales in 2005 in theUnited States.7. LONG-TERM LIABILITIESMortgagesThe movements are as follows:Balance as of January 1Stated under current liabilitiesIncrease due to consolidationConcluded during the financial yearRepaymentsExchange rate differencesNet book value as of December 31Stated under current liabilities2004405,43911,72023,80191,832(97,896)(1,599)433,297(11,164)422,1332003393,11617,89317,784125,934(127,292)(10,276)417,159(11,720)405,439As of December 31, 2004, the long-term mortgage financing in the Netherlands amounts to EUR 368 million(2003 EUR 370 million). The long-term mortgage financing in the United States amounts to EUR 35 million(2003: EUR 29 million) and in Belgium EUR 30 million (2003: EUR 18 million). The repayment commitments ofless than one year are included under current liabilities. Of the mortgages, almost EUR 56 million has a remainingterm of more than five years at the end of 2004 (2003: EUR 346 million). The average remaining term of themortgages is 3.3 years (2003: 4.2). The average rate of interest for mortgages in the Netherlands in 2004 is4.7% (2003: 5.2%). In the United States and Belgium, these percentages are: 3.3% (2003: 4.1%) and 3.8%(2003: 4.2%) respectively.

FINANCIAL STATEMENTS 2004Notes to the consolidated balance sheet(x EUR 1,000)Other long-term liabilitiesThe amount of EUR 10.4 million concerns two loans from two non-consolidated subsidiaries withinterest charged at an average of 4.8% (3003: 4.7%).BREEVAST ANNUAL REPORT 2004318. CURRENT LIABILITIESDebts owed to credit institutionsRepayment commitment for long-term liabilitiesDebts owed to related partiesCreditorsDebt to non-consolidated subsidiariesSales tax, social security and corporate income taxAccruals and deferred incomeOther31-12-2004--11,1646939,69518,2018,78626,8033,32878,670The debt to non-consolidated subsidiaries includes an unconditional purchase commitment(EUR 21.2 million) by virtue of a commercial property purchased from a non-consolidated subsidiary.The accruals and deferred income item includes a purchase commitment in excess of EUR 11 millionwith respect to a project in Brussels (Belgium).31-12-200347,77211,720-6,6541,72412,60819,8092,146102,433

FINANCIAL STATEMENTS 2004Notes to the consolidated balance sheet(x EUR 1,000)TRANSACTIONS WITH RELATED PARTIESTransactions with related parties are performed on an arm’slength basis following approval by the Supervisory Board.In 2004, Breevast purchased a commercial property from anon-consolidated subsidiary for EUR 20 million ‘cost for thebuyer’s account.BREEVAST ANNUAL REPORT 200432FINANCIAL OBLIGATIONS NOT APPARENTFROM THE BALANCE SHEETA summary of the financial obligations of the group that arenot apparent from the balance sheet is included in the notesto the company balance sheet on page 39 of this report.TAXATIONThe NetherlandsThe corporate income tax returns have for the most part beenfiled and partly settled through 2003. The total carry-forwardtax loss of Breevast B.V. and its Dutch subsidiaries amountsto approximately EUR 2.9 million at the end of 2004.Any negative consequences resulting from the receivablesubmitted in 1992 by the Treasury Department on the amountof this tax loss are not included here. Likewise, the deferredtax claim against the Internal Revenue Service that then arisesis not evaluated.BelgiumThe tax returns have for the most part been filed andsettled through 2003. The total carry-forward tax lossof Innara Invest N.V. and its subsidiaries amounts toapproximately EUR 53 million at the end of 2003.United StatesThe tax returns have been filed and for the most part settledthrough 2003. Breevast U.S. Inc. has a tax loss carry-over ofapproximately USD 8.3 million at the end of 2004. This carryoveronly relates to Federal Tax.

FINANCIAL STATEMENTS 2004Notes to the consolidated profit and loss account(x EUR 1,000)1. INVESTMENT INCOME20042003Rental incomeThe NetherlandsUnited StatesBelgiumCuracao43,2893,4175,646552,35743,2737,8891,5711552,748BREEVAST ANNUAL REPORT 200433Operating costsThe NetherlandsUnited StatesBelgiumCuracaoResult of subsidiariesThe NetherlandsUnited States2. REALIZED CHANGES IN VALUE ONINVESTMENTSProperties under managementThe NetherlandsUnited StatesBelgiumCuracao(6,444)(959)(2,044)(77)(9,524)5,9611,9107,8711,833(1,082)(359)(9)383(5,526)(1,112)(759)(85)(7,482)6,0685726,6408134,165--4,978Based on the historic cost, the profit on sales in 2004 would have been EUR 17.8 million higher(2003: EUR 9.5 million). This item was previously shown under unrealized changes in value oninvestments and has been realized in the year under review.

FINANCIAL STATEMENTS 2004Notes to the consolidated profit and loss account(x EUR 1,000)3. UNREALIZED CHANGES IN VALUE ON INVESTMENTSIn 2003:Properties under managementProperties under developmentSubsidiariesTheNetherlands13,461-(831)12,630UnitedStates1,328-4431,771Belgium----Curacao-(2,060)-(2,060)Total14,789(2,060)(388)12,341BREEVAST ANNUAL REPORT 200434In 2004:Properties under managementProperties under developmentSubsidiaries8,545-(945)7,6005,57816,2181,07522,871(3,119)--(3,119)The unrealized changes in value in the United States mainly arise from an upward value adjustment of a shopping center to bedelivered in 2005 and from two sales that were previously agreed (and for which an initial payment of USD 3 million was made)and for which the conveyance will take place in 2005. In that case, a movement of more than EUR 9 million from unrealizedchanges in value to realized changes in value will take place.4. OTHER OPERATING INCOMEInterest incomeManagement feesDevelopment feesOther20041,7672791,6311,0074,684----20033,7263411,2942,6688,02911,00416,21813027,352

FINANCIAL STATEMENTS 2004Notes to the consolidated profit and loss account(x EUR 1,000)5. TOTAL OPERATING EXPENSES20042003BREEVAST ANNUAL REPORT 200435Management costs:Gross salariesSocial security / pensionsOffice rentForeign managementAdvisorsDepreciation of office inventory/vehiclesOtherInterest charges:Netherlands mortgage interest chargesUnited States mortgage interest chargesBelgium mortgage interest chargesOther interest charges3,5022884501071,2192402,5498,35517,2337361,9512,76622,686The company had 37.5 FTEs at the end of 2004 (2003: 36), including the 9 employees (2003: 10) ofWattson Breevast, LLC and 14 employees in Belgium (2003: 9). The profit and loss account for 2003does not include any income and expenses for the Belgian organization (only the balance sheet wasconsolidated at the end of 2003).The remuneration of the members of the Supervisory Board amounted to EUR 73,000 in 2004(2003: EUR 73,000). The remuneration of the Management of Breevast amounted to EUR 413,000in 2003 (Article 383(1), Book 2 of the Netherlands Civil Code prevails with respect to 2004).2,9234263481149962422,1767,22519,4781,8902894,36326,020The other operating expenses item includes the write-downs on claims and obligations that ensue fromguarantees issued to third parties. In 2004, this concerns an additional provision of EUR 1.5 millionfor a claim with respect to a Belgian group company acquired in 2003 (2003: EUR 7.7 million).6. CORPORATE INCOME TAX20042003Tax dueDeferred tax liabilitiesTotal(7,962)(13,598)(21,560)(630)(4,484)(5,114)

FINANCIAL STATEMENTS 2004Company balance sheet as of December 31, 2004 (before profit appropriation)(x EUR 1,000)FIXED ASSETS31-12-200431-12-20031. INVESTMENTSProperties under managementProperties under developmentSubsidiaries69,2051,852253,495324,5527,7242,942254,993265,6592. RECEIVABLES6,76418,531BREEVAST ANNUAL REPORT 200436OTHER ASSETSOther tangible fixed assetsCASH AND CASH EQUIVALENTSTOTAL ASSETSLIABILITIES3. SHAREHOLDERS’ EQUITYPROVISIONSLONG-TERM LIABILITIESMortgagesOther27447,36084427476,805408,395314,99320,93248,2043844,03883638428,101312,675289,5325,5794,8744. CURRENT LIABILITIES24,26612,690TOTAL LIABILITIES408,395312,675

FINANCIAL STATEMENTS 2004Company profit and loss account/Notes to the company balance sheet(x EUR 1.000)COMPANY PROFIT AND LOSS ACCOUNTOperating result subsidiariesOther income and expensesNet result after taxesNOTES TO THE COMPANY BALANCE SHEET1. INVESTMENTS200438,134(11,863)26,27131-12-2004200331,307(3,722)27,58531-12-2003BREEVAST ANNUAL REPORT 200437Properties under managementThe movements are as follows:Balance as of January 1Increase due to legal merger -AcquisitionsDisinvestmentsUnrealized changes in valueNet book value as of December 31Mortgages are vested on a substantial portion ofthe properties under management.Properties under developmentThe movements are as follows:Balance as of January 1Increase due to legal mergersInvestmentsDisinvestmentsNet book value as of December 317,72412,38152,562(2,905)(557)69,2052,9422563,581(4,927)1,8527,565---1597,7241,576-1,366-2,942Subsidiaries20042003The movements are as follows:Balance as of January 1Changes in investments in and financing of subsidiariesAnnual resultsNet book value as of December 31Consolidated249,126(40,266)39,354248,214Others5,867635(1,221)5,281Consolidated223,853(6,761)32,034249,126Others2,8793,715(727)5,867The result of subsidiaries can be specified as follows:Annual resultUnrealized changes in valueNet book value as of December 3110,49928,85539,354(275)(945)(1,220)17,08514,94932,034487(1,214)(727)

FINANCIAL STATEMENTS 2004Company profit and loss account(x EUR 1,000)2. RECEIVABLES31-12-200431-12-2003Rent receivablesOther186,7466,764818,52318,5313. SHAREHOLDERS’ EQUITYBREEVAST ANNUAL REPORT 200438Balance on January 1Changes 2004:Profit appropriation 2003Exchange resultsUnappropriated result for 2004Balance on December 31Share capital85,827---85,827Sharepremiumreserve66,584---66,584Otherreserves109,53627,585(810)-136,311Results forthe financialyear27,585(27,585)-26,27126,271The company’s authorized capital on the balance sheet date amounts to EUR 271,800,000. The issued and paid-upcapital amounts to EUR 85,827,192. The capital consists of 18,946,400 shares, each with a nominal value of EUR 4.53.At year-end 2004, the other reserves includes an amount of EUR 65 million (2003: EUR 55 million) in cumulativeunrealized changes in value on the investments.Totalshareholders’equity289,532-(810)26,271314,9934. CURRENT LIABILITIES31-12-200431-12-2003Other24,26624,26612,69012,690

FINANCIAL STATEMENTS 2004Company profit and loss accountFINANCIAL OBLIGATIONS NOT APPARENTFROM THE BALANCE SHEETBREEVAST ANNUAL REPORT 200439Operational obligationsOn account of the sale of a number of properties, Breevasthas in a number of cases issued rental guarantees with aterm of three years. These guarantees are evaluated andincorporated in the financial statements if and insofar asit is expected that a claim will be made against them.Breevast B.V. acts as guarantor for non-consolidated subsidiariesto the tune of EUR 317 million. EUR 310 million ofthis amount relates to a joint and several guarantee in favorof Dexia Bank N.V., Dexia Lease Services N.V., Fortis LeaseN.V. and KBC Bank N.V. for the real estate leasing grantedto Financietoren N.V., a non-consolidated subsidiary. BreevastB.V. has also issued guarantees for the real estate leasingused to finance the renovation activities in Financietoren.The amount involved increases as the renovation progresses,subject to a maximum of EUR 295 million. The renovationactivities will commence after the balance sheet date. Theproperty will be leased to the Belgian Federal government fora lengthy period on the basis of a new rental agreement. Forthis financing, a cash-deficiency guarantee as well as a rightof pledge was also issued for existing and future receivablesthat Breevast B.V. may be owed by Financietoren N.V.Dexia Lease Services N.V. has a conditional put option onBreevast B.V., with the latter being obliged to take over thereal estate leasing if Breevast does not meet its commitments.Following the exercise of the option, Breevast B.V. hassix months to arrange the financing. A solvency requirementof 25% for Breevast B.V. is included in the credit conditions.Breevast B.V. has secured a guarantee from the partner inFinancietoren N.V. amounting to 50% of the surety furnishedby Breevast B.V.Breevast B.V. has issued an interest guarantee for financinggranted to non-consolidated subsidiaries. The outstandingprincipal amounts on which an interest guaranteeapplies totals EUR 89 million on the balance sheet date.Breevast B.V. has issued bank guarantees amounting toEUR 1.2 million on the balance sheet date.Legal obligationsDutch Government claim. It was alleged that with the saleof several corporations in 1983, Breevast B.V. and its formerpartner FGH Bank N.V. should not in fairness have assumedthat they were dealing with a bona fide buyer and shouldhave taken measures to safeguard the interests of the taxauthorities. At the end of 1996, the court in Utrechtestablished in an interlocutory decree that the DutchGovernment had failed to provide sufficient proof for itsposition in the proceedings that were initiated in 1992. TheDutch Government appealed this decision to the Court ofAppeal in Amsterdam. The judgment of the court was thatBreevast B.V. and FGH Bank N.V. did not act contrary to anyrules of law with the sale in 1983 and it rejected the claimof the Dutch Government and the Internal Revenue Service.The Dutch Government and the Internal Revenue Service thenappealed the judgment of the Court of Appeal in Amsterdam.In its ruling on February 1, 2002, the Supreme Court ofthe Netherlands referred the judgment to the Court of TheHague. The burden of proof in this case thus once again lieswith the Dutch Government and the Internal Revenue Service.On February 2, 2005, a writ was served on the DutchGovernment and the Internal Revenue Service demandingthat the action be discontinued at both the Court of TheHague and the Court in Utrecht, as more than three yearshad elapsed since the last act of procedure. The DutchGovernment and the Internal Revenue Service contest this intheir memorandum of reply of February 17, 2005.Breevast B.V. acted in good faith when it sold the com paniesin 1983 and has always disputed the claim of the DutchGovernment. Breevast B.V. is holding the Dutch Governmentliable for any negative consequences from its claim.The outcome of further proceedings continues to be viewedwith confidence by the company.Breevast B.V. has assumed joint and several liability for debtsresulting from the juridical acts of Wolderwijd I B.V. by virtueof article 2:403 of the Netherlands Civil Code.

FINANCIAL STATEMENTS 2004Group companies and participating interestsBREEVAST ANNUAL REPORT 200440Companies included in the consolidated financialstatements (all 100% unless indicated otherwise)Breevast B.V., Amsterdam and subsidiaries:Beleggingsmaatschappij NBOG B.V., AmsterdamBoston Real Estate V B.V. (9.09%), AmsterdamBoston Real Estate Holdings B.V., AmsterdamBreevast Beheer VIII B.V. (55%), AmsterdamBreevast Exploitatie Maatschappij B.V., AmsterdamBreevast International B.V., AmsterdamBreevast Management B.V., AmsterdamBreevast Monumenten (A.) B.V., AmsterdamBreevast Participaties B.V., AmsterdamBreevast Vastgoed Exploitatie XXXII B.V. (55%), AmsterdamBreevast Vastgoed Exploitatie XXXIV B.V. (10%), AmsterdamBreevast Vastgoed Nederland I Inc., Dover, Delaware, UnitedStates, with its registered offices in AmsterdamBreevast Vastgoed Nederland II Inc., Dover, Delaware, UnitedStates, with its registered offices in AmsterdamBrefinca, Inc., Calgary, CanadaDuvast I B.V., AmsterdamEurostate Investment I B.V., AmsterdamExploitatiemaatschappij Zuurzak N.V., Willemstad, CuracaoFinancieringsmaatschappij Wetering B.V. (80%), AmsterdamHeren 2 Construction Management B.V. (51%), AmsterdamKleinhandelsgebouw B.V. (8.63%), AmsterdamMaatschappij tot Exploitatie van Onroerende GoederenMoreelse Park B.V., AmsterdamMaatschappij tot Exploitatie van Onroerende GoederenWolderwijd I B.V., AmsterdamNedmaco Beheer B.V., AmsterdamPortalen Monumenten B.V., AmsterdamPortalen Properties B.V., AmsterdamTelined Beheer B.V., AmsterdamValôme Eindhoven N.V., AmsterdamValôme International N.V., Antwerp, BelgiumWoonboulevard Breda N.V., Antwerp, BelgiumWoonboulevard Princeville N.V., Antwerp, BelgiumZarra S.A., Luxembourg, LuxembourgOn June 23, 2004, the following companies legallymerged with Breevast B.V. as acquiring company:Beleggingsmaatschappij Eurostate B.V., AmsterdamBreevast Vastgoed XXX B.V., AmsterdamB.V. Nevamij III A, AmsterdamImmo Groei B.V., AmsterdamSchaerweijder Bosschen B.V., AmsterdamSlotermeerlaan B.V., AmsterdamVastgoed Nederland B.V., AmsterdamOn June 23, 2004, the following company legallymerged with Portalen Properties B.V. as acquiringcompany:Eurostate Investment II B.V. in AmsterdamIInnara Invest N.V., Brussels, Belgium and subsidiaries:Becolab N.V., Zaventem, BelgiumBreevast Belgium N.V., Zaventem, BelgiumDistrimmo N.V., Zaventem, BelgiumElectrorail N.V., Zaventem, BelgiumHasselt N.V., Antwerp, BelgiumRoosevelt N.V., Antwerp, BelgiumSofidis S.A., Lille, FranceBreevast U.S., Inc., Newport Beach, California,United States and subsidiaries, including Tanforan ParkShopping Center, LLC in Newport Beach, Californië,Verenigde Staten:Wattson Breevast, LLC (51%) and subsidiaries, NewportBeach, California, United States.

FINANCIAL STATEMENTS 2004Group companies and participating interestsNon-consolidated companiesFortress Vastgoed Exploitatie XXXIII B.V. (49.5%), AmsterdamDe Ceder Holding B.V. (32.3%) and subsidiary, HeemstedeDrentestraat 11 B.V. (50%), AmsterdamFortress Vastgoed Rotterdam B.V. (3.33%) and subsidiaries,RotterdamHoog Brabant Holding B.V. (36%), UtrechtOostplein B.V. (50%), UtrechtBREEVAST ANNUAL REPORT 200441Abfin N.V. (66.5%) and subsidiaries, Zaventem, BelgiumFinancietoren N.V. (50%), Antwerp, BelgiumFundinvest N.V. (50%) Antwerp, BelgiumRAC Investment Corp. N.V. (25%), Antwerp, BelgiumLiberty West Holdings, Inc. (50%), Newport Beach CA,United StatesLWB Lido Financial, LLC (50%), Newport Beach CA,United StatesLWB Mira Loma, LLC (50%), Newport Beach CA,United StatesSneath Lane Associates, LLC (50%), Newport Beach CA,United StatesAmsterdam, March 7, 2005Supervisory BoardW. Brounts, chairmanE.A. de Mol van OtterlooTh.F.A. UffingManagementH.G. Brouwer MRE, statutory director

TANFORAN PARK SHOPPING CENTER IN SAN FRANCISCO,UNITED STATES, REDEVELOPMENT SHOPPING MALL OFAPPROXIMATELY 100.000 M 2

OT HER INFORMATIONAuditor’s reportTO THE SHAREHOLDER OF BREEVAST B.V.IntroductionWe have audited the 2004 financial statements of BreevastB.V., Amsterdam, as presented in this report. These financialstatements are the responsibility of the company’s management.Our responsibility is to express an opinion on thesefinancial statements based on our audit.BREEVAST ANNUAL REPORT 200444ScopeWe conducted our audit in accordance with auditing standardsgenerally accepted in the Netherlands. Those standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining,on a test basis, evidence supporting the figures and disclosuresin the financial statements. An audit also includesassessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overallfinancial statements presentation. We believe that our auditprovides a reasonable basis for our opinion.OpinionIn our opinion, the financial statements give a true and fairview of the financial position of the company as of December31, 2004 and of the result for the year then ended in accordancewith accounting principles generally accepted in theNetherlands and comply with the financial reporting requirementsincluded in Part 9, Book 2 of the Netherlands CivilCode.Utrecht, March 7, 2005PricewaterhouseCoopers Accountants N.V.

O T HER INFORMATIONPROFIT APPROPRIATION UNDER THEARTICLES OF ASSOCIATIONProfit appropriation take place in accordance with Article 28of the Articles of Association of Breevast B.V. Pursuant toarticle 28(1) of the company’s Articles of Association, theprofit realized in a financial year is at the disposal of theGeneral Meeting of Shareholders.BREEVAST ANNUAL REPORT 200445PROFIT APPROPRIATIONIt shall be proposed to the General Meeting of Shareholdersthat the profit for 2004 be allocated in its entirety to theother reserves. In anticipation of the adoption by the GeneralMeeting of Shareholders, the profit for 2004 has beenpresented as a separate item in the shareholders’ equity.

MOLENPOORT SHOPPING MALL INNIJMEGEN, THE NETHERLANDS

DISTRIBUTIONCENTRE, SCHARENBURG,WESTELIJK HAVENGEBIED IN AMSTERDAM,THE NETHERLANDS

TANFORAN PARK SHOPPING CENTERIN SAN FRANCISCO, UNITED STATES,REDEVELOPMENT SHOPPING MALL OFAPPROXIMATELY 100.000 M 2

FINANCIETOREN IN BRUSSELS,BELGIUM, RENOVATIONAND REDEVELOPMENTOFFICEBUILDING OFAPPROXIMATELY 200.000 M 2

BUILDINGS CONGRESSTRAATIN BRUSSELS, BELGIUM,AMONGST WHICH THE OFFICEOF BREEVAST BELGIUM N.V.

DE WIJK NEAR MEPPEL,THE NETHERLANDS,DEVELOPMENT OF HOUSESAND CONDOMINIUMS

FINANCIETOREN IN BRUSSELS, BELGIUM,RENOVATION AND REDEVELOPMENTOFFICEBUILDING OF APPROXIMATELY200.000 M 2

C ONTACT/C OLOPHONFOR FURTHER INFORMATIONCOLOPHONBREEVAST ANNUAL REPORT 200456Breevast B.V.J.J. Viottastraat 391071 JP AmsterdamThe NetherlandsT +31 20 570 35 70F +31 20 570 35 80E breevast@breevast.nlW www.breevast.nlBreevast U.S. Inc. / Wattson Breevast, LLC3600 Birch Street, suite 250CA 92660 Newport BeachUnited StatesT +1 949 757 77 76F +1 949 757 77 88E wattsonbreevast@wattsonbreevast.comW www.wattsonbreevast.comBreevast Belgium N.V.Congresstraat 331000 BrusselsBelgiumT +32 2 720 18 80F +32 2 725 40 08E info@breevast.beW www.breevast.beDesignAndré van de Waal, Coördesign, LeidenPrepressAnker PreMedia, LelystadPhotographyAndrew van Dis, Hollandse Hoogte, Amsterdam,page 10, 42, 43, 50 en 51Guy Obijn, Antwerpen,page 2, 6, 52, 53 en 55Jan Scheerder, Leiden,page 7, 9, 13, 18, 20, 21, 46, 47 en 54PrintingAnker Drukkers, Lelystad