Global Growth Opportunities WHY SIMON IN EUROPE? GLOBAL GROWTH OPPORTUNITIES 2003 annual report 17 Significantly expanded the Company’s investment in Europe with a  joint venture created to take advantage of significant growth opportunities in Italy country’s most successful retail complexes. Occupancy of the Kravco mall port- folio was   .  % at year-end, and    sales per square foot were $  . These  are solid-performing, well-located assets in excellent metropolitan markets.  The portfolio also includes interests in four community shopping centers.  The Kravco management company manages a number of retail assets in  addition to the Kravco portfolio and also operates a third-party development  business. The management company will continue to be headquartered in  King of Prussia, Pennsylvania.  E urope is significantly under-retailed  when compared to the U.S. and  the demand exists for new retail  space. Occupancy for our existing  European portfolio is already at  99%.  Simon has global brand name  recognition among retail real estate  developers and retailers and the  ability to influence international  retail developments. We can do this  several different ways. First, our tenant  relationships in the U.S. should reach  overseas to new developments as U.S.  retailers look for global expansion  opportunities. We also expect to  bring exciting, new international  retailers to our North American assets.  This cross-fertilization of retailers  should prove advantageous to our  retail properties on both sides of the  Atlantic. Another way we can impact  international projects is to introduce  Simon’s proven management and  development techniques. Sharing  our expertise on SBN programs  designed to increase operating  efficiencies and SBV initiatives  to maximize the marketing value  of the mall shopper will provide  additional revenue enhancements.  Our European development projects  have consistently generated double  digit returns, and we have been able  to create significant shareholder value  with our international investments. I n    we acquired an interest in a European development company with  significant experience in European retail properties. Simon currently owns a   .  % ownership interest in European Retail Enterprises, B.V., which operates  through a wholly-owned subsidiary, Groupe BEG, S.A. (BEG).  Headquartered in Paris, BEG is an owner, developer and manager of  retail shopping centers in France, Poland and Portugal. There are currently nine  projects open and operating and two additional projects under construction  which are scheduled to open in the fourth quarter of   – Arkadia in  Warsaw, Poland and Torcy North in Paris, France.  Our five years of experience in Europe has been positive and our  European investments have generated attractive returns.  In December    we entered into a joint venture with The Rinascente  Group (RG) to create a separate entity – Gallerie Commerciali Italia S.p.A.  (GCI) – to own, manage and develop shopping centers in Italy. RG contributed  its existing    shopping centers, development opportunities and entitlements  to GCI and then sold a   % interest in GCI to one of our affiliates. The initial  gross value of GCI was approximately    million euros (approximately $ . billion), which included our initial equity investment of approximately   million euros (approximately $   million). GCI also has a number of projects  under construction and in pre-development. Our participation in GCI was a logical step in our growing international  presence. We are not just contributing capital and financial strength, but are  a true joint venture partner. The partnership structure gives Rinascente and  Simon joint decision-making power over matters affecting the operation and  management of GCI, including new development opportunities and the  acquisition and disposition of assets.  Advantages to the Company in this venture are the development pipeline,  the quality of our international partners and access to an under-retailed market.  Auchan, the hypermarket anchor in all of the assets and one of the owners of  The Rinascente Group, is one of the largest and best retailers in Europe and  combined with Rinascente, provides local market expertise and meaningful  relationships with international retailers. We believe that Italy is significantly  under-retailed with slightly more than one square foot of retail space per capita,  as compared to over   square feet of retail space per capita in the U.S. By  another measure, Italy’s GDP (gross domestic product) per square foot of retail  space is approximately  , , compared to approximately  ,  in the U.S.  The existing GCI properties are   % occupied and represent more than   % of the total shopping center space in Italy. This number will likely increase  as GCI has several projects under construction and in predevelopment that  could add up to six million square feet of space to its portfolio over the next  five years. $_{}$ 