How To Grow A Group Of Companies

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1 Strategic Plan Non-Energy Businesses & Real Estate Madrid, October 4 th 2006 Index Main figures Iberdrola Inmobiliaria Divestments 2 1

2 Non-energy businesses & Real Estate Optimising value for the Group, managing where there is value and divesting the rest EBITDA growth of 30% and of Net Profit of 40% in the period Iberdrola Inmobiliaria and stake in Gamesa, basis of growth Market value: > Eur 4,000 MM Capital gains > Eur 2,300 MM Divestments for Eur 1,000 MM in Capital Gains > Eur 500 MM (in line with capital gains 03-05: Eur 530 MM) based on real estate and stakes in listed & non-energy companies 3 Index Main figures Iberdrola Inmobiliaria Divestments 4 2

3 Iberdrola Inmobiliaria Net Profit to increase +50% in Based on a growth model reducing cyclic exposure: Developing land in planning stage Strengthening 1st home promotion and new products (logistics, offices etc.) Renewing the rentals portfolio Growing in international markets Developing an environmentally efficient product Growth at 20% accumulated in Main figures Financial Data (Eur( MM) Property portfolio Assets , % Buildable sq. mt +22% 3.53 Tangible Assets % 2.89 Rentals Inventories % Gross Margin % Land Profit before taxes % MM buildable sq. meters out of an area of land over 8 MM m 2 6 3

4 Gross margin by business area Rentals 17% Asset sales 14% Rentals 19% Land 42% Eur 193 MM Rentals 18% Land 42% Property Development 33% Land 50% Property Development 26% Property Development 39% 7 Investments Property portfolio renewal Investments (Eur( MM) > 1,500 >1, Including investments in international markets of Eur 125 MM in (*) Gross investment in land. Accounted as Inventories Land* Rentals 8 4

5 Iberdrola Inmobiliaria Net Value Net Value after tax of Iberdrola Inmobiliaria* at H1 06, is Eur 1,265 MM 2,555 1, , Gross Asset Value (GAV) Book value Capital gains Shareholders funds Taxes NNAV Cap. gains + Equity - taxes = NNAV = Book value - Debt - taxes (*) Valuation: Richard Ellis 9 Sector Comparison Iberdrola Inmobiliaria leader in profitability Profit before taxes / Total assets Shareholders funds / Total assets IBDI 10.2% IBDI 40.5% Fadesa 7.8% Urbis 28.1% Colonial 7.2% Metrovacesa 25.1% Urbis 7.2% Colonial 23.2% Vallehermoso 4.3% Fadesa 15.6% Metrovacesa 3.7% Vallehermoso 11.8% and with the most solid financial structure n.b. Iberdrola estimates / Figures end of

6 Land Iberdrola Inmobiliaria manages 2.1 MM m 2 of building land in Spain 13% increase in Gross Margin until Diversification of type of land - Rotation of portfolio - Stock of 2-3 MM m 2 of building land Cantabria 73,308 m 2 e Asturias 12,531 m 2 e Castilla y León 221,099 m 2 e Madrid 182,273 m 2 e Castilla la Mancha 183,569 m 2 e Andalucía 496,035 m 2 e La Rioja 16,826 m 2 e Navarra 3,279 m 2 e Cataluña 374,771 m 2 e Aragón 24,831 m 2 e Baleares 113,763 m 2 e C. Valenciana 77,762 m 2 e Murcia 346,334 m 2 e 11 Land Cabo Cope, Águilas. Murcia Total area: 2,100 Ha. (11,000 dwellings and 23,000 hotel places) Project IBDI: 3,361,000 m 2 (1,573 dwellings and 3,289 hotel places). 60% IBERDROLA 12 6

7 Land Sector Nueva Condomina, Murcia Total area: 152,269 m² Project: 1,249 dwellings 13 Land La Herradura, Almuñécar. Granada Total area: 88,814 m² Project: 400 dwellings 14 7

8 Property Development Iberdrola Inmobiliaria: manages 55 developments in 18 provinces 7% increase in Gross Margin until Strengthening: - 1st home in provincial capitals - Other products: offices, commercial, industrial, VPO - Reducing risk to 2nd homes Cantabria 125 dwellings. Asturias 128 dwellings. Castilla y León 351 dwellings 1 Hotel Madrid 293 dwellings Castilla la Mancha 152 dwellings Andalucía 1,059dwellings. 1 office building Aragón 160 dwellings Navarra 24 dwellings Cataluña 136 dwellings 3 office towers Ind Buiding Baleares 316 dwellings C. Valenciana 134 dwellings Murcia 740 dwellings Delivery of 2,722 dwellings in the period 15 Residential Development Belavent Golf Santa Ponça III, Calviá. Mallorca 110 high-rise and 18 detached dwellings 16 8

9 Residential Development Albazano Real. Phase IV Jerez de la Frontera, Cádiz 134 high-rise dwellings 17 Residential Development Residencial Alcora Palma de Mallorca 125 high-rise and 18 detached dwellings 18 9

10 Rental Assets Iberdrola Inmobiliaria manages over 60 industrial, hotel and commercial properties in 14 provinces 44% increase in Gross Margin until Portfolio rotation - Investing in more profitable markets - Currently developing for the portfolio: Torre Valencia y Bilbao Galicia 2,677 m 2 SBA Castilla y León 10,795 m2 SBA Madrid 97,756 m2 SBA Castilla la Mancha 135,851 m2 SBA Andalucía 45,640 m2 SBA País Vasco 15,297 m2 SBA La Rioja 356 m2 SBA Cataluña 48,511 m2 SBA C. Valenciana 46,290 m2 SBA Murcia 5,008 m2 SBA SBA: Gross rental area 19 Rental Assets Torre Iberdrola Abandoibarra, Bilbao Total area: 50,000 m²e Area IBE Inmobiliaria: 25,000 m2e 20 10

11 Rental Assets Aqua Multiespacio (50% Iberdrola) Avenida de Francia. Valencia Commercial and leisure centre 33,600 m² SBA (Gross rentable area) Office tower of 23,700 m² 2 hotels of 3 & 4 stars of 16,000 m² 21 Rental Assets Málaga Business Park Parque Tecnológico de Andalucía, Málaga SBA: 14,772 m

12 Rental Assets Hilton Diagonal Mar Paseo Taulat, Barcelona 433 rooms Torres Diagonal Literal SBA: 36,000 m2 (50% Iberdrola) 23 Rental Assets Porta Firal, Barcelona Development of an office and commercial complex of 91,100 m 2, located in the extension of the Fira 2 in Barcelona 24 12

13 International Expansion Iberdrola Inmobiliaria will invest Eur 300 MM until 2011 in its international expansion Gross margin: Eur 14 MM in Markets with Iberdrola presence - Co-investing with local partners - Areas of expertise - Improving property portfolio on risk/profitability basis * Figures included in the different business areas 25 Business growth Over 60% growth of NNAV & GAV in 2011 vs % >60% Eur 1,910 MM GAV +27% >60% NNAV Eur 1,055 MM EUR 500 MM in dividends in

14 Index Main figures Iberdrola Inmobiliaria Divestments 27 Non-energy businesses portfolio Portfolio: market value over Eur 4,000 MM Non-energy portfolio (Eur( MM) >4,000 >2,300 Market value 1,700 Book value Latent capital gains Latent capital gains over Eur 2,300 MM 28 14

15 Capital gains Eur 1,000 MM on divestments: 50% in real estate; 50% in stakes in listed & non-energy stakes Divestments (Eur( MM) Capital gains (Eur( MM) 50% 50% >1,000 Stakes in listed & non-energy companies >500 Real Estate (ex-ibe. Inmob.) Capital gains over Eur 500 MM 29 15