Real Estate Market in Brazil

Real Estate Industry in Brazil 15Th ULI Europe Annual Conference

February, 2011 Agenda

1. Macro Scenario

2. The Real Estate Market in Brazil . Residential . Office . Hospitality . Industrial . Shopping center 3. Sonae Sierra Brasil at a Glance

2 Growth

Over the last decade, Brazil experienced an unparalleled growth trend and should continue to grow at solid rates in the foreseeable future…

Brazil GDP Growth

7.5%

6.1% 5.7% 5.2%

4.5% 4.5% 4.6% 4.6% 3.9%

3.2%

1.2%

Brazil Area: 8.6 million sq km -0.7% Population (09): 193.7million GDP (10E): US$ 2.0 trillion GDP per capita (10E): US$ 10.4k 2003 2004 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E

Source: IBGE, MCM Source: MCM

3 Decreasing Unemployment & Credit Expansion

Favorable economic conditions have led unemployment rate to its lowest level since 2003, and have boosted both demand for credit and the purchasing power of middle class families mainly…

Unemployment Rate Total Credit to Individuals Outstanding (R$ bn)

12.3% 11.5%

9.9% 10.0% 9.3%

7.9% 8.1% 7.3%

2003 2004 2005 2006 2007 2008 2009 2010E

Source: MCM Source: Cetelem “O Observador 2010, Itau Securities

4 Fast Growing Middle Class

With the strong growth of the Brazilian economy in the last decade, approximately 30 million people have moved upwards into the middle class whose disposable income increased by 67%...

(1) Booming Middle Class Middle Class: Disposable Income (R$/month)

67% 204

122

2005 2009

Approximately R$ 10 billion increase in monthly disposable income

Source: Cetelem “O Observador 2010 Note: (1) Income available for spending and savings Source: Cetelem “O Observador 2010, Itau Securities

5 Agenda

1. Macro Scenario

2. The Real Estate Market in Brazil . Residential . Office . Hospitality . Industrial . Shopping center 3. Sonae Sierra Brasil at a Glance

6 Real Estate Market in Brazil - Residential Market

Sound potential demand of circa R$173 billion with 58% in the mid and upper-mid income classes and 42% in the affordable entry-level segment

# Annual households 2007 2030e (demand in thousand) Annual Potential Demand (R$ bn)

13 0 0.3 Above R$32k Households R$16k - 43 0.3 1.3 (thousand) 530 R$32K Total volume R$8,000 – 1.1 4.3 139 101 R$16,000 (R$ bn)

incomefamilies 335 Mid Mid and Uppermid R$4,000 – R$8,000 3.3 11.0

Households

R$2,000 – R$4,000 8.4 21.8 583 (thousand) 846 (1)

level level Total volume - R$1,000 – R$2,000 15.5 27.6 526 (R$ bn) 72

families (113) Entry Up to R$1,000 31.7 29.1

Total 60.3 95.4 1,526

Total households Monthly Income Bracket (million)

Source: press releases of listed companies

7 (1) It includes only 50% of the potential annual households from R$1,000 – R$2,000 bracket Real Estate Market in Brazil - Residential Market

Growing Credit Availability: credit offer for real Price Trends: Despite transitory drop of new estate financing has increased dramatically with launchings during the world financial crisis lower interest rates and longer tenors, bringing a housing prices continues to go up… huge number of families to the affordable entry-level segment Real Estate Financing (R$ bn)

56% 85 New Stock vs Cumulative Price Evolution (*) - SP ‘04-10’ CAGR 50 40 55 Thousand units world crisis (%)

25 34 15 30 10 18 30 6 6 9 16 3 4 6 7 10 2004 2005 2006 2007 2008 2009 2010E

FGTS SBPE Huge Growth Potential Real Estate Financing (as a % of GDP)

UK 75%

USA 68%

Spain 45%

Germany 45% New Stock Cum. Price Evolution (*) In R$ per m²

France 28% Source: Secovi -SP Chile 17%

Mexico 11%

Brazil 3% 8 Source: press releases of listed companies Agenda

1. Macro Scenario

2. The Real Estate Market in Brazil . Residential . Office . Hospitality . Industrial . Shopping center 3. Sonae Sierra Brasil at a Glance

9 Real Estate Market in Brazil - Office Market

. With an overall average of R$70 per m² per . São Paulo represents the largest office submarket of month, in 3Q10 asking rental rates increased Brazil accounting for 60% of the total class A buildings about 23% yoy . Rio de Janeiro is the 2nd largest office submarket and . Overall vacancy rate averaged 10% in 3Q10 also the most expensive, recording R$142 per m² per month in 3Q10, mainly due to both the lack of vacant Overall Asking Rental Rates (Class A) lands for future developments and growing demand

3Q09 3Q10 . Rio de Janeiro is among the top 20 most expensive 150 142 135 locations in the world but still has lower rental rates 120 when compared to that of prime office markets such as 105 91 Tokyo, London, Dubai, New York and Paris indicating 90 potential for future appreciation 75 Average = 70 R$/sqm/month 60

45 30 Most Expensive World Locations

15 - São Paulo Rio de Brasília Porto Salvador Vitória Curitiba Janeiro Alegre

Overall Vacancy Rates (Class A)

3Q09 3Q10 30%

25%

20%

15% Vacancy Rate Vacancy

10% Average = 10%

5% €0 €300 €600 €900 €1200 €1500 Source: C&W 0% 2010 Occupancy Costs per m² per year São Paulo Rio de Brasília Porto Salvador Vitória Curitiba Janeiro Alegre

10 Source: C&W 2010 Agenda

1. Macro Scenario

2. The Real Estate Market in Brazil . Residential . Office . Hospitality . Industrial . Shopping center 3. Sonae Sierra Brasil at a Glance

11 Real Estate Market in Brazil - Hospitality Market

Since 2004 ADR and RevPAR grew 5.7% and 8.4% per year, respectively, as occupancy rates have been going up. The southeast region represents almost half of the entire national supply with São Paulo and Rio de Janeiro being the main submarkets

Brazil Lodging Performance Distribution of Rooms per Region

3% 8% 200 70% 61% 63% 62% 180 59% 57% 60% 55% 181 21% 52% 164 160 158 50% 151 152 140 137 140 40% 47%

120 112 30% 104 97 100 20% 87 83 21% 78 80 75 10% Mid-west Northeast North Southeast South

60 0% Source: JLL Hotels 2003 2004 2005 2006 2007 2008 2009 Top 10 Brands Average Daily Rate (R$) RevPAR (R$) Room Occupancy # Brands # Rooms % of Total 1 Accor 23,950 5% Source: JLL Hotels 2 Choice 9,158 2% 3 Golden Tulip 5,313 1% 4 Blue Tree 4,149 1% 5 Nacional inn 3,747 1% Offered by national and 6 Meliá 3,395 1% Total Number of Rooms: 440,857 international brands 7 IHG 3,247 1% 8 Transamérica 2,774 1% 9 Windsor 2,726 1% 10 Othon 2,717 1% Source: JLL Hotels 61,176 14%

12 Agenda

1. Macro Scenario

2. The Real Estate Market in Brazil . Residential . Office . Hospitality . Industrial . Shopping center 3. Sonae Sierra Brasil at a Glance

13 Real Estate Market in Brazil - Industrial Market

Industrial real estate market continues to experience strong net absorption with low vacancy rates and escalating rents. The average vacancy rate is 6.3% with asking rents growing 7.8% per year on average, and ranging from R$12 to R$25 per m² per month – the highest levels since 2007

Industrial Space Performance* Asking Rental Rates* (R$/ m² / month)

19 19

Vacancy Rate (%) )

² 17 16 14

Absorption (m Absorption

Net Absorption Vacancy Rate (prime properties) 2005 2006 2007 2008 2009 2010 Gross Absorption Overall Vacancy Rate

Source: CBRE (*) São Paulo & Campinas Region

Trends: .Growing direct investments on new plants are expected to lead cumulative absorption (demand) to historic levels of 600 thousand m² in 2010 .Coupled with rising construction costs, leasing prices may experience a new rising wave in coming future, mainly for built-to-suit developments

14 Agenda

1. Macro Scenario

2. The Real Estate Market in Brazil . Residential . Office . Hospitality . Industrial . Shopping center 3. Sonae Sierra Brasil at a Glance

15 Real Estate Market in Brazil - Shopping Center Market

Shopping centers in Brazil still have a very low market penetration and representativeness in retail sales comparatively to other countries, which indicate a strong growth potential

Shopping Centers Market Penetration Retail Sales in Shopping Centers

Total GLA (m²) / 1,000 inhabitants (2008) (% 2008)

1,872 66%

1,128 51% 50%

28%

213 18% 81 47

USA Canada France Mexico Brazil (1) Canada USA Mexico France Brazil (1)

Note: (1) 2009 data Note: (1) 2009 data Source: ABRASCE and IBGE Source: ABRASCE

16 Real Estate Market in Brazil - Shopping Center Market

In the last 10 years, the number of shopping centers and GLA increased at annual rates of 3.8% and 6.6%, respectively

Number of Operating Shopping Centers Total GLA

9.1 8.6 393 8.3 377 365 7.5 351 338 325 316 6.5 304 294 6.2 280 5.5 5.6 5.1 5.2

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2000 – 2009 CAGR: 3.8% 2000 – 2009 CAGR: 6.6%

Source: ABRASCE (2010) Source: ABRASCE (2010)

17 Real Estate Market in Brazil - Shopping Center Market

The Southeast Region – the most economically advanced in Brazil - holds more than half of total malls and GLA in Brazil Geographic Distribution of Total GLA Geographic Distribution of Number of Shopping Centers Total GLA of shopping centers affiliated to ABRASCE: 96.9 million square feet Total number of shopping centers affiliated to ABRASCE: 391 Geographic Distribution of Number of Malls Geographic Distribution of GLA

North North South 3% Northeast 3% Northeast 15% South 14% 19% 14%

Mid-West Mid-West 8% 9%

Southeast Southeast 60% 55%

Malls in operation: 393 Total GLA: 9.1 million m2

Source: ABRASCE (2010) Source: ABRASCE (2010)

18 Agenda

1. Macro Scenario

2. The Real Estate Market in Brazil . Residential . Office . Hospitality . Industrial . Shopping center 3. Sonae Sierra Brasil at a Glance

19 Portfolio Footprint

Total GLA Centers # Stores (‘000 m²)¹ Operating Assets 1,934 347.7 Greenfields Projects 691 173.3 Total 2,625 521.0

5 Tivoli Shopping 3 Shopping Penha City: Sta. Barbara City: CampinasSão Paulo (SP) (SP) Projects under development: d’Oeste (SP) GLA:GLA1) :29.5 118.730 k m m2 2 GLA: 22.1 k m2 Ownership:Ownership1): 51.0%73.2% 11 Uberlândia Shopping Ownership: 30.0% City: Uberlândia (MG) 8 Shopping Plaza Sul 6 Shopping Metrópole GLA2): 43.6 k m2 City: São Paulo (SP) City: São Bernardo do Ownership: 100.0% GLA: 23.0 k m2 Campo (SP) Exp. Opening2): 2H 2011 1) 2 Ownership: 30.0% GLA : 25.0 k m Ownership: 100.0% 12 Boulevard Londrina Shopping 1 Parque D. Pedro 7 9 Shopping Campo Limpo City: Londrina (PR) Pátio Brasil 2) 2 GLA : 47.8 k m City: Campinas (SP) City: Brasília (DF) City: São Paulo (SP) Ownership: 84.5% GLA: 114.2 k m2 GLA: 29.0 k m2 GLA: 19.9 k m2 2) Exp. Opening : 2H 2012 Ownership: 51.0% Ownership: 10.4% Ownership: 20.0% 13 Passeio das Águas Shopping Franca Shopping 108 Manaura Shopping 2 Boavista Shopping 4 City: Goiânia (GO) City: Franca (SP) 2 City: Manaus (AM) City: São Paulo (SP) GLA: 78.1 k m 2 GLA: 46.7 k m2 GLA: 16.0 k m2 GLA: 18.1 k m Ownership: 100.0% Ownership: 67.4% Exp. Opening: 2013 Ownership: 100.0% Ownership: 100.0%

1) Excludes GLA owned by third parties 20 2) Includes PDP 1 BV’s stake Thank you!

21 Disclaimer

The material herein has been prepared based on data collected through our own research as well as information available to us from public and other external sources. In respect to all external data, the sources are believed to be reliable and have been used in good faith. However, Sonae Sierra Brasil can not accept responsability for their accuracy and completeness, nor for any undisclosed matters that would affect the conclusions we have drawn. In addition, this presentation is provided for informational purposes only and It does not constitute an offer or a solicitation of any kind or to participate in any particular trading strategy.