Bayard Lima

8/6/2019 Bayard Lima

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Cityscape Latin AmericaBayard Lima, CEO Brascan Shopping Centers


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I. Market Overview


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I. Market Overview

6%

8%

10%

12%

14%

2007 2008

7%

12%

Cap Rates in Shopping Center Transactions

There were 14 Shopping Center transactions through August/08 versus 29 in sameperiod of 2007 Only 1 major transaction

Top US companies dealing with home problems no growth expected for near future Major local companies are on the sidelines, focus on other organic growth initiatives

Opportunity to participate in quality shopping center development projects, which haveapprovals in place, but no funding

Shopping Center M&A Activities

Source: Brascan estimates


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I. Market Overview

Development

Twenty new projects are to be inaugurated in 2009

Only seven in 2010 will come to market 13 announced projects on hold

Main local shopping center players have funding to continue the announcedprojects

Major cancelations by medium-sized companies search for private investors

Major retailers reassessing expansion plans: cherry picking developers

Two foreign companies freezing all new developments in Brazil


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Funding: capital has become scarce

I. Market Overview

Public equity market currently unavailable stocks trading at 57% below IPO

Private equity investors evaluating the best timing

Foreign debt capital either too expensive or not available

Local debt capital still available to major companies; more expensive; shorter

tenor

BNDES: shopping centers are not a priority


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I. Market Overview

Retail Sales Trends

Holiday sales expected to be 15% higher compared to 07

Expect some impact on consumer spending behavior

Consumer credit under tighter control and higher interest rates, may causereduction in retail sales in Q109

Mall sales will continue to perform better than overall retail (300-400 bpshigher) expecting year end growth of 11% in 08 y-o-y;


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Brazil has very low supply of shopping center space 4 sqm per 100 people

Even in the top 15 markets, GLA per 100 people averages only 8.5 sqm

Brazils supply of shopping center space is estimated to be 30% below equilibrium (1)

Only 376 shopping centers with 8.1 million square meters of GLA

I. Market Overview

Fundamentals remain in place: underserved market

187

113

59

30 2321 20 14 13 8 4 3

United

States

Canada

Australia

Japan

United

Kingdom

France

Spain

Germany

Italy

Mexico

Brazil

Argentina

Comparative Country Shopping Center GLA

(sqm per 100 persons)

(1) Santander Investments, December 2007

Source: BNDES, ABRASCE


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Less than 30% of the shopping center GLA isowned by the 11 largest companies

An estimated 2.5 4 million square meters ofshopping center space may be placed in themarket for sale(1)

Consolidation of some shopping centercompanies appears likely

Domestic pension funds might reduce realestate holdings

Trend toward acquisitions of minority interests

following acquisition of controlling interest

I. Market Overview

Other Companies /

Individuals: 33.8%

Other 7 Largest Owners:

14.1%

Pension Funds:

37.0%

4 Listed

Companies +

Brascan: 15.1%

GLA of Shopping Center Market (1)

(December 2007)

Source: Santander Investments (BNDES, ABRASCE, ValorEconmico, Abrapp)

(1) Excludes properties under development

Fundamentals remain in place: fragmented ownership


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I. Market Overview

50% of Brazils population is under 25 yearsold

2.6% household growth forecasted (vs.0.9% for the U.S.)

More women are entering the workforce

2008 Brazil looks much like the U.S. in1975 as Baby Boomers entered the

workforce Source: IPDM (Brazil - IBGE, Australia Bureau of Statistics, USACensus Bureaus, Statistics Canada, United Nations StatisticsDivision, Demographic and Social Statistics, StatisticalProducts and Databases, Social Indicators 2007)

Population and Household Growth ForecastSelected Countries

Source: IPDM

Fundamentals remain in place: powerful demographics

AUSTRALIA

BRAZIL

CANADA

CHINA

INDIAMEXICO

US

0.0%

0.5%1.0%

1.5%

2.0%

2.5%

3.0%

0.0% 0.4% 0.8% 1.2% 1.6% 2.0%

CAGR of Population (2007-2017)

CAGRofHo

useholdFormatio

(2007-2017)


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Relative affluence growth across alldemographic groups - nation wide

4 million more households moving into upperincome bracket (15 million persons) in the next10 years

8 million more households moving into themiddle income bracket (26 million persons) inthe next 10 years

Outsized sales growth across a broad retailspectrum

Apparel and Shoes sales YTD +15.5%(1)

Hyper and Supermarket sales YTD +17.7%(1)

Home Furniture and Home Appliances salesYTD +13.3%(1)

AT Kearney June 2008 annual survey ratedBrazil as the best growth market for apparelretailers

I. Market Overview

Source: IPDM

30%

29%28%27%

44%41%

37%

35%

38%

27%

30%35%

10%

20%

30%

40%

50%

2000 2007 2012E 2017E

Upper Income Middle Income Lower Income

Percent of Households(30 largest markets)

Source: IPDM, IBGE

Fundamentals remain in place: growth in affluence

(1) As of August, 2008


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I. Market Overview

Shopping centers currently account for an estimated 20% of Brazilian retail sales, upfrom 13% in 2002. U.S. is 70% and the E.U. is 40%

Expect to reach 40% by 2017

80

100

120

140

160

180

200

220

240

2000 2001 2002 2003 2004 2005 2006 2007

Shopping Center Nominal Sales Total Retail Nominal Sales Shopping Center Same Store Sales

Shopping Center Sales vs Total Retail Sales Growth: 2000-2007

(Y2000 = 100)

CAGR: 12.1%Market

Share Gain

CAGR: 9.7%

Source: IPDM, Abrasce, IBGE

CAGR: 7.6%

Fundamentals remain in place: low penetration of total retail sales


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II. Company Profile


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MG

RJ

PR

SP

Operating Property

New Development Project

MG

RJ

PR

SP

Operating Property


Operating Property


Brazilian Retail Experience & Platform

25 year investor in Brazilian shoppingcenters

Acquired portfolio of approximatelyR$3 billion

Portfolio of 17 retail properties

14 operating properties 3 greenfield projects

6 expansion projects

6 redevelopment projects

395.3 thousand m of GLA

78% of the acquired portfolio is Tier I &II quality

II. Company Profile

Geographic Distribution


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III. Case Study


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III. Case Study

Shopping Ptio Mogi: Green Project

Parking Lot View

Food Court

First green building retail project in Brazil

Working towards obtaining a core and shell LEEDcertificate, granted by the US Green Building Council

Actions include:

build open air spaces

re-use water for lavatories and irrigation

local vegetation utilized in landscaping

bicycle parking make use of certified construction materials

lease to environmentally conscious tenants

More efficient management of resources, despite 5%maximum increase in initial investment

30% energy savings

35% reduction in CO emission

30%-50% reduction in use of water

50%-90% reduction in residual waste

40% CAM and maintenance costs reduction, possible

increase in rental revenues


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Mall ambiance

Sidewalk perspective

The mall is located between the cities of Mogi Mirim,Mogi Guau and Itapira, currently unserved

GDP 30% higher than national average

Trade area population of 280,000 inhabitants

77% of households are B/C classes

Household growth rate of 4% per year

Strong industrial region, including:

AMBEV, Alpargatas, Rainha, Tenneco Automotive,auto parts maker Monroe, Masterfoods, etc

Expected 12% cash-on-cash return first year stabilized,

14% second year stabilized

III. Case Study


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III. Case Study

Main entrance

Side entrance

Property Description

City Mogi Mirim - SP

Inauguration Date (Expected) November 2010

Land Area (m) 84,700GLA (m) 19,920

Number of Stores: 166

Anchor Stores 4

Parking Spaces 1,115


Mogi Mirim, Mogi Guau and Itapira

Total Population 286,479

Urbanization rate 91.9%

GDP, total (2005) R$ 4,52 billion

GDP, per capita (2005) R$ 15,115

GDP, per capita Brazil (2005) R$ 11,622

Active Companies (2006) 6,198

Growth of Active Companies vs 2005 2.45%

Shopping Center in-place None


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Cityscape Latin AmericaBayard Lima, CEO Brascan Shopping Centers

Bayard Lima

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