Brmalls - Annual Report 2009

Greenfield Projects Exploring new markets Currently, BRMALLS is developing five new shopping malls located in São Paulo state (Mooca, Granja Vianna and São Bernardo) and Minas Gerais state (Estação BH and Sete Lagoas), which will combined add 157,600 m² of total GLA and 110,100 m² of owned GLA to our portfolio, an increase of 15% and 23% respectively.

Currently Under Construction
In 2009, we initiated construction of two greenfield projects, Granja Vianna and Sete Lagoas. The projects will add a total GLA of 46,202 m² to our portfolio and a stabilized NOI of R$37.4 million. Please click below to show each project’s details:

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Total GLA (m²): 29,780
Owned GLA (m²): 20,846
Stores: 184
Expected Opening : 4Q10
Stab. NOI : R$ 22.5 million
Total CAPEX : R$ 167 million
CAPEX Status : 48%
IRR: 18.1% (real, unleveraged)
Cash on Cash : 20%

About The Mall
The mall is located in the Granja Vianna region in São Paulo, the richest city of Brazil. Granja Vianna has a population of 600,000 people, the majority being part of the upper and upper-middle classes, and a consumption potential of approximately R$1.9 billion per year.

Located in the densest area of the Granja Vianna region, next to a Wal-Mart, the mall offers easy access, as it is located next to the Raposo Tavares Highway where 2.4 million vehicles pass by per month.

With 240 m of façade, the mall has 184 stores, and is almost 100% leased. The mall is very well anchored with eight anchor stores, a bowling alley, a gym and a cinema complex with five theaters. The brands and retail chain stores we signed contracts with include:

Anchor StoresRestaurantsSatellite StoresOthers

Project Status
Granja Vianna is expected to inaugurate in November 2010. After getting all the necessary licenses, we began the construction in July 2009 and the work has progressed according to plan.

The works have been advancing at full speed, as shown in the pictures beside. All the retaining wall and foundation works have been completed and the structure is almost finished, as seen in the accompanying pictures. The structure is being finalized, and we are already advancing with the masonry and installations services.

With an initial real and unleveraged rate of return of 17%, we sold a 22% ownership interest in December 2009, increasing our rate of return to 18.1%, real and unleveraged.

With the construction running on schedule and its GLA was already 93% leased in 1Q10, we expect Granja Vianna to be inaugurated as scheduled and we are confident of its success.

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Total GLA (m²): 16,566
Owned GLA (m²): 11,596
Stores: 135
Expected Opening: 4Q10
Stab. NOI : R$ 7.5 million
Total CAPEX: R$ 47 million
CAPEX Status : 27%
IRR: 18.8% (real, unleveraged)
Cash on Cash : 21%

About The Mall
Sete Lagoas is in one of Minas Gerais’ most developed regions, located just 65km from Belo Horizonte. It has approximately 407,000 inhabitants, half of them belonging to the upper and upper-middle classes, and attracts people from 19 other cities nearby. The city has a consumption potential of R$360 million per year and is the only municipality among the 10 largest municipalities of the state that still doesn’t have a shopping mall.

The mall site is strategically located at the city’s main entrance, by the BR 040 highway, and is near an avenue that surrounds the whole city, making the access very easy.

Sete Lagoas has 135 stores, including three anchor stores, four megastores, one supermarket, and 120 satellite stores, and 86.2% of its gross leasable area was already leased in 1Q10. It also has an open mall area, with bars, restaurants and games center. The brands and retail chain stores we signed contracts with include:

Anchor StoresRestaurantsSatellite StoresOthers

Project Status
The Sete Lagoas project was announced at the end of 2007. Since then, the project has undergone many modifications to enhance its efficiency and its current design was approved in July 2009.

We began the construction of the mall in October 2009, after leasing 50% of its total GLA and obtaining all the necessary licenses, the construction is proceeding according to schedule. The foundation is being finalized and the construction of the structure and ceiling is advanced.

The project had an initial real and unleveraged rate of return of 17.9%, but in December 2009 we sold a 21% ownership interest in the project, increasing its return rate to 18.8%, real and unleveraged.

We have great expectations for this project. Besides the financial returns, this project can bring gains of scale in terms of development, since once tested this type of shopping mall can be easily replicated in similar cities.

Projects in the pipeline
Besides Granja Vianna and Sete Lagoas we have three other greenfield projects in the pipeline: Mooca Plaza Shopping, São Bernardo and Estação BH. Together these projects will add 111,000 m² to our portfolio. Please click below to show each project’s details:

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Total GLA (m²): 42,108
Landbank (m²): 112,000
Owned GLA (m²): 25,265
CAPEX Status : 34%
Expected Opening: 4Q11

About The Mall
The Mooca neighborhood is located in São Paulo, Brazil’s biggest city. The neighborhood has a total population of 750,000 inhabitants with more than 60% of them from upper and upper-middle classes. This neighborhood is undergoing a transformation, with a lot of new real estate developments, and has a consumption potential of approximately R$1.5 billion per year.

The mall is located where used to be an old Ford plant , in an area of 112 thousand m². Shopping Mooca will have an initial GLA of 41,997 m² with 255 stores, including 14 anchor and mega-stores, and a cinema complex

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ESTAÇÃO BH

Total GLA (m²): 34,987
Owned GLA (m²): 34,987
CAPEX Status : 1%
Expected Opening: 2Q12

About The Mall
Estação BH is located in the north region of Belo Horizonte, the capital of Minas Gerais state. It has a population of 2.4 million, the majority from upper-middle and middle classes. The mall will be located in the region with the highest development rate in the city, with several real estate developments and the construction of the Green Line, which will connect the city center to the airport. It will be the first large size mall located in the region, which has a consumption potential of R$3 billion per year.

The mall is strategically located, above a subway and bus stations. The subway station is called Estação Vilarinho and services 3.6 million passengers every month, which will generate significant visitor traffic to the mall

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SÃO BERNARDO

Total GLA (m²): 40,000
Owned GLA (m²): 34,447
CAPEX Status : 29%
Expected Opening: 1Q13

About The Mall
In February 2010 we acquired a 105,000 m² landbank in São Bernardo do Campo.

São Bernardo do Campo is located 21 km from São Paulo. The municipality’s economy is mainly dependant on the auto industry and service sector and is one of the most developed of São Paulo. The population of the region is of approximately 811,000 inhabitants, the fourth largest in the state, mainly middle class. The region has an estimated consumption potential of R$4.2 billion.

The acquired land offers easy access, right next to Anchieta Highway and less than 1km from the south stretch of the Rodoanel beltway.