Brmalls - Annual Report 2009

Operational Indicators Improving our efficiency We are the best mall operator in Brazil. Through our professional management and experience we achieved the lowest vacancy rates and late payments rate in the sector. We also managed to reduce our tenant’s occupancy cost, the lowest in the sector, enabling us to increase our rents without harming our tenant’s financial health. Below are our main operational indicators:

Sales
The Brazilian retail sector has been growing steadily since 2007, with 15.6% growth through 2009. Our malls have outpaced this rate with total sales growing 37% since 2007.

Since 2007, our malls’ sales per m² have grown 12.2% annually reaching R$938 per m². Looking only at the satellite stores (with less than 1,000 m²), we reached sales of R$1,361 per m² or US$786 per square foot.

Despite the economic challenges posed at the outset of the year, due to the effects of the 2008 global economic crisis, our same store sales continued to present very healthy growth rates, increasing 7% in 2009.

Rent

Rent is our most important source of revenue, representing almost 80% of total revenues. Our malls’ excellent performance and low occupancy cost leaves space for our rents to grow without harming our tenants’ financial health.

Over the last three years, our rent per square meter increased 25.5%, versus a 15.4% rise in the Brazilian inflation measure by the IPCA (IBGE). In 2009, the average rent per square meter reached R$69.

Same store rent (SSR), increased 10.5% in 2009, demostrating our leasing team’s excellent negotiation skills.

Leasing and Occupancy

The exceptional performance of our malls led to an increase in prospective tenants seeking space. We signed 1,301 leasing contracts in 2009.

This process also led to leasing spreads of 17.7% for new contracts and 13.3% for renewals in 2009. As a result, we closed 2009 with an occupancy rate of 98% and an average occupancy rate for 2009 of 97.3%, the Company’s highest-ever occupancy levels.

Excellent Management Skills

BRMALLS’ management skills improved our malls’ overall results, increasing NOI per square meter by almost 40% in only 3 years.

Our continuous efforts in reducing the delinquency of our tenants have produced results, lowering the late payments rate to only 3.9%, a historical low. We also focused on decreasing the occupancy cost for our tenants; in 2009 the average occupancy cost was 9.7% of total sales. These measures together with our leasing efforts were responsible for our superior monthly result of R$76 per m² NOI in 2009.