16-05-2012 - Institutional Presentation May 2012

Institutional Presentation

http://www.sonaesierra.com/en-GB/homepage.aspx�

2

Disclaimer

► The material that follows is a presentation of general background information about Sonae Sierra Brasil S.A. and its subsidiaries

(the “Company”) as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not

intended to be relied upon as advice to potential investors and does not form the basis for an informed investment decision. This

presentation is strictly confidential and may not be disclosed to any other person. No representation or warranty, express or

implied, is made concerning, and no reliance should be placed on, the accuracy, fairness or completeness of the information

presented herein.

► This presentation may contain statements that are forward-looking within the meaning of Section 27A of the U.S. Securities Act of

1933, as amended (the “Securities Act”) and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking

statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-

looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations

and business environments of the Company and its subsidiaries that may cause the actual results of the Company to be materially

different from any future results expressed or implied in such forward-looking statements. No person has any responsibility to

update any such information.

► This presentation does not constitute an offer, or invitation, or solicitation or an offer, to subscribe for or purchase any securities.

Neither this presentation nor anything contained herein shall form the basis of any contract or commitment.

Index

4 Company Fundamentals

11 Our Portfolio

15 Growth Strategy

7 Market and Sector Fundamentals

21 Operational and Financial Indicators

Parque D. Pedro Shopping ‘s Food Court (Campinas) 3

25 Recent Events

Expansion / Greenfield

Announced GLA Growth (2011 – 2013)(1)

(‘000 sqm)(2)

Owned GLA Growth (%)

Sonae Sierra Brasil at a glance

One of the leading developers, owners and operators of top quality and regionally dominant shopping centers in Brazil

► Defined Growth strategy: focus on low served cities’ middle class

► Largest secured growth in the sector: 2 greenfields under

construction, 1 greenfield and 3 expansions recently concluded

almost doubling our owned GLA

► 3 other expansions already defined

► 11 shopping centers owned and managed (403k sqm total GLA)

► Occupancy rate of 98.5%(3)

► Solid margins (EBITDA = 76.8% and FFO = 77.4%)

► Greenfield Expertise (62.4% of GLA)

Note: (1) As of March 31, 2012 (2) Referrers to shopping center’s GLA only. .(3) Excluding Uberlândia Shopping

► Leverage on the expertise, tenant relationships and market

recognition of our shareholders: Sonae Sierra SGPS and DDR

Corp (NYSE: DDR)

► Best-in-class controlling shareholders with significant experience in

the sector

► 33.35% free float

Secured Growth

Operating Expertise

Shareholders: solid base

4

141

135

104

122

181

+42.9%

+86.9%

+45.2%

+32.2%

+17.5%

Sierra Brazil 1

BV66.65%

Free Float33.35%

Ownership Structure

Post-IPO Ownership Breakdown Controlling Shareholders

► Over 21 years of history

► One of the largest developers and operators of shopping centers in Europe

► Over 2.0 mm sq m in total GLA

► 50/50 joint-venture between Sonae and Grosvenor

► NAV: €1.1 billion(2)

► Over 45 years of history

► One of the largest developers and operators of shopping centers in US

► 12 mm sq m in total GLA

► NYSE listed, SOx Compliant

► Equity value of US$3.9 billion(1)

Sierra Brazil 1 BV

Note: (1) as of March 7, 2012

(2) as of December 31, 2011

Sonae Sierra Brasil benefits from best-in-class corporate governance and globally recognized sector expertise, arising from a solid and engaged controlling shareholders

5

http://www.sonaesierra.com/en-GB/homepage.aspx�

Index

6 Manauara Shopping (Manaus)


11 Our Portfolio

15 Growth Strategy



25 Recent Events

3.2%3.9%

6.1%

5.2%

-0.3%

7.5%

2.7%3.2%

3.9%4.5% 4.4%

2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e

18.00%

13.25%

11.25%

13.75%

8.75%

10.75% 11.00%9.50%

10.50% 10.50% 10.00%

2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e

4.8%

6.2%

9.8%9.1%

5.9%

10.9%

6.7%

2005 2006 2007 2008 2009 2010 2011

5.7%

3.1%

4.5%

5.9%

4.3%

5.9%

6.5%

5.2%5.6%

5.2%4.8%

2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e

7

Despite uncertainties in the global macro economic scenario, perspectives are compelling for Brazil

Macro Economic Scenario

IPCA Rate (%) Retail Sales Growth (%)

Selic Rate (%) GDP Growth Rate (%)

Source: MCM

Source: MCM Source: MCM

Source: IBGE

Shopping centers in Brazil

Brazilian Shopping centers growth by region: 2014e

Shopping centers sales - CAGR (08-11): 16%

Source: IBOPE Source: IBOPE

Low shopping center market penetration

Source: ABRASCE and IBGE.

Total GLA (m²) / 1,000 inhabitants (2010)

2,180

USA Canada

1,290

SP

91

PR

53

MG

31

GO

34

AM

42

DF

143

Other BR states

34

Average: 49

Mexico

81

Source: IBOPE

Southeast 2010 205

South 2010 73

Northeast 2010 55

Mid West 2010 37

North 2010 11

+29%

+15%

+20%

+16%

+72%

Southeast 2014 265

South 2014 84

Northeast 2014 66

Mid West 2014 43

North 2014 19

70.1 78.889.5

109.1

13.7%14.0% 14.0%

15.4%

2008 2009 2010 2011eSales (R$ billion) % of Total Retail Sales

Attractive shopping center industry fundamentals Despite recent growth, decreasing vacancy rates and low penetration vis-à-vis developed markets indicate significant room for new shopping centers in Brazil

8

342359

381

419

2008 2009 2010 2011e

Fast growing middle class Over 40 million people have moved upwards into the middle class, while middle class disposable income has tripled

Middle class: disposable income(1) (R$/month)

Note: (1) Income available for spending and saving Source: Cetelem “O Observador 2012”, IBGE and Itau Securities

122

363

2005 2011

+198%

R$ 30 billion increase in monthly disposable income

Total credit to individuals outstanding (R$ bn)

Source: Cetelem “O Observador 2012”

Increasing middle class

51% 24%

34%

54%

22% 15%

2005 2011

Population: 182 mm Population: 191 mm

+16 mm people

+40 mm people

A+B

C

D+E

Upp

er c

lass

M

iddl

e cl

ass

Low

er c

lass

Sonae Sierra Brazil is strategically positioned to capture the middle class consumption growth, as it entails over 80% of its target audience

6.8x

-

200

400

600

Jan-01 May-02 Sep-03 Jan-05 May-06 Sep-07 Jan-09 May-10

- 48 mm people

9

Index

Shopping Penha (São Paulo) 10


11 Our Portfolio

15 Growth Strategy



25 Recent Events

Focus on dominant malls in underserved medium and large cities, targeting middle class customers Sonae Sierra Brasil has an established footprint in the State of São Paulo and its growth strategy is based on offering high quality, market dominant developments in underserved regions

Core portfolio: 9 properties Development strategy: 2 opened and 2 greenfields

Core Portfolio of Assets

Strong track record in Brazil’s most dynamic region Growth strategy focused on underserved regions

Parque D. Pedro

► Campinas (SP) ► Population: 1,089k ► GLA: 121.1k sq m ► Occupancy rate: 98.8% ► Over 20 mm visits in 2010

Total GLA 2010: 298k sq m

Owned GLA 2010: 151k sq m

Greenfield

Manauara Shopping

► Manaus (AM) ► Population: 1,832k ► GLA: 46.8k sq m ► Occupancy rate: 98.8%

# of competitors in area of influence

Parque D. Pedro 2

Boavista 2

Penha 2

Franca 1

Tivoli 1

Metrópole 2

Pátio Brasil 2

Plaza Sul 1

Campo Limpo 2

Total GLA 2013: 552k sq m

Owned GLA 2013: 389k sq m

# of cities with more than 300k inhabitants in Brazil

+ 81

Owned GLA concentration

Shopping centers

Recently opened mall

Shopping centers

Manaus

Uberlândia

Goiânia

Londrina

11

São Paulo Other States

54.9% 45.1%

Portfolio

Greenfield

Shopping centers

4

5

1 8

9 3 2

6

7

11 13

12

10

1. Parque D. Pedro ► Campinas (SP) ► GLA (sqm): 121.0

► Stores : 402 ► 98.4% of GLA leased

2. Boavista Shopping ► São Paulo (SP) ► GLA (sqm): 16.0


3. Shopping Penha ► São Paulo (SP) ► GLA (sqm): 29.7


4. Franca Shopping ► Franca (SP) ► GLA (sqm): 18.5


5. Tivoli Shopping ► Santa Barbara d'Oeste (SP)

► GLA (sqm): 22.1


7 Pátio Brasil ► Cidade: Brasília (DF) ► GLA (sqm): 29.0 ► Stores : 235 ► 97.2% of GLA leased

8. Shopping Plaza Sul ► São Paulo (SP) ► GLA (sqm): 23.2


9. Shopping Campo Limpo ► São Paulo (SP) ► GLA (sqm): 22.3


10. Manauara Shopping ► Manaus (AM) ► GLA (sqm): 46.8


12 Boulevard Londrina Shopping

► Londrina (PR) ► GLA (sqm): 47.8

► Opening; 1Q13

13 Passeio das Águas Shopping

► Goiânia (GO) ► GLA (sqm): 78.1

► Opening: 2H13

Data on March 31, 2012

Our portfolio is composed by 11 operating shopping malls, totaling 2,215 stores, 403 thousand sqm of total GLA and 254 thousand sqm of owned GLA. Until 2013 there will be more 2 new malls, adding 118 thousand sqm of owned GLA to the portfolio

12

11. Uberlândia Shopping ► Uberlândia (MG) ► GLA (sqm): 45.3


6. Shopping Metrópole ► São Bernardo do Campo (SP) ► GLA (sqm): 28.6


Controlling interests in most shopping centers Sonae Sierra Brasil average ownership stake is 63% in its 11 operating properties. It will reach 70% when all three greenfield developments are completed

Rationale Percentage of the Company’s interest Shopping Center City State GLA

(‘000 sqm) Stake Management

Parque D. Pedro(1) Campinas SP 121.0 51.0% Penha São Paulo SP 29.7 51.0% Metrópole São Bernardo SP 28.6 100.0% Tivoli Santa Bárbara

d’Oeste SP 22.1 30.0% Pátio Brasil Brasília DF 29.0 10.4% Boavista São Paulo SP 15.9 100.0% Franca Franca SP 18.5 67.4% Plaza Sul São Paulo SP 23.2 60.0% Campo Limpo São Paulo SP 22.3 20.0% Manauara Manaus AM 46.8 100.0% Uberlândia Uberlândia MG 45.3 100.0% Weighted Average 63.1%

Londrina Londrina PR 47.8 84.5%(2) Goiânia Goiânia GO 78.1 100.0% Weighted Average 70.5%

Note: (1) Sonae Sierra and DDR hold an additional 25.9% indirect ownership in Parque D. Pedro through another structure. (2) Ownership considering partner will fully exercise its rights in the project

Ability to expand and adapt to market trends

Control the management services of 100% of the malls

Strategic control of the malls

13

Index

Uberlândia Shopping’s façade (Uberlândia) 14


11 Our Portfolio

15 Growth Strategy



25 Recent Events

Secured Growth

Owned GLA growth (‘000 sqm)

15

Sonae Sierra Brasil has a solid new development and expansion pipeline which will almost double the Company’s owned GLA until 2013

209

390

1745

118

1

2011 2012 2013 Total

M&A GreenfieldsExpansion

Uberlândia

Londrina and Goiânia

PDP (II), Metrópole (II) and Tívoli

+87%

Plaza Sul and Penha

Opening March 27th, 2012

Total GLA (‘000 sqm) 45.3

SSB’s ownership 100%

Occupancy rate 93.0%

Number of stores 201

Anchor stores 15

Parking spaces 2,400

Gross Investment R$201 million

16

With Uberlândia Shopping, Sonae Sierra Brasil reaches 11 malls owned and managed, totaling 410 thousand sqm of total GLA and 254 sqm of owned GLA. Uberlândia Shopping is the 3rd largest mall in the Company’s portfolio, just behind Parque D. Pedro Shopping and Manauara Shopping. Sonae Sierra Brasil’s average ownership interest increased to 63.1%.

Greenfield Projects – Uberlândia Shopping

Greenfield Projects – Boulevard Londrina Shopping

Construction pictures

Project Illustration

Boulevard Londrina Shopping

City Londrina

State PR

Opening 1Q13

GLA (sqm) 47.8

SSB’s stake* 84.5%

Committed GLA 70%

Gross Capex Incurred (R$ MM) 122.9

Scheduled to open in 1Q13, the shopping mall is part of a big renovation project of an old industrial region in downtown Londrina

Data as of March 31, 2012 * Ownership considering partner will fully exercise its rights in the project 17

Greenfield Projects – Passeio das Águas Shopping

Project Illustration and Construction Site

Passeio das Águas Shopping

City Goiânia

State GO

Opening 2H13

GLA (sqm) 78.1

SSB’s stake 100%

Committed GLA 43%

Gross Capex Incurred (R$ MM) 91.6

Scheduled to open in 2H13, the biggest project of our portfolio and is located within the growth sector of Goiânia

Data as of March 31, 2012 18

Expansions

Metrópole (Expansion I)

São Bernardo (SP)

100%

9.0

Nov 2011

1H2010

100%

Campo Limpo

São Paulo (SP)

20%

3.0

Sep 2011

1H2011

100%

Parque D. Pedro (Expansion I)

Campinas (SP)

51%

5.0

Nov 2010

1H2010

100%

Parque D. Pedro (Expansion II)

Campinas (SP)

51%

5.0

2013

1H2013

n.a.

Metrópole (Expansion II)

São Bernardo (SP)

100%

12.0

2013

2H2012

n.a.

Tivoli

Sta. Bárbara D’Oeste (SP)

30%

7.0

2013

1H2012

n.a.

*Data as of March 31, 2012

Location

Sonae Sierra Brasil Stake

Additional Total GLA (‘000 sq m)

Expected Opening

Construction Start Date

% of GLA already committed*:

Future expansions Concluded expansion

19

Shopping Campo Limpo’s façade (São Paulo) 20

Index


11 Our Portfolio

15 Growth Strategy



25 Recent Events

21 21

Operational and Financial Indicators

98.3% 98.5% 98.4%98.0% 97.7% 97.5% 97.4%

98.8% 98.5%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12

Occupancy Rate (% of GLA)

111

Sales (R$ million)

111

SSS/sqm

111

SSR/sqm

841 936

3,545 3,969

1Q11 1Q12 2010 2011

11.4%

12.0%

856 940 958 1,039

1Q11 1Q12 2010 2011

9.8%8.5%

49

55 51

57

1Q11 1Q12 2010 2011

12.1%

11.5%

34.4 34.6

123.4 170.2

1Q11 1Q12 2010 2011

0.5%

37.9%

38.0 41.9

140.3 168.9

1Q11 1Q12 2010 2011

10.4%

20.4%

49.7 56.6

185.0 219.2

1Q11 1Q12 2010 2011

13.9%18.5%

Adjusted EBITDA and Margin (R$ million)

22

Operational and Financial Indicators

Net Revenue (R$ million)

Adjusted FFO and Margin (R$ million) Net Operating Income - NOI (R$ million)

76.3% 74.0% 75.8% 77.1%

69.2% 61.0% 66.7% 77.7%

47.7 54.9

174.4 211.5

1Q11 1Q12 2010 2011

15.1%

21.3%

Fixed19%

CDI19%

TR33%

IPCA29%

23

Net Cash Position and Modest Leverage

Data on March 31st, 2012

Net Cash Position (R$ million) Debt Profile

Debt Amortization Schedule (R$ million)

30.0 35.2 48.6 49.5 92.8

453.9

2012 2013 2014 2015 2016 2017 and

beyond

731,3

21,3

710,0

Cash and Cash Equivalents

Debt Net Cash

Contracted Debt Financing Committed Amount (R$

MM)

Term (Years)

Interest Rate

Balance as of

03/31/12 (R$ MM)

Working Capital 20 5 CDI + 2.85% 16

Working Capital 27 6 CDI + 3.30% 24

Manauara Shopping 112 12 8.5% 132

Metrópole Shopping – Expansion I 53 8 TR + 10.3% 55

Uberlândia Shopping 81 15 TR + 11.30% 78

Boulevard Londrina Shopping 120 15 TR + 10.90% 53

Passeio das Águas Shopping 200 12 TR + 11.00% 49

Debentures – first series 95 5 CDI + 0.96% 97

Debentures – second series 205 7 IPCA + 6.25% 207

Total 914 710

Average 10.2 11.40%

Índice

Shopping Metrópole (São Bernardo do Campo) 24


11 Our Portfolio

15 Growth Strategy



25 Recent Events

25

Recent Events – First Issuance of Debentures

The net funds raised by the Company with the Issue will be allocated (i) to the acquisition of new plots of land; (ii) to the increase of the Company’s participation in shopping malls; (iii) to the acquisition of new shopping malls; (iv) to the development of new shopping malls; and (v) to constitute cash reserve for the Company.

Emission details Total amount of the issue R$300 million Number of debentures 30,000 Unit par value R$10,000

Characteristics Simple, unsecured, non convertible, 2 series (1st: CDI and 2nd: IPCA)

Banks Coordinators Itaú BBA (leader), BTG and Bradesco 1st series term 5 years 1st series remuneration CDI + 0.96% 2nd series term 7 years 2nd series remuneration IPCA + 6.25%

26

Recent Events – SSB obtains Plaza Sul control

Transaction overview SSB receives:

• 30.00% of Shopping Plaza Sul, valued at R$102.9 million

CSHG receives: • 17.12% of Shopping Penha, valued at R$39.0 million and • R$63.9 million in cash

Transaction IRR: 16.9% (nominal, unleveraged and after taxes)

Cap rates: • 9.4% for Plaza Sul transaction and • 9.5% for Penha transaction

Opening 1994 1992

Total GLA (‘000 sqm) 23.0 29.6

SSB’s ownership 30.00% → 60.00% 73.18% → 56.06%

Occupancy rate 99.4% 99.0%

Sales/sqm (2011 monthly avg.) R$ 1,436 R$ 990

Rent/sqm (2011 monthly avg.) R$ 98.4 R$ 60.9

The transaction rational was to reinforce Sonae Sierra Brasil’s strategy to pursue opportunistic M&A activities, adding to the portfolio the controlling ownership of a high-quality mall located in the city of São Paulo while maintaining the controlling ownership stake in another asset. Additionally, Sonae Sierra Brasil sold a 5.1% additional minority stake on Shopping Penha to CSHG for R$11 million. After these transactions, SSB’s stake on this mall is 51.0%, maintaining the controlling ownership interest in this asset.

Shopping Plaza Sul

Shopping Penha

16-05-2012 - Institutional Presentation May 2012

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Transcript of 16-05-2012 - Institutional Presentation May 2012