A Major World Economic Power

BRAZIL

Quick Facts

BRAZIL

7th largest economy in the world

GDP of Brazil is US$2.22 trillion. São Paulo

accounts for 1/3 of Brazil’s total GDP.

Next largest economy in Latin America is Mexico,

which has a GDP of US$1.18 trillion.

Stable Inflation

Brazil suffered from high inflation in the 1980s

through the mid-1990s. Inflation has been stable in

the 5% to 7% range over the past decade.

Tremendous reserve

of natural resources

Growing population and

excellent demographic trends.

BRAZIL

Metrics

Brazil’s

Central Bank

Rate is 9.50%.

Loans for

Real Estate to

50% LTV are

11% to 14%.

Rents are

indexed to

inflation.

Cap rates for

institutional

quality real

estate in the

6% to 9% range

in São Paulo

and Rio.

IRRs range from

11% to 15% for

stable assets

and from

15% to 25% for

development

assets.

Brazil has serious problems with:

•Socio-economic Stratification

•Education

•Worker Productivity

•Infrastructure

•Bureaucracy

•Corruption

BRAZIL

Not all smooth sailing

If you are a foreign investor with a big bet on Brazil,

this is not something you want to see – or is it?

BRAZIL

Problems bubble to the surface

Tower Bridge Marginal Pinheiros –

São Paulo March 2013

55,079 square meters, completed in 2012

Sale Price: R$950 million

R$17,248 per m2 / US$763 per SF

Buyer: Fundo de Investimento Imobiliário FII TB Office

Seller: Tishman Speyer JV

Cap Rate: 7.60%

Fully leased, tenants include: Grupo Fleury, Banco

Toyota, TAM , and Zurich

BRAZIL

Recent Sale Transaction: Office Building

TRANSACTION DATABASE

siila.com

Galleria Shopping Campinas –

São Paulo October 2013

33,236 square meters, built in 1992

30% interest purchased

R$278.7 million (imputed 100% price)

R$8,385 per m2

US$346 per SF

Buyer: Iguatemi

Seller: Luis Roberto Coutinho

Cap Rate: 8.47%

Anchors: C&A, Le Lis Blanc, Cineflix

BRAZIL

Recent Sale Transaction: Shopping Mall

TRANSACTION DATABASE

siila.com

Industrial

Retail

Hotel

Office

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Fibra Uno MacquarieMexico

Vesta Fibra Hotel Terrafina Fibra Shop Fibra Inn

FIBRAS MARKET CAP

Market CapMX$ (inbillions)

MEXICO

In Mexico it is “FIBRA Fever”

SOURCE: THE SUPER SMART FOLKS AT BARNHART ASSET MANAGEMENT

10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%

17.00%

4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13

Discount Rate

8.00%

9.00%

10.00%

11.00%

12.00%

13.00%

14.00%

4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13

OAR Cap Rate

MEXICO

Recent Transactions: Retail

TRANSACTION DATABASE

siila.com

PERIOD BUYER SELLER NO. OF PROPERTIES M2 SALE PRICE MX$ M MX$ PER M2 PROFORMA CAP RATE

4Q13 Fibra Uno N/A 6 26,850 $439.50 $16,369 8.16%

4Q13 Planigrupo Kimco 4 102,193 $1,200 $11,743 n/a

3Q13 Fibra Uno MRP/Apolo 49 ~1,000,000 $23,155 - 7.60%

2Q13 Planigrupo Kimco 9 241,548 $3,350 $13,869 n/a

6 properties

- one Retail

in Merida

Coacalco & Tecamac Power Centers November 2013

134,246 square meters (combined GLA)

Sale Price: US$158.4 million, US$1,180 per m2

Buyer: Fibra Macquarie

Seller: Fondo Comercial Mexicano

Cap Rate: 8.35%, 98.7% Occupied

Financing: US$71.9 million

(Banamex)

Coacalco Power Center

• Total GLA: 76,209 m2,

99 small shops, 19 kiosks

• Anchor: Walmart; Other

large tenants: Sanborns,

Cinepolis, Suburbia,

Office Max

Tecamac Power Center

• Total GLA: 58,037 m2,

83 small shops, 14 kiosks

• Anchor: Suburbia; Other

large tenants: Walmart,

Sam’s, Cinepolis

Recent Sale Transactions: Retail

MEXICO

TRANSACTION DATABASE

siila.com

8.00%

9.00%

10.00%

11.00%

12.00%

13.00%

14.00%

4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13

OAR Cap Rate

9.00%

10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%

4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13

Discount Rate

Recent Sale Transactions: Industrial

MEXICO

TRANSACTION DATABASE

siila.com

PERIOD BUYER SELLER NO. OF PROPERTIES M2 SALE PRICE MX$ M MX$ PER M2 PROFORMA CAP RATE

4Q13 Fibra Uno N/A 5 1.28 $86.50 $67 8.10%

3Q13 Fibra Uno N/A 7 0.19 $10.77 $55 8.75%

3Q13 Terrafina Kimco / AI 87 11.00 $600.00 $55 8.70%

3Q13 Macquarie DCT Industrial 15 1.65 $82.70 $50 8.10%

4Q12 Fibra Uno G-30 30 19.37 $1,415.38 $73 7.00%

Jalisco, Aguascalientes, Guanajuato, SLP

Recent Hotel Acquisitions by Fibra Inn

Mexico Plaza Irapuato Hotel

102 Rooms – Limited Service

SALE DATE: 3Q13

MX$93 million

± US$7.2 million

US$70,588/room

CAP RATE: 10.10%

Hilton Reforma – Mexico City

458 Rooms – Full Service

SALE DATE: 4Q13

MX$1,163 million

±US$89.8 million

US$197,070/room

CAP RATE: 10.30%

MEXICO

TRANSACTION DATABASE

siila.com

• Record high of US$15.8 billion in 2012, on track to

reach a new high in 2013

• Investment in local stocks and

debt doubled to US$4.1 billion

• Significant pent up demand for most types of

commercial real estate and housing

• Strong growth

• Business friendly government

• Limited partnership

opportunities for

foreign investors

Foreign Direct Investment

COLOMBIA

-

2

4

6

8

10

12

14

16

18

2004 2005 2006 2007 2008 2009 2010 2011 2012 3Q13

Historical FDI US$B

• 51 shopping centers

under development in

Colombia

• Changing ownership

structure away from

fractured interests

• 56% of new projects are

hold and lease

• Parque Arauco and

Planogrupo two major

foreign players

Villa Nueva Plaza - Cali

US$41.1 million

•66,000 square meters, 3 levels

•Anchors: Superinter and Cinemark

•260 small shops, 24 restaurants, 34

large spaces, 17 kiosks and 2 anchors.

•Delivery date: November 2015

COLOMBIA

Significant Retail Development: Underway

Portal del Oriente - Cali

US$62.5 million

•2 levels

•Anchors: Exito, Flamingo and

Cine Colombia

•220 small shops, 24 restaurants,

7 banks and 3 anchors.

•Delivery date: 1Q 2015

Marcas Mall - Cali

US$88.6 million

•2 levels

•Anchor: Cine Colombia

•280 retail spaces and 1 anchors.

•Delivery date: 2Q 2015

Argentina •Strong populist movement

•Volatile political and economic environment

•High government debt lack of capital for

new development

Peru •Growing middle class and increasing

economic growth

•Political /economic uncertainty is too great

for most foreign investors

Chile •Small market with high barriers to entry

•Most real estate owned by local investors

Panama •Canal expansion to be completed in 2015.

•Increased shipping traffic will strengthen

local economy

•US dollar currency gives the country a currency

stability advantage over other markets

OTHER LATIN AMERICAN MARKETS

CONCLUDING THOUGHTS

Different selloff/leasing risk

Property rights that favor the tenant

Fractured interests

Currency/sovereign risk

Construction cost/timing risk for development assets

The Risks are Different in Latin America