BRMALLS Acquires a 49.99% Ownership Interest in Shopping Tijuca

RIO DE JANEIRO, Nov. 22, 2010 /PRNewswire-FirstCall/ -- BR MALLS PARTICIPACOES S.A. (Bovespa: BRML3), a publicly held company headquartered at Avenida Borges de Medeiros no 633, 1st floor in the city and state of Rio de Janeiro ("BRMALLS"), hereby announces it acquired 49.99%, having an option to purchase the remaining 50.01%, of CIMA Empreendimentos do Brasil S.A. ("CIMA") which holds a 100% stake in Shopping Tijuca and three commercial towers that are part of the same complex located in the Tijuca neighborhood in Rio de Janeiro. 

Transaction Overview

• BRMALLS acquired a 49.99% ownership stake of CIMA, company that owns 100% of Shopping Tijuca and three commercial towers, that are part of the same complex;
• The acquisition price was R$425 million, of which R$265.6 million will be paid in 10 quarterly installments starting on the 21st month;
• Additionally, BRMALLS signed a document that guarantees a call option to acquire the remaining 50.01% in up to 90 days from this date, for R$ 375 million, of which R$234.4 million will be paid in 10 quarterly installments starting on the 21st month;
• On the next few days BRMALLS shall call an Extraordinary General Meeting ("EGM") to approve the acquisition of the remaining 50.01% ownership stake;
• BRMALLS signed a Memorandum of Understanding with CHL Desenvolvimento Imobiliario S.A. ("CHL") negotiating the ownership stake of 50% of the commercial towers, if BRMALLS completes the acquisition of 100% of CIMA's shares;
• From the total of R$800 million for 100% ownership stake, R$775 million are regarding the mall and R$25 million refer to the commercial towers.

Shopping Tijuca

Inaugurated in 1996, Shopping Tijuca is positioned in a privileged location in the Tijuca neighborhood, in an area with a large traffic of people, surrounded by three subway stations and enclosed by important avenues, besides being only a couple minutes away from Maracana Stadium and the UERJ University campus. Tijuca has over 150 thousand inhabitants, primarily from the mid-income class.

The mall mix is complete possessing a wide variety of entertainment and dinning options and posting excellent results in key performance indicators such as sales/m² and NOI/m². Currently, with 35.4 thousand m² of GLA, Shopping Tijuca has 287 stores, 5 anchors, including Renner, Lojas Americanas, besides several established brands such as Centauro, Fast Shop, Saraiva, Ponto Frio, Outback, Vivara, Richards, Osklen, Ellus and Arezzo and a Kinoplex movie theater with 6 rooms.

Commercial Towers

The three commercial towers located above the mall have 200 commercial offices, totaling 10.7 thousand m² of GLA, providing great synergy to the mall and increasing the number of visitors.

Synergies

The acquisition of Shopping Tijuca will generate great synergy to our portfolio in Rio de Janeiro, being our 9th mall in the city and our 24th mall in the Southeast region, which is responsible for the highest percentage of Brazil's retail sales. Additionally, it will contribute to our presence in the mid-income class.

Acquisition Rationale

Considering 100% of the mall, we estimate that Shopping Tijuca will generate R$78.2 million in NOI (including service revenues) to BRMALLS in 2011, being one of our top NOI contributors in 2011. The potential estimated NOI for 100% of the commercial towers is R$5.0 million. The total transaction value is R$800.0 million, of which R$425 million for the initial transaction and R$375 million for the additional 50.01%. From the total value of R$800 million, R$775 million are related to the mall and R$25 million to the commercial towers. The nominal entry cap rate is 10.0% and the estimated stabilized cap rate is 12.2%. The estimated IRR for 100% of the mall is 14%, real and unleveraged, and 16.2% real and leveraged (considering the payment structure described above).

Next steps

Considering that the acquisition of all of the shares of CIMA, which owns 100% of Shopping Tijuca, represents a relevant investment, in other words, involves a value greater than 10% of BRMALLS shareholders equity, we pretend to hold a Extraordinary General Meeting in order to approve the exercise of the option of 50.01%. That will guarantee BRMALLS 100% participation on Shopping Tijuca and on the commercial towers.

BRMALLS Portfolio

With the Shopping Tijuca acquisition, BRMALLS increased its owned GLA in 17.7 thousand m², reaching a total owned GLA of 552.3 thousand m², and its total GLA in 35.4 thousand m², reaching 1,167.2 thousand m². Moreover, with the acquisition, BRMALLS' portfolio increased from 38 to 39 malls. Additionally, after the acquisition of 100% of CIMA we will increase our owned GLA to 570.0 thousand m² and the number of malls managed by BRMALLS will increase from 27 to 28 malls and the number of malls leased by the Company will increase from 30 to 31.

Teleconference

BRMALLS invites all those interested to a conference call to be held next Tuesday, November 23rd, where we will be available to provide more details and explanations about the transaction.

English

November 23rd, 2010 - 1:00 pm (US EST) / 4:00pm (Brasilia)

Tel.: Brazil - 55 11 3301-3000 / US - 1 866 866-2673

Replay: Brazil - 55 11 3127-4999 / US - 1 866 866-2673

Code: 68001487

Webcast: http://www.mediatown.com.br/prnewswire/player/?id=431

Portuguese

November 23rd, 2010 - 12:00 pm (US EST) / 3:00pm (Brasilia)

Tel.: +55 11 3301-3000

Replay: +55 11 3127-4999

Code: 67996456

Webcast: http://www.mediatown.com.br/prnewswire/player/?id=430

ABOUT BRMALLS

BRMALLS is the largest integrated mall company in Brazil, with a portfolio of 39 malls, comprising 1,167.2 thousand m² of GLA and 552.3 thousand m² of owned GLA. BRMALLS is the only shopping mall company in Brazil with nationwide presence and targeting all income segments.

SOURCE BR MALLS Participacoes S.A.