BRAZILIAN REAL ESTATE OFFICE MARKET OVERVIEW
2009
AGENDA
 Company Overview
 Brazilian Real Estate Market Evolution
 Brazilian Real Estate Office - Market Overview
 Investment Cases - Rio de Janeiro and São Paulo
 Real Estate Market - Challenges and Opportunities
* F/X Rate: 1,85
Company Partners
Bueno Netto
 With over 30 years of experience,
 Focused on urban transformation, homebuilding and development.
 Over 25 projects in the pipeline and a construction portfolio adding up to approximately
US$1,5 billion.
MaxCap/Bank of America Merrill Lynch (BAML)
 MaxCap is a leading Brazilian real estate investment management company,
 MaxCap has five partners, who together , acquiring or developing real estate
investments totaling over US$3 billion.
 BAML’s Global Real Estate Principal Investments group has invested US$8.2 billion in
real estate and real estate related assets in North and South America since 2003
* F/X Rate: 1,85
BNCORP
 Created in mid 2008, leveraging Bueno Netto´s track record in the sector
 Combining with the strategic vision and financial management of MaxCap and
Bank of America/Merrill Lynch,
 A leading position in a segment with no dedicated players - FOCUS
 Five projects “under development” with potential sales value of more than
US$320 million, and
 A development pipeline of corporate buildings, office suites and mixed-use
projects of US$500 million.
Company Business
Sample Projects
CORPORATE BUILDING
Minimum of 500 sqm per floor
Class A and over to 800 sqm
Class AA
Leased to Corporate Tenants
Sold to End Users/Tenants,
Individual Property Investors or
Institutional Investors
CONDOS OFFICE BUILDINGS
Several small units per floor
starting with 35,0 sqm
Small companies and service
providers
Sold to End Users/Tenants or
Individual Property Investors
RETROFIT PROJECTS
Acquisition of buildings in need of
renovation
 Bring to current market standards
Class AA requirements
Sold to End Users/Tenants,
Individual Property Investors or
Institutional Investors
Market Overview
Brazilian Real Estate Market Evolution
UNTIL 2003
 LACK OF AQUISITION AND CONSTRUCTION
FINANCING – NO CAPITAL MARKETS
 LACK OF GOVERNANCE
 STRATIFIED PROPERTIES
 BRAZILIAN PENSION FUNDS THE MAIN
INSTITUTIONAL INVESTORS
 LOCAL PLAYERS
 DEVELOPERS AND CONSTRUCTION
COMPANIES
 PROPERTY COMPANIES
 WEALTHY FAMILIES
 RIO DE JANEIRO AND SAO PAULO 2,3 MM sqm.
2003 - 2008
 HIGH LIQUIDITY (FUELED BY IPOs AND
FOREIGN DIRECT INVESTMENT)
 INVESTMENT GRADE IN 2008
 STABLE POLITICAL ENVIRONMENT
 INTERNATIONAL INVESTORS => PENSION
FUNDS , DEVELOPERS, HEDGE FUNDS
 LOCAL PLAYERS => REAL ESTATE FUNDS,
PROPERTY COMPANIES, PRIVATE EQUITY
FUNDS, WEALTHY FAMILIES, CONSTRUCTION
AND DEVELOPMENT COMPANIES
 BUILT TO SUIT –ATYPICAL LEASE
 RIO DE JANEIRO AND SAO PAULO 3.2 MM sqm.
Market Overview
Main Office Markets
Total Stock 20 MM sqm.
70% in Sao Paulo and Rio de Janeiro
18%Class A/AA – 65% in Sao Paulo
BRASÍLIA (DF)
BELO HORIZONTE (MG)
Total stock: 1.7 million sqm.
Total stock: 2.0 million sqm.
Class A & AA Stock: 86 thous sqm.
Class A & AA Stock: 38 thous sqm.
New stock: 50 thous sqm.
Net absorption: 23 thous sqm.
Vacancy rate: 2.5%
New stock: 97 thous sqm.
Vacancy rate: 1.7%
Source: Jones Lang LaSalle; Cushman & Wakefield ; BN CORP
RIO DE JANEIRO (RJ)
SÃO PAULO (SP)
Total stock: 4.5 million sqm.
Total stock: 9.6 million sqm.
Class A & AA Stock: 876 thous sqm
Class A & AA Stock: 2.4 million sqm.
Net absorption: 36.2 thous sqm.
Net absorption: 15.3 thous sqm.
New stock: 25.7 thous sqm.
New stock: 29.0 thous sqm
Vacancy rate: 3.76%
Vacancy rate: 7,44%
PORTO ALEGRE (RS)
CURITIBA (PR)
Total stock: 800 thous sqm
Total stock: 1.1 million sqm.
Class A & AA Stock: 150 thous sqm
Class A & AA Stock: 100 thous sqm
New stock: 47 thous sqm.
New stock: 39 thous sqm.
Vacancy rate: 7.1%
Vacancy rate: 6.7%
Market Overview
Corporate Office Market 2nd Quarter 2009
São Paulo Class A and AA
9,6 MM sqm Total Stock
2,4 MM sqm Class A and AA
7.4% Vacancy Rate
 NET ABSORTION FROM 2009 /2011 -
São Paulo
Thousand m²
300
30%
 HISTORICALLY LEASE RATES DO
250
22%
24%
25%
200
20%
18%
150
100
21%
12%
13%
11%
12%
13%
15%
12%
11%
NOT DECREASE UNTIL VACANCY
REACHES 16%
 65% OF BRAZIL’S HIGH-END
PROPERTIES ARE LOCATED IN
10%
7%
50
10%
7%
SÃO PAULO
5%
New Supply
Net Absorption
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
0
-50
500 thous sqm.
0%
Vacancy Rate
Source: Jones Lang LaSalle; BN CORP
Market Overview - Brazil
Market Overview – São Paulo
2nd Quarter 2009
Prices – AA and A Class Buildings
R$/sm/month
AA Class
A Class
RENTAL ASKING PRICES
160
140
CLASS A – US$ 41.5/ sqf. /year
120
R$ 64.0 / m2 / Month
100
80
60
CLASS AA – US$ 54.4 / sqf.
40
/Year
20
R$ 84.0 m2 / Month
0
Primary Regions
Secondary Regions
Alternative Regions
Source: Jones Lang LaSalle; BN CORP
Market Overview - Brazil
Condo/Suites Office Market
São Paulo - 2nd. Semester 2009 and forecast
4,600 Units
US$900 million Sales Value
 CONSTRUCTION FINANCING
 EMERGING SECURITIZATION
MARKET FOR RECEIVABLES
90%
80%
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
 SALES VALUE - 25%
4,451
4,035
80%
100%
100%
USD 153
USD 255
2005
2006
2,600
USD 520
USD 565
2007
2008
 60% OF BUYERS ARE
INDIVIDUAL INVESTORS
1,995
1,826
1,514
 CULTURAL ENVIRONMENT
 60% OF SOLD UNITS - 50sqm.
USD 364
1S 2009
USD 541
2S 2009/10
 REDUCED DEVELOPMENT
CYCLE
 SMOOTH APPROVAL PROCESS
Potential Sales (US$ 'MM)
Units Launched
% Sold
AND CLEAR EXIT OF PROJECT
WITHIN THREE YEARS
Source: BN CORP
São Paulo
Investment Case
Alpha Tower
Company Project
Alpha Tower – São Paulo
Assumptions
Type of Project
Corporate
Total Private Area
6,900 SQM
Number of Floors
12
Private Area per Floor
570 SQM
Construction
Aug/2009 until Mar/2011
Market Overview - Brazil
Corporate Office Market – 1st Semester 2009
Rio de Janeiro – Class A and AA
Total Stock 4,5 MM sqm.
Class A and AA - 876 Thousand sqm.
3.76% Vacancy Rate
 SECOND PRIME MARKET IN
Rio de Janeiro
Thousand Sqm
160
BRAZIL
140
16%
16%
15%
120
 “RETROFIT”
 GOVERNMENT COMPANIES
100
11%
5%
10%
11%
80
GAS COMPANIES
9%
60
9%
5%
7%
40
4%
6%
5%
3%
4%
PENSION FUNDS, OIL AND
SERVICING
3%
2%
20
1%
0
-20
-40
-4%
New Supply
Net Absorption
Vacancy Rate
Source: Jones Lang LaSalle; BN CORP
Market Overview - Brazil
Market Overview - Rio de Janeiro 2nd
Quarter 2009
Prices – AA and A Class Buildings
AA Class
R$/sqm
A Class
120
 CLASS A AVERAGE
110
 R$ 83 / sqm/ Month
100
US$ 53.8/sqf/Year
90
 CLASS AA AVERAGE
80
 R$ 84 / sqm / Month
70
US$ 54.4/sqf/Year
60
50
Centro
Orla
Barra
Source: Jones Lang LaSalle; BN CORP
Rio de Janeiro
INVESTMENT CASE
Rio Branco 115
Company Project
Rio Branco 115 – Rio de Janeiro
Assumptions
Type of Project
Corporate (Retrofit)
Total Private Area
12,200 SQM
Number of Floors
20
Private Area per Floor
610 SQM
Construction
Oct/2008 until Aug/2010
Market Overview
Cap Rate by Sector
CORPORATE
 BUYERS (12-14%)
Cap Rate
20.0%
 SELLERS (11%)
 REALIZED RATES 11.8% UP TO MID 12%
18.0%
 DOWNWARD PRESSURE ON THE RATES DUE TO THE
Industrial
16.0%
Retail
14.0%
12.0%
LOWERING INTEREST RATE – TRENDS 10%
Corporate
 ASSET VALUE INCREASING
Selic (Dec)
 INDUSTRIAL
 SUBSTANTIAL DECREASE IN CAP RATES IN THE PAST
FIVE YEARS
10.0%
 STILL A INCIPIENT MARKET
8.0%
2005
2006
2007
2008
2009
 LESS THAN 2 MILLION SQM AS PRIME STOCK
 CONCENTRATED IN SAO PAULO AND RIO DE JANEIRO
Source: Jones Lang LaSalle; Colliers International; BN CORP
Market Overview - Brazil
2008/2009Brazilian Real Estate Market
Challenges and Opportunities
BRIC - Real Estate Market
Trend:
Lease Rate
US$ per m²
160
• São Paulo lease rate: +25%
• Moscow: -63%
140
• Mumbai: -44%
120
Beijing
100
Mumbai
• Beijing: -16%
Moscow
80
São Paulo
60
Vacancy Rate Trend:
Total Stock (high-end):
Beijing
8,8 MM sqm
Mumbai
3,8 MM sqm
Moscow
1,5 MM sqm
São Paulo
2,4 MM sqm
40
20
2Q/08
3Q/08
4Q/08
1Q/09
2Q/09
Source: Jones Lang LaSalle; BN CORP
Market Overview
Brazilian Real Estate Market
Challenges and Opportunities
Challenges
 Funding options
Opportunities
 An emerging securitization market
 Brazilian Pension Funds are investing
 Transaction Structuring
 Real Estate Funds - the development phase
 Foreign Investors should be Familiarized with
 Prevalent stratified title and Pre-Sell floors
the Market Dynamics.
 Capital needs and provide self liquidating.

Local developers are becoming more institutional
 The world is Global, Regional and Local
 Local expertise with local partners
 Risk Adjusted Opportunity Cost of Investing in
 Underleveraged Market - the real estate market
Brazil
is not distressed and a strong bank system is
present.
 Cap rates will go down soon; Low interest rate
trend, Rise asset value, With the yield
compression
Sandra Ralston
sandra.ralston@bncorp.com.br
+55 11 4083-5301
+55 11 4083-5302
+55 11 9952-7772