1Q11 Earnings Release                              SONAE SIERRA BRASIL ANNOUNCESInvestors                        ADJUSTED ...
1Q11 Earnings ReleaseFinancial Indicators(R$ million)                         1Q11      1Q10      Var. %Net Revenue       ...
1Q11 Earnings ReleaseMANAGEMENT’S COMMENTSIn the first quarter of 2011, we successfully completed our primary IPO, raising...
1Q11 Earnings ReleaseFINANCIAL HIGHLIGHTSConsolidated Statutory AccountsThe consolidated financial and operating informati...
1Q11 Earnings ReleaseGross Revenue (R$ 000)                                              1Q11         1Q10          Var. %...
1Q11 Earnings ReleaseCosts and Expenses (R$ 000)                                                     1Q11        1Q10     ...
1Q11 Earnings ReleaseNet Financial Result(R$ thousand)                                     1Q11         1Q10         Var. ...
1Q11 Earnings ReleaseAdjusted EBITDAAdjusted EBITDA increased by 18.3% in 1Q11 to R$ 38.0 million, while the adjustedEBITD...
1Q11 Earnings ReleaseAdjusted EBITDA and Adjusted FFOReconciliation(R$ million)                                        1Q1...
1Q11 Earnings ReleaseAdjusted EBITDA and Adjusted FFO Reconciliation(Considering 51% of PDP) (R$ million)                1...
1Q11 Earnings Release                      Debt Amortization (R$ million)                                                 ...
1Q11 Earnings ReleaseShopping and Boulevard Londrina Shopping has already been contracted, whilefinancing for Passeio das ...
1Q11 Earnings ReleaseOccupancy Rate                                   Occupancy (% GLA)                                   ...
1Q11 Earnings ReleaseDiversified Realty (NYSE: DDR), both companies that have deep experience in thedevelopment, ownership...
1Q11 Earnings Release                                         10                                                          ...
1Q11 Earnings ReleaseFocus on creating value through organic growth. Our growth strategy is basedon two main sources: (i) ...
1Q11 Earnings ReleaseNEW PROJECTS (GREENFIELD)Sonae Sierra Brasil’s strategy is to develop greenfield projects that have t...
1Q11 Earnings ReleaseBoulevard Londrina Shopping: Located in Londrina, the second largest city in thestate of Paraná, Boul...
1Q11 Earnings ReleaseEXPANSIONSExpansion and renovation of Shopping Metrópole – Phase IWe are currently renovating and exp...
1Q11 Earnings ReleaseSHARE PERFORMANCEOn February 02, 2011, Sonae Sierra Brasil raised R$ 465.0 million in a primary initi...
1Q11 Earnings ReleaseGLOSSARYGLA (Gross Leasable Area): Equivalent to the sum total of all the areas availablefor leasing ...
1Q11 Earnings ReleaseOccupancy Rate: Ratio between leased area and total GLA of each mall at the end ofeach period.       ...
1Q11 Earnings ReleaseAPPENDICESConsolidated Balance Sheet(R$ thousand)                                        1Q11        ...
1Q11 Earnings ReleaseConsolidated Balance Sheet(R$ thousand)                                             1Q11         4Q10...
1Q11 Earnings ReleaseConsolidated Income Statement(R$ thousand, except earnings per share)             1Q11       1Q10    ...
1Q11 Earnings Release        Cash Flow Statement        (R$ thousand)                                                     ...
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  1. 1. 1Q11 Earnings Release SONAE SIERRA BRASIL ANNOUNCESInvestors ADJUSTED EBITDA OF R$38.0Relations MILLION IN 1Q11, AN INCREASE OFCarlos Alberto Correa 18.3% OVER 1Q10Investors Relations Officer São Paulo, May 13, 2011 – Sonae Sierra Brasil S.A. (BM&FBovespa: SSBR3), a leading Brazilian shopping mallMurilo Hyai developer, owner and manager, announces today its resultsInvestors Relations Manager for the first quarter of 2011 (1Q11).Email:ribrasil@sonaesierra.com HighlightsPhone:+55 (11) 3371-4188  Sonae Sierra Brasil’s primary IPO was successfully concluded in 1Q11, raising a total of R$ 465.0 million.  The Company’s Net Revenue increased 17.6%1Q11 CONFERENCE CALLS compared to 1Q10, to R$ 49.7 million.Portuguese  Adjusted EBITDA totaled R$ 38.0 million in 1Q11, a 18.3% increase over 1Q10 and the Adjusted EBITDAMay 16, 2011 Margin reached 76.3%.1 pm (New York time)2 pm (Brasilia Time)  Adjusted FFO totaled R$ 34.4 million, a 15.2% increasePhone: (55 11) 2188-0155 over 1Q10.Code: Sonae Sierra Brasil  NOI grew 21.4% in 1Q11, reaching R$ 47.1 million. NOI margin reached 94.8% in the same period.English  Same-store rent (SSR) reached double-digit growth atMay 16, 2011 11.1% in 1Q11 and Same-store sales (SSS) increased2.30 pm (New York time) by 9.8%.3.30 pm (Brasilia Time)  Total Net Income attributable to the ShareholdersPhone: (1 412) 317-6776 reached R$ 62.6 million in the quarter, from R$ 21.3Code: Sonae Sierra Brasil million in the same period of 2010. 1
  2. 2. 1Q11 Earnings ReleaseFinancial Indicators(R$ million) 1Q11 1Q10 Var. %Net Revenue 49.7 42.3 17.6%EBITDA 38.0 31.7 19.8%EBITDA Margin 76.3% 75.0% +139 bpsAdjusted EBITDA 38.0 32.1 18.3%Adjusted EBITDA Margin 76.3% 75.9% +44 bpsFunds From Operations (FFO) 34.4 29.5 16.7%FFO Margin 69.2% 69.7% -53 bpsAdjusted FFO 34.4 29.9 15.2%Adjusted FFO Margin 69.2% 70.7% -147 bpsNet Operating Income (NOI) 47.1 38.8 21.4%NOI Margin 94.8% 91.9% +291 bpsOperating Indicators 1Q11 1Q10 Var. %Total GLA (000 sqm) 349.1 342.4 2.0%Owned GLA (000 sqm) 202.6 199.4 1.6%Number of shopping malls 10 10 0.0%Sales (R$ million) 840.7 743.8 13.0%Sales/sqm (monthly average) 847.7 764.7 10.9%Occupancy rate 97.6% 98.3% -68 bpsCost of occupancy (% of sales) 9.9% 9.9% 0.0%SSS/sqm 860.6 783.9 9.8% SSS/sqm - Satellite stores 1,276.2 1,140.5 11.9% SSS/sqm - Anchor stores 615.5 573.7 7.3%SSR/sqm 51.0 45.9 11.1% SSR/sqm - Satellite stores 96.1 86.1 11.6% SSR/sqm - Anchor stores 20.1 18.4 9.6%Overdue Payments (25 days) 2.3% 3.5% -120 bps 2
  3. 3. 1Q11 Earnings ReleaseMANAGEMENT’S COMMENTSIn the first quarter of 2011, we successfully completed our primary IPO, raising a totalof R$ 465.0 million by listing our shares in BM&FBovespa. This transactionsignificantly broadened our shareholder base and provided financial resources to fundour growth strategy.Despite macro economic conditions including higher inflation and interest rates in1Q11, Sonae Sierra Brasil maintained a strong trajectory of growth as our same-storerent reached double-digit growth at 11.1% and same-store sales reached 9.8%growth in 1Q11.Consolidated net revenues totaled R$ 49.7 million, a 17.6% increase over 1Q10.Consolidated Adjusted EBITDA in 1Q11 had a more significant increase of 18.3% overthe same period last year, totaling R$ 38.0 million, while the Adjusted EBITDA marginreached 76.3%. The consolidated Adjusted FFO totaled R$ 34.4 million in 1Q11 with amargin of 69.2% on net revenue. We continue to benefit from the maturation of ourmalls, particularly Manauara Shopping in Manaus, which was opened in April 2009 andfrom the growing parking revenues. The net income attributable to shareholdersreached R$ 62.6 million in 1Q11, from R$ 21.3 million in the same period last year.This increase is mainly due to the positive performance of the portfolio and to thevaluation gains on investment properties in 1Q11.In terms of new developments and expansions, the Company continues to follow theplans previously announced, with the construction of Uberlândia Shopping inUberlândia (MG), Boulevard Londrina Shopping in Londrina (PR) as well as theexpansion of Shopping Metrópole in São Bernardo do Campo (SP). In addition, in1Q11 we also initiated the construction of the expansion of Shopping Campo Limpo.Located in the city of São Paulo, Shopping Campo Limpo has benefited remarkablyfrom the growth in consumption of the lower middle income class.Pre-letting in Uberlândia Shopping and Boulevard Londrina remained strong at 86%and 70% of the GLA, respectively, as at the end of 1Q11. In the expansions ofMetrópole and Campo Limpo, pre-letting reached 99% and 90%, respectively, at theend of this quarter.We remain confident in our strategy to develop market dominant malls, focused onthe middle class segment.The Management 3
  4. 4. 1Q11 Earnings ReleaseFINANCIAL HIGHLIGHTSConsolidated Statutory AccountsThe consolidated financial and operating information outlined below is based onaccounts prepared in accordance with accounting policies adopted in Brazil and inaccordance with the International Financial Reporting Standards (IFRS) issued by theInternational Accounting Standards Board - IASB, and correspond to the comparisonof the results obtained in the 1Q11 with the same period of the previous year, alsoadjusted to the new accounting standards. The consolidated financial informationincludes 100% of the results of Parque D. Pedro Shopping (even though the Companyholds a 51% ownership stake in the mall).Gross RevenueSonae Sierra Brasil’s gross revenue totaled R$ 54.7 million in 1Q11, an increase of18.1% over the same period of the previous year. The increase in revenue was drivenby growth in rental revenue which totaled R$ 41.3 million in 1Q11, an 18.4% increaseover 1Q10 given the combination of strong leasing spreads, inflation adjustments andlow vacancy. Another factor that contributed to the growth in revenue in 2011 was thesignificant increase in revenue from parking, which totaled R$ 5.6 million in 1Q11, animpressive 102.2% increase over the same period last year. It is also important tohighlight that parking revenue represented 10% of gross revenues in 1Q11 comparedto 6% in 1Q10. Gross Revenue Breakdown 1Q11 1Q10 Rent 1% 4% Rent contract straight- 6% 6% lining 10% Service revenue 7% 10% 2% 3% Parking revenue 76% 75% Key Money Other revenue 4
  5. 5. 1Q11 Earnings ReleaseGross Revenue (R$ 000) 1Q11 1Q10 Var. %Rent 41,342 34,912 18.4%Rent contract straight-lining 949 1,401 -32.3%Service revenue 4,033 4,453 -9.4%Parking revenue 5,610 2,774 102.2%Key Money 2,398 2,722 -11.9%Other revenue 325 32 915.6%Total 54,657 46,294 18.1%Costs and ExpensesCosts and Expenses totaled R$ 12.6 million in 1Q11, a 14.7% increase over 1Q10.Approximately 44.6% of Cost and Expenses in 1Q11 were represented by Personnelcosts, which totaled R$ 5.6 million, a 11.9% increase over the same period last year.The increase in Personnel expenses stems from regular annual union increases andpre-operating expenses, mainly commissions to brokers in the amount of R$ 569thousand (R$ 220 thousand in 1Q10), given the leasing activities for the developingprojects of Uberlândia Shopping, Boulevard Londrina Shopping and the expansions ofShopping Metrópole and Shopping Campo Limpo.Total Costs and Expenses were also adversely impacted by the variances withprovisions for doubtful accounts, which were back to a regular expense in 1Q11 in theamount of R$ 580 thousand, from a net income of R$ 382 thousand in 1Q10.Excluding the provisions for doubtful accounts, total Costs and Expenses would haveincreased by 5.8% only.Conversely, we continued to see lower Occupancy Costs related to vacant stores. In1Q11, Occupancy Costs totaled R$ 865 thousand, a 24.9% decrease compared to1Q10. 5
  6. 6. 1Q11 Earnings ReleaseCosts and Expenses (R$ 000) 1Q11 1Q10 Var. %Depreciation and amortization 403 275 46.5%Personnel 5,623 5,027 11.9%Outsourced services 2,132 2,575 -17.2%Occupancy cost (vacant stores) 865 1,152 -24.9%Cost of contractual agreements with tenants 336 438 -23.3%Provision (reversal) of the allowance for doubtful 580 (382) -251.8%accountsRent 625 570 9.6%Travel 224 257 -12.8%Other 1,824 1,082 68.6%Total 12,612 10,994 14.7%Classified as:Cost of rentals and services 8,556 7,761 10.2%Operating expenses 4,056 3,233 25.5% 12,612 10,994 14.7%Changes in Fair Value of Investment PropertiesSonae Sierra Brasil adopted the IFRS accounting standards, under which, theCompany opted to value its investment properties at fair market value. Thus, thegains and losses resulting from changes in fair market value of the properties arerecorded in the Change in Fair Value of Investment Properties account, which totaledR$ 71.1 million in 1Q11 compared to R$ 14.5 million in 1Q10. The increase reflectsthe improved valuation of the portfolio, given the NOI growth and the positiveperformance of operating metrics.Net Financial ResultThe consolidated net financial result in 1Q11 was a net financial cost of R$ 116thousand, 68.2% lower than 1Q10. Interest income on financial investments had asubstantial increase of 366.9% to R$ 5.9 million in 1Q11, primarily due to the interestincome on the invested net cash proceeds of the IPO. Conversely, the exchange ratevariation on the Company’s euro denominated inter-company loan changed fromincome of R$ 3.4 million in 1Q10 to a cost of R$ 2.0 million in 1Q11. This inter-company loan was fully repaid in 1Q11. 6
  7. 7. 1Q11 Earnings ReleaseNet Financial Result(R$ thousand) 1Q11 1Q10 Var. %Financial income:Interest on financial investments 5,911 1,266 366.9%Interest receivable 166 215 -22.8%Monetary and exchange variations - 3,439 -100.0%Other 581 565 2.8%Total 6,658 5,485 21.4%Financial Expenses:Interest on loans and financing (4,286) (4,467) -4.1%Interest on intercompany loans (400) (1,232) -67.5%Monetary and exchange variations (2,088) - n/aOther - (151) -100.0%Total (6,774) (5,850) 15.8%Total Financial Result - Net (116) (365) -68.2%Net IncomeNet Income totaled R$ 86.2 million in 1Q11, a 134.2% increase over 1Q10. It is worthnoting, however, that the Net Income is largely influenced by the Change in Fair Valueof Investment Properties, which totaled R$ 71.1 million in 1Q11, 388.8% higher than1Q10. The increase in Change in Fair Value of Investment Properties was ledparticularly by improved valuation of our malls, given the strong performance of theportfolio.Net Operating Income (NOI)Consolidated NOI totaled R$ 47.1 million in 1Q11, a 21.4% increase over 1Q10,reflecting, as mentioned above, the overall positive performance of the portfolio.Net Operating Income - NOI (R$ million) 1Q11 1Q10 Var. %Rent 42.6 36.3 17.3%Key Money 2.4 2.7 -11.9%Parking 5.6 2.8 102.2%Total Revenues 50.6 41.8 21.0%(-) Malls Operating Expenses (3.5) (3.0) 16.3%NOI 47.1 38.8 21.4% 7
  8. 8. 1Q11 Earnings ReleaseAdjusted EBITDAAdjusted EBITDA increased by 18.3% in 1Q11 to R$ 38.0 million, while the adjustedEBITDA margin reached 76.3% in the same period. Adjusted EBITDA (R$ million) 18.3% 38.0 32.1 1Q10 1Q11Adjusted Funds From Operations (FFO)Adjusted FFO totaled R$ 34.4 million in 1Q11, an increase of 15.2% over 1Q10 with amargin of 69.2% over net revenue. FFO Adjusted (R$ million) 15.2% 34.4 29.9 1Q10 1Q11The reconciliation of the operating income before financial results with the EBITDA,adjusted EBITDA, FFO, and Adjusted FFO is shown below: 8
  9. 9. 1Q11 Earnings ReleaseAdjusted EBITDA and Adjusted FFOReconciliation(R$ million) 1Q11 1Q10 Var. %Net Revenue 49.7 42.3 17.6%Operating income before financial result 109.5 46.6 134.8%Depreciation and amortization 0.4 0.3 46.0%Gain from fair value of investment properties (72.0) (15.2) 372.3%EBITDA 38.0 31.7 19.8%Non-recurring expenses - 0.4 -100.0%Adjusted EBITDA 38.0 32.1 18.3%EBITDA Margin 76.3% 75.0% +139 bpsAdjusted EBITDA Margin 76.3% 75.9% +44 bpsEBITDA 38.0 31.7 19.8%Net financial result (0.1) (0.4) -68.2%Current income and social contribution taxes (3.4) (1.9) 86.0% - -FFO 34.4 29.5 16.7%Non-recurring expenses - 0.4 -100%Adjusted FFO 34.4 29.9 15.2%FFO Margin 69.2% 69.7% -53 bpsAdjusted FFO Margin 69.2% 70.7% -147 bpsManagement AccountsIn accordance with accounting policies adopted in Brazil and the IFRS, the Companyconsolidates 100% of Parque D. Pedro Shopping despite owning only 51% of this mall.However, considering the relevance of this mall to the Company’s results, weprepared pro-forma management accounts with the proportional consolidation ofParque D. Pedro. The key operating results under this methodology are presentedbelow: 9
  10. 10. 1Q11 Earnings ReleaseAdjusted EBITDA and Adjusted FFO Reconciliation(Considering 51% of PDP) (R$ million) 1Q11 1Q10 Var. %Net Revenue 38.9 32.4 20.2% - -Operating income before financial result 86.1 31.2 175.5%Depreciation and amortization 0.4 0.3 46.1%Gain from fair value of investment properties (58.0) (8.5) 583.4%EBITDA 28.5 23.0 23.7%Non-recurring expenses - 0.4 -100.0%EBITDA ajustado 28.5 23.4 21.6%EBITDA Margin 73.2% 71.1% +210 bpsEBTIDA ajustado Margem 73.2% 72.4% +86 bpsEBITDA 28.5 23.0 23.7%Net financial result (0.3) (0.5) -31.7%Current income and social contribution taxes (3.4) (1.9) 86.0%FFO 24.7 20.7 19.4%Non-recurring expenses - 0.4 -100%FFO ajustado 24.7 21.1 17.1%FFO Margin 63.6% 64.0% -25 bpsAdjusted FFO Margin 63.6% 65.2% -164 bpsCash, Cash Equivalents and DebtCash and cash equivalents, which is comprised of cash, banks deposits and financialinvestments, increased by R$ 352.0 million, from R$ 61.6 million on December 31,2010 to R$ 413.6 million on March 31, 2011 as a result of the net proceeds from theCompany’s IPO.In 1Q11, the Company used part of the proceeds from the IPO to settle the debtorloan agreement with the parent company, Sierra Brazil 1 BV, amounting to R$ 76.2million. The repayment of this loan was already planned as part of the disposition ofresources from the Companys initial public offering as described in the Final PublicOffering Memorandum dated February 01, 2011.The Company’s total debt reached R$ 212.3 million in 1Q11, and the respectiveamortization schedule is as follows: 10
  11. 11. 1Q11 Earnings Release Debt Amortization (R$ million) 111.4 28.0 28.0 27.3 7.7 9.9 2011 2012 2013 2014 2015 2016 and beyondConsidering our cash position, the long-term profile of our debt and our operatingcash flow, we believe that we are well positioned in terms of the capital required tofund our investment plan.A total of R$ 125.4 million, which corresponds to approximately 59% of theCompany’s total debt, is fixed at a 8.5% p.a. interest rate (10.0% p.a. with a 15%discount) on the loan from the Banco da Amazônia (BASA) for the construction ofManauara Shopping, with a final maturity of 12 years. The base rate debt profile atthe end of 1Q11 was as follows: Debt Profile TR 19% CDI Fixed 22% 59%The Company’s leverage strategy is to finance the greenfield projects and expansionswith property-level debt up to 50% of total project costs. Financing for Uberlândia 11
  12. 12. 1Q11 Earnings ReleaseShopping and Boulevard Londrina Shopping has already been contracted, whilefinancing for Passeio das Águas Shopping (Goiânia) is currently under negotiation.In 1Q11, the Company contracted a R$ 53 million loan with Banco Itau Unibanco S.A.to finance the refurbishment and expansion of Shopping Metrópole. This is a 8-yearterm loan, including a 2-year grace period, with an interest rate of TR + 10.3% p.a.,which will be drawn down mostly this year.SHOPPING CENTERS’ SALES PERFORMANCETotal sales in the ten existing and operating malls in Sonae Sierra Brasil’s portfoliototaled R$ 840.7 million in 1Q11, a 13.1% increase over the same period last year.Considering the Company’s ownership interest in each of the ten malls (including 20%of Campo Limpo Shopping and 100% of Parque D. Pedro Shopping), sales reached R$622.0 million in 1Q11, a 14.4% increase from 1Q10.The best performing malls in terms of sales growth were Manauara Shopping, FrancaShopping, Shopping Penha and Shopping Metrópole, with sales increases of 36.5%,35.8%, 17.1% and 14.2%, respectively. The robust growth recorded by ManauaraShopping can be mainly attributed to the continuing maturation of the mall, while thestrong performance of Franca Shopping and Shopping Penha reflected the reduction intheir vacancy rates over the previous quarters.OPERATING HIGHLIGHTSThe operating indicators of Sonae Sierra Brasil in 1Q11 maintained the growth trendexperienced in the previous year. Same-store rent (SSR) reached double-digit growthwith an impressive 11.1% increase over 1Q10, while same-store sales (SSS) had asolid 9.8% increase in 1Q11 compared to the same period last year. 12
  13. 13. 1Q11 Earnings ReleaseOccupancy Rate Occupancy (% GLA) 98.3% 98.5% 98.4% 98.0% 97.6% 97.3% 97.2% 97.0% 96.3% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11Same Store Sales and Same Store Rent SSS/sqm SSR/sqm 9.8% 11.1% 860.6 51.0 783.9 45.9 1Q10 1Q11 1Q10 1Q11DESCRIPTION OF BUSINESSSonae Sierra Brasil S.A. is a company specialized in the shopping center business andcounts on the expertise of its management team and its international controllingshareholders: the European group Sonae Sierra and the U.S. REIT Developers 13
  14. 14. 1Q11 Earnings ReleaseDiversified Realty (NYSE: DDR), both companies that have deep experience in thedevelopment, ownership and management of shopping centers.We are one of the leading real estate developers, owners, and operators of shoppingmalls in Brazil. Through our integrated business model, we work with all phases of thebusiness, including development management, property management, leasing, assetmanagement, and marketing services.We hold a controlling interest in the majority of the shopping malls in our portfolio andmanage all of them. On March 31, 2011, we had a weighted average ownershipinterest of 58.0% in the ten operating shopping malls in our portfolio, representing202.6 thousand sqm of owned GLA and ownership control of six of the ten shoppingmalls.OUR PORTFOLIOOur portfolio is comprised of ten shopping malls in operation. Additionally, we are inthe process of developing three new shopping malls in three major cities in Brazil: (i)Uberlândia, the second most populous city in the state of Minas Gerais; (ii) Londrina,the second largest city in the state of Paraná; and (iii) Goiânia, the state capital ofGoiás. These three cities are important centers for the agribusiness and servicessectors which have experienced strong demographic and economic growth. Theselection of these cities for developing new shopping malls fits into our preferredstrategy of growth through potentially market dominant shopping malls, with incomeper capita and population density that meet our requirements. We estimate that thecombined GLA from these three shopping malls is approximately 170.0 thousand sqm.The map below shows the location of our Brazilian malls. All figures related to GLAand the Company’s interests are as at the end of March, 2011, except whereotherwise indicated: 14
  15. 15. 1Q11 Earnings Release 10 7 4 13 11 5 1 8 3 9 12 2 6 Shopping Centers in Operation GLA Owned GLA Occupancy City State Stores (000 sqm) Ownership (000 sqm) Rate 1 Parque D. Pedro Campinas SP 407 121.0 51.0% 61.7 (% GLA) 95.1% 2 Boavista Shopping São Paulo SP 148 16.0 100.0% 16.0 98.0% 3 Penha Shopping São Paulo SP 198 29.6 73.2% 21.7 98.0% 4 Franca Shopping Franca SP 101 18.1 67.4% 12.2 98.4% 5 Tivoli Shopping Santa Barbara dOeste SP 147 22.1 30.0% 6.6 100.0% 6 Metrópole Shopping São Bernardo do Campo SP 148 23.9 * 100.0% 23.9 100.0% 7 Pátio Brasil Brasília DF 234 28.8 10.4% 3.0 98.7% 8 Plaza Sul Shopping São Paulo SP 220 23.1 30.0% 6.9 99.7% 9 Campo Limpo Shopping São Paulo SP 127 19.9 20.0% 4.0 99.3%10 Manauara Shopping Manaus AM 232 46.7 100.0% 46.7 99.2% Total 1,962 349.1 58.0% 202.6 97.7% * Including an area of 5,161 sqm, currently reserved for expansion of the shopping mall Projects under Development GLA Owned GLA City State (000 sqm) Ownership (000 sqm)11 Uberlândia Shopping Uberlândia MG 43.6 100.0% 43.612 Boulevard Londrina Shopping Londrina PR 47.8 84.5% 40.413 Passeio das Águas Shopping Goiânia GO 78.1 100.0% 78.1 Total 169.5 95.6% 162.1OUR STRATEGYOur strategy focuses on profitably increasing our portfolio and maintaining ourposition as one of the leading developers, owners, and managers of shopping malls inBrazil, seeking to provide superior returns to our shareholders in a sustainable andresponsible way. We intend to achieve our goals by continuing to pursue the followingstrategies: 15
  16. 16. 1Q11 Earnings ReleaseFocus on creating value through organic growth. Our growth strategy is basedon two main sources: (i) developing new market dominant shopping malls that areable to establish and maintain a solid competitive position based on certain factorssuch as population density, purchasing power of the potential customers, andunderserved consumer demand; and (ii) expanding and/or remodeling of existingshopping malls by including new tenants, features and attributes in order to increasetheir market share.Acquisition of additional stakes in properties. We plan on analyzing opportunisticacquisitions at reasonable prices of additional ownership interests in the shoppingmalls already part of our portfolio. In parallel, and whenever opportunities arise thatfit our strategy, we shall analyze potential acquisitions at attractive pricing ofcontrolling interests in shopping malls that are not part of our portfolio, or at least astrategic shareholding to possibly allow us to eventually acquire control and to ensurethat we control the management of the property.ONGOING PROJECTSSonae Sierra Brasil currently has eight ongoing projects, comprised of three greenfieldprojects and five expansions, which should increase our owned GLA by approximately92% to 392.0 thousand sqm by 2013. It is worth noting that this substantial growthincludes only those projects already in our pipeline and excludes future projects yet tobe announced. Owned GLA Growth (000 sqm) Goiânia Greenfields Expansion Londrina 78 Uberlândia 13 40 3 Metrópole (II) 44 Tívoli 10 PDP (II) 392 Metrópole (I) Campo Limpo 204 +92% 2010 2011 2012 2013 Total 16
  17. 17. 1Q11 Earnings ReleaseNEW PROJECTS (GREENFIELD)Sonae Sierra Brasil’s strategy is to develop greenfield projects that have the potentialto become the leading malls in their regions. Based on this strategy, we have threesuch projects in our portfolio. Construction on two of these – Uberlândia Shopping andBoulevard Londrina Shopping – is already under way and a high percentage of leasingcontracts have already been committed (86% and 70% of GLA, respectively).Construction of the third mall, Passeio das Águas Shopping (in Goiânia), is scheduledto begin in mid 2011.Uberlândia Shopping: Construction of this mall, located in Uberlândia, Minas Gerais,began in February 2010. Approximately 86% of GLA was committed to tenants as ofMarch 31, 2011. Uberlândia Shopping City Uberlândia State MG Expected Opening 4Q11/1Q12 GLA (‘000 sqm) 43.6 SSB’s ownership interest 100% Committed GLA 86% Capex Incurred (R$ million) 100.7 Uberlândia Shopping Construction Site Uberlândia Shopping Project Illustration 17
  18. 18. 1Q11 Earnings ReleaseBoulevard Londrina Shopping: Located in Londrina, the second largest city in thestate of Paraná, Boulevard Londrina Shopping began construction in September 2010.The mall’s GLA was 70% committed to tenants as of March 30, 2011. Boulevard Londrina Shopping City Londrina State PR Expected Opening 2H12 GLA (‘000 sqm) 47.8 SSB’s ownership interest 84.5% Committed GLA 70% Capex Incurred (R$ million) 48.4Boulevard Londrina Construction Site Boulevard Londrina Project IllustrationPasseio das Águas Shopping: Construction of Passeio das Águas Shopping, locatedin Goiânia, the capital and most important city of Goiás state, is scheduled to begin in2011. Passeio das Águas Shopping City Goiânia State GO Expected Opening 2013 GLA (‘000 sqm) 78.1 SSB’s ownership interest 100% Committed GLA 20% Capex Incurred (R$ million) 47.7Passeio das Águas Project Illustration 18
  19. 19. 1Q11 Earnings ReleaseEXPANSIONSExpansion and renovation of Shopping Metrópole – Phase IWe are currently renovating and expanding Metrópole Shopping, given the growingnumbers of visitors, which we expect to increase even further with the addition ofseveral high-end commercial and residential towers adjacent to the mall beingdeveloped by other companies. The new area, which corresponds to approximately8.7 thousand sqm of GLA was already 99% committed to tenants as of March31,2011. Metrópole Project Illustration Metrópole Renovation and ExpansionCampo Limpo ExpansionIn early 2011, the Company also started the construction of the expansion ofShopping Campo Limpo. The strong performance of this mall has mainly been fueledby increased consumption of the lower income groups. The mall had an occupancyrate of 99.3% as of March 31, 2011. The expansion will add 2.5 thousand sqm of GLA,of which approximately 90% was already committed to tenants at the end of 1Q11. Campo Limpo Expansion Construction Site 19
  20. 20. 1Q11 Earnings ReleaseSHARE PERFORMANCEOn February 02, 2011, Sonae Sierra Brasil raised R$ 465.0 million in a primary initialpublic offering on BM&FBovespa of 23.3 million shares (including the green shoe) at aR$ 20.00 price per share.Sonae Sierra Brasil’s shares (BM&FBovespa: SSBR3) closed 1Q11 at R$ 23.20, a16.0% gain from the launching price. Over the same period, the Ibovespa Indexincreased by 2.9%. Ownership Breakdown Free Float 30.42% Sonae DDR Sierra Sierra 50% SGPS 50% Enplanta Brazil 1 Shopping BV 2.93% 66.65% 20
  21. 21. 1Q11 Earnings ReleaseGLOSSARYGLA (Gross Leasable Area): Equivalent to the sum total of all the areas availablefor leasing in the shopping malls.ABRASCE: Brazilian Shopping Mall Association.BM&FBOVESPA: BM&FBovespa S.A. - Securities, Commodities and FuturesExchange.CSLL: Social contribution tax on net income.EBITDA: Operating income before financial result + depreciation and amortization -gain from fair value of investment propertiesAdjusted EBITDA: EBITDA adjusted for the effects of non-recurring expenses effectFFO (Funds from Operations): EBITDA +/- Net financial result – current incomeand social contribution taxesAdjusted FFO: FFO adjusted for the effects of non-recurring expenses.IFRS: International Financial Reporting Standards.IGP-M: General Market Price Index, published by the FGV.IPCA: Consumer Price Index, published by the IBGE.Anchor Store or Large Anchors: Well-known stores with special marketing andstructural features that serve to attract consumers, assuring continuous visitor flowsand uniform traffic in all areas of the mall.Satellite Stores or Satellites: Small stores without special marketing or structuralfeatures located around the anchor stores and aimed at general commerce.NOI (Net Operating Income): Gross revenue from malls (excluding servicerevenue) + parking revenue – mall operating expenses – provisions for doubtfulaccounts.Novo Mercado: A special listing segment of the BM&FBOVESPA with special corporategovernance rules determined by the Novo Mercado Regulations.SSR (same-store rent): Relation between invoiced rent for the same operation inthe current period compared to previous period.SSS (same-store sales): Relation between sales for the same tenant in the currentperiod compared to the previous period. 21
  22. 22. 1Q11 Earnings ReleaseOccupancy Rate: Ratio between leased area and total GLA of each mall at the end ofeach period. 22
  23. 23. 1Q11 Earnings ReleaseAPPENDICESConsolidated Balance Sheet(R$ thousand) 1Q11 4Q10 Var. %ASSETSCURRENTCash and cash equivalents 413,621 61,566 571.8%Accounts receivable, net 15,965 21,650 -26.3%Taxes recoverable 11,391 9,659 17.9%Advances to suppliers - 183 -100.0%Prepaid expenses 201 175 14.9%Other credits 5,193 5,801 -10.5%Total current assets 446,371 99,034 350.7%NON-CURRENTLong-term receivables:Restricted financial investments 944 557 69.5%Accounts receivable, net 10,505 9,582 9.6%Loans to condominiums 668 561 19.1%Deferred income and social contribution taxes 20,738 13,590 52.6%Juducial deposits 3,506 3,584 -2.2%Other credits 2,255 2,461 -8.4%Total long-term assets 38,616 30,335 27.3%Investments 20,128 19,033 5.8%Investment properties 2,309,821 2,181,412 5.9%Fixed Assets 4,941 4,532 9.0%Intangible Assets 954 873 9.3%Total non-current assets 2,374,460 2,236,185 6.2%TOTAL ASSETS 2,820,831 2,335,219 20.8% 23
  24. 24. 1Q11 Earnings ReleaseConsolidated Balance Sheet(R$ thousand) 1Q11 4Q10 Var. %LIABILITIES AND SHAREHOLDERS EQUITYCURRENTLoans and financing 7,736 7,171 7.9%Brazilian suppliers 15,959 15,807 1.0%Taxes payable 5,133 6,602 -22.3%Salaries, wages and benefits 6,429 6,733 -4.5%Technical structure 5,420 5,410 0.2%Related parties 12,005 85,599 -86.0%Dividends payable 2,939 2,939 0.0%Other obligations 13,324 11,370 17.2%Total current liabilities 68,945 141,631 -51.3%NON-CURRENTLoans and financing 204,569 194,677 5.1%Key Money 14,824 11,838 25.2%Accounts payable - land purchases 25,000 25,000 0.0%Deferred income and social contribution taxes 297,861 278,943 6.8%Provision for civil, tax, labor and pension risks 10,706 10,906 -1.8%Provisions for variable compensation 527 427 23.4%Total non-current liabilities 553,487 521,791 6.1%SHAREHOLDERS EQUITYCapital stock 997,866 532,845 87.3%Capital reserve 80,730 96,198 -16.1%Retained earnings 62,559 - -Profit reserve 648,344 648,344 0.0%Equity attributable to controlling shareholders 1,789,499 1,277,387 40.1%Minority interest 408,900 394,410 3.7%Total Shareholders Equity 2,198,399 1,671,797 31.5%TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 2,820,831 2,335,219 20.8% 24
  25. 25. 1Q11 Earnings ReleaseConsolidated Income Statement(R$ thousand, except earnings per share) 1Q11 1Q10 Var. %NET OPERATING REVENUE FROM RENT, SERVICES 49,713 42,262 17.6%AND OTHERCOST OF RENT AND SERVICES (8,556) (7,761) 10.2%GROSS PROFIT 41,157 34,501 19.3%OPERATING REVENUE (EXPENSES)General and administrative (4,056) (3,233) 25.5% Outsourced services (1,331) (1,162) 14.5% Legal fees (268) (257) 4.3% Provisions for doubtful accounts (580) 359 -261.6% Other administrative expenses (1,474) (1,898) -22.3% Depreciation and amortization (403) (275) 0.0%Taxes (255) (394) -35.3%Equity income 1,345 803 67.5%Change in fair value of investment properties 71,087 14,542 388.8%Other operating revenue (expenses), net 256 423 -39.5%Total operating revenue (expenses), net 68,377 12,141 463.2%OPERATING INCOME BEFORE FINANCIAL RESULT 109,534 46,642 134.8%NET FINANCIAL RESULT (116) (365) -68.2%INCOME BEFORE INCOME AND SOCIAL 109,418 46,277 136.4%CONTRIBUTION TAXESINCOME AND SOCIAL CONTRIBUTION TAXESCurrent (3,442) (1,851) 86.0%Deferred (19,738) (7,611) 159.3%Total (23,180) (9,462) 145.0%NET INCOME 86,238 36,815 134.2%INCOME ATTRIBUTABLE TO:Controlling Shareholders 62,559 21,307 193.6%Minority interests 23,679 15,508 52.7%EARNINGS PER SHARE 0.95 0.40 137.5% 25
  26. 26. 1Q11 Earnings Release Cash Flow Statement (R$ thousand) 1Q11 1Q10 CASH FLOW FROM OPERATING ACTIVITIES Net income for the year 86,238 36,815 Adjustments to reconcile net income to net cash from (used in) operating activities: Depreciation and amortization 403 275 Residual cost of written-off fixed assets - (59) Unbilled revenue from rentals (923) (1,198) Provisions for doubtful accounts 580 (382) Provisions (reversal of) for civil, tax, labor and pension risks (200) (368) Acrrual for variable compensation 312 332 Deferred income and social contribution taxes 19,738 7,611 Financial charges on loans and financing 4,286 4,467 Interests, exchange rate changes on intercompany loans 2,488 (2,207) Changes in fair value of investment property (71,087) (14,542) Equity income (1,345) (803) (Increase) decrease in operating assets: - - Restricted investments (387) 418 Accounts receivable 5,105 2,024 Loans to condominiums (107) 190 Taxes recoverable (1,732) (1,835) Advances to suppliers 183 6 Prepaid expenses (26) (218) Judicial deposits 78 (194) Other 814 (1,172) Increase (decrease) in operating liabilities: Salaries, wages and benefits (784) (2,216) Brazilian suppliers (2,492) (535) Taxes payable (1,469) (590) Technical structure 2,996 382 Other obligations 1,954 77 Cash provided by (used in) operating activities 44,623 26,278 interest paid (4,959) (8,913) Net cash from (used in) operating activities 39,664 17,365 CASH FLOW FROM INVESTMENT ACTIVITIES Acquisition or construction of investment property (52,448) (17,611) Acquisition of fixed assets (410) (205) Increase in intangible assets (137) - Dividends received 250 - Net cash used in investment activities (52,745) (17,816) CASH FLOW FROM FINANCING ACTIVITIES Capital increase 465,021 - Loans and financing raised 8,900 - Loans and financings paid - principal - (4,500) Earnings distributed by real estate funds - minority shareholders (9,291) (9,579) Costs of fundraising (23,437) - Related parties (76,057) (603) Net cash from financing activities 365,136 (14,682) NET INCREASE (DECREASE) IN BALANCE OF CASH AND CASH 352,055 (15,133) EQUIVALENTS CASH AND CASH EQUIVALENTS At end of year 413,621 71,119 At beginning of year 61,566 86,252 NET INCREASE (DECREASE) IN BALANCE OF CASH AND CASH 352,055 (15,133) EQUIVALENTS 26

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