RELÁTORIO ANUAL 2015

Competitive Advantages

ABOUT BRMALLS

What distinguishes us from other mall companies

In 2006, when BRMALLS was established, we were the fifth largest mall company in Brazil; only three years later, we became the largest company in the sector. We achieved this position through a combination of hard work, excellence and teamwork, together with certain other differentials, such as our scale and performance-driven professional management, uniting all the competitive strengths that have helped ensure our continued sector leadership.

Strategically diversified portfolio

Our mall portfolio is strategically diversified both in terms of geographical location and income segment. We believe our nationwide presence and experience of running malls that target different income groups allows us to benefit from the economic growth of each region and group, minimizing the impact of fluctuations in regional economies and sectors while providing us with a key competitive advantage for the implementation of our growth and consolidation strategy.

Professional management and the best operating performance

We have an exemplary team of professionals who are widely recognized in the market and have substantial experience in shopping mall, real estate and financial sectors, as well as general management. Our compensation policy seeks to align the interests of these professionals with those of our shareholders through a bonus program and stock option plan that reward good performance and the achievement of established goals. However, being the best mall operator in the sector requires more than just a strong team, so we have also implemented several management tools to ensure the best possible operating performance. We focus on improving our results while maintaining the quality of our operations through practices such as tenant mix planning, quality indices, standards of excellence and meticulous control over late payments.

Multiple growth opportunities

The Brazilian shopping mall industry presents us with unique growth opportunities. The combination of retail sales growth and the fragmentation of the mall market create excellent opportunities for the development of greenfield projects and the acquisition of interests in existing malls. Our growth strategy has several competitive advantages, including the successful track record of our management team and our principal shareholders, as well as privileged access to opportunities arising from the latter's extensive network of relationships. Our diversified growth strategy, through new projects and acquisitions, is another key advantage, allowing us to benefit from the multiple opportunities in the Brazilian market. By the end of 2014 we had developed a total of 10 greenfields and 17 expansions.

Most efficient company in the sector

Since 2006 we have implemented a series of measures to increase our margins, focusing on cutting costs, increasing revenues, improving collection tools and reducing vacancy. As a result, we have the highest margins of any listed company in the Brazilian shopping mall industry and they are expected to widen still further following inauguration of the new malls and expansion projects envisaged in our business plan.

Since 2006 we have implemented a series of measures to increase our margins, focusing on cutting costs, increasing revenues, improving collection tools and reducing vacancy. As a result, we have the highest margins of any listed company in the Brazilian shopping mall industry and they are expected to widen still further following inauguration of the new malls and expansion projects envisaged in our business plan.

Size matters

Our nationwide presence (the only mall company present in all regions) and position as the leading shopping mall company in the sector has increased our bargaining power with outsourced companies and retailers, and diluted our general expenses and investments in technology thanks to our more extensive asset base. Our size also allows us to attract and hire the best people and offer more opportunities to our employees. Also, scale give us advantage in a more competitive scenario, in which we don't see it as a threat, but as an opportunity to consolidate the sector.

Turnaround

The turnaround process consists of three stages. The first one is the takeover, which offers rapid gains. Its objective is to implement our culture and controls, hire the base team and reduce vacancy. This phase lasts for 12 months. The second stage is consolidation, which takes from 12 to 30 months and is achieved through indicator-based management, the application of all of the management tools, strong team skills, MANOI and participation in the Mall Excellence Program. The final stage is that of the mature shopping malls. It consists of innovating and exporting talent, obtained by piloting new tools, cultivating a stabilized team and obtaining the latest information related to the three stages. This phase lasts from 30 months on. The principals involved in each of these three phases are: people, processes and discipline.