Legal Due Diligence Report - BFRE - Brazilian Finance e Real Estate

Brookfield is the registered owner of 49% of the Botafogo Praia Shopping Property
since November 5, 2010. Before that, Plaza Trust registered the acquisition of its interest in
the property in two different moments: the ownership on 14% of the property was registered
on November 21, 2002 and the ownership on 35% of the property was registered on
November 18, 2004.
1. Construction of the mall
On 12.19.2005, a license to modify the property, creating an additional area and to
alter the usage of the property was recorded under AV-28 of the matrícula. According to such
license (dated as of 11.22.1999), the Municipality authorized the construction of: a two story
building of stores to be built on an existing pavement of stores; above that floor, seven floors
of parking spaces to be built in the height of 4 floors, plus an horizontal addition in these 8
floors on which stores were to be built, provided that the 8 th floor shall contain 10 stores and 6
movie theaters. The additions were designated as: no. 400 (building), stores 101 to 154; 201
to 258; 301 to 356; 401 to 403; 501 to 504; 601 to 603; 701 to 705; and 801 to 816; and 756
parking spaces; all comprising a built-up area of 57,611.85 square meters. The negative
certificate regarding social security contribution (CND/INSS) 4 was presented accordingly.
On 09.23.2010, a new license was granted to alter an existing building, creating an
additional area, and to unify and split stores. According to such license, the occupancy permit
is granted in regard to the property of Praia de Botafogo, 400, stores SS101, 101, 104 to 106,
108, 110, 112 to 120, 122, 124, 126, 128, 129, 131, 133 to 135, 137 to 139, 141 to 145, 147,
153, 201 to 203, 205 to 208, 210 to 216, 218, 220 to 224, 227 to 230, 232, 233, 235 to 237,
240, 241, 243 to 245, 247 to 249, 251, 252, 254 to 257, 301, 302, 304, 305, 307, 308, 310 to
313, 315 to 317, 320, 322, 324, 326, 328 to 332, 334, 336, 337, 339, 340, 342, 343, 346, 351,
354, 355, 401, 402, 402A, 403, 404, 405, 501 to 503, 504, 504A, 505, 601, 701, 702, 702A,
703, 704, 704A, 705, 801 to 807 and 809 to 816. We have not received evidence that this
license was recorded under the property matrícula, and we did not receive copy of the
respective negative certificate regarding social security contribution (CND/INSS).
2. Liabilities related to previous owners of Brookfield’s stake in Botafogo Praia
Shopping
Debts and lawsuits filed against the previous owners of a real property can create a
liability under which the transfer of such real property is challengeable under certain
conditions.
The Brazilian Law consider to be ineffective in relation to a creditor of an obligation
claiming collection of his credit the sale by the debtor of a property made when there is a
pending lawsuit against the debtor capable of making him insolvent. Therefore, there is always
the theoretical risk that the creditor of a previous owner of a real estate, which has a lawsuit in
4 To register an occupancy permit with the Real Estate Registry of the relevant property, it must be
presented a negative certificate issued by the Social Security Institute. Please refer to the Tax Aspects
chapter of this Report for further information on this subject.
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