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

shoppings, including Botafogo Praia Shopping (the credit rights from Botafogo Praia
Shopping, hence forward named “Future Receivables”). Essentially, it seems that the structure
of the operation made under this Conditional Assignment Agreement was a loan agreement,
under which BCN would granted the Malzoni Companies monetary loans, and the Malzoni
Companies would assign to BCN their credit rights as payment for such loan.
To secure payment of the loan, the Malzoni Companies mortgaged some of their
assets, including the following mortgages on the Botafogo Praia Shopping Property (i) 14%
first degree mortgage (granted by Plaza Trust), (ii) 17,5% first degree mortgage (granted by
Geminus), (iii) 35% second degree mortgage (granted by Geminus), (iv) 14% second degree
mortgage (granted by Plaza Trust), (v) 31,5% second degree mortgage (granted by Plaza
Trust) and (vi) 49% third degree mortgage (granted by Plaza Trust). The mortgages
mentioned in items i, ii, iii and iv above were canceled by authorization of the creditor (which,
by then, was Bradesco).
As a result, the existing mortgages on the Botafogo Praia Shopping Property related to
the Conditional Assignment Agreement (i.e., a second degree mortgage of 31,5% and a third
degree mortgage of 49%) became, respectively, a first degree mortgage on 31,5% of the
property and a second degree mortgage on 49% of the property. Such mortgages were made
in accordance to the Public Deed of Amendment to the Public Deed of Mortgage and Other
Covenants dated 06.01.2007, which was later complemented by the Public Deed of
Reinforcement of Mortgage, referring to the Fourth Amendment to the Conditional Assignment
Agreement and Other Covenants dated 12.20.2007, and afterward amended by a public deed
of rectification and ratification of the precedent deeds, dated as of 11.03.2008 (which was not
presented to us).
According to the Third Amendment, upon the repayment of each 24 th installment,
Bradesco shall authorize the release of the mortgages corresponding to 20% of all mortgages,
provided that the existing mortgages shall always correspond to 174% of the outstanding
balance.
We are not informed as to the current status of the debt related to this mortgage. We
have requested Brookfield for further information, but we have not received such information
yet.
C. 3 rd Mortgage of 49% (R-52)
Deed: 12.20.2007
Creditor: Banco Bradesco S.A.
Debtor: Brascan Shopping Centers Ltda. (previous name of Brookfield)
Mortgagor: Plaza Trust
Debt: R$1,680,000,000.00
According to the Public Deed of Granting of Mortgage and Other Covenants, made in
accordance to the Bank Credit Certificate no. 2.192.719 and to the Private Instrument of
Agreement for the Future Placement of Bond and Other Covenants no. 2.07.923-0, dated as
of 12.20.2007 (“Deed of the 3 rd Mortgage”), Brookfield mortgaged its 49% interest in Botafogo
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