Demographics in Latin America Example: Age Distribution Brazil vs ...

Travel Times and Time ChangesRoute Travel Time Time Difference Route Travel Time Time DifferenceToronto to Beijing 14 hours 13 hours Toronto to Sao Paulo 12 hours 1 - 3 hoursToronto to Delhi 22 hours 11 hours Toronto to Mexico City 5 hours 1 hourToronto to Moscow 15 hours 9 hours Toronto to Bogotá 6 hours None

BRAZIL IS NOW AN ECONOMIC POWERHOUSEBrazil is now a major economic power

BrazilNatural Resource Advantage

Brazil3500%3000%2500%Historical Inflation Rate2011 TotalForeign Direct Investment2000%1500%1000%500%0%September 2012: 5.28%In the 3% ‐ 7% rangesince 200519851987198919911993199519971999200120032005200720092011Country World Rank US$ (Billions)China 7 776.0Brazil 13 426.4Russia 16 343.4India 20 225.0Source: CIA World FactbookBrazil’s Stable Economy Attracting Foreign Investment

BrazilSocio-economic Disparities

BrazilInfrastructure Deficiencies

BrazilRetail Market TrendsBrazil only has about 400shopping centers (+/- 1 per450,000 people)Little variety in retail formatsGROC ratios for satellitetenants in the 12% – 15%range at well run malls.Expected annual retail salesgrowth in the 8% to 10%range for the next 3 years.Over 20 transactions so farthis year, cap rates rangefrom 5% - 10%

BrazilOffice Market TrendsVery little office vacancy in the best districts of São Paulo and Rio de Janeiro.175,000 square meters of new office space has been delivered in São Paulo thisyear. Only 12,000 square meters added to inventory in Rio de Janeiro.Market Rents for Class A space in São Paulo and Rio range from R$120 – R$200per square meter/month ($65 – $110 per square foot per year).Cap rates in the 7% - 10% range.

BrazilHousing Market TrendsIncreased access to financinghas increased demand forhousing, especially in the middleincome segment.Government subsidizedprograms have been good forhome buyers, but bad fordevelopers.Construction costs haveskyrocketed due to labor andmaterials shortages.Housing in the upper-incomesegment may be reachingsaturation point.Trend towards smaller unit size.

BrazilLogistics Market TrendsSignificant spec construction activity in São Paulo. Less availableland in Rio de Janeiro. Strong demand for modern product in bothmarkets.Rio and São Paulo rents R$20 – R$27 per square meter per month($11 – $15 per square foot per year).Cap rates in the 8.5% - 10.0% range.Construction is underway in many secondary markets.

MexicoSecurity Concerns Persist

MexicoTijuana$3.96‐$0.23 Juarez$3.87‐$0.13Monterrey$4.24+$0.22Reynosa$3.62‐$0.49Bajio$4.39‐$0.11MX City$5.77+$0.49Asking Rent (US$/SF/YR) as of 2Q12Rental Rates in Major Industrial Markets

MexicoPublic and privatecompetition resulting in caprate compressionPublic markets buying +/-100bps lower than private marketsFIBRAs focused on acquisitionCKDs focused on developmentImpact of FIBRAs and CKDs

ColombiaPro-business GovernmentOil Reserves/ExportsInfrastructure InvestmentGrowing Middle ClassFavorable Risk Profile

Colombia$20$18$16$14$12$10$8$6$4$2$02002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 eSource: Proexporta ColombiaHistorical FDI (US$Billions)26% YOY increase as of mid-2012Equity International investsUS$75M in Terranum (Aug 11)Celfin plans to launch 2 nd fundfor US$100M in 1Q13Acon Investments seeking toraise US$500MBogotá-based AltraInvestments aiming to raiseUS$300M in 4Q12Foreign Direct Investment on the Rise

Other Latin American MarketsPeru: One of the fastest growingeconomies in the world, but stillseeking political stability.Chile: The most stable andsophisticated business environmentin Latin America, but it is a smallmarket.Argentina: Strong populistmovement, high inflation, and adifficult business environment.

Concluding Thoughts…Different selloff/leasing riskProperty rights that favor the tenantFractured interestsCurrency/sovereign riskConstruction cost/timing risk fordevelopment assetsThe Risks are Different in Latin America