on.point Brazil Industrial High-End Warehouses Outlook st half 2012 Real Estate Research

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1 on.point Real Estate Research Brazil Industrial High-End Warehouses Outlook st half 2012 Forecast for new stock - Brazil 13.2 million m² Forecast for delivery in Brazil 2.8 million m² Forecast for new stock - São Paulo 8.1 million m² through 2016 Forecast for new stock - Rio de Janeiro 1.5 million m² through 2016 Range of rental prices - Brazil R$15 to R$30 m²/month

2 Monthly Family Income x Stock of Warehousing Space AA & A sqm per R$ 1 MM of Income sqm per Household cubic meter per Household Income (R$) per sqm Source: IBGE / Jones Lang LaSalle The market today Consumption driving growth of logistics condominiums The market for industrial condominiums is evolving rapidly, year after year. Logistics parks and new industrial areas can be seen in constant development along federal and state highways. All this nonstop activity has been aimed at meeting the 11.7% per annum growth in consumption and the 9.2% p.a. growth in Brazilian family income see graph below. These growth rates are higher than inflation or the rise in construction costs, so justifying the increased investments in this segment of the real estate market. The outlook Monthly family income x Stock of warehousing space We estimate that more than 13.2 million sqm of high-end warehousing will be delivered in Brazil through 2016, at least tripling the total available storage space. For each R$1 million of disposable income, Brazil will have 140 sqm of warehousing. That s 3.7 cubic meters per family, assuming an average of 10 meters free ceiling height usable for storage see graph above. An analysis of current income in terms of sqm of available warehousing indicates R$21,000 of annual income per square meter, which appears to be a significant amount of money for little space. With income continuing to grow, the demand for warehouses will increase constantly. Income and Consumer Expenditure Growth vs Inflation and Construction Cost Source: IBGE

3 New stock High end Classes AA & A More than 13.2 million sqm will be delivered through 2016, representing compound annual growth of 24.4% and carrying the country to over 21 million sqm of total inventory. No less than 2.8 million sqm of this is scheduled for 2012 alone, with more than 60% of that already delivered. The vast majority of logistics centers have been leased very rapidly, and all were leased before delivery. This highlights the lack of efficient, high-end logistics warehouses in strategic locations. Most of the forecast new warehousing space is speculative build. % by state AA &A New stock forecast, Brazil AA & A Importance of regional markets Classes AA & A The Southeast of Brazil will continue to be the largest and most representative region, accounting for more than 70% of new deliveries and driven mainly by São Paulo (61%) and Rio de Janeiro (11%). Expansion in São Paulo will take place to the northwest of the state capital beyond the Beltway (the Rodoanel ring road), in particular along the corridors formed by the Anhanguera, Bandeirantes and Castelo Branco highways. Some of the key players with projects here are Prosperitas, HSI, Hines, Fulwood, Succespar and GWI Real Estate. New stock in Rio de Janeiro will be delivered along the corridors centering on the Presidente Dutra highway and the municipality of Duque de Caxias. Key players are Prologis CCP and Pangea. Some of the most recent logistics parks are to be found in states in the South and Northeast of Brazil. The region around Suape Port in Pernambuco features developments by GL Empreendimentos and Moura Dubeux, while Prosperitas and Capital Realty have developments in the Curitiba region of Paraná state, and Varicred is in Fortaleza, Ceará state. New stock 1.7 delivered in 1 st half * Estimate

4 New stock by state and year AA & A Total: Total: 13.2 MM 13,2 m² MM sqm Delivery cycle 56% forecast through 2013, nationwide Of the total national sample, 22% will be delivered in Forecast delivery in São Paulo is 8 million sqm, with 52% of this due through Rio de Janeiro will see delivery of 1.5 million sqm through Deliveries planned for the Northeast are mainly in the states of Pernambuco and Ceará, with 1.3 million sqm through 2016 and 0.4 million sqm through 2014, respectively. Prices Classes AA & A Rental prices in São Paulo reveal variations of up to 56%, with monthly minimums and maximums of R$16 and R$25 per sqm. Rents in Rio de Janeiro vary by 100%, ranging from R$15 to R$30 per sqm per month. The greatest price ranges occur in these two states because of the wider geographic availability of high-end warehouses. Areas away from the main São Paulo and Rio de Janeiro regions show less variation in prices because of the reduced supply of highend warehousing. Rental prices, by state AA & A

5 Highway logistics map in São Paulo AA & A Expansion along the highway corridors Major São Paulo transportation routes The greatest volume of new stock in São Paulo will be developed along the Anhanguera-Bandeirantes corridor. 43% of new stock will lie between São Paulo city and the 2nd toll booth (Km 82 on the Anhanguera highway; Km 77 on Bandeirantes), with the main concentration in the region of Cajamar (Km 36). The other 57% of new stock to be delivered through 2015 will be concentrated around the 100-km point of the corridor in the region of Campinas, Hortolândia and Sumaré. Key drivers are developments by Global Sumaré, CELOG and Anhanguera 107. The average rental asking price along the Anhanguera- Bandeirantes corridor is influenced by the distance from the capital and the number of toll booths. Monthly rents can drop by as much as 35%, starting at R$25/sqm at Km 16 and falling to R$16/sqm in the region of Ribeirão Preto. Connecting routes like the Dom Pedro I and Santos Dumont highways are spoken of as a second beltway and have become options for new development away from the traditional corridors. A concentration of new stock has emerged on the Régis Bittencourt highway at the junction with the Beltway near Embu. Some 1.4 million sqm of new stock will be delivered along the Castelo Branco highway in the regions of Sorocaba, Araçariguama and Santana do Parnaíba, driven by Succespar, GWI Real Estate and Fulwood developments. SP-348 SP-330 SP-075 BR-374 BR-116 BR-381 SP-160 SP-150 BR-116 SP-070 Beltway (Rodoanel) Planned SP nd Beltway See the highways list at foot of page 6 New stock by highway corridor AA & A Total: 8 MM sqm

6 on.point Publicação periódica do Departamento de Pesquisa Jones Lang LaSalle Periodic publication by Jones Lang LaSalle Research Department Executivo responsável Executive in charge Marcelo Sasaki Colaboradores Staff Ricardo Hirata, Elisa Dutra, Cindi Leal Cindi Leal 1º semestre de st half 2012 Todos os direitos reservados Reprodução permitida desde que citada a Source. All rights reserved Reproduction allowed provided that the source is mentioned. Real estate research The businesses and services of Jones Lang LaSalle are driven by knowledge. Our extensive investments in research help guide real estate development and the investment strategies of our clients. The Global Research Department supervises and coordinates the activities of more than 350 research professionals covering the markets in 70 countries. In Brazil, the Jones Lang LaSalle Research team conducts periodic field-work to gather information on the warehouse market in major cities and maintains a constantly updated database. This effort is designed to ensure a supply of the most precise information to support quality analysis for decision making. Warehouse classification There is no accepted norm or standard for the classification of warehouses, or for associated terminology. Jones Lang LaSalle divides logistics warehouses into classes AA, A and B, based on analysis and the weighted quantification of characteristics. The company does not use other terms found in the market, for example Triple-A or A+. Class AA: Floor loading greater than five tonnes per square meter, acoustic and thermal insulation, clear height (floor to ceiling) equal to or greater than 12 meters, laser leveled floor, one dock per 1,000 sqm, dock doors with levelers, sprinkler system, distance between pillars equal to or greater than 22.5 meters, natural lighting, artificial lighting in warehouse equal to or greater than 300 lux, artificial office lighting equal to or greater than 500 lux, mechanical warehouse ventilation equal to or greater than six air changes per hour, generator. Class A: Floor loading greater than four tonnes per square meter, acoustic and thermal insulation, clear height (floor to ceiling) equal to or greater than 10 meters, laser leveled floor, one dock per 1,000 sqm, natural lighting, artificial lighting in warehouse equal to or greater than 300 lux, artificial office lighting equal to or greater than 500 lux, mechanical warehouse ventilation equal to or greater than six air changes per hour, generator. The information contained in this publication was obtained from published material referring to the property market, commercial brochures, information on the websites of projects and developers, telephone contacts and field research. Data compiled using statistical methods developed by Jones Lang LaSalle. Jones Lang LaSalle cannot accept responsibility for any change of schedule by the developers that participated in the research or for the accuracy of data and information provided and/or released by the developers themselves. Glossary Total stock: Total square meters of warehousing area. Vacancy rate: Empty warehousing space, as a percentage of total warehousing stock. Asking price: Price per square meter of constructed area, asked by the owner for rent or sale. New stock: Square meters of space delivered or forecast for delivery in a specific period. Net absorption: Real increase or decrease in space occupied, measured between two moments or periods. Gross absorption: Indicates the total occupation occurring during a specified period. Constructed area: Includes total area of warehouse, mezzanine, marquise or canopy, and support areas. Highways BR 116 (northeast): Rodovia Presidente Dutra BR 116 (southeast): Rodovia Régis Bittencourt BR 374: Rodovia Castelo Branco BR 381: Rodovia Fernão Dias SP 330: Rodovia Anhanguera SP 348: Rodovia dos Bandeirantes SP 070: Rodovia Carvalho Pinto / Ayrton Senna SP 065: Rodovia Dom Pedro I SP 075: Rodovia Santos Dumont SP 160: Rodovia dos Imigrantes SP 150: Rodovia Anchieta