Risk Factors

An investment in securities involves a high degree of risk. All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing in BRMALLS‘ securities. In general, investing in the securities of issuers in emerging market countries, such as Brazil, involves a higher degree of risk than investing in the securities of U.S. issuers or issuers in other countries with highly developed capital markets. BRMALLS‘ business, financial condition, results of operations and prospects may be materially adversely affected by any of these risks.
The risks briefly described below are those that the Company currently believes most likely may materially affect its performance.

1) Risks Relating to the Company and the Brazilian Shopping Center Industry

  • Adverse economic conditions in the regions where BRMALLS‘ shopping centers are located may adversely affect its levels of occupancy and its ability to lease available areas and thus have an adverse effect on the Company.
  • The results of the shopping centers that BRMALLS‘ owns or manages depend on its tenants‘ sales.
  • The contracts under which the Company provides management services for shopping, commercial and business centers may be terminated or not renewed by its clients, which could adversely affect the Company.
  • The opening of new shopping centers near the ones that BRMALLS owns or manages may require the Company to make unanticipated investments and hinder its ability to renew its store leases or to lease space to new tenants, which could adversely affect the Company.
  • BRMALLS may not succeed in growing its business through acquisitions.
  • The Company shares control of its shopping centers with other investors, whose interests may differ from and compete with BRMALLS.
  • Possible financial difficulties of its anchor stores may adversely affect the Company.
  • Lease agreements in the shopping-center industry have specific provisions that create risks to its business and may adversely affect BRMALLS.
  • Because its shopping centers are public places, incidents beyond the Company‘s control may occur, which could result in material damages to the image of its shopping centers and could expose BRMALLS to civil liability.
  • The Company depends on the availability of public utilities and services, especially for water and electric power. Any reduction or interruption of these services may adversely affect BRMALLS.
  • The Brazilian shopping-center industry is subject to extensive regulation, which may result in higher expenses or hurdles for the development of certain projects and adversely affect the Company.
  • Losses not covered by insurance may adversely affect BRMALLS.
  • Unfavorable judicial or administrative decisions may adversely affect the Company.
  • BRMALLS may not succeed in fully implementing its business strategies.
  • The Company may be a passive foreign investment company for U.S. federal income tax purposes in any year.

2) Risks Relating to Brazil

  • The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazilian political and economic conditions, could adversely affect BRMALLS.
  • Fluctuations in interest rates may negatively affect the Company.
  • Inflation, along with the Brazilian government‘s measures to curb inflation, may have an adverse effect on the Brazilian economy, the Brazilian securities market and BRMALLS.
  • Exchange rate instability may adversely affect the Brazilian economy.
  • Developments and the perception of risks in other countries, especially emerging market countries, may adversely affect the market price of Brazilian securities, including the Company‘s common shares or GDSs, and limit its access to the international capital markets.

3) Risks Relating to the Company‘s Common Shares and GDSs

  • An active and liquid market for BRMALLS‘ common shares may not develop, limiting investor‘s ability to sell the Company‘s common shares or GDSs.
  • The sale of a significant number of BRMALLS‘ common shares and GDSs may adversely affect their trading price.
  • The Company may need additional funds in the future and may issue additional common shares in lieu of incurring indebtedness, which may result in a dilution of investor‘s interest in BRMALLS‘ common shares or GDSs.
  • Holders of the Company‘s common shares and GDSs may not receive any dividends
  • BRMALLS‘ principal shareholders may have interests which conflict with those of other investors.
  • No single shareholder or group of shareholders holds more than 50% of BRMALLS‘ capital stock, which may increase the opportunity for alliances between shareholders, conflicts between them and other events that may occur as a result thereof.
  • Changes in Brazilian tax laws may have an adverse impact on the taxes applicable to the disposition of the Company‘s GDSs.
  • The protections afforded to minority shareholders in Brazil are different from those in the United States and may be more difficult to enforce.
  • Asserting limited voting rights as a holder of GDSs may prove more difficult than for holders of BRMALLS‘ common shares.
  • If investors surrender their GDSs and withdraw their common shares, they risk losing the ability to remit foreign currency abroad and certain Brazilian tax advantages.
  • Holders of BRMALLS‘ common shares and GDSs may face difficulties in serving process on or enforcing judgments against the Company and other persons.