2007 - retail real estate | sonae sierra · vila olÍmpia, sÃo paulo - sp cep: 04547 - 005...

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INNOVATIVE SPIRITED MODERN

2007IN REVIEW

Son

ae Sierra In R

eview 2007


2 CEO’s Statement4 Our organisational structure6 Our partnerships past and present8 The year in numbers

10 A year of achievements12 Sierra Investments24 Sierra Developments34 Sierra Management44 Sonae Sierra Brazil

54 Sonae Sierra Consolidated Accounts58 Corporate Responsibility62 Board of Directors 64 Other Executives66 Our Future

Front cover: Alexa, Berlin, Germany

SONAE SIERRA In Review 20071

FOR US, SHOPPING AND LEISURE ARE INDIVISIBLE.

WE ARE AS PASSIONATE ABOUT INNOVATIVE IDEASFOR THEIR DEVELOPMENT AND MANAGEMENT ASWE ARE COMMITTED TO THE SUSTAINABILITY OFEVERY CENTRE WE CREATE.

THROUGH A UNIQUE COMBINATION OF CREATIVEENERGY, IMAGINATION AND PRACTICALITY, WENOT ONLY DEVELOP AND MANAGE EXCEPTIONALRETAIL PROPERTY SOLUTIONS THAT PROVIDESTIMULATING SHOPPING AND LEISURE SPACESFOR OUR TENANTS, THEIR CUSTOMERS AND THE COMMUNITIES WE SERVE, WE ALSO DELIVER REWARDING RESULTS FOR OURINVESTORS AND PARTNERS.

CEO’s Statement

SONAE SIERRA In Review 2007 2

Álvaro PortelaChief Executive Officer

2007 was a very good year for Sonae Sierra. We not onlyachieved record profits, we also broke new ground by expandinginto new territory – Romania – where we have added three newassets to our portfolio.

The increase in our profitability is due in no small measure to theinspirational hard work and dedication of our team. Working insometimes difficult conditions and circumstances, they havesustained our steady progress towards our goal of becoming a €2 billion NAV company by 2009. At the end a year with twodistinct halves – one of buoyant confidence in the two quartersprior to the US sub-prime crisis and one of some uncertainty overthe following six months – our total net profits stood at €300million and our NAV had increased by 15% to €1,713 million.

Now, as an alternative way of expressing our growth, we areseeking to improve the Open Market Value (OMV) of theproperties we are responsible for, which stood at €6 billion in2007, to €10 billion by the end of 2012. Achieving this willenhance our standing as asset managers and make it possible forus to increase our share of the asset management market.

New operational territoryAfter six years without any geographical expansion, 2007 saw usenter the Romanian market.

We have made a good beginning in this new territory by addingthree new assets to our portfolio. We have acquired oneoperating shopping centre, River Plaza Mall in Ramnicu Valcea,170 km from Bucharest, and we are already building anothernew shopping centre in Craiova, 240 kms west of the capital.This centre will have a Gross Lettable Area (GLA) of over55,000m2. We are making progress with the development of ourthird asset, an innovative centre in the city of Ploiesti, which willhave a GLA of some 64,000m2. In total, these two newdevelopments represent an investment of €293 million.

We see Romania as a very promising market. The country has manylarge cities, which already feature shopping centres, and there aregood forecasts for the country’s continuing economic growth as thegovernment encourages the development of a free market.

We will continue to explore other territories but, as withRomania, we will only enter any new market when we haveidentified the right opportunities.

New centre openings As well as breaking new ground in Romania, we have opened anumber of new centres in our established markets.

The most exciting of these is Alexa, in Berlin, a development weshared with Fonciére Euris, which opened in September with 178shops in a GLA of 56,200m2. On the inauguration day, we had tohave police on crowd control duty, and customers had to beasked to wait in line, because their numbers were so great. Sincethen Alexa has grown in popularity, with more than 5.2 millionvisits in just three-and-a-half months. I believe this bodes well forthe opening of our other new centre in Germany, Loop5.

Many of our competitors and current and potential investorswere eager to see how our first German centre would perform.Alexa has proved that our style of product is popular outside ourtraditional southern Europe territory, which gives usencouragement for the future.

Of the other new openings, 8ª Avenida in the Portuguese city ofS. João da Madeira, is a €54.3 million investment with 130 shopsin a GLA of 30,477m2, while El Rosal in Ponferrada, Spain, is a€111 million investment between ourselves and the Mall Group,which has 147 shops in a GLA of 49,500m2.

Developments and renovationsOur development pipeline remains robust, with new projects inPortugal, Spain, Italy, Germany, Greece, Romania and Brazil.

In every case, our plan is to offer a Sierra concept of shopping andleisure which combines shopping with an element of fun. This is inline with our belief that shopping is not just an economic activitybut also something which people can enjoy as a leisure pursuit.

In addition to our new developments, we are continuing with ourprogramme of renovation, including the refurbishment of Valecenterin Italy, which opened some 15 years ago and, over time, has been


“WE ARE SEEKING TO IMPROVE THE OPENMARKET VALUE OF THE PROPERTIES WE ARE RESPONSIBLE FOR TO €10 BILLION BY THE END OF 2012.”

transformed. Originally one of the least appealing centres one mightsee anywhere, it is now an attractive destination that is popular withthe people living in and around Marcon, near Venice.

After several years, we have finally been able to start theconstruction of the first of the two office towers that formed partof the original designs for the Centro Colombo in Lisbon. Ouractivities have become more focused since this project was firstdesigned, and we will be seeking to dispose of our share of thecompleted towers, now reduced to 25%, through a commercialproperty specialist with an interest in office space.

Similarly, our sale of Lima Retail Park reflects our sharpenedshopping centre focus and our view that – once completed –retail parks offer us little opportunity for adding to their value.

Rewards for excellenceLast year we were pleased to have won a number of awards. This year we have done even better.

In October we were presented with an award as the bestcompany operating in the European shopping centre sector. Wefirst received this accolade, which is presented by the UK realestate magazine, “Property Week”, and its German counterpart,“Immobilien Zeitung”, in 2005. It is particularly pleasing to havesucceeded twice.

Equally satisfying was our winning of a Dupont Safety Award forour Personæ project. This ground-breaking safety & healthprogramme focuses on the need to create a culture of accidentanticipation and prevention at all our centres. Its aim is to buildon the involvement of everyone working in our centres – tenantsand our own staff alike – so that neither we nor our stakeholdershave to rely solely on the work of a team of safety professionals.

In July we won the Elite Lombard Award for the best retailstrategy in Italy. This award is given to institutions, companies andtop managers who, over the course of the year, have attainedspecial achievements in various areas of real estate development.It was particularly pleasing to win this, because it shows the valueof our consistent commitment to innovation and quality in allthat we do.

Earlier in the year we had won the first-ever ReSource Award,created by the International Council of Shopping Centres (ICSC)Europe for the sole purpose of distinguishing a developer, project,manager or tenant who, in the ICSC’s opinion, consistently takesa long-term view of sustainability. It was gratifying to hear thePresident of the Jury, Stephen Pragnell, highlight two of our mostrecent developments as “excellent examples of the high level ofinnovation and quality the company has developed with thepurpose of reaching profitability and sustainability for each of itsshopping centres”.

As a reflection of our commitment to sustainability andenvironmental efficiency, our objective is to obtain ISO 14001certification for all the shopping centres we own, as well as forthe construction of all the centres we develop.

The year aheadLast year I was able to announce our new partnership in Brazil withDevelopers Diversified Realty, which I am pleased to report isprogressing well. This year we have consolidated our partnershipwith the German investment house, Deka, through the sale of 50%of LoureShopping, and we shall seek other similar liaisons over time.We also reinforced our partnership with Rockspring with thedevelopment of Pantheon Plaza, a new project in Larissa, Greece.

At the beginning of 2008, events in the investment sector suggestthat the climate for borrowing may become a little difficult over thecourse of the year. However, we expect consumer confidence toprovide limited growth in Portugal, Italy and German, more robustgrowth in Greece and Spain, and stronger growth in Romania.

As a result, we have every reason to look forward to anotherprofitable period as we seek to attain our long-term goals.


Our organisational structure

SierraCorporateServices*

SierraFunds

PortugalSpainItalyGerm

anyGreece

Romania

PortugalSpainItalyGermanyGreeceRomania

Portugal

Spain

Italy

Germany

Greece

Romania

Inve

stmen

t

Develo

pmen

t

Man

agem

ent

Sonae Sierra

SierraDevelopments

Sierra

Management

Sonae

Sierra

Brazil

Sierra

Investments


OUR FOUR-PART ORGANISATIONAL STRUCTUREREFLECTS OUR THREE MAIN BUSINESS AREAS –EUROPEAN SHOPPING AND LEISURE CENTREOWNERSHIP, DEVELOPMENT AND MANAGEMENT– AND OUR ACTIVITIES IN BRAZIL.

SIERRA INVESTMENTS

Owns Sonae Sierra’s assets,provides its asset managementservices and is responsible forour investments in Europe. Also holds our share of theSierra Funds’ equity and acts asasset manager for the Funds.

SEE PAGE 12

SIERRA DEVELOPMENTS

Responsible for thedevelopment of our shoppingand leisure centres in Europe.Activities include all aspects ofprocurement, conceptualdevelopment, architecturaldesign and constructionmanagement.

SEE PAGE 24

SIERRA MANAGEMENT

Responsible for all aspects ofthe property management ofour European shopping andleisure centres, including thoseowned by Sierra Investmentsand other third parties.

SEE PAGE 34

SONAE SIERRA BRAZIL

Operates autonomously,investing in, developing andmanaging a growing number of shopping and leisure centresin Brazil.

SEE PAGE 44

Sierra Corporate Services provides a comprehensive portfolio of financial, legal, human resources, environmental,communications, safety & health, and back-office services that support our operations.

*


Portugal

Romania

Greece

Germany

Italy

Spain

Brazil

COUNTRIES OF OPERATION

Our partnerships past and present


OUR AIM IS TO DEVELOP LONG-TERMRELATIONSHIPS WITH LIKE-MINDEDORGANISATIONS WHO SEE US AS THEIRPARTNER OF CHOICE IN THE SHOPPING AND LEISURE SECTOR.

ING Real Estate ABP

CNP Assurances CDC

Castle City

Grosvenor Fund Management

Netherlands

France

United Kingdom

Miller Developments

Charagionis Group Lamda Development

Greece

27 PARTNERS FROM

Foncière Euris Ecureuil Vie

Rockspring

Deka

Germany


Estevão Neves

Portugal

NSL Group

Sonae Distribuição Estação Shopping

Mall Group

Eroski Group

LAR Group

Multiplan Tivoli EPSpain

Brazil

AIG

USA

TIAA- CREF

Enplanta Engenharia

DDR

Coimpredil

Italy10 COUNTRIES

The year in numbers


IN A YEAR WHEN PROFITS ACHIEVED RECORDLEVELS, WE ALSO REINFORCED THE ASSETVALUE OF OUR PORTFOLIO WITH THE ENTRY OF SEVEN NEW OPERATING CENTRES.

NOI of

€156.2million (+4.8%)

OMV of

€6,154million (+30.2%)

NAV per share

€52.69(+15%)

2007

2006

No.

8,162

7,293

7,166

6,134

5,399

5,089

3,949

8,162Number of tenant contracts under management

2005

2004

2003

2002

2001

2007

2006

€m

156.2

149.0

125.7

107.6

98.1

95.5

73.8

€156.2Consolidated Net Operating Income – IAS (€ million)

2005

2004

2003

2002

2001

2007

2006

€m

300.1

270.6

219.5

126.8

249.1

144.5

120.5

€300.1Consolidated Net Profit – IAS (€ million)

2005

2004

2003

2002

2001

2007

2006

€m

6,154

4,721

4,090

3,335

2,861

2,569

1,940

€6,154OMV of Assets under Management (€ million)

2005

2004

2003

2002

2001


2007

2006

€m

1,713

1,490

1,265

1,060

948

1,037

934

€1,713mReal Estate Net Asset Value as of 31 December (€ million)

2005

2004

2003

2002

2001

2007

2006

€

52.69

45.82

38.90

32.60

29.16

27.67

24.9

€52.69Real Estate Net Asset Value as of 31 December per share (€)

2005

2004

2003

2002

2001

2007

2006

m2

1,855

1,660

1,586

1,362

1,203

1,140

790

1,855GLA owned in operating centres (000’s m2)

2005

2004

2003

2002

2001

2007

2006

m2

2,183

2,001

2,025

1,839

1,564

1,517

1,128

2,183GLA under management (000’s m2)

2005

2004

2003

2002

2001

A year of achievements


2007 WAS AN EXCEPTIONAL YEAR FOR SONAESIERRA. NOT ONLY DID WE START OPERATIONSIN ROMANIA AND OPEN FOUR NEW CENTRESELSEWHERE IN EUROPE, WE ALSO ACHIEVEDRECORD PROFITS OF €300 MILLION.

2007 was a significant year forSonae Sierra, with entry into the Romanian market and theinauguration of four newshopping centres.

We strengthened our partnershipsin Europe and have increasedour holdings in three assets in Brazil.

We are on course to achieve ourgoal of becoming a €2 billionNAV company by 2009.

MARCHSonae Sierra’s brand value increasedby 44% to €566 million since thecompany’s new brand launch in 2004.

MAYSonae Sierra enters the Romanianmarket with the €42 millionacquisition of the River Plaza Mall inRamnicu Valcea, 170 km from thecapital, Bucharest.

SEPTEMBERThe company’s first new centre inGermany – Alexa in Berlin – opens tomassive acclaim from tenants andtheir customers.

DECEMBERA new partnership with Germanfund manager Deka ImmobilienInvestment was done trough thesale to them of 50% ofLoureShopping in Portugal.


2007 WAS ALSO A YEAR IN WHICH WE HAVEINTERNATIONAL RECOGNITION FOR THE WAYWE MANAGE OUR BUSINESS.In October we were presented with an award from “Property Week” and“Immobilien Zeitung” as the best company in the European shopping centre sector.In the same month we won a Dupont Safety Award for Personæ, our ground-breaking safety & health programme.

SIERRAINVESTMENTS2007 was another active year for Sierra Investments. We acquired a total of seveninvestments bringing the NAV of our portfolio to €1,713 million.

• Acquired first operatingshopping centre in Romania.

• Acquired two new centresin Germany.

• Strengthened our positionin Spain.

• Acquired new assets inPortugal.

SIERRADEVELOPMENTSA competitive year in which wemade good progress withdevelopments in our traditionalmarkets and began operationsin a new one: Romania.

• Started work on two newdevelopments in Romania.

• Opened four new shoppingcentres in Europe.

• Four centres due to open in 2008.

• 7 more under developmentand 13 new projects indifferent phases ofcompletion.

SIERRAMANAGEMENTA year of steady progress witha satisfactory performance froman enlarged portfolio in ourcore markets. New venturesstarted in Romania.

• Began management of twocentres in Germany.

• Took over management oftwo centres in Romania.

• Enlarged portfolio in Iberia.• Steady progress in Italy and

Greece.

p12 p24 p34 p44

SONAE SIERRABRAZIL2007 was a year ofconsolidation in Brazil. Weincreased our holdings in threeof our existing shoppingcentres and have started workon a new centre in Manaus.

• Increased holdings in threeSão Paulo shopping centres.

• Started construction offirst-ever centre in Manaus.

• Awarded first-ever ISO 14001 accreditation for a shopping centre in Brazil.


SIERRA INVESTMENTS OWNS THE COMPANY’SSHOPPING CENTRE ASSETS AND MANAGES ITSEUROPEAN INVESTMENT BUSINESS.

SIERRAINVESTMENTS

Performance 2007The Sierra Fund in 2007Financial Report 2007

14

21

22


Our core business activitiesSierra Investments’ prime objective is to increase the asset value of all thecompany's shopping and leisure centres.

The division is also becoming increasingly involved in managing third-party interests through the creation of real estate funds, and intends todevote more resources to the development of this new business.

Sierra Investments’ principal contribution to Sonae Sierra's results isderived from a combination of rental income and the rising market valuesof the shopping centres it owns. Sierra Asset Management, a companywithin Sierra Investments, also provides income-producing assetmanagement services to the third party investors in these properties.

Acting on behalf of the company, the division takes a long-term view,investing in assets developed by Sierra Developments as well asestablished centres acquired from third parties for their potential increasein value.

Sierra Investments holds 50.1% of the Sierra Fund, thus maintaining itsposition as co-owner and manager of the Fund's underlying assets.

Sierra Investments in 2007 Sonae Sierra’s entry into the Romanian market was an importantmilestone for Sierra Investments. The successful acquisition of the RiverPlaza Mall in Ramnicu Valcea has allowed us to begin operating inRomania with a brand new asset that will give us a good understandingof the country’s retail market and a sound base for the future. We lookforward to acquiring the centres under development in Craiova andPloiesti in due course.

Aside from our entry in this new territory, one of the major highlights ofthe year was our acquisition of two new centres in Germany: MünsterArkaden near Dortmund, for the Sierra Fund, and – from SierraDevelopments – the Alexa shopping and leisure centre in Berlin, whichwas inaugurated in September. The introduction of these two populardestinations into our portfolio will be followed by our future acquisitionof Loop5 at Weiterstadt near Frankfurt. This is scheduled for 2009.

During 2007 we strengthened our position in Spain through theacquisition of El Rosal, a shopping and leisure centre serving Ponferradaand the surrounding area.

Acquisition of River Plaza Mall inRamnicu Valcea, Romania

Acquisition of two new centres inGermany: Münster Arkaden and Alexa

Acquisition of Modelo de Albufeiraand Continente de Portimão, inAlgarve, Portugal

Acquisition of the 50% interest inGaiaShopping and the expandedArrábidaShopping held by our originalinvestment partners, and acquisition of8ª Avenida, all in Portugal

Acquisition of El Rosal, in Ponferrada, Spain

Sale of a 50% interest inLoureShopping in the Lisbon area toDeka Immobilien Investment

Ana Guedes OliveiraSonae Sierra, Executive Director,Investment and Asset Management, Europe


In Portugal, we acquired 50% of two assets in Porto,GaiaShopping and the expanded ArrábidaShopping from ouroriginal investment partners, and acquired 8ª Avenida in S. Joãoda Madeira from Sierra Developments. We have also started theconstruction of the first of the two office towers at the ColomboCentre in Lisbon, where we have a 25% share.

In Italy, following the completion of its refurbishment, wecelebrated the opening of the expansion of the Valecenter inMarcon near Venice.

In a move designed to strengthen our links with Germanpartners, we also sold 50% of LoureShopping to DekaImmobilien Investment at the end of 2007.

RentsFixed rents Variable rents Total rents % 07/06 rents

2007 2006 2007 2006 2007 2006 total like-for-like

Portugal 177,177 166,772 8,633 8,435 185,810 175,207 6.1% 3.9%

Spain 65,790 64,642 3,543 3,384 69,333 68,026 1.9% 0.4%

Italy 6,180 6,901 43 – 6,223 6,901 -9.8% -4.3%

Greece 14,647 12,353 1,706 994 16,353 13,346 22.5% 22.5%

Germany 9,270 – 199 – 9,469 – 100.0% –

Romania 1,572 – – – 1,572 – 100.0% –

Total 274,637 250,669 14,124 12,812 288,761 263,481 9.6% 5.3%

Figures in Euro (thousands)

SalesSales % 07/06 sales

2007 2006 total like-for-like

Portugal 2,176,112 2,029,478 7.2% 5.9%

Spain 904,740 828,284 9.2% 5.9%

Italy 45,638 42,281 7.9% -16.3%

Greece 164,061 118,779 38.1% 38.1%

Germany 182,041 – 100.0% –

Romania – – – –

Total 3,472,592 3,018,821 15.0% 10.3%


Occupancy Rate

2007 2006

Portugal 97% 98%

Spain 94% 96%

Italy 87% 79%

Greece 100% 98%

Germany 99% –

Romania 100% –

Performance 2007

Rental income and property valuesIn 2007, total rents from Sierra Investment’s owned portfolioincreased by €25.3 million over the previous year – a 10%improvement or 5.3% on a like-for-like basis. This increase wasachieved through organic (like-for-like) growth and acquisitions,both from Sierra Developments and from third parties. Turnoverrents were 5.1% of total fixed rents.

Following standard industry practice, we assess the performanceof our properties through the growth of their market value.

When compared with 2006, the increase in the valuation of ouroperating properties is €963 million. This increase is partly a resultof the general decrease in exit yields of our existing shoppingcentres and their good operational performance, but also fromthe growth in our portfolio arising from the addition of sevennew properties during 2007.


Open Market Value Figures in Euro (thousands)

Shopping Centres in Operation % Sierra * Open Market Value OMV Variation OMV Variation31 Dec. 2007 31 Dec. 2007 31 Dec. 2006 Total %

AlgarveShopping 100% 157,989 140,176 17,813 13%ArrábidaShopping(3) 100% 179,032 73,926 105,107 142%CascaiShopping 50% 191,233 169,286 21,947 13%Centro Colombo 50% 408,756 361,250 47,506 13%Ocidente Tower(5) 25% 1,801 – 1,801 –Oriente Tower(5) 25% 1,577 – 1,577 –CoimbraShopping 100% 35,120 35,025 95 –GaiaShopping(3) 100% 185,431 81,632 103,800 127%GuimarãeShopping 100% 49,730 46,243 3,487 8%LoureShopping(4) 50% 65,362 119,205 -53,843 -45%MadeiraShopping 50% 40,263 38,549 1,714 4%MaiaShopping 100% 60,827 57,555 3,272 6%NorteShopping 50% 213,422 188,233 25,189 13%Parque Atlântico 50% 37,382 37,044 338 1%Estação Viana 100% 86,979 82,167 4,812 6%Centro Vasco da Gama 50% 156,940 137,952 18,988 14%ViaCatarina 50% 34,349 35,854 -1,506 -4%Serra Shopping 50% 23,589 22,426 1,163 5%RioSul Shopping 50% 58,279 55,516 2,763 5%CC Modelo de Albufeira(2) 50% 7,001 – 7,001 –CC Continente de Portimão(2) 50% 11,804 – 11,804 –8ª Avenida(1) 100% 71,485 – 71,485 –

Total Portugal 2,078,347 1,682,036 396,310 24%

Grancasa 50% 100,507 89,734 10,774 12%Max Center 50% 90,585 87,491 3,094 4%Valle Real 50% 49,574 48,128 1,446 3%La Farga 50% 31,674 29,949 1,725 6%Avenida M40 100% 65,106 82,506 -17,400 -21%Dos Mares 100% 59,391 55,308 4,083 7%Luz Del Tajo 100% 106,904 102,295 4,609 5%Zubiarte 50% 41,600 43,826 -2,226 -5%Plaza Mayor 100% 78,853 81,721 -2,868 -4%Plaza Éboli 100% 57,994 56,702 1,292 2%Parque Principado 50% 95,555 88,966 6,589 7%El Rosal(1) 100% 131,930 – 131,930 –

Total Spain 909,671 766,624 143,047 19%

Valecenter 100% 149,868 116,159 33,709 29%Airone 100% 18,642 18,506 136 1%

Total Italy 168,510 134,665 33,845 25%

Mediterranean Cosmos 19.95% 31,421 29,682 1,739 6%

Total Greece 31,421 29,682 1,739 6%

Münster Arkaden(2) 100% 168,634 – 168,634 –Alexa(1) 50% 176,950 – 176,950 –

Total Germany 345,584 – 345,584 –

River Plaza Mall(2) 100% 42,703 – 42,703 –

Total Romania 42,703 – 42,703 –

Total 3,576,236 2,613,007 963,229 37%

* In Centres owned by SIERRA Fund, it means control(1) Opening during 2007(2) New Acquisition – Operating Centre(3) Acquisition of 50% in 2007(4) Sale of 50% in 2007(5) Sale of 25% in 2007; in 2006 the OMV was included in Centro Colombo


Performance 2007 continued

Retail market outlookThe retail market outlook suggests that, despite some unrest inthe financial markets in the last half of 2007and early 2008, ourcore activities will keep on expanding across our target markets.

In Portugal, following the progress made in 2006, economicactivity in 2007 kept on improving. Although unemployment isfalling slowly and no fiscal easing is anticipated, investors’ interestshows no sign of waning. 2007 recorded an increase ininvestment activity, mainly due to strong investment demand forprime retail property and to domestic funds’ activity, pushing foradditional compression in yields.

In Spain, economic activity remained strong, although by the finalquarter of 2007 it began to slow as the credit lines that havefuelled much of the country’s growth over the past started to dryup. In the shopping centre sector, following the growth in supply,greater competition in some specific areas and an easing ineconomic growth, we have seen a growing degree of polarisationbetween the best and worst centres.

In Italy, the latter half of 2007 saw relatively strong growth rates,with the property market having another strong year overall.Although the economy looks set to decelerate, Italy remains oneof the best performing markets in Europe, in terms of rentalgrowth. Shopping centres yields have stabilised as retailerscontinue to absorb the several large schemes of recent years.

Economic activity in Greece remains strong at around 4.0% ofGDP growth, although it was slowing slightly in the second halfof 2007, with consumer spending still an important driver. Yieldcompression movements continued as part of an increasinginvestment activity. The country remains a relatively small marketbut it is still expected to outperform the EU with an improvinginvestment market supported by the number of schemesscheduled to be completed during 2008.

2007 was a strong year for the German economy, withunemployment falling to its lowest level in 15 years. However,despite an improvement in the labour market, the consumersector remained weak and retail sales saw negative growthtowards the end of the year. Shopping centre yields compressionremains the main performance driver. Bearing in mind thecountry’s limited number of shopping centres, opportunities mayarise from improvements and active management.

In Romania, the economy continues to grow at a steady pace –well above most EU markets – supported by thriving consumerdemand. The improved market transparency and a significantincrease in the quality of shopping centres has increasedinvestors’ interest and contributed to a significant reduction ofthe yield gap between Romania and its European neighbours.

Future prospectsOur constant objective is to look for opportunities that will allowus to add value to our existing portfolio, either through theexpansion or improvement of our shopping and leisure centres,or through the ongoing process of tenant renewal.

As mentioned in the description of our core business activities,we are also aiming to increase our asset management businessduring the coming year, through the management of thirdparties’ assets.

Overall, we expect 2008 to offer more opportunities for shoppingand leisure centre acquisition than were available to us in 2007,when the market was ‘hot’ and property prices were high. Whilethe debt markets may take a little while to recover from the crisisof late 2007 and early 2008, we anticipate a calmer period as theyear unfolds.

1 2 3

4

Owned shoppingcentres GLA (m2)

8ª AvenidaS. João da Madeira, Portugal 20,155

AlgarveShopping Guia, Albufeira, Portugal 42,540

ArrábidaShopping Vila Nova de Gaia, Porto, Portugal 54,652

CascaiShopping Cascais, Lisboa, Portugal 73,525

CC Continente de Portimão Portimão, Portugal 13,485

CC Modelo de Albufeira Albufeira, Portugal 10,461

Centro Colombo Lisboa, Portugal 119,771

Centro Vasco da Gama Lisboa, Portugal 47,691

CoimbraShopping Coimbra, Portugal 26,494

Estação Viana Viana do Castelo, Portugal 18,556

GaiaShopping Vila Nova de Gaia, Porto, Portugal 59,683

GuimarãeShopping Guimarães, Portugal 26,830

LoureShopping Loures, Portugal 38,986

MadeiraShopping Funchal, Madeira, Portugal 26,700

MaiaShopping Maia, Porto, Portugal 28,906

NorteShopping Matosinhos, Porto, Portugal 73,122

Parque Atlântico Ponta Delgada, Azores, Portugal 22,340

RioSul Shopping Seixal, Portugal 44,406

Serra Shopping Covilhã, Portugal 17,680

ViaCatarina Porto, Portugal 11,656

4

5

7

Owned shoppingcentres GLA (m2)

Avenida M40 Madrid, Spain 48,223

Dos Mares San Javier, Murcia, Spain 24,776

El Rosal Ponferrada, Spain 49,476

Grancasa Zaragoza, Spain 77,378

La Farga Barcelona, Spain 17,412

Luz del Tajo Toledo, Spain 42,020

Max Center Bilbao, Spain 59,362

Parque Principado Oviedo, Spain 74,398

Plaza Éboli Pinto, Madrid, Spain 31,068

Plaza Mayor Málaga, Spain 34,359

Valle Real Santander, Spain 47,825

Zubiarte Bilbao, Spain 20,562

Airone Monselice, Padova, Italy 15,779

Valecenter Marcon, Venice, Italy 58,152

Alexa Berlin, Germany 56,445

Münster Arkaden Münster, Germany 39,897

Mediterranean Cosmos Thessalonica, Greece 45,956

River Plaza MallRamnicu Valcea, Romania 11,953

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2

3


The objective of the Sierra Fund is to provide its investors withdividends and capital growth from investments in high quality,actively managed shopping centres in the Fund’s target marketsof Portugal, Spain, Italy, Germany and Greece.

Our five partner investors in the Fund are Stichting PensioenfondsABP of Holland, the French companies Caisse des Dépôts etConsignations EP, CNP Assurances and Ecureuil Vie, and TIAA-CREF which is based in the USA.

The commitment of these international institutional investors notonly validates the quality of Sonae Sierra's existing assets anddevelopment programme, but also provides new knowledge sourceswhich will help Sonae Sierra improve its performance going forward.

The Fund reported another very good year at the end of 2007,with the investors’ return reaching 28%.

During the year, the acquisition of Münster Arkaden was formallyconcluded.

The Fund also contributed to the expansion and refurbishment ofArrábidaShopping, with the second phase due to open in March2008, and to the refurbishments of Valecenter and Grancasawhich were initiated and are expected to come to full fruitionduring the first half of 2008. The Fund also benefited from theexpansion of MaiaShopping, concluded in October with theopenings of C&A, Springfield and Women Secret.

The Sierra Portugal FundIn addition, in March 2008 we launched a new fund – theSierra Portugal Fund (SPF) – which focuses on a diversifiedportfolio of high quality shopping centre assets located inPortugal. The acquisition of the 50% interest in GaiaShoppingand ArrábidaShopping, formerly owned by our investmentpartners, is part of this strategy. These two centres form anessential part of the new Fund, which is seeded with eightshopping centres and also benefits from a pipeline of threeprojects currently being developed in Portugal. The Fund’stotal equity is € 300 million, of which Sonae Sierra intendsto hold an interest of 20%.

Three reference investors have joined Sonae Sierra in theinitial closing of the SPF with combined commitments of€120m: LGPI – Local Government Pensions Institution, aFinnish pension fund for municipal workers; Ilmarinen, aFinnish mutual pension insurance company; ContinentalEuropean Fund I and Continental European Fund II, two realestate funds of funds managed by Schroder InvestmentManagement.

THE SIERRA FUND WAS ESTABLISHED IN 2003 WITHA TOTAL COMMITTED EQUITY OF €1.08 BILLION.SONAE SIERRA HOLDS 50.1% OF THE FUND ANDSIERRA INVESTMENTS MANAGES ITS ASSETS.

The Sierra Fund in 2007


Direct profitsThe direct profits of Sierra Investments are derived from theoperation of shopping and leisure centres that are part of itsportfolio, including those assets that are in the Sierra Fund. Thedirect profits also include the asset management services providedto the properties by Sierra Asset Management.

The growth in turnover over 2006 is largely due to growth in theportfolio on two fronts.

The first includes the opening of Sierra Developments’ centres in2007 – namely 8ª Avenida in Portugal, Alexa in Germany and ElRosal in Spain – and their acquisition by Sierra Investments.

The second are the acquisitions of the River Plaza Mall inRomania, Münster Arkaden in Germany, and CC Continente dePortimão and CC Modelo de Albufeira in Portugal.

The increase in asset management income over 2006 is also the result of the increase in the portfolio of the Sierra Fund andhigher property valuations. Net Operating Income increased by 8%.

Net financial costs rose 28% compared to 2006 due to anincrease in bank debt from €1.175 million to a total of €1.680million. This increase is largely the result of the acquisition ofassets during 2007 and of new financing/ refinancing of theexisting portfolio.

Indirect profitsIndirect profits arise either from the change in value of theinvestment properties or the realisation of capital gains on thesale of assets and/or shareholding positions.

The value created on investment properties reached €178 millionin 2007, of which €167 million relate to value creation on assetsin Portugal and €9 million in Spain.

Minority interests of €82.5 million correspond mainly to 49.9%ownership of our five partners in the Sierra Fund results.

Financial Report 2007

SIERRA INVESTMENTS CONTRIBUTED €198.5 MILLIONTO THE CONSOLIDATED PROFIT OF SONAE SIERRA.THE COMPANY CONSOLIDATES THE SIERRA FUND INFULL, GIVEN THAT IT HOLDS EFFECTIVE CONTROLWITH 50.1% OF THE CAPITAL.

Retail operating incomeof €192 million

Net operating income (NOI)increased by 8% to €150 million

Value created on propertiesof €178 million

Net profit attributable to equityholders of €115.9 million


Sierra Investments Profit & Loss Account (€ 000)

2007 2006 % 07/06

Fixed Rental Income 169,326 152,080 11%Turnover Rental Income 8,601 7,600 13%Key-Money Income 6,167 6,264 -2%Other Income 7,536 7,103 6%

Retail Operating Income 191,629 173,047 11%

Property Management Services 9,644 8,719 11%Asset Management Services 22,075 18,093 22%Letting & Promotion 1,201 4,037 -70%Capital Expenditures 4,657 3,088 51%Other Costs 19,472 14,220 37%

Retail Operating Costs 57,049 48,157 18%

Retail Net Operating Margin 134,580 124,890 8%

Parking Net Operating Margin 3,216 3,027 6%

Co-generation Net Operating Margin 1,062 1,217 -13%

Shopping Centre Net Operating Income 138,859 129,135 8%

Offices Net Operating Income 342 372 -8%Income from Asset Management Services 23,072 18,661 24%Overheads 12,283 9,824 25%Asset Management Net Operating Income 10,789 8,836 22%

Net Operating Income (NOI) 149,990 138,344 8%

Depreciation 886 1,453 -39%Recurrent net financial costs/(income) 59,747 46,511 28%Non-Recurring costs/(income) (3,969) 200 –

Results Before Corporate Taxes 93,327 90,179 3%

Corporate Taxes 18,219 18,771 -3%

Direct Profit 75,108 71,408 5%

Realised Property Profit (1,549) (9) –Non-Realised Property Profit 179,918 221,060 -19%

Total Indirect Income from Investments 178,370 221,051 -19%

Deferred tax 55,023 51,560 7%

Indirect Profit 123,347 169,492 -27%

Net Profit for the Period 198,455 240,900 -18%

Attributable to:Equity holders 115,941 131,441 -12%Minority interests 82,514 109,458 -25%

(un-audited accounts)

Sierra Investments Consolidated Balance Sheet (€ 000)

2007 2006 Var. (07 – 06)

Investment properties & others 3,661,027 2,661,382 999,644

Tenants 14,158 10,849 3,309

Deferred taxes 18,655 15,677 2,978

Other assets 100,956 80,586 20,370

Deposits & short term investments 208,495 281,845 -73,349

Total assets 4,003,291 3,050,339 952,952

Net worth 930,795 832,265 98,530

Minorities 440,212 398,014 42,198

Bank loans 1,679,884 1,175,106 504,779

Shareholder loans 97,318 73,041 24,276

Deferred taxes 561,079 446,430 114,650

Other liabilities 294,003 125,483 168,520

Total liabilities 2,632,284 1,820,060 812,225

Net Worth, minorities and liabilities 4,003,291 3,050,339 952,952



SIERRA DEVELOPMENTS HAS RESPONSIBILITYFOR ALL ASPECTS OF THE DEVELOPMENT OFTHE COMPANY’S PORTFOLIO OF SHOPPINGCENTRES IN EUROPE.

SIERRADEVELOPMENTS

Performance 2007Financial Report 2007

26

32


Our core business activitiesSierra Developments’ activities cover land procurement, concept creationand development management services designed to ensure the successfulcompletion and inauguration of Sonae Sierra’s new shopping and leisurecentres in Europe.

Sierra Developments contributes to our consolidated income in twoprincipal ways: by supplying development services to our projects acrossEurope – which now include those in Romania – and by adding value toeach one during its development phase. The full value of each project isrealised when the completed property is acquired by Sierra Investments atmarket value.

The most added value is created during each centre’s developmentphase. The constant recycling of capital, backed by a rigorousprocurement policy and excellent management standards, createsinnovative assets that are also attractive investments.

Effective marketing and letting also impact on the success of ourdevelopments. These services are contracted out to Sierra Management.

Sierra Developments in 20072007 was a positive year for Sierra Developments. Despite increasedcompetition in all our markets, we not only made very good progressthroughout Europe but also approved several new projects.

In Portugal and Spain, the lowering of real estate yields had a verypositive effect on the Open Market Value of the shopping centres weinaugurated or were developing during the year.

In Italy, despite increasing financing costs and heavier fiscal charges onreal estate deals, the additional pressure on yields made the market evenmore competitive than ever.

In Germany, we had to take a number of measures to minimise thenegative impact of the tax reform that was enacted on 1 January 2008.

Inauguration of Alexa shopping centrein Berlin, Germany

Inauguration of 8ª Avenida shoppingcentre in S. João da Madeira, Portugal

Inauguration of El Rosal shoppingcentre in Ponferrada, Spain

Inauguration and sale to PREF of LimaRetail Park in Viana do Castelo,Portugal

Start of new developments in Ploiestiand Craiova in Romania

Fernando Guedes OliveiraSonae Sierra, Executive Director,Developments Europe


Brand new marketNevertheless, we began work in Romania and have made goodprogress in what is, for us, a brand new market.

The beginning of operations in any new market is always animportant milestone in our progression. Our entry into theRomanian market shows that our company is becoming strongerin our newer territories, and that there is potential for even moregrowth in other Central European countries when the rightopportunities present themselves.

In addition to Sierra Investment’s acquisition of one operatingshopping centre in Romania, we started work on two brand newdevelopments in the cities of Craiova and Ploiesti, which will result in55,000m2 and 64,000m2 of Gross Lettable Area (GLA) respectively.

New centre openingsAs well as starting our Romanian operations, we also inauguratedfour new shopping and leisure centres in Europe.

The most exciting of these was Berlin’s Alexa, which has not onlyset new standards of design and construction in the Germanshopping and leisure centre market, but also recorded a total of5.2 million visits in its first three-and-a-half months of trading.

Other successful inaugurations included 8ª Avenida in S. João da Madeira in Portugal, which now offers 30,477m2 of GLA, andEl Rosal, a new centre in Ponferrada, Spain, which has 49,500m2

of GLA.

We also opened Lima Retail Park in Viana do Castelo, Portugal,with 10,764m2 of GLA. This Retail Park has since been sold toPREF, the European Retail Park Fund managed by British Land, as part of our planned disposal of completed retail park assets.

New centre developmentsLooking ahead, we have four shopping centres due to openduring 2008, seven more under development and 13 newprojects in different phases of completion. We are also in theadvanced stage of negotiations for several other very interestingopportunities.

In Portugal, we are also developing a new retail park in Setúbal,in Greater Lisbon, as a 50/50 joint venture between ourselves andMiller Developments.

At the beginning of 2008, we finally received a definitive buildingpermit for Plaza Mayor Shopping in Málaga, Spain, which willallow us to restart the construction of 18,800m2 of GLA, which isalready fully let and due for completion in 2008. We have alsocontinued the licensing process for Pulianas Shopping and RetailPark in Granada and hope to secure one other new project.

Unfortunately, we were forced to postpone the opening ofFreccia Rossa in Brescia, Italy. This centre is now due to open inApril 2008 while Gli Orsi, in Biella, is expected to open in October2008. We are also making progress with the licensing of LeTerraze, in La Spezia, and we plan to secure two additionaldevelopment projects in 2008.

In Germany, the construction of Loop5 in Weiterstadt isprogressing well and we expect the successful opening of Alexato help us secure further development projects and investments.

In Greece, our Pantheon Plaza project in Larissa, which we aredeveloping as a 50/50 joint venture with Rockspring, is beingexpanded to create a larger centre designed to accommodate themarket’s demands. It is scheduled to open by the end of 2008.We are progressing the development of Galatsi in Athens and, bythe year’s end, we hope to have secured two new projects.

In Romania, as reported elsewhere, we are poised to start workon new shopping centres in Craiova and Ploiesti during the firsthalf of 2008, and we will be looking for more new opportunitiesin this market.

Performance 2007

1 2

3

Projects underdevelopment GLA (m2)

Setúbal Retail Park Setúbal, Portugal 20,300

Plaza Mayor Shopping Málaga, Spain 18,750

Pulianas Shopping and Retail Park Granada, Spain 45,000

Freccia Rossa Brescia, Italy 29,741

Gli Orsi Biella, Italy 40,700

Le Terrazze La Spezia, Italy 39,100

Loop5Weiterstadt, Germany 56,000

Galatsi Shopping Athens, Greece 38,695

Pantheon Plaza Larissa, Greece 22,000

Craiova Shopping Craiova, Romania 55,537

Ploiesti Shopping Ploiesti, Romania 64,070

1,6

2

5

4

3

Inaugurated in 20078ª Avenida, S. João da Madeira, Portugal


Prospects for 2008The economic outlook for 2008 seems to be improving at aslower-than-expected rate, and we face increased levels ofcompetition, yet we are confident we can expand ourdevelopment pipeline beyond its 2007 parameters.

Our plan is to build on the sound base we have established inPortugal, Spain, Germany, Italy and Greece, and to become amajor participant in Romania and other Central Europe markets.

We are reorganising our structure and staffing, and being moreselective in our choice of development opportunities, so that wecan bring our plan to fruition. At the same time, we remaincommitted to innovation in terms of concepts and design as wellas tenant mix and services.

Our main ambition is to continue to be recognised as one of thebest shopping centre developers in Europe and to maintain ourpattern of growth through the development of new centres andworking partnerships.


WE ARE CONFIDENT WE CAN EXPAND OURDEVELOPMENT PIPELINE AND MAINTAIN OURPATTERN OF GROWTH IN OUR TRADITIONALTERRITORIES AND THE NEW MARKETS OF CENTRAL EUROPE.


Net Profit for the periodThe income from the development services, capitalised on theprojects under development, remains at a high level.

2007 was a year of successful inaugurations, with two openingsin Portugal, one in Spain and one in Germany.

The portfolio of projects under development remains highlydynamic, with new projects in Portugal, Spain, Italy, Germany,Greece and Romania.

The realised value in projects benefited from the fourinaugurations of the year, especially Alexa, which was valued onopening at a much higher than forecast.

The value created in projects under development reached animpressive €93 million, which compares with €28 millionrecognised in the previous year. This performance is mainly due to the yields’ compression in the real estate market, and theexcellent projects’ management combined with an efficientleasing of projects, both completed and under development.

The operating costs increased by 27% when compared with2006, mainly due to the growth in our business activities and ourentry into a new European market, which has resulted in higherpersonnel costs – up by 18% – arising from the reinforcement ofour existing teams and the creation of new operational structuresdesigned to support the new market.

The net financial income is the result of the capital invested in our portfolio, which reduces as the financial leverage ofprojects increases.


SIERRA DEVELOPMENTS CONTRIBUTED €61.6 MILLION TO THE CONSOLIDATED NET PROFIT OF SONAE SIERRA.

Development services delivered€13 million

Value created on assets €93 million

Net Profit attributable to equityholders €61.6 million


Sierra Developments Profit & Loss Account (€ 000)

2007 2006(*) % 07/06

Project Development Services Rendered 13,037 12,942 1%Value created in projects 92,635 28,401 226%

Operating Income 105,672 41,343 156%

Personnel costs 9,244 7,818 18%Other costs 19,344 14,685 32%

Operating costs 28,587 22,503 27%


Depreciation and provisions 22 78 -71%Net financial costs/(income) (449) (2,912) 85%

Profit Before Taxes 77,512 21,674 258%

Corporate taxes (2,821) (2,265) -25%Deferred tax 18,718 12,101 55%

Net Profit for the Period 61,614 11,838 –

Attributable to:Equity holders 61,614 11,838 –Minority interests – (0) –

(un-audited accounts)(*) 2006 was restated in order to demonstrate the combined effect of the provision of services and the creation of value in

projects

Sierra Developments Consolidated Balance Sheet (€ 000)

31/12/07 31/12/06 Var (07 – 06)

Properties under development 470,341 348,482 121,859

Customers 1,876 1,248 627

Other assets 155,505 106,082 49,423

Deposits 34,171 33,210 961

Total assets 661,894 489,023 172,871

Net worth 148,695 92,845 55,850

Minorities 1,225 2,229 -1,004

Bank loans 83,951 125,820 -41,869

Shareholder loans 342,119 162,458 179,661

Deferred taxes 28,050 8,784 19,265

Other liabilities 57,854 96,886 -39,033

Total liabilities 511,974 393,949 118,025

Net worth, minorities and liabilities 661,894 489,023 172,871



SIERRA MANAGEMENT IS RESPONSIBLE FORMANAGING, MARKETING AND LETTING ADIVERSE PORTFOLIO OF SHOPPING CENTRESOWNED BY SONAE SIERRA AND THIRD PARTIESIN EUROPE.

SIERRAMANAGEMENT


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43


Our core business activitiesSierra Management’s role is to create and maintain vital links betweenowners, tenants and shopping centre customers and thus contribute toSonae Sierra profits through various management services we provide inthe shopping centres we are responsible for.

As a pioneer in our sector, we have long recognised that services likethese must be maintained at the highest levels if the shopping centres inour care are to increase in value over time. This approach is particularlyimportant in matters relating to tenant mix, marketing and operationalefficiency, where we have achieved some notable successes.

In the last year we have reorganised the new technologies side of ourbusiness with the objective of focussing solely on the activities whichwere adding value to our shopping centres. These activities now formpart of our Marketing function. We have also created a new InnovationOffice focused on enhancing the value proposition of the shoppingcentres we manage.

Sierra Management in 2007 Sierra Management made steady progress during 2007. Our business inour traditional territories produced a satisfactory performance inmoderately good economic circumstances, while our entry into theRomanian market added two new shopping centres to our portfolio ofmanaged properties. The first, River Plaza Mall in Ramnicu Valcea, is analready operating shopping centre acquired by Sierra Investments. Thesecond, Arena Mall in Bacau, is owned by a third-party and wasinaugurated last December. We look forward to the start of the leasingof Sierra Developments’ two new projects in this fast-moving market inthe cities of Ploiesti and Craiova.

We also started managing centres in Germany. The opening of Alexa inBerlin and our takeover of the management of the Münster Arkadencentre adds two major properties to our German portfolio. We believeAlexa is one of the most innovative shopping and leisure centres inGermany. It has an attractive style with several novel features, and animaginative tenant mix offering consumers a wide choice of shoppingand leisure activities. It was almost fully let when it opened in September.Since then its trading figures have been excellent, with traffic and saleswell above budget.

Started management of Alexa andMünster Arkaden, in Germany

Began management of River PlazaMall and Arena Mall, in Romania

Start of management of Lima RetailPark and 8ª Avenida, in Portugal

Commenced management of El Rosal,in Spain

Pedro CaupersSonae Sierra Executive Director,Property Management Europe

António CasanovaSonae Sierra Executive Director,Key Accounts, Marketing andInnovation


The total visits in Portugal decreased in comparison to 2006, due to the cessation in the management of the Modelo galleries.On a comparable basis, this means that total visits increased by 0.2%. In Italy, the decrease in the number of visits on acomparable basis is linked to the refurbishment of the Valecenter,a fact that obviously limited the number of visits, and thereforesales figures, in 2007.

Iberian additionsWe have enlarged our portfolio in Iberia with the addition ofLima Retail Park and 8ª Avenida in Portugal and El Rosal in Spain.

Lima Retail Park, which – as reported elsewhere – was sold toPREF in December 2007, provides 13 retail outlets of between150m2 and 4,000m2 and features brands such as Maxmat,Moviflor, Mundo dos Fatos, Fábio Lucci and Casa. The car parkhas spaces for 400 vehicles. While it is not Sonae Sierra’s policy toown retail parks once they have been built, we are still able toprovide income-earning management services at centres such asthis one at Viana do Castelo.

Sales and Visits

Visits % 07/06 Sales % 07/062007 2006 total like-for-like 2007 2006 total like-for-like

Portugal 218,458 230,417 -5.2% 0.2% 2,389,145 2,229,748 7.1% 5.9%

Spain 77,725 77,049 0.9% -0.8% 987,518 886,859 11.4% 6.1%

Italy 14,563 12,545 16.1% -13.8% 45,638 42,281 7.9% -16.3%

Greece 8,152 7,314 11.5% 11.5% 164,061 118,779 38.1% 38.1%

Germany 5,234 – – – 182,041 – – –

Romania 1,173 – – – – – – –

Sales in Euro (thousands)Visits in thousands

8ª Avenida is located in the city of S. João da Madeira, some 40kilometres south of Porto. It is a medium-size centre, built overtwo levels, and the result of an expansion into what was theModelo supermarket gallery. It now offers more than 100 shops,thus making it possible for local people to satisfy most of theirshopping needs without having to travel to Porto.

El Rosal, located in Ponferrada in Spain’s Leon province, wasopened in October 2007. Offering a total of more than49,500m2, it occupies a dominant position in its catchment area.The centre still had some 30 shops unoccupied at the end ofDecember, but it is trading rather well and we expect to reduceits vacancy levels very quickly.

Performance 2007

Managed shoppingcentres GLA (m2)

8ª AvenidaS. João da Madeira, Portugal 20,155

AlgarveShoppingGuia, Albufeira, Portugal 42,540

ArrábidaShoppingVila Nova de Gaia, Porto, Portugal 54,652

CascaiShoppingCascais, Lisboa, Portugal 73,525

CC Continente da AmadoraAmadora, Portugal 18,849

CC Continente de LeiriaLeiria, Portugal 23,785

CC Continente de PortimãoPortimão, Portugal 13,485

CC Modelo de AlbufeiraAlbufeira, Portugal 10,461

Centro ColomboLisboa, Portugal 119,771

Centro Vasco da GamaLisboa, Portugal 47,691

CoimbraShoppingCoimbra, Portugal 26,494

Coimbra Retail ParkCoimbra, Portugal 12,749

Estação do Oriente S.C.Lisboa, Portugal 3,752

Estação VianaViana do Castelo, Portugal 18,556

GaiaShoppingVila Nova de Gaia, Porto, Portugal 59,683

Galeria LambertLisboa, Portugal 1,995

Grandella Lisboa, Portugal 5,907

GuimarãeShoppingGuimarães, Portugal 26,830

Lima Retail ParkViana do Castelo, Portugal 10,764

LoureShoppingLoures, Portugal 38,986

MadeiraShoppingFunchal, Madeira, Portugal 26,700

MaiaShopping Maia, Porto, Portugal 28,906

MarcoShoppingMarco de Canavezes, Portugal 1,820

NorteShoppingMatosinhos, Porto, Portugal 73,122

Parque AtlânticoPonta Delgada, Azores, Portugal 22,340

RioSul ShoppingSeixal, Portugal 44,406

1 2 3

4

1

4

5

2,6

Managed shoppingcentres GLA (m2)

Serra ShoppingCovilhã, Portugal 17,680

Sintra Retail ParkSintra, Portugal 17,489

ViaCatarinaPorto, Portugal 11,656

Avenida M40Madrid, Spain 48,223

Dos MaresSan Javier, Murcia, Spain 24,776

El RosalPonferrada, Spain 49,476

GrancasaZaragoza, Spain 77,378

La FargaBarcelona, Spain 17,412

La MoreaPamplona, Spain 18,878

Luz del TajoToledo, Spain 42,020

Max CenterBilbao, Spain 59,362

Parque GuadairaSeville, Spain 32,668

Parque PrincipadoOviedo, Spain 74,398

Plaza ÉboliPinto, Madrid, Spain 31,068

Plaza MayorMálaga, Spain 34,359

ValderadueyZamora, Spain 20,400

Valle RealSantander, Spain 47,825

ZubiarteBilbao, Spain 20,562

AironeMonselice, Padova, Italy 15,779

ValecenterMarcon, Venice, Italy 58,152

AlexaBerlin, Germany 56,445

Münster ArkadenMünster, Germany 39,897

Mediterranean CosmosThessalonica, Greece 45,956

River Plaza MallRamnicu Valcea, Romania 11,953

Arena MallBacau, Romania 18,928

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Italian and Greek developmentsWe have made no additions to our Italian portfolio during theyear. Instead, we have concentrated on leasing space in FrecciaRossa in Brescia, which is due to open in April 2008, and in GliOrsi in Biella, which is due to open in the Autumn. We have alsostarted the leasing process for the larger stores that will feature inLe Terrazze in La Spezia, which is scheduled for completion andinauguration in 2010.

We have one operating shopping centre in Greece,Mediterranean Cosmos, which opened in 2005. Lettings werecomparatively slow during the first year of trading but haveaccelerated during the past year. Occupancy is now above 99%of Gross Lettable Area (GLA). Mediterranean Cosmos’sperformance has convinced tenants of the value of being in amodern shopping and leisure centre and has eased our passageinto the leasing processes for our new centres, Galatsi Shoppingin Athens, which is due to open in 2009, and Pantheon Plaza inLarissa, due to open in the latter part of 2008.

Looking aheadLooking ahead to the coming year, we anticipate somedeceleration of growth in all the European economies we operatein the first half of the year, partly as a result of the difficultiesfacing the international debt market and partly because of someexpected reduction in consumer confidence. We anticipateimproved economic conditions during the second half-year.

For Sierra Management, our principal growth is expected to comefrom the countries outside Iberia – in particular in Germany, Italyand Romania – where there is potential for acquiring shoppingand leisure centres which, at present, do not enjoy the benefits ofour management expertise. Within Iberia, our aim is to capitaliseon the synergies between Portugal and Spain so that we canbecome more efficient as property managers while stillmaintaining a very high level of service.

As part of our commitment to high levels of service, we created a new cluster philosophy in the marketing area, scheduled forroll-out across Europe during 2008. This new approach bringstogether various centres according to their catchment areas andcompetitive situation, so that we can apply our management andmarketing skills across the clusters in a more cost-effective way.

Our over-arching objective is to be recognised as the bestshopping centre management company in Europe – a statuswhich has already been acknowledged, in broad terms, by SonaeSierra’s receipt of several property industry awards.

As the company’s property Management division, we recognisethat we must consolidate our presence in the countries outsideIberia before Sierra Management can expect to receive a similaraccolade as the best pan-European specialists in our particularfield.


OUR PRINCIPAL GROWTH IS EXPECTED TO COMEFROM THE COUNTRIES OUTSIDE IBERIA – INPARTICULAR IN GERMANY, ITALY AND ROMANIA – WHERE THERE IS SCOPE FOR THE APPLICATION OF OUR SKILLS.


Sierra Management contributed €5.1 million to Sonae Sierra’sconsolidated profit.

The division’s portfolio of centres under management increasedby five in 2007 with the addition of Alexa in Germany, 8ª Avenidaand Lima Retail Park in Portugal, El Rosal in Spain and River PlazaMall in Romania.

In line with this expansion of the portfolio, total income grew by9% between 2006 and 2007. The new shopping centreopenings, together with those scheduled for 2008, fuelled asharp increase in letting income, which up by 26%. For the firsttime in some years, with the addition of Alexa and River PlazaMall, Sierra Management has a responsibility for operatingcentres in all the markets where Sonae Sierra is present.

During the year, total costs grew by 10%, only slightly abovetotal income, which is a very good result considering the currentgeographical expansion of the management business. Given thenecessary increase in personnel costs, a great effort was made tocontrol all other operating costs, with special emphasis ongeneral supplies and services.

As a result of the growth of the Sierra Management structure, netoperating income (NOI) increased by 5% between 2006 and 2007.


Income from managementservices €34.1 million

Net Operating Income €6.9 million

Net profit attributable to equityholders €5.0 million


2007Portugal

Spain

Italy

Greece

Germany

Romania

2006

778/139

738/179

527/107

478/107

76/62

73/61

46

46

96

12/31

GLA owned (000 m2)GLA third-party (000 m2)

Portfolio under Management in 2007

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

GLA(000 m2)

1,863

1,682

1,732

1,576

1,342

1,293

1,015

853

784

625

550

349

No. ofContracts

6,539

5,705

5,729

4,916

4,333

3,974

3,210

2,724

2,393

2,050

1,747

1,186

GLA (000 m2)No. of Contracts

Portfolio under Management over time

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996


Sierra Management Profit & Loss Account (€ 000)

2007 2006 % 07/06

Property Management Income 25,924 24,008 8%Letting Services Income 5,241 4,151 26%Other Income 2,887 3,215 -10%

Total Income from Management Services 34,052 31,374 9%

Operating Costs 27,163 24,801 10%


Depreciation and Provisions 1,299 830 56%Net financial costs/(income) (1,474) (938) -57%Non-recurring costs/(income) (4) (62) 93%


Corporate taxes 1,994 2,253 -12%

Net Profit for the Period 5,074 4,489 13%

Attributable to: Equity holders 5,012 4,424 13%Minority interests 62 66 -6%


Sierra Management Consolidated Balance Sheet (€ 000)

31/12/07 31/12/06 Var. (07 – 06)

Net Fixed Assets 433 730 -297

Goodwill 5,472 7,099 -1,627

Tenants 13,240 11,763 1,477

Tax Shelter 402 202 200

Other Assets 7,024 11,429 -4,406

Deposits 21,551 16,393 5,158

Total Assets 48,122 47,617 505

Net Worth 5,979 6,114 -135

Minorities 84 12 72

Other Liabilities 42,060 41,491 569

Total Liabilities 42,060 41,491 569

Net Worth, Minorities and Total Liabilities 48,122 47,617 505



SONAE SIERRA BRAZIL, A 50/50 PARTNERSHIPBETWEEN SONAE SIERRA AND DEVELOPERSDIVERSIFIED REALTY, IS FOCUSED ON OWNING,DEVELOPING AND MANAGING SHOPPINGCENTRES IN BRAZIL.

SONAE SIERRABRAZIL


46

52


Our core business activitiesSonae Sierra Brazil is the power base for the Brazilian business of SonaeSierra and Developers Diversified Realty (DDR), one of the largest US-based REITs with a focus on the shopping centre sector.

The 50/50 partnership currently owns and operates a total of nineincome-generating shopping centres – eight located in the São Pauloregion and one in Brasilia – featuring a total of 1,846 shops.

Sonae Sierra Brazil’s aim is to become one of Brazil’s leading companies anda partner of choice in the shopping and leisure centre sector. This objectiveis being achieved through a combination of organic growth and acquisitionaccelerated by the 2006 acquisition of 50% of Sonae Sierra Brazil by DDR.

While many international investors have previously perceived Brazil as arisky market, the country’s current economic situation is comparativelysound. Inflation is under control and interest rates are being steadilyreduced. As a result, there is a growing interest in Brazil amongst severalmajor international investors.

We anticipate that, as the shopping centre market matures over thecoming years and the economic conditions change, more internationalreal estate investors will be encouraged to include Brazil in their portfolios.

Sonae Sierra Brazil in 2007 2007 was a year of consolidation for Sonae Sierra Brazil. Although wedid not open any new shopping centres, we increased our holdings inthree of our existing operations and have started the construction ofManauara Shopping, our first major development in Manaus, the capitalof Amazon State and the most important city in Northern region.

We now own 83% of the assets in Shopping Metrópole in São Bernardodo Campo, SP, which is an increase from 10%.

We have increased our holding in Shopping Plaza Sul in São Paulo to30%, where we previously owned 20%.

And we now own 30% of Tivoli Shopping in Santa Bárbara D’Oeste, SP,which is an increase on our original holding of 25%.

Having increased our holding in Shopping Metrópole, we have alsostarted a major refurbishment programme at this centre, and we areexpanding Shopping Plaza Sul through the addition of a new food halland multiplex cinema.

Increased holdings in ShoppingMetrópole, Shopping Plaza Sul andTivoli Shopping

Started construction of ManauaraShopping

Parque D. Pedro and Shopping Penhaawarded ISO 14001 verification – first-ever for a shopping centre in Brazil

João Pessoa JorgeSonae Sierra Executive Director,Brazil


Much of this progress stems from the benefits we have derivedfrom our partnership with DDR. Not only do we have increasedfinancial strength, we have also learned much from DDR’smanagement techniques and principles. We believe the value ofthis learning process can only increase over time.

Higher Occupancy rates and OMV growthDuring 2007, we achieved an increase in our occupancy rate, interms of GLA, from 94.0% to 95.8%.

Our results for the year also benefited from a substantial increasein the value of our assets. This significant increase in the OpenMarket Value (OMV) in Euros is due to three factors: yieldscompression in the Brazilian market, improved performance ofthe shopping centres and the effects of foreign exchange rates.

Performance 2007

Open Market Value Figures in Euro (thousands)

Shopping Centres in Operation % Sierra Open Market Value OMV Variation OMV Variation31 Dec. 2007 31 Dec. 2007 31 Dec. 2006 Total %

Parque D.Pedro 100% 222,595 150,694 71,901 48%Boavista Shopping 100% 23,921 20,576 3,345 16%Shopping Penha 73% 36,707 27,166 9,541 35%Shopping Metrópole (1) 83% 60,494 4,542 55,952 1232%Tivoli Shopping (2) 30% 7,365 4,303 3,062 71%Franca Shopping 65% 8,088 5,953 2,135 36%Pátio Brasil 10% 9,317 6,875 2,442 36%Shopping Plaza Sul (3) 30% 22,170 9,141 13,029 143%Shopping Campo Limpo 20% 5,862 4,061 1,801 44%

Total Brazil 396,519 233,309 163,209 70%

(1) Acquisition of 73% in 2007(2) Acquisition of 5% in 2007(3) Acquisition of 10% in 2007

Occupancy Rate

2007 2006

Brazil 95.8% 94.0%

Owned and managedshopping centres GLA (m2)

Boavista Shopping São Paulo, SP, Brazil 26,156

Franca Shopping Franca, SP, Brazil 17,561

Parque D.Pedro Campinas, SP, Brazil 119,968

Pátio Brazil Brasília, DF, Brazil 33,324

Shopping Campo Limpo São Paulo, SP, Brazil 19,937

Shopping Metrópole São Bernardo do Campo, SP, Brazil 24,724

Shopping Penha São Paulo, SP, Brazil 29,692

Shopping Plaza Sul São Paulo, SP, Brazil 27,002

Tivoli Shopping Santa Bárbara D’Oeste, SP, Brazil 22,017

Projects underdevelopment GLA (m2)

Manauara ShoppingManaus, AM, Brazil 43,616

1 2 3

4

1,6

2

3

7

5

4



Rents

Fixed rents Variable rents Total rents % 07/062007 2006 2007 2006 2007 2006 total

Brazil 47,230 41,177 3,447 2,502 50,677 43,680 16.0%

Figures in Euros (thousands)

Sales and Visits

Visits % 07/06 Sales % 07/062007 2006 total like-for-like 2007 2006 total

Brazil 84,747 79,718 6.3% 6.3% 1,010,628 826,822 22.2%

Sales in Euros (thousands)Visits in thousands

Tenants’ sales upIn line with the increase in the occupancy rates, our tenantsachieved a significant increase in their sales income.

Much of this success is due to the way we conduct annualmarket research in each centre and their catchment area, and toour development of specific marketing and strategic plans foreach shopping centre. In every case, our aim is to improve theirperformance and increase traffic and sales.

We also develop commercial strategies that aim to increase ouroccupancy rate and bring in new tenants and new operationsthat will make our shopping centres more attractive, moreprofitable and, as a result, more valuable.

Environmental targetOne of our long-term ambitions is to have all our shopping andleisure centres ISO 14001 verification for their environmentalmanagement. This is in line with the group’s commitment todemanding levels of environmental management in vital areassuch as energy savings, water quality and usage, air quality andwaste disposal.

As part of our plan, we submitted Parque D. Pedro and ShoppingPenha centre for ISO 14001 verification last year. We are pleasedto report that this was granted, making these two shoppingcentres the first-ever of its kind to receive ISO verification inBrazil. We hope that others will follow in due course.

Ambitions for 2008We aim to continue the consolidation of our business throughthe improvement of our established centres, the acquisition offurther existing operating centres – whenever and whereverappropriate – and the identification of at least one suitablegreenfield development site.

We aim to complete the construction and development ofManauara Shopping by the by the second semester of 2009, and to open this centre fully let. This would be a ‘first’ for Sonae Sierra Brazil and a considerable accomplishment.


Direct profitThe retail operating income from our investment business grewby 35% during 2007. This increase was mainly due to theincrease of the occupancy rates in several shopping centres, tothe favourable effect of our acquisition of additional stakes inShopping Metrópole, Shopping Plaza Sul and Tivoli Shopping,and the positive improvement in the Brazilian Real exchange rate.The year also saw a 43% increase in our operating margin.

The development business has had a very positive year, with a76% increase in the income.

The income from our property management business grew by86% during 2007 as a result of higher occupancy rates in severalshopping centres and growth of our letting activities.

Indirect ProfitIndirect profit represents the growth in the Open Market Value ofour assets in 2007, which was mainly due to a new yieldscompression in the Brazilian real estate market.

Balance SheetThe improvement in the exchange rate of the Real, together witha total net profit of €87.2 million and an increase in the equityemployed of €51.5 million, led to an increase in the total networth of €158 million. The value of the investment propertiesbenefited from a combination of the favourable change in theexchange rates (+€ 19.4 million), our increased stake of threeshopping centres, and the value created during the year.


OUR DEVELOPMENT BUSINESS HAD A VERY POSITIVEYEAR, WITH A 76% INCREASE IN ITS INCOME. OURPROPERTY MANAGEMENT BUSINESS ALSO GREW BY 86% OVER THE YEAR.

Shopping centre net operatingmargin increased 43% to €27.3 million

Net operating income increased46% to €25.9 million

Net profit increased by 305%to €87.2 million, of which€84.3 million are attributable to equity holders


Sonae Sierra Brazil Profit & Loss Account (€ 000)

2007 2006 % 07/06

Fixed Rental Income 29,750 21,780 37%Turnover Rental Income 2,166 1,557 39%Key-Money Income 2,044 1,768 16%Other Income 1,081 868 25%

Retail Operating Income 35,041 25,973 35%

Property Management Services 1,516 1,050 44%Letting & Promotion Services 834 997 -16%Other Costs 6,251 5,013 25%

Retail Operating Costs 8,601 7,060 22%

Parking Net Operating Margin 854 210 307%

Shopping Centre Net Operating Margin 27,294 19,123 43%

Income from Project Development Services 271 154 76%Income from Property Management Services 6,330 3,410 86%

Total Income from Services Rendered 6,601 3,564 85%

Overheads 7,994 4,933 62%


Depreciation 121 78 55%Provisions 964 1,189 -19%Net financial costs/(income) (530) 1,534 -135%Non-recurring costs/(income) 242 475 -49%


Corporate taxes 5,028 3,092 63%

Direct Profit 20,076 11,385 76%

Non-Realised Property Profit 91,885 23,644 289%Non-Realised Property Profit (Under Dev.) 9,102 –

Total Indirect Income from Investments 100,987 23,644 327%

Deferred tax 33,850 13,492 151%

Indirect profit 67,136 10,151 –

Net Profit for the Period 87,212 21,536 305%

Attributable to:Equity holders 84,264 20,476 312%Minority interests 2,948 1,060 178%


Sonae Sierra Brazil Consolidated Balance Sheet (€ 000)

2007 2006 Var. (07 – 06)

Properties 434,242 233,352 200,890

Investments 396,519 233,309 163,209

Projects Under Development 37,724 43 37,681

Tenants 4,994 6,399 -1,405

Tax Shelter 6,018 4,107 1,911

Other Assets 4,183 4,541 -358

Deposits 5,304 5,952 -648

Total Assets 454,740 254,351 200,389

Net Worth 365,753 207,708 158,045

Minorities 14,895 10,401 4,494

Bank Loans 673 953 -281

Shareholder Loans – -88 88

Deferred Taxes 62,986 27,980 35,005

Other Liabilities 10,433 7,396 3,037

Total liabilities 74,092 36,242 37,849

Net Worth, Minorities and Total Liabilities 454,740 254,351 200,389


Sonae Sierra Consolidated Accounts


José Edmundo FigueiredoSonae Sierra Executive Director, CFO

The Group’s 2007 performance2007 was an outstanding year for Sonae Sierra, with a solidoperating performance and gains in the valuations of ourproperties producing record profits of €300 million and anincrease of 15% in our NAV to €1.713 billion.

The opening of Alexa, our new landmark shopping and leisurecentre in Berlin, and our entry into the Romanian market are also milestones in our progress towards our goal of becoming a€2 billion NAV company by 2009.

As part of our programme of leveraging the assets of thecompany, we closed the refinancing of the largest property in ourEuropean portfolio, Centro Colombo in Lisbon, in April. We alsosecured an increase in our debt levels from 29.4% to 38.3%, andhave achieved marked improvements in our operational costs.

In the latter part of the year, taking advantage of the relativelylow rates on long maturities, we hedged a number of our loans,mostly for five-year periods.

Thus far, the US sub-prime crisis has had limited impact in ourbusiness. In general, the cost of our debt has gone slightly upand there is clearly some uncertainty in the market relating toliquidity. Despite this, we have maintained our growth strategyand we continue to pursue opportunities that we find attractive.

Ratios

31/12/07 31/12/06

Asset Gearing 38.3% 29.4%Interest Cover 2.13 2.81Development Risk 20.7% 21.3%

Looking in 2008Looking ahead, we believe that the monetary authorities,financial institutions and investment community will worktogether and will be able to overcome the present liquiditydifficulties in the markets. The fundamentals in many of theworld’s biggest economies still allow for some sustained growth.However, our main concerns relate to the price of some productsand the impact they will have on inflation levels in the developedcountries.

Given this caveat, we have a moderately optimistic view of 2008,which we believe will be an interesting year for the Europeanshopping centre industry. On the one hand, yields are athistorically low levels and the scope for valuation gains is limited.On the other hand, the operating performance of well-located,well-designed, well-managed shopping centres continues to bestrong.

It is this basic strength in the shopping and leisure centre sectorthat supports our strategy for growth, generally through thedevelopment of new projects. As a result, the finance team’sfocus for 2008 will be on the delivery of the funds needed tosupport this strategy.

The assumption that yield compression in mature markets will be limited in the future, does, however, have significantimplications for financial management. In light of this, we will be concentrating on operational optimisation, particularly at the cost level. With the objective of securing maximum valuefor the company we shall aim to control both operating andfinancial costs.


SONAE SIERRA’S CONSOLIDATED ACCOUNTSPRESENT THE GROUP’S YEAR-ON-YEARPERFORMANCE IN PURELY FINANCIAL TERMS.LAST YEAR’S PERFORMANCE WAS OUTSTANDING,WITH RECORD PROFITS OF €300 MILLION ANDAN INCREASE IN NAV OF 15%.

Net Asset ValueIn 2001, the company decided to adopt International AccountingStandards (IAS) in the preparation of its consolidated accounts.This led to the Open Market Value (OMV) of the investmentproperties being reflected in the company’s consolidated balancesheet. However, the company does not believe that the Net AssetValue (NAV) resulting from such a consolidated balance sheettruly reflects its value, for two reasons.

In the first instance, under IAS rules, properties being developedand properties held for sale are not booked at market value. Inthe case of Sonae Sierra, shopping centres under developmentare therefore booked at historic cost. The undervaluation of theseassets can be significant.

In the second instance, under IAS rules, deferred taxes onunrealised gains on investment properties are accounted for inthe balance sheet. From the company’s point of view, thededuction of this deferred tax is arguable, as the transactions ofLima Retail Park in Viana do Castelo and LoureShopping inLoures, both of which are in Portugal, have once againconfirmed. When a property is sold, the market practice is not tosell the property as such, but to sell the holding company whichowns it. Moreover, in various jurisdictions, capital gains arisingfrom the sale of shares are sheltered from tax.

For these reasons, the company calculates and publishes an NAVwhich results from valuing all its properties at Open Market Valueand does not include a deduction for deferred taxes onunrealised capital gains. Neither does the NAV include the valueof its operating businesses, other than that resulting fromacquisitions.

The calculation now presented is consistent with the NAVcalculation published in previous years.

The NAV on 31 December 2007 of the properties attributable toSonae Sierra was €1,713 million compared with €1,490 millionon 31 December 2006. The NAV per share of the propertiesattributed to the company is €52.69 against €45.82 on 31 December 2006, an increase of 15.0%.

Net Asset Value (NAV) 2007

Total

Open market value 4,361,437Investment properties 3,850,362Properties under development & others 511,074

Total bank debt -1,750,513Cash & Deposits 48,848Minorities -686,111Other net liabilities -230,867Dividend paid -29,588NAV 2007 1,713,204


2007

2006

NAV€m

1,713

1,490

1,265

1,060

948

1,037

934

NAV per share

€m

52.69

45.82

38.90

32.60

29.16

27.67

24.9

NAVNAV per share

Net Asset Value (NAV)

2005

2004

2003

2002

2001


Consolidated Profit & Loss AccountsThe Company reached a record Net Profit of €300 million,representing an increase of 11% when compared with previous year.

To allow the comparison between the 2007 performance and the2006 performance, was prepared an pro-forma Profit & LossAccount of 2006 (2006 PF). The variation is calculatedconsidering this 2006 PF Profit & Loss Account.

The total direct income from investments increased by €21.2million, from €258.7 million to €279.9 million. This reflects theincrease in the portfolio resulting from the acquisitions in 2007(Albufeira, Portimão, Münster and River Plaza), the increase in theparticipations of three assets in Brazil (Shopping Metrópole, PlazaSul Shopping and Tivoli Shopping) and the four inaugurations ofthe year (Lima Retail Park, Alexa, 8ª Avenida and El Rosal).

The company presented an indirect profit from investments of€214 million, resulting mainly from the gains on openings andfrom the increase in the Open Market Value (OMV) of theinvestment properties. However the growth in the OMV of theassets, when compared with 2006, was lower, as the yieldscompression was more aggressive during 2006 and in the futuretends to be more stable.

Sierra Developments recognises as non-realised gains the marginsin the projects under development, but these margins are notrecognised at Sonae Sierra consolidated level, given that, underIAS rules, the value created is only recognised at the time of theopening of the shopping centre.

During 2007, Sonae Sierra recognised the gains realised onproperties of €12.3 million, as a result of the followingtransactions:

Adjustment to the 50% sale price of Loop5 to Foncière Euris;

Sale of 100% of Lima Retail Park to PREF;

Sale of 50% of LoureShopping to Deka Immobilien.

The transactions completed during 2007 have confirmed, onceagain, that the Open Market Value, less company liabilities andexcluding the deferred taxes, reflects the Net Asset Value.

The amount of Net Profit attributable to Equity Holders increasedby €54.6 million, corresponding to a growth of 34%.

Consolidated Balance SheetThe total assets amounted to €4,495 million at the end of 2007.This represents an increase of €893 million when compared withthe previous year and results mainly from an increase in theinvestment portfolio arising from the openings, from theacquisitions and from the value created in the existing portfolio.

The increase in the bank debt amounts to €456 million andresults mainly from the financing of the acquisitions and theprojects under development.

The development risk weight, measured as the amount investedand to be invested to conclude the projects under developmentas a percentage of total assets, plus the amount needed toconclude those same projects, reduced from 21.3% to 20.7%, as a result of the centre openings during the year.

THE TOTAL DIRECT INCOME FROM INVESTMENTINCREASED FROM €242.1 MILLION TO €279.9MILLION FOR THE YEAR, WHILE OUR INDIRECTPROFIT FROM INVESTMENTS WAS €214 MILLION.

Net profit attributable to equity holders increased 34%to €215 million

NAV increased €223 million, a growth of 15% over 2006

Asset gearing increased to38.3%, from 29.4% in 2006


Sonae Sierra Consolidated Profit and Loss Account (€ 000)

2007 2006 PF* 2006 % 07/06 PF

Direct Income from Investments 279,854 258,653 242,052 8.2%Operating costs 119,694 102,659 84,773 17%Other costs 3,950 6,974 6,974 -43%Direct costs from investments 123,644 109,633 91,747 13%Net Operating Margin 156,211 149,020 150,305 4.8%

Depreciation 1,944 1,950 1,950 –

Net financial costs 47,997 44,162 44,162 9%

Direct profit before taxes 106,269 102,908 104,193 3%

Corporate tax 19,969 20,548 20,548 -3%

Direct profit 86,300 82,360 83,645 5%

Gains Realised on investments 12,294 -13,861 -13,861 189%

Value created on investments 293,299 271,177 269,892 8%

Indirect income 305,593 257,317 256,031 19%

Deferred tax 91,746 69,094 69,094 33%

Indirect profit 213,847 188,223 186,937 14%

Net profit before minorities 300,147 270,583 270,583 11%

Attributable to:Equity holders 214,897 160,318 160,318 34%Minority interests 85,250 110,265 110,265 -23%

(un-audited accounts)* 2006 PF – the year 2006 was restated to demonstrate the effect on Income and on Costs of the asset management

service rendered.

Sonae Sierra Consolidated Balance Sheet (€ 000)

2007 2006 Var. (07 – 06)

Investment properties 3,774,495 2,729,662 1,044,833

Properties under development and others 428,618 354,544 74,074

Goodwill 81,338 51,345 29,993

Deferred taxes 22,194 25,483 -3,289

Other assets 139,288 108,742 30,546

Deposits 48,848 332,313 -283,465

Total assets 4,494,782 3,602,089 892,693

Net worth 1,339,137 1,142,894 196,243

Minorities 448,970 405,513 43,457

Bank loans 1,750,513 1,294,504 456,010

Shareholder loans from minorities 88,636 64,255 24,381

Deferred taxes 598,956 468,792 130,164

Other liabilities 268,570 226,131 42,438

Total liabilities 2,706,675 2,053,682 652,993

Net worth, minorities and liabilities 4,494,782 3,602,089 892,693


Corporate Responsibility


OUR MISSION IS TO CREATE VALUE FOR OURSHAREHOLDERS, THROUGH THE SHOPPING CENTREBUSINESS, WHILE TAKING INTO ACCOUNT ITSSOCIAL RESPONSIBILITIES TOWARDS OTHERIMPORTANT STAKEHOLDERS, AS WELL AS ITSENVIRONMENTAL RESPONSIBILITIES.

A year of progressThe strategy of Sonae Sierra’s Corporate Responsibility programmeremained unchanged during 2007. Its main focus is on the issueswe believe are the most significant facing our business today, andthe challenges and opportunities they present. The key issuesinclude climate change, water use, waste management, land use,safety and health, the business chains involving our suppliers andtenants, and community and employee relations.

Excellence rewardedWe were delighted when, in October, we won a Dupont SafetyAward for our Personæ project. This ground-breaking safety &health programme focuses on the need to create a culture ofaccident anticipation and prevention at all our centres. Its aim isto build on the involvement of everyone working in our centres –our staff and tenants alike – so that neither we nor ourstakeholders have to rely solely on the work of a team of safetyprofessionals.

The ultimate objective of Personæ is to reduce to zero theincidence of preventable, safety-related accidents in our shoppingand leisure centres. Its operation is based on 14 elements ofcontrol in a Safety & Health Management System, with each onecomplementing the others. One of the elements includes a seriesof Safety Preventive Observations (SPOs), carried out by our staffin common areas and tenants’ units, which identify operationalshort-comings such as a blocked emergency exit in a storeroomthat could cause safety-related accidents.

We are pleased to report that, during 2007, the number of hazardsrecognised by staff conducting SPOs fell to eight per hour – abouthalf the level since the introduction of the Personæ project.

On another front, we were also very pleased to win the first-everReSource award, presented by the International Council ofShopping Centres in Europe to the developer, project, manager ortenant who, in the Council’s opinion, most consistently takes along-term view of sustainability. In presenting the award, thePresident of the Jury, Stephen Pragnell, described two of ourmost recent developments as “excellent examples of the highlevel of innovation and quality the company has developed withthe purpose of reaching profitability and sustainability for each ofits shopping centres”.

We also achieved the distinction of being ranked first in the“Climate Change and Corporate Management – A ResponseIndex”, which is promoted by Euronatura, a Portuguese non-governmental organisation.

Winners of Dupont SafetyAward for Personæ project

Ranked first in Euronatura’s“Climate Change andCorporate Management – A Response Index”

First-ever winners of ICSCReSource Award forsustainability

15 more centres granted ISO 14001 certification


Environmental managementDuring the year we once again achieved an overall decrease in ourelectricity consumption per m2 of shopping centre GLA and acorresponding reduction in our greenhouse gas emissions.

We also achieved an increase in waste recycling which resulted ina reduction in the volume of waste we are sending to landfill.

As part of our plan to ensure that best practice is achieved in theenvironmental management of all our shopping and leisure centres,we submitted a further 11 operating centres for ISO 14001certification during the year. We are pleased to report that all ofthem are now certified. Two of them, Parque D. Pedro and PenhaShopping in São Paulo, were the first-ever centres of its kind toreceive this ISO certification in Brazil.

We also submitted three recently completed projects – 8ª Avenidain Portugal, El Rosal in Spain, and Alexa in Germany – andanother, Freccia Rossia in Italy, which is due for inauguration in2008, and can report that each one received ISO 14001certification for their construction works.

Our long-term aim is that every one of our shopping centres in allour operating territories achieves ISO 14001 certification.

On a broader front, our long-term objectives in the areas ofclimate change, water usage, waste and land use are:

to achieve a 10% reduction in greenhouse gas emissions persquare metre of GLA by 2020 when compared with the 2005level;

to ensure that water consumption is contained at or below 4litres/ visit/ year;

to reduce the proportion of total waste (by weight) sent tolandfill in order to achieve a maximum 30% landfill rate;

to increase the proportion of total waste (by weight) that isrecycled, recovered or re-used in order to obtain a minimum50% recycling rate;

to promote the use of previously developed land for newshopping centre projects and to protect and enhancebiodiversity wherever possible.

Risk managementWe remain committed to risk management throughout thecompany.

During the year, proposals for a Risk Management Framework forSonae Sierra were developed by the Risk Management WorkingGroup and approved by the company’s Executive Committee.These proposals bring together the risk management activitiespracticed by our various business units, with a view to thembeing governed by a centralised, global outlook in future.

2007 also saw us focusing on the need for improved instrumentsfor the management of development risks. Two reports werepresented to the Board covering risks anticipated beforecommitment and after commitment to any development project.

We have also continued with the deployment of an integratedsystem for the control of project costs, based on the APSISplatform. This will be rolled out in Portugal, Spain and Italy during 2008.

Our financial risk management policies will be refined over thecoming year, and we will be introducing improvements to ourmonitoring and management systems over the same period.

The detection and analysis of new risks will continue across the board.

Human resourcesDuring the year, we carried out our first climate and satisfactionsurvey designed to gain an understanding of our employees’expectations and concerns about Sonae Sierra. The results haveenabled us to identify some opportunities for improvement,define specific measurable targets and develop relevant action plans.


We have made some organisational changes to our HumanResources department that transfer their responsibility for theadministrative/financial aspects of their work to the administrativedepartments, thus allowing HR to focus on more strategic issues.

In November it was announced that Danilo Picolo had beenappointed as Sonae Sierra’s first independent Ombudsman. MrPicolo has been with the Sonae Group for many years and haswide experience of the shopping and leisure centre industry. Inhis new role he will act as a facilitator, working with all SonaeSierra’s stakeholders to establish their needs and hear theirsuggestions for improved processes and their complaints aboutweaknesses, with the aim of ensuring that this developingdialogue creates constantly improving working relationshipsbetween the company and its tenants, their customers and thecommunities we serve.

During the year we conducted a focused research programme inall the countries we operate in with the aim of implementing amore flexible working arrangements policy. The results wereincorporated in a document presented to the CorporateResponsibility Steering Committee with recommendations thatwill allow part-time working arrangements, within the definedrules, whenever an employee wishes. We have also madearrangements for employing people with disabilities and chronicdiseases, within the current legal framework.

For more detailed information on our Corporate Responsibilitymanagement and performance, please refer to our separateCorporate Responsibility Report for 2007 or visit our corporateportal at www.sonaesierra.com

Corporate Responsibility continued

Corporate Governance


The organisation The Shareholders' General Assembly is the highest governingbody of Sonae Sierra. It appoints the officers of the Shareholders'General Assembly, the Fiscal Board, the RemunerationsCommittee and the Board of Directors of the Sonae Sierra groupand its companies.

The Sonae Sierra Board of Directors reports to the Shareholders'General Assembly and is presided over by a non-executiveChairman and has four other non-executive members. This Boardalso includes the Chief Executive Officer (CEO) and another fiveexecutive members, all with designated responsibilities. In thebeginning of 2008 the Board was enlarged with the addition ofanother executive member.

The Sonae Sierra Board of Directors has delegated some of itscorporate decision-making responsibilities to specialisedcommittees.

The Executive Committee is presided over by the CEO, who alsopresides over the Investment and Finance Committees. The Auditand Compliance Committee is presided over by an independentprofessional.

The Executive Committee is responsible for Sonae Sierra’soperational management and for the actions and decisions thatare not under the remit of either the Board of Directors or any ofthe other three committees mentioned. The Executive Committeemembers include the CEO Àlvaro Portela, Edmundo Figueiredo,Pedro Caupers, Fernando Oliveira, Antonio Casanova, JoãoPessoa Jorge and Ana Guedes Oliveira. It reports to the Board ofDirectors and may invite other senior executives and executives toattend its meetings.

The Board of Directors meets five times a year. The InvestmentCommittee and the Finance Committee each meet eleven times ayear and the Executive Committee meets once every two weeks.The Audit and Compliance Committee meets three times a year.

THE SONAE SIERRA BOARD OF DIRECTORS,WHICH REPORTS TO THE SHAREHOLDERS’GENERAL ASSEMBLY, HAS BEEN AUGMENTEDWITH THE APPOINTMENT OF ANA GUEDESOLIVEIRA AS A NEW EXECUTIVE MEMBER.

Board of Directors


Paulo AzevedoChairman

Paulo Azevedo joined the Sonae Group in1988, occupying several directoratepositions. In 1996 he was namedAdministrator of Modelo Continente SGPS,in charge of the Sales and InformationSystems area. In 1998, he became Chairmanof the Executive Committee of Optimus,Telecomunicações, SA., a position he keptuntil 2000. Later, he became Chairman ofSonaecom’s Executive Committee. In 2007he was named CEO of Sonae SGPS, as wellas Chairman of the Board of Directors ofSonaecom, Sonae Sierra and SonaeDistribuição.

Besides his degree in Chemical Engineeringfrom the "École Politechnique Federal deLausanne", Paulo Azevedo also has an MBAfrom the Instituto Superior de EstudosEmpresariais (Universidade do Porto).

Jeremy NewsumNon-Executive Director

Jeremy Newsum is Group Chief Executive ofGrosvenor.

Jeremy originally joined Grosvenor in 1976,having graduated from Reading University.He left the company after two years, butreturned in 1987 and was appointed ChiefExecutive in 1989.

As a specialist in real estate investment anddevelopment, he is a director of TR PropertyInvestment Trust Plc, a member of theCouncil of Imperial College London and aTrustee of the Urban Land Institute.

Ângelo PaupérioNon-Executive Director

Ângelo has been a non-executive BoardDirector of Sonae Sierra since 2000.

His main executive responsibilities are asChairman of Sonaecom’s ExecutiveCommittee and Board Nomination andRemuneration Committee; Executive ViceChairman of the Sonae Group holdingcompany, Executive Chairman of SonaeCapital and Sonae Turismo, and BoardDirector of Modelo Continente, all of whichare sub holdings of Sonae.

He graduated as a Civil Engineer from PortoUniversity and has an MBA from PortoManagement School.

Benoit Prat-StanfordNon-Executive Director

Benoit Prat-Stanford has been withGrosvenor since 2000 and is the FinanceDirector for Continental Europe. His careerincludes a period as military attaché to theFrench Embassy in Italy. He has also workedfor Arthur Andersen and UnitedTechnologies.

With a Business degree and an MBA gainedin Boston, he has lived and worked in Paris,Boston, Rome, Brussels and London.

Neil JonesNon-Executive Director

Neil Jones is Chief Executive of GrosvenorContinental Europe. He is based in Paris,from where he oversees ContinentalEuropean business.

Neil joined Grosvenor in 1997 and hasworked in London, Brussels and Hong Kong.He is a non-executive director of SonaeSierra SGPS.


Álvaro Portela was appointed CEO of SonaeSierra in 1989. His particular responsibilitiesinclude Safety & Health, CorporateCommunications, Environment andInstitutional Relations.

Álvaro has a degree in MechanicalEngineering from the Faculdade deEngenharia da Universidade do Porto, anMBA from the Universidade Nova de Lisboaand an AMP/ISMP from Harvard BusinessSchool.


Edmundo Figueiredo Director, CFO

Edmundo Figueiredo is the CFO of SonaeSierra and a member of the Sonae GroupFinance Committee. His particularresponsibilities include Internal Audit; Legal,Fiscal and Mergers & Acquisitions; Finance,Planning & Control; HR & Back-Office.

Edmundo joined the Sonae Group in 1989,as Financial Controller of the company’s RealEstate activities, which later became SonaeSierra.

He has a degree in Finance from the LisbonSchool of Economics (ISCEF).

João Pessoa Jorge Director, Brazil

João Pessoa Jorge joined the Sonae Group in1983 and was one of the executives involvedin starting the Group’s Real Estate business.Since 1998 he has been living in São Paulo,where he is responsible for all aspects of thecompany’s business in Brazil.

João has a degree in Civil Engineering gainedat the University of Porto and a MBA fromKent State University in Ohio.

Fernando Guedes OliveiraDirector, Developments Europe

Fernando Oliveira joined the Sonae Group in1984 and moved to Sonae Sierra in 1991.He was Project Manager of two of thecompany’s award-winning shopping Centres:ViaCatarina and Centro Vasco de Gama.Currently he is responsible for theimplementation of Sonae Sierra’s shoppingand leisure centre development programmein Europe.

With a degree in Civil Engineering, Universityof Porto, and an MBA from ISEE. Fernandoalso gained an AMD at Harvard BusinessSchool, USA.

Pedro CaupersDirector, Shopping Centre Management,Europe

Pedro Caupers joined Sonae Sierra in April1997 and was appointed Board Director in1999. He is responsible for all PropertyManagement and Leasing activities acrossthe European markets where Sonae Sierrais active.

Pedro has a degree in Electrical Engineeringfrom Instituto Superior Técnico, a PhD fromParis University and an MBA from INSEAD.

António CasanovaDirector, Key Account Management,Marketing and Innovation

António Casanova joined Sonae Sierra in1998, having previously been CEO ofOptimus, a mobile phone joint venturebetween Sonae Group, Orange and EDP,Portugal’s electricity utility.

He was appointed a Board Director of SonaeSierra in 2005 and has particularresponsibilities for Marketing, Key AccountManagement and Innovation.

António has a BSc from the London Schoolof Economics, an MBA from UniversidadeNova de Lisboa and a AMP from HarvardBusiness School.

Ana Guedes OliveiraDirector, Investment and AssetManagement,Europe

Ana Guedes Oliveira joined Sonae Sierra in1987 and later took over the development oftwo major shopping centres in Portugal,. In1999 she moved to portfolio managementand is now in charge of the company’sinvestment division. She has particularresponsibilities for the portfolio of shoppingcentres in Europe and also acts as managerof the Sierra Fund and the Sierra PortugalFund, which are co-owned by Sonae Sierra.

Ana has a degree in Civil Engineering,University of Porto, and an MBA gained atISEE. Ana also gained an AMP from INSEADin France.

Other Executives


Adrian FordResponsible for Expansion in Europe (exceptIberia)

Adrian Ford has worked with Sonae Sierrasince its inception. He assumed responsibilityfor the company’s new business in Europeoutside of Iberia in 1998.

Adrian studied business studies at PlymouthPolytechnic and has a Masters Degree inManagement and Business Studies from theUniversity of Warwick.

Joaquim Pereira MendesResponsible for the Legal, Tax, Mergers andAcquisitions

Joaquim Pereira Mendes joined Sonae Sierrain 1989. He is responsible for the Legal, Tax,Mergers and Acquisitions activities of SonaeSierra.

Joaquim has a law degree gained at theFaculdade Direito Universidade Coimbra in1980 and is a visiting professor atUniversidade Portucalense in Porto.

José QuintelaResponsible for Conceptual Developmentand Architecture

José Quintela joined Sonae Sierra in 1987and has since led the team responsible forthe concept and design of all the company’sshopping and leisure centres. He is currentlyinvolved in more than 20 projects at differentstages of development in all the countrieswhere Sonae Sierra is active.

José has a degree in Architecture, an MBAfrom Universidade Nova de Lisboa and anAMP from Harvard Business School.

José Falcão MenaResponsible for Development in Iberia

José Mena has been responsible for thecompany’s expansion in Iberia since 1998and for its development in the same regionsince 2004.

José has a degree in Civil Engineering fromPortugal’s Instituto Superior Técnico and apost-graduate qualification in Managementfrom the Instituto Superior de Ciências doTrabalho e da Empresa. He is alsosuccessfully completed an AdvancedMarketing Programme for Executives at theUniversidade Católica de Lisboa.

Luis Carvalho MarquesResponsible for Human Resources and BackOffice

Luis Carvalho Marques joined Sonae Sierra in1992. His previous career as an army officerhad focused on administration, teaching andtraining. Since 1998, his responsibilities atSonae Sierra have covered all facets of thecompany’s human resources and back officefunctions, including information systems andlogistics.

With degrees in Military Sciences andBusiness Administration, the latter gained atthe Instituto Superior de Ciências doTrabalho e da Empresa (ISCTE), Luis is aqualified Chartered Accountant and, for 16years, was visiting professor of Auditing andAccounting in a Portuguese University.

João Correia de SampaioResponsible for Management in Portugal and Spain

João Correia de Sampaio joined Sonae Sierrain 1992 following a military career duringwhich he taught at the Portuguese MilitaryAcademy and was commanding officer ofseveral operational and training units.

He is currently Managing Director of SierraManagement Portugal and SierraManagement Spain, with responsibilities forthe management and leasing in the Iberianpeninsular.

João has a degree in Military Sciences gainedat the Academia Militar in Lisbon and anMBA from Universidade Nova de Lisboa.

Pietro Malaspina Responsible for Developments in Italy

Pietro Malaspina joined Sonae Sierra at theend of 2000 and has since been responsiblefor the company’s development business inItaly. From 2003 to 2006, he was a memberof the ICSC Europe Advisory Board and iscurrently President of its Italian branch,CNCC.

Pietro has lived and studied in Italy and theUnited States. He has a degree in PoliticalSciences from the Sacred Heart CatholicUniversity in Milan.

From top to bottom, left to rightAdrian FordJoaquim Pereira MendesJosé QuintelaJosé Falcão MenaLuís Carvalho MarquesJoão Correia de SampaioPietro Malaspina Joaquim RibeiroIngo NissenThomas BinderCarlos Felipe FulcherCésar GarbinVítor Nogueira


Joaquim RibeiroResponsible for Finance, Planning andControl

Joaquim Ribeiro joined the Sonae Group in1985, starting in the holding company andthen moving to Sonae Indústria. From there,he moved to London for six years to workfor Sonae International.

In 1995 he joined Sonae Sierra to work in the financial department, becomingDirector, Finance, Planning and Control, in 2006.

Joaquim has a degree in Economics fromFaculdade de Economia do Porto, an MBAfrom Universidade Nova de Lisboa and anMSc in Property Investment from the CityUniversity, London.

Ingo NissenResponsible for Developments in Romania

Ingo Nissen joined Sonae Sierra in 2000,when the company began operations inGermany. In 2007 he was appointedDirector, Development Romania, withparticular responsibilities for theDevelopment activities t in that country.

Ingo has a degree in Civil Engineering fromthe Technical University in Braunschweig. Hegained his PhD at the Technical University inMunich.

Thomas BinderResponsible for Developments in Germany

With more than 20 years’ experience gainedin project and lease management in theGerman shopping centre, business parks andcommercial property sector, Thomas Binderjoined Sonae Sierra as CEO of Sonae SierraDevelopments Germany GmbH in 2006.

Thomas studied German law in Bochum andKiel, and has real estate management degreegained at Wirtschaftsakademie Kiel.

Carlos Felipe FulcherResponsible for Development in Brazil

Felipe joined Sonae Sierra in 2001 as ashopping centre Development Manager withresponsibilities in Portugal and Spain. In2004 he was appointed General Manager ofthe company’s business in Greece, withoverall responsibility for all aspects of SonaeSierra’s operations in that market. He wasappointed Sonae Sierra Brazil’s Head ofDevelopment in February 2008.

Educated at universities in Europe and theUS, Felipe’s most recent executive studieshave included a Harvard Business Schoolcourse on Developing Future Leaders.

César GarbinResponsible for Property Management inBrazil

César joined Sonae Sierra Brazil in 2003 after18 years’ in the Brazilian retail and realestate business. As the company’s OperationsDirector, he has wide-ranging responsibilitiesfor the day-to-day management and leasingof Sonae Sierra Brazil’s nine shoppingcentres. His work covers all aspects of SonaeSierra Brazil’s activities, including planningnew procedures designed to sustain thecompany’s progress.

Vitor NogueiraResponsible for Property Management inGermany, Greece and Romania

Vitor’s initial responsibilities with Sonae Sierraincluded overseeing operations leading up tothe inauguration of five of the company’sIberian shopping centres. More recently, heled the Sierra Management support teamresponsible for 17 shopping centres in Spain.In April 2007, his responsibilities shifted tothe company’s non-Iberian operations. SinceDecember he has focused on Germany,Greece and Romania.

With an MBA from IEDE in Madrid, Vitor hasbeen a visiting lecturer on EUDEM businessschool’s MBA course.


OUR AIM IS TO BE THE BEST INTERNATIONALSPECIALIST IN THE SHOPPING AND LEISURESECTOR. OUR THANKS GO TO THE MANYPEOPLE – IN PARTICULAR OUR EMPLOYEES –WITHOUT WHOM WE COULD NOT ACHIEVEOUR OBJECTIVES.

The futureSonae Sierra aspires to be the best international specialist in the shopping and leisure centre sector and a preferred partner in any market it operates in.

The company will also analyse new markets and opportunities,whether by constantly expanding its shopping centredevelopment pipeline or through the acquisition of alreadyoperational shopping centres, complemented by the creation of new alliances with local partners or significant institutionalinvestors.

OutlookSonae Sierra knows that it will only achieve its future objectivesby paying attention to the way in which it implements itsbusiness in the present.

The Company will continue to blaze a trail of success bydeveloping and using its knowledge and imagination and bymaintaining high standards of professionalism and innovation in all its undertakings.

AcknowledgementsThe Board of Directors would like to thank all the tenants of the Sonae Sierra shopping centres, the authorities, financialinstitutions and suppliers for all the support and confidence that they have shown.

We would also like to thank the Statutory Auditor for hiscooperation in monitoring our activity.

Our thanks go to our employees for their efforts throughout this year, which have been well reflected in the results achievedby Sonae Sierra.

DESIGNED AND PRODUCED BY MAGEEwww.magee.co.uk

PRINTED BY CTD

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2 CEO’s Statement4 Our organisational structure6 Our partnerships past and present8 The year in numbers

10 A year of achievements12 Sierra Investments24 Sierra Developments34 Sierra Management44 Sonae Sierra Brazil

54 Sonae Sierra Consolidated Accounts58 Corporate Responsibility62 Board of Directors 64 Other Executives66 Our Future

Front cover: Alexa, Berlin, Germany

PORTUGALPORTOLUGAR DO ESPIDO, VIA NORTE4471– 909 MAIATELEPHONE: +351 22 948 7522FAX: +351 22 010 4698

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www.sonaesierra.com

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BRAZILRUA GOMES DE CARVALHO,1327, 2º ANDARVILA OLÍMPIA, SÃO PAULO - SPCEP: 04547 - 005TELEPHONE: +55 11 3371-4133FAX: +55 11 3845-4522

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