Tax Considerations relating to Real Estate Investment in Brazil Presented by Ivan Tauil Senior Partner / Dallas-TX Thompson & Knight LLP March 5, 2008

Summary 1.Comparative Charts – FFI, FIP and SPE 2.International Planning for Investments in Brazil

1 – Chart 5 (FII vs. FIP vs. SPE) – General Aspects FII – Real Estate Investment Fund FIP – Equity Investment Fund SPE – Special Purpose Company  Purpose: To invest exclusively in real estate ventures Regulated by CVM  Purpose: To invest and participate in companies, including from the real estate sector, receive dividends and make profits by way of the fortuitous sale of interests Regulated by CVM  Purpose: To invest in a specific investment vehicle – a company constituted to develop a specific project WITHOUT regulation by CVM (except if a publicly-held company)  Suitability: Moving savings accounts of qualified investors into real estate ventures that generate income  Suitability: Creation of a capital pool of increase value within one or several companies by way of participation in the policies, administration and control of the companies  Suitability: Intermediate “joint- ventures” between investors, from the Brazilian real estate sector or not, in such a manner that each may participate in the specific project

1 – Chart 6 (FII vs. FIP vs. SPE) – General Aspects 1 – Chart 6 (FII vs. FIP vs. SPE) – General Aspects FII – Real Estate Investment Fund FIP – Equity Investment Fund SPE – Special Purpose Company  Participation: Investor’s interests shall grant each identical voting and economic rights (e.g., cascading distributions are not allowed)  Participation: Investor’s interests may grant different voting rights but shall grant the same economic rights to investors (except in that different fees to the administrator of the fund, including performance fees, may be due by the different classes of interests in accordance with the provisions of the fund’s charter)  Participation: The shares of an S.A. may grant different voting and economic rights to shareholders. The quotas of a Ltda. may grant different economic rights but each quota shall be entitled to one vote at the meetings or upon the resolutions of the Ltda.  Disclosure: Subject to several disclosure requirements  Disclosure: Subject to several disclosure requirements (however, less strict than the requirements imposed on an FII)  Disclosure: Less disclosure requirements than an FII and FIP  Debt: Restricted for obtaining or granting loans  Debt: Restricted from obtaining (except from multilateral bodies) or granting loans  Debt: Generally, no restrictions

1 – Chart 7 (FII vs. FIP vs. SPE) – Fund Taxation FII – Real Estate Investment Fund FIP – Equity Investment Fund SPE – Special Purpose Company  Fund Taxation: General Rule – not subject to IRPJ levied upon rental incomes (condominium) Exceptions – a)revenues and net profits arising from financial investments subject to the IRRF b)b) will be taxed as a Corporate Entity if invest in real estate ventures where the entrepreneur, principal contractor or partner holds title (individually or jointly) to 25% or more of the FII  Fund Taxation: In relation to the acquisition and sale of ventures in Brazil: not subject to taxation Income received from those investments are tax free Companies in which the FIP holds an interest are typically subject to Brazilian taxation as corporate entities  Company Taxation: Income is taxed at a rate of 34% (IRPJ 25% + CSLL 9%)

1 – Chart 8 (FII vs. FIP vs. SPE) – Taxation of Investors FII – Real Estate Investment Fund FIP – Equity Investment Fund SPE – Special Purpose Company  INCOME (i) Foreign investors not domiciled in a tax haven and under Resolution No /00 owes an IRRF of 15% (ii) Foreign investors domiciled in a tax haven or outside Resolution BACEN 2.689/00 owes an IRRF of between 15% and 22.5% (iii) Brazilian Individuals are EXEMPT but if outside Resolution BACEN 2.689/00 owe between 15% and 22.5% (definitive taxation) (iv) Brazilian Corporate Entities owe an IRRF of between 15% and 22.5% (provisional IRPJ)  CAPITAL GAINS From 0% (Res ) to 15%, depending on the facts of each case  INCOME (i) Foreign investors not domiciled in a tax haven and under Resolution No /00 owe an IRRF of 0%, or 15% if not in compliance with those conditions (ii) Foreign investors domiciled in a tax haven owe an IRRF of 15% (iii) Brazilian Individuals owe an IRRF (definitive taxation) of 15% (or a progressive tax rate of between 15% and 22.5%) (iv) Brazilian Corporate Entities owe an IRRF of 15% (or a progressive tax rate of between 15% and 22.5%) – provisional IRPJ  CAPITAL GAINS From 0% to 15%, depending on the facts of each case  INCOME Dividends received are not subject to taxation Interest received - IRRF of 15% or IRRF of 25% if participating investor / resident shareholder resides in a tax haven  CAPITAL GAINS From 0% to 15%, depending on the facts of each case

2 – Chart 9 - Investment Structure - Brazilian Subsidiary ●International Investment “Pure Equity” Foreign Investor Abroad Brazil Subsidiary BrazilCo Project No. 01 BrazilCo 1.ForeignCo raise funds for BrazilCo to develop Project No Project No. 01 produces results = R$ BrazilCo pays R$ 34 for IR and CSLL 4.BrazilCo pays dividends of R$ 66 Total Taxation of ForeignCo = 34%

2 – Chart 10 - Investment Structure - Brazilian Subsidiary ●International Investment “Debt + Equity” Foreign Investor Abroad Brazil Subsidiary BrazilCo Project No. 01 BrazilCo 1.ForeignCo lends resources to BrazilCo for development of Project No BrazilCo pays R$ 15 in interest to ForeingCo, which receives net R$ 12.75, after payment of 15% IRRF 3.Project No. 01 produces results = R$ 85 4.BrazilCo pay dividends of R$ Total Taxation for ForeignCo = 31.15% Save = 2.85%

2 – Chart 11 - Investment Structure - SPE ● “Debt + Equity” in SPE with Local Company Foreign Investor Abroad Brazil Subsidiary BrazilCo ABC Incorporation Project B ABC Incorporation Project A SPE Loan Corporate Interests in SPE

2 – Chart 12 - Investment Structure – SCP ● “Debt + Equity” in SCP Local Incorporation Foreign Investor Abroad Brazil Subsidiary BrazilCo ABC Incorporation Project B ABC Incorporation Project A SPC Loan Limited Partnership

2 – Chart 13 - Investment Structure - Foreign SPE Foreign Investor Country 01 – LTJ Brazil Subsidiary BrazilCo ABC Incorporation Project B ABC Incorporation Project A SPE Loan Limited Partnership Country 02 Foreign Investor Owner

2 – Chart 14 - Investment Structure - F.I.O. sells F.I. to buyer Foreign Investor Country 01 – LTJ Brazil Subsidiary BrazilCo ABC Incorporation Project B ABC Incorporation Project A – SPE Loan Limited Partnership Country 02 Foreign Investor Owner Buyer

THANK YOU! Ivan Tauil Tauil, Chequer e Mello Advogados Senior Partner – Thomson & Knight LLP – Dallas / TX Rua do Carmo nº. 43, 8º e 9º andares Centro – Rio de Janeiro – RJ