The strategy of Sonae Sierra Brasil is to grow its portfolio and maintain its position as one of the leading shopping center developers, investors and managers in Brazil, while seeking to provide superior returns to its shareholders in a sustainable and responsible way. The company aims to meet these goals by implementing the following strategies:
Focus on value creation through organic growth. The Company has a well-defined strategy to increase its shopping center portfolio based on two main sources: (i) first by developing new shopping centers that are dominant in their geographic areas, focused on the developing middle-class segment of Brazilian consumers and capable of maintaining a strong competitive position based on factors such as population density, the increasing purchasing power of potential customers and unsatisfied consumer demand; and (ii) second by expanding and/or refurbishing its existing shopping centers to differentiate them by including innovative features to increase their market share and create entry barriers against new competitors.
In further detail, our main strategies are.
Sonae Sierra Brasil believes that its main competitive strengths include the following:
Significant presence in key markets. Five of our nine shopping centers in operation are located in the State of São Paulo, the wealthiest and most economically significant state in Brazil.
Exposure to the fast-growing middle class segment of the Brazilian population. The majority of shopping centers in its portfolio is aimed at the middle class segment of the Brazilian population. Sonae Sierra Brasil believes that one of the key drivers of its significant growth in revenues, net income and EBITDA in recent years has been this focus on Brazil‘s growing middle class.
Vertically integrated business model which allows control and strong cash generation. Sonae Sierra Brasil believes that its vertically integrated business model enables it to exercise continuous control over the quality and profitability of its shopping centers.
Controlling interests in most of its shopping centers. By virtue of its equity interests, the Company controls eight of our nine operational shopping centers and manages all of them, giving it an ample say in strategic decisions, such as expansions, redevelopment and selection of tenants, all facilitating the execution of its strategy of organic growth, maintenance of relationships with key tenants and generation of value. In any other cases, it needs a specific quorum for approval.
Partnership with tenants and relationships with Brazilian and foreign retail operators. Sonae Sierra Brasil has established important relationships with some of the top international retail tenants, such as Walmart, Zara, C&A and Cinemark by building on their existing relationships with its indirect controlling shareholders, as well as with leading Brazilian retailers, including Lojas Renner, Riachuelo, Centauro and Livraria Saraiva. The Company believes that commercial relationships generate new business and facilitate the launching and marketing of new shopping centers and expansions of existing shopping centers.
Experienced shareholder sponsorship and experienced and professional management team. Sonae Sierra Brasil has obtained significant benefits from the active contributions and management experience of its indirect controlling shareholders, Sonae Sierra and Alexander Otto, international leaders in the shopping center and leisure sectors in their operating market.