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Shopping Center Sector Regulation

Shopping centers in Brazil are generally formed either by incorporation through (i) the creation of independent units, known as building condominiums, established pursuant to the Brazilian Condominium and Development Law, or Lei de Condomínio e Incorporação and the Brazilian Civil Code, in which case each store represents an independent unit and the relationship between the condominium members is regulated by the condominium agreement and internal regulation, or (ii) a deed for an undivided shopping center under the pro indiviso condominium model, known as civil condominiums, also regulated by the Brazilian Civil Code, in which case the development represents a single property and the relationship between the co owners is regulated by a co owners’ agreement. Our portfolio of owned and managed shopping centers is comprised of both building condominiums and civil condominiums.

The main difference between a building condominium and a civil condominium is that only the building condominium allows the developer to sell individual units separately, in whole or in part, without the consent of the owners of the other units. A building condominium and a civil condominium may coexist within the same development. For example, in a shopping center organized as a building condominium, in which each store is independently owned, any individual store may be owned by two or more owners in the form of a civil condominium. For our partially held shopping centers that adhere to this dual condominium format, we are co owners of the individual store units that we then rent to our tenants.

In Brazil, there are no specific regulations that govern the operation of shopping centers, and therefore, the organization and regulation of the relationship between the shopping center, the tenants and the shopping center’s manager are also governed by the following instruments:

  • The lease agreements with tenants;
  • An agreement for services with the management company of the shopping center;
  • Public deeds of general rules for lease agreements; and
  • Tenant association agreements.