FINANCIAL INSTITUTIONS

CREDIT OPINION28 April 2017

Update

RATINGS

BR Malls Participacoes, S.A.Domicile Rio de Janeiro, Rio de

Janeiro, Brazil

Long Term Rating Ba2

Type LT Corporate FamilyRatings - Dom Curr

Outlook Negative

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Analyst Contacts

Juan Acosta 212-553-4849Analystjuan.acosta@moodys.com

Philip Kibel 212-553-4402Associate ManagingDirectorphilip.kibel@moodys.com

Ken Acuña 212-553-6859Associate Analyst 1ken.acuna@moodys.com

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

BR Malls Participações, S.A.Update to Discussion of Key Credit Factors

Summary Rating RationaleBR Malls' Ba2 (global scale)/Aa2.br (national scale) ratings reflect the company's dominantposition as the largest owner and manager of shopping centers in Brazil with a strong balancesheet and a substantial unencumbered asset pool. As of December 31, 2016, BR Malls held anownership interest in 45 malls, totaling over 1.6 million square meters (m2) of gross leasablearea (GLA). The ratings also account for the high-quality and resiliency of the mall portfolio,which was challenged during Brazil's worst economic recession. The company has ampleliquidity and good access to local capital markets to meet its near-term obligations.

These credit strengths are offset by the overall lagging effects from the recession (highunemployment levels, high household debt, weak consumption and unclear signs of astrong economic recovery). Consequently, sales growth rate for BR Malls and for the generalBrazilian retail sector will remain weak until there is stronger demand. Additionally, thereis some lease roll-over risk for a portion of the company's portfolio over the next 12 to 24months.

Credit Strengths

» Largest shopping mall owner/developer in Brazil

» Strong balance sheet with low leverage and a substantial unencumbered asset pool

» High quality, diversified and resilient portfolio

» Ample liquidity and good access to domestic capital markets to meet its near-term debtmaturities

Credit Challenges

» Exposure to the lagging effects from the recession, despite emerging indications ofeconomic improvement

» Anemic sales growth rate in the near term

» Some lease roll-over risk in the next 12 to 24 months

» A weakened fixed charge coverage mitigated by an expected decline in BR Mall's interestexpense costs from recent and anticipated interest rate cuts

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Rating OutlookWhile there is an improvement in Brazil's economy as result of recent accommodative monetary easing and fiscal reforms, BR Mall'srating outlook remains negative until there are clearer signs of a recovery in Brazil and an increase in consumer demand.

Factors that Could Lead to an UpgradeA return to stable rating outlook would be predicated the following factors:

» A change to Brazil’s sovereign bond rating outlook;

» Stronger indications of an economic recovery and increased consumer demand;

» Secured debt as a percentage of gross assets below 15% on a sustained basis;

» Successful delivery and lease up of the development/expansion pipeline.

Factors that Could Lead to a DowngradeDownward rating movement would be predicated upon:

» Downgrades of Brazil’s bond ratings;

» Fully loaded fixed charge coverage (interest expense, capitalized interest and principal amortization) below 1.3x on a sustainedbasis;

» Inability to show adequate liquidity for the next 24 months;

» Debt to Gross Assets consistently above 50%.

Key Indicators

Exhibit 1

BR Malls Participações, S.A.

2016 [1] 2015 2014 2013 2012

Total Revenue (BRL$ mil) [2] 1,368 1,515 1,538 1,541 1,339

Recurring EBITDA (BRL$ mil) 922.1 1,127.8 1,128.6 1,190.2 1,035.4

Recurring EBITDA / Total Revenue 67.4% 74.5% 73.4% 77.2% 77.3%

Total Debt / Recurring EBITDA 5.2x 4.9x 4.5x 4.0x 4.3x

Recurring EBITDA / Fixed Charge 1.57x 1.68x 2.08x 2.42x 2.38x

Total Assets (BRL$ mil) 19,402.2 20,684.0 19,860.6 18,820.9 17,695.2

Secured Debt / Gross Assets 13.8% 13.6% 14.5% 12.4% 13.5%

Total Debt + Pfd Equity / Gross Assets 24.7% 26.6% 25.8% 25.1% 25.4%

[1] For the 12-month period ended on December 31, 2016.[2] Total revenue excludes non-recurring revenue.Sources: Company filings and Moody's Investors Service.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 28 April 2017 BR Malls Participações, S.A.: Update to Discussion of Key Credit Factors

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Detailed Rating ConsiderationsKey factors influencing the ratings and outlook include:

Factor 1 - Liquidity & Funding

Trend: Neutral

BR Malls has adequate liquidity coverage, determined by its near-term sources and uses of funds, to meet its near-term obligations.As of December 31, 2016, the company reported approximately R$383 million of available cash and marketable securities. Like mostcompanies in Brazil, BR Malls has no committed lines of credit and raises capital as needed to replenish its cash balance and/or to fundgrowth activities.

The company has approximately R$587 million of debt obligations due 2017, followed by R$594 million due 2018. At YE16, thecompany's unencumbered asset base was 59% of gross assets, which bolsters its financial flexibility by allowing it raise capital throughsecured debt transactions as well as through the sale of whole or partial interests in its malls. In March 2017, BR Mall announced thesale of its ownership stake in ItauPower Shopping for over R$100 million.

Factor 2 - Leverage & Capital Structure

Trend: Neutral

BR Malls’ book leverage (Total debt plus Preferred stock as a percentage of gross assets) and Net Debt to EBITDA were strong atapproximately 25% and 4.8x, respectively at 4Q16. Debt financing in Brazil is generally floating rate, which exposes companies withlocal currency denominated debt to greater risks and volatility tied to inflation and interest rate fluctuations. The company's capitalstructure is tied to various interest rate indices, partially diversifying its exposure. Approximately 80% of the company’s outstandingdebt is split equally between the low variable “Taxa Referential” (TR) index, which provides added rate stability, and the local interbankdeposit certificate rate (CDI). BR Malls' Net Debt to EBITDA and fixed charge coverage will improve due to lower interest expense costsas a result of the Central Bank's recent reduction of its inflation target and interest rate cuts. Additional cuts are expected in 2017-18.

The company's secured debt levels, as percentage of gross assets, remain consistently in the low to mid-teens. For local companies,secured debt is the most ubiquitous and cheapest form of long-term financing in Brazil. BR Malls will continue to rely upon this type offinancing in the foreseeable future. Although the mall company has demonstrated good access to all forms of capital, Moody's adjuststhe leverage factors in our scorecard to reflect the higher costs of capital in Brazil.

Factor 3 - Market Positioning & Asset Quality

Trend: Neutral

At YE16, the company's portfolio consisted of 45 shopping centers, covering approximately 1.6 million m2 of GLA. The portfolio isspread across 15 states with concentrations in the Southeast states of Sao Paulo, Rio de Janeiro and Minas Gerais. As the largest retaillandlord in Brazil, it has a strong base with over 9,000 stores. The portfolio’s good quality and resiliency is reflected in its high physicaloccupancy levels, which have been consistently above 96% for multiple consecutive quarters. In the second half of 2016, BR Mallsexperienced some tenant defaults, causing the turnover rate to increase close to 10% and the occupancy rate to dip below 96% for thefirst time after many years of operation. The company seized the opportunity to strategically improve its tenant mix, resulting in a 70basis points (bps) increase in occupancy to 96.2% at 4Q16 compared to 95.5% in the prior quarter. Management maintains its steadyfocus on streamlining its operations and was able to lower the portfolio's occupancy costs by 140 basis points to 10.7% at 4Q16 downfrom 12.1% at 1Q16.

The recession proved most challenging for BR Malls in 2016 as it reported a negative same store sales growth rate of 0.5% for the firsttime in its operating history. The decline was primarily driven by the underperformance of the anchor and megastore segments, whichmuted the strong performance from the malls' leisure segment. Overall, the sales growth rate will remain weak in the near term despitesome improvement in economy. The Central Bank's accommodative fiscal policies will first benefit companies before consumers.Secondly, given the high unemployment and household debt levels, lower interest rates will not immediately translate to lower creditrates for the average Brazilian consumer. Consequently, consumers will continue to focus on deleveraging and/or delaying the purchase

3 28 April 2017 BR Malls Participações, S.A.: Update to Discussion of Key Credit Factors

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of big-ticket, credit-dependent, discretionary goods until credit conditions improve and disposable income grows. In contrast to thecontraction in sales growth, BR Malls' same store rent growth was at a little over 4% from its inflation-indexed leases in 2016. The 300basis points decline in growth rate in 2015 reflects the challenges the mall operator encountered during the peak of the recession tomaintain occupancy and attract new tenants.

Asset recycling and development/expansions have been core components of the company's growth and value enhancement strategy. In2015, the company divested its ownership stakes in three non-core assets, partially redeploying net proceeds to its expansion projects.There were no asset sales in 2016 and the company announced in March 2017 the divestiture of a partial stake in Shopping ItauPowerfor R$107 million. With regard to its development activities, the company completed the first phases of the expansions of ShoppingEstacao BH and Top Shoppings in the fourth quarter of 2015 and 2016, respectively. At YE16, the company's development pipelineconsisted of two greenfield projects and five expansion projects. The pipeline would add approximately 100,000 m2 of new GLA to theportfolio. However, the company has extended the delivery dates of several of these projects as it awaits for more favorable marketconditions. As the economy enters into full recovery, BR Malls should be well positioned to internally grow from higher rents and alarger footprint. Also, the company will continue to enjoy the “flight to quality” with tenants seeking to be in strong malls that are well-located and professionally managed by seasoned operators.

Factor 4 - Sustainability of Cash Flow & Earnings

Trend: Neutral

With the impact from lower rents, higher delinquencies and vacancies, BR Malls reported a 6% decline in the adjusted EBITDA marginfor full year 2016 (Moody's EBITDA margin calculation excludes non-recurring revenues). The company's active leasing campaign, whichproduced 425 new leases signed in 4Q16, along with its expansion activities should help boost the margins as the economy graduallyrecovers. Leases for approximately 19% of the GLA will expire over the next 12 months, followed 13% in 2018. The roll-over risk ispartially mitigated by management's strong franchise as the “place of choice” for its tenant base. Nonetheless, Moody's will continue tomonitor these metrics.

Fixed charge coverage declined to 1.6x at YE16 from 2.1x at YE14 due to lower EBITDA and higher interest expense on the company'sdebt. BR Malls will enjoy relief in its interest expense costs from the recent interest rate cuts and the additional rate cuts expectedin 2017-18. With regard to joint ventures, the majority of properties are in joint venture structures, which limits decision-makingauthority and transparency.

Corporate ProfileBR Malls is based in Rio de Janeiro and is the largest owner and manager of shopping centers in Brazil. The company owns interestsin a portfolio of 45 malls, totaling 1.65 million square meters of gross leasable area, located across 15 states, including two greenfieldprojects under development projects and five expansion projects.

4 28 April 2017 BR Malls Participações, S.A.: Update to Discussion of Key Credit Factors

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Rating Methodology and Scorecard Factors

Exhibit 2

BR Malls Participações S.A. [1]

Rating Drivers Aa A Baa Ba B Caa Ca Implied Score Adjusted Score Trend

Liquidity & Funding High Ba High Ba Neutral

Liquidity Coverage Moderate

Upcoming Debt Maturities 21.8%

FFO Payout 70.7%

Amount of Unencumbered Assets 59.1%

Leverage & Capital Structure High Baa Low Ba Neutral

Debt + Preferred/Gross Assets 24.7%

Net Debt/EBITDA 4.8x

Secured Debt/Gross Assets 13.8%

Access to Capital Good

Market Positioning & Asset Quality Low Baa Low Baa Neutral

Franchise/ Brand Name Good

Gross Assets [2] $6.0

Diversity-

location/tenant/industry/economic

Moderate

Development % Gross Assets

Asset Quality Good

Cash Flow & Earnings High Ba Mid Ba Neutral

EBITDA/Revenues 67.8%

EBITDA Margin Volatility 4.2%

Fixed Charge Coverage 1.6x

JV/Fund Business % Revenues

Overall Assessment

Implied Score Low Baa

Adjusted Score Mid Ba

[1] For the 12-month period ended on December 31, 2016.[2] Gross assets are in US dollar.Source: Company filings and Moody's Investors Service.

Ratings

Exhibit 3Category Moody's RatingBR MALLS PARTICIPACOES, S.A.

Outlook NegativeCorporate Family Rating -Dom Curr Ba2Senior Unsecured -Dom Curr Ba2NSR Corporate Family Rating Aa2.brNSR Senior Unsecured Aa2.br

BR MALLS INTERNATIONAL FINANCE LIMITED

Outlook NegativeBkd Senior Unsecured Ba2

Source: Moody's Investors Service

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6 28 April 2017 BR Malls Participações, S.A.: Update to Discussion of Key Credit Factors