Interview with Álvaro Portela, Sonae Sierra's CEO

Q - What's your analysis on 2006 for Sonae Sierra?

Álvaro Portela  -  2006 was a very good year for Sonae Sierra. Despite the generally poor performance  of  retail  sales  across  the  countries  where  we  operate,  the  truth  is  Sonae Sierra's  results  have  exceeded  our  expectations,  with  an  23%  increase  in  our  total  net profit, a  20% increase in  EBITDA, and an increase in our shopping centres NAV of  18%, which we consider to be excellent.

These  results  are  due  to  the  inspirational  hard  work  and  professionalism  of  the  Sonae Sierra team, which adds value to our assets, both the new shopping and leisure centres we have inaugurated, and the ones in our existing portfolio.

In short, I will say that 2006 allowed us to make good progress towards our goal of making Sonae Sierra a € 2 billion NAV company.

Q -Sonae Sierra has continued to privilege partnerships in its growth strategy ...

A - That is true. One of our main objectives throughout 2006 was the strengthening of our financial  base  through  the  establishment  of  partnerships  with  prestigious  companies, capable of adding value to the Company's strategic development.

At the start of the year, Grosvenor acquired an additional  17.04% of our share capital, which increased their holding to  50%, with Sonae SGPS onto an equal footing. Not only does this move reinforce our position in the market, it is - I believe - a direct reflection of the mutual trust and respect that exists between both our shareholders, and an expression of their total commitment to the Company's growth.

Also relevant was the partnership established for our operation in Brazil with Developers Diversified Realty, with the resulting injection of some R$ 600 million over the next three years in Sonae Sierra Brazil. The new partner is one of the biggest and most prestigious shopping  and  leisure  centre  developers  in  the  North-American  market,  and  therefore  I believe we have created the conditions for an accelerated growth in the Brazilian market, and to fight for the leadership of this industry in Brazil as well.

Q - What were the most important investments made in 2006?

A  - Our two most important investments during the year have been in Greece  - where, following  a  very  competitive  bidding  process,  we  won  the  usage  rights  for  the  Galatsi Olympic Hall for the next 40 years - and in Germany, where we secured the acquisition of the Münster Arkaden shopping centre.

The Athens Star Dome development - a €69 million joint venture with Acropole Charagionis -  will  become  our  second  Greek  shopping  and  leisure  centre  development,  after  the successful inauguration of Mediterranean Cosmos in Thessaloniki.

Securing  the  acquisition  of  Münster  Arkaden  is  only   one  of  several  encouraging developments  in  Germany.  We  also  acquired  a  well-located  site  in  Weiterstadt,  near Frankfurt, where we have already started to build a large shopping and leisure centre, and we are making good progress with our Alexa centre in Berlin.

Q - What other aspects of Sonae Sierra's performance in 2006 would you highlight?

A  -  I'm  naturally  proud  to  underline  the  fact  that  our  activity,  our  creativity  and  our professionalism  continue  to  earn  distinctions  from  the  market  and  from  prominent institutions, which have again in 2006 awarded us with a valuable set of prizes.

For example, we were pleased to be recognised by the Portuguese and Spanish Chamber of Commerce and Industry as the best Portuguese company operating in Spain, and shopping and leisure centre Luz del Tajo, in Toledo, was considered by the Spanish Shopping Centre Association to be the best in the country.

It was satisfying, too, that our Personæ Project, which aims to make us the shopping and leisure  centre  company  with  the  highest  standards  and  practices  of  health,  safety  and social  responsibility,  won  the  2006  ECO  award  in  the  ‘Corporate  Social  Responsibility  Internal Public' category. The 2006 presentation ceremony, which took place in São Paulo, was attended by the former Vice President of the United States, Al Gore.

Q - Is Sonae Sierra's international expansion strategy confined to the countries where the company already operates, or is it open to new markets?

A  -  We  have  always  stated  that  our  expansion  strategy  is  based  on  consolidating  our position  in  the  markets  where  we  already  operate,  seeking  to  achieve  a  leadership position, but we're not overlooking the possibility of entering new markets, if interesting opportunities arise.

This strategy remains valid, and at the moment we have 14 shopping and leisure centres in different stages of development in the several markets where we operate, which ensures a short-term significant growth of our portfolio.

We are currently operating in Portugal, Spain, Italy, Germany, Greece and Brazil, but we are  always  looking  for  new  opportunities,  namely  in  Central  Europe.  Nevertheless,  our study and  evaluation  process of new  markets is very  thorough, and  even though we're interested in increasing our geographic reach, we only move forward after making sure that the circumstances are favorable for ourselves and our investors.

Q - What are Sonae Sierra's long-term objectives?

A - Sonae Sierra's ambition is to become one of the leading companies in the shopping and leisure centre business. We have a long-term investment strategy, and we intend to be in one of the top three positions in the every market where we operate.

We are aware that we will only be able to reach those objectives in the future if we can consolidate our business in the present. It is my belief that if we continue to develop our know-how, maintaining high standards of innovation and professionalism in everything we do, we will reach all of our objectives.