earnings release 3q07

Unconsolidated and Consolidated

Quarterly Financial Information

BR Properties S.A.

September 30, 2007

with Special Review Report of Independent Auditors

BR PROPERTIES S.A.

UNCONSOLIDATED AND CONSOLIDATED QUARTERLY FINANCIAL

INFORMATION

September 30, 2007

Contents

Special Review Report of Independent Auditors ................................................................ 1

Quarterly Financial Information

Balance Sheets ..................................................................................................................... 2

Statements of Operations .................................................................................................... 4

Notes to the Quarterly Financial Information...................................................................... 5

Report Company’s Performance Consolidated ................................................................... 24

1

A free translation from Portuguese into English of Special Review Report of Independent Auditors on

quarterly financial information prepared in Brazilian currency in accordance with the accounting

practices adopted in Brazil .

SPECIAL REVIEW REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders of

BR Properties S.A.

1. We have performed a special review of the accompanying unconsolidated and consolidated

Quarterly Information of BR Properties S.A. and BR Properties S.A. and its subsidiaries (“the

Company”) for the three and nine-month periods ended September 30, 2007, including, the

balance sheet, statements of operations, report on Company’s Performance and relevant

information, prepared in accordance with the accounting practices adopted in Brazil.

2. Our review was conducted in accordance with specific procedures determined by the Brazilian

Institute of Independent Auditors (IBRACON) in conjunction with the Brazilian Federal

Accounting Council (CFC), and consisted principally of: (a) inquiries of and discussions with

management responsible for the accounting, financial and operational areas of the Company and

its subsidiaries in respect to the main criteria adopted for preparing the Quarterly Information;

and (b) review of information and subsequent events which have, or could have, significant

effects on the financial position and operations of the Company.

3. Based on our special review, we are not aware of any material modification that should be made

to the Quarterly Information referred to above for it to comply with the accounting practices

adopted in Brazil, consistently with specific standards established by the Brazilian Securities

Commission (CVM), and specifically applicable to the preparation of the Quarterly

Information.

São Paulo, November 9, 2007

ERNST & YOUNG

Auditores Independentes S.S.

CRC-2SP015199/O-6

Antonio Humberto Barros dos Santos

Accountant CRC-1SP161745/O-3

2

A free translation from Portuguese into English of quarterly financial information prepared in

Brazilian currency in accordance with the accounting practices adopted in Brazil.

BR PROPERTIES S.A.

BALANCE SHEETS

September 30, 2007 and June 30, 2007

(In thousands of reais)

Parent Company Consolidated

September 30,

2007

June 30,

2007

September 30,

2007

June 30,

2007

Assets

Current assets

Cash and banks (Note 4) 698 25,842 5,795 25,852

Short-term investments (Note 4) 50,628 52,656 59,358 52,746

Rental receivable - - 4,830 638

Advances (Note 6) 608 5,500 3,284 5,500

Recoverable taxes (Note 7) 1,561 537 1,606 544

Deferred income and social contribution

taxes (Note 12)

54

54

54

54

Prepaid expenses 18 26 358 26

Other accounts receivable 90 18 423 177

53,657 84,633 75,708 85,537

Noncurrent assets

Deferred income and social contribution

taxes (Note 12)

187

201

187

201

187 201 187 201

Permanent assets

Investments (Note 6) 226,915 21,233 - -

Goodwill 12,222 - 13,628 -

Property and equipment (Note 9) 499 467 581,951 83,876

239,636 21,700 595,579 83,876

Total assets 293,480 106,534 671,474 169,614

3


September 30,

2007

June 30,

2007

September 30,

2007

June 30,

2007

Liabilities and shareholders’ equity

Current liabilities

Loans and financing (Note 10) - - 37,276 6,369

Trade accounts payable 251 16 630 16

Salaries and social charges payable 217 103 312 103

Taxes payable 88 62 757 83

Provision for income and social

contribution taxes

-

112

79

112

Payables for acquisition of real estate

(Note 11) - - 9,081 -

Other accounts payable 1,289 78 956 78

1,932 371 49,091 6,761

Noncurrent liabilities

Loans and financing (Note 10) - - 330,835 56,690

- - 330,835 56,690

Shareholders’ equity

Capital:

Subscribed capital (Note 14) 300,921 203,745 300,921 203,745

Unpaid capital - (97,140) - (97,140)

300,921 106,605 300,921 106,605

Accumulated losses (9,373) (442) (9,373) (442)

291,548 106,163 291,548 106,163

Total liabilities and shareholders’ equity 293,480 106,534 671,474 169,614

See accompanying notes.

4

BR PROPERTIES S.A.

STATEMENTS OF OPERATIONS

Three and nine-month periods ended September 30, 2007



Three months

period ended

September 30,

2007

Nine months

period ended

September 30,

2007

Three months

period ended

September 30,

2007

Nine months

period ended

September 30,

2007

Gross Revenues:

Rental - - 8,340 9,388

Services rendered 35 35 35 35

Taxes on revenues (5) (5) (1,268) (1,365)

Net revenue from rental 30 30 7,107 8,058

Cost of rental - - (3,349) (3,851)

Gross profit 30 30 3,758 4,207

Operating income (expenses)

General and administrative expenses (2,435) (4,836)) (2,429) (5,116)

Financial income 1,928 4,680 2,006 4,744

Financial expenses (1,115) (1,369) (12,411) (13,330)

Equity pick-up in subsidiaries (7,617) (8,119) - -

Operating and pretax loss (9,209) (9,614) (9,076) (9,495)

Non operating income - - - 14

Income and social contribution

taxes (Note 9)

223

241

108

108

Loss for the period (8,986) (9,373) (8,968) (9,373)

See accompanying notes.

5

BR PROPERTIES S.A.

NOTES TO THE QUARTERLY FINANCIAL INFORMATION

September 30, 2007


1. Operations

The Company was incorporated on May 26, 2004 as Itarema Participações S.A. On

December 22, 2006, its corporate name was changed to BR Properties S.A. (“BR

Properties” or the “Company”).

On December 22, 2006, the Company received contributions from the shareholders,

including the new shareholders, amounting to R$ 53,000. The major new shareholders

were Private Equity Partners LLC, Reic Brasil Holding LLC, Castlerigg Latin

American Investments LLC, Peter L. Malkin Family 2000 LLC, Talisman Special

Purpose Fund Ltd, Tudor Proprietary Trading LLC and Tudor Brazil Investments LLC.

The shareholders established the Company’s business plan and resolved that it would

operate as a holding, mainly engaged in the acquisition, management, leasing and sale

of commercial buildings in Brazil, especially commercial buildings and office space,

retail stores and warehouses, provided that they are existing or built to suit assets and

the subject matter of lease agreements already entered into.

The Company began its operations in April 2007, by establishing Specific Purpose

Companies (SPC) to acquire properties and have them rented under commercial lease

agreements.

By September 30, 2007, the Company had invested R$587,505 in the acquisition of the

following properties:

On April 16, 2007, the Company through its subsidiary BRPR I Empreendimentos e

Participações Ltda., acquired a building (Edf. Bonfiglioli) located at Rua Dr. Renato

Paes de Barros, nº 33, in the City of São Paulo, State of São Paulo.

On May 25, 2007, the Company through its subsidiary BRPR II Empreendimentos e

Participações Ltda., acquired a building (Edf. Plaza Centenário) located at Av. João

Gualberto, nº 717, in the city of Curitiba, State of Paraná.

On May 29, 2007, the Company through its subsidiary BRPR II Empreendimentos e

Participações Ltda., acquired a building (Condomínio Panamérica Park) located at Av.

Guido Caloi, nº 1000, Blocos 2, 3, 5 and 6, in the city of São Paulo, State of São Paulo.

On July 17, 2007, the Company through its subsidiary BRPR III Empreendimentos e

Participações Ltda., acquired a building (Centro Empresarial Cinelândia) located in

Praça Floriano, in the downtown area of the city of Rio de Janeiro.

BR PROPERTIES S.A.

6

NOTES TO THE QUARTERLY FINANCIAL INFORMATION (Continued)

September 30, 2007


1. Operations - - continued

On July 31, 2007, the Company through its subsidiary BRPR I Empreendimentos e

Participações Ltda. acquired a portfolio of commercial buildings including an office

building, four industrial warehouses and an auto mall (Auto Shopping Piraporinha).

The office building is located in Barueri, Alphaville district, with a gross leasable area

of 8,424 m2. The portflio further includes four industrial warehouses, which altogether

have a gross leasable area of 122,380 m2. Auto Shopping Piraporinha comprises

several car stores rented to different individual tenants and is located in São Bernardo

do Campo, a gross leasable area of 5,600 m2.

On August 2, 2007, the Company through its subsidiary BRPR III Empreendimentos e

Participações Ltda. acquired the building Edifício Generali located on Rua Bráulio

Gomes, in the city of São Paulo. This building is rented to Banco Santander, Telesp

Celular and Amil Assistência Média.

On August 27, 2007, the Company through its subsidiary BRPR III Empreendimentos

e Participações Ltda. acquired two floors of the building Edifício Bolsa de Valores do

Rio de Janeiro, a gross leasable area of 3,190 m², being located in the city of Rio de

Janeiro.

On August 31, 2007, the Company through its subsidiary BRPR IV Empreendimentos

e Participações Ltda. acquired ten commercial buildings located in the city of São

Paulo.

On September 3, 2007, the Company through its subsidiary BRPR IV

Empreendimentos e Participações Ltda. acquired the Celebration building located at

Rua Casa do Ator, 1155 – Vila Olimpia, in the city of São Paulo, State of São Paulo.

On September 3, 2007, the Company through its subsidiary BRPR IX

Empreendimentos e Participações Ltda. acquired the Icomap III building, located at

Avenida Marechal Floriano, 99 in the downtown area of the city of Rio de Janeiro,

state of Rio de Janeiro.


Empreendimentos e Participações Ltda. acquired the Athenas building, located at Rua

Dr. Fernandes Coelho, 64 - Pinheiros, in the city of São Paulo, state of São Paulo.

7

BR PROPERTIES S.A.


September 30, 2007


1. Operations - - continued

On September 28, 2007, the Company through its subsidiary BRPR VII

Empreendimentos e Participações Ltda. acquired the Avaya building, located at Rua

Verbo Divino, 1227 – Chácara Sto. Antonio, in the city of São Paulo, state of São

Paulo, and the Presidente Vargas building, located at Av Presidente Vargas, 824 and

844, in the downtown area of the city of Rio de Janeiro, state of Rio de Janeiro.

These properties have been leased for terms ranging from 4 to 8 years, and are

renewable for identical periods.

2. Basis of Preparation and Presentation of the Quarterly Financial Information

The quarterly financial information was prepared based on the accounting practices

adopted in Brazil and the accounting guidance provided by the Brazilian Corporation

Law and the rules and accounting procedures established by the Brazilian Securities

Commission (CVM).

The preparation of the quarterly financial information involves the use of accounting

estimates. Such estimates were based on objective and subjective aspects considering

management’s judgment to determine the adequate amount to be recorded in the

quarterly financial information. Significant items subject to these estimates and

assumptions include selection of useful lives and recoverability of property and

equipment and measurement of financial instruments and other assets and liabilities at

the date of the quarterly financial information.

Settlement of transactions involving these estimates may result in amounts

significantly different from those recorded in the quarterly financial information due to

the uncertainties related to the estimate process.

Income and social contribution taxes were computed based on applicable legislation at

the balance sheet date.

Assets and liabilities are classified as current whenever their realization or settlement is

likely to occur within the following twelve months. Otherwise they are classified as

noncurrent.

8

BR PROPERTIES S.A.


September 30, 2007


2. Basis of Preparation and Presentation of the Quarterly Financial Information - -

continued

The consolidated financial statements include operations of the Company and the

following subsidiaries, in which its ownership interest at September 30, 2007 is as

follows:

The fiscal year of subsidiaries included in consolidation is the same as that of the

Company, also accounting policies were consistently applied by the consolidated

companies.

The main consolidation procedures are:

- Elimination of the balance of intercompany assets and liabilities;

- Elimination of participation in capital, reserves and retained earnings of

consolidated companies;

- Elimination of the balances of revenues and expenses resulting from intercompany

transactions.

Direct

Ownership

Interest

Consolidation

Criterion

BRPR I Empreendimentos e Participações Ltda. 99.99% Integral

BRPR II Empreendimentos e Participações Ltda. 99.99% Integral

BRPR III Empreendimentos e Participações Ltda. 99.99% Integral

BRPR IV Empreendimentos e Participações Ltda. 99.99% Integral

BRPR V Empreendimentos e Participações Ltda. 99.99% Integral

BRPR A Administradora de Ativos Imobiliários Ltda. 99.99% Integral

BRPR VII Empreendimentos e Participações Ltda. 99.99% Integral

BRPR VIII Empreendimentos e Participações Ltda. 99.99% Integral

BRPR IX Empreendimentos e Participações Ltda. 99.99% Integral

9

BR PROPERTIES S.A.


September 30, 2007


3. Summary of Significant Accounting Practices

a) Determination of profit and loss: Revenues and expenses are recorded on the

accrual basis. Revenue is not recognized if there is significant uncertainty about

realization thereof.

b) Cash and cash equivalents: Include bank account balances and short-term

investments redeemable within 90 days from the balance sheet date. These are

stated at acquisition cost plus income earned to the balance sheet date.

c) Investments: Investments in subsidiaries are stated by the equity method.

d) Property and equipment: These are recorded at acquisition cost less accumulated

depreciation. Depreciation is calculated by the straight-line method at rates

mentioned in Note 9.

e) Goodwill: Goodwill on the acquisition of investments is based on expected future

profitability and is being amortized based on projected net income curve of each

such investment prepared by management, over a period no longer than 10 years.

The Company reviews projected future results and goodwill for any impairment

indicated every year.

f) Liabilities: Liabilities are recognized in the balance sheet when the Company has a

legal or constructive obligation arising from past events, the settlement of which is

expected to result in a cash outflow. Due to uncertainty with respect to the timing

and amount of the cash outflow required for settlement, certain liabilities are

estimated as incurred and recorded as a provision. Provisions are recorded

reflecting the best estimates of the risk involved.

g) Loans and financing: Loans and financings are subject to monetary variations and

include respective charges to the quarterly information date.

10

BR PROPERTIES S.A.


September 30, 2007


3. Summary of Significant Accounting Practices - - continued

h) Taxation: Revenues from the lease of real estate are subject to the following taxes

and mandatory contributions at the following statutory tax rates:

Taxes and mandatory contributions Abbreviation Statutory tax rates

Social Contribution Tax on Gross Revenue for Social

Integration Program

PIS

1.65%

Social Contribution Tax on Gross Revenue for Social

Security Financing

COFINS

7.6%

These charges are shown as deductions from revenues from the lease of real estate

in the statement of operations. Non-cumulative Pis/Cofins credits are stated

deducting cost of leased properties and services rendered in the statement of

operations.

Income taxes comprise both income and social contribution taxes.

Income tax is calculated at a rate of 15%, plus a surtax of 10% on taxable income

exceeding R$ 240 over 12 months, whereas social contribution tax is computed at

a rate of 9% on taxable income, both recognized on an accrual basis; therefore

additions to book income deriving from temporarily non-deductible expenses or

exclusions from temporarily non-taxable income upon determination of current

taxable income generate deferred tax assets or liabilities.

4. Cash and Cash Equivalents


09/30/2007 06/30/2007 09/30/2007 06/30/2007

Cash and banks 698 25,842 5,795 25,852

Short-term investments – Debentures (a) 50,628 52,656 59,358 52,746

51,326 78,498 65,153 78,598

(a) These mainly refer to highly-liquid investments (debentures) with major banks, which are

remunerated at rates between 100.3% and 101% of Interbank Deposit Certificate (CDI).

11

BR PROPERTIES S.A.


September 30, 2007


5. Rental Receivable

Consolidated

09/30/2007

Rental receivable 4,692

Condominium quotas 138

4,830

At September 30, 2007, there were no amounts overdue in the balance of lease

receivable. Lease is usually received until the 10th

business day of the month following

that to which it refers. Company management does not expect losses on the realization

of accounts receivable at balance sheet date, reason why no allowance for doubtful

accounts has been recorded.

6. Advances

At September 30, 2007, the balance of R$ 3,284 (consolidated) is represented by

advances made by the Company to forwarders for the payment of taxes and expenses

related to the properties acquired.

7. Recoverable Taxes


09/30/2007 06/30/2007 09/30/2007 06/30/2007

Income and social contribution tax

prepayments

1,462

537

1,506

536

PIS recoverable 18 - 18 2

COFINS recoverable 81 - 81 6

Withholding income tax - - 1 -

1,561 537 1,606 544

12

BR PROPERTIES S.A.


September 30, 2007


8. Investments

a) Information on subsidiaries at September 30, 2007:

Investments in subsidiaries stated by the equity method were determined in

accordance with the balance sheets at September 30, 2007.

Parent Company

Companies

In Thousands

of Shares

/Units of

Interest

Capital

Sharehold

ers’Equity

Net

income

(loss) for

the

period

Investmen

t book

value

Equity

Pickup

BRPR I Empreendimentos e Participações Ltda. 98,741,498 98,741 93,695 (5,047) 93,695 (5,047)

BRPR II Empreendimentos e Participações Ltda. 33,016,000 18,970 18,506 (464) 18,506 (464)

BRPR III Empreendimentos e Participações Ltda. 23,785,000 23,785 23,011 (774) 23,011 (774)

BRPR IV Empreendimentos e Participações Ltda. 66,663,997 66,167 64,735 (1,431) 64,735 (1,431)

BRPR V Empreendimentos e Participações Ltda. 1,000 1 (1) (1) (1) (1)

BRPR VII Empreendimentos e Participações

Ltda. 21,994,399 21,994 21,578 (415) 21,579 (415)

BRPR VIII Empreendimentos e Participações

Ltda. 1000 - (1) (1) (1) (1)

BRPR IX Empreendimentos e Participações Ltda. 5,583,771 5,584 5,391 14 5,391 14

226,915 (8,119)

Company’s interest in subsidiaries is described in Note 2.

13

BR PROPERTIES S.A.


September 30, 2007


8. Investments - - continued

b) Information on the main asset, liability and profit & loss items for subsidiaries at

September 30, 2007:

Assets Liabilities

Current

Non-

current

Permanent

Total

Current

Non-

current

Equity

Total

BRPR I Empreendimentos e Participações Ltda. 13,142 1,407 258,423 272,972 24,836 154,441 93,695 272,972

BRPR II Empreendimentos e Participações Ltda. 909 - 68,659 69,568 5,312 45,750 18,506 69,568

BRPR III Empreendimentos e Participações Ltda. 4,505 - 72,086 76,591 7,682 45,898 23,011 76,591 BRPR IV Empreendimentos e Participações Ltda. 2,797 - 129,305 132,102 6,875 60,492 64,735 132,102

BRPR V Empreendimentos e Participações Ltda. 1 - - 1 2 - (1) 1

BRPR VII Empreendimentos e Participações Ltda. 1,027 - 47,624 48,651 2,819 24,254 21,578 48,651 BRPR VIII Empreendimentos e Participações

Ltda. - - - - 1 - (1) -

BRPR IX Empreendimentos e Participações Ltda. 144 - 5,,354 5,498 107 - 5,391 5,498

Profit &Loss

Net

revenues

Cost

Operating

expenses

Income and

social

contribution

taxes

Net income

(loss) for

the period

BRPR I Empreendimentos e Participações Ltda. 3,563 (1,863) (6,619) (128) (5,047)

BRPR II Empreendimentos e Participações Ltda. 2,400 (936) (1,928) - (464)

BRPR III Empreendimentos e Participações Ltda. 1,253 (651) (1,375) - (774)

BRPR IV Empreendimentos e Participações

Ltda. 752 (444) (1,739) - (1,431) BRPR V Empreendimentos e Participações Ltda. - - (1) - (1)

BRPR VII Empreendimentos e Participações

Ltda. - (19) (396) - (415) BRPR VIII Empreendimentos e Participações

Ltda. - - (1) - (1) BRPR IX Empreendimentos e Participações

Ltda. 59 (38) (2) (5) 14

14

BR PROPERTIES S.A.


September 30, 2007


8. Investments - - continued

c) Goodwill

Consolidated

Goodwill on

acquisition

DVR V Empr. Imob. Ltda acquired in July 2007 1,407

ICOMAP Ind.Com Ltda acquired in September 2007 12,221

13,628

Goodwill amortization will be in proportion to projected net income curves

prepared by management for each company acquired, as under:

DVR V ICOMAP

2010 1% 4%

2011 3% 4%

2012 4% 6%

2013 7% 8%

From 2014 to 2017 85% 78%

100% 100%

Based on projected discounted cash flow for each company, Company management

did not identify any evidence of impairment of goodwill recorded at September 30,

2007.

15

BR PROPERTIES S.A.


September 30, 2007


9. Property and Equipment

Parent Company

09/302007 06/30/2007

Average annual

depreciation rate

Cost

Accumulated

Depreciation

Net

Net

Facilities 10% 86 (3) 83 73

Furniture and fixtures 10% 205 (8) 197 191

Data processing equipment 20% 241 (22) 219 203

532 (33) 499 467

Consolidated

09/30/2007 06/30/2007

Average annual

depreciation rate

Cost

Accumulated

Depreciation

Net

Net

Land - 111,514 - 111,515 -

Buildings * 475,458 (5,521) 469,937 83,409

Facilities 10% 86 (3) 83 73

Furniture and fixtures 10% 205 (8) 197 191

Data processing equipment 20% 241 (22) 219 203

587,504 (5,554) 581,951 83,876

* Depreciation is calculated considering the period in which properties are expected to be used by the

Company, for periods ranging from 13 to 25 years.

16

BR PROPERTIES S.A.


September 30, 2007


10. Loans and Financing

Consolidated Consolidated

Purpose

Financial

Charges

Maturity

09/30/2007

06/30/2007

Acquisition - Condomínio Edifício

Bonfliglioli

IGPM

(General Market

Price Index)

+8.8436% p.a.

4/17/2017 11,808 11,836

Acquisition - Condomínio Panamérica Park

and Edifício Plaza Centenário TR+9.90% p.a. 5/25/2017 50,983 51,223

Aquisition of Condomínio Edifício Glória

(RJ), at Avenida Piraporinha TR+9.90% p.a. 8/17/2017 146,563 -

Acquisition of 2 warehouses in Jandira

CDI+1.278102%

p.a. 8/17/2017 38,048 -

Acquisition of Edifício Generalli(SP) and

Edifício Glória TR+9.90% p.a. 8/17/2017 26,453 -

Acquisition of offices in Edifício Paulista

Park, Edifício Berrini, Condomínio

Edifício Isabella Plaza, 3rd. floor of

Edifício Olimpic Tower, Edifício Joaquim

Floriano, Condomínio Edifício Midas,

Edifício Number One and office no. 31 in

Edifício Network Empresarial, Edifício

Athenas, Edifício Celebration and Paulista

Plaza

TR+10.15% p.a.

8/17/2017 67,282 -

Buildings IBM Vargas and Avaya T

R TR+10.15%p.a. 9/18/2007 26,974 -

Portion maturing over the next 12 months (37,276) (6,369)

Noncurrent liabilities 330,835 56,690

Properties acquired were used as a security (mortgage) for the repayment of the loans

from Banco Itaú BBA. In addition lien on units of interest of subsidiaries raising loans

was also provided as guarantee, as well as fiduciary assignment of credit rights from

lease agreements entered into with tenants.

17

BR PROPERTIES S.A.


September 30, 2007


10. Loans and Financing - - continued

Long-term loans and financing mature as follows:

2008 20,076

2009 42,161

2010 38,985

2011 35,694

2012 to 2017 193,919

330,835

11. Liabilities for the Acquisition of Properties

At September 30, 2007, the balance of R$9,081 corresponds to amounts payable in

connection with the acquisition of commercial buildings, as under:

Consolidated

2007

Icomap 1,289

Industrial building in Jundiaí 3,000

Warehouse in Alphaville 1,050

Edifício Glória 2,001

Warehouse in Jandira 1,740

9,081

18

BR PROPERTIES S.A.


September 30, 2007


12. Income and Social Contribution Taxes

a) Reconciliation of income and social contribution tax expense in the statement of

operations for the period is set out below:


Nine-month period

ended 9/30/2007

Nine-month

period ended

9/30/2007

Income (loss) before income and social contribution

taxes (9,614) (9,482)

Exclusion of result from equity pickup 8,119 -

Calculation base (1,495) (9,482)

Income and social contribution tax credit at combined

statutory rate of 34% 508 3,224

Unrecorded tax credit (280) (3,129)

Permanent differences 13 13

Income and social contribution tax credit in the statement

of operations 241 108

At September 30, 2007, the subsidiaries recorded income and social losses

amounting to R$8,119. The Company did not establish any deferred income tax

assets in this amount, since there is not expectation of profitability from subsidiaries

since their operation began in April 2007.

b) Breakdown of deferred income and social contribution tax assets:

Parent Company and Consolidated

9/30/2007 6/30/2007

Temporary differences:

Deferred pre-operating expenses 241 255

Current portion (54) (54)

Noncurrent portion 187 201

19

BR PROPERTIES S.A.


September 30, 2007


13. Contingencies

Considering the period covering operations concerned (as from April 2007), the

Company is not a party in judicial actions of any nature.

14. Shareholders’ Equity

a) Capital

On December 22, 2006, a capital increase was approved in the amount of

R$ 53,960, which was paid-up on January 8, 2007.

On April 16, 2007, a capital increase was approved and paid-up in the amount of

R$ 1,080, with the issue of 500,000 common shares at the issue price of R$ 2.15.

On May 10, 2007, a capital increase was approved in the amount of R$ 51,566 by

means of private subscription of shares. Relevant contribution took place on May

31, 2007.

On June 19, 2007, the Board of Directors approved a capital increase in the amount

of R$ 97,140. Relevant contribution took place on July 19, 2007.

On July 27, 2007, the Board of Directors approved a capital increase in the amount

of R$ 97,175. Relevant contribution took place in August 2007.

At September 30, 2007, subscribed capital amounting to R$ 300,921 comprises

139,569,346 common registered shares with no par value. Of total subscribed

capital, R$ 295,020 relates to shares held by foreign shareholders.

At September 30, 2007, authorized capital limit is of 200,000,000 common shares.

20

BR PROPERTIES S.A.


September 30, 2007


14. Shareholders’ Equity - - continued

b) Subscription warrants

As approved by the Extraordinary General Meeting of December 22, 2006, the

General and Extraordinary Meetings of April 16, 2007, Board of Directors Meeting

of May 10, 2007, Board of Directors Meeting of June 19, 2007 and the

Extraordinary General Meeting of July 27, 2007, subscription warrants were issued,

with no issue price. The subscription warrants grant to shareholder GP Investments,

Ltd. the right to subscribe 13,956,935 common shares, equivalent to 10% of the

shares issued by the Company, as under:

Warrant Issue Date Quantity of Shares

12/22/2006 2,500,000

04/16/2007 50,000

05/10/2007 2,389,091

06/19/2007 4,500,527

07/27/2007 4,517,317

Total 13,956,935

Subscription warrants subscriber may exercise them at any moment as from their

date of issue. The warrants may be freely transferred by GP Investments, Ltd. to any

other company that is directly or indirectly a subsidiary, controlling company or

under the same control as that of GP Investments, Ltd.

The issue price for subscription warrants, if exercised by subscriber, will correspond

to the equivalent in national currency of US$ 1,00 (one US dollar) per share. The

issue price shall be restated by Libor for six-month deposits, as from warrant issue

date through to the warrant exercise date.

21

BR PROPERTIES S.A.


September 30, 2007


14. Shareholders’ Equity - - continued

c) Stock option plan

According to the General and Extraordinary Meetings held on April 16, 2007, the

stock option plan is managed by the Board of Directors, which at its discretion may

periodically grant stock options to employees under approved stock purchase plans.

Stock options may be granted until the limit of 10% of Company capital. The terms

and conditions of each stock option program are also defined by the Board of

Directors.

On July 17, 2007 and August 31, 2007, the first and second Stock Option Plans

were approved, respectively for 2007, providing for the number of options granted,

price and other conditions for the exercise of the corresponding options. These plans

did no benefit any Board of Directors members or employees but only Company

Executive Board members.

15. Financial Income (Expenses)

2007


Financial income:

Short-term investments 4,680 4,744

4,680 4,744

Financial expenses:

Interest and charges on loans (56) (7,028)

IOF - (4,116)

CPMF (1,313) (2,186)

Other

(1,369) (13,330)

In the first quarter of 2007, the Company earned financial income amounting to

R$ 1,400, which was partially used (R$ 788) to offset pre-operating expenses incurred

through March 31, 2007 and recorded under deferred charges. The remaining R$ 612

was posted directly to income, as established in CVM Guidance Opinion No. 17 of

February 15, 1989, because it was considered as a recurring realized gain and therefore

not attributable to the implementation of the operational phase.

22

BR PROPERTIES S.A.


September 30, 2007


16. Financial Instruments and Risk Management

The Company and its subsidiaries engage in transactions involving financial

instruments with a view to financing its own activities or invest available funds.

Management of such instruments and related risks is performed through defining

conservative strategies aiming at liquidity, profitability and reliance.

The Company minimizes its exposure to credit risk by making short-term investments

with world-class institutions.

Credit risk is minimized since lease agreements are entered into with major customers.

At September 30, 2007, there was no significant concentration of credit risk with

customers.

The Company and its subsidiaries have no significant debts, liabilities or costs

denominated in foreign currency.

The Company has not engaged in financial transactions involving derivatives during

the period ended September 30, 2007. Management understands that the book value of

financial instruments at the balance sheet date comprises substantially short-term

investments (Note 4) and loans and financing (Note 16), which approximate estimated

market value.

The main financial risks are as follows:

Interest rate risk

The Company’s revenues and expenses are affected by changes in interest rates

because of the impact of such changes on interest expenses in connection with

instruments of indebtedness with variable rates and interest income on cash and short-

term investment balances.

Liquidity risk

Liquidity risk management is performed based on the Company’s cash flow, by

maintaining a robust capital structure and a low leverage level. Additionally, any

mismatching between assets and liabilities is consistently monitored.

23

BR PROPERTIES S.A.


September 30, 2007


17. Insurance Coverage (unreviewed)

At September 30, 2007, insurance retained by lessees is considered to be sufficient by

Company management to cover any losses.

BR PROPERTIES S.A.

REPORT ON COMPANY’S PERFORMANCE (CONSOLIDATED)

24

(Unaudited)

In the 3rd

quarter of 2007, BR Properties S/A acquired the following properties:


Participações Ltda. acquired the building Business Park Jundiai located at Rua Kanebo,

175 –Distrito Industrial, in the city of Jundiai, state of São Paulo.


Participações Ltda. acquired the building Edifício Visanet located at Alameda Grajau,

159/189/219 –Alphaville, in the city of Barueri, state of São Paulo (SP).


Participações Ltda. acquired a warehouse located at Rua Portugal, 40, in the city of

Itapevi, state of São Paulo (SP).


Participações Ltda. acquired a warehouse at Estrada Piraporinha, 1280, in the city of

São Bernardo do Campo, state of São Paulo (SP).

On July 17, 2007, the Company through its subsidiary BRPR III Empreendimentos e

Participações Ltda. acquired the Gloria building located at Praça Floriano, 31 –

Cinelândia, in the city of Rio de Janeiro, state of Rio de Janeiro.


Participações Ltda. acquired the Generali building located at Rua Braulio Gomes, 36-

downtown area, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired the Rio de Janeiro Stock Exchange building, located at

Praça XV de Novembro, 20, in the city of Rio de Janeiro, state of Rio de Janeiro.


Empreendimentos e Participações Ltda. acquired the Athenas building, located at Rua

Dr. Fernandes Coelho, 64 - Pinheiros, in the city of São Paulo, state of São Paulo.


Empreendimentos e Participações Ltda. acquired the Celebration building, located at

Rua Casa do Ator, 1155 – Vila Olímpia, in the city of São Paulo, state of São Paulo.

BR PROPERTIES S.A.

REPORT ON COMPANY’S PERFORMANCE (CONSOLIDATED) (Continued)

(Unaudited)

25

On August 31, 2007, the Company through its subsidiary BRPR IV Empreendimentos e

Participações Ltda. acquired interest in the Olimpic Tower building, located at Rua Dr.

Cardoso de Mello, 1450 – Vila Olímpia, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Berrini 1681 building, located at Av. Eng. Luiz

Carlos Berrini, 1681, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in George V Residence building, located at Praça

Roque Pinto, 9 Alto de Pinheiros, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Isabella Plaza building, located at Av. Pres.

Juscelino Kubistchek, 28 – Itaim Bibi, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Joaquim Floriano building, located at Rua

Joaquim Floriano, 913 – Itaim Bibi, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Midas building, located at Alameda Vicente

Pinzon, 173 – Vila Olímpia, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Network Empresarial building, located at Rua

Dr. Cardoso de Mello, 1340 - Vila Olímpia, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Number One building, located at Alameda

Vicente Pinzon, 144 – Vila Olímpia, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Paulista Park building, located at Rua Paraíso,

41 – Paraíso, in the city of São Paulo, state of São Paulo.


Participações Ltda. acquired interest in Paulista Plaza building, located at Rua Paraíso,

148 – Vila Mariana, in the city of São Paulo, state of São Paulo.

BR PROPERTIES S.A.

REPORT ON COMPANY’S PERFORMANCE (CONSOLIDATED) (Continued)

(Unaudited)

On September 28, 2007, the Company through its subsidiary BRPR VI

Empreendimentos e Participações Ltda. acquired the industrial property Business Park

26

Jandira, located at João de Goes Road, 2300, in the city of Jandira, state of São Paulo.


Empreendimentos e Participações Ltda. acquired the Avaya building, located at Rua

Verbo Divino, 1227 – Chac. Sto Antonio, in the city of São Paulo, state of São Paulo.


Empreendimentos e Participações Ltda. acquired the Presidente Vargas building,

located at Av. Presidente Vargas, 844, in the city of Rio de Janeiro, state of Rio de

Janeiro.

On September 3, 2007, the Company through its subsidiary BRPR IX

Empreendimentos e Participações Ltda. acquired the Icomap III building, located at

Rua Marechal Floriano, 99 – downtown area, in the city of Rio de Janeiro, state of Rio

de Janeiro.

The properties acquired in the quarter generated accumulated gross revenue of R$ 5,930

thousand. Gross revenue in the quarter from the portfolio of properties amounted to R$

8,375 thousand, and year-to-date gross revenue of R$ 9,423 thousand.

In the quarter BR Properties S/A posted net loss of R$ 9,373 thousand, mainly due to

the recording of Tax on Financial Operations (IOF) and Tax on Financial Movement

(CPMF) totaling R$ 5,642 thousand on loans raised to acquire the aforementioned

properties, which do not represent recurrent cost.

earnings release 3q07

Documents

b review of information

financing note

relevant information

advances note

shareholders of br properties

subscribed capital note

accounting practices

financial position