3 q10 results presentation

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3 q10 results presentation

  1. 1. 3Q10 Earnings Release PresentationNovember 11th, 2010BRProperties
  2. 2. BRProperties 3Q10Highlights2FinancialHighlightsOperatingHighlights With the acquisition of 41% of Ventura Corporate Towers II, we completed 84% of the acquisitiongoal proposed in the capital budget after the Company’s IPO and a record R$ 1.5 billion in 2010 At the end of 3Q10, our portfolio had 1,014,636 sqm of gross leasable area (GLA), a 139%increase compared to the same period of last year The Company concluded a perpetual bond issuance, in the amount of US$ 200 million, offered toqualified institutional investors. The bond has a call option at par after the 5th year, and will pay 9%interest a year. The bond proceeds will be mainly utilized for new acquisitions During 3Q10, we raised approximately R$ 238 million in real estate long term financing linked toTR; this type of credit represents 78% of the total Company debt, excluding the perpetual bondproceeds In 3Q10, our property management revenues increased 72% over 3Q09 3Q10 gross revenues increased 91% compared to 3Q09, totaling R$ 58.5 million Adjusted EBITDA, excluding stock option plan expenses and bonus provision, of R$ 45.4 million atthe end of 3Q10, an increase of 101% over 3Q09 In 3Q10 and 9M10, we estimated a pro-forma adjusted EBITDA of R$ 49.0 million and R$ 162.4million, with 85% and 88% margin, respectively. Excluding vacancy expenses, the margins wouldrise to 93% and 92% in 3Q10 and 9M10, respectively Net income of R$ 10.4 million, a 67% increase over 3Q09 and consolidated FFO of R$ 17.9 millionwith a 33% FFO margin
  3. 3. BRProperties 3Q10Recent Acquisitions3 In August 2010, we acquired - together with Banco BTGPactual - 82% of one of the towers which make up theVentura Corporate Towers, a Triple A office complex, for R$680 million The acquisition was done through the real estateinvestment fund Ventura II-A Fundo de InvestimentoImobiliário-FII, which will be managed by BR Properties It is the best and largest office building in Rio de Janeiro,located in the downtown region of the city, one of thehighest valued corporate regions in the country, with ampleaccess to public transportation and close to the city’s majorairport. With the acquisition, BR Properties portfolio reached over1 million sqm of GLA, of which approximately 108 thousandsqm is located in the downtown region of Rio de Janeiro.Ventura Corporate Towers II Type: Office AAA GLA: 21,493 sqm % Owned: 41% Floors: 17 Capex: R$ 340 MM
  4. 4. BRProperties 3Q10PortfolioPortfolio Growth (GLA sqm)Portfolio Breakdown(% market value)Portfolio Breakdown(% GLA)458%38%1% 3%Office Industrial Other Development27%72%1%Office Industrial Other993.1431.014.63621.4932Q10 Acquisition Ventura Towers 3Q10
  5. 5. BRProperties 3Q10 BR Properties has already invested R$ 1.2 billion, or 84%, of the total acquisition value outlined in thecapital budget after IPO It is also important to mention that we are currently 25% above the acquisition goal established for 2010AcquisitionsAcquisition CAPEX Schedule Post IPO Post IPO Acquisitions51.212mar/10 apr/10 may/10 jun/10 jul/10 aug/10 sep/10 oct/10 nov/10 dec/10Capital BudgetActual1.4529681.212mar/10 apr/10 may/10 jun/10 jul/10 aug/10 sep/10Capital BudgetActual+25%
  6. 6. BRProperties 3Q10 Our financial vacancy was 12.3% in the period; Excluding CBOP - Jacarandá, Torre Nações Unidas, and VenturaTowers II, our financial vacancy would drop to 1.8%Operating HighlightsVacancy Breakdown Jacarandá Building: paid only 18% of the total acquisition value as a down payment, it is currently 55%leased and under lease up process of its vacant areas, at the responsibility of the seller TNU: in the final stage of its retrofit process, it is 55% leased, and we expect an upside in the rental price persqm in the leasing of the reminiscent area Ventura II: acquired in August 2010, it is currently 50% leased to BNDES and British GasVacancy per Property64,7%3,0%2,8%0,9%0,5%0,2% 0,2% 0,0%VenturaCastelo Branco Office ParkTNUPiraporinhaDP Louveira 9Plaza CentenárioRaja HillsNumber One6,6%5,2%1,8%10,4%12,3%1,8%2Q10 3Q10 3Q10 Ex CBOP, TNU &VenturaPhysicalFinancial
  7. 7. BRProperties 3Q107Operating HighlightsRenegotiations New Leases-4,2%13,6%-0,4%13,4%0,0%14,4%3,9%7,1%3Q09 3Q10 9M09 9M10OfficeIndustrial-3,7%6,6%1,8%7,7%-13,3%13,7%-12,3%13,6%3Q09 3Q10 9M09 9M10OfficeIndustrialLeasing Spread 3Q10 3Q09 var % 9M10 9M09 var %Leasing Spread (Renegotiations) - Office 13,6% -4,2% n/a 13,4% -0,4% n/aLeasing Spread (Renegotiations) - Warehouse 14,4% 0,0% n/a 7,1% 3,9% 82,5%Renegotiated Area - Office (sqm) 2.545 6.362 -60,0% 3.490 8.823 -60,4%Renegotiated Area - Warehouse (sqm) 1.107 1.612 -31,3% 17.899 4.964 260,6%Leasing Spread (New Leases) - Office 6,6% -3,7% n/a 7,7% 1,8% n/aLeasing Spread (New Leases) - Warehouse 13,7% -13,3% n/a 13,6% -12,3% n/aNew Leased Area - Office (sqm) 7.330 2.903 152,5% 24.955 12.584 98,3%New Leased Area - Warehouse (sqm) 19.752 9.054 118,2% 26.919 10.814 148,9%* Leasing spreads are net of inflation
  8. 8. BRProperties 3Q10% Revenues% GLA% GLA% RevenuesLease Contract 3 Year Market Alignment ScheduleLease Contract Expiration Schedule8Operating Highlights0% 6%8% 30%57%2010 2011 2012 2013 >20132%5%6%36%51%2010 2011 2012 2013 >201316%36%20%27%1%2010 2011 2012 2013 >201317%44%23%15%1%2010 2011 2012 2013 >2013
  9. 9. BRProperties 3Q10Managed Properties Property Management Revenues9Operating Highlights24293Q09 3Q10494.499894.2403T09 3T103Q09 3Q10
  10. 10. BRProperties 3Q10Net RevenuesNet Income FFO10Financial Highlights6.23110.43723.78341.5013Q09 3Q10 9M09 9M1067%74%10.29017.91836.07560.10537%33%42% 43%3Q09 3Q10 9M09 9M10FFO Margin74%67%27.61653.688 57.33686.886140.177183.6133Q09 3Q10 3Q10 Pro Forma 9M09 9M10 9M10 Pro Forma94%7%94%61%31%111%108%
  11. 11. BRProperties 3Q10Pro-Forma EstimatesAdditional Pro-forma Gross Revenues(non audited)Adjusted EBITDA(non audited)11153.897198.4924.346 500 2.8446.0356.8028.86315.2069M10 Actual BBP DPAraucáriaTNU Ed.JacarandáLouveira3-6Louveira8-9Ventura 9M10Pro-forma22.58045.356 49.004 53.08773.995118.995162.430 169.83182%84% 85%93%85% 85%88%92%3Q09 3Q10 3Q10ProForma3Q10Pro -Forma(ex -vacancy)9M09 9M10 9M10ProForma9M10Pro -Forma(ex -vacancy)AdjustedEBITDA Margin101%8%61%37%135%130%8%5%
  12. 12. BRProperties 3Q10DebtDebt Amortization ScheduleNet Debt 3Q10 Debt Index Breakdown 3Q10123621.42989093974 539ST Debt ObligationsforAcquisitionsLT Debt Total Debt Cash Net Debt245.15270.39488.875 84.998109.550 108.015120.282266.21486.26377.73244.75622.68410.5912010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022** includesdebt short term debt, which will be fully paid, utilizing the Company’s cash, by the end of 201078%3%20%TRIGPMCDI
  13. 13. BRProperties 3Q10Perpetual Bond13 In October 2010, the Company concluded a perpetual bond issuance, in the amount of US$ 200 million, offered toqualified institutional investors. The bond has a call option at par after the 5th year, and will pay 9% interest per year.Swap OperationWe signed contracts of foreign exchange hedge to mitigate our exposure to currency fluctuations,hedging the coupon to be paid for 5 years at local currency, linked to CDI fluctuations. Given that only the coupon will be hedged, potential volatility in the debt principal could emerge in real(R$) terms. The net effect on the Company’s cash flow, however, will be zero, since the bond has nomaturity date.Bond BRProperties BankUSDUSD 115,64% CDI> Maintain Companys strong growth > Lengthen Companys amortization schedule> Raise capital at lower costs than in the local market > Reduce the long-term average cost of debt> Alternative to real estate dedicated loans for long-term financingObjectives
  14. 14. BRProperties 3Q10Stock Performance14GP Investments14%Laugar S.A.5%Silverpeak4%Free Float77%* As of November 9th, 2010 Number of shares: 139,403,585 Market Value: R$ 2.4 billion Average Daily Vol. (30d): R$ 11.1 million33,46%4,53%-20%-10%0%10%20%30%mar-10 abr-10 mai-10 jun-10 jul-10 ago-10 set-10 out-10 nov-10BRPR3Ibovespa BR Properties current ownership structure is highly fragmented, with no controlling shareholder, no shareholdersagreement, and over 77% of its shares in free float
  15. 15. BRProperties 3Q10GlossaryEBITDA (Earnings Before Income, Tax, Depreciation and Amortization): a non accounting measure whichmeasures the Company’s capacity to generate operational revenues, without considering its capital structure.Measured by excluding the operational expenses from Gross Profit and adding back the depreciation and amortizationexpenses for the period(Gross Profit – General and Administrative Expenses + Depreciation + Amortization)Adjusted EBITDA: adjustments made to EBITDA by excluding R$ 0.2 million from expenses regarding the Companystock option plan, along with R$ 1.1 million in employee bonus provisionsFFO (Funds From Operations): non accounting measure, which adds back depreciation to net income in order todetermine, utilizing the income statement, the net cash generated in the period(Net Income + Depreciation)Leasing spread: real gain (net of inflation) from the renegotiation of existing leases, and new leases of vacant areaswhen compared to the previous in-place rentVacancy - Financial: estimated by multiplying the average rent per sqm which could be charged in the buildings andtheir respective vacant areas, and then dividing this result by the potential gross revenues of each property. Indicatesthe percentage of potential revenue which is lost each month due to vacancyVacancy - Physical: estimated by dividing the total vacant area by the total GLA of the portfolio- 15 -
  16. 16. BRProperties 3Q10IR ContactsInvestor RelationsPedro DaltroCFO & Investor Relations OfficerLeonardo FernandesInvestor Relations ManagerMarcos HaertelInvestor Relations AnalystPhone: (55 11) 3201-1000Email: ri@brpr.com.brwww.brpr.com.br/ri16

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