Company presentation november, 2011

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Company presentation november, 2011

  1. 1. Company Presentation
  2. 2. Company OverviewThe largest and most complete commercial property company in BrazilSegments of ActivityOfficeIndustrialRetailPortfolio of Retail PropertiesTorre Nações UnidasDP LouveiraEd. Ventura II Ed. MancheteDP AraucáriaCompany Profile2 Largest public commercial property companyin Brazil Diversified portfolio (55% office, 29% warehouse, 7%retail, 8% development) currently holds 91 properties,with 1.35 million m² of gross leasable area (GLA) andestimated market value of approximately R$5.2 billion Diversified tenant base Regional footprint 5 greenfield projects, with approximately 178thousand m² of GLA Fully integrated and experienced in-house teams:acquisitions, financing, legal and engineering Pro active, value added investment strategy, “hands-on” approach Market recognition: proven ability to source deals andexecute transactions makes BR Properties the partnerof choice for co-development and built-to-suitoperations Fully owned Property Management Company
  3. 3. Promised and Delivered3Commitment to over-delivering results to its shareholdersIPO(March 2010)Current(November 2011)Growth(Current / IPO)613,499 1,168,183 1.9x150,473 178,434 1.2x7.4% 0.9% Reduction of 88%93.9(2009)339.7(3Q11 Annualized)3.6x45.0(2009)169.9(3Q11 Annualized)3.8xPortfolio GLA(m²)Under DevelopmentGLA(m²)Physical VacancyAdjusted EBITDA(R$ mm)Adjusted FFO(R$ mm)83.3%(2009)92.5%(3Q11 Annualized)Most Profitable Player in theSectorEBITDA Margin1,719(2009)5,799(November, 2011)3.4xTotal Portfolio(R$ mm)
  4. 4. Highest Growth in the Sector…Impressive growth rate, much higher than the average of its comparables…GLA CAGR 2008 - 2010 Net Revenues CAGR 2008 - 2010FFO CAGR 2008 - 2010 EBITDA CAGR 2008 – 20104¹¹¹¹222Source: CompaniesNotes:1 Considers BR Malls, Multiplan, Iguatemi and Alliansce2 Considers São Carlos and CCP53.6%24.8%7.9%Shopping Malls Average Properties Average64.4%9.8%-4.3%Shopping Malls Average Properties Average156.3%50.7%28.9%Shopping Malls Average Properties Average65.4%29.4%8.7%Shopping Malls Average Properties Average2
  5. 5. Ample market fragmentation and little professional competition create a unique environment formarket consolidationSignificant Opportunities to Expand Current PortfolioAddressable Market1: 36.3 mm m²BRProperties10 OrganizedCompaniesSource: BR Properties EstimatesNote:1 Does not include retail propertiesOrganizedCompanies9%Non-OrganizedMarket91%35%65%Fragmented Industry (in terms of GLA – m²) Acquisition Pipeline - In Negotiation (R$ mm)54,7839,3957621803,220450CurrentPortfolioOffice Built-to-Suit Retail Industrial Total
  6. 6. Portfolio OverviewSECTION 1
  7. 7. BR Properties tenant base entails some of the best known Companiesin the country, spanning wide industry diversificationA top-notch portfolio comprised of office buildings, industrial, and retail properties located in themost dynamic regions of BrazilPortfolio: Breakdown and Tenant BaseMarket Value of the Portfolio(R$ mm)GLA by Property Type(m²)Tenant Breakdown(by Industry)Main TenantsOver 180 highquality tenants7Total: R$5.2 bn Total: 1,168 k m²Logistics20%ConsumerGoods19%FinancialServices13%Industry10%Technology7%Others26%Energy5%56%29%7%8%OfficeWarehouseRetailGreenfield22%57%8%13%OfficeWarehouseRetailGreenfield
  8. 8. Portfolio FootprintOfficeWarehouseBRPRRetail Number of existing properties: 91— Office: 37— Warehouse: 24— Retail: 30 Total GLA of the properties: 1,168,183 m²— Office: 300,205 m²— Warehouse: 767,093 m²— Retail: 100,885 m²States Total GLA %São Paulo 892,707 76.4%Rio de Janeiro 154,385 13.2%Paraná 63,120 5.4%Minas Gerais 18,998 1.6%Bahia 7,607 0.7%Pernambuco 6,238 0.5%Alagoas 4,678 0.4%Maranhão 4,663 0.4%Espírito Santo 3,989 0.3%Pará 3,418 0.3%Distrito Federal 2,989 0.3%Goiás 2,814 0.2%Ceará 2,577 0.2%TOTAL 1,168,183 100%BR Properties’ portfolio is present in 13 states, covering all 5 regions of Brazil8
  9. 9.  Average office lease term: 3-5 years Average warehouse lease term: 5-10 yearsExpiration Schedule(% revenues)Market Alignment Schedule(% revenues)Inflation Adjustment IndicesPortfolio: Lease Contract CharacteristicsLease contracts in place allow for stable, predictable cash flows, while creating a very lowvacancy risk scenario and considerable upside potential in revenues9 Annual Inflation Adjustments— 100% of lease contracts are indexed to inflation— 72% IGP-M, 24% IPCA and 3% other Triple Net Contracts— Tenant is responsible for all operating property costs— Costs include: taxes, insurance, and maintenanceexpenses Next 3 Years— 74% market alignment— 32% expiration Bank Guarantees on Leases— Standard practice in Brazil— Protects against delinquencies from smaller tenants Tenant Delinquency̶ Delinquency exceeding 30 days, lessor has right tobreak the contract and remove the tenantMain Characteristics2011 2012 2013 >20133%5% 20%73%2011 2012 2013 >201328%14%27%31%73%24%3%IGP-MIPCAOther
  10. 10. Effects of the Nominal Interest Rate Increase(SELIC vs. TR)Source: Santander research and Central BankPortfolio: Resilient Business DynamicsPositive Effects of the Growth of Inflation Indices(TR vs. IPCA vs. BRPR Inflation basket) The potential increase in the nominal interestrate until the end of the year would result in a slightincrease in the TR, main index that readjusts our financingcontracts The inflation increase, on the other hand, wouldhave a positive effect on the Company’s results, given that100% of our lease contracts are indexed to inflation rates Our cash reserves are invested exclusively in bank notesindexed to the Brazilian inter-bank rate (CDI), which wouldcause an increase in our financial revenues with theforecast increase in the SELIC rate10Main Highlights0,69% 1,23%5,90%6,48%7,92%0%2%4%6%8%10%12%2010 2011eTRIPCA (CPI)Avg. BasketInflation passthrough 201110,75% 11,00%0,69% 1,23%0%2%4%6%8%10%12%2010 2011eForecast SELICTR
  11. 11. Growth DriversSECTION 2
  12. 12. Acquired PropertiesTotal CAPEX(R$ billion)1033.4Equity Raised(R$ billion)2.3Growth Drivers: AcquisitionsGLA Growth (‘000 m²) 2Average IRR onDivestments (%)¹28%Notes:1 Considers all the divestments since Company’s inception, and it is gross and leveraged2 Does not consider greenfield projectsSince 2007, BR Properties acquired stakes in 103 different properties with a total CAPEX of R$3.4billion12Market Value of CurrentPortfolio(R$ billion)5.22941.168143203531(3)2007 2008 2009 2010 2011 Current
  13. 13. RB 115 (Delivered in Dec/2010)Growth Drivers: Performance Improvement13Long-TermValueTriggerHenrique Schaumann (Acquired in 2007) Presidente Vargas (Acquired in 2007)69.3%49.6%Cap Rate Cap RateShort-TermValueTriggerCap Rate13.8%Outstanding management leads to very fast operating improvements and impressive increases inthe long runTNU (Acquired in Mar/2010)Cap Rate10.5%Ventura (Acquired in Aug/2010)Cap Rate11.8%10.3%30.8%13.8%14.0% 12.2%12.3%Initial 3Q11 Initial 3Q11 Initial 3Q11Initial 3Q1111,1%18,8%Initial 3Q1113,9%20,4%
  14. 14. Growth Drivers: Performance Improvement (cont’d)14Leasing Spreads – New LeasesCompany has been building a successful track record on increasing spreads in both contractrenegotiation and new leasesLeasing Spreads – RenegotiationsCase Study: Retail TenantDate of Acquisition Dec/2010GLA 97.431 m²Revenues @ Acquisition R$30.7 mmCap Rate @ Acquisition 10.2%Current RevenuesR$41.4 mm (post-renegotiation)Current Cap Rate13.4% (11 months afteracquisition)15,5%14,3%12,0%11,1%28,3%0,0%n/a n/a n/a1Q11 2Q11 3Q11Office Industrial Retail21,5%24,5% 24,1%22,6%n/a n/an/a15,7%17,1%1Q11 2Q11 3Q11Office Industrial Retail
  15. 15. Growth Drivers: Developments / Retrofit Type: Office A Location: São Paulo / SP Delivery Date: 4Q12 GLA: 2,019 m² Owned: 50% Type: Warehouse Location: São José dos Campos / SP Delivery Date: n/a GLA: 125,000 m² Owned: 100% Type: Warehouse Location: Louveira / SP Delivery Date: 2Q12 GLA: 30,122 m² Owned: 100%SouzaAranhaTechParkSJCDPLouveira7The Company currently holds 5 greenfield projects, that once finalized, will add 178 thousand m²of GLA to the portfolio, along with Ed. Manchete, which is now in retrofit15CidadeJardimPanaméricaGreenPark Type: Office AAA Location: São Paulo / SP Delivery Date: 2Q12 GLA: 6,792 m² Owned: 50%Pre-certified Building Type: Office A Location: São Paulo / SP Delivery Date: 1Q13 GLA: 14,502 m² Owned: 50%Pre-certified BuildingUnder ApprovalOngoingManchete Type: Office Location: Rio de Janeiro / RJ Delivery Date: 4Q11 GLA: 27,658 m² Owned: 100%
  16. 16. Financial HighlightsSECTION 3
  17. 17. Financial Highlights17Net Revenues(R$ mm)Adjusted EBITDA and Margin(R$ mm and %)Adjusted FFO and Margin(R$ mm and %)53,791,8132,4253,23Q10 3Q11 9M10 9M1145,484,9111,2229,43Q10 3Q11 9M10 9M1184%93%84%91%22%46%35%27%11,642,546,068,33Q10 3Q11 9M10 9M11
  18. 18. Solid Balance SheetNet Debt* (R$ mm) Debt Profile (Index)Debt Service Schedule (R$ mm)18ST Debt ObligationsforAcquisitionsLT Debt Total Debt Cash Net Debt1722.1681.096151.982 1.07371%2%27%TRIGPMCDI2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 202248179 166 152 134 117 95 68 54 39 32 2924129 129 159 162 180333157 155128 26 14PrincipalInterest
  19. 19. APPENDIX
  20. 20. Appendix: São Paulo Office Market20Source: CBRE 2Q11 Market View ReportNote:1 There are no class A buildings in this submarket. Lease rates apply to the best buildings in the areaTotal StockSubmarkets Total Stock Vacancy RateAsking Lease RateRange (Class A)(m²) (%) (R$/ m²/ month)Downtown ¹ 362,400 2.1% R$ 15 - R$ 50*Paulista 1,023,300 3.8% R$ 75 - R$ 125Jardins 1,007,600 1.5% R$ 90 - R$ 170Marginal 2,270,200 5.9% R$ 45 - R$ 130Other 1,321,600 4.1% R$ 50 - R$ 70Total Market 5,985,100 4.2% R$ 45 - R$ 170Alphaville 472,200 20.3% R$ 30 - R$ 65Marginal35%Other20%Paulista16%Jardins16%Alphaville7%Downtown6%
  21. 21. Appendix: Rio de Janeiro Office Market21Source: CBRE 2Q11 Market View ReportTotal StockSubmarkets Total Stock Vacancy RateAsking Lease RateRange (Class A)(m²) (%) (R$/ m²/ month)Downtown 1,794,100 1.6% R$ 115 - R$ 180Botafogo 352,500 1.2% R$ 115 - R$ 160Flamengo 51,500 0.0% R$ 100 - R$ 185Barra da Tijuca 358,100 12.4% R$ 80 - R$ 120South Zone 144,500 1.8% R$ 150 - R$ 250Other 148,700 4.1% R$ 60 - R$ 100Total Market 2,849,400 3.0% R$ 60 - R$ 250Downtown63%Botafogo12%Barra daTijuca13%Other5%South Zone5%Flamengo2%
  22. 22. Appendix: São Paulo Industrial Market22Source: CBRE 2Q11 Market View ReportTotal StockSubmarkets Total StockVacancyRateAsking Lease RateRange (Class A)(m²) (%) (R$/ m²/ month)ABCD * 129,000 0.0% R$ 12 - R$ 18Atibaia * 129,100 14.7% R$ 20 - R$ 23Barueri 437,200 5.1% R$ 21 - R$ 27Cajamar * 482,800 3.2% R$ 21 - R$ 24Cotia/ Embu * 304,600 0.5% R$ 18 - R$ 22Greater Campinas 1,464,900 6.7% R$ 16 - R$ 28Guarulhos * 183,700 19.3% R$ 18 - R$ 24Jundiaí/ Itupeva * 487,500 8.6% R$ 13 - R$ 19São Paulo 560,800 1.9% R$ 21 - R$ 25Sorocaba/ Alumínio * 107,200 5.5% R$ 16 - R$ 20Vale do Paraíba * 241,800 16.8% R$ 14 - R$ 17Total Market 4,528,600 6.4% R$ 12 - R$ 28* The eight submarkets that comprised the "Others" region in previous reportsGreaterCampinas32%São Paulo12%Barueri10%Cajamar11%Jundiaí11%Cotia/ Embu7%Vale do Paraíba5%Guarulhos4%ABCD3%Atibaia3%Sorocaba2%
  23. 23. Appendix: Historical Market Data23Fonte: CBRE 2T11 Market View ReportNew Supply (in thousands) Net Absorption (in thousands)Average Rent per m² (in R$) Vacancy Rate (in %)1344001002003004005002006 2007 2008 2009 2010 1S11São Paulo Rio de Janeiro94600501001502002502006 2007 2008 2009 2010 1S11São Paulo Rio de Janeiro13014003060901201502006 2007 2008 2009 2010 1S11São Paulo Rio de Janeiro4,23,00,02,04,06,08,010,012,014,02006 2007 2008 2009 2010 1S11São Paulo Rio de Janeiro
  24. 24. ContactInvestor Relations24Pedro DaltroChief Financial and Investor Relations OfficerLeonardo FernandesInvestor Relations ManagerMarcos HaertelInvestor Relations AnalystPhone: (55 11) 3201-1000Email: ri@brpr.com.brwww.brpr.com.br

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