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2 q14 earnings release presentation (1)

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2 q14 earnings release presentation (1)

  1. 1. 2Q14 Earnings Release Presentation
  2. 2. 2Q14 Highlights • 2Q14 net revenues totaled R$223.4 million, a decrease of 6% versus 2Q13, when net revenues came in at R$238.2 million. This reduction is explained by the loss of rental revenues resulting from property sales occurring in the past 12 months. It is worth highlighting that the average rent per square meter of the same properties grew 6.2% over the last 12 months. • 2Q14 net income reached R$182.9 million, an increase of 267% over 2Q13. • 2Q14 adjusted EBITDA of R$205.6 million, and adjusted EBITDA margin of 92%. • 2Q14 adjusted FFO totaled R$65.3 million, and adjusted FFO margin of 29%. • Throughout the quarter, 14,665 sqm of GLA were leased by the Company, representing an increment of R$1.1 million in the monthly rent revenues. • The Company signed with AIG Seguros Brasil a lease agreement for the occupancy of 5 floors of JK Complex Tower E. The lease has a term of 64 months and involves the lease-up of 6,038 sqm of gross leasable area. • In addition, a 10-year long lease agreement was signed with Indra Brasil, involving 75% of Panamérica Green Park’s total GLA. • During the 2Q14 the Company’s office portfolio financial and physical vacancy rates fell by 190 and 130 bps, respectively. 2Q14 is the 4th consecutive quarter in which BR Properties records an improvement in this indicator. • The Company finalized the 1st tranche of the sale of its industrial portfolio to GLP for the amount of R$2,345.1 million – equivalent to 73.7% of total transaction. The remaining assets, which account for R$834.9 million, will be posteriorly transferred, subject to the fulfillment of certain precedent conditions relating to such assets. • BR Properties renegotiated R$217.3 million of loans, reducing its average cost by 69 bps. • In May, the Company distributed R$160.0 million – R$0.54/share – of ordinary dividends to its shareholders, representing a dividend yield of 3.0%. • In addition, upon receipt of cash from the sale of its industrial portfolio to GLP, the Company paid out in June an extraordinary dividend of R$1,636.5 billion – R$5.50/share – representing a dividend yield of 29.2%. • In July, the Company signed a Quotas Sale Agreement with Capital Brasileiro de Empreendimentos Imobiliários Ltda. involving the sale of totality of quotas held by BR Properties in the Comercial Progressivo II Real Estate Investment Fund for the amount of R$606.7 million. The consummation of the transaction as provided for in the agreement is subject, among other conditions, to the approval of antitrust authorities. 2
  3. 3. Portfolio 3 2Q14 Revenue Breakdown Portfolio Breakdown (% market value) Portfolio Breakdown (% GLA) Portfolio Market Value 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 12.968 13.552 13.840 14.031 14.096 13.759 13.423 13.538 11.248 Asset sales in the amount of R$482.1 million Sale of Industrial Portfolio – 1st Tranche R$ 2.3 billion Services 1.5% Straight-line 1.2% Leasing 97.3% 68% 27% 6% Office Industrial Retail 60% 26% 9% 5% Office AAA Office Industrial Retail 29% 23% 39% 9% Office AAA Office Industrial Retail
  4. 4. Portfolio Recycling 4 Sale of Industrial Portfolio – 1st Tranche Total Number of Shares after Repurchase 297.538.945 Special Dividend 1.636.464.197,50R$ Special Dividend per Share 5,50R$ Dividend Yield * 29,1% * Share Price: R$ 18,90 (06/11/2014) Capital Allocation Sale of FII Comercial Progressivo II Sold GLA 112.503 Sale Price: Cash + Debt 606.651R$ Cash Payment 418.580R$ Debt Assumed by the Buyer 188.072R$ Sale of CPII Real Estate Fund (thousand) Sold Properties Type City State Acquisition Date # of Properties Owned GLA (sqm) Portfolio C&A Retail Several n/a 29/12/10 28 98.714 Alphaville - Araguaia Office Barueri SP 29/12/10 1 8.084 Call Center Conexão Office São Paulo SP 29/12/10 1 1.448 Ed. Santa Catarina Office AAA São Paulo SP 29/12/10 1 4.257 Total 31 112.503 Sold GLA 859.055 Sale Price 2.345.147R$ Sale Price - Readjusted by Inflation 2.377.055R$ Pre-Paid Debt in the Transaction 445.221R$ Sale of Industrial Portfolio (thousand)
  5. 5. Financial Highlights 5 Net Income (R$ thousand)Net Revenues (R$ thousand) 2Q13 2Q14 6M13 6M14 238.214 223.361 464.141 456.220 (6%) (2%) 2Q13 2Q14 6M13 6M14 49.847 182.892 140.740 242.359 267% 72%
  6. 6. Financial Highlights 6 Adjusted EBITDA (R$ thousand) 93% 90% 92% Adjusted EBITDA Margin 2Q13 1Q14 2Q14 221.849 209.269 205.639 (2%) (7%) EBITDA Composition 2Q14 2Q13 var % 6M14 6M13 var % Net Income (loss) before Minority Interest 183.451 49.245 273% 242.124 134.144 80% (+) Deferred Taxes (66.162) 16.911 -491% (18.221) 47.747 -138% (+) Income and Social Contribution Taxes 153.291 18.083 748% 165.229 21.695 662% (-) Minority Interest (559) 603 -193% 234 6.596 -96% (+) Depreciation 95 224 -58% 101 224 -55% (+) Net Financial Result 111.617 176.179 -37% 232.394 311.041 -25% EBITDA 381.732 261.245 46% 621.862 521.448 19% EBITDA Margin 171% 110% 61 p.p. 136% 112% 24 p.p. Adjusted EBITDA Composition 2Q14 2Q13 var % 6M14 6M13 var % EBITDA 381.732 261.245 46% 621.862 521.448 19% (-) Gain (Loss) on Appraisal of Investment Properties (56.303) (39.944) 41% (92.542) (88.820) 4% (-) Gain (Loss) on Sale of Investment Properties (377) (2.250) -83% (377) (2.250) -83% (+) Other Operating Income (120.753) 1.263 -9661% (116.877) 6.211 -1982% (+) Stock options 190 387 -51% 544 1.048 -48% (+) Bonus Provision 1.149 1.149 0% 2.298 2.298 0% Adjusted EBITDA 205.639 221.849 -7% 414.907 439.934 -6% Adjusted EBITDA Margin 92% 93% -1 p.p. 91% 95% -4 p.p.
  7. 7. Financial Highlights 7 Adjusted FFO (R$ thousand) 35% 25% 29% Adjusted FFO Margin 2Q13 1Q14 2Q14 83.799 57.312 65.289 (22%) 14% Adjusted FFO Composition 2Q14 2Q13 var % 6M14 6M13 var % Net Income (loss) 182.892 49.847 267% 242.359 140.740 72% (+) Deferred Taxes (66.162) 16.911 -491% (18.221) 47.747 -138% (+) Income Taxes on Property Sales 145.524 820 17637% 145.524 820 17637% (+) PIS/Cofins (Revenue Taxes) on Property Sales - - n/a - - n/a (-) Gain (Loss) on Appraisal of Investment Properties (56.303) (39.944) 41% (92.542) (88.820) 4% (-) Gain (Loss) on Sale of Investment Properties (377) (2.250) -83% (377) (2.250) -83% (+) Non-cash Losses on Exchange Rate Variation 935 62.107 -98% 25.187 73.310 -66% (-) Non-cash Gains on Exchange Rate Variation (18.343) (3.543) 418% (65.747) (23.014) 186% (+) Non-cash Variations on Derivative Instruments (650) (149) 335% 8.647 24.070 -64% (-) Other Operating Income/Expense (Sale of Assets) (122.228) - n/a (122.228) - n/a Adjusted FFO 65.289 83.799 -22% 122.602 172.604 -29% Adjusted FFO Margin 29% 35% -6 p.p. 27% 37% -10 p.p.
  8. 8. Indebtedness 8 2Q14 Net Debt (R$ mn) 2Q14 Debt Profile ST Debt Obligations for Acquisitions LT Debt Total Debt Cash Net Debt 844 5.011 4.220 19 4.147 791 36% 48% 10% 0,2% 6% TR CDI IGPM INPC IPCA Indebtedness 2Q14 1Q14 var % Short Term Loans and Financing 863.514 963.441 -10% Loans and Financing 779.717 868.994 -10% Perpetual Bond 64.565 66.338 -3% Derivative Instruments - - n/a Payables for Acquisition of Real Estate 19.233 28.109 -32% Long Term Loans and Financing 4.147.019 4.601.490 -10% Loans and Financing 3.568.825 4.007.597 -11% Perpetual Bond 578.194 593.893 -3% Gross Debt 5.010.533 5.564.931 -10% Cash and Cash Equivalents 790.672 814.467 -3% Net Debt 4.219.862 4.750.464 -11% Portfolio Value 11.247.509 13.537.531 -17% Gross Debt / Portfolio Value (Loan to Value) 45% 41% 3 p.p. Net Debt / Portfolio Value (Loan to Value) 38% 35% 2 p.p. Adjusted EBITDA / Net Financial Expenses * 1,6x 1,6x 0% Duration (years) 4,2 4,0 5% Unsecured Debt / Total Debt 40% 37% 3 p.p. * Considering Net Financial Expenses (ex. non-cash variations)
  9. 9. Indebtedness 9 Debt Amortization Schedule (R$ million) Loan to Value: Gross and NetInterest Coverage Ratio Net Debt / Adjusted EBITDA 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 613 186 1.036 400 266 279 177 106 93 95 83 66 71 82 94 Principal 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 6,0x 5,5x 3,2x 3,4x 9,7x 7,8x 7,3x 6,7x 5,6x 5,7x 5,2x 5,5x 5,7x 5,1x Net Debt/EBITDA 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 1,4x 1,6x 2,7x 2,5x 3,0x 1,1x 1,5x 1,5x 1,7x 2,0x 1,7x 1,6x 1,6x 1,6x EBITDA / Net Financial Expenses 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 45% 43% 42% 41% 40% 39% 37% 38% 39% 40% 39% 41% 41% 45% 36% 35% 21% 21% 30% 35% 34% 34% 34% 36% 33% 34% 35% 38% LTV Gross Debt LTV Net Debt
  10. 10. Operating Highlights 10 Lease Contract Expiration Schedule (% Revenues) Lease Contract 3 Year Market Alignment Schedule (% Revenues) The schedules below exclude the industrial portfolio and Comercial Progressivo II Real Estate Investment Fund Lease Contracts Duration Rent / Sqm / Month – Same Properties 2014 2015 2016 >2017 2% 9% 11% 77% 2014 2015 2016 >2017 5% 46% 13% 6% Lease Contracts Duration All Contracts 6.7 Years Build-to-Suit Contracts 10.3 Years Rent / Sqm / Month - Same Properties * 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Office 16,0% 13,7% 11,4% 8,3% 8,6% 12,9% 7,9% 7,3% 5,6% 6,1% Industrial 6,4% 6,3% 5,4% 7,8% 8,8% 8,3% 6,9% 5,3% 3,8% 6,6% Retail 20,8% 5,1% 5,1% 5,1% 5,4% 6,5% 6,6% 6,6% 5,9% 6,2% Total 12,4% 9,9% 8,3% 7,9% 8,4% 10,9% 7,5% 6,7% 5,1% 6,2% IPCA (Inflation Indicator) 5,2% 4,9% 5,3% 5,8% 6,6% 6,7% 5,9% 5,9% 6,2% 6,5% IGP-M (Inflation Indicator) 3,2% 5,1% 8,1% 7,8% 8,1% 6,3% 4,4% 5,5% 7,3% 6,2% Weighted Average: IPCA x IGP-M (23% x 77%) 3,7% 5,1% 7,4% 7,4% 7,7% 6,4% 4,7% 5,6% 7,0% 6,3% * Comparison between: the average same property rent in the current period vs the average same property rent in equal period of last year * Considering only occupied areas * In nominal terms
  11. 11. Operating Highlights 11 Office Vacancy Industrial Vacancy Properties with Vacancy (Occupancy Rate per Asset) 2Q13 3Q13 4Q13 1Q14 2Q14 12,6% 12,1% 10,2% 10,9% 9,6% 15,0% 14,7% 12,5% 11,5% 9,6% Physical Financial 2Q13 3Q13 4Q13 1Q14 2Q14 2,4% 2,5% 1,3% 1,9% 1,9%1,9% 1,9% 0,8% 1,3% 1,2% Physical Financial Occupancy per Asset Type GLA 1Q14 2Q14 ∆ CBOP - Ed. Jacarandá Office 31.954 93% 93% 0 p.p Ed. Ventura - West Tower Office 42.986 99% 99% 0 p.p Icomap Office 9.164 90% 90% 0 p.p RB 115 Office 11.516 90% 90% 0 p.p Ed. Manchete Office 23.591 77% 77% 0 p.p JK Complex - Tower D&E Office 34.583 27% 50% 23 p.p Cidade Jardim Office 6.792 43% 43% 0 p.p Ed. Paulista Office 22.855 83% 83% 0 p.p TNU Office 27.931 95% 95% 0 p.p Panamérica Park Office 18.667 68% 55% -13 p.p Panamérica Green Park I Office 4.583 0% 75% 75 p.p Raja Hills Office 7.534 75% 68% -7 p.p Brasília Office 7.751 48% 48% 0 p.p Santa Catarina Office 4.257 100% 75% -25 p.p Santo Antonio Office 5.017 100% 89% -11 p.p Total - Office BBP - Barão de Mauá - Brahms Industrial 6.317 67% 67% 0 p.p Condomínio Industrial SJC Industrial 73.382 94% 94% 0 p.p Total - Industrial Total - Portfolio
  12. 12. Capital Markets 12 Stock Performance – 6M14 - 10.000.000 20.000.000 30.000.000 40.000.000 50.000.000 60.000.000 70.000.000 80.000.000 -20% -15% -10% -5% 0% 5% 10% 15% Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 ADTV BR Properties Ibovespa Stock Performance (BRPR3) 2Q14 2Q13 var % 6M14 6M13 var % Total Number of Shares 297.538.945 312.653.445 -5% 297.538.945 312.653.445 -5% Free Float (%) 99% 99% 0% 99% 99% 0% Stock Price (average for the period) 12,71 15,41 -18% 12,20 17,39 -30% Stock Price (end of period) 13,31 13,50 -1% 13,31 13,50 -1% Market Cap end of period (R$ million) 4.161 5.940 -30% 4.161 5.940 -30% Average Daily Trading Volume (R$ million) 32,48 55,14 -41% 37,10 44,73 -17% Average Daily Traded Shares 1.879.165 2.698.460 -30% 2.162.898 2.048.370 6% Average Daily negotiations 5.145 7.594 -32% 5.478 6.493 -16% * For comparative purposes, the historical stock price was ajusted according to the extraordinary dividends paid in June 2014 (R$5.50) Volume (R$) 278.629.519R$ Stock Price (07/31/2014) 14,03R$ Repurchased Shares 15.114.500 Adjusted Price (Dividends) 20,07R$ Average Purchase Price 18,43R$ Gain per Share 1,63R$ Total Gain 24.658.038R$ Buyback Program Gain on Buyback Program
  13. 13. IR Contacts 13 Pedro Daltro CFO & Investor Relations Officer Marcos Haertel Investor Relations Manager Gabriel Barcelos Investor Relations Analyst Phone: (55 11) 3201-1000 Email: ri@brpr.com.br www.brpr.com.br/ri Investor Relations

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