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Company presentation


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Company presentation

  1. 1. Company Presentation 1
  2. 2. Disclaimer► The material that follows is a presentation of general background information about BR Properties S.A. and its subsidiaries (“BR Properties” or “BRP” or the “Company”) prepared as of the date of the presentation by BR Properties.► This information is in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. Information contained in this material has not been independently verified. Certain information has been obtained from public sources. Information not obtained from public sources and contained herein was prepared solely based on information provided by the Company. No representation or warranty, either express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein. This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving investment advice. It is not targeted to the specific investment objectives, financial situation or particular needs of any recipient. It is not intended to provide the basis for any third party evaluation of any securities or any offering of them and should not be considered as a recommendation that any investor should subscribe for or purchase any securities► Although BR Properties believes that the expectations and assumptions reflected in the forward-looking statements are reasonably based on information currently available to BRP’s management, BR Properties cannot guarantee future results or events. BR Properties expressly disclaims a duty to update any of the forward-looking statement.► Neither this material nor its content shall be deemed to constitute an offer of or an invitation, or solicitation of an offer to subscribe for or purchase any securities. The information contained herein is subject to change without notice and neither the Company past performance is not indicative of future results. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.► No person is authorized to give any information or to make any representation not contained in and not consistent with this material and, if given or made, such information or representation must not be relied upon as having been authorized by or on behalf of the Company.► These materials are strictly confidential and are being submitted to selected recipients only. They may not be reproduced (in whole or in part), distributed or transmitted to any other person without the prior written consent of the Company. These materials are not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. 2
  3. 3. Company OverviewThe largest and most complete commercial properties company in BrazilCompany Description Illustrated Portfolio – Recent Acquisitions ► Largest public commercial properties company in Brazil ► A GP sponsored company, BR Properties was founded in Dec/06 by an experienced team of executives, aiming at acquiring,  Manchete Building managing, developing and leasing high quality commercial  26,439 sqm properties in Brazil  Acquisition: Jun/10 ► Company’s portfolio currently holds 61 properties, with approximately 1 million sqm of GLA and estimated market value of R$ 2.98 billion ► Experienced in-house teams: acquisitions, financing, legal and engineering  DP Louveira 8 & 9  88,643 sqm ► Market recognition: proven ability to source deals and execute  Acquisition: Jun/10 transactions makes BR Properties the partner of choice for co- development and built-to-suit operations ► 4 greenfield projects, with approximately 150.4 thousand sq m of gross leasable area (GLA)  RB 115  11,344 sqm 3
  4. 4. Portfolio OverviewA top-notch portfolio comprised of office buildings and warehouses, located in the most dynamicregions of BrazilMarket Value of the Portfolio¹ (R$ mm) GLA Breakdown by Type of Property¹ sq m # of Properties 36 24 1 61 730.148 7.184 993.143 1,311 22 22 2,988 2.988 1.311 1,655 1.655 255.810 Office Escritórios Warehouse Galpões Redevelopment Redesenvolvimento Total Escritórios Office Galpões Warehouse Redesenvolvimento Redevelopment Total Main Tenants Tenant Base Breakdown by Industry ► 150 tenants Other Storaging Telecom Consumer Goods Tecnology Credit Cards Media Construction Consulting Publishing Education Energy Pharma Logistics Industrial Government Financial Inst. Note: 1 As of June, 2010 BR Properties tenant base entails some of the best known Companies 4 in the country, spanning wide industry diversification
  5. 5. Investment CaseA unique vehicle, exposed exclusively to Brazilian commercial real estate, extremely wellpositioned to benefit from the bullish fundamentals of the sector in Brazil Favorable Macro-Economic Scenario World-Class 1 Sponsorship Attractive Sector and Tier 1 Dynamics 5 2 Management Team 4 3 Broad Growth Potential: Natural Industry Unique Business Model Consolidator 5
  6. 6. 1 Favorable Macro-Economic Conditions 1Q10Growing industrial production and GDP, declining unemployment rates and single-digit interestrates are fueling sectors exposed to domestic market Real GDP Growth (%) Unemployment Rate (%)¹ ► Pent-up demand for commercial properties ► Emerging middle class 12.4% 6.3% 11.9% 5.7% 5.7% 11.0% 5.1% 9.7% 9.7% 4.5% 8.7% 4.0% 7.9% 3.2% 2.7% 6.5% 6.8% 1.3% 1.1% -0.2% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011E 2002 2003 2004 2005 2006 2007 2008 2009 2010E Industrial Production Growth (%)¹ NTN-B (% aa.) - July 15th 2010 ► Increasing demand for industrial and distribution space ► Lower interest Rates ► Increased credit availability 12% 10.5% 6.2% 11% 3.8% 3.8% 10% 9% -5.5% 8% 7% 6.2% 6% -17.7% 5% 2005 2006 2007 2008 2009 2010E 4%Source: Brazilian Central BankNote: Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-101 Adjusted Seasonally 6
  7. 7. 1 Favorable Macro-Economic Conditions 1Q10 The potential increase in the nominal interest rate until the end of the year would result in a small increase in the TR, main index that readjusts our financing contracts The inflation increase, on the other hand, would have a positive effect on the Company’s results, given that 100% of our lease contracts are indexed to inflation rates Our cash reserves are invested exclusively in bank notes indexed to the Brazilian inter-bank rate (CDI), which would cause an increase in our financial revenues with the forecast increase in the SELIC rate Effects of the Nominal Expected Positive Effects of the Growth Interest Rate Increase of Inflation Indexes (SELIC vs. TR) (TR vs. IPCA vs. BRPR Inflation basket)14,0% 9,0% BRPR Basket of lease contract inf lation readjustment indices12,0% 12,00% 8,0% TR 7,95% 7,0%10,0% IPCA (CPI) 8,75% 6,0%8,0% 5,47% Forecast SELIC 5,0% 4,31%6,0% TR 4,0% 3,0%4,0% 2,0%2,0% 0,82% 0,97% 0,82% 0,97% 1,0%0,0% 0,0% 0,00% 2009 2010e 2009 2010e Source: Santander research 7
  8. 8. 2 Attractive Sector Dynamics Low vacancy combined with steady demand and short supply in the near term allow for solid growth potential in the commercial properties sector São Paulo Rio de Janeiro Rental Rate (R$/sq m/month) Vacancy Rate (%) Rental Rate (R$/sq m/month) Vacancy Rate (%) 120 20 12 150 95 123 16 120 90 8 12 90 60 8 60 5.9 4 3.7 30 4 30 0 0 0 0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 New Offerings (‘000 sq m) Gross Absorption (‘000 sq m) New Offerings (‘000 sq m) Gross Absorption (‘000 sq m) 800 150 240250 200200 600 100 160150 400 120100 50 80 200 14850 43 20 40 27 0 0 0 0 2005 2006 2007 2008 2009 1Q10 2005 2006 2007 2008 2009 1Q10 2005 2006 2007 2008 2009 1Q10 2005 2006 2007 2008 2009 1Q10 Source: CBRE 8
  9. 9. 3 Unique Business ModelBR Properties benefits from its strong expertise to add value throughout the whole Real Estateinvestment chain… Value Creation Pro-active Lease / Property Deal Sourcing Management Selective Retrofit Developments Conservative Divestment Use of Leverage 9
  10. 10. 3 2010 Gross Leasable Area EvolutionOut of 8 acquisitions finalized in 2010, 5 were concluded only three months after IPO ► GLA Acquired: 392,121 sqm ►► 2010 GLA Growth: 62% ano: 62% Crescimento do ABL no ► Acquisitions’ market value: R$1,304 mm ►► Amountinvestido após IPO: R$ 873.8 mm Valor invested after 873,8 ► Amount invested: R$ 1,196 mm ► Concluded Acquisitions: 8 ► Concluded Disinvestments: 3 993,143 sqm IPO 260.0 1,196.2 1.196,2 157.0 157,0 94.1 94,1 182.7 182,7613,645 sqm 180.0 180,0 151.2 151,2 101.2 101,2 69.8 69,8 DP Araucária BBP TNU Jacarandá DP Louveira RB 115 DP Louveira Manchete Total Build. 3,4,5,6 8,9 Build. Dec/09 Mar/10 Jun/10 Jul/10 10
  11. 11. 3 Unique Business Model: Successful Cases Sale Value Addition Ed. Generali Henrique Schaumann Acquisition Value R$ 16.6 mm Acquisition Value R$ 41.0 mm Acquisition Date Aug/07 Acquisition Date Nov/07 Sale Value R$ 21.5 mm Re-tenanting R$ 6.5 mm / year (42% increase on rental income) Sale Date Jan/10 Retrofit Elevators/ Façade/Parking Holding Period 29 months IRR 36% 2009 Appraised Value R$ 78.0 mm ROE*: 147% 90,0 45,00 38.10 80,0 40,00 70,0 35,00 26.97 30,00 60,0 25,00 50,0 21.5 78.0 20,00 40,0 15,00 16.6 30,0 10,00 41.0 20,0 5,00 10,0 - Acquisiton Value Sale Value At Acquisition Current * Before taxes Property Value Lease/sq mNote:1 CBRE’s independent appraisal, as of December 31st, 2009 11
  12. 12. 4 Broad Growth Potential: Natural Industry ConsolidatorAmple market fragmentation and lack of professional competitors creates a unique environmentfor market consolidatorsFragmented Industry (in terms of GLA – sq m) Stages of Our Acquisition Pipeline Jun/10 (R$ mm) Addressable Market: 36.3 mm sq m Current Portfolio R$2,988 Total Acquisition Pipeline R$3,543 Non – Organized Market 92% 3.543 2.390 2.114 1.476 1.429 1.153 914 Organized 638 515 Companies 8% In Negotiation Under Analysis Total Pipeline Office Industrial Retail Total Br Properties 22% 10 Organized Companies 78% 12
  13. 13. 5 Management Team BiographyBR Properties is managed by a team of seasoned professionals, highly motivated and fully alignedwith stockholders through long term stock options plans Mr. Bruni’s whole career was dedicated to real estate development and management. From 1979 to 1989, Mr. Bruni worked forClaudio Bruni Multiplan, Brazil’s largest real estate developer, where he was in charge of market research, construction management, commercialCEO and residential planning, and development. From 1983 to 1985, Mr. Bruni was the Managing Director of Renasce, Brazil’s first shopping center management company, a joint venture of Multiplan and Brazilian investment bank Bozano, Simonsen. From 1986 to 1994 Mr. Bruni co-partnered in Visor, a real estate development company dedicated to low income residential housing, where he helped develop 4,000 residential units, generating revenues of US$128 million. In 1988, Mr. Bruni founded Deico, Brazil´s largest independent real estate services company, where he was the CEO until December of 2006. Mr. Bruni served as Executive Vice-President of ABRASCE, Brazil’s shopping center association for 3 years. Mr. Bruni served as a member of the Retail and Commercial Development Council of the Urban Land Institute. Claudio Bruni is a civil engineer, with a graduate degree from The Polytechnic School of Engineering at the University of São Paulo (class of 1978). Industry Experience: 31 Years Mr. Jaco started his career in Andrade Gutierrez and Metodo Engenharia and joined CB Richard Ellis in 1996 with the objective ofMartin Jaco developing the investment consultancy operations of the company in Brazil. Mr. Jaco had direct responsibility and involvement in allCIO investment activities of the company in the country in the last 10 years, especially in advising investments for institutional investors, pension funds, property companies and foreign institutions. Martin Jaco graduated as a civil engineer from the Polytechnic School of Engineering at the University of São Paulo, Brazil, MBA from the College of Estate Management, Reading University, UK and a Postgraduate Diploma in Project Management from the Royal Institute of Chartered Surveyors, UK. Industry Experience: 17 Years Mr. Cordeiro was in charge of construction and project management at Schahin Cury and Metodo Engenharia (general contractors)Marco AntônioCordeiro for 15 years. While at Deico, Mr. Cordeiro was in charge of planning, market studies, feasibility analysis and appraisals. Mr. Cordeiro has also been in charge of the consulting division, advising the vast majority of Brazilian pension funds. Mr. Cordeiro hasCOO assisted pension funds in over US$350 million of real estate transactions in the last 2 years. Marco Cordeiro is a civil engineer, with a graduate degree from the Polytechnic School of Engineering at the University of São Paulo and specialization at the Business School of Fundação Getúlio Vargas. Industry Experience: 30 Years Mr. Daltro started his career in Banco Marka as a Corporate Finance Manager and a Deputy Director. Later, he worked as a VP inPedro Daltro the Credit Risk Management department of Citigroup and Treasurer and Financial Manager in Gafisa, the second largest real estateCFO developer in Brazil. After Gafisa, he went back to Citigroup as Director of the Public Sector, Infrastructure and Real Estate division. Pedro Daltro has a bachelor´s degree in Business Administration from Unifacs, Brazil, and MBA from the Owen Graduate School of Management, Vanderbilt University, U.S. Industry Experience: 16 Years 13
  14. 14. Financial Highlights 1Q10Net Revenues 1Q10 (R$ mm) EBITDA (R$ mm) and EBITDA Margin (%) 85% 88% 85% 46.753 52.874 35.479 41.600 27.281 23.210 1Q09 1Q10 1Q10 Pro Forma 1Q09 1Q10 1Q10 Pro Forma 14
  15. 15. Solid Balance SheetNet Debt 1Q10 (R$ mm) Debt Profile 1Q10 (Index) 4.8% 5.1% 637 TR 698 788 IGPM CDI 58 92 90 Short Term Obligations Long Term Total Debt Cash & Net Debt Debt for Debt Equivalents 90.1% AcquisitionsDebt Amortization Schedule 1Q10 (R$ mm) 221.818 77.812 72.846 81.006 63.496 56.650 42.008 48.312 37.904 24.025 2.738 1.027 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 15
  16. 16. Strategy Going Forward► Deployment of the offering proceeds (R$726 million) over the next 9 to 12 months► Maintain Loan to Value of roughly 50%► Maintain diversification levels of our current portfolio► Keep development at a level equal to or below 15% of our portfolio► Maintain focus on key regions of the country 16
  17. 17. Appendix: Office Market São Paulo Rio de JaneiroFonte: CBRE 17
  18. 18. Appendix: Industrial Market São Paulo - Industrial Fonte: CBRE 18