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Earnings Release 2Q10

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Earnings Release 2Q10

  1. 1. BRProperties Earnings Release 2nd Quarter 2010 Webcast 2Q10 Portuguese August 12nd , 2010 11:00 A.M. (Brasília) 10:00 A.M. (US EDT) Phone: (55 11) 2188-0155 Replay: (55 11) 2188-0155 English August 12th , 2010 1:00 P.M. (Brasília) 12:00 P.M. (US EDT) Phone: (1 866) 890-2584 Replay: (1 866) 890-2584
  2. 2. BRProperties 1 2Q10 BRPR3 INDEX Page 2Q10 Highlights 2 Management Report 3 Recent Acquisitions 4 RB 115 Building DP Louveira 8 & 9 Manchete Building Tables 6 Financial Highlights Operating Highlights Stock Performance Management Comments of 2Q10 Results 7 Gross Revenues 7 Net Revenues 8 Depreciation 8 SG&A 8 Vacancy Expenses 9 Net Financial Expense 9 Net Income 9 Adjusted EBITDA 10 FFO (Funds from Operations) 10 Gross Debt and Available Cash 11 Operating Indicators 13 Property Management 13 Portfolio Vacancy 14 Property Leasing 15 Acquisition Schedule 17 Acquisition CAPEX Schedule Post IPO Post IPO Acquisition Portfolio Area Growth Development Projects 18 Estimated Development CAPEX Schedule 18 - Cidade Jardim Building 18 - PP II Building 19 - Souza Aranha Building 19 - Tech Park SJC 19 Our Portfolio 20 Glossary 21 Income Statement 22 Balance Sheet 23 Cash Flow Statement 24 Section
  3. 3. BRProperties 2 2Q10 BRPR3 BR PROPERTIES ANNOUNCES R$ 872 MILLION IN ACQUISITIONS IN 2Q10 (60% OF THE POST-IPO ACQUISITION GOAL) São Paulo, August 11th , 2010 – BR Properties S.A. (Bovespa: BRPR3), one of Brazil´s largest real estate investment companies, announces today its Earnings Release of the second quarter of 2010 (2Q10). Currently, BR Properties holds 61 commercial properties, which total 993.143 sq m of Gross Leasable Area (GLA), and also 4 development projects of which, once finalized, will add 150.473 sq m of GLA to our portfolio. The Company also manages properties of its portfolio through the subsidiary BRPR A. The following financial and operational information will be presented in R$, except where it is indicated, and follow the same standards put forth by the Corporations Law (Lei das S/A) and the Comissão de Valores Mobiliários (CVM). Contacts Pedro Daltro CFO and IR Officer Leonardo Fernandes IR Manager Marcos Oliveira IR Analyst ri@brpr.com.br t: +55 11 3201-1000 f: +55 11 3201-1001 Stock (08/11/2010) Ticker: BRPR3 Stock price: R$13.70 # of shares: 139,391,381 Market Value: R$ 1,909.7 million US$ 1,078.9 million Corporate Governance Highlights of 2Q10 and Recent Events  2Q10 Gross Revenues of R$ 49.2 million, a 39% increase compared to 2Q09. Estimated pro-forma gross revenues of R$58.6 million in 2Q10 and R$ 121.1 million in 6M10  Adjusted EBITDA of R$ 38.2 million at the end of 2Q10, an increase of 43% over 2Q09 and an adjusted EBITDA margin of 85%. In 2Q10 and 6M10, we estimated an pro-forma adjusted EBITDA of R$ 46.5 million and R$ 97.9 million, with an 87% and 88% margin, respectively  At the end of 2Q10, Net Income totaled R$19.3 million, an increase of 83% over 2Q09.  Consolidated FFO in 2Q10 totaled R$ 25.6 million, with an FFO margin of 57%  We have reached 60% of the acquisition goal proposed in the capital budget in just 4 months after the Company’s IPO. During the period, we acquired the following properties: CBOP – Ed. Jacarandá, DP Louveira 3, 4, 5, 6, 8 & 9, RB 115 and Ed. Manchete for a total investment value of R$ 872 million  During 2Q10, we raised approximately R$ 168 million in real estate financing linked to TR with an average term of 120 months, consolidating the strategy of utilizing real estate financing. This type of credit represents 92% of the total Company debt, and protects us in the higher interest rate scenario
  4. 4. BRProperties 3 2Q10 BRPR3 MANAGEMENT REPORT The financial and operating results observed in the 2nd quarter of 2010 demonstrate our ability to maintain our rapid portfolio growth through acquisitions, and how our constant search for excellence has positively influenced our results and margins. At the end of the period, we have completed 60% of the acquisition goal stipulated in our capital budget, by acquiring properties with a total investment value of R$ 872 million, and approximately 265 thousand sq m of gross leasable area (GLA). It is important to state that these acquisitions were completed in just 4 months after the Company’s IPO. During the quarter, we acquired the following properties: CBOP – Ed. Jacarandá, DP Louveira 3, 4, 5, 6, 8 & 9, RB 115 and Edifício Manchete. It is also worth mentioning that BR Properties uses its own contacts and seasoned investment team to seek out unique investment opportunities. Our gross revenues grew by 39% in 2Q10, when compared to the same period of 2009. By utilizing an estimated pro-forma revenue, in which we assume that all properties had been generating revenues in our portfolio since the beginning of the respective periods, we reached an estimate of R$ 58.0 million in 2Q10 and R$ 121.1 million in 6M10. These estimates would represent a 63% and 84% growth when compared to the result in 2Q09 and 6M09, respectively, demonstrating the Company’s strong revenue growth potential. We also experienced significant growth in our adjusted EBITDA, and adjusted EBITDA margin. Our adjusted EBITDA totaled R$ 38.2 million at the end of 2Q10, a 43% increase over 2Q09 and an adjusted EBITDA margin of 85%. Our adjusted pro-forma EBITDA estimates were of R$ 46.5 million in 2Q10 and R$ 97.9 million in 6M10, with 87% and 88% margins, respectively, the highest in the industry. The acquisitions made during 2Q10 were in accordance with our strategy to acquire properties of exceptional quality, leased to large tenants and located in the main economic regions of Brasil. Properties such as RB 115, Ed. Jacarandá, TNU and Ed. Manchete, acquired during their final stages of delivery or retrofit, are already in advanced tenanting processes, and due to their unique locations and the favorable market dynamic, should be fully leased by year end 2010, with the exception of Ed. Manchete of which delivery is expected in 3Q11. Since the end of the information “black-out” period imposed by the 30 day stabilization after our IPO, we have actively exercised our policy to maintain constant communication with not only our shareholders, but also other members of the investment community in our sector through the attendance of non-deal roadshows and conferences, hosted by the main financial institutions, and interviews and online chats with the main Brazilian brokerage firms. We believe that, by participating in these events, we will generate more demand for our shares and consequently greater liquidity for our shareholders. We reinforce our belief in the solid outlook for the Company and the commercial real estate market in the 2nd semester, by maintaining our current acquisition pace.
  5. 5. BRProperties 4 2Q10 BRPR3 RECENT ACQUISITIONS RB 115 O June 2nd , we acquired the RB 115 building, a commercial office building located in the Downtown region of Rio de Janeiro, close to the Santos Dumont airport and the main business districts. The region in which the property is located has reached the highest lease rates in the city, – according to real estate consulting firm Jones Lang LaSalle, the current lease per sq m varies between R$ 90 and R$ 100 – mainly due to the availability of mass transportation, complete service infrastructure and the extremely low supply of new stock coming in to the region. The RB 115 building holds 11,345 sq m of gross leasable area (GLA), high technical specifications, and is currently undergoing a retrofit process with expected delivery in October of 2010. The building, which will be delivered in October of 2010, is currently under pre- leasing. DP Louveira 8 & 9 On June 17th , we acquired 2 new warehouses used for logistics operations: DP Louveira 8 & 9. The distribution park is located in the city of Louveira, an important industrial region in São Paulo state, where BR Properties owns six other logistics warehouses. DP Louveira 8 & 9 was acquired from the property portfolio managed by Hines do Brasil. The properties hold a total of 88,643 sq m of gross leasable area (GLA), of which 80,888 sq m in DP Louveira 8 and 7,755 sq m in DP Louveira 9. Currently, DP Louveira 8 is fully leased to Ceva Logistica, a well known logistics and distribution company, which will provide us with immediate rental revenues from the property. Delivered at the end of 2009, DP Louveira 9 is currently under lease-up efforts. Considering this acquisition, BR Properties currently holds 339,548 sq m in GLA in the Louveira region, consolidating its presence in one of the main logistics region in the country. According to CB Richard Ellis estimates, presented in their quarterly industrial market report, the current lease rates for the region where the properties are located are between R$ 16.00 and R$ 18.00/ sq m per month.  Type: Office  Location: Rio de Janeiro/RJ  GLA: 11.345 sq m  % Owned: 90%  CAPEX: R$ 94,1 mm  Type: Warehouse  Location: Louveira/SP  GLA: 88.643 sq m  % Owned: 100%  CAPEX: R$ 157 mm
  6. 6. BRProperties 5 2Q10 BRPR3 Ed. Manchete On June 30th, we acquired the Manchete Building and assumed the execution of its complete retrofit, along with the construction of a parking building with capacity for 320 vehicles, which will provide more comfort and convenience to its tenants and neighborhood. The execution of the retrofit projects will preserve the original conception of Oscar Niemeyer – author of the Building’s project The Manchete Building, which holds an excess of 26,500 sq m of gross leasable area (GLA), also offers an auditorium, along with corporate rooms for meetings and events. At the end of the retrofit process, the Building can be leased by either a sole large company or by multiple tenants, thanks to its flexible internal area. The property is located in front of Flamengo Beach, with easy access to downtown and Santos Dumont Airport. According to the latest market report released by the real estate consulting firm CB Richard Ellis, – Market View Rio de Janeiro Office 1Q 2010 – the rental prices for offices in the Downtown, Flamengo, and Botafogo areas range from R$ 90 to R$ 150 per sqm.  Type: Office  Location: Rio de Janeiro/RJ  GLA: 26.439 sq m  % Owned: 100%  CAPEX*: R$ 260 mm * includes retrofit costs
  7. 7. BRProperties 6 2Q10 BRPR3 FINANCIAL AND OPERATING HIGHLIGHTS PORTFOLIO BREAKDOWN Portfolio Value Gross Leasable Area Financial Highlights 2Q10 2Q09 var % 6M10 6M09 var % 2Q10 pro-forma* 6M10 pro-forma* Net Revenues 44.889 31.989 40% 86.489 59.270 46% 53.223 110.701 General and Administrative Expenses (8.036) (6.305) 27% (15.546) (10.376) 50% (8.036) (15.546) Adjusted EBITDA 38.202 26.735 43% 73.639 50.995 44% 46.536 97.851 Adjusted EBITDA Margin 85% 84% 2% 85% 86% -1% 87% 88% Net Income 19.305 10.537 83% 31.064 17.553 77% - - Net Margin 43% 33% 31% 36% 30% 21% - - FFO 25.550 14.649 74% 42.187 25.786 64% - - FFO Margin 57% 46% 24% 49% 44% 12% - - * non-audited Operating Highlights 2Q10 2Q09 var % 6M10 6M09 var % GLA Current Portfolio (sq m) 993.143 424.573 133,9% 993.143 424.573 133,9% - Office (sq m) 255.810 178.327 43,5% 255.810 178.327 43,5% - Warehouse (sq m) 730.148 239.062 205,4% 730.148 239.062 205,4% - Other (sq m) 7.184 7.184 0,0% 7.184 7.184 0,0% GLA Properties Under Development 150.473 150.473 0,0% 150.473 150.473 0,0% - Office (sq m) 25.473 25.473 0,0% 25.473 25.473 0,0% - Warehouse (sq m) 125.000 125.000 0,0% 125.000 125.000 0,0% Financial Vacancy 10,4% 3,0% 249,2% 10,4% 3,0% 249,2% Financial Vacancy (Stabilized portfolio) 3,0% 3,0% 2,4% 3,0% 3,0% 2,4% Physical Vacancy 6,6% 2,5% 164,1% 6,6% 2,5% 164,1% Physical Vacancy (Stabilized portfolio) 3,7% 2,5% 48,8% 3,7% 2,5% 48,8% Same Property Rent / sq m - Office R$ 43,57 R$ 40,12 8,6% R$ 43,57 R$ 40,12 8,6% Same Property Rent / sq m - Warehouse R$ 15,95 R$ 14,02 13,7% R$ 15,95 R$ 14,02 13,7% Leasing Spread (Renegotiations) - Office 12,7% 0,4% 3322,2% 12,6% 4,4% 187,0% Leasing Spread (Renegotiations) - Warehouse 10,6% 5,3% 101,8% 6,6% 5,3% 26,1% Leasing Spread (New Leases) - Office 13,8% 2,5% 455,3% 9,0% 3,4% 162,7% Leasing Spread (New Leases) - Warehouse 14,0% -8,8% n/a 13,2% -8,8% n/a Stock Performance (BRPR3) 2Q10 2Q09 var % 6M10 6M09 var % Total Number of Shares * 139.391.381 60.258.675 131,3% 139.391.381 60.258.675 131,3% Shares Outstanding 105.840.497 n/a n/a 105.840.497 n/a n/a Free Float (%) 75,9% n/a n/a 75,9% n/a n/a Stock Price (average for the period) 12,17 n/a n/a 12,35 n/a n/a Stock Price (end of period) 12,85 n/a n/a 12,85 n/a n/a Market Cap end of period (R$ million) 1.791 n/a n/a 1.791 n/a n/a Average Daily Trading Volume (R$ million) 3,34 n/a n/a 4,84 n/a n/a Average Daily Traded Shares 276.203 n/a n/a 389.503 n/a n/a Average Daily negotiations 89 n/a n/a 131 n/a n/a * Company began trading its shares on the Bovespa in March of 2010 54% 42% 1% 3% Office Industrial Other Development 26% 74% 1% Office Industrial Other
  8. 8. BRProperties 7 2Q10 BRPR3 MANAGEMENT COMMENTS OF 2Q10 RESULTS With the objective of reflecting the real revenues the properties acquired during 2Q10 would have had on our financial statements, we estimated, up to the level of adjusted EBITDA, the outcome of the revenues of those properties assuming they had been in our portfolio since January 1st – pro-forma. The chart below describes the revenue gains achieved if those properties had been in the portfolio since the beginning of the year. It is important to state that such results were estimated by the Company, therefore, they were not reviewed nor audited by our independent auditors. Gross Revenues Our Gross Revenues reached R$ 49.2 million at the end of 2Q10, which resulted in an increase of R$ 13.7 million, or 39%, compared to the end of 2Q09, when our gross revenues were R$ 35.5 million. The significant increase occurred mainly from addition of new properties in our portfolio. Gross Revenues Breakdown:  41.0%, or R$ 20.2 million resulted from leasing revenues from offices  54.2% or R$ 26.7 million resulted from leasing revenues from warehouses  3.0% or R$ 1.5 million resulted from properties sale revenues  1.8% or R$ 0.9 million resulted from property management revenues. At the end of 2Q10 and 6M10, our pro-forma gross revenues reached R$ 58.0 million and R$ 121,1 million, respectively. Gross Revenue Growth (R$ thousand) Additional Pro-forma Gross Revenues 2Q10 (R$ thousand) Additional Pro-forma Gross Revenues 6M10 (R$ thousand) 35.491 49.237 57.987 65.929 95.435 121.111 2Q09 2Q10 2Q10 Pro Forma 6M09 6M10 6M10 Pro Forma 39% 18% 63% 84% 27% 45% 49.237 57.987 726 - 675 2.381 1.383 3.585 2Q10 Actual BBP DP Araucária TNU Ed. Jacarandá Louveira 3-6 Louveira 8-9 2Q10 Pro-forma 95.435 121.111 3.588 500 2.645 4.761 6.479 7.703 6M10 Actual BBP DP Araucária TNU Ed. Jacarandá Louveira 3-6 Louveira 8-9 6M10 Pro-forma
  9. 9. BRProperties 8 2Q10 BRPR3 Net Revenues Our Net Revenues reached R$ 44.9 million, an increment of R$ 12.9 million, or 40%, compared to the end of 2Q09, when our net revenues totaled R$ 32.0 million. At the end of 2Q10 and 6M10, our pro-forma net revenues totaled R$53.2 million and R$ 110,7 million, respectively. Net Revenue Growth (R$ thousand) Depreciation Our depreciation expenses totaled R$ 6.2 million at the end of 2Q10, an increase of R$ 2.1 million, or 52%, compared to 2Q09, which totaled R$ 4.1 million. The increase of our depreciation resulted mainly from the addition of new properties to our portfolio. Depreciation (R$ thousand) General and Administrative Expenses (ex-vacancy) In 2Q10, our general and administrative expenses, excluding vacancy expenses, totaled R$ 6.0 million, while in 2Q09, these expenses totaled R$ 5.5 million, an increase of 8%. During 6M10, the increase in expenses is mainly explained by the increase in employee bonus provisions and personnel expenses, due to the allocation of employees that manage the condominiums of the properties in our portfolio to our subsidiary BRPR A. Prior to that, such employees had their salaries allocated directly to the properties which they managed. It is worth mentioning that those expenses with personnel will be refunded by the condominiums, and will have no net effect on the Company’s net income. G&A Expenses (R$ thousand) 31.989 44.889 53.223 59.270 86.489 110.701 2Q09 2Q10 2Q10 Pro Forma 6M09 6M10 6M10 Pro Forma 40% 19% 66% 46% 28% 87% 4.112 6.245 8.233 11.123 2Q09 2Q10 6M09 6M10 52% 35% 5.548 6.015 9.486 12.228 2Q09 2Q10 6M09 6M10 8% 29% Expenses (ex-vacancy) 2Q10 2Q09 var % 6M10 6M09 var % General and Administrative (6.015) (5.548) 8% (12.228) (9.486) 29% Personnel (3.748) (3.446) 9% (7.938) (5.202) 53% Administrative (1.557) (873) 78% (2.927) (3.030) -3% Comercial (710) (1.229) -42% (1.363) (1.254) 9%
  10. 10. BRProperties 9 2Q10 BRPR3 Vacancy Expenses Our vacancy expenses result from the obligation imposed to the property’s owner of paying the pro- rata expenses, such as administration fees, taxes, insurance, among other property expenses, in case there are vacant areas in the property. In 2Q10, we had vacancy expenses of R$ 2.0 million, while in 2Q09, these expenses totaled R$ 0.8 million, an increase of R$ 1.2 million. The result is explained mainly by the acquisition of two properties with high vacancy rates, and vacant areas of properties already in our portfolio: (i) Torre Nações Unidas – currently under retrofit, is currently 55% leased; (ii) CBOP – delivered at the beginning of 2010, is currently 50% leased; and (iii) Panamérica Park – 100% leased at the end of 2Q09, had 41% of its GLA vacant during 2Q10. Vacancy Expenses (R$ thousand) Net Financial Expense In 2Q10, we had net financial expenses of R$ 10.8 million, which corresponds to an increase of 4% in relation to 2Q09, in which our net financial expense totaled R$ 10.5 million. This small increase is explained mainly by the increase in our financial income, derived from the high cash reserves held during the period, which were attained through the equity raising in March of 2010. During the period, we took in new debt related to the acquisition of the properties DP Araucária, Ouvidor 107 and DP Louveira 3, 4, 5 & 6. Net Financial Expense (R$ thousand) Net Income Our net income for 2Q10 was R$ 19.3 million, a 83% increase in comparison with 2Q09, when our net income totaled R$ 10.5 million. Net Income Growth (R$ thousand) 757 2.021 890 3.318 2Q09 2Q10 6M09 6M10 167% 273% (10.462) (10.842) (21.767) (25.221) 2Q09 2Q10 6M09 6M10 4% 16% 10.537 19.305 17.553 31.064 2Q09 2Q10 6M09 6M10 83% 77%
  11. 11. BRProperties 10 2Q10 BRPR3 Adjusted EBITDA Our adjusted EBITDA grew by 43% in the period, from R$ 26.7 million in 2Q09 to R$ 38.2 million in 2Q10. Our adjusted EBITDA margin for 2Q10 was 85%. The adjustments made to EBITDA were: (i) adding back R$ 0.2 million from non-cash expenses regarding the Company stock option plan; and (ii) adding back R$ 1.2 million in employee bonus provisions. Our pro-forma adjusted EBITDA totaled R$ 46.5 million, an increase of 22% in relation to 2Q10 adjusted EBITDA. In order to estimate the adjusted EBITDA pro-forma, we assumed that the 2Q10 G&A expenses would remain the same, given the fact that we would not incur further operating expenses with the addition of the properties in our portfolio. Our 2Q10 adjusted EBITDA pro-forma margin was 87%, 2% above the margin obtained in the period. It is our understanding that the gains of scale obtained from the new acquisitions executed throughout the year will allow the adjusted EBITDA margin to continue on its upward trend. Adjusted EBITDA Growth FFO Our FFO for 2Q10 totaled R$ 25.5 million, which corresponds to an increase of 74% in relation to 2Q09, in which our FFO was R$ 14.6 million. FFO Growth 26.735 38.202 46.536 50.995 73.639 97.851 2Q09 2Q10 2Q10 Pro Forma 6M09 6M10 6M10 Pro Forma 43% 22% 44% 33%74% 92% 14.649 25.550 25.786 42.187 2Q09 2Q10 6M09 6M10 74% 64%
  12. 12. BRProperties 11 2Q10 BRPR3 Gross Debt and Available Cash Our gross debt, represented by loans and financing realized for the acquisition of our properties totaled R$ 896.2 million at the end of 2Q10, an increase of R$ 166.6 million compared to the end of 1Q10. In the same period, our net debt was increased by approximately R$ 468.3 million, mainly due to the cash used for the acquisition of new properties, and from the new financing raised, related to the acquisitions completed throughout 2010. The change in our gross debt is explained mainly by the take in of new debt for the acquisition of the DP Araucária, Ouvidor 107 and DP Louveira 3-6 properties. Debt Amortization Schedule Cash and Cash Equivalents Our available cash resources totaled R$ 396.4 million at the end of the quarter, a decrease of R$ 301.7 million when compared to 1Q10. Our conservative stance in regards to our cash resources, along with restrictions imposed by our short-term investment policy approved by our Board of Directors, makes it so that we invest our cash resources exclusively in bank notes from top quality financial institutions. At the end of 2Q10, the average yield on our short-term investments was 100.7% of CDI, the Brazilian inter- bank loan rate. Net Debt 2Q10 1Q10 Cash and Cash Equivalents 396.393 698.054 Loans and Financing 896.204 729.644 Payables for Acquisition of Real Estate 58.621 58.498 Net Debt 558.432 90.087 Net Debt / Annualized Adjusted EBITDA 3,7x 0,6x Adjusted EBITDA / Net Financial Income 3,5x 2,5x Duration (years) 5,5 5,3 Gross Debt Breakdown 2Q10 Gross Debt on 03/31/2010 729.644 New debt for the acquisition of DP Araucária 40.127 New debt for the acquisition of Ouvidor 107 20.000 New debt for the acquisition of DP Louveira 3, 4, 5, 6 109.075 Amortization in the period (2.641) Gross Debt on 06/30/2010 896.204 41.886 59.665 75.989 70.399 93.016 89.560 99.408 242.290 59.921 48.411 14.632 1.027 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Cash and Cash Equivalents 2Q10 1Q10 Cash and Cash Equivalents 396.393 698.054 Average yield on short-term investments (% CDI) 100,7% 100,5%
  13. 13. BRProperties 12 2Q10 BRPR3 Loans and Financing It is our strategy to take in new debt exclusively for the acquisition of properties, preferably financing them individually. Given the high levels of operating cash generated in our business, we do not utilize debt to finance our working capital needs. Approximately 92% of our debt is linked to the Referential Rate – TR. We believe that this financing structure allows us to finance our acquisitions competitively when compared to other financing sources available in the market. Debt Index Breakdown 92% 4%4% TR IGPM CDI Property Acquisition Financing Institution Index Cupon Term Maturity 06/30/2010 03/31/2010 Icomap Itaú BBA/ Unibanco IGPM 8,84% 120 months 16/04/17 11.129 11.108 Itapevi Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 30.129 30.610 Piraporinha Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 11.588 11.773 Jundiaí Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 46.005 46.739 Alphaville Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 20.279 20.603 Panamérica Park Itaú BBA/ Unibanco TR 9,90% 120 months 25/05/17 41.822 42.170 Plaza Centenário Itaú BBA/ Unibanco TR 9,90% 120 months 25/05/17 5.548 5.641 Henrique Schaumann Itaú BBA/ Unibanco TR 10,15% 120 months 17/10/17 29.784 29.938 Bolsa RJ Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 11.990 12.224 Generali Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 10.764 10.974 Glória Itaú BBA/ Unibanco TR 9,90% 120 months 17/07/17 22.921 23.150 Joaquim Floriano Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 9.293 9.355 Paulista Park Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 2.070 2.078 Paulista Plaza Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 7.972 8.005 Isabela Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 2.406 2.422 Olympic Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 4.200 4.218 Midas Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 3.031 3.051 Network Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 713 718 Number One Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 1.874 1.882 Berrini Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 1.149 1.157 Celebration Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 17.890 18.009 Athenas Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 14.188 14.302 Raja Hills Brazilian Finance TR 10,00% 120 months 20/12/17 14.085 14.206 Ed. Comercial Indaiatuba Brazilian Finance TR 10,00% 120 months 20/12/17 26.491 26.717 Sylvio Fraga Brazilian Finance TR 10,00% 120 months 20/12/17 16.898 17.043 MV9 Brazilian Finance TR 10,00% 120 months 20/12/17 22.778 22.972 Galpão Industrial Paraná Brazilian Finance TR 10,00% 120 months 20/12/17 16.959 16.539 Jandira I & II Itaú BBA/ Unibanco CDI 1,28% 120 months 17/08/17 34.466 35.027 Ed. Vargas Itaú BBA/ Unibanco TR 10,15% 120 months 17/09/17 12.834 13.184 São Pedro Itaú BBA/ Unibanco TR 10,15% 120 months 17/09/17 10.515 10.643 São José & Santo Antônio Brazilian Finance IGPM 6,00% 120 months 17/01/18 26.288 25.954 Souza Aranha Itaú BBA/ Unibanco TR 10,15% 155 months 17/01/21 8.533 8.630 Cond. Ind. São José dos Campos Itaú BBA/ Unibanco TR 10,15% 120 months 17/01/18 26.851 27.500 Cond. Ind. Itapevi Itaú BBA/ Unibanco TR 10,15% 120 months 08/04/18 12.499 12.676 DP Louveira I & II Santander TR 10,50% 116 months 04/08/19 127.549 124.240 Galpão Ind. Sorocaba Itaú BBA/ Unibanco TR 10,15% 156 months 04/09/21 8.932 9.026 CD Castelo Bradesco TR 11,00% 99 months 27/02/18 38.259 39.012 Alexandre Dumas Santander TR 10,50% 120 months 05/03/20 15.934 16.149 DP Araucária Santander TR 10,50% 120 months 13/04/20 39.970 - Ouvidor 107 Bradesco TR 10,50% 120 months 12/05/20 19.998 - DP Louveira 3, 4, 5, 6 Santander TR 10,00% 120 months 13/06/20 109.618 - Total 896.204 729.643
  14. 14. BRProperties 13 2Q10 BRPR3 OPERATING INDICATORS Property Management We consider the pro-active stance we take on managing the properties in our portfolio as a vital part of our operation. Through our wholly owned management subsidiary BRPR A, we focus on the property value appreciation, reduction of our tenants’ common area costs, along with the alternative sources of revenues such as parking lot fees. The reduction of common area costs is highly important, given that by doing so, we are able to increase our rent revenues without increasing the total occupancy cost for the tenant. Furthermore, the active management of our properties allows us to anticipate the maturity of the property in terms of lease appreciation, allowing for a more precise analysis of the adequate holding period for each property. Besides promoting structural improvements in our properties, we seek to maintain a close relationship with all our tenants, in order to identify expansion needs and anticipating tenant movements, thereby keeping financial vacancy rates low and increasing our revenue generating potential with the existing tenants. Managed Properties There was an increase in the number of properties managed by BR Properties. Between 2Q09 and 2Q10, our subsidiary BRPR A began managing four new properties, increasing from 24 to 28 the number of managed properties in our portfolio. Common Area Costs (CAC) During the period, there was a reduction in the average common area costs in our warehouse properties, due to building management efficiencies and cost reduction strategy employed by the Company. In regards to the managed office properties, there was an increase in the average common area costs due to condominium employee salary readjustments, which is a benefit conceded through the unions. Along with such increases, new stipulations in regards to the building fire brigades were imposed, which also raised common area costs. Common Area Costs Common Area Costs Managed Warehouses (R$ / sq m) Managed Offices (R$ / sq m) 24 28 2Q09 2Q10 1,99 1,94 2Q09 2Q10 -3% 10,94 11,28 2Q09 2Q10 3%
  15. 15. BRProperties 14 2Q10 BRPR3 BRPR A Revenues At the end of 2Q10, BRPR A’s revenues totaled R$ 0.9 million, approximately 1.8% of the consolidated gross revenues obtained by BR Properties. This represented an increase of 63% in relation to the same period of the previous year, where BRPR A’s revenue was R$ 0.5 million. BRPR A Revenue Growth (R$ thousand) Portfolio Vacancy When estimating the vacancy of our portfolio, we utilized two distinct metrics, the physical and financial vacancy rates. Physical vacancy is estimated by dividing the total vacant area by the total GLA of the portfolio. We believe that this metric does not accurately reflect the revenue loss generated by the vacant areas in the portfolio, due to the fact that it does not reflect the potential rent per sqm for which the vacant areas could be leased. The financial vacancy is utilized specifically to remedy such distortions. By multiplying the average rent per sqm which could be charged in the buildings and their respective vacant areas, and then dividing this result by the potential gross revenues of each property, you calculate the percentage of potential revenue which is lost each month due to vacancy. At the end of 2Q10, our financial vacancy was at 10.4%, an increase of 2% over 1Q10, mainly due to the acquisition of properties with high vacancy rates. Portfolio vacancy does not take into account the vacant areas of the RB 115 and Ed. Manchete buildings, as they are currently under retrofit, and therefore cannot produce lease revenues. Portfolio Vacancy 529 863 957 1.712 2T09 2T10 6M09 6M10 63% 79% 6,0% 6,6% 3,7% 8,3% 10,4% 3,0% 1Q10 2Q10 2Q10 Ex CBOP & TNU Physical Financial
  16. 16. BRProperties 15 2Q10 BRPR3 Current Vacancy Breakdown 2Q10 1Q10 At the end of 2Q10, the majority of our financial vacancy was located in Torre Nações Unidas and CBOP – Ed. Jacarandá, both of them office buildings acquired in 2010. TNU is currently under retrofit and modernization of its installations, and is currently 50% leased. CBOP – Ed. Jacarandá has not yet been delivered by the developer, and is currently under lease-up process of its vacant areas, at the responsibility of the seller. It is important to mention that the payment of the remaining amount of the transaction value is conditioned to the lease-up of at least 80% of the building’s areas. We believe that, given their technical specifications and privileged locations, both properties will be fully leased by the end of the year. If we exclude these two properties, our portfolio vacancy would fall considerably. Property Leasing We differentiate ourselves from the market in our ability to prospect and attract new tenants to the properties in our portfolio, keeping our vacancy rates historically low. In order to do so, we established a leasing department exclusively focused on keeping track of our lease contracts, which allows us to anticipate vacancy trends within our portfolio and initiate re-tenanting efforts before our properties become vacant. Lease Contract Inflation Readjustment Indexes 4,1% 3,3% 1,0% 0,9% 0,6% 0,3% 0,2%0,1% Castelo Branco Office Park TNU Piraporinha Cond.Ind.São José dos Campos DP Louveira 9 Raja Hills Plaza Centenário Vargas 4,2% 1,3% 1,0% 1,0% 0,3% 0,3%0,1% TNU Piraporinha Panamérica Park Cond.Ind.São José dos Campos Raja Hills Plaza Centenário Vargas 81% 15% 5% 1Q10 IGP-M IPCA Outros 76% 22% 2% 2Q10
  17. 17. BRProperties 16 2Q10 BRPR3 With the recent trend of appreciation of commercial property value, especially those located in the large metropolitan regions of Brazil, along with the scarcity of properties with state of the art technical specifications, we believe that having a large portion of our lease contracts expiring or becoming eligible for market alignment in the next two years creates an opportunity to renegotiate such lease contracts with real increases in lease values. Lease Contract Expiration Schedule Gross Revenues (%) Gross Leasable Area (%) Lease Contract 3 Year Market Alignment Schedule Gross Revenues (%) Gross Leasable Area (%) 1% 7% 9% 34% 51% 2010 2011 2012 2013 >2013 2% 5% 6% 37% 49% 2010 2011 2012 2013 >2013 20% 41% 24% 13% 1% 2010 2011 2012 2013 >2013 19% 47% 24% 9% 1% 2010 2011 2012 2013 >2013
  18. 18. BRProperties 17 2Q10 BRPR3 ACQUISITION SCHEDULE We intend to take full advantage of the favorable market scenario, in order to quickly expand our property portfolio. We believe that a significant portion of our future growth will come from our ability to acquire new properties, consolidating our market share in the most attractive regions in Brazil. In order to do so, we rely on an investment department, dedicated exclusively to the prospecting, analyzing and acquiring of new properties, which allows us to focus primarily on identifying and evaluating of new investment opportunities. There was no involvement of real estate brokers in 73% of the acquisitions completed by the Company. After the acquisitions announced in the 1st quarter of 2010, along with the acquisition of the RB 115 building, Distribution Park Louveira 8 & 9 and the Manchete building, BR Properties has already invested R$ 872 million, or 60%, of the total acquisition value outlined in the capital budget, and approved at the Company’s General Shareholders Meeting held last April 23rd . It is also important to mention that we are currently 35% above the acquisition goal which was established for 2010, which demonstrates our ability to execute deals and expand our portfolio under attractive conditions. Acquisition CAPEX Schedule Post IPO Post IPO Acquisitions (R$ million) (R$ million) The chart below illustrates our portfolio growth in terms of GLA. With the recent acquisitions, including those completed after the IPO, BR Properties has consolidated itself in the market as the largest commercial property company in terms of GLA, with approximately 1,0 million sq m. Portfolio Area Growth (GLA sq m) 872 mar/10 abr/10 mai/10 jun/10 jul/10 ago/10 set/10 out/10 nov/10 dez/10 Capital Budget Actual 1.452 645 872 mar/10 abr/10 mai/10 jun/10 jul/10 Capital Budget Actual +35% 730.548 993.143 31.954 106.306 11.345 88.643 (2.091) 26.439 1Q10 Acquisition Ed. Jacarandá Acquisition DP Louveira 3,4,5,6 Acquisition RB 115 Acquisition DP Louveira 8,9 Sale 50% Ed. Souza Aranha Acquisition Ed. Manchete 2Q10
  19. 19. BRProperties 18 2Q10 BRPR3 DEVELOPMENT PROJECTS Our portfolio currently holds four greenfield projects, of which three are commercial office buildings located in the city of São Paulo and one is an industrial warehouse condominium located in the city of São José dos Campos, in the state of São Paulo, which together will total approximately 150 thousand sqm of GLA. BR Properties will invest a combined total of approximately R$ 22 million in these projects by the end of 2010. BR Properties has co-investors in 50% of the following projects: Cidade Jardim, Souza Aranha, and Panamérica Park II. Estimated Development CAPEX Schedule (R$ thousand) Cidade Jardim building The Cidade Jardim building, a AAA office project has initiated construction, and its delivery is scheduled for June of 2012. The property is located in the corner of Cidade Jardim Avenue and Mario Ferraz Street, on of the most valued commercial regions in the city of São Paulo. The region also has an extremely low forecast of new supply of office space coming to the market, little development land available, high lease rates per sqm, high growth potential for property leases, and strong demand for high quality office space. 41.961 256.608 3.700 8.666 67.202 59.135 25.315 25.315 25.315 Disbursed up to 2009 6M10 2010(e) 2011(e) 2012(e) 2013(e) 2014(e) 2015(e) Total Projects Type City / State Region GLA (sq m) Forecast Rent (R$ / sq m) Investment Completion (%) Delivery Cidade Jardim AAA Office São Paulo / SP Jardins 6.792 R$ 125,00 48% jun-12 Panamérica Park II Office São Paulo / SP Marginal 29.004 R$ 48,00 20% dec-11 Souza Aranha Office São Paulo / SP Marginal 4.037 R$ 57,00 28% dec-12 Tech Park SJC Warehouse São José dos Campos / SP Dutra highway 125.000 R$ 13,00 2% n/a* * delivery will be made in several stages
  20. 20. BRProperties 19 2Q10 BRPR3 Panamérica Park II Buildings The Panamérica Park II office buildings will be developed in a site located in the Marginal Pinheiro region, and its delivery is expected for the second quarter of 2012. The development is part of an expansion of the office condominium adjacent to the site, of which BR Properties currently owns 4 of the 9 existing buildings. This will allow for a sharing of the in place infrastructure, generating a reduction in occupancy costs for its tenants. Souza Aranha building Tech Park - São José dos Campos The land area where the SJC Tech Park will be built is part of an industrial property acquired by BR Properties in 2008. The common area infrastructure will be shared among the new and existing tenants, in order to reduce development and occupancy costs. The land area is located directly next to the Presidente Dutra highway, the main connecting highways between São Paulo and Rio de Janeiro state, in the São José dos Campos municipality. The Souza Aranha building is located in Chácara Santo Antonio, a highly consolidated office region of the city of São Paulo, with an increasingly strong demand for high quality commercial office space in which BR Properties holds 5 other buildings. The project is being implemented on remaining land space from another office building that also belongs to BR Properties.
  21. 21. BRProperties 20 2Q10 BRPR3 OUR PORTFOLIO Our portfolio currently holds 61 properties, located mainly in the metropolitan region of São Paulo, Rio de Janeiro, Curitiba and Belo Horizonte, which total 993,143 sqm of GLA and a market value of R$ 2.9 billion according to CB Richard Ellis and our internal estimates. Our portfolio is highly diversified in terms of geographic location and tenant profile, which we believe reduces the operating and financial risk to which we are exposed. We intend to expand our activities, with the continuous diversification of our property portfolio and with the acquisition and/or development of properties with characteristics compatible to our yield requirements. Property Type City State Acquisition Date # of Properties GLA (sq m) % Owned Plaza Centenário Office Curitiba PR 25/05/07 1 3.366 100% Panamérica Park Office São Paulo SP 29/05/07 4 18.667 100% Glória Office Rio de Janeiro RJ 17/07/07 1 7.843 100% Alphaville Office Barueri SP 31/07/07 1 9.292 100% BP Jundiaí Warehouse Jundiaí SP 31/07/07 1 53.343 100% BP Itapeví Warehouse Itapeví SP 31/07/07 1 33.526 100% Jandira I (Vetco) Warehouse Barueri SP 31/07/07 1 16.314 100% Jandira II (Interfile) Warehouse Barueri SP 31/07/07 1 17.990 100% Piraporinha Redevolpment São Bernardo do Campo SP 31/07/07 1 7.184 100% Bolsa RJ Office Rio de Janeiro RJ 27/08/07 1 3.224 21% Athenas Office São Paulo SP 31/08/07 1 6.230 92% Berrini Office São Paulo SP 31/08/07 1 331 4% Isabela Plaza Office São Paulo SP 31/08/07 1 473 9% Joaquim Floriano Office São Paulo SP 31/08/07 1 2.728 73% Midas Office São Paulo SP 31/08/07 1 1.200 23% Network Empresarial Office São Paulo SP 31/08/07 1 231 4% Number One Office São Paulo SP 31/08/07 1 717 24% Olympic Tower Office São Paulo SP 31/08/07 1 1.795 33% Paulista Park Office São Paulo SP 31/08/07 1 784 25% Paulista Plaza Office São Paulo SP 31/08/07 1 2.577 34% Celebration Office São Paulo SP 03/09/07 1 5.590 100% Icomap Office Rio de Janeiro RJ 12/09/07 1 8.695 100% São Pedro Office São Paulo SP 28/09/07 1 3.575 100% Vargas Office Rio de Janeiro RJ 28/09/07 1 11.413 100% Henrique Schaumann Office São Paulo SP 14/11/07 1 14.125 100% Raja Hills Office Belo Horizonte MG 20/12/07 1 7.166 70% MV9 Office Rio de Janeiro RJ 20/12/07 1 12.300 100% Galpão Ind. Paraná (Coveright) Warehouse São José dos Pinhais PR 20/12/07 1 7.748 100% Ed. Comercial Indaiatuba Office Indaiatuba SP 20/12/07 1 11.335 100% Sylvio Fraga Office Rio de Janeiro RJ 20/12/07 1 2.153 85% Sto Antônio Office São Paulo SP 17/01/08 1 4.448 100% São José Office São Paulo SP 17/01/08 1 4.997 100% Galpão Ind. Araucária (Interbox) Warehouse Araucaria PR 31/01/08 1 6.462 100% Souza Aranha Office São Paulo SP 31/01/08 1 2.091 100% Cond. Ind. SJC Warehouse São José dos Campos SP 18/02/08 1 73.382 100% Galpão Itapevi (Trisoft) Warehouse Itapevi SP 08/05/08 1 15.500 100% Galpão Sorocaba (Tecsis) Warehouse Sorocaba SP 04/08/08 1 14.797 100% CD Castelo Warehouse Itapevi SP 02/10/09 1 49.659 100% Alexandre Dumas Office São Paulo SP 03/12/09 1 6.889 100% Ouvidor 107 Office Rio de Janeiro RJ 10/12/09 1 6.284 100% DP Louveira I (Unilever) Warehouse Louveira SP 30/12/09 1 138.095 100% DP Louveira II (K&G) Warehouse Louveira SP 30/12/09 1 6.503 100% DP Araucária Warehouse Araucaria PR 22/01/10 1 42.697 100% Brazilian Business Park Warehouse Atibaia SP 26/02/10 5 59.182 100% TNU Office São Paulo SP 16/03/10 1 25.555 100% CBOP - Ed. Jacarandá Office Barueri SP 12/04/10 1 31.954 100% DP Louveira 3, 4, 5/6 Warehouse Louveira SP 20/04/10 4 106.306 100% RB 115 Office Rio de Janeiro RJ 02/06/10 1 11.345 90% DP Louveira 8 e 9 Warehouse Louveira SP 17/06/10 2 88.643 100% Manchete Office Rio de Janeiro RJ 30/06/10 1 26.439 100% Total 61 993.143
  22. 22. BRProperties 21 2Q10 BRPR3 GLOSSARY BRPR A: wholly owned property management subsidiary of BR Properties S/A. Currently manages 28 properties of the Company’s portfolio CAPEX - Acquisition: capital expenditures utilized in the acquisition of new commercial properties for the portfolio CAPEX - Development: capital expenditures utilized in the development of new commercial properties for the portfolio EBITDA (Earnings Before Income, Tax, Depreciation and Amortization): a non accounting measure which measures 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 amortization expenses 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 Company stock option plan, along with R$ 1.1 million in employee bonus provisions FFO (Funds From Operations): non accounting measure, which adds back depreciation to net income in order to determine, utilizing the income statement, the net cash generated in the period (Net Income + Depreciation) Gross Leasable Area (GLA): refers to the area of a property owned by BR Properties which generates revenues. Average rent per sq m, vacancy, and portfolio size are calculated utilizing this metric Lease per square meter (R$ / sq m): refers to the amount charged per square meter of gross leasable area in each property. Does not include the effects of revenue linearization Leasing spread: real gain (net of inflation) from the renegotiation of existing leases, and new leases of vacant areas when compared to the previous in-place rent Same Property Rent / sq m (2Q10): refers to the most recent R$/sq m applied to the respective properties which were in our portfolio in 2Q09 Same Property Rent / sq m (2Q09): refers to the average R$/sq practiced in the properties in our portfolio in 2Q09 Vacancy - Financial: estimated by multiplying the average rent per sqm which could be charged in the properties and their respective vacant areas, and then dividing this result by the potential gross revenues of each property. Indicates the percentage of potential revenue which is lost each month due to vacancy Vacancy – Financial (stabilized portfolio): portfolio financial vacancy excluding the effects of the CBOP – Ed. Jacarandá and TNU properties Vacancy - Physical: estimated by dividing the total vacant area by the total GLA of the portfolio Vacancy – Physical (stabilized portfolio): portfolio physical vacancy excluding the effects of the CBOP – Ed. Jacarandá and TNU properties
  23. 23. BRProperties 22 2Q10 BRPR3 INCOME STATEMENT Income Statement 2Q10 2Q09 var % 6M10 6M09 var % Gross Operating Revenues 49.237 35.491 39% 95.435 65.929 45% Leasing 46.915 30.460 54% 85.931 60.470 42% Office 20.187 19.299 5% 39.478 41.184 -4% Industrial 26.699 10.940 144% 46.296 18.755 147% Retail 29 220 -87% 157 531 -70% Sale of Properties 1.459 4.502 -68% 7.792 4.502 73% Services Rendered 863 529 63% 1.712 957 79% Deductions from Gross Revenues (4.348) (3.502) 24% (8.946) (6.659) 34% Taxes (PIS/Cofins and ISS) (4.147) (2.941) 41% (8.219) (5.470) 50% Deductions (201) (561) -64% (727) (1.189) -39% Net Revenues 44.889 31.989 40% 86.489 59.270 46% Cost of Leased Properties* (6.245) (4.112) 52% (11.123) (8.233) 35% Gross Profit 38.644 27.877 39% 75.366 51.037 48% General and Administrative Expenses (8.036) (6.305) 27% (15.546) (10.376) 50% Personnel (3.748) (3.446) 9% (7.938) (5.202) 53% Administrative (1.557) (873) 78% (2.927) (3.030) -3% Comercial (710) (1.229) -42% (1.363) (1.254) 9% Vacancy Costs (2.021) (757) 167% (3.318) (890) 273% Net Financial Result (10.842) (10.462) 4% (25.221) (21.767) 16% Financial Income 11.910 4.146 187% 17.691 8.736 103% Financial Expenses (22.752) (14.608) 56% (42.912) (30.503) 41% Other Operating Income 1.887 217 769% 2.002 422 374% Operating Income 21.653 11.327 91% 36.601 19.316 89% Non Operational Result - - 0% - - 0% Income (loss) before taxes 21.653 11.327 91% 36.601 19.316 89% Income and Social Contribution taxes (2.580) (790) 227% (5.820) (1.763) 230% Deferred taxes 232 - 100% 283 - 100% Net Income (loss) 19.305 10.537 83% 31.064 17.553 77% Adjusted EBITDA 38.202 26.735 43% 73.639 50.995 44% Adjusted EBITDA Margin 85% 84% 85% 86% FFO 25.550 14.649 74% 42.187 25.786 64% FFO Margin 57% 46% 49% 44% * Comprised mainly of depreciation
  24. 24. BRProperties 23 2Q10 BRPR3 BALANCE SHEET ASSETS 06/30/2010 03/31/2010 var % Current Assets 597.763 739.448 -19% Cash and Cash Equivalents 396.393 698.054 -43% Trade Accounts Receivable 35.937 17.790 102% Recoverable Taxes 10.690 8.530 25% Advances for Acquisition of Real Estate 148.674 966 15284% Pre-paid Expenses 4.619 190 2337% Properties Available for Sale* - 12.959 -100% Other Accounts Receivable 1.450 960 51% Non-Current Assets 2.104.664 1.775.164 19% Judicial Deposits 93 93 0% Intangible Assets 116.630 23.613 394% Equipment 937 824 14% Investment Properties 1.987.004 1.750.633 14% Buildings 1.504.065 1.299.740 16% Land and Land Bank 503.056 473.926 6% Developments Under Way 34.580 24.335 42% (-) Accumulated Depreciation (54.697) (47.368) 15% Total Assets 2.702.427 2.514.612 7% LIABILITIES 06/30/2010 03/31/2010 var % Current Liabilities 188.554 167.110 13% Loans and Financing 111.721 92.239 21% Suppliers 1.817 2.309 -21% Payables for Acquisition of Real Estate 58.621 58.498 0% Provision for Salaries and Employee Contributions 1.076 4.266 -75% Taxes Payable 2.229 1.387 61% Deferred Short Term Income and Social Contribution tax Payable - - 100% Provisions 6.850 3.146 118% Client Advancements - - 100% Dividends Payable - 3.576 -100% Derivative Instruments 131 423 -69% Other Accounts Payable 6.109 1.267 382% Non-Current Liabilities 831.090 684.198 21% Loans and Financing 784.484 637.405 23% Deferred Income and Social Contribution taxes 46.606 46.793 0% Shareholders Equity 1.682.783 1.663.304 1% Capital 1.568.859 1.566.710 0% (-) IPO Expenses (25.305) (23.129) 100% Capital Reserves 3.894 3.695 5% Revaluation Reserves - subsidiaries 90.467 90.832 0% Income Reserves 44.868 25.196 78% Total Liabilities 2.702.427 2.514.612 7%
  25. 25. BRProperties 24 2Q10 BRPR3 CASH FLOW STATEMENT Fluxo de Caixa - Consolidado 2Q10 2Q09 Cash Flow from Operating Activities Net Income (loss) for the period 19.305 10.741 Adjustments to reconcile net income 18.992 4.677 Depreciation 6.088 4.376 Interest and monetary variation on loans and financing 12.705 - Stock option plan expenses 199 301 Reduction (increase) in assets (158.736) 2.112 Accounts receivable (18.046) (656) Recoverable Taxes (2.160) - Advances for the acquisition of real estate (147.708) - Properties available for sale 12.959 - Other assets (3.781) 2.768 Increase (reduction) in liabilities 1.776 (875) Provision for employee and management bonuses 1.149 750 Payables for acquisition of real estate 123 (3.997) Other liabilities 504 2.372 Net cash generated by (used in) operating activities (118.663) 16.655 Cash Flow from Investment Activities Acquisition of real estate (244.038) - (-) Payables for acquisition of real estate - - Investments in subsidiaries (93.016) - Net proceeds from sale of assets 226 Fixed asset purchases - (2.629) Other 2 - Net cash generated by (used in) investment activities (336.826) (2.629) Cash Flow from Financing Activities Capital increase 2.149 - Loans and financing 169.201 3.640 Payment of loans and financing (15.345) - Costs from Equity Raising (2.176) - Net cash generated by (used in) financing activities 153.829 3.640 Increase (decrease) in cash and cash equivalents (301.660) 17.666 Cash and Cash Equivalents At the beginning of the period 698.053 119.753 At the end of the period 396.393 137.419

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