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Earnings Release 3Q10

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Earnings Release 3Q10

  1. 1. BRProperties Earnings Release 3rd Quarter 2010 Webcast 3Q10 Portuguese November 11th , 2010 10:00 A.M. (Brasília) 07:00 A.M. (US EDT) Phone: (55 11) 2188-0155 Replay: (55 11) 2188-0155 English November 11th , 2010 12:00 P.M. (Brasília) 09:00 A.M. (US EDT) Phone: (1 866) 890-2584 Replay: (1 866) 890-2584
  2. 2. BRProperties 1 3Q10 BRPR3 INDEX Page 3Q10 Highlights 2 Management Report 3 Recent Acquisitions 4 Tables 5 Financial Highlights Operating Highlights Stock Performance Management Comments of 3Q10 Results 6 Gross Revenues 6 Net Revenues 7 Depreciation 7 SG&A 7 Vacancy Expenses 8 Net Financial Expense 8 Net Income 8 Adjusted EBITDA 9 FFO (Funds from Operations) 9 Gross Debt and Available Cash 10 Perpetual Bond 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 Our Portfolio 18 Retrofit Projects 19 Development Projects 20 Estimated Development CAPEX Schedule 20 - Cidade Jardim Building 20 - PP II Building 21 - Souza Aranha Building 21 - Tech Park SJC 21 Glossary 22 Income Statement 23 Balance Sheet 24 Cash Flow Statement 25 Section
  3. 3. BRProperties 2 3Q10 BRPR3 BR PROPERTIES ANNOUNCES NET REVENUES OF R$140.2 MILLION IN 9M10, AND A STABILIZED VACANCY RATE OF 1.8% São Paulo, November 10th , 2010 - BR Properties S.A. (Bovespa: BRPR3), one of Brazil´s largest real estate investment companies, announces today its Earnings Release for the third quarter of 2010 (3Q10). Currently, BR Properties holds 62 commercial properties, which total 1,014,636 sqm of Gross Leasable Area (GLA), and also 4 development projects of which, once finalized, will add 148,313 sqm of GLA to our portfolio. The Company also manages properties of its portfolio through the subsidiary BRPR A. The following financial and operational information will be presented in R$, 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 Haertel IR Analyst ri@brpr.com.br t: +55 11 3201-1000 f: +55 11 3201-1001 Stock (11/09/2010) Ticker: BRPR3 Stock price: R$ 17.35 # of shares: 139,403,585 Market Value: R$ 2,419 million US$ 1,424 million Corporate Governance Highlights of 3Q10  3Q10 Gross Revenues of R$ 58.5 million, a 91% increase compared to 3Q09. Estimated pro-forma gross revenues of R$ 61.7 million in 3Q10 and R$ 198.5 million in 9M10;  Adjusted EBITDA of R$ 45.4 million at the end of 3Q10, an increase of 101% over 3Q09 and an adjusted EBITDA margin of 84%. In 3Q10 and 9M10, we estimated a pro-forma adjusted EBITDA of R$ 49.0 million and R$ 162.4 million, with an 85% and 88% margin, respectively. Excluding vacancy expenses, the margins would rise to 93% and 92% in 3Q10 and 9M10, respectively;  Consolidated FFO in 9M10 totaled R$ 60.1 million, with an FFO margin of 43%;  On August 12th , we acquired 41% of Ventura Corporate Towers II, completing 84% of the acquisition goal proposed in the capital budget after the Company’s IPO and a record R$ 1.5 billion in acquisitions;  In October, the Company concluded a perpetual bond issuance, in the amount of US$ 200 million, offered to qualified institutional investors. The issued bond has a call option at par after the 5th year, and will pay 9% interest per year. The perpetual bond proceeds will be mainly used for new acquisitions, in order to maintain our strong growth prospects;  During 3Q10, we raised approximately R$ 238 million in real estate long term financing linked to TR. This type of credit represents 78% of the total Company debt, excluding the perpetual bond proceeds.
  4. 4. BRProperties 3 3Q10 BRPR3 MANAGEMENT REPORT We have experienced another excellent quarter in terms of financial and operating highlights, driven mainly by the expansion of our portfolio and the increase in our financial margins. In the 3rd quarter, we have continued expanding our portfolio by acquiring Ventura Corporate Towers II. The property is located in the Downtown region of Rio de Janeiro, one of the most coveted commercial regions in the country, and where we still see great upside potential both in terms of rental revenues and property value. Recently delivered, the Ventura Corporate Towers II is a Triple A office complex, signaling the highest technical standards for commercial office properties, and a landmark in Rio’s Downtown. With this acquisition, we have completed 84% of the acquisition goal set forth after our IPO, with a total invested value of R$1.2 billion, and approximately 286 thousand sqm of gross leasable area (GLA). During the quarter, we experienced gross revenue growth of 91% when compared to the same period of the previous year. Our pro-forma revenues, which basically consider that all properties were in our portfolio and generating revenues since the beginning of the respective periods, reached an estimated R$61.7 million in 3Q10 and R$198.5 million in 9M10. These estimates represent an increase of 102% and 106% compared to the results in 3Q09 and 9M09, respectively, demonstrating strong revenue growth potential. Our adjusted EBITDA and our adjusted EBITDA margin grew during the period, influenced by the addition of new properties to the portfolio, and the non-incurrence of proportional operating costs. We showed an adjusted EBITDA of R$45.4 million at the end of 3Q10, an increase of 101% over 3Q09, and an adjusted EBITDA margin of 84%. Our pro-forma adjusted EBITDA totaled R$49.0 million in 3Q10 and R$162.4 million in 9M10, with margins of 85% and 88%, respectively, one of the highest in the industry. We also projected a pro-forma scenario with 0% vacancy in order to estimate the revenue generation and respective margins. In this scenario, the margin for 3Q10 and 9M10 were 93% and 92%, respectively. We achieved excellent results in relation to the stabilized financial vacancy in our portfolio, which totaled 1.8% in 3Q10, compared to 3.0% in 2Q10. This drop in vacancy rates was largely due to the efforts of our leasing department, along with the increased demand for commercial space. In October, we accessed the debt capital markets by issuing a Perpetual Bond, for a total value of US$200 million. The bond is callable after the 5th year, and will pay interest of 9% per year, paid quarterly, of which the coupons will be fixed to the local currency (BRL), linked to the benchmark CDI rate. We will use the resources from the issuance for new acquisitions, maintaining the strong portfolio growth without diluting the corporate capital. The consolidated revenues in the quarter and accumulated in 2010 reflect our capacity to expand our portfolio with value adding acquisitions, and demonstrates the accelerated pace with which such transactions were completed. We will maintain our portfolio expansion strategy with the current cash available, taking advantage of the opportunities sourced by our investment team.
  5. 5. BRProperties 4 3Q10 BRPR3 RECENT ACQUISITIONS Ventura Corporate Towers II In August 12th , 2010, we acquired - together with Banco BTG Pactual - 82% of one of the two towers which make up the Ventura Corporate Towers, a Triple A office complex, for R$ 680 million. The acquisition was done through the real estate investment fund Ventura II-A Fundo de Investimento Imobiliário-FII, which will be managed by BR Properties. Considered the largest and best office building in the city of Rio de Janeiro, the Ventura Corporate Towers are located in the downtown region of the city, one of the highest valued corporate regions in the country, with ample access to public transportation and close to the city’s major airport. The acquired portion of the building holds approximately 43,000 sqm of GLA, of which 1,269 sqm is retail space on the ground level, along with 495 parking spaces. Considering the new acquisition, BR Properties portfolio reaches over 1 million sqm of GLA, of which approximately 108 thousand sqm is located in the downtown region of Rio de Janeiro. According to CB Richard Ellis estimates in their quarterly office market reports, the lease for the region the property is found is approximately R$ 150.00 / sqm per month.  Type: Office AAA  Location: Rio de Janeiro/RJ  ABL: 21,493 sqm  % Owned: 41%  CAPEX BR: R$ 340 MM
  6. 6. BRProperties 5 3Q10 BRPR3 FINANCIAL AND OPERATING HIGHLIGHTS PORTFOLIO BREAKDOWN Portfolio Value Gross Leasable Area Financial Highlights 3Q10 3Q09 var % 9M10 9M09 var % 3Q10 pro-forma* 9M10 pro-forma* Net Revenues 53.688 27.616 94% 140.177 86.886 61% 57.336 183.613 General and Administrative Expenses (9.680) (6.019) 61% (25.226) (15.974) 58% (9.680) (25.226) Adjusted EBITDA 45.356 22.580 101% 118.995 73.995 61% 49.004 162.430 Adjusted EBITDA Margin 84% 82% 3% 85% 85% 0% 85% 88% Net Income 10.437 6.231 67% 41.501 23.783 74% - - Net Margin 19% 23% -14% 30% 27% 8% - - FFO 17.918 10.290 74% 60.105 36.075 67% - - FFO Margin 33% 37% -10% 43% 42% 3% - - * non-audited Operating Highlights 3Q10 3Q09 var % 9M10 9M09 var % GLA Current Portfolio (sqm) 1.014.636 424.573 139,0% 1.014.636 424.573 139,0% - Office (sqm) 277.303 178.327 55,5% 277.303 178.327 55,5% - Warehouse (sqm) 730.148 239.062 205,4% 730.148 239.062 205,4% - Other (sqm) 7.184 7.184 0,0% 7.184 7.184 0,0% GLA Properties Under Development 148.313 150.473 -1,4% 148.313 150.473 -1,4% - Office (sqm) 23.313 25.473 -8,5% 23.313 25.473 -8,5% - Warehouse (sqm) 125.000 125.000 0,0% 125.000 125.000 0,0% Financial Vacancy 12,3% 7,6% 61,2% 12,3% 7,6% 61,2% Financial Vacancy (Stabilized portfolio) 1,8% 7,6% -76,7% 1,8% 7,6% -76,7% Physical Vacancy 5,2% 8,1% -36,0% 5,2% 8,1% -36,0% Physical Vacancy (Stabilized portfolio) 1,8% 8,1% -77,9% 1,8% 8,1% -77,9% Leasing Spread (Renegotiations) - Office 13,6% -4,2% n/a 13,4% -0,4% n/a Leasing 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/a Leasing Spread (New Leases) - Warehouse 13,7% -13,3% n/a 13,6% -12,3% n/a New 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 Stock Performance (BRPR3) 3Q10 3Q09 var % 9M10 9M09 var % Total Number of Shares * 139.403.585 60.258.675 131,3% 139.403.585 60.258.675 131,3% Free Float (%) 77% n/a n/a 77% n/a n/a Stock Price (average for the period) 13,89 n/a n/a 13,03 n/a n/a Stock Price (end of period) 16,30 n/a n/a 16,30 n/a n/a Market Cap end of period (R$ million) 2.272 n/a n/a 2.272 n/a n/a Average Daily Trading Volume (R$ million) 5,46 n/a n/a 5,11 n/a n/a Average Daily Traded Shares 385.519 n/a n/a 387.732 n/a n/a Average Daily negotiations 170 n/a n/a 148 n/a n/a * Company began trading its shares on the Bovespa in March of 2010 Office 58,68R$ Warehouse 16,22R$ Current Average Rent (R$/ sqm/ month) 58% 38% 1% 3% Office Industrial Other Development 27% 72% 1% Office Industrial Other
  7. 7. BRProperties 6 3Q10 BRPR3 MANAGEMENT COMMENTS OF 3Q10 RESULTS With the objective of reflecting the real revenues the properties acquired during 3Q10 would have had on our financial statements, we estimated, up to the level of adjusted EBITDA, the outcome of the revenues of those properties assuming they had been in our portfolio since the beginning of their respective periods – pro-forma. The chart below describes the revenue gains achieved if those properties had been in the portfolio since the beginning of the year. It is important to state that such results were estimated by the Company, therefore, they were not reviewed nor audited by our independent auditors. Gross Revenues Our Gross Revenues reached R$ 58.5 million at the end of 3Q10, which resulted in an increase of 91%, compared to the end of 3Q09, when our gross revenues totaled R$ 30.6 million. The significant increase occurred mainly from the addition of new properties in our portfolio, acquired throughout 2010. Gross Revenues Breakdown:  40%, or R$ 24.5 million resulted from leasing revenues from offices;  58% or R$ 34.1 million resulted from leasing revenues from warehouses;  2% or R$ 0.9 million resulted from property management revenues;  No revenues from property sales in the quarter. At the end of 3Q10 and 9M10, our pro-forma gross revenues reached R$ 61.7 million and R$ 198.5 million, respectively. Gross Revenue Growth (R$ thousand) Additional Pro-forma Gross Revenues 3Q10 (R$ thousand) Additional Pro-forma Gross Revenues 9M10 (R$ thousand) 30.579 58.462 61.678 96.508 153.897 198.492 3Q09 3Q10 3Q10 Pro Forma 6M09 9M10 9M10 Pro Forma 91% 6% 102% 106% 29% 59% 58.462 61.678 3.216 3Q10 Actual Ventura 3Q10 Pro-forma 153.897 198.492 4.346 500 2.844 6.035 6.802 8.863 15.206 9M10 Actual BBP DP Araucária TNU Ed. Jacarandá Louveira 3-6 Louveira 8-9 Ventura 9M10 Pro-forma
  8. 8. BRProperties 7 3Q10 BRPR3 Net Revenues Our Net Revenues reached R$ 53.7 million, an increment of 94%, compared to the end of 3Q09, when our net revenues totaled R$ 27.6 million. At the end of 3Q10 and 9M10, our pro-forma net revenues totaled R$ 57.3 million and R$ 183.6 million, respectively. Net Revenue Growth (R$ thousand) Depreciation Our depreciation expenses totaled R$ 7.5 million at the end of 3Q10, an increase of 84%, compared to 3Q09, 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 3Q10, our general and administrative expenses, excluding vacancy expenses, totaled R$ 5.6 million, while in 3Q09, these expenses totaled R$ 5.2 million, an increase of 9%. During 9M10, the 25% increase in expenses is mainly explained by the increase in 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) 27.616 53.688 57.336 86.886 140.177 183.613 3Q09 3Q10 3Q10 Pro Forma 9M09 9M10 9M10 Pro Forma 94% 7% 108% 61% 31% 111% 4.059 7.481 12.292 18.604 3Q09 3Q10 9M09 9M10 84% 51% 5.150 5.597 14.277 17.825 3Q09 3Q10 9M09 9M10 9% 25% Expenses (ex-vacancy) 3Q10 3Q09 var % 9M10 9M09 var % General and Administrative (5.597) (5.150) 9% (17.825) (14.277) 25% Personnel (2.094) (2.847) -26% (10.032) (7.847) 28% Administrative (1.167) (562) 108% (4.094) (3.449) 19% Comercial (2.336) (1.742) 34% (3.699) (2.981) 24%
  9. 9. BRProperties 8 3Q10 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 3Q10, we registered vacancy expenses of R$ 4.1 million, while in 3Q09, these expenses totaled R$ 0.9 million, an increase of R$ 3.2 million. The majority of our vacancy expenses come specifically from recently acquired properties and properties that are in their final stage of retrofit: (i) Torre Nações Unidas – currently in the final stage of its retrofit and is 55% leased; (ii) Ventura Corporate Towers II – delivered in June, already 50% occupied by BNDES and British; (iii) CBOP – partially delivered at the beginning of 2010, currently 55% leased. Vacancy Expenses (R$ thousand) Net Financial Expense In 3Q10, we had net financial expenses of R$ 22.7 million, which corresponds to an increase of 107% in relation to 3Q09, in which our net financial expense totaled R$ 11.0 million. During the period, we took in new debt related to the acquisition of the properties Brazilian Business Park, Torre Nações Unidas, and DP Louveira 8, 9. Net Financial Expense (R$ thousand) Net Income Our net income for 3Q10 was R$ 10.4 million, a 67% increase in comparison with 3Q09, when our net income totaled R$ 6.2 million. Net Income Growth (R$ thousand) 868 4.083 1.697 7.401 3Q09 3Q10 9M09 9M10 370% 336% (10.985) (22.728) (32.752) (47.949) 3Q09 3Q10 9M09 9M10 107% 46% 6.231 10.437 23.783 41.501 3Q09 3Q10 9M09 9M10 67% 74%
  10. 10. BRProperties 9 3Q10 BRPR3 Adjusted EBITDA Our adjusted EBITDA grew by 61% in the period, from R$ 74.0 million in 9M09 to R$ 119.0 million in 9M10. Additionally, our adjusted EBITDA margin for 9M10 was 85%.The adjustments made to EBITDA were: (i) adding back R$ 0.6 million from non-cash expenses regarding the Company stock option plan; and (ii) adding back R$ 3.4 million in employee bonus provisions. Our 9M10 pro-forma adjusted EBITDA totaled R$ 162.4 million, an increase of 37% in relation to 9M10 adjusted EBITDA, and 120% above 9M09 adjusted EBITDA. In order to estimate the adjusted EBITDA pro-forma, we assumed that the 9M10 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. In 3Q10, our adjusted EBITDA pro-forma margin was 85%, 1% above the margin demonstrated in the period, due to scale gains resulting from recent acquisitions. In order to demonstrate the effect of our operations, we also simulated a pro-forma scenario in which our portfolio shows a vacancy rate of 0%, and how it would affect our margins and cash generation. In such scenario, our 3Q10 and 9M10 EBITDA would reach 93% and 92%, respectively. Adjusted EBITDA Growth FFO Our FFO for 3Q10 totaled R$ 17.9 million, which corresponds to an increase of 74% in relation to 3Q09, in which our FFO was R$ 10.3 million. In the accumulated period, we registered an increase of our FFO margin, rising from 42% in 9M09 to 43% in 9M10. FFO Growth 22.580 45.356 49.004 53.087 73.995 118.995 162.430 169.831 82% 84% 85% 93% 85% 85% 88% 92% 3Q09 3Q10 3Q10 ProForma 3Q10 Pro-Forma (ex-vacancy) 9M09 9M10 9M10 ProForma 9M10 Pro- Forma (ex-vacancy) Adjusted EBITDA Margin 101% 8% 61% 37%135% 130% 8% 5% 10.290 17.918 36.075 60.105 37% 33% 42% 43% 3Q09 3Q10 9M09 9M10 FFO Margin 74% 67%
  11. 11. BRProperties 10 3Q10 BRPR3 Gross Debt and Available Cash Our gross debt, represented by loans and financing used for the acquisition of our properties totaled R$ 1,335.6 million at the end of 3Q10, an increase of R$ 439.4 million compared to the end of 2Q10. In the same period, our net debt increased by approximately R$ 331.8 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 Brazilian Business Park, Torre Nações Unidas, and DP Louveira 8, 9. During the period, we also took in short-term debt totaling R$ 240.0 million for the acquisition of Ventura Corporate Towers II. It is worth mentioning that such debt will be fully paid, utilizing the Company’s cash, by the end of 2010. Debt Amortization Schedule Cash and Cash Equivalents Our available cash resources totaled R$ 538.6 million at the end of the quarter, an increase of R$ 142.2 million when compared to 2Q10. At the end of 3Q10, the average yield on our short-term investments was 100.7% of CDI, the Brazilian inter-bank loan rate. Net Debt 3Q10 2Q10 Cash and Cash Equivalents 538.573 396.393 Loans and Financing 1.335.555 896.204 Payables for Acquisition of Real Estate 93.294 58.621 Net Debt 890.276 558.432 Net Debt / Annualized Adjusted EBITDA 4,9x 3,7x Adjusted EBITDA / Net Financial Income 2,0x 3,5x Duration (years) 5,5 5,5 245.152 70.394 88.875 84.998 109.550 108.015 120.282 266.214 86.263 77.732 44.756 22.684 10.591 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cash and Cash Equivalents 3Q10 2Q10 Cash and Cash Equivalents 538.573 396.393 Average yield on short-term investments (% CDI) 97,3% 100,7%
  12. 12. BRProperties 11 3Q10 BRPR3 Perpetual Bond In October, the Company concluded a perpetual bond issuance, in the amount of US$ 200 million. The perpetual bond has a call option at par after the 5th year and will pay 9% interest per year. The perpetual bond proceeds will be mainly used for new acquisitions, in order to maintain our strong growth, without diluting our corporate capital through a Secondary Public Offering. The main objectives of our international issuance were to reach a larger base of investors and to raise capital at lower costs than in the local market. Furthermore, we were able to lengthen our amortization schedule, thus, reducing risks inherent to short duration capital structures and decreasing our long term average cost of debt. Subsequently, we 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 the benchmark 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 no maturity date. Mitigation of Exchange Rate Risk Bond BRProperties Bank USD USD 115,64% CDI
  13. 13. BRProperties 12 3Q10 BRPR3 Loans and Financing Given the high levels of operating cash generated in our business, we do not utilize debt to finance our working capital needs. Approximately 78% 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. Considering the perpetual bond, the TR linked debt would represent approximately 62% of our total debt. Debt Index Breakdown 78% 3% 20% TR IGPM CDI Property Acquisition Financing Institution Index Cupon Term Maturity 3Q10 Balance 2Q10 Balance Icomap Itaú BBA/ Unibanco IGPM 8,84% 120 months 16/04/17 11.036 11.129 Itapevi Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 29.670 30.129 Piraporinha Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 11.411 11.588 Jundiaí Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 45.304 46.005 Alphaville Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 19.970 20.279 Panamérica Park Itaú BBA/ Unibanco TR 9,90% 120 months 25/05/17 41.503 41.822 Plaza Centenário Itaú BBA/ Unibanco TR 9,90% 120 months 25/05/17 5.457 5.548 Henrique Schaumann Itaú BBA/ Unibanco TR 10,15% 120 months 17/10/17 29.660 29.784 Bolsa RJ Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 11.762 11.990 Generali Itaú BBA/ Unibanco TR 9,90% 120 months 17/08/17 10.559 10.764 Glória Itaú BBA/ Unibanco TR 9,90% 120 months 17/07/17 22.712 22.921 Joaquim Floriano Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 9.241 9.293 Paulista Park Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 2.063 2.070 Paulista Plaza Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 7.947 7.972 Isabela Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 2.392 2.406 Olympic Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 4.187 4.200 Midas Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 3.014 3.031 Network Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 709 713 Number One Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 1.868 1.874 Berrini Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 1.143 1.149 Celebration Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 17.789 17.890 Athenas Itaú BBA/ Unibanco TR 10,15% 120 months 17/08/17 14.088 14.188 Raja Hills Brazilian Finance TR 10,00% 120 months 20/12/17 13.973 14.085 Ed. Comercial Indaiatuba Brazilian Finance TR 10,00% 120 months 20/12/17 26.279 26.491 Sylvio Fraga Brazilian Finance TR 10,00% 120 months 20/12/17 16.763 16.898 MV9 Brazilian Finance TR 10,00% 120 months 20/12/17 22.596 22.778 Galpão Industrial Paraná Brazilian Finance TR 10,00% 120 months 20/12/17 17.404 16.959 Jandira I & II Itaú BBA/ Unibanco CDI 1,28% 120 months 17/08/17 34.016 34.466 Ed. Vargas Itaú BBA/ Unibanco TR 10,15% 120 months 17/09/17 12.487 12.834 São Pedro Itaú BBA/ Unibanco TR 10,15% 120 months 17/09/17 10.396 10.515 São José & Santo Antônio Brazilian Finance IGPM 6,00% 120 months 17/01/18 26.373 26.288 Souza Aranha Itaú BBA/ Unibanco TR 10,15% 155 months 17/01/21 4.221 8.533 Cond. Ind. São José dos Campos Itaú BBA/ Unibanco TR 10,15% 120 months 17/01/18 26.210 26.851 Cond. Ind. Itapevi Itaú BBA/ Unibanco TR 10,15% 120 months 08/04/18 12.334 12.499 DP Louveira I & II Santander TR 10,50% 116 months 04/08/19 112.039 127.549 Galpão Ind. Sorocaba Itaú BBA/ Unibanco TR 10,15% 156 months 04/09/21 8.841 8.932 BBP Itaú BBA/ Unibanco TR 10,00% 144 months 07/07/22 81.326 - CD Castelo Bradesco TR 11,00% 99 months 27/02/18 37.506 38.259 TNU Itaú BBA/ Unibanco TR 10,00% 144 months 07/07/22 63.640 - Alexandre Dumas Santander TR 10,50% 120 months 05/03/20 15.723 15.934 DP Araucária Santander TR 10,50% 120 months 13/04/20 39.458 39.970 Ouvidor 107 Bradesco TR 10,50% 120 months 12/05/20 19.754 19.998 DP Louveira 3, 4, 5, 6 Santander TR 10,00% 120 months 13/06/20 108.218 109.618 DP Louveira 8, 9 Bradesco TR 10,50% 120 months 12/09/20 94.369 - Ventura Corporate Towers II * Itaú BBA CDI 2,00% 90 days 12/11/10 228.142 - Total 1.335.555 896.204 * debt will be fully paid, utilizing the Company’s cash, by the end of 2010
  14. 14. BRProperties 13 3Q10 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 3Q09 and 3Q10, our subsidiary BRPR A began managing five new properties, increasing from 24 to 29 properties managed in our portfolio. Common Area Costs (CAC) In 3Q10, we saw 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. The increase in the average common area costs of our office properties results from the incurrence of higher costs associated with the condominium work force. Common Area Costs Common Area Costs Managed Warehouses (R$ / sqm) Managed Offices (R$ / sqm) 24 29 3Q09 3Q10 2,46 2,33 3Q09 3Q10 -5% 11,62 11,86 3Q09 3Q10 2%
  15. 15. BRProperties 14 3Q10 BRPR3 BRPR A Revenues At the end of 3Q10, BRPR A’s revenues totaled R$ 894 thousand, approximately 1.5% of the consolidated gross revenues obtained by BR Properties. This represented an increase of 72% in relation to the same period of the previous year, where BRPR A’s revenue was R$ 519 thousand. 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 3Q10, our financial vacancy was at 12.3%, an increase of 2% over 2Q10, mainly due to the acquisition of Ventura Towers II, which was 50% vacant. 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 519 894 1.476 2.606 3Q09 3Q10 9M09 9M10 72% 77% 6,6% 5,2% 1,8% 10,4% 12,3% 1,8% 2Q10 3Q10 3Q10 Ex CBOP, TNU & Ventura Physical Financial
  16. 16. BRProperties 15 3Q10 BRPR3 Current Vacancy Breakdown 3Q10 2Q10 At the end of 3Q10, the majority of our financial vacancy was located in Torre Nações Unidas (TNU), CBOP – Ed. Jacarandá, and Ventura II, all office buildings acquired in 2010. TNU is currently at the end of its retrofit process and modernization of its installations, and is 55% leased. CBOP – Ed. Jacarandá is currently 55% leased and 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 contingent upon the lease-up of at least 80% of the building’s areas. Finally, Ventura II was acquired in August, and is currently 50% leased to BNDES and British Gas. We strongly believe that, given their technical specifications and privileged locations, these properties will be fully leased by the end of 2010. If we exclude these three properties, our portfolio vacancy would be less than 2%. 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 4,7% 3,0% 2,8% 0,9% 0,5% 0,2% 0,2% 0,0% Ventura Castelo Branco Office Park TNU Piraporinha DP Louveira 9 Plaza Centenário Raja Hills Number One 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 78% 20% 2% 3Q10 76% 22% 2% 2Q10 IGP-M IPCA Other
  17. 17. BRProperties 16 3Q10 BRPR3 Leasing Spread Our Leasing Spread, which is the real gain, net of inflation, obtained on the renegotiation of our existing contracts and the new leases signed in vacant areas, increased considerably when compared to the respective periods in the previous year. This increase was largely due to the efforts of our leasing department, along with the increased demand for commercial space. Renegotiations New Leases Lease Contract Expiration Schedule Gross Revenues (%) Gross Leasable Area (%) Lease Contract 3 Year Market Alignment Schedule Gross Revenues (%) Gross Leasable Area (%) -4,2% 13,6% -0,4% 13,4% 0,0% 14,4% 3,9% 7,1% 3Q09 3Q10 9M09 9M10 Office Industrial -3,7% 6,6% 1,8% 7,7% -13,3% 13,7% -12,3% 13,6% 3Q09 3Q10 9M09 9M10 Office Industrial Leasing Spread 3Q10 3Q09 var % 9M10 9M09 var % Leasing Spread (Renegotiations) - Office 13,6% -4,2% n/a 13,4% -0,4% n/a Leasing 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/a Leasing Spread (New Leases) - Warehouse 13,7% -13,3% n/a 13,6% -12,3% n/a New 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% 0% 6% 8% 30% 57% 2010 2011 2012 2013 >2013 2% 5% 6% 36% 51% 2010 2011 2012 2013 >2013 16% 36% 20% 27% 1% 2010 2011 2012 2013 >2013 17% 44% 23% 15% 1% 2010 2011 2012 2013 >2013
  18. 18. BRProperties 17 3Q10 BRPR3 ACQUISITION SCHEDULE We intend to maintain our strong growth pace demonstrated in 2010, taking full advantage of the favorable economic scenario that we have seen this year, and mainly the very fragmented commercial properties sector 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 76% of the acquisitions completed by the Company. With the acquisition of Ventura Corporate Towers II, BR Properties has already deployed R$ 1.2 billion, or 84%, 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 25% above the acquisition goal 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 more than 1 million sqm. Portfolio Area Growth (GLA sqm) 1.212 mar/10 apr/10 may/10 jun/10 jul/10 aug/10 sep/10 oct/10 nov/10 dec/10 Capital Budget Actual 1.452 968 1.212 mar/10 apr/10 may/10 jun/10 jul/10 aug/10 sep/10 Capital Budget Actual +25% 993.143 1.014.63621.493 2Q10 Acquisition Ventura Towers 3Q10
  19. 19. BRProperties 18 3Q10 BRPR3 OUR PORTFOLIO Our portfolio currently holds 62 properties, located mainly in the metropolitan region of São Paulo, Rio de Janeiro, Curitiba and Belo Horizonte, which total 1,014,636 sqm of GLA. 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 (sqm) % 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% 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% 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% Souza Aranha Office São Paulo SP 31/01/08 1 2.091 100% 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% 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% RB 115 Office Rio de Janeiro RJ 02/06/10 1 11.345 90% Manchete Office Rio de Janeiro RJ 30/06/10 1 26.439 100% Ventura Towers II Office Rio de Janeiro RJ 12/08/10 1 21.493 41% Sub-total Offices 37 277.303 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% Galpão Ind. Paraná (Coveright) Warehouse São José dos Pinhais PR 20/12/07 1 7.748 100% Galpão Ind. Araucária (Interbox) Warehouse Araucaria PR 31/01/08 1 6.462 100% 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% 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% DP Louveira 3, 4, 5/6 Warehouse Louveira SP 20/04/10 4 106.306 100% DP Louveira 8 e 9 Warehouse Louveira SP 17/06/10 2 88.643 100% Sub-total Industrial 24 730.148 Piraporinha Other São Bernardo do Campo SP 31/07/07 1 7.184 100% Sub-total Other 1 7.184 Total 62 1.014.636
  20. 20. BRProperties 19 3Q10 BRPR3 RETROFIT PROJECTS Currently, 2 of our properties are undergoing full retrofits, which, once completed will add another 38 thousand sqm of office GLA to our portfolio. It is important to mention that we have structured such acquisitions with disbursements which are contingent upon the delivery of the projects, therefore mitigating any development execution risk for the Company. RB 115 Building Acquired in June of 2010, the RB 115 building is currently in the final stages of a full retrofit of its internal installations and façade. Once delivered, the property will hold 11,345 sqm of GLA and 20 floors. We have begun the pre-leasing process of the building, which will be one of the only properties delivered in Downtown Rio de Janeiro, where we hold the majority of our office buildings, and where the vacancy rates are at historic low levels. The region also boasts the best mass transportation infrastructure in the city, along with its high concentration of office buildings and its proximity to the Santos Dumont airport. We estimate that the property will be delivered until year end. Manchete Building The complete renovation and retrofit of the Manchete Building, which has been vacant since 2000, will allow for the re-insertion of a landmark property into the economic cycle of the city of Rio de Janeiro. The property is located in front of Flamengo beach, with easy access to downtown and the Santos Dumont airport. The execution of the renovation project will faithfully follow the original concept created by Oscar Niemeyer – world famous architect and building designer. The property will hold 26,439 sqm of GLA, along with an auditorium and a deck parking structure. At the end of the retrofit, the property can be leased to a large, single tenant or by multiple tenants, given that its floor space and layout is flexible in that sense. We estimate that the property will be delivered by 3Q11.
  21. 21. BRProperties 20 3Q10 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 148 thousand sqm of GLA. BR Properties will have invested a combined total of approximately R$ 57.9 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, an 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. 40.018 259.176 6.619 11.251 59.020 61.508 31.555 24.603 24.603 Disbursed up to 2009 9M10 2010(e) 2011(e) 2012(e) 2013(e) 2014(e) 2015(e) Total Projects Type City / State Region GLA (sqm) Forecast Rent (R$ / sq m) Investment Completion (%) Delivery Cidade Jardim AAA Office São Paulo / SP Jardins 6.792 R$ 125,00 50% jun-12 Panamérica Park II Office São Paulo / SP Marginal 14.502 R$ 48,00 20% jun-12 Souza Aranha Office São Paulo / SP Marginal 2.019 R$ 57,00 19% 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
  22. 22. BRProperties 21 3Q10 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.
  23. 23. BRProperties 22 3Q10 BRPR3 GLOSSARY BRPR A: wholly owned property management subsidiary of BR Properties S/A. Currently manages 29 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 3Q10 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. The adjustments made to 9M10 EBITDA were R$ 0.6 million and R$ 3.4 million regarding the aforementioned costs, respectively 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 sqm, vacancy, and portfolio size are calculated utilizing this metric Lease per square meter (R$ / sqm): 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 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, Torre Nações Unidas, and Ventura Corporate Towers II 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, Torre Nações Unidas, and Ventura Corporate Towers II
  24. 24. BRProperties 23 3Q10 BRPR3 INCOME STATEMENT Income Statement 3Q10 3Q09 var % 9M10 9M09 var % Gross Operating Revenues 58.462 30.579 91% 153.897 96.508 59% Leasing 57.568 30.060 92% 143.499 90.530 59% Office 23.458 20.341 15% 62.936 61.524 2% Industrial 34.056 9.507 258% 80.352 28.262 184% Retail 54 212 -75% 211 743 -72% Sale of Properties - - 0% 7.792 4.502 73% Services Rendered 894 519 72% 2.606 1.476 77% Deductions from Gross Revenues (4.774) (2.963) 61% (13.720) (9.622) 43% Taxes (PIS/Cofins and ISS) (4.576) (2.499) 83% (12.795) (7.969) 61% Deductions (198) (464) -57% (925) (1.653) -44% Net Revenues 53.688 27.616 94% 140.177 86.886 61% Cost of Leased Properties* (7.481) (4.059) 84% (18.604) (12.292) 51% Gross Profit 46.207 23.557 96% 121.573 74.594 63% General and Administrative Expenses (9.680) (6.019) 61% (25.226) (15.974) 58% Personnel (2.094) (2.847) -26% (10.032) (7.847) 28% Administrative (1.167) (562) 108% (4.094) (3.449) 19% Comercial (2.336) (1.742) 34% (3.699) (2.981) 24% Vacancy Costs (4.083) (868) 370% (7.401) (1.697) 336% Net Financial Result (22.728) (10.985) 107% (47.949) (32.752) 46% Financial Income 22.624 3.341 577% 40.315 12.077 234% Financial Expenses (45.352) (14.326) 217% (88.264) (44.829) 97% Other Operating Income 922 488 89% 2.924 488 499% Operating Income 14.721 7.041 109% 51.322 26.356 95% Non Operational Result - - 0% - - 0% Income (loss) before taxes 14.721 7.041 109% 51.322 26.356 95% Income and Social Contribution taxes (4.582) (1.017) 351% (10.402) (3.251) 220% Deferred taxes 298 207 44% 581 678 -14% Net Income (loss) 10.437 6.231 67% 41.501 23.783 74% Adjusted EBITDA 45.356 22.580 101% 118.995 73.995 61% Adjusted EBITDA Margin 84% 82% 85% 85% FFO 17.918 10.290 74% 60.105 36.075 67% FFO Margin 33% 37% 43% 42% * Comprised mainly of depreciation
  25. 25. BRProperties 24 3Q10 BRPR3 BALANCE SHEET ASSETS 09/30/2010 06/30/2010 var % Current Assets 759.815 597.763 27% Cash and Cash Equivalents 538.573 396.393 36% Accounts Receivable 34.629 35.937 -4% Recoverable Taxes 13.140 10.690 23% Advances for Acquisition of Real Estate 163.891 148.674 10% Pre-paid Expenses 7.881 4.619 71% Other Accounts Receivable 1.701 1.450 17% Non-Current Assets 2.442.351 2.104.664 16% Judicial Deposits 93 93 0% Investments - Goodwill 116.630 116.630 0% Equipment 1.042 937 11% Investment Properties 2.324.586 1.987.004 17% Buildings 1.846.096 1.504.065 23% Land and Land Bank 501.008 503.056 0% Developments Under Way 40.435 34.580 17% (-) Accumulated Depreciation (62.953) (54.697) 15% Total Assets 3.202.166 2.702.427 18% LIABILITIES 09/30/2010 06/30/2010 var % Current Liabilities 488.702 188.554 159% Loans and Financing 361.719 111.721 224% Suppliers 1.795 1.817 -1% Payables for Acquisition of Real Estate 93.294 58.621 59% Provision for Salaries and Employee Contributions 1.171 1.076 9% Taxes Payable 2.239 2.229 0% Provisions 11.023 6.850 61% Derivative Instruments 15.807 131 11966% Other Accounts Payable 1.654 6.109 -73% Non-Current Liabilities 1.020.253 831.090 23% Loans and Financing 973.836 784.484 24% Deferred Income and Social Contribution taxes 46.417 46.606 0% Shareholders Equity 1.693.211 1.682.783 1% Capital 1.569.033 1.568.859 0% (-) IPO Expenses (25.688) (25.305) 2% Capital Reserves 4.093 3.894 5% Revaluation Reserves - subsidiaries 90.100 90.467 0% Income Reserves 55.673 44.868 24% Total Liabilities 3.202.166 2.702.427 18%
  26. 26. BRProperties 25 3Q10 BRPR3 CASH FLOW STATEMENT Consolidated Cash Flows 3Q10 3Q09 Cash Flow from Operating Activities Net Income (loss) for the period 10.437 6.231 Adjustments to reconcile net income 30.363 18.089 Depreciation 7.529 4.108 Interest and monetary variation on loans and financing 22.635 13.797 Stock option plan expenses 199 184 Reduction (increase) in assets (16.098) 841 Accounts receivable 1.327 94 Recoverable Taxes (2.450) 109 Advances for the acquisition of real estate (15.217) - Properties available for sale - - Other assets 242 638 Increase (reduction) in liabilities 34.612 (2.148) Provision for employee and management bonuses 1.149 750 Payables for acquisition of real estate 34.673 134 Other liabilities (1.210) (3.032) Net cash generated by (used in) operating activities 59.314 23.013 Cash Flow from Investment Activities Acquisition of real estate (354.523) (4.273) (-) Payables for acquisition of real estate - - Investments in subsidiaries - - Net proceeds from sale of assets 5.137 - Fixed asset purchases - - Other - - Net cash generated by (used in) investment activities (349.386) (4.273) Cash Flow from Financing Activities Capital increase 175 888 Loans and financing 478.000 - Payment of loans and financing (45.540) (19.782) Costs from Equity Raising (383) - Net cash generated by (used in) financing activities 432.252 (18.894) Increase (decrease) in cash and cash equivalents 142.180 (154) Cash and Cash Equivalents At the beginning of the period 396.393 137.419 At the end of the period 538.573 137.265

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