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Analyst Meeting Presentation – Dec/07
- 1. General Shopping Brasil Analystand Investor Meeting December 17, 2007
- 2. Disclaimer 1 This presentation containsstatements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward- looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of General Shopping and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. This material is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments and should not be treated as giving investment advice. It is not targeted to the specific investment objectives, financial situation or particular needs of any recipient. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. This material should not be regarded by recipients as a substitute for the exercise of their own judgment. Any opinions expressed in this material are expressed as of this date and subject to change without notice and General Shopping is not under the obligation to update or keep current the information contained herein. General Shopping and the respective affiliates, directors, partners and employees accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision (including decisions regarding the suitability of this transaction) based upon your own judgment and advice from such advisers as you deem necessary and not upon any views expressed in this material.
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- 4. Highlights Growth through Greenfield (GSBexpertise track record) Acquisitions (GSB market intelligence and complementary services adding) Gross revenues up 37.9% to R$ 14.2 million in 3Q07 Pro forma (as now) up 69.3% in 9M07 Adjusted EBITDA up 48.1% to R$ 8.6 million in 3Q07 Pro forma (as now) up 76.8% in 9M07 3
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- 6. 5 Positive Sector Outlook 281294 303 317 326 335 346 2000 2001 2002 2003 2004 2005 2006 7.5 6.46.2 5.65.55.25.1 6.36.46.25.7 5.24.9 2000 2001 2002 2003 2004 2005 2006 125 203 135 160 175 185 181 2 2 9 2 192 0 318 918 9 19 5 2000 2001 2002 2003 2004 2005 2006 23.0 25.3 27.9 31.6 36.6 40.0 44.0 2000 2001 2002 2003 2004 2005 2006 CAGR = 7.7% Visitors per month (million) Revenue / average visitors per month (R$) Revenues (R$ in billion) Operating Shopping Centers Visitors per Month GLA CAGR = 11.4% CAGR = 3.5% CAGR = 6.6% Source: ABRASCE GLA (million m2) Revenue / average GLA (R$ thousand / m2 )
- 7. 6 Low Sector Penetration Revenues(% of Local Retail Market (1)) Vacancy Rate (2) 20% 70% 30%-35% Brazil Europe USA The Brazilian Shopping Center Sector Presents Ample Room for Growth 5.7% 4.0% 4.4% 2.9% 7.4% 2.4% 1.2% 1.7% 2003 2004 2005 2006 Secto r General Sho pping B rasil Source: ABRASCE (1) Excludes car sales (2) Year end
- 8. 7 Favorable Macroeconomics Brazilian ShoppingCenter Industry Revenue (1) Disposable Income vs. Interest Rates (2) Retail Sales Real Growth (2) 90% 100% 110% 120% 130% 2000 2001 2002 2003 2004 2005 2006 2007 $400 $450 $500 $550 $600 $650 M ar-00 Jun-01 Aug-02 Nov-03 Jan-05 M ar-06 Jun-07 12% 16% 20% 24% 28% Sector Revenues Inflation Real (R$ bn) Growth (IPCA) GDP Growth 2000 23.0 - 6.0% 4.3% 2001 25.3 10.0% 7.7% 1.3% 2002 27.9 10.3% 12.5% 2.7% 2003 31.6 13.3% 9.3% 1.2% 2004 36.6 15.8% 7.6% 5.7% 2005 40.0 9.3% 5.7% 2.9% 2006 44.0 10.0% 3.1% 3.7% Selic Disposable Income Disposable Income (R$ billion) Selic (% p.a.) (1) Source: ABRASCE (2) Source: IBGE
- 9. 8 Retail Sector Growthin September/07 Activities Jan-Sept 12 months Supermarkets and hypermarkets 7.2 7.7 Fabrics, clothing and footwear 10.5 7.2 Pharmaceutical, medical, orthopedic and cosmetics products 7.9 6.4 Office supplies and equipment, personal computers and telecom 25.2 23.8 Books, newspapers, magazines and stationery 7.5 5.2 Other personal and domestic products 23.3 22.2 Vehicles, motorcycles and autoparts 23.4 19.5 Accumulated (%) Furniture and white/durable goods 16.7 15.6 Source: GSB and IDV
- 10. 9 @ IPO: 207.0 @ IPO: 238.9 @IPO: 117.1 @ IPO: 119.0 257.9 372.6 207.9 161.3 317.0 BRMalls Multiplan Iguatemi General Shopping Brasil Own GLA (1) (m2 in thousand) Market Share (2) (% of Total GLA) 31.5% 68.5% The industry is highly fragmented: the largest groups operate only 18.3% of the existing Shopping Centers and 31.5% of the total GLA in the country 9 Largest Companies + Acquisitions (1) Source: Companies’ website (2) Source: Valor Análise Setorial – December/06 Fragmented Sector
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- 12. 11 Majority ownership: 85.9%average 11 shopping centers and 4 greenfields Total GLA: 187,784 m2 Own GLA: 161,343 m2 Complementary services activities 9M07 financial highlights – Gross revenue: 23.0% – Adjusted EBITDA: 26.8% – EBITDA margin: 73.2% Focus on serving the B and C consumption classes These classes represent approximately 66% of the total consumption in Brazil Shopping Center Own GLA Internacional Shopping 100.0% 72,958 72,958 Santana Parque Shopping 50.0% 26,538 13,269 Shopping do Vale 84.4% 16,487 13,913 Shopping Light 50.1% 14,140 7,092 Suzano Shopping 100.0% 13,120 13,120 Auto Shopping 100.0% 11,477 11,477 Americanas Prudente 100.0% 10,276 10,276 Cascavel JL Shopping 85.5% 8,877 7,590 Top Center 100.0% 6,166 6,166 Poli Shopping 50.0% 4,527 2,264 Americanas Osasco 100.0% 3,218 3,218 85.9% 187,784 161,343 Itupeva Project 50.0% 17,357 8,679 Barueri Project 96.0% 25,000 24,000 Sulacap 90.0% 32,000 28,800 Convention Center 100.0% 25,730 25,730 Greenfield Interest 87.1% 100,087 87,209(1) Gross leasable area (2) Considering additional call of 20.0% stake General Shopping Brasil at-a-Glance Own GLAInterest Total GLA Total GLA One of the largest companies in the Brazilian Shopping Center industry in terms of own GLA (1)
- 13. Competitive Advantages 12 Majority ownershipinterest Close relationship with store owners and retail intelligence Well defined growth strategy Diversified portfolio comprised of high quality assets Innovative malls and services Experienced management team Average 14 years of experience in shopping center/retail sector
- 14. 13 Majority Ownership Interest ShoppingCenters / Stake Held General Shopping Brasil is the key decision-maker of the strategies and policies of its shopping centers Redevelopment and remodeling the shopping centers Provide complementary services Flexibility in establishing partnerships Redevelopment and remodeling of the tenant mix Internacional Shopping Guarulhos Auto Shopping 100% Santana Parque Shopping (1) Shopping Light Suzano Shopping Poli Shopping Cascavel JL Shopping Shopping Americanas Presidente Prudente Shopping Americanas Osasco Top Center Shopping São Paulo Shopping do Vale 50% 50.0% 50.1% 100% 85.5% 100% 100% 100% 84.4% 100% Expansion of the existing shopping malls
- 15. Retail Intelligence andRelationship with Store Owners 14 Understanding of the shopping center business through both the retail and the real estate approach Quantitative and qualitative market surveys Internal surveys Market surveys With retailers Credibility to retain and attract the main retailers Focus on improving store performance increasing revenues from rent Expansion and greenfied projects on demand
- 16. Diversified Growth Strategy 15 CONSOLIDATION Acquisitionof shopping centers GREENFIELDS Conception and development of new shopping centers EXPANSION Increase ownership interest in assets GLA expansion in the existing portfolio Implementation of mixed-use projects Synergies + Profitability TURN AROUND Control of the tenant mix Innovation in complementary services
- 17. 16 Poli Shopping 80’s Poli Shopping 90’s Internacional Shopping Guarulhos Internacional ShoppingGuarulhos Auto Shopping 2006 After IPO Auto Shopping Santana Parque Shopping Suzano Shopping Shopping Light Cascavel JL Shopping Internacional Shopping Guarulhos Shopping Light Acquisition of several shopping centers: Suzano Shopping, Cascavel JL Shopping, Shopping Americanas Presidente Prudente, Shopping Americanas Osasco, Top Center Shopping, Shopping do Vale Sulacap Shopping, Shopping Barueri and Shopping Center in Itupeva - greenfield projects Convention center – mixed use Opening of Santana Parque Shopping Planned expansions: Suzano Shopping, Cascavel JL Shopping, Top Shopping, Internacional Shopping, Poli Shopping Several other projects under analysis IPO Jul/07 Solid and Proven Historical Growth
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- 19. 18 SP Total GLA (m2 ) No.of stores Visitors/year (mm) 11,477 80 ND 9 8 10,276 56 4.0 15 17,357 NA NA (1) 13,120 170 9.0 6 13 25,000 NA NA (1) 2 6,166 55 4.0 72,958 292 23.5 1 14,140 134 12.0 7 12 25,730 NA NA 4 3,218 19 1.5 5 26,538 176 ND 4,527 52 6.0 3 Dominant Player in São Paulo (1) Estimated Total GLA (m2 ) No. of stores Visitors/year (mm) Total GLA (m2) No. of stores Visitors/year (mm) Total GLA (m2) No. of stores Visitors/year (mm) Total GLA (m2 ) No. of stores Visitors/year (mm) Total GLA (m2) No. of stores Visitors/year (mm) Total GLA (m2 ) No. of stores Visitors/year (mm) Total GLA (m2) No. of stores Visitors/year (mm) Total GLA (m2 ) No. of stores Visitors/year (mm) Total GLA (m2 ) No. of stores Visitors/year (mm) Total GLA (m2) No. of stores Visitors/year (mm) Total GLA (m2 ) No. of stores Visitors/year (mm)
- 20. RS 19 RJ Shopping centers inoperation 1. Internacional Shopping 2. Top Center 3. Poli Shopping 4. Americanas Osasco 5. Santana Parque 6. Suzano Shopping 7. Shopping Light 8. Americanas P. Prudente 9. Auto Shopping 10. Shopping do Vale 11. Cascavel JL Shopping Greenfields 12. Convention Center 13. Barueri Shopping 14. Sulacap Shopping 15. Shopping in Itupeva 32,000 165 n.a. (1) (1) 14 10 16,487 94 2.0 (1) Estimated Focus on the Southeastern and Southern Regions PR 11 8,877 80 3.4 Total GLA (m2 ) No. of stores Visitors/year (mm) Total GLA (m2 ) No. of stores Visitors/year (mm) Total GLA (m2 ) No. of stores Visitors/year (mm)
- 21. 20 Services currently providedto the mall Service rendering potential/on implementation Parking Water Energy Manage ment Increasing Complementary Services Activities Complementary Services Activities Complementary services activities present high margins, strong growth potential and diversify the Company’s revenues ISG Auto Poli Light Santana Suzano Cascavel Americ. Pres. Prudente Americ. Osasco Do Vale Top Center * * Partial
- 22. 21 Experienced Management Team Fully-IntegratedTeam Victor Veronezi Identification of attractive opportunities Planning and Expansion Director Alexandre Dias Analyses of retail demand and market potential Marketing and Retail Relations Director Waldemar Jezler Strategic planning CEO Ricardo Castro Feasibility studies and financial planning CFO Alessandro Veronezi Communication of value creation to shareholders Investor Relations Director Experience in the shopping center / retail sector (years) (1) Mr. Ricardo Castro has 13 years of experience in banking and M&A 24 14 15 1 (1) 15
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- 24. Gross Revenue (R$000) 23 53,316 38,720 31,491 10,260 14,153 3Q06 3Q07 9M 06 9M 07 9M 07 PRO-FORMA 37.9% 69.3%
- 25. Adjusted EBITDA (R$000) and EBITDA Margin 24 5,816 33,920 8,615 19,189 24,325 73.2% 64.6% 3Q06 3Q07 9M06 9M07 9M07 48.1% 76.8% PRO-FORMA 69.3% 70.7%
- 26. Net Income (R$000) 25 16,233 9,614 415 (4,660) 3,730 3Q06 3Q07 9M 06 9M 07 9M 07 3,811% PRO-FORMA
- 27. Gross Revenue Breakdown 9M07Revenue Breakdown RENTALS SERVICES Rent Energy Water 3Q07 Revenue Breakdown Transfer Fee Mall & Merchadising Parking Shopping Center Management 26 91% 4%5% 58% 1%5% 36% 91% 5%4% 59% 36% 4% 1%
- 28. 7,503 8,369 22,566 24,438 3Q06 3Q079M06 9M07 11.5% 8.3% Revenue from Rentals (R$ 000) Revenue from Rentals (Same GLA Rent) 27
- 29. Financial Performance/M2 119.6 118.8 367.9361.4 3T06 3T07 9M06 9M07 87.7 90.6 287.5 284.9 3T06 3T07 9M06 9M07 77.3 84.0 255.1 264.5 3T06 3T07 9M06 9M07 Net Revenue NOI Adjusted EBITDA Adjusted Net Income -62,0 36.4 5.5 104.5 3T06 3T07 9M06 9M07 28
- 30. 36.5 18.4 78.7 22.0 10.9 2007 2008 20092010 After 2010 Indebtedness Amortization Schedule (R$ million)Term R$ 166.5 million 29 28% 72% Short term Long term
- 31. Cash (R$ million) TotalCash: R$ 193.9 million 30 29.1 164.8 Debt amortization Net cash
- 32. Greenfield Case –Santana Parque Shopping 31 Search for property according to internal survey pointing supply shortage in the region Quantitative and qualitative market surveys on project Surveys with main anchor tenants through internal and crossed data banks MOU’s with anchors Acquisition proposal – Higher bid than the competitors’ based on project’s potential and risk mitigation Opened in October 25, 2007 Successful occupancy levels (97% leased of total GLA) and sales (30% higher than retailers’ expectations) at opening
- 33. Suzano has 290,000inhabitants and annual population growth of 3.45%, above the state of São Paulo’s average growth, and qualified demand of approximately R$ 370 million/year Suzano Shopping serves also the neighboring cities, such as Itaquaquecetuba, Poá and Ferraz de Vasconcelos, and it is the only shopping center in the region Located beside the region’s largest supermarket Tenant mix is currently based on few anchor tenants, but it has potential for expansion of its GLA by over 50%, increasing the flow of visitors and turning the mall into a regional shopping center Potential for all complementary services adding revenues Acquisition/Expansion Case – Suzano Shopping 32
- 34. Acquisition/Turn Around Case– Shopping Light The only shopping center located in downtown São Paulo, above the Anhangabaú subway station, which has 63,000 users a day. Demand potential above R$ 540 million a year Public comprised of B and C consumer segments (82%), GSB’s target markets Vacancy rate of approximately 25% at the time of acquisition by GSB due to market gap GSB is addressing the large vacant area of this shopping center by improving the store mix, increasing the retail supply with greater sales potential, filling the vacant areas or replacing the existing ones (retail category management) and adding services to tenant mix Potential for all complementary services adding revenues 33
- 35. Area chosen accordingto survey pointing supply shortage 60,000 square meter lot of land located in privileged area, without shopping malls in primary and secondary areas Over 500 thousand inhabitants, mostly from the B anc C consumer segments (79% of total) Demand in the neighboring area is R$ 1.9 billion per year At the opening, the shopping center will have GLA of approximately 32,000 m² and a mix comprised of 165 stores Power center with supermarket Carrefour and Home Center C&C, both successful operations at the location Shopping center has area for future expansion and mixed use, as it is located in area with potential for strong population growth Greenfield Case - Sulacap 34
- 36. Key Takeaways Market‐driven companywith retail approach B and C consumption classes as target market Innovative complementary services Innovative shopping center operations and themes 35
- 37. Contacts GSB INVESTOR RELATIONS AlessandroPoli Veronezi Investor Relations Director Marcio Snioka Investor Relations Manager 55 11 3159-5100 dri@generalshopping.com.br www.generalshopping.com.br