4 q13 earnings release presentation

2013 Earnings Release

Presentation

2013 Highlights

• 2013 net revenues totaled R$923.7 million, an increase of 46% over 2012, when net revenues came in at R$630.8 million. The

significant growth resulted from additional rental revenues of properties that were previously under development or lease-up;

• 2013 adjusted EBITDA of R$866.1 million, a 76% increase over 2012, and adjusted EBITDA margin of 94%;

• 2013 net income reached R$81.2 million;

• 2013 adjusted FFO, excluding non-cash expenses, totaled R$310.3 million, a 246% increase over 2012, and adjusted FFO

margin of 34%;

• The Company delivered 6 new projects throughout the year, representing a total GLA of 205 thousand sqm, and of which 84%

or 173 thousand sqm are already leased;

• The average net of inflation leasing spread of the portfolio reached 3.0% in 2013, which involved a total area of 347 thousand

sqm of GLA;

• At the end of the year financial and physical vacancy rates were at 8.6% and 4.1%, respectively. Excluding the JK Towers,

currently under lease-up, stabilized financial and physical vacancy would drop to 3.9% and 2.6%, respectively;

• In 2013 the Company renegotiated/pre-paid R$1,336.7 million in loans and issued R$850.0 million of non-secured

debentures, which resulted in a reduction of 88 bps in its annual average cost of debt;

• In line with the Company’s recycling strategy, 5 property sales were completed in 2013, totaling R$492.2 million at an average

cap rate of 8.6%. The rental loss resulting from the sale of properties reached R$13.2 million;

• In November the Company executed an agreement with WTGoodman for the sale of 100% of its existing industrial/logistics

portfolio. According to the agreement, WTGoodman will pay to BR Properties the amount of R$3,180.0 million, subject to

certain adjustments established in the agreement. The effectiveness of the acquisition of the real estate assets provided for in the

agreement is subject, among other conditions, to the applicable contractual approvals, to the negotiation of the definitive

agreements and to the satisfactory conclusion of the due diligence to be carried out by WTGoodman. The Company intends to use

the sale proceeds in order to reduce the net leverage, for the share repurchase program and for the payment of dividends to the

shareholders.

2

Portfolio

3

2013 Revenue Breakdown

Portfolio Breakdown

(% market value)

Portfolio Breakdown

(% GLA)

Portfolio Market Value

49%

22%

25%

4%

Off ice AAA Off ice Industrial Retail

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

11.71512.968 13.552 13.840 14.031 14.096 13.759 13.423

Asset sales in the amount of R$482.1 million

Services 1%

Straight-line 3%Leasing 96%

65%

29%

6%

18%

14%

63%

5%

Off ice AAA Off ice Industrial Retail

Financial Highlights

4

Net Income (R$ thousand) Net Revenues (R$ thousand)

4Q12 4Q13 2012 2013

200.666 222.953

630.825

923.670

11%

46%

4Q12 4Q13 2012 2013

172.064

(149.132)

1.216.400

81.163

(187%)

(93%)


5

Adjusted EBITDA (R$ thousand)

72% 95% 78% 94%

Adjusted EBITDA Margin

4Q12 4Q13 2012 2013

144.371 211.148

492.679

866.147

46%

76%

EBITDA Composition 4Q13 4Q12 var % 2013 2012 var %

Net Income (loss) before Minority Interest (156.472) 206.793 -176% 70.312 1.279.349 -95%

(+) Deferred Taxes (52.627) 27.265 -293% (23.158) 690.414 -103%

(+) Income and Social Contribution Taxes (712) (11.692) -94% 50.109 22.702 121%

(-) Minority Interest 7.340 (34.729) -121% 10.851 (62.949) -117%

(+) Depreciation 104 69 50% 378 279 35%

(+) Net Financial Result 163.437 60.002 172% 614.004 364.311 69%

EBITDA (38.930) 247.708 -116% 722.496 2.294.106 -69%

EBITDA Margin -17% 123% -141 p.p. 78% 364% -285 p.p.

Adjusted EBITDA Composition 4Q13 4Q12 var % 2013 2012 var %

EBITDA (38.930) 247.708 -116% 722.496 2.294.106 -69%

(-) Gain (Loss) on Appraisal of Investment Properties 28.872 (115.161) -125% (104.397) (1.824.964) -94%

(-) Gain (Loss) on Sale of Investment Properties 205.366 (298) -69042% 203.664 6.071 3255%

(+) Other Operating Income (220) (172) 28% 23.442 (1.070) -2291%

(+) Stock options 387 716 -46% 1.822 3.511 -48%

(+) Bonus Provision 15.673 11.577 35% 19.120 15.024 27%

Adjusted EBITDA 211.148 144.371 46% 866.147 492.679 76%

Adjusted EBITDA Margin 95% 72% 23 p.p. 94% 78% 16 p.p.


6

Adjusted FFO (R$ thousand)

Adjusted FFO Composition 4Q13 4Q12 var % 2013 2012 var %

Net Income (loss) (149.132) 172.064 -187% 81.163 1.216.400 -93%

(+) Deferred Taxes (52.627) 27.265 -293% (23.158) 690.414 -103%

(+) Income Taxes on Property Sales - 1.597 -100% 16.453 4.649 254%

(+) PIS/Cofins (Revenue Taxes) on Property Sales - - n/a 17.125 1.239 1283%

(-) Gain (Loss) on Appraisal of Investment Properties 28.872 (115.161) -125% (104.397) (1.824.964) -94%

(-) Gain (Loss) on Sale of Investment Properties 205.366 (298) -69042% 203.664 6.071 3255%

(+) Non-cash Losses on Exchange Rate Variation 40.549 23.946 69% 159.322 122.769 30%

(-) Non-cash Gains on Exchange Rate Variation (7.934) (20.429) -61% (72.537) (74.624) -3%

(+) Non-cash Variations on Derivative Instruments 1.016 (52.169) -102% 32.668 (52.169) -163%

Adjusted FFO 66.111 36.815 80% 310.303 89.784 246%

Adjusted FFO Margin 30% 18% 11 p.p. 34% 14% 19 p.p.

18% 30%14%

34%

Adjusted FFO Margin

4Q12 4Q13 2012 2013

36.815 66.111

89.784

310.303 80%

246%

Indebtedness

7

2013 Net Debt (R$ mn) 2013 Debt Profile

39%

44%

10%

1%

6% TR

CDI

IGPM

INPC

IPCA

ST Debt Obligations for

Acquisitions

LT Debt Total Debt Cash Net Debt

909

5.557

4.607

10

4.639 951

Indebtedness 4Q13 3Q13 var %

Short Term Loans and Financing 918.756 419.014 119%

Loans and Financing 840.294 343.937 144%

Perpetual Bond 68.672 65.371 5%

Derivative Instruments - - n/a

Payables for Acquisition of Real Estate 9.791 9.706 1%

Long Term Loans and Financing 4.638.664 4.950.385 -6%

Loans and Financing 4.023.690 4.364.953 -8%

Perpetual Bond 614.974 585.432 5%

Gross Debt 5.557.420 5.369.399 4%

Cash and Cash Equivalents 950.864 839.730 13%

Net Debt 4.606.556 4.529.669 2%

Portfolio Value 13.423.101 13.759.034 -2%

Gross Debt / Portfolio Value (Loan to Value) 41% 39% 2 p.p.

Net Debt / Portfolio Value (Loan to Value) 34% 33% 1 p.p.

Adjusted EBITDA / Net Financial Expenses * 1,6x 1,7x -5%

Duration (years) 4,2 4,4 -5%

Unsecured Debt / Total Debt 37% 30% 6 p.p.

* Considering Net Financial Expenses (ex. non-cash variations)

Indebtedness

8

Debt Amortization Schedule (R$ million)

Loan to Value: Gross and Net Interest Coverage Ratio

Net Debt / Adjusted EBITDA

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

2,5x

3,5x

2,4x

2,1x

1,4x

1,6x

2,7x2,5x

3,0x

1,1x

1,5x 1,5x1,7x

2,0x

1,7x 1,6x

EBITDA / Net Financial Expenses


38% 40%

24%

40%45% 43% 42% 41% 40% 39%

37% 38% 39% 40% 39% 41%

4%23% 21%

36%36%

35%

21% 21%

30%

35% 34% 34%34% 36% 33%

34%

LTV Gross Debt LTV Net Debt


0,6x

3,7x

4,9x

7,0x

6,0x5,5x

3,2x 3,4x

9,7x

7,8x7,3x

6,7x

5,6x 5,7x5,2x

5,5x

Net Debt/EBITDA

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

770

250

1.280

495

316 325

18794 76 71 73 66

Principal

Interest Rates

9

Variation of BRPR Average Cost of Debt vs Variation of CDI Rate (bps)

(62)(10) (23)

10

60(46)

1171

99

106

3Q12 - 0 Base 4Q12 1Q13 2Q13 3Q13 4Q13

Variation of BRPR Average Cost of Debt (bps) Variation of CDI Rate (bps)

BRPR Cost of Debt vs Interest Rates 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

BRPR Average Cost of Debt 11,53% 10,91% 10,81% 10,57% 10,67% 11,28%

Variation QoQ (bps) - (62) (10) (23) 10 60

CDI Rate 7,36% 6,90% 7,01% 7,72% 8,71% 9,77%

Variation QoQ (bps) - (46) 11 71 99 106

Total Debt - 4Q13 5.589.406

Nominal Average Cost of Debt - 4Q13 11,28%

Annual Pro-Forma Interest Expenses 630.359

Total Debt - 4Q13 5.589.406

Nominal Average Cost of Debt - 4Q13 (Post Increase) 11,72%

Annual Pro-Forma Interest Expenses 655.261

Annual Post Tax Impact in FFO * (16.435)

* Tax Rate of 34%

Table below assumes a 100 bps increase in the CDI Rate

Impact of Interest Rates Hike in FFO

Sensitivity Analysis 4Q13

CDI Rate -300 bps -200 bps -100 bps 9,77% 100 bps 200 bps 300 bps

BRPR Average Cost of Debt 9,94% 10,39% 10,83% 11,28% 11,72% 12,17% 12,61%

Variation on BRPR Debt (bps) -134 bps -89 bps -45 bps 0 bps 45 bps 89 bps 134 bps

Reduction Increase

Operating Highlights

10

Leasing Spreads

Lease Contract Expiration Schedule

(% Revenues)

Lease Contract 3 Year Market Alignment

Schedule (% Revenues)

2013 2014 2015 >2016

1%7%

12%

79%

2013 2014 2015 >2016

2% 15%

31%

17%

Lease Contracts Duration

All Contracts 5.8 Years

Build-to-Suit Contracts 7.1 Years

Leasing Spread 4Q13 4Q12 2013 2012

Leasing Spread - Portfolio 1,3% 31,9% 3,0% 26,8%

Renegotiated GLA (sqm) 159.046 101.325 346.942 241.382

% Portfolio 8% 5% 18% 13%

Operating Highlights

11

Vacancy Evolution Financial Vacancy per Segment

Vacancy per Property

Property Type Financial Physical

Ed. Jacarandá Office 0,1% 0,1%

Ventura - West Tower Office 0,3% 0,1%

Icomap Office 0,03% 0,05%

RB115 Office 0,1% 0,1%

Manchete Office 1,0% 0,4%

JK Complex - Towers D&E Office 4,6% 1,4%

Cidade Jardim Office 0,6% 0,2%

Paulista Office 1,0% 0,3%

TNU Office 0,14% 0,10%

Panamérica Park Office 0,1% 0,1%

Raja Hills Office 0,1% 0,1%

Brasília Office 0,3% 0,2%

Total Office 8,4% 3,2%

BP Jandira Industrial 0,1% 0,2%

BP Jundiaí Industrial 0,1% 0,4%

BBP Barão de Mauá-Brahms Industrial 0,04% 0,1%

Cond.Ind.SJC Industrial 0,0% 0,1%

Total Industrial 0,2% 0,8%

Total Portfolio 8,6% 4,1%

4Q13

4Q12 1Q13 2Q13 3Q13 4Q13

2,6%

4,7%5,5% 5,3%

4,1%4,0%

8,9%

10,8% 10,5%

8,6%

Physical

Financial

3Q13 4Q13

10,0%

8,4%

0,5% 0,2%0,0% 0,0%

Off ice

Industrial

Retail

Portfolio Recycling

12

In line with the Company’s recycling strategy, 5 property sales were completed in 2013,

totaling R$492.2 million at an average cap rate of 8.6%. The rental loss resulting from the

sale of properties reached R$13.2 million

Total Sales Volume (R$ thousand) Average Exit Cap Rate (%)

2012 2013

137.008

492.200

2012 2013

8,4%

8,6%

Sold Properties Type Sale DateSale Price

(R$ K)Exit Cap Rate

Rental Loss

2013 (R$ K)

Paulista Park (2 Units) Office Apr-13 4.000 8,6% 258

Cetenco Plaza (2 Units) Office May-13 6.100 7,9% 283

Plaza Centenário Office Aug-13 13.700 9,6% 471

Pateo Bandeirantes Office Sep-13 442.000 8,4% 11.485

Galpão Sorocaba Warehouse Sep-13 26.400 10,2% 740

TOTAL 492.200R$ 8,6% 13.237R$

Capital Markets

13

Stock Performance – 2013

-

10.000.000

20.000.000

30.000.000

40.000.000

50.000.000

60.000.000

70.000.000

80.000.000

-35%

-25%

-15%

-5%

5%

15%

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

ADTV

BR Properties

Ibovespa

Stock Performance (BRPR3) 4Q13 4Q12 var % 2013 2012 var %

Total Number of Shares 312.653.445 311.612.894 0% 312.653.445 311.612.894 0%

Free Float (%) 99% 99% 0% 99% 99% 0%

Stock Price (average for the period) 18,63 25,79 -28% 20,80 23,27 -11%

Stock Price (end of period) 18,60 25,50 -27% 18,60 25,50 -27%

Market Cap end of period (R$ million) 5.815 7.946 -27% 5.815 7.946 -27%

Average Daily Trading Volume (R$ million) 56,09 32,38 73% 46,67 29,04 61%

Average Daily Traded Shares 3.020.156 1.254.317 141% 2.329.181 1.241.830 88%

Average Daily negotiations 7.350 4.621 59% 6.694 3.834 75%

IR Contacts

14

Pedro Daltro

CFO & Investor Relations Officer

Marcos Haertel

Investor Relations Manager

Gabriel Barcelos

Investor Relations Analyst

Phone: (55 11) 3201-1000

Email: [email protected]

www.brpr.com.br/ri

Investor Relations

4 q13 earnings release presentation

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