company presentation august 2013
DESCRIPTION
TRANSCRIPT
Company Presentation
Company Overview
The largest commercial property company in the country, with a portfolio of approximately
US$6.3 billion in market value and over 2 million sqm of GLA
Company Profile
2
Diversified portfolio, comprised of 123 properties, with 2.2 million sqm of gross leasable area (GLA) and estimated market value of US$6.3 billion
Diversified tenant base, composed of high credit-quality national and multinational companies
Footprint in 14 Brazilian states
6 development projects and 6 landbanks, with approximately 277 thousand sqm of GLA
Wholly self managed company: acquisitions, financing, legal, property management and engineering
Value creation management strategy through re-tenanting, market realignments, retrofit, and improvements to technical installations
Market recognition: proven ability to source deals and execute complex transactions
Wholly owned property management subsidiary – BRPR A
Segments of Activity
Off
ice
Ind
ustr
ial
Re
tail
C&A Portfolio
Manchete - Statoil
DP Louveira - DHL / Unilever
Chucri Zaidan - Vivo TNU - Microsoft
Brazilian Business Park - multi
Tok & Stok Portfolio
Note: USD/BRL 2,25
Highest Growth in the Sector
Impressive growth rate, much higher than the average of its comparable
GLA CAGR 2008 - 2012 Net Revenues CAGR 2008 - 2012
FFO CAGR 2008 - 2012 EBITDA CAGR 2008 – 2012
3
Source: Companies
Notes:
1 Malls Average: Considering BR Malls, Multiplan, and Iguatemi
2 Properties Average: Considering São Carlos and CCP
Properties Average Shopping Malls Average
39%
-3%
14%
Properties Average Shopping Malls Average
60%
30%28%
Properties Average Shopping Malls Average
82%
29%26%
Properties Average Shopping Malls Average
72%
16%
31%
Ibovespa
-25%
-22%
Ibovespa
41%
-2%
Ibovespa
38%
7%
Ibovespa
10%
-15%
BR Properties’ stock has outperformed the most relevant indices over the last years, given its
more defensive profile in an uncertain economic outlook
4
Value Creation Since IPO
Fonte: Bloomberg
Stock Performance
2010
Stock Performance
2011
Stock Performance
2012
ADTV:
R$ 8 million
ADTV:
R$ 13 million
ADTV:
R$ 30 million
Stock Performance
6M13
ADTV:
R$ 45 million
CCP São Carlos
5.790($ 2.573)
1.722($ 765)
2.171($ 965)
Largest and Most Efficient Company
BR Properties has the highest EBITDA margin among all players in the properties and malls
sectors
5
Source: Companies
Notes:
1 Properties Average: São Carlos and CCP
2 Malls Average: BR Malls and Multiplan
3.4x 2.7x
Source: Bloomberg (08/07/2013)
Note: USD/BRL 2,25
2Q13 EBITDA Margin BRPR vs Competitors
(Market Cap – R$ million)
Properties Average
Shopping Malls Average
93%
79%
71%
Great Potential for Market Consolidation
6
The Company has a proven track record as the consolidator of the highly fragmented Brazilian
commercial properties market
Addressable Market1: 36.3 mm sqm
BRProperties
10 Organized
Companies
58%
Organized
Companies
12%
Non-Organized
Market
88%
42%
Fragmented Industry¹ (in terms of GLA - sqm)
1 Including existing properties only
Note: USD/BRL 2,25
Acquisition Pipeline (R$ million)
Off ice Industrial Total
2.000(US$ 889)
3.000(US$ 1.333)
1.000(US$ 444)
Portfolio: Strategic Positioning
7
Irreplicable portfolio concentrated in São Paulo e Rio de Janeiro, the most liquid and
resilient regions of the country
— Office: 44
— Warehouse: 37
— Developments: 6
— Retail: 30
Number of Properties : 123
Total Properties GLA: 2,221,712 sqm
— Office: 618,121sqm
— Warehouse: 1,212,708 sqm
— Developments: 84,134 sqm
Portfolio Breakdown (% Revenues) Existing Properties/Development (% Market Value)
Office
Warehouse
BRPR
Retail
Portfolio Footprint
% GLA
94%
6%
Existing Properties Developments
— Landbank: 6
— Landbank:192,695 sqm
— Retail: 114,054 sqm
38%
28%
2%
26%
5%
Off ice Rio de Janeiro
Off ice São Paulo
Off ice Other
Industrial
Retail
67%
22%
11%
São Paulo Rio de Janeiro Others
8
Ven
tura
Co
mp
lex
Type: Office AAA
Location: Rio de Janeiro/ RJ
CBRE Region: Downtown
Owned GLA: 88,563 sqm
Type: Office AAA
Location: Rio de Janeiro/ RJ
CBRE Region: Downtown
Owned GLA: 95,174 sqm
Cen
tro
Em
pre
sari
al S
en
ad
o
JK
Co
mp
lex –
To
wers
D
&E
Type: Office AAA
Location: São Paulo / SP
CBRE Region: Jardins
Owned GLA: 34,583 sqm
Pate
o B
an
deir
an
tes
Type: Office AAA
Location: São Paulo / SP
CBRE Region: Jardins
Owned GLA: 17,458 sqm
82%
18%
AAA Off ice A Off ice
Rio de Janeiro - Revenues (%)
São Paulo - Revenues (%)
Trophy properties located in São Paulo and Rio de Janeiro account for approximately 70% of
Company’s office portfolio
Portfolio of Trophy Office Properties
53%
47%
AAA Off ice A Off ice
9
Dis
trib
uti
on
Park
- L
ou
veir
a
Type: Warehouse A Main Tenant
Location: Louveira/ SP
Owned GLA: 339,548 sqm Dis
trib
uti
on
Park
- A
rau
cári
a
Qu
eim
ad
os W
are
ho
use
Vin
hed
o W
are
ho
use
Portfolio Breakdown
(% Revenues)
Breakdown of Lease Contracts
(% Revenues)
Logistics and Distribution portfolio comprised of state-of-art warehouse facilities leased to “triple
AAA” credit-quality tenants
The Safe Harbor: Logistics and Distribution Centers
Type: Warehouse A Main Tenant
Location: Araucária/ PR
Owned GLA: 42,697 sqm
Type: Warehouse A Main Tenant
Location: Queimados/ RJ
Owned GLA: 24,112 sqm
Type: Warehouse A Main Tenant
Location: Vinhedo/ SP
Owned GLA: 112,501 sqm
64%
36%
Build-to-Suit Typical
76%
9%
15%
SP RJ Other
10
Most Defensive and Resilient Business
Occupancy Rate (%)
Despite having experienced several cycles throughout the years, the Company has maintained
very high occupancy rates and significantly low delinquency rates
Delinquency Rate (%)
50%
60%
70%
80%
90%
100%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
97%99% 99% 99% 99% 98% 97% 97%
95% 95%
Occupancy Rate
0,9%
0,0% 0,0% 0,3%
1,1%
0,1%0,3%
0,0%
0,5%
0,0% 0,0%0,0%
1,1%
0,2%0,0%
0,2%0,5%
0,4%0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
11
Premier portfolio attracts the best-credit tenants, providing a long-term, high-quality cash flow
Tenants Composition by Sector
Diversified, High-Credit Quality Tenants
Oil & Gas Other Consumer Goods
Financial Services
Telecom Logistics Industrial Tech
23%20% 19%
14%10%
7% 6%
1%
Largest Tenants
Duration of lease contracts: + 6 years
Expiration Schedule (% revenues)
Market Alignment Schedule (Ex. BTS) (% revenues)
Inflation Adjustment Indices
Favorable Legal Environment
Lease contracts in place allow for stable, predictable cash flows, while creating a very low
vacancy risk scenario and considerable upside potential in revenues
12
Annual Inflation Adjustments
— 100% of lease contracts are indexed to inflation
Triple Net Contracts
— Tenant is responsible for all operating property costs
— Costs include: taxes, insurance, and maintenance expenses
Next 2 Years
— 47% market alignment
— 15% expiration
Bank Guarantees on Leases
— Standard practice in Brazil
— Protects against delinquencies from smaller tenants
Tenant Delinquency
Delinquency exceeding 30 days, lessor has right to break the contract and remove the tenant
Main Characteristics
79%
18%
3%
IGP-M
IPCA
Other
2013 2014 2015 >2016
7%8%
12%
73%
2013 2014 2015 >2016
21%
26%
41%
12%
Initial 12 months later
Initial 45 days later
Ventura East (Acquired in Apr/2012)
13
Adding Value: Performance Improvement
Outstanding management leads to very fast operating improvements and impressive increases in
the short and mid term
RB 115 (Delivered in Dec/2010)
C&A Portfolio (Acquired in Dec/2010)
TNU (Acquired in Mar/2010)
Cap Rate
+310bps
8,5%
11,6%
Cap Rate
+380 bps
12,3%
16,1%
Cap Rate
+260 bps
10,5%
13,1%
Cap Rate
+180 bps
10,6%
12,4%
Initial 3 months later
Initial 2Q13
Adding Value: Impressive Real Gains on Rental Prices
14
Leasing Spreads
BR Properties continues to take advantage of the favorable market dynamics to update the
contracts which are below market levels
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
35,5%
15,9%
22,3%
33,6%
17,3%15,3%
1,7%
34,4%
18,0%20,0%
5,4%
14,6%
Off ice Industrial Retail
Adding Value: Portfolio Recycling
15
BR Properties maintains a constant portfolio recycling by selling properties that have reached
their maturity and full potential for value creation
Exit Cap Rates Sold Properties (R$ million)
Average
2009
Average
2010
Average
2011
Average
2012
11,4%
8,6%
9,2%
8,4%
Average
6M13 8,2%
2009 2010 2011 2012 6M13 Total
90
364
37
89
137 10
Adding Value: Selective Developments
16
6 development projects, which once finalized, will correspond to 84,134 thousand sqm of GLA
Ongoing Projects
CE
S:
Reta
il
Type: Retail
Location: Rio de Janeiro / RJ
Delivery Date: 3Q13
Owned GLA: 2,881 sqm
Stake: 100%
Type: Office A
Location: São Paulo / SP
Delivery Date: 3Q13 – Phase 1
Owned GLA: 5,185 sqm
Stake: 50%
Pan
am
éri
ca G
reen
Park
Gaia
Terr
a -
Ara
ucári
a
Type: Warehouse
Location: Jarinú / SP
Delivery Date: 2Q14 – Phase 2
Owned GLA: 14,388 sqm
Stake: 67%
Type: Warehouse
Location: Louveira / SP
Delivery Date: 3Q13
Owned GLA: 30,122 sqm
Stake: 100%
DP
Lo
uv
eir
a 7
Type: Office A
Location: São Paulo / SP
Delivery Date: 3Q14
Owned GLA: 2.019 sqm
Stake: 50%
Ed
. S
ou
za A
ran
ha
JK
Co
mp
lex –
To
wer
B
Type: Office AAA
Location: São Paulo / SP
Data de Entrega: 3Q14
Owned GLA: 29,539 sqm
Stake: 100%
17
Landbanks
Type: Warehouse
Location: São José dos Campos / SP
Delivery Date: n/a
Owned GLA: 125,000 sqm
Stake: 100%
Tech
Park
SJC
Adding Value: Selective Developments
In addition to 6 landbanks projects, which once finalized, will correspond to 192,695 thousand
sqm of GLA
Type: Office
Location: Rio de Janeiro / RJ
Delivery Date: n/a
Owned GLA: 22,000 sqm
Stake: 100
CE
S II
Type: Office
Location: Rio de Janeiro / RJ
Delivery Date: n/a
Owned GLA: 21,989 sqm
Stake: 100
Bayv
iew
Gaia
Terr
a -
Casta
nh
eir
a
Type: Warehouse
Location: Jarinú / SP
Delivery Date: n/a – Phase 3
Owned GLA: 14,388 sqm
Stake: 67
Type: Office A
Location: São Paulo / SP
Delivery Date: n/a – Phase 2
Owned GLA: 4,659 sqm
Stake: 50%
Pan
am
éri
ca G
reen
Park
– P
hase 2
Type: Office A
Location: São Paulo / SP
Delivery Date: n/a – Phase 3
Owned GLA: 4,659 sqm
Stake: 50%
Pan
am
éri
ca G
reen
Park
– P
hase 3
2010 2011 2012 6M12 6M13
72,0
124,9
154,2
62,4
166,0
2010 2011 2012 6M12 6M13
178,4
312,1
568,8
237,2
433,3
2010 2011 2012 6M12 6M13
204,5
343,5
630,8
262,1
464,1
18
Net Revenues
(R$ mm)
Adjusted EBITDA and Margin
(R$ mm and %)
Adjusted FFO and Margin
(R$ mm and %)
209%
Financial Highlights: P & L
77%
219%
83%
114%
166%
87%91% 90% 90%
93%34% 36%
24% 24%
36%
19
Cash and Cash Equivalents 2Q13 Debt Profile
Financial Highlights: Balance Sheet
Indebtedness
2009 2010 2011 2012 1Q13 2Q13
89
232
1.032
574
771
661 41%
42%
11%
1%6% TR
CDI
IGPM
INPC
IPCA
Debt Breakdown
2009 2010 2011 2012 6M13
636
1.830 2.083
5.252 5.672
547
1.598
1.051
4.678 5.011
Gross Indebtedness Net Indebtedness
IGP-M
IPCA
INPC
TR
CDI
620
325
45
2,345
2,370
10.26%
6.91%
12.07%
9.96%
0.97%
Índex Balance
(R$mm)
Average
Coupon
20
Loan-to-Value Debt Service Coverage Ratio
Financial Highlights: Indebtedness
Debt Amortization Schedule (R$ million) Net Debt / EBITDA
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
288
784
265
887
511
332 336
187
94 75 70 72 60
Principal
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q132,5x 3,5x 2,4x 2,1x 1,4x 1,6x 2,7x 2,5x 3,0x 1,1x 1,5x 1,5x 1,7x 2,0xEBITDA / Net Financial Expenses
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
2,5x
3,5x
2,4x2,1x
1,4x1,6x
2,7x2,5x
3,0x
1,1x
1,5x 1,5x1,7x
2,0x
EBITDA / Net Financial Expenses
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
38% 40%
24%
40%45% 43% 42% 41% 40%
39%37% 38% 39%
40%
4%23% 21%
36%36%
35%
21% 21%
30%
35% 34% 34%34%
36%
LTV Gross Debt LTV Net Debt
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
0,6x
3,7x
4,9x
7,0x
6,0x5,5x
3,2x 3,4x
9,7x
7,8x7,3x
6,7x
5,6x 5,7x
Net Debt/EBITDA
21
Growing Dividend Payouts
Defensive player and significant free cash flow generator with all revenues indexed to inflation
* Considering BRPR3’s closing price in 12/28/2012 – R$25.50
2010 2011 2012
R$ 0,108
R$ 0,193
R$ 0,513
79%
166%
2010 2011 2012
0,6%
1,0%
2,0%
75%
93%
Dividend per Share Dividend Yield *
22
Appendix - Real Estate Market
New Supply (sqm) * Total Absorption (sqm) *
Average Rental Price/sqm (R$/month) Vacancy Rate (%)
100.000
200.000
300.000
400.000
500.000
600.000
700.000
800.000
2007 2008 2009 2010 2011 2012
São Paulo Rio de Janeiro
50
70
90
110
130
150
170
190
2007 2008 2009 2010 2011 2012
São Paulo Rio de Janeiro
1,0%
3,0%
5,0%
7,0%
9,0%
11,0%
13,0%
15,0%
2007 2008 2009 2010 2011 2012
São Paulo Rio de Janeiro
*Excluding Alphaville and Barra da Tijuca regions
-
50.000
100.000
150.000
200.000
250.000
300.000
350.000
400.000
450.000
500.000
2007 2008 2009 2010 2011 2012
São Paulo Rio de Janeiro
Source: CBRE
Contact
Investor Relations Team
23
Pedro Daltro
Chief Financial Officer and IRO
+55 11 3201-1020
Marcos Haertel
Investor Relations Manager
+55 11 3201-1044
Gabriel Barcelos
Investor Relations Analyst
+55 11 3201-1031
Investor Relations e-mail: [email protected]
www.brpr.com.br