3q12 presentation
TRANSCRIPT
3Q12 Earnings Release Presentation
3Q12
Highlights
2
3Q12 HIGHLIGHTS AND SUBSEQUENT EVENTS
• 3Q12 results were significantly stronger than 2Q12, when One Properties was merged into BR Properties;
• 3Q12 net revenues totaled R$168.0 million, an increase of 83% over 3Q11, when net revenues came in at R$91.8 million. The significant growth
resulted from additional rental revenues of the new properties;
• 3Q12 adjusted EBITDA of R$156.4 million, an 84% increase over 3Q11 and adjusted EBITDA margin of 93%. 3Q12 non-adjusted EBITDA reached
R$147.0 million, and EBITDA margin of 88% (adjusted EBITDA excludes non-cash and non-recurring expenses);
• 3Q12 net income totaled R$259.2 million, impacted by the net gain on appraisal of investment properties and by the net operating profit of the quarter;
• 3Q12 adjusted FFO excluding non-cash and non-recurring expenses totaled R$34.8 million, and adjusted FFO margin of 21%. It is worth mentioning
that BR Properties already incurred financial expenses related to some properties under development, which are not generating any additional revenue;
• During 3Q12, the Company reached leasing spreads (net of inflation) of 27.0% on new leases signed in office buildings and 45.8% in industrial
properties. On market alignments of existing contracts, real gains were 20.8% in office buildings and 16.1% in industrial properties;
• The financial vacancy rate was 4.5%, while physical vacancy rate came in at 3.2%. Excluding the recently delivered Paulista Building, currently
under lease-up, financial vacancy drops to 1.4%. In terms of area, office, industrial, and retail properties were 95%, 97%, and 100% occupied at the end
of the quarter, respectively;
• In July, BR Properties concluded its first issuance of non-convertible local debentures, raising R$600.0 million in two tranches: R$369.0 million at CDI
+ 1.08% p.a. maturing in five years and R$231.0 million at IPCA + 5.85% p.a. maturing in seven years;
• Also in July, the Company prepaid/refinanced additional R$364.5 million of debt inherited from One Properties, which had a weighted average cost of
CDI + 3.7% p.a.;
• In August, the Company prepaid commercial papers issued in 2Q12, utilizing part of the proceeds from its first issuance of non-convertible local
debentures;
• Also in August, the Company executed the sale of units of the Cetenco Plaza Building for R$47.2 million, resulting in exit cap rate of 6.5%.
3Q12
Portfolio
9M12 Revenue Breakdown
Portfolio Breakdown
(% market value) Portfolio Breakdown
(% GLA)
3
Portfolio Market Value
18%
15%
62%
5%
Off ice AAA Off ice Industrial Retail
50%
21%
24%
5%
Off ice AAA Off ice Industrial Retail
Services 1%
Straight-line 1% Leasing 98%
56%
36%
8%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
4.751 4.918 5.142 5.254
11.71512.968 13.552
3Q12
Financial Highlights
4
Net Revenues (R$ thousand) Net Income* (R$ thousand)
* Impacted by the net gain on appraisal of investment
properties
3Q11 2Q12 3Q12 9M11 9M12
91.803 160.935 168.031
253.156
430.159 75%
4%
83% 70%
3Q11 3Q12 9M11 9M12
83.749 259.234 264.909
1.044.337
294%
210%
3Q12
EBITDA Breakdown 2Q12 3Q12 3Q11 3Q12 x 3Q11 9M12 9M11 9M12 x 9M11
Net Income (loss) 332.390 259.234 83.749 210% 1.044.337 264.909 294%
Deferred Taxes (153.916) 150.588 53.807 180% 648.611 98.549 558%
Income and Social Contribution Taxes (12.104) 17.293 5.441 218% 34.381 17.004 102%
Gain (Loss) on Appraisal of Investment Properties (554.489) (382.650) (180.268) 112% (1.667.045) (348.209) 379%
Gain (Loss) on Sale of Investment Properties 8.525 (2.156) (485) 344% 6.369 856 644%
Other Operating Income (1.646) 1.218 1.589 -23% (898) 2.308 -139%
Net Financial Result 184.952 103.507 116.237 -11% 304.340 184.027 65%
EBITDA 135.752 147.034 80.070 84% 370.094 219.445 69%
EBITDA Margin 84% 88% 87% 0 p.p. 86% 87% -1 p.p.
Bonus Provision 1.149 1.149 1.149 0% 3.447 3.447 0%
Stock Option Provision 773 735 3.703 -80% 2.795 8.084 -65%
Merger Expenses 6.894 - - n/a 8.927 - n/a
Brokerage Fees (Ventura Building Acquisition) - 7.463 - n/a 7.463 - n/a
Reversal of 2010 Bonus Provision - - - n/a - (1.600) n/a
Adjusted EBITDA 144.568 156.380 84.923 84% 392.726 229.376 71%
Adjusted EBITDA Margin 90% 93% 93% 1 p.p. 91% 91% 1 p.p.
5
Financial Highlights
Adjusted EBITDA (R$ thousand) Non-adjusted EBITDA (R$ thousand)
93%90%
93%91% 91%
Adjusted EBITDA Margin
3Q11 2Q12 3Q12 9M11 9M12
84.923 144.568 156.380
229.376
392.726 70%
71%
8%
84%
87%84%
88% 87% 86%
EBITDA Margin
3Q11 2Q12 3Q12 9M11 9M12
80.070 135.752 147.034
219.445
370.094 70%
84%
8%
69%
3Q12
6
Financial Highlights
Adjusted FFO (R$ thousand)
46%
5%21% 31% 23%
Adjusted FFO Margin
3Q11 2Q12 3Q12 9M11 9M12
42.128
8.482
34.830
77.527 97.195
25%
(80%)
(17%)
311%
Adjusted FFO 2Q12 3Q12 3Q11 3Q12 x 3Q11 9M12 9M11 9M12 x 9M11
Net Income (loss) 332.390 259.234 83.749 210% 1.044.337 264.909 294%
Deferred Taxes 153.916 150.588 53.807 180% 648.611 98.549 558%
Taxes on Property Sales 8.525 - 323 -100% 3.905 6.803 -43%
Gain (Loss) on Appraisal of Investment Properties (554.489) (382.650) (180.268) 112% (1.667.045) (348.209) 379%
Gain (Loss) on Sale of Investment Properties 8.525 (2.156) (485) 344% 6.369 856 644%
Non-cash Losses on Exchange Rate Variation 57.794 7.964 88.414 -91% 98.823 96.361 3%
Non-cash Gains on Exchange Rate Variation (453) (5.613) (3.413) 64% (54.194) (41.742) 30%
Merger Expenses 6.894 - - n/a 8.927 - n/a
Brokerage Fees (Ventura Building Acquisition) - 7.463 - n/a 7.463 - n/a
Adjusted FFO 8.482 34.830 42.128 -17% 97.195 77.527 25%
Adjusted FFO Margin 5% 21% 46% -25 p.p. 23% 31% -8 p.p.
3Q12
Ed. Paulista Centro Empresarial
Senado
Cidade Jardim
JK Complex - D&E
Panamérica Green Park
Retail Petrobrás
WTNU -Tower III
DP Louveira 7
Gaia Terra JK Complex - B
Souza Aranha
Total Additional
Revenue
30
300
100 12
62 3 5 21 7
5
53 2
7
Non-income producing properties
Potential Annual Revenue (R$ million)
Non-Income Producing Properties TypeMonths of Generated
Income in 3Q12Delivery Date Owned GLA Rent / sqm / Month ¹
Potential Annual
Revenue (R$ mm) ²
Ed. Paulista Office 0,5 month Delivered in 3Q12 22.855 R$110 - R$135 30 millionR$
Centro Empresarial Senado - CES Office AAA 0 month 4Q12 95.174 R$ 87,39 100 millionR$
Cidade Jardim Office AAA 0 month 4Q12 6.792 R$150 - R$170 12 millionR$
JK Complex - Towers D&E Office AAA 0 month 1Q13 34.583 R$150 - R$170 62 millionR$
Panamérica Green Park Office 0 month 1Q13 5.185 R$50 - R$60 3 millionR$
Retail Petrobrás Retail 0 month 1Q13 2.881 R$140 - R$170 5 millionR$
WTNU - Tower III Office AAA 0 month 1Q13 14.868 R$120 - R$140 21 millionR$
DP Louveira 7 Warehouse 0 month 2Q13 30.122 R$19 - R$24 7 millionR$
Gaia Terra Warehouse 0 month 2Q13 23.017 R$18 - R$23 5 millionR$
JK Complex - Tower B Office AAA 0 month 1Q14 29.539 R$150 - R$170 53 millionR$
Souza Aranha Office 0 month 2Q14 2.019 R$65 - R$85 2 millionR$
TOTAL 300 millionR$
¹ Internal Estimate
² Considering the bottom of the estimated range
3Q12
8
Portfolio Recycling
As part of its recycling strategy, the Company concluded 6 sales throughout 9M12 which totaled
R$133.3 million. The rental loss in 9M12 is R$4.4 million
9M11 9M12
9,3%
8,4%
9M11 9M12
77.290
133.258
Total Sales Volume (R$ K) Average Exit Cap Rate (%)
Sold Properties Type Sale DateSale Price
(R$ K)
Rental Loss
9M12 (R$ K)
Paço do Ouvidor Retail Mar-12 25.000 1.285
Olympic Tower Office Apr-12 14.000 653
Paulista Plaza Office Apr-12 20.000 1.002
Cetenco Plaza (2 Units) Office Mar-12 5.448 273
Cetenco Plaza (8 Units) Office May-12 21.600 655
Cetenco Plaza (16 Units) Office Aug-12 47.210 508
TOTAL 133.258R$ 4.376R$
3Q12
9
Debt Reprofiling
3Q12 Prepaid Debt
3Q12 Renegotiated Debt
During 3Q12, the Company prepaid/refinanced R$364.5 million of debt inherited from One Properties, which had a
weighted average cost of CDI + 3.7% p.a.
3Q12 Prepaid Debt Type Institution Index Cupon Term Maturity 2Q12 Balance
BR Properties (holding) Debentures Banco do Nordeste CDI 145,00% 48 months 01/03/15 178.709
BR Properties (holding) CCB ABC CDI 3,90% 23 months 09/07/12 839
BR Properties (holding) CCB ABC CDI 3,90% 24 months 09/08/12 839
Prepaid Debt - Subtotal 180.387
Since One Properties merger, BR Properties has reprofiled (paid/refinanced) R$591.9 million of inherited debt.
3Q12 Renegotiated Debt Type Institution Index Cupon Term Maturity 2Q12 Balance
BR Properties (holding) * Debentures Banco do Brasil CDI 113,83% 58 months 30/09/15 71.939
BR Properties (holding) ** CCB Santander CDI 1,14% 60 months 19/08/19 112.190
Debt - Renegotiated 184.130
* Renegotiated Debt (from 130,0% of CDI to 113,83% of CDI)
** Renegotiated and Extended Debt (from CDI+1,5% to CDI+1,14%)
3Q12
Indebtedness
3Q12 Net Debt (R$ mn) 3Q12 Debt Index Breakdown
10
ST Debt Obligations for
Acquisitions
LT Debt Total Debt Cash Net Debt
667
4.958 4.564
13
4.279 394
46%
33%
14%
1%
6%TR
CDI
IGPM
INPC
IPCA
Net Debt 3Q12 2Q12 var %
Short Term Loans and Financing 679.382 1.115.598 -39%
Loans and Financing 554.331 991.441 -44%
Perpetual Bond 59.526 59.253 0%
Derivative Instruments 52.787 50.663 4%
Payables for Acquisition of Real Estate 12.739 14.242 -11%
Long Term Loans and Financing 4.278.954 3.994.751 7%
Loans and Financing 3.745.869 3.464.272 8%
Perpetual Bond 533.085 530.479 0%
Gross Debt 4.958.336 5.110.349 -3%
Cash and Cash Equivalents 394.179 609.460 -35%
Net Debt 4.564.157 4.500.889 1%
Portfolio Value 13.552.098 12.968.469 5%
Gross Debt / Portfolio Value (Loan to Value) 37% 39% -7%
Net Debt / Portfolio Value (Loan to Value) 34% 35% -3%
Adjusted EBITDA / Net Financial Expenses * 1,5x 1,1x 36%
Duration (years) 5,3 4,9 8%
* Considering Net Financial Expenses (ex. non-cash variations)
3Q12
Indebtedness
11
Debt Amortization Schedule (R$ million)
Loan to Value: Gross and Net
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
86
525
387 367
517574
385 375
213
106 78 64 56 39
Principal
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
38% 40%
24%
40%45% 43% 42% 41% 40% 39%
37%
4% 23% 21%
36% 36%35%
21% 21%
30%35% 34%
LTV Gross Debt LTV Net Debt
3Q12
12
Operating Highlights
Leasing Spreads
Leasing Spread - Market Alignments 3Q12 3Q11 9M12 9M11
Leasing Spread - Office 20,8% 24,1% 25,6% 23,4%
Renegotiated GLA (sqm) 10.819 26.099 41.406 50.104
% Office portfolio 2% 9% 9% 17%
Leasing Spread - Warehouse 16,1% 0,0% 15,5% 20,6%
Renegotiated GLA (sqm) 22.760 783 29.600 15.581
% Warehouse portfolio 2% 0,1% 3% 2%
Leasing Spread - Retail n/a 17,1% n/a 15,8%
Renegotiated GLA (sqm) - 4 - 97.435
% Retail portfolio 0% 0% 0% 97%
Leasing Spread - New Leases 3Q12 3Q11 9M12 9M11
Leasing Spread - Office 27,0% 12,0% 25,8% 14,6%
Leased GLA (sqm) 4.592 1.257 14.046 27.043
% Office portfolio 1% 0,4% 3% 9%
Leasing Spread - Warehouse 45,8% n/a 3,2% 15,6%
Leased GLA (sqm) 1.761 - 57.555 18.019
% Warehouse portfolio 0,2% 0% 5% 2%
Leasing Spread - Retail n/a n/a n/a n/a
Leased GLA (sqm) - - - -
% Retail portfolio 0% 0% 0% 0%
3Q12
Operating Highlights
13
Financial Vacancy per Segment Vacancy Breakdown
Property Type Financial Physical
CBOP - Jacarandá Office 0,2% 0,1%
Ventura - Torre Oeste Office 0,1% 0,0%
Bolsa do Rio Office 0,2% 0,1%
Icomap Office 0,0% 0,0%
Santa Catarina Office 0,2% 0,1%
Paulista Office 3,1% 1,0%
Brasília Office 0,2% 0,1%
Total Office 4,0% 1,4%
BP Itapevi Industrial 0,1% 0,2%
BP Jundiaí Industrial 0,1% 0,3%
BBP CEA Topázio Industrial 0,1% 0,2%
BBP Barão de Mauá Industrial 0,1% 0,2%
Cond.Ind.SJC Industrial 0,2% 0,9%
Total Industrial 0,5% 1,8%
Total Portfolio 4,5% 3,2%
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
1,5%
0,9% 0,9%
1,9% 1,9%
3,2%
2,3%
1,5% 1,7%1,3% 1,3%
4,5%Physical
Financial
2Q12 3Q12
0,9%
4,0%
0,4% 0,5%
0,0% 0,0%
Off ice
Industrial
Retail
Excluding the recently delivered Paulista Building, financial vacancy drops to 1.4%.
3Q12
% Revenues
% GLA
% GLA
% Revenues
14
Operating Highlights
Lease Contract 3 Year Market Alignment Schedule
Lease Contract Expiration Schedule
2012 2013 2014 >2015
2%8%
16%
74%
2012 2013 2014 >2015
2%18%
22%
57%
2012 2013 2014 >2015
24%
23%
38%
15%
2012 2013 2014 >2015
33%
18%
39%
9%
3Q12
Capital Markets
15
Stock Performance (BRPR3) 3Q12 3Q11 var % 9M12 9M11 var %
Total Number of Shares 310.307.396 180.003.919 72,4% 310.307.396 180.003.919 72,4%
Free Float (%) 99% 99% 0,0% 99% 99% 0,0%
Stock Price (average for the period) 23,80 17,23 38,1% 22,48 17,40 29,2%
Stock Price (end of period) 26,45 17,08 54,9% 26,45 17,08 54,9%
Market Cap end of period (R$ million) 8.207,6 3.074,5 167,0% 8.207,6 3.074,5 167,0%
Average Daily Trading Volume (R$ million) 24,77 16,23 52,6% 27,79 11,94 132,8%
Average Daily Traded Shares 1.057.065 941.962 12,2% 1.237.891 686.207 80,4%
Average Daily negotiations 4.074 1.508 170,2% 3.550 896 296,3%
15,00
17,00
19,00
21,00
23,00
25,00
27,00
29,00
-
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12
Gain of R$2.5
billion in 9
months
Shareholder Value Creation
Market Cap
3.330 million
Stock Price
R$18.50
Market Cap8.208 million
Stock PriceR$26.45
3Q12
IR Contacts
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
16
Investor Relations