3Q2017 INSTITUTIONAL PRESENTATION

Transcription

1 Institutional Presentation 3rd QUARTER 2017 SHOPPING CAMPO GRANDE - MS 0

2 Overview Company Highlights LARGEST mall company in Latin America Nationwide presence covering all 5 regions of Brazil Active portfolio management: 39 acquisitions, 21 expansions and 20 asset sales Portfolio with 39 regional malls, 7% of the total malls in Brazil Current Owned GLA will grow 11.4% with the development projects by the end of 2021* Plaza Niterói - RJ Shopping Tijuca - RJ NorteShopping - RJ Shopping Villa-Lobos - SP * Growth considering the pipeline disclosed in the last Earnings Release. 1

3 Overview High quality potfolio, with large presence and regional scale Northeast / North Region % of total NOI 1 Main Malls: 9% Recife Amazonas Shopping Capim Dourado 5 Midwest / MG Region % of total NOI 1 Main Malls: 19% Del Rey Center Uberlândia Campo Grande RJ / ES Region % of total NOI 1 Main Malls: Norte 32% Shopping Plaza Niterói Tijuca South Region Source: BR MALLS 1 As of 3Q17 % of total NOI 1 Main Malls: Catuaí 14% Londrina Shopping Estação Shopping Curitiba 6 São Paulo Region % of total NOI 1 Main Malls: 26% Villa Lobos Mooca Plaza Tamboré 2

4 Overview Largest company in the sector in only 10 years Net Revenue (R$ million): 31.1% per year or 15x NOI: 32.8% per year or 17x Adjusted EBITDA: 33.2% per year or 18x Total GLA Growth: 670% or 8x 6 Malls Acquisitions Greenfields Expansions Divestments # Malls Total GLA (thousand m²) ,033 1,197 1,434 1,621 1,689 1,691 1,638 1,646 (*) Considering asset sales and acquisitions only of the malls in which the company divested its entire interest or added one more shopping center to the portfolio. 3

5 Resilience and Strength BRMALLS is the best and largest company in the sector 1 o Size 1 o Growth 1 o Profitability Current Total GLA (in thousand sqm) # Malls , Owned GLA CAGR - ( ) 25.2% 14.3% 10.6% EBITDA Margin Avg % 77.8% 71.7% 21,798 Total Sales 2016 (R$ million) 13,726 12,719 Net Revenues CAGR - ( ) 31.1% 20.0% 16.1% NOI Margin Avg % 87.7% 80.0% EBITDA 2016 (R$ million) 1, Adjusted EBITDA CAGR - ( ) 33.2% 22.5% 19.0% G&A/ Gross Revenues Avg % 11.1% 8.2% 4

6 Resilience and Strength Retail Sales/Shopping Malls/BRMALLS Growth Market Share BRMALLS: % 14.9% 13.8% Shopping Centers historically outperform retail sector *Source: Shopping Center Sales ABRASCE; Retail Sales - IBGE 5

7 Resilience and Strength Highly Diversified Client Base Brands (% do AMM) Segment (% of Satellites GLA¹) 2.7% Apparel 9.3% Brand 1 Restaurant 8.5% Brand 2 2.4% Women s Apparel 7.6% 1.5% Fast-Food 6.1% Brand 3 Shoes 5.0% Brand 4 1.4% Men s Apparel 4.3% Brand 5 1.3% Cosmetics 3.9% *Updated in September/17. ¹ Most representative segments, excluding Department Stores, Supermarkets and Movie Theaters. 6

8 Growth Drivers SHOPPING PLAZA NITERÓI- RJ 7

9 Added Years Acquisitions Growth Drivers Solid Portfolio Management Track-Record Total = 39 Divestitures 1 = GLA # of Acquisitions since 2007 ( New Assets ) # of Divestitures 1 since Source: BR MALLS and Companies 1 Considers full and partial sales 2 Total GLA added, in thousands of sqm 8

10 Growth Drivers: Acquisitions Discipline in acquisitions and solid post integration results NOI of Acquisitions since 2006 (R$ mm): Actual / Projected NOI Projected Actual Turnaround Expertise: Main Upsides Rent Parking Mall & Media Tenant Mix Improve Customer Experience Increasing occupancy rates and strong leasing spreads Better Auditing process Pricing Expertise Optimizing the park operation Media: Portfolio scale negotiating with national advertisers Mall: Increasing occupancy rates and strong leasing spreads Largest Landlord Access to most desirable brands and restaurants Renovation Marketing Expertise 9

11 Growth Drivers: Acquisitions We still see a great opportunity for acquisitions in Brazil. Market Share Ownership of Brazilian Shopping Malls Market Share (% of owned GLA in 2016) * Brazil Total GLA in 2016: 15,237 thousand sqm *Top 4 mall Players: BRMALLS, Multiplan, Aliansce and Iguatemi. Source: ABRASCE 10

12 Added Years Expansions Greenfields Growth Drivers: Development Development: 21 Expansions and 10 Greenfields Total = 10 = GLA ¹ Source: BR MALLS 1 Own GLA added 11

13 Growth Drivers: Development Solid Development History Owned GLA (in thousand sqm) Already developed (Owned GLA) Pipeline (Owned GLA) % of the Owned GLA ,2 12

14 Growth Drivers: Development Pipeline: Shopping Estação Cuiabá Click Here for aerial shots of the construction site. Click Here for a Virtual Tour Opening date: 4Q18 LARGEST Mall in Mato Grosso 46,924 m² of Total GLA 75% Stake 13

15 Growth Drivers: Organic SSS & SSR Same Store Sales Annual Growth (%) Same Store Sales Quarterly Growth (%) 14.1% 10.6% 7.0% 8.9% 7.4% 6.5% 5.3% 4.6% 4.5% 3.0% -0.5% 0.4% Q16 4Q16 1Q17 2Q17 3Q17-0.6% -0.6% Same Store Rent Annual Growth (%) Same Store Rent Quarterly Growth (%) 11.2% 10.5% 9.3% 13.6% 9.6% 9.8% 7.9% 7.3% 5.3% 6.5% 7.5% 4.3% 4.4% 2.6% Q16 4Q16 1Q17 2Q17 3Q17 14

16 Capital Markets 15 SHOPPING TIJUCA- RJ

17 Capital Markets True corporation, high liquidity and world-class corporate governance standards Average Daily Traded Volume 90d (R$ million) Full corporation, listed under Novo Mercado No shareholders agreement 39 Key employees aligned with company via performance share program Alignment with investors: AFFO/Share as key long term goal Governance Committees (Audit, Risk, People and Compensation Committee) 11 ISS QualityScore Benchmark (1 = Lowest Risk): x the average ADTV of peers 16

18 Capital Markets Currently trading at a spread over interest rates % 3.7% 150 bps Note: Yield AFFO = Adjusted FFO 24M Fwd / Market Cap Source: Bloomberg em 09/30/

19 Capital Markets... and at a large discount. Price R$ R$ R$ % +44.4% R$ % NAV Historical High Consensus* Last Price Updated November, 14th, NAV = fair value of investment properties of current malls net debt minority interest/ Number of Shares *Bloomberg Consensus 18

20 Present Moment 19 NORTESHOPPING- RJ

21 Present Moment Changes in the Company and Our Targets Complete Governance & Management New CEO; New Chief Officers of Operations, Development and Human Resources New Audit & Risk and Human Resources Committees Long Term Incentive Plan: Performance Shares Complete Balance Sheet Enhancement Public Offering of Shares: R$1.7 billion Net Debt / Adjusted EBITDA LTM: 2.4x vs 4.2x (1Q17) Repurchase of Perpetual Bond: R$1.2 billion removal of foreign currency exposure Targets For Next Quarters Occupancy Rate and Late Payments Portfolio Recycling Capital Allocation: Focus on Core Assets Improve Tenant Mix 20

22 Present Moment Experienced Board of Directors with six independent directors TOP MANAGEMENT BOARD OF DIRECTORS Officer Years at BRMALLS Member Position Years of Experience Professional Experience Ruy Kameyama CEO 10 years Cláudio Bruni Chairman +38 Frederico Villa CFO e IR Director 9 years Mauro Gentile Rodrigues da Cunha Independent Director +24 José Vicente Avellar COO 7 years Bruno Hermes da Fonseca Rudge Independent Director +20 Mariane Wiederkehr Grenchinski Development Director Claudia Lacerda General Counsel 10 years 10 years Rodolpho Amboss José Afonso Alves Castanheira Richard Paul Matheson Independent Director Independent Director Independent Director ECISA Bianca Bastos HR Director 6 years Luiz Alberto Quinta Director +30 Team Strengthening: David Contis (former vice president at Simon, former president of Simon Malls, former vice president and COO at Macerich and former Board member of the International Council of Shopping Centers). 21

23 Present Moment Capital Structure BR Malls Detailed Debt Profile: 3Q17 Average Cost of Debt / Exposure Cash R$1.0 billion Average remuneration 102.8% of CDI Gross Debt R$3.3 billion Avg. Cost of Debt 9.9% Net Debt / LTM Adjusted EBITDA 3Q17* Rating Moody s: Aa1 / Ba2 Fitch: AA+ / BB *Source: BRMALLS and comapnies **Source: BRMALLS 22

24 Present Moment Tenant Mix Improvement Net Late Payments (%) Sales/m 2 (R$) Leased Contracts During The Last 12 Months* Leasing Highlights LTM st. Lobos *Leased contracts between 2Q16 and @NorteShopping

25 FY 2017* consensus (R$ MM) NET REVENUES R$ 1,358 ADJUSTED EBITDA (1) Discounts: 31MM (2) Vacancy: 20MM Stabilized Result (R$ MM) NET REVENUES R$ 1,409 ADJUSTED EBITDA +3.8% R$ 933 (3) PDA: +124MM R$ 1, % ADJUSTED EBITDA MARGIN ADJUSTED EBITDA MARGIN 68.7% 78.6% +990bps AFFO AFFO R$ 445 Financial Result: +50MM R$ % AFFO MARGIN AFFO MARGIN 32.8% 47.6% +1,480bps Source: BRMALLS (1) Discount upside considers a historical average of 2-3% of rente revenues. (2) Vacancy upside is based on 9M17 and a stabilized occuppancy of 97,5%. (3) Provision for doubtful accounts ( PDA ) upside is based on PDA as a % of net revenues (9M17 vs. historical average. *Average of the 10 most recent updates. 24

26 Financial Highlights SHOPPING VILLA-LOBOS- SP 25

27 Financial Highlights Net Revenues Evolution (R$ mm) Gross revenue Breakdown (3Q17) CAGR 06-16: 31.1% Rents 70.9% Parking 19.1% Services 6.7% Key Money 1.9% Others 1.0% Transfer Fee 0.4% Rent Revenue Breakdown: Base Rent: 56.7% Mall & Media: 10.0% Overage Rent 4.2% 26

28 Financial Highlights Adj. EBITDA (R$ mm) and Adj. EBITDA Margin NOI (R$ mm) and NOI Margin (%) 63.4% 67.9% 75.7% 81.4% 79.8% 79.7% 81.0% 81.0% 80.3% 79.7% 74.2% 81.1% 86.9% 89.6% 91.9% 89.2% 90.2% 91.3% 91.7% 91.8% 91.8% 90.2% CAGR 06-16: 33.2% Avg: 76.7% CAGR 06-16: 32.7% Avg: 89.6% 27

29 Appendix 28

30 Sales Performance in the Shopping Mall Sector since1995 Average Inflation ( ): +6.6% Average GDP Growth ( ): +2.3% Sales CAGR ( ): +14.0% Mexican Crisis (1994) & Asian Crisis (1997) Russian Crisis (1998) & Real Depreciation (1999) 2002 Crisis Lula Election Subprime Crisis ( ) European Crisis ( ) Car Wash Crisis ( ) Avg. GDP Growth (95-97): 2.9% Avg. GDP Growth (98-00): 1.8% Avg. GDP Growth (03-05): 3.0% Avg. GDP Growth (08-09): 3.2% Avg. GDP Growth (11-12): 2.5% Avg. GDP Growth (14-16): -2.4% Avg. Inflation (95-97): 7.4% Avg. Inflation (98-00): 5.5% Avg. Inflation (03-05): 7.5% Avg. Inflation (08-09): 5.1% Avg. Inflation (11-12): 5.8% Avg. Inflation (14-16): 7.1% Avg. Interest Rate (95-97): 35.5% Avg. Interest Rate (98-00): 21.3% Avg. Interest Rate (03-05): 17.4% Avg. Interest Rate (08-09):11.2% Avg. Interest Rate (11-12): 9.1% Avg. Interest Rate (14-16): 14.2% Sales Growth CAGR (95-97): 18.3% Sales Growth CAGR (98-00): 20% Sales Growth CAGR (03-05): 12.4% Sales Growth (08-09): 14.6% Sales Growth (11-12): 10.6% Sales Growth (14-16): 5.4% Source: IPEA Data e ABRASCE 29

31 BRMALLS vs. International Peers EV/EBITDA 2017E vs. International Peers Updated in November, 2017 Source for International Peers: Bloomberg Source for national Peers: sell-side analysts estimates 30

32 Shopping Malls: Brazilian s favourite leisure destination Top Leisure Activities Highlights Rio de Janeiro, 2013 Go to the Shopping Mall Beach Cinema Shows 77% 74% 68% 56% The frequency of visits to a shopping mall remained constant over the past few years (2012: 7x/month 2016: 7x/month) and Clients seek security, brands, convenience variety Main Reason Why Customers go to Malls Considers all ages, 2016 Cinema 3% Dating 4% Leisure 14% Other 21% Parties Eating 15% Shopping 28% Services 15% 54% Brazilian consumers prefer immediate satisfaction service Perception salon, Street shops usually have low quality of and low variety of security inside the city Diversified services for all ages (gym, hair spa, games, etc.) Source: BR Malls, ABRASCE and Veja 31

33 E-Commerce in Brazil E-commerce Share in Total Retail Sales (%) E-commerce Share in Total Christmas Sales (%) % 9.8% 8.4% 7.5% 5.7% 5.4% 5.1% 3.3% 2.0% Main Challenges for the E-commerce Consolidation in Brazil For the Tenant For the Customer High logistics cost High cost of capital (inventory, working capital) Fiscal complexity Franchising model Incremental Costs (shipping costs) High level of delay in deliveries High average delivery time (10 days) Source: BR Malls, ABRASCE and Statista 32

34 Brazilian Mall industry offers strong potential for growth and expansion GLA per 1,000 inhabitants (sqm) % of Retail Sales in Shopping Malls USA Canada Australia South Africal France Mexico Brazil Canada USA South Australia France Mexico Brazil Africal Source: Abrasce,

35 IR Contacts Frederico Villa CFO Telefone: Derek Tang IR Manager Telefone: Renato Campos Coordinator Telefone: Guilherme Lahr Specialist Telefone: Antonio Velloso Intern Telefone:

36 Disclaimer The material that follows is a presentation of general background information about BR Malls Participações S.A. and its consolidated subsidiaries ( BR Malls" or the "Company") as of the date of the presentation. It is information in summary form and does not purport to be complete and is not intended to be relied upon as advice to potential investors. You should consult the offering memorandum for complete information about the transaction and base your investment decision on such offering memorandum. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives, accepts any responsibility whatsoever for any loss or damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice. Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, the Company makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors. This presentation is strictly confidential and may not be disclosed to any other person. This presentation contains forward-looking statements. Such statements are not statements of historical facts, and reflect the beliefs and expectations of BR Malls management. The words "anticipates", "wishes", "expects", "estimates", "intends", "forecasts", "plans", "predicts", "projects", "targets" and similar words are intended to identify these statements. Although the Company believes that expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to the Company's management, the Company cannot guarantee future results or events. You are cautioned not to rely on forward-looking statements as actual results could differ materially from those expressed or implied in the forwardlooking statements. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended (the Securities Act ). Any offering of securities to be made will be made solely by means of an offering circular. This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities, and neither any part of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any decision to purchase securities in any offering of securities of the Company should be made solely on the basis of the information contained in the offering document which may be published or distributed in due course in connection with any offering of securities of the Company, if any. This presentation is being made only to investors that, by means of their attendance at this presentation, represent to the underwriters and the agents that they are Qualified Institutional Buyers as that term is defined in the Securities Act. 35