Earnings Release 2Q17

Transcription

1 Earnings Release 2Q17 Conference Call (English) August 9 th, :00 PM (Brazil Time) Tel NY: Tel: (55 11) Replay: (55 11) Conference Call (Portuguese) August 9 th, :00 AM (Brazil Time) Tel: (55 11) Replay: (55 11) IR Contact: André Bergstein CFO & IRO Gabriel Barcelos IR Manager Nelson Brazan IR Analyst ri@brpr.com.br Tel: (55 11) Fax: (55 11)

2 INDEX 2Q17 Highlights and Subsequent Events... 3 Table of Highlights... 4 Financial Indicators... 5 Gross Revenues... 5 Net Revenues... 5 SG&A Adjusted EBITDA... 7 Financial Income / (Expenses)... 8 Other Operating Income / (Expenses)... 9 Net Income (Loss)... 9 Adjusted Net Income (FFO) Indebtedness and Cash Position Table of Loans Operating Indicators Property Management Property Leasing Portfolio Vacancy Portfolio Delinquency Portfolio Built-to-Suit Portfolio Projects under Construction / to be Developed Capital Markets Income Statement Balance Sheet Cash Flow Statement

3 2Q17 HIGHLIGHTS AND SUBSEQUENT EVENTS BR Properties registered Adjusted Net Income (FFO) of R$20.9 million, with 20% margin São Paulo, August 8th, 2017 BR Properties S.A. (Bovespa: BRPR3), one of the largest commercial properties company in Brazil, announces today its 2Q17 Earnings Release. Currently, BR Properties holds 46 commercial properties, totaling 684 thousand sqm of Gross Leasable Area (GLA), of which 5 are sites for future development represented by 74 thousand sqm of potential GLA. The Company also manages properties of its portfolio through BRPR A (subsidiary). The following financial and operational information will be presented in R$, unless indicated otherwise, and follow the Corporations Law (Lei das S/A) and the standards put forth by Comissão de Valores Mobiliários (CVM). 2Q17 Highlights BR Properties registered in 2Q17 net revenues of R$104.7 million, which represents a decrease of 6% when compared to 2Q16, considering the same properties' revenues. This reduction is explained by an increase in vacancy rates during 2016 and by a reduction in rent prices in specific contracts. 2Q17 adjusted EBITDA was R$83.0 million, with a margin of 79%, one of the highest in the sector. BR Properties registered adjusted financial results (expense) of R$65.4 million in 2Q17, a reduction of 18% compared to previous quarter. The reduction reflects, partially, the benefits related to the recent cuts in the basic interest rate (SELIC). BR Properties registered a net loss of R$8,8 million in 2Q17. This result was impacted by a R$26.0 million non-cash effect of the FX variation on the principal of our dollar-denominated perpetual debt. 2Q17 Adjusted Net Income (FFO) totaled R$20.9 million, with a margin of 20%, 200 basis points higher than the margin registered last quarter. BR Properties' cash position at the end of the quarter was R$998.9 million. The company registered a net debt of R$2,732.2 million and a 10.5% p.a., or 103% of CDI average cost of debt by the end of 2Q17. The Company s portfolio ended the quarter with consolidated financial and physical vacancy rates of 22.9% and 32.6%, respectively, representing a reduction of 60 basis points in the financial vacancy, compared to 1Q17. Considering new leases completed in July, totaling 10,056m² of GLA, current financial and physical vacancy rates are reduced to 22.1% and 30.7%, respectively. 3

4 Subsequent Events On July 5 th, the Company concluded the public offering of primary distribution with restricted placement efforts, pursuant to CVM Instruction 476. Through the issuance of 108,906,849 new common shares with the price per share of R$8.75, BR Properties raised R$952.9 million. On July 10 th, BR Properties raised R$275.0 million through its 7 th Debentures Issue. The issuance has three series with the following characteristics: The Debentures of the 1 st series have a maturity of 12 years and cost of CDI % per year. The Debentures of the 2 nd and 3 rd series have a maturity of 15 years and cost of IPCA % per year. On July 14 th, the Company concluded the acquisition of Condomínio Centenário Plaza, located in the city of São Paulo. The Complex was acquired for R$439.6 million, has a leasable area of 53,892 m² and it is composed by two properties. On July 17 th, BR Properties concluded the acquisition of Galpão Imbuia, located in the city of Jarinu, with leasable area of 22,986 m² and for a total amount of R$49.4 million. Between the signing of the Deed of Purchase and Sale of Real Estate (CCV) and the conclusion of the acquisition, 50% of the property was leased. During the month of July, BR Properties leased 10,056 m², being 9,836 m² in Panamérica Park and 221 m² in Ed TNU. TABLE OF HIGHLIGHTS Financial Highlights 2Q17 2Q16 var % 6M17 6M16 var % Net Revenues % % General and Administrative Expenses % % General and Administrative Expenses (Adjusted)* % % Adjusted EBITDA % % Adjusted EBITDA Margin 79% 80% -1 p.p. 79% 80% -1 p.p. Net Income (Loss) (8.790) (26.997) -67% % Adjusted Net Income (FFO) % % Adjusted Net Income Margin (FFO Margin) 20% 29% -9 p.p. 19% 18% 1 p.p. Operating Highlights 2Q17 2Q16 var % 6M17 6M16 var % GLA Current Portfolio (sqm) % % - Office (sqm) % % - Industrial (sqm) % % - Retail (sqm) n/a 6.099,00 - n/a GLA Properties Under Development and Landbanks % % - Office (sqm) % % - Industrial (sqm) % % - Retail (sqm) - - n/a - - n/a Financial Vacancy 22,9% 13,0% 10 p.p. 22,9% 13,0% 10 p.p. Physical Vacancy 32,6% 19,2% 13 p.p. 32,6% 19,2% 13 p.p. * Excluding Vacancy Expenses, SOP - LTIP, Taxes and Attorney's Fees (Non-Recurring) Portfolio Market Value Portfolio GLA 1% 1% 8% 33% 49% 67% 42% Office AAA Office Industrial Office AAA Office Industrial Retail 4

5 FINANCIAL INDICATORS Gross Revenues Gross Revenues (R$ k) Gross revenues reached R$116.6 million in 2Q17, a decrease of 6% relative to 2Q16, considering the same properties' revenues. (11%) (6%) 96%, or R$111.7 million, resulted from office lease revenues; 4%, or R$4.8 million, resulted from property management fees; Q16 2Q16 - Same Properties 2Q17 Net Revenues Net Revenues (R$ k) 2Q17 net revenues reached R$104.7 million, a decrease of 6% in comparison to 2Q16, considering the same properties' revenues. This reduction is explained by an increase in vacancy rates during 2016 and by a reduction in rent prices in specific contracts. (13%) (6%) Q16 2Q16 - Same Properties 2Q17 5

6 FINANCIAL INDICATORS General Administrative Expenses General and administrative expenses, excluding vacancy expenses, stock options - LTIP, taxes, nonrecurring attorney s fees, totaled R$12.1 million in 2Q17, a decrease of 4% relative to 2Q16, when the same expenses totaled R$12.7 million. This reduction reflects the company's efforts on the readjustments of its structure to the current size of the Company, as well as the challenges imposed by the economic scenario. Account General and Administrative Expenses 2Q17 2Q16 var % 6M17 6M16 var % (13) SG&A (29.524) (24.563) 20% (88.611) (52.739) 68% (14) Operating Expenses (11.216) (6.220) 80% (20.544) (13.983) 47% (15) Taxes 997 (2.664) -137% (30.098) (8.155) 269% (16) Personnel Expenses (4.548) (4.047) 12% (10.985) (9.049) 21% (17) Management Fees (1.739) (2.418) -28% (2.861) (5.176) -45% (18) Stock Options / LTIP (2.283) (472) 384% (4.566) (835) 447% (19) Vacancy Expenses (10.735) (8.743) 23% (19.556) (15.541) 26% Adjusted SG&A (12.120) (12.685) -4% (27.715) (28.208) -2% (19) (+) Vacancy Expenses % % (18) (+) Stock Options / LTIP % % (15) (+) Taxes (997) % % (14) (+) Arbitration Fees - - n/a n/a (14) (+) Attorney's Fees (Non-Recurring) n/a n/a Percentage: G&A / Net Revenues 12% 10% 2 p.p. 13% 11% 2 p.p. Total personnel expenses (Personnel Expenses and Management Fees) registered a reduction of 3% in comparison to 2Q16, an effect of the efforts mentioned above. The Bonus Provision expense registered was R$0.9 million in 2Q17. Meanwhile, year to date, the same expense totaled R$3.2 million. It is important to emphasize that the Bonus Provision it is already considered in the Personnel Expenses account. Total Personnel Expenses 2Q17 2Q16 var % 6M17 6M16 var % Personnel Expenses (4.548) (4.047) 12% (10.985) (9.049) 21% Management Fees (1.739) (2.418) -28% (2.861) (5.176) -45% Total Personnel Expenses (6.287) (6.465) -3% (13.846) (14.225) -3% -> Bonus Provision (879) (1.149) -23% (3.180) (2.298) 38% G&A (R$ k) 10% 12% 11% 13% (2%) (4%) Q16 2Q17 6M16 6M17 % Net Revenues 6

7 FINANCIAL INDICATORS Adjusted EBITDA Adjusted EBITDA - excluding the non-cash effects of the stock option plan and the non-recurring attorney s fees, reached R$83.0 million in 2Q17, a reduction of 15% compared to 2Q16. This reduction is mainly explained by the loss of rental revenues resulting from property sales occurred over the last 12 months. Despite the nominal decrease on the adjusted EBITDA, the margin reached 79%, one of the highest in the sector and in line with the margin registered in 2T16, representing more operational efficiency of the Company. It is important to note that from 2017 onwards, the adjustment of the "Bonus Provision" will not be considered in the calculation of Adjusted EBITDA, which causes a distortion when compared to the same period of last year, when it was considered in the Adjusted EBITDA. Adjusted EBITDA Margin (R$ k) 80% 79% 80% 79% (14%) (15%) Q16 2Q17 6M16 6M17 Adjusted EBITDA Margin Adjusted EBITDA Composition Account Adjusted EBITDA Composition 2Q17 2Q16 var % 6M17 6M16 var % (29) Net Income (loss) before Minority Interest (8.790) (26.286) -67% % (30) (-) Minority Interest - (711) n/a - (1.733) n/a (28) (+) Deferred Taxes (1.400) % (64.942) % (27) (+) Income and Social Contribution Taxes (3.262) (412) 692% % (25) (-) Gain (Loss) on Appraisal of Investment Properties n/a n/a (24) (-) Gain (Loss) on Sale of Investment Properties - - n/a (65.423) (5.348) 1123% (23) (+) Other Operating Income (28) (16.510) -100% (18.269) (15.542) 18% (20) (+) Financial Result % % (18) (+) Stock Options / LTIP % % (16) (+) Bonus Provision * n/a n/a (15) (+) PIS/Cofins (Revenue Taxes) on Property Sales (Galpão SBC ) - - n/a n/a (15) (+) Taxes on One Properties Incorporation (ITBI) - - n/a n/a (15) (+) PIS/Cofins (Revenue Taxes) on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (14) (+) Depreciation % % (14) (+) Attorney's Fees (Non-Recurring) n/a n/a (34) Adjusted EBITDA % % (35) Adjusted EBITDA Margin 79% 80% -1 p.p. 79% 80% -1 p.p. * From 2017 onwards, the adjustment of the "Bonus Provision" will not be considered in the Adjusted EBITDA calculation 7

8 FINANCIAL INDICATORS Adjusted Financial Results (R$ k) Adjusted Financial Results (R$ k) Excluding the non-cash effects from the FX variation on the principal of our dollar-denominated perpetual debt and the variations on derivative instruments, adjusted financial results totaled R$65.4 million in 2Q17, a 6% reduction relative to 2Q16. If compared to the first quarter of this year, the reduction corresponds to 18%, already reflecting part of the benefits related to the recent reductions in the basic interest rate (SELIC). (6%) (3%) Q16 2Q17 6M16 6M17 Financial Results 2Q17 2Q16 var % 6M17 6M16 var % Financial Income % % Return on Cash Reserves % % Non-cash Variations (MTM - Perpetual Bond Swap and Interest) n/a % Exchange Rate Variation (16.906) % n/a Other % % Gains on the Perpetual s Buyback - - n/a n/a Monetary Adjustment on "Galpão SBC " Sale - - n/a n/a Monetary Adjustment of Tax Credits n/a n/a Financial Expenses ( ) ( ) -36% ( ) ( ) -22% Interest Expense on Company Debt (98.259) ( ) -6% ( ) ( ) -3% Non-cash Variations (MTM - Perpetual Bond Swap and Interest) n/a (688) (3.588) -81% Exchange Rate Variation (9.070) - n/a (9.070) - n/a Other (11) (34) -67% (119) (48) 149% Expenses on the Perpetual s Buyback - - n/a - (1.806) n/a Debt Renegotiation Results (Waiver) - (62.982) n/a - (62.982) n/a Financial Results (88.633) (67.106) 32% (96.938) (25.346) 282% (-) Non-cash Gains on Exchange Rate Variation (65.390) -126% - ( ) n/a (+) Non-cash Losses on Exchange Rate Variation n/a n/a (-) Non-cash Gains (MTM - Perpetual Bond Swap and Interest) (2.510) - n/a (8.670) (4.783) 81% (+) Non-cash Losses (MTM - Perpetual Bond Swap and Interest) (247) - n/a % (-) Monetary adjustment on "Galpão SBC" Sale - - n/a (49.503) - n/a (-) Non-cash Gains on the Perpetual s Buyback - - n/a - (55.726) n/a (+) Debt Renegotiation Results (Waiver) n/a n/a Adjusted Financial Results (65.413) (69.513) -6% ( ) ( ) -3% 8

9 FINANCIAL INDICATORS Other Operating Income / (Expenses) Other Operating Income / (Expenses) registered in 2Q17 an income of R$28 thousand, which is explained by the credits related to the program Nota Fiscal Paulista. Net Income Net Income (R$ k) As already described in this report, the Company registered a net loss of R$8.8 million in 2Q17. This result was mainly impacted by the non-cash effect of the FX variation on the principal of our dollar-denominated perpetual debt in the amount of R$26.0 million. Year to date, the Company registered a net income of R$174.0 million, an increase of 118% over the same period last year. 67% 118% (26.997) (8.790) 2Q16 2Q17 6M16 6M17 9

10 FINANCIAL INDICATORS Adjusted Net Income (FFO) In 2Q17, Adjusted Net Income (FFO) totaled R$20.9 million, and FFO margin of 20%, 200 basis points higher than the margin registered last quarter. Adjusted Net Income (R$ k) 29% 20% 18% 19% (41%) (10%) Q16 2Q17 6M16 6M17 Adjusted Net Income Margin Account Adjusted Net Income Composition (FFO) 2Q17 2Q16 var % 6M17 6M16 var % (31) Net Income (loss) (8.790) (26.997) -67% % (28) (+) Deferred Taxes (1.400) % (64.942) % (27) (+) Income Taxes on Property Sales - - n/a % (25) (-) Gain (Loss) on Appraisal of Investment Properties n/a n/a (24) (-) Gain (Loss) on Sale of Investment Properties - - n/a (65.423) (5.348) 1123% (23) (+) Other Operating Income/Expense (Non-Recurring) (28) (8.276) -100% (18.269) (6.184) 195% (20) (+) Non-cash Losses on Exchange Rate Variation n/a n/a (20) (-) Non-cash Gains on Exchange Rate Variation (65.390) -126% - ( ) n/a (20) (+) Non-cash Variations (MTM - Perpetual Bond Swap and Interest) (2.757) - n/a (7.982) (1.194) 568% (20) (-) Monetary Adjustment on "Galpão SBC " Sale - - n/a (49.503) - n/a (20) (-) Non-cash Gains on the Perpetual s Buyback - - n/a - (55.726) n/a (20) (+) Debt Renegotiation Results (Waiver) n/a n/a (18) (+) Stock Options / LTIP % % (15) (+) PIS/Cofins (Revenue Taxes) on Property Sales (Galpão SBC ) - - n/a n/a (15) (+) Taxes on One Properties Incorporation (ITBI) - - n/a n/a (15) (+) PIS/Cofins (Revenue Taxes) on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (14) (+) Attorney's Fees (Non-Recurring) n/a n/a (14) (+) Depreciation n/a n/a (36) Adjusted Net Income (FFO) % % (37) Adjusted Net Income Margin (FFO Margin) 20% 29% -9 p.p. 19% 18% 1 p.p. 10

11 FINANCIAL INDICATORS Indebtedness and Cash Indebtedness 2Q17 1Q17 var % Short Term Loans and Financing % Loans and Financing % Perpetual Bond % Derivative Instruments - - n/a Payables for acquisition of Real Estate % Long Term Loans and Financing % Loans and Financing % Perpetual Bond % Payables for acquisition of Real Estate % Gross Debt % Cash and Cash Equivalents % Net Debt % Portfolio Value % Gross Loan to Value 53% 54% -1 p.p. Net Loan to Value 39% 37% 2 p.p. Gross Loan to Value - Ex Perpetual Bond 44% 45% -1 p.p. Net Loan to Value - Ex Perpetual Bond 30% 28% 2 p.p. Net Debt/EBITDA 8,1x 7,3x 11% Net Debt/EBITDA - Ex Perpetual Bond 6,2x 5,6x 11% Adjusted EBITDA / Net Financial Expenses * 1,3x 1,4x -3% Duration (years) ** 8,3 8,4-2% Duration (years) Ex Perpetual Bond 4,1 4,4-6% Unsecured Debt / Total Debt 30% 29% 1 p.p. * Considering Adjusted Financial Results and Adjusted EBITDA (Last 12 months) ** Considering the expiration of the Perpetual Bond in 2050 Indebtedness and Cash Proforma Indebtedness Proforma Capital Increase (Follow-on) Centenário Plaza Complex Acquisition Galpão Imbuia Acquisition* Debentures - 7th issuance Gross Debt Net Debt Portfolio Value Gross Loan to Value 53% Net Loan to Value 30% Gross Loan to Value - Ex Perpetual Bond 45% Net Loan to Value - Ex Perpetual Bond 21% Adjusted EBITDA (LTM) ** Net Debt/EBITDA 6,3x Net Debt/EBITDA - Ex Perpetual Bond 4,6x Adjusted EBITDA / Net Financial Expenses ** 1,4x * R$ already paid in 2Q17 ** Considering EBITDA of Centenário Plaza and Galpão Imbuia (Vacancy of 50%) 11

12 Gross LTV (Gross Debt/Portfolio Value) & Net LTV (Net Debt/Portfolio Value) 45% 39% 40% 41% 40% 44% 52% 46% 44% 45% 46% 54% 53% 53% 38% 34% 34% 36% 37% 41% 34% 29% 29% 29% 33% 37% 39% 30% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 2Q17 Pro LTV Gross Debt LTV Net Debt forma Interest Coverage (Adjusted EBITDA/Net Interest Expenses) 1,6x 1,6x 1,5x 1,4x 1,3x 1,4x 1,2x 1,3x 1,4x 1,3x 1,4x 1,4x 1,3x 1,4x 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 2Q17 Pro forma Net Debt / Adjusted EBITDA vs. Net Debt ,1x 5,2x 5,4x 6,1x 6,2x 6,3x 4,4x 4,8x 5,0x 5,6x 6,5x 7,3x 8,1x 6,3x 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 2Q17 Pro * 2Q17 Net Debt/EBITDA - Proforma and Ex Perpetual Bond = 4,6x forma 12

13 Debt Amortization Schedule (R$ MI) * S * Perpetual Bond Debt Profile 10% 17% 14% 17% 41% TR CDI USD Perpetual Bond IGPM IPCA 13

14 FINANCIAL INDICATORS Table of Loans Loans Type Institution Index Coupon Term Maturity 2Q17 Balance 1Q17 Balance Icomap CCB Itaú BBA/ Unibanco IGPM 8,84% 120 months 16/04/ BP Itapevi CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Piraporinha CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Jundiaí CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Alphaville CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Panamérica Park CDC Itaú BBA/ Unibanco TR 9,90% 120 months 25/05/ Plaza Centenário CDC Itaú BBA/ Unibanco TR 9,90% 120 months 25/05/ Henrique Schaumann CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Bolsa RJ CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Galpão Ind. Araucária CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Glória CDC Itaú BBA/ Unibanco TR 9,90% 120 months 17/07/ Joaquim Floriano CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Paulista Park CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Paulista Plaza CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Isabela CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Olympic CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Midas CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Network CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Number One CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Celebration CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Athenas CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Ed. Comercial Indaiatuba CCI Brazilian Securities TR 10,00% 120 months 20/12/ Jandira I & II CCB Itaú BBA/ Unibanco CDI 1,28% 120 months 17/08/ Ed. Vargas CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ São Pedro CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Souza Aranha CCB Itaú BBA/ Unibanco TR 11,25% 155 months 17/06/ Cond. Ind. São José dos Campos CCB Itaú BBA/ Unibanco TR 11,25% 120 months 17/06/ Cond. Ind. Itapevi CDC Itaú BBA/ Unibanco TR 9,40% 120 months 08/06/ Galpão Ind. Sorocaba CCI CIBRASEC TR 10,15% 156 months 04/09/ TNU CCI Brazilian Securities TR 9,40% 144 months 07/07/ Alexandre Dumas CCI CIBRASEC TR 9,60% 120 months 05/03/ Ouvidor 107 CCI CIBRASEC TR 9,60% 120 months 12/05/ Ed. Jacarandá CCI RB Capital TR 11,50% 120 months 16/12/ Manchete CCI RB Capital TR 11,50% 120 months 16/12/ BR Properties (holding) * Perpetual Bond Capital Markets USD 9,00% Perpetual Pre-payable (quarterly) BRPR 40 CCI RB Capital IPCA 10,82% 125 months 06/05/ BRPR 45 CRI Capital Markets IGPM 7,60% 146 months 10/10/ BRPR 55 CRI Capital Markets IGPM 10,30% 183 months 03/11/ BRPR 56 CRI Capital Markets IGPM 9,50% 183 months 07/03/ Ed. Paulista CDC Santander TR 11,50% 144 months 28/06/ BR Properties (holding) Debêntures - 1st Issuance Capital Markets CDI 1,08% 60 months 15/07/ BR Properties (holding) Debêntures - 1st Issuance Capital Markets IPCA 5,85% 84 months 15/07/ CD Anhanguera CDC Santander TR 11,50% 144 months 20/12/ BR Properties (holding) Debêntures - 5th Issuance Banco do Brasil CDI 117,00% 60 months 11/11/ Vargas II CCB Itaú BBA TR 11,25% 144 months 13/05/ JK Complex - Tower B ¹ CCI RB Capital CDI 1,45% 144 months 31/08/ JK Complex - Tower B ² CCI RB Capital CDI 1,45% 144 months 31/08/ Chucri Zaidan CCI RB Capital CDI 1,65% 144 months 23/12/ BR Properties (holding) Debêntures - 6th Issuance Capital Markets CDI 107,00% 90 months 12/04/ Total * USD Perpetual Bond (Swap % of R$3.58) Loans Type Institution Index Coupon Term Maturity 2Q17 Balance 1Q17 Balance Passeio Corporate Payables for acquisition of Real Estate Opportunity FII IGPM 7,00% 144 meses 15/12/

15 OPERATIONAL INDICATORS Property Management Pro-active stance taken on managing the properties in the portfolio is a vital part of BR Properties operation. Through the wholly owned management subsidiary BRPR A, BR Properties focuses on close tenant relationship, property value appreciation, reduction of common area costs, along with the alternative sources of revenues. BRPR A Revenues In 2Q17, BRPR A s revenues totaled R$4.8 million or 4% of the consolidated gross revenues obtained by BR Properties. BRPR A Revenues (R$ k) (4%) % Q16 2Q17 6M16 6M17 Properties under Management BRPR A currently manages 26 properties, all of them office buildings. Managed Properties Nº GLA City Ed. Manchete Rio de Janeiro Glória Rio de Janeiro Henrique Schaumann São Paulo Santo Antonio São Paulo São José São Paulo Icomap Rio de Janeiro Vargas Rio de Janeiro Panamérica Park São Paulo Ouvidor Rio de Janeiro TNU São Paulo RB Rio de Janeiro Ed. Comercial Indaiatuba Indaiatuba Ed. Jacarandá Alphaville Ed. Paulista São Paulo Ed. Ventura - West Tower Rio de Janeiro Ed. Ventura - East Tower Rio de Janeiro JK Complex - Tower B São Paulo Panamérica Green Park I São Paulo Ed. Brasília Brasília Passeio Corporate Rio de Janeiro TOTAL

16 OPERATIONAL INDICATORS Property Leasing BR Properties has an in-house team dedicated to the management of new leases and the renegotiation of existing ones. The property leasing department plays a critical role in anticipating any potential movement of vacancy and promoting preventive action. In addition, all the processes of negotiation of the lease agreements are executed directly by the team. Lease Contract Inflation Adjustment Indexes 2Q17 1Q17 4% 5% IGP-M IPCA 96% 95% Rent / Sqm / Month Same Properties The Rent Price/sqm/month of the same properties had a 5.1% nominal decrease in 2Q17, relative to 2Q16. If compared to the previous quarter, the average rent of the same properties increased by 0.8%. Rent / Sqm / Month - Same Properties * 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 2Q17 x 1Q17 Office 5,6% 6,1% 4,1% 3,8% 3,2% 3,5% 2,0% 0,1% 1,8% 3,6% -0,3% -4,4% -5,5% -5,1% 0,8% Industrial 3,8% 6,6% 6,7% 4,7% 4,7% 4,1% 4,6% 0,2% 0,2% 10,8% 10,6% 10,6% n/a n/a n/a Retail 5,9% 6,2% 2,4% 6,0% 7,8% 5,3% 8,6% n/a n/a n/a n/a n/a n/a n/a n/a Total 5,1% 6,2% 4,3% 3,9% 3,4% 3,6% 2,4% 0,1% 1,7% 3,9% 0,0% -4,0% -5,5% -5,1% 0,8% IPCA (Inflation Indicator) 6,2% 6,5% 6,7% 6,4% 8,1% 8,9% 9,5% 10,7% 9,4% 8,8% 8,5% 6,3% 4,6% 3,0% 0,2% IGP-M (Inflation Indicator) 7,3% 6,2% 3,5% 3,7% 3,2% 5,6% 8,4% 10,5% 11,6% 12,2% 10,7% 7,2% 4,9% -0,8% -2,7% Weighted Average: IPCA¹ x IGP-M (~ 4% x 96%) 7,0% 6,3% 4,3% 4,4% 4,4% 6,4% 8,7% 10,6% 11,4% 11,9% 10,6% 7,1% 4,8% -0,6% -2,6% * Comparison between: the average same property rent in the current period vs the average same property rent in equal period of last year * Considering only rent prices of leased areas * In nominal terms ¹ IPCA and Other 16

17 OPERATIONAL INDICATORS Lease Contract Expiration Schedule Revenues (%) GLA (%) 66% 75% 5% 1% 28% >2020 5% 2% 18% >2020 Lease Contract 3rd Year Market Alignment Schedule Revenues (%) GLA (%) 17% 24% 37% 32% 9% 22% 7% 20% > >2020 Lease Contracts Average Duration Existing Lease Contracts All Contracts Built-to-Suit Contracts Current Average Duration 5.0 Years 3.5 Years 17

18 OPERATIONAL INDICATORS Portfolio Vacancy Physical vacancy is estimated by dividing the total vacant area by the total GLA of the portfolio. This metric does not accurately reflect the revenue loss generated by the vacant areas in the portfolio, because it does not reflect the potential rent for which the vacant areas could be leased. Financial vacancy is utilized specifically to remedy such distortions. Financial vacancy is calculated by multiplying the average rent per sqm which could be charged in the buildings and their respective vacant areas, divided by the potential gross revenues of the portfolio. The Company s portfolio ended the quarter with consolidated financial and physical vacancy rates of 22.9% and 32.6 %, respectively. During the quarter, the Company leased 10,170 sqm of GLA in the portfolio, versus cancelations, which were already forecasted, that totaled 10,619 sqm of GLA. In face of these events, the physical vacancy remained relatively stable related to last quarter, while financial vacancy decreased 60 basis points. This decreased occurred since new leases had an average rent price higher than the cancellations. Considering the new leases completed in July, totaling 10,056 m² of GLA, the current financial and physical vacancy rates are reduced to 22.1% and 30.7%, respectively. Vacancy 32,5% 32,6% 30,7% 9,0% 4,1% 10,4% 9,8% 10,0% 9,7% 10,4% 14,3% 11,2% 16,0% 22,6% 19,2% 14,5% 13,0% 11,8% 19,8% 23,5% 22,9% 22,1% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 with Financial Physical Passeio 2Q17 with Passeio July with Passeio 18

19 2,2% 1,9% 0,9% 2Q17 RESULTS OPERATIONAL INDICATORS Portfolio Delinquency Since its establishment in 2006, BR Properties has registered very low delinquency levels in its portfolio, given the excellent credit quality of the tenant base. In 2Q17 the delinquency rate was 0.2%. 0,2% 0,0% 0,2% 0,5% 0,4% 0,1% 0,0% 0,2% 0,8% 0,4% 0,4% 0,5% 0,1% 0,3% 0,3% 0,3% 0,3% 0,2% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Largest Tenants 19

20 PORTFOLIO Property Type City State Acquisition Date Nº of Properties Owned GLA (sqm) Panamérica Park Office São Paulo SP 29/05/ Glória Office Rio de Janeiro RJ 17/07/ Alphaville Office Barueri SP 31/07/ Bolsa RJ Office AAA Rio de Janeiro RJ 27/08/ Celebration Office São Paulo SP 03/09/ Icomap Office Rio de Janeiro RJ 12/09/ São Pedro Office São Paulo SP 28/09/ Vargas Office Rio de Janeiro RJ 28/09/ Henrique Schaumann Office São Paulo SP 14/11/ Ed. Comercial Indaiatuba Office Indaiatuba SP 20/12/ Santo Antônio Office São Paulo SP 17/01/ São José Office São Paulo SP 17/01/ Souza Aranha Office São Paulo SP 31/01/ Alexandre Dumas Office São Paulo SP 03/12/ Ouvidor 107 Office Rio de Janeiro RJ 10/12/ TNU Office São Paulo SP 16/03/ CBOP - Ed. Jacarandá Office Barueri SP 12/04/ RB 115 Office Rio de Janeiro RJ 02/06/ Ed. Manchete Office AAA Rio de Janeiro RJ 30/06/ Ed. Ventura - West Tower Office AAA Rio de Janeiro RJ 12/08/ Águas Claras Office AAA Nova Lima MG 29/03/ Chucri Zaidan Office AAA São Paulo SP 29/03/ Barra Funda Office São Paulo SP 29/03/ Barra da Tijuca Office Rio de Janeiro RJ 29/03/ Brasília Office Brasília DF 29/03/ Porto Alegre Office Porto Alegre RS 29/03/ Ed. Ventura - East Tower Office AAA Rio de Janeiro RJ 30/04/ Ed. Paulista Office São Paulo SP 29/03/ Panamérica Green Park I Office São Paulo SP 29/05/ JK Complex - Tower B Office AAA São Paulo SP 29/03/ Souza Aranha II Office São Paulo SP 31/01/ Passeio Corporate Office AAA Rio de Janeiro RJ 15/12/ Centenário Plaza Complex* Office AAA São Paulo SP 14/07/ Sub-total Office Galpão Imbuia* Industrial Jarinu SP 17/07/ Sub-total Industrial Passeio Corporate Retail Retail Rio de Janeiro RJ 15/12/ Sub-total Retail Panamérica Green Park II Office São Paulo SP 29/05/ Panamérica Green Park III Office São Paulo SP 29/05/ Ed. CES II Office AAA Rio de Janeiro RJ 29/03/ Ed. Bayview Office AAA Rio de Janeiro RJ 29/03/ Galpão Pirituba Industrial São Paulo SP 03/06/ Sub-total Landbanks * Properties acquired in July Total

21 BUILT-TO-SUIT (BTS) PORTFOLIO Properties City Region (CBRE) Owned GLA (sqm) Águas Claras Nova Lima n/a Barra Funda São Paulo Other Barra da Tijuca Rio de Janeiro Barra da Tijuca Porto Alegre Porto Alegre n/a Total Lease Contracts Breakdown Lease Contracts Breakdown (% Revenues) (% ABL) 9% 9% 91% 91% BTS Contracts Typical Contracts BTS Contracts Typical Contracts 21

22 PROJECTS UNDER CONSTRUCTION / TO BE DEVELOPED BR Properties has not invested in projects under development in 2Q17. Projects Segment Type City / State Owned GLA (sqm) Total Estimated Capex (R$ mm) Investment Completion (%) CES II AAA Office Landbank Rio de Janeiro / RJ n/a 0% n/a Bayview AAA Office Landbank Rio de Janeiro / RJ n/a 0% n/a Panamérica Green Park II Office Landbank São Paulo / SP n/a 0% n/a Panamérica Green Park III Office Landbank São Paulo / SP n/a 0% n/a Galpão Pirituba Industrial Landbank São Paulo / SP n/a 0% n/a Estimated Delivery Development/Retrofit CAPEX Schedule (R$ thousand) Capex Schedule Q17 2Q E Panamérica Green Park I Ed. Vargas JK Complex - Tower B Souza Aranha II Total Existing Properties / Developments and Landbank Ratio (% Market Value) 2% 98% Existing Properties Developments 22

23 CAPITAL MARKETS BR Properties common stock is traded on the Novo Mercado listing segment of the São Paulo Stock Exchange (BM&FBOVESPA) under the ticker BRPR3. Stock Performance (BRPR3) 2Q17 2Q16 var % 6M17 6M16 var % Total Number of Shares % % Free Float (%) 30% 30% 0% 30% 30% 0% Stock Price (average for the period) 9,18 8,70 6% 8,92 8,49 5% Stock Price (end of period) 9,01 7,50 20% 9,01 7,50 20% Market Cap end of period (R$ million) % % Average Daily Trading Volume (R$ million) 5,15 11,39-55% 6,96 9,13-24% Average Daily Traded Shares % % Average Daily negotiations % % Performance BRPR3 6M17 70% 60% 50% 40% 30% 20% 10% 0% -10% ADTV BR Properties Ibovespa -20% Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun Shareholder Base Distribution Index 3% 3% 84% 9% Brazil United States Canada Other Index Weight BRPR IBrX 0,09% IBrA 0,09% SMLL 0,85% IMOB 4,00% IGCX 0,14% IGCT 0,11% IGC-NM 0,21% ITAG 0,12% IDIV 0,51% 23

24 INCOME STATEMENT Account Income Statement 2Q17 2Q16 var % 6M17 6M16 var % (1) Gross Revenues % % (2) Leasing % % (3) Office % % (4) Industrial n/a % (5) Retail - - n/a - - n/a (6) Services Rendered % % (7) Deductions from Gross Revenues (11.876) (9.581) 24% (23.509) (18.980) 24% (8) Taxes (PIS/Cofins and ISS) (7.514) (8.730) -14% (17.335) (17.646) -2% (9) Deductions (4.361) (852) 412% (6.174) (1.335) 363% (10) Net Revenues % % (11) Cost of Leased Properties - - n/a - - n/a (12) Gross Profit % % (13) General and Administrative Expenses (29.524) (24.563) 20% (88.611) (52.739) 68% (14) Operating Expenses (11.216) (6.220) 80% (20.544) (13.983) 47% (15) Taxes 997 (2.664) -137% (30.098) (8.155) 269% (16) Personnel Expenses (4.548) (4.047) 12% (10.985) (9.049) 21% (17) Management Fees (1.739) (2.418) -28% (2.861) (5.176) -45% (18) Stock Options / LTIP (2.283) (472) 384% (4.566) (835) 447% (19) Vacancy Expenses (10.735) (8.743) 23% (19.556) (15.541) 26% (20) Financial Result (88.633) (67.106) 32% (96.938) (25.346) 282% (21) Financial Income % % (22) Financial Expenses ( ) ( ) -36% ( ) ( ) -22% (23) Other Operating Income/Expense % % (24) Gain (Loss) on Sale of Investment Properties - - n/a % (25) Gain (Loss) on Appraisal of Investment Properties - (55.937) n/a - (79.387) n/a (26) Income (loss) before taxes (13.451) (10.195) 32% % (27) Income and Social Contribution taxes % (7.814) (25.858) -70% (28) Deferred taxes (16.503) -108% (4.062) -1699% (29) Income (loss) before Minoritary Interest (8.790) (26.286) -67% % (30) Minority Interest - (711) n/a - (1.733) n/a (31) Net Income (loss) (8.790) (26.997) -67% % Account Adjusted EBITDA Composition 2Q17 2Q16 var % 6M17 6M16 var % (29) Net Income (loss) before Minority Interest (8.790) (26.286) -67% % (30) (-) Minority Interest - (711) n/a - (1.733) n/a (28) (+) Deferred Taxes (1.400) % (64.942) % (27) (+) Income and Social Contribution Taxes (3.262) (412) 692% % (25) (-) Gain (Loss) on Appraisal of Investment Properties n/a n/a (24) (-) Gain (Loss) on Sale of Investment Properties - - n/a (65.423) (5.348) 1123% (23) (+) Other Operating Income (28) (16.510) -100% (18.269) (15.542) 18% (20) (+) Financial Result % % (18) (+) Stock Options / LTIP % % (16) (+) Bonus Provision * n/a n/a (15) (+) PIS/Cofins (Revenue Taxes) on Property Sales (Galpão SBC ) - - n/a n/a (15) (+) Taxes on One Properties Incorporation (ITBI) - - n/a n/a (15) (+) PIS/Cofins (Revenue Taxes) on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (14) (+) Depreciation % % (14) (+) Attorney's Fees (Non-Recurring) n/a n/a (34) Adjusted EBITDA % % (35) Adjusted EBITDA Margin 79% 80% -1 p.p. 79% 80% -1 p.p. * From 2017 onwards, the adjustment of the "Bonus Provision" will not be considered in the Adjusted EBITDA calculation Account Adjusted Net Income Composition (FFO) 2Q17 2Q16 var % 6M17 6M16 var % (31) Net Income (loss) (8.790) (26.997) -67% % (28) (+) Deferred Taxes (1.400) % (64.942) % (27) (+) Income Taxes on Property Sales - - n/a % (25) (-) Gain (Loss) on Appraisal of Investment Properties n/a n/a (24) (-) Gain (Loss) on Sale of Investment Properties - - n/a (65.423) (5.348) 1123% (23) (+) Other Operating Income/Expense (Non-Recurring) (28) (8.276) -100% (18.269) (6.184) 195% (20) (+) Non-cash Losses on Exchange Rate Variation n/a n/a (20) (-) Non-cash Gains on Exchange Rate Variation (65.390) -126% - ( ) n/a (20) (+) Non-cash Variations (MTM - Perpetual Bond Swap and Interest) (2.757) - n/a (7.982) (1.194) 568% (20) (-) Monetary Adjustment on "Galpão SBC " Sale - - n/a (49.503) - n/a (20) (-) Non-cash Gains on the Perpetual s Buyback - - n/a - (55.726) n/a (20) (+) Debt Renegotiation Results (Waiver) n/a n/a (18) (+) Stock Options / LTIP % % (15) (+) PIS/Cofins (Revenue Taxes) on Property Sales (Galpão SBC ) - - n/a n/a (15) (+) Taxes on One Properties Incorporation (ITBI) - - n/a n/a (15) (+) PIS/Cofins (Revenue Taxes) on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (14) (+) Attorney's Fees (Non-Recurring) n/a n/a (14) (+) Depreciation n/a n/a (36) Adjusted Net Income (FFO) % % (37) Adjusted Net Income Margin (FFO Margin) 20% 29% -9 p.p. 19% 18% 1 p.p. 24

25 BALANCE SHEET ASSETS 06/30/ /31/2017 var % Current Assets % Cash and Cash Equivalents % Accounts Receivable % MTM on Derivatives % Properties Available for Sale - - n/a Pre-paid Expenses % Anticipated Taxes / Recoverable Taxes % Advances for Acquisition of Real Estate - - n/a Other Accounts Receivable % Non-Current Assets % Judicial Deposits - - n/a Deferred Income and Social Contribution taxes % Recoverable Taxes % Other non-current Assets % Equipment % Investment Properties % Intangible Assets % Total Assets % LIABILITIES 06/30/ /31/2017 var % Current Liabilities % Loans and Financing % Derivative Instruments - - n/a Suppliers % Tax Liabilities % Taxes Payable % Provision for Salaries and Employee Contributions % Labor Obligations % Dividends Payable n/a Payables for acquisition of Real Estate % Other Accounts Payable % Non-Current Liabilities % Deferred Income and Social Contribution taxes % Loans and Financing % Provision for Contingencies % Payables for acquisition of Real Estate % Other Non-Current Liabilities - - n/a Shareholders Equity % Shareholder Capital % Shareholder Capital to be paid in - - n/a (-) Issuance Expenses (48.462) (47.288) 2% Capital Reserve % Net income (Loss) for the period % Additional Proposed Dividend Payment - - n/a Profit Reserves % Minority Interest - - n/a Total Liabilities % 25

26 CASH FLOW STATEMENT Consolidated Cash Flows 6M17 6M16 Cash Flow from Operating Activities Cash Flow from Operations Income (loss) before taxes Depreciation and Amortization Property Fair Market Value (65.423) Straight Line Rent (39.114) (10.271) Interest and Monetary Variation on Loans and Financing Interest on Perpetual Bond MTM MTM on Swap (8.670) (4.783) Minority Interest - (1.733) Net Exchange Rate Variations ( ) Losses (Gains) on Derivative Instruments Gains from marketable (21.676) - Financial Result on the Perpetual s Buyback - (57.532) Stock Option Plan Results on Sale of Investments (18.777) (2.980) Other (57.814) (9.288) Variations in Assets and Liabilities (20.788) ( ) Accounts Receivable Recoverable Taxes 193 (40.197) Advances for Acquisition of Real Estate - - Properties Available for Sale - - Other Assets (2.836) (5.247) Payables 942 (352) Payables for Acquisition of Real Estate (25.000) - Provision for Salaries and Employee Contributions (4.676) (12.524) Provision for Employee and Management Bonuses (6.453) 69 Other Liabilities (6.430) (68.201) Cash Flow from Investment Activities Net Proceeds from Sale of Assets Fixed Asset Purchases (433) (467) Reductions in Fixed Assets - - Acquisition of Investment Properties (34.963) (13.096) Net cash from Incorporation - - Receivables on Gains with Financial Instruments (13.494) Payables on Losses with Financial Instruments (9.575) (8.422) Changes in Ownership Interests in Subsidiaries Cash Flow from Financing Activities ( ) ( ) Capital Increase - - Gain and Loss from Sale of Shares - - Costs from Equity Raising - - Dividends Paid (6.851) - New loans and financing - - Payment of Loans and Financing ( ) ( ) Stock Buyback (11.495) - Transaction costs (1.058) - Increase (Decrease) in Cash and Cash Equivalents ( ) Cash Balance At the beginning of the period At the end of the period