Earnings Release 4Q16 & 2016

Transcription

1 Earnings Release 4Q16 & 2016 Conference Call (English) February 15 th, :00 PM (Brazil Time) Tel NY: Tel: (55 11) Replay: (55 11) Conference Call (Portuguese) February 15 th, :00 AM (Brazil Time) Tel: (55 11) Replay: (55 11) IR Contact: André Berenguer CFO & IRO Gabriel Barcelos IR Manager Nelson Brazan IR ri@brpr.com.br Tel: (55 11) Fax: (55 11)

2 INDEX 4Q16 and 2016 Highlights and Subsequent Events... 3 Table of Highlights... 4 Financial Indicators... 5 Gross Revenues... 5 Net Revenues... 5 SG&A Adjusted EBITDA and EBITDA... 7 Financial Income / (Expenses)... 9 Other Operating Income / (Expenses) Net Income (Loss) Adjusted Net Income (FFO) Indebtedness and Cash Position Table of Loans Operating Indicators Property Management Property Leasing Portfolio Vacancy Portfolio Delinquency Asset Acquisition Portfolio Built-to-Suit Portfolio Projects under Construction / to be Developed Capital Markets Income Statement Balance Sheet Cash Flow Statement

3 4Q16 & 2016 HIGHLIGHTS AND SUBSEQUENT EVENTS BR Properties registered Adjusted Net Income (FFO) of R$74.6 million in São Paulo, February 14th, 2017 BR Properties S.A. (Bovespa: BRPR3), one of the largest commercial properties company in Brazil, announces today its 4Q16 and 2016 Earnings Release. Currently, BR Properties holds 44 commercial properties, totaling 654 thousand sqm of Gross Leasable Area (GLA), of which 5 are land plots represented by 74 thousand sqm of GLA. The Company also manages properties of its portfolio through BRPR A (subsidiary). The following financial and operational information will be presented in R$, except where indicated otherwise, and follow the Corporations Law (Lei das S/A) and the standards put forth by Comissão de Valores Mobiliários (CVM). 4Q16 and 2016 Highlights BR Properties registered in 2016 net revenues of R$465.7 million, meaning a decrease of 4% in comparison against 2015, considering the same properties revenues. This reduction is explained by the increase in vacancy rates over the last 12 months and by the reduction in rent prices of specific contracts adjusted EBITDA was R$366.0 million, with a margin of 79%, in line with the Company's expectations. BR Properties registered a net income of R$ 28.8 million in Adjusted Net Income (FFO) totaled R$74.6 million, with a margin of 16%. The Company concluded the acquisition of "Ed. Passeio Corporate" in the city of Rio de Janeiro, building in final phase of development, for R$715.0 million, with GLA of 81,423 sqm, being paid the amount of RS301.7 million and the balance of the price to be paid in 12 years with a 2 year grace period. The property is already 10% pre-leased. The company registered a net debt of R$2,396.4 million and a 13.6%, or 105% of CDI, average cost of debt by the end of BR Properties' cash position at the end of the period was R$996.2 million. In December, the Company issued R$120.0 million of debt at the cost of CDI % per year and term of 12 years. The Company s portfolio ended the quarter with consolidated financial and physical vacancy rates of 11.8% and 19.8%, respectively, representing a reduction of, approximately, 3 percentage points when compared to the previous quarter. 3

4 Subsequent Events In January, BR Properties concluded the sale of "Galpão SBC" to GLP for the total amount of R$240.2 million, according to an arbitral award favorable to the Company, ending a discussion initiated in November TABLE OF HIGHLIGHTS Financial Highlights 4Q16 4Q15 var % var % Net Revenues % % General and Administrative Expenses % % General and Administrative Expenses (Adjusted)* % % Adjusted EBITDA % % Adjusted EBITDA Margin 75% 80% -5 p.p. 79% 86% -7 p.p. Net Income (Loss) (66.315) ( ) -81% ( ) -104% Adjusted Net Income (FFO) % % Adjusted Net Income Margin (FFO Margin) 15% 2% 13 p.p. 16% 13% 3 p.p. Operating Highlights 4Q16 4Q15 var % 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) n/a n/a - Retail (sqm) - - n/a - - n/a Financial Vacancy 11,8% 10,4% 1 p.p. 11,8% 10,4% 1 p.p. Physical Vacancy 19,8% 14,3% 6 p.p. 19,8% 14,3% 6 p.p. * Excluding Vacancy Expenses, SOP and Taxes Portfolio Market Value Portfolio GLA 1% 3% 12% 34% 43% 63% 44% Office AAA Office Industrial Office AAA Office Industrial Retail 4

5 FINANCIAL INDICATORS Gross Revenues Gross Revenues (R$ k) Gross revenues reached R$505.3 million in 2016, a decrease of 4% relative to 2015, if considering the same properties revenues (35%) 92%, or R$463.9 million, resulted from office lease revenues; 5%, or R$22.8 million, resulted from industrial lease revenues; 4%, or R$18.5 million, resulted from property management fees; Same Properties (4%) Net Revenues Net Revenues (R$ k) 2016 net revenues reached R$465.7 million, a decrease of 4% in comparison against 2015, if considering the same properties revenues. This reduction is explained by the increase in vacancy rates over the last 12 months and by the reduction in rent prices of specific contracts (35%) (4%) Same Properties

6 FINANCIAL INDICATORS General Administrative Expenses (Ex-Vacancy, SOP and Taxes) General and administrative expenses, excluding vacancy expenses, stock options and taxes, totaled R$69.7 million in 2016, a decrease of 2% relative to 2015, when the same expenses totaled R$71.3 million. "Personal Expenses" and "Management Fees" registered a reduction of 23% in comparison with This reduction reflects the company's efforts on the readjustments of its structure to the current size of the Company, as well as the challenges imposed by the economic scenario. The increase in "Operating Expenses" is mainly explained by the non-recurring costs of sale and lease commission, in addition to a higher expense on property maintenance in "Taxes" expenses was mostly impacted by the Taxes (ITBI - "Property Transfer Tax") on corporate restructuring, in the amount of R$ 58.6 million. Such taxes will be largely offset by the gains originated from the referred reorganization over the coming years. General and Administrative Expenses 4Q16 4Q15 var % var % SG&A (91.575) (50.688) 81% ( ) ( ) 39% Operating Expenses (17.917) (11.517) 56% (37.335) (29.528) 26% Taxes (53.849) (14.938) 260% (65.093) (17.458) 273% Personnel Expenses (7.088) (7.584) -7% (20.916) (23.586) -11% Management Fees (3.249) (7.645) -57% (11.428) (18.162) -37% Stock options (499) (360) 39% (1.806) (4.048) -55% Vacancy Expenses (8.972) (8.644) 4% (34.064) (29.733) 15% SG&A (Ex. Vacancy, SOP and Taxes) (28.254) (26.745) 6% (69.679) (71.275) -2% (+) Stock Option % % (+) Vacancy Expenses % % (+) Taxes % % Percentage: G&A / Net Revenues 26% 16% 10 p.p. 15% 10% 5 p.p. G&A (R$ k) 16% 26% 10% 15% (2%) % Q15 4Q % Net Revenues 6

7 FINANCIAL INDICATORS Adjusted EBITDA and EBITDA Adjusted EBITDA, excluding the non-cash effects on appraisal of investment properties, provision of bonuses and the stock option plan, as well as non-recurring income and expenses such as the impact of taxes (ITBI) paid on the Company's corporate restructuring, reached R$366.0 million in 2016, a reduction of 40% relative to EBITDA margin reached 79%, one of the highest in the sector. The nominal decrease is mainly explained by the loss of rental revenues resulting from property sales occurred in 2015 and 2016, while the decline in margin was essentially derived from the increase in vacancy costs and reduction in rent prices of specific contracts. Adjusted EBITDA and EBITDA Margin (R$ k) 80% 75% 86% 79% (40%) (41%) Q15 4Q Adjusted EBITDA Margin 7

8 FINANCIAL INDICATORS Considering the methodology determined by the CVM Instruction No. 527/12, 2016 EBITDA registered R$138.2 million and EBITDA margin of 30%. EBITDA (CVM Methodology) and EBITDA Margin (R$ k) -180% -104% -10% 30% 63% 303% ( ) (68.123) ( ) 4Q15 4Q EBITDA Margin EBITDA and Adjusted EBITDA Composition EBITDA Composition 4Q16 4Q15 var % var % Net Income (loss) before Minority Interest (66.315) ( ) -82% ( ) -104% (+) Deferred Taxes ( ) (60.245) 73% (80.389) ( ) -60% (+) Income and Social Contribution Taxes % % (-) Minority Interest n/a (1.733) % (+) Depreciation % n/a (+) Financial Result % % EBITDA ( ) ( ) -63% (68.123) -303% EBITDA Margin -104% -180% 76 p.p. 30% -10% 40 p.p. Adjusted EBITDA Composition 4Q16 4Q15 var % var % EBITDA ( ) ( ) -63% (68.123) -303% (-) Gain (Loss) on Appraisal of Investment Properties % % (-) Gain (Loss) on Sale of Investment Properties - (22.999) n/a (5.348) (22.710) -76% (+) Other Operating Income % % (+) Stock options % % (+) Bonus Provision % % (+) Non recurring Provision for Contingencies n/a n/a (+) PIS/Cofins on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (+) Taxes on Corporate Restructuring (ITBI) n/a n/a Adjusted EBITDA % % Adjusted EBITDA Margin 75% 80% -5 p.p. 79% 86% -7 p.p. 8

9 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, besides the non-recurring expenses related to the renegotiation of debt under the Tender Offer process in May, adjusted financial results totaled R$261.6 million in 2016, a 44% reduction relative to This improvement resulted from the success of the financial deleveraging strategy adopted by the Company's Management since the end of In addition, financial income was positively impacted by the monetary adjustment of the Company's tax credits. (44%) (63%) Q15 4Q Financial Results 4Q16 4Q15 var % var % Financial Income % % Return on Cash Reserves % % Non-cash Variations on Derivative Instruments % % Exchange Rate Variation (1.717) - n/a n/a Other % % Gains on the Perpetual s Buyback - - n/a n/a Monetary adjustment of Tax Credits n/a n/a Financial Expenses ( ) ( ) -20% ( ) ( ) -47% Interest Expense on Company Debt ( ) ( ) -29% ( ) ( ) -23% Non-cash Variations on Derivative Instruments (4.942) -135% (1.513) (16.484) -91% Exchange Rate Variation n/a - ( ) n/a Expenses on the Perpetual s Buyback - - n/a (1.806) - n/a Other (1.721) (101) 1602% (1.766) (4.284) -59% Debt Renegotiation Results (Waiver) - - n/a (62.982) - n/a Financial Results (39.860) (97.887) -59% ( ) ( ) -83% (-) Non-cash Gains on Exchange Rate Variation n/a ( ) - n/a (+) Non-cash Losses on Exchange Rate Variation - (20.190) n/a n/a (-) Non-cash Gains on Derivative Instruments (2.956) (4.007) -26% (8.567) (5.418) 58% (+) Non-cash Losses on Derivative Instruments (1.746) % % (-) Non-cash Gains on the Perpetual s Buyback - - n/a (57.532) - n/a (+) Expenses on the Perpetual s Buyback - - n/a n/a (+) Debt Renegotiation Results (Waiver) - - n/a n/a Adjusted Financial Results (42.844) ( ) -63% ( ) ( ) -44% 9

10 FINANCIAL INDICATORS Other Operating Income / (Expenses) Other Operating Income / (Expenses) registered in 4Q16 an expense of R$12.4 million, which was affected by following non-recurring events: Expense of R$1.9 million of "write-off" related to the agreement entered into with WTORRE S.A. in 2Q16. Expense of R$10.5 million related to a reclassification of "Monetary Adjustment of Tax Credits" account (revenue). Starting from 4Q16 this revenue is now correctly demonstrated on "Financial Income" account. Net Income Net Income (R$ k) As already described in this report, the Company registered a net profit of R$28.8 million in % 104% (66.315) ( ) ( ) 4Q15 4Q

11 FINANCIAL INDICATORS Adjusted Net Income (FFO) In 2016, Adjusted Net Income (FFO) totaled R$74.6 million, and FFO margin of 16%. This result shows the robustness and resiliency of BR Properties' businesses even in a year of difficult operating results, due to the worst moment of the commercial real estate market cycle of the last 10 years. Adjusted Net Income (R$ k) 2% 15% 13% 16% (18%) % Q15 4Q Adjusted Net Income Margin Adjusted Net Income Composition (FFO) 4Q16 4Q15 var % var % Net Income (loss) (66.315) ( ) -81% ( ) -104% (+) Deferred Taxes ( ) (60.245) 73% (80.389) ( ) -60% (+) Income Taxes on Property Sales n/a % (-) Gain (Loss) on Appraisal of Investment Properties % % (-) Gain (Loss) on Sale of Investment Properties - (22.999) n/a (5.348) (22.710) -76% (+) Non-cash Losses on Exchange Rate Variation - (20.190) n/a n/a (-) Non-cash Gains on Exchange Rate Variation n/a ( ) - n/a (+) Non-cash Variations on Derivative Instruments (4.702) % (7.054) % (+) Non recurring tax on dividends of Real Estate Funds (FII) - - n/a n/a (+) Stock options % % (+) Other Operating Income/Expense (Non-Recurring) % % (+) PIS/Cofins on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (-) Non-cash Gains on the Perpetual s Buyback - - n/a (55.726) - n/a (+) Debt Renegotiation Results (Waiver) - - n/a n/a (+) Taxes on Corporate Restructuring (ITBI) n/a n/a (+) Income Taxes on Ventura Tower Sale (Corporate Restructuring) n/a n/a Adjusted Net Income (FFO) % % Adjusted Net Income Margin (FFO Margin) 15% 2% 13 p.p. 16% 13% 3 p.p. 11

12 FINANCIAL INDICATORS Indebtedness and Cash Indebtedness 4Q16 3Q16 var % Short Term Loans and Financing % Loans and Financing % Perpetual Bond % Derivative Instruments % Long Term Loans and Financing % Loans and Financing % Perpetual Bond % Gross Debt % Cash and Cash Equivalents % Net Debt % Portfolio Value *** % Gross Loan to Value 46% 45% 1 p.p. Net Loan to Value 33% 29% 4 p.p. Adjusted EBITDA / Net Financial Expenses * 1,4x 1,3x 11% Duration (years) ** 8,7 8,5 3% Duration (years) Ex Perpetual Bond 4,0 3,0 36% Unsecured Debt / Total Debt 29% 41% -12 p.p. * Considering Adjusted Financial Results and Adjusted EBITDA (Last 12 months) ** Considering the expiration of the Perpetual Bond in 2049 *** Considering R$92MM related to CES II - Landbank (Off Balance) Gross LTV (Gross Debt/Portfolio Value) & Net LTV (Net Debt/Portfolio Value) 52% 41% 41% 45% 39% 40% 41% 40% 44% 46% 44% 45% 46% 34% 35% 38% 34% 34% 36% 37% 41% 34% 29% 29% 29% 33% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 LTV Gross Debt LTV Net Debt Interest Coverage (Adjusted EBITDA/Net Interest Expenses) 1,6x 1,6x 1,6x 1,6x 1,5x 1,4x 1,3x 1,4x 1,2x 1,3x 1,4x 1,3x 1,4x 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 12

13 FINANCIAL INDICATORS Net Debt / Adjusted EBITDA vs. Net Debt ,5x 5,7x 5,1x 5,2x 5,4x 6,1x 6,2x 6,3x 4,4x ,8x 5,0x 5,6x 6,5x 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Debt Amortization Schedule (R$ MI) * * Perpetual Bond Debt Profile 5% 11% 21% 18% 46% TR CDI USD Perpetual Bond IGPM IPCA 13

14 FINANCIAL INDICATORS Table of Loans Loans Type Institution Index Coupon Term Maturity 4Q16 Balance 3Q16 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/ São José & Santo Antônio CCI Brazilian Mortgages IGPM 6,00% 120 months 17/01/ 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/ BRPR 62 CCB HSBC IGPM 10,00% 122 months 30/04/ BRPR 62 CCB Bradesco IGPM 10,00% 122 months 30/04/ BR Properties (holding) CCB Itaú BBA/ Unibanco IGPM 10,00% 122 months 30/04/ BR Properties (holding) CCB Itaú BBA/ Unibanco IGPM 10,00% 122 months 30/04/ BR Properties (holding) CCB Itaú BBA/ Unibanco IGPM 10,00% 105 months 30/11/ BR Properties (holding) CCB Itaú BBA/ Unibanco IGPM 10,00% 122 months 30/04/ BR Properties (holding) CCB Bradesco IGPM 9,25% 121 months 05/06/ BR Properties (holding) CCB Bradesco IGPM 9,25% 121 months 05/06/ 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 - 4th Issuance Capital Markets CDI 1,15% 24 months 05/12/ 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) 14

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 2016, BRPR A s revenues totaled R$18.5 million or 4% of the consolidated gross revenues obtained by BR Properties. BRPR A Revenues (R$ k) (2%) (15%) Q15 4Q Properties under Management BRPR A currently manages 22 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 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 the critical role of anticipating any potential movement of vacancy and promoting preventive replacements. In addition, all the processes of negotiation of the lease agreements are executed directly by the team. Lease Contract Inflation Adjustment Indices 4Q16 3Q16 4% 5% IGP-M IPCA Other 96% 95% Rent / Sqm / Month Same Properties The Rent Price/sqm/month of the same properties had a 4% nominal decrease relative to equal period of last year. Rent / Sqm / Month - Same Properties * 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Office 7,9% 7,3% 5,6% 6,1% 4,1% -2,8% 3,2% 3,5% 2,0% 9,2% 1,8% 3,6% -0,3% -4,4% Industrial 6,9% 5,3% 3,8% 6,6% 6,7% 4,7% 4,7% 4,1% 4,6% 0,2% 0,2% 10,8% 10,6% 10,6% Retail 6,6% 6,6% 5,9% 6,2% 2,4% 6,0% 7,8% 5,3% 8,6% n/a n/a n/a n/a n/a Total 7,5% 6,7% 5,1% 6,2% 4,3% -2,0% 3,4% 3,6% 2,4% 8,8% 1,7% 3,9% 0,0% -4,0% IPCA (Inflation Indicator) 5,9% 5,9% 6,2% 6,5% 6,7% 6,4% 8,1% 8,9% 9,5% 10,7% 9,4% 8,8% 8,5% 6,3% IGP-M (Inflation Indicator) 4,4% 5,5% 7,3% 6,2% 3,5% 3,7% 3,2% 5,6% 8,4% 10,5% 11,6% 12,2% 10,7% 7,2% Weighted Average: IPCA¹ x IGP-M (~ 4% x 96%) 4,7% 5,6% 7,0% 6,3% 4,3% 4,4% 4,4% 6,4% 8,7% 10,6% 11,4% 11,9% 10,6% 7,1% * 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 leased areas * In nominal terms ¹ IPCA and Other 16

17 OPERATIONAL INDICATORS Lease Contract Expiration Schedule Revenues (%) GLA (%) 89% 90% 1% 4% 5% 1% 5% 5% > >2019 Lease Contract 3rd Year Market Alignment Schedule Revenues (%) GLA (%) 17% 25% 35% 7% 28% 20% 6% 36% > >2019 Lease Contracts Average Duration Existing Lease Contracts All Contracts Built-to-Suit Contracts Current Average Duration 4.9 Years 3.9 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, due to the fact that 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 each property. The Company s portfolio ended the quarter with consolidated financial and physical vacancy rates of 11.8% and 19.8 %, respectively. This result represents a reduction of approximately 3 percentage points in the portfolio vacancy rates when compared to the previous quarter. If considered the impact of "Ed. Passeio Corporate", building in final phase of development, the financial and physical vacancy rates would be 21.8% and 29.8%, respectively. The property is already 10% preleased. Vacancy 29,8% 14,3% 10,4% 10,0% 10,4% 11,2% 8,1% 8,1% 8,3% 8,6% 9,0% 9,8% 9,7% 8,0% 6,0% 6,3% 7,3% 4,1% 16,0% 13,0% 22,6% 19,2% 19,8% 14,5% 11,8% 21,8% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 4Q16 with Financial Physical Passeio 18

19 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 4Q16 the delinquency rate was 0.3%. 0,0% 1,1% 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% 2,2% 1,9% 0,9% 0,3% 0,3% 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Largest Tenants 19

20 ASSET ACQUISITION Passeio Corporate Construction Year: 2016 Acquisition Date: December, 2016 Acquisition Value: R$ Down payment: R$ Seller financing: R$ Total GLA (sqm): Office Area (sqm) Retail Area (sqm) Debt Profile Term 12 years Instalments Monthly Grace Period 2 years Index IGPM Coupon 7% Cap Rate Sensitivity Average Rent Price (R$/sqm/month) R$ 85 R$ 90 R$ 95 R$ 100 R$ 105 R$ 110 Cap Rate (%) 11,6% 12,3% 13,0% 13,7% 14,3% 15,0% 20

21 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/ Sub-total Office Galpão SBC Industrial São Bernado do Campo SP 29/03/ 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 Total

22 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) 8% 8% 92% 92% BTS Contracts Typical Contracts BTS Contracts Typical Contracts 22

23 PROJECTS UNDER CONSTRUCTION / TO BE DEVELOPED BR Properties invested R$88.0 thousand in Greenfield projects during 4Q16. Projects Segment Type City / State Owned GLA (sqm) Total Estimated Capex (R$ mm) Investment Completion (%) Estimated Delivery Souza Aranha II Office Development São Paulo / SP R$ % Delivered 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 Development/Retrofit CAPEX Schedule (R$ thousand) Capex Schedule Q16 2Q16 3Q16 4Q Panamérica Green Park I Ed. Vargas JK Complex - Tower B Souza Aranha II Total Existing Properties / Developments and Landbank Ratio (% Market Value) 3% 97% Existing Properties Developments 23

24 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) 4Q16 4Q15 var % var % Total Number of Shares % % Free Float (%) 30% 99% -70% 30% 99% -70% Stock Price (average for the period) 8,06 9,00-10% 8,39 8,90-6% Stock Price (end of period) 7,50 8,42-11% 7,50 8,42-11% Market Cap end of period (R$ million) % % Average Daily Trading Volume (R$ million) 3,85 24,13-84% 6,34 17,97-65% Average Daily Traded Shares % % Average Daily negotiations % % * For comparative purposes, the historical stock price was ajusted according to the extraordinary dividends paid in December 2015 (R$2.01) Performance BRPR % 40% 30% 20% 10% 0% -10% ADTV BR Properties Ibovespa -20% Dec-15 Feb-16 Mar-16 Apr-16 May-16 Jul-16 Aug-16 Sep-16 Oct-16 Dec Shareholder Base Distribution Index 3% 3% 82% 11% Brazil United States Canada Other Index Weight BRPR IBrX 0,06% IBrA 0,06% SMLL 0,57% IMOB 3,03% IGCX 0,09% IGCT 0,07% IGC-NM 0,14% ITAG 0,08% IDIV 0,33% 24

25 INCOME STATEMENT Income Statement 4Q16 4Q15 var % var % Gross Revenues % % Leasing % % Office % % Industrial % % Retail n/a n/a Services Rendered % % Deductions from Gross Revenues (10.314) (13.326) -23% (39.576) (59.881) -34% Taxes (PIS/Cofins and ISS) (9.277) (13.002) -29% (35.970) (54.862) -34% Deductions (1.037) (324) 220% (3.606) (5.019) -28% Net Revenues % % Cost of Leased Properties - - n/a - - n/a Gross Profit % % General and Administrative Expenses (91.575) (50.688) 81% ( ) ( ) 39% Operating Expenses (17.917) (11.517) 56% (37.335) (29.528) 26% Taxes (53.849) (14.938) 260% (65.093) (17.458) 273% Personnel Expenses (7.088) (7.584) -7% (20.916) (23.586) -11% Management Fees (3.249) (7.645) -57% (11.428) (18.162) -37% Stock options (499) (360) 39% (1.806) (4.048) -55% Vacancy Expenses (8.972) (8.644) 4% (34.064) (29.733) 15% Financial Result (39.860) (97.887) -59% ( ) ( ) -83% Financial Income % % Financial Expenses ( ) ( ) -20% ( ) ( ) -47% Other Operating Income/Expense (12.358) ( ) -89% (3.283) ( ) -97% Gain (Loss) on Sale of Investment Properties n/a % Gain (Loss) on Appraisal of Investment Properties ( ) ( ) -66% ( ) ( ) -73% Income (loss) before taxes ( ) ( ) -63% (572) ( ) -100% Income and Social Contribution taxes (19.058) (16.514) 15% (49.238) (64.130) -23% Deferred taxes % % Income (loss) before Minoritary Interest (66.315) ( ) -82% ( ) -104% Minority Interest n/a (1.733) % Net Income (loss) (66.315) ( ) -81% ( ) -104% EBITDA Composition 4Q16 4Q15 var % var % Net Income (loss) before Minority Interest (66.315) ( ) -82% ( ) -104% (+) Deferred Taxes ( ) (60.245) 73% (80.389) ( ) -60% (+) Income and Social Contribution Taxes % % (-) Minority Interest n/a (1.733) % (+) Depreciation % n/a (+) Financial Result % % EBITDA ( ) ( ) -63% (68.123) -303% EBITDA Margin -104% -180% 76 p.p. 30% -10% 40 p.p. Adjusted EBITDA Composition 4Q16 4Q15 var % var % EBITDA ( ) ( ) -63% (68.123) -303% (-) Gain (Loss) on Appraisal of Investment Properties % % (-) Gain (Loss) on Sale of Investment Properties - (22.999) n/a (5.348) (22.710) -76% (+) Other Operating Income % % (+) Stock options % % (+) Bonus Provision % % (+) Non recurring Provision for Contingencies n/a n/a (+) PIS/Cofins on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (+) Taxes on Corporate Restructuring (ITBI) n/a n/a Adjusted EBITDA % % Adjusted EBITDA Margin 75% 80% -5 p.p. 79% 86% -7 p.p. Adjusted Net Income Composition (FFO) 4Q16 4Q15 var % var % Net Income (loss) (66.315) ( ) -81% ( ) -104% (+) Deferred Taxes ( ) (60.245) 73% (80.389) ( ) -60% (+) Income Taxes on Property Sales n/a % (-) Gain (Loss) on Appraisal of Investment Properties % % (-) Gain (Loss) on Sale of Investment Properties - (22.999) n/a (5.348) (22.710) -76% (+) Non-cash Losses on Exchange Rate Variation - (20.190) n/a n/a (-) Non-cash Gains on Exchange Rate Variation n/a ( ) - n/a (+) Non-cash Variations on Derivative Instruments (4.702) % (7.054) % (+) Non recurring tax on dividends of Real Estate Funds (FII) - - n/a n/a (+) Stock options % % (+) Other Operating Income/Expense (Non-Recurring) % % (+) PIS/Cofins on Non-cash Gains on the Perpetual s Buyback - - n/a n/a (-) Non-cash Gains on the Perpetual s Buyback - - n/a (55.726) - n/a (+) Debt Renegotiation Results (Waiver) - - n/a n/a (+) Taxes on Corporate Restructuring (ITBI) n/a n/a (+) Income Taxes on Ventura Tower Sale (Corporate Restructuring) n/a n/a Adjusted Net Income (FFO) % % Adjusted Net Income Margin (FFO Margin) 15% 2% 13 p.p. 16% 13% 3 p.p. 25

26 BALANCE SHEET ASSETS 12/31/ /30/2016 var % Current Assets % Cash and Cash Equivalents % Accounts Receivable % MTM on Derivatives - - n/a Straight Line Rent Receivable % 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 Other non-current Assets % Equipment % Investment Properties % Intangible Assets % Total Assets % LIABILITIES 12/31/ /30/2016 var % Current Liabilities % Loans and Financing % Derivative Instruments % Suppliers % Provision for Salaries and Employee Contributions % Taxes Payable % Provisions % Labor Obligations % Dividends Payable n/a Other Accounts Payable % Non-Current Liabilities % Deferred Income and Social Contribution taxes % Loans and Financing % Other Non-Current Liabilities % Shareholders Equity % Shareholder Capital % Shareholder Capital to be paid in - - n/a (-) Issuance Expenses (47.288) (47.288) 0% Issued Stock Options % Capital Reserve % Income Reserve n/a Net income (Loss) for the period % Additional Proposed Dividend Payment - - n/a Available Surplus % Minority Interest - - n/a Total Liabilities % 26

27 CASH FLOW STATEMENT Consolidated Cash Flows Cash Flow from Operating Activities Cash Flow from Operations Income (loss) before taxes (572) ( ) Depreciation and Amortization Property Fair Market Value Straight Line Rent (10.888) Interest and Monetary Variation on Loans and Financing Interest on Perpetual Bond MTM (5.418) MTM on Swap (8.567) Minority Interest (1.733) 134 Net Exchange Rate Variations ( ) Losses (Gains) on Derivative Instruments (30.804) Financial Result on the Perpetual s Buyback (57.532) - Stock Option Plan Results on Sale of Investments (21.819) Other Variations in Assets and Liabilities ( ) ( ) Accounts Receivable (9.448) ( ) Recoverable Taxes ( ) ( ) Advances for Acquisition of Real Estate - - Properties Available for Sale - - Other Assets (31.107) Payables (9.242) Payables for Acquisition of Real Estate - (453) Provision for Salaries and Employee Contributions (22.696) Provision for Employee and Management Bonuses (1.213) (26.210) Other Liabilities (18.349) (31.666) Cash Flow from Investment Activities Net Proceeds from Sale of Assets Fixed Asset Purchases (2.093) (576) Reductions in Fixed Assets - 3 Acquisition of Investment Properties ( ) (54.991) Net cash from Incorporation - - Receivables on Gains with Financial Instruments Payables on Losses with Financial Instruments (16.307) - 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 (2.723) ( ) New loans and financing Payment of Loans and Financing ( ) ( ) Stock Buyback - - Transaction costs (61.632) - Increase (Decrease) in Cash and Cash Equivalents ( ) Cash Balance At the beginning of the period At the end of the period