1 q14 earnings release presentation

1Q14 Earnings Release

Presentation

1Q14 Highlights

• 1Q14 net revenues totaled R$232.9 million, an increase of 3% over 1Q13, when net revenues came in at R$225.9

million. The following assets – sold after 1Q13 – would have generated approximately R$14.0 million of revenues during

this quarter: Cetenco Plaza, Plaza Centenário, Pateo Bandeirantes and Galpão Sorocaba;

• 1Q14 adjusted EBITDA of R$209.3 million, and adjusted EBITDA margin of 90%;

• 1Q14 net income reached R$59.5 million;

• 1Q14 adjusted FFO, excluding non-cash expenses, totaled R$57.3 million, and adjusted FFO margin of 25%;

• Throughout the quarter, 20,320 sqm of GLA were leased by the Company, representing an increment of R$2,745

thousand in the monthly rent revenues;

• At the end of 1Q14, financial and physical vacancy rates were at 8.1% and 4.6%, respectively. Excluding the JK

Towers, currently under lease-up, stabilized financial and physical vacancy would reach 3.9% and 3.3%, respectively;

• In March, the Company executed a Share and Real Estate Purchase and Sale Agreement with GLP for the sale of

100% of its existing industrial/logistics portfolio. According to the agreement, GLP will pay BR Properties the

amount of R$3,180.0 million, subject to certain adjustments set forth in the agreement. The consummation of the

transaction, as provided for in the agreement, is still subject to the approval of the antitrust authorities;

• In March 28th, the Company acquired the Gaia Ar - Tucano warehouse for R$60.5 million, which includes the

amount of CAPEX yet to be disbursed on the project. Its delivery is expected for July 2014;

• During the quarter, BR Properties bought back 2.1 million of shares (R$36.6 million) of its own issuance. Since the

Program’s launch last November, the Company has repurchased 14.2 million of shares or 84% of the total announced

(17 million shares);

• In line with its recycling strategy, the Company signed in April a Real Estate Purchase and Sale Agreement with

Schattdecor do Brasil for the sale of the Galpão Industrial Paraná warehouse, amounting to R$20.5 million.

2

Portfolio

3

1Q14 Revenue Breakdown

Portfolio Breakdown

(% market value)

Portfolio Breakdown

(% GLA)

Portfolio Market Value

18%

14%

63%

5%

Off ice AAA Off ice Industrial Retail

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

11.71512.968 13.552 13.840 14.031 14.096 13.759 13.423 13.538

Asset sales in the amount of R$482.1 million

Services 1%

Straight-line 2% Leasing 97%

64%

30%

6%

Office

Industrial

Retail

49%

22%

24%

5%

Off ice AAA Off ice Industrial Retail

Financial Highlights

4

Net Income (R$ thousand) Net Revenues (R$ thousand)

1Q13 1Q14

225.927

232.858

3%

1Q13 1Q14

90.893

59.467

(35%)

It is worth highlighting that the following assets – sold after

1Q13 – would have generated approximately R$14.0 million

of revenues during this quarter: Cetenco Plaza, Plaza

Centenário, Pateo Bandeirantes and Galpão Sorocaba.


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Adjusted EBITDA * (R$ thousand)

94%

90%

Adjusted EBITDA Margin

1Q13 1Q14

212.183 209.269

(1%)

EBITDA Composition 1Q14 1Q13 var %

Net Income (loss) before Minority Interest 58.674 84.899 -31%

(+) Deferred Taxes 47.941 30.837 55%

(+) Income and Social Contribution Taxes 11.938 3.612 230%

(-) Minority Interest 793 5.994 -87%

(+) Depreciation 6 - n/a

(+) Net Financial Result 120.777 134.862 -10%

EBITDA 240.129 260.203 -8%

EBITDA Margin 103% 115% -12 p.p.

Adjusted EBITDA Composition 1Q14 1Q13 var %

EBITDA 240.129 260.203 -8%

(-) Gain (Loss) on Appraisal of Investment Properties (36.240) (48.876) -26%

(-) Gain (Loss) on Sale of Investment Properties - - n/a

(+) Other Operating Income 3.876 (954) -506%

(+) Stock options 354 661 -46%

(+) Bonus Provision 1.149 1.149 0%

Adjusted EBITDA 209.269 212.183 -1%

Adjusted EBITDA Margin 90% 94% -4 p.p.

* Adjusted EBITDA was

impacted by the sale of

properties, which represented

a rental loss of approximately

R$14 million in 1Q14, and by

higher G&A and vacancy

expenses.


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Adjusted FFO (R$ thousand)

37%25%

Adjusted FFO Margin

1Q13 1Q14

83.229

57.312

(31%)

Adjusted FFO Composition 1Q14 1Q13 var %

Net Income (loss) 59.467 90.893 -35%

(+) Deferred Taxes 47.941 30.837 55%

(+) Income Taxes on Property Sales - - n/a

(+) PIS/Cofins (Revenue Taxes) on Property Sales - - n/a

(-) Gain (Loss) on Appraisal of Investment Properties (36.240) (48.876) -26%

(-) Gain (Loss) on Sale of Investment Properties - - n/a

(+) Non-cash Losses on Exchange Rate Variation 24.252 11.204 116%

(-) Non-cash Gains on Exchange Rate Variation (47.404) (19.471) 143%

(+) Non-cash Variations on Derivative Instruments 9.297 18.644 -50%

Adjusted FFO 57.312 83.229 -31%

Adjusted FFO Margin 25% 37% -12 p.p.

* Adjusted FFO was impacted

by the sale of properties,

which represented a rental

loss of approximately R$14

million in 1Q14, and by higher

G&A, vacancy and financial

expenses.

Indebtedness

7

1Q14 Net Debt (R$ mn) 1Q14 Debt Profile

39%

44%

10%

1%

6% TR

CDI

IGPM

INPC

IPCA

ST Debt Obligations for

Acquisitions

LT Debt Total Debt Cash Net Debt

935

5.565

4.750

28

4.601 814

Indebtedness 1Q14 4Q13 var %

Short Term Loans and Financing 963.441 918.756 5%

Loans and Financing 868.994 840.294 3%

Perpetual Bond 66.338 68.672 -3%

Derivative Instruments - - n/a

Payables for Acquisition of Real Estate 28.109 9.791 187%

Long Term Loans and Financing 4.601.490 4.638.664 -1%

Loans and Financing 4.007.597 4.023.690 0%

Perpetual Bond 593.893 614.974 -3%

Gross Debt 5.564.931 5.557.420 0%

Cash and Cash Equivalents 814.467 950.864 -14%

Net Debt 4.750.464 4.606.556 3%

Portfolio Value 13.537.531 13.423.101 1%

Gross Debt / Portfolio Value (Loan to Value) 41% 41% 0 p.p.

Net Debt / Portfolio Value (Loan to Value) 35% 34% 1 p.p.

Adjusted EBITDA / Net Financial Expenses * 1,6x 1,6x 0%

Duration (years) 4,0 4,2 -5%

Unsecured Debt / Total Debt 37% 37% 0 p.p.

* Considering Net Financial Expenses (ex. non-cash variations)

Indebtedness

8

Debt Amortization Schedule (R$ million)

Loan to Value: Gross and Net Interest Coverage Ratio

Net Debt / Adjusted EBITDA

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

736

270

1.300

517

338 341

193 101 84 76 72 64

Principal

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

0,6x

3,7x

4,9x

7,0x

6,0x5,5x

3,2x 3,4x

9,7x

7,8x7,3x

6,7x

5,6x 5,7x5,2x

5,5x 5,7x

Net Debt/EBITDA


2,5x

3,5x

2,4x

2,1x

1,4x

1,6x

2,7x2,5x

3,0x

1,1x

1,5x 1,5x1,7x

2,0x

1,7x1,6x 1,6x

EBITDA / Net Financial Expenses


38% 40%

24%

40%45% 43% 42% 41% 40% 39%

37% 38% 39% 40% 39%41%

41%

4%23% 21%

36%36%

35%

21% 21%

30%

35% 34% 34%34% 36% 33% 34%

35%

LTV Gross Debt LTV Net Debt

Interest Rates

9

Variation of BRPR Average Cost of Debt vs Variation of CDI Rate (bps)

(62)(10) (23)

10

60

65

(46)

1171

99

106

78

3Q12 - 0 Base 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Variation of BRPR Average Cost of Debt (bps) Variation of CDI Rate (bps)

BRPR Cost of Debt vs Interest Rates 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

BRPR Average Cost of Debt 11,53% 10,91% 10,81% 10,57% 10,67% 11,28% 11,93%

Variation QoQ (bps) - (62) (10) (23) 10 60 65

CDI Rate 7,36% 6,90% 7,01% 7,72% 8,71% 9,77% 10,55%

Variation QoQ (bps) - (46) 11 71 99 106 78

Total Debt - 1Q14 5.571.477

Nominal Average Cost of Debt - 1Q14 11,93%

Annual Pro-Forma Interest Expenses 664.514

Total Debt - 1Q14 5.571.477

Nominal Average Cost of Debt - 1Q14 (Post Increase) 12,37%

Annual Pro-Forma Interest Expenses 689.370

Annual Post Tax Impact in FFO * (16.405)

* Tax Rate of 34%

Table below assumes a 100 bps increase in the CDI Rate

Impact of Interest Rates Hike in FFO

Sensitivity Analysis 1Q14

CDI Rate -300 bps -200 bps -100 bps 10,55% 100 bps 200 bps 300 bps

BRPR Average Cost of Debt 10,59% 11,03% 11,48% 11,93% 12,37% 12,82% 13,27%

Variation on BRPR Debt (bps) -134 bps -89 bps -45 bps 0 bps 45 bps 89 bps 134 bps

Reduction Increase

Operating Highlights

10

Lease Contract Expiration Schedule

(% Revenues)

Lease Contract 3 Year Market Alignment

Schedule (% Revenues)

2014 2015 2016 >2017

5%

48%

13%

5%

2014 2015 2016 >2017

1%9%

11%

79%

The schedules below take into account only the office and retail contracts

Lease Contracts Duration - Office and Retail Only

Lease Contracts Duration

All Contracts 6.7 Years

Build-to-Suit Contracts 10.6 Years

Rent / Sqm / Month - Same Properties * 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Office 16,0% 13,7% 11,4% 8,3% 8,6% 12,9% 7,9% 7,3% 5,6%

Industrial 6,4% 6,3% 5,4% 7,8% 8,8% 8,3% 6,9% 5,3% 3,8%

Retail 20,8% 5,1% 5,1% 5,1% 5,4% 6,5% 6,6% 6,6% 5,9%

Total 12,4% 9,9% 8,3% 7,9% 8,4% 10,9% 7,5% 6,7% 5,1%

IPCA (Inflation Indicator) 5,2% 4,9% 5,3% 5,8% 6,6% 6,7% 5,9% 5,9% 6,2%

IGP-M (Inflation Indicator) 3,2% 5,1% 8,1% 7,8% 8,1% 6,3% 4,4% 5,5% 7,3%

* 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 occupied areas

* In nominal terms

Rent / Sqm / Month – Same Properties

Operating Highlights

11

Vacancy Evolution Financial Vacancy per Segment

Vacancy per Property

1Q13 2Q13 3Q13 4Q13 1Q14

4,7%5,5% 5,3%

4,1% 4,6%

8,9%

10,8% 10,5%

8,6%8,1%

Physical

Financial

4Q13 1Q14

8,4%

7,7%

0,2% 0,4%0,0% 0,0%

Office

Industrial

Retail

Property Type Financial Physical

CBOP - Ed. Jacarandá Office 0,1% 0,1%

Ed. Ventura - West Tower Office 0,1% 0,0%

Icomap Office 0,03% 0,05%

RB 115 Office 0,1% 0,1%

Ed. Manchete Office 0,7% 0,3%

JK Complex - Towers D&E Office 4,1% 1,3%

Cidade Jardim Office 0,6% 0,2%

Ed. Paulista Office 1,0% 0,3%

TNU Office 0,09% 0,07%

Panamérica Park Office 0,2% 0,3%

Panamérica Green Park I Office 0,3% 0,2%

Raja Hills Office 0,1% 0,1%

Brasília Office 0,3% 0,2%

Total Office 7,7% 3,3%

BP Jandira Industrial 0,1% 0,2%

BP Jundiaí Industrial 0,1% 0,3%

BBP - Barão de Mauá - Brahms Industrial 0,04% 0,1%

DP Louveira II Industrial 0,12% 0,3%

Condomínio Industrial SJC Industrial 0,0% 0,2%

Total Industrial 0,4% 1,2%

Total Portfolio 8,1% 4,6%

Capital Markets

12

Stock Performance – 1Q14

-

10.000.000

20.000.000

30.000.000

40.000.000

50.000.000

60.000.000

70.000.000

80.000.000

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Jan-14 Feb-14 Mar-14

ADTV

BR Properties

Ibovespa

Stock Performance (BRPR3) 1Q14 1Q13 var %

Total Number of Shares 312.653.445 311.612.894 0%

Free Float (%) 99% 99% 0%

Stock Price (average for the period) 17,19 25,01 -31%

Stock Price (end of period) 18,63 22,40 -17%

Market Cap end of period (R$ million) 5.825 6.980 -17%

Average Daily Trading Volume (R$ million) 41,65 33,60 24%

Average Daily Traded Shares 2.441.980 1.354.205 80%

Average Daily negotiations 5.805 5.319 9%

IR Contacts

13

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

Investor Relations

Business

1 q14 earnings release presentation