26 09-2011 - US NDRS Presentation
description
Transcript of 26 09-2011 - US NDRS Presentation
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US NDRS Presentation
September 2011
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Disclaimer
► The material that follows is a presentation of general background information about Sonae Sierra Brasil S.A. and its subsidiaries
(the “Company”) as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not
intended to be relied upon as advice to potential investors and does not form the basis for an informed investment decision. This
presentation is strictly confidential and may not be disclosed to any other person. No representation or warranty, express or
implied, is made concerning, and no reliance should be placed on, the accuracy, fairness or completeness of the information
presented herein.
► This presentation may contain statements that are forward-looking within the meaning of Section 27A of the U.S. Securities Act of
1933, as amended (the “Securities Act”) and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking
statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-
looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations
and business environments of the Company and its subsidiaries that may cause the actual results of the Company to be materially
different from any future results expressed or implied in such forward-looking statements. No person has any responsibility to
update any such information.
► This presentation does not constitute an offer, or invitation, or solicitation or an offer, to subscribe for or purchase any securities.
Neither this presentation nor anything contained herein shall form the basis of any contract or commitment.
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Index
4 Company Fundamentals
13 Growth Strategy
19 Operational and Financial Indicators
9 Sector Fundamentals
Parque D. Pedro Shopping „s Food Court (Campinas)
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One of the leading developers, owners and operators of top quality and regionally dominant
shopping centers in Brazil
Sonae Sierra Brasil at a glance
► Defined Growth strategy: focus on low served cities‟ middle class
► Largest secured growth in the sector: 3 greenfields, 1 expansion
recently concluded and 2 expansions at advanced stage, almost
doubling our owned GLA
► 3 other expansions already defined
► 10 shopping centers owned and managed (350k sqm total GLA)
► Occupancy rate of 97.5%
► Solid margins (EBITDA = 76.5% and FFO = 83.5%)
► Greenfield Expertise (62.4% of GLA)
Note: (1) As of June 30, 2011
(2) Referres to shopping center‟s GLA only.
.
► Leverage on the expertise, tenant relationships and market
recognition of our shareholders: Sonae Sierra SGPS and DDR
Corp (NYSE: DDR)
► Best-in-class controlling shareholders with significant experience in
the sector
► 30.4% free float
Secured
Growth
Operating
Expertise
Shareholders:
solid base
Expansion / Greenfield
Announced GLA growth (2010 – 2013)(1)
(„000 sq. m)(2)
+41.9% 115
+60.5% 161
+17.1% 115
+42.0% 156
+92.1% 188
Owned GLA Growth (%)
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Ownership Structure
Post-IPO Ownership Breakdown
Sierra Brazil 1 BV
66.65%Enplanta
Shopping
2.93%
Free Float
30.42%
Sonae
Sierra SGPS
50%
DDR
50%
Controlling Shareholders
► Over 21 years of history
► One of the largest developers
and operators of shopping
centers in Europe
► Over 2.0 mm sq m in total
GLA
► 50/50 joint-venture between
Sonae and Grosvenor
► NAV: €1.2 billion(1)
► Over 45 years of history
► One of the largest
developers and operators of
shopping centers in US
► 12.4 mm sq m in total GLA
► NYSE listed, SOx Compliant
► Equity value of US$3.5
billion(1)
Sierra Brazil 1 BV
Note: (1) as of June 30, 2011
Sonae Sierra Brasil benefits from best-in-class corporate governance and globally recognized
sector expertise, arising from a solid and engaged controlling shareholders
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Sto
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orm
ance (base 1
00)
Ibovespa SSBR3
IPO Update
Stock Performance Since IPO versus Ibovespa
Performance – Feb 02 to September 09, 2011
SSBR3: + 29.0%
Ibovespa: - 16.4%
Since the IPO in February 2011, Sonae Sierra Brasil’s shares have had a solid performance
when compared to the Ibovespa
As a result of the
resources from the
IPO, SSB had a net
cash position of
R$159 million as of
June 30, 2011.
Broker Target Price (R$) Recommendation Last Update
Credit Suisse 31.501 Outperform 09/05/2011
Itaú BBA 33.802 Outperform 09/11/2011
JP Morgan 35.002 Overweight 06/10/2011
112 month period 212/31/2012
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Investment thesis
Competitive edges
► Attractive industry fundamentals
► Strategy focused on dominant malls in underserved medium and large
cities targeting to the fast growing middle class
► Leverage on the know-how, strengths and long term commitment
of our sponsors
► Sound track record of developments and turnaround cases
► Experienced and committed management team
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Index
4 Company Fundamentals
13 Growth Strategy
19 Operational and Financial Indicators
9 Sector Fundamentals
Manauara Shopping (Manaus)
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Despite the current turmoil in the global macro economic scenario, perspectives are still
compelling for Brazil
Macro Economic Scenario
IPCA Rate (%) Retail Sales Growth (%)
Selic Rate (%) GDP Growth Rate (%)
Source: MCM
Source: MCM Source: MCM
Source: IBGE
9
5.7%
3.1%
4.5%
5.9%
4.3%
5.9%
6.5% 6.4%
5.5%
4.7%4.5%
2005 2006 2007 2008 2009 2010 2011e 2012e 2013e 2014e 2015e
IPCA
3.2%
3.9%
6.1%
5.2%
-0.7%
7.5%
3.6% 3.8%
2.6%
4.9%4.5%
2005 2006 2007 2008 2009 2010 2011e 2012e 2013e 2014e 2015e
PIB (%)
4.8%
6.2%
9.8%9.1%
5.9%
10.9%
2005 2006 2007 2008 2009 2010
Retail Sales
18.00%
13.25%
11.25%
13.75%
8.75%
10.75% 11.00%11.50%
13.00%
11.00% 10.75%
2005 2006 2007 2008 2009 2010 2011e 2012e 2013e 2014e 2015e
Selic
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Attractive shopping center industry
fundamentals
Despite recent growth, decreasing vacancy rates and low penetration vis-à-vis developed
markets indicate significant room for new shopping centers in Brazil
Shopping centers in Brazil
Brazilian Shopping centers growth by region: 2014e
Shopping centers sales - CAGR (08-11): 16%
Source: IBOPE Source: IBOPE
Low shopping center market penetration
Source: ABRASCE and IBGE.
Total GLA (m²) / 1,000 inhabitants (2010)
2,180
USA Canada
1,290
SP
91
PR
53
MG
31
GO
34
AM
42
DF
143
Other BR
states
34
Average: 49
Mexico
81
342359
381
419
2008 2009 2010 2011e
Shopping Malls
Source: IBOPE
Southeast 2010 205
South 2010 73
Northeast 2010 55
Mid West 2010 37
North 2010 11
+29%
+15%
+20%
+16%
+72%
Southeast 2014 265
South 2014 84
Northeast 2014 66
Mid West 2014 43
North 2014 19
10
70.178.8
89.5
109.1
13.7%14.0% 14.0%
15.4%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
40
60
80
100
120
140
160
2008 2009 2010 2011e
Sales (R$ billion) % of Total Retail Sales
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Fast growing middle class
Around 39 million people have moved upwards into the middle class, while middle class
disposable income has increased by 99%
Middle class: disposable income(1) (R$/month)
Note: (1) Income available for spending and saving
Source: Cetelem “O Observador 2011”, IBGE and Itau Securities
122
243
2005 2010
+99%
Over R$ 12 billion increase in monthly disposable
income
Total credit to individuals outstanding (R$ bn)
Source: Cetelem “O Observador 2011”
Increasing middle class
51%
25%
34%
53%
21% 15%
2005 2010
Population: 182 mm Population: 191 mm
+16 mm people
+39 mm people
A+B
C
D+E
Up
pe
r c
las
s
Mid
dle
cla
ss
L
ow
er
cla
ss
Sonae Sierra Brazil is strategically positioned to capture the middle class consumption
growth, as it entails over 80% of its target audience
6.8x
-
200
400
600
Jan-01 May-02 Sep-03 Jan-05 May-06 Sep-07 Jan-09 May-10
- 45 mm people
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Index
4 Company Fundamentals
13 Growth Strategy
19 Operational and Financial Indicators
9 Sector Fundamentals
Shopping Penha (São Paulo)
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Focus on dominant malls in underserved medium
and large cities, targeting middle class customers
Sonae Sierra Brasil has an established footprint in the State of São Paulo and its growth strategy
is based on offering high quality, market dominant developments in underserved regions
Core portfolio: 9 properties Development strategy: 1 opened and 3 greenfields
Core Portfolio of Assets
Strong track record in Brazil’s most dynamic region Growth strategy focused on underserved regions
Parque D. Pedro
► Campinas (SP)
► Population: 1,065k
► GLA: 121k sq m
► Occupancy rate: 95.2%
► Over 20 mm visits in 2010
Total GLA: 343k sq m
Owned GLA: 203k sq m
Greenfield
Manauara Shopping
► Manaus (AM)
► Population: 1,739k
► GLA: 47k sq m
► 99.7% leased
# of competitors in area of influence
Parque D. Pedro 2
Boavista 2
Penha 2
Franca 1
Tivoli 1
Metrópole 2
Pátio Brasil 2
Plaza Sul 1
Campo Limpo 2
Total GLA 2013: 513k sq m
Owned GLA 2013: 391k sq m
# of cities with more than 300k
inhabitants in Brazil
+ 81
41.6%
58.4%
São Paulo Other states
Owned GLA concentration
Shopping centers
Recently opened mall
Shopping centers
Manaus
Goiânia
Uberlândia
Londrina
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Controlling interests in most shopping centers
Sonae Sierra Brasil average ownership stake is 58% in its 10 operating properties. It will reach
70% when all three greenfield developments are completed
Rationale Percentage of the Company’s interest
Shopping Center City State GLA
(‘000 sqm) Stake Management
Parque D. Pedro(1) Campinas SP 121,0 51.0%
Penha São Paulo SP 29,6 73.2%
Metrópole São Bernardo SP 23,9 100.0%
Tivoli Santa Bárbara
d‟Oeste SP 22,1 30.0%
Pátio Brasil Brasília DF 28,8 10.4%
Boavista São Paulo SP 16,0 100.0%
Franca Franca SP 18,1 67.4%
Plaza Sul São Paulo SP 23,0 30.0%
Campo Limpo São Paulo SP 19,9 20.0%
Manauara Manaus AM 46,8 100.0% Weighted Average 58.2%
Uberlândia Uberlândia MG 43,6 100.0%
Londrina Londrina PR 47,8 84.5%
Goiânia Goiânia GO 78,1 100.0% Weighted Average 70.3%
Note: (1) Sonae Sierra and DDR hold an additional 25.9% indirect ownership in Parque D. Pedro through another structure.
Ability to expand and
adapt to market trends
Control the management
services of 100% of the
malls
Strategic control of the malls
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Greenfield Projects
Uberlândia Shopping
Uberlândia
Minas Gerais
1Q12
Construction in progress
43.6
100%
88%
Boulevard Londrina
Shopping
Londrina
Paraná
2H12
Construction in progress
47.8
84.5%
71%
Shopping Passeio das
Águas
Goiânia
Goiás
2013
Construction in progress
78.1
100%
24%
Opening :
Total GLA (‘000 sq m):
Company’s stake:
% of GLA already
committed*:
Status:
Sonae Sierra Brasil’s strategy is to develop greenfield projects which have the potential to
become the market dominant malls in their regions
City:
State:
* As of June 30, 2011
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Expansions
Future expansions
Tivoli Metrópole
(Expansion II)
Parque D. Pedro
(Expansion II)
Campo Limpo
Concluded
expansion
Parque D. Pedro
(Expansion I)
On-going expansions
Metrópole
(Expansion I)
Location São Bernardo
(SP)
Sta. Bárbara
D‟Oeste (SP) Campinas (SP) São Paulo (SP) Campinas (SP)
São Bernardo
(SP)
Sonae Sierra
Brasil Stake 100% 30% 51% 20% 51% 100%
Additional
Total GLA (‘000 sq m) 12.0 7.0 5.0 3.0 5.0 9.0
Expected
Opening 2013 2013 2013 Sep 2011 November 2010 Nov 2011
Construction
Start Date 2H2012 1H2011 2H2012 2H2012 1H2010 1H2010
% of GLA
already committed*: 100% 99% 90% n.a. n.a. n.a.
* As of June 30, 2011
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Secured Growth
Owned GLA growth (000 sq m)
Uberlândia
Londrina
Goiânia
+92%
Metrópole (I)
PDP (II)
Metrópole (II)
Tívoli 84
203
391
16
78
2010 2011 2012 2013 Total
Expansion Greenfields
10
Campo Limpo
Sonae Sierra Brasil has a solid pipeline of new developments and expansions underway that
will almost double the Company’s GLA within 3 years
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B: 227
Index
4 Company Fundamentals
13 Growth Strategy
19 Operational and Financial Indicators
9 Sector Fundamentals
Shopping Campo Limpo (São Paulo)
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B: 227
111
Occupancy Rate
111
Sales (R$ million)
111
SSS/m²
111
SSR/m²
865
950
830
913
2Q10 2Q11 1H10 1H11
SSS/sqm
9.8%10.0%
47
53
46
52
2Q10 2Q11 1H10 1H11
SSR/sqm
12.7% 12.9%
831 934
1,575 1,775
2Q10 2Q11 1H10 1H11
Sales (R$ million)
12.4%
12.7%
97.3%
96.3%
97.0%97.2%
98.3% 98.5% 98.4%98.0%
97.7% 97.5%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Occupancy (% GLA)
Strong Operational and Financial Performance
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B: 51
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B: 227
Strong Operational and Financial Performance
Gross Revenue (R$ ‘000) 2Q11 2Q10 Var. % 1H11 1H10 Var. %
Rent 43,692 36,905 18.4% 85,034 71,895 18.3%
Rent contract straight-lining 1,044 1,094 -4.6% 1,993 2,417 -17.6%
Service revenue 4,057 2,525 60.7% 8,090 6,978 15.9%
Parking revenue 5,882 4,922 19.5% 11,492 7,696 49.3%
Key Money 2,523 3,096 -18.5% 4,921 5,818 -15.4%
Other revenue 120 275 -56.3% 445 307 45.0%
Total 57,318 48,817 17.4% 111,975 95,111 17.7%
111
Gross Revenue (R$ million)
111
Gross Revenue Breakdown
49 57
95 112
2Q10 2Q11 1H10 1H11
17.4%
17.7%
76%
2%5%
10%6%
1%
2Q10
76%
2%
7%
10%
5%
2Q11
Rent
Rent contract straight-lining
Service revenue
Parking revenue
Key Money
Other revenue
2Q11 2Q10
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B: 227
111
Adjusted EBITDA and Margin (R$ million)
111
Net Revenue (R$ million)
111
Adjusted FFO and Margin (R$ million)
111
Net Operating Income - NOI (R$ million)
76.2% 76.5% 75.9% 76.5%
75.6%
83.5%
73.0% 76.6%
3541
6779
2Q10 2Q11 1H10 1H11
Adjusted EBITDA (R$ million)
17.6%
18.2%
3444
6479
2Q10 2Q11 1H10 1H11
FFO Ajustado
23.1%
29.4%
45 53
88103
2Q10 2Q11 1H10 1H11
Receita líquida
17.3%
17.2%
44 51
83 99
2Q10 2Q11 1H10 1H11
NOI
18.7%
15.2%
Strong Operational and Financial Performance
21
R: 102
G: 98
B: 0
R: 124
G: 106
B: 85
R: 164
G: 0
B: 70
R: 0
G: 90
B: 132
R: 187
G: 140
B: 10
R: 246
G: 137
B: 51
R: 212
G: 209
B: 15
R: 238
G: 43
B: 116
R: 98
G: 202
B: 227
20.939.6 39.6 39.2
159.9
Up to 2012 2013 2014 2015 2016 onwards
Net Cash Position and Modest Leverage
Data on June 30th, 2011
Net Cash Position (R$ million) Debt Profile
Debt Amortization Schedule (R$ million)
Fixed42%
CDI16%
TR42%
22
R: 102
G: 98
B: 0
R: 124
G: 106
B: 85
R: 164
G: 0
B: 70
R: 0
G: 90
B: 132
R: 187
G: 140
B: 10
R: 246
G: 137
B: 51
R: 212
G: 209
B: 15
R: 238
G: 43
B: 116
R: 98
G: 202
B: 227
9.4x
15.6x14.5x
15.8x 15.8x
SSBR3 ALSC3 MULT3 BRML3 IGTA3
EV/EBITDA
11.9x14.1x
17.0x 17.3x
13.7x
SSBR3 ALSC3 MULT3 BRML3 IGTA3
P/FFO
12.6x
16.6x 17.2x
21.4x
17.9x
SSBR3 ALSC3 MULT3 BRML3 IGTA3
EV/EBITDA
14.3x 14.1x
18.4x
23.9x
16.9x
SSBR3 ALSC3 MULT3 BRML3 IGTA3
P/FFO
Appendix: Sector Multiples
SSBR3 is trading at a discount against its peers in the Brazilian shopping malls sector.
2011 P/FFO (x) 2011 EV/EBITDA (x)
2012 P/FFO (x) 2012 EV/EBITDA (x)
Peers Avg: 18.3x
Peers Avg: 18.3x
Peers Avg: 15.5x
Peers Avg: 15.4x
22.1% discount to Peers Avg
31.2% discount to Peers Avg
23.7% discount to Peers Avg
39.0% discount
to Peers Avg
Source: Bloomberg 23
R: 102
G: 98
B: 0
R: 124
G: 106
B: 85
R: 164
G: 0
B: 70
R: 0
G: 90
B: 132
R: 187
G: 140
B: 10
R: 246
G: 137
B: 51
R: 212
G: 209
B: 15
R: 238
G: 43
B: 116
R: 98
G: 202
B: 227
Appendix: Sector Operating Performance
Adjusted EBITDA Margin
Adjusted FFO Margin
SSB’s FFO margin is the highest of the Brazilian shopping mall sector, reaching 84% in 2Q11 and 77% in 1H11. Also, SSB’s
EBITDA margin is among the highest of the sector, just behind of BR Malls, which benefits from its size.
Note: SSB considers 100% of the Parque D. Pedro Shopping results.
Source: Companies Earnings Results
Source: Companies Earnings Results
76%
57%
82%
74%
64%
71%77%
68%
80%
72% 72% 70%
SSB Multiplan BR Malls Iguatemi Aliansce General
2Q10 2Q11
76%
61%66% 65%
70%
8%
84%
51%
43%
61% 62%
42%
SSB Multiplan BR Malls Iguatemi Aliansce General
2Q10 2Q11
76%
60%
83%
69% 65% 70%
77%
66%
80%
66% 67% 70%
SSB Multiplan BR Malls Iguatemi Aliansce General
1H10 1H11
73%
64% 62% 61% 63%
8%
77%
58%
38%
57% 58%
32%
SSB Multiplan BR Malls Iguatemi Aliansce General
1H10 1H11
24