COMPANY PRESENTATION - ri.sonae
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COMPANY PRESENTATION May 2016
Agenda 01. THE COMPANY 02. FINANCIAL AND OPERATING PERFORMANCE 03. NEW GENERATION OF MALLS AND EXPANSIONS
1. THE COMPANY
SONAE SIERRA AT A GLANCE
A leading developer, owner and operator of top quality and regionally dominant
shopping centers in Brazil
• 9 shopping centers owned and managed, with over 445 thousand sqm of total GLA
OPERATING
• Occupancy rate at 98.0%*
EXPERTISE
• Greenfield Expertise (83% of GLA)
• Leverage on the expertise, tenant relationships and market recognition of our
STRONG majority shareholders
SHAREHOLDERS’ • Controlling shareholders with significant expertise in the sector
BASE
• Free Float = 33.35%
• Roughly 90% of rental revenue is fixed, providing significant foreseeability
• Lowest occupancy cost in the sector, as a result of malls’ formats and
COMPETITIVE Company’s efficiency
ADVANTAGES • Centralized back office structure
• Substantial organic growth
4
*Excludes Uberlândia Shopping, Boulevard Londrina Shopping and Passeio das Águas Shopping 4
OWNERSHIP STRUCTURE
Sonae SGPS Grosvenor
• Largest business group of Portugal, with operations in • British company with over 300 years of history in the
over 40 countries properties market
• Retail, properties, shopping centers and • Over 1,000 properties under management with a total
telecommunications business value of £10.9 billion
• Market value: €1.9 billion(1) • Properties in retail, commercial and residential segments
50% 50%
Sonae Sierra Alexander Otto
• Over 21 years of history
• Mr. Alexander Otto is the CEO of ECE Projektmanagement
GmbH & Co. KG
• One of the largest developers and operators of shopping
• Audit Board Member of Otto Group and DES Deutsche
centers in Europe
EuroShop AG
• NAV: €1.1 billion
• Mr. Otto is also the chairman of the ICSC Europe
50% 50%
Sierra Brazil 1 B.V. Free Float
66.65% 33.35%
Note: (1) As of May 2016
5 Source: Reuters, Sonae Sierra
5
PORTFOLIO TIMELINE
Own GLA in thousand sqm Uberlândia Shopping
expansion
CAGR Boulevard Londrina 363
354 354 347
Shopping and Passeio
Sonae Sierra enters +18% das Águas Shopping
the Brazilian opening
shopping center
market, creating a
Parque D. Pedro Sale of
joint-venture with
expansion Boavista
Enplanta
Engenharia, Sonae Shopping
Shopping 231
Enplanta. The Campo Limpo
portfolio was 204 209
Parque D. opening 200
composed by: Boavista
Pedro Shopping
Franca Shopping,
Shopping opening
Shopping Tivoli, 150 149
opening
Shopping Penha,
Shopping 128
Metrópole and 103 108 Manauara • Uberlândia Shopping Opening;
Pátio Brasil. Shopping • Swap: acquisition of additional 30%
80 81 Acquisition of opening and in Plaza Sul & sale of 22% in Penha
additional acquisition of • Acquisition of additional 9.5% in
ownership additional Franca
Acquisition of 20% interests in ownership
25 25 25 • Sale of total ownership interests in
ownership interest in Metrópole, Plaza interest in Penha, Tivoli and Pátio Brasil
Shopping Plaza Sul Sul and Tivoli Metrópole
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Own GLA ('000 sqm)
6
6
PORTFOLIO
9 operating malls, 1,980 stores, 445 thousand sqm of total GLA and 347 thousand sqm of
own GLA. SSB also manages Shopping Penha totaling 475 thousand sqm of GLA under
management.
Shopping centers City GLA (tsd sqm) Occupancy Stores
1 Parque D. Pedro Shopping Campinas (SP) 124.9 98.2% 399
6
2 Franca Shopping Franca (SP) 18.6 97.8% 109
Sã o Berna rdo do
3 Shopping Metrópole 30.0 96.4% 191
Ca mpo (SP)
4 Shopping Plaza Sul São Paulo (SP) 23.7 97.6% 215
5 Shopping Campo Limpo São Paulo (SP) 22.3 98.6% 147
9 6 Manauara Shopping Manaus (MA) 47.0 98.4% 232
7 7 Uberlândia Shopping Uberlândia (MG) 52.4 94.3% 211
8 Boulevard Londrina Shopping Londrina (PR) 48.3 93.9% 220
8 9 Passeio das Águas Shopping Goiânia (GO) 77.9 76.7% 256
Total 445.1 93.4% 1,980
2
Managed third-party shopping
City GLA (tsd sqm) Occupancy Stores
centers
A Shopping Penha São Paulo (SP) 29.6 209
A
4
1 5 Data on 3/31/16
3
8
8
CONTROLLING INTERESTS IN
MOST OF SHOPPING CENTERS
Sonae Sierra Brasil’s average ownership is 78% in its 9 properties
Shopping center GLA (tsd sqm) % SSB Management
Parque D. Pedro Shopping 124.9 51.0% √
STRATEGIC
CONTROL OF
Franca Shopping 18.6 76.9% √
THE MALLS
Shopping Metrópole 30.0 100.0% √
Shopping Plaza Sul 23.7 60.0% √
Shopping Campo Limpo 22.3 20.0% √
Manauara Shopping 47.0 100.0% √
Uberlândia Shopping 52.4 100.0% √
Boulevard Londrina Shopping 48.3 88.6% √
Ability to Controls the
expand and management
Passeio das Águas Shopping 77.9 100.0% √
adapt to services of
Average 77.9% market 100% of owned
trends malls
9
Note: Sonae Sierra and Alexander Otto hold an additional 25.9% indirect ownership in Parque D. Pedro through another structure. 9
2.
FINANCIAL AND
OPERATING
PERFORMANCE
10
SHOPPING CENTER SALES
R$ million
Shopping Center Tenant Sales 1Q16 1Q15 ∆ 2015 2014 ∆
Shopping Metrópole 74.2 78.5 -5.6% 350.7 361.5 -3.0%
Franca Shopping 48.8 50.9 -4.2% 216.3 219.1 -1.3%
Parque D. Pedro Shopping 329.4 326.7 0.8% 1,432.9 1,400.3 2.3%
Shopping Plaza Sul 96.5 95.4 1.2% 433.7 438.9 -1.2%
Shopping Campo Limpo 81.1 80.9 0.3% 370.2 371.2 -0.3%
Manauara Shopping 173.5 181.3 -4.3% 793.5 832.4 -4.7%
Uberlândia Shopping 72.7 70.7 2.9% 302.3 280.9 7.6%
Boulevard Londrina Shopping 64.8 62.6 3.5% 268.8 230.8 16.4%
Passeio das Águas Shopping 87.8 78.7 11.6% 374.6 263.3 42.3%
Total 1,028.8 1,025.7 0.3% 4,542.9 4,398.5 3.3%
SSB SALES EVOLUTION SSB SALES VS RETAIL SALES
19.2%
16.5%
CAGR 4.543
4.399 12.8%
+12%
4.013
11.0%
3.614 15.1% 9.6%
7.6%
3.101
9.5% 8.9%
2.748 7.8% 9.4%
3.3%
2.305
R$ million
3.9% 0.3%
-0.7%
2009 2010 2011 2012 2013 2014 2015 -1.9%
2009 2010 2011 2012 2013 2014 2015 1Q16
SSB Sales Retail Sales
11
11SSR & SSS
SSB’s same-store rents has been benefiting from the combination of strong leasing
spreads and high occupancy rates in our malls, growing at a healthy pace.
SAME-STORE RENTS (SSR) SAME-STORESales
Same-store SALES(SSS)
(SSS)
Same-store Rents (SSR)
11.0% 10.8% 10.2%
10.1% 10.3%
9.7% 7.9% 7.6%
8.4% 6.5% 6.4%
6.4%
5.8% 2.1%
5.0%
-1.6% -2.2% -2.1%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
Same-store Rents (SSR) Same-store Sales (SSS)
12
12OTHER OPERATING INDICATORS
OCCUPANCY RATE OCCUPANCY COST
10.2%
96% 96% 96% 9.5% 9.7% 10.0%
94% 94% 95% 9.4% 9.4% 9.4% 9.5% 9.4%
93% 93% 93%
% GLA
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
LEASING SPREADS
LATE PAYMENT
(renewals)
4.9%
31% 4.2%
4.1%
3.4% 3.7%
22% 23% 3.3% 3.2% 3.2% 3.4%
21%
19%
17%
10%
8% 8%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
13
13GROSS REVENUE
Our gross revenue reported consistent growth in the last years.
GROSS REVENUE EVOLUTION
CAGR
+15% 367 382
5.1%
316
283
240 97
202 92
169
R$ million
2009 2010 2011 2012 2013 2014 2015 1Q15 1Q16
GROSS REVENUE BREAKDOWN (2015)
1.2%
2.9%
9.7%
Rent 7.5%
7.5%
Rent contract 6.8% Fixed rent
straight-lining
Service Revenue Turnover rent
Kiosks and
Parking Revenue 85.0%
79.3% Merchandising
Key money
14
Data considers 100% of Parque D. Pedro Shopping. 14RENTAL REVENUE
In our malls, tenants rental contracts have a minimum 5-year term and are annualy
adjusted by inflation (IPCA), which brings more previsibility to our cash flow.
RENTAL CONTRACTS RENOVATION SCHEDULE
24%
20%
17%
16%
12%
10%
% of rental
contracts
2016 2017 2018 2019 2020 2021 onwards
Tenant Contract term
Satellite 5 years
Anchor 10 to 15 years
15
15COSTS & EXPENSES
Temporary occupancy costs reduction expected as the new malls ramp-up.
R$ million
Costs and Expenses 1Q16 1Q15 ∆ 2015 2014 ∆
Depreciation and amortization 0.7 0.7 1.5% 2.7 2.5 8.2%
Personnel 9.7 9.5 2.8% 40.3 36.9 9.4%
External services 1.7 2.4 -32.3% 9.0 9.1 -0.9%
Occupancy expense (vacant stores) 6.6 5.0 29.9% 22.8 21.9 4.1%
Cost of contractual agreements with tenants 2.5 2.7 -5.2% 11.6 11.0 4.9%
Provision for bad debts 2.8 2.3 22.4% 7.5 5.5 37.3%
Other 2.7 3.1 -12.6% 13.8 13.9 -0.5%
Total 26.7 25.8 3.8% 107.7 100.7 6.9%
COSTS & EXPENSES BREAKDOWN
Costs and Expenses
11.7%
27.9
25.0
5.3%
-7.6%
75.7 79.7
R$ million
7.5 6.9
8.4%
18.3 19.8
1Q15 1Q16 2014 2015
Cost of rentals and services Operating expenses
16
Data considers 100% of Parque D. Pedro Shopping. 16FINANCIAL PERFORMANCE
Net Revenue Net Revenue
331
84 +3.9%
+2.9%
319
81
FFO Rent Revenue Adj. FFO Rent Revenue
-3.5% +6.6% +4.8%
145 303
36 77
73 143 289
35
-1.7%
58 77 227 304
+4.0%
+10.7% +2.6% +3.8%
80
233
64 315
EBITDA NOI Adj. EBITDA NOI
1Q15 1Q16 2014 2015
17
Data considers 100% of Parque D. Pedro Shopping. 17FINANCIAL PERFORMANCE
PROPORTIONAL CONSOLIDATION (51% PDP)
Net Revenue Net Revenue
278
+3.5%
69 268
+2.1%
68
FFO Rent Revenue Adj. FFO +4.6% Rent Revenue
+7.3% 92 -6.2% 252
23 241
-13.2% 60 64
86
20
45 62
+1.7%
+10.0% 63
176 249
+2.2% +2.3%
50 254
179
EBITDA NOI Adj. EBITDA NOI
1Q15 1Q16 2014 2015
18
Data considers 51% of Parque D. Pedro Shopping and 20% of Shopping Campo Limpo. 18CASH POSITION & LEVERAGE
SSB’s balance sheet remains one of the DEBT PROFILE
strongest in the sector, with a
CDI Fixed
consolidated net debt to EBITDA ratio 12% 10%
of 2.4 times (3.2 times with the
IPCA
proportional consolidation of our 28%
TR
malls) and with a debt average cost of 50%
12.21%.
NET FINANCIAL DEBT FINANCIAL DEBT AMORTIZATION SCHEDULE
825 207 207
122 168
249
114
62 66
R$ million
R$ million
702
576
Total Debt Cash and cash Net Debt 2016 2017 2018 2019 2020 2021 and
equivalents beyond
Short-term Long-term
19
Data on 12/31/15 19LEVERAGE STRATEGY
Financing
through bank
loans up to 50%
of the total cost
for each project
No exposure to Debt guaranteed
foreign by Sonae Sierra
currencies Brasil’s assets
Management of cash
and financial Amortization
leverage indexes schedule highly
(restricted to 3.0x of manageable
Net Debt/ EBITDA in
2016)
20
20PAYMENT OF DIVIDENDS
SSB has been providing a consistent shareholders’ remuneration in dividends.
60.0 4.00%
3.00% 3.09%
50.0 3.00%
2.26%
2.00%
40.0 1.23% 1.29%
34.8 34.8 34.8
1.00%
30.0 0.18% 26.7
24.5
0.00%
20.0
-1.00%
10.0 -2.00%
2.9
0.0 -3.00%
2011 2012 2013 2014 2015 2016*
Dividends payed (R$ million) Dividend Yield
21 *To be approved at the Company’s 2016 Annual Shareholders’ Meeting, which is to be held on April 27 th, 2016. 213. NEW GENERATION OF MALLS AND EXPANSIONS
UBERLÂNDIA SHOPPING
Opened in March 2012, the mall stands out for its innovative architecture. The
mall brought renowned brands to Uberlândia and its region.
Uberlândia Shopping
UBERLÂNDIA SHOPPING SALES
90
85
71 70 71 73
64 65 67
R$ million
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
23
23BOULEVARD LONDRINA SHOPPING
Boulevard Londrina has a privileged location, in the city’s downtown, and is
part of an imposing mixed-use project. The shopping center gathers a tenant
mix of diversified stores, with high appeal to the public.
Boulevard Londrina Shopping
BOULEVARD LONDRINA SHOPPING SALES
78 83
63 61 62 65
52 54
46
R$ million
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
24
24PASSEIO DAS ÁGUAS SHOPPING
Passeio das Águas is the second largest shopping of Sonae Sierra Brasil and
the largest mall in Brazil’s Mid-West region and has a diversified tenant mix,
with renowned brands.
PASSEIO DAS ÁGUAS
Passeio SHOPPING
das Águas SALES
Shopping
115
95 90 90 88
79
65
57
46
R$ million
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16
25
25UBERLÂNDIA SHOPPING EXPANSION
Uberlândia Shopping’s expansion aims to complement the mall’s tenant mix by bringing renowned
fashion anchor stores to the mall. The expansion, which adds 8 thousand sqm of GLA to Uberlândia
Shopping, also includes a fitness center and a technology service provider office, both expected to
start operations in the beginning of 2016.
C&A STORE OPENING RIACHUELO STORE OPENING
26
26EXPANSION AND REFURBISHMENT
OF PARQUE D. PEDRO SHOPPING
We opened Parque D. Pedro’s last refurbishment and expansion phases in November 2015, with the
conclusion of the Alameda coverage and the opening of the new restaurant area of the mall, which
has exclusive brands in the region, such as Jamie’s Italian and Bacio di Latte.
PDP’s NEW RESTAURANT AREA ALAMEDA COVERAGE
New l’Entrecote de Paris restaurant Alameda before its refurbishment
27 New Jamie’s Italian restaurant Alameda after its refurbishment
27EXPANSION AND REFURBISHMENT
OF PARQUE D. PEDRO SHOPPING
With the new restaurant area and the Alameda coverage we concluded the refurbishment on some
areas of Parque D. Pedro, one of Brazil’s main shopping centers. Sonae Sierra Brasil works constantly
to perpetuate the mall’s dominant position at its market.
1. Refurbishment of aisle
currently dedicated to
furniture stores and
fitness center
2
1
4
2. 13.8 k sqm area leased 5 3. New dining area,
featuring 7 new sit-down
to a convention center
restaurants and new
operator
entrance
3
4. Refurbishment of
movie theater, adding 2 5. Coverage of Alameda
VIPs screens and the first Parque D. Pedro (PDP
IMAX theater in the first expansion)
28 region 28NEW STORES IN OUR MALLS
We continue to improve and adapt the tenant mix of our malls to their markets. These
are examples of stores that opened recently in our malls.
@Parque D. Pedro @Parque D. Pedro
@Plaza Sul
@Plaza Sul @Passeio das Águas
@Uberlândia @Uberlândia
@Uberlândia @Uberlândia
29
29COOP STORE®
We opened a new store format that offers a solution for small operators to develop their
business, the Coop Store, a shared sales space. The first Coop store was opened at
Shopping Metrópole in November 2015.
• The project comes under the Sustainability view of Sonae Sierra
Brazil and aims to help the development of small businesses.
• Shopping Metrópole’s Coop Store is shared by seven tenants at
the same time.
• Com layout adaptável, a loja conta com mobiliário modular que
permite o uso conforme a necessidade de cada operador. With an
adaptive layout, the store has modular furniture that fit each
tenant’s needs.
• The first SSB’s Coop Store brought a big diversity of goods that are
not easily found in shopping malls, such as liquors, cosmetics and
Amazon bio-jewels, embroidery and handmade jewelry.
30
30SALE OF BOAVISTA SHOPPING
In March 2016 we concluded of the sale of our subsidiary Pátio Campinas Shopping
Ltda., which owns 100% of Boavista Shopping.
• The final sale price, which included Pátio Campinas’ cash
balance, working capital and receivables, totaled R$64.2
million, already received in cash.
• With only 15.9 thousand sqm of GLA and no expansion
potential, Boavista was a non-strategic asset and we managed
to get a compelling offer for this mall.
• The sale of this non-strategic asset is in line with our recycling
capital policy.
31
31Investor Relations
+55 11 3371-3692
ribrasil@sonaesierra.com
ir.sonaesierra.com.br
32DISCLAIMER
• 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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