Company presentation - ri.sonae

Company presentation - ri.sonae

Company presentation - ri.sonae

COMPANY PRESENTATION May 2016

Company presentation - ri.sonae

01. THE COMPANY 02. FINANCIAL AND OPERATING PERFORMANCE 03. NEW GENERATION OF MALLS AND EXPANSIONS Agenda

Company presentation - ri.sonae

THE COMPANY 1.

Company presentation - ri.sonae
  • 4 4 OPERATING EXPERTISE STRONG SHAREHOLDERS’ BASE
  • 9 shopping centers owned and managed, with over 445 thousand sqm of total GLA
  • Occupancy rate at 98.0%*
  • Greenfield Expertise (83% of GLA)
  • Leverage on the expertise, tenant relationships and market recognition of our majority shareholders
  • Controlling shareholders with significant expertise in the sector
  • 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 Company’s efficiency
  • Centralized back office structure
  • Substantial organic growth *Excludes Uberlândia Shopping, Boulevard Londrina Shopping and Passeio das Águas Shopping SONAE SIERRA AT A GLANCE A leading developer, owner and operator of top quality and regionally dominant shopping centers in Brazil COMPETITIVE ADVANTAGES
Company presentation - ri.sonae
  • 5 5 OWNERSHIP STRUCTURE Sonae SGPS
  • Largest business group of Portugal, with operations in over 40 countries
  • Retail, properties, shopping centers and telecommunications business
  • Market value: €1.9 billion(1) Grosvenor
  • British company with over 300 years of history in the properties market
  • Over 1,000 properties under management with a total value of £10.9 billion
  • Properties in retail, commercial and residential segments Sonae Sierra
  • Over 21 years of history
  • One of the largest developers and operators of shopping centers in Europe
  • NAV: €1.1 billion Alexander Otto
  • Mr. Alexander Otto is the CEO of ECE Projektmanagement GmbH & Co. KG
  • Audit Board Member of Otto Group and DES Deutsche EuroShop AG
  • Mr. Otto is also the chairman of the ICSC Europe Sierra Brazil 1 B.V. Free Float 50% 50% 50% 50% 66.65% 33.35% Note: (1) As of May 2016 Source: Reuters, Sonae Sierra
Company presentation - ri.sonae
  • 6 25 25 25 80 81 103 108 128 150 149 200 204 209 231 354 354 363 347 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Own GLA ('000 sqm) Sonae Sierra enters the Brazilian shopping center market, creating a joint-venture with Enplanta Engenharia, Sonae Enplanta. The portfolio was composed by: Franca Shopping, Shopping Tivoli, Shopping Penha, Shopping Metrópole and Pátio Brasil. Parque D. Pedro Shopping opening Boavista Shopping opening Shopping Campo Limpo opening Parque D. Pedro expansion Boulevard Londrina Shopping and Passeio das Águas Shopping opening Acquisition of 20% ownership interest in Shopping Plaza Sul Acquisition of additional ownership interests in Metrópole, Plaza Sul and Tivoli Manauara Shopping opening and acquisition of additional ownership interest in Metrópole
  • Uberlândia Shopping Opening;
  • Swap: acquisition of additional 30% in Plaza Sul & sale of 22% in Penha
  • Acquisition of additional 9.5% in Franca
  • Sale of total ownership interests in Penha, Tivoli and Pátio Brasil 6 CAGR +18% Uberlândia Shopping expansion Sale of Boavista Shopping PORTFOLIO TIMELINE Own GLA in thousand sqm
Company presentation - ri.sonae

8 City GLA (tsd sqm) Occupancy Stores 1 Parque D. Pedro Shopping Campinas (SP) 124.9 98.2% 399 2 Franca Shopping Franca (SP) 18.6 97.8% 109 3 Shopping Metrópole São Bernardo do Campo (SP) 30.0 96.4% 191 4 Shopping Plaza Sul São Paulo (SP) 23.7 97.6% 215 5 Shopping Campo Limpo São Paulo (SP) 22.3 98.6% 147 6 Manauara Shopping Manaus (MA) 47.0 98.4% 232 7 Uberlândia Shopping Uberlândia (MG) 52.4 94.3% 211 8 Boulevard Londrina Shopping Londrina (PR) 48.3 93.9% 220 9 Passeio das Águas Shopping Goiânia (GO) 77.9 76.7% 256 445.1 93.4% 1,980 City GLA (tsd sqm) Occupancy Stores A Shopping Penha São Paulo (SP) 29.6 209 Shopping centers Total Managed third-party shopping centers 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.

8 Data on 3/31/16 1

Company presentation - ri.sonae

9 CONTROLLING INTERESTS IN MOST OF SHOPPING CENTERS Sonae Sierra Brasil’s average ownership is 78% in its 9 properties 9 Note: Sonae Sierra and Alexander Otto hold an additional 25.9% indirect ownership in Parque D. Pedro through another structure. STRATEGIC CONTROL OF THE MALLS Ability to expand and adapt to market trends Controls the management services of 100% of owned malls Shopping center GLA (tsd sqm) % SSB Management Parque D. Pedro Shopping 124.9 51.0% √ Franca Shopping 18.6 76.9% √ 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% √ Passeio das Águas Shopping 77.9 100.0% √ Average 77.9%

Company presentation - ri.sonae

10 FINANCIAL AND OPERATING PERFORMANCE 2.

Company presentation - ri.sonae

11 7.6% 19.2% 12.8% 16.5% 11.0% 9.6% 3.3% 0.3% 7.8% 15.1% 9.4% 9.5% 8.9% 3.9% -1.9% -0.7% 2009 2010 2011 2012 2013 2014 2015 1Q16 SSB Sales Retail Sales 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% 11 SHOPPING CENTER SALES SSB SALES EVOLUTION R$ million SSB SALES VS RETAIL SALES R$ million 2.305 2.748 3.101 3.614 4.013 4.399 4.543 2009 2010 2011 2012 2013 2014 2015 CAGR +12%

12 10.1% 10.3% 9.7% 11.0% 10.8% 8.4% 6.4% 5.8% 5.0% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Same-store Rents (SSR) Same-store Rents (SSR) 7.9% 7.6% 6.5% 10.2% 6.4% 2.1% -1.6% -2.2% -2.1% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Same-store Sales (SSS) Same-store Sales (SSS) 12 SSR & SSS SAME-STORE RENTS (SSR) SAME-STORE SALES (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.

13 3.3% 3.2% 3.4% 3.2% 4.1% 4.2% 3.4% 3.7% 4.9% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 31% 22% 21% 23% 17% 10% 19% 8% 8% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 9.4% 9.4% 9.4% 9.5% 9.4% 9.5% 9.7% 10.0% 10.2% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 94% 94% 95% 96% 96% 96% 93% 93% 93% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 LEASING SPREADS (renewals) 13 OCCUPANCY RATE OCCUPANCY COST % GLA LATE PAYMENT OTHER OPERATING INDICATORS

14 79.3% 6.8% 9.7% 2.9% 1.2% Rent Rent contract straight-lining Service Revenue Parking Revenue Key money 85.0% 7.5% 7.5% Fixed rent Turnover rent Kiosks and Merchandising Data considers 100% of Parque D. Pedro Shopping. 14 GROSS REVENUE Our gross revenue reported consistent growth in the last years. GROSS REVENUE EVOLUTION GROSS REVENUE BREAKDOWN (2015) R$ million CAGR +15% 169 202 240 283 316 367 382 2009 2010 2011 2012 2013 2014 2015 92 97 1Q15 1Q16 5.1%

15 10% 17% 24% 20% 12% 16% 2016 2017 2018 2019 2020 2021 onwards 15 RENTAL 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 % of rental contracts Tenant Contract term Satellite 5 years Anchor 10 to 15 years

16 18.3 19.8 75.7 79.7 7.5 6.9 25.0 27.9 1Q15 1Q16 2014 2015 Costs and Expenses Cost of rentals and services Operating expenses 8.4% 5.3% -7.6% 11.7% 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% 16 COSTS & EXPENSES BREAKDOWN R$ million R$ million COSTS & EXPENSES Temporary occupancy costs reduction expected as the new malls ramp-up.

Data considers 100% of Parque D. Pedro Shopping.

17 Net Revenue Rent Revenue NOI EBITDA FFO 1Q15 1Q16 81 73 77 58 36 84 77 80 64 35 +2.9% +6.6% +4.0% +10.7% -3.5% Net Revenue Rent Revenue NOI Adj. EBITDA Adj. FFO 2014 2015 319 289 304 227 145 331 303 315 233 143 +3.9% +4.8% +3.8% +2.6% -1.7% 17 FINANCIAL PERFORMANCE Data considers 100% of Parque D. Pedro Shopping.

18 Net Revenue Rent Revenue NOI EBITDA FFO 1Q15 1Q16 68 60 62 45 23 69 64 63 50 20 +2.1% +7.3% +1.7% +10.0% -13.2% Net Revenue Rent Revenue NOI Adj. EBITDA Adj. FFO 2014 2015 268 241 249 176 92 278 252 254 179 86 +3.5% +4.6% +2.3% +2.2% -6.2% 18 FINANCIAL PERFORMANCE PROPORTIONAL CONSOLIDATION (51% PDP) Data considers 51% of Parque D.

Pedro Shopping and 20% of Shopping Campo Limpo.

19 Fixed 10% TR 50% IPCA 28% CDI 12% 62 114 207 207 66 168 2016 2017 2018 2019 2020 2021 and beyond 702 576 122 249 Total Debt Cash and cash equivalents Net Debt 825 Data on 12/31/15 NET FINANCIAL DEBT FINANCIAL DEBT AMORTIZATION SCHEDULE R$ million R$ million Long-term Short-term 19 CASH POSITION & LEVERAGE SSB’s balance sheet remains one of the strongest in the sector, with a consolidated net debt to EBITDA ratio of 2.4 times (3.2 times with the proportional consolidation of our malls) and with a debt average cost of 12.21%.

DEBT PROFILE

20 LEVERAGE STRATEGY 20 Financing through bank loans up to 50% of the total cost for each project No exposure to foreign currencies Debt guaranteed by Sonae Sierra Brasil’s assets Management of cash and financial leverage indexes (restricted to 3.0x of Net Debt/ EBITDA in 2016) Amortization schedule highly manageable

21 2.9 24.5 26.7 34.8 34.8 34.8 0.18% 1.23% 1.29% 3.00% 2.26% 3.09% -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 2011 2012 2013 2014 2015 2016 Dividends payed (R$ million) Dividend Yield PAYMENT OF DIVIDENDS 21 SSB has been providing a consistent shareholders’ remuneration in dividends. *To be approved at the Company’s 2016 Annual Shareholders’ Meeting, which is to be held on April 27th, 2016. *

NEW GENERATION OF MALLS AND EXPANSIONS 3.

23 64 65 67 85 71 70 71 90 73 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Uberlândia Shopping Opened in March 2012, the mall stands out for its innovative architecture.

The mall brought renowned brands to Uberlândia and its region. 23 UBERLÂNDIA SHOPPING UBERLÂNDIA SHOPPING SALES R$ million

24 46 52 54 78 63 61 62 83 65 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Boulevard 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. 24 BOULEVARD LONDRINA SHOPPING BOULEVARD LONDRINA SHOPPING SALES R$ million

25 46 57 65 95 79 90 90 115 88 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Passeio 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.

25 PASSEIO DAS ÁGUAS SHOPPING PASSEIO DAS ÁGUAS SHOPPING SALES R$ million

26 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. 26 UBERLÂNDIA SHOPPING EXPANSION C&A STORE OPENING RIACHUELO STORE OPENING

27 27 PDP’s NEW RESTAURANT AREA EXPANSION 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.

ALAMEDA COVERAGE Alameda before its refurbishment Alameda after its refurbishment New l’Entrecote de Paris restaurant New Jamie’s Italian restaurant

28 28 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. 13.8 k sqm area leased to a convention center operator 3. New dining area, featuring 7 new sit-down restaurants and new entrance 4. Refurbishment of movie theater, adding 2 VIPs screens and the first IMAX theater in the region 5. Coverage of Alameda Parque D.

Pedro (PDP first expansion) EXPANSION AND REFURBISHMENT OF PARQUE D. PEDRO SHOPPING

29 29 @Parque D. Pedro @Plaza Sul @Uberlândia @Uberlândia @Uberlândia @Uberlândia @Plaza Sul @Parque D. Pedro @Passeio das Águas 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. NEW STORES IN OUR MALLS

  • 30 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. 30 COOP STORE®
  • 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.

  • 31 In March 2016 we concluded of the sale of our subsidiary Pátio Campinas Shopping Ltda., which owns 100% of Boavista Shopping. 31 SALE 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.

32 Investor Relations +55 11 3371-3692 ribrasil@sonaesierra.com ir.sonaesierra.com.br

  • 33 DISCLAIMER 33
  • 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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