São Carlos Empreendimentos. Ticker BM&F Bovespa: SCAR3 August 2011

Transcription

1 São Carlos Empreendimentos Ticker BM&F Bovespa: SCAR3 August 2011

2 Contents Overview Commercial Income Property Market in Brazil São Carlos Real Estate Portfolio Financial Performance Acquisition and Retrofit Cases Expansion Potential 2 / 40

3 OVERVIEW 3 / 40

4 Overview São Carlos invests in and manages office buildings and retail properties in the São Paulo and Rio de Janeiro markets in order to maximize their rental revenue. The Company proactively manages its portfolio, which currently comprises 43 properties, 413,000 sq.m of gross leasable area (GLA) and an estimated market value of R$ 2.24 billion 1. The portfolio also includes a combined expansion potential of more than 250,000 sq.m of GLA, spread through selected properties. In June 2011, the Company s recurring gross revenue was R$ 237 million per year, with a recurring EBITDA margin as high as 85% of net revenue. Brazilian Financial Center Centro Empresarial Botafogo Mykonos Sul America 1 Value appraised by CB Richard Ellis in Sep/10 plus acquisitions and less disposals since then available at 4 / 40

5 Successful Business Model 1 2 Active Management, Turnaround, Expansion Property Acquisition Rent Revenue Increase 3 5 Keep in Portfolio or Sell Property Appreciation 4 5 / 40

6 Focus on Profitability The portfolio s current cap rate is estimated at 10.9% 2 We obtained an average spread of 3.7% 15.6% (370 bps) between acquisition and disposal cap rates in % 11.5% 14.3% 11.5% 10.6% Average acquisition cap rate (3rd year) Average disposal cap rate Recurring revenue from leases in June 2011 (R$ million), divided by the estimated market value of the portfolio s leasable properties (R$ 2.17 billion). Excludes real rent increases and adjustements for inflation. 6 / 40

7 Company overview Current Portfolio 43 commercial properties 413,000 sq.m of GLA Estimated market value of R$ 2.24 billion Expansion Potential within the Company s Portfolio Expansion potential of selected properties totaling 250,000 sq.m of GLA (60% above the current portfolio), not included in the portfolio s appraisal value Ericsson, Globaltech, CD Barueri, Guaíba, Brasilprev, CASA Recurring Gross Revenue From Leases R$ 237 million per year Expected real increase of 31% on average (R$ 17.0 million), on rent revenue from 23% of our contracts in the next 2 years Recurring Profitability Margin EBITDA margin of 85% of the Company s net revenue 7 / 40

8 COMMERCIAL INCOME PROPERTY MARKET IN BRAZIL 8 / 40

9 Market Trends (Brazilian Economy) 30% 25% 20% 15% 10% 5% 0% Nominal Interest Rate % 13% 12% 11% 10% 9% 8% 7% 6% 5% Unemployment Rate % Inflation Rates 12% NTN-B - IPCA Indexed 30% 25% 20% 15% 10% 5% IPCA IGPM % 10% 9% 8% 7% 6% 5% 6.6 0% -5% % Source: Bloomberg, FGV, Bacen 9 / 40

10 Market Trends (GLA and Vacancy) 6.0% 10.0% 14.0% 16.4% 17.5% 16.6% 12.6% 8.9% 5.5% 6.6% 3.9% 4.2% São Paulo Q11 Market Inventory ('000,000 sq.m) Average Vacancy in Offices 11.4% 10.0% 9.3% 8.9% 8.0% Rio de Janeiro 7.0% 7.0% 6.4% 4.6% 3.7% 3.0% 2.0% Q11 Source: CB Richard Ellis Market View Report Market Inventory ('000,000 sq.m) 10 / 40 Average Vacancy in Offices

11 Market Trends (Average Rent Prices) Rents for Class A Office Space: SP Mkt Average 280 R$/sq.m/month Q04 2Q05 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 Rents for Class A Office Space: RJ Mkt Average 280 R$/sq.m/month Q04 2Q05 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 Source: CB Richard Ellis Market View Report 11 / 40

12 SÃO CARLOS REAL ESTATE PORTFOLIO 12 / 40

13 Profile of the Real Estate Portfolio Focus on office buildings located in São Paulo and Rio de Janeiro, and on retail stores 43 commercial properties 14 Own GLA: sq.m 11% 10% % Of f ices Retail Stores Other Of f ices Retail Stores Other Portfolio value: R$ 2,244 mn 5% Geographic Distribution 3% 34% 92% 62% 3% 1% Of f ices Retail Stores Other São Paulo Rio de Janeiro Rio Grande do Sul Minas Gerais 13 / 40

14 Real Estate in São Paulo 18 properties: 17 office buildings and 1 distribution center DC Barueri CA Rio Negro BST Logistic Center Ericsson Antonio Carlos BFC Barros Loureiro Top Center Sul America Mykonos Itaim Center Borges Lagoa Corporate Plaza C.A.S.A. Brasilprev Spop II Spop X Source: Google Maps 14 / 40

15 Real Estate in Rio de Janeiro 15 properties: 8 office buildings and 7 retail street stores Madureira Venezuela 43 Niterói Ouvidor Citi Tower Meier Passeio CE Arcos da Lapa Petrópolis Tijuca Laranjeiras Visconde OP CEB Pasteur 110 Copacabana Source: Google Maps 15 / 40

16 Diversified Mix of First-Tier Tenants Biggest single tenant is responsible for less than 8% of revenue from leases Zero delinquency Tenants 10 biggest tenants (% of recurring revenue from leases) 7.9% 4.8% 4.7% 4.5% 4.4% 4.1% 3.4% 3.1% 3.1% 2.1% 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Note: As of June / 40

17 Average Physical Vacancy The portfolio s average financial vacancy has also been consistently low, reaching 0.6% at June 2011 end 4.7% 5.3% 2.3% 4.4% 3.1% 2.4% 2.7% 1.6% 1.6% 2.2% 3.3% 2.9% 3.7% 4.3% 2.6% 2.5% 0.7% Jun/07 Sep/07 Dec/07 Mar/08 Jun/08 Sep/08 Dec/08 Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 Jun/10 Sep/10 Dec/10 Mar/11 Jun/11 Note: Physical vacancy is the total vacant area in the portfolio, divided by the portfolio's total own GLA, excluding non-operating properties and the Venezuela 43 and Barros Loureiro buildings, at month end; Financial vacancy is the estimated potential revenue from properties vacant areas divided by the estimated total rent revenue in the month in question. 17 / 40

18 Duration of São Carlos lease contracts Lease agreements normally have a 5-year term Contract renewals in the next 2 years will take into account the strong rent increases over the last 4 years In Terms of Rent Revenue We estimate an upside of 31% or R$ 17.0 mn/year in 23% of the contracts 37% 8% 15% 8% 16% 15% 1 year 2 years 3 years 4 years 5 years 5 years+ Note: from June 30, 2011 on 18 / 40

19 Sustainable Buildings São Carlos trusts in sustainable development, and seeks to add value to its portfolio and clients by improving the quality of its properties and certifying them with LEED Leadership in Energy & Environmental Design certification. In association with Gafisa, São Carlos developed the Eldorado Business Tower, the only Brazilian building with LEED Platinum certification (at the time, there were only 3 other buildings in the world with the same certification). In August 2011 we received the LEED Existing Building Operations & Maintenance Silver certification - of towers B and C of the Rio Negro property. We are now focusing on certifying another three buildings, located in São Paulo and Rio de Janeiro. 19 / 40

20 FINANCIAL PERFORMANCE 20 / 40

21 Financial Performance R$ mn Gross Revenue From Leases Adjusted EBITDA and EBITDA Margin % 84% 84% 78% 85% pro forma pro forma Net Debt and Leverage Net Income x 3.9 x 1.2 x 3.0 x 2.7 x pro forma / 40

22 Management Reduced structured with 47 employees Management compensation is aligned with shareholders' interests, through variable compensation (by achieving a set of goals) and a stock option plan BOARD OF DIRECTORS ROLANDO MIFANO (chairman) RICCARDO ARDUINI JORGE FELIPE LEMANN ROBERTO THOMPSON ABRAM SZAJMAN (independent) ROGÉRIO ZIVIANI (independent) OFFICERS CEO Rolando Mifano Executive Director Felipe Goes CFO and IRO Fabio Russo COO Marcelo Scarabotolo New Businesses Officer Rubens Cardoso 22 / 40

23 Executive Profiles Rolando Mifano Felipe Góes Rubens Cardoso Marcelo Scarabotolo Fabio Russo Correa 64 years old 39 years of experience in the real estate sector at São Carlos since 1998 previously worked for Banco Comind, Unibanco and Carrefour 38 years old At São Carlos since June 2011 previously worked for McKinsey and was Rio de Janeiro s City Development Secretary 57 years old 20 years of experience in the real estate sector at São Carlos since 1999 previously worked for Carrefour 45 years old 20 years of experience in the real estate sector at São Carlos since 1999 previously worked for Deico Desenvolvimento Imobiliário 38 years old At São Carlos since November 2009 previously worked for CCR 23 / 40

24 Shareholder Base CONTROLLING SHAREHOLDERS MANAGEMENT TREASURY FREE-FLOAT 50.01% 1.40% 0.93% 47.66% Note: As of August 22, 2011 Note: Total of 57,737,319 common shares and approximately 3,000 shareholders 24 / 40

25 Stock price Previous 12 months (through August 18, 2011): SCAR3 +21%, IBOV -22% and IMOB -20% YTD2011 (through August 18): SCAR3-12%, IBOV -24% and IMOB -24% São Carlos Ibovespa Imob Aug 18, 2010 Aug 18, / 40

26 Potential for Share Price Increase NAV does not include expansion potential in São Carlos' portfolio São Carlos common shares are being traded on the BM&F Bovespa with a discount of 32% to the Company's NAV (assuming R$ 20.50/share) NAV Portfolio's estimated market value (R$ mn) 2,243.9 Net Debt (R$ mn) (514.9) NAV (portfolio's value minus net debt) (R$ mn) 1,728.9 Outstanding shares (net of treasury) (mn) 57.4 NAV/share R$ 30/share NAV = Appraisal value of the property portfolio less the Company's pro forma net debt in Jun/11 and the acquisition value of one lot in Jul/11. The NAV/share ratio excludes shares held in treasury 26 / 40

27 Competitive Environment and São Carlos Advantages São Carlos Empreendimentos (ticker SCAR3): Offices for retrofitting or repositioning in the market and retail street stores BR Properties: Distribution centers and recently-developed offices CCP: Development of AAA offices, malls and distribution centers São Carlos competitive advantages: Expertise in managing commercial properties, focusing on increasing profitability Active portfolio management Focus on class A type office buildings, with large floor plates and located primarily in São Paulo and Rio de Janeiro, and retail street stores Extremely low vacancy rate, achieved through a meticulous selection process and diversification of tenants Reduced costs 27 / 40

28 Contacts FABIO RUSSO CFO and IRO MARC GROSSMANN IR Manager Phone: (5511) / Brasilprev building Sul America building 28 / 40

29 ACQUISITION AND RETROFIT CASES 29 / 40

30 Citi Tower Rio de Janeiro, RJ Acquired in November 2005 from Citibank for R$ 43.3 mn. Investments of R$ 5.2 mn in improvements Retrofit of the main hall Replacement of elevators Replacement of the air conditioning system Optimization of the tenant mix Increase in the average rent from R$38/sq.m in Dec/05 to R$68/sq.m in Jun/11. The current market average is around R$78/sq.m. Decline in the average condominium expense, from R$14.6/sq.m in Dec/05 to R$ 10.9/sq.m in Jun/11. Appraisal value of R$ 135,7 mn as of Sep/10. Leveraged IRR of 90%/year. 30 / 40

31 Top Center São Paulo, SP Acquired from Marubeni in November 2004 for R$ 63.0 mn. Authorization to transform the retail area on the ground floors into a shopping mall, and subsequent disposal for R$35.0 mn. Investments of R$ 2.5 mn in improvements Upgrade of the building's entrance hall Improvement of the floors' common areas Upgrade of the elevators and air conditioning system Increase in the average rent from R$ 44/sq.m in Dec/04 to R$ 78/sq.m in Jun/11. The current market average is around R$ 90/sq.m. Decline in the average condominium expense from R$ 12.0/sq.m in Dec/04 to R$ 11.1/sq.m in Jun/11. Appraisal value of R$ mn as of Sep/10. Leveraged IRR of 173%/year. 31 / 40

32 Centro Empresarial Botafogo Rio de Janeiro, RJ Acquired from the Caemi Foundation in January 2002 for R$ 72.0 mn. Investments of R$ 4.3 mn in improvements Overall upgrade of the entrance hall, replacement of elevators and air conditioning system. Improvement of the auditorium and meeting rooms, allowing for extra rent revenue. Transformation of common into private areas and relocation of the restaurant to the ground floor, thus increasing the building's leasable area. Complete transformation into an AAA class property, one of the best office buildings in Rio de Janeiro 32 / 40

33 Passeio Office Building Rio de Janeiro, RJ Acquired from BCN Bank / Mesbla in Dec/03 for R$ 12.0 mn. Investment of R$ 8.0 mn in improvements Complete restoration and upgrade of the building's façade, following the Patrimônio Histórico rules, since this property is protected due to its historical value and its clock tower is a city landmark. Overall retrofit of the building, including electrical and hydraulic upgrades, and changes in the air-conditioning system, elevators and data center. Complete transformation of the building into a corporate office located in one of the most sought-after office districts in Rio de Janeiro at the moment. 33 / 40

34 Edifício Venezuela 43 Rio de Janeiro, RJ Acquired in Sep/09 for R$ 6.5 mn. Retrofit totaling R$ 14.0 mn being developed, aiming at a complete upgrade of the building followed by sustainability certification. Creation of this building s corporate identity in the Porto Maravilha area. 34 / 40

35 EXPANSION POTENTIAL 35 / 40

36 Centro Empresarial Guaiba Porto Alegre, RS Existing building with 12,500 sq.m of GLA. Potential to develop an additional 12,500 sq.m of GLA. Prime location in the fastest growing area of Porto Alegre city. Foundations and lower levels are already developed and construction has been approved by the municipal authorities. Estimated rent of around R$50/sq.m. Potential for a built-to-suit project. 36 / 40

37 Barueri Distribution Center Barueri, SP The distribution center is currently leased to DHL. Outstanding location in front of the Castelo Branco highway, adjacent to the access road to Alphaville and the Tamboré shopping mall. Appraised by CBRE as of Sep/10 at R$68.9 mn, considering the current profile of the property. Opportunity to replace the distribution center and develop office buildings with an estimated GLA of 180,000 sq.m. Estimated rent of around R$58/sq.m. 37 / 40

38 Ericsson São Paulo, SP Property currently has 24,800 sq.m of GLA and 50,600 sq.m of free land (construction potential is currently being dimensioned). Outstanding location on the Tietê expressway, close to a subway station, an important hub for buses, Cumbica international airport and the main city exits. Expansion Potential 38 / 40

39 Tower D of the Centro Administrativo Rio Negro - Barueri, SP Property currently has 34,900 sq.m of GLA. Development of an additional office tower with 12,000 sq.m of GLA, to be concluded in the second half of Estimated rent of R$58/sq.m. High standard office building; towers B and C with the LEED EBOM Silver certification. 39 / 40

40 GlobalTech Campinas - Campinas, SP Property currently has 9,500 sq.m of GLA. Appraised by CBRE as of Sep/10 at R$23.6 mn (São Carlos' share). Potential development of a further 40,000 sq.m of GLA in the executive project phase. Estimated rent of around R$35/sq.m. São Carlos owns 60% of the property. Expansion Project Existenting Facilities 40 / 40