Institutional presentation

Transcription

1 Institutional presentation IQ FY 2018 Pendiente

2 IRCP at a glance Business description Largest owner and operator of premium shopping malls and one of the largest owners of office buildings in Argentina ~423,000 1 gross leasable area ( GLA ) in prime locations Land reserve to develop ~375,000 2 sqm of commercial property Over 98% occupancy rates in shopping malls in last 10 years Average lease rates of US$26.3 / sqm and 97% office occupancy GLA breakdown (as of September 30, 2017) Simplified ownership structure 7 office buildings ~84,000 sqm 1 20% Total: ~423,000 1 sqm 16 shopping malls ~339,000 sqm 80% 86.5% 13.5% 16 year track record 20 year track record IRSA is a leading, diversified, publicly listed company with presence in real estate and other sectors 1 Includes acquisition of 8,000 sqm of Philips building completed on June 5, Considers land reserve as of September 30, 2017 of 251,206 sqm from shopping malls and 106,400 sqm from offices, in addition to 18,000 sqm of additional potential GLA from recent Philips acquisition 2

3 We have consistently grown and established our market position by developing and adding premium real estate assets to our portfolio Our growth story in GLA ( 000 sqm) shopping malls 1 office building 36% developed shopping malls 5 office buildings 64% acquired In December 2014, we acquired several premium office buildings from our parent company IRSA and changed our name to IRSA Commercial Properties 1 Includes acquisition of 8,000 sqm of Philips building completed on June 5,

4 Our prime portfolio of assets is located in Argentina s wealthiest neighborhoods and principal business districts Buenos Aires shopping malls Buenos Aires office buildings 67% market share in terms of sales City of Buenos Aires City of Buenos Aires Argentina shopping malls Low income Area Mid Income Area High income Area Land reserve Expanding Corporate North Area Business Center AAA Location Back Office Center Land reserve Our premium locations act as an entry barrier for new competitors 4

5 We have unique advantages that differentiate us from our competitors both nationally and regionally 1 Bargaining power and ability to charge top-level rents and brokerage fee 2 Real sales tracking of all tenants Key money paid in advance Brokerage fee paid in advance Full control of mall operations BEST Real Estate Company 3 Strong local tenants and longstanding strategic relationships that mitigate risks 4 Valuable data gathering through cutting edge technology and strong customer relationships Long term history of collaboration working with Top 10 tenants Strong local apparel industry and low tenant concentration Top tenant represents <7% of total sales Entertainment Home Services Anchor Store 5% Restaurant Miscellaneous Strong local industry Clothing and Footwear 54% ~110mm annual shopping mall visitors ~2.6x Argentina s population Electric appliances 5

6 We are the top mall operator in Latin America, supported by strong operating and financial metrics Highest market share 1 Highest ownership interest in malls 18,0% Total GLA as % of country GLA 93,4% Ownership stake in malls (%) 82,9% 76,6% 12,0% 60,9% 59,0% 6,3% 5,1% 3,0% Highest occupancy One of the highest EBITDA margins Lowest leverage ratio Occupancy (%) 9M17 EBITDA Margin Net debt / LTM EBITDA 98,8% 97,5% 95,2% 93,3% 93,0% 77,0% 76,3% 74,4% 70,5% 65,5% 5,9x 3,4x 2,4x 2,1x 1,0x Source: Company filings, as of September 30, Multiplan, BR Malls and Iguatemi as of September 30, Parque Arauco market share corresponds to Chile, as of

7 We are the top mall operator in Latin America, supported by strong operating and financial metrics (cont d) Highest sales per sqm Properties (US$/sqm) Company average LTM (US$/sqm) IRCP shopping malls Source: Morgan Stanley equity research report, February Source: Company filings as of September 30, 2017

8 Macroeconomic and industry trends 2. Our track record and growth prospects 2. Significant growth opportunities DOT Shopping, City of Buenos Aires 8

9 Argentina is the third largest economy in Latin America and its macroeconomic fundamentals offer a unique growth opportunity Third largest economy in Latin America (2017) Real GDP expected to outpace the rest of Latam Argentina Real GDP growth (yoy) Projected real GDP CAGR Country Nominal GDP (US$bn) Rank Population (mm) GDP per capita (PPP, US$) 2,6% 3,6% 3,4% 3,4% 2,8% 2,5% 3,2% 2,8% 2,8% 2,0% 2,0% 2, ,485 1,5% , ,707 (2,5%) (2,3%) '14 '15 '16 '17E '18E '19E '20E '21E Source: Economist Intelligence Unit database Inflation is gradually normalizing while incomes increase Total real personal income growth Inflation ,609 41,4% 24,0% , ,501 Source: IMF World Economic Outlook, as of April ,9% 9,4% 7,9% 6,3% (1,4%) 1,4% 7,5% 5,4% 4,6% 4,4% '16 '17E '18E '19E '20E '21E Source: Economist Intelligence Unit database 9

10 which provides favorable conditions for increased consumption Strong private consumption growth Private consumption expenditure per capita (US$) '16 '17E '18E '19E '20E '21E Source: Economist Intelligence Unit database Positive overall real estate cycles Consumer momentum Office space rents Peaking Falling Peaking Falling Rising Bottoming Rising Bottoming Source: Morgan Stanley equity research report, January 2017 Source: Jones Lang LaSalle Latin America Office Report YE

11 Industry age Shopping malls in Argentina present an attractive opportunity given high consumption rates and low penetration Local GLA per capita (mall GLA per 000 inhab.) Local shopping mall sales penetration (%) Shopping mall sales / retail sales ,0% 92 24,0% 79 21,4% 63 19,4% 63 17,0% 50 Latam avg w/o Arg: 93 Source: Cushman & Wakefield Global Shopping Center Development Report, as of ,0% Source: International Council of Shopping Centers, as of 2014 The Argentine shopping mall industry is the youngest in Latin America and has strong potential for future growth years Southdale Center 51 years Iguatemi Sao Paulo 42 years Unicentro Bogota 41 years Plaza San Miguel 38 years Shopping del Sol 35 years Parque Arauco 32 years Montevideo 30 years Soleil 11

12 The Buenos Aires office sector is underdeveloped relative to other major cities in Latin America Low regional penetration in the Class A office sector Office penetration (sqm / '000 inhab.) Latam avg w/o Arg: x 91 Santiago Mexico City Bogota Sao Paulo Lima Buenos Aires Source: Jones Lang LaSalle Latin America Office Report YE 2016 and United Nations The World s Cities in 2016 report A+ offices in the City of Buenos Aires Sale price (US$/sqm) Rent (US$/sqm/month) Cap rate (%) ,7% ,7% 9,8% 8,3% 8,0% 4,6% 5,3% 5,3% 7,2% 7,8% '08 '09 '10 '11 '12 '13 '14 '15 '16 17 Source: LJ Ramos Informe Tecnico Mensual April

13 Our land reserve will allow us to significantly expand our property portfolio We have a robust pipeline for shopping malls as well as for premium office properties 1.7x ~10,000 sqm currently under construction x ,000 sqm currently under construction Current Brownfield Greenfield Current GLA & pipeline In existing land reserve Current New developments Current GLA & pipeline In existing land reserve Total potential investment: US$1,000mm 1 Includes acquisition of 8,000 sqm of Philips building on June 5, Considers 106,400 sqm from offices as of March 2017 in addition to 18,000 sqm of additional potential GLA from recent Philips acquisition 13

14 Current Malls Expansions Movie Theatres in the region of Patagonia Alto Comahue Shopping Mall The shopping of the South of BA Alto Avellaneda Shopping Mall City of Neuquén Shopping mall ~ARS 180mm estimated investment FY2019 opening date 2,200 sqm GLA Progress 30% City of Buenos Aires Shopping mall ARS 36 mm estimated investment FY2018 opening date 3,500 sqm GLA Progress 80% 14

15 Current projects under development Highest sales/sqm mall in the region Shopping Alto Palermo Modern office building in the City Catalinas Office Building City of Buenos Aires shopping mall US$28.5mm estimated investment FY2019 opening date 4,000 sqm GLA City of Buenos Aires office US$45mm estimated investment FY2020 opening date 16,000 sqm GLA 15

16 Current projects under development and recent acquisition Top quality office project in the booming northern area 98,000 sqm 1 Total GLA Polo Dot Phase 1 Buenos Aires office 32,000 sqm GLA FY2019 opening date 80% owned by IRCP US$65mm estimated investment 1 Includes 32,000 sqm from Dot Phase 1; 38,000 sqm from Dot Phase 2; 10,000 current and 18,000 additional potential sqm from recently acquired Philips building 16 Philips Building Recently acquired 8,000 sqm GLA 26,000 potential sqm GLA

17 Our five year development pipeline ~US$580mm estimated 5-year investment ,441 sqm Alto Comahue 2,200 sqm Alto Avellaneda 3,500 sqm Alto Rosario Mall 3,320 sqm Mendoza Plaza Mall 9,870 sqm ,331 sqm Polo DOT Phase 1 32,000 sqm Alto Rosario Mall 7,500 sqm La Ribera Mall 3,000 sqm Alto Palermo Mall 4,000 sqm ,831 sqm San Martin Mall 35,000 sqm Catalinas Office 16,000 sqm Cordoba Office 5,000 sqm Polo DOT Phase 2 16,000 sqm Soleil 5,300 sqm ,131 sqm 55,510 other potential expansions CAGR 17-22: 9.0% Polo DOT Phase 3 22,400 sqm Tucuman Mall 10,000 sqm Alto Rosario Office 10,000 sqm Cordoba Mall 7,000 sqm DOT Mall 16,800 sqm ,331 sqm 651,931 sqm ,000 other potential developments Intercontinental II 19,600 sqm Legend Developments Expansions Cordoba Shopping Alto Rosario Patio Bullrich Philips 18,000 sqm Caballito 68,000 sqm 2 Parana 5,000 sqm 1 Assumes average of US$/sqm of 2,500 for all developments and expansions excluding Alto Palermo (US$28.5mm), Dot Phase 1 (US$65mm) and Catalinas (US$45mm) 2 Approvals pending. Shopping mall GLA 30,000 sqm 17

18 We will continue to take advantage of acquisition opportunities that may arise in the market as we have done so in the past We have successfully turned around underperforming shopping malls with obsolete infrastructure and inefficient tenant mixes Soleil Shopping Mall (2010) La Ribera Shopping Mall (2011) Cordoba Shopping Mall (2006) Value creation (US$mm) Value creation (US$mm) Value creation (US$mm) 2.5x 51,8 2.1x 9,6 1.8x 4.4x 46,8 20,7 4,5 10,6 Acquisition value Fair value Acquisition value Fair value Acquisition value Fair value Note: Soleil Fair Value of ARS797.7mm, La Ribera Fair Value of ARS292.8mm adjusted to reflect IRCP s 50% stake, Cordoba Shopping Fair Value of ARS797.7mm; all converted to USD at a Ps FX rate 18

19 3. Financial highlights 3. Financial highlights Patio Bullrich, City of Buenos Aires 19

20 Resilient revenue model That has withstood historical inflation and currency depreciation Shopping malls Revenue from leases Office buildings Revenues from leases In advance Our tenants pay a peso denominated base rent plus an additional percentage linked to sales % Sales Brokerage fee ~5x monthly base rent % Sales % Sales US$ US$ US$ Key money admission rights ~8x monthly base rent Base Rent Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 Other revenues Non Traditional Advertising Shopping mall rent revenue breakdown 1 Admission rights 9,1% Other 8,4% 3-year average term for office lease contracts US Dollar based Parking Stands Percentage rent 26,2% Base rent 56,3% Rental rates for renewed terms are negotiated at market 1 As of September 30,

21 IRCP financial overview Income from sales, rents and services (US$mm) CAGR: 10.7% % FY13 FY14 FY15 FY16 FY17 IQ17 IQ18 NOI (USDmm)1 CAGR: 10.1% % FY13 FY14 FY15 FY16 FY17 IQ17 IQ18 1 NOI: Gross profit minus selling expenses, plus net realized gain from FV adj. of investment properties, plus D&A 21

22 IRCP financial overview Adj. EBITDA (USDmn)2 CAGR: 9.5% % FY13 FY14 FY15 FY16 FY17 IQ17 IQ18 Adjusted FFO (USDmm) CAGR: 5.5% % 30 FY13 FY14 FY15 FY16 FY17 IQ17 IQ18 2 Adjusted EBITDA: EBITDA minus changes in FV of Investment Properties + unrealized gain from sales of investment properties 3 Adjusted FFO: Total profit for the period minus net gain from FV adj. of investment properties, plus D&A, minus foreign exchange effects, gains/(losses) on derivative instruments, minus fair value gains of financial assets and liabilities, plus other financial results (net), plus deferred tax, excluding non-controlling interest 22

23 IRCP financial overview Dividend payment (US$mm) FY13 FY14 FY15 FY16 FY17 4 Dividend payments converted to USD at the official exchange rate considering the ex-date of the dividend. 23

24 Capital structure overview Debt description (as of September 30, 2017) (US$mm) Capital structure and indebtedness ratios Description Issue Currency Outstanding Amount (US$ million) Rate Maturity As of Sep 30, 2017 Net debt / EBITDA 1.0x Series II Notes due 2023 (int.) US$ % mar-23 Series iv Note due 2020 (local) US$ ,00% Sep-20 Short-term debt ARS < 365 days Interest coverage ratio 5 5.6x Total debt / Assets 18.0% Other Loans Local Credit Rating (Fitch) AA+ Total IRSA CP s Debt IRSA CP s Net Debt Unsecured debt International Credit Rating B+ Debt amortization schedule (US$mm) 4 xx as % of total 71.1% 0.3% 0.9% 27.7% 360,0 140,0 1,6 4, Does not consider accrued interest. 5 Adjusted EBITDA / Net interest expense 24

25 IRCP investment highlights 1 Largest commercial real estate company in Argentina with a proven track record acquiring and developing assets, even before capital markets were open in Argentina 2 Pure, simple and focused commercial real estate player positioned for Argentina s new growth phase 3 Unique prime portfolio of assets located in profitable areas 4 Strong cash flow generation with conservative financial discipline 5 Significant growth potential 6 Experienced management team with longstanding industry expertise 25

26 Thanks!