Discussion Material August, 2018
August, 2018 Disclaimer This presentation is only indicative of the Company's intention to develop the mentioned projects. The images presented are merely illustrative, and the projects could be modified in whole or in part, at Multiplan's discretion. Many factors and assumptions that establish the feasibility of these projects are not in the control or expectation of the Company. The reader/investor should not rely solely on the information herein to make decisions with respect to trading the securities issued by Multiplan. The document may also contain prospective statements, which are subject to risks and uncertainties as they are based on expectations of the company s management and on available information. The company is under no obligation to update these statements. The Company s future financial situation, operating results, market share and competitive position may differ substantially from those expressed or suggested by forward-looking statements. Many factors and values that may impact these results are beyond the company s ability to control. Future projects could differ materially due to market conditions, changes in laws or government policies, changes in operational conditions and costs, changes in project schedules, operating performance, demands by tenants and consumers, commercial negotiations or other technical and economic factors. These projects may be altered in part or totally by the company with no prior warning. For more detailed information, please check our Financial Statements, Reference Form (Formulário de Referência) and other relevant information on our investor relations website ir.multiplan.com.br.
Growth August 2018
Future Growth A seasoned Company with a proven tack record......in spite of the storm October, 2017 Multiplan's GLA growth over the years ('000 sq.m) 4
We believe developing generates more value August 2018 Future Growth October, 2017 Development Acquisition No investment Short Term Result Risk Long Term Result Value Generated 5
We think on the long term and anticipate opportunities ParkShopping Canoas Park Jacarepaguá¹ 48,000 sq.m. of GLA, 93% leased 258 stores and 2,600 parking spaces Modern and sustainable architecture Opened in November 2017 216 stores opened with the shopping center 45,000 vehicles in its first weekend 1. Artist s rendering for illustrative purposes only Project subject to changes without previous notice. 39,000 sq.m. of GLA +230 stores, 15 anchor and mega store +2,000 parking spaces Incorporates all inovations of ParkShopping Canoas and new trends 6
Myths and truths about malls sector Q: There are no growth opportunities in Brazil A: There are opportunities to grow through developments and acquisitions: - Top 5 public companies own only 18% of Brazilian GLA - Multiplan owns only 19 malls and works on new greenfields and brownfields - Mall sales represented 20%¹ of total retail sales Q: There are many cities without Shopping Centers in Brazil Q: There is potential for building a Shopping Center in every city Q: Brazil is overpenetrated A: Only 3.8%¹ of Brazilian municipalities (or 212 cities) have malls, but only 5.6%³ of Brazilian municipalities (or 310 cities) have more than 100,000 inhabitants A: GLA per 1,000 inhabitants ratio¹ ² 75 m² 150 m² 2,191 m² 359 m² Q: Cities are expected to grow less in the future A: Cities are expected to grow less, but should still expand due to internal growth vectors SP RJ 2010-2017³ +9.3% +4.5% 2017-2030³ +7.4% +4.2% 1 Source: Abrasce Associação Brasileira de Shopping Centers (2017) 2 Source: ICSC International Council of Shopping Centers (ICSC) 3 Source: IBGE Brazilian Statistics Bureau 7
Location, Location, Location + Quality, Quality, Quality Multiplan vs. Brazil average (2017) Multiplan s share in Brazil (2017) BEST CITIES GDP per capita (Exposure to States) R$19,901 R$25,814 0.2% Number of municipalities 5,570 cities HIGH INCOME CLASSES Exposure to A/B classes 64% 83% 3.3% Number of malls 571 malls Average GLA by mall REGIONAL MALLS 43,851 sq.m. 5.3% GLA 15,580,379 sq.m. 27.286 sq.m. HIGH EFFICIENCY Total sales (R$/sq.m.) 10.767 R$/sq.m. 20,439 R$/sq.m. 8.7% Shopping center sales (R$) R$167.7 billion Source: Multiplan, Abrasce and IBGE. 8
Mix Management and Trends August 2018
Why people go to shopping centers in Brazil? People look for more than a shopping center 68% go weekly Source: Abrasce (2016) 72% of people seek other experiences, beyond shopping 10
Efficient management, anticipating trends Change in shopping center GLA by segment ( 000 sq.m.) 18 expansions e 1 mall delivered +49 wellness centers¹ +45 restaurants +30 medical centers +30 supermarkets and delis +3% +18% +21% -11% +28% Includes gyms, beauty salons, spas and beauty clinics. Source: Multiplan 11
Generating value for tenants and for the company Sales and rent growth by segment (Mar-13 to Mar-18) Multiplan 12
The mall of the future: a versatile environment The shopping center is no longer a place of consumption only and it is becoming a place for interaction, with people and environments. Work Interaction Escape - Building memories - Connecting with people - Connection with nature - Inspire freedom Condominium Bank Convenience - Safety - Solving everything in one place - Organization Search for the unpredictable - Experience the new - Out of the routine - Search for contents Public Park Square Shopping EVERYWHERE Gym Source: Multiplan 13
Innovative technologies adding value to the in-store shopping experience E-commerce Convenience Assortment of products Decision-making: online reviews Bargain hunting: find the best possible price Useful functions: manage shopping lists and set up shopping baskets over time Omni-channel is Present the future Online purchase with in-store pickups, returns and upsale Internet retailers expanding their physical footprint Shopping centers convenience In-store Experience, touch and feel Fill an immediate need or desire Provide a one-stop shopping trip Better for expensive shipping goods Fresh products People interactions CONVENIENCE POWER TO THE CONSUMER EXPERIENCE The consumer does not care where a sale is booked, but demands excelent incentivised service at all stages of the shopping experience. 1 Source: Multiplan 1 Source: ICSC International Council of Shopping Centers (ICSC) Exploring New Leasing Models in a Omni-Channel World (2016) 14
We own and manage a high productive portfolio August 2018 Tenants sales: Multiplan & USA malls Tenants sales USD/sq.f. ³ (satellite stores only) - 2017 467 799 1. Location, location, location: we are well positioned inside the largest cities; 2. Consumer experience: Food + Service segments represented 35.1% of Multiplan s GLA, equal to Apparel; 3. Mixed-use: integrate other types of real estate with malls, generating synergies; 4. Organic growth: 46 mall expansions delivered in 44 years; USA malls¹ Multiplan's malls Tenants sales: Multiplan & Brazilian malls Tenants sales USD/sq.f.³ (anchor + satellite stores) - 2017 5. Innovation: constant mix change antecipating consumers need and trendspotting; 6. Efficiency: High productivity, low tenant concentration. Multiplan (2017) Store Segment GLA Distribution USA (2017) ¹ 574 313 Brazilian malls² Multiplan's malls 1 Source: ICSC International Council of Shopping Centers 2 Source: Abrasce Associação Brasileira de Shopping Centers. 3 Source: Bloomberg. 2017 final Exchange rate of R$3.1921/ US$. 15
MULT3 Valuation August 2018
Valuation Analysis Jul 26, 2007 2 LTM NOI 3 of R$205 mn R$8.33/share 4 252,147 sq.m. of owned GLA LTM NOI 1, stock price and owned GLA evolution 1 since IPO NOI: 427% Owned GLA: 154% Share Price: 128% Jul 27, 2018 LTM NOI 5 of R$1,078 mn R$57.00/share 641,238 sq.m. of owned GLA 527 NOI Share Price Owned GLA 254 240 100 jul/07 mai/08 abr/09 fev/10 dez/10 out/11 ago/12 jun/13 abr/14 fev/15 dez/15 nov/16 set/17 jul/18 Source: Multiplan and Bloomberg as of July 27 th, 2018. (1) Considers the 90 days moving average of LTM NOI and owned GLA. (2) July 26 th, 2007 was Multiplan s IPO date. (3) NOI from Oct-06 to Sep-07. (4) Stock price adjusted by the Split. (5) NOI from Jul-17 to Jun-18. 17
Valuation Analysis 150 140 Base 100 as of June 30 th, 2017, ending on July 27 th, 2018 ¹ NTN-B 2024 (Unit Price) MULT3 Stock Price FFO LTM 130 120 110 100 90 80 70 Jun-17 Aug-17 Sep-17 Oct-17 Nov-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jul-18 Source: Tesouro Nacional website, Multiplan and Bloomberg ¹ Initial data on June 30 th, 2017: NTN-B 2024 (Price Unit): R$2,029; MULT3 Stock Price: R$21.77 (adjusted by the Split); FFO LTM: R$482.2 M. Final data on July 27 th, 2018: NTN-B 2024 (Price Unit): R$2,269; MULT3 Stock Price: R$20.00 ; FFO LTM: R$668.9 M. 18
Valuation Analysis 5-year histogram of quarterly yield figures NTN-B 2024 Yield (Gov. Bond) FFO Yield NOI Yield Recent (July 27, 2018) 9 5 6 6 Recent (July 27, 2018) 11 Recent (July 27, 2018) 2 4 1 5 2 1 3 2 5 1 4 1 1 4.1%- 4.5% 4.6%- 5.3% 5.4% 5.5%- 6.2% 6.3%- 6.8% 6.8%- 7.4% 3.5%- 4.3% 4.3%- 4.9% 5.0%- 5.5% 5.6% 5.7%- 6.5% 6.5%- 7.4% 5.3%- 6.3% 6.3%- 7.7% 7.7% 7.6%- 8.3% 8.3%- 9.3% 9.3%- 10.3% Source: Tesouro Nacional website, Multiplan and Bloomberg 19
Results August 2018
Highlights August 2018 Despite economic challenges faced by the country during the second quarter, the Company was able to record robust growth in its main financial performance indicators, as well as sustain solid operating metrics. Tenants Sales Growth (y/y) +8.7% +2.2% Same Store Rent (SSR) Real Growth Occupancy Rate +0.5% +2.7% 97.3% EMPTY FULL 2Q17 2Q7 Average Satellite store sales reached 753 USD/sq.f.¹ on June 30, 2018 (last 12 months). The nominal SSR was R$118/sq.m. per month in, 3.2% higher than 2Q17. Excluding the areas delivered in 2017, the occupancy rate would reach 97.7%. Indebtedness As of June 2018 New Debenture Issued 7.66% Net debt/ EBITDA R$300 Million Average cost of debt 2.27x 107.25% of CDI 6yr-Bullet Net Income +39.4% Recent Initiatives 105 M 2Q17 146 M The Net Income margin reached 47.5% in the quarter, growing 1,067 b.p. over 2Q17. Several projects to improve customer experience are underway by our Digital Innovations team New green parks are being renovated and integrated with our shopping centers Focusing on enhancing stock liquidity, Multiplan s shares were split 3-for-1 as of July 23, 2018. ¹ Considering the 12-month average exchange rate of R$3.3171, from July 1 2017 to June 30, 2018 (Bloomberg). 3
Operational Indicators August 2018 Tenants sales Same Area / Same Store Sales SAS and SSS growth 2.2% 3.0 B 3.2 B 3.2 B 8.7% 3.5 B 3.6 B 2Q14 2Q15 2Q16 2Q17 12.0% 9.3% 5.7% 9.4% 2.8% 8.3% 1.2% 4.3% 4.1% 4.2% 2.3% 1.6% 7.8% 5.6% 6.7% 3.3% 3.2% 2.9% 2Q14 1Q14 2Q15 1Q15 1Q16 2Q16 1Q17 1Q18 2Q17 Same Area Sales Same Store Sales -0.6% -0.8% Occupancy rate 12.9% 12.7% 12.6% Occupancy cost 13.1% 12.9% 12.8% Gross and net delinquency rates EMPTY 97.3% Average FULL 5.3% 5.3% 4.9% 5.3% 5.2% 5.2% 12.8% 13.0% 13.0% 12.9% 5.4% 5.4% 5.2% 5.2% 7.6% 7.5% 7.6% 7.8% 7.7% 7.6% 1.3% 0.9% 7.4% 7.6% 7.8% 7.7% 2013 2014 2015 2016 2017 5-year average 4Q16 2Q17 1Q17 2Q17 3Q17 4Q17 2.4% 3.0% 3.0% 3.0% 2Q17 Jun-17 Jun-18 Gross Delinquency Rate Rent as sales % Other as sales % Net Delinquency Rate 2.7% 1.3% 2.8% 3.3% 2.5% 2.2% 1.1% 2.3% 22
Gross Revenue and Property Ownership Results August 2018 Gross revenue Rental revenue Parking revenue 7.2% 315.0 M 2Q17 337.8 M Services 7.5% Parking 14.4% 1 Others 4.0% Rental 74.0% 238.8 M 2Q17 4.7% 250.1 M 45.9 M 2Q17 6.0% 48.7 M Same Store Rent SSR Real SSR Growth: -1.7% -3.3% -2.2% -2.4% -1.0% 0.5% 1.3% 2.0% 2.5% Real SSR recovery 2.7% 7.5% 5.8% 9.3% 6.0% 10.8% 10.7% 8.4% 8.1% 00000000000 9.8% 8.7% 8.6% 8.1% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 6.7% 5.3% 4.8% 2.8% Same Store Rent (SSR) growth (y/y) x% IGP-DI inflation adjustments on contracts (y/y) x% SSR real growth/decline (y/y) 3.6% 1.1% 3Q17 4Q17 1Q18 3.2% 0.5% ¹ Others includes key money, real estate for sale, straight-line effect and other revenues 23
1,200. 0M 1,000. 0M 80. 0M 60. 0M 40. 0M 20. 0M - Evolution of G&A and as % of net revenue Operating and Financial Results Share-based compensations and stock price (R$) August 2018 Shopping center expenses and as % os shopping center revenues 1 34.1 M 13.3% 38.6 M 26.1 M 65.32 3.3 M 66.30 24.5 M 73.33 65.32 70.90 68.68 24.5 M 73.33 70.90 57.00 68.68-0.2% 32.6 M 32.6 M 12.0% 12.6% 3.3 M (9.1 M) (1.7 M) (1.7 M) 12.5% 11.9% 2Q17 2016 2017 (9.1 M) (28.5 M) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q17 3Q17 4Q17 1Q18 Share-based compensations Stock price 2Q17 2016 2017 Net Operating Income NOI and margin CAGR: 9.4% 5.9% 4.9% 902.7 M 946.3 M 1,018.3 M 1,078.0 M 260.5 M 88.6% 273.3 M 89.0% 753.2 M 86.1% 88.5% 88.1% 87.2% 88.1% jun/14 (12M) jun/15 (12M) jun/16 (12M) jun/17 (12M) jun/18 (12M) 2Q17 ¹ Shopping center rental and parking revenues. 2016 2017 Jun-14 NOI Jun-15 Jun-16 NOI margin Jun-17 Jun-18 24
Operating and Financial Results August 2018 EBITDA and margin (%) Net income and margin (%) FFO and margin (%) 21.2% 212.3 M 74.9% 257.3 M 84.0% 104.5 M 36.9% 39.4% 145.7 M 47.5% 160.4 M 56.6% 35.0% 216.6 M 70.7% 2Q17 2016 2017 Operational margins 2Q17 2016 2017 2Q17 Financial margins 2016 2017 86.1% 722,116 sq.m. 88.1% 75.5% Owned GLA growth: 13.4% 46.5% 722,116 sq.m. 55.1% 37.4% 65.5% 30.5% 636,663 sq.m. 636,663 sq.m. Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Owned GLA NOI Margin EBITDA Margin Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Owned GLA FFO Margin Net Income Margin 25
Debt and Cash August 2018 Evolution of Net Debt-to-EBITDA Financial expenses and coverage ratio 1 4.00x 3.00x 2.00x 2.39x 2.40x 2.40x 2.35x 2.35x2.34x 2.34x 2.33x 2.33x 2.27x 1.00x Mar-17 Jun-17 Jun-17 Sep-17 Sep-17 Dec-17 Dec-17Mar-18 Mar-18 Jun-18 Lowest covenant (4.00x) 231.9 M 226.9 M 199.8 M 3.55x 3.62x 4.13x Jun-17 Sep-17 Dec-17 172.7 M 156.6 M 5.04x Mar-18 5.85x Jun-18 Lowest covenant (2.00x) Net Financial Expenses EBITDA / Net Financial Expenses Debt Indexes on June 30, 2018 Weighted average cost of funding (% p.a.) TR 31.5% 2 Others 1.5% CDI 67.0% 13.75% 14.25% 14.25% 14.25% 14.25% 14.25% 13.75% 12.25% 10.61% 12.29% 12.81% 13.09% 13.22% 13.23% 13.50% 13.18% 12.18% 9.18% 8.24% 7.79% 10.25% 7.66% 8.25% 6.50% 7.00% 6.50% Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Multiplan Cost of Funding (gross debt) Selic Rate 1 EBITDA and Net Financial Expenses are the sum of the last 12 months. 2 Others include IPCA, IGP-M and other indexes. 26
Debt and Cash Multiplan s debt amortization schedule on June 30, 2018 Cash (Jun-18) FFO 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 1 226 M 87 M 28 M 30 M 33 M 36 M 39 M 10 M 394 M 433 M 414 M 422 M 418 M 493 M 669 M 6 th Debenture Issue Amount: R$300,000,000.00 Settlement date: June 11, 2018 Final price: 107.25% CDI p.a. Rating: braaa by S&P Maturity: May 2024 (6-Yr Bullet) Covenants: Net Debt/EBITDA 4.0 Interest Coverage 2.0 984 M 1 Debt amortization schedule from Jul-18 to Dec-18. 27
IR Contact Armando d Almeida Neto CFO and IRO Hans Melchers Investor Relations and Planning Director Franco Carrion Investor Relations Manager Leandro Vignero Investor Relations Analyst Nathalia Boiseaux Investor Relations Analyst Tel.: +55 (21) 3031-5600 Fax: +55 (21) 3031-5322 E-mail: ri@multiplan.com.br ir.multiplan.com.br