Parque Arauco S.a. · BCS:PARAUCO

Parque Arauco — Q3 2018 Earnings Presentation

41 slides from Parque Arauco's earnings presentation, December 2018

  1. Slide 1: Investor Presentation Third Quarter 2018

    parque arauco Investor Presentation Third Quarter 2018 1 INVESTOR PRESENTATION [Third Quarter 2018] CONTACTS Tori Creighton (Head of Investor Relations) Francisco Moyano (Corporate Finance Manager) Claudio Chamorro (Chief Financial Officer) Tel: (562) 22990510 | Email: [email protected]

  2. Slide 2: Important Disclaimer

    « parque arauco Investor Presentation Third Quarter 2018 IMPORTANT DISCLAIMER This document has been prepared by The information contained herein has been Parque Arauco for the purpose of providing prepared to assist interested parties in general information about the Company. making their own evalu

  3. Slide 3: Introduction, Investment Highlights, Our Operations, Future Development

    parque arauco Investor Presentation Third Quarter 2018 « 3 4 INTRODUCTION 16 INVESTMENT HIGHLIGHTS 11 OUR OPERATIONS 35 FUTURE DEVELOPMENT

  4. Slide 4: 1. Introduction

    parque arauco Investor Presentation Third Quarter 2018 4 1. INTRODUCTION

  5. Slide 5: Parque Arauco at a Glance

    parque arauco Investor Presentation PARQUE ARAUCO Third Quarter 2018 AT A GLANCE FINANCIAL INDICATORS (SEPTEMBER 2018) POSITIVE LOCAL RISK RATING Parque Arauco is a real estate company Key Figures Total Risk Rating Agency Rating dedicated to the development and GLA (m2) 1,030,500 Fitch AA- operation

  6. Slide 6: In the Last Six Years Parque Arauco Has Doubled GLA, NOI and AFFO

    parque arauco Investor Presentation IN THE LAST SIX YEARS Third Quarter 2018 PARQUE ARAUCO HAS DOUBLED GLA, NOI AND AFFO GLA M2 1982 Parque Arauco Kennedy opens as first shopping center in Chile 2014 Capital increase for US$182 MM 1995 Parque Arauco S.A. IPO +1.8X 2015 Purchase of minority sharehold

  7. Slide 7: Purpose, Mission and Corporate Values

    PURPOSE, MISSION parque arauco Investor Presentation Third Quarter 2018 AND CORPORATE VALUES OUR VALUES CORPORATE PURPOSE « Our purpose is to create spaces that contribute to improving people’s lives. Openness va to change and inno tion MISSION « Our mission is to be leaders in developing and operat

  8. Slide 8: 2. Our Operations

    parque arauco Investor Presentation Third Quarter 2018 8 2. OUR OPERATIONS

  9. Slide 9: Iconic and Dominant Shopping Centers in Chile, Peru and Colombia

    PARQUE ARAUCO HAS ICONIC AND DOMINANT parque arauco Investor Presentation Third Quarter 2018 SHOPPING CENTERS IN CHILE, PERU AND COLOMBIA PARQUE ARAUCO KENNEDY ARAUCO MAIPÚ ARAUCO ESTACIÓN CHILE CHILE CHILE 9 LARCOMAR MEGAPLAZA NORTE PARQUE LA COLINA PERU PERU COLOMBIA

  10. Slide 10: Chilean Portfolio

    parque arauco Investor Presentation Third Quarter 2018 CHILEAN PORTFOLIO % Owned Year of Chile GLA (m2) Ownership GLA (m2) Occupancy incorporation IN CHILE PARQUE ARAUCO HAS: Parque Arauco Kennedy 111,000 100% 111,000 99.1% 1982 Arauco Maipú 72,500 100% 72,500 98.8% 1993 7 Regional shopping centers

  11. Slide 11: Peruvian Portfolio

    parque arauco Investor Presentation Third Quarter 2018 PERUVIAN PORTFOLIO % Owned Year of Peru GLA (m2) Ownership GLA (m2) Occupancy incorporation IN PERU PARQUE ARAUCO HAS: MegaPlaza Norte 109,500 50% 54,750 98.3% 2006 MegaPlaza Express Villa Chorrillos 8,000 50% 4,000 97.4% 2009 6 Regional shoppin

  12. Slide 12: Colombian Portfolio

    parque arauco Investor Presentation Third Quarter 2018 COLOMBIAN PORTFOLIO % Owned GLA Year of IN COLOMBIA PARQUE ARAUCO HAS: Colombia GLA (m2) Ownership (m2) Occupancy incorporation Parque Arboleda 41,000 55% 22,550 96.5% 2010 3 Regional shopping centers Parque Caracoli Parque La Colina 38,500 62,5

  13. Slide 13: 3. Investment Highlights

    parque arauco Investor Presentation Third Quarter 2018 13 3. INVESTMENT HIGHLIGHTS

  14. Slide 14: Investment Highlights

    parque arauco Investor Presentation Third Quarter 2018 INVESTMENT HIGHLIGHTS 5. Financial Strength 1. Stability 14 4. Sustainability and 2. Diversification Corporate Governance 3. Growth

  15. Slide 15: Stability: Revenue Type and Contract Duration

    « STABILITY REVENUE TYPE AND CONTRACT DURATION parque arauco Investor Presentation Third Quarter 2018 FIXED VS VARIABLE RENTAL REVENUES CONTRACT LENGTH (BASED ON % OF REVENUES) 14 % 40% 100% Other revenues 5.7 86 % 40% of our contracts Rental have a duration of more revenues 11% than 4 years and the

  16. Slide 16: Consistent Same Store Growth and Healthy Occupancy Cost

    « STABILITY CONSISTENT SAME STORE GROWTH AND HEALTHY OCCUPANCY COST parque arauco Investor Presentation Third Quarter 2018 SAME STORE SALES (SSS) Y SAME STORE RENT (SSR) (%) OCCUPANCY COST (%) 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 11.4 10.7 10.9 10

  17. Slide 17: Results Have Been Positive in All Three Countries

    « STABILITY RESULTS HAVE BEEN POSITIVE IN ALL THREE COUNTRIES parque arauco Investor Presentation Third Quarter 2018 GLA TENANT SALES 1 COUNTRY LEVEL COUNTRY LEVEL (M2) (US$ MM) REVENUES1 (US$ MM) EBITDA1,2 (US$ MM) +2.4% +0.5% +4.6% +4.8% 455,500 466,500 1,751 1,742 176 129 168 123 CHILE 17 3Q17 3Q

  18. Slide 18: Focus on Capital Cities

    « STABILITY FOCUS ON CAPITAL CITIES parque arauco Investor Presentation Third Quarter 2018 Parque Arauco is concentrated inthe capital cities of Santiago, Lima and Bogota. PERU CHILE COLOMBIA LIMA SANTIAGO BOGOTA 18 Megaplaza Norte Parque Arauco Kennedy Parque La Colina Larcomar Arauco Maipú Premium

  19. Slide 19: Diversification by Country, Format and Socio-Economic Level

    « DIVERSIFICATION PARQUE ARAUCO DIVERSIFIES ITS MARKET RISKS parque arauco Investor Presentation Third Quarter 2018 AT A COUNTRY, FORMAT, AND SOCIO-ECONOMIC LEVEL COUNTRY LEVEL DIVERSIFICATION FORMAT LEVEL DIVERSIFICATION SOCIO-ECONOMIC DIVERSIFICATION (% REVENUES) (% REVENUES) (% REVENUES) 13% 5% 7

  20. Slide 20: Parque Arauco Operates in Three Attractive Economies

    « DIVERSIFICATION PARQUE ARAUCO OPERATES IN THREE ATTRACTIVE ECONOMIES parque arauco Investor Presentation Third Quarter 2018 GDP GROWTH POPULATION (MILLIONS) 49.3 49.8 4.0% 48.7 3.7% 3.4% 2.7% 31.5 31.8 32.2 2.5% 1.9% 1.6% 1.8% 18.6 1.5% 18.2 18.4 20 2016 2017 2018f 2016 2017 2018f 2016 2017 2018f

  21. Slide 21: Diversifies Its Portfolio with New Real Estate Formats

    « DIVERSIFICATION parque arauco Investor Presentation Third Quarter 2018 PARQUE ARAUCO DIVERSIFIES ITS PORTFOLIO WITH NEW REAL ESTATE FORMATS SOME OF THE OUTLETS CURRENTLY IN OUR PORTFOLIO ARAUCO PREMIUM OUTLET ARAUCO PREMIUM OUTLET ARAUCO PREMIUM OUTLET BUENAVENTURA CONCEPCIÓN CURAUMA CHILE CHILE C

  22. Slide 22: Diversification via Mixed-Use Properties

    « DIVERSIFICATION DIVERSIFICATION VIA MIXED-USE PROPERTIES parque arauco Investor Presentation Third Quarter 2018 • Generate synergy between formats • Densify strategic locations in urban areas RATIONALE • Respond to each area’s different client needs • Follow new trends toward creating spaces that

  23. Slide 23: 1 Million m2 and 2% Market Participation in Latin America

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 PARQUE ARAUCO HAS 1 MILLION M2 AND A 2% MARKET PARTICIPATION IN LATIN AMERICAN AND A 9% MARKET PARTICIPATION IN THE ANDEAN REGION MÉXICO 18.4 GLA: Million m2 39% of total ANDEAN REGION 23 11.1 GLA: Million m2 24% of total BRASIL 15.4 GL

  24. Slide 24: The Latin American Real Estate Region Is Quickly Developing

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 THE LATIN AMERICAN REAL ESTATE REGION IS QUICKLY DEVELOPING Walmart sells 10 assets in Chile for ~US$ 650 million to insurance com- First condominium First condominium Inauguration of pany mall in Peru: Risso mall in Colombia: Mexico’s

  25. Slide 25: Growth from Greenfield Projects, M&A and Minority Interest Purchases

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 PARQUE ARAUCO’S GROWTH HAS COME FROM GREENFIELD PROJECTS, M&A AND MINORITY INTEREST PURCHASES TOTAL INVESTMENT (US$ MM) 175 -18 1,376 305 4% Landbank 25 13% M&A 348 13% Minority Interest 25 192 70% Greenfields 234 and expansions 139 201

  26. Slide 26: Our Value Creation Spread Is Approximately 3%

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 OUR VALUE CREATION SPREAD IS APPROXIMATELY 3% 3% 8% 5% 26 26 WACC Spread Over WACC Cap Rate Source: Parque Arauco

  27. Slide 27: Total Return

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 TOTAL RETURN Parque Arauco’s value creation is proven by the fact that it has had one of the highest “Total Return” of the real estate sector in the last years. TOTAL RETURN 1, LAST 5 YEARS TOTAL RETURN 1, LAST 10 YEARS ANNUALIZED, LOCA

  28. Slide 28: Supporting the Globalization of Brands Entering the Andean Region

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 PARQUE ARAUCO IS SUPPORTING THE GLOBALIZATION OF SEVERAL BRANDS ENTERING THE ANDEAN REGION RETAIL PRESENCE BY COUNTRY FIRST OPENINGS IN CHILE (% OF GLOBAL BRANDS IN COUNTRY) 1 53.0 52.7 44.0 27.5 23.1 21.3 28 13.2 9.9 8.7 il at es do m

  29. Slide 29: Innovating in a New Business Environment

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 INNOVATING IN A NEW BUSINESS ENVIRONMENT TOTAL RETAIL SALES GROWTH 1 PARQUE ARAUCO IS INVESTING IN TECHNOLOGY 4.0% 4.0% 2.8% 2.1% 2.3% 2.0% 1.7% 1.4% 1.5% USA Chile, Perú, Colombia 0.0% 2013 2014 2015 2016 2017 Digital New New Directori

  30. Slide 30: Countries with Growing Retail Markets

    « GROWTH parque arauco Investor Presentation Third Quarter 2018 PARQUE ARAUCO PARTICIPATES IN COUNTRIES WITH GROWING RETAIL MARKETS ROOM FOR GROWTH IN EMERGING ECONOMIES 1 AT KEARNEY GRDI WINDOW OF OPPORTUNITY2 OPENING PEAKING MATURING CLOSING 2,500 250,000 Brazil Mexico 2,000 200,000 Colombia Chile

  31. Slide 31: Important Recognitions from Local and International Organizations

    « SUSTAINABILITY & CORPORATE GOVERNANCE parque arauco Investor Presentation Third Quarter 2018 PARQUE ARAUCO HAS RECEIVED IMPORTANT RECOGNITIONS FROM LOCAL AND INTERNATIONAL ORGANIZATIONS WORKPLACE RECOGNITION MANAGEMENT RECOGNITION 31 Parque Arauco was recognized by Great Place 1 st place ranking i

  32. Slide 32: Advancing Our Sustainability Strategy

    « SUSTAINABILITY & CORPORATE GOVERNANCE parque arauco Investor Presentation Third Quarter 2018 IN THE LAST YEARS WE HAVE CONTINUED ADVANCING OUR SUSTAINABILITY STRATEGY 2018 SUSTAINABILITY AGENDA GENERATING SOCIAL VALUE COMMITMENT AND LEADERSHIP IN DECISION Develop programs and initiatives MAKING th

  33. Slide 33: Financing Policy of 50% Debt and 50% Equity, Within Covenants

    « FINANCIAL STRENGTH parque arauco Investor Presentation Third Quarter 2018 PARQUE ARAUCO’S POLICY IS TO FINANCE PROJECTS WITH 50% DEBT AND 50% EQUITY, AND IS COMFORTABLY WITHIN ALL ITS COVENANTS LIABILITIES / EQUITY NET FINANCIAL DEBT / EQUITY _< 1.40x _< 1.50x 1.18x 1.21x 1.20x 1.15x 0.89x 0.81x 3

  34. Slide 34: Conservative Debt Structure

    « FINANCIAL STRENGTH CONSERVATIVE DEBT STRUCTURE parque arauco Investor Presentation Third Quarter 2018 LIABILITY AMORTIZACION PROFILE AND DURATION (MM USD) 1 204 DEBT LOCAL 183 DURATION RATING 121 116 6.0 Fitch: AA- years Feller: AA- 85 ICR: AA- 64 51 47 RENTAL 34 49 50 46 47 48 39 43 43 CONTRACT L

  35. Slide 35: The Cost of Debt Has Decreased in the Past 5 Years

    « FINANCIAL STRENGTH THE COST OF DEBT HAS DECREASED IMPORTANTLY IN THE PAST 5 YEARS parque arauco Investor Presentation Third Quarter 2018 DATE: 04 / 17 / 2015 BASE: 1.62 % DATE: 08 / 30 / 2018 SPREAD: 1.68 % BASE: 1.59 % RATE: 3.30 % SPREAD: 0.75% DURATION: 14.77 GENERIC LONG-TERM BOND RATE 2.34% D

  36. Slide 36: 4. Future Developments

    parque arauco Investor Presentation Third Quarter 2018 36 4. FUTURE DEVELOPMENTS

  37. Slide 37: Future Developments

    parque arauco FUTURE DEVELOPMENTS Investor Presentation Third Quarter 2018 ESTIMATED TOTAL TOTAL TOTAL GLA TOTAL GLA NEW PROJECTS TYPE COUNTRY FORMAT OPENING % OWNERSHIP INVESTMENT INVESTMENT M² M² DATE LOCAL CURRENCY¹ MUSD2 Arauco Express Coquimbo Development Chile Strip Center 4Q18 3,000 53% 1,590

  38. Slide 38: Landbank

    LANDBANK parque arauco Investor Presentation Third Quarter 2018 TOTAL COST LANDBANK BY TOTAL COST (SEPTEMBER 2018) % TOTAL COST NAME M 2 (LOCAL OWNERSHIP (US$ MM)2 CURRENCY) 1 Quilicura 25,486 100% 78,000 3 Buenaventura 115,864 100% 455,000 19 33% Chicureo 47,614 100% 206,000 9 Los Andes 39,254 100%

  39. Slide 39: MegaPlaza Business Combination

    parque arauco MEGAPLAZA BUSINESS COMBINATION Investor Presentation Third Quarter 2018 Total GLA City (m2) Occupancy MegaPlaza Norte Lima 109,500 98.3% MegaPlaza Express Villa Chorrillos Lima 8,000 97.4% MegaPlaza is a Peruvian shopping center company, which began its MegaPlaza Chimbote Chimbote 28,0

  40. Slide 40: Glossary

    « parque arauco Investor Presentation Third Quarter 2018 GLOSSARY ADJUSTED FFO MARGIN: AFFO / revenues GREENFIELD PROJECTS: Organic development of PIPELINE: Greenfield and expansion projects under new shopping centers development AFFO: Adjusted Funds From Operations: Net Profit Depreciation & Amorti

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