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Investor Presentation FEBRUARY 2017
CONTACTS SARAH INMON (HEAD OF INVESTOR RELATIONS) | EDUARDO PEREZ MARCHANT (CORPORATE FINANCE MANAGER) TEL: (562) 22990510- 1| EMAIL: - [email protected] 2
disclaimer
This document has been prepared by Parque Arauco for the purpose of providing general infor- mation about the Company. The Company assumes no responsibility for, or makes any represen- tation or warranty, express or implied, with respect to, the accuracy, adequacy or completeness of the information contained herein. The Company expressly disclaims any liability based on such information, errors therein or omissions therefrom.
This presentation includes certain statements, estimates and forecasts provided by the Company with respect to it’s anticipated future performance and involves significant elements or subjec- tive judgment and analysis that may or may not prove to be accurate or correct. There can be no assurance that these statements, estimates and forecasts will be attained and actual outcomes and results may differ materially from what is estimated or forecast herein.
The information contained herein has been prepared to assist interested parties in making their own evaluation of the company and does not purport to be all - inclusive or to contain all the infor- mation that a potential counterparty may desire. In all cases, interested parties should conduct their own independent investigation and analysis of the Company. Interested parties can only rely on the result of their own investigation and the representations and warranties made in any definitive agreement that may be executed.
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INTRODUCTION
OUR OPERATIONS
INVESTMENT HIGHLIGHTS
FUTURE DEVELOPMENTS
- 3 - INTRODUCTION Parque Arauco at a glance
parque arauco OPERATIONAL METRICS BY COUNTRY
Parque Arauco is the third largest shopping center operator in Chile , the Peru second largest Peru, and the fourth largest in Colombia. 38.9% Peru 30.9% Indicator/ Country CHILE PERU COLOMBIA TOTAL Colombia 14.6% Total GLA (m2)1 454,000 380,000 143,000 977,000 TOTAL GLA1 TOTAL 2 Owned GLA 383,108 270,000 124,775 777,883 977,000 m2 REVENUES US$MM 237 Revenues 2016 (US$MM)2 147 73 17 237 46.5% 62.1% Colombia # of Operations 26 18 3 46 Chile Chile 7.0%
Shareholder structure (December 2016)
5% 2% Others Local Mutual Funds 26% Controlling Group OPERATIONAL METRICS BY FORMAT
24% Neighborhood Neighborhood 3 Outlet Foreign MARKET CAP 9.9% Outlet 5.3% investment 5.2% Funds US$MM 2,020 6.2% Strip center 5% 4.0% Said Yarur Family Strip center 4.0% 3% 1 TOTAL Abumohor Family TOTAL GLA 2 2 13% 977,000 m REVENUES 22% Local pension Local brokers Funds US$MM 237 79.9% 85.5% Daily Traded Volume 2016: US$MM 1.8 Regional Regional
Source: Parque Arauco (1) Does not include Marina Arauco nor Mall Center Curicó (2) Revenues from January 2016- December 2016. Exchange rate: US$= CLP 676.74 (3) Source: Bloomberg 5
INTRODUCTION In the last five years Parque Arauco has doubled GLA, revenues and EBITDA
(1) 2 GLA m 1982 Parque Arauco Kennedy opens as first shopping center in Chile 1993 Arauco Maipu inaugurates in Santiago +2.0X 1995 Parque Arauco S.A. IPO 1997 Inauguration of Marina Arauco in Viña del Mar, Chile 947,000 2006 Parque Arauco expands into Peru with the purchase of a 45% stake in MegaPlaza Norte in Lima 728,500 818,500 2008 Parque Arauco acquires Arauco Estación in Santiago, Chile 693,100 2010 Parque Arauco opens first mall in Colombia, Parque Arboleda in 559,700 479,200 Pereira 2011 Capital increase for US$145 MM 2012 Parque Arauco enters outlet format in Chile by acquiring Arauco Premium Outlet Buenaventura 2014 Capital increase for US$182 MM 2015 Purchase of minority shareholders in Colombia and Peru 2011 2012 2013 2014 2015 2016 2016 Capital increase for US$100 MM
Revenues(1) US$ MM EBITDA(1) US$ MM
+1.9X +1.8X
237 163 148 185 215 126
158 109 137 96 127 91
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
Source: Parque Arauco. Exchange Rate: US$= 676,74 (1) Does not include Marina Arauco nor Mall Center Curicó nor Mall Costa Pacífico in Coronel. - 5 - 6 INTRODUCTION The spread over the cost of capital of our last projects is approximately 3%
9% 6%
3%
Real WACC (2) Spread Over Real WACC Real Cap Rate(1)
Source: Parque Arauco (1) Real caprate is the yield on cost rate averaged by amount invested and considers the following properties: Arauco Express Calama, Arauco Express Ciudad Empresarial I, Arauco Express Colón, Arauco Express Huechuraba, Arauco Express Irarrázaval, Arauco Express Las Brujas, Arauco Express Luis Pasteur, Arauco Express Manuel Montt, Arauco Express Palmares, Arauco Premium Outlet Buenaventura, Arauco Premium Outlet Curauma, Arauco Premium Outlet San Pedro, Arauco Premium Outlet Coqumbo, Arauco Quilicura, MegaPlaza Chimbote, MegaPlaza Express Villa El Salvador, MegaPlaza Express Chincha, InOutlet Faucett, Viamix Chorrillos, Viamix Las Malvinas, InOutlet Premium Lurín, MegaPlaza Cañete, MegaPlaza Express Barranca, MegaPlaza Pisco, El Quinde Cajamarca, El Quinde Ica, Plaza Jesús María, Parque Caracolí. (2) Weighted Average Cost of Capital 7
INTRODUCTION 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 Return1, last 5 years Total Return1, last 15 years Annualized, local currency Annualized, local currency
17% 16% 16% Falabella 18% 15% 14% 14% 13% Parque Arauco 18% 12% 11% 10% 10% Simon 18% 8% 7% Taubman 16%
Macerich 13% 4% 3%
1% Keplierre 13% -2% -7% General Growth 10%
Intu IPSA 9% IPSA Simon Unibail S&P 500 Aliansce Falabella Iguatemi Keplierre Macerich Taubman Multiplan Fibra Uno Fibra Hammerson 8% Hammerson Parque Arauco Arauco Parque
General Growth S&P 500 7%
BR Malls Intu 3% Cencosud
Source: Bloomberg (1) Total return includes dividends as of December 31,2016. - 7 -
Intu INTRODUCTION Revenue type and contract duration
FIXED VS VARIABLE RENTAL REVENUES CONTRACT LENGTH as of December 30, 2016 (BASED ON º/º OF revenues) Other Revenues 15%
85%
Rental Revenues 39% 100%
10% Variable Revenues 10% 15% 41%
‹2 YEARS 2-3 YEARS 3-4 YEARS ›4 YEARS TOTAL 85% Fixed Revenues
OUR RENTAL REVENUES ARE DERIVED PRIMARILY 39 º/ OF OUR CONTRACTS HAVE A DURATION OF MORE º FROM FIXED CONTRACTS AND ARE PROTECTED AGAINST INFLATION THAN 4 YEARS AND THE AVERAGE LENGTH IS 6.5 YEARS 9
INTRODUCTION
OUR OPERATIONS
INVESTMENT HIGHLIGHTS
FUTURE DEVELOPMENTS
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OUR OPERATIONS Portfolio Parque Arauco has iconic and dominant shopping centers in Chile, Peru and Colombia PARQUE ARAUCO KENNEDY - CHILE ARAUCO MAIPÚ - CHILE LARCOMAR - PERÚ
LA COLINA- COLOMBIA MEGAPLAZA NORTE - PERÚ ARAUCO ESTACIÓN - CHILE
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OUR OPERATIONS Portfolio
Parque arauco is concentrated in Santiago and Lima, which makes the company a “market specialist” in these cities
Antofagasta
Coquimbo Cajamarca
Santiago Lima
San Antonio Chillán Cañete Pisco Quilicura Buenaventura Arequipa Concepción Outlet MegaPlaza Norte Kennedy Plaza Jesús María
Maipú InOutlet Faucett Estación Central Larcomar Villa Chorrillos Villa El Salvador
InOutlet Premium Lurín
SANTIAGO1: 58% DEL NOI DE PARQUE ARAUCO LIMA1: 19% DEL NOI DE PARQUE ARAUCO
Source: Parque Arauco (1) Santiago represents 90% of the NOI of Chile and Lima represents 65% of the NOI of Peru. NOI: Net Operating Income: Ingresos ordinarios + Costo de ventas + Gastos de Administración - Depreciación y- Amortización 11 - + NOI Empresas relacionadas 12 OUR OPERATIONS Chile Portfolio
Parque Arauco has 6 regional shopping centers, 4 outlets and 14 strip centers in Chile. the average age of the portfolio is 17 years.
Year of 2 Owned GLA GLA (m ) % Ownership 2 Occupancy (m ) incorporation Antofagasta
Parque Arauco Kennedy 113,500 100% 113,500 98.6% 1982 Coquimbo
Arauco Maipú 73,500 100% 73,500 99.0% 1993 Santiago Arauco Chillán 32,000 100% 32,000 100.0% 2007 San Antonio Arauco Estación 66,500 83% 55,195 97.4% 2008 Chillán Arauco San Antonio 28,500 51% 14,535 94.2% 2009 Quilicura Buenaventura Arauco Express 33,000 53% 17,378 84.9% 2012 Concepción Outlet Kennedy Arauco Premium Outlets(1) 45,000 100% 45,000 92.4% 2012 Maipú Arauco Quilicura 32,000 100% 32,000 99.8% 2013 Estación Central
Mall Costa Pacífico 30,000 100% 30,000 N/A 2017
Total Chile 454,000 84% 413,108 96.7%
Source: Parque Arauco (1) Arauco Premium Outlet has four outlets located in Santiago, Concepción, Coquimbo and Curauma. (2) Arauco Express has 14 Stripcenters in Chile: 11 strip centers in Santiago, 1 in Viña del Mar, 1 in Calama, and 1 in Antofagasta.
- 12 - 13 OUR OPERATIONS perú Portfolio
In Peru in the company has 6 regional shopping centers and 8 neighborhood shopping centers, 2 outlets and 2 strip centers. The average age of the portfolio is 5 years.
Year of 2 1 Owned GLA GLA (m ) % Ownership 2 Occupancy (m ) incorporation
MegaPlaza Norte 110,000 50% 55,000 98.9% 2006 Cajamarca MegaPlaza Express Villa Chorrillos 8,000 50% 4,000 96.6% 2009
Larcomar 26,500 100% 26,500 92.7% 2010 Lima Parque Lambramani 29,500 100% 29,500 88.0% 2010
MegaPlaza Chimbote 28,000 50% 14,000 95.5% 2012 Ica Cañete MegaPlaza Express Villa El Salvador 9,500 50% 4,750 98.3% 2012 Pisco MegaPlaza Express Chincha 9,000 50% 4,500 76.1% 2013 Arequipa MegaPlaza Norte InOutlet and Viamix(2) 22,500 100% 22,500 68.7% 2013 Plaza Jesús María InOutlet Faucett MegaPlaza Cañete 16,500 50% 8,250 98.0% 2013 Larcomar MegaPlaza Express Barranca 10,000 50% 5,000 98.8% 2013 Villa Chorrillos Villa El Salvador MegaPlaza Pisco 14,500 50% 7,250 95.3% 2015 InOutlet Premium Lurín El Quinde Cajamarca 30,500 100% 30,500 92.8% 2015
El Quinde Ica 36,500 100% 36,500 96.5% 2015
Plaza Jesús María 14,500 100% 14,500 75.6% 2016
MegaPlaza Jaén 14,500 50% 7,250 82.7% 2016
Total Perú 380,000 71% 270,000 92.6%
Source: Parque Arauco (1)Only parnter in Peru is Grupo Wiese, which includes MegaPlaza formats (50%). (2) InOutlet and Viamix includes two premium outlet malls in Lima and two strip centers in Lima. - 13 - 14 OUR OPERATIONS COLOMBIA Portfolio
Parque Arauco has 3 regional shopping centers in Colombia and the average age of the portfolio is 3 years
Owned GLA Year of Bucamaranga GLA (m2) % Ownership Occupancy (m2) incorporation Pereira
Parque Arboleda 40,500 55% 22,275 95.7% 2010 Bogotá Parque Caracoli 38,500 100% 38,500 88.4% 2013
Parque La Colina 64,000 100% 64,000 N/A 2016
Total Colombia 143,000 87% 124,775 91.6%
Source: Parque Arauco
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INTRODUCTION
OUR OPERATIONS
INVESTMENT HIGHLIGHTS
FUTURE DEVELOPMENTS
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6. 1. Important growth Strong results in a challenging opportunities. macroeconomic environment.
5. 2. Conservative debt investment Stable and diversified revenues structure and outstanding highlights financial performance.
4. 3. Solid corporate governance Strong commercial relationships with local and increased concern with and global businesses. sustainability
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STRONG RESULTS IN A CHALLENGING MACROECONOMIC ENVIRONMENT Positive but weaker macroeconomic outlook and attractive industry dynamics Parque Arauco is positioned in countries with strong macroeconomic prospects
GDP Growth Retail Sales Growth 8.2% 7.4% 7.6% 7.1% 7.2% 6.0% 5.9% 4.5% 4.9% 4.9% 3.9% 3.3% 3.3% 2.5% 2.8% 2.3% 2.2% 1.6%
2015 2016 2017f 2015 2016 2017f 2015 2016 2017f 2014 2015 2016 2014 2015 2016 2014 2015 2016 Chile Peru Colombia Chile Peru Colombia
Population (Millions) GDP Per Capita, PPP 48.7 47.7 48.2 23,507 23,969 Av. Latam: 23,025 41.7 30.8 31.1 31.5 13,430 13,836 14,161 Av. Latam: 12,124 12,518 13,019 15,078 17.8 18.0 18.2
2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Chile Peru Colombia Chile Peru Colombia
Source: GDP Growth, Population and GDP Per Capita: International Monetary Fund, Consumption: Euromonitor.
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STRONG RESULTS IN A CHALLENGING MACROECONOMIC ENVIRONMENT Results have been positive in all three countries
GLA1 Tenant sales2 Revenues2 NOI2
+3.5% +9.0% +8.7% +10.0%
424,000 1,024,996 409,500 99,417 88,850 940,488 91,479 80,802 Chile
2015 2016 2015 2016 2015 2016 2015 2016
1Q1 +6.7% +12.1% +16.4% +12.6%
2,749,836 380,000 244,318 189,124 337,500 2,577,202 PERU 217,877 163,124
2015 2016 2015 2016 2015 2016 2015 2016
+100.0% +7.6% +9.4% +14.7%
143,000 376,439 44,446 33,346 349,727 40,614 29,080 COLOMBIA 71,500
2015 2016 2015 2016 2015 2016 2015 2016 (1) GLA in Chile does not include Mall Costa Pacífico. - 18 - (2) Chile in MMCLP, Peru in MSoles and Colombia in MMCOP. (2) Not including overhead expenses (Corporate headquarters, regional Services Center, Chile Division, Peru Division and Colombia Division) 19
STABLE AND DIVERSIFIED REVENUES Strong Same Store Growth and a Healthy Occupancy Cost
CHILE SAME STORE SALES / CH % CHILE SAME STORE RENT / CH % CHILE OCCUPANCY COST
7.7 7.2 6.8 10.1% 10.0% 5.8 6.2 54% 5.5 Others 4.3 4.1 2.6 2.7 46% Anchor Stores
4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 4Q16
PERU SAME STORE SALES1 / CH % PERU SAME STORE RENT1 / CH % PERU OCCUPANCY COST 9.3
6.8 5.8 4.6 36% 3.8 7.2% Others 3.0 6.7% 2.2 2.0 1.6 64% Anchor 0.4 Stores 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 4Q16
COLOMBIA SAME STORE SALES / CH % COLOMBIA SAME STORE RENT / CH % COLOMBIA OCCUPANCY COST 12.5 11.5 11.2 9.2 9.6% 8.6 8.3 8.4 9.2% 5.7 69% 5.3 5.5 Others
31% Anchor Stores 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 4Q16
1) Peru’s Same Store Sales and Same Store Rent in 4Q16 do not include Larcomar due to contingencies. - 19 - 20
STABLE AND DIVERSIFIED REVENUES Parque Arauco diversifies its market risks at a country, format, and socio-economic level
Country level diversification (º/º revenues) Format level Diversification (º/º revenues) Neighborhood 7.0% 5.3% Outlet Colombia 5.2% Strip center 30.9% 4.0% Peru
85.5% Regional 62.1% Chile
socio-economic level diversification (º/º revenues)
48 10 100
42
Medium to High Medium Income: Medium to Low Income: Includes Includes C3 and D in Income: Includes ABC1 and C2 in Chile, Chile, C and D E in Chile and Peru A and B in Peru and 6, in Peru and 3 in and 2 and 1 in 5 and 4 in Colombia Colombia Colombia
Source: Parque Arauco. Based on socio-economic composition of community in which malls are located. - 20 - 21
STABLE AND DIVERSIFIED REVENUES With a 39% market share in Chile, Parque Arauco is the market leader in the outlet format in the Andean region
Outlets currently in our portfolio
Arauco Premium Outlet Buenaventura, Chile Arauco Premium Outlet Concepción, Chile
Keys to the Premium Outlet Format
(1) Location Arauco Premium Outlet Curauma, Chile InOutlet Faucett, Perú Located near main cities
(2) Brands Premium name-brands
(3) Discounts More than 30% discount
InOutlet Premium Outlet Lurin, Perú Arauco Premium Outlet Coquimbo, Chile
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STRONG COMMERCIAL RELATIONSHIPS WITH LOCAL AND GLOBAL BRANDS Consolidated commercial relationships with well-known tenants
Total GLA Years as a Tenant Malls Country (m2) client
CHILE 11 PERU 96.554 35 Anchor COLOMBIA CHILE 10 74.548 35 Stores PERU
CHILE 5 48.050 12 PERU
CHILE 33.011 16 4 PERU
CHILE 4 PERU 8.934 18 COLOMBIA CHILE 18 PERU 7.316 11 Non Anchor COLOMBIA CHILE Stores 12 PERU 6.058 9 Colombia
CHILE 14 PERU 2.307 14 COLOMBIA
Source: Parque Arauco - 22 - 23
STRONG COMMERCIAL RELATIONSHIPS WITH LOCAL AND GLOBAL BRANDS Parque Arauco is supporting the globalization of several brands entering the Andean region
NEW TENANTS PARQUE ARAUCO KENNEDY IN THE LAST 5 YEARS:
NOMBRE GLA NOMBRE GLA 80% of new GLA leased in Parque FOREVER 21 1,639 ETIQUETA NEGRA 209 Arauco Kennedy over the last TOP SHOP 464 MICHAEL KORS 208 5 years has been leased to UNDER ARMOUR 445 RALPH LAUREN 207
LOUIS VUITTON 420 TORY BURCH 201 international brands.
GUCCI 406 ERMENEGILDO ZEGNA 197
BANANA REPUBLIC 363 ENTEL 190 Many brands have opened their AMERICAN EAGLE 351 ARTE ISABEL ANINAT 161 first store in Chile in Parque Arauco AEROPOSTALE 342 VICTORIA´S SECRET 129 Kennedy during the last five years DOLCE & GABBANA 316 ETAM 123 including Tiffany & Co., Dolce & BURBERRY 276 MILK 117 Gabbana, Forever 21, Bath & Body Works, EMPORIO ARMANI 247 CANELA HOME & DECOR 105 Tory Burch, Victoria’s Secret,Omega, SALVATORE FERRAGAMO 241 METRO CUADRADO 114 Versace Collection, Vince Camuto, and TIFFANY & CO 219 JUSTICE 104 BCBG. EL VOLCAN 218 BATH & BODY WORKS 103 BOLD 214 OCTOBER 102
OTHERS 3,020
TOTAL 14.956
International Local - 23 - 24
SOLID CORPORATE GOVERNANCE AND INCREASED CONCERN WITH SUSTAINABILITY Parque Arauco has received important recognitions from local and international organizations
workplace Recognition Management recognition
Parque Arauco was recognized by Best Capital Markets Strategy: Great Place to Work in Chile and Andes in 2016. Peru in 2016.
Investor Relations recognition Sustainability REcognition
Best Investor Relations In 2016, Parque Arauco is part of the Dow Jones Department for Mid-Size Emerging Market Sustainability Index. We are companies according to the first Latin American real estate company to Santander and Revista Capital in be part of this prestigious index. 2016.
Source: Parque Arauco - 24 - 25
SOLID CORPORATE GOVERNANCE AND INCREASED CONCERN WITH SUSTAINABILITY In the last year we have continued advancing on our sustainability strategy
ESG workstreams
• Baseline measurement: Environmental assessment and definition of baseline carbon emissions in Chile, Peru and Colombia • Sustainable Construction: Sustainable building criteria applied in InOutlet Lurín in Peru and Parque La Colina in Environment Colombia • Environmentally friendly operation: Environmental experts visited assets in Chile, Peru and Colombia, providing a diagnostic report and improvement recommendations
• Communication with neighboring communities: Community relations strategy advancement • Cultural activities: Hosting cultural activities in our malls social • Social spaces: Providing spaces to social organizations • Donations: Definition of corporate donation policy
• Talent attraction: Attract and retain talent through working conditions • Risk management: Corporate Creation of a risk executive committee to identify, evaluate and manage risks governance • Ethical behavior: Important ethical behavior campaign, including virtual games with ethical dilemmas in Chile, Peru and Colombia
Source: Parque Arauco - 25 - 26
CONSERVATIVE DEBT STRUCTURE AND OUTSTANDING FINANCIAL PERFORMANCE 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
1.15x 1.18x
0.89x 0.76x 0.72x 0.87x 0.81x 0.78x 0.59x 0.47x 0.41x 0.43x
2011 2012 2013 2014 2015 3Q16 2011 2012 2013 2014 2015 3Q16
ebitda/financial expenses net financial debt/EBITDA 5.87x 5.88x 3.89x 3.84x 5.00x 3.42x 3.31x 3.33x 4.25x 3.85x 3.04x 3.34x
> 2.50x
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
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CONSERVATIVE DEBT STRUCTURE AND OUTSTANDING FINANCIAL PERFORMANCE During the last 24 months, the Company has improved its debt rating, eliminated debt in Dollars, and considerably increased the duration of its liabilities
Liability amortization profile and duration2 IMPROVEMENT IN LOCAL DEBT RATING Fitch: AA- Feller: AA- ICR:AA- DECEMBER 2014 (US$MM)
5.0 years 1 196
168
116 BBB- BBB BBB+ A- A A+ AA- AA AA+ 106 94
35 25 22 Summary of debt by currency 9 0
0-3 4-6 7-12 13-24 25-36 37-48 49-60 6-10 11-20 21-35 CLP 54% 7% months months months months months months months years years years UF 68% 5% CLP UF DEC. 16% PEN DEC. 16% PEN DECEMBER 2016 (US$MM) 2014 2016 1 6.7 years 300 14% USD 11% COP 186 9% COP 158 138 128 95 Summary of debt rates 74 88 93% Fixed 23 6 7% 4% DEC. Variable DEC. Variable 0-3 4-6 7-12 13-24 25-36 37-48 49-60 6-10 11-20 21-35 months months months months months months months years years years 2014 2016 96% Source: Parque Arauco Fixed (1) Average age (2) Does not include accrued interests and the exchange rate is at the close of December 31, 2016. - 27 - 28
ONSERVATIVE DEBT STRUCTURE AND OUTSTANDING FINANCIAL PERFORMANCE The cost of debt has decreased importantly in the past 5 years
Date: 12-12-2014 Date: 04-17-2015 Base: 1.66% Base: 1.62% Spread: 1.74% Spread: 1.68% Duration: 14.3 Duration: 14.77 Date: 10-12-2016 Base: 1.46% Spread: 1.02% Duration: 12.71
Generic long-term bond issued by Parque Arauco in Chile
The cost of debt of Parque Arauco has decreased 160 points from 4.1% to 2.5%
The spread five years ago had collateral agreements, while the current spread is unsecured with no collateral.
Source: Risk America - 28 - 29
IMPORTANT GROWTH OPPORTUNITIES Parque Arauco has 0.9 million m2 and a 2% market participation in Latin American and a 8% market participation in the Andean Region.
LATIN AMERICA GLA: 45.5 million m2
BRAZIL MEXICO GLA: 14.7 million de m2 GLA: 17.4 million m2 32% of total 38% of total
ANDEAN REGION GLA: 11.3 million m2 25% of total
Indicator CHILE PERU COLOMBIA
Total GLA (th) 3,600 2,100 5,600 GLA Parque Arauco (th) 424 380 143 ARGENTINA
Market Share 12% 18% 3% 2 Rank #3 #2 #4 GLA: 2.1 million m 5% of total
Source: Prepared using information published by the International Council of Shopping Centers (ICSC)., and Parque Arauco analysis - 29 - 30
IMPORTANT GROWTH OPPORTUNITIES Parque Arauco participates in markets with a growing retail market
GDP Per Person vs. GLA per 1,000 inhabitants1
2,500
USA 2,000
1,500 Canada AT Kearney GRDI1 window of opportunity 1,000
South Africa 500 Portugal Spain Opening Peaking Maturing Closing Mexico Chile France GLA per 1,000 habitants Colombia Brazil Italy Brasil - Peru 5,000 Argentina 50,000 Mexico Colombia Peru GDP per person, PPP (log scale) Chile
500
400 South Africa
Portugal 300 (1) Global Retail Development Index
200 Chile Mexico 100 Colombia Brazil GLA per 1,000 habitants Peru Argentina - 10,000 20,000 30,000 40,000 GDP per person, PPP
(1) Source: International Council of Shopping Centers, World Bank - 30 - 31
IMPORTANT GROWTH OPPORTUNITIES Parque Arauco’s growth has come from greenfield projects and M&A
128,500 947,000
90,000
37,400 132,858
69% Greenfields 80,242 650,643 m2 27,676 91,625
24,595 83,708
55,651 194,745
31% M&A 296,357 m2
Total Total Total Total Total Total Total Total Total Total New Total GLA GLA GLA GLA GLA GLA GLA GLA GLA GLA GLA GLA in 2006 in 2007 in 2008 in 2009 in 2010 in 2011 in 2012 in 2013 in 2014 in 2015 in 2016 2016
Greenfield M&A - 31 - 32
INTRODUCTION
OUR OPERATIONS
INVESTMENT HIGHLIGHTS
FUTURE DEVELOPMENTS
- 32 - 33 Future Developments 2016 and Onwards Parque Arauco has announced projects that will add 228,000 m2 of GLA over the next few years and will require an investment of US$ 819 million.
Estimated Total GLA Owned GLA Total Investment Total Investment Type Country Format % Ownership New Projects Opening Date m2 m2 in local currency1 USDMM2 Parque Angamos Greenfield Chile Neighborhood 1H18 11,000 55% 6,050 886,000 35 MegaPlaza Villa El Salvador II Greenfield Peru Neighborhood 2H17 11,000 50% 5,500 36,000 11 MegaPlaza Express Huaral Greenfield Peru Neighborhood 1Q17 16,500 50% 8,250 38,000 11 Various Projects SCP Greenfield Peru Neighborhood 2H18 19,500 100% 19,500 180,000 54 Viamix Colonial Greenfield Peru Strip Center 1Q17 3,000 100% 3,000 25,000 7 Arauco Premium Outlet Bogotá Greenfield Colombia Outlet 1H17 13,000 100% 13,000 78,000 26 Subtotal 74,000 55,300 144 Estimated Total GLA Owned GLA Total Investment Total Investment Type Country Format % Ownership expansions Opening Date m2 m2 in local currency1 USDMM2 Parque Arauco Kennedy Expansion2 Expansion Chile Regional / Hotel 2H21 11,000 100% 11,000 5,355,000 211 Renovación Parque Lambramani Renovation Peru Regional 2H17 N/A 100% N/A 39,500 12 Hotel Bucaramanga Expansion Colombia Hotel 2H17 N/A 100% N/A 17,500 6 Subtotal 11,000 11,000 229 Total GLA Owned GLA Total Investment Total Investment Type Country Format Oeening Date % Ownership projects incorporated in 2016 m2 m2 in local currency1 USDMM1 Mall Costa Pacífico Acquisition Chile Regional 1Q17 30,000 100% 30,000 1,520,000 60 Parque La Colina Greenfield Colombia Regional 4Q16 64,000 100% 64,00 672,000 224 Arauco Express Antofagasta Greenfield Chile Strip Center 4Q16 6,000 53% 3,160 320,000 13 Viamix Chorrillos Expansion Expansion Peru Strip Center 4Q16 1,500 100% 1,500 9,500 3 MegaPlaza Norte Libertadores Expansion Expansion Peru Regional 4Q16 9,500 50% 4,750 53,000 16 Megaplaza Norte Cine Conquistadores Expansion Expansion Peru Regional 2Q16 7,500 50% 3,750 38,000 11 Arauco Express Ciudad Empresarial II Greenfield Chile Strip Center 2Q16 4,500 53% 2,370 319,000 13 MegaPlaza Express Jaen Greenfield Peru Neighborhood 2Q16 14,500 50% 7,250 47,000 14 MegaPlaza Chimbote Minority Interest Minority Interest Peru N/A 2Q16 N/A N/A 4,620 28,600 9 Inmobiliaria Viña del Mar Minority Interest Minority Interest Chile N/A 2Q16 N/A N/A N/A 2,137,500 84 Arauco Premium Outlet Coquimbo Greenfield Chile Outlet 1Q16 6,000 100% 6,000 309,000 12 Arauco Express Recoleta Greenfield Chile Strip Center 1Q16 3,500 53% 1,843 115,000 5 MegaPlaza Chimbote Expansion Expansion Peru Regional 1Q16 2,500 50% 1,250 9,000 3 InOutlet Premium Lurín Greenfield Peru Outlet 1Q16 8,500 100% 8,500 76,000 23 Plaza Jesús María Acquisition Peru Neighborhood 1Q16 14,000 100% 14,000 53,500 16 Subtotal 173,000 149.372 506 Total 258,000 215,672 879 Remaining investment as of December 31, 2016 311 1) Projects in Chile in UF, in Peru in ThPEN and in Colombia in MCOP 2) Exchange rate as of December 31, 2016: 226,347.1 CLP/UF, 669.5 CLP/USD, 3,00.3 COP/USD, 3.4 PEN/USD. - 33 - 2) In addition to the 11,000 m2, this expansion includes a 401 room Hilton by Hilton Hotel and largest hotel convention center in Santiago. 34
Parque La Colina was inaugurated in December 2016
Committed brands:
- 34 - 35
We announced a new expansion of Parque Arauco Kennedy
Hotel Operator:
Project Details:
Investment: 5,355,000 UF 5-star hotel: Hilton by Hilton Rooms: 401 Convention center: 3,000 m2 Parking spots: 700 Additional GLA: 11,000 m2 - The project will have the first five star Hilton hotel in Chile, a convention center, as well as the incorporation of new stores and more parking. - The five star Hilton hotel will have 401 rooms, two restaurants, three bars, two pools, a gym and an executive lounge. It will have the largest hotel convention center in the country, with the possibility of hosting over 2,800 people. - The expansion will include a new flagship Falabella store with almost 25,000 m2 of GLA. This store will occupy the first four floors of the expansion.
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Landbank
Total Cost Total Cost name M2 % Ownership (Local Currency)1 (USD MM) Quilicura 25,486 100% 78,000 3 Buenaventura 115,864 100% 455,000 18 Chicureo 47,614 100% 206,000 8 Los Andes 39,254 100% 117,000 5 Others in Chile 55,567 100% 445,000 17 Total Chile 293,785 100% 1,301,000 51 Parque El Golf - San Isidro 14,790 70% 109,000 32 Chimbote 42,657 100% 18,000 5 Talara 30,675 100% 9,400 3 Ica 12,643 100% 13,500 4 Chiclayo 6,608 100% 6,300 2 Others MegaPlaza 211,417 50% 115,000 34 Total Peru 318,790 65% 271,200 81 Neiva 49,537 100% 18,000 6 Valledupar 46,000 100% 30,000 10 Barranquilla 56,166 100% 76,000 25 Total Colombia 151,703 100% 124,000 41 Total 754,278 86% 171 1) Landbank in Chile in UF, in Peru in ThPEN and in Colombia in MCOP
The company also has a valuable landbank which will serve as the base for future development.
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Glossary
Adjusted FFO Margin - AFFO / revenues weighted by average occupancy for the period AFFO -Adjusted Funds From Operations: Net Profit - Depreciation Monthly Sales/m2 -Monthly tenant sales divided by GLA weighted & Amortization - Other Income/expenses - Share of Profit (Loss) by average occupancy for the period of Associates Accounted - Foreign Exchange Differences - Income Neighborhood Mall -A shopping mall with a GLA between 6,000 (Loss) for indexed assets and liabilities - Gains (losses) from the and 20,000 m2 difference between the previous book value and the fair value of financial assets - Deferred tax+ Associates accounted Adjusted Net income margin -Net profit / revenues FFO NOI -Net Operating Income: Revenues + Cost of Sales + Controlling Adjusted FFO -AFFO attributable to the shareholders Administration Expenses - Depreciation & Amortization of the company + Associates accounted NOI Controlling FFO -FFO attributable to the shareholders of the Occupancy -GLA paying rent divided by total GLA company Occupancy cost -Minimum rent, plus variable rent, plus common EBITDA - Earnings Before Income Tax Depreciation and expenses, plus a promotion fund that the tenants pay Parque Amortization: Revenues + Cost of Sales + Administration Expenses Arauco divided by the sales of the tenant. - Depreciation and Amortization Owned GLA -Total GLA weighted by Parque Arauco’s interest in the EBITDA margin -EBITDA divided by revenues mall EPS -Earnings Per Share: Net income attributable to the equity Pipeline -Greenfield and expansion projects under development holders of the company/weighted average number of shares Premium Outlet - Shopping center located outside of the city outstanding offering name brand clothing and goods for a reduced price FFO -Funds From Operations: Net Profit - Depreciation & Regional Mall - A shopping mall with a GLA over 20,000 m2. Amortization - Share of Profit (Loss) of Associates Accounted + Associates Accounted FFO SSR -Same Store Rent: Percentage change in rent collected from tenants that paid rent in both of the periods compared GLA -Gross Leasable Area. Equivalent to the sum of all the areas available for lease SSS -Same Store Sales: Percentage change in sales from tenants that reported sales in both of the periods compared Green Field Projects - Organic development of new shopping centers Strip Center -A shopping center with a GLA less than 6,000 m2 Landbank -Land held by the company for future development Tenant Sales Tenant sales of the consolidated assets LTM -Refers to information from the last twelve months UF -Unidad de Fomento: A chilean currency unit indexed according to inflation daily Monthly Revenues / m2 -Monthly revenues divided by GLA
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