1
Earnings Release THIRD QUARTER 2016
CONFERENCE CALL DATE: OCTOBER 25, 2016 | TIME: 10:00AM EST / 11:00AM SANTIAGO TIME PARTICIPANTS CALLING FROM: US (TOLL FREE): 1-888-317-6003 | CHILE (TOLL FREE): 1230-020-0479 | INTERNATIONAL: 1-412-317-6061 | PARTICIPANT ELITE ENTRY NUMBER: 3387156 HTTP://SERVICES.CHORUSCALL.COM/LINKS/PARQUE161025.HTML
CONTACTS SARAH INMON (HEAD OF INVESTOR RELATIONS) | EDUARDO PEREZ MARCHANT (CORPORATE FINANCE MANAGER)
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CLAUDIO CHAMORRO CARRIZO (CFO) | TEL: (562) 22990510 | EMAIL:
[email protected]
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Disclaimer This document has been prepared by Parque Arauco for the purpose of providing general information about the company. The Company assumes no responsibility for, or makes any representation 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 its anticipated future performance and involves significant elements or subjective 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 information 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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EXECUTIVE SUMMARY Net profit attributable to the equity holders of the Company
the same quarter of the previous year, amounting to 873,500
increased 43.6% in the third quarter of 2016, amounting to Ch$
m2, due to the incorporation of new assets during the last
11,069 million.
year including Arauco Premium Outlet Coquimbo and the inauguration of MegaPlaza Express Jaén, InOutlet Lurín and
Adjusted Funds From Operations (FFO) of the equity holders
the incorporation of Plaza Jesús María en Perú.
increased 5.4% with respect to 2015, totaling Ch$ 15,813 million.
The consolidated occupancy levels slightly improved to 94.7%
EBITDA increased 6.8% during the third quarter of 2016,
Parque Aruaco became the first real estate company in Latin
compared to the same period the previous year, totaling Ch$
America to enter into the Dow Jones Sustainability Emerging
26,223 million.
Markets Index, which evaluates over 100 social, economic and environment matters.
Revenues during the third quarter of 2016 increased 7.5% with In October the Company issued and placed a 21-year bond with
respect to 2015, totaling Ch$ 38,350 million.
a 10-year grace period for UF 2 million, at a 2.48% yield. The Tenant sales increased 8.4% compared to 2015, amounting to
company also issued and placed a 7-year bond with a 3-year
Ch$ 397,080 million.
grace period, for UF 3 million, with 1.73% yield. These are the lowest yields in the history of the Chilean capital markets for
At the end of the third quarter of 2016, 48.2% of Parque
corporations that are not banks or state-owned companies.
Arauco’s GLA is in Chile, 42.8% in Peru and 9.0% in Colombia. Gross Leasable Area (GLA) increased 7.3% in comparison to
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TABLE OF CONTENTS Financial And Operating Results Balance Sheet Review Cash Flow Review
Highlights By Country 25
14
Future Developments
16
Landbank
Main Financial Indicators Portfolio
5
17
35
Analysis Of Market Risks
19
Property Level Results
31
Case Study
20
37
38
Consolidated Financial Statements
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42
5
statement - consolidated
ands
Financial And Operating Results
consolidated income statement / ThCh$
3Q16
3Q15
Chg. %
LTM Sep. 16
LTM Sep. 15
Chg. %
Revenues
38,350,090
35,668,403
7.5%
156,247,517
141,037,649
10.8%
(+) Cost of sales
(9,387,438)
(8,751,488)
7.3%
(36,501,726)
(33,018,817)
10.5%
28,962,653
26,916,915
7.6%
119,745,791
108,018,832
10.9%
(3,621,906)
(3,141,818)
15.3%
(15,610,496)
(15,433,329)
1.1%
25,340,747
23,775,097
6.6%
104,135,296
92,585,503
12.5%
(882,279)
(778,514)
13.3%
(3,127,244)
(3,308,026)
-5.5%
26,223,026
24,553,611
6.8%
107,262,540
95,893,529
11.9%
(9,560)
(327,527)
-97.1%
(2,564,528)
(2,737,112)
-6.3%
1,292,998
1,269,319
1.9%
5,338,230
3,709,347
43.9%
(8,654,018)
(7,838,337)
10.4%
(33,945,901)
(29,701,317)
14.3%
1,720,518
1,108,126
55.3%
9,854,284
8,773,594
12.3%
(48,403)
(240,666)
-79.9%
(2,504,365)
(3,918,058)
-36.1%
(2,654,767)
(5,553,524)
-52.2%
(13,305,786)
(14,551,477)
-8.6%
-
-
N/A
33,955,291
16,707,834
103.2%
Non-operating income (expenses)
(8,353,232)
(11,582,608)
-27.9%
(3,172,776)
(21,717,189)
-85.4%
Profit before income tax
16,987,515
12,192,488
39.3%
100,962,520
70,868,314
42.5%
(3,641,309)
(2,374,564)
53.3%
(21,540,519)
(10,600,523)
103.2%
13,346,207
9,817,924
35.9%
79,422,001
60,267,791
31.8%
11,069,464
7,709,882
43.6%
66,878,207
57,023,086
17.3%
2,276,742
2,108,042
8.0%
12,543,795
3,244,705
286.6%
13,346,207
9,817,924
35.9%
79,422,001
60,267,791
31.8%
Gross profit (+) Administration expenses Operating income (-) Depreciation & amortization EBITDA (+) Other income (expenses) (+) Financial income (+) Financial expenses (+) Share of profit (loss) of associates accounted (+) Foreign exchange differences (+) Income (loss) for indexed assets and liabilities (+) Gains (losses) from the difference between the previous book value and the fair value of financial assets
(-) Income tax Net profit (loss) Attributable to: Equity holders of the company Minority interests Net profit (loss)
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Financial And Operating Results Key performance indicators
3Q16
3Q15
Chg. %
LTM Sep. 16
LTM Sep. 15
Chg. %
EBITDA margin %
68.4%
68.8%
-46
68.6%
68.0%
66
Net income margin %
34.8%
27.5%
728
50.8%
42.7%
810
NOI (Ch$ million)
29,132
26,339
10.6%
118,347
103,350
14.5%
11,900
8,434
41.1%
70,440
61,170
22.4%
Controlling Adjusted FFO (Ch$ million)
15,813
14,998
5.4%
69,300
57,550
14.5%
Adjusted FFO margin %
50.1%
51.5%
-143
51.6%
43.9%
169
Total tenant sales (Ch$ million)
397,080
366,306
8.4%
1,642.162
1,469,251
11.8%
Total GLA (m2) 3
873,500
814,000
7.3%
873,500
814,000
7.3%
Owned GLA (m )
709,860
627,994
13.0%
709,860
627,994
13.0%
891.70
818.38
9.0%
858.87
816.50
5.2%
12.41
9.42
31.7%
77.89
69.90
11.4%
Stock price (Ch$)
1,486.6
1,194.7
24.4%
1,486.6
1,194.7
24.4%
Daily traded volume (Ch$ million)
1,279.0
1,011.6
26.4%
1,116.3
887.7
25.8%
1
Controlling FFO (Ch$ million)1 1
2
2 3
Weighted average shares (million) EPS (Ch$)
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«During the quarter the company showed a healthy operating income, which will be enhanced with the opening of Parque La Colina in Colombia. Parque Arauco also achieved an exceptional non-operating income, as a result of its recent efforts to reduce its funding costs. Recently, Parque Arauco placed a bond at the lowest yields in the history of the Chilean capital market for non-banking and non-state owned corporations, which will refinance liabilities that were at significantly higher rates. Last but not least, this month we recieved the good news that we are the first Latin American real estate company to enter the Dow Jones Sustainability Emerging Markets Index, one of the world’s most prestigious sustainability indices, which commits us to continue incorporating sustainability as part of our operating management model.» Juan Antonio Álvarez, Executive Vice President
(1) NOI = Revenues + Cost of Sales + Administration Expenses - Depreciation & Amortization + Associates accounted NOI. FFO = Net Profit - Depreciation & Amortization - Share of Profit (Loss) of Associates Accounted + Associates Accounted FFO. FFO Adjusted = Net Profit - Depreciation & Amortization - Other Income/expenses - Share of Profit (Loss) of Associates Accounted - Foreign Exchange Differences - Income (Loss) for indexed assets and liabilities - Gains (losses) from the difference between the previous book value and the fair value of financial assets - Deferred tax+ Associates accounted Adjusted FFO. 2) Total tenant sales = tenant sales (3) GLA of Marina Arauco notincluded. (4) EPS = Net income attributable to the equity holders of the company/weighted average number of shares outstanding
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Financial And Operating Results reconciliation of NOI and FFO CH$ thousands
3Q16
3Q15
Chg. %
LTM Sep. 16
LTM Sep.15
Chg. %
Revenues
38,350,090
35,668,403
7.5%
141,037,649
141,037,649
10.8%
(+) Cost of sales
(9,387,438)
(8,751,488)
7.3%
(33,018,817)
(33,018,817)
10.5%
(+) Administration expenses
(3,621,906)
(3,141,818)
15.3%
(15,433,329)
(15,433,329)
1.1%
(-) Depreciation & amortization
(882,279)
(778,514)
13.3%
(3,308,026)
(3,308,026)
-5.5%
(+) Associates accounted NOI
2,909,162
1,785,215
63.0%
7,456,544
7,456,544
48.7%
NOI
29,132,188
26,338,826
10.6%
103,350,073
103,350,073
14.5%
Net profit (loss)
13,346,207
9,817,925
35.9%
60,267,792
60,267,792
31.8%
(-) Depreciation & amortization
(882,279)
(778,514)
13.3%
(3,308,026)
(3,308,026)
-5.5%
(-) Share of profit (loss) of associates accounted
1,720,518
1,108,126
55.3%
8,773,594
8,773,594
12.3%
(+) Associates accounted FFO
1,753,215
1,170,975
49.7%
6,367,378
6,367,378
66.3%
14,261,183
10,659,288
33.8%
61,169,602
61,169,602
36.1%
2,360,879
2,225,179
6.1%
3,619,204
3,619,204
254.8%
FFO equity holders of the company
11,900,304
8,434,109
41.1%
57,550,397
57,550,397
22.4%
Net profit (loss)
13,346,207
9,817,925
35.9%
60,267,792
60,267,792
31.8%
(-) Depreciation & amortization
(882,279)
(778,514)
13.3%
(3,308,026)
(3,308,026)
-5.5%
(-) Other Income and expenses
(9,560)
(327,527)
-97.1%
(2,737,112)
(2,737,112)
-6.3%
1,720,518
1,108,126
55.3%
8,773,594
8,773,594
12.3%
(48,403)
(240,666)
-79.9%
(3,918,058)
(3,918,058)
-36.1%
(2,654,767)
(5,553,524)
-52.2%
(14,551,477)
(14,551,477)
-8.6%
-
N/A
N/A
16,707,834
16,707,834
103.2%
(1,127,210)
(988,182)
14.1%
(3,532,281)
(3,532,281)
254.9%
2,854,552
1,772,103
61.1%
7,537,752
7,537,752
45.4%
19,202,460
18,370,315
4.5%
70,371,069
70,371,069
14.5%
3,389,112
3,372,636
0.5%
9,216,409
9,216,409
22.7%
15,813,348
14,997,680 - 7 -
5.4%
61,154,661
61,154,661
13.3%
FFO Attributable to: FFO minority interests
(-) Share of profit (loss) of associates accounted (-) Foreign exchange differences (-) Income (loss) for indexed assets and liabilities (-) Gains (losses) from the difference between the previous book value and the fair value of financial assets (-) Deferred tax (+) Associates accounted adjusted FFO Adjusted FFO Adjusted FFO attributable to: Adjusted FFO minority interests Adjusted FFO equity holders of the company
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Financial And Operating Results SSS AND SSR During the third quarter of 2016, Same Store Sales (SSS) increased 7.2% in Chile, 2.0% in Peru and 5.7% in Colombia compared to the same period of the previous year. The Same Store Rent (SSR) showed increases of 6.2% in Chile, 5.8% in Peru and 5.3% in Colombia during the same period. These nominal increases incorporate inflation, which was 3.5% in Chile, 3.0% in Peru and 8.1% in Colombia during
the last twelve months. Considering the previous information, the SSS showed a real growth of 3.7% in Chile, and a decrease in real terms of 1.0% in Peru and 2.4% in Colombia. SSR had a real growth of 2,7% in Chile and 2.8% in Peru, and a decrease in real terms of 2.8% in Colombia.
SAME STORE SALES / CHG. %
SAME STORE RENT / CHG. % 12.5 11.2
11.5
7.7
4.5
5.3
8.4 7.2
6.8 6.1
9.3
9.7
9.2
8.6
6.8 5.7
5.5
6.2
5.8
5.5
5.3 4.3
4.1
3.8
3.0 2.2
2.2 2.0
1.6
3Q15
4Q15
5.8
1Q16
Same Store Sales reflect variations in the tenant sales reported from stores that were in operation in both of the periods being compared.
3Q15
3Q16
2Q16
CHILE
PERU
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4Q15
COLOMBIA
1Q16
2Q16
3Q16
Same Store Rent reflect variations in the rents reported from stores that were in operation in both of the periods being compared.
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Financial And Operating Results Occupancy cost Occupancy Cost is a relevant performance measurement in the real estate industry as it allows the measurement of the financial health of our tenants. This indicator measures the relevance of what tenants pay in rent in relation to their sales. Specifically, it is calculated as the minimum rent, plus variable rent, plus common expenses, plus a promotion fund that the tenants pay Parque Arauco divided by the sales of the tenant.
During the third quarter, occupancy cost remained stable in all three countries, decreasing slightly to 10.5% in Chile, increasing slightly in Peru to 7.5% and increasing slightly to 12.0% in Colombia. The differences between countries are explained mainly by the the relevance of anchor stores in the three countries. In countries where there is an important portion of the GLA rented out to anchor stores, such as Peru, the occupancy cost is lower because anchor stores normally pay a lower rent as a percentage of their sales.
OCCUPANCY COST CHILE 10.9%
3Q15
PERU
COLOMBIA 11.9%
12.0%
3Q15
3Q16
10.5%
3Q16
7.3%
7.5%
3Q15
3Q16
* Occupancy cost calculation: (fixed rent + variable rent + common expenses + promotion fund)/ sales
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Financial and Operating Results Revenues The revenues of the third quarter of 2016 increased 7.5% compared to the same period in the previous year, amounting to Ch$ 38,350 million. The increase is mainly explained by the expansion in GLA, improvements in revenues from fixed rent and by increased sales in from our tenants which resulted in the variable rent growing more than the fixed rent. During the third quarter of 2016, total GLA amounted to 873,500 m2, which represents an increase of 7.3% compared to the previous year. The incorporation of Arauco Premium Outlet Coquimbo, and the
strip center Arauco Express Ciudad Empresarial II in Chile as well as two neighborhood shopping centers in Peru, Plaza Jesús María and MegaPlaza Express Jaen and InOutlet Premium Lurin contributed to the increase in GLA. The consolidated occupancy levels improved slightly, increasing to a consolidated 94.7%. Total tenant sales increased 8.4% in comparison to the same period the previous year amounting to Ch$ 397,080 million.
TENANT SALES (CH$ MILLION) 1
+8.4 %
+11.8 % 397,080
366,309
3Q15 1
Revenues (CH$ Million)
1,469,251
3Q16
LTM Sep. 15
+7.5%
+10.8% 38,350
1,642,162
35,668
3Q15
LTM Sep. 16
3Q16
Tenant sales in Peru and Colombia are expressed in CLP using the following exchange rates: US$ 1 = CLP 680.13; US$ 1 = PEN 3.37; US$ 1 = COP3,063.35.
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156,248 141,038
LTM Sep. 16
LTM Sep.16
11
Financial and Operating Results
In line with our regional expansion strategy, Parque Arauco has increased the importance of GLA and revenues that come from assets located outside of
Peru
Colombia
31.3%
6.1%
Peru
Colombia
31.6%
6.1%
Chile. In fact, during the third quarter of 2016, the GLA of Peru and Colombia represented 51.9% of the
REVENUES BY COUNTRY 3Q16
total GLA. The revenues that come from Peru and Colombia represent 37.4% of the total, a number slightly less than the 37.7% from the third quarter
REVENUES BY COUNTRY 3Q15
of 2015. During the third quarter of 2016 the revenues of Chile were $24,013 million, in Peru Ch$ 11,986 million and in Colombia Ch$ 2,351 million.
Peru
Chile
Chile
62.6%
62.3%
Colombia
31.2%
6.3%
REVENUES BY COUNTRY LTM SEP. 16
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Peru
Colombia
29.8%
7.0%
REVENUES BY COUNTRY LTM SEP. 15 Chile
Chile
62.5%
63.2%
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Financial and Operating Results Third quarter EBITDA was Ch$ 26,223million, increasing 6.8% compared
during the third quarter compared to the same period of the previous
to the third quarter of 2015. The consolidated EBITDA margin was 68.4%,
year. This increased administration expense is mainly explained by a
decreasing with respect to the 68.8% of the same quarter of 2015. The 46
larger provision for doubtful accounts, which is the result of having a
base point fall in margins is mainly due to an increase in administration
positive provision for doubtful accounts in the third quarter of 2015 due to
expenses .
normalization of late rent in Arauco San Antonio.
Cost of sales was Ch$ 9,387 million, 7.3% greater than the total from the same
The sum of the cost of sales and administration expenses increased 9.4%, a
period of the previous year, which increased less than the 7.5% increase in
growth greater than the 7.5% increase in Company revenues in the quarter.
revenues during the period. The lower increase in cost of sales, in relation to revenues, is due mainly to a lower personnel expense. Administration expenses amounted to Ch$ 3,622 million, increasing 15.3%
Peru and Colombia’s contribution to EBITDA improved from 32.4% to 33.3% in the third quarter of 2016, compared to the same quarter in 2015. During the third quarter the EBITDA was Ch$ 17,488 million in Chile, Ch$ 7,606 million in Peru and Ch$ 1,129 million in Colombia.
EBITDA / Ch$ Million +6.8%
+14.1%
Perú
Perú
29.0%
28.7%
Colombia
Colombia
4.3% 26,223 24,554
3Q15
EBITDA BY COUNTRY 3Q16
95,894
3Q16
3.7%
107,263
LTM Sep. 16
LTM Sep. 15 - 12 -
EBITDA BY COUNTRY 3Q15 Chile
Chile
66.7%
67.6%
13
Financial and Operating Results 3Q16
ThCh$
3Q15
Chg. %
LTM Sep.16
LTM Sep. 15
Chg. %
Current taxes
(2,514,099)
(1,386,382)
81.3%
(9,006,205)
(7,068,239)
27.4%
Deffered taxes
(1,127,210)
(988,182)
14.1%
(12,534,314)
(3,532,284)
254.9%
Total taxes
(3,641,309)
(2,374,564)
53.3%
(21,540,519)
(10,600,523)
103.2%
NON OPERATIONAL EXPENSES
Net non-operational expenses during the third quarter of 2016 decreased 27.9%, amounting to Ch$ 8,353 million, compared to the Ch$ 11,583 million from the third quarter of 2015. This decrease is mainly explained by a 52.2% reduction in the account for income (loss) of assets and liabilities during the third quarter of 2016, compared to the same quarter the previous year. This account reflects the effect of inflation on our liabilities indexed to inflation in Chile, and the decrease is explained by an inflation of 0.7% in Chile during the third quarter of 2016, compared to an inflation of 1.5% in Chile during the third quarter of 2015. The favorable non-operational results are also explained by the company’s financial management, which has allowed Parque Arauco reduce its funding costs. In the last twelve months the net financial debt has increased 25.6% amounting to Ch$ 630,217 million. However, in the same period the financial margin, measured as financial income minus financial expenses, increased only 9.2%, amounting to Ch$ 9,947 million. The variation is also explained by a 55.3% increase in the account of share of associated accounted during the third quarter of 2016, compared to the same quarter the previous year, totaling Ch$1,721 million. This important increase occurred due to the solid results of the Company Inmobiliaria Mall Viña del Mar S.A., and due to the fact
that in the beginning the third quarter of 2016 we recognize 50% of the profits of the Company, after acquiring 16.7% of its shares. The account other income (expenses), which is made up mainly of expenses that do not correspond to ordinary recurring activities of the Company, decreased to less than Ch$ 10 million, decreasing 97.1% in comparison to the same quarter last year. Taxes during the last three months increased 55.3% to Ch$ 3.641 million, compared to the Ch$ 2,375 million from the previous year. This increase in taxes is due to an important increase in deferred taxes, which do not represent a cash outflow, but are the consequence of the revaluation of tax assets and liabilities originating from changes in the tax rates in the countries where we operate. Net profit attributable to equity holders of the Company increased 43.6%, and earnings per share increased 32.1% from Ch$ 9.39 to Ch$ 12.41. The total number of shares increased 6.4% to 893,727,050 shares after the capital increase during the first quarter of 2016. Controlled Adjusted Funds From Operations (FFO) for the equity holders of the Company increased by 41.1% during the third quarter amounting to Ch$ 11,900 million, compared to Ch$ 8,434 in the third quarter of 2015. - 13 -
14
Balance Sheet Review Assets Ch$ million
9.30.2016
9.30.2015
Chg. %
Dif.
Current assets
165,594
231,231
-28.4%
-65,637
Non-current assets
1,598,486
1,402,538
14.0%
195,947
Total assets
1,764,080
1,633,769
8.0%
130,311
ASSETS Current assets decreased from Ch$ 231,231 million to Ch$ 165,594 million in the last twelve months, which is explained by a decrease in cash and cash equivalents. Cash and cash equivalents amounted to Ch$ 100,704 million compared to the Ch$ 149,327 million as of September 30, 2015. Non-current assets increased from Ch$ 1,402,538 million as of September 30, 2015 to Ch$ 1,598,485 million. This increase is mainly due to the investment properties account which has had new assets included and the projects under construction during the last twelve months.
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15
Balance Sheet Review LIABILITIES AND EQUITY 9.30.2016
9.30.2015
Chg. %
Current liabilities
137,590
115,780
18.8%
21,809
Non current liabilities
773,420
695,004
11.3%
78,416
Total liabilities
911,010
810,784
12.4%
100,226
Equity
853,070
822,985
3.7%
30,085
1,764,080
1,633,769
8.0%
130,311
Ch$ million
Total liabilities and equity
Dif.
LIABILITIES AND EQUITY Current liabilities increased Ch$ 21,809 million, mainly due to an increase in the current financial liabilities, which increased Ch$ 22,395 million in the last twelve months.
Non-current liabilities increased Ch$ 78,416 million. The increase in non-current liabilities is mainly explained by an increase in other non-current financial liabilities of Ch$ 57,411.
Total equity increased Ch$ 30,085 million mainly due to an increase in the account of issued share capital, which increased Ch$ 71,330 million due to the capital increase finished during the first quarter of 2016.
- 15 -
16
Cash Flow Review Ch$ million
Chg. %
LTM Jun-16
Chg. %
3Q16
3Q15
From operating activities
23,919
12,322
94.1%
94,748
94,662
0.1%
From investment activities
(31,055)
(41,400)
-25.0%
(229,948)
(172,114)
33.6%
From financing activities
(39,289)
25,052
N/A
95,698
95,697
0.0%
310
12,601
N/A
(48,623)
41,073
N/A
Net cash flow during the period
(46,115)
16,627
-98.1%
(9,122)
22,827
N/A
Cash and cash equivalents at beginning of period
146,819
136,726
7.4%
149,328
108,255
37.9%
Cash and cash equivalents at end of period
100,704
149,327
-32.6%
100,704
149,327
-32.6%
Eff. of chg. exchange rate on cash and cash equi.
LTM Jun-15
Operational cash flows increased 94.1% totaling Ch$ 23,919 million in the third quarter of 2016, mainly due to the decrease in the account “other outputs in cash” of Ch$ 7,536 millones. Investment activities during the first semester generated negative cash flows of Ch$ 31,055 million which is explained by the cash flows used to develop and acquire new properties. Also, the financial activities generated negative cash flows of Ch$ 46,115 million, which is explained by loan payments.
- 16 -
17
Main Financial Indicators Financial Indicators
Unit
9.30.2016
9.30.2015
Gross financial debt
Ch$ million
730,921
651,115
Net financial debt
Ch$ million
630,217
501,788
Covenant Limit
Net financial debt / EBITDA (LTM)
times
5.88
5.23
EBITDA / financial expenses (LTM)
times
3.16
3.23
Liabilities / equity
times
1.07
0.99
> _ 2.5 <_ 1.4
Net financial debt / equity
times
0.74
0.61
<_ 1.5
Current liabilities
%
15%
14%
Non current liabilities
%
85%
86%
Net financial debt amounted to Ch$ 630,217 million at the close of the third quarter. The Company continues to comply with its financial covenants, with an indicator of liabilities / equity of 1.07- below the maximum limit of 1.4x; with a ratio of net financial debt / equity of 0.74x- less than the established limit of 1.5x;with an indicator of EBITDA/ financial expanses of 3.16- above the minimum limit of 2.5x, and with an indicator of EBITDA / financial expense reaching 5.88x, an increase that is explained by the payments of debt to finance projects in construction that have not yet begun to generate EBITDA, most notably the debt related to the Parque La Colina Project in Colombia, which we expect to generate EBITDA in the first quarter of 2017.
- 17 -
18
Main Financial Indicators Ch$ million
Units
9.30.2016
9.30.2015
Liquidity level
Current assets / current liabilities
times
1.20
2.00
Short term debt
Current liabilities / total liabilities
%
15.10
14.28
Long term debt
Non current liabilities / total liabilities
%
84.90
85.72
Net profit
Net profit
MCh$
38,904
31,232
Basic EPS
Net profit att. equity holders / N° shares - treasury shares
38.08
32.25
Return on equity
Net profit att. equity holders / average equity 1
%
9.62
8.88
Return on assets
Net profit att. equity holders / average total assets 1
%
4.62
3.81
Return on operating assets
Net profit / average operating assets 2
%
5.99
4.98
Dividend yield
Dividends paid LTM / last share price
%
2.02
2.51
Gross profit margin
Operating profit / revenues
%
65.72
65.71
Ch$
(1) The operational and financial indicators presented are calculated based on standards set out by the superintendencia de valores y seguros, and they don´t necesarrily coincide with the calculations used to calculate the company´s debt covenants. (2) Calculated using results from the last twelve months
- 18 -
19
Portfolio Name
Total GLA m2
Parque Arauco Kennedy
% Ownership
Owned GLA m2
% Occupancy
116,500
100%
116,500
97.8%
73,500
100%
73,500
98.8%
Arauco Chillán
32,000
100%
32,000
99.9%
Arauco Estación
66,000
83%
54,780
97.1%
Arauco San Antonio
28,500
51%
14,535
94.2%
Arauco Express (Strip Centers Chile)
27,000
51%
13,770
84.9%
Arauco Premium Outlets
45,000
100%
45,000
92.3%
Arauco Quilicura
32,000
100%
32,000
99.8%
TOTAL CHILE
420,500
91%
382,085
96.5%
MegaPlaza Norte
104,000
50%
52,000
98.1%
8,000
50%
4,000
94.9%
Larcomar
26,500
100%
26,500
92.7%
Parque Lambramani
29,500
100%
29,500
92.3%
MegaPlaza Chimbote
28,000
50%
14,000
94.3%
MegaPlaza Express Villa El Salvador
9,500
50%
4,750
97.9%
MegaPlaza Express Chincha
9,000
50%
4,500
80.7%
InOutlet y Viamix
22,000
100%
22,000
68.9%
MegaPlaza Cañete
16,500
50%
8,250
98.5%
MegaPlaza Express Barranca
10,000
50%
5,000
98.8%
MegaPlaza Pisco
14,500
50%
7,250
94.3%
El Quinde Cajamarca
31,000
100%
31,000
92.7%
El Quinde Ica
36,500
100%
36,500
97.1%
Plaza Jesús María
14,500
100%
14,500
88.9%
MegaPlaza Express Jaén
14,500
50%
7,250
81.9%
374,000
71%
267,000
93.1%
Parque Arboleda
40,500
55%
22,275
95.7%
Parque Caracolí
38,500
100%
38,500
88.5%
TOTAL COLOMBIA
79,000
77%
60,775
92.2%
873,500
81%
709,860
94.7%
Arauco Maipú 1
MegaPlaza Express Villa
TOTAL PERU
TOTAL
2
- 19 -Arauco not included. (1) GLA and occupancy of Arauco Chillán does not include office tower. (2) GLA of Marina
20
Property Level Results third quarter Chile in MCLP / Peru in THPEN Colombia in MCOP
gla
tenant sales
3Q15
116,500
115,000
1.3%
97,008
92,753
4.6%
10,424
9,791
6.5%
9,823
8,774
12.0%
Arauco Maipú
73,500
75,000
-2.0%
45,834
40,868
12.2%
3,344
3,021
10.7%
3,228
2,954
9.3%
Arauco Chillán
32,000
31,500
1.6%
19,845
17,398
14.1%
1,469
1,348
9.0%
1,230
1,003
22.6%
Arauco Estación
66,000
68,500
-3.6%
29,545
27,535
7.3%
3,832
3,643
5.2%
3,471
3,109
11.6%
Arauco San Antonio
28,500
28,500
0.0%
9,304
7,821
19.0%
1,007
922
9.2%
739
1,430
-48.3%
Arauco Express (Strip Centers Chile)
27,000
18,500
45.9%
7,940
4,717
68.3%
1,068
778
37.2%
806
453
78.2%
Arauco Premium Outlet
45,000
39,000
15.4%
19,931
13,790
44.5%
1,811
1,354
33.7%
1,360
925
47.0%
Arauco Quilicura
32,000
32,000
0.0%
13,563
12,683
6.9%
1,052
970
8.4%
872
838
4.1%
TOTAL CHILE
420,500
408,000
3.1%
242,970
217,565
11.7%
24,007
21,827
10.0%
21,529
19,485
10.5%
MegaPlaza Norte
104,000
110,500
-5.9%
291,328
289,485
0.6%
21,066
20,504
2.7%
18,627
14,204
31.1%
8,000
7,000
14.3%
18,911
17,055
10.9%
1,347
1,228
9.7%
1,027
875
17.3%
Larcomar
26,500
26,000
1.9%
70,986
63,762
11.3%
9,806
8,851
10.8%
6,576
6,414
2.5%
Parque Lambramani
29,500
28,500
3.5%
32,997
37,481
-12.0%
2,860
2,935
-2.6%
1,046
1,320
-20.8%
MegaPlaza Chimbote
28,000
28,000
0.0%
56,945
54,643
4.2%
3,158
2,853
10.7%
2,871
2,547
12.7%
MegaPlaza Express Villa El Salvador
9,500
9,000
5.6%
17,104
16,922
1.1%
1,516
1,487
2.0%
1,189
1,111
7.0%
MegaPlaza Express Chincha
9,000
7,000
28.6%
7,531
6,937
8.6%
1,099
1,143
-3.8%
823
826
-0.4%
InOutlet y Viamix
22,000
11,500
91.3%
33,188
24,306
36.5%
3,590
2,554
40.6%
2,998
1,109
170.3%
MegaPlaza Cañete
16,500
16,500
0.0%
27,022
27,489
-1.7%
1,575
1,565
0.6%
1,242
1,113
11.6%
MegaPlaza Express Barranca
10,000
9,500
5.3%
11,072
10,317
7.3%
1,323
1,265
4.6%
1,029
890
15.6%
MegaPlaza Pisco
14,500
14,000
3.6%
18,993
18,353
3.5%
1,470
1,385
6.1%
1,136
1,095
3.7%
El Quinde Cajamarca
31,000
30,500
1.6%
33,816
34,982
-3.3%
4,236
3,729
13.6%
3,279
2,005
63.6%
El Quinde Ica
36,500
36,500
0.0%
46,727
47,128
-0.9%
4,721
3,895
21.2%
3,809
3,018
26.2%
Plaza Jesús María
14,500
-
N/A
N/A
-
N/A
-
-
N/A
1,016
-
N/A
MegaPlaza Express Jaén
14,500
-
N/A
17,128
-
N/A
-
-
N/A
558
-
N/A
374,000
334,500
11.8%
683,748
648,861
5.4%
61,613
53,393
15.4%
47,225
36,528
29.3%
Parque Arboleda
40,500
33,000
22.7%
49,042
43,856
11.8%
5,649
5,097
10.8%
4,411
3,313
33.2%
Parque Caracolí
38,500
38,500
0.0%
36,014
35,856
0.4%
4,818
4,504
7.0%
3,535
3,109
13.7%
TOTAL COLOMBIA
79,000
71,500
10.5%
85,056
79,712
6.7%
10,467
9,601
9.0%
7,946
6,422
23.7%
MegaPlaza Express Villa
TOTAL PERÚ
Source: Parque Arauco (1) Includes four Premium Outlets located in: Santiago, Concepción, Coquimbo y Curauma (2) Includes 13 strip centers located in: Santiago (11), Viña del Mar(1) y Calama (1)
3Q16
3Q15
Var %
- 20 -
3Q16
EBITDA
3Q16
Parque Arauco Kennedy
Chg. %
revenue 3Q15
Chg. %
3Q16
3Q15
Chg. %
21
Property Level Results third quarter Occupancy
Chile in MCLP / Peru in THPEN Colombia in MCOP
3Q16
3Q15
EBITDA margin Chg. b.p.
3Q16
3Q15
monthly sales per m2 Chg. b.p.
3Q16
3Q15
monthly revenues per m2 Chg. %
3Q16
3Q15
Chg. %
Parque Arauco Kennedy
97.8%
97.6%
17
94.2%
89.6%
462
284,027
275,415
3.1%
30,521
29,072
5.0%
Arauco Maipú
98.8%
96.7%
215
96.5%
97.8%
-126
210,491
187,640
12.2%
15,357
13,869
10.7%
Arauco Chillán
99.9%
96.4%
348
83.7%
74.4%
930
206,955
194,806
6.2%
15,319
15,094
1.5%
Arauco Estación
97.1%
98.0%
-89
90.6%
85.3%
523
153,402
136,850
12.1%
19,896
18,105
9.9%
94.2%
94.4%
-21
73.3%
155.0%
-8,167
115,616
97,267
18.9%
12,519
11,471
9.1%
Arauco Express (Strip Centers Chile)
84.9%
89.2%
-437
75.5%
58.1%
1,735
117,112
95,300
22.9%
15,755
15,726
0.2%
Arauco Premium Outlets
92.3%
84.0%
828
75.1%
68.3%
682
166,577
140,261
18.8%
15,132
13,774
9.9%
Arauco Quilicura
99.8%
99.4%
31
82.9%
86.4%
-343
141,545
132,845
6.5%
10,978
10,164
8.0%
TOTAL CHILE
96.5%
95.7%
86
89.7%
89.3%
41
200,548
186,147
7.7%
19,815
18,675
6.1%
MegaPlaza Norte
98.1%
93.7%
438
88.4%
69.3%
1,915
956
932
2.6%
69
66
4.8%
MegaPlaza Express Villa
94.9%
98.3%
-336
76.2%
71.3%
492
830
826
0.5%
59
60
-0.6%
Larcomar
92.7%
89.1%
359
67.1%
72.5%
-542
973
894
8.8%
134
124
8.3%
Parque Lambramani
92.3%
86.3%
594
36.6%
45.0%
-840
405
490
-17.4%
35
38
-8.6%
MegaPlaza Chimbote
94.3%
98.9%
-462
90.9%
89.3%
164
715
658
8.7%
40
34
15.4%
MegaPlaza Express Villa El Salvador
97.9%
98.4%
-47
78.4%
74.7%
369
612
637
-3.9%
54
56
-3.0%
MegaPlaza Express Chincha
80.7%
98.0%
-1,730
74.9%
72.3%
258
345
337
2.3%
50
56
-9.4%
InOutlet y Viamix
68.9%
79.0%
-1,015
83.5%
43.4%
4,009
724
872
-17.0%
78
92
-14.5%
MegaPlaza Cañete
98.5%
98.9%
-44
78.9%
71.1%
774
554
561
-1.4%
32
32
1.0%
MegaPlaza Express Barranca
98.8%
98.0%
80
77.8%
70.4%
744
374
369
1.2%
45
45
-1.4%
MegaPlaza Pisco
94.3%
95.8%
-150
77.3%
79.1%
-177
463
456
1.6%
36
34
4.2%
El Quinde Cajamarca
92.7%
90.8%
186
77.4%
53.8%
2,365
393
416
-5.6%
49
44
10.9%
El Quinde Ica
97.1%
92.9%
419
80.7%
77.5%
319
440
468
-6.1%
44
39
14.8%
Plaza Jesús María
88.9%
-
N/A
43.8%
-
N/A
N/A
-
N/A
60
-
N/A
MegaPlaza Express Jaén
81.9%
-
N/A
36.5%
-
N/A
82
-
N/A
43
-
N/A
TOTAL PERU
93.1%
93.1%
3
76.6%
68.4%
824
642
691
-7.1%
59
57
3.9%
Parque Arboleda
95.7%
89.5%
616
78.1%
65.0%
1,310
422,029
485,380
-13.1%
48,613
56,414
-13.8%
Parque Caracolí
88.5%
90.4%
-185
73.4%
69.0%
432
347,400
350,247
-0.8%
46,479
43,995
5.6%
TOTAL COLOMBIA
92.2%
90.0%
221
75.9%
66.9%
902
386,843
413,600
-6.5%
47,607
49,817
-4.4%
Arauco San Antonio 1
2
Source: Parque Arauco (1) Includes four Premium Outlets located in: Santiago, Concepción, Coquimbo y Curauma (2) Includes 13 strip centers located in: Santiago (11), Viña del Mar(1) y Calama (1)
- 21 -
22
Property Level Results last twelve months
GLA
Chile in MCLP / Peru in THPEN Colombia in MCOP
Tenant Sales Chg. %
Revenues LTM Jun-15
Chg. %
43,571
40,958
6.4%
40,908
38,029
7.6%
10.3%
13,923
12,609
10.4%
13,601
12,328
10.3%
71,806
14.6%
6,060
5,060
19.8%
4,867
3,769
29.1%
121,968
113,226
7.7%
15,284
14,200
7.6%
13,977
12,554
11.3%
0.0%
38,705
34,769
11.3%
4,075
3,773
8.0%
2,753
2,738
0.5%
18,500
45.9%
25,925
16,826
54.1%
3,692
3,156
17.0%
2,418
1,762
37.2%
45,000
39,000
15.4%
80,192
54,041
48.4%
7,133
5,133
39.0%
5,366
3,706
44.8%
32,000
32,000
0.0%
55,428
49,877
11.1%
4,157
3,821
8.8%
3,345
3,203
4.4%
TOTAL CHILE
420,500
408,000
3.1%
1,009,219
907,166
11.2%
97,896
88,710
10.4%
87,235
78,090
11.7%
MegaPlaza Norte
104,000
110,500
-5.9%
1,174,790
1,151,816
2.0%
86,338
83,736
3.1%
75,120
65,538
14.6%
8,000
7,000
14.3%
74,348
66,639
11.6%
5,541
4,860
14.0%
4,157
3,781
9.9%
Larcomar
26,500
26,000
1.9%
268,008
241,377
11.0%
39,274
36,478
7.7%
27,093
24,739
9.5%
Parque Lambramani
29,500
28,500
3.5%
138,964
146,926
-5.4%
11,672
12,184
-4.2%
4,082
5,857
-30.3%
MegaPlaza Chimbote
28,000
28,000
0.0%
229,281
214,254
7.0%
12,896
11,141
15.8%
11,160
9,744
14.5%
MegaPlaza Express Villa El Salvador
9,500
9,000
5.6%
68,799
67,539
1.9%
6,175
6,224
-0.8%
4,852
4,844
0.2%
MegaPlaza Express Chincha
9,000
7,000
28.6%
30,399
29,135
4.3%
4,553
4,651
-2.1%
3,308
3,472
-4.7%
InOutlet y Viamix
22,000
11,500
91.3%
124,224
88,231
40.8%
13,610
9,445
44.1%
10,347
7,334
41.1%
MegaPlaza Cañete
16,500
16,500
0.0%
114,357
111,284
2.8%
6,478
6,476
0.0%
4,646
4,570
1.7%
MegaPlaza Express Barranca
10,000
9,500
5.3%
44,724
39,762
12.5%
5,349
4,886
9.5%
3,824
3,556
7.6%
MegaPlaza Pisco
14,500
14,000
3.6%
76,921
42,781
79.8%
5,879
2,936
100.2%
4,447
2,182
103.8%
El Quinde Cajamarca
31,000
30,500
1.6%
140,718
92,748
51.7%
16,162
10,075
60.4%
11,764
6,850
71.7%
El Quinde Ica
36,500
36,500
0.0%
205,696
124,284
65.5%
19,626
11,201
75.2%
16,055
9,257
73.4%
Plaza Jesús María
14,500
-
N/A
N/A
-
N/A
-
-
N/A
1,447
-
N/A
MegaPlaza Express Jaén
14,500
-
N/A
30,570
-
N/A
-
-
N/A
892
-
N/A
374,000
334,500
11.8%
2,721,799
2,416,777
12.6%
238,937
204,294
17.0%
183,193
151,724
20.7%
Parque Arboleda
40,500
33,000
22.7%
215,841
187,837
14.9%
23,510
20,742
13.3%
18,600
15,425
20.6%
Parque Caracolí
38,500
38,500
0.0%
159,056
145,380
9.4%
20,037
18,654
7.4%
13,810
13,045
5.9%
TOTAL COLOMBIA
79,000
71,500
10.5%
374,897
333,217
12.5%
43,548
39,395
10.5%
32,409
28,471
13.8%
LTM Jun-16
LTM Jun-15
116,500
115,000
1.3%
410,961
390,889
5.1%
Arauco Maipú
73,500
75,000
-2.0%
193,759
175,732
Arauco Chillán
32,000
31,500
1.6%
82,281
Arauco Estación
66,000
68,500
-3.6%
28,500
28,500
Arauco Express (Strip Centers Chile)
27,000
Arauco Premium Outlet Arauco Quilicura
Parque Arauco Kennedy
Arauco San Antonio 1
2
MegaPlaza Express Villa
TOTAL PERU
LTM Jun-16
Source: Parque Arauco (1) Includes four Premium Outlets located in: Santiago, Concepción, Coquimbo y Curauma (2) Includes 13 strip centers located in: Santiago (11), Viña del Mar(1) y Calama (1)
LTM Jun-15
Chg. %
EBITDA
- 22 -
LTM Jun-16
LTM Jun-16
LTM Jun-15
Chg. %
23
Property Level Results last twelve months occupancy
Chile en mmCLP/ Perú en mPEN / Colombia en mmCOP
LTM Jun-16
LTM Jun-15
EBITDA margin Chg. b.p.
LTM Jun-16
LTM Jun-15
Monthly Sales Per m2 Chg. b.p.
LTM Jun-16
LTM Jun-15
Monthly REvenues Per m2
Chg. %
LTM Jun-16
LTM Jun-15
Chg. %
Parque Arauco Kennedy
97.8%
97.6%
17
93.9%
92.8%
104
301,816
290,377
3.9%
31,999
30,426
5.2%
Arauco Maipú
98.8%
96.7%
215
97.7%
97.8%
-8
222,751
202,206
10.2%
16,007
14,509
10.3%
Arauco Chillán
99.9%
96.4%
348
80.3%
74.5%
583
218,494
203,616
7.3%
16,093
14,348
12.2%
Arauco Estación
97.1%
98.0%
-89
91.5%
88.4%
304
155,487
140,983
10.3%
19,484
17,681
10.2%
94.2%
94.4%
-21
67.5%
72.6%
-502
120,140
108,652
10.6%
12,649
11,792
7.3%
Arauco Express (Strip Centers Chile)
84.9%
89.2%
-437
65.5%
55.8%
964
106,684
87,406
22.1%
15,193
16,395
-7.3%
Arauco Premium Outlets
92.3%
84.0%
828
75.2%
72.2%
302
202,531
158,069
28.1%
18,015
15,013
20.0%
Arauco Quilicura
99.8%
99.4%
31
80.5%
83.8%
-338
173,106
131,399
31.7%
12,984
10,067
29.0%
TOTAL CHILE
96.5%
95.7%
86
89.1%
88.0%
108
211,766
196,998
7.5%
20,542
19,264
6.6%
MegaPlaza Norte
98.1%
93.7%
438
87.0%
78.3%
874
953
930
2.5%
70
68
3.6%
MegaPlaza Express Villa
94.9%
98.3%
-336
75.0%
77.8%
-276
841
806
4.3%
63
59
6.6%
Larcomar
92.7%
89.1%
359
69.0%
67.8%
117
942
841
12.1%
138
127
8.7%
Parque Lambramani
92.3%
86.3%
594
35.0%
48.1%
-1.310
445
451
-1.1%
37
37
0.1%
MegaPlaza Chimbote
94.3%
98.9%
-462
86.5%
87.5%
-93
712
643
10.7%
40
33
19.8%
MegaPlaza Express Villa El Salvador
97.9%
98.4%
-47
78.6%
77.8%
75
628
634
-1.0%
56
58
-3.6%
MegaPlaza Express Chincha
80.7%
98.0%
-1,730
72.7%
74.6%
-198
353
352
0.0%
53
56
-6.2%
InOutlet y Viamix
68.9%
79.0%
-1,015
76.0%
77.6%
-163
792
791
0.1%
87
85
2.5%
MegaPlaza Cañete
98.5%
98.9%
-44
71.7%
70.6%
115
585
567
3.2%
33
33
0.5%
MegaPlaza Express Barranca
98.8%
98.0%
80
71.5%
72.8%
-127
389
354
9.7%
47
44
6.8%
MegaPlaza Pisco
94.3%
95.8%
-150
75.7%
74.3%
134
472
443
6.5%
36
30
18.6%
El Quinde Cajamarca
92.7%
90.8%
186
72.8%
68.0%
480
414
460
-10.1%
48
50
-4.9%
El Quinde Ica
97.1%
92.9%
419
81.8%
82.6%
-84
492
514
-4.4%
47
46
1.2%
Plaza Jesús María
88.9%
-
N/A
45.5%
-
N/A
N/A
-
N/A
51
-
N/A
-
N/A
40.4%
-
N/A
539
-
N/A
39
-
N/A
TOTAL PERU
93.1%
3
76.7%
74.3%
240
690
707
-2.4%
61
60
1.4%
Parque Arboleda
89.5%
616
79.1%
74.4%
474
511,721
513,795
-0.4%
55,739
56,735
-1.8%
Parque Caracolí
90.4%
-185
68.9%
69.9%
-101
383,919
359,601
6.8%
48,364
46,140
4.8%
TOTAL COLOMBIA
90.0%
221
74.4%
72.3%
215
448,393
432,823
3.6%
52,085
51,171
1.8%
Arauco San Antonio 1
2
MegaPlaza Express Jaén
Source: Parque Arauco (1) Includes four Premium Outlets located in: Santiago, Concepción, Coquimbo y Curauma (2) Includes 13 strip centers located in: Santiago (11), Viña del Mar(1) y Calama (1)
- 23 -
24
Colombia
PerU
Highlights by country
Chile
- 24 -
25
Chile
Highlights by Country PARQUE ARAUCO KENNEDY - SANTIAGO
ARAUCO MAIPÚ - SANTIAGO
ARAUCO ESTACIÓN - SANTIAGO
ARAUCO QUILICURA - SANTIAGO
ARAUCO EXPRESS (STRIP CENTERS CHILE)
ARAUCO SAN ANTONIO - SAN ANTONIO
ARAUCO CHILLÁN - CHILLÁN
ARAUCO PREMIUM OUTLETS - SANTIAGO, CONCEPCION, CURAUMA AND COQUIMBO
- 25 -
Chile
Highlights by Country During October 2016, Parque Aruaco Chile announced the expansion of Parque Arauco Kennedy, a Project will increase the GLA of the mall and will add a Hilton Brand hotel and a convention center.
centers in Chile, and during the third quarter of the year we opened more than 24 new stores, including Kitchen Republic, Adidas Kids, and Volcán, the restaurant Tavelli and the outlet stores Skechers, Maui and Lippi.
During the quarter the sales of our tenants increased 11.7%, revenues increased 10.0% and EBITDA increased 10.5% in comparison with the same quarter the previous year. The most important project under construction in Chile is Parque Angamos in Antofagasta. We are also carrying out the remodeling of the San Borja food court in Arauco Estación, which renovate close to 70% of the installations of the food court and will bring in seven new tenants. As always, we held several activities in all of our shopping malls in Chile during the third quarter of 2016: - We celebrated the children’s Winter vacations with a pirate boat in our shopping centers in Parque Arauco Kennedy and Arauco Quilicura. - We had the Mercadito Echinuco in Parque Arauco Kennedy and Arauco Maipu. This is a small market which brings gastronomic products from Chilean entrepreneurs. - We celebrated Children’s Day in several of our shopping centers in the country, which activities focused on the youngest member of the family. - We hosted the social activity Otoño de Lujo in the Luxury District in Parque Arauco Kennedy. We continued improving our commercial mix in our shopping - 26 -
26
27
perU
Highlights by Country MEGAPLAZA NORTE - LIMA
MEGAPLAZA EXPRESS VILLA - LIMA
LARCOMAR - LIMA
INOUTLET FAUCETT - LIMA
MEGAPLAZA CAÑETE
MEGAPLAZA EXPRESS BARRANCA
MEGAPLAZA EXPRESS CHINCHA
VIAMIX CHORRILLOS - LIMA
PARQUE LAMBRAMANI - AREQUIPA
- 27 -
MEGAPLAZA EXPRESS VILLA EL SALVADOR - LIMA
MEGAPLAZA CHIMBOTE
perU
Highlights by Country During the third quarter of 2016 the GLA of Parque Arauco Perú grew 11.8% due to the incorporation of Plaza Jesús María and also due to the inauguration of MegaPlaza Express Jaén and InOutlet Premium Lurín during the last twelve months. During the quarter the sales of our tenants grew 5.4%, the revenues grew 15.4% and the EBITDA grew 29.3% in comparison with the same quarter the previous year.
our first modern art gallery in a mall. We also continued improving our commercial mix, and during the third quarter of hte year we opened more than 12 new stores in our shopping centers in Peru, including important brands such as Agatha Ruiz de la Prada, Florideas, Nuevo Mundo and Factory Brands.
During the quarter we continued working on the second stage of the expansion of MegaPlaza Norte, which will open with new H&M and Zara stores during the fourth quarter of this year. We also continued working on the renovation of Parque Lambramani in Arequipa, which is a project to enclose the mall and improve its infrastructure. Finally, in Lima we continued working on the expansion of the strip center Viamix Chorrillos, where we will add 4,500 m2 of GLA. We had several activities at our shopping centers during the third quarter of this year. We highlight the following activities: - The whole country and our shopping malls celebrating Shopping Day, a day in which all of the malls had special discounts and activities. - We celebrated Peru’s Independence Day in El Quinde Cajamarca with a night-time sale. - The majority of our malls celebrated Children’s Day with activities focused on the youngest member of the family. - In Larcomar we had a special event for the inauguration of - 28 -
28
colombia
Highlights by Country PARQUE ARBOLEDA- PEREIRA
PARQUE CARACOLÍ - BUCARAMANGA
- 29 -
29
colombia
Highlights by Country
Parque Arauco Colombia achieved a positive performance
- A fashion show in Parque Caracolí in Bucaramanga.
during the third quarter of 2016. The GLA grew 10.5% with the
- After its successful first version, we celebrated the second
incorporation of the office towers at Parque Arboleda in Periera.
version of the Wedding Week at our shopping malls in
Tenant sales, revenues and EBITDA had solid numbers during the
Colombia.
quarter of 6.7%, 9.0%, and 23.7%, respectively.
During the third quarter we welcomed more than four new stores
The most important project for the Colombia Division is Parque La
into our shopping centers in Colombia, including the beauty store
Colina, the regional shopping center that will inaugurate during
Cromantic and the hamburger restaurant Presto.
the first quarter of 2017. The project is on time and on budget, generating interest from international and local retailers. Parque Caracolí and Parque Arboleda had several events to improve traffic at the malls. The most important events were the following:
- 30 -
30
31
Future Developments 2016 and Onwards Parque Arauco has announced projects that will add 230,000 m2 of GLA over the next few years and will require an investment of US$ 828 million.
new projects
Total GLA m2
% Ownership
4T16
6,000
51%
1H18
11,000
55%
2H17
11,000
50%
5,500
36,000
11
4Q16
16,500
50%
8,250
38,000
11
2H17
19,500
100%
19,500
180,000
53
Strip Center
1T17
3,000
100%
3,000
25,000
7
Colombia
Regional
1Q17
63,500
100%
63,500
672,000
232
Colombia
Outlet
1H17
13,000
100%
13,000
78,000
Type
Country
Format
Arauco Express Antofagasta
Greenfield
Chile
Strip Center
Parque Angamos
Greenfield
Chile
Neighborhood
MegaPlaza Villa El Salvador II
Greenfield
Peru
Neighborhood
MegaPlaza Express Huaral
Greenfield
Peru
Neighborhood
Various Projects SCP
Greenfield
Peru
Neighborhood
Viamix Colonial
Greenfield
Peru
Parque La Colina
Greenfield
Arauco Premium Outlet Bogotá
Greenfield
Estimated opening date
Subtotal
expansions
143,500
121,860
27 389
Format
Estimated opening date
Total GLA m2
% Ownership
Chile
Hotel
2H21
11,000
100%
11,000
5,355,000
Peru
Strip Center
4T16
4,500
100%
4,500
32,000
9
Renovation
Peru
Regional
2H17
N/A
100%
N/A
39,500
12
Expansion
Peru
Regional
4T16
10,000
50%
5,000
53,000
16
Type
Country
Kennedy Expansion2
Expansion
Viamix Chorrillos Expansion
Expansion
Parque Lambramani Renovation MegaPlaza Norte Libertadores Expansion
25,500
Subtotal
projects incorporated 2016
Owned GLA Investment total Investment Total (Local currency)1 (MUSD)2 m2 Owned GLA 320,000 3,060 13 m2 886,000 6,050 35
Type
Country
Owned GLA Investment total Investment Total m2 (Local currency)1 (MUSD)2
20,500
Format
Estimated opening date
Total GLA m2
% Ownership
213
250
Owned GLA Investment total Investment Total m2 (Local currency)1 (MUSD)2
MegaPlaza Norte Cine Conquistadores Expansion
Expansion
Peru
Regional
3Q16
7,500
50%
3,750
38,000
11
Arauco Express Ciudad Empresarial II
Greenfield
Chile
Strip Center
3Q16
4,500
51%
2,295
319,000
13 14
MegaPlaza Express Jaen
Expansion
Peru
Neighborhood
3Q16
14,500
50%
7,250
47,000
Minority Interest MegaPlaza Chimbote
Minority Interest
Peru
N/A
3Q16
N/A
N/A
4,620
28,600
8
Minority Interest Inmobiliaria Viña del Mar
Minority Interest
Chile
N/A
3Q16
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
51%
1,785
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
22
Plaza Jesús María
Acquisition
Peru
Neighborhood
1Q16
14,000
100%
14,000
53,500
16
Subtotal
Total
61,000
49,450
188
230,000
180,810
828
Remaining Investment as of Sept. 30, 2016 1) Projects in Chile in UF, in Peru in ThPEN and in Colombia in MCOP 2) Exchange rate as of September 30, 2016: 26,224,30 CLP/UF, 658,02 CLP/USD, 2,891,95 COP/USD, 3.40 PEN/USD. - 31 - center in Santiago. 2) In addition to the 11,000 m2, this expansion includes a 401 room Hilton by Hilton Hotel and largest hotel convention
367
32
Parque La Colina is progressing on-time and within budget and should be inaugurated during the first quarter of 2017
Committed brands:
Construction State: Currently building fourth underground level.
Commercialization state: 75% of the GLA is signed, another 1o% is agreed upon, and 15% will be negotiated during the last quarter of this year. More than 50% of the GLA has been handed over to the tenants.. - 32 -
33
Parque La Colina’s commercial mix will have anchor stores, smaller stores, entertainment and a restaurant boulevard 1st floor
2nd floor Anchor stores Intermediary stores Smaller stores Cafés Financial services Smaller stores - Sport cluster Entertainment Food Court Restaurants Boulevard
3rd floor
Sweets spot
- 33 -
34
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.
- 34 -
35
Landbank name
% Ownership
M2
Total Cost
Total Cost (Local Currency)
1
(USD MM)
25,486
100%
78,000
3
115,864
100%
460,000
18
Chicureo
47,614
100%
201,000
8
Los Andes
39,254
100%
115,000
5
Others in Chile
55,577
100%
445,000
18
283,795
100%
1,299,000
52
Parque El Golf - San Isidro
14,813
70%
109,000
32
Chimbote
42,657
100%
18,000
5
Talara
30,675
100%
9,500
3
Ica
12,643
100%
13,500
4
6,000
100%
5,000
1
Others MegaPlaza
200,115
50%
80,000
24
Total Peru
306,903
66%
235,000
69
Neiva
49,537
100%
19,000
6
Valledupar
46,000
100%
30,000
10
Barranquilla
56,166
100%
76,000
26
Total Colombia
151,703
100%
125,000
42
Total
742,401
86%
Quilicura Buenaventura
Total Chile
Chiclayo
163
1) Landbank in Chile in UF, in Peru in ThPEN and in Colombia in MCOP
The company also has a valuable land bank which will serve as the base for future development.
- 35 -
36
Sustainability SUSTAINABILITY Parque Arauco is the first Latin American Real Estate company to enter into the Dow Jones Sustainability Emerging Markets Index, which incorporates 95 companies in the world, of which only six are Real Estate companies, including Parque Arauco. The Dow Jones Sustainability Index is one of the most prestigious sustainability indexes in the world, which rigorously and independently evaluates over 100 matters in the social, environment and economic dimensions. The actions with which Parque Arauco has recently advanced are detailed in their Sustainability Report published in April of this year. In the environmental dimension, of note is the first LEED certified shopping center in Chile; as well as the continued advancement of the construction of sustainable projects in Peru and Colombia. Additionally, Parque Arauco was recognized in the ranking of best transparency practices according to the Corporate Transparency report organized by the consulting firm Inteligencia de Negocios, where the Company was recognized as the company that best improved the publication of its sustainability information, and occupied the second place among companies that best improved their information regarding corporate governance.
- 36 -
37
Analysis Of Market Risks The following are potential risks that the Company may face:
The level of activity/sales of our tenants are linked to
Parque Arauco does not hold speculative positions in the
economic growth and consumption growth in each economy
derivatives market, the coverage taken will eventually be
in which we operate. The decline in economic activity
used to hedge exposures to foreign exchange risk and interest
may adversely affect the level of sales of our tenants and
rates risks due to the nature of the business sources of
therefore affect the Company’s revenues, as a percentage of
financing. The Company primarily maintains its operational
our income depends on the level of sales of certain tenants.
and financial income and expenses in the same currency and
Of the 84% of Parque Arauco´s revenues that are derived
in the local currency of each operations location.
from rental revenues, approximately 86% are fixed revenues and 14% are variable revenues that depend on the volume of The Company is also subject to risks regarding return on
sales of our tenants.
investment in Colombia and Peru, given the evolution of economic variables such as exchange rates, interest rates and taxes, among other factors.
A general deterioration in the economy could also affect the occupancy of our shopping centers. However, the contracts between Parque Arauco and its tenants are generally medium to long term and stipulate a minimum fixed rental fee. The Company has a solid contractual framework as well as a conservative financial position enabling the Company to be prepared to face a potential economic decline.
- 37 -
38
Case Study
Colombian Shopping Mall Sector The emerging market for renting retail spaces in Colombia In 2007 Parque Arauco Chile legally formed its subsidiary Sociedad de Inversiones Colombianas Arauco S.A.S. in this year, only 11.3% of the 2,900,000 m2 of the mall retail spaces have been managed under a “singleowner” structure1, where one counterpart rents their retail space from an mall operator, as currently occurs in developed markets. The remaining 88.7% was managed under a “multi-owner” or “condominium” structure1, where there are many owners of the retail properties. In fact, in many cases it occurs that the owners of the spaces are the same as the retail operators. In the years in which the interest rates were at double digits and when there was not availability of long-term financing, real estate companies looked to finance their projects through the sale of real estate spaces. Due to this, the retail real estate sector was developed mainly by real estate companies and construction companies that built and sold spaces to third parties. Considering the great majority of the retail-oriented real estate spaces had many owners, it was not posible to enter into Colombia through an acquisition. Parque Arauco began developing greenfield projects, inaugurating its first shopping center “Parque Arboleda” in 2010 in the city of Pereira. The first years of operation in Colombia were not free of challenges. One of the main challenges was convincing local retail operators of the benefit of renting, and not buying, retail real estate spaces, 1) Source: Various public sources and Parque Arauco analysis.
- 38 -
39
Case Study
Colombian Shopping Mall Sector and the advantages of the “single-owner” management. At first, not all of the operators saw the advantages of a centralized management. Additionally, the real estate market had been experiencing a positive performance, which made the real operators even more hesitant to enter the new operating model. In the following years, Parque Arauco was able to overcome this obstacle, and inaugurated its second regional shopping center, “Parque Caracolí” in the city of Bucaramanga. The retail-oriented real estate market has shown a compound annual growth rate of GLA of 6.2% since the arrival of Parque Arauco into Colombia in 2007. In this period, the real estate spaces managed under the “single-owner” structure have grown at a compound annual growth rate of GLA of 12.9%. This growth is considerably larger than
the compound annual growth rate of 5.0% that the “multi-owner” structure has shown in the same period. Currently, around 19% of the almost 5,000,000 m2 of the retail real estate spaces are managed under the “single-owner” structure1, where a centralized owner rents out the retail-oriented real estate spaces. The remaining 81% is managed under the “multi-owner” structure1, in which retail real estate property has many owners. Parque Arauco’s two regional shopping centers represent only 1.6% of the Colombian retail real estate area. Despite the competitive and economic environment, these two malls have had a solid performance. Parque Araboleda has had a compound annual growth rate of its sales of 11.7% since its opening at the end of 2010, while Parque Caracolí has had a compound annual growth rate of its sales de 17.9% since its opening in 2013. Comparing these numbers to those of the Colombian retail growth, the performance is clearly superior. We believe that part of the positive performance is explained by the management of “single-owner” shopping malls, which has certain advantages with respect to the management of “multi-owner” properties. Firstly, “Multi-owner” malls physically depreciate at a faster pace. This occurs because it is difficult for the different owners to agree upon renovations to the mall. Frequently, there is a store owner who wants to receive the benefits of having a renewed mall, without having to pay for the renovation. Additionally, due to condominium regulation, any renovation require a quorum among the property
- 39 -
1) Source: Various public sources and Parque Arauco analysis.
40
Case Study
Colombian Shopping Mall Sector owners. Secondly, these malls suffer from a gradual deterioration of its comercial mix. This occurs because when an owner decides to sell a space, he or she will sell this to the person who pays the most for the space. The owner selling the property is not concerned about how the commercial mix of the mall will be when he leases, which means that in the medium term the commercial mix will no longer be optimum. This can result in cases where there are many shoe stores and no sports stores, for example. We have even seen that some spaces be used as offices. The result of the deterioration in commercial mix is that the client will begin to prefer other malls that have a better commercial mix, especially when fashion trends are changing at a higher pace than before.
or a space that meets their requirements. This affects the decision of many international retailers, such as H&M, which have opted to open their first store in Colombia in one of our “single-owner” shopping malls. Currently, we are building two new assets that will strengthen our presence in Colombia. Parque La Colina is a 63,500 m2 shopping mall that we expect to open during the first quarter of 2017. Arauco Premium Outlet Bogotá is a 13,000 m2 outlet that we expect during the first half of 2017. Considering these openings, Parque Arauco will have a gross leasable area of 155,000 m2, becoming one of the three main operators of retail real estate in Colombia.
Thirdly, some “multi-owner” malls are very passive in marketing to bring new clients to the mall. This happens because there can be an owner who wants the benefit of having increased traffic in the mall thanks to a marketing campaign, but does not want to pay for this. Finally, in our sector it is fundamental to be able to incorporate the retail trends into the mall offerings as quickly as possible. The “multi-owner” malls can take months, or even years, to incorporate new trends. This occurs because when a world-class retailer comes to Colombia they are not used to buying their store, but rather they are accustomed to renting. Even if they would make an exception and would choose to buy a real estate space, the retailer has to wait until someone is willing to sell the location that they are looking for, - 40 -
41
Consolidated Financial Statements Balance sheet Ch$ Thousands
9.30.2016
Ch$ Thousands
9.30.2015
ASS ETS
LI ABI LIT I ES
Current assets
Current Liabilities
Cash and cash equivalents
100,704,185
149,327,413
472,262
-
Other current non financial assets
29,265,737
49,147,124
Trade accounts receivable and other receivables
23,592,092
20,581,699
Accounts receivable from related compies
5,271,807
Current tax receivable
Other current financial assets
Total current assets
Other current financial liabilities
9.30.2015
104,081,599
81,686,379
15,673,455
16,440,931
Current accounts payable to related parties
2,367,482
2,474,808
Current provisions
1,561,525
1,651,148
7,529,491
Current tax liabilities
1,757,503
4,203,508
6,288,205
4,645,740
Current provisions for employees
3,839,102
3,810,232
165,594,289
231,231,467
Other current non financial liabilities
8,308,773
5,513,243
137,589,439
115,780,249
ther non current financial liabilities
626,839,663
569,428,761
Deferred tax liabilities
129,364,061
110,828,693
17,216,503
14,746,672
Commercial credits and other accounts payable
Total current liabilities Non-current Assets
9.30.2016
Non-current liabilities
3,095,815
-
23,736,841
25,846,905
235,807
280,576
108,034,783
53,626,769
Other non current non financial liabilities
Intangible assets excluding surplus value
15,801,298
13,712,851
Total non current liabilities
773,420,227
695,004,126
Surplus value
14,343,847
38,086,643
Total liabilities
911,009,666
810,784,375
2,909,433
2,909,504
1,388,756,230
1,226,059,587
41,571,439
42,014,982
412,429,496
341,099,887
1,598,485,493
1,402,537,817
-
(3,736,839)
Accumulated earnings (losses)
337,798,628
322,417,217
Premium on new issued shares
289,355
200,964
Other reserves
(20,265,707)
6,935,393
Equity attributable to shareholders of the company
730,251,772
666,916,622
Minority interest
122,818,344
156,068,287
Total equity
853,070,116
822,984,909
1,764,079,782
1,633,769,284
Other non current non financial assets Non current accounts receivable Share of profit (loss) of associates accounted
Property, plant and equipment Investment properties Deferred tax assets Total non-current assets
TOTAL ASSETS
1,764,079,782
EQUIT Y Issued share capital Treasury shares
TOTAL LIABILITIES AND EQUITY
1,633,769,284 - 41 -
42
Consolidated Financial Statements cash flow statement Ch$ thousands Net cash flow from operating activities Receipts from sales of goods and services Payments to suppliers for goods and services Payments on behalf of employees Income taxes refunded (paid) Other inputs (outputs) in cash Net cash flow from operating activities Net cash flow from investment activities Cash flows used for acquiring subsidiaries or other businesses Cash flows used for acquiring non-controlling interests Other proceeds from the sale of equity or debt instruments of other entities Interest received Purchases of property, plant and equipment Purchase of intangible assets Dividends recieved Purchases of intangible assets Purchases of other long-term assets Other inputs (outputs) of cash Net cash flow from investment activities Net cash flow from financing activities Share issuance Proceeds from long term debt Loans from related entities Proceeds form short term debt Total proceedes from loans Cash flow from issuance of public debt Loan payments Financial leasing payments Dividends paid Interest paid Other inputs (outputs) in cash Net cash flow from financing activities Net increase (decrease) in cash and cash equivalents Effects of variation in the exchange rate on cash and cash equivalents Increase (decrease) in net cash and cash equivalent Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period
LTM Sep. 16
LTM Sep. 15
-2.7% -13.5% -10.8% -50.5% -54.8% 94.1%
227,932,368 (83,187,070) (16,386,322) (9,452,263) (24,158,347) 94,748,365
208,906,520 (73,990,936) (15,958,887) (8,623,753) (15,670,582) 94,662,362
9.1% 12.4% 2.7% 9.6% 54.2% 0.1%
(2,943,357) 1,452,880 1,005,398 (161,103) (404,562) 180 (22,989,388) (17,360,362) (41,400,314)
N/A N/A N/A N/A 14.5% 99.3% -65.8% -91.0% 39.1% N/A -25.0%
(7,620,954) (66,749,269) (55,287,442) (404,863) 4,432,859 (565,026) (187,597) 13,021,779 (121,150,970) 4,563,095 (229,948,388)
(41,129,977) (25,577) 2,308,930 (578,013) (2,444,290) 2,626,579 (111,401,100) (25,051,903) (172,114,388)
-81.5% N/A N/A 1482.9% 92.0% -2.2% -92.3% 395.8% 8.8% N/A 33.6%
5,802,328 4,763,943 1,038,839 5,802,782 32,490,423 (2,566,141) (3,477,993) 74,827 (13,105,182) 30,937 25,051,981 (4,026,237) 16,627,158 12,600,921 136,726,492 149,327,413
-30.1% 32.8% N/A 9.2% 28.5% N/A 1517.0% -37.3% N/A -45.8% N/A -256.8% 1053.1% -98.1% N/A 7.4% -32.6%
81,781,588 134,196,051 222,763 36,389,398 170,808,212 (940,410) (81,884,614) (9,385,681) (156,154) (33,498,344) (1,755,746) 95,698,417 (39,501,606) (9,121,623) (48,623,228) 149,327,413 100,704,185
14,275,709 32,304,818 1,352,052 34,575,349 179,905,384 (57,067,113) 72,680,527 (47,296,643) (19,803,009) (2,303,745) 95,697,265 18,245,239 22,827,327 41,072,566 108,254,847 149,327,413
472.9% 315.4% N/A 2591.4% 394.0% N/A 43.5% N/A -99.7% 69.2% -23.8% 0.0% N/A N/A N/A 37.9% -32.6%
3Q2016
3Q2015
Chg.%
58,612,985 (22,626,940) (4,262,749) (1,598,202) (6,206,388) 23,918,704
60,242,293 (26,167,755) (4,781,366) (3,228,396) (13,742,680) 12,322,096
91,718 95,051 1,151,114 (321,100) (138,461) 16 (31,979,112) 45,999 (31,054,775) 4,058,473 6,324,285 1,134,856 7,459,142 (41,494,434) (2,180,886) (7,101,946) (200) (39,288,632) (46,424,702) 309,744 (46,114,957) 146,819,142 100,704,185 - 42 -
Chg.%
43
- 43 -
