third quarter 2014 results

T H IR D QUART ER 2 0 1 4 R ES ULT S
CONFERENCE CALL
DATE: NOVEMBER 3, 2014 | TIME: 9:00AM 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: 6268597
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CONTACTS
SAMANTHA ZERBE (Head of Investor Relations) | EDUARDO PEREZ MARCHANT (Corporate Finance Manager) | CLAUDIO CHAMORRO CARRIZO (CFO)
TEL: (562) 22990510 | FAX: (562) 22114077 | EMAIL: [email protected]
|1
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 it’s
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.
PASEO ARAUCO ESTACION, CHILE
|3
EXECUTIVE SUMMARY
11.8% increase in total Gross Leasable Area (GLA) to
EBITDA grew 15.1% to Ch$21,197 million during the
718,000 m2 with the incorporation of six new properties
third quarter on an EBITDA margin of 68.9%.
and the inauguration of three expansion projects during
Funds From Operation (FFO) during the quarter
the last twelve months.
increased 16.3% over 2013, reaching Ch$ 15,941
Consolidated occupancy rate of 95.1%, in line with
million.
the consolidated occupancy of 95.0% during the third
Strip Center Viamix Chorrillos was incorporated into
quarter 2013.
the portfolio in Peru, marking the first time Parque
Third
quarter
2014
revenues
increased
17.8%
compared to the same period in 2013, reaching Ch$
30,784 million.
Arauco participates in the strip center format outside
of Chile.
TABLE OF CONTENTS
FINANCIAL AND OPERATING
RESULTS (6)
BALANCE SHEET REVIEW (12)
CASH FLOW REVIEW (15)
MAIN FINANCIAL INDICATORS (16)
PORTFOLIO 2014 (17)
PROPERTY LEVEL RESULTS (18)
HIGHLIGHTS BY COUNTRY (22)
FUTU RE DEVELOPMENTS (29)
LANDBANK (30)
ANALYSIS OF MARKET RISKS (31)
CASE STUDY – LA RCOMAR (32)
CONSOLIDATED FINANCIAL
STATEMENTS (35)
PARQUE ARBOLEDA, COLOMBIA
|5
FINANCIAL AND OPERATING RESULTS
INCOME STATEMENT - CONSOLIDATED
3Q14
3Q13
2014
2013
Revenues
30,784,238
26,136,196
17.8%
88,685,580
75,295,864
17.8%
Cost of Sales
(7,304,268)
(5,427,593)
34.6%
(20,667,518)
(15,844,459)
30.4%
Gross Profit
23,479,970
20,708,603
13.4%
68,018,062
59,451,405
14.4%
Administration Expenses
(3,353,095)
(2,972,418)
12.8%
(10,411,194)
(9,077,709)
14.7%
OPERATING INCOME
20,126,875
17,736,185
13.5%
57,606,868
50,373,696
14.4%
Depreciation & Amortization
(1,069,819)
(685,865)
56.0%
(2,587,508)
(2,062,384)
25.5%
EBITDA
21,196,694
18,422,050
15.1%
60,194,376
52,436,080
14.8%
Other Income / Expenses
(288,046)
(1,828,635)
-84.2%
(1,285,183)
(4,769,623)
-73.1%
Financial Income
1,549,326
695,857
122.7%
3,682,371
2,748,521
34.0%
(6,804,619)
(5,414,886)
25.7%
(18,626,733)
(13,793,406)
35.0%
Share of Profit (Loss) of Associates Accounted
1,275,828
1,169,250
9.1%
3,732,461
3,829,881
-2.5%
Foreign Exchange Differences
1,830,529
(640,369)
-385.9%
2,394,387
404,917
491.3%
Income (Loss) for indexed assets and liabilities
(1,687,822)
(2,684,077)
-37.1%
(9,153,414)
(2,816,785)
225.0%
NON-OPERATING INCOME (EXPENSES)
(4,124,804)
(8,702,860)
-52.6%
(19,256,111)
(14,396,495)
33.8%
Profit before Income Tax
16,002,071
9,033,325
77.1%
38,350,757
35,977,201
6.6%
Income Tax
(1,901,116)
(910,171)
108.9%
(6,593,456)
(6,227,890)
5.9%
NET PROFIT (LOSS)
14,100,955
8,123,154
73.6%
31,757,301
29,749,311
6.7%
12,428,020
7,034,562
76.7%
27,046,397
26,872,050
0.6%
1,672,935
1,088,592
53.7%
4,710,904
2,877,261
63.7%
14,100,955
8,123,154
73.6%
31,757,301
29,749,311
6.7%
CH$ THOUSANDS
Financial Expenses
Chg. %
Chg. %
Attributable to:
Equity holders of the company
Minority interests
NET PROFIT (LOSS)
|6
FINANCIAL AND OPERATING RESULTS
KEY PERFORMANCE INDICATORS
3Q14
3Q13
Chg. %
2014
2013
Chg. %
EBITDA Margin %
68.9%
70.5%
-163
67.9%
69.6%
-177
Net Income Margin %
40.4%
26.9%
1346
30.5%
35.7%
-519
15,941
13,703
16.3%
45,250
41,391
9.3%
51.8%
52.4%
-64
51.0%
55.0%
-395
Total Tenant Sales (Ch$ Millions)2
320,611
279,129
14.9%
936,239
794,850
17.8%
Total GLA (m2)3
718,000
642,100
11.8%
718,000
642,100
11.8%
Owned GLA(m2)3
540,940
483,431
11.9%
540,940
483,431
11.9%
814.50
699.50
16.4%
789.22
699.50
12.8%
15.26
10.06
51.7%
34.27
38.42
-10.8%
1,142.60
970.00
17.8%
1,142.60
970.00
17.8%
415.39
1,085.00
-61.7%
999.30
1,331.00
-24.9%
FFO (Ch$ Millions)1
FFO Margin %
Weighted Avg. Shares (Millions)4
EPS (Ch$ Thousands)5
Stock Price (Ch$)
Daily Traded Volume (Ch$ Millions)
“During the third quarter, sales in Parque Arauco´s shopping centers in Peru and Colombia continued consolidating and showed healthy levels
of growth, while sales in our shopping centers in Chile remained relatively stable in spite of the overall deceleration of retail sales in the country.
Also during the quarter we incorporated the first strip center to our portfolio in Peru. This marks the first time we have participated in this
format outside of Chile. Strip Center Viamix Chorrillos adds 4,000 m2 of GLA and adds to Parque Arauco´s diverse commercial offering in
Peru which includes regional shopping centers, neighborhood shopping centers, outlet malls and strip centers.
Finally, during the third quarter the President of Parque Arauco S.A.´s Board of Directors, Mr. José Said Saffie was recognized as one of the
top three Directors of Leading Companies in Sustainability by Agenda de Líderes Sustentables 2020, ALAS20, organized by the think tank
GovernArt. The same organization recognized Parque Arauco as one of the top five companies in Chile in terms of quality of its investor
relations team. This recognition joins that given by Revista Capital during the second quarter, which distinguished Parque Arauco as one
of the top three medium sized companies in Chile in terms of its investor relations team” said Chief Executive Office Juan Antonio Álvarez.
1. FFO = EBITDA + FINANCIAL INCOME + FINANCIAL EXPENSES 2. TOTAL TENANT SALES = SALES OF CONSOLIDATED ASSETS 3. GLA OF MARINA ARAUCO NOT CONSIDERED 4. EXCLUDES 3,250,000 TREASURY
SHARES 5.EPS = NET INCOME ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY/WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING.
|7
FINANCIAL AND OPERATING RESULTS
OPERATING INCOME
Revenues for the third quarter of 2014 increased 17.8% yearover-year to Ch$ 30,784 million. The growth was primarily the
result of additional GLA and improved rental revenues and tenant
sales across nearly all of the Company´s existing properties. Total
GLA for the Company at the end of the third quarter was 718,000
m², up 11.8% compared to the same period in 2013. The increase
reflects the addition of Mall Outlet Concepcion, Strip Center
Manuel Montt and Strip Center Las Brujas in Chile, and Strip Center
Viamix Chorrillos, MegaPlaza Cañete, and MegaPlaza Barranca in
Peru. Additionally, the expansion of Arauco Chillan in Chile, and the
expansions of MegaPlaza Norte, Parque Lambramani and InOutlet
Faucett (Lima Outlet Center) in Peru contributed to the growth of
the Company´s GLA.
Consolidated occupancy remained stable at 95.1% in 3Q14. Total
tenant sales for the quarter increased by 14.9% to Ch$ 320,611
million.
TENANT SALES (Ch$ Millions)
17.8%
936,239
794,850
14.9%
279,129
320,611
REVENUES (Ch$ Millions)
3Q13
17.8%
88,686
75,296
17.8%
26,136
3Q13
30,784
3Q14
2013
2014
3Q14
2013
2014
Parque Arauco is committed to diversifying its asset base in
terms of formats. During the last twelve months, Parque Arauco
increased its GLA of outlet malls and strip centers by 42.5%.
During the third quarter Parque Arauco inaugurated its tenth strip
center in Chile, Strip Center Las Brujas in La Reina, Santiago and
construction continued on Strip Center El Carmen de Huechuraba
and Mall Outlet Curauma. Additionally, Buenaventura Premium
Outlet is being expanded by 6,900 m2. In Peru, Strip Center Viamix
Chorrillos was added to the portfolio and construction on a new
neighborhood shopping center, MegaPlaza Pisco, continued.
|8
FINANCIAL AND OPERATING RESULTS
In keeping with the Company’s regional expansion strategy, revenue participation of assets outside of Chile continued to increase in the
third quarter. Revenues from Colombia and Peru represented 36% of total revenues, up from 30.5% during the same period in 2013. During
the third quarter of 2014, revenues from Chile totaled Ch$ 19,701 million, revenues from Peru were Ch$ 8,504 million, and revenues from
Colombia reached Ch$ 2,579 million.
3Q14 REVENUES BY COUNTRY
3Q13 REVENUES BY COUNTRY
8.4%
8.2%
Colombia
Colombia
64.0%
69.5%
Chile
Chile
27.6%
22.3%
Perú
Perú
1H14 REVENUES BY COUNTRY
1H13 REVENUES BY COUNTRY
8.2%
6.6%
Colombia
Colombia
65.1%
70.7%
Chile
Chile
26.7%
22.6%
Perú
Perú
Operating income during the third quarter of 2014 increased 13.5% to Ch$ 20,127 million. Cost of sales and administration expenses
increased 26.9% during the period, reaching Ch$ 10,657 million. This increase is explained by additional expenses in territorial taxes,
electricity and salaries.
|9
FINANCIAL AND OPERATING RESULTS
EBITDA
The Company reported EBITDA of Ch$ 21,197 million during the
third quarter of 2014, a 15.1% increase over 2013. The consolidated
EBITDA margin was 68.9%, compared with the previous year’s
margin of 70.48%. The decrease reflects the increased number
of new shopping centers in the Company´s portfolio that are still
in the process of maturation, as well as additional costs incurred
during a period of intense growth.
EBITDA BY COUNTRY 3Q14
5.6%
Colombia
67.3%
EBITDA (Ch$ Millions)
Chile
27.1%
Perú
14.8%
60,194
52,436
15.1%
21,197
18,422
EBITDA BY COUNTRY 3Q13
3Q13
3Q14
2013
2014
Colombia and Peru´s contribution to the company´s EBITDA
during the third quarter increased importantly to 32.7%, up
from 25% during the same period in 2013. During the quarter,
EBITDA from operations in Chile totaled Ch$ 14,269 million,
Ch$ 5,734 million in Peru and Ch$ 1,193 million in Colombia.
6.0%
Colombia
75.0%
19.0%
Chile
Perú
| 10
FINANCIAL AND OPERATING RESULTS
Net non-operating expenses during the third quarter of 2014 totaled Ch$ 4,125 million, compared to net non-operating expenses of
Ch$ 8,703 million in 2013. The reduction was due primarily to a better result in foreign exchange differences due to the depreciation
of the local currencies against the dollar; lower expenses in the other income and other expenses account due to events that occurred
in 2013 and did not occur in 2014, higher expenses in the financial expenses account due to the company holding more debt overall
including a higher proportion of nominal debt; and a lower cost for losses on indexed assets and liabilities, due to a lower level of
inflation in 2014 than in 2013.
Income taxes for the quarter increased to Ch$ 1.901 million as compared to the 2013 figure of Ch$ 910 million. Excluding the noncash deferred tax expense, third quarter 2014 real income tax totaled Ch$ 2,730 million compared to Ch$ 1,213 million in 2013.
CH$ THOUSANDS
Real Income Tax
Deferred Tax
Total Tax
3Q14
3Q13
(2,729,878)
(1,212,648)
828,762
(1,901,116)
Chg. %
2014
2013
Chg. %
125.1%
(7,289,635)
(5,427,051)
34.3%
302,477
174.0%
696,179
(800,839)
-186.9%
(910,171)
108.9%
(6,593,456)
(6,227,890)
5.9%
Net profit was up 73.6% in the third quarter due to the Company´s higher EBITDA and lower non-operating expenses. Net profit
attributable to equity holders of the company was up 76.7% and earnings per share increased from Ch$ 10.06 to Ch$ 15.26. The
average number of shares outstanding for the quarter and the total number of shares outstanding increased to 817,747, 054 after the
capital increase that was executed during the first quarter 2014. This figure includes 3,250,000 treasury shares. FFO (“Funds from
Operations”) for the quarter were Ch$ 15,941 million, as compared to Ch$ 13,703 million in 2013, representing a 16.3% increase.
| 11
BALANCE SHEET REVIEW
BALANCE SHEET REVIEW
ASSETS
Ch$ millions
30.09.2014
Current Assets
158,556
Dif.
31.12.2013
Var. (%)
117,108
35.4%
41,448
Non Current Assets
1,219,890
1,084,848
12.4%
135,042
Total Assets
1,378,445
1,201,956
14.7%
176,489
Current assets increased to Ch$ 158,556 million from Ch$ 117,108 million at the end of 2013 due primarily to an increase in cash
and cash equivalents. Cash and cash equivalents increased to Ch$ 108,255 million from Ch$ 68,946 million as of December 31,
2013. The additional cash reflects the Ch$ 103,894 million capital increase completed during the first quarter.
Non-current assets increased to Ch$ 1,219,890 million from Ch$ 1,084,848 million as of December 31, 2013. The increase was
due primarily to Ch$ 120,537 million of additional investment properties corresponding to the ongoing development of projects
which include growth in Chile of Ch$ 42,669 million, growth in Peru of Ch$ 24,578 million and growth in Colombia of Ch$ 21,771
million.
| 12
BALANCE SHEET REVIEW
LIABILITIES AND EQUITY
Ch$ millions
30.09.2014
31.12.2013
Var. (%)
Dif.
Current Liabilities
78,383
76,064
3.0%
2,319
Non Current Liabilities
523,689
490,585
6.7%
33,104
Total Liabilities
602,072
566,649
6.3%
35,423
Equity
776,374
635,307
22.2%
141,067
1,201,956
14.7%
176,489
Total Liabilities and Equity
1,378,445
Current liabilities increased by Ch$ 2,319 million while non-current liabilities increased by Ch$ 33,104 million, mainly due to higher
deferred tax liabilities.
Total equity increased by Ch$ 141,067 million due mainly to the capital increase executed during the first quarter of 2014.
| 13
BALANCE SHEET REVIEW
FINANCIAL INDICATORS
Units
30.09.2014
31.12.2013
Gross Financial Debt
Ch$ million
458,464
441,378
Net Financial Debt
Ch$ million
350,209
372,432
Covenant
Limit
Net Financial Debt / EBITDA (12 months)
times
4.3
5.0
EBITDA / Financial Expenses (12 months)
times
3.4
3.9
> 2.5
Liabilities / Equity
times
0.8
0.9
< 1.4
Current Liabilities
%
13
13
Non-Current Liabilities
%
87
87
Net financial debt at the end the third quarter of 2014 was $350,209 million. The Company remains comfortably within its financial
covenants, with Liabilities/Equity of 0.8 times as compared to a limit of 1.4 times and EBITDA/Financial Expenses of 3.4 times, above the
limit of 2.5 times.
CONCEPT
Current MM$
30.09.2014
Non Current MM$
30.09.2014
Current MM$
31.12.2013
Non Current MM$
31.12.2013
Financial Leasing
1,329
9,017
1,275
10,585
Bank Loans
46,011
264,401
29,373
270,492
Bonds
5,364
118,446
5,078
116,163
-
13,895
-
52,704
405,760
35,726
Hedge Liabilities
TOTAL
8,412
405,652
| 14
CASH FLOW REVIEW
BALANCE SHEET REVIEW
CASH FLOW (CH$ MILLIONS)
30.09.2014
From Operating Activities
36,979
From Investment Activities
(80,424)
30.09.2013
Var. %
Dif.
39,223
-6%
(2,244)
(111,897)
-28%
31,473
From Financing Activities
79,585
43,648
82%
35,937
Eff. of var. exchange rate on cash and cash equi.
3,169
(2,223)
-243%
5,392
Net cash flow during the period
39,309
(31,249)
-226%
70,558
Cash and cash equivalents at beginning of period
68,946
103,782
-34%
(34,836)
Cash and cash equivalents at end of period
108,255
72,533
49%
35,722
Cash flow from operating activities decreased by 6% to Ch$ 36,979 million. Investment activities during the semester generated a negative
cash flow of Ch$ 80,424 million which is explained by the use of cash for the development of new projects and the expansion of existing
properties. Financing activities generated a positive cash flow of Ch$ 79,585 million which is mainly explained by the Ch$ 103,894 million
capital increase that was executed during the quarter.
| 15
MAIN FINANCIAL INDICATORS
MAIN FINANCIAL INDICATORS 1
FINANCIAL RATIOS
30.09.2014
Unit
INDICATOR
30.09.2013
Liquidity Level
Current Assets / Current Liabilities
times
2.02
1.99
Leverage Ratio
Total Liabilities / Equity
times
0.78
0.84
Current Liabilities / Total Liabilities
%
13.02
11.93
Non Current Liabilities / Total Liabilities
%
86.98
88.07
EBITDA / Financial Costs*
times
3.43
3.94
Net Profit
Net Profit
Ch$ mill.
57,607
50,374
Basic EPS
Net Profit att. Equity Holders / N° shares - trea. shares
Ch$
34.27
38.42
Return on Equity
Net profit att. Equity Holders / Av. Shareholders Equity*
%
9.24
8.00
Return on Assets
Net profit att. Equity Holders / Average Total Assets*
%
4.01
4.37
Net Profit /Average Operating Assets*
%
5.23
5.46
Dividends Paid Last 12 m. / Last Share Price
%
2.36
2.80
Operating profit / Revenues
%
64.96
66.90
Short Term Debt
Long Term Debt
Interest Coverage Ratio
Return on Operating Assets
Dividend Yield
Gross Profit Margin
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.
* CALCULATED USING RESULTS FROM THE LAST TWELVE MONTHS.
| 16
PORTFOLIO 2014
Total GLA (m2)
% Ownership
Owned GLA (m2)
Var.% Total
GLA vs 2013
115,000
100%
115,000
0%
Arauco Maipu
75,000
100%
75,000
1%
Arauco Chillán (Plaza El Roble)
31,500
100%
31,500
26%
Paseo Arauco Estación
69,000
83%
57,270
1%
Arauco San Antonio
28,500
51%
14,535
-2%
Arauco Quilicura
32,000
100%
32,000
0%
Arauco Express (Strip Centers)
18,000
51%
9,180
32%
Buenaventura Premium Outlet
19,000
100%
19,000
-5%
6,500
100%
6,500
Nuevo
394,500
91%
359,985
107,500
50%
53,700
29%
7,000
50%
3,500
0%
Larcomar
26,000
100%
26,000
0%
Parque Lambramani
30,000
100%
30,000
7%
Megaplaza Chimbote
28,000
34%
9,380
0%
Mega Express Villa El Salvador
9,000
50%
4,500
0%
Mega Express Chincha
7,000
50%
3,612
-1%
Mega Express Cañete
16,500
50%
8,199
Nuevo
9,500
50%
4,754
Nuevo
Center)
7,500
51%
3,825
50%
Viamíx Chorrillos
4,000
51%
2,040
Nuevo
252,000
59%
149,495
Parque Arboleda*
33,000
30%
10,285
-3%
Parque Caracolí
38,500
55%
21,175
1%
TOTAL COLOMBIA
71,500
44%
31,460
-1%
718,000
75%
540,940
12%
Name
Parque Arauco Kennedy
Outlet Mall Concepción
TOTAL CHILE
Megaplaza Norte
Mega Express Villa Chorrillos
Mega Express Barranca
5%
InOutlet Faucett (Lima Outlet
TOTAL PERU
TOTAL **
*PARQUE ARBOLEDA DOES NOT INCLUDE OFFICE TOWERS
**GLA OF MARINA ARAUCO NOT INCLUDED
30%
| 17
PROPERTY LEVEL RESULTS
NINE MONTHS 2014
Chile in MMCLP/ Perú in MPEN
Colombia in MMCOP
GLA
Sales
Revenue
EBITDA
9M14
9M13
Var. %
9M14
9M13
Var. %
9M14
9M13
Var. %
Parque Arauco Kennedy
115,000
115,200
0%
258,094
242,276
7%
27,099
25,331
7%
Arauco Maipú
75,000
74,000
1%
113,671
103,156
10%
8,346
7,733
Arauco Chillán (Plaza El Roble)
31,500
25,000
26%
45,786
45,040
2%
3,190
Paseo Arauco Estación
69,000
68,000
1%
75,210
69,863
8%
Arauco San Antonio
28,500
29,000
-2%
23,840
22,869
Arauco Quilicura
32,000
32,000
0%
31,160
Arauco Express (Stripcenters Chile)
18,000
13,600
32%
Buenaventura Premium Outlet
19,000
20,000
Mall Outlet Concepción
6,500
TOTAL CHILE
Megaplaza Norte
9M13
Var. %
24,941
23,393
7%
8%
7,970
7,215
10%
3,095
3%
2,431
2,407
1%
10,017
9,758
3%
8,741
8,455
3%
4%
2,611
2,556
2%
1,728
1,758
-2%
19,578
59%
2,323
1,252
86%
1,865
871
114%
9,951
9,683
3%
1,712
1,640
4%
1,015
1,082
-6%
-5%
22,930
20,053
14%
2,324
1,906
22%
1,794
1,401
28%
-
-
1,925
-
-
227
-
-
52
0
-
394,500
376,800
5%
582,569
532,518
9%
57,848
53,271
9%
50,537
46,582
8%
107,500
83,000
30%
799,892
731,182
9%
56,394
45,612
24%
44,767
35,603
26%
Mega Express Villa Chorrillos
7,000
7,000
0%
47,541
41,607
14%
3,184
2,950
8%
2,380
2,070
15%
Larcomar
26,000
26,000
0%
170,576
133,640
28%
24,405
19,654
24%
16,572
12,223
36%
Parque Lambramani
30,000
28,000
7%
106,868
94,057
14%
8,284
7,543
10%
3,386
2,322
46%
Mega Plaza Chimbote
28,000
28,000
0%
154,773
146,058
6%
7,650
7,183
6%
5,123
4,454
15%
Mega Express Villa El Salvador
9,000
9,000
0%
45,479
36,505
25%
3,844
3,192
20%
2,879
2,251
28%
Mega Express Chincha
7,000
7,300
-4%
21,769
12,935
68%
3,144
1,815
73%
2,251
998
126%
Mega Plaza Cañete
16,500
-
-
79,517
-
-
4,046
-
-
2,733
-
-
Mega Plaza Barranca
9,500
-
-
25,969
-
-
3,082
-
-
2,046
-
-
InOutlet Faucett (Lima Outlet Center)
7,500
5,000
50%
32,427
25,047
29%
2,865
1,910
50%
2,464
1,520
62%
Víamix Chorrillos
4,000
-
-
1,406
-
-
-
-
-
-
-
-
252,000
193,300
30%
1,486,216
1,221,032
22%
116,898
89,859
30%
84,601
61,440
38%
TOTAL PERÚ
9M14
954,695
Parque Arboleda
33,000
34,000
-3%
109,779
99,986
10%
13,279
12,709
4%
10,279
10,633
-3%
Parque Caracolí
38,500
38,000
1%
87,257
42,225
107%
11,924
6,253
91%
8,286
3,694
124%
TOTAL COLOMBIA
71,500
72,000
-1%
197,036
142,211
39%
25,203
18,963
33%
18,564
14,327
30%
73,500
0%
| 18
PROPERTY LEVEL RESULTS
NINE MONTHS 2014
Occupancy
Chile in MMCLP/ Perú in MPEN
Colombia in MMCOP
Monthly sales per m2 *
EBITDA Margin
Monthly revenue per m2*
9M14
9M13
Var. b.p.
9M14
9M13
Var. b.p.
9M14
9M13
Var. %
9M14
9M13
Var. %
Parque Arauco Kennedy
97.7%
98.4%
-75
92.0%
92.4%
-36
256,029
248,856
3%
26,882
26,019
3%
Arauco Maipú
96.8%
97.2%
-40
95.5%
93.3%
219
175,156
158,856
10%
12,861
11,908
8%
Arauco Chillán (Plaza El Roble)
93.4%
91.3%
214
76.2%
77.8%
-156
171,683
207,803
-17%
11,961
14,280
-16%
Paseo Arauco Estación
97.8%
98.7%
-90
87.3%
86.7%
56
124,257
115,612
7%
16,549
16,148
2%
Arauco San Antonio
93.2%
94.7%
-152
66.2%
68.8%
-260
98,031
91,509
7%
10,739
10,228
5%
Arauco Quilicura
98.8%
97.7%
112
80.3%
69.6%
1075
111,967
99,159
13%
8,345
6,341
32%
Arauco Express (Stripcenters Chile)
83.9%
100.0%
-1610
59.3%
66.0%
-670
84,184
88,760
-5%
14,480
15,033
-4%
Buenaventura Premium Outlet
92.4%
90.8%
164
77.2%
73.5%
370
137,311
122,021
13%
13,914
11,598
20%
Mall Outlet Concepción
75.3%
-
-
22.8%
-
-
38,508
-
-
4,537
-
-
TOTAL CHILE
95.7%
97.1%
-135
84.4%
84.9%
-44
172,919
168,266
3%
17,171
16,833
2%
Megaplaza Norte
94.7%
92.0%
272
79.4%
78.1%
133
870
1,037
-16%
61
65
-5%
Mega Express Villa Chorrillos
99.3%
99.9%
-64
74.8%
70.2%
459
759
674
13%
51
48
6%
Larcomar
93.5%
89.8%
372
67.9%
62.2%
571
768
626
23%
110
92
19%
Parque Lambramani
94.7%
77.6%
1710
40.9%
30.8%
1009
428
434
-1%
33
35
-5%
Mega Plaza Chimbote
99.9%
100.0%
-8
67.0%
62.0%
497
615
621
-1%
30
31
0%
Mega Express Villa El Salvador
99.4%
96.0%
337
74.9%
70.5%
437
573
490
17%
48
43
13%
Mega Express Chincha
100.0%
95.0%
500
71.6%
55.0%
1663
338
257
32%
49
36
35%
Mega Plaza Cañete
99.9%
-
-
67.5%
-
-
542
-
-
28
-
-
Mega Plaza Barranca
100.0%
-
-
66.4%
-
-
317
-
-
38
-
-
InOutlet Faucett (Lima Outlet Center)
81.0%
88.0%
-698
86.0%
79.6%
646
655
913
-28%
58
70
-17%
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL PERÚ
95.8%
91.3%
450
70.5%
65.3%
524
695
771
-10%
55
57
-4%
Parque Arboleda
92.9%
97.1%
-425
77.4%
83.7%
-626
387,879
343,950
13%
46,919
43,719
7%
Parque Caracolí
86.8%
77.0%
976
69.5%
59.1%
1042
281,142
226,852
24%
38,418
33,597
14%
TOTAL COLOMBIA
89.6%
86.5%
308
73.1%
70.7%
246
332,052
298,240
11%
42,473
39,767
7%
Víamix Chorrillos
*MONTHLY SALES/REVENUE PER M2 FIGURES ARE CALCULATED USING THE SALES/REVENUE OF THE PERIOD DIVIDED BY THE AVERAGE OCCUPIED GLA OF THE PERIOD.
| 19
PROPERTY LEVEL RESULTS
THIRD QUARTER 2014
Chile in MMCLP/ Perú in MPEN
Colombia in MMCOP
GLA
Sales
3Q14
3Q13
Var. %
3Q14
Parque Arauco Kennedy
115,000
115,200
0%
83,443
Arauco Maipú
75,000
74,000
1%
37,220
Arauco Chillán (Plaza El Roble)
31,500
25,000
26%
Paseo Arauco Estación
69,000
68,000
Arauco San Antonio
28,500
Arauco Quilicura
EBITDA
Var. %
3Q14
3Q13
Var. %
3Q14
3Q13
Var. %
1%
9,201
8,605
7%
8,484
7,979
6%
36,680
1%
2,810
2,624
7%
2,736
2,432
13%
14,931
15,007
-1%
1,076
1,009
7%
772
701
10%
1%
25,410
23,986
6%
3,427
3,285
4%
3,114
2,936
6%
29,000
-2%
7,296
7,211
1%
840
816
3%
587
561
5%
32,000
32,000
0%
10,621
9,194
16%
806
628
28%
654
444
47%
Arauco Express (Stripcenters Chile)
18,000
13,600
32%
3,877
3,511
10%
612
560
9%
357
374
-5%
Buenaventura Premium Outlet
19,000
20,000
-5%
7,648
6,947
10%
770
624
23%
616
438
41%
Mall Outlet Concepción
6,500
-
-
1,438
-
-
227
-
-
52
-
-
TOTAL CHILE
394,500
376,800
5%
191,884
184,896
4%
19,769
18,151
9%
17,373
15,865
10%
Megaplaza Norte
107,500
83,000
30%
285,912
245,438
16%
19,477
15,584
25%
16,217
10,996
47%
Mega Express Villa Chorrillos
7,000
7,000
0%
16,782
14,430
16%
1,063
1,038
2%
838
708
18%
Larcomar
26,000
26,000
0%
59,528
47,155
26%
8,624
6,676
29%
6,160
4,128
49%
Parque Lambramani
30,000
28,000
7%
37,775
31,484
20%
2,872
2,584
11%
1,122
881
27%
Mega Plaza Chimbote
28,000
28,000
0%
54,840
52,556
4%
2,647
2,535
4%
1,827
1,652
11%
Mega Express Villa El Salvador
9,000
9,000
0%
16,355
12,975
26%
1,330
1,107
20%
983
770
28%
Mega Express Chincha
7,000
7,300
-4%
7,905
7,624
4%
1,056
879
20%
775
555
40%
Mega Plaza Cañete
16,500
-
-
27,568
-
-
1,612
-
-
1,214
-
-
Mega Plaza Barranca
9,500
-
-
9,622
-
-
1,158
-
-
800
-
-
InOutlet Faucett (Lima Outlet Center)
7,500
5,000
50%
13,830
11,829
17%
1,145
974
18%
1,013
767
32%
Víamix Chorrillos
4,000
-
-
1,406
-
-
-
-
-
-
-
TOTAL PERÚ
252,000
193,300
30%
531,522
423,493
26%
40,982
31,377
31%
30,949
20,456
51%
Parque Arboleda
33,000
34,000
-3%
37,327
34,416
8%
4,490
4,308
4%
3,213
3,627
-11%
Parque Caracolí
38,500
38,000
1%
30,955
23,971
29%
4,067
3,713
10%
2,643
2,656
0%
TOTAL COLOMBIA
71,500
72,000
-1%
68,282
58,387
17%
8,558
8,022
7%
5,856
6,283
-7%
73,500
0%
3Q13
Revenue
82,360
-
| 20
PROPERTY LEVEL RESULTS
THIRD QUARTER 2014
Occupancy
Chile in MMCLP/ Perú in MPEN
Colombia in MMCOP
Monthly sales per m2 *
EBITDA Margin
Monthly revenues per m2*
3Q14
3Q13
Var. b.p.
3Q14
3Q13
Var. b.p.
3Q14
3Q13
Var. %
3Q14
3Q13
Var. %
Parque Arauco Kennedy
97.7%
98.4%
-75
92.2%
92.7%
-51
248,035
252,983
-2%
27,349
26,432
3%
Arauco Maipú
96.8%
97.2%
-40
97.4%
92.7%
469
171,930
169,549
1%
12,982
12,129
7%
Arauco Chillán (Plaza El Roble)
93.4%
91.3%
214
71.8%
69.5%
228
148,737
209,522
-29%
10,724
14,087
-24%
Paseo Arauco Estación
97.8%
98.7%
-90
90.9%
89.4%
151
125,942
119,248
6%
16,984
16,332
4%
Arauco San Antonio
93.2%
94.7%
-152
69.9%
68.9%
102
90,546
85,758
6%
10,428
9,704
7%
Arauco Quilicura
98.8%
97.7%
112
81.1%
70.6%
1054
113,615
105,580
8%
8,624
7,212
20%
Arauco Express (Stripcenters Chile)
83.9%
100.0%
-1610
58.3%
66.8%
-848
95,095
90,646
5%
15,004
14,458
4%
Buenaventura Premium Outlet
92.4%
90.8%
164
80.0%
70.2%
977
139,293
128,720
8%
14,022
11,562
21%
Mall Outlet Concepción
75.3%
-
22.8%
-
-
TOTAL CHILE
95.7%
97.1%
-135
85.5%
84.7%
81
168,107
171,433
-2%
17,319
16,829
3%
Megaplaza Norte
94.7%
92.0%
272
83.3%
74.9%
836
936
1,069
-12%
64
68
-6%
Mega Express Villa Chorrillos
99.3%
99.9%
-64
78.8%
71.5%
729
805
698
15%
51
50
2%
Larcomar
93.5%
89.8%
372
71.4%
61.8%
961
808
654
24%
117
93
26%
Parque Lambramani
94.7%
77.6%
1710
39.1%
34.1%
495
448
453
-1%
34
37
-8%
Mega Plaza Chimbote
99.9%
100.0%
-8
69.0%
66.2%
283
653
659
-1%
32
32
-1%
Mega Express Villa El Salvador
99.4%
96.0%
337
73.9%
71.1%
280
610
517
18%
50
44
12%
Mega Express Chincha
100.0%
95.0%
500
73.4%
65.9%
749
370
370
0%
49
43
16%
Mega Plaza Cañete
99.9%
-
-
75.3%
-
-
559
-
-
33
-
-
Mega Plaza Barranca
100.0%
-
-
69.1%
-
-
338
-
-
41
-
-
InOutlet Faucett (Lima Outlet Center)
81.0%
88.0%
-698
88.5%
78.7%
980
765
863
-11%
63
71
-11%
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL PERÚ
95.8%
91.3%
450
73.4%
65.4%
798
740
797
-7%
57
59
-3%
Parque Arboleda
92.9%
97.1%
-425
71.6%
84.2%
-1264
398,265
354,424
12%
47,909
44,365
8%
Parque Caracolí
86.8%
77.0%
976
65.0%
71.5%
-654
299,891
257,566
16%
39,403
39,901
-1%
TOTAL COLOMBIA
89.6%
86.5%
308
68.0%
77.5%
-949
346,706
307,023
13%
43,451
42,180
3%
Víamix Chorrillos
*MONTHLY SALES/REVENUE PER M2 FIGURES ARE CALCULATED USING THE SALES/REVENUE OF THE PERIOD DIVIDED BY THE AVERAGE OCCUPIED GLA OF THE PERIOD.
| 21
HIGHLIGHTS BY COUNTRY
BUCARAMANGA
PEREIRA
CHIMBOTE
BARRANCA
LIMA
CAÑETE
CHINCHA
AREQUIPA
SAN ANTONIO
SANTIAGO
CHILLÁN
CONCEPCIÓN
| 22
HIGHLIGHTS BY COUNTRY
CHILE
ARAUCO SAN ANTONIO, CHILE
During the third quarter of 2014, Parque Arauco opened its tenth strip center in Chile, Strip Center Las Brujas, in La Reina, Santiago. This property adds 3,600m2 to Parque
Arauco´s portfolio as the company continues to build its GLA of strip centers through its subsidiary, Arauco Express. Construction continues on El Carmen de Huechuraba
which will open during the fourth quarter of this year and become the company´s 11th strip center. This quarter tenant sales of Arauco Express increased by 10%, income
increased by 9% and EBITDA decreased by 5% due to higher administration expenses.
In Arauco Chillan the 12,500 m2 the expansion of the mall was completed and all commercial space was opened to the public, including the new anchor store Hites, and the
new food court. During the quarter Caffarena, OPV, Rip Curl and Cellairis opened in the new tower of the shopping center. The renovation of the old food court began and
that space will be used for new entertainment options and fashion retailers. The mall was officially inaugurated during the third quarter by members of the local government
and Parque Arauco´s CEO Juan Antonio Álvarez. This quarter, tenant sales in Arauco Chillan decreased by 1%, income increased by 7% and EBITDA increased by 10%.
In Parque Arauco Kennedy, the third quarter brought new improvements in terms of customer services. The Valet Parking service was expanded, enabling faster and easier
access for customers wishing to use the service. At the same time, Parque Arauco began operating innovative interactive kiosks designed to enable customers to quickly sign
up for Arauco Tag, the system that links the Parque Arauco Kennedy parking lot with customers’ highway toll payment system, making parking payment automatic and the
process of entering and exiting the parking lots much more convenient.
| 23
The shopping mall initiated a new platform to communicate with its customers with the
residents of Quilicura and its surroundings. New stores offering clothing and beauty
launch of Revista Detalle (www.revistadetalle.cl.) The website is a blog that provides
supplies also opened, including Americanino, Tua and Planet Sport improving the
a way to keep customers informed of news related to fashion, technology, art and
overall commercial mix of the shopping center. The mall continues to perform above
gastronomy, among other topics. The expansion of the Luxury District continues, which
expectations and this quarter tenant sales increased 16%, revenues increased 28%
will add new stores to the high end mix. The expansion is expected to be completed
and EBITDA increased 47%.
during the first quarter of 2015 and will add 1,000 m2 of GLA. During the quarter,
tenant sales in Parque Arauco Kennedy increased 1%, revenues increased by 7% and
In Arauco San Antonio, during the quarter the recently inaugurated Sonesta Hotel
EBITDA increased by 6%.
fully opened and began to see an increase in visits. The mall is also working on
improving its commercial mix and has signed contracts to welcome new brands
In Mall Arauco Maipu diversification of the commercial mix continued and new stores
during the coming months such as Maui and Sons.
were added including Place Vendome, Audiomusica, Polemic, and GNC, offering an
array of new products and services and further increasing the draw of the mall. During
The expansion of Buenaventura Premium Outlet continues and is going as planned.
the quarter, tenant sales increased 1%, revenues increased 7% and EBITDA increased
Some space has already been handed over to retailers for them to complete the
13%.
finishing of the interior space in order to open at the beginning of next year. During
the quarter tenant sales increased 10%, revenues increased 23% and EBITDA
In Arauco Paseo Estacion we continued remodeling and modernizing not only the
increased by 41%.
physical space but also the commercial mix, adding more highly demanded brands and
remodeling one of the food courts. The mall is also modernizing its signage to help
Mall Outlet Concepcion, which opened during the second quarter of this year,
customers navigate the large mall surrounded by the main train and bus station in
has been well received by the community and has quickly reached an occupancy
Santiago. Tenant sales increased 6%, revenues increased 4% and EBITDA increased
rate of 75.3%. Parque Arauco´s participation in premium outlet malls will further
6%.
be expanded with the opening of Mall Outlet Curauma, expected to be completed
during the fourth quarter of this year. The mall, located near the city of Valparaiso,
During the third quarter of 2014 Mall Arauco Quilicura inaugurated Clinica Megasalud,
will add 7,200 m2 of premium outlet retail to the coastal region of Chile.
adding health care and dental care as services offered at the shopping center for the
ARAUCO QUILICURA - SANTIAGO
PARQUE ARAUCO KENNEDY - SANTIAGO
STRIP CENTER COLON - SANTIAGO
| 24
HIGHLIGHTS BY COUNTRY
PERÚ
LARCOMAR, LIMA
| 25
In Peru, Parque Arauco announced the inclusion of the first strip center into
earn points that can be used in the mall and therefore encouraging customer
its portfolio, ViaMix Chorrillos. Chorrillos, which has 4,000 m2 of GLA, began
loyalty. During the quarter tenant sales increased by 20%, revenues
contributing to the company´s EBITDA during the third quarter.
increased by 11% and EBITDA increased by 27% as compared to the same
period in 2013.
In Larcomar, Parque Arauco continued working to position the mall as the
premier shopping center in the city. The upscale restaurant La Trattoria de
During the third quarter of 2014, after the inauguration of its expansion,
Mambrino, a well-known name in Lima, joined the already impressive list
InOutlet Faucett saw its occupancy rate steadily increasing to 81%. During
of upscale restaurants in the mall. In addition, a VIP parking area and Valet
the tenant sales increased 17%, revenues increased 18% and EBITDA
Parking service was incorporated. Finally the Larcomar webpage was re-
increased 32%.
launched with a new look and better information to improve the shopping
experience even before the customer arrives. The efforts to renovate the mall
Performance in all the MegaPlazas throughout Peru was very strong during
can be seen clearly in the numbers - this quarter the tenant sales increased
the quarter and revenues and EBITDA increased in every shopping mall.
26%, revenues increased 29% and EBITDA increased 49%.
In MegaPlaza Norte, new stores were opened including U.S. Polo and the
restaurant Mr. Shao, among others. In MegaPlaza Cañete, Coney Park, a
In Parque Lambramani Parque Arauco continued improving the commercial
store that offers entertainment for children opened. The neighborhood
mix of the mall adding new stores and services including an Easy Taxi stand
shopping center format will be expanded during the fourth quarter with
to help customers find transportation options safely. The mall´s customer
the inauguration of MegaPlaza Pisco in the city of Pisco. The US$14 million
rewards system “Puntos Bonus” gained traction and a number of new stores
project will add 14,000 m2 to the company´s portfolio and will include Plaza
in the mall joined the program to enable purchases in their store help clients
Vea, Estilos and Promart as the anchor stores.
MEGAPLAZA NORTE - LIMA
PARQUE LAMBRAMANI -AREQUIPA
MEGAPLAZA CAÑETE- CAÑETE
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HIGHLIGHTS BY COUNTRY
COLOMBIA
PARQUE CARACOLÍ, BUCARAMANGA
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In Colombia, in Parque Arboleda, the interior of the office tower
continues to be completed and will soon offer high quality, well
equipped space to business looking for commercial space in
Pereira. The shopping center remains the preferred mall in the
coffee region of the country and during the quarter the tenant
sales increased 8%, revenues increased 4% and EBITDA decreased
11%, as the mall began paying territorial taxes in 2014.
In Parque Caracoli, the Parque Arauco team continued improving
the commercial mix of the mall. The North American brand
American Eagle opened its second store in all of Colombia in the
PARQUE LA COLINA, BOGOTA
mall located in Bucaramanga. The mall showed strong growth with
tenant sales increasing 29%, revenues increasing 10% and EBITDA
remaining flat during the quarter.
Construction at Parque La Colina in Bogota is on schedule and
on budget. The shopping center will be Parque Arauco´s largest
asset in Colombia and is expected to open during the first half of
2017. The mall will include Falabella as its anchor store, various
international brands, and a variety of entertainment and service
options in its 63,400 m2 of GLA.
PARQUE ARBOLEDA, PEREIRA
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FUTURE DEVELOPMENTS
To date, Parque Arauco has announced projects that will add 132,300 m2 of GLA over the next few years. Developments have been announced
in Chile, Peru and Colombia and the total investment is estimated at US$ 579 million. Parque Arauco has a land bank valued at US$ 226.5
million (at acquisition cost), which will be used to support future growth and to develop shopping centers, outlet malls and strip centers in
Chile, Peru and Colombia.
GREENFIELD PROJECTS
NAME OF THE PROJECT
Location
Format
Estimated
Opening Date
Total GLA
(m2)
% Ownership
Owned GLA
(m2)
Total
Investment
(MMUS$)
Mall Outlet Curauma
Chile
Outlet Mall
4Q 2014
7,200
100.0%
7,200
12
Stripcenters Chile (Arauco Express)
Chile
Strip Center
Under development
14,700
51.0%
7,497
35
Stripcenters Perú
Perú
Strip Center
Under development
25,100
51.0%
12,801
72
MegaPlaza Pisco
Perú
Neighborhood
4Q 2014
TBD
50.0%
TBD
14
MegaPlaza
Perú
Various
Under development
14,000
50.0%
7,000
124
Colombia
Regional
1H 2017
63,400
55.0%
34,870
289
69,368
546
La Colina
124,400
Subtotal
EXPANSION PROJECTS
NAME OF THE PROJECT
Location
Format
Estimated
Opening Date
Total GLA
(m2)
% Ownership
Owned GLA
(m2)
Total
Investment
(MMUS$)
Boulevard V Kennedy Expansion
Chile
Regional
1Q 2015
1,000
100.0%
1,000
9
Buenaventura Expansion
Chile
Outlet Mall
4Q 2014
6,900
100.0%
6,900
24
7,900
33
Subtotal
Total
7,900
132,300
77,268
579
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LANDBANK
M2
% Ownership
Total Cost
Quilicura 2
25,486
100%
3
Buenaventura
70,297
100%
16
Coquimbo
40,000
100%
4
Chicureo
47,614
100%
10
Los Andes
40,000
100%
5
Others in Chile
50,000
100%
23
TOTAL CHILE
273,397
100%
61
Parque El Golf
15,000
70%
28.5
Lurin
67,000
100%
14
La Molina
10,085
51%
16
Colonial
2,960
51%
2
Terrenos IPSA
169,745
50%
19
TOTAL PERÚ
264,790
64%
79.5
Barranquilla
56,000
100%
54
Neiva
47,000
100%
11
Valledupar
54,000
55%
21
TOTAL COLOMBIA
157,000
85%
86
TOTAL
695,187
83%
226.5
Name
(MMUS$)
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ANALYSIS OF MARKET RISKS
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 economic growth and consumption growth in each economy in which we operate.
The decline in economic activity may adversely affect the level of sales of our tenants and therefore affect the Company's revenues, as a
percentage of our income depends on the level of sales of certain tenants. Of the 86% of Parque Arauco´s revenues that are derived from
rental revenues, approximately 85% are fixed revenues and 15% are variable revenues that depend on the volume of sales of our tenants.
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. 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.
Parque Arauco does not hold speculative positions in the derivatives market, the coverage taken will eventually be used to hedge exposures
to foreign exchange risk and interest rates risks due to the nature of the business sources of financing. The company primarily maintains its
operational and financial income and expenses in the same currency and in the local currency of each operations location.
The Company is also subject to risks regarding return on investment in Colombia and Peru, given the evolution of economic variables such
as exchange rates, interest rates and taxes, among other factors.
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CASE STUDY– LARCOMAR
In 2009, Parque Arauco´s Peru Division had a plan for growth based
on three strategic pillars: continue developing the Megaplaza format,
CHIMBOTE
develop new Greenfield projects, and find attractive acquisition
BARRANCA
opportunities. At the time, Parque Arauco´s only asset in Peru was
Megaplaza Norte, of which it owned 45%. Megaplaza Villa Chorrillos was
LIMA
CAÑETE
in development.
Peru had been experiencing strong growth, driven mainly by consumption
and private investment. The average GDP growth between 2005 and
2009 was 6.6%. There was a growing middle class, however there was
still a large informal retail market which made up a large percent of retail
CHINCHA
MegaPlaza Norte
AREQUIPA
InOutlet Faucett
Larcomar
Mega Express Villa Chorrillos
VíaMix Chorrillos
MegaPlaza Express Villa El Salvador
sales.
As Parque Arauco was researching potential Greenfield projects, it
As Larcomar was the only shopping mall in Graña y Montero´s portfolio,
was also actively monitoring the market for potential acquisitions. An
administration of shopping malls was not part of the company´s core
acquisition was an attractive option, as the property would already be
business. During its first eight years of operations, Larcomar performed
producing a mature EBITDA. Various options in Latin America were
below expectations and produced a negative EBITDA. The commercial
being considered when contact was made with Graña y Montero, the
mix of the mall was tailored primarily to tourists, and 50% of the mall´s
largest construction company in Peru.
GLA was dedicated to entertainment options such as a movie theaters
and night clubs. But given the mall´s design, location, and international
Graña y Montero built its first and only shopping center in 1998, the
draw, it was clear this shopping center held much more potential.
emblematic Larcomar. It was built on a cliff overlooking the Pacific
Ocean in the Miraflores sector of Lima, one of the best neighborhoods in
The 26,000 m2 mall was an attractive acquisition option for Parque
the city, with a population of primarily wealthy families. Miraflores is also
Arauco. It was a well-built project in a prime location within a very
the most popular tourist destination in Lima, as there are many hotels
desirable sector of Lima. The socio-economic profile of Miraflores would
and tourist attractions in the area. Since its inauguration, Larcomar has
provide exposure for Parque Arauco to a different type of customer base
been one of the most visited spots in Lima, known for its architectural
than it had in Megaplaza Norte, which was in a predominately middle
uniqueness. It has also been a tourist hotspot and is listed in many
class area in northern Lima. In 2009 Larcomar registered tenant sales of
international guide books on Lima.
US$50 million and an EBITDA of US$ 5.7 million.
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CASE STUDY – LARCOMAR
Parque Arauco considered many factors during the due diligence process of the
commercial mix needed to be revamped and a larger percentage of GLA had to
acquisition. The main competitor in the area at the time was Jockey Plaza and
be dedicated to retail brands, especially well known international brands. The
the formal retail market was growing quickly in Peru and especially in Lima. The
company reached out to many brands that it has been working with in Chile,
company carefully studied market trends and investigated what was missing
including many that were not yet in the Peruvian market. At the same time,
from the current commercial mix in Miraflores and the surrounding area. The
negotiations began with the retailers already in Larcomar that would remain
physical renovations that would be required were also evaluated. After many
in the mall in order to rearrange the layout of the stores. An important aspect
months of research and negotiations, a deal was reached and the purchase of
of a mall´s layout is ensuring that the store layout encourages customer flow.
100% of Larcomar was finalized in July of 2010 for US$ 58 million.
In addition, the overall protocols and processes followed when working with
tenants were evaluated and improved to encourage professionalism, lower
With the purchase completed, Parque Arauco immediately began working on
costs, and streamline the working relationship.
repositioning the mall and improving its results. The tenant mix needed to be
strengthened and the overall commercial layout needed to be improved. The
While the commercial team was working on the tenant mix, the engineering
common space needed to be renovated and redesigned, the mall´s accesses had
and infrastructure teams were working on improving the physical look and
to be overhauled, and the exterior would be revitalized.
feel of the mall. Many renovations were needed for the central plazas, service
areas, mall accesses, and parking lots. In 2012 Larcomar´s “Facelifting” plan
Parque Arauco wanted to make Larcomar not just the most popular mall for
was approved and Parque Arauco invested more than US$5 million between
tourists but also the preferred mall of the residents of Miraflores and the
2012 and 2013.
surrounding areas of San Isidro, Barranco and San Borja. To achieve this, the
Larcomar before the renovation.
| 33
CASE STUDY – LARCOMAR
The common areas, plazas, and surrounding parks were revitalized and landscaped. The façade, flooring, hallways, and lighting throughout the mall were renewed.
The mall´s services were improved as well, including the bathrooms, parking lot, and its security and cleaning teams.
Larcomar´s commercial mix was gradually adjusted between 2010 and 2013 in order to dedicate a much larger percentage of GLA to retail space. By 2012 tenant sales per
square meter in the mall had improved by double digits in every category and in some cases by over 100% in comparison to tenant sales per square meter in 2010. Brands
such as Adidas, Quiksilver, and Guess were brought in to improve the fashion offering of the mall.
In 2013 Larcomar became home to international brands entering Peru for the first time including Gap and Banana Republic. This year Desigual opened its first store in
Peru in the shopping center and H&M announced it would open its second store in Peru in Larcomar in 2015. La Trattoria di Mambrino opened during 2014, adding to the
gastronomical offering of the mall. Larcomaps was launched this year to help customers find their way around the mall and VIP and Valet parking services were launched
to improve the customer experience.
The Larcomar turn-around has been a great success, which can be seen clearly in the shopping center´s results. During the first nine months of 2014, tenant sales reached
over US$ 60.5 million, 28% higher than the same period in 2013. The mall’s revenues improved 24% and EBITDA 36%. The Parque Arauco Peru team continues working
to improve the commercial mix, services, and overall customer experiences offered in Larcomar so that it remains the preferred mall for the residents of Miraflores and the
surrounding area.
Larcomar today.
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CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEET
CH$ THOUSANDS
30.09.2014
31.12.2013
ASSETS
68,946
Other Current Non-Financial Assets
4,180
Trade Accounts Rec. and Other Rec.
Current Tax Receivable
Total Current Assets
31.12.2013
Current Liabilities
108,255
Accounts Receivable from Rel. Comp.
30.09.2014
LIABILITIES
Current Assets
Cash and Cash Equivalents
CH$ THOUSANDS
Other Current Financial Liabilities
52,704
35,726
3,149
Comm. Cred. and Other Acc. Payable
11,265
25,101
17,566
18,886
Current Acc. Payable to Rel. Parties
2,188
1,902
6,152
4,836
Current Provisions
1,508
2,330
22,404
21,291
Tax Liabilities
5,908
5,083
158,556
117,108
Current Provisions for Employees
3,086
1,999
Other Current Liabilities
1,723
3,923
Total Current Liabilities
78,383
76,064
Other Non-Current Fin. Liabilities
405,760
405,652
Deferred Tax Liabilities
100,194
75,999
Other Non-Current Liabilities
17,736
8,934
Total Non-Current Liabilities
523,689
490,585
TOTAL LIABILITIES
602,072
566,649
Non-Current Liabilities
Non-Current Assets
25,791
26,458
278
808
0
542
Share of Profit (Loss) of Associates Accounted
50,586
49,634
Treasury Shares
Intangible Assets exc. Surplus Value
15,160
14,988
Surplus Value
17,427
15,629
2,922
2,724
1,068,376
947,839
39,350
26,225
Total Non-Current Assets
1,219,890
TOTAL ASSETS
1,378,445
Other Non-Current Non-Fin. Assets
Non-Current Accounts Receivable
Non-Current Acc. Rec. with Rel. Part.
Property, Plant and Equipment
Investment Properties
Deferred Tax Assets
EQUITY
336,925
233,643
(3,737)
(3,737)
Accumulated Earnings (Losses)
294,211
290,550
Premium on New Issued Shares
201
0
4,853
(10,113)
Attrib. to Shareholders of the Company
632,453
510,344
Minority Interest
143,921
124,963
1,084,848
Total Equity
776,374
635,307
1,201,956
TOTAL LIABILITIES AND EQUITY
1,378,445
1,201,956
Issued Share Capital
Other Reserves
CONSOLIDATED FINANCIAL STATEMENTS
CASH FLOW STATEMENT
30.09.2014
30.09.2013
Receipts from sales of goods and services
137,235,554
112,058,479
22%
Payments to suppliers for goods and services
(68,390,124)
(42,350,581)
61%
Payments on behalf of employees
(10,285,269)
(8,142,149)
26%
(1,213,151)
(2,930,464)
-59%
(20,367,874)
(19,412,553)
5%
36,979,136
39,222,732
-6%
CH$ THOUSANDS
Var. %
Net cash flow from OPERATING activities
Income taxes refunded
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
(3.512.345)
(11.799.567)
-70%
Loans to related entities
(1.315.958)
(364.421)
261%
Purchases of property, plant and equipment
(530.380)
(642.565)
-17%
Purchases of intangible assets
(138.202)
(3.990)
3364%
Proceeds from related entities
542.191
761.142
-15%
2.569.709
1.218.809
-29%
(84.531.035)
(99.814.401)
111%
6.491.671
(1.252.088)
-618%
(80.424.349)
(111.897.081)
-28%
112,306,650
13,708,498
719%
77,331,149
97,358,336
-21%
285,415
1,797,851
-84%
(80,198,278)
(31,549,023)
154%
0
(1,004,809)
N/A
(2,328,648)
(1,355,084)
72%
(23,900,658)
(18,646,794)
28%
3,089,444
2,347,972
32%
(17,815,653)
(15,196,538)
17%
10,815,939
(3,812,512)
-384%
Net cash flow from financing activities
79,585,360
43,647,897
82%
Net increase (decrease) in cash and cash equivalents, before the effect of changes in the exchange rate
36,140,147
(29,026,452)
-225%
3,168,904
(2,222,811)
-243%
Increase (decrease) in net cash and cash equivalent
39,309,051
(31,249,263)
-226%
Cash and cash equivalents at beginning of period
68,945,796
103,782,289
-34%
108,254,847
72,533,026
49%
Dividends received
Purchases of other long-term assets
Other inputs (outputs) in cash
Net Cash flow from investment activities
Net cash flow from FINANCING activities
Share Issuance
Proceeds from long term debt
Loans to related entities
Loan Payments
Loan payments to related entities
Financial leasing payments
Dividend payments
Interest received
Interest paid
Other inputs (outputs) in cash
Effects of variation in the exchange rate on cash and cash equivalents
Cash and cash equivalents at end of period
CONTACTS
SAMANTHA ZERBE (Head of Investor Relations) | EDUARDO PEREZ MARCHANT (Corporate Finance Manager) | CLAUDIO CHAMORRO CARRIZO (CFO)
TEL: (562) 22990510 | FAX: (562) 22114077 | EMAIL: [email protected]
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