Conference Call Transcript

1Q12 Results
Aliansce (ALSC3 BZ)
May 9th, 2012
Operator:
Good morning ladies and gentlemen. At this time we would like to welcome everyone
to the Aliansces 1Q12 earnings conference call. Today with us, we have Mr. Henrique
Cordeiro Guerra, Executive Director; Mr. Renato Botelho, CFO; and Mr. Eduardo
Prado, IR Manager.
We would like to inform you that this event is being recorded and all participants will be
in listen-only mode during the Companys presentation. After the Companys remarks
are completed, there will be a question and answer section for investors and analysts.
At that time, further instructions will be given. Should any participant need assistance
during this call, please press *0 to reach the operator. There will be a replay facility for
this call for one week.
We would like to inform that questions can only be asked by telephone, so if you are
connected through the webcast, you should email your questions directly to the IR
team at ri@aliansce.com.br
Before proceeding, let me mention that forward-looking statements are based on the
beliefs and assumptions of the Companys management, and on information currently
available to the Company. They involve risks, uncertainties and assumptions because
they relate to future events and therefore depend on circumstances that may or may
not occur in the future. Investors should understand that general economic conditions,
industry conditions and other operating factors could also affect the future results of the
Companys and could cause results to differ materially from those expressed in such
forward-looking statements.
Now, I will turn the conference over to Mr. Henrique Cordeiro Guerra, Aliansces CEO,
who will start the presentation. Mr. Henrique, you may begin the conference.
Henrique Cordeiro Guerra:
Good morning. I would like to welcome everyone to the 1Q12 earnings release for
Aliansce. During this quarter, Aliansce continued to benefit from the solid growth of
operating and financial indicators, Aliansces portfolio is uniquely positioned;
approximately 25% of our GLA is in the North and Northeast regions of Brazil, while the
balance is concentrated in the Southeast.
Our portfolio is also diversified in terms of income segments, with approximately 34%
being exposed to the emerging middle class in Brazil. Assets with less than five years
of operating history represent 57% of the Companys GLA.
In the 1Q12 our consolidated gross revenues increased by 16% to reach R$66.7
million. Our NOI increased by 19.9% to reach R$60 million, and our adjusted EBITDA
grew by 20.4% to reach R$45 million. The adjusted NOI and adjusted EBITDA margins
were 92.9% and 64.1% respectively.
It is important to highlight that the adjusted EBITDA margin was adversely impacted by
higher G&A costs for the payment of 2011 executive bonuses during this past quarter.
Excluding these payments, the adjusted EBITDA margin would have approximately
71.2%. The AFFO was of R$37.7 million in the 1Q12. The portfolios occupancy was of
98.5%, the highest occupancy ever recorded by the Company.

Conference Call Transcript

1Q12 Results
Aliansce (ALSC3 BZ)
May 9th, 2012
The Company also closed the acquisitions of additional ownership in our property in
Salvador and all of the Pargim portfolio, both transactions had been previously
announced and were concluded in February and April respectively.
Aliansce raised R$685 million of financings to fund these transactions and maintain a
comfortable balance sheet position. Together, these transactions increased Aliansces
GLA by 23.7%.
On April 25, Aliansce opened its second property in Belem. Parque Shopping Belem,
which is 97% leased is going to benefit from the same success of Boulevard Belem,
given the pent up demand in this area.
We will continue to selectively pursue new development opportunities. Our focus lies in
identifying assets that will have a long term sustainable competitive advantage in large
markets.
We will maintain our disciplined investment approach. This, we believe, is most
appropriate to deal with the price and pressure from escalating construction costs and
a more intense competitive environment.
Our priorities are to vigorously pursue the expansion and mix used potential of our
assets to focus our resources on our more strategic properties and to open our malls in
Bauru, Vila Velha and Maceio.
The Vila Velha and Bauru projects have scheduled openings this coming November,
and are 65% committed by tenants respectively, both actually being 65%
approximately committed by tenants. Parque Shopping Maceio has planned opening in
September 2013, and is 62% commited by tenants. These assets combined will
increase Aliansces 1Q12 own GLA by 23.9%.
The reduction of interest rates will have a positive impact on the sale of retailers in our
malls and consequently on our rental income. We are confident that our portfolio is
strategically positioned to continue on a solid growth path in 2012.
With that, I would like to turn to the presentation and just highlight some key operating
and financial figures for the Company.
Turn to page two, please. Main important aspect of this page is its segmentation of our
portfolio to show the different growth trajectories here of the assets that are more
mature and the assets that are less mature, the new generation of assets for the
Company, as you will see later in the presentation when we speak about same store
sales and same store rental growth.
Also, I would like to highlight that in the new generation of assets, as I had mentioned
before, the Parque Shopping Belem assets was successfully opened this past April.
Turning to page three, I would just like to comment on the recent acquisitions that were
previously announced and have now been consummated. I think it is important to
mention the impact they would have, as you will see not only on page three, but in
terms of GLA growth, but also on page four, if you turn to the next page, please, when
you can see the pro-forma impact in terms of NOI and adjusted EBITDA.
Down below, you see basically, if we had recorded both these acquisitions as of
January 1st of this year, we would have had a 21% increase in our NOI, and almost a

Conference Call Transcript

1Q12 Results
Aliansce (ALSC3 BZ)
May 9th, 2012
25% increase in our adjusted EBITDA. Our EBITDA margin would have increased to
67.9% while our NOI margin would have gone from 92.9% to 93.4%. This shows how
synergistic this is with our platform, how much scale they bring to our portfolio.
Now turning to page five, the operating highlights of this section of the presentation,
between the 1Q11 and the 1Q12 we had 14.5% increase in our sales. It is important to
know, again, as I have mentioned previously, the outstanding performance of our new
generation of assets, which basically had same store sales growth of 15% between the
1Q11 and the 1Q12, while our co-assets expanded by 9.5%.
Shifting now to page six, getting into the financial highlights of this section of the
presentation, we see on the left hand side the gross revenues breakdown for the 1Q12,
where minimum rent represented 84% of our rental income.
Percentage rents accounted for 8.5%, stands and kiosks, for 7.3%, services rendered,
10.7%. We had an increase in our parking revenue from two malls that began to
charge for parking, and also from a positive adjustment in the parking fee in several of
our properties, which parking revenue now represents 14% of our overall revenue
breakdown, and key money 5.4%.
Gross revenues, as you see, on the right-hand side of the presentation, increased
16.1% to total R$76.7 million.
On page seven, we talk about rental revenues. It is important to see basically the
growth of our rental revenues reaching 13.5%. If you look at same-store rental growth
for the core assets, 11.2%, and new generation of assets 9.8% growth between the
same quarter in 2011 and the 1Q12. I think the important thing to highlight is that we
expect positive momentum and possibility to adjust, to capture very significant lease
spreads, given the growth of same-store sales and new generation of assets.
Now, turning to page eight, please we see basically the evolution of NOI. Our NOI
increased almost 20% between the 1Q11 and the 1Q12. Our net income also having
significant growth, to reach R$31 million. our adjusted EBITDA margin, on the upper
right-hand side, increasing 20% to reach R$60 million. Our adjusted FFO, we had a
small decrease in our adjusted FFO came in at R$32.7 million.
Turning now to page nine, occupancy rates for the Company, in core assets at 99.5%,
new generation of assets at 97.2%, occupancy costs we see the core assets at 10.3%
and the new generation of assets at 10.5%.
Shifting now to page ten, I would just like to highlight the own GLA growth that we have
here. I think the important thing here is really to show the growth that we have, the
important growth that we will have coming from the three malls and the expansions,
and the tower that all are planned actually for the next 18 months. That would take our
GLA to approximately 475,000 m2.
On page 11, the three malls, greenfields that we now have that we are working on. Our
Boulevard Vila Velha, pictures are not excellent here, but we have construction in all
three sites. And we are closely monitoring the progress of leasing. In these malls we
expect them to open with above 90% occupancy, and maybe even significantly higher
than that. That is certainly the case with our Parque Shopping Macei, which has
longer tenure between now and the opening.

Conference Call Transcript

1Q12 Results
Aliansce (ALSC3 BZ)
May 9th, 2012
Shifting now to page 12, talk about the expansions. We have about a dozen
expansions, actually, across our portfolio of properties, all with planned openings
between now and the next 24 months, approximately.
On page 13, I would like to talk about the balance sheet, beginning with our total debt
position currently of R$966 million, net debt of R$741 million. You see basically the
debt profile of the Company; we have increased our exposure to CDI to try to capture
some of the benefit of decreasing interest rates in the Country. But we have maintained
ample coverage here, as seen by the amortization schedule below.
On the next page you see the main performance indicators of the Company. These are
the principal indicators. And I would be very happy to take any questions that you may
have, any comments on any aspects of our operations and finance.
I would just like to add one comment, actually, to the presentation. We strengthened
our cash position on the balance sheet with an additional financing of R$100 million in
the month of April. So, just as an addendum here to add that cash position now you
can incorporate this additional R$100 million, which we have planned already.
John Friedland, Porter Orlin:
Hey, Henrique. How are you?
Henrique Cordeiro Guerra:
Very well, John. Nice to hear from you.
John Friedland:
Likewise. Henrique, can you just comment on whether you see much correlation
between movement in the Real and sales in your malls? How does it all correlate
typically?
Henrique Cordeiro Guerra:
I would say it is pretty inelastic, John. I think devaluation, it had to be a steeper
movement where you begin to have inflation as a result of devaluation, to begin to have
an impact on the purchasing power.
John Friedland:
OK. Let us see, I noticed that parking lot revenues are increasing as a percentage of
your sales.
Henrique Cordeiro Guerra:
That is right.
John Friedland:
Can you comment on what is going on there?

Conference Call Transcript

1Q12 Results
Aliansce (ALSC3 BZ)
May 9th, 2012
Henrique Cordeiro Guerra:
Yes. We had two malls that did not collect parking and began collecting parking this
year. It was in our property in Campos and our property in Braslia. And we also had
readjustments in about ten properties, where we had markup in the hourly tickets.
John Friedland:
OK. That is all for me. Thank you so much.
Operator:
There are no further questions at this time.
Henrique Cordeiro Guerra:
I would like to thank everyone for their interest and participation on the call. And we
remain here available to clarify any issues or questions that you may have, as always.
Thank you very much, and have a very nice day.
Operator:
Thank you. This concludes todays presentation. You may disconnect your line at this
time, and have a nice day.

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