2Q19 INVESTOR PRESENTATION - Parque Arauco
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PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 1
2Q19 INVESTOR
PRESENTATION
MEMORIA INTEGRADA 2018 PARQUE ARAUCO
IMPORTANT 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.
CONTACTS: Tori Creighton (Head of Investor Relations)
Francisco Moyano (Corporate Finance Manager)
Claudio Chamorro (CFO)
Tel: (562) 22990510 | Email: ir@parauco.com
MEMORIA INTEGRADA 2018 PARQUE ARAUCO
Content
1 2
INTRODUCTION PG. 4 OUR OPERATIONS PG. 10
›› Parque Arauco at a glance ›› Chilean portfolio
›› Purpose, Mission & corporate strategy ›› Peruvian portfolio
›› Geographic presence: assets and formats ›› Colombian portfolio
›› Parque Arauco iconic and dominant
shopping centers
3 4
INVESTMENT HIGHLIGHTS PG. 14 FUTURE DEVELOPMENTS PG. 31
›› Investment highlights ›› Future developments
›› Stability ›› Landbank
›› Diversification ›› Glossary
›› Growth
›› Sustainability & Corporate governance
›› Financial strength
PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 4
1
INTRODUCTION
CONTENT
Parque Arauco at a glance
Purpose, Mission & corporate strategy
Geographic presence: assets and formats
Parque Arauco iconic and dominant
shopping centers
PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 5
PARQUE ARAUCO
At a glance
Parque Arauco is a real estate FINANCIAL INDICATORS (JUNE 2018) SHAREHOLDER STRUCTURE
company dedicated to the KEY FIGURES TOTAL Data as of June 2018
development and operation GLA (m )
2
1,061,500
of mixed-used properties in Local
Revenues LTM (US$ MM) 288 mutual Other
the Andean region. funds shareholders Foreign
EBITDA LTM (US$ MM) 215 Abumohor
2% investment
family 6%
EBITDA Margin LTM (%) 73.6% funds
3%
Net Financial Debt (US$ MM) 1,087 Said Yarur 22%
family
POSITIVE Total Assets (US$ MM) 3,589
LOCAL RISK RATING 5%
17%
Risk Rating Agency Local
pension
funds
Feller
AA
17 Regional
shopping centers
10 Neighborhood
shopping centers
ICR 25%
AA Controlling
group
20%
Fitch
Local
AA-
7 Outlets 19 Strip
centers
9 Offices, medical
centers, hotels
brokers
PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 6
IN THE LAST SIX YEARS
Parque Arauco has doubled GLA, NOI and AFFO
1995 2010
1982 Parque Arauco S.A. IPO 2006 Parque Arauco opens first mall in 2011
Parque Arauco Kennedy Colombia, Parque Arboleda in Pereira
Parque Arauco expands into Peru Capital increase
opens as first shopping with the purchase of a 45% stake for US$145 MM
center in Chile. in MegaPlaza Norte in Lima.
2014 2016
Capital increase for US$182 MM 2015 Capital increase for US$100 MM 2019
Purchase of minority shareholders Parque Arauco achieves full operational
in Colombia and Peru control of Peruvian operation with purchase
of Wiese Group minority interest.
GLA (M2) NOI (US$ MM) CONTROLLED ADJUSTED FFO (US$ MM)
+1.9x +2.0x +1.9x
1,053,000
1,012,000 147
947,000 239 238 140
818,500
203 115
693,100 728,500 179 103
154 99 91
559,700 135 78
118
2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018
PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 7
Purpose, mission & corporate strategy
CORPORATE PURPOSE
To create spaces that contribute to improving
people’s lives
MISSION
To be leaders in developing and operating real
estate assets, through profitable and sustainable
growth that generates value for our stakeholders.
STRATEGIC OBJECTIVES
Growth
Profitability
Sustainability
OUR VALUES
Excellence and Happiness are the cornerstones of our corporate culture
PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 8
GEOGRAPHIC PRESENCE
Assets and formats
Chile Peru 53 ASSETS
29 ASSETS 20 ASSETS
We are present in Latin
American markets with high
growth potential in real
estate development:
8 Regional
shopping
6 Regional
shopping
Chile, Peru and Colombia.
centers centers
Colombia
4 ASSETS
1 Neighborhood
shopping
9 Neighborhood
shopping
center centers
3 Regional
shopping
centers
16 Strip
centers
3 Strip
centers
2 Premium
Outlets
1 Outlets
4 Premium
Outlets
PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 9 PARQUE ARAUCO HAS ICONIC AND DOMINANT SHOPPING CENTERS In Chile, Peru and Colombia PARQUE ARAUCO KENNEDY / CHILE ARAUCO MAIPÚ / CHILE ARAUCO ESTACIÓN / CHILE LARCOMAR / PERU MEGAPLAZA NORTE / PERU PARQUE LA COLINA / COLOMBIA
PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 10
OUR
OPERATIONS
2
CONTENT
Chilean portfolio
Peruvian portfolio
Colombian portfolioPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 11
Chilean portfolio
IN CHILE PARQUE ARAUCO HAS:
17 8 Regional shopping centers
years 1 Neighborhood shopping center
16 Strip centers
AVERAGE AGE
OF THE PORTFOLIO 4 Outlets
FORMAT YEAR INCORPORATED TOTAL GLA (m2) OWNERSHIP (%) Parque Arauco-owned OCCUPANCY (%)
GLA (m2)
Parque Arauco Kennedy Regional Shopping Center 1982 110,500 100% 110,500 98.6%
Arauco Maipú Regional Shopping Center 1993 72,000 100% 72,000 99.6%
Arauco Chillán Regional Shopping Center 2007 35,500 51% 18,105 93.5%
Arauco Estación Regional Shopping Center 2008 67,000 83% 55,610 95.7%
Arauco San Antonio Regional Shopping Center 2009 28,500 36% 10,175 95.6%
Arauco Express 1
Strip Center 2012 39,500 51% 20,145 92.3%
Arauco Premium Outlets 2
Outlet 2012 46,000 100% 46,000 98.3%
Arauco Quilicura Regional Shopping Center 2013 32,000 51% 16,320 97.7%
Arauco Coronel Regional Shopping Center 2017 30,000 51% 15,300 97.6%
Parque Angamos Neighborhood Shopping Center 2018 10,500 55% 5,775 69.3%
Arauco El Bosque Regional Shopping Center 2018 30,000 51% 15,300 100.0%
Total Chile 501,500 77% 385,230 96.7%
1. Includes 16 strip centers located in: Santiago (12), Viña del Mar (1), Calama (1), Coquimbo (1) and Antofagasta (1).
2. Includes four premium outlets located in Santiago, Concepción, Coquimbo and Curauma.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 12
Peruvian portfolio
IN PERU PARQUE ARAUCO HAS:
8 6 Regional shopping centers
years 9 Neighborhood shopping centers
3 Strip centers
AVERAGE AGE
OF THE PORTFOLIO 2 Outlets
FORMAT YEAR TOTAL GLA (m2) OWNERSHIP (%) Parque Arauco-owned OCCUPANCY (%)
INCORPORATED GLA (m2)
MegaPlaza Norte Regional Shopping Center 2006 112,000 92% 102,816 98.7%
MegaPlaza Express Villa Chorrillos Neighborhood Shopping Center 2009 8,000 92% 7,344 96.0%
Larcomar Regional Shopping Center 2010 27,000 100% 27,000 79.9%
Parque Lambramani Regional Shopping Center 2010 30,000 100% 30,000 95.6%
MegaPlaza Chimbote Regional Shopping Center 2012 28,000 92% 25,704 95.8%
MegaPlaza Express Villa El Salvador Neighborhood Shopping Center 2012 9,000 92% 8,262 95.0%
MegaPlaza Express Chincha Neighborhood Shopping Center 2013 10,500 89% 9,387 95.8%
MegaPlaza Cañete Neighborhood Shopping Center 2013 26,000 100% 26,000 85.4%
MegaPlaza Express Barranca Neighborhood Shopping Center 2013 16,500 92% 15,147 98.6%
InOutlet (premium outlets) and Viamix (strip centers) 1
Outlets / Strip Centers 2013 10,000 92% 9,180 89.7%
MegaPlaza Express Pisco Neighborhood Shopping Center 2015 14,500 92% 13,311 92.8%
El Quinde Cajamarca Regional Shopping Center 2015 33,000 100% 33,000 95.8%
El Quinde Ica Regional Shopping Center 2015 36,500 100% 36,500 98.9%
MegaPlaza Express Jaén Neighborhood Shopping Center 2016 14,500 87% 12,601 96.7%
MegaPlaza Huaral Neighborhood Shopping Center 2017 14,000 92% 12,852 96.3%
MegaPlaza Villa El Salvador II Neighborhood Shopping Center 2017 15,500 92% 14,229 93.0%
Total Peru 405,000 95% 383,333 95.0%
1. InOutlet and Viamix includes two premium outlets in Lima and three strip centers in Lima.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 13
Colombian portfolio
IN COLOMBIA PARQUE ARAUCO HAS:
3 Regional
shopping centers
1 Outlet
5
years
AVERAGE AGE
OF THE PORTFOLIO
FORMAT YEAR INCORPORATED TOTAL GLA (m2) OWNERSHIP (%) Parque Arauco-owned GLA OCCUPANCY (%)
(m2)
Parque Arboleda Regional Shopping Center 2010 41,000 55% 22,550 96.8%
Parque Caracolí Regional Shopping Center 2013 38,500 100% 38,500 91.2%
Parque La Colina Regional Shopping Center 2016 62,000 100% 62,000 97.0%
Arauco Premium Outlet Bogotá (Sopó) Outlet 2017 13,500 100% 13,500 57.1%
Total Colombia 155,000 88% 136,550 92.0%PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 14
INVESTMENT
HIGHLIGHTS
3
CONTENT
Investment highlights
Stability
Diversification
Growth
Sustainability
& Corporate governance
Financial strengthPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 15
Investment highlights
Financial
Strength Stability
5 1
Sustainability and
Corporate Governance Diversification
4 2
3
GrowthPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 16
STABILITY
Revenue type and contract duration
REVENUE BREAKDOWN CONTRACT LENGTH TENANT REVENUE
(Based on % of revenues) (Based on % of revenues LTM)
4%
Parking 11%
Other 39% 100% 12%
revenues Top 10
10%
15%
85% 36%
Rental 11%
revenues Variable
revenues
4 TOTAL
88%
Other tenants
years years years years
89%
Fixed
revenues
Our rental revenues are derived primarily
5.7 Our top 10 tenants
represent only 12% of
12 %
from fixed contracts and are protected years weighted average length of
rental contracts
Parque Arauco’s total
against inflation. revenue.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 17
STABILITY
Consistent same store growth and healthy occupancy cost
SAME STORE SALES (SSS) AND SAME STORE RENT (SSR) (%) OCCUPANCY COST (%)
2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
CHILE 11.4 11.3
10.7 10.9 11.0
10.6
10.4
10.0 9.8
3.4 4.4 3.8
2.6
1.7 2.1 2.1
1.2 1.3
0.1
-0.5
SSS SSR -1.5 -2.2 -2.2
-3.1 -2.7
-4.0 -4.2
PERU 7.5 7.7 8.3
6.6 7.4 7.4 7.2 7.4 7.6
6.1 6.8
7.0
4.2 4.1 3.8 3.6 4.2
3.4 3.5 4.1
3.0 2.8 2.8
1.6 1.3 2.2
0.7
SSS SSR
10.7 16.0
COLOMBIA 8.6 13.9 13.2 13.2 13.9
8.1 12.7 12.5
7.4 7.1 11.1
6.6 10.0
5.3 5.5 5.3
4.3 4.0
3.7
2.5
0.2 0.3
-0.2
-0.9 -0.9 SSS SSR
* Note: Peru’s Same Store Sales and Same Store Rent in 4Q17 do not include Larcomar due to contingencies.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 18
STABILITY
Results have been positive in all three countries
GLA (M2) TENANT SALES1 (US$)
1,061,500 m2 MMUS$ 2,901
Total M2 47,2% 14,6% Total US$ MM 55,4% 11,0%
501,500 m2 155,000 m2 MMUS$ 1,606 MMUS$ 318
Chile Colombia Chile Colombia
SALES/M2
295
Chile
38,2% 221 33,7%
405,000 m2 Peru MMUS$ 976
Peru Peru
194
Colombia
COUNTRY LEVEL EBITDA1,2 (US$ MM) COUNTRY LEVEL REVENUES1 (US$)
MMUS$ 212 MMUS$ 287
Total US$ MM 59,8% 13,2% Total US$ MM 58,9% 13,9%
MMUS$ 127 MMUS$ 28 MMUS$ 169 MMUS$ 40
Chile Colombia REVENUES/M2 Chile Colombia
29
Chile
17
26,9% Peru
27,2%
MMUS$ 57 MMUS$ 78
Peru 23 Peru
Colombia
1. In MUSD using the following exchange rates: US$1= CLP 690.87 US$1= PEN 3.32, US$1= COP 3,248.72.
2. Including overhead expenses (Corporate headquarters, regional Services Center, Chile Division, Peru Division and Colombia Division)PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 19
DIVERSIFICATION
Parque Arauco operates in three attractive economies
RETAIL CONSUMPTION (US$ Billion) NOMINAL INTEREST RATES
2015 2017 2018E 2020E 2022E BCP 7 años BCP 2 años
5
CHILE 4,3% 4.5
3,6% 3,8%
3,3% 4
3.5
18.6 million 4.0% 62,4
Population 2018 GDP 54,2 58,1 3
51,4 52,5 E-Commerce/Total
2.5
2.6% 2.8% 2.7% In-store sales
jul.-17
sept.-17
nov.-17
ene.-18
mar.-18
may.-18
jul.-18
sept.-18
nov.-18
ene.-19
mar.-19
may.-19
Inflation 2019f GDP 2020f GDP 1,5 1,8 2 2,3 2,8 Online sales
7
PEN 10Y PEN 20Y
PERU 6.5
2,4%
2,0% 6
1,6% 1,5%
32.2 million 4.0% 5.5
Population 2018 GDP 35,1 37,3 E-Commerce/Total 5
31,1 32,6
28,7
2.3% 3.4% 3.5% In-store sales 4.5
Inflation 2019f GDP 2020f GDP
jul.-17
sept.-17
nov.-17
ene.-18
mar.-18
may.-18
jul.-18
sept.-18
nov.-18
ene.-19
mar.-19
may.-19
0,3 0,5 0,5 0,7 0,9 Online sales
7.5 COGR10Y Index COGR1Y Index
COLOMBIA 12,1%
7
8,7%
5,2% 6.5
3,7%
6
49.8 million 2.7% 78,6
Population 2018 GDP 74,3 5.5
68,8 69,5 70,8 E-Commerce/Total
5
3.3% 3.1% 3.1% In-store sales
4.5
Inflation 2019f GDP 2020f GDP 1,2 2,7 3,9 7,1 10,8 Online sales 4
jul.-17
sept.-17
nov.-17
ene.-18
mar.-18
may.-18
jul.-18
sept.-18
nov.-18
ene.-19
mar.-19
may.-19
Source: GDP Growth, Population: Bloomberg consensus, June 2018. Retail Sales: Euromonitor, December 2018.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 20
DIVERSIFICATION
Parque arauco diversifies its market risks
at a country, format, and socio-economic level
COUNTRY LEVEL DIVERSIFICATION FORMAT LEVEL DIVERSIFICATION SOCIO-ECONOMIC DIVERSIFICATION
(Based on % of revenues) (Based on % of revenues) (Based on % of revenues)
14% 5% 7% 9%
Colombia Neighborhood 48% Medium-low
Outlet
Medium
27% 3% Strip Center
Peru
59% 85% 43%
Chile Regional Medium-high
GLA BY CATEGORY (%)
%
50.0 46.2
45.0
40.0
35.0 30.9 31.7 29.8 Chile
30.0 26.9 26.0
25.0 20.8 19.5 22.3 Perú
20.0 18.1 16.6 17.2
15.3 16.0 13.4
15.0 11.2 12.0 10.4 Colombia
10.0 7.2
3.9
5.0 0.9 2.0 0.4 1.2 Consolidated
0.0
Departament Home improvement Food & Specialized retail Mixed-use & services Others
Stores & supermarkets entertainmentPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 21
GROWTH
Parque Arauco’s investment history
Parque Arauco is a real estate company dedicated to the
development and operation of mixed-used properties in the
Andean region.
3% Our value creation
spread (approx).
TOTAL INVESTMENT (US$ MM)* VALUE CREATION SPREAD
1,391
53
71 3% 8%
159
5% Landbank
277
12% M&A
316 12% Minority Interest
5%
174
212
71%
Greenfields
125 and expansions
2012 2013 2014 2015 2016 2017 2018 2Q19 TOTAL WACC Spread Over Cap Rate
WACC
1. Using the following exchange rates: US$1= CLP 690.87. M&A considers cash flows used for acquiring subsidiares or other businesses. Minority interests considers cash flows used for acquiring non-con-
trolling interests and other payments to acquire joint ventures. Greenfields and landbank includes purchase of other long-term assets. This does not include other investments, including interests recieved,
purchases of property, plant and equpment, purchases of intangible assets, dividends recieved, and other inputs (outputs) of cash.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 22
GROWTH
Total return
Parque Arauco’s value creation is proven by the fact that it has had one of the
highest “Total Return” of the real estate sector in the last years.
TOTAL RETURN1, LAST 5 YEARS TOTAL RETURN1, LAST 10 YEARS
ANNUALIZED, LOCAL CURRENCY ANNUALIZED, LOCAL CURRENCY
18%
16%
19%
12% 17% 17% 17%
11%
15%
6% 4% 3% 13% 12%
10% 9%
0% -1% -4% 9%
-7% -8%
1 2 3 4 5 6 7 8
-10% 5% 3% 1%
9 10 11 12
13 1 2 3 4 5 6 7 8 9 10 11 12 13
-21% -8%
14 14
1 Iguatemi Empresa de Shopping C 9 SACI Falabella 1 Iguatemi Empresa de Shopping C 9 SACI Falabella
2 Parque Arauco SA 10 Cencosud SA 2 Parque Arauco SA 10 Taubman Centers Inc
3 Multiplan Empreendimentos Imob 11 Taubman Centers Inc 3 Multiplan Empreendimentos Imob 11 S&P/CLX IPSA CLP TR
4 S&P 500 Index 12 Macerich Co/The 4 Simon Property Group Inc 12 Hammerson PLC
5 S&P/CLX IPSA CLP TR 13 Hammerson PLC 5 S&P 500 Index 13 Cencosud SA
6 BR Malls Participacoes SA 14 Intu Properties PLC 6 BR Malls Participacoes SA 14 Intu Properties PLC
7 Simon Property Group Inc 7 Macerich Co/The
8 Klepierre SA 8 Klepierre SA
Source: Bloomberg
1. Total return includes dividends as of June 30, 2019.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 23
GROWTH
Parque Arauco is supporting the globalization
of several brands entering the Andean region
RETAIL PRESENCE BY COUNTRY
(% OF GLOBAL BRANDS IN COUNTRY)1
FIRST OPENINGS
IN CHILE
53.0 52.7
44.0
27.5
23.1
21.3
13.2
9.9
8.7
s il ile a rú la
te om ico bia az Ch tin Pe ue
St
a d éx m Br n z
d ing M l o ge ne
ite d
K Co Ar Ve
Un e
Unit FIRST OPENINGS
IN PERU
There is still potential for
new international brands
to enter the Chilean,
Peruvian and Colombian FIRST OPENINGS
markets.
IN COLOMBIA
1) Source: CBRE: How Global is the business of retail? (2017)PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 24
GROWTH
Innovating in a new business environment
E-COMMERCE SALES E-COMMERCE SALES BRICK AND MORTAR
OVER TOTAL RETAIL SALES1 (%) GROWTH1 (%) SALES GROWTH 1 (%)
13.7 37.5
13.3 32.7
26.0 26.8
11.6
10.3 23.3 23.5 3.7
9.3
8.5 3.0
3.7 15.0 14.1
3.2 13.4 13.1 13.3 2.5
2.4 11.6
1.9 1.5
1.3 1.6 1.2 1.2 1.2 1.3
0.4 0.9
-1.6 -0.5
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
USA Chile, Perú, Colombia USA Chile, Perú, Colombia USA Chile, Perú, Colombia
INTERNET USE FOR ONLINE SHOPPING
PARQUE ARAUCO IS INVESTING IN TECHNOLOGY
AND BILL PAYING2 (%)
United States 77
China 49
Chile 30
Digital New New Smart Customer App Colombia 12
Directories webpages Wifi parking journey development
redesign Perú 7
1. Source: Eurmonitor, December 2018
2. Source: Global Findex 2017 (WorldBank)PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 25
GROWTH
Parque Arauco participates in countries
with growing retail markets
ROOM FOR GROWTH IN EMERGING ECONOMIES 1 RETAIL MARKETS IN CAPITAL CITIES 1
2,500 300 2,500 300
2,000 250 2,000 250
200 200
1,500 1,500
150 150
1,000 1,000
100 100
500 50 500 50
0 0 0 0
e il k o n e ty o á lo a es
US
A
po
r UK pa
n
xic
o
hil
e
Pe
r u bia as ina Yo
r
ok
y do po
r i
tia
g
go
t
au Lim s Air
Ja e C
lom Br ent n oC
ga M g w T Lo ga ic Sa
n Bo oP o
Sin Co Ar Ne Sin M
ex Sa en
Bu
GLA per 1,000 inhabitants GDP / GLA GLA per 1,000 inhabitants GDP / GLA
1. Source: International Council of Shopping Centers, World Bank, The Brooking Institution, CoStar, Alphawise, CASC, CapitalLand Mall Trust, Japan Council of Shopping Centers, Mexico (CBRE), Brazil
(ABRASCE), Peru (ACCEP), Morgan Stanley ResearchPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 26
SUSTAINABILITY & CORPORATE GOVERNANCE
Parque Arauco has received important recognitions
from local and international organizations
Parque Arauco was recognized Parque Arauco has been included, for the
by Great Place to Work in Chile in 2018. second consecutive year, in the FTSE4Good
index. This index includes the best
performing companies in sustainability,
taking into account environmental,
social and governance topics.
3 rd best Investor Relations program in 2018 For the third year running, in 2018 Parque
Latin American Real Estate sell-side ranking Arauco is part of the Dow Jones Emerging
by Institutional Investor. Market Sustainability Index. We are the first
Latin American real estate company to be
part of this prestigious index.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 27
SUSTAINABILITY & CORPORATE GOVERNANCE
In the last years we have continued advancing
our sustainability strategy
SUSTAINABILITY AGENDA
GENERATING SOCIAL VALUE COMMITMENT AND LEADERSHIP IN
DECISION MAKING
•Develop programs and initiatives that support
local and emerging entrepreneurship in Chile, • Continue progress on assessment and
Peru and Colombia. implementation of labor practices in order Support for local Managing Working
to be recognized as a company that attracts and emerging conditions with
• Conduct activities that promote a culture the best talent. Enterpreneurship our value chains
of inclusion and accessibility at our shopping Magaging the
centers in Chile, Peru and Colombia. • Implement a risk management model Social
enviromental
integration of
Res impact of
• Develop and implement a corporate • Strengthen ethics and good corporate our shopping alu
e p
Ou on
lV rS shopping center
strategy on engagement with surrounding governance practices. center
sa opp
ia
construction
bil ing C
h
oc
communities.
ity
Generating S
Operating
Magaging the
enter
Strengthening SUSTAINABILITY
ties with enviromental
RESPONSIBLY OPERATING OTHER HIGHLIGHTS Neighboring impact of shopping
OUR SHOPPING CENTERS communities center operations
ip
C
om in g
mi Decision Makin ersh
• We adhere to the United Nations Global
tme d
nt and Lea
• Provide training on and launch a tool for Compact.
assessing our strategic suppliers’ sustainability
Ethics and Atracting and
practices in Chile, Peru and Colombia. • We continued to be the only Latin American good corporate Managing retaining talent
Real Estate Company in the Dow Jones governance
• Implement sustainable construction and monitoring
Sustainability Emerging Markets Index for the
standards for future Parque Arauco projects. third consecutive year.
• Measure environmental performance of • We published our second integrated annual
operational shopping centers and efficiently report based on our 2018 results.
manage natural resources.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 28
FINANCIAL STRENGTH
Parque Arauco’s policy is to finance projects with 50% debt
and 50% equity, and is comfortably within all its covenants
LIABILITIES / EQUITY NET FINANCIAL DEBT / EQUITY
2013 2014 2015 2016 2017 2018 2Q19 2013 2014 2015 2016 2017 2018 2Q19
< 1.50x
1.21x 1.21x 1.28x
1.15x 1.18x
0.89x
0.81x 0.77x
0.76x 0.72x 0.66x 0.69x
0.59x
0.47x
EBITDA/FINANCIAL EXPENSES NET FINANCIAL DEBT / EBITDA
2013 2014 2015 2016 2017 2018 2Q19 2013 2014 2015 2016 2017 2018 2Q19
3.89x 3.87x 5.87x 5.88x
3.76x 5.54x
5.00x 5.19x 5.04x
3.31x 3.33x 3.42x
3.04x 4.25xPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 29
FINANCIAL STRENGTH
Conservative debt structure
LIABILITY AMORTIZACION PROFILE AND DURATION (US$ MM)1
213
177
166
134
121
133
6.1 5.7 Feller: AA
years years ICR: AA
57
Fitch: AA-
47 44 43 43 44 44 45
37 38 37
Rental
15 10 15 15 17 contract length
8 4 4 4 3 Debt duration Local rating
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
SUMMARY OF DEBT BY CURRENCY SUMMARY OF LIABILITY STRUCTURE SUMMARY OF DEBT RATES
17% 8%
PEN Variable
36%
6% Loans
COP
JUNE 2019 JUNE 2019 JUNE 2019
77% 61% 92%
UF Bonds Fixed
3% Leasing
Source: Parque Arauco
(1) Does not include accrued interests and the exchange rate is at the close of June 30, 2019.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 30
FINANCIAL STRENGTH
The cost of debt has decreased importantly in the past 5 years
DATE: 04 /17/2015
BASE: 1.62%
DATE: 08/30/2018
PA The cost of debt of Parque Arauco
SPREAD: 1.68%
BASE: 1.59% has decreased 180 POINTS from
RATE: 3.30%
4.1% to 2.3%
SPREAD: 0.75%
DURATION: 14.77
DATE: 12/12/2014 RATE: 2.34% Generic
BASE: 1.66% DURATION: 8.9 long-term bond the spread five years ago had
collateral agreements, while the
SPREAD: 1.74%
DATE: 10/12/2016 Issued by Parque current spread is unsecured with
RATE: 3.40%
BASE: 1.46% Arauco in Chile no collateral.
DURATION: 14.3
SPREAD: 1.02%
RATE: 2.48%
4 DURATION: 12.71
3,5
3
2,5
2
1,5
1 Generic AA Chilean Bond
(Duration 15 years)
0,5
Central Bank of Chile
0 Interest Rate
4
4
5
5
6
6
7
7
8
8
9
1
1
1
1
1
1
1
1
1
1
1
2-
8-
2-
8-
2-
8-
2-
8-
2-
8-
2-
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
22
22
22
22
22
22
22
22
22
22
22
Source: Risk AmericaPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 31
FUTURE
4
DEVELOPMENTS
CONTENT
Future developments
Landbank
GlossaryPARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 32
FUTURE DEVELOPMENTS
Parque Arauco Kennedy expansion
PHASE 1 PHASE 2
Format
Mixed use
Commercial GLA
11,000 m2
PA ownership
100%
This expansion will add 11,000 m2 of commercial GLA at
The second expansion phase
Total investment Parque Arauco Kennedy, along with a 5-star Hilton hotel Format Total investment
at Parque Arauco Kennedy was
US$212 million featuring 401 rooms and Santiago’s largest hotel convention Mixed use US$86 million announced in 2018. It includes
center (with capacity for more than 2,800 people and
a 14-story, 15,000 m2 tower
surface area of 3,000 m2). Additionally, there will be two Commercial GLA Construction begins
Construction began with an additional 10,000 m2
restaurants, three bars, two pools, a gym and an executive
2017 10,000 m2 2021 GLA at the base of the tower.
lounge as well as 700 additional parking spaces. The project
also includes construction of a 25,000 m2 Falabella store,
Scheduled to open the retail chain’s largest. PA ownership Scheduled to open
2021 100% 2024PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 33
FUTURE DEVELOPMENTS
Parque Alegra
Type PA ownership
Regional mall 100%
Location Total investment
Barranquilla, US$135 million
Colombia
Construction begins
Additional GLA 2019
50,000 m2
Scheduled to open
2021
The project is in the initial stage of construction and is
located in the southern part of Barranquilla on Boyacá
Avenue, one of the main roads that connects the
northern and southern sectors of the city, as well as the
Barranquilla Airport. The anchor stores of the project
will be a department store (Falabella), a supermarket
(Olímpica), a movie theater (CineColombia) and a
children’s entertainment area (Playland). The shopping
center will have more than 300 stores, a food court, a
restaurant area, large common areas and underground
parking, and is expected to be the leading shopping
center in southern Barranquilla.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 34
FUTURE DEVELOPMENTS
In Chile, Peru and Colombia
TOTAL TOTAL
TOTAL GLA Parque Arauco INVESTMENT INVESTMENT
TYPE COUNTRY FORMAT SCHEDULED TO OPEN (m²) OWNERSHIP (%) owned GLA (m2) (Local currency) 1 (MUS$)2
New Projects
Parque Alegra Development Colombia Regional 2H21 50,000 52.5% 26,250 433,000 135
La Molina Development Peru Neighborhood TBD 19,500 100% 19,500 180,000 54
Subtotal 69,500 45,750 189
Expansions
Parque Arauco Kennedy, Phase 13 Expansion Chile Regional/Hotel 2H21 11,000 100% 11,000 5,355,000 218
Parque Arauco Kennedy, Phase 2 4
Expansion Chile Regional/Tower 2H24 10,000 100% 10,000 2,200,000 88
Arauco Premium Outlet Buenaventura Expansion Chile Outlet 2H19 3,500 100% 3,500 140,000 6
Subtotal 24,500 24,500 312
Acquisitions
Puerto Nuevo Antofagasta Development Chile Strip center Various dates (2019 - 2022) 9,500 100% 9,500 709,710 29
Subtotal 9,500 9,500 29
Projects incorporated in 2019
Arauco Express El Peñón Acquisition Chile Strip center 2Q19 2,100 51% 1,070 146,201 6
MegaPlaza Minority Interest Peru Various 2Q19 - 50% 123,000 583,450 174
Subtotal 2,100 124,070 180
Total 105,600 203,820 710
Remaining to invest 454
1. Projects in UF (Chile), MPEN (Peru) and MCOP (Colombia)
2. Considering the exchange rate as of June 30, 2019: 27,908.86 CLP/UF, 679.15 CLP/US$, 3,209.39 COP/US$, 3.29 PEN/US$.
3. In addition to the 11,000 m2 of GLA. This expansion includes a 401-room Hilton hotel and the largest hotel convention center in Santiago.
4. The project also includes a 15,000 m2 tower.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 35
Landbank
LANDBANK BY TOTAL COST (JUNE 2019) NAME SURFACE OWNERSHIP TOTAL TOTAL
AREA (m2) (%) INVESTMENT INVESTMENT
(LOCAL (MUS$)2
CURRENCY)1
Chile
29% 40%
Quilicura 25,486 100% 78,000 3
Chile TOTAL COST Buenaventura 115,864 100% 455,000 18
Peru
US$ 124
MILLION 745,966 m 2 Chicureo 47,614 100% 206,000 8
Los Andes 39,254 100% 117,000 5
total surface area
31% of our land bank
San Pedro de la Paz 17,002 100% 51,000 2
Colombia Total Chile 245,220 100% 907,000 36
Peru
Chimbote 42,657 100% 18,000 5
Talara 30,675 100% 9,400 3
Ica 12,643 100% 13,500 4
Chiclayo 6,609 100% 6,300 2
Pomalca Chiclayo 45,042 100% 6,565 2
Lambayeque-MegaPlaza 25,260 50% 18,900 6
San Juan de Lurigancho- MegaPlaza 80,000 50% 10,415 3
Other MegaPlazas 106,157 50% 85,685 24
Total Peru 349,043 70% 168,765 49
Colombia
Neiva 49,537 100% 18,000 6
Valledupar 46,000 100% 30,000 9
Barranquilla 56,166 100% 76,000 24
Total Colombia 151,703 100% 124,000 39
Total 745,966 86% 124
1. Land bank in UF (Chile), MPEN (Peru) and MCOP (Colombia)
2. Considering the exchange rate as of June 30, 2019: 27,908.86 CLP/UF, 679.15 CLP/US$, 3,209.39 COP/US$, 3.29 PEN/US$.PARQUE ARAUCO | INTRODUCTION | OUR OPERATIONS | INVESTMENT HIGHLIGHTS | FUTURE DEVELOPEMENT 36
Glossary
ADJUSTED FFO MARGIN: AFFO / revenues MONTHLY SALES/M2 : Monthly tenant sales divided by
AFFO: Adjusted Funds From Operations: Net Profit salesgenerating GLA during the month
Depreciation & Amortization - Other Income/expenses - NEIGHBORHOOD MALL: A shopping mall with a GLA
Share of Profit (Loss) of Associates Accounted - Foreign between 6,000 and 20,000 m2
Exchange Differences - Income (Loss) for indexed NET INCOME MARGIN: Net profit / revenues
assets and liabilities - Gains (losses) from the difference NOI: Net Operating Income: Revenues + Cost of Sales +
between the previous book value and the fair value of Administration Expenses - Depreciation & Amortization
financial assets - Deferred tax+ Associates accounted + Associates accounted NOI
Adjusted FFO OCCUPANCY: GLA paying rent divided by total GLA
CONTROLLING ADJUSTED FFO: AFFO attributable to the OCCUPANCY COST: Minimum rent, plus variable rent,
shareholders of the company plus common expenses, plus a promotion fund that the
CONTROLLING FFO: FFO attributable to the tenants pay Parque Arauco divided by the sales of the
shareholders of the company tenant.
EBITDA: Earnings Before Income Tax Depreciation and OWNED GLA: Total GLA weighted by Parque Arauco’s
Amortization: Revenues + Cost of Sales + Administration interest in the mall
Expenses - Depreciation and Amortization EBITDA margin PIPELINE: Greenfield and expansion projects under
-EBITDA divided by revenues development
EPS: Earnings Per Share: Net income attributable to PREMIUM OUTLET: Shopping center located outside of
the equity holders of the company/weighted average the city offering name brand clothing and goods for a
number of shares outstanding reduced price
FFO: Funds From Operations: Net Profit - REGIONAL MALL: A shopping mall with a GLA over
Depreciation & Amortization - Share of Profit (Loss) of 20,000 m2.
Associates Accounted + Associates Accounted FFO SSR: Same Store Rent: Percentage change in rent
GLA: Gross Leasable Area. Equivalent to the sum of all collected from tenants that paid rent in both of the
the areas available for lease periods compared
GREENFIELD PROJECTS: Organic development of new SSS: Same Store Sales: Percentage change in sales
shopping centers from tenants that reported sales in both of the periods
LANDBANK: Land held by the company for future compared
development STRIP CENTER: A shopping center with a GLA less than
LTM: Refers to information from the last twelve months 6,000 m2
MONTHLY REVENUES/M2: Monthly revenues divided by TENANT SALES: Sales of the consolidated assets
revenue-generating GLA during the month UF: Unidad de Fomento: A chilean currency unit indexed
according to inflation on a daily basis.You can also read
