Transcript Expenses reduction and portfolio management to uncertain times. Prepared by Renato Fusaro Brazil Real Estate Head Citigroup.

Expenses reduction and
portfolio management to
uncertain times.
Prepared by
Renato Fusaro
Brazil Real Estate Head
Citigroup
Summary
Portfolio
 AC versus DC
 Action plan

Portfolio Evolution
Branches
PAEs e PABs
Citifinancial
160
134
140
120
130
123
130
127
100
110
100
101
80
60
73
45
44
53
60
62
51
40
44
38
42
43
2005
2006
28
20
9
0
2003
2004
2007
2008 sept
2009 fcst
Portfolio – Occupancy costs
6%
3%
1%
4%
10%
44%
10%
22%
Rent/Tax/Condominium
Depreciation
Utilities
Repair & Maintenance
Cleaning
Contract Services
Permits
PSP
AC versus DC
Hypergrowth versus reality
500
434
450
400
334
350
300
250
200
134
150
0
310
210 130
130
100
100
50
234
410
9
38
2003
28
53
110
123
127
2006
2007
2008 sept
101
73
45
2004
2005
2009 fcst
Action Plan
Reduce portfolio size
Rentable Square Meters
160.000
137.322
140.509
140.000
120.000
98.187
97.316
100.000
80.000
60.000
40.000
44.980
28.690
27.204
2003
2004
20.000
0
2005
2006
2007
2008 sept
2009 fcst
Improve space utilization
Torre Los Angeles
Torre Nova York
Citibank
Citibank
Prodam
Prodam
Prodam
Prodam
Prodam
Prodam
Prodam
Citibank
Citibank
Citibank
Citibank
Citibank
IBM
IBM
IBM
IBM
Prodam
Prodam
Citibank
NS
Sion
Citibank
Citibank
CAF
Citibank
Citibank
Novo Nordisk
Novo Nordisk
Citibank
Capgemini
Capgemini
Unilever
Citibank
Sion Info
Sion Info
IBM
Planeta Barsa
Ingram
Planeta Barsa
Ingram
Ingram
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
Torre Torino
Torre Milano
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Citibank
Citibank
Rohr
Hold
Citibank
CC Assoc
CC Assoc
Quintiles Brasil Ltda
Quintiles Brasil Ltda
Air Products
Air Products
Genzyne
Citibank
Citibank
Viacom
Phelphs
Nickelodeon
Citibank
Citibank
Citibank
Citibank
Citibank
Bco Brasil
Citibank
Improve space utilization
Torre Los Angeles
Torre Nova York
Citibank
Citibank
Prodam
Prodam
Prodam
Prodam
Prodam
Prodam
Prodam
Citibank
Citibank
Citibank
Citibank
Citibank
IBM
IBM
IBM
IBM
Prodam
Prodam
Vacant
NS
Sion
Capgemini
Vacant
CAF
Vacant
Vacant
Novo Nordisk
Novo Nordisk
Vacant
Capgemini
Capgemini
Unilever
Vacant
Sion Info
Sion Info
IBM
Planeta Barsa
Ingram
Planeta Barsa
Ingram
Ingram
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
Real Estate expense reduction per year
R$ 2.613 M (rent)
R$ 508 M (condominium)
R$ 158 M (tax)
Torre Torino
Torre Milano
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Price
Citibank
Citibank
Rohr
Hold
Citibank
CC Assoc
CC Assoc
Quintiles Brasil Ltda
Quintiles Brasil Ltda
Air Products
Air Products
Genzyne
Citibank
Citibank
Viacom
Phelphs
Nickelodeon
Citibank
Citibank
Citibank
Citibank
Citibank
Bco Brasil
Citibank
Close locations

Office consolidation
JK Financial Center (R$ 90/rsm) to CEAB (R$ 45/rsm)


Rent reduction : R$ 2.167M/year
Performance analysis
30 Citifinancial Branches


Rent reduction : R$ 1.870M/year
Proximity analiysis
21 Citibank Branches

Rent reduction : R$ 4.200M/year
dez/06
abr/07vacant space
out/07
Reduce
Belo Horizonte Branch
2nd floor
1st floor
ground floor
RSM and Annual Rent
603
R$
102.929,40
244
R$
49.339,32
0
R$
603
577
R$
R$
102.929,40
408.858,60
603
577
R$
R$
102.929,40
408.858,60
603
577
R$
R$
102.929,40
377.070,60
1.783
R$
614.717,40
1.424
R$
561.127,32
1.180
R$
480.000,00
R$
134.717,40
jun/07
-
2nd floor
1st floor
ground floor
ago/07
Legend
Citifinancial
Quitanda
Citi Occupancy
2ndb/(w)
floor
Vacant
R$
134.717,40
1st floor
Annual
ground
floor Rent Reduction
Third Party
New lease of R$ 33.90/rsm, below market range of R$ 34.60/rsm – R$ 51.50/rsm
RSM and Annual Rent
263
R$
11.718,24
2nd floor
298
390
Valor
R$
R$
12.000,00
96.000,00
1st floor
ground floor
951
R$
119.718,24
40000
390
R$
96.000,00
390
R$
96.000,00
R$
23.718,24
Legend
Citi Occupancy
Vacant
Third Party
Reduce vacant space
Batel Branch
1st floor
ground floor
RSM and Annual Rent
352
396
R$
R$
95.993,40
144.000,00
396
R$
144.000,00
748
R$
239.993,40
396
R$
144.000,00
R$
95.993,40
1st floor
ground floor
Trianon Branch
ground floor
RSM and Annual Rent
833
R$
470.665,56
417
R$
360.000,00
833
R$
470.665,56
417
R$
360.000,00
R$
110.665,56
ground floor
Legend
Citi Occupancy
Vacant
Third Party
Renegotiate
Use appraisal to assure market rent
 Start one year early


Use inflation rate increase to reduce rent



IGPM april 2003 : 32% (less R$ 1MM/year)
IGPM july 2008 : 15% (less R$ 270M/year)
Maintenance and Cleaning

Review scope : R$ 4.13 MM/year
dez/09
nov/09
out/09
set/09
ago/09
jul/09
jun/09
Lease Negotiations 2007 - 2008 - 2009
mai/09
abr/09
mar/09
fev/09
jan/09
dez/08
nov/08
out/08
set/08
ago/08
jul/08
jun/08
mai/08
abr/08
mar/08
fev/08
jan/08
dez/07
nov/07
out/07
set/07
ago/07
jul/07
jun/07
mai/07
abr/07
mar/07
fev/07
jan/07
Millions
Rent decrease
Without closures/negotiations
Rent Paid
R$5,90
R$5,70
R$5,50
R$5,30
R$5,10
R$4,90
R$4,70
R$4,50
R$4,30
R$4,10
R$3,90
R$3,70
R$3,50
“If you don´t reduce expenses,
you will be the expense
to be reduced ...!!!”
Thanks !!!