expenses reduction and portfolio management to uncertain times. prepared by renato fusaro brazil...
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Expenses reduction and Expenses reduction and portfolio management to portfolio management to
uncertain times.uncertain times.
Prepared byPrepared byRenato FusaroRenato Fusaro
Brazil Real Estate HeadBrazil Real Estate HeadCitigroupCitigroup
SummarySummary
PortfolioPortfolioAC versus DCAC versus DCAction planAction plan
Portfolio EvolutionPortfolio Evolution
38
73
110
123
101
44 42 4351
62
134 130
100127
45 6044
130
9
28
53
0
20
40
60
80
100
120
140
160
2003 2004 2005 2006 2007 2008 sept 2009 fcst
Branches
PAEs e PABs
Citifinancial
Portfolio – Occupancy costsPortfolio – Occupancy costs
44%
22%
10%
10%
6%3% 1% 4%
Rent/Tax/Condominium
Depreciation
Utilities
Repair & Maintenance
Cleaning
Contract Services
Permits
PSP
AC versus DCAC versus DCHypergrowth versus reality
38 4573
110 123 127101
38 4573
110
210
310
410
928
53
134 130100
928
53
134
234
334
434
130
0
50
100
150
200
250
300
350
400
450
500
2003 2004 2005 2006 2007 2008 sept 2009 fcst
Action PlanAction Plan
Reduce portfolio sizeReduce portfolio sizeRentable Square Meters
28.690 27.204
44.980
97.316
137.322 140.509
98.187
0
20.000
40.000
60.000
80.000
100.000
120.000
140.000
160.000
2003 2004 2005 2006 2007 2008 sept 2009 fcst
Improve space utilizationImprove space utilization
20
NS Sion 1918 Rohr Hold1716151413121110987654321 CitibankProdam Ingram Price Bco Brasil
CitibankProdam Ingram Price Citibank
IBM Ingram Planeta Barsa PriceIBM Planeta Barsa Price CitibankIBM IBM Price CitibankIBM Sion Info Price Citibank
ViacomCitibank Sion Info Price Phelphs NickelodeonCitibank Citibank Price CitibankCitibank Unilever Price CitibankCitibank Capgemini Price Genzyne
Air ProductsCitibank Capgemini Price Air ProductsProdam Novo Nordisk Citibank PriceProdam Novo Nordisk Price Quintiles Brasil LtdaProdam Citibank Price Quintiles Brasil LtdaProdam Citibank Price CC AssocProdam CAF Price CC AssocProdam Citibank Price Citibank
Citibank Price CitibankProdam Citibank Price
Citibank Citibank Price Citibank
Torre Los Angeles Torre Nova York Torre Torino Torre Milano
Improve space utilizationImprove space utilization
20
NS Sion 1918 Rohr Hold1716151413121110987654321 CitibankProdam Ingram Price Bco Brasil
CitibankProdam Ingram Price Citibank
IBM Ingram Planeta Barsa PriceIBM Planeta Barsa Price CitibankIBM IBM Price CitibankIBM Sion Info Price Citibank
ViacomCitibank Sion Info Price Phelphs NickelodeonCitibank Vacant Price Citibank
Price GenzyneCitibank Unilever Price Citibank
Citibank Capgemini Price Air Products
Price Quintiles Brasil LtdaProdam Novo Nordisk Price Air Products
Vacant Price CC AssocProdam Vacant Price Quintiles Brasil Ltda
Vacant Price CitibankProdam CAF Price CC Assoc
CitibankProdam Capgemini Price
Citibank Vacant Price Citibank
Torre Los Angeles Torre Nova York Torre Torino Torre Milano
Citibank
Prodam
Prodam
Prodam Novo Nordisk
Price
Citibank Capgemini
Vacant
Real Estate expense reduction per year
R$ 2.613 M (rent)R$ 508 M (condominium)R$ 158 M (tax)
Close locationsClose locations
Office consolidationOffice consolidation
JK Financial Center (R$ 90/rsm) to CEAB (R$ 45/rsm)JK Financial Center (R$ 90/rsm) to CEAB (R$ 45/rsm) Rent reduction : R$ 2.167M/yearRent reduction : R$ 2.167M/year
Performance analysisPerformance analysis
30 Citifinancial Branches30 Citifinancial Branches Rent reduction : R$ 1.870M/yearRent reduction : R$ 1.870M/year
Proximity analiysisProximity analiysis
21 Citibank Branches21 Citibank Branches Rent reduction : R$ 4.200M/yearRent reduction : R$ 4.200M/year
Reduce vacant spaceReduce vacant space
LegendLegend
Citi OccupancyCiti Occupancy
VacantVacant
Third PartyThird Party
Reduce vacant spaceReduce vacant space
LegendLegend
Citi OccupancyCiti Occupancy
VacantVacant
Third PartyThird Party
Batel Branch1st floor
ground floor
RSM and Annual Rent352 95.993,40R$ 1st floor
396 144.000,00R$ 396 144.000,00R$ ground floor
748 239.993,40R$ 396 144.000,00R$
95.993,40R$
Trianon Branchground floor
RSM and Annual Rent
833 470.665,56R$ 417 360.000,00R$ ground floor
833 470.665,56R$ 417 360.000,00R$
110.665,56R$
RenegotiateRenegotiate
Use appraisal to assure market rentUse appraisal to assure market rentStart one year earlyStart one year early
Use inflation rate increase to reduce rentUse inflation rate increase to reduce rent IGPM april 2003 : 32% (less R$ 1MM/year)IGPM april 2003 : 32% (less R$ 1MM/year) IGPM july 2008 : 15% (less R$ 270M/year)IGPM july 2008 : 15% (less R$ 270M/year)
Maintenance and CleaningMaintenance and Cleaning Review scope : R$ 4.13 MM/yearReview scope : R$ 4.13 MM/year
Rent decreaseRent decreaseLease Negotiations 2007 - 2008 - 2009
R$3,50
R$3,70
R$3,90
R$4,10
R$4,30
R$4,50
R$4,70
R$4,90
R$5,10
R$5,30
R$5,50
R$5,70
R$5,90
jan
/07
fev/0
7
ma
r/0
7
ab
r/0
7
ma
i/0
7
jun
/07
jul/0
7
ag
o/0
7
se
t/0
7
ou
t/0
7
no
v/0
7
de
z/0
7
jan
/08
fev/0
8
ma
r/0
8
ab
r/0
8
ma
i/0
8
jun
/08
jul/0
8
ag
o/0
8
se
t/0
8
ou
t/0
8
no
v/0
8
de
z/0
8
jan
/09
fev/0
9
ma
r/0
9
ab
r/0
9
ma
i/0
9
jun
/09
jul/0
9
ag
o/0
9
se
t/0
9
ou
t/0
9
no
v/0
9
de
z/0
9
Mil
lio
ns
Without closures/negotiations
Rent Paid
““If you don´t reduce If you don´t reduce expenses, expenses,
you will be the expense you will be the expense to be reduced ...!!!”to be reduced ...!!!”
Thanks !!!Thanks !!!