Parque Arauco Reports Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091030005499/en

* Gross Profit Improves by 17.6% to Ch$9,970 million as Revenues Increase by
14.8%
* Quarterly EBITDA Reaches Ch$10,831 million, an Improvement of 19.6%
* FFO Increases to Ch$8,907 million, a 283.4% Increase on FFO Margin of 59.2%

SANTIAGO, Chile--(Business Wire)--
Parque Arauco S.A. (Santiago Stock Exchange: Parauco; Bloomberg: PARAUCO:CI),
one of Latin America`s leading shopping center developers and operators, based
on gross leasable area (GLA), reported financial results for the third quarter
ended September 30, 2009. The following financial and operating information,
unless otherwise indicated, was prepared and presented in accordance with
Chilean GAAP. Additionally, the Company utilizes the equity method of
accounting, and its financial statements and operating information consolidate
the numbers for Parque Arauco and its majority owned subsidiaries, and refer to
Parauco`s stake (or participation) in its joint ventures and developments. For a
more detailed review of the results filed with the SVS (Chilean Securities and
Exchange Commission), please visit the investor section of Parque Arauco`s
website www.parauco.com/eng/.

"We are pleased with our third quarter results, which reflected substantial
increases in total revenues and profitability. Our strong quarterly results
reflect the greater efficiency of our operations, as well as an improved
economic climate in the region that indicates an emergence from the period of
market turbulence that was experienced during the first half of the year. We
expect a stronger economic climate to prevail during the remainder of 2009 and
in 2010, allowing for the acceleration of investment in the development of
diverse properties throughout Chile, Peru, and Colombia. The recent opening, in
September, of the casino at our Arauco San Antonio property is another example
of the Company`s ability to successfully execute its expansion strategy while
using innovative, multi-use formats that diversify our revenue streams,"
commented Andrés Olivos, Chief Executive Officer of Parque Arauco.

"One noteworthy achievement during the quarter was the formation of an important
alliance with Bancolombia, the leading financial institution in the developing
market of Colombia. The agreement strengthens Parque Arauco`s strategic and
financial position in this large yet underserved market, where we plan to open
our first shopping center in 2010, in the city of Pereira. We look forward to a
fruitful relationship that combines Bancolombia`s local knowledge, relationships
and financial strength with Parque Arauco`s expertise in the development and
operation of commercial real estate," added Mr. Olivos.

Third Quarter Results

Revenues for the third quarter of 2009 increased by 14.8% to Ch$15,042 million
from Ch$13,101 million in Q308. Third quarter results reflected revenue
increases at nearly all of the properties in the Company`s portfolio, aided by
the expansion of owned leasable area by 10.6%. In Chile, shopping center Paseo
Arauco Estación ("Estación"), located in the capital city of Santiago, showed a
marked increase in revenues of 43%, thanks to the property`s substantial
expansion since the end of the third quarter of the prior year.

Gross profit for the quarter increased by 17.6% to Ch$9,970 million as compared
to the third quarter of 2008, despite a 9.7% increase in the cost of sales
during the period to Ch$5,073 million, which occurred mainly as a result of the
additional selling area at Estación and higher energy and fuel expenses
associated with an energy sales business that commenced operations at Estación
and Plaza El Roble ("El Roble") in January 2009 and April 2009, respectively.
Even with the launch of this new business, operating expenses per square meter
declined during the third quarter by 1% as compared to the equivalent period in
2008.

Net operating income ("NOI"), defined as revenues less cost of sales plus
depreciation and amortization, increased by 19.8% to Ch$12,396 million from
Ch$10,347 million in the third quarter of 2008. The physical expansion of
Estación and Parque Arauco Kennedy and stronger operating efficiency across most
portfolio properties were the main contributors to the improvement in NOI.

Selling, General and Administrative Costs increased by 21.1% to Ch$1,565 million
as compared to the prior year`s third quarter. The increase in SG&A costs as
compared to the third quarter of 2008 primarily reflects the additional selling
area at Estación, as well as higher administrative fees and provisions for
uncollectibles. However, excluding Estación, personnel costs declined by 10% in
Chile, as compared to Q308.

In the third quarter, EBITDA increased by 19.6% to Ch$10,831 million from
Ch$9,054 million, while EBITDA margin increased to 72.0% from 69.1% in Q308.
Expansion of the leasable area of portfolio properties, at Estación and Parque
Arauco Kennedy in particular, was the primary reason for the substantial
improvement in EBITDA. With the exception of El Roble, all properties achieved
substantial EBITDA growth individually. It should be acknowledged that the
EBITDA result includes a property tax amount of Ch$734 million that is generally
excluded from EBITDA by other comparable mall developers and operators in the
Latin American region. Parque Arauco can also deduct property taxes paid in
Chile as a credit when computing income tax.

A non-operating loss of Ch$(537) million was recorded in the third quarter 2009,
as compared to Ch$(5,271) million in Q308. The principal contributors to the
improved result were the profits from the Company`s investment in its
Argentinean unit, Alto Palermo S.A., and a favorable price-level restatement
which due to negative inflation observed in Chile during the 9 months of 2009.

During the quarter, a profit on investment in related companies of Ch$2,082
million was recorded, a significant improvement as compared to the loss of
Ch$(421) million reported in the third quarter of 2008. This result is mainly
attributable to Parque Arauco`s equity participation in Alto Palermo S.A. of
Argentina, where profits recovered as compared to the unusually weak performance
of the unit`s credit division, Tarshop, in Q308. Profits derived from Argentina
more than compensated for a slight decline in profitability at Inmobiliaria Mall
Viña del Mar S.A. in Chile.

Net income increased by 1336.3% to Ch$6,482 million, or Ch$10.67 per share,
compared with net income of Ch$451 million, or Ch$0.74 per share, in Q308.

FFO ("Funds from Operations"), defined as net income plus depreciation plus
amortization, increased substantially year-over-year, more than doubling to
Ch$8,907 million, or Ch$14.66 per share, as compared to Ch$2,323 million in the
third quarter of 2008. The main drivers of this significant increase were the
improved operating performance of most malls and increased selling area at
Estacion, as well as higher non-operating income due to higher profits from the
Company`s investment in Alto Palermo (Argentina) and a favorable price-level
restatement.

Cash and cash equivalents totaled Ch$35,040 million in the third quarter
compared to Ch$42,026 million reported at the end of Q308, as funds were used
primarily for the development of properties such as Arauco San Antonio in Chile,
Stripcenter Chorrillos in Lima, Perú and Mall Alameda in Pereira, Colombia.

Total GLA totaled 738,251 m², as compared to 654,192 m² in Q308, and owned GLA
was 415,352 m², an increase from 375,542 m² in the equivalent period of the
previous year. Occupancy rates reflected the strength of Parque Arauco`s long
term lease contracts with tenants and the overall improvement in the economic
climate in Chile and Peru. Parque Arauco Kennedy, El Roble, Estación, Megaplaza
Norte, and Marina Arauco each recorded occupancy rates of 99% or more. At Mall
Arauco Maipú, however, the occupancy rate fell from 99% to 88%, as GLA that was
added during Q408 went unleased.

Accounting Adjustment in Financial Results:

Parque Arauco incurs costs associated with the operations of each of its
shopping centers, and part of those costs is passed on to the venues as common
and other expenses. A percentage of the costs are not passed on and are assumed
by the Company. Since the Company does not generate a profit margin on these
items, going forward, beginning in June 2009, only the expenses that are not
recovered will be accounted for within operating expenses or sales and
administration costs. Thus, the amounts that are recovered will not be included
in operating revenue nor expenses.

The effect of this reclassification on the results of the first nine months of
2008 is a reduction of the totals of three accounts: Revenues are adjusted by
-17.4% or Ch$7,754 million, Cost of Sales by -32.6% or Ch$(6,141) million, and
SG&A by -30.3% or Ch$(1.613) million. The impact of these reclassifications does
not affect EBITDA.

Property Highlights (Financial and Operating)

Parque Arauco Kennedy - PAK`s total income in the third quarter of 2009
increased by 8.1% to Ch$7,342, reflecting the addition of GLA from the Office
Towers project, which has extended the property`s total GLA by more than 11,000
m2 to 123,193 m2. The EBITDA of the shopping center rose slightly by 0.8%
year-over-year to Ch$6,252 million, contributing more than half of the Company`s
total. PAK continues to be a flagship property with a strong brand name and
location, and the property`s 100% occupancy rate is an indication of its
popularity among retailers and consumers.

Mall Arauco Maipú - This shopping center, located in Santiago, Chile,
contributed Ch$1,570 million in income during the third quarter of 2009, an
increase of 14.7% as compared to the total in Q308. The property`s EBITDA also
rose to Ch$1,161 million, 9.6% over the C$1,059 recorded in the same period of
2008. The incorporation of the nearby and affiliated strip mall, Arauco Express
Pajaritos, which has a GLA exceeding 4,000 m2, contributed to the improved
results recorded at this property.

During the third quarter, Arauco Express Pajaritos (formerly called Strip Center
Pajaritos) became 95.5% leased. The strip center is located next to Mall Arauco
Maipú in Santiago, and its quarterly financial results are consolidated in those
of Mall Arauco Maipú.

Plaza El Roble - Located in Chillán, Chile, El Roble has a GLA of 26,712 m2 and
contributed total income of Ch$819 million during the third quarter, an increase
of 11.6% as compared with Q308. EBITDA also increased, by 4.1% to Ch$627
million, as earnings outpaced the increase in operating expenses largely
associated with the energy sales business that was recently launched at the
property.

Paseo Arauco Estación - Parque Arauco has substantially expanded the selling
area of this property during the past year with the addition of a new shopping
center, and the mall`s total GLA now exceeds 64,000 m2. Aided by this expansion
and better operating performance, Estación achieved total income of Ch$2,466
million, a 51.6% increase over the amount reported in Q308, and EBITDA of
Ch$1,838 million, an 83.1% increase.

Mega Plaza Norte - Third quarter income of Sol$14,090 thousand was 9.3% higher
than the result recorded in the same period of the previous year, despite a
cumulative 8.6% decline in tenant sales during the first three quarters. Anchor
stores, which occupy nearly two-thirds of the total GLA at this Peruvian
shopping center, again delivered strong results, generating 78% of sales
year-to-date. The property`s EBITDA result improved by 0.9% to Sol$8,784
thousand, as compared to the result in Q308.

Non-Consolidated Assets

Inmobiliaria Mall Viña del Mar S.A. (Chile) - Net profit for the third quarter
of 2009 decreased by 8.2% to Ch$1,428 million. Combined, these two shopping
centers have a GLA that exceeds 100,000 m2. Parque Arauco holds a 33.3% stake in
each of the malls.

Marina Arauco - This property, located in Viña del Mar, Chile, reported third
quarter income of Ch$2,250 million, a slight decrease of 3% from the amount
recorded in Q308, and EBITDA of Ch$2,199 million, a small decline of 2.8% from
Q308 levels. However, Marina Arauco`s monthly sales per square meter were the
second strongest in Parque Arauco`s portfolio of properties during the nine
months of 2009.

Mall Center Curicó - This shopping center, located south of Santiago, Chile,
derives a significant percentage of sales from anchor stores. Third quarter
income was Ch$797 million, in line with the result during the same quarter of
the prior year, while EBITDA decreased slightly to Ch$756 million from Ch$779
million in Q308.

Alto Palermo S.A. (Argentina) - Parque Arauco holds a 31.6% share on a fully
diluted basis in Alto Palermo S.A. (APSA) of Argentina, which owns eleven
shopping centers in Argentina following the opening of Mall Dot Baires in May
2009. Combined, these eleven shopping centers have a total GLA of 232,659 m2.
This unit contributed a net income of Ch$1,538 in the third quarter of 2009.

Tenant Sales

Total tenant sales increased by 1.6% during the third quarter, to Ch$151,449
million.

Outlook

Parque Arauco will continue to extend its regional footprint during the fourth
quarter of 2009 and has committed to investing an additional US$178 million in
Chile, Colombia, and Peru through 2010, bringing the total investment in those
markets since 2007 to US$535 million. The Company is proceeding with the
development of properties Arauco San Antonio, Stripcenter Chorrillos, Mall
Alameda and Mall Paseo Marina, furthering its expansion in each of the three
markets in which it operates, and continuing to improve its current portfolio of
assets. The Company expects that its recent agreement with Bancolombia, a
leading financial institution in Colombia, will facilitate expansion efforts in
that market.

Expansion and New Development Projects

Arauco San Antonio - San Antonio - Chile: Parque Arauco S.A. has completed the
first stage of the construction of this innovative commercial center in San
Antonio, Chile, which will benefit from diverse sources of revenue through
incorporation of a mall, hotel, and casino. As expected, the property`s casino
began commercial operations in September, and the Company was also able to
advance improvements to the mall and hotel during the third quarter. A small
portion of the mall is expected to open during the fourth quarter of 2009, and
the remainder of the property will begin commercial operations in 2010 with a
total GLA of 31,000 m2 following a total investment of US$45 million. Parque
Arauco holds a 51% interest in this project.

Strip Center Chorrillos - Chorrillos - Perú: This property, located in
Chorrillos, Perú, has an expected GLA of 6,000 m2 and is expected to begin
commercial operations during November of 2009, following a total investment of
US$7 million, in which Parque Arauco will have a 51% interest. During the third
quarter, Parque Arauco furthered the construction of the strip center and
continued to sign lease agreements with new tenants, bringing the portion of
total GLA that is leased to 90%.

Mall Alameda - Pereira - Colombia: Parque Arauco will hold a 55% interest in
this shopping center, which is expected to open during the second half of 2010
in Pereira, Colombia. The property will be the first operated by the Company in
the Colombia market, and is expected to have a total GLA of 40,000 m2 following
a total investment of approximately US$88 million. Construction is well underway
and the property has already attracted leading international and domestic retail
brands. Lease agreements with three well-known anchor tenants have been secured,
and the Company is currently focusing primarily on lease negotiations with
smaller tenants.

Mall Paseo Marina

This commercial center, to be located next to Mall Marina Arauco in Viña del
Mar, Chile, will feature small stores, restaurants, offices and entertainment.
The property is expected to open during the second quarter of 2010 with a total
GLA of 11,000 m2 following a total investment of US$13.5 million.

About Parque Arauco

Parque Arauco, based in Chile, is one of Latin America`s largest developers and
operators, in terms of GLA, of retail real estate in Latin America. Over the
last 25 years, Parque Arauco has developed, operated and managed shopping
centers throughout Chile. It has a 31.6% ownership interest in Argentina`s Alto
Palermo, S.A., (APSA) which is traded on the Buenos Aires Stock Exchange and the
Nasdaq. APSA is the owner and operator of 11 shopping centers. Parque Arauco
also has a 45% interest in Peru`s Inmuebles Panamericana, S.A., owner and
operator of one of Lima`s largest shopping centers.

This release contains forward-looking statements relating to the prospects of
the business, estimates for operating and financial results, and those related
to growth prospects of Parque Arauco. These are merely projections and, as such,
are based exclusively on the expectations of management concerning the future of
the business and its continued access to capital to fund the Company`s business
plan. Such forward-looking statements depend, substantially, on changes in
market conditions, government regulations, competitive pressures, the
performance of the economies in which we work and the industry, among other
factors; therefore, they are subject to change without prior notice.

Parque Arauco S.A.

Consolidated Income Statement

Chilean GAAP
Ch$ millions
Quarter Ending September 30,

2009 2008 Chg. %
Revenues 15,042 13,101 14.8%
Cost of Sales (5,073) (4,626) 9.7%
Gross Profit 9,970 8,475 17.6%
Selling, General and Admin. Expenses (1,565) (1,293) 21.1%
OPERATING INCOME 8,405 7,182 17.0%
EBITDA 10,831 9,054 19.6%
Financial Income 371 1,158 -68.0%
Profit on Investment. in Related Companies 2,082 (421) -594.4%
Other non-operating Income 64 192 -66.7%
Amortization of Goodwill (73) (75) -3.8%
Financial Expenses (2,345) (2,382) -1.5%
Other non-operating Expenses (629) (222) 183.9%
Price-level Restatement 202 (3,543) -105.7%
Exchange Differentials (209) 21 -1074.0%
NON-OPERATING INCOME (537) (5,271) -89.8%
Profit before Income Tax & Extraord. Items 7,868 1,911 311.7%
Income Tax (1,313) (891) 47.5%
Profit (Loss) before Minority Interest 6,555 1,021 542.2%
Minority Interest (126) (575) -78.0%
Net Profit (Loss) 6,428 446 1341.5%
Amortization of Negative Goodwill 53 5 898.3%
NET INCOME 6,482 451 1336.3%
Depreciation & Amortization 2,426 1,872 29.6%

Financial and Operating Highlights
Quarter Ending September 30,

2009 2008 Chg. %
Revenues (Ch$ Millions) 15,042 13,101 14.8%
NOI (Ch$ Millions) 12,396 10,347 19.8%
NOI Margin % 82.4% 79.0% 3.4 pp
EBITDA (Ch$ Millions) 10,831 9,054 19.6%
EBITDA Margin % 72.0% 69.1% 2.9 pp
Net Income (Ch$ Millions) 6,482 451 1336.3%
Net Income Margin % 43.1% 3.4% 39.6 pp
FFO (Ch$ Millions) 8,907 2,323 283.4%
FFO Margin % 59.2% 17.7% 41.5 pp
Weighted Avg. Shares (million) 607.45 607.25 -
EPS ($) 10.59 0.73 1341.5%
Total Tenant Sales (Ch$ Millions) 1 151,449 149,079 1.6%
Total GLA (m2) 738,251 654,192 12.8%
Parque Arauco GLA (m2) 415,352 375,542 10.6%

1. Total Tenant Sales = Sales of Consolidated Assets

Consolidated Balance Sheet

(Ch$ millions) September 30,
2009 2008 % Change
Assets:
Cash and Cash Equivalent 35,040 42,026 -16.6 %
Accounts Receivable 11,468 10,830 5.9 %
Other Current Assets 14,625 14,153 3.3 %
Total Current Assets 61,133 67,009 -8.8 %
Net Property, Plant and Equipment 414,618 354,791 16.9 %
Investments in Related Companies 75,807 74,683 1.5 %
Other Assets 29,701 37,838 -21.5 %
Total Assets 581,259 534,321 8.8 %

Liabilities & Stockholder's Equity:
Short Term Debt 12,971 25,418 -49.0 %
Other Current Liabilities 7,615 9,284 -18.0 %
Total Current Liabilities 20,586 34,702 -40.7 %
Long Term Debt 269,200 239,198 12.5 %
Other Long Term Liabilities 22,693 19,366 17.2 %
Total Long Term Liabilities 291,893 258,564 12.9 %

Minority Interest 17,191 10,601 62.2 %

Stockholder's Equity
Capital 152,356 138,434 10.1 %
Reserves and Others (3,500 ) 9,294 -137.7 %
Retained Earnings 102,734 83,284 23.4 %
Total Liabilities & Stockholder's Equity 581,259 534,881 8.7 %

Property Financial Highlights
Chilean GAAP
(Ch$ millions) Quarter Ended
*(Sol$ thousands) September 30,
2009 2008 % Change
Total Revenues
Parque Arauco Kennedy 7,342 6,794 8.1 %
Arauco Maipu (1) 1,570 1,369 14.7 %
* Mega Plaza Norte 14,090 12,894 9.3 %
Marina Arauco (unconsolidated) 2,250 2,320 -3.0 %
Mall Center Curico (unconsolidated) 797 801 -0.5 %
Mall Plaza El Roble 819 733 11.6 %
Paseo Arauco Estacion (2) 2,466 1,626 51.6 %

Gross Profit
Parque Arauco Kennedy 5,616 5,268 6.6 %
Arauco Maipu (1) 986 911 8.2 %
* Mega Plaza Norte 9,779 9,194 6.4 %
Marina Arauco (unconsolidated) 1,960 2,013 -2.6 %
Mall Center Curico (unconsolidated) 740 735 0.7 %
Mall Plaza El Roble 628 573 9.7 %
Paseo Arauco Estacion (2) 2,004 929 115.7 %

EBITDA
Parque Arauco Kennedy 6,252 6,202 0.8 %
Arauco Maipu (1) 1,161 1,059 9.6 %
* Mega Plaza Norte 8,784 8,705 0.9 %
Marina Arauco (unconsolidated) 2,199 2,263 -2.8 %
Mall Center Curico (unconsolidated) 756 779 -3.0 %
Mall Plaza El Roble 627 603 4.1 %
Paseo Arauco Estacion (2) 1,838 1,004 83.1 %

Gross Margins
Parque Arauco Kennedy 76 % 78 % -1.4 %
Arauco Maipu (1) 63 % 67 % -5.6 %
Mega Plaza Norte 69 % 71 % -2.7 %
Marina Arauco (unconsolidated) 87 % 87 % 0.4 %
Mall Center Curico (unconsolidated) 93 % 92 % 1.2 %
Mall Plaza El Roble 77 % 78 % -1.9 %
Paseo Arauco Estacion (2) 81 % 57 % 42.2 %

EBITDA Margins
Parque Arauco Kennedy 85 % 91 % -6.7 %
Arauco Maipu (1) 74 % 77 % -4.4 %
Mega Plaza Norte 62 % 68 % -7.7 %
Marina Arauco (unconsolidated) 98 % 98 % 0.2 %
Mall Center Curico (unconsolidated) 95 % 97 % -2.5 %
Mall Plaza El Roble 77 % 82 % -6.9 %
Paseo Arauco Estacion (2) 75 % 62 % 20.7 %

(1) Number reflects Q309 results of the affiliated commercial property, Arauco
Express Pajaritos.

(2) Formerly named Mall Plaza Estacion

Property Operating Indicators
Chilean GAAP
(Ch$) Cumulative to
*(Sol$ thousands) September 30,
2009 2008 % Change
Monthly Revenue per m²
Parque Arauco Kennedy 215,396 230,261 -6.5 %
Arauco Maipu 92,850 102,997 -9.9 %
* Mega Plaza Norte 840 994 -15.6 %
Marina Arauco (unconsolidated) 189,434 188,678 0.4 %
Mall Center Curico (unconsolidated) 72,731 71,212 2.1 %
Mall Plaza El Roble 166,884 176,102 -5.2 %
Paseo Arauco Estacion (1) 110,473 141,372 -21.9 %

Monthly Rent per m²
Parque Arauco Kennedy 17,568 18,955 -7.3 %
Arauco Maipu 7,427 7,560 -1.8 %
* Mega Plaza Norte 40 41 -2.4 %
Marina Arauco (unconsolidated) 12,851 13,383 -4.0 %
Mall Center Curico (unconsolidated) 5,754 5,710 0.8 %
Mall Plaza El Roble 8,989 9,303 -3.4 %
Paseo Arauco Estacion (1) 11,840 14,128 -16.2 %

Total Visitors (thousands)
Parque Arauco Kennedy 18,307 21,612 -15.3 %
Arauco Maipu 10,483 14,041 -25.3 %
Mega Plaza Norte 24,361 25,791 -5.5 %
Marina Arauco (unconsolidated) 12,804 13,310 -3.8 %
Mall Center Curico (unconsolidated) 4,895 5,296 -7.6 %
Mall Plaza El Roble 9,649 N/A
Paseo Arauco Estacion (1) N/A N/A

% Occupancy
Parque Arauco Kennedy 99.9 % 99.9 % 0.0 %
Arauco Maipu 88.3 % 98.9 % -10.7 %
Mega Plaza Norte 99.5 % 99.5 % 0.0 %
Marina Arauco (unconsolidated) 99.7 % 99.8 % -0.1 %
Mall Center Curico (unconsolidated) 98.2 % 98.7 % -0.5 %
Mall Plaza El Roble 99.6 % 98.5 % 1.1 %
Paseo Arauco Estacion (1) 99.0 % 98.2 % 0.8 %

(1) Formerly named Mall Plaza Estacion

Investor Relations (Chile)
Felipe Velasco Larach, +562.299.0608
Fax: +562.211.4077
ir@parauco.com
Website: www.parauco.com
or
Investor Relations (International)
MBS Value Partners
Monique Skruzny/Matt Komonchak
+1-212-750-5800
Fax: +1-212-661-2268
monique.skruzny@mbsvalue.com
matt.komonchak@mbsvalue.com

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