Multiplan Empen Unsp/Adr

Ladies and gentlemen, good morning. Thank you for waiting. Welcome to the conference call about Multiplans results of the second quarter of 2020. Today with us, we have Mr. José Zacchiperi, CEO, Mr. Armando Dalmeida Neto, CFO and Investor Relations Officer, Mr. Marcelo Barney, CIO, Mr. Hans Melters, IR and Planning Director, and Mr. Franco Carrion, IR Manager. We would like to inform you that the presentation will be made, and it is available for download at irmultiplan.com.br. We would like to inform you that participants will be in listen-only mode during the company presentation, and afterwards, we will have a Q&A session when further instructions will be given. Should you need assistance during the call, please press star 02 to reach the operator. Before proceeding, we would like to inform you that forward duty statement that might be made during this call in relation to the business perspectives of the company, operating and financial projections and targets. Our beliefs and assumptions of multiplets management, as well as information currently available to the company, forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions as they refer to future events, and therefore they depend on circumstances that may or may not occur. Investors should understand that there are economic conditions, industry conditions, and other operating factors may affect the future results of the company and may lead to results that differ materially from those expressed in such forward-looking statements. Let's call the last 60 minutes. After this period, the investor relations area of the company will be available should you have any additional doubts or questions. Now, we would like to turn the floor over to Mr. Szezak Ferris, CEO, and he will start the presentation. Mr. Ferris, good morning. Thank you very much for the opportunity, and please, the floor is yours. Good morning, everybody. Ladies and gentlemen who are listening to us, we thank you very much for the opportunity to address you today. I would like to start the presentation by saying that this is a very good time for us to think about the 45 years of Mutuplan's existence. And I have been working as an entrepreneur for 57 years already. And during this period, we have already went through many different crises. And I have never, ever imagined that we would be facing a situation such as the one that we have been living in the last few months, as of March 15th. We practically had all our malls closed, not because of the authorities' orders, but because of our own initiative regarding the threat of a very serious pandemic. And in these 120 days of paralyzation for most of our commercial centers, we have worked to reduce our expenses and mainly to support our retailers in a way that we had ever imagined. and we understood the seriousness and the way that the authorities have dealt with trade and the commerce in general. And in spite of everything, we have been able to deliver modest results, but in a way, they show the resilience of our projects. a comparison between this dramatic moment that we have lived and are still living. I would like to ask your lead to make a comparison here. Life has been showing us that it is on a permanent renovation, and those who do not adapt, they do not survive. So innovation is necessary not only to spur consumption but also to meet our needs. And let us imagine the following situation. For instance, nature all the time surprises me with the way it works and very often you have a devastation in a region. Let's say a tree loses its branches during a storm. However, it is able to survive in the middle of a devastated forest. If this tree is strong and if it has deep roots, it may lose the branches. But when spring comes again, it blooms again and it gives us fruits again. And in the last few months, our strength has been tested and it has proven that our own If it were not so, the company would not have been able to survive. Okay. Our main virtue is to recycle our projects, our shopping malls, our real estate, and this allows us to consolidate the results of the company with confidence and so life is a permanent renovation and these 57 years I have seen so many crisis and they have tested us but they have made us stronger. Our commercial centers are projects that create cities and towns around them and they have done so. And I would like to highlight the first five shopping malls that Mutuplan has built for instance. Barra Shopping in Barra, in Barra da Tijuca, when we started to build it 41 years ago. Around this area, there were about 40,000 inhabitants, and today we have 500,000. And the same happened with the BH Shopping, Ribeirão Preto, Morumbi Shopping, Mark Shopping Brasília, inaugurated. by President Figueiredo during the military administration. And during this period, during this period, we had our main shopping center or the first shopping center in Portugal and then in Miami, the United States. And the company has always been able to adapt to the situation, to the environment, and to the stumbling blocks on our side. And I would like to take this moment to highlight a few figures for the quarter and that show our resilience. If we consider the operating hours of our shopping centers, the sales from tenants were proportionally higher than the second quarter of last year. This is incredible. The occupancy rate was 96%. 96.3%, in fact, of the tenants that remained in our shopping center and higher than the national average. And this shows the confidence and the good understanding that we had and the support that we have given our tenants during this time of crisis. And I would like to highlight the fact that in the last quarter, up to March 15th, our sales were growing around 11% year on year. And unfortunately, the development of the country was suddenly interrupted by this pandemic. And this pandemic, in my opinion, had serious political implications in a way that they were mixed up with political opportunism that was very detrimental to the moment that it made things more complicated, more difficult, with negative impacts on the country's economy. Nevertheless, the traffic of people rose consistently in our shopping centers. Baja shopping, 14,000 vehicles per day already, and then park shopping canoes, which was the last one that we inaugurated. during the period in which it was closed with only a handful of stores open, such as drugstore and supermarket, the traffic was kept at 50% on our year-on-year comparison. And this shows the strength of the habit of using and coming to a shopping mall And this has been growing consistently every single year. And every year we see this in our project, in our properties. And the return of our clients to the shopping malls happened not only because of the safety of these environments, and we followed all the measures suggested by ABRAC and all the ones that were validated by the Sidiou Lebanese Hospital and the Matade Network and we contacted the pathologists in order to develop a protocol that is being rigorously followed in all our properties and we are taking all the necessary measures and we have already installed hundreds of points for the for hand sanitizer delivery and people feel safe in our environment. And so we see a gradual return of our clients to our shopping centers. And in Rio de Janeiro, for instance, the park shop in Jacarepaguá, which was briefly interrupted, we have already resumed that. and it will be our 20th shopping center. It already has 70% of all the operations leased, and we expect to return to the previous speed and being able to inaugurate it in the next year, and also in Curitiba, the expansion of Park Shopping Barigui, which we launched during the first half of March. And we did know that in the second part of March, a storm was coming our way. And we were surprised, of course. But in spite of everything, we already have 50% of the area granted. And in January, we are going to start the work and it's growing very rapidly. And I would like to mention that we have our origin has always been in real estate and property and In this real estate segment, I would like to highlight the sale of the Diamond Tower in São Paulo. It is also an evidence of the value that we generate. For instance, we invested $266.8 million in the construction of this tower, and up to June this year, We had already received 269 million in rent, corresponding to the amount invested. So it is a return in approximately seven years. And now more recently, we sold the same tower for 810 million with a very good result for the company besides reinforcing our financial position. And I would like to mention that we would not have sold this tower if it were not for the crisis that we are living. And during all these years, very often we have to sell a stake in a shopping center and then we buy it back and we sell a shopping mall abroad, for instance, at the moment in crisis. The fact is that the company has never stopped growing and has never stopped increasing our footprint. And this was a move that we decided to make for prudential reasons because we didn't have a clear view of the extension and the depth of the crisis. And I would like to highlight two very important things for the sector, for our sector. and looking at the real estate side of the company, we are living a time of extremely low interest rates. And we could never imagine 2% interest rate and inflation rate that is practically zero. And because of that, we have the possibility for us to invest in the real estate sector. And the company today has over 1 million square meters for sale. and for projects. And I would like to mention that we acquired these areas a long time ago. Many of these areas are around our shopping malls and at low amounts and they could generate an additional profit, a major additional income for the company. And at the same time, improving the cash position of the company and These projects have a marked click value, conservatively speaking. It represents $9.5 billion to be sold. And this is not going to be done all at the same time. However, it is an important asset for the company, and that will bring us a lot of additional income, such as the case of the tower that I have just mentioned that was developed by the company and that generated an outstanding result for the company. The company today is sufficiently capitalized with a low indebtedness and we have been making our best endeavors in terms of reducing our expenses about 20 million during this quarter in the headquarters only besides reducing expenditures as a whole and relieving the burden for our tenants as well. Net net EBITDA today is 2.71. But if we consider the recent sale of the Diamond Tower, it would be 2.9 vis-a-vis the EBITDA. So this is a good financial indicator and that makes us comfortable in order to proceed with our investments. And lastly, it is important to mention that we know where we are heading. We have a schedule and we have not canceled any expansions or launches and with the extension of our super app called Moti in partnership with Delivery Center. In this sense, e-commerce was important, but it was not enough, neither for our tenants nor for the consumers. And this reinforced our view that physical retail prevails, and it is helped by the online retail, and technology becomes a new driver for sale and for our consumers and for tenants. In summary, we are coping with an unprecedented situation that tested us all, and that showed that our roots are firm. Today, of the 19 shopping centers of Mutukun, 17 are already open, and I can tell you that next week, all our shopping centers will be in operation. We continue to pay attention to our needs to adapt, investing in safety for our clients, our tenants, and employees to feel protected in our shopping centers. Safety is the key word, but our long-term view is the same. We will continue to deliver well-being, convenience, quality of life, and value generation. And I would like to mention that our main business is very simple and it is subjective. Our main business is to give pleasure to people, working more and more in order to make all our properties, our achievements, A reality that goes beyond the building and beyond the delivery of a shopping center attitude in the company has always been an attitude of gratitude, gratitude to our investors, gratitude to our clients. And because of that, our philosophy is very important. More than ever, we are a company that has always tried to make reality bigger than the dream. We I thank you very much for your attention that I would like to give the floor now to admin.

Thank you, Dr. Pettis, ladies and gentlemen, good day. So we have to consider the significant impact on our revenue lines. We simply have to comment on some of the achievements that we had in the second quarter to date, which decrease our disbursements and brought us positive results. They include G&A expenses. Dr. Pettis already said, and it dropped 67.7% year over year. Therefore, in the first quarter, it amounted to 40.7% lower than the same period of last year. So we are managing the shopping malls, and we also mapped the company's management and so we could cut down on expenses and adapt to this reality. And now in July, we raised 400 million reals by issuing two debentures for a five to six year term, respectively, CDI plus 3% per year. The weighted average cost of gross debt was 3.53% per year and the net debt As Dr. Pettis just mentioned, accounted for 2.71 times EBITDA of the last 12 months or, in other words, only 13.1% of the fair value of our properties. We sold one of the towers of Modum B Corporate for 810 million BRL. It allowed us to generate value to our shareholders. from the moment we sold with a cap rate that was substantially below the one traded in our shares or that were traded on the closing day. So we are also factory, so to speak, like Dr. Petty said, not only do we buy, did we buy many minority stakes in recent years, but we still have this mission. And I highlight that the difference between this funding cost and our projects has never been so great, all the way to the lower cost-debt ratio, lower SILIC, different interest rates in Brazil, and the return of the projects. And naturally, this is not the best time to make comments on, but before the pandemic, we were doing well, and we hope to resume it soon. So this negotiation of the tower has to be considered in the fair value calculation and realize that on June 30, we were already with this trading with a 38.4% discount between the EV and the fair value of our properties. And there has been a gradual continuous growth in flow and sales. Combined with a larger number of shopping centers that are reopening and the gradual easing of opening hours and operations. Just to give an example of this evolution, if you think about the second quarter, our shopping centers operated only 8.4% of the hours of operation pre-COVID or pre-pandemic. Today, on August 7, the portfolio counts on approximately 60% of usual opening hours. And now we just disclosed this morning nine operations opening, and our expectation is that starting next week, we are going to have 100% of the malls operational, Dr. Paddy's. With a gradual easing, an increase in opening hours will also be very positive to the shopping center operations. We've been making great efforts to keep our tenants' operations feasible. Maintaining this partnership with our tenants today, although shopping centers are coming back to normal, we are charging only 60% of Common Expenses and 20% of the Promotion Fund. And sales keep on increasing. Dr. Patti said before that we continue to build Parque Jacarepagua and we're getting ourselves ready to build the expansion of Park Shopping Barigui early next year. And we'll be disclosing data further on. And we're ready to invest more. We will invest more in our shopping centers. Be it through physical or digital channels. And this is in order to make these properties even more attractive to our consumers. Lastly, I would just like to remind our investors and analysts that in the income statement, the discounts granted reduce our line of rental revenues. collection of rent minus discount. And since Q1 we excluded the straight line calculation of the operating cash flow because it does have an impact on the whole move of the cash. And I'm just saying this to remind and to help with unavoidable comparison between companies in the industry. So, I'll end up here, and let's start the Q&A session so we can elaborate more of this data. Thank you. Thank you, ladies and gentlemen. The floor is open now for questions. If you have a question, please press star 9 on your touch-tone phone at this or at any time. So we are already working on the questions. The first question is from Alex Ferra with Itaú BBA. Alex, good morning. Good morning, Dr. Pérez and Armando. Thank you for your presentation. I have two questions. The first question has to be about this topic. It's slightly more open. But by and large, how do you see the performance of tenants Now that stores are reopening in the quarter, we tend to have a limited view because it only started in the June. But following up your opening remarks, I can see a gradual return resumption. So could it give us more color? And if there is any market that is better than others, or tenants are in break even points, or if you were adopting another policy to address pent-up demand. And the second question is more related to Armando. He already talked about G&A expenses with a strong reduction. Should we consider an efficiency gain down the road, Armando, any savings that can be perennial or lower G&A expenses moving forward, or is it only a seasonal effect? Alex, I went to your question. I believe that the move is growing strongly and gradually. Actually, there is a pent-up demand. People were in social distancing for such a long time, and they urgently need to go back to normal life, to the normal course of life. So a shopping center is always a party, a show, and I always say that the greatest show lies in people. But we are like lamb, we follow the flock. And I'd like to highlight that one of the greatest shows in the mall, despite everything we have to offer, are not things but people. People are the show. And we are gregarious. We like partying. And the party is only beginning. So shoppings are having good flow. And the pent-up demand will bring an increase in sales definitely in the coming months. Above all, because people had their money in. They didn't spend. They stayed home. The ladies didn't go shopping. to buy clothes to parties. There were no parties to go. So I would say that we had this incredible suffering. I personally did not. I have to say that I traveled. I went to Brasilia. I didn't think about the mask. I did everything that we should do. We always have to take into account everything that was done. But what I'm trying to say is that people were dominated by the media, constantly speaking of death and only dying to COVID. And people began to realize that this is not exactly so. 1.3 million people die per year in Brazil, and the country never stopped. We never stopped because the 160,000 people die to cardiovascular disease, for instance. All many people in hospital doors crowded, people with crutches along the hallways. Brazil didn't stop, but naturally it stopped. Now with this pandemic, that seemed to be devastating. Perhaps not as devastating as we first imagined. 80 to 90,000 people die to flu every year. So Brazil is a country that loses 1,000,003,000 people plus 300,000 per year and we still have a mortality rate that follows the demographics. anyway I can see the strength and force of habit the power of habit with the key to everything people will keep on going to the shopping center to go shopping because streets today public streets today public and parks today have difficult access not only only to traffic but also safety conditions climate conditions and now the shopping center brings a new product which is safety safety to your health as well there is no other place that is cleaner and this is attested by our ID physicians some even say Shopping centers are so good that we didn't have to do a thing. However, we went beyond whatever was necessary and therefore, I'm confident that we'll move forward and life will go as usual. The pandemic will come to an end. Lex, good morning. Armando speaking. Just adding to the comments and giving you more color regarding the regional aspect. If you look closely at The numbers you see that shopping centers in Rio or in Brasilia, perhaps their performance was faster. Recovery was faster compared to other regions. However, when you begin to focus on the time, reopening time for instance, opening during the day with some hour restrictions or operation restrictions, then you can have a better analysis. So it made a lot of difference, the city where that operation was taking place during that time. But what we've seen is a gradual recovery in car flow, people flow in the shopping centers, and consequently, sales growth. And we expect to have a positive consequence and effect on rents. As for G&A expenses, I would like to go back to March. What we had was a very strong contingency plan. And it was not really a plan at first because it had to be done with contingency that we never imagined in any stress test that we had been through before, any reality test, reality check, or a PowerPoint presentation or Excel spreadsheet. So, we just did the stress test to rating agencies and our own understanding, but never as intense. So, it was very hard to look at the future and see how to adapt the company size. So, how far can we go adapting G&A expenses? And obviously, the company overcoming this scenario, we expect to have a gradual increase over time. However, and I make this clear today, I don't see it go back. It will go back to what it was before, including condominium expenses, for instance. Naturally, we can never say it will never happen again. But if you think about a visible horizon, we don't see condominium expenses, for instance, going back to pre-COVID times in a short timeframe, which is good for tenants. They'll be increasing sales at a lower cost. And the same goes to the company. Very hard, very tough. We've cut down on our own expenses to all of us in this room. We had a reduction in our salaries starting April, big reductions. Many things were cut down. Many expenses were cut down in the flesh because we wanted to have the perpetuity of the company and its profitability in the long run. So I believe that even though things may go back to normal gradually, it doesn't happen overnight, but it will come, at a given moment we might consider or expect to see lower DNA expenses. Thank you, Armando. Thank you, Dr. Pettis. Thank you, Alex. Next, we'll have with us Mr. Victor Papad with Bradesco BBI. Victor, over to you. Good morning, everyone. My question to you has to do with development. After everything happened about coronavirus, I believe you stepped on the brake in development in general. If we consider that you can envisage an improvement already taking place, projects include to some extent a very commercial aspect too. And after the sale of the diamond tower, your cash position, your liquidity is relatively high. Does it make sense or wouldn't it make sense to go back to speed up again? with these projects now in the short term in order to serve a better scenario once everything is clearer and resume more clearly or are you still going to keep on holding these projects development and if I may ask what about M&A there is a lot of cash minority stakes So what about this conversation right now? Victor? Josephette is speaking. I'll be answering your question. The sun is rising. It's daylight already, but what we still need is the light of freedom. the horizon in Brazil but what I have to say is that we're very bullish now with his resurrection so to speak and I would say that we will move with these projects forward plenty of new ideas not only projects in development but with new concepts because the mix has to be adapted to this new reality health is a key element our shopping centers for 27 years now. We were pioneers in the world to create big commercial centers and medical centers too, health centers, including a day hospital inside the shopping center, and therefore offering all our visitors a whole range of services that will bring more health to people. And today they gave us a very good return. Think about Curitiba for instance. We had a launch there and the shopping center will also include a very modern medical center. Our medical center was rented because we invented medicine with pleasure. So you see the doctor and you still enjoy it. Pleasure and pain are two aspects of the same coin. So shopping center equals enjoyment and pleasure. But when you go to, and if you go to the medical center inside the mall, you lower your resistance to seeing the doctor. Therefore, you become healthier if you go to the shopping center. And the latest international congress, the big international congress is that shopping centers should have huge medical centers, something that started 27 years ago with Baja Shopping. and more recently in Ribeirão Preto and now also in Curitiba. So healthcare will always be core to us. I cannot disclose our plans about it, about the integration of health with the shopping center, but certainly that's a strategy in the heart of the company. I'm very confident that we don't need to speed up even more than we already are. We are fresh and agile by nature. We stepped on the brake, but now the car started driving well again. And I believe our financial earnings by year-end may surprise, may take people by surprise. And just adding, this is Marcelo Barney speaking. I would like to say that in Jacarepagua, for instance, We didn't have any contract termination during this whole timeframe. And in Barigui, nearly 100% of the medical center is there and we have new rents both in Jacarepaguá and also in Barigui. This shows that the pandemic brought tenants closer to us, showing our partnerships. The tenants Realize we are committed not only with a first rent and even 50% condominium rate and zero rent so they can trust us and now we have stronger bonds and they also trust our product and there's also our credibility they trust we're going to be here for a greater good and we still have a very good sustainable pipeline for properties will have but we're surfing this wave slightly slower right now. Answering the second question on G&A, having cash is something, have market access is something different and room for leverage, this is critical and But our focus is still on shopping centers and bringing operations back to normal. This is our major focus right now. Naturally, always keep an eye on good opportunities. However, our focus as we speak lies on bringing operations back to normal, new operations, and having the shopping mall ready for the future. That's the short-term challenge, okay? Crystal clear. Thank you, everyone.

Daniel Gasparetti from Credit Suisse. Good morning, everybody. Thank you very much for the call. I have two questions. We have already talked about the sales performance. and the resumption of the project and I would like to understand a little bit about the support to your tenants in the last few months July and the beginning of August in terms of discounts And I would like to understand your frame of mind regarding the vacancy performance. It was quite low, even if you take into account the quarter like this one, and this showed the quality of your portfolio, the resilience of it. So how do you believe this indicator will perform from now on? Daniel, this is Armando. Good morning. Let me jot down your question, otherwise I will forget it. In relation to our support to our tenants, we continue with the same position. We want to continue to support them, to help them, but this has to be done on a case-by-case basis. You cannot have a blanket rule, everything at the same time, everything equal, because some of them are closed and it's totally different from the ones that are open. Those that are open four hours a day, some are 12 hours a day. So this makes a lot of difference. It has to be taken into account. Once again, we want to help our tenants to cross this bridge and get to the other side. And we are sure that the quality and the location, the outstanding location of our properties has not changed. And regarding now your second question, This is a big help for us in terms of closing this vacancy in the short run. Of course, if you take, for instance, BH that opened yesterday, it was closed for five months, if I'm not mistaken, from March to now. So you have to take everything into account and the tenants as well. How was the reopening, whether the product is a product that has a very big demand, whether they sell well or not, if they have the necessary stamina to hang on. and this has to be taken into account so we are always prepared ourselves for the worst and we are hoping always for the best and now that we are opening everything we have to see what is really healthy what will continue what will be able to continue in order to know what kind of space that you have available in order to bring aboard these new operations this has already started in some of the malls not all of them many of them were closed but we already have a lot of rent happening and you saw that the turnover was very low because you don't even know whether you're going to have the space or not and now things become more clear and what I meant was that with outstanding location good properties I'm talking about a fly to quality because you have the best properties attracting good operations, everybody. All the retailers want to be present where they can have a high exposure and a high productivity. And this is what we have in our portfolio. Excellent locations with high productivity, and this is why we have confidence in the future and that we will be able to close this vacancy, whatever the size of it may be in the next few months. Okay? Thank you very much, Armando and Dr. Perez. Andrea Mazzini from Citibank. Good morning, everybody. My question is still about vacancy. It was the biggest drop quote on quote in the history of the company, although it was so low. And I would like to understand who left the portfolio. Smaller tenants, franchisees, or do you have any geography that had the biggest one, the biggest turnover? Do you have a pattern? And the second question has to do with delinquency. It was higher in spite of all the discounts and whatever you didn't charge during the closing times, especially the condominium expenses. So I would like some color on that. This is Josep Perez. you're asking about the occupancy rate and whether there was a pattern no no what happened was the following during all this time of course we wouldn't be able to charge them anything because after all the shopping centers were closed and we suffered, in a way, an act of force on the part of the state that confiscated our right to work, our right to produce. And I have never in my whole life imagined that I could have this kind of situation in this unimaginable scenario. So you look at the guy and you say, how can I charge him anything if the store is closed? So I was not the one who closed the stores. It was the government, it was the mayors, it was the state. So you have to attribute unemployment to all the mayors and governors. We have to call a spade a spade, okay? And we continue to pay the property taxes, the municipalities continue to collect the taxes, the government continues to collect taxes, although they are confiscating from us the right to work. It is almost a confiscation of the license to operate the shopping malls. and fortunately we had reserves we had the necessary financial capacity and we were able to sail this crisis and being very good partners of our tenants because our success is their success and you have to understand that the tenants are extremely important and in our company tenants are king but consumers are gods So this is the way we treat them. We are service providers, and as service providers, we want to deliver the best possible service at all times. So in this occasion, what did we do? We only charged half of the condominium expenses, but now things are going back to normal. And I do not see a lot of delinquency. And we are collecting things gradually as the sales go up, step by step. So we are very good partners with all the tenants. We are receiving everybody's adhesion and praise and people thanking us, all the tenants that work with us. So it is highly rewarding for all of us. Although we do have the financial aspect, however, it is temporary and it's already going away. I would like to add, Dr. Pettis, Andrea was asking about the concentration. We had everything. We had some names that were not performing well before the pandemic. People who had, let's say, one single store and they started to look at life in a different fashion. So it's a little bit of everything. In relation to delinquency, I would like to remind you that the rent of the first quarter is collected in the second quarter. So you have rent and you have condominium expenses. primarily condominium expenses but also rent and some of our shopping centers were open and the company charged the rent and there was a bigger delay it is only natural in a moment such as this one it's only natural for this to go down gradually as time goes by and also as the access to funds becomes easier many credit lines established by the federal government and by private banks or federal banks so these credit lines start to get to the tenants and it's only natural for this delinquency goes down as the operation goes back to normal thank you okay thank you very much thank you andre the next question

is from Igor Altero with Santander. Igor, good morning. Good morning, everyone. Thank you for the presentation. Just one question. Armando made it clear the growth and when we consider the cash of the company. So the focus is more in-house, but I'd like to understand, I believe you check several opportunities, but still there is always some kind of feeling that it's difficult to sell the good and the evil, considering discounts. So what about AAA malls with more flexibility in price? Thank you. Igor, just making it clear, growth is not an obligation. We see growth as an opportunity, a growth to allocate capital and return. Otherwise, we only have this full hand and beautiful buying different things. But the first question, I think I said several times already, when I say to Dr. Pettis, he always wants to know the income. He never asks about revenue or EBITDA. He focuses on income. So we want to be profitable. And next, we have to assess because as we speak, And by the way, let me consider the sale of Modum B Corporate, for instance. We had 15 years and the cap rate is lower. So what we want is to always check for opportunities to buy good assets. Certainly buying things that are cheap is not the case. We need to go for good assets and with a return compatible to our expectations of capital allocation. in the mid to long run. When we look at that, we keep an eye of opportunities with third parties, or minority stakes in our malls, or buying third party malls, or to build ourselves. That's the advantage. We don't have a single path, we have several options. And that's what we'll look at. Maybe have cash, or return to shareholders, or buy new shares, so we always consider what will bring more value to our shareholders in the future. Did I answer your question? Great. Thank you, Armando. And if I may ask a second question, this time more related to delivery center. You mentioned in the earnings release that you expanded with five malls in the operation. How far can we imagine such growth and could you give us more granularity about the operation? Igor, I'm sorry, I did not understand clearly. None of us understood you clearly. Could you repeat the question, please? Can you hear me now? Can you hear me now? About delivery center, you expanded the operation to five malls in the quarter, so I'd like to understand how far can you go? Could you give us more granularity the economics of the operation? Igor, thank you. I think I said it before in the first quarter. I'm sorry. As a reminder, every strategy takes a partner. We had a cash call in February with delivery center. We are happy because at the end of the day, it was great timing, considering the demand and the pandemic. So delivery center is now in another five malls this quarter, and by year end, we expect to have all our shopping centers managed by the company. Remember, one of them is not managed by ourselves, but we expect to have delivery center, their strategy in all of them. And we can strongly see this growth. Not necessarily now, but after some time we will look back and see which asset, which is the asset of the pandemic. And we have to demystify that retail is only online or retail is only brick and mortars. We knew already it was not physical only. But sometimes people believe it's only online. and you can see that many online operations were not enough without the physical channel so it is important to have to think about channels I hate to use English terms but omni-channel that's the best explanation the customer at the core and sales in different channels with the same customer he is not different According to the channel, it's the single customer, and that's the path ahead. Can I just say something? The statement of the president of Restaurants Association, we had a live together about shopping centers right in the beginning of the process. And he said the following, the sale of restaurants is residual. about 15%. Restaurants that close cannot be on their own through online channels only. And tenants also said that sales are residual. A store cannot lose 70% of its sales. 30%, okay, but despite online, they lost 90% of the sales. So it is important to understand that IT, e-commerce, et cetera, this is one leverage for growth. Actually, we had this partnership with delivery center in order to make it easier to deliver. It's a logistics thing. And now working to deliver to consumers and tenants One shopping center store and also a virtual store, which is for free. We're not going to turn that into a business. We're going to make it something else to bring added value to our assets. Now coming back to Igor's question about growth, I think I did not answer it completely. We can see a clear cap in prices between the value traded by the company and the value that you manage to negotiate with a good asset in the operation. And we have to work on this in order to look for more opportunities and M&A. Okay, Igor? Crystal clear. Thank you. Thank you, Dr. Pettis. Thank you. The next question is from Marcelo Mota with JP Morgan. Marcelo, good morning. Just a brief question on delinquency. I would like to understand if you could maybe think about delinquency with a foreign tenant who could not afford to pay the rent, whereas The mall was closed. Does it take negotiations with the headquarters or another tenant that didn't know, for instance, if the mall would be closed for one month or one year and maybe they don't want to pay condominium expenses because they don't know how deep the well can be? And what about the tenant who has enough funds to pay? So just to give us more color about delinquency, some tenants didn't pay but could afford, and those who didn't pay and are going broke, like restaurants, for instance, it's a clear picture how hard it is for them. So I'd just like to understand more about it. Can you have any classification or rating about delinquency? Marcelo, Josefetti speaking. So we did not have delinquency because during these three months, we didn't charge a penny. So delinquency, is, well, we just charged 50% of condominium expenses. And from the moment shopping centers become more operational and start selling again, and we have a gradual collection of rents, from the moment sales increase, we are being great partners concerning this. And then we're going to feel the real or have a real picture of delinquency. We all know that many stores particularly some restaurants had a really great a really bad time and they closed concluding those who couldn't operate in freestanding stores on the other hand we have something very interesting the canon philosopher used to say Domenico Di Masi he used to say he talked about the creative destruction there is renewal whenever a tenant goes out a new tenant comes in with a new vision a new outlook and more up-to-date about the current reality so I would say that the room will never be empty there will always be someone in and we always want to add quality to them all It's not only a matter of having the rent paid. Our focus is a tenant that adds quality to the shopping center. This will bring an increase in sale, in flow, and consequently a higher rent. That's our rationale. Just adding one point to Dr. Perry's answer. Marcelo, we can see an increase an increase of our collections on a monthly basis. We've been having many calls from delinquent tenants trying to pay their bills. From the moment you have clarity that the malls are opening, sales are performing, it's only natural that tenants want to no longer be delinquent so they can move forward. So we are increasingly being called with orders or requests, better saying, to settle recent debts. So our expectation is that once things go back to normal, delinquency will go down as well. Only time will tell us that that's our expectation once there is improvement in the collection response. and also longer operation times and stronger sales on a monthly basis. Perfect. Thank you.

Now we close our Q&A session. We would like to give the floor back to Ms. Jose Zaccaperis. Once again, I would like to thank you very much for participating in our call, all the participants, investors, ladies and gentlemen, journalists, Everybody who have been following as our company for so many years, and I would like to reiterate that we are bullish about this year. In spite of this very critical moment that we have already crossed and looking ahead, we see a very bright horizon, the economy with a lot of liquidity, a lot of money, a lot of pent-up demand, and this is all going to be reflected. in a positive way in the second half. If I were not one of the controlling shareholders of Multiplan, I would certainly buy shares in the company. So thank you very much. Multiplan's conference call has come to an end. We thank you very much for your participation and we wish you a very good afternoon. Thank you.