Multiplan Empen Unsp/Adr

Ladies and gentlemen, good morning. Thank you for waiting. Welcome, everyone, to Multiplan's first portal of 20 earnings conference calls today. With us, we have Mr. José Zac Pérez, CEO, Mr. Armando Domínguez Couto, Industrial Relations Officer and CFO, Mr. Marcelo Vargas, Development Vice President, and Mr. Hans Messer, Executive Officer. We would like to inform you that the presentation that will be made is available for download at ir.multiplan.com.br. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company presentation. Afterwards, there will be 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 mention that forward-looking statements that might be made during this call in relation to the company's business perspectives, operating and financial projections and targets, our beliefs and assumptions of multi-plan 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 relate to future events, and therefore they depend on circumstances that may or may not occur. Investors should understand that general 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. This conference will ask 15 minutes after this period. Investor Relations team will be available should you have any additional doubts. Now, I would like to turn the conference over to Mr. Jose Zac Perez-Hill, who will start the presentation. Mr. Perez, good morning. Once again, thank you for the opportunity and you may begin. Good morning, ladies and gentlemen, and I would like to start My presentation with two remarks that have just occurred to me. The first one is that you should never rule against the tide. And in these circumstances, you should not. I know that the market is very volatile, especially in a quarter in which the company presents its best historic results in these 46 years of activity, as we will be seeing. Having said that, I'm going to read some remarks to you. In the third quarter, we have already seen the return of the operations and the recovery of sales and the revenues. And in fact, we were able to see the force of habit prevailing over any other entertainment option for the shopping centers and the speed of recovery that we had and our strength and the results and the operating results make it very clear that shopping centers continue to play an important role in society. And the pandemic accelerated digitization. And, but human beings want to be together in spite of the digital world and the financial performance with your record. driven by contingency measures and our development strategy in the real estate activity. Our net income in the fall was 569 million reals. In the first nine months of the year, we had 817 million reals. If we include the sale of the office store, Multiplans net income would be around 300 million in the year, therefore in line with what occurred last year. I would like to mention that in the first nine months of this year, during four months, we were practically closed with revenues around 10% and in October, tenant sales are already higher than 80% comparing to 2019. Nevertheless, this percentage has already exceeded 90% in terms of stocking census such as Brasília, Maceió and Rio Grande do Sul and Campo Grande in Rio de Janeiro. And we still have two good months ahead of us, November and December. And considering the recovery that occurred in October and the lifting of a major part of the restrictions, our expectation for November and December is that sales should be close to the sales that we had last year. I would like to remind you now the following. In January, February, and up to March 15th, we were growing very steeply vis-à-vis the previous year. when the shopping centers had to be closed. And we were the first company to take this initiative. And as some authorities said, this closing of all the shopping centers should be around 15 days, and they lasted for about four months. You can see that, let's say if we had had all these months this year, with the shopping centers open, regardless of the activities of the real estate activities, our net income would have been much higher. And I would like you to understand everything that we're saying here. I always say that in a not too distant past, The company had as its flagship the real estate activities and over time we started to invest more and more in shopping centers. And this was a very rightful decision and we will continue to do so. Shopping centers will be our flagship. But now with the reduction of the inflation rate and also the interest rate, investment in real estate becomes extremely attractive. And due to this reason, we have placed a team 100% dedicated to this sector. This will be an independent department in the company or possibly a new company. Currently, we own 1 million square meters with projects already approved for the selling areas in different regions of Brazil. And we do not need any additional capital because these properties are already paid in full. Our PSV, under this aspect, that is in real estate, is around 8 to 10 billion reals. These are lands that are close to the shopping centers that were acquired over our trajectory, along our trajectory, and the historical value is half a billion reals. It's a very low value, and this allows us to launch at very attractive prices. At the beginning of next year, we will be launching the Golden Lake project in Porto Alegre. And the prelaunch will be in January. And this will be the first phase of a project that could go beyond 3 billion in PSB. It will be carried out in stages over eight years, such as was the case of the Golden Green in Barra da Tijuca and Rio de Janeiro. This is a magnificent project. This is a private district, in fact, with unprecedented characteristics and facing the Guaiba River and very close to our Barra shopping mall. All in all, We will have 18 residential towers and one office tower. And this October, we have already started the urbanization work with an area of 163,000 square meters. That is to say a new neighborhood, a new district with outstanding characteristics and unprecedented that this will be a landmark with the concept of a closed condominium with a golf course was facing the Guayiba River and the other one was facing the sea. And here we have a spectacular lake with an artificial beach. And I believe anybody would dream of living in a place such as that one. So we have already acquired over two years ago and we are having very competitive prices. We continue to focus on all the real estate diversity, residential, office, medical centers, hotels, hospitals. And these projects will be generating additional traffic for the shopping centers. They will benefit from the characteristics of our volunteer students. And we also have expansions planned for our shopping centers, almost 200,000 square meters of close-leasable area. And next year, we will be starting the expansion of the park shopping in Curitiba and Diamond Mall in Belo Horizonte. And in October 2021, we will be inaugurating the Jacarepaguá Park Shopping, the 20th shopping center built by our company. We were the first company in the world to build, 30 years ago, a medical center within the Bar and Shopping. We are talking about 42 clinics that carry out 250,000 consultations and exams every single month. And I would like to mention, above all, our focus that has always been on health, facilitating the life of our consumers. in the Congress of the International Association of Shopping Centers. The recommendation by the association was that shopping centers should have medical centers. You can see that we already saw the synergy between health and entertainment that was the focus of shopping centers 30 years ago. We also have a medical center in Ribeirão Preto. We are building one in Curitiba. And curiously, the biggest demand that we see today are for the medical centers. So you can see that the shopping centers have the capacity to adapt to the new ways and the new habits. And I always say that the shopping centers continue to be a waste in the middle of large cities. For instance, what would happen in the cities if all the shopping malls should close? It would be a tragedy because the streets do not offer the necessary safety and they are not healthy in the sense of people being able to walk and carelessly. And with the pandemic, with the destruction of about 50% of the standalone stores What happened was that we had this social isolation, so to say, here in Brazil, and this was not the best choice from our viewpoint. The vertical isolation would have been much better because it would have avoided mass unemployment. And of course, we wouldn't have the activities with mortality rates lower than 60 years of age. So what I mean is that this was not needed. And unfortunately, the pandemic was politicized not only in Brazil, but in the whole world. I would like to mention the polling. We have the initiative of asking an international company to carry out PCR tests on 60 surfaces of our shopping centers in Sao Paulo. And the objective was to check the absence or presence of coronavirus in shopping centers in the state of Sao Paulo. And this is an international lab. And they collected 60 samples on 60 different surfaces, such as we do with a regular PCR. That is to say, the same thing that you do with a PCR in your nose. So we did that on 60 surfaces between August and October this year. And the results showed that there was no trace of coronavirus detected on none of the surfaces tested, so the result of all the samples was negative. And I would like to draw attention to the fact that we anticipated ourselves. We hired infectologists in order to guide us, and we established a standard that regardless of all the official standards that were very good, but we implemented with the help of all these infectologists of testing all the air conditioning systems and temperature of all clients. And now people are coming back to shopping centers and they feel safer. Not safer in the sense of the safety that we have always given them, but I'm talking about safe health-wise. And so we've hired these astrologers since the beginning of the pandemic. And this shows that shopping centers are the safest and most hygienic public locations in the country. And as a consequence of the pandemic, we are being approached by many retailers that only operated with standalone stores And that now they want to count on the benefits that are offered by shopping centers. Because we offer physical and sanitary safety, client traffic, parking, capacity to reduce costs, and facility of integration of e-commerce with the whole logistics chain. And among retailers, e-commerce ones were the ones that really approached us the most. This is very interesting because they wanted to have access to areas and spaces in our shopping centers. And in spite of all the restrictions that are still in place, We already see sales exceeding 80% of the amount that we had last year in all the regions, exceptionally to Sao Paulo, where the reduced opening hours was extended for a longer time. And we are keeping our support measures to the retailers who helped us to sustain our occupancy rate today at 95.3%. What I mean by that is that when this started, I thought we would be losing 20% of our retailers And we only lost a handful because we had 92 and now it's 95.3. It was 98. It was 98. And now it is 95.3. Just to finalize my remarks, I would like to add that In the last eight years, the digital tools came to add more sales also to the physical shopping malls. So we have a program in place in order to support all our tenants, and we will soon be offering a new tool in this regard. Those who do not know how to make a shopping mall, they believe that all digital is everything. But those who know how to make shopping and started almost 50 years ago, and we built the Ibirapuera Mall, and this was the first one that we had the joy to build. Okay, digital is great, but your presence is irreplaceable people above all in this isolation because this isolation social isolation has been the most painful thing that we have ever seen in our lifetime the rates of depression and mental problems have increased deeply and people to stop going to hospitals because of fear of contagion. And so this was very bad for health overall. And I thank our people who have given all their dedication to the company. And there was an a major decrease in the salaries of our people and this was their collaboration but now it has become something very rewarding because our shopping centers have no risk from the health viewpoint and the results of all this concerted effort was our going back to this level of sales that we did not expect given this situation and in the time we had 800 million that came from the sale of the office hour and this is the reason why we were able also to present such good results and now we are going to bring more results by means of this new company, we do not need additional capital because we have everything we need and that's very good historical prices. And this will be generating a major net income to the company over the next 10 years. And we are still thinking about the details and how we are going to put this in place, et cetera. But I would like to thank all our employees, Tenants for all the sacrifices that they made when the shoppings were closed. And from the tenants, we received only half of the condominium expenses. We waived the other 50% and others because we are the creators, but the soul of the shopping centers are the tenants. So I would like to thank our tenants who were very courageous and in spite of all the adversity, they went back and they reopened their stores and they are always with us. So I thank everybody who participates in our companies, also our investors who have been with us in these difficult times. Thank you very much.

Ladies and gentlemen, good morning. This is Armando. We are still in isolation and restriction mode, but even then we had a strong operating recovery in the third quarter with less operation time equivalent to 51.7% of the third quarter of 2019. We had better results for hourly rent, 55.5%, when compared to the prior year. same growth is observed in October, getting closer to pre-COVID levels. Analyzing the comments from analysts, we see that this increase in the third quarter is clear when we analyze our receivables due on the following month, which go from 42.8 million in June to 83.7 million in September 2020. sales and people traffic recovery allowed a lower occupancy cost in a third quarter since the IPO in 2007. It was 11.8% comparable only to the historical lower cost in fourth quarters, which happens thanks to Christmas season. And more important, that turns our properties more attractive to tenants in the short term as well. For those that are analyzing and concerned about vacancy, we see a great immediate attractiveness there. Another extremely positive aspect was the strong rent revenue recovery, followed also by a significant drop in delinquency. from 16.3% in the second quarter to 7.2% now in this third quarter. Commercial activities resumed with 90 new store rentals, a turnover of 1.1% of the gross leaseable area. Our efforts to adjust the company and our properties to the pandemic effects are still bringing good results. One of them is a reduction in property expenses, 6.8% of the tower expenses and also shopping mall expenses. It was reduced in despite of the higher vacancy. And as Dr. Pettis mentioned, a lower headquarters expenses. 48.5% vis-a-vis the same quarter in 2019. Diamond Tower Sale, which is part of our multi-user strategy, that's part of our activity, that allowed a strong financial leverage, bringing down our net debt over EBITDA ratio to 1.33 times. In this quarter, we issued 400 million RELs in new debentures, prepaid that's in the amount of R388.4 million, basically that were indexed to TR, the reference rate, and we renegotiated the cost of a loan, also indexed in TR. The actions allowed us savings of R23.6 million at net present value, net financial expenses here, that is the gross expenses less than what we received in investments, those expenses were down 46.4%. So having said all that, the gross debt average cost was down 40 BPS to 3.13% a year, a little faster than Selic rate, which dropped 25 BPS. In this quarter, we also bought back 1,955,700 shares. I'm trying to give you more transparency and more information about details also about the selling of our tower. We reached a cash generation record measured by the EBITDA or by the FFO as well as a new net income record. I usually say that our to our investors and analysts that we already discount from the FFO the non-cash effect once again so that we can have greater transparency and so that our FFO is a good indication of cash generation. And using technology, we continue investing in projects. that may bring Multiplan and its tenants greater access to different markets, as well as it will allow consumers to have even more convenience. Recently, we launched a beta version for sales via WhatsApp and participated in a new round of capital increase for delivery center. And our share today is 26.5%. Our MultiSuper app has now eight times more active users than the same period of 2019. It's still low. We are going to grow there. And we will expand its marketplace functionality to a total of 16 of our malls until this year's Black Friday. That's going to be within two weeks. So to conclude, I hope we have been able to show you that instead of of wasting time and complaining about what happened, we dedicated ourselves. We worked hard to overcome this huge challenge. And now we can celebrate the quick and strong operating and financial recovery we had in this third quarter. Thank you very much. And now I turn the floor to the Q&A session. Very well. We will now start the Q&A session. If you have a question, please press star nine on your phone. Star nine so that we can receive your question. First question from Alex Ferraz . Alex?

Good morning, Mr. Perez Armando. Thank you very much for the presentation. I have two questions. The first one has to do with the turnover. This has been a positive surprise. The appetite for new spaces, and we already expected this turnover, but the demand for new areas is surprising, even more so if you consider this challenging scenario. So what do you believe is driving this appetite? You mentioned the retailers that only had standalone stores and they want to take advantage of the advantages offered by malls. And also, You made it very clear, this correlation between the sales performance and the restrictions regarding the opening hours. And last week we saw, I think it was on Valour's publication, mentioning tenants that wanted to reduce the opening hours. Do you believe there will be a discrepancy or do you believe that the news published by This publication has nothing to do with the profile of your tenants. It's very difficult to acquire a good shopping center. We do have this appetite. Oh, you're talking about new tenants. Okay, now I understand your question. This is happening very frequently. These are retailers that survived in standalone stores and they now want to go to the shopping centers because they know that it is much safer and it is much stronger in terms of attraction. Of course, there are momentary difficulties such as the ones that we are having now. But there is something called creative destruction. Whenever you open a new space, there is a new one opening up. And our shopping centers have a very high occupancy rate, around 98%, but some areas are being replaced easily. And this is a very positive thing. As we said before, in spite of all the difficulties that we were facing, we are delivering sales figures that are very similar to what we had last year, in spite of all the restrictions that continue to be in place. And regarding the opening hours that you were mentioning, this happened in São Paulo, because in São Paulo, The restriction was bigger. In a period of eight hours, let's say, for retailers, they thought it would be better to have eight hours open in a critical situation than having two different shifts. And financially speaking, that would be more advantageous. But most of our shopping centers today have these two shifts now. And in São Paulo, we again have two shifts. In some shopping centers in the interior of São Paulo, they no longer or they still do not have two shifts. Porto Alegre, for instance, does not have two shifts. So this is the situation. Thank you very much. Penny from Santander. Good morning, everybody. I have two questions. along the lines of the previous question, which has to do with vacancies. Some people are concerned with the increase in vacancies. But probably the retailers that were not having a good performance, they did not wait for Christmas and they decided to leave before Christmas. And how do you evaluate the health of your tenants in your shop? This reminds me of a song that this year is not going to be the same as last year because differently from the previous years, people usually rush to open the store before Christmas and they want to have everything ready to go. And what happened was that we saw this movement before it was earlier because of so many months closed. We are having this earlier this year. So it's really the opposite. We see the new renters with a better quality because they want to be ready for Christmas and they want to save to start this and we see new brands and new segments that are participating in the shopping centers and they want to stay in the medium and the long run. And they are taking advantage of this opportunity because today we charge much less the promotion on 30% condominium between 70 and 80% of what we used to charge. So they want to take advantage of these very attractive situation. They want to tap into this opportunity. So, the retailers that were only had standalone stores and restaurants that were only outside shopping centers and they want to be present in our malls now. And we believe that all in all, it's going to be very attractive. And we believe that the vacancies that we still have will be very much sought after as of next month. Of course, it's very difficult to foresee what is going to happen. But this year, we believe that it's going to be exactly the opposite that happened in the previous years. We will see this recovery at the end of the year and beginning of next year. And we believe that vacancies are going to go down and not up. There is something that is undeniable. People who were isolated during all this time and many people remain at their home in social distancing. And all this created a pent up demand so much so that our recovery is be very fast. People are tired of staying home all the time. and the shopping centers are places of convenience and they're meeting points and people cannot just live with whoever lives with them in the same home. We are gregarious. And what I mentioned during my presentation, the force of habit and even when the shopping centers were closed, people came and they knocked at our door and said, well, I just want to to see the shopping center. And at the beginning when we only had supermarkets and drugstores operating, people wanted to come. They wanted to come as entertainment because our cities today, they are very inhospitable. People are afraid all the time and they do not want to walk in the street. They are afraid. So our consumers or most of our shopping centers come by car, their own cars or they use Uber. They do not come walking anymore. And what is happening, I really did not expect, but this shows what I call the strength of habit. People have nowhere to go. In Rio, you have either the beach or the shopping malls because the theaters are too close and the cinemas are closed or nobody goes and you cannot hold any events. And when everything comes back at full steam, I believe that we will have a lot to gain from that. We are recovering 80% of our sales with restricted opening hours in October. And I didn't answer your second question. You were asking about the tenants. And just to complete, Fanny, I think a good indicator that translators quite well with delinquency. It worked. This is a very positive information because you see that we are selling more and we are being more efficient in collection. We made a study about that. and you can see that sales had a very strong recovery. Okay? Thank you.