Multiplan Empen Unsp/Adr

and welcome to Multiplan's Fourth Quarter of 2020 Earnings Conference Call. Today with us, we have Mr. José Zacperes, CEO, Mr. Armando D'Almeida Neto, CFO and Investor Relations Officer, Mr. Marcelo Barney, CIO, and Mr. Hans Melschitz, Executive Officer. We would like to inform you that the presentation 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 mention that forward-looking statements that might be made during this call in relation to the company's business perspective, operating and financial projections and targets, are beliefs and assumptions of multiple management, as well as information currently available to the company. Forward-looking statements are no guarantee of performance. They involve risks, and 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. The duration of this fall will be 60 minutes after the spirit investor relations area will be available should you need any further clarification. Now, I would like to send the conference over to Mr. José Zaccaris, CEO, who will start the presentation. Good morning, Mr. Pettis. Thank you for the opportunity. You have the floor. Good morning, everyone. Ladies and gentlemen, our shareholders and other entities. I would like to start the presentation by making a brief summary about our trajectory and also talk about our confidence in our business, our development during so many years. I would like to mention, as one example, the fact that the five first shopping centers of Ho Chi Minh were inaugurated in the early 80s, very difficult years. And when the interest rates were very high, inflation was 100, 150, and 200% even. And it was within this very tough context in Brazil that we continued our trajectory. and such as we face other challenges today. And I would like to mention something more recent, the Barra Shopping Zoo. It was opened right in the middle of the world financial crisis with the downfall of the Lehman Brothers Bank. And we built it and we inaugurated it and we delivered it 100% rented right in the middle of the crisis. I remember that one newspaper interviewed me at the time and he said, the guy said, well, are you courageous enough to inaugurate a shopping center right now? And I said, the small is evidence of the resilience that we have to recession and it will be a big winner. And it was in a way. The park shopping canoas, for instance, we opened it right in the middle of the recession with a very big economic and political crisis, a very deep one. And it was very difficult to open it with 90% of all stores rented, but we did. And we also showed at the time that we were showing a new project, a new product adapted to the conditions that prevailed at the moment. It was already integrated to the green area in Tejitulu Park and we created many attractions and it was a very leisure-oriented shopping center and it continues to grow and we know that shopping centers for four to five years, it continues going up, that is to say, until it reaches a full production, so to say. For instance, sales in 2020 reached 83.3% of the sales. The fourth quarter was 19, and in spite of all the restrictions that were in place at that time, limited parking, and movie theaters closed, and many restaurants only opened until 8. and we could not sell any alcoholic beverages after 8 p.m. and we know that their income or comes from alcoholic beverage and not from the food offered so you can imagine the dramatic crisis faced by the restaurant sector but you know that crisis generate opportunities and we have been growing right in the middle of crisis adapting ourselves to each situation that comes our way and during 57 years also we have been operating in the real estate market and some of the younger or the people who joined the company 10 years ago they are are familiar with that and shopping centers in the last 40 years. And our company was initially a real estate company, in fact. And those who have been with us for longer, they know that. But I can tell you that the pandemic is the biggest crisis that we have ever faced and maximized because of arbitrary decisions that were made and things didn't have to be like that because I understand that the freedom to work and health go hand in hand and they do not work without each other. But we live very difficult moments and we are surviving. And I would say that emotional suffering is even bigger than the physical suffering. People who are confined and older people, for instance, they... older people have suffered fractures, for instance, because they stay home and they do not exercise and they end up falling and that they are afraid of going to the hospital. So, we have to look ahead. And we have to see that vaccines are already being distributed. And afterwards, I will talk about the support of Multiplan in terms of the pandemic, what we have been doing. And there is something very interesting here. We have information from a very large bank, and of course, I cannot say the name of the bank. But anyway, the information that we have is that families have saved, in this period, something like three to four times what The savings were a few years ago because they didn't spend any money, and this is why we say that there is a pent-up demand. People are crazy to go out and to go shopping and to go traveling, and life has to go back to normal. It's already gradually going back to normal. The restate activity is very important for a company. Because it generates value in the short run, and as we have seen during this past year, we see we had an investment of $266.8 million and was sold by $810 million, the Golden Tower. And we had already recovered in rental practically the amount or the full amount of What we invested and it was a strategic move on the part of the company. The company builds and the company takes advantage of opportunities that it sells, of course. And the decision was made based on a precaution on the part of the company so as not to face any cash problems. We didn't have to go to banks or we don't have to go to banks to survive, nevertheless. We made many efforts in terms of savings, internal savings, in the company, and this improved the indices of the company. And also, as you will be seeing, it generated a fantastic profit last year. Although we had an year of crisis, Mutual Plans reinvents itself, and we keep on reinventing ourselves. And this is the reason why we had, last year, approximately $1 billion in net income. 964 million. We are going to pay out dividends to our shareholders much higher than we paid out in the previous years. You can see that there is a paradox because we were right in the middle of the crisis and we can do that. We can do that because of our strategy. because this is a very careful strategy in terms of demobilizing a minimum part of our assets and bringing a major financial result. The company has practically 900 and something thousand square meters in the land adjacent to our shopping malls. and of course this is going to generate quite a lot of cash because we reactivated the development of the real estate activity and it's going to be an additional gain, but we continue to build shopping centers as you will be seeing later on. And one detail is that all this land that is adjacent to our shopping malls, all these Prices of land are fully paid. So when we sell the project, we immediately generate quite a lot of profit. And this is the way it is with us. We have to pay attention to all the opportunities in the real estate. Because of the very low interest rates, people do not want to get heavily invested in security, for instance. People still know and they still feel safer when they have a property, a real property, and sales will be much more facilitated because of that. And I have just read that the central bank does not intend to increase interest rates in March. And this is an interesting remark because the expectation of the market was that, well, it's going to go up because of inflation and this and that. However, we see the central bank doing this. Well, great. Brazil is going back on track and things are improving. And the shopping centers also appreciated our real estate properties. In Ribeirão Preto, when I acquired the property, it was part of a sugarcane farm. And the consumer was a scarecrow of the farm. This was the only bean. that was close to this area, so only a care crew looked at us. Well, I was called crazy, and I had already been called crazy very often in the past, but just to give an idea, I acquired this piece of land at one real per square meter 30 years later, and this was about 40 years ago. We acquired one area, Adjacent to this one, paying $3,000 for the same square meter. However, it was no longer a farm. It was a very well-developed area because the shopping centers are a major driver of development, such as happened in the Barra da Tijuca and in Belo Horizonte. And afterwards, I can say a few words about that as well. And this appreciation. Well, we also have a project with this appreciation of our land and we buy more and more land always adjacent to what we already have with the expectation of generating new real estate projects that bring about synergy to the shopping centers. We're talking about hotels and hospitals and apartments and houses and office buildings. For instance, the Barra Shopping Sioux. It was really a slum when we got there first and we recovered 600 homes and we built a decent and very good village. And today that region starts to grow right next to the Barra Shopping Sioux. And the situation is quite similar to Barra da Tijuca in the south of Porto Alegre. And this is where we are going to have the project that we call Golden Gate and the value is about 3 billion reals. It's an iconic project and very similar to what we have here and which is recognized in Brazil and all over the world as one of the best closed condominiums in the country, the Golden Lake condominium. It has tennis courts and a golf club and looking to the sea. It's really the best possible situation that one could have. And after the storm, when the sky is clear, we are going to see the reaction on the part of real estate markets and the shopping centers will go back to what they were. Many people think that Multiplan is a shopping center company, but it's not. It's a real estate company. And of course, we have to invest in income generating project. At the time, when we did a lot of development, we bought a piece of land, and then we developed, and then we built, and then we sold, and then in order to buy another area. Of course, it became very expensive. So, we have to work with income generating. properties and the first thing that came to my mind and I thought well let's make a shopping center here in Brazil because before of that we only built that is to say we were developers we were developers in fact and the name of the company was different but today it's a multi-plan but the reality is that The company made a lot of money from shopping centers and we will continue to make a lot of money with the shopping centers as well. Today, we maintain 80.1% stake in our shopping centers. We have full control over them. And these assets have been in existence for about 40 years and around them large cities have started to appear. And now I would like to turn to last year. Last year we lost 41.3% of our regular opening hours. If you discount this and you transform this into sales, our sales, I would say that it has to be absurdly higher than it was. We lost almost half of the opening hours of our shopping centers, and in spite of that, we delivered profit. And it was lucrative. And we weighed about $500 million because of measures that we put in place in order to help our tenants. We only charged half of their rent. No, the rent was zero, in fact. The rent was zero that they charged. And we were criticized by some of our colleagues, but we know that tenants are our partners and we need them the same way they need us. In some cities like Rio, where the mayor was a little bit more liberal, the shopping centers had the best performance. Sao Paulo, of course, has always been the main one and the problems were big and in Belo Horizonte the shopping centers were closed for about four months and so we had problems there also. And I believe that commerce and services were punished so to say And it's very beautiful, so to say, to close shopping centers. Oh, we are saving lives, and this gives us a lot of visibility. But about 1,300,000 people died last year. 200,000 of COVID. But we don't even talk about the people that have died without any money to buy and with no medical service and dying right at the doorstep or the medical clinics or people who had a heart stroke and they died at home because they were afraid of going to a hospital, they were afraid of contamination. And this is a very sad story that one day in the future it will be told according to what really happened. Okay, I am digressing a little bit, but I would like to go back and say that we reinforced all our measures of hygiene and surface tests, for instance, carried out in all shopping centers, showed that no traces of coronavirus were found. There were two very big samples, 370 samples collected on surfaces in our shopping centers. All the results were negative, no presence of coronavirus at all. 360 additional tests were carried out this year. The first one was last year. Nothing was found, including all the surfaces and air conditioning etc. And no traces of coronavirus were found on the handrails or tables or chairs in the air conditioning grids or bathrooms. Nothing whatsoever. And this shows that with the protocol adopted by Abracia, our association, and that we follow very strictly in measuring the temperature of everybody and having hand sanitizers available everywhere. According to the pathologist, the shopping centers are the safest public places from the viewpoint of contagion. Besides people started to wear masks and respecting social distancing and a certain number of people Allowed in each one of the stores one by one. And of course all that hindered our activities. We did our share, we collaborated, we did everything that we could in terms of helping decrease this pandemic. Also, this week, the shoppings are open. This weekend, this coming weekend, the shoppings are open, and the newspapers criticize retail, and they say that, well, the result was bad. It dropped 6% retail in general. 6% drop? It should have been 50% drop. overall for retail with all that, with all these restrictions. However, Commerce is resilient. People are gregarious. They want to be together and people want to be with people. And in this crisis, I would like to say to you that from my viewpoint, one important thing that I would like to reiterate here I would like to reiterate this here. I would like to draw your attention to the following. We do not live in a digital world. We live in a real world, and the real world is a world of people. People go to malls because they want to be together. They want to meet the needs for shopping, for consumption, for leisure, and also for health reasons because we have medical centers and the real world is the world of people. E-commerce will not make malls disappear. All the large cities were created around the large commercial centers or the small commercial centers that existed at the beginning. So, commerce is a real driver of development. And the major attraction is interaction among people. I understand that e-commerce will be one additional lever, one additional driver. However, it is one additional tool. But our sector will continue to grow, will innovate, will adapt. Always meeting the needs and the wishes of the population. We have a doctor in Hirbara. He has per month 200,000 consultations and people I like to go there because going to the mall is very pleasant. So they say, well, I'm going to the mall, but then I'm going to the doctor for a couple of minutes. We have to talk. And this helps a lot in terms of health as well. I would say that the human being continues to be the same. We are a gregarious animal according to Aristotle and we continue to be gregarious. We want to be with people, be together. And I believe that the biggest attraction one mole can have are the people. I thank you very much. I thank our employees, our tenants, everybody who participated in the trajectory of our company. I thank you very much for the trust. And as far as we are concerned, we will do everything we can in order to deserve your trust. And now, with this new vector of development in the company, the real estate sector will continue to grow. Thank you very much. I will give the floor to Amanda Omega, who will be talking about the financial results of the company. Thank you very much. Thank you very much, Mr. Perez. I'm going to make some quick remarks, and then we will go through the questions. First, I would like to talk about the satisfaction to see the strong operating recovery that we had in the fourth quarter, and I will highlight a few points. The sales and traffic of vehicles, et cetera, everything going up, not only over the previous quarter, but consistently every single month since April. and in spite of all the restrictions, the numerous restrictions and shorter opening hours and sale of 83.3% and 97% rental when compared to the fourth quarter of 19. And as a consequence of the efforts and the many measures taken to support our tenants and Mr. Petty said over 500 million in rentals that we wage, We reduced the condominium expenses maintaining the occupancy costs at 11.6% unchanged vis-a-vis 2019 in spite of the strong drop in sales because of the shopping being closed. And benefited by these measures, the net delinquency also dropped 5.8%, decreasing very strongly since the 16.3% that we had in the second quarter of this year. From the second to the third, it dropped. And now to 5.8. And it is also important to talk about the increase in the occupancy rate, 95.8%, 60 basis points higher than the third quarter of 2020. And even more, the song, A good sign or good indicator was the strong commercial activity represented by the turnover of stores, 1.9% in gross-feasible area, 170 stores or 14,121 square meters negotiated in one single quarter of new tenants only, with all the challenges faced and described by Mr. Paddy that we faced in 2020, we invested 827 million rials. We returned 270 million to our shareholders via interest on equity, and we bought back 5 million shares for our treasury. And then I show you the use of the funds of the company here. And I would like to open for questions. But before that, I would like to invite you to read our report, our early release, where we try to give more visibility. We have received so many questions daily. And we placed a chapter about our digital innovation strategy. And it's a very big report, about 60 pages. and about 20 are about our strategy for digital innovation, how we think about it. And we also carried out a brief study about omnichannel and the role of the shopping centers in this distribution in this omnichannel sale. And this is very important as well, and we made a study about that. And many pages also talking about ESG or environmental strategy, governance, and this is so important, so relevant today. There are so many remarks, but I would like to open for questions. And thank you very much for your attention, your dedication, your interest, and all the time that you devote to us, our investors, analysts, journalists, and everybody who participates and starts the Q&A session.

Ladies and gentlemen, we now open a question and answer session. I would like to remind you all that if you want to ask questions, please press star nine on your phone. We already have a couple of questions. The first one will be from Nicole Inouye with Bank of America. Nicole, good morning. Good morning. Thank you very much for the conference call and for the comments. It's great to see that sales are coming up fast, recovering. However, people flow is still taking a while to happen. In your opinion, what do you think still needs to happen for people flow to come back to normal levels? Restaurants running normally, for instance, or movie theaters coming back? Or do you think there's something beyond that, like the vaccination effect Just to understand your view better, what is going on and what still has to happen again so we can come back to pre-pandemic levels? Thank you. Nicole, this is Betty speaking. Let me answer your question. Our problem is that we have a limitation of the use of the parking lot, and we also have restrictions of several activities like movie theaters. We can only have one third of the audience and that's not how it actually works. We also have restaurants working at restricted hours. Anyway, some cities used to have restricted hours to be in the mall, in the shopping center. Definitely, we are going to see a recovery. Think about a huge number or the big amounts at saving accounts or banks three times higher than what we had last year or the previous year according to this second big bang. So people are avid to go out, to go shopping, to meet their desires. Luckily now, after the vaccination, And obviously, with protocols that are adopted with prevention with coronavirus, we already begin to see a learning curve by physicians on how to treat the disease. So I believe these problems will go down, and I'm very confident that in the following months, we'll go back to normal life. So much so that nobody can stand anymore to stay home. Think about children, for instance. They go to school much happier than they used to do in the past. Children don't usually like to go to school, but now they're avid to go to school. Like if hell turned into heaven. So I believe that the minds of people are still very traumatized with all this advertising that is constantly talking about death, COVID, etc. So that's the pandemic. It really bothers her a lot, but we are facing and cooperating. For instance, the company would try to buy 300,000 doses of the vaccine and donate 200,000 doses to the public sector. One-third of the doses is to people who work in our shopping centers, approximately 100,000 people. At the end of the day, as ID physicians say, it is the safest Public space, the shopping mall, I mean. So we're just about to start another vaccination for people to learn more about. We do. And we are going to win this war as well. Thank you very much. May I just add with the numbers, Nicole, this is Amanda speaking. Thank you for your question. In December, we had 74.2% of carb flow. So there was a strong recovery, going above 60% in the whole fourth quarter. And if you check, for instance, what we had in July, and by the way, this is even posted in our report, it was 34.5%, so we doubled car flow. And two points, like Dr. Pettis mentioned, movie theaters and theaters are not allowed yet. And when we create Attractions, big sales, and meetings. We couldn't do it anymore, so we cannot manage the shopping center today as we did in the past. We couldn't even benefit from all the discounts we usually give. So from the moment restrictions go down, we are very confident of this comeback, and naturally the vaccination campaign will be very important too. We don't have a concern about car flow. We can see this flow growing more and more. This is it. Great. Thank you very much. The next question is from Alex Ferraz with Isau DDA. Alex, good morning. Good morning, Dr. Pettis. Good morning, Armando. I have two questions. My first question is about the turnover level, which was a record this quarter. I would like to go deeper into your impression about the reasons behind it. Do you see any seed to justify this very strong turnover rate in such a challenging scenario? Tenants that are capitalized, like quality, like you said. Is there any segment that is adding more? I'd like to learn more about how you feel. What is the reason behind this positive turnover rate? And my second question is about the occupancy cost. Despite same-store rent recovery, same-store sales is flat owing to condominium costs and charges to tenants. Do you envisage any structural thing, particularly about charges that went down that can be maintained down the road, should we assume that promotion funds could be lower in the future or more significant savings? Actually, was there a real gain in charges that can be used in the future and further down the occupancy cost? Alex, is speaking. Let me try to answer your question. When it comes to the turnover rate you mentioned, there is a pent-up demand that is huge. People are hungry to leave home. They're avid to meet other people, to go shopping. The shopping center is a big center to meet other people. We no longer have public parks. People don't go along the sidewalk to window shop because the pandemic brought this freestanding stores to an end, but shopping centers survived. Today, our occupancy rate is actually higher than what we had in 2019. We closed the year with a higher occupancy rate. On the other hand, if you think about what you said, your question about charges and costs, we did lower them because the crisis offered us or obliges us to reinvent ourselves, and we are reinventing ourselves throughout the crisis, adapting our malls into a new system. We're cutting down expenses that were not that necessary, and we are searching for a higher level of efficiency, even investing more in power and energy so that the power costs in our malls be much lower. Our goal is one day to zero electricity costs in the malls You can go there without paying for electricity. Another speaking now added to Dr. Paddy's comments. We have this mega store and many stores, satellite stores, many satellite stores, like Dr. Paddy said, there is a pent-up demand by consumers and tenants are responding now. The whole crisis also brings opportunities, opportunities for new stores, new segments. The majority satellite stores. We produce a report about the flight to quality concept. Certainly there was the search for good points, good locations. We can see several tenants who were in freestanding stores trying to migrate into the mall because the mall supports with protection, with marketing, protocols, with hygiene and safety. So we can see this higher pursuit coming on more and more. On top of that, for instance, we have everything related to a strategy to integrate tenants with digital sales. You can see the mall as a big hub providing access to consumers. At the end of the day, there are also many other advantages that we can provide tenants with just because they are in the mall with us. On slide number seven, we show some examples of benefits that we try to extend to our tenants. And Dr. Pettis already told you about the charges and costs. We opened this year, particularly benefiting from this challenging time in order to further reduce promotion funds and charges to support tenants to move away from this crisis as well as we did last year. What I'm trying to say is that or I'm very confident that there is some perpetuity with lower expenses for tenants. We're doing everything in our power to cut down on expenses in the mid-run. Perfect. Thank you. The next question is from Gustavo Pambauva. with BTG Pactual. Good morning, Gustavo. Good morning. I would like to ask a question as a follow-up to the turnover rate comments made. I would like to understand if this big volume of new contracts that have just entered into, are you considering any kind of change to the contract structure? We can see many things in the media. tenants complaining about EPCA, IPCA, for instance, or IGP, and eventually trying to move into IPCA. So what about new agreements? Have you signed with a different index or a separate of a rent that is slightly different? Or maybe given tenants any kind of higher So, I'd like to learn more about negotiations and also know better about the turnover rates in these many satellite stores that just joined the malls. Is there any kind of significant change to the mix or a slightly stronger segment right now? Thank you. Gustavo, let me try to be very to the point. The answer is no. That's it. Now, let me go back and explain it. It's nice to have this question because you're very familiar with the industry, the company following up with so many years and asking the same questions in 2015, 16, 17, tough times to the economy. What about total occupancy cost? Are things going to change? Are we going to use a different index? Let us remind ourselves that in our case, IGPs in general, were deflation were negative and then the same questions would come are the agreements going to be negative now things are more positive the thing is we have to take care of a good replica or copy of freestanding stores which is the mall freestanding stores no longer exist they come to an end so we have to be careful enough in order to bring the flow back bringing people flow back, car flow back, as Nicole asked. We want to have the mall being people's daily solution, providing quality, good locations, the basic factors. It's part of a real estate industry, like having location, and location is even more important now, and that's what we have to pay attention to, and also adding a new layer, which is the sales. layer via the web in order to add even more value on the operation. So, about the turnover rate, I can say the agreement has the same structure, Gustavo. It contains the same provisions, the same clauses that we always had for a while. I hope I answered your question. Did I forget anything about the logistics company that we partner with? We perfectly know what this company delivers at a higher rate. This refers to food, for instance, or drugs, commodities. Nobody buys a coat, gloves, or shoes, a picture. Well, that's an experience, right? But Brazilians, in general, love to meet other people. We are a tropical country, unlike Nordic countries that are so cold. And people are more isolated. They're used to staying home. They don't walk on the streets so much. But Brazilians live in a tropical country. We are the carnival country. Are we going to change our habits overnight? Absolutely not. Craziness is going to continue because that's Brazil carnival and despite our weaknesses we have a joyful people Brazilians are not sad Brazilians are joyful and happy so that's what we mean by joy it implies being in contact with people and showing that we invest in a logistic company in order to support our tenants to deliver the sales and purchases on the web. They are found in nearly all of them. And we use an IT, a new IT tool, and we're investing very heavily on technology. So technology will be an additional tool for them all. That's what we want, just as we have many other tools. Gustavo, there is just one thing that I forgot. Many shut their doors during the pandemic. And operations are being very successful right now, improving flow, selling more compared to last year. We have a wide mix of satellite stores and a big demand for areas and many companies that want to be in the mall experience. And we can see demand from some tenants who are already at the mall and want to expand their space. Right, it's important to talk about Village Mall as well. Apparently last quarter, it exceeded sales despite restrictions. are going to make a lot of profit after the pandemic. You're right. The sale was 108% on top of 2019. Village Mall, amazing. Right. Absolutely amazing. Gustavo, did we answer all your questions? That's very clear. Thank you, Redmond. Thank you. Next we have with us Andre Maglini with Citibank. Andre, good morning. Hello, good morning, Dr. Paris Armando. Thank you for the conference call. My first question is about a piece of news in the media earlier this year telling us that a fashion store would closed nine stores with you in early 2021. And that reminded me of Finac when it also closed. There was a lot of fear at that time. So probably that has an impact on a higher rent. So what is this process of replacing these stores in particular? Q4, the turn was very good, 15 meters rent. However, we can see other stores shutting down too. I'd like to know about the changing dynamics in the first quarter. That's my first question. And the second question is about a statement you made. The take rate is the new rent. So if you think about e-commerce, 20%. 1.6% in the current quarter. So I want to know if this comparison is expected to happen in the future. And also Mooty. Is the purpose of Mooty to support considering online and brick and mortars? Are you going to sell through this new channel without paying extra? And it can even be cheaper to sell on the mall via the web. I'd like you to tell us more about it. Thank you. Let me answer your question about Forega. It was a store that started with us and we supported We invested because it was something new. It was a different store. The clothing style was very inexpensive, casual, convenient, but it didn't thrive. So delinquency was already very high. For a long time, we supported this delinquency, provided more opportunities, and then came a time in which we made an agreement. And naturally, it was a friendly agreement we replaced the areas that it occupies with new stores that are very important and that pay as well and today they're adding a lot more adding a lot more value to the mall improving the environment the atmosphere like for instance the new Renault store that just opened a store, an amazing store in Village Mall, outstanding quality. But the problem is the creative destruction. Domenico De Masi used to tell us a lot about it, and he's right. Crisis is nothing but a creative destruction. It will generate and bring more space, more room for new opportunities in our mall, people who are doing fine, people who are innovative, So, we had some gain there. I regret that. I'm very sad when the tenants is not profitable, but it's not because of the mall because other tenants are doing fine. Otherwise, our doors would be closed. So, I would say that's a natural agreement, a natural process, a process . And we human beings, Have a renewal process in our own bodies. Cells are constantly renewing. This is our life, and tenants are also a cell of the society. And when we do it poorly, well, we have an impact on our audience. Well, we can lose money, but we can never lose flow. We can never impair our consumer trust. This is critical. I don't know if I answered your question, but I'm never going to answer all your other questions. And we deeply value what we can do with our locations. And that's very important. That's key. Although occupancy rate is slightly lower compared to a recent past, pre-pandemic levels, We do value our operations a lot and what we're going to include in it. So oftentimes you won't hesitate to go for a higher turnover rate with other solutions because as Dr. Petty said, that's an opportunity to turn the mall into a better place. So I hope that soon we can publish a case study just as we did in the past with another group that left us. I think you'll recall that well. And maybe we can have a new study in the future. So we are really engaged in that with a lot of trust. And your question about the take rate, that's great. As you say in English, there's no free lunch. So oftentimes, people say, well, brick and mortar will come to an end. Everything will be sold on the web. There is no more no costs. If you're a tenant that is going to run your own sales channel, your customer acquisition cost has to be there. If you're going to use Marketplace, you have to take rate and it entails a cost. And you compare it to occupancy cost, how much you sell. Now, what about the following? And here comes our digital strategy. And you also mentioned very well our super app, Multi. We want to generate additional value in our malls. So we are going to leverage the physical presence, the base of consumers that is already there. How much does it cost to have a base of customers as we have in our malls, which is so strong, so loyal, and they daily come back? So it takes a long time to build that customer base. So what you said is very important. Right. What you said is very important to show that the take rate using your example, 20%, is way above our occupancy cost. Now, I would just like to repeat something that I said many times in the past. We joined so many conference calls. Retail is not only digital, not only brick and mortars. It is one and the other. That's retail. It depends on how a consumer wants to interact at that time, owing to their needs, convenience. And in the mall, we do even further. Dr. Patti told us a lot about it. It has to do with people meeting one another. something we cannot do in the digital world. People meeting one another, interacting, enjoying lunch and dinner together, doing shopping, having experiences, feeling, touching, added to convenience of buying online. So, that's what, at the end of the day, we want to deliver to our consumers and tenants alike. Okay? Thank you, Andrea. Did we answer your question? Yes, Armando, thank you. Have a good day. Great. The next question is from Jerelle Jolet with Morgan Stanley. Jerelle, good morning. Good morning, everyone. And thank you for taking my question. I'd like to talk more about the We can see there is a significant drop in the second quarter, coming to 7.7% now in Q4. Usually in the fourth quarter and first quarter, we see an increase in delinquency. So I'd like to better understand how you're considering delinquency now that we're getting in the first quarter. Do you expect to see it to go up similarly to what it did in the past or maybe slightly higher? and connected to that. How do you think about accounts receivable? Because obviously, it went up from the third to fourth quarter as it usually happens, but should expect to see a different trend compared to the past in terms of accounts receivable being currently paid. That's it. Thank you. Good morning. Thank you for your questions. First of all, following the standards, the government standards and rules, I cannot give a guidance. And secondly, what the world lived last year made our forecast, any forecast, to disappear. But like I said before, we are very confident about our location, like I said to Andrea, the value behind the location or the value behind having a delinquent store in a prime location. And if you think about this place where you have a lot of vacancy, and by the way, you mentioned shop and we are considering the value of the location and the risk of a longer delinquency time. Obviously, the first quarter, Owing to January, more specifically, owing to the rent and the higher rent in December, January is a month where, seasonally speaking, you have higher delinquency rates. And in the current month of January, it was atypical because on top of delinquency, we also had a number of restrictions to operations in many cities. And obviously, we expect to see an impact on our figures. This is going to have an impact. We are in January, but we still have February and March, many things to happen. We have vaccinations, signs of improvement, employment coming back, the economy growing again, and children going back to school. And cities like Sao Paulo, for instance, people moved into different cities outside the big centers, and they're coming back now. So there is a dynamics here. And I wouldn't like to work on any kind of guidance for the first quarter. It's too early to say anything, and the environment is very different. What about accounts receivable? I would just like to say that we didn't change the way we are charging. We are repeating the same statement meeting after meeting, quarter on quarter. We keep on charging the bank slips to mature in the day. following the collection month. So the bank slip in January is due on February 10 or 15. There is no deferred bill. So accounts receivable basically and primarily are due to the rent charge. We are charging more and more month after month, and secondly, with a higher delinquency. Thank you very much.

Thank you. I apologize because I said, I apologize. We were talking about fast fashion and somebody corrected me because I said the wrong name of the store, so I apologize. Good morning. A quick question. What about the Golden Gate? Do you have an update to give us? What is your application and what is the phase of the approval? Could you give us some color about it, about the status? Here is Jose's experience. I'm going to explain this to you. We are already building it. If you go there, you will see all the machines working. We have already started our pre-sale with all the documents. And just to give an idea, it took us 10 years until it was fully approved. 10 years for the full approval. That's the country. But the project has not been changed. That is to say, everybody's receiving it very well, and we started a communication campaign, advertising campaign, and people go there and they see that it is being built. And it was, in fact, one of our main projects in the country, such as we did the Golden Gate here. It was a big hit. and we decided to repeat the same formula there and we build as we sell. But the urbanization in five months time it will be totally concluded with a big lake and clubs and many tennis courts and right across of the Guayiba River which is a very special place Only a handful of projects can build right next to the Guayiba River, and we do not foresee any problem whatsoever. It took us so long to make it feasible, but the company is going to get a very good return, and it's going to be another iconic project in the country. We are sure of that. Thank you. Good morning everybody, Mr. Pérez Armando, congratulations for the results. I would like to ask two questions. One about Jacarepaguá. Was it the demand for the project, your growth-leasable area, and could you explain to the increase that we saw in the fourth quarter and regarding the bonuses at the end of the year and what can we expect for 2021 in relation to this line. Good afternoon, Sani. Thank you for the questions. In relation to Jacare Pavoie, We are close to 65% of the gross leaveable area already leased. And we only resumed as of the second half of last year. And as I said before, this is very positive. We are very enthusiastic about it. And this is a unique opportunity. As Mr. Petty said, it's a modern project with 10,000 square meters and the best project for Muhtarplan here. And although it was conceived and built much before the pandemic, it is very much aligned with everything that we have been detecting regarding needs and even more so after the pandemic. And Let me go back a little bit here. During the year, we had many tough measures put in place in the company, but we believed it was necessary to put them in place in order, because of the lack of visibility for planning and when we would be returning and how and as the skies became more clear and as we reached our internal targets that we established, we re-established in the fourth quarter a provisioning for bonuses that had not been done during the year already. I believe that you must remember that in the second quarter we reversed Some of our provisions, we reversed some of the provisions and in the fourth quarter we had the higher provisioning and this is why we have this impact. Well, you had to look at the ear and you need to have a snapshot of the full ear, okay? If you look at the full ear, I think it becomes more clear and it will help all of you to establish your models. In Jacarepagua, in fact, we are already close to 80% of the gross leasable area already rented. Okay, just correcting what was said before. Thank you very much. And I would like to invite you to come and see our project. And it would be a great pleasure for us to bring you all there to see our project. You would have like an avant-premier. Marcelo Mota from J.P. Morgan. Marcelo? In January, what was the percentage of opening hours? given there are some restrictions regarding the greater São Paulo area and Belo Horizonte. So I would like to know the situation in Jerry and your treasury stock. Are you going to cancel them? Good afternoon. In January, we had about 77% of the opening hours vis-à-vis the previous January 2019, 2020. And the idea regarding these shares is to keep them in our treasury until I have a clear picture of the situation. Thank you. A question from the webcast, and the question is from Aberdeen, from Jones. How much did you invest in your digital initiatives in 2020, and what is your expectation regarding this kind of investment for the next couple of years? Bethany. Thank you for your question. I'm going to try to remember and fetch this from my memory. I think it was from 13 to 15 million reals in expenses and capex, expenses you have already seen because of our report and the capex is there as an investment. What Mr. Perry said, Last year was very atypical because of the huge uncertainty that we had, but this was an area that we gave top priority in the company and we kept our people, we focused and we made an investment at the end of the year. All our system regarding awards and our marketing strategy was done 100% through our app. So we had over 500,000, 600,000 downloads of our app because of that. And now, during 2021, and from now on, we're going to invest more. And unfortunately, due to governance reasons, I'm not going to give you a projection or give you a figure, but our intention is to give a big focus and bring this area of retail inside the company, better to say, bringing value and additional value to our tenants and drive our brick and mortar stores and bringing convenience to our consumers as well. Bringing many services to our consumers, to our clients via app and that will bring a lot of facility to them. user-friendly, giving them new options. And made our investments also to capital increases that reinforced our capital. We participated in that. And in the first one, we contributed about 19 million. No, 19 million in the second and the first one, 21. If I'm not mistaken, I'm trying to remember that we have information from the company .

So this was to support the growth plan, investment and delivery center, and both happened last year. I hope I answered your question. Thank you. The leader has left the conference. Thank you for all your questions and thank you for your interest. In order to be respectful to time, we close the Q&A session. And if you still have questions, please contact the IR department. Now I'd like to give the floor back to Dr. Suzette Izaki-Pettis for the final remarks. Over to you, Dr. Pettis. First of all, I would like to thank you all for your patience. Thank you for listening to our conference calls. I know sometimes they can be a little bit boring, but we are almost always ready for any questions you may have. Secondly, I'd like to say that I'm very bullish about the year. I believe we'll go back to normal. And once normal life comes back, naturally, There will be a huge increasing demand and this time even more powerful because people have saved to so many months. They haven't bought a thing. So it's only natural that we can even have a B-shaped recovery. The central bank is now an autonomous independent institution, which is great news to Brazil and to all of us. We know they take better care of our currency, the purchasing power of the currency. And we just heard that the central bank does not intend to increase interest rates in March, for instance. People expected this to happen, but it won't, so I'm very happy about it. I believe if you consider the current interest rates in Brazil of 2%, we find ourselves slightly higher than that. Naturally, for a company that has been on with half a century and had inflation rates of 300%, 2% is not significant. Three or 5% is also good. The company has a lot of credibility. The company was never in default, was never delinquent over 50 years. So I hope and I'm very confident that Brazil is going to come out of this crisis even better. Already in the first quarter and the second quarter will be even better. There will be a strong recovery. Thank you very much. I'm very bullish. And we'll keep on investing. We're going to deliver which will generate 2,000 jobs at a country in which nobody's doing a thing. We are investing, generating jobs. which is a very important location, 600,000 people have it for services. We're going to deliver it. It's a project that will really renovate the whole region. Thank you very much to all of you. This concludes multi-plus fourth quarter 2020 Earnings Conference Call. Have a great day.