Multiplan Empen Unsp/Adr

Good morning, welcome everyone to the third quarter 2021 earnings conference call. Today we have José Isaac Pérez, CEO, Mr. Armando de Almeida Neto, CFO and IRO, Mr. Marcelo Barnes, CIO, and Mr. Hans Melkers, Planning and Investor Relations Director. We inform that the presentation of the results will be available for download at the website. And now, today's webcast will be present and may be accessed through Multiplan's website at jrmultiplan.com.br. We would like to inform you that you We would like to inform you that this event is recorded and that all participants will be in a listen-only mode during the company's presentation. After Multiplan's remarks, there will be a Q&A session. At that time, further instruction will be given. Should any participant need assistance during this call, please press Start 0 to reach the operator. Before proceeding, let us mention that forward-looking statements are based on briefs and assumptions of Multiplan management and on information currently available to the company. They involve risk and uncertainties because they relate to future events that are therefore dependent on circumstances that may or may not occur. Investors should understand that conditions related to microeconomic scenarios, industries and other factors could also cause to result to differ materially from those expressed in such forward-looking statements. This teleconference will last for 60 to 70 minutes. After this period, the investor relations team will be available if any questions have not been answered. Now I would like to give the floor to Mr. Jose Izaqui Perez.

CEO and he will begin the presentation please the floor is yours hello everyone ladies and gentlemen and everybody who is listening to us I will start so once again it is a great pleasure to be with you and now

This is a very special moment for Multiplan. Well, we've spent two years in crisis when most of the shopping malls were closed for over six months and they were reopened with restrictions. Nonetheless, Multiplan would like to celebrate with you some of the Landmarks that show the strength of our company through our trajectory. Well, let's celebrate first. Barra Shopping is 40 years old. It shows strength and capacity to renovate our enterprises. And in the third quarter, this shopping mall registered $583 million in sales. 3.3% above the same period in 2019, actually, and 28.9% compared to the same period in 2020. But we have very expressive numbers here that you can take into consideration. Well, that for the period 3.3 for the period of 19, of course. I mean, it could have been 28.9 in the same period as 2020, as I already stated. Now, Madras Shopping also has a great turnover and new stores and new operations. Now, November 18th, we are going to talk about Parque Jacarepaguá. which is our newest enterprise. And we are certain that on the 18th of November, we will finish Parc Jacarepagua. We have it with 95% of ABL, 95% of the leaseable area. Our results can be compared to those of 2019. 2020 was a challenge, but let's talk about a good year of growth, which was 19 before the pandemic. Now the revenue for rent has grown 19.7% in comparison to the same period of 2019. This is the biggest volume that we already reached in the third quarter, getting to a record of 290 million reais, 290.7 actually. If we compare apples and apples, oranges and oranges, then the growth at the stores on the same basis, if we compare it to 2019, It would be even larger. The previous growth was 28.4%. Now, if we exclude, here is another important exercise. The real estate activity, which is at the core of this company, was always the core of this company. If we exclude that, the revenue would grow 103.1% in comparison to the third quarter of 2020. The EBITDA, we finally get a growth of 37.9%. And the FFO already surpasses the third quarter of 2019 and it advances a whopping 162.8%. Eight shopping malls of the company had operational growth above the sales of 2019. Let's take, for example, Village Mall, which grew 17.1% in comparison to 2020 and 26.3% in regards to 2019. Now our total sales have grown. And we got to 3.7 billion Reais, 168.3% if we compared to 2020. And if we have a normal year, 19, it would have been 98.3%. This is what you're hearing. The sales are strong and they're servicing a demand that is actually a repressed demand for over 24 months. People are now finally leaving their homes. And we can see that that demand is being serviced by the shopping malls. Today, the malls have a harmonious area for social interaction, and they're located in the main centers, the main cities of the country. And this makes the company to be able to continue to grow in a very sustainable way, in my opinion. Now, in 25 days since we started the month of October we already surpassed 10% the sales in the same period of 2019 actually 9.7% to be exact now the interest in the tenants they are talking to us obviously and the interest has surpassed our expectations with the allocation of 132 The growth in that occupancy rate was higher than the previous quarter, and it was the highest since 2012. Our occupancy rate has grown to 95.2%, and we believe that in the next quarter it will be ever larger. I believe that we're going to get to that frontier of the almost 100% that we already had in the past. The occupancy rate, I already talked about the 95.2%, but it is very important to notice that many of these stores are migrating also and are moving to the shopping mall from the digital world. And this shows the importance of the shopping malls, shopping centers, which are located in strategic areas. close to the distribution centers. If you just take Barra Shopping, we receive 2.5 million people per month. Per year is 30 million people in a single shopping center. Now with Jacarepaguá, we're going to grow and we are going to get close to servicing even the total Population in all of our months, the total population of Brazil, which is close to 200 million people. Now, our flow of people here is the same as 2019, even though it's not a permanent one. Now, I would like to highlight a few things that we are very proud our innovations. We are always adapting to the needs, the current needs of our clients and our customers. Now, Parque Xacarepagua already shows an evolution in the concept of a shopping mall, more adapted to the current conditions and the longings of our customers. And it is integrated with nature. That greenery already occupies 36,000 square meters of the real estate. We are going to have areas for relaxing, for children to play. And now we are repeating what we did already with Cárnovas. Now in a way that we are More integrated because the park is inside of the shopping mall. The area built of the shopping mall is 100,000 square meters. And I believe that Parque Jacarepagua will be one of the most impactful shopping malls that was ever built in our country. And it will be a new threshold in the market. On the other hand, we have to also take into consideration that our actions have a very strong social, they strike a social nerve We invested 50 million in public works to make the shopping mall more viable and to provide a better environment for the population. We actually invested. We built a bridge. We doubled avenues. We installed modern lighting, public lighting. We built a great landscaping along many public highways, public ways. It is important to mention that this mall will generate 4,000 direct jobs and 4,000 indirect jobs. So, this is a lever for development for the region, and we are regenerating an area where 800,000 people live, and this is one of the oldest neighborhoods in Rio de Janeiro. I would say that it's one of the most, Empen Unsp If you think about the times of the Empire, this is a very old region and it was forgotten. And now with this new model, with this shopping mall, we are regenerating, revitalizing the region. Now we're going to have the valuation, obviously, an increase in the value of the surrounding real estate. That's what is expected. Well, That was a strategy from the company to consolidate our leadership and our presence in the western zone of Rio de Janeiro. But in this region, we have several shopping malls that basically service over 20,000 people in jobs. Now, let's go back to our origins, our roots. We are doing a great real estate enterprise, the Golden Lake. It is a unique project in the country and in a way it surpasses all of our expectations. Even, you know, the ones that we started establishing 30 years ago in Rio de Janeiro. Golden Lake is a unique project. It will be the first closed neighborhood, a private neighborhood in Porto Alegre with 18 towers. Residencial Towers. It will be integrated with Chabarra Shopping Soul and it is all around the rescue. We are providing a great valuation for the area of the Guayiba Bay. This is a project that was developed for many years and it has a revenue predicted for 4 billion Reais. The first stage, if I am not wrong, we did the official launching We have 30% of the sales already done. And this is a stage of the project, which is 524 million and sales are corresponding to 162 million reais. We are always adapting to the new demands of our clients. And this is a continuous process, a permanent process in all of our enterprises, residential and commercial. This process involves digital innovation and also you have to take into consideration our great app Multi and constant innovations in the mix architecture and the concept of our malls. We are always adapting to the new times. In that sense, I would like to highlight actually the innovation at the global level introduced by Multiplan 27 years ago at Barra Shopping where no shopping mall had a medical center. But we built a medical center 27 years ago and now we have 42 integrated clinics that service 300,000 people per month with exams and appointments. This is a great relevant service for the population and for everybody that goes in this mall. Now, many times we know of the suffering in the post-pandemic world with a population that needs psychological support. And we are implementing a new concept, a pioneering concept, even at the international level. We will launch in November in Ribeirão Shopping, the first management center for emotions in a shopping mall. The shopping mall is Multiserre and actually the center is called Multiserre, I apologize, and it was developed in a partnership with the psychiatrist Augusto Curi and it will make our region, it will benefit the region of Ribeirão Preto. It will address that issue of that unmet need of the psychological support for the population. For many years, we have paid attention to the environment and we have worked with product services and leisure in that sense. We worked on pleasure, on the assets and fun, but now we believe that we can also take care of something that is so subjective, but ever so fundamental and essential, which is the soul of human beings. This is obviously a pilot. project, and we hope to be able to extend this to all the shopping malls of the company, reinforcing Multiplan's commitment with the social well-being of the population. You're all invited in November to get to know this unique experiment in the world. which is to bring psychotherapy at an accessible level, at a social level. Now, our shopping malls are here to stay. They substitute the old boulevards and they became the great point for meeting up for the Brazilian society. I would say the main one. Over the last few months, regardless of the difficulties, we were always pleased with a strong recovery and payment in interest rates of 270 million over our own capital. And we distribute this to our shareholders in October. We continue to trust in our growth based on quality innovation and to be in the forefront of our projects. And we expect a Christmas that will be exceptional with results that are better than we had before. Thank you very much for the opportunity to address all of you. Once again, thank you for your support of all of our team, all of our tenants, all of our investors and the municipal authorities, which also support us. And well, dear friends, we are very pleased to be able to create another innovation that if it works correctly, it will be a historical landmark.

Thank you very much to you all. Now we're going to go to the Q&A session.

Thank you. Now we will start the Q&A session for shareholders, investors and analysts. Should you have any questions, please type asterisk one. If your question has been answered, you can leave the virtual line by typing asterisk 2. We will answer the questions in order. Please speak over the phone when you ask the question so we can offer the best quality of sound. Please wait while we collect the questions.

Our first question. is from Alinical Data, Bank of America.

Hello, everyone.

Thank you very much for accepting my question.

A little bit of occupancy costs. Since the beginning of the pandemic, you've been operating at a kind of medium level. Then the improving, well, lower occupancy that In the third quarter, you charged more, now there is Christmas, and now you have almost 100% of the full-time. What about the condominium costs and occupancy and promotion? We have a new normal level for the company or not yet? We have not reached a new normal.

Hello, good morning.

This is Armando. Thank you very much for your question. I am certain that many of the efficiencies that were adopted for 2020, they will remain and will have a very positive effect. We're still working on several projects. And we have shown improvements, efficiencies in the use of systems. And we surely hope to keep this reduction in the rates for a prolonged period for many of the cases. But obviously, as you have the return to the normal working hours and all those issues, this applies into more expenses. For example, the entries of the malls that were closed, now they're open. You need more security and other things to make everything work. But all throughout time, we hope to see an efficiency. Yes. To keep the efficiency. I hope that I answered the question. Yes. Very clear. Thank you. And also, I would like to mention something that is extremely relevant. We are talking about the cost reduction. And it's important that Marcelo will answer this better. We are now using, well, this enterprise and we are installing is the solar panels in the shopping mall that will reduce the cost of condominium, condominium costs and other technical things that we're adding in terms of the reduction of the cost, partial at least cost. Well, Jacare Padua will have 16,000 square meters of the solar panels for solar energy. Well, besides that, all of the air conditioning system is intelligent and therefore we have a reduction. And taking for the example of Canoas, which was the lowest cost of the network, it will have the lowest occupancy. That is a threshold, the lowest occupancy rate in our network. And during the pandemic, all of our shopping malls, they are in the free market of energy, which has a reduced tariff. And it is fixed. All throughout a very long period of time. So we are reducing the operational costs. If you'd like, we can have a listing here from Hans and all the synergies and all the investments that we've seen in our last malls to be able to reach those condominium reductions. Yes. Well, maybe, well, a lot of these investments actually, we have to be focused on the environmental aspect, not only sustainability in the sense of economics, but also we have to think about the environmental sustainability. Well, we have even solar energies to service and lower the condominium costs, for example, in many of our enterprises.

Thank you. Next question will be from Alex Ferraz from Itaú BBA.

Hello, good morning, Dr. Pérez, Armando. Thank you for your presentation. I actually have two questions. The first question is related to Aline's question, but more specifically regarding that Jacarepaguá, well, rents for sales, very strong in comparison to 2019, that we have positive numbers already. but still below the threshold. But as a competition, the occupancy continued. And well, we have to understand if with the talks that you have with the tenants, are you going to, well, the rent, are they seeing stronger recovery in the sales? So we can, How do you have those conversations with the tenants and the turnover? Well, we've seen turnover in this quarter. And there is new appetites for new areas, but I wanted to see if there is any returns of, you know, should we, we wanted to see your opinion on what is gonna be the recovery over the next quarters. Hello, good morning. This is Armando. Let's talk about the turnover. We are very pleased to see that we have a high turnover. And if we see the turnover 8%, sometimes we had the turnover 2% to 3%. We had many years that the turnover was much lower. I am very happy to actually see a turnover that is so high. because it shows a strong and vigorous economic activity. And we see people looking for the best real estate in retail. We can see consumers here. Perez already talked about the number of our clients, customers that are growing in Jacarepaguá since the opening. So we have a consumer that is qualified. So it They connect to the stores that they're looking for. So many, many banks, for example, and shopping malls as well. So this makes us very optimistic for the future, specifically because you can have a reduction, a higher reduction in those vacancies. Well, if we look at the operations and there is a rent, of course, that is align with the type of properties that we offer. It doesn't matter just occupying the space and saying that your vacancy is lower. You have to occupy the space with an operation that is the best operation possible for that specific spot and with a rent that services our portfolio. So that is the first phase of your question, the first part of your question, the difference between the rent in one store and, I apologize, the rent and sales in the same areas all throughout time. We are living in an active process and we have an acceleration of inflation and this isn't a typical process of living with values of discounts that is not common. They were not common in our portfolios and they are reducing with the return of the operation with the normality. We can see that as a factor that is very specific to the times. When you look at the agendas and you look at the numbers of October, October 25th, in a quarter, it was almost 10% thus far. You see that there are shopping malls, portfolios that have growth of 30%. And the average was 10%. So you can see, yes, you can see a strong recovery of the activity. And this allows for the month of October to have the highest volume of sales for our tenants, the highest in the history of our company. And 2019 was the record. So for 2020, of course, we had the restrictions and we saw a drop in sales. But now with the growth above of 2019, we have a new record for sales, a new record for the company and our tenants in the month of October. And of course, with the strong campaign for vaccination of the population that has been very successful in Brazil and with the reduction of the number of cases and the easing of restrictions all throughout October of 2021 that we're observing, this makes us be very optimistic with the sales scenario for the future. Is that okay? Yeah.

Thank you, Armando. The next question is from Elvis from BTG Pactual.

Thank you, Perez, Armando. So I have two questions. The first about events. You showed in the release that in the third quarter, the number of events was 45% of the total events that were done in the third quarter of 19. So I wanted to understand what is your expectation in regards to the evolution of these events now in the fourth quarter? Can we recover, I mean, to a better number? And what would be the best effects I mean, in the context of these events, what is the impact in your portfolio? The second question is regarding the growth in projects. I wanted to understand how you're thinking internally in your projects. The company never stopped to do these events, but now with the scenario of the recovery of sales, maybe there is a change in growth. Now you have different projects and you are discussing them in a very intense way, or because of the macro scenario, maybe the economic, I mean, we're still taking into consideration the recovery of the economy. Can you tell us a little bit more about that?

Sure, thank you for the question. First of all, the management model that we have adopted at the company a long time ago is very proactive for the shopping mall. I mean, we are looking at having gourmet events, cultural events, many different exhibits. We're looking to have different projects at the mall, something that we've been doing all this time. And this allows us to bring people as a consequence. You know, they are at the mall and they spend more time. So the pandemic of course had an impact on that. It stopped us from having the same projects as we were used to. And that's why we brought this indicator now showing that we have had a few specific events, some activities, some initiatives at the shopping mall. So we believe that that's going to have, that's going to be a leverage for sales that is going to promote more initiatives at our malls. So we're doing that also through the app, the multi app. that allows people to, for instance, register their invoices and everything so they can get some prizes, et cetera. Well, the company hasn't stopped. That's actually very admirable. We did have a reduction in speed, but we were always willing to have new projects, new exhibitions, et cetera, et cetera. At Jacarepaguá, for instance, we're having this opening. We've already talked about this opening, this mall. and we're extremely proud. We are going to test that out and we're very happy to do so because it was a very complicated year last year and now we're looking at the 20th shopping mall with the area that is pretty much all rented. So as Perez usually says, it is our best initiative, I think our best project so far. And I have to say this makes us very hopeful. We know that it's been crazy these past few weeks with the opening, but we're very happy, very hopeful, very optimistic. The same thing with Curitiba. We have an enterprise there, a project that has a very good occupancy rate. It is growing. So people want new operations, new services. We are requalifying them all even further. It is going to be even better with this expansion. So we're going to have new operations, new services, leisure. We're going to have a great leasable area being used there. Oh, Armando, by the way, the medical center is 100% leased and for the stores, at least 30%. And we've already We're already doing the rest of the area. We're already under construction. Yeah, and we're also doing the expansion of Baru Mall. So we're looking again at new operations, re-qualifying this mall in Belo Horizonte. So it's going to be even better. So we're working on multiple expansions, multiple projects. And if you look at the entire potential, if you look at the reports that we had in the previous quarters, some of them actually show that potential for expansion. And it is truly interesting. It is true, Armando. I just wanted to say that for a few years now, we've been also looking at the expansion of modem B shopping. in Sao Paulo. So we're now looking at the final approvals. So that's going to start next year, probably. Excellent. It is true. This shopping mall is located in a very well-developed area in Sao Paulo. It is one of the main growth players I would say that we have in Sao Paulo and we're able to expand it and improve its capacity. It's very good in terms of mix, in terms of services, entertainment, et cetera. Excellent. Paris, you wanted to say something? Yes, I just wanted to say that in my experience, I've been working on this for over 50 years now, I was never an employee per se, so I had to create a job for myself. So what I'm trying to say is in my life experience, that's what I've noticed. Brazil is like this. If you're concerned about a crisis, you're never going to do anything because every five years approximately, we have to overcome a crisis. So it's ups and downs. I would say with a higher frequency than in other countries. So we have to get used to that. Brazil is basically a school for great professionals. So what I'm saying is I have my own private project in Miami with a great project and it was 100% sold. And of course, I don't live there. I live in Rio de Janeiro and Brazil. I love Brazil. I fight for Brazil. But what I'm saying is it is very nice that every intervention that we had abroad worked, multi-planned. Even in Portugal, when we were looking at Dicasca Shopping, for instance, which is a pioneering project, it's no longer in our list because at a certain point we needed to sell that. We had a debt at the time that would grow 100 or 200 times a year. So we had to face different crises, but the company knows how to take advantage of that and continue to develop. Maybe there is a reduction in speed, but this company never stops and it will continue to do so for the next years. Excellent, Paris. And I wanted to mention one more thing that is important. The beginning of the company, the budget of Golden Lake, now for October, it brings back an interesting real estate activity to the company because last time we did that was back in 2011, if I'm not wrong, which was top or tall Allegra, which was commercial and residential at the same time. and they're integrated to Barra Shopping Sul. I have to confirm the date, but we're now launching a new project that Piers has mentioned already, a new lifestyle basically in Porto Alegre in the south of Brazil. So we're looking at new types of properties, expansion of shopping malls. We're also looking at real estate that is very nice. Yeah, I have to say this is the main real estate project ever done by our company, probably in Brazil. But anyway, it is a project that is not going to happen overnight. It is going to be launched gradually because we know that we have to be careful about that. So we are expanding. We are daring, that is true, because if you're not daring to try something, you won't be able to do much, but this is what we're doing. Excellent. Paris, Armando, thank you so much for the answers. Thank you for the question.

We have a question from Pedro Raginal from Credit Suisse.

Hello, everyone. Good morning. Thank you for the presentation. I have two questions about the average ticket here or the average revenue, basically. We know that there was a change in the behavior of consumers because they see the malls in a more objective manner now. Now, I wanted to know, do you think that that average is going to be reduced? The average ticket sales, is it going to increase or to be reduced? What do you say? Also, this flow is 15 to 20% below. So, do you have to, As we have people spending more time at the mall, do you think that that's going to change again? And also I wanted to ask you about the lease. Looking at this perspective that we have now, do you think you could maybe tell us more about the inflation and the backlog? Because last year that was discounted. So during the entire period of time, I wanted to know a little bit more about that, the inflation and the backlog. Well, Pedro, I was taking notes here and I didn't hear the second question. Oh, sorry. Yeah, the second question has to do with inflation. If you could maybe comment on that. I mean, there were a few discounts due to the inflation and the backlog. So how much of that is going to also reflect on the rent? Is that going to have an impact? Well, let me talk about the inflation and then I'll talk about the first question. If you look at the report on page 33, you see we talk about the lease for the stores and there is this table where we have the GDPI. Do you see that? Because investors wanted us to compare that to 2019 and 2020, so we have a rent, actually a GDP that is accumulated in all those months. We also have the effect of GDPI, which is the ratio with the leasable area. So if you look at the inflation for 12 months, and then you divide that by the, what we call the ABL, the leasable area. So you have that indicator. If you look at that table, you're going to see that the indicator for stores is actually below inflation, below the adjustment. the adjustment effect of the GDPR. So that shows that we are also working with that discount policy. That's the perspective of the company, trying to help tenants face this very challenging time. So as we have said before, and the figures show that clearly, What we know is that for this recovery time, we have reduced some of the discounts which were specific for the pandemic and now little by little that's removed. And now we also have the indicator of GDPI. And actually I wanted to talk about GPM as well, which is a figure that was released today. It is 0.64. That's interesting. And as for the average sales, the average ticket, I'm not sure how you're calculating that average revenue. But anyway, it would also go up due to the growth in sales. And also because as you said, people are spending more time at the mall. Now we see basically people spending more than one hour, which goes back to what we had back in the day. And I think that is going to also help Those numbers go up. I mean, people are spending more time. They go to the theater. They go to the movies. They go to an art exhibition or something. They go have dinner. They go to a medical appointment. So the stay is much longer, and they're using the mall as a hub for all of their daily needs. Well, yes, during the pandemic, it's true that people would only go to the mall with a certain mission in a way. So they will only go to buy something very quickly whenever they needed something, and that's it. Now, the flow was, let me see, 64, if I'm not wrong, in 2019, and the sales were 78. And now it is 80%, the flow. And sales are 100%. So obviously, we know that the flow went up more than sales, but for sure, we have a lot more to recover because the flow is not 100% still or the events. So the state is getting better. And I think everything else is going to get much better. So yes, the average is going to be a little bit different it is going to be better in the future and the stay is also going to increase as we saw in October it is a hundred percent excellent thank you so much

Now we have a question from Pedro Lobato from Bradesco BBI.

Hello, Perez, Armando, everyone. Thank you for the presentation. Well, we wanted to understand what you're thinking for the next phases of Golden Lake. Is that going to depend on the sales and the first phase? Is that actually a matter of time until you continue with the rest of the project? Thank you.

Well, this is Jose Perez.

I think we started really well. It is a huge project. It is a neighborhood in a way. So we have to be careful about that. But the first one is really high class, I would say luxury. Luxury, so we're looking at expensive places, three to five million approximately. The apartments are large. So in this type of project, we always start with the best. But the great demand, as we all know, is medium-sized apartments, 150 to 180, maybe 200, 220 square meters. That is a huge demand. And we're probably going to anticipate the next phase because of that. So we're probably going to anticipate that second wave. But of course, everything else continues. Now we're starting to build a lake, which actually is going to be a private beach for them. Even before we finish everything, we're building that lake. because it brings more life to the project. So a golden win, that worked. And that's the strategy that we're going to adopt in Porto Alegre. And we're very satisfied. No criticism at all. We have received many compliments for this. But of course, the next two waves are going to be faster.

Excellent, thank you.

We have a question from Andre Mazzini from Citibank.

Hello, good morning. I have a question about the Golden Lake as well. I saw that the sales are around 34%. That is very good. That is even better than the sales for the local competitor to which we have access. So I wanted to know in terms of margin, what you see for this project. Are you looking at what kind of gross margin, 30%, 40%? What are you going to have? Dr. Perez was talking about that as well. So what kind of expectations do you have? And the second question has to do with IPCA and IGP. As Armando was saying, there is a difference in these 24 months, IGP 46, and the other is 13. We know that in the long run, they might be similar, but in the short run, there is this change probably also because of the currency. So I wanted, well, I think that that difference also explains the occupancy for the third quarter. We see that, as was said before, We also noticed that. So if it had been similar, IPCA, IGP, maybe one would be lower, would be closer to the references. Since in the long run, they should be similar. They should be back to normal in the future, right?

Thank you.

So André, I'm going to answer very quickly on the real estate issue. And well, here, You know, I am in Sao Paulo and our guys are there in Rio de Janeiro. So I'm here and I'm looking at them at the screen and the connection was not working there, but I know we came back, we came back to, we are already connected again. The first question in a very objective way, our margins are good. I can tell you that I can assure you that. But I can make it very explicit, something that is starting with an inflation that is, well, the inflation is growing and it's very strong. Now, what we see today is the following, that these projects, they are extremely promising and they have a valuation above the dollar. So 20, 30 years ago, an apartment that was bought at $500,000 today is worth $2 million, $2.5 million. I'm not even talking about the rent of the people that bought. because otherwise the return on investment would be higher. These are projects that it's very difficult for them to not be profitable in many cities in the world. We've been for, it took 11 years to approve this project. We built Barra Shopping Sul and we did real estate developments in the area and now evidently there is a great demand for investments in real estate especially when the interest rate is high. And people always look for real estate for refuge. But real estate, depending on the people, it depends on the person and the understanding if they're going to do a great business or not. Well, today we have a good price below the thresholds in the noble areas of town, and we will quickly launch The second stage. We were not expecting this very quick launch. But, you know, we always have, you know, 10, 12 years, 12 year projections. We can see that one project is very close to the other. Well, maybe our price is composed, you have to see. So people want to pay short term sometimes without readjustments. and we have IGP and IPCA rates. IPCA during the construction and sorry INCC the national index for construction and then after the work is done and the investments during the construction is low and we know that that small investments that they're going to do during construction when it's ready will be worth much more for those that are going to resell are going to earn money as we say in Miami we're delivering a building there and initially Our market was very bad and we started to... Now we are delivering 100% sold with valuation. It's being valued over two years. So I believe that the strategy, I am somebody that comes from real estate. I did my professional life with hundreds of real estate projects and We are talking about multiplying. I've been an entrepreneur for 57 years. But we come back to our origins and we should not forget that the objective of the company is constant revenue that is ever-growing. So I don't know if I answered your question. Hello, Andre, and this is Armando, and I apologize. We had a connection issue, but we are back. I was just maybe I got the question of IPCA and the other race. Is it related to building or the condominium of the shopping malls? It's more for the occupancy costs and the spread of the rates, the taxes. Would it be better if they're close to one another, which is what we see in the long term, basically. Okay. Certainly, if they were closer, then the spread would be different. That's what I imagine, but that's not a reality. We already commented the curves are paired, were paired up, and for a period that there was IPCA was positive, IGPM was negative. These are cycles of the economy. We have no control over it. What we do have is to try and build the shopping mall in the best way possible to improve the sales of tenants, of stores, of retail, and servicing the clients and consumers in the best way possible for the shopping mall. So we see that there are some indicators that show that, for example, IPCA over the last month is, well, I'm using IGPM only as a base for published data. Our expectation actually is that this will be aligned. But obviously, we have the prediction, we have also to take into consideration the inflation and we cannot predict for real for what is going to be the impact on retail. Thank you. The next question is from Beatriz Abreu from Goldman Sachs. Hello, good morning, everyone. Thank you for accepting my question. Now, my question in regards to revenue. Revenue for lease. We see that you had a lease revenue that was very positive above the threshold of the third quarter of 19, so pre-pandemic. So I wanted to know in regards to the revenue of services and the expectation for others, the numbers in the third quarter should be lower. So I wanted to know from you, what do you expect that the number of revenue of services, will it grow and surpass the historical levels?

Hello, Beatriz. Thank you.

Thank you for your question. I cannot answer this as I would like. We are dealing with situations month by month, day to day. So the fact that the revenue income will be lower will be, well, the income will be lower is due to other factors We promoted condominium discounts and rent that are very specific and that impacts our services revenue. And also, if you take into consideration at the end of 2018, beginning of 19, we announced several M&A's. So that reduces our services revenue that that we get from the administration of the enterprises.

Well, just one second.

Rio de Janeiro is coming back, okay. Ladies and gentlemen, please wait for the reconnection of the speaker in Rio de Janeiro, thank you. Ladies and gentlemen, once again, please wait for the reconnection of the speaker in Rio de Janeiro.

Beatriz, can you hear me? Hello, I can hear you.

Beatriz, okay, now we came back.

We are having a lot of difficulties with the connection and we apologize. I would just like to, well, you talked about the revenue of services. The revenue of services I already explained, The parking was seen in, well, for the month of September, beginning of June, many discussions in several things, enterprises that were present, and we have to see that normalized all throughout the time. And indicators that show, well, the Going back to the numbers in 19 people that the time that they remained in the shopping mall, we see a great increase in the movement of the shopping malls. But one thing that we cannot forget is that more and more you see the public transportation being important. You have the Uber effect as well to arrive to the mall. And also, you know, cities becoming ever more populous. Even in Sao Paulo or other capitals where we have the headquarter, for example, in Sao Paulo of Multiplan, we see that there is a growth around the city in and outside the city. So you can have all throughout this time the recovery of parking lots, but There is a decrease in the number of vehicles. That's the trend. I hope that I answered the questions, and I apologize for the problems in the connection.

Thank you. Next question is from Fanny Orenge from Santander Bank.

Hello, everyone. Armando, Dr. Perez. So, there are a few questions, actually, that is very interesting to mention that we have a very strong recovery in services when we look at the IBGE numbers. When we are talking about sales, even though we are reaching thresholds that are similar to 2019, we haven't seen that regrowth in services in the third quarter. Can you give us a little bit of your opinion, what we have seen all throughout the fourth quarter and maybe some places are easing up restrictions? That's the first question. And the second question, second point is, can you tell us a little bit more about Villa Olympia. How is the work in the region? I mean, the offices are starting to come back to life in the region of Villa Olympia. And how is the interest for people that have actually left the property? What is the expectation for the tenants for that shopping mall specifically? So I will answer this. You talk about services. Services are important, but they are not the main one. The main thing is sales. From sales, everything is derived and then services. Now, sales, when it comes stronger, then the services are better yet. But the stronger sales are not fully because sometimes Many times they have that trauma of going to closed spaces and that trauma is not going to be eased up overnight. But people are coming back from that being locked up at home with the vaccines. The auto isolation is something that is very bad. So now that's why we are providing the psychiatry services also inside of the shopping mall, besides the medical centers as well. But it is evident that the world changes and they create new opportunities because of an unmet need. It is very difficult to have it serviced. Now, in regards to the, you talk about Villa Olympia. Filo Olympia suffered a lot because Sao Paulo was completely emptied the offices. It's in a center there of services. People are coming back, yes. And they're coming back for a simple reason. It is very difficult, for example, in certain companies for you to manage a company, everybody at home, being at home. And there is a psychological which is boredom. People start getting anxious. They get fat. They're depressed. Because our life, we don't live in a digital world. We live in the real world, in the world of things. So it is an illusion to think that the digital solution will make the gregarious feelings of homo sapiens that we've had for millions of years. I mean, anthropologists speak of this. So our pleasure of going to them all is, well, when we see them all full, everybody likes to be in the mix. It's just like carnival. I mean, if there are six people in a party, it's not a party. You need a lot of people. So we are We have a behavior as beings that we have a herd effect. That is women and men and myself included. Humanity, we do not eat in the digital. We don't make love digital. There are many things that we need on site and everybody wants to go back to their real life. I don't know if I answered your questions. I think it is clear, Dr. Pettis, but I was specifically talking about the restaurants. How do you see the restaurants in the fourth quarter? Is there an increase in the demands for this type of service? And they are an important part of the revenue of the shopping malls. Well, let me complete the answer. In terms of services, we have a lot of difference in cinema. You have to remember that The theaters, they had a big restriction in the main cities up until a short while ago. And if you look at the services in regards to 2019, they still drop in 26%. There is a great cinema highlight, for example, movies, and you get leisure. And the parks inside of the shopping malls, they have a tremendous growth. showing that the ease up of restrictions is allowing for a better growth. And now the pet shops, the pet stores that have a great expressive growth when we compare it to 2019. And another indicator florist, for example, flower shops We can see more declaration revenue. These are things that have changed and positive highlights that we observe in comparison to 2019, but that are still very highly impacted. And I'm sorry, I didn't say specifically with the issue. Well, we have theaters and movies that are still greatly affected. If you look at in comparison to 2020, we have 67% growth in that sense. And all of those activities from the services segment will continue to strongly grow. So this is an issue for discussions. And with time, we hope that we will bridge that gap along once again with 2019.

Thank you very much. Next question is Jonathan Contras from JP Morgan.

Hello, Dr. Perez.

Two questions. Well, the turnaround and the whole idea that we have been discussing. There is a change in the mix, looking at the positive trends and also the consumer behavior. We've mentioned that There are percentages that are positive. And while we see that the behavior, there is a return of the movies and people are consuming more leisure. And we also have holidays, sales for the holidays. What can you tell us about that? Jonathan, can you repeat the first question? We did not understand you. Sure. Well, here, the mix of the retailers, I mean, there is a growth in the semester, right?

Jonathan, thank you.

So, we have a slide in the presentation. Page 12 is traditional. where we try to show that change in the new consumer habits. So these changes, they're not overnight. The contracts are long-term. So we see that this changes all throughout the years. And we added a few points to this analysis showing the evolution of the shopping mall which was a place that you went because you needed to buy a few things. And now there is an evolution of consumer habits, adding convenience, the experience, the exclusivity. I would like to buy or take part or live in this scenario. And also one point that Dr. Perez always talks about and these calls about human beings, about Conviviality. I mean, people talking. And there wasn't a change.

But there was a trend, you know.

And the reason if you take the project of the project, this is a project that was conceived before the pandemic and it wasn't changed even with the pandemic. It is a modern project. Because it includes the trends for consumer habits that we've seen all throughout time. The second question.

If you can answer the second part.

As I've told you, there is difficulty with the connection with the line. Sure. For the consumer behaviors, we've seen that there are percentage that are increasing. Well, we've seen that there is a lot of new movies, for example, 007. Do you think what is really influencing in last year? Well, perfect. Your question is excellent. And there is a set of factors. First, I would like to say once again, We had the success of the vaccination campaign. We have the population that already took the first dose or second dose with the complete cycle. And that, secondly, the end of restrictions or as we've seen the occupancy recently, We have new movies, new products. We imagine that the stores are open and they don't have merchandise to sell. So the sales would be zero. So we need to have new movies, new attractions, and that's important for movie theaters and for services and, you know, for leisure. Now it's the sum of all parts. People come back. and they have new products available to buy, to experiment, and to experience, which is the case of movie theaters that had some recent launches, as you've mentioned.

Thank you, Armando. Ladies and gentlemen, thank you for all the questions.

We close the Q&A session. And now we invite the participants that still have questions to get in contact with the investor relations department. And now I would like to give the floor to Jose Isaac Perez for the final considerations. Please, the floor is yours. So today it seems that we have very serious connection issues with Rio de Janeiro and Sao Paulo as well. We just, well, what we wanted to actually, first of all, we would like to thank you all for your attention and your dedication and your trust that you have with Multiplan. We remain at your service. through our investor relations area should you have any questions. And since this is the last call of the year, the next call will be done in 2022. I bid you all a great end of the year celebrations with a lot of health, peace, and success. Once again, thank you very much for your attention and trust.

Thank you. So Dr. Perez will talk.

I would like to bid everybody farewell from this year by saying the following. You saw in this presentation the effort of hundreds of our employees, the collective effort of society and the country to return to normalcy. I am certain that commerce will come back in full. I believe that 20% of the stores went bankrupt, but the ones that are coming back are coming back very strongly. But we will have a lot of efficiencies in retail. And even though this is a political year, we never really cared about the crisis and we will continue with our trajectory. Thank you very much to you all for having the patience to hear us for so long. Thank you very much.

Thank you.

The earnings call for the third quarter of 2021 in Multiplan is closed. We thank you all for your participation and have a wonderful day. Thank you.