Multiplan Empen Unsp/Adr

Welcome to the earnings call of the third quarter of 2022 of Multiplan. We have here Mr. Jose Zacferes, CEO, Mr. Armando Daumida Neto, CFO and IRO, Mr. Marcelo Barnes, the CIO, Mr. Wander Jordan, CCO, Mr. Hans Melker, Planning and Investor Relations Director, and Mr. Richard Swartman, Digital Strategy Director. We would like to inform you that this event is being recorded and you can download it at the irmultiplan.com.br website. Also, you will only hear the earnings call during the presentation. Thereafter, they will start with the Q&A. They will receive further instructions. If you just need any assistance, please press asterisk zero to reach the operator. Before proceeding, let us mention that forward-looking statements are based on the beliefs and assumptions of multi-plan management and non-information currently available to the company. They also involve risks and uncertainties because they are related to future events and therefore depend on circumstances that may or may not occur. Investors should understand that conditions related to the microeconomic scenario, industry, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. This teleconference will last approximately 60 minutes. After this period, the investor relations team will be available should you have any further questions. Now, I would like to give the floor to Mr. José Zac Pérez, President. He will start the presentation. Please, Mr. Pérez, the floor is yours. Good morning to everyone that is hearing, shareholders, journalists, people that are interested. I would like to say that it is with great satisfaction that we will present the results. Even though it's not my objective yet, my objective is larger. But now, I would like to say that this was the best quarter in the company's history when the sales got to 4.8 billion. This result, 28.3% over the same period of last year. As a consequence, we've had a revenue of 400, well, And there was a revenue of 186 million Reais. I would like to highlight that this revenue was the best results that we've had in this quarter. We had a revenue of 1.6 billion. All of our shopping malls, they've had a growth that was very expressive. And I'd like to highlight that, well, We are also evaluated by the square footage sales. And here we have the village mall, which is the youngest that is directed towards the upper middle class. This is the third in sales per square footage. in sales, and he is only losing to Morumbi and Baja Shopping, which are the shopping malls that are the ones that annually are chosen as the preferred ones by the population. This year, once again, we've had a great recognition from society that pointed to Morumbi and Baja Shopping, which are the best shopping malls in their respective cities. We've also had an Aliafrenko in third place. So we had two champions. Hopefully we're going to have more. I would like to say also that Vilolimpia that suffered a lot with the pandemic because this is an area that is very much occupied by the office buildings. During the pandemic, a lot of people were working remotely. I personally was not, but a lot of people was working remotely, and that affected the malls. And now with the return to the office life, almost 100%, Filolipi already recovered and grew. in regards to the previous quarter, 51%, which is very good. And it will reach its occupancy in a short while. There is a very important detail, and it's important to mention, technology. We used to talk about that technology was disruptive, that commerce was going to be over. And then we realize that the shopping malls are the providers of big tenants that use a lot of technology. And we have the demonstration that today with our multi-app that got it started a short while ago, we have 3 million downloads. And then we need to understand that the technology is a reinforcement for the tenant. It is as if they're opening an extra store. They're not forgoing the onsite. Without the onsite, we wouldn't have the conditions to continue, of course. And having the onsite, the sales of onsite is much larger than digital sales, than remote sales. But now you have two stores, an onsite and a remote one. But there is that thing of selling, of purchasing. that people don't like buying everything over the internet. Well, if you want to solve a problem, you cannot go to the shopping mall. But the business depends on time and money. So if the people don't have money at the shopping malls, they don't purchase. And the people that have the most money are the ones that buy the less because they don't have time. I'm not a good example because I purchase a lot. But on the other hand, with that issue of technology, we're advancing, we're advancing well. And I think that since we have the shopping malls that receive 200 million, just so you realize, in 2019, we received 47 million cars that got into our malls. We came back with full strength of cars and now we have 45 million and this is our projection for this year. So as you can see, when we talk about 200 million people that visit our malls yearly, you have a relationship that is very Honest with the number of vehicles. For each car, there is four visits. In a car, there is usually more than one or two people. Sometimes you'll get the whole family. But Uber today is great. It's a great, they go to our malls and we have the space to service the Ubers and we know that they're very important. So, once again, we really reinforce this, that there is a characteristic of human beings that does not allow people to Be isolated. Isolation is the worst thing that it happens. Well, being in prison is horrible. Not having your freedom is horrible. And then you are in conflict. You, oh, should I leave home? Should I not leave home? So fortunately we've gone over this and I can tell you that our malls are extremely proactive during the pandemic. And today, we are very sustainable. I'm going to give you the recent mall that we just built, Jacare Pagua. This is a mall that is that is very modern. And in reality, it has the treatment of waste waters, the use of waters, and all of our shopping malls, they have stations so you can charge your electric cars. But we're always trying to be at the forefront of technology. And that's why we're creating Most of you do not know this, but what we did as a pioneer in barra shopping 30 years ago, and people said, oh, well, the physicians, they said, why do you want to get a medical center on top of a supermarket? And I told, listen, doctor, this isn't a medical center. and on top of a supermarket, this is more. And now Barra Shopping, 30 years later, we have appointments and exams per month. We have over 300,000. We have 300 physicians working there. We increased the size of the medical center. Now we have it in Ribeirão Preto. We have it in Curitiba. And now we launched something completely new. The Center for Emotion Management. This is a new innovation. The medical center is an innovation of multi-plan in the world. We were the pioneers in getting a medical center inside of a shopping mall. And now in Riberon Preto, and we hope that it works, we are creating a center for the management of emotions. So we can capture the anguish, the difficult times that many times People are passengers in the shopping mall. But I always realized that every person that wants to, that seeks some pleasure is carrying some suffering as well, emotional suffering. All of us have a bit of an anguish, emotional anguish. And sometimes that problem is not going to be solved by purchasing a new shirt. So with a partnership with Augusto Curie, a great psychiatrist, one of the great psychiatrists of the world, we built in Ribeirão Preto a center that services several people, several. We have classes and it meets the requirements of that problem that all of us humans have. Our anguish, our depression, And I thought about this. Well, you might be having problems with your partner, but you can go to this place and try to sort this out. Maybe we can even reconcile some of these marriages.

Who knows? So this year,

After two years waiting, I think that Marcelo can confirm that we're going to launch the biggest, most attractive park external. The park at Jaca de Pagua, which is our most modern shopping mall. And this is a park with several Attractions that were imported even from Europe. It took two years to build it and it was supposed to be ready before, but the pandemic didn't allow us. We are delivering it a bit late. Nonetheless, when we build a shopping mall, we always invest in social. So we work with schools, we work with the ways, the The roadways and we become. It is a moment of trying to be a public service provider. That's what the shopping mall should be. And now we have over a hundred thousand people working in our malls. And I'm not even mentioning those that are indirectly working towards us. because when there is one person directly working, there's usually 14 people working at the production line. So we can get the product until the distribution channel. So our company is a great company of generating these jobs. And of course the costs are increasing. Of course, one day we're gonna get robots selling articles of clothing, but still not the time. And when we get there, we're going to get robots, of course. But now let's return to another point. Our DNA is real estate. Multiplano was born as a real estate company. And now throughout my life, 60 years, 60 years as an entrepreneur, my first entrepreneurs were always real estate. We were always Big innovators in this area. This year, we have Golden Green, which is a condominium of 14 buildings, the golf field. We also do it in Porto Alegre, Golden Lake. Golden Lake is a more advanced project because many times we have to compete with ourselves. When the competition doesn't do what you do, you have to overcome. And here I tell my companions of work that the objective is to make reality better than pleasure. To make the reality larger than the dream. And we're delivering more than people expect. And Multiplan is doing at the Golden Lake. It's a condominium in Porto Alegre. This condominium was born from the intervention that we had at the urban setting when we built Barra Shopping Zoo. At that time, that was an area that was occupied by 900 Small huts and houses. It was a bit of a shantytown. So we did something with the municipality that we transferred these people to apartments of two bedroom apartments that were better than the public housing. We transferred all these people. So really, we had the recognition of the municipality, which allowed us to do this project and this project Golden Lake. It took 10 years to be approved. And you need a lot of drive to do a project. The Golden Lake also took six years. Me in Florida as well, I was recognized as the Entrepreneur of the Year at the Brazil Florida Chamber by the project that we delivered recently. But here we approved One of the things that is important that curtails the development of the country is bureaucracy. There are several problems, but bureaucracy is fatal. People give up along the way because they cannot approve a project or because it just takes too long. And we are driven nonetheless And now I'm going to Porto Alegre and tomorrow we're going to launch Golden Lake, which is the largest private lake in the country. It's a lake that is a beach. You can swim in those waters. You can fish. You can go with your boat. It's a fantasy land. And it's actually the dream there. While we dream, we live. The day that we stop dreaming, then we die. So I let you all dreaming. My dream is always to try and deliver more than what people expect. Our company has this DNA. So this project, to summarize, is a project that is evaluated in 4.5 billion Res and we should get the results of up to 30%. So I'm not getting the numbers to impress her, but it will be done for eight years. So we're now building the first sub condominium. We have six sub condominiums and we are delivering the area completely urbanized. The mayor will be there as well. is the biggest real estate enterprise of the gender of the type in the southern region of the country. And we sold 55 of the private with a revenue of 550 million in sales. So we reached 55% of that number. And now with a delivery, we're going to get a new attractiveness. Regardless of all the difficulties in this country, we continue to believe in Brazil. We believe in the potential of this country, which is not a small country. Brazil is a continent. A Portuguese continent. And all my family is of Portuguese descent. We're all a mix of people. And I look at people and I ask them, where do you come from? And here, that's the beauty of Brazil. We're all mixed. The Christmas tree of Barra Shopping should be the largest one in Brazil. About 70 meters in height this year. Maybe we're going to do 73. I love Sao Paulo. Our biggest investment is Sao Paulo. I go to Sao Paulo for 50 years. The important thing is what we do and what we preach. A data that I think that you have to think. In 2020, our company got to have its share evaluated in 36.1. I think it was July, February. And I think that the company in June was valued something around 20-some billion. And now we have the lower price, but I understand that the interest rate has gone up. So certainly at that time, the interest rate was smaller. But the reality is we delivered in these, all of these years of activities, post IPO, what have we done? We delivered a company.

Let me see the numbers.

I would like to say that we delivered post IPO. We did 50 projects, including 18 expansions, 15 M&A's, minority. Some belong to ourselves that we purchased. And we build 12 buildings, residential, some office buildings, and they also generate some revenue for the company. Regardless, this was the best order without any non-recurrent revenue. So we had a moment that we had a big revenue, but we sold Our real estate, there was $800 million evaluated. During the pandemic, we forgo the revenue of the company for a few months from rent, and our tenants would pay half a condominium charges. And we believe that without that partnership, the entrepreneurs and sellers They wouldn't be able to survive. And the reality is that our company is being recognized in that sense. We're being a partner for being their partner to understand their difficulties. And now we have returns with exceptional sales. The company is going to have a great income, but it's still Well, my goal is one billion. It's going to be a bit less. But thank you very much to all of you. I'm sorry that I spoke a lot, but this is part of the company. Thank you. We're going to start the Q&A session for the investors and analysts. Should you have any questions, please type asterisk one. If your question is answered, you can leave by typing asterisk 2. We will answer the questions in order. Please ask your question over the telephone so we can get the best quality of sound.

Please wait while we gather the questions. Our first question is from Juan from XP Investments.

Thank you, good morning. Well, congratulations on the results. Very good. I have two questions. The first one is aligned with the sales expectancy. Do you have a growth in sales that is gonna be very relevant in October? And do you have a good expectation for the sales, even though with the World Cup? How the events have improved the flow of people in the shopping malls? And the second question is the Golden Lake. It seems that the acceptance of the project is very relevant. And I have to understand with the sales team, do you have any idea And we need to understand what is the mix that you are thinking for the Golden Lake over the next few months.

Thank you very much. Or expectations of sales.

Sorry. You know my voice already. I'm Joseph Perez. The expectation of selling in the shopping malls is good. We're not expecting any retraction, any problems, but we have invested a lot. And we are building a Christmas tree that is very expensive, 70 meters. It's the big star of Christmas at Barra Shopping. And we're doing a lot of events and the other events. And we know that at this time of transition, we need to do more to sell more. So I believe that the sales of the shopping mall The last quarter is always good. These are two very strong months. In regards to Golden Lake, we're doing well. But the first apartments that we're making are luxury apartments, 370 square meters up until 500 square meters. So we have 55% sold. That's a very good evaluation. and we are building this. And the mix of projects will have, but we know what the people of the sales area, there is a big demand for the 170, 200 square meter apartments. It's just that we have apartments that are double the area. So I think that with this interest rate perspective that is going to drop, I think that this is going to help. So we are not concerned. But our strategy is to sell core by core.

We are not

We are not working with the real numbers. We want to sell as we, we want to build as we sell.

It's very good. Next question is from Pedro Lobato. Good morning, everyone.

The first one, vacancy. It's still 95%. I wanted to understand how is it going with the new tenants and I wanted to know more about the tenants up ahead.

And the second one, based on the records,

We will get some comfort now that there is an improvement in the non-payment. Do you think that this occupancy cost will be reaching a new threshold looking up ahead?

Pedro, good morning. This is Armando.

First of all, vacancy is much smaller than what we expected, five months being closed. Well, we've changed the mix of the shopping malls. It's higher than the records of the company. We have an increase in rent and we've seen our shopping malls better and they're generating. We have the events, there was the question and we have larger sales. And now looking at this and the economic perspective is that this vacancy will decrease with time. And there is the increase in the occupancy rate, but you have to charge for that. You have to pay for rent, the percentage. That is not our business. Our business is to value the space that we have and help our tenants with the management to have high profitability in high quality malls that are vectors for growth where we are located.

Without occupancy, I think that's a wonderful question. You know, I remember Dr. Perez was talking about that. If we're talking about 20 degrees and the head is 50, On average, they're okay, but they're dead. You remember that example. So the concern here is the sum of the occupancy of all of the malls. So to give you a more precise answer, I would have to talk about each and every one of them. So let me give you a few good examples. Paris was talking about Village Mall, which is 10 years old. Campo Grande, it's the same. Jundiaí, five years in Canoas, 11 years in Sao Caetano. Jacarepagua for instance also so there are many things consolidating right now and as a consequence they have better numbers and there's a great potential to improve that to increase that rent right so I think there is a lot of space in my opinion to increase occupancy but in this quarter specifically what happened is We had this division between rent and the condominium. And we have an increase in cars, right? So what we were discussing, by the way, is I'm just going to give you a, General number 2017 to 2022, for instance, the cost of the condominium, the condominium charges went up 15% approximately, depending on the mall, but it would be around that. So we're talking about the same number for a few years, but the IPCA index was above 31%, if I'm not wrong. Let me double check that number. IPCA, September 2022, I mean, 2017 to 2022, 31.1% and GDPI index 79% in that same period of time. So we are increasing much less then that, then those indexes in that inflation in that period of time. So what we're not going to do is allow the quality of our projects to go down. No, we won't stop doing initiatives and events. That means that we're trying to focus on sales. We're trying to focus on that quality. Yes, indeed. We had great increase in sales. Good results. So relatively, we had actually a decrease in the costs for the condominium, the condominium charges. Exactly. That's what we're talking about. So we are promoting many things. We're looking at a very good quarter, very good fourth quarter. Right now, the best quarter in the year is usually the fourth. And that's one of the reasons we have high quality. We have costs under control. We have safety. We have good maintenance service. You know, I repeat quality over and over again because it is about that. Excellent Armando. Thank you so much.

Our next question is from Victor from UBS.

Good morning, everyone. Can you hear me? Yes. Good morning, everyone.

The first point that I wanted to ask you is in regards to development. you have in the highlights in the presentation as well, and some data about expansion. So in the current scenario, for the development and expansion, I also wanted to understand what would be your preference. And also, in the context of this question, in the 200,000 square meters of expansion, What is the necessary conditions to get this working?

And the second question in regards to promotion.

We have an increase in the occupancy cost. Well, we have the increase in the interest rates, but now for the fourth quarter with the with the World Cup, should we see this number still a bit higher? And also in a follow up of this last question.

There is a.

Well. you haven't reached your potential but once you do and you and you charge for this promotion fund how much should we see the and then how proportionally should we see the occupancy costs uh are the occupancy rates increasing actually okay development Development, we always want to develop. We always want to grow. The DNA of the company is that we create the projects, we create the innovations, we develop them.

And for example, Golden Lake, we are building

There is a cost where the cost increases a lot, and a lot of people might be worried that the index might not cover the cost, but you're paying more for the concern that whether if it's the builder or, but when you're working, we start to squeeze the orange a little bit more. So, residually, the revenue of construction is affected. This is not our objective. We are entrepreneurs. So, we subcontract those services for building and real estate. But we have architects and we know how to build. We build canoas, canoa shopping because there was difficulty Hiring the construction companies to do this. And we can always do it cheaper, but this is not the objective of the company. Now, in regards to the expansion, we have projects that evidently allow us to say that we have over 200,000 square meters to start working on. And we will only do that at the time that there is, of course, a better vision of the economy. We're happy because the interest rate is stabilizing and inflation is stabilizing. And a shopping mall 50 years ago, Ibirapuera, We launched it when the inflation was 150% a year. And then we got the increase of interest rates and then we had the correction and it became a snowball effect. And we still had the shop being built 100% with full tenants and we got a revenue of 50% that we could account of this income because for each amortization of all the financing that we did to pay for the building still we got half of this for the company in the term in terms of cash flow so at that time it was very successful maybe the first one there was a shopping mall real shopping mall in brazil And we are very audacious and we are doing a luxury enterprise in Porto Alegre, everybody is concerned. And we are working with this issue. We have to move on forward. And here we have a DNA of trying to make everything work. We do not like to stay on idle. There are many opportunities, many opportunities for M&As. We like to do business, but we know that at this moment, maybe purchasing is the best business. Maybe a fusion will be better. So we are open to all ideas, and we hope that this last quarter will be the best quarter. And it will contribute to improve the income that we are expecting. And we're working strongly towards that. Victor. So could you repeat part of your question, please? It wasn't very clear. Sure. My point is, in the fourth quarter, the promotion fund should still be a bit more overloaded by the World Cup and there is a lot of competition for the clients, the customers. And you mentioned in your previous question that you're still not charging the When you get to the previous potential, how much should we increase the occupancy costs? Not necessarily. This is going to happen. These are opportunities that we evaluate in each event. And sometimes you would want to Spend the money, but there is not a great event that will add value for the shopping mall. This is a case-by-case analysis. But, of course, we always follow up on the situation of each company, the occupancy costs. All of your concerns, we have them in our day-to-day.

In regards to the World Cup. It's good for cost benefit. So in FANGO when people, I think it was a record and we are replicating this and it improves the cost.

This is what made Shopping Modum B a shopping mall that grows exponentially. The sales in the second quarter, it was above 40% and now over 30 and 40% repeating again. Peter, Copa do Mundo? When Brazil plays, you certainly see a reduction of foot traffic in the shopping mall. But after the World Cup, We did a daily study to show to the market is that you have an anticipation of sales. And the day of the game is kind of slow, but in the day before it's much higher. And this is a national passion of Brazilians and it is what it is.

Thank you. Next question, Andre Mazzini, Citibank.

Hi, everyone. Thank you for the call. Two questions as well. First question about the acquisition of Endemol. Is it the fact that we still had some conditions to be met, essentially, for this to choose to happen? And does that happen? Did you pay for that installment? And if it's not the case, what are the conditions for this payment? That's the first question. Second question about the app Multi. It's interesting the amount of downloads. But a question on how do you expect to monetize this app? It generates engagement But can you monetize directly with marketing, for example, in a direct monetization of the app or is just another way of having the digital completeness of the shopping mall?

Thank you. Hi.

In regards to the first question, we are still in the process. It's still not definitive. We're in the normal process of contracts and evaluations, due diligence. Our expectation is to be 100% connected to this. We want to do it as quickly as we can. In regards to the multi-app, I'm going to ask Richard to answer, but I would like to show you another dimension. Sometimes you see revenue, how can you monetize? Well, it's the expenses that can be decreased. For example, the payment of parking, all of that was reduced, communication, vehicle with multi. So you have to think about not only what you can earn, but what you can stop spending on. When you work with digital transformation, you have operational gains. As Armando said, you're saving money with the payment of the online parking instead of having the ATM. So we have a great gain in that sense. Also, we talk about the improvement for the experience of the consumer. Our consumer is coming to the mall more frequently. We also have the tenants. And we have an increase in the flow of their stores along with the use of Multiplan with the MultiApp. And we have the monetization of shopping malls. To monetize the online audience doesn't make sense. The big punch is in the increase of sales at the shopping mall. That's maybe an option in the future, but not something that we're seeing right now. We want to create multi, it's not just a channel for you to invoice. Because of the size of the company, whatever you do is small, but it generates value for the consumers and the tenants. That's one of our big objectives. 200 million visits per year. 50 million cars in our parking lots. That shows the future potential that Mewty has. We're not gonna think that it's gonna be a business. I think that in the future, it will be a business. as we can offer a lot of advantage to the consumer.

Little by little, we will get there.

I think it's important to explore these coupons. It's 1,500 coupons that we got here with Multi. and we have 600,000 people that use the coupons in the shopping mall. And this resulted in the comments with sales of above 40, 50%. This is the great value. And then you get the occupancy cost and then you solidify all of this. Thank you very much.

Thank you guys. Our next question is Natada Pereda, Morgan Stanley. Good morning, thank you for answering my question. Yes, Natada, we can hear you.

So going back to Golden Lake, I wanted to see if you can give us some color in regards to the project, the VGB in regards in the next years, or even an idea of VGB for a next phase. Thank you very much.

Not that yet.

The project is very clear. We don't have a specific date. This is an opportunity. It's not a core business that we have to launch every time. The second phase has a BGP, which is very similar to the first phase with a lot more units and it's ready to be launched. So we're just waiting the right moment. Well, such an enterprise, you have 18 buildings, 4.5 billion in sales. You don't do everything overnight. And then you work with this project as you work with the demand, for example. We know, and we don't want to give all the information, but there is a big demand for a certain type of apartments. We started with big apartments and that's how we have to work. Because the luxury apartments, they obviously give the perception that this is a very high quality enterprise, and it is. Very high. and for Rio de Janeiro and Sao Paulo, the big centers, you're never going to have a project soon that is as good as this one. We know perfectly that there is a big demand for products, for a certain type of apartment, but we in the first stage is 550 million. We sold 55% of this value. So we sell more, and that makes us happy because we started with the works, but we still have two years up ahead. Of course, before this first subcondominium is ready, the condominium is going to have their own autonomy, but it's a gated community, so privacy, safety, probably we're going to have even a school in there because it's a picture and we paint it, we urbanize it. It's a shame that we cannot show an image. So if we can do a teleconference that we can show image because a good image would, this is a very beautiful project. Well, my idea is a good design is worth a thousand words. If you're going to do a good drawing, it's still worth half of the words. So anyway, it's beautiful to see, but go there and see the reality. We are delivering much more than what you're seeing. I invite you to go to Porto Alegre. And it's very good. I'm joyful. We as entrepreneurs, we have to overcome. Sometimes we don't have the competition to copy and sometimes we have to create and we are pioneers in that creativity. But we don't create it based on an abstract idea. We do it with a sentiment. So post-pandemic, everybody wants to get you a green area, a paradise. The neighbor is 100, 150 meters.

And this is very open. So we have office there.

And from that window, I can see the sunset and it's a beautiful sunset.

And I am from Rio de Janeiro.

And maybe we're going to launch more and be sure it's going to be better than the marketing.

Do you have any more questions, Natalia? No, that's it. Thank you very much. Our next question is from . I have two questions.

The first one is the revamping of some shopping malls. Departigui, for example. I want you to know about this. And I want you to understand that in the context of CAPEX.

And you're doing a reposition, for example. Virolimpia, Santa Cruz as well.

Those are my questions. And just a follow-up with a previous question in regards to expansion. This quarter, the Motumbi shopping is getting to 99% occupancy rate, and there is an expansion plan of 9,000 square meters. So I want to understand what needs to happen for you to talk about this expansion.

Hello, everyone. Good afternoon.

So, the revamping. You know that this is a constant. We are always updating our projects.

We want to improve.

We improve the mix. And then there is a second question. And then you do the reposition and revamping. Actually, we are always trying to get a better mall, to have a better tenant. And sometimes you need to adapt, you need to change, you need to adapt it to a new reality and do improvements that allow you to work with the shopping mall. And it will allow you for a bigger operation because we are updating the models and we're working together. The company during the pandemic decreased the rhythm of updates, of course. So we have a larger CAPEX. I don't know, I don't remember how much is... And

We have. And we have improvements, for example. New common areas.

Well, we have that. Issue of treating the consumer well. And then they can choose their mall. We can charge more. This is a virtual cycle. The expansion. You mentioned very well the modem B shopping. We have a need that is much higher.

And we have to expand. And one issue that

We need the return that the world is disorganized. So the cost of materials is immensely going up. Marcelo was dealing with situations that are atypical. Lots and lots of months. And now we start to organize again. And then you start to have more clarity of what you can have in the projects.

What we have to be careful is we cannot just think about having more of a leaseable area. We actually have to think about the right demand and what the right use of capital is for our situation. Well, and as you know, in our strategy, we are worried about the possible uncertainty that is coming ahead. We had planned everything for 2022, and we want to have a better use of our resources. We want to leverage the resources the right way. During the pandemic, we had many changes, and as was said, we're thinking about development, development, development now. All the time, that's what we are focusing on. Excellent Armando, thank you so much. And by the way, Dr. Perez was saying that he sees that the market is ready for M&A's. So could you maybe share a little bit more about that? What do you think would make sense in terms of geographies, in terms of income? I mean, what kind of details could you share with us? Well, I'm sorry. I have to be honest. I cannot share much info right now about that. We cannot tell you. What we're going to do. I mean, we can only tell you what we are doing right now. We are reviewing everything so that we're going to have the right situation. And if there is an opportunity where we have good advantages, then it might happen. But of course, with the right use of capital and everything that was mentioned. But I'm sorry, I cannot share more info than that. Okay, I tried, right, Armando? I had to try. Of course, of course. No problem. But yes, I have to be honest and say I cannot share more information on that. Okay, thank you. Thank you so much. Have a great day. Okay, we have a question from Marcelo Mota from JP Morgan Bank. Hello. I have a quick question for you. Do you think the actions are a little bit different from what you were doing in terms of expenses in the past? Well, Mota, It is hard to have a good forecast of what's going to happen, but basically for the next few quarters, I mean, and then in the last ones, we had a higher expense for marketing campaigns. We needed to promote a few events that were recurring. We had more than one event at different malls. We also had social events. There were some legal expenses due to some legal fees. Obviously, what we want is to make sure that in the future we're going to have everything under control, but it's not always possible. The thing is, we're looking at what is recurring and non-recurring in a very careful way. I'm sorry, I cannot share more info than that. No problem, thank you, Armando. Thank you, Marta. Our next question comes from Pedro Rosnel, Credit Suisse. Hello, good afternoon. Thank you for the opportunity to ask a question. My first question has to do with rent increase. Now that we're thinking about the inflation level, the changes in that index, we think that now it is more of a normalized index. And from now on, we have to focus on the future and not the pandemic anymore. You can continue to ask your question. I think you had an issue with your connection, Pedro.

Well, maybe we can continue with the next question.

Or maybe I can answer what I understood from his question before his connection dropped. Well, our next question is from Jorel. from Goldman Sachs. Well, I have two quick questions. I wanted to know how you see the turnover in the future because there was a peak in turnover in 2021 and it's still high, right? The last 12 months approximately until the third quarter 2022. So do you think that is going to be normal again around the same percentage as before. And connected with that, my second question is how do you see leasable area between satellite and anchor? What is the percentage for the future? Do you think satellite is going to continue to increase in terms of leasable area?

Well, Joelle.

If you see a longer period during the pandemic, it grew a lot. If you see a longer period since the IPO, we'll see a growth. I don't remember, well, 4%. It was much lower than it was comparing to Europe and the United States. It was a higher turnover than us. So there was a period of turbulence. And then there is more predictability. And I believe that the turnover will decrease. To what levels? It's very difficult to predict because you also change habits. It's very, we try to bring the best operations and we're going to be very relevant, right? We're going to be very proactive. So if you get this longer period, We've recently had the, before the pandemic, we had the problems with the electronic stores, FNACs. So we tried to use those opportunities. And we have our shopping malls and the M&As will allow us to get The same thing will happen with these other enterprises. We're always trying to find the opportunities, but it's not easy. And we're gonna have the high productivity data, and then you can get this data, the space. Okay, thank you.

Thank you, Joel.

Next question. Hi, everyone. Sorry, I had a bit of a problem of connections with my question. I had two questions. The first question is growth in rent. We see the numbers that are overcoming. And would you say that what we have left of discount is a normal level that is part of the game. And we have to think about the growth in rent for the future. And the second one, the second question is one of the results of the quarter is one of the levers in the company. You mentioned this desire of expansion. So there is an expansion bias, but that would depend on a clear economic scenario of the country. Until we get a clear vision, would it be a strategy for the capital allocation to have a more repurchasing of the shares and distribution of JCP, or the company will want to keep its cash position until the economic scenario will signal that we can have an expansion for the Greenfield project? Thank you.

Thank you, Pedro.

If I am not mistaken, you're talking about 2019 and the discounts. So I want to say the discount, there was always discounts. In the best years, 2010, 2011, there was discounts. There is always a discount. Discount is a case by case needs of tenants. It's part of that long-term, that partnership that we mentioned. What happened? If we're going to remember that period of 2014, 15, 16, 17, it was so harsh for the country with a growth above 3%, a growth, sorry, no, a reduction of the GDP, less than three and a half, interest rates that were higher than what we lived, 14%. And then you created a base of discount that was much higher than what was normalized for us. And this is, if we think about the pre-COVID, We can deliver discounts that are better than what we have there in regards to that positive sale for the value generation and growth that we've seen. In regards to the levers, we always talk about this. We have our management of liquidity, which is, that's the idea. This is the idea that we're gonna have the cashflow that is available This is key for the strategy of the company. And it is natural that as we have less use of capex, for example, in a hypothetical scenario, you can return more money to the shareholders and the shareholders can do whatever they want with their money. And then we can repurchase the share eventually. The repurchasing is easy to use when we disagree from the market, but it has a factor which is not removing the liquidity. It's important to, we have a company with two controller shareholders that are very clear with a percentage of the company that is very significant. So what we try to do is, all throughout these years, is to take part of the events to generate the liquidity for these shares, and the repurchase will remove. So it's something that we're careful about, but when we see a disagreement with the market, we have the policy of rebuting this access and the acquisition of on the mall that was finalized as an investment for the future that we're talking about 300 some million reais. And if we consider that that would be finalized this year with a capex that is higher than it was in the previous year. that we had . And if you look at in terms of JCP, we have 245 million Reais already invoiced, already accounted for in the first quarter. And this is how we are working. The idea is not to have debts or this is not the idea. We want to have a space. for balance so we can act when we think that there is a great opportunity. Did I answer, Pedro? Yes, thank you.

Good afternoon. Next question is Daniel Gasparetti, Itaú BBA.

Good morning, everyone. Thank you for the call. Now we went through the election and now the tax reform. There is the increase in taxes and dividends. What is your opinion? Having an environment such as this, a company would be thinking about paying extraordinary dividends. How do you think that the future scenario will play a hold on that?

Daniel.

That issue of the tax reform has been going on for many, many years. It wasn't just last year. It was the previous year, and we have those discussions that resurface. We need to see next year to have a coherent decision. We have that space of accumulated profits, so we will evaluate, but we need to have more clarity, surety with this scenario. So we can make a decision. And once again, it's important for us that there is a saying that we say, what we want is to have a space to want more and evaluate what we want to do in the future.

Thank you Armando. Thank you for all the questions.

We close the Q&A session, and we invite the participants to contact the investor relations department. Now I would like to give the floor to Mr. Armando D'Amedanetto for the final part of the presentation. Well, thank you very much to all of you. Thank you. Dr. Pettis has already mentioned at the beginning our investors, analysts, journalists, collaborators, all of you that hear us. Thank you for your attention, your support. And to us, this is very important. I would like to say that once we finish the earnings call, we are only going to start We're only going to meet again in 2023, but we're still going to have a meeting on December 7th where we're going to tell you a bit more about the company, what was done about the year, and several things that we're going to explore. And we will talk to you on December 7th. Thank you very much. Have a nice weekend.

Thank you. Thank you.

The earnings call of the results of the third quarter of Multiplan is closed.