Syn Prop E Tech Sa S/Gdr

Good morning, ladies and gentlemen. Welcome to the SYNC video conference to discuss the results for the first quarter of 2022. This video conference is being recorded and the replay can be accessed on the company's website, ri.sync.com.br. The presentation will be also available for download. Please be advised that all the attendees will only be watching the video conference during the presentation. And then we will start the Q&A session when further instructions will be provided. For those who are watching this video conference in English, we advise you to download the presentation in the company website in the quarter results section, so you can see translated material. Before proceeding, I would like to emphasize that the forward-looking statements are based on the beliefs and assumptions of the SIN management. and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore depend on the circumstances that may or may not occur. Investors, analysts and journalists should be aware of events related to the macroeconomic environment, the industry and the other factors could case results to differ materially to this presentation, Mr. Thiago Muramatsu and Mr. Hector Leitão. Mr. Muramatsu, the floor is yours. Good morning, and I would like to thank you so much who reserved some time to follow our conference, quarterly results, talking about the achievements during this quarter. This quarter, after the asset sales that we had in November and payment December last year. And part of this resource, we already paid dividends and partly was reserved for debt paying. So here together with Hector, we analyze what we had on debt. And then we anticipate the payment within two operations in the quarter, seventh and the ninth debenture, the seventh $36 million with different collaterals, ITM and USPS. And the ninth debenture payment, almost $100 million. and Grand Plaza Real Estate Fund. After the quarterly results, we have the results and we also have the antecipate, the 13th debenture, the value over 100 million. That was the repurchase of the first series of the 13th debenture. These three debts that we paid had the term that was closed, we could see the duration of these debts of the company in general. And we had cash flow freedom so we could work with investments, dividend payments and other prepayment of debts. The prepayment of debts that we had in this quarter, we also communicate a dividend of 80 million paid on May 30th, this month. Talking about operational performance, I believe there is a big change of the portfolio. And it's interesting to understand these changes reflected in our balance, in our TRE. Hector can talk about it. And it's interesting to see the portfolio divided into three big groups. We have shopping malls, we have AAA offices and Class A offices. The final one has been suffering more with the occupation and the main sensor in this group is ITN. 35,000 meters of ABL that we have more than 35%. In our part, everything is open, is vacant. We have 17,000 vacancy in meters and the other buildings have higher vacancy, but the area is smaller. And the rest of our Class A buildings are 100% leased. AAA, this level of vacancy that is elevated now in this quarter, is the consequence of the acquisition we had, 1,500 meters in tower D, JK complex building. We have a vacant area. This operation was interesting considering costs. We sold our portfolio 36,000 reais, the square meters, and we acquired less than 25, So this has generated value in the acquisition part of what we acquired. We have already rented and the value is above our underwrite. And that is also a part that we have been working on it. But the good news is that there is a good willing for renting and leasing that is high demand on AAA shopping malls. I believe, next slide, I can explain it better. Observing the shopping malls, and we have the number since 2019, in 2020, January and February, these months were normal. Before the first result, March, it worked half of the month without restriction. Then 2021, we had restriction in the first quarter. And then we reached the first quarter 2022 with a drop. 627 million in 19 for 565 in the first quarter 22. the main factor that we could not check near the sales in 2019 was cidade de sao paulo shopping mall that is a great dependency on offices and tourism the offices from march on especially april There was a return, more massive return of people to the offices. And then we can see the reflection of these in April and May. We had May with excellent flow in the malls, no exception. The sales perception for Mother's Day was good. So in some malls, the estimate numbers is overcoming the sales on Mother's Day 2019. So from this point on, we can reach closer and closer to the sales in 2019 and overcome it. The flow is not represented here, but basically we see the same effects on sales. In our release, you can see in the detail, but the difference is that we can differently to make profitable the real estate, the parking areas with the lower flow in although areas also had profit and in the end of the day, the revenue in the parking area is higher than in 2019. And the sales also, productivity on sales is very good. Fewer people, but spending more, the average ticket is higher. And this year, especially, with big launches in the movies everything is going to back to the same levels that we had in 19 and higher in the financial aspect you see that we are getting higher about occupation when we see the first quarter 21 and 22 91.8 compared to 1995.1 there is a piece of information that is important to understand, to understand this difference in occupation. When we observe the occupation at stores, number of stores, we are so close to 2019. The big difference there is, a little bit better, in the case of occupation, is a tower that we have a commercial building in Grand Plaza. We consider it in the ABL. When we exclude the effect of this commercial building that is not something related to retailing, it's occupied by companies, small and mid-sized, we have this occupation effect on stores, the same levels that we had in 2019, the beginning of 2020. Observing the sales at the stores when we compare the first quarter 2021, we see a big growth, 63% observing the first quarter 2022 compared to 2019. Comparing sales at the stores, we see a drop of 6.5% explained by the fact the sales of Cidade de São Paulo shopping mall. Next slide. I mentioned about corporate buildings. And the ITM is considering its occupation rate when we exclude ITM class A. It has 86.2% occupation, reflected what I commented that its area is really representative in the occupation the value of rent is not so representative as AAA and AAA, we have the occupational rate and there are two buildings AAA within our portfolio and all the rest that we are still managing. And these buildings, there was the acquisition in the beginning of this year and the occupation suffered, but this is not in our concern because we have there relevant demand to occupy this space is a matter of price and not so much demand. And talking about prices in corporate buildings, it's not here in the presentation, but when we observe in our class A, the same area per square meter, we have a small drop around 3 or 4%. But when we observe AAA in the same period, first quarter 21 and first quarter 22, that is an increase of 12%. And this is reflected on what I say about prices. The problem that we see in vacancy in AAA is not depend, but more proper prices that we understand for debt development. And from my side, I believe that's it. I pass the microphone to Hector. Thank you so much, Thiago. And thank you so much all the attendees for your presence. I will talk about P&OI. This was the highlight of our balance, what our performance, operational performance in the assets. On the left-hand side, NOI plus PDD, We have a decrease of 16% compared to the last quarter, but there was an impact of 20 millions in the portfolio that we sold in the fourth quarter. To the right-hand side of the graph, we see the same properties. There was a growth of 32.5%, concentrated in shopping malls, and I will talk more about it. Observing shopping malls, we had a growth of 38.2%, observing the same properties. Observing 2019, we see a growth of 1.4% compared to 2019. And here, it's not here, the effect of default, but adding this effect, we grew 8%, almost 9% compared to 2019. So the takeaway message, the shopping malls are returning powerfully in all the malls. in default aspect and also vacancies. We see the first quarter seasonally is bad on contract decisions. We see a good settlement of vacancy and a good pipeline of new lease for the next quarters. And I believe the takeaway message for shopping malls, we are in a point in time that we are increasing going up. Also, March and Mother's Day were excellent. The weekends on these days, we were over 2019, double-digiting sales. So we are so confident on the return of shopping malls. Talking about buildings, we also see some important events. 2021, that is a drop, but there were some events, non-recurrent ones in 2021. causing this drop of 24%, an effect of linearization. Sign we receive from contract terminations. When we remove these effects, we still have growth near 10%. So, as Thiago mentioned, there is a stabilized price for Class A and a big challenge for ITM. our asset that is almost 100% vacant. And we have a growth that is interesting in AAA rent. We can see throughout the other quarters. Next slide. We see the adjusted EBITDA compared to last year. We had a drop of 5.5% in 2019, The effect was AAA sales, a part of BH Station that we sold, 20 million. So we are leveling up and pitching up with a smaller portfolio, exactly because there was this interesting performance in operations in malls, and DNA is well controlled. Basically, there was no event. highlighted, not even positive or negative in the DNA. It's well controlled. Compared to the previous years, we keep the same level on expenses. But when we see this adjusted FFO, we add operational result, financial result. There is an expressive drop compared to 19 and 21, specifically compared to 21. there was basically 15 million more on financial expenses compared to 21. And if we exclude this effect, it would get a result 2 million under 21, but the recurrent revenue under operationally speaking, there was an interesting evolution. But the downside is that it was not the scale of CDI. that was in consideration and the surprise for this quarter nobody expected was IPCA scale. As we observe, we are a level of 12% in the last 12 months. And then we have a specific debt on IPCA with a higher impact in our financial result. Observing debt, as Thiago mentioned, We prepaid already in this quarter, and even with the dividend distribution is four quarter additional. We're going to have one more. We have a level of leverage that is under control. So we close the quarter with a gross debt of 1.5, 1.487, and the cash of 546. but we are in a capital reduction process this month, adding to our cash almost 347 million. So the net debt is almost 600 million and cognate debt is three of 0.4 times and adjusting with current revenue is three times. So we have a balance that is well acquainted here. And then Talking about the amortization schedule, 200 million in March. We are going to mark 200 million in the following months. Up to May, we fulfill 200 million and we see that the following years, two years, we have space, interesting space of services and debt to pay. And of course, we are going to analyze throughout this period If eventually we anticipate some prepayment, but the good news, the photograph is that we are well acquainted with our cash compared to what we have of investment ahead of us. And highlighting that is one fourth of our debt is connected to IPCA and the rest CDI. So in the following years, we see and amortization equated to our cash flow generation. And then we can open up the floor for Q&A now. Thank you so much. We are going to start the Q&A session for investors and analysts. If you would like to place a question, raise your hand. You can use the button. If you want to write your question, please write your questions in the Q&A box with your name and company.

Wait until we collect all the questions, please.

To ask questions, you can raise your hand and you can also write your questions on Q&A box with your name and company name. The first question is from Mr. João Bellic. Can you talk more about the vacancy in Cerrado Shopping Mall? Hi, João. Yes, we can talk about it. Cerrado Shopping Mall There was a very challenging beginning. In 2019, we increased the occupation of the mall. The pandemic hit and everybody knows what happened. I don't need to repeat. We lost some operations, but now we could relocate great part of these operations. Some were located in the first quarter, another after. the end of the quarter so our occupational level is higher than this result we have now there two areas that are higher vacant and we have been working and it's interesting because there we see two effects that is a growth of the retailer's demand for the development we have been working with a higher qualification of the stores in that mall. So throughout this year, we are going to see the effects. And the second point, surrounding the mall, what's natural to happen when the mall goes to a site away from the big centers, we see real estate development, households around the mall. That region was residential, households and storages and warehouses. So we see these warehouses giving place to buildings and houses, bringing a positive effect to the mall. And this is going to be part of a virtual cycle of renting answering to your question i believe that we have for this year a good perspective to improve and improve a lot the shopping occupation next question mr elvis credential you can open up your microphone mr credential

Mr Elvis, you can speak now. Mr Elvis, can you try it now?

You can leave and get back to the conference. In the meantime, let's answer this question from Mr. Eduardo Salma, Conceito Construtora. How about JV and the regularization and commercialization of Brasilio Machado? Thank you. Hi, Eduardo. How are you? I believe I will answer about Brasilio Machado. Brasilio Machado, there was a permit for reform for improvement we executed in the tower everything we did it the neighboring tower remodeling is ongoing the next 60 days going to be concluded that asset is totally regularized so we have started already the work there trading brasilio machado The demand over there, it's not a AAA building, is soft, but we see already some people interested. But the great shift is when we have the permit without any restriction. And I believe that for the following months, we see commercial activity over there in Brasilio Machado. About JV. jv with xpx we have now some projects in the first fund 350 million reais and the main project is cld that we sold two-thirds of the market share to the fund and this one is a project that is already ongoing the construction work since the beginning of this year so things over there are doing fine and we have some other projects there in the beginning of investment some in construction work others in pre-construction work some sales have started already and I believe that the expectation is to have a higher capitation but within what we capture what we have map is enough so for now that's it we are studying some other kinds of means but what we have is this model next question is mr elvis credential your microphone is open can you test it now good morning can you hear me yes how else is i'm sorry the problem with my microphone I have two questions. The first is about shopping malls. If you can talk about the sales evolution and rent every month to understand, you see an acceleration in the year and talk more about the health of the retailers, the number of occupation default and the evolution now in the second quarter, as you see sales and rent, the evolution. And my second question is about M&A. I would like to understand what is the company's appetite for M&A. The market is not so competitive and the association with CPP, you have a management feed and it's meaningful to be more active in M&A because of this fee. I would like to understand the opportunities that you see, the interesting things and the segments that are more attractive. Thank you. Yes, I go for the first one. Good morning, Elvis. About shopping mall, what we realize it's an evolution every month in our portfolio. There are six malls and there was Terricidade de São Paulo representing a lot in our sales figure. And that mall benefit a lot from offices flow, January and February was a month flat for Cidade de São Paulo shopping mall. March, we see the return of movement. And April, when the offices return in Avenida Paulista, we see in our portfolio a growth of sales over there. So in the same store sales curve, there was near six under the same period last year. April, we had the same start, almost 5% positive, and May going towards the same way, even better. Mother's Day was excellent, as Easter was excellent too. Every month, we see growing January and February. A little bit under March, the quarter near six, and next quarter, we expect the same start that is positive compared to 19. We could pass great part of IGB and IPCA last year, but we still have to balance with discounts for the retailer's occupation cost gets balanced. But the good news that is the default indicator is aligned to what we had in 19. default in the condominium that is important as the owner we need to cover this cost default the first quarter was negative we recover more condominium quotas than we demand on rent is around 1.52 percent in almost all the malls it means that We are collecting and it's balanced with the finance of the retailers. What we expect for the following months is to adjust this discount, removing the discount as the sales go up. So I would say there is no pressure on vacancy and default because we have the occupational cost balance and we analyze store after store. every month discount request, we analyze the occupation cost, PRE, and we discuss based on figures and numbers what we have in the market so they can pay. So that's the scenario that we can talk about. Default, did you mention default? Yes, it's well balanced. answering your second question about M&A. What are the sectors we see interesting and our appetite? Offices, you mentioned the association with CPIP is something that we see as a segment that is timely and with small participation. The challenge is to find good properties so we can have acquisitions in a percentage that is lower and the vision is 10, 20% of that property and CPIB or the fund that we are partners in, SPX, trying to balance the return of the rent and the management fees. and talking about it's not so competitive, as you mentioned, and this competitiveness getting lower is because of interest rate in order to have the calculation. We are so conservative, so it's harder to calculate because of the capital cost and the interest rate to find an opportunity to have something that is good for us. We have seen something good. But all of them, there are two pathways. What is core? A lower participation, focusing on profitability of management. And non-core possibilities on acquisition, so we can have a turnaround of that property and eventually can have whatever is necessary to sell it. after a few years, three or four years stop. So this type of opportunity we observe. We are seeking to be judicious and have the best business possible. About other segments, shopping malls, we have a big work at home. And we can see in our management the result of our portfolio that is upside in our properties. We have some things to happen in the following years. We have been working hard focusing on it. And about industrial, it's a sector that at some point is intensive in capital. Lots of what we want to do in industrial. eventually at home, but a great part of it in association with SPX. That's great. It's clear now. Thank you so much. And remember that for questions, you press raise your hand or write in the Q&A with your name and company name. No further questions? This Q&A session is over. I'd like to pass the microphone to Mr. Thiago Muramasa for his final considerations. Go ahead, sir. The takeaway message that we have already reinforced during this call is that although we had big degradation in our financial status because of the interest rate, We have a liability management work, so this can be mitigated as much as we can. And we can see the operational aspect with more agility. We have been doing it and it's reflected something in our result, our EBITDA growing a lot compared to the last year and a little bit above what we expected in our budget this year. And the following months, we are in the middle of May already. So April was good. May is good so far. So we are carefully optimistic for the rest of the years and the following years as well. Any other comments or questions, you can come to us. Feel free to contact me or Hector, Bruno, and our people in our IT team. Thank you so much and have a great day. seems video conference is over we thank you so much for your participation and i have you all a great day