Syn Prop E Tech Sa S/Gdr

Good morning, ladies and gentlemen. Welcome to this video call at SYNC to discuss the results on the fourth quarter 2022. This video conference is being recorded and you can watch it later at the company website, ri.sync.com.br. The presentation will be available for download. We'd like to inform that all the participants will be watching this call during this presentation And right after that, we open up the floor for Q&A session and further instructions. Before starting, I'd like to reinforce that all the declarations are based on beliefs and supposition of SIN administration and the current information that we have available at the company. This statement brings risks and uncertainties considering they consider future events. So they do depend circumstances that may or may not happen. Investors, analysts, and journalists should consider that events related to the macroeconomic environment, the segment, and other factors. May these results be material different from the ones expressed in the prospective statements we have here in this call. Mr. Thiago Muramatsu, president and COC, and Mr. Hector Leiton, financial CEO and investor relationship at this company. I'd like to pass the microphone to Mr. Muramatsu to start up this presentation. Mr. Muramatsu, the floor is yours. Thank you so much for being here, participating in this call. We are going to talk about the results of 2022. And to start up this year's conference, we are going to see the highlights. The year was... active when you see the structure of capital just to remind you in the end of 2021 we conclude the sales of four buildings the transaction of Brookfield we sell one more AAA in JK to double the participation that we had in the BH shopping mall and 40% of the project We conclude the year with a volume of cash that was high. Although we had a distribution of December of 1 billion 250, we finished the year with over 1 billion in cash and great part of this resource was for paying debt. So we prepaid the seventh debenture, the ninth debenture, the first and the second series. of the 11th debenture as well. I also prepaid the first series of the third debenture, everything at 700 million in prepayment. And we understand the year that we saw difficulties for new investment, this choice was assertive and this strategy proven to be correct throughout the year to reduce the debt. although the spread that we have on the base rate, great part of CDI, is low cost. But with the increase of Selic that happened, and we end the year with almost 14%, and we believe that it was a good movement to anticipate as much as we could the debt. And these ones here with little or none prepayment And also now in the end of the year, we had the elevation of the rating. This was part of the movement of the capital modes could not elevate our rate of the A plus Brazilian for AA Brazilian. So we are two ranks up, although the environment is more hostile. Last year, we also received two awards. We were awarded. One is Valor New, that we were awarded the best company of real estate investments and development. That is the second time we participate, but it's the first time we were awarded. And one more time that we were awarded is recognition of 100 startups, open startups as one of the most innovative companies in Brazil, category real estate and construction. And the main investment that we had in technology was an investment in Condo Conta. It's one of the biggest rounds of investment that we had in Brazil last year. With DrivePoint, we got this investment at Hakota. And... The investment was 24 million, and the total was 10% that we acquired of this company. And then the second year in a row, we have been working on our side, ESG, and this is the second year that we issued a report. And here we see the main points of the pillars of ESG, environmental in 2021, we closed with almost a very high number, 85% of the water resources come from alternative sources. Energy, this is a more expressive figure, 100% of the buildings strip away, use some kind of energy source that is incentivating and at the most, we have most, half of the malls using already energy sources that are incentivized. Social aspects, for many years we have been working in our institute by SIN and in 2022 we invested more than 4 million in social initiatives distributed here in four big pillars in this institute. In addition to that, we foster, this topic is very relevant when we manage big audience, big malls, shopping malls, three, four million people in our developments every month. So together with the University Zumbi dos Palmares, we had a training session anti-racist for the security guards and great part of the employees of the mall and here corporate company, they were part, they attended this training session. So we try and understand how we decrease the effects of racist attitudes inside our development. And finally talking about gender equity, we have 50% of our body of directors of the board of directors and 67 of the managers are women. if we get top management more than half is composed of leadership positions by women and governance in 2021 we changed the shape of our board of directors in addition to leo and i we have more for advisors and they are independent so we have a comfortable number of advisors based on governance with a relevant number of advisors that are independent. And finally, in the end of the year, moving with the ESG actions, you see more ahead, some more results of these initiatives that we have been working on ESG at the company. We instituted a committee of ESG and sustainability in November 2022. Now talking about operational performance, in my point of view, the year was very good. And the year was more focused on inside the financial aspect and also in the very beginning, I mentioned about the prepayment of debts that we had in 2022. And also we are going to see The operational results, and I believe they showcase that. First, let's talk about financial occupation. We are back to the rates near 90% in the fourth quarter 22. And physical occupation, it was 83.6. Out of these, we have ITM representing very big rate, almost half of our vacancies ITM. So if you remove ITM, and I'll talk more about it, the occupation of our buildings and the relevance of ITM in this occupation rate, we would reach 93%. And remember that everything that we sold on corporate buildings, they were 100% located. So ITM is more relevant now. Moving ahead and talking about the shopping malls, first, we are so pleased to see this result that we achieved in occupation at the malls. And we finalized financial occupation 94.5%. But this 94.5% is the average of the quarter in our final day of 2022. We finalized financial occupation almost 96%. And when we see physical occupation, we finished with 95.2. And there is a commercial building, Grand Plaza, 5,000 meters. And we started the year with it vacant, but now we have 1,400 meters. And if we move it out, we see that the year is 96.7. This is the average of the quarter for the end of the year, more than 97%. And the vacancy rate is under 3%. This result is very good, even when we see the history of the performance of the most. Moving ahead, sales, we finalized the year with 873 million, already more than 10%. Almost 10% above the fourth quarter, 2021. And the vehicles flow ended the year with the quarter with 2.1 tied with the fourth quarter of 2021. And store sales, same store sales, 7.7. And I would like to talk about same store sales. is also a result of several changes that happened throughout the last three years in the malls. And I mentioned that we could elevate the occupation of our development, and I believe the same store sale that was not so high as we would like to see due to several factors. Our portfolio is concentrated in São Paulo, a little bit in Rio de Janeiro, I believe that the cities that suffered this growth delayed compared to 2019 North and Northeast. But I believe that a very important point that I would like to bring is representing a little bit of same sort, say of not so accelerate throughout the last two years, we have been working replacing the store and qualifying this mix. So this volume of location in 2022 was replacement retailers that was bad in performance or problems in their operation. And we are professionalizing and improving the operator's quality. And of course, this will bring an impact of the same store sale because we moved the stores compared to the last year, but we believe that now We have occupation cost with good growth with NOI. When we see the same properties in malls in 2021 and 2022, we grew more than 30% on results with the occupation cost that is healthier. And I believe that from this point on, we can capture more of these changes that we had, improving the mix, in same store sale, but currently we captured this already on day one, when we see our results. Corporate buildings now, we finished the financial occupation of 75 and physical 61. When we see ITM, excluding ITM, we would go next there 85%. And we have currently two problems in our portfolio on vacancy ITM that is a typical building. Initially, it was conceived to be textile center and then it became an exposition center. Finally, it has begun office buildings in the region that is more challenging. We see the complex of occupation of the city in general It doesn't matter the quality of this asset, the location is a very important factor for our location. In our buildings, here in our regions, we have a leasing spread in 2022 above 22%, near 25%, and I believe this shows the strength that the real estate has in this region compared to other regions that AAA suffer vacancy. But opposite to that, when we see Class A buildings, we have three buildings in a region with lots of vacancy, but they are 100% rented with long contracts. And one of the tenants started the operation in 2022. And we have contracts varying from terms, four and nine years. So we are at ease with these other properties. Another building that is a challenge is Brasil Machado. We had some technical problems in that building, making it difficult renting it. And we spent a year and a half solving, troubleshooting, And we believe that we concluded this troubleshooting in the end of this quarter. And I believe that is a good perspective to rent this building representing 6, 7% of our vacancy in office buildings. When we see general aspect of cash, generation, general why of the portfolio, these two assets considering 100% rented, we have an increase seven, 8% in our NOI. And I believe that although we report a number that seems to be, and it is a number that is not so good, at the same time, we have been dedicating time to address all these assets. They are special assets. And the weight that they have in our results is not so relevant, but of course there's nothing that we can feel comfortable about. So we have been addressing these two assets, especially. I pass the floor to Hector. Now he's going to talk about financial performance. Good morning, everybody. Before starting deep diving into numbers, just on top of Tiago's introductions about 21 and 22, and it's important to remember that We see the reflection on these figures, NOI, not of the same properties, but then total NOI, they beat the FFO lower than 2021 because we decreased 35, 40% the results of our assets. But on the other hand, we had a distribution of dividends over 1 billion and 300,000. And we have paid 600 million in debts, 700 plus interests. So we are talking about a good ratio. We lose 86 million EBITDA and we bring the return to the investors of 2 billion. So they are, was shy considering absolute numbers in cashflow generation of assets, but this is strategy. was considered and assertive considering December 21, even before the third quarter of 2022, we saw an acceleration of inflation and a probability of a strong reaction of central bank. All the strategy of 22 bringing benefits to 23 was thinking about the return of capital to the stockholders Also changing the profile of the debt that now is more concentrated in IPCA. And later I will show when the rates cross in the end of last year, in the beginning, the end of 21, the beginning of 22, we benefit from the total cost of the debt reduction. So we had a strategy that was really aware. And to me and all the team, the result was interesting. So from the NOI, total NOI of the quarter, we reached 45.8 million, a drop of 25.6 compared to 21, similar level to 29.8, 100 million in the total of the year, dropping almost 20%. and 26 compared to 21 and 26 in 19. So observing the same properties, how we worked, the productivity of what we have to compare to 2021. We grew almost 5%, quarter after quarter. And the growth was very robust, 23.6 compared to last year and 32 compared to 2019. Next slide, we are going to open up the business units on the left-hand side, shopping malls, same properties. We had a decrease of 1.6, basically because recovery of default in the fourth quarter last year. So the NOI was aligned to last year's and this year, this quarter 22, the final quarter we had The World Cup and election year bringing a huge impact on the mall's results. And these days of the World Cup and election days, the malls were empty and it was some days in a period of a month. So the impact is really relevant. In the accrual of the year, the growth was 37.7 malls. 145 million results and a growth of 23% compared to 19. Although the same store sale and the sale was in the same level of 19, we have been working hard. We have mentioned this before, but I'd like to highlight the team's work, maintaining the cost in nominal basis. We had a an actual gain over 40% in the last five, six years. And this brings a consequence that we can keep the occupational rate that is healthy for the retailer receiving more rent. So we can live with levels that are higher on occupational rate. NOI of buildings on the right hand side, the growth was 40% in the quarter, 60 compared to 19. And in the crew of the year, we reached 35 million in NOI of buildings and growth of 19 compared to 21 and 9% compared to 19. So this we see an impact of building that we conclude the rent, 100% of the rent in the end of 21. And we are picking up the effects now of the revenue and

The grace period in 2022 and 2023, we see an interesting impact.

Observing EBITDA, and here's an important point that we do not consider the impact, the effect of the linearization of discounts. EBITDA without this impact would be higher if we compared. We reached 31 million in the fourth quarter 2022, so when we compare The effect without the assets sold in the last year, 2021, we see a level close of a bid up. And when we see the accrual of the year, we reached 136 million on operational results. Excluding here the impact of selling the assets in 2021, we could see a growth near 20%. So briefing up, this is the operational aspect. We worked in a satisfactory manner this year, increasing productivity. FFO, it's a proxy of cash generation. The indicator that is close to that, we closed the quarter with 8 million FFO, a drop of 13 compared to 21 and 50 compared to 19. And in the accrual of the year, we concluded with a cash generation of 1.4 million and a decrease of 98% compared to 21 and 97 compared to 19. So the big impact was exactly selling the assets. And the interest rate coming from two in 21, they went for 4.5 CELIC. coming to 14% the average cost, superior to 12%. So we worked on the growth rate, on productivity here of these assets, and a strong work of debt management that we are going to deep dive later, bringing results, comparative results, comparing the same scenario of interest rate in the same scenario snapshot, December 22, but the financial result was so similar because of the increase three times the average cost of CPI a year. Next slide. We concluded the quarter with 317 million cash and gross debt 1 billion, net debt 769 million. So we can see a decrease on the gross debt compared to the previous quarter, almost 600 million. And we still have a cash that is comfortable to face possible investments, considering that we have a positive generation of cash of the assets. So the situation is comfortable. to have an experience of a period of lack of liquidity in the market and the credit is accelerated because of the recent events of political uncertainty and some news on private credit with the ratings that were worse. About covenants, we are also comfortable net debt on EBITDA in FRS closed in five times. And our limit is seven times. So we have a considerable gap of two EBITDAs. And another important covenant are the exonerated assets, the valuation of the assets that are not guaranteed, and the corporate debt. Our limit is 1.4, non-encumbered, and we have three times this indicator. If we compare the previous year, we improved this indicator because of the prepayment with a ratio that was clear, increasing the duration of the debt and decreased the encumbered property and improved the