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Good morning, ladies and gentlemen. Welcome to the video conference of SIM to discuss the results of the second quarter 2023. This video conference is being recorded and you can access the replay at the company site, ri.sim.com.br. The presentation is available for download. We would like to inform that all the participants will be just watching the video conference during the presentation. And then we start the Q&A session when we give you further instructions. Before resuming, I'd like to use this opportunity to say that declarations are based on beliefs and suppositions of sin and the information that the company has available. This declaration might bring risks and uncertainties, considers that they concern future events. They depend on circumstances that may or may not occur. Investors, analysts, and journalists may consider that defense with the macroeconomic environment, segment, and other factors that make the results materially different from the ones expressed in the respective prospective declarations. Here present in this video conference, Mr. Thiago Muramasso, President of SIN, and Mr. Hector Leitão, Financial Director of Investors Affairs of the company. Now I would like to pass the microphone to Mr. Muramatsu, who will start this presentation. Please, Thiago, the floor is yours. Good morning, everybody. I'd like to thank you so much for your attendance for this call. We are going to talk about the quarter and perspectives. going for the second month, the second semester. And to start, I would like to talk about operational performance, that we are so pleased with the results, they are improving. We see in physical and financial occupancy, actually will bring more the results, financial results. that they had a good performance in the second quarter. In start physical occupancy, we left 21.88.4 to 22.90.7. And this quarter, we finalized in 91.9. And that is a relevant allocation in the third quarter at Grand Plaza that was the full allocation of the commercial building. It's disoccupied in 2022. Now we finalize its occupation and it brings an impact that is relevant in physical occupation, improving it. Going to financial occupation, we had growth, leaving 91. And now there is this growth of 1.4%, leaving 9.7 and reaching 92.1. This result is not considering this final allocation in July. Going to the next slide and detailing corporate buildings, we also had an increase in the physical and financial. So we finalized the quarter with occupation of 83.5 and 82 financial on AAA buildings CO that has an occupancy that is lower, but the market share in the financial result is less relevant when we compare it physical and financial in AAA, 83, and financial, we are almost 90. Class A, that is more uniform, we have three buildings in Chacra Santo Antonio, totally located, and the vacancy is a little bit higher in Brasilio Machado, and also in Suarez State. And talking about malls, especially in the financial occupancy, the weight is higher than the offices. Here we have some improvement when you see in the second semester 94.2, not considering, it is also considering the beauty club plaza. So now we are closer to 95% of physical occupation and financial 93, that is going to increase because of this occupation. Malls, still malls, the sales, the result was positive in sales, especially an outlook when we see IGPM inflation negative in the last 12 months.

We see the contribution

to grow 7.3%, part of it 3.3% in the same store sales, representing 20 million.

Replacing, we have been doing. And this increased 21 millions in this quarter sales. We have been investing in kiosk and events.

And this added the second quarter last year, plus 8 million. So this quarter, 750 million sales, growing 7.3 based on last year. That is the actual growth. The same stores, we closed the quarter 3.3. underneath the previous quarters, and I believe that the previous quarter, the previous year, that the impact was a rest of pandemic effect in the final quarter of 22, 23, and the slowdown of inflation that contributed for lower results on sales of stores. and renting of the stores, we keep the number that is high, closing in 8.1% of growth in the renting of the stores. Financial performance, I pass the microphone to Hector. Thank you so much. Thank you for the attendance, Eric. financial performance. When we see properties, we had a growth of 9% in NOI consolidated in the quarter and we closed the semester with 8% of growth. That is really concentrated in top line revenue. And then we had a good evolution in the last years on costs. And now the highest contribution in results is really renting, renting the properties, shopping mall. The growth is 11%, very robust. We closed the quarter in 40 million NOI, compared 36 the previous year. And in the semester 79.8, considering recovery of default and 70 million the previous year, growth of 13.7%. We are so pleased with this result considering that great part of the rents are adjusted by the IGPM. That is negative. The actual growth is robust and it pleases us that the strategy is correct. Offices, we have the growth in the quarter of 5.8%, 8 million and a half on result. And in the semester, a drop of 7%, closing 16 million NOI on offices per semester. And I commented last quarter that was the linear effect on Berman 10, excluding this effect, there is the growth of 3% positive. compared to negative IGPM that is the base for most of the contracts. Following the analysis, adjusted EBITDA operational result, adding services, expenses, and office, it is 14% growth explained by the performance of the assets, nothing new about expenses and other results on services, and here the robust growth is the consequence of asset performance. When we see the semester, we are flat compared to previous year, and that is an impact that I commented last quarter. The first quarter, 22, we had a reversion of bonus payment at the company. If I exclude this effect, we have a growth of 11% EBITDA positive. Financial result, that was the leverage of results on the result improvement year over year. There is a drop of financial result, net 44% to improve. We were in net expenses 38 million, now it's 21. And then we had some factors, important factors to comment. The first one is our days acceleration strategy, paying. gross debt and then you have the cost of payment and what you pay on that this strategy the result selic is a little bit over and then we had also positive effect on IPCA slowing down great part of our debt is IPCA we're going to see The numbers later, this helped to bring the cost down. And also, financial revenue that is better, even with the cash reduced, we had some good performance of applications. And observing this semester, a drop of 30%, closing with net expenses of $51.8 million compared to the previous year. Following up, net profit. Observing adding up all the variations, we have an improvement, expressive improvement. Net profit adjusted almost 3 million in the quarter compared a loss of 15 of the previous year quarter and a loss of 6.4 in the semester compared to 20 million loss in the previous semester. When we see FFO adjusted, excluding depreciation effect and the cash effect, we close the quarter and the semester with cash generation 12 million compared 6 million of negative FFO, 6.6 final quarter and 2.9 previous semester. So briefing up, operational is doing well. We have robust growth. in the assets, especially shopping malls, with a good recovery since last year. The strategy and the expenses are well controlled, fixed expenses of the company. And the financial result improves based on the strategy of debt payment that is accelerated that we had last year. But interest rate drop, we are seen in the Selic rate. The perspective is very positive for the following quarters as well. Following up, debt. We closed the quarter with 292 million and gross debt, 1 billion. A reduction of over 230 millions compared to the last quarter. Net debt, 784 million. When we see the leverage, there was an improvement six times to 5.87 times in this quarter. Especially because the adjusted EBITDA of the last 12 months, we see EBITDA rate better growing every quarter. So we are going to see this leverage reduction in the following quarters as well. When we see financial covenants, IFRS vision, there was a good improvement, 5.32516, and we have room for more leverage seven times. And another important covenant and cooperative that we have room two times and the obligations

we are comfortable. And finally, the final slide showing amortization. We pay the debts with shorter term. We allocate the debt.

In the next one years and a half and 18 months, we have a small amortization. that with amortization that are monthly, we do not have obligations in the following months. In 2025, we are going to have 200 million of amortization. The debt profile, 35% is IPCA and the rest is CDI. So here justifying that IPCA is slowing down and it's important answering for part of the drop in the debt cost. of financial expenses and the average cost, IPCA debt and CDI. The average spread is 1.5. That is very low considering the macro outlook. So the equation is doing well with the profile of debt. The financial part is over here. Now we are going to start the Q&A session. For investors and analysts, if you wish to place a question, please raise your hand. If your question is answered, you can leave the queue and lower your hand. If you want to place your written question, you can write it down in the Q&A box with your name and company's name. Please wait, we are collecting the questions.

Our first question is written by Mr. Fernando Telles.

Congratulations on the results. The company SPX in Gestão de Recursos Limitada is part of the structure of the company. What is the ratio of the market share? And there is one more question. If I may ask another question, what about the results of Barra Metropolitano Mall, especially on sales, renting, and vacancy? Thank you so much.

Good morning, Fernando. How are you? The first question that you asked about SPX, yes.

Honestly, I do not know if this is the name of the company. but we have a society of 50 of a manager real estate. So we have two funds. We have some information about the performance of these two funds and our participation, but our society participation is in the holding, that is the managing holding. I do not know if I have answered your question. Anything you can compliment later. And about the Metropolitano Barra Mall, this mall is growing a lot in the last years, especially after 2019 onwards, there was a drop in 2020, but since then we are recovering well, it's growing a lot. Just to give a perspective about the sales we have by the end of this first and second quarter, We have a growth of over 10% compared to the first semester last year. Our vacancy is low. We have less than 4% of vacancy. And result, we also are growing more than 10% compared last year.

It's following the trend of the other malls. Thank you. If you want to place your question, you can raise your hand.

If your question is answered, you leave your cue and lower your hand. If your question is in written, you can use Q&A box with your name and company's name. Please wait, we are collecting more questions.

Next question is from Mr. Damien Baum.

And he says, good morning. Have you considered the sales of any asset in the mall sector? Hi, Damian, how are you? I believe I have answered. We communicated and it was on the media. We had a process for a possible sale. transaction with two malls, Grand Plaza and Cidade de São Paulo. And we do it normally. Talk about sales and acquisition in all the classes of assets that we have. So since 2019, we had some acquisitions and divestment as well. And I'm telling you that we have been working trying to find the best opportunity. So if we find a good opportunity of sales, we maximize it. But if there is a good opportunity for acquisition as well, we are going to do it. So we try to be very pragmatic, always trying to observe good opportunities that come up and try to have an arbitrage of prices that we see in the private market, but not public market between two players. Also, in the case talking about Bradesco transaction, the prices, sometimes we take prices like this and it was out in the media. That's why we communicated. There was no specific problem about that transaction. It was something

that is a habit. Written questions, you can use the Q&A button, your name, and your company name. Please wait. We are collecting more questions.

Our next question is coming from Valdir Bautista from Centro Investimentos. And he says, good morning, I'm Valdir. I'm an investor as an individual. And I would like to know your strategy to decrease the debt for 2025 once that the SIN cash is lower and lower. Valdir, good morning. Thank you so much for the question. We have some choices for 2025. The first is that we can roll out this debt, take a finance to pay this obligation in 2025. It's always a choice and it's usual in the market. The second analysis is that we start generating cash, especially on selling drop. The assets are growing double digit, and we are going to see a cutoff on the interest rate bringing results. In the following months, we are going to assess, and it always depend on the, if you're going to leverage, it depends if you have new projects to invest, if you do not have it, what is the capital cost? of the shareholders, everything is part of the equation to decide if we are going to bring it up or down the leverage, but I believe the most important point, we have seen this decrease of balance in the cash is a rational choice. It's not a concern, this cap is really comfortable toward considering that we have the revenue and there is volatility, low volatility in the results. And you're going to generate more cash from these assets in the following years. Maybe the calculation 300 million in cash is 200 million, but we have to remember there is a positive match starting today, this quarter. We see already a positive FFO and we expect it's not a guidance, but the interest rate dropping and the assets going well, we continue to see positive trend. Thank you so much. Next question, Mr. Reinaldo Verissimo. And he says, congratulations on the results. Lower Selic probably will revert the loss. Question, considering midterm interest rate, is there the possibility of follow-on?

Hi Renato, how are you? Thiago here.

It's hard to tell you about follow on. We believe we have this connection on what we believe is the value of the company versus the value of negotiation in the market. So the price is a new issuance that is very low. At this point, we do not see any possibility of follow-on. But then again, as I mentioned about the assets, we try to be opportunistic when we see a window. So we always follow, of course, the capital market. And if there is a good window indicating a good perspective on a good follow-on, we are going to do it, of course.

And if you want to send your question, you can use the Q&A button. We are collecting more questions. Next question is from Mr. Carlos Herrera, Condor Insider.

Good morning, everybody. Please, can you talk a little bit about the market point of view from July on and the first days of August? Can we have an expectation that this third quarter, 23, is better than the second quarter, 23? And the fourth quarter, 23, according to the seasonality of the sector, is it going to improve? Based on it and the drop on the interest rate, do you expect back to profit in 2023? Thank you, Carlos, for your question. July and the beginning of August was very good. The second quarter, there is a slowdown, although 7% was a robust result. I know why the Dublin digit was worse than the first three in the second quarter. It was robust. The third quarter is starting so well. The flow in the most is increasing. The sales in July will grow 15%. So there is an acceleration compared to the second quarter. Same store sale is double digit compared to 3% that we presented. At least is what we saw in July. According to this data, we expect that the third quarter is good as well. Fourth quarter, you are Right, the seasonality is interesting, especially because of Christmas. The end of the year is very good for most. But the book profit anticipate this factor of seasonality with the linearization of rent. Normally, you have double rent. Most of the stores, especially the satellite stores, they are linear throughout the year. So the cash result is stronger than the pool profit when you see the seasonality of the final quarter. So we do not see increase on accounting results. Based on your second question, I believe 2023, we're going to have accounting results that is more limited. But of course, if you calculate our gross debt that is more than 1 billion, Every percentage point of CERIC is representative in our result and IPCA as well. And I believe we are going to follow a positive trend on growth on accounting results as well. If you want to place your questions, you can use Q&A button, your name and company's name. If you are going to open up the mic and speak, you raise your hand.

Wake up, we are going to collect more questions. Q&A session is over.

We would like to place the floor to Mr. Thiago Murabatsu for his final considerations at the company. I believe that during the Q&A, we answered questions and we talked about it. We had a second quarter, considering as good quarter, and Hector said the first 40 days, the second semester, we see good news on sales and flow. We mentioned that, of course, there was vacation period, but we are going to keep a good growth pace. And we are talking with possible new tenants, building commercial buildings and malls. And we feel that the second semester has good perspectives. I really hope that I'll get back three months from now with good news about the third quarter as we did for the second quarter. One more time, I'd like to thank you so much for your attendance at this call. And if you have comments or questions left, the RI team is at your service to help you out. Thank you so much. This video conference of Cine is closed. We thank you so much for your participation. Have you all a great afternoon.