Syn Prop E Tech Sa S/Gdr

Good morning, ladies and gentlemen. Welcome to the SYNC video conference to discuss the results for the third quarter of 2023. This video conference is being recorded and the replay can be accessed on the company's website, ri.sync.com.br. This 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. Before starting, I'd like to reinforce that the forward-looking statements are based on the beliefs and assumptions of scene 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 circumstances that may or may not occur. Investors, analysts and journalists should be aware of events related to the macroeconomic environment, the industry and other factors that could cause results to differ materially from those expressed in the receptive forward-looking statements. Present in this video conference, Mr. Tiago Muramatsu, CEO of SIN, and Mr. Hector Leitão, CFO and IRO of the company. Now, I would like to give the floor to Mr. Tiago Muramatsu, who will start the presentation. Please, Tiago, you can proceed. Good morning, everybody. Thank you so much for your time. Let's start this call talking about the third quarter. The first one was an asset sale. This investment was very interesting in Suarez Trade. This asset has been a while in the company in a geographic region that we do not have anything but it. Strategically speaking, this sale was interesting, although the value of the transaction is not so relevant to the result of the company, 14.1 million. And we have two-thirds of this asset. So this value is 100%, is 10 million. In this quarter, one more time, is the fourth consecutive time, recognizing by the Brazilian ranking of innovative companies. And this year, we got the third place in the category of real estate services. And this is the reflection on how we incorporate new technology to improve our processes and productivity. So it's nice to see that for four years in a row, we are participating in an active way of innovation and technology, bringing them into our daily activities and being recognized for that. Advancing now, I will talk about operational performance. We start with the occupancy graph, physical occupation on the left-hand side, We have total occupation including shopping malls and offices 92.6 from 91.3 in the third quarter 22 to 92.6 in this quarter increasing 1.3% driven by the occupancy of the malls. And financial occupancy, we kept a growth compared to 22, growing from 91 to 92.2. I believe that driven by shopping malls. And we are going to see individually these categories. First, going through corporate buildings, we kept the physical occupation. since the first quarter 21, 22, and 23 is flat. And the shift in a meaningful way was financial occupancy, leaving 92.6 to 87. But there is a difference in the analysis physical occupation and financial occupation. The third quarter 21, we did not have the transaction of the assets in Faria Lima. So, the renting value was high, driven by the financial occupancy. When you see physical occupation is in the same level, financial occupancy did not decrease compared to the other asset. Just we removed Faria Lima, that they had higher rent value. That's the difference. But the portfolio that we have currently compared to the same portfolio in the past, the performance is basically aligned. Advancing to shopping malls, we have an interesting barrier in physical occupation, 95% of occupation. And the more occupied, we improve our margins and the results. So this advance is very important in the shopping malls occupation, physical and financial. 95% we have broken this barrier financially. we are in a trend of breaking this barrier. So I believe we have assets that are well positioned and today they represent a great part of the company's results. So it's very important to keep on advancing on this indicator of occupation. Talking about the operational development of the sales in our malls, There was this growth on sales, very interesting on the third quarter, 22 and 23, growing almost 10%, reaching 9.6. In that scenario, that inflation rate was beyond that. It's very important. Within this growth of 9.6, we have almost 6% of same store sales showing that the stores have a good performance, almost 6% quarter after quarter. Occupation and replacement of stores help a lot, growing 22 million, replacing stores. And we also have more than 4% of growth in the store same store rents kiosk and events we have total sales of 740 millions approximately and to talk more about financial performance i pass the floor to hector good morning everybody thank you so much for your attendance in our results conference i will start explaining our portfolio of assets Shopping malls and offices, the behavior during the quarter and the nine months of accrual start with total NOI. Malls plus offices, the growth was robust in 14.7 in the quarter, almost 15 million NOI in the quarter, observing the accrual of the year. The growth is 9%, 145.9 million in nine months, 23 compared to 133 millions in 22. Breaking it down into business units, malls, highlights with expressive growth of 16.4%, 40 million NOI during the quarter, and 13 growth in nine months, reaching 118.7, highlighting 18. Rental, growing a lot, although negative IGP and the revenue that we grow is discount reduction that we granted during the pandemic, we are reducing in time. And this is directly connected to the sales increase, as Tiago mentioned. Offices, the growth is 11.4%. concentrating Berman 10 in the development that we occupied last year 100% and started recognizing this revenue and in the accrual of 9 months a drop of 1.3 last year there was an effect of Berman 10 on discount if you analyze the cash the growth would be near 10% excluding this accounting effect so briefing up a robust growth in malls flatting corporate buildings because we do not have a trigger of revision we did it in the last years so this was expected that corporate buildings would behave in a linear way next slide number 12 observing adjusted the beach that following the growth of the portfolio we see 16% above 2022 and 42.8 million in the quarter. In the accrual of nine months, 124 million EBITDA, 5% growth. And here I comment in the last two quarters that there was in 2022, two accounting effects. One reverting the expenses. We had some provisions that were reverted last year. and the linearization that I commented about permanent renting. Excluding this accounting, in fact, the growth would be 13% in nine months. On the right-hand side, we see adjusted financial result. There was an improvement of financial expenses in 6%, 21.8 to 20.5, negative financial expenses, net value, and in nine months, an expressive drop of 19% in financial expenses in nine months, 76.6% in net expenses compared to 94.7% last year. And here, there is an effect. The main effect here were the amortizations that we had, prepayments throughout last year, especially in the two first quarters. And now we see an effect this year. of this gross debt going down and the cash is lower as well. So our strategy is fruitful this year. And finally, observing FFO, this quarter we have adjusted net income 5.7 million compared to 1.1 million last year. And in the accrual of nine months, a loss of 700,019 million last year. So we see a trend of improvement quarter after quarter compared to net income. FFO, that's the most interesting indicator, excluding the effects on depreciation, especially no cash effect. Different from most of the companies of properties, malls and offices in the market, we account costs in our properties. So we have this effect of depreciation in our balance. So excluding this effect, it would be a comparison, a more fair comparison to other companies. We have an FFO of 15 million during the quarter, growth of 56.8% compared to the last year. And in nine months, a crew of theirs, 26.9 million of FFO compared to 6.7 million last year. So this growth in these two fronts, operations, with the assets performing well and the financial expenses with less gross debt. And now with the trend of Selic of dropping, there was this important cut last quarter. And we are going to follow this improvement in the financial result. Next slide. We see the net debt during the quarter We close 1 billion and 84 and a cash of 304 million. So, net debt 780 million. Our EBITDA in the last 12 months, 148.7 million. So, net debt pro forma in our participation 5.25 times that we presented an improvement quarter after quarter. especially here because of the increasing of EBITDA. And this will happen in the final quarter as well. And the financial confidence, IFRS, the criterion, consolidated of SIN, not only pro forma, not only in our participation. We closed the quarter with net debt on EBITDA 5.3 times. Our ceiling is 7 times. So we have an interesting room here. and unencumbered assets and net corporate debt 3.45 and we need always to be above 1.4 times so that is room in the main covenants of our debts and underneath we see the evolution of financial expenses we are going to see this dropping this decrease because of smaller selic So in the average, we spent a good time in 365. We have a lower SELIC now. And the point that is more volatile maybe is IPCA that presented a trend of stabilization. So we are going to see with these indicators, financial expenses improving quarter after quarter. And finally, the indebtedness pro forma amortization schedule in 2024, we still have little obligation on amortization, just 5.4 million. And in 2025, we have an amortization of 200 million. And remember that our strategy of last year was exactly to pay debts, short-term debts. with two important effects, extending the debt and the cost of money that is lower. On the right-hand side, we see the division of our debt, 36% IPCA, the rest is CDI. And the spread in average, very interesting, 1.5 is CDI, IPCA 6%, that is close to what would be NTNB, long. A data is very interesting that we also have. And I conclude the financial session. We can open up the floor for questions now. We will start now the Q&A session for investors and analysts. If you'd like to ask any questions, please press the reaction button and then click on raise hand. If your question is answered, You can exit the queue by clicking on lower hand. If you like to ask a question in writing, please enter it in the Q&A field, followed by your name and your company's name. Our first question comes from Mr. Reinaldo Verissimo. Mr. Reinaldo said, congrats on the results. As an investor, my first quarter with profit, I'd like to hear from you if the net profit is recurrent or if it receives the effect of the sales and if the costs of ITM are damaging the balance of SIN. Thank you so much. Reynaldo, good morning. Thank you so much. Hector here answering. The first question on profit, there was non-recurrent effect. This is already... the effect of the operations, rents, and all the work we had managing the debt. And about ITM, yes, is in an asset that is vacant and the impact of nine months is two millions and a half in our profit. So yes, that is an impact. I believe that's it. I have answered your question. I forget one part about the sales. The impact of selling Suarez Trade will be next quarter. We did not recognize it in this quarter. If you would like to ask a question, you click raise hand or write your question in the Q&A button. We are collecting more questions. Please hold. The Q&A session is closed. We would like to place the floor to Mr. Thiago Muramasu for his final considerations. I believe that, then again, I'd like to thank you so much for your participation this quarter. It's been a quarter very nice for the company. We had businesses and also reverting a trajectory of losses that we had in the last years. The performance of our assets showing the fourth quarter. They are also promising, especially in the beginning of November. We launched Christmas campaigns. They are welcomed by the retailers and also the clients, the consumers at the mall. I believe that we can expect November and December keeping this growth trajectory in our sales and rents. And obviously, a great part of our result is affected by interest rate. I believe this interest rate reduction is relieving, helping us in the result of this quarter. We have a perspective on the next quarters that they will have good operational results and some other things so the team can work. And I believe... We are going to see better results for the company. I thank you so much for your participation. Hector and I and our IT team, we are at your service. If you have further questions, thank you so much. This sim video conference is closed. We thank you so much for your participation. Have you all a great afternoon.