Syn Prop E Tech Sa S/Gdr

Good morning, ladies and gentlemen. Welcome to the SYNC video conference to discuss the results for the fourth quarter of 2023. 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 this video conference during the presentation, and then we'll start the Q&A session when further instructions will be provided. I'd like to reinforce that the prospective declaration has the keys of the administration and current information for the material. 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 their respective forward-looking statements. presenting this video conference, Mr. Hector Leitão, CFO and investor relations of the company. Now, I would like to give the floor to Mr. Leitão, who will start the presentation. Please, Hector, you can proceed. Good morning and thank you so much for being here. I will start my presentation for the four-quarter achievement. In October 23, we found the asset Suárez Street, a corporate building in Salvador outside our core region of investment. The transaction was 14 million and two-thirds representing our market share. And it's equivalent to 9 million on Steam market share. We were acknowledged one more time for top-ranking open courts, and this re-achieves the third place for real estate services. We are relevant in the real estate market. It's recognition from all the players in the market. And after this subsequent event, this is like in February, we announced The swap of assets, exchanging 37.7% of Tietê Plaza Shopping and 37.5% of the company that has 85% of Cerrado, 32% of Cerrado Mall Market Share. In exchange, we deliver 20%, 30% of JK Towers B&E with funds quota, to the other partner. And in exchange, we have financial additional $67 million in cash. And we have a decrease of our gross debt in $60 million. So this swap has a neutral effect, a little bit positive in that debt. And after that, a few weeks later, we announced We sell part of our portfolio, 1,800,000 PC. And the transactional portfolio, 51% of Gran Plaza Shopping Mall, 32% Cidade de São Paulo, 7% Shopping Metropolitano, 52.5% Tietê, Plaza Shopping, the total of our market share in Cerrado, 85% after the swap, and 23% Shopping Deals. Next page, we are going to see the conclusion of these two transactions and our portfolio with this development. So basically, we have 10% of Gran Plaza, 60% shopping Cidade de São Paulo, 10% Metropolitano and Tietê, 0% in Cerrado, shopping the 8.6% and 10% in J.K. Towers. And it's important to highlight that these transactions are about to be fulfilled, precedent conclusions. We did not recognize them in the balance, these transactions, so there is no impact in the accrual profit or dividend distributions up to the moment that we concluded these transactions. So the focus is totally on execution, but we have the precedent conditions and transactions like this. In fact, in operational performance, our physical occupancy was superior than last year, the fourth quarter 90% occupancy compared to 92.7% last year. The division among malls, 95.8% are physical vacancy. And later on, I will deep dive more information about the malls. AAA buildings, 81% on vacancy and Class A offices, 86.5. And what's new on this quarter, we delivered the first part CLD warehouse in Dutra Highway Excellent location. We delivered this phase one with 51% of rental and it's an interesting demand to occupy the rest, this portfolio is 7,000 square meters in our participation that we have just delivered. This is the physical occupancy of walls. We closed the quarter 95.8 compared 95.3 last year So what happened in the year, more than increase of occupancy was qualification. And later on, we're going to see the impact on sales of the mall with this replacement. And financial occupancy was basically flat compared to previous year. Talking about sales, we grew 9.5% in the total year and same store sales of 6.4% a year. And then, what is the complement of this growth of 9.5% are these replacements that we have been doing. More qualification on the mix, better operators, so the result has better sales. And these replacements represent a 3% of growth of total sales and QOX an event with a lower market share shower that is robust growth in non-traditional revenue of the company in temporary rentals on kiosks and renting and allocating more operations in the space of the mall and another line of revenues merchandise. When you use the mall, And then a billboard for important brands, the ones that are already in the mall or brands that are not in the retail, Ricks and Mortar, but we get closer to this brand. So we can extract more value from our assets. And rental of same stores, we conclude that they are with 6%. And in the quarter, 2.9%. This drop in the quarter in October and November, there was a higher impact in the electronic appliances and entertainment. This was a functional fact because in December we see SSS growing. And in January, we see a growth of sales superior to the fourth quarter and rents as well. So it was a punctual drop that we see it's not going to be recurrent. The trend is keeping the robust growth that we presented in 2023. Financial performance now. The result was satisfactory in 2023. It started on the quarter. We closed in 55 billion NOI. a growth of 17%, and in the year represents the 200 million NOI, a growth of 11% compared to the previous year. This growth is meaningful because of the malls representing 80% of our results. So in this little table, we see that we concluded the quarter with 45.8 million NOI, growing 23%. And underneath, in the year, we grew 15.9%, reaching 164 million NOIs. So the growth is very robust this year on revenue. Although the EGPM was negative, we can reduce the discount because of sales performance. So the rental base was constant this year because of this index. But little by little, we removed the discounts that we are carrying since the pandemic, since the return to the operation. And finally, offices on the right-hand side of the graph, no volatility in the results this year. The quarter represents a drop of 5%. And in the year, a drop of 2%, closing the year in 34 million. NOI 23 and the impact was important in linearization of discount and grace period last year in bitumen 10, 2 million. Excluding this effect, we have a growth underneath the inflation 3%. Talking about EBITDA operational result without surprises in cost and expenses and why growing. And naturally, we have an interesting impact in adjusted ABT. In the quarter, we grew 32.6%, almost 50 million in ABT. And in the year, 173.8 million ABT, growing 11.6%. And this, we are going to show more ahead. There was a positive impact leveraged the company. About adjusted financial results, in the quarter we closed with net expenses of 19 million, a line better than last year. And in the year, we closed the year with a drop of 16.4% in net expenses, closing 95.6 million. And basically, the most relevant effect is our work in amortization that we have been doing since the end of 2021, 2022, there was also repayment in 2023. We pick the fruit of these amortizations without variation in our data. And in lower scale, it's going to be more and more meaningful. The impact of the beginning of central banking interest rates and a positive impact in lower scale for this year. I believe we are going to see a drop of this financial expense because of the leak is dropping now in 2024. And to conclude the results, Adjusted net profit 12 million compared to 3.4 the previous year and expressive growth. And in there we conclude with 11.5 on profit compared a loss of 15.6 million last year. And these two effects, the effect of growing NOI at the malls especially and the work of managing the liabilities especially in 2022, with good results. And therefore, excluding depreciation, we reached 21.6 million in the quarter, a growing of 53%. And in the year, we conclude with 48 million, compared to 20 million last year. The growth is 134%. Moving to talk about leverage, In that sense, I'd like to heed your attention to the total set and adjust it. It should not perform in the first table. We conclude the quarter in 4.4 times. Compare 5.95 times in the previous quarter. And here we see the impact of growth, all the development growth, leveraging the company. And this is a natural trend. that is going to be ongoing. It doesn't matter the transaction. I believe the company will leverage in with the development. And in the underneath table, financial confidence, according to the contract, IFRS consolidated. Also, we have 4.5 times compared 5.3 times previous quarter. So we have interesting room for covenants, seven times the limit. And another covenant that is also important are the assets and net corporate. We have room that is very interesting. Closing the year three times and the limit minimum is 1.4 times. So we are nice on the financial covenants. And to conclude this session, the financial results, which show that the amortization timeline has not changed in the last quarter. There is no pressure on amortization that is important in the next 12 months, just 5 million to 2024, and this amortization for 2024 is concentrated on the second semester. We have more than 12 months in February. to the amortization that is relevant. And on the right-hand side, our deadness is the same, almost 40% IPCA. The spread is 6.5 and 60% in CDI, and the spread is 1.5. So we have a profile of death that is comfortable, aligned with our test generation. I believe in the moment that we have to re-leverage to pay these amortizations, we are going to have a company that is leveraged lower in a good timing. And we move with the cost that is very low of indebtedness, very competitive. Now we can open up the floor for Q&A sessions. We are going to start the Q&A session for investors and analysts. If you would like to place your question, click the button, raise your hand. If your question is answered, you can exit the queue by clicking on the lower hand. If you would like to ask a question in writing, please enter in the Q&A field, followed by your name and your company. Please wait. We're collecting all the questions. The first question comes from Gustavo. Hi, good morning, everybody. I'd like to ask two questions about the transactions that you announced. The first, you can talk about the status and the procedure to conclude the transaction preceding you can talk more about what you are overcoming and also an expectation of a timeline to conclude these asset sales. And my second question, if you have a definition, what's going to be done with the resources connected to this table that you showed about indebtedness? When the transaction is concluded, the company will have a surplus of cash that is very big. My question is, if you define the volume that is going to be distributed as dividends or it's going to be reinvested in the business, in some specific asset, if you're going to observe M&A, to understand, how this resource is going to be used when the transaction is concluded. Thank you so much. Thank you, Cambova, for the question. We are going to clarify many questions with your question. So, good reflection to bring the first one. We had this negotiation in a very fast way. We had just signed the MOU. What's going on right now? We start in a diligence. Then in the end of the day, even if it's a bigness, we see it's going to multiply by six diligence. The right of way of partners. This is the first point is XB understand the structure. Where is the SBE, the partners, who they are in order to start. in parallel, running technical diligence, engineering. And I believe that in the following two and three weeks, we are going to see this going on so people know well the details of the development. About the timeline, we expect by the end of, by the middle of the year, so the diligence signing contracts, and in the middle of the way, it all depends on the right of way and approved by CAGI. This is not exactly our authority, the timing, but as soon as the better. And about the resources allocation, we are going to receive by December next year, 1,850,000. And first, we want to focus on executing the transaction that is a swap as a preceding condition so we can conclude in the same format that we agreed with XP. And then we have not decided, not yet, what is probable is to have a mix of both payment of debt that the company is with that leverage closer to the other players. And this healthier balance, it doesn't matter what we distribute on dividends, we are going to be comfortable to be back on business. We can leverage to buy assets, to have a consortium with other investors in order to purchase something bigger, but we're going to have room in the balance in order to go for M&A. And our idea is exactly to follow this strategy through for many years to be more asset light and start with an investment 15, 20% managing the asset with partners and investors that are strategic with us. So that's our mindset here. Probably it's going to be a mix of both scenarios. And the percentage of this scenario we are going to announce timely as we take this decision. That's perfect. It's clear. I have a follow-up question about investing in more things. As a concept, I'd like to understand what is the class of assets that you are observing because you have a big sales on offices. And it was concentrated shopping malls. Now you're selling shopping malls. You've balanced more. I would like to understand what you are excited about doing, shopping malls, office buildings, or get back to warehouses. I'd like to understand what is the class of assets that is in your higher interest right now? I believe that shopping malls and offices have the same importance in our presence. The warehouse, not so much. Warehouses, depending on the opportunity, investing together with SPX, JV. And I believe that we are going to see good opportunities for office in the next 12, 18 months. And shopping malls is always strategic The higher the platform, the better. You have important gains of sales. So these two classes of assets have higher importance. Warehouses depend on the opportunity, punctual business. That's great. Thank you so much. Have you all a great day. Thank you, Gustavo. Good morning. Next question is the investor, Renaldo Francisco. So proud, one more profitable quarter recently that is a relevant fact informing sales of quota at the most. With this sales, is it possible to close the quarters with the recurring profit in the next results? Hi, Reinaldo. Thank you so much. Good morning. Thank you for your comment. These MOUs that we signed, the contract of SWAP and the MOU, do not impact our results, not yet. Until they are concluded, accounting, they do not have any impact and the revenue of these developments is not going to the buyer and the swap is not with us, not yet, as if nothing had happened until we closed this operation. And after the transaction, pre-transaction, we see that the company is having an interesting recovery of the results. So we see 2024 better than 2023 on result-wise. After the closing, we should see a company equally profitable. And we are going to be lighter on our debt. That is the biggest problem of our result is leverage, so we should not see some kind of worsening or decrease of our results. Because here we have good management on how we have on NOI and the financial result when you pay debt. I would say that this scenario is good and polls is good. They are better than what we have seen so far. Thank you. Next question is . Any expectations, say, of renting, swap, or any other destination for ITM, what its annual expense? Thank you for your question. ITM is an asset that is very specific because it's old, 45,000 ABL. and we have 20,000 in the real estate fund. To understand the structure, different from the other developments, we do not have a control on this development. We have a majority in our fund, but that is condominium and other partners that hold 25%. The decisions are slower than what we are using to taking when we control the development SP or real estate fund. The expectation over there on rental is low. We do not have demand on the size that we want to occupy. It's a trade-off. You can occupy a development of 45,000, you rent 2,000. It's not worth it because you have to reactivate the condominium and that's expensive. And then you have a minimum critical mass. So you can start renting in ITM. What we have been studying on ITM are changes of use. We are studying the class of assets that you imagine to extract the best value out of that development. We have been studying with advisory companies. We provoke the market to understand the demand. There is no expectation short term to solve the problem of IPM. But we have good alternatives that we have been studying. The execution is hard. It's a change of views. We need to study permits. We need to have the demand, but the takeaway message is that it's not forgotten. We are going to focus on solving. This is our biggest problem on vacant FITM. So we are aware and focused on solving. Thank you so much. In order to ask a question, you click on raise hand or send a text using Q&A. informing your company and your name. Please wait, we are collecting questions. One more time, in order to raise a question, you click on raise hand or a Q&A, inform your name, write your question. Please wait, we are collecting questions. Next question is Leonardo Andrantes. What is the accounting impact in the profit if the most transaction is fulfilled? I'm asking in order to have an idea how much we have free for dividends. Thank you for your question, Leonardo. In this transaction, first, we do not have price allocation per asset. The reasoning of the deal was global price and the profitability for the fund. considering the paid price. So we went from macro to mid. We arranged the transaction, good for both. And then, of course, we have an idea on how much the cost will be because we have the percentage of every development. And then the tax changes depending on price allocation, and this depends on the buyer. we estimate an estimate number that 30% of the transaction is 30% of gross margin of this transaction before taxes, before any other accounting. In fact, if you consider the cost compared to what we are selling, we see a margin 30%, conservative 30, 35%. A conservative number just for you to have an idea on the specific profit in this transaction, and then the dividend to be distributed, it will depend on the moment. When we conclude the transaction, in the moment, what's going to be worth doing. We have mapped already all the possibilities on what to do. But we are conservative, focusing on the execution of the business first in the next month, And then in the right moment, observing the macro situation of the country and the opportunities in the future, we take this decision and submit to the shareholders approval. Thank you so much. If you want to place a question, raise your hand or write in the Q&A field. Please wait, we are collecting. all the questions. Next question is Marcelo Luiz Santiago, investor. Good morning. In the strategy of the company, is there a possibility of divesting the assets or even migrating to a structure of real estate fund seeking higher efficiency and recognition of value from the market. Good morning, Marcelo. Thank you so much for asking. About the total divestment, the company, the focus of the company is to be asset-light. This means that we still have assets. The company is not planning any type of liquidation or total divestment. And that's why We always place as a condition on our deal except some specific case that we do not control, we do not manage. But that is an important point in the negotiation. We keep the management of the assets. And this choice of total divestment has a low probability to remote what we are excited Always observing opportunities, generating value to the shareholders. That's what we are going to do if we execute all the transactions. And then clear space in the balance so we can be open to M&As in the future. So plan A is to increase the return on invested capital. What we have been doing with this divestment is still holding part of the development with certain control, managing it with voice in the governance of each development. And I believe the main point of the strategy is to continue using this structure. Real estate fund. Today, with the enforced taxation, we do not know what comes in the tax reform. We do not know for sure. But within our structure, this migration has a high cost, CBI cost, and you have high cost for capital gain as well. So we always assess this possibility of migrating of company to a real estate fund, but the payback is low normally because the operation of the fund is more expensive than FB, but The game capital is going to be a dispenser if it's transferred to a different FIBA plus ITBI that you paid. We do not see room, not now, generating value or with a good return to migrate this way. So probably we're going to keep on working the same social structure that we have currently. So if you want to ask your question, you click in raise hand or write your questions in Q&A with your name or company. Next question is Eduardo Saulo of Concei. Good morning, everybody. How are you? First of all, congrats on the transaction. Congrats on management. I am a shareholder for a long time. I'm so pleased, as usual, and proud to be with you. My question is the following. I think it's very good that during the transaction, you saved 60% of Cidade de São Paulo. It's an SSI as well as gold. And you said that it was about to be expanded. What about this project? It's been approved or not? That's a question that I have that I do believe in this asset. On top of that, I would like to hear about Brasilio Machado. Have you solved? Maybe you mentioned it and I got lost. And my final question, a while ago you purchased 10% of Fondo Com. I would like to hear about that. Thank you so much and congrats. Thank you, Eduardo. Good questions. Let's see. I will start by the final one, Condo Conta. We purchased 10% of Condo Conta. It's a bank for condominiums. And then what happened after the high interest rate, we filed the strategy in the first point. We reduced the cash burn that I talked about earlier radically, focusing on the core of the company, the banking services and revenue. And then we experienced a period of stabilization on cost and started following the revenue. Our perspective for this year is a breakeven in Condo Conta by the end of the year. And we see expressive growth in number of condominiums. We grew twice the number of condominiums last year, and this year we hope to triple them. So it's an investment that we are very excited. With the big size of the market, 500,000 condominiums in the country, that are not well served. That's the part of . The second question is . We are about, we provided all the document in the city administration. We are in the regulated term for the city administration with the permit. So everything is going well with Brasilio Machado. And the first question was Cidade de São Paulo Mall. Great. Cidade de São Paulo, the construction work is approved, pending for approval with the other participants of the condominium. If you remember, there is a mall. And in the same land, one developed also corporate building. And then the expansion considers common area between the two condominiums. So we are going to determine the arrangement, governance, and all the aspects of management of this part that is a common area between two entities small and office buildings. So the construction work is okay. Everything is correct. We are doing the project already. And these aspects of negotiations with the other part, the office building is about to be concluded. So this expansion, we estimate to start the work this year, second semester. And the opening would be in 2024 in the end. What I mean is the end of 2025. And what is the increase of area to be rented? The mall currently has 17,000 meters. We increased 25%, 4,000 meter extra area. That's nice. We are so excited about it. Based on your comments, the portfolio that we have after this transaction at XP, when you conclude, is a portfolio with 70% of increase on productivity and a life per square meter improving 70% because we concentrate in cidade, more concentrating the operation in São Paulo, 60, 85, if I'm not wrong. So we have a portfolio with more value because of this mix, better mix, So the snapshot is much better in this portfolio. That's the point of view that is positive, the transaction. Congrats. Congratulations. Thank you so much. Thank you. Good morning. The Q&A session is over. We would like to pass the floor to Mr. Leighton for his final considerations. Thank you so much. For your interest in our call, 2023 was a year that was very good to us. We had good results in our operation. The shopping mall with a robust growth. All the corporate buildings well managed. There was no triggers on growth in the building. But the evolution is very interesting and 2024 is going to be a better year for the corporate buildings as well. It doesn't matter the transaction, our goal here is to value the development and this valuation comes from our management. Teamwork on making this development more attractive, for the clients, shopping mall clients, the tenants of warehouse and corporate building. That's the differentiation of our company from the others, bringing a specific stamp on our portfolio. In addition to the brick we offer, we provide services excellently. I'd like to congratulate Team Team for the work you have been doing with competence. And thank you so much. And I wish you all a good day. Thank you so much. This video conference is over. We'd like to thank you so much for your attendance. Have you all a good afternoon.