Syn Prop E Tech Sa S/Gdr

Good morning, ladies and gentlemen. Welcome to CIN video conference to discuss the second quarter 24 results. And this video conference is being recorded and replay could be watched at the company's website, ri.cin.com.br. This presentation will also be available for download. We would like to inform that all the participants will be just watching to this conference. And then after that, we are going to open up the floor for Q&A and further instructions will be supplied. Before starting, I'd like to use this opportunity that the prospective declaration is based on beliefs and suppositions of SING administration and current information. And this declaration could bring risk uncertainties considering that regard future events So they depend on circumstances that might or might not happen. Investors, analysts, and journalists consider that events related to the macroeconomic environment, the segment, and other factors might make these results different from the ones here expressed. Present in this video conference, Mr. Thiago Muramatsu, Director and President of SIN, and Mr. Hector Leton, Financial Director and Investor Relationship with Customers in the Company. I pass the floor to Mr. Thiago Muramatsu to start this presentation. Thiago, please, the floor is yours. Thank you. Good morning, everybody. Thank you for your time and availability for this call. I'd like to start about the achievement. This quarter was very active and I believe people here were looking forward to seeing this according to the last quarter. and they were concluded now in this quarter. I will talk about them very briefly. First, we have the swap of assets. We announced this in the beginning of the year. This swap, we had an exchange of participation that we have in the towers JK participation in Tietê Plaza Shopping and Cerrado Shopping. So we received 37.5% of Tietê Plaza Shopping, 37.5% of the participation in Espea, 85% of Cerrado Shopping, And then we received 19 million, referring to 37.5% of the debt that we had in Tietê Plaza Shopping. In exchange, we gave 20% of JK Towers, D&E. also 79 million debt that were connected to this 20% market share of the malls, I mean the towers. And then we give 57 millions cash. So this configuration, we had a market share of 62.5% in Cidade and 85% in Cerrado Shopping. This was aligned with the transaction that we announced on February 27th, the transaction with XP Mall selling the most. So recapping, it was six shopping malls selling in our portfolio, In a total, 1,850,000. The participation is 51% in Gran Plaza, 32% in Cidade, 70% in Metropolitano, 52% in Tietê. 37.5% was referring to this exchange, this swap. 85% of Cerrado and then we received 31.22, 37 times 85% and 23% of ShoppingD. This transaction was concluded four months after the announcement and then we could fulfill it successfully And after this conclusion, we had a market share of 10% in Grand Plaza, 60% in Cidade, 10% in Metropolitano, 10% in Tietê, selling our total participation in Cerrado, and 12% in Shopping D. In addition to that, we announced in this quarter that we signed an MOU for divesting Brasilio Machado in total of 32 million and a half paid in six parts. And we are in the process to sign it. And we observe the conclusion of the signature within this quarter. In addition to that, there was a subsequent event, prepayment of 13th debenture. It was the most expensive debenture that we had in our debt portfolio, the most expensive debt. This debt cost to us CD plus 0.5 in March expired, so we paid anticipate this debenture. Another point that here is not considered as a subsequent event, but we communicated yesterday after the market closed, after we announced the result, the distribution of dividends, $440 million paid on September 2nd. And this dividend payment was $440 million because it was accounting profit in this operation. that we finalized. Finalized with a little bit more, we have legal deductions and it was the profit to be distributed 440 million, and then we distribute it. The board approved the distribution of the distributed amount. After dividend payment, we are going to have a cash that is very high, leverage low, and then we have to receive by the end of the year one more part. 360 million with correction of CDI and plus price adjusts around 384, 400 million. And then we understand that there is room to return more to the shareholders and the distribution of dividend is based on our profit accounted in our PL and we used already in its totality for this distribution. we are analyzing now to have a capital reduction to return more for the shareholders. And it depends on negotiations with the creditors. We are going to keep everybody informed about our next steps and the volume of this capital as a relevant fact. Following up with this presentation, here we have a little bit more of the cash flow of the transaction we had. It was not paid totally in the closing. We received in the closing $941 million. more than half of the volume. There was the payment of taxes that was optimized. We tried to use the loss that we had accumulated, fiscal credit that we had, so we could have a cash payment of this transaction, 70 million. And the first installment 360 million, this is the absolute value. So you have the correction of CDI, price adjust to be paid by the end of the year. And next year we have one more part, 550 nominal value to be corrected by the CDI. and paid in the end of next year when we observe the transaction in general net profit 100 and 1078 million in 2024 we are going to receive 1 billion 230. we have the remaining portfolio Information, a reduction that was B, considering ABL of the malls, reducing 70%, 77% from 127 to 29 meters, 10% reduction of offices. The swap was 20% in JK Towers, and the rest is the same, although currently we have our portfolio reduced by half in the ABL. We do believe that quality wise, we have improved a lot in the sales we sold. Part of both that had a lower productivity than the remaining portfolio. And the remaining portfolio has a higher concentration in the city of Sao Paulo. And we do believe that it's more resilient. Also, when we pick up, sometimes we see crisis, it is fast return. Talking about operational performance, starting with the moles. we improve here in our occupation. I believe it's one of the occupations that we had in the last year. The highest one, we could reach 96% of our occupied portfolio. In the other quarters, 22 and 23, we had vacancy in the corporate buildings, commercial buildings that we had in El Plaza. not considering the vacancy that we had last quarter compared to this one increase of 1.2%, considering the vacancy that is allocated now from 94, we raised to 96. Financial occupation was better, more than 2%, second quarter 23, second quarter 24. Observing the sales of the malls, we grew 2.6% in total sales. We built up the store sales, replacement of stores, and the increase in media and mall. From 70-50, we reached 769. Same store sale, 1%. And here there was probably... All the companies listed had the same mismatch when we compare same store sale because of changing Easter dates. And in the quarter, there was a semester with a growth of 2.4 in sales, same stores, and rental same stores, 3% raise. All these numbers are considering our portfolio. the old portfolio without considering the sold ones. Just to reinforce what I mentioned before about improving the quality of the portfolio on productivity after the sales, if we consider the same numbers, but with our current percentage, the same store sale, we would raise almost 2%. From 1%, we doubled the quarter. Rental, the same, would follow this movement, almost 1% triple. And something that we did in the last year, lots of replacement of stores with low productivity for higher productivity stores. So when we see the replacement, it's more representative in the growth of sales than the same store sales. And observing The comparison with the new portfolio that we have, we would be close to 3% of growth in sales. Corporate buildings, it was flat quarter after quarter, 85 to 83. We lost some areas. in a building but in compensation we have a good prognosis of rental of these triple ways suffering a great impact because of the change of participation So lower market share of a building that had higher occupation. And finally here, the occupation in our warehouse currently it's two thirds of the area already occupied. one-third that is left for occupation. We have negotiations ongoing, advanced negotiations, and we do believe that we are going to see a good evolution by the end of the year occupying this warehouse. That's the first phase. The other phases are under construction and for rental, but they are going to be ready next year. So we are keeping the sales effort into the area that we have opening phase one. So we are optimistic that we are going to finalize this rental by the end of the year. So passing the floor to Hector so he can talk more about the financial performance at Sync. Good morning, everybody. Thank you so much for your attendance in our conference. I will start by informing you about net profit and main indicators, but before the effect of selling in our balance with some characteristics, and it's important to clarify In the first point, all the profit of the sale is already in the year. No important effect of receivables that we are having in the profit, financial revenue and all the other parts adjusted by CDI. Of course, we are going to see results, financial results during the period where we have receivables in our balance, but the result is already here. Net profit there was this market share 440 million in net profit. The rest is operational effects and some other effects non-recurrent from other elements not related to the sales. Another impact that the sales will generate results more than 75% of our DL shopping malls and 60% of the result So we are going to see the top line of the company EBITDA lower than what we presented before. Around 10 million EBITDA that we lost every month, 120 per year. Thinking that in run rate EBITDA, we estimate around 85, 80 million. And the new company will have lower EBITDA, but we expect to see good margins, better margins, because we are having leverage that is not motivated and more productive malls. Considering NOI, the productivity expected 70% better with this new configuration in our portfolio. More concentrated in the southeast, where we have more influence, more know-how. And we expect to see a company with a balance more adjusted, paying the shareholders and groomers well to have acquisitions and grow again with a new portfolio. So this strategy of recycling the portfolio We commented about it. This is our strategy. So we closed the quarter with a profit of 463.8 million. As Tiago commented, 440 million distributed. The legal reserve meeting in our balance as a reserve, 5%. That's why we are distributing all the profit possible to be distributed EBITDA. We closed 644.7 billion in the quarter. Expressive growth because of the sales, the sales that was responsible for 560 million of this EBITDA, FFO almost 500 million. Adjusted result, non-recurrent defense assigned. We closed the quarter with almost 10 million profit and lost last year, the first semester, 6 million. EBITDA 77.6 compared 81 last year, dropping four. If we adjust this EBITDA loss from the sales, In June, we have one month less of results in this portfolio because we sold, we would have grown 9% with it. So the operational aspect of the company is doing well as it has been doing well in the other quarters. So this is one more effect of sales. FFO 25.9 on the first semester compared to 12 last year. Even with the sales effect, we see improvement of FFO because we do not have much financial expenses, 14 million better than last year in expenses. Next slide, we are going to see the NOI accrual in the semester closing almost 92 million, dropping 4%. Adjusting it, semi-proper NOI, we would have a growth of 7%. The same for shoppings. adjusted with the participation compared to this decrease of 4.6. Offices and a swap of assets, we saw 20% of the 30 that we have in JK Towers losing results in offices as well, that is recurrent. So adjusting it, this result, we would have grown 6%. In general, the operational result of the quarter was good, the semester as well. and these effects of sales distort the analysis, but the takeaway message is the development is answering according to the expected. Leverage this quarter has a different piece of data. We closed with net cash 200 million, gross debt 1 billion and 19, 1 billion 219 available. So this net cash 200 million will be distributed and still have leverage that is low. And considering receivables that we still have from the sales, we have that cash that is negative. So net debt on EBITDA is negative 1.2 on the quarter. and financial covenants, IFRS, negative here. We have more cash than debt. And finally, the last slide, we see the terms and expiration dates. And this schedule is considering the pre-payment of the 13th part, the end of July. removing out of this schedule 160 million amortization of interest accrued by the end of July. For this year, we only have amortization monthly of a debt, 30 million that we have in one of the SPS, amortization that is irrelevant. And for the next years, we have 135 million of amortization. The schedule is mild on the debt. 2028, we have a debt with the expressive expiration, but the cash flow is well equated for the next years. And receivables at XP December next year, we have the possibility either reducing this debt or having acquisitions to add our operational results matching these debt terms. We have an optionality that is good in our hands. This idea of expiration dates, the cash, net cash to pay more the shareholders and have the option that's the best for the company considering profitability. That's it. And finally, our debt cost dropped compared to the last quarter. 1.3 because of the prepayment of this debt. In IPCA, we have a debt of 6.5%. That is good, almost CDI. So that cost, we also have a level of leverage that is good and good cost as well. Closing this session on financial results, we can open up the floor now for Q&A. We are going to start the Q&A session for investors and analysts. If you want to place a question, please press reaction and then click raise hand. If your question is answered, you can leave the line and lower your hand. If you want to place a question in written, write your question in Q&A button with your name and your company name. First question is Gustavo Cambaúba, BTG Pactual Bank. Good morning, everybody. I'd like to ask two questions. The first is about dividends. Thiago commented about the opening session about this negotiation that you're having with creditors. to clear more room for capital reduction. And then my question is the following. First, do you have any idea of timing? And also, if there is a penalty that needs to be paid for the creditors in order to have these renegotiations of debt and capital reduction. And still about this topic, If you are thinking about in this first point, this first moment in this year, one more distribution for the shareholders different from December 24 that you have to receive, or if there is the possibility as well of eventually having an anticipation of receivable of 2025 as well. I understand that it's connected already to the assets and the operation. Maybe the risk of not receiving is almost zero. Maybe it's cheap to have a financial operation to anticipate this receivable in 2025. And maybe the distribution right now could be higher. And my second question is related to DNA that you commented in the presentation of margins expectations to have NOI margin that is higher for the company after the sales. Cidade de São Paulo shopping mall is very relevant now in the portfolio. So you have NOI margin higher, but my question is EBITDA. I imagine that you are not going to have any relevant cut on expenses, fixed expenses. I know why that is much lower accounting dropping. So if we could see a drop in EBITDA margin or if you have been working some kind of effort to reduce TNA of the company in order not to have operational this motivation because of the sales. These are my questions. Thank you so much. Good morning, Gamboa. Answering your first question. What is the limitation that we have here? We have a limit according to our debentures issue to reduce capital. So what we are talking and deciding to see if we can have more elasticity And in the beginning, the negotiation, there is no additional cost. It's just a commercial negotiation and in a balance that is new with the better leverage. We do not believe that we are going to face problems on this aspect. And this calculation that we are doing on the debt, what we have to receive in December this year and next year in order to have the calculation of how much would be possible to distribute, keeping the company with a good level of leveraging. And also with room for, as Hector said, for optionality and eventually go for other investments. timeframe for this business, we believe that our objective is to solve all these questions and then reduce capital this year. And the volume wise, we do not have a certainty. I'm not going to give you any guidance because later on I will let you down or people will get so much happy about it. Let's leave this to the right moment when we have the close number and then we announce it here very briefly. I will answer the first part of your second question. This first one is answered already. And about our DMA, as you mentioned, we do not see that we are having a reduction of DNA. Even because our work has not changed, although we sold market share in our malls, the management is with us. The operational daily activities of the malls are with us still. And for a while, we are having an offset of what we have of DNA, how we receive administration fees. So in the margin, this will improve. With a lower participation, we have higher revenue. of administration fee of these malls that we managed. Some of them we received and it was coming to one pocket and leaving by another pocket because of tax deficiency. And we are going to receive a tax in the participation that we did not receive. Leverage, there was no change because we still manage these malls, but we had a pace of having a DNA positive piece and this will improve the margin as well. A bit, Hector can talk more about it. Hi, good morning. EBITDA, I believe EBITDA without the adjust of the stationary. We always communicate the margin EBITDA, full margin as is, and X back place. That is our parking operation. EBITDA margin total, it will get worse. You are right. because of the representativeness of services compared to the full we are going to have expressive drop on revenue of rental and we are going to increase the revenue and the margin EBITDA of a parking area is low because we receive all the revenue and pass great part to the development That's how we work in our balance. The legal characteristic of our business, we consolidate these results, so we penalize the margin. When we see the adjusted margin of parking area, it's going to be better because DNA, as Tiago said, we paid with our services, so having better assets. with more NOI margin, we have better expression on EBITDA. For a while, we are going to have adjusting DNA on the assets. So if you have SPS with the assets with less rental, you can renegotiate some expenses, like auditing expenses, negotiation of expenses of administration fee, real estate. PL lower in these assets. So we still have time to adjust DNA, not related to people, but other costs of third parties that we can reduce in time. And the T0 is not going to be reflected on the results. But generally speaking, we hope that the bottom line net profit FFO, we are going to have better margins. EBITDA has the detail of services that will be penalized. But in general, that's it. And you mentioned back to the debt, all these negotiations as a premise, we do not have any fee or penalty to negotiate waivers for reduction. If we do not have any repayment, there is no possibility of having a relevant cost. on these debt negotiations. That's it. That's great. It's clear. Maybe a follow up question very briefly about capital reduction. Just to understand, maybe we're going to announce this year later what I'm going to ask right now. Throughout the year, we are going to see more movements. I understand that maybe the distribution advance, but have you considered part of 2025 could be anticipated to be distributed this year? As I understand, that's the way you are going. Yes, yes, you're right. Exactly. The idea in these renegotiations to open up room also to have a part of this reduction, part what we are going to receive in 2025. About the time in Cambaúva, We have a time to sum up the assembly and the creditors manifestation. Everything is 90 days. In order to have the payment this year, we need in the beginning of September top to have a signal from everybody. I believe that's not take long in order to open up a little about these plans this year about the payment of the shareholders. We have 15 days ahead of us to have all the planning and execution. That's perfect. Great. Thank you so much. Have a great day. Thank you. Next question is Reinaldo Francisco, investor. I'm so proud for this result. A question. Think we'll get a half of ABL. Is that a possibility of new malls? What about the expansion of Cidade do São Paulo shopping mall? Thank you. Hi Reinaldo, how are you? Answering to your question, we reduced meaningfully our ABL. ABL managed is the same level and I believe that the balance now is configured in a way As I showed in the beginning, we have room to go to new acquisitions plans. And then we have a comment. We try to see opportunistic. It's not about the mall. We also observe logistic offices. We are aware of the opportunities of the market. As soon as we have something that makes sense, we believe with this new balance and distribution of dividends, we have room, interesting room, to invest in new properties. The expansion of Cidade de São Paulo expansion, we are under negotiation to start something. But by the end of this year, in the beginning of next year, we are going to start the work in this expansion. Okay, thank you so much. The Q&A session is closed. We would like to pass the floor to Mr. Thiago Muramatsu for his final considerations. I believe we talked about the main events in the past, a little bit of the future as well. And we do believe that the company in this new format is lighter, is more efficient. This company will generate good results. Because we have this new balance, we are seeking other opportunities on investments and the investments focusing more in finding new opportunities to grow our ABL, our own and the managed one. And we are going to keep you all informed on the next steps on capital reduction and eventually new investments. I'd like to thank you so much. Have you all a great day. Since video conference is closed, we thank you so much for your attendance and have you all a great afternoon.