Q3 2021 Iguatemi Empresa de Shopping Centers SA Earnings Call
Speaker 1: The FFO reached minus 18.3 million. We're down 118% over 20. But again, if you exclude the effect of interchroma share variation, we have a positive FFO, which is 70 to 1.7 million AI.
Speaker 1: Laboratory ended at 2.82 times net depth over Ibiza, which will open up at 0.24 against second quarter of 21, but down 0.29 over the third quarter of 21.
Speaker 1: We also had the issue of 500 million reais in the bench in two series, for a series.
Speaker 1: million with CDI plus 1.48%, five-year term and administration on maturity. The second series was the one with 236.1 million AI with CDI plus 1.6% of the time.
Speaker 1: is a seven year term in Amosization in two domains as of 2027. We also, as I mentioned, have a new CFO , Gidori Levera, which has been with the company for many, many years. He's now the current financial director.
Speaker 1: He's announced as the Guatamichi Financial Officer starting January 22. He had a fraction of a million dollars in his
Speaker 1: The precious sale of land in Ibotenis Planata generated a revenue of almost 20 million reais, 19.9 million.
Speaker 1: The operating restructuring October 13 was a big thing that I mentioned was approved at the EGM, Igbo-Temi and Igbo-Temi and Jely Sacha approved the mergers of Igbo-Temi shares. His operation will create Igbo-Temi SA.
Speaker 1: Units will be traded under the ticker of EGTI 11. As of November 20 to remember that how we will do. Yes.
Speaker 1: The project is in progress. We have this amazing opposite tower that has been built in Campinas along with Galeria Mall. It's supposed to be the best AAA opposite tower in Galeria Mall.
Speaker 1: The computers showing that it's very important to not only the position for the mall, but also create a very important way of giving visibility to.
Speaker 1: Properties which we intend to have more of this type of NICDU's drop developments over this property as well.
Speaker 1: And I will give the floor to Christina with the operation financial results and thank you for your time.
Speaker 2: Good morning everyone and thank you for being all with us. So straight into page 12, the main operational indicator.
Speaker 2: I'll just mention a lot of them in terms of sales and things through under the same store and same area, sales and rent.
Speaker 2: of skipping straight into occupancy cost. I mean, we have.
Speaker 2: back to a level which is pretty much pre-pandemic levels of occupation costs and others.
Speaker 2: Big part of the story here is the increase in sales. So back to 12.3.
Speaker 2: Very, very reasonable. Occurability rate.
Speaker 2: first time since the beginning of the pandemic that we've had an increase in the occupancy rate to 90.7. We're well on our way to come to something around 93% by year end.
Speaker 2: and there was a lot of new activity on the commercial side.
Speaker 2: Net delinquency rate came in at 2.1%, also incredibly healthy for this period. And when we think about what growth delinquency is, we think about what's growth delinquency.
Speaker 2: Basically what we tried within a month and received within the month, we are at a single digit.
Speaker 2: So most of our collection happens within the month, which is again, considering that we are still suffering a few of the effects of the pandemic and so on. It's an incredibly positive.
Speaker 2: I'll show you to the financial results in the P&L on page 13. You know, as Caledad, we have gross revenues of $25 million in ICE and net revenues of $212.00. When we look at it, compared to the third quarter of 19 of...
Speaker 2: And across the expenses I'll go into it in a minute, it was an increase compared to 19 of 50% other operational revenues.
Speaker 2: And this line basically because as Carlos mentioned we had the fractional share of the land around Flanada which gave us almost 20 million hires in them.
Speaker 2: in profits for 2021, but in 19, we also had fractional sales of land, but also we had almost 20 million in the results of the sale of Iguatemi Cascio. So there's a one time off when we compare gains and that's why we have a drop of almost 41%.
Speaker 2: a bit that came in at 153 million highs, at that margin, a bit the margin of 72.3%. Thank you.
Speaker 2: Financial expenses were up an enormous amount and this is basically due also as Carlos mentioned to the evaluation of shares from the end of the second quarter to the end of the third quarter of Infercallments which is
Speaker 2: You know, classified as one of our cash investments. And so we have that variation on the share price here. This also includes the variation on the shares that we have as a synthetic buyback program. So a swap program on the shares of the Guatumi, which of course during the period have also declined.
Speaker 2: So that's also here and a few adjustments in regards to contingency balance sheet as well.
Speaker 2: So we come into a net profit for the quarter, actually a net loss for the quarter of 57 million PI, on an FFO of 18 million, but also again, net loss.
Speaker 2: lot of it, the buff majority of it based on unrealized effects on the financial expense
Speaker 2: When we look at piece 14 and we look at the numbers without the linearization of the discount line, we see compared to 2009.
Speaker 2: an increase in net revenue of almost 62 percent, so super, super healthy here, and how we are growing against...
Speaker 2: actually it did 20 and then it did 19 compared to 182 also very healthy.
Speaker 2: And then again the effects of that in the net profit and effort.
Speaker 2: On page 15, the gross revenues and looking at the table above, we have an increase for the quarter of gross revenues is 42%. When we compare to 19, it's an increase in 1%. The majority of the increase is based on rents. So comparing to 19, 22% increase in rents, which is the major portion of gross revenues, accounts were almost over 70% of our gross revenues. Management fees, compared to 19 is slightly below, but basically in line, parking is still actually below.
Speaker 2: We'll have in terms of actual vehicles coming into our malls somewhere between 20 and 15% and minus.
Speaker 2: And we expect that number to improve during the fourth quarter with everything that's happening and pandemic kind of blowing away. Other has an increase, a substantial increase. And this basically contains our retail division, I retail and Igleta Me 365. I remember that Igleta Me 365, our marketplace, was only inaugurated in October of 2019.
Speaker 2: not existent and also we have an increase of the retail division with everything that's happening in the luxury sector.
Speaker 2: Look at the breakdown of the rents in page 16. We see that minimum rent again comparing to 19 have increased almost 24% so again, very healthy and overage which is the percent over the minimum increasing an incredible amount of 67% over 19.
Speaker 2: I guess 20 is kind of an unfair call for comparison, but I guess 19 is still pretty substantial.
Speaker 2: The temporary rent which accounts for the media activity and key off cannot kind of thing are still below 2019 levels and we expect that also to have a pick up during the fourth quarter with the increased activity of all the different retailers but also with the traffic coming into the malls.
Speaker 2: In terms of costs on page 17, the vast majority of the increase in costs also pertains to the retail and the 365 activities, which is booked in other. So we see almost 100% variation here. We see a big variation on things like promotional fund and third party, but they're actually quite
Speaker 2: not significant in the total amounts here. But again, this is basically the resumption of the activity and third quarter of 21 compared to 20. That makes these lines vary. Right, parking, as I said, is still below, so the costs also are still below. Personals are substantially below at 8.2 level. Also, we're maintaining gains on things that we see.
Speaker 2: In terms of expenses, there's also been an increase compared to 2020. 47% almost when you compare a quarter or a quarter. A basic difference here.
Speaker 2: personnel and if you, if everybody remembers well, we decided last year to
Speaker 2: not have the provision for variable concentration, short term variable concentration.
Speaker 2: since the results have taken a hit because of the pandemic. So that is what is reflected here in the increase because we have the provision for that for this year. Share based compensation, we had a second grant at the beginning of the year. So that's the increase there. And then third party and other again are.
Speaker 2: Resumption of the activities in terms of our work with parties and consultants.
Speaker 2: We look at that profile in pace 19. As Scott has mentioned, we're at 2.8 times net depth, we bit them. We have a very healthy cash on hands on the balance.
Speaker 2: which, and if you look at the armortization schedule on the bottom of the slide.
Speaker 2: We are very, very easy on 2022. Again, we're always very conservative about election years. They tend to be volatile. And so...
Speaker 2: have pushed a martyzation beyond the...
Speaker 2: to the next, but still even looking at 2023, I think we have plenty of cash on hands to weather that too. And finally,
Speaker 2: that profile in terms of the...
Speaker 2: spread and as everybody knows we're very heavily relied on the CDI and of course with the increase of
Speaker 2: add an increase of our nominal value here of what we pay on terms of our depth. We have a lot of things that are fixed rates as well, so that enables us to...
By the Reinstallation of the sector during the third quarter.
The pizza was masked by a resumption of activities with few restrictions and for the first time since the beginning of the pandemic, we started operating 100% with 12 hours regime.
Speaker 2: lower the difference between what we actually pay and what the syndicate is is trading at but of course we're super still and we took the great benefit during the you know previous year and the year before they're very very incredibly low syndicate rates we're back to something that was more normal before but again very healthy that profile
Douglas.
With that our utilization capacity rose to 99% during the period of our.
Our indicators.
Advanced.
Also the effect of.
Significant improvement allowed us to equal and surpass so many cadence of 2019 prep and Damien level, which really represents a period of promising results.
Speaker 2: With that, we finish our presentation for the third quarter and we are open to any questions.
Speaker 3: Thank you. The floor is now open for questions. If you have a question, please press star 9 on your touchtone phone at this or anytime. And to promote yourself, please press star 6. Questions will be taken in the order they are received. We do ask that when you pose your question that you pick up your headset, to provide options and quality. Please, hold while we pull for questions.
As we are going to show.
The slides along with the presentation.
And show the evolution, mainly in sales, reaching $3 3 billion.
Total sales and a growth of $82 seven.
7% compared to.
Third quarter of 2020, and an increase of two point.
<unk>, 1% in relations to the.
Third quarter of 2019.
If you exclude this excludes.
If you exclude the malls, we sold at that time, because she has he put in office the growth would be four 4%.
Speaker 3: Necrolize from Morgan Stanley would like to make a question. Please go ahead.
We also recognize actual growth in the same store rents, which grew 20 to put an impressive 22.
One 9%.
<unk>, which was above inflation for the period, we maintained it.
Evaluation of discounts on rent charges in a sustainable manner and together with the shopping mall industry founded vaccination allowed us our tenants investors to have the same positive impact on the economic recovery.
Speaker 4: Oh brilliant, sorry about that. Well, thanks. Congratulations on your very strong numbers. And thank you very much for the call and for taking my questions. Two questions to make. First, any kind of color you can provide on the growth of 365.
Motivated by convenience experience exclusivity and coexistence.
We saw the beginning of the return of our customers not only in stores, but in restaurants with costs. So it was small the entertainment of accretion.
The third quarter of 2021 had a and that delinquency of two 1%.
Speaker 4: Now it appears from the comments you already made that there's not a lot of accountability. You seem to be growing that business even though you're opening the malls and clearly folks are flocking back to the malls.
Demonstrate to you that we were able to receive a higher amount of the rent.
We were at.
Speaker 4: But any kind of reflections and color you can provide on that, if there's any sort of, as people go to the mall, you'll realize that there's some kind of a realization or whether it's just a separate growth line. So that's question number one. Question number two, if you could give a little bit, it appears that the credit quality is getting out better. But any kind of color you can give.
And we are collecting.
I think what it also marks the most important chapter in our history.
We approved was the shareholders.
Corporate restructuring for them for me, what an Esa S. A.
Allow us to continue to grow we expect to grow, especially exponentially with the highest level of corporate governance, and sustainable Omnichannel business model, which only brings benefit to us to our shareholders and also to our customers.
Speaker 4: on how you feel about the receivables and as you come towards the fourth quarter, which is typically the clean up quarter, you know, how we should think about any potential to write down as we turn the page into print. Thank you very much and again, I think we're up for an under non-eless.
Also in line with the chain this changes from 2000.
Oh on words.
Well no because that will take the position of CEO and on generating 22, and he really data the current chief financial Officer, we assumed the position of Vice President of Finance.
Speaker 5: So on the 3.5, as you know, we're not super forthcoming here on the numbers yet, but I can tell you that just been an incredible experience here for 3.5. You know, as Kalas mentioned, we're now servicing, you know, basically all of the GDP of Brazil with 3,000 cities that we're delivering to.
Timmy.
Continue the comply with the strategy and your objective is to go out to me.
From now on.
So there's less quantity over the year after the completion of the expansion of the process throughout Brazil.
Speaker 2: out of 5,000 of these in the bill, that basically covering the box which are the GDP. And that makes a big difference, of course, when you compare. So.
Which allows you bought which is exciting to see five O e-commerce to reach more than 3000 Cds.
Along Oh country, we have the launch we will also have the launch of.
Speaker 2: In terms of GMV, it's almost like a 200% gain.
365 App.
Speaker 2: And I think we mentioned in our report that we're gradually increasing the increase to...
And the opening of a pop up store and you got to be some fall, which reinforced the omni channel.
How long is.
Speaker 2: cities that we don't have a physical presence in, you know, so last year it was something like 90% this year at some like 30% so, you know, I think
Easier.
<unk>.
The interest by our customers.
<unk> continues to invest in the omni channel experience.
Speaker 2: are at our pace slowly but conscientiously doing, you know, this increase.
This model.
Any new complementary of sales.
Sales channels, which are vital.
No.
Nowadays to really.
Speaker 5: footprint. Well, in terms of the receivable, you know, as I said, you know, we, um,
If you are customer centric you got to have all that in place.
And I think to do the consistency of its results continue to be encouraged to look forward with optimism is coming you ever closer to the pre pandemic levels in all respects.
Speaker 2: It's been a really tough 18 months of course now with the pandemic and everything. The first time we hit a single digit growth delinquency number, I think it was June , July .
Oh, Yeah, now I'll share with you some of the highlights of the quarter on slide three we have the accretion status. So you can see that.
Speaker 2: I think everybody on our team was, you know, we had a mini celebration in the company because it was, you know, it's been like 12 months since we had seen a single digit growth delinquency number in the company.
Now I know, we're in much better condition in Brazil.
Most no restrictions.
At all but on the third quarter, we still had some just.
Speaker 2: So of course there's still a lot of backtrack here on things that we have to connect.
Social distancing restrictions, but we operate already with the 12 hours a day.
Speaker 2: But we are collecting because if you think about it, it's still high single digit, but the actual net, the linkancy number is 2.1. It means that we are collecting from previous periods, over time. And I think that the key here is to make sure that
Which were pre pandemic levels of hours operated before.
Daniel.
On slide four we had the operation status to kind of showing the sales of.
Speaker 2: give the tenants enough space that they manage their cash in that way that we can collect. I don't think it's an issue of whether we can collect or not. I think it's an issue of when we collect. So, and we're seeing that now. Okay. So.
The third quarter as we have positive sales.
All the months generally July August September you should compare to 2019 and impressive growth continues on the October which is the Florida first months of the fourth.
Speaker 2: In terms of the provision for bad death and so on, you know that we
Boston, which will grow 15% above which was the sales on 2019, the fourth quarter of 2019 showing that.
Speaker 2: So I think it's already in our numbers in a way that what we think is, I think we've been quite conservative actually on our provision. My expectation to be honest is a little bit higher than what we've provided for, given that we've seen that the numbers, as I said, between growth and net delinquency are so different.
With our tenant mix with a lot of exclusive brands also people going back to the malls are made.
Making boom and helping us too.
I drive these excellent results in terms of sales and helping all of the other lines of business.
Speaker 2: But let's see, I mean, you know, if it is, it means that it's positive because it's already provided for it anyway.
The accretion starts on slide five you have the Golden state is showing that.
Not only we don't have any more hours restrictions, but the social distancing is always also.
Speaker 3: Remembering if you have a question, please press star 9 on your touch phone at this or anytime. And to emote yourself, please press star 6. Please hold while we pull for questions.
Dean.
Out of our malls, which was helping people a lot of other <unk>.
Operations like food services and entertainment to start to have a much better.
Our results are in.
Especially in the spot.
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The highlights of the results we have the as I mentioned the portfolio cat capacity, reaching 99% total sales $3 3 billion over 82% 22 20 <unk>.
Speaker 3: Shoney from Santander would like to make a question. Please go ahead.
0.1.
19, when you exclude the sales of some of the two malls. We I mentioned, we grew four 5% same store sales increased by seven 8% in aerospace by four 4% show.
Speaker 6: Hi, good morning, Chris. Good morning, Carlos. Thanks for taking my question. So that's just a brief question regarding the amazing recovery observed in the month of October . If you could give us an overview in terms of sectors, we see that are some places that are removing already social distancing from restaurants, for example, but I imagine that this is a factor that is affecting the sales of these kinds of
What's important here to see that turn up out of 16 malls.
Growing comparable sales compared to 2019, showing the persona performance I mentioned that he's getting even better in the fourth quarter.
<unk>.
Same store rents grew 22, 9% same area rents rent were up 11, 9%.
Speaker 6: So if you could provide what are your views for quarter overall in terms of sales and also on the sustainability of these very strong same-store rent. How do you see the outlook for 2022 given the fact that when you compare to the inflation numbers for the last 24 months there you could
Gross revenue, reaching 2200 55 million.
42% over.
2021, 9% over 19 Radnet net revenue.
$212 million up $16 five against a third quarter of 20.
$16 three against the third quarter of 19.
Speaker 6: Increase even further these same store ramps figures. So that's pretty much it. Thank you, guys.
So they need the straight line effect that you all know that we are doing during the pandemic the ability to reach 139 million.
Speaker 2: Just to give you a color, I mean...
So 88% over 2000.
And down $17 five compared to 19.
Speaker 2: Great news here is that I think all our malls are increasing sales. Of course, some are stronger than others and it makes sense because they're more consolidators and so on. But everybody in their own space is increasing. And actually, we only have now two malls that are not positive against 19. Until the end of the third quarter we said 10. But now it's only two. And the two malls that are not positive are very heavily reliant on corporate.
But EBIT EBITDA, reaching 152 billion in the quarter up.
14, 5% and down $8 94 compared to 19.
72.3% margin EBITDA margin.
As I mentioned net loss.
We had a net loss of 50.
<unk> seven 9 million.
Speaker 2: and public workers coming back to their offices and so on. So I think, and that's, that's obvious gender actually coming up, you know, in the next, maybe not this quarter yet, but maybe in the beginning of 2022. So, so there's that, I think that also helps us going forward. You know, as I said, in terms of, um,
Down from.
Almost 200% over too.
20.
But of course this is.
It was mainly due to the you have to exclude the effect of common shares price variation, which I know that no personal line.
<unk> net income if you exclude that.
Entercom is chair of price variation you will reach a positive 32 million.
Speaker 2: We are still below what would be our normal number of vehicles and so on. And so as you can't, I think we have excellent conversion coming through and so on. Part of that conversion. About 2020.
Our profit in.
The new one.
150% over a.
20.
The CFO, Richard and minus 8% to $18 3 million were down on 118% over 'twenty, but again, if you exclude the effect of into a common share variation, we have a pause because that's a full which assumed that your $1 7 million in AI.
Leverage ended the quarter at $2 eight two times and net debt over EBITDA.
Speaker 2: So some kind of restriction in traveling is gone. Not gonna be as exchange rate is still super high.
Oh up zero point 24 against.
Speaker 2: that may be appetite for, you know, let's say, an aspiring middle class travel and so on. But one of the key things that, you know, we've been discussing with our luxury partners is that,
Second quarter of 'twenty, one but down.
Zero point 29 over the course of the third quarter of 'twenty.
We also had the issue of <unk>.
Speaker 2: A lot of people who used to buy a broad all the time have experienced or have intensified their relationship with the bands here locally.
500.
100 million hasn't debentures two series a series.
So one was 263 9 million CDI plus 148% five year term and administration went from a maturity second series was the one with $236 1 million high with Sky plus 163.
Speaker 2: I think the part of the luxury brand is the actual experience that you have in the stores and how people cater to your needs and and being that the price is not that different anymore. I mean it hasn't been this for a long time but maybe everybody realizes this but now they have because they've been purchasing all this time.
He is a seven year term and amortization installments.
2027, we also as I mentioned have a new CFO.
She has been with the company for many many years. He's now the current financial director and he is Tennessee.
Speaker 2: taking us to this because if you're going to buy a fantastic handbag or an exclusive piece of jewelry, you won't have the service that goes along with it and you don't necessarily when you go abroad have that same level of service in New York or London.
Tennessee, Colectomy Chief Financial Officer.
Starting January 22.
Yeah the fractional.
Our sale of <unk>.
Speaker 2: Again, I think a lot of people will continue to buy here. Okay, so I think there's...
Actual sale of land any bulk and eastland neither generated.
And revenue off to almost 20 million high at $19 9 million.
Speaker 2: There's sustainability to the sales. I mean, obviously there's going to be some shift because people are going to continue to go back to traveling and there's going to be some allocation in terms of leisure and pleasure spend in other buckets. But I think, if you think about it long-term, I think we gained because the experience of people who had during the pandemic of the actual experience of the brand here.
So if rates restructuring in October 13.
It was a big thing that I mentioned was approved.
S E T M. He brought to me anyway to me and jetty Saatchi.
Proof the mergers of equal I can be sure is separation will create both in the U S. A.
Units will be traded under the ticker of E. G T.
I 11 as of November 20 to remember that now.
Speaker 6: we've got some pinky sends to try and we'll talk about some foodlifts with greased things in the regarding shades of a collage dy look at lots of street cro?i kurz
Yeah.
So it's being changed for the new company with it.
Speaker 2: Ah, so I think, you know, because we, sorry, I didn't fully explain myself, but I think because we have this result in the sale, then I think the rent side, you know, because the sales will...
The projects in progress we have these amazing amazing.
Oh, there's been build in Campinas, along with got a video in a mall.
Speaker 5: have the foot traffic which is still going to increase. We have all the operations are like the cinemas, finally back to being able to operate properly and the restaurants and so on. All this traffic that comes with all the services are coming back plus the stickiness of the conversion allows us to continue to pass through the IGPM and so on, remove the discounts and so on. So I think for us, it's a very healthy scenario looking forward in terms of rents, you had the service that whenever we look back to the Commission and you are busy in the country, so listen to that and unenderk it to be available musically. The S mehrac Jungum Service is in charge of the trackreich trying to its seat a corner to get a seat in full district. The S mehrac Jungum Service is in charge of the trackreich trying to its seat a corner to get a seat in full district.
It's supposed to be the bone mass the best Triple a.
Obviously, it's our in there you go out to me in Campinas, showing that you know.
It's very important to the not only the position for the mall, but it also creates a very important way.
Oh, giving visibility too.
Proper to which we intend to.
You have more of these type of mixed use development.
Developments over this property as well.
And now I give floor to casino with the operation and financial results and thank you.
For your time.
Good morning, everyone and thank you for being with US so straight into page 12, the main operational indicators.
Speaker 3: Thank you. There are no further questions at this time. Mr. Carlos.
It was mentioned a lot of them in terms of sales and same store on the same store in the same area.
<unk> thousand rent.
So it's getting straight into occupancy cost I mean, we have.
Back to a level, which is pretty much pre pandemic levels of occupation cost and obviously.
A big part of the story here is the increase in sales so back to $12 three.
Very very reasonable occupancy rate.
First time since the beginning of the pandemic that we've had an increase in the occupancy rate to 97.
We're well on our way to come to something around 93% by yearend.
And it was a lot of new activity on the commercial side that delinquency rates came in at a two 1% also incredibly healthy for this period when.
When we think about.
What's the gross delinquency was basically what we tried to within a month and received within the month, we are at a single digit number.
Most of our collection happens within the month, which is again you know.
Considering that we are you know.
Still suffering a few of the effects of the pandemic and so on and it's an incredibly positive number.
Going into the financial results in the P&L on page 13.
Ted we have gross revenues of $255 million and net revenues of 212.
When we look at it compared to the third.
Third quarter of 19, that's an increase.
And.
Corporate expenses I'll go into in a minute it was an increase compared to $19 50.
Other operational revenues.
And this line basically because as Carlos mentioned, we have the fractional share of the.
The land around spun out of that which gave us the 20, almost 20 million hangs in EM and.
And profit for FY, 2020, one but in 19, we also had a fractional sales of land, but also we had almost 20 million in the results of the sale of quantum you Cassia.
So there it's a one time off when we compare against and that's why we have a drop of almost 21%.
They came in at $153 million is that that margin EBIT margin of 72, 3%.
Sit around 113.
Financial expenses were up an enormous amount and this is basically true also as Carlos mentioned to the devaluation of shares from the end of the second quarter to the end of the third quarter of inks requirements, which as you know.
Occupied as one of our cash investments.
And so we have that variation on the share price here.
Also includes the variation of the shares that we have as a synthetic buyback program. So a swap program on the tariffs I think what to me which of course during the period as well have also decline. So that is also here and a few adjustments in regards to a contingency balance sheet as well.
So we come into a net profit for the quarter actually a net a loss.
For the quarter of 57 million and an <unk>.
So of 18 million, but also again net loss.
A lot of it the vast majority of it based on unrealized effects on the financial expense line.
When we look at page 14, and we looked at the numbers without the linearization of the discount line.
Compared to our.
Our 2019.
An increase in net revenue of almost 62% to Super Super healthy here and how we how we are growing against.
Yeah, actually I think 'twenty and then <unk> 19, compared to 182 also very healthy increase.
And then again the effects of that and the net profit and SFO.
Turning to page 15, the gross revenues and looking at the table above we have an increase for the quarter of gross revenues of 42% when compared to 19 one.
1%.
The majority of the increases based on rent.
So comparing to 19, 22% increase in rents, which is the major portion of gross revenue accounts for almost over.
Over 70% of our gross revenues management fees compared to 19 are slightly below but basically in line parking is still actually below.
You'll have in terms of actual vehicles.
Going into our a malls somewhere between 20 and 15% and minus.
And we expect that number to improve during the fourth quarter with everything that's happening and.
And it kind of blowing away.
The other has an increase a substantial increase in basically contains our retail division I retail and they got to meet the six five.
I remember that you got to need to six five our marketplaces early inaugurated in October of 2019.
No not existent and also we have an increase of the retail division with everything that's happening in the luxury sector in Brazil.
Look at the breakdown of the rent in page 16, we.
We see that minimum rent again, comparing to 19 have increased almost 24%, so again, very healthy and overage, which as a percent over the minimum increasing an incredible amount of 67% over 19 F. 'twenty, it's kind of an unfair comparison, but against 19 is still a pretty substantial increase.
The temporary rent, which account for the media activity and kiosks and that kind of thing that's still below 2019 levels and we expect that also to have a pick up during the fourth quarter.
With.
Increased activity of all the different retailers, but also.
The traffic coming into the mall and so on.
In terms of costs on page 17.
Vast majority of the increase in costs also pertains to the retail and the 365 activities, So which is booked in other that's what.
He has an almost 100% variation here we.
We see a big variation on things like promotional thing funded third party, but they're actually quite quiet.
Alright, not significant and the total amount here, but again is basically he resumption of the activity and third quarter of 'twenty, one compared to 20 that makes these lines are very high parking as I said, it's still below so the costs also are still below on personnel.
Substantially below $8 two level Oh, so we're maintaining our games on things that we printed are intertwined and.
In terms of expenses are there's also been an increase.
Compared to 2020.
47%, almost when you compare quarter against quarter basic.
Basic difference here.
Personnel and if you if everybody remembers well, we decided last year to a two notch have the provision for variable compensation short term variable compensation since the results had taken a hit because of the pandemic. So that that is what is reflected here in the increase because we have.
The provision for that put it here share based.
Sensation, we had a second grant at the beginning of the year. So that's the increase there and then third party and other again or he was actually one of the activities in terms of our work with third parties in and and Consultancies.
When you look at that profile on page 19.
I've kind of mentioned we're at two eight times net debt to EBITDA, we have a very healthy cash on hand on the balance sheet, which are and if you look at the our amortization schedule at the bottom of the slide we are very very easy on 2022.
Again, we were always very conservative about election years are they tend to be volatile and so we have pushed amortization beyond.
Greater than action, but.
But still even looking at 2023, I think we have plenty of cash on hand to weather that too.
Finally on page 20 that profile in terms of Ah.
Spread as everybody knows we're very heavily reliant on the CDI and of course with the increase of the city.
An increase of our nominal value here of what we pay on terms of our debt and we have a lot of things that are fixed.
Fixed rates as well so that enables us to are lower.
Lower the difference between what we actually pay and what the Sydney Keys is trading at but of course, we were Super steel.
Okay.
Took the great benefit during the previous year and the year before they're very right.
Quite a bit he loved finicky rates and go back to something that was more normal before.
But again very healthy debt profile as well.
With that we finish our presentation for the third quarter and we are open to any questions you may.
Thank you. The floor is now open for questions. You should have a question. Please press <unk> on your Touchtone phone at any time.
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Thanks Glenn.
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Nicolai from Morgan Stanley would like to make a question.
Please go ahead.
Okay.
Good morning Carlos.
Jimmy.
Yes can hear you.
Im sorry, Im sorry about that.
Congratulations on your on your very strong numbers and thank you very much for the call and for taking my questions two questions. If I may.
Any kind of color you can provide on the growth of.
365 now it appears from the comments you already made that Theres not a lot of cannibalization you seem to be growing that business, even though you're opening the malls.
Folks are flocking back to the malls, but any kind of reflection and color you can provide on that if there's any sort of is as people go to the mall, you'll realize that there's some kind of amortization or whether it's just a separate growth line. So thats question number one question number two if you could give a little bit.
Yes.
It appears that the.
The credit quality is getting a better but any kind of color you can give on how you feel about your receivables and as we come towards the fourth quarter, which is typically the sort of a clean up quarter.
How we should think about any changes sort of write downs.
As we turn the page in Japan. Thank you very much and again congrats on the numbers.
Nick.
So on the 365 as you know we are not super.
Coming here on the numbers yet.
But I can tell you that it's been an incredible.
Experienced here for 365.
Carlos mentioned, we are now servicing.
All of the GDP in Brazil, with 3000 cities that were that were delivering to which is out of the 5000 cities in Brazil.
Basically covering the vast majority of the GP and <unk> and that makes a big difference of course, when you compare so.
In terms of DMV.
The Q1 number it's almost like a 200% increase.
Further.
And I think we mentioned in our report at.
We're gradually increasing piece too.
Cam cities that we don't have a physical presence and so last year it was something like that.
9% this year something like 30%.
So I think.
And at our PE slowly, but conscientious and you're doing it.
Uh huh.
Yeah.
Increase of 36 five.
Footprint.
In terms of the receivable.
As I said.
So it's been a really tough 18 months of course, now with the pandemic and everything and so the first time, we hit a single digit growth delinquency number I think it was June July.
I think everybody on our team was we had a we had a mini celebration in the company because it was.
Being like 12 months since we had seen a single digit growth delinquency number in the company.
So of course, there's still a lot of backtrack here on things that we have to connect.
But we are collecting because if you think about it it's still high single digits, but the actual net delinquency number at $2. One means that we are collecting from previous periods.
Period over time, and I think that the.
To make sure that we give the attendants enough space that they manage their cash in that way that we can collect and I think it's an issue of whether we can collect or not I don't think it's an issue of when we collect so so and we're seeing that now okay. So.
In terms of the provision for bad debt and so on.
<unk>.
Carter.
So I think it's already in our numbers in a way that what we think is is I think we've been quite conservative actually on our on our provision.
My expectation to be honest, it's a little bit higher than what we provided for.
Given that we've seen in the numbers.
I said between gross and net delinquency are so different.
Well lets see I mean, you know if it is it means that it's positive because it's already provided for it anyway.
Got it thank you very much.
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Tony <unk> from Santander would like to make a question. Please go ahead.
Yeah.
Okay.
Hi.
Good morning, Chris Good morning, Carlos Thanks for taking my question. So I have just a brief question regarding to the amazing recovery observed in the month of October if you could give.
Give us an overview in terms of sectors.
We see that are some places that are removing already social distancing from restaurants for example, but I imagine that this is a sector that is affecting the sales of these kinds of.
So if you could provide what are your views for fourth quarter.
Overall in terms of sales and also on the sustainability of these very strong.
Same store rent.
How do you see the outlook for 2022, given the fact that.
When you compare to the inflation numbers for the last 24 months you could.
Increase even further.
Same store rents figures, so that's pretty much it.
Thank you Bobby.
And just to give you.
Color I mean.
Right.
Great News here is that I think all our malls are increasing sales.
Some are stronger than others and it makes sense because they were consolidated and so on.
But everybody and their own space is increasing.
And actually we only have now two balls are not positive against 19 until <unk>.
End of the third quarter, we set 10, but now it's 72 and the two malls that are not positive or very heavily reliant on corporate.
And public.
Workers coming back to their offices and so on so so I think that that's on the agenda actually coming up in the next.
Maybe not this quarter, yet, but maybe in beginning of 2022. So there is that I think that also helps us.
Going forward as I said in terms of.
Working.
We're still below what would be our normal.
A number of vehicles and so on.
And so.
As you know I think we have excellent conversion coming through and so on.
Part of that conversion.
About 2020.
Actually maybe for even longer.
The story here is that I think this is going to be some kind of restriction and traveling and so on I'm not going to be at the exchange rate is still super high.
Okay.
Maybe appetite for let's say, an aspiring and middle class of travel and so on.
But one of the key things that we've been discussing with our with our luxury partners is that.
A lot of people who used to buy abroad. All the time have experienced.
Or have intensified their relationship with the brands here locally and to be honest I think.
Part of the luxury brand is the actual experience that you have in the store isn't and how people cater to your needs and.
And that the price is not that different anymore I mean, it hasn't been there for a long time that maybe.
Everybody realizes it but now they have because they've been purchasing all this time.
Stickiness to this because.
If youre going to buy a fantastic handbag or an exquisite piece of jewelry.
To have the service that goes along with it and you don't necessarily when you go abroad have that same level of service.
New York or London, and so on so again I think a lot of people will continue.
To to buy here, Okay. So I think there is.
There's sustainability to the sales I mean, obviously theres going to be some shift because people are going to continue to go back to traveling and there's going to be some allocation in terms of leisure and pleasure to spend and other buckets.
But I think.
If you think about it long term I think we gained because of the experience that people have had during the pandemic of the actual experience of the brands here.
Great. Thanks.
Thanks.
Regarding same store rent.
Also I think because we are sorry, I didnt fully explain myself, but I think because we have this resolved.
A result in the sale then I think the rent side.
The sales will continue to have the.
Foot traffic, which is still going to increase we have all of the operations.
Like the cinema finally back to being able to operate properly and AR and.
The restaurants and sponsor at all this traffic that comes with all of the services aren't coming back plus the stickiness of the conversion allows us to continue to pass through the <unk>.
P M. So on remove the discounts and so on so I think for us. It's a very healthy scenario looking forward in terms of rents net rates as well.
Okay, great. Thank you please.
Thanks.
Thank you Darren no further questions at this time Mr. Thomas.