Allos SA

BOVESPA:ALOS3

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon, and thank you for waiting. Welcome to the earnings call of Allos for the discussion of the results regarding the first quarter of 2024. We have here with us Mr. Rafael Sales, the President; Leandro Lopes, VP of Business; and Ms. Daniella Guanabara, Financial Director and IR Director.

So we inform you that this is being recorded, so that all participants will be able to take part and hear the presentation. Thereafter, we're going to start the Q&A just for analysts and investors when additional information will be available. This event is also simultaneously being translated in the webcast ri.allos.com, where you have the presentation as well. The replay of this event will be available for 1 week.

We would like to inform you that questions can only be asked through the Zoom app. Should you have -- and should you be connected via the webcast, your question has to be submitted directly to the IR e-mail on the appropriate communication channel. Before we would start, we would like to clarify that any statements that are done throughout this earnings call regarding the business perspectives of the company, projections and operational financial goals are based on beliefs and premises available to the Board of Directors of the company and based on information that is currently available.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and premises because they are related to future events and depend on circumstances that may or may not occur. Investors should understand that general economic conditions -- industry conditions and other operational factors may affect the performance of the company and may conduct to results that are materially different from those that are stated in the forward-looking statements.

Now we would like to give the floor to Mr. Rafael Sales. He will start the presentation. Mr. Rafael, go ahead.

[Rafael Guimarães, executive]

Good afternoon. Thank you very much for taking part in the results of Allos.

Now I'd like to start talking about the difficult situation that Rio Grande do Sul State is going through. We have malls in the region, Caxias and Santa Maria. Our focus is to provide the support for the teams, local teams, the family members and providers and as well give the support to the population of the affected region. In our malls -- our malls didn't have damage to their infrastructure, so they're open and provide services for the population. We also contribute with donations of hygiene products, foods, and we will continue to do so to help the professionals that are there working in Rio Grande do Sul. We are in contact with the civil defense and the Mayor's office, and we also provide psychological support for the collaborators, the direct and indirect. I would like to thank our Rio Grande Sul team for their work in this difficult time. You are in our thoughts and prayers in this very difficult moment. And that we hope that you overcome this, we all overcome this very soon.

Now let's talk about the earnings call. The first -- at the start of 2024, there was a positive consolidation for the year. The first quarter, we delivered strong results. We had good sales from our tenants, strong demand in the area, leisure times, leisure spaces, and this reflects in the growth and in performance that is exceptional for the stores and the media. Now the spaces in our malls, they are growing so much, and we had the same occupancy that we had in the last quarter last year, once again, over 96%. These are very expressive numbers. considering the seasonality. And remember that the fourth quarter is a quarter of the Christmas break.

Let's start on the presentation, and I would like to update you on the investments that we were done in over BRL 8 billion. We confirm that we are going to continue with the disinvestments (sic) [ divestments ] of over BRL 1.8 billion, and we are expecting the results in the next months. Up until now, we received BRL 1.5 billion out of the BRL 1.8 billion that we were supposed to receive by the fourth quarter of last year.

Now we have up until BRL 1 billion in possible disinvestments. And we announced yesterday the full selling in the participation of top shopping in the state of Rio de Janeiro, about BRL 112 million. It was also an important day because we signed the acquisition of up to 15% of Shopping Rio Sul. This acquisition was structured by -- with the investors and strategic investors, we're going to have now 54% of Rio Sul. So the administration will be done by Allos. So it's important to highlight that this is one of the most -- one of the best shopping malls in Brazil. The third biggest one in Allos. So the fourth NII in our company, our transactions, we continue with our strategy. So we are ever stronger from the standpoint of relevance for tenants that trust our business.

Now Slide 3. I'd like to highlight that we had BRL 9 billion in sales, which is a growth of pro forma of 8% if you compare it to the first quarter of last year. And here is why we already adjusted for the assets that were sold at the base. The same-store sales, 6%. And this different -- this difference shows that the performance of sales of our new tenants is still better than the previous space, which shows that our commercial relationship and the synergies are working well as we've done last year. Now the new stores was representative there was over 30% sales in the new stores if you compare it to the first quarter of 2023. And all throughout the presentation, we're going to talk about the operational indicators of the quarter.

Next slide. In terms of financial performance of the company, this last quarter, the net revenue, BRL 616 million, we grew almost 7% in regards to the first quarter of last year. The highlight of growth was media, which we started to work with all the shopping malls in the portfolio of the company. So we have over 100 malls that now are the media is done inside. And we've had growth in net revenue. So the media got to 5% of the revenue of the company in comparison to 3.5% in the first quarter of last year. We are very confident on the potential of growth of the media structure of our malls. The allocation revenue also grew 3%, even though we had the negative effect from the allocation.

Now same-store rent also growing 4% in real gains, and this is benefited by the capture of the synergies. The EBITDA had a growth of 7% in regards to the first quarter of last year, a margin of 73%, that was affected by the strong operational performance of our business lines and Parking Lot specifically, equalizing the effect of the harmonization of salary, payroll that impacted the fourth quarter of 2023. Without that, the growth of EBITDA would have been over 8%. We got to BRL 290 million in FFO, and we've grown 37% compared to the first quarter of last year. The performance was reached in very successful areas of the partners, and it reduced our costs on an evident synergy that we expected with the creation of Allos.

It's important to highlight the growth of structuring, which is a consequence of the purchasing that were done since the last quarter of last year. So with that, the operational improvement and growing the result of the company we had on FFO increased just 41% in this quarter. And it's important to highlight in the next slide, something that is very interesting to comment the growth of FFO since 2017. As you can see, it's explain why. If we start with 2017 as a base, it was the beginning of the fusion of Aliansce with Sonae. Therefore, 2017, it's a great starting point, so we can evaluate the growth of the company. And in this case, we worked with 84% of growth of FFO per share in '17 until the end of last year.

So even with the issuance of shares to do the acquisition and to increase the capital of the company, the consolidated of the industry, we also generated a growth per share. Even though there is a gain for the shareholders, the result is a growth in these results. And obviously, this is the most correct formula to provide value for the shareholders.

I would also like to highlight in recent events that are important. At the end of last month, the shareholders of Allos approved the dividend distribution in BRL 612 million, more than double of last year. The proposal, considering 50% of FFO, reached in 2023, and it was a year in guidance that was better than 23%. Besides the dividends, we did investments in over BRL 500 million in repurchasing of the shares. So the total return to the shareholders is over BRL 1 billion, and it represents cash return of 10%, considering the market value of the company on April 30. I would also like to issue the CRI, which has an equivalent cost of CDI plus 5%. That result reinforces the trust of the market in our strategy, business strategy and our financial health.

I'd like to give the word to Daniella, and I can come back to the Q&A. Thanks.

[Daniella Guanabara, executive]

Thank you, Rafael. Good afternoon, everyone. Continuing to Slide 5. We show that our commercial rhythm is still strong. In the first quarter of '24, we signed 150 new contracts, and we closed the quarter with an occupancy rate of 96.3%, which is the same threshold observed in the fourth quarter. We neutralized the turnover that is season at the beginning of the year, showing a strong commercial demand for the spaces in our malls. The total GLA that was added is 21,000 square meters.

We are expanding with big brands, such as Vivara that launched a store in Shopping Campo Limpo, another one in Shopping Piracicaba and another 2 in North Shopping and [indiscernible] Shopping. We also had the launching of Decathlon at Shopping Tijuca and NBA store in Shopping Estação Cuiabá and also at the end of the year, Parque Dom Pedro.

Slide 6. Occupancy cost closed at 11.5% in the first quarter of the year, a bit below of what was reported in the first quarter of '23 due to the strong performance in sales. The delinquency of the period, there is a drag of BRL 100 million in regards to the first quarter -- last quarter of '23. This is usually higher the delinquency in the first quarter of the year. We can see in the next slide, our net debt dropped to 3.3%, a reduction of 60 bps in regards to the first quarter. This reduction shows the actions of management of partners that was done all throughout the last quarters.

With the reduction of the CDI rate, the prefixed debt gain representatives in the total cost. So that's why we have a total cost of CDI plus 0.7% in the first quarter to CDI plus 0.8% in the first quarter. About the profile of our debt, we closed the first quarter with 84.4% indexed to the CDI rate, 15.1% to the prefix and 0.5% is indexed to the inflation itself. And our leverage was 1.8x of the net debt over EBITDA.

Next slide. Let me talk about the media revenue progress. Let me talk about the first quarter of '24, helloo, the media company of Allos broadened its coverage to over 100 shopping malls, and we became the biggest media platform in shopping malls in Brazil, reaching big announcers such as Disney, Burger King, McDonald's, Netflix, Estacio and Fresh Up. In February '24, helloo announced to the marketing market, the creation of a marketing agency that is focused to reduce projects in residential buildings and shopping malls of Brazil. Helloo Life is born with invention of Allos to make the experience of the consumer enchanting integrating to the brands in a significant way.

All throughout '23, all the portfolio of Allos started to be commercialized by helloo, which pushes the invoicing of media in the company in the first quarter of '24. We registered an invoicing in media of BRL 33 million, so a growth of 49% in regards to the same period of 23%. With the percentage of the net revenue, the media revenues increased 140 bps in comparison with the first quarter of '23, reaching to 5%, showing a great potential in the business line and the capture of synergies.

Next Slide #9, an update about the apps of the shopping mall. At the end of '23, we launched -- we got to the 2 million individual consumers, that use some of the benefits that were provided by the shopping malls of Allos. In 2024, we reached another significant brand. One million app users that are active that are present just in 8 malls in the portfolio and are present in all the shopping malls of the company until '25. Through the apps of the shopping malls, the consumers can access several benefits, information about the shopping malls, it's stores, services, promotions, purchasing tickets for cinema events, payment of parking lot and others.

Today, 1 to 3 cells are recognized in the shopping mall, an increase of 15% of the total GMV captured with the loyalty program in the first quarter of '24, if you compare it to the first quarter of '23, which highlight the importance of making the availability of app stores and the data captured on the behavior of the clients is a powerful tool for the monetization of these apps through the loyalty program. Helloo with that offers audience and no longer just marketing slots, the product with a value proposition that is much higher to the marketing companies.

Following the presentation, now Slide 10. We bring some highlights on our journey on sustainability. The commitment of Allos with sustainability permeates a series of initiatives and projects supporting several social causes and the local development. It is with great pride that at the beginning of '24, we are with Rio Open and presenting a new attraction, the Wheel Chair Tennis Elite, an international tennis tournament in wheelchair. Allos as a sponsor of this very -- it's a very proud moment for the company for the inclusion and diversity also.

We have another connection with another project that we're very proud, which is the Empodera Ela project to [indiscernible] women's month. The focus is female entrepreneurial, local development, with the connection of clients, partners and women tenant store owners, and it provides the generation of business. Also the back-to-back -- Back-to-School campaign. Education is a fundamental tool for the building of a better future. The visitors and collaborators donated school material for children that are socially vulnerable.

Now the guidance for 2024. Due to the approval of the disinvestments plan by the Board of Director of Allos, which can generate up until BRL 1 billion in resources, we reduced the guidance of leverage that was published in March to an interval between 1.4x to 1.9x the net debt over EBITDA. Besides that, we inform you that for the next year, the new guidance for remuneration for the shareholders is minimum 50% of 2024 AFFO, and it can be done via purchasing of sales or dividends.

Thank you very much, and we will start now the Q&A session.

[Operator]

So now we start the Q&A session just for investors and analysts. [Operator Instructions] First question comes from Andre Mazini, Citibank.

[André Mazini, analyst]

Congratulations on the results, very strong. First question about capital allocation. I believe it's fair to say that Allos is the shopping mall that is the most active in the capital allocation. And well, at selling and -- most of the transactions, well, either you -- they purchase from you or they invest together, which is the case in the south. So how do you see the possibility of having a vehicle of a third-party balance specifically for the real estate funds that are sponsored by the company? Would it help you to be more active in the capital allocation? Would it be a scheme that would increase the possibilities of the company? That's the first.

And the second one about the administration of shopping malls, which is an old thing for you, but in that state of Rio Sul, that will be the part of you, which is the part that is not yours, what can you charge to administer the stake of third parties? Is it something 3% NOI plus the condominium value? Just so we can quantify and so you can take the administration of these assets alongside your company.

[Unknown Executive]

Mazini, thank you very much for the question. In regards to the first topic. From the series standpoint, certainly, we are happy that you think that we can be a good manager of third-party capital since this is a listed company. Nonetheless, this is a process that, obviously, we have the discussion. Here, we evaluate that possibility of having our own vehicle. There are pros and cons. Obviously, the pros from the financial standpoint are obvious. You gaining the fix over the NAV of the asset from market cap or getting the versus, or just getting the administration of the property. This is different, but there is also strategic issues of interest group that has to be taken into consideration in things such as this.

I think that this is the opportunity that is real for the company. Nonetheless, we cannot give a predictability if that's going to happen and if that's going to happen in a medium term. Well, it makes sense. There are some practical issues, of course, for the preservation of the relationship with our partners. We have to take that into consideration when we make the decision.

Now the fact is that our performance for capital allocation is different. It's something that we are very proud. But I would like to bring your attention that we only have the right to allocate capital purchasing or selling because we operate the shopping malls very well. So the fact that we have a company that has more operational efficiency and it could do the integration of two fusions and of several acquisitions and several investments, this is what allows us to have the capacity to do the disinvestments. Disinvestments of shopping malls at the beginning would be the most difficult to sell. And then investing in shopping malls or doing the transactions with the credibility that makes a delivery of the result after the service provision or the shopping mall.

In regards to the business of third parties, as you said, these are average fees of the market. Yes. It's natural that there's going to be negotiations case by case, from the local depending on the type of mall that we are looking at the size of the company -- shopping mall. So there are some variations. The main ones are, well, these are averages that are reasonable from what is charged for the industry, but we don't have a definition thus far in regards to that real because we have the previous conditions so that the transaction is concluded. This is what I can answer to you.

[Operator]

Our next question comes from Ygor Altero, XP.

[Ygor Altero, analyst]

I think that now you can hear me, right? Wonderful. So I just wanted to understand that stake of Rio Sul in its first moment, we're talking about 15%. Do you see a space for purchasing an additional stake? Or is that share in your opinion, is it enough? And then we can understand a bit on the recycling dynamics. So given this macro, which is a bit more difficult with the interest rate that is more curved is more stressed. How do you see the appetites of the real estate funds by your assets? Do you feel that there is a cap? What is the temperature?

[Unknown Executive]

The acquisition of Rio Grande do Sul is being structured by the combination of several partners. So we understand that the stake that today makes sense is that 15% from the standpoint of allocated capital and also from the return that we expect to have due to the accessory revenues. Now this -- in the future, obviously, we don't know if there's going to be an opportunity to increase in the stake. But today, for us to make the structure for acquisition to work, this is where we're going to be limited to have within the effect of 4% that are being transaction right now. From the standpoint of the capture dynamic or the available capital, I think that last year is a great example because up until March last year, it seemed that the number of risk assets were done. It was very difficult to do any transaction and just in the middle of the year, we start to prepare and then we approved our disinvestment plan last year and between March and April. And now it's the same thing.

We just published the plan that we approved for disinvestment. If we are going to be able to execute it in 1 year, 6 months, 1.5 years, it depends on the questions that you already mentioned. The important thing is that the company doesn't have to do any of the transactions. All the transactions that are being done, they are done due to the opportunities. It's convenient strategic to our -- and also the opportunity. Of course, we have a few opportunities appearing and for us to buy and to sell, we want to do this with a value that is fair for the company.

So these elements are being considered the size, the macroeconomic factor, external factors that can affect the capturing. That's why it's important to highlight our balance. We capture that IR, and we will do the prepayments. And still, we're going to be prepared to fend off over the next few years, should there be a volatility in terms of macroeconomics, even though this is affecting the price -- net price of the assets. It didn't affect the capacity to capture in the real estate investors, what you saw, the ones that did the capturing shows that there is available capital. And if we're going to do good transactions, it depends on our capacity to build the transactions and making our assets be valued by the fair value that we think that they are valued. And we don't have any capital pressure or disinvestment. That's why we don't have to rush.

[Operator]

Next question is [indiscernible], UBS.

[Unknown Analyst]

Rafael, Daniella, on my side is 2 questions. First is the investment plan that you commented -- that you announced. Could you give us some color of what would be the shopping malls that wouldn't make sense? Is there any average that you're looking at, NOI? And you commented on the lease in the presentation a lot about helloo because it increased the coverage you have in 5 malls and you created helloo life. So just to understand, what is the best differential if you compare it to the players in the market and still with the helloo life, do you see a potential for the media revenue?

[Daniella Guanabara, executive]

This is Daniella. I will start the first one, and then I will let my colleague talk about helloo. When we think about the disinvestment strategies in the company, I think that the metrics are the same. We had a big size in regards to the business of [ bigger ] malls, and some shopping malls are small due to the size of the portfolio. These are shopping malls that are dominant in the cities that they are. They have a revenue that is very resilient, and they fit very well in the strategy of other market agents, such as the FIIs.

So we can have a combination that these assets are attractive for us, and that they are no longer a part of this strategy. We can combine it very well. We continue with this strategy. And as you've seen over the last announcements that we've done, besides disinvestment in total participations, we also disinvest in participations that are partial. So we can reinvest this capital in assets that are completely aligned with our strategy as it was the issue of disinvestments in the total participation of [indiscernible] and the disinvestment in Rio Sul.

[Vicente Avellar, executive]

This is Vicente. Thinking about -- well, talking about helloo. First of all, our differential since the beginning was a strong focus in the verticals that we work with. So initially, we have the shopping malls and then we have the residential building. So knowing the profile of the announcing client in these media, servicing well this plan and knowing how to offer the best medium more adequate for these clients. Now our differential will become the way that we can understand the behavior of this client, and we can transform it into a most valuable media for this announcer.

So combining what we do in Allos in terms of knowledge of the consumer and knowing that using this data and this knowledge, the behavior of them inside of the shopping or outside, but also in the selling behavior of the tenants after the campaigns, we can tie this down and deliver to the announcer more -- something more than value and not just a screen and that has a marketing ad there.

Helloo life will give us a lot of fruit in that sense. You can translate the campaigns and then you can create specific projects for the announcers and leave the screen and impact the consumer in a very strong way. So you can interact with the brand. And then creativity is limitless. Using the space of the shopping mall and the residential condominium, we can make the brands interact with the consumer in a very valuable way and generate an impact that is very strong for the perception of brand interaction and selling naturally.

[Operator]

Our next question comes from Antonio Castrucci, Santander.

[Antonio Castrucci, analyst]

Two points. Could you give us more color about the terms of acquisition in regards to the cap with the payment and the disinvestment program? Besides the capital that you announced, what would be your user proceeds for the selling up ahead?

[Unknown Executive]

Antonio, thank you very much for the question. The terms that we highlighted are terms that we can talk about right now and they're the most relevant because one of the relevant factors here that we commented is the range of price very narrow. And knowing the size of the shopping mall, that would be the third in sales and fourth in NII. So we have to establish the strategic relevance and everything that it has, and these are sufficiently relevant for the decision-making progress.

Besides distribution and capital, the use of proceeds of the sales once again, it's like we said in the previous question, we have all the scenarios for the price of the assets. The strategy is always subject to the scenario. They are living at that specific moment. So what we understand is that our strategy is to continue to grow in dominant assets. We have wholesale -- sorry, retail until medical services and aesthetic service, media, we have parking lot, all well convenience events, all of this are priorities. We want to allocate capital, and then we want to get a distinctive return on investment for the company.

One of the distinctive aspects of the company take into consideration the macroeconomic aspects is the share to the company. We have the repurchasing program. So with an expressive value, along with the payment of dividends of BRL 600 million, just on this year in terms of cash, we have BRL 400 million plus the BRL 600 million that are being paid in this month and a part of this BRL 600 in June.

So we continue to work with this process that we have seen over the last few years. If there are interesting opportunities we're going to do, we're going to work with them, but we just announced that we are going to have more disinvestments to do than acquisitions. This is what's on the table. And we reinforced the guidance and this release the guidance of dividends, which is 50% minimum of FFO. And we say minimum because if there are opportunities to increase, we will evaluate according to the market. Okay?

Thank you, Antonio.

[Operator]

Next question from Bruno Mendonca, Bradesco BBI.

[Bruno Mendonca, analyst]

I would like to hear from you about the turnovers of tenants and the strategy of the assets. So you have an effect they realize not just in you, but in the other shopping malls, which was the rent growing less than the same-store rent, the total rent. Yours was even the smallest gap. But intuitively, what do we conclude out of this, that the new tenant is getting in, being smaller rent than the previous one. So if you can talk about that, if it's a pinpoint effect, or if that's a trend?

And the second one is more strategic. Looking up ahead, we still see an occupancy cost of Allos that is low, that is very low with the space to increase. So do you identify opportunities in the [ stabilization ] assets or reduction of the companies? Is that future lever for the occupancy cost and obviously, an increase in rent and has that been done in this recent turnover?

[Rafael Guimarães, executive]

Bruno, thank you very much for the question, for your interest. So I'm going to ask -- I'm going to answer the first part, a part that we can discuss on the strategy of [ stabilization ], all of the combination of things that we are discussing in a shopping mall. It's natural depending on the quarter, you have the same-store rent, specifically because of some factors. The growth of complementary rent. So it removes a bit of the average, then there are several factors. For example, the opening of stores. We have the same occupancy of the first -- fourth quarter, but there is a lot of exchanges that were implemented at the end of the year or beginning of January, specifically with the turnover that we have right now.

The result of the turnover was positive. The fact that we grew rent, regardless of having a negative [ IGPM ] is an indicator of the health of our tenants of the activities of the shopping mall. So these quarterly factors, they affect the results of specific. For example, we had Easter in the first quarter, which is not so common. So just this factor in and on itself affects this issue on the short term when you have specific variations of performance and some contracts.

[Bruno Mendonca, analyst]

So could you tell us about the management of the mix?

[Unknown Executive]

Hello, everyone. Complementing a bit of what Rafael said. We are reworking some big issues. We are decreasing the exposure. And going back to the leader [indiscernible] big ones that we had difficulty last year and even [indiscernible] American. So we have a strategy to work with the stabilization of these areas, several of them we have contracts signed. And there are several examples of that. One of them, there is a leader selling 4x more a leader in Bangu. So we have several examples that we are seeing a stabilization and qualification of the mix. So I think that the occupancy cost is a consequence of that.

We've been managing to bring on average, the new allocations selling on average, 30% above the previous ones, and we are able to work with higher levels than the ones are left. Obviously, it -- when you have a higher sale, it rebalances the occupancy cost, but I think that the subproduct of this is as Rafael said. There is a negative readjustment. And regardless of that, we can bring increments in the line of rent, even with a negative IGPM scenario.

[Operator]

Next question is Marcelo Motta, JPMorgan.

[Marcelo Motta, analyst]

Two quick questions. Going back to the issue of the disinvestment and understanding why BRL 1 billion, why not BRL 2 billion, BRL 3 billion? So how do you get to that metric? Because when we look at the cap rate that the company is trading and a level of capital, you're selling the more that you do, the more value added. So I think that there is a limit because of scalability of the company. But how much could you do in terms of the disinvestment and the limit is because there is a cap in the market. So I wanted to understand this math. And the other doubt is about treasury. You have here the shares that have a new program of over BRL 20 million. [indiscernible] cancel that. What are you going to do with that amount? Are you going to use a strategic M&A, something in that sense?

[Daniella Guanabara, executive]

I will start with the second question, the issue of treasury. We are going to be able to cancel these shares in the short term that we have in the treasury. We have the legal transaction, and we open more space for the repurchasing program should there be -- should our standard be kept. Well, doing more or less is what you mentioned. We have to -- the scalability of the company, we have to see what is the size of our company, and we are a shopping mall company with a short, long term. We want to continue to be a shopping mall company. And if we would grow indeterminately, it would be to liquidate the company, and we don't want to do that.

So what we need to do is to do the studies and understand what are the assets that we have resources for disinvestment and others that we have mentioned that are suffering. We have participation, so we can have more acquisition opportunities, which is the case for Rio Sul. We are going to focus on those assets that are leaders of the market, resilient, and they add to our ecosystem and making our that scalability, big scalability and with the negotiation power.

[Operator]

Our next question is from Elvis [indiscernible].

[Unknown Analyst]

Thank you very much, 2 questions. First one, broad tax reform. Did you do any internal study to predict what would be the effect of this new proposal? And if you can share what is the conclusion? And the second question is to understand in a more pinpoint way. You commented the net debt to EBITDA, it should be in a ratio of 1.4, 1.9. So I want to know what's implicit in the number? Do you have a possible disimbursement with Rio Sul? And also the repurchasing, what can you tell us given what we've seen?

[Daniella Guanabara, executive]

Well, let me start by the tax reform. I think that everybody knows 2 weeks ago, the government published what is the complete proposal for the tax reform of Brazil, and it included the specific details and consequently, the rules for the real estate selling. With this proposal of the government, we're working to deepen the knowledge on what is the proposal and working with ABRASCE and the other associations in the real estate sector to get an equilibrium for the total real estate. The IBS, CBS regime is full noncumulative taxes calculated on the outside and highlighted. So it will be a credit for the next one in the chain.

It's important to highlight that because of the rule of CBS and IBS, the CapEx starts to generate credits, and that's important. And we have another point that we have to highlight, which is the new taxes that will substitute in a gradual way the current taxes until 2033. So there is a space of time sufficient for the agents and the change to be balanced.

But if we are going to talk about what is the percentage and what is the impact is still very premature because we are starting with a proposal of the government and there is space for negotiation. And so we don't know what is the equilibrium point. I think that there is a concern in regards to this transition. We know that those that are in the REAL or PRESUMIDO, they can credit and the issue SIMPLE would be 15%, 20% of our bases in SIMPLES, and we have a space to work and defend the interest of the sector, including the tenants.

Now talking about your second question in regards to the leverage points, the guidance went 1.4, 1.9. It includes the repurchasing of sales, the guidance of dividends and also part of the disinvestments. So we are getting that all on the line. And if it's more for the bottom or the top, it depends on the market conditions and what can we execute all throughout the year.

[Operator]

Next question, Jorel Guilloty, Goldman Sachs. Please continue.

[Wilfredo Jorel Guilloty, analyst]

Two questions here. One is pinpoint, the other one is strategic. First is about your disinvestment plan. I just wanted to understand, how much in terms of ABL and NOI, what are you looking at? And second question is, how do you structurally think about leverage? You have the new guidance and leveraging is 0.5x less in regards to the previous leverage. When I look at you and your competition, they're trying to work with the 1x or 2x the net debt over the EBITDA. So this is the record. But I wanted to understand, do you believe that from now on structurally other feature company in the sector, we should see this type of leveraging more light? Or is it a pinpoint thing, maybe because of the macro situation, the interest rates or opportunities for growth? That would be it.

[Unknown Executive]

Jorel, thank you for the question. I think that -- this is the first straightforward question. Well, I cannot open to the market what I am expecting for evaluation at a moment that the interest rate is varying if you -- because of the commodities. So we are seeing this more volatile, and we have to speak less and execute more than what we speak. And within our targets for selling, this is important given that the -- last year, we did BRL 1.1 billion and with our selling objectives, we have this possibility, the potential of doing transactions that gave a lot of liquidity to the company in the case of the selling of assets. Fortunately, I just wanted to facilitate the lives of those that wouldn't buy.

Now I think that your question is exceptional and very important for the investors so they can understand the future of our business. The question is, I don't know because what we know is that in Brazil, the absolute uncertainties are always proven every crisis that happens. So I'd like to have the company not more than 2x the EBITDA, of course, depending on the investment scenario that have a quicker return. Rio Sul is low return with low risk and other situations that are more daring. We're growing our business in other fronts, and these are smaller checks.

So in Brazil, in markets such as ours, we cannot write down in stone the level of risk that we want to have perennially. We want to have flexibility. So that the -- I don't know, it's also a decision for the strategy so we can take care of the company in a prudent and humble way. So maybe coincidentally, all of our peers, they think alike, and they managed to survive a country that is very instable with a very stable business, building businesses that are very resilient and going through a different crisis, and now we are alive.

And in the case of the 3 companies, it's much higher than the wholesale growth -- retail growth and the other shopping malls growth. So I think that we've done an exceptional work in this -- in a sense. And if everyone has the same level of expectation, it's important information, but the macroeconomic scenario changes, international scenario changes. And if the facts change, I change my mind. So since you need to be a philosopher from a strategic standpoint in the long term, that's my answer.

[Operator]

[Operator Instructions] Since there are no more questions, I would like to give the floor to Mr. Rafael Sales to close the event. Please, the floor is yours.

[Rafael Guimarães, executive]

I would like to close restarting with our message of concern and support to the State of Rio Grande do Sul. Our team that is there would like to offer our support. Obviously, we would like to do more than what we can. But today, we need to have a big effort, so we can -- in this moment of difficulty. We need to help the state to rebuild so that people can have a better life. So this is my desire, my wish so that things improve quickly in Rio Grande do Sul. And remembering that you are in our thoughts and prayers. Thank you very much and see you next call.

[Operator]

The earnings call of the first quarter of 2024 of Allos is closed. Thank you. And you can have a nice afternoon. Thanks.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]