Iguatemi SA

BOVESPA:IGTI3

Earnings Call Analysis

Company Highlights Strong Earnings Growth

In a robust quarter, the company showcased a 9.3% increase in same-store sales and a notable occupancy rate of 94.8%. Gross revenue grew by approximately 11% and net revenue by 12.4%. The reduction of discounts contributed to a 23% drop in expenses from BRL 108.5 million to BRL 85 million. Notably, the EBITDA margin reached 90%, with a total EBITDA of BRL 860 million for the last 12 months, surpassing expectations for 2023. Moving forward, net debt decreased to 2.3x EBITDA, predicting a year-end below the 2x threshold. The net revenue surpassed the annual guidance with an 18.3% increase, while investments reached BRL 139.5 million, signaling a strong compliance with the full-year guidance.

Performance Overview and Strategic Highlights

Iguatemi has showcased a robust performance, adhering to all guidance with confidence in meeting year-end targets. The company's total sales have risen by 9.3%, amounting to BRL 4.5 billion, outperforming the sector's average growth. This growth is attributed to the strategic enhancement of their store mix and an uptick in occupancy rate. An additional highlight is the debut of the flagship Tiffany store, expected to amplify the company's appeal and drive further growth. Furthermore, a critical factor behind Iguatemi's positive results is the improved quality of tenant mix, allowing for a reduction in discount levels and maintaining low default levels. With a blend of operational efficiency, improved leasing spreads, and a sharp focus on high-margin business segments like luxury retail and food services, Iguatemi is positioning itself for sustainable growth and profitability.

Financial Strength and Investment

Iguatemi has demonstrated financial resilience with significant growth in gross revenue by approximately 11% for the quarter and 14.5% year-over-year. Net revenue growth stood at 12.4%, supported by a scaling back of discounting and efficient cost management. The company's expenses have seen a 23% decline in comparison to previous figures, and operational efficiency efforts are expected to yield cost reductions in the fourth quarter. The company registered a strong EBITDA margin of 90%, underlining the effectiveness of innovative strategies like harnessing other revenue streams. With careful capital allocation, Iguatemi reported an investment of BRL 139.5 million, emphasizing the full compliance with the year's investment guidance.

Debt Management and Future Outlook

Focusing on prudent financial management, Iguatemi's net debt-to-EBITDA ratio improved from 2.6% to 2.3%, signaling a robust cash flow and the responsibility taken towards deleveraging. The company's efforts in maintaining a sound debt profile have resulted in a borrowing cost close to the CDI (Interbank Deposit Certificate) rate, benefiting from reduced Selic rates. Reflecting on future prospects, guidance compliance remains strong with net revenue surpassing expectations, reaching 18.3%. Despite predicting a slight decrease in retail revenues due to certain brand transitions, Iguatemi anticipates maintaining high occupancy rates through the end of the year, further facilitating sales growth and margin expansion.

Market Position and Expansion

The company expressed confidence in reaching a consolidated occupancy level of 95%, supported by a portfolio of contracts signed throughout the year. Iguatemi underscored the importance of their retail segment, mentioning substantial growth in fashion sales and strong demand in the jewelry and beauty sectors. Their strategic focus on signature stores and leasable spaces, particularly through the introduction of new fashion brands, reiterates their commitment to growing their core business. In addition, Iguatemi's strategy to adapt its retail platforms, shifting focus to brands with higher profitability, reflects adaptability and strategic foresight to maximize returns.

Earnings Call Transcript 2023-Q3

[Operator]

Good morning, everyone, and thank you for holding. Welcome to Iguatemi S.A. Third Quarter 2023 results conference call. With us here today, we have Ms. Cristina Betts, the company's CEO; and Mr. Guido de Oliveira, CFO and Investor Relations Officer.

Please be advised that this event is being recorded [Operator Instructions] This event is also being broadcast live via webcast and may be accessed through Iguatemi's Investor Relations website at www.iguatemi.com.br/ir where the slide presentation is also available for download [indiscernible] and made you the slides at their own convenience. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Iguatemi management and on information currently available to the company. They involve risks, uncertainties and assumptions as they relate to future events and therefore, depend on the contents that may or may not occur. Investors and analysts should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Iguatemi. We will now give the floor to Ms. Cristina Betts, who will begin the presentation. You may proceed, Ms. Betts.

[Cristina Betts, executive]

Well, thank you, and a good day to all of you. Welcome to another conference call. And once again, we have had excellent performance of Iguatemi. I have always spoken about our resilience and our assets. We end the third quarter complying with all of our guidance and sure that we will conclude the guidance this year. And we're going to shorten the presentation somewhat to allow more time for question and answers. I'm going to simply refer to some highlights. Now in the opening, we had total sales increasing almost 10% above the average in sector according to [ ABRATE ] data, total sales reached [ BRL 4.5 million ] (sic) [ BRL 4.5 billion ] 9.3% above the third quarter '22, which was strong. Of course, this refers to what we have been stating of enhancing the store mix and you must have observed an increase in the occupancy rate as well. Now all of this has contributed to this and something that does not contribute to this along the lines of the mix. We announced the first flagship the Tiffany that will change places in Iguatemi and will be in front of what we call the watch square [indiscernible]. Obviously, when it comes to results, the company also had sales generating positive results. The qualification of mix, of course, helps us to decrease the level of discount, which is a very important factor, and it was very positive in this sector and the default levels that are truly very low. Very frequently we stated net default that is negative. And in other periods, we have spoken about past due amounts that we are receiving. And if we compare to the third quarter last year, we also have had a growth. Of course, Guido will present the figures and I'll allow him to give you more detail as part of the result that we released. We think about our ESG agenda. We have, of course, spoken about our concern with that as part of the company issues and we're still at the beginning of a journey. We're working with 100% renewable energy. One of the few companies in the sector. We will speak about our projects for energy efficiency instituting lighting per lead. We spoke about our [indiscernible], SGA, 10.8% of energy and a reduction in the use of water in the shopping mall.

To speak about the surrounding of our assets. Of course, it's always very important to refer to our strategy to pursue the densification around our shopping malls to ensure it has quality. And in the third quarter, we carried out a sale of a small plot close to Iguatemi Rio Preto and it has brought in BRL 3.3 million into our results. An important highlight that we mentioned here is the occupation of Sky Galleria in front of the Galleria shopping that is fully occupied and until the end of the year, it will be fully occupied and people do have an important impact on the flow of the shopping mall and the impact that this refers to.

We also have a share buyback plan that we referred to last year, we have complied with 12% of what was approved a little less 2.9% of our outstanding units. We also mentioned the construction of [indiscernible] which is an entire neighbor that we're going to develop. The first part will be developed something that we call a prototypic area that will be the infrastructure of the neighborhood. This will be -- this was concluded in September. But also go to their shopping mall, you can see this route. It seems an annex but this is a way of showing how the neighborhood will look. We will begin with infrastructure and the construction of our focal point for commercialization, which is a house that we're also calling the Casa Figueira that will begin in January. Now another highlight. We have referred to how strong the events are for the shopping mall, we had a great deal happening this quarter. Perhaps the highlight was the seventh addition of fashion talks that took place in October. This was our seventh addition and was a full success. We had partnership in terms of partner sponsorship. We also brought in a very differentiated audience, and we had a highly qualified [indiscernible] of speakers and influencers. We have steadily enhanced this event positioning the company in terms of fashion and as a developer of fashion in Brazil to speak about new trends. We're in the final stages, and this should be concluded this week on Sunday. Our third division of collections you have until Sunday to change the pins. And once again, this addition has been highly positive. We have 15,000 new clients, 7% sales more than the last collection, and 20% of the fills identified as part of collections gives us that beat of our activities in the shopping malls that are very important, of course, for other activities that were also enhancing. We're going to speak about all of this, and we must say we're quite confident for the final results of the year 2023. We already have the result of till for October. On clothes, we ended the October sale above 9%, and we haven't even gotten to November and December where we normally have very strong sales. We have had a positive net flow of vehicles up to present. We have spoken, therefore, a resumption of growth in -- well, in the flow of vehicles in the shopping mall, and we are quite confident that we are in the upper part of our guidance. We're going to also speak about our results. Now to begin with the presentation. I'll simply mention the first part and then Guido will refer to the results I spoke about the results of the third quarter total sales reaching BRL 4.5 billion, up by 9.3% versus the third quarter '22 and the highlight of October, which is very positive for us. Same-store sales grew by 6.3%, same area stores, 9.3%. This is very important for us as it reflects the channels, we have a positive spread of our store. Same-store rents growing 8.3%, and same area of rent 6.5% gross revenue, reaching BRL 341.5 million, up 10.2% vis-a-vis third quarter '22 and the net revenue reaching BRL 282.7 million with a growth of 11.2% over the third quarter '22. If we exclude this straight-line that, net revenue reached BRL 301 million, a growth of 12.4% over the third quarter '22. The consolidated adjusted EBITDA -- we have a consolidated EBITDA reached BRL 247.8 million, 35% higher than the third quarter '22 and a very good EBITDA margin of 82%, adjusted net income reaching BRL 100 million in the quarter, 80% increase over the third quarter '22, and an adjusted net margin 33.8%. The FFO, very positive, BRL 145.2 million, up 48.6% with a 48% margin. And of course, because of all of this, we have a drop in the leverage of the company, reaching 2.13x, 0.24x below the second quarter '23. As I mentioned, we had the sale of a fraction Iguatemi Rio Preto, the third dividend installment of BRL 27.5 million that will be paid on September 15. I've already referred to the share buyback plan, where we have concluded 12% of our plan. We have in portfolio, some units to outstanding. I've already spoken about the Iguatemi Collections campaign that will extend until November 19. We ended the event of Barbie Dreamhouse at JK Iguatemi, this has been taken to the Campinas mall where it will be until November 29. We have the back at Iguatemi Sao Paulo was chosen as most loved mall in the country by Veja in August 2023. This is in the mind and the memory of people.

Etiqueta Única’s kiosk was opened. We spoke about the investments last year, the largest operation of luxury secondhand products, and we now have the kiosk to facilitate the connection with products. Change of 9 tenants in Iguatemi Sao Paulo, we spoke about the move of Tiffany and all together is to make this movement more feasible. And this has given us BRL 22.4 million in key money that was accounted for this quarter. I have already spoken about the Iguatemi Talks Fashion. I did not speak about the issue in this quarter, a very positive one of BRL 500 million of CRIs. Now to speak about real estate property development. To show some photos of Casa Figueira. This is the prototyping work when we look at the pictures, if you look at the right below in the slide, this is the street that goes to the mall in the background. And this is always where the [indiscernible] of what we be doing again in terms of sidewalks, bicycle lanes that we will put throughout the entire neighborhood. This gives you a very good idea of what it is that we're trying to develop. I will allow Guido, therefore, to speak about the main financial indicator.

[Guido de Oliveira, executive]

Now on Slide 8. Good morning to all of you. I'll speak about some highlights for this quarter. Well, the upgrades highlight is reaching 9.3% in the quarter, in the second quarter, 8%. We have ended October, showing you very strong sales of 9.4%. This gives us a great deal of strength for the fourth quarter, which is the main quarter of the year, same-store range 6.3% with an average of 7% as in other quarters. Offsetting the drop of IGPM that we had in the last quarter. In the third quarter, the impact was only 2%. This because we have withdrawn the strong discount. And in this quarter, we have 2 percentage points for discounts or the average for the last 12 months and a positive spread on renewals. This has been arduous work with real gains of 4.1%. What is also important is our occupancy closing at 93.4% vis-a-vis the second quarter with an increase of 1 percentage point on the average. Now we get to 94.8% of occupation. We began the quarter with very strong occupancy. We'll go on to the next slide, #9. And we would like to highlight the growth of our gross revenue of 11% approximately for the third quarter and 14.5% for the third quarter. Now in revenue, 12.4% growth. It's important to show you that the discount has dropped to 8 million vis-a-vis the second quarter of '23 and the third quarter of '22. This shows you the strength of our sales and the resiliency of our tenant this quarter. Also, the drop in costs and expenses, 7% in expenses. When we look at the 9 months, we're still above the cost and expenses line item. But during the year, we will be below 2022. Now the cost and expenses dropped BRL 108.5 million to BRL 85 million, a drop of 23% when it comes to expenses. And in the third quarter, our work in terms of operational efficiency reach up to June. This still shows the cost of a recession, and we will only have these new figures coming in, in the fourth quarter with a slight impact on expenses. Let's go on to the following Slide #10. Here, we show you our results without the Infracommerce and share swap results. The impact on gross revenue of 16%. And our net revenue with a margin of 33.8%. And a margin of 48%. Beginning this quarter, our net margin will continue to BRL 138 million and our FFO margin increasing very close to 48%, which is a new reality in the company, showing you the work that we have carried out in the. In the next slide, #11, we refer to I-Retail and Iguatemi 365. Our retail results, we had a drop of 17% in gross revenue and the net revenue. As we have mentioned in the second quarter, we turned over the operations of Balenciaga. It is no longer part of our retail platform. And this is what we do constantly. We bring down brands after they become mature. They are operated by the operator and the decrease of 365 focusing on brands with a more positive profitability. This is what we have done with Iguatemi 365. EBITDA is negative by [ BRL 3.176 billion ] were not for the rescission cost that we had in the third quarter. This figure would have been positive. Beginning in the fourth quarter, these figures for I-Retail and Iguatemi will become positive. Let's go onto Slide #12, a where we speak about our mall P&L. We've spoken a great deal about this. Now the EBITDA margin reached 90% based on extremely focused work on other revenue and we highlight the work we did of replenishing the stores of Iguatemi 365 and the opening of the Tiffany flagship store that brought us again BRL 3 million, along with other gains in the portfolio, we reached almost BRL 3 million in other revenues. Now this is a gain for Iguatemi, the sale of our sales points and the valuing of our sales point. This is a very important point, reaching a margin of 90%. And this 82% for the 9 months of '23. In Slide #13, we've already referred to this, but you see the strength of the growth of revenue, rentals increasing 13%, parking, once again, with gains, and of course, the renewal of older rentals reaching a growth of 13.8% for the quarter and 15% for the 9 months. We go on to Slide #14. And here, we would like to underscore the work on rent, both temporary rentals and the overage. Now having this occupation enabled us to enhance the lease spread. This is a recurrent work that we have carried out lease spread, and we show it here. And the condo has maintained a very healthy level we see more tenants overcoming breakeven, and 16% of the tenants are paying the full rental. Now this shows you the strength of the sales in our portfolio and the maintenance of the condominium cost based on the strong work our company has carried out, a growth of 36% between 1 quarter or another 27% year-on-year. In temporary rentals, and we're referring to events here. We have held a large number of events we mentioned in the release. And along with this, we also have sponsorship and the entire part of panel and kiosks with a growth of 20% in this quarter and a growth of 25%. And in the 9 months and the growth for the future will continue to be very strong. We have been working steadily in event, and we have become a benchmark there. We go on to Slide 25 (sic) [ Slide 15 ]. I have already spoken about the drop in cost and expenses. If you look to the right, we show you that our expenses represent 21.7% of our net revenue. And throughout the order, we have been working on this. We have gained 7 percentage points, but we still have had an impact on expenses when we look at the cost of severance of recession, and this does not reflect the true figures of the company. Costs and expenses for the year were below those of 2022 and only 5% above this because of the work we carried out during this quarter. We go on to our balance on Page #16. We show you the EBITDA reaching BRL 860 million in the last 12 months. And this EBITDA for the last 12 months is above the consensus for the year 2023. So it shows you the work and the growth of our EBITDA. Net debt because of the company's cash generation and the growth of EBITDA goes from 2.6% to 2.3%, with a drop of 0.4 per quarter. And this shows you that at the end of the year, we will be below 2x net debt EBITDA. When we look at the graph below, you see our cash at September 30 of BRL 1.071 billion. And the cash for the quarter that ended October 16, a very well carried out operation. We were able to work with a 5- to 7-year operation with a CDI rate, a very successful operation. And in the last graph of Page 16, you see that our cost is very close to CDI. And this is the work that we carry out to maintain our debt profile through the CRI real estate certificates. The rate is 80% of CDI and the debentures and others also very close. So the reduction in CDI pushes our rates down. And this because of the reduction in Selic, which should aid in a bit our results in net revenue and FFO. We now go on to the last slide on Page 19 where we show you our guidance and what we have done for the 9 months, '23. Net revenue above the guidance, 18.3%. Net revenue growth in retail, we're very close to the ceiling of 5%. And in margins, of course, once again, very close and an investment, BRL 139.5 million. As Cris mentioned this reinforces how we have fully complied with the guidance for the 12 months of the year.

We're quite calm at this point. that we will fully comply with our guidance. If we keep in mind the third quarter. And we have seen the figures of October, sales of 9.4%, October better than the third quarter. So we have a very good quarter ahead of us. With this, I would like to end the presentation, and we will open the floor for questions and answers.

[Operator]

Thank you very much. Ladies and gentlemen, we will now go on to the question-and-answer session [Operator Instructions] Our first question comes from Juan from XP Investments. Juan, you may proceed.

[Unknown Analyst]

I have two topics I would like to mention. First of all, understand your distribution of the sales performance during the quarter, you had a very strong July. What happened during the quarter? And if you could speak about your expectations and the strategy for the end of the year. The second topic refers to occupancy. First of all, I would like to understand which assets can allow you for an evolution going forward and also hear about your expectations for the fourth quarter. Now you spoke about your higher consolidated occupancy and if you believe you will attain the level of 95% that we had discussed in other costs. Can we expect that?

[Cristina Betts, executive]

Now to speak about the distribution of our sales performance. We had in terms of services, entertainment and other, the highly expressive value of increase in sales vis-a-vis the third quarter of '22 because let's agree we didn't have the cinemas for the operation of last year after Barbie and Oppenheimer came that was a boost and this has continued. So we had a very strong resumption in that part. What is more important for us is when we look at fashion, which is a flagship and that has been highly expressive. When we speak about a growth of 5.8% in terms of cash transactions and other products. This is 1/3 of our PL so we can understand the importance of this. And when we speak about good, we're still doing extremely well in terms of food. And I joke in Sao Paulo, if you come down to the mall 5x a day, that would be very peculiar. And we truly do see growing demand for interesting not only for the lunch period, but also in the evening. And we see visits to these spaces during the day. Many of our restaurants are occupied in the morning, [ Padaki ], for example, is always full. And these spaces are occupied during the first snack or something similar, which means that we're taking full advantage of these assets.

We see something very similar, and Guido was referring to the sales of October. The sales of October are 9% over the sales of the third quarter '22, still very strong in terms of entertainment and also very, very strong when it comes to fashion. What we have maintained as well and that is very important are the jewelry stores and the health and beauty sections, we observed strong demand for skin care, beauty products, makeup, and this is growing strongly. Now jewelry has always done this is an important segment for us, and the Japanese store, of course, is very welcome. It will simply reinforce this trend. In terms of occupancy, we're quite confident that we will obtain what we had offered in terms of guidance. We ended up with 94% for the quarter, and there's very little left for us to reach the end of the year with our guidance and many things are happening because what is it that happens, which is the dynamic. We sign things, there's some time between the signature, you have the project, you begin to work in the stores. And of course, it's difficult to have more store openings at the end of the year. People either open their stores on Mother's Day at the end of the year. Well, nobody will open a store in July. I'm overdoing it perhaps because this is a month of vacations and discounts, there is this dynamic. And with the dynamic in mind and as we know the portfolio of contracts that have been signed we do believe we will attain that value now where the greatest differences lie in the hinterland of Sao Paulo. And hinterland of Sao Paulo, we have had a strong increase. And in Alphaville as well. Last year, we carried out a radical change in Alphaville, I don't know if you visit that shopping mall, but the qualification of mix is very clear, and we have several new stores entering that mall. We're very enthusiastic. We've also signed important contracts in the hinterland of Sao Paulo, restaurants. So we're quite calm in terms of our occupancy rate.

Now to refer to the occupancy rate. When you look at the store that have been inaugurated in the second quarter, we said that we had 150 contracts. We now have 111 additional contracts. In July, we had an additional 40, 190 contracts since the beginning of April, signatures in July, and all of these came into effect at the beginning of the third quarter and will come to fruition in the fourth quarter. When we think about the opening, we have a great deal of fashion. New fashion coming into the mall, and this will reinforce that figure for the growth of fashion. In October, the growth of fashion was 15%. And we have accessories and other stores, either fast food, but most of the stores are accessories jewelry and fashion, a great deal of fashion. And this reinforces the importance of our retail thing. Because services are extremely well anchored with restaurants with a very good performance.

[Operator]

My next question comes from Daina Acosta from UBS. You may proceed.

[Unknown Analyst]

I would like to further explore your guidance and look at the revenues for the first 9 months, you're at the top of the guidance in terms of that metric, you have had very healthy positive operational factors. What will happen in the fourth quarter with a lower consolidated revenue growth. In the fourth quarter, will there be an acceleration of revenues, a stronger comparison or something that we cannot see here. And when we speak about costs, given what you did in July, I would like to know if this has altered your cost for the third quarter. This will happen from the fourth quarter onwards. And if there is space for your margins to go beyond the guidance.

[Cristina Betts, executive]

To answer the first question about the guidance we're quite calm when it comes to complying with the guidance when we look at the net revenue, we're on the upside of the guidance for the mall. And in terms of [ breach ], we're very close to the upside. Now in terms of the shopping mall, we should be part of the guidance and be very close to the top of the guidance. Last year, the fourth quarter was quite difficult. And we have a same-store rent to maintain what we saw in the third quarter, the IGPM, we will be very close to the upside of guidance. Now when we look at the retail there, yes, we will have a drop because there we have already shown you there is a drop vis-a-vis third quarter. We have had a decrease in 365. And we remind you that last year, we had Balenciaga part of retail increasing sales. Balenciaga withdrew from the mall in the second quarter. And we will be very close to the floor, the bottom of the guidance in this. Regarding the margins, we will be over and beyond the guidance we are already above. And as you mentioned in cost and expenses, I showed you that we had a drop of BRL 24 million from one quarter to the other and the impact of recessions [indiscernible]. If you remove these impacts from the third quarter, the fourth quarter will have figures that are lower. So the cost and expenses will be below 2022, considering the third quarter. Is third quarter still does not reflect the work of efficiency that we have done throughout the quarter.

[Operator]

Our next question comes from Bruno Mendonca, Bradesco BBI, you may proceed Bruno.

[Bruno Mendonca, analyst]

We have two questions. First, about the default levels. This is another quarter of reversion, if you could give us more color in terms of what you estimate in terms of fact that you have, how many more quarters to reach a normalized level of receivables. This is the first question. Second, to speak more about details, looking at asset per asset and the growth of rentals and parking. What draws attention are some differences, especially in the assets that are performing less as well in P&L, marketplace and another, they have a negative growth in rentals year-on-year, but a strong growth in terms of parking Praia de Belas, parking has increased in marketplace, a drop of 6% in rentals, but parking with an increase of 11%. Now this increase in parking, let's speak about this. This has already become a sale. And will this mean that we can think about the stabilization of rentals. I think you have a few assets that are outliers in this case, Praia de Belas and marketplace, of course, do draw attention. But the others will perhaps close this gap in 2024.

[Cristina Betts, executive]

Now if we speak about default for the second quarter, we have a negative default in the release, the growth default is around 4%. And much lower than the indicators before the pandemic. And we're close to the figures we had in 2015, 2016. The state-of-the-art would be to have gross default of 3%. We are at 4.5%. And we're working strongly on this. We had a recovery last year because we're very good at fighting out our collection we did not leave the rentals that were under litigation behind and in a recurrent way, we show you that we have a negative default. And if you look at accounts receivable, there is a drop. And because of the straight line effect, there is a drop. Amortization has increased its state. And in other revenues, we also have an enhancement in the path to account. In the coming quarters, we believe the Selic rate will be low, accounts receivable will be quite strong, default will be low. And once again, the strength of the sales of October that we showed you here we already see in the -- what we received on November 1 because bills are always paid on November 1, the opening of default was the best in the year. So this shows you the robustness of our tenants. Let's speak a bit about marketplace and Praia De Belas. In fact, there are assets do have a slight difference between them in Praia De Belas to speak about the mix we have an important plan to requalify the mix of Praia De Belas. We have a plan that we have next name here in-house the fashion trend. We have the top down coming, important things in the few months. We had the opening of Nike and other important things. So very gradually, we're seeking this recovery. So we're pursuing this and that is why the rental is suffering more.

When it comes to parking, we always have an increase in the rate to be at the level of those surround us. And of course, we have a significant proportional increase. We're working on this in Praia De Belas and marketplace to ensure that we have monthly parking contracts, especially in market place. In the last floor, we have a [ card ] that has positioned itself very well. This is a very important region for offices, and we have had meetings together 10 days ago, well, some years ago, we used to do this here as well with card. And it has been very successful at marketplace. We're trying to be very creative in terms of occupying our idle spaces in these two assets. And this is thanks to the work we do. We also have a plan for a marketplace in terms of rentals of repositioning the mall. We will give you further details going forward. But we clearly want them to become shopping malls that are more connected to services and guestronomy. We have given the malls an important positioning in guestronomy with new restaurants, the food court works very well. With the return, perhaps not 100% of home, office, there are several offices that surrounding this mall, and there has been a resumption in the occupation of restaurants. But we know that we have to rethink the use of spaces that are not connected to these two ideas. In parking, we're becoming more creative. We're being more expeditious and that is why you have that discrepancy in growth. And the flow and parking, well, it's not a traditional flow. We have monthly contracts. We also have the card. We have different rates. The flow is more constant compared to what we saw in other quarters. But of course, we have the effects that have led to this increase.

[Operator]

Our next question comes from Andre Mazini from Citibank.

[André Mazini, analyst]

We have three questions. About the sale of [ BRL 0.3 million ], which is significant. Could you remind us of the mechanics if the store goes into a space that was vacant or is it entering into a space of a tenant that was in default or areas where Iguatemi had repurchased the point of sales. And if we could have an update in terms of greenfields, I know that you're going to increase your operations there. In the past you had a potential project close to Congonhas. I don't recall if it didn't go forward because of problems of approval or because of the market condition with the improvement in the market with that specific project be something that you are considering again?

[Cristina Betts, executive]

Simply to remind you, we did miss part of your question, we had some noise in our back-up line. if I don't fully answer, please tell me in terms of the mechanic of tenants, how does this work when you have a balance when you change one for another, we have to approve who will be the new tenant. And of course, the new will pay the key money to the older tenant. Now in terms of the accounting that we carried out for Tiffany, many of the sales points were already ours. Because we had retaken some of the points build we had taken out some tenants. This is work that we did through time. So we had this inventory of point of sales. It's just not something that happens overnight. Of course, all of this process has taken more than a year to get to where we are. And we have already been working on this. But we do constantly at Iguatemi taking back point of sales. Perhaps some tenants are operating, but they're not entitled to the point of sales. So this is how our measures have been geared to occupy spaces that were already ours when we were removing some tenants, some were removed for good and others simply left. So this amount that is accounted for in the quarter is because those areas were already ours when it comes to the greenfields.

It's true that we do have some things in our pipeline and that we maintain there. We continue with the process of approval. It is a very complex project. We still do not have 100% of what we would need.

In terms of appetite for greenfield in a very generic way. We're still not fully there. We do want to think about expansion. We have been speaking about this another quarter because it makes more sense, especially that point that has reached an important occupancy rate. Now we're going to speak about the guidance for 2024, and we're going to continue to increase our occupancy rate, and we realized we no longer have any more space. So we're thinking about new space and planning new malls. There is room in our portfolio to work with expansion and now look at greenfields at this point in time. But we want to have an organic expansion. This makes more sense for -- in the retail part, an expansion of the mall, and we see a great synergy and excellent impact in shopping malls. I think the greenfield project will be left for the future.

[Operator]

Our next question comes from [ Matthew Ismiloni ] from Santander Bank.

[Unknown Analyst]

Congratulations for your results. We would like to understand your outlook of the demand of developers for the Figueira project, which are your negotiations, your conversations. And if you could speak about Starbucks, if they are in [indiscernible], there was news in the press that they were trying to recover some stores in some shopping malls, if you could refer to that process.

[Cristina Betts, executive]

Matthew, to speak about Casa Figueira, we still have not begun to sell the lots for Rio. We will begin that in the coming year. We're getting ready to -- what you do with equity, a road show or something similar to present the project to show with RD lot. Remember that this is the gigantic piece of land that we're going to carry out the sale in stages. We're going to sell the lots that are closer to the shopping mall first and then over the entire area through time. We're going to begin in 2024. We're preparing the material. We have done quite a bit so far, and we're almost ready to be begin. There will be a normal interest, and if it is a neighborhood that stands out. The project is incredible and I talk with Carlos that we should create a senior living there because it's the nicest neighborhood in Brazil. But jokes side, very special project we have begun from scratch. And we have that ability to do what began in other areas in terms of mobility, everything has been thought out. We have a park that was integrated it's fully very different, and it will incentivize the integration of the land part with the other buildings. We have better interval for services, laboratories, several very positive things in the neighborhood that are quite innovative, but we're going to begin selling in the coming year. Now in terms of the tenants, we don't speak about individual tenants. I would not like to think about Starbucks. But I will say that it's not the first time that we have tenants undergoing difficulties.

We are aware of this. We know how to act, and this is not going to impact. Our rental were quite calm. When it comes to negotiating with them. We have done this in the past. It's not going to be a big deal. And you will recall in the past and this continues to hold true in the present. We're not concentrated on a single tenant. We have a highly fragmented portfolio. And when this type of event happens, of course, we offer them our full attention, but it does not impact the whole in a significant fashion. We're quite calm. And a great deal has been said about the retail market during the quarter. But the shopping mall doesn't depend only on retail services. We have maintained a growing occupancy rate and we have maintained these problems as something minor. And we have worked very well with the turnover of tenants, but the impact will be minor. Once again, the impact will be almost nil, and we have sales of more than 10% for the entire year. Sales have been very strong.

[Operator]

Our next question comes from Jorel Guilloty from Goldman Sachs. You may proceed.

[Wilfredo Jorel Guilloty, analyst]

We have two questions. The first, I would like to know about the performance of the retailer, EBITDA was the lowest, the lowest drop that you had, will your schedule change in terms of your breakeven trend for the retail considering that there was a drop in cash burn. Will you achieve the breakeven sooner than you expected? And another question. One of your competitors has been quite active in the sale of assets and the sale of shopping malls. What is your thought? What is your appetite for the sale of assets or stakes in other shopping malls?

[Cristina Betts, executive]

Well, in terms of the retail, we're quite calm as Guido mentioned, we hope to get to a positive situation with the retail unit coming quarter, we were not positive this quarter because we had the impact of restructuring Iguatemi 365. We're not for that, we would be positive I don't know if we would be fully positive. And in the fourth quarter, we will be positive. When it comes to the recycling of that -- and we always say, we've always got our eyes on that. And perhaps at the beginning of the year, we didn't have too many buyers in the market. The return of the real estate sector has led to having more people interested in converting with us. And I do joke around because there are not too many players in the market, our conversations tend to focus on the existing players. But one thing at a time, and simply to mention this, Jorel, as you know in the past, we have that habit of always looking at our assets. We have done this with Iguatemi in 2012, 2019. We sold and we enhanced our portfolio. We're always looking at this. And of course, not differently from the competitors. People are also looking at us in terms of this.

[Operator]

Our next question comes from Elvis Credendio from BTG Pactual.

[Elvis Credendio, analyst]

We have two questions at our end. We have seen that inflation seems to be speeding up. And this inflation will contribute most to the growth of rentals. Could this influence or help you in the growth of rents going forward? And well, the company is in a trend for deleveraging. What do you imagine that can be done going forward? If you could prioritize what you're thinking? You already mentioned this during the presentation or if you're thinking of carrying out an M&A, the real estate players have become more aggressive in terms of their purchases. If you could refer to all of this.

[Cristina Betts, executive]

Elvis, regarding the spread, this is one of the company's main KPIs the operations and commercial teams follow this very closely. All of the new rent, all of the new remodeling means that we have an increase in rents compared to the previous rents. Now our table -- rental table is updated month after month. According to what happens in the market, and we're increasing rentals because of that effect that you mentioned the IGP in the fourth quarter will be lower than what it was in the third quarter, practically zero. So the growth, of course, will depend on the [indiscernible]. Once again, we mentioned that we were at 4.5%, and not transferring this to the rent or the monthly rent correction, is due to the fact that the tenants have observed a drop in inflation. And there is ease of the work and the renewal contracts and in new rentals, and this is our work. We have very strong sales for tenants. You see that sales are above rentals and payments to observe an improvement in the situation. And this helps renewals and new rentals for our team.

When we speak about capital allocation of the cash that we have raised for the coming year, we do have some ideas. We're going to continue to deleverage the company with interest rates above 10%. This is somewhat controversial. Now as you mentioned, we talked about expansion about our projects, our portfolio and much more, and we have a significant focus for the year 2024 to pick up in terms of the [indiscernible] opportunities. Now for the towers were going to be making more money into that. It's not a significant cash burn for us because we do work with the B2Bs. It depends on the project. And of course, we have the Figueira house. It's not exactly an extension, it's something separate from the company, but we will begin the entire part of infrastructure for the Casa Figueira [indiscernible] be a relevant project for us and a peak investment in '24. When it comes to M&As, we've talked about the investment, we have to think about the cost of investment. Of course, we keep our eyes open. As you know, we won't purchase any asset. We're very specific about the assets we want as part of our portfolio. We have a strategy for this. I always speak about the purchase of minority stake, assets of third parties. But once again, this will depend on what is put on the table, the moment of the company, and we will be prepared for that. And first of all, number one, we want to deleverage the company. This gives us firing power to do what we truly want to do. And this will enable us, it will create an opportunity to truly do what we want to do.

[Operator]

Our next question comes from Marcelo Motta from JPMorgan.

[Marcelo Motta, analyst]

We have two questions as well. The first about resale of point of sales, multiuse projects, if we can expect more opportunities through the fourth quarter or for 2024. If there's something relevant that could happen in the results. And if we should monitor these multi-use projects more closer, we have seen a very recurrent contribution. And the second question refers to retail and 365. Just if I understood this correctly, the expectations for EBITDA is to improve in the fourth quarter. And have you tested this model in terms of SKUs? Is this a time for more online operations? What is it that it can become or if it will be more breakeven, which are your next steps in other words.

[Cristina Betts, executive]

Motta, let's speak about our retail, you can always expect the result of retail during the year. But I think this would be unusual. It's a very specific project with a very large area and several people involved. We don't normally work with projects of this size. It's funny we get to that stage where we're working with budgeting. And there's always a point of sales to sell. Some people forget to renew their contracts, others leave. And every year, it's the same story. We're always able to attain high values in terms of resales. Yes, you can always count upon this in the fourth quarter. We still have some things in the pipeline that will lead to resales in the fourth quarter, revenue from the retail. And we're working on multi-use projects more specifically and we will conclude the negotiations until the end of the fourth quarter. It's possible we will have a project. We remind you, Motta, if you look at our portfolio so far in our release, you will see we have already done in multiuse projects, we made almost BRL 200 million, 200 thousand meters of residential hotel areas. It is part of our DNA. And of course, we will have results for this in the coming quarters. We're going to continue to do what we do every year. And this besides the Casa Figueira project. It's also a retail project. We're not going to incorporate it. But it is something separate and will begin the coming year.

Now in your question referring to Retail 365. Yes, your assumptions are correct. We should reach breaking then in the fourth quarter. And once again, we've done our homework fully. We've worked on the tick of the restructuring. We have a second stage that refers to your question about the end game here. It's important for us to understand the [ shock ] at the end consumer of our shopping malls, obviously, they carry out several purchases in brick-and-mortar stores. But it is a fact that we cannot deny that what we see as an opportunity of linking all of our digital initiative, I'll call them like it. With our loyalty project, which has got a new one, and the link will allow us to show everything we have in 365 and through time, we can communicate with our end user enhancing the sales of our tenants without disclosing figures so far.

What has a very positive impact on the sales is the collection. We see the incremental sales that we have generated. The amount of people that I know that are friends, personal friends that are crazy about exchanging for the collection gifts. I have -- hence I need more friends to ensure I get the collection. This is truly surprising. It's become like a game practically. And this has been something that is positive. But also the social part, an example that I will pose the last coverage of fashion week, we carried out a very interesting coverage in the daily. We spoke about the fashion show the most from Milan, from Paris, this is something that we're beginning to learn how to explore. We're creating awareness on a platform. We also have the loyalty that we're going to link to behaviors. We have 365 that does carry out in sales. Of course, perhaps it has shrunk somewhat now, but it won't in the future. And all of this will enable us to communicate with the end user working through this funnel. This is important work, but it will take some time. It's not easy to make all of this come to reality. It's a B2C company. But we're -- well, we're not truly a B2C company, but it will be, and we have an important work in terms of share of wallet if we do this properly.

[Operator]

Our next question comes from [ Hafele Heather ] from Banco Safra.

[Unknown Analyst]

Good morning, everybody. Well, most of the questions have been approached. I would like to speak about revitalizing and maintenance and understand because of the pandemic, you're working at lower levels and not normalized levels. And looking forward to 2024, 2025, if you're thinking of larger projects and larger investments, of course, in this above the levels that you have conveyed through the guidance for this year.

[Cristina Betts, executive]

Now to speak a bit about our maintenance CapEx, it's true that in the year of 2021, we did have lower investments in maintenance. But this is not what we do to leave maintenance aside. We understand that this is part of the services, the quality we're delivering to the end user and the tenants, we're always pursuing to work with maintenance. And this goes all of the way from renewing or remodeling bathrooms, and rails, flooring, landscaping, you name it, in truth, we are very judicious when it comes to maintenance. We had in 2023 already higher investments compared to the last 2 years, we're making up for what we did not do in the last 2 years. So we did carry out maintenance in 2021. We had to reduce condominium and many other things, there was too much to do. We didn't allow things to follow part, and we're not trying to recover everything. This simply does not exist. We're quite calm about this. And as I mentioned, the larger things come from the allocation of cash flow and other things that deleveraging. The beginning of sales in Casa Figueira, beginning our organic growth projects and maintenance. It's also part of what we're used to doing, perhaps with higher investments.

[Operator]

Ladies and gentlemen, thank you. As we have no further questions, we will return the floor to Ms. Cristina Betts for her closing remarks. Ms. Betts, you may proceed.

[Cristina Betts, executive]

Well, thank you so much for your attendance at our third quarter conference call. The fourth quarter and the year 2023 will be very good, and we will meet again to speak about the end of the year, the closing of the year guidance for 2024. We have a great deal to think about in the coming call. We're always at your entire disposal, should you have any additional doubts. Thank you very much, and I hope to see you in the next call.

[Operator]

The Iguatemi conference call ends here. We would like to thank all of you for your attendance. You can now disconnect.