Multiplan Empreendimentos Imobiliarios SA

BOVESPA:MULT3

Earnings Call Analysis

Multiplan Optimistic About Growth and Christmas

Multiplan executives are upbeat about the company's future, marking a special moment in its journey. They are already working on Christmas strategies for the coming year, focusing on unique promotions, events, and experiences to surprise consumers and drive sales. The company expects Christmas to be excellent due to their preparation and iconic campaigns. On the topic of ongoing tax reform, it's too early to assess the impact, but current reforms don't seem to directly affect company results. BarraShopping continues to grow despite a changing mix and competition from new operations. Multiplan implemented a gateless parking initiative to ease access and improve customer experience without increasing delinquency. This successful innovation reflects Multiplan's growth focus and optimism for the future.

Record-Setting Performance with an Eye on Expansion and Digital Initiatives

In the third quarter of 2023, the company marked a historical moment with sales growing 8% in the quarter and 9.5% year-on-year, showcasing exceptional results. Highlights include a net earnings of BRL 718 million year-to-date, already matching the previous year's total and a 12-month earnings reaching BRL 957 million, nearing the internal goal of BRL 1 billion. In addition, the company experienced a negative net delinquency, indicating a recovery greater than losses for the first time, and expanded retail space with 500 stores rented, equating to roughly 80,000 square meters—comparable to introducing a new BarraShopping mall. The company continues its upward trajectory with 800 events driving profitability and a growth strategy focusing on conscientious expansions and revitalizations. For instance, they plan to inject BRL 300 million into the expansion and improvement of a key shopping mall, expecting to deliver significant results next year.

Strategic Digital Endeavors and Social Responsibility

The company has launched digital initiatives to enhance customer experiences, like introducing a gate system in one-third of its malls to facilitate entry, with expectations to expand this to the entire network within the first four months of the next year. This initiative aims to improve quality of life and brings valuable data without making it mandatory for customers. Social initiatives also stand out in the company’s portfolio, with various community aid programs and educational opportunities for employees. As the company approaches its 50-year anniversary, it prides itself on a legacy of dedication focused on consumer experience and expects the following year to set revenue records.

Investment Strategies and Dividend Distribution

The company remains open to both expansions and greenfield investments, with a preference for expansion due to certainty in economic variables and success from past strategies, balancing these investments with rewarding shareholders. Over the past 12 months, BRL 1.050 billion were allocated to investor dividends and share repurchases, and despite more expenditure planned for growth, such as shopping mall expansions, the company maintains a comfortable leverage. Executives stressed strategic investment choices over hitting arbitral thresholds, favoring developments prepared to capitalize on market opportunities.

M&A Prospects and Investment Philosophy

While the company keeps an eye on potential acquisitions, it primarily focuses on being the best rather than the largest. M&A pursuits will always be strategically considered for their impact on the bottom line, and any transformational M&A must make sense financially. Previously, Multiplan grew organically, and any future transformational opportunities will have to meet stringent criteria to be pursued. The company reassures investors that if any M&A discussions were to take place, they would be among the first to know.

Expectations Moving Forward and Addressing Market Concerns

The company is optimistic about the upcoming Christmas season, working year-round preparing campaigns and events to enhance the consumer experience and drive sales. Despite concerns over the tax reform, its impacts are still uncertain, with some changes potentially not affecting the company directly. The corporate team is diligently tracking legislative developments to adapt as necessary. Moreover, the introduction of gateless parking systems across the malls has been well-received by customers and shown no delinquency issues, furthering the company’s commitment to innovation and customer satisfaction.

Closing Remarks: A Time of Growth and Anticipation

The company concludes the earnings call with a sense of pride and excitement about returning to robust growth and dreaming big for the future. Endorsements by the executive team about the company's trajectory and strategies suggest confidence in continuing to break records in the following years. The final sentiment was thankful, acknowledging the efforts of analysts, investors, and the company's dedicated employees.

Earnings Call Transcript 2023-Q3

[Operator]

[Interpreted] Good morning, ladies and gentlemen. Welcome to the earnings call, the third quarter of 2023 from Multiplan. We have here with us today the Executive Directors of the company. May I inform you that the presentation of the results can be accessed or download at the website, ri.multiplan.com.br/en/. Before starting, let us mention that forward-looking statements that are done during this earnings call regarding the business perspectives of the company, projections and operational goals and financial goals are based on beliefs and premises of the Board of Director of Multiplan and based on information that is available to the company. Any forward-looking statements is not a guarantee of performance that involve risks, uncertainties and premises.These are based on forward-looking statements and depend on circumstances that may materialize or not. Investors should understand that general economic conditions, industry conditions and other operational factors may affect the results of the company and may lead to results that differ materially to those expressed in the forward-looking statements.Now I would like to give the floor to Eduardo Peres, CEO of the company. He will start the presentation. Mr. Peres, the floor is yours.

[Eduardo Peres, executive]

[Interpreted] Hello. Welcome. I would like to thank everyone that is listening to us. It is a great pleasure to be with you here today and to share with you the results -- the exceptional results unprecedented in the history of this company. I would like to highlight a few points that are very important and really bring the attention to our performance this year and this quarter, the third quarter of 2023.Let's talk about sales. They've been growing in an accelerated fashion and overcoming our expectations. We grew in the quarter, 8%. We grew in the year 9.5%. Earnings. Our earnings is BRL 718 million until September, and that is almost the earnings of last year -- all the year, last year. So BRL 700 million [ facing ] BRL 445 million. I don't remember the number off the top of my head. But the important thing is that year-on-year, we already produced the net earnings of last year, and we still have the best quarter yet to come. So this is great news.The performance for the earnings over the last 12 months, our earnings reached BRL 957 million. So we are here meters to the billion that was an internal number goal. That is an important goal for the company, and it's close to us. It's almost real.Over this year, we had -- in this quarter, sorry -- over this quarter, we had the delinquency -- net delinquency that is negative. So we received -- we recovered actually much more than we lost, and this is for the first time in the company. And we got 500 stores rented -- [ subleted ]. So we are talking about 80,000 square meters of the ABL. Well, the -- we have over 80,000 -- It's almost [ a ] [ BarraShopping ] of new stores. This brings bigger, new options for the people that visit our shopping malls.We've done over 800 events, and this is a very important data so we can analyze how we operate and how we make the shopping mall profitable. The pandemic has turned us into something more efficacious. We improved the way that we operate our shopping malls. So we are improving the promotion of the sales event. So the culture as well that lead to entertainment, they bring content for all the enterprises.Let me talk about the growth strategy that is based in the expansions and the [ revitalization ] of the shopping malls. This is not a strategy -- This is a strategy that is conscientious, and it's a strategy that we've taken many, many years ago. We had here the opportunity to have a lot more malls than what we had before, but we preferred to have the best malls.So this is -- we are aware that we want to be the best in every single city that we are operating. This is our obsession as a company. We want to transform all of the malls, even the good ones, and we want to improve them. And the ones that haven't reached that maturity, we're going to get there. So continuing to invest in our portfolio today of all the options and opportunities that came up. This seems a more viable and more rental -- more profitable.So this shows that we are in the correct path, that our path is a one-way street, and we are going to continue in that path. So just to exemplify a few things, and -- we're going to deliver next year. By the way we have the expansion, 90%. If I could, I would open the expansion to date, but there is still -- it's a shopping mall [ that ] we're investing BRL 300 million in expansion improvement, and it will be another equipment.DiamondMall. It will be luxury to Belo Horizonte. And for the first time, we are going to transform the entirety of the shopping mall and high food -- well, good food courts, international brands that were not there. We knew that we had that niche. And this is the shopping mall that has 40%, 50% [ subleted ] but we are going to have the expansion open.We have in our pipeline of expansion -- I'm going to show you that we're going to start next year. One that is very important for me, and maybe it doesn't seem so obvious for those of you that go to the shopping mall is MorumbiShopping. MorumbiShopping grows -- Next year we are going to start the expansion in January. We start with the renovation -- total renovation of the shopping malls in January. It's not -- I think, we are going to start the works of the expansion and the revamp of MorumbiShopping that is scheduled for these 2 investments, yes, BRL 300 million, BRL 350 million. And then people say, well, well, why Morumbi is doing so well? What's happening? Well, that's what makes us work with so much will and love.We want to improve on what we've always done. So we look at Morumbi and we see failures that maybe people did not see in the very competitive market such as Sao Paulo. This is the important vision that allows us to advance every single day in the direction of being the best in every city. We will do the same in Brasilia. Brasilia is getting close to the 40 years we revamped almost the entirety of the mall. We're going to do the expansion in Brasilia. The project is ready, was approved. Same thing will happen in Maceio.So this is -- this company has grown this way up until now. So I don't see where we should change and I don't want to change it. We are taking a look at -- well, we are still paying attention to all the opportunities even in-house, the most viable and more profitable are presented close to us. So growth is at -- I wanted to talk about an important point, which is our digital initiative.We wanted to remove all the entries of the shopping mall with the device that we created with another company. This is a shared technology. So we can facilitate the -- well, the customers that are getting into the shopping model -- we're implementing the new gate system in 3 new malls -- in 1/3 of the malls.Our intention is that this new gate system for the next -- first 4 months of next year, 100% of our network will have no entry gates. Why is this important? It's important because it improves the experience of people at the shopping mall. We created Multi app with that function, with that definition, this path moving forward.We are investing in a tool that will make the life of the user of our enterprise -- it will be a better, more quality life. That's how it's -- we're improving the quality of life of people, and we're bringing an amount of -- big amount of information for us. So the growth is very expressive over the last few months. The recurrence of use is very good because people that try it, they don't want to stop using it.Well, we're not making it mandatory that people use Multi. They can pay physically in the shopping mall if they want to. We want to convince the people that this app is good. It's better than you are in this environment. This is our objective.And I would like to highlight the social initiatives that we've had this year, the shopping malls. They have an interaction and an interactivity with the communities that we are inserted, that is very important, whether if it's doing improvement works in hospitals, in schools. I'm going to show you the example -- recent example of Porto Alegre that went through terrible flood. People were without their homes, without food, without their needs. And the shopping mall donated, and we've gathered a lot of things, and we donated it back. And this is what we do in all of the cities that we're present in.Our initiative to take -- to placing this -- the possibility of providing schooling for our employees in the primary, secondary school is expanding. We had it first in BarraShopping and now we have it in Sao Paulo, and we hope that in the close future -- near future that we have the entirety of the network for education. The continuous education of our employees implemented in all the network.So I would like to remember -- remind you, Multiplan is going to be 50 years next year. It's an important date. I'm very proud to be a part of the 50 years with such an important result, very symbolic and significant. 50 years of dedication -- extreme dedication and an obsession for improving the experience of the consumer.The results that you're seeing here of revenue -- we are going to have a record setting year next year because of the improvement of the experience of each of these malls. This is our obsession once again. And I would like to thank enormously to the people that are here with me in the room, the people that work with all the malls, whether if it's our employees or subcontracted parties, that make this day to day ever better for everyone. So thank you very much for listening to me. Thank you.And now let's go to the Q&A.

[Operator]

[Interpreted] [Operator Instructions] First question is from Mr. Gustavo Cambauva the analyst of BTG.

[Gustavo Cambauva, analyst]

[Interpreted] I want to ask a question more in regards to the investments that you mentioned on expansion. I wanted to understand, given the scenario of wholesale -- of retail that is more challenging, the expansions -- do you think that the investments are going to be more focused in expansion? And maybe thinking about a greenfield, that was something very important, the growth of the company. Do you think that for greenfield, is it still far away or in the scenario that the sales of Multiplan are growing well, can you think about a greenfield? And also the second question is -- well, it's a follow-up of the issue of investments. You -- well, you distributed a lot of dividends, and the company at the same time is -- doesn't have -- it's unlevered. So do you have any intention of maybe increasing the payout via dividend or JCB? Or are you going to remain with a threshold -- current threshold and the leverage that you're guiding? That's it.

[Eduardo Peres, executive]

[Interpreted] I'm going to -- let's divide the question. I'm going to answer the first one, and that's concerning the expansion and the greenfield. But to clarify, we -- do you have a preference to do expansion? Of course, yes, because this is a strategy that is positive for the company for many, many years. I closed the doors to the greenfield, never. However, greenfield is different, much more challenging, specifically when you don't have the certainty of the economical variables that we're going to have ahead. So the uncertainty makes us move towards the direction of the expansion. We are not -- are we looking at greenfield and acquisition? We're always going to do both.And I'm going to let Armando now talk about the dividend distribution that you commented and deleveraging.

[Armando Neto, executive]

Well, look, Gustavo, we keep over the last 12 months, BRL 1.050 billion in capital allocation, distributed amongst the return to the money to the investor and repurchasing of the shares that added to the BRL 685 million. That's -- and CapEx, that's BRL 440 million. So if you take a look at our earnings, there is a record -- a long record of the profit sharing with our investments -- investors. And we've been -- since 2011, we've profit shared over 50% or more of the net revenue post reserve, with the exception of 1 year that we had a big accounting -- in 2006, a big accounting point. And well, that's the records of the company. And we have cycles of big growth and this cycle that the growth is preparing to grow more in expansion, not only will open the -- what we will have the space to do the profit sharing, but without fiddling with the leverage in a big way.We're also repurchasing the shares. As you know, we have the announced approved program in June. And if you look at this year, it was 4 million. I think it was this year or it was 12 months -- sorry. 4,800,000 shares repurchased. And as Eduardo has said, we have money in CapEx, and we have a pipeline of growth. But this is -- because of the strong operational goal of the company there is leverage.And even though we're getting more money to work when compared to the last year, there is a small deleveraging because of the good results. So we can do more.So well, we have to be in 2, 3 -- 3x is something very comfortable through the covenants. What we do not want is to place ourselves in a position that we cannot take on the opportunities that are in the market. We're always going to work with some leeway and then we -- if we want to, we can act immediately.

[Operator]

[Interpreted] The next question is from [indiscernible].

[Unknown Analyst]

[Interpreted] Congratulations on the great result. My question will be very brief. Given the continuity to the previous question, is there a possibility of acquisition of an asset from [indiscernible], for example Parque Maceio?

[Eduardo Peres, executive]

[Interpreted] Well, your question, you talked about [indiscernible], but we are here analyzing all the opportunities that we think that makes sense for us. I think that you mentioned Parque Maceio , right? Well, nobody told us that it was for sale. If it is, we're going to take a look at it. But here, it's not -- we are not pursuing to try and be the largest. We want to be the best. So we are going to continue down this path, which is important, and sincerely, out of the opportunities that I've -- we've taken a look, I can mention one. There is a lot of shopping malls in the market. It is in the same city that of a mall. That is the same of ours, and they started the same time that we did. And at the beginning in the 1980s when there was the inception, they had a better performance than ours. I'm not going to say the name of the asset or the city, so it's not really out there. But when I looked at the numbers, to my surprise -- happy surprise, our shopping mall grew 3x what that shopping mall sales. So the path that we are undergoing is a prosperous one. We're not going to -- we're always going to take a look at all the assets, whatever they are, even if they're an entire company. Did I answer your question?

[Operator]

[Interpreted] Our next question is from Tainan Costa analyst, UBS.

[Tainan Costa, analyst]

[Interpreted] I wanted to explore the theme of provisioning. Until the pre-pandemic the provisioning was something about 15% of the total of accounts receivable of the company. And now when we look at the last report on the quarter, that number doubled, close to 30%. I wanted to understand what needs to happen for this provisioning to go back to a level that was closer to the pre-pandemic 15%? It would be the delinquency [ more control ] for more time? And maybe we would see the reversion of provisions more recurrently on the short term? And if that's the point, what would be the level of delinquency that is ideal? And for what time can we deliver that -- those reversions?

[Unknown Executive]

[Interpreted] Thank you for your question, Tainan. Well, I'm going to start backwards. There is no level of provisioning that is ideal. The provisioning is possible and in accordance to the circumstances of the time, your question is appropriate in this quarter because it shows a strong recovery of previous rents, specifically of previous quarters. As I commented during the pandemic, there was a provision that was increased, and they increased because there is an increase of the percentage that you provision of the rent because of the time that goes by, which is aging. So you start provisioning 15%, whatever. I'm just giving you a number off the top of my head. It all depends on the deadline that the time that spends. But that success that you mentioned on the receivables, it's also -- it's a mirror of the performance of our tenants in the shopping malls, the desire to be in the malls and a series of other circumstances.There is no one specific explanation. It's a set of factors. But the main factor is that -- Eduardo already mentioned this. We are making our shopping malls better for our clients. And this is going to be better for the tenants. And consequently, they want to stay and do not lose that point of sale, and that helps in the recovery of provisions, and consequently reduces the percentage as time goes by. That provisioning growth -- grows as you grow your rent revenue.And this is what we see over the pandemic -- from the end of the pandemic to now. 50% growth in rent. So this is due to the volume and the time. Did I answer your question?

[Operator]

[Interpreted] Next question from Daniel Gasparete analyst of Itau.

[Daniel Gasparete, analyst]

[Interpreted] Congratulations on the result. The quality is impressive in a very difficult retail wholesale market. 2 questions. So first, just to understand the dynamics of rent in a few assets. It's bringing our attention to the evaluation of the rent in Morumbi about our shopping and evaluation quarter-on-quarter. I understand that quarter-on-quarter is not the best analysis. But to understand [indiscernible] we observed that there is a small drop -- dip, even though we saw a great performance in sales in general in the market. So I wanted to see -- the first point, I understand it. And second, I wanted to understand the issue regarding the publication, the communication on the -- I'm going to read it, in regards to the -- statutory authorization to —[indiscernible] of preferential shares after the shareholders' agreement.I wanted to understand more why you're keeping the infrastructure and why not [ cease ] this moment and migrate to a new market? I'm sorry for the question, but also I can understand the rationale behind that. These are the 2 questions.

[Armando Neto, executive]

[Interpreted] D First, rent. Really, the comparison quarter-on-quarter on this exercise doesn't make any sense. There are many things affecting here. That's why the comparison year-on-year makes more sense. And the comparison over the last few months is better, in my opinion, because you get any hiccup, like you say, during the quarter, as you mentioned. Specifically in the shopping malls that you mentioned, we had a few isolated events due to actions and success in negotiations that affected the results in the second quarter and not the third quarter, just to answer your question.Besides that, you have also -- when you open the rent, you start to see that the complementary as well as merchandise, it decreased over the quarter. And when you look at the closed rent, you see that there was no growth in the second quarter of '23 to the third quarter of '23. Would you like to compliment anything?

[Eduardo Peres, executive]

[Interpreted] Well, something else. Merchandising in the second quarter usually seasonally is higher. So it is true, we had greater [ base ] for merchandise in the first quarter. We have the increase to decrease. Second quarter is where you have Mother's Day -- no. There is a lot of seasonal merchandise that gets in the second quarter that leads to this. So Armando talked about this. We have Valentine's Day. We have seasonality. I know that very well -- if you compare it to this quarter, it's going to be higher because seasonally, fourth quarter is stronger. So that comparison is limiting, as you mentioned, but the point that you mentioned merchandising in the last quarter in the shopping malls [ where ] is very strong. Remember, the BarraShopping shopping last quarter grew quarter-on-quarter year-on-year, over 10% -- 12%. So we have a campaign that is very successful in the last quarter.Second point, Daniel, the issue of the market motivated because of the conversion of the preferential shares, extraordinary shares of our partner. There is today a bigger difference than what happened before between the disclosure level to -- and the disclosure to the market, which are not the preferential shares, which make it difficult for that migration within the market. But regardless of the disclosure that the company -- what the company tries to do is to adopt the best governance practice so we can do, not only our guidelines, and also that our [ data ] is permeated by this.Recently, for example, we have an audit -- internal audit area that works to support the team, supporting our processes in a way that is very proactive amongst others -- amongst many other actions for governance that we have here today. So not answering directly, we are not looking for a new market in the short term.

[Operator]

[Interpreted] A question from Mr. Ygor Altero Analyst from XP.

[Ygor Altero, analyst]

[Interpreted] Congratulations on the results. 2 questions from my side. Let's go back to -- well, I wanted to understand, if you see a space for the selling of assets of any of your portfolio asset that is noncore? And secondly, I wanted to understand the performance dynamics of Santa Ursula, Vila Olimpia that are really bringing attention on the sales performance. What do you attribute to this very positive performance? And if you can share the initiatives to improve the performance of these assets?

[Unknown Executive]

[Interpreted] Good question. Santa Ursula andVila Olimpia, they improve because of [ insistence ]. Nothing overcomes insisting. We are going to insist until they work out. So nothing happens for no reason. They're growing. We are seeking operations and solutions for each and every one of them. It's not easy. These are cities that have a lot of competition [Technical Difficulty] there is a level -- I think I didn't do, but GLA of Ribeirao Preto is comparable -- [indiscernible] area is comparable to Sao Paulo. So, it's in an area of the city. The first [ Monsanto ] is in a deteriorated area. We're trying to make it into the growth point for that region of the city. It's not easy, but we are never going to give up. Vila Olympia also, it was in the best moment pre-pandemic. We were doing very well. There was -- the region of Vila Olimpia suffered an enormous impact mainly with the remote work, and then here, you can see that several places all throughout the world business centers, they cease to exist. We're still privileged because there is a path moving forward and there is work to -- returning to its formulary majesty.There's a lot of houses being built, apartments being built around Vila Olimpia, and that is going to be a benefit on the medium, long term. But we're going to continue to promote, insist and to take the good operations because from then on, we're going to get a return on investment.Selling assets. Yes. Look, might happen. I'm not saying no. People don't really talk to us. I mean they do to buy stuff that we're never going to [ sale ]. So that's it. These assets -- we never stopped to think about that. If it's worth it or not, we discuss it. But the option is to continue to improve when the asset is good, and there is several people interested, and then we don't want to sell it. It's complicated, but it is what it is. It happens to us.

[Operator]

[Interpreted] Now the next question is from Mr. Bruno Mendonca, analyst, Bradesco.

[Bruno Mendonca, analyst]

[Interpreted] Thank you for the opportunity and the presentation. 2 questions. My first question, when Eduardo was talking, it was very focused in an investment in the assets and taking care of these assets. And thereafter, you talked about the digital strategy and investments in these lines. I understand that this is a maintenance CapEx. Every quarter that goes by, it's more proven in your results that this investment increases the differentiation of the assets in regards to the rest of the market, and that gives you good low-hanging fruits. But can you quantify how much that investment is costly? I mean what is reasonable -- historically with our models, there is always a CapEx of maintenance. I don't know what percentage of the NOI in the revenues. So I wanted to understand how you think about this investment? And this investment, I mean for the entirety of the group, I mean, revamping digital strategy, anything that is investment to maintain the capacity of the assets to generate revenue and growing as they've been growing, but how do you think about that, percentage of the revenue, of the NOI? Is there a different math? This is the first question. [Audio Gap]

[Unknown Executive]

[Interpreted] Bruno, are you there? We lost you. If you can tell us -- sorry, can you repeat the second part? We lost your connection. I understood until you said CapEx for investments in digital. Second part, I didn't hear it.

[Bruno Mendonca, analyst]

[Interpreted] I wanted to see if we can quantify that CapEx -- maintenance CapEx, if it's a CapEx for maintenance a big [Technical Difficulty] for digital strategy, anything that is initiative to keep the capacity of the assets generating revenue? We saw it as a revenue percentage, NOI percentage. Do you think about that in that way, or is there any other way that we should think about this investment? That's the first. Second -- can you hear me now?

[Unknown Executive]

[Interpreted] Yes. Go ahead.

[Bruno Mendonca, analyst]

[Interpreted] Second, I wanted to go back to the theme that Gasparete mentioned on the issuance of maybe the NPs. I mean it's clear that this is a new move for a new market, it's not so obvious. But do you -- can you tell us a hypothetical situation where you would think about using the prerogative of issuing these -- for example, to pay M&As? Or what would be the other situation that would justify you having this prerogative in your guidelines?

[Eduardo Peres, executive]

[Interpreted] I'm going to share this in 2 types -- 2 parts. First part that you asked about the remodeling, revamping the digital projects, is there a magical number to invest? No, there is no. It's more according to the need that you perceive of your assets. In every mall they need an intervention so we can -- so we don't lose a market. There is a funny situation, and I was talking to a partner about an asset in New York, and we were at the beginning of the remodeling. And he was saying, well, finance is questioning me because we're investing a lot. What do I tell them? I say you have 2 options, no investing, losing the asset, or investing and continuing with the asset. So revamping, remodeling, maintenance is that we -- [ discretion ]. I mean, we are still -- remember, licking the wounds of the pandemic. So when I talk about that, Morumbi was a mall that needs to be taken care, and a lot of care. We didn't do anything big in terms of renovation in Morumbi for many, many years. The pandemic really caused a lot of problems and taught us a lot, but caused a lot of issues.So in terms of number, we will have more of an expense next year and less expense over the next year, maybe BRL 250 million, BRL 300 million of digital initiatives and -- renovations for next year, and BRL 100 million maybe for 2025, if I'm not wrong. But, I'm not -- these are not [ set in ] stone because this number can change. I mean there are times that you cannot do anything, as it was in pandemic. But when you need to do things, you need to do that correctly. This is our specialty.

[Armando Neto, executive]

Bruno, just to complement, I know that it's very difficult for you guys [ unless ] to place it in the model for us. We also get into a model to confirm as a percentage of NOI, but this is just a reference. It was -- it's what Eduardo mentioned. Not necessarily we're going to be -- it's going to be mandatory limited to do that. It all depends on the opportunities, the perception of the manager of each mall. Second question, the issuance of the [ PMs ]. Well, not proposing anything. We have here the possibility of -- maybe one day if there is an opportunity, we're going to do that. So we are here celebrating results of a great management and a great control of the company, of the infrastructure and the capital allocation of the company. And I think it's important and fundamental. So what we want is to have instruments in the market that have opportunities in a market where the players listed represent 1/5 of the GLA or less national. And we see a great opportunity for growth.So we just want to convert this opportunity. So there's nothing proposed in the case of the -- should we have a conversion? We will leave it in the guidelines. [ Possibility ] of doing it. There is nothing being proposed now.

[Operator]

[Interpreted] We're going to continue the next question. Fanny Oreng, Santander, analyst.

[Fanny Oreng Avino, analyst]

[Interpreted] Congratulations on the results. Really good. 2 questions. First, can we talk about Golden Lake? How is the expectancy of sales? What do you think about terms of launch in 2024, the project? And the second one, if we go back to the theme, on average, the investors are very uneasy with the M&A and the possibility of Multiplan doing an M&A, that is transformational. We know that there are several assets of Multiplan and important ones such as outstanding minority, partitions that would make more sense, but I wanted to know how important it is to Multiplan to do this transformational M&A from the strategic, well, standpoint? And Multiplan in my opinion, has a great -- part of the great assets of the market. So I wanted to understand the mind of Eduardo in that sense?

[Eduardo Peres, executive]

[Interpreted] It's a pleasure to answer. Thank you for the questions. Golden Lake, Marcello is here to help me. We have a strategy on the long term, the project of 10, 12 years up ahead. We are here in the first phase in the Golden Lake Victoria with 54% sold. We are where we wanted. It could have been better. It also depends on the economic variable because the sale of a real estate is very sensitive to the future of what people see in stability of the country, economy. But we didn't stop. We still are building. We're going to deliver Lake Victoria at the end of next year. We're going to launch maybe in the first quarter of next year a smaller enterprise with the possibility of having a smaller ticket and products -- diverse products within the same condominium. We will help with the liquidity. You will have -- I mean, the point is that place didn't exist. It was the backside of the Jockey Club. We transformed it into real estate. It was a very complicated operation, took 10 -- 11 years to happen. Every time that I visit the place, it's almost Barra da Tijuca of Porto Alegre. We still have here to invest, almost BRL 150 million of counterparts that are going to be in the region, making the continuation of the lakeside of that part of Veja Rio.In regards to the second part of your question, an M&A -- transformation M&A. I don't know, it's difficult to answer because I don't see something that excites us or to really look at the numbers. For now, nothing happened to -- guiding us towards that path. Might happen? Yes.The only guarantee that I can give you is the following. You are going to be the first ones to know if that's going to happen. Now, it's not. Did I answer the question?

[Fanny Oreng Avino, analyst]

[Interpreted] Well, sort of. I understand it is complicated. I think that there is a big anxiety in the market in regards to the level of the value of negotiated [ firms ] [ versus ] the private market transaction. So the investor is really thinking on -- Multiplan negotiates a cap of [ BRL 12 million ], but [ buy ] somebody with cap of [ BRL 7 million ], and then you dilute the threshold. Maybe that type of point frightens us. So it was for us -- there is -- doesn't make sense something like that for you guys. Is there any -- that you say, well, would that make sense? So I think that this is the anxiety of the investor, giving you a feedback of what we discussed.

[Eduardo Peres, executive]

[Interpreted] Yes, Fanny once again, understand the fear and the lack of surety of the market. Today, we don't have it. Today, I can affirm that there is no negotiation on the table. We do not look on everyone, and today, it doesn't happen. It's difficult to assemble this operation. M&A is not something easy because it depends on the other side. We didn't choose to grow through expansion. We wanted to do expansion and growth through greenfield. First, we are good at it. Secondly, we can measure and do this. M&A, I cannot. I'm going to -- I'm not going to do it. I don't need it. So there's people that exist need M&As. I don't need it. I don't know if I answered question.

[Armando Neto, executive]

[Interpreted] So just to complement, well, the definition that a transformational for us is bottom line. Transformation of [ overall ], the line of the revenue and you have -- you lose money down below, it doesn't make sense. So it's very much in line with the investors. And as Eduardo said, look at the records of the company of growing in an organic way, growing with new projects, growing with expansion. And there is a lot to do. I'm going to give you an example. The biggest operation that this company has done, we bought [ Bolzano ] in 2006. That was the other half of our orange. Multiplan was half, we bought and we ended up buying that, just that, opening well, listing, and we couldn't. And then we have the [ Canadian ].

[Fanny Oreng Avino, analyst]

[Interpreted] Well, maybe there is another opportunity like that?

[Armando Neto, executive]

[Interpreted] Yes.

[Fanny Oreng Avino, analyst]

[Interpreted] But it doesn't make any sense for me to change. The control that I have today, just so I can have -- today, I have a company that I know what it is, I control, it delivers results, expressive results. Why am I going to change this for something that I don't know what's going to happen? I am the biggest -- well, just to be bigger in transformation? No, that's not in the minds of anybody here. So just to tell you what we do not want, and congratulations for your numbers.

[Operator]

[Interpreted] Now the next question is from Mr. Marcelo Motta, JPMorgan analyst.

[Marcelo Motta, analyst]

[Interpreted] 2 questions, very quick. First, in the services revenue, if you can tell us the volume, if there is anything else you want to give us if that was cash or just a volume of the contract? And what would be the options? And do you think that in the future there is still more to explore with that issue of the --well, the agreement with the telecom? And the second is the expectation for Christmas. We see that retail is more cautious with Black Friday, the sales because of inflation smaller when we see the nominal coefficient is weaker. What we want to understand what you're thinking about the fourth quarter and Christmas?

[Armando Neto, executive]

[Interpreted] First part, that services cycle was larger with the contract that we've done. We cannot give the disclosure values of negotiation, it doesn't make sense. But if you look at the second quarter, there was another revenue that we negotiated because of Multi, and we do that for 50 years, seeking optimization of our revenue, optimizing our results. But we have the potential of bringing up revenues that a shopping mall has, that our portfolio has. So that is part of what Eduardo said, the obsession of making the mall better and that generates the opportunity to grow also in the financial part. Would you like to comment on expectations?

[Eduardo Peres, executive]

[Interpreted] Yes. Thank you for the question. The expectation for Christmas is great. We are very optimistic. We are working Christmas all day -- all year, sorry. So whenever I go back to the beginning, I start the strategy at the beginning of the year. We work with Christmas all throughout the year. And now we're thinking about next year already. It's an obsession to have differentiated Christmas. What does it mean? Promotions, events, experiences is to surprise the consumer in every way possible. And we are a company that make sales.Everybody that operates a shopping mall opens the door and waits for people to get in, get out, buy and then they charge the rent regardless of the tenant. Here, we don't work that way. Here, we fight for every single cent and we fight for every improvement that we can find up ahead. So my expectation for Christmas is very good. We're very much prepared with several campaigns that are important and iconic things that will happen in a few cities that were installed. That will make our Christmas better. That's the certainty.

[Operator]

[Interpreted] Now we received a few questions written down. I'm going to read them for the Board. First one is from [ Maxell ]. He says, could you tell us about the changes in the tax reform and the impact for the company? We're getting clearly -- could you talk about the changes of the tax reform and how those changes impact the company?

[Unknown Executive]

[Interpreted] Thank you for the question. Look. It's too early to do an analysis on the tax changes that are upcoming. Some of the changes are -- they do not impact the result of the company directly, others yes. So we have to evaluate what's coming up. The tax reform is undergoing. The real estate sector was included with a specific regime, still undefined what is going to be the percentage. That's going to be a complementary law in the future. But the tax reform that we are seeing, it should be transparent, given that this is a payout of the tax that you do. So there shouldn't be a direct impact in the DRE of the company. The reform that discusses the interest rates of our own capital, if there is another impact, and it's very preliminary, and there is nothing being proposed, that was approved at the chamber in the Congress. So we are waiting and seeing how we're going to adapt in the best way to the reforms.

[Operator]

[Interpreted] Another question from [indiscernible]. She's is asking, we'd like to have a better overview about the lower growth of BarraShopping. You consider that the Shopping Jacarepagua captured part of the public of Barra?

[Unknown Executive]

[Interpreted] It's an interesting thing that we showed. I'm not wrong, in our public meeting last year, we showed how BarraShopping was on sales and New York, which is complementary and the sales grow. CampoGrande was open. It's a competition, yes. And the sales of Barra Group and CampoGrande from 0 had a potential for sales that is great. Village was opened on the side of BarraShopping and BarraShopping is growing, and the village also in a market that did not have -- well, and it's growing even more. It's our second best square meter.And the same thing with Jacarepagua. Jacarepagua was born in 2021 -- November '21. Rose -- started from scratch, there was nothing there. BarraShopping continues to grow. So Barra, there is a change in mix that is important. And we cannot do the omelette without breaking the egg. So you have a store that -- a new operation, some operations that are coming that are spectacular. But another one like closes and you lose sales temporarily, the tenant leaves and we start preparing the project, we implement and we're going to start from scratch. So this is what we're seeing, exchanges in mix that is important, that has a specific impact in the revenue of rent and consequently, of sales.On the contrary, the fact that Jacarepagua is more complementary. The operations that we have in the shopping malls are complementary, and we're very proud to see in the long term. That's why I ask you to see this presentation last year that we show the great growth that we had throughout time. I hope that answer your question.

[Operator]

[Interpreted] Another question from [indiscernible]. Could you give us how it was the first months of the gate list? What was the delinquency behavior?

[Eduardo Peres, executive]

[Interpreted] Could you repeat the second part, what was the behavior of…?

[Operator]

[Interpreted] The behavior of the delinquency.

[Eduardo Peres, executive]

[Interpreted] I mean from the company or the parking lot? Doesn't mention. But possibly, once you know if there wasn't any…?

[Operator]

[Interpreted] So could you give us how it was the first month of the gate list parking lot? What was the behavior of delinquency, if there was any delinquency in the parking lot?

[Unknown Executive]

[Interpreted] Answering the question. It was -- the gate list was my initiative. I had the idea because we really wanted -- we were satisfied with the antennas go back and forth, and that creates a problem at the entry of the malls. The shopping malls have [ automatous ] entrance. It doesn't read very well, doesn't [ really hear ]. So there has to be a better technology than the antennas. So that's why we created the free flow. Well, we were not going to remove the case, but we evolved to say, well, I don't need a gate. If I have the license plate reading -- connected to the payment, why do I need a gate? So it evolved, so we can really provide a better service. Up until now, wherever it's implemented, there is a success. People like it. Those are ones who experience, those who try it, they like it. We don't mandate, oblige every -- well, many cases in the world -- you see that you have access to Disney, you need to download their app, otherwise you don't use anything. It's not the case of the free flow. We created something easy for those that wants you use it. So the -- it's very positive for the malls that we implemented this.And I mentioned that the delinquency is over somebody doesn't pay the parking lot. There is no possibility of that because the gate is at the exit. So the control continues to exist. We created an ease for people to get into the mall, and we will keep it on the network. I hope that you can -- that I answer your question?

[Operator]

[Interpreted] Well, thank you for the questions. We close the Q&A session, and we invite the participants if they still have questions to get in contact with the Investor Relations department. I'd like to give the floor to Mr. Eduardo Perez for the closing of the session.

[Eduardo Peres, executive]

[Interpreted] Once again I would like to thank everyone. It's a very special moment for the company. We return to growth. We returned to dreaming. So we are very excited with the prospectus for growth of the company, the results. They speak for themselves. It's a very special moment -- historical moment, another year of breaking out the record. So I think that we're on the right path, doing the correct, right thing. So thank you to all the analysts, investors, partners, non-partners, employees and my colleagues that work with me at Multiplan. Thank you very much. Have a nice day, and thank you for the results.

[Operator]

[Interpreted] The earnings call of the third quarter of 2023 of Multiplan is closed. Have a nice day.[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.