Multiplan Empreendimentos Imobiliarios SA

BOVESPA:MULT3

Earnings Call Transcript 2022-Q4

[Operator]

Good morning, ladies and gentlemen. Welcome to the earnings call of the fourth quarter of 2022 of Multiplan. We have here with us today, Mr. Jose Isaac Peres, Mr. Eduardo Kaminitz Peres; Mr. Armando d'Almeida Neto, Mr. Marcello Barnes; Mr. Vander Giordano, and Mr. Hans Melchers. We inform you that the presentation of the results is available for download at the website, ri.multiplan.com.br. [Operator Instructions] Before we continue, we would like to clarify that anything that might be stated during this earnings call regarding the perspectives for the business of the company, provisions, projections and financial goals based on beliefs of the Board of Directors of Multiplan, as well as information available for the company based on information available for the company. Therefore, these are not guarantees of performance and they are involved in risk and changes in premises. These are future [Technical difficulty] and things might happen or not. Investors should invest bad economic conditions, industry conditions and other operational factors might affect the future results of the company and might lead to results that differ materially from those stated in the forward-looking statements. I'd like to give the floor to Mr. Jose Isaac Peres. He will start the presentation. Please, Dr. Peres, the floor is yours.

[Jose Peres, executive]

Good morning, for those of you, ladies and gentlemen that are hearing us, investors, shareholders, analysts, everyone. We are here presenting the main indicators for the results of 2022, where we obtained a growth of 37% in regards to 2021 last year. The total revenue of the company in 2022 reached BRL 1.9 billion, a growth of 40% in comparison to '21. Our net revenue is BRL 769 million, a record increase of 70% in regards to the previous year. And this year, we have an expectation of having a better result, but I cannot confirm yet. I've told you my goals, but we will see these great numbers. And this year, regardless of January -- comparing January with January, the previous one of 2022, there is, well, there -- '23 with '22. We've had a growth that was very expressive in terms of sales and I will report that for you. I believe that our strategy is correct and we will continue with this strategy trying to improve more and more. Our leverage is very important. Last year, we had a leverage of 1.63x. Today, our leverage is 1.62x, so we decreased. Our financial expenses in the year of 2021 was BRL 241 million. This year, in '22, we got BRL 241 million and BRL 114 million to BRL 241 million just by the increase in the interest rates. We had an additional cost of almost BRL 130 million. Nonetheless, our leverage decreased. Today, we have 1.63 when we had 3.06. So we distributed BRL 420 million of dividends to our shareholders with an increase of approximately 43% in regards to 2021. Also, with the shares, we did the repurchase of our shares, about 7.1 million shares were repurchased. When we look at the fourth quarter of the year, the sales of the tenants got to BRL 6.3 billion, surpassing 13% in the fourth quarter of 2021. I would like to highlight that it would have been much better if we hadn't had the World Cup that really impacted, a lot of the days were negative. And also we had the elections in Brazil. So those election days and the World Cup, we had low movement, if we had regular days, certainly, our results would have been much better. There is an interesting data that I would like to highlight. We today, well, I mentioned that shopping mall, we have over 700 malls in Brazil. Multiplan has only 20. Therefore, in theory, we have 3% of the total malls. An important data is that the sales -- total sales, our total sales represent 10% of the total sales of shopping malls in Brazil of the total market. It is as if theoretically we should have had by arithmetic, 70 malls, but we actually have 20, that shows our quality and efficiency and our malls will continue to improve. We've had this work of bringing new attractions, always improving quality and expanding. A piece of data that is relevant -- if we're comparing the [ iGTB ] with IGP-DI of January '23 of January '22, we've seen the IGP-DI grew only 3%, but our sales have grown 22.6%. That means that all the tenants had a gain last year. We started the works of expansion of ParkShoppingBarigui, and it represents a 100% occupancy. The expansion is 14,000 square meters, so there is an increase of 30% in total area. We already started the works and we should conclude this in 2 years' time. Also very important is that last year. [Technical difficulty]

[Operator]

So ladies and gentlemen, let's come back. And also, oh, we had a drop in connection. Excuse me, the reconnection -- we have reconnected. Please continue.

[Jose Peres, executive]

Thank you very much. So we were talking about ParkShoppingBarigui that we are compensating the situation with 30%. And now we are talking about a Diamond Mall. The important thing is that this is a long-term project. As we've done with Golden Lake, it is an estimated sales of BRL 5 billion, we are going to do this in stages, 7 condominiums that will respond for -- it will be approximately 20 buildings. Last year, we have the largest late maybe 5,000 square cubic feet -- cubic meters of crystalline waters, you can do standard apparel, you have private beaches. So we have a project and a quality that we hadn't used before and it hasn't been seen before. That shows the concern of the company to always overcome and always innovate and always being meeting the requirements of our customers and the people that will live in this condominium. Another important point is that last year, we finished the memorial to the victims of the Holocaust, which was an initiative from Multiplan that we've had with the former mayor and we concluded with the current mayor Eduardo Paes, and we've had this enterprise. It is an area for us to think about the terrible and crime that happened in the [indiscernible] and it also keeps the history alive. And for our great satisfaction, it's been the works, a project that has been wonderful. And we've had people all throughout Brazil taking part. This is another contribution that we are doing on the human standpoint and also in the standpoint of Rio de Janeiro, which is a tourist center. Also in the social area, I would like to highlight that we did the works to revamp 2 schools, 2 family clinics around ParkJacarepagua in Rio de Janeiro. Therefore, it was difficult to build this shopping mall during the pandemic but maybe it was the only one that we delivered -- was delivered during the pandemic. Also something very important that Multiple -- the app Multi has 3.6 million downloads so far and the number of access is almost 13 million double of 2021. [indiscernible] received almost 200 million people all throughout the year. And this integration of technology with the on-site is necessary. We feel that today, one doesn't exclude the other. But the curious thing is that the on-site commerce has returned with a lot of strength, almost as much as the virtual. So I remember that it was 47 million cars before the pandemic and now last year, it was 44 million cars. So it's back, but another additional. The technology is integrated to the shopping malls. And the great advantage is, we are located in areas which are hubs for commerce. So there is -- it's very easy to identify a product and a shopping mall in 15, 20 minutes, you can identify on site the quality, that has helped us a lot to talk to the tenants and it's been very positive. We have around our shopping malls, 790,000 square meters. I imagine that this 790,000 has a potential -- well, we still have a potential for building almost 1.5 million square meters. So that multi-use is something that we frequently have done and this is the moment that we acquired maturity. But a lot of these properties have had projects and they're going to generate revenue that is very good. And the value that we acquired 15, 30 years back is a value of the landbank that is much lower than what we have today. So potentially, this is still to be seen the enterprises that we will launch in the future. We're very excited about that. Now talking about the future, I'm sitting here with my son, [Eduardo] here with us. He has been following me for 30 years, 34 years actually, 34 years. Here's my boy. Well, he was 30 and then [Technical difficulty] my son and I have complete trust and absolute surety that he will conduct this company in the same way, if not better, than I have done so over the years, and I would like to say to you. Even though I am still at the Board of Directors, I think that it is -- I continue to be present in the company, my hobby is to work to create projects. The company -- well, the Chairman of the Board doesn't get paid. So I will be here contributing -- continuing to contribute to the company, and I hope to have now more time to create and think from the strategic standpoint on how to make the company to grow more, regardless of all the circumstances and consequences in a very tough moment for the economy of Brazil and the world. However, the company has always grew and will continue to grow. Therefore, I would like to thank you all. I know that we will continue to create and I thank you for your trust and your support for -- from the shareholders and investors. These -- thank you all to 32,000 all of you and all of our workers all throughout Brazil, once again, thank you, and thank you to my family, which is the basis of my life. I am very proud that -- of what we built together. I am an entrepreneur for 60 years so far and I would like to say my hobby is to be an entrepreneur to create. And in the same way that this company has worked out, now I will have more time certainly, my contribution in this area of innovation will be larger. Thank you very much. And I would like to say that even though we've had a revenue of BRL 770 million, it didn't get to my goal. My goal is larger, but we're getting close. What we pay in interest rate in 2022 was BRL 140 million. If you add the interest rate, well, the leverage dropped from 3% to 1.6%, right. So see, we decreased the indebtedness, but the interest rates are high. It's a consequence that we had to carry over with a higher financial cost. And it will get close to BRL 800 million, BRL 900 million, but the interest rates really ran over us. And this year, we've had really good goals comparing January of '22 with January '21, which are overcoming and everything is pointing that we have -- we're going to have a wonderful year. And I would like to say that in a certain way, the pandemic has isolated people. And the great attraction that I see and I cannot substitute is people like to gather, like to join and meet up at our shopping mall. That's the greatest attraction of the shopping mall. It's people intermingling, is socializing. So thank you to everyone. And I hope that we have a wonderful Carnival. It creates a positive energy many times, I've seen in my speeches that the shopping mall is the biggest anti-depressant that exists. Thank you very much to all and we will continue to innovate all throughout the years. Thank you very much.

[Operator]

[Operator Instructions] Our first question we have [indiscernible] Bank of America.

[Unknown Analyst]

Congrats on the results. I have a quick question here on the sales for January. I think in the fourth quarter, movement was announced and expected, but January was a positive surprise to me. So you've seen -- have you seen any highlights that would explain that maybe one region that did better or a category that did better. We have seen that happening. We wanted to see if that has continued. And also that growth level that we've seen in January. Do you think it's something that is sustainable for the rest of the semester?

[Armando Neto, executive]

Hello, Aline, this is Armando. Well, Aline, the sales in January were truly strong, especially when we consider the inflation rate at a completely different level in IPCA that was higher. We're talking about the wholesale levels that were around 3%, 4%. But what we've seen in January was a great growth that was very uniform. We still do not know which segment played a major role in that, but we expect a normal -- back to normal trend, let's per se, similar to what we had last year. But still, we have this interesting movement that is happening right now. It's a very positive thing for retail in this moment. We are working strongly now to have more innovation in our malls. We're investing in our buildings and different attractions for the shopping malls. We -- last year, we had 700 events approximately and we intend to continue to do that this year, so that it is really a place for people to socialize, to be together to go shopping so that we have positive results as well.

[Unknown Analyst]

Just one thing, Armando, just to complement on that, if you allow me. The fourth quarter was good, but it would have been better if we hadn't had elections and the World Cup, right?

[Armando Neto, executive]

I believe it would have been exceptional. It was good, but it would have been extraordinary. In January, as was expected, this trend for malls to grow after the pandemic, we expected that to happen because actually street market is no longer the same and malls are still -- they have survived. So basically, it is a service that is offered to the community. It is not just about selling and buying. We have all kinds of services. We have medical centers. We have labs, et cetera. So our goal right now is you can go to a mall and do everything that you need to do in just one place. It's a one-stop shop. And by the way, Aline, during the presentations -- these presentations, whenever people ask me about the GDP, if it's going up or down or how the agenda is going to be, I usually have this old, very old joke that when the Shark is close to you, you want to swim faster. But actually, you need to swim faster than all the competitors around you in real life. So we are prepared. Malls are prepared. We show this in the presentation. Our market share in the industry of shopping malls is the following. In 2019, we had 8.5% of the total sales of malls. Somebody said that a while ago. In 2021, it was 9.15 and in 2022, we're looking at what was now announced, we're looking at 10.4% of the agenda of the shopping malls. And GLA remains the same, the gross leasable area. We're looking at that in Jacarepagua, going up in 2022. It's growing a lot. So that's what we want to see. We want to see a positive trend in that regard, whether it's in the same area, in the GLA actually or in total revenue.

[Operator]

The next question is from Ygor Altero from XP.

[Ygor Altero, analyst]

I just have 2 quick questions here. The first one has to do with the leave of Dr. Peres and Eduardo Peres coming as a CEO, we wanted to understand more about that. What's going to change for the company? And the second is about the Golden Lake. We see the rhythm of sales went down a little bit or do you think that's mostly because of the elections and the World Cup or any other factors? And how much can that impact on the timing for the mall or the growth? Are you going to change the mix maybe?

[Armando Neto, executive]

Should I start? Well, about the succession plan, the company went on a very clear path that is continuity. We have been working together for a long time. We'll continue to develop things together and to improve the assets continuously. I think this is a great team, a great family, and this will continue on the same path. That was the option. That's why we -- that's why I decided to do this. And I think my father also thought about that, we're going to continue to evolve as in the past 50 years. And the second question was about the Golden Lake, isn't it?

[Ygor Altero, analyst]

Exactly.

[Armando Neto, executive]

Well, what we saw in the fourth quarter, especially with that expectation of interest rates going up or more financing or that expectation in changes in politics. So we see this change in speed and rhythm, we continuously invest in our buildings, in our projects, of course, but we're looking at people making decisions in a different rhythm, a different speed. We expected that to happen, of course, given everything that was happening and the price of our units and what we're doing. And also, there is usually a higher number when things are launched for sales. And then it changes during construction. We are now advancing with the construction. And I think now that the floors, labs are almost done. That is going to stimulate sales a little bit better. People see that it is about to -- that we're about to finish that construction. Well, just one more thing, Ygor. I think last year, we had, what, 520 things that were concluded, stores that had agreed to be there, but we're looking at 400 in total. I'm sure it is going to be extremely successful.

[Operator]

Now, we have Gustavo Cambauva from BTG Pactual.

[Gustavo Cambauva, analyst]

I just wanted to go back to what you were saying about 2023, your perspective for this year. Last year was indeed very good for Multiplan. And I wanted to know a little bit more from you. How do you see this macro scenario with higher interest rates with this perspective of growth that is a little bit lower in terms of economy? And also we're looking at this rent effect that is lower after such a good year that Multiplan here had last year. So my question is, do you think we should be concerned that we might have a more difficult year with a rent level that is much higher? Or do you think the fact that tenants are selling well and they have good store productivity? Do you think that factor makes you not be concerned about inflation, about vacancy? So I just wanted to understand what your perspective is for the portfolio this year.

[Eduardo Peres, executive]

You've probably seen this author Domenico something. He was talking about creative destruction. I read that and I found that interesting. Any crisis will imply that you need to make changes. I mean, the crisis per se is not bad. What is good or bad is not -- they're not completely separated, they're intertwined. When you see something happening that is bad or looks bad, it is actually an opportunity for change to see that you're on the wrong path. So that applies to relationships, to society, to people, to anything. And we sometimes think, well, everything has to be perfect, everything, this [romance] is amazing, but then you find something out and then you start to suffer. And suffering is necessary for you to grow and move on and learn to identify that bad per se, it's not bad. It made you change. I mean we've seen so many crises, me personally ever since '63 when I started working on this, ever since the first project in '63, I remember a lot of people were saying, well, you're crazy, nobody's going to purchase anything. Well, it's true at the time, it was a very complicated moment and people were worried about buying food and water and I was launching this project in Rio de Janeiro. But I only had this option, this one option. If I didn't sell that project, then I would be bound for failure. I saw that in '63, hundred-and-something units in 19 days. But, yes, we were looking at a crisis, but the product that we had at the time didn't exist. It was small apartments in Lapa, certain neighborhood and Rio de Janeiro with good price and it was good investment. At the time, nobody was investing in bonds, they would simply buy a house, an apartment, real estate. There has always been a good option for investment. So we've seen so many crises ever since, so many in these what 60-some years. That's true. I mean, I remember, I launched my first building. In '66, we had that change to Cruzeiro Novo, a new currency than -- a different currency a few years after that. And we have survived, because we have this philosophy. I think the secret for us to be successful is to insist and continue and deliver more than what people are expecting. We always want to transform reality into something bigger than a dream. Whenever somebody goes to a real estate event or there is a launch or now with digital, it seems like everything is built, everything is done. But in the end, people buying that, they have the feeling that it is going to be worse than what it is, but they still buy because it's interesting. So what we can do is, we can try to make reality better than their dreams. We may -- we are able to deliver more than what they're expecting. Basically, that's the idea. So we created the Gourmet Shopping Mall, we have created medical centers within malls. I mean, 30 years ago in BarraShopping, that was brand new. And now we have 300,000 appointments per month in that place, in that medical center. And nowadays, the international association for shopping malls, they recommend that every mall should have a medical center. Now we have in Ribeirao Preto, we have the management center [Technical difficulty] emotions. It looks weird that name. You're saying what management emotions, what is that? Well, we created a center for people who need, I don't know, a psycho analyst or self-help or psychologists. We even have Augusto Cury taking care of that. So that was an idea that we had -- we've had for a long time, I kept thinking people go to the mall to do many things, but we also have to make sure that we are taking care of their soul. So I have this desire I was talking to Augusto Cury last year and I simply had to implement that. It's in Ribeirao Preto. It is a very interesting contribution. It is a service we're offering. We're not intending to earn money. We're looking at appointments that cost around BRL 140 and you know that any psycho analyst that you go to see is going to charge you more than that. So it's really a service we're offering. So we want to help improve people's lives. So they're happier. That's our business. We want to please people and that's why we'll continue to do everything that is good and we have some areas actually around the malls that we can expand. We can build a hotel, a hospital, another building, et cetera, et cetera. So that's our philosophy. And I think that the company will continue to follow that path. And we'll continue to surprise people and deliver more than they expect.

[Armando Neto, executive]

By the way, Gustavo, let me just complement on that on what Dr. Peres was saying. The company has just completed the 15 years of being listed. So it is interesting to see all the data, all the numbers. The only year in which we didn't have good growth was 2020 in sales, because we couldn't operate because of the pandemic, other than that, all the other years, we had good growth in our base and sales, whichever way we look at it. So last year was a very good, very good, very strong year. It was historical, especially considering what happened, considering the restrictions we had in place and we were able to deliver. So Dr. Peres our answer, when we're facing any adversity is to do more is to do better. And that's why we are able to deliver a market share improvement and expansion because we are able to manage shopping malls the best way. So the company has shown for a long time now its ability to adapt. And Dr. Peres mentioned it and showed us a few examples. There is a huge very interesting philosophy behind this, right, Gustavo?

[Operator]

Our next question is from [indiscernible] UBS.

[Unknown Analyst]

I have 2 questions. The first one has to do with the store mix and turnover, you've changed that a little bit. Do you think there is still space for more changes? What is the potential improvement in that regard? And also about the levels of occupancy, we've seen a historical number of around 200%, but the consolidated number is 95%. So I wanted to know what you're thinking about this year? Do you think it's going to continue with the same historical rhythm or is it going to change?

[Armando Neto, executive]

Tina, this is Armando. You were talking about occupancy, right? I think your line cut a little bit.

[Unknown Analyst]

Yes, that's it, occupancy.

[Eduardo Peres, executive]

Okay. Tina, this is Eduardo Peres, I will talk about the store mix, your first question. I think it's interesting to think about that from an operations standpoint. I have to say that the mall platform is a very flexible one. So it adapts to the wishes of those who go there. So sometimes people think that the owner of the shopping mall is going to choose who stays or who leaves, but actually, it's the people who go to a mall. It's not the owner of a shopping mall, it's consumers. So I see -- I've seen people confusing that in the past. If you think about the past few years, people were more interested in clothing. And nowadays, they're more interested in restaurants. So it really changes, it varies. But the thing is we have -- we depend on what consumers want. As for the occupancy rate or cost, that was the second question, wasn't it?

[Armando Neto, executive]

Yes, he was asking about the 97%.

[Eduardo Peres, executive]

Oh, I'm sorry. Well, I think there's still space. I think it's a constant West, the company to improve occupancy and to have more services and more products at a mall. It is like a huge department store and stores are the products. I mean the mall will concentrate certain stores. But if they have just a few stores, it's just a few products, just low variety. So BarraShopping, for instance, is a complete mall. They have all kinds of products and services for everyone. It is difficult to have vacancy very low. It is a challenge because nowadays, we're looking at a moment where we have this scenario, but there is space for us to look at 97%, 98%, maybe 100% -- that was the second question, right?

[Unknown Analyst]

Yes, that was the second question.

[Eduardo Peres, executive]

I think it's important to say that we're -- we have the best commercial centers in large cities. So if we think about Rio de Janeiro, it's BarraShopping. What about Sao Paulo, MorumbiShopping. If we were able to extend, if we were able to double that, I mean, if the sky was the limit, but we don't have wings, we cannot really fly. So I agree with what you were saying. I think considering our limitations and our ability, we are doing what we can when we came here to Barra, everyone said you're crazy. There's nothing in there. There's 2, 3, condominium buildings. And that's it, we see -- we start with 20 stores and now we have what, 60. It's true. It's a lot of resiliency, a lot of resilience. I mean, we spent 1 year without really operating the adequate way. So if it weren't for the courage of the company to continue to invest, to continue to help tenants so they wouldn't give up. If the company wasn't brave, we wouldn't be here. Tina, we have a few malls where the occupancy is 100%, Morumbi is 99%, 98%, sometimes it is very good. And just one more thing, one thing is the total, the other thing is having the right mix. I mean, it's useless to just have that completely occupied, but without quality. We need to think about the right mix, the right amount of sales so that we're going to have also a good effect in the future, right?

[Operator]

Our next question is from Andre Mazini, Citibank.

[André Mazini, analyst]

Congratulations on the succession on the board. Well, I would like to ask the question, I think, that we've already discussed this a bit. For 2023, I wanted to understand if now do you think that we will have an accumulation of CEO and Director of Operations, Eduardo? And what is the idea for the career of the Director of Operations? The idea is to bring somebody from the market or are you thinking about someone, someone in-house? Can you announce anything? That's the first question. The second question, the greenfields, I think that you can say that you're one of the most excited companies about greenfield, interesting cases to give support to this -- so you're maybe separating 3 regions to Southeast, Southern and the South and Brasilia, the capital, which one are you more excited for the potential for greenfield in these 3 regions?

[Eduardo Peres, executive]

Andre, this is Eduardo, thank you for the question. I believe, yes, we have, and I will get someone in my place, in my former position, which is the VP of Operations. It will be certainly somebody from -- well, it will be time we have to define. Multiplan is a company that has a philosophy and a pool of talent of promoting people that are in site. So probably will be somebody from in-house. We haven't defined what that person is going to be, but it should happen briefly. Greenfield, I can say the following. We're extremely focused on expansion. I believe that it is better, sometimes it is better for you to expand and complement the real estate enterprise and starting to have the -- it's better to improve than starting from scratch. So we look at today the number of malls that [indiscernible] were years ago with a possibility and actually a need of growth. So when I said to define the shopping mall that I've been recently, for example, in Maceio and I've been recently in Jundiai. Both of these malls, for example, they need an expansion to increase their capacity of attracting new customers. That's it.

[Armando Neto, executive]

And if you consider these 2 -- this is Armando speaking. Just Barigui and the other one is a shopping mall at 6,000 square meters. So the challenge is that there is a lot to be done. And with economy that we know as it is. So we're going to have to choose our investments. Nonetheless, there are many things, many possibilities to grow and a story about that. When I did BarraShopping, it only had 1 floor, but we had built the foundations to get a second floor. Great. So the first year was incredible. A lot of people came to Barra da Tijuca -- Barra da Tijuca was still the access was difficult. We didn't have the yellow line, the access was via [indiscernible] it was a lot of confusion traffic-wise. Second year of the mall, well, all the news had blown away. It was news, but now it wasn't new news. And there was no turnover. There was no -- so we started to discuss with our partners. It was an international company. [Shell] was our partner because they had the tennis field and they didn't do anything. And they said, well, let's use the tennis courts to build a nice mall and they were up for it. When the problem came up that with the partners, they said, well, this shopping mall doesn't attract a lot of people, a lot of customers, why? Because we have the strength of gravity, the law of Newton matter, attracts matter, [indiscernible] square the sense is, the more peripheral, the larger, the mass of the object has to be to attract. So there is another detail that I told them that we have had made the decision of expanding actually to attract more people. And some people like to joke with me. And I like to, for example, take those sugar cubes and I'd like to see how we worked. And of course, if you get a sugar cube near the ant mount, it's going to disappear very fast. But if you put it 3 meters away from the nest, they're not going to really -- the answer is they're not going to see the sugar cube. Can you imagine what happens if you put the sugar cube at 10 meters of distance? But if you get a lot of sugar 10 meters away a bag, then the answer going to form a line.

Anyway, it's an analogy with ants, but the point is, BarraShopping peripheral that didn't have any attraction, any gravity, it wasn't attracting people from the southern zone to go to the Barra, because it didn't have the size. So we doubled the size of the mall. And people are saying you're completely gone after rails, but BarraShopping grew when we expanded and it helped to create the Barra da Tijuca, which is the greatest center for development in terms of taxes [indiscernible] tax here in Rio de Janeiro. So that's some idea that we've created the idea that we've had 40 years ago and it's been working since. So Rio de Janeiro changed and Barra da Tijuca is a vector for growth. And here in the Western zone, we've done several other malls where we dominated. These are the regions that grow the most in Rio de Janeiro. And in the middle of the pandemic, you can see ParkShopping Jacarepagua, it's doing very well. It's growing January on January a lot, 2 digits. But they said, Dr. Peres come on. You're going to spend so much money in Jacarepagua. Okay. It is a simpler neighborhood, but we do not discriminate people nor places. Our philosophy here at our company is that we have to overcome the obstacles. So we can now look at the competition because they're not going to do what we are going to do. So the company, every mall that we do, it has to be better than the previous one. We have to innovate. And we identify the demands, unmet needs and we meet those in. That's the idea. We can see that everything is possible with an enterprise, even selling apartment buildings in the middle of the Amazon, anything is possible. You just need to have a philosophy, a perspective of being an entrepreneur, demand. Nobody won't buy anything if there is not an offer, what creates the demand is the offer. It's not the offer that creates the demand. The demand doesn't exist. It's abstract, but the offer of something creates that. When I study economy, if I remember correctly, from the university, that's it. Well, demand, what creates the demand is the offer. So if I have a golden pen, if it's worth BRL 10 or more, it depends on the demand.

[Operator]

Our next question comes from Jorel Guilloty, Goldman Sachs.

[Wilfredo Jorel Guilloty, analyst]

Congratulations, Dr. Peres and Eduardo for this succession. I ask 2 questions. First, I would like to talk about, well, where do you see the lower leverage and EBITDA and net revenue, it's 1.6x. There is still a lot of room for you in capital allocation. And I wanted to ask, what do you think about the capital allocation today, thinking about that favorable leverage. Of course, there is a high interest rate. There's PDP that is weaker. But I wanted to know how you see, how you think about the triggers for capital allocation for brownfield, greenfield, M&As in the context of being at your strength? And also the occupancy cost, you mentioned that you were waiting for the occupancy cost to improve to increase because you have pricing power. But I wanted to know if really occupancy cost would be moved by the larger, more established shopping malls such as BarraShopping, where that occupancy cost would be more driven by the small malls, last consolidated, it's Canoas, Jacarepagua, so on and so forth? That would be it.

[Armando Neto, executive]

Everybody wants to answer the question. Anyway, leverage. I -- we are not asset managers. Our excess of cash is in net operations to see the investments and opportunities that we had. We deleveraged the company with -- strategically we talked about the fourth quarter '21 than in the fourth quarter of the '21 to have less leverage, more -- well, everything that happened in the pandemic, all the discounts in rent were given in the context of the pandemic. Now what we've seen, what we've done with capital allocation is to give back some more money to the investors since there were less investments, but nonetheless, we invested about BRL 70 million in that order of magnitude and we repurchased the shares in the order of BRL 55 million. So we're now going to deleverage. We will, if there is less investment, we will give more money to the shareholders. However, looking at 2023, we have 2 expansions. As I've mentioned, it's almost 21,000 square meters. So we're looking -- Eduardo talked about several opportunities for expansion. And that should continue to follow up on the growth of the company, improving our shopping malls. Therefore, as we have said in the second part -- taking your second part in the question, we are growing the occupancy cost, is one of the priorities of the company. So I'm going to let Eduardo -- Dr. Peres to comment.

[Jose Peres, executive]

So I just wanted -- here's Eduardo. Sorry. You were commenting about the occupancy cost. And I believe that the search for keeping the threshold of occupancy cost for our tenants is eternal. We know that's important because the profitability of the tenant is taken. Therefore, along that path, we try to negotiate everything this year. We have -- just to give you an example, we have big contracts with the energy utilities companies. We have a contract of BRL 200 of [PLD]. And since there is an excess of water and the price of energy has come to BRL 50. Our contract predicts that we can opt at the beginning of the year for subcontracting 100% or part, in this case, half we've done so. And we reverted that discount, which is 15 million to 20 million that's gone for the economies for our tenants, so they can have a low working cost. So the search for efficiency, condominium efficiency is eternal. And just to take another example, a shopping mall, there was 5, 6 malls -- we have malls that were 5, 6 years with an increase in condominium cost. So this is our total attention to this detail. It's not the small ones or the big ones, it's every mall. Would you like to say anything else?

[Armando Neto, executive]

I would like to say that this opportunity is, as we've said, this issue is connected to the interest rates because, obviously, if we had an interest rate that was low, we would have had a larger revenue. However, on the other hand, even with the high interest rate, because we built a lot of shopping malls where interest rates are at 100%. But I'd like to say, if you have the opportunity of something that is complementary to the company in terms of growth and productivity, therefore, gains and scalability and economic gains, if that happens, the company will examine this, because regardless of the issue of the economic, macroeconomic, the politics, it doesn't matter. We will always have to go over and revisit the new opportunities. Well, you're doing this and that, people might say. It's a question of opportunity, once we want to do something, it has to be compatible with our assets. We don't want to buy shopping malls or poor quality also. And the capital allocations will have a good return. So we have to see the greenfield, there has to be a higher return.

[Operator]

Next question comes from Marcelo Motta, JPMorgan.

[Marcelo Motta, analyst]

Question is about the Diamond Mall, the M&A, the acquisition. Can you give us a bit of an idea of how that is unfolding? Also, the idea of doing all this expansion at Diamond, how much does it depend on the acquisition, if there's no acquisition, there's no expansion, you're going to be taking a look at a different project. So a few comments on Diamond?

[Armando Neto, executive]

The expansions are regardless of any acquisition we are talking -- we've been working for some time and we've been working with the reallocation of areas, bringing a nice product for the shopping mall. Regarding the 24.95% acquisition, we hope that there is a liquidation soon. It's under the approval of CADE, the council and we hope that that happens soon. And it is important to highlight that we are growing 75.05% of the mall, which gives us a lot of comfort.

[Operator]

Our next question comes from Fanny Oreng, Santander.

[Fanny Oreng Avino, analyst]

So I would like to read my compliments for Dr. Peres, the trajectory and congratulations to Eduardo for the new position. My question is simple. Most has been answered, but we know that we've had 2 to 3 specific assets that should go through a process of revitalization, revamping. Can I continue? Armando? Can you hear me?

[Operator]

I am. Excuse me, 1 minute for the reconnection of the speakers. I think we can try having our next question. Ms. Fanny Oreng, we can continue. Okay. Can you hear me now?

Our next question is from Daniel Gasparete from Itau BBA.

[Daniel Gasparete, analyst]

Just wanted to thank Peres for all these years and the conference calls. Hopefully, we'll have him with us for more time. We've learned a lot. And I wanted to ask you a question. So Eduardo, I want to ask you a question. If we were to list the -- I don't know, expansions, M&A payments, dividends, how do you see these levers? And how would you -- what would you say is the best way to unlock more potential for the company?

[Operator]

Mr. Daniel, I think the speakers did not get your question. Can you repeat it?

[Daniel Gasparete, analyst]

Sure, of course. I was saying, first of all, I wanted to congratulate Peres for all these years in the conference calls. Hopefully, he will continue with us in the next calls, because we learned a lot with him, and I also wanted to congratulate Eduardo for the new position and I wanted to ask him a question. So my question would be about [indiscernible] how do you see the main levers to unlock more potential for the company. If you were to list that [indiscernible] M&A, dividend payments, et cetera, how do you see that, what do you think would be the main way for the company to have better value?

[Eduardo Peres, executive]

Daniel, this is Eduardo Peres. It's very interesting to think about the opportunities that we have in terms of return for investment. I believe that it is fundamental that we invest in the assets that we have because that represents great value for the company. I mean, the rest is going to come from the quality of the services that we offer. So when we have an expansion for instance, we want to continue to make this work. We want to have more people working with us. We want to have the right consequences for them. So we want to distribute dividends, we want to maybe purchase another mall, another company. So in my mind, it is very clear that the better our assets, more distribution of dividends we'll have. And I think there's another part of your question that we wanted to address?

[Daniel Gasparete, analyst]

No, that was basically it. That was it about priority [indiscernible] under your direction.

[Operator]

Our next question is from Fanny Oreng from Santander.

[Fanny Oreng Avino, analyst]

I wanted to thank and congratulate Dr. Peres for everything that we've learned in these past few years. Thank you also Eduardo, congrats on the new position. The question here for Eduardo is the following. We understand that there are 2 or 3 assets that still have to be reviewed such as VilaOlimpia, Santa Ursula, New York City Center. So I think it would be interesting if you could share a bit of what you intend to do? Of course, you cannot tell us everything, but just so we have an idea on how that's going to be reviewed or repositioned?

[Eduardo Peres, executive]

I think it is relevant. As for the New York unit, it is undergoing an interesting transformation right now. We're looking at investments that are around BRL 50 million for the next 2 years on that unit to reposition that asset. That is a constant project for us. I mean, the pandemic did affect us, especially in terms of our ability to reinvest -- there's this expression that says, if you need to serve live, you cannot really dream. There is no space for dreaming, but now we have survived and we have no space to dream again. We want to improve all of our buildings, all of our units and projects. I mean, it is an important portfolio. We can do everything that we want. We have limited resources, but we, for sure, are trying to do our best. All of the assets that you have mentioned, they're not forgotten. We have been trying to improve all of them. By the way, Eduardo, VilaOlimpia, we had the best performance in the fourth quarter. That's an important recovery that we have to consider. It's true.

[Operator]

I would like to thank everyone for your questions. We have now ended the Q&A session. [Operator Instructions] I will now turn it over to Mr. Peres for some final remarks. Mr. Peres, you have the floor.

[Jose Peres, executive]

Thank you. I would like to thank you all once again for your patience, for being connected. Unfortunately, we had a big issue here with our Internet connection, but it was not. I believe that our team was still able to answer your questions. And I just wanted to say the following, despite the fact that I'm going to be in the Board of Directors, I intend, continue here working with everyone with my ideas, with new projects. This is my hobby as well. I mean, this is something that is fun for me. It is something that I've been doing for a long time, many years and with great pleasure. This company has this motto, which is the secret of success is to do things the right way, and we'll only do things the right way if we like what we're doing. That's why I think this is partly the reason for success of the company. People love what they're doing here. Thank you so much.

[Operator]

This is the end of our conference call for Multiplan for this quarter. We would like to thank you all for your participation. Have a great day.