Good morning everyone, and thank you for waiting. Welcome to BR Properties Q4 of 2021 Results Conference Call. With us here today, we have Martín Jaco, CEO, André Bergstein, CFO and IR officer. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After BR Properties remarks, there will be a question-and-answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. This event is also being broadcast live via webcast and may be accessed through BR Properties website at www.brpr.com.br/ir, where the presentation is also available. Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded. Now, I will turn the conference over to Martín Jaco. Mr. Martín Jaco, you may begin your presentation. Thank you and hello everyone, and thank you for your presence and interest in the results of BR Properties related to the Q4 of 2021, therefore the entire 2021. In terms of dynamics, I'll start with a brief introduction detailing the main highlights of the Q4 and 2021, followed by a presentation of the details of the results made by André Bergstein. Last but not least, we'll leave enough time for the Q&A session for all your questionings and doubts that you might have. Let me start with the introduction now with the main highlights of the company. Again, same as we did in 2020, 2021, the great highlight was the operational side of the company. Presenting very strong and positive results on a very complex and difficult scenario, both challenging scenario from the pandemic and also the macro scenario and economic and political scenario in Brazil. In terms of the operational itself, we got three main highlights. The first one obviously will be leasing. The leasing activity in 2021 followed the same behavior that we saw in 2020. Even with the pandemic, we were able to reduce vacancy levels of the company. In 2021, while leasing 111,000 sq m of new lease transactions in 2021, we were able to reduce by 6.6 percentage points the total vacancy of the company. If we consider the subsequent lease that we already announced in January 2022, it represents another 1.5% in reduction of the lease vacancy. Therefore, 7.5% reduction in vacancy levels of BR Properties portfolio. The reduction in vacancy rates occur in the entire portfolio was not concentrated on one asset or on one city, but it was throughout São Paulo and Rio de Janeiro and all of our properties. That shows the right decision that we make in the past with the strategy of positioning our assets in buildings that offers to the tenant, to the final user, what we call the full package. That is to say, state-of-the-art technical specification, plus public transportation, plus services. This is what we call the triple-A BR Properties portfolio. Those are the demands of the tenants, and with the pandemic, this demand has been increased even more because now it's democratized along all the different tenants, the need of flexibility. Once you have technical specifications, public transportation and services, you have the flexibility that is now required. We did that throughout the knowledge that we have of the clients and the proximity that we have of the client, again, with the strategy of having our own property and facilities management company providing this service for our own clients. At the same time when we saw this vacancy reduction in the portfolio of BR Properties, if we analyze the overall market, office market of São Paulo and Rio de Janeiro, we saw the increase in vacancy. The overall market, companies were not growing or on average were not growing. Some were giving space back because of the knowledge of the remote possibility of remote work. There was now, as I mentioned, democratized throughout the entire market. Therefore, we have a reduction in São Paulo and Rio de Janeiro market. Respectively, this market lost 140,000 sq m and 14,000 sq m respectively to São Paulo and Rio de Janeiro. While on the other hand, we were observing, so relatively speaking to the behaviors of the office market as a whole in São Paulo and Rio, the portfolio of BR Properties really have a performance and outperformance by far. In January 2022, as we mentioned, we already saw a very large transaction in Parque da Cidade. That's reduction even more the vacancy levels of our portfolio, and that's the tendency that we expect to happen throughout 2022. Not only in our portfolio, but we are seeing improvements in the overall market. According to some consultancy companies that we have very close relationship, the first months of 2022 was strong, very strong in terms of leasing by occupying but making the same amount of leases than the last quarter only on the first months of this year. Therefore, we expect that this vacancy reduction will be in the overall market, but our portfolio being much more demanded or for the tenants, we'll have a much better performance than we have in 2022. This is for leasing. The second highlight that I would like to talk is about the acquisitions. We've been very active, again, on acquisitions. We acquire the 2 towers of Parque da Cidade. Besides the first one that we acquired at the end of 2020, we acquired the last two in the beginning of 2021. Therefore, we comprise 102,000 sq m of vacant space on January when we acquired those properties. Today, throughout the first year of really operational leasing activities that we have, more than a third of the complex is already leased. Therefore, in line with what we expected to reach 80% by 24 months of operations. We're pretty much in line with what we expected, against what the market was expecting with this pandemic. The second important acquisition we did in 2021 was in the warehouse, in the logistics sector, the warehouse called Centauri in Jarinu. We bought this warehouse in the beginning of construction, 63,000 sq m of state-of-the-art logistics space that we were able to pre-lease on the same day that we made the acquisition for a very large multinational for all its e-commerce group. Construction has already been finalized. All the documentation has been obtained, and the tenant already started the fit-out works internally. Therefore, these effects in terms of income will be felt by the company by the Q2 of this year. The other acquisition, which is worth mentioning, is what we call Cajamar Two, which is really the expansion of Cajamar One. Cajamar One, we're finalizing the construction of 150,000 sq m of state-of-the-art logistics space with a lot of pre-leasing conversations that probably will occur throughout this year. The complex will be ready in a couple of months. One of the properties has already been sold, and I will get that in a minute. We're providing a very good result for the company. Since we are completing this one, we acquired the next-door site for a potential of another 150,000 sq m. Once they are ready, they will provide a scale that will reduce the total cost of occupancy, again, generating more liquidity for the property. The interesting thing about, besides the location of Cajamar, the expansion of the existing, the best location in Brazil for logistics, but another very interesting characteristic of this acquisition is that we didn't acquire it through the payment, direct payment of the site. We acquired the site through a swap of a built area to be delivered in the future. Therefore, no pressure on a present cash structure. This is for acquisitions. The last highlight on operations will be the sales side. We've been very active, not only on acquisition, but also on sales. Again, this is how the company has been structured since day one, back in 2007 when we started operations. In our DNA was we have to bring results for our shareholder, for the companies. We are not pure FFO providers keeping the building forever in our portfolio. We have the capability of acquiring, aggregate value, add value to our operations, and then making the recycling of the asset, providing the capital gains for the shareholders, and then we continue this continuous cycle. Therefore, we are always very active both on sales and acquisitions. On the sales side, we did in 2021 close to BRL 465 million in transactions. We started with three smaller assets that we sold in the beginning of the year, Souza Aranha I, Souza Aranha II and Porto Alegre for the value of BRL 64 million. We sell a 20% participation in JK Tower B for BRL 185 million. We sold the logistics warehouse called Tucano in Jardim for BRL 94 million. We already sold, as we mentioned, Warehouse 300, which is one of the warehouses in Cajamar One, 35,000 sq m. We sold for BRL 123 million. That was a development that we sold at final price, still under construction, providing a very high return in our investment as we presented, and I'm not gonna spend time on that, as we presented in our previous Q3 results. The important thing about all those sales is they were all carried out at NAV value, some with a premium and some with a small discount, but all on NAV value as it had been throughout the entire years. Therefore, proving that the NAV that we have in our portfolio carried out every year by third parties, in this case CBRE, is correct and in line with really what the market is demanding. On the sales side as well, we also had announced by the end of last year the possibility of a sale of the remaining 80% stake in JK Tower B. However, through all the timeline, the buyer didn't follow the time that was established. Therefore, we finalized these discussions. However, it's still something that could come in the future. Why am I saying that? Because I'm entering now on the last part of this introduction, which is really what we could expect in 2022. For 2022, we really expect and we'll focus ourselves in two main issues. The first one is always occupancy. This is always the first issue in our list throughout the year. How are we gonna reduce vacancy levels? It's always, as we mentioned, the target of the company. As we said, the pipeline is strong. We have been decreasing vacancy throughout 2020 and 2021 and when increasing this speed. We are having a scarcity in the market as a whole of the good quality assets that have the full package, as we said, is demanded now by the tenants. Expectation is that we have a very important year in terms of absorption, probably close to what we did in 2021 or maybe exceeding 2021. As you saw, we started very good at, with over 9,000 sq m on January alone on Parque da Cidade. This is the first target. The second target, the second priority that we have by this year has everything to do with the increase in interest rates. The increase in interest rates is bringing our financial costs up. Therefore, we have a clear strategy of how we can reduce the total debt of the company and the total debt will be carried out while the sale of assets and the proceeds of the sale will be used to reduce or therefore prepay debt and reducing the financial cost and the financial impact that we have in the portfolio today, in the company today, due to the increase in interest rates. You may ask, okay, but what about the market? The sale activity, the FIIs are out. Again, we have in 2021, according to to consultancy companies, BRL 22.7 billion in real estate transaction at the same level that we have on the pre-pandemic period. Therefore, the market, the real estate market in Brazil has been mature year after year, so we are not only counting on one type of investment. We have all different type of investment. Therefore, when one is not active anymore, the other becomes active because it is their opportunity, therefore creating a very interesting liquidity and opportunity for continuing the sales as we carried out throughout 2021. This is for the first part of the introduction. Now for the detailing of the results, I'll turn the word to André. André, please. Thanks very much, Martín. Good morning, everyone, and thank you for attending the call today. Regarding the financial highlights of the Q4 of 2021, I would like to talk about the following points. Full 2021 net revenue was BRL 326 million, 8% above 2020 when we consider the same property portfolio. The Q4 net revenue reached BRL 82 million, 5% above the same quarter of last year, also considering same properties. It's worth mentioning that we have today 85,000 sq m, 63,000 from warehouses and 22,000 from office, already leased that have not contributed yet to our revenues. The average rent per square meter from same properties increased 8.2% over the Q4 of 2020. If we consider only the inflation adjustments, the increase was in line with the contract indexes, IGPM and IPCA. In 2021, G&A expenses excluding vacancy expenses, stock option plan and taxes amounted to BRL 57.7 million, down 5% versus 2020. This result shows the company's historical absolute commitment toward maintaining high levels of operational efficiency despite the rampant inflation, which, measured by IPCA, reached 10% per annum in the last twelve months. It means that we got to a 15% real reduction. Annual adjusted EBITDA excluding non-cash results totaled BRL 228 million, stable when comparing with 2020. It should be noted that just as with gross and net revenues, this drop was due to assets sold during 2021. Excluding the sales effect, adjusted EBITDA was up 5% in the period. 2021, adjusted net financial expenses was BRL 128 million, a nominal increase of BRL 93 million versus the previous year. This result is explained by the increase in the Selic interest rate between March and December of last year. It went from 2% to 9.25% per year. Also, by the company's disbursement of cash for Parque da Cidade acquisition, and finally by the Cajamar and Centauri warehouses investment, reducing thus the appropriate financial revenue. We recorded a net loss of BRL 47 million in the Q4 due to the non-cash effect of the property's appraisal, representing a loss of 66 million reais, but just 1% of our total portfolio. The strong increase in interest rates and the volatility of the scenario in Brazil were put under evaluation by CB Richard Ellis, impacting the asset pricing. In 2021, the company recorded net income of BRL 32 million. The adjusted FFO in the quarter totaled 8.6 million, with margin of 11%. The total 2021 FFO was of BRL 97 million, a 48% decrease versus 2020. The FFO decrease is mainly justified by the increase in net financial expenses, as we already talked. By the end of 2021, net debt was of BRL 2 billion, and our comfortable cash position was at BRL 966 million. In the Q4, the average effective cost of debt was 11.7%, which is equal to CDI/Selic plus 2.3% per annum. Talking about capital structure, in 2021, we finished the share buyback program of 2020. We acquired 11 million shares for an average price of BRL 8.63. The remaining 17.3 million shares in treasury were canceled just after the conclusion of the program. After that, we approved a new program of 18 million shares. We have acquired until year-end around 10 million shares. Following our dividends policy, the company has distributed BRL 95 million during 2021. Considering 2021 results, the management is willing to distribute almost BRL 50 million, which still subject to the general meeting approval. Well, those were the financial highlights of BR in the Q4 of 2021. Thanks again for your presence. We will now open for the Q&A session. Thanks very much. The floor is now open for questions. If you have a question, please press star one on your touch tone phone at this or any time. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Questions will be taken in the order they are received. We do ask that when you pose your question that you pick up your handset to provide optimum sound quality. Please hold. This concludes today's question and answer session. I would like to invite Mr. Martín Jaco to proceed with his closing remarks. Please, Martín, go ahead. Thank you very much for your time and your interest. In case of any doubt or any other clarification that you might need, we'll be at your entire disposal. Thank you very much and have a nice day. That does conclude BR Properties conference call for today. Thank you very much for your participation, and have a nice day.
Loading workspace