Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Parque Arauco SA (XSGO:PARAUCO, Financial) reported a strong growth in sales, revenues, and EBITDA, with a 20.4% increase in EBITDA across all three countries.
- The company announced an acquisition agreement for Open Plaza Kennedy, strategically expanding its GLA in Santiago.
- Parque Arauco SA (XSGO:PARAUCO) achieved the lowest level of leverage in the last five years, with a net-debt-to-EBITDA ratio of 4.9 times.
- The company received multiple awards, including Most Honored Company, Best CEO, and Best CFO in the real estate small cap category.
- Parque Arauco SA (XSGO:PARAUCO) published its second TCFD climate management report, demonstrating its commitment to sustainability.
Negative Points
- Colombia's sales levels were flat, attributed to the impact of tax reforms and exchange rate effects.
- The company experienced a decrease in financial income due to lower returns on financial investments.
- There was a significant negative impact from the line of income for indexed assets and liabilities due to changes in inflation in Chile.
- Some malls in Peru saw a decrease in EBITDA due to an increase in bad debt provisions.
- The company noted a decrease in sales at Parque Arboleda and Parque La Colina in Colombia, attributed to increased personal income and import taxes.
Q & A Highlights
Q: How do you see occupancy cost trends in Chile, given that same store rents grew more than same store sales this quarter?
A: Eduardo Perez Marchant, CEO, explained that there is still room for increasing occupancy costs in Chile, as they are currently below pre-pandemic levels. Contracts for minor stores, which make up about 15% of GLA, are being renegotiated at inflation plus 1-2% annually. This gradual increase is expected to continue as sales improve.
Q: What are Parque Arauco's plans for consolidation in the sector, and is there a focus on a particular country or asset class?
A: Eduardo Perez Marchant, CEO, noted that consolidation is a trend in Chile, Peru, and Colombia, driven by economies of scale and access to capital. Parque Arauco evaluates M&A opportunities on a case-by-case basis, focusing on high-quality assets rather than specific countries.
Q: Could you explain the increase in revenues per square meter in Chile compared to Peru and Colombia?
A: Eduardo Perez Marchant, CEO, attributed the increase to two factors: renegotiation of contracts at inflation plus 1-2% and a shift to a simplified contract structure that consolidates rent, marketing fees, and common expenses into a single revenue line.
Q: Why did Alegra's NOI margin drop despite increasing occupancy, and what are the expectations for the next 12 months?
A: Eduardo Perez Marchant, CEO, explained that Alegra is still maturing, with ongoing improvements and cost efficiency initiatives like solar panels. The margin drop this quarter was mainly due to bad debt provisions, but improvements are expected as occupancy and contract terms evolve.
Q: How much of Parque Arauco's contracts have transitioned to the new simplified contract structure?
A: Eduardo Perez Marchant, CEO, stated that approximately one-third of the contracts have transitioned to the new structure, with about half of the new contracts being renegotiated under this format.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
