Welcome to the Allos teleconference for discussion of the results referring to the second quarter of 2023. With us today, we have Rafael Sales, President, Leandro Lopes, Vice President of Business, and Ms. Daniella Guanabara, Financial Officer of, and Investors Relations Director. This event is being recorded, and all participants are in a listen-only mode during the company's presentation. Later, there will be a question and answer session for analysts and investors only, when further instructions will be provided. Should any of you require assistance during the conference, please press star zero to reach the operator. This event is also being broadcast simultaneously over the internet via webcast and can be accessed at ri.alianscesonae.com.br, where the respective presentation is available. The replay of this event will be available shortly after the end.
The replay of this event will be available shortly after it ends, for a period of one week. We would like to inform you that questions can only be asked over the phone. If you are connected by the webcast, your question should be sent directly to the RI team by the email provided from the company. Before proceeding, we would like to clarify that any statements that may be made during this conference call relating to the company's business prospect, projections, and target operating and financial, constitutes beliefs and assumptions of the company's board of directors, as well as on currently available information. Forward-looking statements are not guarantees of performance. They involve risks and certainties and assumptions as they refer to future events, and therefore, they depend on circumstances that may or may not occur.
Investors must understand that general economic condition, industry conditions, and other operating factors may affect the future performance of the company and may lead to results that differ materially from those expressed in such future considerations. Now, I would like to turn the floor over to Mr. Rafael Sales, who will begin the presentation. Please, Mr. Rafael, you can proceed.
Good afternoon, everyone, thank you for being interested in our results. Before talking about the company's earnings, I'd like to say that Aliansce and I, plus brMalls, is now Allos. We're beginning a new chapter of our story. I'd like to mention this is a legacy of over 50 years since the inauguration of the second shopping mall in Brazil, the Shopping da Bahia, in 1975 in the city of Salvador. Since then, with the changes in consumer relations and focusing on customer experience, our shopping malls solve many challenges or small challenges in urban life that transform moments and service with enchantment and focus on people's priorities, in addition to driving business that lead to connections and opportunities.
In 2023, Allos is here by bringing together two of the main stars in Brazilian retail, bringing together their strengths and strengthening this new entertainment, lifestyle, services, and purchases platform. This new brand is here to strengthen our purpose, to connect people, business, and society, serving and enchanting every single day. The name Allos comes from the Greek word, allion, together, reciprocally, mutually, Allos of experiences. We're a platform that connects people to experiences, that brings the experience or enchantment to this experience. On the first slide of the presentation, you can see the QR code for our institutional video to launch the new brand. I'd like to invite you all to visit the contact whenever you have an opportunity.
The main takeaway here is that we're looking at the future, and we will continue passionate for our work in moments that enchant and transform people's lives. Now, moving on to the results for the quarter. I'd like to ask you to take a look at the next slide, where we go into the details of the second quarter. Our revenues added BRL 644 million, meaning a growth of 12% year-over-year. Out of the, of the two combined companies, obviously. Across the last two years, we followed the strategy of maintained occupancy in our shopping malls, and they are at very healthy rates. This scenario led to an acceleration of removal of discounts that we had in the past, but now reinforced by capturing synergies and revenues with the business combination that originated Allos.
As a result, total rental revenues was BRL 488 million in the quarter, 12% higher year-over-year. It's interesting to note that in this quarter, our same-store rent was 11%. That indicator is close to the rate of growth of rentals, showing a convergence of profitability of the renewals area and new rentals. The Allos NOI was BRL 563 million in the quarter, with the likes of the good operating results and cost efficiency, even though we had higher provisioning in major retailers. As you know, they're going through financial troubles. EBITDA, BRL 473 million, increased by 12% year-over-year, with a margin of 73%. That indicator was also benefited by our real estate incorporation operations development.
That's, we're dedicated all the opportunities that add value to the shopping mall and create more density in our areas in which we are doing business. On slide four, here we can see company sales. In the second quarter, we've achieved BRL 9 billion in total sales, growing 5% year-over-year, and that's a slowdown compared to what we had in the first quarter. In May, we had the worst growth, and in June, we already had a comeback being the strongest quarter. In July, we had total growth of sales of 10% compared to July last year. We'd like to highlight that that figure is preliminary, not audited, and will be reviewed when we provide results for the third quarter.
It's important to mention some of the highlights of our portfolio in the second quarter, because the shopping malls in São Paulo had two-digit growth, such as Tambore, Campolim, and Bauru, and the same level of performance, Maceió a nd Catuai, Maringá, which are top five for growth in the quarter. When we go to the year to date, the Midwest is the highlight, 12% higher in the first half of 2022 compared to the first half of 2022. It's interesting to see the sales of that region, which is driven by the economy, and especially the results of agribusiness. We're very well positioned in the Midwest. As you all know, we service many different capitals in the region.
The Allos occupancy rate was 96%. You can see that that level is a bit lower than what we've seen in the past quarters. That variation occurred as a result of our decision to go back into strategic places for large retailers that are going through financial difficulties. It's worth noting that that's an opportunity to increase the potential and profitability of these areas by the saturation of areas and other operations that reinforce and qualify the mix in our shopping malls. The difference that we currently have in the total performance and same-store sales show the success in the new mix. The new stores in our portfolio had an increase in sales of 47% year-over-year. That's very high. That number positively contributed for the performance of the portfolio in the quarter overall.
In the next slides, Danny will go into further details about our results, and then I'll come back in the Q&A session. Thank you very much. Danny?
Thank you, Rafael. Good afternoon, everyone. I'd like to move on to slide number six. We're going to talk about our work to manage liabilities and the financial results of the company. In 2Q 2023, we had a drop in the average cost of debt to CDI plus 0.8% to 1.9% in Q2 2023. That's a result of prepayment of higher debt in the issuance in financing at more appealing rates in 2023. We ended the quarter at 83% of our debt index to the CDI, 15% prefixed, and 2% according to inflation. Our leverage is 2.4x net debt over EBITDA.
On slide number seven, we have the operating indicators. We ended Q2 2023, an occupancy cost of 10.8%. That lever is sustainable for our store owners' operations, so the net debt is at a controlled level. Indebtedness, net indebtedness of 2.5% for the period, a drop of 2.1 percentage points compared to 1Q 2023. The variation compared to the same period of the previous year can be mostly explained by the large volume of recoveries as of 2Q 2022. Now we have some highlights of our sustainable journey. We've had some important acknowledgments from the market regarding our positioning in relation to ESG. Our company was acknowledged by Exame Magazine, with the best ESG 2023 award for home building and real estate category.
We also won 11 trophies in the ABRASCE Award, so gold in people management and silver in sustainability. This quarter, we can also highlight the materiality matrix of Allos. This matrix is a way to identify and prioritize the more relevant ESG matters for the company and its stakeholders to help us under, make our strategic decisions. It's worth noting that the results obtained in this process has confirmed our directions in relation to the public commitments that we have take, had taken on, and will be the grounds for the future in terms of our sustainability indicators. On slide 9, we're going to talk about the phygital transformation at Allos. About the relationship programs, the number of customers registered was 617,000, a growth of 250,000 users compared to June 2022.
This MD reflected the share of 29% of the sales captured in the program, with a 4 percentage point growth compared to 2Q 2022. Engaged customer is fundamental for the relationship program. According to the results of the second quarter, we have some success cases for stores owners that had an interesting increment in their sales through the actions of this program and the synergy of these consumers that were engaged with the digital shopping mall. Next, we'll talk about our real estate development program. In the result, we have a compilation of the expansion, revitalization, and redevelopment short-term programs. We're talking about projects that involve 12 shopping malls of the company at a total of 173,000 square meters of area that will be intervened.
Out of that, 61,000 square meters have been already inaugurated since 4Q 2022, and 113,000 square meters are currently under construction. Regarding the multi or mixed-use projects, we have two novelties. In 2Q 2023 received BRL 8 million for a project that will be developed by Contemporânea, which will be built adjacent to Parque Shopping Maceio. The project envisions the construction up to three towers, and one will be for business use. Forty-four thousand square meters of private area, with a density of over 2,500 individuals in the primary area of the shopping mall. In July, we closed the negotiation of a land close to Norte Shopping with our RJZ Cyrela development company.
There are five residential towers and stores, totaling more than 56,000 square meters of private area, with an anticipated density of over 2,200 individuals in the shopping mall's primary area. Thank you, everyone. We'll move on to the Q&A session.
We'll begin the Q&A session for investors and analysts only. In case there are any questions, please type star one. If your question is answered, you can leave the queue by typing star two. Please hold while we collect questions. Our first question is from Bruno Mendonça, from Bradesco BBI. Bruno, go ahead.
Hi, everyone. Good afternoon. Thank you for taking my question. Dani, could you talk about the rental growth dynamics compared to vacancy? We saw that going up in the quarter. We saw that additional vacancy have to do with strong retailers that are having financial issues.
At the same time, last year, we saw more conservative discourse of peers in transferring rental to maintain high occupancy during these moments of reopening. Now I have a feeling that you're being more emphatic, so to speak, in renegotiations, and in this quarter, you had the highest growth in rental compared to other states and an extra point there in vacancy. I'd like to understand your mindset in terms of the negotiations and what should we expect moving forward, not only in rental price growth, but also in vacancy. Thank you.
Hi, Bruno. Good afternoon. Thank you for your question. I believe...
I understand that that question comes up when vacancy goes up, but actually, actually, it's contradictory because across last year, when we were saying that we were going to be a partner of the retailers in the reopening process, it didn't mean that we weren't reviewing the contracts. We just weren't charging them full, especially the new retailers that had come in, and we were opening stores, and that there would be a ramp-up during the year from building stores, opening restaurants, things that took longer to get ready, especially when we're trying to create a better environment and evolving the product so we can bring in more services, events, great things, and replace retailers that may have outdated processes or sustainable model or, excuse me, a financial model that's not sustainable. That was starting with the pandemic and then the recovery.
This year, the areas of vacancy don't have to do with the growth of revenues from last year. Actually, revenue growth comes from normal ramp-up and specific factors of being different in the negotiation. That's why our occupancy rate is very healthy, actually. We still have good occupancy rates at higher than 11%. Even though... Vacancy rate is under percent. Bad debt is very under, much under control, and actually, it's coming from other things where we have to be careful, where retail, some segments in retail are still going through refinancing and so on, and other issues. There is no contradiction in the discourse. Actually, it's a continuation of what started last year, and vacancy this year is actually relating to specific cases and stores that weren't really performing that well on the total sales.
Rentals are coming from other healthy operations. Therefore, the operations that are mentioned in the release, the operations have 47% of growth sales compared to lower Same-store sales, and 47% growth in new stores after 2 months shows that there's the growth, the rental increase can come from that, so healthier stores. Danny, would you like to add to that?
Just one thing I'd like to add. When we look at the growth dynamics for rent, the Same-store rent is very similar to total rent, and that just corroborates what Rafael mentioned. In addition to the new stores selling well, we've been able to profit-wise the new stores areas in similar levels to the renewal areas. When we hear that there's an increase in vacancy as a one-off this quarter, it didn't impact the result or our ability to make these areas profitable.
You can see a result that has a growth of 14% year-over-year.
Okay, just to add to that, what do you expect for the second half? Should we expect more from the negotiations and for these distressed retailers, or should this just repeat itself?
There's a good for the flagship stores. There's... The demands are sustained, many for the quarter. 200, almost 250 contracts signed for the quarter. The demand is not something that concerns us, and we also have a demand for larger areas. Anchor stores coming from restaurants or activities such as services, restaurants, and sectors that are growing, such as women's fashion, fast foods, general beauty services, and cosmetics.
The demand is very resilient, we don't have any specific concerns, the reduction of area of these segments that are frailer right now. We've been able to handle that well, replacing them gradually and without affecting the negotiation for future rental.
Okay, great. Thank you.
Next question is from Matheus Milani, from Santander. Go ahead.
Hi, everyone. Thank you for taking my question. I have two actually. I'd like to understand what you're thinking of for portfolio recycling. I'd like to understand your mindset about that, which assets you're considering selling, and what factors would help you decide if you're going to sell it or not. The other point is: how do you see retailer health in general, separating the two different types?
Good afternoon, Mateus. Thank you for your question.
First of all, first of all, about M&A, sales of assets, and so on. Currently, we do not have any need to recycle portfolios because all our shopping malls have NOI and sales that are very healthy and sustainable. NOI is under BRL 40 million. What we do have are shopping malls that have a position of not being a leader in the region or being small in the markets in which they're located and in markets that have a limit in growth, so they're not sufficiently relevant for a company our size. We have 12,000 stores currently in the portfolio, and obviously, we count on a lot of technology for mix and price, but it's very important. The importance of reallocating capital. I'd say it's capital reallocation. It's not portfolio recycling, it's capital reallocation, and we're very concerned about that.
After all, it's intensive capital, which one of the main items in management in a company like ours is capital allocation. We have understand that if it's interesting shopping mall, it's profitable. If it's gonna give us more work, it could be a lot more work in management in terms of scaling, and then we can reallocate that capital into shopping malls where we have a higher potential for growth, and we have leaders, and there's an ability to expand. As we've been doing in the last year, we bought Bourbon Shopping, Taboáo, Rio, and brMalls with Cuiab á and Maring á. All these shopping malls are going the right way in becoming leaders in relevant places in large markets. We have very healthy leverage, different than what was presented during the merger.
The leverage is once again, one of the lowest in, in history. It's under 5x . According to the covenants, so allocating capital, it's more in that sense. There's a strategy. We don't have a conflict with the former brMalls or former Aliansce Sonae, as we're focusing in leader shopping malls that have competitive differentials and one of the main destinations in their cities or region of influence. That's the strategy. That's the strategy for larger shopping malls. Once again, that could happen in the potential to reallocate that capital in a more interesting manner for the company or for shareholders. As to return for, for dividends or by that. Where we have higher potential for growth or for the industry. All of that is still valid. We have specific segment for the anchor stores.
That's a bit harder because of credit. Currently, the operations that require credit, as such as a shopping mall, are few. In terms of total sales, it's a not very relevant percentage. When you see, we can see increasing and revenues growing a lot, and rent was adjusted. You can see that that segment specifically didn't contribute the most in terms of rent or in growth of sales. Obviously, it's a segment that we want to readjust, but structural aspects behind that. We can adjust our mix for what consumers currently need and demand today. That's why the shopping malls are very healthy, with high traffic and strong sales. In the inline stores, we have intense activity for the inline stores. Franchise is especially, it's very strong.
Now with lower interest rates, the banks have already went back to loaning and especially working capital, because the retailers were affected of what happened in May. There was a slowdown. In June and July, we see better conditions. We're very satisfied with those perspectives for the retailers as well. Thank you, Mateus.
Thank you, Rafael.
Next question is from Elvis, from BTG Pactual. Go ahead.
Good afternoon. Well, I have two questions on our side. The first one is about rent. You commented that there was a growth in rent that was practically... Well, there was a capture of synergies. If you can explore that a bit more, what would be exactly those synergies that we've done? Can you measure what was the direct effect on the growth of rent, under those conditions? The second question would be more related to the conditions that you open. You have 113,000 square meters, open. Would there be a timing for these works, and what do you see as a return for those developments? Thank you.
Hi, Elvis. Good afternoon. First, I'm going to answer, and then I'm gonna give the floor to my colleague.
We, in terms of growth and rent, basically, the synergies come from the fact that you look at two portfolios that came from, well, reduction of discount, and at the same time, there is a growth in sales. We are now with a number that is almost three times in revenues of rent, three, well, in comparison to the inflation, and that's inflation based on the IPCA rate. I think that that is under the scenario where the growth and inflation in the last year added a bit more than 8,000 square meters. These are expansions that would not really move the numbers of the company all at once. We're talking about, you know, a scenario that is very similar to what was last year.
The expansions, they brought a lot of news, rent is going to be important for 1 more or the other. Of course, Shopping Leblon will have a movement of rent that is very relevant, it makes a lot of difference, the other ones are- Well, just pinpoint things. The growth comes from an operation, a mix that was open, that brought that improvement for rent. The synergies come from our capacity to do this quicker and in a more agile way, and then block in a strategic way with negotiations with brands and with players that can have space, and occupy new spaces, having and making that expansion. We saw that very deeply in the first quarter, that just came up in the numbers of the second quarter. Obviously, there is a ramp-up, we can start to capture the revenue.
You can see in the revenue of Mall Media that there was a growth that is very important, which is another point that we saw the synergies that happened in the company and as we announced. We cannot give the open to the previous budget because it's two separate companies, but the number of rent is much higher than what we expected separately. We verified that in the second quarter.
Elvis, hi. Speaking, as Rafa said, the works that we expanded are pinpoint expansions, Shopping Leblon, and as you saw, all the square meters, and Shopping Carioca, that we saw an expansion of 1,300 sq m. The other one is the revitalization of other malls. We have two projects that we are commenting that are very significant: the revitalization of Parque Dom Pedro Shopping and Shopping da Bahia.
It's important to talk about these two malls because once we have the published numbers, these are malls that are reacting in sales above the average of the company. The revitalization process is undergoing, but we can see results that are specific. We have projects for the expansion in several malls of our portfolio. For example, we have Shopping da Bahia, that can have a project for expansion of 10,000 sq m. It's very relevant. Another mall that can have a process of expansion that is more, is Shopping Taboão, 16,000 sq m projected to expansion. That we will analyze the market conditions to understand better the moment that we're going to launch these expansions.
The idea is to bring this chapter on the release and then have a summary of all the projects that are undergoing, and therefore, bringing what those that are finished. As soon as we have a definition of when we're going to start the other projects, then we will release the information to the market.
Excellent. Very clear. Thank you very much. Good afternoon.
Next question comes from Tainan Costa, UBS. Please, take the floor.
Good afternoon, everyone. I wanted to explore what you commented on the business communication. We've seen that from now on, there should be a lower impact, and you work with positive costs. What can we expect over the next quarters? Is it going to be close to the BRL 2 million? There's still the payment for...
Well, how much do you estimate that that can represent in the next quarters, the payment, that is a BRL 2 million order magnitude? Well, also, media, it's the Mall Media that is relevant, 15% of the visitation revenue. That 15% threshold is what you re-foresee as recurrent, or is there any potential for an increment, or maybe was there an outlier this quarter? If you can give some, give us some color, that would be great.
Hi, this is Daniella again. In regards to the expenses of the combination of the businesses, we reduced the threshold of the 4th quarter and the 1st quarter was still very high, and in the 2nd quarter, we can drop to BRL 1.8 million. What we have now scheduled until the end of the year are the expenses for the launch of the brand.
These are pinpoint things, not very different from what we reported for this quarter. Mall Media, I'm going to comment, and then Vicente can take it away. This is a line that we expect a revenue. These are lines that are important for brMalls and Alians, and the volume that we have in this portfolio combined of 62 malls with the expressive visitation volumes are going to be very relevant for the market of media. I'm going to give the floor to Vicente so he can comment.
Hi, good afternoon. As Danny said, this is a line that we have the expectation of having a growth that is important over the next quarters. This is a line that we've seen, that we structured now after the fusion and subcontracting of the teams, a few changes in infrastructure that we've done over the first quarter.
We had the expectation that these changes will mature all throughout the second semester, and that we can capture these synergies. There is an important part, which is in the part of services. We have the media for shopping malls of third parties and all the part of media and residential buildings that we do here that is not connected to the NOI of the shopping mall. These lines are going to grow over the next quarters, and we're going to give you the disclosures over the next quarters.
Next question, Andr é Mazini, Citibank.
Hi, Rafael, Danny. Thank you for the call. Two questions. Now it's PDD, and now the NOI, and we were conservative. We are doing the bad debt, and it's being controlled. We have the net margins, 4.3%.
If you can remember, how is the rule for the... Well, the bad debt, it was mathematical. As a receivable, you would do the provision for the-- Well, you were here more conservative with that mathematic, for this provision. The second question is about the new retailers in Brazil. We've seen news of H&M coming to Brazil. A bit of those-- Well, the portfolio is very large, and I would think that that threshold of activities, well, they wanna be in other regions, and they need a lot of space, so having them in your portfolio might help in the talk. In fact, we're talking about the specific player, if you talk to that specific player.
Hi, Motta, this is Danny.
Well, starting with the first question regarding the allowance for doubtful accounts or the provision. Well, the provision follows a rule of a percentage for each. As the title is getting older, you increase the percentage for a provision. We follow that rule. It doesn't allow. Well, we can do a criterious analysis of this bad debt, then we can do a provision that is larger every quarter, which is what we did, facing the situation of stress in some specific companies in retail.
About, Mazzini, about the question that Danny explained very well, that issue that I think that everyone has to have in their minds, that the finance portfolio for the receivables, you have the general rule, and you have the specific stress moments as any relation. You have provisions, so it's natural that these are specific.
This is, as we discussed in the previous talk, the capital allocation and the financial management is one of the things that we have to take into consideration. You know that very well. Now, the new tenants, we are ready to receive as the demand appears for the retail demand, even for international brands. We opened, three or four, we're gonna open more brands, international brands, which are very nice, and they're expanding. Some are already here and expanding. The other ones, as we announced, we obviously would love to have them in some malls whenever it makes sense. We have to talk about the commercial, issues, and we hope that Brazil is ever more attractive and, we will have more value for our consumer.
However, today, the publication at Valor Econômico newspaper, they're discussing the retailers that are over BRL 1 million in revenue. There is over 200 retailers with that. It's important to show that Brazil has an important potential, big potential, and we have a very well-priced retail. We have the competencies here, and they are much welcome. We today, obviously, we require works adaptation of areas, so that's why we imagine that we are going to continue to grow until 2025.
Thank you.
Is there any questions in regards to that point?
No. Thanks.
Next question, Jorel Guilloty, Goldman Sachs. Please.
Good afternoon. Thank you for taking my question. Now, I have two questions. First, I wanted to go back to the issue of the discount on the rent.
I wanted to get an idea of how many more discounts would there be to remove, what would be the potential for growth of the rent, looking at the discounts? The second question is in regards to the performance in the Centro-Oeste. You highlighted the growth of sales there as something very relevant. I wanted to know if there is an area where you foresee that there is more capital allocation, an area that is more interesting for you guys. Thank you.
Hi, Jorel. Thank you for the question. Well, basically, I think that the discounts was very strong in the fourth quarter of last year and in the first quarter of this year. Today we don't have a lot of discounts with AIS and cafes. Rent, we have the new contracts in running rates, which is basically-...
just in the second quarter. In the second quarter, we are running close to the natural growth. Of course, we have that embedded growth for the factors that I mentioned before. There were no discounts in the previous rent. There were temporary discounts that were undergoing once these are our malls, we changed all throughout the pandemic. 40% of the number of tenants, we had occupancy, but we did a lot of relocations in this area. This is the main lever for growth and revenue. The discount came, it was important, and it was... Well, it doesn't exist anymore. What we have now is the current growth of contracts and ramp up.
The difference, as I explained before, I don't know if it's clear between rent and sales, is that operations that have a drop in sales that are suffering do not contribute with rent, while the new operations are operating in a healthy way with positive margins and with margins that are higher than the segments that we had before. We can pay better rents with this rent issue without the increase in cost of occupation, and it's something very healthy. Well, from the Centro-Oeste, as Centro-Oeste, to give you more color, we think about investment in improving the assets, and most of these are new assets, and these are multi-use around them. It's not in the Centro-Oeste, it's influenced by the same dynamic of culture as a whole.
In Goiânia, Passeio das Águas, we have projects of multi-use around the shopping mall. The occupancy of the mall was improved over the last few years. Cuiabá was a success, and it's the main destination of the city, showing that you can create better destinations still in Brazil, depending on the dynamics, the competitive dynamics. Now, before I give the floor to Vicente, I wanted just to pinpoint a few issues about income. It's very interesting what you commented, that there is a discussion between income and the quality of the mall. The shopping mall, A, for example, we coincidentally highlighted here in the release, the main growth were from Tambore, Campolim, and Bauru, followed by Maceió and Catoa and Maringá. All of these malls are very much influenced by the D threshold.
Campolim is B and C, but it's highly dominant and with a lot of demand, so the expansion is almost 100% occupied, the occupancy. Before we started with the tenants, yesterday, for example, there is nothing to do with A and the performance of the asset, and probably Boulevard Shopping, by the luxury brands that are there. We have Cuiaba and Londrina. It's gonna be better, it seem better than some of the malls in São Paulo. It's one of the best ones in our portfolio, and these are malls that receive people from the B class. Unfortunately, the C class in Brazil has a share of wallet that doesn't allow relevant, well, consumption in, in the mall, even though... Well, they're not buying. The five best performances for our malls, they have this characteristic.
Last year was different. It was Leblon, it was Boulevard Shopping, Villa-Lobos, and a few malls that I can highlight, all with a profile that is of income of clients of A class. This year we can see a different dynamic. It's more the middle class. Vicente,
to complement the point of Rafael, talking about the Centro-Oeste region, we have, in fact, Passeio das Águas in Goiânia and in Cuiabá, which are shopping malls that are relatively new and maturing with a lot of speed and presenting good results and using this growth. We have a few malls that exist for a long time, but that have always matured very well, and that we have good opportunities, specifically here, Goiânia, Goiânia Shopping, and Shopping Campo Grande in Mato Grosso do Sul.
Even though there is a dominant position, they have the potential for expansion, and these potential are being explored. In Campo Grande, we launched recently a second commercial tower. There was a commercial tower that was the main one of the state within the mall. We launched a second tower in comparison, but we have other real estate businesses under discussion for Campo Grande Mall, as well as a project for the expansion that is undergoing and studied. In Goiania Shopping, the same thing.
We opened recently a small expansion with the Cap One. We have a new project for expansion also under discussion at this moment, while using the growth of Goiania Shopping is servicing, is benefiting a lot from the growth where it's inserted, which is the region that it grows more vertically in Goiania. That has interfered a lot with the growth and sales in Goiania Shopping. We are very hopeful for the perspective of the Midwest malls and with the possibility of being able to continue to invest in the region.
Thank you.
Next question, Marcelo Motta, JPMorgan, please.
Good afternoon. Two quick questions. First, about that issue in the Norte Shopping. After the end of the second quarter, if you can give us some color on the potential impact in the state, understand the dynamic.
Second question, still with the capital allocation, just wanted to understand if what you commented on the sales of mature assets, that could be reverted as a return by the shareholders, a buyback. I understand that the stake in smaller, non-dominant malls, because they are smaller, you can do a reallocation of assets. Just to understand the dimension of those two, of the investments of the non-dominant assets, and how does that affect with the leverage of your company? Maybe more dividends, more buyback.
Thank you for the question. First part, maybe I didn't understand completely, but I'm going to start answering. I understand that this is about Norte Shopping and the expansion of the multi-use projects that might stem from it.
Yes. If in this agreement that you sign after the end of the quarter, would there be a monetary impact? How does that work?
Well, I think that it's good. I'm gonna clarify a few points. The business of real estate is the business of the company. We have a team of architects and engineers and all the infrastructure for the development of shopping malls and multi-use projects. There are several issues, and we have expansions for the development of the multi-use because it's part of our business. We have 4.5 million sq ms of potential rentable plus 7 million potential building in the company. This is not a non-recurring business, so we don't give it per project. We, we treat the, the, the business as with the annual guidance. In the projected EBITDA, we're always taking into consideration those projects because we imagine that all throughout the year, some things will come up.
We consider that, and then we can give you the overview of the results of the company. This is our business. There is margin, et cetera. We only do not allocate capital here because we have, the, the terrain. We only allocate the areas that we have. We decrease the risk by the financial operations. Of course, when there is a lot of trust, we can have a bit more risk of upside in the project, and eventually, for the conditions that we do not have, a knowledge, or depending on the region that we are, we can decrease the risk from that standpoint. We do not give a guidance of a number on the project because Maceió, for example, it's been four years that it's generating net revenues in terms of this project.
Norte Shopping has developments undergoing, parallel to it, there is a lot of area around it, the same thing with Dom Pedro. These are all projects that are undergoing. That's why we don't give a specific guidance per project. We tell you what's going on, so you know the size of the real estate development. Today, we should have 17, if I'm not wrong, works of multi-use around the malls of the company. These are all projects that will generate result all throughout the years as they are captured in the accounting standpoint. All of that is booked, and we have a guidance with a cash flow for these projects that for the land bank, that Daniel will use until the end of the second quarter.
Well, the sell of allocated capital, the selling of the smaller malls has to do with the long-term strategy that focuses with the malls that have a potential for growth or the potential for dominance. They can be in regions where there is demographic and income that is sustainable, and they can be relevant malls for our portfolio. Without taking into consideration the administrative, the managed business, for example, we manage Eldorado. They have several owners, and we have the malls in Feira de Santana, that is a good mall, and we will continue to manage, and it's important for our commercial portfolio. In terms of what we are going to do, it's exactly what we announced when we published Our policy for dividends, which is we will pay 50% of FFO in dividends from next year on.
We pay 25% of FFO combined with, well, this year. Next year, we're going to run the company with 50% of payment of FFO in dividends, and what is the exceeding what is going over the capital structure that is good at that time. For example, for the works or even M&As or projects for. That the company wants to do investments in digital, or technology, or projects of product development, these are really helping us to have this sales differential. It's important to highlight that what does shopping mall companies are reporting in terms of growth of sales versus the retail is very expressive. When you see the data of ABRASCE, the listed companies are doing, doing better than. Well, the shopping malls as a whole, they perform better than the Brazilian retail and the shopping malls of the listed companies, even more.
This is a dynamic that we've mentioned that gaining market share because we have a better mall is our best strategy possible. We will have a better product, and we will service the client better. The capital allocation will, will obey those criteria. First, having the best product, being the capacity to face this every day, improving the consumer experience, and thereafter, we can generate a result because of that. Disinvesting in shopping malls that are not so strategic by the reasons that I explained.
With the resources that are left, we can continue to invest in those aspects, and in the case of any extras resources, then you will-- we will-- we can discuss the repurchasing of the shares, which we discussed, that we can do it till the end of the year, until the time that we are going to pay for dividends next year. If those two happen, we're going to have lower than what we planned. We didn't give the guidance of indebtedness, Danny can correct me if, if it's not clear enough, but we will be-- we can do the repurchase. We don't have the ideal leverage forever. We have an idea of not going over, never closing, never getting close to the covenants because so we don't have any risk of refinancing. As we can see, we're having a good refinancing.
We just did a reduction in the cost of debt. That is important. Today is CDI plus 0.8%, which is the cost of the debt, which is one of the lowest that you have among the big companies in Brazil. In that aspect, we can choose, in an easy way, how we are going to differentiate the company. Now I'm going to let Daniella correct me.
Hi, Marta. Danny speaking. Just to confirm, we indebtedness guidance, guidance from 2.1 times to 2.5 times net debt over EBITDA for 2023. When we talk about the mixed-use projects, we also have guidance, the sales speed of BRL 3.1 million and BRL 409 million in cash flow until 2023. That's the guidance that we have for mixed-use and leverage or indebtedness.
Thank you, Danny. Thank you, Rafael.
The next question is Mariana Castro from Itaú. Please go ahead.
Good afternoon, everyone. Thank you for the call. Thank you for taking my question. Just to follow up about sales growth that you already mentioned, a high of 10% in the July line is mentioned.
I'd like to hear more flavor on what you think about for August and if that could continue for the rest of the quarter, or is that because of an important month, such as the movie theater launches or winter vacations in schools? Hi, Marianne. Thank you for the question. It's Danny speaking. The sales dynamic in the second quarter, first of all. The base for comparison was very difficult in May, but in June, we were able to increase sales that reached 7% at the end of the quarter. When we have preliminary data in July, that's not audited, that's approximately 10% per month. That means, if confirmed, an increase compared to the June figure.
When we look at the categories that contributed the most to improve sales in general were food, and there we can highlight the restaurant, apparel, very positive, with a highlight for sports category and convenience and services segment, as Rafael mentioned. About Father's Day and the rest of the quarter, that would be sales. That would be projection, and we can't comment.
Next question is from Eleni Caldera from Bank of America. Go ahead, Eleni.
Good afternoon, Rafael and Danny. Thank you for taking my question. On my side, I have two quick questions. I'd like to go back to turnover and your mix strategy. We've seen the company operating with a higher turnover, and at the same time, as you mentioned, new retailers are performing-. Could you talk about company strategy in that sense?
In terms of retailer profile that has been going into the base, that's been giving you a poor form, better performance, is that because of the inline strategy or anchor strategy, or does that have to do with the type of retailer? Can you talk about the integration process for the two companies? What are the two main things that you touched on this quarter, and what else is to be done that we can see coming up?
Hi, Eleni. How are you doing? Thank you for your question. I believe Leandro can answer those questions better, so I'm gonna hand it over to him. Leandro?
Hi, Eleni. How are you doing? Our turnover is on average 2% per quarter. This one was even a bit lower, 1.6%. It's what we've been seeing every quarter. That number could change a little.
About the mix strategy, Rafael already talked about that. First of all, we see getting back these big areas are an opportunity because these big retailers are going through difficult times, and we're taking back some of those areas. Maybe, and considering a mix that would add on to the experience and that would improve, because instead of bringing anchors that are not performing well, instead of that, developing those areas as entertainment or restaurants. There's an opportunity for creating inline stores in some areas. About the mix effect. About... Reinforcing the areas that we have for entertainment and leisure, reinforcing that with beauty and health and gyms, for instance, we've been following that trend. That society demands.
Recently, we brought Decathlon to Goiânia because that region didn't have that type of mix or a sports store in the area, so we reinforced that. On the other point, about what we mentioned in the last call, so about the integration that started on January sixth, obviously, we didn't want the company to lose traction and results. We were bringing together two very large companies that had an efficient way to operate, so we had to bring together So the shopping mall had to work well for consumers, for the retailers, and for the bottom line. That was the first challenge we had. Now we have a second quarter with very positive results that really proves that the integration on the operational side, commercial side, and financial side, and all the internal teams, were able to get through that, and it's working well.
We still have a big agenda moving forward in integrating the areas such as IT, that will probably continue for yet another year and a half, and looking for synergy results. It's not only in revenues, but also in costs. We can already see that. For integration, we're very happy with the results of that. In finance and operations, we launched the new company brand. With a big agenda and streamlining all of that moving forward. Thank you, Eleni. That's clear.
Thank you, Leandro.
Since we have no further questions, I'd like to hand over to Rafael Sales for his final remarks.
I would like to thank everyone for being interested in the Allos results once again. If you're in doubt about that, we should pronounce it Allos in English. We're very excited to deliver results, enchant consumers, and offer our partners and retailers to grow and make a lot of money with us in our shopping malls. Thank you, everyone. Thank you.
The call for Allos for 2Q23 is now over. You can disconnect. Have a great afternoon.