Afternoon. Thank you for waiting. Welcome to the earnings call of Aliansce Sonae to discuss the results regarding the second quarter of 2022. Today with us we have Mr. Rafael Sales, CEO, Mr. Leandro Lopes, COO, Mr. José Baeta Tomás, CFO, and Ms. Daniella Guanabara, Strategy and IR Investor Relations Officer. We inform you that this event is being recorded and the participants will only hear the earnings call for the company. Thereafter, we will start with the Q&A session for analysts when further instructions will be provided. Should you need any assistance, please request the operator by pressing asterisk zero. We will have simultaneous webcast, and you can access that through www.allos.com.br where it is available for this presentation. The slide will be available at the website. Also, we would like to tell you that questions can only be done through telephone.
Should you be disconnected, your question can be submitted to alianscesonae.com.br. Before we proceed, we would like to say that any forward-looking statements that are based on the beliefs and the assumptions of the company management and is based on any information that currently available to the company. So any future thoughts are not guarantees of performance. They are involved in risks and uncertainties, and therefore depend on circumstances that may or may not occur. Investors will have to understand that industry conditions, general economic conditions and operational factors may also affect the future results of the company that may differ materially from those expressed in such forward-looking statements. Now, I'd like to give the floor to Mr. Rafael Sales, who will start the presentation. Please, Mr. Rafael.
Good afternoon, everyone. Thank you for taking part here.
And we are very excited for the prospects for the year-end. In June, our proposal for the business combination with BrMalls was approved by the shareholders of both companies. Now, the transaction is under the analysis of CADE. We have hired Bain & Company to help us with the integration process and formation of the clean team. In July, we closed two important deals for the company. First, we have the sale of Uberlândia Shopping, and secondly, we have the management of Shopping Eldorado. Uberlândia Shopping was already a part of our disinvestment pipeline. The sale cap rate was 8.2% reflecting a valuation that seems extremely attractive, especially given the market conditions. Now, furthermore, taking over the management of Shopping Eldorado further reinforces our strategic thesis of synergies and commercial leverages.
This is one of the pillars for the rationale for the merger with BrMalls. Additionally, this management brings to our portfolio a very relevant destination for in terms of a shopping center, for services, for purchasing, for entertainment in the capital, the city state, the city of São Paulo, the capital of the state of São Paulo. If we consider the combined portfolio of Aliansce Sonae and BrMalls, Shopping Eldorado would be the third largest mall in terms of total sales. Now, let me tell you a little bit about the operating performance. The sales in the quarter have reached BRL 2.9 billion, representing an increase of 46% in regards to 2021 and 21% increase in comparison to 2019.
With this acceleration, we actually managed to withdraw more discounts and lowest levels of discounts over rents since the fourth quarter 2019. Rent revenue therefore grew. Rent revenue grew 20% compared to the second quarter of 2019. Once again, our operational costs have been going down since 2019, which represented this quarter reduction of 13%. Additionally, contributing to the results of the company, we have a cost reduction that was very important for the reduction of the cost of occupancy for our tenants, which reached 10.5% this quarter. Cost reductions are the results of our efficiency in capturing the synergies. Synergies that stem from the merger of Aliansce and Sonae and contributed to our net operating income to reach BRL 222 million reais in the quarter.
That is a growth of 57% in comparison to last year and 19% in comparison to 2019. Let's talk about provisions now. The PDD continued to decline this quarter in comparison to the previous quarter, dropping about 33% in comparison to our last report. This is mainly due to a significant drop in delinquency, which was 4.5% in the quarter and was negative in the month of June. In the quarter as well in this quarter, the EBITDA reached BRL 185 million and the organic increase considering the same base, we grew 16% if you compare it to the same period in 2019.
Now, the funds from operations was BRL 108 million, growing 3% versus 2019, and this effect reflects the acquisition of over BRL 620 million in BrMalls shares with an estimated cap rate of 14%. We consider this an excellent capital allocation. If we exclude the effect of acquisition of shares, the adjusted FFO would have grown 16% this quarter, despite the high interest rates observed all throughout this year. Now, regarding our demand for new areas, we signed 173 new contracts in the second quarter of 2022. Therefore, we kept our occupancy rate at a very high level, reaching at the end of the quarter, 96.7%. It's the same rate that we had for the fourth quarter of 2019.
This indicator confirms a strong demand for space in our malls, therefore strengthening our commercial position for the negotiation in the second half of this year. Now, regarding our initiatives for phygitalization of retail, we have some big news for Shopping Leblon. This quarter, we launched Shopping Leblon Online, which is our mall e-commerce with express delivery to the neighborhoods that are closest to the mall in the capital, well, the capital of the state of Rio de Janeiro. We also launched the app Solar. That application is of our loyalty program from Shopping Leblon, allowing for greater engagement for our customers and meeting our customers in all demands. Whether it's onsite, online, we have a strategy that is all around phygital.
Regarding the evolution of our logistic solutions, AllosTech and alongside with Box Delivery, that we managed to sign the first dark store or partnership with Zé Delivery at Carioca Shopping. Box Delivery alone exceeded 1 million monthly deliveries just in June. Our sustainability journey. We actually took an extra step, an important extra step, which is joining the UN Global Compact. Well, several major worldwide leading companies have already committed to these premises and the sustainability commitments of the UN Global Compact. We are very happy to also manage to commit to our practices, implement our practices, so that our communities are not affected, are improved, and we can keep the sustainability of our business. Now, I would like to give the floor to Daniella, and she will continue the presentation.
Thank you very much, and I'll see you in the Q&A.
Thank you, Rafael. Have a wonderful afternoon, everyone. Now, in the next slide, we can see that the occupancy rate of the company actually closed the first quarter 2022 at 96.7%, reaching the same levels of the fourth quarter 2019. Reinforcing that the demand for the space in our malls remains high. Specifically, Passeio das Águas Shopping registered a growth of 7.7 percentage points in its occupancy rate in the second quarter of 2022, if you compare it to the second quarter of 2021. The leasing, the commercial team continues to achieve consistent results. We signed 173 contracts aforementioned in the second quarter. Among the highlights, we have the UCI Cinemas chain and three malls of the portfolio, namely Manaíra, Shopping Metrópole, and Plaza Sul Shopping.
Among the highlights for the recent openings, we have Centauro at Carioca Shopping, Lacoste at Shopping Leblon. This is a flagship for Latin America Lacoste and Outback restaurant at Caxias Shopping. The next slide. We can see that in the second quarter of 2022, the sales performance continued to be in an upward trend, and once again exceeded the levels in the same period of 2019. We reached BRL 2.9 billion in total sales, expansion of 46% in comparison to the second quarter of 2021, 21% comparison to the second quarter of 2019. Malls in different regions have posted double-digit growth in the same period, underscoring the strength of Aliansce Sonae portfolio at a national level.
The highlights with the growth in sales of the second quarter of 2022 in comparison to the second quarter of 2019 were Shopping Leblon and Parque Shopping Barueri, 49.1%, 48.6% respectively. Parque Shopping Maceió, 45.8%. Boulevard Shopping Belém, 30.7%. And Manaíra Shopping, 29%. On the next slide, we have the company's cash flow. Aliansce Sonae presents robust operational cash flow in the first quarter of this year, sufficient to meet our obligations. We can see in the graph that the chart 77.6% that is linked to the CDI index, 7.3% is fixed rate, 15.1% is linked to inflation. The company leverage remains at a low level, 1.1x the net debt over the EBITDA. The next slide.
We can see that the company's net delinquency, which is 4.5% in the quarter, 3.3% below second quarter of 2021. Especially in June 2022, the delinquency was negative, indicating a strong recovery in overdue receivables. PDD of the quarter represented 3.1% of the net revenues. Next slide. We can show you some of the achievements and important campaigns which are aligned with Aliansce Sonae sustainability pillar. We started a project of guided visitation at MAM, the Museum of Modern Art, in Rio de Janeiro, for students from Instituto Reação in Rio de Janeiro. In these tours, the children and teenagers have the opportunity to get to know the museum together with educators, expanding horizons through art.
In the last quarter, Aliansce Sonae sponsored the Livros nas Praças project, books in the neighborhood. Project a mobile library that circulates through vulnerable communities in Rio de Janeiro, where there are no public libraries nearby. Books are borrowed for free of charge, and the collection has around 2,000 books, and 80% of those composed by Brazilian authors from all ages. The action also made available audiobooks, works in braille, and with enlarged fonts for people with low vision or impaired vision. Last but not least, Rafael mentioned that we joined the UN Global Compact. The Global Compact has a voluntary initiative that provides the guidelines for the promotion of sustainable growth and citizenship through committed and innovative corporate leadership.
We at Aliansce Sonae are committed to turning ten universal principles in human rights, labor, environment, anti-corruption, part of our strategy, culture, and day-to-day operations. We engage in cooperative projects that advance the broader development goals of the United Nations, specifically the Sustainable Development Goals, also known as SDGs of the 2030 agenda. Thank you very much, and let's take it to the Q&A.
Ladies and gentlemen, we'll now begin the Q&A session for investors and analysts only. To pose your question, press 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.
Hi, everyone. Good afternoon. Thank you for the presentation and taking my question. So Rafael and Daniela, I'm wondering about the sales aspects and the breakdown per asset. She mentioned the malls that were better, Leblon, Belém, Maceió, BH, Belo Horizonte. But on the other hand, some assets are very relevant to you, where the sales were under average, such as Carioca, Bahia, Bangu. What is the reason for that slower recovery, and what kind of opportunity do you envision in those assets? And I'd also like to consider the occupancy cost.
Is there a difference in these assets that are growing slower if the occupancy cost is different or not? I'm trying to identify any opportunities that you might have in those assets that have a slower growth, meaning the ones that haven't caught up yet.
Hi, Bruno. Thank you for your question. In fact, I would say that the recovery isn't the same for all the different destinations, all the different shopping malls. Some markets, in fact, recovered faster. We can see that some of the shopping malls here in Rio de Janeiro are still a little slower in recovery. I think it's worth noting that in 2019, those shopping malls had stronger performance than the average even. I think that the basis for comparison is a bit contaminated, so to speak, by that. In general, we can see that shopping malls in many different regions are recovering well. In some of them we are intervening, such as Shopping da Bahia, we're doing some renovation work, some civil, some works at the mall. Now, things are getting back to normal as well.
We're expecting lower growth sales in July than the quarter. But similar to what we see in other retail segments, there was a slowdown in the speed of growth. We had 14% in growth.
And the shopping mall with a lower growth, it had a higher occupancy cost. But in terms of occupancy, you can see that even in the shopping malls that you've highlighted, they have a high occupancy rate. We don't have any vacancy issues. Quite on the contrary, we have a high demand, so it's natural that that would reflect on the results and sales as the market heats up in those in each of those regions. Would you like to add? Leandro is going to add a comment.
Hi, Bruno. How are you doing? I'd just like to reiterate what Rafael mentioned. We don't have a general pattern, I'd say. I'll mention two cases, Plaza Sul and Metrópole. They're shopping malls in the city of São Paulo, and given COVID, we're changing the movie theater operations. So we signed a contract with UCI movie theaters.
And when you compare that to a shopping mall that the movie theaters aren't operating at, that affects the sales. We're gonna have an expansion with 30 stores. All of them have already been sold with Centauro, Hering, and those stores will be implemented. So we took advantage of this moment and put some plans into practice. So we're expanding the Carioca mall, starting the parking lot in Franca, and that really adds a lot to the shopping mall. I can't say it's a pattern. There are some specific cases where we decided to take this opportunity to invest in these shopping malls, and they will soon produce more in the second half now with these inaugurations, with the parking lot in place and the new movie theaters. Thank you.
Okay, thank you.
Thank you, Bruno, for your question.
Thank you, everyone.
Our next question is from Pedro Hajnal from Credit Suisse.
Hi, good afternoon, everyone. And thank you for the presentation and for taking my question. So actually, I have one question. As you mentioned in your presentation that the discounts reached the lowest level since 2019, I'd like to understand your mindset. So what would be the next steps for that gap in price increases in rent? So getting closer to inflation. I know that there's sales as well, so I'd like to know what would you consider these sales levels to net those discounts? Or is anything that you can do at the company level, maybe efficiency, like in the management costs that could be transferred over to rent or turnover and a positive spread. So I'd like to understand what kind of triggers that you would have for rent going forward. Thank you.
Hi, Pedro.
Thank you for your question. In fact, all of the elements that you mentioned are elements that lead us to lower the discounts much more and increase revenues. So in the last quarter, the increase in revenues wasn't as fast as sales growth, given some important elements such as the store turnover. We signed many contracts and brought in new operations, and they have a minimum period to stay with us, and we also have positive spreads in general. So we're very optimistic that the same-store rent that we see and same area rent would give us better revenues by increasing the rent. Given the occupancy cost, as you could see, they're very sustainable. They're even low. So the discounts in some shopping malls are already much lower, and others that are still not growing their sales that much, the discounts are still a bit higher.
That's why I'd say that they're not homogeneously spread out in the portfolio in terms of discounts. In general, the common area cost reduction has been beneficial, not only to maintain a low occupancy cost, but also so we can recover rent. All of that is within the plan. But we don't expect to keep cutting down on the common area costs. We've already done that effort because of the synergies with Aliansce and Sonae in this combination, and we'll still capture some more during the year. But now we will have inflationary pressure after so many years of inflation that we've been seeing. So based on the point of view of recovering rent, we should see that increasing during the year as they've stayed with us for a minimum period and see recovery in sales.
Perfect, Rafael.
Thank you. Next question is from Daniel Gasparete from Itaú BBA.
Hi, good afternoon, everyone. Thank you for the call. I have a question. Do you see an upside in terms of traffic and sales? So I'd like to understand those two indicators. So if traffic could increase even more or sales? Or should we see something similar to June? Thank you.
Thank you, Gasparete, for your question. In fact, we have a lot of scheduled events for the second half to bring in more traffic and recover that. It's still 10% lower than it was in 2019. But the sales, even though we still don't have the traffic the same, the sales have increased. We have promotional activities and events in the shopping malls to bring in more people.
We have many cultural activities as well, and that's really good to bring in the traffic, different shows, concerts. So we've been doing that in the different malls. But sales aren't moving as fast as they were in May and April. There was also a specific case of temperature, of the weather. So we saw more sales in apparel and fashion in May because the weather got colder, it was pretty cold. So obviously we saw people buying more clothing, winter clothing. And at the end of the month, or actually at the end of the quarter, we no longer saw that demand. It got hot again now in July. So that would naturally affect apparel sales. And that's one of the lines that have been growing more in terms of sales in the past months.
So we see a growth of 14%-15% on top of 2019, which is a reasonable figure in our opinion. And some lagging malls are getting close to the average now. So in general, I'd say we're healthy with a good occupancy, and that will enable us to capture the sales and traffic in rental pretty soon.
Okay, great, Rafael. Thank you.
Thank you.
Good afternoon. Next question is from Jorel Guilloty , Goldman Sachs.
Good afternoon, everyone. I have two questions. First of all, I'd like to understand your same-store rent, about how much that accounts for as a total of rent, if it's 70%, 80%, 90%. Second question is, I'd like to know a little more about the shopping mall management. You closed a deal to manage Shopping Eldorado. So how about synergies and commercial levers? Could you quantify the synergies that you would have?
Would that be because you really know the customers, or is it because of the common area cost? So I'd like to understand that a little more to see how it works. Thank you.
Jorel, thank you for the question. In fact, the same-store rent, it should be 75%-80% of our base of the tenants because of the turnover, we're talking about the stores, and it was a bit stronger than the natural 8% on average. And so I believe that we are at 75%-80% of the rent. Now, in the management of the malls, the commercial synergies, they do not change. When we think about the digital, it's a mix.
Not only of the increase in rent, which is not the same, the only source, but also training, the qualification of the malls with better tenants, better logistical partners, that will make us have an overall better sales and a flow that is a high frequency foot traffic than. And this is where we know that we earn more when you increase the traffic, the foot traffic. So also the investment of all of these initiatives to get to know the customer better, get to know our clients better, our customers better. These are synergy sources because when you take into consideration, for example, a technology, the cost of technology is diluted in terms of the total revenue of the company and in terms of expenses, total expenses.
We have the fixed rates, the fixed expenses. In the case of the malls, there is an important reduction in condominium costs, common area costs. These common area cost reductions also become a synergy, not only in terms of the cost for the company, but also increase in rent. Based on this occupancy cost that is based on a lower occupancy cost. So I am going to ask Leandro if he wants to add anything else.
Hello, everyone. I think that it is very important, as we have mentioned in terms of partnership with the wholesale. Well, we've done a study here that when we take the base of the tenants that work in a shopping mall, there is 803 brands that have over five stores in retail in shopping malls.
Of course, there are some tenants that have more, but when you take that universe, the separated companies, the individual companies, it's about 72%-74% of presence of these brands in the shopping mall. And if you get all the companies combined, you get to over 90%. So it shows that we're gonna have business that doesn't. Well, in the end, we are going to increase, and we will be a company that will be a partner of the retail. We're not just going to segment and work in silos. No. And just so you can understand, our peers, they have lower numbers than the ones that we are publishing. So this is another data that shows how this business combination can bring more partnerships and more strength for our tenants. Thank you.
Next question, Marcelo Motta, JPMorgan bank.
Hello, everyone. Two questions. First of all, in terms of the EBITDA margin, I just wanted to understand a little bit more, how do you see the evolution of that margin all throughout the year? First and second quarter in the 72.5% threshold, 73% maybe. Of course, PDD can improve a little bit more, but the mall going back to the normal traffic, and you know, the operational expenses, they also increased. G&A also is important. I think that it's important. So also the sales of assets. We see that the sale of the Uberlândia mall with a very attractive cap rate. What do you think about Vila Velha, Londrina? How are these numbers? What are we expecting in terms of cap rates? Is it similar to Uberlândia?
Thank you, Motta, for the wonderful question.
Due to a few negotiations that are undergoing, we cannot comment a lot about the perspective of valuation for sales. Nonetheless, the processes are ongoing, and it is what is expected by us. With the timing, we should get the approval for the transaction maybe towards the end of the year, maybe next year. So we're working to achieve those goals and, with a conviction, actually, that it will be possible to achieve those objectives, those transactions until the deadline. And yes, we thought that the cap rate of Uberlândia was a very attractive cap rate if we are thinking about the conditions of the market, the current conditions of our market. And also there is this investment opportunity for the company because the market is expecting a drop and the interest rates are not so high.
Nonetheless, it will be positive for us to have the reduction of leverage. In terms of margins, yeah. We're expecting actually similar margins because of the effects that you mentioned. We have a drop in PDD. Nonetheless, of course, with the inflationary pressure, we cannot avoid it for the drop in the doubtful provisions. So it seems that one thing will. Well, there will be an increase in G&A. Nonetheless, it's compensated by the improvement of the top line, the drop in bad debt reserve, the PDD, and also reduction of operational costs that we still have a drop in this year. Thank you, Motta.
Next question. Castrucci from Santander Bank.
Good afternoon, everyone. Actually, I have two questions. First, if you can explain a little bit better the reason for that gap in the revenue of retail and the quarter.
I wanted to understand how the sales of July were and what is your perspective for the rest of the year, because we see that the rising sales, which is robust in comparison to 2019.
Well, we have the explanation of the gap of the rent and the same-store rent. I'm going to let my colleague.
Hello, Antonio. As Leandro has said, we have 75% of our base same-store rent, but we had a turnover that towards the end of the pandemic. And on the other hand, we can occupy our malls. But there is a part of that revenue that still has some time to receive. So there is a gap of the same-store rent and these new rents that will come up.
And we've talked about the 14% small deceleration in terms of June, but still some very healthy numbers. And we've seen that the flow has improved versus 2019. So in general, we are seeing the impact of the cost of salary is stronger, and in general is reflected in the activities of the malls. And the retail is very optimistic. There's still strong demand for areas. Some of our malls, we don't even have some area to offer to our tenants. And the expansion that we've just launched is 100% subletted in Carioca . So the demand is being reflected in those numbers. We're expecting healthy growth, and we can see that we're getting to that level of 15% is what we're working all throughout in the rest of the year. Thank you.
Ladies and gentlemen, to take part in the Q&A, please type asterisk one for your questions. If there are no more questions, I would like to give the floor to Mr. Rafael Sales for the final thoughts.
Now, I would like to thank you all for the interest in our earnings call. Our team is available to answer any further questions, and we will keep in touch, and we can schedule the meetings. Thank you very much.
The earnings call for the second quarter of 2022 of Allos is over. You may disconnect. Have a wonderful afternoon.