Ladies and gentlemen, welcome to EZTEC's Q4 2023 and Full Year 2023 Earnings Conference Call. I'm Pedro Lourenço, Head of the Company's Investor Relations Department, and joining us for this presentation are Silvio Zarzur, Board Member, Chief Executive Officer, and Real Estate Development Officer, Flávio Zarzur, VP and Chairman of the Board of Directors, Samir El Tayar, VP of the Board of Directors, Emílio Fugazza, CFO and Investor Relations Officer. We would like to inform you that this event is being recorded, and that all participants will be in listen-only mode during the company's presentation. We'll then begin the Q&A session, when further instructions will be provided. Should any of you need assistance during the conference call, please ask support for help via the chat. In the event of a connection failure, please reuse the same link or ID available on ri.eztec.com.br to return to the presentation.
You can also find the presentation slides in the download center on our website. The information is presented in Brazilian reais and BR GAAP and IFRS, applicable to real estate development entities in Brazil, unless otherwise noted. Before we begin, we would like to mention that any statements made during this conference call regarding EZTEC's business prospects, such as projections, operating, and financial targets, are the beliefs and assumption of the company's management, and are based on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions, because they refer to future events, and therefore, depend on circumstances that may or may not occur. Investors are cautioned that general economic conditions, industry conditions, and other operating factors may affect EZTEC's future performance and lead to results that will materially differ from those in the forward-looking statement.
Now, I'm going to hand the call over to Mr. Emílio Fugazza, Chief Financial and IR Officer, who will begin the presentation. Please, Mr. Fugazza.
Thank you, Pedro. I'd like to thank the members of the board of directors for joining us, members of the management, our CEO, VP, executives of the company. I would like to start talking about the company launches for the year of 2023, reaching BRL 987 million. Some highlights can be seen on the left part of the presentation. Three launches under in partnership and under the brand Adolpho Lindenberg. First Jota Vila Mariana, a development that EZTEC has 50%, and that is 64% sold. Lindenberg Alto de Pinheiros, that has a very suitable price for the region and compensation of capital, 37% sold. And Lindenberg Ibirapuera.
Important to highlight that the percentage sold, 20%, corresponds to... The first tower. We are going to launch the second tower along the year of 2024. And also EZ Blue Tatuapé, a development that is 100% EZTEC, and that, we have achieved 67% of sales. I'm going to talk about sales further on, but still on launches, in the bottom right part of the chart, we see the percentages of launches sold in 2021 and 2022. The highlight of sales that we had along 2023 was precisely those of developments under construction, so much so that all the deliveries that we are going to have for the next 2 to 3 years shows that we have a very suitable percentage sold, and therefore, a very little formation of inventory for the future, including 2024. Sales now.
We had BRL 1.5 billion in gross sales for the company, resulting in BRL 1.27 billion of net sales. The highlight on this slide is that in the fourth quarter, we went back to a level that was a lot more suitable and adequate to our operation, compared to what we experienced in the years of 2021 and 2022. And in the bottom right part, we see the fourth quarter and see how strong sales were of apartments under construction. Approximately BRL 150 million of the total BRL 255 million that we had were of developments under construction. So the highlight of sales, undoubtedly, for the year of 2023, were new sales and gross sales that added up to approximately BRL 930 million of the total BRL 1.5 billion of units sold altogether.
On the next slide, we talk about our deliveries. It was undoubtedly a year with the highest number of deliveries for the company. On the left part of the slide, we can see the Air Brooklin residential that was delivered on Santo Amaro. In the end of December, we had that development Air Brooklin with 84% private area of units sold, which is exactly what we had in the year to date. Of all thirteen, of BRL 1.8 billion, 84% was sold. In the bottom part on the right, you can see that the year of 2024 is not going to be as strong in terms of deliveries. We are going to amount to BRL 764 million, but still 73% of the units to be delivered this year have been sold.
So again, we are not going to build relevant inventory, which I think is important. We are able to move the operation, and when we get to the end of construction of developments, the gross inventory is very low. That also means that we are having good prices for the performed units that are inventory. So let's now take a look at our inventories. In the upper left chart, we see the bars for 2021 and 2022. That show our inventory for each one of these years, BRL 2.8 billion every one of these years. For 2023, we closed at BRL 2.67 billion, a fruit of BRL 987 million of launches, BRL 1.5 billion of sales, 229 of terminations, and our inventory of BRL 104 million.
The highlight, certainly, is the chart on your right, that shows that now we have a bit more inventory performed that is being released for sale as we finish the transfers to banks in 2024. And this inventory performed because I don't have much inventory in the developments delivery. This inventory has a potential, but to grow our gross margin for the company. So we see the BRL 371 million of inventory to be available for sales along the year of 2024. On the next slide, we talk about our land bank. When we talk about land bank, we talk about future developments for the company. Our land bank has been relatively stable.
The only acquisition we had in the period is a plot of land in the area of Paraíso district, together with Adolpho Lindenberg, a launch that should take place by the end of 2024, beginning of 2025. We also have our plots to be resolved, and after the acquisition is ratified and we start to pay for this development, we are going to add something close to BRL 3 billion in PSV, with the potential for the end of 2024 of BRL 12 billion land bank for the company. Now, talking about, we have talked about past events, but let's now talk about financial indicators for the company. First, I'm going to talk about the quarter itself. In the fourth quarter of 2023, we had BRL 338 million in net revenue.
This revenue, please take note of an important increase compared to all quarters of 2023. In the fourth quarter, this increase has to do with the accounting recognition of Lindenberg Ibirapuera and the sales we had there. By the way, we just had another sale in the fourth quarter for Lindenberg Ibirapuera. And until December, for each sale, we had a 60% POC. That's why we have a very interesting balance for the fourth quarter. As of now, all sales will continue to be recognized, as well as construction execution. On the top right part, gross profit growth as revenue grows, but margins also show a sign of recovery. Gross margin already reaches 33% in the quarter.
Important to note, however, that is to say that to me, the most positive effect that continues to be positive in the quarter and should represent a pure improvement in margin, is the bottom right chart, which is margin to be appropriated. Note from the fourth quarter 2022 until the fourth quarter 2023, we have a steady improvement of our gross margin, already reaching 38%. And in the third quarter, because we have round numbers, from the third quarter to fourth quarter, the increase was 0.9 percentage points. So it's quite significant to us.
In an operation that is optimal, we expect in 2024 to observe this gross margin improving, as we saw in the past, and perhaps even additional accessory gains coming from inventory units performed that have gross margin above 40%.... Finally, when we talk about equity, I would like to highlight the BRL 21 million. This is the beginning of the recognition of Lindenberg Alto de Pinheiros. We had two beginning of recognitions in the year of 2023, with a total of BRL 100 million. This is what we have been doing with partners that represented in 2023 equity and percentages of net profit of BRL 100 million.
Still talking about quarter results, we talk about our financial results, which is a lot more in line with the rationale of the whole year of 2023, with BRL 24 million, basically resulting from our portfolio of fiduciary sale portfolio that you can see on the right. See that since 2019, we have decreased our portfolio, getting to the floor in 2022 with BRL 363 million. In 2023, we went up to BRL 387 million, but this number does not tell the whole story. In the end of 2023, we already see a higher formation of portfolio units that have been either already signed or that are under registration. And along the first and second quarters of 2024, they are already going to show in our earnings release, leading this number to above BRL 400 million.
In the bottom part of your slide, to your left, we have net profit, BRL 83 million, net margin of 25%, which adds to our annual profit, which is the best performance in the quarter that we had for the past five quarters. Just to close, we have our debt to net cash position. We had, by the end of 2023, our net debt position at BRL 94 million, which is largely expected from the company. We should keep at this level for another two years, given that we obviously have a substantial amount of developments under construction, and that will need real estate credit a long time. On the next slide, my considerations on our annual indicators, net revenue, approximately BRL 1.1 billion, and net profit, BRL 239 million.
That is 23% of net margin for the company in the year of 2023 as a whole. Now, I would just like to highlight issues related to our capital structure and dividends. On the left part of our pie chart, we can see our shareholders capital, BRL 4.6 billion, which represents BRL 21.3 per share, and on the right, in the distribution of assets, we have a higher variation, so to speak, in receivables, in terms of, performing investments, because we have been selling a lot of, units in developments ongoing, and very, low, inventory, as we can see, what was delivered in the end of 2023. The ready inventory that we have between residential and, commercial units, about BRL 800 million and BRL 400 million of costs for this ready inventories.
Gross margin, as I mentioned before in this call, of approximately 40%-45%. Our shared assets, 501 million, are those investments that the company has in joint ventures and partnerships that have already been released of the company, that generated net profits of 100 million. That is a return on invested capital of about 20%. All that said, remember that we have our dividends policy. For the fourth quarter, we are talking about more than 19.6 million to be paid out on March twenty-eighth, approximately BRL 0.09 cents per share, ex-dividend date, March the twenty-second. To close our presentation and open for your questions, and also pass on to the company's managers and controllers, I would like to mention subsequent events. In the first quarter, we already launched the two first phases of the Mooca Città development.
We have a joint venture there that is a 50% share. EZTEC is building and managing the development, and it is a development in which we have several launch phases to happen. Also, which we launched, Mooca Città Firenze, with 33% of units sold with PSV for EZTEC, and Milano with a slightly larger apartment, 16% sold, 50% share. Now, for the end of February and March, we started to work our sales, and that will be announced soon. For Lindenberg Vista Brooklin, a fantastic development in partnership with Adolpho Lindenberg. We are talking about a development at the best place in Brooklin, with a permanent view in this development. We have high hopes, not only in terms of sales, but also in terms of results, and very soon we are going to announce its launch.
For the beginning of April, most probably, we are going to have our first launch in recent years on the north side of São Paulo. We are going back to the north side. It's called Vila Inglesa, BRL 140 million. EZTEC has a 75% share, with basically mid-class, an area that the company works very well. With that, I'm going to open for the remarks of our managers before we open to questions. We are going to start with Silvio Zarzur, our CEO.
Well, good morning, everyone. I'd like to thank you for joining us. And, you know, last year, we had recognition of an increase in cost of construction that hurt us a lot. This is practically settled in our point of view.
We should not have deviations in the magnitudes that we had in the past. We are very much focused on, you know, the mid-market. We have something that is premium, but our main focus is going to be the mid-market with a segment that we usually perform very well with traditional margins. We are somehow going back to really lead to this space in mid-market. So we are going to working in the whole of the city in São Paulo and also the Great São Paulo area, Osasco, Guarulhos. These are areas that we understand. We have lower competition and therefore better margins. The inventory of ready developments, we had BRL 500 million delivered in the past six months. And because of our MO, this is going to be put to sale now.
We should have a high speed of sales of these units because they were just delivered last year, so we are going to focus on selling those units, those finished units, in the next 3-4 months. We developed a strategy for the Minha Casa, Minha Vida government program. We are working again, establishing partnerships. During the year, we should close some relevant amount of partnerships for the government program. That's it. We are very confident about our operation. We also had a drop in financial results, which hurt our balance sheet. Traditionally, we have a stronger financial P&L. That does not depend on us. It has to do also with inflation and interest rates, but it did drop by almost 50% in terms of our P&L.
In a nutshell, we should increase revenues and sales this year considerably, and we should have better performance than last year because we are not going to have the deviations of costs in constructions as we had in the past. We hired two new directors. You should expect new things to come. With regards to company management, we are working very hard for things to run as smoothly as possible. That's it.
This is Flávio Zarzur. I would like to say good morning. I would like to say that Samir El Tayar, our partner, is here, has been our partner for more than 45 years, along the whole history of EZTEC. Pedro is also here. So we are all very much in line with the strategy designed by Silvio. The strategy he designed is consensus within the company.
Our objective is to pursue and execute this strategy. This is our focus. So just to say it again, to operate in mid-market, to have partnerships in the premium market, and also partnerships in the low-income market, that will bring higher fluidity to our land bank. It will improve our return on invested capital in the coming years. We are really confident about that. And just as a reminder, we have a very comfortable indebtedness position, and that will allow us to really pursue our objectives. I thank you very much, and we are here for your questions.
Thanks for the presentation, gentlemen. And now we are going to open the Q&A session. If you want to ask a question, please use the Raise Your Hand feature on Zoom. If we have the time, we are also going to take the questions on the chat box. If it's not possible, please forward your questions with your email address to IR, IR department. In this way, our IR team will be able to answer your questions. Our first question comes from Pedro Lobato, from BBI. Mr. Lobato?
Good morning, everyone. Thanks for the presentation. Can you hear me? Yes, we can. Okay, good. So thanks for the presentation. I have two questions. First, with regards to launches, just to understand your strategy. First, if it is actually to accelerate launches, what kind of mix are you talking about, between, you know, premium, mid-market and low end? If a premium is more partnerships with Lindenberg, low income, the strategy you mentioned also, partnerships and joint ventures. So what are conversations like? And mid-market, what is your, mindset for launches this year?
Second question, just to understand your strategy for your direct portfolio in 2024, because that is indeed an important line for your results. I would like to understand if there is a connection between you continuing for the next two years with this level of net debt, if that affects your strategy in terms of direct portfolio, or things should go on business as usual. Just to understand what the segment is going to be like for the coming period. Thank you.
This is Silvio speaking. Okay, this year, Pedro, we should have some kind of launches in the premium segment, but we are not going to be alone. We are going to have this focus on mid-market, but even in the premium market, we have a new brand.
We have the rebranding for the company, so we should come up with a new premium brand. So we had something in premium by ourselves, something with Lindenberg, and the main focus is on low income. A little for the Minha Casa, Minha Vida government program at first. I believe that we had 2 developments for this program this year, and then a pipeline that is a lot heavier for the coming year for the Minha Casa, Minha Vida program. So that is basically it. The bulk of it in mid-market, some in premium, 2-3, and then 2-3 for the low income markets, but with a lower present sales value. Emílio is talking about Lindenberg. We have had partnerships with them, joint ventures that are doing very well. Together, we have better performance than we had before we worked alone.
You know that we have an agreement of acquisition with them that we signed before, and that could be executed. We do have the option of acquiring 50% of the company. If we do, whatever we capitalized in the company is enough for the acquisition to be completed. So we are not going to have a cash impact because we already done that just through the partnership. The decision has not been made, but this is an option on the table, and things have been doing very well with good margins, good sales. So, it's really running smoothly. That's it.
The other question about your direct portfolio, that is direct sales.
You talked about net debt. Although Emílio modeled net debt correctly, I'm going to work a lot for us not to have net debt. I want to change scenarios through the aggressiveness of sales, of really turning inventory into cash. Emílio is right, and everything he does is right, but I expect not to keep net debt as presented in what Emílio rightly said, so I don't want to reach this level. Anyhow, the fiduciary portfolio has a good yield to us. We know how to manage that. It's also a management and sales tool. The cost of financing is lower than the yield of the portfolio, so I see no reason not to have it. That's it.
If I can add to that, Pedro, we see the conversion of this portfolio at the end of the development, so we don't have many deliveries for 2024. So even and I'm giving you an example of 10%-15% about the developments of 2024, this altogether is not high. We already had BRL 500 million in our portfolio. It would be welcome for us to have that, given our gross cash. So we have no concern with the portfolio or any substantial addition now. But we have a cash position that is very comfortable and generates additional results, as Silvio mentioned.
And when I say a strategy of strong liquidity for ready units, one of the things we use is the sales portfolio that really enables us to finance things faster without customers having to go through the bank. And these finance-ready units are already, you know, free of burden. So I'm not removing cash for the company, I'm just delaying it. That's it.
Have we answered your question, Pedro?
Yes, very clear. Thanks, everyone.
Thank you. Our next question comes from Ruan from XP Investimentos. Ruan, you may go on.
Hello, everyone. Can you hear me? Yes, loud and clear. How are you? Thanks for taking my questions. I have two. One, margins. When we see your slide on margins per year, it seems that previous years are less representative. And my question is basically to understand what is the level of recurring margin that you would expect, and also, if you could give us a bit more color in terms of level of margins for the mid-market as you are being more exposed to the segment. My second question is to try and understand your strategy to accelerate the sales of your inventory. So just to understand if you are providing a bit more discount, a better financing term, having a bit more of sales efforts, how are you dealing with the sale of inventory? Thank you very much.
Well, when we talk about mid-market, we are very much focused on, what shall I call it? Product design. So on Roque Petroni, I don't know exactly what our PSV is, but it's high. Emílio or Pedro can perhaps look at it for Roque Petroni Avenue. But instead of having a product that has a very high cost of construction, I make it slightly simpler, and I have a more competitive price, but that's BRL 15,000 per square meter. So when I talk about mid-market, I'm talking about Roque Petroni, Carrefour, more than BRL 1.5 billion-BRL 2 billion PSV at this price range of 15,000.
Carrefour, Roque Petroni, we are adjusting. Roque Petroni is much larger than that. It is approximately BRL 1.2 billion for Roque Petroni. That is a rough estimate, and the Carrefour, about BRL 500 million. So this margin is traditional margin, a simplification of construction for us to run less risk in terms of competition, so we can sell slightly cheaper than the competition and a lower risk of engineering involved. So as a reminder, this plot that Emílio mentioned, the Extra supermarket plot that is probably going to come in this year, is 230,000 square meters at a price of BRL 12,000-13,000 per square meter. And again, we are trying to have a more economical building to sell at about BRL 12,000-13,000 per square meter. The competition is selling at BRL 18,000-20,000. So that's our policy. That's the strategy.
Now, you ask, and Emílio is going to add to that because I don't recall everything, you know, by heart. But when you talk about sales of inventory, it is what we said - you said. It's a bit of discount. I want to expedite sales. If the unit is corrected at the INCC level, and it will take me one year to sell. If I sell now, I'm going to have a yield of 12%-14%. So I'm going to offer a discount, I'm going to finance this buyer with IPCA +8, +10, that, in a way, offsets any losses. So all strategies, all weapons for us to expedite sales as much as possible.
Margins, should I start?
Go ahead.
Let me ask - answer your question on margins. First, when you talk about margins of the past, they are shown on our earnings release.
That chart is very interesting for you to understand each period of launches and the level of margins that we are attaining. Just as a reminder, there is also an accounting effect, which is adjustment to present values. That is, when I recognize the gross margin, I discount the present values. That is, gross margin grows a long time for each development, and I reach maturity at the end of construction. But you see the gross margin of everything that has been launched and under execution in the company, and it is on average, close to 35%. Now, when you take a look at our REF margin, it represents many of the sales that are happening now of units under construction, that we had some kind of valuation compared to the time of launch. So you already see the 38% there.
There is obviously a difference between the 38% and 33% of gross margin, which are financial burdens. So whenever you get to the end, you have to discount financial burdens that could represent 1-2 percentage points of the average. When Silvio talks about margins for launches in mid-market, and he talks about the company's comfort or expertise in mid-market, that has to do with the fact that they are large developments, whose plots have a lower weight in price composition, and whose engineering work takes us back to a very competitive environment in terms of construction costs for this kind of development, which is what led us to reach very substantial margins in the past. And when I say the past, I say 5-10 years time.
So obviously, we expect for future launches in mid-market to have gross margin that is better than what we show on average today. This is the work of the company that starts, you know, in planning, continues in engineering, in management, as Silvio mentioned. Silvio, would you like to add?
No, I'm fine.
Ruan, were we able to answer your question?
Yes, fully. Thank you, and have a good day.
You, too. Bye-bye.
Thank you, Ruan. Our next question comes from Hugo Grassi from Citi. Hugo?
Hello, gentlemen. Good morning. Congratulations on your results. Thanks for taking my question. I see that in this quarter, you started to recognize in your report and in managerial data on land bank, the PSV gains, related to the changes in the city's master plan.
For your choice of yours, I was led to believe that there is more to come. Could you give us a bit of color in terms of potential size in the repricing of PSV? And along this line, if I can ask you, perhaps more systemic question about how projects are being approved in this new cycle. I don't think you are the only ones that are going to, you know, work with projects in your pipeline. So I wonder if things are taking a bit longer with the regulatory agency because of that. We saw in the past, a bottleneck for approval of new projects. Are you observing anything of the kind that can lead to delays in launches? Thank you.
Thanks, Hugo. Would you like to start?
I would just like to say something. Things are happening in a very dynamic manner. What you see is just the tip of the iceberg, which is the city's master plan. But then we have other real estate operations going along the lines that have affected some of our properties. And this is a tough game to play. For instance, you have a project that is almost approved, then the city administration says something about the plot that you have. I'll give an example. We have a plot with a considerable PSV and they double the potential for that plot, but you already have something going on. So it is hard. It's not even in our land bank. They probably don't even have this information, but I think I did mention that in a meeting last week.
So you have something ongoing, then you think, are we going to delay it? Are you going to go? It's a hard game to play, and it is not over. It's still going on. There are other things to be approved that may interfere in, what shall I call it? The construction potential of our properties. So it is a paradox, I would say. And we have to play the game. You talked about smooth, but, you know, I'm concerned about the company. If you have a capacity to perform and you change the rules of the game, you lose capacity. So it is something that we are taking a look very cautiously, we are monitoring it from close.
Sometimes, you know, we prefer to launch it because we don't want to wait, and others, we think it is worth taking our time and redesign the project. So the thing is, what gives me the comfort is that we have plenty of things to launch. So I may wait and leave some things behind, because I don't want to launch everything that I have. It was not even in our plan. Hugo, have we answered your question? Any follow-up?
Yes, and I thank you. But I have another question, if I may. I'd like to hear from you how you see the low-income segment. We did talk about premium and mid-market segments. Perhaps low income is not going to be so substantial in 2024, but perhaps growing in 2025. You have a land bank of, if I'm not mistaken, BRL 2.2 billion. I remember with the new technical director, you revisited the engineering of the segment. So, what are your prospects for the future in terms of low-income launches? Thank you.
Well, it is what I mentioned in the presentation. It's all about partnerships, joint ventures. Today, I don't recall by memory, but I think it's BRL 1.5 billion in partnerships that are already ongoing. Now, you have to understand that there are large plots whose completion will take 2-3 years. I'm talking about large plots of land, but ongoing things that we already established joint ventures, BRL 1.5 billion. Excuse me. This is the first step.
Now we are going to restructure everything to also be able to work directly with the Minha Casa, Minha Vida government program. But with these partnerships, we are talking about construction alone. We are not talking about the other needs, of the development as a home. Sometimes we finance our partner with CDI + 3, depending on the partner that we have, and that also gives responsibility and accountability for our partner. There is a case with Cyrela. We have a JV, 50/50, although Vivaz is going to operate. So with the segment, perhaps for next year, we are going to have a restructuring and work directly. The margins that we have, at least for these ones now, are good. We believe the Minha Casa, Minha Vida, this is my understanding, is going to be very important for a long time.
So I think that we are working through JVs with relevant results for the company, and we cannot be as fast, directly. We are going to continue as this until we are able to operate directly in the segment.
Yes, Hugo, have your questions been answered?
Just perfectly. Thank you very much. It's always a pleasure to see you.
The pleasure is all ours.
Thank you, Hugo. Our next question comes from André Dibe from Itaú. André?
Good morning, everyone. Thanks for the presentation and taking my question. I have one question. It's basically a follow-up on the first question about launches, about the pipeline of launches for this year. We understand that you are more comfortable with the level of sales that you see in estimated deliveries, and you are going to resume launches this year. This resumption of launches also depend on the performance of sales of that you're having. So as you sell more, you get more comfortable to launch more. I'd like to understand your mindset in terms of level of sales for the first quarter that would give you the comfort to continue accelerating launches for the coming quarters.
André, let me say something.... I'm not happy. We are not happy with the results of last year, and with the volume of sales that we have. We intend to improve a lot, and I'm not comfortable with the level of inventory either. I want to sell more. So if you want to have some color, it's hard for me to give you some color, but we are going to do our best to be aggressive in sales.
So what's the point is, I'm talking about inventory, but that is for everything. Financing customers, granting discounts, be aggressive. You know, if we can increase the number of sales and decrease admin commercial costs, because, you know, admin costs are high, advertising costs are high. Sometimes I'm getting a discount of 5%. I'm not attaining to numbers, just as an example, but then my margin is going to be the same. I sell more, I have less admin expenses, advertising expenses, and that's okay.
So the idea is to be aggressive for us to be able to sell more and keep the pace of launches. I have no questions that we are going to be more aggressive than what you saw in the past. I don't have a target, but Emílio and I have agreed, of course, that inventories, you know, start going up. We are not going to have irresponsible launches, but I'm sure we are going to sell because we are going to be aggressive.
André, have we answered your question?
Yes, thank you. Have a good day.
Thank you, and have a good day.
Thank you, Andrea. Our next question comes from Luma Paias from UBS . Luma, go ahead.
Good morning, Emílio, Silvio. I have two questions. The first is about Esther Towers. I'd like to have an update on the project. What's the pace of construction, if it is as planned, indeed, and also, what are your plans and strategies for the project once ready? Second, Parque da Cidade, a project that hurt company margins by more than two percentage points, as you mentioned in your release. Any other project that runs the risk of additional expenses and costs because of delay, and what the company is doing differently to avoid it to happen again?
Should I start? Okay. Hi, Luma. Good morning. Thanks for your questions. I'm going to start with Parque da Cidade, which is a past event, and then we are going to talk about future events.
Parque da Cidade, it's important to mention that we proposed when we bought the project and we started construction. We started construction in 2019. Back then, it was one of the projects with the best reference for the city of São Paulo, and it was a challenge for the company and our engineering. We delivered the project. It was our purpose to deliver at the highest level of quality and sophistication, exactly what we had proposed to do and what we sold, and this is what we did. But given the challenge of the project, to do that, we needed additional time. However, we always communicated and informed the consumers as the law demands, with no resistance whatsoever. They bought it. They had a gain in prices, that's important to say that, because we started selling this development at BRL 11,000 per square meter.
Now, it's BRL 24,000, and this is the reason why we had very, very few terminations. I'm now passing customers on to banks, and you see some people with difficulty in the end of the way, but they don't want to let their units go because they were compensated for their money. So in terms of Parque da Cidade, it's important is that, okay, it did hurt the company, but it was an excellent impression for the company, an important growth in terms of EZTEC rent status in the Brazilian market as a whole and in the city of São Paulo. Of course, it was a lesson learned, for the company.
This new technical director, the leadership of our CEO and chairman, will really take these lessons learned for new developments, for us not to experience anything of the kind of Parque da Cidade for the next developments, and that is important. There is nothing even close to what we experience in Parque da Cidade for the next two years. As for Esther Towers, this is a project in which the company invested so far an important volume of capital, and obviously, it is going to complete the project when it sees that rental and sales prices are compatible to company's needs and expectations. The thing is, we are not going to finish the building while we do not see that we are going to sell or rent it. That is, we are not going to invest or finish in it.
And you know, buildings get old. So we are at a point in which we are going to keep it semi-finished with a close delivery time, and we are waiting for the market to react. That is, why am I going to sell something when the market is negative? We are going to wait a little when the market gives sign of positivity. It is the most modern commercial building in Brazil, by far, the most beautiful, the most modern. When the market reacts, we are going to put it to sell. We are not going to finish it and let it age. When the moment comes, we complete it and sell it. I don't want to be the first or, you know, the first runner to do that. It took us a lot to build it. I want the compensation.
I don't want to sell it, you know, as a first mover. I want the fair price, and that's the strategy that we arranged with managers, executive officers, and directors. Just in a nutshell, to be very clear.
We are getting the bottlenecks that we had in the building that were challenging, that takes longer to happen, and like the helicopter station and things like that, for us to get to that point that Silvio is mentioning, eventually, you know, go on standby and wait for the opportunity to come. Meanwhile, we are going to look for someone that leverages and gives us the comfort to complete the towers.
Luma, have we answered your question?
Super clear. Thank you very much. Bye-bye.
Thank you, Luma. Our next question comes from Elvis Credendio from BTG Pactual. Elvis?
Good morning, everyone. We have two questions. One, first, about transfers to banks. How we're feeling the banks, are they being more restrictive? We see news about that. And if the volume of your portfolio should grow because of that, not only because of more promotional events, but also the banks kind of varying or being more restrictive to transfers. Second question, cash generation and leverage for the company at the end of the year. I know it's hard to say a number because, you know, the market is dynamic. But how you see cash generation, you had a high volume of deliveries in the fourth quarter, you have receivables for the first quarter, so how that can impact your cash generation and leverage for the year end?
I would just like to say something. Remember that we have the payment of the Extra plot of land that is quite relevant. If things happen as far as planned, we have to pay BRL 200 million to be paid. And although we have high receivables, Emílio is going to give you a number. I don't know. Emílio is going to say something, but we cannot forget the Extra plot of land.
Elvis, good morning. I'm going to start with the transfers that you asked for. The thing is, we are not. Well, to be fully transparent, we are not feeling a restrictive environment from banks in terms of transfers. And why is that? I think it is because the deliveries we are making are deliveries in which customers pay well. We have more than 50% payment, there is less than 50% remaining to the bank.
But in addition to that, we have a unit amount that improved along time and along deliveries. So basically, it becomes only 30% to bank. So the level of risk for the banks is very low for this remainder balance. And in the deliveries that EZTEC is making, banks have been accepting transfer and have been engaging in that. Even the average rates that we see in the real estate credit market for banks in general is not what is being collected from customers. It's still double digit, but low, and that's why we don't believe the portfolio is going to grow significantly. I did say that this should be slightly above BRL 400 million for this first quarter, because this is already what we have at the Notary's office.
But truly, for the beginning of 2023, we are with a very, very friendly environment. As for cash generation, we have the major payment to be made this year, which is important to us.... So in my opinion, and this is not guidance, it's just my impression, and is according to company models. We have an increase in gross cash for the company until the payment of the Extra plot of land that is going to be in the second half of this year. And we also have an increase of gross debt, given the fact that developments to be delivered in 2024, 2025 and 2026 will consume real estate credit. So I have an increase of gross cash and increase of gross debt. Silvio already mentioned that we are going to work with the sales department to expedite sales of ready units.
The objective is really not to increase our net debt. This is very important to mention. This is an expectation, not a guidance, but it is a company expectation. Correct? That's it. Elvis, have we answered your questions?
Yes, very clear. Thank you.
Thank you, Elvis. Good morning. Because of time, we are going to take the last question from Fanny Oreng from Santander. Fanny?
Thanks, Pedro. Good morning, everyone. My question is a quick one. I'd like to understand what is your diagnosis on the Lindenberg Ibirapuera. You mentioned another unit sold, but why do you think sales are not as fast given, like, you know, the investments of the project?
Okay, Fanny. Emílio said something, but I don't think that it's very interesting. He said 20% of one tower.
It's 40% of the first 20% of the whole development, that is 40% of one tower. So it's not a huge speed of sale, but 40% is not that bad. Because of the way it was acquired, we acquired this development in a system of building a parking space and et cetera, and that we accounted it as a whole. So we haven't launched the second tower, but we are accounting for it as a whole. So now, in May, we are going to launch the second tower, which is not in our launch guidance, because it is given as launched, but you're going to see a giant sales campaign for its real launch. And, you know, the campaign's very nice, all plans are prepared for us to have a major launch.
Our expectation is that this is a spectacular building. We want to sell another 20 units for this launch along the year. So the idea, you talked about our plans, basically, the Sales over Supply, and we should have a decorated apartment at the tower. And, you know, the feeling that you have at top of the tower is completely different. So we are going to have this apartment that is going to be decorated. It's not going to be fully sold until ready, but I think we should reach 60%-65% until completion. That is what I believe should be reasonable.
Just one thing, this is a type of development that is not replicable. People are taking some time, but we are sure that the people who bought this development are doing an excellent deal. It is a plot of land of more than 10,000 square meters. It's a whole club. So, sometimes people have questions, but we know that, the project, is not replicable, especially in this region. It is—it's one of a kind.
Okay, Fanny, have we answered your questions?
You have. Thank you very much, Emílio, and everyone.
Thank you. Have a good day, Fanny.
Thank you for all your questions. Since there are no questions, I am going to turn the call to our directors for their final remarks.
I think I already talked a lot today, perhaps more than I should. The market is not that easy, but it is not that hard. It's average, and we are going to be very aggressive. And I'm saying that we are going to be aggressive in sales. I want to increase our volume of sales, and we are taking care for this company to improve its performance in all sectors. The thing is, we are not happy about last year, and we are trying to improve for this year, and we are very much engaged in doing so.
I also would like to thank you all for joining us and reinforce a point here... I think that in recent times, we had major changes in the country. We had the pandemic, we had the passing of my father, which was a natural event and a celebration of everything that he did. It was harmonic and continues to be so. Right now, we clearly have a strong strategy agreed amongst ourselves, and I'm talking about Executive Officers and Board of Directors, to be pursued and met. This is important to say.
I clearly want to tell you that we are in harmony right now. So thank you very much. I'd like to note the presence of Samir here, he's our patron today, and Silvio, my brother, Emílio, that has been with us for just little time, 25 years, so two-thirds of his life. And Pedro Lourenço, that is a promise, and that we believe a lot in him. Thank you very much. If you have questions, call Pedro. He will answer all of them. Thank you.
Thank you. EZTEC conference call is now closed. Don't forget to check out the materials available on the Investor Relations website. And thank you for joining us, and have a great day. Have a great weekend.