Fischer, CEO, André Vitória, CFO and Investor Relations Officer, and Enrique Schaffner , Finance Director and Investor Relations Director. We would like to let you know that the presentation is being recorded and translated simultaneously. Translation is available by clicking Interpretation. For those listening to the video conference in English, there is the option of silencing, or silencing original audio by muting original audio. During the company presentation, all participants will be in listen-only mode. Next, we are going to start our question and answer session. To ask questions, please click on the icon Q&A, type in your name and company name. When you are called, a request to you, unmute your microphone will be shown on your screen. Click on it, and then ask your question.
We would like to let you know that forward-looking statements that may be made during this conference call with respect to business prospects, forecasts, operational and financial goals of the company, are all based on assumptions of the executive board, which may or may not occur. Investors should understand that political, general macroeconomic conditions, and other operational factors may affect the future performance of the company and lead to results which may differ materially from those expressed in this forward-looking statements. To open our call today for the second quarter 2024, I would like to hand it over to Mr. Sérgio Fischer.
Good morning. Thank you for your participation in our LOG's quarter 2024 earnings release call. In this quarter, we reached a new level of quarter production, totaling 115,000 square meters of GLA.
It highlights our ability to expand and execute in line with the new production level of 500,000 square meters of GLA per year. This new production capacity allow us to deliver the LOG plan for 1.5. We are the only player operating in all regions of the country and with high customer demand for quality logistics warehouses. Strong demand in all regions has allowed us to deliver projects with high pre-lease rates, most of them already stabilized, which reveals the commercial effectiveness and strong demand for LOG warehouses, factors that continue to be competitive differentiators for the company. Second quarter 2024, we delivered approximately 64,000 square meters of GLA in three projects: LOG Contagem IV, LOG Natal, and LOG Salvador. The latter sold when it was still under construction.
The pre-lease rate of this delivery is 79%, with yield on cost close to 13%, an average ticket of 25.90 BRL per square meter. In addition, the pre-lease level of the assets have reached 72%. Gross absorption was 115,000 square meter of GLA in the quarter and 278 accumulating the year. We have the capacity to serve logistics, operations of all sizes at different times of customer business, which reflects stabilized vacancy rate below 2% for the sixth consecutive quarter, much lower than the national average. With diversified portfolio that includes around 200 customers distributed all over Brazil, we maintain a sector concentration of less than 17% and concentration per customer below 7%. This balanced distribution is critical for stability and risk reduction in our portfolio.
In the context of asset recycling, in April, we concluded the sale of LOG Betim and LOG Salvador, and in July, we made two announcements: sale of LOG Gaiolli and LOG Viana I. Additionally, we are advanced negotiations for the sale of LOG Goiânia. Transactions total BRL 764 million, always in line with the equity value of the assets or NAV. These sales showed gross margins of 41%-47%, a relevant increase of up to 70 percentage points. It indicates a significant improvement in the spread between yield on cost and cap rate of assets, demonstrating our ability to maximize return on investments. Over the past 24 months, we sold BRL 2.4 billion of our projects, always compatible with NAV, proving a high attractiveness, liquidity, and correct pricing of its assets. We have made progress in the execution of LOG 2 Million Plan.
Its deliveries will begin in 2025 and conclude in 2028. It will be important for us to maintain our sustainable growth of the NAV, which has registered relevant increase since 2019, growing on average 18% on a yearly basis. We have a land bank of about 400% of 2 million square meters of GLA to be delivered in the main metropolitan regions of the country. I emphasize that in the end of the plan, we will have net growth of 70% in our portfolio between deliveries and sales. In the second quarter, LOG presented financial performance compatible with its strong operational momentum. Net revenues was BRL 53 million in the quarter. The slight change from the same period of the previous years is mainly due to asset sales, which temporarily affected revenues, net revenues.
Excluding the impact of the sales, gross revenue would have grown by 31%. Prices by new contracts has an average ticket of 24 BRL, which shows potential increase of 20% compared to the average ticket of our current portfolio. For the eighth consecutive quarter, LOG reported positive lease spread. During our growth cycle from 2024 to 2028, we expect substantial growth in revenue between 20 and 25 per year. Accumulated net delinquency of the past 12 months, well controlled, amounting to only 0.6% of accounts receivable. This indicator reflects the good quality of LOG's customer portfolio. Revenue from asset managed by LOG ADM, reached 3.6 million BRL in the quarter, up 9% compared to the same period of the previous year. This area has become a growing source of funds for the company, in addition to building loyalty of our customers.
Operating expenses show sizable improvement of 34% over the second quarter 2023, due to lower impact of tax differences from asset sales. The company has repeatedly sought more efficiently in G&A. This quarter, we already presented reduction of these expenses compared to previous year. We reached a EBITDA of BRL 141 million in the quarter, twice higher than compared to the same period last year. Financial results of BRL 32 million versus BRL 8 million in the second quarter 2022 is due to the one-off mark-to-market adjustment of the equity swap in the share buyback. It was offset by reduction in interest expenses due to the fall in CDI in the period, and increasing revenues from financial investments. Deferred tax decreased by 31% in the quarter due to the write-off of PPI, disposal, and gain the fair value valuation of new assets.
Net income in the quarter was BRL 92 million, 109% higher than the same period last year. The significant increase in profit is a direct consequence of the company's growth. We continue to demonstrate robustness and prudence in the management of capital structure. In the second quarter of 2024, net debt adjusted for receivables from assets sold by the company was BRL 531 million, a reduction of 24% compared to the previous year. The practice of adjusting net debt by receivables from assets sold is justified by the high quality of these receivables. They come from large real estate investment trusts, supported by some of the country's leading financial institutions. As a consequence, adjusted leverage improved significantly to 1.49x in the end of the quarter.
Net LTV, adjusted for receivables from sales, decreased by 4.7 percentage points, amounting to 11.9%. In addition, effective cost of debt reduced from CDI + 1.9% to CDI + 1.7% in one year, showing the excellent credit risk of LOG. This performance is a direct result of our asset monetization strategy and effective capital management, which have allowed us to strengthen our balance sheet and improve our credit profile with leading financial institutions. I would like to reinforce our strategic position in relation to shareholder structure. In July, we announced the cancellation of 9.5 million shares, amounting to approximately 9.3% of capital stock.
This move, together with the continuation of the share buyback program, is a reflection of our confidence in the intrinsic value of LOG, where we observe potential upside leverage by the current NAV, which is 42% above market value. We will continue to focus on maximizing returns for our shareholders. At the same time, we maintain solid responsible capital structure. Let's now move on to the Q&A session.
Thank you. We are going to start now our Q&A session. I would like to remind you that to ask a question, please click Q&A and type in your name and company name. Once you were called, a request to unmute your microphone will be seen on the screen. Unmute the mic and ask the question. The first question comes from Bruno Mendonça of Bradesco BBI.
Hello, good morning. Thank you for the presentation. I have two questions.
First, about sales margins. We've seen you very active in selling assets, which is very good news, with increasing margins. Sergio, could you please tell us more about what you anticipate to come? Do you think that the recent sales have better margins because they are older assets that had been built at different levels of construction levels? Even though you don't reveal Cap Rate or Yield on Cost of sold assets, if you can, please give us some information about the spread of Yield on Cost of these assets that have been well sold, and the ones that you are currently developing, so that we can have an idea of future sales margins. Second question concern the buyback. Your decision to be part of the recent sales of shares.
If you can, please explain your rationale, always trying to improve liquidity of the shares as opposed to general, valuation to shareholders, because there was a significant discount on the intrinsic value. Please tell us more about this process of, decision-making, of having the buyback and buying it, as a company in the market, rather than having the liquidity of the shares go up. Thank you.
Thank you for the questions, Bruno. This is Sérgio. I'm going to talk about sales liquidity, and then André will talk about the buyback. Things have changed considerably this year compared to last year. Last year, we delivered a gross margin of 30%. This year, we can see 41%-47%. Very strong margins for two main reasons. First, which is the main one, is the yield on cost going up.
We've been performing quite well in our projects expected to be delivered this year, a yield on cost of 13%, very strong yield. In the cap rate, we've seen not a significant improvement, but a marginal improvement in the transaction cap rates. This alligator mouth, as we call it internally, has been increasing, and we expect it to be close to 40% in upcoming years. Yes, we've sold older assets and got better margin, but the main volume, so this year, were ongoing constructions. The project of Salvador, we delivered in the second quarter, but it was sold in the first quarter, some months before the actual delivery. So I think it's a wonderful moment of investments we've been experiencing. We've got a huge records of yield on cost, and I'm very optimistic about the liquidity of our assets.
I think we have additional capture improvement of cap and improvement of funding of future sales. But looking ahead, a very good number to use in upcoming sales, 40%. Very strong number. Now, André, please, buyback.
Now, Bruno, concerning the programs of buyback, we've been doing it for a while. I would say, at least for the past two years, we've been considering the opportunities as there is the moment of the market. The decision of maintaining the program open results from the fact that we want to have that specific structure and the use of our cash. They were all market operations and really improving the potential valuation of shares. If we maintain the gap between our NAV and our current price, this is going to be considered as having opportunities.
Now, that was an opportunity, and there would be others throughout this buyback period, and we'll keep on doing it. It's a strategic decision, showing that we are confident it will gain value, and also generating value to our shareholders.
Let me piggyback on it. We are not going to leverage the company with the buyback programs. We had a very aggressive movement in June, exactly because of the conditions that André pointed out. We can see huge discrepancy and a capacity of generating additional value by making such moves. What really makes us very comfortable, we are opening new programs, and we want to do more things in pricing, is the liquidity we have of our assets. We've been selling very close to NAV, sometimes ahead of NAV, BRL 2.4 billion.
So in the past 24 months, we're very much aligned with NAV, which is about 41 BRL per share, which is a very interesting movement, and we want to keep on doing it. We are not going to leverage further the company. To do that, we will have additional recycling opportunities if we think we should keep on doing it in the future.
That's great. Very good. Thank you.
The next question comes from André Mazini, from Citi.
Hello, Sérgio, André. Thank you for the opportunity. First question about the potential of 20% upside in the average ticket to 24 BRL per sq m. Do you think that you can close this gap? How long will it take? And to explain that, could you give us more details about LOG contracts?
If I recall it accordingly, most of them don't have any revision clauses, and they have on average, like a five-year term. So if it's a five-year term contract, 20% of the base will have a maturation on a yearly basis, so 20% of the bases would convert to the 24 BRL. Is it a good way of interpreting that? Does it make sense, my interpretation of it? So that's my first question. Secondly, you have lots of receivables in your balance because of the sales that need sellers finance, become the market standard, BRL 632 million. You've discounted some receivables in this quarter. I'm talking about the trade-off, discounting receivables, leverage faster. Probably it has a cost, it impacts finance, or maybe collect the receivables within the conventional schedule.
So what are, what are you thinking about this trade-off, so to speak?
Thank you for the questions, Mazini. I will answer the first one. About the average ticket, most of our businesses, and this is the advantage of our business model, we have a modular warehouse. Most of our projects are so-called speculative, and we have a churn, which is high, 10%, historically. Churn is an opportunity to capture and to close the gap, and we've been doing that. Contracts have, on average, a four-year term. 25% of the contracts will be annually renewed, and then we'll have a price increase, and this is what we've been doing, and the same applies to churning. But closing the gap, it's difficult to talk about that. Such an interesting market of 16 years of LOG.
We've never seen such good, pricing, strategy moment, so the market is bringing up prices by itself. We've been seeing this moment, this momentum happening. Prices are growing every quarter, and we've managed to have prices up for new income. So I guess the gap might even remain for a while because of the positive, market moment we are experiencing. Yes, we have BRL 600 million of receivables as a result of sales, mid and long term. We've been trying to assess the liquidity of the receivables, which can be an alternative of cash for the future, should we need it. We understand receivables are of very high quality. We are very confident about receiving them. We just wanted to assess the trade-off you mentioned with potential of anticipating receivables and use cash in the future.
The receivables are related with the way that we make sales with some of the real estate funds, which require sales finance, and it will maintain while we have a two-digit interest rates. In the future, the interest rate may come down, and then negotiation terms will be different. Not necessarily with all investors, but when you talk about investment funds, we still need the structure to sell with quality, as we've been doing. Receivables, we're testing in terms of quality, thinking about anticipation if we need to use cash in the future.
Great. Thank you very much.
The next question comes from Elvis Credendio, BTG Pactual.
Good morning, Sérgio, André. My questions are the following: First, about pre-lease, still strong or developed projects, deliveries. Is there any segment that has been attracted your attention, demanding more areas? My second question concerns the investments of assets and the real estate fund market. We've seen some more challenging areas fundraising have been somewhat more difficult in the area. So how do you see the demand for recycling of your current assets? Has it been reduced or not? That's it.
Thank you. Sérgio speaking here. Elvis, I'll talk about first pre-lease. We delivered 64,000 square meters, 80% pre-lease. Very strong number that we've seen in the market for the past two years. Some quarters, we delivered 100%. Now, in the future, we will have strong activity in the second quarter of this year, most concentrated on the second half of the year, and also very good level of the construction. 70% of them are expected to be delivered this year.
Another segment that has been attracting our attention is e-commerce. In 2024, differently from last year, in which marketplace were somewhat more selective for new businesses, with geographic diversification that LOG has, we were not very much impacted. But this year, things are different. We see the Chinese platforms getting a lot of area. It's something really amazing to observe the amount of GLA that they are getting and the profile of GLA. There are clients getting 10 operations from us throughout the country. We are increasing capillarity, and we've been surfing the wave. Very strong pre-lease, over 70%, as I mentioned, and e-commerce is the main demanding area for pre-lease. As to sales of assets, I have a different opinion. We've recently had moments of stress, but we feel here a constant demand for assets. Recently, we had two operations since April.
Three operations for different situations. The last one had very positive payment terms. We are getting paid in 12 months. We are very optimistic about this real estate funds, but we've seen some institutional investors looking for it. We always have ongoing conversations, very positive interactions with different funds. We are going to talk about more recycling throughout the years and very positive situations. I'm very optimistic about liquidity of our assets. I think that it has been confirmed throughout the years, and this is going to be the main source of resources for our growth.
Thank you.
The next question comes from Rafael Rehder, Safra. Rafael, your microphone is on. Please unmute it. The next question comes from Antonio Castrucci, Santander. Please unmute yourself.
Hello. Thank you for taking my question. I have two points to make. First, let me understand your take on the demand for data center, sharehouses, warehouses, I mean. Have you been seeing the demand for that kind of application? And I'd like to understand the reduction of G&A in the quarter. What are the main measures that you have adopted to reduce G&A, and what can we expect for level of G&A for upcoming quarters?
Sérgio speaking here. I'm going to answer the first one. Data centers. We are in the market, so we are always being asked about the opportunities of different businesses. Data centers are being observed for a while. We've seen transactions, happening. It's a different kind of business, you see? I don't think this is going to scale up of 500,000 square meters of GLA. I don't think data centers will demand too much of GLA. I know it's growing.
We can see some transactions going on, but it's not something that would have that huge relevance in our understanding. We keep on analyzing opportunities that will determine if. It, it all depends on return on investment, and we are very much focused on dealing with modular, speculative, warehouses. Data center are not quite the same profile. But we've just always based on return on the opportunity. Concerning G&A, throughout past months, we've been performing a very serious understanding of our cost, and we've had an administrative reform internally. We have an optimized structure, and it should be the level to operate from now on. We will, of course, keep on buying focusing on optimizing and using our cash, but we are very much focused on stabilizing G&A at the levels that we presented this quarter.
As of upcoming quarters, we expect to have the same levels as a result of the changes we've made in the recent months.
Great. Thank you both.
The next question comes from Rafael Rehder of Safra. Please unmute yourself.
Hello. Thank you for taking my question. I would like to know about dividends. In the initial plan, you were thinking to sell 50,000 square meters of GLA per year, but you are going to go over that. Is it going to speed up the payment of dividend, or do you expect to speed up the sharing of dividends depending on your sales?
Thank you, Rafael. This is Sérgio speaking. We've distributed the 25% dividend as regulatory action.
This year, we increased somewhat the volume close to 40%, which is an indication that shows the company is in a unique moment in terms of profitability and also cash generation. In the past 12 months, we didn't burn any cash, considering the revenues from sales with record CapEx. Very interesting momentum. We, in the future, it's interesting to consider how to consider increase of dividends, but we are returning really money to our shareholders with the buyback. We've doing it very aggressively, as I described before. 10% of the company capital was canceled in June, which means extra dividend to everyone. We'll keep on paying close attention, and I'm sure you are going to have good opportunities to share our profits with the shareholders.
Thank you very much.
The next question comes from Mariangela de Castro, Itaú BBA. Please unmute yourself.
Nossa próxima pergunta vem de Giovanni Vescovi, da JP Morgan.
The next question is from Giovanni Vescovi, JP Morgan. Please unmute yourself.
Hello, can you hear me?
Yes, yes, go ahead, please.
Good morning. I have some quick questions. First, about cost of construction. I would like to hear from you about the upcoming year. How do you anticipate that? Also, for ongoing construction. Would also like to analyze the level of vacancy that you would expect for the whole year, especially concerning the recent investments that you've announced. And the third question concerns your plan of growth. Are you considering the mutual funds opportunities? How are you analyzing all of that? Thank you.
I'm going to go with the cost of construction. Since the sudden increase during the pandemic, we've been observing stability in the cost of construction in the past 24 months.
We've prepared some material in the release, showing the gap between the increase of INCC and our reality of cost and construction. We've been running below the index for a while. Now, looking ahead, everything under construction is very well constructed. The cost of construction has been given, no surprises, and we are very optimistic about the sure, the short future. No cost pressure over prices, and we expect it to be stable, even operating below the INCC, the index of construction cost. Now, concerning vacancy rate, our main metric is a stabilized vacancy rate. As we've been growing significantly, our, one-off vacancy may mask positive numbers, but it's also running quite well below 3% of our total vacancy rate. This is a very comfortable situation.
Anything below 5%, we have very good pricing power, bargaining power, and we hadn't seen it for a while, so I don't think it's going to change now, even with the recurrence of expressive volume that is going to be delivered from now on. Now, concerning growth plan, we've had some previous BTS in the past. This year, we had one small one that we delivered. What will determine that is return on investments. Our growth plan for the second half of the year is 0% BTS. We've delivered relevant volume. It's all LOG, modular, speculative model. We want to maintain, the LOG 2 Million Plan that's going to be delivered as of 2025. It was all planned based on that, having modular assets close to the consumption centers.
Great. Thank you. Very clear. The next question comes from Mariangela de Castro, Itaú BBA.
Our Q&A session is closed now. Let me hand it over to Sergio for his closing remarks.
Thank you all very much for joining us. I would like to close by telling you a little bit about the change of level that we showed in this quarter. We are very optimistic about the operational, operations and operational, management. We've been operating now 500,000 square meters per year, which is very significant. The second quarter was the last quarter in which there was a decrease compared to previous years. As of the third quarter, we are going to see robust growth of revenues, FFO, because of additional GLA that we are adding, even considering sales that we're going to make. So 500,000 of GLA, we expect 20% growth on a yearly basis, even more than that, looking ahead. We are really optimistic.
Thank you all very much. See you next time. The earnings release conference call of LOG is closed now. If you have a question, please send your question to the investor relations team, using the email of the investors relations area. Thank you all very much for your participation. Have a great day!