Good morning, everyone, and welcome to Mallplaza 4Q 2024 Results Conference Call. Today with us are Fernando de Peña, CEO; Derek Tang, CFO; Rodrigo Sirham, Finance Manager; and Mathias Guerra, Investor Relations. This presentation and the 4Q 2024 earnings release are available on our Investor Relations website and will also be available for download in the chat. During the company's presentation, all microphones will be disabled. Later, we'll begin the Q&A section. To ask questions on audio, click on the raise hand button, and when your name is announced, you will receive a request to activate your microphone. Please activate it to ask your question. To ask questions in written form, just cue the question on the Q&A button. Please be aware that your company name should be visible for a question to be taken. I'll now turn the call over to Derek Tang. Please go ahead, sir.
Greetings and welcome to Mallplaza News Conference Call. Thank you for joining us this morning. I'm here today with Fernando de Peña, our CEO and the only Latin American member of the Board of Trustees of the ICSC. Also with us is the Investor Relations team represented by Rodrigo Sirham and Mathias Guerra. We're pleased to introduce the company's earnings results for the fourth quarter of 2024. First, we'll begin with a brief overview of the company's quarterly results. Second, we'll highlight some strategic remarks regarding the quarter, and as usual, we'll end with a Q&A session. 2024 was an important and transformative year for Mallplaza, marked by significant progress in executing our growth-driven business strategy.
A key highlight of this quarter was the successful acquisition of Falabella Peru, which owns 100% of Open Plaza Peru and 66.6% of Mallplaza Peru, which, in addition to the 33.3% previously owned in Mallplaza Peru, increases our stake to 100% and allows us to consolidate, as of December 2024, a portfolio of 15 assets in Peru and become the second operator of shopping centers in that country in terms of GLA, in addition to reinforcing our presence as the leading platform for urban centers in the Andean region with 2.3 million sq m. With finances expansion, we carried out a capital increase of $325 million, which increased the free float and liquidity of the stock, attracting a broader base of international investors.
On the operational front, this quarter continued with the trends observed in the last two quarters, with growth in terms of visitors, tenant sales, and occupancy of our urban centers. All of this contributed to the delivery of continued growth in revenues, EBITDA, and FFO, in addition to an increase in efficiency.
Just a second while we reconnect the speaker. Please, Mr. Tang, if you can restart the script, go on.
Greetings and welcome to Mallplaza News Conference Call. Thank you for joining us this morning. I'm here today with Fernando de Peña, our CEO and the only Latin American member of the Board of Trustees of the ICSC. Also with us is the Investor Relations team represented by Rodrigo Sirham and Mathias Guerra. We're pleased to introduce the company's earnings results for the fourth quarter of 2024. First, we'll begin with a brief overview of the company's quarterly results. Second, we'll highlight some strategic remarks regarding the quarter, and as usual, we'll end with a Q&A session. 2024 was an important and transformative year for Mallplaza, marked by significant progress in executing our growth-driven business strategy.
A key highlight of this quarter was the successful acquisition of Falabella Peru, which owns 100% of Open Plaza Peru and 66.6% of Mallplaza Peru, which, in addition to the 33.3% previously owned in Mallplaza Peru, increases our stake to 100% and allows us to consolidate, as of December 2024, a portfolio of 15 assets in Peru and become the second operator of shopping centers in that country in terms of GLA, in addition to reinforcing our presence as the leading platform for urban centers in the Andean region with 2.3 million sq m. With finances expansion, we carried out a capital increase of $325 million, which increased the free float and liquidity of the stock, attracting a broader base of international investors.
On the operational front, this quarter continued with the trends observed in the last two quarters, with growth in terms of visitors, tenant sales, and occupancy of our urban centers. All of this contributed to the delivery of continued growth in revenues, EBITDA, and FFO, in addition to an increase in efficiency. As seen on page three of this presentation, footfall to urban centers reached 91 million visitors through the fourth quarter, an increase of 18.4% compared to the fourth quarter of 2023. While during 2024, we recorded 311 million visits, up 9% over the previous year. This increase is mainly explained by the opening of Mallplaza Cali during the first quarter of 2024, the acquisition of Open Plaza Peru during December, in addition to the opening of the Lifestyle Sector in Mallplaza Distribution.
In terms of tenant sales, we reached CLP 1.6 trillion during the quarter, an increase of 19.7% year- over- year, with growth in the three countries in which we operate. This growth was mainly driven by the incremental sales of Open Plaza assets, which were added to our portfolio in December, the opening of Mallplaza Cali, in addition to a better performance of retail and retail safety. Same-store sales posted an increase of 7.9% during the fourth quarter, an increase of 10.9 percentage points compared to the fourth quarter of 2023. Demand for spaces in our urban centers continued to be in great shape. Rate change rate this fourth quarter of 204 new openings at a regional level and 677 openings during the full year, allowing us to reach an occupancy rate of 96.6% during the quarter, which is a 0.8 percentage point increase compared to 2023.
In this sense, it is important to highlight the 96.9% occupancy reached at the urban centers in Peru, with an increase of 4.2 percentage points. This increase was mainly explained by higher occupancy in Mallplaza Comas, an urban center that continues to ramp up since its opening in 2020, and by the high levels shown by Open Plaza assets of 98.7%. In Chile, we reached a 96.6% occupancy, explained by higher occupancy in Mallplaza Sur, Mallplaza Norte, and Mallplaza Rica, among other malls. Turning to page four, revenues during the quarter reached CLP 140.5 billion, increasing 31.8% year- over- year, and a 17.8% growth for the full year.
This strong performance was primarily driven by the consolidation of revenues in December from the recently acquired assets in Peru, higher lease revenues due to more lease dealers, higher sales, and readjustment of rates and taxation of lease contracts to inflation in each country, and by higher parking revenues. Excluding the consolidation of a Peruvian operation in December, revenue would have increased 21.2% year- over- year, and same-store rent for the quarter increased 9.4%. Plaza sales during the fourth quarter reached CLP 50.6 billion, remaining flat year- over- year, mainly due to the recovery of real estate taxes, which were partially offset by higher expenses associated with the inauguration of Mallplaza Cali in Colombia and higher parking expenses. In terms of administrative expenses, an increase of 58.3% during the fourth quarter of 2024 reached CLP 17.3 billion.
This increase was mainly explained by the consolidation of expenses of Falabella Peru, higher expenses associated with the provision for bad debt, and the inauguration of Mallplaza Cali. Regarding EBITDA, it increased 34.1% year- over- year during the fourth quarter of 2024, totaling CLP 108.3 billion, mainly due to the Falabella Peru consolidation, higher lease revenues due to a higher occupancy rate, higher sales, readjustment of lease contracts, and higher parking revenues. Excluding Falabella Peru asset consolidation, EBITDA would have increased 22.4%. In terms of EBITDA margin, we reached 77.1% during the quarter, a 1.3 percentage point increase compared to the fourth quarter of 2023.
Turning now to page five, net income reached CLP 100.8 billion during the fourth quarter, increasing 22.6% year- over- year, mainly explained by higher revenue, higher income from exchange differences due to favorable effects in foreign currency assets, a higher financial income due to higher available cash for the acquisition, and higher other income due to gains on revaluation of investor properties. This was partially offset by higher other expenses due to non-recurring expenses in the acquisition of assets in Peru, higher administrative, higher financial costs due to the consolidation of debt in Peru, and higher interest in Mallplaza Chile and higher income tax expense.
In terms of adjusted FFO, it reached CLP 81.6 billion during the fourth quarter, increasing 33.6% year- over- year, mainly explained by better performance of the operation, consolidation of the Peruvian operation during December, and higher financial income due to higher available cash for the acquisition. Our capital structure and balance sheet remained solid, finishing the fourth quarter with a net debt to EBITDA ratio of 3.8 times. This ratio only considers one month of consolidated EBITDA from Peru, which was acquired in December. If we were to consider the EBITDA for the last 12 months, it would be closer to 3.1 times, lower than the historical levels shown by the company. This financial position leaves us in a favorable condition to continue with our growth agenda and take advantage of the best opportunities that the market offers us without compromising the financial stability of the company.
Now, I turn the table to Fernando, who will share some strategic remarks from the quarter.
Thank you, Derek. 2024 was a remarkable year for Mallplaza, as we consolidate ourselves as a shopping center platform, being the gateway to the adversarial world for brands and investors seeking exposure to this market, as well as for those who want to expand their presence. In the same sense, growth is a fundamental part of Mallplaza's DNA, and we are focused on expanding both through organic pockets and through acquisition. In terms of M&A, and as Derek mentioned, we have successfully completed during December the acquisition of Falabella Peru. As a result, we started consolidating 15 assets in the country and increased our presence from three to nine cities. From now on, our strategy in Peru seeks to improve the value proposition and market share of our assets. Currently, 62% of the GLA of the former and Open Plaza Peru assets is dedicated to convenience.
We seek to transform these assets towards an experience-oriented model, balancing the commercial mix and promoting categories such as fashion and entertainment. This represents a key opportunity to increase the value proposition of our assets to our vision. Looking ahead to the coming years, we have an ambitious expansion plan in Peru consisting of brownfield projects that will add 100,000 sq m over the next four years. This growth will be focused on enhancing strategic assets such as Mallplaza Trujillo, our current Tier A event center in the country, Mallplaza Comas, Mallplaza Ñuñoa, Mallplaza Durango, and Mallplaza Roncador. We aim to transform some of these assets from convenience centers into experience-driven expansion, with the potential for center properties to reach Tier A standard within our portfolio.
Chile, in the same line, will be positively impacted in an organic growth plan consisting of 125,000 sq m of Tier A of growth employment in the next four years. At that level, we will be mainly focused on our Tier A assets in order to continue boosting the leadership position in their respective markets. This plan began to be delivered during the first quarter with the opening of new lifestyle space in Mallplaza, transforming this equipment center into the largest in Chile in terms of Tier A, with 190,000 sq m consolidating its leadership in the southeast area of Santiago. This new expansion of relevant brands such as H&M, with 3,200 sq m, Gap with its first store in the southeast sector of Santiago, as well as Casilleros, Ibais, and Lipi, among others, reinforcing the mixed fashion segment of our event center.
Thanks to the consolidation of its value proposition, during December, Mallplaza Expansión managed to increase the flow of visitors by 15% and sales by 14% year to year. During the first quarter of 2025, we expect to continue with the opening in this space, highlighting the largest seller store in the Southern Cone with 4,300 sq m, Adidas Original, Alfa, and the cooperation of a second supermarket in this urban center with a 5,700 sq m Santa Isabel store. We hope to continue executing our strategy to provide a differentiated value proposition in our Tier A assets, developing brownfield projects in Mallplaza Trébol, Mallplaza Oeste, Mallplaza Norte, Mallplaza Santa Antofagasta, and Mallplaza La Serena. In addition, we continue to execute our department store conversion plan, highlighting during the fourth quarter the opening of Puma in Mallplaza Tobalaba, completing the reconversion of the two stores previously occupied by Ariston.
The performance of this event center during the fourth quarter was in great shape, showing a 16% increase in sales per square meter and a 37% increase in revenue per square meter. Also, we continue with the full renovation of our commercial proposal in Plaza Alameda in order to continue with the reconversion strategy focused on improving the retail and service offering. In this sense, we continue with the reconversion of the spaces that used to host the department stores Falabella, Tobalaba, and Joy. During the quarter, we highlight the opening of Marketes, a 2.3 thousand square meter new convenience proposal in the second floor of what was previously a Falabella store. Just to mention some metrics that reflect the success of this renovation, during the fourth quarter, we saw a year-over-year increase of 4% in footfall, 11% increase in tenant sales, and 10% increase in revenue.
Just to finish, I want to mention the sustained interest of different brands to be in our shopping center. We conclude 2024 with 677 new openings, including the opening of five new H&M stores during the year, reaching 19 stores in our urban centers, in addition to several global brands that continue to choose our company to expand their business in the Andes region, such as Inditex, IKEA, Decathlon, Waikiki, Adidas, Puma, among others. Now, I will pass to Rodrigo for some final remarks.
Thank you, Fernando. Just to conclude, I want to highlight some of our omnichannel initiatives in order to improve our consumers' experience and attract digital flow to our urban centers. Our differentiated offer is also closely linked to digitalization as an enabler of visitor experience. In terms of click-and-collect, we continue to consolidate strategic alliances with relevant operators in the region, such as Mercado Libre, Starken, and Blue Express, adding this quarter for EOT Chile. In Colombia, we initiated an alliance with Mercado Libre and Coordinadora, an important logistics partner in this country. In terms of data, during this quarter, we reached over 10.7 million contactable clients, illustrating one of the benefits of being part of the Falabella ecosystem, which enables us to add value to our visit.
Lastly, in terms of parking, we continue to integrate our digital parking service, integrating this service with important apps such as Bank of Falabella and CoPay, adding during this quarter a new alliance with MACH. Thanks to this expansion, more than 750,000 customers per month enjoying 100% free-flow parking in Mallplaza, without friction or delays, in addition to reach a 27% penetration of digital parking in Chile. Finally, in terms of ESG, we continue to strengthen our stakeholders' appreciation of our brand. For the sixth consecutive year, we were listed in the Chile and MILA indices of the Dow Jones Sustainability Index. In addition, Mercos Empresas ranked as first in the real estate retail category and 30th overall as a company with the best corporate reputation. With this, we conclude the general remarks of the quarter, and we are now ready for questions, and we'll start the Q&A.
Thank you. We will now start the Q&A session. To ask a question on audio, click on Raise Hand. When your name is announced, a request to activate your microphone will appear. Please activate it to ask your question. To ask questions in written form, just cue your question on the Q&A button. Please be aware that your company name should be visible for a question to be taken. Wait while we pull four questions. Our first question comes from Chorel Guillotte from Gourmand Sex. Please, Mr. Guillotte, your microphone is open.
Thank you for taking my questions. I actually have two questions on line items that we saw on the income statement. The first one was on other revenues. We saw that this went from a CLP 8 billion run rate in the first three quarters in 2024, and it is now CLP 12 billion in Q4 2024, so an increase significantly. I was wondering if this is driven by the Falabella Peru acquisition or if there is any other item that is in there that we should be thinking about. The second question is about administrative expenses. Those increased materially year on year. They were 60% higher. Looking at the notes, there is a couple of reasons given, but two of them stood out, and I was just wondering if I could get some color on those.
One of the explanations was that it's associated with bad debt provisions due to a reversal of provisions made in 2023. It also says it's also to a lesser extent due to a higher impairment of the portfolio in 2024. If you can provide detail on those two items, it would be helpful. Thank you.
Great. Thank you, Jerrel. Thank you for your questions. First, starting off, when talking about the revenues, I think there are two main aspects here. First of them being the fact that we started consolidating the acquisition in December. When you look at the fourth quarter figures for the month of December, that already consolidates all the operation in Peru, be it what was Mallplaza Peru and Open Plaza. Aside from this, also when you look at the other countries, being Chile and Colombia, we also observed incremental revenues. For example, in Chile, our revenue grew 13.1% in the fourth quarter. For Colombia, there was a growth of 167%.
That also has a lot to do with the fact of the opening of Cali and also the reversal of a penalty for the delayed opening of its store in NQS, which happened the fourth quarter of 2023. Now, with regard to your second question in terms of the G&A, most of the when you look at the variation year on year, it was a 58.3% growth, of which approximately half of it has to do with provision for that bad debt. Now, on this provision, I think it's also important to highlight that in the fourth quarter of last year, there was a reversal of a provision on a real estate project that contributed for this number to be positive in the fourth quarter of last year.
If we were to look into the fourth quarter, the number and excluding Peru, which was not last year or was not in the third quarter, we would have seen a decrease in about 22% compared to what was the third quarter of 2024. Now, of course, this has a lot to do with the health of our retailers in general. For that metric, it makes for constantly monitoring the occupancy costs and what we're able to do with that regard. I think that the positive news here is that we've been seeing incremental footfall in our malls, which drives incremental sales. I mean, in footfall, if you look at, for example, in Chile, we grew 8%.
In Peru, on the same basis, considering pro forma for both this year, our fourth quarter of 2024 and fourth quarter of 2023, Mallplaza Peru and Open Plaza grew footfall by about 8.2%. In Colombia, 15.6% that also helped by the opening of Cali. Of course, these levels of footfall have helped sales increment and us being able to sustain controlled occupancy costs.
Just following up really quickly with the first question. On the other revenue, so the 50% increase quarter on quarter on that item, was that due to a fine, was it? Or I was not quite sure what drove the increase sequentially.
Yeah, that also has to do with parking, which has been ramping up in our assets as well. The fact of Peru, as I explained before.
All right. Thank you.
Next question comes from Marcelo Mota from JP Morgan. Please, Mr. Mota, your microphone is open.
Hi, good morning, everyone. Thanks for taking the questions. Two quick questions as well. The first one, since it has been just a month that you are recognizing the assets acquired from Falabella Peru, is there any clear point of synergy or low-hanging fruits that you have already noticed on the portfolio that we could expect to benefit results in 2025? The second question is more regarding the asset level. When we look at a monthly sales per square meter, we saw some weak figures in some malls like Mallplaza Tobalaba, Mallplaza Sur. In the case of Tobalaba, even with declining sales, rents per square meter or the revenue per square meter have a significant increase. Just wondering if here is something that is more painful or just to understand what should be the trend on those specific assets. Thank you.
Thank you, Monta. With regards to your first question in terms of Peru, I think it's relevant to mention what is our plan, our ultimate plan in Peru, which is, as we've announced previously to the market, we have a plan to expand our assets there in 100,000 sq m. This plan in Peru also will enable us to increase the number of tiered assets that we have in that market. I mean, currently, we have Trujillo, and we have plans to convert Comas and Ñuñoa and Durango and other tiered assets in that market. Also, in the earnings release, you can see how the tenant mix is structured right now in Peru.
Our goal and our focus is converting that mix, which today is highly dependent on convenience, to increase the fashion and entertainment proposal, as it is the case with the rest of our portfolio of Mallplaza. We believe that with this change, we'll also be able to generate additional revenue for those malls. As shown in the earnings release, I mean, these are malls that do still have a lower occupancy cost than what we observed in the other two countries. We think that there's an opportunity there for us to continue to grow and to extract value from this acquisition. Now, as to your second question, in terms of sales data, there's some, and I guess you mentioned two assets in Chile, being, for example, Sur and Tobalaba.
In the case of Sur, it has more to do with specific entertainment and big box, which had presented there a bigger impact. In the case of Tobalaba, also a drop in sales in big box and mixed use. This is something that was more specific. I mean, these are assets that we've been working significantly on the reconversion. We expect these metrics to improve going forward. I just also want to highlight here on the reconversions that we did and call your attention to what we disclosed in the earnings release of what we did in Alameda, which was a significant reconversion. There is a case study that we detailed in the earnings release as well of all the value that was generated from this reconversion. As you well know, this is part of our ongoing strategy.
With this specific case of Alameda, we were able to increase footfall for that mall in 12% year- over- year, overall sales in 11%, and revenue in 10% for that mall year- over- year.
Perfect. Super clear there. Thank you very much.
Our next question comes from Felipe Pachevona from Centenario. Please, Mr. Pachevona, your microphone is open.
Thanks for the call. I would just like to have some color in property taxes. Thank you.
Felipe, thank you for your question. I guess in general, when speaking about the effective tax rate of the company, bear in mind that we now do consolidate Peru. This brings in an effect into the effective tax rate. The effect for Peru was the consolidation in December. On top of this, there is also an effect in the fourth quarter of 2023, which was in the recognition of a deferred tax asset in the resulting tax losses line that you can see in note 13 of the financial statements. That was an effect specific in particular to the fourth quarter of 2023. These are the main issues on tax. I'm not sure if there is any specific other question that you would have.
Yeah, actually, that was really good color. How about property taxes?
Oh, thank you. Sorry, I did not get the property part of your question. On property taxes in general, we have been working with advisors as well. I mean, as we have mentioned in previous calls, there have been precedents by other companies in the sector as well who have successfully been able to recover part of the charges that were made. We are following in the same manner. We do expect to have some positive outcome in the coming quarters with regards to property taxes in general.
That's very helpful. Thanks, Derek.
Once again, if you wish to ask a question in audio, use the raising button. If you want to ask a written question, use the Q&A button. Wait while we pull for questions. Our next question comes from Guillermo Edwards from LarrainVial. Please, Mr. Edwards, your microphone is open.
Hi, many thanks. Regarding the temporary closure of Mallplaza Bayavista, is there any material risk involved? Could you give us some context on this situation? Thanks.
Guillermo, thank you for your question. As of right now, yes, we do have the recently announced closure of Mallplaza Bayavista and Manquehue, both of which are in Peru. We are working closely with the authorities for the malls to be able to operate normally as soon as possible.
Okay, perfect. Thanks.
Once again, if you wish to ask a question, use the raising button. Or for written questions, type it down on the Q&A field. Wait while we pull for questions. Our next question comes from Joel Letterman from Itaú BBA. Please, Mr. Letterman, your microphone is open. Mr. Joel, activate your microphone, and you can ask your question. Mr. Joel, seems that you have some issue with your audio. We'll ask you to reconnect to the conference and rejoin the queue. Once again, if you wish to ask a question, use the raising button or type it down on the Q&A field. Wait while we pull for questions. This does conclude the Q&A section. At this time, I'd like to turn the floor back to Derek for any closing remarks. Sorry, we'll reopen the Q&A. Our next question comes from Carolina Zelaya from Bci. Please, Mr.
Zelaya, your microphone is open.
Hey, hi everyone. Welcome. For your results, could you give us some color for January and February, and not only in terms of the consumer behavior, also if you can add some comments related with the tenant and what happened during the last quarter related with the provisions? If that trend continued during the last month.
Hi, Carolina. Thank you for your question. Now, we do not typically comment much on how the current quarter is progressing, but I think if you see how we ended the year in terms of also, I mean, the year 2024 was a significant year in terms of contracts that we signed. We signed 677 contracts, and that is typically a good read-through of sort of what is the retailers' confidence as well and their appetite to sign in new contracts. Also, on top of this, I mean, if you look at the overall occupancy levels, we have been able to increase occupancy in Chile and also in Peru. In Colombia, even though the overall headline number decreased by 0.3%, that has to do because of the basic comparison, right, because we added Cali. I mean, in general, there has been a lot of demand and appetite for GLA.
This helps towards this environment of us being able to sign new contracts. If you look at the overall footfall and sales trajectory, that came off strong, as mentioned earlier, in the fourth quarter. In general, I mean, we sort of expect this behavior to continue, I mean, in terms of the operational figures that we noticed for the recent months.
Excellent. Thank you.
Now, this concludes the Q&A section. At this time, I would like to turn the floor back to Derek for any closing remarks. Please, Mr. Derek, the floor is yours.
Thank you all very much for connecting to this fourth quarter earnings call for Mallplaza. As shown, I mean, in the quarter, and just want to reinforce here the focus that the company has in terms of growth. I mean, this was a quarter in which even when you exclude the acquisition that we did in Peru, net revenue grew at 21.2%. They grew at 22.4%. Going forward, as part of our strategy, as we've mentioned earlier, we do have a focus to continue to expand. We do have a focus to continue to expand our malls. We have an expansion plan of 125,000 sq m in Chile, 100,000 sq m in Peru. As we've mentioned also and added in this earnings release, our land bank consists of about 627,000 sq m in both Chile and Peru, which allows us to continue to expand.
As an example of what we did recently with Mallplaza Expansión, which with north of 190,000 sq m became the largest mall in Chile with its lifestyle. From a balance sheet perspective, we ended the quarter at 3.8 times. If you look at the last 12 months' figures for Peru, and consider that, that's 3.1 times. That gives a sample room to continue to see growth opportunities going forward, be it on the M&A side or be it for other brownfield opportunities. I think also important to highlight here that Peru was an acquisition that we concluded in December. We consolidated the month of December and not the full quarter. Now we're going to have a full year of Peru, which should help towards growth as well.
It is relevant to have an assessment of what will be the full year sort of effect into Peru. Having said all this, I would like to thank you all once again for connecting on the call. Any other questions that you might have, please feel free to reach out to our investor relations team. Thank you.
Thank you. This does conclude today's presentation. You may now disconnect and have a wonderful day.