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Good afternoon, and welcome to Fibra UNO's First Quarter 2023 Results Conference Call. We are joined by Mr. Andre El-Mann, Mr. Gonzalo Robina, Mr. Fernando Alvarez Toca and Mr. Jorge Pigeon. I will now hand over to Mr. El-Mann to begin the presentation.
Thank you, Tim. Thank you, everybody, for your interest in our quarterly call. We are here to provide a slide on the results of first quarter 2023. Before I pass the mic to Jorge to go in depth on the numbers, I just would like to comment on the excitement that we have all across the company about the results on this quarter. We have been recording very solid numbers on income and NOI lines. Of course, we are aware that the FFO line has been affected by the interest rates.
But we have been seeing in perspective the company after the pandemic. We have been overcoming all difficulties. We are in a very good shape right now, and we have been absorbing the steep interest rate hikes that we have been seeing in our market. In the last 15 months, where the base rate went from 4% to 11.5% currently. And we have been absorbing that blow in our numbers. We have been distributing. We recorded record FFO and yield distributed last year. And we have been seeing our company performing extremely well, recovering from the pandemic. Remember that 2022 last year, was the first year after the pandemic, and we recorded record numbers last year.
Today, again, we recorded record numbers for one quarter. It was, for us, a milestone, recording more than MXN 5 billion in income for this very quarter. And this comes due to an improvement in the occupancy after the pandemic and also improvement in all operating costs and operating service for the company. We have been really, really very active trying to contain the increases in the costs and we have been achieving a lot of success in that front. We have not reached yet our level of occupancy, pre-pandemic occupancy as well in the retail sector, we were recording 93% occupancy level pre-pandemic. And today, we are sitting almost on 91%. So we are still yet to get to the pre-pandemic levels. And we feel very comfortable that we will reach that level in the coming months.
In the Office segment that many of our counterparts are worried about, we are not that worried. We are yet not yet reached pre-pandemic levels. Pre-pandemic, we were sitting at 83% occupancy level and today, we recorded close to 79%. So we feel very comfortable that we also, in the Office sector where we will capture and get to the pre-pandemic levels in the coming months. In terms of income per sector, we are also very excited about the results. Of course, as you know, Industrial sector is still very costly, still very active, and we feel very comfortable with close to 40% of our company income coming from Industrial sector.
We feel comfortable about that. We feel comfortable on our level of debt of rent rate. Remember that we want always to be in a comfortable level for our tenants. We usually are just below the market. We feel comfortable about that. And this comes for the service of our tenants, we want our tenant to feel comfortable that they will receive very competitive level of rent, aside of being receiving the best location possible.
If we continue with that policy, I am sure that we will surpass our pre-pandemic levels, and we will continue to be delivering very good results. I am sure that the numbers are improving, and we will improve even further and continue to deliver the results to our investors. And also, we feel that we have reached peak levels on interest. We don't think that it will go much further, and we have been absorbing all the [ glow ]. I think that from now on, all the improvements that we will continue to receive due to occupancy and stabilization of the properties that we just add to our incoming portfolios and increases on the rent will help us deliver the solid results we have been delivering in the last 6 quarters.
So with no further ado, I would like to pass the mic to Jorge Pigeon to give us a sense on the numbers Jorge, please?
Thank you very much, Andre. Thanks, everybody, for joining our quarterly call. Indeed we are very happy and very excited about the very solid, very strong operating and financial results that we are posting this quarter and the milestone that we reached of breaking the MXN 5 billion mark for 1 quarter of net operating income, I think, is a very remarkable for our company, very pleased with that.
So going into the quarter the MD&A, I'll start, as usual, with our P&L and then move on to the balance sheet and operating metrics. In terms of the P&L, starting with the revenue line, we increased MXN 146 million to MXN 6.377 billion for income of the quarter, 2.3% above the fourth quarter of 2022. This is a little over 9% growth for the revenue line on an annualized basis. And if we compare that to where inflation is today, which is around 6.5-ish, we basically have, if you look at it this way, 50% growth on top of inflation. So very happy and very solid income line that we are recording as a company. Where this is coming from. As Andre was mentioning, it comes from an increase in consolidated occupied gross leasable area of 10 basis points, which is a combination of increases primarily in the office and retail sector.
Rent increases resulting from the inflation pass-through in our active contracts. Rent increases in renewal of contracts of payments, leasing spreads. We had very solid positive leasing spreads in peso terms. And also solid in dollar terms, and we'll talk a little bit about those in a second. The initial contribution of some projects under development, in particular here, obviously, the highlight of the new projects that are coming online is the development of Mitikah which is one of the crown jewels of Fibra UNO and it's with great pride that we are happy to see that, that development has been a success that has gone above and beyond our initial expectations.
And we have in there a world-class mixed-use property, and we're very happy with the great success that this has been doing. All of this positive effect was offset by the peso dollar exchange rate appreciation, which obviously had a negative effect on the U.S. dollar-denominated rents, particularly in the industrial and office segments, and we'll touch a little bit on those in a second. Going into the details of the occupancy the operating portfolio reached 93.8%. So we're getting close to the historical average target of where we want to be in terms of occupancy for the company.
If you recall, we've always been very vocal about being plus/minus 1%, around 95% for the company as a whole, knowing that this is a cyclical business and there's a different time cycle for office, retail and industrial. Today's turn is -- industrial is the market that is the darling of the real estate sector. Office is not so much today, but 15 years, 20 years ago, industrial was not the darling of the market and office was doing well. So we like the diversification as part of the core strategy of Fibra UNO.
And again, we're very happy that we're getting close to that 94% mark, 93.8%. Industrial portfolio decreased 10 basis points. Basically, it's part of the normal process of contract leasing and renewal just when the quarter cuts we ended up with this number, but it is a market that, as you know, is extremely hot in Mexico as a whole. And obviously, our portfolio is great part of that -- of what's happening in the market. The retail portfolio reached 90.3% occupancy, 30 basis points above the previous quarter.
The office portfolio almost reaching 78% and well on its way to what we expect to be somewhere probably around 80% towards the end of this year. If you recall, we have been very vocal about the expectation that the office was going to recover in occupancy in the period of 18, maybe 24 months, depends on how absorption is looking. It's looking positive for us. As you've seen, we've seen a couple of quarters with increase in occupancy in the office sector.
And we spent about 3 or 4 quarters with stable occupancy of 75%. So we feel that the worst part of the cycle is now behind us, and we are in recovery mode first in occupation. We don't expect to see increases in rents as of yet. I think we still need to see the market overall gain occupancy significantly higher from where it is today. So in order for us to start seeing upward pressure in rents in the office sector, but that eventually will happen.
So we're comfortable with where we're sitting today and with the directionality of the trends that we're seeing exactly as we expected, and I have commented with you in prior quarterly calls. The other sector, 99.1% occupancy basically stable as well as the in-service property also stable. In terms of operating expenses, property taxes and insurance, this has been a strong area of focus and obviously, a big challenge for us to rein in the inflationary pressures that obviously, as you can imagine, go above and beyond what Banco de Mexico publishes as an inflation.
We saw this total operating expenses decreased by $92.6 million or 11.5% from the fourth quarter of '22, mainly due to the seasonality of some expenses. And as I mentioned, obviously, there is inflationary pressures to deal with. Property taxes increased by 16.7% or 9.4% compared to the previous quarter, mainly due to the update [ universe of ] municipality of the property tax rates at the beginning of the year as well as some inflation pressures and insurance expenses close at $96.5 million, basically remaining stable compared to the prior quarter.
This results in a net operating income increasing MXN 128.1 million or 2.6% and again, significantly above the inflation if we compare this 2.6% and on an annualized basis is almost 50% above the current level of inflation, and we are breaking the MXN 5 billion mark which is something that we're very pleased about. NOI margin calculated over rental revenues, 86.5% and 78.4% compared to total revenue. So there's been a little bit of margin pressure which we think is normal. And I think we've done a solid job in reining in expense inflation to contain that and maintain our margins close to where they are today. In terms of interest expense and interest income, we have an increase of MXN 134.4 million, almost 6% compared to the fourth quarter of '22. This is no surprise.
It's mainly due to the interest in the variable debt base rate, which -- as Andre mentioned in initial comments, we've seen 7.5% or 750 basis points increase in the base rate for our variable debt. So we've been able to swallow a lot of that increase without affecting FFO in prior quarters. This increase was offset by exchange rate appreciation of the peso from 19.4% at the beginning of the quarter to 18.10% at the end of the quarter. And also offset by capitalization of interest expenses of MXN 439 million. As a result of the above, FFO, [ continuing ] operation controlled by FUNO decreased only by MXN 29 million or 1.3%, reaching MXN 2.2 billion.
Adjusted FFO remains stable with FFO. It's a decrease of MXN 627 million, 22%. This is obviously due to the fact that we did not close on the sale of any properties during this quarter. So AFFO and FFO are basically the same MXN 2.2 billion. On a per CBFI basis, we also didn't see any movement on the CBFI count, either repurchases or issuance of new CBFIs. So we have a stable number of 3,779 million CBFIs outstanding. The FFO per average CBFI MXN 0.5874. In both cases, a 1.3% increase and a 22% decrease, obviously, in the FFO as I mentioned, resulting from the lack of sales during this quarter.
In terms of the distribution, we paid out of the MXN 2.2 billion, MXN 1.4 billion, resulting in MXN 0.3891 per CBFI. We were required to pay some taxes based on the net taxable income result of 2022. To the tune of MXN 441 million. However, since we made some of that -- those payments on behalf of the CBFI holders of whom will be effective tax rate that should be deducted for this quarter for CBFI holders instead of the normal 30% given that 100% of the distribution will be from taxable income is only 18.99%.
Now moving to the balance sheet. Accounts receivable remained basically stable and a very minor increase of MXN 19.8 million or 0.7% from the previous quarter, basically normal business operations. In terms of investment property, the value of our properties, including financial assets, as you recall, in particular, the Memorial portfolio, we had to reclassify as a financial asset given the nature the contract for that acquisition. All of this increased by MXN 2.6 billion or 0.8%. So we're not even increasing inflation in the value of our properties.
A fair value adjustment, as you know, is something that is done once a year by a third party, and we are calculating this as an estimation done by ourselves during the year. It includes this. It includes [ no more ] progress in construction projects under development. We have still some investment to do in [ Galeria by Arena. ] We continue to invest in some TIs and things of that nature in Mitikah. We continue to invest in the development of Portal Norte. So there's still some ongoing CapEx in the operating portfolio as well as CapEx in the operating portfolio, which there's a lot of things that we end up doing that adds to that CapEx line.
In terms of total debt, we saw the quarter closed with MXN 134.6 billion compared to MXN 140 million because of the previous quarter. The variation is mainly due to the prepayment of the FUNO-18 bond for MXN 5.4 billion. The prepayment of bilateral lines of credit for MXN 1.6 billion. We issued MXN 6.7 billion of sustainability-linked bonds on a 7-year and 4-year, 7-year [indiscernible] and 4-year floating rate basis.
Earlier this quarter, very successful placement and we extended the maturity of that. And with that, we reduced significantly the amount of refinancing that we have pending for this year. Also, exchange rate variations of the peso moving from MXN 19.4 to MXN 18.1 resulted in a lower number. As of the close of the first quarter of 2023. We still have outstanding receivable for the $205 million of sales of properties that we announced in the fourth quarter 2022. There was some delays with authorities giving the permits for the transaction to go through.
We have surpassed that and we expect that transaction to close and receive the proceeds from the sale during the second quarter of '22 and the proceeds of those asset sales will be directed to repaying existing debt. We have some alternatives as to what debt to repay, but we'll go to repay debt. And we also have a pipeline a bit further down in our result line a little over MXN 5 billion that we expect to use also to repay down debt.
We can see -- you can see Page 40 for the specific details on the pipeline. In terms of total equity, we saw an increase of MXN 2.8 billion, 1.5%. Including controlling and noncontrolling interest. This is basically a combination of net income generated from the quarterly results, [ derivative ] valuation, the shareholder distribution and the employee compensation plan provision.
Moving to the operating results, the leasing spreads, as I was mentioning earlier, we are very pleased to see a very healthy 1,560 basis points peso leasing spread in industrial, 15% basically. 9% in retail. So very, very, very solid.
Let me stress that very solid performance, not just in the industrial sector that we all know is hot, but also on the retail segment. And even we saw an increase of 110 basis points in the office segment. Obviously, if you compare that to inflation, it becomes a negative leasing spread, but being able to increase the rent in office when you have occupancy of 77% by -- even 1% is a very solid result. So we're very pleased with the leasing spreads we were seeing.
For dollar leases, 600 basis points, retail 510 million and the industrial sector, 310 basis points for office. In terms of constant property performance, we saw an increase of 4.2% compared to the previous year. It's a decrease of 3.5%, mainly due to the FX appreciation almost 10% in the quarter. And there's obviously, as you know, a natural lag in the recognition of inflation. Moving to the subsegment level.
Total portfolio and rent per square meter moved from $11.5 per square foot to $11.6, 0.8% increase, mainly due to increase in both current contracts and renewals, which was again offset by the FX appreciation given that we report in pesos in this case, the appreciation of the currency has a negative effect on our income and net operating income. This resulted, for example, in a decrease of 1% in logistics in peso terms, a decrease of almost 6% in light manufacturing, which, as you know, is much more heavily weighted towards dollar contracts.
However, considering that the appreciation of the currency was almost 10% only having a 5.9% decrease we see as a very successful and positive number. Office decreased by 2.9%, again, mainly due to the FX appreciation. The retail segment standalone increased 1.4%, regional centers, 4% and obviously, you see a very significant increase in fashion malls of almost 30%, 28.2%, which is largely driven by the inclusion of Mitikah in that segment. Standalone and the increase in standalone segment was due to [indiscernible] property taxes for the first quarter of 2023. The other segment decreased 14.9%. This is a seasonal effect. It's a sector that is highly dependent on variable income.
As you know, hotels are included in this segment, and we just passed one of the high points of the season, which is the year-end vacation time. So normal to see that type of performance. And with that, I conclude the presentation of numbers. Tim we can open the floor to Q&A, please.
[Operator Instructions] So our first question comes from Carlos Peyrelongue at Bank of America.
Two questions, if I may. The first one, I believe you mentioned something on your expectation for occupancy in the office portfolio by year-end. I was not able to get that. If you could repeat that would be helpful. And if you could make any comments as to how you're seeing the Mexico market on the office side in terms of absorption. And the second question is related to your leverage, if you could comment, what is the total amount of debt that is due this year and the breakdown between fixed and variable? And on that same note, if you can comment on any plans to reduce your debt, in particular, if you could provide any estimates of a range of potential asset sales for this year?
Sure, Carlos. Yes. I'll try to remember all of the questions. If I miss one, please remind me. Starting from the last -- to the first, we have a pipeline of pending properties to sell of about MXN 5.6 billion, roughly. It's on Page 20 of the supplement, we expect to close those sales this year, and that money will go directly to repay down debt.
In addition to $205 million. So I'm going to round numbers, it's about MXN 9.5 billion of proceeds that will be directed to repaying debt. So being that deleveraging of roughly MXN 9.5 billion for this year. We expect to collect on the $205 million in the next month or so. And the remainder is something that we have a good feeling of execution and the ability to close the remaining part of this year. In terms of maturities for the year, we have roughly left about MXN 16 billion, including bilateral lines of credit. The 2 non-bilateral lines of credit marks that we have is the peso bond that matures in December that we can prepay as of June of this year.
As of today, we still cannot prepay that bond. And then there's also a credit associated with our headquarters. Part of the acquisition of the property came with that credit and some derivatives, and that is outstanding and matures this year. So basically about MXN 16 billion left for this year. The peso bond and the credit on our headquarters are fixed rate. The rest, obviously, by later lines of credit is floating.
We're still yet to decide in terms of what is the most effective use of our money, but clearly not rocket science that if we pay down variable rate debt, it's a very high direct impact to the bottom line. And obviously, that has been the priority. In terms of the office market, occupancy more or less 80% is where we expect to end the year. We'll see how things continue to develop. And in terms of absorption, Gonzalo you can help me with commenting a little bit more on that.
Yes. Absolutely. Thank you, Carlos. As we have been really active on the office market. What we are seeing is that if you may recall that all the construction in Mexico City was stopped once the city mayor took place at the end of 2018. That means that since then, really there has not been new inventory into the market. So any demand that we are seeing in the market is absorbing existing buildings.
And we are seeing that. I think that all the model that the offices have been the suffering since the pandemia has stopped and everyone is taking new spaces or their definitive area that they will be using in the future. So as the formation, the only thing that we see from now on is that the office market will be improving in terms of occupancy. There is a lag on -- in terms of price per square meter, probably that we will be struggling that for the next 18 months. As soon as we don't get around 83% occupancy in the market, 85% occupancy in the market, we will be seeing that gap in the market. We will be seeing the same prices per square meter in the next 18 months.
Next question. Do we have more questions?
Yes. Apologies for the delay. So our next question comes from Pablo Monsivais at Barclays.
Just probably the same question that I've been asking for quarter after quarter. But just wanted to understand what are your growth plans? I mean new shoring is impacting the industrial market? And you guys have shown that you can actually capture an opportunities on markets in the past. What should we expect for you to keep growing because development pipeline is not large. The M&A pipeline, it is not also relevant as well. So what do you have in mind to capture these opportunities?
Well, given that the situation that we're in Pablo and this is obviously no news. We are trading at a level that issuing new equity is something that would be very highly dilutive.
So we have not been able to tap the equity markets since our last issuance in 2017. We are at a leverage level that with the liability management activities we have, we feel comfortable with. And obviously, going forward, given that the company has this inflation indexation in our contract is going to generate more cash, and it will naturally continue to delever over time. But this is a capital-intensive business. I mean, in order for us to be able to capture substantial growth opportunities, we need new capital.
It's no -- I'm not saying anything that should be a surprise. Asset recycling is something that we can do on the margin. But in order for us to really be able to grow, we would need a substantial amount of capital. What we do have as a company, and I think this is something that is extremely valuable is that we have a right of first review so that the founders of Fibra UNO have granted Fibra UNO on all of their properties that is suitable for Fibra UNO and in this regard, the largest owner and developer of industrial real estate in Mexico is our sponsor by a wide margin.
This was published recently. I don't remember if it was [ Colliers ] [indiscernible] came up with a report showing the different developments and the size of developments that the different parties are carrying and the potential that our sponsor has could be extremely significant.
That is sitting on our sponsor's table. They have been investing in that portfolio. Ideally, it's their wish since the IPO, and it would be our wish as a company as well to be able to do that inside of Fibra UNO. We need to be able to figure out a way of how to tap that growth. The good thing is that no one else can tap it because no one else has that right of first refusal. Only Fibra UNO. So it's something that is there for us to capture, but we need new capital. We need to find a way to access new capital.
So our next question comes from Adrian Huerta from JPMorgan.
Most of my questions were answered. So I think I just have one which is are there anything else in your portfolio that you would probably like to dispose? So basically, when we think about further asset sales on top of what is planned already for this year.
Yes. We have been receiving all solicited offers for some of the assets. The ones that are disclosed you already know them. But on top of that, we still have some offers, for example, in the industrial sector. But obviously, we are thinking twice or getting rid of the industrial at this stage. But yes, definitely we are still seeing some unsolicited offers. We have office buildings. Two of them that will be reconverted for a third party, another one that will be converted into a hospital. So there's some action going on there. We are seeing also a request of retail in mainly in the [ Jalisco ] state.
So yes, definitely, we are still seeing and receiving a lot of unsolicited offers for some of our assets. We will be selling non-core assets only.
Just to complement what Gonzalo is saying, it's becoming a common practice for a company to recycle some of our assets, and you will be seeing during the next quarters always being active in recycling noncore assets.
Good to hear that, Andre, I think it's also a good strategy and things to do as well. Difficult trade-off on the industrial side.
Our next question comes from Juan Ponce at Bradesco.
It's similar to the leverage and growth question. What level of loan to assets would you feel more comfortable to begin putting in new developments?
Level of what, sorry?
Loan to assets.
Okay. What level we couldn't get no one of that in the room...
No problem. Loan to assets.
Loan to assets, okay. I think that the company strategy strategically would be comfortable in the 35% to 40% loan-to-value range. Obviously, the closer we are to 35% closer on a stabilized portfolio, the closer we are to being below between, let's say, 4.75 and 5x net debt-to-EBITDA, which is something that rating agencies are looking at, and that will be sort of a very comfortable sum for us to be working with.
So our next question comes from Andre Mazini at Citi.
Yes, sure. So also on the asset recycling program, who do you think are the main buyers in this environment of higher interest rates? Would it be a [ Fotis ], pension funds, other pension funds, PE funds, strategics? And it seems that the asset type you want to sell the most in the short term is retail rights as per the Page 20 in the supplemental. And in addition to that, when do you think the lifetime -- the cycle of a property is complete so that it's up for sale? So when does it become noncore, right?
Is it by age or when the rents are at or above market? And I know you guys like to have rents a little bit below market. Any metrics you can provide for when the property becomes on core and then you want to sell it?
Actually, the type of buyer that we are seeing, for example, for the industrial portfolio that we sold at the end of the year, that was an institutional fund that bought it with pension funds money with a [indiscernible] money. And what we have in the pipeline are mainly final users that will be used in the asset for themselves or wealthy family money that are buying assets that is producing a nice level of income. And looking for the long run an estate asset for them, not really trying to get the leverage at top and try to be accretive with the leverage or whatever. It's mainly family owned estate for a long time. Which was the second one?
What is a non-definition of what a noncore asset is.
When do assets become noncore?
It's not a matter of age. And I always put this sample. A building like Torre Mayor, no matter the age will be an iconic asset as the Empire State has been for 100 years in New York. It's not a matter of age. It's a matter of market circumstances, probably their location, probably that won't be improving that much due to its location. It's not a book definition of how does it come noncore. It's just a matter of different factors that makes them like noncore for us.
Our next question comes from Jorel Guilloty at Goldman Sachs.
So I wanted to focus on 2 things. One, on NOI margins over rental revenue and on distribution. So looking at your NOI margin was 86.5% is flat sequentially, but it's 200 basis points down year-on-year. And I was just wondering if you can provide us some color on how we should think about that dynamic if it's -- if it's somewhat is due to perhaps cost inflation or something else?
And what should we expect going forward for that specific metric? And then on distribution, I was just wondering if you could give us an update on how you're thinking about distribution. There's a lot of factors including FX and inflation and what have you. And then I just wanted to see if there's any updated views on how you're thinking about payout ratios through the end of the year.
In terms of the margins, obviously, it's been a struggle and a key focus of the team to rein in or control expenses because obviously, the inflation that you see published by Banco de Mexico is not necessarily the inflation that our suppliers want to reflect in their services and goods that they sell to us. So the decrease of 200 basis points in the margin comes primarily due to inflationary pressures that go beyond the inflation that is published by Banco de Mexico and the businesses struggle to contain that.
And obviously, to the extent that we see inflation normalize closer to more stable levels of [ 4% ] or something like that, you will see that we will be able to have an even better management of our expenses, and we should be able to return to those 78% more or less margin. So it is due primarily to inflation.
No doubt about that. In terms of distribution, I think we have to be very careful because of the combination of arrivals that we saw during 2022 is something that was completely unexpected. I think even by the people who wrote the law did not expect ever to see a scenario where you have monetary position gain and an FX gain at the same time, normally those 2 end up offsetting each other because when you have a depreciation of the currency, you have high inflation, but it's difficult to have high inflation and an appreciation of the currency, which we continue to see this year.
In addition to that, there is the element of interest rates. We feel we are and if I go with the comments of the government of the Mexican Central Bank yesterday, we are at peak rates in Mexico, which means that we start -- we should start with rates going down at some point in the not-too-distant future and obviously, that's going to feed through to the FFO, and that's going to be an improvement for us. And if rates are going down is because inflation is going down, and it's because the monetary position gain is going to be smaller.
The big wild card that we are facing is the FX. Every research report I read from experts is quoting the FX at 19.50 by year-end. If indeed ends at 19.50, then we would have no FX gain for the year, basically, would be flat with where the FX began the year. But we have to be very careful with the distribution. One thing I do anticipate is that it is very likely that distributions this year will be net taxable income, whatever money we distribute this year will come from net taxable income. There will be no return of capital this year.
In terms of how we manage distribution, we usually like to keep some cash in our hands. So not necessarily paying out 100% of FFO every quarter, also dependent on what happens with asset sales. And by year-end, you should expect us to pay obviously, 100% of the 95% net taxable income result, whatever that number is. Unfortunately, I wish I would be able to tell you with a crystal ball where that number is going to be, but we can't do that. What we're very comfortable with is the expectation where we are heading in terms of the NOI.
The revenue growth is going to beat inflation this year. We're very positive on that. [indiscernible] behaves is going to be largely dependent on the deleveraging and the level of interest rates. And the final payout, obviously, we had to measure how inflation and the FX behave in combination during the year, and those 2 are the most critical driving factors. As of where we are sitting today, it looks like we're going to have to distribute something similar to what happened last year, which is more than what we generated. It is best it remains where it is. If it depreciates, then we'll have a different scenario.
Okay. I think we're going to take one more question. So the final question comes from Anton Mortenkotter at GBM.
Congrats on the good economics of the quarter. Quick follow up on Joe's question. Getting a bit more into detail. I'm sorry if it's a bit repetitive, but just wanted to confirm that the distribution announced for this quarter corresponds to 100% of what you calculate your fiscal result was during the quarter? Or if you are taking a different strategy and will distribute below that amount and is needed to catch up later in the year or not depending on the rate of inflation. As you mentioned, I know it's impossible to know without a crystal ball, but just wanted to be understand how you are approaching this?
Well, it's -- let me respond it differently. The distribution corresponds 100% to net taxable income. So whatever money you receive $0.30, $0.20 whatever is going to be net taxable income. That is one message. The second message is that our legal requirement is to distribute 95% of the net taxable income once a year, and that obligation is due by March 15, 2024. So by March 15, 2024, we have to distribute 95% of the net taxable income of the fiscal year 2023.
Since we're not going to know that number until the end of the year, everything we are doing right now is an estimation or an approximation that we are trying to do with the numbers that we have today. If things change, then obviously, the numbers change. But the money received is 100% net taxable income. But the calculation of the net taxable income is only done at the end of the year. It's not a quarterly calculation.
Thank you. We'll close the Q&A there, and I will hand back to Andre for closing remarks.
Thank you, Tim. Thank you, everybody, for your interest in our results of the first quarter of 2023, and we'll be happy to hear from you and for you to hear us in the 2 quarter -- second quarter results next quarter. Thank you very much.
That concludes the call for today. Thank you, and have a nice day.