Allos SA
BOVESPA:ALOS3
Earnings Call Analysis
Q4-2023 Analysis
Allos SA
The merger that led to the creation of Allos marked a significant development in the Brazilian shopping mall industry. Overcoming the challenges of integration, the new entity ended 2023 on a positive note, with the team at Allos effectively avoiding any disruptions in business operations. The synergy capture process has already yielded BRL 80 million in efficiencies, signaling that Allos is well on its way to achieving its target of BRL 210 million. The company shows strong capital allocation skills, with numerous transactions and a considerable investment in its stock buyback program amounting to 4% of the company's capital. In keeping with its commitment to shareholder returns, Allos distributed BRL 293 million in dividends in 2023 and plans to pay out 50% of its funds from operations (FFO) in dividends for 2024.
Allos takes pride in its operational efficiency, achieving a remarkable 96% occupancy rate after signing over 1,000 new contracts in 2023. The company's strategic approach to rent and space optimization has led to an impressive expansion with notable brands such as Sephora and Adidas joining its malls, enhancing consumer experience and contributing to the financial health of the organization. Its focus on adding value and improving services has resulted in strong same-store sales (SSR) and total sales, culminating in considerable yearly growth in revenues and net income. A commendable delinquency rate of -1.7% portrays a dramatic improvement in payment attitudes, suggesting the stability of Allos’ tenant base.
The company showed robust financial growth with a 16% increase in debt, which aligns with its forward-looking investments. Allos recognizes the importance of driving traffic and engagement at its malls, as evidenced by the effective utilization of digital media through its partnership with Helloo. Encouraging media visibility and innovative loyalty programs have bolstered customer attraction, with a total of 2 million individual users benefiting from the company’s offerings by the end of 2023. Allos has expressed a deep commitment to social programs, underpinning its sustainable values and community-focused initiatives such as social inclusion through sports and education. For 2024, the company forecasts an EBITDA of up to BRL 2.05 billion and aims to maintain its leverage ratio while managing capital expenditures of BRL 450 million to BRL 550 million.
In the Q&A session of the call, executives tackled critical investor questions with transparency. They outlined the strategy behind same-store rent outpacing same-store sales, emphasizing the shift towards higher-margin tenants and diversified revenue streams, which include parking fees and media revenue from Helloo. The proactive approach to contract renewals and vacancy management is part of Allos' strategy to capitalize on synergies, aiming for 80% realization by the end of the third year. Expectations for cash generation and dividends were reaffirmed, with a disciplined approach to mergers and acquisitions and investor returns through continued stock buyback programs. In terms of portfolio management, Allos will continue to actively optimize its mall portfolio, targeting dominant and relevant properties that align with its strategic objectives.
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Good afternoon. Welcome to the earnings call for Allos [indiscernible] Fourth quarter 2023. We have Rafael Sales, President, Leandro Lopes, VP -- Business VP; and Daniella Guanabara, Financial Director; and also Investor Relations Director. We inform you that we're recording this call, and everyone will be able to listen to the conference throughout the presentation, afterwards we're going to have a Q&A session just for analysts and investors, and we will give you further instructions. [Operator Instructions] This is going to also be available right after for 1 week. We inform you that you may send questions through the Zoom app. So if you're connected on the webcast, your question has to be sent to the RI team, ri@allos.co. Before we begin, we just wanted to make it clear that any declarations anything that is said through -- during this conference about projections, results and any other metrics and objectives are premises of the directors of the company and any other information that is also available nowadays currently. Any guarantees are not a guarantee for performance. There are other risks because we're talking about future events. So it depends on circumstances that may or may not happen. Investors must understand that any economic conditions, industry conditions and other operational factors might affect the development or the performance of the company and the results may differ from these considerations. We will turn it over to Mr. Rafael Sales now. Mr. Sales, you have the floor.
Hello, good afternoon. Thank you all so much for being here today. Well, last quarter was the creation of Allos. 2023 was the creation of Allos, and we have over 50 years of experience in the shopping mall industry. Even though we had so many challenges with the integration, we got to the end of 2023, and very satisfied with the results that were reached. But all the planning and all the clear vision that we had after 100 days, we were able to talk about the results, we were able to promote the integration, we were able to have practices and processes focused on operations and continuity of the business. We are just beginning our journey to create more value on this platform, which 1 year ago did not exist in Brazil, in the Brazilian market. So in this journey, we started to disseminate our culture and our values. And we've had very positive values for the team and for the market. We have also talked about our strategic pillars, they have to do with our main goals, and this is how we're going to continue to work with the company. I am very satisfied with the work of the team at Allos. They have been working nonstop. We didn't have any disruptions in our business as you can see in the results. Now let's see Slide #2. Here, I just wanted to tell you more about the synergies that we were able to capture at Allos this year. As was shown in our guidance, our expectation is to combine different businesses and to have BRL 210 million in synergies, in M&As as well. We've had BRL 80 million already and BRL 53 million out of those are in revenue and BRL 27 million in costs and expenses. It is worth saying that we've had more productivity with the diminished reduction of costs and expenses over the revenue of the company. Now on Slide #3. Before we talk about the operational indicators. I just wanted to highlight capital allocation last year. In just 4 months, we were able to have 18 transactions, and that corresponds to for partial investments and all the other were complete. So we've had different buyers, BRL 1.8 billion, with 8.2% approximately in cap. In parallel to all the things that we have disseminated, we were able to reallocate our capital to have a better return for shareholders. Ever since we started with the program, we have invested over BRL 520 million in stocks of the company, which is equivalent to 4% approximately of the capital of our company. These actions are going to be the object of our attention after we also finish all the financial processes related to that. We've also paid BRL 293 million in dividends in 2023, and we announced in the guidance that we're going to have the 50% of the FFO paid in dividends this year in 2024. Now on Slide 4. Just a few of the main indicators that we have. In 2023, I think we had a very challenging year in the industry. We know many companies had issues in our sector, and we know that the general results of retail were very different really from the past. But we were able to have different results because we were able to explore all the opportunities that we noticed.
I mean, we went from a more traditional view into a better innovative vision. We redesigned the spaces of our shopping malls, and we increased the experience level of our consumers. And we had a better mix as well with stores that are more attractive for consumers. We also had more productivity, as said before. And this shows an SSR that grew, as you can see here in the fourth quarter of 2023. Besides that, in the fourth quarter, the total sales also continued to grow. They got to BRL 12 billion, which is an increase of 7% against the fourth quarter of the previous year. So Allos got to BRL 40 billion in total sales, a growth of 8% against '22. And if we consider all of the malls that we manage, it is over BRL 44 billion in sales in our ecosystem. It is worth saying that 13 malls in our portfolio sold over BRL 1 billion and Recife and Dom Pedro had BRL 2 billion a year. So that shows the potential of our main malls to continue to have these results. Now Daniella is also going to show you some of the operational performance indicators. But let's continue to talk about our results. We had a very good performance this year. And in the fourth quarter, we had a net revenue of over [ BRL 18 million (sic) BRL 817.5 million ], so more than 5% increase. And this also thanks to the shopping parking fees as well that were readjusted. It is worth saying that in the fourth quarter, we had a very important growth in rent. The NOI of Allos got to [ BRL 58 million ] and the EBITDA BRL 620 million, with the expansion of 8%, an increase of 8% versus the fourth quarter of 2022. The EBITDA margin is 76%, so 217 basis points increase. So with a consistently better results and more fiscal efficiency, the FFO got to BRL 433 million. So we're talking about 15% growth. And the results in 2023 were BRL 1.2 billion FFO for the new company. Last not least, I just wanted to say that we're implementing a program for the alignment and retention for the long run for some of the executives. This program started in December 2023, and this is for the global capital of the company. So we're going to work with that in different phases. The first one started in December, the next ones are going to be annually. Except for the first one, every phase is going to have a cap and some other factors. This is not consuming any cash flow of the company. This is going to be 100% on stocks in the treasury and also the share buyback program that we had before. So this is not going to affect the current buyback program, which is going to be really handling the shares that were acquired last year and this year. Now let me turn it over to Dani now, and I will be here at your disposal. Should you have any questions in the Q&A session.
Thank you, Rafael. Let's continue with Slide 6 now. We can see that our commercial rhythm is very good. In the fourth quarter, we had over 200 new contracts, which is a very expressive number considering the seasonality of the end of the year, and we ended the year with over 96% occupancy rate. In 2023, we also signed over 1,000 new contracts, sold over 159 square meters of GLA. We're talking about 4 new contracts per business day basically. So we are recovering these strategic pillars really in different malls of the company. We're talking about Sephora, for instance, in Boulevard Shopping Belem, Catuai Londrina, and other malls. We have Adidas and also some others like Coco Bambu and Carioca Shopping, Passeio das Aguas Shopping and some other malls. Now on Slide 7, we have the cost of occupancy, which is a bit lower than the fourth quarter of 2022. We see that this is sustainable for our tenants, and we're considering the better volume in sales. This is also good for better to pay or delinquency, which was negative in the fourth quarter. It's minus 1.7%. So it is a reduction of over 6% against the same period in the previous year. So we're talking about a very good base points reduction, an important reduction in delinquency. On Slide 8, we can see that we had a reduction of indebtedness as well. We see here all that against the CDI rate. So this reflects the assets and liabilities management last year. We had 15% in -- we had a growth of 16% compared to 2022. As we can see here, this is according to the guidance. And this is -- this has to do with the investments that we had in the fourth quarter of 2023. Now we wanted to talk a little bit about our media, Helloo is also working with Allos and they started working with the digital inventory of 17 malls. And we -- they started working with all of the media, digital media, static media and experience in these assets. And this also increases the relevance of Helloo at these malls. They ended 2023 with 98 malls in the portfolio. There are present in 49 places -- cities in Brazil, and they are the main platform of out-of-home in the malls in Brazil. This was also important for the inventory of screens, for instance, in elevators, 12,000 digital screens that were placed in the main cities in Brazil. And this quarter, we're also looking at the Mooca Plaza shopping case. In 2023. We've had thousands of people who went to the mall and looked at these Helloo digital screens. In Mooca, for instance, 59% of the people living in Mooca, in the neighborhood went to a mall and they stayed for over 2 hours each. So these are very expressive numbers that will potentialize also the use of these media in the malls. Now on Slide #10, we have an update on the applications used at the malls. At the end of 2023, we had 2 million individual users that took advantage of some benefits at the malls in Allos. We had over BRL 25 million in offers and benefits related to this. On loyalty, in December 2023 we had GMV as well in the 8 malls that are connected to the program. Throughout the year, we had BRL 2.4 billion in GMV that were captured. Now still in this presentation, we have a couple important things on sustainability. Our commitment has to do with many social programs and local development as well. It is a pleasure for us to say that in 2024, Allos will continue to be part of the ISE B3 and will continue to work with sustainability, of course, to continue to improve these programs. We also wanted to talk about the great party we had in Rocinha with many students that were supported by these financial aids. So this project is for social inclusion of these students through sports and education. And this is one of the initiatives that we're very proud to support. We also wanted to talk about the solidary contract program in 2023, we decided to donate a basic food basket for each commercial contract that was signed. The aim of the project is to celebrate the success of the leasing team and contribute to a social cost that benefits the communities where the company's malls are located. Now let me tell you more about the guidance on the potential of the company after the disinvestments. Now the total that we had was 6.8 million square meters. The guidance was reviewed for [ VGV ] and for the multi-use programs up to December 2023. It is BRL 6.3 billion, and we're looking at BRL 430 million cash generation until 2023. And these projects are 49 towers and 9 malls in 6 different states. And the idea is for these projects to have a higher number of people in the main spaces of these malls, over 24,000 people. Now let's see the guidance is for 2024. We're looking at ending the year with an EBITDA up to BRL 2.05 billion, considering that these investments that impacted a reduction of BRL 160 million, approximately BRL 160 million. So the guidance of EBITDA is a little bit different from the range. And as for leveraging the company, we hope to go to 1.9 or 2.3x the net EBITDA. For CapEx, we're looking at BRL 450 million to BRL 550 million, considering a carry over of investments that were projected for 2023 before but were delayed. Now for the AGM after April 30, when we have to discuss these results for approval, then we will let you know with the new guidance for payout is based on the FFO of 2024. The guidance is for EBITDA for leveraging and for CapEx are considering the current scenario of M&A transactions that have already been announced and there might be some changes in this scenario. Thank you all so much for your attention. I think we can start with the Q&A session.
[Operator Instructions]
Our first question is from Pedro Lobato from Bradesco BBI.
My first question has to do with the following. What's the dynamics for same-store sales for 2024, you think, because, in 2023, we noticed that the same-store rent was higher than the same-store sales. It was 2 points higher. So I wanted to understand if that is going to also be a pattern this year. what do you think these indicators are going to be for 2024. Also, I wanted to know the following. Looking at delinquency, looking at failure to pay, I'm looking at the results that you had. I think throughout the year, I mean, if we're looking at quarter-over-quarter, it was a positive result. But what do you think might happen this year as well, in terms of nonpayment?
Thank you for your question, Pedro. Your first question on expansion of same-store rent, same-store sales. I am going to tell you something that I explained during the Allos Day. Maybe it wasn't that clear. When we have an occupied space when it is occupied by, I don't know, store that sells electronics, where the margin is even less than 5%. The rent is going to be completely different with a good average ticket. We are replacing areas with that kind of margin with operators that are growing with a different average, 26%, 27% higher sales than those other stores that have a very low margin which I just mentioned. So you're looking at sales that have more profitability and a better use for tenants for customers and for us. So that will allow us to continue to grow our rent, and that is not going to depend on the same-store sales, basically. So that's what we're doing right now. Of course, that happens gradually. It doesn't happen all at once, but these sales, they have a very good financial health. It is much more robust.
Pedro, this is Dani Guanabara. I think we also have some other revenue lines that are contributing for that result. We have the parking fees being readjusted. We have a better flow of people in the malls. We have the media as well. As we mentioned, we have a very good media strategy with Helloo right now, with the company. So I think that also grows revenue. And when we combine rent and these other factors, when we factor all these in, we're going to have a more robust result. We looked at EBITDA of 10%, increasing 10%, and we were able to have a result that is better than the guidance. So just a final comment, really. When we're talking about this negative failure to pay, I think this was a clear improvement throughout the year. We started with more of a crisis in retail, I would say, especially after what happened with Americanas, and as time went by, we gradually started to notice an improvement. Now when we're talking about the fourth quarter, the volume of businesses that we had in that quarter and also the volume of businesses that we had throughout the year was quite good. We were talking about 4 contracts per business day, as I mentioned before. But of course, some of these things, they were -- some of these contracts, they were signed in December when we're also looking at Christmas. But I think the feeling for tenants is quite positive. It's more positive than before. And we see the consequence in this indicator as well, improving in the fourth quarter and throughout the year.
Our next question comes from Tainan Costa from UBS.
I don't want to focus on the fourth quarter. I want to talk about the future. After the integration, after these first investments, I think you're more focused on shareholders. I wanted to understand how do you see the portfolio of the company in 5 to 10 years? Are you satisfied with the size, the quality of the malls? Or do you think there is a target that you want in terms of sales or growth of the region, et cetera, something that the mall needs to have a better portfolio. Also, are you going to change the geography to have them better placed? I wanted to know more about the portfolio for the future.
I think it is clear when you look at the [indiscernible] Sonae, Br Malls, Aliansce. I think in 2015, when we were looking at all of them, it would be 80, 80 shopping malls almost. So in a way, we've been working on the exercise, changing that exposure especially when it's not a very important place, we try to focus on other places, other geographies. And of course, we're reconsidering what is -- what a premium mall is. Of course, you have to think about the social class of the buyers. You have to think about a premium mall as being also a main destination for entertainment, for leisure, et cetera. So in our portfolio, nowadays, we have 14 malls with BRL 1 billion. One of them is not our own. It is managed by us. We don't have any portfolio in Brazil that really comes close to that, and the number of malls, that's BRL 1 billion. I mean, and out of those 14, there are 2, Parque Dom Pedro and Shopping Recife with over BRL 2 billion per year. So these are clearly very important destinations in their markets. So if you look at what we have the most, well, we sold as well, some of the malls that were sold, they were not good in terms of geography or relevance from a competitive standpoint. They were not going to be the main destination for sales, for leisure in those markets. So that was the main criterion. We wanted to have an important market, we have certain margins, certain criteria for sales to see if they're okay in that regard. And besides that, we want to be the best product in that specific region. This year, we had a growth that was very strong in Parque Dom Pedro, which is a mall that basically is for classes A and B, and we also had a very strong growth in Campo Limpo, for instance, for classes B and C. So it's important to be dominant to be -- to have a very good mix, a complete mix for services, entertainment, leisure, shopping, and we want to be a place where people want to be in that specific market. All of the main luxury brands in Brazil, we are the main partners for all of them. It is really twice as much agreements or contracts that we have with them more than our competitors. So that shows that our malls these characteristics, and we'll continue to invest in this kind of assets. So for both expansions or redesigns that we've had that we have announced for this year, and also for new acquisitions for new assets or the development of new assets. We want to extend this kind of asset. But anyway, we will continue with this kind of dynamics, very active dynamics for our portfolio. So we want to reduce the exposure in some malls, and we want to increase participation or share in some others or even purchase malls that have these characteristics. They are the main destination. They are dominant and they are relevant for our portfolio in terms of good services for our tenants and for our customers as well. We want to be the best option in all of the specific markets in which we work.
Our next question is from André Mazini from Citi.
About deleveraging guidance, you were talking about a twofold change, right, in EBITDA or the net indebtedness and all that, considering that -- considering the CapEx that is around BRL 500 million, we would imagine that there will be a lot of leverage for the end of 2024. So my question is, are you going to have any acquisitions or a payout that is over 50% of the FFO? Basically, I need to understand cash generation, which is expected to be very strong and also that guidance for financial leveraging that is maybe a bit higher than I expected. So is there anything, inorganic thing or more payout? Is there anything that makes sense in that math, let's just say.
This is Dani. When we think about what we have here, how can I put this, when we think about Allos, I think our balance is one of the levers that we have for the strategy of the company. So we like to have some flexibility in that to be able to have a good opportunity for occasional investments, to try also some opportunities in M&A. Of course, we always respect our capital discipline. And at the same time, we want to have a more predictable return for shareholders. So we had a guidance of 50% of the FFO, BRL 682 million being paid this year. And obviously, we're sending that for approval by everyone. And then we also have the buyback program. We had BRL 520 million already, and we still like a couple. So we have certain flexibility to maybe think about a second program for a buyback. I think it's a good practice to have these open buyback programs so that you can have a better return for investors as well.
Our next question comes from [indiscernible] BTG Pactual.
Two questions on our side. First, synergies. You communicated on the synergies, the several million, BRL 600 million or so of synergies and well, that you linked back then. So I wanted to understand what is your expectation in synergies in 2024 that is implicit in the guidance, and what do you see in risks to collect these synergies? And the second question is more on the side of the receivables that the company has in regards to the selling of the assets. I wanted to understand these receivables and if you can help us with that, that would be great.
This is Daniel. Well, talking about synergies. When we discussed the year 2023, we reported almost BRL 81 million already in synergies captured, out of which BRL 53.3 million in revenue and BRL 27.3 million in cost and expenses. It's important that we see this cost and expenses here. So that is a percentage of the gross revenue, they dropped 120 bps. So we have the 19.1% to [ 17% ]. When we think about synergies and revenue and the way that we work the synergies, we look at the growth that these companies had in the pre-pandemic period, we add the inflation and whatever overcomes that value, we considered synergy. So when we talk about the guidance, the expectation is that we get to 80% of that value. At the end of the third year -- and why? Because we have the renewals of contracts all throughout time, we'll have the coverage of vacancy and that is done in a gradual way and you will capture those synergies for revenue. Synergies of expenses we already commented, there is a lot of -- in the first year, but we still have the expectations of having synergies of expenses over the last 2 years, mainly after we conclude the implementation of the RP in the company. We're going to keep the legacy that already existed at Aliansce Sonae, the old, [indiscernible] SAP, and then we're going to migrate the shopping malls of the previous bigger malls to this one. So after we have the system implemented, then we hope to capture synergies in that sense. But we -- this is a line for the plan for this year. In regards to the receivables, we received BRL 750 million, we have to conclude some investments within the month of March. Once we conclude these investments, then we're going to have a schedule that is more detailed up ahead.
Next question is from Jorel Guilloty with Goldman Sachs.
Two questions. First, about selling. As you highlighted, you were very active in the selling of the shopping malls of 2023, so BRL 1.8 billion in shopping malls. So I wanted to understand how do you see the potential for more sales in 2024. So whether if it's participation, if it's the [ former ], how do you see the environment? The second question is in regards to CapEx, the provision of CapEx, you have [ BRL 450 million, BRL 500 million ]. I wanted to know how do you divide this between CapEx, so -- and CapEx for the expansion, we see CapEx for current assets and CapEx for new assets. But what are you looking for the CapEx of this new space?
Jorel, thank you for the question. The investments, I think that we are in a market that is ever more good to do businesses with the real estate funds and we are analyzing some transactions with the drop in the interest rate. Of course, that facilitates the transactions and we cannot wait for such a relevant number as the selling that we did last year because we had a window that was very positive of opportunities with that and shopping malls that we didn't want to get for the reasons that we already discussed. Well, that was our objective for the long term for the portfolio. As you said, there are alternatives for participations in -- minority participations that are on the table that may get viable for us to do to direct these investments for the shopping malls that have transferred better, more relevant for these assets. And remember that within these malls, we have over 40 malls that are within this characteristics, within the relevance, within the importance of the market. So we continue to be optimistic in regards to the operational side, and also the business environment that is positive to do transactions. We also do not -- this -- what -- we are going to do investments, the shopping mall makes sense for the profile of our portfolio. But in numbers of transactions, it's more transactions of selling than acquisitions all throughout this year, if we can summarize in this way. In terms of CapEx, I think that -- well, we don't get into the details, case by case, what we're going to do, but we talk about the projects that are ongoing. And we have several projects ongoing for refurbishing, expansion. The main expansion of this year is Parque Shopping Maceió which we're doing along with Multiplan, Multiplan is the leader of this process. We have 50% out of shopping mall, and we continue the project that we are implementing there. We continue to do the projects of transformation of assets and Recife shopping mall. And these are very dominant shopping malls and it's good that we invest in them. There is the revitalization of the external parts. And externally, we have to do improvements for access, update the outside, the use of the external area of the shopping mall. And in Parque Dom Pedro, Shopping da Bahia, these are several shopping malls that are very dominant that we're going to get resources so that they continue to grow. And remember that this year, the highlights of selling are coming from Tambore, Shopping da Bahia and Parque Dom Pedro, shopping malls that have projects for revitalization and shopping malls that have the market that is very different from one another. One is much more dominant. Some are urban, some are more dominant in a regional standpoint, so the revitalization and modernization of these assets make sense. Anyway, I think that the results prove that the capacity for the creation of Allos is correct, which allowed us to disinvest in the assets that were not so relevant from the competitive standpoint. And we reinforce the assets of the 2 companies with the investments that we've done since last year. And just we could only get these 14 malls with this junction. There is no other combination that could have generated this size of a portfolio with this dominance, with this relevance in sales in the market.
Our next question is from Rafael Rehder, Safra.
I have 2 questions on my side. Well, first of all, I just wanted to understand a bit more, how is your decision-making process when you're going to do an expansion. If it's going to be more in shopping malls with a high occupancy rate, do you look for the minimum business -- just -- if you can understand us and give us more detail so we can understand it better. And you were talking about the improvement in the mix. And I just wanted to understand the discussion between the same-store rent, same area rent. Can we see the same area rent that is above the same store rent for the mix? And when do you think that we should get this catch up?
Rafael, thank you for the question. Decision-making process for the expansion is basically, we have a planning of each shopping mall that is done and details and knowing the market, updating the market analysis with monitoring instruments, with flow of areas, of retail, with the technology invested that indicates where we have a price that is relatively adjusted that makes it worth for us to get a new retail area available. For example, I am more optimistic in redeveloping areas of [ crown jewels ], therefore, reducing -- that are reducing the size of storage or clothing stores, so we can use those areas as areas for the expansion of news, of bringing alternatives for the shopping mall that didn't exist before and then not necessarily, we are going to -- we're not going to need the expansion because of a redevelopment that is much more profitable than the expansions. Today, the expansions that are on the table, they have a return expected of 12% on average, which is the number that we've seen. And we've recently seen with the conditions of the shopping mall that were launched. In regards to the mix by the same area rent, same-store rent, I think that this is already happening. I think that slowly, we've seen the occupancy cost being affected upwards but with the performance of sales that also supports this increase in rent and this increase in the value of the rent. So the fact that the NOI grew 8% in the quarter with selling growing less, shows this capture of -- more capture of NOI within the shopping malls, and we are satisfied with the pace of this capture this year tends to accelerate. Remember that this platform, Allos, of being the biggest player in the retail, entertainment and leisure of Brazil, started just in January of last year. And we, in the last 6 months, we were integrating 2 big companies, and we didn't want to make mistakes, which we know that they can happen. It's very common for them to integrate through cultures through companies. There is accounting issues. There is cultural issues. So we understand that this process of value capturing will happen mainly from that one. In the case of Helloo, we are very optimistic with them. And we just finished with the conversion to the Helloo platform just in this -- at the end of last year. There are many things operationally that we are doing to generate results. If we just think about loyalty with the 2 companies added in one cycle, we're going to get to 2 million of loyalty members using the programs, in a way, day-to-day. Over 2,000 openings per day, so imagine they're selling media on top of the platform, selling information for our tenants on the type of promotions that they can direct for our clients. So the gain of market share that we have is our main driver to increase the rent as a consequence of that. So whether if it's increasing brand or increasing adjacent revenues such as -- is the media revenue and that's why it's important that we have an updated mall and a good-looking mall. So the decision-making process for expansion is under that criteria.
Next question is from Fanny Oreng, Santander.
Two questions. First, in regards to the provision of the malls. I think that there was a drop in the provisioning of this quarter, of course, with the drop in the delinquency levels, but I wanted to understand what is the trend for 2024? And the second question is a question also simple, is in regards to the other provision which is the provision for contingencies that grew a lot in this quarter. And so I wanted to understand what was that line. Those will be the questions.
Well, let's start about the second question. That contingency line, it was updated from 1 year to another, but it also has a change in the prognosis of one specific action that affected almost the entirety of this sector. So from probable to possible, and that's why it's appearing in this contingency line. When we talk about PDD and the bad debt and the provision of the malls, we have to go back to another point, which is when we started in 2023, I think that there was still a lot of doubt on how the retail would evolve. We have the case of Americanas but -- well, there is another of the wholesale, and we increased the provision in the second quarter. And as that scenario was improving, and it was stronger, we reduced the provisioning level, and we could recover some late rents. So if you think about the commercial standpoint, the success that we had in attracting tenants in the fourth quarter, even with a strong activity in December, it means that the wholesale is more optimistic looking ahead. So I think that things are improving. We have the EBITDA for 2024 in the middle of the range that grows. I think that this is important because this is a year that we know that there is a compression of GP, so the revenue of rent, the trend is that we have a more modest growth. But as we commented, other service lines, other business lines, whether if it's parking, mall, the media and services as a whole, they are growing and they help us to compose our NOI, EBITDA and the FFO.
Can you just go back to the provision of the contingency, what would be it? Can you talk about it? You said that it affects the whole industry?
It's a discussion of taxes which we provisioned, there is an issue of PIS and COFINS tax, but it's a one-off. It was a [indiscernible]. Nothing too different from what other companies that only -- our sector, they had to make that decision from the superior report.
Our next question is from Jonathan Koutras, JPMorgan.
Well, thank you for the -- I have 2 questions, as you've seen -- well, in the sector, you have healthier selling. The second question is what you discussed in the presentation, VGV potential that is higher. I just wanted to understand the timing of that.
Thank you. Jonathan, could you repeat the first question because the sound wasn't good.
Can you hear me now? Okay. The first one, I just wanted to get your opinion on the quarter thus far. It's about the inflation. The selling in the quarters at the beginning of the year continue positive. We see numbers that are good for the growth of sales, and specifically with this trend of operators that have higher profitability, and we have the possibility of increasing the rent not only the rent with the [ ITBM ] but also the ramp-up of the new contracts that were signed over the last few years, specifically last year, that allows us to have more revenues of rent. I think that's it. I'm going to let Dani explain the other one.
Jonathan, our building potential is 6.8 million square meters. It's important that we should highlight that when we had some these investments, we had the expectation of BRL 3.4 billion of VGV, BRL 400 million of cash flow, and that's until 2033. What is the point here? We own the land and sometimes we -- we asked the question to the real estate developers. We don't run the risk, but we have a percentage on the selling. And the important part here is that when we say about the multiuse, I'm thinking about the potential that I can improve on that mall. So what we think about every shopping mall in each portfolio, we build the master plan, that master plan is to think about the lifespan of the shopping mall in the next 20, 30 years. And first, look, is there any possibility for expansion? What is the expectation of the economic growth of the region? The project, what would be the expansions in the future? And if there is a terrain still left, how can we populate it commercial or residential development -- in Maceió, we have a hospital. We are building residential towers as well. So there is a series of projects, and it's 49 contracts signed and 9 shopping malls and 6 states. And this is a line that is growing and what is the idea, to increase the number of people that go to the mall. If you buy an apartment, close to the mall and you went to them all twice a month, you're going to start to go there twice a week. More frequency generates more selling so that helps to make the territory more dense and reinforce the leadership potential that our leaders have.
Since we don't have any more questions, I'd like to give the floor to Mr. Rafael Sales for the final -- to finalize this event.
Well, I think that this is a very interesting moment for us. Whereas to comment the results once we could deliver what was proposed. As a conclusion between the fusion of Br Malls and Aliansce Sonae, in March of 2022, we were promising the numbers of '23. The company is very satisfied in that sense because besides having delivered the numbers than we expected, of course, besides the -- a lot of people being skeptical and the analysts and the investors and from the standpoint of financial results we could deleverage the company much quicker than what we predicted and reducing the cost of debt much quicker than what was thought out. And remember that 2017, Aliansce was a 5th then -- of Br malls. And when we did that proposal, there was a doubt about the capacity to make this integration in a successful way. And I think that this year proves that a great deal of these premises were correct. And we have the big talents of the 2 companies together, which is a potential for synergy, and the synergy of people will generate things that we haven't measured yet. But I would like to highlight the case of Helloo from the standpoint of targeting media. And we hope that next year, it will be something in 2025, close to BRL 300 million of revenue for the company. So this is something that, clearly, there is a lot of synergy of these 2 businesses operating together, differently, obviously, than what the 2 companies did, and we are culminating this in a way that we are going to use our information and what we're bringing to the consumer to help them to sell media and direct events and selling, and all of that is just possible with the platform of our size. And we are going to gain in commercial capacity for our tenants.
So I think that this is a way of finishing the -- wrapping up the year, the first year of integration in a way that we are very satisfied. And we are just starting. The company has a lot to do to provide value for the shareholders and the consumers and the tenants, and we are just starting. So be ready, we're going to get a lot of good stuff in the next years. Thank you very much, and see you in the next call.
The earnings call of the fourth quarter of 2023 of Allos is finished. Thank you for your participation. Have a nice day. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]