Aliansce Sonae Shopping Centers SA

BOVESPA:ALSO3

Earnings Call Transcript

[Operator]

Good afternoon, and thank you for waiting. Welcome to the earnings call of Aliansce Sonae plus brMalls for the discussion of the results on the first quarter of 2023. We have here Rafael Sales, President; Leandro Lopes, VP of business; and Ms. Daniella Guanabara, Business Director and Investor Relations Director. This event is being recorded.

All participants will only hear the earnings call. Thereafter, we will start with a Q&A session, just for analysts and investors. They will receive further instructions. [Operator Instructions] This event is being simultaneously transmitted via webcast and you can access it on the website of the company, where you have the presentation available. The replay of this event will be available for 1 week. Questions can only be asked through the telephone. Should you connect via webcast, your question has to be submitted directly to the [ IR ] team on the e-mail provided by the company.

Before continuing, we would like to clarify that any statements that might be done during the earnings call regarding the business perspective of the company, and operational goals are based on beliefs of the company as well as information that is currently available. Forward-looking statements are not a guarantee of performance. They involve uncertainty risks. And they are pertaining to future events and, therefore, depend on circumstances that may or may not occur.

General economic conditions and industry conditions as well as other operational factors might hinder the -- what affect the performance of the company, and might lead to results that are different to what we expected.

Now we would like to give the floor to Rafael Sales. He will start the presentation. The floor is yours.

[Rafael Guimarães, executive]

Good afternoon, everyone. Thank you for taking part in the first quarter 2023 of the new company, Aliansce Sonae plus brMalls. It's a temporary name. Hope that in the next quarter, we have a better combination that really reflects what is and what will be the new great platform and this great opportunity that we are creating.

It's with great satisfaction that we have the first earnings release. And every day, we are ever more -- what we believe that we're going to create a platform that will bring more -- ever more special experiences to our clients, and it will improve the opportunities for our tenants. So our financial performance in the first quarter confirmed the rationale. Even though we've had a very short time in the operations, we didn't face any rupture and we continue to [ scaling ] the raising trajectory that both companies are -- were working separately. The new company has better results than in comparison to the year-on-year due to this.

The first quarter, now talking about sales, we got to BRL 8.6 billion in total numbers. Growth that is -- if you compare it to the same basis of the portfolio, that gives you 16% over the first quarter of '22. It's interesting to highlight the strength that the Aliansce Sonae portfolio has at a national level. It is clear that the growth of 16% based on a base that it's over BRL 8 billion is something that we know will have a great importance.

Disposed growth is especially -- well, we have a few malls that grew above 25%. And in some of the cases, the Shopping da Bahia that grew 28%, Tamboré grew 26%, Curitiba 25% and Passeio das Águas 24%. It's interesting to highlight how these projects have -- improvement has a great impact in the results and they modernized the value proposition of the malls, understanding the markets where we are leaders already.

In this case, we bring leisure areas and use that are only possible with the improvement and repositioning of these malls, as a whole in some specific areas as well. As an example, of these cases, we have here 2 that are very important, Shopping da Bahia and Tamboré, 2 mature malls that for a long time, didn't go through such a revamp that is so relevant and there are areas that demand a lot of improvements. And we raised today occasion quickly. These improvements generated a lot of improvements above the threshold of the market and other malls as well.

We will see those sales being converted into rent and these improvement projects will -- has profitability -- have profitability, and they have reinforced our power to attract our clients. And we have growth of over 7% in April. Another month that grows the positive trend of growing above inflation.

Looking at our occupancy rate and the commercial activity, let's talk about, well, we've continued with a strong rhythm. And we have the diversification of the portfolio of the company. And therefore, we have an expansion avenue for wholesale and retail brands. We have 196 contracts signed. And we have, in this quarter, the first quarter is a quarter that is the weaker of the year, but we have managed to get great new contracts. Our occupancy is maintained at 97%. And so I feel that is a very healthy beginning of the year. Reflecting the policies of last year, giving gradual discounts and bringing better tenants, improving our mix. And the clients experience.

Let's talk about the results, financial results. The revenue is growing strongly, growth of 9%, and that was by the tenant and sustained by the improvement of the mix. Therefore, we have better leasing and more sustainable rents. And parking is growing 24% in the first quarter of the same year.

On the NOI, we reached BRL 541 million, growth of 12%. And even without any synergies, we had an improvement of the margin in that period, which confirms that the company didn't have any problem during this process of business combinations, even though it is so complex and it is something that obviously going to get a lot of effort that will generate great results. Even though we have all this complexity, the result reinforce our conviction that union of these 2 powerhouses will have a lot of strategic value and clear synergies that will be captured all throughout the next years.

EBITDA grew 9%, once again showing the growth above inflation at a moment that is difficult, where we had expenses, and we are starting to work together and we are growing results. And even though the payment that was done to the shareholders at the beginning of the year, there is an increase in the interest rate. But we grew 23%. This is an exceptional work of remanaging the debt of both companies that was done before we joined.

This is a result that is combined of the leaders of brMalls and Aliansce Sonae separately. And here, we show our culture and vision and responsibility, engagement is something common to both companies, and it will be very important for the execution of our integration. Besides that, let's talk about our capacity to work with complex transactions.

Besides the fusion M&A with brMalls that was done last year, we did 7 investments in malls in a period of 12 months. And these investments besides being extremely aligned with our long-term strategy and being owners of dominant malls and leaders in our market, those investments generated a lot of value for the shareholders in the company because they've reduced our indebtedness at a moment that is very important with high interest rates and the decrease in the activity in the market.

I'm going to conclude telling you something about that we didn't mention a lot last year because our fusion M&A was very -- was ongoing. So let's talk about the digital transformation in our case. We like to talk about the digital transformation. I would like to share a few important points that happened recently. We had the sale of our [ participation ] of Logitech box delivery to Rappi international specifically.

That transaction really brings the identity to our strategy of corporate venture capital because besides getting a great return, it confirms that we can do partnerships that are part -- well, that are successful. Just taking into consideration our [indiscernible] finance and the operational partnerships that were developed. Since we invested the number of deliveries has gone to almost [ 2,400,000, ] which is almost what Rappi delivers per month. So Box, the company improved 3x, reaching to BRL 100 million. So besides to having a great return on investment and this investment is a confidential number. Box has left operational improvements with expressive improvements for our tenants and improving the omnichannel experience for our clients. We have operations of Box with 20 malls.

And our service level for the clients and the improvement of the experience of the shopping mall is clear. And we continue -- we hope to have this partnership out -- throughout. Now the scale of Aliansce Sonae and brMalls will allow us to invest in companies that have knowledge people, the capacity to have technology to address the pains and continue with the operations of our tenants and our investments. Whether we're talking about temporary investments such as Box, or definitive products of Aliansce Sonae plus brMalls. We're going to continue to seek opportunities for corporate venture capital in agnostic way, always trying to improve the lives of our tenants regardless of the channels that they're working with.

Now I'll give the floor to Daniella. And I would like to give you an update on the integration. And here, we have Lopes, our VP who is here to answer a few specific questions that you might have in that process. We are continuously focusing on that integration, the creation of the new company and executing the planning that was preestablished all throughout the 6 months of structuring of this project.

Pre-integration, we've structured a great deal of the teams, and we have definitions for several areas such as operations and commercial. We're working with several goals established. At the beginning of this year, several objectives for operational improvement. So we are down the right path, capturing synergies and much confident on the success of this integration and the creation of a new company, that is ever stronger, more robust and capable of doing more and better than what we did before.

So I will give the floor to my colleague, and I'll come back to Q&A.

[Daniella Guanabara, executive]

Thank you, Rafael. Good afternoon. So next slide, let's talk about our strategy of management of liabilities. Throughout the next month, we prepaid the most onerous debts, and we issued 2 new finances at attractive rates. So in the first quarter of '23, we observed a reduction of our average cost of debt to CDI plus 0.8% from CDI plus 2.2% in the first quarter of '22. We closed the period with 84% of our liabilities connected to the CDI rate, 14% to pre-fixed rates and 2% to inflation. In the first quarter of 2023, leverage of the company is remaining at [indiscernible] 2.4x the EBITDA over EBIT.

Moving to the next slide, the operational indicators, specifically across occupancy cost, we finished the first quarter of '23 with an 11.5% rate. It's important to realize that even with the increase in comparison based with the previous quarters, we have sustainable standards for our tenants. The health of our tenants can be collaborated [indiscernible] [ 12.2% ] at the level of bad debt. In the same period of 2022, we saw in the first quarter '23 with bad debt of 24% -- [ 24% ], sorry.

Considering the resolution, we have the highlights of our sustainability campaigns. In the first quarter, we renewed our partnership with the Reação institute, giving incentive to sports and through the resources for the good training of [ few ]. Also, we were present in the -- one, we had the floods in the northern part of São Paulo. And in March, we promoted in 29 of our malls, a series of environment initiatives in [indiscernible] and entrepreneurs [indiscernible] through the 5th addition of the project EmpoderaEla. Besides that, along with offer the online entrepreneurship free course for the capture of entrepreneurs.

The next slide, let's talk about the digital transformation strategy of the company of Aliansce Sonae plus brMalls, continued trustworthy in this journey. We joined the scale and strategic investments with 60 million visits per month in our malls. With that, we are in a differentiated stage to reach the objective of creating an ecosystem where the shopping mall is present in the journey of the client regardless of the channel that is chosen.

To make this possible company is based in 3 main [indiscernible], increasing the recurrence share of our clients and our mall, monetizing the knowledge of the consumer through data and being of digital platform for our malls. And our strategy is to increase recurrence and share of what -- of our consumers is a relationship program. The relationship program is based on 3 main phases: attraction, engagement and monetization.

So now we have 8 of our malls in this relationship program, 650,000 clients, a growth of 300,000 clients in January '23. And we have a GMV of over BRL 800 million [indiscernible] corporate venture capital and the potential to be determined by the strategic clients, that we call the master clients, with each of our malls which are completely -- are continuing to study. Now we have consolidated 7.8 million square meters in possibility of development for real estate that should be allocated amongst future expansions and multiuse projects.

The rest of potential that is already sold. We have contracts signed from the construction of 43 new towers in 6 different states and malls as well. This project add 20,000 people to the areas of the mall increasingly the GMV. And net cash generation of BRL 469 million [ by 2023 ]. Out of that amount -- BRL 409 million, sorry, by [ 2033 ]. And we already rescaled some of the investment.

Before going to Q&A, I would like to mention that we published yesterday the guidance for the [indiscernible] 2023. We have the projection of the EBITDA of BRL 1.95 billion and BRL 2 billion, really raising the estimate and [indiscernible] BRL 400 million and BRL 480 million. Still reinforcing the guidance of synergies, operational synergies between BRL 100 million and BRL 110 million.

Thank you, everyone. Now we will go to the Q&A session.

[Operator]

[Operator Instructions] The first question is from [indiscernible], Bank of America.

[Unknown Analyst]

I actually have 2 questions. The first one has to do with assets. I wanted to know the following. You have invested some of the assets there. We didn't know we're going to be investing [indiscernible] or now with the 2 integrated portfolios, how are you going to recycle these going forward? And also about the integration process, you have talked a little bit about it, but we wanted to know more on how this process is going? You are now selling your now telling your results together. So we wanted to know what the main stages going forward are going to be?

[Rafael Guimarães, executive]

This is Rafael. Thank you for the question. We now have a combined portfolio of 11 malls for BRL 1 billion per year. So if we're right in our expectations, we are going to end the year with our 13 malls, which are going to represent over BRL 1 billion, which is twice as much basically as the second mall group nowadays. So it is a very different portfolio, different from what we had in 2014 until 2016 or '17 actually for the transition.

So these it is 22 malls, it's 3 companies, Sonae, brMalls and Aliansce. If we look back at the time in which we had that recession moment. I mean it is a different portfolio, now we have very good results. Actually, also in malls that were brand new at the time. such as Passeio das Águas, for instance, and Cuiaba, these are malls that had a very good ramp up recently. And they proved to be very good elements in our portfolio.

Nowadays, none of our malls has less than BRL 20 million NOI, and that's very important because they're very good, very viable malls. But of course, any malls that have limited markets or that have very competitive markets or in which we don't have the right structure to grow, to expand, to have better products, if we have that scenario, then we're going to sell.

For some of the malls, we try to accelerate the sales at the end of the year. And we're going to continue to assess the scenario. We have to have a good return. And if we don't have to sell, well, we have a very good scenario right now for the company. So we will look at acquisitions like that. At Aliansce, we were always looking at acquisitions. Amidst the pandemic, we also have this very high cap. Very important cap, 6.7%, if I'm not wrong, that was the cap rate, which would be observed today. And if we look at the results in the past, it would be almost 9% of cap at mall that continues to grow as it is right now. So we have this ability to expand.

So each situation is going to be different. Of course, we have this very strategic view on the transactions that we have. So I think we have to continue to see our portfolio. We don't have a weak portfolio right now. It's very well structured actually, but we have to see this in the long run in terms of the products that we're offering our customers. So that's our view on M&A for these malls.

As per integration, I think I will turn it over to Leandro to answer that question because he is dealing with that project. But I just wanted to say that in the first quarter, we had good results. And of course, if we had 2 separate companies, we would say, well, everything is okay, in line with what it was expected. But in such an integration, I would say we're very satisfied with what is happening. We're going to continue to work the way we were planning to work. So Leandro, I think you can answer this question.

[Leandro Rocha Lopes, executive]

Sure. Thank you for your question. Just wanted to highlight what Rafael was saying. The main goal for this first quarter was to make sure we had good continuity in our business without any issues since we were integrating 2 very large companies with certain complexities. So the first stage was to integrated the commercial areas of both companies. We've seen many good contracts that we've been able to maintain and also close. So we integrated the operations teams to integrate the portfolio. I think the first phase of this plan has been very successful.

On January 6, we understood that the integration has been very successful and very good in terms of business continuity. Now for the next stage, I would say that there are many initiatives in place right now. Some of them are simple, reviewing some of the structures that we have. Some of them are more complex, such as IT integration for instance, since one company is working with Oracle and the other is working with SAP.

So we have to see how that's going to work, but we're certainly going to have good synergy once we use one system to integrate all processes. But in terms of business continuity, again, this was very successful already. And now we're going to focus on those other details. We're also going to look at cultural alignment, strategy alignment and some other initiatives. I could mention the marketing teams working together, also digital transformation teams integrating and add these priorities in different areas until the end of the year. Thank you.

[Operator]

Now we have Antonio Castrucci from Santander.

[Antonio Castrucci, analyst]

I have 2 questions about the combination of these businesses. First of all, I wanted to understand what the tax impact might be for the investments of brMalls and also the goal to recognize that increase in your assets? I mean are you going to have a change in JCP or dividends?

[Daniella Guanabara, executive]

Hello, Thank you for your question. This is Daniella. Well, I think it's worth saying that this is coming from the accounting [indiscernible] we have. This doesn't have an effect on cash, I think the change here is because of the shares that we had for brMalls, the value of the shares, and what we have considered to be the right values for those shares. So we believe that there is no economic foundation for that.

We understand that the price of the [ foundation ] of these businesses is the result of the [indiscernible] portion between these parties and the values that were negotiated. Also this [ movement ] doesn't have any tax impact because not our intention to incorporate brMalls. So we have extended the tax structure is more efficient this way, and we actually preferred preserve the fiscal benefit, the tax benefit. If there is a brMalls asset, for instance, I can, if I have an increase, I could use that impact and the accumulated total. But if that is not executed, this is not going to be the foundation for the payment of dividends. So I think it's important to highlight that.

[Operator]

Our next question is from André Dibe, Itau BBA.

[André Dibe, analyst]

I have 2 questions. First on sales, you were talking about the performance in April [indiscernible] actually. This portfolio is more exposed to a higher income audience, as we can see, but the performance decelerated in April, as we compare that with the first quarter, of course, there is a difference. Because first and the second quarters are usually different. But I want to understand how or what you think is going to happen from now on? And you're going to stabilize or not considering the second quarter, and also the second semester until the end of the year. And the same question has to do with the tenants, do you think [indiscernible]. Do you use tenant in that regard or not? Do you think that could be a challenge or maybe even opportunity depending on the asset that we're discussing.

[Daniella Guanabara, executive]

Well, in April as you were saying, we started with 6.9% sales. This is a month that was very positive. Overall, when we look at the entire portfolio, the performance levels were similar in the geographies. And actually, as Rafael was saying, we had [ greater ] performance at Shopping da Bahia, Tamboré and Tamboré [indiscernible] actually had to go through a certain process of [ renewal ] and all then and operating results may now. So if we compare that with the first quarter, it's the first quarter and the second quarter tend to be different.

Now we have a better foundation for this comparison and still very good results. Looking at May, we still don't know what [indiscernible] other state was. It was a bit cold in terms of the weather. So that might have an impact as well. There are some segments that are doing well, looking at sports apparel, sports shoes, but we still don't know what the exact number is for [indiscernible]. I think the trend is similar to what we had in April.

Well, as for the financial health of our tenants I [indiscernible] this resilience [indiscernible] consumers. So it's not surprising, I think, to see the results of the portfolio. you were saying that we have this high-income audience and all that. I think our portfolio actually is supposed to be the portfolio that is going to be the best for the consumers that are in each and every region. If it is a [indiscernible] you were saying that we have this high-income audience and all that. I think our portfolio actually is supposed to be the portfolio that is going to be the best for the consumers that are in each and every region.

If it is a lower income region, usually it is more of a dense region where you also have a certain potential for consumption. So usually people won't use their private loans so much buying appliances or buying a car, buying a bike or invest in construction at home for instance or buying a house, buying an apartment, and they will not use their credit on that, they will actually buy products at a mall, for instance. And we know that our stores will see that impact.

I think it's only natural. We are directing those areas to use other types of offers. I think restaurants, bars are doing well in that regard. And I think when it comes to working capital of our tenants, maybe be [indiscernible] would be as good as last year in that regard, but we're all prepared for that. Well, thank you for that question. I am presented Director of Operations. And as Rafael was saying, I think when it comes to retail, retailers that are facing certain difficulty because of the interest rates. I think we're all prepared to deal with this moment, this scenario.

We see that the delinquency rates are going down against last year. So also, we have very good occupancy rates. So again, if we see that a certain mix doesn't make sense anymore for a mall, we're going to adapt that mix. We're going to bring new brands, different products that are more adaptive. So again, if we see that a certain mix doesn't make sense anymore for a mall, we're going to adapt that mix. We're going to bring new brands, different products that are more adapted to the needs of our customers.

I think we're all ready to deal with that specific scenario whenever that's necessary. And by the way, related to what Leandro was saying, I have to say that last year, we received many questions on tenancy or lease freight that the fees were different from other groups because of the exposure that we've had in Brazil or the average income. We understand that we're partner companies. We partner with our tenants. We want our tenants to do well. So since we have high occupancy right now, and tenants are doing well financially speaking, we see that reflection on sales and results as well.

So it might be a bit higher, but last year, it was lower than most of our peers in the industry. So -- and this is a reflection of having a portfolio that is very good, very complete. And two of the malls that -- which are [indiscernible] shopping and Shopping da Bahia, they have very good results. They had a renewal also processed over the last few months, and you're also dealing with beta income audiences.

[Operator]

Our next question is from André Mazini, Citibank.

[André Mazini, analyst]

I want to more on the guidance of -- CapEx guidance midrange. There's an additional $500 million CapEx to revitalized portfolio was all executed by brMalls? Is that finalized by now? What is the range that is stabilized now for maintenance? Both the NOI. How when you think when you go with ERPs, you were saying one that of the companies has Oracle, the other SAP and you're probably going to choose one, right, to integrate everything. So do you have any consultancy CapEx as well for that kind of integration?

[Daniella Guanabara, executive]

Well, I think you actually answered your own questions because you know the company very well. But well, let me start. Well, brMalls had basically concluded their reno of the main malls. I mean [indiscernible], North Shopping, Villalobos, [indiscernible]. Those were the main malls that needed a revamp, let's just say. At Aliansce Sonae, we also had some of those cases such as Dom Pedro and Bahia. And for specific reasons, they needed more profound revitalization work in partnership with our tenant to do that to trade a time line that is better for everyone.

Today, the sites you just mentioned, we have 3 cases, BRL 50 million, that are expenses from the cost [indiscernible] because in Leblon, North Shopping and Carioca malls, these works they finished in December and we had to still pay some of those expenses to date. We have that IT CapEx as well this year because of what you just mentioned, we added a 2-year project. We have Leandro working on that. [indiscernible] also working on that. So the process that is going to come to this synergy. But of course, we're going to have this initial cost in terms of CapEx. But still, we're going to have a very robust system at the end of all these. And we're going to be able to integrate everything for the future so that the CapEx makes sense and it's going to make our company be way more efficient.

We also are looking at 7% NOI for maintenance. And we want all to be good, to be updated. Also Villalobos, and all these projects. And also [indiscernible]. What's good about this merging is that we all know both portfolios now, and we have the operational team very well integrated, with people from those companies working together. And so that helps greatly.

[Operator]

Our next question is from Bruno Mendonca, Bradesco.

[Bruno Mendonca, analyst]

I have a question on the guidance. Can you tell us more what the scenario that you expect to have online for this guidance? Also the contract? I think you're still close to the IPCA case. So that might help this year. I imagine more on how you're working and what you're expecting from this contract. And also do you think that's going to expand? How are you looking at that CapEx? And do you have also venture capital in that CapEx?

[Daniella Guanabara, executive]

Bruno, this is [ Daniella ]. Well, talking about the EBITDA. This is a guidance that took into consideration what we are expecting for the year. And also a bit of the effect that we've done all throughout the year. These stores are maturing. We are seeing the result and the improvement of rent. The rent, you can see that it's low, sure it's what we expect, and we have an equipment in those [indiscernible]. It's important to highlight that our guidance of EBITDA, it doesn't take into consideration the nonrecurring. So we have the expectation that we have for the year as well as the natural improvement, which is a consequence of all the training and mix and pricing work that we've done all throughout the years.

Implementing CapEx. This year, we have a spot reserve for investments in innovation, in corporate venture capital, and the innovation is doing very well, the projects for the apps that are ever more user-friendly and easy to connect. The digital and physical experience, whether if it's by helping our tenants to use this tool from the store itself and doing partnerships with more mature partners in digital that they use part of our services, but they have a big impact. So we have -- it's -- bringing services, the app of the hospitals are being updated every day. And the banks are not digital native. So I don't see the dichotomy or the type of conflict that you're seeing or a doubt on having digital as something necessary.

In fact, it can be something that will make us get a different competitive differential in regards to our competition, which is not just the mall on the other side of the street, but all the experience of the product and the shopping mall of getting the online purchasing, also all the power of our services and our programs that have grown and are very efficient. And this CapEx only happened if there is an opportunity. We can just -- well, now we have cash, we mentioned loyalty, and we didn't expect the partnership with Box continues via Rappi, and they're providing services in the shopping mall, but competing with other operators. And the most important part is to follow the client and give the best opportunities for our tenants.

[Bruno Mendonca, analyst]

Is there any doubt on the guidance? Or just a renegotiation? You know that you are -- it's doing better this year according to the IPCA rate.

[Rafael Guimarães, executive]

Well, obviously, we have most of our contracts connected to ITBM, the tax on the inflation. But now as you've seen last year, there was a few moments where we had an occupancy that is growing and the revenue is not growing at the same rhythm. So wasn't it the fact that the revenue should grow the same? No, because the store is not operating. The tenants, they are working on the store. So -- synergies. These synergies come next year. But we are certain that this number, we are going to work with the guidance of last year, and we are delivering, and we want to continue with it.

[Bruno Mendonca, analyst]

As you commented it's -- is there any side effect on the bad debt? But in these numbers, we have seasonality, was there any side effect? And also thinking up ahead, thinking about discounts. You foresee a stabilized standard threshold according to the pandemic or is there still space?

[Vicente Avellar, executive]

Bruno, this is Vicente. I think that this is a bit of what we commented. On the anchors, we have the strategy for the reduction of the discounts. The -- this has impacted in a positive way. The delinquency. Of course, it has an effect in the occupancy rate. But we are prepared with a high occupancy rate and the adequate mix. We are looking at that from the angle of opportunities of renewing the mix and getting some area satellite that ends up helping in the distribution of condominium costs, and this is something healthy that might stem from this scenario.

[Operator]

Our next question, Jorel Guilloty, Goldman Sachs.

[Wilfredo Jorel Guilloty, analyst]

My first question is about the occupancy cost. So we were seeing some interesting things. The occupancy cost year-on-year dropped 70 basis points, and it's 11.5% now. And yes, what do you think about the occupancy cost? The threshold is on the right threshold? Or is it rising, dropping? If you can tell us a little bit more about the occupancy cost, that would be great.

The other question is about leasing. [indiscernible]

[Rafael Guimarães, executive]

Rafael, thank you for the question. First off, with regard to the occupancy cost. Occupancy cost and percentage is something that is completely -- it's very difficult to explain. Well, how we're going to evaluate it [indiscernible] we are making some area satellite, and we're improving the mix, it's natural that we have an occupancy cost that is higher because the tenant will sell more. And then there is the improvement in the rent, and that mall will become ever more dominant. So we removed 22 malls from the portfolio. These are the malls that couldn't charge a lot rent. For example, just the last malls that we sold, these were malls that we couldn't charge because they didn't sell a lot per square meter, and we kept the malls occupied, so they can generate results.

So Villa Bella and Uberlandia and Londrina were shopping malls that were BRL 3 million, BRL 4 million, BRL 1 million of NOI per year. Villa Bella 2017 and these 2 with post-fusion Aliansce Sonae. So -- portfolio a bit more stronger as we have an improvement, there is a higher percentage. And manage the company looking at segments, attractiveness of the store. And today, the tenants that pay, not only for the point of sale, many of them are migrants from the digital to the physical and it will combine sales, and we have the physical tenants, I should say, doing the online sales.

So ever more, there is an investment to charge different ways, not only looking at the sales of the tenant. This is one of the changes that the economies are undergoing, specifically from -- over that last few years that we have an acceleration of digitalization process. So therefore, we will charge the minimum rent and provide the conditions for the tenants to continue to do business.

So we do not see the spreads as difficult. The delinquency is always increasing in the first quarter and -- but it was less than the first quarter last year. And by the way, the peers reported the -- well, higher delinquency than us. So now we have a delinquency aligned with the others. So it's very much -- it's similar. When we look at the numbers of the market in general, we have a different reality. So it shows that the shopping malls evermore already makes a difference.

And in regards to the leasing spread, we have great leasing spreads over the last year, and we are helping. And this year, the demand is high, and high occupancy rate improves our negotiation power. We want to charge the tenants well. So depending on the type of operation, we have -- in a more controlled way.

[Operator]

Our next question, Marcelo Motta, JPMorgan.

[Marcelo Motta, analyst]

Two quick questions. The first parking, something that is very strong, and maybe some synergies and some practices that the company has presented. And should we wait for growth at that level, I wanted to understand how that line is behaving.

And the second one, in terms of multi-use of cash flow over the next 10 years, we can wait for a contribution of results in the short term. And maybe in the next 2, 3 years, what can we expect from that line of service plus P&L.?

[Rafael Guimarães, executive]

Motta, I'm answering your question. In practice, our focus is very high in the continuity of the business of the first quarter. In fact, there was an exchange of experiences. And I think that parking is something that we start to look at the structure of operations, cost of operations, pricing and several other levers. So in fact, here, we start to capture the synergies that exist amongst digital companies in those slides -- in those 2 slides.

But multi-use, Motta, is our business with the allocated capital because the terrains are ours. The areas are ours. So the allocated capital is of projects and approval. And sometimes it might be that we are a partner in the project, if it's something that is very special. But we always try to do this with a financial return, always seeking to bring a more qualified return for the shopping mall and bringing complementary -- complementarity.

So this is a business that is recurring with 7 square -- million square meters is, well, something that we have for the company for the next 20 years. So the last year was BRL 40 million of EBITDA that came from that. And this year, we should get some more, but there is -- the business is cycling. It depends on the real estate and development.

So if I'm not wrong, there's 17 buildings commissioned, hospitals, residential, hotels and single stores as well, that adds value. It adds a qualification of flow of clients and generates a result that we understand that is a recurring result, and we have an entire team dedicated to this. And also it has a clear benefit for the mall. You saw the results of Maceio last year, and it was a place that we developed the most projects over the last few years. Projects that, today, per square meter, I think it was 120x what we paid per square meter.

And of course, with the return of these projects, we have this effect that we mentioned of the BRL 40 million, BRL 50 million, but we are not going to give the broken guidance because we understand that there is -- well, this is cyclical in this type of project, but we have a few results that are subcontracted for this year and that are in the projected EBITDA. And this is something that we have as a strategic pillar and will continue to happen. The partners are always good quality and provides us with the conviction that the projects will work, and that we've had very few problems all throughout the year.

[Operator]

Our next question is by Pedro from Credit Suisse.

[Pedro Hajnal, analyst]

I have a question the following. Now that you have started the integration process, I wanted to understand a bit more on what the main things that need attention. I mean in the past, we've seen that whenever you have the integration of 2 companies of different complexity, there are some points of attention. So I would like to understand what kind of costs or expenses you could have?

[Leandro Rocha Lopes, executive]

This is Leandro. I think when it comes to integration, we have to, first of all, make sure that we don't have -- that we do have a good business continuity. I think that's the main thing that we'd like to highlight. There are companies in which the operational units overlap or are competing with each other. But we solved all those issues beforehand. So we have a very well-aligned team right now working in our paper. This is not a scenario where you have 2 stores that are competing against each other or that are rivals.

So in practical terms, I think this is very positive. I think now we have a commercial team and an operational team and a digital transformation team that are very well aligned, which is great for the results of the company. So I think that's the main thing that could be a warning really. But we are sure that this is working great.

Also, as you were saying, the main risk are not risk per se. They are actually activities that we have mapped before. So we have this integration process where we're going to have 1 ERP from both companies. And I think nowadays, both companies have a lot of experience in that regard. So Aliansce has already done that as Aliansce Sonae. If you think about the history of both companies, there has been a lot of investment in that. So we've seen good integration within the company for different operational units. So we know how to do that.

I agree that this is an important thing to address. But we have all areas working together to make sure that we can have -- that we can be successful in the new dynamics of the company. So on that perspective of the integration or risks for the integration, I think we have already overcome most of the risks, and we have mapped some of the activities that might take longer to implement.

[Operator]

We have no further questions. I'd like to give the floor over to Mr. Rafael Sales for his final comments.

[Rafael Guimarães, executive]

Thank you. I would like to thank you all very much once again for your questions. Thank you for your interest in our conference. Thank you for participating in our call, and let us know if you have any additional questions. Thank you very much.

[Operator]

Thank you. This is the end of the first quarter call of 2023 for Aliansce Sonae plus brMalls. You may now disconnect. Have a great day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]