Multiplan’s net income grows 28% and shopping center sales rise 5.5% in 2018

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Multiplan Empreendimentos Imobiliários released its earnings results for the fourth quarter of 2018

All stores sales totaled R$ 15.5 billion, representing growth of 5.5% over 2017. Same Stores Rentals reached a new record of R$ 1,537/m², up 4.4%, or 2.4% above the effect of inflation. The occupation rate closed the year at 97.5%. These are representative results, mainly due to the political and economic turbulence faced by the country in the last year.

In the financial sphere, the numbers also reflected the operating result. Net Income rose 28.0% in 2018 to R$ 473 million, mainly due to the EBITDA (up 14.7% to R$ 947 million) and the reduction in net financial expenses.

NOI (net operating revenue) increased by 8.9% in 2018 to R$ 1.138 billion, in the wake of strong growth in rental (5.2%) and parking (10.8%) revenues, and lower shopping expenses centers (-14.1%); for its part, FFO (cash generation) increased 26.0% to R$ 704 million, following strong operating performance, resulting in an FFO per share of R$ 1.18 for the year.

The Company has recorded growth in store sales in all quarters since the IPO, including the last five years, with an annual increase of 6.3% in the last five years. This robust history was supported by a combination of factors, namely: asset location and architecture; strong mix management, which anticipated consumer trends and needs; and new areas delivered, which led to a 38.4% increase in own GLA. In short, this success formula enhanced the attractiveness and boosted the scale of Multiplan's portfolio, resulting in recurring sales growth and increased overall shopping mall productivity.

The total turnover of the shopping malls was 2,246 square meters higher than in 2017, reaching 41,316 square meters, or 388 stores. As a percentage of the shopping center ABL, turnover was 5.0%, the same as the previous year. ParkShoppingCampoGrande was responsible for 64 new stores, followed by BarraShopping (50) and BarraShoppingSul (34).

The tenant occupancy cost decreased by 28 basis points in the fourth quarter of 2018 compared to the same period last year, reaching 11.8%, a percentage equal to the average of the last five quarters. The combination of increased sales and control of condominium expenses contributed to a stable indicator, even considering the real increase in rental revenue.

The combination of the Company's cash generation and a reduction of R$ 91.1 million in gross debt - through amortization of loans and other obligations - led to a cash position of R$ 866.2 million at the end of 2018, an increase of 1.6% when compared to September 2018. As a result, net debt decreased 5.0% to R$ 2,002.0 million.

The net debt/EBITDA ratio declined from 2.19x in September 2018 to 2.11x in December 2018, remaining distant from the Company's lowest net debt/EBITDA covenant (4.00x).