Grupo Gicsa S.A.B. de C.V. (GICSAB) Earnings Call Transcript & Summary

Good day, everyone, and thank you for standing by. Welcome to GICSA's Fourth Quarter 2024 Earnings Conference Call. Joining us today from GICSA is Mr. Diodoro Batalla, Chief Financial Officer, whom is here this morning to discuss the company's performance and answer any questions you may have. [Operator Instructions] Please be advised that today's conference is being recorded and will be available on the company's Investor Relations website. A special note to any members of the media who are joining us today, we would like to remind you that today's call is met for investors and analysts only. Therefore, questions from the media will not be taken. If you are a member of the media and wish to direct any questions to the company, please contact the company directly after today's call. Before we get started, let me remind you that information discussed in today's call may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions not to place undue reliance on these forward-looking statements. GICSA undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. It is now my pleasure to turn the call over to Mr. Batalla, Chief Financial Officer of GICSA, who will lead today's presentation. Mr. Batalla, please proceed.

Thank you, operator, and good morning to everyone. I hope you all are doing fine. Thank you for joining us today to our 2024 fourth quarter earnings conference call. And I'm going to share the main achievements of this reporting period. As a result of the agreements reached with the holders of our local bonds, GICSA 16 and GICSA 18, we were able to reduce our total consolidated debt and improve our maturity profile. As GICSA was released from the payment obligation of GICSA 16U through the sale of 38 units available for commercialization from the Cero5Cien residential project and by the full early amortization of GICSA 18U using funds from a new bank loan secured by Forum Buenavista. In this sense, our consolidated total debt decreased 10% from MXN 27,336,000 at the close of 2023 to MXN 24,573,000 at the end of 2024, while the loan-to-value was 32% at the close of 2024. Starting with the operational side. During this year, our visitor traffic of same properties increased 3%, reached 84 million visitors, maintaining a stable results through the year. Under this context, in 2024, our tenant sales considering same properties increased also 3%. In this regard, during the 2024, we signed 227 new lease agreements, which are equivalent to [ 83,000 ] square meters and 247 leasing space started operation. That represents 81,000 square meters. As a result, our occupancy rate grew 72 basis points to 88%, and our average rent per square meter increased 5% to reach MXN 389 both on the year-to-year basis. About the commercialization of the Grand Outlet Riviera Maya continued to progress in stabilization with its occupancy rate ending the year at 56%. As for our product development, Paseo Metepec is moving forward, closing the year with 99% of its construction. In December, we also began operation for some commercial spaces. We expect to start receiving positive income in the next months. Consolidated and proportional NOI for the full year reached MXN 3.7 billion and MXN 3.1 billion respectively, achieving 10% growth rates. Consolidated and proportional annual EBITDA amounted MXN 3.4 billion and MXN 2.8 billion respectively, 14% and 16% growth rate. Summing up, we foresee a stable outlook for 2025 based on the continuous execution of our collect, operate, rent and renovate strategy, continue improving our operations and financial position under the projection of more stable key macroeconomic variables. Therefore, our focus will continue on increasing our occupancy levels, strong tenant relationships, completing our project under development, reducing our corporate debt and offering not only an outstanding shopping experience with a wide variety of entertainment options for all our business. This concludes my participation, and we'll now turn the call over to the operator for the Q&A. Operator, please proceed.

[Operator Instructions] Our first question comes from Carlos Alcaraz of Apalache Research.

I will first like to ask you what is your expectation on occupancy for 2025? And see if you could give us more color on your debt strategy for this year?

Carlos, thank you for your question. Regarding our occupancy rates, we expect to continue growing our occupancy in our Riviera Maya project, but we are very cautious in Culiacán because of the situation that is happening there. We are having some renovations of contracts in this year in both properties. And we are negotiating with the clients in order for them to stay maybe doing some rents agreements or something because Culiacán as you know is very difficult right now. So in the other properties, we expect to continue growing our occupancy, but Culiacán is the one that we are worried about. Regarding our debt strategy for this year, we are now focusing on trying to solve our remaining CEBURES local bonds. We are -- and started now analyzing different options in order to reduce that debt and also with [ our case ] portfolio.

With no questions in queue, the question-and-answer session concludes. Thank you, everyone, again, for joining us today at our earnings conference call. As a reminder, GICSA Investor Relations team are always available to punctually address any and all of your questions. So please do not hesitate to contact us if you have any further inquiry after today's call. On behalf of GICSA, we wish you a great day. Thank you all for being in today's conference call. Now you may disconnect.