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 Third Quarter 2025 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 that today's call is meant 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 uncertainty. 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. Thank you for joining us today at our 2025 third quarter earnings conference call. I trust you are all well. I would like to begin by discussing our operating performance during this quarter and despite the challenging environment affecting our properties in Culiacán, Sinaloa, we maintained a steady leasing activity, with 76 new lease spaces starting operation, representing 29,000 square meters of GLA and signing 59 new lease agreements equivalent to 22,000 square meters. As a result, our occupancy rate improved by 300 basis points compared with the third quarter last year, closing this quarter at nearly 90%, reflecting solid performance across our portfolio. The office segment showed significant improvements with increases in occupancy closing the quarter at the same level as the commercial segment. Additionally, in this quarter, our collection levels remained solid, reaching 95% of invoice amount, reflecting the stability of tenant operations across our portfolio. In this sense, tenant sales increased 8% year-over-year, while visitor traffic reached 21 million visitors across our properties. Regarding our financial indicators for the reporting period, total revenue grew 5% on an annual basis, reaching MXN 1.2 billion, mainly driven by higher occupancy rate and average rent. Consolidated and proportional NOI stood at MXN 977 million and MXN 807 million, increasing 5% and 4%, respectively, both with margins of almost 80%. Consolidated and proportional EBITDA were up 2% and 1% on an annual basis, reaching MXN 895 million and MXN 725 million, respectively, over the quarter. Turning to our financial position. As of quarter end, total debt stood at MXN 23 billion, representing an 18% decrease when compared to the same period last year, driven by our consistent efforts to improve the debt structure, as a result of loan-to-value ratio, stood at 30% at the end of this period. It is important to highlight that in this August, at the request of our bondholders, we held a bondholders' meetings for our GICSA 15, 17 and 19 local notes where some modifications were approved, aimed at improving flexibility and strengthening our credit structure, including adjustments to the interest rate, the unification of the maturity date, interest capitalization option, incentives for early repayments and the addition of more collateral amongst others. In this context, I would like to mention that in October, we completed the sale of Paseo Coapa for MXN 800 million, payable in 2 installments, of which MXN 400 million have already been received, which in accordance with obligations were used for the partial early amortization of the GICSA 15, 17 and 19 local notes. The remaining proceeds will be collected over the next few months and will be allocated in accordance with our agreed obligations. Furthermore, we recently signed agreements to sell our entire stake in Paseo Metepec project and to sell the land in Cancun. We expect to receive approximately MXN 1.7 billion in net proceeds from the first transaction over the next few months, subject to the fulfillment of certain conditions. While for the second transaction, we have already received MXN 150 million. In line with our obligation, these proceeds will be used for the partial early amortization of the GICSA local notes mentioned above. As GICSA received the remaining proceeds from this transaction, additional partial prepayments will be made, which are expected to result in the full settlement of these local notes. Towards the year-end, we will continue striving to crystallize our endeavors to reinforce GICSA's position as a connection and enjoyment space for Mexican families, seeking to reach a great visitor satisfaction over the upcoming months that typically record the highest traffic of the year with the Christmas season. Thank you for your continued trust. I will now turn the call over to the operator to open the floor for Q&A. Operator, please proceed.

[Operator Instructions]. We have a question of [ Juan Pablo ].

Yes. Can you hear me?

Yes.

Yes. Just wondering about the sale of these assets that you mentioned. Can you be a bit more specific about the time line for the sale of Metepec and what the conditions would be?

Yes. It will take -- the time line for Paseo Coapa is no longer than 6 months. And Paseo Metepec is depending of certain authorization from the authorities. So we don't have a specific time line for that. We are just expecting to have this authorization in the next upcoming months, but it's difficult to establish a specific time line for that.

Okay. Perfect. That's helpful. And just one more question, if I may. Regarding the 2 short-term loans that you have maturing in June of next year, could you give us a bit more color about the renegotiation of those loans?

Yes, of course. Both loans are for Arcos Bosques and Capital Reforma. And we are now in the process of receiving bids from several banks, and we are in the process of selecting the suitable company that is going to give us the money to refinance that assets. But it's all going on the process.

Our next question comes from Andres Borrego of Catena Activos Alternativos.

Hello? Can you hear me?

Yes.

The question is, I understand from the proceeds of the sales that were announced, it's around MXN 2.5 billion. And then I think it's going to be applied to the CEBURES, and there's also an agreement to -- if there is a prepayment on the CEBURES, there is a discount to the face value of the outstanding CEBURES. And I think that's 25%. Is that the case? Can you tell us how that works? Like what -- if you pay that amount, how much existing debt would you retire? [indiscernible].

As you said, the agreement says that we have a factor that is applied to the payment that is increasing over the time. So depending that factor that we apply is the amount of debt that we are discounting. So taking then that in consideration, we are estimating that the full amount of the 3 CEBURES will be settled at the end of this transaction.

And what is the full amount of the CEBURES?

It's -- at the close of the quarter, it's MXN 3.4 billion.

Okay. So this is enough proceeds to take care of the 3 CEBURES?

Yes.

And does that require -- that was an agreement set in advance. Does that require any assembly or any other thing or it's just have to...

Yes. Since 2022, we strengthened the position. We made our first agreement in the middle of the pandemic, and we gave these assets as a warranty. These were non-guaranteed.

No. They were unsecured.

Unsecured. And we gave this, since 2022, with the compromise of selling that to repay them. So that was the agreement, and it remains.

With no questions in queue, the question-and-answer session concludes. Thank you, everyone, again, for joining us at today's earnings conference call. As a reminder, GICSA Investor Relations team are available to address further inquiries. So please do not hesitate to reach out after today's call. We wish you a good day. Now you may disconnect.