HBR Realty Empreendimentos Imobiliários S.A. ($HBRE3)

Good morning, ladies and gentlemen. Welcome to the HBR Realty Video Conference to discuss the results of the first quarter of 2026. This video conference is being recorded, and the replay may be accessed on the company's website where the presentation is also available for download. [Operator Instructions] This video conference will be presented in Portuguese with simultaneous translation into English. [Operator Instructions] Before proceeding, we would like to reiterate that forward-looking statements are based on the beliefs and assumptions of HBR Realty's management and on currently available information. These statements may involve risks and uncertainties given that they relate to future events and therefore, depend on circumstances that may or may not materialize. Investors, analysts and journalists should take into account that events related to the macroeconomic environment, the segment and other factors may cause results to differ materially from those expressed in the respective forward-looking statements. Today with us are Mr. Alexandre Nakano, CEO; Mr. Alexandre De Freitas, CFO and IRO; and Mr. Alexandre Bicudo, COO. I would now like to turn the floor over to Mr. Nakano to start the presentation.

Good morning to all. First of all, I would like to thank you for your time and interest in the company. It's very important to have you here as we share the results of the company and our vision. This will allow you to understand a little bit more about our company and how we envision the future in the next few months. We are also going to talk about our strategy for 2026. On Slide 3, we have the highlights. And this has to do with the main figures. We had a net revenue of nearly BRL 60 million, net revenue of BRL 53 million and NOI was also very substantial. We have grown 38%. The NOI has grown as well. And this attests to the progress that we made with W Hotel and ComVem. We also give you some more color about SG&A over net revenue, and we are now at a level that makes us feel a lot more comfortable. We have worked hard to improve operations. We have always focused on costs, expenses and we don't focus only on revenue, on growing rents, revenues and sales. So the SG&A over revenue is a very important measure for us. Also in relation to sales, BRL 0.5 billion. And these are sales that started -- the process started in 2025. In terms of opportunities, we would like to highlight W Hotel, BRL 25 million in terms of operational revenue. It's yet another very important point. The revenue from W is growing very strongly. So the net revenue of this vertical grew 71%, a very robust growth. And we also sold 2 +Box units in Tambore. We sent it to a storage company in January 2026. In the corporate vertical, NOI is nearly BRL 10 million with a 96% margin. And we highlight the revenue of HBR Corporate Pinheiros. We sold this to the Einstein Hospital. It's the first expansion of the Albert Einstein Hospital on this side of the river. And we were chosen by Einstein, which made us very proud. This shows that we have been getting it right as we choose land and we develop products. The construction is also right and the way we market our projects as well. We signed the sale in December, and this was paid in March of 2026. And then as regards to ComVem, if you look at the last few quarters, you will see that growth has been strong in the last few quarters in terms of sales and in terms of rents and the NOI as well. For the first time, the margin was above 90%. We have been pursuing this very strongly. We put a lot of energy into increasing the convey margin. And the growth has shown the importance of this platform within our portfolio. I'm going to talk about the recycling, the churn strategy. We have a critical mass in terms of ComVem. We have 40 units with over 50,000 square meters of GLA and 80% of this area is occupied. If you Google active facade on Google, you are going to see lots of news about an occupancy problem. On average, active facades have 80% vacancy in Sao Paulo, which is the opposite of what we see. Our portfolio has an occupancy rate of over 80%. Bicudo and his team who is responsible for this platform have done a great job, and Bicudo is going to give you more color about how we achieve this and how we are going to continue to work once the new deliveries happen.

And then in the shopping malls, NOI grew by 4.9% with a margin of 83%. Sales were at BRL 420 million approximately, and the rents have increased approximately 5%, which is what we expected. The gross leasable areas are mature in our shopping malls. We are adding 7,000 square meters in the Mogi mall. And we are starting to think about the expansion of another shopping mall. We need to increase the GLA due to the high occupancy rates of these 2 shopping malls. Now we are going to talk about ComVem and shopping malls. As Nakano said, we are very happy with the performance of ComVem. We are seen in the market, especially by clients as good marketers, good planners and good operators of commercial convenience centers. And this is very important for us. And this is reflected in the figures. So just very briefly in the quarter, net revenue was BRL 7.3 million, a 31% increase relative to Q1 2025. Total sales were BRL 108 million. And in the same-store concept, also 5% above Q1 2025. In terms of rents, BRL 10.4 million in Q1, increased by 36% and FSR, 71% increase. So these are very good figures, which attest to the power of ComVem as a platform. In terms of occupancy rate, the occupancy rate has been growing gradually and consistently. In Q1 2026, it was 88%. We are looking for high occupancy whilst trying to increase rents. We have an NOI that expanded 54%. And the margin, as Nakano said, is record at 91%. Now in the HBR malls, there is an impact from Mogi and Suzano, mature enterprises in terms of sales, BRL 409.6 million, an 8% growth relative to last year. Suzano grew 13%. And here, I would like to highlight telephone, sports gear grew really well. SSS grew by 6% relative to Q1 last year, especially Olinda with a 7% growth. In terms of total rents, the growth was in the region of 5%, reaching BRL 35.1 million. And Olinda was the highlight. We managed to increase rents by 16.5% relative to Q1 2025. Entertainment and education institutions account for that increase. In terms of SSR, rent grew to BRL 24 million. And the highlight is Urupema. Then moving on to the operational data. Sales were in the region of BRL 420 million, an 8% growth relative to last year. Average occupation was 93%. And I would like to make some comments. In Mogi, occupancy rate is really good, 98.8%. And this is a mature shopping. So we are trying to improve the shopping mall and to optimize the GLA. We have been very careful in doing this in Mogi. In Suzano, especially last year, we managed to improve the mix, and this is improving all the indicators, 97.3% of occupancy. And vacancy has to do with a mega store. So once we rent this store out, we will be able to bring vacancy to zero. As for Olinda, occupancy is 89%. It's a shopping mall that is still maturing. And after we closed the quarter on April, we managed to close a deal with a cosmetics shop, which has been doing really well. So we are very happy with the prospects for Olinda. In terms of Urpema, occupancy rate is 82%. We are improving the mix of this shopping mall. We will have a big gym, which is going to open at the end of Q2. And we have other stores, which are coming to the shopping mall and make us very optimistic. In general, NOI grew and the margin is 83.3%. So in general, this is what I had to say about HBR Malls. And now on Slide 8, I'm going to give you some more color about our assets for you to understand the quality that we see in these assets and the importance they have within our portfolio. First, we are going to deliver Vila Nova o Conceicao, which is located between Vila Nova Conceicao and Itaim. We have been talking to 2 or 3 potential tenants, and we had a proposal to sell, but we didn't move forward with that. But this attests to the liquidity of the assets in the market. It's between Santo Amaro, uhermeet close to the Ambev building. And for those who want to be in Itaim, Vila Nova or Vila Olimpia, it's a good asset at a competitive price. So this is how we position this asset. And companies have been approaching us, companies that want to be near the clusters, the corporate clusters, apologies, but at a more competitive price. Ibirapuera is located on [Foreign Language]. There is a gym that wants to occupy the first floor. We have sold some stores. And also, we have been approached for the corporate floors. Then Moema is across from the Ibirapuera shopping mall and close to the Eucalyptus underground station. We have rented a store to Pao de Acucar, and we have 2 floors, 2 corporate floors with 2,500 square meters each. It's a great location. Paulista is located on Avenida Angelica, with Avenida Paulista and Rua Minas Gerais, a corporate tower with nearly 10,000 square meters of area. And we believe that within this month, we will be closing the deals to rent all the building to a couple of companies at market rate for this type of rent. So even before we get the permit, we believe the whole tower will be rented out. And then Faria Lima II is a corporate building with 32 residential units. The residential units have to do with improving the construction efficiency of the building. We do believe in having residential units on Faria Lima. This building has 32 residential units, a store down on the ground floor for 200 square meters. There are 2 companies looking to acquire these residential units to then rent them out. These are small units of 40, 50 square meters, which are looked after in this region. And then Pedroso Alvarenga, which we call Itaim 1 is located between Renato Paes de Barros and Pedroso Alvarenga, premium location. The GLA is 7,000 square meters plus a store with 350 square meters on the ground floor. And we have been approached to rent out the corporate floors and the store because it's a sought-after address. We are going to start working on that on the second semester of the year. So Faria Lima will be ready at the end of 2028 and Pedroso Alvarenga will be ready in the first semester of 2029. So we have delivered the sale of Hilton, Albert Einstein and +Box. So for this year, we are going to focus on selling and recycling Faria Lima percentage also of the shoppings in Mogi and Suzano and the ComVem platform. There was a bit of frustration at the end of the year with Faria Lima, which didn't work well, but it gave us an opportunity to reprice the asset. We had an earnout based on renewing the agreement we had with the tenant, and we renewed it with a very good value, a very good amount, which repriced it to the market average in the region. So we will be able to reprice it when we try to sell it again. In terms of Mogi and Suzano shopping malls, these are very mature enterprises. So we have to look for the best proposal. In these 2 shopping malls, we want to continue to control and manage but we have many companies who are interested in it. This is being dealt with by Bradesco, who has been talking to many players. In the last 2 or 3 weeks, we have signed over 15 NDAs, which attests to the interest of funds in these assets. And in terms of ComVem, Dalpiero and myself have been talking with 3 players. One of them is very interested in buying it through a fund. And because of ComVem characteristics, it's a very good asset for this fund. ComVem operates in different geographies, and this allows one unit to offset the results of another unit. So this allows a consistency of income, which is sought by funds of this type of profile. ComVem with growing sales, growing NOI is a very good product for this type of fund. In Q2 and Q3, we should be able to announce a sale of ComVem, Faria Lima and some percentages of the shopping malls. Now moving on to Slide 9. We are going to talk about the opportunities vertical. And the highlight here, as you can see, is the increase of gross revenue of the W Hotel. We are now having a revenue of BRL 25 million in gross revenue after the ramp-up period of 1 year. We can still make it grow. It's a young asset. And we are very happy with the way Marriott manages W Hotel, but we still see a lot of opportunity to increase revenue. We have also been talking to Marriott and the team on site to lower costs. As you know, we are very active in the management of these enterprises, and this is the way we work with W as well. So we are very disciplined in terms of costs and also the recycling of the 2 units of +Box, which were sold to the storage group. Here, you can see the new deliveries. We have a ComVem in Giovanni Gronchi, which we bought from Cury. There are 2,000 units in these 2 towers, 6,000 people living there who can use our stores. ComVem has a very good potential. We have been selling the stores very well in ComVem. And then we acquired other ComVems from Cyrela, Vila Nova Conceicao, Ibirapuera and Cotovia, 3 units, as I have told you before. On the right-hand side, you see the GLA on the platforms. And you can see that our energy and focus is on ComVem and 3A. In terms of malls, we are expanding Mogi. In the future, we are going to expand Suzano as well. And this gives you an idea of our strategy, which is to focus on corporate and ComVem. Now I turn the floor over to Dalpiero, who's going to talk about the company's finances.

Good morning. Once again, I come here to talk to you about the results of HBR. In terms of net revenue, we had BRL 53.4 million 37.9% increase relative to Q1 2025, which reflects a growth in nearly all the platforms. On 3A, an 83% increase; opportunities, 71% and also ComVem grew 31% and Malls, which grew 8%. Also, we had efficiency gains, especially in ComVem. NOI is 54% greater than in Q1 2025. The graphs below give you all the breakout. The renewal of the rent, as mentioned by Nakano in the Faria Lima building had a great impact. The rent is now mark-to-market. And just to complement what Nakano said, today, in Sao Paulo, there is a balance between assets of corporate units, which favors owners. So we see not only this in this asset on Faria Lima, but as Nakano said, there is a strong demand for corporate assets in other places in the city, especially Pinheiros, Paulista and Itaim and Faria Lima. And these are places where we have a relevant presence. In terms of IFRS, the increase in revenue was 42.1%. In terms of NOI, 25.9% was the increase. 3A has a very relevant presence, but the shopping malls as well account for a lot of it. Here, we see the G&A over net revenue ratio. And for the fifth consecutive quarter, there was a reduction in this indicator. This is the lowest in terms of our history. We had geared efforts to align processes to use automation to reduce headcount to reorganize the structure and also to do more with less. Last year at ComVem, there was an increase of approximately 15,000, 16,000 GLA, but with no increase in SG&A. So our processes are now more streamlined, and we are more organized to keep costs under control. Then on the next slide, we see EBITDA, adjusted EBITDA, which reached nearly BRL 26 million in Q1 2026, an increase by nearly 36% vis-a-vis Q1 2025. The managerial margin is nearly 50%, which is supported by the strong growth in revenue, in net revenue and the control of administrative expenses. On the graph here, you can see the increase in adjusted EBITDA by 35%. In terms of IFRS, this reaches nearly 42%. FFO is very important. It's a metric we have to improve. It is impacted by financial expenses. And when we affect sales, we want to reduce financial expenses and improve our adjusted FFO. Net income as well, there is a slight improvement, but it was impacted by financial expenses. And this is why we focus on sales to decrease the financial expenses. On the next slide, we see our CapEx. It's under control, the future CapEx. And when we closed last year, there were some displacements of CapEx. So there's no additional CapEx. What we have done is rebalance the CapEx between periods. As you know, we are facing difficulties in the civil construction industry. So there are some delays in deliveries and delays in what we have to receive, and therefore, the execution flow suffers. In terms of debt, there was a reduction by 12.2% in net debt relative to Q4 2024 and a stability of the net debt relative to Q1 2025. We have been able to amortize BRL 88 million in debt coming from sales. I have been talking a lot about reducing our debt. And at the end of the quarter, our debt was BRL 1.6 billion, cash and equivalent, BRL 213 million, and the net debt is BRL 1.4 billion. Our focus is to rebalance the capital structure to reduce debt. This is not going to be a straight line going down because we have CapEx to execute and this CapEx is partially funded with debt. But when we execute sales, we want to ensure that our debt goes down, and this is what you see here in Q1. When we look at the amortization of debt, we don't have any peaks of debt here. There is a dilution of our debt in the payment schedule. The indices of our debt also are diversified. Most of them are linked to civil construction indices. So this debt is competitively priced. And then on the right-hand side, you have our debt by vertical.

[Operator Instructions] Questions that are sent in writing and not answered during this video conference will be answered by our IR department. The first question comes from Mr. de Meloni from Santander.

The impact of the renewal of 3A in Faria Lima was an ad hoc thing, right? Or should we expect something similar for the next semester? Is the revenue level sustainable? Or should we expect changes in the next few quarters?

Thank you, Matheus. The impact of the renewal of 3 Faria Lima has a bit of both. we had an agreement in January, but it was retroactive to October. So we had the impact of October, November and December, which were paid in January. And then in January, you start to see a substantial increase in this rent quarter-on-quarter. in recurring terms, BRL 1.2 million, BRL 1.3 million per month more than we had before. So it's an increase which is relevant with no additional costs. In terms of SG&A over revenue, this is structurally sustainable. when we adjusted the structures last year, we managed to optimize the structure. So this is sustainable from a staffing point of view. We also have automation, gains of scale, process improvements and policies to restrict some more costs. So this is a structural reduction, which is also sustainable. There may be increases. But what I can say is that it is a structural change.

The next question comes from Mr. Lee from Bradesco BBI.

I have 2 questions. Can you give us an update on the maturation of W? Is there an increase in the occupancy rate? And then there was an adjustment in the rent of Faria Lima. How will this impact the sale price?

Herman, thank you very much for being here and for asking your question. In regards to W, yes, of course, it has had an increase in the occupancy rate. This is the beginning of the second year of operation. And from Monday through Friday, the occupancy rate was nearly 100%. We had to send our guests somewhere else because we had some overbooking. Just to give you a little bit more color, 60% or 70% of the revenue of the hotel comes from the occupancy of rooms and then 34% comes from food and beverages. So we are gearing efforts together with Marriott to increase the number of events so that companies will hold corporate events there because this is what can move the needle in this type of -- so we are looking to capture revenue from events. And then in terms of Faria Lima, it will have an impact, not only on the selling price, but also on the velocity of sale. The rent was below market value. And now it is aligned with market value and maybe a little bit higher than market value. So this was a very good upgrade in the value of that rent. And we believe that we will receive proposals that reflect this improvement we had in the rent value.

Next question is from Mr. [ Damian Brown ].

Congratulations for the quarter. One question about the ComVem platform. Will it be sold to an existing fund? Or will it be a spin-off of the company, a fund where the asset would remain the property of the company, but on a separate fund?

Thank you, Damian, for the question. It's an opportunity for us to talk about what we are thinking to do with ComVem. In the beginning of this presentation, Nakano talked about the sale of this portfolio of assets. So just to make it clear, all the ComVem units are under our balance sheet. So the transaction means that we want to sell these assets to a company outside HBR. So it would be a sale to a third-party fund, which would manage the fund. HBR would be part of this fund as a realty consultant and would receive a fee to provide this service. For us, it is essential to continue to manage these assets. The occupancy rate is nearly 90% because we focus on managing those assets. We have been able to create a mix of convenience proximity. We don't sell shoes. We have restaurants. We have shops that sell wine. We have grocery stores. So what we have is a product, a recipe that is very difficult to replicate in the market. So we would like to continue to manage the mix, but it would be a sale. And once this happens, we will have a recycling of our capital. It would be a proof of concept for ComVem. We have many thousand square meters of convey that we are developing, and this creates a virtuous cycle, development, creation of value and sale to a fund. And we still -- we will be able to receive revenue to reinvest in ComVem. This transaction is moving forward. As Nakano said, we have been talking to some funds, and this is in our pipeline for 2026 to execute this deal.

The next question comes from Mr. [ Magallanes ].

Congratulations for the results. What can we expect in relation to the reduction of debt given the recycling of the portfolio? What amount of net debt should we expect at the end of 2026?

Thank you, [ Samuel ]. Thank you for participating. in this conference call, I will give you no guidance. It's something that we are very mindful about. What I can say is to reiterate what Nakano said. We have a pipeline of sales for this year. Faria Lima, percentages of the shopping malls and the ComVem transaction. These 3 blocks of assets and maybe others may be added to that will allow us to amortize the debt. But I won't give you a percentage. We have the breakdown of our managerial data where we have the level of indebtedness per asset per vertical, but could be in the region of BRL 0.5 billion and the sale could be in the region of over BRL 1 billion. So I'm not talking about an amortization straight down. The amortization will allow the debt to go down, and we will make new debt because of our CapEx commitment. And then the debt will go down again once we do another sale. The important thing here is to say that the trajectory is towards reducing debt. This is what we have been focusing on. In the current scenario with high interest rates, this debt impacts our FFO, and this is our concern. But we are not going to just sell off the assets. We are looking to make good transactions with prices that make sense to us and to the investors.

The next question comes from [ Jose Luiz ].

The occupancy of ComVem reached 88% with FFR of 7.1% pipeline of 12,000 square meters for delivery in 2026. Is there room to expand occupation and rent per square meter? Or are you thinking more in terms of diluting costs over the current base?

Thank you, Jose Luis, for your question. This allows us to give you some more color about convey. First of all, we have to talk about the quality of this additional 12,000 square meters, 5 ComVems in upscale regions of Sao Paulo. So we want to maintain and increase the quality of the tenants, increase the rent, maintain the occupancy rate. We are going to continue to be very careful with the tenants, commercial, financial planning, then marketing, then a careful selection of the tenants, the brands, the activities because they have to adhere to the profile of ComVem. The occupancy has to be high. The mix has to be good and sustainable in the long term. So this is a very good prospect for when we add this new GLA. In terms of the costs, as Nakano and Dalpiero said, our team is ready to work with this GLA with the same team. So the dilution of costs should take place as well.

The Q&A session is now ended. I now turn the floor over to Mr. Nakano, CEO, for his final remarks.

Once again, I would like to thank you all for your time. I would like to thank our controllers, our shareholders, our Board and our associates for this strong operational results. NOI over 54%, sales growing 37%, 88% occupancy, Faria Lima with the new value of the rent, which allows us to reprice the asset, the shopping malls with 97% occupancy and W. W has been growing as expected or even above what we budgeted for in terms of occupancy and events. So what we have been doing is managing W together with Marriott to improve the NOI. In terms of recycling, which is extremely important, Dalpiero has already explained our thinking. We have maintained our strategy in terms of deliveries. We are selling assets once they reach maturity. And once they reach maturity, we are going to sell these assets, but not at any cost. We are not going to sell 34off the assets. We want a healthy cash position, a healthy debt position as well. and we have to find the best time and the best value to sell the assets. As has been said, our focus will be on the sale of the corporate tower in Faria Lima, our share in the shopping malls, Mogi, Suzano and maybe part of Olinda, and the sale of ComVem. And ComVem is a game changer, over 50,000 in terms of GLA, BRL 15 million, and it's part of our strategy. We want to be asset-light in the ComVem platform. Very few have this kind of knowledge. We are able to rent out to charge, to collect, and we now can recycle that, and we can become real estate consultants within this fund, we want to sell ComVem to. Very few in the market can manage this type of retail. Once again, thank you so much for attending this video conference and see you next quarter.

The video conference of HBR Realty is now ended. Thank you all for participating, and have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]