Overview of the sector
The shopping centers if you are in a large part of the remaining assets of the sector of real estate. This ecosystem is highly adaptable to the socio-economic context and changes in the behavior of the consumer and are shaped by the demands of the target audience, and reflecting on the task at hand, and the changes all around you. The concept of the shopping center, has been evolved, before focusing almost exclusively on the purchase of the products, and went on to encompass a growing, service, entertainment, and food. According to a survey of the ABRASCE (2023), 57% of visits to shopping malls are inspired by the new ways.
This adaptability is also reflected in the increasing involvement of enterprises, multi-purpose. By 2024, 35% of all shopping malls in the brazilians were already embedded in the complex, which includes the towers of corporate houses, educational institutions, laboratories and hotels. An emblematic example is the Shopping mall el dorado, one of the first in the country to incorporate slabs, standard in their field. The resort also has rooms were spacious, clean, integrated connection to the bus stop and the railway station, driving in a daily flow of organic thousands of people. By 2024, the flow, the monthly average for the visitors in the shopping malls in the brazilian was 476 million people — more than twice the population of the country. As well as el dorado, many shopping malls have become a part of the everyday life of the population, as in the case of the shopping Metrô Tucuruvi Metro and Broke it, both in São Paulo. The combination of high flow, and the ability to adapt has led to the representation of the sector in the national economy. By 2024, the business volume of the shopping centers amounted to R$ 198,4 billion, with an increase of more than 1 million formal-sector jobs — the equivalent of 2.3% of the total number of jobs as a registered employee in the country. Today, there are 684 shopping centers are in operation, with more than 18 million m2 of GLA (Gross leasable Area), and half of it is located in the south-East, and 88 of the greater São Paulo area. The average rate of occupancy of the shopping malls is a quick and remained close to 95% over the course of the year. Of course, the projects will also fit a mix of stores, according to the socio-economic and behavioral area.
In the face of these dynamics, and the shopping is considered as an asset, which, in theory, should provide the actual returns — that is, the above-inflation — from time to time. However, when we look at the history of the growth in sales since 2015, we have seen an average annual increase of 3.0%, less than the average annual inflation for the period, up by 5.2%. The company's total revenues, is commonly used as a primary thermometer, and performance, including being the basis for the calculation of the cost of the occupation, the index is considered healthy when it is between 10% and 15% of the sales. In this way, and if the sales are not keeping pace with the rate of inflation, and the rents, as a result, they tend not to evolve over time in real terms. In this scenario, however, is in contrast with the results of the major shopping malls in the country, which is reported in real terms, sales of between 2.0% and 3.0% per year over the same period. The difference is due to the specific nature of the assets. In order to better understand and evaluate each of the shopping center, we use the following variables:
- Location: As well as all assets of the real estate location, location, location is a major component of the analysis of the active — both on the macro view, considering the growth of the city, as well as in the microlocalização, taking into account the ease of access, for example. In addition to this, we are also factors that are relevant to the population density of the region is served by a shopping mall, and the synergy between the audience and the majority of the surrounding area.
- Maturity and Dominance: Maturity is a measure of the degree of integration of a shopping mall in the daily life of the people. This is, in general, is a process of time and the growth of the organic flux. In addition to this, the shopping malls that cater to the same audience in the same microlocalização tend to be direct competitors to each other. For this reason, we also consider your level of dominance, and the consolidation of assets in the region as an important factor in the analysis.
- The specifications of the assets: The questions are specific to the assets include a number of factors, such as: 1) the Quality of the administrator of the shopping center, which is reflected in the ability to adjust the mix of retail stores, to promote their business and gain the edge; (2) the Potential for growth; (3) the Structure of the physical asset.
A portfolio of the Stocks in shopping Malls
In order to understand in more depth the differences between the various types of shopping malls as well as the impact of the metrics outlined above, we have developed a database with records of all the shopping malls in Brazil. However, for the purposes of the assessment, according to RBR, we've obtained complete data for 156 projects. As it turned out, a significant portion of the shopping malls in the country, is made up by a regional or microregionais. Approximately 40% of all the shopping malls are less than 20, 000m2 of GLA, it being considered to be small. Those assets, mostly located in small towns, are faced with a more difficult to pass on the inflation of contracts for the lease of the time, which contributes to the fact that the national rate of growth of sales and the rental income is significantly below that of inflation.
Already in the shopping centers of highest quality, which can pass between 2.0% and 3.0% above inflation over long periods of time, are, in most cases, in the hands of institutional investors. Among them, we highlight the foundations, and other institutional investors, listed companies, (Multiplan, Ii, Charisma, and JHSF), and some of the other real estate funds. Together, these portfolios that exceed$ 100 billion in assets under management, with the majority comprised of projects to a high standard and is in a privileged location.
For the measurement of the difference in the quality of these assets, we look at the evolution of the lease in the same store (the Same Store Rent for the last ten years, the three largest companies listed in the business-and Multiplan, Ii, and Charisma. Even with the economic times tough — as-recession of 2015-2016, the government of Dilma rousseff and lula, and the pandemic of COVID-19, which has temporarily halted the operations of these companies have delivered a CAGR of 6.5%. This is more than double that of the national average in sales, topping the year-end inflation at 0.8%. As the total account for about 75% of the net proceeds of the mall, the blue dragon/m2 (operating income net of a square meter), follows a path very close to that. It is a direct reflection of the quality of the operation, and the ability to raise the price of those assets.
In order to deepen the analysis of the portfolios of the three companies that are listed, we can use the metrics mentioned in the previous page, in order to estimate the category of each of the assets. The shopping malls have been classified into the following groups of people: the Prime, A+, A -, B -, C -, and D -, allowing the mean to compare them to. The assets of the Prime is the so-called “active” trophy. The Multiplan, for example, has the Morumbi Shopping, Iguatemi, Iguatemi São Paulo shopping mall is the oldest in the country, as well as the Charisma, the Mall is air-conditioned. In our study, the malls and classified as "Prime", and The+ show performers that are similar in terms of growth in sales, rentals, and a blue dragon. The main difference between them is the liquidity that the assets of the Prime are more likely to be played out for institutional investors. Of the categories, Press The+ and-have the greatest potential to generate real growth in NOI. Since the assets of the class B will tend to deliver a performance close to that of inflation. In the end, all the shopping malls in the categories C and D, facing more difficult to pass on price in full.
In the evaluation of the RBR, we estimate the value of each of the shopping center that is proportional to the share capital held by the company. The chart to the right shows the percentage distribution of the valuation of the portfolio, segmented by class of asset. The Ii, for example, a concentration of 44% of the value of its portfolio of three assets in Prime: the Iguatemi São Paulo, JK Iguatemi, and the Patio Higienopolis. Based on this segmentation, Multiplan has 89% of its portfolio in assets that are classified as Prime, a, A+ or A. b. c. Ii, 77%, and Charisma, 67%. Thus, the exposure of the assets, a, B, C, and D, is the representative, confirming the high quality of the portfolio analyzed.
Credit spread Risk: Source: RBR, March 25
Although the actions of the shopping malls have a direct focus on the operation of the projects, and they are still embedded in the macroeconomic environment is volatile. Real estate, in general, tend to be used interchangeably in the fixed-income securities for the long term — in the case of brazil, the NTN-Bs in the long term. This is because they provide the review on inflation in rental income, preservation of capital and the generation of the basis of the yield. In this way, it is natural for variations in the NTN-Bs. to serve as a benchmark for pricing in the industry of Real Estate. Whereas, in the NTN-B-long-reflect the economic environment and its uncertainty, it is reasonable to assume that the valuation of the shares of the shopping malls in the secondary market, however, at least in part, these changes — from that of other structural factors of the companies, such as general and administrative expenses the company's leverage, you are in control.
Opportunity to work at the Stock exchange
The NTN-B, long long is at the highest level in the last 15 years, which is comparable only to the period of stress, economic lived during the Dilma government, in 2015-2016. Over the past five years, as well as the pandemic of COVID-19, and the overall picture has faced a strong instability, which is marked by both direct conflict (Ukraine, Russia, Israel and Palestine). In addition, the process of deglobalization has gained momentum, especially after the government of Trump and his policies, tariffs, increasing the perceived overall risk. On the plane home, with the Brazilian also has to live with uncertainty, and in particular in the field of taxation. In this context, the fundamentals of real assets such as shopping, end up as, at times, to be blinded to an endorsement.
As shown previously in the sales and rentals, one of the main features of the shopping malls, high quality, resiliency, and operational. This is reflected particularly in the stability of the main line, as a result, the NOI (Net Operating Income). Over the last 10 years, excluding any period of the pandemic, the volatility of the average of the F/m2, the portfolios are analysed, it was only 4.7%. In addition to this, the industry has historically maintained the levels of conservative leverage, which is a trend that has intensified over the past few years. At the end of 2024, with the Multiplan presented a debt of only 2.3%, and Ii at 1.8%, and the Charisma of 1.9%. This is a combination of free cash flow generation, predictable, and low leverage, and offers, in our view, there is a high degree of security for the investor.
Even so, when you look at the charts of the AFFO Yield — Adjusted Funds From Operations, the metric is widely used in real estate, which accounts for the generation of operating cash flow divided by the price of the market, compared to the rate in the NTN-B is a long one, we see a strong upswing in the last few years, and undock significant in history. This is particularly true in the face of the foundations for a solid, indicating that the market may be precificando the risk of an exaggerated way.
