HBR Realty Empreendimentos Imobiliários (HBRE3) Q4 2023 earnings summary

Executive summary

• Q4 net revenue was BRL 36.5 million, NOI BRL 30 million (+3% YoY), and net income BRL 151 million, boosted by property revaluations.

• Operating platforms grew through higher sales, rents and occupancy; ongoing construction and scheduled deliveries are expected to expand the asset base.

• Management was optimistic for 2024, citing project deliveries and potential asset sales to support deleveraging and future development.

Financial highlights

• FY managerial net revenue reached BRL 144 million, up 5.7% YoY; ComVem grew 20%, 3A 3.4% to BRL 21 million, and malls 5.6% to BRL 63 million.

• FY managerial NOI was BRL 118 million, up 7%; ComVem NOI rose 14.2% to BRL 13.6 million, 3A grew 6%, and malls posted double-digit growth.

• FY EBITDA was BRL 67 million, practically stable YoY; Q4 EBITDA was BRL 20 million, lower YoY due to higher SG&A and rent discounts.

• FFO was negative BRL 35 million, worsening YoY as CapEx reduced cash and project loans increased financial expenses.

Outlook and guidance

• 2024 ABL deliveries are forecast at nearly 23,000 sq m, including Chácara Klabin, ComVem sites and the W Hotel/João Moura project in the second half.

• The Klabin project, nearly 8,000 sq m, was expected to open in April–May 2024 and was already nearly fully leased.

• Further projects are scheduled for 2025–26, including developments with Cyrela and a ComVem on Paulista Avenue.

• Management expects revenue and operating results to strengthen as assets are delivered and occupied, and expects 2024 asset recycling to depend on market conditions and transaction values.