GRUPO GICSA, S.A.B. DE C.V.: GICSA Announces Consolidated Results for Second Quarter 2020

MEXICO CITY, MEXICO / ACCESSWIRE / July 28, 2020 / GRUPO GICSA, S.A.B. de C.V. ("GICSA" or "the Company") (BMV:GICSA), a Mexican leading company specialized in the development, investment, commercialization and operation of shopping malls, corporate offices, industrial buildings and mixed use properties, announced today its results for the second quarter ("2Q20") and for the sixth months ("6M20") period ended June 30, 2020.

All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS") and are stated in millions of Mexican pesos (Ps.). GICSA's financial results presented in this report are unaudited; therefore, figures mentioned throughout this report may present adjustments in the future.

Main Highlights

Corporate

• Our administration is focused on preserving liquidity and on maintaining the continuity of the business, under the best conditions and for the benefit of all our shareholders, clients, suppliers and financial creditors. During 2Q20, the Company entered into agreements to implement support measures to reduce the COVID-19 impact on our business. In summary, we are executing the following actions:
  • Financial Actions
    • Reduction of operating expenses by 36%, and corporate expenses and project under development investments by 59%.
    • We achieved negotiations with financial institutions to defer capital amortization for an average period of 6 months for loans at project level, as well as to defer capital amortization and interest payments for loans for project under development. With these negotiations we managed to defer financial obligations for the amount of approximately Ps. 328 million during this crisis.
    • For local bonds with ticker symbols: GICSA 15, GICSA 16U, GICSA 17, GICSA 18U and GICSA 19, we hold a local bondholders' meeting, in which it was approved, modifications related to certain obligations and capitalization of interest for up to 9 months. This will result in the capitalization of approximately Ps. 550 million.
    • As part of our strategy to reduce corporate debt, we undertook the following actions:

• On April 23, 2020, we purchased 5 million local bonds issued under the ticker symbol GICSA 19. With this transaction, the outstanding balance of GICSA 19 issuance is Ps. 1,591 million (the original amount was Ps. 2,500 million).
• In line with Banco de Mexico's gradual interest rate reductions, the Company carried out the early payment of coverage rates for Ps. 8,390 million, at a cost of approximately Ps. 164 million; with this adjustment, the new interest rate coverage is 67% TIIE and 82% LIBOR.
• On July 21, 2020, we agreed with Goldman Sachs to pay off the interim loan assigned to 9 properties. With this agreement the amount of debt decreased by Ps. 2,750 million

• We carried out programs and support plans for our tenants to regularize payments and deferred discounts on the payments of rent.
• As of today, nearly 800 agreements have been signed, 340 are close to signing and 140 notifications have been sent, which on average correspond to 50% fixed income discount from April to June and is subject to the adjustment of its debits and the fulfilment of its obligations in the following months of 2020.
• By signing these agreements and despite the highly negative environment generated by this pandemic, we have managed to recover about 60% of our regular cash flow, as well as allows us to mitigate the impact on revenue recognition in our financial statements.

• Operational and Health Actions
  • We implemented health protocols complying with the health measures enacted and suggested by the authorities of the places in which we operate.
  • We have strengthened our healthcare and cleaning efforts, intensified the monitoring and maintenance of air conditioners, installed anti-bacterial gel stations at the entrances and interiors of our shopping centers, placed temperature intake and sanitizing mats at the entrances, required mandatory use of face mask, minimum distance of 1.5 meters and at the corporate offices sanitizing showers for our employees.
  • All our shopping centers operate following the capacity restrictions set by authorities at each location. Customer traffic has gradually recovered, per the mobility conditions of each location.
• The technological support we have allowed us to continue remote operations and constantly monitor the health of our staff. Since July 13, we resumed in person activities at the corporate offices, alternating weekly our staff between work from home and in our offices. Our staff who are part of the vulnerable group will continue to work remotely.

Operational

• GICSA reported a total of 912,162 square meters (m²) of Gross Leasable Area (GLA) comprised of 16 properties in operation at the close of 2Q20. GICSA's proportional GLA was 84.7% equivalent to 772,978 square meters. This represented an increase of 9% of total GLA and 11% of proportional GLA, compared to 2Q19.
• As of 2Q20, the renewal rate of the stabilized portfolio was 98%.
• As of 2Q20, the occupancy rate of the stabilized properties was 90.5% and 89.0% of the total portfolio.
• Average leasing rate per square meter of the stabilized portfolio at the close of 2Q20 was Ps. 393, and Ps. 387 in the total portfolio, an increase of 12.9% and 11.2%, respectively, compared to 2Q19.
• At the close of 2Q20, the lease spread of the shopping malls of the stabilized portfolio was 4%, which was above the inflation rate.

Financial

• Fixed rental revenues were Ps. 712 million in 2Q20, a decrease of 3% compared to 2Q19.
• In 2Q20, consolidated Net Operating Income (NOI) reached Ps. 789 million, while GICSA's proportional NOI was Ps. 663 million, a decrease of 7% and 2%, respectively, compared to 2Q19.
• Consolidated EBITDA reached Ps. 730 million in 2Q20, a decrease of 4% compared to 2Q19; while GICSA's proportional EBITDA increased by 3%, to Ps. 604 million.
• At the close of 2Q20, net income before valuation effects was Ps. 667 million.
• Consolidated debt at the close of 2Q20 was Ps. 29,672 million; while GICSA's proportional debt was Ps. 26,981 million. Consolidated LTV was 40%. With the agreement signed on July 21, our consolidated debt decreased to Ps. 26,922 million, reaching a LTV of 37%.

Pipeline

• As a precautionary measure to preserve the Company's liquidity, as of March 2020, investments in new developments were halted with the exception of Explanada Culiacán, which exceed 90% of work progress, and Cero5Cien, which is self-built with the collection of sales already made.
• Due to health restrictions, Explanada Culiacán and Cero5Cien restarted their construction process during the second week of June, reporting work progress rates of 96% and 39%, respectively, as of the close of 2Q20.
• Regarding the work progress, during 2Q20 the Company invested Ps. 86 million in shopping centers under development and Ps. 25 million in Cero5Cien.

For a full version of GICSA's Second Quarter 2020 Earnings Release, please visit:

http://www.gicsa.com.mx/en/investors-relationship/financial-information

Conference Call

GICSA cordially invites you to its Second Quarter 2020 Conference call

Wednesday, July 29, 2020
1:00 PM Eastern time
12:00 PM Mexico City Time

Presenting for GICSA:
Diódoro Batalla - Chief Financial Officer
Avril Carenzzo - Treasury and Investor Relations Officer

To access the call, please dial:
1 [phone] U.S. participants
1 [phone] International participants

001-800- 514-6145 Mexico dial in (Toll free)
Passcode: 44272

About the Company

GICSA is a leading company in the development, investment, commercialization and operation of shopping malls, corporate offices and mixed used well known for their high-quality standards, which transform and create new development spaces, lifestyles and employment in Mexico, in accordance to its history and executed projects. As of June 30, 2020, the Company owned 16 income-generating properties, consisting of ten shopping malls, five mixed use projects (which include four shopping malls, four corporate offices and one hotel), and one corporate office building, representing a total Gross Leasable Area (GLA) 912,162 square meters, and a Proportional GLA of 772,978 square meters. Since June 2015, GICSA is listed on the Mexican Stock Exchange under the ticker (BMV:GICSA B).

Investor Relations Contact:

Avril Carenzzo Yinneth Lugo
Tel: [phone] Ext. 4609 Tel: [phone]
Email: [e-mail] Email: [e-mail]

SOURCE: GRUPO GICSA, S.A.B. DE C.V.

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