How to Build a Financial Model for Multiplan

Financial Information How to Build a Financial Model for Multiplan

ain Sources of Revenue from Shopping Centers

Multiplan’s revenues from shopping centers are primarily derived from:

  • Leasing stores in shopping centers – shopping centers enter into lease agreements indexed to the IGP-DI, usually for a term of five years, in which rent is based on the higher of (i) a fixed minimum amount based on market rates or (ii) a percentage of the tenant’s total sales. The tenant typically pays the higher amount on a monthly basis and double rent in the month of December.
  • Kiosks and merchandising – we lease spaces in shopping centers for kiosks, under agreements that have an average term of three months, and for the placement of media and merchandising in common areas.
  • Transfer fees – whenever a tenant transfers its lease to another tenant, Multiplan receives a percentage of the total amount negotiated between the parties;
  • Key Money (KM) – Key money revenue is the amount paid by a tenant in order to open a store in a shopping center. The key money contract, when signed, is accrued in the deferred revenue account and in accounts receivable, but its revenue is accrued in the key money revenue account in linear installments, only on the occasion of an opening, throughout the term of the leasing contract. Key Money revenues are composed of (i) recurring or operational revenue, from Key Money accrued from shopping centers with more than five years in operation, and reflects the Company’s effort to improve tenant mix in its malls, and (ii) non-recurring revenue, from Key Money of leasing contracts for stores in greenfields and expansions delivered in the last five years.
  • Parking – all shopping centers in operation charge an hourly fee for the use of parking.

 Expenses Associated with Operation of the Shopping Centers

Expenses associated with operation of the shopping centers including leasing stores, key money and parking fees are as follows:

  • Expenses Associated With Vacant Stores – a shopping center is responsible for the maintenance of a store when it is vacant, which principally includes a condominium fee and real estate tax;
  • Contribution to The Shopping Center Marketing Fund – previously, a shopping center would contribute a percentage of the total marketing fund fees collected from tenants to fund marketing and publicity expenses. In more recent developed shopping centers (for instance, Shopping Anália Franco, DiamondMall and ParkShoppingBarigüi), such expenses are not obligatory;
  • Leasing/Brokerage Fees – expenses related to the leasing of the stores and other spaces in the shopping centers;
  • Legal Expenses – legal expenses related to cases involving tenants and contractors;
  • Marketing and Publicity Expenses – in expansion and development of new shopping centers an initial investment in marketing for the shopping center is necessary;
  • Audit Expenses – contractors are responsible for the expenses of internal audits of tenants’ sales and of external audits over condominiums, marketing fund fees and operational results of shopping centers;
  • Land Lease – DiamondMall is leased for 30 years by Clube Atlético Mineiro and the football club receives 15% of the lease fees received by the contractors of this shopping center;
  • General Expenses – these expenses are mainly related to initial expenses for the launch of a new shopping center or the expansion of a existing one; and
  • Contractual Obligations – commercial arrangements negotiated with tenants, most of them anchor stores, under which the shopping center agrees to bear any condominium and/or marketing fund fees due from the tenants.

 Revenue (Expenses) from services

Multiplan’s revenues from services they provide to shopping centers are primarily derived from:

  • Leasing/Brokerage Fees Charged to Owners;
  • Managing Shopping Centers for Owners and Tenants (Condomínio Civil); and
  • Planning, Developing and Marketing During Shopping Center Development.

Service fees collected from operating shopping centers are classified as:

  • Fees paid by a shopping center’s owners, calculated as a percentage of the shopping center’s net income, which is calculated by deducting the shopping center’s operating expenses (excluding the management fee itself) from total gross revenue; and
  • Fees paid by tenants to the shopping center, divided intwo types: (i) a condominium fee, calculated as a percentage of the total expenses of the condominium; and (ii) a marketing fund fee, which is calculated as a percentage of total marketing fund expenses).
  • Marketing services are based on a percentage of the rent under the lease agreements, key money, lease of kiosks and merchandising, transfer fees and properties sold, such that an increase in revenues leads to a direct increase in the revenues from the provision of services. Alternatively, marketing services can be based on a contractual amount, which is established on a case-by-case basis and reviewed every year.

 Office and Residential Real Estate Development

  • Revenues: Multiplan receives revenues from the sale of office and residential real estate developments.
  • Expenses: Multiplan’s cost of properties sold is associated with their real estate development business and is composed primarily of the cost of construction of the properties, the cost of land and general development expenses.

 

In order to access the company´s data history click here.

Last updated on 2013-08-08T10:14:21
Back