1Q17 EARNINGS RELEASE

Transcription

1 1Q17 EARNINGS RELEASE INVESTOR RELATIONS Carlos Alberto Correa CFO and Investor Relations Officer Murilo Hyai Senior Investor Relations Manager Eduardo Oliveira Investor Relations Specialist Website: ir.sonaesierra.com.br Phone: +55 (11) CONFERENCE CALLS English May 12, :30 pm (BR) 3:30 pm (US ET) 7:30 pm (GMT) Phone (New York): +1 (646) Phone (London): +44 (203) Phone (São Paulo): +55 (11) Replay: +55 (11) Portuguese May 12, :30 pm (BR) 2:30 pm (US ET) 6:30 pm (GMT) Phone: +55 (11) Replay: +55 (11)

2 SONAE SIERRA BRASIL REPORTS 1Q17 RESULTS São Paulo, May 11, 2017 Sonae Sierra Brasil S.A. (B3: SSBR3), a leading Brazilian shopping mall developer, owner, and manager, announces its results for the first quarter of 2017 (1Q17). HIGHLIGHTS Tenants sales had a strong recovery, growing 4.7% in 1Q17 over the first quarter of 2016, the highest y-o-y growth since the 2Q15. Same-store sales (SSS) also registered the highest quarterly increase in two years, increasing 3.1% in 1Q17 compared to the first quarter of Same-store rents (SSR) grew 6.8% in 1Q17 compared to 1Q16, the highest level since the second quarter of The occupancy rate remained high, closing the first quarter of 2017 at 94.6%, 117 bps higher than in 1Q16. Rental and parking revenues continued to increase, growing 3.2% and 13.9% respectively compared to 1Q16. EBITDA, excluding the gains with assets sale (in March 2016), increased 1.1% over the first quarter of Net financial expenses decreased 20.6% in 1Q17 compared to 1Q16 and the FFO, also excluding the gains with assets sale, increased 7.6% in comparison with the 1Q16. On April 27, the Company s 2017 General Shareholders Meeting approved the payment of dividends related to the 2016 fiscal year, totaling R$34.8 million or R$0.455 per share, to be paid until June 30 th,

3 FINANCIAL AND OPERATIONAL PERFORMANCE Financial Indicators (R$ million) 1Q17 1Q16 Net Revenue % EBITDA % EBITDA Margin 69.9% 76.6% -675 bps FFO % FFO Margin 41.6% 42.0% -41 bps Net Operating Income (NOI) % NOI Margin 88.7% 88.6% 16 bps EBITDA ex assets' sale % FFO ex assets' sale % Operating Indicators 1Q17 1Q16 Total GLA ('000 sqm) % Owned GLA ('000 sqm) % Number of Shopping Malls % Sales (R$ million) 1, , % Sales/sqm (monthly average) % Occupancy Rate 94.6% 93.4% 117 bps Occupancy Cost (% of sales) 10.0% 10.2% -21 bps Same Store Sales (SSS) % Same Store Rents (SSR) % Late Payments (25 days) 4.89% 4.92% -4 bps Key Financial Indicators (R$ million) Net Revenue NOI +1.8% +2.9% Q12 1Q13 1Q14 1Q16 1Q17 1Q12 1Q13 1Q14 1Q16 1Q17 EBITDA* FFO* -7.1% % Q12 1Q13 1Q14 1Q16 1Q17 1Q12 1Q13 1Q14 1Q16 1Q17 * Includes net gains with assets' sale. 3

4 Parque D. Pedro Shopping Uberlândia Shopping Shopping Plaza Sul 4

5 MANAGEMENT COMMENTS Performance and Positioning Sonae Sierra Brasil had a robust performance in1q17. In the first three months of 2017, tenants sales in our malls grew 4.7%, the highest quarterly sales growth since the second quarter of Among our mature portfolio, the highlights were Metrópole, Franca and Manauara, which recorded sales increase of 9.0%, 6.3% and 4.2%, respectively, in the quarter. Meanwhile, the new generation of malls continues to lead the tenants sales growth in our portfolio, with Uberlândia Shopping maintaining its double-digit growth pace in the first three months of Same-store sales in the portfolio kept its upward trend, posting its highest level in the last two years, growing 3.1% in 1Q17 while same-store rents grew 6.8%, also the highest mark in the last couple of years. The overall occupancy rate in our malls fell slightly compared to the fourth quarter of 2016, explained by the natural first quarters seasonality. However, in comparison to 1Q16 the index rose by approximately 120 bps, closing the 1Q17 in 94.6%. The occupancy rate of our mature portfolio remains high, at 97.7% at the end of March. At the same time, our tenants' occupancy cost stood at 10.0%, in line with 4Q16 and 20 bps below 1Q16. Our financial performance remained solid. Our fixed rental revenue excluding Boavista Shopping, sold in March 2016, grew 6.0%. In addition, the parking revenue had a double-digit growth. Thus, the net revenue increased 1.8% in 1Q17 over the same period of Excluding the impact of gains with the sale of a mall in March 2016, EBITDA totaled R$59.4 million, growing 1.1% with a margin of 70%, and FFO reached R$35.4 million, up 7.6%. 5

6 Outlook We expect inflation to continue trending down, opening space to lower interest rates. These factors should stimulate the economy as a whole, including retail and the shopping mall sector, to resume their investments and thus boosting the Brazilian economy. As we have said in recent years, our focus remains the continued improvement of our assets and the maturation of our new generation of malls. The projects to transform Parque D. Pedro, Franca, Passeio das Águas and Uberlândia shopping centers into large multipurpose complexes continue to make strides. In April, the municipality of Campinas issued the license allowing us to increase the construction potential in Parque D. Pedro for mixed-use projects. We firmly believe that innovation alongside restaurants/food court and leisure will be increasingly more important to the future of shopping centers. Thus, we will continue to bring such features to our malls. As an example, we have signed an agreement for a theme park in Parque D. Pedro that should open soon. The park, to be called T. Rex Park, will occupy an area of roughly 6,700 sqm and should increase even more the traffic and revenues in the mall. Furthermore, we believe that new growth opportunities will emerge at major metropolitan areas in the coming years and Sonae Sierra Brasil is well positioned to take advantage of such opportunities and start a new growth and value creation cycle for our stakeholders. The Management 6

7 1Q17 PORTFOLIO At the end of 1Q17, our portfolio was comprised of nine operating malls, totaling thousand sqm of total GLA and thousand sqm of owned GLA. Total assets under management totaled thousand sqm of GLA. Operating Shopping Centers Shopping Metrópole São Bernardo do Campo (SP) % % Franca Shopping Franca (SP) % % Parque D. Pedro Shopping Campinas (SP) % % Shopping Plaza Sul São Paulo (SP) % % Shopping Campo Limpo São Paulo (SP) % % Manauara Shopping Manaus (AM) % % Uberlândia Shopping Uberlândia (MG) % % Boulevard Londrina Shopping Londrina (PR) % % Passeio das Águas Shopping Goiânia (GO) % % Total 1, % % Managed Third-party Shopping Centers Penha Shopping São Paulo (SP) Total Assets Under Management 2, City City Stores Stores Total GLA ('000 sqm) Total GLA ('000 sqm) Ownership Owned GLA ('000 sqm) Occupancy (% GLA) 7

8 OPERATING PERFORMANCE Shopping Centers Tenants Sales Total tenant sales in Sonae Sierra Brasil s operating malls totaled R$1.1 billion in 1Q17, a strong recovery of 4.7% over 1Q16. The 1Q17 maintained the upward trend observed since the second half of 2016 and tenants had the best quarterly y-o-y sales increase since the 2Q15, led by the continuous ramp-up of our new generation of malls summed up with solid sales recovery of Metrópole, Franca and Manauara shopping centers. Tenants' Sales Performance (Y-o-Y) +438 bps +256 bps 4.7% 1.3% 0.3% 1.2% 2.1% -1.6% -0.3% 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Shopping Center Tenant Sales (R$ thousand) 1Q17 1Q16 Shopping Metrópole 80,821 74, % Franca Shopping 51,837 48, % Parque D. Pedro Shopping 339, , % Shopping Plaza Sul 97,019 96, % Shopping Campo Limpo 81,007 81, % Manauara Shopping 180, , % Uberlândia Shopping 80,752 72, % Boulevard Londrina Shopping 69,674 64, % Passeio das Águas Shopping 95,000 87, % Total 1,076,904 1,028, % 8

9 Same-store Sales (SSS) Following the total sales improvement in the quarter, the same-store sales (SSS) index had its best performance in two years, reaching 3.1% over the first quarter of Excluding hypermarkets sales, which decreased in the quarter, the consolidated SSS from all other segments grew 4.3%, showing an important recovery. Similarly to total sales, Uberlândia Shopping SSS was the highest in our portfolio, posting a double-digit index, and among our mature portfolio, Metrópole and Franca shopping centers reported the highest same-store sales. Same-store sales evolution 3.1% 0.3% 0.5% -1.6% -2.2% -2.1% -1.7% 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Anchor tenants registered the highest SSS in the quarter, 2.9% growth in comparison to 1Q16. Excluding hypermarkets, all anchor store segments SSS increased in the first quarter of Among satellite tenants, services and electronics were highlights, all of them with double-digit SSS, while footwear and women fashion also reported solid indexes. Fast food and restaurants operations remained positive and presented above average same-store sales. Same-Store Sales (SSS) - R$/sqm/month 1Q17 1Q16 Satellite 1, , % Anchor % Leisure % Total % Same-store Rents (SSR) Led by the recovery of tenants and positive leasing spreads on renewals, the same-store rents index also reported its highest increase since 2015, growing 6.8% in 1Q17. 9

10 Same-store rents evolution 6.4% 5.8% 5.0% 4.4% 4.7% 5.9% 6.8% 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Uberlândia and Boulevard Londrina shopping centers remain the highlight among our new generation of malls, with double-digit SSR increase in 1Q17, while among our mature portfolio Franca and Parque D. Pedro were the highlights. Same-Store Rents (SSR) - R$/sqm/month 1Q17 1Q16 Satellite % Anchor % Leisure % Total % Occupancy rate Usually the first quarter of the year is the weakest for occupancy, due to retail s seasonality. Nevertheless, in comparison with 1Q16, the occupancy rate in our malls continued to increase, growing 117 bps. Occupancy Rate (%) 93.4% 93.6% 94.8% 95.4% 94.6% 1Q16 2Q16 3Q16 4Q16 1Q17 10

11 Occupancy cost Occupancy cost stood at 10.0% of sales in 1Q17, 21 bps lower than in 1Q16, explained by the better performance of our tenants and our continuous cost reduction initiatives. Occupancy Cost (%) 10.2% 10.1% 10.1% 10.0% 10.0% 1Q16 2Q16 3Q16 4Q16 1Q17 Late-payments Delinquencies are coming down to levels that are more reasonable and late-payments (above 25 days) closed the quarter at 4.89%, slightly lower than in 1Q16. Late Payment (%) 6.90% 4.92% 5.55% 3.98% 4.89% 1Q16 2Q16 3Q16 4Q16 1Q17 11

12 FINANCIAL PERFORMANCE The consolidated financial and operating information outlined below is based on accounts prepared in accordance with accounting policies adopted in Brazil as well as the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and present a comparison of results obtained in 1Q17 with the same period of the previous year. Therefore, the consolidated financial information includes 100% of the results of Parque D. Pedro Shopping. Revenues The Company s gross revenue totaled R$98.7 million in 1Q17, growing 2.2% over 1Q16. Revenues (R$ million) 1Q17 1Q16 Rent % Rent contract straight-lining (0.1) 0.5 N/A Service revenue % Parking revenue % Key Money % Other revenues % Total Gross Revenues % Fixed rent grew 3.9% in 1Q17. If we exclude Boavista Shopping rents, which was sold in March 2016, the overall fixed rent revenue would have grown 6.0% y-o-y in 1Q17. Among our mature assets, Parque D. Pedro and Manauara led the increase. Uberlândia was the highlight among our new generation of malls. Similarly to the previous quarters, parking revenue kept growing at a healthy pace, registering an increase of almost 14% in 1Q17 over the same period of Service revenue posted a 5.0% decrease in comparison with 1Q16, resulting from lower management fees charged to our partners and the termination of Tivoli and Boavista shopping centers management service contract in Gross Revenue Breakdown in the Quarter 2.2% 0.2% Rent + Rent contract straight-lining 6.4% Parking revenue Service revenue Key Money Other revenue 10.8% 80.3% 5.2% 7.3% Fixed Rent Revenue 87.5% Turnover Rent Revenue Kiosks and Merchandising 12

13 Costs and Expenses Costs and Expenses totaled R$27.8 million in 1Q17, 3.8% higher than in 1Q16, explained by higher personnel and external services costs, partially compensated by much lower occupancy costs and provisions for bad debts. The 20.8% increase of costs with personnel is explained by: (i) regular annual salary adjustments in a high inflation period; (ii) higher provisions for variable compensation (annual bonus); and (iii) one-time severance payments. External services costs and expenses totaled R$2.9 million in 1Q17, representing an increase of 76.2% over 1Q16, explained by one-time legal fees and the operational costs with parking in our newest malls due to the promotional campaign of free parking. One of the many benefits from increasing occupancy rate is the reduction of costs with vacant units, which continues to decrease, falling 18.2% y-o-y to R$5.4 million in 1Q17. The provisions for bad debts also continued to decrease in 1Q17, decreasing 51.9% when compared with the same period of 2016, led by the continuous recovery of our tenants. Costs and Expenses (R$ million) 1Q17 1Q16 Depreciation and amortization % Personnel % External services % Occupancy cost (vacant stores) % Cost of contractual agreements with tenants % Provision for bad debts % Other % Total % Classified as: Cost of rentals and services % Personnel % External services % Occupancy cost (vacant stores) % Cost of contractual agreements with tenants % Other % Operating expenses % Personnel % Depreciation and amortization % External services % Provision for bad debts % Other % Total % 13

14 Net Financial Result The consolidated net financial result in 1Q17 was a net financial expense of R$14.8 million, 20.6% lower than in 1Q16. Lower inflation and interest rates allied with lower leverage led the decrease in net financial expenses. Net Financial Result (R$ million) 1Q17 1Q16 Financial Income % Financial Expenses (21.8) (28.5) -23.2% Total Financial Result - Net (14.8) (18.7) -20.6% Net Income Net income attributed to shareholders totaled R$17.7 million in 1Q17, which compares to R$18.7 million in 1Q16. Net Operating Income (NOI) NOI totaled R$82.0 million in 1Q17, 2.9% higher than in 1Q16. NOI (R$ million) 1Q17 1Q16 Operating Revenues Rent + contract straight-lining % Key money % Parking revenue % Other revenue % Total Revenues % Operating Costs External services (1.5) (0.4) 312.4% Occupancy cost (vacant stores) (5.4) (6.6) -18.2% Cost of contractual agreements with tenants (2.7) (2.5) 5.5% Other (0.8) (0.8) 3.4% (-) Total Operating Costs (10.4) (10.3) 1.3% NOI % NOI Margin 88.7% 88.6% 16 bps 14

15 EBITDA & FFO In 1Q17, EBITDA decreased 7.1% compared to 1Q16, to R$59.4 million, and EBITDA margin was 69.9%. 1Q16 EBITDA includes the R$5.2 million gain with assets sale, and, excluding it, the EBITDA grew 1.1% in 1Q17. The FFO increased 0.8% in 1Q17, totaling R$35.4 million. The net gain with assets sale boosted 1Q16 FFO by R$2.2 million, without it, 1Q17 FFO grew 7.6%. The reconciliation of operating income before financial results with EBITDA and FFO is presented as follows: EBITDA and FFO Reconciliation (R$ million) 1Q17 1Q16 Net Revenue % Operating income before financial result % Depreciation and amortization % EBITDA % EBITDA Margin 69.9% 76.6% -675 bps EBITDA excluding gain with assets' sale % EBITDA % Net financial result (14.8) (18.7) -20.6% Current income and social contribution taxes (9.2) (10.2) -10.0% FFO % FFO Margin 41.6% 42.0% -41 bps FFO excluding net gain with assets' sale % 15

16 Cash & Financial Debt The Company s cash totaled R$205.7 million at the end of 1Q17, a 19.7% decrease from 4Q16, mainly because of the amortization of the Debentures (1 st Series) in February. The cash balance is invested in low-risk, short-term, investment grade bank securities, at an average interest rate of 100.4% of CDI. The Company s total financial debt totaled R$743.5 million at the end of the quarter, and the corresponding amortization schedule is as follows: Financial Debt Amortization (R$ million) and beyond Net Financial Debt (R$ million) Debt Profile Short term CDI 7% Fixed 9% IPCA 33% Long term TR 51% Total Debt Cash Net Debt The R$537.7 million net debt represents 2.3 times the last-twelve-months consolidated EBITDA (or 3.2 times considering the proportional consolidation of our assets). 16

17 Cost of Debt The Company s average cost decreased to 11.06% in 1Q17 and is expected to keep decreasing in the coming quarters given lower inflation and interest rates. Contracted Debt Financing Remaining Term (years) Interest Rate (1) Balance as of 3/31/17 (R$ million) Manauara Shopping % 64.2 Metrópole Shopping - Expansion I 1.1 TR % 29.4 Uberlândia Shopping 8.6 TR % 55.9 Boulevard Londrina Shopping 8.6 TR % 99.9 Passeio das Águas Shopping 6.2 TR % Debentures - 2 nd series 1.9 IPCA % Debentures - 2 nd series (2) 1.9 CDI % 54.5 Total Weighted Average % (1) Considering TR at 1.90% p.a., CDI at 11.33% p.a. and IPCA at 4.41%. (2) The Company contracted in August 2013 a derivative instrument (swap) of R$ 54.5 million at a rate of CDI %. 17

18 MANAGEMENT ACCOUNTS In accordance with accounting standards and policies adopted in Brazil and IFRS, the Company consolidates 100% of Parque D. Pedro Shopping, despite owning 51% of this mall and, on the other hand, it does not consolidate its Campo Limpo 20% stake. However, considering the relevance of those malls to the Company s results, we prepared proforma management accounts with the proportional consolidation of our assets. The operating results of this methodology are presented below: NOI (R$ million) 1Q17 1Q16 Operating Revenues Rent + contract straight-lining % Key money % Parking revenue % Other revenue % Total Revenues % Operating Costs External services (1.5) (0.3) 375.1% Occupancy cost (vacant stores) (5.2) (6.3) -17.4% Cost of contractual agreements with tenants (2.6) (2.5) 4.4% Other (0.5) (1.1) -57.1% (-) Total Operating Costs (9.7) (10.2) -4.7% NOI % NOI Margin 87.0% 86.1% 83 bps EBITDA and FFO Reconciliation (R$ million) 1Q17 1Q16 Net Revenue % Operating income before financial result % Depreciation and amortization % EBITDA % EBITDA Margin 63.2% 71.7% -851 bps EBITDA excluding gain with assets' sale % EBITDA % Net financial result (15.3) (19.2) -20.3% Current income and social contribution taxes (9.3) (10.4) -9.9% FFO % FFO Margin 27.7% 29.0% -132 bps FFO excluding net gain with assets' sale % 18

19 T. REX PARK IN PARQUE D. PEDRO We believe that innovation, coupled with restaurants/food court and leisure will play an increasingly more important role in shopping centers. As a result, our team continue to focus to bring unique, innovative attractions to our malls. Having this in mind, we signed an agreement with a theme park in Parque D. Pedro. The park, to be called T. Rex Park, will occupy an area of roughly 6,700 sqm, which will be used as an expansion for the mall in the future. T-Rex Park will open soon and should increase even further the traffic and revenues in the mall. Future Location of T. Rex Park and construction works photos: T-Rex Park 19

20 GLOSSARY Anchor Store or Large Anchors: Well-known stores with special marketing and structural features that serve to attract consumers, assuring continuous visitor flows and uniform traffic in all areas of the mall. B3: Brasil Bolsa Balcão S.A. Securities, Commodities, Futures Exchange and Over the Counter Market. EBITDA: Operating income before financial result + depreciation and amortization gains from the fair value of investment properties. FFO (Funds from Operations): EBITDA +/- Net financial result current income and social contribution taxes. GLA (Gross Leasable Area): Equivalent to the sum total of all the areas available for leasing in the shopping malls. IFRS: International Financial Reporting Standards. IPCA: Consumer Price Index, published by the IBGE. Late Payment: The total financial amount of rents past due for more than 25 days, divided by the total financial amount of rents in the same period. NOI (Net Operating Income): Gross revenue from malls (excluding service revenue) + parking revenue mall operating expenses provisions for doubtful accounts. Occupancy Cost: Ratio (of the last twelve months) between total rent plus common charges and promotion fund paid by the tenants and total sales. Occupancy Rate: Ratio between leased area and total GLA of each mall at the end of each period. SSR (same-store rent): Relation between invoiced rent for the same tenants in the current period compared to the previous period, proportional to our stake in each of the assets. SSS (same-store sales): Relation between sales of the same tenants in the current period compared to the previous period, proportional to our stake in each of the assets. Satellite Stores or Satellites: Small stores without special marketing or structural features located around the anchor stores and aimed at general commerce. Non-accounting information has not been reviewed by the external auditors. 20

21 APPENDICES Consolidated Balance Sheet - ASSETS (R$ thousand) 3/31/17 12/31/16 CURRENT Cash and cash equivalents 205, , % Accounts receivable, net 36,535 43, % Taxes recoverable 4,774 4, % Prepaid expenses % Other credits 6,593 7, % Total current assets 253, , % Non-current assets held for sale 32,316 32, % NON-CURRENT Long-term receivables Accounts receivable, net 15,520 15, % Taxes recoverable 26,591 27, % Loans to condominiums 26,770 27, % Deferred income and social contribution taxes 7,132 9, % Juducial deposits 18,678 17, % Other credits 4,175 4, % Total long-term assets 98, , % Investments 39,984 40, % Investment properties 4,498,799 4,495, % Fixed Assets 2,912 2, % Intangible Assets 2,801 3, % Total non-current assets 4,643,362 4,643, % TOTAL ASSETS 4,929,500 4,988, % 21

22 Consolidated Balance Sheet: LIABILITIES (R$ tsd) 3/31/17 12/31/16 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT Loans and financing 70,321 79, % Debentures 151,254 65, % Domestic trade accounts payable 5,786 6, % Taxes payable 6,369 9, % Personnel, payroll taxes, benefits, and rewards 10,323 11, % Key money 4,284 4, % Dividends payable 34,773 34, % Earnings payable 6,920 7, % Other payables 6,750 6, % Total current liabilities 296, , % NON-CURRENT Loans and financing 372, , % Debentures 149, , % Deferred revenue 1,199 1, % Deferred income and social contribution taxes 621, , % Provision for civil, tax, labor and pension risks 7,727 7, % Provisions for variable compensation 3,010 2, % Total non-current liabilities 1,155,786 1,305, % SHAREHOLDERS' EQUITY Capital stock 1,397,866 1,397, % Capital reserve 80,115 80, % Profit reserve 998, , % Retained earnings 17,661 0 N/A Equity attributable to shareholders 2,494,356 2,476, % Minority interests 982, , % Total Shareholders' Equity 3,476,934 3,458, % TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 4,929,500 4,988, % 22

23 Consolidated Income Statement (R$ thousand, except earnings per share) 1Q17 1Q16 NET OPERATING REVENUE FROM RENT, SERVICES AND OTHER 85,079 83, % COST OF RENT AND SERVICES (22,006) (19,810) 11.1% GROSS PROFIT 63,073 63, % OPERATING REVENUE (EXPENSES) General and administrative (5,746) (6,923) -17.0% Personnel (141) (177) -20.2% External services (1,385) (1,286) 7.7% Provisions for bad debts (1,370) (2,846) -51.9% Other administrative expenses (2,237) (1,930) 15.9% Depreciation and amortization (613) (683) -10.3% Taxes (657) (778) -15.6% Equity income % Other operating revenue (expenses), net 1,324 6, % Total operating revenue (expenses), net (4,240) (409) 936.1% OPERATING INCOME BEFORE FINANCIAL RESULT 58,833 63, % Net financial result (14,825) (18,664) -20.6% INCOME BEFORE INCOME AND SOCIAL CONTRIBUTION TAXES 44,008 44, % INCOME AND SOCIAL CONTRIBUTION TAXES Current (9,196) (10,216) -10.0% Deferred (903) (634) 42.5% Total (10,099) (10,849) -6.9% NET INCOME 33,909 33, % INCOME ATTRIBUTABLE TO: Shareholders 17,661 18, % Minority interests 16,248 15, % Earnings per share % 23

24 Consolidated Cash Flow Three-month period ending on R$ thousand 3/31/17 3/31/16 CASH FLOW FROM OPERATING ACTIVITIES Net income for the period 33,909 33,811 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization Result value of property and equipment sold Gains on derivatives transactions, net 892 (580) Unbilled revenue from rentals 111 (527) Allowance for doubtful accounts 1,370 2,846 Reversal of civil, tax, labor, and social security risks (47) 76 Monetary adjustment of reserve for civil, tax, labor and social security risks Accrual for variable compensation Deferred income tax and social contribution Income tax and social contribution 9,196 10,216 Interest on borrowing, financing, debentures and acquisition of assets 19,804 28,328 Gains on disposals of investments 0 (7,040) Equity pick-up (839) (819) (Increase)/decrease in operating assets: Trade receivables 5,803 4,278 Loans related to condominiums Recoverable taxes (1,382) (2,199) Prepaid expenses (165) (64) Escrow deposits (680) (832) Other 1,210 12,363 Increase (decrease) in operating liabilities: Domestic trade accounts payable (363) (5,231) Taxes payable (4,210) (8,342) Personnel, payroll taxes, benefits and rewards (1,246) (1,436) Key money (544) (1,218) Other payables Cash provided by operating activities 66,068 67,227 Interest paid (28,484) (32,240) Income tax and social contribution paid (6,815) (3,638) Net cash provided by (used in) operating activities 30,769 31,349 CASH FLOW FROM INVESTING ACTIVITIES Acquisition or construction of investment property (2,984) (7,832) Acquisition of property and equipment (234) 0 Acquisition of intangible assets (124) 0 Sale of subsidiary, net of cash and other operating assets at sale 0 36,581 Dividends received 1, Net cash used in investing activities (2,342) 29,669 CASH FLOW FROM FINANCING ACTIVITIES Debentures paid - principal (47,750) (47,750) Loans and financing paid - principal (15,418) (14,269) Distributed earnings of real estate funds - non-controlling interests (15,576) (15,238) Net cash used in financing activities (78,744) (77,257) DECREASE IN CASH AND CASH EQUIVALENTS, NET (50,317) (16,239) CASH AND CASH EQUIVALENTS At the end of the period 205, ,906 At the beginning of the period 256, ,145 DECREASE IN CASH AND CASH EQUIVALENTS, NET (50,317) (16,239) 24

25 Pro-forma consolidated income statement considering the proportional consolidation of our malls 1Q17 SSB Consolidated (100% PDP) Adjustments* SSB Management Consolidated (R$ thousand) 1Q16 Δ NET OPERATING REVENUE FROM RENT, SERVICES AND OTHER 85,079 15,738 69,341 69, % COST OF RENT AND SERVICES (22,006) (690) (21,316) (19,734) 8.0% GROSS PROFIT 63,073 15,048 48,025 49, % OPERATING REVENUE (EXPENSES) General and administrative (5,746) (227) (5,519) (6,268) -12.0% Personnel (141) 0 (141) (177) -19.9% External services (1,385) (108) (1,277) (1,244) 2.7% Provisions for bad debts (1,370) (54) (1,316) (2,880) -54.3% Other administrative expenses (2,237) (65) (2,172) (1,285) 69.0% Depreciation and amortization (613) 0 (613) (683) -10.3% Taxes (657) 2 (659) (780) -15.5% Equity income N/A Other operating revenue (expenses), net 1,324 (7) 1,331 6, % Total operating revenue (expenses), net (4,240) 607 (4,847) (559) 766.5% OPERATING INCOME BEFORE FINANCIAL RESULT 58,833 15,654 43,179 48, % Net financial result (14,825) 442 (15,267) (19,163) -20.3% INCOME BEFORE INCOME AND SOCIAL CONTRIBUTION TAXES 44,008 16,096 27,912 29, % INCOME AND SOCIAL CONTRIBUTION TAXES Current (9,196) 134 (9,330) (10,355) -9.9% Deferred (903) 18 (921) (665) 38.5% Total (10,099) 152 (10,251) (11,020) -7.0% NET INCOME 33,909 16,248 17,661 18, % *Adjustments represent the exclusion of 49% of PDP's NOI, the inclusion of 20% of Campo Limpo and all consolidation effects Pro-forma consolidated gross revenue (Proportional consolidation: Parque D. Pedro/ C. Limpo) (R$ million) 1Q17 1Q16 Rent % Rent contract straight-lining (0.2) 0.4 N/A Service revenue % Parking revenue % Key Money % Other revenue % Total Gross Revenue % 25

26 Pro-forma Proportional Consolidated Balance Sheet (R$ thousand) ASSETS 3/31/17 12/31/16 CURRENT Cash and cash equivalents 193, , % Accounts receivable, net 30,355 36, % Taxes recoverable 4,680 4, % Prepaid expenses % Other credits 5,857 6, % Total current assets 234, , % Non-current assets held for sale 32,316 32, % NON-CURRENT Long-term receivables Accounts receivable, net 12,637 12, % Taxes recoverable 26,591 27, % Loans to condominiums 26,770 27, % Deferred income and social contribution taxes 7,099 9, % Juducial deposits 18,733 18, % Other credits 4,349 4, % Total long-term assets 96,178 98, % Investment properties 3,585,536 3,582, % Fixed Assets 2,930 2, % Intangible Assets 2,801 3, % Total non-current assets 3,687,445 3,687, % TOTAL ASSETS 3,954,136 4,011, % 26

27 Pro-forma Proportional Consolidated Balance Sheet (R$ thousand) LIABILITIES 3/31/17 12/31/16 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT Loans and financing 70,321 79, % Debentures 151,254 65, % Domestic trade accounts payable 4,642 3, % Taxes payable 5,954 9, % Personnel, payroll taxes, benefits, and rewards 10,323 11, % Key money 4,295 4, % Dividends payable 34,773 34, % Other payables 6,815 6, % Total current liabilities 288, , % NON-CURRENT Loans and financing 372, , % Debentures 149, , % Deferred revenue 1,174 1, % Deferred income and social contribution taxes 637, , % Provision for civil, tax, labor and pension risks 7,695 7, % Provisions for variable compensation 3,010 2, % Total non-current liabilities 1,171,402 1,320, % SHAREHOLDERS' EQUITY Capital stock 1,397,866 1,397, % Capital reserve 80,115 80, % Profit reserve 998, , % Retained earnings 17,661 - N/A Total Shareholders' Equity 2,494,355 2,476, % TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,954,136 4,011, % 27