EBITDA Margin at the top of the Guidance and Net Profit growing 45.3%

Transcription

1 EBITDA Margin at the top of the Guidance and Net Profit growing 45.3% São Paulo, August 8 th, 2017 Iguatemi Empresa de Shopping Centers S.A. (IGUATEMI) [Bovespa: IGTA3], one of the largest full-service companies in the Brazilian shopping mall sector, reports results for the second quarter of 2017 (2Q17). Financial and operational information is based on the consolidated figures, in R$ 000, under the Brazilian Corporate Law accounting legislation and IFRS, as expressed in Accounting Pronouncements approved by the Brazilian Securities Commission (CVM). Nonaccounting figures have not been reviewed by the external auditors. Conference Calls on 2Q17 Results Portuguese Conference Call August 9 th, a.m. BRT 9 a.m. EST Tel.: +55 (11) Password: Iguatemi Replay: +55 (11) Password: Iguatemi Available for 7 days 2Q17 HIGHLIGHTS Total sales were R$ 3.2 billion in 2Q17, a 5.3% increase versus 2Q16 Same-area sales (SAS) were up 5.1% and same-store sales (SSS) grew 4.1% in 2Q17 Same-store rent (SSR) was up 6.3% and same-area rent (SAR) increased 6.6% in the quarter English Conference Call August 9 th, a.m. BRT 10 a.m. EST Tel.: +1 (412) Password: Iguatemi Replay: +1 (412) Password: Available for 7 days Net revenues reached R$ million in 2Q17, a 4.1% growth YoY EBITDA reached R$ million in 2Q17, increasing 7.3% versus 2Q16, with a 77.0% margin Net profit reached R$ 51 million in 2Q17, 45.3% above 2Q16 FFO reached R$ 77.4 million in the quarter, a 24.1% YoY increase Leverage ended 2Q below 1Q17 at 3.14x Net Debt/EBITDA (a 0.12 reduction versus 2Q16) Subsequent Event IR Team: Cristina Betts, CFO Roberta Noronha, IRD Carina Carreira, IR Arnon Shirazi, IR Autorization for issuance of Real Estate Receivables (CRI), estimated liquidation in September, value of R$ 250 million up to 97.5% of CDI and total term of 7 years. Tel.: +55 (11) /6877 ri@iguatemi.com.br

2 MESSAGE FROM MANAGEMENT Iguatemi results stayed solid in the second quarter of We saw a 5.3% Sales growth within our portfolio in the quarter when compared to the same period of 2016, to R$ 3.2 billion. Our result reflects the Company s effort to focus on quality and well located assets (benefited by the Flight to Quality effect) intended for an A/B public, which is empirically more resilient in times of economic stress. We continue with the mix change strategy in our Malls in the capital of São Paulo, while we are in the process of maturing certain assets in the country side area. Regarding the operational indicators, we believe that we already passed the most critical moment. The performance of April deserves to be highlighted due to the positive results in all assets of our portfolio. Same Area Sales (SAS) grew 5.1% and Same Store Sales performance was 4.1% in the quarter. Even with the deceleration of the indexes used for contracts, we achieved a Same Area Rent and Same Store Rent of 6.6% and 6.3%, respectively. Concerning the performance at 100% of the Mall, we had a 5.1% growth in Rental Revenues for the quarter (Minimum Rental + Overage + Temporary Rent), reaching R$ million. Parking Revenues grew 7.1% in 2Q17, totaling R$ 57.5 million. In April 2016 we launched the Iguatemi Porto Alegre expansion, adding more 20,000 m² of total GLA to the project, as well as a 10,000 m² GLA commercial tower to the complex. After one year we have no doubt that the increase of GLA have brought concrete results and have strengthened the mix of the asset, such as the region in which is located. Aerial View of Iguatemi Porto Alegre and Commercial Tower 2

3 In the end of June we celebrated JK Iguatemi five years of existence. Opened in 2012, the mall is known for its modern architecture. The mix composition of the asset envolves the fashionest brands desired by the public, to the restaurants that are now considered reference in gastronomy. In a few years, is one of our malls that highlighted in terms of revenue per m², even going through a maturation period affected by the macroeconomic environment. In the second quarter of this year we still have four assets in the maturation process (five years after launch): JK Iguatemi (2012), I Fashion Outlet Novo Hamburgo (2013), Iguatemi Ribeirão Preto (2013) and Iguatemi Rio Preto (2014). At the end of June, these new malls represented 15.3% of portfolio total GLA. We still have great revenue potential in these assets that are through maturation process. Total GLA (%) Maturing Malls (2012) 5.0% Maturing Malls ( ) 15.3% Interior Gross Revenues/sqm 1, Mature Malls 79.7% Maturing Malls Mature Malls (1) Includes minimum rental, overage, temporary rental and parking (at 100%). 3

4 Another important growth vector for the Company is the densification of the areas surrounding our malls, which takes place both through the delivery of PSV projects announced in the past years and the real estate development of third parties. Regarding the PSV previously announced by Iguatemi, in the last quarter, 3 towers were delivered in May for the Residencial Integrato Iguatemi located in our complex in São José do Rio Preto with a total of 17,352 m² of private area. In addition, the construction of Torre 1 Iguatemi Business was resumed in June in the complex of Iguatemi Ribeirão Preto, schedule to be completed in January 2018 with a total of 13,723 m² of private office area. Besides that, there were important deliveries by third parties around the Iguatemi Porto Alegre and Galleria Shopping. In Porto Alegre, the delivery of the residential Murano, with 16,034 m² of private area next to Germânia Park, confirms the potential of densification of the region that still has deliveries for the next year. Acqua Galleria in Campinas, delivered in May, is considered one residential resort, has a total of 41,401 m² of private area, distributed in 8 towers that will bring high density to the surroundings of Galleria Shopping. In the city of São Paulo, were we have most of our assets located, the Quartier Auri Vila Olímpia was delivered in May, a high-end residential project compound of 3 towers, with sizes between 217 and 977 m² of private area per unit, only 2km of Shopping JK Iguatemi. Our net revenue reached R$ million in the quarter, growing 4.1%. The Costs and Expenses of the Company (excluding depreciation and amortization) increased by only 1.5%, below the accumulated inflation in the period. We continue to succeed reducing costs and expenses through the implementation of the Matrix/Zero-Based Budget in the end of In the end of the quarter, our Costs and Expenses as a percentage of Gross Revenue was 24%, equal to the same level presented in 2Q16. EBITDA reached R$ million in 2Q17, an increase of 7.3% compared to 2Q16. However, even if we withdraw the effect of the Other Operating Revenues (Expenses) line in both periods, since the are non-recurring, we continue to have an EBITDA growth of 5.1% YoY. We closed the quarter with an EBITDA margin in 77.0%, at the top of our Guidance. The Company s Total Debt closed the quarter at R$ 2.0 billion, and Cash and Equivalents increased 19.6%, reaching R$ million. As a consequence, Net Debt was R$ 1.7 billion, with a Net Debt/EBITDA multiple of 3.14x, 0.05 below 1Q17. This reduction in leverage is part of the Company s deleveraging process for future potential opportunities of growing. Our expectation for 2017 remained unchanged, despite the uncertainties noted below in our Guidance: 2017 Guidance 6M17 Net revenues growth 2 7% 4.2% EBITDA margin 73 77% 76.1% Investments (R$ million) (1) (1) Accrual basis. Carlos Jereissati Filho CEO, Iguatemi Empresa de Shopping Centers S.A. 4

5 MAIN INDICATORS Financial and operational information is based on the consolidated figures, in R$ 000, under the Brazilian Corporate Law accounting legislation and IFRS, as expressed in Accounting Pronouncements approved by the Brazilian Securities Commission (CVM). Non-accounting figures have not been reviewed by the external auditors. Financial indicators 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Gross Revenues (R$ 000) 196, , % 389, , % Net Revenues (R$ 000) 169, , % 336, , % EBITDA (R$ 000) 130, , % 256, , % EBITDA Margin 77.0% 74.7% 2.3 p.p. 76.1% 77.5% -1.4 p.p. Net Profit (R$ 000) 50,975 35, % 101,594 73, % Net Margin 30.1% 21.6% 8.5 p.p. 30.2% 22.8% 7.3 p.p. FFO (R$ 000) 77,356 62, % 154, , % FFO Margin 45.7% 38.3% 7.4 p.p. 45.9% 39.9% 6.0 p.p. Performance indicators 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Total GLA (sqm) 746, , % 746, , % Owned GLA (sqm) 454, , % 454, , % Average Owned GLA (sqm) 454, , % 454, , % Total GLA, malls (sqm) 701, , % 701, , % Owned GLA, malls (sqm) 419, , % 419, , % Number of malls (1) % % Total sales (R$ 000) 3,248,348 3,085, % 6,158,543 5,850, % Same-stores sales (SSS) 4.1% 3.0% 1.1 p.p. 2.9% 2.2% 0.7 p.p. Same-area sales (SAS) 5.1% 3.2% 1.9 p.p. 3.5% 2.2% 1.3 p.p. Same-store rentals (SSR) 6.3% 6.4% -0.1 p.p. 6.6% 6.3% 0.3 p.p. Same-area rentals (SAR) 6.6% 6.1% 0.5 p.p. 6.7% 6.0% 0.7 p.p. Occupancy cost (% of sales) 11.5% 11.7% -0.2 p.p. 12.0% 12.1% -0.1 p.p. Occupancy rate 93.1% 93.8% -0.7 p.p. 93.1% 93.9% -0.8 p.p. Net delinquency rate 1.2% 3.0% -1.8 p.p. 2.6% 3.4% -0.8 p.p. (1) Considers Iguatemi Esplanada and Esplanada Shopping as one asset. (2) 1Q16 data adjusted for Iguatemi Caxias. 5

6 IGUATEMI PORTFOLIO Portfolio City Iguatemi Interest Total GLA (sqm) Iguatemi GLA (sqm) Iguatemi São Paulo São Paulo 58.41% 47,322 27,641 JK Iguatemi São Paulo 64.00% 34,957 22,372 Pátio Higienópolis São Paulo 11.20% 34,100 3,819 Market Place São Paulo % 26,940 26,940 Iguatemi Alphaville Barueri 78.00% 31,312 24,423 Iguatemi Campinas Campinas 70.00% 73,492 51,444 Galleria Campinas % 33,146 33,146 Iguatemi Esplanada (1) Sorocaba 55.37% 64,360 35,636 Iguatemi São Carlos São Carlos 50.00% 22,323 11,162 Iguatemi Ribeirão Preto Ribeirão Preto 88.00% 43,648 38,410 Iguatemi Rio Preto São José do Rio Preto 88.00% 43,649 38,411 Proprietary Area (2) Sorocaba % 3,678 3,678 Southeast Sub-total 69.09% 458, ,083 Iguatemi Porto Alegre Porto Alegre 36.00% 59,302 21,349 Praia de Belas Porto Alegre 37.80% 47,205 17,843 Iguatemi Florianópolis Florianópolis 30.00% 21,189 6,357 Iguatemi Caxias Caxias do Sul 8.40% 30,324 2,547 South Sub-total 30.44% 158,020 48,096 Iguatemi Brasília Brasília 64.00% 32,302 20,673 Federal District Sub-total 64.00% 32,302 20,673 I Fashion Outlet Novo Hamburgo Novo Hamburgo 41.00% 20,115 8,247 Boulevard Iguatemi (3) Campinas 77.00% 32,422 24,965 Outlet and Power Center Sub-total 63.22% 52,537 33,212 Malls Sub-total 59.71% 701, ,065 Market Place Tower I São Paulo % 15,685 15,685 Market Place Tower II São Paulo % 13,395 13,395 Iguatemi São Paulo Tower São Paulo 58.41% 4,469 2,610 Iguatemi Porto Alegre Tower Porto Alegre 36.00% 10,692 3,849 Towers Sub-total 80.33% 44,241 35,539 Total 60.94% 746, ,604 (1) Considers Iguatemi Esplanada and Esplanada Shopping as one asset. (2) Area owned by Iguatemi in Esplanada, held through a subsidiary. (3) Boulevard is contiguous to the Iguatemi Campinas mall. 6

7 OPERATIONAL PERFORMANCE (at 100% of the mall) Portfolio Minimum Rental + Overage + Temp. Rent (R$ 000) (1) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Iguatemi São Paulo 45,806 44, % 89,048 84, % JK Iguatemi 18,346 17, % 35,154 34, % Pátio Higienópolis (4) 23,143 22, % 45,677 43, % Market Place 7,069 6, % 13,998 13, % Torres Market Place 6,046 5, % 12,175 12, % Iguatemi Alphaville 7,491 7, % 14,487 14, % Iguatemi Campinas 25,199 23, % 48,925 45, % Galleria 5,390 5, % 10,733 10, % Iguatemi Esplanada (2) 15,838 15, % 31,708 29, % Iguatemi São Carlos 2,706 2, % 5,387 5, % Iguatemi Ribeirão Preto 5,356 5, % 11,465 11, % Iguatemi Rio Preto 6,777 6, % 13,045 12, % Iguatemi Porto Alegre 25,275 21, % 49,334 40, % Praia de Belas 12,070 11, % 23,905 22, % Iguatemi Florianópolis 6,638 6, % 13,287 12, % Iguatemi Caxias (3) 5,838 6, % 11,761 12, % Iguatemi Brasília 10,125 9, % 20,038 19, % I Fashion Outlet Novo Hamburgo 2,833 2, % 5,517 5, % Boulevard Iguatemi % 1,630 1, % Total 232, , % 457, , % Portfolio Parking (R$ 000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Iguatemi São Paulo 7,506 7, % 14,621 14, % JK Iguatemi 5,108 5, % 9,970 10, % Pátio Higienópolis 3,771 3, % 7,904 7, % Market Place 5,736 6, % 11,849 12, % Torres Market Place Iguatemi Alphaville 3,850 3, % 7,649 7, % Iguatemi Campinas 7,089 6, % 14,069 12, % Galleria 2,294 2, % 4,572 4, % Iguatemi Esplanada (2) 5,020 4, % 9,122 7, % Iguatemi São Carlos % 1,684 1, % Iguatemi Ribeirão Preto Iguatemi Rio Preto % % Iguatemi Porto Alegre 6,445 5, % 12,699 8, % Praia de Belas 3,950 3, % 7,573 6, % Iguatemi Florianópolis 1,213 1, % 2,648 2, % Iguatemi Caxias (3) 1, % 3,095 2, % Iguatemi Brasília 2,699 2, % 5,560 5, % I Fashion Outlet Novo Hamburgo Boulevard Iguatemi % % Total 57,460 53, % 113, , % (1) Numbers do not include the linearization effect. (2) Considers Iguatemi Esplanada and Esplanada Shopping as one asset. (3) Revenues for Pátio Higienópolis were calculated using the cash accounting regime until 4Q16 and using accrual regime from 1Q17 onwards. 7

8 SALES AND RENTALS Total sales reached R$ 3.25 billion in the quarter, a 5.3% growth compared to the same period of last year. The best sales performing segments were Household Articles, Entertainment and Restaurants. One more time, the segment which hasn t performed well was Books & Stationary Stores. Same-area sales (SAS) were up 5.1% in the quarter, while same-store sales (SSS) were of 4.1%. Same-store rentals (SSR) were up 6.3% and same-area rentals (SAR) grew 6.6% in 2Q17. Rental Revenues, calculated at 100%, were R$ million in the quarter (up 5.1% YoY). Parking Revenues were R$ 57.5 million in 2Q17 (up 7.1% YoY). Iguatemi São Paulo: Rental revenues grew 3.0% due to an increase in the minimum rent, as a result of the automatic adjustments for inflation in rental contracts. Hermès and Fendi were among several stores that inaugurated in the quarter. The 0.8% increase in parking revenues can be explained by a combination of tariff increase and reduction in flow of vehicles when compared to 2Q16. JK Iguatemi: 3.4% growth in rental revenues, even with higher vacancy due the mix adjustment. Parking revenues decreased 6.9% due to a reduction in vehicle flow. Pátio Higienópolis: 5.1% increase in rental revenues, mainly driven by automatic adjustments in rental contracts. The 7.5% increase in parking revenues was a result of tariff increase. Market Place: Rental revenues increased 5.1% in 2Q17, specially driven by the automatic adjustments for inflation in rental contracts and higher overage, after a mix repositioning. Parking revenues decreased 5.7% due to a reduction in vehicle flow in the quarter. Market Place Towers: Rental revenues presented a 1.0% grow compared to the same period of last year due to increase in occupation. Iguatemi Alphaville: The 0.8% growth in rental revenues is explained mainly by a stability in minimum rental, while vacancy level decreased. Parking revenue grew 8.4%, due to the tariff increase and better automotive flow. Iguatemi Campinas: 8.9% growth in rental revenues due to higher minimum rental, mainly driven by automatic adjustments for inflation in rental contracts and temporary rent. Parking revenues increased 8.4% as a result of tariff increase and the expansion maturation process, leading to higher vehicle traffic along the year. Galleria: Rental revenues increased 3.5% in the quarter was mainly driven by the automatic adjustment of the rental contracts. Parking revenues decreased 8.8% - important to note that in June 2016 the parking revenue was impacted by the interruption of activities due to weather conditions. Iguatemi Esplanada: Rental revenues grew 5.1% in the 2Q17 mainly driven by overage and temporary rental. The boost in car flow and tariff increase contributed to higher parking revenues, which 20.7% YoY. 8

9 Iguatemi São Carlos: In function of a smaller overage, the rental revenues presented a contraction of 0.4%. Parking revenues expanded 19.1% YoY due to higher tariffs. Iguatemi Ribeiro Preto: Rental revenues grew 1.5%, especially due to minimum rental and overage, but impacted by a cancellation in temporary rent. The mall is undergoing a maturation process and therefore we still don t charge for parking. Iguatemi São José do Rio Preto: The 3.6% increase in rental revenues was driven by the overage, as sales grew in the quarter. Iguatemi Rio Preto is one of the malls inaugurated in the Company s latest organic growth cycle and therefore we still don t charge for standard parking. The parking revenue presented is due to Valet operations. Iguatemi Porto Alegre: Rental revenues increased by 18.1% compared to the second quarter of 2016, given the expansion at the end of April Parking revenues grew 24.7% driven by the same reason. Praia de Belas: Rental revenues grew 5.8% positively impacted by overage performance due to sales. Parking revenues grew 11.3% mainly by automotive flow. Even with the expansion of Iguatemi Porto Alegre, we continue showing solid results in both assets, as a result of resilience and differentiation in the assets. Iguatemi Florianopolis: Rental revenues were 5.5% above 2Q16, as a result of the automatic adjustment by inflation on rental contracts and good performance on temporary rent, overage impacted negatively this line. Parking revenues contracted by 7.3% YoY, driven by lower vehicle traffic versus last year, when foreign tourist massively visited the region. Iguatemi Brasília: Rental revenues increased 1.6% as a result of the automatic adjustment by inflation on rental contracts with a less expressive overage. Parking revenue shrinked 7.2% versus 2Q16 due to a lower traffic. I Fashion Outlet Novo Hamburgo: Rental revenues increased 3.9%. The highlight is for the positive change in minimum rental. We do not charge for parking in this type of asset. 9

10 OCCUPANCY RATE AND OCCUPANCY COST Average occupancy rate for the portfolio in 2Q17 was 93.1%, 0.7 percentage point below 2Q16, and occupancy cost was 11.5%, in line with the results presented in the same quarter of last year. Occupancy Rate Occupancy Cost 95.0% 94.1% 94.0% 94.0% 93.8% 93.3% 93.4% 93.0% 93.1% 11.6% 12.1% 12.7% 11.7% 12.5% 12.7% 11.5% 11.5% 11.0% 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1T17 2T17 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1T17 2T17 DELINQUENCY Net delinquency for 2Q17 was 1.2%, below 2Q16 (in 1.8 p.p.). In the last 6 months our net delinquency ended 2.6%, against 3.4% reported last year in the same period. ECONOMIC AND FINANCIAL PERFORMANCE Consolidated P&L (R$ 000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Gross Revenue 196, , % 389, , % Taxes and Discounts -27,380-26, % -52,579-46, % Net Revenue 169, , % 336, , % Costs and Expenses -46,684-45, % -88,388-87, % Other Operational Revenues 7,444 4, % 7,264 13, % Equity gain (loss) in subsidiaries % % EBITDA 130, , % 256, , % EBITDA Margin 77.0% 74.7% 2.3 p.p. 76.1% 77.5% -1.4 p.p. Depreciation and Amortization -26,381-27, % -52,860-55, % EBIT 104,091 94, % 203, , % EBIT Margin 61.4% 58.0% 3.5 p.p. 60.4% 60.5% -0.1 p.p. Financial Revenue (Expenses) -43,387-52, % -86, , % Income Tax & Social Contribution Tax -9,729-6, % -14,917-16, % Net Profit 50,975 35, % 101,594 73, % Net Margin 30.1% 21.6% 8.5 p.p. 30.2% 22.8% 7.3 p.p. FFO 77,356 62, % 154, , % FFO Margin 45.7% 38.3% 7.4 p.p. 45.9% 39.9% 6.0 p.p. 10

11 GROSS REVENUE Iguatemi s gross revenues in the second quarter of 2017 were R$ million, a 4.1% increase compared to the same period of Gross Revenues (R$ 000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Rentals 133, , % 265, , % Administration Fees 11,474 10, % 22,847 22, % Parking 36,024 35, % 71,480 69, % Other 15,427 15, % 29,896 29, % Total 196, , % 389, , % Rental revenue in 2Q17, comprising minimum rental, overage and temporary rental, was 5.5% higher than in 2Q16 and represented 68% of total gross revenue. Rental Revenues (R$ 000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Minimum Rental 115, , % 231, , % Percentage Revenues (Overage) 8,237 8, % 14,763 15, % Temporary Rentals 10,443 10, % 18,813 19, % Total 133, , % 265, , % This year-on-year increase in Rentals compared to 2Q16 mainly reflects: Minimum rental: Up 7.2%, mainly due to: (i) inauguration of the expansions of Iguatemi Porto Alegre in April/2016; and (ii) the automatic adjustments for inflation in rental contracts. Percentage revenues (Overage): Down 2.8%, as the increase in minimum rentals was above sales performance. Temporary rental: Down 4.4% YoY, reflecting fewer media and marketing contracts for the period. Administration fees were up 4.6% in 2Q17 versus 2Q16 due to the higher condominium expenses. Parking revenue was up 2.3% YoY in the quarter, mainly reflecting: (i) readjustments in parking tariffs placed along the year; and (ii) the maturation of the expansions inaugurated in the past quarters. Other revenues presented a negative change of 3.1% in quarter compared to the same period of last year. 11

12 DEDUCTIONS AND TAXES Deductions and Taxes totaled R$ 27.4 million, a slight increase of 4.7% compared to 2Q16 due to the stability of discounts level. NET REVENUES Net Revenue in 2Q17 was R$ million, 4.1% more than in 2Q16. COSTS OF RENTALS, SERVICES AND ADMINISTRATIVE EXPENSES The Company continues to seek for efficiency, delivering a very controlled Costs and Expenses line in 2Q17, of R$ 46.7 million (excluding Depreciation and Amortization), representing a 1.5% increase compared to the same period of last year. Costs and Expenses (R$ 000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Rent and Services Costs 32,774 32, % 62,969 60, % Expenses 13,910 13, % 25,419 27, % Administrative Expenses 13,869 12, % 25,290 26, % Stock Options Plan % % Pre-operational % % Sub Total 46,684 45, % 88,388 87, % Depreciation and Amortization 26,381 27, % 52,860 55, % Total 73,065 73, % 141, , % This quarter rent and services costs remained flat (+0.1%) when compared to 2Q16, even with more vacancy, payroll readjustments and GLA expansion (Iguatemi Porto Alegre). On the other hand, all Expenses related lines presented a expansion in the quarter (+5.1%) due to more Administrative Expenses. Administrative Expenses were 7.0% up in 2Q17 induced by an increase in personnel expenses. Employees (A) Owned GLA ('000 sqm) (B) (A)/(B) With the maturity of our share-based remuneration 1, (stock option plan) issued in 2012, this line came zeroed. Pre-operational expenses presented a positive change of R$116 thousand in 2Q17 due to projects in our pipeline Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q

13 OTHER OPERATIONAL REVENUES (EXPENSES) In 2Q17, the Company generated Other Operational Revenues (Expenses) of R$7.4 million, an increase of 64.2% versus 2Q16, mainly due more revenues related to the resale of retail location in our malls. Other Operational Revenues (Expenses) (R$ 000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Exchange of PSV 0 0 n/a 0 0 n/a Other 7,444 4, % 7,264 13, % Other Operational Revenues (Expenses) 7,444 4, % 7,264 13, % NET FINANCIAL REVENUES (EXPENSES) Iguatemi had net financial expenses in the 2Q17 of R$ 43.4 million, 18.0% below the amount presented in 2Q16. The lower financial revenues in the quarter is explained by reduction in interest rates and, mainly, by the settlement of a related party debt in 4Q16, which caused the Company to cease to have an asset in US dollar (such debt positively impacted the Financial Revenue in 2016 due to foreign exchange variation). On the other hand, the smaller financial expenses is explained by (i) a contraction in the Company s indebtedness total debt decreased to R$ million, versus R$ 2,028.3 million in 2Q16, being 75% indexed to the CDI; and (ii) a reduction in interest rates. Net Financial Revenues (Expenses) (R$ '000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Financial Revenues 11,577 17, % 28,644 36, % Financial Expenses -54,964-70, % -115, , % Net Financial Revenues (Expenses) -43,387-52, % -86, , % INCOME TAX AND SOCIAL CONTRIBUTION TAX (CURRENT AND DEFERRED) In 2Q17 the income tax and social contribution tax totaled R$ 9.7 million, 53.0% higher than 2Q16. Compared to last year first semester, the Company presented a 12.1% contraction. NET PROFIT AND FFO Iguatemi had a net profit in 2Q17 of R$ 51 million, 45.3% above 2Q16, with net margin of 30.1%. FFO reached R$ 77.4 million, a 24.1% increase versus 2Q16, with FFO margin of 45.7%. In a half-yearly comparison to 2016, this year net profit and FFO grew 37.7% and 19.9% respectively. 13

14 EBITDA EBITDA reached R$ million in the quarter, 7.3% ahead 2Q16, and EBITDA margin was 77.0%, at the top of our Guidance. This YoY grow in the EBITDA is explained by a higher amount of Other Operational Revenues (Expenses) booked in the quarter versus 2Q16, this quarter we had strong revenues related to the resale of commercial spaces in our malls. If we exclude the effect of this line in both years, the EBITDA grew 5.1% in 2Q17 versus the same period of the previous year. EBITDA (R$ 000) 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Net Profit 50,975 35, % 101,594 73, % (+) Income & Social Contribution Taxes 9,729 6, % 14,917 16, % (+) Depreciation and Amortization 26,381 27, % 52,860 55, % (+) Financial Expenses 54,964 70, % 115, , % ( ) Financial Revenues -11,577-17, % -28,644-36, % EBITDA 130, , % 256, , % Net Revenues 169, , % 336, , % EBITDA Margin 77.0% 74.7% 2.3 p.p. 76.1% 77.5% -1.4 p.p. DEBT Iguatemi ended the second quarter of 2017 with a total debt of R$ 2,015.8 million, with average duration of 4.7 years and with average cost of 102.0% of the CDI index, to which 75% of our total debt is linked. The cash position totaled R$ million, currently remunerated by an average rate of 101.7% of the CDI. As a result, our net debt stayed stable versus 1Q17 to R$ 1,656.4 million, leading to a net debt/ebitda multiple of 3.14x for the end of the quarter, below both 2Q16 and 1Q17 levels. Debt breakdown by index Debt breakdown by modality Others TJLP 5% 6% TR 14% Real Estate Credit 19% BNDES 7% CRI 42% CDI 75% Debentu res 32% 14

15 Cost of debt (% of the CDI) 97.2% 97.6% 98.6% 100.0% 97.5% 96.6% 97.7% 95.9% 94.8% 98.1% 100.3% 101.2% 101.5% 103.5% 102.0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Tenor of the debt (years) Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Consolidated Figures (R$ 000) 06/30/ /31/2017 Chg. % Total Debt 2,015,762 2,014, % Cash and Cash Equivalents 359, , % Net Debt (Cash) 1,656,462 1,650, % EBITDA (LTM) 526, , % Net Debt/EBITDA 3.14x 3.19x - Cost of Debt (% of CDI) 102.0% 103.5% -1.5 p.p. Average Debt Term (years) Total Debt Breakdown (R$ 000) 06/30/2017 % 03/31/2017 % TJLP 115, % 138, % TR 287, % 288, % CDI 1,518, % 1,493, % Others 94, % 93, % Short-term 279, % 263, % Long-term 1,735, % 1,750, % DEBT AMORTIZATION TIMETABLE (R$ mn) 66 Financing Debentures

16 ADJUSTED CASH FLOW Iguatemi s Adjusted Cash Position (including cash, cash equivalents and financial investments) decreased by R$ 4.8 million versus the end of the previous quarter (1Q17) to R$ million. The main changes are explained below: Net cash from operations (1) of R$ million; Net cash from investment activities (2) of R$ 8.7 million negative; Cash from financing activities (3) of R$ million negative. (R$ mn) Initial Balance (1Q17) Operational Investments Financing Final Balance (2Q17) (1) Cash flow from operations adjusted by R$ 21.2 million negative for interest payment; (2) Cash from investments adjusted by R$ million negative classified as Financing Activities; (3) Cash flow from financing activities adjusted as per item 1 above. INVESTMENT PROPERTIES In December 2016 we updated the fair value of our properties in operation, and properties under development. On December 31 st, 2016 this amount (for the equity interest owned by Iguatemi) was R$ 9.0 billion or 8.9% higher than 2015 year-end, reflecting the recent inaugurations (2) (1) Value of 100% of malls (R$ mn) 5,849 7,340 8,678 10,531 11,401 12,613 14,955 16,406 Iguatemi stake (R$ mn) 3,288 4,181 5,258 6,118 6,862 7,647 8,287 9,027 Total GLA ( 000 sqm) Owned GLA ( 000 sqm) Number of shares 79,255 79,255 79, , , , , ,612 Stock price NAV per share Base date: December 31 st (1) Includes operating malls and expansions to be inaugurated until 4Q16. Does not consider greenfields/expansions to be inaugurated from 4Q16 onwards. (2) Stock Split in

17 The fair value of the properties for investment was estimated using the discounted cash flow method. All the calculations are based on the analysis of the physical qualifications of the properties under study coupled to a range of information researched in the market, used to determine the fair value of the projects. The following assumptions were used for the valuation: (i) (ii) Real discount rate of 7.2% to 10.0% p.a.; and Real perpetuity growth rate: 2.0% p.a. (iii) Does not consider greenfield projects (I Fashion Outlets) (R$ mi) 9,027 7,471 5,814 Base date for the Market Cap and EV: 06/30/2017. Market Cap EV NAV INVESTMENTS Investments (R$ million) (1) Q17 2Q17 6M17 Acquisitions Other investiments (2) Total (1) Accrual basis. Investments made in the quarter were related to maintenance/reinvestment capex in the malls of the portfolio, as well as investments in the premium outlet project already announced. We ended the quarter with total investments of R$ 49.5 million. 17

18 PROJECTS IN PROGRESS GREENFIELD PROJECTS The figures below refer to 100% of each project. Greenfields I Fashion Outlet Santa Catarina I Fashion Outlet Nova Lima Planned opening Total GLA (sqm) 30,000 30,300 Iguatemi stake 54% 54% 18

19 CONSTRUCTION POTENTIAL In the medium/long term, we expect Iguatemi to continue growing in a robust fashion. Our construction potential of approximately 1.0 million square meters (216 thousand sqm of GLA and 733 thousand sqm of potential floor area) is important, because it demonstrates the growth potential that can be captured by Iguatemi (in addition to the new opportunities of greenfields and outlets that we expect to be announcing over the coming years). Mall Mall (GLA sqm) Real Estate (PA sqm) % Iguatemi Iguatemi São Paulo 5, % Iguatemi Campinas - adjacent site (2) - 501, % Iguatemi Campinas - Boulevard - 19, % Iguatemi Porto Alegre - 32, % Iguatemi Porto Alegre - adjacent site (1) 22,000 29, % Iguatemi Esplanada 28,500 27, % Praia de Belas 5, % Galleria 28,200 28, % Market Place % Iguatemi São Carlos 20,000 15, % Iguatemi Brasília 10, % Iguatemi Alphaville 12, % Iguatemi Ribeirão Preto 20,500 35, % I Fashion Outlet Novo Hamburgo 12,000 6, % Iguatemi Rio Preto 21, % Iguatemi Rio Preto - adjacent site (3) - 23, % Subtotal, malls in operation 185, , % I Fashion Outlet Santa Catarina (1) 15,034 8, % I Fashion Outlet Nova Lima (1) 15,000 8, % Subtotal, malls under development 30,034 16, % Total 215, , % (1) Sites exchanged. (2) Exchange option + preference. (3) Exchange option. Note: Indicative landbank. Projects may be altered, changing the coefficients of use, and usage of the construction potential. 19

20 STRATEGY AND GUIDANCE Iguatemi keep confident about its strategy to have the best assets in the best locations, focusing its operations on the South and Southeast regions of Brazil, and Brasília, areas with the highest purchasing power and potential per capita consumption in the country, with a target public predominantly in the A and B income groups this public is less susceptible to adverse macroeconomic situations, and more demanding in terms of quality of products and services offered. Since 2009, Iguatemi has consistently met or exceeded its guidance for profit and growth published to the market. For 2017, despite the stagnant macroeconomic scenario, our net revenue grew 4.2% until the end of June, between our net revenues Guidance of 2% to 7%. Our EBITDA Margin is 76.1%, next to the top of 77% and may be slightly below to 2016, since opportunities of cost and expenses reductions are smaller, even if we stay focused on controlling expenditures. We have been cutting expenses since the end of 2014, making the comparative base harder. Our first semester investment was R$ 49.5 million, between R$ 80 to 130 million projected to Guidance 6M17 Net revenues growth 2 7% 4.2% EBITDA margin 73 77% 76.1% (1) Accrual basis. Investments (R$ million) (1) Growth in the Company s GLA: We have almost tripled the size of the Company since its IPO, in early Today we have 455 thousand sqm of owned GLA. With the three Premium Outlet projects announced, our owned GLA will increase to approximately 488 thousand sqm by Owned GLA ('000 m²) (Pre IPO) Additional GLA ( ) Sale of Boulevard Rio (2012) Current GLA Total Announced GLA until

21 fev-07 nov-07 jul-08 abr-09 jan-10 out-10 jul-11 abr-12 jan-13 out-13 jun-14 mar-15 dez-15 set-16 jun-17 EARNINGS RELEASE CAPITAL MARKETS Iguatemi shares are listed on Novo Mercado of the BM&F Bovespa, under the ticker IGTA3, and are part of the IBx-100 Index. The table below presents our largest stockholders and the free float, with date base of 06/30/2017: Stockholding structure Number of shares % of total Jereissati Participações 89,642, % Treasury 87, % Others 86,880, % Total 176,611, % Iguatemi stock price ended the second quarter of 2017 at R$ Currently, ten sell-side analysts have active coverage on Iguatemi shares. IGTA3 (1) Iguatemi x Ibovespa (Feb./2007 Actual) Closing Price (06/30/2017) R$ IGUATEMI IBOVESPA Higher price in 2Q17 R$ Lower price in 2Q17 R$ Appreciation in 2Q % 150 Appreciation in % 100 Number of shares 176,611, Market Cap. (06/30/2017) R$ 5,814,053,148 0 Average daily liquidity in 2Q17 R$ 33,435,358 (1) Source: Bloomberg, base date: 06/30/2017. HUMAN RESOURCES We have an experienced management team, and we consistently seek to align the interests of our management and employees with those of our stockholders, through two mechanisms of variable remuneration: Iguatemi bonus plan: This program is linked to meeting short-term budget and operational targets. All our employees are eligible. The amount distributed to each employee is linked to the Company s Key Performance Indicators KPIs (On-Going Business, Projects Under Development and Future Growth) and to individual KPIs. Stock options purchase plan: The stock option plan is administered by our Board of Directors, which may, at its exclusive choice, grant purchase options to managers, employees or service providers. The stock options issued under the plan are limited to a total of 3% of the company s share capital. 21

22 Our policies in relation to employees are based on retention of qualified employees, creation of management tools to improve their efficiency, creation of additional opportunities for internal promotion, efficient training programs, assessment of performance and appropriate remuneration. We revisited our Mission, Vision and Values, and also created our own method for evaluating and managing our people. We believe that this tool, together with the bonus plan pegged to KPIs, will help Iguatemi meet its growth target without diminishing the identity and values that make Iguatemi one of the 50 most valuable brands in Brazil. SOCIAL AND ENVIRONMENTAL PROGRAMS For more than 10 years, Iguatemi - always concerned with social and environmental aspects - has been implementing sustainability actions that save water and reduce consumption of energy. Highlights are: Actions to reduce energy consumption Migration to the Free Market (at present, all our malls are supplied by the Free Market ) Continuous replacement of lamps and equipment by new, more efficient technologies (chillers, LED,...) Systems automation to improve the efficiency of malls (illumination, air conditioning...) Actions to save water and increase self-sufficiency Artesian wells Water and sewerage treatment stations Installation of water saving equipment (aerators, toilet bowls, water-saving valves,...) Other initiatives We develop our logistics processes (for example, recycling or selective collection) always taking the environment into account. Each process is based on a vision, on the basis of which objectives, targets and action plans are constructed. Currently, four malls have an evolved composting system: Iguatemi São José do Rio Preto, Iguatemi Porto Alegre, Iguatemi Campinas e Iguatemi Esplanada. In each mall a different model was adopted and analyzes are being made to define the best model to be adopted in the other assets of the portfolio. In addition, we practice social actions, supporting cooperatives, which benefit needy communities with the work of separations of wastes and re-use of raw materials. 22

23 EXTERNAL AUDITING SERVICES: COMPLIANCE WITH CVM INSTRUCTION 381/2003 As from the first quarter of 2017 Iguatemi and its subsidiaries began using the auditing services of Ernst & Young Auditores Independentes S.S. The Company s activity in contracting with our independent auditors of any services not related to external auditing is based on the principles that preserve the external auditor s independence. These internationally accepted principles are: (a) the auditor must not audit his own work; (b) the auditor must not exercise a management function in his client; and (c) the auditor should not promote his client s interests. Note: Non-financial data, such as GLA, average sales, average rentals, occupancy costs, average prices, average market prices, EBITDA and pro-forma cash flow have not been reviewed by our external auditors. The Company is committed, by the Commitment Clause in its by-laws, to arbitration in the Market Arbitration Chamber. About Iguatemi Empresa de Shopping Centers S.A. Iguatemi Empresa de Shopping Centers S.A. ( Iguatemi ) is one of the largest full service companies in the Brazilian shopping mall sector. Its activities cover the whole range of the business, from conception, through planning, to development and management of regional shopping malls, outlets and mixeduse real estate complexes with office towers. Iguatemi has equity holdings in 16 shopping malls, 1 premium outlet and 4 commercial towers, with a total GLA of 746 thousand sqm; and an owned GLA of 455 thousand sqm (based on the percentage owned by Iguatemi at each mall). Iguatemi participates in the management of 15 of its 16 shopping malls, its premium outlet and its office towers. It also has 2 greenfield premium outlet projects in progress. Iguatemi s stock is traded on the Novo Mercado of the São Paulo Stock Exchange (BM&F Bovespa). Investor Relations Team: Cristina Betts CFO Roberta Noronha IR and Integrated Planning Director Carina Carreira IR Coordinator Arnon Shirazi IR Analyst Tel.: +55 (11) / 6877 ri@iguatemi.com.br Any statements on the outlook for the business, estimates for operational or financial results, or the growth outlook for Iguatemi, that may be expressed in this report are projections, and as such are based exclusively on the expectations of Iguatemi s management in relation to the future of the business, and its continuing access to capital to finance the Company s business plan. Such statements are subject, substantially, to changes in market conditions, government rules, competitive pressures, the performance of the sector and the performance of the Brazilian economy, among other factors, and are, therefore, subject to change without prior notice. 23

24 APPENDICES The Company s non-accounting information has not been reviewed by the external auditors. 1. CONSOLIDATED FINANCIAL STATEMENTS FOR THE SECOND QUARTER OF Consolidated Profit and loss account Formal accounting Consolidated P&L 2Q17 2Q16 Chg. % 6M17 6M16 Chg. % Gross revenues 196, , % 389, , % Deductions and taxes -27,380-26, % -52,579-46, % Net revenues 169, , % 336, , % Cost of goods and /or services sold -55,315-54, % -107, , % Gross profit 114, , % 229, , % Operational revenues (expenses) -10,007-13, % -25,634-23, % General and administrative expenses -17,750-18, % -33,496-37, % Other operational revenues 10,346 6, % 14,004 19, % Other operational expenses -2,902-2, % -6,740-5, % Equity gain (loss) in subsidiaries % % Profit (loss) before Fin. Revs. (Exp.) & Taxes 104,091 94, % 203, , % Net financial revenues (expenses) -43,387-52, % -86, , % Financial revenues 11,577 17, % 28,644 36, % Financial expenses -54,964-70, % -115, , % Profit (loss) before taxes on profit 60,704 41, % 116,511 90, % Profit before income tax and Social Contribution tax -9,729-6, % -14,917-16, % Current -11,580-13, % -24,492-25, % Deferred 1,851 7, % 9,575 8, % Profit in the period 50,975 35, % 101,594 73, % Attributed to owners of parent company 50,368 34, % 100,378 72, % Attributed to non-controlling stockholders % 1,216 1, % 24

25 1.2. Consolidated Statement of financial position Formal accounting ASSETS (R$ 000) 06/30/ /31/2017 Chg. Current assets 502, , % Cash & cash equivalents 323, , % Accounts receivable 132, , % Taxes recoverable 20,803 22, % Prepaid expenses 12,213 15, % Other current assets 13,080 18, % Noncurrent assets 4,531,646 4,527, % Long term assets 360, , % Financial Investments 35,401 33,724 - Accounts receivable 79,484 80, % Deferred taxes 126, , % Owed by related parties 101,838 99, % Other noncurrent assets 16,727 16, % Investments 4,050,232 4,056, % Stockholdings 19,397 19, % Investment properties 4,030,835 4,037, % Property, plant and equipment 22,200 22, % Intangible assets 98,960 99, % Total assets 5,034,349 5,037, % LIABILITIES (R$ 000) 06/30/ /31/2017 Chg. Current liabilities 415, , % Payroll-associated and employment-law obligations 20,486 15, % Suppliers 8,681 11, % Tax issues 32,955 24, % Loans and financings 105, , % Debentures 174, , % Other liabilities 73,824 48, % Noncurrent liabilities 1,868,063 1,895, % Loans and financings 1,270,208 1,285, % Debentures 465, , % Liabilities owed to related parties % Other % Deferred taxes 97, , % Provisions 14,055 14, % Profits and revenues to be appropriated 19,610 20, % Stockholders equity 2,750,482 2,776, % Paid-up share capital 1,231,313 1,231, % Capital reserves 462, , % Profit reserves 949,614 1,031, % Accumulated profit (loss) 100,378 50, % Minority interests 6,649 6, % Current liabilities 5,034,349 5,037, % 25

26 1.3. Statement of cash flows Formal accounting Consolidated (Formal Accounting) 06/30/ /31/2017 Net cash from operations 125,593 80,992 Cash generated by operations 142, ,494 Net profit for the year 50,975 50,619 Depreciation and amortization 26,381 26,479 Write-off of fixed assets 0 0 Equity gain (loss) in subsidiaries Monetary variations, net 67,405 91,679 Provisions for tax, labor-law and third-party risks 0 0 Deferred income tax and Social Contribution tax -1,851-7,724 Provision for share-based payments 0 66 Provision for Bonus Program 3,434 1,447 Allowance for doubtful accounts 2,381 3,548 Deferred revenues -7,389-7,112 Amortization of cost of capitalization 1,435 1,436 Minority interests Provision for impairment of inventories Changes in assets and liabilities 17,354 39,085 Other -33, ,587 Net cash from (used in) investment activities -122, ,401 Financial investments -113, ,191 Others -8,708-40,790 Net cash from (used in) financing activities -121, ,984 Amortization of financings -56, ,356 Dividends paid -59,999 0 Funds raised 0 0 Proceeds of debenture issue 0 0 Proceeds of issue of shares 0 0 Other -5,264-22,628 Increase (reduction) in cash and cash equivalents -118,589-29,591 Initial balance of cash and equivalents 155, ,755 Final balance of cash and equivalents 36, ,164 26

27 1.4. Statement of cash flows Adjusted Formal Accounting (graph on page 16) Consolidated (Formal Accounting) 06/30/ /31/2017 Net cash from operations 146, ,192 Cash generated by operations 142, ,494 Net profit for the year 50,975 50,619 Depreciation and amortization 26,381 26,479 Write-off of fixed assets 0 0 Equity gain (loss) in subsidiaries Monetary variations, net 67,405 91,679 Provisions for tax, labor-law and third-party risks 0 0 Deferred income tax and Social Contribution tax -1,851-7,724 Provision for share-based payments 0 66 Provision for Bonus Program 3,434 1,447 Allowance for doubtful accounts 2,381 3,548 Deferred revenues -7,389-7,112 Amortization of cost of capitalization 1,435 1,436 Minority interests Provision for impairment of inventories Changes in assets and liabilities 17,354 39,085 Other -12,578-12,387 Net cash from (used in) investment activities -8,708-40,790 Financial investments 0 0 Others -8,708-40,790 Net cash from (used in) financing activities -142, ,184 Amortization of financings -56, ,356 Dividends paid -59,999 0 Funds raised 0 0 Proceeds of debenture issue 0 0 Proceeds of issue of shares 0 0 Other -5,264-22,628 Interest Payment -21, ,200 Increase (reduction) in cash and cash equivalents -4, ,782 Initial balance of cash, equivalents and financial investments 272, ,718 Initial balance of cash, equivalents and financial investments 268, ,936 27

28 GLOSSARY EBITDA: Non-accounting measure prepared by Iguatemi s management, calculated, according to CVM Circular 01/2006, as: Operational profit plus Net financial revenues (expenses) plus Depreciation and amortization. EBITDA per sq. meter: EBITDA divided by Mean owned GLA. FFO: Funds from operations = Net profit plus Depreciation and amortization. FFO per sqm: FFO divided by Mean owned GLA Mean owned GLA: Arithmetic mean of Owned GLA in a period, (to avoid distortions, in months during which acquisitions occur. Mean owned GLA is weighted by the number of calendar days during which each acquisition contributes to revenues). Mean total GLA: Arithmetic mean of Total GLA in a period. NAV (Net Asset Value): fair value of the Company s investment portfolio. Occupancy cost as % of sales: [Total rentals (minimum plus overage) + condominium costs + Promotion fund], divided by Total sales. Occupancy rate: Total leased area divided by Total GLA. Owned GLA: (Total GLA of a property) x (Iguatemi s percentage interest in the property). Same-store rentals per sq. meter: Refers to rental revenues per m² only of the stores that were present during the whole of the periods in question (both in the previous year and in the present year): i.e. leaving out of account new operations and operations that are no longer present in the mall/s. Also leaves out of account malls that have been acquired or sold in the intervening period. Same-store sales per sqm: Refers to total sales per m² reported by store operators, only of the stores that were present during the whole of the periods in question (both in the previous year and in the present year): i.e. leaving out of account new operations and operations that are no longer present in the mall(s). Also leaves out of account malls that have been acquired during the intervening period or were sold in that period. Total GLA: Total gross leasable area, corresponding to the sum of all areas available for lease, except kiosks, of the malls in which Iguatemi has interests. Total number of malls: Number of malls in which Iguatemi holds an interest. Total sales: Total sales declared by store operators in all malls in which Iguatemi holds an interest. 28