Quarterly Information (ITR) Iguatemi Empresa de Shopping Centers S.A.

Transcription

1 Quarterly Information (ITR) Iguatemi Empresa de Shopping Centers S.A. September 30, 2017 with Independent Auditor s Review Report (A free translation from Portuguese into English of Independent auditor s review report on Quarterly Information prepared in Brazilian currency in accordance with rules issued by the Brazilian Securities Commission (CVM) applicable to Quarterly Information (ITR))

2 Contents Message from management... 1 Report on review of the quarterly information Individual financial statements Balance sheet - Assets Balance sheet - Liabilities Statement of income Statement of comprehensive income Statement of cash flows - Indirect method Statement of changes in shareholders equity / DMPL - 01/01/ /30/ Statement of changes in shareholders equity / DMPL - 01/01/ /30/ Statement of added value Consolidated financial statements Balance sheet Assets Balance sheet Liabilities Statement of income Statement of comprehensive income Statement of cash flows - Indirect method Statement of changes in shareholders equity / DMPL - 01/01/ /30/ Statement of changes in shareholders equity / DMPL - 01/01/ /30/ Statement of added value Notes to the financial statements... 38

3 MESSAGE FROM MANAGEMENT Iguatemi s P&L for the third quarter was above expectations, which is a result of the pursuit of excellence on all our fronts. Our strategy of having the best assets in the best locations shows that we are aligned with one of the main market trends: the search of storekeepers for locations where they can establish their flagships, to have greater proximity to consumers and consequently better and more complete experience. Based on operational indicators, we noticed a gradual recovery in consumption. Sales growth in our portfolio was 6.8% in the quarter compared with the same prior-year period, reaching R$ 3.1 billion. Our performance in same-store sales (SSS) was 5.9% in the quarter and in same-area rents (SAR) was 6.8%. Even with well-anchored inflation, same-store rents (SSR) and same-area rents (SAR) grew 5.8% and 6.1%, respectively. The growth in sales is a result of the performance of assets: considering Assets at 100%, we had a 5.8% increase in Rent Revenue for the quarter (Minimum Rent + Overage + Temporary Rent), reaching R$235.9 million. Parking Revenue grew 6.0% in 3Q17, totaling R$56.4 million. Currently we have two greenfield projects already disclosed, both are outlets. One of them in Santa Catarina (SC) state, in the city of Tijucas, and another in Minas Gerais (MG), a state where we are still not present, in the city of Nova Lima. The outlet model is part of one of our growth strands in which we see opportunity in a yet untapped market. The commercialization of our outlet in Santa Catarina state was attended by main fashion retailers such as Inbrands, Restoque and Arezzo. We have three assets that are still in the process of maturation - a five-year period after the launch. In the South region only I Fashion Outlet Novo Hamburgo, opened in 2013; in the Southeast of Brazil (São Paulo state countryside) Iguatemi Ribeirão Preto (2013) and Iguatemi Rio Preto (2014). Together these assets represent 15.3% of our Total GLA of Shopping Malls. Even with last years presenting an adverse scenario, impacting consumption, we are confident with the progress of our new projects. Total GLA (%) Shopping malls under maturation 15.3% Countryside - Gross Revenue 3Q17/sqm Mature shopping malls 84.7% Shoppings em Maturação Shoppings Maduros Another factor that contributes to the maturation of our projects is the densification of the immediate surroundings. Significant changes in the quarter derived from third parties in Iguatemi Esplanada and Iguatemi Florianópolis surroundings. In the city of Sorocaba, 41 thousand square meters of medium-sized projects were delivered, referring to ventures Panorama Campolim, Saint Tropez, Soleil de Quebec and Way Compact Premium, and in Florianópolis, also medium-sized projects, there was a total delivery of 34 thousand square meters, referring to Jardim Imperiale and Porto Caravelas. In the city of São Paulo, there were few changes, we highlight the delivery of VN Casa Feirreira Lobo of Vitacon, a project that confirms the trend of smaller studios in the surroundings of highly qualified areas, with good infrastructure and quality of life, like the surroundings of JK Iguatemi complex. Page 1 of 71

4 Among other monitoring carried out, we highlight the launch of Jardim Olhos d Água Planned Neighborhood, 5 minutes far from Iguatemi Ribeirão Preto Shopping Mall, with the announcement of Magna Vista da Bild Desenvolvimentos Imobiliários, with 108 units of 135 square meters. This project is only the first in the neighborhood that provides a high standard proposal for a mixed and harmonious use among land subdivisions, gated residential communities (of different sizes) and a green area with more than 100,000 square meters that outlines horizontal condominiums and vertical developments. Our Net Revenue reached R$169.7 million in the quarter, a 5.3% growth, which is within our Guidance disclosed to the market. EBITDA reached R$133.8 million in 3Q17, a 4.6% growth compared with 3Q16. However, even if we rebate the effect of Other Operating Income (Expenses) account in both years, we remain with an EBITDA growth of 5.2% in 3Q17 compared with 3Q16. We closed the EBITDA Margin in 78.9% in the quarter, overtaking the Guidance top. On September 18, we took out Mortgage-backed Securities (CRI) of R$279.6 million, 96% of the Interbank Deposit Certificate (CDI), to strengthen the Company's cash position for the next quarters, in addition to extending the debt term to 4.8 years. Also in the third quarter, the second and last installment of Dividends was paid on September 22, in the amount of R$60 million, totaling R$120 million paid to shareholders this year - equivalent to a dividend yield of 1.7 %. Therefore, the Company's Total Debt closed the quarter at R$2.2 billion, with Cash and Cash Equivalents 56% higher compared with 3Q16, reaching R$560.6 million. Accordingly Net Debt totaled R$1.7 billion, with a Net Debt/EBITDA multiple of 3.14x. Debt reduction is part of the deleveraging strategy for potential future growth opportunities. Despite the uncertainties of this year, our expectation remained unchanged, as noted below in our Guidance: Guidance M17 Net Revenue Growth 2 7% 4.6% EBITDA Margin 73 77% 77.0% Investment (R$ million) (1) (1) Accrual basis. Carlos Jereissati CEO of Iguatemi Empresa de Shopping Centers S.A. Page 2 of 71

5 MAIN INDICATORS The financial and operating information below is based on consolidated accounting figures, in thousands of Brazilian reais, in accordance with the Brazilian Corporation Law and the International Financial Reporting Standards (IFRS), as expressed in accounting pronouncements issued and approved by the Brazilian Securities and Exchange Commission (CVM). The Company s nonfinancial information has not been reviewed by independent auditors. Financial indicators 3Q17 3Q16 Var. % 9M17 9M16 Var. % Gross Revenue (R$ thousands) 197, , % 587, , % Net Revenue (R$ thousands) 169, , % 506, , % EBITDA (R$ thousands) 133, , % 390, , % EBITDA Margin 78.9% 79.4% -0.5 p.p. 77.0% 78.1% -1.1 p.p. Net Income (R$ thousands) 53,061 40, % 154, , % EBITDA Margin 31.3% 25.2% 6.1 p.p. 30.5% 23.6% 6.9 p.p. FFO (R$ thousands) 79,804 67, % 234, , % FFO Margin 47.0% 41.8% 5.2 p.p. 46.3% 40.5% 5.7 p.p. Performance Indicators 3Q17 3Q16 Var. % 9M17 9M16 Var. % Total GLA (sqm) 746, , % 746, , % Owned GLA (sqm) 454, , % 454, , % Average Owned GLA (sqm) 454, , % 454, , % Total GLA, shopping malls (sqm) 701, , % 701, , % Owned GLA, shopping malls (sqm) 419, , % 419, , % Total, malls (1) % % Total sales (R$ thousands) (2) 3,097,345 2,901, % 9,253,603 8,754, % Same-store sales (SSS) 5.9% 1.0% 4.9 p.p. 3.9% 1.9% 2.0 p.p. Same-area sales (SAS) 6.8% 2.4% 4.4 p.p. 4.5% 1.8% 2.7 p.p. Same-store rentals (SSR) 5.8% 7.4% -1.6 p.p. 6.3% 6.6% -0.3 p.p. Same-area rentals (SAR) 6.1% 6.4% -0.3 p.p. 6.1% 6.2% -0.1 p.p. Occupancy cost (% of sales) 12.0% 12.5% -0.5 p.p. 12.0% 12.2% -0.2 p.p. Occupancy rate 93.3% 93.3% 0.0 p.p. 93.2% 93.7% -0.5 p.p. Net delinquency rate 1.5% 1.1% 0.4 p.p. 2.2% 3.1% -0.9 p.p. (1) Considers Iguatemi Esplanada and Esplanada Shopping as a single venture. (2) Amount of 1Q16 adjusted for Iguatemi Caxias. Page 3 of 71

6 IGUATEMI PORTFOLIO Portfolio City Iguatemi Interst Total GLA (smt) Iguatemi FLA (smt) Iguatemi São Paulo São Paulo 58.44% 47,322 27,655 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 Owned area (2) Sorocaba % 3,678 3,678 Subtotal Southeast 69.10% 458, ,097 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 Subtotal South 30.44% 158,020 48,096 Iguatemi Brasília Brasília 64.00% 32,302 20,673 Subtotal Federal District 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 Subtotal Outlet and Power Center 63.22% 52,537 33,212 Subtotal Shopping Malls 59.72% 701, ,079 Market Place Torre I São Paulo % 15,685 15,685 Market Place Torre II São Paulo % 13,395 13,395 Torre Iguatemi São Paulo São Paulo 58.44% 4,469 2,612 Torre Iguatemi Porto Alegre Porto Alegre 36.00% 10,692 3,849 Subtotal Towers 80.33% 44,241 35,541 Total 60.94% 746, ,620 (1) Considers the Iguatemi Esplanada complex, comprising Esplanada Shopping and Iguatemi Esplanada (2) Area owned by Iguatemi in Esplanada, held through a subsidiary (3) Boulevard is contiguous to the Iguatemi Campinas shopping mall. Page 4 of 71

7 OPERATIONAL PERFORMANCE (Assets at 100%) Portfolio Minimum Rent + Overage + Temporary Rent (R$ thousands) (1) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Iguatemi São Paulo 46,036 42, % 135, , % JK Iguatemi 18,023 17, % 53,177 52, % Pátio Higienópolis (3) 22,977 20, % 68,654 64, % Market Place 6,851 7, % 20,848 20, % Torres Market Place 6,094 6, % 18,269 18, % Iguatemi Alphaville 8,247 7, % 22,734 21, % Iguatemi Campinas 25,638 24, % 74,564 69, % Galleria 4,784 5, % 15,518 15, % Iguatemi Esplanada (2) 16,199 15, % 47,908 44, % Iguatemi São Carlos 2,741 2, % 8,128 7, % Iguatemi Ribeirão Preto 5,513 5, % 16,978 16, % Iguatemi Rio Preto 6,524 6, % 19,569 18, % Iguatemi Porto Alegre 28,194 24, % 77,528 64, % Praia de Belas 11,831 11, % 35,737 33, % Iguatemi Florianópolis 6,500 6, % 19,787 19, % Iguatemi Caxias 5,753 6, % 17,514 19, % Iguatemi Brasília 10,306 9, % 30,344 29, % I Fashion Outlet Novo Hamburgo 2,818 2, % 8,335 8, % Boulevard Iguatemi % 2,466 2, % Total 235, , % 693, , % Portfolio Parking (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Iguatemi São Paulo 7,587 7, % 22,208 21, % JK Iguatemi 5,242 5, % 15,212 15, % Pátio Higienópolis 3,913 3, % 11,817 10, % Market Place 5,705 6, % 17,554 18, % Torres Market Place Iguatemi Alphaville 3,579 3, % 11,228 10, % Iguatemi Campinas 6,681 6, % 20,750 18, % Galleria 2,352 2, % 6,924 6, % Iguatemi Esplanada (2) 4,820 4, % 13,942 11, % Iguatemi São Carlos % 2,483 2, % Iguatemi Ribeirão Preto Iguatemi Rio Preto % % Iguatemi Porto Alegre 6,222 5, % 18,921 13, % Praia de Belas 4,365 3, % 11,938 10, % Iguatemi Florianópolis 1,173 1, % 3,822 4, % Iguatemi Caxias (2) 1,264 1, % 4,358 3, % Iguatemi Brasília 2,420 2, % 7,980 8, % I Fashion Outlet Novo Hamburgo Boulevard Iguatemi % % Total 56,384 53, % 169, , % (1) The figures do not include the straight-line effect. (2) Considers the Complex comprising Iguatemi Esplanada and Esplanada Shopping. (3) Revenues for Pátio Higienópolis were calculated on a cash basis until 4Q16 and on an accrual basis from 1Q17 onwards. SALES AND RENTALS Total sales reached R$3.1 billion in the quarter, a 6.8% growth compared with the same period of the prior year. In the last nine months, sales grew 5.7% compared with prior year. The best performing segments were Jewellery, Services and Home Goods. Once again, the segment that has not performed well was Books & Stationary Stores. Page 5 of 71

8 Same-area sales (SAS) grew 6.8% in the quarter, while same-store sales (SSS) grew 5.9%. Same-area rentals (SAR) grew 6.1% and same-store rentals (SSR) grew 5.8%. Rental Revenue of Assets at 100% reached R$235.9 million in 3Q17 (+5.8% compared with 3Q16). Parking Revenue reached R$56.4 million in the quarter (+6.0% compared with 3Q16). Iguatemi São Paulo: Rental Revenues grew 8.5% due to an increase in Minimum Rent, as a result of the contractual adjustments. Parking Revenue grew 6.5% due to a combination of tariff increase and increase in the flow of vehicles. JK Iguatemi: Although in mix reformulation process, Rent Revenues grew 0.5%. Parking Revenue remained stable (+0.2%), despite a worsening in the flow of vehicles due to alternative means of transportation. Pátio Higienópolis: 10% increase in Rent Revenues, mainly referring to a combination of a greater number of rented stores, inflation adjustments and temporary rent. The 9.4% increase in Parking Revenue was a result of tariff increase. Market Place: Rent Revenues decreased by 7.9% due to the decrease in the number of storekeepers and lower Overage in the period. Parking Revenue decreased by 5.3% due to a reduction in flow of vehicle. Market Place Towers: Rent Revenues decrease by 1.0% due to the loss of one tenant. Iguatemi Alphaville: Compared with the same period of prior year, Rent Revenues grew 11.7% as a result of a combination of Minimum Rent, Overage and higher temporary rent. Parking Revenue grew 0.9%, partially impacted by the reduction in the flow of vehicles. Iguatemi Campinas: Increase in Rent Revenues by 6.2%, due to a higher Minimum Rent. Parking Revenue increased by 8.1% due to tariff adjustment and stable flow of vehicles. Galleria: Rent Revenues decreased by 6.9% due to the low number of temporary rent in the quarter. Parking Revenue increased by 7.5% mainly driven by the high number of monthly pass holders. Iguatemi Esplanada: Rent Revenue grew by 7.4% as a result of a higher occupancy and temporary rent rate. Parking Revenue increased by 19.6% due to tariff adjustment and increase in flow of vehicles. Iguatemi São Carlos: Total Rent Revenues grew by 5.6% due to an increase in all our revenue accounts. Parking Revenue grew 14.9% due to tariff increase. Iguatemi Ribeirão Preto: Growth of 0.8% in Rent Revenues boosted by higher revenue from temporary rent. Since the venture is in phase of maturation, we do not charge parking fees in this shopping mall. Iguatemi São José do Rio Preto: Grow of 2.2% in Rent Revenues due to increase in sales, impacting the Overage collection. The Parking Revenue presented refers to the Valet service. Iguatemi Porto Alegre: Growth of 13.9% in Rent Revenue mainly due to contractual adjustments referring to Minimum Rent and good performance of temporary rent. Higher flow of vehicle combined with a tariff adjustment led to a 14.4% increase in Parking Revenue. Page 6 of 71

9 Praia de Belas: Rent Revenues increased by 5.9%, as a result of the increase in Minimum Rent contracts and in the number of temporary rent. Parking Revenue increased by 19.9% due to flow of vehicles and tariff adjustment. Iguatemi Florianópolis: Rent Revenues increased by 2.9% due to an increase in Minimum Rent, however impacted by a reduction in Overage. Parking Revenue decreased by 4.1% due to flow of vehicles. Iguatemi Brasília: Increase by 5.8% in Rent Revenues due to a positive increase in Minimum Rent and a less significant Overage. Parking Revenue decreased by 10.5% due to a reduction in flow of vehicle. I Fashion Outlet Novo Hamburgo: Rent Revenue grew 3.7% due to Minimum Rent adjustment. Due to the nature of this asset, we do not charge parking fees in this type of venture. OCCUPANCY RATE AND COST Average occupancy rate of Shopping Malls for this quarter was 93.3%, a marginal increase compared with the second quarter. Occupancy cost for 3Q17 was 12.0%. Occupancy Rate Occupancy Cost 94.1% 94.0% 94.0% 93.8% 93.3% 93.4% 93.0% 93.1% 93.3% 12.7% 12.1% 11.7% 12.5% 12.7% 11.0% 11.5% 11.5% 12.0% 3T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 3T17 3T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 3T17 DEFAULT In the third quarter, the net default was stable at 1.5%. In the past 9 months, our net default was 2.2%. Page 7 of 71

10 ECONOMIC AND FINANCIAL PERFORMANCE Consolidated P&L (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Gross revenue 197, , % 587, , % Taxes and discounts -28,144-25, % -80,724-71, % Net revenue 169, , % 506, , % Costs and expenses -40,645-38, % -129, , % Other operating income (expenses) 4,499 5, % 11,763 18, % Equity pickup % % EBITDA 133, , % 390, , % EBITDA Margin 78.9% 79.4% -0.5 p.p. 77.0% 78.1% -1.1 p.p. Depreciation and amortization -26,743-26, % -79,603-81, % EBIT 107, , % 310, , % EBITDA Margin 63.1% 62.8% 0.3 p.p. 61.3% 61.3% 0.0 p.p. Finance income (costs) -42,827-53, % -129, , % Income and social contribution taxes (IRPJ and CSLL) -11,211-6, % -26,128-23, % Net income 53,061 40, % 154, , % Net margin 31.3% 25.2% 6.1 p.p. 30.5% 23.6% 6.9 p.p. FFO 79,804 67, % 234, , % FFO Margin 47.0% 41.8% 5.2 p.p. 46.3% 40.5% 5.7 p.p. GROSS REVENUE Iguatemi s Gross Revenue in the third quarter of 2017 amounted to R$197.8 million, a 5.9% increase compared with the same period of Gross Revenue (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Rent 138, , % 403, , % Administration fee 11,559 10, % 34,406 32, % Parking 35,455 33, % 106, , % Other 12,701 15, % 42,597 44, % Total 197, , % 587, , % Rent Revenue in 3Q17, comprising Minimum Rent, Percentage Rent (Overage) and Temporary Rent, grew 7.9% in relation to 3Q16 and represented 69.8% of total Gross Revenue. Rent Revenue (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Minimum rent 121, , % 352, , % Percentage rent 6,382 6, % 21,145 22, % Temporary rent 10,356 9, % 29,169 28, % Total 138, , % 403, , % Page 8 of 71

11 The growth in Rent Revenue compared with 3Q16 mainly reflects: Minimum Rent: Increase of 8.4%, mainly due to: (i) inauguration of the expansion of Iguatemi Porto Alegre; and (ii) contract renewals. Percentage Rent (Overage): Decrease of 7.6% due to adjustment to minimum rent above the increase in sales. Temporary Rent: Increase of 12.5% due to higher media and rent of spaces for the period. Administration Fee increased by 10% compared with the same prior-year period, due to the increase in Rent Revenues and change in the accounting regime from cash basis to accrual basis. Parking Revenue grew 7.4% in relation to 3Q16, mainly reflecting: (i) the adjustment in tariffs placed along the year; (ii) the maturation of recent expansions, entailing higher flow; and (iii) due to a higher flow of vehicle in the consolidated. Account Other in Gross Revenue presented a negative variation of 16.3% in relation to 3Q16 due to the termination of commercial key money of JK Iguatemi after its fifth anniversary. DEDUCTIONS, TAXES AND CONTRIBUTIONS Deductions, Taxes and Contributions totaled R$28.1 million, a 9.7% increase above 3Q16 partly explained by discount agreements in the past. NET REVENUE Net Revenue for 3Q17 amounted to R$169.7 million, a 5.3% increase in relation to 3Q16. COSTS AND EXPENSES The Company continues to seek efficiency, delivering a very controlled line of Costs and Expenses in 3Q17, totaling R$40.6 million (excluding Depreciation and Amortization), an increase of 5.7% compared to the same period of prior year. Costs and Expenses (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Rent and Service Cost 28,932 27, % 91,901 87, % Expenses 11,713 10, % 37,132 37, % Administrative expenses 11,626 10, % 36,916 36, % Share-based payment % 66 1, % Pre-operating expenses % % Subtotal 40,645 38, % 129, , % Depreciation and amortization 26,743 26, % 79,603 81, % Total 67,388 65, % 208, , % Page 9 of 71

12 Nº Funcionários (A) ABL Própria (mil m²) (B) (A)/(B) ,75 0,72 0,69 0,69 0,65 0,66 0,66 0,67 0, ,30 1,10 0,90 0,70 0,50 0,30 0,10 In this quarter, rent and service costs increased by 4.0% compared with 3Q16, with vacancy rate and salary adjustments at the same level T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 3T17-0,10-0,30-0,50 In general, expenses increased by 10.3% in this quarter, due to an increase in administrative expenses. Administrative Expenses were 13.5% higher than in 3Q16, mainly due to the increase in personnel expenses and third-party services. With the expiration of our share-based payment plan (stock options) issued in 2012, there were no expenses under this account. Pre-Operating expenses presented a negative variation of R$57 thousand in relation to 3Q16, due to the progress of projects in our pipeline. OTHER OPERATING INCOME (EXPENSES) In 3Q17, the Company generated total Other Operating Income (Expenses) of R$4.5 million, a decrease by 10.2% compared with the same prior-year period. This decrease is mainly observed in the Revenue from resale of sales point account. Other Operating Income (Expenses) (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % PSV 0 0 n/a 0 0 n/a Other 4,499 5, % 11,763 18, % Other Operating Income (Expenses) 4,499 5, % 11,763 18, % FINANCE INCOME (COSTS) Iguatemi's Finance Income (Costs), Net for this quarter was negative, R$42.8 million, 20.4% below the amount reported in 3Q16. The decrease in Finance Income is partly explained by the decrease in the CDI (Interbank Deposit Certificate) rate and mostly by the related party debt settled in 4Q16, resulting in the Company ceasing to have an asset in US dollar (such debt positively impacted Finance Income in 2016 due to the foreign exchange difference). Lower Finance Costs, on the other hand, are explained by the sharp fall in interest rate between periods. Although the Company s total indebtedness increased due to the obtainment of Mortgagebacked Securities (CRI) at the end of September (Total Debt increased from R$2,015.8 million to R$2,236.1 million in this quarter, 79% of which is indexed to the CDI), there was no significant impact on Finance Costs. Finance Income (Costs), Net (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Finance Income 12,364 24, % 41,008 61, % Finance Costs -55,191-78, % -170, , % Finance Income (Costs), Net -42,827-53, % -129, , % Page 10 of 71

13 INCOME AND SOCIAL CONTRIBUTION TAXES (CURRENT AND DEFERRED) In 3Q17, Income and Social Contribution Tax Expenses totaled R$11.2 million, an increase of 66.5% compared with 3Q16. NET INCOME AND FFO Net Income for the quarter amounted to R$53.1 million, 30.6% higher than the one recorded in 3Q16, with a Net Margin of 31.3%. The FFO reached R$79.8 million, an increase of 18.5% compared with the same prior-year period, with FFO Margin of 47.0%. In the nine-month period comparison, net profit and FFO increased 35.2% and 19.4%, respectively, in relation to prior year. EBITDA EBITDA for the quarter reached R$133.8 million, a 4.6% increase compared with the same quarter of prior year, and EBITDA margin of 78.9%, reaching the top figures of our Guidance. Excluding the effect of Other Operating Income (Expenses) in both years, EBITDA grew 5.2% compared with the same prior-year period. EBITDA (R$ thousands) 3Q17 3Q16 Var. % 9M17 9M16 Var. % Net Income 53,061 40, % 154, , % (+) Income and social contribution taxes 11,211 6, % 26,128 23, % (+) Depreciation and amortization 26,743 26, % 79,603 81, % (+) Finance costs 55,191 78, % 170, , % (-) Finance income -12,364-24, % -41,008-61, % EBITDA 133, , % 390, , % Net Revenue 169, , % 506, , % EBITDA Margin 78.9% 79.4% -0.5 p.p. 77.0% 78.1% -1.1 p.p. INDEBTEDNESS Iguatemi ended the third quarter of 2017 with a Total Debt of R$2,236.1 million, with average duration of 4.8 years and with average cost of 103.9% of the CDI, to which 79% of our debt is pegged. The Cash position totaled R$560.6 million, with current yield of 102.7% of the CDI. Page 11 of 71

14 The Net Debt remained stable in relation to 2Q17, with an increase of 1.1% to R$1,675.4 million, leading to a Net Debt/EBITDA multiple of 3.14x at the end of 3Q17, below the levels recorded at the end of 3Q16 (3.40x). Debt Profile by Index Debt Profile by Type Other TJLP [PERCE 4% TR NTAGE] 13% CDI 79% BNDES 6% Real Estate Credit [PERCE NTAGE] Debentu res [PERCE NTAGE] CRI 49% Debt cost 13.75% 14.25% 14.25% 14.25% 14.3% 14.4% 14.0% 11.75% 11.00% 14.25% 14.25% 13.4% 13.7% 13.5% 14.0% 13.75% 10.5% 12.3% 12.25% 11.0% 11.5% 10.25% 8.6% 12.75% 12.7% 8.25% 3T14 4T14 1T15 2T15 3T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 3T17 Iguatemi SELIC Debt term (years) T14 4T14 1T15 2T15 3T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 3T17 Consolidated Data (R$ thousands) 09/30/ /31/2016 Var. % Total Debt 2,236,058 2,240, % Cash and cash equivalents 560, , % Net Debt 1,675,409 1,683, % EBITDA (LTM) 532, , % Net Debt/EBITDA 3.14x 3.23x - Cost of Debt (% of CDI) 103.9% 101.5% 2.4 p.p. Debt Term (years) Page 12 of 71

15 Total Debt by Index and Term (R$ thousands) 09/30/2017 % 12/31/2016 % TJLP 95, % 164, % TR 285, % 289, % CDI 1,759, % 1,691, % Other 95, % 94, % Short term 242, % 325, % Long term 1,993, % 1,914, % DEBT AMORTIZATION SCHEDULE (R$ MM) 66 Empréstimos Debêntures CASH FLOW Iguatemi s adjusted Cash Position (including Cash and Cash Equivalents and Short-Term Investments) decreased by R$201.3 million compared with prior quarter (2Q17), to R$560.6 million in 3Q17. The main changes are explained below: Net cash provided by operating activities (1) of R$76.4 million; Cash from investing activities (2) of R$19.2 million negative; Cash from financing activities (3) of R$144.1 million. Adjusted Accounting Cash Flow (R$ milhões) 144,1 560,6 359,3 76,4-19,2 Saldo Inicial (2T17) Operacional Investimentos Financiamento Saldo Final (3T17) (1) Cash flow from operating activities adjusted by R$82.5 million negative referring to payment of interest. (2) Cash flow from investing activities adjusted by R$198.5 million negative classified as Short-term Investments. (3) Cash flow from financing activities adjusted according to item 1 above. Page 13 of 71

16 INVESTMENT PROPERTIES In December 2016, we restated the fair value of our properties in operation and properties under development. At December 31, 2016 this amount (for the equity interest owned by IGTA) was R$9.0 billion or 8.9% higher than in 2015, reflecting the recent inaugurations. Value 100% shopping malls (R$ million) (2) (1) 5,849 7,340 8,678 10,531 11,401 12,613 14,955 16,406 Iguatemi Interest (R$ million) 3,288 4,181 5,258 6,118 6,862 7,647 8,287 9,027 Total GLA (thousand sqm) Owned GLA (thousand sqm) Number of shares 79,255 79,255 79, , , , , ,612 Share price NAV per Share Reporting date: 12/31/2016. (1) This only includes operating shopping malls and expansions inaugurated until 4Q16. It does not consider Greenfields/expansions to be inaugurated from 4Q16 onwards. (2) Stock split in The fair value of investment properties was estimated using the discounted cash flow method. All the calculations are based on the analysis of 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.; Real perpetuity growth rate: 2.0% p.a.; (iii) Does not consider Greenfield projects (I Fashion Outlets). (R$ milhões) Market Cap EV NAV Reporting date for Market Cap. and EV: 09/30/2017. Page 14 of 71

17 INVESTMENTS Investments (R$ million) (1) T17 2T17 3T17 9M17 Acquisitions Other investments Total (1) Accrual basis. Investments made in the quarter refer to maintenance/reinvestment Capex in the Shopping Malls of the portfolio, as well as investments in the Premium Outlet projects already disclosed. We ended the quarter with total investments of R$69.5 million YTD. PROJECTS IN PROGRESS - GREENFIELD PROJECTS The figures below refer to 100% of the project. Greenfields I Fashion Outlet Santa Catarina I Fashion Outlet Nova Lima Planned opening Total GLA (sqm) 30,000 30,300 % Iguatemi 54% 54% LANDBANK In the medium/long term, we expect a strong growth for Iguatemi. Our landbank of approximately 1.0 million square meters (214 thousand sqm of GLA and 726 thousand sqm of private/real estate area) shows the future growth potential of Iguatemi (in addition to the new Greenfield and outlet opportunities that we expect to announce over the coming years). Page 15 of 71

18 Project Shopping Mall (GLA sqm) Real Estate (PA sqm) % Iguatemi Iguatemi São Paulo 5, % Iguatemi Campinas - Terreno Anexo (2) - 501, % Iguatemi Campinas - Boulevard - 19, % Iguatemi Porto Alegre 3,000 32, % Iguatemi Porto Alegre - Terreno Anexo (1) 22,000 29, % Iguatemi Esplanada 28,500 27, % Praia de Belas 5, % Galleria 22,429 44, % 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 12,500 6, % Iguatemi Rio Preto 21, % Subtotal Shopping Malls in Operation 183, , % I Fashion Outlet Santa Catarina (1) 15,034 8, % I Fashion Outlet Nova Lima (1) 15,000 8, % Subtotal de Shopping Malls under Development 30,034 16, % Total 213, , % (1) Land exchanged. (2) Exchange option + preference. Note: Indicative landbank. Projects may be altered, changing the coefficients of use of the construction potential. STRATEGY AND GUIDANCE Iguatemi continues to rely on its strategy of having the best assets in the best locations, focusing on the South, Southeast and Brasília regions, areas with the highest purchasing power and potential per capita consumption in the country, an on 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 profits and growth disclosed to the market. In 2017, despite the uncertain macroeconomic scenario, our Net Revenue grew 4.6% YTD, within our Guidance of 2% and 7%. EBITDA margin stands at 77.0%, aligned to the top of 77%, and should be slightly lower than the one recorded in 2016 since, although we remain focused on controlling expenses in 2017, there will be less opportunities to reduce costs and expenses. It should be noted that this downturn has been occurring since the end of 2014, making the basis for comparison more difficult each year. In this ninemonth period we invested R$69.5 million from a total of R$80 to R$130 million estimated for the year. Page 16 of 71

19 Guidance M17 Net revenue growth 2 7% 4.6% EBITDA margin 73 77% 77.0% Investment (R$ million) (1) (1) Accrual basis. Growth in the Company s GLA: We have almost tripled the size of the Company since its IPO, in the beginning of Today we have 455 thousand sqm of owned GLA. With the two Greenfield projects (I Fashion Outlets) announced, our owned GLA will increase to approximately 488 thousand sqm by Own GLA (Thousand sqm) (pré IPO) ABL Adicional ( ) Venda Boulevard Rio (2012) ABL Atual Total de ABL Anunciada até 2019 CAPITAL MARKETS Iguatemi shares are listed on Novo Mercado of B3, under the ticker symbol IGTA3, and are part of the IBx-100 Index. The table below presents our largest shareholders and free float at 09/30/2017: Ownership structure Number of shares % of total Jereissati Participações 89,642, % Treasury 23, % Other 86,945, % Total 176,611, % Iguatemi s share price ended September 2017 at R$ Currently, ten sell-side analysts have active coverage on Iguatemi shares. IGTA3 (1) Iguatemi vs. Ibovespa (Feb./2007 Current) Closing price (09/30/2017) R$ IGUATEMI IBOVESPA Highest price in 3Q17 R$ Lowest price in 3Q17 R$ Appreciation in 3Q % 100 Appreciation in % Number of shares 176,611, Market Cap (09/30/2017) Average daily liquidity in 3Q17 R$6,933,770,552 R$38,791,331 0 fev-07 nov-07 ago-08 mai-09 fev-10 nov-10 ago-11 mai-12 fev-13 nov-13 ago-14 mai-15 mar-16 dez-16 set-17 Page 17 of 71

20 (1) Source: Bloomberg, reporting date: 09/30/2017. HUMAN RESOURCES We have an experienced management team, and we consistently seek to align the interest of our management and employees with those of our shareholders, through two mechanisms of variable compensation: Iguatemi Bonus Plan: This program is linked to meeting short-term budget and operational goals. All our employees are entitled. The amount distributed to each employee is contingent on the Company s Key Performance Indicators (KPIs), divided into three main groups: (1) On-Going Business profitability; (2) adherence to the original business plan, quality and time-to-market of Projects Under Development; and (3) quality and strategic importance of Future Projects/Growth Paths and to individual KPIs. Stock Option Plan: The stock option plan is managed by our Board of Directors, which may, at its exclusive discretion, grant stock options to managers, employees or service providers. The stock options issued under the Option Plan are limited to a total of 3% of the Company s capital. Our policies in relation to our 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, performance assessment and appropriate compensation. We revised our Mission, Vision and Values, and also created our own method for assessing and managing our people, so as to reward competence and desired behaviors. We believe that this tool, together with the bonus plan pegged to KPIs, will help Iguatemi to meet its growth target without diminishing the identity and values that make Iguatemi one of the 50 most valuable brands in Brazil. ENVIRONMENTAL PROGRAMS For more than 10 years, Iguatemi - always concerned with social and environmental issues - has been implementing sustainability actions that save water and reduce consumption of energy, such as: Actions to reduce energy consumption Migration to the Mercado Livre (free market) (currently, all our shopping malls are supplied by Mercado Livre ); Continuous replacement of lamps and equipment by new, more efficient technologies (chillers, LED, among others); Automation of systems to improve the efficiency of malls (illumination, air conditioning, among others). Actions to save water and increase self-sufficiency Artesian wells; Water and sewage treatment stations (ETE/ETA); Installation of water saving equipment (aerators, toilet bowls, water saving valves, among others). Page 18 of 71

21 Other initiatives We develop our logistics processes (such as recycling or selective waste collection) always considering the environment. Each process is based on a vision, on the basis of which objectives, goals and action plans are built. Currently, four shopping malls have a state-of-the-art composting system: Iguatemi São José do Rio Preto, Iguatemi Porto Alegre, Iguatemi Campinas and Iguatemi Esplanada. In each shopping mall a different model was adopted and analyses are being conducted to define the best model to be adopted in the other assets of the group. In addition, we implemented social actions, supporting cooperatives that benefit communities in need with the works such as separation of waste and re-use of raw material. EXTERNAL AUDIT SERVICES: COMPLIANCE WITH CVM RULING No. 381/2003 As from the first quarter of 2017 Iguatemi and its subsidiaries began to use the audit services of Ernst & Young Auditores Independentes S.A. The Company s policy in contracting with our independent auditors 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 shall not audit his own work; (b) the auditor shall not have a management role in his client; and (c) the auditor shall not advocate his client s interests. Note: Nonfinancial 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 independent auditors. The Company is subject to arbitration at the Market Arbitration Chamber, pursuant to the arbitration clause contained in its Articles of Incorporation. Page 19 of 71

22 São Paulo Corporate Towers Av. Presidente Juscelino Kubitschek, Vila Nova Conceição São Paulo SP - Brasil Tel: ey.com.br A free translation from Portuguese into English of Independent auditor s review report on Quarterly Information prepared in Brazilian currency in accordance with rules issued by the Brazilian Securities Commission (CVM) applicable to Quarterly Information (ITR) Independent auditor s review report on quarterly information To Shareholders, Board of Directors and Management of Iguatemi Empresa de Shopping Centers S.A. São Paulo - SP We have reviewed the individual and consolidated interim financial information contained in the Quarterly Information Form (ITR) of Iguatemi Empresa de Shopping Centers S.A. ( Company ) for the quarter ended September 30, 2017, which comprises the balance sheet as of September 30, 2017, and the related statements of income and comprehensive income for the three and ninemonth periods then ended, and the statements of changes in equity and cash flows for the ninemonth period then ended, including explanatory notes. Management is responsible for the preparation of these individual and consolidated interim financial information in accordance with the Technical Pronouncement CPC 21 (R1) Demonstração Intermediária ( CPC 21 ) and International Financial Reporting Standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) ( IAS 34 ), as well as for the presentation of this information in conformity with the standards issued by the Brazilian Securities Commission ("CVM"), applicable to the preparation of Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Review Engagements (NBC TR Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the individual and consolidated interim financial information Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the quarterly information referred above is not fairly presented, in all material respects, in accordance with CPC 21 (R1) and IAS 34 applicable to the preparation of Quarterly Information Form (ITR), and presented consistently with the standards issued by the CVM. Uma empresa-membro da Ernst & Young Global Limited Page 20 of 72

23 Other matters Statements of value added We have also reviewed the individual and consolidated statements of value added for the ninemonth period ended September 30, 2017, prepared under the responsibility of the Company`s Management, whose presentation in the interim financial information is required by the standards issued by CVM, applicable to preparation of Quarterly Information Form (ITR), and considered supplementary information under IFRS, whereby no statement of value added presentation is required. These statements were submitted to the same review procedures previously described above and, based on our review, we are not aware of any fact that would make us believe that they were not prepared, in all material respects, in accordance with the overall individual and consolidated interim financial information taken as a whole. Financial statements and interim financial information of prior periods audited and reviewed by another independent auditor The audit of the balance sheets, individual and consolidated, as of December 31, 2016 and the review of the interim financial information, individual and consolidated, related to the quarter ended September 30, 2016, presented for comparison purposes, were conducted under the responsibility of other independent auditors who issued audit and review reports without modification, dated February 21, 2017 and November 7, 2016, respectively. São Paulo, November 7, 2017 ERNST & YOUNG Auditores Independentes S.S. CRC-2SP034519/O-6 Marcos Alexandre S. Pupo Accountant CRC-1SP221749/O-0 Page 21 of 71

24 Individual financial statements / Balance sheet - Assets (In thousand of reais) Account Description 09/30/ /31/ Total Assets 4,285,081 4,208, Current Assets 489, , Cash and Cash Equivalents 31, , Short-term Investments 361, , Short-term Investments Measured at Fair Value 361, , Securities Held for Trading 361, , Short-term Investments Measured at Amortized Cost - 27, Securities Held to Maturity - 27, Accounts Receivable 54,076 56, Trade Accounts Receivable 40,989 43, Other Accounts Receivable 13,087 12, Taxes Recoverable 27,479 8, Current Taxes Recoverable 27,479 8, Prepaid Expenses 1, Other Current Assets 14,404 4, Other 14,404 4, Loans Receivable Stock Option 10,838 1, Other Current Assets 3,335 2, Noncurrent Assets 3,795,298 3,748, Long-Term Assets 339, , Financial Investments Measured at Amortized Cost 29, Securities Held to Maturity 29, Accounts Receivable 7,119 7, Trade Accounts Receivable 7,119 7, Deferred Taxes 72,358 64, Deferred Income and Social Contribution Taxes 72,358 64, Receivables from Related Parties 217, , Receivables from Subsidiaries 137,683 72, Receivables from Other Related Parties 79,713 83, Other Noncurrent Assets 13,335 13, Loans Receivable Judicial Deposits Other Noncurrent Assets 12,501 12, Investments 3,444,056 3,493, Equity Interest 2,351,297 2,406, Interest held in Subsidiaries 2,336,498 2,392, Other Equity Interest 14,799 14, Investment Properties 1,092,759 1,086, Property and Equipment 3,132 3, Property and Equipment in Operation 3,132 3, Intangible Assets 8,682 10, Intangible Assets 8,682 10, Software 8,682 10,508 Page 22 of 71

25 Individual financial statements/ Balance sheet - Liabilities (In thousand of reais) Account Description 09/30/ /31/ Total Liabilities 4,285,081 4,208, Current Liabilities 261, , Social and Labor Liabilities 17,905 18, Labor Liabilities 17,905 18, Trade Accounts Payable 4,811 4, Domestic Suppliers 4,811 4, Tax Liabilities 31,033 2, Federal Tax Liabilities 29,687 2, Income and Social Contribution Taxes Payable Other Federal Tax Liabilities 29,618 2, Municipal Tax Liabilities 1, Loans and Financing 171, , Loans and Financing 13,546 37, In Local Currency 13,546 37, Debentures 158, , Charges on Debentures (777) (971) Debentures 158, , Other Liabilities 35,786 70, Payables to Related parties 33,212 29, Payables to Subsidiaries 33,212 29, Other 2,574 41, Mandatory Minimum Dividends Payable - 38, Other Payables 2,574 3, Noncurrent Liabilities 1,232,823 1,148, Loans and Financing 1,139,850 1,020, Loans and Financing 673, , In Local Currency 673, , Debentures 465, , Other Liabilities , Payables to Related Parties - 45, Payables to Subsidiaries - 45, Other Taxes and Contributions Payable Deferred Taxes 69,708 60, Deferred Income and Social Contribution Taxes 69,708 60, Deferred Income and Social Contribution Taxes 69,708 60, PIS and COFINS on Deferred Revenues Provisions 17,794 17, Provision for Tax, Social Security, Labor and Civil Contingencies 12,476 12, Provision for Social Security and Labor Contingencies Provision for Civil Contingencies 12,316 12, Other Provisions 5,318 5, Valuation Allowance 5,318 5, Unearned Income and Revenues 4,789 3, Unearned Revenues 4,789 3, Deferred Revenues 4,789 3, Equity 2,791,159 2,734, Pai-in Capital 1,231,313 1,231, Capital Reserves 457, , Share Issue Premium 452, , Treasury Shares (857) (1,494) Other Capital Reserves 6,213 21, Income Reserves 949,614 1,031, Legal Reserve 91,383 91, Retained Profits Reserve 858, , Retained Earnings/Accumulated Losses 152,794 - Page 23 of 71

26 Individual financial statements / Statement of income (In thousand of reais) Account Description 07/01/ /30/ /01/ /30/ /01/ /30/ /01/ /30/2016 Revenue Deductions 3.01 Revenue from Sales and/or Services 64, ,622 59, , Cost of Sales and/or Services (20,683) (63,046) (19,517) (60,522) 3.03 Gross Profit 43, ,576 40, , Operating Income (Expenses) 35, ,706 32,612 94, General and Administrative Expenses (12,168) (39,692) (12,517) (40,958) Other Operating Income 3,093 10,403 2,420 15, Other Operating Expenses (643) (4,373) (211) (3,144) Equity Pickup in Subsidiaries 45, ,368 42, , Income Before Finance Income (Costs) and Taxes 79, ,282 72, , Finance Income (Costs) (22,773) (69,296) (33,817) (101,814) Finance Income 8,195 23,750 11,281 28, Finance Costs (30,968) (93,046) (45,098) (130,629) 3.07 Income Before Income Taxes 56, ,986 39, , Income and Social Contribution Taxes (3,929) (4,192) 977 2, Deferred (3,929) (4,192) 977 2, Net Income from Continuing Operations 52, ,794 40, , Income/Loss for the Period 52, ,794 40, , Earnings (Loss) per Share (Reais / Shares) Basic Earnings per Share Registered Common Shares (RCS) 0, , , , Diluted Earnings per Share Registered Common Shares (RCS) 0, , , ,63706 Page 24 of 71