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

Transcription

1 Quarterly Information (ITR) Iguatemi Empresa de Shopping Centers S.A. June 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... 37

3 MANAGEMENT REPORT In 2Q17, Iguatemi continued to present solid results. Sales growth in our portfolio was 5.3% in the quarter compared with the same prior-year period, reaching R$ 3.2 billion. Our result reflects the company's efforts to focus on high quality, well-located assets (benefited by the Flight to Quality effect) intended for A/B social classes, which are empirically more resilient in times of economic stress. We continue with the mix renewal strategy in our Malls in the capital city of São Paulo State, while we are in the process of maturing certain assets in the countryside area. Regarding the operational indicators, we believe that we have already passed the most critical moment. The performance in April deserves to be highlighted due to the positive results in all assets of our portfolio. Same-area sales (SAS) grew 5.1% and the same-store sales (SSS), 4.1% in the quarter. Even with the decrease in indices used for adjustment of contractual prices, samearea rents (SAR) and same-store rents (SSR) grew by 6.6% and 6.3%, respectively. Regarding the performance of our Shopping Malls at 100%, we had a 5.1% increase in rental revenue for the quarter (Minimum Rent + Overage + Temporary Rent), reaching R$ million. Parking Revenue grew 7.1% in 2Q17, totaling R$57.5 million. Last year, in April, we launched the expansion of Iguatemi Porto Alegre, adding 20,000 sqm of total GLA to the venture, in addition to a commercial tower of 10,000 sqm of GLA. After a one-year period, we have no doubt that the increases in GLA have brought concrete results and have further strengthened the asset mix, as in the region in which it is located. At the end of June, we celebrated the fifth anniversary of JK Iguatemi. Opened in June 2012, the Mall is known for its modern and bold architecture. This mall includes shops ranging from fashionable brands most coveted by the public to restaurants that are currently seen as a reference in gastronomy. In a few years, it is one of our malls that stood out in terms of revenue per square meter, even going through a maturation period affected by the macroeconomic environment. In the second quarter we still have four assets undergoing maturation process (5 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, new Shopping Malls located in the countryside accounted for 15.3% of total GLA of the portfolio. We have great potential for generating revenue in these assets that are still undergoing maturation process. Total GLA (%) New Malls (2012) 5,0% New Malls ( ) 15,3% Countryside - Gross Revenue 2016/sqm Mature Malls 79,7% Shoppings em Maturação Shoppings Maduros (1) Includes Revenues from Minimum Rent, Overage, Temporary Lease and Parking (Shopping at 100%). Page 1 of 69

4 Another important growth vector for the Company is the densification of the areas surroundings our malls, which takes place both through the delivery of PSV projects announced in the past years and by the real estate development of third parties. Regarding the PSVs 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 private area totaling 17,352 sqm. In addition, construction of Tower 1 - Iguatemi Business was resumed in June in our complex in Ribeirão Preto, and it is expected to end in January 2018, totaling 13,723 sqm of private office space. Furthermore, there were important deliveries by third parties around the Iguatemi Porto Alegre and Galleria Shopping Malls. In Porto Alegre, the delivery of the Murano residential building with a private area of 16,304 sqm in April, next to Germânia Park, only confirms the potential for densification of the region that expects other deliveries in Acqua Galleria in Campinas, which is considered a residential resort and was delivered in May, has a total private area of 41,401 sqm distributed in 8 towers that will bring a high level public to the surroundings of Galleria Shopping. In the city of São Paulo, where most of our assets are located, the Quartier Auri Vila Olímpia, a high-standard residential project comprising 3 towers and with a private area per unit ranging from 217 to 977 sqm, located 2 km from Shopping JK Iguatemi, was delivered in May. Our Net Revenue reached R$ million in the quarter, i.e. a growth of 4.1%. The Company's Costs and Expenses line (excluding Depreciation and Amortization) increased 1.5%, well below the accumulated inflation for the period. We continue to reap the rewards of continuing efforts to reduce costs and expenses through the implementation of the Matrix/ Zero-Based Budgeting in In 2Q17, the Cost and Expenses/Gross Revenue ratio was 24%, equal to the level presented in 1Q16. EBITDA reached R$ million in 2Q17, up 7.3% when compared with 2Q16. However, if we remove the effect of the Other Operating Income (Expenses) in both years, since these are non-recurring, the EBITDA increase is 5.1% in 2Q17 when compared with 2Q16. The EBITDA margin reached 77.0% in the quarter, reaching the top percentage in the Guidance. The Company s Total Debt ended the quarter at R$ 2.0 billion, and Cash and Cash Equivalents increased 19.6% against 2Q16, reaching R$ million. Consequently, Net Debt was R$ 1.7 billion, with a Net Debt/EBITDA multiple of 3.14x, 0.05 below the 1Q17 level. This reduction in indebtedness is part of the Company s deleveraging strategy for future potential growth opportunities. Our expectation for 2017 remained unchanged, despite the uncertainties, as described below in our Guidance: Guidance M17 Net Revenue Growth 2 7% 4.2% EBITDA Margin 73 77% 76.1% Investment (R$ million) (1) (1)Accrual basis. Carlos Jereissati CEO of Iguatemi Empresa de Shopping Centers S.A. Page 2 of 69

5 MAIN INDICATORS The financial and operating information is based on consolidated accounting figures, in R$ thousand, in accordance with the Brazilian Corporate Law and the international financial reporting standards (IFRS), as expressed in accounting pronouncements issued and approved by the Brazilian Securities Commission (CVM). The Company s non-financial information has not been reviewed by independent auditors. Financial indicators 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % Gross Revenue (R$ thousand) 196, , % 389, , % Net Revenue (R$ thousand) 169, , % 336, , % EBITDA (R$ thousand) 130, , % 256, , % EBITDA Margin 77.0% 74.7% 2.3 p.p. 76.1% 77.5% -1.4 p.p. Net income (R$ thousand) 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$ thousand) 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 Dif. % 6M17 6M16 Dif. % 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, , % Total, malls (1) % % Total sales (R$ thousand) 3,248,348 3,085, % 6,158,543 5,850, % Same-store 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 a single project. Page 3 of 69

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 Owned 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 Sub-total Outlet and Power Center 63.22% 52,537 33,212 Sub-total Malls 59.71% 701, ,065 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 58.41% 4,469 2,610 Torre Iguatemi Porto Alegre Porto Alegre 36.00% 10,692 3,849 Subtotal Towers 80.33% 44,241 35,539 Total 60.94% 746, ,604 (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 mall. Page 4 of 69

7 OPERATIONAL PERFORMANCE (Shopping Mall at 100%) Portfolio Minimum rental + Overage + Temp Rent (R$ thousand) (1) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % 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$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % 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 (2) 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) 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 using the cash basis until 4Q16 and using accrual basis from 1Q17 onwards. SALES AND RENTALS Total sales reached R$ 3.2 billion in the quarter, a 5.3% growth compared with the same period of the prior year. In sales, the best performing segments were Home Goods, Entertainment and Restaurants. Once again, the segment that has not performed well was Books & Stationary Stores. Page 5 of 69

8 Same-area sales (SAS) were up 5.1% in the quarter, while same-store sales (SSS) were up 4.1%. Same-store rentals (SSR) were up 6.3% and same-area rentals (SAR) grew 6.6%. Rental Revenue of Malls, calculated at 100%, reached R$ million in 2Q17 (+5.1% compared with 2Q16). Parking Revenue reached R$ 57.5 million in the quarter (+7.1% compared with 2Q16). Iguatemi São Paulo: Rental Revenues grew 3.0% due to an increase in the Minimum Rent, as a result of the rental adjustments. Among the stores that became operational in this quarter are Hermès and Fendi. Parking Revenue grew 0.8% in relation to 2Q16, due to a combination of tariff increase and decrease in the flow of vehicles. JK Iguatemi: Rental Revenues grew 3.4%, even as vacancy increased due to changes in the store mix. With the increase of alternative means of transportation, the Parking Revenue decreased by 6.9%. Pátio Higienópolis: 5.1% increase in Rental Revenues, mainly referring to automatic adjustments for inflation in rental contracts. The 7.5% increase in Parking Revenue was a result of tariff increase. Market Place: Rental Revenues increased 5.1%, specially driven by adjustments in rental contracts, and the good performance of Overage due to changes in the mix of stores. Parking Revenue decreased by 5.7% due to a reduction in vehicle flow. Market Place Towers: Rental Revenues grew 1.0% compared with the second quarter of the last year, due to a higher occupancy rate. Iguatemi Alphaville: Growth of 0.8% in Rental Revenues, maintaining the stability of the minimum rent. This quarter recorded a decrease in the number of vacant areas. Parking Revenue grew 8.4% due to tariff adjustment and increased flow of vehicles. Iguatemi Campinas: Increase in Rental Revenues by 8.9%, due to a higher minimum rent and temporary leases. As a result of the maturity of the expansion, Parking Revenue also increased by 8.9%. Galleria: Rental Revenues increased 3.5% in 2Q17 compared with 2Q16. The increase is largely due to automatic adjustment in contracts and the scaling effect. The quarter posted a growth of 8.8% in Parking Revenue - it is important to note that in June of last year the flow of vehicles in the parking lot was impacted by the interruption of activities due to weather events. Iguatemi Esplanada: Rental Revenue increased by 5.1%, mainly driven by Overage and Temporary Lease revenues. The increase in the flow of vehicles combined with a recent tariff adjustment generated a 20.7% growth in the Parking Revenue. Iguatemi São Carlos: Due to lower Overage, Rental Revenues dropped 0.4%. We had an increase in the Parking Revenue of 19.1% compared with the same prior-year period, due to increase in tariffs. Iguatemi Ribeirão Preto: Rental Revenues grew 1.5%, Minimal Rent and Overage performed well, but a temporary lease cancellation negatively impacted this account. At the moment the asset is undergoing a maturation process; therefore, we are not charging parking fees yet. Iguatemi São José do Rio Preto: Growth of 3.6% in Rental Revenue, due to an increase in sales, impacting the Overage collection. Since the asset is in a maturation phase, we are not charging parking fees yet. The Parking Revenue presented refers to the Valet service. Iguatemi Porto Alegre: Growth was 18.1% in Rental Revenue when compared with the second quarter of 2016, considering that we inaugurated the expansion of the Mall at the end of April. Parking Revenue continues positively impacted by the expansion, increasing by 24.7%. Page 6 of 69

9 Praia de Belas: Rental Revenues grew 5.8%, driven by a strong performance of Overage as a result of sales. In the Parking Revenue account, growth of 11.3% due to flow of vehicles. We emphasize that even with the recent expansion of Iguatemi in Porto Alegre in April last year, we continue to present solid results in both Malls, proving the resilience and differentiation of the public of both assets. Iguatemi Florianópolis: Rental Revenue increased 5.5% in relation to 2Q16, even with a decrease in Overage revenue, minimum rent and temporary leases performed well. Due to the large number of tourists in the same prior-year period, the Parking Revenue recorded a decrease of 7.3% due to the flow of vehicles. Iguatemi Brasília: Increase of 1.6% in Rental Revenue, due to a favorable adjustment in minimum rent with a less expressive Overage. Parking Revenue had a negative oscillation of 7.2% due to a reduction in the flow of vehicles. I Fashion Outlet Novo Hamburgo: Rental Revenue increased by 3.9%. The positive highlight was the variation in minimum rent. We do not charge parking fee in this type of business. OCCUPANCY RATE AND COST Average occupancy rate of the Malls in 2Q17 was 93.1%, 0.7 percentage point below 2Q16 and slightly higher than the one recorded in 1Q17. Occupancy cost was 11.5%, in line with the results presented in the same prior-year period. 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 1Q17 2Q17 2T15 3T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 DEFAULT In the second quarter, the net default was at 1.2%, lower than last quarter at 1.8 p.p. In the past 6 months, our net default was 2.6%, against 3.4% in the first half of the prior year. Page 7 of 69

10 ECONOMIC AND FINANCIAL PERFORMANCE Consolidated P&L (R$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % 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 operating income (expenses) 7,444 4, % 7,264 13, % Equity pickup % % 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. Finance income (costs) -43,387-52, % -86, , % Income and social contribution taxes (IRPJ and CSLL) -9,729-6, % -14,917-16, % Net income 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. GROSS REVENUE Iguatemi s Gross Revenue in the first quarter of 2017 amounted to R$ million, a 4.1% increase compared with the same period of Gross Revenue (R$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % Rentals 133, , % 265, , % Administration fee 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 Rent, Percentage Rent (Overage) and Temporary Lease, grew 5.5% in relation to 2Q16 and represented 68.0% of total Gross Revenue. Rental Revenue (R$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % Minimum rent 115, , % 231, , % Percentage rent 8,237 8, % 14,763 15, % Temporary leases 10,443 10, % 18,813 19, % Total 133, , % 265, , % This growth in Rental Revenue compared with 2Q16 mainly reflects: Minimum Rent: Up 7.2%, mainly due to: (i) inauguration of the expansion of Iguatemi Porto Alegre; and (ii) the automatic adjustments for inflation in rental contracts. Page 8 of 69

11 Percentage Rent (Overage): Down 2.8%, as the increase in minimum rentals was above sales performance. Temporary Leases: Down 4.4%, reflecting fewer media and marketing contracts for the period. The Administration Fee had an increase of 4.6% compared with the same prior-year period due to an increase in condominium expenses. Parking Revenue was up 2.3% in relation to 2Q16, mainly reflecting: (i) adjustments in parking tariffs placed along the year; and (ii) the maturation of the expansions inaugurated in the past quarters. The Others line in Gross Revenue presented a negative variation of 3.1% in relation to 2Q16. DEDUCTIONS, TAXES AND CONTRIBUTIONS Deductions, Taxes and Contributions totaled R$27.4 million, a slight increase of 4.7% over 2Q16 due to a greater stabilization in discount levels. NET REVENUE Net Revenue for 2Q17 amounted to R$ million, a 4.1% increase in relation to 2Q16. COSTS AND EXPENSES The Company continues to seek efficiency, delivering a very controlled Costs and Expenses line in 2Q17, totaling R$ 46.7 million (excluding Depreciation and Amortization), representing a 1.5% increase compared with the same prior-year period. Costs and Expenses (R$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % Lease and Service Costs 32,774 32, % 62,969 60, % Expenses 13,910 13, % 25,419 27, % Administrative expenses 13,869 12, % 25,290 26, % Share-based payment % % Pre-operating % % Sub-total 46,684 45, % 88,388 87, % Depreciation and amortization 26,381 27, % 52,860 55, % Total 73,065 73, % 141, , % In this quarter, lease and service costs remained almost unchanged compared with 2Q16, even with a higher vacancy rate, salary adjustments and increase in GLA (Iguatemi Porto Alegre expansion). In general, expenses increased by 5.1% in the quarter, due to an increase in administrative expenses. Administrative Expenses were 7.0% higher than in 2Q16, mainly due to the increase in personnel expenses. With the expiration of our share-based payment plan (stock options) issued in 2012, there were no expenses in this line. Pre-Operating expenses presented a negative variation of R$116 thousand in relation to 2Q16, due to the completion of the construction work relating to the tower and expansion of Iguatemi Porto Alegre. Page 9 of 69

12 OTHER OPERATING INCOME (EXPENSES) In 2Q17, the Company generated total Other Operating Income (Expenses) of R$ 7.4 million, an increase of 64.2% versus the same prior-year period. This increase refers mainly to the increase in revenue with resale of store. Other Operating Income (Expenses) (R$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % PSV 0 0 n/a 0 0 n/a Other 7,444 4, % 7,264 13, % Other Operating Income (Expenses) 7,444 4, % 7,264 13, % FINANCE INCOME (COSTS) Iguatemi's Net Finance Income (Costs) for this quarter was minus R$ 43.4 million, 18.0% below the amount reported in 2Q16. The decrease in Finance Income is partly explained by the decline in the CDI (interbank deposit rate) 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 exchange difference). Lower Finance Costs, on the other hand, are explained by (i) the decrease in the Company s total indebtedness Total Debt decreased from R$ 2,028.3 million to R$ 2,015.8 in this quarter, with 75% pegged to the CDI; and (ii) the strong decrease in interest rate between the periods. Finance Income (Costs) (R$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % Finance income 11,577 17, % 28,644 36, % Finance costs -54,964-70, % -115, , % Finance income (costs), net -43,387-52, % -86, , % INCOME AND SOCIAL CONTRIBUTION TAXES (CURRENT AND DEFERRED) In 2Q17, Income and Social Contribution Tax Expenses totaled R$ 9.7 million, an increase of 53.0% when compared with 2Q16. The YTD figures show a decrease of 12.1% in the disbursement of Income and Social Contribution Taxes when compared with the same prior-year period. NET INCOME AND FFO Net Income for the quarter amounted to R$ 51.0 million, 45.3% higher than the one recorded in 2Q16, with a Net Margin of 30.1%. The FFO reached R$ 77.4 million, an increase of 24.1% versus the same prior-year period, with FFO Margin of 45.7%. In the sixmonth period comparison, net profit and FFO increased 37.7% and 19.9%, respectively, in relation to the prior year. EBITDA EBITDA for the quarter reached R$ million, a 7.3% increase versus the same quarter of the prior year, and EBITDA margin of 77.0%, reaching the top figures of our guidance. This growth in EBITDA is largely explained by an improvement in the Other Operating Income (Expenses) line compared with the same prior-year period. Excluding the effect of the Other Operating Income (Expenses) line in both years, EBITDA grew 5.1% compared with the same prior-year period. Page 10 of 69

13 EBITDA (R$ thousand) 2Q17 2Q16 Dif. % 6M17 6M16 Dif. % Net Income 50,975 35, % 101,594 73, % (+) Income and social contribution taxes 9,729 6, % 14,917 16, % (+) Depreciation and amortization 26,381 27, % 52,860 55, % (+) Finance costs 54,964 70, % 115, , % (-) Finance income -11,577-17, % -28,644-36, % EBITDA 130, , % 256, , % Net Revenue 169, , % 336, , % EBITDA Margin 77.0% 74.7% 2.3 p.p. 76.1% 77.5% -1.4 p.p. INDEBTEDNESS Iguatemi ended the first 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 debt is pegged. The Cash position totaled R$ million, with current yield of 101.7% of the CDI. The Net Debt remained stable in relation to 1Q17, with an increase of 0.4% to R$ 1,656.4 million, leading to a Net Debt/EBITDA multiple of 3.14x at the end of 2Q17, below the levels recorded at the end of 2Q16 and 1Q17. Debt Profile by Index Debt Profile by Modality OtherTJLP 5% 6% TR 14% Crédito Imobiliá rio 19% BNDES 7% CRI 42% CDI 75% Debêntu res 32% Cost of Debt (% CDI) 97% 98% 99% 100% 98% 97% 98% 96% 95% 98% 100% 101% 102% 104% 102% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Debt Term (years) 3,9 3,9 3,6 4,2 4,0 4,1 4,0 4,2 4,5 5,0 5,0 4,9 4,7 4,9 4,7 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Page 11 of 69

14 Consolidated Data (R$ thousand) 06/30/ /31/2016 Dif. % Total Debt 2,015,762 2,240, % Cash and cash equivalents 359, , % Net Debt 1,656,462 1,683, % EBITDA (LTM) 526, , % Net Debt/EBITDA 3.14x 3.23x - Cost of Debt (% of CDI) 102.0% 101.5% 0.5 p.p. Debt Term (years) Total Debt by Index and Term (R$ thousand) 06/30/2017 % 12/31/2016 % TJLP 115, % 164, % TR 287, % 289, % CDI 1,518, % 1,691, % Other 94, % 94, % Short term 279, % 325, % Long term 1,735, % 1,914, % DEBT AMORTIZATION SCHEDULE (R$ MM) 66 Loans Debentures CASH FLOW Iguatemi s adjusted Cash Position (including Cash, Cash Equivalents and Short-Term Investments) decreased by R$ 4.8 million compared with the prior quarter (1Q17), to R$ million in 2Q17. The main changes are explained below: Net Cash from operations (1) of R$ million; Net cash from investing activities (2) of negative R$ 8.7 million; Cash from financing activities (3) of negative R$ million. Page 12 of 69

15 Adjusted Cash Flow (R$ million) 146,8 272,9-8,7 268,1-142,9 Opening balance (1T17) Operating Investments Financing Closing balance (2Q17) (1) Cash flow from operating activities adjusted by negative R$ 21.2 million referring to payment of interest. (2) Cash flow from investing activities adjusted by negative R$ million classified as Short-term Investments. (3) Cash flow from financing activities adjusted according to item 1 above. INVESTMENT PROPERTIES In December 2016, we updated 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 2015, reflecting the recent inaugurations (2) (1) Value 100% Malls (R$ million) 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) 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 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). Page 13 of 69

16 (R$ million) Reporting date for Market Cap. and EV: 06/31/2017. Market Cap EV NAV INVESTMENTS Investments (R$ million) (1) Q17 2Q17 6M17 Acquisitions Other investments Total (1) Accrual basis. Investments made in the quarter refer to maintenance/reinvestment Capex in the Malls of the portfolio, as well as investments in the Premium Outlet projects already disclosed. We ended the quarter with total investments of R$ 49.5 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) % Iguatemi ,000 30,300 54% 54% Note: In the first quarter of 2017, we terminated the land exchange contract signed for the construction of I Fashion Outlet Paraná. LANDBANK In the medium/long term, we expect a strong growth for Iguatemi. Our landbank of approximately 1.0 million square meters (216 thousand sqm of GLA and 733 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 14 of 69

17 Project Mall (GLA sqm) Real Estate (PA sqm) % Iguatemi Iguatemi São Paulo 5, % Iguatemi Campinas Annexed land (2) - 501, % Iguatemi Campinas - Boulevard - 19, % Iguatemi Porto Alegre - 32, % Iguatemi Porto Alegre Annexed land (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 Annexed land(3) - 23, % Sub-total Malls in Operation 185, , % I Fashion Outlet Santa Catarina (1) 15,034 8, % I Fashion Outlet Nova Lima (1) 15,000 8, % Sub-total Malls under Development 30,034 16, % Total 215, , % (1) Land exchanged. (2) Exchange option + preference. (3) Exchange option. 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 profit and growth disclosed to the market. In 2017, despite the uncertain macroeconomic scenario, our Net Revenue grew 4.2% YTD, within our Guidance of 2% and 7%. EBITDA margin stands at 76.1%, close 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 first six-month period we invested R$ 49.6 million from a total of R$ 80 to 130 million estimated for the year. Page 15 of 69

18 Guidance M17 Net revenue growth 2 7% 4.2% EBITDA margin 73 77% 76.1% 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) (pre (pré IPO) Additional ABL Adicional GLA ( ) IPO) ( ) CAPITAL MARKETS Venda SaleBoulevard Boulevard Rio (2012) Rio ABL Atual Total de ABL Current Total announced Anunciada até 2019 GLA GLA Iguatemi shares are listed on Novo Mercado of BM&FBovespa, under the ticker symbol IGTA3, and are part of the IBx-100 Index. The table below presents our largest shareholders and free float at 06/30/2017: Ownership structure Number of shares % of total Jereissati Participações 89,642, % Treasury 87, % Other 86,880, % Total 176,611, % Iguatemi s share price ended the first six-month period of 2017 at R$ Currently, ten sell-side analysts have active coverage on Iguatemi shares. IGTA3 (1) Iguatemi vs. Ibovespa (Feb./2007 Current) Closing price (06/30/2017) R$ IGUATEMI IBOVESPA Highest price in 2Q17 R$ Lowest 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 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 Page 16 of 69

19 (1) Source: Bloomberg, reporting 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 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 malls, with the exception of Iguatemi Brasilia, 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). 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. Page 17 of 69

20 Currently, four 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 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 RULE 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: Non-financial data, such as GLA, average sales, average rentals, occupancy costs, average prices, average market prices, EBITDA, NOI 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 18 of 69

21 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 June 30, 2017, which comprises the balance sheet as of June 30, 2017, and the related statement of income, comprehensive income, for the three and six-month periods then ended, and the statements of changes in equity and cash flows for the six-month 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 accounting information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Review Engagements (NBC TR Review of Interim Financial Information Performed by the Independent Auditor of the Entity 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 19 of 69

22 Other matters Statements of value added We have also reviewed the individual and consolidated statements of value added for the six-month period ended June 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 statements of value added presentation is required. These statements were submitted to the same review procedures previously described above and, based on our review, were 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 June 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 August 9, 2016, respectively. São Paulo, August 8, ERNST & YOUNG Auditores Independentes S.S. CRC-2SP015199/O-6 Marcos Alexandre S. Pupo Accountant CRC-1SP221749/O-0 Page 20 of 69

23 Individual financial statements / Balance sheet - Assets (In thousands of reais) Account Description 06/30/ /31/ Total Assets 4,028,112 4,208, Current Assets 287, , Cash and Cash Equivalents 29, , Financial Investments 194, , Financial Investments Measured at Fair Value 194, , Securities Held for Trading 194, , Financial Investments Measured at Amortized Cost - 27, Securities Held to Maturity - 27, Trade Receivables 49,877 56, Customers 38,442 43, Other Receivables 11,435 12, Taxes Recoverable 6,855 8, Current Taxes Recoverable 6,855 8, Prepaid Expenses 1, Other Current Assets 5,121 4, Others 5,121 4, Loans Receivable Stock Option 1,739 1, Other Current Assets 2,864 2, Noncurrent Assets 3,740,167 3,748, Long-Term Assets 312, , Financial Investments Measured at Amortized Cost 28, Securities Held to Maturity 28, Trade Receivables 6,512 7, Customers 6,512 7, Deferred Taxes 72,374 64, Deferred Income Tax and Social Contribution 72,374 64, Receivables from Related Parties 191, , Receivables from Subsidiaries 108,511 72, Receivables from Other Related Parties 82,548 83, Other Noncurrent Assets 13,345 13, Loans Receivable Judicial Deposits Other Noncurrent Assets 12,502 12, Investments 3,415,636 3,493, Equity Interests 2,322,241 2,406, Interests in Subsidiaries 2,307,442 2,392, Other Equity Interests 14,799 14, Investment Property 1,093,395 1,086, Property and Equipment 3,283 3, Property and Equipment in Operation 3,283 3, Intangible Assets 9,124 10, Intangible Assets 9,124 10, Software Licenses 9,124 10,508 Page 21 of 69

24 Individual financial statements/ Balance sheet - Liabilities (In thousands of reais) Account Description 06/30/ /31/ Total Liabilities 4,028,112 4,208, Current liabilities 326, , Social and Labor Obligations 16,174 18, Labor Obligations 16,174 18, Trade Payables 3,173 4, Domestic Suppliers 3,173 4, Tax Obligations 5,155 2, Federal Tax Obligations 3,077 2, Income Tax and Social Contribution Payable Other Federal Tax Obligations 3,023 2, Municipal Tax Obligations 2, Borrowings 198, , Borrowings a 24,308 37, In Local Currency 24,308 37, Debentures 174, , Charges on Debentures (860) (971) Debentures 175, , Other Obligations 103,494 70, Payables to Related Parties 39,695 29, Payables to Subsidiaries 39,695 29, Others 63,799 41, Minimum Mandatory Dividend Payable 60,001 38, Other Payables 3,798 3, Noncurrent Liabilities 957,363 1,148, Borrowings 868,405 1,020, Borrowings 402, , In Local Currency 402, , Debentures 465, , Other Obligations - 45, Payables to Associates - 45, Payables to Subsidiaries - 45, Deferred Taxes 65,795 60, Deferred Income Tax and Social Contribution 65,795 60, Deferred Income Tax and Social Contribution 65,795 60, Pis and Cofins on Deferred Revenues Provisions 17,804 17, Provision for Tax, Social Security, Labor and Civil Risks 12,478 12, Provision for Social Security and Labor Risks Provision for Civil Risks 12,316 12, Other Provisions 5,326 5, Provision for Loss on Investments 5,326 5, Unearned Profits and Revenues 5,359 3, Unearned Revenues 5,359 3, Deferred Revenues 5,359 3, Equity 2,743,833 2,734, Capital 1,231,313 1,231, Capital Reserve 462, , Share Premium 452, , Treasury Shares (2,752) (1,494) Other Capital Reserves 13,198 21, Earnings Reserves 949,614 1,031, Legal Reserve 91,383 91, Earnings Retention Reserve 858, , Retained Earnings/Accumulated Losses 100,378 - Page 22 of 69