Iguatemi Empresa de Shopping Centers S.A.

PRESS RELEASE
3RD QUARTER 2010
OVERVIEW
The third quarter of 2010 followed the trend of improvement in consumption seen since the
second half of 2009, with greater growth in our operational indicators than in the second quarter
– when sales growth and visitor flow indicators were reduced by the Soccer World Cup. It´s
important to mention that we had growth in 3Q09 in all indicators, so the growth in this quarter is
higher than previous quarters (coming from a higher base).
Total sales in our shopping malls were 18.9% higher year-on-year, boosted by the opening of the
Iguatemi Brasília mall at the end of March 2010. Same-area sales were up 11.4% year-on-year,
led by the results of the Iguatemi Florianópolis, Galleria and Market Place malls.
We also succeeded in adjusting rental levels by more than inflation, while at the same time
keeping occupancy cost at comfortable levels for store operators, with a high level of occupancy.
In July 2010 we inaugurated the first phase of the expansion of the Praia de Belas Mall with
1,1150m2 of total GLA and four stores. We have a 43.8% holding in this phase of the expansion
(distinct from the holding in the main mall itself – there are different groups of partners).
Additional to the stores, there is a tower above the stores with 190 offices that will be important
to bring additional daily traffic to the mall (we do not have a stake in the office tower).
Also at Praia de Belas, in this quarter we carried out an additional swap of PSV (Purchase Sales
Value) in a terrain adjacent to the mall. After the construction is completed this site will have an
additional two office towers and a parking deck that will enable the third floor of the existing mall
to be expanded (the existing 3rd floor, presently used as a parking space, will be transformed into
GLA (store spaces).

At the end of this expansion phase, the area surrounding the Praia de Belas Mall will
gain 6 additional towers (1 new office tower - already inaugurated, 3 towers from the
first swap and 2 towers from the new swap), helping strengthen consumer density
adjacent to the mall. The net revenue generated by these two swaps of PSV
transactions was R$ 19.8mn (R$ 8.0mn in 2Q10 and R$ 11.8mn in 3Q10). It is
important to mention that:There is potential for us to make additional exchanges of
Potential Sales Value (PSV) in our other enterprises, and we expect these exchanges to
continue taking place, more recurrently, over the coming years. These exchanges are
made possible by the fact that we have malls of high standard, located in densely
populated regions with high economic level.

These exchanges of PSV will not compete with the construction potential necessary for
us to expand our existing malls. In addition to the construction potential allocated for
future exchanges of PSV, we have enough construction potential to double our present
GLA through expansions.
The leasing of our new malls continues to be carried out successfully: 92% of the GLA of the
Iguatemi Alphaville mall has been leased and we expect to have 95% of the area leased by
December. The mall will be inaugurated in April.
Contracts for 40% of the GLA of JK Iguatemi have been leased. This mall, which will be opened in
September 2011, will have 35,200m2 of GLA, with 188 stores selected from the best of Brazilian
and international retailers, including brands that are not yet present in Brazil.
48
PRESS RELEASE
3RD QUARTER 2010
During this quarter we signed a contract with the Brazilian Development Bank (BNDES) for the
financing of the JK Iguatemi mall. The cost is the Long-Term Interest Rate (TJLP) + 3.82% p.a.,
a total of 9.82% p.a., on the construction works and facilities; and 5.5% p.a. on Brazilian-made
equipment. The loan has a grace period of 24 months from the date of signature with
amortization in 60 months.
We believe that in 2011 we will continue to grow our performance indicators through (i) the
continuous strengthening of our existing portfolio, (ii) the maturity of the Iguatemi Brasília Mall,
and (iii) the inaugurations of our new malls.
In line with what we have done in the last two years, together with the release of the 3rd quarter,
we state our guidance for our results in 2011: net revenue 25% to 30% higher than in 2010 and
an Ebitda margin between 70% and 72%.
Additionally, we reaffirm our commitment to our 2010 guidance that indicated a 15% to 17%
increase in net revenues and an Ebitda margin between 70 and 72%.
MAIN INDICATORS
Performance indicators
3Q10
3Q09
%
9M10
9M09
%
Total GLA (Sq.m.)
433,175
397,680
8.9%
433,175
397,680
8.9%
Own GLA (Sq.m.)
237,678
214,882
10.6%
237,137
214,344
10.6%
Own average GLA Shopping (Sq.m.)
404,095
368,600
9.6%
330,909
307,086
7.8%
Own average GLA (Sq.m.)
208,598
185,802
12.3%
210,539
194,957
8.0%
Same-store sales per Sq. m. (R$/Sq.m.)
12
1,500,665
1,368
11
1,262,324
1,248
9.1%
18.9%
9.6%
12
3,448,293
1,329
11
3,041,399
1,216
9.1%
13.4%
9.3%
Same-area sales per Sq. m. (R$/Sq.m.)
1,208
1,084
11.4%
1,171
1,059
10.5%
84.4
78.3
7.9%
83.5
78.6
6.2%
Number of malls
Total sales (R$ mn)
Same-store rent
per Sq. m. (R$/Sq.m.)
76.5
71.3
7.3%
76.5
72.0
6.2%
Occupancy cost as a % of sales
11.3%
11.7%
-0.4p.p.
11.5%
11.9%
-0.4p.p.
Occupancy Rate
97.9%
95.8%
2.1p.p.
97.7%
96.6%
1.1p.p.
4.1%
3.7%
0.4 p.p.
4.1%
3.7%
0.4 p.p.
77.6
53.7
44.5%
65.7
51.9
26.5%
69.9
45.0
55.5%
55.9
38.7
44.3%
Same-area rent
per Sq. m. (R$/Sq.m.)
Default Rate
Monthly Ebitda
Monthly FFO
per Sq. m. (R$ / Sq. m.)
per Sq. m. (R$ / Sq. m.)
Financial indicators
3Q10
3Q09
%
9M10
9M09
%
Gross revenue (R$ K)
75,554
58,749
28.6%
212,962
171,054
24.5%
Net revenue (R$ K)
67,609
52,084
29.8%
190,626
151,890
25.5%
EBITDA (R$ K)
55,319
34,612
59.8%
140,153
100,173
39.9%
Adjusted EBITDA (R$ K)
56,144
34,612
62.2%
146,794
100,173
46.5%
EBITDA margin
Adjusted EBITDA margin
FFO (R$ K)
Net profit (R$ K)
81.8%
83.0%
49,863
39,436
66.5%
66.5%
28,989
19,537
7.9 p.p.
0.9 p.p.
72.0%
101.9%
73,5%
77,0%
119,306
98,771
66,0%
66,0%
74,732
57,994
7.5 p.p.
11.0 pp.
59.6%
70.3%
49
PRESS RELEASE
3RD QUARTER 2010
THE IGUATEMI PORTFOLIO
Shopping Center
Iguatemi
interest
50,5%
100,0%
65,0%
77,0%
45,0%
60,7%
37,8%
50,0%
36,0%
30,0%
8,4%
29,7%
100,0%
64,0%
Total GLA*
(s.m.)
40.230
26.236
55.057
29.176
19.046
26.203
29.109
24.074
39.320
20.178
30.324
27.663
3.678
33.800
Iguatemi
GLA
20.316
26.236
35.787
22.466
8.571
15.892
11.003
12.037
14.155
6.053
2.547
8.224
3.678
21.632
51,6%
404.095
208.598
Market Place tower I
Market Place tower II
100,0%
100,0%
15.685
13.395
15.685
13.395
Commercial Properties
100,0%
Iguatemi São Paulo
Market Place
Iguatemi Campinas
Boulevard¹
Iguatemi São Carlos
Iguatemi Rio de Janeiro
Praia de Belas²
Galleria
Iguatemi Porto Alegre
Iguatemi Florianópolis
Iguatemi Caxias
Esplanada
Área proprietária³
Iguatemi Brasília
Retail
29.080
29.080
433.175
237.678
#
Stores
301
160
265
4
74
195
185
140
274
156
136
161
164
2.215
Parking
spaces
1.805
1.998
3.980
922
1.342
1.519
1.996
2.236
918
2.003
1.950
2.673
23.342
Total
54,9%
* Does not include area owned by the store operators that are partners in the mall.
¹ Boulevard, located next to the Iguatemi Campinas Mall.
² Weighted holding. We own 37.5% of the mall (28.0 k m² of GLA) and 47.8% of the expansion (1.1 k m² of GLA).
³ Area in the Esplanada Mall owned by Iguatemi through a subsidiary.
OPERATIONAL PERFORMANCE
Shopping Center*
Revenue
3Q10
NOI
3Q10
Mg. %
Revenue
3Q09
Iguatemi São Paulo
30,275
28,659
94.7%
27,810
Market Place
8,773
7,665
87.4%
7,699
Torre I
3,086
3,083
99.9%
2,920
Torre II
2,545
2,493
98.0%
2,425
Iguatemi Campinas
15,932
13,613
85.4%
14,201
Iguatemi São Carlos
1,359
936
68.8%
1,111
Iguatemi Rio de Janeiro
5,002
3,860
77.2%
4,445
Praia de Belas
8,204
6,635
80.9%
7,337
Galleria
3,455
2,594
75.1%
2,286
Iguatemi Porto Alegre
16,104
15,009
93.2%
15,520
Iguatemi Florianópolis
5,652
5,309
93.9%
4,823
Iguatemi Caxias**
1,348
1,731
128.4%
3,094
Esplanada
7,807
5,819
74.5%
6,883
Brasília
8,236
6,984
84.8%
Total
117,778
104,389
88.6%
100,555
* Takes into account 100% of the results of the mall, without linearization.
NOI
3Q09
Mg. %
26,379
6,073
2,905
2,423
13,825
687
3,039
5,364
1,638
14,086
4,636
3,006
6,062
90,124
94.9%
78.9%
99.5%
99.9%
97.4%
61.8%
68.4%
73.1%
71.7%
90.8%
96.1%
97.2%
88.1%
89.6%
50
PRESS RELEASE
3RD QUARTER 2010
** NOI above 100% due to changes in accountability (cash basis to accrual basis)
In the third quarter of the year we succeeded in adjusting our rentals at rates higher than
inflation. Same-store rentals were up 7.9%, and same-area rentals were up 7.3%, from 3Q09.
The Company’s total sales were 18.9% higher year-on-year in the quarter, with same-store sales
9.6% higher, and same-area sales up 11.4%. Our total sales growth was higher than our samearea sales growth due to the opening of the Iguatemi Brasília operation. In our existing portfolio,
the main contributors to our growth were the Iguatemi Florianópolis, Market Place, Galleria and
Iguatemi Porto Alegre Malls
We observed sales growth throughout all market segments but with significantly higher growth in
entertainment, which grew 36.7% in the quarter. Other segments that grew above average were
Food and beverage, fashion and household goods.
Occupancy cost in the third quarter of 2010 was 11.3%, 0.4 percentage points less than in the
third quarter of 2009, and unchanged from the previous quarter, this year (2Q10).
Occupancy rate
Occupancy cost
12,7%
11,4%
12,0%
11,7%
10,7%
1Q09
2Q09
3Q09
96,4%
4Q09
1Q10
11,3%
11,3%
2Q10
3Q10
1Q09
95,8%
95,8%
2Q09
3Q09
96,6%
4Q09
97,2%
97,2%
1Q10
2Q10
97,9%
3Q10
The occupancy rate in 3Q10 was 97.9%, 2.1 percentage points higher than in 2Q09, and 0.7 of a
percentage point higher than in the second quarter of this year (2Q10).
Strong demand continued from store operators for new spaces, as shown by our continued
increase in commercialization (% leased) in our greenfield projects, and by the high occupancy
rates throughout all our malls.
51
PRESS RELEASE
3RD QUARTER 2010
ECONOMIC AND FINANCIAL PERFORMANCE
INCOME STATEMENTS
Gross revenue
Taxes, contributions and other deductions
Net revenue
Cost of rentals and services
Gross income
Administrative expenses
Other operating income (expenses), net
Operational result
Financial income
Financial expenses
Income before taxation(1)
Income tax and social contribution
Minority interest
Net income
EBITDA
Adjusted EBITDA
FFO
(1)
A.V.
3Q10
75,554
3Q09
58,749
%
28.6%
3Q10
111.8%
3Q09
112.8%
(7,945)
(6,665)
19.2%
-11.8%
-12.8%
67,609
52,084
29.8%
100.0%
100.0%
(22,676)
(17,044)
33.0%
-33.5%
-32.7%
44,933
35,040
28.2%
66.5%
67.3%
(13,324)
(8,739)
52.5%
-19.7%
-16.8%
13,286
(1,141)
-1264.4%
19.7%
-2.2%
44,894
25,160
78.4%
66.4%
48.3%
16,615
8,813
88.5%
24.6%
16.9%
(12,462)
(8,182)
52.3%
-18.4%
-15.7%
49,048
25,791
90.2%
72.5%
49.5%
(9,600)
(6,236)
53.9%
-14.2%
-12.0%
(11)
(18)
-38.1%
0.0%
0.0%
39,437
19,537
101.9%
58.3%
37.5%
55,322
34,612
59.8%
81.8%
66.5%
56,147
34,612
62.2%
83.0%
66.5%
49,864
28,989
72.0%
73.8%
55.7%
Income before taxation and minority interest
INCOME STATEMENTS
A.V.
(2)
Gross revenue
Taxes, contributions and other deductions
Net revenue
Cost of rentals and services
Gross income
Administrative expenses
Other operating income (expenses), net
Operational result
Financial income
Financial expenses
Income before taxation (1)
Income tax and social contribution
Minority interest
Net income
EBITDA
Adjusted EBITDA
FFO
(1)
9M10
212,962
9M09
171,054
%
24.5%
9M10
111.7%
9M09
112.6%
(22,336)
(19,164)
16.6%
-11.7%
-12.6%
190,626
151,890
25.5%
100.0%
100.0%
(64,149)
(51,753)
24.0%
-33.7%
-34.1%
126,477
100,137
26.3%
66.3%
65.9%
(40,034)
(25,465)
57.2%
-21.0%
-16.8%
24,877
576
4219.0%
13.1%
0.4%
111,320
75,248
47.9%
58.4%
49.5%
46,114
28,462
62.0%
24.2%
18.7%
(35,434)
122,001
(23,196)
(28,177)
75,533
(17,503)
25.8%
61.5%
32.5%
-18.6%
64.0%
-12.2%
-18.6%
49.7%
-11.5%
(34)
(37)
-6.9%
0.0%
0.0%
98,772
57,994
70.3%
51.8%
38.2%
140,156
100,173
39.9%
73.5%
66.0%
146,797
100,173
46.5%
77.0%
66.0%
119,307
74,732
59.6%
62.6%
49.2%
Income before taxation and minority interest
52
PRESS RELEASE
3RD QUARTER 2010
(2)
There was reclassification between lines of costs, expenses and other operational revenues from the income statement of
2Q10. The reclassified income statement is in Appendix I. The reclassification in costs and expenses is in Appendix II.
GROSS REVENUE
Iguatemi's gross revenue in the third quarter of 2010 was R$ 75.6 million, 28.6% more than in
the same period of 2009 – this mainly reflects growth in revenues from rentals, administration
fees and parking, partially offset by a lower total in the item Other revenues.
Growth revenue in the first nine months of 2010 (9M10) was R$ 213.0mn, 24.5% more than in
the first three quarters of 2009 (9M09).
Gross Revenue
Rent
Management Fee
Parking
Others
Total
3Q10
3Q09
%
9M10
9M09
%
54,796
6,222
11,262
3,274
42,793
3,672
7,893
4,390
28.0%
69.4%
42.7%
-25.4%
155,509
14,921
31,489
11,044
126,553
10,939
22,885
10,677
22.9%
36.4%
37.6%
3.4%
75,554
58,749
28.6%
212,962
171,054
24.5%
Rental revenue in 3Q10, comprising the minimum rent, percentage rent and temporary rental,
were 28.0% higher than in 3Q09. In 9M10 rental revenues were 22.9% higher than in 9M09, and
composed 73.0% of the total gross revenue of the period.
Rental Revenue
Minimum Rent
Linearization
Percentage Rent
Temporary Rent
Total
3Q10
3Q09
%
9M10
9M09
%
43,874
3,303
3,370
4,250
37,005
125,153
9,743
9,590
11,022
109,723
2,681
3,107
18.6%
NA
25.7%
36.8%
8,010
8,820
14.1%
NA
19.7%
25.0%
54,796
42,793
28.0%
155,509
126,553
22.9%
‐ ‐ The increase in rental revenues in the quarter mainly reflects:
 The opening of the Iguatemi Brasília Mall, accounting for 54.0% of the growth in rental
revenue.
 Increase in minimum rent due to (i) leasing spreads on renegotiations and (ii) automatic
inflation adjustments, resulting in same-area rental growth of 7.3%.
 Linearization of revenues, which accounted to R$ 3.3mn in the 3rd quarter.
 Increase of 25.7% in the variable (percentage) portion of rentals, as a result of strong
sales growth; the main contributors to the growth in percentage rent were the Iguatemi
Campinas, Iguatemi Porto Alegre, Esplanada and Iguatemi Rio de Janeiro malls.
 Increase of 36.8% in temporary rentals (kiosks and media). The malls that contributed
the most for this growth were Iguatemi São Paulo, Iguatemi Brasília, Iguatemi Campinas
and Iguatemi Porto Alegre.
53
PRESS RELEASE
3RD QUARTER 2010
Parking revenues were 42.7% higher on the 3r quarter, mainly due to (i) beginning to charge for
parking at the Galleria Mall, (ii) to the opening of the Iguatemi Brasília Mall, and (iii) to increases
in the parking rates charged in the Market Place, Iguatemi São Paulo and Iguatemi Campinas
malls.
Administration fees were 69.4% higher than 3Q09, as a result of the startup of three operations:
the Iguatemi Brasília Mall, the parking operations at the Galleria mall and the management of the
Villa Daslu retail operation, which we took over in March 2010.
The reduction in Other Revenues mainly reflects the lower revenue from brokerage in this
quarter, partially offset by key money at the Brasília Mall, which will be amortized monthly
through the contract´s duration (5 years).
DEDUCTIONS AND TAXES
Deductions from sales in 3Q10 were R$ 7.9mn, or 10.5% of gross revenue. In 9M09, taxes and
deductions totaled R$ 22.3mn.
NET SALES REVENUE
Net sales revenue in the third quarter of 2010 was R$ 67.6mn, 29.8% more than in the third
quarter of 2009.
Net revenue in the first nine months of 2010 totaled R$ 190.6mn, 25.5% more than in 9M09.
COSTS AND EXPENSES
Depreciation
Personnel
Third-party
services
Parking
Fund for
promotion
Others
Total
Cost
3Q10
9,224
SG&A
3Q10
1,202
Total
3Q10
10,427
Cost
3Q09
7,019
SG&A
3Q09
1,085
Total
3Q09
8,104
28.7%
5,170
5,384
10,554
3,314
4,027
7,341
43.8%
690
5,523
6,212
1,017
1,551
2,567
142.0%
4,635
-
4,635
2,550
-
2,550
81.8%
1,181
-
1,181
979
-
979
20.7%
1,776
1,215
2,992
2,165
2,076
4,242
-29.5%
22,676
13,324
36,001
17,044
8,739
25,783
39.6%
%
54
PRESS RELEASE
3RD QUARTER 2010
Depreciation
Personnel
Third-party
services
Parking
Fund for
promotion
Others
Total
Cost
9M10
25,121
SG&A
9M10
3,715
Total
9M10
28,836
Cost
9M09
20,782
SG&A
9M09
2,796
Total
9M09
23,578
%
Acum.
12,341
15,626
27,967
9,910
12,236
22,147
26.3%
4,612
13,057
17,669
3,376
4,410
7,786
126.9%
11,579
-
11,579
7,910
-
7,910
46.4%
3,727
-
3,727
2,780
-
2,780
34.1%
6,769
7,635
14,405
6,995
6,022
13,017
10.7%
64,149
40,034
104,183
51,753
25,465
77,218
34.9%
22.3%
Cost and expenses in 3Q10 totaled R$ R$ 36.0mn, 39.6% more than in 3Q09, mainly due to the
following:

Pre-operational expenditures on the greenfields projects, mainly for the Iguatemi Brasília,
Iguatemi Alphaville and JK Iguatemi Malls, totaling R$ 0.8mn, allocated in expenses, in the
lines Third Party Services and Others.

Third party services increased due to legal expenses (success fees) and pre-operational
expenses

Depreciation increased as a result of the startup of the Iguatemi Brasília Mall, and due to
the amortization of the first phase of the SAP system.

Personnel increased 43.8% mainly reflecting the hiring of 52 new employees and the
increase in the provision for the 2010 bonus payment.

Parking expenditures increased as a result of the startup of the Iguatemi Brasília Mall, and
start-up of parking operations at the Galleria Mall.
Total costs and expenses in the first nine months of the year were R$ 104.2mn, 34.9% more than
in 9M09. Pre-operational expenses totaled R$ 6.6mn in the nine months, and were allocated
principally in the lines Outsourced Services and Others.
FINANCIAL REVENUES (EXPENSES)
We report net financial revenues of R$ 4.2mn in 3Q10, compared to R$ 0.6mn in 3Q09 – and
total financial revenues of R$ 10.7mn in 9M09.
In spite of the growth in the company’s indebtedness, the debt contracted for the greenfield
projects is being capitalized and will be amortized as each new mall starts operation.
This explains why, after the inauguration of the Iguatemi Brasília Mall, we had an increase in
financial expenses – because the interest was included, from then on, in that account.
55
PRESS RELEASE
3RD QUARTER 2010
Net financial revenue
(expenses)
3Q10
Total financial revenues
16,615
Total financial expenses
Net financial revenue
(expenses)
(12,462)
4,153
3Q09
%
9M10
8,813
88.5%
46,115
(8,182)
52.3%
(35,435)
631
558.1%
9M09
%
28,462
62.0%
(28,177)
25.8%
285
3647.6%
10,681
OTHER OPERATIONAL REVENUE (EXPENSES)
We posted positive net other operational revenues of R$ 13.3mn in the third quarter of 2010,
compared to a negative net operating expense expense of R$ 1.1 million in 3Q09. This line
includes revenues and expenses relating to contractual penalty payments, provisions for doubtful
debtors, resale of retail location points, and other items.
Once again in this quarter, we have had revenue arising from a swap of PSV (Potential Sales
Value) on a terrain adjacent to the Praia de Belas Mall, where two additional office towers will be
built. Later on a new parking deck will also be built on this terrain, wich will allow an expansion of
the third floor of the mall, since part of the parking located in this area will be transformed into
GLA for inclusion of new stores.
The minimum guaranteed net revenue of the PSV swap is R$ 11.8mn, which will be received in up
to 36 months after the commercial launch of the towers, tied to the flow of receipt of PSV
(potential total sales value) by the real estate developer.
The Other operational revenues (expenses) line in 9M10 totaled a positive R$ 24.9mn. The net
result of the exchanges of the sites was R$ 19.8mn. The remaining of the other revenues is
mainly due to revenues came from the resale of retailing positions and to the reversal of
provisions.
INCOME TAX AND SOCIAL CONTRIBUTION (CURRENT AND DEFERRED)
Expenses on income tax and the Social Contribution tax in 3Q10 totaled R$ 9.6 million, compared
to an expense of R$ 6.2 million in 3Q09. The effective tax rate in the period was 19.6%.
Expenses on taxes in 9M10 totaled R$23.2mn, an effective rate of 19.0%.
NET PROFIT
Iguatemi reports net profit of R$ 39.4 million for the third quarter of 2010, 101.9% more than in
the third quarter of 2009
Net profit in the first nine months of 2010 totaled R$ 98.8mn, 70.3% more than in 9M09. Net
margin in the nine months of 2010 was 51.8%.
56
PRESS RELEASE
3RD QUARTER 2010
EBITDA
R$ K
Net revenue
3Q10
3Q09
%
9M10
9M09
%
67,609
52,084
29.8%
190,626
151,890
25.5%
49,048
25,791
90.2%
122,001
75,533
61.5%
10,427
9,452
10.3%
28,836
24,925
15.7%
12,462
8,182
52.3%
35,434
28,177
25.8%
(-) Financial revenues
(16,615)
(8,813)
88.5%
(46,114)
(28,462)
62.0%
EBITDA
55,322
34,612
59.8%
140,156
100,173
39.9%
EBITDA Margin
(+) Pre-operational
expenses
Adjusted EBITDA
Adjusted EBITDA
Margin
81.8%
66.5%
15.4p.p.
73.5%
66.0%
7.6p.p.
825
‐ NA
6,640
‐ NA
56,147
34,612
62.2%
146,797
100,173
46.5%
83.0%
66.5%
16.6p.p.
77.0%
66.0%
11.1p.p.
Income before
taxation and extra
(+) Depreciation and
amortization
(+) Financial expenses
Ebitda in the third quarter of 2010 was R$ 55.3mn, 59.8% greater than in 3Q09, and with Ebitda
margin of 81.8%.
In the first nine months of the year Ebitda was R$ 140.2mn, with an Ebitda margin of 73.5%.
Adjusted Ebitda, which does not take into account the pre-operational expenses on the greenfield
projects, was R$ 56.1mn, with an Ebitda margin of R$ 83.0%.
Total Ebitda in the first nine months of 2010 was R$ 140.2mn, 39.9% more than in 9M09.
Adjusted Ebitda for this nine-month period was R$ 146.8mn, with an Ebitda margin of 77.0%. We
do not adjust Ebitda for the revenue from the exchange of the land holdings in Porto Alegre,
since, as explained above, this type of transaction will be recurrent for the company.
DEBT
Iguatemi’s gross debt at the end of the third quarter of 2010 was R$ 445.6mn, compared to
R$ 377.5mn at the end of June, increased primarily by the release of the real estate financing for
the Iguatemi Alphaville Mall, and the entry of cash from the BNDES for that same Mall.
The cash position at the end of June was R$ 592.8mn, resulting in net cash of R$ 147.2mn. The
average tenor of our debt is 3.6 years (or 4.2 years if the debentures are not considered), with
average cost of 105.6% of the CDI rate (or 101.9% if the debentures are not considered). The
cost of debt is diminishing and the average tenor is widening with the entry of the new financing
for the greenfield projects.
57
PRESS RELEASE
3RD QUARTER 2010
In October we signed financing with the BNDES (Brazilian Development Bank) for the JK Iguatemi
Mall. The financing is linked to the TJLP long-term interest rate plus 3.82% p.a., currently a total
of 9.82% p.a., on the building works and facilities, and 5.5% p.a. on Brazilian-made equipment.
The grace period is 24 months from signature, with amortization in 60 months.
The loan was borrowed directly by Iguatemi, and only for our share of the works.
Currency
Costs
Loans not
subjected to
payment in
cash
R$
IGP-DI
BNDES
R$
BNDES
R$
BNDES
R$
TJLP + 4.40% a.a.
TJLP + 2.3% a.a. +
0.55%
TJLP + 3.45% a.a.
Santander
Santander
Santander
Santander
R$
R$
R$
R$
99% do CDI
TR + 9.52% a.a.
TR + 9.51% a.a.
TR + 12.0% a.a.
Bradesco
R$
TR + 10.5% a.a.
Debentures
R$
110% do CDI
Short Term
Long Term
Total Debt
Cash position
Net cash (net
debt)
Final
Maturity
Repayable
monthly
against part of
rent for the
use of the
property
3Q10
2Q10
2,017
2,136
May/2011
1,508
2,074
February / 2012
5,247
5,876
June / 2017
50,403
-
August / 2016
4,580
13,974
12,973
92,333
4,765
14,721
12,847
94,594
55,917
39,645
206,686
200,837
27,957
417,681
(445,638)
592,831
22,180
355,315
(377,495)
557,788
147,193
180,293
August / 2016
October / 2016
January / 2019
September /
2019
December /
2014
58
PRESS RELEASE
3RD QUARTER 2010
97.5
100.8
99.9
32.5
28.0
30.2
21.5
15.5
14.2
2017
2018
2019
5.6
Short
term
2011
2012
(three
m onths)
2013
2014
Financing
2015
2016
Debentures
CASH FLOW
Iguatemi’s cash position increased by R$ 8.2mn in the third quarter of 2010, from June 30. The
main changes are:



Net cash from operational activities totaling R$ 52.0mn, comprising R$ 61.5mn generated
by operations and a reduction of R$ 9.5mn in variations on assets and liabilities.
Net investment of R$ 73.2mn, spent principally on our greenfield and expansion projects.
Increase of R$ 56.2mn in financing activities, mainly because of the entry of the cash for
the financing from the BNDES for the construction of Iguatemi Alphaville.
3Q10 Cash Flow
56,234 557,788 52,076
592,831 (73,267) Initial Balance
Operational
Financings
Investm ents
Final Balance
CAPITAL EXPENDITURES FOR GREENFIELD PROJECTS
A total of R$ 36.7m was invested in Iguatemi’s greenfield projects in the third quarter of 2010, as
shown in the table below. We expect to invest a further R$ 97.0mn in the projects in 4Q10.
59
PRESS RELEASE
3RD QUARTER 2010
Real
Real
Until 2Q10
3Q10
Ribeirão Preto
58.6
70.8
114.4
1.3
Jundiaí
Total
4Q10e
2011e
2012e
Após
2012e
Greenfields
7.2
28.7
0.8
-
29.4
59.8
1.3
6.4
64.7
21.5
115.1
-
-
160.0
180.7
116.5
122.9
1.9
-
-
32.2
77.8
-
112.0
S. J. Rio Preto
-
-
-
-
4.8
130.3
135.1
Total
247.0
36.7
97.0
233.6
82.6
130.3
827.2
Shopping Center
JK
Alphaville
Brasília
Note1: The capex figures shown above are net of key money.
Note2: Iguatemi had additional capital expenditures for (i) its expansions and (ii) its existing portfolio.
THE GREENFIELD PROJECTS
Below are details of the five Greenfield projects so far announced by Iguatemi. The figures given
for total expected investment include the whole cost of the construction works, net of key money.
60
PRESS RELEASE
3RD QUARTER 2010
Iguatemi Alphaville
Construction is 63% completed, including the cinema´s shell. Closing of the skylights are in
process as well as the electrical, hydraulic and air conditioning installations. The mall is 92%
leased.
JK Iguatemi
Works more than 41% completed. Roof level concreted, and covering of the atrium begun.
Masonry and metalic structure work at an advanced phase. The mall is 40% leased.
Iguatemi Ribeirão
Plans approved by local
planning authorities;
pricing of building works
in progress.
Iguatemi Jundiaí
Plans undergoing aproval
by local planning
authority.
Iguatemi S.J. do Rio Preto
Start of detailing of the
architectural plans and
preparation of
documentation for approval
by the local authority.
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PRESS RELEASE
3RD QUARTER 2010
The figures below refer to 100% of each project.
Alphaville
JK
Ribeirão
Jundiaí
SJRP
Opening
Apr/11
Sep/11
2012
2012
2014
GLA (sq. m.)
31,930
35,246
32,500
30,000
34,600
Total
investment
R$ 180.8 MM
R$ 243.3 MM
R$ 123 MM
R$ 112.2 MM
R$135.1 MM
NOI year 1
R$ 24.3 MM
R$ 40 MM
R$ 14.8
MM
R$ 19.2 MM
R$ 21.6 MM
R$ 63.42
R$ 94.6
R$ 37.95
R$ 53.33
R$ 52.02
78%
50%
88%
79%
88%
18.0%
20.5%
15.8%
21.5%
22.2%
22%
50%
12%
21%
12%
NOI/sq. m.
(month)
Iguatemi
stake
Estimate
IRR¹
Other
partners
¹ Real, unlevered.
EXPANSIONS OF EXISTING MALLS
Iguatemi also has 3 expansion projects in progress. These expansions will strengthen our
existing malls by (i) increasing their attractiveness, (ii) increasing their total GLA and (iii) allowing
improvement of their existing mix of stores.
The three expansion projects will add 14,400m2 of own GLA to Iguatemi's portfolio.
The figures below for the expansion projects refer to 100% of each project. Iguatemi will
maintain its equity holdings in the malls, hence its investment is proportional to its holding in
each mall. The investments are net of key money.
Iguatemi São Paulo: A new 14-storey building, comprising 3 storeys of offices and the
remaining floors of parking space (including 3 basement storeys). The mall will also have two new
restaurants. The constructution is almost complete, in finishing phase. Structure of the work has
been concluded; finishing work in progress on the facade. Delivery scheduled for December 2010.
Praia de Belas: Two office buildings, a new parking deck, a new multiplex cinema, and
refurbishment of the third story for inclusion of another 88 new stores. The project will be carried
out in phases. The first phase is the delivery of an office building, with 1,1 m² of GLA for retailing
(we have no equity interest in the offices). The second phase is the delivery of the cinema. The
third phase is the delivery of a new office building and a parking deck, and the restructuring of
the third floor for the inclusion of new stores. The inauguration of the first phase was concluded in
July 2010, with the addition of 4 new stores. The total GLA of the second and third phase
amounts to 16.5 thousand sqm.
Galleria Shopping Mall: 2 new anchor stores, four megastores, 2 restaurants and 55 satellite
stores – a total of 63 additional stores. The project will add 8.2 thousand sq.meters of GLA to the
mall. The project is approved, and the works are scheduled to begin in January 2011.
62
PRESS RELEASE
3RD QUARTER 2010
Iguatemi
São Paulo
Opening date
Total GLA (m²)
Total investment
% Iguatemi:
Praia de
Belas
Galleria
R$ 62.0 MM
jul/10
(First phase)
17,624
(total)
R$ 62.8 MM
(total)
R$ 30.4 MM
50.5%
37.6%
50.0%
dec/10
6,240
sep/11
8,198
CAPITAL MARKETS
Iguatemi is listed on the Novo Mercado of the BM&F Bovespa, with ticker IGTA3. The table below
shows our principal stockholders, and the company’s free float.
Shareholders
Jereissati Participações
La Fonte Telecom
Petros
Fidelity
Others
Shares (‘000)
%
41,954
721
8,185
8,400
19,996
52.9%
0.9%
10.3%
10.6%
25.2%
100.0%
Total
79,255
Iguatemi’s shares closed at R$ 38.00 on September 30, 2010, having gained 19.9% in value in
the quarter, and 39.7% in the last 12 months.
IGTA
Final price
Highest price
Lowest price
Appreciation in 3Q10
Appreciation in 1 year
Number of shares (’000)
Market Cap.
Average daily liquidity
130
38.00
38.88
33.46
19.9%
39.7%
79,255
3,011,709
4,759,112
Share
price
3Q10
Cotações
noin
3T10
122%
120
113%
110
100
90
80
70
60
IGTA
IBOV
63
PRESS RELEASE
3RD QUARTER 2010
HUMAN RESOURCES
We have an experienced management team, and we seek consistently to align the interests of
our management and employees with those of our stockholders, through two variable
compensation mechanisms:
Iguatemi Bonus Plan: The Iguatemi Bonus Plan is linked to meeting budget and operational
targets. The amount paid to each employee is linked to the Key Performance Indicators (KPIs) of
the company and to individual KPIs. All our employees and managers are eligible for this plan.
Stock option plan: We also have a stock option plan, administered by our Board of Directors,
which may, at its exclusive choice, grant stock options to our managers, employees and service
providers. The stock options issued under the plan are limited to a total of 2% of our registered
capital. Our policies in relation to employees are based on retention of qualified employees,
creation of management tools to improve their efficiency, creation of additional opportunities for
internal promotion, efficient training programs, assessment of performance and appropriate
remuneration.
In line with our major GLA expansion plan (growth of 142% of our own GLA as of December
2009), we reviewed our Mission, Vision and Values and created a new methodology for the
evaluation and management of our human resources. We believe that this new tool, together with
the bonus plan linked to KPIs (Key Performance Indicators) should aid the company in achieving
its growth target without losing the identity and values that make Iguatemi one of the 50 most
valuable brands in Brazil.
On September 30, 2010 Iguatemi had 185 employees.
ENVIRONMENTAL PROGRAMS
One of our targets is to have economic activities that meet the needs of society without leaving
aside a constant concern with the environment. Rational use of natural resources is one of the
ways of exercising this responsibility.
For the last 10 years our malls have been implementing actions to increase saving of water and
reduce energy consumption, generating significant efficiency gains while reducing environmental
impact.
Our social actions in support of cooperatives benefit needy communities with the work of
separation of waste, or re-use of raw materials.
All our logistical processes take the environment into account. Examples are recycling and
selective collection. Each process is based on a vision, from which we decide objectives, targets
and plans of action.
STRATEGY AND GUIDANCE
Iguatemi continues to focus on the South, Southeast and Brasilia, which are Brazil’s areas of
greatest purchasing power and per capita consumption, and predominantly on the A and B
income groups, which are less susceptible to economic crises, and more demanding in terms of
quality of products and services offered.
In line with what we have done in the last two years, together with the release of the 3rd quarter,
we state our guidance for our results in 2011: net revenue 25% to 30% higher than in 2010 and
an Ebitda margin between 70% and 72%.
64
PRESS RELEASE
3RD QUARTER 2010
Additionally, we reaffirm our commitment to our 2010 guidance that indicated a 15% to 17%
increase in net revenues and an Ebitda margin between 70 and 72%.
The table below shows our guidance for Net revenue and Ebitda margins for 2010 and 2011.
2009
Real
Net Revenue
218
EBITDA Margin
70%
2010
Guidance
Growth of 15%
to 17%
70% to 72%
2011
Guidance
Growth of 25%
to 30%
70% to 72%
Under its dividend policy, Iguatemi is committed to paying, through the end of business year
2010, at least 50% of net profit as dividends and/or Interest on Equity. From 2011 through 2014,
Iguatemi commits to payout at least R$ 0.63 per share as dividends and/or interest on equity.
Growth in GLA: At the end of 2009 Iguatemi owned GLA totaling 215,000m². In June 2010,
after the opening of Iguatemi Brasília, this figure had increased to 237,000m² of owned GLA.
We have three expansion projects in progress and five greenfield projects. With the GLA from the
expansions and greenfield projects, by 2014, Iguatemi will have 375,000 m² of owned GLA.
Our GLA target guidance is 520,000 m² of owned GLA in 2014.
Own GLA
145
30
4
30
74
520
375
237
GLA
2010
2011
2012
2014
Total GLA
To be
announced
Guidance
2014
65
PRESS RELEASE
3RD QUARTER 2010
EXTERNAL AUDITING SERVICES: COMPLIANCE WITH CVM INSTRUCTION 381/2003
In the first quarter of 2009 the Company and/or its subsidiaries began to use the auditing
services of Deloitte Touche Tohmatsu. The Company’s policy in relation to contracting with our
independent auditors of any services that are not related to external auditing is based on the
principles that preserve the external auditor’s independence. These principles, in accordance with
internationally accepted principles, are: (a) the auditor must not audit his own work; (b) the
auditor must not exercise a management function in his client; and (c) the auditor should not
promote his client’s interests.
Note:
Non-financial data, such as GLA, average sales, average rentals, occupancy costs, average
prices, average market prices and Ebitda, have not been reviewed by the external auditors.
By the Commitment Clause in its Bylaws, the Company is committed to arbitration in
the Market Arbitration Chamber.
66