São Carlos Empreendimentos E Participações S.A. and Subsidiaries

(Convenience Translation into English from the Original Previously Issued in Portuguese)

São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Individual and Consolidated Financial Statements for the Year Ended December 31, 2016 and Independent Auditor’s Report

Deloitte Touche Tohmatsu Auditores Independentes

(Convenience Translation into English from the Original Previously Issued in Portuguese)

INDEPENDENT AUDITOR’S REPORT To the Shareholders, Directors and Management of São Carlos Empreendimentos e Participações S.A.

Opinion

We have audited the accompanying individual and consolidated financial statements of São Carlos Empreendimentos e Participações S.A. (“Company”), identified as Parent and Consolidated, respectively, which comprise the balance sheet as at December 31, 2016, and the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the individual and consolidated financial statements present fairly, in all material respects, the individual and consolidated financial position of the São Carlos Empreendimentos e Participações S.A. as at December 31, 2016, and its individual and consolidated financial performance and its individual and consolidated cash flows for the year then ended in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”).

Basis for Opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Individual and Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical requirements in the Code of Ethics for Professional Accountants and the professional standards issued by the Federal Accounting Council (“CFC”), and we have fulfilled our other ethical responsibilities in accordance with these standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

a) Revenue recognition

As mentioned in Notes 2.20 and 2.21, the Company recognizes revenue from the sale of properties at the time the sale is completed, regardless of the term for the receipt of the amount established by contract, and revenue arising from operating lease agreements is recognized on a straight-line basis over the lease period. Accordingly, we consider revenue recognition as a key audit matter because the procedures performed by the Company involve specific contractual clauses and system calculations to determine the revenue amount per agreement and the recognition period.

The key audit procedures are intended to understand the key control activities performed by Management on the determination of an agreement’s amount and the revenue recognition timing, and conduct tests, on a sampling basis, on the sale and lease agreements entered into to validate the completeness, accuracy, classification, and occurrence of the generated revenue. We also assessed the adequacy of the disclosures made in the financial statements. b) Impairment of investment properties

According to Note 2.3, the Company owns investment properties held for earning rent revenue and/or for capital appreciation, which are recognized at cost, less accumulated depreciation, which does not exceed its realizable value.

In light of the unfavorable economic environment and the increase in the supply of inventories of commercial real estate units, we understand that there is a significant risk of impairment of such investment properties.

Due to the materiality of the balances and the use of internal subjective and market assumptions to determine the recoverable amount of the assets, which involves significant Management judgment, this matter was considered a key audit matter.

As part of our audit procedures, we assessed the design of the controls put in place by Management to ensure the completeness and accuracy of the data on the operating lease agreements used to project future cash flows, we conducted tests, on a sampling basis, of the lease agreements used to project future cash flows, and challenged the reasonableness of the assumptions and projections used by Management to prepare the impairment test of investment properties. c) Compliance with covenants in borrowings and financing agreements

As disclosed in Note 10, certain borrowings and financing agreements contain accelerated maturity clauses in case of noncompliance with financial and operating ratios. This matter involves the use of assumptions and significant Management judgment to calculate these ratios.

The key audit procedures applied were the identification of controls put in place by Management in relation to the preparation and review of the calculations to confirm the compliance with contractual ratios. In addition, we reviewed the borrowing and financing agreements, as well as the relevant covenants, and checked if the financial and operating ratios had been complied with. We also assessed the adequacy of the disclosures made in the financial statements.

Other Matters

Statements of value added

The individual and consolidated statements of value added (“DVA”) for the year ended December 31, 2016, prepared under the responsibility of the Company’s management and disclosed as supplemental information for purposes of the IFRS, were subject to audit procedures performed together with the audit of the Company’s financial statements. In forming our opinion, we assess whether these statements are reconciled with the financial statements and the accounting records, as applicable, and whether their form and content are in accordance with the criteria set out in technical pronouncement CPC 09 - Statement of Value Added. In our opinion, these statements of value added have been prepared, in all material respects, in accordance with the criteria set out in such technical pronouncement and are consistent in relation to the individual and consolidated financial statements, taken as a whole.

Other Information Accompanying the Individual and Consolidated Financial Statements and the Independent Auditor’s Report

Management is responsible for such other information. The other information comprises the Management Report.

Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of audit conclusion thereon.

In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether such report is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Management Report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Individual and Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance accounting practices adopted in Brazil and International Financial Reporting Standards (“IFRSs”), issued by the IASB, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the individual and consolidated financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and its subsidiaries’ financial reporting process.

Auditor’s Responsibilities for the Audit of the Individual and Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and its subsidiaries’ internal control.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.

 Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and its subsidiaries’ ability to continue as going concerns. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as going concerns.

 Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The accompanying individual and consolidated financial statements have been translated into English for the convenience of readers outside Brazil.

São Paulo, March 8, 2017

DELOITTE TOUCHE TOHMATSU Alexandre Cassini Decourt Auditores Independentes Engagement Partner

(Convenience Translation into English from the Original Previously Issued in Portuguese)

SÃO CARLOS EMPREENDIMENTOS E PARTICIPAÇÕES S.A. AND SUBSIDIARIES

BALANCE SHEETS AS AT DECEMBER 31, 2016 (In thousands of Brazilian reais - R$)

Parent Consolidated Parent Consolidated ASSETS Notes 12.31.2016 12.31.2015 12.31.2016 12.31.2015 LIABILITIES AND EQUITY Notes 12.31.2016 12.31.2015 12.31.2016 12.31.2015

CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents 3 50,885 140,505 57,089 147,107 Borrowings and financing 10 62,129 42,696 142,855 113,906 Short-term investments 4 181,507 128,644 203,105 134,113 Advances from customers - - 1,366 5,236 Trade receivables 5 5,461 4,450 18,501 26,921 Payroll and related taxes 9,710 4,657 10,639 5,442 Due from related parties - - 972 875 Provision for income tax and social contribution - - 6,512 6,282 Recoverable taxes 6 23,125 20,817 27,844 24,737 Taxes, fees and contributions 1,027 832 3,100 3,037 Prepaid expenses and other receivables 1,849 5,524 7,495 15,609 Dividends and interest on capital 14.3 18,104 11,308 18,104 11,308 Properties held for sale 27 - - 12,636 1,351 Payables for acquisition of properties - - 3,202 10,002 Total current assets 262,827 299,940 327,642 350,713 Other payables 5,433 6,177 5,565 8,295 Total current liabilities 96,403 65,670 191,343 163,508 NONCURRENT ASSETS Trade receivables 5 29,137 13,435 108,169 68,920 NONCURRENT LIABILITIES Related-party balances and transactions 8 95,782 92,799 14,455 1,554 Deferred taxes 11 703 730 8,361 7,995 Escrow deposits 12 40 24 124 90 Borrowings and financing 10 786,408 831,508 1,516,012 1,611,681 Prepaid expenses and other receivables 4,394 - 10,512 - Provision for risks 12 14,085 13,655 14,085 13,655 Investments in subsidiaries and joint ventures 7 1,015,515 963,356 11,981 13,997 Total noncurrent liabilities 801,196 845,893 1,538,458 1,633,331 Investment properties 9 811,957 800,221 2,570,645 2,607,935 Property, plant and equipment 480 489 8,755 10,973 EQUITY Intangible assets 727 747 3,941 3,933 Capital 14.1 673,912 673,912 673,912 673,912 Total noncurrent assets 1,958,032 1,871,071 2,728,582 2,707,402 Stock option plan 27,251 22,680 27,251 22,680 Treasury shares 14.2 (63,822) (64,938) (63,822) (64,938) Earnings reserves 685,919 627,794 685,919 627,794

Equity attributable to owners of the Company 1,323,260 1,259,448 1,323,260 1,259,448 Noncontrolling interests - - 3,163 1,828 Total equity 1,323,260 1,259,448 1,326,423 1,261,276

TOTAL ASSETS 2,220,859 2,171,011 3,056,224 3,058,115 TOTAL LIABILITIES AND EQUITY 2,220,859 2,171,011 3,056,224 3,058,115

The accompanying notes are an integral part of these financial statements.

6 (Convenience Translation into English from the Original Previously Issued in Portuguese)

SÃO CARLOS EMPREENDIMENTOS E PARTICIPAÇÕES S.A. AND SUBSIDIARIES

INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2016 (In thousands of Brazilian reais - R$, except earnings per share)

Parent Consolidated Notes 12.31.2016 12.31.2015 12.31.2016 12.31.2015

NET REVENUE 16 49,592 148,567 450,238 477,209 Cost of properties sold 17 - (19,774) (47,913) (47,166) Rental cost 17 (13,860) (10,932) (43,701) (40,486)

GROSS PROFIT 35,732 117,861 358,624 389,557

OPERATING INCOME (EXPENSES) General and administrative expenses 17 (29,807) (25,850) (37,465) (32,542) Selling expenses 17 (4,193) (6,505) (25,008) (23,429) Other operating income, net 17 117 1,098 4,564 7,474 Share in profit (loss) of subsidiaries 7 142,812 131,579 (2,108) (925)

OPERATING INCOME BEFORE FINANCE INCOME (COSTS) 144,661 218,183 298,607 340,135

FINANCE INCOME (COSTS) Finance income 18 31,398 35,230 38,499 41,555 Finance costs 19 (99,965) (86,693) (203,782) (188,141)

OPERATING INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 76,094 166,720 133,324 193,549

INCOME TAX AND SOCIAL CONTRIBUTION Current 20.1 135 (3,604) (56,216) (30,329) Deferred 20.1 - - (242) 156

PROFIT FOR THE YEAR 76,229 163,116 76,866 163,376

ATTRIBUTABLE TO Owners of the Company 76,229 163,116 Noncontrolling interests 637 260

EARNINGS PER SHARE Basic (cents per share - in R$) 21.1 1.356 2.906 Diluted (cents per share - in R$) 21.2 1.334 2.827

The accompanying notes are an integral part of these financial statements.

7 SÃO CARLOS EMPREENDIMENTOS E PARTICIPAÇÕES S.A. E CONTROLADAS

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 (In thousands of Brazilian reais - R$)

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

PROFIT FOR THE YEAR 76,229 163,116 76,866 163,376

Other comprehensive income - - - -

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 76,229 163,116 76,866 163,376

ATTRIBUTABLE TO Company’s owners 76,229 163,116 Noncontrolling interests 637 260

The accompanying notes are an integral part of these financial statements.

8 (Convenience Translation into English from the Original Previously Issued in Portuguese)

SÃO CARLOS EMPREENDIMENTOS E PARTICIPAÇÕES S.A.

STATEMENTS OF CHANGES IN EQUITY (PARENT AND CONSOLIDATED) FOR THE YEAR ENDED DECEMBER 31, 2016 (In thousands of Brazilian reais - R$)

Attributable to owners of the Company Treasury shares Earnings reserves Loss on sale of Treasury Stock Earnings Retained Noncontrolling Total Notes Capital treasury shares shares option plan Legal retention earnings Total interests equity

BALANCE AS AT DECEMBER 31, 2014 673,912 (9,134) (48,739) 18,521 56,585 450,401 - 1,141,546 5,146 1,146,692

Recognition of stock option plan - - - 4,159 - - - 4,159 - 4,159 Sale of treasury shares - (791) 4,114 - - - - 3,323 - 3,323 Acquisition of treasury shares - - (10,388) - - - - (10,388) - (10,388) Subscription by noncontrolling interests ------(3,578) (3,578) Profit for the year ------163,116 163,116 260 163,376 Legal reserve - - - - 8,156 - (8,156) - - - Interest on capital ------(31,000) (31,000) - (31,000) Proposed dividends - R$0.201 per share ------(11,308) (11,308) - (11,308) Earnings retention - - - - - 112,652 (112,652) - - -

BALANCE AS AT DECEMBER 31, 2015 14 673,912 (9,925) (55,013) 22,680 64,741 563,053 - 1,259,448 1,828 1,261,276

Recognition of stock option plan - - - 4,571 - - - 4,571 - 4,571 Sale of treasury shares - (2,317) 3,810 - - - - 1,493 - 1,493 Acquisition of treasury shares - - (377) - - - - (377) - (377) Acquisition of noncontrolling interests ------698 698 Profit for the year ------76,229 76,229 637 76,866 Legal reserve - - - - 3,811 - (3,811) - - - Proposed dividends - R$0.3136 per share ------(18,104) (18,104) - (18,104) Earnings retention - - - - - 54,314 (54,314) - - -

BALANCE AS AT DECEMBER 31, 2016 14 673,912 (12,242) (51,580) 27,251 68,552 617,367 - 1,323,260 3,163 1,326,423

The accompanying notes are an integral part of these financial statements.

9 (Convenience Translation into English from the Original Previously Issued in Portuguese)

SÃO CARLOS EMPREENDIMENTOS E PARTICIPAÇÕES S.A. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 (In thousands of Brazilian reais - R$)

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

CASH FLOWS FROM OPERATING ACTIVITIES Profit for the year 76,229 163,116 76,866 163,376 Adjustments to reconcile profit for the year to net cash generated by operating activities: Allowance for doubtful debts - 922 3 978 Depreciation and amortization 13,860 10,932 43,701 40,486 Share of profit (loss) of subsidiaries (142,812) (131,579) 2,108 925 Recognition of stock option plan 4,571 4,159 4,571 4,159 Gain on the sale of investments - (91,008) (110,706) (132,767) Gain on the sale of assets held for sale - - (1,430) - Gain on other income (fines for breach of contract) - (1,163) - (7,643) Income from short-term investments (15,216) (7,599) (19,719) (12,931) Provision for risks - (174) - (174) Adjustments to provision for tax risks 590 558 590 558 Income tax and social contribution - 3,604 56,216 30,329 Deferred income tax and social contribution - - (242) - Acquisition of noncontrolling interests - - 1,335 (3,318) Finance charges on borrowings and financing 96,599 86,251 198,811 188,672 Cash generated by operating activities 33,821 38,019 252,104 272,650

Changes in operating assets: Trade receivables (16,713) (13,567) (30,832) (40,688) Due from related parties - - (97) (145) Escrow deposits (16) (181) (34) (365) Recoverable taxes (2,308) (3,273) (3,107) (2,383) Properties held for sale - - 144 25,149 Prepaid expenses and other receivables (719) (3,110) (2,398) (4,239)

Changes in operating liabilities: Payroll and related taxes 5,053 (3,172) 5,197 (3,589) Taxes, fees and contributions 195 (3,874) 63 (3,926) Provision for risks (160) - (160) - Payables for acquisition of properties - 3,687 (1,500) (434) Deferred taxes (27) (54) 608 713 Advances from customers - (222) (3,870) (31,231) Other payables (744) - (3,112) - Income tax and social contribution paid - (3,603) (55,986) (31,442) Interest payment (62,985) - (127,667) - Changes in operating assets and liabilities (78,424) (27,369) (222,751) (92,580) Net cash used in (provided by) operating activities (44,603) 10,650 29,353 180,070

CASH FLOWS FROM INVESTING ACTIVITIES Related parties 1,037 (2,777) (12,993) (5,927) Dividends received 126,957 78,453 - - Short-term investments (37,647) (74,213) (49,273) (74,350) Advance for future capital increase (92,908) (24,470) - - Proceeds from the sale of properties - 110,783 - 147,194 Capital decrease in subsidiaries received 52,584 58,510 - - Acquisition of investment properties, property, plant and equipment and intangible assets (25,567) (44,421) (68,156) (169,555) Net cash provided by (used in) investing activities 24,456 101,865 (130,422) (102,638)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from disposal of investment property - - 159,107 - Repayment of principal - borrowings (59,281) (25,173) (139,725) (49,247) Interest payment - (81,925) - (182,255) Borrowings - - 1,861 73,744 Sale of own shares 1,493 4,114 1,493 4,114 Share buyback (377) (10,388) (377) (10,388) Dividends paid (11,308) (11,824) (11,308) (11,824) Interest on capital paid - (31,000) - (31,000) Net cash used in (provided by) financing activities (69,473) (156,196) 11,051 (206,856)

DECREASE IN CASH AND CASH EQUIVALENTS (89,620) (43,681) (90,018) (129,424)

Cash and cash equivalents at the beginning of the year 140,505 184,186 147,107 276,531 Cash and cash equivalents at the end of the year 50,885 140,505 57,089 147,107

DECREASE IN CASH AND CASH EQUIVALENTS (89,620) (43,681) (90,018) (129,424)

The accompanying notes are an integral part of these financial statements.

10 (Convenience Translation into English from the Original Previously Issued in Portuguese)

SÃO CARLOS EMPREENDIMENTOS E PARTICIPAÇÕES S.A. AND SUBSIDIARIES

STATEMENTS OF VALUE ADDED FOR THE YEAR ENDED DECEMBER 31, 2016 (In thousands of Brazilian reais - R$)

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Revenues: Lease revenue 53,636 41,048 307,877 318,918 Revenue from sale of properties - 110,783 160,635 180,608 53,636 151,831 468,512 499,526

Inputs purchased from third parties: Cost of properties sold - (19,774) (47,913) (47,166) Supplies, power, outside services and other inputs (7,218) (13,717) (30,018) (52,118) (7,218) (33,491) (77,931) (99,284)

Gross value added 46,418 118,340 390,581 400,242

WITHHOLDINGS Depreciation and amortization (13,860) (10,932) (43,701) (40,486)

Wealth created 32,558 107,408 346,880 359,756

Wealth received in transfer: Share of profit (loss) of subsidiaries 142,812 131,579 (2,108) (925) Finance income 31,398 35,230 38,499 41,555 Other income 117 1,098 4,564 7,474 174,327 167,907 40,955 48,104

Total wealth for distribution 206,885 275,315 387,835 407,860

Wealth distributed: Employees and payroll taxes 26,342 21,840 31,787 26,074 Taxes, fees, contributions and other 7,715 6,296 80,371 39,635 Interest and inflation adjustments 96,599 84,063 198,811 178,775 Noncontrolling interests - - 637 260 Dividends and interest on capital 18,104 42,308 18,104 42,308 Retained earnings 58,125 120,808 58,125 120,808

Wealth distributed 206,885 275,315 387,835 407,860

The accompanying notes are an integral part of these financial statements.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

SÃO CARLOS EMPREENDIMENTOS E PARTICIPAÇÕES S.A. AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (In thousands of Brazilian reais - R$, unless otherwise stated)

1. GENERAL INFORMATION

São Carlos Empreendimentos e Participações S.A. (“Company”) is a publicly-held company established in Brazil, with registered office at Rua Dr. Eduardo de Souza Aranha, 153, 12o andar, Vila Nova Conceição - São Paulo - SP - Brazil. The Company currently has a portfolio that includes office buildings and convenience retail centers located mainly in the States of São Paulo and Rio de Janeiro. The Company has been operating in this market since 1999 and in December 2006 it has joined the Novo Mercado corporate governance listing segment of the São Paulo Commodities, Futures and Stock Exchange (BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros), where it is listed under the ticker symbol SCAR 3. The Company is engaged in the following operations:

a) The management of own or third-party real estate projects, including shopping malls.

b) The purchase and sale of completed or under construction residential and office properties, land or undivided interests in the properties.

c) Property leasing.

d) The operation of short-term parking lots.

e) Performance of other similar activities or any business related to its core business.

f) Holding interests in other entities.

The Company’s subsidiaries are engaged in several core businesses, including investments in and management of single- or multi-tenant commercial real estate projects, mainly in the States of São Paulo and Rio de Janeiro, real estate development projects, purchase and sale of properties, and real estate brokerage services.

The individual and consolidated financial statements are presented in Brazilian reais (R$), which is the Company's functional and reporting currency in Brazil.

These individual and consolidated financial statements were approved by the Company’s Board of Directors and authorized for issue on February 22, 2017.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied to the preparation of these individual and consolidated financial statements are described below. These policies have been applied consistently over all reporting periods, except as otherwise indicated.

2.1. Statement of compliance

The individual and consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board ("IASB"), and accounting practices adopted in Brazil.

12 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

The accounting practices adopted in Brazil comprise the policies set out in the Brazilian Corporate Law and the technical pronouncements, guidelines, and interpretations issued by the Accounting Pronouncements Committee (“CPC”) and approved by the Federal Accounting Council (“CFC”).

Management asserts that all relevant information related to the financial statements is being disclosed and corresponds to the information used by it in its management.

2.2. Basis of presentation

The financial statements have been prepared based on the historical cost, unless otherwise stated. The historical cost is generally based on the fair value of the consideration paid in exchange for assets.

In preparing the financial statements, Management makes estimates and assumptions that affect the reported amounts of certain assets, liabilities and other transactions. To make these estimates, Management used the best information available at the end of the reporting period, as well as past and/or current events, also considering assumptions on future events. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The financial statements include, therefore, estimates related to the useful lives of investment properties, property, plant and equipment and intangible assets, the estimated recoverable value of long-lived assets, provisions for contingencies, and the fair value measurement of financial assets and financial liabilities and deferred income tax and social contribution, the allowance for doubtful debts, and the fair value of stock options, among others. Actual results may differ from these estimates.

2.3. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation and are recognized at cost, less any accumulated depreciation and accumulated impairment losses. There are no structured plans for the sale of the properties held for investment since these are substantially used to earn rent revenue and these properties are only sold if Management believes that it would be more beneficial to sell them than keep them as part of the Company’s core business. In the case of qualifying assets, the capitalization of charges thereon is in accordance with the Company's accounting policy. The depreciation of these assets begins when they are ready for use and is calculated based on their estimated useful lives, on a straight-line basis, except for land and construction in progress, which are not depreciated.

CPC 28 - Investment Property allows the Company to recognize its investment properties at fair value or at cost less accumulated depreciation, in which case the fair value of the properties must be disclosed in a note to the financial statements.

The Company elected to maintain its investment properties recorded at cost less accumulated depreciation since it understands it is the best information for companies operating in the real estate investment market to rely on for rental purposes.

13 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

2.4. Investments in joint ventures

A joint venture is a contractual arrangement whereby the Company and other parties undertake an economic activity that is subject to joint control, where the decisions on financial and operating strategic policies relating to the joint venture activities require the approval of all parties sharing control.

The Company adopts IFRS 11 - Joint Arrangements (CPC 19 (R2) - Joint Arrangements and CPC 36 (R3) - Consolidated Financial Statements). This standard sets out a more realistic approach of joint arrangements and focus on the rights and obligations under the arrangement rather than in its legal form. There are two types of joint arrangements: (a) joint operations - when a joint operator has rights to the assets and obligations relating to the arrangement and consequently accounts for its interest in the assets, liabilities, revenue and expenses; and (a) joint control – when the operator has rights to the net assets of the arrangement and accounts for the investment under the equity method. The Company’s investments qualify as joint ventures and are recorded under the equity method of accounting in the individual and consolidated financial statements.

2.5. Property, plant and equipment

Buildings for use in the provision of services, or for administrative purposes, are stated in the balance sheet at cost, less any accumulated depreciation and accumulated impairment losses.

Other property, plant and equipment items are stated at cost, less accumulated depreciation and accumulated impairment losses.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognized in profit or loss as ‘Other operating income (expenses)’.

2.6. Intangible assets

Intangible assets consist mainly of software licenses and are carried at cost less any accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives.

The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

2.7. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

14 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

2.8. Properties held for sale

Properties (and groups held for sale) are classified as properties held for sale and measured at cost, net of the depreciation calculated through the date Management decides to sell them.

Such condition is considered met only when the sale is highly probable and the assets are available for immediate sale “as is”.

Properties classified as properties held for sale are recognized at the lower of their carrying amount and fair value.

2.9. Impairment of tangible and intangible assets

The Company reviews the carrying amounts of its tangible and intangible assets whenever there is any indication that those assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated and the loss is recognized in profit or loss. No losses are identified and recognized related to the impairment of tangible and intangible assets for the years ended December 31, 2016 and 2015.

2.10. Financial assets

Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, available-for- sale financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

All regular-way purchases or sales of financial assets are recognized and derecognized, respectively, on a trade date basis, when the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the related market, and are initially measured at fair value, plus transaction costs, except for financial assets classified at fair value through profit or loss.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At the end of each reporting period subsequent to initial recognition, loans and receivables (including trade and other receivables) are carried at amortized cost using the effective interest method, less any impairment losses.

Financial assets at fair value through profit or loss

These comprise held-for-trading financial assets, when acquired for such purpose, mainly in the short term. Derivative financial instruments are also classified in this category. Assets in this category are classified in current assets.

The Company and its subsidiaries did not have the categories below recorded in the financial statements as at December 31, 2016 and 2015:

15 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

 Held-to-maturity financial assets

Comprise investments in certain financial assets that the Company intends to hold to maturity, which are measured at acquisition cost, plus income earned according to contractual terms and conditions.

 Available-for-sale financial assets

When applicable, non-derivative financial assets are included in this category, such as securities and/or shares quoted in active markets, or which are not quoted in an active market but whose fair values can be reasonably estimated.

Impairment of financial assets

For certain categories of financial assets, such as trade and other receivables, assets that are assessed not to be individually impaired, are subsequently tested for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables includes the Company’s past experience of collecting payments as well as observable changes in national or local economic conditions that correlate with default on receivables.

2.11. Cash and cash equivalents and short-term investments

Include cash, unrestricted bank accounts, and highly-liquid short-term investments, with insignificant risk of change in fair value, especially investment fund shares, bank certificates of deposit, and debentures. Short-term investments are stated at cost, plus income earned through the end of the reporting period, which does exceed fair value.

2.12. Trade receivables

Trade receivables consist basically of receivables from properties leased and sold in the normal course of the Company’s business. If the collection term corresponds to one year or less (or another period that satisfies the normal course of activities), trade receivables are classified in current assets. The criteria for the allowance for doubtful debts is described in Note 5.

2.13. Borrowings and financing

Borrowings and financing are initially recognized at fair value, less transaction costs incurred, and subsequently stated at amortized cost. Any difference between the amounts raised (less transaction costs) and the settlement amount is recognized in the income statement over the period borrowings and financing are outstanding, using the effective interest method.

2.14. Distribution of dividends and interest on capital

The distribution of dividends and interest on capital to the Company’s shareholders is recognized as a liability in the financial statements at the end of the reporting period, as set forth in the Company’s bylaws. Any amounts in excess of the mandatory minimum dividend can only be accrued on the date they are approved by the shareholders at a General Meeting.

16 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

2.15. Financial liabilities and equity instruments issued by the Company

Classification as debt or equity

Debt and equity instruments issued are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements.

2.16. Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized net of direct issue costs.

2.17. Financial liabilities

Financial liabilities are initially recognized at fair value at the date they are originated or the trade date when the Company or its subsidiaries become a party to the underlying contract, less any transaction costs attributable thereto and subsequently recognized at amortized cost using the effective interest method.

The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability.

Other financial liabilities (including borrowings and financing and trade and other payables) are subsequently measured at amortized cost using the effective interest method.

2.18. Provisions

Provisions are recognized when the Company and its subsidiaries have a present obligation (legal or constructive) as a result of a past event, it is probable that they will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. A constructive obligation arises out of the Company’s actions which, by way of a defined standard of past practices, published policies or a satisfactorily specific current statement, indicates to other parties that the Company will assume certain responsibilities; and, consequently, creates a valid expectation among these other parties that the Company will discharge such responsibilities.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties referring to the obligation, according to in- house and outside legal counsel.

2.19. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable from an operating lease or the sale of properties. Revenue is recognized when the Company and its subsidiaries have transferred to the buyer the significant risks and rewards of ownership.

17 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

2.20. Revenue from sale of properties

Revenue from the sale of properties is recognized at the time the sale is completed, regardless of the term for the receipt of the amount established by contract, in accordance with the following assumptions: (a) its price can be reliably estimated, i.e., the sales price is known or the uncollectible amount can be reasonably estimated; and (b) the sales revenue recognition process is basically completed, i.e., the Company is no longer required to comply with a significant portion of the activities that would generate future costs on the sale of the property.

2.21. Revenue from operating leases

Revenue from operating leases is recognized on a straight-line basis over the lease period.

2.22. Interest income

Interest income earned on short-term investments is accrued on a timely basis, by reference to the outstanding principal and at the applicable effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

2.23. Leasing

Lease agreements are classified as finance or operating leases according to CPC 06 (IAS 17) - Leases.

Leases that transfer substantially all the risks and rewards incidental to ownership of an asset from the Company to the lessees are classified as finance leases and recognized as sale financing of the leased assets. The following assumptions were used for the classification analysis, pursuant to said standard: (a) end of the lease term, when ownership is transferred to the lessee; (b) option to purchase the asset at a price that is substantially lower than its fair value; (c) the lease term represents a substantial portion of the asset useful life; (d) the present value of the lease agreement in relation to the fair value of the asset; and (e) the nature of the leased assets, considering the customization for the lessee without the need for material changes. As at December 31, 2016 and 2015, the Company does not have finance leases.

The lease agreements for which the material portion of ownership risks and rights is maintained by the Company, as the lessor, are classified as operating leases. In the years ended December 31, 2016 and 2015, the Company basically acted as a lessor.

Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased assets and recognized on a straight-line basis over the leased items’ useful lives.

2.24. Share-based payments

Equity-settled payments to employees and officers are measured at the fair value of the equity instruments at the grant date.

18 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Details regarding the determination of the fair value of equity-settled payments are described in Note 23.

The fair value determined at the grant date of the equity-settled payments is recorded on a straight-line basis over the vesting period, based on the Company’s estimate of equity instruments that will eventually vest. At the end of the reporting period, the Company revises its estimate of the number of equity instruments expected to vest.

The impact of the revision of the original estimates, if any, is recognized in profit or loss over the remaining vesting period, with a corresponding adjustment in line item ‘Stock option plan’, in equity.

2.25. Income tax and social contribution

Income tax and social contribution expenses represent the aggregate of current and deferred taxes.

Current taxes are based on taxable income for the year. Taxable income differs from the profit reported in the consolidated income statement as it includes and excludes revenue or expenses taxable or deductible in other years, and also excludes items that are neither taxable nor deductible. The Company’s current tax liabilities are calculated at the tax rates effective at the end of the reporting period, i.e., 25% for income tax and 9% for social contribution.

As permitted by the tax law, some of the Company’s subsidiaries opted for taxation based on deemed income. The tax bases of income tax and social contribution under the deemed income regime are calculated at the rate of 8% on revenues from sales of subsidiaries’ properties, 32% on gross lease and service revenue, and 100% on finance income, on which the regular 15% tax rate is levied, plus a 10% surtax for income tax and 9% for social contribution. As a result, certain subsidiaries are not subject to the noncumulative regime for taxes on revenue (PIS and COFINS).

2.26. Earnings per share

Basic earnings per share are calculated by dividing profit for the year attributable to shareholders by the weighted average of number of shares outstanding during the year, including the issues of rights and subscription warrants. An entity calculates diluted earnings per share taking into account profit attributable to shareholders and the weighted average number of outstanding shares, plus effects of all potential shares. All instruments and contracts that may result in the issue of shares are considered potential shares.

Comparative figures are adjusted to reflect capitalizations, issuance of subscription warrants, or stock splits. If these changes occur after the end of the reporting period, but before authorization for issuance of the financial statements, calculations per share in these or in any prior-year financial statements should be based on the new number of shares.

19 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

2.27. Application of judgment and critical accounting policies in the preparation of the financial statements

Critical accounting policies are those that: (a) are important to portray the Company’s financial condition and results; and (b) require Management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The most significant judgments refer to provision for risks and useful life of investment properties, property, plant and equipment and intangible assets. As the number of variables and assumptions affecting the possible future resolution of the uncertainties increases, those judgments become even more subjective and complex.

In the preparation of the financial statements, the Company has relied on variables and assumptions derived from historical experience and various other factors that it deems reasonable and relevant. Even if these estimates and assumptions are revised by the Company in the normal course of business, the portrayal of its financial condition and results often requires the use of judgments as regards the effects of matters inherently uncertain on the carrying amount of its assets and liabilities. Actual results may differ from estimates based on different variables, assumptions or conditions.

In order to understand how the Company makes its judgments about future events, including the variables and underlying assumptions used in the estimates, comments have been included that relate to each critical accounting policy, described above, on the determination of the useful lives of investment properties, property, plant and equipment and intangible assets, provisions for contingent liabilities, measurement of the fair values of financial assets and financial liabilities, and deferred income tax and social contribution, among others.

2.28. Segment information

Operating segment information is presented in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision makers, who are responsible for allocating resources and assessing performance of the operating segments, are the Executive Committee and the Board of Directors, which are also responsible for making the Company’s strategic decisions.

As at December 31, 2016 and 2015, the Company and its subsidiaries operate in two main segments (management of office buildings and convenience retail centers). The convenience retail center segment is still in the start-up stage and its results of operations are not considered material for disclosure purposes. Accordingly, investment properties for this segment are disclosed in Note 9.

2.29. Statement of value added (DVA)

The purpose of this statement is to disclose the wealth created by the Company and its distribution during a certain reporting period, and is presented by the Company, as required by the Brazilian Corporate Law, as an integral part of its individual financial statements, and as supplemental information to the consolidated financial statements, since this statement is neither required nor mandatory under IFRSs.

The DVA has been prepared using information obtained in the same accounting records used to prepare the financial statements.

20 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

2.30. New and revised standards and interpretations applicable to year ended December 31, 2016

a) The following new and revised International Financial Reporting Standards (IFRSs), effective for annual periods beginning on or after January 1, 2016, have been adopted in the financial statements. The adoption of these new and revised IFRSs applicable to the Company did not have any significant impacts on the amounts reported and/or disclosed for the current and prior years:

Pronouncement Description

Amendments to IFRS 10, IFRS 12 Investment Entities: Applying the Consolidation and IAS 28 Exception Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations Amendments to IAS 1 Disclosure Initiative Amendments to IAS 16 and IAS Clarification of Acceptable Methods of Depreciation 38 and Amortization Amendments to IAS 16 and IAS Agriculture: Bearer Plants 41 Annual Improvements 2012-2014 IFRSs Cycle

b) New and revised standards and interpretations not yet adopted

Pronouncement Description

IFRS 9 Financial Instruments (b) IFRS 15 Revenue from Contracts with Customers (b) IFRS 16 Leases (c) IFRS 19 Provisions (b) Amendments to IFRS Classification and Measurement of Share-based Payment 2 Transactions Amendments to IFRS Sale or Contribution of Assets Between Investor and its Associate 10 and IAS 28 or Joint Venture (d) Amendments to IAS Disclosure Initiative (d) 7 Amendments to IAS Recognition of Deferred Tax Assets for Unrealized Losses (a) 12 IFRIC 22 Foreign Currency Transactions and Advance Consideration (b) Annual IFRSs 2014-2016 Cycle (a) (b) Improvements Amendments to IAS Transfer of Investment Property (b) 40

(a) Effective for annual periods beginning on or after January 1, 2017, with early adoption permitted.

(b) Effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.

(d) Effective for annual periods beginning on or after a date to be determined.

The Company’s management is currently assessing the potential impact of these standards on the financial statements.

2.31. Basis of consolidation

Consolidated financial statements

The consolidated financial statements comprise the financial statements of the

21 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Company and the entities controlled directly by the Company or indirectly through its subsidiaries.

22 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

The accounting policies below are applied in the preparation of the consolidated financial statements.

a) Subsidiaries

Subsidiaries are all entities regarding which the Company has the power to determine the financial and operating policies. Subsidiaries are consolidated from the date on which control is transferred to the Company and they are unconsolidated from the date that control ceases. All intragroup transactions, balances and unrealized gains are eliminated on consolidation. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the transferred asset. The subsidiaries’ policies accounting are changed and their individual financial statements are adjusted, when necessary, to ensure the consistency of the financial data to be consolidated with the Group’s accounting policies.

b) Transactions and noncontrolling interests

For acquisitions of noncontrolling interests, the difference between any consideration paid and the acquired portion of the carrying amount of the subsidiary's net assets is recorded in equity. Gains or losses on disposals to noncontrolling interests are also recorded in equity. When the Company ceases to have control, any retained interest in the entity is remeasured at fair value, and the change in the carrying amount is recognized in profit or loss.

2.32. The financial statements have been prepared on the assumption that the company will continue as a going concern, since in recent years the Company has evidenced the balance of its net working capital and positive gross margin. In addition, the Company expects to generate sufficient cash to settle its liabilities in the coming years.

3. CASH AND CASH EQUIVALENTS

For the purposes of the statement of cash flows, line item ‘Cash and cash equivalents’ includes cash, banks and short-term investments, as follows:

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Cash 6 5 20 15 Banks 270 1,803 4,347 3,027 Short-term investments (*): Repurchase agreements 50,609 138,697 52,118 143,257 Savings and other accounts - - 604 808 50,885 140,505 57,089 147,107

(*) Short-term investments immediately convertible into cash and insignificant risk of change in value. All short-term investments have been structured to have the features and return of fixed-income securities, yielding approximately 102% of the Interbank Certificate of Deposit rate (CDI). The repurchase agreements are mainly comprised of investments in Banco do Brasil and Itaú Unibanco S.A., backed by private securities and with repurchase commitment not subject to significant changes in value.

23 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

4. SHORT-TERM INVESTMENTS

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Financial bills and fixed-income investment funds 181,507 128,644 203,105 134,113

Refer to financial bills issued by prime banks, basically Itaú Unibanco S.A. and Banco Bradesco, that are not highly liquid and whose redemption before maturity date depends on the secondary market. Fixed-income investment funds are open-end funds managed by prime financial institutions.

5. TRADE RECEIVABLES

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Trade receivables 32,443 16,317 114,700 87,821 Allowance for doubtful debts (922) (922) (1,101) (1,098) Receivables from the sale of properties - - 1,430 - Receivables from the sale of equity interests and disposal of real estate projects 922 922 922 922 Common area maintenance and other fees 2,155 1,568 10,719 8,196 Total 34,598 17,885 126,670 95,841

Current 5,461 4,450 18,501 26,921 Noncurrent (i) 29,137 13,435 108,169 68,920

(i) Amounts arising from straight-lining that will be realized after 12 months.

Trade receivables

Outstanding balances of trade receivables are subject to interest of 1% p.m. The Company's management records an allowance for doubtful debts for amounts past due for more than 180 days with no indication that they will be collected or renegotiated.

The aging list of trade receivables is as follows:

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Past due: 31 to 60 days - - 349 397 61 to 90 days - - 306 215 91 to 120 days - 4 243 322 121 to 180 days - - 184 109 Over 180 days 922 940 1,779 1,243 922 944 2,861 2,286 Current 5,461 4,428 16,741 25,733 Unbilled 29,137 13,435 108,169 68,920 Total trade receivables 35,520 18,807 127,771 96,939

24 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Variations in allowance for doubtful debts

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Opening balance (922) - (1,098) (120) Recognition of allowance - (922) (3) (978) Closing balance (922) (922) (1,101) (1,098)

6. RECOVERABLE TAXES

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Recoverable income tax 9,563 8,298 12,471 9,505 Income tax on short-term investments 11,155 8,202 12,077 9,916 Recoverable social contribution (CSLL) 160 2,190 287 2,407 Recoverable taxes on revenue (PIS and COFINS) 2,149 2,029 2,892 2,790 Other 98 98 117 119 Total 23,125 20,817 27,844 24,737

São Carlos Empreendimentos e Participações S.A. and Subsidiaries

7. INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES

Change Share of profit Dividends - Balance as Interest - Profit (loss) Balance as at Capital Capital (loss) of interest on at Subsidiaries Assets Liabilities Capital Equity % for the year 12.31.2014 increase decrease subsidiaries capital 12.31.2015

253 Participações Ltda. 89,977 15,597 32,000 74,380 99.99 58,667 73,713 - (38,000) 58,667 (20,000) 74,380 SC Corretora de Imóveis Ltda. - 2 64 (2) 99.99 (3) 1 - - (3) - (2) Top Center Empreendimentos e Participações Ltda. 506,730 362,607 111,529 144,123 99.99 19,455 132,718 - - 19,455 (8,050) 144,123 Globaltech Empreendimentos e Participações Ltda. 23,615 19,062 5,872 4,553 60.00 636 2,350 - - 382 - 2,732 H.T.Y.S.P.E. Empreendimentos e Participações Ltda. 77,474 9,076 55,084 68,398 99.99 17,478 59,920 - - 17,478 (9,000) 68,398 SC Rio Sul Empreendimentos e Participações Ltda. 123,298 12,615 109,983 110,683 99.99 41,948 117,736 - - 41,948 (49,000) 110,684 SC Rio CEGenerali Empreendimentos e Participações Ltda. 90,476 4,298 84,500 86,178 99.99 4,788 32,705 53,153 - 4,788 (4,468) 86,178 SC Rio CE Candelária Empreendimentos e Participações Ltda. 69,364 36,530 34,134 32,833 99.99 222 49,412 - (16,800) 222 - 32,834 SC Rio Cidade Nova Empreendimentos e Participações Ltda. 238,076 123,964 115,200 114,112 99.99 1,093 110,101 8,918 (6,000) 1,093 - 114,112 SC Rio Pasteur Empreendimentos e Participações Ltda. 47,757 32,245 11,220 15,511 99.99 3,676 15,321 - - 3,676 (3,486) 15,511 SC SP CE Aço Empreendimentos e Participações Ltda. 193,334 126,280 61,239 67,054 99.99 5,003 65,676 270 - 5,003 (3,896) 67,053 Best Center Empreendimentos e Participações Ltda. 391,894 184,862 248,766 207,031 99.99 (20,361) 178,220 49,172 - (20,361) - 207,031 U.K.Q.S.P.E. Empreendimentos e Participações Ltda. - 4 1 (4) 99.60 (1) (3) - - (1) - (4) C.L.D.S.P.E. Empreendimentos e Participações Ltda. 79,840 53,300 26,253 26,539 99.99 157 130 26,253 - 157 - 26,540 D.J.L.S.P.E. Empreendimentos e Participações Ltda. - - 1 - 99.60 ------Total 838,000 137,766 (60,800) 132,504 (97,900) 949,570

Joint ventures

H.T.K.S.P.E. Empreendimentos e Participações Ltda. 50,703 40,495 8,315 10,208 50.00 967 4,764 - - 484 (144) 5,104 Longford Empreendimentos e Participações Ltda. 59,315 41,951 22,972 17,364 50.00 (2,817) 5,181 4,910 - (1,409) - 8,682 9,945 4,910 - (925) (144) 13,786 Total 847,945 142,676 (60,800) 131,579 (98,044) 963,356

Profit Balance as Change Share of profit Dividends Interest (loss) for at Capital Capital (loss) of - interest Balance as at Subsidiaries Assets Liabilities Capital Equity - % the year 12.31.2015 increase decrease Other subsidiaries on capital 12.31.2016

253 Participações Ltda. 96,791 13,368 32,000 83,423 99.99 22,043 74,380 - - 22,043 (13,000) 83,423 SC Corretora de Imóveis Ltda. - 2 66 (1) 99.99 (1) (2) 2 - - (1) - (1) Top Center Empreendimentos e Participações Ltda. 509,151 342,431 97,841 166,720 99.99 70,121 144,123 36,312 (50,000) - 80,521 (44,236) 166,720 Globaltech Empreendimentos e Participações Ltda. 24,210 16,547 7,663 7,663 60.00 1,578 2,732 1,075 - - 947 (155) 4,599 H.T.Y.S.P.E. Empreendimentos e Participações Ltda. 76,048 8,962 57,620 67,086 99.99 17,652 68,398 2,536 - - 17,652 (21,500) 67,086 SC Rio Sul Empreendimentos e Participações Ltda. 118,990 3,304 109,983 115,686 99.99 34,002 110,684 - - - 34,002 (29,000) 115,686 SC Rio CE Generali Empreendimentos e Participações Ltda. 89,151 618 87,300 88,533 99.99 3,243 86,178 2,800 - - 3,243 (3,688) 88,533 SC Rio CE Candelária Empreendimentos e Participações Ltda. 72,767 37,842 35,869 34,925 99.99 356 32,834 1,735 - - 356 - 34,925 SC Rio Cidade Nova Empreendimentos e Participações Ltda. 238,027 116,246 123,200 121,781 99.99 (331) 114,112 8,000 - - (331) - 121,781 SC Rio Pasteur Empreendimentos e Participações Ltda. 46,843 32,236 11,604 14,607 99.99 4,388 15,511 384 - - 4,388 (5,676) 14,607 SC SP CE Aço Empreendimentos e Participações Ltda. 193,504 125,242 61,239 68,261 99.99 3,608 67,053 - - - 3,608 (2,400) 68,261 Best Center Empreendimentos e Participações SA.. 414,922 204,844 273,766 210,079 99.99 (22,216) 207,031 25,000 - 264 (22,216) - 210,079 U.K.Q.S.P.E. Empreendimentos e Participações Ltda. - 2 4 (2) 99.60 (1) (4) 3 - - (1) - (2) C.L.D.S.P.E. Empreendimentos e Participações Ltda. 81,848 53,800 27,053 28,049 99.99 709 26,540 800 - - 709 - 28,049 D.J.L.S.P.E. Empreendimentos e Participações Ltda. - - 1 - 99.60 - - 1 (1) - - - - Total 949,570 78,648 (50,001) 264 144,920 (119,655) 1,003,746 Joint ventures H.T.K.S.P.E. Empreendimentos e Participações S.A. 42,388 31,552 8,833 10,390 50.00 446 5,104 259 - - 223 (168) 5,418 Longford Participações e Empreendimentos S.A.. 57,544 44,842 22,972 17,364 50.00 (4,662) 8,682 - - - (2,331) - 6,351 13,786 259 - - (2,108) (168) 11,769 Total 963,356 78,907 (50,001) 264 142,812 (119,823) 1,015,515

27 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Consolidated

HTKSPE Empreendimentos e Participações S.A. and Longford Participações e Empreendimentos S.A. were not consolidated because the Company holds shared control over such investments and reported an investment balance of R$11,769 as at December 31, 2016 (R$13,786 as at December 31, 2015).

8. RELATED-PARTY BALANCES AND TRANSACTIONS

Transactions refer to borrowings and financing, retail contracts and other expenses between related parties, as follows:

Parent Balances Noncurrent assets Subsidiary/associate 12.31.2016 12.31.2015

Globaltech Empreendimentos e Participações Ltda. 155 1,075 H.T.Y.S.P.E. Empreendimentos e Participações Ltda. 6,274 6,315 SC Rio Cidade Nova Empreendimentos e Participações Ltda. 8,070 10,284 253 Participações Ltda. 11,359 13,986 Longford Participações e Empreendimentos S.A. 12,067 - SC Rio Pasteur Empreendimentos e Participações Ltda. 2,461 805 Top Center Empreendimentos e Participações Ltda. 3,370 30,673 SC Rio CE Generali Empreendimentos e Participações Ltda. 56 3,215 SC Rio Sul Empreendimentos e Participações Ltda. 578 7,818 H.T.K.S.P.E. Empreendimentos e Participações S.A. 2,488 2,354 SC SP CE Aço Empreendimentos e Participações Ltda. 2,842 961 Best Center Empreendimentos e Participações S.A. 40,851 12,847 SC Corretora de Imóveis Ltda. - (1) U.K.Q.S.P.E. Empreendimentos e Participações Ltda. 2 3 C.L.D.S.P.E. Empreendimentos e Participações Ltda. 700 727 SC Rio CE Candelária Empreendimentos e Participações Ltda. 4,509 1,737 Total 95,782 92,799

In the noncurrent assets, R$95,782 (R$92,799 as at December 31, 2015), in Company, and R$14,455 (R$2,354 as at December 31, 2015), in current consolidated, refer to dividends, advance for future capital increase, and interest on capital receivable from subsidiaries and joint ventures.

Management compensation

On April 30, 2016, the Annual Shareholders’ Meeting approved the Company’s overall management compensation for 2016 in the amount of up to R$19,303, of which R$4,909 refers to the fees payable to the Board of Directors and R$14,394 to the fees payable to the executive committee, including benefits and charges, and the fair value of options granted for the year. In the years ended December 31, 2016 and 2015, the following amounts were paid and accrued:

Consolidated 12.31.2016 12.31.2015 Fixed Variable Total Fixed Variable Total

Board of Directors 1,819 1,875 3,694 1,685 456 2,141 Officers 4,529 5,313 9,842 4,536 1,985 6,521 Total 6,348 7,188 13,536 6,221 2,441 8,662

28 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Key management personnel compensation is set by the Company’s Board of Directors, which considers the individual performance and the market trends.

9. INVESTMENT PROPERTIES

Parent 12.31.2016 12.31.2015 Annual depreciation Accumulated rate - % Cost depreciation Net Net

Land 158,912 - 158,912 158,912 Buildings From 1.67 to 3.41 504,086 (25,544) 478,542 488,718 Facilities 10.00 174,683 (7,712) 166,971 152,399 Advance for construction 7,281 - 7,281 - Construction in progress 251 - 251 192 Total 845,213 (33,256) 811,957 800,221

Consolidated 12.31.2016 12.31.2015 Annual depreciation Accumulated rate - % Cost depreciation Net Net

Land 777,148 - 777,148 815,198 Buildings From 1.67 to 3.41 1,410,970 (175,088) 1,235,882 1,251,290 Facilities and improvements 10.00 552,728 (35,830) 516,898 483,417 Advance for construction 10,256 - 10,256 - Construction in progress 30,461 - 30,461 58,030 Total 2,781,563 (210,918) 2,570,645 2,607,935

Variations are as follows:

Parent 12.31.2014 Additions Write-offs (*) Transfers 12.31.2015

Land 19,586 - (8,559) 147,885 158,912 Buildings 39,763 547,803 (17,057) (66,507) 504,002 Facilities 24,825 1,022 (1,216) 132,292 156,923 Construction in progress 180,807 33,078 - (213,693) 192 264,981 581,903 (26,832) (23) 820,029

Depreciation (16,429) (10,444) 7,065 - (19,808) Total 248,552 571,459 (19,767) (23) 800,221

(*) On May 18, 2015, under the Binding and Irrevocable Real Estate Purchase and Sale Agreement (“CCV”), São Carlos Empreendimentos sold the Distribution Center Barueri (DC Barueri), at the amount of R$110.8 million.

29 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Parent 12.31.2015 Additions Transfer 12.31.2016

Land 158,912 - - 158,912 Buildings 504,002 84 - 504,086 Facilities 156,923 17,752 7 174,682 Advance for construction - 7,281 - 7,281 Construction in progress 192 67 (7) 252 820,029 25,184 - 845,213 Accumulated depreciation (19,808) (13,448) - (33,256) Total 800,221 11,736 - 811,957

Consolidated Additions Write-offs Transfers 12.31.2014 (i) (iii) (ii) 12.31.2015

Land 647,011 7,769 (10,512) 170,930 815,198 Buildings 874,583 588,244 (17,293) (34,526) 1,411,008 Facilities 249,905 9,045 (1,216) 251,413 509,147 Advance for construction 37,571 - - (37,571) - Construction in progress 311,004 103,240 - (356,214) 58,030 2,120,074 708,298 (29,021) (5,968) 2,793,383

Depreciation (151,867) (40,646) 7,065 - (185,448) Balance 1,968,207 667,652 (21,956) (5,968) 2,607,935

(i) Main additions included Souza Cruz Building, EZ Towers - Tower A and works in convenience retail centers.

(ii) Main transfers corresponded to completed works in convenience retail centers, Jardim Europa Building retrofit and EZ Towers - Tower A, especially for property, plant and equipment line items ‘Furniture and fixtures’ and ‘Machinery and equipment’.

(iii) The main write-off refers to the Distribution Center Barueri sale.

Consolidated Additions Write-offs Transfers 12.31.2015 (i) (ii) (iii) 12.31.2016

Land 815,198 - (23,298) (14,752) 777,148 Buildings 1,411,008 434 (31,203) 30,731 1,410,970 Facilities 509,148 20,113 (8,684) 32,151 552,728 Advance for construction - 10,256 - - 10,256 Construction in progress 58,029 36,998 - (64,566) 30,461 2,793,383 67,801 (63,185) (16,436) 2,781,563 Accumulated depreciation (185,448) (42,151) 16,681 - (210,918) Balance 2,607,935 25,650 (46,504) (16,436) 2,570,645

(i) Construction in progress in SPOP X, Morumbi Park (e.g. Sul América), Candelaria, and some commercial centers and advance for improvements in EZ Towers project.

(ii) As at March 31, 2016, under the real estate purchase and sale agreement, the Company sold the land plot located at Avenida Washington Luiz, SP, at the amount of R$5,700, as follows: (i) R$500 received in cash; (ii) 20 interest-free installments of R$110; and (iii) installment of R$3,000 paid within 15 days from the delivery of the property documents. The gain on such transaction amounted to R$1,472.

30 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

On July 1, 2016, the Company, through its subsidiary Top Center, sold Top Center Offices Building (“Top Center”) for the amount of R$152.6 million, fully receiving the amount of the transaction upon sale.

(iii) Transfers of Candelária, Urca, Passeio, Centro Empresarial Botafogo and Strips (Atibaia, Américo Brasiliense, Itapeva, Tupã, Boituva, Itapetininga, Bauru) projects and Jaguariúna offices to the held-for-sale assets group.

The Company decided to maintain its investment properties recorded at cost less accumulated depreciation since it understands it is the best information for companies operating in the real estate investment market to rely on for rental purposes.

Pursuant to CPC 28, independent consultant CB Richard Ellis estimated the fair value of the Company’s properties at R$4,339,936 in September 2016, determined using the valuation approach set forth by NBR 14653-1-4 of the Brazilian Technical Standards Association (ABNT) and the technical standards of The Royal Institution of Chartered Surveyors (RICIS) of the United Kingdom and the Appraisal Institute of the United States, which are internationally used and acknowledged for real estate appraisal and other analyses. The lease revenues and selling value in the 10th year are then adjusted to present value at discount rates that are adequate to the market’s risk perception; accordingly, the present value of the cash flows reflects the selling value available for acquisition of the property from the investor’s standpoint.

10. BORROWINGS AND FINANCING

Parent Annual charges Final Balances Description of the property (collateral) (a) Currency - % maturity 12.31.2016 12.31.2015

Current 62,129 42,696 Noncurrent 786,408 831,508

31 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Consolidated Annual charges Final Balances Description of the property (collateral) (a) Currency - % maturity 12.31.2016 12.31.2015

Acquisition - Centro Empresarial Botafogo R$ CDI + 1.80 24,11 ,22 2 7,695 2 7,888 Acquisition - Edifício SPOP II e X R$ IGP-M + 10.40 05,12,21 24,310 25,944 Acquisition - Borges Lagoa R$ TR + 10.00 11,04,22 12,112 13,487 Acquisition - Edifício BST R$ TR + 9.70 16,08,22 21,219 23,446 Acquisition - Edifício Pasteur 110 R$ TR + 9.70 05,09,22 17,580 19,377 Acquisition - Edifício Eldorado R$ TR + 9.90 14,11,22 21,529 23,615 Acquisition - Edifício Eldorado R$ TR + 9.95 23,11,22 59,421 65,253 Acquisition - Edifício Centro Empresarial Guaíba R$ TR + 10.00 27,02,23 25,096 27,341 Acquisition - Edifício Visconde de Ouro Preto R$ TR + 9.90 27,02,23 8,484 9,267 Acquisition - Edifício Arcos da Lapa R$ TR + 9.70 11,12,19 8,132 10,375 Acquisition - Edifício CA Cidade Nova R$ TR + 9.70 06,11,26 43,940 45,547 Construction - Edifício Torre A EZ Towers R$ TR+9.80 05,09,24 50,336 56,123 Acquisition - Edifício Torre A EZ Towers R$ TR+8.90 15,07,30 528,681 526,541 Acquisition - Edifício C.A. Rio Negro R$ TR + 10.00 22,11,20 16,577 19,376 Acquisition - Edifício Itaim Center R$ TR + 10.00 21,12,20 6,163 6,927 Acquisition - Edifício Mykonos R$ TR + 9.70 03,08,22 6,299 6,960 Acquisition - Edifício Corporate Plaza R$ TR + 9.70 28,08,22 12,880 14,240 Acquisition - Edifício Antonio Carlos R$ TR + 10.00 27,02,23 4,938 5,346 Acquisition - Edifício BFC R$ TR + 10.00 05,03,22 52,623 57,335 Acquisition - Edifício Centro Adm. Santo Amaro - CASA R$ TR + 10.25 19,10,22 91,219 94,371 Acquisition - Edifício Sul América R$ TR + 9.70 04,06,25 81,842 85,649 Retrofit - Jardim Europa R$ TR+9.25 28,06,23 26,929 30,538 Series 286 Debentures R$ IPCA+6.10 28,08,20 4,859 5,786 Series 287 Debentures R$ IPCA+6.50 28,08,24 38,796 41,020 Series 288 Debentures R$ IPCA+6.30 28,08,24 10,161 10,743 Convenience retail center development R$ TR+9.80 05,09,24 34,036 37,940 Convenience retail center development R$ TR+9.80 06,12,27 70,637 71,121 Acquisition - Edifício Ciatec II R$ TR + 10.20 18,09,23 15,611 16,806 Acquisition - Edifício CEA R$ TR+10.45 25,06,25 120,916 123,590 Acquisition - Edifício CE Urca R$ TR+9.70 22,04,25 29,276 30,847 Retrofit - Cidade Nova R$ TR+9.80 29,02,24 101,548 106,032 Retrofit - Candelaria 62 R$ TR+9.35 25,03,24 32,788 34,674 Acquisition - Edifício Souza Cruz R$ TR+9.90 05,01,27 52,234 52,082 Total 1,658,867 1,725,587

Current 142 ,855 113,906 Noncurrent 1,516,012 1,611,681

TR - Reference Rate.

IGP-M - General Market Price Index.

IPCA - Broad Consumer Price Index

(a) Each loan is collateralized by the financed property or any other property pledged as collateral or properties sharing the collateral with other loans, except for Centro Empresarial Botafogo, the collateral of which is its mortgage.

As at December 31, 2016, the breakdown of the noncurrent portion per year is as follows:

32 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Parent Consolidated Maturity year 12.31.2016 12.31.2015 12.31.2016 12.31.2015

2017 - 60,282 - 138,473 2018 67,651 65,684 156,262 150,737 2019 73,701 71,602 170,160 164,202 2020 77,072 74,828 181,256 174,860 2021 84,024 81,622 189,844 183,207 2022 78,613 76,663 178,778 196,917 2023 50,239 49,380 159,646 131,723 2024 51,225 50,245 115,116 111,869 2025 48,578 47,320 82,424 79,791 2026 52,396 51,037 69,000 66,864 2027 50,539 49,191 61,156 59,383 2028 55,037 53,569 55,037 53,569 2029 59,936 58,337 59,936 58,337 2030 37,397 41,748 37,397 41,749 786,408 831,508 1,516,012 1,611,681

The variations in consolidated borrowings are as follows:

Parent

Interest Interest and Balance as and inflation Balance as at Fund inflation Payment of adjustment at Description 12.31.2014 raising adjustment principal payment 12.31.2015

Borrowings 377,063 517,988 86,251 (25,173) (81,925) 874,204

Interest Interest and Balance as and inflation Balance as at Fund inflation Payment of adjustment at Description 12.31.2015 raising adjustment principal payment 12.31.2016

Borrowings 874,204 - 96,599 (59,281) (62,985) 848,537

Consolidated

Interest Interest and Balance as and inflation Balance as at Fund inflation Payment of adjustment at Description 12.31.2014 raising adjustment principal payment 12.31.2015

Borrowings 1,176,522 591,895 188,672 (49,247) (182,255) 1,725,587

Interest Interest and Balance as and inflation Balance as at Fund inflation Payment of adjustment at Description 12.31.2015 raising adjustment principal payment 12.31.2016

Borrowings 1,725,587 1,861 198,811 (139,725) (127,667) 1,658,867

33 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

11. DEFERRED TAXES AND CONTRIBUTIONS

Deferred taxes and contributions arise from temporary differences mainly due to temporarily nondeductible provisions and/or straight-line revenue recognized in profit or loss, and are recorded in noncurrent liabilities.

Deferred taxes and contributions reflect the future tax effects attributable to temporary differences between the tax base of assets and liabilities and the respective book value. Reported amounts are monthly reviewed.

Deferred taxes and contributions are broken down as follows:

Company Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Temporary differences: PIS and COFINS - straight-line revenue 86 113 2,940 2,815 IRPJ and CSLL - straight-line revenue 617 617 5,421 5,180 Total 703 730 8,361 7,995

12. PROVISION FOR RISKS AND ESCROW DEPOSITS

The Company and its subsidiaries are parties to tax lawsuits arising from the normal course of business.

The provisions were recognized taking into account the in-house and outside legal counsel’s opinion, the nature of the lawsuits, the similarity with prior proceedings, the complexity of the claims and the position of courts, whenever the loss is assessed as probable and the amount can be measured reliably.

The Company’s and its subsidiaries’ management understands that the provision is sufficient to cover losses arising from the related lawsuits.

Parent 12.31.2016 12.31.2015

Labor provisions 5,075 5,075 Taxes on revenue (PIS and COFINS) (*) 8,955 8,366 Other 55 214 Total 14,085 13,655 Escrow deposits (40) (24) Total 14,045 13,631

Consolidated 12.31.2016 12.31.2015

Labor provisions 5,075 5,075 Taxes on revenue (PIS and COFINS) (*) 8,955 8,366 Other 55 214 Total 14,085 13,655 Escrow deposits (124) (90) Total 13,961 13,565

(*) The Company maintains a provision related to the increase in the PIS and COFINS tax rates, with the purpose of maintaining the payment of such taxes in accordance with

34 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Regulatory Instruction 468/04, which establishes that contracts involving assets entered into through October 31, 2003, for a period in excess of one year, are taxed at the rate prevailing before such increase.

Variations are as follows:

Parent and Consolidated 12.31.2016 12.31.2015

Opening balance 13,655 13,271 Disposals (160) (174) Inflation adjustment 590 558 Closing balance 14,085 13,655

As at December 31, 2016, the Company and its subsidiaries are parties to tax lawsuits, in the amount of R$6,837 (R$10,560 as at December 31, 2015), civil lawsuits in the amount of R$1,688 (R$625 as at December 31, 2015) and labor lawsuits in the amount of R$100 (R$475 as at December 31, 2015), whose likelihood of loss is assessed as possible by their internal and external legal counsel and for which no provision was recorded.

Liabilities relating to legal obligations being discussed in court are recognized until a final and unappealable favorable decision is issued.

13. PROFIT SHARING

The Company has an employees' profit sharing program. This program’s main calculation measures are the goals set based on the employees’ function, area and title, as established by Management, which are recorded in line item ‘General and administrative expenses’.

In the year ended December 31, 2016, the amount of R$2,124 (R$1,669 as at December 31, 2015) was recorded in line item ‘Payroll and related taxes’.

14. EQUITY

14.1. Fully paid common shares

As at December 31, 2016 and 2015, capital amounts to R$673,912, represented by 57,737,319 registered common shares, without par value.

14.2. Treasury shares

The Company intends to use the proceeds from the sale of treasury shares to discharge obligations related to the stock option plan.

As at December 31, 2016, the Company held in treasury 1,520,586 registered common shares (1,616,396 common shares as at December 31, 2015), acquired at the average cost of R$33.92 per share (R$34.03 per share as at December 31, 2015).

14.3. Allocation of profit for the year

In accordance with the Company’s bylaws, shareholders are entitled to a minimum dividend of 25% of the profit for the year, adjusted pursuant to the Brazilian Corporate Law, in accordance with accounting practices adopted in Brazil.

35 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

The allocation of the profit for the year ended December 31, 2016 is as follows:

Profit for the year 76,229 Legal reserve – 5% 3,811 Dividend calculation basis 72,418 Mandatory minimum dividends - 25% 18,104 Earnings retention 54,314

On December 31, 2016, an earnings reserve was recognized as a result of the retention of a portion of profit for the year, pursuant to Article 196, of Law 6404/76 (Brazilian Corporate Law), and Article 5, Sole Paragraph, of CVM Instruction 469, of May 2, 2008. Such 2016 retention is based on the capital budget, prepared by Management and approved by the Board of Directors on February 22, 2016. The remaining balance of retained earnings will be allocated to improve the Company’s and its subsidiaries’ operations, based on the capital budget to be approved at the Annual Shareholders’ Meeting to be held on April 28, 2017.

As at December 31, 2016, the amount in the earnings reserve exceeded the Company’s capital. At the Annual Shareholders’ Meeting to be held on April 28, 2017, it will be proposed to capitalize the amount above the ceiling. If not approved, Management will allocate the remaining balance on the same date.

14.4. Earnings reserve - legal

Recognized in an amount corresponding to 5% of profit for the year, pursuant to Article 193 of Law 6404/76, up to the limit of 20% of capital. The legal reserve balance is R$68,552 as at December 31, 2016 (R$64,741 as at December 31, 2015).

15. LEASE REVENUE

Operating leases relate to the investment properties owned by the Company and its subsidiaries with lease terms of between two to ten years, with an option to extend for equal period. All operating lease agreements contain market review clauses in the event that the Company exercises its option to renew. The lessee does not have the option to purchase the leased property after the lease term.

As at December 31, 2016, the Company and its subsidiaries do not have any non- cancelable operating lease agreements since the lease agreements are based on the Tenant Act and can be canceled by the lessee or the Company and its subsidiaries at any time, provided that the contractual obligations are met.

16. NET REVENUE

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Gross lease revenue 53,636 41,048 307,877 318,918 Revenue from sale of properties - 110,783 160,635 180,608 Taxes (4,044) (3,264) (18,274) (22,317) Total 49,592 148,567 450,238 477,209

17. COSTS AND EXPENSES BY NATURE

36 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Personnel expenses (26,342) (21,840) (31,787) (26,074) Outside services (1,444) (1,482) (2,908) (3,238) Depreciation and amortization expenses (13,860) (10,932) (43,701) (40,486) Cost of properties sold - (19,774) (47,913) (47,166) Selling expenses - Municipal Real Estate Tax (IPTU), common area maintenance and other fees related to vacant areas (4,193) (6,505) (25,008) (23,429) Occupancy expenses (1,051) (1,016) (1,133) (1,105) Tax expenses (56) (61) (91) (99) Other (797) (353) 3,018 5,448 Total (47,743) (61,963) (149,523) (136,149)

12.31.2016 12.31.2015 12.31.2016 12.31.2015

Classified as: Rental cost (13,860) (10,932) (43,701) (40,486) Cost of properties sold - (19,774) (47,913) (47,166) General and administrative expenses (29,807) (25,850) (37,465) (32,542) Selling expenses (4,193) (6,505) (25,008) (23,429) Other operating income, net 117 1,098 4,564 7,474 Total (47,743) (61,963) (149,523) (136,149)

18. FINANCE INCOME

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Interest income on Short-term investments 30,054 34,404 36,637 40,229 Trade receivables 2 56 296 432 Adjustment of recoverable taxes 1,348 763 1,569 885 Other (6) 7 (3) 9 Total 31,398 35,230 38,499 41,555

19. FINANCE COSTS

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Interest and inflation adjustments on borrowings and financing (96,599) (84,064) (198,811) (182,338) Adjustments to provision for tax risks (590) (557) (590) (557) Other finance costs (2,776) (2,072) (4,381) (5,246) Total (99,965) (86,693) (203,782) (188,141)

37 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

20. INCOME TAX AND SOCIAL CONTRIBUTION

20.1. Breakdown of current and deferred income tax and social contribution expenses

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Current expenses: Social contribution (21) (930) (15,161) (8,307) Income tax 156 (2,674) (41,055) (22,022) 135 (3,604) (56,216) (30,329)

Deferred expenses: Social contribution - - (85) 25 Income tax - - (157) 131 - - (242) 156

20.2. Reconciliation of income tax and social contribution expenses - current and deferred

Income tax and social contribution expenses are reconciled at statutory rates as follows:

Parent Consolidated 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Income before income tax and social contribution 76,094 166,720 133,324 193,549 Estimated income tax and social contribution expenses at statutory rates - 34% (25,872) (56,685) (45,330) (65,807) Share of profit (loss) of subsidiaries 48,556 44,737 (717) (315) Effect on interest on capital - 10,540 3,536 13,277 Effect of companies under the deemed income regime - - 18,011 32,016 Offset/reversed losses (22,549) (2,196) (31,958) (9,345) Total 135 (3,604) (56,458) (30,173)

20.3. Deferred tax credits - not recorded

The deferred tax credits not recorded by the Parent as at December 31, 2016 amount to R$25,388 (R$8,248 as at December 31, 2015), of which R$18,668 (R$6,429 as at December 31, 2015) for income tax and R$6,720 (R$2,315 as at December 31, 2015) for social contribution, represented by tax losses and temporary differences. The amount is recorded upon compliance with all assumptions by the Company for recognition of such tax credits.

21. EARNINGS PER SHARE

21.1. Basic earnings per share

The earnings and weighted average number of common shares used in the calculation of basic earnings per share are as follows:

38 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

2016 2015

Profit attributable to the Company’s owners 76,229 163,116 Weighted average number of common shares used to calculate basic earnings per share (all measurements) 56,208 56,126 Basic earnings per share (cents per share - R$) 1.356 2.906

21.2. Diluted earnings per share

The earnings used in the calculation of all diluted earnings per share measures are the same as those for the equivalent basic earnings per share measures, as outlined above.

The weighted average number of common shares used to calculate diluted earnings per share is reconciled with the weighted average number of common shares used to calculate basic earnings per share, as follows:

2016 2015

Profit attributable to the Company’s owners 76,229 163,116 Weighted average number of common shares used to calculate basic earnings per share 56,208 56,126 Effect of employees’ options 953 1,582 Weighted average number of common shares used to calculate basic earnings per share (all measurements) 57,161 57,708 Diluted earnings per share (cents per share - R$) 1.334 2.827

22. FINANCIAL INSTRUMENTS

22.1. General considerations

The Company and its subsidiaries enter into transactions involving financial instruments, all recorded in balance sheet accounts, which are intended to meet their cash requirements and reduce exposure to market and interest rate risks.

Short-term investments reflect the actually agreed yield rates.

Borrowings and financing are recorded based on the contractual interest of each transaction, as shown in Note 10.

22.2. Capital risk management

The Company manages its capital to ensure that subsidiaries will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The Company’s capital structure consists of debt, including borrowings shown in Note 10, cash and cash equivalents, short-term investments and securities, and capital attributed to shareholders, which is composed of paid-in capital and reserves.

39 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

22.3. Categories of financial instruments

Parent 12.31.2016 12.31.2015

Loans and receivables: Trade receivables 34,598 17,885 Cash and cash equivalents 50,885 140,505 Short-term investments 181,507 128,644 Total 266,990 287,034

Financial liabilities measured at amortized cost: Borrowings and financing 848,537 874,204 Total 848,537 874,204

Consolidated Fair value 12.31.2016 12.31.2015 12.31.2016 12.31.2015

Loans and receivables: Trade receivables 126,670 95,841 126,670 95,841 Cash and cash equivalents 57,089 147,107 57,089 147,107 Short-term investments 203,105 134,113 203,105 134,113 Total 386,864 377,061 386,864 377,061

Financial liabilities measured at amortized cost: Borrowings and financing 1,658,867 1,725,587 1,365,050 1,094,202 Payables for acquisition of properties 3,202 10,002 3,202 10,002 Total 1,662,069 1,735,589 1,368,252 1,104,204

22.4. Financial risk management goals

Management monitors and manages financial risks inherent in operations and coordinates the access to local financial markets. These risks comprise market risk (changes in interest rates), credit risk and liquidity risk. The main purpose of the financial risk management strategy is to maintain the Company’s exposure to these risks at minimum levels by using non-derivative financial instruments and assessing and controlling credit and liquidity risks.

22.5. Foreign currency risk management

The Company and its subsidiaries are not exposed to foreign currency risk. The finance strategy is based on domestic borrowings, denominated in Brazilian reais (R$).

22.6. Exposure to interest rate risks

The Company is exposed to floating interest rates, related primarily to the fluctuations in TR, IGP-M, IPCA and CDI. As at December 31, 2016 and 2015, there are no contracts in effect related to transactions with derivatives and hedge transactions in the Company.

Interest rates on short-term investments are mostly related to the variation of the CDI and SELIC rates, under conditions, rates and terms comparable to similar transactions carried out in the market.

40 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

22.7. Market risk management

The results of the operations depend on the Company’s ability to lease the spaces available in the real estate developments. Adverse conditions in the regions where the Company operates may reduce the lease levels, as well as restrict the possibility of increasing the rental price. The most important factors that may adversely affect the operating performance of the Company’s developments are:

 Periods of recession and an increase in vacancy levels of the developments or an increase in interest rates that may result in the reduction of the rental prices or an increase in tenants’ default rate.

 Tenants’ negative perception of the safety, convenience or attractiveness of the areas in which the developments are located.

 Inability to attract and/or maintain premium tenants.

 Default and/or noncompliance with contractual obligations by tenants.

 Increases in the operating costs, including the need to make additional capital contributions, among others.

 Increases in taxes related to the Company’s activities.

 Regulatory changes in the commercial real estate industry.

The construction of new real estate developments close to the Company’s developments may hamper the Company’s ability to renew the rentals or rent them to new tenants, which in turn could require nonbudgeted investments, impairing the Company’s business.

In order to mitigate these risk factors, the Company, with the assistance of outside consultants, continuously monitors the real estate market in the regions where the Company operates to follow up the evolution of rental prices and vacancy rates. This way, the Company may anticipate possible market difficulties.

Notwithstanding, the Company maintains, through its sales department, a close relationship with its lessees for an early identification of possible demands and needs.

The monitoring of market trends and behavior of its lessees provides the Company with inputs that allow mitigating the impacts of unforeseen events that might somehow have an adverse effect on its income.

22.8. Liquidity risk management

The Company manages liquidity risk by maintaining proper reserves, bank and other credit facilities to establish reserves that it considers appropriate, based on the continuous monitoring of estimated and actual cash flows, and the combination of the maturity profiles of financial assets and financial liabilities.

41 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

22.9. Credit risk

The Company’s credit risk can mainly be attributable to the balances of its cash and cash equivalents, short-term investments and trade receivables. In the balance sheet, trade receivables are stated net of the allowance for doubtful debts. The allowance for impairment losses and other receivables is recognized whenever a loss is identified and, based on past experience, such allowance demonstrates that the probable recovery of cash flows is impaired.

The Company’s sales policy is subordinated to the credit sales rules set by Management, which seeks to mitigate any loss from customers’ delinquency.

Before accepting any new customer, the Company analyzes certain documents, including certificates issued by government agencies. Also the credit status is examined by a service bureau named Centralização de Serviços dos Bancos S.A. - SERASA. As a contract guarantee, in most of contracts, the client is required to have a surety or contract a credit letter, credit insurance or bank credit insurance.

22.10. Concentration risk

The Company maintains bank accounts and short-term investments with financial institutions approved by Management, according to objective credit risk diversification criteria.

Additionally, there is no risk of a high customer concentration

22.11. Fair value of financial instruments

The Company’s financial instruments are managed through operating strategies aimed to obtain liquidity, profitability and security. The control policy consists of an ongoing monitoring of rates agreed versus those in force in the market and confirmation as to whether its short-term financial investments are being properly marked to market by the institutions dealing with its funds.

The Company does not make speculative investments in derivatives nor any other risk assets. The determination of estimated realization values of the Company’s financial assets and liabilities relies on information available in the market and relevant assessment methodologies. Nevertheless, a considerable judgment by Management is required when interpreting market data to derive the most adequate estimated realization value.

22.12. Criteria, assumptions and limitations used in determining the fair values

a) Cash and cash equivalents

The fair values of current account balances are consistent with their carrying amounts.

b) Short-term investments

The market values of short-term investment balances are consistent with the account balances.

42 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

c) Trade, other receivables and payables for the acquisition of properties

According to the Company’s management, the account balances of trade receivables, other receivables and payables for acquisition of properties approximate their fair values.

d) Borrowings and financing

The fair value of borrowings and financing referred to in Note 10 was calculated based on its present value calculated at the future cash flows and using interest rates applicable to instruments of similar nature, terms and risks, or based on market quotations of such securities at the balance sheet dates, measured as inputs (Level 2) different from the prices negotiated in the active markets.

22.13. Sensitivity analysis

As at December 31, 2016, the Company has no effective agreements related to derivative and hedge transactions; therefore, the sensitivity analysis was performed only for the TR, IGP-M, IPCA and CDI variation, which are the basis for inflation adjustments of borrowings contracted, using as assumptions for calculation the rates currently adopted in the market, as follows:

Probable Possible Remote scenario scenario Borrowings Risk Balance scenario (a) (b) (c)

Indexed to TR TR increase 1,553,046 27,955 34,944 41,932 Indexed to IGP-M IGP-M increase 24,310 1,215 1,519 1,823 Indexed to CDI CDI increase 27,695 3,808 4,760 5,712 Indexed to IPCA IPCA increase 53,816 2,798 3,498 4,198

Short-term

investment Indexed to CDI CDI decrease 203,105 7,192 8,990 10,788 1,455,762 28,584 35,731 42,877

(a) Usual market rates.

(b) 25% increase in the usual market rates.

23. STOCK OPTION PLAN (EQUITY PLAN)

On February 17, 2016, the Company’s Board of Directors approved the 2016 Stock Option Plan. This Plan is divided into three different grant models, with different structures, and the grants and terms are equal to those set forth in the 2015 Stock Option Plan.

The right to exercise the 2016 and 2015 Stock Option Plans will be vested as follows:

Option fair value on the Exercise Number of options (lot C) issuance date date

2015 Plan: 144,324 30.94 03.10.2020

2016 Plan: 99,138 18.82 03.01.2021

43 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

Adjusted Option fair exercise value on the Exercise Number of options (lot CAD) price issuance date date (*)

2015 Plan: 30,000 26.97 9.05 09.30.2017

2016 Plan: 30,000 15.84 5.23 09.30.2018

Option fair value on the Number of options (lot D) issuance date Exercise date

2015 Plan -150,000 13.89 100,000 options vesting on 03.10.2020 and 50,000 options vesting on 12.22.2020

2016 Plan – 50,000 (to be granted) 9.50 5 years after grant

Option fair value on the Number of options (lot E) issuance date Exercise date

2015 Plan - 600,000 13.16 50% vesting on 12.22.2020 and 13.16 50% vesting on 12.22.2025

(*) The number of options may be exercised between March 1 and 31 and September 1 and 30 of each year, over 30 months as from the grant date of the stock option plan. For the period ended December 31, 2016, the stock option plan expenses amounted to R$4,571 (R$4,159 as at December 31, 2015), recorded in line item ‘General and administrative expenses’.

The Company’s options were priced based on the binomial stock option measurement model developed by outside experts. When material, the expected stock option lives used in the model was adjusted based on Management’s best estimate of the effects of non- transferability, exercise restrictions and behavioral aspects.

Volatility was calculated based on the 90 days prior to the stock option plan grant date. Based on the market scenario, the Company believes that the plan participants will exercise their options on the exercise date.

Below is the number of options available and exercisable at the beginning and at the end of 2016 and 2015:

44 São Carlos Empreendimentos e Participações S.A. and Subsidiaries

12.31.2016 12.31.2015 Weighted Weighted average average Number price of Number price of of options options of options options

Initial number 1,581,905 698,889 - Options granted 79,158 1.11 117,803 2.83 Options granted 99,138 18.82 144,324 30.94 Options granted 30,000 4.30 150,000 13.89 Options granted 5,280 - 30,000 9.98 Options granted - - 600,000 13.16 Options cancelled - - (15,000) 12.63 Options exercised (79,158) 1.11 (117,803) 2.83 Options exercised (27,832) 44.27 - - Options exercised (5,000) 4.30 - - Options cancelled (5,000) 44.27 (410) - Options cancelled (5,000) 25.08 (4,695) 44.27 Options granted - - 18,723 - Options cancelled (20,000) 6.27 (4,926) 25.08 Options cancelled - (5,000) 17.89 Options cancelled - - (30,000) 6.27 Final number 1,653,491 1,581,905

24. INSURANCE

Considering the nature of the Company’s and its subsidiaries’ activities, the main operational assets are insured. The contracting of the insurance policies is the responsibility of the lessees.

25. PROPERTIES HELD FOR SALE

As at December 31, 2016, the consolidated balance of R$12,636 (R$1,351 as at December 31, 2015) in held-for-sale properties refers to the Company’s intention to sell properties (land and offices) located in the state of São Paulo to third parties.

26. NONCASH TRANSACTIONS

a. CASH AND CASH EQUIVALENTS

The breakdown of cash and cash equivalents included in the statements of cash flows is disclosed in Note 3.

b. Noncash transactions

2016 2015 Consolidate Consolidate Parent d Parent d

Transfer of investment properties to properties held for sale - 11,376 - - Purchase of financed investment properties - - 517,985 518,149 Advance for future capital increase 73,065 - 118,206 118,206 Reduction in subsidiary’s capital receivable 269 - 2,290 2,290 Dividends receivable 22,450 - 11,308 11,308 Interest on capital - - 19,590 19,590 Interest capitalization - 1,895 5,138

2017-SPO-0701 Notas.docx

45 4Q16 and 2016 EARNINGS

Fourth Quarter and full year of 2016

Earnings Release and Supplementary Financial Information

4Q16 and 2016 Conference Call March 9th, 2017

Portuguese 10:00 a.m. (Brasília) 8:00 a.m. (US ET) Phone: +55 (11) 3127-4971 +55 (11) 3728-5971 Code: São Carlos English The audio of the English presentation will be available on 1 the IR website. 4Q16 and 2016 EARNINGS

Recurring gross revenue from leases grows by 4.7% on a same-property basis in 2016 Portfolio physical vacancy rate closes 2016 at 11.0%, versus 13.2% in 2015

São Paulo, March 8, 2017 – São Carlos Empreendimentos e Participações S.A. (“São Carlos” or “Company”) announces today its results for the fourth quarter (4Q16) and full year of 2016 (2016). In order to preserve comparability, the Company presents an analysis of the recurring results of its lease activity by excluding the impacts of non-recurring events (for more details, see the ‘Adjustments to the Income Statement’ section).

Main Highlights

 Recurring gross revenue from leases grew by 4.7% on a same-property basis in 2016, totaling R$291.3 million. Total revenue from leases totaled R$306.3 million in 2016, down by 4.0% on 2015, impacted by the sale of assets (Top Center and Barueri distribution center) and the retrofit of Morumbi Park  High operational profitability with EBITDA and FFO margins of 80.0% and 15.2%, respectively in 2016. EBITDA and FFO totaled R$232.1 million and R$44.2 million. In 4Q16, EBITDA totaled R$60.7 million, with a margin of 81.5% and FFO came to R$15.1 million, with a margin of 20.3%  Net income totaled R$76.2 million in 2016, leveraged by the sale of the Top Center building. In 4Q16, net income totaled R$6.3 million  Intense leasing activity in 2016 with the signature of leasing contracts that totaled 82,000 sq.m. of GLA, the highlights are the full occupancy of EZ Tower A, Morumbi Park and SPOP X  Portfolio closes 2016 with physical and financial vacancy rates of 11.0% and 8.4%, respectively  The market value of the portfolio reached R$4.3 billion, 2% up on a same-property basis, according to CBRE’s appraisal in Sep/16  NAV (net asset value) of R$2.9 billion, corresponding to R$52.2 per share

Operating and Financial Indicators 4Q16 4Q15 ∆ % 2016 2015 ∆ % Gross Revenue from Leases (R$ million) 78.5 80.8 -2.9% 306.3 319.1 -4.0% NOI margin 92.9% 90.1% 91.8% 92.8% Recurring EBITDA (R$ million) 60.7 64.7 -6.2% 232.1 253.1 -8.3% Recurring EBITDA Margin 81.5% 85.0% 80.0% 84.3% Recurring FFO (R$ million) 15.1 19.7 -23.4% 44.2 80.8 -45.3% FFO Margin 20.3% 25.9% 15.2% 26.9% Recurring Net Income/Loss (R$ mn) 4.8 8.5 -43.9% 0.5 40.3 -98.8% Recurring Net Margin 6.4% 11.2% 0.2% 13.4% Net Income/Loss (R$ mn) 6.3 9.2 -31.6% 76.2 163.1 -53.3% NAV (R$ billion) 2.9 3.0 -1.7% NAV/share (R$) 52.2 53.2 -1.6%

4Q16 and 2016 EARNINGS

Message from Management

The active management of São Carlos’ portfolio, leveraged by our commercial platform, has been a differential in the lease of our properties. In 2016, we leased 82,000 sq.m. and the highlights are the full occupancy of EZ Tower A (47,000 sq.m. of GLA), Morumbi Park (22,200 sq.m. of GLA) and SPOP X (3,300 sq.m. of GLA). Consequently, we significantly reduced the physical and financial vacancy rates, closing 2016 at 11.0% (13.2% in 2015) and 8.4% (13.3% in 2015), respectively.

Another highlight in 2016 was the sale of the Top Center building (Jul/16), for R$152.6 million. The transaction’s internal real rate of return was 59% p.a. – net of taxes – contributing to generating value to our shareholders.

São Carlos’ portfolio closed the year valued at R$4.3 billion, with annual growth of 2% on a same-property asset basis. This valuation reflects the portfolio’s defensive and resilient profile and the success of the Company’s strategy of investing in properties with high appreciation potential. The portfolio closed 2016 with 84 properties, totaling 429,623 sq.m. of GLA, comprising 27 office buildings and 57 convenience retail centers.

The convenience retail centers portfolio advanced in 2016. We closed 2016 with 32 operational centers, of which 25 fully operational and 7 under pre-operational phase, totaling approximately 66,000 sq.m. of GLA, and a land bank to develop further 25 centers.

Gross revenue from leases grew by 4.7% on a same-property basis, reaching R$291.3 million in 2016, while total gross revenue from leases totaled R$306.3 million in 2016, reducing by 4.0% year-on-year, impacted by the lack of revenue from the properties sold: the Top Center building (Jul/16), the Barueri distribution center (May/15) and the retrofit of Morumbi Park (Dec/15).

Operational profitability remained high in 2016, with an EBITDA margin of 80.0% and an FFO margin of 15.2%. EBITDA and FFO totaled R$232.1 million and R$44.2 million, respectively, in 2016. Our continued focus on cost control and our pursuit of operational efficiency in managing our condominium cost have contributed to deliver high profitability.

São Carlos ended the year maintaining its conservative and long-term debt profile, with 94% of total debt indexed to the TR reference rate, average annual interest equivalent to 87% of the CDI interbank rate and an average maturity term of 9.4 years. Cash and cash equivalents totaled R$260.2 million at the end of 2016.

We are optimistic regarding the segment’s outlook and the recovery of the real estate cycle in Brazil, starting in 2017. The coming years will bring excellent growth opportunities for the Company and continuous value creation to our shareholders.

4Q16 and 2016 EARNINGS

Property portfolio: appreciation of 2% on a same-property basis, reaching R$4.3 billion

São Carlos’ portfolio closed 2016 valued at R$4.3 billion. On a same-property basis, the portfolio’s value increased 2% over 2015, according to the appraisal by CBRE consulting firm, even in a market of falling rent prices and increasing vacancy rates. The portfolio’s total value recorded a slight reduction of 2% due to the sale of assets in the last 12 months (Top Center building, the banking branch of the João Úrsulo building and the Washington Luis parcel), with total appraised value of R$179.9 million. The table below shows the evolution of our portfolio over the last 12 months1.

Office Buildings Convenience retail TOTAL Market Market Market Changes in the property portfolio Month Own GLA Own GLA Own GLA value value value (sq.m.) (sq.m.) (sq.m.) (R$ mn) (R$ mn) (R$ mn) Position as of Dec/15 389,811 3,967 34,939 462 424,751 4,429 Area adjustments in office buildings Mar/16 -1,163 -1,163 Area gains in convenience retail Mar/16 20 20 Sale of the Washington Luis site Mar/16 -6 -6 Position as of Jun/16 388,649 3,967 34,959 456 423,607 4,423 Sale of the Top Center building Jul/16 -13,463 -166 -13,463 -166 Area gains in convenience retail Sep/16 10,177 10,177 Portfolio appraisal (CBRE) Sep/16 91 -9 83 Position as of Sep/16 375,186 3,885 45,136 447 420,321 4,340 Area gains in convenience retail Dec/16 9,302 9,302 Sale of the banking branch (João Úrsulo building) Dec/16 -8 -8 Position as of Dec/16 375,186 3,877 54,438 447 429,623 4,332

The Company closed 2016 with a portfolio of 84 commercial and convenience retail properties totaling 429,623 sq.m. of GLA, located in the states of Rio de Janeiro and São Paulo (for further details, see the ‘Portfolio Profile’ section). These assets are recorded at their depreciated values in the financial statement, and their book value totaled R$2.6 billion at the end of December 20162.

The convenience retail centers portfolio comprises 32 operational centers, of which 25 fully operational with total GLA of 54,438 sq.m. and 7 under the pre-operational phase. The total GLA of the operational centers totals 66,000 sq.m. Additionally, the portfolio has a land bank to develop further 25 centers.

Net Asset Value (NAV) came to R$2.9 billion, or R$52.2 per share, at the close of 2016, versus R$3.0 billion, or R$53.2 per share, on December 31, 2015.

R$ million Dec/16 Dec/15 ∆ % Portfolio’s market value 4,331.9 4,429.3 -2.2% Net debt -1,398.7 -1,444.4 -3.2% NAV 2,933.2 2,984.9 -1.7% Outstanding shares (net of treasury) (million) 56.2 56.1 0.2% NAV (R$/share) 52.2 53.2 -1.6%

1 The Company does not record its own GLA for convenience retail properties under development. Acquisition values reflect transaction amounts and sales are based on the appraisal conducted by the consulting firm CBRE. 2 ‘Investment Properties’ line in the balance sheet.

4Q16 and 2016 EARNINGS

Vacancy rate: São Carlos closes 2016 with 11.0% of physical vacancy rate (13.2% in Dec/15)

Vacancy

15.1% 13.2% 13.3% 14.7% 13.5% 13.8% 10.7% 11.0% 9.6% 8.4%

Dec/15 Mar/16 Jun/16 Sep/16 Dec/16

Physical Vacancy Financial Vacancy

Physical and financial vacancy rates closed the quarter at 11.0% and 8.4%, respectively. The reduction over Dec/15 was mostly due to new leases in EZ Tower A, totaling 15,000 sq.m. of GLA in 2016, which increased the building’s occupancy to 100%. In addition, the Company also signed new relevant leasing agreements in C.A. Cidade Nova and C.A. Santo Amaro, among others, which totaled 82,000 sq.m. of GLA leased in 2016. It is also worth emphasizing that São Carlos reduced its vacancy while average market vacancy rates moved up substantially in the same period in the main markets (São Paulo and Rio de Janeiro).

Gross Revenue from Leases: growth of 4.7% on a same-property basis in 2016

Gross revenue from leases totaled R$306.3 million in 2016, 4.0% down on 2015, due to the sale of the Barueri distribution center (May/15) and the Top Center building (Jul/16), and the retrofit of Morumbi Park. On a same- property basis, however, revenue from leases grew by 4.7% in 2016, due to new leases in EZ Tower A, Candelária, Jardim Europa and City Tower, in addition to the partial inflation adjustments of lease agreements.

In the fourth quarter, gross revenue from leases came to R$78.5 million, 2.9% down year-on-year, due to the sale of the Top Center building (Jul/16), which generated revenue of R$3.9 million in 4Q15. On a same-property basis, revenue increased by 0.9%.

Gross Revenue from Leases Gross Revenue from Leases (R$ million) (R$ million) 319.1 80.8 -4.0% 306.3 -2.9% 78.5

291.3 +4.7% +0.9% 74.0 278.2 (same- (same- 73.3 property property basis) basis)

4Q15 4Q16 2015 2016

4Q16 and 2016 EARNINGS

Recurring Potential Revenue Annualized recurring revenue is R$322.5 million, based on (R$ million) leasing agreements in December 2016. Potential annual 352.2 revenue is R$352.2 million, considering the current portfolio’s 306.3 322.5 revenue generation and assuming zero vacancy. It is worth noting that revenue from the leasing of the convenience retail projects under development were not included in the potential revenue calculation. 2016 Revenue Recurring Potential Revenue Revenue w/o Vacancy

A breakdown of the maturity schedule of the current lease agreements and the average term weighted by recurring lease revenue is shown below.

Maturity Schedule on the Lease Agreements (% of recurring revenue)

Average Term: 5.6 years 58%

20% 7% 8% 7%

2017 2018 2019 2020 2021+

In 2016, 96% of the Company’s lease revenue and 90% of the portfolio value were generated by the office building segment.

Revenue from Leases Portfolio Breakdown (% of revenue) (% of market value)

Offices 96% Offices Convenience Convenience 90% Retail 10% Retail 4%

The Company’s NOI margin remained high at 92.9% of gross revenue from leases in 4Q16.

R$ million 4Q16 4Q15 ∆ % 2016 2015 ∆ % Gross revenue from leases 78.5 80.8 -2.9% 306.3 319.1 -4.0% G&A with maintenance and vacant areas -5.5 -8.0 -30.5% -25.0 -22.9 9.3% NOI 72.9 72.8 0.1% 281.8 296.2 -5.0% NOI margin 92.9% 90.1% 2.8 p.p. 91.8% 92.8% -1.0 p.p.

4Q16 and 2016 EARNINGS

General and Administrative Expenses (G&A)

G&A expenses totaled R$16.2 million in 4Q16, 15.5% more than in 4Q15, due to the increase in personnel expenses and management fees, given that in 4Q15 we reversed a significant portion of employees and management’s bonus for not achieving their goals, partially offset by the decrease in property maintenance expenses and vacant areas – as a result of the decline in portfolio vacancy and other expenses.

R$ million 4Q16 4Q15 ∆ % 2016 2015 ∆ % Property maintenance and vacant areas 5.5 8.0 -30.5% 25.0 22.9 9.3% Management and Personnel 8.5 3.1 171.2% 31.8 26.1 21.9% Other 2.2 2.9 -26.1% 5.6 6.5 -12.9% Total G&A Expenses 16.2 14.1 15.5% 62.4 55.4 12.6% G&A margin 21.8% 18.5% 3.3 p.p. 21.5% 18.5% 3.0 p.p.

Recurring EBITDA of R$232 million and margin of 80%

EBITDA totaled R$60.7 million in 4Q16, with a margin of 81.5%, while in 2016 EBITDA came to R$232.1 million.

R$ million 4Q16 4Q15 ∆ % 2016 2015 ∆ % Net Revenue 74.5 76.1 -2.1% 289.9 300.2 -3.4% G&A Expenses -16.2 -14.1 15.5% -62.4 -55.4 12.6% Other Operating Revenue 2.4 2.7 -8.2% 4.6 8.3 -45.0% Recurring EBITDA 60.7 64.7 -6.2% 232.1 253.1 -8.3% EBITDA margin 81.5% 85.0% -3.5 p.p. 80.0% 84.3% -4.2 p.p.

We estimated annualized recurring EBITDA of R$245.4 million, with a margin of 80.9%, considering annual recurring gross revenue of R$322.5 million, an effective PIS/COFINS tax rate of 6.0% of gross revenue and average G&A expenses in the last 12 months. The straight-line revenue from the lease of the Morumbi Park building (currently in retrofit) is already included in this calculation given that the agreement is effective. The convenience retail centers under development are not included in the calculation of recurring EBITDA below.

R$ million Annual Gross Revenue 322.5 Tax on revenue (effective 6.0%) -19.4 Net Revenue 303.2 Recurring G&A -57.8 Recurring EBITDA 245.4 Recurring EBITDA Margin 80.9%

4Q16 and 2016 EARNINGS

Financial Result

Financial revenue totaled R$8.5 million in 4Q16 (R$10.4 million in 4Q15). This reduction reflects the lower average cash balance between the periods. Financial expenses fell 7.9% in 4Q16 over 4Q15.

R$ million 4Q16 4Q15 ∆ % 2016 2015 ∆ % Financial revenue 8.5 10.4 -18.8% 38.5 41.6 -7.4% Financial expenses -49.1 -53.3 -7.9% -203.8 -188.1 8.3% Financial Result -40.6 -42.9 -5.1% -165.3 -146.6 12.8%

Net Income and Recurring FFO

In 2016, the Company posted net income of R$76.2 million in 2016, mostly due to the profit from the sale of the Top Center building.

Profit from Top Center sale: R$73.7 mn Net Income Recurring Net Income (R$ million) (R$ million) 163.1

40.3 76.2 9.2 8.5 6.3 4.8 0.5 4Q15 4Q16 2015 2016 4Q15 4Q16 2015 2016

Recurring FFO totaled R$15.1 million in 4Q16, with a margin of 20.3%.

R$ million 4Q16 4Q15 ∆ % 2016 2015 ∆ % Recurring Net Income (Loss) 4.8 8.5 -43.9% 0.5 40.3 -98.8% Depreciation 10.3 11.2 -7.8% 43.7 40.5 7.9% Recurring FFO 15.1 19.7 -23.4% 44.2 80.8 -45.3% Recurring FFO Margin 20.3% 25.9% -5.6 p.p. 15.2% 26.9% -11.7 p.p.

4Q16 and 2016 EARNINGS

CAPEX

São Carlos invested R$3.4 million in 4Q16, R$3.0 million in property maintenance. In 2016, the investments totaled R$30.9 million and the majority were distributed as follows: (i) R$15.0 million in the development of convenience retail centers and (ii) R$10.6 million in property maintenance, which includes improvement in elevators and air conditioning, among others.

R$ million 1Q16 2Q16 3Q16 4Q16 2016 Property maintenance and improvements – office 3.4 1.5 2.7 3.0 10.6 Retrofit (Candelária and Morumbi Park) 2.7 2.3 0.0 0.3 5.3 Convenience retail developments 1.4 5.4 8.0 0.1 15.0 Total 7.5 9.2 10.7 3.4 30.9

Debt: long-term profile and cost equivalent to 87% of the CDI

R$ million Dec/16 Gross Debt3 1,658.9 Cash and Cash Equivalents (260.2) Net Debt 1,398.7 Annualized Recurring EBITDA 245.4 Portfolio’s value 4,331.9 Net Debt / Annualized Recurring EBITDA (x) 5.7 Net Debt / Portfolio’s value (%) 32.3% Average term (years) 9.4 Nominal Cost of debt (% p.a.) 12.0%

São Carlos closed 2016 with a cash balance of R$260.2 million. The cash position in the quarter was chiefly affected by (i) portfolio investments of R$3.4 million, and (ii) financing amortization totaling R$23.2 million. In addition, the operation generated net cash of R$17.1 million, including the sale of assets.

Gross debt totaled R$1,658.9 million, with only 9% maturing in the coming 12 months. All the Company’s debt is in domestic currency (R$) and is therefore unaffected by exchange rate variations. Net debt came to R$1,398.7 million.

São Carlos’ excellent credit profile allows it to raise long-term financing at a low cost. At the close of 2016, the average debt maturity term was 9.4 years and the nominal cost of debt was 12.0% p.a., equivalent to 87% of the CDI interbank rate. In addition, 94% of the debt was pegged to the TR reference rate (with an average cost of debt of 9.6 % p.a.), as shown below.

3 Sum of short and long-term loans and financing.

4Q16 and 2016 EARNINGS

Debt by Index Cost of Debt (% p.a.)

IGPM 14.25% 14.25% 14.25% 14.25% 13.75% TR 1% 94% IPCA 3% 11.9% 12.2% 12.3% 12.2% 12.0% CDI 2%

4Q15 1Q16 2Q16 3Q16 4Q16

Average cost SELIC

Average Interest Cost of Debt Outstanding Debt Index4 Index (p.a.) Rate (p.a.) (p.a.)5 (R$ million) TR 2.0% 9.6% 11.8% 1,553.0 CDI 14.0% 1.8% 16.1% 27.7 IGPM 7.2% 10.4% 18.3% 24.3 IPCA 6.3% 6.4% 13.1% 53.8 Total 2.4% 9.3% 12.0% 1,658.9

The graph below shows São Carlos’ debt amortization schedule. Details of the Company’s financing are shown in the Loans table.

Debt Amortization Schedule (R$ million)

181.3 189.8 178.8 170.2 159.6 142.9 156.3 115.1 82.4 69.0 61.2 55.0 59.9 37.4

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

4 Last twelve months 5 Weighted average of annual cost of debt

4Q16 and 2016 EARNINGS

Capital Market

São Carlos’ shares are listed in the BM&FBovespa’s Novo Mercado trading segment under the ticker SCAR3 and are included in the Special Tag Along Stock Index (ITAG), the Special Corporate Governance Stock Index (IGCX) and the Corporate Governance Index – Novo Mercado (IGC-NM). They are also included in the S&P Global Ex-U.S Property index.

On December 31, 2016, the Company’s capital stock was represented by 57,737,319 common shares, including 1,520,586 treasury shares.

On May 4, 2016, the Company’s Board of Directors approved a new share buyback program involving up to 800,000 shares with one year term.

4Q16 and 2016 EARNINGS

Adjustments to the Income Statement (reconciliation between IFRS and Recurring Income Statement)

In order to preserve comparability between the 2016 and 2015 financial information, the Company presents an analysis of adjusted information. This information was prepared based on the income statement produced in accordance with the accounting practices generally accepted in Brazil (IFRS) and adjusted to exclude the effects of non-recurring events in the reporting periods (property sales).

Non Recurring Recurring Non Recurring Recurring R$ 000 4Q16 2016 Items 4Q16 Items 2016 Gross Revenues 81,275 -2,304 78,971 468,512 -160,447 308,065 Gross revenues from leases 78,472 78,472 306,132 188 306,321 Property sale 2,304 -2,304 - 160,635 -160,635 0 Services 499 499 1,745 1,745 Taxes on revenues -4,532 12 -4,520 -18,274 156 -18,118 Net Revenues 76,743 -2,292 74,451 450,238 -160,290 289,948 COGS -10,831 532 -10,299 -91,614 47,913 -43,701 Depreciation -10,299 -10,299 -43,701 -43,701 Cost of properties sold -532 532 - -47,913 47,913 0 Gross Profit 65,912 -1,760 64,152 358,624 -112,377 246,247 Operating Revenues (expenses) -13,811 0 -13,811 -57,909 62 -57,847 G&A -10,723 -10,723 -48,936 62 -48,874 Management Compensation -5,526 -5,526 -13,537 -13,537 Other operating revenues (expenses) 2,438 2,438 4,564 4,564 Equity income (loss) 723 723 -2,108 -2,108 Operating Income 52,824 -1,760 51,064 298,607 -112,315 186,292 Financial Result -40,606 - -40,606 -165,283 - -165,283 Financial Revenues 8,468 8,468 38,499 - 38,499 Financial Expenses -49,074 -49,074 -203,782 - -203,782 Income before taxes 12,218 -1,760 10,458 133,324 -112,315 21,009 Income taxes -5,722 245 -5,477 -56,458 36,563 -19,895 Non-controlling shareholders -183 -183 -637 - -637 Net Income (loss) 6,313 -1,515 4,798 76,229 -75,752 477

Non Recurring Recurring Non Recurring Recurring R$ 000 4Q15 2015 Items 4Q15 Items 2015 Gross Revenues 82,063 -924 81,139 499,526 -179,414 320,112 Gross revenues from leases 80,813 80,813 317,873 1,194 319,067 Property sale 924 -924 - 180,608 -180,608 0 Services 326 326 1,045 1,045 Taxes on revenues -5,089 -5,089 -22,317 2,409 -19,908 Net Revenues 76,974 -924 76,050 477,209 -177,005 300,204 COGS -11,419 249 -11,170 -87,652 47,166 -40,486 Depreciation -11,170 -11,170 -40,486 -40,486 Cost of properties sold -249 249 0 -47,166 47,166 0 Gross Profit 65,555 -675 64,880 389,557 -129,839 259,718 Operating Revenues (expenses) -11,396 -11,396 -48,497 1,359 -47,138 G&A -14,564 -14,564 -47,315 539 -46,776 Management Compensation 513 513 -8,656 -8,656 Other operating revenues (expenses) 2,655 2,655 7,474 820 8,294 Equity income (loss) -211 -211 -925 -925 Operating Income 53,948 -675 53,273 340,135 -128,479 211,656 Financial Result -42,874 -42,874 -146,586 -146,586 Financial Revenues 10,433 10,433 41,555 41,555 Financial Expenses -53,307 -53,307 -188,141 -188,141 Income before taxes 11,074 -675 10,399 193,549 -128,479 65,070 Income taxes -1,747 -1,747 -30,173 5,635 -24,538 Non-controlling shareholders -104 -104 -260 -260 Net Income (loss) 9,223 -675 8,548 163,116 -122,845 40,271

4Q16 and 2016 EARNINGS

Recurring Income Statement6

R$ 000 4Q16 4Q15 ∆ % 2016 2015 ∆ % Gross Revenue 78,971 81,139 -2.7% 308,065 320,112 -3.8% Leases 78,472 80,813 -2.9% 306,321 319,067 -4.0% Services 499 326 52.9% 1,745 1,045 66.9% Taxes on Revenue -4,520 -5,089 -11.2% -18,118 -19,908 -9.0% Net Revenue 74,451 76,050 -2.1% 289,948 300,204 -3.4% COGS -10,299 -11,170 -7.8% -43,701 -40,486 7.9% Gross Profit 64,152 64,880 -1.1% 246,247 259,718 -5.2% Operating Revenues (Expenses) -13,811 -11,396 21.2% -57,847 -47,138 22.7% General and Administrative Expenses -10,723 -14,564 -26.4% -48,874 -46,776 4.5% Management Compensation -5,526 513 -1176.4% -13,537 -8,656 56.4% Other Operating Revenues (Expenses) 2,438 2,655 -8.2% 4,564 8,294 -45.0% Equity income (loss) 723 -211 -442.7% -2,108 -925 127.9% Operating Income 50,341 53,484 -5.9% 188,400 212,581 -11.4% Financial Result -40,606 -42,874 -5.3% -165,283 -146,586 12.8% Financial Revenue 8,468 10,433 -18.8% 38,499 41,555 -7.4% Financial Expense -49,074 -53,307 -7.9% -203,782 -188,141 8.3% Income Before Income Taxes 10,458 10,399 0.6% 21,009 65,070 -67.7% Income Taxes -5,477 -1,747 213.5% -19,895 -24,538 -18.9% Non-controlling shareholders -183 -104 76.0% -637 -260 145.0% Net Income (Loss) 4,798 8,548 -43.9% 477 40,271 -98.8%

6 Unaudited managerial statements. See the ‘Adjustments to the Income Statement’ section of this release for more information.

4Q16 and 2016 EARNINGS

Consolidated Balance Sheet

R$ 000 Dec/16 Dec/15 ∆ % Current Assets 327,642 350,712 -6.6% Cash and cash equivalents 57,089 147,107 -61.2% Financial investments 203,105 134,113 51.4% Account receivables 18,501 26,921 -31.3% Receivables from related parties 972 875 11.1% Taxes recoverable 27,844 24,737 12.6% Other receivables 7,495 15,609 -52.0% Assets held for sale 12,636 1,351 835.3%

Non Current Assets 2,728,582 2,707,402 0.8% Account receivables 108,169 68,920 56.9% Receivables from related parties 14,455 1,554 830.2% Judicial deposits 124 90 37.8% Other receivables 10,512 0 -

Investments in subsidiaries 11,981 13,997 -14.4% Investment properties 2,570,645 2,607,935 -1.4% Fixed assets 8,755 10,973 -20.2% Intangible assets 3,941 3,933 0.2%

Total Assets 3,056,224 3,058,115 -0.1%

Current Liabilities 191,343 163,508 17.0% Loans and financing 142,855 113,906 25.4% Advanced from customers 1,366 5,236 -73.9% Payroll and related charges 10,639 5,442 95.5% Provisions for income and social contribution taxes 6,512 6,282 3.7% Taxes 3,100 3,037 2.1% Dividends and interest on equity 18,104 11,308 60.1% Accounts payable for property acquisition 3,202 10,002 -68.0% Other Payables 5,565 8,295 -32.9%

Non Current Liabilities 1,538,458 1,633,331 -5.8% Deferred taxes 8,361 7,995 4.6% Loans and financing 1,516,012 1,611,681 -5.9% Provisions for contingent liabilities 14,085 13,655 3.1%

Shareholders' Equity 1,326,423 1,261,276 5.2% Capital stock 673,912 673,912 0.0% Stock Option 24,173 22,680 6.6% Treasury shares -60,744 -64,938 -6.5% Profit Reserve 685,919 627,794 9.3% Non-controlling shareholders 3,163 1,828 73.0%

Total Liabilities 3,056,224 3,058,115 -0.1%

4Q16 and 2016 EARNINGS

Portfolio

Property City/State GLA (sq.m.) Brasilprev São Paulo/SP 11,845 C. E. Aço São Paulo/SP 35,051 C. E. Arcos da Lapa Rio de Janeiro/RJ 9,126 C. E. Botafogo Rio de Janeiro/RJ 20,865 C. E. Candelária 62 Rio de Janeiro/RJ 6,401 C. E. Região Portuária Rio de Janeiro/RJ 4,488 C. E. Urca Rio de Janeiro/RJ 4,557 C.A. Cidade Nova Rio de Janeiro/RJ 31,356 C.A. Santo Amaro São Paulo/SP 38,184 C.E. Visconde Ouro Preto Rio de Janeiro/RJ 5,730 City Tower Rio de Janeiro/RJ 21,233 Corporate Plaza São Paulo/SP 9,848 Ericsson São Paulo/SP 24,788 EZ Tower A São Paulo/SP 47,002 Generali Rio de Janeiro/RJ 11,310 GlobalTech Campinas/SP 5,920 Itaim Center São Paulo/SP 5,890 Jardim Europa São Paulo/SP 9,031 João Úrsulo Rio de Janeiro/RJ 2,526 Latitude* Rio de Janeiro/RJ - Morumbi Park São Paulo/SP 22,206 Mykonos São Paulo/SP 4,859 Passeio Rio de Janeiro/RJ 22,023 Pasteur 110 Rio de Janeiro/RJ 4,806 Souza Cruz Rio de Janeiro/RJ 8,325 SPOP II São Paulo/SP 4,541 SPOP X São Paulo/SP 3,276 Sub-total Office 27 375,186

Atibaia - Lago Atibaia/SP 1,237 Campinas - Taquaral Campinas/SP 1,332 Cotia - São Camilo Cotia/SP 2,220 Diadema - Centro Diadema/SP 1,925 Embu das Artes - Elias Yazbek Embu das Artes/SP 1,672 Guaratinguetá - Pedregulho Guaratinguetá/SP 1,481 Hortolândia - Olívio Franceschini Hortolândia/SP 2,907 Indaiatuba - Pq. Ecológico Indaiatuba/SP 6,126 Itatiba - Centro Itatiba/SP 2,061 Jacareí - Centro Jacareí/SP 2,119 Jacareí - Villa Branca Jacareí/SP 1,480 Jaguariúna - Centro Jaguariúna/SP 1,386 Macaé – Glória Macaé/RJ 1,807 Paulínia - Jd. América Paulinia/SP 3,055 Pindamonhangaba - Centro Pindamonhangaba/SP 1,117 Rio de Janeiro - Cidade Nova Rio de Janeiro/RJ 3,311 Santo André - Pirelli Santo André/SP 2,258 São João de Meriti - Vilar dos Teles São João de Meriti/RJ 3,409 São Paulo - Chácara Santo Antônio 1 São Paulo/SP 539 São Paulo - Ellis Maas São Paulo/SP 1,867 Sorocaba - Horto Florestal Sorocaba/SP 3,416 Sorocaba - Pannunzio Sorocaba/SP 1,774 Sumaré - Villa Flora Sumaré/SP 2,023 Taubaté - Padre Fisher Taubaté/SP 1,769 Vinhedo - Benedito Storani Vinhedo/SP 2,132 Projects and Sites 27 Sub-total - Convenience Retail 57 54,438 Total 84 429,623 * Property comprising commercial offices for sale

4Q16 and 2016 EARNINGS

Portfolio Profile

Segment Quantity GLA (sq.m.) Market Value7 (R$ 000) Office Buildings 27 375,186 3,884,700 Convenience retail 57 54,438 447,136 Total 84 429,623 4,331,836

Portfolio GLA breakdown (# of properties) (% of GLA)

Office Convenience Convenience retail 27 retail Office 13% 57 87%

Market Value Breakdown Portfolio Location (% of market value) (% market value)

Office Convenience Rio de 90% retail São Paulo Janeiro 10% 58% 42%

Client Portfolio (% of recurring revenue)

25%

16%

8% 9% 7% 8% 6% 6% 5% 5% 5%

7 According to CBRE in its annual appraisal

4Q16 and 2016 EARNINGS

Loans

Loans Maturity Term (years) Balance (R$ 000 ) Index Coupon (% p.a.) CEB building 24-Nov-22 5.9 27,695 CDI 1.80% Rio Negro building 22-Nov-20 3.9 16,575 TR 10.00% Itaim Center building 21-Dec-20 4.0 6,166 TR 10.00% Spop II e X building 05-Dec-21 4.9 24,310 IGPM 10.40% Borges Lagoa building 11-Apr-22 5.3 12,112 TR 10.00% BST building 16-Aug-22 5.6 21,219 TR 9.70% Mykonos building 03-Aug-22 5.6 6,298 TR 9.70% Corporate Plaza building 28-Aug-22 5.7 12,881 TR 9.70% Pasteur 110 building 05-Sep-22 5.7 17,581 TR 9.70% Eldorado Modal building 14-Nov-22 5.9 21,528 TR 9.90% Eldorado Gafisa building 23-Nov-22 5.9 59,421 TR 9.95% CA Guaíba building 27-Feb-23 6.2 25,096 TR 10.00% Visconde building 27-Feb-23 6.2 8,484 TR 9.90% Antonio Carlos building 27-Feb-23 6.2 4,938 TR 10.00% GlobalTech building 18-Sep-23 6.7 15,610 TR 10.20% Lapa RJ building 11-Dec-19 2.9 8,132 TR 9.70% BFC building 05-Mar-22 5.2 52,621 TR 10.00% CASA building 17-Oct-22 5.8 91,220 TR 10.25% Sul América building 04-Jun-25 8.4 81,843 TR 9.70% Cidade Nova building 07-Oct-26 9.8 43,939 TR 9.70% CEA building 27-Feb-26 9.2 120,917 TR 10.45% Urca building 25-Apr-25 8.3 29,276 TR 9.70% Convenience retail developments 28-Aug-20 3.7 4,861 IPCA 6.10% Convenience retail developments 28-Aug-24 7.7 38,796 IPCA 6.50% Convenience retail developments 28-Aug-24 7.7 10,160 IPCA 6.30% Cidade Nova building 15-Feb-24 7.1 101,549 TR 9.81% Jardim Europa retrofit 28-Jun-23 6.5 26,926 TR 9.25% Candelária 62 retrofit 25-Mar-24 7.2 32,788 TR 9.35% EZ Towers retrofit and development 05-Sep-24 7.7 50,337 TR 9.80% Convenience retail projects 05-Sep-24 7.7 34,036 TR 9.80% Convenience retail projects 06-Dec-27 10.9 70,636 TR 9.80% Acquisition of Souza Cruz headquarters 05-Jan-27 10.0 52,234 TR 9.80% Acquisition of Tower A EZ Towers 15-Jul-30 13.5 528,682 TR 8.90%

Total 1,658,867

4Q16 and 2016 EARNINGS

EBITDA – CVM Instruction 527/12

The methodology determined by CVM Instruction 527/12 includes results from non-recurring events, such as gains from the sale of properties.

R$ million 4Q16 4Q15 ∆ % 2016 2015 ∆ % Net Income/Loss 6.3 9.2 -31.6% 76.2 163.1 -53.3% Income Taxes 5.7 1.7 227.5% 56.5 30.2 87.1% Financial Result 40.6 42.9 -5.3% 165.3 146.6 12.8% Depreciation 10.3 11.2 -7.8% 43.7 40.5 7.9% EBITDA 62.9 65.0 -3.2% 341.7 380.4 -10.2% EBITDA margin 82.0% 84.4% -2.4 p.p. 75.9% 79.8% -3.9 p.p.

Glossary

GLA Gross Leasable Area

Cap Rate Gross lease revenue of a property in the following 12 months, based on the values in the current lease agreements with no updates, divided by the property value.

EBITDA Net income for the period minus the effects of the financial result, equity accounting, income tax and social contribution taxes, and depreciation and amortization expenses. Our calculation of EBITDA may not be the same as the EBITDA methodology adopted by other companies.

FFO (Funds from Operations) Net income for the period plus depreciation and amortization expenses and minus earnings from property disposals and the effects of non-recurring items recorded in the period, if any. Our methodology for calculating FFO may be different from those used by other companies.

NOI (Net Operating Income) Lease gross revenue, minus expenses directly allocated to the properties, such as expenses inherent to vacant areas, maintenance of the owner's responsibility and commissions to real estate brokers on the leasing of vacant areas. Our methodology to calculate NOI may be different from the ones used by other companies.

NAV (Net Asset Value) Market value of the Company’s real estate portfolio minus the Company’s net debt on a specific date. Our methodology to calculate NAV may be different from those used by other companies.

Investor Relations

Fabio Itikawa – CFO and IRO Fernanda Naveiro – IR Manager Phone: +55 11 3048-6417 E-mail: [email protected] | Website: www.scsa.com.br/ri