Cyrela Commercial Properties S.A. Empreendimentos E Participações and Subsidiaries

Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Financial statements on December 31, 2018 (A free translation of the original report in Portuguese as published in Brazil containing Financial Statement prepared in accordance with accounting practices adopted in Brazil and IFRS)

KPDS 428841 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018 Contents

Message from Management 3

Independent auditors' report on individual and consolidated financial statements 4

Balance sheets 9

Statements of Income 11

Statements of comprehensive income 12

Statements of changes in shareholders’ equity 13

Statements of cash flows 15

Statements of added-value 16

Notes to the financial statements 17

Message from Management

The year 2018 marked a recovery, although slow, of the Brazilian economy. The truck drivers' strike stopped the country in May, affecting the performance of the production and of GDP. Furthermore, the World Cup which also contributed to the drop in the flow and sales of shopping malls during 2Q18. The dollar and the stock exchange registered fluctuations driven by internal and external factors, such as the October elections and the trade tension between the United States and China. Despite all these events, CCP was able to maintain its strategy of acquisitions and maturation of assets.

CCP traded R$ 350 million in assets during the year 2018. We disposed of our equity interest in Parque Shopping Belém and sold 8% of our interest in Shopping Cidade São Paulo to XP Malls. Moreover, we sold the last warehouse in our portfolio, called Parque Industrial Tamboré. In 3Q18, we still have the purchase of a unit of JK 1455 and the transaction involving Miss Silvia Morizono, consolidating our position in these two corporate buildings.

The Company has been seeking to optimize its capital structure, lengthening the indebtedness amortization and renegotiating the interest rate of some debts. In this sense, CCP prepaid R$ 540 million in debts in 2018, in addition to concluding the 9th and 10th issuance of debentures.

CCP stood out again as one of the largest dividend payers on the Bovespa stock exchange in 2018. The Company paid R$ 120 million in dividends in November, closing the year with a 12% dividend yield. In addition to the dividends paid in 2017, CCP recorded an accumulated dividend yield of 40% over the last two years, reaffirming its commitment to remunerate shareholders and to capital discipline.

In the offices segment, CCP had a year of evolution in the lease of properties, mainly the development Miss Silvia Morizono, which ended the year 2018 with only 13.9% of physical vacancy, which corresponds to one floor and a half vacant. The physical occupancy of CCP's buildings increased 2.8 pp from the third quarter to the fourth quarter of 2018, reaching 90.2%, one of the highest occupancy rates in the segment.

In the segment of Shopping Malls, the total sales of CCP malls increased by 9.1% when compared to the fourth quarter of 2017. Same-store sales (SSS) and same-store rents (SSR) recorded amounts above inflation again at the end of 2018, showing the resumption of the industry after the events for the year. Furthermore, the vacancy of CCP shopping malls recorded a decrease in all quarters of 2018, reaching only 5.8% of physical vacancy and 5.0% of financial vacancy.

CCP continues investing in the pursuit of innovations and in the management of its ventures, resulting in substantial growth in its portfolio and enabling the generation of positive results for its shareholders and clients.

Executive Board.

KPMG Auditores Independentes Rua Arquiteto Olavo Redig de Campos, 105, 6º andar - Torre A 04711-904 - São Paulo/SP - Brasil Caixa Postal 79518 - CEP 04707-970 - São Paulo/SP - Brasil Telefone +55 (11) 3940-1500 kpmg.com.br

Independent auditors' report in the individual and consolidated financial statements

KPMG Auditores Independentes, uma sociedade simples brasileira e firma- KPMG Auditores Independentes, a Brazilian entity and a member firm of membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), uma entidade suíça. International Cooperative (“KPMG International”), a Swiss entity. 4

Balance sheets as of December 31, 2018 and 2017

(In thousands of reais – R$)

Parent company Consolidated

Assets Note 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Current assets Cash and cash equivalents 4 138,626 56,993 215,896 170,324 Securities 5 123,301 148,621 166,687 170,908 Accounts receivable 6 419 - 80,794 100,653 Inventories 7 - - 944 4,428 Taxes recoverable 8 6,783 4,822 6,783 4,822 Advances to suppliers - - 1,988 2,045 Dividends receivable 5,353 6,025 251 100 Other accounts receivable 25,256 166 34,895 8,341

Total current assets 299,738 - 216,627 - 508,238 - 461,621

Non-current assets Accounts receivable 6 - - 3,226 4,568 Inventories 7 - - 42,200 41,858 Advances for future capital increase 16.a 46 32 46 38,928 Taxes recoverable 8 29,825 22,812 36,959 34,120 Judicial deposits 15 - - 191 121 Other accounts receivable 2,862 307 43,308 32,543 Investments 9 2,085,434 2,161,889 159,673 174,622 Investment properties 10 - - 2,789,883 2,849,786 Property, plant and equipment 11 143 62 702 782 Intangible assets 11 78 2 3,999 479

Total non-current assets 2,118,388 - 2,185,104 - 3,080,187 - 3,177,807

Total assets 2,418,126 - 2,401,731 - 3,588,425 - 3,639,428

See the accompanying notes to the financial statements.

9 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Balance sheets as of December 31, 2018 and 2017

(In thousands of reais – R$)

Parent company Consolidated

Liabilities Note 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Current liabilities Loans and financing 12.1 12,687 42,304 46,725 70,132 Debentures 12.2 261,059 158,466 261,060 158,466 Promissory notes 12.3 - 39,092 - 39,092 Suppliers - 2,008 515 10,021 12,385 Taxes and contributions payable 13 338 352 13,457 11,496 Deferred taxes and contributions 14 - - 560 351 Advances from clients - - - 74 - Unrecorded res sperata income 18 - - - 4,148 7,369 Dividends payable - 17 12 17 12 Other accounts payable - 40,139 6,221 30,106 31,976

Total current liabilities 316,248 - 246,962 - 366,168 - 331,279

Non-current liabilities Loans and financing 12.1 263,263 497,248 633,496 895,824 Debentures 12.2 792,500 376,513 792,500 376,513 Promissory notes 12.3 - 120,000 - 120,000 Deferred taxes and contributions 14 - - 3,525 6,264 Unrecorded res sperata income 18 - - - 16,590 29,477 Provisions for labor, tax and civil risks 17 692 - 1,628 1,608

Total non-current liabilities 1,056,455 - 993,761 - 1,447,739 - 1,429,686

SHAREHOLDERS' EQUITY Capital 19.a 799,763 799,763 799,763 799,763 Treasury shares - - (3,326) - (3,326) Legal reserve - 46,227 46,227 46,227 46,227 Profit retention 19.b 199,433 318,344 199,433 318,344 1,045,423 - 1,161,008 - 1,045,423 - 1,161,008

Non-controlling interest - - 729,095 717,455

Total shareholders' equity 1,045,423 - 1,161,008 - 1,774,518 - 1,878,463

Total liabilities and shareholders’ equity 2,418,126 - 2,401,731 - 3,588,425 - 3,639,428

See the accompanying notes to the financial statements.

10 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Statements of Income

For the years ended december 31, 2018 and 2017

(In thousands of reais – R$)

Parent company Consolidated

Note 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Net income 23 1,798 4,728 489,767 446,272

Costs 24 - (10) (204,935) (186,797)

Gross income 1,798 4,718 284,832 259,475

Operating income (expenses) Commercial 24 (1,708) (1,353) (17,298) (17,046) General and administrative expenses 24 (15,949) (23,248) (28,970) (35,407) Management remuneration 24 (3,666) (4,936) (5,310) (6,710) Employee profit sharing and Directors’ fees 24 (5,857) (5,260) (8,872) (6,634) Equity in net income of subsidiaries 9 144,731 95,863 (1,145) (3,709) Other operating income (expenses), net (13,854) 289,189 (10,247) 281,101

103,697 350,255 (71,842) 211,595

Operating income (loss) before financial income 105,495 354,973 212,990 471,070

Financial income 25 21,828 26,590 32,657 42,328 Financial expenses 25 (128,240) (201,526) (159,487) (254,229)

Financial income (loss) (106,412) (174,936) (126,830) (211,901)

Income (loss) before income and social contribution taxes (917) 180,037 86,160 259,169

Income tax and social contribution Current 26 30 (5,833) (36,202) (37,380) Deferred assets - - (256) 664

30 (5,833) (36,458) (36,716)

Income (loss) before non-controlling interest (887) 174,204 49,702 222,453

Income (loss) attributed to controlling shareholders - - (887) 174,204 Income (loss) attributed to non-controlling shareholders - - 50,589 48,249

Basic earnings (losses) per thousand shares - R$ 28 - - (0.007) 1.459 Diluted earnings (losses) per thousand shares - R$ 28 - - (0.007) 1.459

See the accompanying notes to the financial statements.

11 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Statements of comprehensive income

For the years ended december 31, 2018 and 2017

(In thousands of reais – R$)

Parent company Consolidated

12/31/2018 12/31/2017 12/31/2018 12/31/2017

Net income (loss) for the year (887) 174,204 49,702 222,453

Translation adjustments in the period 3,520 299 3,520 299

Total comprehensive income for the year 2,633 174,503 53,222 222,752

Attributed to the Parent Company's shareholders 2,633 174,503 2,633 174,503 Attributed to non-controlling partners - - 50,589 48,249

See the accompanying notes to the financial statements.

12 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Statement of changes in shareholders’ equity

For the year ended december 31, 2018

(In thousands of reais – R$)

Attributable to controlling shareholders

Profit reserves

Treasury Income for the Comprehensive Non-controlling Note Capital shares Legal reserve Profit retention year income Total interest Total

Balance at December 31, 2017 799,763 (3,326) 46,227 312,648 - 5,696 1,161,008 717,455 1,878,463

Adjustments of first-time adoption related to IFRS 9 - - - (1,544) - - (1,544) - (1,544)

Effect of non-controlling shareholders in subsidiaries ------(38,949) (38,949)

Write-off of treasury shares - 3,326 - - - - 3,326 - 3,326

Net income (loss) for the period 19 - - - - (887) - (887) 50,589 49,702 Dividends paid - - - (120,000) - - (120,000) - (120,000) Expansion reserve ------Investment translation adjustments - - - - - 3,520 3,520 - 3,520

Balance at December 31, 2018 799,763 - 46,227 191,104 (887) 9,216 1,045,423 729,095 1,774,518

See the accompanying notes to the financial statements.

13 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Statement of changes in shareholders’ equity

For the year ended december 31, 2017

(In thousands of reais – R$)

Attributable to controlling shareholders

Profit reserves

Treasury Legal Profit Income for Comprehensive Non-controlling Capital shares reserve retention the year income Total interest Total

Balance at December 31, 2016 799,763 (3,326) 37,517 336,329 - 5,397 1,175,680 936,630 2,112,310

Barter of non-controlling interest with no change in control - - - 155,825 - - 155,825 (267,424) (111,599)

Gain in transactions with subsidiaries ------

Capital subscription with profit reserve ------

Net income for the period - - - - 174,204 - 174,204 48,249 222,453 Dividends paid - - - (303,627) (41,373) - (345,000) - (345,000) Legal reserve - - 8,710 - (8,710) - - - - Expansion reserve - - - 124,121 (124,121) - - - -

Investment translation adjustments - - - - - 299 299 - 299

Balance at December 31, 2017 799,763 (3,326) 46,227 312,648 - 5,696 1,161,008 717,455 1,878,463

See the accompanying notes to the financial statements.

14 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Statements of cash flows

For the years ended december 31, 2018 and 2017

(In thousands of reais – R$)

Parent company Consolidated

12/31/2018 12/31/2017 12/31/2018 12/31/2017

Cash flow from operating activities

Income (loss) before income and social contribution taxes (917) 180,037 86,160 259,169 Adjustment for reconciliation of net cash generated (invested) in operating activities: Depreciation of property, plant and equipment, and amortization of intangible assets 50 # 83 250 409 Depreciation of investment properties - 10 40,292 46,825 Equity in net income of subsidiaries (144,731) (95,863) 1,145 3,709 Interest, inflation adjustments on loans, debentures and promissory notes 111,314 178,870 150,631 224,279 Amortization of commission on loans/debentures 2,856 4,268 3,388 4,801 Provision (reversal) of allowance for doubtful accounts - - 2,472 11,384 Provisions for labor, tax and civil risks 692 - 20 (52) Capitalized interest change 10,513 19,224 10,513 23,192 Amortizations 1,914 - 706 - Income (loss) from sale of interest - (286,375) - (286,375) Treasury shares 3,326 - 3,326 -

Increase (decrease) in assets Accounts receivable (419) 330 18,729 (7,207) Taxes recoverable (8,974) 69,286 (4,800) 65,345 Dividends receivable 672 6,172 (151) (21) Advances to suppliers - - 57 6,467 Inventories - - 40,965 146,808 Advances for future capital increase (14) 103 (1,532) 6,318 Judicial deposits - - (70) 350 Other assets (27,646) 3,566 (37,319) (2,004)

Increase (decrease) in liabilities Suppliers 1,493 (219) (2,364) (17,845) Taxes and contributions payable 16 - (1,990) (15,620) Advance from clients - - 74 (109,308) Unrecorded res sperata - - (16,108) (16,462) Other accounts payable 33,918 1,948 (1,870) (9,633)

Interest paid (76,076) (148,697) (111,550) (187,086) Corporate income (IRPJ) and social contribution (CSLL) taxes paid - (5,833) (35,037) (7,317) Dividends received 210,465 182,579 785 6,521

Net cash generated (invested in) in operating activities 118,452 109,489 146,722 146,647

Cash flow from investment activities (Increase) in investments (3,248) (197,888) (28,790) (120,568) Sale of investment - 1,151,112 - 1,151,112 Decrease in securities 25,320 (112,665) 4,221 (106,046) (Increase) of property, plant and equipment and intangible assets (203) (32) 132 (6,676) (Increase) in investment properties - 1,772 8,483 (53,987)

Net cash used in investment activities 21,869 842,299 (15,954) 863,835

Cash flow from financing activities Funding of loans, debentures and promissory notes 750,000 135,000 750,000 161,648 Payment of loan, debentures and promissory notes (principal) (691,491) (906,903) (717,999) (1,005,417) Commission on acquisition of loans, debentures and promissory notes (717) (277) (717) (277) Dividends paid (120,000) (344,989) (120,000) (344,989)

Net cash from (invested in) financing activities (62,208) (1,117,169) (88,716) (1,189,035)

Net increase (decrease) in cash and cash equivalents 78,113 (165,381) 42,052 (178,553)

Cash and cash equivalents At the beginning of the period 56,993 222,075 170,324 348,578 Effect of changes in exchange rate on cash and cash equivalents 3,520 299 3,520 299 At the end of the period 138,626 56,993 215,896 170,324

Net increase (decrease) in cash and cash equivalents 78,113 (165,381) 42,052 (178,553)

See the accompanying notes to the financial statements.

15 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries

Statements of added value

For the years ended december 31, 2018 and 2017

(In thousands of reais – R$)

Parent company Consolidated

12/31/2018 12/31/2017 12/31/2018 12/31/2017

Income Income from services rendered (Management/Lease) 1,937 5,546 449,578 438,233 Income from sales of real estate - - 62,400 31,774 Other income 20,374 286,375 20,374 286,375

22,311 291,921 532,352 756,382

Inputs acquired from third parties Costs of products, goods and services rendered - - (151,484) (125,966) Materials, energy, outsourced services and other operating items (5,467) (15,756) (11,833) (24,181) Other (3,565) (2,033) (16,501) (15,178)

(9,032) (17,789) (179,818) (165,325)

Gross added value 13,279 274,132 352,534 591,057

Net depreciation and amortization (1,963) (989) (48,201) (53,566)

Net value added produced by the Company 11,316 273,143 304,333 537,491

Added value received as transfer Equity in net income of subsidiaries 144,731 95,863 (1,145) (3,709) Other (33,006) 3,710 (31,198) (5,930) Financial income 21,828 26,590 32,657 42,328 133,553 126,163 314 32,689

Total added value payable 144,869 399,306 304,647 570,180

Distribution of added value

Personnel Salaries and payroll charges 6,297 6,418 15,901 13,592 Sales commissions 737 - 5,331 4,876 Management fees 3,666 4,402 5,309 6,172 Employee profit sharing 6,615 6,004 10,105 8,293

Taxes, duties and contributions Federal (251) 6,616 54,374 57,138 Municipal 188 287 4,419 4,099

Third-party capital remuneration Interest 122,595 194,962 152,560 244,851

Other 5,909 6,413 6,946 8,706

Remuneration of own capital Retained earnings (losses) for the periods (887) 174,204 (887) 174,204 Dividends earned in the period - - - - Non-controlling interest in retained earnings - - 50,589 48,249

144,869 399,306 304,647 570,180 See the accompanying notes to the financial statements.

16 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Notes to the financial statements

(Amounts expressed in thousands of reais, unless otherwise indicated)

1 General information Cyrela Commercial Properties S.A. Empreendimentos e Participações (“Company”) is a publicly-traded corporation, domiciled in Brazil, and its shares are traded on [B]³ under the code “CCPR3”. The Company’s headquarters are located at Avenida Brigadeiro Faria Lima, 3600 - 14º andar, São Paulo, State of São Paulo.

The Company and its subsidiaries are mainly engaged in the development, sale and rent of commercial properties, the management of assets, the exploitation of shopping malls, the provision of management services, management of agreements, real estate development and other related services, as well as holding interest in other companies.

2 Significant accounting practices

2.1 Statement of conformity The Company’s Management is responsible for (individual and consolidated) financial statements and are comprised of:

(a) The consolidated financial statements were prepared in accordance with the International Financial Reporting System (IFRS) issued by the International Accounting Standards Board (IASB) and also in accordance with the accounting practices adopted in Brazil (BR GAAP).

(b) The individual financial statements of the parent company were prepared according to the BR GAAP.

The issuance of the Company’s information for the year was authorized by the Board of Directors as of February 14, 2019. After their issuance, only the shareholders have the power to change the financial statements.

All relevant information specific to the financial statements, and only such information, is being evidenced, and corresponds to the information used by company Management.

2.2 Basis of preparation The individual and consolidated financial statements were prepared based on the historical cost, unless otherwise indicated.

All amounts presented in these financial statements are expressed in thousands of reais, except when otherwise indicated.

Functional and presentation currency of financial statements. Consolidated financial statements are being presented in Real (R$), functional currency of the parent company and its subsidiaries, except for the subsidiary CCP ASSET Management LLC, which functional currency is USD.

17 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

The income statements and the balance sheets of the Company’s entities whose functional currency is different from presentation currency are translated into presentation currency as follows: (i) the assets, liabilities and shareholders’ equity (except for the items mentioned in item (iii)) are translated at the exchange rate in effect on the balance sheet date; (ii) income and expenses are translated at the average exchange rate, except for specific operations which, due to their relevance, are translated at the rate on the date of operation; and (iii) capital, capital reserves and treasury shares are translated at the rate on the date of transaction. All foreign exchange differences are recognized in the comprehensive income as accumulated translation adjustments, and transferred to income (loss) upon realization of the operation.

2.3 Basis of consolidation The consolidated financial statements as of December 31, 2018 and 2017, include the consolidation of investees according to the criteria shown below:

(i) Subsidiaries - The financial statements of the subsidiaries are included in the consolidated financial statements as from the date that the Company obtains the control, until the date such control ceases. The individual financial statements of subsidiaries are recognized under the equity method in the financial statements of the parent company.

(ii) Investments in entities valued under the equity method - The Company’s investments in entities valued under the equity method include interest in associated companies and jointly- controlled subsidiaries.

(ii.a) Associated companies are the entities in which the Company has, directly or indirectly, significant influence but not control or jointly-control on financial and operating policies.

(ii.b) Jointly-controlled subsidiaries in which the Company shares the control with third-parties, regarding financial and operating policies.

Such investments are initially recognized by the cost, which includes expenditures with transactions. After initial recognition, quarterly financial information includes the Company’s interest in investee’s net income (loss) for the year and other comprehensive income up to the date in which significant influence no longer exists.

(i) Non-controlling interest - The Company measures any non-controlling interest at their proportion in identifiable net assets on the acquisition date. Changes to the Company’s interest in a subsidiary that do not result in loss of control are accounted for as transactions of the shareholders’ equity.

(ii) Transactions eliminated upon consolidation - Balances and transactions among consolidated companies were eliminated in consolidation process. Gains and losses deriving from transactions among the Company’s entities are equally eliminated.

For further information about the investees, see note 10 investments.

When the Company loses its control over an entity, assets and liabilities and any non-controlling interest and other components recorded in shareholders’ equity regarding this entity, are derecognized, and in case of gains or loss, is recorded in income (loss).

18 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

2.4 Significant accounting practices

2.4.1 Use of estimates and judgments. The preparation of financial statements requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and the amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and assumptions are reviewed on a continuous basis. Reviews of estimates are recognized prospectively.

Information on uncertainties, assumptions and estimates that pose a significant risk of resulting in a material adjustment in the next year is mainly due to the following aspects:

a. Useful life of investment properties The estimates of our assets held in investment properties are based on technical reports, including the useful life of the asset.

b. Provisions for tax, civil and labor contingencies The estimates of probable, possible and remote are determined according to the status of the lawsuits, which are subject to interpretation of each jurisprudence, which may have a change in relation to the initial evaluation of the lawyers.

c. Losses related to accounts receivable As a policy, we have adopted the provision for losses when a significant uncertainty is identified, usually installments overdue for more than 360 days. For the expected loss, the company carried out an analysis of accounts receivable along with the analysis of the macroeconomic scenario to define the percentage used to calculate the expected loss of accounts receivable.

d. Financial instruments Our financial instruments are mainly subject to change in the CDI rate (Interbank Deposit Certificate), which is influenced by the Selic rate (Special System of Settlement and Custody), regulated by the Central Bank of Brazil.

e. Disclosure of fair value of investment properties We used a few methods to define the fair value of the properties. Namely: direct comparison of market data; involutive method and method of direct capitalized income or discounted cash flow, all of them detailed in note 10.

Measurement of fair value A series of Company’s accounting policies and disclosures requires the measurement of fair value, for financial and non-financial assets and liabilities.

19 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

When measuring fair value of an asset or liability, the Company uses observable data as much as possible. Fair values are classified at different levels according to hierarchy based on information (inputs) used in valuation techniques, as follows:

 Level 1: Prices quoted (not adjusted) in active markets for identical assets and liabilities.

 Level 2: Inputs, except for quoted prices, included in Level 1 which are observable for assets or liabilities, directly (prices) or indirectly (derived from prices).

 Level 3: Inputs, for assets or liabilities, which are not based on observable market data (non- observable inputs).

2.4.2 Determination and statement of income from lease and sale of real estate

(a) Income from rent of malls, parking lots and commercial units, and rendering of services, are recognized when the services are provided, on the accrual basis.

Composing the income we have their linearization, following CPC 6 - Commercial leasing operations (R1) for the recording of rental income and accounts receivable. Based on this method, our income is subject to linearization according to the lease agreements.

(b) Income from sale of real estate is recognized when (or as) the entity meets the performance obligation by transferring the good or service (asset) promised to the client. The asset is considered transferred when (or as) the client obtains control of that asset.

2.4.3 Cash and cash equivalents. It includes cash, positive balances in checking account and securities with possibility of redemption within a period shorter than 90 days and without risk of material change in its market value. Financial investments are represented by Interbank Deposit Certificates and purchase and resale commitments, both with daily liquidity, demonstrated at the acquisition cost, plus yields earned up to the dates of closing of years.

2.4.4 Securities. Securities are classified as “amortized cost” and are stated at amortized cost, and the effects of actual interest rates recorded in the result, under the caption “Financial Income”.

2.4.5 Accounts receivable and allowance for doubtful accounts They include rental fees receivable, as well as management fees and of assignment of right of use of the store owners of the shopping malls, and amounts corresponding to the sale of real estate units.

A provision was recorded in an amount deemed sufficient by Management for credits whose recovery is considered doubtful (based on risk assessment to cover probable losses), upon a record of income (loss) for the year.

20 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

2.4.6 Inventories. Represented by land for the development of commercial real estate projects, with purpose of sale. The inventories of land and real estate units are stated at historical formation cost, which includes all correlated expenditures, directly linked and measurable.

Interest capitalization Interest on debentures and financing contracted at the Parent Company are attributable to real estate developments according to the contributions made to the companies with constructions in progress. This interest is capitalized, net of financial income, in inventory or investment property and is recorded at cost according to the ideal fraction sold or depreciation.

Net realizable value of inventories The net recoverable value of inventories is calculated pursuant to CPC 16 R.1 - Inventories, whereby the value accounted for in inventories is stated at the lower of cost or net realizable value.

2.4.7 Liabilities and advances from clients for acquisition of properties On acquisitions of properties, payments may be made in kind or with the delivery of future real estate units. Both are initially recognized at contractual value. The amounts are settled upon the payment in cash or according to the percentage of completion of the work.

2.4.8 Investments. In individual financial statements, investments in subsidiaries are accounted for under the equity method. As per such method, such investments are initially recognized by the cost, which includes expenditures with transactions. After initial recognition, financial statements include the Company’s interest in income or loss for the year and other comprehensive income of the investee up to the date in which significant influence or joint control no longer exists.

2.4.9 Investment properties. Refer to properties from which continuous and permanent economic benefit is expected, represented by properties for rent, are stated at acquisition cost less depreciation calculated under the straight-line method, at annual rates mentioned in Note 10. Depreciation rates consider the economic useful life of the assets, which are reviewed on annual basis.

In addition, the fair value of the investment properties is determined based on market conditions, for purposes of calculation of losses on recoverable value of these assets and disclosure, as presented in the respective note.

2.4.10 Property, plant and equipment. Comprised of tangible assets, destined for administrative purposes and stated at acquisition cost, net of accumulated depreciation of these assets. Depreciation is calculated under the straight- line method at annual rates mentioned in Note 11, taking into account the economic useful life of assets.

2.4.11 Intangible assets Intangible assets acquired separately are measured upon the initial recognition at cost and, subsequently, deducted from accumulated amortization and impairment losses, if any.

21 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

2.4.12 Evaluation of recoverable value of assets (“impairment” test) Management reviews the net book value of assets annually in order to assess events or changes in economic, operating, or technological circumstances likely to point out impairment or loss of their recoverable value. When these evidences are detected and the net book value exceeds recoverable value, a provision for impairment is recorded. In the years presented, there were no losses on reduction to recoverable value of the assets.

2.4.13 Other assets and liabilities (current and non-current). An asset is recognized in the balance sheet when it is likely that its future economic benefits will be used in favor of the Company, and cost or value can be safely measured. A liability is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event, and it is probable that an economic resource will be required to settle it. When applicable, these will include the respective charges, inflation adjustments and exchange- rate changes incurred.

Assets and liabilities are rated as current when their realization or settlement is likely to occur in the following 12 months. Otherwise, they are presented as non-current.

2.4.14 Income tax and social contribution on net income. Income tax and social contribution on net profit are calculated in conformity with the criteria set forth by the current tax legislation. Income tax is calculated at the regular rate of 15% (plus a 10% surtax on annual income exceeding R$ 240) and social contribution at the rate of 9%. As allowed by the tax legislation, companies with annual sales in the prior year that was lower than R$ 78,000 may adopt the deemed profit taxation system and certain subsidiaries exercised this taxation option. For these companies, the calculation basis of income and social contribution taxes for gross income of lease calculated at the rate of 32% and income from sales of real estate, bases are 8% and 12%, respectively (100% for both taxes when income is derived from financial gains), to which the regular income and social contribution tax rates are applied.

Deferred income and social contribution taxes are calculated at rates by which temporary differences will be effectively taxes, according to tax legislation.

2.4.15 Provisions. A provision is recognized when the Company have a present obligation as a result of a past event; it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

2.4.16 Financial and derivative instruments.

a. Financial instruments. The financial instruments of the Company and its subsidiaries include cash and cash equivalents, cash investments, accounts receivable and payable, financing, loans, debentures, promissory notes, certificates of receivables, among other.

The Company and its subsidiaries recognize financial instruments on the date that they become one of the parties of the contractual provisions of the instrument.

22 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

b. Financial assets Financial assets are classified as amortized cost comprising accounts receivable, loans, and other receivables with fixed or determinable payments and that are not quoted in one market. Financial assets classified as amortized cost are measured at amortized cost using the effective interest method, less any impairment. This classification depends on the nature and purpose of financial assets and is determined at initial recognition.

c. Financial liabilities The financial liabilities are classified as other financial liabilities, which include loans, financing, debentures, promissory notes, certificates of real estate receivables, suppliers and other accounts payable, and are initially stated at fair value, net of transaction costs. Subsequently, they are measured at amortized cost, using the effective interest method and financial expenses is recognized under the effective remuneration.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating its interest expense over the applicable period. The effective interest rate is the rate that exactly discounts estimated future cash flows over the expected life of the financial liability.

2.4.17 Employees’ and directors’ benefits The Company does not maintain private pension plans or any pension plan or post-employment benefits. The Company offers profit sharing (PLR) benefit, which is recognized as expense during the effectiveness period. See details in Note 20.b.

2.4.18 Basic and diluted earnings per share The basic earnings per share are calculated by dividing the income (loss) for the year attributable to the Company's shareholders and the number of common shares available in the respective period (total shares, less treasury shares). The diluted part also considers the exercise of call options, if any. See Note 28.

2.4.19 Segment reporting Operating segments are defined as components of an entity for which separated Financial Statements are available and are evaluated on regular basis by the principal operating decision maker, so as to allocate funds to the evaluation of the performance of managers of a given segment. In view of the Company’s operations, we segregated the segment reporting, namely: buildings, sheds, shopping malls, services, real estate development and other.

2.4.20 Distribution of dividends The payment of dividends to shareholders is recognized as liability in the following situations: (i) if the payment is approved according to the by-laws, prior to the closing of the years; and (ii) according to the Corporate Law, which defines the minimum dividend of 25% of income for the year. In the Annual Shareholders' Meeting, additional dividends may be approved and are recognized only in this occasion, and possible proposal for supplementary dividends made by Management upon preparation of financial statements is maintained as profit reserve at balance sheet date.

23 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

2.4.21 Supplementary information The Company prepared the individual and consolidated statement of added value in accordance with the terms of technical pronouncement CPC 09 - Statement of Added Value, which is presented as an integral part of the financial statements prepared according to the accounting practices adopted in Brazil applicable to publicly-held companies, whereas under IFRS they represent additional financial information.

2.4.22 Treasury shares They are equity instruments that are bought back, recognized at cost, and deducted from shareholders’ equity. No gain or loss is recognized in the income statement on the purchase, sale, issuance or cancellation of the Company’s equity instruments. Any difference between the book value and the remuneration is recognized in other capital reserves.

3 Accounting pronouncements

New standards and interpretations not yet adopted

IFRS 16 CPC 06 (R.2) Lease operations January 1, 2019

Amendment to IFRS 2 unaudited Share-based payments To be determined

Amendment to IFRS 10 and IAS 28 unaudited Associated company or "Joint Venture" To be determined

IFRS 16 Leases (CPC 06 R.2 Lease Operations) IFRS 16 introduces a single model of accounting of leases in the balance sheet to lessees. A lessee recognizes an asset of right of use that represents its right to use the leased asset and a lease liability that represents its obligation to make the lease payments. Optional exemptions are available for short-term leases and low-value items. The lessor’s accounting remains similar to the current standard, that is, lessors continue to classify leases as financial or operating leases.

IFRS 16 replaces the current lease standards, including CPC 06 (IAS 17) Commercial Lease Operations and ICPC 03 (IFRIC 4, SIC 15 and SIC 27) Complementary Aspects of Commercial Lease Operations.

The Company began the initial evaluation of the potential impact on its financial statements and it does not expect any material impact, since the Company operates as lessor and the impacts of this standard affect mainly the statements of the lessees.

First-time adoption of CPC 48 Financial Instruments CPC 48 / IFRS 9 - Financial instruments includes new rules regarding the classification and measurement of financial assets, impairment and new hedge accounting principles.

The accounting policies used in financial statements are the same as those used in the financial statements as of December 31, 2017, except for the adoption of the new pronouncement in question. Thus, changes in accounting policies will also be reflected in the Group's financial statements for the year ending December 31, 2018.

24 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

The Group has initially adopted CPC 48 / IFRS 9 - Financial Instruments as from January 1, 2018. The effect of the initial application of this standard is attributed by the Company's business model to an increase in impairment losses of accounts receivable.

It is worth emphasizing that on December 31, 2017, the Company had no hedge operations and had them as of December 31, 2018.

The effect of the adoption of CPC 48 / IFRS 9 on the book values of financial assets as of January 1, 2018 refers only to the new requirements for impairment, as follows:

Original value in New book value in Accounting caption accordance with CPC 38 accordance with CPC 48 Change

Allowance for doubtful accounts (20,844) (22,388) (1,544)

Due to the change in accounting policy and its adoption in a prospective manner, the Company recorded the adjustment shown in the table below in shareholders' equity as of January 1, 2018:

Statement of Changes in Shareholders' Equity (DMPL) - 12/31/2018

Account Opening balance Adjust. IFRS 9 Closing balance

Profit retention 312,648 (1,544) 311,104

In addition, IFRS 9 changed the definition of the original measurement categories in IAS 39, and the new measurement categories under IFRS 9 for each class of financial assets of the Group as of January 1, 2018. This change only comprised the definition of categories, not impacting the measurement of financial instruments as of January 1, 2018. There is a chart showing the impacts of adoption in note 21.e.

4 Cash and cash equivalents Refer to cash, bank balances and cash investments in Certificates of Bank Deposit (CDB) and Repurchase and resale agreements backed by debentures, which are remunerated at rates that approximate CDI change (75-100%) and for which there are no penalties or any other restrictions for their immediate redemption, in addition to the right to require the repurchase anytime.

Balance of cash and cash equivalents are under the category of measurement at amortized cost.

Description Parent company Consolidated

12/31/2018 12/31/2017 12/31/2018 12/31/2017

Cash and banks 465 55 12,047 20,651 Investments 138,161 56,938 203,849 149,673

Total cash and cash equivalents 138,626 56,993 215,896 170,324

25 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

5 Securities

Description Parent company Consolidated

12/31/2018 12/31/2017 12/31/2018 12/31/2017

Debentures - 30,005 26,071 44,291 CDB - - 17,478 6,320 Purchase and sale commitments - - 30,739 65,911 Financing bills 36,923 - 74,400 15,567 Financial Treasury Bills - LFT - - 15,120 34,088 Investment funds 86,378 118,616 2,879 4,731

Total 123,301 148,621 166,687 170,908

Refers to repurchase and resale agreements, and investment funds, distributed according to table above, characterized by repurchase at previously defined term and price. With remuneration at rates that approximate CDI change (98-100%).

Balance of cash and cash equivalents are under the category of measurement at amortized cost.

6 Accounts receivable Represented by:

Description Parent company Consolidated

12/31/2018 12/31/2017 12/31/2018 12/31/2017

Leases 419 - 58,456 72,521 Assignment of Usage Rights (CDU) - - 10,948 12,960 Sale of units completed (a) - - 1,399 6,655 Management services - - 4,324 4,305

Subtotal of balance receivable 419 - 75,127 96,441 Linearization (b) - - 32,207 29,623 Allowance for doubtful accounts (c) - - (23,314) (20,843)

Total group - accounts receivable 419 - 84,020 105,221

Current 419 - 80,794 100,653 Non-current - - 3,226 4,568

(a) Refers to amounts receivable from units sold regarding Thera Residencial and Saletas projects.

(b) Accounting method under CPC 6 - Commercial leasing operations (R1) to record rental income and accounts receivable.

(c) The company adopts a policy of recording an allowance for doubtful accounts when it identifies a significant certainty, usually installments overdue for more than 360 days and a percentage of expected loss on the remaining balance of accounts receivable.

26 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Balance receivable on October 31, 2018 is broken down per maturity as follows:

Falling due / Maturity < 360 days 56,951

Maturity > 360 days 18,176

Balance Receivable 75,127

On December 31, 2018, balance of non-current is broken down by year of maturity as follows:

2020 2,597 2021 337 2022 114 2023 178

Balance at 12/31/2018 3,226

7 Inventories

Current 12/31/2018 12/31/2017

Thera Residencial & Saletas 944 4,428

Total current 944 4,428

Non-current

Corporativo Centro Metropolitano 42,200 41,858

Total non-current 42,200 41,858

In December 2018, the Company does not have any real estate property in the inventory given as a debt guarantee.

The consolidated changes in inventories, for the period ended December 31, 2018, is represented as follows:

Balance in 2017 46,286

Costs incurred 5 Sales (41,012) Stock transfers 41,017 Transfers to intangible assets (3,484) Capitalization 332

Balance in 2018 43,144

Compound interest During the period ended December 31, 2018, changes in capitalized interest occurred as follows:

27 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Description Amount

Balance at 12/31/2017 9,454 Interest capitalized in the period 332

Balance at 12/31/2018 9,786

8 Taxes recoverable Represented by:

Description Parent company Consolidated

12/31/2018 12/31/2017 12/31/2018 12/31/2017

IRRF - Withholding income tax (a) 36,586 25,677 42,653 34,327 CSLL - Social contribution on net income 2 1,937 628 2,460 PIS and COFINS 9 15 404 2,080 Other recoverable taxes 11 5 57 75

Total 36,608 27,634 43,742 38,942

Current 6,783 4,822 6,783 4,822 Non-current 29,825 22,812 36,959 34,120

(a) The income tax value is represented by withholdings over cash investments and dividends received from real estate funds, even of prior years, which pursuant to article 66 of Law 8383/91, with new wording given by article 58 of Law 9069/95, establishes the right to offset against taxes of same nature or request of restitution, which ensures to the Company its full realization at restated values.

28 Cyrela Commercial Properties S.A. Empreendimentos and Participações and Subsidiaries Financial statements on December 31, 2018

9 Investments

9.1 Main information of associated companies as of December 31, 2018 and 2017 is summarized as follows

Total Assets Total Liabilities

Current assets Non-current assets Current liabilities Non-current liabilities Shareholders' equity

12/31/201 Associated companies 8 12/31/2017 12/31/2018 12/31/2017 12/31/2018 12/31/2017 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Carcavelos 5 1 9,576 9,559 - 2 - - 9,581 9,558 Cyrela Tururin 2,001 2,302 37 23 717 123 - - 1,321 2,202 CLD 33,886 30,715 - - 71 79 - - 33,815 30,636 CCP Canela 14 9 31,799 31,994 11 8 - - 31,802 31,995 CCP Sandalo 952 9,417 86 23 568 608 981 430 (511) 8,402 North Shopping - 11,112 - 194,279 - 18,314 - 135,839 - 51,238 SPE Azione 15,783 26,256 257,765 274,202 17,848 38,209 41,976 59,813 213,724 202,436 Fundo Brasilio Machado 1,325 1,356 8,594 8,814 686 476 - - 9,233 9,694

Net income Costs Income (loss)

Associated companies 12/31/2018 12/31/2017 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Carcavelos - - - - - (277) Cyrela Tururin - - 97 665 (82) (661) CLD - - - - (71) (67) CCP Canela - - - - (292) (389) CCP Sandalo - 2,090 41 858 (913) 1,453 Norte Shopping Belem - 22,921 - 7,642 - (679) SPE Azione 28,474 26,534 15,154 15,593 5,724 (6,695) Fundo Brasilio Machado 2,343 3,618 2,043 1,620 39 1,941

30 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

9.2 Changes and breakdown of investments are as follows

Interest % Equity in net Balance at Paid-up capital income of Interest Balance at Description of the companies 2017 2018 12/31/2017 (decrease) Dividends subsidiaries capitalization 12/31/2018

Investments in subsidiaries

Aquarius 66.57% 66.57% 62,230 3,627 (23,721) 17,705 - 59,841 CCP Acácia 100.00% 100.00% 17,269 - (1,000) (5) - 16,264 CCP Açucena 66.57% 66.57% 7,767 655 (3,706) 2,721 - 7,437 CCP Adm de Propriedades 100.00% 100.00% 10,007 - (9,834) 9,942 - 10,115 CCP Agata 99.99% 99.99% 1 33,071 - (2,311) - 30,761 CCP Alecrim 66.57% 66.57% 3,466 279 (1,693) 1,516 - 3,568 CCP Ambar 66.57% 66.57% 9,389 588 (3,782) 2,972 - 9,167 CCP Asset 100.00% 100.00% 19,236 3,297 (15,566) 687 - 7,654 CCP Aurora 66.57% 66.57% 59,127 6,578 - (4,030) (278) 61,397 CCP Bromélia 25.00% 25.00% 25,408 - - 281 (140) 25,549 CCP Caliandra 62.50% 62.50% 143,245 20,447 - (15,694) (841) 147,157 CCP Carvalho 100.00% 100.00% 3 2 - (2) - 3 CCP Citrino 99.99% 99.99% 1 2 - (3) - - CCP Eucalipto 100.00% 100.00% 34,839 3 - (8) 332 35,166 CCP Laranjeira 100.00% 100.00% 31,762 143 - 699 - 32,604 CCP Lavanda 99.99% 99.99% 1 2 - (2) - 1 CCP Leasing Malls 100.00% 100.00% 15 80 - (177) - (82) CCP Lilac 100.00% 100.00% 16,559 11,109 - (2,206) - 25,462 CCP Magnólia 100.00% 100.00% 476,312 3,747 - (4,331) (1,143) 474,585 CCP Marfim 25.00% 25.00% 83,550 (15) (575) 2,540 (212) 85,288 CCP Marmore 66.56% 66.56% 1,955 261 (1,796) 1,401 - 1,821 CCP Mogno 99.90% 99.90% 494 - - 22 - 516 CCP Nordeste 66.57% 66.57% 6,458 (926) (642) 546 - 5,436 CCP Participações 100.00% 100.00% 90 - - (3) - 87 CCP Pinheiro 99.99% 99.99% 2 2 - (3) - 1 CCP - Real estate 62.13% 61.29% 42,287 11,401 (8,763) 6,467 - 51,392 CCP Quartzo 99.98% 99.98% 1 2 - (2) - 1 CSC Serviços Administrativos 99.99% 99.99% 47 189 - (501) - (265) Fundo CTI 51.11% 51.11% 16,572 131 (5,789) 5,782 - 16,696 Fundo Grand Plaza 61.41% 61.41% 120,241 801 (38,973) 39,183 (28) 121,224 Hatiha 100.00% 0.00% 56,172 (52,238) (3,934) - - - Micônia 100.00% 100.00% 580,448 (129) (65,522) 64,354 (7,594) 571,557 Millennium 66.57% 66.57% 70,088 (3,082) (25,067) 19,011 - 60,950 ON Serviços Digitais 99.99% 99.99% 457 1,936 - (1,858) - 535 YM Investimentos 100.00% 100.00% 95,009 (26,865) - (1,585) - 66,559 Goodwill in the acquisition of interest (b) 26,378 (1,914) - - - 24,464

Subtotal - subsidiaries - investees 2,016,886 13,184 (210,363) 143,108 (9,904) 1,952,911

Investments in associated companies

Carcavelos 12.64% 12.64% 1,208 3 - - - 1,211 CCP Canela 50.00% 50.00% 16,339 50 - (146) - 16,243 CCP Sândalo 50.00% 50.00% 4,201 (4,000) - (457) - (256) CLD 60.00% 60.00% 18,582 1,950 - (42) - 20,490 Cyrela Tururim 50.00% 50.00% 1,101 (400) - (41) - 660 Fundo Brasilio Machado 50.00% 50.00% 4,847 (150) (100) 19 - 4,616 Norte Shopping Belém 25.00% 0.00% 13,311 (12,809) - - (502) - SPE Azione 40.00% 40.00% 85,414 1,962 - 2,290 (107) 89,559

Subtotal - associated companies - investees 145,003 (13,394) (100) 1,623 (609) 132,523

Total investments 2,161,889 (210) (210,463) 144,731 (10,513) 2,085,434

31 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Equity in net income of subsidiaries includes the amount of R$ 1,544 related to the adoption of CPC 48 Financial Instruments.

(a) The Company issued a call option for the sellers in the amount of R$154 million, which they may exercise from October 8, 2017 to April 30, 2019. For the quarter, the company chose to acquire the repurchase right to which the sellers were entitled.

(b) Upon acquisition of companies Norte Shopping, SPE Azione and Fundo CTI, part of amount paid, in excess of cost, was allocated to some assets - mainly pieces of land - and, in companies Fundo Grand Plaza and Hatiha, to buildings. Accordingly, this fair value, which was added to assets, is depreciated, if applicable, at the same rates used for original amounts, which vary from 2% to 2.7% per annum. Recorded net values are as follows:

Parent company

Description 12/31/2018 12/31/2017

Norte Shopping Belém S/A - 711 SPE Azione Gestão e Particip. Ltda 1,466 1,493 Fundo Centro Textil 758 773 Fundo Inv. Imob Grand Plaza Shop. 19,031 19,576 Hatiha Comercial Imobiliaria Ltda - 561 CCP Aurora Empreend. Imob. S/A 3,209 3,264

Total 24,464 26,378

9.3 Investments in associated companies Changes in investments in associated companies that remain recorded in consolidated statements are as follows:

% Direct interest Equity in Paid-up net income Associated Balance at capital of Interest Balance at companies 2017 2018 12/31/2017 (decrease) Dividends subsidiaries Other capitalization 12/31/2018

Carcavelos 12.64% 12.64% 1,208 3 - - - - 1,211 CCP Canela 50.00% 50.00% 16,338 50 - (146) - - 16,242 CCP Sândalo 50.00% 50.00% 4,201 (4,000) - (457) - - (256) CLD 60.00% 60.00% 18,582 1,951 (1) (43) - - 20,489 Cyrela Diamante 48.98% 48.98% 7,453 (13) (390) (15) - - 7,035 Cyrela Tururin 50.00% 50.00% 1,101 (400) - (41) - - 660 Fundo Brasilio Machado 50.00% 50.00% 4,847 (148) (100) 19 - - 4,618 Norte Shopping Belém 25.00% 25.00% 13,311 (12,809) - - - (502) - Parallel 0.20% 0.20% 1,267 (64) - (124) 148 - 1,227 SPE Azione 40.00% 40.00% 85,151 2,225 - 2,290 - (108) 89,558 Other investments (a) - - 18,744 1,418 (294) (2,628) (64) - 17,176 Goodwill in the acquisition of interest - - 2,419 - - - (706) - 1,713

Total investments 174,622 (11,787) (785) (1,145) (622) (610) 159,673

(a) According to the contract for the purchase and sale of quotas and other covenants, entered into on March 10, 2016, CCP Lilac acquired companies Cyrela Milão Empreendimentos Imobiliários Ltda., Cyrela Tennessee Empreendimentos Imobiliários Ltda., API SPE 88 - Planejamento e Desenvolvimento de Empreendimentos Imobiliários Ltda., CHL LLXXVIII Incorporações Ltda., Cyrela Oceania Empreendimentos Imobiliários SPE Ltda., Evidense PDG Cyrela Ltda and SPE CHL Incorporações Ltda.

34 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

10 Investment properties Investment properties are initially recorded at cost and, then, depreciated, and are comprised of properties that are rented by the Company. Balances as of December 31, 2018 and 2017 are as follows:

Parent company Consolidated

Description % Depreciation 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Buildings and constructions 2.0%%-2.7% - - 2,599,567 2,612,185 Land - - - 364,018 379,871 Leasehold improvements 2% - - 39,141 35,571

Total cost - - 3,002,726 3,027,627

(-) Accumulated depreciation - - (212,843) (177,841)

Total investment properties - - 2,789,883 2,849,786

As at December 31, 2018, the Company provided R$ 1,978,037 as debt guarantee.

Consolidated changes in investment properties for the period ended December 31, 2018 are as follows:

Balance at Balance at Description 12/31/2017 Additions Write-offs Depreciation Transfers Capitalization 12/31/2018

Buildings and constructions 2,440,086 23,779 (25,753) (34,785) 4,219 (10,236) 2,397,309 Land 379,870 - (11,029) - (4,823) - 364,018 Improvements in progress (592) - - - 592 - - Leasehold improvements 30,422 6,858 (2,337) (5,506) (882) - 28,555

Total 2,849,786 30,637 (39,119) (40,292) (893) (10,236) 2,789,883

(a) Transfers are comprised of:

Income from joint ventures Transfers

Buildings and constructions 4,219 Land (4,823) Leasehold improvements 592 Improvements in progress (882) Goodwill -

Total (893)

The Company opted to record investment properties at cost less depreciation. Comparison between cost value and fair value of investment properties (calculated on an annual basis for the purpose of recoverability analysis):

Fair value as of Book value on Unrecorded gross Properties 12/31/2018 12/31/2018 goodwill

Buildings 1,618,318 639,053 979,265 Shopping malls 3,988,042 2,120,544 1,867,498 Other 143,259 30,286 112,973

Total 5,749,619 2,789,883 2,959,736

35 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Evaluation was carried out internally as of December 31, 2018 and, depending on property and market characteristics, one or more methods were used to determine market value, as follows:

 Yield method |- direct capitalization: in this methodology, the expected yield is presupposed by an investor on a certain real estate, that is, it is based on the timely return analysis of the investment made. Value is obtained through capitalization of annual income, using rate consistent with the market and reflecting investment risk. The result indicates amount available for acquisition of property from the investors’ point of view. With yield between 8.5% and 10%.

 Yield method - discounted cash flow - In this methodology, the current rent income is estimated, based on current lease agreements, over a 10-year period, considering appropriate growth rates and contract events (price adjustments, revisions and renewals), which shall take place in the shortest term provided for the legislation.

The measurement of fair value of all the investment properties were classified as Level 3 based on used inputs.

For our evaluation of assets, we used the following rates:

Indicators Weighted average

Growth of income 3.4% Default 1.8% Discounts on sales 5.2% Financial vacancy 3.9% Adm/Income fee 2.4% Discount rate 6.2%

11 Property, plant and equipment and intangible assets Represented by:

Parent company Consolidated % Depreciation Description and amortization 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Property, plant and equipment Buildings and constructions 2.0%%-2.7% - - - 3 Furniture and fixtures 10% 50 18 52 162 Data processing equipment 20% 695 602 1,242 1,378 Improvements - - 404 -

Total cost 745 620 1,698 1,543

(-) Accumulated depreciation (602) (558) (996) (761) Property, plant and equipment, net 143 62 702 782

Intangible assets Software and hardware 20% 94 12 754 589 Trademarks, patents and rights - - 3,484 -

Total cost 94 12 4,238 589

(-) Accumulated amortization (16) (10) (239) (110) Intangible assets (net) 78 2 3,999 479

36 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

(a) Changes in consolidated property, plant and equipment and intangible during the period ended December 31, 2018 are as follows:

Depreciation Balance at Addition/write- and Balance at Description 12/31/2017 off amortization Transfer 12/31/2018

Property, plant and equipment Buildings and constructions 3 (3) - - - Furniture and fixtures 146 (111) (2) - 33 Data processing equipment 633 (135) (99) - 399 Improvements - - (20) 290 270

Total 782 (249) (121) - 702

Intangible assets

Software 479 166 (129) - 516 Trademarks, patents and rights - - - 3,483 3,483

Total 479 166 (129) 3,483 3,999

12 Loans, financing, debentures and promissory notes

12.1 Financings Breakdown:

Parent company Consolidated Contracting Financial institution date Charges Ref 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Banco do Brasil 12/23/2013 9.00%pa+Ref.rate (a) - 166,288 - 166,288 Banco Itaú 11/03/2010 10%pa+Ref.rate (b) - 11,371 - 11,371 Banco Bradesco 09/30/2011 9.30%pa+Ref.rate (c) - - 117,793 130,904 Banco do Brasil 11/18/2014 9.20%pa+Ref.rate (d) - 79,824 - 79,824 Bradesco 12/12/2014 9.60%pa+Ref.rate (e) 275,949 282,069 275,949 282,069 Bradesco 05/12/2014 9.60%pa+Ref.rate (f) - - 79,716 81,325 Banco Itaú 08/03/2015 9.85%pa+Ref.rate (g) - - 101,886 105,447 Banco do Brasil 07/23/2015 9.52%pa+Ref.rate (h) - - 104,876 108,728

Total 275,949 539,552 680,220 965,956

Current liabilities 12,687 42,304 46,725 70,132 Non-current liabilities 263,263 497,248 633,496 895,824

On December 31, 2018, balance of non-current is broken down by year of maturity as follows:

Years Parent company Consolidated

2020 12,497 47,143 2021 13,723 51,048 2022 15,065 55,146 2023 16,537 59,535 2024 18,150 64,343 2025 19,918 50,503 >6 167,373 305,778

Total 263,263 633,496

(a) Value referring to bank credit bill with mortgage collateral and lien of Micônia’s credit receivables, for construction of Shopping Cidade São Paulo. Amortization term is 151 months. Financing settled within the year.

37 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

(b) Value referring to bank credit bill with pledge of shares of CCP Bromélia, for construction of joint venture Corporate Executive Offices (CEO). Amortization term is 84 months. Financing settled within the year.

(c) Subsidiary CCP Marfim contracted a bank credit bill with fiduciary collateral and lien of credit receivables for construction of joint venture Shopping Tietê. Amortization term is 120 months.

(d) Value referring to contract addendum for opening a Banco do Brasil credit facility for construction of joint venture Matarazzo. Amortization term is 151 months.

(e) Bank credit bill contracted with Bradesco for construction of several joint ventures. Amortization term is 204 months.

(f) Bank credit bill contracted by subsidiary CCP Magnólia with Bradesco to cover expenditures related to Shopping Metropolitano. Amortization term is 204 months.

(g) Subsidiary CCP Aurora contracted a bank credit bill with mortgage collateral for construction of joint venture Morizono. Amortization term is 144 months.

(h) Subsidiary CCP Caliandra contracted a bank credit bill with mortgage collateral for construction of joint venture Shopping Cerrado. Amortization term is 138 months. Certain financing contracts determine early maturity of credits contracted by the Company in case certain obligations are not complied with. On this information date, the Company’s management is complying with all obligations established in contracts. Changes in loans for the period ended December 31, 2018 can be shown as follows:

Description Parent company Consolidated

Balance at 12/31/2017 539,552 965,956 Funding - - Payment of principal (276,420) (302,928) Interest payment (32,580) (68,054) Accrued interest 44,269 83,586 Commissions recognized 1,128 1,660

Balance at 12/31/2018 275,949 680,220

12.2 Debentures

Parent company and Consolidated 12/31/2018 12/31/2017

Debentures 1,021,197 531,090 (-) Expenditures from debentures to amortize (4,357) (5,138) Interest on debentures 36,719 9,027

Total 1,053,559 534,979

Current 261,059 158,466 Non-current 792,500 376,513

38 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

 On September 11, 2013 the Company’s Board of Directors approved proceeding with the Company’s 5th simple debenture issue, not convertible into shares and unsecured, issued in two series comprising 20,000 debentures with par value of R$ 10 and the issue totaling R$ 200,000. The debentures will pay interest equal to 110% of the accumulated change in the DI average daily rates. The principal value will be paid in one installment maturing in August 2019, with interest payable every quarter as of November 2013. On December 8, 2017, 9,200 second series debentures were repurchased and canceled.

The balance of these debentures on December 31, 2018 is R$ 54,450. (R$ 109,092 as of December 31, 2017).

 On January 28, 2014, the Company’s Board of Directors approved the 6th issuance of simple debentures, not convertible into shares and with collateral guarantee, issued in one single series comprising 150 debentures with par value of R$ 1,000 and the issue totaling R$ 150,000. The debentures pay interest equal to 100% of the accumulated change in the DI average daily rates, plus 1.15% per annum. The principal value will be paid in 11 six-monthly installments as of January 2017, with interest payable on a half-annual basis as of July 2014.

This debenture was settled on January 12, 2018 (R$ 140,280 as of December 31, 2017).

 On September 22, 2016 the Company’s Board of Directors approved the 7th issuance of Company’s simple debentures, not convertible into shares and with collateral guarantee, issued in one single series comprising 92 debentures with a par value of R$ 1,000 and issuance totaling R$ 92,000. The debentures pay interest equal to 100% of the accumulated change in the DI average daily rates, plus 1.20% per annum. The principal value and interest will be paid as of November 2016.

The balance of these debentures on December 31, 2018 is R$ 81,748. (R$ 85,340 as of December 31, 2017).

 On November 22, 2016 the Company’s Board of Directors approved the 8th issuance of Company’s simple debentures, not convertible into shares and unsecured, issued in one single series comprising 20,000 debentures with par value of R$ 10 and the issuance totaling R$ 200,000. The debentures pay interest equal to 100% of the accumulated change in the DI average daily rates, plus 2.32% per annum. The principal value will be paid in 3 annual installments as of November 2018, with interest payable on a half-annual basis as of May 2017.

The balance of these debentures on December 31, 2018 is R$ 133,414 (R$ 200,267, on December 31, 2017).

 On January 10, 2018 the Company’s Board of Directors approved the 9th issuance of Company’s simple debentures, not convertible into shares and unsecured, to be converted with real guarantee in one single series comprising 45,000 debentures with par value of R$ 10 and the issuance totaling R$ 450,000. The debentures pay interest equal to 100% of the accumulated change in the DI average daily rates, plus 1.40% per annum (base of 252 business days). The principal and interest will be paid in 9 semi-annual installments starting as of January 2019.

The balance of these debentures on December 31, 2018 is R$ 483,588.

 On October 17, 2018 the Company’s Board of Directors approved the 10th issue of Company’s simple debentures, not convertible into shares in single series, with real guarantee in one single series comprising 300,000 debentures with par value of R$ 10000.00 and the issuance totaling R$ 300,000. The Face Value of debentures will be restated by the National Amplified Consumer Price Index (IPCA) plus remuneration interest equivalent to 6.5106% per annum (252 business days base). The principal will be paid on the maturity date and the remuneration interest is payable in monthly installments as of November 2018.

The balance of these debentures on December 31, 2018 is R$ 300,359.

The Company may at its sole discretion, redeem in advance all outstanding debentures, at any time as of the issuance date and following a resolution by the Board of Directors’ meeting, which may take place upon publishing a notice to debentureholders at least 5 business days before the date of advance redemption.

All debentures will not be subject to programmed renegotiating.

Changes in debentures for the period ended December 31, 2018 can be shown as follows:

39 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Parent company Description and Consolidated

Balance at 12/31/2017 534,979 Interest payment (38,055) Payment of principal (260,745) Principal addition 750,000 Accrued interest 66,599 Provision for commission (717) Commissions recognized 1,498

Balance at 12/31/2018 1,053,559

Balance of non-current of debentures as of December 31, 2018, is broken down as follows, by year of maturity:

Years Amounts

2020 172,558 2021 108,123 2022 109,780 2023 61,902 2024 13,880 6 or > 326,257

Balance at 12/31/2018 792,500

40 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

5th, 8th and 9th issuance - "Covenants" The Company will be bound to extend an advance redemption offer to all debentureholders, should it during two consecutive quarters not comply with the contractually agreed on financial ratios, which will be confirmed by the Trustee based on the quarterly financial statements presented by the Company, as follows:

Up to 12/31/2018 Current Ratios and limits determined in debenture contracts maturity position

Net corporate debt/EBITDA should be below or equal to: 3,5x 2.58x

Net debt/EBITDA should be below or equal to: (a) 7x 5.20x

Unencumbered assets/Net corporate debt should be above or equal to: 1,4x 3.01x

(a) It refers to 9th issuance. The Company will be released from redeeming in advance in case debentureholders represented by 75% of all debentures authorize the lack of redemption in a Meeting.

On December 31, 2018, these contractual clauses were complied with.

On guarantees For the 5th and 8th issuance, we only have the Covenants without guarantee requirements. For the 9th issuance, debentures are secured by a mortgage and a lien of quotas, as a guarantee of the punctual as well as full compliance with all the obligations as provided in the 9th Deed of Issue, pursuant to the respective public mortgage deeds (“Real Guarantees” and “Guarantee Agreements” respectively).

On December 31, 2018, these contractual clauses were complied with.

7th issuance - Guarantees. The debentures are secured by a lien of quotas of FII Grand Plaza Shopping and FII Centro Têxtil Internacional, as well as a pledge of quotas of CCP Ambar and CCP Nordeste.

The transaction is in compliance with all covenants provided for in the issue deed.

12.3 Promissory notes

Parent company and Consolidated 12/31/2018 12/31/2017

Promissory notes - 159,323 Interest on promissory notes - - (-) Expenditures with commissions to amortize - (231)

Total - 159,092

Current - 39,092 Non-current - 120,000

41 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

In the third quarter of 2016, the Company concluded the issue of R$ 150,000 in promissory notes, by means of a transaction with Banco Safra. It is secured by a 1st degree mortgage and disposal of quotas in common with the 6th issuance of debentures. The payment term is of three years with payments at every 180 days as of each series’ issue (six series in total). Each series is paid off in full on its maturity date. The transaction’s cost is CDI + 1.15% per annum. The 1st and 2nd series promissory notes were paid off on January 18 and July 17, 2017 respectively. On January 12, 2018 the third to sixth series were settled.

For the period ended December 31, 2018, changes in promissory notes may be represented as follows:

Parent company and Description Consolidated

Balance at 12/31/2017 159,092 Funding of principal - Interest payment (5,441) Payment of principal (154,326) Accrued interest 445 Provision for commission - Commissions recognized 230

Balance at 12/31/2018 -

13 Taxes and contributions payable Represented by:

Parent company Consolidated

Description 12/31/2018 12/31/2017 12/31/2018 12/31/2017

PIS 35 16 261 328 COFINS 218 92 1,256 1,533 ISS 14 28 330 472 IRPJ - - 7,254 5,827 CSLL - - 2,679 2,148 RET - - - - IPTU - - - - IRRF, INSS, PIS, COFINS, CSLL - Withholding 71 216 1,293 1,158 Other - - 384 30

Total 338 352 13,457 11,496

14 Deferred taxes and contributions The Company has the following temporary differences as of December 31, 2018 and 2017:

Parent company Consolidated

Calculation basis 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Accounts receivable - lease - - 8,961 5,222 Res sperata - - 24,261 43,109

Total - - 33,222 48,331

42 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Due to tax obligations aforementioned, the corresponding tax effects (deferred taxes) were calculated as of December 31, 2018 and 2017 as follows:

Parent company Consolidated

Tax Deferred assets 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Accounts receivable - lease - - 560 351

Total current - - 560 351

Res sperata - - 3,525 6,264

Total non-current - - 3,525 6,264

Total deferred taxes - - 4,085 6,615

PIS - - 212 314 COFINS - - 978 1,450 IRPJ - - 2,106 3,553 CSLL - - 789 1,298

15 Taxes payable, installments and judicial deposits These refer to legal obligations arising from tax liabilities by subsidiaries, which were deposited in court accounts as seen below:

Consolidated

Description 12/31/2018 12/31/2017

PIS and COFINS (a) (9,481) (9,481) Refis IV (b) - (1,553) Iptu (2,294) -

Subtotal (11,775) (11,034)

Judicial deposits 11,966 11,155

Total Non-current assets 191 121

(a) PIS and COFINS Sums covering the period between May 2006 to August 2013 for COFINS and PIS and totaling R$ 9,481 (R$ 9,481 on December 31, 2016), in particular regarding extension of the bases of incidence by the mentioned contributions on income prior to Law 9718/98. There is a judicial deposit amounting to R$ 9,481 (R$ 9,481 at December 31, 2016).

(i) REFIS IV On May 27, 2009, the Federal Revenue Service (RFB) has established the Special Installment Payment Program, called “REFIS IV” through Law 11941, and the Joint Ordinance PGFN/RFB 06/2009. The installment option covered in this law implies the irrevocable and irreversible confession of liabilities by the debtor and taxpayer in order to settle the mentioned installments, and is deemed an out-of-court confession. This program allows the renegotiation of special payments of tax debts maturing up to November 30, 2008, as well as debts originating from tax assessments drawn up by the Federal Revenue Service, with the mandatory desistance from any litigation involving these debts.

43 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

This installment arrangement provides, among others, for: (i) a certain percentage to be deducted from amounts due in fines and interest, depending on the payment term decided on by the Company; and (ii) use of the balance of tax losses from income ta x and negative basis of social contribution on net income on the remaining amounts of fines and interest.

As of November 30, 2009, the Company opted for this REFIS modality, and until now has been fulfilling the legal requirements for the maintenance of said program. It is worth mentioning that the permanence of the taxpayer in the program is subject to a timely payment of installments and, as appropriate, the withdrawal of the actions related to the scheduled debt payment.

Company’s debits are mainly those arising from discussions with regard to the applicability of COFINS and social contributions (CSLL) by legal entities with no employees. On December 31, 2018 it reflects amounts of R$ 1,553 stated in the entries “installments payable” and “judicial deposits.”

On August 2014 the federal tax authorities referred partly to this credit, which gave rise to a R$ 1,618 reduction in this provision.

During this year, this process had a favorable outcome, resulting in the reversal of the provision in the amount of R$ 1,409.

16 Related parties

a. Advances for future capital increase (AFAC)

ASSETS Parent company Consolidated

Related parties 12/31/2018 12/31/2017 12/31/2018 12/31/2017

CCP Caliandra (a) - - - 38,896 CLD 46 32 46 32

Total related parties 46 32 46 38,928

(a) Disproportionate advance for capital increase

(b) Amount transferred to investment properties. b. Rental income The Company has units leased to Cyrela Brazil Realty S/A and its subsidiaries, as follows:

Restatement Monthly Joint venture Unit Effectiveness of agreement index amount

FARIA LIMA SQUARE 12th 08/01/2016-07/31/2021 IGP-M 302 FARIA LIMA SQUARE 14th (Part) 08/01/2016-07/31/2021 IGP-M 83

Total 385

c. Management remuneration Technical Pronouncement CPC 05 (R1) - Related Parties defines key management personnel as those professionals with authority and responsibility for planning, for managing and controlling the Company’s activities, directly or indirectly, including any officer (executive or otherwise). Remuneration and charges incurred by the Company until December 31, 2018 and 2017 are broken down as follows:

44 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Parent company Consolidated

Description 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Directors’ fees 8,463 6,337 11,226 7,776 Remuneration of Board members: 746 864 746 564

Total 9,209 7,201 11,972 8,340

(a) In the remuneration paid in 2018, the amount of R$ 3,675 refers to the payment of profit sharing (PLR) for 2017. The limit value for the annual remuneration of Directors in 2018, approved during Annual and Special Shareholders’ Meetings, was R$10,000 for 2018.

17 Provisions for labor, tax and civil risks In their regular course of business, the Company and its subsidiaries are exposed to certain lawsuits and risks, regarding tax, labor and social security issues.

The Company has provisions totaling R$ 1,628 (R$ 1,608 on December 31, 2017) in consolidated and R$ 692 (R$ 0 as of December 31, 2017) in the parent company, based on a risk analysis prepared by management and legal advisors.

Lawsuits evaluated with a likelihood of possible loss by our lawyers, as of December 31, 2018, total R$ 22,119 (R$ 19,959 on December 31, 2017).

18 Res sperata realizable We describe below the balance of realizable res sperata that refers to the assignment of rights of use of real property areas due by retailers based on entering into rental agreements for commercial points.

These sums are billed pursuant to contractual terms of as much as 36 months and are acknowledged under the straight line method in the income (loss) for the period, in accordance with the rental period, normally of 60 months, as of the date on which the shopping mall begins operations.

Consolidated

Joint venture 12/31/2018 12/31/2017

Shopping Tiete (mall) 1,692 3,881 Shopping Metropolitano 1,467 3,462 Shopping Cidade São Paulo 16,059 27,107 Shopping Cerrado 1,520 2,396

Total 20,738 36,846

Total current 4,148 7,369

Total non-current 16,590 29,477

19 Shareholders' equity a. Capital Capital on December 31, 2018 and the respective number of common shares may be described as follows:

45 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Number of shares Capital

December 31, 2017 119,663,612 799,763 December 31, 2018 119,663,612 799,763

The Company’s Board of Directors is authorized to increase capital - regardless of Shareholders’ Meeting or amendments to the Bylaws - up to the limit of 800,000,000 common shares for distribution in the country and/or abroad, either publicly or privately. b. Profit retention reserve Refers to the balance of retained earnings in order to meet the Company’s budget for funding additional fixed and current capital investments and the expansion of operating activities, and may be comprised of as much as 100% of net income that remains following legal and statutory allocations, but that may not exceed the sum of paid in capital.

As resolved at the meeting of the Company's Board of Directors held on October 22, 2018, ad referendum of the annual general meeting that decides on the financial statements for the current fiscal year, interim dividends in the amount of R$ 1.002811114 per share were paid, totaling R$ 120,000, distributed to the profit reserve account. By strategic redefinition of the Company's management, the amount of R$ 120,000 currently allocated to the expansion reserve will be reallocated, through a resolution at the respective annual general meeting which, in addition to ratifying the distribution, will resolve on the destination of the remaining amount of R$ 199,000 to real estate acquisition projects, as provided for in the capital budget to be approved in a timely manner.

c. Allocation of net income for the year Net income for the year, after offsets and deductions set forth in law and adequate statutory provision shall be allocated as follows:

 5% for legal reserve, until reaches 20% of paid-up capital.

 25% of balance, after allocation to legal reserve, shall be allocated to pay mandatory minimum dividend to all shareholders.

 After allocating the legal reserve and voting dividends, the balance will be allocated to a profit reserve by means of a capital budget.

Distribution of 25% of the net income for the year is assured to shareholders, adjusted in accordance with article 202 of Law No. 6404/76.

46 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

20 Directors’ and employees’ benefits a. Post-retirement benefits The Company and its subsidiaries do not provide private pension plans to its employees, but make monthly contributions based on social security payroll to official pension funds and private pension plan, which are recorded in expenses at the accrual system. b. Profit sharing program - PLR The Company and its subsidiaries CCP Administradora de Propriedades Ltda, and CCP Leasing Malls Empr. Imob. Ltda., CSC Serviços Adm. Ltda, Park Place Adm. e Empr. de Lavor Ltda have a profit sharing program for employees in accordance with the collective agreement entered into with the São Paulo Civil Construction Worker Industries’ Union. On December 31, 2018 the Company and its subsidiaries have reserves totaling R$ 6,134 (R$ 6,132 on December 31, 2017) stated in other accounts payable, based on indicators and parameters defined in the undersigned agreement.

21 Financial instruments a. Credit risks The Company’s transactions include managing lease properties, either shopping malls, commercial buildings or sheds, all of which governed under specific contracts containing certain conditions and deadlines, and substantially indexed to inflation updating rates. The Company adopts specific selectiveness and client portfolio analysis procedures in order to prevent losses due to non-compliance.

As its policy for recording allowance for doubtful accounts, the company considers installments overdue for more than 360 days. This criterion was defined after a detailed analysis of the behavior of trade accounts receivable, in which the effective losses were evaluated according to the accounts receivable aging in the last 5 years. As of 2018 we also adopted a criterion to determine the expected loss percentage on the remaining balance of accounts receivable. This percentage was also defined through the analysis of the behavior of accounts receivable associated with the analysis of the projections of economic indicators related to our market segment. b. Liquidity risks The liquidity risk consists of the eventuality of the Company and its subsidiaries not having sufficient financial resources to honor their commitments on account of settlement terms of their rights and obligations.

To mitigate liquidity risks and optimize capital weighted average cost, the Company and its subsidiaries permanently monitor indebtedness level in accordance with market standards and index compliance ("covenants") provided for in loan, financing and debenture contracts so as to ensure that cash operating generation and previous fund raising, as necessary, are sufficient to maintain payment schedule, thus not generating liquidity risk for the Company and its subsidiaries (Note 12).

47 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

The maturities of financial instruments of loans, financing, suppliers, obligations with investors and debentures are as follows:

Parent company

<1 1-3 4-5 >5 Year ended December 31, 2018 year years years years Total

Loans and financing (Note 12.1) 12,687 41,285 34,687 187,291 275,950 Debentures (Note 12.2) 261,059 390,461 75,782 326,257 1,053,559 Promissory Note (Note 12.3) - - - - - Obligations with investors 17 - - - 17 Suppliers 10,021 - - - 10,021

283,784 431,746 110,469 513,548 1,339,547

c. Market risks Results from the possibility of the Company and its subsidiaries suffering gains or losses arising from oscillations of interest rates levied on their financial assets and liabilities. Aiming to mitigate this kind of risk, the Company and its subsidiaries seek to diversify funding in terms of prefixed or post-fixed rates. Interest rates on loans, financing, and debentures are mentioned in Note 12. Interest rates on interest earning bank deposits are mentioned in note 5. d. Valuation of financial instruments Fair value of financial assets and liabilities is the value by which the instrument may be exchanged in a current transaction between parties that are willing to negotiate, and not in a forced sale or settlement.

The following methods and assumptions were adopted to estimate the fair value:

 Cash equivalents, trade accounts payable and other short-term obligations measured at amortized cost approximate their respective market value, due to the maturity date on short-term basis of these instruments.

 Debentures issued by the Company have public character and allow comparison with other instruments at market value. The Company considers that the book value of the debentures is the value that most approximates the market value of these securities.

 Securities are remunerated at CDI, according to quotations disclosed by respective financial institution; therefore, recorded value of these securities is not significantly different from market value.

48 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

e. Category of financial instruments

Parent company Consolidated Type of measurement

Description 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Before IFRS 9 After IFRS 9

Financial assets Valued at cost method amortized: Cash and cash equivalents 138,627 56,993 215,896 170,324 Loans and receivables Amortized cost Securities 123,301 148,621 166,687 170,908 Loans and receivables Amortized cost Accounts receivable 419 - 84,020 105,221 Loans and receivables Amortized cost Other accounts receivable 25,256 166 34,896 8,341 Loans and receivables Amortized cost Advances for future capital increase - 32 - 38,928 Loans and receivables Amortized cost Financial liabilities Valued at cost method amortized: Financings 275,949 539,552 680,220 965,956 Amortized cost Amortized cost Debentures 1,053,559 534,979 1,053,559 534,979 Amortized cost Amortized cost Promissory notes - 159,092 - 159,092 Amortized cost Amortized cost Suppliers 2,008 515 10,021 12,385 Amortized cost Amortized cost

f. Transactions with derivative instruments As of December 31, 2018, the Parent Company and its subsidiaries did not have derivative transactions.

g. Sensitivity analysis statement

Parent company Consolidated

Possible Remote Possible Remote Probable scenario - scenario - Probable scenario - scenario - Contents Risk % scenario 25% stress 50% stress Base scenario 25% stress 50% stress Base Assets CDI Index incr. 6.40% 16,734 12,550 8,367 261,462 23,714 17,786 11,857 370,534

Liabilities CDI Index incr. 6.40% (67,428) (84,285) (101,142) (1,053,559) (67,428) (84,285) (101,142) (1,053,559)

Management’s best estimate for a change in the CDI rate over the next twelve months is of 6.48%.

Loans and financing are not included in the analysis because they are all indexed to the reference rate, which rate projected for the next few months is close to zero.

22 Capital management Company’s capital management aims to ensure that a strong credit rating is maintained before institutions, as well as a strong capital relationship, so as to support Company's business and leverage shareholders' value.

The Company controls its capital structure by adjusting it to the current economic conditions. In order to maintain an adjusted structure, the Company may pay dividends, return capital to the shareholders, fund new loans and issuances of debentures, among other.

Objectives, policies and proceedings were not changed during years ended December 31, 2018 and 2017.

49 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

The Company includes in the net indebtedness structure: loans and financing, debentures, liabilities with credit assignments and obligations with investors less cash and banks (cash and cash equivalents, marketable securities):

Parent company Consolidated

2018 2017 2018 2017

Loans and financing (Note 12.1) 275,949 539,552 680,220 965,956 Promissory Note (Note 12.3) - 159,092 - 159,092 Debentures (Note 12.2) 1,053,559 534,979 1,053,559 534,979 Obligation with investors (Note 10) 17 12 17 12 (-) Cash and cash equivalents and securities (Note 4 and 5) (261,927) (205,614) (382,581) (341,232)

Net debt 1,067,598 1,028,021 1,351,215 1,318,807

Shareholders' equity 1,045,423 1,161,008 1,774,518 1,878,463

23 Net income Below follows a reconciliation between gross and net income as reflected in the statement of income.

Parent company Consolidated Description 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Gross income 1,937 5,546 524,569 474,811 - Leasing of real estate - 1,813 367,698 354,879 - Sales of real estate - - 62,400 31,774 - Rendering of services 1,937 3,733 94,471 88,158

Deductions from income (139) (818) (34,802) (28,539) - Discounts granted - - (12,591) (4,805) - Taxes levied on sales, lease and services (*) (139) (818) (22,211) (23,734)

Net income 1,798 4,728 489,767 446,272

(*) ISS tax on services and PIS/COFINS contributions on services, rentals and sales

50 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

24 Costs and expenses by nature Expenses and costs classified according to the type, for the periods ended December 31, 2018 and 2017 are as follows:

Parent company Consolidated Description 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Commissions (737) - (5,331) (4,886) Condominiums and rental - - (31,357) (37,939) Construction cost - - (39,412) (19,233) Interest capitalization - - (10,238) - Other sales expenditures - - (10,322) (11,069) Depreciation, amortization and depletion (50) (94) (46,902) (53,566) Personnel expenses (17,493) (17,261) (33,401) (29,251) Taxes and rates - - (4,822) (3,380) Maintenance - - (3,265) (8,091) Other income and expenses (4,094) (9,643) (5,696) (11,740) Advertising and publicity - - - - Professional and engaged services (4,806) (7,808) (74,639) (73,439)

Total (27,180) (34,806) (265,385) (252,594)

Allocated: Costs - (10) (204,935) (186,797) Commercial expenses (1,708) (1,353) (17,298) (17,046) Administrative and general expenses (15,949) (23,247) (28,970) (35,407) Management remuneration (3,666) (4,936) (5,310) (6,710) Employee profit sharing and Directors’ fees (5,857) (5,260) (8,872) (6,634)

Total (27,180) (34,806) (265,385) (252,594)

25 Financial income (loss) The financial income (loss) for the periods ended December 31, 2018 and 2017 are broken down as follows:

Parent company Consolidated

Financial income: 12/31/2018 12/31/2017 12/31/2018 12/31/2017

Income from interest earning bank deposits 21,747 19,554 28,517 29,246 Other 81 7,036 4,140 13,082

Total financial income 21,828 26,590 32,657 42,328

Financial expenses: Interest on loans and financing (44,117) (85,258) (83,434) (130,667) Interest and restatement of debentures (66,599) (75,245) (66,599) (75,245) Interest and restatement of promissory notes (598) (18,367) (598) (18,367) Other (6,413) (3,435) (8,579) (10,726) Compound interest (10,513) (19,222) (277) (19,223) Total financial expenses (128,240) (201,527) (159,487) (254,228)

Net financial income (loss) (106,412) (174,937) (126,830) (211,900)

The capitalized interest is displaced to cost in the consolidated view.

51 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

26 Income tax and social contribution Income (25%) and social contribution (9%) taxes on net income are calculated in conformity with the criteria set forth by the current tax legislation. As provided for in fiscal legislation, certain subsidiaries and jointly-controlled subsidiaries opted for the presumed profit taxation base.

Reconciliation of income tax and social contribution expenses Current income and social contribution tax values as reflected in the periods’ income statements show the following reconciliation at the nominal rate:

Parent company Consolidated

Reconciliation of taxes LAIR (916) 86,160 Tax using the parent company’s tax rate (34%) 312 (29,294)

Permanent differences 16,053 18,994 - MEP 34,187 (389) - Other permanent differences (18,134) 19,383 Tax credit on tax loss (not recognized) / used (16,365) (24,989) Additional IRPJ - (240) Effect from tax rate for “presumed profit” companies - (436) Other adjustments - (236) Income tax and social contribution - in income (loss) - 36,202 Effective rate - 42.02%

Deferred income tax and social contribution assets are recognized only in the proportion of the probability that the positive taxable base will be available and temporary differences can be used for it and the tax losses may be offset. The Company did not disclose on December 31, 2018 its background of profitability and/or expectation of creating taxable profits, tax credits on income tax losses and the social contribution calculation base were not recognized. As of December 31, 2018, the balance of tax loss is R$ 389,229.

27 Segment reporting For management purposes, the Company is divided into branches of activity, based on the goods and services provided and described below:

 Buildings: consists in the sale and rental of concluded commercial buildings.

 Real estate development: consists in the sale of commercial units under construction.

 Sheds: consists of rentals of industrial warehouses.

 Shopping Malls: consists of rentals of stores located in shopping malls.

 Services: consists in management service provision to shopping malls, property development and exploiting car parks.

 Others: consists of rentals of other types of properties.

 Below follows a statement of information per activity and per region on December 31, 2018 and 2017.

52 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Segment reporting - December 2018

Real estate Description Buildings Sheds Shopping malls Services development Other Total

Rental 122,793 - 230,890 - 271 13,744 367,698 Sale - - 62,400 - - - 62,400 Rendering of services 1,937 - - 92,534 - - 94,471

Total 124,730 - 293,290 92,534 271 13,744 524,569

Deductions from income Rental (10,871) - (15,073) - (48) - (25,992) Sale ------Rendering of services - - - (8,810) - - (8,810)

Total (10,871) - (15,073) (8,810) (48) - (34,802)

Net income 113,859 - 278,217 83,724 223 13,744 489,767

Cost Rental (16,751) - (84,362) - (87) (1,794) (102,994) Sale - - (39,412) - - - (39,412) Rendering of services - - - (62,529) - - (62,529)

Total (16,751) - (123,774) (62,529) (87) (1,794) (204,935)

Gross income 97,108 - 154,443 21,195 136 11,950 284,832

Operating assets 651,287 - 2,120,544 - 30,910 30,286 2,833,027

(*) Refers to Inventories and Investment Properties captions

Information per region - December 2018

Description SP RJ BA Other Total

Gross income 487,745 34,529 1,463 832 524,569 Deductions from income (32,647) (2,098) (57) - (34,802)

Net income 455,098 32,431 1,406 832 489,767 Costs (181,588) (22,856) (491) - (204,935)

Gross income 273,510 9,575 915 832 284,832

Operating assets 2,199,620 625,785 7,622 - 2,833,027

Segment reporting - December 2017

Real estate Description Buildings Sheds Shopping malls Services development Other Total

Rental 120,642 734 216,288 - 57 17,158 354,879 Sale - 31,500 - - 274 - 31,774 Rendering of services 3,733 - - 84,425 - - 88,158

Total 124,375 32,234 216,288 84,425 331 17,158 474,811

Deductions from income Rental (7,135) (1,252) (10,402) - - - (18,789) Sale - - - - (39) - (39) Rendering of services - - - (9,711) - - (9,711)

Total (7,135) (1,252) (10,402) (9,711) (39) - (28,539)

Net income 117,240 30,982 205,886 74,714 292 17,158 446,272

Cost Rental (15,700) (1,430) (90,577) - (374) (2,764) (110,845) Sale (1,438) (17,367) (192) - (236) - (19,233)

53 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

Rendering of services - - - (56,719) - - (56,719)

Total (17,138) (18,797) (90,769) (56,719) (610) (2,764) (186,797)

Gross income 100,102 12,185 115,117 17,995 (318) 14,394 259,475

Operating assets (*) 666,437 18,817 2,174,050 350 5,718 30,700 2,896,072

Information by region - December 2017

Description SP RJ BA Other Total

Gross income 436,181 35,565 1,365 1,701 474,812 Deductions from income (23,548) (4,936) (55) - (28,539)

Net income 412,633 30,629 1,310 1,701 446,273

Costs (158,089) (28,028) (678) - (186,795)

Gross income 254,544 2,601 632 1,701 259,478

Operating assets 2,253,160 635,217 7,694 - 2,896,071

28 Earnings/losses per share In compliance with CPC 41, the Company presents the following information on earning/losses per share for the period ended December 31, 2018 and December 31, 2017.

Earning/loss per share is basically calculated by dividing net income (loss) for the year attributed to holders of the parent company’s common shares by the weighted average number of common shares available during the period less treasury shares.

The Company has no potential profit diluting factors; hence diluted earnings is equal to basic earnings.

54 Cyrela Commercial Properties S.A. Empreendimentos e Participações and Subsidiaries Financial statements on December 31, 2018

The tables below show information on profit and shares used to calculate basic diluted earnings/losses per share:

Consolidated

Earnings per share 12/31/2018 12/31/2017

Net income (loss) (887) 174,204

Number of shares 119,664 119,416

Earnings/losses per share (0.007) 1.459

29 Insurance The Company’s subsidiaries adopt the policy of contracting insurance coverage for assets subject to risks to cover eventual claims, considering the nature of its activity. We consider that we have a risk management program, with the purpose of limiting risks, seeking coverages compatible with our size and operations in the market. The policies in force and the premiums were dully paid.

Insurance coverages:

(a) Structure and fire, shopping malls: R$ 2,828,881

(b) Structure and fire, corporate buildings: R$ 1,627,791