PDG Realty Empreend e Participacoes : 1Q17 Release

1Q17

Earnings Results

São Paulo, May 15th, 2017: PDG Realty S.A. (PDGR3) - Under Court-supervised Reorganization - announces today its results for the first quarter of 2017. Founded in 2003, PDG develops projects for different segments and publics, operating in the development, construction and sale of residential and commercial units, as well as land plots.

(+ 55 11) 2110-4400

www.pdg.com.br/ir ri@pdg.com.br

Conference Call

Date:

Tuesday, May 16th, 2017

• Portuguese

  11:00 a.m. (Brasília)

  10:00 a.m. (NY)

  Tel.: (+ 55 11) 3193-1001

  (+ 55 11) 2820-4001

  Replay:

  (+ 55 11) 3193-1012

  Password: 2891337#

• English

(Simultaneous translation)

10:00 a.m. (NY)

11:00 a.m. (Brasília)

Tel.: +1 (888) 700-0802

+1 (786) 924-6977

Replay:

(+ 55 11) 3193-1012

Password: 1388361#

In 1Q17, we obtained occupancy permits for 3 projects with over 600 units in total, decreasing the Company's operational and financial risk. (page 13)

The Company concluded, with Vinci Partners, a credit facility in the total amount of R$100 million, which was implemented through two unsecured debenture issues, each of which divided into two series. The first series of the 9th and 10th issue, totaling R$50 million, were paid in 2016. The second series, in turn, was paid in 1Q17, also in the amount of R$50 million. (Page 19)

In 1Q17, we concluded the sale of the projects Dom Condominium and Dom Offices, reducing costs to be incurred by R$127 million and SFH debt

1Q17 Earnings Results

by R$52,7 million. (Pages 18 and 19) 1

Message from Management 3

Operating and Financial Indicators 6

Operating Performance - Launches 7

Operating Performance - Sales 7

Operating Performance - Cancellations and Resale 8

Operating Performance - Sales Speed (VSO) 10

Operating Performance - Inventory 11

Operating Performance - Landbank 13

Operating Performance - De-risking Panel 14

Operating Performance - Title Individualizations 14

Operating Performance - Historical Data 15

Operating Performance - Mortgage Transfers 15

Financial Performance 16

Balance Sheet and Income Statement 22

In the 2017´s first quarter, PDG filed for Court-supervised Reorganization, an important step towards the Company´s restructuring plan. The main objectives of the Court-supervised Reorganization are: (i) continue advancing - in an organized way and with predefined terms and procedures - with the coordination of all parties involved in the Restructuring Process; (ii) enable the maintenance of the operational normalcy of the Company's activities; in addition to (iii) preserve the Company's value and cash flow.

Another important step involving the Company's Court-supervised Reorganization was the approval of the Court-supervised Reorganization filing by the judge on 03/02/2017. Among the main measures set forth are:

1. the appointment of PricewaterhouseCoopers Assessoria Empresarial Ltda. as the Judicial Administrator;

2. the suspension of the lawsuits and executions currently pending against PDG, for 180 days;

3. the issuance of a notice, pursuant to paragraph 1 of article 52 of the Brazilian Fiscal Responsibility Act (LRF), within 30 days for interested parties to present proof of claim and/or an objection to the claim within the Court-supervised Reorganization Process;

4. the presentation of the PDG Group court-supervised reorganization within 60 working days.

The filing and approval of the Court-supervised Reorganization request represent essential steps towards the Company's Restructuring Process. In this regard, PDG alongside with its advisors, have been focusing on the elaboration of the Restructuring Plan, fundamental to the Company´s operational and financial health and continuity. The Plan shall be presented by the beginning of June.

Besides the elaboration of the Court-supervised Reorganization Plan, the management has been directing efforts to the reduction of SG&A, the preservation of the Company´s cash flow by the dismantle or sale of SPEs and in the continuous reduction of financial leverage.

This quarter's gross sales continued to be affected by the sector´s weak demand and sluggish economic situation. Another factor that directly affected our sales was that we had to restructure our sales processes after filing for court-supervised reorganization, which required an implementation and adaptation period, thus reducing sales. This situation will not apply in the second quarter.

Given the abovementioned factors, gross sales totaled R$81 million in 1Q17, which was 80% down on 1Q16 and 76% down on 4Q16.

Our 1Q17 cancellations amounted to R$141 million, which was 54% less than in 1Q16, and 18% below 4Q16. In the course of the year, we shall prioritize the cancel of units that show good liquidity and are free of encumbrance, thus generating immediate cash flow on resale.

Due to the low gross volume sales number posted in 1Q17, net sales in the period were negative R$60 million.

Despite tight restrictions affecting cash flow and credit for production, the Company continues its efforts to deliver projects in progress and reduce impacts for its customers as much as possible. This quarter, we delivered 3 projects totaling 661 units and approximately R$170 million in PSV. Therefore we started 2Q17 with only 21 projects underway.

In this quarter we sold the Dom Condominium and Dom Offices developments, thus reducing costs to be incurred by R$127 million and slicing R$52.7 million off the amount owed as construction financing debt (SFH).

A total of 783 units were transferred in the quarter, corresponding to R$133 million PSV.

General and administrative expenses were 16% down year-on-year, in line with our objective of resizing our operational structure. Our 1Q17 headcount was 54% less than 1Q16's and we ended the quarter with 603 employees.

Our 1Q17 selling expenses were 68% lower than 1Q16's, mainly because no new developments were rolled out and there were no sales campaigns in the quarter.