goldfarb increase in stake presentation
DESCRIPTION
TRANSCRIPT
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PDG Realty increases its stake in Goldfarb to 75%, and acquires an option
to purchase an additional 5%Investors Relations:
Michel Wurman Investors Relations Director
João MalletInvestors Relations Manager
Gustavo JanerIR Analyst
Telephone: +55 (21) 3504 3800E-mail: [email protected]
Website: www.pdgrealty.com.br/ir
Agenda
Deal Rationale
Increase of PDG Realty´s stake in Goldfarb
PDG Realty Business Model
Final Comments
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Deal Rationale
Consolidation of PDG Realty´s position as one of the leaders in operations within the mid and mid-low income segment.
Opportunity to accelerate investments in the market segment with the largest repressed demand on Brazilian real estate market.
Investment in a company with proven execution capacity and great potential growth.
Stake acquisition based on accretive valuation.
Arbitrage opportunity on discounts between listed companies versus private equity investments.
Reaffirm and reiterate the strategic alignment between the current shareholders of Goldfarb and PDG Realty.
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Increase to 75% of PDG Realty´s stake in Goldfarb
The company has over 40 years of experience and is one of the largest developers and homebuilders in the country focused in popular and economic units.
Successful business model based in 3 main principles:
– Focus in market segment (popular and economic units).
– Standardization of the development process resulting in low operational costs.
– Production and sales verticalization.
One of the largest Caixa Econômica Federal associative credit operators.
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Increase to 75% of PDG Realty´s stake in Goldfarb
In Goldfarb’s original strategic business plan, 5 to 5.5 thousand units were expected to be launched in 2007, 7 thousand units in 2008 and 10 thousand units in 2010.
After the recent capitalizations of the company, its strategic business plan was reviewed: Goldfarb expects to launch 7 to 8 thousand units in 2007 and 9.5 to 10.5 thousand units already in 2008.
Expected Units to be launched- Goldfarb (thousand units launched)
5.0 -5.5
7.07.0 - 8.0
9.5 - 10.5
0
2000
4000
6000
8000
10000
12000
2007 2008Original Strategic Plan Review 5
Increase to 75% of PDG Realty´s stake in Goldfarb
Goldfarb is exclusively focused in the market segment that concentrates the biggest and most promising consumer demand (popular and economic).
Number of Residences (2006) Main Competitors Target-segment
6
4%
7%
18%
71%
8.7 million
1.7 million
3.7 million
37.3 million
> 20 MW
10 < > 20 MW
5 < > 10 MW
<5 MW
HabitationalHabitational
DeficitDeficit
Total Residencies: 51.6 million
MW: Minimum Wage
Acquisition Structure
• We are increasing, once again, our stake in Goldfarb by 5% reaching 75%.
• PDG Realty’s acquisition structure will be concluded as follows:
- Assuming an equity value of R$ 800 million for Goldfarb, PDG Realty will increase its capital by
R$100 million, issuing shares representing 3.33%. Consequently, PDG Realty's stake in Goldfarb will reach
73.33%.
- Goldfarb’s current shareholders will increase the capital of a holding company by which they
will hold 100% of the company, paid up through issue of common shares by Goldfarb equivalent to 1.67%
of its capital.
- PDG Realty will incorporate the holding company by increasing its capital and issuing 681,818
new common shares.
• The holding shareholders are subject to a 9 month lock up period of 75% of their shares, with 25% of the
shares being unlocked on a quarterly basis.
• Furthermore, PDG Realty now holds an option with expiration in December 31, 2008 to acquire an
additional 5% stake of Goldfarb, reaching 80%. The option will be exercised in the same terms as the ones
described above: considering an equity value of R$900 million, PDG Realty will increase Goldfarb’s capital by
R$100 million and issuance of 1,136,364 shares of PDG Realty.
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Successful track record
PDG Realty´s track record proves its ability to continuously originate co-developments and private equity opportunities.
44 projects launched2003 -2006
Jan-07
IPO
Private Equity...
...and co-developmentinvestments.
14 projects launched1Q07
Feb-06Additional acquisition
of 10%
Acquisitionof 20% stake
May-06
Set-06JVJV
Nov-06JVJV
Feb-07
Acquisition of 40% stake
JVJV
April-07
Additional acquisition
of 21%
June-07
Sale of20% stake
Joint VentureCHL & PIAL
JVJV
Joint VenturePDG & Abaurre
JVJV
R$ 250 mm Debentureissuance
21 projects launched2Q07
August-07
Acquisition of 30% stake
July - 07
Acquisition of 14,5% stake
Set - 07
Additional acquisition
of 5%
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Portfolio Investments
9
Even in a competitive environment PDG Realty was able to make important acquisitions in accretive deals.
Current portfolio enables strong presence in all market segments:
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Part.: 75%Focus: São Paulo, Rio de Janeiro and Espirito Santo
Part: 17%Focus: São Paulo Part: 17% (indirect)
Focus: São Paulo
Part.: 50% of a joint ventureFocus: São Paulo
Part: 50%Focus: Rio de Janeiro
Mid to low incomeMid to low income Mid to high incomeMid to high income Land parcelingLand parceling Rental Income Rental Income PropertiesProperties ServicesServices
Part: 50% of a joint ventureFocus: Bahia
Joint VentureFocus: Rio de Janeiro
JVJV
JVJV
Joint VentureFocus: Espirito Santo
JVJV
Joint VentureFocus: Niteroi, RJ
Part: 30%Focus: Argentina
Part: approx. 14,5%Focus: São Paulo, Rio de Janeiro, Bahia, Minas Geraisand Rio Grande do Norte
Closing Remarks
Diversification
Expertise and capacity to invest in different:– Geographic regions– Markets – Income segments
Flexibility Flexibility to capture a large range of investment opportunities and market trends
Management expertiseManagement with strong real estate expertise, financial background and return oriented culture to implement PDG Realty´s business strategy
Additional capital gain potential
Capital gain potential from portfolio investments since PDG will help its invested companies to grow and access equity capital
Count on the best management teams in
the industry
Ability to “hire” the best management in the industry and leverage on their specific and local knowledge
The right platform to accomplish a sustainable long term growth
Unique business model in the Brazilian real estate market 10