lopes apresentação institucional en. 07.04.2011
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TRANSCRIPT
1
Institutional Presentation
April 2011
Disclaimer
This presentation does not constitute an offer, or invitation, or solicitation of an offer to subscribe for or purchase
any securities neither does this presentation nor anything contained herein form the basis to any contract or
commitment whatsoever.
The material that follows contains general business information about LPS Brasil – Consultoria de Imóveis S.A
(“LPS”) as of December 31st, 2010. It is not intended to be relied upon as advice to potential investors. The
information does not purport to be complete and is in summary form. No reliance should be placed on the
accuracy, fairness, or completeness of the information presented herein and no representation or warranty,
express or implied, is made concerning the accuracy, fairness, or completeness of the information presented
herein.
This presentation contains statements that are forward-looking and are only predictions, not guarantees of
future performance. Investors are warned that these forward-looking statements are and will be subject to
many risks, uncertainties, and factors related to the operations and business environments of LPS and its
subsidiaries such as competitive pressures, the performance of the Brazilian economy and the industry, changes
on market conditions, among other factors disclosed in LPS filed disclosure documents. Such risks may cause the
actual results of the companies to be materially different from any future results expressed or implied in such
forward-looking statements.
LPS believes that based on information currently available to LPS management, the expectations and
assumptions reflected in the forward-looking statements are reasonable. Lastly, LPS expressly refuses any duty to
update any of the forward-looking statements contained herein.
2
Investment Highlights
3
Mr. Francisco Lopes
initiates its activities
intermediating
properties
1935 40´s
50´s
60´s
70´s
80´s
90´s
00´s
Launch one of the
first buildings under
the condominium
concept
First TV
advertisement for
a real estate
development
Start of long term
partnership with
Gomes de Almeida
Fernandez (Gafisa)
Launch and sell of 14
office buildings at Av.
Paulista
Launch and sell of 11
office buildings at the Faria
Lima region
Creation of the launching
system with sales stands
and marketing materials,
attracting customers
specially during weekends
Identification of Marginal
Pinheiros as an attractive
area and launch one of
the first buildings in the
region
Start up of sales of hotel
condominium (Flats)
Partner of Grupo Espírito
Santo in selling one of the
largest launching in Lisboa:
Parque dos Príncipes
Introduction of the
concept of condominium
clubs
First “Top Imobiliário”
award, in 1993 – Largest
Brokerage Company
Lopes becomes an important player at
the segment of gated communities
Triples in size in a decade,
strengthening its leadership
Wins its 16th consecutive
“Top Imobiliário”
Lopes‟ IPO
Lopes starts its geographic expansion
process
Lopes‟ website become leader on real
state market
Joint Venture with Itaú Bank in order to
create CrediPronto, our mortgage
company.
Lopes‟ follow-on
The company‟s first
logo
Becomes reference in real
estate launchings and
presents its new logo
The Brokerage Market Has No Other Company With Our History
and Track Record
4
Simple and Focused Value Added
Business Model
Main Distribution
Channel in the Industry with a
National Footprint
Low Risk Business
with a Diversified Client Base : Cash
Generator Company
Already scaled down to face new
market conditions
Unmatched Scale and Reach
Experienced Management Team
and Outstanding Track Record
Investment Highlights
5
6
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
Joint Venture with Banco Itaú to
provide mortgage loans
Low, mid and high-income segments
Mortgage Loan Primary Market Secondary Market
Focus on secondary market, with a
unique model of own stores and a
network of licensed brokers
Growth through acquisitions
LPS Brasil: Unique Business Platform
+
6
3.23% 3.15% 3.06% 2.60% 2.54% 2.56%
Lopes Net Commission
SP GVS / Consolidated GVS 100% 95% 80% 50% 48% 46%
Net Commission São Paulo
Net Commission Brazil
2005 2006 2007 2008 2009 2010
7
3.23% 3.16% 3.19%
3.10%
2.85% 2.88%
2005 2006 2007 2008 2009 2010
8
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
Virtuous Cycle of the Business Model Creating Strong Barriers to Entry
Strong Established Base
Leading, nationally recognized brand
Present in 12 Brazilian states and in the Federal
District
Extensive distribution channel
Database with more than 1.7 million clients
More than 350 homebuilder clients
Leadership and Wide Range of Products Indisputable Sales Performance
Speed of sales of 34,2% in 4Q10,
and 58.9% for Habitcasa
R$15.6 billion in contracted sales
in 2010
Most visited website in the real
estate sector: more than 4.8
million hits in the quarter
Retention of Talent
Largest sales force: more than 11,300
independent brokers
Attracts and maintains its sales force
Leader in the primary market
One-stop-shop: unique and
complete solution for the client
: unique platform to
develop the secondary market
: partnership with one
of the largest retail banks in the
world, Itaú Unibanco
8
Institucional Website
9
Visits on www.lopes.com.br
Source: Google Analytics,
The most visited
website in the real estate market
Strong investment
in online media
Increased
generation of Leads
Higher sales
conversion
2,432 2,579 3,533 3,524
4,249 4,349 4,737 4.814
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Competitive Advantage
Competitive Advantage: A single, integrated and solid Company
“Lopes” culture in all
business units of different
states
National Integration
of Systems
One single brand,
recognized by the
market
Identity that stands
Lopes out from the
competitors
10
LPS Brasil‟s Market Mix
42%
53% 52% 54% 49% 50% 46%
6%
5% 6% 5% 5%
11% 19% 21%
16% 14% 14% 17%
9%
12% 9%
7% 12% 10% 11% 12%
10% 6% 6%
6% 6% 6% 6% 5%
16% 13% 10% 11% 13% 12% 8%
2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
São Paulo
Rio de Janeiro**
Brasília
South
Northeast
Other*
*Other: Ceará, Estpírito Santo, Minas Gerais, Goiás and the city of Campinas 11
LPS Brasil in the Primary Market
12
Lopes is exclusively focused on providing value-added real estate brokerage services to its client-developers, with a permanent concern of avoiding conflicts of interest
Formal relationship through agreements
Over 350 Clients
176,287 effective buyers1
1,727,568 prospects included in our data base
Client-Developers Client-Buyers
Ho
w d
o w
e d
o
bu
sin
ess
?
Ho
w d
o w
e m
ak
e m
on
ey
?2
, 3
$ 0.28
$ 0.07
$ 2.21
$ 100
$ 10
Total Price
per Unit
Down-
payment
Gross
Commission
$ 0.85
$ 1.15
Agents +
Managers
Re
ve
nu
e R
ec
og
nitio
n
$ 4.56 ²
Developer
1 Data until Dec-10 2 Data from the LTM
$ 2.00
$ 2.56
Net Commission Premium Contract Advisory Fee
Simple and Focused Business Model…
13
Lopes is focused on providing its clients with a full range of consulting services, from land procurement advisory to product formatting, development and sale
Value-Added Services Across the Development Cycle
Determines
the Site‟s Vocation
Masters Market
Research
Formats Product Meeting Buyers‟
“Wants and Needs”
Develops
Marketing Campaign
Optimizes Media
Negotiations
Coordinates
Product
Launching
Events
Individual Sales Strategy
Created to Each Product
Coordinates Product
Launching Events
14
Lopes is Growing Nationwide
SOUTHEAST REGION São Paulo – Beginning of operations in 1935. Acquisition of 60% of Capucci
&Bauer, in October 2007, for R$9 million (7.1x P/E 2008) and an earn-out
payment.
Rio de Janeiro – Entry by greenfield operation, with beginning of operations in
July 2006, with LCI-RJ. . Lopes acquires permanently an additional 10% stake
of Patrimóvel, in July 2010, and more 31% in october 2010 (51% total).
Espírito Santo – Acquisition of 60% of Actual, in July 2007, for R$5.76 million
(7.0x P/E 2008) and an earn-out payment.
Minas Gerais – Entry by greenfield operation with beginning of operations in
February 2008.
SOUTHERN REGION States of Rio Grande do Sul, Santa Catarina and Paraná – Acquisition of 75% of
Dirani, in May 2007, for R$15.1 million (7.5x P/E 2008) and two ear-out
payments. In July 2008, Lopes acquired the 25% left by the call/put
mechanism.
MIDDLE WEST REGION Federal District – Acquisition of 51% of Royal, in November 2007, for R$12
million (9.0x P/E 2008) and an earn-out payment.
Goiás - Greenfield operation with beginning of operations in August 2008.
NORTHEAST REGION Bahia - Greenfield operation with beginning of operations in October 2007.
Pernambuco – Acquisition of 60% of Sérgio Miranda, in August 2007, for R$ 3
million (10.0x P/E 2008) and an earn-out payment. In September 2009, Lopes
acquired the 40% left by the call/put mechanism. In 2010, there was a transfer
to LPS Fortaleza –of 100% (one hundred percent) of the capital stock of LPS
Pernambuco.
Ceará e Rio Grande do Norte – Acquisition of 60% of Immobilis, in January
2008, for R$2.4 million (10.0x P/E 2008) and an earn-out payment.
Lopes tracks developers‟ regional movements, consolidates its
position as the largest consulting and sales player
PR
RJ
BA
SP
RS
ES
SC
PE
MG
DF
CE
GO
RN
Source: Lopes RI 15
Sales Expertise in all Market Segments
Notas: Relatórios Gerenciais.
Absorção calculada sobre unidades disponíveis
Santos/ SP
42/49m²
The Blue Officemall– Nov / 10
58 un. – R$ 11.000/m²
Location
Usable Area
Sales
Jardim Castelo/ SP
47m2
Mais Cangaíba – Nov/10
399 un. – R$ 2.702/m²
Location
Usable Area
Sales
Nova Lima/ SP
70m²
Lumiere Residences – Dec/10
224 un. – R$ 3.500/m²
Location
Usable Area
Sales
Campinas/ SP
87m2
Le Monde – Dec/ 10
52 un. – R$ 5.500/m²
Location
Usable Area
Sales
Paraíso/ SP
216 / 358m²
Le Premier Ibirapuera Parc– Oct/10
46un. – R$ 11.300/m²
Location
Usable Area
Sales
100% sold.
Developer : Odebrecht
CASE
100% sold.
Developer : Living
CASE
100% sold.
Developer : Dominus
CASE
98% sold.
Developer : Rossi Residencial
CASE
94% sold.
Developer : EZTEC
CASE HIGH
MEDIUM-HIGH
MEDIUM
ECONOMIC
BUSINESS UNITS
16
LPS Brasil in the Low Income Segment
17
HABITCASA: Focus on Low Income Segment
Focus on Low Income Segment
Units up to R$ 200 thousand
The Habitcasa brand is applied in all Lopes‟ markets
18
19
Habitcasa Stands Up as the Biggest Player in sales in the Low
Income Segment
2,297 units sold
in the 4Q10 Average Price in the
4Q10 of R$157 thousand
58.5% Sales Speed
In the 4Q10
Sales in the 4Q10
increased 37,6% when
compared to the 3Q10
Only Real State
Brokerage Company
specialized on the low
income segment, not
only in sales, but also
in advisory
In 2009, Habitcasa became Caixa‟s
correspondent
40%
42%
12% 6%
Units Sold
Contracted Sales
20
Total units sold = 56,633
13%
39% 25%
23%
Total Contracted Sales = R$ 15,630 million
16%
38% 22%
24%
34%
45%
15% 6%
2009
2009
2010
2010
Sales by Income Segment – Primary and Secondary Markets
Increase in the Potential Demand
Maturity in years
10 15 20 25 30
12% 13 11 10 10 9
11% 13 10 9 9 9
10% 12 10 9 8 8
9% 12 9 8 8 7
8% 11 9 8 7 7
7% 11 8 7 6 6
6% 10 8 7 6 6
5% 10 7 6 5 5
Maturity in years
10 15 20 25 30
12% 1,377 1,152 1,057 1,011 987
11% 1,322 1,091 991 941 914
10% 1,269 1,032 926 872 842
9% 1,216 974 864 806 772
8% 1,165 917 803 741 704
7% 1,115 863 744 679 639
6% 1,066 810 688 619 576
5% 1,018 759 634 561 515
Unit Value
R$120,000
Mortgage
R$96,000
30% of income
commitment 80% of the total value
financed
In Minimum Wages Monthly Payment (R$)
Inte
rest
Ta
x (
%)
Inte
rest
Ta
x (
%)
21
Better Economic Situation of the Low Income Segment…
Monthly Income (Millions of
Families) 2007 2008
Untill R$1,000 31.7 53% 29.1 31%
From R$1,000 to R$2,000 15.5 26% 27.6 29%
From R$2,000 to R$4,000 8.4 14% 21.8 23%
From R$4,000 to R$8,000 3.3 5% 11 12%
From R$8,000 to R$16,000 1.1 2% 4.3 5%
From R$16,000 to R$32,000 0.3 0% 1.3 1%
More than R$32,000 0 0% 0.3 0%
TOTAL 60.3 100% 95.4 100%
25.5
7.5
1
34
Government
Budget
FGTS BNDES TOTAL
“Minha Casa, Minha Vida” Funds
32.5
36.5 37.4 38.0
40.0
47.0
52.0
1992 1995 1998 2001 2004 2007 2008
% of the population with monthly income between
R$1,064 and R$4,561 (program‟s target population)
Source: “Minha Casa, Minha Vida” Program
Source: FGV Source: IBGE, FGV, Ernst & Young
22
62.2
9.5
71.7
Government
Budget
FGTS TOTAL
“Minha Casa, Minha Vida 2” Funds
2.2 3 4.99.3
18.425.2
3.8 3.95.5
7
6.9
10.2
2003 2004 2005 2006 2007 Savings untill
Oct 2008 FGTS
untill Nov 2008
Financed with FGTS' Funds Financed with Savings' Funds
Housing Credit (R$ billions)
Housing
(„000)
Total of
houses
New
houses
formed
New houses
financed
% of new
houses
financed
2002 48,035 1,530 83 5%
2003 49,710 1,675 104 6%
2004 51,752 2,042 112 5%
2005 53,114 1,362 101 7%
2006 56,610 1,496 151 10%
2007 56,343 1,733 166 10%
... and also Better Supply of Mortgages
Source: ABECIP, Central Bank of Brazil, CEF e FGV
Source: IBGE, BC
23
Minha Casa Minha Vida
Brazilian Government will dispose of R$34 bi.
In the State of São Paulo 183,995 units will be built.
Source: Lopes‟ Market Intelligence
São Paulo‟s families
(3.4 million of families)
41% have a monthly family income between 3 and 10 minimum wages, with “Minha Casa, Minha Vida” this
families will become potential buyers.
It is estimated that there is a 140
thousand units demand in the city of
São Paulo inside the
“Minha Casa, Minha Vida” program .
10% has purchase intention for the next 12 months
(1.4 million of families)
Premise: with the federal government subsidy, the decrease of interest rates and more extended mortgages terms, the minimum family income to acquire a R$100 thousand house became 3 minimum wages, not 6 minimum wages as before.
24
LPS Brasil in the Secondary Market
25
Pronto!
26
Pronto has 229 stores in 12 States + Federal District : 44 owned stores and185 licensed brokers
SOUTHEAST REGION
São Paulo – Acquisition of 51% of VNC, in July 2010, for
R$7.1 million (R$ R$1,8 million + R$0,3 million of
investiments + R$5,2 million of earn out ).
Acquisition of 51% of Plus Imóveis, in August 2010, for
R$11.7 million (R$4.7 million + R$7.0 million of earn out).
Acquisition of 51% of Maber, in September 2010, for
R$17.3 million (R$6.0 million + R$11.3 million of earn out).
Acquisition of 55% of Local, in December 2010, for R$25.6
million (R$10.0 million + R$15.6 million of earnout)
Acquisition of 60% of Erwin Maack, in March 2011, for
R$8.4 million (R$2.9 million + R$5.5 million of earn out)
Rio de Janeiro – Acquisition of 51% of Self Imóveis, in July
2010, for R$ 2,6 million (R$900 thousand + R$1,7 million of
earn out)
SOUTH REGION
Rio Grande do Sul – Acquisition of 51% of Ducati, in
December 2010 forR$15,5 million (R$5.3 million + R$10.2
million of earnout).
Paraná – Acquisition of 60% of Thá, in February 2011, for
R$20.9 million (R$7.4 million + R$13.6 million of earnout).
27
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
Present in 12 states and the Federal District
– Covers 91% of the Brazilian GDP
– 44 own stores
– 185 licensed brokers
– Strong presence in São Paulo and Rio de Janeiro
Unique one-stop-shop business model
Solid client base
Strong internet presence
Diversified products in the portfolio
Unique Platform Poised for Growth Well Defined Acquisition Model with a Successful Track
Record
Appreciation and alignment of interests
– Earn-out
– 51% ownership stake
Natural Consolidator
Potential synergies:
– Scale and reach: network effect
– Access to mortgage financing
– Expertise of LPS Brasil management
Pronto!: A Natural Consolidator
Acquisition strategy:
– Companies with expertise in their regional markets
– Companies with limited access to capital
– Well positioned in relevant markets
– Widespread network
Successful acquisitions through the years
– 8 acquisitions since July focused on the secondary market
– Benchmark for future partners
– Accretion
27
Strengthening of mortgage origination and other related services.
Leadership position
in their respective
markets
Management
Excellence High Value Brands
Joint Venture Lopes Itaú
Lopes and Itaú created the first and biggest pure mortgage company of Brazil.
Direct and exclusive access to its
customer database
Seamlessly integrated operation with
Lopes‟ sales process, including an
incentive compensation plan
Lopes media exposure
Service excellence
Competitive financing terms and
conditions
Speed and quality of processing
Experienced credit analysis
Successful exposure to the lending
business and in joint ventures
28
29
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
Differentiated Model: One-Stop-Shop
Winning Model
Secondary Market: a significant potential for origination
44 own stores and 185 licensed real estate brokers in 12
states and the Federal District
Selective acquisitions to replicate the successful formula
used in the primary market
27% of Pronto!‟s contracted sales are financed by
Credipronto!
Distinctive channel for clients in the secondary market
R$804 million in financing
Incipient market in Brazil with huge expansion potential
59% of CrediPronto! transactions are originated through
Pronto!
Use of LPS Brasil‟s platform and significant reduction in
CAPEX requirement
Focus
Relevance
Growth
Potential
Synergies
29
Financed Volume
CrediPronto!
(R$ MM)
67.3
213.0 158.2
600.0
4Q09 4Q10 2009 2010
216%
279%
30
In 2010, CrediPronto! financed R$600 million , representing 2,176 contracts, with avarege rate of 10.1% + TR and an average term of 272 months.
Mortgages Portfolio
CrediPronto!
The Average Portfolio Balance in 2010 was R$403 million.
(R$ MM)
178
707
Opening portfolio balance Ending portfolio balance
297%
31
217 247
291 331
385
437 474
529
591
654
727
804
150
250
350
450
550
650
750
850
jan/10 feb/10 mar/10 apr/10 may/10 jun/10 jul/10 ago/10 set/10 out/10 nov/10 dez/10
Accumulated Sales Volume*
CrediPronto!
(R$ MM)
32 *Excluding amortization.
The amount of financing of CrediPronto! grew by 12% per month in 2010.
33
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
Credipronto!: Unique Partnership to Capture Mortgage Loan Market Potential
Evolution of Origination (base 100 = Jan-10)1
Business Highlights
In 1.5 year, it has already reached 5% of market share
in the private mortgage loan market (excluding Caixa)1
Profit Sharing with limited credit risk
Leverage on LPS Brasil‟s points of sale
Differentiated process of approval and release of funds
Unprecedented credit in the market
Innovative Real Estate Financing Process
Notes: 1 ABECIP (as of December 30th, 2010) and Company. Ranking based on December/2010 origination 2 Bacen
+ Market
Leader
Largest Private Bank
in Brazil
Market Share CrediPronto!
High Growth Potential – Real Estate Financing equals only 3% of Brazilian GDP2
12% of Itaú
Ranking of Real Estate Financing December 2010 (R$ mm)¹
Total Origination Dec/10: R$3.5 bi
1,949
625
341 235
181 105 29 22 4 2
77
Ca
ixa
Ita
ú
Bra
de
sco
Sa
nta
nd
er
Ba
nc
o d
o
Bra
sil
HSB
C
Citib
an
k
Ba
nrisu
l
Po
up
ex
Ba
ne
se
Credit Analysis Assessment ofthe Property
Legal Analysis Issuance of theContract
Release ofResources
24 hoursUntil 3
workingdays
2 working
days
3 working
days
5 working
days
Efficiency in Release of Credit
33
100
240 340 314
423 406 293 429 485
490 576 601
99 132 130 136 148 156 160 166 137 160 189
CrediPronto! Mercado
0,7% 1,7% 1,8% 1,6% 2,0%
Market Share CrediPronto!
2,1% 1,3% 1,9% 2,0%
Jan - 10 Fev - 10 Mar - 10 Abr - 10 Mai - 10 Jun - 10 Jul - 10 Ago -10 Set - 10 Out - 10 Nov - 10 Dez - 10
2,5% 2,5% 2,2%
Brazilian Real Estate Market
34
35
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
Growth 2007 - 2030
Significant Creation of Demand
Demographic Bonus Population Pyramid (millions of people)
Expansion of Class C (% of the population) Number of Families by Income Segment (millions)
40%
60%
80%
100%
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Economically active population = 15 – 64 year-old
Dependence Index
(8%) 78% 160% 233% 291% 433%
70-74
60-64
50-54
40-44
30-34
20-24
10-14
0-4
Age
2000
2020
174 209 Total
10 10 0 10 0 10
Men
Women
2003
2008
11%
49%
24%
16%
Classes A and B Class C Class D Class E
8%
37%
27%
28%
Source: IBGE, Febraban and FGV
31.7
15.5
8.4
3.3 1.1 0.3
29.1 27.6
21.8
11
4.3 1.6
Up to R$1k
R$1k to
R$2k
R$2k to
R$4k
R$4k to
R$8k
R$8k to
R$16k
Above
R$ 16k
2007A
2030E
35
Source: Goldman Sachs – Base 2007-2008
Mortgage Market
Mortgage Market as a % of GDP
86%
66%
50%
40%
33%
22%
10% 6% 5% 5%
3% 3% 1% 1% 0% 0%
15% 11%
2% 3%
2%
35%
30%
15% 13%
9% 5% 5%
2%
36
37
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
Growth Drivers
Housing deficit
– 7.2 million houses (2009)
Incipient mortgage loan market
Declining interest rates
Rising employees‟ income
Growing availability of long-term funding
Increasing secondary market financing
Increasing family turnover
Market Potential for Real Estate Financing
Source: Bacen and ABECIP Notes: 1 Data from 2006, except for Brazil (2009) 2 FGV’s Center for Social Studies, 2010 3 Represents the number of times a family moves to a different house during their lifetime. Source: Credit Suisse
Mortgage Loan Access (% by Social Class)2
7.7%
5.0%
3.0%
1.7%
Classes A and B Class C Class D Class E
4.0x
1.8x
9.0 – 10.0x
G-7 Mexico Brazil
Family Turnover3
5.4
6.7
7.9
6.3 5.8
1991 2000 2006 2007 2008
Quantitative Housing Shortage (millions of homes)
37
38
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
2,545
4,873
9.370 8.658
15.600
2006 2007 2008 2009 2010
33.3
37.2
29.2
2007 2008 2009 2010E
Lopes: Leadership and Growth
Primary Market: Leadership1 in an Expanding Market
Second Growth Cycle
Notes: 1 Includes the acquisition of Patrimóvel 2 US$3.4 billion raised in 9 equity offerings and US$7.0 billion issued in debt. Only includes public issuances. Source: Bloomberg 3 Earnings release: Brookfield, CCDI, CR2, Cyrela, Direcional, EVEN, EZTEC, Gafisa, Helbor, Inpar, JHSF, João Fortes, MRV, PDG, Rodobens, Rossi, Tecnisa and Trisul 4 Annualized, considers that contracted sales launched in the first half are equal to 40% of contracted sales launched per year
Highly capitalized homebuilders
– US$10.4 billion raised since 2009²
– Developments launched in the first wave have
completed their cycles, generating cash for further
investments in the market
Lopes Contracted Sales: Significant Growth (R$ mm)
Lopes‟ scale and reach result in extensive network and
sales capacity: essential for distributing units launched
Unique database with more than 1.7 million clients
355 homebuilder clients
Speed of sales of 34.2% in 4Q10, and 58.9% for Habitcasa
Launched PSV – Listed Companies (R$ mm)3
44.84
38
39
R: 176
G: 17
B: 22
R: 180
G: 180
B: 180
R: 90
G: 90
B: 90
R: 255
G: 155
B: 155
R: 253
G: 231
B: 227
R: 159
G: 159
B: 159
R: 192
G: 192
B: 192
R: 231
G: 231
B: 231
R: 255
G: 155
B: 155
15.1 16.0 17.7
24.4 22.8
17.4
14.1
24,9
Number of Launches - SP
GVS¹ Launched (R$ bn) - SP
Units Launched („000) - SP
¹ Launched values adjusted by the INCC until February/10
1996 1997 2006 2007 2008
Launches Metropolitan Region of São Paulo
Source: Lopes’ Market Intelligence
2009 2010
509
377 341
467 458
538 548 509
442 478
574 548
494
574
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
70
33 35
40 35 34
37
31 36 38
68 70
59
76
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
39
Sales Speed Metropolitan Region of São Paulo
Source: Secovi –SP and Lopes’ Market Intelligence.
Units Launched and Sold SP Capital
40
Average (Units Sold/Launched) = 0.66
Average (Units Sold/Launched) = 1.42
Units Launched
Units Sold Year Units Launched Units Sold
2008 34,500 32,800 2009 30,100 35,800 2010 37,300 35,870
Dez/08 Jan/09 Fev/09 Mar/09 Abr/09 Mai/09 Jun/09 Jul/09 Ago/09 Set/09 Out/09 Nov/09 Dez/09 Jan/10 Fev/10 Mar/10 Abr/10 Mai/10 Jun/10 Jul/10 Ago/10 Set/10 Out/10 Nov/10 Dez/10
7.516
4.960
2.541
1.677
0.76
R$/m2
SPMR Real Estate Market Overview – Prices
Source: EMBRAESP
Nominal
INCC Adjusted
Evolution of Average Launches‟ Prices in SP
R$/m2
41
1360 1370 1550 1620 1740
1930 2230
2470
2850 2890 3050 3000
3200 3480
4470
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
4120 3880
4180 4140 4070 4180 4390
4190 4340
4040 4040 3770 3680 3730
4570
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
Factors that Sustain the Growth in the Real State Market
Positive Economic Trend
Brazil is Latin America’s biggest economy
and presents economic, political and social stability;
Positive economic fundaments:
1. Country-risk in minimum historical level
2. Inflation under control
3. Extern debt at lower levels
4. Decreasing of the unemployment tax
Real State Sector Development
Consumer’s buying intention increase;
Technology achieved in both sides;
Products with more sophisticated
attributes for the middle income
segment;
Technology in the low income segment
construction; and
Development of new
Brazilian markets.
Housing Deficit
Estimated deficit of 7.2MM de houses;
Bad quality housing for middle and low
income segments.
Financing Availability
Smaller Taxes, longer terms;
SFH and FGTS limit increase;
Higher participation of the private
sector; and
In Brazil, the mortgages represent
10-20% of the total credit, smaller than in
other countries (70%).
42
Lopes‟ Confidence Index
43
(base: jan/2009=100)
Source: Lopes Market Intelligence
Lopes‟ Confidence Index (LCI) – February/11
Lopes is the first company to create a Real Estate Consumer Confidence Index.
44
Lopes‟ Confidence Index intend to measure clients confidence, so Lopes can follow and anticipate, in the short term,
housing purchase tendency.
The sample has 582 interviews, with Grande São Paulo resident clients, which contacted Lopes in the last 3 months and
are interested in purchasing a new home.
Lopes‟ Confidence Index (LCI)
February/11
118,0
142,9
100,0
137,4
82,0
131,9
Expectation Index Lopes' Confidence Index Present Situation Index
(base: jan/2009=100)
Source: Lopes Market Intelligence
Present Purchase Intention Growth – February
45
Evolution of the current intention of purchasing property
Simple Answer
Economic Average Standard High Standard
jan/09 apr/09 jul/09 oct/09 jan/10 apr/10 jul/10 oct/10 jan/11 jan/09 apr/09 jul/09 oct/09 jan/10 apr/10 jul/10 oct/10 jan/11 jan/09 apr/09 jul/09 oct/09 jan/10 apr/10 jul/10 oct/10 jan/11
For the housing market are considered the positives attributes of the intended
purchase of property High and Average that is mentioned by the prospects
during the interview .
High and
Average
Low
Sales Speed Over Supply
46
Sales Speed over Supply
Lopes' Consolidated Sales Speed
*Management information,
The Sales Speed over Supply is obtained based on the quarter’s contracted GVS compared to inventory and launches.
Habitcasa‟s Sales Speed
47
25% 34%
2009 2010
61% 59%
2009 2010
Operational Highlights
48
(128, 128, 128) (255, 225, 225) (192, 192, 192) (0, 0, 102) (128, 0, 0) (154, 186, 222) (234, 234, 234) (243, 250, 255)
(255, 128, 128) (255, 204, 153)
Contracted Sales‟ Historical in the Primary Market*
•Unaudited managerial information.
• 2010 considers 100% of Patrimovel sales
Total GVS – Primary Market
(in R$ thousands)
591 850 1,166 1,253 1,556 1,853 2,545
4,873
9,370 8,658
14,364
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
49
Contracted Sales
(R$ MM)
Contracted Sales – Primary and Secondary Markets
Units Sold
12,731 17,408
36,888
56,633
4Q09 4Q10 2009 2010
3,061 4,736
9,257
15,630
4Q09 4Q10 2009 2010
69%
55%
37%
54%
In This Quarter, We Achieved Our Record in Contracted Sales
50
Financial Highlights
51
Results 2010 - IFRS
52
2010 Income
(R$ thousand)
2010 Income Statements Lopes Pronto! Olímpia LPS Brasil
Gross Revenue 335,750 36,724 863 373,337
Revenue from Real Estate Brokerage 321,250 36,724 863 358,837
Revenue to Accrue from Itaú Operations 14,500 - - 14,500
Net Revenue 305,847 32,125 743 338,715
(-) Operating Costs and Expenses (148,440) (12,169) (6,025) (166,634)
(-)Stock Option Expenses (CPC 10) (3,268) - - (3,268)
(-) Expenses to Accrue from Itaú (952) - - (952)
(-) Other nonrecurring revenues (expenses), net 724 - - 724
(=)EBITDA 153,911 19,956 (5,282) 168,586
EBITDA margin 50.3% 62.1% -711.0% 49.8%
(-) Depreciation and Amortization (18,669) (3,361) (18) (22,048)
(+/-) Financial Result 27,067 (1,532) 1,045 26,580
(-) Income and social contribution taxes (39,521) (1,486) (81) (41,088)
(=) Net Income for the year 122,788 13,578 (4,336) 132,030
Net Margin 40% 42% -584% 39%
Attributable to:
LPS Brasil Shareholders 108,527
Non-Controlling Shareholders 23,504
26% 34% 41% 49%
1T10 2T10 3T10 4T10
22 38
48 60
16 27
36 53
34% 48% 55% 56%
4Q10 Performance - Comparative Analysis
53
50%
R$169
R$339 Net Revenue
(R$ millions)
EBITDA Margin
R$132 Net Income (R$ millions)
EBITDA
Net Revenue, EBITDA Margin, Net Income and Net
Margin Analisys
63 80 87
108
Highest EBITDA of
the history of the
Company, and a
Margin in the
same level as in
the IPO.
Highest Net
Income of the
history of the
Company.
Net Revenues
Record in the Real
Estate Services
Sector.
39% Net Margin
2010
45%
R$100
R$225
R$25
11%
2009
CrediPronto!
54
(R$ thousand) P&L 2010
Amount financed 600,030
Portfolio opening balance 177,688
Portfolio ending balance 707,053
Portfolio average balance 403,587
Financial Margin 9,773
% Spread 2.42%
(-) SalesTaxes -919
(-) Total costs and expenses -22,087
(-) Expenses Itaú -3,471
(-) Expenses Olímpia -12,551
(-) Commissions -5,945
(-) Insurance and sinister (+/-) -120
(+/-) Bank correspondance -
(+) Other Revenues (Financial) 2,153
(-) Allowance for Doubtful Accounts -3,210
(-) IRPJ/CSLL 302
(=) Net result -13,988
% Net margin -143%
50% Profit Sharing -6,994
*The managerial P&L measures the results of the JV. Olimpia’s Results and all Revenues and Expenses incurred by Itau are considered.
• The numbers of the managerial P&L were audited for 2010 by Ernst&Young and, due to its managerial nature, it does not follow accounting standards.
Net Income – IFRS Adjustments
55
97,481
23,948
11,148
5,631 11,255
4,570 7,650
3,725 2,573
108,524
BRGAAP
Income
Call Patrimóvel
Adjustment
Negative
Goodwill
Amortization of
Intangible
Assets
Differed
Income Tax
Financial
Expense with
Earn-Out
Put Loss LPS
Pernambuco
Net Income
Assigned to LPS
Shareholders
IFRS
Reconciliation of BRGAAP Income and IFRS Income
(R$ thousand)
Additional Information
56
Two seasonality components:
• Natural variation in sales related to holidays or vacation periods over the year. The first quarter is more significantly affected by summer vacations and the week of Carnival celebrations.
• Variations in sales stemming from the sales pipeline in the real estate development market, in which projects launched are subject to licensing and permit requirements, which account for significant distortions in a quarter-over-quarter comparison.
Lopes‟ Contracted Sales Seasonality
Unstable sales behavior in each quarter accounts for variations in yearly sales
57 * The seasonality can not be verified in 2008, because of the effects of the world financial crisis.
17% 18%
14%
23%
15%
19% 21%
31%
22%
32%
24% 25% 25% 22% 23%
29% 28% 26%
37%
29%
41%
16%
33% 30%
2005 2006 2007 2008* 2009 2010
1Q 2Q 3Q 4Q
Ownership Structure
Total of 55,265,863common shares
Ownership Structure Post-IPO
58
33%
8% 16%
33%
8% 2%
Rosediamond LLP
F.I.M. Crédito Privado Mocastland
Management
Foreigner Investors - Free Float
National Investors - Free Float
Individual Investors
