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Goldfarb Increase in Stake Presentation


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Goldfarb Increase in Stake Presentation

  1. 1. 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 Mallet Investors Relations Manager Gustavo Janer IR Analyst Telephone: +55 (21) 3504 3800 E-mail: Website: 1
  2. 2. Agenda Deal Rationale Increase of PDG Realty´s stake in Goldfarb PDG Realty Business Model Final Comments 2
  3. 3. 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. 3
  4. 4. 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. 4
  5. 5. 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) 12000 9.5 - 10.5 10000 7.0 - 8.0 8000 7.0 5.0 -5.5 6000 4000 2000 0 2007 2008 Original Strategic Plan Review 5
  6. 6. 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 Habitational Deficit 4% 1.7 million > 20 MW 7% 3.7 million 10 < > 20 MW 18% 8.7 million 5 < > 10 MW 71% 37.3 million <5 MW Total Residencies: 51.6 million 6 MW: Minimum Wage
  7. 7. 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$100 million and issuance of 1,136,364 shares of PDG Realty. 7
  8. 8. Successful track record PDG Realty´s track record proves its ability to continuously originate co-developments and private equity opportunities. Additional Acquisition of acquisition 14,5% stake JV of 21% JV Acquisition Joint Venture Set-06 of 20% stake PDG & Abaurre JV Private Acquisition of Equity... Acquisition of 30% stake Joint Venture 40% stake CHL & PIAL JV Additional Additional acquisition acquisition Feb-06 of 10% of 5% Sale of JV April-07 20% stake Feb-07 Nov-06 May-06 Set - 07 August-07 June-07 July - 07 44 projects launched 21 projects launched 14 projects launched R$ 250 mm 2003 -2006 2Q07 Debenture 1Q07 issuance IPO ...and co-development investments. Jan-07 8
  9. 9. Portfolio Investments 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: Rental Income Mid to low income Mid to high income Services Land parceling Properties Part.: 75% Part: approx. 14,5% Part: 17% Part.: 50% of a joint venture Focus: São Paulo, Rio de Janeiro Focus: São Paulo, Rio de Focus: São Paulo Focus: São Paulo and Espirito Santo Part: 17% (indirect) Janeiro, Bahia, Minas Gerais Focus: São Paulo and Rio Grande do Norte Part: 50% JV Focus: Rio de Janeiro Joint Venture Focus: Rio de Janeiro Part: 50% of a joint venture Focus: Bahia JV Joint Venture Focus: Niteroi, RJ JV Joint Venture Focus: Espirito Santo 9 Part: 30% Focus: Argentina
  10. 10. Closing Remarks Flexibility to capture a large range of investment opportunities and Flexibility market trends Expertise and capacity to invest in different: – Geographic regions Diversification – Markets – Income segments Count on the best Ability to “hire” the best management in the industry and leverage on management teams in their specific and local knowledge the industry Additional capital gain Capital gain potential from portfolio investments since PDG will help its potential invested companies to grow and access equity capital Management with strong real estate expertise, financial background Management expertise and return oriented culture to implement PDG Realty´s business strategy The right platform to accomplish a sustainable long term growth Unique business model in the Brazilian real estate market 10