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TGLT Deal’s Presentation


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TGLT Deal’s Presentation

  1. 1. PDG R lt enters the Argentinean real Realty t th A ti l estate market through stake acquisition in i TGLT Investor Relations: Michel W Mi h l Wurman CFO and IRO João Mallet Financial and IR Manager Gustavo Janer Financial and IR Analyst y Telephone: +55 (21) 3504-3800 1 E-mail: Website:
  2. 2. Agenda Acquisition Rationale TGLT Company Profile Appendix Appendi 2
  3. 3. Acquisition Rationale Enter into the Argentine market with a dynamic, entrepreneurial and professional partner, who can be one of the leaders in the transformation of the development industry in the country. Create a strong partnership that can eventually expand to other Latin American markets. Accumulate land bank through attractive deals. Continue its strategy of investment diversification through partnerships with major market players. Deal St D l Structure: t – PDG Realty has invested USD 7 million in TGLT S.A., acquiring a 30% stake in the company – In the case of additional sourcing for new developments, PDG Realty has the right (but is not obliged) to act as a co – investor for up to 100% of the required investment amount. 3
  4. 4. TGLT Company Profile: Opportunity There is a highly attractive opportunity to lead the transformation of the residential development market of Argentina: – Argentina has demonstrated resiliency to overcome its worst crisis ever. The economy has been growing at high rates for the last 4 years with the real estate sector in the frontline of this recovery. – With barely any mortgages available to finance acquisition of property, less than 3% of the market h fh k has access to new h homes. ThThrough the appearance of mortgages hh f demand for new homes will increase significantly. – Argentina is set to follow the path that Brazil and Mexico’s real estate markets followed less than a decade ago. – There are few development companies in Argentina that are prepared to lead this process with access to capital markets and institutional investors. 4
  5. 5. TGLT Company Profile: Investment Strategy TGLT aims at becoming the leading residential development company in Argentina based on sales, profitability and quality of the products. The strategy consists in: sales products – Developing large residential projects in main cities of Argentina – mostly Buenos Aires, Rosario, Cordoba and Mendoza, with after-tax margins ranging from 18% to 27%, depending on th market segment. t 27% d di the kt t – As mortgages permeate to the lower income brackets, developing projects for all market segments. – Securing a land bank equivalent to 3 years of development. – TGLT will seek to fund as much as possible of the investments with funds from its p shareholders or debt. Whatever portion TGLT is unable or unwilling to fund, it will use co-investments from PDG Realty or any other partner for development projects and land banking. 5
  6. 6. TGLT Company Profile: The Company TGLT is a real estate company that has been successfully investing in Argentina since 2002: – TGLT h has a tteam of professionals th t f t f f i l that foster creativity, t ti it transparency and d integration with strategic partners. TGLT has been able to attract the most talented professionals in the market, most of who have either been trained in the US or have master’s degrees in real estate. g – The company controls all the steps of the development process. It has developed a collaboration model with key partners (construction management companies, brokers, designers, constructors, brokers designers constructors vendors and advisors) which allows TGLT to grow fast with proven methodologies. 6
  7. 7. TGLT Company Profile: The Company – Founding partner is Federico Weil (BS, MS in Industrial Engineering - University of Buenos Aires / MBA – Wharton). He has been investing in Argentina for the last 7 years, generating annual returns of over 100% for foreign institutional investors. investors – Federico Weil began investing in real estate in early 2002, a few weeks after the crisis, when he structured with other partners the acquisition of Pecom Agropecuaria (now Adeco) backed by Soros a company owning 85 000 hectares Soros, 85,000 of premium farmland in Argentina. Adeco is now one of the largest and most successful farmland operators in the country. – Prior to its partnership with PDG Realty, TGLT has been developing Forum Buenos Aires (, a 47,000 m2 of residential project in dock IV of Puerto Madero, Buenos Aires. The project – 80% sold - will be completed in April 2008. p 7
  8. 8. TGLT Company Profile: Pipeline TGLT and PDG Realty recently acquired from the Bemberg Group a site in Rosario, on the banks of the Paraná river: – Th property i l The t is located i P t d in Puerto N t a re-developed area only 5 minutes away t Norte, d l d l it from downtown Rosario, that resembles Puerto Madero (most prominent newly developed real estate area in Buenos Aires). – The development (43,000 m2 of usable area) will be a mixed-use project, including residences, a hotel, office space, retail and cultural areas and a marina. – The site – formerly a beer factory built in 1908 – will have 7 buildings (3 of them y y g( to be recycled). – Estimated PSV is USD 60 million, launching is expected for 1H08. In 2008 TGLT is expected to launch 3 other large projects in Argentina, all under negotiation or approval process. 8
  9. 9. Appendix: Argentinean Real Estate Market Demographics: – Argentina, with almost 40 million people, is the third largest country in Latin America. – Argentina is an urbanized country with almost 90% of the population living in urban centers. – Greater Buenos Aires – with more than 13 million people - is the 8th largest city in the World and the 3rd largest city in Latin America. – Half of the population lives in large urban centers, mostly in Greater Buenos Aires, C d b R Ai Cordoba, Rosario and M d i d Mendoza. 9
  10. 10. Appendix: Argentinean Real Estate Market Residential Products: – In the City of Buenos Aires, 80% of the population lives in multi-family condos and 20% in single-family dwellings. – In Greater Buenos Aires, though gated communities became fashionable over the last 15 years, most of the population lives in single-family units and some multi - family near each district's commercial center. – In other major cities, the distribution between single and multi-family is about even. 10
  11. 11. Appendix: Argentinean Real Estate Market Consumer Behavior: – Argentina has a young, urban population which, despite its preference for home ownership over rentals, has been unable to buy homes over the last decade, leaving a significant pent-up demand which should be reverted as household pent up income recuperates: – Argentines have a high propensity to save in real estate. People invest in real estate as a value preservation tool (mainly for their own residencies) or for rental income (buying properties for rent) – Given how fast real estate recuperated its dollar value after the last crisis, property is regarded as a low risk investment. – There is a low propensity to save in financial assets such as stocks and bonds. 11
  13. 13. Appendix 3: PDG Realty´s timeline PDG Realty´s track record proves its ability to continuously originate co-developments and private equity opportunities it t iti Additional acquisition JV JV of 21% Joint Venture Set-06 JV PDG & Abaurre Acquisition of 20% stake Private Acquisition of Acquisition of Equity... 30% stake Joint Venture 40% stake CHL & PIAL JV Additional acquisition Feb-06 of 10% Sale of JV April-07 20% stake Feb-07 Nov-06 May-06 August-07 June-07 R$ 250 mm 44 projects launched 21 projects launched Debenture 14 projects launched Founding 2003 -2006 2Q07 issuance 1Q07 2003 IPO ...and co-development investments. Jan-07 13
  14. 14. Appendix 4: 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.: 70% Part: 17% Part.: 50% of a joint venture Focus: São Paulo, Rio de Janeiro Focus: São Paulo Part : 49% Focus: São Paulo and Espirito Santo Part: 17% (indirect) Focus: São Paulo and Rio de Focus: São Paulo Janeiro 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 Niteroi JV Joint Venture Focus: Espirito Santo 14 Part: 30% Focus: Argentina