apresentação institucional english 20080408
TRANSCRIPT
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Institutional Presentation
2
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 (“Lopes”) as of the Fiscal Year ended at 31st of December 2007. 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 Lopes 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 Lopes 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.
Lopes believes that based on information currently available to Lopes management, the expectations and
assumptions reflected in the forward-looking statements are reasonable. Lastly, Lopes expressly refuses
any duty to update any of the forward-looking statements contained herein.
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Investment Highlights
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Simple and Focused Value
Added Business Model
Simple and Focused Value
Added Business Model
Main Distribution Channel in a
Growing Industry with a National
Footprint
Main Distribution Channel in a
Growing Industry with a National
Footprint
Low Risk Business with a
Diversified Client Base : Cash Generator Company
Low Risk Business with a
Diversified Client Base : Cash Generator Company
Key Position to Benefit from
Market Growth due to
Homebuilders’ IPOs
Key Position to Benefit from
Market Growth due to
Homebuilders’ IPOs
UnmatchedScale and Reach
UnmatchedScale and Reach
Experienced Management
Team and Outstanding Track Record
Experienced Management
Team and Outstanding Track Record
Investment Highlights
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Mr. Francisco Lopes initiates its activities intermediating properties
193540´s
50´s60´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 14th consecutive “Top Imobiliário”
The company’s first logo
Becomes reference in real estate launchings and presents its new logo
Brokerage Market Has No Other Company With The History and Track Record of Lopes
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Lopes’ Market Share Evolution – São Paulo Market
Uncontestable leader in the São Paulo real estate market for more than 10 years
Lopes’ Market Share – São Paulo Market
Source: Embraesp. Launch GSV Market share in the greater São Paulo area. Non-official information for 2007.
Posit
ion
ing
1
2
3
4
5
1996199719981999200020012002200320042005
Competitor 1 Competitor 2
Competitor 4 Competitor 5
2006
Market Positioning - GSV
2007
Source: Embraesp. Launched VGV in the greater São Paulo area.
Competitor 3
Competitor 6
7
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 exclusivity agreements
Over 160 Clients
– 46,393 effective buyers1
– 80,000 prospects included in our data base in 2006
Client-DevelopersClient-Developers Client-BuyersClient-Buyers
How
do w
e
How
do w
e
do b
usin
ess?
do b
usin
ess?
How
do w
e m
ake m
on
ey?
How
do w
e m
ake m
on
ey?2
, 3
2,
3
$ 0.53$ 0.12
$ 2.45
$ 100
$ 10
Total Price per Unit
Down-payment
GrossCommission
$ 0.73
$ 0.12
$ 1.05
Agents +Managers
Reven
ue R
ecog
nitio
nR
even
ue R
ecog
nitio
n
$ 5
Developer
1 Over the last 5 years in Sao Paulo2 Figures only for example, not related to financials3 Considering Sao Paulo market
$ 1.90
$ 3.10
Net Commission PremiumContract Advisory Fee
Simple and Focused Business Model…
Lopes Net Commission
SP GSV / Consolidated GSV 100% 95% 80% 50%
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Net Comission São Paulo
Net Comission Brazil
9
Lopes’ business is clearly fundamental to the profitability and returns of its clients…
Working Capital
Is Fundamental Pre Sales
Speed of Sales Concentrated in
the Launch Period
Reliance on Sales Force Scale and EfficiencyReliance on Sales Force Scale and Efficiency
Speed of Sales is the Key
for Profitability
With a Key Role in the Real Estate Value-Chain
More than 5,000 brokers
Over 500 Exclusive Sponsored Sales Points
Real Estate DevelopmentReal Estate DevelopmentBrazilian Market DynamicsBrazilian Market Dynamics
…and its scale and reach – nearly impossible to replicate – enhance this importance
10
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
Determines the Site’s
Vocation
Masters Market
Research
Masters Market
Research
Formats ProductMeeting Buyers’“Wants
and Needs”
Formats ProductMeeting Buyers’“Wants
and Needs”
Develops Marketing Campaign
Develops Marketing Campaign
Optimizes Media
Negotiations
Optimizes Media
Negotiations
Coordinates Product Launching
Events
Coordinates Product Launching
Events
Individual Sales
Strategy Created to
Each Product
Individual Sales
Strategy Created to
Each Product
11
Lopes’ unmatched reach and remarkable scale reinforce each other, enhancing success rate and permanently attracting new brokers
More More AgentsAgents(5,000 (5,000
Brokers)Brokers)
More More Efficiency Efficiency in Salesin Sales
More More Trust Trust from from
DevelopeDevelopersrs
More More Deal FlowDeal Flow
Amplify market intelligenceAmplify market intelligence
Improve financial Improve financial
performanceperformance
Attract and maintain top Attract and maintain top
talentstalents
More More Sales Sales PointsPoints
(500 Sales (500 Sales Sites)Sites)
More More Media Media
ExposureExposure3,500 3,500
pages / pages / yearyear
Virtuous Growth Cycle: High Barrier to Entry
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Notes: Managerial Reports.
Absorption calculated over available units
Granja Viana / SPGranja Viana / SP
153/197/230 m2153/197/230 m2
Reserva Santa Maria – Sep/ 07
177 units177 units
LocationLocation
Usable AreaUsable Area
SalesSales
Cachambi / RJCachambi / RJ
48 to 65 m248 to 65 m2
Norte Village – Jun / 07
850 un. – R$ 113,000,000
850 un. – R$ 113,000,000
LocationLocation
Usable AreaUsable Area
SalesSales
Paralela / BAParalela / BA
112 to 243 m2112 to 243 m2
Le Parc Residential Resort – Nov / 07
258 un. – R$ 121,000,000
258 un. – R$ 121,000,000
LocationLocation
Usable AreaUsable Area
SalesSales
Barra da Tijuca / RJBarra da Tijuca / RJ
203 to 260 m2203 to 260 m2
Santa Mônica Jardins – Nov / 06
142 un. – R$ 20,700,000
142 un. – R$ 20,700,000
LocationLocation
Usable AreaUsable Area
SalesSales
Barra da Tijuca / RJBarra da Tijuca / RJ
262 to 278 m2262 to 278 m2
Itaúna Gold
30 units – R$ 45.000.000
30 units – R$ 45.000.000
LocationLocation
Usable AreaUsable Area
SalesSales
100% sold within 3 weeks
Developer: Scopel and Desim
CASE
90% sold within 5 months.Developer: Living / Brascan
CASE
58% sold within 11 days.Developers: Cyrella /
Andrade Mendonça / Jotagê
CASE
70% sold within 1 year.Developer: Brascan
CASE
80% sold within 30 daysDeveloper: Brascan
CASEHIGH
MEDIUM-HIGH
MEDIUM
ECONOMIC
GATED COMUNITIES
Sales Expertise in all Market Segments
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HABITCASA: Focused on the Economic Segment
• Business Unit Exclusively Focused on the Economic Segment
• Units ranging up to R$180 thousand
• Focused in all Brazilian real state market
The economic segment will be one of the most important drivers for the long term growth of the real estate industry, due to the Brazilian housing deficit of 8 million homes1.
1 According to Fundação Getúlio Vargas – FGV1 According to Fundação Getúlio Vargas – FGV
Units Sold per Segment (2007)
35%
36%
18%
11%<150k
150k-350k
350k-600k
>600k
1414
Geographic Expansion
15
Lopes is Growing Nationwide
SOUTHEAST REGIONSão Paulo – Lopes is the incontestable leader and with the acquisition of Cappucci & Bauer, become the leader in the Campinas Metropolitan Area.
Rio de Janeiro – LCI-RJ and Patrimóvel operate separately, but with synergies on the back office, promoting reducing of cost.
Espírito Santo – Entry in this market through the acquisition of Actual, leading real estate broker in that market.
Minas Gerais – Greenfield operation in the state of Minas Gerais, with operations scheduled to start in February 2008.
SOUTHERN REGIONStates of Rio Grande do Sul, Santa Catarina and Paraná – After the acquisition of Dirani in May 2007, Lopes is already benefiting from operating synergies and foresees opportunities to consolidate its leading position in the region.
MIDDLE WEST REGIONFederal District – Entry in this market through the acquisition of Royal, the industry leader in the region.
NORTHEAST REGIONBahia - Greenfield operation in the state of Bahia, with launches initiated in October 2007.
Pernambuco – Entry in this market through the acquisition of Sergio Miranda, one of the leading real estate brokers in that market.
Ceará - Entry in this market through the acquisition of Immobilis, leading real estate broker in that market.
NORTHERN REGION
Pará – Greenfield operation in the state of Pará with launches scheduled for March 2008.
Lopes tracks developers’ regional movements, consolidates its position as the largest consulting and
sales player
PR
RJ
BA
SP
RS
ES
SC
PE
MG
PA
DF
CE
Business Unit State Lopes Participati
on
Market
Habitcasa SP/RJ 100% Primary Market
LCI-RJ RJ 100% Primary Market
Lopes Dirani PR/SC/RS 75% Primary and Secondary Market
and Rent
Lopes Salvador BA 100% Primary Market
Lopes Actual ES 60% Primary and Secondary Market
Lopes Sérgio Miranda PE 60% Primary and Secondary Market
Lopes Minas Gerais MG 75% Primary Market
Lopes Bauer SP – Campinas 60% Primary and Secondary Market
Lopes Pará PA 60% Primary and Secondary Market
and Rent
Lopes Royal DF 51% Primary and Secondary Market
Patrimóvel RJ 100% Primary and Secondary Market
Lopes Immobilis CE 60% Primary and Secondary Market
and Rent
Expansion Plan
Lopes is present in 11 States and Federal District, through more than 50 cities
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Geographic Expansion Model
Geographic Expansion Model
Aquistions• Earn-out system• Call and put mechanisms• Non compete clause
Greenfields• Alliance with local partners• Fragmented and unprofessional markets• Low barriers of entrance
Integration• Focused team on business units integration• Process and systems (SAP and SIAV)• Technology of communications (VOIP)
Objectives
• To capture the opportunities on markets very fragmented with lower efficiency• To decrease the dependency of São Paulo• To render services on the most important markets, through a model tested on the most competitive market of Brazil
17
Lopes developed a geographic expansion model that aligned interests between Lopes and its subsidiaries, generating value to its shareholders
18
Joint Venture: Lopes Itaú
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Strengthening of mortgage origination and other related services.
Leadership position in their
respective markets
Management Excellence
High Value Brands
Joint Venture Lopes Itaú
Establishment of a Promotion Sales Company (non-financing company) to promote and offer financial products and services – mortgage and other related – with emphasis on the
secondary market and with exclusivity to Lopes’ clients
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
20
Earn-out will be paid every 2 years during a 10-year period, conditioned to the achievement of certain operational metrics
Banco Itaú will have exclusivity to offer mortgages and related financial products to Lopes’ clients
Joint Venture Lopes Itaú: Transaction
Transaction
Structure
• No full recourse over Lopes’ assets• Results accounted through a Virtual P&L
Term 20 years
21
The payment received from Banco Itaú will be recorded and deferred over a 20-year period (term of the contractually agreed exclusivity), beginning with the start of operations by the joint marketing company, expected to take place in the second
half of 2008.
Recognition of Revenue from Banco Itaú Payment
DescriptionAmount
(in R$ thousands)Yearly deferral (in R$ thousands)
Number of years
(+) Revenue 290,000 14,500 20
(-) PIS tax (1,885) (94) 20
(-) COFINS tax (8,700) (435) 20
(-) Corporate income tax (23,200) (1,160) 20
(-) CSLL tax (8,352) (418) 20
(-) Related expenses (20,500) (1,025) 20
Net Revenue 227,363 11,368 20
Both Lopes and Banco Itaú agreed to an initial R$14 million investment to implement and put the joint marketing company into operation.
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Brazilian Real Estate Market
Brazil
Shortage
in units 7.9 MM
% 14.9
Northeast
Shortage
in units 2.7 MM
% 20.6%
Southeast
Shortage
in units 2.9 MM
% 12.2%
South
Shortage
in units 0.87 MM
% 10.4%
Mid West
Shortage
in units 0.54 MM
% 14%
North
Shortage
in units 0.85 MM
% 22.9%
Regional Housing Shortage
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Social Economic Scenario and Housing Shortage
5,4
6,7
0
3
6
9
1991 20062000
7,9
Source: Fundação João Pinheiro e Ministério das Cidades
Source: Credit Suisse
47 million homes
19%A/B > 10 minimum wages- US$ 1.90052%
5 – 10 minimum wages-
US$ 950 - US$ 1.900
30%C 28%
< 5 minimum wages - US$
95051%D/E 20%
Source: Losango
-6% -4% -2% 0% 2% 4% 6%
0 to 4
10 to 14
20 to 24
30 to 34
40 to 44
50 to 54
60 to 64
more than 70
Men Women
* Qualitative Housing Shortage is the number of times that a family moves to different houses in life
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Age Pyramid in Brazil - 2005 Segments by Income in Brazil
Quantitative Housing Shortage(millions of homes)
Qualitative Housing Shortage
25
Real Estate Credit Availability from Commercial Banks – Brazil
Source: IMF - 2006
CAGR Savings Accounts: 54.4%CAGR FGTS: 18.3%CAGR Total: 37.3%
(R$ Bi)
Commercial banks were mainly responsible for the expansion in real estate financing in 06’and the credit expansion trend was reflected in the market in 2007 and will be in 2008
Current Brazilian Real Estate Market Scenario
FGTS Savings Accounts
26
Projection to the Mortgage Loans in Brazil (% of GDP)
Mortgage Market in Brazil
8,1%
11,0%
3,8%
20182012
2,4%
20142010
14,3%
5,7%
2008 2016
Source: BACEN, Lopes and Goldman Sachs surveys.
27Source: EMBRAESP
R$ Billion
São Paulo Real Estate Market – Launches in R$
The SPMR has averaged 8.4 Billion in new residential launches over the last 10 Years.
Evolution of Launches in the São Paulo Metropolitan Region
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R$/m2
SPMR Real Estate Market Overview – Prices
Source: Secovi-SP
Nominal
INCC Adjusted
Evolution of Average Launches’ Prices in the SPMR
R$/m2
29
33%46%
60% 66%
51%
0%
10%
20%
30%
40%
50%
60%
70%
2003 2004 2005 2006 2007
Market absorption levels reinforce the conclusion that demand is recovering after the market’s downturn in the late 90’s
Un
its S
old
:3
6.6
k6
6%
Units Launched
38.5kMarket Absorption:
Units Sold/
Total Units Available
Initial Supply:
17.2 k
Source: Secovi-SP
Market Absorption – City of São Paulo
São Paulo Real Estate Market – Market Absorption
Market Absorption in 2007 Tota
l S
up
ply
55.7
k
30
Operational Highlights 2007
31
Contracted Sales
83%
2006* 2007
Secondary Market*Launches*
2,856
5,221
Total GVS (R$ MM)
311
348
4,873
2,545
Total Sales – Launches (R$ MM)
1,253
1,556
200320042005
CAGR: 35 %
CAGR: 35 %
1,853
850
591
1,166
200220002001 2006*
2,545
2007
4,873
* Until 2006, managerial numbers
In 2007, the geographic diversification resulted an increase of the participation of other regions in the contracted sales, it also highlighted the good position of Lopes in the
economic segment.
Contracted Sales per Region and Segment
32
Contracted Sales per Region in 2007(Primary Market – In GSV)
Contracted Sales per Segment in 2007(Primary Market – In Units)
33
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.
Contracted Sales Seasonality
Unstable sales behavior in each quarter accounts for variations in yearly sales
17% 18%14%
21%
31%
22%25%
22% 23%
37%
29%
41%
2005 2006 2007
1Q 2Q 3Q 4Q
45%
21%
6%
8%
20%
São Paulo
Other
Habitcasa
LCI
Patrimóvel
Percentage of Brokers per Business Unit
Lopes Total of Brokers = 5.000
Sales Force
34
13%
11%
6%
20%12%5%
7%
7%
19%Lopes ActualLopes BahiaLopes Sérigio MirandaLopes DiraniLopes BauerLoppes RoyalLopes ImmobilisLopes ParáLopes Minas Gerais
%
of
Brokers
per
Business
Units
in
'Other'
35
Financial Highlights 2007
Financial Highlights
74%
2006 2007
82.0
143.0
(R$ MM)
Net Revenue Adjusted EBITDA*
78%
39.5
70.548.2%48.2%
49.3%49.3%
2006 2007
(R$ MM)
67%
31.7
52.9
2006 2007
Adjusted Net Income**
(R$ MM)38.6%38.6%
37.0%37.0%
Net MarginNet Margin
36
*Adjusted EBITDA is a non-accounting measure created by Lopes, consisting of net income before interest, income tax and social contribution tax, net financial result (financial revenues and expenses), depreciation, amortization and non-operating income. The calculation of Adjusted EBITDA does not correspond to any generally accepted accounting practice in Brazil, does not represent cash flow for the periods presented, and should not be considered a substitute for net income as an indicator of operating performance, or a substitute for cash flow as an indicator of liquidity. Adjusted EBITDA does not have a standardized meaning and the definition of EBITDA adopted by Lopes may not be identical or comparable to the definitions of EBITDA or Adjusted EBITDA used by other companies.**Adjusted Net Income is an accountability issue decided by Lopes, it represents the amount of net income without the goodwill amortization.
Ebitda MarginEbitda Margin
37
Guidance for 2008
38
Guidance for 2008 (R$MM)
35%
105%
275% 596%
* The information for 2008 is based in the middle point of the divulged guidance.** Includes Lopes Bauer, located in São Paulo state.
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Additional Information
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Launches – São Paulo
Lopes reached a market share of 34%* in São Paulo, consolidating its leading position in the largest and most competitive Brazilian market
* Market share according to EMBRAESP ranking for launches, using the criteria of points in the São Paulo Metropolitan Region in 2007.* Market share according to EMBRAESP ranking for launches, using the criteria of points in the São Paulo Metropolitan Region in 2007.
Ranking Company GSV (R$)1 LOPES 6,500,825,7312 ABYARA 4,613,178,9183 TENDA 1,307,938,7964 DEL FORTE 811,061,6465 COELHO DA FONSECA 535,243,8306 AVANCE 533,255,8507 ITAPLAN 475,563,4538 IPRICE 345,630,0169 FERNANDEZ MERA 284,664,000
10 PLUS 118,590,913
43%
7%
49%
1% Foreigner Investors - Free Float
Nacional Investors - Free Float
Controlling
Management
Ownership Structure
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Total of 49.390.715 shares
Ownership Structure Post-IPO
Institution Analyst Contact
Agora Cristiane Viana (+55 21) 2529-3393 [email protected]
Banco Espírito Santo
Rodrigo Bonsaver (+55 11) 3074-7412 [email protected]
Credit Suisse Marcelo Telles (+52 55) 5283-8933 [email protected]
Fator Eduardo Guimarães (+55 11) [email protected]
Itaú Tomas Awad (+55 11) 5029-4517 [email protected]
Link Celso Boin Jr. (+55 11) 4505-6701 [email protected]
Planner Ricardo Martins (+55 11) 2172-2600 [email protected]
UBS Pactual Guilherme Vilazante (+55 21) 3262-9610 [email protected]
Analysts Coverage
Waited for 2008
Coin Valores
Bulltick
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