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PresentationFrancisco Lopes - COORoberto Amatuzzi - CFO and IRO
3rd Quarter of 2007Earnings Conference Call Presentation
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 Lopes – LPS Brasil – Consultoria
de Imóveis S.A related to the quarter ended on September 30, 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 – LPS Brasil – Consultoria de Imóveis S.A 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 – LPS Brasil – Consultoria de Imóveis S.A 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 – LPS Brasil – Consultoria de Imóveis S.A believes that based on information currently available
to Lopes – LPS Brasil - Consultoria de Imóveis S.A management, the expectations and assumptions
reflected in the forward-looking statements are reasonable. Lastly, Lopes – LPS Brasil – expressly
refuses any duty to update any of the forward-looking statements contained herein.
Forward-looking Statements
Agenda
I. Operating Highlights
II. Business Units
III.Geographic Expansion
IV.Brazilian Real Estate Market
V. Financial Highlights
VI.Additional Information
Operating Highlights
Operating Highlights
Lopes’ contracted sales amounted to R$1.2 billion in 3Q07, 90% up on the R$645 million registered in 3Q06.
In 9M07, Lopes contracted sales amounted to R$3.1 billion, 55% up on the R$2.0 billion registered in 9M06.
In terms of volume of launches, in the 9M07, Lopes launched R$4.7 billion, a 147% growth when compared to the same period in 2006.
Lopes’ sales force reached 2,383 brokers in 3Q07, nearly twice the 3Q06 force.
In terms of geographic expansion, Lopes expanded its operations to 4 new important markets in Brazil:
– Lopes acquired 60% of the 2nd largest sales operation in the state of Pernambuco, Sérgio Miranda, with a launch pipeline of R$1.2 billion1.
– Lopes acquired 60% of Cappucci & Bauer, the largest real estate brokerage and consultancy company in the Campinas Metropolitan Region, the 5th biggest metropolitan market in the country, with a 46%2 market share and pipeline of R$1.7 billion1.
– Expansion to the state of Minas Gerais, one of the biggest markets in Brazil, through a greenfield operation. Operations are scheduled to start in December, with contracted sales expected to reach R$200 million in 2008.
– Expansion to the state of Santa Catarina, important economic pole in the South Region of Brazil, through the operation platform already established in other states of the South Region.
– We have recently announced Lopes’ entry in the state of Pará, one of the main markets in the North Region of Brazil.
Lopes consolidates its strategy of becoming a benchmark as provider of real-estate brokerage and property launch consultancy services with single scale – offering a higher added-value to clients–developers in 10 states of Brazil: Sao Paulo, Rio de Janeiro, Espírito Santo, Minas Gerais, Rio Grande do Sul, Paraná, Santa Catarina, Bahia, Pernambuco and Pará.
Creation of Habitcasa: Lopes’ business unit focused on the economic segment with administrative, operating and financial autonomy to operate in one of the most promising segments in the real estate market, with a initial total pipeline1 of R$5.1 billion.
1 Considering adjusted potential GVS
2 Market Share calculation was based on GSV of Launches provided by SECOVI Campinas
Contracted Sales* – Total Volume
90%
3Q06 3Q07
Secondary MarketLaunches
645
1,222
Total Contracted GVS (R$ MM)
* Unaudited and managerial information.
Contracted GVS of Launches (R$
MM)
1,253
1,556
200320042005
CAGR: 28 %
CAGR: 28 %
1,853
850
591
1,166
200220002001 2006
2,545
9M06 9M07
1,754
2,823
61%
76
99
1,123
569
Launches Volume - Brazil
161%
2,438
935
3Q06 3Q07
4,664
1,887
9M06 9M07
147%
Total GVS of Launches (R$ MM) Total GVS of Launches (R$ MM)
Units Sold by Income Segment (3Q07) - Brazil
Contracted Sales of Launches by Income Segment
Total Units Sold: 3,427
*Does not include secondary market; Does not include parking slots; includes sales of residential land.
0-150k
150k-350k
350k-600k
> 600k
35%
33%
19%
13%
1,160 Units
1,148 Units
666 Units
453 Units
Business Units
HABITCASA: Focus on the Economic Segment
Lopes’ Business Unit exclusively focused on the
Economic Segment
Habitcasa was created to operate nationwide in real estate launches oriented to the economic segment.
Potential GVS of more than R$5.1 billion and over 44 thousand units1.
Intermediation of units ranging from R$60 thousand to R$180 thousand.
Habitcasa will immediately benefit from the proven proficiency and expertise of Lopes, which has been the leading company in the sale of units to this income segment from 2003 to 2006, according to a survey of EMBRAESP (2).
The economic segment will be one of the most important drives for the long term growth of the real estate industry, due to the Brazilian housing deficit of 7.2 million
homes (3).
1 Considering total potential. Adjusted potential GVS is estimated at R$4.34 billion and 38.7 thousand units2 According to EMBRAESP ranking, for units with price lower than R$180,000 in the São Paulo Metropolitan Region3 According to João Pinheiro Foundation
1 Considering total potential. Adjusted potential GVS is estimated at R$4.34 billion and 38.7 thousand units2 According to EMBRAESP ranking, for units with price lower than R$180,000 in the São Paulo Metropolitan Region3 According to João Pinheiro Foundation
LCI-RJ
Contracted Sales in Rio de Janeiro reached R$117,4 million and 470 units sold in the 3Q07.
2008
1,989
Estimated Launch Pipeline*Estimated Launch Pipeline*R$MM
Sales TeamSales TeamNumber of brokers
4Q07
1,478364
Sep/07
•LCI-RJ, our business unit in Rio de Janeiro, had contracted sales of R$117.4 million in 3Q07 and R$295.5 million in 9M07.•In the 3Q07, launches reached R$531.2 million and, in the 9M07, R$877.8 million.
*Considering total potential. Adjusted potential GVS is estimated at $815 million and R$1,512 million in 4Q07 and 2008, respectively.*Considering total potential. Adjusted potential GVS is estimated at $815 million and R$1,512 million in 4Q07 and 2008, respectively.
313
Jul/07
Lopes Dirani
Lopes Dirani is the market leader in the South Region of Brazil*, operating in the states of Rio Grande do Sul, Paraná and Santa
Catarina.•Lopes Dirani ended its first operational quarter with contracted sales of R$80.6 million in the 3Q07, with launches of R$304.5 million in the period
•Lopes Dirani sold 343 units in 3Q07, 93% of which were launches.
2008
822
Estimated Launch PipelineEstimated Launch Pipeline22
R$MM
4Q07
1,122
Sales TeamSales TeamNumber of brokers
111
Sep/071 Managerial data. 2 Considering total potential. Adjusted potential GVS is estimated at $759 million and R$637 million in 4Q07 and 2008, respectively.
1 Managerial data. 2 Considering total potential. Adjusted potential GVS is estimated at $759 million and R$637 million in 4Q07 and 2008, respectively.
79
Jul/07
Other Markets
Sales TeamSales TeamNumber of brokers
126
Sep/07 2008
770
PipelinePipeline * *R$MM
4Q07
835
*Considering total potential. Adjusted potential GVS in Salvador is estimated at R$545 million and R$700 million in 4Q07 and 2008, respectively, while, in Vitória, it is estimated at R$225 million and R$916 million, for 4Q07 and 2008, respectively.*Considering total potential. Adjusted potential GVS in Salvador is estimated at R$545 million and R$700 million in 4Q07 and 2008, respectively, while, in Vitória, it is estimated at R$225 million and R$916 million, for 4Q07 and 2008, respectively.
Lopes already posts expressive indicators for its new units operating in the states of Bahia and Espírito Santo.
Lopes Salvador
Lopes Actual
Sales TeamSales TeamNumber of brokers
90
Sep/07 2008
1,158
PipelinePipeline * *R$MM
4Q07
275
Geographic Expansion
STATE OF BAHIA - Greenfield operation in the state of Bahia, with launches initiated in October, 2007.
STATE OF PERNAMBUCO – Entry in this market through the acquisition of Sergio Miranda, one of the leading real estate brokers in that market. Operations initiated in October, 2007.
Lopes is Growing Nationwide
Southeast Region
South Region
PR
RJ
BA
SP
RS
ES
Northeast Region
SC
PE
MG
PA
North STATE OF PARÁ – Greenfield operation in the state of Pará with launches scheduled for January, 2008.
STATE OF SÃO PAULO – Lopes is the incontestable leader, with a 29% share of the largest Brazilian market. Lopes also expanded its operations to Campinas metropolitan region, acquiring the largest real estate broker in the region.
STATE OF RIO DE JANEIRO – LCI-RJ completed its first operational year in July 2007 and is already ranked second in that market.
STATE OF ESPÍRITO SANTO – Entry in this market through the acquisition of Actual, leading real estate broker in that market.
STATE OF MINAS GERAIS – Greenfield operation in the state of Minas Gerais, consolidating Lopes position in the Southeast Region.STATES OF RIO GRANDE DO SUL, SANTA CATARINA E 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.
Lopes started operations in the state of Santa Catarina last October. Operations in the state of Minas Gerais and Pará are scheduled to start in December, 2007 and January,
2008, respectively
Greenfield Operations: States of Minas Gerais, Santa Catarina and Pará
Lopes Minas Gerais will start operations with expected sales of R$200 million for 2008 and sales force of 50 brokers. The Minas Gerais market posted a 53% growth in the first half of 2007 when compared to the same period in 2006.
Entry of Lopes in the Minas Gerais and Santa Catarina markets consolidates
its leading position in the South and Southeast Regions of Brazil.
Minas Gerais
Lopes’ presence in the state of Santa Catarina follows the natural expansion process of the company in the South Region, based on the operations platform located in the neighbor states of Paraná and Rio Grande do Sul. Launches pipeline in Santa Catarina is expected to reach R$390 million1.
Santa Catarina
Lopes Pará will start operations with contracted sales expected to reach R$200 million in 2008 and a sales force of 50 brokers.
Pará
1 Considering total available pipeline
Lopes Sérgio Miranda
Payment for Sérgio Miranda will be as follows:
Initial fixed amount of R$3.0 million, R$549 thousand of which to be settled in cash and the remaining amount in 9 monthly and consecutive installments.
Remaining balance to be settled in a variable payment based on the net income accumulated in the 36 months after the acquisition with cap of R$11.15 million.
Estimated value for the transaction on the basis case scenario is R$9.1 million for the 60% stake acquired.
Payment for Sérgio Miranda will be as follows:
Initial fixed amount of R$3.0 million, R$549 thousand of which to be settled in cash and the remaining amount in 9 monthly and consecutive installments.
Remaining balance to be settled in a variable payment based on the net income accumulated in the 36 months after the acquisition with cap of R$11.15 million.
Estimated value for the transaction on the basis case scenario is R$9.1 million for the 60% stake acquired.
38%
2001
2751
4002
5502
36%
46%
(R$MM)
2005 2007E 2008E2006
Launched VolumeLaunched Volume
The earn out model adopted by Lopes in all acquisitions aligns Lopes’ and acquired companies’ interests
Lopes Sérgio Miranda started operations in October as one of the main real estate brokerage firms in the Pernambuco market, with sales force of 76 brokers.
The entry of Lopes in the Pernambuco market is a strategic opportunity to operate in one of the main poles of the Northeast Region real estate market, which has been welcoming large developers.
2 Managerial information.2 Intermediation GVS estimated by Sérgio Miranda for 2007 and 2008.
Lopes Bauer
Lopes Bauer will start operations with a launch pipeline of R$1.7 billion1.
The entry of Lopes in the Campinas market is an opportunity that enables LOPES to consolidate its leading position in the largest real estate market in Brazil, becoming the sales leader in the second largest metropolitan region in the São Paulo state and the fifth largest in Brazil
1 Considering total available pipeline2 Intermediation GVS estimated by Cappucci & Bauer for 2007 and 2008..
9.7x P/E 2008
7.1x P/E 2008
1Considerating the 60% stake acquired, based on cash flow projections with no guarantee of future
performance
Acquisition P/E
Initial payment of R$9 million to be settled in 6 installments
Variable payment based on the net income accumulated in the 36 months
Estimated value for the transaction on the basis case scenario is R$22.5 million1
Initial payment of R$9 million to be settled in 6 installments
Variable payment based on the net income accumulated in the 36 months
Estimated value for the transaction on the basis case scenario is R$22.5 million1
All Lopes’ acquisitions were made under very accretive acquisition models in relation to LOPES P/E ratio
3302
5002
52%
(R$MM)
2007E 2008E
Contracted SalesContracted Sales
Brazilian Real Estate Market
0.0%
5.0%
10.0%
0 to 4 20 to 24 40 to 44 60 to 6480 years or over
Brazil Europe
Current housing deficit of 7.2 million homes.
Favorable Timing
The development of the real estate market demand is expected to be driven by the combination of important factors in a unique scenario in Brazil
Fiduciary Alienation significantly reduced contract defaults
“Patrimônio de Afetação”* provided buyers with more confidence regarding the delivery of projects * New tax regime in which construction companies may elect a flat tax rate of 7 percent for the payment of federal taxes (corporate taxes and gross revenues taxes). They must separate revenues from other activities from revenues attributable to specific construction projects which are subject to the special tax regime.
Evolution of Real Estate Loans(R$ billion)
Commercial banks Brazilian Federal
Saving Bank (CEF)
Wide Availability of Loans
Improved Legal ContextFavorable Demographic
Conditions
Brazilian population is young and
concentrated in the age of buying
properties
Brazilian population is young and
concentrated in the age of buying
properties
Commercial banks are yet the largest real estate
financing providers
Legal security encourages investments
in the sector and provides banks with comfort to offer credit
34%34%
12%12%
54%54%
12%12%
Source: João Pinheiro Foundation
3.0
6.0
2.24.8
9.54.5
9.1
6.1
2003 2004 2005 2006
Greater Professionalism
Agile Development of Products
Greater Scale in Launchings
Public Offerings – Developers
(R$ MM)
6901,27
2,46
11,24
2H05 1H06 2H06 Jan-Oct/07
New Level of Business for the
Market
Industry Capitalization
Developers raised R$15.7 billion in Developers raised R$15.7 billion in Capital Markets over last 2 years*Capital Markets over last 2 years*
Positive Results
Over last 2 years, 23 Brazilian developers listed its shares on Bovespa, all of them under the
Novo Mercado.
Over last 2 years, 23 Brazilian developers listed its shares on Bovespa, all of them under the
Novo Mercado.Source: CVM. Filings.
Net Resources raised by real-estate developers in IPOs held since September 2005.
Financial Highlights
Net Revenue
55%
55.4
86.0
9M06 9M07
Net Revenue (9M)
(R$ MM)
64%
3Q06 3Q07
20.1
32.9
(R$ MM)
Net Revenue (3Q)
Net Income
148%
5.0
12.4
3Q06 3Q07
Net Income (3Q)
(R$ MM)
50%
9M06 9M07
21.4
32.0(R$ MM)
39%39% 37%37%
Net MarginNet Margin
25%25%
38%38%
Net Income (9M)
Adjusted EBITDA*
123%
7.9
17.6
53%
28.5
43.7
9M06 9M07 3Q06 3Q07
Adjusted EBITDA (9M) Adjusted EBITDA(3Q)
(R$MM)
EBITDA MarginEBITDA Margin
52%52% 51%51%
40%40%
54%54%
Adjusted EBITDA is a non-accounting measure created by Lopes, consisting of net profit before minority interests, income tax and social contribution tax, net financial result (financial income and expenses), depreciation, amortization and non-operating income. The calculation of Adjusted EBITDA does not correspond to any accounting practice adopted in Brazil, does not represent cash flow for the periods presented, and should not be considered a substitute for net income as an indicator for operating performance or a substitute of cash flow as an indicator of liquidity. Adjusted EBITDA does not have a standardized meaning and the definition of Adjusted EBITDA adopted by Lopes may not be equivalent or comparable to the definitions of EBITDA or Adjusted EBITDA adopted by other companies.
Additional Information
Geographic Expansion & Nation Leadership
RankingRankingNumber
Of BrokersNumber
Of BrokersOperation Segment
Operation Segment
Region of OperationRegion of Operation
Business UnitBusiness Unit
Rio de JaneiroRio de Janeiro
2nd2nd
9090
5050
Rio Grande do Sul,
Paraná and Santa
Catarina
Rio Grande do Sul,
Paraná and Santa
CatarinaEspírito SantoEspírito Santo
111111
LaunchesLaunches 364364
Minas GeraisMinas Gerais
126126BahiaBahia
7676PernambucoPernambuco
1st1st1,6161,616São PauloSão Paulo
2nd2nd
N/AN/A
1st1st
1st1st
2nd2nd
CampinasCampinas
ParáPará
5050
5050
1st1st
N/AN/ALaunches and
Secondary Market
Launches and Secondary
Market
LaunchesLaunches
LaunchesLaunches
LaunchesLaunches
Launches and Secondary
Market
Launches and Secondary
Market
Launches and Secondary
Market
Launches and Secondary
Market
Launches and Secondary
Market
Launches and Secondary
Market
Launches and Secondary
Market
Launches and Secondary
Market
Launches – São Paulo
Lopes reached a market share of 32%* in São Paulo, consolidating its leading position in the largest and more competitive Brazilian market
* Market share according to EMBRAESP ranking for launches, using the criteria of points in the São Paulo Metropolitan Region, from January to September, 2007.
* Market share according to EMBRAESP ranking for launches, using the criteria of points in the São Paulo Metropolitan Region, from January to September, 2007.
32%
23%9%
9%
6%
6%
5%
3%2%
5%
Abyara
Avance
Tenda
F. Mera
C. Da Fonseca
Del Forte
Iprice
Itaplan Plus
Lopes
1 LOPES 6,829 54 1,477,459.394 2,807,619,119 327.32 ABYARA 5,865 21 1,296,614.890 2,101,335,034 223.4
3 F. MERA 975 9 288,844.546 667,433,462 62.5
4 C. DA FONSECA 971 11 273,690.444 485,574,790 56.2
5 AVANCE 3,072 18 307,234.862 356,825,130 86.0
6 DEL FORTE 1,276 12 226,781.612 331,399,830 50.5
7 IPRICE 1,329 11 163,868.135 275,203,716 46.0
8 TENDA 2,440 18 176,928.318 205,402,000 84.6
9 ITAPLAN 828 8 98,379.691 164,212,700 29.6
10 PLUS 675 12 66,079.950 80,253,365 23.9
TOTAL AREA GSV (R$) POINTSRanking COMPANIESNUMBER OF UNITS
TOTALLAUNCHES
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