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Institutional Presentation
May 2009
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 31st of March 2009. 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
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 in 2009
UnmatchedScale and Reach
Experienced Management Team
and Outstanding Track Record
Investment Highlights
4
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 15th consecutive “Top Imobiliário”
Lopes’ IPO Lopes starts its geographic
expansion process Lopes’ website become
leader on real state market
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 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 2007
Client-DevelopersClient-Developers Client-BuyersClient-Buyers
Ho
w d
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o
Ho
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bus
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bus
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Ho
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ake
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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
Reve
nue Re
co
gnitio
nRe
venue
Rec
og
nition
$ 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 Premium Contract Advisory Fee
Simple and Focused Business Model…
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Lopes Net Commission
SP GVS / Consolidated GVS 100% 95% 80% 50% 41%
Net Commission São Paulo
Net Commission Brazil
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2005 2006 2007 2008 1Q09
Lopes’ business is clearly fundamental to the profitability and returns of its clients…
Working Capital
Is FundamentalPre 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
Real Estate DevelopmentReal Estate DevelopmentBrazilian Market DynamicsBrazilian Market Dynamics
…and its scale and reach – nearly impossible to replicate – enhance this importance
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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 Determines the Site’s the Site’s Vocation Vocation
Masters Masters Market Market
ResearchResearch
Formats Formats ProductProductMeeting Meeting Buyers’Buyers’
““Wants and Wants and Needs”Needs”
Develops Develops Marketing Marketing CampaignCampaign
Optimizes Optimizes Media Media
NegotiationsNegotiations
Coordinates Product
Launching Events
Individual Individual Sales Strategy Sales Strategy
Created to Created to Each Product Each Product
Coordinates Coordinates Product Product
Launching Launching EventsEvents
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Institutional Website
Evolution of visits to Lopes’ Website
Source: Google Analytics 10
Notes: Managerial Reports.
Absorption calculated over available units
Granja Viana / SP
153/197/230 m2
Reserva Santa Maria – Sep/ 07
177 units
Location
Usable Area
Sales
Cachambi / RJ
48 to 65 m2
Norte Village – Jun / 07
850 un. – R$ 113,000,000
Location
Usable Area
Sales
Paralela / BA
112 to 243 m2
Le Parc Residential Resort – Nov / 07
258 un. – R$ 121,000,000
Location
Usable Area
Sales
Barra da Tijuca / RJ
203 to 260 m2
Santa Mônica Jardins – Nov / 06
142 un. – R$ 20,700,000
Location
Usable Area
Sales
Barra da Tijuca / RJ
262 to 278 m2
Itaúna Gold
30 units – R$ 45.000.000
Location
Usable Area
Sales
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 COMMUNITIES
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
• Own units in São Paulo, Rio de Janeiro and São Paulo’s countryside
• The other markets work with the brand
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 – FGV
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Geographic Expansion
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Lopes is Growing Nationwide
SOUTHEAST REGIONSão 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.
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 REGIONStates 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 REGIONFederal District – Acquisition of 51% of Royal, in November 2007, for R$12 million (9.0x P/E 2008) and an earn-out payment.
Goiás - Greenfield operation with beginning of operations in August 2008.
NORTHEAST REGIONBahia - Greenfield operation with beginning of operations in October 2007.
Pernambuco – Acquisition of 60% of Sérgio Miranda, in August 2007, for R$ 3 million (10.0x P/E 2008) and an earn-out payment.
Ceará – Acquisition of 60% of Immobilis, in January 2008, for R$2.4 million (10.0x P/E 2008) and an earn-out payment.
Lopes tracks developers’ regional movements, consolidates its position as the largest consulting and sales player
PR
RJ
BA
SP
RS
ES
SC
PE
MG
DF
CE
GO
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Lopes’ Market Mix
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São Paulo
Rio de Janeiro
Brasília
South
Northeast
Other*
*Other: ES, MG, GO and PA.
Lopes in the Secondary Market
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The Secondary Market
Source: ITBI, Gafisa prospectus, Cushman Wakefield report, team analysis
118
Primary
Secondary
100%
(Total in R$ billion, % of total potential sales value)
Real estate market by segment
In the city of São Paulo, the difference is as high as 30% ~ 50%
Difference (in %) between the average price per m² in new development vs. used properties
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At the same time that a property sale generates a “derived” demand for financing, it broadens the base of buyers, creating a virtuous circle that supports liquidity in the secondary real estate market. Pronto! and Credipronto! (JV with Itaú) will mutually strengthen this virtuous circle, offering a unique service in
the real estate market
Synergies Between Credipronto! and Pronto! – Competitive Advantage
With Lopes’ leadership and financing from Itaú (Brazil’s largest bank), Pronto! and Credipronto!, acting together, will create a competitive advantage that is hard to replicate
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CrediPronto!
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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
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Innovative Real State Financing Process
The deadlines mentioned are linked to the complete delivery of the documentation and they can change in case of any restrictions.
CrediPronto!
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Brazilian Real Estate Market
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Social Economic Scenario and Housing Shortage
5,4
6,7
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$ 1.900 52%
5 – 10 minimum wages- US$ 950 - US$ 1.900
30%C 28%
< 5 minimum wages - US$ 950
51%D/E 20%
Source: Losango
* Qualitative Housing Shortage is the number of times that a family moves to different houses in life
Age Pyramid in Brazil Segments by Income in Brazil
Quantitative Housing Shortage(millions of homes) Qualitative Housing Shortage
Source: IBGE
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AAA
AAA
AA
A+A+
A
A-
BBB+
BBB-BBB-
BBB+
Mortgage Market as a % of GDP
Mortgage Market and the Investment Grade
Source: Lopes, FMI, S&P and Santander
X Rating S&P
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Number of Launches - RMSP
GVS¹ Launched (R$ bn) - RMSP
Units Launched (‘000) - RMSP
¹ Launched values adjusted by the INCC until December/08.
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
1996 1997 2006 2007 2008
Nominal GVS launched in 2008 was the same amount as 2007: R$ 20 bn.
20,6
Launches RMSP – Historic data (1996 - 2008)
Source: Lopes’ Market Intelligence*2009E – 1996 + GDP growth or similar amount of 2006 (GDP growth – CAGR with data from IBGE, GDP of 2008 was annualized).
2009E*
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+14%
+37%
R$/m2
SPMR Real Estate Market Overview – Prices
Source: EMBRAESP
Nominal
INCC Adjusted
Evolution of Average Launches’ Prices in the SPMR
R$/m2
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Lopes’ Confidence Index
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116,9
Lopes’ Confidence Index intend to measure clients confidence, so Lopes can follow and anticipate, in the short term,
housing purchase tendency.
The sample has 565 interviews, with Grande São Paulo resident clients, which contacted Lopes in the last 3 months and
are interested in purchasing a new home.
+35.6%
Lopes’ Confidence Index (LCI) April/09
(base: jan/2009=100)Source: Lopes Market Intelligence
Lopes’ Confidence Index (LCI) - April/09
Lopes is the first company to create a Real Estate Consumer Confidence Index.
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The scenario is positive when compared the present purchase intention with the purchase intention for the next 6 months,
specially in the Low Income and Medium-High Segment.
The factors that show the optimism for the future are:
(i) the perception about the brazilian economic situation in the next 6 months, which for 47% of the interviewed will be good;
and (ii) the purchase intention, which is high or medium for 75% of the interviewed.
116,9
36%
39%31%
(base: jan/2009=100)Fonte: Inteligência de Mercado Lopes
Lopes’ Confidence Index (LCI) – April/09
Low Income
Medium-High
High
Lopes’ Confidence Index
Present Situation Index
Expectation Index
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Operational Highlights
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Contracted Sales’ Historical*
* Unaudited managerial information.
Total GVS – Primary Market(in R$ million)
CAGR: 36%
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-38%
Contracted Sales
(R$ MM)
Contracted Sales
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2,336
1,441-12%
1,600
Units Sold per Region and per Income Segment
Sales per Segment(in units)
Sales per Region(in units)
33
Lopes stands out as the brokerage company with the best performance per sales agent. The highest contracted GVS per sales agent ratio is an appeal and a retention factor for the best brokers of the market.
(R$ MM)
Source: Lopes Market Intelligence
Contracted Sales per Agent - SP
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Financial Highlights
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Results 1Q09
1Q09 Results(R$ thousand)
LOPES PRONTO! CREDIPRONTO! CONSOLIDATED
Net Revenue 32,820 1,073 763 34,656
Operating Costs and Expenses (25,141) (2,884) (704) (28,729)
Stock Option Expenses(CPC 10) (824) - - (824)
Expenses Appropriated from Itaú (238) - - (238)
EBITDA Pro-Forma 7,442 (1,812) 59 5,689
Pro-Forma EBITDA Margin 22.68% -168.9% 7.7% 16.4%
Non- Recurring Expenses (1,313) (37) - (1,351)
Net income Pro-Forma 4,614 (1,782) 304 3,136
Pro-Forma Net Margin 14.06% -166.1% 39.79% 9.05%
Without Pronto! and CrediPronto!’s effects Lopes’ EBITDA would achieve R$7,4 million, with a 23% margin, and a Net Income of R$4,6 million, with a
14% margin.
Brasília had a R$4,7 million Income, while Campinas had a R$1,0 million
Income.
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Reasons for the Decrease of the net Commission
(i) Contracted sales decrease, from R$2.3 billions in the 1Q08 to R$1.4 billion in the 1Q09;
(ii) Market Mix change, with increase of Other Market’s share; e
(iii) Decrease of São Paulo’s net commission, once Habitcasa, LIL and LIV rose its share on São Paulo’s contracted sales.
1Q08
1Q09
Net Commission Net Commission Market Mix
Brasília
Brasília
Costs of Services and Operating Expenses
Operating Costs and Expenses
(R$ thousands)
4Q08 1Q09 Lopes Pronto! Var. %
Personnel expenses 22,010 13,980 12,435 1,530 (37%)
Commissions and other services 2,120 1,091 959 117 (49%)
Third party services, advisory and consulting 7,155 2,344 2,050 279 -67%
Infrastructure 2,872 3,279 2,707 557 14%
Telecommunications 4,028 2,028 1,908 106 (50%)
Advertising and marketing 3,884 1,416 1,238 163 (64%)
Depreciation 1,500 1,633 1,406 228 9%
Office supplies 436 393 349 29 (10%)
Other operating expenses (296) 3,493 3,373 105 (1,280%)
Stock Option expenses 6,299 824 824 - (87%)
Itaú expenses to accrue - 238 238 - -
Non-recurring Loss - 1,351 1,313 37 -
Total 50,011 32,071 28,960 3,112 (36%)
* The total costs and operating expenses include the 4Q08 write-off on CPC04 of $ 10 million and the reversal of interest on Patrimóvel of $ 14.6 million and, therefore, without these effects, the total costs and operating expenses of the quarter would be of $ 54.6 million. The 1Q09 does not include the cost of CrediPtonto! worth of $ 0.7 million, which are managed by Banco Itaú.
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39
(R$ MM)
Other R$3.8 MM
Itaú ‘s expenses to accrue R$0.2 MM
Depreciation R$1.4 MM
Pará’s One-Off Costs R$1.3 MM
Stock Option R$0.8 MM
Other
Costs of Services and Operating Expenses
Operating Costs and ExpensesOperating Costs and Expenses
Guidance for 2009
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Sales’ Guidance for 2009 – Primary Market
9%
(R$ MM)
* The General Value of contracted sales (Contracted GVS) projected in this release may change due to many variables. This material fact includes forward looking statements related to business perspectives, results estimates and, also, the growth outlook for Lopes. Such forward looking statements may be substantially affected by changes in market conditions, government decisions, stronger competition, industry performance as well as Brazilian economy performance, in addition to those risks presented in the documents released and filed by Lopes, consequently, they are subject to changes without previous notice. 41
Sales’ Guidance for 2009 – Secondary Market
Pronto!’s Guidance 2009
Contracted Sales$ 1.1 billion – R$ 1.4 billion
i. Sales Lopes* R$ 0.4 billion – R$ 0.6 billion
ii. Sales Franchisers R$ 0.7 billion – R$ 0.8 billion
Net Revenue R$ 12 million – R$ 14 million
*Secondary market sales from Lopes’ other units are not included. .
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Additional Information
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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
44* The seasonality can not be verified in 2008, because of the effects of the world financial crises.
Ownership Structure
Total of 49,448,033 common shares
Ownership Structure Post-IPO
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Institution Analyst Contact
Agora Cristiane Viana (+55 21) 2529-3393 [email protected]
Banco Espírito Santo TBD -
Credit Suisse Marcelo Telles (+52 55) 5283-8933
Itaú David Lawant (+55 11) [email protected]
Link Celso Boin Jr. (+55 11) 4505-6701 [email protected]
Planner Ricardo Martins (+55 11) 2172-2600 [email protected]
UBS Pactual Rodrigo Monteiro (+55 21) 3262-9208 [email protected]
Coin Valores Marco Barbosa (+55 11) [email protected]
Analysts Coverage
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