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Institutional Presentation
1
Institutional Presentation
August 2011
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
(“LPS”) as of June 30th, 2011. 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 LPS 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 LPS 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.
LPS believes that based on information currently available to LPS management, the expectations and
assumptions reflected in the forward-looking statements are reasonable. Lastly, LPS expressly refuses any duty to
update any of the forward-looking statements contained herein.
2
Investment HighlightsInvestment Highlights
3
� Mr. Francisco Lopes initiates its activities intermediating properties
80´s
90´s
00´s� First TV advertisement for a real estate development
� Launch and sell of 14 office buildings at Av. Paulista
� Launch and sell of 11 office buildings at the FariaLima region
� Creation of the launching system with sales stands and marketing materials, attracting customers specially during weekends
� Introduction of the concept of condominium clubs
� First “Top Imobiliário” award, in 1993 – Largest Brokerage Company
� Becomes reference in real estate launchings and presents its new logo
The Brokerage Market Has No Other Company With Our History and Track Record
193540´s
50´s
60´s
70´s
80´s
� Launch one of the first buildings under the condominium concept
� Start of long term partnership with Gomes de Almeida Fernandez (Gafisa)
� 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 EspíritoSanto in selling one of the largest launching in Lisboa: Parque dos Príncipes
� Lopes becomes an important player at the segment of gated communities
� Triples in size in a decade, strengthening its leadership
� Wins its 16th consecutive“Top Imobiliário”
� Lopes’ IPO � Lopes starts its geographic expansion
process� Lopes’ website become leader on real
state market� Joint Venture with Itaú Bank in order to
create CrediPronto, our mortgage company.
� Lopes’ follow-on
� The company’s first logo
4
Simple and Focused Value Added Business Model
Simple and Focused Value Added Business Model
Main Distribution Main Distribution
Experienced Management Team and Outstanding Track Record
Experienced Management Team and Outstanding Track Record
Investment Highlights
Main Distribution Channel in the Industry with a
National Footprint
Main Distribution Channel in the 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
Already scaled down to face new market conditions
Already scaled down to face new market conditions
UnmatchedScale and Reach
UnmatchedScale and Reach
5
Mortgage LoanPrimary Market Secondary Market
LPS Brasil: Unique Business Platform
+
6
Joint Venture with Banco Itaú to provide mortgage loans
Low, mid and high-income segments Focus on secondary market, with a unique model of own stores and a
network of licensed brokersGrowth through acquisitions
6
3.23% 3.15% 3.06%2.60% 2.54% 2.56% 2.40%
Lopes Net Commission
Net Commission Brazil
2005 2006 2007 2008 2009 2010 2Q11
SP GVS / Consolidated GVS 100% 95% 80% 50% 48% 46% 48%
Net Commission São Paulo
7
3.23% 3.16% 3.19% 3.10% 2.85% 2.88% 2.79%
2005 2006 2007 2008 2009 2010 2Q11
Virtuous Cycle of the Business Model Creating Strong Barriers to Entry
Leadership and Wide Range of ProductsIndisputable Sales Performance
� Speed of sales of 25% in 2Q11, and 51% for Habitcasa
� R$4.9 billion in contracted sales in 2Q11.
� Most visited website in the real estate sector: near 9 million visitors in the first half of 2011.
� Leader in the primary market
� One-stop-shop: unique and
complete solution for the client
� : unique platform to
develop the secondary market
� : partnership with one
of the largest retail banks in the
world, Itaú Unibanco
8
Strong Established Base
� Leading, nationally recognized brand
� Present in 12 Brazilian states and in the Federal District
� Extensive distribution channel
� Database with more than 1.8 million clients
� More than 350 homebuilder clients
Retention of Talent
� Largest sales force: over 13,000 independent brokers
� Attracts and maintains its sales force
8
Institutional Website
Visits on www.lopes.com.br
• 9 million unique accesses in thefirst half of 2011
• Over 600 launches and more than40 thousand units in the secondarymarket
• Mobile version compatible withover 5 thousand kinds of cell phones
9
Source: Google Analytics,
The most visitedwebsite in the real estate market
Strong investmentin online media
Increasedgeneration of
Leads
Higher salesconversion
• First brokerage company to launchan App for iPad
• Leader in presence in socialnetworks
Competitive Advantage
“Lopes” culture in all business units of different
states
National Integration of Systems
One single brand, recognized by the
Competitive Advantage: A single, integrated and solid Company
of Systems recognized by the market
Identity that stands Lopes out from the
competitors
10
LPS Brasil’s Market Mix
5% 6% 5%5%
11% 19% 18% 24%
16% 14% 14%17%
9%12% 9% 8%
7% 12% 10% 11% 12%
10% 11% 12%6%6% 6% 6% 6%
5%2% 2%
13% 10% 11% 13% 12% 8% 12% 10%
Rio de Janeiro**
Brasília
South
Northeast
Other*
53% 52% 54%49% 50% 46% 48% 44%
6%5%
3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
São Paulo
Rio de Janeiro**
*Other: Ceará, Estpírito Santo, Minas Gerais, Goiás and the city of Campinas11
LPS Brasil in the Primary MarketLPS Brasil in the Primary Market
12
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 agreements
� Over 350 Clients
� 1,847,522 prospects included in our data base
ClientClient--DevelopersDevelopers ClientClient--BuyersBuyers
How do we do
How do we do
business?
business?
$ 100Total Price per Unit
Revenue Recognitio
nRevenue Recognitio
n
Simple and Focused Business Model…How do we m
ake m
oney?
How do we m
ake m
oney?2, 3
2, 3
$ 0.19
$ 0.07
$ 2.14
$ 100
$ 10
per Unit
Down-payment
GrossCommission
$ 0.85
$ 1.15
Agents +Managers
Revenue Recognitio
nRevenue Recognitio
n
$ 4.56 ²
Developer
1 Data until Dec-102 Data from the LTM
$ 2.00
$ 2.40
Net Commission Premium Contract Advisory Fee
13
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 Determines Determines Masters Masters Masters Masters
Formats Formats ProductProductFormats Formats ProductProduct Develops Develops Develops Develops Optimizes Optimizes Optimizes Optimizes Coordinates Coordinates Individual Individual Individual Individual Coordinates Coordinates
Product Product Coordinates Coordinates Product Product Determines Determines
the Site’s the Site’s Vocation Vocation
Determines Determines the Site’s the Site’s Vocation Vocation
Masters Masters Market Market ResearchResearch
Masters Masters Market Market ResearchResearch
ProductProductMeeting Meeting Buyers’Buyers’
“Wants and “Wants and Needs”Needs”
ProductProductMeeting Meeting Buyers’Buyers’
“Wants and “Wants and Needs”Needs”
Develops Develops Marketing Marketing CampaignCampaign
Develops Develops Marketing Marketing CampaignCampaign
Optimizes Optimizes Media Media
NegotiationsNegotiations
Optimizes Optimizes Media Media
NegotiationsNegotiations
Coordinates Product
Launching Events
Coordinates Product
Launching Events
Individual Individual Sales Strategy Sales Strategy Created to Created to
Each Product Each Product
Individual Individual Sales Strategy Sales Strategy Created to Created to
Each Product Each Product
Product Product Launching Launching EventsEvents
Product Product Launching Launching EventsEvents
14
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. . Lopes acquires permanently an additional 10% stake of Patrimóvel, in July 2010, and more 31% in october 2010 (51% total).
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
BA
PE
DF
CE
GO
RN
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. In September 2009, Lopes acquired the 40% left by the call/put mechanism. In 2010, there was a transfer to LPS Fortaleza –of 100% (one hundred percent) of the capital stock of LPS Pernambuco.
Ceará e Rio Grande do Norte – Acquisition of 60% of Immobilis, in January 2008, for R$2.4 million (10.0x P/E 2008) and an earn-out payment.
Lopes tracks developers’ regional movements, consolidates its position as the largest consulting and sales player
PR
RJSP
RS
ES
SC
MG
DFGO
Source: Lopes RI 15
HIGH
MEDIUM-HIGH
MEDIUM
Sales Expertise in all Market Segments
Aquarella Pari – Abr/11
Vila Madalena/ SP
70 / 174 m2
SoulMada – Jun/ 11
50 un. – R$ 9.530/m²
Location
Usable Area
Sales
Itaim/ SP
35 / 974 m²
F.L. – May/11
329un. – R$12,500/m²
Location
Usable Area
Sales
CASE
� 98% vendido.
� Incorporador: PDG
CASE
� 100% sold.
�Developer: Stan
CASE
ECONOMIC
BUSINESS UNITS
Notas: Relatórios Gerenciais.
Absorção calculada sobre unidades disponíveis
Jundiaí/ SP
42 / 421 m²
Barão de Teffé – Jun/11
111 un. – R$ 6.550/m²
Local
Usable Area
Sales
Valinhos/ SP
44 / 64 m2
Mais Campos Salles – Mai/11
372 un. – R$ 2.800/m²
Location
Usable Area
Sales
Pari/ SP
55 / 75 m²
592 un. – R$ 3.930/m²
Location
Usable Area
Sales
� 91% vendido.
� Incorporador: Helbor
CASE
� 98% vendido.
� Incorporador: Living
CASE
� 100% vendido.
� Incorporador: Agre
16
LPS Brasil in the Low Income SegmentLPS Brasil in the Low Income Segment
17
HABITCASA: Focus on Low Income Segment
Focus on Low Income Segment
Units up to R$ 300 thousand
The Habitcasa brand is applied in all Lopes’ markets
18
Habitcasa Stands Up as the Biggest Player in sales in the Low Income Segment
Sales in the 1H11 increased 38% when compared to the 1H10
Only Real StateBrokerage Company specialized on the low income segment, not only in sales, but also
in advisory
In 2009, Habitcasa became Caixa’scorrespondent
Over 3,000 units sold in the 1H11
Average Price in the 2Q11 of R$175 thousand
51% Sales Speed In the 2Q11
19
Sales by Income Segment – Primary and Secondary Markets
ContractedContracted SalesSales
13%
39%27%
22%
Total Contracted Sales = R$ 4.957 milhões
10%
35%
23%
32%
2Q10 2Q11
UnitsUnits SoldSold
20
34%
43%
15%8%
34%
44%
17%5%
2Q10 2Q11
Total units sold = 17.119
Increase in the Potential Demand
Unit ValueR$120,000
MortgageR$96,000
30% of income commitment
80% of the total value financed
In Minimum Wages Monthly Payment (R$)
Maturity in years
10 15 20 25 30
12% 13 11 10 10 9
11% 13 10 9 9 9
10% 12 10 9 8 8
9% 12 9 8 8 7
8% 11 9 8 7 7
7% 11 8 7 6 6
6% 10 8 7 6 6
5% 10 7 6 5 5
Maturity in years
10 15 20 25 30
12% 1,377 1,152 1,057 1,011 987
11% 1,322 1,091 991 941 914
10% 1,269 1,032 926 872 842
9% 1,216 974 864 806 772
8% 1,165 917 803 741 704
7% 1,115 863 744 679 639
6% 1,066 810 688 619 576
5% 1,018 759 634 561 515
Interest Tax (%)
Interest Tax (%)
21
Better Economic Situation of the Low Income Segment…
Monthly Income (Millions of Families)
2007 2008
Untill R$1,000 31.7 53% 29.1 31%
From R$1,000 to R$2,000 15.5 26% 27.6 29%
From R$2,000 to R$4,000 8.4 14% 21.8 23%
From R$4,000 to R$8,000 3.3 5% 11 12%
From R$8,000 to R$16,000 1.1 2% 4.3 5%
From R$16,000 to R$32,000 0.3 0% 1.3 1%
More than R$32,000 0 0% 0.3 0%
TOTAL 60.3 100% 95.4 100%
32.536.5 37.4 38.0 40.0
47.0
52.0
1992 1995 1998 2001 2004 2007 2008
% of the population with monthly income between R$1,064 and R$4,561 (program’s target population)
Source: FGV Source: IBGE, FGV, Ernst & Young
25.5
7.5
1
34
Government Budget
FGTS BNDES TOTAL
“Minha Casa, Minha Vida” Funds
Source: “Minha Casa, Minha Vida” Program
Source: FGV Source: IBGE, FGV, Ernst & Young
22
62.2
9.5
71.7
Government Budget
FGTS TOTAL
“Minha Casa, Minha Vida 2” Funds
Housing(‘000)
Total of houses
New housesformed
New housesfinanced
% of new housesfinanced
2002 48,035 1,530 83 5%
2003 49,710 1,675 104 6%
2004 51,752 2,042 112 5%
2005 53,114 1,362 101 7%
2006 56,610 1,496 151 10%
2007 56,343 1,733 166 10%
... and also Better Supply of Mortgages
Source: IBGE, BC
2.2 3 4.99.3
18.425.2
3.8 3.95.5
7
6.9
10.2
2003 2004 2005 2006 2007 Savings untill Oct 2008 FGTS untill Nov 2008
Financed with FGTS' Funds Financed with Savings' Funds
Housing Credit (R$ billions)
Source: ABECIP, Central Bank of Brazil, CEF e FGV23
Minha Casa Minha Vida
Brazilian Government will dispose of R$34 bi.
In the State of São Paulo 183,995 units will be built.
São Paulo’s families 41% have a monthly family income between 3 and 10 minimum wages, with “Minha Casa, Minha Vida” this
families will become potential buyers.
10% has purchase intention for the next 12 months
Source: Lopes’ Market Intelligence
(3.4 million of families)
It is estimated that there is a 140 thousand units demand in the city of
São Paulo inside the“Minha Casa, Minha Vida” program .
(1.4 million of families)
Premise: with the federal government subsidy, the decrease of interest rates and more extended mortgages terms, the minimum family income to acquire a R$100 thousand house became 3 minimum wages, not 6 minimum wages as before.
24
LPS Brasil in the Secondary MarketLPS Brasil in the Secondary Market
25
Pronto!
SOUTHEAST REGIONSão Paulo – Acquisition of 51% of VNC, in July 2010, for R$7.1 million (R$ R$1,8 million + R$0,3 million of investiments + R$5,2 million of earn out ).
Acquisition of 51% of Plus Imóveis, in August 2010, for R$11.7 million (R$4.7 million + R$7.0 million of earn out).
Acquisition of 51% of Maber, in September 2010, for R$17.3 million (R$6.0 million + R$11.3 million of earn out).
Acquisition of 55% of Local, in December 2010, for R$25.6 million (R$10.0 million + R$15.6 million of earnout)
Acquisition of 60% of Erwin Maack, in March 2011, for R$8.4 million (R$2.9 million + R$5.5 million of earn out)
Acquisition of 51% of Condessa in July 2011, for R$4.9 million
26
Pronto has 246 stores in 11 States + Federal District : 46 owned stores and200 licensed brokers
Acquisition of 51% of Condessa in July 2011, for R$4.9 million(R$1.9 million + R$3 million of earn out).
Rio de Janeiro – Acquisition of 51% of Self Imóveis, in July 2010, for R$ 2,6 million (R$900 thousand + R$1,7 million of earn out)
FEDERAL DISTRICT :
Acquisition of 51% of AçãoDall’Oca in April 2011, for R$12.2 million (R$3 million + R$9.2 million of earn out).
SOUTH REGIONRio Grande do Sul – Acquisition of 51% of Ducati, in December 2010 forR$15,5 million (R$5.3 million + R$10.2 millionof earnout).
Paraná – Acquisition of 60% of Thá, in February 2011, for R$20.9 million (R$7.4 million + R$13.6 million of earnout).
� Present in 11 states and the Federal District
– Covers 91% of the Brazilian GDP
– 46 own stores
– 200 licensed brokers
– Strong presence in São Paulo and Rio de Janeiro
� Unique one-stop-shop business model
Unique Platform Poised for GrowthWell Defined Acquisition Model with a Successful Track
Record
� Appreciation and alignment of interests
– Earn-out
– 51% ownership stake
Pronto!: A Natural Consolidator
� Acquisition strategy:
– Companies with expertise in their regional markets
– Companies with limited access to capital
– Well positioned in relevant markets
– Widespread network
27
� Solid client base
� Strong internet presence
� Diversified products in the portfolio
–
Natural Consolidator
� Potential synergies:– Scale and reach: network effect– Access to mortgage financing– Expertise of LPS Brasil management
� Successful acquisitions through the years
– 10 acquisitions since July focused on the secondary market
– Benchmark for future partners
– Accretion
27
Joint Venture Lopes Itaú
Lopes and Itaú created the first and biggest pure mortgage company of Brazil.
� 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
Strengthening of mortgage origination and other related services.
Leadership position in their respective
markets
Management Excellence
High Value Brands
business and in joint ventures
28
Differentiated Model: One-Stop-Shop
� Secondary Market: a significant potential for origination
� 46 own stores and 200 licensed real estate brokers in 11
� Distinctive channel for clients in the secondary market
� Over R$1.3 billion in financing
Focus
29
Winning Model
� 46 own stores and 200 licensed real estate brokers in 11
states and the Federal District
� Selective acquisitions to replicate the successful formula
used in the primary market
� 30% of Pronto!’s contracted sales are financed by
Credipronto!
� Over R$1.3 billion in financing
� Incipient market in Brazil with huge expansion potential
� 59% of CrediPronto! transactions are originated through
Pronto!
� Use of LPS Brasil’s platform and significant reduction in
CAPEX requirement
Relevance
Growth Potential
Synergies
29
1,341
CrediPronto!
146
328
125%
207%
FinancedFinanced VolumeVolume
(R$ MM) (R$ MM)
Accumulated Accumulated Volume Sold*Volume Sold*
30
437
Jun/10 Jun/11
In 2Q11, CrediPronto! financed R$327,6 million, growing 125% when compared to 2Q10.
146
2Q10 2Q11
30
*It doesn’t include amortization.
MortgagesMortgages PortfolioPortfolio
CrediPronto!
(R$ MM)
1,162
553%
The Average Portfolio Balance in 2Q11 was R$1,063 million.
178
Opening portfolio balance Jan/10 Ending portfolio balance Jun/11
31
529 591
654 727
804 854
928 1,013
1,113
1,219
1,340
700
900
1.100
1.300
1.500
AccumulatedAccumulated Sales Volume Sales Volume **
CrediPronto!
(R$ MM)
11%
217 247 291
331 385
437 474 529
591
100
300
500
32
CrediPronto! financed over R$121 million in June 2011.
*Not including amortization.
Credipronto!: Unique Partnership to Capture Mortgage Loan Market Potential
Business Highlights
� In 2 years, it has already reached over 6% of market share
in the private mortgage loan market (excluding Caixa)1
� Profit Sharing with limited credit risk
� Leverage on LPS Brasil’s points of sale
� Differentiated process of approval and release of funds
� Unprecedented credit in the market
Innovative Real Estate Financing Process
+Market Leader
Largest Private Bank in Brazil
Credit Analysis Assessment ofthe Property
Legal Analysis Issuanceof theContract
Release ofResources
24 hoursUntil 3 workingdays
2 workingdays
3 workingdays
5 workingdays
Efficiency in Release of Credit
33
Evolution of Origination (base 100 = Jan-10)1
� Unprecedented credit in the market
Notes:1 ABECIP (as of December 30th, 2010) and Company. Ranking based on June/2011 origination2 Excluding Caixa3 Bacen
High Growth Potential – Real Estate Financing equals only 4% of Brazilian GDP2
Ranking of Real Estate Financing 2T11 (R$ mm)¹
33
5.625
2.010
956 905 797438 99 51 16 14
327
6% de Market Share ²16% of Itau
Total origination2T11: 10.9 billion1H11: 19.7 billion
1,4% 1,9% 1,7%
Market Share CrediPronto!
2,4% 2,4%
100
168 177
245 241
376
125 145 147 144179
1T10 2T10 3T10 4T10 1T11 2T11
Credipronto! Mercado
3%
Brazilian Real Estate MarketBrazilian Real Estate Market
34
Significant Creation of Demand
Demographic Bonus Population Pyramid (millions of people)
40%
60%
80%
100%
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Economically active population = 15 – 64 year-old
35
Growth 2007 - 2030
Expansion of Class C (% of the population) Number of Families by Income Segment (millions)
Dependence Index
(8%) 78% 160% 233% 291% 433%
2003 2008
11%
49%
24%
16%
Classes A and B Class C Class D Class E
8%
37%
27%
28%
Source: IBGE, Bird, Febraban and FGV
31.7
15.5
8.4
3.31.1 0.3
29.1 27.6
21.8
11
4.31.6
Up toR$1k
R$1k to R$2k
R$2k to R$4k
R$4k to R$8k
R$8k to R$16k
Above R$ 16k
2007A
2030E
35
106%104%
88%84%
81%
68%65%
Mortgage Market
Mortgage Market as a % of GDP
48%42%
40% 38%35%
22% 22%19%
15%11% 11% 10%
6% 5% 5% 5% 4% 3% 3% 2% 2% 2% 1% 1%
Source: Goldman Sachs, Abecip, BCB
36
Growth Drivers
� Housing deficit
– 7.2 million houses (2009)
� Incipient mortgage loan market
� Declining interest rates
� Rising employees’ income
� Growing availability of long-term funding
� Increasing secondary market financing
� Increasing family turnover
Market Potential for Real Estate Financing
5.4
6.7
7.9
6.35.8
1991 2000 2006 2007 2008
Quantitative Housing Shortage (millions of homes)
37
Source: Bacen and ABECIPNotes:1 Data from 2006, except for Brazil (2009) 2 FGV’s Center for Social Studies, 20103 Represents the number of times a family moves to a different house during their lifetime. Source: Credit Suisse
Mortgage Loan Access (% by Social Class)2
7.7%
5.0%
3.0%
1.7%
Classes A and B Class C Class D Class E
4.0x
1.8x
9.0 – 10.0x
G-7 Mexico Brazil
Family Turnover3
1991 2000 2006 2007 2008
37
Lopes: Leadership and Growth
Primary Market: Leadership1 in an Expanding Market
Second Growth Cycle
� Highly capitalized homebuilders
– US$10.4 billion raised since 2009²
– Developments launched in the first wave have completed their cycles, generating cash for further investments in the market
Lopes Contracted Sales: Significant Growth (R$ mm)
� Lopes’ scale and reach result in extensive network and sales capacity: essential for distributing units launched
� Unique database with more than 1.8 million clients
� Over 350 homebuilder clients
� Speed of sales of 25% in 2Q11, and 51% for Habitcasa
Launched PSV – Listed Companies (R$ mm)3
38
2,545
4,873
9.3708.658
15.600
2006 2007 2008 2009 2010
33.3
37.2
29.2
2007 2008 2009 2010E
Notes:1 Includes the acquisition of Patrimóvel2 US$3.4 billion raised in 9 equity offerings and US$7.0 billion issued in debt. Only includes public issuances. Source: Bloomberg3 Earnings release: Brookfield, CCDI, CR2, Cyrela, Direcional, EVEN, EZTEC, Gafisa, Helbor, Inpar, JHSF, João Fortes, MRV, PDG, Rodobens, Rossi, Tecnisa and Trisul4 Annualized, considers that contracted sales launched in the first half are equal to 40% of contracted sales launched per year
44.84
38
15,1 16,017,7
24,422,8
17,4
24,9
GVS Launched (R$ bn) - SP
20102007200619971996 2008
Launches Metropolitan Region of São Paulo
2009
39
Number of Launches - SPUnits Launched (‘000) - SP
Source: Lopes’ Market Intelligence
509
377341
467 458
538 548509
442478
574548
494
574
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
70
33 35
40 35 34
37
31 36 38
68 70
59
76
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
39
40103663
Average (Units Sold/Launched) = 0,87
Average (Units Sold/Launched) = 1,31
Sales Speed Metropolitan Region of São Paulo
Units Launched and SoldUnits Launched and SoldSP CapitalSP Capital
2092
2380
2220 1603
Year Units Lauched Units Sold
2008 34.500 32.800
2009 30.100 35.800
2010 37.300 35.870
05M11 10.830 8.960
Units Launched
Units Sold
40
R$/m2
SPMR Real Estate Market Overview – Prices
Nominal
Evolution of Average Launches’ Prices in SP
R$/m2
1360 13701550 1620 1740
19302230
2470
2850 28903050 3000
32003480
4470
Source: EMBRAESP
INCC Adjusted
41
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
41203880
4180 4140 4070 41804390
41904340
4040 40403770 3680 3730
4570
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Factors that Sustain the Growth in the Real State Market
Positive Economic Trend
Brazil is Latin America’s biggest economy
and presents economic, political and social stability;
Positive economic fundaments:
1. Country-risk in minimum historical level
2. Inflation under control
3. Extern debt at lower levels
Financing Availability
Smaller Taxes, longer terms;
SFH and FGTS limit increase;
Higher participation of the private sector; and
In Brazil, the mortgages represent 15-20% of the total credit, smaller than in other countries (70%).
4. Decreasing of the unemployment tax
Real State Sector Development
Consumer’s buying intention increase;
Technology achieved in both sides;
Products with more sophisticated attributes for the middle income segment;
Technology in the low income segment construction; and
Development of new
Brazilian markets.
Housing Deficit
Estimated deficit of 7.2MM de houses;
Bad quality housing for middle and low
income segments.
other countries (70%).
42
Lopes’ Confidence IndexLopes’ Confidence Index
43
118,0
100,0
Lopes’ Confidence Index (LCI) – June/11
Lopes is the first company to create a Real Estate Consumer Confidence Index.
Lopes’ Confidence Index (LCI) June/11
Expectation Index Lopes' Confidence Index Present Situation Index
(base: jan/2009=100)
Source: Lopes Market Intelligence44
Lopes’ Confidence Index intend to measure clients confidence, so Lopes can follow and anticipate, in the short term,
housing purchase tendency.
The sample has 553 interviews, with Grande São Paulo resident clients, which contacted Lopes in the last 3 months and
are interested in purchasing a new home.
Present Purchase Intention Growth – June/11
Evolution of the current intention of purchasing propertySimple Answer
Economic Average Standard High Standard
High andAverage
Low
(base: jan/2009=100)
Source: Lopes Market Intelligence45
For the housing market are considered the positives attributes of the intended purchase of property High and Average that is mentioned by the prospects during the interview .
Low
Sales Speed Over SupplySales Speed Over Supply
46
Lopes' Consolidated Sales Speed Habitcasa’s Sales Speed
Sales Speed over Supply
47
24% 25%
1Q11 2Q11
60%51%
1Q11 2Q11
*Management information,The Sales Speed over Supply is obtained based on the quarter’s contracted GVS compared to inventory and launches.
Operational HighlightsOperational Highlights
48
Contracted Sales’ Historical in the Primary Market*
Total GVS – Primary Market
(in R$ thousands)
14,364
•Unaudited managerial information.
• 2010 considers 100% of Patrimovel sales
591 850 1,166 1,253 1,556 1,853 2,545
4,873
9,370 8,658
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
49
613
2,290 12,369
Contracted Sales
(R$ MM)
Contracted Sales
272
1,0853,410
45%
Units Sold
38%
4,95717,119
11,756 14,828
2Q10 2Q11
50
3,138 3,872
2Q10 2Q11
In this Quarter, We Achieved R$ 4.9 billion in Contracted Sales.
Financial HighlightsFinancial Highlights
51
2Q11 Results
2Q11 Results
(R$ thousand)
LOPES Pronto! CrediPronto! Consolidado
Gross Revenue 94.787 27.068 16.125 137.979
Revenue from Real Estate Brokerage 91.162 27.068 481 118.710
Revenue to Accrue from Itaú 3.625 - - 19.269
Earn Out 15.644
Net Revenue 86.090 24.584 16.046 126.720
(-) Operating Costs and Expenses (48.117) (14.396) (3.707) (66.219)
(-) Stock Option Expenses (CPC 10) (517) - - (517)
52
(-) Stock Option Expenses (CPC 10) (517) - - (517)
(-) Expenses to Accrue from Itaú (238) - (571) (809)
(=)EBITDA 37.217 10.188 11.768 59.174
EBITDA Margin 43,2% 41,4% 73,3% 46,7%
(-) Depreciation and Amortization (6.819) (5.284) (10) (12.113)
(+/-) Financial Result 10.664 1.720 (267) 12.116
(-) Income and social contribution taxes (10.803) (1.521) (957) (13.282)
(=) Net Income for the year 30.260 5.102 10.534 45.896
Net Margin 35,1% 20,8% 65,6% 36,2%
(=) Net Income for the year
- Attributable to Non Controlling Shareholders (6.244)
- Attributable to Controlling Shareholders 39.652
Net margin after Non Controlling Shareholders 31,3%
Net Revenue
(R$ million)
EBITDA
Disconsidering theeffect of the EarnOut, net revenuewould be R$ 111
million
Quarterly Performance – Compared Analysis
EvolutionEvolution ofof Net Net RevenueRevenue, EBITDA , EBITDA MarginMargin, Net , Net IncomeIncomeandand Net Net MarginMargin
40%
48% 47%
53 80
127
139%
18%
53
EBITDA
Margin
Net Income
after Non
Controlling
Shareholders(R$ million)
Net Margin
after Non
Controlling
Shareholders
Net Income in the2Q11 sustained thegrowth comparedto 2Q09 e 2Q10.
21%27%
31%
2Q09 2Q10 2Q11
11
21
40
18%
260%
51%
Without Earn out
CrediPronto!
(R$ thousand) P&L 2010
Amount financed 600,030
Portfolio opening balance 177,688
Portfolio ending balance 707,053
Portfolio average balance 403,587
Financial Margin 9,773
% Spread 2.42%
(-) SalesTaxes -919
(-) Total costs and expenses -22,087
54
(-) Total costs and expenses -22,087
(-) Expenses Itaú -3,471
(-) Expenses Olímpia -12,551
(-) Commissions -5,945
(-) Insurance and sinister (+/-) -120
(+/-) Bank correspondance -
(+) Other Revenues (Financial) 2,153
(-) Allowance for Doubtful Accounts -3,210
(-) IRPJ/CSLL 302
(=) Net result -13,988
% Net margin -143%
50% Profit Sharing -6,994
*The managerial P&L measures the results of the JV. Olimpia’s Results and all Revenues and Expenses incurred by Itau are considered.• The numbers of the managerial P&L were audited for 2010 by Ernst&Young and, due to its managerial nature, it does not follow accounting standards.
• General (0,5%)
Allowance for Doubtful Accounts
Automatic credit score – 100% of the new contracts
For delays higher than 29 days
Example of P&L with a contract de financiamento para um imóvel de $200:
Month 8
$100
-$60
Month 1
$100
-$60
Month 2
$100
-$60
Month 5
$100
-$60
• Specific (variable)
Financial Margin
Expenses¹
55
Ex: Sale for $300
Ex: Sale for $150
+$200
$240
-
$40
-$5
$35
-$25
$15
+$100: Profit forthe bank
-$50: Lossof the bank
Sale of therecoveredproperty
Recovery ofProperty
¹ Including general allowance
Default
Specific Allowance
Result
Additional InformationAdditional Information
56
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
31% 32%
29% 28% 26%
37%
29%
41%
33%30%
Unstable sales behavior in each quarter accounts for variations in yearly sales
57* The seasonality can not be verified in 2008, because of the effects of the world financial crisis.
17% 18%
14%
23%
15%
19%21% 22%
24% 25%25%22% 23%
29% 28% 26%
16%
2005 2006 2007 2008* 2009 2010
1Q 2Q 3Q 4Q
Ownership Structure
Ownership Structure Post-IPO
33%
33%
7% 2%
Rosediamond LLP
F.I.M. Crédito Privado Mocastland
Management
Total of 55,845,094 common shares
58
8%
18%
33% Management
Foreigner Investors - Free Float
National Investors - Free Float
Individual Investors
