Contracted Sales of R$ 1.1 billion and Sales Velocity of 28% in the Quarter Cash and Short Term Investments reached R$930 million

Transcription

1 2Q11 Earnings Release Contracted Sales of R$ 1.1 billion and Sales Velocity of 28% in the Quarter Cash and Short Term Investments reached R$930 million Rio de Janeiro, August 12, 2011 Brookfield Incorporações S.A. ( Brookfield Incorporações or the Company ) (BM&FBovespa: BISA3, US OTC: BRRSY), one of Brazil's largest integrated developers, today announced its consolidated results for the second quarter of Financial Highlights Net revenues 1 totaled R$ million in the second quarter of 2011, up 20.4% over the first quarter in 2011 and up 27.5% over the second quarter of 2010 (excluding the Faria Lima office project). Strong Backlog, with results to be recognized of R$1,311 million (up 49.6% from the prior year), based on a margin of 39.3%. Gross profit totaled R$250.2 million in the second quarter, with a reported gross margin of 28.4%. Adjusting for capitalized interest of R$30.3 million, APV of R$6.8 million and the reallocation of depreciation and amortization due to the implementation of IFRS (non-cash effect) of R$14.5 million, the adjusted gross margin was 34.0%. EBITDA of R$184.6 million in the second quarter, with a 21.0% margin. Net Financial results improved to negative R$37.8 million in the second quarter of 2011 from negative R$49.4 million in Q1 2011, enhancing the company s profitability. Reduced the company s average cost of debt. The share of Project Finance (SFH 2 ) in the total debt mix increased to 32%, from 27% in the previous quarter. During the first six months, the company has already contracted R$834 million using this structure, which will be used to fund projects as they progress. Net income totaled R$ 78.2 million in the second quarter, 18.9% higher than in the first quarter of 2011 and up 27.4% over the second quarter of 2010, excluding the Faria Lima office project. Return on Equity 3 was 11% for the last twelve months. Issued Mortgage Backed Securities ( CRI ) of R$100 million in the second quarter of Received upgraded credit rating from Fitch to BB from BB-. IR Contact Alexandre Dinkelmann Chief Investment Officer and IR Paola Mello Marques IR Manager Tel: +55 (11) ri@br.brookfield.com Avenida das Nações Unidas, º andar Torre B São Paulo - SP, Brazil CEP: Q11 Conference Call August 15, 2011 English am (NY) am (Brasília) 4.30 pm (London) 8.30 am (Los Angeles) Phone: +1 (973) Code: Replay: +1 (404) Replay Code: Webcast: Portuguese 09:30 am (NY) 10:30 am (Brasília) 2:30 pm (London) 6:30 am (Los Angeles) Phone: +55 (11) Code: Brookfield Replay: +55 (11) Replay Code: Brookfield Webcast: 1 Recognized by the Percentage of Completion Method - PoC 2 Sistema Financeiro da Habitação Housing Financial System Funds originated from saving accounts deposits and FGTS (Government Severance Indemnity Fund for Employers) designated to housing mortgages and funding. 3 LTM Last 12 months, considers Net Income / Average Shareholders Equity.

2 Operating Highlights Contracted Sales totaled R$1.1 billion in the second quarter, an increase of 70.5% over the first quarter of Launches reached R$746 million in the second quarter of 2011, 60.1% higher than the first quarter of this year. 27,377 units under construction on 82 sites, with approximately 4,800 company employees working on these sites. Recent Events The Brookfield MB acquisition was concluded under the terms of the Purchase and Sales Agreement signed in R$203.2 million was paid during the second quarter, R$ 13.4 million was paid in July and August while the remaining balance of R$180 million is to be paid in shares of the company. A rights offering was concluded for minority shareholders on July 29 th, and a shareholders meeting shall be called later in August to approve the capital increase of 22,043,542 shares to be paid to the sellers of Brookfield MB under the terms of the Purchase and Sales Agreement. In August 2011, the Company issued debentures of R$300 million, successfully reducing the Company s cost of capital and lengthening the repayment schedule. The issue is comprised of 4 and 5-years notes with the respective interest rates of CDI % and CDI % per annum. Operating and Financial Highlights R$ million 2Q11 2Q10 2Q11 x 2Q10 (%) 2Q10* (without Faria Lima 4 ) 2Q11 x 2Q10* (%) 1Q11 2Q11 x 1Q11 (%) Launches % % % Contracted Sales % % % Inventory at Market Value % 3, % 3, % Sales Velocity (%) 28% 28% 0% 14% 14% 17% 11% Net revenues , % % % Gross profit % % % Gross Margin 28.4% 24.8% 3.6% 28.1% 0.3% 30.2% -1.8% EBITDA % % % EBITDA Margin 21.0% 22.2% -1.2% 19.2% 1.8% 24.6% -3.6% Net Profit % % % Net Margin 8.9% 11.4% -2.6% 8.9% 0.0% 9.0% -0.1% Revenues to be recognized 3, , % Results to be recognized 1, % Backlog Margin 39.3% 37.6% 1.7% Net Debt 2, , % Cash and Short Term Investments % Equity , % Net Debt / Equity (%) 68% 47% 21% ROE - LTM (%) 11% 13% -2.3% 4 In the second quarter of 2010 BISA sold the Faria Lima Project, a corporate office building in a premium region of São Paulo, with a Potential Sales Value (PSV) of R$600.6 million. This project represented a significant portion of the Company s results in this quarter, and increased significantly both the sales and revenues base distorting comparisons on a quarterly basis. Page 2 of 28

3 Index Financial Highlights... 1 Operating Highlights... 2 Recent Events... 2 Operating and Financial Highlights... 2 Message from the CEO... 4 Return on Equity (ROE)... 6 Margins... 7 Backlog Margin... 8 Sales, General and Administrative Expenses... 9 Launches Contracted Sales Sales Velocity Inventory Land Bank Execution Capacity Delivered Projects Liquidity and Capital Resources Funding Capital Markets and Ownership Structure Glossary About Brookfield Incorporações S.A About Brookfield Brasil Appendix Page 3 of 28

4 Message from the CEO Over the last two years, BISA has emerged as a leader in the real estate industry in Brazil with significant advantages of both scale and scope. We have seamlessly integrated leading commercial and residential businesses with strong track records in the most significant developed and growing regions of the country. And, while we have a diverse portfolio of products, we have prioritized expansion in our residential business to serve the fast-growing and largest segment of the population, the middle class. Between 2005 and 2010 this segment, with significant pent up demand for housing, grew over 60% and now represents over 100 million people, or 53% of the population. Finally, with a reliable supply chain in place and almost 100% control of the construction of our projects through our wholly-owned construction company we are in an advantaged position going into an increasingly challenging macroeconomic environment. With the goal of achieving a superior industry ROE, we remain sharply focused on enhancing profitability while constantly evaluating the most appropriate use of capital. Demand for both residential and commercial real estate remains unabated. The expanding job market and record low unemployment, at 6.2% in June, coupled with strong consumer confidence, despite increasing inflation, continue to fuel sales in our industry. We experienced strong sales results in the second quarter across almost all segments in which BISA operates. Contracted sales reached R$ 1.1 billion in the quarter and R$ 1.7 billion for the first six months of the year, representing 43% of our sales guidance for 2011, which is positive, since the second half of the year is traditionally a stronger sales season than the first half. On a consolidated basis our sales velocity (the speed at which our units are sold) for the quarter was 28% demonstrating the continued strength of the market, the quality and adeptness of our products, the reputation of our brand, and the success of our sales and marketing efforts. We are also pleased that our strategy of pursuing the middle income demographic is on target with 54% of our sales in the first six months of the year represented by this segment. Despite the robust market demand, many companies are facing challenges on the supply side with respect to execution and approvals. BISA, on the other hand, has put in place a strategy that has effectively allowed us to navigate these challenges. We enjoy a track record of over 25 years in the principal regions in which we operate and have developed reliable supply chains in each one of these markets. Additionally, our experienced executive team is supported by almost five thousand of our own employees on construction sites which provides us with a strategic labor force reserve. From the approvals perspective, our major business units count on a specialized and experienced team that is dedicated exclusively to this activity. During the first half of 2011 we launched R$1.2 billion, an 8% increase over the previous year s first half. Fifty eight percent of launches took place in São Paulo and Rio, and 42% in the Midwest, regions where we have a strong track record and project profitability remains robust. We will continue to focus our operations on these markets, which account for the majority of the Brazilian real estate market while targeting the best possible capital allocation within our strategy. In order to maintain financial flexibility to be able to take advantage of investment opportunities which typically arise in volatile business environments such as the current one, we have decided to reduce the expected growth rate of new launches. As a result we are reducing the average point of our full year launch guidance of 2011 and 2012 to R$4.1 billion and R$4.5 billion, respectively. This new level for 2011 represents a 38% increase over 2010 s full year launches, and a 24% compounded annual growth rate from We intend to incorporate the launches that were postponed into our plans for 2013 onward. We remain committed to maximizing return for our shareholders and believe this step will allow us to do just that. Our guidance for full year contracted sales remains unchanged at R$ 4.0 billion for 2011 and R$4.2 billion for Page 4 of 28

5 In terms of operational profitability, measured by gross margin and backlog margin, we are within the top quartile of the industry, and are solidly within what we believe is an appropriate range given the current operating environment with 2Q11 gross margin at 28.4% and adjusted EBITDA margin at 21%. Our operational performance together with the continued upward trend in our key profitability indicators, particularly return on equity, confirms we are pursuing the correct strategy. With cash and short term investments of R$930 million and broad access to the capital markets, we are in a strong position to support growth. Most recently, we were able to lengthen our debt profile at extremely competitive rates and received an upgrade in our credit rating assigned by Fitch, to BB on the basis of our strong operating track record in Brazil. Today, BISA presents a healthy debt amortization profile with no concentration of maturities in the short term. A key component of our strategy of targeting the middle income segment, is that it gives us the ability to tap additional project finance (SFH 5 ) and thereby lowering our cost of capital. We anticipate that our financing mix will have a larger share of SFH funding, an important source of competitive financing in our industry. SFH as a percentage of total debt increased to 32% in the second quarter of 2011, from 27% in the previous quarter. Our results for the second quarter of 2011 prove that our strategy is built on a solid foundation. This strategy is supported by a seasoned team of highly experienced and talented executives, a dedicated workforce, suppliers and clients who believe in the value of our brand. The demand for housing and commercial developments in Brazil, fueled by over a decade of low credit and financing availability, continues to remain high and poised for long-term growth. We remain committed to our growth plans by making the most of the current economic cycle which favors the residential industry, and to continued improvement in the Company s profitability metrics and returns. Nicholas Reade, CEO 5 Sistema Financeiro da Habitação Housing Financial System Funds originated from saving accounts deposits and FGTS (Government Severance Indemnity Fund for Employers) designated to housing mortgages and funding. Page 5 of 28

6 Return on Equity (ROE) The company has consistently increased the return on equity for shareholders Return on Equity (%) - LTM 14% 13% 10% 3% 11% 7% 7% 10% 14% 10% 11% 12/ / /2010 6/2010 6/2011 ROE (ex-faria Lima Project) Faria Lima Project Note: In the second quarter of 2010 BISA sold a Faria Lima Project, a corporate office building in a premium region of São Paulo, with a Potential Sales Value (PSV) of R$600.6 million. This project represented a significant portion of the Company s results in the quarter. Note 2: LTM Last twelve months. The company s strategy to continue growth in ROE is based on four pillars: 1) Execution capability: primarily related to construction expertise, which can be measured by gross margin improvement and backlog margin stability (please read pages 7, 8 and 16). 2) Increased asset turnover through shortening the business cycle: faster land bank turnover and improved revenue recognition (please read page 15). 3) SG&A expense reduction as a percentage of revenues: increased operational leverage and efficiency gains (please read page 9). 4) Reduction in cost of capital: increasing the proportion of project finance (SFH) in the debt mix and refinancing, at lower costs, the debt contracted in 2009 (please read page 18). Page 6 of 28

7 Margins The gross margin, on its own, does not fully reflect the profitability of the core business because of the distortions caused by non-cash items and financial expenses allocated to COGS. We prefer to focus on the adjusted gross margin, which excludes: 1) amortization of goodwill originating from the business combination and allocated to land, prior classified as depreciation and amortization expense in the Income Statement, and now booked under the cost of real estate development and sales; 2) financial impact on the reported gross margin due to adjustments of the present value of long term assets and liabilities (APV); and 3) capitalized interest of project loans. Gross Margin Reconciliation 3.4% 1.6% 0.5% 34.0% 28.4% 2Q11 Goodwill Allocation of MB Acquisition APV Capitalized Interest 2Q11 Adjusted Page 7 of 28

8 Backlog Margin The backlog of results to be recognized under the PoC method reached R$1.3 billion with a steady 39.3% margin. Revenues to be Recognized (R$ million) Jun 2011 Mar 2011 Dec 2010 Sep 2010 Jun 2010 Revenues to be Recognized 3, , , , ,313.3 Advances from Clients Total Revenues to be Recognized 3, , , , ,327.0 Costs to be Recognized -2, , , , ,451.1 Results to be Recognized 1, , , , Backlog Margin (1) 39.3% 40.4% 40.7% 37.9% 37.6% (1) Margin before taxes and interest capitalized Page 8 of 28

9 Sales, General and Administrative Expenses In the second quarter of 2011, due to the lower concentration of launches and sales, SG&A ratios deteriorated. However, on an annual basis the ratios have improved due to higher operating leverage and efficiency gains. SG&A Expenses Analysis 2Q11 2Q Sales Expenses (R$ million) G&A Expenses (R$ million) Sales Expenses + G&A (R$ million) Sales Expenses /Contracted Sales 4.1% 3.9% 4.3% 4.2% G&A / Contracted Sales 4.5% 2.8% 4.2% 6.3% Sales Expenses + G&A / Contracted Sales 8.7% 6.7% 8.7% 10.6% Sales Expenses /Gross Revenues 5.0% 4.0% 4.6% 5.1% G&A / Gross Revenues 5.4% 2.8% 4.5% 7.6% Sales Expenses + G&A / Gross Revenues 10.4% 6.8% 9.2% 12.7% Sales Expenses /Net Revenues 5.1% 4.1% 4.8% 5.3% G&A / Net Revenues 5.6% 2.9% 4.7% 7.9% Sales Expenses + G&A / Net Revenues 10.7% 7.0% 9.5% 13.2% 6 In the second quarter of 2010 BISA sold the Faria Lima Project, a corporate office building in a premium region of São Paulo, with a Potential Sales Value (PSV) of R$600.6 million. This project represented a significant portion of the Company s results in this quarter, and increased significantly both the sales and revenues base distorting comparisons on a quarterly basis. Page 9 of 28

10 Launches Launches in 2Q11 totaled R$ million, 60.1% higher than 1Q11. 2,331 units were launched in the quarter. Launches were geographically distributed among the regions in which we operate: 18% in São Paulo, 34% in Rio de Janeiro, and 48% in the Midwest region. In line with the Company s strategy to focus on the highest growth segment of the population, 40% of the launches were in the middle-income segment (within the SFH7 limit) and 4% in the affordable segment (up to R$170,000). Launches (R$ mm) Launches (R$ mm) 1,113 2, ,440 1,157 2,981 2, ,219 2,299 1,127 1, S10 2S11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Residential Corporate Office Suites Residential Corporate Office Suites Launches (R$ million) Unit Price 2Q11 1Q11 Residential % % Affordable Up to R$170 thousand % % Mid-Low R$170 to R$350 thousand % % Middle R$350 to R$500 thousand - 0.0% % Mid-High R$500 to R$1 million % % High Above R$1 million - 0.0% % Lots - 0.0% - 0.0% Office % - 0.0% Corporate % - 0.0% Office Suites % - 0.0% Total % % Launches per State and Year of Launch (R$ million) 2Q11 1Q11 4Q10 3Q10 2Q10 1Q São Paulo Rio de Janeiro Mid-West , Other Total , , , Sistema Financeito da Habitação, for additional details please refer to the Glossary. 8 Refers to the launch and sale of a shopping mall that is part of a mixed use project Pirelli Shopping. Page 10 of 28

11 BISA' Share Launched Projects Type Segment State City Saleable Area (sqm) Average PSV (R$mm) Units Price (R$000) R$/sqm Ettore Living R Middle SP São Paulo 8, ,308 L'Adresse R High SP São Paulo 5, ,185 11,185 Oiticica R Mid-High SP São Paulo 15, ,691 Astral - Ceilândia QNM33 R Mid-Low DF Ceilândia 8, ,733 Vivace - Q1 19 R Mid-Low DF Taguatinga 32, ,890 Benjamin Constant R Mid-Low SP Campinas 4, ,903 Belfort Roxo - Carolina F - Fase 1 R Affordable RJ Belfort Roxo 20, ,250 Camargos e Eden - Fase 2 R Affordable GO Águas Lindas 7, ,442 Hortolândia R Affordable SP Hortolândia 9, ,145 Total 1Q11 112, , ,124 Pirelli - Shopping - Fase 1 C Corporate SP São Paulo 29, ,000 4,539 One World (Corporate) C Corporate RJ Rio de Janeiro 7, ,484 8,994 One World (Matertrade (Mall) C Corporate RJ Rio de Janeiro 1, ,471 10,471 One World (Matertrade (Office) C Office Suites RJ Rio de Janeiro 48, ,466 Wish R Mid-High MT Cuiabá 7, ,400 Blend - Av. Araucárias Lt R Mid-Low DF Águas Lindas 27, ,122 Spot - Av. Jacarandá LT. 20 R Mid-Low DF Águas Lindas 10, ,799 Yes - Jamil Name - Fase 1 R Mid-Low MS Campo Grande 20, ,317 Doce Lar Conquista - Fase 1 R Affordable GO Águas Lindas 8, ,676 Doce Lar Conquista - Fase 2 R Affordable GO Águas Lindas 8, ,677 Total 2Q11 170, , ,386 Note: R Residential, C Corporate. RJ Rio de Janeiro, SP São Paulo. DF Federal District, GO Goiás, MT Mato Grosso, MS Mato Grosso do Sul. Page 11 of 28

12 Contracted Sales Contracted sales in 2Q11 totaled R$ 1,088.2 million, 70.6% higher than 1Q11. Contracted Sales (R$ million) Contracted Sales (R$ million) 1, , , ,763 3, ,316 1, , , , , S10 2S11 Residential Corporate Office Suites 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Residential Corporate Office Suites Contracted Sales (R$ million) Unit Price 2Q11 1Q11 Residential % % Affordable Up to R$170 thousand % % Mid-Low R$170 to R$350 thousand % % Middle R$350 to R$500 thousand % % Mid-High R$500 to R$1 thousand % % High Above R$1 million % % Lots % % Office % % Corporate % - 0.0% Office Suites % % Total 1, % % Sales by State and Year of Launch Total % (R$ million) São Paulo % Rio de Janeiro % Mid-West* % Other % Total , % Note: Mid-West = DF, Goiás, Mato Grosso and Mato Grosso do Sul. Other = Ceará, Santa Catarina, Bahia e Paraná Sales by Stage of Development - 2Q 2011 (R$ million) % Completed % Under Construction % Launching % Total 1, % Note: Launches include projects launched in the previous 6 months.. Page 12 of 28

13 Sales Velocity Sales Velocity increased to 28% in 2Q11, versus 17% in 1Q11. For a better understanding of BISA s Sales Velocity two projects should be excluded from the calculation of the ratio since they were not effectively available for sale: 1) Brookfield Towers Sigma Tower ( Giroflex Project ), due to the specific marketing strategy that an office product of this type requires it is not directly comparable to our other segments; 2) Gávea Green, which is not available for sale at the moment due to pending legal issues. Taking these adjustments into account. Sales Velocity totaled 32% in 2Q11, versus 20% in 1Q11. Sales Velocity Adjusted * 2Q11 1Q11 Sales Velocity 2Q11 1Q11 Beginning Inventory 2,610 2,782 Beginning Inventory 3,152 3,389 Launches Launches Offer 3,356 3,248 Offer 3,898 3,855 Contracted Sales 1, Contracted Sales 1, Sales Velocity 32% 20% Sales Velocity 28% 17% Page 13 of 28

14 Inventory Inventory at market value ended the quarter at R$ 3.2 billion. Completed units represented only R$167 million, corresponding to 5.2% of total inventory. Inventory per Stage of Development - 2Q11 (R$ million) Residential % Office Suites % Corporate % Completed % % - 0.0% Under Construction % % % Launching 1, % % % Total 2, % % % Inventory per Segment - 2Q11 (R$ million) Units Price 2Q11 % Residential 2, % Affordable Up to R$170 thousand % Mid-Low R$170 to R$350 thousand 1, % Middle R$350 to R$500 thousand % Mid-High R$500 to RS1 million % High Above R$1 million % Lots % Office % Corporate % Office Suites % Total 3, % Inventory Other (R$ million) Years Total % São Paulo , % Rio de Janeiro % Mid-West , % Other % Total , % Note: Mid-West = DF, Goiás, Mato Grosso and Mato Grosso do Sul. Other = Ceará, Santa Catarina, Bahia and Paraná. Note 2: BISA inventory contains 1) Brookfield Towers Sigma Tower ( Giroflex Project ) launched in 2008 with PSV of R$405 million, due to the specific marketing strategy that an office product of this type requires it is not comparable to other segments; 2) Gávea Green Project launched in 2008 with PSV of R$126, which is not available for sale at the moment due to pending legal issues. Page 14 of 28

15 Land Bank In line with our strategy of increasing asset turnover, we have been reducing the development horizon of our land bank significantly. The land bank ended the quarter totaling R$17.8 billion, equivalent to roughly 3.6 years of launches and approximately 60% with a short-term development horizon (land to be launched within the next 5 years). The Affordable (up to R$170,000), Mid-Low (between R$170,000 and R$350,000) and Middle (between R$350,000 and R$500,000) segments, including lots, represented 74.3% of the land bank. In the 2Q11, acquisitions totaled R$ million in Potential Sales Value (PSV). 18.7% of the land was acquired through swap agreements and 81.3% through future commitments to be paid in cash in installments. Land Bank Turnover - PSV (R$ Billion) 17,2 17,8 15,5 15,6 10,4 10,3 5,8 5,8 3,6 3, T11 PSV Launch Years Middle 43% Landbank per Segment Mid-Low 13% Mid-High 9% Affordable 7% Corporate 1% Office Suites 13% Lots 11% High 1% Others 2% Land Bank 06/30/2011 Saleable Area (sqm) % PSV (R$ million) % São Paulo 9, % 2,537, % Rio de Janeiro 3, % 1,605, % Mid-West* 3, % 1,248, % Other 1, % 515, % Total 17, % 5,906, % *Mid-West = DF, Goiás, Mato Grosso and Mato Grosso do Sul Other = Ceará, Santa Catarina, Bahia e Paraná Page 15 of 28

16 Execution Capacity Construction management is one of our key pillars for profitable growth. We build all of our projects and do not use third-party contractors. This gives us the highest degree of control over the construction process. We finished 2Q11 with 82 work sites and 27,377 thousand units under construction, with approximately 4,800 direct and 12,000 indirect workers on these sites. No. of construction sites x units under construction No. of employees involved in production process Construction sites 82 in progress Units 27,377 units being developed UN SP 23 Constuction sites 6,229 Units UN RJ 9 Constuction sites 2,540 Units UN CO 35 Constuction sites 11,836 Units UN ECON 12 Constuction sites 5,772 Units UN South 3 Constuction sites 1,000 Units Q11 Note 1: UN Business Unit. Note 2: RJ Rio de Janeiro, SP São Paulo, CW Central West and ECON - Affordable. Page 16 of 28

17 Delivered Projects BISA already delivered 22 projects in the first half of the year, which includes 12 in the second quarter of BISA' Share Delivered Projects Type Segment Stat e City Saleable Area (sqm) PSV (R$mm) Units Average Price (R$000) R$/sqm Tendence R Mid-High SP São Paulo 2, ,800 Living Club Chácara Flora R Mid-Low SP São Paulo 16, ,022 Fascination R Mid-High SP São Paulo 11, ,300 Aquarela (Torre Coral) R Mid-Low GO Goiânia 8, ,310 Noblesse R Middle DF Águas Claras 8, ,622 Paineiras II (Bloco E) R Mid-Low SP Campinas 2, ,926 Paysage (Torre Scene) R Mid-Low GO Goiânia 9, ,325 Vivaz (Bloco C) R Mid-Low GO Goiânia 10, ,962 Norte Village (Bloco Penedo) R Mid-Low RJ Rio de Janeiro 4, ,280 Norte Village (Bloco Mauá) R Mid-Low RJ Rio de Janeiro 4, ,190 Total 1Q11 80, ,791 The Penthouses Tamboré R High SP Santana do Parnaíba 35, ,036 Tatuapé Cond. Club R Middle SP São Paulo 36, ,074 Parque Clube Guarulhos R Mid-Low SP Guarulhos 21, ,964 Lumini R Mid-Low DF Águas Claras 14, ,853 Paysage - Horizon R Mid-Low GO Goiânia 5, ,325 Ventura - Bloco A R Mid-Low DF Samambaia 9, ,034 Ventura - Bloco B R Mid-Low DF Samambaia 9, ,034 Felicitá - Bloco F R Affordable GO Goiânia 5, ,629 Doce Lar (Jardim Dom Bosco) R Affordable DF Cidade Ocidental 4, ,072 Doce lar (Lot Mansões Camargo) R Affordable GO Águas Lindas 1, ,146 Bella Colonia Fase 2 R Mid-Low SP Jundiaí 9, ,552 Viva Alegria Cajamar Qd.25 R Mid-Low SP Cajamar 14, ,299 Total 2Q11 168, , ,737 Note: R Residential, C Corporate. RJ Rio de Janeiro, SP São Paulo. DF Federal District, GO Goiás, MT Mato Grosso, MS Mato Grosso do Sul. Page 17 of 28

18 Liquidity and Capital Resources Currently the Company has R$ 6.3 billion of receivables of which more than 50% mature in 2011 and Receivables (R$ million) Jun/11 Mar/11 Dec/10 Units under Construction 2, , ,118.7 Units Concluded 1, Services Adjusted Present Value (74.2) (67.5) (55.6) Provision for Losses (37.0) (37.9) (34.9) Total Receivables in Balance 3, , ,032.1 Revenues to be Recognized 2, , ,625.6 Advances from Customers (23.0) (44.0) (145.3) Total Receivables 6, , ,512.3 Schedule of Maturities (R$ million) Jun/11 Mar/11 Dec/ , , , , , , , , , After Total Receivables 6, , ,512.3 Revenues to be Recognized (2,850.5) (2,646.7) (2,625.6) Advances from Customers Total Receivables in Balance 3, , ,032.1 Funding During the second quarter, project finance (SFH) as a percentage of total debt increased to 32%, from 27%, in line with the company s strategy of reducing its average cost of debt. Additional sources of short term liquidity consist of receivables on delivered units of up to R$ 1,163.1 million, which can be readily monetized if needed. The increase in net debt was mainly caused by the increase in the number of projects in the beginning of the construction stage and payment of land acquisition obligations. Cash consumption from operations decreased to R$167.8 million in the second quarter of 2011, from R$369.8 million in the previous quarter. Fitch ratings upgraded BISA s rating to BB from BB -. Today, BISA presents a healthy debt amortization profile with no concentration of maturities in the short term. Liquidity (R$ million) 2Q11 1Q11 Cash and Short Term Investments Total Debt 2, ,541.6 Project Finance (SFH) Corporate Debt 2, ,846.5 Net Debt 2, ,552.3 Net Debt Variation / Cash Consumption From operations Dividends MB Earnout Shareholder's Equity 2, ,748.1 Net Debt / Equity 68% 56% Net Debt ex-project Finance (SFH) / Equity 37% 31% Page 18 of 28

19 Debt Maturity Schedule 2Q Beyond Construction Loans Corporate Debt Loans and Financing (R$ Million) Effective Rate Jun - 11 Mar 11 Construction Loans TR + 8.3% to 13.0% After Debentures 108% of CDI After Debentures IPCA + 9.5% to 10.25% After Debentures CDI + 1.6% to 2.0% After Page 19 of 28

20 Loans and Financing (R$ Million) Effective Rate Jun - 11 Mar 11 Working Capital Loans 1.5% + CDI 1, After Secured Loans After Total Debt 2, , After (Less) Cash and Short Term Investments (929.7) (989.3) Net debt (cash) 2, ,552.4 Equity 2, ,748.1 Net Debt to Equity Ratio 67.7% 56.5% Current Loans Long Term Loans 2, ,998.7 Total Debt 2, ,541.6 Note 1: Cash and Short Term Investments includes long term investments in the amount of R$212,800. Page 20 of 28

21 Capital Markets and Ownership Structure Total Shares Nº of Shares Before Capital Increase % Nº of Shares after Capital Increase BROOKFIELD BRASIL LTDA 186,651, % 186,906, % Other Shareholders that signed the Shareholders Agreement 26,689, % 38,615, % Treasury 6,429, % 6,429, % Members of the Board 8 0.0% 8 0.0% Directors 49, % 49, % Free Float 218,319, % 228,182, % TOTAL 438,140, % 460,183, % Note: The Capital Increase refers to Brookfield MB acquisition. A rights offering was concluded for minority shareholders on July 29th, and a shareholders meeting shall be called later in August to approve the capital increase of 22,043,542 shares to be paid to the sellers of Brookfield MB under the terms of the Purchase and Sales Agreement signed in % Page 21 of 28

22 Glossary ADTV Average daily trading volume. Affordable Residential units priced below R$130,000. Backlog Margin Backlog of Results divided by Backlog of Revenues. CDI - Money market interest rate. CEF Caixa Ecômica Federal is a government financial institution, provides banking products and services in Brazil, including real estate credit. Commercial Commercial units developed exclusively for sale. Contracted Sales Sale resulting from purchase and sale agreements including new units and those in inventory. These sales will be recognized according to the PoC method. Costs to be Recognized Off-balance sheet costs that will be recognized in the future according to the PoC. CRI Mortgage backed security. High Luxury residential units with a unit price of over R$1.0 million. ICC - Construction Cost Index, measured by Fundação Getulio Vargas FGV. IGP-M - General Market Price Index, measured by Fundação Getulio Vargas FGV. INCC - National Construction Cost Index, measured by Fundação Getulio Vargas FGV. Land Bank Land in inventory that is expected to be developed and launched in the future. Middle Residential units with a per unit price ranging between R$350,000 and R$500,000. Mid-High Residential units with a per unit price ranging between R$500,000 and R$1.0 million. Mid-Low Residential units with a per unit price ranging between R$130,000 and R$350,000. PoC Method In accordance with Brazilian GAAP, revenues and costs in the Real Estate sector are accrued based on actual costs incurred as compared to the total budget cost for every project s stage. PSV - Estimated potential sales value of our developments based on market conditions. Revenues to be Recognized Off-balance sheet revenues that will be recognized in the future according to the PoC. Sales Velocity - Sales over supply. SFH Funds Housing Financial System Funds originated from saving accounts deposits and FGTS (Government Severance Indemnity Fund for Employers) designatedto housing mortgages and funding. Swap Agreement Land acquisition system which exchanges a number of the projects future units or a stake in the future revenues of the project for the land. TR Reference Rate Page 22 of 28

23 About Brookfield Incorporações S.A. Brookfield Incorporações S.A. (BM&F Bovespa: BISA3) is one of the leading developers in Brazil s real estate industry, with operations that include land acquisition, product development, marketing, sales, construction and customer service. Brookfield Incorporações offers a broad array of products in the residential and office segments, with its primary focus on middle income residential. Brookfield Incorporações is present in the main metropolitan areas in Brazil, namely São Paulo, Rio de Janeiro, Federal District, Goiânia, Curitiba and Campinas, which account for the majority of the Brazilian real estate market. About Brookfield Brasil Brookfield Brasil owns 40.6% of Brookfield Incorporações S.A. and is an asset management company and a wholly owned subsidiary of Brookfield Asset Management Inc. ( BAM ). It has been investing and operating in Brazil for over 100 years, and today has approximately 4,700 employees and one of the largest investment platforms in the country. Brookfield Brasil has approximately R$20 billion under management, which includes its own funds and those of its institutional clients, invested in real estate, renewable energy, agricultural, forestry and infrastructure sectors. Brookfield Asset Management Inc. is a global asset management company with over US$150 billion under management, of which approximately US$70 billion is invested in properties. The company is listed on the NYSE, TSX and Euronext Amsterdam under the stock tickers BAM, BAM.A and BAMA, respectively. Conference Call (English) Conference Call (Portuguese) Date: August 15, 2011 Date: August 15, 2011 Time: am (NY) pm (Brasília) 4.30 pm (London) 8.30 am (Los Angeles) Time: 9.30 am (NY) am (Brasília) 2.30 pm (London) 6.30 am (Los Angeles) Phone: +1 (973) Code: Replay: +1 (404) Replay Code: Webcast: available at our website Phone: +55 (11) Code: Brookfield Replay: +55 (11) Replay Code: Brookfield Webcast: available at our website IR Contact: Alexandre Dinkelmann Chief Investment Officer and IR Paola Mello Marques IR Manager ri@br.brookfield.com This release contains forward-looking statements concerning the business prospects, estimates of operating and financial results and growth outlook for Brookfield Incorporações. These are merely projections and as such are based exclusively on the expectations of Brookfield Incorporações management concerning the future of the business and its continuous access to capital to finance Brookfield Incorporações business plan. These forward-looking statements depend materially on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors, in addition to those listed in the documents filed by Brookfield Incorporações, and are therefore subject to change without prior notice.except where stated otherwise, all figures for 2008 and prior periods are pro-forma. Page 23 of 28

24 Appendix Income Statement (R$ Thousands) 2Q11 % 1Q11 % 2Q10 % Gross revenues 906, ,970 1,236,103 Revenues from real estate development and sales 856, ,499 1,192,005 Other revenues 49,857 61,471 44,098 Taxes (25,905) (21,833) (40,871) Net revenues 880, % 731, % 1,195, % Operating costs Cost of real estate development and sales (607,469) -69.0% (469,952) -64.3% (870,019) -72.8% Other costs (22,935) -2.6% (40,270) -5.5% (28,740) -2.4% Gross profit 250, , ,473 Gross margin 28.4% 30.2% 24.8% Operating expenses Selling and marketing expenses (45,024) -5.1% (33,613) -4.6% (49,307) -4.1% General and administrative expenses (49,212) -5.6% (39,240) -5.4% (34,527) -2.9% Other expenses (8,418) -1.0% (6,406) -0.9% (7,854) -0.7% Depreciation and amortization (3,396) -0.4% (2,772) -0.4% (3,527) -0.3% Net financial results (37,811) -4.3% (49,426) -6.8% (19,043) -1.6% Earnings before taxes 106,377 89, ,213 Income tax and social contribution Incurred (21,936) -3.0% (22,523) -3.1% (14,505) -2.0% Deferred (6,224) -0.9% (1,127) -0.2% (30,961) -4.2% - - Net income 78,217 65, ,747 Net margin 8.9% 9.0% 11.4% Number of shares (thousands) 460, , ,658 Earnings per share EBITDA (R$ Thousands) 2T11 1T11 2T10 Net income 78,217 65, ,747 (+) Income and social contribution tax 28,160 23,650 45,466 (+) Net financial results 37,811 49,428 19,045 (+) Capitalized interest in operating costs + APV 37,005 38,053 60,421 (+) Depreciation and Amortization 3,396 2,772 3,527 EBITDA 184, , ,206 EBITDA Margin 21.0% 24.6% 22.2% Page 24 of 28

25 Balance Sheet (R$ Thousands) Consolidated Assets 06/30/11 03/31/11 Cash and equivalents 606, ,960 Short-term investments 110,108 90,729 Accounts receivable 1,541,540 1,310,535 Inventory of properties for sale 1,460,073 1,449,297 Current taxes and witholding taxes 46,639 34,663 Other 360, ,116 Current assets 4,126,120 3,957,300 Long-term investments 212, ,574 Trade accounts receivable 1,953,548 2,005,530 Inventory of properties for sale 1,208,408 1,111,119 Current taxes and witholding taxes 3,762 2,633 Deferred taxes 73,432 78,706 Intangible 498, ,615 Other 254, ,419 Long-term assets 4,204,656 4,091,596 Property, plant and equipment 65,589 56,002 Total assets 8,396,365 8,104,898 Liabilities 06/30/11 03/31/11 Borrowings and financing 622, ,900 Trade accounts payable and other 554, ,944 Advances from customers 393, ,330 Current taxes payable 44,429 47,933 Provisions 12,798 8,901 Proposed dividends - 86,371 Other 201, ,309 Current liabilities 1,829,445 2,203,688 Borrowings and financing 2,333,938 1,998,729 Trade and other payables 423, ,059 Advances from customers 301, ,321 Deferred taxes 220, ,465 Provisions 78,442 71,813 Other 215, ,704 Long-term liabilities 3,573,625 3,153, Total Liabilities 5,403,070 5,356,779 Capital 2,128,255 1,947,498 Reserves 605, ,530 Valuation adjustments to equity 151, ,307 Proposed additional dividends - 17,274 Treasury shares (35,296) (35,296) Retained earnings 144,023 65,806 Shareholders' equity 2,993,295 2,748,119 Total liabilities and shareholders' equity 8,396,365 8,104,898 Page 25 of 28

26 Cash Flow from Operating Activities Consolidated (R$ Thousands) 2Q11 1Q11 2Q10 Net income for the period 78,217 65, ,747 Adjustments to reconcile the net income for the period with the cash generated by (used in) operational activities: Depreciation and amortization 3,396 2,772 3,527 Allowance for doubtful accounts (912) 2,979 (377) Borrowing and intercompany revenues and costs 19,077 81, ,791 Guarantee provisions 6,442 4,251 - Income tax and social contribution expense recognized in income for the period 28,160 23,650 45,466 (Increase)/decrease in operating assets: Decrease (increase) in trade and other receivables (174,866) (312,488) (676,680) (Increase) decrease in inventory of properties for sale 5,618 (65,253) 316,827 Decrease (increase) in other assets (147,629) (53,592) (37,622) Increase/(decrease) in operating liabilities: Decrease (increase) in trade and other payables 14,121 13,573 (113,550) Other liabilities (235,701) (128,637) (58,318) Interest paid (53,960) (66,348) (28,309) Income tax and social contribution paid - 58,626 (4,753) Net cash used in (generated by) operating activities (458,037) (368,709) (296,251) Cash flow from investing activities Payments on acquisition of property, plant and equipment (12,983) (6,509) (17,671) Intangible asset acquisition (4,553) (9,159) (8,693) Rescue of Short term-investments - 351,992 - Payment for acquisition of financial assets (4) - 1,830 Net cash used (generated by) in investing activities (17,540) 336,324 (24,534) Cash flow from financing activities Borrowings 592, , ,780 Amortization of borrowings (165,664) (151,913) (61,485) Payment for share buyback - (22,120) (1,109) Dividends paid (103,645) - (47,948) Net cash generated by (used in) financing activities 323, , ,238 Availability Increase in cash and cash equivalents, net (152,120) 531,134 (65,547) Cash and cash equivalents, beginning of period 758, , ,912 Cash and cash equivalent, end of period 606, , ,365 Page 26 of 28

27 Projects Type Segment State Launching Quarter End of Construction Completion 2Q11 Sales 2Q11 Brookfield Incorporações' Share Saleable PSV Average Total of Area (R$ Price Units (sqm) million) (R$ 000) La Reference R Mid-High SP 1T06 Feb % 100% Entretons R Mid-High SP 2T06 Jun % 100% Grand Art R Mid-High SP 2T06 Jan % 100% Acqualife R Middle SP 3T06 Feb % 100% Espaço das Artes R Mid-High SP 3T06 Sep % 100% Ile Eco Life R Mid-Low SP 3T06 Dec % 100% Infinite R Mid-Low SP 3T06 Dec % 100% Landmark E Office Suites SP 3T06 Oct % 100% Les Residence de Monaco R High RJ 3T06 Dec % 95% Refuge R Mid-Low SP 3T06 Aug % 99% Identità R Mid-High SP 4T06 Feb % 97% Santa Monica Jardins Condominium Club - 1a Fase R Mid-High RJ 4T06 Jun % 100% Tendence R Mid-High SP 4T06 Oct % 100% Acquare Campo Bello R Mid-High SP 1T07 Jan % 100% Santa Monica Jardins Houses and Lots - 1a/2a Fase R Mid-High RJ 1T07 Jun % 96% Espaço & Vida Pacaembu R Mid-Low SP 2T07 Apr % 98% Fascination R Mid-High SP 2T07 Feb % 100% Norte Village R Mid-Low RJ 2T07 Mar % 94% Real ParkTietê L Lots SP 2T07 Feb % 100% Torre IV E Office Suites SP 2T07 Dec-11 52% 100% Attualitá R Mid-Low SP 3T07 Apr % 100% Brascan Century Plaza - Green Valley R/E Middle SP 3T07 Mar % 97% Brooklin Park R Mid-High SP 3T07 Jun % 100% Colinas do Sol R Mid-Low SP 3T07 Nov % 86% Company Work Station E Office Suites SP 3T07 May % 100% Mooca Condominium Club R Middle SP 3T07 Apr % 100% Real Park Arujá L Lots SP 3T07 Jun % 81% Real Park Sumaré L Lots SP 3T07 Jun % 22% Reserva Real Paulínia L Lots SP 3T07 Jun % 97% Santa Monica Jardins Condominium Club - 2a Fase R Mid-High RJ 3T07 Jun % 100% The Triumph E Office Suites SP 3T07 May % 100% Villa Branca L Lots SP 3T07 Dec % 98% Condominium Parque Clube - 1a Fase R Mid-Low SP 4T07 Dec % 100% Evolution R Mid-Low DF 4T07 Feb % 98% Grand Home R Mid-Low DF 4T07 Jul % 100% Itaúna Gold R High RJ 4T07 Mar % 100% Noblesse R Middle DF 4T07 Feb % 100% Panorama R Mid-Low DF 4T07 May-11 51% 51% The Penthouses Tamboré - 1a Fase R High SP 4T07 Dec % 73% Uniqueness R High SP 4T07 Aug % 95% Ventura R Mid-Low DF 4T07 Apr-11 95% 57% Villa Amalfi - 2a Fase R Middle SP 4T07 Jul % 73% Ideale Mooca R Mid-Low SP 1T08 Jul % 100% Living Club Chacara Flora R Mid-Low SP 1T08 Mar % 99% Ocean Breeze R Mid-Low RJ 1T08 Mar % 99% Aquarela R Mid-Low GO 2T08 Jun-13 72% 79% Cond. Bella Colônia - 1a Fase R Mid-Low SP 2T08 Dec % 100% Faria Lima (3) E Office Suites SP 2T/3T08 Dec-11 91% 100% Parque Cidade (3) E Office Suites DF 2T08 Jul % 100% Paysage R Mid-Low GO 2T08 Jun % 45% Tatuapé Condominium Club R Mid-Low SP 2T08 Mar % 99% Trend Pacaembu R Mid-Low SP 2T08 Apr-11 96% 100% Villa Branca - Houses R Mid-Low SP 2T08 Dec-12 3% 100% Viva Alegria Cajamar - 1a Fase R Affordable SP 2T08 Aug % 86% Gávea Green Residencial*** R High RJ 3T08 Aug-11 43% 8% Lumini R Mid-Low DF 3T08 Nov % 98% Premiere R Mid-High DF 3T08 Sep-11 51% 97% Soneto - 1a Fase R Mid-High DF 3T08 Mar-11 84% 97% Vivaz - 1a Fase R Mid-Low GO 3T08 Jan % 92% Allegro - 1a Fase R Mid-Low DF 4T08 Aug-12 84% 98% Barra Prime Offices E Office Suites RJ 4T08 Jun % 86% Company Business Tower - Mall (3) M Corporate SP 4T08 Jun-13 26% 0% Company Business Tower - Tower Alpha (3) E Office Suites SP 4T08 Jun-13 47% 98% Company Business Tower - Tower Sigma (3) E Office Suites SP 4T08 Jun-13 36% 0% Grand Boulevard Parque da Mooca R High SP 4T08 Jul % 90% Jardins do Recreio R Middle RJ 4T08 May % 93% Maison Classic R Middle SP 4T08 Mar % 100% Soneto - 2a Fase R Middle DF 4T08 Jan-12 84% 97% Vivaz - 2a Fase R Mid-Low GO 4T08 Dec-11 82% 82% Bonavita - 1a Fase R Mid-Low MT 1T09 Aug-11 74% 64% Casas Alto Taquari - 1a Fase R Affordable MT 1T09 Jul % 100% Condominium Parque Clube R Mid-Low SP 1T09 Dec % 100% Ícaro E Office Suites DF 1T09 Nov % 100% Paineiras II R Mid-Low SP 1T09 Nov % 100% Sinfonia - 1a Fase R Mid-Low DF 1T09 Sep-11 74% 97% The Penthouse Tamboré R High SP 1T09 Dec % 73% Allegro - 2a Fase R Mid-Low DF 2T09 Feb-13 55% 98% Barra Business Center E Office Suites RJ 2T09 Sep-11 92% 100% Catu Residence - 1a Fase R Mid-Low CE 2T09 Jun % 24% Espaço & Vida Jundiaí R Mid-Low SP 2T09 Feb-12 42% 60% Felicitá - 1a Fase R Affordable GO 2T09 Mar-12 57% 97% Green Valley Office Park E Office Suites SP 2T09 Jun % 100% Jardins do Recreio Office E Office Suites RJ 2T09 Jun % 100% Sinfonia - 2a Fase R Middle DF 2T09 Jul-12 74% 97% Vitalitá - 1a Fase / 2ª Fase R Mid-Low MS 2T09 Jun-12 37% 88% Bella Colônia R Mid-Low SP 3T09 Jul-11 95% 99% Bonavita - 2ª Fase / 3ª Fase R Mid-Low MT 3T09 May-12 74% 49% Brascan Office E Office Suites RJ 3T09-100% 100% Cajamar (Q4 a Q6) R Affordable SP 3T09 Mar-12 59% 72% Costa Morena R Mid-Low BA 3T09 Dec-11 26% 100% Felicitá - 2ª Fase / 3ª Fase R Affordable GO 3T09 Mar-13 44% 81% Maison Autentique R Mid-High GO 3T09 Aug-12 64% 52% Maison Classic R Mid-High MT 3T09 Apr-12 48% 58% Pedra de Itaúna Comercial E Office Suites RJ 3T09-100% 100% Piazza de Pádova R Middle SP 3T09 Sep-11 71% 100% Sahy Residencial Resort - 1ª Fase (Mar Azul) R Mid-Low RJ 3T09 Sep-11 71% 95% R$ / sqm Page 27 of 28