Gafisa Day Presentation

Transcription

1 Gafisa Day Presentation March 11,

2 Important Notice We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements include statements regarding our intent, belief or current expectations or that of our directors or executive officers. Forward-looking statements also include information concerning our possible or assumed future results of operations, as well as statements preceded by, followed by, or that include the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,' ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. 2

3 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment AlphaVille Tenda Wrap up and Q&A Period 3

4 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment Alphaville Tenda Wrap up and Q&A Period 4

5 Management present Wilson Amaral, CEO Duilio Calciolari, CFO João Audi, Managing Director, AlphaVille Antonio Carlos Ferreira, Managing Director, Gafisa Carlos Trostli, CEO Paulo Mazzali, CFO 5

6 Our Company 1954 Gafisa founded Launches CAGR: 87% R$ million GP takes control of the Company Equity Int l (Sam Zell) invests IPO AlphaVille Acquisition Sales CAGR: 78% R$ million 2007 Follow-on Equity Offering NYSE listing % control of Tenda Equity Int l increases stake by 5%

7 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment Alphaville Tenda Wrap up and Q&A Period 7

8 Brazil has a housing deficit of 7.2 million homes HOUSING DEFICIT PER REGION IN 2007 In Thousands of Homes North % 17.6% Northeast 2, , ,235.6 Brazil Total Deficit: 7.2 million Homes Inadequate Housing Central-West % 10.3% Southeast 2,667.5 Cohabitation % South , ,402.3 Relative Deficit 12.8% Source: IBGE, FGV 2007, Ernst & Young Brazil has a population of 190 million, 83% urban, 43% below 24 years. 8

9 Increased purchasing power will generate greater demand for new housing New Housing Formation Monthly Income (Million Families) New Families per year (in thousands) Up to R$ 1, % % From R$ 1,000 to R$ 2, % % From R$ 2,000 to R$ 4, % % From R$ 4,000 to R$ 8, % 11 12% From R$ 8,000 to R$ 16, % 4.3 5% From R$ 16,000 to R$ 32, % 1.3 1% More than R$ 32, % 0.3 0% TOTAL % % (113) Source: Brazilian Geography and Statistics Institute (IBGE), FGV, Ernst & Young. 9

10 Brazil s housing industry provides ample opportunity for growth and consolidation Real estate market highly fragmented, with no dominant player Biggest markets in Brazil are São Paulo and Rio de Janeiro. Gafisa is one of the largest players, yet its estimated market share is only ~ 5% in São Paulo and ~ 6% in Rio de Janeiro Untapped potential, especially in markets where the housing deficit is high 10

11 Despite strong mortgage market growth recently, Brazil has low mortgage penetration Mortgages to GDP Households (in thousands) 69% 58% Total Households New Households Formed New Homes Financed by SBPE and FGTS % Financed Over New Households ,035 1, % ,710 1, % ,752 2, % 13% 11% 2% ,114 1, % ,610 1, % ,343 1, % US Spain Chile Mexico Brazil Source: JP Morgan, 2008 Sources: IBGE, BC. Does not include financing of existing homes. 11

12 Over the last few years, housing credit has increased with better rates and longer terms Interest Rates vs. Housing Credit Dec, 2008 Interest rate=12.75% Evolution of Financing Terms Average term in running days Housing Credit 30% 65,000 25% 20% 60,000 55,000 50,000 3,000 2,500 15% 10% 5% 45,000 40,000 35,000 30,000 25,000 2,000 1,500 1, % Dec-02 May-03 Sep-03 Feb-04 Jun-04 Nov-04 Mar-05 Jul-05 Dec-05 Apr-06 Aug-06 Jan-07 May-07 Sep-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 20,000 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Interest Rate (Selic) Real Estate Credit (R$MM) Note: Housing credit available through December Source: Banco Central do Brasil Source: Febraban 12

13 Consumer mortgage financing has grown exponentially Housing Credit Growth CAGR ( ): 43% (R$ bn) Savings Accounts and FGTS Balances Over R$400 billion available (R$ bn) Housing Credit using resources from FGTS Housing Credit using resources from Savings Accounts Saving Accounts Balance FGTS Balance Sources: ABECIP, Banco Central do Brasil, CEF and FGV. 13

14 Recent government measures are expected to stimulate growth Since September 2008, the Brazilian government has made nearly $400 bn available to Brazilian businesses and consumers through the following vehicles: Total Sources: Brazilian Central Bank, Gazeta Mercantil and Goldman Sachs Value Treasury funds lent to BNDES for onlending Reduction of reserve requirements 99.2 Relaxation of bank capital requirements/ reg. changes 81.2 Supply of dollar hedge via dollar-swaps 33.3 Incremental farm lending 19.0 Cash foreign exchange sales to market 14.3 BNDES capital increase from National Treasury 15.0 FX made available thru repurchase auctions 7.4 Auctions of dollars for trade finance 6.0 Permission for small banks to use FGC funds for lending 5.4 Banco do Brasil new lines for small and medium companies 5.0 Income-tax schedule changes 4.9 Banco do Brasil new credit lines to automaker banks 4.0 Reduction of tax on financial operations 2.5 Reduction of industrial production tax on cars

15 Specific measures for homebuilders have already been announced Oct 2008 Additional R$10 billion to finance up to 20% of each development, at rates of TR+10% to TR+11%, within the limits of the 65% of savings balances which must be used for real estate financing. Dec 2008 Mar 2009 FGTS Oversight Board announced new financing conditions: Builders: R$3 billion of FGTS to finance up to 80% of each development at TR+7% per annum for properties up to R$130,000, and TR+9% New Housing Package expected. Goal is to build 500,000 to 1 million new houses by 2010, focusing on the low-income segment. 15

16 Government to announce additional measures to support the sector Government is expected to announce soon a plan to build up to 1 million new houses through 2010; special attention given to low income segment. Improved mortgage terms to increase attractiveness: ti Lower costs related to insurance and origination Use of Price Table, abandoning Constant Amortization System 30-year maturity with loan to values close to 100%. Creation of Guarantee Fund to allow for a bridge of mortgage payments in case of unemployment Extend the Housing Financing System (SFH) eligibility requirements to allow unit values to R$500,000 from R$350,000 Direct use of monthly worker s compensation fund (FGTS) contribution to pay part of home buyer s total installment Subsidies will be provided in inverse proportion to income level 16

17 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment Alphaville Tenda Wrap up and Q&A Period 17

18 Key competitive advantages Professional management with a significant pipeline of talent National reach & strong local partnerships Large land bank to sustain future growth Welldeveloped and recognized brands Reputation for financial discipline 100% focused on the residential market in all income segments The strongest platform to sustain leadership in the 18 rapidly growing lower income segments 18

19 Gafisa is present in all income segments Families by Income Level* Gafisa Brands High and Mid-High Income Level Above R$4,807 15,2% 9.1 million families 15.1% Middle Income Level Between R$1,115 and R$4, million families 52.3% Low Income Level Up to R$1, million families 32.6% Total: 60.3 million families Source: FGV/CPS, Feb * Income percentage in six Brazilian metropolitan areas 19

20 Comprehensive portfolio of products Gafisa & Tenda s Offerings: High-income Mid-high Middle Income Affordable Entry Level Nice Terraças Alto Lapa Parque Barueri Tenda Clube Vivaldi Manaus AM São Paulo SP Barueri SP São Paulo - SP Average unit price: R$ 800,000 Average unit price: R$ 399,000 Average unit price: R$ 224,000 Average unit price: R$ 70,

21 Professional management and established organizational structure Management with extensive experience in the sector Senior management with knowledge of diverse industries Reputation for on-time and on-budget execution Dedicated teams for each business line / market Standardized procedures with modern management system and tools 21

22 Our Product Lines: Focused Management for Each Market Mid, Mid High and High Vertical Metropolitan areas Financing: Banks Unique Projects Unit Prices: > R$200K Sales through own sales force and brokers 60% owned by Gafisa Mid High and High Horizontal (lots) Outside Metropolitan Areas Financing: Direct Unique Projects Unit prices: R$70K R$500K Sales through own sales force and brokers 60% owned by Gafisa Low Affordable Entry Level Horizontal / Vertical Metropolitan Areas and Outskirts Financing: CEF and Banks Standardized Projects Unit Prices: R$50K R$200K Sales in stores through own sales force - and brokers 22

23 National reach and strong local partnerships The partnership strategy has many benefits: Local market knowledge Local culture knowledge Access to local government, reducing time of approvals Access to business opportunities Reduce barriers to entry Local operational support 23

24 A diversified, high quality landbank, with 53% acquired through swaps 199 different sites throughout the country Company Potential Units (100%) Potential Units (% Gafisa) Future Sales R$ billion Swap % GAFISA 22,412 19, ALPHAVILLE 32,122 16, TENDA 70,116 67, Total 124, , The size of the land bank gives us the ability to develop it selectively, according to market demand 24

25 The Gafisa brand is a household name Gafisa Is a Top of Mind, leading brand in our largest markets 1 st 2 nd Spontaneous GAFISA 22% - 13% 3 rd - 10% 1 st 2 nd Stimulated recall GAFISA 55% - 32% 3 rd - 29% Our campaigns aim to reinforce Gafisa s key brand attributes (honest, reliable, traditional, innovative and creative). Institutional Campaign Countdown to 1,000 Completed Buildings Safe Purchase Guide 25

26 A reputation for financial discipline Strong relationship with the most important banks Sarbanes-Oxley Article 404 compliance as of December 2008 SAP management information systems Credit Ratings: Moody s: international Ba2 and local A1.br Fitch: A-(bra) local Standard & Poors: BrA local 26

27 Tenda is an anchor of the company s future growth strategy Tenda is a platform for leadership in the affordable entry level segment: One of the largest land banks A business model with regional offices that enable strong local relationships with CEF s (Caixa) Unique sales model based on retail stores that provides a range of products within a region Well trained own sales force focused exclusively on our products Gafisa owns 60% of Tenda shares and began consolidating 100% of this Company s results as of October 21,

28 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment Alphaville Tenda Wrap up and Q&A Period 28

29 Gafisa s Products Gafisa s products are priced at more than R$ 200,000 and targeted to families with monthly income above R$ 4,800 (High and Mid-High Income Levels) Condominiums Residential Buildings Planned Neighborhoods Breakdown of families by income level (millions of families) Within 23 years, 12 million new families R$ 4,000 to R$ 8, R$ 8,000 to R$ 16, R$ 16,000 to R$ 32, > R$ 32, TOTAL Source: Brazilian ian Geographic and Statistics Institute ( IBGE ) and FGV 29

30 Gafisa s Strategy National presence Products targeted to Mid, Mid-High and High segments and adapted to regional needs Standardized processes Strength of Gafisa brand Focus on sales 30

31 National Presence Developments in progress / Gafisa Landbank (Potential Sales Value) Land Bank by Region 12 / R$380MM 22 / R$1.770MM No rth 5% Center- West 3% South 3% 03 / R$220MM 59 / R$5,080MM Northeast 23% Southeast 66% São Paulo Rio de Janeiro Minas Gerais Espirito Santo 4% 2% 16% 44% 06 / R$230MM Land Bank by Segment Up to R$ 200 thousand: 5% R$ 200 to R$ 350 thousand: 28% R$ 350 to 700 thousand: 50% R$ 700 to 1,200 thousand: 12% R$ > 1,200 thousand: 5% 31

32 Geographic Expansion Importance of Local Partnerships Expertise in local culture and market Lowers barriers to entry Business prospecting enhanced Speeds approval processes Assignments in a typical development Number of Cities where Gafisa Launched Due diligence analysis on GAFISA land acquisitions Product and project development Marketing campaign Sales management Administrative and financial management PARTNER Business prospection Licenses and permits Customized customer services Centralization of activities Cost reduction (offices only in SP and RJ) Business model easy to replicate 32

33 Sales Force Gafisa Vendas (Gafisas s own sales Team): Operating in SP, RJ and BA 123 brokers Dedicated teams for inventory, launches and online sales Gafisa Sales participation in 2008: SP RJ 42% Inventory 29% Launches 35.0% 45% Inventory 41% Launches 43.0% Gafisa Vendas sells only Gafisa s products, resulting in Efficient Sale of Inventory External Sales Force: Partnerships with Brokerage Companies 7 in SP 6 in RJ 26 in New Markets Sales force of approximately 8,000 brokers 33

34 Standardized Products Average unit price between R$ 200,000 and R$ 350,000 Standardized projects for apartments with 2 and 3 bedrooms Cost optimization Reduction of construction cycle Faster approval and launching 34

35 Unique projects Exclusive support/follow-up during the construction works, allowing for customized blueprints and finishings Units price above R$ 350,000 Customer-driven feasibility studies regarding different income levels Projects designed according to features considered important by customers (research) 35

36 Current Scenario Customers visiting sales stand several times Consumer / Buyer More Conservative Decision-making period has increased from 20 to 70 days Customers concerned about reliable delivery: - customer research of real estate companies has increased Tradition: 54 years history. Reliability: 961 developments delivered. Credibility: 10 million m² built. 36

37 New Launches Assumptions for new launches: Construction financing secured Pre-launch period up to 90 days to confirm demand Launch only if 40% of units are likely to be sold during first month Examples: Chácara Santana Launching Date: 11/15/2008 Pre-marketing: 75 days Brink Launching Date: 11/30/2008 Pre-marketing: 70 days Alphaville Barra da Tijuca Launching Date: 12/06/2008 Pre-marketing: 20 days 68% Sold in the 1 st month 75% Sold in the 1 st month 90% Sold in the 1 st month 37

38 Case Study Porto Velho Population: 300,000 inhabitants Local economy stimulated due to the construction of 2 hydroelectric power plants PSV: R$100 million Gafisa s Share: 80% Units: 280 in 4 towers Local market research: September 07 Local partner definition: November 07 Land Acquisition: April 08 Launch: September 08 Sales: 76% 38

39 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment Alphaville Tenda Wrap up and Q&A Period 39

40 AlphaVille Overview 40

41 Strategic and Geographic Positioning National Presence Master Developer Residential Lots in Gated Communities coupled with local Commercial Facilities Leadership Position No national competitor in the segment Track Record The concept is well established throughout the country, with a visible presence in 38 Alphavilles in 26 different cities and 16 states Brand Recognition AlphaVille is one of the best known brands in the country and the most desired in the markets where it is established AlphaVille Brand Recognition Prizes Master Top de Superbrands Imobiliário Marketing FIABCI 2005 Pop List

42 Project Approval Process Long-term perspective and complex approval process are significant entry barriers to the segment DUE DILIGENCE / STRATEGIC ANALYSIS PARTNER/ LAND SWAP CONTRACT PROJECT APPROVAL MARKETING & SALES CONSTRUCTION OCCUPATION 3 years 2 years PROJECT ANALYSIS LAND SWAP CONTRACT APPROVAL PROCESS MKT & SALES CONSTRUCTION OCCUPATION Analysis of legal and environmental aspects, location, market and feasibility studies Contract with land owner Development of master plan to be submitted to local authorities for analysis, registration and approval. This process takes an average of three years and deals with federal and local authorities On average, 80% of the units are sold in the launching week AlphaVille manages the construction, contracting third parties through a centralized procurement. Average development takes 2 years Customers are invited to begin construction of their houses under specific regulations developed for an organized occupation 42

43 Recent Growth Steady launch growth at a CAGR of 46% since 2006 Launches (R$ Millions) Sales (R$ Millions) 114% % % %

44 Sales Velocity Q4/08 (R$ Millions) December s Launches Barra-RJ Mossoró-RN Nova Esplanada-SP Launching date Dec. 13th Dec. 5th Dec. 17th Launched PSV 59,6 12,1 29,4 Sold PSV 53,6 12,0 21,0 Sales / PSV - until December 31st 90% 99% 71% Launched Units Average Ticket (R$) Average R$/m² The average sales of these 3 launches reached 86% above the PSV, in spite of adverse market conditions. Note: Total PSV amounts to R$172 million, part belonging to Alphaville and part to Gafisa Segment 44

45 Land Bank reaches R$3 billion Targeting cities that have unique commercial potential PSV potential (R$ millions) Total January 1st ,929 Launches 2008 PSV (313) Additions Revision/Change in PSV 102 Land Bank position in december ,032 Land Bank AUSA sustains 9.7* years * Based on 2008 launching figures Prospective Pipe Line of 4.4 billion Areas Dec 08 VGV São Paulo State 978 Brasília 668 Porto Alegre - (2 projects) 207 Florianópolis - (2 projects) 177 Among Other 18 areas Total Land Bank of almost 10 years based on 2008 launch level; 98% of them based in land swaps 45

46 Project Design A typical Alphaville project RESIDENTIAL AREAS LEISURE AREAS RESIDENTIAL AREAS Highly sustainable business model COMMERCIAL AREAS BUILDING AREAS ALPHAVILLE CLUB GOLF COURSE COMMERCIAL AREAS AlphaVille Graciosa (Curitiba, Paraná) RESIDENTIAL AREAS Land swaps: no cash outlay Infrastructure development after the launch Outstanding Sales Velocity Use of Alphaville Foundation to help the social integration of neighborhood 46

47 Case Study AlphaVille Jacuhy Vitória - ES CONTRACT DATE: 2002 LAUNCH DATE: December 2007 LOCATION: PSV R$: PRICE R$/m²: Vitória - ES Million 275 (launch price) UNITS: 775 SALEABLE AREA: 475,000 m² SALES SPEED: SALES MIX: 90% upon launch 40% Short Term 47

48 Case Study Jacuhy Vitória - ES Construction started on Jan/08 48

49 Case Study Jacuhy Vitória - ES R$ Millions 90% sold on launching week Receivables securitization after completion Construction 24 months Minimum Cash Exposure 49

50 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment Alphaville Tenda Wrap up and Q&A Period 50

51 FY2008 and 4Q08: Financial & Operating Highlights Net Revenues (R$ million) Gross Profit (R$ *Excluding million) non-recurring items 544* 4* 31.3% 45% 56% 1,204 1, Net Revenues 27.9% 30.2% Gross Profit EBITDA (R$ million) 61% * 261* % Net Income (R$ million) 20% 171* % % 12.7% % 6.3% EBITDA Adjusted Net Income 51

52 Gafisa s Solid Financial Position R$606 million cash in addition to R$300 million in securitizable receivables. R$3.4 billion in construction finance lines of credit provided by all of the major banks: R$1,699 million signed contracts R$751 million contracts in process R$951 million additional availability 73% of our debt is long term 4Q08 3Q08 4Q07 Total Debt 1,552 1, Cash and Cash Equivalents Obligation to Investors Net Debt & Obligation to Investors 1, Shareholder s Equity 1,612 1,689 1,485 Total Capitalization 3,164 3,066 2,180 Net Debt & Obligation to Investors / Equity 77.3% 52.5% 12.0% 52

53 Highest Trading Volume in Real Estate Sector Volume (R$ MM) Price Feb-06 Mar-06 Apr-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Jan-09 NYSE Listing: Gafisa is the only Brazilian real estate company listed in the United States. 80 Avg. daily volume from Feb 01 of Feb 28 of 2009 (R$ MM) Market Cap (R$ MM ) 3, , , Gafisa Cyrela Rossi MRV PDG Agra Tenda Inpar Tecnisa Lopes CCDI Abyara Klabin Even Brascan Invest Tur Rodobens EZ Tec Trisul São Carlos JHSF CR2 53

54 Agenda Introduction Market and Macroeconomic Overview Gafisa: the Company Gafisa Segment Alphaville Tenda Wrap up and Q&A Period 54

55 Key competitive advantages A presence in all income segments Professional management and a pipeline of talent National reach & strong local relationships Large land bank to sustain future growth Well-developed and recognized brands Reputation for financial discipline The strongest platform to sustain leadership in the rapidly growing lower income market segments 55

56 Strategy Continue diversification (Product & Geography) Maintain financial discipline and preferred borrower status Benefit from expertise, positioning and key relationships in the fast-growing affordable housing segment Leverage reputation for quality and brand strength in new and existing markets Maximize sales of broad product portfolio through complimentary sales channels Superior Revenue Growth High ROE & Capital Appreciation Focus on high-return opportunities Maintain land bank of 2-3 years 56

57 Navigating the current market environment Ongoing Measures: Fortified product and geographic portfolio with acquisition of Tenda Implemented conservative approach to launch strategy Renewed focus on cash flow and returns Strengthening of financial relationships Launched consumer educational campaign Safe Purchases Poised to respond quickly to new potential financing opportunities aimed at spurring continued growth in the sector 57

58 Outlook Given the current economic situation and the continued disruption in the credit markets, visibility on overall growth in the industry is limited. Despite these factors, we are optimistic that government actions including the additional R$3 billion in FGTS funds designated for financing within the construction industry, the stimulus program aimed at building one million houses by 2010, and the lowering of the Selic interest rate by the Central Bank will result in the increased availability of funds to support the growth of homebuilding. However, without all of the elements currently in place, we are not providing guidance in the short term. In 2009, we will continue to be very selective with our launches, conserve cash and increase our sales efforts towards our inventory. 58

59 Gafisa Day Presentation 59