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Gafisa Acquires AlphaVille Urbanismo AlphaVille Developments Conference Call Sao Paulo, October 3 rd , 2006 Vila dos Ingleses - MG AlphaVille Campinas - SP AlphaVille Graciosa - PR AlphaVille Fortaleza - CE Investor Relations Contact: Gustavo Felizzola [email protected] Conference Call São Paulo October 3 rd , 2006 12PM (Brasilia Time), 11AM (US-ET) Phone: +1 (973) 935-8757 Code: 7947080 Webcast: http://www.gafisa.com.br/ir

Gafisa acquires alpha ville urbanismo

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Page 1: Gafisa acquires alpha ville urbanismo

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Gafisa Acquires AlphaVille Urbanismo

AlphaVille Developments

Conference Call

Sao Paulo, October 3rd, 2006

Vila dos Ingleses - MG AlphaVille Campinas - SP

AlphaVille Graciosa - PR AlphaVille Fortaleza - CE

Investor Relations Contact:Gustavo [email protected]

Conference CallSão Paulo October 3rd, 200612PM (Brasilia Time), 11AM (US-ET)Phone: +1 (973) 935-8757Code: 7947080Webcast: http://www.gafisa.com.br/ir

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AlphaVille Strengthens Gafisa’s Position as a Premier Growth Opportunity

GeographicDiversification

World-class Shareholdersand the Highest

Standards of CorporateGovernance

Efficient Business Modeland Strategic Land Bank

Robust Housing Growth

Industry Leadership and Strong Brand Recognition

Professional Managementand

Established Organization

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AlphaVille Urbanismo

Residential Area Parks

Business Area

Multi-family Area

AlphaVille Club

Golf Course

Business Area Residential Area

Residential Area

Characteristics of an AlphaVille Community1

Note (1): Based on AlphaVille Graciosa (located in Curitiba, Paraná)

AlphaVille Urbanismo is the largest and only nationwide community development company in Brazil, with no

major competitors to date

The Company transforms large rural acreage into urbanized lots, developing all required infrastructure

(water, sewage, electricity, roads), as well as facilities such as sports club, high-rise monitored fences, for

subsequent sale

AlphaVille does not get involved in the construction of the houses, which is done by the buyers

AlphaVille’s residential communities (lots) are targeted at upper and upper-middle class families in the

outskirts of metropolitan regions throughout Brazil

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Financing the Transaction

Gafisa will acquire 100% of AlphaVille over the next 5 years

The transaction involves the purchase of 100% of Alphaville’s shares for cash and stock divided in 3 phases as described below:

Phase 1 – acquisition of 60% of Alphaville shares for R$20 million cash at the date of the closing; and issuance of 6,477,718 new Gafisa’s shares @R$28.05 valued at approximately R$181.7 million to current Alphaville shareholders;

Phase 2 – acquisition of 20% of Alphaville shares in exchange for Gafisa’s shares 36 months after the closing of the transaction;

Phase 3 – acquisition of the remaining 20% of Alphaville shares in exchange for Gafisa’sshares 60 months after the closing of the transaction;

The share price Alphaville for the 2nd and 3rd phases will be calculated based on valuation done by an independent institution based on the Discounted Cash Flow Method.

Alphaville shareholders are expected to own approximately 5.9% of Gafisa after the 1st phase of the transaction.

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Note (2): Based on Gafisa's stock price of R$28.05

42.2% Discount over Gafisa´s Multiple (2)

13.2xGafisa's P/E 2008E

7.6xTransaction P/E 2008E

P / E

41.6% Discount over Gafisa´s Multiple (2)

10.1xGafisa's EV / EBITDA 2008E

5.9xTransaction EV / EBITDA 2008E

EV / EBITDA

Note (1): Based on Analysts Consensus Estimates (Deutsche Bank, Itau, Merrill Lynch, UBS)

218.4 Earnings 2008E (1)

271.3 EBITDA 2008E (1)

2,744.1 Enterprise Value (EV)

(147.0)Net Debt (Net Cash)

0.0 Minority Interest

102.6 # shares (mm)

Gafisa's Financials (R$ million, as of June 30th 2006)

Attractive Valuation

Multiples Analysis

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Attractive Economics

The segment presents higher margins and lower cash exposure than that of residential buildings

10%2%62%19%% of Gafisa Launches in 2006²

44%28%31%37%Typical Project Margin

100 to 400100 to 500150 to 300up to 100# of Units

R$ 1,800 to R$ 2,000

100% CEF (directly to buyer)

R$ 32,000 to R$ 62,000

R$ 70k to 130K

45 to 65 sq.m

Affordable Entry Level Residential LotsMiddle and Mid-HighHigh-End

R$ 2,000 to R$ 3,600

Commercial Banks and CEF

R$ 70,000 to R$150,000

R$ 150k to 400K

70 to 150 sq.m

10-15%30-35%Cash exposure / Total Sales

R$ 150 – R$ 800

Provided by Gafisa

Diverse

Up to 300k

100 to 1,000 sq.m

Above R$3,600

Provided by Gafisa

Above R$150,000

Above 400K

100 to 500 sq.m

Average Price sq.m

Financing

Household Income¹

Price Range

Size

Notes:¹ Annual household income. ² Gafisa has commercial buildings which accounted for the remaining 7% of the 2006 Launches

Lorian - SPBlue -RJ Side Park - SPThe Gold-SP

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Unparallel market positioning

With its Strong Brand Recognition and Nationwide Presence, AlphaVille has no Comparable Competitor

AlphaVille’s National Reach

AlphaVille

Gafisa

Leadership position: Alphaville is the uncontested leader in the segment

Proven track record: The AlphaVille concept has been very well accepted throughout the country, present in 35 cities and 16 states

Strong brand: A recognized high-quality infrastructure, high-quality after-sale customer service, and efforts to create a strong sense of loyalty and community between its clients are among the characteristics that the “AlphaVille” brand carries within its target markets. This strong brand allows it to charge a premium over its competitors in every market it competes and facilitates new partnerships.

2005

Top de Marketing

2005 2005

Superbrands

2005

FIABCI

2005

Pop ListMasterImobiliário

Some of AlphaVille’s Awards (2005)

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Prospective / Strategic Analysis

Partnership / Land

AcquisitionOccupation

Approval and

Registration

Marketing& Sales Construction

Analysis involving legal, environmental, urban, technical and market aspects (e.g. price, demand, competition and adherence to concept) to opportunistically invest in

Prospective / Strategic Analysis

Signature of a Partnership Agreement with the land owner or a selective acquisition of the land

Partnership / Land Acquisition

In the last phase, clients are free to build their houses and AlphaVille support the establishment of the community’s “management council”

AlphaVille works as Construction Manager with the construction outsourced with third-party companies

After the launching, AlphaVille starts pre-selling the units during the construction phase (similar to Gafisa)

Development of a detailed Master Plan to be submitted to authorities for approval process

This process takes on average 3 years (compared to Gafisa’s 6 months) and involves interactions with Federal, State and Municipal authorities, thereafter the development is registered at the municipality and is ready for commercialization

Occupation

Construction

Marketing& Sales

Approval andRegistration

High Entry Barrier Segment

The segment is characterized by a long approval process for new developments…

It is unlikely that any competitor would be able to replicate AlphaVille’scurrent position and strength in the near future

3 years 1 years 2 years

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High growth with relatively low risk

AlphaVille has a sizable and virtually non-replicable land bank with a potential PSV of R$2billion

100%155,2781,430746,533South

%acquiredby swap

Future Sales (R$000)Potential UnitsUsable Area

(sq.m)

100%566,6463,4612,626.057Northeast

8,963,794

162,121

502,757

4,926,325

15,467

438

926

9,213

1,997,452

32,424

104,954

1,138,151 93%Southeast

27%Mid-West

92%Total

100%North

Land Bank¹

¹ As of 06/30/06

Between 2006 and 2010 the Company expects to launch 46 developments, of which 42 are already in the land bank

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Cross-selling opportunities of Gafisa’s residential buildings in AlphaVille’s lots

Utilization of AlphaVille’s wide experience with local authorities and business partners inover 35 cities in 16 states to further accelerate Gafisa’s geographical expansion

AlphaVille will greatly benefit from Gafisa’s financial expertise, allowing it to optimize its capital structure and provide customers with better products

We expect both companies to benefit from future synergies

This combination offers attainable synergies

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Note: (1) Price per sq.m for Gafisa excludes lots

40012221247715551089687244611321790Number of Units

nanana263,7 200,2 146,6 2.768,0 2.725,0 2.701,0 Price per sq.m (1)

1.684.164 1.285.291 836.157 1.170.096 1.151.898 656.720 514.068 133.393 179.437 Usable Launched Area (m2)

828.307 348.463 434.771 176.492 141.521 57.415 651.815 206.942 377.356 Launches (R$ '000)

25 15 23 4 4 3 21 11 20 Number of Launches

2005A2004A2003A2005A2004A2003A2005A2004A2003A

Gafisa + Alphaville (Pro-forma)AlphavilleGafisa(R$ million, except when indicated)

Selected Combined Operating Data (Pro-forma)

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Governance at AlphaVille

Alphaville’s capabilities will remain with the company after the transaction is complete.

Nuno Luiz Alves and Renato Albuquerque will retain 40% of Alphaville going forward

Nuno Luiz Alves will remain as CEO

Alphaville will operate as a subsidiary of Gafisa

Alphaville’s Board of Directors will be composed by 5 members of whom 3 will be indicated by Gafisa. Nuno and Renato will be the other two board members

Gafisa will seek shareholder approval for the indication of Mr. Renato Albuquerque as a Board Member of Gafisa.

Gafisa S.A.

SPE A SPE B SPE C Gafisa Vendas Alphaville...60%

Gafisa’s Pro-Forma Corporate Structure after Consummation of the Transaction (Phase 1)

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AlphaVille Strengthens Gafisa’s Position as a Premier Growth Opportunity

GeographicDiversification

World-class Shareholdersand the Highest

Standards of CorporateGovernance

Efficient Business Modeland Strategic Land Bank

Robust Housing Growth

Industry Leadership and Strong Brand Recognition

Professional Managementand

Established Organization