1. PDG Realty increases its stake in CHL to 70%
70%,
and acquires an option to purchase an
additional 30% reaching 100%
Investors Relations:
Michel Wurman
Investors Relations Director
João Mallet, CFA
Investors Relations Manager
Gustavo Janer
IR Analyst
Telephone: +55 (21) 3504-3800
E-mail: ri@pdgrealty.com.br
Website: www.pdgrealty.com.br/ir 1
3. Deal Rationale
Capture the CHL´s further expansion potential on the real estate market of Rio de Janeiro
Investment in a company with proven execution capacity and great potential growth.
Stake acquisition based on accretive valuation.
Arbitrage opportunity on discounts between listed companies versus private equity
investments.
Reaffirm and reiterate the strategic alignment between Rogério Chor (founder and CEO of
CHL), CHL executives, and PDG Realty.
Rogério Chor, together with Milton Goldfarb, from Goldfarb, will join PDG Realty´s
Realty s
operational committee, actively participating in the strategic and operational decisions of
the company.
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4. Acquisition Structure
We acquired na additional 20% stake in CHL, reaching 70% of the company.
The operation will be take place as described below:
– Considering the economic value of CHL of R$550 million, we increased the capital in
R$100 million (to be paid until May/08) with the issuance of CHL shares. As a
consequence PDG Realty will hold a stake on CHL of 57 69%
57,69%.
– Merger of a holding company with a 12.31% interest in CHL, to be paid through the
issuance of 3.2 million new common shares delivered to CHL’s partners.
After the conclusion of the deal described above, PDG Realty will hold 70% of CHL.
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5. New Purchase Option of 100%
We
W entered into an agreement with the remaining shareholders of CHL for a share purchase
t di t t ith th i i h h ld f f h h
option for acquisition of up to 100% of CHL’s shares by PDG Realty.
The option may be exercised on an annual basis by any of the parties in 4 tranches from 2009 on,
with the fi st t anche of 6% and the othe s of 8%
ith first tranche others 8%.
The acquisition will be carried out through the issue of new shares by PDG Realty, pursuant to the
proposal to be submitted to the shareholders.
The economic value of CHL for purposes of exercising the options will be determined by
comparing the price earnings multiples, with a 35% discount relative to PDG Realty’s multiple.
CHL Net Income * 65% / PDG Realty Net Income
The number of PDG Realty shares to be issued will be calculated as follows:
Number of PDGR3 = (LL CHL DI / PDG NI) * 0 65 * PDG shares* % CHL DI shares
N b f 0,65 h * h
Where:
number of PDGR3: number of PDG shares to be issued as a result of the respective incorporation;
PDG NI: means the net income of PDG included in the balance sheet as of December 31 of the year immediately prior to the fiscal year of the tranche of the respective Option;
CHL NI: CHL’s net income included in the balance sheet as of December 31 of the year immediately prior to the exercise of the tranche of the respective Option;
PDG shares: number of shares representing the capital stock of PDG as of December 31 of the year immediately prior to the exercise of the respective Option.
%o C
of CHL DI S a es percentage of CHL sold in the concerned tranche (6%).
Shares: pe ce tage o C so d t e co ce ed t a c e (6%)
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6. Accretive Valuation
Once again we were capable to consolidate an attractive investment with accretive valuation,
leveraged on the arbitrage opportunity on discounts between listed companies versus private
equity investments.
Accretive Valuation
Estimated Economic Value (R$ million) 550
g ( $ )
Estimated Earnings * 09´ (R$ million) 120 ‐ 140
Estimated 09´ P/E 3.93 ‐ 4.58
* based on internal company estimates
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7. PDG Realty Business Model
PDG R lt h
Realty has b
been managing t create new b i
i to t businesses b
based on th private equity model and
d the i t it d l d
establish new successful partnerships with companies with proven track record.
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8. PDG Realty Business Model
Constant deal flow at capital markets, operational and corporate finance levels
arkets / Inv.
Credit Suisse Deutsche Bank
Real Estate road trip Conference (NY)
UBS Conference Non Deal Road One on one UBS
São Paulo Show (NY) Conference Follow-On
London R$ 575 mm
ation
IPO Initiating Coverage Debentures Santander
R$ 432 mm R$ 250 mm Real Estate road trip Banco Brascan
Capital Ma
Rela
Non Deal
Boston NY and Toronto
UBS CEO IPO
Conference R$ 304 mm
Initiating Coverage Initiating coverage
Initiating Coverage (debenture)
Operational
4Q06 1Q07 2Q07
Launches: 16 projects Launches: 14 projects Launches: 21 projects
Sales pro rata: R$82 mm Sales pro rata: R$78 mm Sales pro rata: R$224 mm
O
GSV pro rata: R$ 159mm GSV pro rata: : R$ 144mm GSV pro rata : R$ 231mm
Acq. of 20%
(+30% option)
Acquisition Pipeline
Acq. of 21%
Joint Venture
Goldfarb and
Acq. of 14.5%2
q C J
CHL JV
Joint Venture JV
Acq. of 20%
Joint Venture Acq. of 5%
(+20% option)
JV Acq. of 5%
Acq. of 40% Acq. of 10% Sale of 20% Acq. of 30% (+5% option) 36.9%1
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct -07 Nov -07
Notes: 8
1 25% directly and 11.9% indirectly through Lindencorp
2 Subject to further changes after new acquisitions
9. Business Model
Exposure to the Low Income Flexibilidade pararata PSV in the Landbank amounts to R$ 3,5 billion
Low Income Pro atuar em todos os segmentos do mercado
Segment imobiliário42 k units
with over Brasileiro
Expertise and capacity to invest in:
– Geographic regions
Diversification
– Market
– Income class segments
Leverage on Partnership Abilidade “hire”agregar os melhores profissionais do mercado e on
Ability to para the best management in the industry and leverage
their specific and local knowledge
Philosophy alavancar suas abilidades em suas especificas áreas de atuação
Additional capital gain Potenciais ganhos de capital através dos seus investimentos de
Potential capital gains through its portfolio investments
potential portfolio
Management with strong real estate expertise, financial background
g g p , g
Gestão com grande culture to implement PDG Realty´s business
and return oriented expertise no setor imobiliário e financeiro com
Management expertise
forte cultura de maximização de retornos
strategy
The right platform to accomplish a sustainable long term growth
Unique business model in the Brazilian real estate market
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