Brazilian Real Estate

1. Brazilian Real Estate Real Estate Sector Overview David Lawant 55.11 3073-3037 david.lawant@itausecurities.com Cecília Viriato 55.11 3073-3007 cecilia.viriato@itausecurities.com Brazilian Real Estate Industry Itaú Securities

2. SECTION 1 The Real Estate Sector and Capital Markets

3. The Real Estate Sector in Capital Markets 140 129 124 111 82 100 37 Brazilian Homebuilders Ibovespa Index 2009 2007 2008 Source: Bloomberg and Itaú Securities

4. SECTION 2 Overall Market Outlook

5. Overall Market Outlook Outlook is Positive in Our View due to a Combination of Factors • “Minha Casa Minha Vida” - R$34 bn housing program • Several working capital lines provided for homebuilders • Caixa Economica Federal as financing operator for low-income housing • Itaú’s economists forecast GDP growth of 4.8% in 2010, backed by record-low level of interest rates remaining at 8.75% • Inflation is expected to remain under control at around 4% in 2009 and 2010 Government Support for the Sector Positive Macroeconomic Trend Availability of Financing Structural Pent-up Demand • Balance of savings accounts increased fromR$127 million in 2004 to R$231 million in July 2009 • Working capital lines from commercial banks • Real Estate companies are returning to capital markets • Household formation is at 1.4 million per year • Quantitative and qualitative housing deficit • Number of units financed is still similar to 1980’s Source: Itaú Securtities

6. Overall Market Outlook Real Estate Consumer Confidence Index (from Lopes) Source: Lopes and Itaú Securtities

7. Overall Market Outlook Average Price of Launches in the Metropolitan Region of São Paulo (R$/m2) Source: Embraesp, Lopes and Itaú Securities. Note: Deflated by the INCC index.

8. Overall Market Outlook Contracted Sales (in R$ million) and Sales Speed (in %) Source: Selected Companies and Itaú Securtities

9. Overall Market Outlook Launches (in R$ million) and months of inventory Source: Selected Companies and Itaú Securtities

10. Overall Market Outlook Cash Burn (in R$ million) and net debt/equity levels (%) Source: Selected Companies and Itaú Securtities

11. “Minha Casa Minha Vida” Housing Program Three broad income segment classes 0-3 minimum wages • R$16 billion of subsidies, installments will be 10% of income with a minimum of R$50 • Caixa Economica Federal (CEF) will analyze projects and contract developers • R$10 billion for subsidies, reaching up to R$23,000 per unit • Guarantee fund in case of unemployment (24-36 months) and reduced rates to TR+5% 3-6 minimum wages • Guarantee fund in case of unemployment (12-24 months) 6-10 minimum wages Other measures • Reduction in life insurance embedded in the mortgage from 4-35% to 1-7% of installment • Reduction in registration fees of 80-100% for the homebuyer and 75-90% for the developer Other benefits outside the package Mid and Mid-high income • Increase in SFH cap limit from R$350,000 to R$500,000 per unit • Maximum amount financed raised to 90% from 80% previously FGTS mortgage lending increased • Recent debt raising operations from Tenda, MRV and PDG • Lower launches put less pressure on cash requirements What has is still uncertain? Implementation Price amortization system • Due to legal risk, CEF only uses the SAC amortization table. The Price sales table, which yields lower initial installments is still not clear if it will be used or not • For the 0-3 minimum wages segment seems that companies will work more as contractors than as developers. Other income segments might use a scheme like “Credito Associativo” Cash flow profile of projects for homebuilders

12. SECTION 3 Key Investment Themes

13. Key Investment Themes Key Investment Themes in a Medium Term Perspective Low Income Exposure Profitability Sustainability of the Housing Program Execution Risk Geographical Diversification Convergence to IFRS Accounting Standards

14. Contact Information DAVID LAWANT – REAL ESTATE ANALYST FROM ITAÚ SECURITIES +55 11 3073 3037 DAVID.LAWANT@ITAUSECURITIES.COM Brazilian Real Estate Industry Itaú Securities