Brazilian Real Estate David Lawant Itaú Securities Brazilian Real Estate Industry Cecília Viriato Real Estate Sector Overview

SECTION 1 The Real Estate Sector and Capital Markets

- 3 - The Real Estate Sector in Capital Markets Source: Bloomberg and Itaú Securities Brazilian HomebuildersIbovespa Index

Overall Market Outlook SECTION 2

- 5 - Outlook is Positive in Our View due to a Combination of Factors Source: Itaú Securtities Positive Macroeconomic Trend Government Support for the Sector Structural Pent-up Demand Availability of Financing  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  Household formation is at 1.4 million per year  Quantitative and qualitative housing deficit  Number of units financed is still similar to 1980’s  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  “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 Overall Market Outlook

- 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 Source: Selected Companies and Itaú Securtities Contracted Sales (in R$ million) and Sales Speed (in %)

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

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

“Minha Casa Minha Vida” Housing Program Three broad income segment classes 0-3 minimum wages 3-6 minimum wages 6-10 minimum wages Other measures Cash flow profile of projects for homebuilders Implementation Price amortization system  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%  Guarantee fund in case of unemployment (12-24 months)  Reduction in life insurance embedded in the mortgage from 4-35% to 1-7% of installment  Reduction in registration fees of % for the homebuyer and 75-90% for the developer  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” What has is still uncertain? 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 Other benefits outside the package FGTS mortgage lending increased  Recent debt raising operations from Tenda, MRV and PDG  Lower launches put less pressure on cash requirements

Key Investment Themes SECTION 3

Key Investment Themes Key Investment Themes in a Medium Term Perspective Low Income ExposureProfitability Convergence to IFRS Accounting Standards Execution RiskSustainability of the Housing Program Geographical Diversification

Contact Information DAVID LAWANT – REAL ESTATE ANALYST FROM ITAÚ SECURITIES Itaú Securities Brazilian Real Estate Industry