Overall economic situation in LatinAmerica (1997-2006)

Source: IFO World Economic Survey

2006200520042003200220012000199919981997

8

7

6

5

4

3

2

Diffusion index

Latin America’s GDP growth

200720062005200420032002200120001999199819971996

5

4

3

2

1

0

-1

Percent change year ago

Source: IFO World Economic Survey

Latin America’s real GDP

Source: Economic Intelligence Unit

200720062005200420032002200120001999199819971996

2600

2400

2200

2000

1800

1600

US$billions

Source: World Resources Institute

42.9

171.4

60.8 56.7

0

25

50

75

100

125

150

175

200

Africa Asia Eastern

Europe

Latin

America

BOP Spending on Housing 331.8 Billion

Latin America Poverty

• 205 million people below the poverty line =38.5 percent of the total population

• 79 million people = 14.7% of the totalpopulation living in extreme poverty

2006

Latin America private equity at a glanceUS$ millions, 2005 and 2006

$63$141Private Equity Funds Raised

$1,320$1,538Private Equity Investments

$575$1,966Net Returns to LPs

2006 (1H)

2005

$858$1,494Net Returns to LPs

$595$1,069Private Equity Investments

$1,272

Total

$1,000Private Equity Funds Raised

Ex-Brazil

Source: Emerging Markets Private Equity Quarterly Review, Q4, 2006

Private equity investments by countryUS$ millions

$512$76Chile

$270$176Mexico

$170$0Uruguay

$0$14Central America

$26$15Andean

$36$0Caribbean

$218$474Brazil

$261

2005

$156Argentina

1H2006

Source: Venture Equity, Latin America

Scorecard of investment climates 2005

54.4

58.8

58.8

69.1

76.5

79.4

92.6

Score

Jamaica

Uruguay

El Salvador

Argentina

Colombia

Peru

Costa Rica

39.7Taiwan

38.2Mexico

41.2Brazil

52.9U.K.

41.2Spain

42.6Chile

47.1

Score

Israel

Source: Latin American Venture Capital Association

Development of Secondary Mortgage Market

Source: Inter-American Development Bank, Reforming Latin American Housing Markets

U.S. mortgage backed securitiesUS$ billions

Source: Federal Reserve

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

GSE Non-GSE

10th Milken Institute Annual Global Conference Los Angeles, April 24 2007

Using Capital Markets to IncreaseAccess to Housing:

Making it a Reality in Mexico

The Mexican mortgage industry has grown briskly over thelast 6 years. While SHF (a government agency) was the onlysource of funds for privately – originated mortgages between1995 and 2002, the fast pace of growth since 2003 has beensupported by funding other than SHF.

Source: SHF and CONAFOVISource: SHF and CONAFOVI

Number of Mortgages Originated by

Sofoles and Banks

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Ho

us

es

2001 2002 2003 2004 2005 2006

Funded by SHF Not Funded by SHF

Cumulative Annual Growth Rate : 27.3%

The RMBS market, just born on Dec-2003, should become themain source of funds for mortgages sometime in 2009. TheseRMBS are issued out of privately-managed SPVs, and carry aspread over government securities of approximately 90 basispoints.

Accumulated Amount of RMBS Issued by Private Lender

(Expressed in USD millions)

$4,427

$54 $304$564

$1,700

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2003 2004 2005 2006 2007

*Exchange rate used for conversion = 11 MXP/USD.Source: Source: SociedadSociedad HipotecariaHipotecaria Federal Federal

All of these securities are enhanced by Mortgage Insurance and/or Financial

Guarantee Insurance (full-wrap). At first, these were provided by SHF and the

FC, but since 2006 four private credit-insurance firms have been active in the

market.

2,749 2,8591,721

9,055

3,832

4,337

0

2,000

4,000

6,000

8,000

10,000

12,000

2004 2005 2006 2007*

Full Wrap MI + Partial Enhancement

*January – March 2007

Annual Amount of RMBS Issued (million pesos)

Source: Source: SociedadSociedad HipotecariaHipotecaria Federal Federal

371 555Minimum Monthly Income

111 166Monthly Payment

620 1,000Total Up-Front Payment

15,500 20,000House Value

Examples of Affordability under the Subsidy Program

(Figures in USD)

This system is now the base of an ambitious subsidy program

that should cater to relatively low income households to be

served by private lenders.

The successful experience on mortgages is also now trying to

be replicated on housing microfinance programs.Source: Source: SociedadSociedad HipotecariaHipotecaria Federal Federal

• Milken ConferenceMarch 2007

This material is provided for informational purposes and is not intended to be a formal research report. This presentation is delivered solely as reference material.

Latin America has experienced consecutive years ofeconomic prosperity and political stability since 2002…

Real GDP growth (%)

Source: Central Bank, INE, IMF and Credit Suisse

1.4%

3.9%

1.9% 2.3%3.0%

4.9%

0.5%1.3%

4.8%

2.8%4.2%

0.8%

-0.2%

9.2%8.5%

-4.4%

8.8% 9.0%

3.4%4.2%

6.3%6.2%

2.2%

5.3%4.9%

3.9%

7.0%

1.9%1.5%

2001 2002 2003 2004 2005 2006E

Brazil Mex Arg Chile Colombia

CPI Inflation rate (%)

Source: Central Bank, INE, IMF, and Credit Suisse

1.1%

12.5%

5.7%

3.1%

7.6%9.3%

7.7%

4.0%4.1%

3.3%5.2%

5.7%4.4%

12.3%

9.9%

-1.5%

3.7%

6.1%

2.6% 2.6%3.7%

2.4%2.8%

4.9%5.5%6.5%

4.5%

7.0%7.7%

2001 2002 2003 2004 2005 2006E

Brazil Mex Arg Chile Colombia

• GDP Growth

• Brazil, Argentina, Chile, Mexico and Colombia GDPs haverecovered since the ’02 bottom boosted by the high commodityprices, exports, private consumption, and investment

• Controlled inflation• High levels of inflation experienced in 2002 have come down

significantly in most Latin American countries

12.5%

-10.9%

…resulting in a 3 year bull market and lower countryrisk premium among Latin American countries

Latin American Indices Country Risk Premiums (EMBI Spread over US Treasury)

• Bull Market• Local Latin American Stock Exchanges have appreciated over 300% since 2002,

significantly outperforming most international stock markets creating significantwealth among investors and local companies

• Country Risk Premium• Improved economic fundamentals and stability have led to re-ratings of the Latam

countries and cheaper financing

100%

200%

300%

400%

500%

Dec-02 Oct-03 Aug-04 Jul-05 May-06 Apr-07

Mexbol

IPSA

Bovespa

Merval

FTSE 100

S&P 500

0

250

500

750

1000

1250

1500

1750

2000

Dec-02 Oct-03 Aug-04 Jul-05 May-06 Apr-07

Brazil

Colombia

Latin America

Mexico

Chile

Source: Bloomberg

Note: IPSA=Santiago Stock Exchange

Source: JPMorgan

Note: based on the weighted average of bonds outstanding

SOT

Latin America 166bps

Brazil 160bps

Mexico 90bps

Chile 82bps

Colombia 152bps

However, the standard of living bypeople in poverty has not improved with theeconomic boom in the region

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1980 1990 1997 1999 2002 2004 2005 2006E

Extreme Poor Other poor

Latin America: Poverty Rates (%) Income inequality (Gini coefficient)

Source: ECLAC United Nations Economic Commission for Latin

America and the Caribbean(2006)

Note: Population-weighted average for 19 countries

Source: ElCLAC and De Ferranti et al.

Note: Population-weighted averages, For Latin American countries,

1990=available observation closest to 1990, 1999=available

observation closest to 1999, 2005= most recent available

observation

40

50

60

70

Central America South America & Mexico Latin America

1990 1999 2005

Credit expansion in the regionhas been slow to develop

• Ability to Foreclose• Banks ability to foreclose on houses has been very

cumbersome due to the bureaucratic process inLatin American countries

• Legality of property rights• Due to the informal nature of acquiring a house by

most lower class citizens, they are unable leveragethe deed to their house to obtain credit

• Lack of credit scoring information• The lack of available credit over the past decades

have left many without the opportunity to developcredit history

Household credit levels remain atlow levels even with robust economic growth throughout the region

Household Credit (As % of GDP) Market Loan Penetration (As % of GDP)

Source: IMF and Merrill Lynch, 2006Source: IMF and Merrill Lynch

Note: As of Dec 2005

The mortgage market in LatinAmerica is still significantlyunderdeveloped compared to other nations

2%2%2%2%3%4%5%7%

9%10%11%12%

14%17%

30%32%33%

34%

39%42%

51%

82%84%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

UK

Aust

ralia

Germ

any

Taiw

an

Hong K

ong

South

Afr

ica

Japan

Sin

gapore

Mala

ysi

a

Thailand

Chil

e

Hungra

y

Czech

Chin

a

Mexic

o

Pola

nd

Bulg

ari

a

Kaza

khst

an

Colo

mbia

Peru

Indonesi

a

Bra

zil

Arg

enti

na

• Low Mortgage Loan penetration• Latin American countries remain one of the most under

penetrated regions Globally

Mortgage Loan as % of GDP

Source: UBS Pactual

The current Brazilian and Mexicangovernments have taken significant strives to promotefinancing to the lower class for home ownership

Mexico – mortgage supply by government provides(loans 000s) Brazilian Mortgage Origination (R$ Bn.)

Source: Central Bank, ABECIP, UBS Pactual

605542

60

180

138

100

36

2004 2005 2006E 2007E

Infonavit Fovissste Sofoles

305

376435

512

• Mexican sponsored entities

• Infonavit and Fovissste providing mortgages

• Sofoles, nonbank mortgage originators with funding from the Federal MortgageSociety

• Brazilian funds

• FGTS (Fundo de Garantia do Tempo de Servico) and SBPE (savings accounts)

Source: Conafovi, SHF, Banorte and Credit Suisse

FGTS, a mandatory fund created t support employees that, SBPE=compulsory allocation of part of the fund used for the housing sector

econviews

Presentation at the Presentation at the MilkenMilken Conference: Conference:

The Argentine Mortgage MarketThe Argentine Mortgage Market

April 2007April 2007

MIGUEL A. KIGUELMIGUEL A. KIGUEL

Overview

• The Argentine Mortgage market is small.

• The supply of funds is concentrated on short termfinancial instruments.

• The Unpleasant Gap: Wages in Pesos, Real EstatePrices in Dollars.

• Some policy measures to foster the mortgagemarket in Argentina.

Mortgage Market Size

The level of the financialintermediation activity as a whole fellafter the crisis, and the recovery is gradual

Deposits and credit to the private sector

As % of GDP

0%

5%

10%

15%

20%

25%

30%

35%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Total deposits

Credit to the privatesector

Source: Econviews based on BCRA

Figure 1. Mortgage Loans as % of GDP

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Source: BHSA

The size of the mortgage market in Argentinafell by almost 60% in the aftermath of the crisis

Mortgages are a Very Small Share of

New Bank Lending

Credit to Private Sector

var. YoY - in million pesos

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000O

ve

rdra

fts

Do

cu

me

nts

Mo

rtg

ag

es

Ple

dg

e

loa

ns

Pe

rso

na

l

Cre

dit

ca

rds

Oth

ers

2005

2006

The Argentine mortgage market

remains among the small ones in the region

Mortgage Loans as % of GDP

As of 2005

65%

46%40%

16%12% 12%

5% 4% 2% 2%

0%

10%

20%

30%

40%

50%

60%

70%

US UE

Can

ada

Chi

le

Col

ombi

a

Chi

na

Bra

zil

Mex

ico

Arg

entin

a

Per

u

Source: BHSA

The supply of funds goes to short term loans

The Increase in Financial Trusts

Issuance is Driven by Short Term Loans

Financial trusts issuance

AR$, billion

1,63

5,12

7,62

0

1

2

3

4

5

6

7

8

2004 2005 2006

Source: Gainvest

Figure 5. Financial trusts by type of underlying assets

1st. Semester 2006 issuance

Personal and

consumer

loans

45%

Guaranteed

loans

32%

Leasing

2%Comercial

loans

3%

Credit card

coupons

14%

Mortgage

loans

2%Other

2%

Mortgage Backed Securities Do Not YetRepresent a Significant Share of theSecuritization Market.

The Unpleasant Gap:Wages in Pesos, Real Estate Prices in

Dollars

Figure 3. Meters squared bought by one monthly salary

0

0.5

1

1.5

2

2.5

3

Jan-

77

Jan-

80

Jan-

83

Jan-

86

Jan-

89

Jan-

92

Jan-

95

Jan-

98

Jan-

01

Jan-

04

m2

Source: Cruces, Kawamura y Weinschelbaum (2006) based on Gimenez Zapiola, Cento de

Estudios Avanzados de la UADE, INDEC y FIEL.

Affordability of housing

•Property values have increased pari passu with the devaluation,

while wages have been lagging in dollar terms.

Affordability of housing

Table 2. Achievable amount of credit

by monthly salary and TFC (AR$)

Total financial cost (%)

Monthly salary (AR$)

2000 3500 5000

10 73,225 128,144 183,062

13 60,402 105,703 151,004

15 53,779 94,112 134,447

•Most workers cannot qualify for loan to buy an apartment or a house

Although construction activity is growing at a high pace,buyers do not take mortgages

Supply of housing

Housing construction activity

Index number 1997=100

30

50

70

90

110

130

150

01

-19

93

01

-19

94

01

-19

95

01

-19

96

01

-19

97

01

-19

98

01

-19

99

01

-20

00

01

-20

01

01

-20

02

01

-20

03

01

-20

04

01

-20

05

01

-20

06

Index 12 months MASource: INDEC

Some policy measures to foster the mortgagemarket in Argentina

•Some public actions are need to deal with therelative high rates of Inflation that lead to highnominal interest rates and high monthly paymentsthat it makes it difficult to qualify for the loans.

•Indexation is not a solution at this time due to legalrestrictions and a manipulation of the official priceindices

• The difficulty observed in foreclosing properties is aproblem for new loans, as well as the existence ofcapital and foreign exchange controls or the taxes onbank credit and debit.

Policy measures to foster the mortgage market

• Some possible policy actions inlcude:

• A subsidy on the buyers to help themqualify for the mortgages

•The provision of credit insurance toincrease the LTV above 60%.

• The creation of a new mortgage financeagency (similar to Fannie Mae)

• The development of a market that wouldallow a swap between fixed interest rateloans on the one hand and indexed oradjustable instruments on the other

Policy measures to foster the mortgage market

Growth of Potential Demand

> R$ 4,8014.7 mm families

From R$1.201 to R$4.80019.0 mm families

< R$1.20024.9 mm families

> R$2,60111.7 mm families

From R$1,201 toR$2,60012.0 mm families

< R$1.20024.9 mmfamilies

10%

39%

51%

24%

25%

51%

TR+9%20years

TR+14%10 years

PotentialDemand:+7 mm families

Source: UBS Pactual

Beginning of 2006

MonthlyIncome

MonthlyIncome

Beginning of 2007

Market for Units of R$ 110,000

71%

77%

80%

82%

73%

65%

70%

75%

80%

85%

< 5 5 ~ 10 10 ~ 20 > 20 Total

Minimum Wages

% O

wn

ers

hip

111%

73%

65%

53%

46%

20%

13%

10%

9%

8%

6%

2%

2%

166%

156%

249%

137%

125%

141%

63%

46%

17% 33%

28%

37%

35%

0%

50%

100%

150%

200%

250%

300%

Neth

erl

ands UK

USA

Irela

nd

Sp

ain

South

Afr

ica

Chile

Hungary

Mexic

o

Cze

ch R

ep.

Po

lan

d

Ind

ia

Bra

zil

Mortgage credit to GDP Ratio Total credit to GDP Ratio

2,2 3,04,8

10,04,56,0

9,1

10,3

0,0

5,0

10,0

15,0

20,0

25,0

2003 2004 2005 2006

Commercial Banks CEF

Home OwnershipCredit Availability(R$ billion )

Source: Central Bank and Bradesco Corretora

Source: PNAD and MCMSource: ABECIP and Central Bank

Brazilian Real State Market Information

Mortgage to GDP Ratio

Brazilian Real State Market Information

-6% -4% -2% 0% 2% 4% 6%

0 to 4

10 to 14

20 to 24

30 to 34

40 to 44

50 to 54

60 to 64

70 or more

Men Women

6660544842

Brazilian Interest Rates(average rate per year)

Housing Deficit(million of households)

5.4

6.7

0

3

6

9

1991 2006Source: Fundação João Pinheiro and Ministry of Cities

2000

7.9

Income Segments in BrazilAge Pyramid in Brazil - 2005

47 mn households

Consumption

19%A/B > 10 min wages - US$ 1,590 52%

5 – 10 min wagesUS$ 780 - US$ 1,590

30%C 28%

< 5 min wages - US$ 780

51%D/E 20%

Source: LosangoSource: IBGE

2002 2003 2004 2005 2006Source: Central Bank and MCM Consultores

19.2%

23.5%

16.4%

19.0%

15.1%

2007E 2008E

12.0% 11.3%

Favorable Macroeconomic and Demographic Environment

Contact IR

Cyrela Brazil Realty S.A. Empreendimentos e Participações

Address: Av. Brigadeiro Faria Lima, nº 3.400, 10th floor São Paulo - SP - Brazil ZIP Code: 04538-132

Luis Largman Dani AjbeszycCFO and Investor Relations Officer Investor Relations ManagerPhone: +55 (11) 4502-3153 Phone: +55 (11) 4502-3144e-mail: ri@cyrela.com.br e-mail: dania@cyrela.com.br

www.cyrela.com.br/ir