presentation of rossi´s action plan towards the low income segment

Target public of the product

Rossi: qualified, prepared and active

Why we believe in this market

Products

Actions already in progress and targets

Final conclusions

TARGET PUBLIC OF THE PRODUCT

Property value from R$46,000 to R$120,000

Monthly payment from R$183 during construction

Monthly payment from R$481 after delivery

Families with income ranging from 4 to 10 minimum wages




Products


Final conclusions

MACROECONOMIC SCENARIO

Economic stability

Foreign investment

Falling interest rates

Need for jobcreation

Need for higher GDP growth

Higher GDP growth combined with falling interest rates

2003

MACROECONOMIC SCENARIO

2004 2005 2006 2007E 2008E 2009E 2010E

23.50%

16.40%

19%

12,75%

11%10% 9% 8%

4.9%

0.5%

2.3%

3.3%4.1% 4.6% 4.8% 4.8%

SELIC rate

GDP growth

DECLINING INTEREST RATES AND LENGTHENING OF FINANCING TERMS

To finance construction To finance the client Lengthening of terms from 10 to 20 years

SIZE OF MARKET

Potential Demand in BrazilHighly dependent on the level of interest rates and on financing terms

110.000

13%

10

1.700

35%

4.800

110.000

8%

20

900

35%

2.600

2005Scenario

2007Forecast

Potential Demand+7 million families+148% increment

24%

10%

20072005

Average Value R$Real Mortgage Rates (p.a.)

Term (years)Monthly Payment (R$)Percentage of IncomeMonthly Income (R$)

% of families with the potential to buy

LEGAL SECURITY

CHATTEL MORTGAGES




Products


Final conclusions

EXPERIENCE

Launched in 1992

Apartments with areas from 56 to 85 m²

4 units per floor

2 to 4 bedrooms

4 standardized designs with differentiated facades and common areas

13,438 units delivered

EXPERIENCE

Launched in 1996


6 or 8 units per floor

2 to 3 bedrooms

4 standardized designs with differentiated facades and common areas


EXPERIENCE

Launched in 1999


Sale prices from R$46,000 to R$120,000

2 to 3 bedrooms

8 standardized designs


Planned neighborhood

DECENTRALIZED MANAGEMENT MODEL

Proven Management Model with Track Record of Success

Decentralized operations: 6 regional offices

Centralized financial control and management

Partnerships with local developers

More than 30 executives with at least 15 years experience in the real estate and construction industries

GEOGRAPHICAL DIVERSIFICATION

6 regional offices: Porto Alegre, São Paulo, Campinas, Rio de Janeiro, Belo Horizonte and Salvador

Operations in 30 cities in 11 states across Brazil

MANAGEMENT SOFTWARE (SAP) IMPLEMENTED 7 YEARS AGO

400 work stations on the network

CUSTOMER SERVICE CENTER

30,000 customers

8,000 customers served each month

HIGHLY ADVANCED ENGINEERING

SAP

Designs

Procurement

Processes

Development of people

Development of products

Management of knowledge


Focus on processes

Example:Rossi Construction System Economy Segment - Houses

1 2

3

4

5



Focus on processes

1 2 3

4 5


Focus on processes


1 2

3 4

5


Focus on processes

1 2 3

4 5 6



Focus on processes

Tools Scaffold Spacers Mobile and covered concrete mixer

Short timetable – land moving is still going on, but other services have already begun

Electrical blocks

Steel for masonry Access

Concrete blocks piled correctly and near the application site

Energy Water GroutBays assembled nearby with aggregates

HIGHLY ADVANCED ENGINEERING – LOGISTICS


Example:Rossi Construction System Economy Segment – Residential Squares

Focus on processes

1

2


Example:Rossi Construction System Economy Segment – Residential Squares

Focus on processes

EASY ACCESS TO FINANCING

R$3.0 billionFinancing Agreements with Commercial Banks:

33,000 units

Annual rate of 9% + TR (Reference Rate) and 20 years to pay

EXPERIENCE IN CREDIT ANALYSIS

Experience since launch of Plano 100

Continuous training of real estate brokerages

Analysis of payment capacity vs. analysis of income

Analysis of payment capacity by each product

Analysis of payment capacity by financial agent

Villa Natura – SP Condominium buildings

Casas Brasileiras – CampinasCondominiums of high-end Homes

Orizzonte – NiteróiRetrofit

Iguatemi Corporate – Porto AlegreCommercial - Triple A

EXPERTISE IN PRODUCT DEVELOPMENT

Development of expertise in a variety of segments (cities and price ranges)

EXPERTISE IN PRODUCT DEVELOPMENT

Development expertise in a variety of segments (cities and price ranges)

Example: Elevador do Praça

Development based on “Target Cost”

Experience in developing products on a mass scale

Market research




Products


Final conclusions

VILLA FLORA

RESIDENCIAL SQUARES

VERTICAL BUILDINGS

VILLA FLORA

PRAÇASRESIDENCIAIS

PRÉDIOS VERTICAIS

VILLA FLORA

Units with area from 46 to 115 m²

Units starting at R$45,000

Monthly payments from R$183 during construction

Monthly payments from R$ 481 after delivery

VILLA FLORA

VILLA FLORA

Bruna

46m²

VILLA FLORA

Carolina

62m²

VILLA FLORA

Beatriz

65m²

VILLA FLORA

Natália

66m²

VILLA FLORA

Mariana

69m²

VILLA FLORA

Clara

85m²

VILLA FLORA

Paula

115m²

VILLA FLORA - SOROCABA

VILLA FLORA

RESIDENTIAL SQUARES

VERTICAL BUILDINGS

RESIDENTIAL SQUARES – SÃO JOSÉ DOS CAMPOS (SP)

RESIDENTIAL SQUARES – CANOAS (RS)

RESIDENTIAL SQUARES - PORTO ALEGRE (RS)

DIFFERENTIALS OF RESIDENTIAL SQUARES

Architectural Design

Quality Finishings

Landscaping

Sustainability

Sustainability program with 3 pillars

SUSTAINABILITY

DESIGN CONSTRUCTION USE

CONCEPTS

Optimization of spacesSelection of area | Installation | Treatment of external spacesMinimization of energy consumptionOrientation | Form/design| Openings/closures

Preference for environmental materials

Protection and conservation of water

Improvements in quality of internal environments

Optimization of construction, operational and maintenance processes

LongevityAdaptability, durability, diversity

Creation/identification of value

Relationship with community/social responsibility

The idealist says...

The pessimist says…

We believe…learning curve

economies of scale

scarcity of resources

stricter legislation

“UNDISPUTABLE” REGIONS

LIFE CYCLE COST

INIT

IAL

COST

Equal

Equa

l

<

>

>

<

EXPECTATIONS REGARDING SUSTAINABLE PROJECTS

DesignPreliminary study

Documentationand contract Construction Use and operation

Optimization of the site’s potential

Impact on performance

Increase in cost/difficulty of implementation

Minimization of energy consumption

Preference for environmental materials/products

Water conservation

Quality of internal environment

Construction practices

Operation andretrofit practices

STRATEGIES VS. LIFE CYCLE PHASE

$**

(will implement) ******Ease of execution

and maintenance

$*

(will implement) ******

Sensitizing users regarding water conservation

**(will implement)

**

*(will implement)

*(will implement)

*(will implement)

Implementation period (Rossi reality)

**

**

***

***

***

Ease of implementation

$$***Use of measurement by sector

$$**Use of alternative sources

$***Reduce water consumption for landscaping

$$***Reduce water consumption at points of use

$***Limit flow (pressure) at points of use

Investment(other) Benefits

Environmentaleffectiveness

Practices and strategies

WATER

RESIDENTIAL SQUARES

Units with areas from 50 to 82 m²

Units starting from R$65,000



CAMPINAS RESIDENTIAL

SQUARES

FACADE

LEISURE AREAS

LAUNCH

VILLA FLORA

RESIDENTIAL SQUARES

VERTICAL BUILDINGS

VERTICAL

Country club concept

Rationalization of spaces

Location

VERTICAL - DIFFERENTIALS

Units with areas from 46 to 62 m²

Units starting from R$80,500



VERTICAL

LAND ACQUISITION

price of land x common areas x construction cost x size of unit%

less

exp

ensi

ve S

quar

e vs

. Ve

rtic

al

15%

10%

5%

0%

-5%

-10%

-15%

-20%

2 bdm: 48m2

3 bdm: 60m2

3 bdm: 64m2




Products


Final conclusions

LAND BANK – POTENTIAL UNITS

Villa Flora16,036

Residential Squares10,380

Vertical2,144

TOTAL: 28,560 = R$ 2.6 billion

ANNUAL GENERAL SALES VALUE

R$ 1,920 toR$ 2,160

Economy Segment

2008

R$ 450

R$ 1,600 toR$ 1,800

2007

R$ 288

2009

R$ 720

2010

R$ 1,080

2011

R$ 1,350

Amounts in million

LAUNCHES PER YEAR

Units

2008

5,000

2007

3,000

2009

8,000

2010

12,000

2011

15,000




Products


Final conclusions

presentation of rossi´s action plan towards the low income segment

Investor Relations