Public-held Corporation with Authorized Capital CNPJ/MF No 02.950.811/0001-89 Praia de Botafogo, 501, 2 nd floor, part Zip Code 22250-040, Pão de Açúcar Tower. Rio de Janeiro – RJ
Company’s Identification PDG Realty S.A. Empreendimentos e Participações, enrolled in the Federal Taxpayers Registry under the No 02.950.811/0001-89 and with its articles of incorporation filed in the Commercial Registry of the States of São Paulo and Rio de Janeiro.
Headquarters Praia de Botafogo, 501, block 1, room 201, part, Pão de Açúcar Tower, Centro Empresarial Mourisco, at the Capital of the State of Rio de Janeiro.
Investor Relations Office Located in our office in the City of Rio de Janeiro, State of Rio de Janeiro, at Praia de Botafogo, 501, Pão de Açúcar Tower, cj. 203. Mr. Michel Wurman is responsible for this office and may be contacted through the phone number (+55 21) 3504-3802, fax (+55 21) 3504-3849 and e-mail [email protected].
Company’s Independent Auditors Ernst & Young Auditores Independentes S.S.
Shareholders Services Our shareholders services is performed by our agent Itaú Corretora de Valores Mobiliários S.A., located at Avenida Engenheiro Armando de Arruda Pereira, 707, 7 th floor, orange side, in the city of São Paulo, State of São Paulo, telephone (+55 11) 5029-7780 and fax (+55 21) 3274-3543.
Newspapers in which the Company Diário Oficial of the Company’s headquarters and Valor discloses information Econômico newspaper.
Site www.pdgrealty.com.br. The information contained in the website is not part of this Reference Form, neither is incorporated to it.
Reference Form’s last Update January 17, 2011.
BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
CONSIDERATIONS ABOUT THIS FORM
This “ Formulário de Referência” (“Form ” or “Reference Form ”) is based on the Brazilian Securities and Exchange Commission (“CVM ”) Rule No. 480 dated as of December 7, 2009 (“ICVM480 ”).
The date of the last update of this Form does not necessarily mean that this document had all its information updated at such date, but that some or all of the information contained herein was updated pursuant to Article 24 Paragraphs 1, 2 e 3 of ICVM480.
This Form cannot be characterized as a securities public offer document, nor does it constitute an offer of sale or a request for offer of purchase of securities sales in Brazil or any other jurisdiction.
This is a free translation of the Form filed with CVM and shall not be used, in any matter or grainds, as the basis for any investment decision, contract or commitment whatsoever. The Portuguese and official version of the Form can be found at www.cvm.gov.br and www.pdgrealty.com.br/ri.
1. IDENTIFICATION OF THE INDIVIDUALS RESPONSIBLE FOR THE FORM’S CONTENT 1.1. Statement of the CEO and the Investor Relations Officer José Antonio T. Grabowsky (CEO of the Company) and Michel Wurman (Financing Vice-President and Investor Relations Officer) declare that: (i) they reviewed this Form; (ii) all information contained here meets the requirements contained in the ICVM480, in special articles 14 to 19; and (iii) the information contained here is true, accurate and complete description of the economic-financial situation of the Company and of the risks inherent to its activities and its issued securities.
2 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
2. AUDITORS
2.1. Independent Auditors
Fiscal Year ended on 12.31.2009 Fiscal Year ended on 12.31.2008 Fiscal Year ended on 12.31.2007 Corporate name
Terco Grant Thornton Auditores Terco Grant Thornton Auditores Ernst & Young Auditores Independentes S.S. Independentes S.S. Independentes S.S.
Name, CPF and contact information (telephone and e -mail) of person in charge Name: Eduardo José Ramon Leverone Name: Eduardo José Ramon Leverone Name: Mauro Moreira CPF: 833.302.597-87 CPF: 833.302.597-87 CPF: 510.931.467-53 Tel.:(+55 21) 2222-3100 Tel.:(+55 21) 2222-3100 Tel.: (+55 21) 2109-1400 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]
Service contracting date 02.13.2008 02.13.2008 04.20.2007
Description of contracted services Individual and consolidated ITR revision Individual and consolidated ITR revision Individual and consolidated ITR revision - Annual audit of individual and consolidated - Annual audit of individual and consolidated balance sheet balance sheet
Auditors substitution Not applicable Not applicable Not applicable
Reason for substitution Not applicable Not applicable In order to uniformize the audit for all companies of the group in a single auditor, once Terco Grand Thorthon was already the auditor of the controlled Goldfarb.
Eventual arguments submitted by the auditor against the Company’s reason for its substitution, according to CVM´s specific regulations in this subject Not applicable Not applicable Not applicable
2.2. Inform the total amount of remuneration of the independent auditors in the last fiscal year, specifying the fees relative to audit services and those relative to any other provided services
In the last fiscal year ended on December 31, 2009, the independent auditors received fees that amounted to a total of R$1,196,950.80, referring to the services of Audit of the Controller and Consolidated Financial Statements.
2.3. Other relevant information.
There is no other relevant information in respect to item “2”.
3. SELECTED FINANCIAL INFORMATION
3.1. The information presented by the table below is based on the Company’s financial statements or, when it is obligated to disclose consolidated financial statements, based on the consolidated financial statements of the Company.
Nine months ended on Fiscal Year ended on Fiscal Year ended on Fiscal Year ended on Period 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Equity (in R$ thousands) 5,893,694 2,940,820 1,476,437 1,349,666 Total Assets (in R$ thousands) 14,631,820 6,102,517 3,246,747 2,563,046 Net Revenue (in R$ thousands) 3,450,764 1,983,819 1,231,159 552,018 Gross Income (in R$ 1,065,683 576,026 433,360 196,682 thousands) Net Income (in R$ thousands) 586,699 338,132 182,463 71,157 Amount of shares, ex-treasury 553,121,087 389,877,818 292,006,296 (1) 291,465,070 (1) Equity value per share (in 10.6553 7.5429 5.0562 4.6306 Reais) 3 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Nine months ended on Fiscal Year ended on Fiscal Year ended on Fiscal Year ended on Period 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Net Income per share (in Reais) 1.0607 0.8673 0.6249 0.2441 Other selected information Not applicable Not applicable Not applicable Not applicable (1) Adjusted by the splitting.
3.2. Non accounting measures, conciliation between the disclosed values and the amounts of the audited financial statements and explanation about the reason why the Company understands that such measures are more appropriated for the correct understanding of its financial situation and the result of its operations.
EBITDA
Our EBITDA consists of the income before income tax and social contribution, added to the net financial revenues/expenses, depreciation e amortization. The EBITDA is not considered a measure in accordance with the Brazilian GAAP, nor does it represent the cash flow for the presented periods. It should not be considered as an alternative to net income as an indicator of our operational performance or as an alternative for cash flow as an indicator of liquidity. The EBITDA does not have a standard definition and our definition of EBITDA cannot be compared to the ones used by other companies. We are convinced that the EBITDA is an important index to be used to follow-up Company operational performance once our results are presented free from the impact of financial expenses that are influenced rather by conditions prevailing in the credit market and not by real the estate market conditions and free also from the influence of depreciation and amortization expenses which are essentially accounting expenses.
Ni ne months period ended on Year ended on September 30, December 31,
R$ Thousands 2010 2009 2009 2008 2007 Income before income tax and social contribution 696,734 268,174 371,327 245,061 122,786 (-/+) Financial Revenues / Expenses (28,611) (21,024) (52,841) (12,532) 36,202 (+) Depreciation and amortization 25,315 3,546 4,983 28,198 16,573 EBITDA 693,438 250,696 323,469 260,727 175,561 EBITDA Margin 20.10% 31.80% 18.38% 16.31% 21.20%
ADJUSTED EBITDA
Our Adjusted EBITDA is calculated based on the definition issued by CVM Rule 01/2007, consisting of the sum of income before interest, income tax, depreciation and amortization, added to the following adjustments: non- operational results, interest of non-controlling shareholders and compensation expenses based on stock options. Our Adjusted EBITDA is not considered as a measure of financial performance in accordance with the Brazilian GAAP, nor should it be considered individually or as an alternative to net income, as a measurement of operational performance, or as an alternative to the operating cash flows, or as a liquidity measurement. Other companies may calculate the Adjusted EBITDA based on a different method from the one adopted by us. Considering that the financial results, financial charges on the costs of properties sold, income tax and social contribution, depreciation and amortization expenses, interest of non-controlling shareholders and adjustments to compensation expense based on stock options, the Adjusted EBITDA is an indicator of our general economic performance, which is not affected by variations in interest rates, changes in the tax burden of income tax and social contribution or levels of depreciation and amortization. However Adjusted EBITDA has limitations that avoid its use as a profitability indicator, since adjusted EBITDA does not consider certain costs connected to our business, which could adversely affect our profits, such as our financial results, taxes, depreciation and amortization, capital expenses and other related charges.
Nine months period ended on Year ended on September 30, December 31, R$ Thousands 2010 2009 2009 2008 2007 Income before income tax and social contribution 696,734 268,174 371,327 245,061 122,786 (-/+) Financial Revenues / Expenses (28,611) (21,024) (52,841) (12,532) 36,202 (+) Interest allocated to cost of properties sold 220,430 68,199 113,982 18,867 - 4 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Nine months period ended on Year ended on September 30, December 31, R$ Thousands 2010 2009 2009 2008 2007 (+) Depreciation and Amortization 25,315 3,546 4,938 28,198 16,573 (+) Stock option plan 31,393 8,682 11,577 11,468 - Adjusted EBITDA 945,261 327,577 448,983 291,062 175,561 Adjusted EBITDA margin (1) 27.39% 24.02% 22.63% 23.60% 31.80% (1) Adjusted EBITDA divided by the net operating revenue.
ADJUSTED NET INCOME
Our Adjusted Net Income consists of the net income added to expenses with amortization and expenses relating to our public offerings of shares. The Adjusted Net Income is not a measure in accordance with the Brazilian GAAP, nor does it represent the cash flow for the presented periods. It should not be considered as an alternative to the net income as an indicator of our operational performance or as an alternative for cash flow as an indicator of liquidity. The Adjusted Net Income does not have a standard definition and our definition of Adjusted Net Income cannot be compared to the ones used by other companies. We believe that the is the appropriate measure of our results because it shows the bottom line o four activities without the impact of amortization, which has mainly accounting impact. We believe that the Adjusted Net Income is the appropriate measure for the calculation of our results because it reflects the final result of our activities without causing merely accounting and non-recurring impacts, such as expenses with amortization.
Nine months period ended on Fiscal Year ended on September 30, December 31, R$ Thousands 2010 2009 2009 2008 2007 Net Income 586,699 240,680 338,132 182,463 71,157 (+) Expenses with amortization - - 4.938 28,198 15,442 (+) Expenses with Raisings - - - - 39,027 Adjusted net result 586,699 240,680 343,070 210,661 125,626 Adjusted net margin (1) 17.00% 17.65% 17.29% 17.10% 22.80%
(1) Adjusted Net Income divided by the net operating revenue.
3.3. Subsequent event to the last year and financial statements that changes them substantially
Term sheet with Marriot International
On November 2010, the Company, through its subsidiary Agre Empreendimentos Imobiliários S.A. executed a term sheet with the Marriot International, Inc. for the development of tourists hotel projects.
Under the term sheet, the parties shall develop fifty (50) hotel projects in the national territory, on land already contracted or that will be contracted. The obligations and responsibilities of the parties, construction and administration of projects shall be negotiated individually.
Split of shares
On November 2010, was approved in the General Shareholders Meetinf the split of all Common Shares issued by the PDG Realty in a 2:1 ratio. Thus, each Common Share was split in two (02) Common Shares, with no change in the value of capital stock, which will be divided into 1,106,242,174 common shares (the Depositary Shares continue to represent two (02) Common Shares after the split).
Transfers Of Real Estate Receivables
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On August 27, 2010, the Board of Directors of the Company approved the Third Series of the Third Issuance of Certificates of Real Estate Receivables (CRIs) based on real estate credits resulting from the trade of residential and commercial units, with the following characteristics:
Issuance Date Maturity Date Series Issuance Quantity Face Value Total Issuance Value
10/14/2010 10/03/2018 3rd 3rd 1,350 300 405,000
The CRIs will receive interest equal toone hundred and seven per cent (107%) of the CDI (as definied below) per year, capitalized daily on an exponential and pro-rata cumulative basis, based on a year with 252 days. There shall not be scheduled amortization of the nominal value of the CRI, which shall be entirely paid on the maturity date. Interest will be amortized twice a year as from April 14, 2011 until the CRIs’ maturity date, in October 14, 2018.
The CRIs were registered for placement in the primary and secondary markets: (i) in CETIP 21, managed and operated by CETIP, being the paid in of the CRIs in this case liquidated by CETIP; and (ii) in DDA and BOVESPAFIX (enviroment of trading assets and fixed income), managed and operated by BM&FBovespa, in wich case processed by the BM&FBovespa the financial liquidation of the Issue and the trading and custody of the CRIs. The registry of the Issue was granted by CVM on October 11, 2010 under No. CVM/SRE/CRI/2010-042.
IPO TGLT
On November 4, 2010, was perfomed the initial public offer (“IPO ”) of TGLT in the Stock Exchange of Buenos Aires, including the issuance of Global Depositary Receipts traded in the United States of America, each one representing five (05) shares.
With issuance of new shares, TGLT shall receive the equivalent in Argentine pesos of US$55 million, sufficient resources for TGLT to implement its current business plan.
Before the IPO, the Company increased its participation to 41.54% with the transfer of participation in projects that it develops together with the TGLT. After the IPO, the Company now owns 27.18% of the capital stock of TGLT.
3.4. Description of the income distribution policy of the results of the last 3 fiscal years
Fiscal Year ended on Fiscal Year ended on Fiscal Year ended on Period 12.31.2009 12.31.2008 12.31.2007 Rules on The retention of income was The retention of income was The retention of income was retention of considered by the AGM of the considered by the AGM of the considered by the AGM of the profits Company, which decided to retain Company, which decided to retain Company, which decided to retain 75% of adjusted net income of that 75% of adjusted net income of that 75% of adjusted net income of that year, as recommended by year, as recommended by year, as recommended by a management. management. management. Arrangements According to the bylaws of the According to the bylaws of the According to the bylaws of the for distribution Company, 25% of adjusted net income Company were allotted 25% of Company were allotted 25% of of dividends for the year were distributed as adjusted net income for the year as adjusted net income for the year as dividends. dividends. dividends. Frequency of Dividends are distributed according to Dividends are distributed according to Dividends are distributed according to distributions a resolution of the Company's AGM, a resolution of the Company's AGM, a resolution of the Company's AGM, usually held in April each year. usually held in April each year. usually held in April each year. Restrictions on Debentures of the 1st and 3rd issuance Debentures of the 1st and 3rd predict Debentures of the 1st and 3rd predict distributions of predict restriction issued by the restriction issued by the Company to restriction issued by the Company to dividends Company to pay dividends in excess pay dividends in excess of the pay dividends in excess of the of the minimum of 25% until they are minimum of 25% until they are paid minimum of 25% until they are paid paid off. off. off.
3.5. Summary of the dividends distribution and retained profits
Nine-month Fiscal Year Fiscal Year Fiscal Year period ended on ended on ended on ended on Period 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Adjusted net income regarding dividends (R$ Not applicable 338,132 182,463 71,157 Thousands) Distributed dividends Not applicable 80,306 29,527 16,900 6 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Nine-month Fiscal Year Fiscal Year Fiscal Year period ended on ended on ended on ended on Period 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Ratio Dividend / Adjusted Net Income Not applicable 23.7% 16.2% 23.7% Distributed dividend per share class and species Not applicable 0,21 / Common 0,20 / Common 0,11 / Common Share Share Share Dividend payment date Not applicable 6/30/2010 29/6/2009 7/5/2008 Return on Equity Not applicable 11.5% 12.4% 5.3% Retained net income (R$ Thousands) Not applicable 240,919 130,005 50,699 Date of retention approval Not applicable 4/29/2010 4/302009 4/29/2008
3.6. Declared dividends on account of retained incomes or reserves over the last three fiscal years
Nine months ended Fiscal Year ended on Fiscal Year ended on Fiscal Year ended on on 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Period Retained Income (R$ thousands) Not applicable Not applicable Not applicable Not applicable Constituted Reserves – Legal Not applicable Not applicable Not applicable Not applicable Reserve
3.7. Company’s Indebtness level
Nine-month Fiscal Year Fiscal Year Fiscal Year period ended on ended on ended on ended on Period 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Amount of debt of any nature (R$ Thousands) 8,644,463 3,141,519 1,601,680 1,158,718 Indebtness (current liabilities plus the non current liabilities, divided by the net equity) 146.7% 106.8% 108.5% 85.9% Other Indebtness index Not applicable Not applicable Not applicable Not applicable
3.8. Collateralized debt, debt with floating and unsecured debt, indicate the amount of the Company's obligations according to the maturity
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
PDG Realty S.A. Empreendimentos
Participações
Dinamarca Empreendimentos 579 768 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Dinamarca Empreendimentos 1,303 - - - apr/13 CEF Imobiliários SPE Ltda.
Gold Amapá Empreendimentos 7,981 3,441 - - apr/14 Bradesco Imobiliários SPE ltda
Gold Aruba Empreendimentos - 768 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Beige Empreendimentos 7,067 - - - jun/12 Itaú Imobiliários SPE Ltda.
Gold Cuiabá Empreendimentos 4,145 - - - oct/11 Santander Imobiliários SPE Ltda.
Gold Groelândia Empreendimentos - 1,024 - - jan/11 Votorantim Imobiliários SPE Ltda.
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MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Gold Ilhéus Empreendimentos 193 255 259 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Lituania Empreendimentos 297 - - - sep/12 CEF Imobiliários SPE Ltda.
Gold Orange Empreendimentos 579 768 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Polônia Empreendimentos 386 512 518 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Porto Velho Empreendimentos 772 1,024 1,035 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Portugal Empreendimentos 386 2,257 518 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Portugal Empreendimentos Banco do 3,307 - - - aug/12 Imobiliários SPE Ltda. Brasil
Gold Red Empreendimentos 1,350 - - - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Sudão Empreendimentos 579 775 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Tunísia Empreendimentos 463 614 - - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Turquia Empreendimentos 1,158 1,535 1,553 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Turquia Empreendimentos 188 - - - oct/12 Caixa Imobiliários SPE Ltda.
Gold Turquia Empreendimentos 990 - - - jun/13 CEF Imobiliários SPE Ltda.
Gold Withe Empreendimentos 579 767 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Banco do 7,178 - - - aug/12 Goldfarb PDG 2 Incorporações Ltda. Brasil
PDG Realty S.A. Empreendimentos e Itaú- 306,800 - - - dec/10 Participações Unibanco
PDG Realty S.A. Empreendimentos e 23,195 - - - feb/18 FINEP Participações
PDG Realty S.A. Empreendimentos e 23,055 - - - feb/18 FINEP Participações
PDG Realty S.A. Empreendimentos e 3,806 7,201 500 - feb/11 IBM Participações
Total PDG Realty 396,336 21,709 8,263 -
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MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Goldfarb e PDG Co
Alencar Araripe Empreendimentos Rio Bravo / - - 5,068 - oct/11 Imobiliários Ltda. GMAC
Alencar Araripe Empreendimentos - - 5,981 - aug/09 ABN Amro Imobiliários Ltda.
Alves Pedroso Empreendimento 460 834 500 - sep/10 Caixa Imobiliário Ltda.
Amsterdam Empreendimentos 39,622 27,906 6,800 - feb/11 ABN Amro Imobiliários SPE Ltda.
Áustria Empreendimentos Imobiliários 6,661 18,796 11,043 - jun/11 ABN Amro SPE Ltda.
Bandeirantes Empreendimentos 3,652 - - - apr/13 CEF Imobiliários S.A.
Big Field S.A Incorporações 25,761 11,827 - - nov/11 Itaú
Bruxelas Empreendimentos Imobiliários 11,466 - - - sep/12 CEF SPE Ltda.
Dinamarca Empreendimentos 573 768 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Dinamarca Empreendimentos 1,302 - - - apr/13 CEF Imobiliários SPE Ltda.
Estela Borges Empreendimentos 5,719 7,119 667 - mar/12 Itaú Imobiliários Ltda.
EP770 Empreiteira Ltda 2,552 - - - jan/12 Bradesco
Estela Borges Empreendimentos - - 1,134 - sep/11 Cyrela Imobiliários Ltda.
Finlândia Empreendimentos - - 6,614 - nov/09 Unibanco Imobiliários SPE Ltda.
Gold Acapulco Empreendimentos - 4,316 - - mar/12 Caixa Imobiliários SPE Ltda.
Gold Acre Empreendimentos - - 16,447 - jul/11 Itaú Imobiliários SPE Ltda.
Gold Alaska Empreendimentos 772 1,024 1,035 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Amapá Empreendimentos 7,980 3,441 - - apr/14 Bradesco Imobiliários SPE Ltda.
Gold Argentina Empreendimentos 1,157 1,536 1,553 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Aruba Empreendimentos - 768 776 - jan/11 Votorantim Imobiliários SPE Ltda.
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MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Gold Beige Empreendimentos 7,066 - - - jun/12 Itaú Imobiliários SPE Ltda.
Gold Black Empreendimentos 7,792 - - - oct/11 Caixa Imobiliários SPE Ltda.
Gold Canadá Empreendimentos 772 1,024 1,035 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Canadá Empreendimentos 4,965 - - - aug/11 Santander Imobiliários SPE Ltda.
Gold Cancun Empreendimentos 3,472 4,606 4,658 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Celestino Bourroul Empreend. - 11,078 2,703 - apr/10 Itaú Imobiliários SPE Ltda.
Gold Cuiabá Empreendimentos 4,145 - - - oct/11 Santander Imobiliários SPE Ltda.
Gold Egito Empeendimentos 7,176 - - - dec/11 Santander Imobiliários SPE Ltda.
Gold Escócia Empreendimentos 3,086 6,259 4,140 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Escócia Empreendimentos 11,245 2,165 - - jul/09 Santander Imobiliários SPE Ltda.
Gold França Empreendimentos 34,429 17,538 - - sep/11 Itaú Imobiliários SPE Ltda.
Gold Geneva Empreendimentos 4,921 - - - sep/11 HSBC Imobiliários SPE Ltda.
Gold Groelândia Empreendimentos 38 1,024 2,070 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Haiti Empreendimentos - 113 5,234 - feb/10 ABN Amro Imobiliários SPE Ltda.
Gold Ilhéus Empreendimentos 191 256 259 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Lituania Empreendimentos 297 - - - sep/12 CEF Imobiliários SPE Ltda.
Gold Índia Empreendimentos 1,929 2,559 2,588 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Irlanda Empreendimentos 1,389 1,842 1,863 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Irlanda Empreendimentos 3,955 - - - feb/13 Caixa Imobiliários SPE Ltda.
Gold Jamaica Empreendimentos - - 6,130 - jul/09 Safra Imobiliários SPE Ltda.
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MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Gold Lisboa Empreendimentos 3,261 12,998 - - jul/11 HSBC Imobiliários SPE Ltda.
Gold Madri Empreendimentos - - 3,051 - jan/10 ABN Amro Imobiliários SPE Ltda.
Gold Marília Empreendimentos 45,149 39,848 25,055 - oct/10 Votorantim Imobiliários SPE Ltda.
Gold Marrocos Empreendimentos 9,187 4,544 - - oct/11 ABN Amro Imobiliários SPE Ltda
Gold Milano Empreendimentos 4,252 - - - jun/12 Itaú Imobiliários SPE Ltda.
Gold Minas Gerais Empreendimentos 2,700 19,901 1,812 - jun/11 HSBC Imobiliários SPE Ltda.
Gold Minas Gerais Empreendimentos 3,970 1,791 1,811 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Mônaco Empreendimentos 9,019 3,772 - - sep/11 Santander Imobiliários SPE Ltda.
Gold New York Empreendimentos 71 277 - - feb/13 Caixa Imobiliários Ltda.
Gold Noruega Empreendimentos 72,127 32,110 21,808 - mar/11 Votorantim Imobiliários SPE Ltda,
Gold Noruega Empreendimentos 27,327 - - - mar/13 CEF Imobiliários SPE Ltda.
Gold Noruega Empreendimentos 3,732 - - - feb/14 CEF Imobiliários SPE Ltda.
Gold Oceania Empreendimentos 772 1,024 1,035 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Oregon Empreendimentos 704 - - - aug/13 CEF Imobiliários SPE S.A.
Gold Orange Empreendimentos 573 768 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Panamá Empreendimentos 21,805 14,632 3,370 - nov/10 Bradesco Imobiliários SPE Ltda.
Gold Paraíba Empreendimentos 1,760 1,836 - - dec/17 Caixa Imobiliários SPE ltda
Gold Polônia Empreendimentos 377 512 518 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Porto Velho Empreendimentos 764 1,024 1,035 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Portugal Empreendimentos 386 512 518 - jan/11 Votorantim Imobiliários SPE Ltda.
11 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Gold Portugal Empreendimentos Banco do 3,307 1,745 - - aug/12 Imobiliários SPE Ltda. Brasil
Gold Properties Vila Guilherme S.A. - - 9,202 - jul/09 Itaú
Gold Purple Empreendimentos - 1,541 1,553 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Purple Empreendimentos 11,438 - - - may/12 Bradesco Imobiliários SPE Ltda.
Gold Recife Empreendimentos 9,904 9,330 - - aug/10 Bradesco Imobiliários SPE ltda
Gold Red Empreendimentos 1,337 1,791 1,811 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Roraima Empreendimentos 1,157 1,535 1,553 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Roraima Empreendimentos 15,023 - - - jan/12 Itaú Imobiliários SPE Ltda.
Gold Santiago Empreendimentos 2,284 3,642 - - jul/12 Caixa Imobiliários SPE ltda
Gold Santiago Empreendimentos 1 429 - - apr/12 Caixa Imobiliários SPE ltda
Gold São Paulo Empreendimentos - 7,824 9,473 - jun/10 ABN Amro Imobiliários SPE Ltda.
Gold Sidney Empreendimentos - - 8,202 - feb/10 Matone Imobiliários SPE Ltda.
Gold Sidney Empreendimentos - 3,220 - - aug/12 Caixa Imobiliários SPE Ltda.
Gold Singapura Empreendimentos 2,277 688 - - nov/12 Caixa Imobiliários SPE Ltda.
Gold Sudão Empreendimentos 579 775 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Sudão Empreendimentos - 61 - - sep/12 Caixa Imobiliários SPE Ltda.
Gold Suíça Empreendimentos 8,402 7,694 - - aug/10 Bradesco Imobiliários SPE ltda
Gold Texas Empreendimentos 18,194 6,882 - - jul/11 Santander Imobiliários SPE ltda
Gold Tunísia Empreendimentos 448 614 1,242 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Turquia Empreendimentos 1,157 1,535 1,553 - jan/11 Votorantim Imobiliários SPE Ltda.
12 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Gold Turquia Empreendimentos 1,178 - - - jun/12 BTG Pactual Imobiliários SPE Ltda.
Gold Uberaba Empreendimentos 25,494 20,379 - - may/11 ABN Amro Imobiliários SPE Ltda.
Gold Uberaba Empreendimentos 3,472 2,303 4,658 - jan/11 Votorantim Imobiliários SPE Ltda.
Gold Venice Empreendimentos 15,984 - - - sep/11 Itaú Imobiliários SPE Ltda.
Gold Viena Empreendimentos 1,783 1,870 - - may/12 Caixa Imobiliários SPE ltda
Gold Viena Empreendimentos - 2,357 - - feb/12 Caixa Imobiliários SPE ltda
Gold Withe Empreendimentos 565 768 776 - jan/11 Votorantim Imobiliários SPE Ltda.
Goldfarb Incorporações e Construções - 814 12,483 20,441 jan/10 ABC Brasil S.A.
Goldfarb Incorporações e Construções Banco do - - 13,361 7,104 aug/09 S.A. Brasil
Goldfarb Incorporações e Construções - 4,562 5,345 - apr/12 Bradesco S.A.
Goldfarb Incorporações e Construções 12,220 12,566 12,823 - jan/14 Brascan S.A.
Goldfarb Incorporações e Construções 98 1,924 5,289 - feb/11 Caixa S.A.
Goldfarb Incorporações e Construções - - 30,789 1,985 aug/10 Caixa S.A.
Goldfarb Incorporações e Construções 976 1,424 1,872 - jan/12 CIT Brasil S.A.
Goldfarb Incorporações e Construções 13,410 28,392 30,368 - may/11 Safra S.A.
Goldfarb Incorporações e Construções - 17,568 - - jun/10 BTG Pactual S.A.
Goldfarb Incorporações e Construções 896 - - - mar/12 Caixa S.A.
Goldfarb Incorporações e Construções 6,778 - - - jan/14 Safra S.A.
Goldfarb Incorporações e Construções - - - 5,673 oct/11 Cyrela S.A.
Goldfarb Incorporações e Construções - - - 3,942 nov/09 ABN Amro S.A.
13 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Goldfarb Incorporações e Construções - - - 1,676 sep/10 Santander S.A.
Goldfarb Incorporações e Construções - - - 5,077 apr/10 Itaú S.A.
Goldfarb Incorporações e Construções - - - 16,539 oct/09 Bradesco S.A.
Goldfarb Incorporações e Construções - - - 1,916 jul/08 BIC S.A.
Goldfarb Incorporações e Construções Rio Bravo / - - - 8,911 nov/08 S.A. GMAC
Goldfarb Incorporações e Construções Banco do 787 - - - jun/15 S.A. Brasil
Goldfarb Incorporações e Construções 379 - - - mar/14 CEF S.A.
Goldfarb PDG 2 Incorporações Ltda. 7,177 - - - jul/11 HSBC
Holanda Empreendimentos Imobiliários - 5,044 7,551 - mar/10 Matone SPE Ltda.
Kirmayr Negócios Imobiliários SPE 10,551 7,922 1,710 - nov/10 Bradesco Ltda.
Luxemburgo Empreendimentos 9,261 18,156 8,708 - aug/10 ABN Amro Imobiliários SPE Ltda.
Nova Água Rasa Empreendimentos 1,146 8,510 11,196 - feb/11 HSBC Imobiliários SPE S.A.
Nova Mooca Empreendimentos 7,886 - - - apr/12 Santander Imobiliários Ltda.
Nova Tatuapé Negócios Imobiliários - - 10,817 1,316 dec/10 HSBC SPE Ltda.
Oswaldo Lussac Empreendimentos 1,580 5,307 - - feb/10 Bradesco Imobiliários S.A.
Oswaldo Lussac Empreendimentos 4,337 - - - feb/11 Bradesco Imobiliários S.A.
Padre Adelino Empreendimentos - 9,520 5,894 - jul/10 ABN Amro Imobiliários S.A.
Petrônio Portela Empreendimentos 208 1,001 2,414 - dec/12 ABN Amro Imobiliários Ltda.
Santa Genebra Empreendimentos - - 1,877 - oct/11 Cyrela Imobiliários Ltda.
São João Clímaco Empreendimentos - 698 - - jun/11 Caixa Imobiliários Ltda.
14 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
São João Clímaco Empreendimentos - - 3,658 - dec/10 Caixa Imobiliários Ltda.
Serra Bella Empreendimento 3,515 11,885 4,852 - jun/12 Caixa Imobiliário S.A.
SPE Gama Desenvolvimento Imobiliário 569 11,131 10,306 - jul/09 Bradesco Ltda.
SPE Jaguaré Construções Ltda. - 19,860 11,537 - feb/10 Santander
SPE Reserva do Alto Aricanduva - 107 15,131 - jul/09 Bradesco Construções Ltda.
Vassoural Empreendimentos 20,091 13,816 - - oct/10 Bradesco Imobiliários ltda
Vila Maria Empreendimentos 4,782 3,316 - - mar/12 ABN Amro Imobiliários S.A.
Vila Maria Empreendimentos - - 1,145 - nov/09 Cyrela Imobiliários S.A.
Outros - 277 12 1
Total Goldfarb e PDG Co 643,112 523,131 399,800 74,581
CHL Desenvolvimento Imobiliário S.A.
Araxá Participações e Empreendimentos 13,991 34,669 - - feb/11 Bradesco Imobiliários S.A
Assis Bueno 30 Incorporações Ltda. - 2,100 2,146 - jul/10 Unibanco
Assis Bueno 30 Incorporações Ltda. 5,590 6,311 - - apr/10 Bradesco
Bandeirantes Empreendimentos 2,435 - - - apr/13 CEF Imobiliários S.A.
Bento Lisboa 106-A Empreendimento - - 17,534 - jul/09 Unibanco Imobiliário S.A.
Bento Lisboa 106-B Empreendimento - - 7,400 - oct/10 Bradesco Imobiliário S.A.
CHL Desenvolvimento Imobiliário S.A. - 10,947 10,764 - jun/10 Bradesco
CHL Desenvolvimento Imobiliário S.A. - 3,807 11,307 - jun/10 Safra
CHL Desenvolvimento Imobiliário S.A. - - 2,778 - jun/09 Unibanco
CHL Desenvolvimento Imobiliário S.A. - 21,327 21,655 21,195 aug/10 Unibanco
CHL Desenvolvimento Imobiliário S.A. 20,762 - - - jun/11 Bradesco
CHL Desenvolvimento Imobiliário S.A. 5,104 - - - jul/11 Itaú BBA
CHL Desenvolvimento Imobiliário S.A. 5,606 - - - aug/11 Itaú BBA
15 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
CHL Desenvolvimento Imobiliário S.A. 10,140 - - - aug/11 Itaú BBA
CHL Desenvolvimento Imobiliário S.A. 406 - - - jan/00 Itaú
CHL LI Incorporações Ltda. 4,119 - - - jun/11 Itaú BBA
CHL LIV Incorporações Ltda. 3,604 - - - jun/11 Itaú BBA
CHL LXXII Incorporações Ltda. 4,119 - - - jun/11 Itaú BBA
CHL LXXIII Incorporações Ltda. 4,119 - - - jun/11 Itaú BBA
EP770 Empreiteira Ltda. 2,552 - - - jan/12 Bradesco
Jaime Poggi Incorporações Ltda. 91,908 58,042 - - feb/12 Itaú
Savelli Empreendimentos e 4,936 3,907 1,175 - nov/13 HSBC Participações Ltda.
SPE Aberlardo Bueno 3600 14,468 - - - may/11 Santander Incorporações Ltda.
SPE Almirante Baltazar 131 7,820 13,728 3,565 - oct/12 HSBC Incorporações Ltda.
SPE Almirante Baltazar 131 - 1,470 1,502 - jul/10 Unibanco Incorporações Ltda.
SPE Baronesa de Poconé 222 2,177 3,796 4,326 - sep/11 Bradesco Incorporações Ltda.
SPE BMI 600 Incorporações Ltda. - 6,081 8,036 - dec/10 Unibanco
SPE BMI 600 Incorporações Ltda. - 2,086 2,127 - aug/10 Unibanco
SPE CHL LVII Incorporações Ltda 2,648 - - - nov/11 Bradesco
SPE Dalcidio Jurandir 255 - 13,236 12,681 - feb/10 Bradesco Incorporações Ltda.
SPE Dona Mariana 187 Incorporações 7,329 - - - sep/11 Itaú Ltda.
SPE Estrada do Monteiro 323 58,172 49,183 7,330 - may/10 Unibanco Incorporações Ltda
SPE Estrada do Monteiro 323 - 5,984 6,114 - jul/10 Unibanco Incorporações Ltda.
SPE General Mitre 137 Incorporações 14,595 7,631 - - apr/11 Unibanco LTDA
SPE MOL 38 Incorporações Ltda. 18,921 - - - may/11 Itaú
Miguel de Frias 156 Empreendimentos 4,586 19,249 3,735 - may/11 Itaú Imobiliários S.A.
SPE Parque Anchieta Empreendimentos 7,584 7,032 27 - dec/10 Unibanco Imobiliários S.A
16 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
SPE VPA 144 Incorporações Ltda. 14,681 6,721 11,901 - apr/10 Bradesco
SPE VPA 144 Incorporações Ltda. - 19,332 6,867 - jul/10 Unibanco
SPE Voluntários da Pátria 244 4,453 - - - Incorporações Ltda
Oswaldo Lussac Empreendimentos - 3,538 - - feb/10 Itaú Imobiliários S.A.
Oswaldo Lussac Empreendimentos 1,053 - - - jan/11 Bradesco Imobiliários S.A.
Oswaldo Lussac Empreendimentos 2,891 - - - feb/11 Bradesco Imobiliários S.A.
Total CHL 340,769 300,177 142,970 21,195
Agre Empreendimentos Imobiliários
S.A.
Abyara Planejamento Imobiliário S.A. 1,463 - - - sep/11 BTG Pactual
Abyara Planejamento Imobiliário S.A. 88 - - - mar/11 BTG Pactual
Abyara Planejamento Imobiliário S.A. 24,935 - - - jun/12 BTG Pactual
Abyara Planejamento Imobiliário S.A. 22,076 - - - mar/15 ABC
Abyara Planejamento Imobiliário S.A. 26,807 - - - apr/17 Votorantim
Abyara Planejamento Imobiliário S.A. 6,498 - - - jan/13 Fibra
Abyara Planejamento Imobiliário S.A. 6,118 - - - jan/16 Fibra
Abyara Planejamento Imobiliário S.A. 71,775 - - - jul/17 HSBC
Abyara Planejamento Imobiliário S.A. 2,234 - - - dec/10 HSBC
Agra Empreendimentos Imobliários 1,003 - - - nov/11 Santander S.A.
Banco do 29,967 - - - may/12 Agra Empreendimentos Imobliários S.A. Brasil
Agra Empreendimentos Imobliários S.A. 3,428 - - - mar/14 Safra
Agra Empreendimentos Imobliários S.A. 69,463 - - - jul/12 Safra
Agra Empreendimentos Imobliários S.A. 2,321 - - - jan/16 Safra
Agra Empreendimentos Imobliários S.A. 14,792 - - - mar/11 Safra
Deutsche 33,983 - - - apr/15 Agra Empreendimentos Imobliários S.A. Bank
Agra Empreendimentos Imobliários S.A. 10,803 - - - aug/12 Fibra
Agra Empreendimentos Imobliários S.A. 30,037 - - - mar/12 Fibra
17 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Agra Loteadora S.A. 6,653 - - - may/12 BIC BANCO
Agra Moab Incorporadora Ltda. 6,351 - - - sep/13 CEF
Agre Empreendimentos Imobiliários 80,113 - - - jun/14 HSBC S.A.
Agre Empreendimentos Imobiliários Banco do 250,934 - - - jul/13 S.A. Brasil
Alive Morumbi Empreendimento 813 - - - jun/16 Safra Imobiliário S.A.
API SPE 02 Planej. Desenv. Empreend. Itaú- 12,062 - - - dec/12 Imobiliario Ltda Unibanco
API SPE 02 Planej. Desenv. Empreend. Itaú- 3,477 - - - mar/13 Imobiliario Ltda Unibanco
API SPE 02 Planej. Desenv. Empreend. Itaú- 13,321 - - - may/12 Imobiliario Ltda Unibanco
API SPE 02 Planej. Desenv. Empreend. Itaú- 4,207 - - - jan/13 Imobiliario Ltda Unibanco
API SPE 15 Planej. Desenv. Empreend. 17,310 - - - jun/11 Bradesco Imobiliario Ltda
API SPE08 - Plan. Desenv. de 725 - - - jan/13 CEF Empreendimentos Imob.
Arena Park Empreendimento 45,790 - - - nov/10 Itaú Imobiliário SPE Ltda
ASACORP - Empreendimentos e 383 - - - aug/13 CEF Participações S.A.
Barra Ville Incorporadora Ltda. 1,970 - - - aug/10 Santander
Barra Ville Incorporadora Ltda. 11,819 - - - aug/10 Santander
BNI Artico Desenvolvimento Imobiliário 5,209 - - - dec/12 HSBC Ltda
BNI Báltico Desenvolvimento 7,217 - - - jun/10 Bradesco Imobiliário Ltda.
BNI Báltico Desenvolvimento 3,257 - - - jun/10 Bradesco Imobiliário Ltda.
BNI Báltico Desenvolvimento 7,215 - - - jun/10 Bradesco Imobiliário Ltda.
BNI Báltico Desenvolvimento 3,256 - - - jun/10 Bradesco Imobiliário Ltda.
Itaú- 9,376 - - - may/12 BNI Ìndico Des. Imob. Ltda Unibanco
18 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Brindisi Empreendimentos Imobiliários 746 - - - jun/11 Itaú Ltda.
Brotas Incorporadora Ltda. 8,731 - - - jan/13 Itaú
Brotas Incorporadora Ltda. 882 - - - jul/10 Itaú
Caph Incorporadora Ltda. 8,787 - - - jan/12 Itaú
Ciclame Incorporadora Ltda. 1,819 - - - feb/11 Unibanco
Ciclame Incorporadora Ltda. 12,736 - - - feb/11 Unibanco
Companhia Setin de Empreendimentos e 33,433 - - - dec/12 Santander Participações
Conquista Empreendimento Imobiliário Itaú- 27,718 - - - feb/12 SPE Ltda Unibanco
Contemporanium Empreendimento Itaú- 3,142 - - - dec/13 Imobiliário Unibanco
Coreopisis Empreendimento S.A. 13,387 - - - jun/11 Bradesco
Cyrela Oceania Empreendimentos 1,301 - - - nov/12 HSBC Imobiliários Ltda
Eltanin Incorporadora Ltda. 847 - - - sep/12 Itaú
Eltanin Incorporadora Ltda. 3,386 - - - sep/12 Itaú
Etage Botafogo Empreendimentos 8,115 - - - jul/13 Real Imobiliários SPE Ltda
Exuberance Empreendimento 22,065 - - - may/11 Santander Imobiliário SPE Ltda
Gan Empreendimentos Imobiliários 9,638 - - - oct/11 HSBC Ltda.
Gliese Incorporadora Ltda. 1,718 - - - jan/12 Itaú
Grajaú Empreendimentos Imobiliários 1,081 - - - aug/15 Unibanco Ltda.
Gundel Incorporadora Ltda. 7,271 - - - apr/12 Itaú
Heliconia Incorporadora Ltda. 2,182 - - - jul/10 Santander
Heliconia Incorporadora Ltda. 6,874 - - - jul/10 Santander
Icarai Village Empreendimentos 13,235 - - - aug/12 HSBC Imobiliários Ltda
Inpar Abyara Projeto Residencial 901 - - - feb/12 BICBANCO América SPE LTDA.
Inpar Abyara Projeto Residencial 9,924 - - - jun/12 Santander América SPE LTDA.
19 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Inpar Abyara Projeto Residencial Santo 7,784 - - - oct/11 Real Amaro SPE LTDA.
Kalapalo Empreendimentos Imobiliários 7,497 - - - oct/12 Itaú Ltda.
Kalapalo Empreendimentos Imobiliários 3,508 - - - jan/12 Itaú Ltda.
Kamayura Empreendimentos 2,006 - - - jul/10 Santander Imobiliários Ltda.
Kamayura Empreendimentos 14,042 - - - jul/10 Santander Imobiliários Ltda.
Kamayura Empreendimentos 4,012 - - - jul/10 Santander Imobiliários Ltda.
Kantarure Empreendimentos Itaú- 33,480 - - - aug/12 Imobiliarios Ltda Unibanco
KFA Empreendimentos Imobiliários 4,188 - - - jan/11 Santander Ltda
KFA Empreendimentos Imobiliários 23,728 - - - jan/11 Santander Ltda
KFA Empreendimentos Imobiliários 13,958 - - - jan/11 Santander Ltda
Klabin Segal Invetimentos e 28,665 - - - mar/12 Safra Participações SPE S.A.
Klabin Segall Lider Praça Louveira SPE 11,885 - - - dec/10 Santander Ltda
Klabin Segall S.A. 1,245 - - - dec/11 Safra
Klabin Segall S.A. 35,099 - - - feb/12 Safra
Klabin Segall S.A. 8,149 - - - apr/12 Banco Safra
Klabin Segall Santana 8,666 - - - oct/12 Real Empreendimentos Imobiliários Ltda
Klabin Segall Vergueiro 3,156 - - - aug/12 Real Empreendimento Imobiliário SPE Ltda
Klabin_Tagipuru Empreendimento 6,595 - - - may/11 Itaú Imobiliário SPE S.A.
Klabin_Tagipuru Empreendimento 29,678 - - - may/11 Itaú Imobiliário SPE S.A.
Kochab Incorporadora Ltda. 6,534 - - - jan/12 Itaú
Kochab Incorporadora Ltda. 1,035 - - - sep/12 Itaú
Kochab Incorporadora Ltda. 26,138 - - - jan/12 Itaú
20 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Kochab Incorporadora Ltda. 4,138 - - - sep/12 Itaú
KSC 2 Empreendimento Imobiliário 5,394 - - - jul/13 Real SPE Ltda
Lagoa Alpha Empreendimentos 10,979 - - - aug/11 HSBC Imobiliários Ltda.
Laguna Incorporadora Ltda. 8,085 - - - jun/10 Bradesco
Itaú- 5,551 - - - jun/12 Lordello Emp. Imob. Ltda Unibanco
Itaú- 944 - - - oct/12 Lordello Emp. Imob. Ltda Unibanco
Luau do Recreio Empreendimentos 24,278 - - - aug/13 Real Imobiliários SPE Ltda
Maioruna Empreendimentos 1,237 - - - dec/11 Santander Imobiliários Ltda.
Maioruna Empreendimentos 2,448 - - - dec/11 Santander Imobiliários Ltda.
Maioruna Empreendimentos 2,168 - - - dec/11 Santander Imobiliários Ltda.
Malte Investimentos Imobiliários Ltda 5,038 - - - aug/11 Itaú
Mareas Empreendimento Imobiliário 22,750 - - - nov/13 Brasdesco SPE Ltda
Marubo Empreedimento Imobiliários 13,654 - - - jan/13 Santander Ltda
Itaú- 25,516 - - - sep/12 Matipu Empreedimento Imob. Ltda Unibanco
Moema Empreendimentos Imobiliários 5,594 - - - dec/20 Safra SPE Ltda
More Alphaville Empreendimentos 23,835 - - - jun/10 ABC Brasil Imobiliários Ltda.
Morumbi SPE Ltda. 1,757 - - - jul/19 Real
Mutinga Empreendimentos Imobiliários 12,174 - - - jun/10 Unibanco Ltda.
Parque do Sol Empreendimento Itaú- 54,234 - - - feb/12 Imobiliário SPE Ltda Unibanco
Pereira Barreto Empreendimentos 4,013 - - - may/12 Real Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 3,492 - - - oct/11 Real Imobiliários SPE Ltda.
21 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Pereira Barreto Empreendimentos 6,009 - - - oct/11 Real Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 13,114 - - - mar/12 Santander Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos Itaú- 10,897 - - - dec/12 Imobiliários SPE Ltda. Unibanco
Pereira Barreto Empreendimentos Itaú- 4,779 - - - mar/13 Imobiliários SPE Ltda. Unibanco
Pereira Barreto Empreendimentos 7,817 - - - may/12 Real Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 6,803 - - - oct/11 Brasdesco Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 11,706 - - - oct/11 Real Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 25,547 - - - mar/12 Santander Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 4,222 - - - may/12 Real Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 3,674 - - - oct/11 Brasdesco Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 6,322 - - - oct/11 Real Imobiliários SPE Ltda.
Pereira Barreto Empreendimentos 13,796 - - - mar/12 Santader Imobiliários SPE Ltda.
Poli Investimentos Imobiliários Ltda. 4,729 - - - jul/10 Bradesco
Poli Investimentos Imobiliários Ltda. 23,646 - - - jul/10 Bradesco
Poli Investimentos Imobiliários Ltda. 18,917 - - - jul/10 Brasdesco
Praia Nova Empreendimentos 4,789 - - - jul/10 HSBC Imobiliários Ltda.
Saiph Incorporadora Ltda. 1,545 - - - sep/12 Real
Saiph Incorporadora Ltda. 5,165 - - - sep/11 Real
Saiph Incorporadora Ltda. 2,021 - - - sep/12 Unibanco
Saiph Incorporadora Ltda. 6,756 - - - sep/11 Itaú
Schahin Astúrias Incorporadora Ltda 6,615 - - - oct/11 Bradesco
Spasso Mooca Empreendimento 14,160 - - - mar/11 HSBC Imobiliário SPE Ltda
17,064 - - - apr/11 Santander Springs Empreendimento Imobiliário 22 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
SPE Ltda
Itaú- 3,596 - - - apr/12 Torre de Ferrara Incorp Ltda Unibanco
Torre de Rhodes Incorporadora Ltda. 3,313 - - - nov/12 Itaú
Trinta e Um de Janeiro 5,130 - - - jul/12 Safra Empreendimentos Imobiliários Ltda.
Trinta e Um de Janeiro 237 - - - oct/10 Unibanco Empreendimentos Imobiliários Ltda.
Trinta e Um de Janeiro 1,550 - - - aug/11 ABC Brasil Empreendimentos Imobiliários Ltda.
Trinta e Um de Janeiro 15,001 - - - mar/11 BTG Pactual Empreendimentos Imobiliários Ltda.
Vila Mascote SPE Ltda. 572 - - - aug/14 ABC Brasil
Village Recreio Empreendimentos 20,708 - - - mar/11 Santander Imobiliários S.A.
Vitality Empreendimento Imobiliário 22,827 - - - nov/10 Santander SPE Ltda
Total AGRE 1,860,522 - - -
Fator Sky Empreendimentos 2,267 6,869 2,193 - oct/09 Santander Imobiliários Ltda.
Fator Amazon Empreendimentos 15,054 12,634 1,726 - mar/11 Santander Imobiliários Ltda.
Fator Aquarius Empreendimentos 16,890 12,039 - - sep/10 Unibanco Imobiliários Ltda.
Jaguaré Empreendimentos Imobiliários 3,605 3,590 - - may/10 Bradesco Ltda.
Prunus Empreendimentos S.A. - 6,835 6,288 - may/10 ABN Amro
Cyrela Milão Empreendimentos 3,216 6,572 9,649 7,616 oct/12 ABN Amro Imobiliários S.A.
Ecolife Vila Leopoldina Empreend. - - 6,357 - mar/10 ABN Amro Imobiliários S.A.
Ecolife Independência Empreend. 8,394 8,353 - - apr/11 ABN Amro Imobiliários S.A.
Administradora de Bens Avante S.A. 9,964 8,375 - - feb/11 Itaú
Ecolife Parque Prado Empreendimento 6,399 6,371 2,910 - mar/10 ABN Amro Imobiliário Ltda.
Bento Lisboa Participações S.A. - - 16,622 - jul/09 Unibanco
23 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Bento Lisboa Participações S.A. - - - 37,105 oct/10 Bradesco
Ecolife Santana Empreendimentos e 8,432 7,571 24 - jan/13 Bradesco Participações S.A.
Habiarte Barc PDG Porto Búzios 7,552 4,233 - - jun/11 Bradesco Incorporações S.A.
Club Florença Empreendimentos 6,583 3,953 - - aug/11 Itaú Imobiliários
REP DI Desenvolvimento Imobiliário - 583 441 - mar/10 Diversos S.A.
Vista do Sol Empreendimentos 3,227 2,186 - - sep/11 Itaú Imobiliários
Ecolife Campestre Empreendimentos e 5,279 - - - jul/14 Santander Participações S.A.
PDG LN Inc. e Construções AS 5,902 - - - mar/11 Santander
América Piqueri Incorporadora S.A. - - - 11,659 dec/07 Bradesco
Boa Viagem Empreendimento - - - 1,495 oct/08 HSBC Imobiliário S.A.
Ecolife Butantã Empreendimentos - - - 13,914 may/08 Unibanco Imobiliários S.A.
Lindencorp Desenvolvimento - - - 7,111 apr/09 ABC Brasil Imobiliário S.A.
Lindencorp Desenvolvimento - - - 16,356 aug/12 UBS Pactual Imobiliário S.A.
Lindencorp Desenvolvimento - - - 237 jan/10 Unibanco Imobiliário S.A.
HL Empreendimentos S.A. - - - 2,214 feb/09 Unibanco
PDG Desenvolvimento Imobiliário S.A. - - - 19,842 oct/10 Unibanco
Sardenha Empreendimentos - - - 10,097 feb/08 Unibanco Imobiliários S.A.
Três Rios Empreend. Imob. S.A. 3,010 - - - jul/11 Bradesco
Queiroz Galvão Mac Cyrela Veneza 4,013 - - - jul/11 Santander Emp.Imob. S.A.
Debêntures - 1a Emissão 257,013 261,888 267,680 267,384 jul/14 Bradesco
Debêntures - 3a Emissão 299,211 303,849 - - sep/14 Caixa
Debêntures - 4a Emissão 284,994 - - - aug/16
Debêntures - 5a Emissão 594,631 - - - aug/15
24 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
MATURIT CONSOLIDATED (R$ THOUSANDS) 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Y CREDITOR
Outros 40 3,221 45 72
TOTAL INDEBTNESS 4,786,414 1,504,139 864,968 490,878
Fiscal Year ended on 12/31/2007 Inferior to 1 year Superior to 1 year and Superior to 3 years and Superior 5 years Total (R$ Period (in R$ inferior to 3 years (R$ inferior to (R$ Thousands) Thousands) Thousands) Thousands) 5 years (R$ Thousands) Real 145,710 88,204 131,964 125,000 490,878 Floating Not applicable Not applicable Not applicable Not applicable Not applicable Unsecured Not applicable Not applicable Not applicable Not applicable Not applicable Total 145,710 88,204 131,964 125,000 490,878
Fiscal Year ended on 12/31/2008 Inferior a 1 ano Superior 3 years and Total Superior 1 year and inferior Superior 5 years Period (em R$ inferior (R$ 3 years (R$ Thousands) (R$ Thousands) Thousands) 5 years (R$ Thousands) Thousands) Real 219,364 157,585 427,330 62,500 866,779 Floating Not applicable Not applicable Not applicable Not applicable Not applicable Unsecured Not applicable Not applicable Not applicable Not applicable Not applicable Total 219,364 157,585 427,330 62,500 866,779
Fiscal Year ended on 12/31/2009 Inferior to 1 year Superior to 1 year and Superior to 3 years and Total Superior to 5 years Period (in R$ inferior to 3 years (R$ inferior to (R$ (R$ Thousands) Thousands) Thousands) 5 years (R$ Thousands) Thousands) Real 543,242 546,868 415,821 - 1,505,931 Floating Not applicable Not applicable Not applicable Not applicable Not applicable Unsecured Not applicable Not applicable Not applicable Not applicable Not applicable Total 543,242 546,868 415,820 - 1,505,930
Nine month period ended on 09/30/2010 Superior to 1 year and Superior to 3 years and Total Inferior to 1 year Superior to 5 years Period inferior to 3 years (R$ inferior to (R$ (R$ Thousands) (R$ Thousands) Thousands) 5 years (R$ Thousands) Thousands) Real 1,671,351 390, 367 1,614,990 1,109,706 4,786,414 Floating Not applicable Not applicable Not applicable Not applicable Not applicable Unsecured Not applicable Not applicable Not applicable Not applicable Not applicable Total 1,671,351 390,367 1,614,990 1,109,706 4,786,414
3.9. Other information deemed relevant by the Company
There is no other relevant information concerning this item 3.
25 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
4. RISK FACTORS
4.1. Risk factors that may influence the investment decision, in special, those related to:
a. The Company
We may have difficulties identifying and carry out new transactions for real estate development together with other companies active in the real estate market or new investments for indirect development of real estate (“Joint Ventures ”), what may adversely affect us.
We carry out a portion of our projects as joint ventures with other companies. Our ability to successfully indentify and create new Joint Ventures is essential to our growth. However, we may encounter difficulties in identifying attractive business in the future or we may be unable to make new investments in joint ventures on favorable terms. Furthermore, our strategy of identifying our real estate operations and expanding geographically will depend on our ability to form partnerships with companies operating in several segments of the market and in other regions of Brazil. In addition, unfavorable economic conditions may increase our financing costs and limit our access to the capital market, reducing our ability to enter into new Joint Ventures.
If we are unable to make strategic acquisitions or to form new Joint Ventures, we may not grow as quickly as we expect, and this may adversely affect the Company.
We are a company whose results depend on the results of our subsidiaries, for which we have no assurance will be made available to us.
The Company’s ability to meet its financial obligations and to distribute dividends to its shareholders, including in the form of interest on shareholders’ equity, depends on the distribution of cash flow and income from its Subsidiaries. We have no control of part of our Subsidiaries, therefore the payment of dividends by such Subsidiaries is not mandatory, as such payments are generally determined by the majority of their shareholders. Therefore, there is no assurance that any such funds will be made available to the Company, or that the funds distributed to us will be sufficient to fulfill our financial obligations or to pay dividends to our shareholders.
The loss of members of our management and/or our inability to attract and retain qualified personnel could have an adverse effect on our business, financial condition or results of operations.
Our ability to maintain our competitive position largely depends upon the performance of our management team, mainly because of the business model and investments adopted by the Company. None of our managers is subject to long-term employment agreements or non-competitions agreements. There is no assurance that we will succeed in attracting and retaining qualified management personnel to assist us in our growth. The loss of services of any members of our management or our inability to attract and retain qualified personnel could have an adverse effect on our business, financial condition and operating results of the Company.
Some of our Subsidiaries depend on the credit facilities provided by the Caixa Econômica Federal (“CEF”), and institutional and/or operating changes in this government agency could adversely affect us.
We frequently use credit facilities provided by the CEF to finance the sale of residential units developed for middle and lower-middle income classes, especially those developed by our subsidiaries Goldfarb Incorporações e Construções S.A. (“Goldfarb ”). These credit facilities are essential to leverage our residential unit sales capacity and to enable us to develop new projects because their availability reduces our need to use our own capital to grant loans to our customers. Being CEF a government agency, it is vulnerable to political influence and there may be changes to the current rules and policies for granting credit facilities that would reduce the availability or benefits of their financing. The failure to receive financing or the suspension, interruption or significant change in their financing could adversely affect the estimation of growth of our businesses. Furthermore, the suspension, interruption or slowdown of the CEFs activities in approving our projects, extending financing to our customers, and assessing the development of our construction projects, among other activities, could adversely affect our business, our financial condition, our operational results and/or the market price of our common shares (“Shares ”). Additionally, such factors could, in the future, lead us to seek and use new forms of financing instead of the CEF. However, if such alternative sources of financing are not made available to our customers under similar conditions as those granted by CEF, our results of operations could be adversely affected.
26 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
The market value of the land we hold in stock may decrease, what could adversely affect our operating results.
We maintain some land in stock for part of our future developments and we intend to increase the size of our land bank as well as acquire larger parcels of land in the future. The market value of our land may significantly decrease from the time of acquisition to the time when such parcels are actually developed due to market or economic conditions. A decrease in the market value of our land bank may adversely affect the results of the sales of our developments and consequently our operating results.
We could be unable to sustain or increase our historical growth rate.
We have recently experienced a rapid growth, as well as a geographic expansion of our operations. We intend to continue expanding our business in the markets where we operate, as well as markets in other regions we have not yet explored, so we can take best advantage of opportunities to grow in existing and potential markets. However, we may be incapable of increasing or maintaining similar levels of growth in the future, and our operating results in recent periods may not be indicative of our future performance. If we are unable to grow and maintain a satisfactory composite index of annual growth, our financial results could be adversely affected.
Our internal growth has placed, and we expect it will continue to place substantial adjustments on our business, particularly our administrative, technical, operational and financial resources and internal controls. Additional growth and expansion in our existing markets and in new markets may further strain our resources and will depend substantially on our ability to implement and manage the expansion of these resources. If we are unable to respond rapidly and properly to such expansion, our operating results may be adversely affected.
We may need additional funds in the future and may issue additional securities, which may result in a dilution of investors' interests in our Shares.
We may need to raise additional capital and may opt to obtain such capital through the public or private placement of debt securities, shares or securities convertible into our common shares. In the event that public or private financing is unavailable, or if our shareholders so decide, such additional funds may be obtained through an increase in our capital, which may dilute the percentage of investors’ interest in our common shares.
Holders of our common shares may not receive any dividends or interest on shareholders' equity.
According to the Company’s bylaws (“By Laws ”), we must pay our shareholders at least 25% of our annual adjusted net income as dividends or interest on shareholders' equity, as calculated and adjusted pursuant to the Brazilian Corporate Law. This adjusted net income may be capitalized, used to absorb losses or otherwise retained as allowed under Brazilian Corporate Law, and may not be made available for payment as dividends or interest on shareholders' equity. Additionally, Brazilian Corporate Law allows a publicly traded company like ours to suspend the mandatory distribution of dividends in any particular fiscal year if our Board of Directors informs the Annual General Meeting that such distribution would be inadvisable in view of our financial condition. If these events were to occur, the holders of our common shares may not receive dividends or interest on shareholders' equity.
b. The Controlling shareholder of the Company, directly or indirectly, or control group
The Company has no controlling shareholder.
c. The Company’s Shareholders
The relative volatility and limited liquidity of the Brazilian securities markets may substantially limit the ability of investors to sell our Shares at the desired price and time.
Investment in securities in developing markets such as Brazil frequently involves a greater degree of risk than in other markets. The Brazilian securities market is substantially smaller, less liquid, more concentrated and generally more volatile than the major international securities markets.
For example, the BM&FBOVESPA had a total market capitalization of approximately R$1.3 trillion as of December 31, 2009 and an average daily trading volume of R$5.3 billion at the same date. During the year a total of 81,75 million of businesses were done as of 61.02 million in the year before. These market characteristics may
27 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
substantially limit our shareholders ability to sell our Shares at the price and time you wish and as consequence, could adversely affect the market value of our Shares.
The interests of our officers and employees could become excessively linked to the price of our shares, since they are granted stock options to purchase or subscribe to our common shares
We have a plan that grants options to purchase shares pursuant to Article 168, paragraph three of the Corporations Act. It was approved at the general meeting of shareholders held on January 9, 2007, later changed in the Extraordinary General Meeting that the Company held on December 21, 2007 (“Stock Option Plan ” or “Plan ”), with which we seek to stimulate improvement in our management and retention of our executives to achieve gains by compromising with the results of long term and short-term performance.
The fact that our managers and employees can receive stock options to purchase or subscribe to our common shares at a lower price than the market price of our common shares could lead their interests to become excessively linked to the price of our common shares which could have a negative impact on our business.
d. The subsidiaries and colligated Companies
The risks related to the subsidiaries and colligated Companies are the same related to us.
e. The Suppliers of the Company
The use of outsourced labor force could expose us to labor and social security liabilities.
The company and its subsidiaries have a reduced number of employees. Currently, approximately 80.97% of our direct and indirect labor force was outsourced (approximately 22,000 temporary employees on the date of this Form). The use of an outsourced labor force by our subsidiaries, mainly with respect to the hiring of construction companies, exposes us to labor and social securities liabilities. The assumption of such contingencies is inherent on the hiring of third parties, since it can be attributed to the Subsidiaries, as makers of third party services, the responsibility for the labor and social security debts of employees of service providers companies when they fail to comply with their labor and social security obligations. The Company itself could respond for labor and social security contingencies relating to its Subsidiaries, regardless of the right of the Company and its Subsidiaries to return action against the service providers companies. The occurrence of any contingencies is difficult to predict and quantify, and if they happen, it may adversely affect the financial condition and results of the Company.
Problems with our real estate projects that are beyond our control may damage our image, reputation, or our business, as well as expose us to indemnification payments as a result of civil liabilities.
In the normal course of our business, we acquire materials from third parties, and we outsource a portion of the labor services to develop our real estate projects to contractors. As a result, the timely completion and quality of our developments are subject to certain factors that are beyond our control, including, but not limited to, the quality and availability of construction materials supplied for use in our projects and the technical skills of the construction companies and contractors that we hire. Our image and reputation, as well as the technical quality of our real estate projects, are determining factors for the success of our sales and growth. The occurrence of one or more problems in our real estate projects may adversely affect our image, reputation, future sales and relationship with our customers, which in turn could adversely affect our business and results.
Additionally, pursuant to article 618 of the Brazilian Civil Code, we are required to provide our customers with a five-year warranty against significant structural problems in our developments, and we may be called upon to uphold these warranties. In this event, we may incur unanticipated costs and therefore be adversely affected.
f. The Company’s Clients
There is no risk related to the Company’s clients, considering that there is a wide dispersion of our clients.
28 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
g. Sectors of the economy in which the Company operates
The Brazilian real estate market is highly competitive, which could present a threat to our market position in Brazil and our expansion strategy.
The increasing competition in the Brazilian real estate market by our current and future competitors, including foreign competitors, could increase our land acquisition costs, hampering the expansion of our land bank or even making it impracticable to maintain its current size. Competition may also impact the profitability of our operations, including by reducing the prices and by increasing our marketing costs. As a consequence, our operations and profits may decrease, adversely affecting our financial condition.
In addition, the Brazilian real estate market is highly competitive and fragmented, and lacks high-entry barriers that would restrict new competitors from entering the market. The main competitive factors in the real estate development business include availability and location of land parcels, terms and availability of financing, characteristics of the projects, quality of the developed residential units, reputation and ability to enter into joint ventures with other developers. We compete with a number of residential and commercial developers and real estate companies in seeking: (i) land for acquisition; (ii) obtaining financial resources for development; and (iii) identifying prospective clients. New companies, including foreign companies working in joint ventures with local companies, may become active in the real estate development business in Brazil in the near future, further increasing competition in this industry.
To the extent that one or more of our competitors initiates a very successful sales or marketing campaign and, as a result, their sales increase significantly, our business, financial condition and operating results could be materially and adversely affected if we are not able to respond to such pressures as promptly and effectively as our competitors.
Furthermore, some of our competitors might obtain access to financial resources under better conditions than ours and, consequently, establish a capital structure that is better able to adapt to market pressures, principally in periods of instability in the real estate market.
The scarcity of available financing and/or increased interest rates may reduce demand for residential or commercial real estate units (“Units ”), which could negatively affect the real estate market and adversely affect us.
Purchasers of our Units generally rely on loans to finance their acquisitions. The scarcity of financing resources available in the market, changes in current policies for the concession of financing and/or an increase in interest rates may adversely affect the ability or willingness of prospective buyers to purchase our Units. Most of the bank financing obtained by consumers for the purchase of real estate comes from the Sistema Financeiro de Habitação - SFH (the national housing system), which in turn is financed with funds raised from savings account deposits. Furthermore, the Conselho Monetário Nacional - CMN (the national monetary council) may reduce the amount of funds that banks are required to make available for real estate financing. If the CMN restricts the amount of funds available to finance the purchase of real estate, or if there is an increase in prevailing interest rates, demand for construction of new properties could decrease, which may have a material adverse effect on our business, financial condition and operating results.
Additionally, if the Brazilian economy experiences a recession, our sales may slow down and customers could default, which could also have an adverse effect on the Company .
Our business is subject to extensive regulation, which may increase our costs and limit our strategy of expansion.
The Brazilian real estate industry is subject to extensive building and zoning regulations imposed by various federal, state and municipal authorities that govern land acquisition and development and construction activities, primarily through zoning restrictions, license requirements and consumer protection laws. We are required to obtain the approval of various governmental authorities for our development projects. New laws or regulations could be adopted, enforced or interpreted in a manner that could adversely affect our business.
Our operations are also subject to Brazilian federal, state and municipal environmental laws and regulations. These environmental laws may result in delays, may cause us to incur substantial costs and may prohibit or severely restrict 29 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
commercial and residential projects activities in environmentally sensitive regions. Regulations governing the Brazilian real estate industry as well as the environment have tended to become more restrictive over the years, and this increased regulation could adversely affect the Company.
In addition, zoning and environmental laws may change after the acquisition of a parcel of land and before its development, causing delays and modifications to the originally proposed project, which may have an adverse effect on our business and expected results.
The real estate industry is subject to risks generally associated to development and construction activities.
The risks associated with the development and construction activities of real estate companies like ours include, without limitation, the following: (i) due to the significant time lag between the commencement and completion of a project (18-36 months), possible changes in the macroeconomic scenario during such period, such as slowing economy, increased interest rates, currency fluctuations and political instability the devaluation of land stock, demographic changes, could occur and make our projects less attractive to our customers; (ii) construction costs may exceed initial estimates; (iii) the developer or the construction company may not be allowed to index their costs to certain industry inflation rates or to index their receivables, as currently permitted, which could potentially make the real estate project economically unattractive; (iv) the level of customer interest in a project, or the residential unit sales price necessary to sell all of the residential units, may not be sufficient to make the project profitable or the lack of customer interest or the difficulty in obtaining customer financing may reduce the pace of sales, generating additional selling and marketing costs; (v) possible interruptions in supply or shortage of construction materials and equipment may delay the conclusion of the project; (vi) construction and sales may not be concluded on time, resulting in higher costs; (vii) we may face difficulties in acquiring land, such as environmental and land-related negotiations; (viii) land that we acquire may be expropriated by the Brazilian government, or the beginning of public works may impair its use or access; and (ix) project costs may be increased as a consequence of delays during development and increases in the construction costs, since, except for Goldfarb and CHL, none of our Subsidiaries performs its own construction activities. The occurrence of one or more of these factors may have an adverse effect the Company.
Real estate projects entail risks usually associated with the granting of consumer financing.
As is common in our industry, we grant loans to some of our customers. As a result, we are subject to the risks associated with the granting of financing, including the risk of inflation, default in the payment of principal or interest of our loans and the risk of increased costs for the funds we raised. In addition to the interest rate of 12% per year, our sales agreements provide for monetary adjustment based on the National Index of the Construction Cost (Índice Nacional de Custo da Construção), or INCC, applicable during construction of the Units, and on the General Market Price Index (Índice Geral de Preços ao Mercado), or IGP-M, applicable after the completion of the work. Both these indexes vary according to the inflation rate. If there is an increase in the inflation rate, our customers' indebtedness may increase as a result of the sales agreements, causing higher customer default. This could have an adverse effect on our cash generation and therefore our operating results.
In the event of default of a customer after the delivery of the Units, Brazilian law provides for the filing of a judicial collection claim to recover the amount owed or to repossess the Unit. The collection of overdue amounts or the repossession of property usually takes two years. Thus, if a customer is in default, we cannot guarantee that we will recover the full amount of the unpaid principal, which could adversely affect our results.
Along with other real estate companies, we raise funds at different rates, and we may be unable to match our payment conditions with the terms of the loans we grant to our customers. This possible mismatch of rates and terms between the funds we raise and the loans we grant could adversely affect us.
The real estate market may be subject to a liquidity crisis.
Like other companies in the real estate industry, we depend on a variety of factors outside our control in order to build and develop real estate projects, including (i) the availability of market resources for the granting of financing to our customers for the acquisition of our Units and to us for the development of new real estate projects and (ii) relying on our customers to make timely payments related to the acquisition of our Units.
Any scarcity of market resources may decrease our sales capacity due to difficulties in obtaining credit for construction or land acquisition, or due to fewer launchings of new projects. 30 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
The combination of these risks could reduce our earnings, cash generation and results.
In addition, a possible change, allowing the employees to use the Severance Payment Fund (Fundo de Garantia por Tempo de Servico), or FGTS, for purposes other than the ones currently permitted, may reduce the overall funds available by financial institutions for purchase of real estate properties, especially the CEF.
We are exposed to numerous risks associated with the incorporation, construction, lease and sale of real estate properties.
We are dedicated to incorporation, construction, lease and sale of real estate properties and we intend to keep developing these activities. Besides all the risks that generally affect the Brazilian real estate market, such as changes in supply and volatility of materials and construction equipments, scarcity of qualified labor to provide services, changes in supply and demand for real estate projects in the regions in which we operate , strikes and environmental and zoning regulations, our activities are specifically affected by the following specific risks:
• economic conditions in Brazil may adversely affect the growth of the real estate business as a whole, by means of an economic slowdown, an increase in interest rates, exchange rate fluctuations and political instability, among other factors;
• new regulations or market conditions may prevent us from obtaining our receivables, in accordance with certain rates of inflation, as currently permitted, which could make a project economically or financially infeasible;
• customer demand for new projects may wane or the unit sale price necessary to sell all of our units may be significantly lower than expected, which could make projects less profitable and/or the total value of units different than expected;
• bankruptcy or significant financial difficulties of a major real estate company may adversely affect the real estate market as a whole, particularly if customers lose confidence in the real estate companies, including the Company;
• we are affected by local or regional real estate market conditions such as the oversupply of lower-income residential projects, with sales price between R$60,000.00 and R$130,000.00;
• potential buyers may have a negative perception of the security, convenience and attractiveness of our real estate properties and the areas in which they are located;
• increases in operating costs, including insurance premiums, real estate taxes and utilities, may affect our profit margins;
• we may be affected by the scarcity of well-located land for the development of our projects in areas where we operate, currently or in the future;
• we may be affected by the interruption of the provision of materials and construction equipment;
• real estate development opportunities may slow down or disappear; and
• construction and sale of units may not be completed on schedule, resulting in increased construction costs or early termination of sales contracts.
The occurrence of any of these factors may have an adverse effect on our financial condition and operating results.
Additionally, pursuant to the terms of our standard contracts to sell our units, the purchasers have the right to terminate the contract, without incurring any penalty, and to receive back a significant portion of payments made to us as adjusted for inflation, if the purchased units are no timely delivered within 180 days counted as from the original delivery date. We cannot guarantee that we will not be subject to future construction delays in our projects. In addition, pursuant to article 618 of the Brazilian Civil Code, we must provide a five-year warranty with respect to structural defects that may be exercised during such period of time. The occurrence of any such events may also have an adverse effect on our financial condition.
h. The regulation of industries in which the Company operates 31 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
An increase in existing tax rates or the creation of new taxes while our sales contracts are in force may have an adverse effect on our financial condition and operating results.
The real estate industry is influenced by government policies and an increase in the tax rates applicable to the industry could adversely affect real estate transactions. In the past, the Brazilian government has changed tax rates and created new taxes, as well as modified the system of taxation with some frequency. If the government increases tax rates or creates new taxes on the purchase and sale of real estate while our sales contracts are in force, we may suffer an adverse effect to the extent that we cannot amend these agreements in order to pass such increased costs on to our customers.
In addition, an increase in, or creation of, new taxes on the purchase and sale of real estate that are passed on to our customers may increase the final price to our customers, which could potentially reduce the demand for our properties, causing an adverse effect on our results.
Furthermore, the Brazilian government may terminate the “presumed profit” method used to calculate corporate income taxes used by many of our Subsidiaries, in particular the special purpose vehicles established development of projects or for co-development activities, the tax burden on our special purpose vehicles would increase and our operating results could be adversely affected.
Our activities are subject to extensive environment regulation, which may increase our costs and limit our development, or in some other manner adversely affect our business.
Our operations are subject to federal, state and municipal environmental laws and regulations. We are required to obtain approval from various government authorities to develop our real estate business. New laws or regulations could be approved, implemented or interpreted in a way that could affect our results of operations, particularly if they become more rigid.
These environmental regulations could cause delays and cause us to incur significant compliance and other costs. They could also prohibit or severely restrict our business activities and residential construction in environmentally sensitive areas or regions. The laws that govern the Brazilian real estate sector, as well as environmental laws, tend to become more restrictive over time and any increase in restrictions could adversely and materially affect our operating results.
i. Foreign countries where the Company operates
Developments and perceptions of risk in other countries, especially in emerging market countries and the United States, could have an adverse effect on Brazilian securities market, including the market price of our common shares, and could cause a negative impact on our operating results and financial condition.
The market price of securities issued by Brazilian companies is influenced by economic and market conditions in other countries, particularly other Latin American and emerging market countries, as well as the United States. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, the reaction of investors to events in these other countries may have an adverse effect on the market value of Brazilian securities, including our common shares. Crises in other emerging market countries could diminish investors' interest in securities of Brazilian issuers, including our common shares.
In the past, the development of adverse economic conditions in other emerging market countries resulted in a significant flow of funds out of the country and, consequently, in the reduction of foreign capital invested in Brazil. The financial crisis that began in the United States in the third quarter of 2008 created a global recession. Changes in the prices of common shares of public companies, lack of available credit, reductions in spending, the general slowdown of the global economy, exchange rate instability and inflationary pressure may adversely affect, directly or indirectly, the Brazilian economy and securities market. In addition, financial institutions may be unable to renew, extend, or grant new lines of credit under economically favorable conditions, or may even be unable or unwilling to honor existing obligations. Any of these factors could adversely affect the market price of our common shares, and could also make it more difficult for us to access the capital markets and finance our operations in the future on acceptable terms, or at all.
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4.2. Company’s expectations on the reduction or increase of the exposure to the risks described above.
The Company constantly analyses the risks to which it is exposed and that can adversely affect its business, financial situation and results. This way, we are constantly monitorating changes in the macro-economic scenario that can affect our activities through accompaniment of the main performance indicators. We have a strong control of our suppliers, which avoid any sort of adverse effect on our activities. Nowadays, the Company does not see any increase or reduction of the risks described in section 4.1.
4.3. Judicial, administrative or arbitraries proceedings in which the Company or its subsidiaries are parties, discriminating works, taxes, civils and other: (i) that are not confidential; and (ii) that are relevant for the Company’s and its subsidiaries business.
In the end of last fiscal quarter we and our Subsidiaries were parties in judicial and administrative proceedings, originated from the business natural course, resulting on a total involved value of R$62,0 million. We do not believe that any judicial or administrative proceeding, if judged in an unfavorable way could cause an adverse effect over our activities, financial situation and operational results. There is only one proceeding among all the judicial and administrative proceedings that the Company and its Subsidiaries are parties, we considerate only one, where Goldfarb is a party, which is relevant since it involves share participation on the subsidiary, but this proceeding is under confidentiality.
As mentioned, the criteria used to determine this proceeding a valid one is that a loss on the proceeding could affect our participation in Goldfarb’s. But, we believe that even if this judicial proceeding is judged favorable to the other part, it will not affect us adversely and it will not bring negative consequences to the development of our business .
4.4. Judicial, administrative or arbitraries proceedings in that are not confidential which the Company or its subsidiaries are parties or ex parties and whose other parties are managers or ex managers, controller or ex controller or investor of the Company or its subsidiaries.
Currently there are no judicial, administrative or arbitrary proceedings that are not confidential in which the Company and its subsidiaries are parties and the other party consist on an ex-manager, ex controller, ex investor of the Company or of its subsidiaries.
4.5. Confidential Proceedings that are relevant and that the company or its subsidiaries are parties that have not been described on items 4.3 and 4.4. analyze the impact in case of loss and inform the involved values.
The claim that is mentioned on 4.3 is approximately R$4 million, and the consequence in case we lose will be the loss of the shares issued by our subsidiary Goldfarb arround4% of the totality of its capital stock and the right of the Company request compensation of Goldfarb’s former controlling shareholders.
4.6. Description of the judicial administrative or arbitrary proceedings that are repetitive or connected based on juridical facts and causes that are similar. They are not confidential but reliant in a way that the Company and its subsidiaries are parties, discriminating works, taxes and others.
Currently the Company and its subsidiaries do not have repetitive or connected judicial, administrative and arbitraries proceedings, based on the similar facts and causes that are not confidential and that together are relevant (besides the judicial and administrative proceedings mentioned on this item 4)
4.7. Description of other relevant contingencies not described in the anterior items
Currently the Company and its subsidiaries do not have any relevant contingencies not included in the previous items.
4.8. Rules from the origin country from the foreign issuer and rules from the country in which foreign securities are custoded, if diverse from the origin country
Not applicable to the Company.
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5. MARKET RISKS
5.1. Quantitative and qualitative description of the main market risks to which the Company is exposed, including foreign exchange risks and interest rates.
The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazilian economic and political conditions, could adversely affect our business and the market price of our Shares.
The Brazilian economy has been characterized by frequent, and occasionally drastic, intervention by the Brazilian government, which has often changed monetary, fiscal, credit and tax and other policies to influence Brazil's economy. The Brazilian government's actions to control inflation and affect other policies have often involved wage and price controls, currency devaluations, controls on remittances abroad, fluctuations of the base interest rate, as well as other measures. We have no control over, nor can we foresee, any measures or policies that the Brazilian government may adopt in the future. Our business, financial condition and operating results may be adversely affected by changes in the policies of the Brazilian government, including, without limitation:
• economic and social instability; • inflation; • exchange rate fluctuations; • negative diplomatic developments; • exchange controls and restrictions on remittances abroad; • expansion or contraction of the Brazilian economy, as measured by GDP growth rates; • energy rationing; • fiscal or monetary policy and amendments to the tax legislation; • interest rates; • liquidity of domestic and foreign capital and lending markets; • expropriation of privately-owned land; • environmental and sanitary laws and regulations; • interpretation of labor and social security laws, and • other political, diplomatic, social and economic policies or developments in or affecting Brazil..
Uncertainty over whether the Brazilian government will implement changes in policy or laws affecting these and other factors in the future may contribute to economic uncertainty in Brazil and to heightened volatility of the Brazilian capital markets and securities issued abroad by Brazilian companies. Thus, such uncertainties and other future events in the Brazilian economy may have a material adverse effect on our business and operating results, and the market price of our Shares.
Inflation and government efforts to curb inflation may contribute to economic uncertainty in Brazil, adversely affecting our operations and the market price of our Shares.
In the past, Brazil has experienced extremely high inflation rates. Inflation and certain measures taken by the Brazilian government to combat it, combined with speculation over eventual governmental measures, have had significant negative effects on the Brazilian economy, contributing to the economic uncertainty already existing in Brazil and heightened volatility in the Brazilian securities market. Most recently, the average annual inflation rate measured by the IGP-M, decreased from 20.10% in 1999 to 9.80% on 2008. Inflation rates as measured by the IGP- M were negative 1.72% as of September 30, 2009. In three months ended on March 2009 and 2010, inflation rates were 0.92% and deflation rates were 2.78%, as measured by the IGP-M. The Brazilian government's measures to control inflation have frequently included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and reducing economic growth. Consequently, interest rates have presented significant fluctuation. For example, the official interest rates in Brazil at the end of 2007, 2008 and 2009 were 11.25%, 13.25%, 8.75%, respectively, and 8.75% and 10.75% in the quarter ended on September 30, 2009 and 2010, respectively, as established by Central Bank's Monetary Policy Council (Conselho de Politica Monetária do Banco Central), or COPOM.
Future measures by the Brazilian government including reduction of interest rates, money market intervention, and actions to adjust or fix the value of the Real, may trigger an increase in inflation. If Brazil experiences increased inflation in the future, we may be unable to adjust the prices charged to our clients to compensate for the effect of 34 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
inflation on our cost structures, which may result in an increase in our costs and a reduction in our net operating margin.
Exchange rate instability may adversely affect the Brazilian economy and the market price of our Shares.
As a result of several inflationary pressures, the Brazilian currency has been devalued periodically relative to the US dollar and other strong currencies during the last four decades. Throughout this period, the Brazilian government has implemented various economic plans and adopted a number of exchange rate policies, including sudden devaluations, periodic mini-devaluations (during which the frequency of adjustments has ranged from daily to monthly), floating exchange rate systems, exchange controls and dual exchange rate markets. From time to time, there have been significant fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies. For example, the Real depreciated 18.7% on 2001 and 52.3% on 2002 against the US dollar. Although the Real appreciated 17.2% against the US dollar in 2007, in 2008, as a result of the worsening global economic crisis, the Real depreciated 32% against the US dollar, closing at R$2.34 to US$1.00. On 2009, after the end of the global crisis, the Real appreciated 34.3%, closing at R$1,74 to US$1,00 at the end of the year. On September 30, 2010, the exchange rate between the Real and the US dollar was R$1.69 to US$1.00. We cannot guarantee that the Real will not again depreciate or appreciate against the US dollar in the future.
The devaluation of the Real against the US dollar may create additional inflationary pressures in Brazil and increase interest rates, which may negatively affect the Brazilian economy as a whole, as well as the market price of our Shares.
Modifications in accounting practices in Brazil due to of the adoption of International Financial Reporting Standards (“IFRS ”) could adversely affect our results.
On December 28, 2007, Law No. 11,638/07 was enacted, complemented by Law No. 11,941/09 of May 27, 2009 (converted into law from Provisional Measure No. 4491/08), altering the Brazilian corporate law and introducing new accounting rules applicable to our type of corporation. with the objective of adopting IFRS as issued by the International Accounting Standards Board (“IASB ”). The effectiveness of such rules will depend on regulation by CVM and the Brazilian Internal Revenue Service, or legislative changes. A portion of this legislation was already passed.
In relation to the real estate sector, the interpretation of IFRIC 15 – “Agreements for the Construction of Real Estate” specifically addresses the accounting practices for the recognition of sales revenue from real estate property by construction companies before the property's completion and shall be applied for financial statements with IFRS in fiscal years initiated in or after January 1, 2009. This interpretation was approved by the CPC and the CVM (by means of CVM Decision No. 612, of December 22, 2009), and has been applied in Brazil since January 1, 2010. The principal change brought by the enforcement of this interpretation is a change in the recognition of revenue related to the sale of real estate properties.
A portion of the legislation standardizing accounting rules in Brazil was already passed, or has caused a transitional tax regime to be instituted, and the uncertainty surrounding the impact of this regulation or legislation could adversely affect our business and operating results, since we recognize revenue throughout the period of construction, that is, before the property is handed over. Besides this, the modification of accounting practices, especially those related to the real estate sector, could have material impacts on our financial statements, with a possible effect on our results, including possible impacts on the distribution of dividends
Our future financial statements could occasionally be altered in a significant way as a result of various accounting pronouncements issued by the CPC and standardized by the CVM on 2010.
Law No. 11,638/07 and Law No. 11,941/09 (converted into law from Provisional Measure No. 449/08) modified and introduced new provisions to the Brazilian corporate law, with the main objective of updating the Brazilian corporate legislation to facilitate the process of standardizing Brazilian GAAP with the accounting practices consistent with the international norms of accounting issued by the IASB. The enforcement of the alterations introduced by this legislation is mandatory for financial statements relating to the fiscal year beginning January 1, 2008.
As a result of this legislation, during 2008 the CPC released various pronouncements with mandatory application to the preparation of financial statements as of and for the year ended December 31, 2008. 35 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Additionally, to continue this process of standardization, new accounting pronouncements are expected to be released that may occasionally bring material impacts to our operating results. Although the CPC has published a schedule for the approval of new pronouncements, we do not have control over nor can we foresee which accounting pronouncements will be issued on 2010 and in the coming years.
The future financial statements that we must prepare could occasionally be altered in a significant way as a result of various accounting pronouncements issued by the CPC and standardized by the CVM on 2010.
Interest Rate Risk
The Company is exposed to floating interest rates especially to the taxes variations that pay their financial applications, debts and other assists and liabilities. The following are the main indexes in our present business plan:
• INCC: it’s the biggest part of our costs (supplies and manpower) and is updated by the INCC index ( Índice Nacional de Custo da Construção ). An increase of one per cent in this index during the quarter ended on September 30, 2010 would result a decrease in the Net Income of the Company of R$18,295.
• Interbank Deposit Certificate (“CDI ”) : all of our financial applications and approximately 38% of our total Indebtness are hold to CDI. An increase of one per cent in the average rate of CDI in the quarter ended on September 30, 2010 would result a decrease in the Net Income of the Company of R$5,459.
• Others: among other indexes, we highlight only the TR, which has approximately 59.6% of our Indebtness (R$2,853.9 million on September 30, 2010) held to this index.
Currency Risks
The Company does not have any debs or values to receive in a foreign currency. Additionally, none of our relevant costs is in a foreign currency.
The Company has an investment in TGLT, a company based in Argentina. For more information see section “8. Economic Group – TGLT” below.
5.2. Description of market risks management policy adopted by the Company’s, its objective, strategies and instruments
a. Risks for which protection is sought
As mentioned in the item 5.1 above, the main market risk for the Company is the fluctuation of indexes and interest rates, since we do not have any currency risk. We also seek protection for liquidity and results risks.
b. Patrimonial Protection Strategy (hedge)
The main strategy of the patrimonial protection is holding our assets to the same indexes as our liabilities. As mentioned in the item 5.1 above, our main indexers are (i) INCC and (ii) CDI. Below, it’s described the main strategies to minimize the exposure to these indexes:
(i) INCC: the biggest portion of our resources is held to this index. To minimize this exposure our non performed receivables is linked to INCC (approximately 80.6% of the total receivables on September 2010).
(ii) CDI: part of our Indebtness (approximately 38.7% on September 30, 2010) is held to the CDI. In order to minimize this exposure, all of our financial applications are corrected by this index.
In addition, we are constantly looking for an optimization of multidisciplinary organization in which the direction evaluates if actions undertaken are being made as to mitigate any risk of the Company's business.
c. Instruments used for patrimonial protection (hedge)
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The main financial instruments used by the Company and its subsidiaries are the financial applications, borrow money for capturing and turning to finance projects under construction, acquisition of debentures, all in market’s normal conditions.
d. Parameters used for managing those risks
The management of these risks is performed by setting conservative strategies, aimed at liquidity, profitability and safety. The control policy is active in monitoring the rates contracted by the Company versus the current market.
e. If the Company operates various financial instruments with goals of asset protection (hedge) and what are these goals
The Company does not perform operations with financial instruments with different goals of asset protection (hedge).
f. Organizational structure to control management risk
The CFO, along with the management control, periodically analyze the risks to inform the direction and the board of directors, which assesses whether the actions taken are being made as to follow the policy.
g. Adequacy of the operational structure and internal controls to verify the effectiveness of the policy adopted
Through multidisciplinary organizational structure, which also uses the board as a strategic asset protection, management financial and controllership monitor and evaluate the adequacy of operations with the policy.
We trust that such structure is appropriate to monitor our activities and risks and to identify possible issues for improvement. No need to improve our current controls has been evidenced.
5.3. Compared to last fiscal year, an indication of significant changes in key market risks to which the Company is exposed or the risk management policy adopted
In the last fiscal year, there has been no material change in the principal market risks to which the Company is subject, in policies or risk management.
5.4. Other information deemed relevant by the Company
There are no other relevant information about this item 5.
6. HISTORY OF THE COMPANY
6.1. Company’s Incorporation
The Company was incorporated on November 17, 1998 in the city of Sao Paulo, state of Sao Paulo, Brazil as a closely held corporation.
6.2. Time Period
Undetermined.
6.3. Brief History of the Company
The Company was incorporated on November 17, 1998 in the city of Sao Paulo, state of Sao Paulo, Brazil as a closely held corporation. The partners and founding members of the Company Pactual Electra Administração e Investmentos Ltda., Alvaro Luis Gonçalves and Fernando Jorge Kalleder remained in the same until 2004. Since then, the Fundo de Investimento em Participações Pactual Desenvolvimento e Gestão I (PDG), vehicle of the long- term investment area of the Bank Pactual SA, became the largest shareholder of the Company. At the same time, the Company began to be administrated by its current directors, José Antonio Grabowsky Tornaghi and Michel Wuman. On 2007, it was decided that the Company would invest in real estate market, that’s the reason why there was a capital opening. Since then the Company has been investing in real estate projects through co-development (FDI) and portfolio (indirect investment). The portfolio investment comes primarily from our subsidiaries “CHL” in Rio 37 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
de Janeiro and Goldfarb and Agre in Sao Paulo. Both of them are 100% (hundred percent) controlled by the Company.
We're the developer with the largest growth in total value to be potentially obtained by sale of all Units of certain real estate projects launched at the price of launch (“VGV Released” ) since our initial public offering of shares (“PSV ”) on 2007 until September 30, 2010 among real estate public companies, such as, Cyrela Brazil Realty SA Empreendimentos e Participações, Gafisa SA, MRV Engenharia e Participacoes SA, Rossi Residencial SA and Construtora Tenda SA, comparing the data obtained from financial statements published by such companies during this period. We operate focusing on enterprise development for the Lower Class and the public consumer units with sales price between R$130.1 and R$350.0 thousands (“Medium Low ”), through our subsidiary Goldfarb, and act strategically in the segment for the public consumer of Units with sales price between R$350.1 and R$500.0 thousands, and between R$500.1 and R$999.9 thousands (“Middle Class ” and “Medium High ”, respectively), through our subsidiary CHL.
PDG Realty presented a rapid growth since our IPO from 2007 until September 30, 2010 in comparison with the listed companies, based on data obtained from financial statements published by such companies. We reached at the same period, R$19.7 billion PSV and obtained R$15.9 billion from Net Sales Contracts. Additionally, PDG Realty achieved the second position in sales velocity between the sector listed companies, with sales over offer (based on the division of sales contracts by the initial stock after launch) of 70.2%, considering consolidated data since 2009 as published by the sector public companies.
Since its initial public offering, PDG Realty is focused on medium and lower-income residential projects, which has resulted in the expansion of our business in this segment both geographically and in terms of volume of transactions. As of September 30, 2010, our land bank was comprised of R$28.5 billion PSV residential units, of which approximately 45% have an average price below R$130 thousands, 27% between R$130.0 and R$250.0 thousands and 19% between R$250.0 and R$500.0 thousands, what means that 91% of the Units have an average price below R$500.0 thousands. This strategy was highlighted on 2009 with the decision of the CMN to increase the maximum financing value of the housing financial system - SFH, from R$350 to R$500 thousands and with the creation, by the Brazilian government, of an incentive program for lower-income housing called “ Minha Casa, Minha Vida” (My House, My Life), aimed at reducing the housing deficit in Brazil, which the Brazilian Institute of Geography and Statistics ( Instituto Brasileiro de Geografia e Estatística ) - IBGE estimated at 7.2 million housing units on 2007. We believe we are one of the biggest public-traded real estate companies together with CEF, inside and outside de program “Minha Casa, Minha Vida”, and we believe that a good relation with this institution will help us conduct our business in the several geographic business areas in which we operate. In addition, we believe we have an organizational structure capable of absorbing the business growth of the past few years and further expanding in order to take advantage of future market opportunities.
Based on the data obtained from the financial statements disclosed by the real estate companies, for the twelve- month period ended on September 30, 2010, we were the second largest real estate developer ( incorporadora ) among such real estate companies in the terms of general sales volume launched, reaching R$6.44 billion of general sales volume launched, and the second largest in terms of contracted net sales, reaching R$6.03 billion in the same period.
In addition, we have presented impressive growth in our financial statements. Our net operating revenue increased 855.1% between 2007 and 2010, from R$361.3 million for the nine month period ended on September 30, 2007 to R$3,450.8 million for the nine month period ended on September 30, 2010. Over the same period our Net Profit increased 1,178.2%, from R$45.9 million for the nine month period ended on September 30, 2007 to R$586.7 million for the nine month period ended on September 30, 2010. We reached this growth while maintaining one of the highest profitability levels among Brazilian real estate companies. Our adjusted EBTIDA margin accumulated since our gone to public until September 30, 2010, averaged 25,8%, one of the highest among the open real estate companies in terms of individual increase of adjusted EBITDA margin, based on data obtained from the financial statements disclosed by such real estate companies during this period.
We have successfully implemented our growth strategy established on 2007, which is: (i) non-organic growth through the full consolidation of our participation in the business units of the Company (“Business Units ” – unidades de negócios ), which are, our subsidiaries Goldfarb, Agre and CHL Desenvolvimento Imobiliário S.A. (“CHL ”), generating higher operating and financial efficiency; and (ii) organic growth of the Company and our main
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Business Units, as shown in our main operating and financial information, provided in the table below, for the indicated periods:
Nine months ended on Year ended on December 31, September 30, 2010 2010 2007 2008 2009 Revised Revised Audited Audited Audited Financial and Operating Information (R$ Thousands) PDG Net operating revenue 1,363,677 3,450,764 552,018 1,231,159 1,983,819 (1) Goldfarb 524.,23 822,01 249,797 500,064 744,451 AGRE - 1,314,550 - - - (1) CHL 334.,44 443,034 145,464 333,443 504,877 PDG Net income 240.,80 586,699 71,157 182,463 338,132 (1) Goldfarb 67,15 125,910 22,667 54,314 103,428 AGRE - 158,371 - - - (1) CHL 58,02 96,986 26,909 35,849 73,628 (2) PDG Adjusted EBITDA 327,577 945,261 175,561 291,062 448,983 (3) PDG Adjusted EBITDA margin 24.02% 27.39% 31.8% 23.6% 22.6% PDG general sales volume (4) (5) (6) 1,997,673 4,895,377 1,233,450 2,611,540 3,026,550 PDG contracted net sales (4) (5) (6) 1,887,508 4,763,090 969,950 1,811,830 2,670,255 1 These numbers are calculated based on the proportional corporate held by us on the capital stock of Goldfarb and CHL, which: (i) on 2007 was 80,0% in Goldfarb and 70.,0% in CHL; (ii) on 2008, was 80,0% in Goldfarb and 70,0% in CHL; and (iii) on 2009, was 100,0% in Goldfarb and 100,0% in CHL. 2 Adjusted EBITDA is calculated based on the definition issued by CVM Rule 01/2007, consisting of the sum of income before interest, income tax, depreciation and amortization, added to the following adjustments: non-operational results, interest if non-controlling shareholders and compensation expenses based on stock options. 3 Adjusted EBITDA divided by net operating revenue. 4 Includes partners’ interest in joint ventures 5 Operational data not directly reflected in our audited consolidated financial statements. 6 The operating and financial data here reported for the previous quarters of 2009 and the first quarter of 2010 were estimated pró-forma , including 100% of operating and financial results of AGRE, as if the incorporation of AGRE by PDG had already been performed under respective dates. We remember also that these figures are unaudited.
In the second semester of 2008, we began the expansion and consolidation of the operational structures of our Business Units, investing in internal control systems, employees and improvement of internal procedures.
We have an internal structure capable of conduct and perform all the stages of the real estate development process, including credit on-lending from financial institutions to our customers. In the ease of Goldfarb, which focuses on lower-income residential projects, we begin by preparing the project, continue through construction management and exclusive sales team, and conclude with post-sale customer service.
Our management team is comprised of professionals with substantial experience in financial markets, especially in private equity and financing and/or structuring transactions, which we believe is important for conducting business in an efficient and effective manner. Our Business Units have their own dedicated management teams with substantial expertise in their respective areas of business. In addition, our management culture, which is based on meritocracy, ability and knowledge, and a profound understanding of the Brazilian real estate market, is constantly impressed upon our employees.
We are engaged in (i) the co-development of the real estate projects with several other well-known Brazilian real estate developers through incorporation of SPEs; and (ii) the acquisition of significant ownership interests in companies operating in the real estate industry, in which we actively participate through the development and implementation of their strategic plans.
We operate in different segments of the real estate industry, including: (i) the development of residential projects targeted in different income classes, (ii) the development of residential communities, (iii) investments in commercial projects to generate income from rent, (iv) the trade of commercial and residential units, and (v) the structuring of real estate receivables secured transactions. At this present date, we maintain investments in real estate in 106 Brazilian cities, in more than 16 states (SP, RJ, MG, BA, ES, PR, SC, RS, GO, MS, MT, RN, PA, AM, MA, CE) and also in Brasília, the Federal District, as well as in the Argentine cities of Buenos Aires and Rosario.
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On June 10, 2010, our shareholders, in a shareholder’s meeting, unanimously approved the merger of AGRE’s shares by PDG, through the transference of all shares that were issued by AGRE to PDG (“Merger of Shares ”). This merger aimed turning AGRE in a PDG’s full subsidiary, under article 252 of Lei 6.404/76. This operation was successfully done, according to the terms of the Protocol and Justification of Merger of AGRE’s shares by PDG, celebrated on May 3, 2010, by these companies’ managers.
AGRE’s shareholders got 0.495 of the new common share issued by PDG for each common share issued by AGRE totalizing an issuance of 148,500,001 new common shares by PDG.
The Merger of Shares aims the unification of the management and shareholder bases of the Companies, as well as provide synergy gains resulting from the unification of the activities of companies that will have a more efficient structure for the development of real estate projects, with potential cost-saving for technical, supplies and other general and administrative costs, and enable greater growth and profitability of businesses developed by the Companies.
The Merger of Shares creates the largest real estate company in the country, and aims to unify the management and shareholder bases of the Companies, as well as provide synergy gains resulting from the unification of the activities of companies that will have more efficient structure, incorporating two additional regional land banks, making up a portfolio of relevant products in all income groups. It is further considered that there is a potential cost saving technical, procurement, and other general and administrative costs, providing better conditions for increased growth and profitability of businesses developed by the Companies.
Considering that both AGREE and PDG meet the requirements of Art. 137, II of the Corporations Act, there is no right of withdrawal or recess for shareholders of both companies who might dissent from the Merger of Shares.
6.4. Date of registration with the CVM
The filing with the CVM as a public company on January 23, 2007.
6.5. Major corporate events such as takeovers, mergers, acquisitions of shares, divestments and acquisitions of corporate control, acquisitions and divestitures of important assets, which have passed by the Company or any of its subsidiaries or colligates
(i) incorporation of Key West Participações SA, which owned 12.5% of the share capital of Goldfarb, with the consequent increase in the capital of the Company of R$12.3 million, with the issuance of 2,022,272 common shares which were delivered to former shareholders of Key West Participações SA, through the Company holds 70% of the shares issued of Goldfarb;
(ii) incorporation of MP Holding SA, which owned 1.67% of Goldfarb, with a consequent increase in the capital of the Company of R$3.3 million by issuance of 681,818 new ordinary shares, which were delivered to former shareholders of MP Holding SA, from the Company holds 75% of the shares issued by Goldfarb;
(iii) incorporation of MP Holding 2 SA, which owned 2.5% of Goldfarb, with a consequent increase in the capital of the Company for R$5.7 million by issuance of 1,136,364 new ordinary shares, which were delivered to former shareholders of MP Holding 2 SA, from the Company holds 80% of the shares issued by Goldfarb;
(iv) incorporation of CHL XV Incorporações Ltda., which owned 10% of the CHL, with a consequent increase in the Company's participation in the CHL in the corresponding 10%;
(v) incorporation of CHL XXXIV Incorporações Ltda., which owned 12.31% of the CHL, with a consequent increase in the capital of the Company of R$20.2 million by issuance of 3.2 million new common shares, which were delivered to Mr. Rogerio Chor, from the Company holds 70% of the shares of CHL;
(vi) incorporation of MP Holding 3 Ltda., which owned 20% of common shares issued by Goldfarb. Due to the merger the Company issued 829,644 new shares and 40 warrants, in four different series;
(vii) incorporation of CHL LXX Incorporations Ltda., which owned 30% of common shares issued by the CHL. Due to the merger the Company issued 779,062 new shares and four warrants, in four different series; and 40 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
(viii) incorporation of the shares of AGRE Empreendimentos Imobiliários S/A. Due to the merger the Company issued 148,500,001 new shares delivered to former shareholders of AGRE.
For more information about the mergers, the effects to the corporate structure, and on the corporate structure before and after the operation, see Section 17.2 of this form, which refers to increases in capital of the Company.
6.6. Bankruptcy filing, since founded in value relevance, or judicial or extrajudicial recovery of Company, and the current status of such requests
Until the date of this Form there was no application for bankruptcy or judicial or extrajudicial recovery of the Company.
6.7. Other information deemed relevant by the Company
There are no other relevant information about item 6.
7. COMPANY’S ACTIVITIES
7.1. Brief description of activities that are developed by the Company and its subsidiaries 1
Company - Our social purpose comprehend: (a) participation in other real estate corporations, as partners, shareholders or consortial, or through other means of investment, as the subscription or acquisition of debentures, subscription bonus or other securities issued by other real estate corporations; (b) provision of collection of the receivables; (c) acquisition of properties for rental; (d) acquisition of land for real estate development; and (e) real estate development.
Business Units
Goldfarb - Goldfarbs’s activities are focused on the development of real estate projects for middle-income and low- income class consumers with monthly income of 5 to 20 times the monthly minimum wage, with structured business model based on standardization of the construction and incorporation and the vertical integration of production.
CHL - CHL focuses on the development of real estate projects mainly for middle and up-middle class consumers, mainly in Rio de Janeiro. It is one of the biggest developers on that Estate.
PDG São Paulo – This company is focused on operations for middle and high class in the State of São Paulo (units from R$200 to R$500 thousands). Recently we completed the hiring of the team responsible for operations, composed of professionals with extensive experience in this segment within the State of São Paulo. Throughout 2010 we have already completed the negotiation of options for purchase of land totaling approximately R$180 million in PSV.
PDG Companhia Securitizadora - Company focused on securitization of real estate receivables, whose activities started on 2009. We performed 3 emission operations of CRI on 2009, which totaled more than R$100 million and with a maturity of up to 8 years. On 2010 we conducted an operation of CRI with value of approximately R$187 million, maturing in up to 10 years (for details see item 8.1. (b) – “PDG Companhia Securitizadora”)
AGRE – Company incorporated by PDG Realty on June 2010, AGREE is the combination of the operations of AGRA, Abyara and Klabin Segall, companies with extensive experience and tradition in the real estate market. This association created one of the most diversified companies of Brazil in this sector, with presence in all regions of the country, activities in all economic sectors, and a land bank with a PSV of approximately R$18.3 billion on December 31, 2009.
Subsidiaries
Lindencorp - Lindencorp aims to explore the market for residential real estate development for the upper and middle-upper classes in the State of São Paulo. Lindencorp focuses on developing customized and sophisticated projects.
1 Source: ADEMI-RJ - Associação de Dirigentes de Empresas do Mercado Imobiliário do Rio de Janeiro. 41 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Real Estate Partners Desenvolvimento Imobiliário S.A. - REP DI operates with consulting and development of commercial ventures. The REP DI focuses the Company's investments in commercial real estate projects aimed at income generation through the development of centers of convenience and services, which are aimed at serving the public resident in the region where they are located.
Brasil Brokers - Brokers Brazil The company is dedicated to service real estate brokerage with a focus on performance and market intermediation and real estate consulting.
TGLT S.A. - TGLT aims to explore the market for residential real estate development for the upper and middle classes to high in Argentina.
7.2. For each operating segment that has been circulated in recent demonstrations financial closing of fiscal year or, if applicable, the consolidated financial statements, indicate the following information
a. Marketed products and services
Sales and leasing of buildings and provision of management services locations.
b. Revenue from the segment and its participation in the Company's net revenue
Nine mounths ended on September 30 Year ended on December 31 (R$ Thousands) 2009 2010 2007 2008 2009 Revised Revised Audited Audited Audited Net Operating Revenue PDG 1,363,677 3,450,764 552,018 1,231,159 1,983,819 (1) Goldfarb 524,423 822,901 249,797 500,064 744,451 AGRE - 1,314,550 - - - (1) CHL 334,344 443,034 145,464 333,443 504,877 Net Profit PDG 240,680 586,699 71,157 182,463 338,132 (1) Goldfarb 67,215 125,910 22,667 54,314 103,428 AGRE - 158,371 - - - (1) CHL 58,502 96,986 26,909 35,849 73,628 (2) Adjusted EBITDA margin PDG 327,577 945,261 175,561 291,062 448,983 (3) Adjusted EBITDA margin PDG 24.02% 27.39% 31.80% 23.60% 22.63% (4) (5) PSV Launching PDG 1,997,673 4,895,377 1,233,450 2,611,540 3,026,550 (1) Goldfarb 1,513,424 2,232,481 799,786 1,715,090 2,155,179 AGRE - 1,800,325 - - - (1) CHL 279,750 516,660 176,897 502,474 580,418 (4) (5) Contracted Sales PDG 1,887,508 4,763,090 969,950 1,811,830 2,670,255 (1) Goldfarb 1,372,743 2,068,793 375,656 1,133,320 1,776,500 AGRE - 1,736,506 - - - (1) CHL 257,470 606,392 105,659 396,969 464,457 ______1 These numbers are calculated based on the proportional corporate held by us on the capital stock of Goldfarb and CHL, which: (i) on 2007 was 80.0% in Goldfarb and 70.0% in CHL; (ii) on 2008, was 80.0% in Goldfarb and 70.0% in CHL; and (iii) on 2009, was 100.0% in Goldfarb and 100.0% in CHL. 2 Adjusted EBITDA is calculated based on the definition issued by CVM Rule 01/2007, consisting of the sum of income before interest, income tax, depreciation and amortization, added to the following adjustments: non-operational results, interest if non-controlling shareholders and compensation expenses based on stock options. 3 Adjusted EBITDA divided by net operating revenue. 4 Includes partners’ interest in joint ventures 5 Operational data not directly reflected in our audited consolidated financial statements.
c. Profit or loss resulting from the segment and its participation in the Company's net income
Data Base: 09.30.2010 Segment Net Income % total Real estate sales 3,503,257 98.17% 42 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Real estate rents 65,458 1.83% Total 3,568,715 100.00%
7.3. For products and services that correspond to the operating segments disclosed in 7.2, describe:
a. Characteristics of the production process
The main steps of the process of incorporation are summarized in the diagram below:
Land Acquisition Development Construction
– Market Survey – Projects development – Final budget – Legal, eviromental – Release strategy – Obtainment of finance and others due – Promotion and Sales – Monitoring holding diligences; – Competitive analysis company – Project Analisys – Financing and partnership – Quality control – Complete Financial with banks – Work delivery Analisys – Monitoring the financial – Management of – Capital Structure viability receivables – Work Budget
Land Acquisition
We actively participate in the land acquisition process, because we believe that it is a critical stage in the development of a real estate project and that it is the first distinguishing factor of the residential units to be launched. Each decision to acquire a parcel of land is analyzed and must be approved by our board of executive officers.
We acquire lands from individuals, legal entities and in judicial and extrajudicial auctions and carry out an audit to assure legal and environmental compliance in connection with the acquisition of the lands where our real estate projects will be developed. As is customary in the industry, we evaluate the cost/benefit ratio of our acquisitions by managing any potential legal and/or environmental risks, in accordance with the opinion of our legal and technical advisors. Concurrently with this audit, we carry out a study to confirm the financial feasibility of the project and often hire an outside consultant to prepare a market research report.
We normally acquire properties from third parties by means of purchase and sale public deeds upon payment of a portion of the price in cash and another portion of the price by means of promissory notes to settle or as payment for such acquisition. Such promissory notes represent a consolidated debt not related to the property sold, are substituted for public debt acknowledgement instruments through which the debt represented by the promissory note to settle is novated, upon the scheduling of payments by three methods: (i) installments in cash; (ii) real estate exchange by means of payment in kind through future independent units; and/or (iii) financial exchange by means of the payment of previously defined percentage rates calculated on the overall sales value of the real estate development. As a guarantee of payment of such debt acknowledgement instruments, the properties subject to the real estate development could be subject to first-priority mortgage. The promissory notes to pay are paid on the scheduled dates, and subsequently, the settlement is carried out by means of the acquisition of the property.
Development
During the development stage, we focus mainly on the standardization of architectural design and construction techniques of the project. In most cases, we hire a construction management company to monitor the development of the project, in order to maximize efficiency and obtain accurate cost estimates. Concurrently, we prepare our strategy for launching, marketing and selling the units being constructed with the assistance of a specialized marketing agency and the real estate broker that will be responsible for sales.
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Once we define a sales campaign and obtain all required legal approvals for the project, we update the feasibility study to confirm or adjust our initial business plan, establish the sales prices of the residential units to be constructed and structure the form of payment to be extended to the project's targeted customers. In order to improve the match between our sales price and payment method, we seek to maintain close relationships with well-known financial institutions. We believe that these relationships may also result in a competitive advantage to us, in the event that an established real estate financing and securitization market develops further in the future.
We hire independent real estate brokers to sell our Units, in the case of Goldfarb, its residential units are exclusively sold by Avance. As a general policy, we seek to maintain close relationship with the main brokerage companies in their respective operating markets, in order to monitor sales and obtain information on market trends.
We begin the sales efforts for our projects when they are launched. In general, we have a sales stand at the location where the real estate development will be constructed, including a model residential unit, illustrative graphic material and a large scale model of the development. We market our real estate developments through newspapers, direct mail and the distribution of pamphlets in the areas surrounding the real estate development, as well as through telemarketing centers and the Internet.
Construction
Our Business Units manage the construction of their own projects. In other cases, the construction of our real estate developments is carried out by subsidiaries of our partners or by third parties. In this sense, we enter into a construction agreement or a turnkey agreement, depending on the situation, for each real estate development, which sets forth the terms of construction, such as maximum cost, delivery date, quality standards, and other obligations of the construction company.
We meet with the construction management company on a monthly basis to evaluate progress of the construction. Our discussions relate primarily to the quality of service provided by the construction company, the term for delivery and budget control. When necessary, an engineer of the construction company in charge of the project is also present at these meetings.
b. Characteristics of the distribution process
The procedures for monitoring sales and marketing are basically two activities: (i) launching process and (ii) management of routine sales.
• Launching Process: at the launching, sale tables are formatted, based on the feasibility study and the project book. Later all marketing strategies of the development are developed (launching date, conventions and sales campaigns). In parallel, the incorporation and legal areas prepare documents necessary to effect the launching.
• Management of sales routine: After the launching, the routine of the sales process begins with an analysis of proposals and monitoring of negotiations until the signing of the contract. Presently the sales are formalized for the company, especially for the financial management of contracts that is responsible for verifying the documentation, analysis and registration of contracts.
c. Characteristics of the markets of operation, in particular:
The main activities in the real estate market are the construction and sale of residential Units for people of different income segments and business units. Thus the market segment is divided into economic, average income, middle income, high-income, allotment and commercial. It is noteworthy that economic units are residential units with unit priced less than two hundred and fifty thousand Reais; average income, the unit price is between two hundred and fifty thousand Reais to five hundred thousand Reais; medium high, the unit price is between five hundred thousand Reais to one million Reais; high income, the unity price is greater than one million Reais. The characteristics of a real estate development, the marketing approach and construction process differ according to the income profile of the target audience. Developments aimed at low income consumers are more sensitive to price change, what requires cost optimization through techniques and construction processes with characteristics of industrial production. Developments of high standard and medium-high differ in the conceptualization of the product, the range of services and benefits included in a particular project, as well as the prime location in desirable locations in large cities
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i. participation in each market
The company's share in the sector can be achieved through internal surveys, market research, public information and industry publications such as Embraesp, ADEMI-RJ, ADEMI-BA, SECOVI, IBGE and Central Bank of Brazil, among others. Based on data from sales (PDG Realty) in the year 2009 to participate in the economic market is 73.5% of total sales from the period, 6.4% in middle-income market, 5.4% in the upper-middle income market, 4.3% in high-income market, 3.2% in the allotment market and 7.1% in the business unities market.
ii. competition conditions in the markets
Our market segment is marked by great competition. It is, above all, a market extremely sprayed, and no individual participant has a significant participation of the national market. In general, competition is more intense in the State of Sao Paulo, where we focus most of our activities. The main differentiation factors before the consumers include location, price, availability and terms of financing, the standard of finishing Units, quality of materials used in construction, reputation of the builder and developer and a history of meeting the deadlines of the work.
For instance, the Goldfarb is ranked first in the category Development and second in the category Construction in the prize Top Imobiliário of 2008, and CHL is a leader in launches in Rio de Janeiro.
The table below shows the breakdown by type and geographic segment of our land bank in PSV Estimated (total value estimated to be potentially obtained by the sale of all Units) of the Company at the end of fourth quarter 2009:
Segmentation of 2009 Contracted Sales (%) Geographic Breakdown of 2009 Contracted Sales (%) Rio Grande do Sul 1% Minas Gerais Mato Grosso do Sul Land Parceling; Paraná High; 4,3% 2% 1% 3,2% 2% Mid - High; 5,4% Commercial; Espírito Santo Mato Grosso 7,1% 1% 6% Mid; 6,4% Argentina 3% São Paulo 24% Rio de Janeiro 18%
Goiás SP - other cities 5% 37% Low Income; 73,5%
In all states, especially in the cities of São Paulo and Rio de Janeiro, face competition from major market participants, as Cyrela Brazil Realty SA Empreendimentos e Participações, MRV Engenharia e Participações SA Gafisa SA and MRV Engenharia e Participações SA and the Cyrela Brazil Realty SA Empreendimentos e Participações still present themselves as competitors also in the economic sector.
d. Possible seasonal
Our operating markets have their activities restricted in the months of January, February and July each year, during which our costumers usually travel because of school vacations, postponing their decisions to purchase Units.
e. Key inputs and raw materials, stating:
i. description of the relationships held with suppliers, including whether they are subject to governmental control or regulation, identifying the bodies and the respective legislation
As a general rule, we have with our supplier’s long-term relationships. Currently we have no outstanding disputes with any supplier. As the practice of the market, we do not usually enter into agreements that create the obligation of exclusivity to the Company in order to maintain our freedom to hire the most suitable supplier for each project, based on price, quality, terms and conditions of delivery. We emphasize that all our suppliers are subject to regulatory agencies, and respective applicable laws. 45 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
ii. eventual dependence on few suppliers
We have a vast list of suppliers, with no significant risk of concentration to the Company. Below there is a list of main inputs and suppliers.
Input Major Suppliers Concrete Lafarge Brasil S.A. Steel Gerdau AçoMinas S.A./ Belgo Siderurgia S.A. Aluminium Hydro Alumínio ACRO S.A.
iii. possible volatility in their prices
Most of our costs are tied to INCC. We define conservative strategies to mitigate risks of price volatility of raw materials (as per sections 5.1 and 5.2 of this form).
7.4. Clients that are responsible for more than 10% of the total net revenue of the Company
None.
7.5. Description of relevant effects of state regulation on the activities of the Company, commenting specifically:
a. Need of government authorization for the exercise of activities and historical relationship with the government to obtain such permits
For our activity of trade of real estate, we need approvals from the local municipalities and state departments of environment for: notary adjustments for demarcation and approvals of land, approval of project, approvals for the start of work and formal end of work (expedition dwell up). Never had problems in obtaining such authorizations with the administration.
To acquire land where to build its real estate, as a result of the need for assistance with environmental legislation, the Company considers all environmental aspects necessary and applicable, with emphasis on the possible existence of fountains, trees, vegetation and location of such land in the occurrence for permanent preservation areas on site. Thus, before the decision to purchase a property, all relevant aspects are analyzed.
b. Environmental policy and costs incurred for compliance with environmental regulation and, where appropriate, other environmental practices, including adherence to international standards of environmental protection
As mentioned in item “a” of section 7.5, we need some authorizations from the departments of environment, and adopt some procedures provided in the law for land acquisition, such as replanting of trees and decontamination of land (where applicable).
Goldfarb also owns the Planet Life project, which concentrates its efforts toward sustainability and environmental concerns. In such project studies are conducted to improve our businesses, such as:
1. individual measurement of water, establishing a system for collecting and encourage individual savings; 2. capture and use of rainwater for use in common areas and plants; 3. selective garbage collection; 4. intelligent water closet discharges, reducing the volume of water used in each use; 5. taps with timer of water; 6. stops of reforested wood; 7. presence sensors in the halls, which result in energy savings; and 8. use of masonry structural system, which reduces the volume of debris and waste material.
The Company has no cost to obtain the environmental permits for the exercise of its business with the government responsible. Also, the Company does not adhere to international standards of environmental protection. 46 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
c. Dependence on patents, trademarks, licenses, concessions, franchises, contracts, royalties for the development of relevant activities
The Company holds two applications for registration of the trademark "PDG", deposited in the INPI (national institute of intellectual property), and holder of four domain names, the most relevant of which is www.pdgrealty.com.br. If requests are not granted, the Company will have to develop its activities through other brands of the group only, what we do not believe that should cause a material impact on our activities. That is, any rejections of patents, trademarks, licenses and domains will cause no adverse effects on our activities or projects developed, launched and marketed by the Company.
7.6. Countries from which the Company obtains relevant revenues, indentify
The Company does not obtain relevant revenues in other countries other than Brazil.
7.7. Foreign countries that were published on item 7.6, have to , inform the extent to which the Company is subject to the regulation of these countries and how this subject affects the Company's business
This item does not apply to the Company.
7.8. Description of the relevant long term relations of the Company that are not in another part of this form
There are no relevant long term relations of the Company that do not figurate in another part of this form.
7.9. Other information deemed relevant by the Company
There are no other relevant information about item 7.
8. ECONOMIC GROUP
8.1. Description of the economic group to which the Company belongs, indicating:
a. Direct and indirect Controllers
We do not have a defined control.
b. Subsidiaries and colligated companies
Goldfarb
Overview: the Goldfarb group started its business in 1952. The founding shareholders of Goldfarb (four recent graduated engineers from Escola Politécnica da Universidade de São Paulo) started to work with the sale of construction materials and development of small construction work and refurbishments in 1952. In the 1980s, the company was restructured in order to separate non-real estate development activities from its main activity, resulting in the incorporation of Goldfarb Incorporações e Construções S.A.
Since 2000, Goldfarb’s activities have focused on the development of economic real estate projects for families with monthly income of 5 to 20 times the monthly minimum wage, with a business model based on the standardization of the construction and development process and vertical alignment of production. The concentration on this segment allowed the company to obtain specific expertise in Brazil. Goldfarb adopted a production method based on large- scale development of standardized projects, resulting in construction cost reduction, increased profitability and risk reduction, as the projects are tested and improved with every new development
Goldfarb is one of the principal beneficiaries of CEF financing among Brazilian publicly traded real estate developers. According to the EMBRAESP’s June 2009 ranking, Goldfarb is ranked first in the metropolitan region of São Paulo, both in number of residential units launched and general sales volume launched on 2008. Goldfarb’s target markets are people with family income between one and ten times the monthly minimum wage, as well as recently married individuals purchasing their first real estate property, divorced individuals, and individuals living in rented residential units who have the financial resources to purchase a residence. Such a target is consistent with the market segment to which the Minha Casa, Minha Vida program is aimed.
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In its more than 56 years of operations, the Goldfarb group has delivered over 30,000 units. Just in the past years, Goldfarb has built more than 33.641 residential units in 168 real estate developments, totaling 1.980.000 constructed square meters. In 1993, Goldfarb launched the Better Plan ( Plano Melhor ), which was innovative in the market and simplified the process of purchasing a residence. More than 7,500 apartments were sold in only six years of activities. Another huge success was the launching of “ Goldfarb 2,000 ”, which reached 1,537 residential units delivered, for which Goldfarb was awarded the title of Top Imobiliário from O Estado de São Paulo newspaper, as well as Marketing Best in recognition of its success. On 2006, Goldfarb was again awarded the title of Top Imobiliário and its position among the largest real estate development companies in Brazil was solidified, reinforcing consumer’ confidence and satisfaction. On 2007, Goldfarb was ranked second in the Construction Company category and third in the Real Estate Development Company category for the Top Imobiliário award. On 2008, Goldfarb ranked second in the Construction Company and Real Estate Development Company for the Top Imobiliário .
Goldfarb also offers the Planet Life project, through which Goldfarb concentrates its efforts on sustainability and environmental matters. Through this project, we carry out studies to improve our real estate developments with respect to electric energy efficiency, water reuse, reduction of environmental impacts and greenhouse gases emission, among others. Employees and third parties are trained in relation to the reduction of the use of office supplies and recycling, among others.
We believe that the Goldfarb brand is currently one of the most traditional and established in the real estate market in São Paulo. We seek to offer a differentiated business model to our customers in order to attract then to buy our products and encourage them to recommend our brand. Under our incentive program, the customers who refer future buyers of residential units receive cash benefits for each new customer referred. We believe we have obtained good results from this business model, which we also consider to be a consequence of the acknowledgement of Goldfarb as a high-quality brand, including our receipt of the ISO9001 certification by ABS Quality Evaluation on 2003, as well as our history of timely delivery of our real estate developments.
Avance is a brokerage company and an indirect subsidiary of Goldfarb, controlled by the Brazil Brokers Group. It has approximately 150 brokers currently working to sell Goldfarb’s real estate developments. We believe that the existence of a brokerage company within Goldfarb group increases Goldfarb’s sales, as Avance brokers are thoroughly familiar with the residential units sold by Goldfarb. Furthermore, because Avance is a member of the Goldfarb group, its brokers are able to offer our customers certain flexibility for the payment of brokerage fees.
In its capacity as Goldfarb’s shareholder, the Company focuses on the implementation of modern corporate governance practices by prioritizing the generation of value and raising funds for the future investments. All of our financial engineering expertise is brought to bear on Goldfarb’s activities.
Capital Stock: Currently we hold 100% of Goldfarb’s capital stock. Our relationship with the Goldfarb group started on February 2006, through an investment we made in GDI - Goldinvest Desenvolvimento Imobiliário S.A. (“GDI”). On June 30, 2006 we acquired our interest in Goldfarb, using a combination of cash, the shares we held in GDI and our participation in certain Units. GDI was subsequently merged into Goldfarb and our relationship with the Goldfarb group concentrated in direct ownership interests held in Goldfarb. On April 30, 2007 we acquired an additional interest in Goldfarb by means of a cash payment of R$80 million, thereby increasing our total interest to 57.5% of Goldfarb’s shares. On June 29, 2007 our shareholders approved the merger of Key West Participações S.A., into us, which owned a 12.5% equity interest in Goldfarb. In connection with such transaction, we issued 2,022,272 common shares that were subscribed by the former shareholders of Key West Participações S.A., and our capital was increased by R$12.3 million. As a consequence, we increased our total interest in Goldfarb to 70%. On August 31, 2007, we again increased our total interest in Golfarb to 73,33% by making an R$100 million investment in newly issued shares. On September 28, 2007, our shareholders approved the merger of MP Holding Ltda. into us, which owned a 1.67% equity interest in Goldfarb. As a result of such merger, we issued 681,818 new common shares to the former shareholders of MP Holding Ltda., and our capital increased by R$3.3 million and our total interest in Goldfarb increased to 75%. On November 1, 2007 we again increased our total interest in Goldfarb to 77.5% by making an R$100 million investment in newly issued shares. On December 21, 2007, our shareholders approved the merger of MP Holding 2 S/A into us, which owned a 2.5% equity interest in Goldfarb. As a result of such merger, we issued 1,136,364 new common shares to the former shareholders of MP Holding 2 S/A., our capital increased by R$5.7 million and our total interest in Goldfarb increased to 80%.
We exercised in advance our options to purchase up to 100% interest in Goldfarb. In this regard, at the shareholders' meeting held on March 31, 2009, we merged into us MP Holding 3 Ltda., which owned a 20% equity interest in 48 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Goldfarb. In view of such merger, we issued 829,644 new shares and 40 subscription bonus, in four different series. On May 4, 2009, the holders of the first series of ten subscription bonus exercised such warrants and we issued 600,720 new shares.
The merger of MP Holding 3 Ltda. was subject to the terms and conditions set forth in the memorandum of understanding entered into by the Company, Mr. Milton Goldfarb and Mr. Paulo Cesar Petrin, dated November 21, 2007, as disclosed in our press release dated November 22, 2007, without any amendment thereto. The memorandum of understanding stipulated, among others, (i) which number of shares to be transferred would be defined based on the formula contained in the press release; and (ii) the schedule for receipt of such shares, which would be carried out on a yearly basis through the next three fiscal years. The market value of Goldfarb would be obtained by comparing PDG Realty's multiples of price per profit at a 35% discount.
On May 2009 there was a conversion of 10 class 1, series A subscription bonus. This resulted on the issuance of 600.270 new common shares. 60.027 of those are common shares by warrant.
On May 2010 there was a conversion of 10 class 1, series B subscription bonus. This resulted on the issuance of 3.886.049 new common shares, 3,388.605 of which are common shares by warrant.
Only three preferred shares are outstanding, which do not confer equity or dividend payment rights to the holder thereof and solely confer voting rights at the shareholders' meeting that approves the financial statements for 2011, in the form of a veto right with respect to (i) the election of two members of the board of directors out of a total of six members; and (ii) the election of the chief executive officer and the real estate development officer.
CHL
Overview : CHL is our business unit focused on the residential real estate development market in the state of Rio de Janeiro, being the second largest developer in such state, with 20 years of operations there, according to a report released by ADEMI-RJ. CHL is traditionally engaged in the development of residential units for higher-income and higher-middle-income customers. CHL had a banner year on 2008, obtaining significant results as compared to the prior year, such as an increase of general sales volume launched by 184% from 2007 to 2008 and an increase of contracted net sales by 276% in the same period. As a result, it was awarded the most significant award from ADEMI in the state of Rio de Janeiro, the 2008 Master Imobiliário in the Company of the Year category, and also received various awards for its projects. CHL also has a strong presence in the middle-high and high income segment, and commercial real estate developments. More recently, CHL is expecting to grow, through its joint venture with Goldfarb, by exploiting the growth potential of the middle-income and lower-income segments in Rio de Janeiro.
Capital Stock : We currently own 100% of CHL’s voting capital stock. Prior to June 29, 2007 we owned a 40% of CHL’s capital stock. On such date, our shareholders approved the merger of CHL XV Incorporações Ltda, into us, which held a 10% interest in CHL. On November 26, 2007, we subscribed new shares issued by CHL, totaling R$100.0 million, and increased our total interest in CHL to 57.69%. On December 21, 2007, our shareholders approved the merger of CHL XXXIV Ltda., into us, which owned a 12.31% equity interest in CHL. In the transaction, we issued 3,200,000 common shares that we were subscribed by Mr. Rogério Chor, and our capital increased by R$20.2 million. As a consequence, we increased our total interest in CHL to 70%.
We exercised in advance the options to purchase up to 100% interest in CHL. In this regard, at the shareholders’ meeting held on April 29, 2009, we merged CHL LXX Incorporações Ltda., which owned a 30% equity interest in CHL into us. In view of such merger, we issued 779,062 new shares and four subscription bonus, in four different series. On May 4, 2009, the holder of the first series of subscription bonus exercised such warrant and we issued 259,688 new shares.
The merger of CHL LXX Incorporações Ltda, was subject to the terms and conditions set forth in a memorandum of understanding entered into by us and Mr Rogério Chor, dated November 26, 2007, as disclosed in our press release dated November 27, 2007, without any amendment thereto, in particular (i) with respect to the delivery of our shares, which number of shares to be transferred would be defined based on the formula contained in the press release; and (ii) the schedule for receipt of such shares, which will be carried out on a yearly basis through the next three fiscal years. The market value of CHL will be obtained by comparing PDG Realty’s multiples of price per profit at a 35% discount.
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Only Class A preferred shares are outstanding, which confer certain equity and certain voting rights upon the holders thereof through the shareholders’ meeting which approves the financial statements for 2011, which includes veto rights with respect to (i) the election of two member of the board of directors out of a total of six members. (ii) the election of the Chief Executive Officer of CHLA; and (iii) certain other matters.
On May 2009 there was a conversion of class 2, series A subscription bonus, resulting on an issuance of 259,688 new common shares.
On May 2010 there was a conversion of class 2, series B subscription bonus, resulting on an issuance of 4,204,896 new common shares.
AGRE
Company incorporated by PDG Realty on June 2010, AGRE is the combination of the operations of AGRA, Abyara and Klabin Segall, companies with extensive experience and tradition in the real estate industry.
AGRA Incorporadora (which preceded the current AGRA) was founded by Luiz Roberto Pinto and Mario Castro in December 1996. Later, in June 1999, Mr. Ricardo Setton joined the company, and on June 2000, Mr. Didier Klotz. On January 31, 2006, the shareholders approved AGRA’s capital increase, among other things, whose capital was subscribed by Cyrela and AGRA resulting on a joint venture. AGRA operates with exclusive focus on activities to incorporate in the residential segment of projects aimed at upper middle class and middle class in the states of São Paulo, (including the ABC Paulista and Santos), Bahia, Rio de Janeiro, Recife and Amazonas. On April 24, 2007, AGRA held its initial public offering shares on the Novo Mercado of the BM&FBOVESPA.
The brand Abyara was launched in the Brazilian real estate market in 1995 when its founding shareholders Celso Minoru Tokuda, Arnaldo Curiati and Emilio José de Almeida Westermann joined to provide real estate services through the CMW Planejamento e Consultoria Imobiliária Ltda., WTC Projetos and Consultoria Imobiliária Ltda, AEC Cliente Assessoria e Consultoria Ltda., including advisory services and brokerage for new developments. Subsequently, on January 4, 2006, Abyara was formed by such shareholders. Abyara acts as a "full service" business consultant and real estate brokerage involved in all stages of real estate development, including the choice of land, project planning, creation of marketing strategy and the launch of the project with a strong presence in metropolitan São Paulo and the southern and southeastern regions of the country. On July 25, 2006, Abyara held its initial public offering of shares in the Novo Mercado of the BM&FBOVESPA.
Klabin Segall started its activities in the real estate market in 1994, through the companies Segall Empreendimentos Ltda. and Klabin Incorporações e Empreendimentos Ltda., founded by its indirect controllers Sergio de Toledo Segall and Oscar Segall. The Klabin Incorporações e Empreendimentos Ltda. and Segall Empreendimentos Ltda. merged in 1999 forming the Klabin Segall. Klabin Segall is in the business of real estate development in various economic segments of the population, comprising oriented developments from the upper class to lower middle class in the states of Sao Paulo and Rio de Janeiro. On October 5, 2006, Klabin Segall held its initial public offering shares on the Novo Mercado of the BM&FBOVESPA.
PDG São Paulo
This company is owned 100% by the Company and is focused on the operations of middle and upper middle class in São Paulo (with a focus on units from R$200 to R$500 thousands). We’ve completed hiring the responsible team for the operations, composed of professionals with extensive experience in this segment within the State of São Paulo. Throughout 2010 we have already completed the negotiation of options for purchase of land, totaling R$180 million in PSV, approximately.
PDG Companhia Securitizadora
This company is owned 100% by the Company and is focused on securitization of real estate receivables, whose activities started on 2009. We performed 3 issuance operations of CRIs on 2009, which totaled more than R$100 million and achieved maturity up to 8 years.
These operations relied on ballast-backed ready units, as well as units under construction , besides the co-obligation with PDG Realty.
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We believe this market presents a great growth potential, being an attractive financing alternative for developers.
We present a summary of operations, highlighting the improvement achieved in the rates and deadlines, as detailed below.
On July 2009 we completed the first issuance of Real Estate Receivables Certificates (CRI), resulting 45 CRIs with a face value of $ 1 million each. The certificates were issued by our subsidiary company PDG Companhia Securitizadora, with a maturity of three years, guaranteed by PDG Realty and with 80% of receivables of units under construction. The yield was set at a rate of 110% of CDI (from the 1 st to the 24 th month) and 115% of CDI (from the 25 th to the 36 th month). Holders of CRIs have option of selling to the PDG Securitizadora or PDG Realty on the 24 th month, or by the unit price on the date. As for redemption, the CRIs do not bring this possibility. As for guarantees, these are performed and not performed in relation to its composition, and commercial and residential, in relation to their nature.
On October 2009 the second issuance of CRIs of PDG Companhia Securitizadora was made, amounting to 30 CRIs with a nominal value of approximately R$1 million each. The certificates of the second issuance have a remuneration of 115% of CDI since the issue until the 36 th month and 117% of CDI from the 37 th to the 60 th month, with a payment period of five years and a grace period of principal and interest until the 36 th month. The holders of the CRIs from the second issuance have put options against the issuer and the Company and at the end of the 36 th month they can resell the asset to the issuer for its unit price. As for guarantees, they are performed and not performed in connection to its composition, and commercial and residential, in relation to their nature.
On November 2009 the third issuance of 25 CRI was held at face value of R$1 million each. The certificates of the third issuance have a remuneration of 110% of CDI with a payment period of eight years and a grace period of principal and interest until the 29 th month. Holders of the CRIs from the third issuance have put options against the issuer and the Company and at the end of the 36 th month and the 60 th month they can resell the asset to the issuer for its unit price. As for guarantees, they are performed and not performed in connection to its composition, and commercial and residential, in connection to their nature.
On May 2010 the issuance of the 2 nd series of the 3 rd issuance was held. It resulted with 186 CRIs with face value of approximately R$1 million each. The certificates have a remuneration of IGP-M plus 9.40% per year on the outstanding face value of the current CRI, with payment of the terms of 124 months as from May 7, 2010 to September 7, 2020. As for guarantees, they are performed and not performed in connection to its composition, commercial and residential, in connection to their nature.
In July 2010 the issuance of the 3 nd series of the 3 rd issuance was held. It resulted with 89 CRIs with face value of approximately R$1 million each. The certificates have a remuneration of TR plus 9.80% per year on the outstanding face value of the current CRI, with payment of the terms of 30 months.
In September 2010, the Company issued the 3nd series of the 2 rd issuance of CRI, with face value R$ 111.000.000,00, due on September 4, 2013. The issuance was guaranteed by PDG and fiduciary assignment of receivables. The certificates have a remuneration of TR plus 9.80% per year.
In August 2010, the Company approved the issuance of the 3 nd and 4 nd series of the 3 rd issuance of CRIs, with total value up to R$ 405.000.000,00, for public distribution pursuant to CVM Instruction Nº 400 and the CVM 414. The certificates of the 3 nd series will be remunerated by 107% of the CDI, and the 4 nd series was canceled. So, the 3 nd Series of the 3 rd Issuance includes the issuance of 1.350 CRI, totaling R$ 405.000.000,00, with a maturity of 95 months and 20 days from the date of issuance, which is October 14, 2010. The the 3 nd Series of the 3 rd Issuance is guaranteed by fiduciary assignment of receivables from the sale of real estate units, as well as endorsement of PDG on the ballot in bank credit issued by Agra Empreendimentos Imobiliários S.A. and Goldfarb Incorporações e Construções S.A.
Investment Portfolio
In addition to the Business Units described above, we conducted since January 2007, the Investment Portfolio described below:
Lindencorp
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Overview : Lindencorp, with headquarters in the city of Sao Paulo, is engaged in the development of real estate projects in the state of São Paulo.
Capital Stock : The Company owns 23% of Lindencorp's capital stock. The remaining shares are held by the Fundo de Investimento em Participações Banif Primus, Grupo Adolpho Lindenberg and other private investors.
Operation : Lindencorp develops sophisticated and customized residential buildings for higher-income and higher- middle income customers.
Shareholders' Agreement: The shareholders' agreement entered into between Lindencorp and the other Lindencorp shareholders on December 08, 2010, contains restrictions on the transfer of shares and mechanisms that allow the shared control of such company. The main provisions of this agreement are: (i) a right of first refusal, which provides that any shareholder who intends to sell its shares in Lindencorp must first offer such shares to the other shareholders, (ii) a drag-along right, which gives any shareholder selling its shares the right to require the other shareholders to sell their shares to the same buyer, (iii) a tag-along right, which grants the shareholders the option to sell their respective shares together with any shareholder that intends to sell its shares, (iv) a preemptive right, which grants shareholders the right to participate in the issuance of new shares or convertible securities in the same proportion as their shareholdings, (v) quorum to approve certain matters. The drag-along right (item ii) may be exercised if requested by shareholders representing, at least, 35% of the capital stock. However, prior to the exercise of the drag-along right, the remaining shareholders of Lindencorp will be permitted to acquire the shares held by such shareholder exercising the drag-along right.
REP DI
Overview : REP Real Estate Partners Desenvolvimento Imobiliario S.A., is located in Sao Paulo and resulted from the joint venture between the Company, LDI and the founding shareholders of REP Participações Ltda. (“REP DI”), a consulting and commercial real estate development company. The Company transferred its equity interest in Company REPAC de Participações to REP DI. On July 11, 2008, REP DI obtained its publicly-held company registration before CVM under n° 2153-9.
Capital Stock: The Company hold 25% of the capital stock of REP DI, and LDI owns the remaining shares, resulting in a total direct and indirect equity interest of 42.25%.
Operation : REP DI focuses the Company´s investments in the developments of commercial real estate properties for rental by means of convenience and service centers (“CCS ”). These centers offer services to the public residing in the neighborhood where the properties are located and to people passing through the surrounding area.
Shareholders' Agreement : The REP DI shareholders' agreement entered into on October 05, 2007 contains restrictions on the transfer of shares and mechanisms that allow the shared control of REP DI and the special purpose vehicles incorporated by REP DI. The restriction on the free transfer of shares is carried out by means of preemptive rights to purchase such shares. The shareholders' agreement also provides for a tag-along right, which grants the shareholders the right (but not the obligation) to sell or transfer its equity interest to the buyer of the shares held by the other party, based on the same price and under the same terms and conditions. With respect to the sharing of control of REP DI and the special purpose vehicles controlled by REP DI, the shareholders' agreement assures Company the option to elect one member of the board of directors, consisting of four members. Certain matters set forth in REP DI's bylaws require approval by supermajority quorum. The real estate projects we decide not to carry out through of REP DI may be freely developed by Lindencorp.
Brasil Brokers
Overview : Brasil Brokers Participações S.A. focuses on providing real estate brokerage and consulting services. It consists over 20 companies and has one of the largest sales team in Brazil with approximately 8.000 brokers currently distributed approximately in 800 sale points in approximately 15 Brazilian states.
Capital Stock : The Company currently holds, directly and indirectly, 3.63% of Brasil Brokers' capital stock.
Operation : Brasil Brokers renders general real estate brokerage services, primarily selling and consulting services.
Shareholders' Agreements : On June 30, 2007, the Company and the other shareholders of Brazil Brokers entered into two shareholders' agreements, (i) one to govern the management of Brasil Brokers and its respective 52 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
subsidiaries, as well as the shareholders' relationships prior to and during the Brasil Brokers IPO (“Pre-IPO Shareholders' Agreement ”), and (ii) other to govern the shareholders' relationship after the Brasil Brokers IPO. The rights and obligations set forth in the post-IPO shareholders' agreement include (a) restrictions on sale or transfer of Brasil Brokers shares, and (b) rules concerning voting rights in the meetings of the board of directors and shareholders´ meetings of Brasil Brokers (“Post-IPO Shareholders' Agreement ”).
The rights and obligations set forth in the Post-IPO Shareholders' Agreement are: (i) restrictions concerning the transfer of Brasil Brokers shares within the first six years after the completion of the Brasil Brokers IPO, (ii) a right of first refusal, which provides that any shareholder who intends to sell its shares in Brasil Brokers must first offer such shares to the other shareholders; (iii) prohibitions on encumbering the shares of Brasil Brokers; and (iv) supermajority quorums and a prior meeting requirement for the approval of certain matters in shareholders' or board of directors' meetings.
TGLT
Description : TGLT S.A. is a real estate development company that develops primarily residential buildings in Buenos Aires, Argentina, and other big cities. Recently, TGLT conducted an IPO before the Stock Exchange in Buenos Aires and received the equivalent in Argentine Pesos to approximately US$55 million, sufficient resources for TGLT to implement its current business plan. The shares sahll be traded on the Stock Exchange of Buenos Aires and shall have Global Depositary Receipts traded in the United States of America, each one representing 05 shares.
Capital Stock : On August 31, 2007, The Company acquired 8,571 Class B registered common shares of TGLT's capital stock for a price in U.S. dollars equivalent to R$13.7 million, representing 30% of TGLT's total voting stock. Prior to the IPO, PDG Realty has increased its participation to 41.54% with the transfer of participation in projects developed together with TGLT. After the IPO, PDG now holds 27.18% of capital stock of TGLT.
Operation : TGLT develops residential buildings for higher-income and high middle-income customers in Argentina.
Shareholders' Agreement : Pursuant to a shareholders' agreement entered between the Company and Mr. Federico Nicolas Weil and TGLT's bylaws, the Company has the right to appoint three members of the Board of Directors and one of the three members of TGLT's board of auditors (commisión fiscalizadora)
a. Participation of the Company in companies of the group
The Company does not participate in companies of the group.
b. Participation of companies of the group in the Company
There is no participation of companies of the group in the Company.
c. Companies under common control There are no companies under common control.
8.2. Organization Chart of the economic group which includes the Company, provided it is compatible with the information presented in item 8.1
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100%
100% 23% 100% 100% 100% 3,38% 27,18% 100%
42,25% (2)
(2) The Company holds 25% of the shares of capital stock of REP DI, and the Lindencorp holds the remaining shares, resulting in a total direct and indirect participation of the Company of 42.25%.
8.3. Description of the operations of restructuring, such as acquisitions, mergers, takeovers of shares, disposals and corporate takeovers, acquisitions and divestitures of important assets, which occurred in the group 2
Fiscal Year ended on December 31, 2007
(i) Merger with Key West Participações S.A., company which owned 12.5% of the share capital of Goldfarb, with consequent increase in the capital of the Company of R$12.3 million, with the issuance of 2,022,272 common shares which were issued to former shareholders of Key West Participações SA through the Company holds 70% of the shares of Goldfarb;
(ii) incorporation of MP Holding Ltda., which owned 1.67% of Goldfarb, with a consequent increase in the capital of the Company of R$3.3 million by issuance of 681,818 new common shares;
(iii) incorporation of MP Holding 2 SA, company which owned 2.5% of Goldfarb, with a consequent increase in the capital of the Company of R$5.7 million by issuance of 1,136.364 new common shares;
(iv) incorporation of CHL XV Incorporações Ltda., which owned 10% of the CHL, with a consequent increase in the Company's participation in the CHL in the corresponding 10%; and
(v) incorporation of CHL XXXIV Incorporações Ltda., which owned 12.31% of the CHL, with a consequent increase in the capital of the Company of R$20.2 million by issuance of 3.2 million new common shares.
Fiscal Year ended on December 31, 2008
2 When the annual presentation of the form of reference, the information should refer to the last three fiscal years. Upon presentation of the form of reference on behalf of the application for registration of public distribution of securities, the information should refer to the three fiscal years and the current fiscal year.
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(vi) incorporation of MP Holding 3 Ltda., which owned 20% of common shares issued by Goldfarb. Due to the merger the Company issued 829,644 new shares and 40 warrants, in four different series.
Fiscal Year ended on December 31, 2009
(vii) incorporation of CHL LXX Incorporations Ltda., which owned 30% of common shares issued by the CHL. Due to the merger the Company issued 779,062 new shares and 4 warrants, in four different series.
Fiscal Year ended on December 31, 2010
(viii) incorporation of the shares of AGRE Empreendimentos Imobiliários S/A. Due to the merger the Company issued 148,500,001 new shares delivered to former shareholders of AGRE.
8.4. Other relevant information
There is no other relevant information about this item 8.
9. MATERIAL ASSETS
9.1. Description of assets of non-current assets for the development of the Company:
a. Fixed assets, including those subject to rent or lease, identifying its location
Consolidated Consolidated Consolidated Consolidated
09/30/2010 12/31/2009 12/31/2007 12/31/2006
Annual Accrued Net Fixed Net Fixed Net Fixed Net Fixed Depreciation Cost Depreciation Assets Assets Assets Assets Rate
Ongoing Fixed Assets - 20,442 - 20,442 12,078 - -
Fixed Assets in Use 342,758 (176,504) 166,254 70,234 75,689 4,987 Plots - 34,202 - 34,202 12,223 12,418 764 Buildings 4% 4,441 (642) 3,799 1,819 8,523 2 Machinery and Equipment 10% 16,636 (2,044) 14,592 7,000 3,934 264 Furniture and Fixture 10% 18,682 (7,354) 11,328 2,.941 2,203 1,316 Computers 20% 15,570 (5,642) 9,928 3,221 2,269 1,994 Vehicles 20% 790 (402) 388 4,770 5,291 65 Booth Sales (*) 231,069 (155,583) 75,486 37,591 40,099 -
Benfeitoria em Imóveis de Terceiros 10% 6,767 (3,276) 3,491 - - - Others 0% a 10% 14,601 (1,561) 13,040 669 952 582
Total 363,200 (176,504) 186,696 82,312 75,689 4,987 * The annual depreciation rate depends on the useful life of each sales stand.
Location
SP RJ PR MG MT Others Balance SP RJ PR MG MT Others
09.30.2010 100% - - - - - 20,442 20,442 - - - - - Ongoing Fixed Assets
2009 100% - - - - - 12,078 12,078 - - - - -
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2008 ------
2007 ------
09.30.2010 100% - - - - - 34,202 34,202 - - - - -
2009 100% - - - - - 12,223 12,223 - - - - - Plots
2008 100% - - - - - 12,418 12,418 - - - - -
2007 100 % - - - - - 764 764 - - - - -
SP RJ PR MG MT Others Balance SP RJ PR MG MT Others 09.30.2010 86% 3% - 11% - - 3,799 3,267 114 - 418 - - 2009 92% 8% - - - - 1,819 1,674 146 - - - - Buildings 2008 100% - - - - - 8,523 8,523 - - - - - 2007 64% 36% - - - - 2 1 1 - - - - 09.30.2010 76% 6% - 4% 6% 8% 14,592 11,090 876 - 584 876 1,167 Machinery and 2009 56% 44% - - - - 7,000 3,920 3,080 - - - - equipment 2008 83% 17% - - - - 3,934 3,265 669 - - - - 2007 95% 5% - - - - 264 251 13 - - - - 09.30.2010 61% 15% 61% 1% 4% 10% 11,328 6,910 1,699 113 1,020 453 1,133 Furniture and 2009 60% 40% - - - - 2,941 1,765 1,177 - - - - fixtures 2008 45% 55% - - - - 2,203 991 1,212 - - - - 2007 53% 47% - - - - 1,316 697 619 - - - - 09.30.2010 46% 39% - 15% - - 9,928 4,56 3,877 - 1,489 - - 2009 59% 40% - - - 1%- 3,221 1,900 1,288 - 32 - - Computers 2008 45% 55% - - - - 2,269 1,021 1,248 - - - - 2007 59% 41% - - - - 1,994 1,176 818 - - - - 09.30.2010 76% 24% - - - 388 295 93 - - - - 2009 100% - - - - - 4,770 4,770 - - - - - Vehicles 2008 100% - - - - - 5,291 5,291 - - - - - 2007 100% - - - - - 65 65 - - - - - 09.30.2010 68% 11% 4% 3% - 14% 75,486 51,303 8,3033 3,019 2,265 - 10,568 2009 76% 24% - - - - 37,591 28,569 9,022 - - - - Booth sales 2008 70% 29% 1% - - - 40,099 28,069 11,629 401 - - - 2007 ------09.30.2010 51% 6% 5% 27% - 11% 3,491 1,780 209 175 943 - - Boon to Third Party 2009 ------Property 2008 ------2007 ------09.30.2010 88% 5% - 7% - - 13,040 11,475 652 - 913 - - 2009 5% 71% 24% - - - 669 33 475 161 - - - Others 2008 - 100% - - - - 952 - 952 - - - - 2007 93% 7% - - - - 582 541 41 - - - -
Leasing - Financial
The Company has a contract of financial leasing of an Aircraft Cessna Model 550 (Citation Bravo), with Safra Leasing SA Arrendamento Mercantil, hired on January 15, 2010 for a period of forty-two months. The Company also has a contract with the Banco Commercial Investment Trust do Brasil SA - a multiservice bank of financial leasing – for six cranes model ZHONGWEN QYZ63, entered into June 4, 2008 for a period of thirty-six months. The Company paid off the lease with Bradesco Leasing SA of an aircraft King Air C-90 and, on March 25, 2010, sold it for R$5,100. The net value of the aircraft downloaded from the category of fixed assets was R$4,288 on the sale date, and revenues earned in this transaction were of R$812.
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Given the CVM Deliberation No. 554 of November 12, 2008, we present the following data relating to leases:
Financial Leasing 09/30/2010 12/31/2009 Acquisition
Cost - 06 Cranes Model ZHONGWEN QYZ63 2,340 2,340 6/4/2008
Cost – Aircraft Cessna Model 550 7,806 5,095 1/15/2010
(Citation Bravo) – Year 2006
Accrued Depreciation (1,000) (1,092)
Total 9,146 6,343
The Company recognized in the results of the period ended on September 30, of 2010 the depreciation expense of R$627 relating to leasing transactions.
The assets of the transaction is recorded in the financial statements under "Fixed Assets" and has been depreciated as the estimated useful life of the asset. The liability of the transaction is recorded at present value under the heading “Loans and Financing”, whose maturity, fees and guarantees are described in Note 12.
The present value of future minimum lease transactions with on September 30, 2010 is as follows:
Current value of future payments 09/30/2010 12/31/2009
Current Installment 2, 974 2,585
Non-current Installment 4,825 3,135
Total 7,779 5,720
b. Patents, trademarks, licenses, concessions, franchises and contracts of technology transfer, informing:
i. duration
The term of the Company's trademarks and patents is the statutory period of 10 years for brands, extendable for equal successive periods, and 20 years for patents, according to Law 9279/96. With regard to the domains, the domain "goldfarb.com.br", owned by our subsidiary Goldfarb, as well as Goldfarb’s domains related to projects, as described below, has duration of 1 year. Moreover, the domains of the Company and CHL, as identified below, also have a 1-year duration. ii. Affected area
Brazilian Territory. iii. Events that can cause loss of rights related to such assets
There are no events that can cause loss of rights related to such assets, in addition to those provided in law.
iv. possible consequences of the loss of such rights to the Company
The Company will have to develop its activities through other brands of the group only, what we do not believe that should cause a material impact on our activities. That is, any rejections of patents, trademarks, licenses and domains will cause no adverse effects on our activities or projects developed, launched and marketed by the Company.
The Company holds two records of the brand “PDG”, both in the class of products and services NCL (8) 36, granted on 8/18/2008, and is the holder of four domain names, the most relevant of which is “www.pdgrealty. com.br”.
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Additionally, our Business Unit Goldfarb holds eight records of the brand Goldfarb, considered important for the development of its activities, as well as 28 domains related to the developments it built, which are:
BRANDS
1) Goldfarb Presentation: Nominative Product or Service Class: NCL (8) 36 Specification: materials for construction and paving; items used in plumbing, sinks, bathroom fixtures and similar items; prefabricated or pre-molded. Granting of registration: 12/10/1991 Duration: 12/10/2011
2) G Goldfarb Presentation: Mixed Product or Service Class: NCL (8) 19 Specification: Building materials (non metallic), non-metallic rigid pipes for building, asphalt, tar and bitumen, non- metallic transportable buildings, monuments not of metal. Granting of registration: 12/10/1991 Duration:12/10/2011
3) G Goldfarb Presentation: Mixed Product or Service Class: 37:05-40 37 - Services of architecture, engineering, technical design, construction, study and graphic representation of the origin, formation, evolution and transformation of the globe, prospecting, landscaping, decorating 05 - Architectural and engineering. 40 - Construction and repair of civil works CFE (4) – 27.5.1 - Letters presenting a special form of writing; 26.7.1 - Circles or ellipses with one or more segments and / or sectors of circles or ellipses Granting of registration: 08/17/1993 Duration: 08/17/2013
4) G Goldfarb Presentation: Mixed Product or Service Class: 19 - Materials for construction and paving, prefabricated or pre-molded structures, wood, sanitary equipment, plumbing and hoses. 10 - Materials for building and paving in general. 30 - Sinks, sanitary ware and similar items. 40 - Articles used in plumbing. CFE (4) – 27.5.1 - Letters presenting a special form of writing; 26.7.1 - Circles or ellipses with one or more segments and / or sectors of circles or ellipses Granting of registration: 08/03/1993 Duration: 08/03/2013
5) Goldfarb Presentation: nominal Product or Service Class: 40 - This class includes services not provided in classes 36, 37, 38, 39 and 41. 15 - Auxiliary services to the trade of goods, including import and export. 25 - Services of agency, training and supply of manpower in general. Granting of registration: 08/12/2007 Duration: 08/12/2007
6) G Goldfarb Presentation: Mixed Product or Service Class: 58 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
40 - This class includes services not provided for in classes 36, 37, 38, 39 and 41. 15 - Auxiliary services to the trade of goods, including import and export. 25 - Services of agency, training and supply of manpower in general. Granting of registration: 08/12/2007 Duration: 08/12/2017
7) Goldfarb Presentation: Mixed Product or Service Class: NCL (8) 19 Building materials (non metallic), non-metallic rigid pipes for building, asphalt, tar and bitumen, non-metallic transportable buildings, non-metallic monuments. CFE (4): Letters presenting a special form of writing Granting of registration: 09/25/2007 Duration: 09/25/2017
8) Goldfarb Presentation: Mixed Product or Service Class: NCL (8) 34 Construction, repairs, installation services. CFE (4): 27.5.1 Letters presenting a special form of writing Granting of registration: 10/30/07 Duration: 10/30/2017
DOMAINS
domain: acquavitamooca.com.br domain: agorada.com.br domain: alphaview.com.br domain: altavistavilamaria.com.br domain: apiceresidencial.com.br domain: brisasdoparque.com.br domain: condominiolavita.com.br domain: essencialresidence.com.br domain: euqueroumapartamento.com.br domain: feiraogoldfarb.com.br domain: goldfarb.com.br domain: goldfarbplanetlife.com.br domain: jardimgardenia.com.br domain: melhordazonanorte.com.br domain: moremelhor.com.br domain: primejaguare.com.br domain: privilegetatuape.com.br domain: reservadasacacias.com.br domain: reservadoslagos.com.br domain: residencialplenitude.com.br domain: residencialvitoria.com.br domain: spirarelapa.com.br domain: supremeresidencial.com.br domain: terrazamarina.com.br domain: terrazzamarina.com.br domain: veritafreguesia.com.br domain: vertitafreguesia.com.br domain: villagiodoparque.com.br
Our Business Unit CHL is holder of three registration applications of brands and one of domain, they are:
BRANDS
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1) O2 Corporate & Offices Presentation: Mixed Product or Service Class: NCL (9) 36 CFE (4): 1:15:15 - Clouds, fog, steam, smoke / 1:15:11 - drops / 27.5.1 - Letters presenting a special form of writing Current status: published in the registration request 01/08/2008
2) Aluguel Nunca Mais Presentation: Mixed Product or Service Class: NCL (9) 36 Insurance, financial business, monetary business, real estate business. CFE (4): 26.1.1- Circles / 26.4.2 – Rectangles/ 27.5.1 – Letter presenting a special form of writing Status: published in the registration request in 03/04/2008
3) Plaza Office Campo Grande Presentation: Mixed Product or Service Class: NCL (9) 3 Insurance, advertisement, business management, business administration, office functions. CFE (4): 27.5.1 – Letters presenting a special form of writing Status: published in the registration request in 12/09/2008
DOMAIN
domain: chlvendas.com.br
Our subsidiary Lindencorp holds an application for the brand Lindencorp, whose transfer was recently concluded, but has not yet been endorsed by the INPI.
c. Companies in which the Company has an interest
Subparagraphs (i) to (vi) of subsection 9.1 (c) are described below:
Subsidiary Company or Investment Investment Investment Investment Company Developed Participatio associated Record in Headquarte on 09.30.10 on 12.31.09 on 12.31.08 on 12.31.07 name activities n company CVM rs ( The Goldfarb activities are concentrated in developing economic and popular residential units for families with monthly Goldfarb Don’t have income Incorporaçõe (had the between 5- São Paulo – s e 100% Subsidiary record 1,183,028 426,204 278,642 260,518 20 minimum Brazil Construções canceled in salary, with S.A. 12/18/2009) a business structure model based in the standardizati on of the construction and incorporatio n process and the vertical 60 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Subsidiary Company or Investment Investment Investment Investment Company Developed Participatio associated Record in Headquarte on 09.30.10 on 12.31.09 on 12.31.08 on 12.31.07 name activities n company CVM rs ( integration of production
The CHL activity is the incorporatio n market of residential CHL real estate in Desenvolvi the State of Rio de mento Rio de 100% Subsidiary Don’t have Janeiro – 263,461 210,724 89,976 85,475 Imobiliário Janeiro, Brazil S.A. being one of the largest developers in that state, especially in middle and upper- middle classes.
61 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Subsidiary Company or Investment Investment Investment Investment Company Developed Participatio associated Record in Headquarte on 09.30.10 on 12.31.09 on 12.31.08 on 12.31.07 name activities n company CVM rs ( Company focused on securitizatio PDG n of real CVM Code Companhia estate 02164-4 Rio de Not Securitizado receivables, 100% Subsidiary (Recorded Janeiro – 5,055 1,918 0 applicable ra whose on Brazil activities 10/03/2008) started on 2009.
Company focused on operations of middle and upper PDG São middle class Paulo São Paulo - Not Not Not in São Paulo 100% Subsidiary Don’t have 7,807 Incorporaçõe Brazil applicable applicable applicable (with a focus s S.A. on units from R$200 to $ 500 thousand).
Company incorporated by PDG Realty on June 2010, AGRE is the combination of the Don’t have AGRE operations of (had its Empreendim AGRA, CVM Code São Paulo - entos Abyara and 100% Subsidiary 2,355,833 - - - 21911 Brazil Imobiliários Klabin Record S/A Segall, canceled) companies with extensive experience and tradition in real estate market.
Focuses the Company's investments in commercial real estate projects aimed at Real Estate income Partners CVM Code generation Desenvolvi 21539 São Paulo - through the 39.93% Subsidiary 10,038 11,675 10,493 9,021 mento (recorded on Brazil development Imobiliário 07/11/2008) of S.A. convenience and service centers, which aims at serving the public resident in the region where they 62 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Subsidiary Company or Investment Investment Investment Investment Company Developed Participatio associated Record in Headquarte on 09.30.10 on 12.31.09 on 12.31.08 on 12.31.07 name activities n company CVM rs ( are located The Lindencorp aims to explore the market for residential real estate development Lindencorp for the upper Desenvolvi and upper- São Paulo - mento middle 23% Subsidiary Don’t have 49,396 49,396 30,396 14,181 Brazil Imobiliário classes in the S.A. State of São Paulo. Lindencorp focuses on developing customized designs and sophisticated projects.
Real estate brokerage service with Brasil CVM Code a focus on Rio de Brokers Invested 21180 performance 3.38% Janeiro - 42,411 2,660 2,660 2,660 Participaçõe entity (recorded on and market Brazil s S.A. 10/26/2007) intermediati on and real estate consulting.
Explore the market for residential Buenos real estate Invested 50,307 TGLT S.A. 30% Don’t have Aires - 29,006 29,810 12,399 development entity Argentina for the upper and middle- high classes in Argentina
63 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
(viii) Market value of participation according to the stock price at the end of the fiscal year, when such shares are traded on organized securities markets. Except for Brasil Brokers, the Subsidiaries are not listed on a stock exchange, so there is no market value of participation. The table below shows the market value of the participation of the Company in the Brasil Brokers:
Nine Months ended Fiscal Years ended on Fiscal Year ended on Fiscal Year ended on R$ on 09.30.2010 12.31.2009 12.31.2008 12.31.2007 Market value Brasil 95,510,006,90 63,919,374.48 16,275,766.65 93,708,959.50 Brokers
Participation in the AGREE is now held only on June 2010 when it ceased to be publicly traded.
(ix) Appreciation or depreciation of such participation in the last three fiscal years, according to the book value and
(x) Aappreciation or depreciation of such participation, in the last three fiscal years, according to market value, according to the quotation of shares on the date of closing of each fiscal year, when such shares are traded on organized markets
With the exception of the devaluation of the market value of the participation of the Company in Brasil Brokers on 2008, and its recovery in the year of 2009, according to the table in paragraph (viii) above, there were no appreciation or depreciation of market value or book value of the Company's participation in other Subsidiaries in the last three fiscal years.
(xi) Dividends
Company/Year (in R$) 2007 2008 2009 09.30.2010 Total Gold 459,355 - - - 584,699 CHL - 4,906,609 2,260,000 - 7,166,609 REP DI - - - - - Lindencorp 3,428,256 1,170,000 429,000 - 5,027,256 Cipasa - - - - - Brasil Brokers - - 51,079 - 51,079 TGLT - - - - -
Total 3,887,611 6,076,609 2,740,079 - 12,829,643
(xii) Reasons for the acquisition and maintenance of such participation.
The reason for maintaining such investments is the development of our real estate development activities, the growth of sector and the expectation of their future income.
9.2. Others information deemed relevant by the Company
There is no other relevant information about this item 9.
10. COMMENTS OF THE MANAGERS
10.1. The managers must comment about:
a. General Financial and Assets Conditions
The macro-economic environment positively influenced Brazilian real estate market during 2006. Since it provided three factors that are extremely relevant to our market: (i) inflation under control; (ii) a decrease in interest rates and 64 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
(iii) increased income. Another key factor for the sector’s growth was the increased availability of credit both to finance the construction of buildings and for the buyer of real estate. Private banks have funded on 2006, R$9.5 billion, a growth of 75.9% over the previous year. At the end of 2006, we focused much of our performance in the economic market via Goldfarb, with the total launched by PDG Realty un this year (R$761.7 million), 87% were directed to this segment. The sales volume was also significant (total sold of R$563.9 million), putting us as one of the main developers in Brazil.
During 2007, the real estate market was driven by the growth of Brazilian economy, with main vectors being the maintenance of the volume of credit and decrease in SELIC rate. In that same year we attended the launching of 73 projects, which amounted to R$2.26 billion in PSV Launched, R$1.233 billion related to PSV Launched PDG Realty, representing an increase of 309% compared to 2006. For sales, we had great prominence in the industry, with a total contracted sales until December 31, 2007 of R$2.077 billion, from which R$969.95 million were the pro rata share of PDG Realty. Of the total units launched during 2007, 77% were sold. We also highlight that throughout 2007 we performed three public funding operations, totaling R$1,467 million, of which R$1,257 million joined the Company's cash (historical values). All these operations have resulted in extensive growth of our operations, as well as a solid cash position.
On 2008 the financial crisis hit the world's leading economies, with their reflections on the Brazilian real estate market, especially as regards the grant of credit (customers and developers), and significant reduction in sales. With funding operations on 2007 (IPO, first issuance of debentures of the Company and public offering of shares of the Company), we could normally proceed with our business plan, achieving significant operational and financial indexes, whereas in comparison with other publicly held real estate developers, PDG Realty occupied the third place in launches and sales (on 2006 and 2007 we occupied the 5th and 4th places respectively). During 2008 we launched over 85 projects, which amounted to R$3.77 billion in PSV Launched, R$2.61 billion related to PSV Launched PDG Realty. Contracted sales reached R$1.81 billion, with over 14,000 units sold.
On 2009, the federal government launched the "My Home My Life," which consists of several initiatives to increase housing supply and purchasing power of Class C to E, with income of up to ten minimum wages, which is currently valued at R$465.00 and reduce the housing deficit in Brazil, now at 7.2 million homes. Such macroeconomic event, significantly leveraged the industry and provided PDG an even greater market expansion due to be one of the largest developers in Brazil with focus on low income. In the midst of significant government subsidies and economic growth, the Company has reached the level of R$3,026.6 million in launches and R$2,670.3 million in sales, ranking among the top 3 developers in the industry.
b. Capital structure and the possibility of redemption of shares or quotas, indicating:
i. chance of redemption ii. formula for calculating the redemption value
There is no chance of redemption of shares of the Company other than those provided by law.
c. Ability to pay in relation to financial commitments
For the year ended on December 31, 2006, we presented a cash of R$39.4 million, for a total debt of R$112.8 million, totaling a net debt position of R$73.3 million. This value shows a good condition of solvency of company, because it represented 29% of net worth on that date.
Throughout the year 2007, we conducted three funding: IPO, in which we raised approximately R$440.0 million (held in January 2007), first issuance of non-convertible debentures on July 2007 (“1st Issuance ”) totaling R$250.0 million and initial public offering on July 2007, totaling approximately R$575.0 million. With these transactions we closed 2007 with an extremely strong cash position, with a total net cash of R$230.9 million on December 31, 2007.
On 2008, we invested most of the funds raised in the last year, and because of the financial crisis that hit the world markets, we observed no favorable conditions for the issuance of debts or other types of funding. On December 31, 2008, we present a net debt of R$610.4 million, representing 41.3% of the net worth on that date.
Our net debt for the year 2009 was R$404.9 million and our net worth on that date was R$2,940.8 million. Thus, our net worth had coverage ratio of 7.3 times our net debt. This means that for each R$1.00 of our net debt we have 65 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
R$7.30 of net worth to cover the balance. Thus, we believe that our existing resources and operating cash flow will be sufficient to meet our liquidity needs and our financial commitments already contracted. We note that during 2009, we held the second and third issuance of convertible debentures (“2nd Issuance ” and “3rd Issuance ”, respectively), held respectively on April and September 2009. These issuances represented a cash inflow of approximately R$570.0 million.
d. Sources used in finance for working capital and for investment in non-current assets
Most of the funds raised on 2006 relates primarily to resources obtained through the Housing Financial System (SFH) of the total debt on that date (R$112.8 million), approximately R$60 million relate to financing projects.
On 2007, we highlight the 1st Issuance of non-convertible debentures, which totaled R$250.0 million. With this transaction, our debt totaled R$490.9 million on December 31, 2007.
Throughout the year 2008 in line with the growth of our operation, we continued to raise funds to obtain work capital and funding for our works through the SFH. On December 31, 2008, our funding totaled R$866.8 million.
For 2009, we highlight the 2nd and 3rd Issuance of convertible debentures held respectively on April and September 2009. These issuances represented a cash inflow of approximately R$570.0 million. On December 31, 2009, the Company's indebtedness totaled R$1,505.9 million.
e. Financing sources for working capital and for investment in non-current assets to use for converging liquidity deficiencies
As in fiscal years 2006 and 2008, the Company intends to make use of available funding from the Housing Finance System (SFH) and other borrowing facilities with financial institutions to raise funds for investment in non-current assets and, repeating what occurred in fiscal years 2007 and 2009, intends to use the issuance of debentures to finance their working capital and other investments.
f. Debt levels and the characteristics of such claims, describing also :
i. Loan agreements and relevant financing
ii. Other long-term relations with financial institutions
iii. Subordination degree between the debts
iv. Any restrictions imposed on the Company, particularly in relation to limits of indebtedness and contracting of new debts, distribution of dividends, disposal of assets, the issuance of new securities and the sale of corporate control
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
PDG Realty S.A. Empreendime ntos Participações
Dinamarca Empreendiment PDG Personal CDI + 1.9% p.a. 579 768 776 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Dinamarca TR + 9.92% p.a. 1,303 - - - Apr/13 Mortgage CEF Empreendiment 66 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand) os Imobiliários SPE Ltda.
Gold Amapá Mortgage / Empreendiment Receivables / TR + 11% p.a. 7,981 3,441 - - apr/14 Bradesco os Imobiliários PDG Personal SPE ltda Garantee
Gold Aruba Empreendiment PDG Personal CDI + 1.9% p.a. - 768 776 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Beige Empreendiment TR + 10.70% 7,067 - - - jun/12 Mortgage Itaú os Imobiliários p.a. SPE Ltda.
Gold Cuiabá Empreendiment TR + 10.50% 4,145 - - - oct/11 Mortgage Santander os Imobiliários p.a. SPE Ltda.
Gold Groelândia CDI + 1.90% PDG Personal Empreendiment - 1,024 - - jan/11 Votorantim p.a. Garantee os Imobiliários SPE Ltda.
Gold Ilhéus Empreendiment PDG Personal CDI + 1.9% p.a. 193 193 259 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Lituania Empreendiment TR + 8.3% p.a. 297 297 - - Sep/12 Mortgage CEF os Imobiliários SPE Ltda.
Gold Orange Empreendiment PDG Personal CDI + 1.9% p.a. 579 768 776 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Polônia Empreendiment PDG Personal CDI + 1.9% p.a. 386 512 518 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Porto Velho PDG Personal Empreendiment CDI + 1.9% p.a. 772 1,024 1,035 - jan/11 Votorantim Garantee os Imobiliários SPE Ltda.
Gold Portugal PDG Personal CDI + 1,9% p.a. 386 2,257 518 - jan/11 Votorantim Empreendiment Garantee os Imobiliários
67 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
SPE Ltda.
Gold Portugal Empreendiment TR + 11% p.a. 3,307 - - - aug/12 Mortgage Banco do Brasil os Imobiliários SPE Ltda.
Gold Red Empreendiment PDG Personal CDI + 1.9% p.a. 1,350 - - - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Sudão Empreendiment PDG Personal CDI + 1.9% p.a. 579 775 776 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Tunísia Empreendiment PDG Personal CDI + 1.9% p.a. 463 614 - - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Turquia Empreendiment PDG Personal CDI + 1.9% p.a. 1,158 1,535 1,553 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Turquia Mortgage / Empreendiment TR + 8.3% p.a. 188 - - - oct/12 Receivables / Caixa os Imobiliários Guaranty SPE Ltda.
Gold Turquia Empreendiment TR + 8.3% p.a. 990 - - - Jun/13 Mortgage CEF os Imobiliários SPE Ltda.
Gold Withe Empreendiment PDG Personal CDI + 1.9% p.a. 579 767 776 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Goldfarb PDG 2 Incorporações TR + 11% p.a. 7,178 - - - aug/12 Mortgage Banco do Brasil Ltda.
PDG Realty S.A. PDG Personal Empreendiment CDI + 1.65% 306,800 - - - dec/10 Itaú-Unibanco Garantee os e Participações
PDG Realty S.A. PDG Personal Empreendiment 8.25% 23,195 - - - feb/18 FINEP Garantee os e Participações
68 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
PDG Realty S.A. PDG Personal Empreendiment 5.25% 23,055 - - - feb/18 FINEP Garantee os e Participações
PDG Realty S.A. Mortgage/Recei Empreendiment CDI + 2.5% p.a. 3,806 7,201 500 - feb/11 vables/Proporti IBM os e onal Guaranty Participações
Total PDG 396,336 21,709 8,263 - Realty
Goldfarb e PDG
Co
Alencar Araripe Empreendiment IGPM + 12.0% Participation Rio Bravo / - - 5,068 - oct/11 os Imobiliários p.a. Share GMAC Ltda.
Alencar Araripe Mortgage/Recei Empreendiment TR + 9% p.a. - - 5,981 - aug/09 vables/Proporti ABN Amro os Imobiliários onal Guaranty Ltda.
Alves Pedroso Mortgage / Empreendiment Receivables / TR + 8.3% p.a. 460 834 500 - sep/10 Caixa o Imobiliário PDG Personal Ltda. Garantee
Amsterdam Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 39,622 27,906 6,800 - feb/11 ABN Amro os Imobiliários PDG Personal SPE Ltda. Garantee
Áustria Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 6,661 18,796 11,043 - jun/11 ABN Amro os Imobiliários PDG Personal SPE Ltda. Garantee
Bandeirante Receivables/ Empreendiment TR + 8.3% p.a. 3,652 - - - apr/13 Proportional CEF os Imobiliários Guaranty S.A.
Mortgage / Big Field S.A Receivables / TR + 10.5% p.a. 25,761 11,827 - - nov/11 Itaú Incorporações PDG Personal Garantee
Bruxelas Empreendiment TR + 9.92% 11,466 - - - sep/12 Mortgage CEF os SPE Ltda.
Dinamarca 573 768 776 - jan/11 Votorantim CDI + 1.90% PDG Personal Empreendiment 69 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand) os Imobiliários p.a. Garantee SPE Ltda.
Dinamarca Empreendiment TR + 9.92% p.a. 1,302 - - - Apr/13 Mortgage CEF os Imobiliários SPE Ltda.
Estela Borges Mortgage / Empreendiment Receivables / TR + 10% p.a. 5,719 7,119 667 - mar/12 Itaú os Imobiliários PDG Personal Ltda. Garantee
EP770 Receivables/ Empreitera TR + 10.5% p.a. 2,552 - - - Jan/12 Proportional Bradesco Ltda. Guaranty
Estela Borges Empreendiment INCC + 12.0% Participation - - 1,134 - sep/11 Cyrela os Imobiliários p.a. pledge Ltda.
Finlândia Mortgage/Recei Empreendiment TR + 11% p.a. - - 6,614 - nov/09 vables/Proporti Unibanco os Imobiliários onal Guaranty SPE Ltda.
Gold Acapulco Mortgage / Empreendiment TR + 11% p.a. - 4,316 - - mar/12 PDG Personal Caixa os Imobiliários Garantee SPE Ltda.
Gold Acre Mortgage / Empreendiment CDI + 1,30% a.a - - 16,447 - jul/11 PDG Personal Itaú os Imobiliários Garantee SPE Ltda.
Gold Alaska Empreendiment CDI + 1,90% PDG Personal 772 1,024 1,035 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Amapá Mortgage / Empreendiment Receivables / TR + 11% p.a. 7,980 3,441 - - apr/14 Bradesco os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Argentina Empreendiment CDI + 1.90% PDG Personal 1,157 1,536 1,553 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Aruba Empreendiment CDI + 1.90% PDG Personal - 768 776 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Beige TR + 10.7% p.a. 7,066 - - - jun/12 Mortgage Itaú Empreendiment 70 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand) os Imobiliários SPE Ltda.
Gold Black Empreendiment TR + 9.92% p.a. 7,792 - - - oct/11 Mortgage Caixa os Imobiliários SPE Ltda.
Gold Canadá Empreendiment PDG Personal CDI + 1.9% p.a. 772 1,024 1,035 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Canadá Empreendiment TR + 11.5% p.a. 4,965 - - - aug/11 Mortgage Santander os Imobiliários SPE Ltda.
Gold Cancun Empreendiment CDI + 1.90% PDG Personal 3,472 4,606 4,658 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Celestino Mortgage / Bourroul Receivables / Empreend. TR + 10.5% p.a. - 11,078 2,703 - apr/10 Itaú PDG Personal Imobiliários Garantee SPE Ltda.
Gold Cuiabá Empreendiment TR + 10.5% p.a. 4,145 - - - oct/11 Mortgage Santander os Imobiliários SPE Ltda.
Gold Egito Empreendiment TR + 10.5% p.a. 7,176 - - - dec/11 Mortgage Santander os Imobiliários SPE Ltda.
Gold Escócia Empreendiment CDI + 1.90% PDG Personal 3,086 6,259 4,140 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Escócia Mortgage / Empreendiment CDI + 10.5% Receivables / 11,245 2,165 - - jul/09 Santander os Imobiliários p.a. PDG Personal SPE Ltda. Garantee
Gold França Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 34,429 17,538 - - sep/11 Itaú os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Geneva Mortgage / Empreendiment TR + 10.5% p.a. 4,921 - - - sep/11 Receivables / HSBC os Imobiliários Guaranty SPE Ltda.
71 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Gold Groelândia CDI + 1.90% PDG Personal Empreendiment 38 1,024 2,070 - jan/11 Votorantim p.a. Garantee os Imobiliários SPE Ltda.
Gold Haiti Mortgage / Empreendiment Receivables / TR + 9% p.a. - 113 5,234 - feb/10 ABN Amro os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Ilhéus Empreendiment CDI + 1.90% PDG Personal 191 256 259 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Lituania Empreendiment TR + 8.3% p.a. 297 - - - sep/12 Mortgage CEF os Imobiliários SPE Ltda.
Gold Índia Empreendiment CDI + 1.90% PDG Personal 1,929 2,559 2,588 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Irlanda Empreendiment CDI + 1.90% PDG Personal 1,389 1,842 1,863 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Irlanda Mortgage / Empreendiment TR + 8.3% p.a. 3,955 - - - feb/13 Receivables / Caixa os Imobiliários Guaranty SPE Ltda.
Gold Jamaica Mortgage/Recei Empreendiment TR + 9.5% a.a - - 6,130 - jul/09 vables/Proporti Safra os Imobiliários onal Guaranty SPE Ltda.
Gold Lisboa Mortgage / Empreendiment Receivables / TR + 12.0% p.a. 3,261 12,998 - - jul/11 HSBC os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Madri Mortgage / Empreendiment Receivables / TR + 10.5% p.a. - - 3,051 - jan/10 ABN Amro os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Mali Mortgage / Empreendiment TR + 9.92% p.a. - - - - sep/13 Receivables / Caixa os Imobiliários Guaranty SPE Ltda.
Gold Marília CDI + 1.50% Mortgage / 45,149 39,848 25,055 - oct/10 Votorantim Empreendiment p.a. Receivables / os Imobiliários PDG Personal 72 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
SPE Ltda. Garantee
Gold Marrocos Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 9,187 4,544 - - oct/11 ABN Amro os Imobiliários PDG Personal SPE Ltda Garantee
Gold Milano Empreendiment TR + 10.7% p.a. 4,252 - - - jun/12 Mortgage Itaú os Imobiliários SPE Ltda.
Gold Minas Mortgage / Gerais Receivables / Empreendiment TR + 12.0% p.a. 2,700 19,901 1,812 - jun/11 HSBC PDG Personal os Imobiliários Garantee SPE Ltda.
Gold Minas Gerais PDG Personal Empreendiment CDI + 1.9% p.a. 3,970 1,791 1,811 - jan/11 Votorantim Garantee os Imobiliários SPE Ltda.
Gold Mônaco Mortgage/ Empreendiment Fiduciary TR + 11.5% p.a. 9,019 3,772 - - sep/11 Santander os Imobiliários Assignment/ SPE Ltda. Guaranty
Gold New York Mortgage / Empreendiment Receivables / TR + 8.3% p.a. 71 277 - - feb/13 Caixa os Imobiliários PDG Personal Ltda. Garantee
Gold Noruega Mortgage / Empreendiment CDI + 3.00% Receivables / 72,127 32,110 21,808 - mar/11 Votorantim os Imobiliários p.a. PDG Personal SPE Ltda. Garantee
Gold Noruega Empreendiment TR + 9.92% p.a. 27,327 - - - mar/13 Mortgage CEF os Imobiliários SPE Ltda.
Gold Noruega Empreendiment TR + 8.3% p.a. 3,732 - - - feb/14 Mortgage CEF os Imobiliários SPE Ltda.
Gold Oceania Empreendiment CDI + 1.90% PDG Personal 772 1,024 1,035 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Oregon Empreendiment TR + 8.3% p.a. 704 - - - aug/13 Mortgage CEF os Imobiliários SPE Ltda.
73 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Gold Orange Empreendiment CDI + 1.90% PDG Personal 573 768 776 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Panamá Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 21,805 14,632 3,370 - nov/10 Bradesco os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Paraíba Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 1,760 1,836 - - dec/17 Caixa os Imobiliários PDG Personal SPE ltda Garantee
Gold Polônia Empreendiment CDI + 1.90% PDG Personal 377 512 518 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Porto Velho CDI + 1.90% PDG Personal Empreendiment 764 1,024 1,035 - jan/11 Votorantim p.a. Garantee os Imobiliários SPE Ltda.
Gold Portugal Empreendiment CDI + 1.90% PDG Personal 386 512 518 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Portugal Empreendiment TR + 11.0% p.a. 3,307 1,745 - - aug/12 Mortgage Banco do Brasil os Imobiliários SPE Ltda.
Gold Properties Vila Guilherme TR + 11.5% a.a - - 9,202 - jul/09 Mortgage Itaú S.A.
Gold Purple Empreendiment CDI + 1.90% PDG Personal - 1,541 1,553 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Purple Empreendiment Mortgage/ TR + 10.5% p.a. 11,438 - - - may/12 Bradesco os Imobiliários Credit Rights SPE Ltda.
Gold Recife Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 9,904 9,330 - - aug/10 Bradesco os Imobiliários PDG Personal SPE ltda Garantee
Gold Red CDI + 1.90% PDG Personal 1,337 1,791 1,811 - jan/11 Votorantim Empreendiment p.a. Garantee os Imobiliários
74 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
SPE Ltda.
Gold Roraima Empreendiment CDI + 1.90% PDG Personal 1,157 1,535 1,553 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Roraima Empreendiment TR + 10.70% 15,023 - - - jan/12 Mortgage Itaú os Imobiliários p.a. SPE Ltda.
Gold Santiago Mortgage / Empreendiment TR + 11.02% Receivables / 2,284 3,642 - - jul/12 Caixa os Imobiliários p.a. PDG Personal SPE ltda Garantee
Gold Santiago Mortgage / Empreendiment Receivables / TR + 8.3% p.a. 1 429 - - apr/12 Caixa os Imobiliários PDG Personal SPE ltda Garantee
Gold São Paulo Mortgage / Empreendiment Receivables / TR + 9% p.a. - 7,824 9,473 - jun/10 ABN Amro os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Sidney Mortgage/Recei Empreendiment CDI + 1.5% p.a. - - 8,202 - feb/10 vables/Proporti Matone os Imobiliários onal Guaranty SPE Ltda.
Gold Sidney Empreendiment TR + 11.02% - 3,220 - - aug/12 Mortgage Caixa os Imobiliários p.a. SPE Ltda.
Gold Singapura Empreendiment TR + 8.3% p.a. 2.277 688 - - nov/12 Mortgage Caixa os Imobiliários SPE Ltda.
Gold Sudão Empreendiment CDI + 1.90% PDG Personal 579 775 776 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Sudão Empreendiment TR + 8.3% p.a. - 61 - - sep/12 Mortgage Caixa os Imobiliários SPE Ltda.
Gold Suíça Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 8,402 7,694 - - aug/10 Bradesco os Imobiliários PDG Personal SPE ltda Garantee
Gold Texas TR + 10.5% p.a. 18,194 6,882 - - jul/11 Mortgage/ Santander Empreendiment Fiduciary 75 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand) os Imobiliários Assignment/ SPE ltda Guaranty
Gold Tunísia Empreendiment CDI + 1.90% PDG Personal 448 614 1,242 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Turquia Empreendiment CDI + 1.90% PDG Personal 1,157 1,535 1,553 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Gold Turquia Property in Empreendiment Araçatuba / SP TR + 8.5% p.a. 1,178 - - - jun/12 BTG Pactual os Imobiliários and Manaus / SPE Ltda. AM
Gold Uberaba Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 25,494 20,379 - - may/11 ABN Amro os Imobiliários PDG Personal SPE Ltda. Garantee
Gold Uberaba Empreendiment PDG Personal CDI + 1.9% p.a. 3,472 2,303 4,658 - jan/11 Votorantim os Imobiliários Garantee SPE Ltda.
Gold Venice Empreendiment TR + 10.7% p.a. 15,984 - - - sep/11 Mortgage Itaú os Imobiliários SPE Ltda.
Gold Viena Mortgage / Empreendiment Receivables / TR + 11.2% p.a. 1,783 1,870 - - may/12 Caixa os Imobiliários PDG Personal SPE ltda Garantee
Gold Viena Empreendiment TR + 8.3% p.a. - 2,357 - - feb/12 Mortgage Caixa os Imobiliários SPE ltda
Gold Withe Empreendiment CDI + 1.90% PDG Personal 565 768 776 - jan/11 Votorantim os Imobiliários p.a. Garantee SPE Ltda.
Goldfarb Incorporações e CDI + 3.66% PDG Personal - 814 12,483 20,441 jan/10 ABC Brasil Construções p.a. Garantee S.A.
Goldfarb Incorporações e PDG Personal CDI + 1.7% p.a. - - 13,361 7,104 aug/09 Banco do Brasil Construções Garantee S.A.
76 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Goldfarb Mortgage / Incorporações e Receivables / CDI + 2.2% p.a. - 4,562 5,345 - apr/12 Bradesco Construções PDG Personal S.A. Garantee
Goldfarb Incorporações e CDI + 2.00% PDG Personal 12,220 12,566 12,823 - jan/14 Brascan Construções p.a. Garantee S.A.
Goldfarb Mortgage / Incorporações e Receivables / TR + 8.3% p.a. 98 1,924 5,289 - feb/11 Caixa Construções PDG Personal S.A. Garantee
Goldfarb Aplication of Incorporações e CDI + 3.54% a.a - - 30,789 1,985 aug/10 R$2 million at Caixa Construções 98% CDI S.A.
Goldfarb Incorporações e PDG Personal CDI + 1.35% a.a 976 1,424 1,872 - jan/12 CIT Brasil Construções Garantee S.A.
Goldfarb Incorporações e PDG Personal CDI + 2.00% a.a 13,410 28,392 30,368 - may/11 Safra Construções Garantee S.A.
Goldfarb Incorporações e CDI + 1.5 % Aval guarantee - 17,568 - - jun/10 BTG Pactual Construções p.a. PDG S.A.
Goldfarb Incorporações e TR + 8.3% p.a. 896 - - - mar/12 Mortgage Caixa Construções S.A.
Goldfarb Incorporações e 6,778 - - - jan/14 Safra Construções S.A.
Goldfarb Incorporações e CDI + 1.5 % Aval guarantee - - - 5,673 oct/11 Cyrela Construções p.a. PDG S.A.
Goldfarb Receivables / Incorporações e INCC + 12% - - - 3,942 nov/09 Proportional ABN Amro Construções p.a. Guaranty S.A.
Receivables / Goldfarb TR + 9% p.a. - - - 1,676 sep/10 Proportional Santander Incorporações e Guaranty Construções
77 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
S.A.
Goldfarb Receivables / Incorporações e TR + 11% p.a. - - - 5,077 apr/10 Proportional Itaú Construções Guaranty S.A.
Goldfarb Receivables / Incorporações e TR + 11.5% p.a. - - - 16,539 oct/09 Proportional Bradesco Construções Guaranty S.A.
Goldfarb Incorporações e Promissory TR + 12% p.a. - - - 1,916 jul/08 BIC Construções Note S.A.
Goldfarb Incorporações e CDI + 6.80 % Rio Bravo / - - - 8,911 nov/08 Receivables Construções p.a. GMAC S.A.
Goldfarb Incorporações e Fiduciary 4.5% 787 - - - jun/15 Banco do Brasil Construções Alienation S.A.
Goldfarb Incorporações e TR + 8.3% p.a. 379 - - - mar/14 Mortgage CEF Construções S.A.
Goldfarb PDG Mortgage / 2 Incorporações TR + 10.5% p.a. 7,177 - - - jul/11 Receivables / HSBC S.A. Guaranty
Holanda Mortgage / Empreendiment Receivables / CDI + 1.5% p.a. - 5,044 7,551 - mar/10 Matone os Imobiliários PDG Personal SPE Ltda. Garantee
Kirmayr Mortgage / Negócios Receivables / TR + 10.5% p.a. 10,551 7,922 1,710 - nov/10 Bradesco Imobiliários PDG Personal SPE Ltda. Garantee
Luxemburgo Mortgage / Empreendiment Receivables / TR + 9% p.a. 9,261 18,156 8,708 - aug/10 ABN Amro os Imobiliários PDG Personal SPE Ltda. Garantee
Nova Água Mortgage / Rasa Receivables / Empreendiment TR + 11% p.a. 1,146 8,510 11,196 - feb/11 HSBC PDG Personal os Imobiliários Garantee SPE S.A.
Nova Mooca TR + 10% p.a. 7,886 - - - apr/12 Mortgage Santander Empreendiment 78 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand) os Imobiliários SPE Ltda.
Nova Tatuapé Mortgage / Negócios Receivables / TR + 11.5% p.a. - - 10,817 1,316 dec/10 HSBC Imobiliários PDG Personal SPE Ltda. Garantee
Oswaldo Mortgage / Lussac Receivables / Empreendiment TR + 11.5% p.a. 1,580 5,307 - - feb/10 Bradesco PDG Personal os Imobiliários Garantee S.A.
Oswaldo Lussac Receivables / Empreendiment TR + 10.5% p.a. 4,337 - - - feb/11 Proportional Bradesco os Imobiliários Guaranty S.A.
Padre Adelino Mortgage / Empreendiment Receivables / TR + 9.31% p.a. - 9,520 5,894 - jul/10 ABN Amro os Imobiliários PDG Personal S.A. Garantee
Petrônio Portela Mortgage / Empreendiment Receivables / TR + 9% p.a. 208 1,001 2,414 - dec/12 ABN Amro os Imobiliários PDG Personal Ltda. Garantee
Santa Genebra Mortgage / Empreendiment INCC + 12% Receivables / - - 1,877 - oct/11 Cyrela os Imobiliários p.a. PDG Personal Ltda. Garantee
São João Mortgage / Clímaco Receivables / Empreendiment TR + 8.3% p.a. - 698 - - jun/11 Caixa PDG Personal os Imobiliários Garantee Ltda.
São João Mortgage / Clímaco Receivables / Empreendiment TR + 8.3% p.a. - - 3,658 - dec/10 Caixa PDG Personal os Imobiliários Garantee Ltda.
Serra Bella Mortgage / Empreendiment Receivables / TR + 8.3% p.a. 3,515 11,885 4,852 - jun/12 Caixa o Imobiliário PDG Personal S.A. Garantee
SPE Gama Mortgage / Desenvolviment Receivables / TR + 11% p.a. 569 11,131 10,306 - jul/09 Bradesco o Imobiliário PDG Personal Ltda. Garantee
SPE Jaguaré TR + 11% p.a. - 19,860 11,537 - feb/10 Mortgage / Santander Construções Receivables / 79 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Ltda. PDG Personal Garantee
SPE Reserva do Mortgage / Alto Receivables / Aricanduva TR + 12% p.a. - 107 15,131 - jul/09 Bradesco PDG Personal Construções Garantee Ltda.
Vassoural Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 20.091 13,816 - - oct/10 Bradesco os Imobiliários PDG Personal ltda Garantee
Vila Maria Mortgage / Empreendiment Receivables / TR + 10% p.a. 4.782 3,316 - - mar/12 ABN Amro os Imobiliários PDG Personal S.A. Garantee
Vila Maria Mortgage / Empreendiment INCC + 12% Receivables / - - 1,145 - nov/09 Cyrela os Imobiliários p.a. PDG Personal S.A. Garantee
Outros - 277 12 1
Total Goldfarb 643,112 523,131 399,800 74,581 e PDG Co
CHL Desenvolviment o Imobiliário S.A.
Araxá Mortgage / Participações e Receivables / Empreendiment TR + 12% p.a. 13,991 34,669 - - feb/11 Bradesco PDG Personal os Imobiliários Garantee S.A
Assis Bueno 30 PDG Personal Incorporações CDI + 2.3% p.a. - 2,100 2,146 - jul/10 Unibanco Garantee Ltda.
Mortgage / Assis Bueno 30 Receivables / Incorporações TR + 11.5% p.a. 5,590 6,311 - - apr/10 Bradesco PDG Personal Ltda. Garantee
Bandeirante Receivables / Empreendiment TR + 8.3% p.a. 2,435 - - - Apr/13 Proportional CEF os Imobiliários Guaranty S.A.
Bento Lisboa Receivables / 106-A TR + 12% p.a. - - 17,534 - jul/09 Proportional Unibanco Empreendiment Guaranty o Imobiliário
80 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
S.A.
Bento Lisboa 106-B Receivables / Empreendiment TR + 12% p.a. - - 7,400 - oct/10 Proportional Bradesco o Imobiliário Guaranty S.A.
CHL Desenvolviment PDG Personal CDI + 1.4% p.a. - 10,947 10,764 - jun/10 Bradesco o Imobiliário Garantee S.A.
CHL Desenvolviment PDG Personal CDI + 2.0% p.a. - 3,807 11,307 - jun/10 Safra o Imobiliário Garantee S.A.
CHL Desenvolviment - - 2,778 - jun/09 Unibanco o Imobiliário S.A.
CHL Desenvolviment PDG Personal CDI + 2.3% p.a. - 21,327 21,655 21,195 aug/10 Unibanco o Imobiliário Garantee S.A.
CHL Desenvolviment Proportional TR + 10.4% p.a. 20,762 - - - jun/11 Bradesco o Imobiliário Guaranty S.A.
CHL Desenvolviment TR + 11.25% Proportional 5,104 - - - jul/11 Itaú BBA o Imobiliário p.a Guaranty S.A.
CHL Desenvolviment Proportional TR + 10.5% p.a 5,606 - - - aug/11 Itaú BBA o Imobiliário Guaranty S.A.
CHL Desenvolviment Proportional TR + 10.4% p.a 10,140 - - - aug/11 Itaú BBA o Imobiliário Guaranty S.A.
CHL Account Desenvolviment Security TR + 10.5% p.a 406 - - - jan/00 Itaú o Imobiliário S.A.
CHL LIV Proportional Incorporações TR + 10.5% p.a 4,119 - - - jun/11 Itaú BBA Guaranty Ltda.
CHL LIV 3,604 - - - jun/11 Itaú BBA Proportional Incorporações 81 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Ltda. Guaranty
CHL LIV Proportional Incorporações 4,119 - - - jun/11 Itaú BBA Guaranty Ltda.
CHL LIV Proportional Incorporações 4,119 - - - jun/11 Itaú BBA Guaranty Ltda.
EP770 Receivables / Empreitera 2,552 - - - jan/12 Proportional Bradesco Ltda; Guaranty
Mortgage / Jaime Poggi Receivables / Incorporações TR + 10.5% p.a. 91,908 58,042 - - feb/12 Itaú PDG Personal Ltda. Garantee
Savelli Mortgage / Empreendiment Receivables / os e TR + 10.4% p.a. 4,936 3,907 1,175 - nov/13 HSBC PDG Personal Participações Garantee Ltda.
SPE Aberlardo Receivables / Bueno 3600 TR + 10.5% p.a. 14,468 - - - may/11 Proportional Santander Incorporações Guaranty Ltda.
SPE Almirante Mortgage / Baltazar 131 Receivables / TR + 10.4% p.a. 7,820 13,728 3,565 - oct/12 HSBC Incorporações PDG Personal Ltda. Garantee
SPE Almirante Baltazar 131 PDG Personal CDI + 2.3% p.a. - 1,470 1,502 - jul/10 Unibanco Incorporações Garantee Ltda.
SPE Baronesa Mortgage / de Poconé 222 Receivables / TR + 13% p.a. 2,177 3,796 4,326 - sep/11 Bradesco Incorporações PDG Personal Ltda. Garantee
Mortgage / SPE BMI 600 Receivables / Incorporações TR + 13% p.a. - 6,081 8,036 - dec/10 Unibanco PDG Personal Ltda. Garantee
SPE BMI 600 PDG Personal Incorporações CDI + 2.3% p.a. - 2,086 2,127 - aug/10 Unibanco Garantee Ltda.
SPE CHL LVII Receivables / Incorporações TR + 11% p.a. 2,648 - - - nov/11 Proportional Bradesco Ltda Guaranty
82 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
SPE Dalcidio Mortgage / Jurandir 255 Receivables / TR + 10.5% p.a. - 13,236 12,681 - feb/10 Bradesco Incorporações PDG Personal Ltda. Garantee
SPE Dona Receivables / Mariana 187 TR + 10.75% 7,329 - - - sep/11 Proportional Itaú Incorporações p.a. Guaranty Ltda.
SPE Estrada do Mortgage / Monteiro 323 Receivables / TR + 10.4% p.a. 58,172 49,183 7,330 - may/10 Unibanco Incorporações PDG Personal Ltda Garantee
SPE Estrada do Monteiro 323 PDG Personal CDI + 2.2% p.a. - 5,984 6,114 - jul/10 Unibanco Incorporações Garantee Ltda.
SPE General Mortgage / Mitre 137 TR + 11.25% Receivables / 14,595 7,631 - - apr/11 Unibanco Incorporações p.a. PDG Personal LTDA Garantee
SPE MOL 38 Receivables / Incorporações TR + 10.5% p.a. 18,921 - - - may/11 Proportional Itaú Ltda. Guaranty
Miguel de Frias Mortgage / 156 Receivables / Empreendiment TR + 10.5% p.a. 4,586 19,249 3,735 - may/11 Itaú PDG Personal os Imobiliários Garantee S/A
SPE Parque Mortgage / Anchieta Receivables / Empreendiment TR + 10.4% p.a. 7,584 7,032 27 - dec/10 Unibanco PDG Personal os Imobiliários Garantee S.A
Mortgage / SPE VPA 144 Receivables / Incorporações TR + 10.5% p.a. 14,681 6,721 11,901 - apr/10 Bradesco PDG Personal Ltda. Garantee
SPE VPA 144 PDG Personal Incorporações CDI + 2.3% p.a. - 19,332 6,867 - jul/10 Unibanco Garantee Ltda.
SPE Voluntários da Receivables / Pátria 244 TR + 10.5% p.a. 4,453 - - - Proportional Incorporações Guaranty Ltda
Oswaldo TR + 11.5% p.a. - 3,538 - - feb/10 Receivables / Itaú Lussac Proportional Empreendiment 83 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand) os Imobiliários Guaranty S.A.
Oswaldo Lussac Receivables / Empreendiment TR + 11.5% p.a. 1,053 - - - jan/11 Proportional Bradesco os Imobiliários Guaranty S.A.
Oswaldo Lussac Receivables / Empreendiment TR + 10.5% p.a. 2,891 - - - feb/11 Proportional Bradesco os Imobiliários Guaranty S.A.
Total CHL 340,769 300,177 142,970 21,195
Agre Empreendiment os Imobiliários S.A.
Abyara Planejamento CDI + 1.5% p.a. 1,463 - - - sep/11 Mortgage BTG Pactual Imobiliário S.A.
Abyara Planejamento CDI + 1.5% p.a. - - - - jul/10 Mortgage BTG Pactual Imobiliário S.A.
Abyara Planejamento CDI + 1.5% p.a. 88 - - - mar/11 Mortgage BTG Pactual Imobiliário S.A.
Abyara Planejamento CDI + 1.5% p.a. 24,935 - - - jun/12 Mortgage BTG Pactual Imobiliário S.A.
Abyara Mortgage Planejamento CDI + 1.5% p.a. - - - - jul/13 Bradesco Receivables Imobiliário S.A.
Abyara Mortgage Planejamento CDI + 1.5% p.a. - - - - jul/13 Bradesco Receivables Imobiliário S.A.
Abyara Mortgage/ Planejamento CDI + 1.5% p.a. - - - - jul/13 Bradesco Receivables Imobiliário S.A.
Abyara Mortgage/ Planejamento CDI + 1.5% p.a. 22,076 - - - mar/15 ABC Receivables Imobiliário S.A.
Abyara CDI + 2.15% Planejamento 26,807 - - - abr17 Mortgage Land Votorantim p.a. Imobiliário S.A.
84 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Abyara Promissory Planejamento CDI + 2% p.a. 6,498 - - - jan/13 Fibra Note Imobiliário S.A.
Abyara CDI + 2.65% Promissory Planejamento 6,118 - - - jan/16 Fibra p.a. Note Imobiliário S.A.
Abyara Planejamento CDI + 1.5% p.a. 71,775 - - - jul/17 Mortgage HSBC Imobiliário S.A.
Abyara CDI + 2.20% Planejamento 2,234 - - - dec/10 Mortgage HSBC p.a. Imobiliário S.A.
Abyara Planejamento CDI+ 2.205 p.a. - - - - aug/10 Mortgage HSBC Imobiliário S.A.
Abyara Planejamento CDI + 2.12 p.a. - - - - sep/13 Mortgage Bradesco Imobiliário S.A.
Agra Empreendiment TR + 11.7% p.a. 1,003 - - - nov/11 Mortgage Santander os Imobiliários S.A..
Agra Empreendiment CDI + 2.3% 29,967 - - - may/12 None Banco do Brasil os Imobliários p.a. S/A
Agra Empreendiment CDI + 0.8% - - - - jul/12 Mortgage Bradesco os Imobliários p.a. S/A
Agra Mortgage / Empreendiment CDI + 0.5% 3,428 - - - mar/14 Aval guarantee Safra os Imobliários p.a. guarantors S/A
Agra Empreendiment Aval guarantee CDI + 2% p.a. 69,463 - - - jul/12 Safra os Imobliários guarantors S/A
Agra Empreendiment IGPM + 12% 2,321 - - - jan/16 Receivables Safra os Imobliários p.a. S/A
Agra Mortgage / Empreendiment CDI + 2% p.a. 14,792 - - - mar/11 Aval guarantee Safra os Imobliários guarantors S/A
85 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Agra Empreendiment CDI + 8.73% Aval guarantee - - - - jun/10 Daycoval os Imobliários p.a. guarantors S/A
Agra Empreendiment CDI + 5.75% Aval guarantee 33,983 - - - apr/15 Deutsche Bank os Imobliários p.a. guarantors S/A
Agra Empreendiment Aval guarantee CDI + 0% p.a. 10,803 - - - aug/12 Fibra os Imobliários guarantors S/A
Agra Empreendiment CDI + 4.91% Personal 30,037 - - - mar/12 Fibra os Imobliários p.a. Guarantee S/A
Agra Loteadora CDI + 7.44% Aval guarantee 6,653 - - - may/12 BIC BANCO S.A p.a. guarantors
Agra Moab Incorporadora TR + 11% p.a. 6,351 - - - sep/13 Mortgage CEF Ltda.
Agra Moab Mortgage/Recei Incorporadora CDI + 2% p.a. - - - - jul/10 ABC Brasil vables Ltda.
Agre Empreendiment Aval guarantee CDI + 2% p.a. 80,113 - - - jun/14 HSBC os Imobiliários guarantor S.A.
Agre Empreendiment CDI + 1.75% 250,934 - - - jul/13 Receivables Banco do Brasil os Imobiliários p.a. S.A.
Alive Morumbi Empreendiment IGPM + 12% 813 - - - jun/16 Receivables Safra o Imobiliário a.aa.. S/A
API SPE 02 Planej. Desenv. Empreend. TR + 9.75% p.a. 12,062 - - - dec/12 Mortgage Itaú-Unibanco Imobiliário Ltda.
API SPE 02 Planej. Desenv. Empreend. TR + 9.75% p.a 3,477 - - - mar/13 Mortgage Itaú-Unibanco Imobiliário Ltda.
86 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
API SPE 02 Planej. Desenv. Mortgage/ Empreend. TR + 9.90% p.a 13,321 - - - may/12 Itaú-Unibanco Receivables Imobiliário Ltda.
API SPE 02 Planej. Desenv. Mortgage/ Empreend. TR + 9.90% p.a 4,207 - - - jan/13 Itaú-Unibanco Receivables Imobiliário Ltda.
API SPE 15 Planej.Desenv. Empreend. TR + 11% p.a. 17,310 - - - jun/11 Mortgage Bradesco Imobiliario Ltda
API SPE 08 Planej. Desenv. Mortgage/ Empreend. TR + 9.56 p.a. 725 - - - jan/13 CEF Receivables Imobiliário Ltda.
Arena Park Empreendiment TR + 11.7% p.a. 45,790 - - - nov/10 Receivables Itaú o Imobiliário SPE Ltda
ASACORP - Empreendiment CDI + 12.68% os e - - - - mar/12 Mortgage Trycury p.a. Participações S.A.
ASACORP - Empreendiment CDI + 10.03% os e - - - - mar/11 Mortgage Trycury p.a. Participações S.A.
ASACORP - Empreendiment CDI + 7.44% os e - - - - dec/10 Loan BIC BANCO p.a. Participações S.A.
ASACORP - Empreendiment Mortgage/ os e TR + 9.92% p.a. 383 - - - aug/13 CEF Receivables Participações S.A.
Barra Ville Mortgage / Incorporadora TR + 11% p.a. 1,970 - - - aug/10 Aval guarantee Santander Ltda. guarantors
Barra Ville TR + 11% p.a. 11,819 - - - aug/10 Mortgage / Santander Incorporadora Aval guarantee 87 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Ltda. guarantors
BNI Artico Desenvolviment TR + 10.5% p.a. 5,209 - - - dec/12 Receivables HSBC o Imobiliário Ltda
BNI Báltico Desenvolviment TR + 10.5% 7,217 - - - jun/10 Mortgage Bradesco o Imobiliário p.a. Ltda.
BNI Báltico Desenvolviment TR + 10.5% 3,257 - - - jun/10 Mortgage Bradesco o Imobiliário p.a. Ltda.
BNI Báltico Desenvolviment TR + 10.5% 7,215 - - - jun/10 Mortgage Bradesco o Imobiliário p.a. Ltda.
BNI Báltico Desenvolviment TR + 10.5% Mortgage / 3,256 - - - jun/10 Bradesco o Imobiliário p.a. Receivables Ltda.
BNI Báltico Mortgage/ Aval Desenvolviment TR + 9.75% 9,376 - - - may/12 Itaú-Unibanco o Imobiliário p.a. guarantee Ltda. guarantors
Brindisi Empreendiment CDI + 2.15% 746 - - - jun/11 Mortgage Itaú os Imobiliários p.a. Ltda.
Brotas TR + 11.5% Aval guarantee Incorporadora 8,731 - - - jan/13 Itaú p.a. guarantors Ltda.
Brotas Mortgage / Incorporadora CDI + 2% p.a. 882 - - - jul/10 Aval guarantee Itaú Ltda. guarantors
Caph Mortgage / Incorporadora CDI + 2% p.a. 8,787 - - - jan/12 Aval guarantee Itaú Ltda. guarantors
Ciclame Mortgage / TR + 13.5% Incorporadora 1,819 - - - feb/11 Aval guarantee Unibanco p.a. Ltda. guarantors
Ciclame Mortgage / TR + 13.5% Incorporadora 12,736 - - - feb/11 Aval guarantee Unibanco p.a. Ltda. guarantors
88 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Companhia Setin de Empreendiment TR + 10.5% p.a. 33,433 - - - dec/12 Receivables Santander os e Participações
Companhia Setin de CDI + 0.15% Empreendiment - - - - jul/13 Receivables Bradesco a.a. os e Participações
Conquista Empreendiment Mortgage / TR + 9.90% p.a. 27,718 - - - feb/12 Itaú-Unibanco o Imobiliário Receivables SPE Ltda.
Contemporaniu m Mortgage / TR + 9.90% p.a. 3,142 - - - dec/13 Itaú-Unibanco Empreendiment Receivables o Imobiliário
Coreopisis Mortgage / Empreendiment TR + 10.5% p.a. 13,387 - - - jun/11 Aval guarantee Bradesco o S/A guarantors
Cyrela Oceania Empreendiment TR + 10.6% p.a. 1,301 - - - nov/12 Receivables HSBC os Imobiliários Ltda
Eltanin TR + 10.3% Incorporadora 847 - - - sep/12 Mortgage Itaú p.a. Ltda.
Eltanin Incorporadora TR + 10.3% p.a. 3,386 - - - sep/12 Mortgage Itaú Ltda.
Etage Botafogo Personal Empreendiment Guarantee / TR + 10.5% p.a. 8,115 - - - jul/13 Real os Imobiliários Guaranty / SPE Ltda Mortgage
Exuberance Empreendiment TR + 10.5% p.a. 22,065 - - - may/11 Receivables Santander o Imobiliário SPE Ltda
Gan Empreendiment TR + 10.5% p.a. 9,638 - - - oct/11 Mortgage HSBC os Imobiliários Ltda.
Gliese Mortgage / Incorporadora CDI + 2% p.a. 1,718 - - - jan/12 Aval guarantee Itaú Ltda. guarantors
89 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Grajaú Empreendiment IGPM + 12% 1,081 - - - aug/15 Receivables Unibanco os Imobiliários p.a. Ltda.
Gundel Mortgage / Incorporadora TR + 10.5% p.a. 7,271 - - - apr/12 Aval guarantee Itaú Ltda. guarantors
Heliconia Mortgage / Incorporadora TR + 10.5% p.a. 2,182 - - - jul/10 Aval guarantee Santander Ltda. guarantors
Heliconia Mortgage / Incorporadora TR + 10.5% p.a. 6,874 - - - jul/10 Aval guarantee Santander Ltda. guarantors
Icarai Village Empreendiment TR + 12% p.a. 13,235 - - - aug/12 Receivables HSBC os Imobiliários Ltda
Inpar Abyara Projeto CDI + 7.44% Residencial 901 - - - feb/12 Mortgage BICBANCO p.a. América SPE LTDA.
Inpar Abyara Projeto Residencial TR + 10.5% p.a. 9,924 - - - jun/12 Mortgage Santander América SPE LTDA.
Inpar Abyara Projeto Residencial TR + 10.5% p.a. 7,784 - - - oct/11 Mortgage Real Santo Amaro SPE LTDA.
Kalapalo Empreendiment Aval guarantee TR + 11.5% p.a. 7,497 - - - oct/12 Itaú os Imobiliários guarantors Ltda.
Kalapalo Mortgage / Empreendiment CDI + 2% p.a. 3,508 - - - jan/12 Aval guarantee Itaú os Imobiliários guarantors Ltda.
Kamayura Empreendiment TR + 10.03% 2,006 - - - jul/10 Mortgage Santander os Imobiliários p.a. Ltda.
Kamayura TR + 10.03% 14,042 - - - jul/10 Mortgage Santander Empreendiment p.a. os Imobiliários
90 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Ltda.
Kamayura Empreendiment TR + 10.03% 4,012 - - - jul/10 Mortgage Santander os Imobiliários p.a. Ltda.
Kantarure Empreendiment Mortgage / TR + 9.60% p.a. 33,480 - - - aug/12 Itaú-Unibanco os Imobiliários Receivables Ltda.
KFA Empreendiment Mortgage / TR + 10.5% p.a. 4,188 - - - jan/11 Santander os Imobiliários Receivables Ltda.
KFA Empreendiment Mortgage / TR + 10.5% p.a. 23.728 - - - jan/11 Santander os Imobiliários Receivables Ltda
KFA Empreendiment TR + 10.5% p.a. 13,958 - - - jan/11 Receivables Santander os Imobiliários Ltda
Klabin Segal Invetimentos e TR + 11.7% p.a. 28,665 - - - mar/12 Receivables Safra Participações SPE S.A.
Klabin Segall Lider Praça TR + 10.5% p.a. 11,885 - - - dec/10 Receivables Santander Louveira SPE Ltda
Klabin Segall TJLP + 3.8% a. Personal 1,245 - - - dec/11 Safra S/A aa.. Guarantee
Klabin Segall CDI + 0.51% a. Personal 35,099 - - - feb/12 Safra S/A aa.. Guarantee
Klabin Segall CDI + 2.99% p. Personal 8,149 - - - apr/12 Banco Safra S/A a. Guarantee
Klabin Segall Santana Empreendiment TR + 10.5% p.a. 8,666 - - - oct/12 Receivables Real os Imobiliários Ltda
Klabin Segall Personal Vergueiro Guarantee / Empreendiment TR + 10.5% p.a. 3,156 - - - aug/12 Real Guaranty / o Imobiliário Mortgage SPE Ltda
91 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Klabin_Tagipur u Mortgage / Empreendiment TR + 10.5% p.a. 6,595 - - - may/11 Itaú Receivables o Imobiliário SPE S/A
Klabin_Tagipur u Empreendiment TR + 10.5% p.a. 29,678 - - - may/11 Receivables Itaú o Imobiliário SPE S/A
Kochab Mortgage / Incorporadora TR + 11.5% p.a. 6,534 - - - jan/12 Itaú Receivables Ltda.
Kochab Incorporadora CDI + 2% p.a. 1,035 - - - sep/12 Mortgage Itaú Ltda.
Kochab Mortgage / Incorporadora TR + 11.5% p.a. 26,138 - - - jan/12 Itaú Receivables Ltda.
Kochab Incorporadora CDI + 2% p.a. 4,138 - - - sep/12 Mortgage Itaú Ltda.
KSC 2 Personal Empreendiment Guarantee / TR + 10.5% p.a. 5,394 - - - jul/13 Real o Imobiliário Guaranty / SPE Ltda Mortgage
Lagoa Alpha Empreendiment TR + 11% p.a. 10,979 - - - aug/11 Mortgage HSBC os Imobiliários Ltda.
Laguna Incorporadora TR + 12% p.a. 8,085 - - - jun/10 Mortgage Bradesco Ltda.
Lordello Emp. Mortgage / TR + 9.90% p.a. 5,551 - - - jun/12 Itaú-Unibanco Imob. Ltda. Receivables
Lordello Emp. Mortgage / TR + 9.90% p.a. 944 - - - oct/12 Itaú-Unibanco Imob. Ltda. Receivables
Luau do Personal Recreio Guarantee / Empreendiment TR + 10,5% p.a. 24,278 - - - aug/13 Real Guaranty / os Imobiliários Mortgage SPE Ltda
Maioruna Empreendiment TR + 10.5% p.a. 1,237 - - - dec/11 Mortgage Santander os Imobiliários Ltda.
92 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Maioruna Empreendiment TR + 10.5% p.a. 2,448 - - - dec/11 Mortgage Santander os Imobiliários Ltda.
Maioruna Empreendiment TR + 10.5% p.a. 2,168 - - - dec/11 Mortgage Santander os Imobiliários Ltda.
Malte Investimentos TR + 10.5% p.a. 5,038 - - - aug/11 Receivables Itaú Imobiliários Ltda
Mareas Empreendiment TR + 10.5% p.a. 22,750 - - - nov/13 Receivables Brasdesco o Imobiliário SPE Ltda
Marubo Empreendiment Mortgage / TR + 10.5% p.a. 13,654 - - - jan/13 Santander o Imobiliário Receivables Ltda.
Matipu Mortgage / Empreendiment TR + 9.75% p.a. 25,516 - - - sep/12 Itaú-Unibanco Receivables o Imob. Ltda.
Moema Empreendiment IGPM + 12% 5,594 - - - dec/20 Receivables Safra os Imobiliários a.aa. SPE Ltda
More Alphaville Mortgage / Empreendiment CDI + 2% p.a. 23,835 - - - jun/10 Aval guarantee ABC Brasil os Imobiliários guarantors Ltda.
Morumbi SPE IGPM + 11.39% 1,757 - - - jul/19 Receivables Real Ltda. p.a.
Mutinga Empreendiment TR + 10.5% p.a. 12.,74 - - - jun/10 Mortgage Unibanco os Imobiliários Ltda.
Mutinga Empreendiment TR + 10.5% p.a. - - - - jun/10 Mortgage Unibanco os Imobiliários Ltda.
Parque do Sol Empreendiment Mortgage/ TR + 9.90% p.a. 54,34 - - - feb/12 Itaú-Unibanco o Imobiliário Receivables SPE Ltda.
93 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Parque do Sol Empreendiment TR + 10.5% p.a. 4,013 - - - may/12 Mortgage Real o Imobiliário SPE Ltda.
Parque do Sol Empreendiment Aval guarantee TR + 10.5% p.a. 3,492 - - - oct/11 Real o Imobiliário guarantors SPE Ltda.
Pereira Barreto Mortgage/ Aval Empreendiment TR + 10.5% p.a. 6,009 - - - ocy/11 guarantee Real os Imobiliários guarantors SPE Ltda.
Pereira Barreto Empreendiment Aval guarantee TR + 11% p.a. 13,114 - - - mar/12 Santander os Imobiliários guarantors SPE Ltda.
Pereira Barreto Empreendiment Mortgage / TR + 9.75% p.a. 10,897 - - - dec/12 Itaú-Unibanco os Imobiliários Receivables SPE Ltda.
Pereira Barreto Mortgage / Empreendiment TR + 9.90% p.a. 4,779 - - - mar/13 Aval guarantee Itaú-Unibanco os Imobiliários guarantors SPE Ltda.
Pereira Barreto Empreendiment TR + 10.5% p.a. 7,817 - - - may/12 Mortgage Real os Imobiliários SPE Ltda.
Pereira Barreto Empreendiment Aval guarantee TR + 10.5% p.a. 6,803 - - - oct/11 Brasdesco os Imobiliários guarantors SPE Ltda.
Pereira Barreto Mortgage / Empreendiment TR + 10.5% p.a. 11,706 - - - oct/11 Aval guarantee Real os Imobiliários guarantors SPE Ltda.
Pereira Barreto Mortgage / Empreendiment TR + 11% p.a. 25,547 - - - mar/12 Aval guarantee Santander os Imobiliários guarantors SPE Ltda.
Pereira Barreto Empreendiment TR + 10.5% p.a. 4,222 - - - may/12 Mortgage Real os Imobiliários SPE Ltda.
Pereira Barreto Aval guarantee TR + 10.5% p.a. 3,674 - - - oct/11 Brasdesco Empreendiment guarantors os Imobiliários
94 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
SPE Ltda.
Pereira Barreto Mortgage / Empreendiment TR + 10.5% p.a. 6,322 - - - oct/11 Aval guarantee Real os Imobiliários guarantors SPE Ltda.
Pereira Barreto Mortgage / Empreendiment TR + 11% p.a. 13,796 - - - mar/12 Aval guarantee Santader os Imobiliários guarantors SPE Ltda.
Poli Investimentos Mortgage / TR + 12% p.a. 4,729 - - - jul/10 Bradesco Imobiliários Receivables Ltda.
Poli Investimentos Mortgage / TR + 12% p.a. 23,646 - - - jul/10 Bradesco Imobiliários Receivables Ltda.
Poli Investimentos Mortgage / TR + 12% p.a. 18,917 - - - jul/10 Brasdesco Imobiliários Receivables Ltda.
Praia Nova Empreendiment TR + 10.03% 4,789 - - - jul/10 Mortgage HSBC os Imobiliários p.a. Ltda.
Ragusa Empreendiment CDI + 1.8% p.a. - - - - jun/13 Mortgage Bradesco o Imobiliários Ltda
Saiph Aval guarantee Incorporadora TR + 10.5% p.a. 1,545 - - - sep/12 Real guarantors Ltda.
Saiph Aval guarantee Incorporadora TR + 10.5% p.a. 5,165 - - - sep/11 Real guarantors Ltda.
Saiph Aval guarantee Incorporadora TR + 10.5% p.a. 2,021 - - - sep/12 Unibanco guarantors Ltda.
Saiph Aval guarantee Incorporadora TR + 10.5% p.a. 6,756 - - - sep/11 Itaú guarantors Ltda.
Schahin Astúrias TR + 10.5% p.a. 6,615 - - - oct/11 Mortgage Bradesco Incorporadora Ltda
95 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Spasso Mooca Empreendiment TR + 10.5% p.a. 14,160 - - - mar/11 Receivables HSBC o Imobiliário SPE Ltda
Springs Empreendiment TR + 10.5% p.a. 17,064 - - - apr/11 Receivables Santander o Imobiliário SPE Ltda
Torre de Ferrara Mortgage/ TR + 9.90% p.a. 3,596 - - - apr/12 Itaú-Unibanco incorp. Ltda. Receivables
Torre de Mortgage / Rhodes TR + 11.5% p.a. 3,313 - - - nov/12 Aval guarantee Itaú Incorporadora guarantors Ltda.
Trinta e Um de Janeiro Mortgage / Empreendiment CDI + 2% p.a. 5,130 - - - jul/12 Safra Receivables os Imobiliários Ltda.
Trinta e Um de Janeiro Mortgage / Empreendiment CDI + 1% p.a. 237 - - - oct/10 Aval guarantee Unibanco os Imobiliários guarantors Ltda.
Trinta e Um de Janeiro Mortgage / Empreendiment CDI + 0.5% p.a. 1,550 - - - aug/11 Aval guarantee ABC Brasil os Imobiliários guarantors Ltda.
Trinta e Um de Janeiro Mortgage / IGPM + 12.25% Empreendiment 15,001 - - - mar/11 Aval guarantee BTG Pactual p.a. os Imobiliários guarantors Ltda.
Vila Mascote IGPM + 9.5% 572 - - - aug/14 Receivables ABC Brasil SPE Ltda. p.a.
Village Recreio Empreendiment TR + 10.5% p.a. 20,708 - - - mar/11 Receivables Santander os Imobiliários S/A
Vitality Empreendiment TR + 10.5% p.a. 22,827 - - - nov/10 Receivables Santander o Imobiliário SPE Ltda
Total AGRE 1,860,522 - - -
Fator Sky TR + 10.5%p.a. 2,267 6,869 2,193 - oct/09 Mortgage / Santander Empreendiment Receivables / 96 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand) os Imobiliários PDG Personal Ltda. Garantee
Fator Amazon Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 15,054 12,634 1,726 - mar/11 Santander os Imobiliários PDG Personal Ltda. Garantee
Fator Aquarius Mortgage / Empreendiment Receivables / TR + 12%p.a. 16,890 12,039 - - sep/10 Unibanco os Imobiliários PDG Personal Ltda. Garantee
Jaguaré Mortgage / Empreendiment Receivables / TR + 10.5%p.a. 3,605 3,590 - - may/10 Bradesco os Imobiliários PDG Personal Ltda. Garantee
Mortgage / Prunus Receivables / Empreendiment TR + 10% p.a. - 6,835 6,288 - may/10 ABN Amro PDG Personal os S.A. Garantee
Cyrela Milão Mortgage / Empreendiment Receivables / TR + 10% p.a. 3,216 6,572 9,649 7,616 oct/12 ABN Amro os Imobiliários PDG Personal S.A. Garantee
Ecolife Vila Mortgage / Leopoldina Receivables / Empreend. TR + 10.5% p.a. - - 6,357 - mar/10 ABN Amro PDG Personal Imobiliários Garantee S.A.
Ecolife Mortgage / Independência Receivables / Empreend. TR + 10.5%p.a. 8,394 8,353 - - apr/11 ABN Amro PDG Personal Imobiliários Garantee S.A.
Mortgage / Administradora Receivables / de Bens Avante TR + 11.5%p.a. 9,964 8,375 - - feb/11 Itaú PDG Personal S.A. Garantee
Ecolife Parque Mortgage / Prado Receivables / Empreendiment TR + 10.5%p.a. 6,399 6,371 2,910 - mar/10 ABN Amro PDG Personal o Imobiliário Garantee Ltda.
Mortgage / Bento Lisboa Receivables / Participações TR + 12%p.a. - - 16,622 - jul/09 Unibanco PDG Personal S.A. Garantee
Mortgage / Bento Lisboa TR + 12%p.a. - - - 37,105 oct/10 Bradesco Receivables / Participações PDG Personal 97 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
S.A. Garantee
Ecolife Santana Mortgage / Empreendiment Receivables / os e TR + 10.5% p.a. 8,432 7,571 24 - jan/13 Bradesco PDG Personal Participações Garantee S.A.
Habiarte Barc Mortgage / PDG Porto Receivables / Búzios TR + 10.5%p.a. 7,552 4,233 - - jun/11 Bradesco PDG Personal Incorporações Garantee S.A.
Mortgage / Club Florença Receivables / Empreendiment TR + 10.5%p.a. 6,583 3,953 - - aug/11 Itaú PDG Personal os Imobiliários Garantee
REP DI Mortgage / Desenvolviment Receivables / CDI + 0.5% aa - 583 441 - mar/10 Diversos o Imobiliário PDG Personal S.A. Garantee
Mortgage / Vista do Sol Receivables / Empreendiment TR + 10.5%p.a. 3,227 2,186 - - sep/11 Itaú PDG Personal os Imobiliários Garantee
Ecolife Campestre Mortgage / Empreendiment Receivables / TR + 10.5% p.a. 5,279 - - - jul/14 Santander os e PDG Personal participações Garantee S.A.
Mortgage / PDG LN Inc. e Receivables / Construções 5,902 mar/11 Santander PDG Personal S.A. Garantee
Mortgage / América Piqueri Receivables / Incorporadora TR + 12.5%aa - - - 11,659 dec/07 Bradesco PDG Personal S.A. Garantee
Boa Viagem Mortgage / Empreendiment Receivables / TR + 12%aa - - - 1,495 oct/08 HSBC o Imobiliário PDG Personal S.A. Garantee
Ecolife Butantã Mortgage / Empreendiment Receivables / TR + 12%aa - - - 13,914 may/08 Unibanco os Imobiliários PDG Personal S.A. Garantee
Lindencorp CDI + Penhor/Receiva - - - 7,111 apr/09 ABC Brasil Desenvolviment 0.25%a.m. bles/Proportion o Imobiliário al 98 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
S.A. Guaranty/Mortg age
Lindencorp Proportional Desenvolviment Guaranty / CDI + 2.5%p.a. - - - 16,356 aug/12 UBS Pactual o Imobiliário Pledge Ações S.A. LDI
Pledge/Receiva Lindencorp bles/Proportion Desenvolviment TR + 12% p.a. - - - 237 jan/10 al Unibanco o Imobiliário Guaranty/Mortg S.A. age
Receivables / HL Partner Empreendiment TR + 12% p.a. - - - 2,214 feb/09 Proportional Unibanco os S.A. Guarantee/ Mortgage
Receivables / PDG Partner Desenvolviment TR + 12% p.a. - - - 19,842 oct/10 Proportional Unibanco o Imobiliário Guarantee/ S.A. Mortgage
Receivables / Sardenha Partner Empreendiment TR + 12% p.a. - - - 10,097 feb/08 Proportional Unibanco os Imobiliários Guarantee/ S.A. Mortgage
Mortgage / Três Rios Receivables / Empreend. TR + 10.5% p.a. 3,010 - - - jul/11 Bradesco PDG Personal Imob. S.A. Garantee
Queiroz Galvão Mortgage / Mac Cyrela Receivables / TR + 10% p.a. 4,013 - - - jul/11 Santander Veneza PDG Personal Emp.Imob. S.A. Garantee
Debentures – CDI + 257,013 261,888 267,680 267,384 jul/14 Bradesco 1st Issuance 0.90%p.a.
Debentures – TR + 8.75%p.a 299,211 303,849 - - sep/14 Caixa 3rd Issuance
Debentures – CDI + 2.40% 284,994 - - - aug/16 Bradesco 4th Issuance p.a.
Debentures – TR + 8.16% p.a. 594,631 - - - aug/15 FGTS 5thIssuance
Debentures Klabin 1st CDI + 3.0%p.a. - - - - Issuance
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Consolidated (in R$ Encumbrance 09/30/2010 12/31/2009 12/31/2008 12/31/2007 Maturity Guarantees Creditor Thousand)
Debentures Klabin 2nd CDI + 3.0%p.a. - - - - Issuance
Others 40 3,221 45 72
TOTAL 4,786,414 1,504,139 864,968 490,878 INDEBTNESS
Under Article 60, caput, of the Corporations Law, the total issuance of debentures may not exceed the Company's capital. It is noteworthy that the outstanding issuance of debentures of the Company is less than its paid-up capital stock. Additionally, the debentures of the first and third issuance of the Company provide: (i) restriction on payment of dividends above the minimum of 25% while the Company is in arrears with its obligations in the scriptures of issuance; (ii) restriction to any sale, assignment or transfer of assets of the Company and / or its subsidiaries, whose value is equal to or greater than 10% of the equity of the Company or its subsidiaries, which proceeds from the sale is not used entirely for the reduction of debt, and (iii) clauses determining indebtness levels and rates of EBITDA.
g. limits on use of funds already contracted
Over the fiscal years ended on December 31, 2007, 2008, 2009 and also for the period ended on March 31, 2010, financing contracted by the Company under the SFH have its resources focused exclusively on works in the respective real estate projects. The resources are released according to the physical and financial progress of works.
For the other debts contracted during the fiscal years ended on December 31, 2007, 2008, 2009 and for the period ended on September 30, 2010, we have only limited use for the 3rd issuance of debentures, held on September 2009. The proceeds from this offering will be used to finance the construction of residential projects covered by the law of the SFH. These resources should only be used in projects (i) which stage of construction has not yet reached 50% of physical schedule of execution until the date on which such ventures are presented by the Company; (ii) which has residential units reaching a minimum of 20% of sales concluded, (iii) whose physical and financial schedule has been approved by the auditor of the works, (iv) whose assets allow the securities provided for in the relevant Issuance Deed; among other requirements. The release of funds is also done according to the physical progress of the works of the developments.
h. significant changes in each financial statement item
Comparison of Operating Results - quarter ended on March 31, 2010 to March 31, 2009
Gross Operating Revenue
Our gross operating revenue increased 151.7%, from R$1,418.0 million for the nine months ended on September 30, 2009 to R$3,568.7 million in the semester ended on September 30, 2010, primarily as a result of the incorporation of our full subsidiary AGRE occurred in the 2nd quarter of 2010 and the increase in projects launched (from 195 projects on September 30, 2009 to 343 projects on September 30, 2010).
Our gross operating revenue for these periods consisted of the following:
In R$ Thousand Nine months ended on September 30 2010 2009 Real Estate Sales 3,503,257 1,407,629 Other Operating Income 65,458 10,351 Operational Gross Revenue 3,568,715 1,417,980
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Real Estate Sales
Our gross operating revenue from real estate sales increased 148.9%, from R$1,407.6 million on September 30, 2009 to R$3,503.3 million on September 30, 2010. This increase was due primarily as a result of the incorporation of our full subsidiary AGRE occurred in the 2 nd quarter of 2010 and to a significant increase in operating projects of our Business Units, as shown below:
Nine months ended on Investment (in thousands of R$) September 30, 2010 September 30, 2009 Gross Interest in Revenue (in Participation Gross the Capital R$ Number of on Capital Revenue (in Number of Stock Thousand) Projects Stock R$ Thousand) projects Total of Business Units N/A 2.607.919 300 N/A 890.398 152 Goldfarb 100% 854.442 166 100% 543.779 122 AGRE 100% 1.298.808 97 100% - - CHL 100% 454.669 37 100% 346.619 30
Direct Investments in co-mergers N/A 895.338 43 N/A 517.231 43
TOTAL N/A 3.503.257 343 N/A 1.407.629 195
Other Operating Revenue
The value of our other operating revenue results primarily from the increased portfolio of malls managed by our subsidiary REP and the incorporation of our full subsidiary AGRE in the 2 nd quarter of 2010, which has revenue from management of works, such other operating revenue increasing 532,4%, from R$10,4 million on September 2009 to R$65.5 million on September 2010.
Sales Taxes
Sales taxes increased 117.2%, from R$54.3 million on September 2009 (representing 4.0% of our net operating revenue), to R$117.9 million on September 2010 (representing 3.9% of our net operating revenue). The increase is related to the variation of the gross operating revenue of the Company when compared to the same period.
Net Operating Revenue
As a result of the foregoing, our net operating revenue increased 153.0%, from R$1,363.7 million on September 2009 to R$3,450.8 million on September 2010.
Cost of Units Sold
Cost of properties sold increased 147.9%, from R$962.1 million on September 2009 (representing 70.6 % of our net operating revenue) to R$2,385.1 million on September 2010 (representing 69.1% of our net operating revenue). This variation results primarily from the incorporation of our full subsidiary AGRE along 2010 and the increase in the portfolio of projects of our subsidiaries, according to the preceding table, in item Real Estate Sales. Gross Operating Profit
As a result of the foregoing, our gross operating profit increased 165.4%, from R$401.6 million on September 2009 (representing 29.4% of our net operating revenue) to R$1,065.7 million on September 2010 (representing 30.9% of our net operating revenue).
Net Operating Expenses
Our operating expenses increased 176.5 %, from R$133.4 million on September 2009 to R$369.0 million on September 2010, according to the main variations detailed below. 101 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Business Expenses Our business expenses increased 117.3%, from R$85.3 million on September 2009 (representing 6.3% of our net operating revenue) to R$185.4 million on September 2010 (representing 5.4% our our net operating revenue), due primarily from the incorporation of our full subsidiary AGRE in the 2 nd quarter of 2010, and the increase in the numbers of project launched from 195 projects on June 2009 to 343 projects on June 2010. Evethough there was an increase in our balance, the percentage of the net operating revenue reduced. This shows an efficiency gain and a outgoing rationalization.
General and Administrative Expenses General and administrative expenses increased by 145.9%, from R$81.0 million on September 2009 (representing 5.9% of our net operating revenue) to R$199.2 million on September 2010 (representing 5.8% of our net operating revenue). This variation is due primarily from the incorporation of our full subsidiary AGRE in the 2 nd quarter of 2010, and to the increase in the number of employees in the Business Units Goldfarb and CHL, attributable to organic growth of the Company.
Financial Revenues and Expenses Our net financial result increased from a negative R$21.0 million on September 2009 to a positive R$28.6 million on September 2010. This significant increase was due to basically to the to increase of the indebtedness of the Company, when we compare the periods under review.
Income before Income Tax and Social Contribution
As a result of the foregoing, our profit of income before income tax and social contribution increased from R$268.2 million on September 2009 to R$696.7 on September 2010.
Income Tax and Social Contribution
Income tax and Social contribution expenses increased 185.8%from R$33.8 million on September 2009 to R$96.6 million on September 2010. This variation is due especially to the incorporation of our full subsidiary AGRE, occurred in the 1 st semester of 2010 and the Company's organic growth.
Minority Interests
Minority interests totaled a credit balance from R$6.3 million on September 2009 to a debt balance of R$13.4 million on September 2010. This variation is due to the fact that in September 2009, the Company has consolidated the two projects throught the minority shareholders which accumulated loss in such period, and because of this the Company has absorbed 100% of results and eliminated the pro rata of third parties in this line.
Net Income in the Period
As a result of the foregoing, net income increased 143.8%, from R$240.7 million on September 2009 (representing 17.6% of our net operating revenue) to R$586.7 million on September 2010 (representing 17.0% of our net operating revenue).
Comparison of Key Balance Sheet – period of nine months ended on September 30, 2010 with September 30, 2009
Our available funds are represented by resources available primarily in bank accounts and our investments in the short and long term, for applications in first-class banks. These accounts totaled R$1,892.3 million on September 30, 2010, representing 12.9% of our total assets at the time, compared with R$534.0 million on September 30, 2009, representing 11.0% of our total assets at that date (meaning an increase of 254.4%). A variation on this line results mainly from the third issuance of common shares held by the Company on October 2009, which totaled an increase of R$784 million in our available funds, the 4 th and 5 th issue of debentures totaling more than R$800 million in our readiness and also to the incorporation of AGRE in the first semester of 2010.
Accounts receivable
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Our accounts receivable related to the short and long term correspond to claims arising from sales of property, in which the value of contracts is updated according to their respective terms, and such credits recorded in proportion to the cost incurred in relation to the total cost, with respect units not yet completed. These accounts totaled R$5,918.3 million on September 30, 2010 (40.4% compared to our total assets at that date), compared to R$2,173.1 million on September 30, 2009 (44.8% of our total assets at that date), representing an increase of 172.3%. This variation was due mainly to the incorporation of AGRE in the first semester of 2010 and to the high rise in operating projects of the Company, which on September 30, 2010 were 343 and on September 30, 2009 were 195 projects, such increase of projects in the portfolio resulted in an increase in revenue, and consequently an increase in the balance of accounts receivable.
Land bank and properties for sale
Our inventory of properties for sale on the short and long term represent land, buildings under construction and units built. Such inventories totaled R$3,923.1 million on September 30, 2010 (representing 26.8% of our total assets at that date), while the amount recorded on September 30, 2009 was R$1,349.3 million (representing 27.8% of our total assets at that date), representing an increase of 190.8%. This variation was mainly due to the incorporation of AGRE in the first semester of 2010 providing an increase of our land inventory, which is in line with the movement of our land bank and the launches and sales in the period.
Expenses to be appropriated
Our expenses to be recognized are represented primarily by values with deferred expenses in selling expenses related to our endeavors. Such deferred expenses totaled R$62.1 million on September 30, 2010 (0.4% of our total assets at that date), compared with R$16.9 million on September 30, 2009 (0.3% of our total assets that date), representing an increase of 267.7%. This variation was due mainly to the incorporation of our full subsidiary AGRE in the first semester of 2010 and to the high rise in operating projects of the Company, which on September 30, 2010 were 343 and on September 30, 2009 were 195.
Fixed assets
Fixed assets totaled R$186.7 million on September 30, 2010 (representing 1.3% of total assets), against R$71.1 million on September 30, 2009 (representing 1.5% of total assets), representing an increase of R$115.6 million; this increase relates to the incorporation of AGRE in the first semester of 2010 and to the costs of sales stands activated under this heading in accordance with the Resolution 11.638/07.
Loans, financing and debentures
Our loans, financing and debentures for the short and long term totaled R$4,786.4 million on September 30, 2010, compared to R$1,635.9million on September 30, 2009, respectively, 32.7% and 33.7% of our total liabilities, representing an increase of 192.6%. This variation is due to the incorporation of AGRE in the first semester of 2010, in which we absorbed all its indebtness, and to the increase in the loan portfolio (SFH) according to the level of the projects.
Liabilities for acquisition of property
This account represents obligations for purchase of land for real estate development, both in current liabilities as in current liabilities in the long term. Our obligations for property acquisitions totaled R$928.2 million on September 30, 2010 (7.5% of our total liabilities at that date), compared with R$465.9 million on September 30, 2009 (9.6% of our total liabilities at that date), representing an increase of 135.4%. This increase was due to the incorporation of AGRE in the first semester of 2010 and to the increase of our land inventory.
Advances from customers
This account is represented by amounts received from purchasers of units, but not yet recognized as receivables by the Company in accordance with the criteria set out in Resolution CFC 963/03. The bill totaled R$613.2 million on September 30, 2010 (4.2% of our total liabilities at that date), compared with R$163.4 million on September 30, 2009
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(3.4% of our total liabilities at that date), which meant an increase of 275.2%. This increase especially the incorporation of our full subsidiary AGRE.
Net worth
Our net worth totaled R$5,893.7 million for the period ended on September 30, 2010 (40.3% of our total liabilities at that date) compared to R$1,965.0 million for the period ended on September 30, 2009 (40.4% of our total liabilities at that date). This increase resulted primarily from capital increase as a function of: (i) the incorporation of AGRE in the first semester of 2010, (ii) undistributed net income generated during the last period, and (iii) the 3 rd offering of common shares which amounted to a primary capture of R$784 million.
Comparison of the Operating Results of Years Ended on December 31, 2009 and 2008
Gross Operating Revenue
Our gross operating revenue increased from R$1,283.4 million for the year ended on December 31, 2008 to R$2,062.4 million in the same period on 2009, an increase of 60.7%. This variation occurred primarily because of the significant increase in our projects launched by the Company (149 projects on December 31, 2008 compared to 246 projects on December 31, 2009) Our gross operating revenue for these periods consisted of the following
R$ Thousand Fiscal Years ended on December 31, 2009 2008 Real Estate Sales 2,046,375 1,274,082 Other Operating Revenue 16,041 9,270 Gross Profit 2,062,416 1,283,352
Real Property Sales
Gross operating revenue from real property sales increased 60.6%, from R$1,274.1 million for the year ended on December 31, 2008 to R$2,046.4 million in the same period on 2009. This increase was primarily due to a significant increase in operating projects of our business units and direct investments in co-development projects in the period, as shown below:
Year ended on Investment (R$ Thousand) December 31, 2009 December 31, 2008
Gross Revenue pro Gross Revenue Capital Stock rata PDG (R$ Total of pro rata PDG (R$ Total of Participation Thousand) projects Participation Thousand) projects Total Business Units n/a 1,297,780 209 n/a 864,505 114 Goldfarb 100% 774,760 163 100% 518,143 83 CHL 100% 523,020 46 100% 346,362 31
Direct Co-Incorporation Investments n/a 748,595 37 n/a 409,577 35
TOTAL n/a 2,046,375 246 n/a 1,274,082 149
Other Operating Revenue
Other operating revenue was derived principally from our malls portfolio, managed by our invested REP. Such other operating revenue increased 73% from R$9.3 million for the year ended on December 31, 2008, to R$16 million in the same period on 2009.
Sales Taxes
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Sales taxes increased 50.6%, from R$52.2 million on 2008 (representing 4.2% of our net operating revenue) to R$78.6 million on 2009 (representing 4.0% of our net operating revenue). The increase is equal to the variation in gross operating revenue in the same period.
Net Operating Revenue
As a result of the foregoing, our net operating revenue increased 61.1%, from R$1,231.2 million on 2008 to R$1,983.8 million on 2009.
Cost of Properties Sold
Cost of properties sold increased 76.5%, from R$797.8 million on 2008 (representing 64.8% of our net operating revenue) to R$1,407.8 million on 2009 (representing 71% of our net operating revenue). This variation results from a mix of products (economic segment): in line with the strategy of sharpening our focus on lower-income customers, we are launching more projects for this class, which have structurally lower gross margins.
Gross Operating Profit
As a result of the foregoing, our gross operating profit increased 32.9%, from R$433.3 million on 2008 (representing 35.2% of our net operating revenue) to R$576 million on 2009 (representing 29% of our net operating revenue).
Net Operating Expenses
Net operating expenses reduced 6.8%, from R$188.3 million on 2008 to R$176.3 million on 2009, as detailed below:
• Business Expenses • Business expenses increased 22.2% from R$105.2 million on 2008 (representing 8.5% of our net operating revenue) to R$128.6 million in the same period on 2009 (representing 6.5% of our net operating revenue). This increase was due to the increase on launched projects, from 149 projects on 2008 to 246 projects on 2009. Even though there was an increase on the balance during this analysis period, the percentage over the net operating revenue reduced. This shows a gain of efficiency and an expense rationalization.
• General and Administrative Expenses • General and administrative expenses increased 16.8%, from R$95.4 million on 2008 (representing 7.7% of our net operating revenue) to R$111.4 million on 2009 (representing 5.6% of our net operating revenue). This variation is due to an increase in the number of employees of our Business Units Goldfarb and CHL, attributable to organic growth. Despite the increase in general and administrative expenses for the period analyzed, general and administrative expenses as a percentage of net operating revenue declined, demonstrating efficiency gains and cost rationalization.
• Financial Expenses and Income • Our net financial result increased from R$12.5 million on 2008 to R$52.8 million on 2009. This increase was due to the average cash of 2009, which was superior to the average cash of 2008, due to the raisings of this period.
Income before Income Tax and Social Contribution Taxes
As a result of the foregoing, income before income and social contribution taxes increased from R$245.1 million on 2008 to R$399.7 million on 2009 .
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Income Tax and Social Contribution Taxes
Income tax and social contribution expenses increased by 12.4%, from R$33.3 million on 2008 to R$37.4 million on 2009. This variation was due primarily to a decrease in the effective rate of income and social contribution taxes as a result of our use of deductible expenses in a tax efficient manner for the Company.
Minority interest
Minority interest totaled a debit balance of R$31.5 million on 2008 and a credit balance of R$4.2 million on 2009. This variation was due to the fact that we acquired a 100% stake in Business Units Goldfarb and CHL. The ownership interests in CHL Business Unit were 70%, in the year ended on December 31, 2008 .
Net Income in the period
As a result of the foregoing, our net income increased by 85.3%, from R$182.5 on 2008 (representing 14.8% of our net operating revenue) to R$338.1 million on 2009 (representing 17% of our net operating revenue).
Comparison of Key Balance Sheet - December 31, 2009 to December 31, 2008 Cash and Cash Equivalents
Our cash equivalents are represented by resources available primarily in bank accounts and our investments in the short term and long term, for applications in first-tier banks. These accounts totaled R$1,101.0 million on December 31, 2009, representing 18.0% of our total assets at the time, compared with $ 256.4 million on December 31, 2008, representing 7.9% of our total assets at that date (meaning an increase of 329.4%)A variation on this line is mainly the third issuance of common shares held by the company on October 2009, totaled R$784 million dollars.
Accounts receivable
Our accounts receivable related to the short and long term correspond to claims arising from sales of property, in which the value of contracts is updated according to their respective terms, and such credits recorded in proportion to the cost incurred in relation to the total cost, with respect units not yet completed. These accounts totaled R$2,509.4 million on December 31, 2009 (41.4% compared to our total assets at that date), compared to R$1,264.3 million on December 31, 2008 (38.9% of our total assets at that date), representing an increase of 98.5%. This variation was due mainly to the high rise projects that the Company's operating on December 31, 2009 was 246 projects and operating on December 31, 2008 was 194 projects, with this increase in the portfolio of projects culminated in a increase in revenues, and consequently an increase in the balance of accounts receivable.
Inventories of land and properties for sale
Our inventory of properties for sale on the short and long term represent land, buildings under construction and units built. Such inventories totaled R$1,678.1 million on December 31, 2009 (representing 27.5% of our total assets at that date), while the value registered on December 31, 2008 was R$1,056.0 million (representing 32.5 % of our total assets at that date), representing an increase of 58.9%. This variation was due to the increase of our land inventory and purchasing new SPEs, which is in line with the movement of our land bank, release and sales of the period.
Expenses to be appropriated
Our expenses to be recognized are represented primarily by values with deferred expenses in selling expenses related to our endeavors. Such deferred expenses totaled R$19.6 million on December 31, 2009 (0.3% of our total
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assets at that date), compared with $ 20.5 million on December 31, 2008 (0.6% of our assets total at that date), representing a decrease of 4.1%. This reduction relates to commercial deferred expenses, which, with the implementation of Law 11.638/07, had their balances adjusted and only the expenses related to commercial stands were activated in the line of fixed assets.
Fixed Assets
Fixed assets totaled R$82.3 million on December 31, 2009 (representing 1.3% of total assets), against R$75.7 million on December 31, 2008 (representing 2.3% of total assets); increase of representing a £ 6.6 million as mentioned in the previous section, this increase relates to costs of sales stands activated under this heading in accordance with the methodology of Law 11.638/07.
Loans and Debentures
Our loans and debentures for the short and long term totaled R$1,505.9 million on December 31, 2009, compared to $ 866.8 million on December 31, 2008, respectively, 24.7% and 26 7% of our total liabilities, representing an increase of 73.7%. This variation is due to the necessity of fundings of new enterprises and capital caption to de acquire more lands. The amount of projects launched was 149 on 2008 against 246 on 2009.
Liabilities for acquisition of property
This account represents obligations for purchase of land for the merger, both in current liabilities as current liabilities in the long run. Our obligations for property acquisitions totaled R$694.4 million on December 31, 2009 (11.4% of our total liabilities at that date), compared with $ 320 million on December 31, 2008 (9.9 % of our total liabilities at that date), representing an increase of 116.4%. This increase was due to the increase of our land inventory.
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Advances from customers
This account is represented by amounts received from purchasers of units, but not yet recognized as receivables by the Company in accordance with the criteria set out in Resolution CFC 963/03. The bill totaled R$179.8 million on December 31, 2009 (2.9% of our total liabilities at that date), compared with R$61.2 million on December 31, 2008 (1.9% of our total liabilities at that date), which meant an increase of 193.7%. This increase was due primarily to higher volume of securitized portfolios of projects which are not performed. This event generates a great evolution of the balance of this item.
Net worth
Our net worth totaled R$2,940.8 million for the year ended on December 31, 2009 (48.1% of our total liabilities at that date) compared to R$1,476.4 million for the year ended on December 31, 2008 (45.5% of our total liabilities at that date). This increase resulted primarily from capital increase as a function of: (i) conversion of part of the debentures of the 2nd Issuance of Debentures which generated an increase of approximately R$70.0 million, (ii) undistributed net income generated during the last period, and (iii) the 3rd offering of common shares which amounted to a primary capture of R$784 million.
Comparison of the Years Ended on December 2008 and 2007
Gross Operating Revenue
Gross operating revenue increased 123.8%, from R$573.5 million for the year ended on December 31, 2007 to R$1,283.3 million in the same period on 2008, due to a significant increase in the number of projects of our business units launched and direct participations in cooperation’s projects, as the table below. Our gross revenue for the periods below was composed as follows:
Thousand R$ Fiscal year ended on 31 December, 2008 2007 Real estate sales 1,274,082 563,441 Other Operational Revenues 9,270 10,132 Gross Operating Revenue 1,283,352 573,573
Real Property Sales
Our gross operating revenues from real property sales increased 126.1% from R$563.4 million for the year ended on December 31, 2007 to R$1,274.1 million in the same period on 2008, due to the increase in the number of projects we launched.
The table below shows gross operating revenue from our real property sales from Business Units and direct investments in co-development projects:
Fiscal year ended on December 31, 2008 2007 Gross revenue pro Gross revenue pro Capital Stock rata PDG (Thousand Total Capital Stock rata PDG (Thousand Total Investment Participation R$) projects Participation R$) projects Total business units n/a 864,505 114 n/a 254,942 60 Goldfarb (1) 100% 518,143 83 80% 236,136 46 CHL (2) 100% 346,362 31 70% 18,806 14
Direct investments with co-incorporation n/a 409,577 35 n/a 308,499 24
TOTAL n/a 1,274,082 149 n/a 563,441 84 (1) Subsidiary fully consolidated on 2008 and 2009 (2) Subsidiary proportionally consolidated on 2007 and fully on 2008
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Other Operating Revenue
Our other operating revenue results primarily from the revenue from the rental of a property located in Avenida Chile, 230, Rio de Janeiro, estate of Rio de Janeiro, and from the revenue from construction management fees earned by Goldfarb in co-development projects. Such other operating revenue reduced 7,9% from R$10.1 million for the year ended on December 31, 2007, to R$9.3 million in the same period on 2008.
Sales Taxes
Sales taxes increased 142.1%, from R$21.6 million for the year ended on December 31, 2007 (representing 3.9% of our net operating revenue) to R$52.2 million in the same period on 2008 (representing 4.2% of our net operating revenue). The increase is related to the increase in gross operating revenue when comparing the two periods. The increase of taxes over sales was bigger than the variation of net revenue, due to the significant increase of service and properties rental revenues. The aliquot in the assumed profit method is superior than the aliquot, also in the assumed profit method, of net revenue of real estate sales.
Net Operating Revenue
As a result of the foregoing, our net operating revenue increased 123%, from R$552 million for the year ended on December 31, 2007 to R$1,231.2 million in the same period on 2008.
Cost of Properties Sold
Cost of properties sold increased 124.5%, from R$355,3 million for the year ended on December 31. 2007 (representing 64.4% of our net operating revenue) to R$797.8 million in the same period on 2008 (representing 64.8% of our net operating revenue). The increase was due to:
(i) Capitalized interest: due to the enactment of Law No. 11,638/07, we began recording all capitalized interest arising from financing and working capital debts under cost of properties sold, starting in the fourth quarter of 2008. Since cost of Units sold on 2007 does not include adjustments resulting from Law No. 11,638107, we noted an increase of R$18.9 million in cost of properties sold for December 31, 2008 (representing 1.5% of our net operating revenue); and
(ii) A significant increase in the number of projects from 84 projects launched during 2007 to 149 projects launched during 2008.
Gross Operating Profit
As a result of the foregoing, our gross operating profit increased 120.3%, from R$196.7 million for the year ended on December 31, 2007 (representing 35.6% of our net operating revenue) to R$433.3 million in the same period on 2008 (representing 35.2% of our net operating revenue).
Net Operating Expenses
Operating expenses increased 117.7%, from R$86.5 million for the year ended on December 31, 2007 to R$188.3 million in the same period on 2008, due to the following:
• Business Expenses (i) Our business expenses increased 285.3%, from R$27.3 million for the year ended on December 31, 2007 (representing 4.9% of our net operating revenue) to R$105.2 million in the same period on 2008 (representing 109 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
8.5% of our net operating revenue), due to (i) introduction of law 11.638/07, where only sales stands are activated and depreciated according to the project’s useful life (all of others sales projects expenses are accounted as its performance and not activated and no longer depreciated (television, pamphlets, newspaper’s expenses, among others)), and (ii) increase of projects launched in the period, with 84 projects launched on December 31, 2009, as for 149 projects launched on December 31, 2008.
• General and Administrative Expenses General and administrative expenses increased by 130.8%, from R$41.3 million for the year ended on December 31, 2007 (representing 7.5% of our net operating revenue) to R$95.4 million in the same period on 2008 (representing 7.5% of our net operating revenue). This increase is mainly due to: (i) an increase of the number of Company’s employees and of its Business Units Goldfarb’s and CHL, in connection with operation’s growth and (ii) the effect of the recognition of expenses compensation for share options in accordance with the introduction of the law 11.638/07.
• Tax Expenses Tax expenses increased from R$1.0 million for the year ended on December 31, 2007 (representing 0.2% of our net operating revenue) to R$2.6 million in the same period on 2008 (representing 0.2% of our net operating revenue), due mainly to an increase in our financial transactions, in connection with the growth of our activities.
• Financial Expenses and Income Financial result has gone from a financial expense of R$36.2 million for the year ended on December 31, 2007 to a financial income of R$12.5 million in the same period on 2008. The increase was due to interest on financing and working capital debts, which was allocated to cost of properties sold for the nine-month period ended on September 30, 2009 as required by Law No. 11,638/07. See "-Financial Information- Cost of Properties Sold."
• Expenses with Goodwill Amortization Our expenses with amortization of goodwill increased from R$15.4 million for the year ended on December 31. 2007 (representing 2.8% of our net operating revenue) to R$28.2 million in the same period on 2008 (representing 2.3% of our net operating revenue), an increase of 83.1%. This variation is primarily due to goodwill resulting from the increased participation in our subsidiaries Goldfarb and CHL, for the year ended on December 31, 2007 and 2008
• Others Other income increased from R$11.1 million for the year ended on December 31, 2007 (representing 2.0% of our net operating revenue) compared to a gain of R$15.2 million in the same period on 2008 (representing 1.2% of our net operating revenue). This was the result of a gain on negative goodwill from purchases of interests in special purpose vehicles.
Income before income tax and social contribution
As a result of the foregoing, income before income and social contribution taxes increased 99.6%, from R$122.8 million for the year ended on December 31, 2007 to R$245.1 million in the same period on 2007.
Minority Interest
Minority interest was R$18.1 million for the year ended on December 31, 2007 (representing 3.3% of net operating revenue) and R$31.5 million in the same period on 2008 (representing 2.6% of net operating revenue). This variation was due largely to an increase in net income of Goldfarb’s and CHL’s business units, which were proportionately consolidated subsidiaries on 2007.
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Income and Social Contribution
Income and social contribution tax expenses increased 74.4%, from R$19.1 million for the year ended on December 31, 2007 to R$33.3 million in the same period on 2008. This variation was due primarily to a decrease in the effective rate of income and social contribution taxes as a result of our use of deductible expenses on a tax efficient manner for the Company.
Net Income
As a result of the foregoing, net income increased 156.4%, from R$71.2 million for the year ended on December 31, 2007 (representing 12.9% of our net operating revenue) to R$182.5 million in the same period on 2008 (representing 14.8% of our net operating revenue).
Comparison of Balance Sheet - December 31, 2008 to December 31, 2007
Available Cash and investments
Our available cash in the short term are represented by investments in first-tier banks. These accounts totaled R$256.4 million in the fiscal year ended on December 31, 2008, representing 7.9% of our total assets at the time, compared with $ 716.4 million in the fiscal year ended on December 31, 2007, representing 28.0% of total assets at the time, which meant a reduction of 64.2%. A variation on this line is mainly due to the amounts received by the Company during the year 2007 as the primary public distributions of shares held on January and October 2007 and January issuances of debentures, held on July 2007.
Accounts receivable
This account on the short and long term corresponds to claims arising from sales of Units in which the value of contracts is updated according to their respective terms, and such credits recorded in proportion to the cost incurred in relation to the total cost, with respect to Units not yet completed. Our accounts receivable totaled R$1,264.3 million for the year ended on December 31, 2008 (38.9% of our total assets at that date) to R$575.0 million for the year ended on December 31, 2007 (22.4% of our total assets at that date), representing an increase of 119.9%. This increase was due to the significant increase in sales and the progress of works of real estate projects launched on the years 2007 and 2008.
Land bank and properties for sale
Our inventory of properties for sale on the short and long term represent land, buildings under construction and Units built. These stocks totaled R$1,056.0 million for the year ended on December 31, 2008 (32.5% of our total assets at that date), compared with R$820.5 million in the fiscal year ended on December 31, 2007 (32.0% of our total assets at that date), representing an increase of 28.7%. This increase was due to higher number of real estate projects launched and land acquisition.
Expenses to be appropriated
Our expenditure to be appropriated for the short term are basically represented by values in deferred expenses with business expenses related to our endeavors. Such deferred expenses totaled R$20.5 million for the year ended on December 31, 2008 (0.6% of our total assets at that date), compared with R$23.4 million in the fiscal year ended on December 31, 2007 ( 0.9% of our total assets at that date), representing a decrease of 9.7%. This reduction relates to commercial costs deferred, which with the implementation of Law 11.638/07, had their balances adjusted and only the expenses related to commercial stands were activated in the line of fixed assets.
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Fixed assets
The fixed assets totaled R$75.7 million for the year ended on December 31, 2008 (representing 2.3% of total assets), against R$5.0 million for the year ended on December 31, 2007 (representing 0.2 % of total assets), representing an increase of 1,417.8%. As mentioned in the previous section, this increase relates to costs of sales stands activated under this heading in accordance with the Law 11.638/07.
Loans, financings and debentures
Our loans, financing and debentures for the short and long term totaled R$866.8 million on December 31, 2008 (26.7% of our total liabilities), represented by loans, financing and debentures hired by some of our Subsidiaries. We found a large variation in this line, and the balance in the fiscal year ended on December 31, 2007 was R$490.9 million (19.1% of our total liabilities at that date). This increase is due to the need for funding of new ventures in its portfolio and raising capital for buying new land.
Liabilities for acquisition of property
This account represents obligations for purchase of land for incorporation, both in current liabilities as current liabilities in the long run. The total balance on those items classified in the fiscal year ended on December 31, 2008 was R$320.9 million (9.9% of our total liabilities at that date), compared to R$368.2 million for the year ended on December 31, 2007 (14.4% of our total liabilities at that date), representing a decrease of 12.8%. This reduction relates to the stability of our land bank with the main motion to pay the creditors of land.
Advances from customers
Are represented by amounts received from purchasers of Units, but not yet recognized as receivables by the Company in accordance with the criteria in Resolution CFC 963/03 and Standard Accounting OCPC 01/08. This account amounted to R$61 million in the second fiscal year ended on December 31, 2008 (1.9% of our total liabilities at that date), compared with R$11.2 million in the fiscal year ended on December 31, 2007 (0.4% of our total liabilities at that date), which meant an increase of 445.6%. This increase relates to increased receipts from customers, and a larger number of projects launched during the year 2008.
Net worth
Our shareholders' equity totaled R$1,476.4 million on December 31, 2008 (45.5% of our total liabilities at that date), compared to R$1,349.7 million on December 31, 2007 (52.7% of our total liabilities at that date), representing an increase of 9.4%. This increase was due to undistributed profits recorded by the Company during the year 2008.
Net Working Capital Considerations
Our working capital as of March 31, 2010 was R$1,752.4 million, an increase of 70.8% from R$1,025.8 million as of March 31, 2009. This increase is related to the bigger available cash after the 3 rd Shares Issuance.
Liquidity and Capital Resources
Our principal sources of liquidity are the cash generated by our operations and the loans and financings we obtain through our subsidiaries, which are usually secured by receivables from our customers, mortgages on units or guarantees provided by the partners of the special purpose vehicles. Financing and the efficient management of cash flows are essential for our long-term activities. We have been able to finance our activities primarily with the sale of our residential units. We seek to reduce our cash exposure for each real estate development through the adoption of 112 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
the following strategies: (i) formation of joint ventures with other real estate developers, (ii) financing of land acquisitions by granting the seller a number of residential units to be constructed on such land or a percentage of the sale of such units and (iii) financing of construction with funds obtained from SFH. We believe these sources, together with the proceeds from the primary portion of the offering, will be sufficient to meet our needs for funds for investments, repayment of indebtedness and working capital.
We systematically review new investment and business opportunities to be carried out either through our Subsidiaries or joint ventures with other real estate developers. We generally consider financing such investments with our working capital reserves or current account receivables, cash flows resulting from our ordinary operations and transactions, funds derived from the issuance of new debt instruments, capital increases or from the combination of any of the foregoing mechanisms.
Sources and Use of Proceeds
We generally rely on the cash flow derived from our operating activities to generate working capital resources and finance our investments and operating activities. Nevertheless, on 2009 we issued non convertible debentures and made the 3 rd Issuance of common shares, which raised approximately R$300.0 million and R$784 million, respectively. On 2007, we were also benefited from the funds received as a result of two public offerings of our common shares conducted in January and October. During such period we had a positive cash flow and we continue using the funds received in the public offerings to implement our strategic plan for investments. For the years ended December 31, 2006, 2007, 2008 and 2009, our operational cash flow was positive.
From our financed sales to customers, we received an average of 30.0% of the price of our residential units by the time construction is completed and the remaining 70.0% after construction is completed (normally within five to ten years). Loans are generally adjusted during the construction period based on the monthly INCC index. After delivery of residential units, we encourage our customers to finance the balance of the purchase price of their Units with financial institutions. If the customer obtains such financing, we receive the total outstanding amount directly from the financial institution, which becomes the secured creditor of our customer. In the event the customer is not able to raise the funds with any financial institution, or in the specific cases in which we decide to grant an alternative form of financing to our customer, we will continue to finance the acquisition of the unit based on variation of the IGP-M index plus an annual interest rate of 12.0%. In such cases, we may choose to securitize our receivables or keep the customer loan until it is fully repaid.
Specifically with respect to the financing granted to our customers, receivables are generally adjusted as follows: (i) during the construction period, by the INCC index, and (ii) after the appropriate residential permits are granted, by an annual interest rate of 12% plus the variation of the IGP-M index.
Cash Flow
Comparing December 31, 2008 to December 31, 2007, it is clear that we have a smaller cash inflow in the tine “Financing Activities”, resulting from the market business carried out during the year 2007, since we have had none during 2008. In terms of cash outflow. the significant increase of projects launched (149 projects launched during 2008, against 84 projects launched during 2007), resulted in a higher consumption of the available funds.
When we compare the year ended on December 31, 2009 with December 31, 2008, we observe an increase in the cash inflow in the line “Financing Activities”. This variation is principally due to the 3 rd public offering of common shares, occurred on October 2009, which represented a cash inflow of approximately R$784 million and the 3 rd issuance of debentures, occurred on September 2009, which represented a cash inflow of R$300 million.
Comparing September 30, 2010 to September 30, 2009, it is clear that we have an increase on all lines, what can be primarily explained by the incorporation of Agre’s activities. In the line “Operational Activities”, we observe an
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increase in the accounts receivables and in the inventory of properties for sale as a result of the large land bank from Agre. In the heading of “Investment Activities” we had an increase due to the great goodwill arising from the acquisition of some investee of Agre and even from the incorporation of Agre by PDG. In the heading “Financing Activities”, the increase is a result of the high indebtness of Agre, in addition to the capital increase in the end of 2009 and on 2010, with the 3 rd , 4 th and 5 th Issuance of Debentures and the 3rd public offering of shares explained before.
The table below show our cash flow for these periods:
Nine Months Ended on Fiscal Year Ended on
September 30, December, 31st of In thousands of R$ 2010 2009 2009 2008 2007 Initial Cash Flow 1,100,979 256,428 256.428 716.381 37.935 (+) Operational Activities (3,65,818) (577,363) (840.550) (634.244) (600.557) (-) Investment Activities (800,877) (35,639) 26.558 (136.484) (164.233) (+) Financing Activities 5,557,976 890,559 1.658.543 310.775 1.443.236 Final Cash Flow 1,892,260 533,985 1.100.979 256.428 716.381
Investments
We have not made significant investments in fixed assets. The lands acquired for real estate development, as well as our Units in inventory, are recorded in our consolidated balance sheet, as "Properties for Sale" in our current assets and are not part of our fixed assists.
The main investments made by our subsidiaries generally refer to our core business activities and consist of acquisition of land for real estate developments and future sale of Units. Our operations are concentrated in the states of Sao Paulo, Rio de Janeiro, Bahia, Paraná, Santa Catarina and Espirito Santo. In all these States, especially in São Paulo and Rio de Janeiro, we have large competitors, such as Cyrela Brazil Realty S.A. Empreendimentos e Participações, Rossi Residencial S.A., MRV Engenharia e Participações S.A. and Gafisa S.A.
On 2007, our subsidiary Goldfarb launched the product "More Melhor" (Live Better) designed to the lower-middle class (sale price between R$60,000 and R$150,000). This product is composed of practical projects, modern architecture and large leisure facilities that give priority to the comfort of its customers. With this product, which is totally financed by financial institutions and has favorable payment conditions, we expect to reach the consumer class in which the housing deficit is concentrated.
Goldfarb has also engaged in the project Planet Life, which is focused on sustainability and environmental concerns. This project comprises studies for improvement of our real estate projects with respect to energy savings, reuse of water, reduction of environmental impact, reduction of greenhouse emissions and others. Training courses are delivered to employees and collaborators to save office supplies, recycle materials and other initiatives.
Financial Capacity
We believe that our current reserves, along with funds expected to be generated from operations, will be sufficient to meet our working capital needs and financial obligations.
We presented in the last three fiscal years an Adjusted EBITDA average margin of 27.4% and a cash flow of R$98.8 million.
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We present an analysis of liquidity of the Company on September 30, 2010, as described below:
Liquidity (In thousands of R$)
Availability and applications 1.892,3 Indebtedness (4.786,4) Certain Debt 2.894,2 Net Worth 5.893,7 Debt / Net Worth 81,2% Certain Debt / Net Worth 49,1%
Indebtness
We raise loans to the extent necessary and preferably through the SFH, which charges lower interest rates than private financial institutions. We intend to maintain our strategy of low indebtedness and also seek alternatives to reduce our exposure to risks associated with potential variation of foreign exchange and interest rates.
As of September 30, 2010, the total amount of our outstanding loans, financing and debentures related to the short and long term was R$4,786.4 million, an increase of 192.6% from R$1,635.9 million as of September 30, 2009, resulting from our capital needs to pursue new developments and the incorporation of Agre. As of the year ended on December 31, 2009, the balance of loans, financing and debentures related to the short and long term, was R$1,505.9 million, an increase of 73.7% from the R$866.9 million as of December 31, 2008, also resulting from our developments increase. As of December 31, 2007, the total amount of our outstanding loans, debentures and financing related to the short and long term was R$490.9 million
The table below sets forth our indebtedness as of September 30, 2010:
INDEBTNESS PROFILE (R$ thousands)
Debentures KS - 1st S. 1sr Issuance Debentures KS - 2nd S. 1st Issuance Debentures KS - 2nd Issuance Position: 41,736 Position: 229,892 Position: 254,956 Index: CDI Index: IPCA Index: CDI Interest per year: 3.00% Interest per year: 13.40% Interest per year: 3.00% Coordinator: Itau BBA Coordinator: Itau BBA Coordinator: Itau BBA Duration: 20 months Duration: 20 months Duration: 22 months Coupon: Semiannual (Feb/Aug) Coupon: Annual (Aug) Coupon: Semiannual (Jul/Oct) 7 semiannual installments starting Aug/10 4 annual installments starting Aug/10 5 semiannual installments starting Apr/11
Debentures - First Issuance Debentures - Third issuance Position: 260,684 Position: 308,221 Index: CDI Index: TR Interest per year: 0.90% Interest per year: 10.45% Coordinator: Bradesco BBI Coordinator: Itau BBA Duration: 31 months Duration: 39 months Coupon: Semiannual (Jan/Jul) Coupon: Semiannual (Sep/Mar) 4 installments starting Jul/11 5 semiannual installments starting Sep/12
Corporate Debts SFH Position: 1,165,533 Position: 1,449,237 Index: CDI Index: TR Interest per year: 2.10% Interest per year: 10.77% Creditor: Others Creditor: Others Duration: 20 months Duration: 10 months
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Consolidated per Creditor Consolidated per Index Total: 3,710,259 Total: 3,710,259 Debenture 29.53% CDI 43.76% Bradesco 15.13% TR 48.02% Santander 14.44% Others 8.22% Itaú Unibanco 13.90% Duration: 19 months HSBC 7.08% Others 19.93%
Below is the schedule of payments of our debts, excluding debts of SFH.
Debt (excludes SFH and partners in projects - already considered into SPC's cash flow) - schedule after 2Q10 and position in the end of period (R$ thousand)
Klabin Segall Debentures (Pre-Paid) 2,000,000 Payments
1,800,000 Balance 500,000
1,600,000
400,000 1,400,000
1,200,000 300,000 1,000,000
800,000
PrincipalBalance 200,000
600,000 Principal- Installments
400,000 100,000
200,000
0 -
The following chart shows the indebtness of the Company as of September 31, 2010:
2Q10 Debt Ratios (R$ thousand) Cash and Cash equivalents 1,120,213 Indebtness (3,710,259)
Net Debt 2,590,046
Equity 5,613,164 Debt to Equity 66.1% Net debt to Equity 46.1%
Usually the Company and its Subsidiaries bestow the following guarantees in the financing operations and lending: (i) mortgage of land, (ii) pledge or fiduciary assignment of receivables from the sale of Units, and (iii) personal security of members of SPE to the project funding agent.
Financial Capacity
We believe that our current reserves, along with funds expected to be generated from operations, will be sufficient to meet our working capital need and financial obligations.
We presented in the last three fiscal years an Adjusted EBITDA margin of 27.4% and a cash flow of R$98,8 million.
We present an analysis of liquidity of the Company on September 30, 2010, as described below:
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Liquidity (In R$ thousands)
Availability and applications 1,892.3 Indebtness (4,786.4) Net Debt 2,894.2 Net Worth 5,893.7 Debt / Net Worth 81.2% Debt Worth / Net Worth 49.1%
Contractual Obligations
The table below summarizes the due dates of our material contractual obligations as of September 30, 2010, which are composed of obligations resulting from financing, loans, debentures and the acquisition of land. The loans, financing and debentures are adjusted by the CDI plus interest that varies from 0.9% per year to 2.4% per year, or adjusted by the TR plus an average interest of 8.2% to 10.4% per year. The majority of accounts payable for the acquisition of land are adjusted by the IGP-M.
Payments of the principal by period Superior Inferior 1 to 2 2 to 3 Total to 3 In R$million to 1 year years years years Financing, loans and debentures 4,786 1,671 390 933 1,791 Payable for land acquisition (1) 1,097 772 120 37 168 Total 5,883 2,443 510 970 1,960
(1) Accounts payable for acquisition of land acquired over time. Does not include land acquired through exchange.
In addition to the contractual obligations set forth in the table above, we also have contractual obligations referring to: (i) repayment of certain taxes pursuant to the Special Program for Payment of Taxes in Installments (Programa de Parcelamento Especial), or PAES; and (ii) acquisition of land to be used in the development of real estate projects. As of September 30, 2010, we had an outstanding balance of R$1,096.5 million from property acquisition. 84.72% must to be paid by 2013.
Most of our accounts to pay are adjusted by the INCC or IGP-M indexes plus annual interest rate that vary from 6% to 12.0%.
Transactions not recorded in the Financial Statements
On September 30, 2010, we did not have any operations or obligations not recorded in our financial statements. We do not have Subsidiaries not included in our consolidated financial statements, nor do we have any interests in or relationships with any special-purpose entities that are not reflected in our consolidated financial statements.
Transactions not Reflected in Financial Statements
There was no release or disposal of the Company's operating segments is not reflected in financial statements. There was no acquisition or disposal of equity interest not reflected in financial statements. There was no unusual event or transaction is not reflected in financial statements.
There are no assets and liabilities held by the Company that do not appear on its balance sheet. According to Corporate law in force, the deferred income (REF) of the Company and its subsidiaries and affiliates, is not shown and / or recorded in the statutory financial statements and consolidated. Only registered and are evidenced in the accounting tax balance sheets, which are generated each month for tax purposes. For more information, check the notes in the financial statements of the Company.
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Accounting Practices
The main changes introduced by Law 11.638/97 and Provisional Measure No. 449 applicable to the Company's accounting practices for fiscal years 2007, 2008 and 2009 were:
• Compulsory registration in property rights that have tangible assets for maintaining the Company's activities, including those arising from leases classified as capital leases; • Requirement that investments in financial instruments are recorded: (i) at market value or equivalent value in the case of applications for trading or available for sale, (ii) at cost of acquisition or issuance price, updated as legal or contractual provisions, adjusted for the likely realizable value, when it is lower in the case of applications that will be held until the maturity date, and (iii) at amortized cost, loans and financing and accounts receivable. • Elimination of presentation rubric of "non-operating income" in demonstration of the result, and • Replacement of the statement of sources and uses of funds by the statement of cash flows.
Accounting procedures adopted in Brazil have specific rules for companies in the sector of real estate market, especially in the context of ownership of the sales result. These criteria were established by the Federal Accounting Council (CFC) on May 2003, and are used by us as the basis for the appropriation of our results, where forward sale of units not yet completed, as described in detail below. In the case of incorporations whose works were started from January 1, 2004, we appropriated the result based on the scheme of costs incurred in relation to the total cost budgeted. In the case of sales of units already completed, the recipes are appropriate at the time the sale is consummated, regardless of the deadline for receipt of the contracted value. On December 17, 2008, approved the guidance OCPC - 01 which deals with Entities and Real Estate Development was aimed to standardize and clarify issuances that generated doubts about the accounting practices adopted by companies, real estate development. The main rules changes that impacted on the criteria above statements have been discussed and are detailed in our notes to financial statements of December 31, 2009, mainly in Item 2 - Presentation of Financial statements and key accounting practices.
Additionally, the Company records its allowances for contingencies in accordance with the classification of its legal counsel, following the legal criteria. With regard to tax credits the Company performs the activation of such credits as approved annual review by the Board in relation to projected use of such credits.
As a general rule, in the preparation of financial statements are assumptions adopted for the recognition of the estimates for records of assets, liabilities and other operations such as provisions for contingencies mentioned here, allowance for doubtful accounts, provision for cancellations, useful life of fixed assets, percentage of progress of work, the result of real estate development and sale of property and income tax on current and deferred income, classification of short and long term, among others. The directors and key executives of the Company monitor and periodically review these estimates and assumptions so that the values of these are always as close as possible to the actual values resulting from the Company's operations.
Quantitative and Qualitative Analysis of Market Risks
We are exposed to market risks related to our operating activities. Among the main risks that we are exposed to, we cite the following.
Interest Rate Risk
The majority of our costs and our entire portfolio of unfinished projects are updated by the INCC index. The increase of one percentage point in such index in the quarter ended on September 30, 2010 would represent a decrease of R$18.3 million in our net income for the third quarter of 2010.
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All of our financial investments and approximately 38% of our total indebtedness bear interest at a rate adjusted by the CDI. An increase of one percentage point in the average rate of the CDI for the quarter ended on September 30, 2010 would represent an increase of R$5.5 million in our net income for the third quarter ended on 2010.
Liquidity Risk
We seek to avoid liquidity risks by keeping an effective management of cash flows, supported by a solid capital structure and adequate levels of leveraging. In addition, our management constantly monitors our assets and liability positions.
Inputs Price Risk
The costs of our Units are directly influenced by the costs of raw materials used in our constructions, such as cement and steel. Generally, an increase in the price of such materials would lead to a proportional increase in the costs of our Units.
Operation Results
Over the quarter ended on September 30, 2010 our revenues raised primarily from the development and sale of units of our residential real estate. Also, we received a smaller portion of our revenue from the leasing of real estate registered under “Other Operating Revenues” due largely to the rental of stores from developments of our subsidiary REP.
The gross revenue from sales of property accounting is appropriate according to the evolution of the financial cost of construction of the project, or even that we have already sold all the real estate development, income from development and sale of Units is recorded according to the percentage of completeness of work. On this basis, the main factors that influenced the balance of gross revenue over the quarter ended on September 30, 2010 were the sale of units and the financial advancement of the costs of their respective projects.
Most of our receivables portfolio (approximately 80,6%% of our total portfolio on September 30, 2010) is updated by INCC, this being the main index on our gross revenue. As mentioned in item (c) of section 5.2 of this form, we use some strategies to minimize impact on the variation of this index on our revenues. We emphasize that we do not have relevant revenue in foreign currency.
The main indexing rates present in our business plan are the INCC and the CDI:
a. INCC: Most of our costs and our entire portfolio of projects not completed receipts are updated by the index INCC. An increase of one percentage point on the index relative to the period of nine months ended on September 30, 2010, would represent a decrease in net income of the Company of R$18,295 (R$15,400 during the quarter ended June 30, 2010).
b. CDI: All of our investments and approximately 38.3% of our total debt are linked to the CDI. An increase of one percentage point over the average rate of CDI's period of nine months ended on September 30, 2010, would represent an increase in net income of the Company of R$5,459 (and a earning of R$5,700 in the quarter ended June 30, 2010).
c. Exchange rates: The Company has no debts or receivables denominated in foreign currency. Additionally, none of the relevant costs of the Company is denominated in foreign currency.
Internal controls
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We understand that the internal procedures and systems for preparation of financial statements are sufficient to ensure the efficiency and accuracy. Given the accelerated growth of the Company and the format of development of our real estate projects through special-purpose entities, the Company decided to deploy the SAP system management information in order to improve its internal controls. The beginning of the SAP System in the Company is scheduled for the beginning of the second quarter of 2010.
Additionally, from the year 2009, certain subsidiaries of the Company created internal audit department, which has as main objective to ensure that operationally the Company maintains quality standards and controls that will contribute to the continued improvement of preparation of financial statements of the Company.
There are no weaknesses and recommendations on internal controls in the report of the independent auditor.
There is no chance of redemption of shares of the Company other than provided by law.
10.2. The directors should comment about
a. Results of the Company’s operations, in particular:
i. Description of any major components of revenue
Over the fiscal years ended on December 31, 2006, 2007, 2008, 2009 and during the quarter ended on March 31, 2010, our revenues are primarily due to development and sales of units of our residential real estate. Moreover, as described in item b of section 7.2, this form, received a smaller portion of our revenue from the leasing of real estate registered under "Other Operating Revenues" due largely to the activities of letting of shops developments of our subsidiary REP.
ii. factors that materially affected the operating results
Gross revenue from sales of property accounting is appropriate according to the evolution of the financial cost of construction of the project, or even that we have already sold all the real estate development, income from development and sale of units is recorded according to the percentage of completeness of work. On this basis, the main factors that influenced the balance of gross revenue over fiscal years ended on December 31, 2007, 2008, 2009 and over the quarter ended on March 31, 2010, were sales of units, and advance financial costs of their projects.
b. Variations in revenue attributable to changes in prices, exchange rates, inflation, changes in volumes and introduction of new products and services
Most of our receivables portfolio (approximately 80.6% of our total portfolio on September 30, 2010) is updated by INCC, this being the main index on our gross revenue. As mentioned in item (c) of section 5.2 of this form, we use some strategies to minimize impact on the variation of this index on our revenues. We emphasize that we do not have relevant receipts denominated in foreign currency.
c. Impact of inflation or changes in the price of key inputs and products, the exchange rate and interest rate in operating income and the Company's financial results..
As mentioned in section 5.2 of the form, the main indexing rates present in our business plan are the INCC, and the CDI:
INCC: Most of our costs and our entire portfolio of projects not completed receipts are updated by the index INCC. An increase of one percentage point on the index relative to the period of nine months ended on September 30, 2010, would represent a decrease in net income of the Company of R$18,295 (R$15,400 during the quarter ended June 30, 2010).
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CDI: All of our investments and approximately 38.3% of our total debt are linked to the CDI. An increase of one percentage point over the average rate of CDI's period of nine months ended on September 30, 2010, would represent an increase in net income of the Company of R$5,459 (and a earning of R$5,700 in the quarter ended June 30, 2010).
Exchange rates: The Company has no debts or receivables denominated in foreign currency. Additionally, none of the relevant costs of the Company is denominated in foreign currency.
10.3. The directors should comment on the material effects that the events below have caused or are expected to cause to the Company's financial statements and results.
a. Introduction or disposal of operating segment
There was no release or disposal of the Company's operating segments not reflected in the financial statements.
b. Constitution, acquisition or disposal of equity interest
Due to the incorporation of AGRE’s shares by PDG, there was the transfer of all issued shares of AGRE to PDG, with the aim of making AGRE a wholly-owned subsidiary of PDG, under Article 252 of the Corporations Law. The transaction was performed under the Protocol and Justification for Merger of Shares of AGRE by PDG, executed by the managers of such companies on May 3, 2010. The Merger of Shares aims to unify the management and shareholder bases of the Companies, as well as provide synergy gains resulting from the unification of the activities of companies that will become more efficient structure for the development of real estate projects, with potential cost-saving technical, supplies and other general and administrative costs, and enable greater growth and profitability of businesses developed by the Companies. The Merger of Shares creates the largest real estate company in the country, and aims to unify the management and shareholder bases of the Companies, as well as provide synergy gains resulting from the unification of the activities of companies that will have more efficient structure, incorporating two additional regional land banks, making up a portfolio of relevant products in all income groups. It is further considered that there is a potential cost saving technical, procurement, and other general and administrative costs, providing better conditions for increased growth and profitability of businesses developed by the Companies.
Implemented the incorporation we believe that there will be increase in all lines of the Company's financial statements, providing higher sales and strong profitability. However, AGRE currently has margins lower than the Company, especially due to higher financial expenses. We believe that in the short term we will be able to financially restructure AGRE, reducing its financial costs and improving the profit margins, making it closer to the Company's current margins.
c. Events or unusual operations
There is no unusual event or transaction not reflected in financial statements.
10.4. The directors should comment about:
The comments below refer also to the three fiscal years
a. Significant changes in accounting practices
2006
Except for changes resulting from legislation, there were no material changes in accounting practices of the Company.
2007
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The accounting practices of the Company for the fiscal year ended on December 31, 2007 have changed due to the entry into force of Law 11.638/07 and Provisional Measure No. 449.
2008
On 2008, with the entry into force of Law No. 11,638/07 and the Provisional Measure No. 449 of December 3, 2008, were promoted amendments aimed, in particular, update the Brazilian corporate law to enable the convergence of practices adopted in Brazil with those contained in the International Accounting Standards (“IFRS ”) and allow new accounting rules and procedures are issued by the Securities Commission in line with international standards of accounting.
However, it is worth mentioning that during the period from January to November 2008 only controlled Goldfarb Incorporations and buildings classified SA and its subsidiaries in the CIV (cost of properties sold) charges for loans for construction. In December of that year, all other subsidiaries and affiliates of the Company recognized the effect of such charges retroactively in CIV, when occurred the reclassification of financial expenses for CIV and inventory, when applicable.
b. Significant effects of changes in accounting practices
The main changes introduced by Law 11.638/97 and Provisional Measure No. 449 applicable to the Company's accounting practices for fiscal years 2007 and 2008 were:
• Compulsory registration in property rights that have tangible assets for maintaining the Company's activities, including those arising from leases classified as capital leases; • Requirement that investments in financial instruments are recorded: (i) at market value or equivalent value, when tartar applications for trading or available for sale, (ii) at cost of acquisition or issuance price, updated as legal or contractual provisions, adjusted for the likely realizable value, when it is lower in the case of applications that will be held until the maturity date, and (iii) at amortized cost, loans and financing and accounts receivable. • Elimination of presentation rubric of "non-operating income" in demonstration of the result, and Replacement of the statement of sources and uses of funds by the statement of cash flows.
c. Caveats and emphases present in the auditor's opinion
There were no reservations or emphases present in the opinion of the auditor in the fiscal years 2006, 2007 and 2008, except for the exception of the review of financial statements on March, June and September 2008 on account of failure of the calculation of present value adjustment of accounts receivable of the Company, which was only held from December 31, 2008. Failure to perform and record of AVP was the subject of consensus among various companies of the industry and, therefore, the exception was implemented on the advice of several companies in the sector that are also audited by our current independent auditors.
10.5. The directors shall indicate and comment on critical accounting policies adopted by the Company, exploring in particular accounting estimates made by management on issues relevant to the uncertain description of the financial position and results, which require subjective or complex judgments, such as stores, contingencies, revenue recognition, tax credits, long-lived assets, useful lives of assets not circulating, pension plans, changes in foreign currency conversion costs, environmental remediation, testing criteria for asset recovery and financial instruments
Brazilian accounting practices have specific rules applicable to real estate companies, particularly with respect to the recognition of sales revenue. Such rules were established by the Federal Accounting Council (“CFC ”) on May 2003 and are used by us as a basis for our results appropriation, in cases of installment sales of uncompleted units, as detailed ahead. For development projects started on or after January 1, 2004, we recognize revenues in the proportion that costs incurred to date bear to total estimated costs. For sales of completed units, revenue is 122 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
recognized when a sale is effected, regardless of the date of receipt of the contracted sale amount. Guidance OCPC 01 was approved on December 17, 2008, with the primary objective of regulating and clarifying issues that gave rise to doubts concerning accounting practices adopted by the real estate companies. The main rules that caused changes in accounting practices were discussed above and are detailed in our notes to the financial statements for the year ended on December 31, 2008 and for the quarterly information – ITR of June 30, 2009, especially item 2 – Presentation of Financial Statements and key accounting practices.
Additionally, the Company records its allowance for contingencies in accordance with the classification of its legal counsel, following the legal criteria. With regard to tax credits, the Company performs the activation of such credits as approved annual review by the Board in relation to projected use of such credits.
As a general rule, in the preparation of financial statements are adopted assumptions for the recognition of the estimates for records of assets, liabilities and other operations such as provisions for contingencies mentioned here, allowance for doubtful accounts, provision for cancellations, useful life of fixed assets, percentage of progress of work, the result of real estate development and sale of property and income tax on current and deferred income, classification of short and long term, among others. The directors and key executives of the Company monitor and periodically review these estimates and assumptions so that the values of these are always as close as possible to the actual values resulting from the Company's operations.
10.6. With respect to internal controls adopted to ensure the preparation of reliable financial statements, the directors should comment:
a. Degree of efficiency of such controls, indicating possible defects and actions taken to correct them
We understand that the internal procedures and systems for preparation of financial statements are sufficient to ensure the efficiency and accuracy. Given the accelerated growth of the Company and the format of development of our real estate projects through special-purpose entities, the Company decided to deploy the SAP system of information management in order to improve its internal controls. The expected start of SAP system in the company is the beginning of the second quarter of 2010.
Additionally, from the year 2008, certain subsidiaries of the Company created internal audit departments, which have the main objective of ensure that operationally the Company maintains quality standards and controls that will contribute to the continued improvement of preparation of financial statements of the Company.
• Deficiencies and recommendations on internal controls in the report of the independent auditor
None.
10.7. If the Company has made a public offer of securities, the directors must comment
a. How have the resources resulting from the offering been used
We conducted 3 primary public offerings of shares and 2 offerings of debentures non-convertible into shares in the last 3 years. The resources involved in issuing these securities were invested in land acquisition, general and administrative expenses, construction of real estate projects and portfolio investments of the Company.
b. If there were significant deviations from the effective application of resources and the implementing proposals disclosed in the prospectuses of their distribution
There was no significant differences.
• If there were deviations, reasons for such deviations
There was no significant deviation.
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10.8. The directors must describe the items that have not been evidenced in the Company's financial statements, indicating:
a. Assets and liabilities held by the Company, directly or indirectly, that do not appear on its balance sheet (off-balance sheet items), such as:
i. operating financial leases, assets and liabilities
ii. portfolios of receivables written off over which the entity maintains risks and responsibilities, indicating their liabilities
iii. contracts for future purchase and sale of products or services
iv. construction contracts not completed
v. contracts for future receipts financing
There are no assets and liabilities held by the Company that do not appear on its balance sheet.
b. Other items not shown in the financial statements
There are no assets and liabilities held by the Company that do not appear on its balance sheet. According to Corporate law in force, the deferred income (REF) of the Company and its subsidiaries and affiliates, is not shown and / or recorded in the statutory financial statements and consolidated. Only registered and are evidenced in the accounting tax balance sheets, which are generated each month for tax purposes. For more information, check the notes in the financial statements of the Company.
10.9. For each of the items not disclosed in the financial statements referred to in item 10.8, the directors should comment:
a. How such items are likely to alter or amend the revenue, expenses, operating income, financial expenses or other items from the Company's financial statements
b. Nature and purpose of the operation
c. Nature and amount of the obligations and rights created in favor of the Company as a result of the operation
Non applicable. There are no Company’s assets and liabilities not exposed in its financial statements.
10.10. The directors shall indicate and comment on key elements of the Company's business, specifically exploring the following topics:
a. Investments, including:
i. qualitative and quantitative description of the investments in progress and planned investment
ii. sources of investment financing
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iii. ongoing relevant divestitures and planned divestitures
To develop our business plan, we optimize our funding sources with an equalized between capital structure and leverage. The main sources of financing used by the Company are the credit lines obtained with banks and other financial institutions, as well as issuances of securities of the Company raised in the market, as non-convertible debentures.
This structure provides resources for our main object of investment, which is the acquisition of land, as we have funding available for spending on construction. The Company has no investments other than the purchase of relevant land and have no projects for mergers and acquisitions and diversification of relevant investments.
We actively participate in the land acquisition process, because we believe that it is a critical stage in the development of a real estate project and that it is the first distinguishing factor of the residential units to be launched. Each decision to acquire a parcel of land is analyzed and must be approved by our board of executive officers. We acquire lands from individuals, legal entities and in judicial and extrajudicial auctions and carry out an audit to assure legal and environmental compliance in connection with the acquisition of the lands where our real estate projects will be developed. As is customary in the industry, we evaluate the cost/benefit ratio of our acquisitions by managing any potential legal and/or environmental risks, in accordance with the opinion of our legal and technical advisors. Concurrently with this audit, we carry out a study to confirm the financial feasibility of the project and often hire an outside consultant to prepare a market research report.
Based on our investments in land acquisition over the past few years and after incorporation of Agre, now we have a land bank covering 16 states and 101 cities. The potential sale value of the projects present in our land bank on June 30, 2010 is approximately R$30.2 billion.
There was no planned divestitures
b. If disclosed, indicate the acquisition of plant, equipment, patents or other assets that should materially influence the productive capacity of the Company
There were no purchases of land, plants, equipment or other material assets.
c. New products and services, indicating :
i. description of ongoing research already disclosed
ii. total amounts spent by the Company in research to develop new products or services
iii. development projects already disclosed
iv. total amounts spent by the Company in developing new products or services
There are no new projects in development because, as described in paragraph "a" of subsection 10.10, the focus of the Company's business is exclusively the purchase of land.
10.11. Comments on other factors that influenced in a relevant operational performance and have not been identified or commented on other items in this section
There are no other factors that influenced in a relevant operational performance of the Company and which have not been identified or commented on other items in this section 10
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11. PROJECTIONS
11.1. Identification of the projects:
a. Projection’s Object
The company projects launchings achieving an Overall Sales Volume for the 2011 in the range of R$9,0 billion to R$10,0 billion. The projection is composed of hypothetical data that shall not constitute performance commitment.
b. Projected period and the duration
The projection comprises only the projects launched in 2011. The projection is valid and, taking into account that it is an annual projection, it will be kept until the end of the respective fiscal year.
c. Assumptions of the projection, with an indication of which can be influenced by management
Projection based on current land bank of the company that includes projects to be launched by it on 2011. This projection reflects the company's vision for the demand on their releases. If demand for our products is somehow affected in the course of the year, the projection will be duly reviewed (positively or negatively).
d. Indicator values that are subject of the projection
PSV launches – (R$ million) 2006 301 2007 1.233 2008 2.612 2009 3.027 2010 7.005
11.2. In the event that the Company has disclosed, during the three fiscal years, forecasts on the evolution of the indicators:
a. state which are being replaced by new projections included in the form and which of them are being repeated in the form
The projection of launches for the year 2011 has already been widely disseminated through Insights, quarterly conferences and corporate presentations and the company is not being changed.
b. as to projections for periods elapsed, designed to compare the data with the effective performance of the indicators, indicating clearly the reasons for deviations in the projection
On the year 2007 we amounted launches of R$1.23 billion against a projected release of launches for the year in the range of R$1.05 billion to R$1.2 billion;
On the year 2008 we totaled launches of R$2.612 billion against a projected release of launches for the year in the range of R$2.6 billion to R$2.8 billion.
On the year 2009 we amounted launches of R$3.03 billion against a projected release of launches for the year in the range of R$2.8 billion and R$3.5 billion.
On the year 2010 we amounted launches of R$7.005 billion against a projected release of launches for the year in the range of R$6.5 billion to R$7.5 billion.
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c. as to projections for periods still ongoing, whether the projections are still valid on the date of delivery of the form and, when appropriate, explain why they were abandoned or replaced the projections remain valid.
12. GENERAL MEETING AND MANAGEMENT
12.1. Description of the administrative structure of the Company as set out in its articles of incorporation and bylaws, identifying:
a. Responsibilities of each agency and committee
a.1. Board of Directors
(a) establish the objectives, policy and general direction of the Company's business; (b) to elect, dismiss, set compensation and duties of Board members, within the limits established by the General Assembly or defined by it, (c) supervise the administration of Directors, (d) appoint and dismiss the Company's independent auditors when appropriate, (e) manifest themselves in advance about the Management Report, the accounts of the Board and the Company's Financial Statements and consider the monthly balance sheets; (f) submit to the General Meeting the proposed allocation to be given to the Company's net income for each fiscal year or on shorter periods; (g) approve the general budget of the Company, (h) approve the Company's business plan, ( i) setting the limit of indebtedness of the Company, (j) decide on the hiring by the Company for financing and loans worth more than 10% (ten percent) of the Company's net worth, calculated at the last balance sheet, for this operation; (k) decide upon the issuance by the Company, of warrants, debentures or other securities, (l) authorize the repayment, redemption or repurchase of shares of the Company to be held in treasury or for cancellation, and to decide on the possible sale of the shares eventually held in treasury, (m) offer the option to purchase shares plans to directors and employees of the Company; (n) to establish the value of the bonuses of directors and employees of the Company, (o) decide on the conclusion, amendment and termination of contracts and execution of operations of any kind between, on one hand, the Company and, Furthermore, the shareholders of the Company and / or its subsidiaries, affiliates or controlling shareholders of the Company, (p) to discuss the company's participation in other companies, as partner unit holder or shareholder, as well as their participation in consortia and agreements association and / or shareholders' agreements and the formation of companies in Brazil or abroad, by the Company, provided that the investment in the company, or consortium agreement in question represents an investment in the Company of greater than or equal to 10% ( ten percent) of equity, calculated on the last balance sheet of the Company, (q) to increase the capital of the Company within the limit authorized by the bylaws, regardless of statutory reform, (r) authorizing the issuance of any credit instruments for the raising of funds, are bonds, notes, commercial papers or other common use on the market, acting on their conditions of issue and redemption; (s) sell fixed assets, and (t) perform other legal duties or which are conferred by the General Assembly, as well as resolve the missing cases
a.2 Executive Board
(a) conduct the general policy and management of the Company, as determined by the Board, (b) coordinate the progress of the ordinary activities of the Company, including compliance with the resolutions passed in General Meetings, at meetings of the Board and their own meetings, (c) develop annual and/or multiyear business plans and budgets for the Company, and submit them to the Board, (d) execute business plans and budgets of the Company, approved by the Board; (e) submit to the Board the proposed allocation of net income each fiscal year, (f) determine the six-monthly survey of intermediaries and submit quarterly to the Board the trial balance economic, financial and patrimonial sheet of the Company, (g) prepare the report and financial statements for each fiscal year, (h) open, operate and close bank accounts and investment, (i) respecting the powers of the Board and the provisions of the Company's Bylaws , compromise, waive, give up, do deals, make compromises, incur obligations, make use of funds, purchase, mortgage, engage or otherwise encumber movable and immovable assets and provide guarantees, signing contracts and their terms, (j) represent Company in or out court, active and passive, before any government agencies or federal, state or municipal authorities, as set forth in the Company's Bylaws, (k) approve the granting of any form of collateral or personal guarantee by the Company in favor of any third party, ensuring its own bonds or third parties, and (l) perform other legal duties or that are granted by the Board.
a.3 Remuneration and Stock Option Plan Administration Committee
General tasks: (i) submit to the Board proposal for the aggregate annual compensation of the Officers and Directors of the Company, which shall include any amount to be paid, directly or indirectly by the Company and / or its 127 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
subsidiaries, as compensation, bonus, prize, participation in profits and / or dividends, (ii) submit to the Board proposal to distribute the overall remuneration annually approved by the general meeting between the Directors and the Officers of the Company, as remuneration for the services rendered to the Company and / or its subsidiaries, (iii) decide on the granting of options to purchase or subscribe for shares to officers, directors and employees of the Company and its subsidiaries, (iv) to administer the Stock Option Plan approved at the Extraordinary General Meeting held on January 9, 2007 (“First Plan ”), subject to the terms of the First Option Plan, (v) decide on the participation of the Officers, Directors and employees Company and its subsidiaries in the profits of the Company and its subsidiaries, (vi) speak on any contract to be concluded between the Company or any of its officers, directors and employees, covering the payment of amounts by way of compensation..
b. Date of installation of the board of auditors, if this is not permanent, and creation of committees
Currently, the Board of Auditors comprises three members and two alternate, all elected at the ordinary general meeting of shareholders held on April 29, 2010, with a mandate until the ordinary general meeting of the Company who shall decide on the numbers of the Company for the year ended on 2010.
The Committee for Compensation and Management of Stock Option Plans was established on December 23, 2008, when its members were also elected.
c. Mechanisms for evaluating performance of each agency or committee
There are no mechanisms for evaluating agencies and committees.
d. Regarding the direction members, their individual powers and duties
The duties of our Chief Executive Officer are to (i) submit for approval by the Board of Directors the business plans and annual budgets, the investment plans and the new plans for expansion of the Company and our controlled companies and subsequently execute the approved plans; (ii) prepare, in conjunction with the other officers, our operating strategies and guidelines as well as establish the performance criteria to implement decisions defined at Shareholders' and Board of Directors' Meetings; (iii) supervise the execution of all activities; (iv) coordinate and supervise the activities of the Direction, by calling to order and presiding its meetings; and (v) perform the other attributions that may be assigned to him by the board of directors.
The functions of our Investor Relations Officer are to (i) disclose and communicate to the CVM and the BM&FBOVESPA, when applicable, any material act or fact occurred or related to our business, as well as see to its prompt and simultaneous disclosure to all markets in which our securities are admitted for trading, in addition to other attributions that may be assigned to him by the board of directors; (ii) provide information to investors; and (iii) keep our share registration updated by providing the required information under the applicable CVM rules.
The functions of our Vice-Chief Financial Officer are to (i) implement any guidelines determined by the board of directors; (ii) perform the financial management of the Company; (iii) manage our internal control system and accounting areas; and (iv) replace the Chief Executive Officer during his absence or temporary disability, according to our bylaw.
The Investment and Management Planning Officer is responsible for: (a) review and approve new investment to perform the activities of the Company, (b) implement the management model in the Company's investees, (c) monitor the performance of the Company's property investments and controlled companies, (d) conduct the management planning of the projects of the Company and its subsidiaries, and (e) direct the activities of co- incorporation of the Company.
The Administrative Operating Officer is responsible for: (a) formulate, coordinate and implement activities and procedures related to transfer customer credit of the Company and its subsidiaries, (b) overseeing the human resources department of the Company and its subsidiaries, (c) formulate, coordinate and perform the activities of Technology
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Information, as well as the implementation of the Company’s systems, (d) formulate, coordinate and perform operating administrative activities of the Company's and its subsidiaries.
The General Counsel is responsible for: (a) formulate, coordinate and implement actions and legal procedures of the Company and its subsidiaries, (b) to monitor matters relating to regulation as a public company, (c) coordinate the preparation of contracts of the Company and its subsidiaries, according to decisions and negotiations with other executive officers, (d) monitor and represent the Company in general meetings and meetings of the Board of Directors of the Company and its subsidiaries.
The Financial Planning Officer is responsible for: (a) plan, formulate and project the cash flows of the Company and its subsidiaries, (b) administer the treasury department of the Company and its subsidiaries, (c) structure, negotiate and monitor the real estate credit in each real estate project in which the Company and its subsidiaries participate, (d) conduct, coordinate and direct project management of the Company's subsidiaries.
e. Mechanisms for evaluating performance of members of the board of directors, committees and board of auditors
The Company performs the evaluation of individual employees based on their performance in the initiative, proactive, decision making, professional behavior, interpersonal relationships, teamwork and commitment to targets and deadlines. After internal evaluation conducted by the Company, this is passed to the Committee for Compensation and Management of Stock Option Plans, which determines the performance evaluation of the employees, directors and officers that have variable pay.
12.2. Description of the rules, policies and practices relating to general meetings, indicating:
a. Notice of Meeting
The General Meetings of the Company are called with at least fifteen days in advance in the first call notice and eight days in case of a second call notice.
b. Competences
It is up to the General Meeting to deliberate over the following matters: without jeopardizing other matters of its competence: (a) amend the bylaws; (b) elect or dismiss, at any time, managers and supervisors of the Company, under de article 142 II; (c) take each year the management accounts and resolve the financial statements submitted; (d) authorize the issuance of debentures, under article 59 § 1; (e) suspend the exercise of the shareholder’s rights (article 120); (f) deliberate over the appraisal of goods with which the shareholder contributes for the capital stock; (g) authorize the issuance of beneficiaries parties; (h) deliberate on the transformation, consolidation, merger and spin-off of the Company and its dissolution and liquidation, elect and dismiss liquidators and examine their accounts; (i) authorize the managers to confess insolvency and bankruptcy; (j) removal from the Novo Mercado; and (k) choice of specialized company responsible for determining our economic value for purposes of public offerings required by the Rules of the Novo Mercado, among the companies identified by our Board of Directors, in a triple list.
c. Addresses (physical or electronic) in which the documents related to the general meeting of shareholders will be available for analysis
The documents will be available in the Company’s headquarters in Praia de Botafogo, 501, 2 nd floor, ZIP CODE 22250- 040, Pão de Açúcar Tower, Rio de Janeiro/RJ, and on the Company’s website www.pdgrealty.com.br/ri.
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d. Identification and management of conflicts of interests
Pursuant to the law, the conflicts of interest are identified and managed by the chairman of the Board of Directors, through the analysis of the object and the parties of the contract.
e. Solicitation of proxies by the administration to exercise the voting rights
The representative must be fully constituted in the proxy and the proxy must contain the vote to be pronounced.
f. Necessary formalities for the acceptance of powers of attorney instruments granted by shareholders, indicating that the Company accepts proxies granted by shareholders electronically
The proxies must be sent notarized and with proven credentials of the signatories to the shareholder’s level. The Company does not accept proxies granted by electronic means.
g. Maintenance of forums and World Wide Web pages that are intended to receive and share feedback from investors about the agendas of meetings
None.
h. Live video broadcast and / or audio of meetings
None.
i. Mechanisms that allow the inclusion in the agenda, of proposals made by the shareholders
None.
12.3. In table form, inform the dates and newspapers publishing:
Financial Financial Financial Financial Statements for Statements for the Statements for Statements for the year ended year ended on the year ended the year ended Year on 12.31.2009 12.31.2008 on 12.31.2007 on 12.31.2006 Notice to shareholders Date (s) of none Revision 30, March none March 30 and communicating the publication in 31 and April 1, 31, 2007 and availability of financial Newspapers 2009 April 3, 2007 statements (DO), March 30, 2007 and April 2 and 3, 2007 (Valor) Newspaper(s) none Diário Oficial do Diário Oficial Diário Oficial Published Estado do Rio de do Estado do do Estado de Janeiro and Valor Rio de Janeiro São Paulo and Econômico and Valor Valor Econômico Econômico April 13, 14 and Convocation of the ordinary Date (s) of Revision 30, Issuance 15, 16 and March 28, 31 17, 2007 (OF) general meeting which dealt publication in March 31, 2010 17, 18 and April 19 and April 1, and April 13, 16 with the financial statements Newspapers and April 1, and April 1, 2009 2008 and 17, 2007 2010 (Valor )
Newspaper (s) Diário Oficial Diário Oficial do Diário Oficial Diário Oficial Published do Estado do Estado do Rio de do Estado do do Estado de Rio de Janeiro Janeiro and Valor Rio de Janeiro São Paulo and and Valor Econômico and Valor Valor Econômico Econômico Econômico
Minutes of the ordinary Date (s) of May 13, 2010 May 4, 2009 May 5, 2008 May 7, 2007 general meeting which dealt publication in 130 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
with the financial statements Newspapers Newspaper (s) Diário Oficial Diário Oficial do Diário Oficial Diário Oficial Published do Estado do Estado do Rio de do Estado do do Estado de Rio de Janeiro Janeiro and Valor Rio de Janeiro São Paulo and and Valor Econômico and Valor Valor Econômico Econômico Econômico
Financial Financial Financial Financial Statements for Statements for Statements for the Statements for the year ended the year ended year ended on the year ended Year on 12.31.2009 on 12.31.2008 12.31.2007 on 12.31.2006 Year
Financial Statements Date (s) of March 29, 2010. April 13, 2009 March 28, 2008 April 3, 2007 publication in Newspapers Newspaper (s) Diário Oficial Diário Oficial do Diário Oficial Diário Oficial Published do Estado do Estado do Rio de do Estado do do Estado de Rio de Janeiro Janeiro and Valor Rio de Janeiro São Paulo and and Valor Econômico and Valor Valor Econômico Econômico Econômico
12.4. Description of the rules, policies and practices relating to the board, indicating:
The Administrative Council is comprised by at least five and at most eleven members. There is also a number of alternates members that will be determined in the general shareholders meeting, limiting the number of voted members, linked or not to specific committees, elected by the general shareholders meeting and dismissible by it at any time. The current members of the Board of Directors are:
Name Title Investiture date Term Age Gilberto Sayão da Silva President April 29, 2010 AUG/2011 39 Alessandro Monteiro Morgado Horta Vice-president April 29, 2010 AUG/2011 39 José Antonio T. Grabowsky Effective Counselor April 29, 2010 AUG/2011 46 Michel Wurman Effective Couselour April 29, 2010 AUG/2011 33 Paulo Roberto Nunes Guedes Independent Counselour April 29, 2010 AUG/2011 60 Alexandre Gonçalves Silva Independent Counselour April 29, 2010 AUG/2011 65
a. Frequency of Meetings
Pursuant to our Bylaws, the Board of Directors shall always meet when covened by its President or by the majority of its members. Historically, the meetings of the Board of Directors are held once every 45 days.
b. If they exist, the provisions of the shareholder’s agreement that establishes some restrictions or linking to the voting exercise of the council members.
There is not.
c. Identification and management rules for interest conflicts
There is not. Pursuant to the Law 6.404/76, any member of our Board of Directors is prohibited of voting in any general shareholder meeting or meeting of the Board of Directors, or entering in any operation or business in which there have conflitants interests with the Company.
12.5. Description of the arbitration clause, if any, included in the statute for the resolution of conflicts among shareholders and between them and the company through arbitration
Under Article 35 of the Bylaws, the Company, its shareholders, managers and members of the Board of Auditors shall resolve through arbitration any dispute or controversy that may arise between them, related to or resulting from, in particular the application, validity, effectiveness, interpretation, breach and its effects, the provisions in the rules of the Novo Mercado , the Bylaws, the Brazilian Corporate Law, the rules issued by the Conselho Monetário 131 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Nacional , the Central Bank or the CVM, and other rules governing the functioning of capital markets in general, beyond those contained in the Regulamento de Listagem do Novo Mercado and the Regulamento de Arbitragem da Câmara de Arbitragem do Mercado , which shall be conducted by the Câmara de Arbitragem do Mercado established by BM&FBOVESPA in accordance with the regulations of such chamber, and the parties may, pursuant to Chapter 12 of the referred rules, agree on another chamber or arbitration center to resolve their disputes.
12.6. For each of the managers and members of the board of auditors of the Company, include, in table form :
Other duties or functions performed at Elected by Professio CPF or Elective Date of Investitur the the Name Age n Passport Position election e date Term Company Controller Gilberto 39 Manager 016.792.777 President of April October AUG/2 Member of N/A Sayão da of third -90 the Board of 29, 20, 2006 011 the Silva party Directors 2010 Remuneratio resources n and Stock Option Plan Administratio n Committee
Alessandro 39 Electronic 005.153.267 Vice- April October AUG/2 Member of N/A Monteiro engineer -04 president of 29, 20, 2006 011 the Morgado the Board of 2010 Remuneratio Horta Directors n and Stock Option Plan Administratio n Committee
José Antonio 46 Civil 853.592.207 CEO and April October AUG/2 None N/A T. engineer -59 member of 29, 20, 2006 011 (as Grabowsky the Board of 2010 board Directors member ) and AUG/2 012 (as officer) Michel 33 Economis 025.915.137 Executive April October AUG/2 None N/A Wurman t -83 Vice 29, 20, 2006 011 (as President of 2010 board Finance, member Director of ) and Investor AUG/2 Relations 012 (as and Member officer) of the Board of Directors.
Independent AUG/2 N/A Alexandre April Mechanic 022.153.817 board April 29, Gonçalves 65 29, 011 None engineer -87 member 2010 Silva 2010
Independent AUG/2 N/A Paulo board April 011 Roberto Economis 156.305.876 April 29, 60 member 29, None Nunes t -68 2010 2010 Guedes Frederico 895.019.007 AUG/2 None N/A Marinho 32 Civil -97 Planning May 10, October 012 Carneiro da engineer and 2010 20, 2006 Cunha Investment Managemen t Officer
307.856.048 AUG/2 None N/A Cauê 27 Lawyer -12 General May 10, November 012 Castello Counsel 2010 13, 2009 132 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Other duties or functions performed at Elected by Professio CPF or Elective Date of Investitur the the Name Age n Passport Position election e date Term Company Controller Veiga Innocêncio Cardoso
054.222.397 AUG/2 None N/A João Miguel 30 Entrepren -09 Financial May 10, November 012 Mallet Racy eur Planning 2010 13, 2009 Ferreira Officer
026.893.667 AUG/2 None N/A Marcus 38 Economis -62 Operations May 10, November 012 Vinicius t Managing 2010 13, 2009 Medeiros Officer Cardoso de Sá
Sergio AUG/2 None N/A Independent Passos member of April 011 Ribeiro Entrepren 026.246.867 April 29, 37 the Board of 29, eur -03 2010 Auditors 2010
Pedro 32 Civil 043558557 Independent April August AUG/2 None N/A Quintella engineer 67 member of 29, 31, 2009 011 the Board of 2010 Auditors
Vitor Hugo 30 Entrepren 292.699.278 Member of April August AUG/2 None N/A dos Santos eur -57 the Board of 29, 31, 2009 011 Pinto Auditors 2010
Alternate None N/A member of April Ricardo Economis 343.060.211 the Board of April 29, AUG/2 44 29, Kobayashi t -49 Auditors – 2010 011 2010 Independent
Alternate None N/A
April Bruno Economis 034.032.377 member of April 29, AUG/2 35 29, Zaremba t -96 the Board of 2010 011 2010 Auditors - Independent
12.7. Provide the information mentioned in item 12.6 in respect of members of statutory committees, as well as audit committees, risk, and financial compensation, even if such committees or structures are not statutory 16 3
Other duties Investit or functions Elected by Professio CPF or Elective Date of ure performed at the Name Age n Passport Position election date Term the Company Controllers Gilberto 39 Manager 016.792.777 President April October AUG/201 Member of the N/A Sayão da of third -90 of the 29, 20, 1 Remuneration Silva party Board of 2010 2006 and Stock resources Directors Option Plan Administration Committee
3 The information provided in this section should include audit committees, risk, and financial remuneration, and the like organizational structures, even if such committees are not statutory or structures, provided that such committees or structures involved in decision-making of the administrative or management of the issuer as consultants or tax. 133 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Alessandro 39 Electronic 005.153.267 Vice April October AUG/201 Member of the N/A Monteiro engineer -04 President 29, 20, 1 Remuneration Morgado of the 2010 2006 and Stock Horta Board of Option Plan Directors Administration Committee
12.8. Each one of the directors and members of the board of auditors should provide:
a. curriculum, containing the following information: i. main professional experiences over the last five years, indicating:
• Company’s name
• position and functions of the office
The duties associated with the positions of executives and directors are set out in the Bylaws of the Company, which are to: (a) establish the goals, policy and general direction of the Company’s business; (b) appoint, remove, set compensation and duties of the Executive Board members, within the limits established by the shareholder’s meeting; (c) supervise the management of the executives; (d) appoint and remove the Company's independent auditors, when applicable; (e) expose an opinion about the Management Report, the accounts of the Executive Board and the Company's Financial Statements and consider the monthly balance sheets; (f) submit to the shareholder’s meeting the proposed allocation that will be given to the Company's net income for each fiscal year or on shorter periods; (g) approve the general budget of the Company; and (h) approve the Company's business plan, among other.
• main activities of the Company in which these experiences occurred, highlighting the corporations or organizations that are part of (i) the economic group of the Company; or (ii) partners with direct or indirect participation, equal or superior than 5% of the same class or type of Company’s securities.
ii. Indicate all of the management positions that occupies or have occupied in public corporations.
Board of Directors of the Company
Gilberto Sayão da Silva – President of the Board of Directors
Mr. Sayão da Silva, 39, is currently the chairman of our Board of Directors. Mr. Sayão da Silva is also currently a partner at Vinci Partners and a member of its Executive Committee. Previously, he was a partner at Banco Pactual responsible for the areas of investment, corporate finance and hedge funds. Between 1998 and 2009, Mr. Sayão da Silva served on the Executive Committee of Banco Pactual and previously at Banco UBS Pactual, participating in strategic and corporate decisions and as chairman of the bank. From 2006 to 2009 he was the principal officer of UBS Pactual Gestora de Investimentos Alternativos Ltda., the holding investment company responsible for the wealth management of the former partners of Banco Pactual. He started his career at Banco Pactual in 1993 in the area of financial computer systems development and became a partner in 1995. Mr. Sayão da Silva is currently a member of the board of directors of several other companies, including Equatorial Energia S.A., Companhia Energetica do Maranhão – CEMAR, and Companhia Sidertirgica Nacional. Mr. Sayão graduated from Pontificia Universidade Catrilica do Rio de Janeiro with a degree in electrical engineering. Finally, Mr. Sayão Gilberto Silva received a warning penalties in administrative proceedings No. 0,001,019,646 and 0,001,019,647 of the Central Bank of Brazil.
Alessandro Monteiro Morgado Horta – Vice President of the Board of Directors
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Mr. Horta, 39, is currently the vice-president of our Board of Directors. Mr. Horta is currently a partner at Vinci Partners and a member of its Executive Committee. Between 2006 and 2009 he was an officer at UBS Pactual Gestora de Investimentos Alternativos Ltda., the holding investment company responsible for the wealth management of the former partners of Banco Pactual, being also the Deputy CEO of Banco UBS Pactual. Between 2003 and 2006, Mr. Horta was the partner responsible for the administration and operations areas of Banco Pactual, which encompassed the operations, compliance, controllers, accountants, taxes, IT, legal, corporate services and human resources departments. From 2001 to 2006, Mr. Horta headed the area of investments of Banco Pactual, especially private equity investments. From 1997 to 1998, Mr. Horta worked as an equity trader for Banco CSFB Garantia, and between 1994 and 1997 he managed investment funds at Opportunity Asset Management. Mr. Horta also worked as an equity and fixed income trader, and as a real estate investments analyst, at Banco Icatu from 1991 to 1994. Mr. Horta has more than 18 years of experience in trading, corporate finance, capital markets, financial analysis and private equity investments. He previously served on the Consulting Board of Saraiva Livraria e Editores, Light S.A., and the board of directors of Satipel Industrial S.A. and Intesa S.A. Currently, he is a member of the board of directors of several other companies, among them Equatorial Energia S.A., Inbrands Gestora de Marcas S.A., Los Grobo do Brasil S.A. and Companhia Energética do Maranhão (CEMAR). He graduated from Pontifícia Universidade Católica do Rio de Janeiro with a degree in electronic engineering.
José Antonio T. Grabowsky
Mr. Grabowsky, 46, is a permanent member of our Board of Directors and our Chief Executive Officer, responsible for the coordination and execution of our activities. Prior to that, he was responsible for the coordination and development of the real estate investment department at Banco Pactual. He joined Banco Pactual on 2003 and became a partner on 2005. Before joining Banco Pactual, he worked for 13 years at the Icatu Group, where he was responsible for the investment area in the holding company of the Icatu Group. Under his coordination, Icatu Group co-developed several commercial, residential and shopping centers real estate developments in Rio de Janeiro and Sao Paulo. He also founded and served as the primary executive at Atlantica Residencial, a real estate developer focused in the middle and mid-low segment, of which Icatu was one of the controlling shareholders together with Prudential Real Estate Investors, Cadim ( Caisse de Dépot et Placement du Québec ) and GIC (Government of Singapore Investment Corporation). Throughout his carrier, Mr. Grabowsky participated in more than 70 real estate development projects. Currently he is member of the board of directors of Goldfarb, CHL, Agre, Lindencorp, REP DI. Mr. Grahowsky graduated with a degree in civil engineering from Pontificia Universidade Católica do Rio de Janeiro and holds a Masters Degree in Finance from COPPEAD-UFRJ.
Michel Wurman
Mr. Wurman, 33, is a permanent member of our Board of Directors and our Chief Financial Officer and Investor Relations Officer, responsible for our finance management and the relationship with our investors. Prior to that, he was a member of Banco Pactual’s investments team, which he joined on 2001 and became a partner on 2005. Mr. Wurman was responsible for private equity investments and monitoring of companies and the PE/VC investment funds that received private equity and venture capital investments, as well real estate investments. Mr. Wurman has a long history of investing in over 50 companies in several areas such as telecommunications, technology, biotechnology and real estate. Before joining Banco Pactual, Mr. Wurman worked for three years at Latintech Capital (a company focused on investing in technology companies), as well as the back-office of Banco Icatu. Currently, he is a member of the board of directors of Goldfarb, CHL Agre and Lindencorp. Mr. Wurman is also a professor of private equity and business plan at the IBMEC Business School graduate program and at Endeavor Venture Corporation and director of ABVCAP. Currently he’s a member of the board of directors of Goldfarb, CHL, PDG Companhia Securitizadora and Lindencorp. He graduated in economics with honors from IBMEC Business School in Rio de Janeiro.
Alexandre Gonçalves Silva
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Mr. Silva, 65, graduated with a degree in mechanic engineering from Pontificia Universidade Católica do Rio de Janeiro. From 2001 to 2007, Mr. Silva was the president of General Eletric do Brasil. Before that, from 1989 to 2001, he was the president of GE CELMA, company specialized in reviewing and repairing aircraft’s, with head offices in Petrópolis. Now a days, Mr. Silva is a member of the board of directors of Equatorial Energia, TAM, Fundições Tupy, Fibria and Alupar. He is the president of the board of directors of AMCHAM and also counselor since 2007 and 2003, respectively.
Paulo Roberto Nunes Guedes
Mr Guedes is a partner and founder of CEO from BR Investimentos, and of BR Educacional, which is a investment fund focused on the Brazilian educational sector. He was one of the partners and founders of Banco Pactual, that had become the biggest private investment bank in Brasil until it was bought by UBS on 2006. Mr. Guedes was the president and main shareholder of IBMEC, an important institution in the executive educational area, being one of the first institutions in the introduction of executive MBAs in Brazil. He was a professor of macroeconomics at Universidade Católica do Rio de Janeiro (PUC-Rio), Fundação Getúlio Vargas (FGV) and IMPA ( Instituto de Matemática Pura e Aplicada ) in Rio de Janeiro. Mr Guedes writes a weekly article for the newspaper O Globo, and a fortnightly article for the magazine Época.
Executive Officers
José Antonio T. Grabowsky – CEO – President Executive Officer
See “Board of Directors” above.
Michel Wurman – Financial Vice-President and Executive Officer of Investor Relations
See “Board of Directors” above.
Frederico Marinho Carneiro da Cunha, CFA – Executive Officer for Real Estate Development and Investment
Mr. Carneiro da Cunha is our executive officer for real estate development and operations, and is therefore responsible for the coordination and management of our co-development investments. Prior to that, he was a member of the real estate investment team of Banco Pactual. Before joining Banco Pactual, he worked with real estate development and investment for six years, particularly at Banco BBM (1998-1999), Banco Modal (2001-2003) and Banco Fibra (2004), where he was responsible for preparing feasibility analysis, structuring finance and managing real estate projects. He is currently a member of the board of directors of Goldfarb, Agre PDG Companhia Securitizadora and CHL. Mr. Carneiro da Cunha graduated in civil engineering from Pontificia Universidade Católica do Rio de Janeiro.
Cauê Castello Veiga Innocêncio Cardoso – Executive Officer and General Counsel
Mr. Cardoso is executive officer of the Company and heads the legal department. He is also the Investor Relations Officer of PDG Companhia Securitizadora and a permanent member of the board of directors of Goldfarb, CHL, Agre and TGLT. Previously, he as a member of the legal department of Banco Pactual, where he worked with private equity, M&A, fixed income, variable income investment banking and stock operations. Before joining the Banco Pactual team, he worked in the law firms Sergio Bermudes Advogados and Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados. He graduated from the Law School of the Universidade de São Paulo, with specialization in corporate law.
João Miguel Mallet Racy Ferreira, CFA – Financial Planning Officer
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Mr. Ferreira is our executive officer of financial planning, as well as the Chief Financial Officer of PDG Companhia Securitizadora. Previously, he was a member of the long-term investment team at Banco Pactual, which created PDG Realty, and he has participated in more than 30 private equity transactions. He graduated from the Faculdade Federal do Rio de Janeiro with a business degree.
Marcus Vinicius Medeiros Cardoso de Sá – Operations Officer
Mr. Medeiros is our operations officer. From 1994-2006, he was the partner responsible for the operations of Banco Pactual S.A., and became the managing officer responsible for the operations of Banco UBS Pactual from 2006 to 2008. Mr. Medeims obtained an economics degree from Universidade Federal Fluminense and an MBA in finance from IBMEC.
Board of Auditors
Pedro Machado Rodrigues Quintella
Mr. Quintella has been portfolio manager at Vinci Partners since 2008. Previously, Mr. Quintella worked at Banco UBS Pactual; Banco de Investimentos Credit Suisse (Brasil) S.A. in the investment banking division; Iposeira Gestäo de Ativos, as a financial analyst; and at Oi (mobile telephone operator) as corporate business officer. Between 1998 and 2000, he worked in internet businesses for GP Investimentos and at Playcenter S.A. Currently, he is a member of our board of auditors. He graduated in civil and industrial engineering from the Pontificia Universidade CatMica do Rio de Janeiro and holds an MBA degree from the Harvard Business School.
Sergio Passos Ribeiro
Mr Passos is a partner and responsible for the controlling area in Vinci. Mr. Passos joined Banco Pactual in 1998. There he is responsible for the fiscal area from 2006 to 2009. He is also responsible for the accounting area. Before Banco Pactual, Mr. Passos was a tax consultant at PriceWaterhouseCoopers. Sérgio Passos is graduated with a degree in Business Administration and Account at Universidade Santa Úrsula. He has a MBA in finance from IBMEC RJ.
Vitor Hugo dos Santos Pinto
Mr. Santos Pinto is a structured assets operating manager for the vice- presidency of the asset management at the CEF. He is a business administrator with a post-graduate degree in investment fund management from the Pontificia Universidade Católica de São Paulo. Since August 2003 he has worked in the asset management area. Between 2003 and 2004, he worked in the analysis and management of assets and investment products of fixed and variable incomes. Since 2005, he has worked in structuring and management of structured funds, with private equity investment funds, creditory rights investment funds and real estate investment funds.
Ricardo Takao Kobayashi (alternate member)
Mr. Kobayashi is a partner and member of the Private Equity team of Vinci Partners. He started in Banco Pactual in 1998, as an analyst in the area of pulp and paper. In 1998 he became chief of the research and analisys area. He became a partner in 1998 and was elected, among the best 2 analists by the Institutional Investor Magazine for nine years in a row, being in the first place for 5 times. On 2006, Mr. Kobayashi was indicated as a resource manager of third parties of UBS Pactual and of Financial Sponsor Banker on 2009 of the investment banks division. Mr. Kobayashi graduated with a degree in Economics at Universidade de Brasilia, and has a MIM from Thunderbird School of Global Management . He has also a CFA certification.
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Bruno Augusto Sacchi Zaremba (alternate member)
Mr. Zaremba is a partner and member of the Private Equity team of Vinci Partners. Mr. Zaremba entered in Banco Pactual in 1996, as a company’s analist. He was part of the research and analisys team until 2003, working with banking area, retail, consuming area and tobacco. He was nominated as area manager for the developed markets proprietary investments segment, working on that position when he entered Vinci Partners in 2009. Mr. Bruno Zaremba graduated with a degree in Economics from the Pontifícia Universidade Católica do Rio de Janeiro, and also has CFA certification.
b. Description of any following events that have occurred over the past 5 years
i. any criminal conviction ii. any conviction in an administrative proceeding of CVM and applied sanction iii. anyjudicial or administrative judged judgment, that has suspended or disqualified the practice of a professional or commercial activities
There is not.
12.9. Existence of a conjugal relationship, marriage or stable relationship between:
1) Directors of the Company
There is not.
2) (i) directors of the Company and (ii) directors of the controlled Companies, directly or indirectly There is not.
3) (i)directors of the Company or its subsidiaries, directly or indirectly e (ii)direct or indirect holdings of the Company
There is not.
4) (i) directors of the Company and (ii) direct and indirect subsidiaries of the Company
There is not.
12.10. Information on reporting relationships, service delivery or control maintained in the past 3 fiscal years, between the Company's management and:
a. Company controlled, directly or indirectly by the Company
Officer Post Subsidiary Member of the Board of Directors Goldfarb, CHL, Agre and TGLT Cauê Castello Veiga Innocêncio Cardoso Investor Relations Officer PDG Companhia Securitizadora Member of the Board of Directors Goldfarb, CHL, Agre and PDG Companhia Frederico Marinho Carneiro da Cunha Securitizadora Member of the Board of Directors Goldfarb, CHL, Agre, PDG Companhia Michel Wurman Securitizadora and Lindencorp Member of the Board of Directors Goldfarb, CHL, Agre, Lindencorp, REP DI, José Antonio T. Grabowsky PDG Companhia Securitizadora João Miguel Mallet Racy Ferreira Chief Financial Officer PDG Companhia Securitizadora
In addition to the positions held by executives shown in the table above in Subsidiaries, the Company's managers also perform functions in the Special Purpose Entities (SPEs) of the Company. 138 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
139 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
b. Direct or indirect control of the Company
Prior to the corporate restructuring that began in August of 2006, the Company's management were employees and/or members of Banco Pactual (currently BTG Pactual), using its infrastructure and its services at no cost to the Company.
c. If material, supplier, customer, debtor or creditor of the Company, its subsidiary or controlling any such persons or control
There is not.
12.11. Description of the provisions of any agreements, including insurance policies, providing for the payment or reimbursement of expenses incurred by administrators of the repair of damage caused to third parties or the Company, penalties imposed by state agents, or agreements with the goal closing administrative or judicial proceedings, in the exercise of its functions
The members of our Board of Directors and our executives, as well as of our controlling companies, are covered by insurance policies for managers and officers (D&O), with coverage throughout the national territory. Such insurance establishes the payment or reimbursement of expenses of the managers if their heritage is affected in result of activities related to the Company. We paid a R$ 600.232,73 premium such insurance.
12.12 Other relevant information
There are no other relevant information about item 12.
13. MANAGERS REMUNERATION
13.1. Description of the compensation policy or practice of the board of directors, statutory and non-statutory officers, board of auditors and statutory Committees, regarding the following aspects:
a. Objective of the compensation policy or practice
The Company and its subsidiaries have a plan of result and profit’s participation. The plan foresees the payment to the collaborators (employees and directors) based on the individual performance evaluation and in line with the interests of the Company and its collaborators with the purpose of aligning the interests of the Company and the interests of its collaborators to encourage their commitment, attracting and retaining qualified staff, improving management and the permanence of collaborators in the assigned positions.
b. Composition of the remuneration, indicating:
i. Description of the remuneration’s elements and each one of its objectives
The members of the Board of Directors and the Board of Auditors receive just a monthly fee for the performance of their functions and are not entitled to direct and indirect benefits and participation in the results, as specified on item 13.2 below. The members of the Remuneration and Stock Option Plan Administration Committee do not receive any remuneration for participation in such Committee. Therefore, there is no other remuneration for members of both Boards other that the monthly fee.
The elements of the statutory officer’s remuneration are: the monthly fee, direct benefits, participation in the Company’s result and remuneration based on the Company’s shares. The benefits received by the statuary officers are health and dental plan only.
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The objective of each element of the manager remuneration is to encourage the alignment of interests of managers with the Company’s goals, in order to stimulate their commitment and also attract and maintain high qualified professionals. In addition, through the Stock Option Plan, the Company seeks the stimulation and improvement of our management and the permanence of our executives. This way, the Company aims its gains because of the commitment to the long-term results and the short term performances. The Plan aims to allow the Company to obtain and maintain its high level executive’s service, offering these executives, as an additional advantage, to become their shareholders, under the same terms and conditions of the Plan.
ii. what is the proportion of each element in the total remuneration
This sub item does not apply to the members of the Board of Directors and the Board of Auditors, since their remuneration is based only on their monthly fee.
As for the Board of Officers, there’s no defined proportion of each element of the member’s total remuneration.
Below the proportion of each element in the total remuneration for the Board of Officers for the last three fical years:
Participation in the Company’s Monthly Fee Direct Benefits Remuneration of the Company Result
2007 1.54% 0.06% 17.26% 81.14% 2008 11.47% 0.45% 53.39% 34.69% 2009 10.19% 0.79% 89.03% -
iii. calculation and adjustment of each remuneration’s element
There is no specified calculation and readjustment for each one of the elements. As for the monthly fee, in all fiscal years, the readjustment is made according to the collective bargaining. But, only on 2009 there was a readjustment for the statuary officers according to the bargaining to the syndicate to which the Company is filiated. The payments to the board members have not been readjusted under the same criteria.
iv. reasons that justify the remuneration’s composition
As described in the item “i” above, the reasons for the remuneration’s composition are the encouragement on the improvement o four management and the permanence o four executives, aiming gains for the commitment on the long-term results and short-term performance.
c. Main performance indicators in the determination of each remuneration’s element
As for all the employees of the Company, the indicators of performance are the achievement of operational and financial goals, such as overall volume of releases, sales, adjusted net income, clients credit transfers, and individual performance, such as autonomy, initiative, planning skills, commitment, communication skills, flexibility, ability to handle relationships, negotiation, problem solving, team work, among others. In addition, the manager’s remuneration is also based on the individual evaluation, that considerate initiative, proactivness, decisions making, professional behavior, interpersonal relation and team work.
d. How is the remuneration structured to reflect on the performance indicators evolution
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The determination of a global remunerations amount of the Company’s and its subsidiaries employees linked to the Company’s equity return is the designed structure to vinculate the variable remuneration paid to the Company’s collaborators in a general way and the profitability performance.
Since our methodology of results accountable recognition through the success percentage of our real estate enterprises, our senior collaborators, Goldfarb’s and CHL’s have 50% of their participation in the results deferred over a year (“Deferred PR ”). The collaborator ceases to have the rights of the Deferred PR in case the Company or the subsidiary in which the collaborator works for has a financial loss in the previous fiscal year of the payment of the Deferred PR or if the employee leaves the company before reviving the Deferred PR.
Through the new approved accounting methods (IFRS), the Deferred PR should not be applied, since there is no more recognition of the result to the completeness percentage.
e. How does the remuneration policy or practice line with the Company’s short, medium and long-term interests
The remuneration described above intends to encourage the collaborators to look for a better investments profitability and Company’s developed projects in a way to line their interests.
f. Remuneration supported by subsidiaries, controlled or direct and indirect controlling entities
Our subsidiaries and controlled pay directly their managers and employees using the same remuneration’s format described above. There is no payment of remuneration to managers or employees from one entity to another entity of the group.
g. Remuneration or benefit linked to the occurrence of a specific corporate event, such as alienation of control of the Company
The receipt of each installment of Deferred PR becomes net and certain right of the employee in case of (i) direct or indirect controller change of the employer; (ii) alterations in the guidelines and definitions of the employer’s activities; (iii) change or degradation on the employee position; or yet any (iii) corporate reorganization, merger, incorporation, new issuance of shares or other corporate operation evolving the employer.
The options to purchase shares granted to employees and officers of the Company shall have have its deadlines automatically advanced, and could be immediately exercised by the beneficiary for a period of 02 years as of such anticipation, on the following cases: (i) changes in the guidelines and statutory definitions of work or employment of the beneficiary; or (ii) change or downgrade in the rank of the hierarquical position of the beneficiary.
13.2. Compensation recognized in the income of the three fiscal years and planned for the current fiscal year the board of directors and board of auditors 4:
2010 - PREVISION Board of Directors Executive Board Board of Auditors Total 3 effective members Number of members 8 6 and 3 alternate 20 members Fixed anual Remuneration 0 0 0 0 (R$) Salary or pro-labore 1,100,000.00 2,200,000.00 120,000.00 3,324,000.00 Direct and Indirect 0 200,000.00 0 200.000.00 Benefits Rumuneration for participation in 0 0 0 0 Committees Others 0 0 0 0 Variable Remuneration (R$) 0 0 0 0
4 To avoid duplication, the computed values as compensation for members of the board shall be deducted from the remuneration of directors who also are part of that board. 142 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
2010 - PREVISION Board of Directors Executive Board Board of Auditors Total Bonus 0 0 0 0 Participation in the 0 up to 26,476,000,00 0 up to 26,476,000,00 results Remuneration for 0 0 0 0 attending meetings Comissions 0 0 0 0 Others 0 0 0 0 Post employment benefits 0 0 0 0 Benefíts motivated by the end of the function 0 0 0 0 Stock based caompensation 0 27.511.766,14 0 27.511.766,14 Amount per remuneration 0 0 0 0 board
* As explained above, the item variable remuneration for the year 2010 will be directly linked with the outcome of the fiscal year. Such remuneration solely represents the difference between the limit of the global and annual amounts of the mangement’s remuneration approved in the Annual Shareholders’ Meeting held on April 29, 2010 (being excluded expenses with stock-options) and the expected amounts for the fixed remuneration and direct benefits. Such amount does not represent the Company’s expectation for the payment of participation in the results.
2009 Board of Directors Executive Board Board of Auditors Total Number of members 6 3.5 0.75 10.25 Fixed anual Remuneration (R$) 0 0 0 0 Salary or pro-labore 791,633.50 1.828.252,65 36.000,00 2.655,886.15 Direct and Indirect Benefits 0 141.186,60 0 141,186.60 Rumuneration for participation in Committees 0 0 0 0 Others 0 0 0 0 Variable Remuneration (R$) 0 0 0 0 Bonus 0 0 0 0 Participation in the results 0 15,979,759.00 0 15,979,759.00 Remuneration for attending meetings 0 0 0 0 Comissions 0 0 0 0 Others 0 0 0 0 Post employment benefits 0 0 0 0 Benefíts motivated by the end of the function 0 0 0 0 Stock based caompensation 0 0 0 0 Amount per remuneration board 0 0 0 0 * There was no stock -based compensation granted in fiscal year 2009.
2008 Board of Directors Executive Board Board of Auditors Total Number of members 6 3 0 9 Fixed anual Remuneration (R$) 0 0 0 0 Salary or pro -labore 738,000.00 1,181,535.00 0 1,922,235.00 Direct and Indirect Benefits 0 46,355.76 0 46,355.76 Rumuneration for participation in Committees 0 0 0 0 Others 0 0 0 0 Variable Remuneration (R$) 0 0 0 0 Bonus 0 0 0 0 Participation in the results 0 6,345,000.00 0 6,345,000.00 Remuneration for attending meetings 0 0 0 0 Comissions 0 0 0 0 Others 0 0 0 0 Post employment benefits 0 0 0 0 Benefíts motivated by the end of the function 0 0 0 0 Stock based caompensation 0 R$3,573,935.45 0 R$3,573,935.45 Amount per remuneration board 0 0 0 0
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2007 Board of Directors Executive Board Board of Auditors Total Number of members 6 3 0 9 Fixed anual Remuneration (R$) 0 0 0 0 Salary or pro-labore 432,000.00 801,615.27 0 1,017,615.27 Direct and Indirect Benefits 0 30.903,84 0 30,903.84 Rumuneration for participation in Committees 0 0 0 0 Others 0 0 0 0 Variable Remuneration (R$) 0 0 0 0 Bonus 0 0 0 0 Participation in the results 0 8,979,500.00 0 8,979,500.00 Remuneration for attending meetings 0 0 0 0 Comissions 0 0 0 0 Others 0 0 0 0 Post employment benefits 0 0 0 0 Benefíts motivated by the end of the function 0 0 0 0 Stock based caompensation 0 R$42,219,656.58 0 R$42,219,656.58 Amount per remuneration board 0 0 0 0
There was no payment of compensation by the Company on 2006, as well the as stock-based compensation granted on 2009.
The stock-based compensation described above is provided in accordance with the exercise of the stock options to purchase shares that were granted. 13.3. Regarding the variable remuneration of the last three fiscal years and planned for the current fiscal year for the board of directors and Board of Auditors 5:
Board of 2010 – PREVISION Board of Directors Executive Board Auditors Total Number of members 8 6 3 17 Bonus(R$) Minimum expected value in No bonus No bonus No bonus applied No bonus applied compensation plan applied applied Maximuum expect value in No bonus No bonus No bonus applied No bonus applied compensation plan applied applied Planned amount in the No bonus No bonus compensation plan, if the No bonus applied No bonus applied applied applied targets established are met Value effectively Not applicable Not applicable Not applicable Not applicable recongnized in the result Pariticpation in the result (R$) Minimum expected value in there is no plan there is no plan for the Board No minimum expected compensation plan for the Board of None of Directors value applied Auditors Maximuum expect value in there is no plan there is no plan for the Board No Maximuum expect compensation plan for the Board of None of Directors value applied Auditors Planned amount in the No value expected, if there is no plan there is no plan for the Board compensation plan, if the the targets established for the Board of None of Directors targets established are met are met effectively Auditors Value effectively Not applicable * up to R$26,476,000.00 Not applicable Not applicable recongnized in the result
* As explained above, the item variable remuneration for the year 2010 will be directly linked with the outcome of the fiscal year. Such remuneration solely represents the difference between the limit of the global and annual amounts of the mangement’s remuneration approved in the Annual Shareholders’ Meeting held on April 29, 2010 (being excluded expenses with stock-options) and the expected amounts for the fixed remuneration and direct benefits. Such amount does not represent the Company’s expectation for the payment of participation in the results.
5 To avoid duplication, the computed values as compensation for members of the board shall be deducted from the remuneration of directors who also are part of that board. 144 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Board of 2009 Board of Directors Executive Board Auditors Total Number of members 6 3.5 0.75 10.25 Bonus(R$) Minimum expected value in No bonus No bonus No bonus applied No bonus applied compensation plan applied applied Maximuum expect value in No bonus No bonus No bonus applied No bonus applied compensation plan applied applied Planned amount in the compensation No bonus No bonus No bonus applied No bonus applied plan, if the targets established are met applied applied Value effectively recongnized in the Not Not applicable Not applicable result Not applicable applicable Pariticpation in the result (R$) None Minimum expected value in No minimum there is no plan there is no plan for the Board compensation plan expected value for the Board of None of Directors applied Auditors Maximuum expect value in No Maximuum there is no plan there is no plan for the Board compensation plan expect value for the Board of None of Directors applied Auditors Planned amount in the compensation No value expected, there is no plan plan, if the targets established are met there is no plan for the Board if the targets for the Board of None of Directors established are met Auditors effectively Value effectively recongnized in the Not applicable 15,979,759.00 Not applicable 15,979.759.00 result
Board of 2008 Board of Directors Executive Board Auditors Total Number of members 6 3 0 9 Bonus(R$) Minimum expected value in No bonus No bonus No bonus applied No bonus applied compensation plan applied applied Maximuum expect value in No bonus No bonus No bonus applied No bonus applied compensation plan applied applied Planned amount in the compensation No bonus No bonus No bonus applied No bonus applied plan, if the targets established are met applied applied Value effectively recongnized in the Not applicable Not applicable Not applicable Not applicable result Pariticpation in the result (R$) None Minimum expected value in No minimum there is no plan there is no plan for the Board compensation plan expected value for the Board of None of Directors applied Auditors Maximuum expect value in No Maximuum there is no plan there is no plan for the Board compensation plan expect value for the Board of None of Directors applied Auditors Planned amount in the compensation No value expected, there is no plan plan, if the targets established are met there is no plan for the Board if the targets for the Board of None of Directors established are met Auditors effectively Value effectively recongnized in the Not applicable 6,345,000.00 Not applicable 6,345,000.00 result
Executive Board of 2007 Board of Directors Board Auditors Total Number of members 6 3 0 9 Bonus(R$) Minimum expected value in compensation No bonus No bonus No bonus No bonus applied plan applied applied applied Maximuum expect value in compensation plan No bonus No bonus No bonus No bonus applied applied applied applied Planned amount in the compensation plan, if No bonus No bonus No bonus No bonus applied the targets established are met applied applied applied Value effectively recongnized in the result Not Not applicable Not applicable None applicable Pariticpation in the result (R$) None Minimum expected value in compensation there is no No minimum plan there is no plan for the plan for the expected value None Board of Directors Board of applied Auditors 145 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Executive Board of 2007 Board of Directors Board Auditors Total Maximuum expect value in compensation plan there is no No Maximuum there is no plan for the plan for the expect value None Board of Directors Board of applied Auditors Planned amount in the compensation plan, if No value there is no the targets established are met expected, if the there is no plan for the plan for the targets None Board of Directors Board of established are Auditors met effectively Value effectively recongnized in the result Not Not applicable 8,979,500.00 8,979,500.00 applicable
The elements of the participation in the results are evaluated annually and determinated by the Remuneration and Stock Option Plan Administration Committee according to the returned obtained by the Company over its net asset value. In addition, the achievement of goals of the Company that the collaborator works and each individual performance is a relevant factor for the individual remuneration.
13.4 In violation to the remuneration plan based in shares of the board of directors an executive board, in connection with the last fiscal year and foreseen to the current fiscal year:
The amount of shares and prices provided here are already are already adjusted to the first and second stock splits approved by the Company in shareholder´s general meeting.
a. General terms and conditions
The Company grants stock options to the beneficiaries indicated by the executive board and approved by the Remuneration and Stock Option Plan Administration Committee. The options are granted in the terms of the Stock Option Plan and of the deliberated programs by the Remuneration and Stock Option Plan Administration Committee, as defined bellow.
In the shareholders’ meeting held on January 9, 2007, the Company approved the Stock Option Plan.
The Stock Option Plan is administrated by the Remuneration and Stock Option Plan Administration Committee, comprised of three members of the Board of Directors. The Remuneration and Stock Option Plan Administration Committee has power to establish appropriated standards to every years’ concession, through the stock options purchases programs (“Programs ”). The options concessions, through the Programs, must respect the maximum limit of 8.00% of the existing issued Company’s shares on the date of the institution of each Program.
Until the date hereof, the Committee had deliberated the creation of 3 Programs, the first one on May 2007 (“First Program ”), the second one on April 2008 (“Second Program ”) and on January, 2010 (“Third Program ”).
There were not granted stock options to the Board of Director’s members that are not officers at the same time.
b. Plan’s main objectives
i. stimulate the expansion, the success and the companies’ and its shareholders’ corporate purpose and interests, allowing its managers and employees to acquire Company’s shares, in the terms, conditions and under the Stock Option Plan, encouraging their integration to the Company; and
ii. allow the Company to obtain and maintain high level executive’s services, offering them an additional advantage to become Company’s shareholders under the terms and conditions of the Stock Option Plan.
c. How did this plan contribute to our objectives
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Aligning the interests of the managers, the Company and its shareholders and through the manager’s benefits and according to the shares performance.
d. How is the plan inserted in the remuneration’s policy
The Company has a valorization policy under the employee’s individual merit, based on the achievement of operational and financial goals and on the individual performance. The compensation stock-based plans implemented encourages the good performance and commitment to the Company’s goal, the meritocratic system and goals achievement.
e. How does the plan lines to the managers and the Company’s interests in short, medium and long term.
The Stock Option Plan lines the managers, Companies and shareholders by granting benefits to the managers according to the Company’s shares. performance. Through the Stock Option Plan we seek to improve our management and the permanence of our executives, aiming gains for the commitment and the long-term and short-term performances. In addition, the Stock Option Plan aims to allow the Company to obtain and maintain our high level executives, offering them additional advantages to become shareholders under the terms and conditions of the Stock Option Plan.
f. Maximum number of included shares
The Remuneration and Stock Option Plan Administration Committee can grant a total of options that represent 8.00% of our issued shares on the date of the implementation of each Program.
g. Maximum number of options to be granted.
The Remuneration and Stock Option Plan Administration Committee can grant a total of options that represent 8.00% of our issued shares on the date of the implementation of each Program. Considering the amount of shares issued by the Company on the date hereof, the total amount is equal to 88,499,374 options, of which 62,360,000 options have already been granted on the date hereof. The First Program granted a total of 24,760,000 options to subscribe common shares of the Company, of which 24,440,000 were allocated to executive officers of the Company on the date hereof, considering the stock split described in item 17.3 of this Form. The Second Program granted a total of 2,400,000 options to subscribe common shares of the Company, of which 1,060,000 were allocated to executive officers of the Company on the date hereof, considering the stock split referred in Item 3.17 of this Form. The Third Program granted a total of 35,200,000 options to subscribe common shares of the Company, of which 29,000,000 were allocated to executive officers of the Company on the date hereof, considering the stock split described in item 17.3 of this Form.
h. Terms of the acquisition of shares
The shares may be purchased in four equal and annual plots, and for each plot there is a period of 24 months to acquire the shares. The shares of First Program has an exercise equal to R$3.15, the Second Program price equal to R$5.57, and the Third Program price equal to R$6.00, all corrected by the IGP-M since the grant date of each plan. The exercise price of options not exercised shall be deducted from the dividends and interest on equity paid by the Company.
i. Criteria for determining the purchase price or exercise
The exercise prices were determined based on a discount on the price of the Company's initial public offering for the First Program, the price of the second offering of Company's shares completed on October 2007 for the Second Program and the price of the third public offering of Company's shares completed on October 2009 for the Third Program.
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j. Criteria for determining the exercise period
The Remuneration and Stock Option Plan Administration Committee set the deadline of 24 months to exercise in view of the alignment of medium and long-term of the beneficiaries of the program.
k. Type of settlement
In cash within 15 days of the subscription of shares.
l. Restrictions on transfer of shares
Unless otherwise decided by the Remuneration and Stock Option Plan Administration Committee, the shareholder may only sell, transfer or in any way transfer the Company's shares originally subscribed or purchased under the terms of the Plan, as well as those that may be acquired by him because of bonuses, stock splits, subscriptions or any other acquisition after the expiry of 24 months from the date that the option was granted.
m. Criteria and events that, when checked, will cause the suspension, modification or termination of the plan
The Board of Directors of the Company may at any time, amend or terminate the Plan or establish rules applicable in case omitted omissions.
n. Effects of the resignation of the manager of the boards of the Company over his rights according to the plan of stock-based compensation
Terminated for any reason, the employment relationship or the term of offices of the executive, except in case of death or permanent disability of the option holder, the following provisions shall apply:
a) In cases of dismissal and/or resignation of the manager or employee for “case” as defined in corporate and labor law, the options that, upon termination of employment relation or the term of officers of the executive, have been granted and not exercised, or yet are not exercisable, shall be extinct. The restriction referred to in item k above remain valid regardless of termination of the employment or the term of offices of the executive;
b) In cases of dismissal and/or resignation of the manager or employee without “cause” as defined in corporate an labor law, the shares that they were already subscribed under the terms of the Plan may be freely sold on the stock exchange market or privately, being without effect the restriction referred to in item k above. The beneficiary shall be entitled to anticipate the next plot of options exercise in proportion to the number of worked months in the current year of his resignation or dismissal without cause, computing the entire month in which such removal or resignation occurred without cause; and
c) In cases of resignation of the manager or employee or his or her retirement, the beneficiary shall be entitled to anticipate the options for the next plot of exercise in proportion to the number of months worked in the year of his or her registration without cause, computing the entire month in which there was such dismissal without cause.
13.5. Number of shares or shares held directly or indirectly, in Brazil or abroad, and other convertible securities into shares or quotas issued by the Company, its controlling direct or indirect subsidiaries or under common control, by members of the board, statutory board or supervisory board, grouped by board, the closing date of the last financial year 6
Total held Directly Indireclty % Total % Total Director shares % Total held shares held shares directly indirectly
6 To avoid duplication, if the person is a member of the board and board of directors, securities held by it shall be disclosed only in the amount of securities held by members of the board. 148 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Total held Directly Indireclty % Total % Total Director shares % Total held shares held shares directly indirectly Alessandro Monteiro Morgado Horta 453,518 0.04% 4 453,514 - 0.04% Cauê Castello Veiga Innocêncio - Cardoso 46,870 0.01% 46,870 0.01% - Frederico Marinho Carneiro da Cunha ------Gilberto Sayão da Silva 3,180,132 0.29% 4 3,180,128 - 0.29% João Miguel Mallet Racy Ferreira 4,922 0,01% 4,922 - 0,01% - José Antonio T. Grabowsky 2,500,004 0.23% 2,500,004 - 0.23% - Marcus Vinicius Medeiros Cardoso de - Sá 93,780 0.01% 93,780 - 0.01% Pedro Quintella ------Sergio Passos Ribeiro ------Vitor Hugo dos Santos Pinto ------Ricardo Kobayashi ------Bruno Zaremba ------Paulo Roberto Nunes Guedes 2 - 2 - - - Alexandre Gonçalves Silva 2 - 2 - - - Michel Wurman 1,885,620 0.17% 1,885,620 - 0.17% - Total 8,164,850 0.74% 4,437,428 3,727,422 0.40% 0.34%
Total Board of Directors 8,019,278 0.72% 4,385,636 3,636,642 0.40% 0.33% Total Board of Auditors ------Total Executive Board 4,531,196 0.41% 4,437,416 93,780 0.40% 0.01%
The information reffer to common shares issued by the Company.
The quantities of shares and prices provided here are already adjusted to the first and second stock splits approved by the Company in the shareholder´s general meeting.
13.6. The stock-based compensation recognized the income of the three fiscal years and planned for the current fiscal year, of the board of directors 7:
Exective Board Exective Board Executive Board First Program Second Program Third Program Number of beneficiaries 5 2 6 members of stock options Granted stock options Grant date (s) May 5, 2007 April 4, 2008 January 01, 2010 Number of options 24,440,000 1,060,000 29,000,000 granted In four annual increaments, the first Deadline for the options being on February 01, In four annual increments, the first In four annual increments, the first to become exercisable 2008, and there was being on February 01, 2009 one on January, 2011 anticipation for 2010 in the lst 2 increaments Deadline to exercise of May 05,2012 & 2013 April 04, 2012, 2013 & 2014 January 1, 2013, 2014,2015, 2016 options Maximum period of restriction to the tranfer May 5, 2009 April 4, 2010 January 1, 2012 of shares Average price of each of the folowing groups of options Outstanding at the beginnig of fiscal R$14.44 R$23,16 - year
7 To avoid duplication, the computed values as compensation for members of the board shall be deducted from the remuneration of directors who also are part of that board. 149 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Exective Board Exective Board Executive Board Lost during the fiscal R$14.48 R$23,22 - year Exercised during the R$14,14 - - fiscal year Expired dureing the - - - fiscal year Fair value of options on R$42,772,450.78 R$5,415,878.93 R$ 118,417,022.30 the dates of the grants Potential dilution in the event of exercise of all 5.23% 0.18% 4.51% options are granted on the dates of grant
The quantities of shares and prices provided here are already adjusted to the first and second stock splits approved by the Company in the shareholder´s general meeting.
On the years 2007 and 2008 there was no stock-based compensation recognized in the results of the Company.
The Third Program was granted on January 3, 2010 and will be recognized as income only on 2010.
There were no options to purchase shares granted to members of the Board of Directors who are not executives simultaneously.
13.7 Regarding the options open to the board of directors and the executive board at the end of last fiscalyear 8:
2009 Executive Board Executive Board First Program Second Program
Numbers of members 6 2 In relation to the option not yet exercisable Amount 12,220,000 in 2 equal increaments 530,000 in 3 equal increaments Date that they will become execisable February 1, 2010 and 2011and February 1, 2010 2012 Deadline for exercising options May 5, 2012 and 2013 April 4, 2012, 2013 and 2014 Restriction period on transfer of shares May 5, 2009 April 4, 2009 Average exercise price R$3.51 R$5.67 Fair value of options on the last day of the fiscal year R$22,749,877.77 R$1,984,322.98 In relation to the exercisable options Date that they will become execisable 0 123,319 Deadline for exercising options Not Applicable February 01, 2011 Restriction period on transfer of shares May 5, 2009 April 4, 2009 Average exercise price R$3.51 R$11.33 Fair value of options on the last day of the fiscal year R$- R$501,182.71 Fair value of the total of options on the last day of the fiscal R$22,479,877.77 R$2,485,505.69 year
The quantities of shares and prices provided here are already adjusted to the first and second stock splits approved by the Company in the shareholder´s general meeting.
On December 31, 2009 there were no options to purchase shares held by members of the Board of Directors who are not executives simultaneously.
13.8. For options exercised and shares delivered on stock-based compensation of the board of directors and the executive board in the past 3 fiscal years:
2009 Executive Board – First Program Number of members 5 In relation to the exercised options Number of shares 10,581,464 Average exercise price R$3.54
8 To avoid duplication, the computed values as compensation for members of the board shall be deducted from the remuneration of directors who also are part of that board. 150 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
2009 Executive Board – First Program Total value of the difference between the exercise value and the market value of shares related to the exercised options, considering the R$16,559,991.16 market price of R$10.20 on the date of the exercise In relation to the shares delivered Number of shares - Average exercise price - Total value of the difference between purchase price and market value of - shares acquired
2008 Executive Board – First Program Number of members 3 In relation to the exercised options Number of shares 978,676 Average exercise price R$3.61 Total value of the difference between the exercise value and the market value of shares related to the exercised options, considering the market R$2,239,943.97 price of R$10.20 on the date of the exercise In relation to the shares delivered Number of shares - Average exercise price - Total value of the difference between purchase price and market value of - shares acquired
The quantities of shares and prices provided here are already adjusted to the first and second stock splits approved by the Company in the shareholder´s general meeting.
For the 2008 fiscal year were considered only stock options held by beneficiaries who were mebers of the Executive Board as well in such fiscal year.
On the 2008 and 2009 fiscal years no stock options were exercised under the Second Program.
There were no stock options exercised during the 2007 fiscal year.
No stock options were granted to the members of the Board of Directors who are not members of the Executive Board simultaneously.
13.9. Brief description of the necessary information to understand the disclosed data in items 13.6 to 13.8, as the explanation of the method of pricing the value of the shares and stock options, including:
a. Pricing Model
b. Data and assumptions used in the pricing model, including the average price of shares, price exercise, expected volatility, maturity, expected dividends and free risk interest rate
c. Method used and assumptions taken to incorporate the effects of the expected early exercise
The average fair value of stock options is updated when using the Black-Scholes model, assuming the dividend payment of 1.31%, expected volatility of approximately 36.73% per year for the First Program and 53.19% per year for the Second Program, with a risk-free rate average of 11.17% and a final maturity of 4.8 years.
The dilution of the current shareholders in case of a full exercise of the stock options granted would be 1.83%, calculated as follows, already adjusted to the stock split approved on November, 10 th , 2010, as if this had already been approved on that date:
12.31.2009 Number of stock options granted 14,294,646 (a) Total of Company’s shares 779,755,636 (b) Total 794,050,282 (c ) = (a)+(b) % of diluiton 1.83% (c )/(b)-1
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The quantities of shares and prices provided here are already adjusted to the first and second stock splits approved by the Company in the shareholder´s general meeting.
d. Form of determiningof the expected volatility
Unable to determine the volatility, since it is historical.
e. If some other features of the option was incorporated into the fair value measurement
There is no other options characteristics incorporated in its value.
13.10. In relation to pension plans in force granted to the members of the board of directors and executive officers, provide the following information:
There are no pension plans in force.
13.11. Indication of the items in the table below, for the three fiscal years related to the board of directors, the executive board and the board of auditors:l9:
2010 - PREVISION Board of Directors Executive Board Board of Auditors (annual) (annual total) (annual total) Number of members 8 6 3 efectives members 3 alternate members Value of the higher personal remunereation (R$) 132,000,00 360,000,00 12,000,00 Value of the lower personal remunereation (R$) 132,000,00 140,000,00 12,000,00 Average value of personal remunereation (R$) 132,000,00 240,000,00 12,000,00 * The above amounts do not include the variable remuneration for the year 2010, considering that this is directly linked with the outcome of the fiscal year and there's no way it currently provides. Such remuneration is limited to the difference between the amount proposed for the shareholders’ meeting to the global remuneration of directors and the provision of other funds. The above amount does not include costs of stock options of the Third Program, which was granted on January 3, 2010 and will be recognized as income on 2010.
2009 Board of Directors Executive Board Executive Board Board of Auditors (annual)(2) (annual total)(1) (annual total)(1)(3) (annual total) Number of members 6 6 6 3 efectives members 1 alternate member Value of higher personal remunereation 12,578,604,78 132,000,00 7,163,514,14 12,000,00 (R$) Value of the lower personal 1,312,982,75 131,633,00 960,073,30 12,000,00 remunereation (R$) Average value of personal remunereation 8,098,379,46 131,938,00 5,115,297,67 12,000,00 (R$)
2008 Board of Directors Executive Board Executive Board Board of Auditors (annual)(2) (annual total) (1) (annual total)(1)(3) Number of members 6 3 3 0 Value of higher personal remunereation 8,815,125,60 123,000,00 3,259,620,80 - (R$) Value of the lower personal remunereation 2,612,818,56 123,000,00 1,253,546,64 - (R$) Average value of personal remunereation 5,466,480,51 123,000,00 2,243,530,25 - (R$)
2007 Board of Directors Executive Board Board of Auditors (annual)(2) (annual total) (1) Number of members 6 3 0 Value of higher personal remunereation (R$) 72,000,00 4,844,143,09 - Value of the lower personal remunereation (R$) 72,000,00 1,719,527,97 - Average value of personal remunereation (R$) 72,000,00 3,270,799,84 - (1) The amounts given do not include the remuneration of directors Michel Wurman and Jose Antonio T. Grabowsky as members of the board.
9 To investigate the values to be inserted in this item, use the criteria described in item 13.2. 152 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
(2) Directors Michel Wurman and Jose Antonio T. Grabowsky also receive compensation indicated in this column the for position of members of the Board of Directors that they hold. (3) The amounts in this column include compensation based on the granting of stock options to executive directors recognized in earnings. To calculate the value of that expenditure per stock option granted was determined the total recognized in these exercises for each of the programs, divided by the number of options granted in each program. In this sense, is reached an expense for options to purchase shares worth R$0.81/option for First Program and R$1.06 option for the Second Program on 2009 and R$0.83/option for First Program on 2008. That remuneration does not reflect on cash expense to the Company.
There was no remuneration paid on 2006.
13.12. Description of contractual arrangements, insurance policies or other instruments that structure mechanisms of remuneration or compensation for directors in case of removal from office or retirement, indicating the financial implications for the Company
See items and 13.1.g and 13.4.m above. The financial consequences shall be the payment of the Deferred PR installment to the manager, as well as the net and certain right that the beneficiary has to exercise stock options of the Company under the Plan.
13.13. Regarding the last three fiscal years, indicate the percentage of total compensation for each agency recognized in the income of the Company relating to members of the board, the board office or the Supervisory Board who are related parties to the control, direct or indirect, as defined by accounting rules that deal with this issue.
Board 2006 2007 2008 2009 Board of Directors 83.33% 83.33% 83.33% 83.33% Statuary Boards 66.66% 66.66% 66.66% 33.33% Board of Auditors - - - 0%
The percentages in the table above were obtained considering that only the independent counsel is not considered related party, since the remaining members of the Board of Directors are quotaholders of the FIP PDG I on those dates, and in turn, are considered related parties. Moreover, regarding the Executive Board, the rule is the same, i.e. , the executives who are also quotaholders of the FIP PDG I are considered related parties on those dates.
13.14. Regarding the last three fiscal years, indicate the amounts recognized on the Company as remuneration for members of the board of directors, the executive board or the board of auditors, grouped by board, for any reason other than the function they occupy, such as , commissions and advisory services or assistance rendered.
There was no payment of compensation for members of the Board of Directors, the Executive Board or the Board of Auditors for any reason other than the function that they perform.
13.15. Regarding the last three fiscal years, indicate the values recognized in the income of drivers, direct or indirect, of companies under common control of the Company's subsidiaries, as remuneration for members of the board of directors, the executive board or the board of auditors of the Company grouped by board, specifying in what respect such values were attributed to such individuals.
There was no payment of compensation for members of the Board of Directors, the Executive Board or the Board of Auditors recognized in the income of drivers, direct or indirect, of companies under common control of the Company's subsidiaries.
13.16. Other relevant information
There are no other relevant information about item 13.
14. HUMAN RESOURCES
14.1. Description of the Company's human resources by providing the following information:
a. number of employees (total, by groups based on activity performed and by geographical location)
The evolution of our employees on 2006, 2007, 2008 and 2009 is described below:
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2006 2007 2008 2009 Sales and management 275 647 1,044 1,925 Construction 42 108 178 125 São Paulo – SP: 560 São Paulo – SP: 634 São Paulo – SP: 1455 Rio de Janeiro – RJ: Rio de Janeiro – RJ: Locations São Paulo - SP Rio de Janeiro – RJ: 195 588 595 Total 317 755 1,222 2,050
b. number of outsourced employees (total, by groups based on the activity performed and by geographical location)
The Company and its subsidiaries have outsourced employees allocated in 3,414 constructions.
2006 2007 2008 2009 Outsourced Employees 0 341 1,613 3,414 São Paulo - SP: 200 São Paulo – SP: 2.900 Rio de Janeiro – São Paulo –SP: 854 Rio de Janeiro – RJ: Location São Paulo - SP RJ: 141 Rio de Janeiro – RJ: 759 514
c. turnover rate
2006 2007 2008 2009 Turnover rate 0 3.34% 1.27% 4.19%
d. Company's exposure to liabilities and contingent labor
Company 2006 (R$ million) 2007 (R$ million) 2008 (R$ million) 2009 (R$ million) Amount of Contingency 0 1.22 1.82 0.74
14.2. Comments on any relevant changes observated period occurred in relation to the figures released in item 14.1 above
We believe that changes in numbers that were reported on item 14.1 due to our operational growth, relating to fiscal years 2006, 2007, 2008 and 2009.
14.3. Description of the policy of remuneration of the Company’s employees:
a. Policy of salaries and variable compensation
Although there is no specific salary policy, employees who have worked more than 90 days are entitled to receive profit participation of the Company. The value of participation is determined by (i) scope of the overall goals of the company where the employee works; and (ii) individual assessment of each employee.
Given the culture geared to maximize results, the Company maintains a policy of merit of individual employees through the adoption of a variable pay based on achievement of operating and financial goals and individual performance. The profit sharing plans and results are implemented as a motivational tool of good individual performance and commitment to business goals, since they aim to reward employees with different performance throughout the year.
b. Benefits Policy
The Company offers the following benefits to all employees, regardless of position, function and time of service: health insurance, dental insurance, food vouchers, meal vouchers, transportation tickets, parking. This way, the Company encourages the alignment of interests of employees with the Company's goals, to encourage the involvement of employees and also attract and retain highly qualified professionals.
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The Company has a profit sharing program, so that a portion of the Directors and employees remuneration is tied to compliance with operating and financial goals and individual performance of each one. Our remuneration policy also has a stock option program, as our variable compensation program, favors meritocracy and goals. CHL offers the following benefits to all employees, regardless of position, function and length of service with such control: health insurance, dental insurance, life insurance, food vouchers, meal vouchers.
c. Characteristics of the compensation plans based on actions of non-employee directors, identifying:
The characteristics of compensation plans based on the employee’s action are identical to those of the directors, particularly those described in subparagraphs (b), (c) and (d) of subclause 13.4 above.
14.4. Description of the relation between the company and unions
Goldfarb's main activity is civil construction, and the Sao Paulo State Union of Workers of the Civil Construction Industry (Sindicato dos Trabalhadores nas Indústrias de Construção Civil do Estado de São Paulo), or the SINTRACON-SP, is the representative of the interests of Goldfarb's employees in the city of Sao Paulo. In general, the São Paulo State Union of Companies of the Civil Construction Industry SINDUSCON-SP (Sindicato da Indústria da Construção Civil do Estado de São Paulo) negotiates the collective bargaining agreements applicable to the employees of our São Paulo subsidiaries on an annual basis with the SINTRACON-SP.
CHL's main activity is civil construction, and the Rio de Janeiro Municipal Union of Workers of the Civil Construction Industry, Hydraulic Floor Tiles and Cement, Marble and Granite Products, and Construction and Highway, Paving and Land Leveling in General and Maintenance and Industrial Assembling Industries (Sindicato dos Trabalhadores das Indústrias da Construção Civil, de Ladrilhos Hidráulicos e Produtos de Cimento e de Mármores e Granitos, e da Constrção e de Estradas, Pavimentação e Obras de Terraplanagem em Geral e Manutenção e Montagem Industrial do Município do Rio de Janeiro), or SINTRACONST-RIO is the representative of the interests of CHL's employees in the city of Rio de Janeiro. In general, the Rio de Janeiro State Union of Companies of the Industry of Civil Construction Industry (Sindicato da Indústria da Construção Civil do Rio de Janeiro), or the SINDESCON-RIO, negotiates the collective bargaining agreements applicable to the employees of our Rio de Janeiro subsidiaries on an annual basis with the SINTRACONST-RIO.
15. CONTROL
15.1. Shareholder’s identification or group of controlling shareholders:
There is no group of controlling shareholders.
15.2. List with the information of the shareholders or of the group of shareholders that act together or that represent the same interest, with a participation equal or above 5% of a same class or type of shares that is not listed on item 15.1:
BlackRock, Inc (“BlackRock ”)
BlackRock is an investment management with its headquarters on 40 East 52nd Street, New York. On February 8, 2010, Blackrock had 44,682,700 common shares trhough its generated funds. This represented 7.21% of its capital stock and of the Comany’s common shares issuance.
The table below describes the shareholders that have participation equal or superior than 5% in the Company:
Participate on % in commmon shareholde CPF Common shares and in the rs’ Name Nationality CNPJ Shares total capital stock agreement Last alteration north- BlackRock Inc. N/A 79.804.600 7.21 No Ferbuary 8, 2010 american
Corporate organization chart as presented in item 8.2 above, does not present another shareholder that has a direct participation superior than 5% in the Company, considering that basically 100% of the Company's shares are in free
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float. The last change occurred in the percentage of participation in the Company was in October 11, 2010. The Company does not have a shareholder’s agreement in force filed in its headquarters.
15.3. Descrption of the capital distribution as established in the last shareholder’s meeting:
Compostion based on General shareholders’ meeting of Capital Stock Distribution November 04, 2010 Physical person shareholders 7,757 Juridical person shareholders 436 Institutional investidors 1,894 Number of shares in the free-float, by class and type 1.098.177.324 common shares
15.4. Corporate Organization, identifying all the direct and indirect controllers as well as the shareholders with an equal or superior than 5% participation of one class or type of shares, as long as compatible with the other information presented in the items 15.1 e 15.2.
The shareholder’s corporate organization is present on item 8.2 above.
15.5. Any shareholder’s agreement in the Company or from the controller that is part, ruling the exercise of the right to vote and the transference of shares from the Company’s issuance
There is no shareholder’s agreement filed in the headquarters of the Company.
15.6. Indication of the relevant alterations on the participation of the controlling group members and management’s of the Company
There has not been an alteration for the past three fiscal years.
15.7. Other relevant information
There are no other relevant information about item 15.
16. RELATED PARTIES TRANSACTIONS
16.1. Description of the rules, policies and practices of the Company in the operations with related parties as defined by the accounting rules.
Business and transactions with related parties of the Company are always performed in observance of the price and market conditions and therefore do not generate any benefit or harm to the Company or to any other parties.
Pursuant to article 13 of our Bylaws, the Board of Directors shall decide about: the conclusion, changes and termination of contracts and the conduct of operations of any kind between the Company and its shareholders and/or its subsidiaries, affiliates or controlling shareholders of the Company. The meetings of the Board of Directors are held to consider these and other investment decisions and they are installed with the presence of most members of the Board of Directors. The resolutions are valid if approved by the majority of members present, being the president's vote the tiebreaker.
16.2. Information related to transactions with related parties that, according to accounting standards, should be disclosed in financial statements or consolidated by the Company. That have been concluded over the past three fiscal years or are in force in the current fiscal year:
The Company's operations with related parties are carried out in terms proven to be equivalent to those contracted in transactions with independent parties.
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Loan operations and advances for future capital increase
Amounts classified in current and non-current assets, as advance for future capital increase ( AFAC ), refer to contributions to make the initial phase of the projects feasible. These contributions are not subject to any index or interest rate, and, the shareholders will decide on the capitalization or refund of these balances to shareholders.
Operations with debentures
The balances of debentures, recorded in the Controlling Company's non-current assets, are remunerated at rates varying from IGPM + interest 12% p.y. to IGPM + interest 14% p.y. and from CDI + interest 3% to TR + interest 8.75% p.y., as set forth in the chart of Note 7.
Endorsements and guarantees
As of September 30, 2010, the Company provided endorsements and guarantees to its subsidiaries in the approximate amount of R$3,154,039 (R$2,139,100 as of June 30 th, 2010) in order to guarantee real estate loan operations with top financial institutions.
The subsidiaries have so far complied with each and every contractual condition of the loan operations mentioned above.
Credit assignment operations sold with guarantee
On 2009, the Company carried out operations to purchase real estate credits of consolidated companies through its investee CHL Desenvolvimento Imobiliário S.A. The total amount of these operations was R$99,618 at a discount rate of 12.68% p.y. in the acquisition of these receivables. Subsequently, the Company carried out the real estate credit assignment operations mentioned above with its subsidiary PDG Companhia Securitizadora S.A. at the discount rate of 12.68% p.y.On September 30, 2010, this amount was fully paid (R$5,947 on June 30 th , 2010). There is no unpaid amount regardind the credit assignment between the Company and PDG Securitizadora.
On May, 2010, the Company carried out operations to purchase real estate credits of consolidated companies through its investee CHL Desenvolvimento Imobiliário S.A. The total amount of these operations was R$168,157 at a discount rate of 12.68% p.y. in the acquisition of these receivables. As of September 30 th , 2010, the unpaid amount regarding related parties in relation to this operation was R$31,009.
These operations were executed with guarantee by the parties assigning the credits. For this reason, real estate credits were not written off from the balances of the companies controlled by CHL Desenvolvimento S.A. and the amounts received by these companies were recorded as liabilities stating the corresponding financial guarantee. Revenues and expenses from the operation are apportioned pro rata tempore in item “Financial expenses”, as the customers pay the installments of assigned credits, consequently ending the guarantee of these installments.
It was retained, in the six month period ended on June 30, 2010, R$1,250 (R$606 on the quarter ended on March 31, 2010) as “Financial Revenues” of the Controlling Company due to the operation of receivables with its controlled company CHL and R$283 (R$192 on the quarter ended on March 31, 2010) as “Financial Revenues” in the securitization transaction with its controlled company PDG Securitizadora. In the consolidated financial statements, the effects of the operations of financial revenues and expenses are eliminated.
It was retained, in the period ended onSeptember 30th , 2010, R$2,903 (R$1,250 on the six month period ended on June 30 th , 2010) as “Financial Revenues” of the Controlling Company due to the operation of receivables with its controlled company CHL and R$810 (R$283 on the six month period ended on June 30 th , 2010) as “Financial
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Revenues” in the securitization transaction with its controlled company PDG Securitizadora. In the consolidated financial statements, the effects of the operations of financial revenues and expenses are eliminated.
The Company did not carry out credit assignment of receivables in the six-month period ended on June 30, 2009.
The balances and operations with related parties are shown below :
Controller Shareholder
Debentures Related AFAC – non- Parties Loans Related AFAC available – available parties - Related parties - currents assets and non- available and currents and and non non
available non-available non current currents currents (Note 7) assets assets liabilities assets liabilities
Agra - - - - (424)
Administradora de Bens Avante S.A. - - - - 3,739 -
Alves Pedroso Empreend. Imob. SPE Ltda. - - - 1,014 (942) -
Amazon Empreend. Imob. Ltda. 7,671 - - - 6.355 -
América Piqueri Incorporadora S.A. - - 346 - - -
API SPE 39 - Planejamento e Desenvolvimento Empreend. Imob. Ltda. - - - - 8,995 -
API SPE 72 - Planejamento e Desenvolvimento Empreend. Imob. Ltda. - - - - (1,949) -
ATP Adelaide Participações S.A. - - - - 231 -
Austria Empreend. Imob. SPE Ltda. - - - - 133 -
Av. Chile 230 Investimentos Imob. S.A. - - - 33 - -
Badeirantes Empreend. Imob. Ltda. - - - - 2,275 -
Baguary Empreend. Imob. Ltda. - - - - 2,719 -
Bento Lisboa Participações S.A. - - 1,153 - 2,712 -
Big Field Empreend. Imob. S.A. - - - - 5,636 -
CHL Desenvolvimento Imob. Ltda. 137,068 - - - - -
Cipasa Desenvolvimento Urbano S.A. - - 12,551 - - -
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Cyrela Milão Empreend. Imob. S.A. - - - - 550 -
Cyrela Tennessee Empreend. Imob. S.A. - - 33 - - -
Club Felicitá Empreendim. - - - - 361 -
Dominus Engenharia Ltda. - 8,880 - - - -
Eco Life Campestre Empreend. Imob. S.A. - - - - 3,246 -
Eco Life Independência Empreend. Imob. S.A. - - - - 9,006 -
Eco Life Jaguaré Empreend. Imob. S.A. - - - - 9,933 -
Eco Life Parque Prado Empreend. Imob. S.A. - - - - 2,211 -
Eco Três Rios Empreend. Imob. S.A. - - - - 6,662 -
Ecolife Recreio Empreend. Imob. S.A. - - - - 6,813
Ecolife Santana Empreend. Imob. S.A. - - - - 1,570 -
Fator da Aquarius Empreend. Imob. Ltda. - - - - 3,359 -
Fator Realty Participações S.A. 3,011 - - -
Finlândia Empreend. Imob. Ltda. - - - 22 (289) -
FL 17 Empreend. Imob. S.A. - - - - 2,017 -
Gardênia Participações S.A. - - 200 - - -
Girassol - Vila Madalena Empreend. Imob. S.A. - - 1,053 705 - -
Gold Acapulco Empreend. Imob. SPE Ltda. - - - - (714) -
Gold Acre Empreend. Imob. SPE Ltda. - - - - 21,031 -
Gold Alaska Empreend. Imob. SPE Ltda. - - - - 4,432 -
Gold Amapá Empreend. Imob. SPE Ltda. - - - - 375 -
Gold Amorgos Empreend. Imob. SPE Ltda. - - - - 6,114 -
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Gold Anafi Empreend. Imob. SPE Ltda. - - - 1 - -
Gold Andros Empreend. Imob. SPE Ltda. - - - - 2,420 -
Gold Angola Empreend. Imob. SPE Ltda. - - - - 4,541 -
Gold Antiparos Empreend. Imob. SPE Ltda. - - - - 2,380 -
Gold Argélia Empreend. Imob. SPE Ltda. - - - - 2,191 -
CONSOLIDATED 2009 (R$ Thousand)
Related Debentures – Parties Loans Related parties AFAC non-available Related parties - Encumbran – available - available and 06.30.2009 assets currents and non ces and non- non-available currents and non current liabilities available assets currents assets (Note 7) assets
Administradora de Bens Avante S.A. N/A - - 24 - -
Alves Pedroso Empreendimentos N/A - (277) 268 - - Imobiliários SPE Ltd
América Piqueri Incorporadora S.A. N/A - 28 - - -
Amsterdan Empreendimentos N/A - - - - 866 Imobiliários Ltda.
API SPE 39 - Planejamento e Des. N/A - 6 1,196 - - Empreend. Imobiliários Ltda
ATP Adelaide Participações S.A. N/A - - - - -
Austria Empreendimentos Imob.SPE N/A - - - - 1,498 Ltda
Av. Chile 230 Investimentos N/A - - - - 2,477 Imobiliários S.A.
Badeirantes Empreendimento N/A - - 815 - - Imobiliário Ltda.
Baguary Empreendeendimentos N/A - 166 474 - - Imobiliários Ltda
Bento Lisboa Participações S.A. N/A - 5,060 - 1,901 -
Big Field Empreend. Imobiliários S/A N/A - - - - -
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CONSOLIDATED 2009 (R$ Thousand)
Related Debentures – Parties Loans Related parties AFAC non-available Related parties - Encumbran – available - available and 06.30.2009 assets currents and non ces and non- non-available currents and non current liabilities available assets currents assets (Note 7) assets
Imobiliário S.A.
Bruxelas Empreend. Imob. Ltda N/A - - - - 5,421
CHL Desenvolvimento Imobiliário Ltda. N/A - 5,041 - - -
Cipasa Desenvolvimento Urbano S.A. N/A - 7,418 - - -
Cyrela Tennessee Empreendimentos Imobiliários S.A. N/A - 233 431 - -
Dominus Empreendimentos N/A - - - - - Imobiliários
Eco Life Campestre Empreendimentos N/A - - 309 393 - Imobiliários S.A.
Eco Life Independência Empreendimento N/A - 13 311 395 - Imobiliário S.A.
Eco Life Jaguaré Empreendimento N/A - 1 - 69 390 Imobiliário S.A.
Eco Life Parque Prado Empreendimento N/A - (74) 379 207 - Imobiliário S.A.
Eco Life Vila Leopoldina N/A - 30 61 - - Empreendimento Imobiliário S.A.
Eco Três Rios Empreendimento N/A - 134 - 822 4,200 Imobiliário S.A.
Ecolife Santana Empreendimento N/A - 36 673 871 - Imobiliário S.A.
Fator Amazon Empreendimentos IGPM 37 900 553 - - Imobiliários Ltda. +14%a.a
Fator Aquarius Empreendimentos IGPM 29 1,483 920 80 - Imobiliários Ltda. +14%a.a
Fator da Vinci Empreendimentos N/A - 8 - - - Imobiliários Ltda.
Fator SKY Empreendimentos N/A 1,090 4 - - Imobiliários Ltda.
Finlândia Empreendimentos N/A - (254) - - - Imobiliários Ltda.
FL 17 Empreendimento Imobiliário N/A - - - (280) 121 S.A.
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CONSOLIDATED 2009 (R$ Thousand)
Related Debentures – Parties Loans Related parties AFAC non-available Related parties - Encumbran – available - available and 06.30.2009 assets currents and non ces and non- non-available currents and non current liabilities available assets currents assets (Note 7) assets
Gardênia Participações S.A. N/A - 200 - - -
GC Desenvolvimento Imobiliário S.A. N/A - - 89 - -
Giardino Desenvolvimento mobiliários N/A - - 493 - - S.A.
Giardino Empreendimentos N/A - - 1,246 - - Imobiliários S.A.
Girassol - Vila Madalena Empreend. N/A - 24 33 - - Imobiliários S.A.
Gold Acapulco Empreendimentos N/A - - - - 5,289 Imobiliários SPE Ltda.
GoldAlaska Empreendimentos N/A - 198 - - - Imobiliários SPE Ltda.
Gold Anafi Empreendimentos N/A - (1) - - - Imobiliários SPE Ltda.
Gold Black Empreendimentos N/A - 1 1,123 - - Imobiliários SPE Ltda.
Gold Canadá Empreendimentos N/A - 11 - - - Imobiliários SPE Ltda.
Gold Donoussa Empreendimentos N/A - - - - - Imobiliários SPELtda.
Gold Escócia Empreendimentos N/A - 360 - - - Imobiliários SPE Ltda.
Gold Geneva Empreendimentos N/A - - 210 - - Imobiliários SPE Ltda.
Gold Havana Empreendimentos N/A - - 12 - - Imobiliários SPE Ltda.
Gold Holanda Empreendimentos N/A - 76 149 - - Imobiliários SPE Ltda.
Gold Japão Empreendimentos N/A - - 20 - - Imobiliários SPE Ltda.
Gold Linhares Empreendimentos N/A - - 94 - - Imobiliários SPE Ltda.
Gold Lisboa Empreendimentos N/A - 444 - - - Imobiliários SPE Ltda.
Gold Luxemburgo Empreendimentos N/A - - - - 3,027 Imobiliários SPE Ltda.
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CONSOLIDATED 2009 (R$ Thousand)
Related Debentures – Parties Loans Related parties AFAC non-available Related parties - Encumbran – available - available and 06.30.2009 assets currents and non ces and non- non-available currents and non current liabilities available assets currents assets (Note 7) assets
Gold Madri Empreendimentos N/A - (324) 99 422 - Imobiliários SPE Ltda.
Gold Marília Empreendimentos N/A - 79 - - - Imobiliários SPE Ltda.
Gold Marrocos Empreendimentos N/A - - 806 - - Imobiliários SPELtda.
Gold Minas Gerais Empreendimentos N/A - 2,049 - - Imobiliários SPE Ltda.
Gold Monaco Empreendimentos N/A - - 299 - - Imobiliários SPE Ltda.
Gold Monaco Empreendimentos N/A - 100 - - - Imobiliários SPE Ltda.
Gold New York Empreendimentos N/A - - - 1 - Imobiliários SPELtda.
Gold Noruega Empreendimentos N/A - 617 - - - Imobiliários SPE Ltda.
Gold Oceania Empreendimentos N/A - - - - 39 Imobiliários SPE Ltda.
Gold Palmares Empreendimentos N/A - 88 - 37 - Imobiliários SPELtda.
Gold Panamá Empreendimentos N/A - 1 - - - Imobiliários SPE Ltda.
Gold Paraíba Empreendimentos N/A - 95 - - - Imobiliários SPE Ltda.
Gold Piaui Empreendimentos N/A - - 1,111 - - Imobiliários SPE Ltda.
Gold Porto Alegre Empreendimentos N/A - 82 201 - - Imobiliários SPE Ltda.
Gold Salvador Empreendimentos N/A - 253 - - - Imobiliários SPE Ltda.
Gold Santiago Empreendimentos N/A - - 99 - - Imobiliários SPE Ltda.
Gold Santiago Empreendimentos N/A - 26 - - - Imobiliários SPE Ltda.
Gold São Paulo Empreendimentos N/A - (130) - - 66 Imobiliários SPELtda.
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CONSOLIDATED 2009 (R$ Thousand)
Related Debentures – Parties Loans Related parties AFAC non-available Related parties - Encumbran – available - available and 06.30.2009 assets currents and non ces and non- non-available currents and non current liabilities available assets currents assets (Note 7) assets
Gold Sidney Empreendimentos N/A - 83 - - 10,015 Imobiliários SPE Ltda.
Gold Sikinos Empreendimentos N/A - - - - - Imobiliários SPE Ltda.
Gold Singapura Empreendimentos N/A - 99 - - 650 Imobiliários SPE Ltda.
Gold Suécia Empreendimentos N/A - - 915 - - Imobiliários SPE Ltda.
Gold Suiça Empreendimentos N/A - - 33 - - Imobiliários SPE Ltda.
Gold Suiça Empreendimentos N/A - 50 - - - Imobiliários SPE Ltda.
Gold Uberaba Empreendimentos N/A - 281 - - - Imobiliários SPE Ltda.
Gold Yellow Empreendimentos N/A - - - - 338 Imobiliários SPE Ltda.
Goldfarb 1 Empreendimentos N/A - 82 69 - 2,862 Imobiliários SPE Ltda.
Goldfarb Incorporações e Construções N/A - 22,805 3,997 - - S.A.
Goldfarb PDG 3 Incorporações e N/A - - 1,405 - - Construções S.A.
Habiarte Barc PDG Porto Búzios N/A - - 689 - - Incorporação S.A.
HL Empreendimentos S.A. N/A - 82 82 - -
Jardins Incorporação SPE Ltda. N/A - - - - 76
Jazz 2006 Participações S.A. N/A - 2,000 - - -
Lindencorp Desenvolvimento IGPM + 44,856 - 485 - - Imobiliário S.A. 12% a.a
Marpal Empreendimentos e N/A - (3) 158 - - participações Ltda.
MZT Empreendimentos Imobiliários N/A - - 386 - 272 Ltda
Nova Água Rasa Empreendimentos N/A - 246 242 - - Imobiliários Ltda
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CONSOLIDATED 2009 (R$ Thousand)
Related Debentures – Parties Loans Related parties AFAC non-available Related parties - Encumbran – available - available and 06.30.2009 assets currents and non ces and non- non-available currents and non current liabilities available assets currents assets (Note 7) assets
Nova Mooca Empreendimentos N/A - - - - 686 Imobiliária Ltda
Novo Tatuapé Empreendimentos N/A - 315 424 - - Imobiliários Ltda
Oswaldo Lussac Empreendimentos N/A - - 57 - - Imobiliários S.A.
PDG Araxá Income S.A. N/A - 5,377 - - -
PDG Co-Incorporação S.A. N/A - - 1 - -
PDG Companhia Securitizadora S.A. N/A - 1 - - -
PDG Desenvolvimento Imobiliário N/A - - - - 140 Ltda.
PDG Loteadora S.A. N/A - - 1 -
PDG-LN 5 Incorporações e N/A - - - - 110 Empreendimentos Ltda.
Performance BR Empreendimentos N/A - - - - 1,072 Imob S.A.
Prunus Empreendimentos S.A. N/A - - - - -
REP DI Desenvolvimento Imobiliário IGPM 7,577 16,725 221 - - S.A. +12%a.a
Saint Hilaire Empreendimentos N/A - 525 484 - - Imobiliários Ltda
São João Clímaco Empreendimentos N/A - - - - 288 Imob. Ltda.
São João Clímaco Empreendimentos N/A - 263 - - - Imobiliários Ltda
Sardenha Empreendimento Imobiliário N/A - 37 - - 1,022 S.A.
Serra Bella Empreendimentos N/A - 369 - - - Imobiliários Ltda
Splendore Empreendimento Imob. S/A N/A - 431 68 - -
Tibouchina Empreendimentos N/A - - - 255 - Imobiliários Ltda
Vassoural Empreendimento Imobiliário N/A - - 68 - - Ltda.
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CONSOLIDATED 2009 (R$ Thousand)
Related Debentures – Parties Loans Related parties AFAC non-available Related parties - Encumbran – available - available and 06.30.2009 assets currents and non ces and non- non-available currents and non current liabilities available assets currents assets (Note 7) assets
ZMF5 Incorporações S.A. N/A - - - - 661
Outros N/A - 3,112 1.980 18 352
Total on December 31, 2009 52,499 78,171 24,268 5,191 41,938
CONSOLIDATED 2008 (R$ Thousand) Related Debentures – Related Parties AFAC Related parties - non-available Loans – parties - Encumb available and Encumbr 06.30.2008 assets available and currents currents rances non-available and non ances non-available and non assets current currents (Note 7) assets assets liabilities
Fator Amazon Empreendimentos Imobiliários IGPM + Ltda. 14% a.a 2,426 - - - - -
América Piqueri Incorporadora S.A. N/A - 346 - - - -
Boa Viagem Empreendimento Imobiliário N/A - (277) (499) - - 111
ATP Adelaide Participações S.A. N/A - - - - 1,149 -
Administradora de Bens Avante S.A. N/A - - - - 551 1,047
Bento Lisboa Participações S.A. N/A - 830 - - - -
CHL Desenvolvimento Imobiliário Ltda. N/A - - 36,643 - - (21,230)
CHL XXXI Incorporações Ltda. N/A - - - - 223 -
Companhia de Serviços Compartilhados S.A. N/A - - - - 120 240
Club Felicitá Empreendimento Imobiliário N/A - - - - 2,239 - Clube Florença Empreendimento Imobiliário S.A. N/A - - - - 192 - Clube Tuiuti Empreendimento S.A. N/A ------
Companhia Repac de Participações N/A - 11 - - - -
Construtora Adolpho Lindenberg S.A. N/A 10,985 - 275 - - - Cyrela Tennessee Empreendimentos Imobiliários S.A. N/A - 30 (245) - 250 245
Dom Pedro Empreendimento Imobiliário N/A - - - - - 1,517 Eco Liffe CampestreLtda. Empreendimentos Imobiliários S.A. N/A - - - - (339) 1,062 Eco Life Independência Empreendimento Imobiliário S.A. N/A - - - - 996 2,125 Ecolife Parque Prado Empreendendimento Imobiliário S.A N/A - 74 - - 16 1,108 166 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
CONSOLIDATED 2008 (R$ Thousand) Related Debentures – Related Parties AFAC Related parties - non-available Loans – parties - Encumb available and Encumbr 06.30.2008 assets available and currents currents rances non-available and non ances non-available and non assets current currents (Note 7) assets assets liabilities
Eco Life Recreio Empreendimento Imobiliário S.A. N/A - - - - - 1,118 Ecolife Santana Empreendimento Imobiliário S.A. N/A - 36 - - 118 1,417
Três Rios Empreendimentos Imobiliários N/A - - - - - 1,042 Eco Life Vila Leopoldina Empreend. Imobiliários S.A. N/A - 30 - - (40) 40 Fator Aquarius Empreendimentos Imobiliários Ltda. IGPM 1,273 453 758 - 315 75 +14% Fator da Vinci Empreendimentos Imobiliários Ltda. N/A - 8 - - - -
Fator Sky Empreendimentos Imobiliários N/A 777 - - - - - Ltda. FL 17 Empreendimento Imobiliário S.A. N/A - - - - 550 1,220
Gardênia Participações S.A. N/A - 200 121 - - -
GC Desenvolvimento Imobiliário S.A. N/A - - 493 - - -
Giardino Desenvolvimento mobiliários S.A. N/A - (123) 4 301 - -
Giardino Empreendimentos Imobiliários N/A - (121) (121) 418 - - S.A.
Gold Argentina Empreendimentos Imobiliários SPE Ltda. N/A - - - (1) - - Gold Linhares Empreendimentos Imobiliários SPE Ltda. N/A - 7 - - - - Gold Palmares Empreendimentos Imobiliários SPE Ltda. N/A - 82 - - - - Gold Santa Catarina Empreendimentos Imobiliários SPE Ltda. N/A - - - 1 - - Gold Tuquoise Empreendimentos Imobiliários SPE Ltda. N/A - - 391 - - -
Goldfarb Incorporações e Construções S.A. N/A - 15,902 (1,267) - - -
Goldfarb PDG 5 Incorporações e Construções S.A. N/A - - - - 2,816 - Goldfarb PDG 2 Incorporações e Construções S.A. N/A - - - - 1,060 -
SCP Green Village N/A - - - - 212 - Habiarte Barc PDG Cidade Madri Incorporação S.A. N/A - - - - 1,237 1,328
Habiarte Barc Olhos Dágua Incorporação N/A - - - - 363 648 Habiarte Barc PDG Porto Búzios Incorporação S.A. N/A - - - - 480 589
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CONSOLIDATED 2008 (R$ Thousand) Related Debentures – Related Parties AFAC Related parties - non-available Loans – parties - Encumb available and Encumbr 06.30.2008 assets available and currents currents rances non-available and non ances non-available and non assets current currents (Note 7) assets assets liabilities
Jardim Morumbi Empreendimento Imobiliário S.A. N/A - - - - 605 871
Jardins Incorporações SPE Ltda N/A - - 124 - (127) 127
Jazz 2006 Participações S.A. N/A - 1,519 (476) - 539 329
JK1 6 Empreendimento Imobiliário S.A. N/A - - - - 102 1,160
Lindencorp Desenvolvimento Imobiliário IGPM 38,449 - - - - - S.A. Marpal Empreendimentos e participações N/A - (124) (124) - - - Ltda. MTZ Empreendimentos Imobiliários Ltda. N/A - 44 - - - -
PDG Nova Lima Incorporações S.A. N/A - - 1,030 - - - Oswaldo Lussac Empreendimentos Imobiliários S.A. N/A - - - - 268 -
PDG Araxá Income S.A. N/A - - 3 - - -
PDG Co-Incorporação S.A. N/A - 591 9,738 - 20,280 -
PDG Desenvolvimento Imobiliário Ltda. N/A - - 7,866 - - 8,000
PDGLoteadoraS.A. N/A - (1) (3) - - 1,034 PDG-LN2 Incorporação e Empreendimentos S.A. N/A - 569 135 - - -
PDG-LN4 Incorporação e Empreendimentos S.A. N/A - 2 6 - (2) -
PDG-LN6 Incorporação e Empreendimentos S.A. N/A - - - - 8 - PDG-LN7 Incorporação e Empreendimentos S.A. N/A - - - - 10 -
Premier da Serra Incorporações S.A. N/A - - 191 - - -
Prunus Empreendimentos S.A. N/A - - 147 - 407 -
IGPM REP DI Desenvolvimento Imobiliário S.A. +12% 9,178 8,053 - - 2,806 1,176 Saint Hilaire Incorporação SPE S.A. N/A - (96) (96) - - -
Sardenha Empreendimento Imobiliário S.A. N/A - 37 (5,728) - - 2,728
Tibouchina Empreendimento S.A. N/A - - - - 716 -
Três Rios Empreendimento Imobiliário S.A. N/A - - - - 120 -
Tresefe Participações S.A. N/A - - - - 4,538 -
Vista do Sol Empreendimentos Imobiliários N/A - - - - 13 - S.A. ZMF5 Incorporações S.A. N/A - 1 - - 214 424
Aportes de Capital - Efeitos a Regularizar N/A - - 405 - (209) - Total on December 31, 2008 63,088 28,083 49,771 719 42,796 9,551
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CONSOLIDATED 2007 (R$ Thousand) AFAC Debentures – Related Related non- Parties Loans Related parties parties - Debentures – non- current Encumbra available – available - available and currents available assets 12.31.2007 s and Encum nces assets and non- non-available and non brances non available assets current (Note 7) currents (Note 7) assets liabilities assets
Alves Pedroso ------Empreendimentos Imob. 12 LTD IGPM 933 ------Fator Amazon Empreend. +14% a.a Imob. Ltda AméricaPiqueriIncorporado N/A 3,143 ra S.A. ------
N/A Austria - - - - - 14 646
CHL Desenvolvimento N/A - 1,497 - - - 16 - Imobiliário S.A.
Clube Tuiuti N/A - - 2,825 3,143 - - - Empreendimento S.A.
Construtora Adolpho N/A 8,861 ------Lindemberg
Cyrela Milão Empreend. N/A - - 107 - - - - Imob. S.A.
Dom Pedro Empreend. N/A ------793 Imob. Ltda Fator Aquarius Empreend. IGPM 763 ------Imob. Ltda +14% a.a.
Fator Sky Empreend. Imob. N/A 547 ------Ltda Giardino Desenvolvimento N/A - - 996 9 - - - Imobiliário S.A.
Gold Acre Empreend. Imob. N/A - - - - 17,033 - - SPE Ltda Gold Amapá Empreend. N/A Imob. SPE Ltda - - - - 461 - -
Gold Argentina Empreend. N/A ------Imob. SPE Ltda 462
Gold Canadá Empreend. N/A - - - - 290 - - Imob. SPE Ltda Gold Cancun Empreend. N/A - - - - 1,515 - - Imob. SPE Ltda
Gold Chile Empreend. Imob. N/A SPE Ltda - - - - 2,008 - -
Gold Escócia Empreend. N/A Imob. SPE Ltda - - - - 2,590 - -
Gold Espírito Santo Emp. N/A Imob SPE Ltda - - - - 849 - -
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CONSOLIDATED 2007 (R$ Thousand) AFAC Debentures – Related Related non- Parties Loans Related parties parties - Debentures – non- current Encumbra available – available - available and currents available assets 12.31.2007 s and Encum nces assets and non- non-available and non brances non available assets current (Note 7) currents (Note 7) assets liabilities assets
Gold França Empreend. N/A ------1 Imob. SPE Ltda
Gold Geneva Empreend. N/A - - 285 - - - - Imob. SPE Ltda
Gold Groelândia Empreend. N/A - - - - 650 - - Imob. SPE Ltda
Gold Ilhéus Empreend. N/A Imob. SPE Ltda - - - - 170 - -
Gold Índia Empreend. Imob. N/A - - - - 1,402 - - SPE Ltda
Gold Marília Empreend. N/A - - - - 9,2 19 - - Imob. SPE Ltda Gold Marrocos Empreend. N/A ------Imob. SPE Ltda 22
Gold Minas Gerais Emp. N/A - - - - 1,925 - - Imob. SPE Ltda
Gold Panamá Empreend. N/A - - - - 2,504 - - Imob. SPE Ltda Gold Piauí Empreend. Imob. N/A - - - - 1,157 - - SPE Ltda
Gold Porto Velho Empreend. N/A ------Imob. SPE Ltda 318 Gold Roraima Empreend. N/A - - - - 830 - - Imob. SPE Ltda
Gold Santa Catarina Emp. N/A - - - - 1,036 - - Imob. SPE Ltda Gold São Paulo Empreend. N/A - - - - 3,65 1 - - Imob. SPE Ltda
Gold Texas Empreend. N/A - - - - 2,628 - - Imob. SPE Ltda Gold Tunísia Empreend. N/A - - - - 680 - - Imob. SPE Ltda Gold Turquia Empreend. N/A - - - - 520 - - Imob. SPE Ltda Gold Uberaba Empreend. N/A - - - - 2,298 - - Imob. SPE Ltda
Goldfarb Incorporações e N/A - 20,186 - - - - - Construções S.A. N/A SCP Green Village - - 461 N/A Jardins Incorporações SPE ------64 Ltda. N/A Jazz2006 Participações - - 1,444 - - - - S.A.
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CONSOLIDATED 2007 (R$ Thousand) AFAC Debentures – Related Related non- Parties Loans Related parties parties - Debentures – non- current Encumbra available – available - available and currents available assets 12.31.2007 s and Encum nces assets and non- non-available and non brances non available assets current (Note 7) currents (Note 7) assets liabilities assets
IGPM Lindecorp Desenvolvimento 27.607 2,147 - 3,041 - - - +12% a.a Imobiliário S.A.
Luxemburgo Empreend. N/A ------139 Imobiliário Ltda N/A Mônaco Incorporações SPE ------3 Nova Água Rasa Empreend. N/A ------174 Imobiliário Ltda Nova Tatuapé Negçócios N/A ------90 Imobiliários Ltda Oswaldo Lussac Empreend. N/A - - - - - 237 - Imobiliário
N/A Prunus Empreendimentos - - 320 - - - - PDG Desenvolvimento N/A - 5,260 - 1,033 - - - Imobiliário S.A. Queiroz Galvão Mac Cyrela N/A - - 296 - - - - Veneza
Vale Nevado Emp e N/A - 12,168 - - - - 138 Participações Ltda. N/A Outros - 696 463 52 - - -
Total on December 31, 38,711 45,097 6,736 7,278 54,196 762 2,048 2007
On October 16, 2008, was executed the “ Contrato de Compromisso de Venda e Compra de Unidade Autônoma e Outros Pactos – Edifício 360 ” between a Company’s subsidiary, Camburiú Empreendimentos Imobiliários S.A. and our Executive Officer and General Counsel, Mr. Cauê Castello Veiga Innocêncio Cardoso, for the purchase of residential real estate property. The real estate was acquired under the same conditions offered to the public, without obtaining any advantage that has not been offered to other buyers.
On March 29, 2010, was approved in Meeting of the Board of Directors of the Company the acquisition of plots together with related parties, SPEs controlled by the Company performed the acquisition of the following plots together with the CEO of our subsidiary CHL Desenvolvimento Imboliário S.A .: (i) VPA 53 ( Cinematéque Botafogo ); (ii) Araxá (O2); (iii) Ideal (MSV Par); and (iv) BMI 600 - (Prime Leblon). Real estate projects were developed on such plots and the acquisition of the notional fraction in the aggregate reduced the initial cash exposure of such projects.
In the Meeting of the Board of Directors held on October 4, 2010, was approved the sale of four units of one of our enterprises, “Condomínio Vivace Park”, to Mr. Milton Goldfarb, manager of a company controlled by the Company. The units will be acquired under the same conditions offered to the public, without obtaining any advantage that has not been offered to other buyers.
Additionally, the Board of Directors approved, on November 19, 2010, the policy of real estate sales to employees and directors. This policy provides wich employee can acquire only one real estate property with discount of up to 171 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
5% to the present valeu stated in the price table enforceable in the date of the purchase, besides the exemption of the payment of the broker fee. The employees and directors can acquire more than one unit, but with no discount. Directors shall have the right just to the exemption of the broker fee, but shall not have the right to any other discount.
16.3. For each transaction or series of transactions referred to in item 16, during the past fiscal year: (a) identify the measures taken to address conflicts of interest; and (b) show the strictly commutative character of the conditions agreed upon or a compensation of adequated payment.
(a) The Company has adopted corporate governance practices and those recommended and/or required by law, including those specified in the rules of the Novo Mercado. To the Board of Directors, Executive Board and the Board of Auditors are submitted the decisions about all the Company's operations, as described in the Bylaws of the Company in force. Thus, all of our operations, especially those occurring with related parties, were properly submitted to the company's decision-making bodies, as existing rules. Furthermore, in accordance with Law 6404/76, any member of the Board of Directors of the Company is prohibited from voting in any shareholders’ meeting or board meeting or acting in any business or transaction in which they have conflicting interests with the Company.
(b) Our related parties transactions of current assets and noncurrent assets,currents liabilities and noncurrent and Advances for Future Capital Increase - AFACs have no rate of return since they are seeking to carry out a capital increase in SPEs controlled by the Company as soon as possible. Additionally, with respect to the debentures and loass operations with related parties, there are remuneration rates only as described in the table below. However, we emphasize that not all of the transactions highlighted in the table below reflect in the opening set described in item 16.2, because these are non-consolidated operations in the period ended on September 30 th ,2010. Entity Description Lindencorp Debentures - IGPM + 12% a.a. REP DI Debentures - IGPM + 12% a.a. Amazon Debentures - IGPM + 14% a.a. REPAC Credit – Sell of shares – IGPM + 12% a.a. CHL DI 3a Emissão Debentures - CDI + 3% a.a. CHL DI 4a Emissão Debentures - CDI + 3% a.a. CHL DI 5a Emissão Debentures – CDI + 3% a.a. Goldfarb 1a Deb Debentures - CDI + 3% a.a. Goldfarb 2a Deb Debentures - TR + 8,75% a.a. Agre 1a Deb Debentures – CDI + 1,65% a.a. Agra 1a Deb Debentures – CDI + 3% a.a. Abyara 1a Deb Debentures – CDI + 3% a.a. Agra 2a Deb Debentures – CDI + 3% a.a. Abyara 2a Deb Debentures – CDI + 3% a.a. Sale of land in Leblon Credit – Sell of Shares - CDI Fator Realty Loan - CDI + 3% a.a. LN II Loan – CDI + 6% a.a. Dominus Loan – CDI + 2% a.a.
17. CAPITAL STOCK
17.1. Information about the capital stock
The Company has only common shares.
Securities Type and Paid in Subscibed Authorized convertible Conversion Issued Capital Class maturity Capital Paid-in Capital Capital* into shares conditions R$4,810,099,22 R$4,810,099,22 Subscription See item 18.5 1,106,242,174 Common N/A 2.14 2.14 680,000,000 Bonus below (*)The authorized capital is represented by shares and was authorized as a result of Extraordinary General Shareholders’ Meeting held on September 9, 2009. 172 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Except for the subscription bonus, there is no securities convertible in outstanding shares, and there is no capital stock to be paid-in.
17.2. Regarding the increases of the capital stock of the Company:
We were incorporated on November 17, 1998 in the city of Sao Paulo, state of Sao Paulo, with a capital stock amounting to R$100.00 under the corporate name of Varsóvia Participações S.A.
In a shareholders' meeting held on December 8, 2003, our capital stock was increased to R$50,001.00, through an issuance of 50,001 common shares at the price of R$1.00 per share. This capital increase was immediately fully subscribed and paid-in in cash by ABF Participacifies Ltda., whose ownership interest was fully sold to FIP PDG I. Through this issuance, our capital stock increased by 50.001%.
In a shareholders' meeting held on December 6, 2004, our capital stock was increased from R$50,101.00 to R$8,600,101.00, through an issuance of 8,500,000 common shares at the issuance price of R$1.00 per share. This increase was fully subscribed and paid in cash by FIP PDG I, resulting in an increase of 17.065% over the previous capital stock.
On 2005, our capital stock undertook five changes: (i) in a shareholders’ meeting held on April 26, an increase of R$586,380.00, resulting on a capital stock of R$9,359,481.00, an increase of 6.82% fully subscribed and paid-in in cash, through the issuance of 568.3800,00 shares at the issuance price of R$1.00 per share; (ii) in a shareholder’s meeting held on June 1 st , a reduction of R$8,424,601.00 million, resulting on a capital stock of R$934,880.00, a decrease of 90% through the cancellation of 8,424,601 shares, which amount was fully transferred to FIP PDG I in shares held by the Company in Giardino Desenvolvimento Imobiliário S.A.; (iii) in a shareholder’s meeting held on June 25, an increase of R$3,360,000.00, resulting in capital stock of R$4.294.880,00, an increase of 359.00% through the issuance of R$3,360,000.00 at the issuance price of R$1.00 per share, fully paid-in in cash; (iv) in a shareholder’s meeting held on December 1 st , a reduction of R$3,091,463.00 through the cancellation of 3.091.463,00 common shares, resulting in capital stock of R$1,203,417.00, a decrease of 72.00% , which amount was transferred to FIP PDG I trhough a transfer of shares in the company Queiroz Galvão Cyrela Veneza Empreendimento Imobiliário S.A.; and (v) in a shareholder’s meeting held on December 21, an increase of R$11.0 million resulting in a capital stock of R$12,203,417.00, an increase of 914.00% resulting in a issuance of 11,000,000 shares at the issuance price of R$1.00 per share, paid-in in cash. All capital increases during this year were fully subscribed by FIP PDG I.
On 2006, our capital stock changed as follows: (i) in a shareholders' meeting held on March 20, an increase of R$6.0 million was approved through the issuance of 6,000,000 common shares at the issuance price of R$1.00 per share, fully paid-in in cash, resulting in capital stock of R$18.2 million, a 49.00% increase over the previous capital stock; (ii) in a shareholders' meeting held on June 29, an increase of R$15,796,583 was approved through the issuance of 15.796,583 common shares at the issuance price of R$1.00 per share, fully paid-in in cash, resulting in capital stock of R$34.0 million, an 87.00% increase over the previous capital stock; (iii) in a shareholders' meeting held on August 30, an increase of R$177,3 million was approved through the issuance of 177,372,535 common shares at the issuance price of R$1.00 per share, fully paid-in in cash, resulting in capital stock of R$213.2 million, a 527.00% increase over the previous capital stock; (iv) in a shareholders' meeting held on September 30, an increase of R$8,455,909 was approved through the issuance of 8,455,909 common shares at the issuance price of R$1.00 per share, fully paid-in through the capitalization of goodwill reserves, resulting in a capital stock of 219.828.444,00 million, a 4.00% increase; (v) in a shareholders' meeting held on October 20, through reverse stock split (as described in the table below); and (vi) in a shareholders' meeting held on December 14, an increase of R$19.5 million was approved through the issuance of 9,750,000 common shares at the issuance price of R$2.00 per share, with the value of the issuance determined by the shareholders' equity of
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the Company, fully paid-in in cash, for a 9.00% increase over the previous capital stock. All capital increases were fully subscribed by FIP PDG I.
Date of approval Amount of Shares before approval Amount of Shares after approval 10/20/2006 219.828.444 109.914.222
On January 24, 2007, based on the authorized capital and as a result of our initial public offering, our board of directors increased our capital stock by 30,000,000 of shares, for public subscription to be paid in cash, at the issuance price of R$14.00 per share, representing an increase of R$420.0 million, with the value of the issuance determined by the equity value of the shares. This resulted in an increase of 175.00% over the previous capital stock, resulting in a capital stock of R$659.3 million, representing 109,776,148 common shares.
On February 23, 2007, also based on the authorized capital, our capital stock was subject to a new increase of 875,933 shares at the issuance price of R$14.00 per share, with the value of the issuance determined by the equity value of the shares of the Company, representing an increase of R$12.3 million due to the exercise the of the over- allotment option in connection with our initial and second public offering to meet excess demand during the offering. This represented a 1.8% increase over the previous capital stock.
In the extraordinary shareholders' meeting held on June 29, 2007, our shareholders increased our capital stock of R$4,6 million as a result of the acquisition of CHL XV Incorporações Ltda. and of R$12,3 million as a result of the acquisition of Key West Participações S.A., with the issuance of 2,022,272 common shares at the issuance price of R$2.25 per share, with the value of the issuance determined by the equity value of the shares, and 5,040,000 common shares at the issuance price of R$2.43, with the value of the issuance determined by the equity value of the shares. This represented a 2.5% increase over the previous capital stock.
Distribution of our capital stock before the capital increase Extraordinary shareholder’s meeting held on June 2007 - 70% Goldfarb and 50% CHL Shareholder FIP PDG I 58.10% 64,288,175 Gilberto Sayão da Silva* 12.32% 13,629,093 André dos Santos Esteves* 13.36% 14,786,280 Free float 41.90% 31,577,626 Total of Issued Shares 100.00% 110,652,081 * Interest held indirectly through FIP PDG I Distribution of our capital stock after the capital increase Extraordinary shareholder’s meeting held on June 2007 - 70% Goldfarb and50% CHL Shareholder FIP PDG I 54.61% 64,288,175 Gilberto Sayão da Silva* 11.58% 13,629,093 André dos Santos Esteves* 12.56% 14,786,280 Free float 45.39% 38,639,898 Total of Issued Shares 100.00% 117,714,353 * Interest held indirectly through FIP PDG I
On September 28, 2007, our shareholders approved in the extraordinary shareholders' meeting, the acquisition of MP Holding Ltda., holder of an interest of 1.67% in the capital stock of Goldfarb, at the issuance price of R$4,89 per share, with the value of the issuance determined by the equity value of the shares, resulting in an increase in our capital of R$3,3 million through the issuance of 681,818 new common shares, a 0.4% increase over the previous capital stock.
Distribution of our capital stock before the capital increase Extraordinary shareholder’s meeting held on September 2007 - 75% Goldfarb Shareholder FIP PDG I 54.61% 64,288,175 Gilberto Sayão da Silva* 11.58% 13,629,093 174 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
André dos Santos Esteves* 12.56% 14,786,280 Free float 45.39% 38,639,898 Total of Issued Shares 100.00% 117,714,353 * Interest held indirectly through FIP PDG I
Distribution of our capital stock after the capital increase Extraordinary shareholder’s meeting held on September 2007 - 75% Goldfarb Shareholder FIP PDG I 54.30% 64,288,175 Gilberto Sayão da Silva* 11.51% 13,629,093 André dos Santos Esteves* 12.49% 14,786,280 Free float 45.70% 39,321,716 Total of Issued Shares 100.00% 118,396,171 * Interest held indirectly through FIP PDG I
On October 23, 2007, based on authorized share capital, the board of directors increased the capital stock by 20,000,000 shares, for public subscription in cash, at the issuance price of R$25,00, with the value of the issuance determined by the bookbuilding procedure. This increase of R$500.0 million represented a 72.00% increase over the previous capital stock, resulting in a total capital stock of R$1,191,764,896.12, comprised of 138,396,171 common shares.
On November 7, 2007, again based on authorized capital, the board of directors increased the capital stock by 3,000,000 shares at the issuance price of R$25,00, with the value of the issuance determined by the bookbuilding procedure. This increase of R$75 million resulted from the exercise the of the over-allotment option in connection with our initial and second public offering to meet excess demand during these offerings. This increase represented a 9.00% increase over the previous capital stock.
On December 21, 2007, our shareholders approved in the extraordinary shareholders' meeting: (i) the acquisition of MP Holding 2 S/A, holder of an interest of 2.5% in the capital stock of Goldfarb, resulting in an increase in our capital of R$5,7 million through the issuance of 1,136,364 new common shares at the issuance price of R$5.00, with the value of the issuance determined by the equity; (ii) the acquisition of CHL XXXIY Incorporações Ltda., holder of an interest of 12.31% in the capital stock of CHL, resulting in an increase in our capital stock of R$20.2 million through the issuance of 3,200,000 new common shares at the issuance price of R$6.32, with the value of the issuance determined by the equity; and (iii) the alteration of our Stock Option Plan. This increase represented a 3.00% increase over the previous capital stock.
Distribution of our capital stock before the capital increase Extraordinary shareholder’s meeting held on December 2007 - 70% CHL and 80% Goldfarb Shareholder FIP PDG I 45.47% 64,288,175 Gilberto Sayão da Silva* 9.64% 13,629,093 André dos Santos Esteves* 10.46% 14,786,280 Free float 54.53% 62,321,716 Total of Issued Shares 100.00% 141,396,171 * Interest held indirectly through FIP PDG I
Distribution of our capital stock after the capital increase Extraordinary shareholder’s meeting held on December 2007 - 70% CHL and 80% Goldfarb Shareholder a FIP PDG I 44.11% 64,288,175 Gilberto Sayão da Silva* 9.35% 13,629,093 André dos Santos Esteves* 10.15% 14,786,280 Free float 55.89% 66,658,080 Total of Issued Shares 100.00% 145,732,535 * Interest held indirectly through FIP PDG I
On February 1, 2008, our board of directors approved the issuance of 268,345 new shares as a result of the exercise of stock options granted under the Stock Option Plan. The issued shares were fully subscribed by the beneficiaries
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of the Stock Option Plan at the price of R$13.42 per share. monetarily adjusted as established therein, an increase of R$3,601,189.90 in the capital stock. In addition, on May 12, 2008, 2,268 new shares were issued as a result of the exercise of options at the price of R$13.72 per share, an increase of R$31,117.07 in the capital stock.
The program shall be valid for 365 days and is limited to 8.142.064 common shares, corresponding to 10.00% of the outstanding shares. On March 31, 2009, our shareholders approved in the extraordinary shareholders' meeting the issuance of 829,644 common shares and 40 class 1 subscription bonus in connection with the acquisition of MP Holding 3 Ltda., at the issuance price of R$15.70 per share, with the value of the issuance determined by the equity value of the shares, resulting in a capital increase of R$13.0 million, a 1.0% increase over the previous capital stock.
Distribution of our capital stock before the capital increase Extraordinary shareholder’s meeting held on March 2009 - 100% Goldfarb Shareholder FIP PDG I 44.03% 64,288,175 Gilberto Sayão da Silva* 9.33% 13,629,093 André dos Santos Esteves* 10.13% 14,786,280 Free float 55.97% 66,928,693 Total of Issued Shares 100.00% 146,003,148 * Interest held indirectly through FIP PDG I
Distribution of our capital stock after the capital increase Extraordinary shareholder’s meeting held on March 2009 - 100% Goldfarb Shareholder FIP PDG I 43.78% 64,288,175 Gilberto Sayão da Silva* 9.28% 13,629,093 André dos Santos Esteves* 10.07% 14,786,280 Free float 56.22% 67,758,337 Total of Issued Shares 100.00% 146,832,792 * Interest held indirectly through FIP PDG I I
On April 29, 2009, our shareholders approved in the extraordinary shareholders' meeting the issuance of 779,062 common shares and four class 2 subscription bonus in connection with the acquisition of CHL LXX Incorporaciles Ltda., at the issuance price of R$14.37, with the issuance price determined by the equity value of the shares, resulting in a capital increase of R$11,2 million, a 0.9% increase over the previous capital stock.
Distribution of our capital stock beofre the capital increase Extraordinary shareholder’s meeting held on April 2009 - 100% CHL Shareholder FIP PDG I 43.85% 64,288,175 Gilberto Sayão da Silva* 9.30% 13,629,093 André dos Santos Esteves* 10.09% 14,786,280 Free float 56.15% 67,537,399 Total of Issued Shares 100.42% 146,611,854 * Interest held indirectly through FIP PDG I I
Distribution of our capital stock after the capital increase Extraordinary shareholder’s meeting held on April 2009 - 100% CHL Shareholder FIP PDG I 43,55% 64.288.175 Gilberto Sayão da Silva* 9,23% 13.629.093 André dos Santos Esteves* 10,02% 14.786.280 Free float 56,45% 67.758.337 Total of Issued Shares 100,53% 147.611.854 * Interest held indirectly through FIP PDG I I
On May 4, 2009, the holders of series A, class 1 and class 2 subscription bonus, exercised their bonus and received 600,720 common shares at the issuance price of R$7.20 per share, with the value of the issuance determined by the equity value of the shares, and 259,688 common shares at the issuance price of R$14.37, with the value of the
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issuance determined by the equity value of the shares, respectively. Such issuance was approved by our board of directors on that date and resulted in a capital increase of R$4.3 million and R$3.7 million, respectively.
On May 12,13,14,15,18 and 19, 2009, our board of directors approved the total issuance of 2,676,069 new shares in connection with the exercise of stock options granted under the Stock Option Plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$14.14 per share, monetarily adjusted as established therein. The issuance resulted in a capital increase of R$37.8 million, a 2.8% increase over the previous capital stock.
On June 22, 2009, holders of convertible debentures relating to the second issuance of debentures requested the conversion of such debentures into shares, which resulted in the issuance of 3,058.642 new common shares at the issuance price of R$17.00 per share, as determined in the indenture. The issuance was approved at a board of directors' meeting and resulted in a capital increase of R$52,0 million, a 3.8% increase over the previous capital stock. Our capital stock increased to R$1,41 billion, divided into 154,206,973 common shares.
On June 30, 2009, holders of convertible debentures relating to the second issuance of debentures requested the conversion of such debentures into shares, which resulted in the issuance of 505,426 new common shares at the issuance price of R$17.00 per share, as determined in the indenture. The issuance was approved at a board of directors' meeting and resulted in a capital increase of R$8.6 million, a 0.6% increase over the previous capital stock. Our capital stock increased to R$1,42 billion, divided into 154,172,399 common shares.
On July 28, 2009, holders of convertible debentures relating to the second issuance of debentures requested the conversion of such debentures into shares, which resulted in the issuance of 766,757 new common shares at the price of R$17.00 per share, as determined in the indenture. The issuance was approved at a board of directors' meeting and resulted in a capital increase of R$13.0 million, a 0.9% increase over the previous capital stock. Our capital stock increased to R$1,42 billion, divided into 155,479,156 common shares.
On August 12, 2009, our board of directors approved the cancellation of 598,600 treasury shares, with no par value, without altering our capital stock. The canceled shares were valuted at R$5,5 million, and canceled against the retained profit reserve in the same amount.
On August 21, 2009, holders of convertible debentures of the second issuance of debentures requested the conversion of such debentures into shares, which resulted in the issuance of 316,792 new common shares at an issuance price of R$17.00 per share, as determined in the indenture. The issuance was approved at a board of directors' meeting on the same date and resulted in a capital increase of R$5.3 million, a 0.3% increase over the previous capital stock. With this issuance, the capital stock increased to R$1.45 billion, divided into 155,197,348 common shares.
On September 9, 2009, our shareholders approved in the extraordinary shareholders' meeting a stock split of our common shares, such that each of our common shares was split into two common shares, with the same rights and privileges as the pre-existing common shares. Each depositary share to represents two common shares after the stock split.
On October 1, 2009, based on authorized capital, our board of directors approved the issuance of 56,000,000 at an issuance price of R$14.00 per share, during the process of the public offering, with the value of the issuance determined by the bookbuilding procedure. The issuance resulted in a capital increase of R$784,0 million, a 54.00% increase over the previous capital stock.
On October 14, 2009, holders of convertible debentures relating to the second issuance of debentures requested the conversion of such debentures into shares, which resulted in the issuance of 2,199,547 new common shares at the
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issuance price of R$8.50 per share, as determined in the indenture. The issuance was approved at a board of directors' meeting and resulted in a capital increase of R$18,6 million, a 0.8% increase over the previous capital stock. Our capital stock increased to R$2,24 billion, divided into 368,594,243 common shares.
On November 23, holders of convertible debentures relating to the second issuance of debentures requested the conversion of such debentures into shares, which resulted in the issuance of 13,791,237 new common shares at the issuance price of R$8.50 per share. The issuance was approved at a board of directors' meeting and resulted in a capital increase of R$117,2 million, a 5.2% increase over the previous capital stock. Our capital stock increased to R$2,36 billion, divided into 382,385,480 common shares.
On November 30, 2009, holders of convertible debentures relating to the second issuance of debentures requested the conversion of such debentures into shares, which resulted in the issuance of 7,492,338 new common shares at the issuance price of RS8.50 per share, as determined in the indenture. The issuance was approved at a board of directors' meeting and resulted in a capital increase of R$63,6 million, a 2.6% increase over the previous capital stock. With the exception of the public offerings held on January and October 2007 and October 2009, the subscription of the increases in capital was private.
On February 11, 2010, our board of directors approved the issuance of 796,740 new shares in connection with the exercise of stock oprtions granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the srock option plan at the price of R$7.08 per share for the first program and R$11.62 per share for the second program, monetarily adjusted as established therein. The issuance resulted in a capital increase of R$5,8 million, a 1.01% increase over the previous capital stock.
On February 25, 2010, our board of directors approved the issuance of 231,638 new shares in connection with the exercise of stock oprtions granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7,08 per share for the first program and R$11.62 per share for the second program, monetarily adjusted as established therein. The issuance resulted in a capital increase of R$1,6 million, a 1.0% increase over the previous capital stock.
On March 26, 2010, our board of directors approved the issuance of 700,000 new shares in connection with the exercise of stock oprtions granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the srock option plan at the price of R$7.16 per share, monetarily adjusted as established therein. The issuance resulted in a capital increase of R$5,0 million, a 1.0% increase over the previous capital stock.
On April 30, 2010, our board of directors approved the issuance of 3,886,049 new shares in connection with the exercise of subscription bonus conversion, Class 1, Serie B, order no 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10; and 4.204.896 new shares in connection with the exercise of subscription bonus conversion, Class 2, Serie B, order no 1, with subscription price of R$4.47 and R$3.55, respectively. The issuance resulted in a capital increase of R$17368,920.75 and R$14,932,335.55 respectevely, a 0,99% and a 1.07% increase over the previous capital stock, respectevely.
On March 26, 2010, our board of directors approved the issuance of 700,000 new shares in connection with the exercise of stock oprtions granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the stock option plan at the price of R$7.16 per share, monetarily adjusted as established therein. The issuance resulted in a capital increase of R$5,0 million, a 1.0% increase over the previous capital stock.
On April 30, 2010, the holders of series B, class 1 and class 2 subscription bonus, exercised their bonus and received 3,886,049 common shares at the issuance price of R$4.47 per share, with the value of the issuance determined by the equity value of the shares, and 4,204,896 common shares at the issuance price of R$3.55, with the value of the issuance determined by the equity, respectively. Such issuance was approved by our board of
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directors on that date and resulted in a capital increase of R$17,3 million and R$14,9 million, respectively and a 1.3 increase over the previous capital stock.
On May 13, 2010, our board of directors approved the issuance of 94,870 new shares in connection with the exercise of stock options granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7.08 per share for the first program, monetarily adjusted as established therein, and R$11.67 per share for the second program. The issuance resulted in a capital increase of R$1,0 million, a 0.4% increase over the previous capital stock.
On May 20, 2010, our board of directors approved the issuance of 386.300 new shares in connection with the exercise of stock oprtions granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7,08 per share for the first program, monetarily adjusted as established therein, and R$11,67 per share for the second program. The issuance resulted in a capital increase of R$2.7 million, a 0.11% increase over the previous capital stock.
On May 25, 2010, our board of directors approved the issuance of 636,559 new shares in connection with the exercise of stock oprtions granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7.08 per share for the first program, monetarily adjusted as established therein, and R$11.67 per share for the second program. The issuance resulted in a capital increase of R$4,5 million, a 0.18% increase over the previous capital stock.
On June 10, 2010, in our extraordinary shareholders’ meeting, we approved the issuance of 148,500,001 new shares in connection with the incorporation of AGRE EMPREENDIMENTOS IMOBILIÀRIOS S.A., at the price of R$7,08 per of share, resulting in a capital increase of R$2,298,936,260.10, a 37.00% increase over the previous capital stock.
On June 25, 2010, our board of directors approved the issuance of 36,272 new shares in connection with the exercise of stock options granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7.17 per share for the shares of the first program, monetarily adjusted as established therein, and at the price of R$11.81 for the shares of the second program. The issuance resulted in a capital increase of R$428,000, a 0.01% increase over the previous capital stock.
On June 30, 2010, our board of directors approved the issuance of 1,887,633 new shares in connection with the exercise of stock options granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7.17 per share for the shares of the first program, monetarily adjusted as established therein, and at the price of R$11.81 for the shares of the second program. The issuance resulted in a capital increase of R$13,89 million, a 0.3% increase over the previous capital stock.
On July 09, 2010, our board of directors approved the issuance of 360,000 new shares in connection with the exercise of stock options granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7.23 per share for the shares of the first program, monetarily adjusted as established therein, and at the price of R$11.91 for the shares of the second program. The issuance resulted in a capital increase of R$2,6 million, a 0.1% increase over the previous capital stock.
On July 14, 2010, our board of directors approved the issuance of 676,016 new shares in connection with the exercise of stock options granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7.23 per share for the shares of the first program, monetarily adjusted as established therein, and at the price of R$11.91 for the shares of the second program. The issuance resulted in a capital increase of R$5,6 million, a 0.1% increase over the previous capital stock.
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On July 26, 2010, our board of directors approved the issuance of 846,295 new shares in connection with the exercise of stock options granted under the stock plan. The new shares were fully subscribed by the beneficiaries of the Stock Option Plan at the price of R$7.23 per share for the shares of the first program, monetarily adjusted as established therein, and at the price of R$11.91 for the shares of the second program. The issuance resulted in a capital increase of R$6,4 million, a 0.2% increase over the previous capital stock.
On November 10, 2010, in the Shareholder´s General Meeting, it was approved the split of all common shares of the Company, so that each common share issued by the Company was split into two common shares, with the same rights and benefits of the pre-existing common shares. Each Depositary Share of the Company represents two common shares.
Except for the public offerings occurred on January and oOctober of 2007, and October’s 2009 offering, our capital stock increases was held in a particular way.
17.3. Splits, grouping and warrants 10 :
The tables below refer to the last three fiscal exercises.
Split of shares:
Approval Shares before approval Shares after approval 09.09.2009 155.197.348 310.394.696 10.11.2010 553,121,087 1,106,242,174
17.4. Capital reduction:
a. Deliberation
06.01.2005 and 12.01.2005.
b. Reduction
06.01.2005 and 12.01.2005.
c. Total amount of reduction
R$8.424.601,00 and R$3.091.463,00.
d. Cancelled shares due to the reduction, separated by class and type
Amount of shares Type 8.424.601 Common 3.091.463 Common
e. Refunded value per share
R$1,00.
f. Ways of refund
- if it is on assests, description of the assests
10 When the annual presentation of the form of reference, the information should refer to the last three fiscal years. Upon presentation of the form of reference on behalf of the application for registration of public distribution of securities, the information should refer to the three fiscal years and the current fiscal year. 180 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
The amount that was transfered to the FIP PDG I, in shares by the Company in the society Giardino Desenvolvimento Imobiliário S.A. and through a way of shares transfer of shares of Queiroz Galvão Cyrela Veneza Empreendimento Imobiliário S.A
g. Percentage represented by the reduction versus the capital stock right after capital reduction
90% and 72%.
h. Reason for Reduction
Excessive capital stock on the date.
17.5. Other relevant information
There are no other relevant information about this item.
18 SECURITIES
18.1. Description of each class and type of shares issued
a. Dividends Rights
Amounts Available for Distribution
the Company’s Board of Directors is required to advise on how to allocate our net income for the preceding fiscal year. The allocation is subject to approval by our shareholders.
The Brazilian Corporate Law defines “net income” for any fiscal year as the results of the Company in a fiscal year after the deduction of accrued losses, the provisions for income and social contribution taxes for that year, accumulated losses from prior years, and any amounts allocated to profit sharing payments to the employees and managers.
The calculation of net income and allocations to reserves for any year, as well as the net income, are determined on the basis of our audited consolidated financial statements prepared in the preceding fiscal year.
In accordance with the Brazilian Corporate Law, the net income, as adjusted, shall be available for distribution, to the shareholders in any fiscal year, and it, could be:
• reduced by any amounts allocated to the legal reserve;
• reduced by any amounts allocated to the statutory reserves, if any;
• reduced by any amounts allocated to the contingency reserve, if any;
• reduced by any amounts allocated to the retained profit reserve, if any;
• reduced by any amounts allocated to the unrealized profit reserve;
• increased by reversed contingency reserve amounts from prior years; and
• increased by amounts allocated to the unrealized profit reserve, upon their realization and if not absorbed by subsequent losses.
Any allocation of our profits to the statutory and retained profit reserves shall not be approved, in any fiscal year, to harm the payment of the minimum mandatory dividends.
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Reserve Accounts
According to the Brazilian Corporate Law, companies usually maintain two principal types of reserve accounts: (i) profit reserve accounts; and (ii) capital reserve accounts.
Profit Reserves: The profit reserve accounts are comprised of the legal, contingency, unrealized profit, retained profit and statutory reserves. As of September 30, 2009, our profit reserve amounted to R$152.7 million.
The balance of the profit reserves, except the balances of contingency, tax incentive and unrealized profit reserves may not exceed the amount of our capital stock. In case of excess, our shareholders shall decide at a shareholders' meeting whether the excess amount will be used to pay or increase our capital stock or pay dividends.
Legal Reserve: Under the Brazilian Corporate Law, we are required to maintain a legal reserve to which we must allocate 5.0% of our net income for each fiscal year until the aggregate amount of the reserve became equals to 20.0% of our share capital. However, we are not required to make any allocations to our legal reserve in a year in which the legal reserve, when added to our established capital reserves, exceeds 30.0% of our share capital. Any net loss may be offset with the amounts allocated to the legal reserve. The amounts allocated to such reserve must be approved by our shareholders in a shareholders' meeting, and may only be used to increase our share capital or to offset losses. As of September 30, 2009, our legal reserve was R$13.7 million.
Contingency Reserve : Under the Brazilian Corporate Law, a percentage of our net profits may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years if their amount may be estimated. The proposal of our Board of Directors with respect to the allocation of a percentage of our net profits to a contingency reserve shall indicate the reason for the eventual loss and justify the constitution of the reserve. Any amount so allocated must be reversed in the fiscal year in which a loss that had been anticipated fails to occur as projected or charged off in the event that the anticipated loss occurs. The allocations to the contingency reserve are also subject to approval of our shareholders in a shareholders' meeting. As of September 30, 2009, we did not have a contingency reserve.
Tax Incentive Reserve : Under the Brazilian Corporate Law, the Board of Directors may propose at a shareholders' meeting to allocate a portion of our net income resulting from donations or government grants for investments to a tax incentive reserve. The amount of this reserve may be excluded from the calculation of the mandatory dividends. As of September 30, 2009, we did not have a tax incentive reserve.
Retained Profit Reserve: Under the Brazilian Corporate Law, our shareholders may decide at the annual shareholders' meeting to retain a portion of our net profits, as provided for in a capital expenditure budget that has been previously approved. As of September 30, 2009, our retained profit reserve was R$152.7 million.
Statutory Reserves: We are permitted by the Brazilian Corporate Law to allocate part of our net income to a discretionary reserve account that may be established in accordance with our bylaws, provided that we: (i) accurately and completely indicate the purpose of each reserve; (ii) set the criteria to determine the annual portion of net income that will be allocated to each reserve; and (iii) set the maximum limit of each reserve. The allocation of net income to statutory reserves may not be made to the detriment of the payment of the mandatory dividend. As of September 30, 2009, we did not have any statutory reserve.
Capital Reserve: Pursuant to the Brazilian Corporate Law, the capital reserves are comprised of goodwill paid in connection with the subscription of our shares, special reserve of goodwill in incorporation, sale of beneficiary interests and sale of subscription bonus. According to the Brazilian Corporate Law, the capital reserve may be used, among other things, to: (i) absorb losses exceeding accumulated profits and profits reserves; (ii) redemption, reimbursement, or purchase of our own shares; and (iii) allocation to our capital stock. As of September 30, 2009, our capital reserve was R$132.0 million. 182 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Mandatory Dividends
The Brazilian Corporate Law requires that the bylaws of a Brazilian company specify a minimum percentage of the available profits for the annual distribution of dividends, known as mandatory dividend, which must be paid to shareholders as either dividends or interest on shareholders' equity. In the event the bylaws does not provide a mandatory dividend, the Brazilian Corporate Law establishes that the mandatory dividends shall not be less than 25.0% of our net income. According to Law No. 9,249 of December 26, 1995,as amended from time to time, interest on shareholders' equity may be distributed and included in the amount due as mandatory dividends.
Pursuant to our bylaws, at least 25% of the adjusted net income of the previous fiscal year, determined in accordance with Brazilian GAAP and adjusted as determined by the Brazilian Corporate Law, shall be distributed as mandatory dividends.
The annual declaration of dividends depends on approval by the shareholders as well as several other factors, such as operational results, financial conditions, cash needs, future profitability and other factors that the shareholders and the board of directors deem relevant. The Brazilian Corporate Law allows, however, a company to suspend such dividend distribution if its board of directors reports to the annual shareholders' meeting that the distribution would not be advisable given the company's financial condition. The board of auditors, if one is in place, reviews any suspension of the mandatory dividend. In addition, the board of directors of publicly held corporations should submit a report to the CVM stating the reasons for the suspension, within five days from the shareholders' meeting. Net income not distributed by virtue of a suspension is allocated to a separate reserve and, if not absorbed by subsequent losses, is required to be distributed as dividends as soon as the financial condition of the company should permit such payment.
According to the Brazilian Corporate Law, the shareholders' meeting of a publicly held corporation may approve the payment of dividends in an amount lower than the mandatory dividends or retain the total amount of net income, exclusively for raising funds through outstanding debentures which are not convertible in shares, provided that no shareholder is against such proposal at the shareholders' meeting.
The mandatory dividend may also be paid as interest on shareholders' equity, and may be deducted as expenses for purposes of income and social contribution taxes.
Dividends
We are required by the Brazilian Corporate Law and our bylaws to hold an annual shareholders' meeting no later than the forth month of each year, at which time, among other subjects, our shareholders shall approve the allocation of the results of operations of the past fiscal year and the distribution of an annual dividend. The payment of annual dividends is based on our consolidated, audited financial statements of the prior fiscal year.
According to Brazilian corporate Law, any holder of shares at the time a dividend is declared is entitled to receive dividends. Under the Brazilian Corporate Law, dividends are required to be paid within 60 days following the date on which the dividend is declared, unless the shareholders' resolution establishes another payment date, which, in any event, must occur before the end of the year in which the dividend is declared. Unclaimed dividends do not accrue interest, are not adjusted in relation to inflation and revert in our favor if not claimed within three years from the date in which they are made available to the shareholders.
Our Board of Directors may also declare intermediate dividends based on annual or semi-annual financial statements, as permitted by our bylaws. The Board of Directors may also declare dividends based on financial statements prepared in our semester or trimester, if permitted by our bylaws. The total amount of dividends paid in each semester cannot exceed the amounts accounted for in our capital reserve account. Any payment of 183 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
intermediate dividends may be set off against the amount of mandatory dividends relating to the net profits earned in the year in which the intermediate dividends were paid. As permitted by our bylaws, our intermediate dividends may also be paid from profit reserve accounts based on any period of time, which will be considered as an anticipation from the minimum mandatory dividend.
Interest on Shareholder’s Equity
Under Brazilian tax legislation in effect since January 1, 1996, Brazilian companies are authorized to pay interest on shareholders' equity to holders or beneficiaries of shares, and to treat those payments as a deductible expense for purposes of calculating corporate income tax and, since 1997, the social contribution tax, to the extent permitted by applicable law.
The amount of the tax deduction in each year is limited to the greater of (i) 50% of our net income (after the deduction of any allowances for social contribution tax but before taking into account allowances for income tax and the interest on shareholders' equity) for the period in respect of which the payment is made and (ii) 50% of our retained profits and profit reserve at the beginning of the relevant period. The rate applied in calculating interest on shareholders' equity cannot exceed the pro rata die variation of the Brazilian long term interest rate (Taxa de Juros de Longo Prazo—TJLP).
Any payments of interests on shareholders' equity to the shareholders, whether Brazilian residents or not, are subject to a withholding income tax of 15%, provided that such rate shall be 25% if the beneficiary of the interests is a resident of a tax haven (i.e., a country with no income tax or which its maximum percentage is fixed bellow 20%, or if the local applicable law imposes restrictions to the disclosure of the shareholders composition or the owners of the investment).
The amount paid as interest on shareholders' equity after deducting the income tax may be set off against the mandatory dividends. According to applicable law, we are required to pay to our shareholders an amount sufficient to ensure that the net amount they receive in respect of interest on shareholders' equity, after payment of any applicable withholding tax, plus the amount of declared dividends, is at least equivalent to the minimum mandatory dividend amount. The interest on the shareholders' equity reverts in our favor if not claimed within three years after the date in which they were made available to the shareholders, as in the case of dividends.
b. Voting Rights
Each common share entitles its holder to one vote at any annual or extraordinary shareholders' meeting
c. Convertibility into another class or type of share:
The Company does not have shares that can be converted into other classes or type.
d. Rights of capital reimbursement
In case of liquidation of the Company, the shareholders will receive payments for the repayment of capital in proportion to their participation in the capital stock, after the payment of all liabilities in proportion to their respective shares in the total shares issued by the Company.
Any of the dissenting shareholders of the Company of certain resolutions passed in the General Shareholders’ Meeting may withdraw from the Company, through reimbursement of the value of their shares based on the criteria described in the Corporations Law. Pursuant to the Corporations Law, the right of withdrawal may be exercised, among others, in the following circumstances: a. Spin-off of the Company (when it causes: (i) changes of the corporate purpose, unless when the asset split is 184 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
poured into a company whose main activity coincides with the result of our corporate purpose of the Company; (ii) reduces the minimum mandatory dividend to be distributed to the shareholders of the Company; or (iii) the Company's participation in a group of companies as defined in the Corporations Act); b. Reduction of the mandatory dividend; c. Change in corporate purpose; d. Merger or consolidation of the Company to another company (in the particular situations as described below); e. Participation in the Company's group of companies (defined in the Corporations Act, and in specific situations, as described below); f. Incorporation of actions involving the Company, pursuant to Article 252 of the Corporations Act by another Brazilian company, to become a wholly owned subsidiary thereof; g. Corporate Transformation; and h. Acquisition of the control of any company if the purchase price exceeds the limits set forth in paragraph 2 of Article 256 of Brazilian Corporate Law.
In cases of (a) a consolidation or a merger of the Company to another company; or (b) Company's participation in a group of companies (as described in the Corporations Act), the Company's shareholders will not be entitled to withdraw if their actions have the following characteristics: (1) have liquidity to integrate the general index of the BM&FBOVESPA, or content any other stock exchange as defined by the CVM; and (2) have spread in the market, so that the controlling shareholders, the parent company or other companies under common control hold less than half the shares of a type or class object of the withdrawal right. The withdrawal right must be exercised within 30 days from the publication of the record of the General Shareholders’ Meeting, which approved the act that made the recess rise. Additionally, we have the right to reconsider any decision that has overburdened right to withdraw within ten days following to the expiration of that right, if we understand that payment of the redemption price of the shares to the dissenting shareholders would jeopardize our financial stability.
In case of exercising its right of redemption, the shareholders shall be entitled to receive the net asset value of their shares, based on last balance sheet of the Company approved by the General Shareholders’ Meeting. If, however, the decision which caused the withdrawal right has occurred 60 days after the date of the last approved balance sheet, the shareholders may request, together with the reimbursement, raising special balance sheet date in complying with the deadline of 60 days to determine the asset value of its shares. In this case, the Company shall immediately pay 80% of the reimbursement that was calculated based on last balance sheet approved by our shareholders and the balance within 120 days from the date of the General Shareholders’ Meeting. The Company's Bylaws provides that the economic value will be used in the case of exercising the right of withdrawal if it is below the asset value.
e. Right to participate in public offer for sale of control
According to the rules of Novo Mercado, the sale of control, either by a single operation, and through successive operations, shall be contracted under a condition precedent or termination of the purchaser undertakes to effect a takeover bid from other shares of other shareholders in the same terms and conditions granted to the selling controlling shareholder, observing the conditions and terms laid down in the existing legislation and the rules of the Novo Mercado, in order to assure equal treatment to selling, controlling shareholder and it must be delivered to BM&FBOVESPA statement containing the price and other conditions of an operation of transference of our control. The public offering is yet required: a. When onerous assignment of subscription rights for shares and other securities or rights with respect to securities that are convertible into shares, which may result in the sale of the Company's control; 185 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
b. When the driver is a company, the control of such parent company is transferred, and in this case the selling controlling shareholder will be obliged to declare to BM&FBOVESPA the value assigned to the Company in such sale and attach documentation supporting this value; and c. When the one who already holds shares of the Company acquires controlling power, in view of a private share purchase agreement. In this case, the acquiring shareholder will be obliged to make a public offer for acquisition of shares by the same terms and conditions offered to the selling shareholder and reimburse the shareholders who have purchased shares on the stock exchange in the six months preceding the date of sale of control. The amount of compensation is the difference between the price paid to the selling controlling shareholder and the amount paid on the stock exchange for shares in that period, duly updated.
The Rules of Novo Mercado also provides that the selling controlling shareholder may not transfer the ownership of its shares and the Company may not register any transfer of shares representing its control, while the acquiring shareholder and those who will hold such a control does not endorse the Statement of Consent from drivers under the Novo Mercado rules.
The buyer, when necessary, should take reasonable steps to recover within six months, the minimum percentage of 25% of the shares that are outstanding in the market.
f. Restriction to negotiation
There is not.
g. Conditions to alternate assured rights by such securities
Pursuant to the Brazilian Corporate Law, not the bylaws neither the shareholder’s decisions in Shareholders’’ Meeting can cause the shareholders to be restricted of the following rights:
a. to participate in the distribution of dividends, in proportion to their respective interest;
b. to participate in the distribution of remaining assets upon our termination, in proportion to their respective interest;
c. to preemptive rights to subscribe new shares, convertible debentures and subscription bonus (bonus de subscrição), except under limited circumstances provided for by the Brazilian Corporate Law, as described in item “Preemptive Rights” in this Section;
d. to monitor the management of our activities, in accordance with the Brazilian Corporate Law;
e. to vote in the shareholder's meeting; and
f. to leave the Company as provided by the Brazilian Corporate Law.
h. Other relevant characteristics There are no other relevant characteristics.
18.2. Description, if there is any, of the statutory rules that limit the shareholder’s voting right or that cause them to make public offerings
See item 18.1(e) above.
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18.3. Description of the exceptions and suspensive clauses including personal and political rights under the bylaws
There is not.
18.4. The table bellow contains the information and the trading volume, as well as the highest and lowest prices of the securities traded on stock exchanges and organizes markets, in each quarter of the 3 lasts fiscal years
BM&FBOVESPA Three month period ended Minimum Maximum Trading (R$) March 2007 5,5 7,1 357.331.411
June 2007 5,4 10,6 435.859.746
September 2007 9,5 13,1 463.640.038
December 2007 11,2 14,1 542.215.045
March 2008 9,2 13,2 576.444.498
June 2008 9,9 13,5 817.257.680
September 2008 5,8 11,9 947.409.632
December 2008 4,0 6,8 425.273.762
Marrch 2009 5,0 6,8 444.617.078
June 2009 6,6 11,9 1.299.907.548
Sepetember 2009 9,9 14,9 1.942.149.716
December 2009 14,0 18,9 1.036.935.990
March 2010 14,8 17,7 1.396.378.537
June 2010 12,3 17,1 5.043.916.030
September 2010 14,8 22,50 4,968,130,420
18.5. Description of other securities that are not shares
On September 30, 2010, securities issued by the Company, executing shares are: simple non convertible debentures from the Company’s first issuance; (ii) subscription bonus; (iii) certificates of receivable securities; (iv) simple, secured, convertible debentures of the 3 rd Issuance of the Company; (v) simple, convertible debentures of the 4 th Issuance of the Company; and (vi) simple, secured, convertible debentures of the 5 th Issuance of the Company.
First Issuance of Simple Debentures
On July 1st , 2007, we issued 25,000 simple, non-convertible, unsecured, registered, single-series debentures, each with a nominal value of R$10,000.00, for a total amount of R$250.0 million for public subscription.
The debentures shall mature in seven years as from the issuance date, and it shall be remunerated by the CDI rate plus 0.9% per year. The total principal amount is due to be paid in four annual installments beginning in the 48th month from the issuance date, or on (July 1, 2011). The debentures from the first issuance are not subject to early redemption..
Pursuant to the terms of the indenture of our 1 st Issuance of debentures, an early maturity of such debentures will occur in the event of distribution of dividends, payments of interest on shareholders' equity or the completion of
187 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
any other payments to the shareholders, if the Company is in; default of any of its obligations, as set forth in the indenture, not including, however, the payment of minimum mandatory dividends under the Article 202 of Brazilian Corporate Law and the rules of Novo Mercado .
The debentures of our 1st Issuance contain clauses determining maximum indebtedness levels and EBITDA ratio, based on our consolidated financial statements, as described below:
• the ratio between (A) the sum of net debt and unpaid properties minus SFH debt; and (B) shareholders' equity shall always be equal to or less than 0.70;
• the ratio between (A) the sum of total unallocated revenue and properties held for sale; and (B) the sum of net debt, unpaid properties and unallocated expenses shall always be equal or higher to 1.30, or less than zero;
• the ratio between (A) EBIT; and (B) net expenses shall always be equal or higher than 1.50, or less than zero, and also the EBIT shall always be positive.
Pursuant to the terms of Article 60 of the Brazilian Corporate Law, the total value of debentures issued cannot be greater than our total capital stock. In addition, the debentures from the 1st Issuance contain: (i) a restriction on payments of dividends above a minimum of 25% for such time as we are in default of our obligations established in the indenture; (ii) a restriction on any sale, cessation or transfer of shares made by us or our subsidiaries that is equal to or greater than 10% of the Company or that of our subsidiaries, whose proceeds will not be fully utilized for the reduction of debt; and (iii) provisions limiting our indebtedness and EBITDA indices, based on our consolidated financial statements.
The 1 st Issuance debentures have clauses in case of prepayment in certain events, such as (i) an individual amount of R$7.0 million or an aggregate amount equivalent to 2.0% of our shareholders' equity; (ii) noncompliance with any unappealable judicial decision determining the payment of an individual or aggregate amount equivalent in reais to 2.0% of our shareholders' equity; (iii) default or mandatory prepayment of any financial obligations in the individual or aggregate amount equivalent to R$5.0 million; and (iv) the approval of a consolidation, spin-off, merger or any form of corporate reorganization involving us or our subsidiaries, except if the consolidation, spin-off or merger (a) complies with the requirements of Article 231 of the Brazilian Corporate Law; or (b) in case a top international rating agency grants new rating for us or our first issuance, if such new rating is not lower than the original one; or (c) involves companies that hold interest in CHL or Goldfarb, among others.
The trustee of the debentures of the first issuance, Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários., receives a fee of R$7.500,00 – per quarter.
Second issuance of convertible debentures
On April 30, 2009, we concluded the second private issuance of debentures, issuing 27,600 simple, convertible, registered, secured, single-series debentures, each with a nominal value of R$10,000.00, for a total amount of R$276.0 million. We subsequently cancelled 142 unsubscribed debentures pursuant to a resolution of the board of directors held on June 30, 2009. The debentures will mature in 42 months as from the issuance date, or the maturity date, and the certificates bear annual interest at the CDI rate plus 2.0%. The total principal amount is due to be paid on October 15,2010.
Our repayment obligations under these debentures are secured by a pledge of 100% of the common shares issued by CHL, and the debentures are considered senior indebtedness of the Company, with priority over our assets in the event of liquidation.
Each debenture is individually convertible into a number of common shares according to a ratio of the division of the face value of each debenture by the price of R$17.00 per common share. The conversion may occur: (i) at any 188 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
time until the 30 th business day before the maturity date, at the sole discretion of the respective debenture holder; or (ii) after a two year period as from the issuance date, at our sole discretion, according to the conditions provided in the respective indenture.
We appointed Planner Trustee DTVM Ltda. as the trustee of the second issuance. Among other duties, the trustee must: (i) declare, in the terms of the indenture, the anticipated maturity of the debentures in case of default, including the principal amount and other amounts due; (ii) liquidate the collateral granted pursuant to the terms of the indenture, applying the proceeds to pay the holders of the debentures; and (iii) take all necessary measures to ensure such payment to the holders of the debentures.
On October 21, 2009, we announced the early redemption of all of the outstanding debentures from our second issuance, with the intention to early convert these debentures into our common shares. The holders of the debentures requested either their conversion into shares or a cash payment. Consequently, there are no longer any debentures from our second issuance outstanding.
Third issuance of non-convertible debentures with secured collateral
On August 31, 2009, the shareholders meeting approved the 3rd Issuance of non convertible debentures into shares, secured and single-series debentures. There were issued 300 debentures, the nominative form and scriptural, each with a face value of R$1.0 million, for a total amount of R$300.0 million. The deed of the 3rd Issuance of Debentures was concluded on September 11, 2009, with the Fundo de Garantia por Tempo de Serviço and the debentures will mature in five years from the issuance. The payment will have 36 months of grace period and after that period, it will be held twice a year. Interest will be paid semiannually.
The debentures bear interest at the Referential Rate (Taxa Referencial), or TR. as published by the Central Bank, calculated on a pro rata basis and added to an initial interest rate of 8.75% per year, on a 252 business days.
The proceeds from such debentures will be allocated to the financing of the construction of residential units classified within the scope of the SFH.
The Company's obligations of the 3 rd Issuance of debentures will be primarily granted by fiduciary assignment of receivables of The SPE’s that are developing projects to be financed by the 3 rd Issuance of Debentures, as well as the fiduciary guarantee of the issuance quotes of such SPE.
Under the indenture of third issuance debentures there will be an advance maturity in case of dividends distribution, interest payments on capital or making any other payments to the shareholders. If the Company is in default with any of its obligations under the indenture, there will be a payment of the minimum mandatory dividend, under article 202 of the Brazilian Corporate Law and the Rules of the Novo Mercado .
The debentures of our third issuance contain provisions limiting our ability to incur indebtedness beyond certain thresholds, and restricting our debt to EBITDA ratio, based on our consolidated financial statements, as described below:
• the ratio between (A) the sum of net debt and unpaid properties minus SFH debt and (B) shareholder’s equity shall always be equal to or less than 0,70;
• the ratio between (A) the sum of total unallocated revenue and properties held for sale and (B) the sum of net debt, unpaid properties and unallocated expenses shall always be equal or higher to 1.30, or less than zero; and
• the ratio between (A) EBITDA and (B) net expenses shall always be equal or higher than 1.50, or 189 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
less than zero, and also the EBITDA shall always be positive.
Pursuant to the terms of Article 60 of the Brazilian Corporate Law, the total value of debentures issued cannot be greater than our total capital stock. In addition, the debentures from the third issuance contain: (i) a restriction on payments of dividends above a minimum of 25% for such time as we are in default of our obligations established in the indenture; (ii) a restriction on any sale, cessation or transfer of shares made by us or our subsidiaries that is equal to or greater than 10% of our shareholders equity or that of our subsidiaries, whose proceeds will not be fully utilized for the reduction of debt; and (iii) provisions limiting our indebtedness and EBITDA indices, based on our consolidated financial statements, as described above.
Pursuant to the terms of the indenture of our 3 rd issuance of debentures, there will be an early maturity in the event of: (i) repeated claims against us with an individual amount higher than the equivalent to 1.0% of our shareholder's equity or an aggregate amount equivalent to 2.0% of our shareholders' equity; (ii) the occurrence of any sale, assignment or transfer of our assets whose value is equal to or higher than 10.0% of our shareholders' equity; and (iii) the approval of a consolidation, spin-off, merger or any form of corporate reorganization involving us or our material subsidiaries, except if the consolidation, spin-off or merger (a) complies with the requirements of Article 231 of the Brazilian Corporate Law, or (b) in case a top international rating agency grants new rating for us or our third issuance, if such new rating is not lower than the original one; or (c) involves companies that we hold interest in, or a company whose primary asset is interest in a company that we also hold interest in; or (d) that does not involve the special purpose vehicles whose shares were given to guarantee our repayment obligations related to the third issuance of debentures, or finally (e) if we are the merging company and Goldfarb or CHL is the merged company.
The redemption may occur until such time as the principal is paid, in full or in part, but at a minimum of 25% of the debt balance of the outstanding debentures. The redemption premium varies depending on when we exercise the redemption option, from a minimum of 0.5% and a maximum of 1.5% above the total value of the issuance, as calculated by the trustee.
The trustee of the debentures of the third issuance, Oliveira Trust DTVM S.A., receives an initial payment of R$30.000 and bi-annual payments of R$60,000.
Simple Debentures of the 4 th Issuance
Under the Simple Debentures of the 4 th Issuance of the Company occurred on August 10, 2010, not Convertible into shares, without guarantee, in a single series, 280 debentures were issued not convertible into shares, nominative, with a face value of R$1.0 million, totalizing the amount of R$280,0 million.
The debentures mature in 6 years and are paid at a rate equivalent to the CDI rate plus 2.4% per year. The annual amortization will be in 16 quarterly installments with failure period of 27 months from the date of the issuance. The Company may make, at any time, extraordinary amortization or early redemption optional, partial or total, as appropriate, the balance of the Unit Face Value of the Debentures.
Under the terms of debentures of the 4 th Issuance will be acceleration in the case of distribution of dividends, interest payments on own capital or making any other payments to shareholders, if the Company is in default with any of its obligations under the deed of issuance, exception, however, the payment of the minimum mandatory dividend referred to in Article 202 of the Law 6.404/76 and the Regulation of Novo Mercado .
The debentures of the 4 th Issuance do not have clauses determining maximum levels of indebtedness and EBITDA levels.
190 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
The debentures of the 4 th Issuance have clauses of early maturity in the event of certain events, such as (i) legitimate protest of securities against the Company in an individual amount or aggregate of R$10 million, (ii) a default or early payment of any financial obligations value, individually or in aggregate, exceeding R$10 million, (iv) if the incorporation, spin-off or merger of the Company, without the prior approval of the Debenture holders, as provided in Article 231 of the Law 6.404/76, among others.
The Trustee of the debentures of the 4 th Issuance is the GDC Partners Serviços Fiduciários DTVM Ltda., which receives quarterly payment of R$12,500.00.
Fifth issuance of non-convertible debentures with secured collateral
On August 31, 2010, the Company issued its 5 th Issuance of non convertible debentures into shares, secured and single-series debentures. There were issued 600 book-debentures, in the nominative form, each with a face value of R$1.0 million, for a total amount of R$600.0 million (“5th Issuance of Debentures ”). The deed of the 5 th Issuance of Debentures was signed at the same date, with the Fundo de Garantia por Tempo de Serviço and the debentures will mature in five years from the issuance. The payment will have 36 months of grace period and after that period, it will be held twice a year. Interest will be paid semiannually.
The debentures bear interest at the Referential Rate (Taxa Referencial), or TR. as published by the Central Bank, calculated on a pro rata basis and added to an initial interest rate of 8.16% per year, on a 252 business days.
The proceeds from such debentures will be allocated to the financing of the construction of residential units classified within the scope of the SFH.
The Company's obligations of the 5 th Issuance of Debentures will be primarily granted by fiduciary assignment of receivables of the SPE’s that are developing projects to be financed by the 3 th Issuance of Debentures, as well as the fiduciary guarantee of the issuance quotes of such SPE.
Under the deed of 5 th Issuance of Debentures there will be an advance maturity in case of dividends distribution, interest payments on capital or making any other payments to the shareholders. If the Company is in default with any of its obligations under the deed, provided, however, the payment of the minimum mandatory dividend, under article 202 of the Brazilian Corporate Law and the Novo Mercado rules.
The 5th Issuance of Debentures contain provisions limiting our ability to incur indebtedness beyond certain thresholds, and restricting our debt to EBITDA ratio, based on our consolidated financial statements, as described below:
• the ratio between (A) the sum of net debt and unpaid properties minus SFH debt and (B) shareholder’s equity shall always be equal to or less than 0,70;
• the ratio between (A) the sum of total unallocated revenue and properties held for sale and (B) the sum of net debt, unpaid properties and unallocated expenses shall always be equal or higher to 1.30, or less than zero;
• the ratio between (A) EBITDA and (B) net expenses shall always be equal or higher than 1.50, or less than zero, and also the EBITDA shall always be positive.
Pursuant to the terms of Article 60 of the Brazilian Corporate Law, the total value of debentures issued cannot be greater than our total capital stock. In addition, the debentures from the fifith issuance contain: (i) a restriction on payments of dividends above a minimum of 25% for such time as we are in default of our obligations established in the Deed of Issuance; (ii) a restriction on any sale, cessation or transfer of shares made by us or our subsidiaries that is equal to or greater than 10% of our shareholders equity or that of our subsidiaries, whose 191 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
proceeds will not be fully utilized for the reduction of debt; and (iii) provisions limiting our indebtedness and EBITDA indices, based on our consolidated financial statements, as described above.
Pursuant to the terms of the Deed Of Issuance of our 5 th Issuance of Debentures, there will be an early maturity in the event of: (i) repeated claims against us with an individual amount higher than the equivalent to 1.0% of our shareholder's equity or an aggregate amount equivalent to 2.0% of our shareholders' equity; (ii) the occurrence of any sale, assignment or transfer of our assets whose value is equal to or higher than 10.0% of our shareholders' equity; and (iii) the approval of a consolidation, spin-off, merger or any form of corporate reorganization involving us or our material subsidiaries, except if the consolidation, spin-off or merger (a) complies with the requirements of Article 231 of the Brazilian Corporate Law, or (b) in case a top international rating agency grants new rating for us or our 5th Issuance of Debentures, if such new rating is not lower than the original one; or (c) involves companies that we hold interest in, or a company whose primary asset is interest in a company that we also hold interest in; or (d) that does not involve the special purpose vehicles whose shares were given to guarantee our repayment obligations related to the third issuance of debentures, or finally (e) if we are the merging company and Goldfarb or CHL is the merged company.
The redemption may occur until such time as the principal is paid, in full or in part, but at a minimum of 25% and maximum of 90% of the debt balance of the outstanding debentures. The redemption premium varies depending on when we exercise the redemption option, from a minimum of 0.5% and a maximum of 1.5% above the total value of the issuance, as calculated by the trustee.
The trustee of the debentures of the fifith issuance, Planner Trustee DTVM S.A., receives an initial payment of R$40.000 and quarterly payments of R$27,000.
Rating
On August 2010, Standard & Poors upgraded the corporate credit rating of our debentures from brBBB+ to brA , which we have maintained up to the date hereof. The Outlook for the corporate credit ratings is Stable.
On August 26, 2010, Moody's Investors Service (Moody's) has assigned for the first time corporate ratings Ba2 in local scale and Aa3.br in Brazilian national scale to the Company. The outlook for the ratings is stable.
Subscription Bonus
In accordance with the merger of MP Holding 3 Ltda. and CHL LXX Incorporacoes Ltda., on March 30, 2008 and April 29, 2008, respectively, we issued non-redeemable and non-negotiable Subscription Bonus in four series, consisting of ten class 1 Subscription Bonus and four class 2 Subscription Bonus each. There is no possibility of redemption of this issuance of Subscription Bonus. The series A Subscription Bonus of both classes were previously exercised. The holders of our subscription bonus will have the right to subscribe registered common shares without par value issued by us, subject to the terms and conditions set forth in the tables below:
Class 1 Subscription Bonus
Nº OF SHARES TO BE ISSUED EXERCISE PERIOD Shall be defined based on our and Beginning End Goldfarb’s combined net income for Date of our annual shareholders´ 90 days from the date of Series A 2008, with deduction of 35% with meeting approving the financial beginning of exercise of the (Exercised) respect to the multiple of our net income, statements as of and for the year Subscription Bonus of this 192 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
Nº OF SHARES TO BE ISSUED EXERCISE PERIOD reduced by the number of shares already ended on December 31, 2008. series. delivered in view of the merger.
Beginning End Shall be defined based on our and Date of our annual shareholders’ 90 days from the date of Goldfarb’s combined net income for meeting approving the financial beginning of exercise of the Series B 2009, with deduction of 35% with statements as of and for the year Subscription Bonus of this (Exercised) respect to the multiple of our net income. ended on December 31, 2009. series.
Beginning End Shall be defined based on our and Date of our annual shareholders’ 90 days from the date of Goldfarb’s combined net income for meeting approving the financial beginning of exercise of the 2010, with deduction of 35% with statements as of and for the year Subscription Bonus of this Series C respect to the multiple of our net income. ended on December 31, 2010. series.
Beginning Defined based on our and Goldfarb’s End Shall be defined based on our and combined net income 90 days from the date of Goldfarb’s combined net income for for 2011, with deduction of 35% beginning of exercise of the 2011, with deduction of 35% with with respect to the multiple of our Subscription Bonus of this Series D respect to the multiple of our net income. net income. series.
Class 2 Subscription Bonus
Nº OF SHARES TO BE ISSUED EXERCISE PERIOD Shall be defined based on our and CHL’s Beginning End combined net income for 2008, with Date of our annual shareholders’ 90 days from the date of deduction of 35% with respect to the meeting approving the financial beginning of exercise of the multiple of our net income, reduced by statements as of and for the year Subscription Bonus of this Series A the number of shares already delivered in ended on December 31, 2008. series. (Exercised) view of the Incorporation.
Beginning End Shall be defined based on our and CHL’s Date of our annual shareholders’ 90 days from the date of combined net income for 2009, with meeting approving the financial beginning of exercise of the Series B deduction of 35% with respect to the statements as of and for the year Subscription Bonus of this (Exercised) multiple of our net income. ended on December 31, 2009. series.
Beginning End Shall be defined based on our and CHL’s Date of our annual shareholders’ 90 days from the date of combined net income for 2010, with meeting approving the financial beginning of exercise of the deduction of 35% with respect to the statements as of and for the year Subscription Bonus of this Series C multiple of our net income. ended on December 31, 2010. series.
Beginning End Shall be defined based on our and CHL’s Date of our annual shareholders’ 90 days from the date of combined net income for 2011, with meeting approving the financial beginning of exercise of the deduction of 35% with respect to the statements as of and for the year Subscription Bonus of this Series D multiple of our net income. ended on December 31, 2011. series.
Depositary Receipts Program Level 1
October 29, 2008, we submitted an application to the CVM for registration of the Sponsored Depositary Receipts Program – Level 1 for purposes of trading American Depositary Receipts backed by our common shares on the U.S. securities over-the-counter market. For this purpose, Citibank DTVM S.A. is the custodian and Citibank, N.A. is the depositary in The United States. Each depositary receipt represents two common shares. As of the date of this Reference Form, 141,589 depositary receipts had been issued.
CRI Issuance 193 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
On July 2009, we issued 45 CRIs in the amount of R$1.0 million each, with a maturity date in three years. The issuance was carried out by our subsidiary PDG Companhia Securitizadora, guaranteed by us and includes 80.0% of the receivables from units under construction. The yield was fixed at a rate of 110% of the CDI (from the first through the twenty-fourth month) and 115% of the CDI (from the twenty-fifth through the thirty-sixth month). The holders of CRIs have a put option against us and PDG Companhia Securitizadora at the end of the twenty-fourth month, with a resale price equal to their face value. The CRIs are not subject to redemption.
On October 2009, we issued 30 CRIs in the amount of approximately R$1.0 million each, with a maturity date in five years and a grace period on principal and interest payments until the thirty-sixth month. The issuance was carried out by our subsidiary PDG Companhia Securitizadora and guaranteed by us. The yield was fixed at a rate of 115% of the CDI (from the first through the thirty-sixth month) and 117% of the CDI (from the thirty- seventh through the sixtieth month). The holders of CRIs from the second placement have a put option against us and PDG Companhia Securitizadora at the end of the thirty-sixth month, with a resale price equal to their face value.
On November 2009, we issued 25 CRIs in the amount of R$1.0 million each, with a maturity date in eight years and a grace period on principal and interest payments until the twenty-ninth month. The yield was fixed at a rate of 110% of the CDI. The holders of CRIs from the third placement have a put option against us and PDG Companhia Securitizadora at the end of the thirty-sixth and the sixtieth months, with a resale price equal to their face value.
On May 2010, we issued 186 CRIs in the amount of R$1 million each. This occurred from the second series of the 3rd issuance of CRIs. The CRIs has IGP-M remuneration plus 9.40% per year, over the balance of the CRI and a maturity date of 124 months, from May 7, 2010 to September 7. 2020.
On July 2010, we issued the 3rd series of the 3rd issue of 89 CRIs in the amount of approximately R$1 million each. The CRIs have TR remuneration plus 9.80% per year, on the balance of the the updated value of the CRI, with a termo f 30 months for payment.
Promissory Notes
The Company issued three hundred (300) promissory notes in an amount of to R$1.0 million each, in a single series (“Promissory Notes ”). The Promissory Notes have a maturity term of one hundred and fifty (150) consecutive days to be counted from the issuance date, and the amount of principal and interest will be subject to amortization upon maturity. The Promissory Notes are entitled to compensatory interest based on the variation of the average daily interest rate of Interfinancial Deposits accrued of a premium of 1.65% per year, calculated exponentially and cumulatively pro rata temporis , per business days. The Promissory Notes were subject to public distribution with restricted efforts, under the secured promissory note method, according to the provisions of CVM Rule 476.
The Promissory Notes have been fully paid on October 15, 2010.
18.6. Indication of the Brazilian markets where the Company's securities are admitted to be traded
The Company's shares are trading on the BM&FBOVESPA, under the code PDGR3. The CRIs issued by the Company are listed for trading in the secondary and primary distribution CETIP SA - Organized OTC Derivatives and Asset (“ CETIP ”).
18.7. Indicate each class and type of securities admitted on the foreign markets.
On October 29, 2008, the Company filed with the Brazilian Securities and Exchange Commission (CVM) a request to be registered in the Sponsored Level 1 Depositary Receipts Program to trade on the US over-the-counter market, securities backed by common shares issued by the Company. For this purpose, Citibank DTVM S.A. is the custodian and Citibank, N.A. is the depositary in the United States. The entity that administers the U.S. OTC market is the Financial Industry Regulatory Authority (FINRA). As of the date of this Form, 141.589 Depositary Shares had been issued. 194 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
In addition, the admission date of the Depositary Shares was December 05, 2008. But, since these securities are not listed in an organized market, there no initial date of listing.
18.8. Description of the distribution of the public offerings made by the Company or by third parties, including controllers and associated companies and subsidiaries, of securities of the Company 31
Shares
On January 24, 2007, based on the authorized capital and as a result of our initial public offering, our board of directors increased our capital stock by 30,000,000 of shares, for public subscription to be paid in cash, at the issuance price of R$14.00 per share, representing an increase of R$420.0 million, with the value of the issuance determined by the equity.
On February 23, 2007, also based on the authorized capital, our capital stock was subject to a new increase of 875,933 shares at the issuance price of R$14.00 per share, with the value of the issuance determined by the shareholders' equity of the Company, representing an increase of R$12.3 million due to the exercise the of the over-allotment option in connection with our initial public offering to meet excess demand during the offering, aiming the exercise of this option by Banco BTG Pactual S.A., on February 23, 2007.
On October 2007, our capital stock was, again, increased by the Board of Directors, during the second public offering of company’s shares. Based on the authorized share capital, and 23.000.00 shares at the issuance price of R$25,00, representing an increase of R$575 million. On October 1, 2009 our capital stock was, again, increased bu the Board of Directors, during the third public offering of company’s sares. Based on authorized capital and 56.000.00 shares at the issuance price of R$14,00 per share, representing na increase of R$784 million.
On February 05, 2010, were granted the registration of the 4th public offering of common shares issued by the Company, by means wich the FIP PDG I executed a secondary public offering of 97.084.946 of the Company’s common share, at the issuance price of R$14,50 per share. Because of the exercise of the green shoe by Banco BTG Pactual S.A., another 14.562.741 common shares, issued by the Company and owned by FIP PDG I, at the same conditions and initial share prices.
18.9. Description of the our public offerings for a third issuance
Until March 31, 2010, public offerings for a third issuance did not occur.
18.10. Other relevant information
There are no other relevant information about item 18 .
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19. PLANS OF REPURCHASE AND SECURITIES HELD IN TREASURY
19.1. Plans to repurchase Company’s shares:
On the fiscal years of 2006 and 2007, there were no repurchase plans of shares.
On the fiscal year of 2008, however, on October 21, our Board of Directors approved the creation of the First Share Repurchase Program, with the scope to maximize value for the shareholders. Such program has a term of 365 days and is limited to 8,142,064 (pre-split) common shares, representing 10% of the outstanding shares.
On August 12, 2009, the Board of Directors approved the termination of the current share repurchase program and the cancellation of 598,600 (pre-split) common shares, nominative, without issuance value, held in treasury, without alteration of the capital stock of the Company. We acquired 7.35% of the total shares approved in the program over the average price of R$9.18 (pre-split). The shares that were canceled accounted R$5.5 million, and will be canceled to the reserve account of retained profits in equal value.
At the time of repurchase of such options, we used the resources of the reserve account of retained profits of the Company to cancellate shares in the same accounted value of shares, R$5.5 million.
19.2. The table below shows the movement of securities held in treasury, separated by type, class and species, indicate the quantity, total value and average price of acquisition:
2009 Initial Acquisition Final Type (class Balance Average- balance and type) Amount (R$) Price (R$) Acquisition Sales Cancellations (R$) Common 2.643.792,1 shares 1.197.200 7 4,56238 36.000 - 1.197.200 -
2008 Initial Acquisition Final Type (class Balance Average- balance and type) Amount (R$) Price (R$) Acquisition Sales Cancellation (R$) Common share 1.161.200 - 2,2767 1.161.200 - - 5.287.584,33
There were no shares acquisitions by the treasury during 2006 and 2007.
19.3. The table below lists the securities that are held in treasury of the last fiscal year, separated by types and classes.:
Year ended 2008 Acquisition Average-Price % of the securities of the same Type (class and type) Amount (R$) Date of acquisition class and type Common share 580.600 9,1071 0,4%
There were no purchases of shares by the tresuary during 2006 and 2007. On August 12, 2009, the cancellation of the shares described above, was approved by the Board of Directors of the Company. Thus, there are no more shares of the Company in treasury.
19.4. Other relevant information
There are no other relevant information about item 19
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20. TRADING POLICY OF SECURITIES
20.1. Trading policy of securities issued by Company by the controlling shareholders, directly or indirectly, directors, members of the board of director, board of auditors and any other agency with technical or advisory functions, created by statutory provision:
All purchase transactions related to our shares must comply with the provision of the “ Manual de Conduta Para a Divulgacão e Uso de infomações e Politica de Negociacão de Valores Mobiliários” , approved by our board of directors on December 14, 2006.
Disclosure of trading by our principal shareholders, directors, executive officers or members of the board of auditors
Our controlling shareholder, directors, executive officers and members of our board of auditors, if one is in place, as well as members of any of our technical or advisory bodies, are required to report to us, so it can be reported to the CVM and BM&FBOVESPA, the number and type of our securities, our subsidiaries or the securities of any publicly-held company that we may control, including derivatives, that they or persons closely related to them hold, as well as any changes in such ownership interest. The information related to such securities negotiation, like the amount, price and date of purchase, must be reported to the CVM and BM&FBOVESPA within ten days from the end of the month in which the changes are carried on. If the person is an individual, the communication must include the shares held by his or her spouse, partner or dependent that is included in his or her tax return and any company directly or indirectly controlled by any of those persons
The communication must include the following information: a. The name and qualifications of the person providing the information; b. The amount, per type and or class, of shares traded, or other characteristics in case of other securities traded; and c. The nature of the acquisition (private transaction, stock exchange transaction, etc), price and date of each transaction.
We are also required to inform CVM and BM&FBOVESPA if no monthly changes have occurred.
Under article 12, § 1° of CVM Rule 358, dated as of January 3 rd , 2002, if our direct or indirect controlling shareholders, the shareholders that elect members of the board of directors or board of auditors, and/or any person or company, individually or as a group, acting jointly or representing the same interests, reaches an ownership interest directly or indirectly equal to at least 5% of our shares, such shareholder or group of shareholders shall report to us, the BM&FBOVESPA and the CVM the following information: a. The name and qualification of the person providing the information; b. The amount, price, per type and class of shares acquired, or other characteristics in case of other securities acquired; c. The nature of the acquisition (private transaction, stock exchange transaction, etc.); d. The purpose of the transaction; and e. The terms of any agreement regulating the exercise of voting rights or the purchase and sale of our marketable securities.
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Disclosure Policy, use of Information and Trading of Securities
Our disclosure policy, use of information and trading of securities was approved by the board of directors' meeting held on December 14, 2006 pursuant to the legislation and regulation in force.
The Company, its direct and indirect controlling shareholders, its directors and officers, the members of its board of auditors, the employees and executives with access to relevant information, and the members of the other technical and consultive bodies of the Company, as well as those who, because of their position, title or job in the controlling shareholders, subsidiaries and affiliates, are aware of the information on the material development relating to the Company and have signed the compliance statement, are prohibited from trading in the Company's securities for fifteen days prior to the disclosure or publication, whenever applicable, of (i) Company's ITR; (ii) Company's DFP and IAN.
The Company's board of directors cannot approve the acquisition or sale of company shares while the following information is not made public by means of the publication of material developments: (i) execution of any agreement or contract contemplating the transfer of control in the Company; or (ii) grant of option or right aimed at the transfer of control in the Company; or (iii) existence of intention to promote consolidation, total or partial spin- off, merger, conversion or corporate restructuring.
Former directors and officers that leave the Company prior to the public disclosure of any material development started during their term of office are prohibited from trading in the Company's securities: (i) for six months after their departure: or (ii) until disclosure by the Company of the material development to the market, except if trading in Company shares after the disclosure of the material development, would interfere in the business conditions to the detriment of the Company or its shareholders.
20.2. Other relevant information
There is no other relevant information about item 20.
21. POLICY ON THE DISCLOSURE OF INFORMATION
21.1. Description of rules or procedures adopted by the Company to assure that the information to be pubicly disclosed will be collected, processed and reported accurately and timely.
Except for the disclosure policy described below, there’s none.
21.2. Description of the disclosure policy of de act or material fact adopted by the Company that indicates the procedures to maintain secret relevant information that were not disclosed.
Our Disclosure Policy, Use of Information and Trading of Securities was approved by the board of directors' meeting held on December 14, 2006 pursuant to the legislation and regulation in force. Pursuant to such policy, the director of investor relations is primarily responsible for communicating and disclosing any material developments, so as to assure that investors are timely, efficiently and reasonably provided with the information necessary to made their investment decisions, ensuring the best symmetry possible for the dissemination of information, avoiding the undue use of privileged information in the securities market by those that have access to which, in their own benefit or for the benefit of third parties, in detriment to investors in general, the market and us.
The Disclosure Policy, Use of Information and Trading of Securities was prepared with the purpose of establishing high levels of conduct and transparency, and must be complied with by the: (i) controlling shareholders; (ii) managers of the Company; (iii) board of auditors; (iv) members of our other bodies with technical and advisory functions; (v) employees and executives with access to relevant information; and (vi) whomever, due to the title, function or position in the Company, controlling companies, subsidiaries and affiliates, is aware of any information 198 BZDB01 88170085.3 14-dez-10 15:52 Reference Form - PDG Realty S.A. Empreendimentos e Participações
referring to material developments about us, so as to adapt our internal policy to the principle of transparency and the good practices of conduct for the use, disclosure of relevant information and trading of our securities. The persons mentioned above must execute the respective compliance statement, which shall be filed at our headquarters while they have a relationship with us and for at least five years after their leave.
Under article 155, § 1 st , of the Brazilian Corporate Law, and article 2 of CVM Rule 358, “material act or fact” means (a) any decision by the controlling shareholders, a resolution of a shareholders' meeting or management bodies; or (b) any other political and administrative, technical, commercial or economic or financial act or fact occurred or related to their business, that may significantly affect: (i) the price of their securities; (ii) the investors' decision to purchase, sell or hold their securities; or (iii) the investors' decision to exercise any rights inherent to the condition of security holder.
The Director of Investor Relations is in responsible for: (i) notifying CVM, BM&FBOVESPA and, if applicable, other stock exchanges and market entities in which our securities are or may be traded, whether in Brazil or abroad; and (ii) disclosing to the market any material facts related to us. Our controlling shareholders, members of management and the board of auditors, employees and executives with access to relevant information, as well as members of our technical or advisory bodies must promptly inform the Director of Investor Relations of any material facts that they become aware of.
Any material facts must be disclosed, whenever possible, before the beginning or after the end of the trading session on BM&FBOVESPA or, as the case may be, on other stock exchanges and market entities in which our securities are or may be traded, whether in Brazil or abroad. In the case of time difference, the trading time of the Brazilian market shall prevail. The Director of Investor Relations must: (i) communicate and disclose the material facts inherent to our business immediately after its occurrence; (ii) concurrently disclose to the entire market the material facts to be disclosed by any communication vehicle, including the press, or at meetings of professional associations, investors, analysts, selected public, in Brazil or abroad; and (iii) analyze the need to request simultaneously to BM&FBOVESPA and, as the case may be, to the other stock exchanges and market entities in which our securities are or may be traded, in Brazil or abroad, for the time necessary to the appropriate dissemination of the relevant information, if it is imperative that the material facts be disclosed during the trading time.
Our directors and officers, members of our board of auditors, and members of our other technical or advisory bodies must inform the holders of our securities, whether on their behalf or on behalf of persons related to them, of well as any changes in such positions. This communication must be made (i) immediately after their investiture, as the case may be; and (ii) within ten days after the end of the month in which the changes took place, disclose the balance of the position over such period. Direct or indirect controlling shareholders, shareholders who elected members of the board of directors and shareholders that elected members of the board of auditors must communicate as well as inform of the acquisition or disposal of any ownership interest, direct or indirect corresponding to 5% or more of any kind or class of shares issued by us, which includes any rights related to such shares.
Our Director of Investor Relations shall have the power to determine the time periods during which the Company, its direct or indirect controlling shareholders, its directors and officers, the members of its board of auditors, the employees and executives with access to relevant information, and the members of the other technical and advisory bodies of the Company, are prohibited from trading in the Company's shares (blackout period).
In addition, the Company, its directors and officers, our direct or indirect controlling shareholders, the members of the board of auditors, employees and executives with access to relevant information, and the members of the other technical or consultative bodies of the Company, as well, as those who, because of their position, title or job in the controlling shareholders, subsidiaries and affiliates, and who have signed the compliance statement, are aware of any material fact regarding the Company, are prohibited from trading in the Company’s shares:
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(i) Whenever any material fact occurs in the Company’s business of which the above persons are aware;
(ii) Whenever there is the intention to promote consolidation, total or partial spin-off, merger, conversion or corporate restructuring; and
(iii) Only with respect to direct or indirect controlling shareholders and directors/officers, whenever any option or right is being granted or has been granted for the purpose of acquisition or sale of the Company’s shares by the Company, its subsidiaries, it affiliates or other jointly-owned entity.
Prohibitions set forth in sub items “i” and “ii” above will cease as soon as the Company discloses the material fact to the market, except if the trading of the Company's shares by the persons mentioned above, after the disclosure of such material fact, may interfere with the business conditions of the Company to the detriment of the Company or its shareholders.
21.3. Inform the managers that are responsible for implementation, maintenance, evaluation and supervision of information disclosure policy
The Director of Investor Relations.
21.4. Other relevant information
There are no other relevant information about item 21.
22. EXTRAORDINARY BUSINESS
22.1. Indicate the acquisition or the disposal of any relevant asset that does not fit as a normal operation in the Company’s business
There is not.
22.2. Indicate singnificant changes in the way of conducting the Company’s business 36
There is not.
22.3. Identify relevant contracts executed by the Company and its subsidiaries that are not directly related to their operacional activities 37
There is not.
22.4. Other relevant information
There are no other relevant information about item 22 .
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