A Securitiza

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Linking Construction Finance and
Securitization Housing Finance in Emerging
Markets March, 2006
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RBSec

• Real Estate Finance Business
• Founded 1998
• Ranking 1st considering capital market MBS
• Rating AA ( LF Rating)
• Amount Issued US 275 million

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RBSec

• Shareholders

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RBSec - Products

• Securitization (Residential and Commercial)
• Acquisition of Subordinated Tranches
• Mezzanine Construction Finance

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Mezzanine Construction Finance
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Main Characteristcs

• Residential only
• Between senior debt and equity
• Provides 40-80 of cash equity
• Receives fixed rate of interest, plus share of
  profits 20-40
• Leverages developers IRR
• Not financing acquisition of land

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Typical Development Project
Mezzanine
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Market Environment

• Senior Debt
• Large Banks
• Cost 12 - 14

• Other Sources of Funding
• Investment banks (equity)
• Private Investors (equity)

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Challenges Lessons

• Challenges
• Necessity to convince (explain to) developers
• Lessons learnt
• Always get bank financing first
• Chose your Developer
• Importance of Risk Rating System

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Experience

• Projects
• Vila Guilherme (dec-07)
• Campinas (mar-06)
• Tatuapé (nov-06)
• Butantã (nov-06)
• Santo André (oct-08)
• Estimated return Inflation 25 a.a.
• Funding
• Proprietary Capital
• Capital Markets
• Product in infancy
• Need to develop track record

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Securitization

• Securitization
• Extensive use of Capital Markets for
  Securitization business.

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Relationship to Securitization

• Brings closer relationship with developers
• Acquisition of post delivery installments during
  construction phase
• Joint or separately

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Nicholas Reade nreade_at_riobravo.com.br www.rbsec.c
om.br