Press Releases
06/07/2013

Gafisa SA Agrees to Sell 70% Stake in Alphaville to Blackstone and Pátria

Cash Transaction Values Alphaville at Approximately R$2 Billion
Transaction to Expand Gafisa Investment Capacity


São Paulo, June 7, 2013
– Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA) (“Gafisa” or the “Company”), one of Brazil’s leading diversified national homebuilder, today announced it has signed an agreement to sell a 70% stake in Alphaville Urbanismo S.A. (“Alphaville” or “AUSA”), the leading residential community development company in Brazil, valuing Alphaville at an equity value of approximately R$2 billion, to funds managed by Blackstone and Pátria Investimentos.

The sale to Blackstone and Pátria Investimentos will allow Gafisa to retain 30% of the company and generate expected gross cash proceeds of R$1.4 billion. Blackstone and Pátria Investimentos plan to maintain the existing Alphaville management team, led by Marcelo Willer, which has driven industry-leading growth and returns. Following the transaction, Alphaville will remain an affiliate to Gafisa with representatives serving as Directors on the Board, with two out of six seats.

In advance of Blackstone and Patria Investimentos’ purchase of 70% of Alphaville, Gafisa entered into an agreement with Alphaville’s founding partners to acquire their outstanding 20% stake in Alphaville, for a total consideration of R$xxx million. This agreement finalized the arbitration process and all pending issues with Alphaville’s founding partners, bringing Gafisa’s ownership to 100% in Alphaville prior to this transaction. 

Alphaville’s unique business model and highly recognized brand, combined with Gafisa’s management oversight, have contributed to significant growth.

Duilio Calciolari, CEO of Gafisa Group, said, “This is a compelling opportunity to unlock the significant value that has been created in Alphaville under Gafisa’s stewardship since its acquisition in 2006. The proceeds will strengthen Gafisa’s balance sheet by reducing leverage and generate long-term shareholder value by capitalizing on the growth of our high potential Gafisa and Tenda brands. These brands operate in expanding markets and are poised for a substantial improvement in profitability following a major restructuring last year and the delivery of the majority of legacy projects in 2013. Furthermore, the transaction will allow our shareholders, through the 30% stake in Alphaville, to participate in the long-term value creation we believe will be produced by partnering with two leading investment firms with global and local experience in the real estate sector.”

Jonathan Gray, Global Head of Real Estate at Blackstone, said, “Blackstone is pleased to announce its first joint real estate investment with Patria in Brazil and to commit capital, alongside Gafisa and Patria, in Alphaville, a well-managed, high potential Brazilian company, primed to capitalize on the country’s increasing growth and development.”

Completion of the sale to Blackstone and Pátria Investimentos is subject to closing conditions customary for a transaction of this nature, including required anti-trust approvals, and is expected to occur towards the end of the third quarter.

Gafisa Group’s flexible post-transaction balance sheet will increase the Company’s investment capacity. The cash proceeds will reduce leverage and remove financial constraints, thereby enabling greater focus on operational performance and on opportunities for organic growth, with the streamlining the portfolio. The reduction in net debt at the Group level, and selective reinvestment in the Company’s high-potential brands, is expected to generate long-term shareholder value by capitalizing on the growth potential of the business. The Gafisa Group’s profitability is expected to improve substantially following a major restructuring at Tenda last year and the delivery in 2013 of the majority of lower margin Gafisa and Tenda projects launched in non-core markets. The sale of inventory is expected to conclude in 2014. Gafisa is focusing its investments on its core markets, which continue to expand. These investments will require planned capital spending over coming years.

Gafisa segment - The brand will maintain its focus on its core markets, namely São Paulo and Rio de Janeiro, where performance has been strong due to brand recognition, an established supplier network and experience accumulated during a long history in these markets. Gafisa is well positioned to acquire strategic land bank to grow the business. Given the high cost of entry into what is a capital-intensive business segment, this transaction will strengthen the Gafisa brand and make it a more competitive player, thus enhancing its leading position in the market.

Tenda segment – Tenda’s operations will continue to expand in line with high growth potential in the brand’s core markets of São Paulo, Rio de Janeiro, Salvador and Minas Gerais. Throughout the past 18 months, the Company underwent a substantial restructuring and results continue to be negatively impacted by the resolution of the remaining Tenda projects. Still, having achieved control of the operational and financial cycle at Tenda last year, the brand was relaunched in the first quarter under a new, profitable business model. The resumption of operations, which is proceeding in a cautious manner, is expected to maximize the segment’s potential within the Group.

Alphaville segment - By maintaining minority ownership of Alphaville, the Group will benefit from its continued growth in an attractive market, further strengthening Alphaville’s business and brand. Currently, Alphaville has a sizable land bank with potential sales of R$13 billion, thereby supporting the Company’s growth over the next seven years.

Rothschild acted as financial advisor and Barbosa, Müssnich & Aragão (BM&A Advogados) acted as legal counsel to Gafisa in the transaction. Patria Investimentos acted as financial advisor and Simpson Thacher and Bartlett acted as legal counsel to Blackstone.

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About Gafisa:

Gafisa is a leading diversified national homebuilder serving all demographic segments of the Brazilian market. Established over 59 years ago, the Company has completed and sold more than 1,000 developments and built more than 12 million square meters of housing only under Gafisa’s brand, more than any other residential development company in Brazil. Recognized as one of the foremost professionally managed homebuilders, "Gafisa" is also one of the most respected and best-known brands in the real estate market, recognized among potential homebuyers, borrowers, lenders, landowners, competitors, and investors for its quality, consistency, and professionalism. Our pre-eminent brands include Tenda, serving the affordable/entry level housing segment, and Gafisa and Alphaville, which offer a variety of residential options to the mid to higher-income segments. Gafisa S.A. is traded on the Novo Mercado of the BM&FBOVESPA (BOVESPA:GFSA3) and on the New York Stock Exchange (NYSE:GFA).

About Blackstone:

Blackstone is a global leader in private equity real estate investing.  Founded in 1991, Blackstone’s real estate business is the largest opportunistic real estate investment manager in the world, with more than $50 billion in investor capital under management.  Blackstone’s portfolio includes hotel, office, retail, industrial and residential properties in the U.S., Europe and Asia.  Major holdings include:  Hilton Worldwide, Equity Office Properties, Brixmor shopping centers and London’s Broadgate office complex.  Blackstone seeks to create positive economic impact and long-term value for its investors, the companies they invest in, the companies they advise and the broader global economy.  In addition to managing real estate private equity funds, our alternative asset management businesses include the management of private equity funds, hedge fund solutions, credit-focused funds and closed-end mutual funds.  Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services.  Further information is available at www.blackstone.com

Follow us on Twitter @Blackstone.

About Patria:

Pátria has become one of the leaders in Brazil´s investment marketplace by building on our spirit of innovation and commitment to excellence. Our partners developed the early private equity industry in Brazil in the 1990s. Today we have one of the most diversified alternative investment portfolios in the country, with over US$6.5 billion* in assets under management. Over time, Pátria has expanded to include a broad spectrum of businesses such as corporate advisory, capital management, infrastructure, and real estate, in response to the needs of our investors and clients, and the opportunities presented by the country’s dynamic economic expansion. Our team’s approach combines world-class investment and advisory expertise with an unsurpassed knowledge of the Brazilian market.

Contacts

Investor Relations
Gafisa S.A.
Luciana Doria Wilson
Telephone: +55 11 3025-9297 / 9242 / 9305
Fax: +55 11 3025-9348
ri@gafisa.com.br
www.gafisa.com.br/ri

or

Media Relations (Brazil)
Maquina da Notícia Comunicação Integrada
Fernando Kadaoka
Phone: +55 11 3147-7498
Fax: +55 11 3147-7900
fernando.kadaoka@maquina.inf.br

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