Competitive Advantages
Strategy

Competitive Advantages

Tecnisa has the following competitive advantages:

Proven Execution Capacity

Our current integrated business platform allows us to rapidly and efficiently expand our activities to other regions, income groups and market segments, in pursuit of the best opportunities. In little more than three years, thanks to the implementation of our business model, we became a developer with a nationwide presence and products targeting all income groups. Our execution capacity can be chiefly credited to the following factors:

• Integrated business model

Our integrated business model provides us with a better view of and control over of our activities, making them more efficient. We have highly trained teams specialized in each stage of real estate development, including land prospection and acquisition, project development, works execution, unit sales and customer service. Since we build and manage most of our developments, we have greater control over expenses, quality standards and delivery deadlines. We have our own in-house sales team, which cuts out brokers’ fees and ensures high-quality sales services, in addition to bringing us closer to our clients and helping us keep abreast of market trends. In addition, our innovative practices and the efficient use of digital media have resulted in a significant reduction in advertising expenses.

• Experience in the real estate market

Our experience of over 30 years operating in the domestic real estate market has given us a better understanding of the demands and expectations of our consumers. We employ a team of professionals with extensive market experience, led by our founder and current CEO and Chairman of the Board of Directors. Our staff is a combination of those who have built their careers in the Company and new talent, ensuring a solid culture of tradition and innovation.

• Management aligned with shareholders’ interests

In order to attract and retain talent and ensure that the interests of our executives are in line with those of our shareholders, we offer incentives in the form of a bonus scheme and stock option plan linked to the Company’s performance. Our bonus system encompasses all our employees and is based on the achievement of goals.

Strong reputation and brand recognition

The Tecnisa brand has achieved a high level of recognition in recent years as a result of our innovative construction, sales, advertising and customer relations practices. In fact, we have become a national benchmark for excellent customer relations, so much so that in 2010 we received the country’s most important customer relations award from Consumidor Moderno magazine for the 7th consecutive year. We are also a national and international reference in the use of internet tools to increase our sales and promote our brand, being acknowledged by Google in 2008 as the world’s best real estate company in sponsored links.

Presence in Brazil’s most strategic regions

In the last three years, we have expanded our operations by carefully and selectively identifying those regions with a high market potential and good business opportunities and establishing partnerships with respected local developers and construction companies willing to adapt to our culture and adopt the same business model as our own. We believe our solid experience in the real estate sector, combined with our partners’ know-how in their local markets have allowed us to develop projects in these new markets that have a high sales velocity and are within our profitability targets. We also believe that our partnership system will allow us to replicate our business model in other regions of the country in a rapid and efficient manner, thus reducing the risk associated with entering new markets.

Operating in various income groups

Building on our solid presence and tradition in the high and higher-middle income groups, we launched the Tecnisa Flex brand in 2009, consolidating our operation in the Flex Segment, where prices range between R$100,000 and R$300,000 per unit. Since Flex Segment projects have a shorter operating cycle (land acquisition, launch, sales, construction and delivery of the units), Tecnisa Flex enables us to reduce our cash exposure in each project and gives us greater agility in the recognition of revenues based on the financial progress of the building works, thus increasing our growth potential. It also allows us to build a more balanced project portfolio in terms of income groups, thus reducing our exposure to any given group and the associated inherent risks.

Efficient financial management, with consistent results

Real estate projects usually have long cycles and require a high volume of capital. Our experience of successful capital management acquired during periods of great economic instability in Brazil has made us one of the most capable companies in the real estate industry. We seek to increase the profitability of each project by combining several forms of financing with strict control over construction costs and effective sales strategies, always keeping corporate risks within the limits that we consider to be proper and safe.

Strategy

The Company believes that the implementation of its main business and financial strategies listed below will improve the development of its activities, maximize returns for Tecnisa’s shareholders and provide the Company with a competitive advantage.

Sustainable growth

We must grow in a sustainable and responsible manner, always seeking to optimize our profitability while carefully managing our risks. Our growth will be underpinned by the preservation of our profitability, the high quality of our products and our excellent customer service standards, always strengthening the Tecnisa brand.

Continuing to expand through new regional branches, partnerships and acquisitions

We intend to consolidate our presence in markets that have proved to be profitable by opening regional branches with a streamlined structure and sufficient capacity to manage our building works, develop sales teams and prospect new business opportunities. We intend to have our own sales force in all the cities where we operate and we will continue to seek opportunities in new cities through strategic partnerships that help us expand our business portfolio. In addition to organic growth, which is our main focus, we will be able to complement our expansion through acquisitions that are in line with our results-oriented culture and strategy.

Expanding the Tecnisa Flex line

Thanks to higher household income and increased social mobility in recent years, there has been a considerable expansion of the B and C income groups in Brazil, creating many opportunities for the Tecnisa Flex line. Differently from projects targeting low-income earners (price per unit of up to R$100,000), which depend mainly on government financing and are more difficult to execute, projects targeting the middle and lower-middle income groups benefit from the presence of many private-sector financial agents, who provide financing both for construction works and clients. In order to expand the activities of Tecnisa Flex, we employ a team of executives with ample experience of this segment, who in turn are fully supported by all our other areas. By December 2010 we had launched 12 Tecnisa Flex projects, accounting for around 33% of launched PSV (potential sales value).

Maintaining a capital structure that is compatible with our new growth plan

We intend to maintain a balanced capital structure, aiming to implement our new growth plan in the coming years, through the following measures: (a) keeping gross corporate indebtedness within appropriate limits; (b) making intensive use of resources from the Housing Finance System (SFH) and other less expensive and long-term forms of funding, such as the securitization of receivables; (c) increasing our operational efficiency by seeking shorter operational cycles; and (d) maintaining strict control over costs and expenses.

Last Update: January 27, 2011