BRAZIL: THE HOTTEST OF HOTSPOTS.

Living and Investing:

FLAVIO PINTO – ATTORNEY AT LAWREAL ESTATE DEVELOPMENT & BUSINESS CONSULTANT

RECENT NEWS.

Brazil is leading the world out of the recession. (Timothy Geithner, US Secretary of the Treasury, at the London G-20 Summit, Sept, 5th, 2009).

Brazil is the most irresistible of the BRIC nations! (James Quigley, President of Bank of America Merrill Lynch in Latin America, August, 17th, 2009).

Brazil’s GDP grew more than analysts forecast in the second quarter, pulling the economy out of its first recession since 2003 thanks to rising domestic demand. (Bloomberg.com, September, 11th, 2009).

The global financial and economic crisis has not left Brazil unscathed. But a recovery is getting under way and should gather momentum in the second half of 2009 and into 2010. (OECD Brazil Confidential Economic Survey 2009).

FORESEEING THE BEST.

The Wealth Grows in the Base of the Pyramid: Medium Class is now more than 50% of population. 316,000 Brazilians leaved poverty line since Oct, 08. UNCTAD: foreign direct investments in Brazil grew

30% in 2008. Safe Banking System ruled by straight laws. US$ 205 billion in reserves, and increasing.

No credit or real estate crisis. Self-sufficient on all kinds of energy sources,

with the greenest energy matrix of the world. The biggest food exporter of the world. Diversified exports. Products with increasing

added value. Democratic, capitalist, with ethical legal system.

FORESEEING THE BEST.

BUILD YOUR FUTURE.

The easiest way – Pre-construction condos: Beach front or beach view: Fortaleza and near beaches. Fortaleza’s ‘Golden Square’: a hidden secret.

You get: Off-plan prices. Longer plans. Units choice.

Legal Issues: Who’s the developer? Licensed, Registered... Contracts reviewing.

SIGN OF TIMES.

Electrical Appliances Sales - R$ Million:

Increase: 13%

Stoves: 26%

Source: Exame Magazine, issue 951

2008 Q2 2009 Q2

4,057

4,578

(2009 2nd Quarter x 2008 2nd Quarter)

The Next Step – Rent your Property : Seize the top of the property evaluation curve. Reach a possible 10% yearly net profit (or more). You can do it as an individual.

Your Strategy: Rental Pools: split the profits, reduce the risks. Administration Companies: no split, higher risks. DIY: highest risks!

Legal Issues: Tenant pays:

Property Taxes. Condominium fees.

Owner pays: Rent Services Fee: 10%. Rental Income Tax: 15%.

BUILD YOUR FUTURE.

COMMERCIAL RENTAL PROFITS.

Commercial Real Estate Market - BRIC Countries Comparison Numbers:

China Russia India Brazil

27,3%22,7%

10.4% 9.5%

Vacancy Rate (%)

Russia India China Brazil-63%

-44%

-16%

25%Rental Prices Variation (%)

(2009 2nd Quarter x 2008 2nd Quarter, dollarized)

Source: Jones Lang LaSale

Office rooms, corporate floors. Malls: touristic, lifestyle, lower middle class.

COMMERCIAL RENTAL PROFITS.

And there’s still room to grow!

Rio de Janeiro

São Paulo Mumbai Shangai Moskow0

20

40

60

80

100

120

46 49 54 62

108

BRIC Countries Rental Prices US$/m²

Source: Cushman & Wakefield, for downtowns.

Get Bigger – Joint Ventures with local players: Developments in Fortaleza:

Residential Buildings. CorporateTowers.

Condominiums in the near beaches: Near beach towns. Good for locals and for renting.

Legal Issues: Due diligences on both parts. Companies set up and operation. Joint venture agreements. International Money Transfers. The funding procedures.

BUILD YOUR FUTURE.

Two Joint Venture examples:

BUILD YOUR FUTURE.

Plot 250m from Beira-Mar Avenue:Land Area m² Private Area m² Units Land Cost

1,352 3,987 56 x 61m² 1,100m² of PA (~27%) 06 x 94m²

Building Cost US$/m² Sales Cost US$/m² Funding - US$ IRR year700 1,500 630,000 40%

Plot 100m from Beira-Mar Avenue:Land Area m² Private Area m² Units Land Cost

1,276 3,352 22 x 203m² US$ 1,150,000 + unit 1 & 2

Building Cost US$/m² Sales Cost US$/m² Funding - US$ IRR year830 1,900 1,900,000 20%

IRR = Internal Rate of Return (annualized effective compound return rate over the funding). US$ 1.00 = R$ 1,85

Extend your Roots – You’re the developer! Find the proper land. Make the best deal: money or units in your project. Hire: environment pro, architect, construction, sales. Register you project, get licences and start.

Legal Issues: Due diligence on land. Companies set up and operation. Contracts drafting. International Money Transfers. Registration, licensing. Checking suppliers.

BUILD YOUR FUTURE.

BUILD YOUR FUTURE.Land Area: 3 hectares (7.5 acres)Beachfront: 150 metersPrice: US$ 1,700,000Condominium with 20 blocks - 4 stores (2 for condos, 2 for duplex penthouses)

Construction Costs: Units Area m² Total Area m² Cost/m² - US$ Total Cost US$Condos: 160 70 11,200 650 7,280,000Penthouses: 40 140 5,600 600 3,360,000 16,800 10,640,000Other Costs Involved:Land: 1,700,000Projects & Licensing: 450,000Legal Consultancy (1% over sales) 254,800Marketing (12% over sales) 3,057,600TOTAL COSTS: 16,102,400

Sales: Units Area m² Total Area m² Price/m² - US$ Total Price US$Condos: 160 70 11,200 1,600 17,920,000Penthouses: 40 140 5,600 1,350 7,560,000TOTAL SALES: 16,800 25,480,000ROI - Return Over Investment: 58% US$ 1.00 = R$ 1,85

Wind Energy Farms: Cheap Land:

Can be farther from main cities. Unattractive places. Inclement wind and sun are finally good!

The Business: All costs supported by power companies. Up to 20 years of rental profits. Yearly income: ~10% (1.5% / energy sales). Your land value keeps increasing...

Legal Issues: Checking power companies. Contracts drafting/reviewing. International Money Transfers.

BUILD YOUR FUTURE.

COMMERCIAL RENTAL PROFITS.

Touristic Mall Plan looking for Investors: Near 5-Star Hotels. 16,000m² built = 1.0%/month rental profits, or more.

Other businesses you should check: Farming Land:

Grains, fruits. Near main hubs: railroads, ports. You must own a BR company.

What’s your business in your country?

BUILD YOUR FUTURE.

FINANCING RESOURCES.

Government money for projects on: Hotels. Malls. Agribusiness. Green Energy.

GOING FURTHER.

Set up a Brazilian Limited Company: At least two shareholders. A resident administrator. The local address: an office room. Open your company bank account. Hire an accountant!

The Administrator Liabilities: Central Bank and BR IRS affairs. Financial resources management. Deals with suppliers and clients.

GET RESIDENCY: LIVE IN BRAZIL.

Use your BR company to get Investor’s Visa: Set up yours or buy other company shares. Invest at least R$ 150,000. Require your Visa at BR Government institutions.

Or get a Permanent Visa for Retiree: 60 years old or more. Able to transfer at least US$ 2,000 monthly. Come with two dependants. US$ 1,000 more for each other dependant.

YOUR MONEY IS FREE.

Repatriate your investment: After taxes. Whenever you want.

Good news about companies and taxes: Shareholders do not pay taxes over profits

distribution after company taxes.

PS 20:7

FLAVIO PINTO – ATTORNEY AT LAWFLAVIOPINTO@GMAIL.COM

PHONE: +55-85-8802-8139 – SKYPE: FLAVIOPINTO_BRRUA GONCALVES LEDO, 1170 – 60110-261, FORTALEZA/CE -

BRAZIL