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São Carlos Substantially Increases its Interest in the ‘Eldorado
Business Tower’, in São Paulo
São Paulo, Brazil – December 26, 2006 – São Carlos Empreendimentos e
Participações S.A. (Bovespa: SCAR3) announces the purchase, from Gafisa S.A., of 9
floors in the Eldorado Business Tower for R$100 million. This building is located on
Avenida Nações Unidas, in the city of São Paulo, in front of Shopping Eldorado, and is
currently at the final stages of its building process, with conclusion anticipated for October,
2007. With this transaction, São Carlos will own 14 out of the property’s 33 floors, which
correspond to a 23,199 m2(1) private area(2), or 41% of the total private area(2), after the
building is concluded.
Photomontage
STRATEGIC RATIONALE: ATTRACTIVE RETURNS AND PRICE APPRECIATION
POTENTIAL
This transaction is completely in line with São Carlos’ long-term strategy:
•
(1)
(2)
It is an investment in a state-of-the-art AAA class office building, with an unparalleled
level of services aimed at first-tier companies. This building is located in a privileged
1 square meters = 10.7639104 square feet
Private area is equivalent to the leasable area
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area of Marginal Pinheiros (City of Sao Paulo), with a great price appreciation potential
in the next years;
•
We are not running any additional construction risks, since the purchase price is fixed
(no additional correction), and we do not anticipate any additional investments in these
floors once they are delivered to Sao Carlos;
•
São Carlos already owned five floors (18th, 19th, 24th, 25th and 26th) in this property, and
through this transaction it will own 14 out of the 33 floors in the building. Due to its high
stake in the building, the company will be able to implement its management style, in
line with its business model;
•
We anticipate that the rental demand for these floors will be high, due to the
development’s unmatched AAA profile, and due to prospects of a continuous decrease
in the vacancy rates for this type of building. The vacancy rate in AAA class office
buildings has been decreasing in São Paulo over the last years, and the Eldorado
Business Tower will be the largest of the few AAA class office buildings completed
throughout 2007 in the city. We estimate that we will have rented all of São Carlos’
floors in this property by the end of the first half of 2008;
•
According to the independent consulting company CB Richard Ellis estimates, the
rental price for this property may range from R$65.00/m2 to R$80.00/m2 (1) of the private
area(2). Based on these rental levels, the company believes that it will obtain attractive
yields (3) – between 11% and 14% – in line with its medium and long-term strategy.
Besides, we believe that this building has the potential to significantly appreciate in
value over the next years, due to a combination of its unparalleled profile and its
strategic location; and
•
The down payment and the first installment of the transaction, amounting to around
R$9.0 million, will be paid with the company’s own resources. The second and last
installment – a fixed amount of around R$91.1 million (without interest or monetary
correction), to be paid by the end of 2007 – may be partially or completely financed,
depending on the market conditions prevailing at the time. São Carlos will keep its
strategy of using third-party resources as a means of financing a substantial portion of
its transactions.
Commenting on the transaction, Rolando Mifano, São Carlos’ CEO, says: “this transaction
is totally in line with São Carlos’ objectives and shows our commitment towards creating
value to our shareholders. The increase in our interest in this unparalleled property,
combined with expectations of high returns and the overall potential for price appreciation
of this building, allows us to be confident in our continuous execution capabilities”. In 2007,
São Carlos will keep looking for new opportunities to acquire commercial real estate, in the
scope of its business strategy.
ELDORADO BUSINESS TOWER – STATE OF THE ART AAA CLASS REAL ESTATE
Eldorado Business Tower is a AAA class office building, comparable to the most modern
and efficient buildings in the world. It will be one of the highest and most modern buildings
in São Paulo. The building is strategically located besides the Shopping Center Eldorado,
(3)
Yield = 12 months of the estimated gross rental incom e, divided by the total value of the purchase (R$100.2 million). It is important to
point out that the purchase price is fixed, and therefore the second and last installment of R$91.1 million will not be receive any kind of
adjustment.
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on Avenida Nações Unidas, and its total area will be 128.6 thousand m2 1. The location
has high visibility and easy access to public means of transportation as well as to
downtown, the airports, main avenues and highways.
The building will have 33 floors, 29 elevators, 1 heliport with a VIP lounge and an attached
area for the parking of the aircraft, 1,806 parking lots, state-of-the-art air conditioning with
low energy consumption, direct access to line 7 of the subway (CPTM) and to the
Shopping Eldorado food court. The construction company of the building is Gafisa, and the
development should be completed in October/2007.
Photomontage
THE TRANSACTION
Dueto Participações Ltda., a wholly-owned subsidiary of São Carlos, has signed today
with Gafisa the “Instrumento Particular de Compromisso de Cessão de direitos Aquisitivos
Sobre Imóveis”, through which it acquires the 1st, 2nd, 7th, 8th, 29th, 30th, 31st, 32nd and the
33rd (penthouse) floors of the Eldorado Business Tower, with a total private area of 14,350
m2 (1) (2). The transaction value is R$100.2 million, out of which approximately R$9.0 million
will be due on the signing date as down payment and first installment, and the rest (R$91.1
million) will be due on November 24, 2007, without interest or monetary correction.
Any additional investments and/or costs directly or indirectly related to the construction of
these floors will be fully undertaken by Gafisa. Therefore, there are no construction risks or
additional costs to São Carlos associated with this transaction.
CONTACTS FOR ADDITIONAL INFORMATION
Marc Grossmann
Investor Relations Manager
Tel.: +55 11 3049-5563
Fax: +55 11 3049-5520
Email: [email protected]
Website: http://www.scsa.com.br/ri
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Press – Máquina da Notícia
Ana Landi – [email protected]
Adriana Vera e Silva – [email protected]
Mauro Teixeira – [email protected]
Tel.: +55 11 3147-7900
Fax: +55 11 3147-7911
The forward-looking statements contained in this document are mostly based on our current expectations and estimates about future
events and trends that affect or may potentially affect our business, our industry, our financial situation, and our operating and
prospective results. These estimates and statements are subject to several risks, uncertainties and conjectures, and are made based on
the information we have at this time.
The words “believes”, “may”, “will be able to”, “estimates”, “continues”, “anticipates”, “intends”, “expects”, and similar expressions are
intended to identify estimates. Such estimates refer solely to the date they are made, and São Carlos is not obliged to update or review
any of them in light of new information, future developm ents or any other factors. These estimates involve risks and uncertainties, and
do not provide any guarantees of future perform ance, and actual results or developments may be substantially different from the
expectations described in the estimates and forward-looking statements. Considering the risks and uncertainties involved, the estimates
and forward-looking statem ents included in this document may not materialize, and, furthermore, São Carlos’ future results and
performance may substantially differ from those foreseen in the São Carlos’ estimates. Due to such uncertainties, the investor should
not rely on these estimates and forward-looking statements to make an investment decision.
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