CORPORATE PRESENTATION We are the largest developer in terms of - - PowerPoint PPT Presentation

CORPORATE PRESENTATION

Presence in 7 attractive markets across Mexico Corporate structure with renowned institutional shareholders

◼ Headquarted in Monterrey, México ◼ Largest homebuilder and leader supplier of Infonavit loans in

Mexico in terms of units sold.

◼ Specializes in the construction and commercialization of

affordable entry-level (“AEL”), middle-income and residential housing.

◼ Efficient and flexible business model aimed to constantly match

product with shifting local market needs, preferences and expected demand.

◼ Focus on ROIC maximization and Free Cash Flow generation

through an efficient working capital cycle. Flexibility to adapt to market changes – Key performance driver

Company overview

2 State of Mexico Querétaro Jalisco Aguascalientes Tamaulipas Nuevo León

8 Subsidiaries (Financial services, administrative services, real estate holdings / sales & marketing, urbanization and construction services) 99.9%

Servicios Corporativos Javer, S.A.B. de C.V. (HoldCo)

39.6% 1.3% 25.1%

Administrative Trust

Promotora de Proyectos Inmobiliarios Turín

Proyectos del Noreste(2)

5.7% 7.1% 26.8%

Arzentia Capital Southern Cross Group Quintana Roo

(Number of units sold

8,572 8,865 5,630 4,470 1,939 2,476 8,132 8,785 11,508 11,714 14,776 15,147 684 875 1,427 2,168 2,035 1,339

17,388 18,525 18,565 18,352 18,750 18,962 2013 2014 2015 2016 2017 2018 AEL MI RES Free Float

34.1%

Source: Company public filings. (1) According to Infonavit’s report “Créditos por Oferente” based on loans grated for new housing as of Dic 31, 2018. (2) Owned by Mr. Salomon Marcuschamer, Javer’s founder.

Attended markets represent more than 53.7% of INFONAVIT loans(1)

Glisco Partners

We are the largest developer in terms of units sold and we have a business model focused on cash flow generation and ROIC maximization

1,159 1,497 2,497 3,551 5,003 6,417 9,193 13,910 16,026 16,063 16,339 17,533 17,388 18,525 18,565 18,352 18,750 18,962 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Home Sales 3

2011

◼ Senior Notes Offer at 9.875%

with expiration in 2021

◼ Reopening of Senior Notes for

US$30 millions with due to 2021

◼ Started operations in Querétaro ◼ Started operations

in Monterrey, México 2000

◼ Started the construction of

AEL projects in Monterrey 2003

◼ Started operations in

Aguascalientes, Jalisco y Tamaulipas 2009

◼ Acquisition of 60% of the

company by different investment funds

◼ Senior Notes Offer for US $180

millon at 13% due to 2014 2010

◼ Reopening of Senior Notes

for US $30 millions with due to 2014 2012

◼ Started operations in

State of Mexico 2013

◼ Reopening of Senior Notes for

US$50 millions with due to 2021

◼ In June, it becomes the #1

supplier of Infonavit loans 2014

◼ Started operations in

Quintana Roo

◼

#1 supplier of Infonavit loans (1) 1973

(1) According to the Infonavit report: Credits formalized by offeror

2008

◼ Syndicated loan for US $160

million to improve the capital structure and growth of the company

◼ Exponential growth due to unattended demand in

the last decades

◼ Financial Crisis ◼ Collapse of the big three and

transformation of the industry

◼ Bankruptcy of

Sofoles and Sofomes 2016

◼ IPO for Ps$1,800 millons ◼ Repurchase of US$136

millions of Senior Notes

◼ Residencial Project in

Mexico City

◼ #1 supplier of Infonavit

loans(1) 2015

◼ #1 Supplier of

Infonavit (1) 2017

◼ Record of units and active

developments

◼ Certification “Best Place to

Work” in Mexico

◼

#1 provider of Infonavit(1) loans 2018

◼ #1 provider of

homes for Infonavit loans in 2018 (1) 2019

Javer has a successful track record of operational and financial milestones

Managing working capital during the process is essential for ensuring the generation of positive FCF, gowth and maximize returns.

4

Permits Geographic Selection Acquisition

• f land

reserves Planning Urbanization and Construction Advertising and Sales strategy Post-Sale services

On average 4 months (depending on the location it could last 1 year)

This strategy allows us to manage our investment portfolio, by balancing outflows derived from exhaustion of current developments and the entries of new projects. Flexibility to build AEL or middle income housing on land plot between 90 – 98m2 Land identification in year 3 of the actual project development cycle Analysis of current demand, location and segment Evaluation of gross margin, ROIC, IRR Legal opinion Land trust agreement with the owners of the properties or direct acquisition of the land Define prototypes, Price strategies and expected absorption Development structure: main avenues, commercial lots, residential sectors Urbanization: 6 months Construction: 3 months Only the sections that we are going to develop are urbanized and we link the beginning of housing construction with sales Price according to the amount of mortgage Occasionally, we offer special agreements to customers, such as free appliances, furniture or discounts Customer service to make the guarantee valid in case requested. Know customer satisfaction. Post sale service: Workers make monthly payments . Periods from 6 to 24 months. Short construction periods is the key for having flexibility to build different prototypes

Our business model allows us to have an efficient management of working capital

5

We currently have more than 60 developments operating

COMPETITIVE ADVANTAGES

Units Sold

Javer will balance the mix between growth and dividends to maximize value for its shareholders

Javer's strategy to create value for its shareholders

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(Number of units sold)

17,388 18,525 18,565 18,352 18,750 18,962 2013 2014 2015 2016 2017 2018

Objectives Scenario 2: Stable Demand and Sales Scenario 1: Increase in Demand and Sales

Efficient capital structure Formation of new homes Deficit reduction Dividend payment

Deficit reduction

Greater availability of credits

Formation

• f new

homes Increase in mortgages dividend payments + growth

Pre-Tax ROIC

Improve the capital structure to take advantage of growth opportunities

19.4% 23.9% 24.0% 23.9% 23.5% 23.1% 2013 2014 2015 2016 2017 2018

Maximize the generation of Free Cash Flow and performance for shareholders Maintain a healthy working capital cycle

14% 14% 17% 19% 22% 23% 25% 24% 25% 24% 22% 24% 25% 23% 24% 24% 21% 21% 20% 24% 24% 27% 27% 23% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

Free Cas Flow

394 370 336 321 316 317 308 311 277 283 312 310 307 288 292 283 273 259 266 249 243 222 234 268 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

Working capital cycle Pre-Tax ROIC

The Company's business model is focused in FCF generation and ROIC through efficient management of the working capital cycle

8

(Days)

LTM (thousands of pesos) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 EBITDA $207 $224 $218 $271 $140 $218 $212 $386 $170 $336 $276 $279 (+)Land Included in COGS 174 172 153 266 150 91 139 197 162 185 155 191 (+/-)Changes in Working Capital (53) 114 (95) (219) 193 286 51 (54) (85) 91 (52) (305) (-)Cash Interest (79) (64) (63) (62) (59) (145) (102) (101) (101) (104) (117) (118) (-)Cash Taxes (1) (1) (4) (13) (36) (227) (40) (36) (46) (50) (46) (44) (-)Equipment CapEx (3) (3) (4) 1 (10) (9) (2) (4) (7) 5 (3) CFO 249 441 206 238 388 212 250 390 97 452 219 (0) (-) Land CapEx (176) (193) (143) (95) (212) (202) (220) (135) (215) (252) (308) (256) FCF $73 $249 $63 $143 $177 $9 $30 $255 ($118) $200 ($89) ($256)

326 66 230 528 471

• 263

2013 2014 2015 2016 2017 2018 $795 $904 $938 $920 $956 $1,062 14.7% 14.9% 14.5% 13.0% 12.6% 12.8%

2013 2014 2015 2016 2017 2018

EBITDA EBITDA Margin

$5,421 $6,057 $6,459 $7,052 $7,563 $8,321 17,388 18,525 18,565 18,352 18,750 18,962

2013 2014 2015 2016 2017 2018

Total Revenues and Units Sold Shortest Working Capital Cycle in the industry (1) 9

Source: Public documents of the Company. (1) Working Capital Cycle calculated as account receivable days + inventory days (work in progress and land reserves) – account payable days– customer advances (Ps. Millions and number of units sold) (Days)

EBITDA and EBITDA Margin

(Ps. Millions) (Ps. Millions)

Free Cash Flow

321 311 310 283 249 268 434 405 501 614 663 804 554 501 500 630 668 769 1,117 1,027 953 884 807 850

2013 2014 2015 2016 2017 2018 Javer Cadu Vinte Ara

We have achieved organic growth in volume and in the main financial indicators being the developer with the shortest CT cycle in the industry

2,102 1,950 1,916 2,604 2,359 2,617 2,096 1,793 1,849 1,271 1,191 1,319 935 1,273 1,123 1,139 755 467 338 379 803 511 508 654 1,577 2,226 2,138 2,191 1,909 1,810 2,643 2,423 2,664 3,014 2,931 2,899 3,161 2,751 2,707 3,095 2,994 3,695 3,505 4,582 3,663 4,504 3,696 3,284 132 135 173 244 150 175 246 304 206 180 385 656 517 575 509 567 475 498 438 624 281 314 342 402

30% 17% 25% 38% 54% 53% 56% 59% 77% 65% 19% 20% 51% 46% 29% 18% 20% 38% 25% 21% 27% 40% 38% 12%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 AEL MI RES Subsidies

Middle Income $300,000 to $850,000 (US$43,290)

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▪ Plot of land 90 - 98m2 / construction 43m2 – 56m2 ▪ One story units or vertical housing (3 story units) ▪ Typically located in large developments ▪ Sub-communities of 300 – 400 units ▪ Average buyer income: less than MX$6K per month (~US$306) ▪ Plot of land 90 - 98m2 ▪ Construction area of:

– Middle Income Low – 57m2 – Middle Income High – 79m2

▪ Most are two story units ▪ Usually located in clusters of 90 - 100 units ▪ Average buyer income: MX$6K – 12K per month (~US$306 – ~US$611) ▪ Plot of land 110m2 – 138m2 ▪ Construction area of:

– Residential Mid 108m2 – 170m2 – Residential High 190m2 – 327m2

▪ Two story units ▪ Located in clusters of 100 units ▪ Targets workers with earning levels that qualify for “Apoyo INFONAVIT”, banks and SOFOM credits ▪ Average buyer income: MX$20K – 60K per month (~US$1,019– ~US$3,056)

(Number of units sold)

Sales Mix

AEL>$300,000 (US.$15,279) Residential (<$850,000)

Sales Mix per quarter

19.3650 MXP/USD In 2018, the price ranges to classify units were modified to better reflect the current market conditions. Before 2018 the price ranges were AEL>$260,000 / MI <$260,000 to $560,000 / RES <$560,000

Our business model gives us the flexibility to adapt our sales mix to market conditions

1,268.0 389.4 279.0 437.0

RES MI AEL

Developments Sales Mix 2011 2018

60

23 Average Sales Price

1,155.8 311.1 209.4 274.7 RES MI AEL Thousand pesos 11 Thousand pesos

AEL 57.5% RES 2.6% MI 39.9% NL 59.1% JAL 33.1% AGS 3.8% QRO 1.8% TAMPS 2.2% NL 47.1% JAL 15.9% AGS 7.4% QRO 5.1% MEX 14.4% TAMPS 0.8% Q ROO 9.3% AEL 13.1% MI 79.9% RES 7.1%

Additionally, we have diversified our portfolio in number of projects and locations, improving our sales mix and with higher average sale prices.

AEL 25.0% Middle 67.1% Residential 7.9% Land Reservesl: 80,455 available lots as of 4Q18

◼ Locations in regions with strong demand for housing ◼ The locations are within the acceptable contours of the

government for urban centers

◼ Land subject to subsidies and financing ◼ Located in markets where the Company has extensive

knowledge of the business and competitive advantage

◼ Access to public services, transport and infrastructure ◼ Land reserve of approximately 4.7 years

Example of Urban Contours (Monterrey) Land owned 67.0% Land trusts 33.0% Key Aspects

Javer’s land reserves are in attractive locations generating a competitive advantage by presenting the best housings to the market

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Source: Public documents of the Company. (1) U1: Location based in high labor demand; U2: Location with sufficient availability of services and; U3: perimiter of the cuty and growth based on population (2) Exempt refers to territories outside the urban contour that qualify for a subsidy

Segment Property Contours(1) (2)

U1 U2 U3 Exempt (2) Exempt(2) Exempt(2) U1 1%

U2 2% U3 72% Exempt 25%

We also distinguish ourselves by having projects in development and land reserves of high quality

INDUSTRY

89 56 88 108 108 95 101 97 104 192 243 200 269 291 301 372 418 456 489 441 352 328 280 255 258 261 237 241 213 50 100 150 200 250 300 350 400 450 500

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

4.5% 3.5% 4.8% 6.0% 7.0% 7.3% 7.0% 8.1% 8.9% 9.3%

Despite the adjustment of the market for new homes to the normalized size of the demand in the last decade, we have increased our market share

Source: CONAVI and Infonavit’s report “Credito por Oferente” as of December 31,2018

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(k loans)

Javer Other homebuilders 15

Infonavit loans for new housing per state (2018)

53.7%

46.3% of loans for new housing are granted in the rest of the states

Source: “Créditos formalizados por oferente” as Dic 31, 2018

Which we have achieved by our presence in the states with the highest percentage of labor formality

9.3% 23.7% 13.3% 13.4% 26.0% 21.1% 12.6%

National NL Qro Jal Ags State of Mex Q Roo

#2

#1 #1 #1 #2

16

9.3% 4.1% 3.7% 3.2% 2.7%

JAVER ARA SADASI RUBA CADU

SADASI

1

1

#1 #2 #1

Nationwide 4.8% NL 17.2% Qro 8.1% Jal 8.7% Ags 15.7% State of Mexico 9.7% Q Roo 10.8%

Market share according to Infonavit’s total loans (New and used housing)1)… 1

ARA

1

Leader in market share of Infonavit credits for new housing (1)… … with a leading presence in Javer (1) main markets

X I A SI A CADU

1

Since 2014, we occupy the # 1 position in the market share of the Infonavit credit system nationwide and the first positions in the states where we have a presence

▪ On December 28, 2018, the Mexican federal government published its expenditure budget for 2019 and the subsidy budget was eliminated. ▪ Ps. 400 million were approved to be distributed for subsidies, however, this amount will be spend within 1 month of operations. ▪ The new housing policy will be released in April.

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UMA:$84.49 (US$ 4.3) Monthly Income: $2,568.50 (US$ 130.8)

INFONAVIT CONAVI

▪ Due to the elimination of the subsidy budget, Infonavit is working to increase the amounts

• f

credits

• f

beneficiaries with income up to 2.8 UMAs to mitigate this effect and help those who need it most. ▪ The maximum amount of a loan was raised from Ps. 921 thousand in 2016 to Ps. 1.7 million in 2017, and in February 2018 it was raised again to Ps. 1.9 million, expanding the universe of customers. ▪ Infonavit loans’ rate remains at 12%.

Carlos Martínez Velázquez

Head of INFONAVIT. In the public sector, he has served as advisor to the Board of Directors of the Federal Electricity Commission (CFE); Head

• f

the Office

• f

the Federal Consumer Procurator (Profeco) and in the Ministry of Economy. He has a degree in Political Science and Economics from ITAM and a Master's degree in Environmental Policy and Management.

Román Meyer Falcón

Head of SEDATU Architect graduated from ITESM, with a Master's degree in Creative Management and Transformation of the City from the Polytechnic University of Catalonia, in Barcelona (UPC). He has specialized in Sustainable Economic Development and Urbanism, with a social, public health and crime prevention approach. He has served as professor at the Universidad Iberoamericana, as Director of Strategic Projects

• f the Ministry of Health of the Government of

Mexico City and as technical advisor to the Ministry of Finance.

The year 2019 will bring changes and challenges to the housing sector

New management in the housing sector agencies

Edna Vega Rangel

Head of CONAVI She has a degree in Sociology, Master in Metropolitan Planning and Doctor in Sociology from the Autonomous Metropolitan University (UAM), with specialty in Society and Territory. She is as an expert in Urban Development.

OUTLOOK 2019

17 in 1H19

23

New Projects in 2019

6 in 2H19

RES: 9 MI: 5 AEL: 3 RES: 4 MI: 2

1H19 will be affected in terms of volume, since the subsidy program will no longer be available. We will also see the effects on working capital due to the start-up of the new projects, which will be reversed in 2H19. We have initiated an austerity and expense reduction plan that will help us maintain an

• ptimal

structure according to market conditions. Our recently updated hedging strategy includes 100% of the principal and 100% of the following three coupon payments.

GUIDANCE

Revenues between Ps. 8.0 – Ps. 8.5 billion EBITDA growth between 2.5% to 5.0% Positive Free Cash Flow

In 2019, there will be a decrease in volume but we will maintain the same levels of profitability through an improvement in our sales mix