Federal Government ratifies its boost to the Housing Sector… we are in line

Last week, during the Announcement of the Annual Housing Programs´ Goals for 2012, the Ministry of Finance ratified that the priority for the government are the low income families, as well those who are not affiliated to a housing institute.

It also mentioned as the most relevant goals and initiatives for the year:

• 1 million actions (including loans and subsidies), which represent an investment of MX $219 bn
• MX $2 bn for subsidies for the Non-Affiliated Program throughout new schemes such as “Crediferente”
• The announcement of the Intersecretarial Housing Commission headed by SHCP, which will strengthen the incentives and resources´ basket to promote a more efficient DUIS certification process.

 With these, we ratify that our strategic decisions and business lines gives us an strategic position  and confidence to face the industry´s new and challenging stage of sustainable growth, being able to take advantage of the sector´s opportunities in line with our 2011-2015 Strategic Framework.

Soon, you´ll have news about our first signatures of the “Crediferente” Program, which without a doubt will be the first ones nationwide.

 For further information you can go to the following link:  

http://excelsior.com.mx/index.php?m=nota&seccion=dinero&cat=13&id_nota=803030

Thanks,

Best regards,

Selene Avalos

Urbi´s CFO

Good news for the Industry: Amendment to Infonavit´s Law passed… second mortgage!

It´s great news that the Senate has finally approved the amendment to Infonavit´s Law: http://www.eluniversal.com.mx/nacion/191951.html

The amendment basically states large benefits with which retirees can recover their savings that they had in their housing sub-account; and even better, the active workers would be able to access a credit in Mexican pesos at nominal rates and to a second mortgage but only those who have already paid the first one.

With this new reform, the potential market increases up to 1.9 million for which we already have an irresistible offer: Casa Capital Plus. This scheme with which we have more than 4 years of experience, promotes pre-habited housing and it´s an ideal alternative for those families that look for a better home that satisfies their actual needs according to their new life-cycle.

These governmental initiatives strengthen our unique position in the industry to take advantage of the new benefits and incentives that the federal government grants to Mexicans.

Thanks,

Best regards,

Selene Avalos

Urbi´s CFO

When we see OPPORTUNITIES where other see THREATS

Last week I had the opportunity to be invited as a guest speaker at a conference at the Foro PyMe 2011, organized by Mexican Chamber of Construction (CMIC) of BC, where the invitation was to re-think about entrepreneurship, leadership and life lessons.

Among the experiences and reflections that surprised the most where:

Our search and decision under a crisis environment, where we see an opportunity that must be gathered, in order to take new positions.

And the most curious, is how it relates and proves the thesis of DO, of taking the opportunities that are present under complex scenarios.

This graph of Mexico´s economic cycles and Urbi’s behavior surprised the audience, since it shows that every time Mexico has faced hard times, Urbi has decided to take advantage of the opportunities presented at that moment to grow.

Thanks to the CMIC´s organizers, to allowing us share our business vision. I am convinced that not always a global crisis is a threat, but within a framework of strategic analysis, it can become a great opportunity.

Thanks for reading me; I would like to know your opinion. 

 

  

Selene Avalos, shares vision and business strategy with businessmen from CMIC

Selene Avalos

Urbi´s CFO

We integrated two new Housing Projects in Progress in Nuevo Leon and Hidalgo

I would like to share with you, that during 3Q11, Urbi integrated to its operation 2 new Housing Projects in Progress (HPPs) in the municipalities of Tepeji Del Rio in the state of Hidalgo, and Ciénega de Flores in the northern state of Nuevo León.

The integration of these new projects is aligned with Urbi´s geographic expansion strategy, having already integrated 11 HPPs over the past 1 ½ year in important cities and states nationwide.

Some of the characteristics of the new projects are:

·         Focused to low income population

·         Targeted to attend workers from industrial zones, as well as from the oil and service industries

·         Combined volumes of over 5,000 homes

With the last HPPs integrated, Urbi has expanded its geographic presence to 39 cities and municipalities in 22 states; and there are several more projects in the pipeline for 2012!

Many of these projects are already generating revenues and some of them already generate free cash flow.

In the Urbi Management Team, we are enthusiastic about how the integration of these projects can become a source of opportunities and productive synergies for Urbi and our operational partners. Many of them are businessmen of small companies that move with great speed, transmit contagious dynamism to our internal areas, they are very receptive to Urbi´s innovative concepts, and they go fast in their implementation. All of these allies represent a very important source of ideas and proposals to improve our cost and expenses structure, and our processes. This exchange of ideas and this source of projects make us believe we have a high potential in this strategic business line.

 Descargar versión en Español. PDF attached

Best regards,

Selene Avalos,

Urbi´s CFO

 

SHF announces new credit scheme for the “Non-affiliated workers”

I am pleased to tell you that on Tuesday, September 27^th, Javier Gavito Mohar, CEO  of SHF (the Federal Mortgage Society), made the official announcement of the new credit scheme for non-affiliated workers.

The new scheme aims to give dynamism to the mortgage industry and therefore reduce the housing deficit; among the attributes of this new program we can find the following:

1. Guaranteed federal funds to absorb first losses

2. Subsidy for the down payment

3. Higher down-payment by the borrower

4. Housing Loans Insurance

I would like to highlight a quote from Javier Gavito Mohar, SHF’s CEO, which emphasizes the team work of homebuilder developers, government agencies and financial institutions:

“This distribution of risks, where everyone collaborates, will allow us to do a more adequate selection of borrowers with purchasing capacity within this segment, which is a riskier one.”

As we can see, this type of initiatives reaffirms the industry´s commitment and progress to offer solutions so low-income Mexicans might have access to a heritage and a better quality of life.

Similarly, for Urbi, this new loan program is an opportunity; that we will take to satisfy a market of over 5.8 million workers that have no access to social security systems, which is in line with our defensive strategy.

Note:

Let me share with you some news about the topic: http://online.wsj.com/article/BT-CO-20110927-714887.html

Descarga versión en español. PDF attached  

Best Regards,

Selene Avalos,

Urbi´s CF

Proposed increase

Proposed increase of over 70% in the budget of subsidies for 2012

I am satisfied to tell you, that President Felipe Calderon’s 2012 budget includes MX$9.5 bn for the subsidies program “Esta es tu casa”; which represents over 70% increase versus 2011.

As you know, the increase in the budget of subsidies is very relevant for the industry, as it ratifies the strategic support and importance of the sector for the economic, social and environmental development of Mexico.

The budget of subsidies allows Urbi to efficiently attend workers in the affordable entry-level segment which represent over 60% of Urbi’s revenues for 1H11.

As Flavio Torres, CANADEVI´s National President, said: “We express our recognition to the Mexican President, and to federal government authorities for their responsibility and commitment with Mexicans, and for making the housing industry and authentic engine for our 2012 development.”

Thus,, we ratify our defensive strategy to lead the industry’s new stage of sustainable growth, in line with Urbi’s r Strategic Framework 2011-2015

Best regards,

Selene Ávalos

Urbi´s´CFO

“Ready to Move House”: Expansion Magazine

Today, I am sharing with you an interesting article by Expansion magazine, about how almost 6 million people non-affiliated to Infonavit or Fovissste could acquire a home thanks to the new products and initiatives to be launched for this market segment.

This article highlights Urbi’s expertise and track-record on the attention of the housing needs of non-traditional workers through our unique Alternativa Urbi scheme, which allows us to be well prepared to take advantage of the new initiatives and increase our leadership in a market that represents over 60% of the working population.

I hope it will be of your interest.

Thank you for your comments,
Selene Avalos,
Urbi CFO

Download the article

About...further details on Urbi’s cross-currency and interest rate swap instruments

Urbi has swap instruments to protect the company versus foreign exchange and interest rate fluctuations related to its US$ denominated debt. The principal coupons are covered until maturity and the interest coupons are covered mainly the first 5 years and protects the company against depreciation of the MX$ vs. US$; For example, Urbi’s 2020 bond is protected against exchange rate losses (depreciation) above MX$12.7/US$1, but it does not have a floor if the exchange rate moves in the opposite direction (appreciation). 

Once the liability management of Urbi’s debt takes place, the characteristics of the swap instruments will be modified and optimized. 

Meanwhile, the valuation and registration of derivatives under the IFRS consider the reasonable value and are specific and technical, but basically, should evaluate:

• The change in the reasonable value or cash flow based on the projection for the full term of the debt
• The registration of swaps derivatives varies depending on its characteristics:

• If they are coverage swaps the changes in valuation should be registered in the income statement.
• If they are cash flow derivatives the ineffectiveness in the valuation should be only registered in the income statement; the effective part is registered in the balance.

Urbi’s swaps are cash flow derivatives:

• The effectiveness in valuation should be registered as part of the integral income in the balance
• The ineffectiveness part in valuation should be registered in the income statement

Each quarter the derivatives should be evaluated, cancelling the previous record and generating a new one.

That´s the reason it has been observed such kind of variations from one quarterly results to the next in that specific row. It will be reported whether it is a cash or non-cash record.

A NEW MORTGAGE PRODUCT FOR WORKERS NON- AFFILIATED TO INFONAVIT or FOVISSSTE IS EXPECTED ON 3Q11!

Urbi IS THE BEST PREPARED COMPANY TO CAPTURE THIS NEW OPPORTUNITY!!!

Let me share CONAVI’s announcement about a New program expected for workers non-affiliated to Infonavit or Fovissste, a potential positive development for Alternativa Urbi:

According to El Sol de Mexico and El Financiero, Ariel Cano, CEO of Conavi, is planning the announcement of a program targeted to workers non-affiliated to Infonavit or Fovissste on July 2011. The product is being developed by SHF in conjunction with Conavi, banks and sofoles under a scheme of guaranteed funds and mortgage insurance through financial institutions.

Mr. Cano cited that there are around 2 million non-affiliated workers with economic capacity who could potentially benefit from this program.

As you recall, Urbi has had sales schemes targeted to non-affiliated workers for over 8 years, so it is uniquely positioned to take advantage of these new initiatives.

Alternativa Urbi attends workers non-affiliated to Infonavit or Fovissste and those affiliated who do not qualify for a mortgage yet; which represents over 20% of Urbi’s revenue for 2010

Thanks to our expertise attending non-affiliated workers, in 2010 Urbi was the only company to participate in the Rent-to-Own Program with Infonavit.

We will keep you posted...

Best regards,
Selene Avalos,
Urbi CFO

Urbi moves forward to 2x1

May 24th, 2011

I am proud to share with you that we are now delivering subsidies through the 2x1 program in the cities where we operate.

Aside from the satisfaction that comes from changing the lives of lower-income families by turning them into homeowners, we can see the multiplying effect this program has, which during 2011 will have more than MX$900 millions in funds.

As you may recall, state and municipal governments match every $1 peso given by the Federal Government with $2 pesos; aside from driving the housing market, these resources have an economic impact that benefits the communities where governments are bringing in their support and channeling additional resources.

The first homes have been delivered to more than 300 families in Tijuana and Mexicali, and very soon new homeowners will be signing for their homes in Sonora, Sinaloa and Aguascalientes. Plus, we are considering adding Guanajuato next.

Let's keep moving forward with the 2x1!

Eneyda Alvarez, mother and a factory worker in Tijuana, signed her 2x1 and made her dream come true with Urbi.

More families signing for their homes with their 2x1…and we're going for more!

We appreciate your comments at blog.cfo@urbi.com

Let's talk

Selene Ávalos
Urbis CFO

In addition to attracting new business and talent, Housing Projects in Progress are in so many ways a catalyst for opportunities at Urbi!

May 18th, 2011

With the start of Housing Projects in Progress (HPP), in the last few months we've seen the dynamics of its integration create an explosion of business opportunities, working as a catalyst for our value chain.

To mention an example, let me tell you what has happened in the western central region. Because of the geographical proximity between Nuevo Vallarta and Guadalajara's metropolitan area, natural interaction between the project leaders of each business unit led them to identify differences in production costs. This interaction generates an exchange of best practices

We visualize some of the benefits of this strategy as three separate items:

1. Urbi's ability to attract clients as a company well-known for its trajectory and reputation as well as for it's unique business model that integrates talent and projects.

2. The ability of Operating Partners to bring proposals or new projects to the table. These allies have worked as small housing promoters, and with the restrictions imposed by the economic environment, they are now generating a great amount of project and business plans with an added value.

3. HPP's INTEGRATION STRATEGY attracts RESOURCES. It is a very attractive line of business, and its dynamism and speed have led providers, subcontractors, banks and financing institution to identify it as a value scheme.

	a. Vendors and subcontractors (supplies) let us know they have the capacity to supply materials or build homes and make themselves available as vendors or subcontractors under conditions that work for the project.
	b. Technology and echo technology vendors. After meeting with our allies in the construction systems sector, we began putting together a pipeline to explore pilot projects to speed up housing production or improve our UrbiNova system for three-level vertical housing.
	c. Financial resources. The recovery cycle for these housing projects is so quick; they are very attractive to bring in resources. Bankers and financial institutions themselves much rather get involved in a project where there is a small promoter they already know; and once Urbi gets added to the mix, they know everything will run smoothly.

We've expanded our WIN-WIN-WIN network!
We realize that with this strategy we are expanding our network, where our Clients Win, our Allies Win and Urbi Wins.

We put forward a strategy, the strategy attracts resources, our allies provide the projects, and we become highly attractive to clients.

We will keep you updated on the progress made with this strategy.

We appreciate your comments at blog.cfo@urbi.com

Let´s talk

Selene Ávalos
Urbis CFO

About the inventory days for 2011…

May 6th , 2011

In regards to the question about inventory days 2011e made during Urbi’s 1Q11 results conference call, let me mention that Urbi expects between 720 to 745 days.

Please let us know if you have additional questions. We will welcome your comments and look forward to hearing from you again.

Keep in touch

Selene Avalos
Urbi’s CFO

Welcome to Urbi’s Blog with the CFO…let’s initiate a dialogue…

May 5th, 2011

As I mentioned during 1Q11 results conference call, given that Urbi is just starting its new strategic plan for the next 5 years, and understanding the investment’s community need for additional details and updates on the evolution of our business plan; we have decided to open a new channel of communication with you, the CFO Blog, where we will post regular updates about Urbi and the Industry, and provide you with additional details on the evolution of our annual goals.

Welcome! Let’s talk!
Selene Avalos
Urbi’s CFO

Quarterly Earnings Report 1Q11

May 2nd 2011

Urbi 1Q2011: Progress on business plan with growth, margins and cash flow generation

Mexicali B.C., May 2nd 2011.- Urbi Desarrollos Urbanos, SAB de CV, announced its 1Q11 earnings results in line with its strategy of profitable growth with cash flow generation.

The company reported in 1Q11:
Revenues of MX$2,832.8 million, 17.1% growth versus 1Q10.
- 87% from the housing development business line and
- 13% from the housing related activities business line
EBITDA of MX$757.8 million, with a margin of 26.8%
Net Income of MX$216.6 million, with a margin of 7.6%
Cash balance of MX$6,032.6 million, 47.3% higher than 1Q10.

Selene Avalos, Urbi’s CFO, commented: “In line with our strategy of profitable growth with FCFE for 2011, during 1Q11 we delivered strong growth and...

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Quarterly Earnings Report 4Q10

February 28th

4Q10: URBI MAINTAINS LEADERSHIP IN MARGINS AND NET INCOME

Mexicali, BC, February 28th 2011.- Urbi Desarrollos Urbanos, SAB de CV announced its 4Q10 results in line with its strategy of quality growth, consolidating its leadership in margins and as the company with the highest net earnings in the industry.

The company’s results in 4Q10 were

• Revenues of MX$4,984 millions, 4.2% higher than 4Q09
• Ebitda of MX$1,334 millions, with a margin of 26.8%
• Net income grew by 127.9% with a margin of 14.6%
• Free Cash Flow to the Equity was MX$347 million, which includes MX$1,088 million of strategic investments in the integration of housing projects in progress from other home developers.

Selene Avalos, Urbi’s CFO, commented: “Our leadership in...

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Quarterly Earnings Report 3Q10

October 25th

3Q10: Urbi maintains leadership in volume and revenue growth with the highest margins in the industry, in line with its strategy of quality growth.

Mexicali, B.C., October 25th, 2010.- Urbi Desarrollos Urbanos, SAB de CV, announced its results for 3Q10, which are in line with its strategy of quality growth, and of maintaining its leadership in affordable entry-level housing.

The company reported in the 3Q10:

• 8,693 units sold, 9.9% higher than in 3Q09; with an increase of 55.6% in affordable entry-level housing
• Revenues of MX$4,200 million; 15.7% higher than in 3Q09.
• EBITDA of MX$1,188 million with a margin of 28.3%
• Net margin: 12%
• Cash: MX$5,658 millions, 90.1% higher than in 3Q09

In this regard, Cuauhtemoc Perez, Urbi’s CEO, commented...

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Quarterly Earnings Report 2Q10

July 26th

2Q10: Urbi delivers strong volume and revenue growth, leadership in margins and solid liquidity position; in line with its strategy of quality growth.

Mexicali, BC, July 26th 2010.- Urbi Desarrollos Urbanos, S.A.B. de C.V. announced its 2Q10 results, which were consistent with its strategy of quality growth, maintaining a strong balance and liquidity position with a focus on the defensive housing segments.

The company reported in the 2Q10:

• 8,517 homes sold, 28.1% higher than in 2Q09; with a 60.4% growth in affordable entry-level housing
• Revenues of MX$3,349.5 millions; 9.1% higher than in 2Q09
• Ebitda of MX$894.2 millions, with a margin of 26.7%
• Net income margin: 12.9%
• Cash: MX$4,899.1 million, 219.9% higher than in 2Q09

Selene Avalos, Urbi’s CFO, commented...

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Quarterly Earnings Report 1Q10

April 27th

1Q10: Urbi grows housing volumes by 23.5%, maintaining the strength of its liquidity and its position as the company with the highest operating margins in the industry.

Mexicali BC, April 27th th , 2010.- Urbi Desarrollos Urbanos, SAB de CV released its 1Q10 results, which are consistent with the strategy for 2010 of delivering quality growth with free cash flow generation, while maintaining its focus on the housing industry defensive markets.

Under this context, the company reported the following results:
• 6,389 units sold, 23.5% more than 1Q09; with an increase of 34.7% in affordable housing.
• Revenues of MX$2,419 million; 9.0% higher than in 1Q09
• Gross income of MX$711 million with a margin of 29.4%
• Ebitda of MX$678 million with a margin of 28.1%
• Cash and cash equivalents: MX$4,094 million, 365.8% higher than in 1Q09

To this regard, Selene Avalos, Urbi’s CFO, commented...

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Quarterly Earnings Report 4Q09

February 22nd

URBI: 2009 RESULTS IN LINE WITH STRATEGY OF PRUDENCE AND LIQUIDITY

- Revenue growth, reduction on operating expenses, taking care of margins and free cash flow during 4Q09 allowed the company to reach goals for 2009
- 4Q09 is the 3rd consecutive quarter that Urbi generates positive free cash flow, which is one of the pillars of growth going forward.

Mexicali, February 22nd 2010.- Urbi Desarrollos Urbanos SAB de CV announced its 4Q09 results which allowed the company to reach its goals of strengthening its balance sheet and liquidity position established on March 2009...

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Quarterly Earnings Report 3Q09

October 26th

“Strengthening balance for a smart and selective growth
in 2010”.

STRONG LIQUIDITY POSITION AND THE HIGHEST MARGINS IN THE INDUSTRY

• The company obtained a FCF position of MX$145 million, a cash balance of MX$2,976 million and revenues of MX$3,076 million.
• Ebitda margin achieved a new high; reaching a level of 30.9% for the quarter. Net margin was of 14.9%

Mexicali, B.C. October 26th 2009.- The company reported revenues of MX$3,076 million for 3Q09. During the first nine months of 2009, revenues were MX$8,740 million, 67% of the target for the year, consistent with its strategy of adjusting the construction-in-progress to 75% of the previous goal for the year and reach a level of MX$13,000 million in revenues for 2009.

Urbi’s FCF generation for the quarter was MX$145 million,...

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