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EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY Powered By Docstoc
					       REPUBLIC OF PERU




     TERRA MAR
 MODULAR CITY PROJECT




  EXECUTIVE SUMMARY



PRIVATE INVESTMENT PROMOTION AGENCY




   SANITATION AND STATE PROJECTS COMMITTEE




                 May 2008
Terra Mar Modular City Project                                                                    Executive Summary




                                  ProInversion Contact Information
          Name                           Position                                       Tel. / Fax / e-mail

                                                                           www.proinversion.gob.pe

Alex Albújar                  Projects Head             Tel:               (511) 6121200 (Extension 1350)
                                                        e-mail:            aalbujar@proinversion.gob.pe
John Schuler                  Real Estate Projects Head Tel:               (511) 6121200 (Extension 1292)
                                                        e-mail:            jschuler@proinversion.gob.pe
Antonio Castillo              Promotion Head            Tel:               (511) 6121200 (Extension 1270)
                                                        Fax:               (511) 4422948
                                                        e-mail:            acastillo@proinversion.gob.pe
Isabel Roncal                 Promotion                 Tel:               (511) 6121200 (Extension 1332)
                                                        Fax:               (511) 4422948
                                                        e-mail:            broncal@proinversion.gob.pe




                                               Important Advice
This Executive Summary has been prepared by PROINVERSION and has been provided solely for informative use by
potential investors to help them in defining their interest in participating in the Terra Mar Modular City Project Bid. This
document does not represent an investment solicitation.

Receiving this document implies that potential investors have expressed acceptance that the Peruvian State,
PROINVERSION and the Financial Advisors shall not be subjected to any present or future liability or any legal liability
stemming from the document herein.




                                                              2
Terra Mar Modular City Project                                                                    Executive Summary


1. Peru

Peru is South America’s third largest country, after Brazil and
Argentina. It spans over 1.28 million Km2 and has a population
of 27 million people and 21 inhabitants per square kilometer
population density. It is located in the west central portion of
South America’s Pacific coast, a position that poses it as a
regional business hub as well as a strategic bridge among the
markets of South America, the United States and Asia.

In terms of GDP, Peru shows a sustained growth and registered
an 8.99% increase in 2007, the highest growth rate in the last
14 years.    In this same year per capita GDP reached almost
US$ 3 931.




Since 2002, Peru has enjoyed a positive trade balance that reached US$ 8,4 billion in 2007, as
a result of a permanent growth in the export levels.

                                                                    Exports and Imports 2006 - 2007
                    GDP’s Growth
                                                           9000
                                                           8000                       US$ Million
                                                           7000
      12,0
                         9,2 8,5             9,7*          6000
      10,0   8,0                 8,1 8,0 8,4               5000
       8,0         6,5                                     4000
       6,0                                                 3000

       4,0                                                 2000
                                                           1000
       2,0
                                                             0
       0,0
                                                                   06T     06T2 06T3 06T4 07T1 07T2 07T3 07T4
             06T1 06T2 06T3 06T4 07T1 07T2 07T3 07T4               1                     Quarters
                         QUARTERS                                   Total Exports                        Total Imports
                                                                    (million US$)                        (million US$)

   (*)Estimated                                            Source: BCR / INEI
   Source: BCR / INEI

Likewise, exports reached a new record in 2007. It registered US$ 28 billion, which represents
a 17% increase compared to 2006. This increase is mainly attributed to a greater product
diversification, favorable price evolution in foreign markets and access to new ones.

                                                                                   Net Foreign Currency Reserves
Net Foreign Currency Reserves reached US$ 27 689                                              US$ Million
million as of December 2007, while Foreign Debt was
estimated at 28,9 % of GDP.                                              30000
                                                                                                                               27689*

                                                                         25000
Peru has an active capitals market. In 2007                                                                             1727
transactions in the Lima Stock Exchange totaled US$                      20000
                                                                                                                 1409
                                                                                                          1263
12 400 billion.                                                          1500
                                                                                                9598 1019 1
                                                                                         8613
In 2006, the Lima Stock Exchange (BVL) earned                            1000     8180

168,3%, and became the world’s most profitable                           5000
market in that year.                                                        0
                                                                                 2000 2001 2002 2003 2004 2005 2006 2007



                                                                  Source: BCR / INEI Source: BCR / INEI



                                                       3
Terra Mar Modular City Project                                                                 Executive Summary


2. Lima

Lima is located on Peru’s central Pacific coast at 101 masl. Temperature ranges from 12ºC to
19ºC in winter to between 21ºC to 28ºC in summer. Relative humidity fluctuates between 80
and 100% throughout the year.

Lima department contributes 48% of national GDP, a sign of its importance nationwide. Its
economy is diverse and includes, most notably, manufacturing, commerce, financial and other
services, tourism and farming.

                                Peru: Demographic and economic highlights


                                                            Population**                 GDP
                                    Surface*
                                                           Total    Urban            US$ 1/.     %
                  Lima                  35                 8 994            8 776    32 765      48
                  Peru                1 285               27 219            19 922   68 397    100
               * 000 sq km
               ** 000 to 2005
               1/. Estimate. Instituto Cuánto (in million USD) as of 2006
               Source: INEI, Instituto Cuánto: Perú en Números



The 2005 headcount by the National Statistics and Informatics Institute (INEI) gave Metropolitan
Lima (Lima and Callao’s quarters) a total 6.9 million people, or 22% higher than in the 1993
census, reflecting the high concentration of people in the nation’s capital.

The most populated quarters among the 43 districts making up Lima province are San Juan de
Lurigancho, San Martín de Porres, Comas and Ate Vitarte. By contrast, Ancon, in northern Lima
province, has only 29,400 people.


                                   Lima: 10 most populated quarters
                      District                                                  Population*
                       San Juan de Lurigancho                                            812.6
                       Sna Martín de Porres                                              525.2
                       Comas                                                             464.8
                       Ate Vitarte                                                       419.7
                       Villa El Salvador                                                 367.5
                       Villa María del Triunfo                                           355.8
                       San Juan de Miraflores                                            335.2
                       Lima                                                              289.9
                       Los Olivos                                                        286.6
                       Santiago de Surco                                                 272.7
                       Ancón                                                              29.4
                     (*) thousand people
                     Source: 2005 Census. INEI




                                                               4
Terra Mar Modular City Project                                              Executive Summary




3. Metropolitan Lima’s realty market

Data from the 2005 Population Census reveal more than 96% of Lima households live in an
individual house (i.e. one family in each house). For statistical purposes, a household is a
group of people who prepare their meals as a group.


The number of households is 2,041,435 of which 77.1% live in an independent house on a plot,
and 15.3% live in apartments in buildings. The remaining 7.6% live in closes, neighborhood
houses, makeshift houses, huts and shacks.


                                 Type of house
                                                                           %
             House                                                        77,1
             Apartment                                                    15,3
             House in close                                               2,8
             Neighborhood house                                           1,4
             Hut or shack                                                 0,2
             Makeshift dwelling                                           2,8
             Not used                                                     0,2
             Other                                                         0,2
             Total (households)                                        2 041 435
             Source: X Population, V Housing National Census, 2005, INEI


Significantly, 69.9% of Lima households live in their own houses. They were bought with a
mortgage loan that has been wholly paid or were built on squattered land. A significant 18.6% of
households live in rented houses.



                            Type of ownership
                                                                           %
             Fully paid property                                          56,5
             Rental                                                       18,6
             Private property, on credit                                   4,1
             Private property, squatter holding                            9,3
             Given by employer                                             1,5
             Given by other household                                      6,2
             Other                                                         3,7
             Total (households)                                        2 041 435
             Source: X Population, V Housing National Census, 2005, INEI


Almost 80% of walls are brick or cement blocks, while flooring is predominantly cement, dirt,
tiles and parquet wood. Roofs are mostly concrete (63%) and corrugated tin sheets (20.1%)




                                                 5
Terra Mar Modular City Project                                                 Executive Summary


                                       Building materials
              Walls                                                           100%
              Brick or cement block                                            78,5
              Adobe or mud wall                                                 9,9
              Other                                                            11,6
              Roofing                                                         100%
              Concrete                                                         63,0
              Other                                                            37,1
              Flooring                                                        100%
              Cement                                                           52,5
              Dirt                                                             15,1
              Tiles and similar materials                                      13,8
              Parquet or polished wood                                         13,6
              Other                                                             4,9
              Source: X Population, V Housing National Census, 2005, INEI




4. Terra Mar Modular City Project

Housing policies have become permanent and stable State policies. The housing sector brings
together regional and local governments, and private organizations with a view at developing
technology for and formalizing house building.

Sector policies aim at consolidating home building to drive growth and wealth distribution,
improve standards of living, and create lifestyles that foster family and community integration
and cohesion.

Central and Metropolitan Lima governments’ urban development policies rule Lima’s growth
must focus on the large central Lima areas and in the peripheral uncultivated land with a viw at
protecting the Rimac, Chillon and Lurin river valleys.

Peru’s government has set in motion the National Houses for All Housing Plan, an umbrella
program including the Mi Vivienda, Techo Propio and Mi Hogar programs that provide a number
of home ownership options for low and medium income households.

By virtue of the Framework Law to Promote Decentralized Investment Number 28059 as
regulated by D.S. N° 015-2004-PCM, as amended by D.S. N° 013-2007-PCM, PROINVERSION
has declared the public interest of a private initiative called Terra Mar Modular City submitted
by the consortium made by Manatt Jones Marconini Global Strategies, Moladi Americas, CRT
Capital Group, PADCO/AECOM, South America Homes, Los Portales Negocios Inmobiliarios
SAC and Desarrollo de Redes SAC, published November 29, 2007.

After the regulatory 30-day waiting period, a third party informed its interest in also executing the
private project. Pursuant to regulations in force, a Call for Tenders was launched on January 1,
2008, to promote private investment in the Terra Mar Modular City real estate project.




                                                  6
Terra Mar Modular City Project                                              Executive Summary


5. Purpose of the Tender
To choose the local or foreign, individual or consortium corporation interested in purchasing the
LAND PROPERTY owned by MINDEF and building there over a period of ten (10) years that
may be extended for an additional maximum five (5) years counted as from the handing over of
the PROPERTY, a social housing development of quality, low cost houses under the best
possible conditions to final users.

Investors shall provide for the comprehensive planning, execution and construction of an urban
compound comprising at least 100,000 social interest houses to be built under the Techo Propio
scheme, which will be provided with all urban and social services for a project of such scope
and type.


6. Main Project Characteristics
Land property location and characteristics
The project will be built on 1599.35
hectares owned by the Ministry of
Defense in the Piedras Gordas
area, between kilometers 46 and 50
along the North Pan-American
Highway, Pasamayo Detour, in
Ancon District, in Lima province and
department.

Pursuant to Ancon District’s zoning
map, a property band along the
highway is an Intermediate Density
Residential Area. The remainder of
the property is uncultivated land. In
addition, the area where the
property is located is devoid of
urban development works, with the
paved      North       Pan-American
Highway, Pasamayo Detour, as the
only construction.

The property is made up pf
predominantly hilly, moderately
sloping and sandy soils with isolated
rock outcroppings.

The    property’s   borders     and
perimeter measures are as follows:

        Northwest: A state owned
        uncultivated property and
        the North Pan-American
        Highway,          Pasamayo
        Detour, along a line of nine
        segments measuring 645.00
        lm, 1,019.03 lm, 1,462.93
        lm, 428.85 lm, 1,044.87 lm,
        645.00 lm, 122.67 lm,
        254.50 lm and 979.58 lm, respectively.


                                                 7
Terra Mar Modular City Project                                              Executive Summary


       Southeast: A state owned uncultivated property along a line of three segments
       measuring 1,021.35 lm, 1,709.50 lm and 830.78 lm, respectively.

       Northeast: A state owned uncultivated property along a line measuring 3,993.46 lm.

       Southwest: A state owned uncultivated property along a line of three segments
       measuring 2,006.01 lm, 300.84 lm and 2,343.81 lm, respectively.


The property is part of the matrix land property registers in Dockets 4264783, Card 84202, and
the matrix land property registered in Docket 12003970, at the Property Registry of the Lima
Registry Office. The property division and conveyance on behalf of the Ministry of Defense is
underway.

Minimum Project Specifications
       Houses

       The realty project will cover at least fifty-five percent (55%) of the gross land area for
       residential use. This area will be used to build at least 100,000 houses under the Techo
       Propio scheme. The minimum floor space will be 49 square meters. The selling price
       will be determined pursuant to the Economic Offer submitted by the Award Winner but
       may not be higher than the maximum selling price fixed by existing regulations, i.e.
       S/.33,500.00 through Ministry Resolution 125-2007-VIVIENDA, dated May 6, 2007.

       Bidders may additionally include, if they so deem appropriate, Mi Hogar Program
       housing projects, selling between 10 and 25 UITs, and Mi Vivienda projects selling for
       between 25 and 50 UITs.

       Building the 100,000 houses comprised in the Techo Propio program shall conclude
       within ten (10) years, with a 5-year extension. This period will start once the
       PROPERTY is handed over to the buyer. The first 20,000 houses must be built in the
       first three (3) years after the PROPERTY is handed over to the investor.

       House quality standards

       Conventional construction Techo Propio houses will be built pursuant to the existing
       Building Unit Values Chart (R.M. N° 543-2007-VIVIENDA):

       Minimum technical standards:
       Walls and columns                       C
       Roofing                                 C
       Flooring                                H
       Doors and windows                       F
       Plastering                              H
       Bathrooms                               F
       Electric and sanitation fixings         G



       The construction system may be decided freely by the Bidders. However, it must ensure
       appropriate sound, environmental and thermal insulation. It must also provide a
       guaranteed useful life of at least 30 years and easy and low-cost maintenance.

       Non-conventional construction systems must ensure similar finishing standards as with
       conventional constructions and provide optimum conditions for habitations.

       City building parameters used to prepare the housing development project for the

                                                8
Terra Mar Modular City Project                                               Executive Summary


       100,000 houses will be defined and proposed by the award winner at his own risk. The
       award winning bidder will be responsible for presenting them to the relevant authorities
       for obtaining the corresponding permits.

       The building materials and procedures to be used must be new and guarantee the
       houses mechanical strength, stability, protection, safety, healthiness, salubriousness,
       hygiene, adequacy to environmental conditions, and easy maintenance. If non-
       conventional building materials and/or procedures are included in the proposal, the
       corresponding certification by the relevant authority (SENCICO) must be provided.

       Minimum house standards

       All rooms must have doors, depending on their function. The kitchen will include a
       hygienic and functional sink.

       Urban development

       Urban development will be type 5-C under the National Building Code (Reglamento
       Nacional de Edificaciones). It should include all the components established by this
       code category and additionally those under the Special Urban Development and
       Construction Code (Reglamento de Habilitación y Construcción Urbana Especial)
       enacted by Supreme Decree 053-98-PCM, as amended.

       The urban development project must include:
       (i)   A commercial area spanning at least 3% of the total property area;
       (ii)  An industrial area spanning at least 3% of the total property area;
       (iii) A Community Area (health, security, neighborhood administration, municipal
             services, churches, etc.) comprising at least 5% of the total property area, of
             which 2% will be allocated to Other Purposes.


       The project’s overall plan will take account of its relation and integration to Metropolitan
       Lima, Lima’s North Side and the Near North (Norte Chico) areas.

       The proposed urban design shall include the project’s immediate integration to the
       existing district and metropolitan road systems.

       It will also envisage a staggered execution so each of the proposed stages will include
       when completed all the services and equipment needed for appropriate development,
       relative to the corresponding stage’s size.

       Urban quality level

       The urban design proposal will be at least Type C, i.e. asphalt paved streets, asphalt
       sidewalks with curbs, individual household water and sanitation connections to the
       public grid, public and private lightning, and public telephone services




                                                 9
Terra Mar Modular City Project                                               Executive Summary



        During the first three years the housing development project will build water storage
        systems to ensure permanent water supply and a waste water disposal system. The
        proposal will include building a reservoir similar to the RP1 Villa Ancon reservoir in the
        Ancon Project to supply water by pumping to the first 20,000 Techo Propio houses.

        Likewise, the housing development project will provide for the expansion and
        improvement of the existing sewerage stabilization ponds in the Piedras Gordas PTAR.

        The winner will prepare the studies and follow the formalities needed to provide the
        project with electric power for normal operations.

        A system for the collection, temporary storage and final disposition of solid wastes will
        be included in the Technical Package. The urban development project will allocate
        public space for temporary collection and include the internal regulations governing the
        solid waste treatment system.

        The project will designate public recreational space conveniently designed and
        equipped for public use, including wooded areas.


7. Property base price and payment

Price is a competitive bidding factor. The PROPERTY’s base price is eighteen million six
hundred thousand dollars of the United States (US$18.6 million). No Economic Proposals will
be accepted for less.

The selling price will be offered by the winner. The price will be paid in full and in cash at the
time of signing the Purchase Sale Contract. Payment will be effected pursuant to the conditions
set forth in the Purchase Sale Contract and is a condition to signing the Contract.



8. Short-listing
To be short-listed, interested candidates must comply with the following.

a.- Financial requirements: Demonstrate a minimum equity as of December 31 of 2006 or later
of fifty million dollars of the United States (US$50 million) and minimum total assets worth one
hundred fifty million dollars of the United States (US$150 million).

b.- Technical requirements: Provide technical and regulatory documentation demonstrating
experience in undertaking low income housing development and/or house building projects sold
for not under one hundred million dollars of the United States (US$100 million) in the last five
years.

Consortia may demonstrate filling the above requirements through one or more of their
members. Adding the members’ equity, assets and experience, if needed, is acceptable.




                                                 10
Terra Mar Modular City Project                                                              Executive Summary


9. Timeline

Submission of Short-listing Package No. 1                Until July 25, 2008.
Submission of Packages N° 2 and Nº 3.
                                                         August 27, 2008
Opening of Package N°2
Opening of Package No. 3 and award of
                                                         September 05, 2008
contract.
Closing date                                             To be announced by circular

 (*) Changes will be timely informed by the ProInversión Committee by circulars sent to Participants and published on
ProInversión’s website.

Rules about deadlines, days and times. Unless otherwise explicitly stated,

     (i)       Deadlines expire on the indicated day if a business day, or on the day after a non-business day.
     (ii)      Non-business days are Saturdays, Sundays, banking holidays and ProInversión non-business days by
               government decision.
     (iii)     All documents and communications relating to the Competitive Award will be delivered at ProInversión’s
               Reception Desk (first floor), at the address mentioned in paragraph 3.3.1 of the Tender Documents.
               Days begin at 09:00 hours and end at 17:30 hours, Lima time.




10. Other information
     Available at Proinversion’s web site at www.proinversion.gob.pe, Iniciativas Privadas sobre
     Recursos Estatales.




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