AVLL3

Alphaville S.A. is a Brazilian publicly traded company in the real estate sector, with common shares listed on B3 under the ticker AVLL3. In its current form, the company was incorporated on May 15, 2012 as a privately held corporation, initially focused on holding interests in other companies and investment funds. On December 9, 2013, this holding company acquired 70% of Alphaville, assuming control of the real estate operation, while Gafisa S.A. retained the remaining 30%. Subsequently, in 2019, a corporate reorganization took place with the exit of Gafisa and Blackstone, leaving investment funds managed by Pátria as the main controlling shareholders. On June 29, 2020, the company adopted the corporate name Alphaville S.A., consolidating the direct association between the holding company and the brand of its master-planned urban developments.

Although Alphaville S.A. is relatively new as a publicly traded company, the operational origins of the Alphaville brand date back to 1973, with the launch of the first residential gated community in Barueri, in the metropolitan region of São Paulo, conceived by Renato Albuquerque and Yojiro Takaoka. The concept of a high-end gated residential community, known as Alphaville Residencial, drove the economic transformation of Barueri and became a benchmark for master-planned urbanism in Brazil. In 1994, Alphaville was formally established as an urban development company and, starting in 1997, began geographic expansion into other cities and states, including Campinas and Belo Horizonte. Over the following decades, the company broadened its portfolio, entered new state markets, and built a track record of more than 130 projects delivered in over 70 Brazilian cities.

Alphaville’s business model is centered on the development of gated residential and commercial subdivisions, with a focus on selling developed lots. Management states that the company is organized into a single business unit, the “lot sales” segment, which accounts for substantially all operating revenue. The activity involves identifying land with urban development potential, entering into partnership agreements with landowners, developing the urban design, obtaining licenses and approvals, managing infrastructure works, and marketing the lots. The company adopts an asset-light model in which, as a rule, there is no direct acquisition of land: the landowner retains the asset and becomes entitled to a share of the net revenue from sales, reducing the need for the developer to tie up its own capital in land.

Alphaville’s projects are structured into three main product lines, segmented by lot size, quality standard and customer income bracket. The Alphaville line comprises projects with lots starting at 360 m², leisure areas between 25,000 and 30,000 square meters, and a high average ticket, targeting high-income clients (AA class), and represents around 60% of the current landbank’s potential sales value (PSV). The Terras Alpha line consists of subdivisions with average lot sizes of 250 to 360 m² and leisure areas of 12,000 to 15,000 square meters, targeting upper-middle income clients (A class), corresponding to approximately 30% of PSV. The Jardim Alpha line comprises projects with average lot sizes of 200 to 250 m², leisure areas of around 6,000 square meters and a lower average ticket, targeting middle-income clients (B class), representing about 10% of PSV. In addition to these formats, the company develops so-called Cidades Alpha, planned neighborhood projects that combine residential, commercial and service features in the same area.

From a geographic standpoint, Alphaville has built a broad nationwide presence, stating that it operates in 23 Brazilian states and in the Federal District. This geographic diversification is reflected both in completed projects and in its landbank, which consists of areas for the development of master-planned neighborhoods, subdivisions and gated communities in various regions of the country. The company’s landbank, estimated at tens of billions of reais in attributable potential sales, includes both new areas and future phases of projects already launched or under development. Its nationwide presence is supported by a standardized process for land prospecting, feasibility studies, market research and product definition, which takes into account local characteristics such as income, demand, competition and urban dynamics. All revenue is generated in Brazil, and the company reports that it has not earned revenue abroad in recent fiscal years.

Alphaville operates in a fragmented competitive environment within the Brazilian real estate development and subdivision market. In the specific subdivision segment, the company highlights the predominance of local competitors, with no other B3-listed groups focused exclusively on this niche. At the same time, in the mid- to high-income real estate construction market, Alphaville competes with publicly traded developers such as JHSF, Cyrela and EZTec. The company specializes in gated subdivisions targeting upper-middle and high-income segments, and states that it is the only B3-listed company focused exclusively on subdivisions. Its sales strategy uses diversified marketing channels, partnerships with real estate agencies and its own commercial and credit management system, with a digital workflow for approval and formalization of purchase and sale agreements.

Operationally, Alphaville organizes its production process into integrated stages, although execution of construction works is mostly outsourced. The company internally conducts the development of urban design projects, technical and legal approvals, licensing management and oversight of works, while hiring contractors based on price, reputation and compliance with quality standards. The engineering department coordinates service providers, suppliers and compliance with codes and regulations, seeking to ensure projects are delivered within contractual deadlines. Works generally begin within 12 months after commercial launch, with average construction periods ranging from 18 to 36 months, depending on the complexity and scale of the project.

Alphaville is subject to extensive municipal, state and, in certain aspects, federal regulation, due to the nature of its subdivision and urban development activities. Each project requires urban planning approvals, environmental licenses and authorizations for the start and completion of works, issued by municipal departments of urban planning, infrastructure and public works, as well as state environmental agencies. The process includes preliminary and installation environmental licenses, approvals of drainage, paving, sanitation and road access projects, and completion certificates, such as occupancy permits (habite-se) and TVO. In areas with relevant archaeological or cultural heritage, there is interaction with the National Institute of Historical and Artistic Heritage (IPHAN), while in cases involving changes in rural land use, procedures before INCRA are required. The company also engages with water, power and sanitation utilities to enable infrastructure for its projects.

In the environmental, social and governance (ESG) field, Alphaville has historically associated its brand with concepts of master-planned urbanism and integration with the surrounding area, and relies on Fundação Alphaville as its social outreach vehicle in some of the regions where it operates. Until 2023, the company prepared sustainability reports based on internationally recognized methodologies, but reported that in fiscal year 2024 it did not publish a specific ESG report to the market. It currently states that it is in the process of adapting to IFRS S1 and S2 standards, which address the disclosure of sustainability- and climate-related financial information. Among internal initiatives under development, the company mentions the creation of a sustainable best practices seal for construction sites, preparation of a Biodiversity Report and the production of sustainability manuals for residents, but it does not provide details on environmental performance metrics or public targets for impact reduction.

Since its initial public offering in December 2020, when it conducted an IPO that raised approximately R$ 306 million in the primary tranche, Alphaville S.A. has consolidated its gated subdivision development operations under the structure of a publicly traded company on B3. Recent operating performance shows launch cycles with varying levels of gross development value (VGV), fluctuations in the sales speed indicator (VSO), and a gradual reduction in cancellations, partly linked to the adoption, starting in 2018, of fiduciary lien contracts as the standard for long-term sales. This legal mechanism reduces delinquency and the need for cash outlays in repossession cases, as properties are auctioned in default situations. The combination of an asset-light model, a nationally diversified landbank and a focused strategy on mid- and high-income gated subdivisions defines Alphaville’s economic profile and, consequently, the context in which AVLL3 shares are valued in the Brazilian capital market.