LAVV3: quote, dividends and indicators for Lavvi

Lavvi Empreendimentos Imobiliários S.A. is a real estate developer and construction company focused on the city of São Paulo, concentrating its activities on residential and non-residential projects in the mid, upper-mid, high-end and luxury segments. The company originated in 2016, initially as a limited liability company formed by Cyrela Brazil Realty S.A. Empreendimentos e Participações, RH Empreendimentos Imobiliários Ltda. and businessman Moshe Horn, with stakes of 45%, 45% and 10%, respectively. In 2020, Lavvi was converted into a corporation, obtained a category A public company registration and carried out its initial public offering. Since September 1, 2020, its common shares have been traded on B3 under the ticker LAVV3, placing the company among the developers listed on the Brazilian capital markets.

Lavvi’s operating history is recent in calendar terms, but marked by a significant volume of project launches in a short period of time. Between 2016 and the end of 2022, the company launched 19 projects, totaling 6,525 units, around 511 thousand m² of private area and approximately R$ 5.4 billion in gross General Sales Value (VGV) on a 100% basis. In 2021, the first full year after the IPO, the company launched projects such as Villa Versace, Wonder Ipiranga and Grand Vitrali, with combined VGV of R$ 1.2 billion, and recorded net sales of R$ 943 million, net income of R$ 178 million and a net margin of 29.2%. In 2022, despite the high interest rate environment, it maintained its launch pace with six new projects and total VGV of R$ 2.6 billion on a 100% basis, including standout commercial ventures such as High Wonder and Verdant Parque Resort, which together added R$ 520 million in VGV. At the end of 2022, the company also reported a net margin of 20.7% and a gross margin of 33.6%, in addition to a net cash position, reflecting a low level of financial leverage.

Lavvi’s business model is based on a vertically integrated real estate development process, in which the company operates from land scouting and acquisition through to delivery of units to buyers. The company internally conducts the stages of land analysis and acquisition, project development and legalization, obtaining government licenses and approvals, planning and execution of works, as well as the sales of the units. This vertical integration is supported by an in-house engineering team that prepares detailed construction schedules, budgets and cost controls, and brings experience of more than 1.3 million m² of planned buildings and more than 600 thousand m² built in its professional history. Lavvi also maintains strong integration among its technical, commercial and financial areas, using systems such as SAP for engineering control and CRM for customer relationship management, which supports tracking the full life cycle of the developments.

Lavvi’s strategy is focused on the city of São Paulo, targeting neighborhoods considered high-value or with good urban infrastructure, close to subway stations, parks, shops and services. As of December 31, 2022, the company’s landbank was estimated at around R$ 4.4 billion in potential VGV, with approximately 47 thousand m² of land area allocated to five new projects in the São Paulo metropolitan area, some of them planned in phases. Among the projects mentioned in its launch and delivery portfolio are Movva, Palazzo, Vitrali, Nativ Tatuapé, Lumiere Residence, Villa Versace, High Wonder, Verdant Parque Resort, Galleria Klabin, Wonder Brás, Grand Square, Eden by Cyrela, among others, highlighting activity in different neighborhoods and zones of the city. The company also participates, through a specific special purpose entity (SPE Vinson), in the Praças da Cidade residential complex in Brás, with around 127.5 thousand m² of private area and VGV of R$ 868 million, with completed, ongoing and future phases.

From an operational standpoint, Lavvi has only one reported business segment: real estate development. In 2022, 100% of net operating revenue of R$ 555.3 million came from this activity, as did 100% of gross profit of R$ 186.3 million. The company structures its products into price ranges per square meter, segmenting them into mid, upper-mid, high-end and luxury, with prices at the stated base date ranging from R$ 8,001/m² to brackets above R$ 20,001/m², depending on the project’s market positioning. There is no material concentration in a single buyer, since no customer accounted for more than 10% of total net revenue in 2022, which is consistent with the highly diversified nature of the base of real estate unit buyers. All revenue is generated in Brazil, with no operations or billings abroad.

Lavvi’s governance is marked by the presence of its founding partners and its historical relationship with Cyrela and RH Empreendimentos, which share control. The board of directors is composed of six members, two appointed by RH, two by Cyrela and two independents, with experience in the real estate and financial sectors. The executive leadership reflects the background of the CEO, who began his career at Cyrela in 1987, working in the financial, commercial, product development, land acquisition and sales areas, and later became a partner at Mac Empreendimentos, where he took part in the launch of 49 developments between 2006 and 2016, totaling around 11 thousand units and 1 million m² of usable private area delivered. This trajectory contributes to a combination of technical expertise, market intelligence in land acquisition and commercial capability in structuring and selling products.

On the regulatory front, Lavvi is subject to the legal framework governing real estate development in Brazil, including Law 4,591/1964, the Civil Code, the Consumer Defense Code, the City Statute and the urban, environmental and land use and zoning laws of the municipalities in which it operates. To develop its projects, the company depends on approvals and licenses from city halls and environmental agencies, including analysis of architectural projects, issuance of construction permits and certificates of completion (habite-se). The company adopts technical, legal and environmental due diligence procedures when acquiring land, with documentation audits and assessment of any restrictions in order to mitigate implementation risks for the projects. In the sectoral tax sphere, projects may benefit from the special tax regime (RET) linked to the “patrimônio de afetação”, a mechanism provided by law to segregate the assets and liabilities of each development from the general assets of the developer.

Regarding environmental, social and governance (ESG) aspects, on May 30, 2023 Lavvi published its first Sustainability Report, referring to the 2022 base year. The document follows Global Reporting Initiative (GRI) guidelines and aims to report the company’s environmental, social and governance practices and indicators, in line with its short track record that began in 2016. The company states that it maintains a social-environmental management system focused on meeting legal and applicable regulatory requirements, with a commitment to reducing the impacts of its activities. The stated intention is to publish sustainability reports every two years, allowing for monitoring of the evolution of its ESG practices. The company is at an early stage on this agenda, but already associates its activities with topics such as construction waste management, compliance with environmental requirements in licensing, relations with communities surrounding its projects and transparency with the market, aspects that add to the corporate governance structure in place due to its status as a share issuer on B3 under the code LAVV3.