Urbi Desarrollos Urbanos S.A.B. de C.V. (”Urbi”), the leading housing developer in Mexico, announced today that it has formed a joint venture with PREI(R) (Prudential Real Estate Investors) to develop housing projects. Urbi and PREI, acting on behalf of institutional investors in its Mexico residential real estate strategy, could invest up to US$1 billion over the next five years.

This investment arrangement will strengthen the execution of Urbi’s strategic plan for 2007-2011, with the goal of joint participation by Urbi and PREI in investment projects for real estate developments; including, among others, the acquisition of land, and the urbanization, infrastructure and the construction of homes, particularly for Urbi’s business lines related to the articulation of macro projects and the city licensee manager program.

According to the venture, Urbi will have the option to present co-investment opportunities to PREI for the acquisition and development of real estate projects. The opportunities must meet certain agreed upon requirements. Urbi will be responsible for identifying the land, presenting the projects, obtaining the permits and performing the urbanization and the construction of the homes. PREI will provide the resources for the acquisition of the land.

Roberto Ordorica, head of PREI-Latin America, said, “Mexico’s housing sector, continues to provide attractive investment opportunities. Accordingly, we are enthusiastic about the prospects of forming this partnership to expand our presence in this market. Since entering the market in 2002, we have continued to look for new opportunities and we believe the Urbi’s partnership will provide our investors with the potential to yield a positive outcome. Notably, we have been impressed with URBI’s growth plan, expertise, execution capabilities and URBI’s overall approach towards the business.”

Cuauhtemoc Perez, Urbi’s CEO, stated: “This agreement is part of a series of funding alternatives that we have deployed, such as our recent equity placement, to ensure adequate liquidity levels that provide us with the flexibility to take advantage of strategic business opportunities without compromising the required resources for the day-to-day operation of our company. Through this agreement, we generate a project funding option, which complements our solid balance sheet and our own internal cash flow generation.”

And he added: “PREI is a real partner in this venture, who has adapted itself to the nature and cycles inherent to our business and recognizes the risks, as well as valuing our skills and expertise in the sector. Furthermore, PREI is a leading global ally in its field with wide experience in the financial markets, which strengthens Urbi’s value chain.”

The financial structure of the investment projects is the same that Urbi uses for the selection of projects that finances and executes with its own working capital; this allows the company to achieve the targeted return on equity. The participants of the real estate trust assume the risk of the execution of the project and the funding of the project.

Urbi will pay 0.5% of the MX$3,500 million (approximately US$323m) on the first phase of the scheme, as a safety deposit. Additionally it will present a standby letter of credit for US$10 million to guarantee that it will develop the project as indicated.

Urbi and PREI initiated this venture with five projects in the metropolitan areas of Tijuana, Guadalajara and Chihuahua, with an initial investment of MX$1,161 million (approximately US$107m).

Finally, Selene Avalos, Urbi’s CFO, pointed out: “We are very optimistic with this agreement because it offers us an option to swiftly take advantage of the business opportunities that the current economic situation could present. Furthermore, this scheme fits with our company’s land reserve development strategy. As we have mentioned thanks to Urbi’s participation in the urban planning and development process of the cities with the local authorities, it has the opportunity to acquire -through quiet option schemes- land which it is not incorporated yet into the city development. This grants us the adequate time to identify, evaluate and plan the development of the real estate projects, capturing the value generated. Thus, we count with a pipeline of projects in different maturation stages where we can integrate public and private investment, under innovative schemes, such as this agreement with PREI.”

Commenting on Urbi’s estimated growth, Avalos added: “As we pointed out during the equity placement process, we have strengthened our strategic plan and, so anticipate that we will increase Urbi’s annual net income by 2.5 times between 2007-2011, instead of the initial estimate of 2 times.”

Urbi Desarrollos Urbanos S.A.B. de C.V. (MSE: URBI*) is one of the leading companies in the housing sector in Mexico and the largest developer in the northern states, a region with one of the highest growth rates. Additionally, it has a growing presence in the country’s metropolitan areas. In its 26 years of operations, Urbi has developed over 240,000 homes, and has always conducted its business with a strong emphasis on financial performance, making it one of the most profitable companies in the sector. Urbi has a unique and replicable business model supported by UrbiNet, its state-of-the-art IT platform.

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