Glossary
| Definitions |
| Glossary of Technical Terms |
Residential Real Estate Development
Operating Revenue - The real estate development revenues include revenues from the sale and resale of units in the residential buildings Cyrela develops, including monetary adjustments from credit sales.
Cost of Sales - Residential real estate development costs consist of costs of land, construction (including foundation, structure and finishing, as well as costs for a broad variety of raw materials) and their own and outsourced labor.
Development and Sale of Office Buildings
Operating Revenue - Revenue from the development and sale of office buildings includes the amounts derived from the sale and resale of the Company’s high-tech and luxury office buildings, which are generally sold after having been constructed and leased. There are three categories of office building sales: (i) "closed price” sales, when the price is set prior to construction, whereby the revenue is recognized in the same manner as for the revenue from development; (ii) sales at cost, when the Company usually acts from the beginning with an investing partner that purchases a percentage of the land and pays only the price of construction, which is recorded on an accrual basis; and (iii) mixed category, which combines the two categories previously mentioned.
Cost of Sales - Cyrela’s development and sale of office buildings costs have the same components as the construction of residential real estate projects, i.e., cost of land acquisition, construction and labor.
Lease of Office Buildings (until August, 2007)
Operating Revenue - Revenues from lease of office buildings consist of the lease of units in the high-tech and luxury office buildings the Company develops and own. Cyrela’s lease agreements have an average term of five years, being renewable every year thereafter, and are indexed to IGP-M.
Cost of Sales - Cyrela’s lease of office buildings costs consist of the depreciation of the real estate lease portfolio, the rates of which vary from 1.2% to 2.5% per year, and of expenses for the maintenance of their real estate for rental.
Lease of Shopping Centers (until August, 2007)
Operating Revenue - The Company’s revenues derived from lease of shopping centers consist of rentals paid by the tenants and, on a smaller scale, revenue from the management of the shopping center parking garages. The rentals paid by the tenants are linked to their tenants´ sales and fixed at a minimal amount regardless of the volume of sales.
Cost of Sales - These costs are composed of the depreciation of shopping centers, the depreciation rates of which range from 2.0% to 2.5% per year, and of expenses relating to the maintenance of the shopping centers.
Real Estate Services
Operating Revenue - Cyrela’s revenues derived from real estate services consist basically of amounts received in connection with the management activities of office buildings and of shopping centers, commissions from sales of units and the management fees billed by their construction company in the buildings it constructs.
Cost of Sales - The Company’s costs of real estate services are composed of direct and indirect labor fees, lease of real property, common charges, outsourced services and expenses incurred in the training of sales personnel.
Selling Expenses
Selling expenses consist mainly of the creation of kiosks, showrooms and furnished model apartments; sales commissions; marketing and advertisement. The expenses for the creation of kiosks, model apartment furnishing and the commissions for developments that have been launched, but not yet constructed, or under construction are deferred and are recognized as expenses based on the percentage of the physical or financial completion of the respective development.
General and Administrative Expenses
General and administrative expenses include mainly labor, management and legal fees and benefits and outsourced services, such as auditing and consulting, payroll, corporate expenses (publication of records, financial statements, etc.), legal expenses (registries, notary public, commercial unions, etc.), in addition to other expenses.
Real Estate Developer - Company or individual which promotes real estate development under the system of condominiums, being allowed to sell independent units before they are ready – making a contractual commitment to deliver the property in accordance with the conditions and periods established in the contract.
Real Estate Development - Developing or undertaking a real estate project. 2. Set of activities which enable a company or individual to construct a building and sell all or part of the independent units composing it. 3. Process which enables a building which is still in project or in the construction phase to be legally commercialized.
Real Estate Launching - Dissemination to the public after the real estate project is duly registered through events, promotional actions, advertising in the media, etc. It is at the launching that the units become available for sale. The company establishes a sales stand at the project’s site.
