Dear Investors:

Peninsula committed R$104M (US$18M) to develop three urban infill sites in consolidated neighborhoods in São Paulo, Brazil with a projected IRR of 21% and 2.1x equity multiple. Peninsula is partnering with Yuny, a major local developer with an extensive + 20-year track record, executing projects in the best neighborhoods in São Paulo. Additionally, the current FX environment makes Brazil "cheap" vis-à-vis other currencies in the region, creating a favorable economic entry point for Peninsula.

All three projects have excellent visibility and surrounding amenities, the investment offers a diversified mix of products in three different neighborhoods, all while mitigating downside risk for Peninsula by keeping a preferred return on consolidated returns coupled with cross-collateralization covenants.

Yuny was founded in 1996 by brothers Marcelo and Marcos Yunes; it is a vertically integrated development company with 56 employees and the winner of four "Premio Master Imobiliario", an important Homebuilder's award in Brazil.

Peninsula believes that Brazil's all-time low mortgage rates and still-depressed housing prices should benefit our investment (see Fig. 1 and Fig. 2) and offset part of the macroeconomic damage caused by the Coronavirus. Before COVID, residential sales were booming (up 47% YOY) due to two main factors; three years of accumulated pent-up demand coupled with low mortgage rates; those two factors created strong tailwinds for the sector during the second half of 2019 and first two months of 2020.

Peninsula has been in talks with Yuny since 2019 but wasn't able to solidify a partnership due to fierce competition from other capital sources.  For context, Homebuilders in Brazil have access to cheap sources of capital via IPOs, REITs, and other equity or debt instruments, pricing capital at 8% or lower. During 2H2019 Yuny engaged a well-known investment bank to roadmap their IPO, yet plans for their IPO were soon put on hold due to COVID, opening a window for Peninsula to quickly step in capturing a great opportunity through a nimble capital strategy.

Brazil's economy is recovering from the COVID crisis; however, the shock still poses a wide variety of threats, therefore the investment has been underwritten with conservative assumptions including, a short time frame to launch, 12 months of pre-sales before construction starts, and other considerations.