Within the Mexican context, Urbi is one of the largest, most established and profitable homebuilders (despite having lowest prices in the sector), with presence in 39 cities and municipalities, including the main metropolitan areas. Urbi’s innovative approach has resulted in it being a pioneer in initiatives targeted to positively impact segments of the population that were not benefiting from access to government programs and consequently housing. Through this, Urbi has been ahead of the curve, having the first mover advantage by tapping new segments of the market, which has strengthened its credibility, brand as well as market positioning. During over 30 years of operations, Urbi has built more than 400,000 housing units.

Some of Urbi’s initiatives, that support and differentiate its operations, include: (i) UrbiNet, a sophisticated information technology platform, (ii) UrbiNova, Company’s proprietary construction technology, and (iii) Alternativa Urbi, a unique program in the industry to attend the non-traditional population segments (low-income workers, non-wage earners, and those not affiliated to the housing agencies). Through the City Licensee Manager (CLM) program, the company has managed to rapidly diversify into new Mexican geographies with lower working capital requirements, almost doubling its geographic coverage in three years. These tools have allowed the Company to increase its operating efficiencies and obtain profitable growth.

Furthermore, Urbi was the first company to develop a Sustainable Integral Urban Development project (“DUIS”) in Mexico. These macro projects are comprehensively planned areas of development that contribute toward improving the quality of life of the residents and the territorial organization of the states and municipalities. The Company is in the process of developing additional DUIS projects, which would continue putting it on the front line of innovation.

In addition to the housing development business line, URBI also has a housing-related line of business, which includes commercial land sales, Urbi’s Casa Capital Program and housing equipment and services.

Urbi has been listed on the Mexican Stock Exchange since May 2004 with a market capitalization of US$1.3bn as of 1/16/2012. 54.5% of the shares is public and traded on the exchange. ~40% of the shares belong to the Pérez Román brothers (co-founders and members of the current management team). Company’s credit rating in Mexican market is Moody A3 and Fitch A- as well as an S&P B+ in the international bond market.

An investment of up to US$50mm either in US$ or equivalent Mexican Pesos (the “Project”) is intended to be made in Urbi in the form of a senior secured corporate loan (the “IFC A Loan”). In addition, IFC would pursue a mobilization (the “Mobilization” or the “IFC B Loan”) which would result in an increase of the funding to Urbi’s environmentally sustainable affordable housing projects by another US$35mm equivalent in local currency. IFC is also considering providing a US$20 million loan from the Canada Climate Change Program to support eligible ‘green building’ projects.

50.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

* These investment figures are indicative

Not relevant given the corporate loan nature of the investment.

The Project''s strong development impact includes: (i) job creation; (ii) addressing the housing deficit; (iii) integrated and sustainable urban developments; (iv) transfer of knowledge and best practices on green building in Mexico, and E&S sustainability; and (v) contribution to equitable economic growth and community development.

IFC''s additionality includes: (i) transfer of green building expertise; (ii) long-term debt; (iii) mobilizing additional debt; and (iv) potential access to advisory services and concessional funding for ''green initiatives''.

This is an E&S category B project because, on the basis of information reviewed by IFC, this investment will have limited adverse social and environmental impacts that are few in number, generally site specific, largely reversible and readily addressed through mitigation measures

Identified Applicable Performance Standards

While all Performance Standards (PS) are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions.
- PS3: Pollution Prevention and Abatement.
- PS4: Community Health, Safety and Security.

Issues related to PS5, Land Acquisition and Involuntary Resettlement are not encountered because, as a practice, land acquisition by Urbi is done on a willing-buyer-willing-seller basis, which would not impinge on individuals or local communities’ rights. There are no current issues with regard to the potential displacement of occupants and/or users of land that is ‘banked’ by the company (approximately 5,500 ha which is equivalent to 7 years of future housing developments). Land acquired for such future projects is regulated by state and local development plans. When an area designated for urban development is under communal ownership (ejidos), which may have been formerly used for limited agricultural production, it is legally subdivided and sold to developers under a willing seller-willing buyer arrangement. Land whose use is changed from agriculture to urban development rapidly increases in value, which amply compensates for any improvements the ejidatario might have made and is paid at the market price.

Issues related to PS6, Biodiversity Conservation and Sustainable Natural Resource Management are not encountered in general, as by law, housing developments in Mexico cannot be located in protected areas or areas with natural habitats. In the case of the San Pedro development, small pockets of vegetation with biodiversity interest were identified through the corresponding ESIA as being in need of preservation and were appropriately incorporated in the master plan as such.

Issues related to PS7, Indigenous Peoples (IPs) were not identified by IFC’s due diligence because IPs are not currently affected by Urbi developments and have not been involved in prior land sales. As noted above, land acquisition by Urbi is done in practice on a willing-buyer-willing-seller basis.

Issues related to PS8, Cultural Heritage may apply on a case by case basis; issues of cultural heritage have not been experienced in the San Pedro development. In order to ensure appropriate management of cultural heritage issues, however, the company will be required to prepare and implement a chance finds policy regarding cultural heritage.