PDG Realty Empreend e Participacoes : Material Fact - Sale of Assets

8b340d46-5783-480b-ac8a-bd7f35d33468.pdf PDG REALTY S.A. EMPREENDIMENTOS E PARTICIPAÇÕES

Publicly-Held Company

CNPJ/MF No. 02.950.811/0001-89 NIRE 35.300.158.954 | CVM Code 20478

MATERIAL FACT

PDG Realty S.A. Empreendimentos e Participações ("Company") informs its shareholders and the market in general that it has executed, on this date, a non-binding Memorandum of Understandings with Banco Votorantim S.A. ("Banco Votorantim") and BV Empreendimentos e Participações S.A. ("BVEP" and, jointly with Banco Votorantim, "Interested Parties"), in order to formalize the understandings among the parties regarding the possible sale, to the Interested Parties or to vehicles controlled by them, of a group of special purpose entities holders of lands and real estate development projects ("Sale of Assets"), and to the hiring of the Company to perform the real estate management and to build the referred real estate developments.

The Sale of Assets is part of the process of the debt restructuring disclosed by means of the material fact on August 17, 2015 ("Debt Restructuring") and of the effort to accelerate the sale of assets that are being undertaken by the new management. As disclosed to the market, such initiatives provide the adoption of measures aiming to reinforce the Company's cash flow, to strengthen its capital structure and to reduce the exposure to the risk of construction.

The Company has granted to the Interested Parties a term of exclusivity to negotiate a definitive agreement regarding the terms and conditions that shall govern the Sale of Assets. If entirely consummated, the Sale of Assets may include the sale of lands and real estate development projects, in different stages of progress, with a total indicative amount of approximately R$461,000,000.00 (four hundred and sixty-one million Reais), subject to usual adjustments in transactions of this nature. In case the Sale of Assets is implemented, a part of the price of the assets involved in the transaction shall be used to strengthen the Company's cash account and another to amortize debts currently held with Banco Votorantim, contributing to the deleveraging of the Company.

It is worth mentioning that, on September 30, 2015, the companies involved in the potential Sale of Assets recorded a total cost to be incurred of approximately R$673,000,000.00 (six hundred and seventy-three million Reais) and a financial net debt of approximately R$444,000,000.00 (four hundred and forty-four million Reais). In this sense, in case the Sale of Assets is entirely implemented, the costs to be incurred and the debt of the special purpose entities shall be fully undertaken by the Interested Parties.

The Sale of Assets, if entirely concluded with the indicative amounts above, will reduce the extended leverage of the Company (as explained in the 3Q15 earnings release) in a total amount of approximately R$1,578,000,000.00 (one billion, five hundred and seventy- eight million Reais) considering the base date of September 30, 2015, equivalent to approximately 23% of the Company's total extended leverage on that date.

The Sale of Assets shall be submitted for approval by the antitrust authorities timely and its consummation will be subject to the compliance of usual specific conditions in transactions

of this nature.

The Company will keep its shareholders and the market informed with relation to new material facts involving the Sale of Asset and the Debt Restructuring.

Rafael Rodrigues do Espírito Santo Investor Relations Officer

São Paulo, January 7, 2016.