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5. Re-Organizing the Company and Finding New Avenues of Growth

During the year, we pursued a transformation process in relation to organizational structure in order to become a more efficient and more profitable company. As a strategy to achieve this goal, we have consolidated our affordable entry-level and middle income operations into one, new division -- Homex Mexico. By unifying our operations we will be better able to manage projects and customer service, while enjoying economies of scale and leveraging operational efficiencies across all developments. At the same time, this consolidation has provided us with more flexibility and enabled us to sustain important market share gains in our target markets. Alberto Menchaca, who has been with Homex for more than 15 years, is a living example of evolution and success, has been appointed to oversee this division.

At the same time, during the year a new and separate division was created: the Homex Government Division. This division was created when, as a result of our 21 years of experience as homebuilder, the Mexican government invited us to participate in different federal projects as their subcontractor. The division brings a new and important dimension and revenue stream to our operations. During 2010, it represented 5.3 percent of our total revenues, and we are expecting good growth from the division for the intermediate term.

As a result of the consolidation of the affordable entry-level and middle income division and the surge of a new division that is attending a new and sustainable source of revenue for the company, we have evolved into a new Homex, that for the first year in our history of operations is integrated through four different and separate divisions: Homex Mexico, Homex International, Homex Government and Homex Tourism. Once again we have proved our ability to rapidly adapt to change and to new opportunities, and today we are proud to be recognized not only for being the only Mexican homebuilder with a dual listing in the Mexican Stock Exchange and the New York Stock Exchange but also as the only Mexican homebuilder that is actively and successfully attending four different and promising avenues of growth.

Looking to the Horizon…

As always, we keep our innovative spirit alive and open to change that could bring about efficiencies and enable growth in each of our divisions.

At our Homex Mexico Division, we will continue to build on our leadership position in the homebuilding industry, using our flexible business model to attend to the most attractive segments and markets where we identify positive mortgage and demand dynamics. We will pay close attention to the evolution of sustainable and effective mortgage programs, from the main mortgage suppliers in México, intended to attend those potential costumers that for diverse reasons today are not active subscribers of the mortgage institutes, and that could represent an important avenue for long-term growth.

Importantly, we will continue to guard our position as the homebuilder of choice among prospective customers, by providing better, more efficiently planned communities, and exceeding our customers’ expectations for quality and on-time delivery. At the same time, we aim to be one step ahead of the curve, pioneering new ways to improve our communities through i) advanced construction technology that also brings better working capital management and a capital structure that is supportive of continued growth, ii) better planned urban communities, using vertical construction to optimize public spaces and accessibility, where families can benefit from an integrated community that promotes and enhances both economic and social development.

At our International Division, we foresee a bright future for our operations in Brazil. Today, we have a much clearer and experienced understanding of mortgage market dynamics in Brazil, more specifically we have worked closely with the Caixa Econômica Federal to learn and understand the nuance of their processes. We know our Brazilian customers likes and dislikes; and today we feel even more excited about the opportunities ahead. Nonetheless, we will continue to grow cautiously, carefully evaluating our growth prospects in the country and other prospective markets, and maintaining a conservative working capital policy.

Homex’ newly-born division, the Government Division, is today the clearest example of our capacity to adapt to change and leverage the experience and knowledge acquired from our other three divisions. For 2011, we have the clear visibility of additional contracts with the Mexican government that gives us confidence in the division’s continued growth for the foreseeable future.

Today, at our Homex Tourism Division, even though we see a more favorable macroeconomic scenario for our prospective customers, we will continue to be conservative in our growth expectations and maintain our focus on an affordable product offering in the price range of US$250,000 to US$450,000 at all three locations currently under development: Loreto, Los Cabos and Cancún.

Every day we think what about our responsibility to create and enhance value on behalf of all our stakeholders, and make Homex a more profitable investment. As we have mentioned before, for us evolution is a living business process and an integral part of all who work at Homex. You have our commitment that we will continue to look for opportunities to improve our business focused on higher returns, while balancing our growth with the optimal working capital structure.

Once again, we thank for your continued support and trust,