Gafisa S.A. (GFA), one of Brazil’s leading diversified national homebuilders, approved a one-for-two stock split. Shareholders of record as of February 22, 2010, will receive two common shares for each common share currently owned.
 
The number of common shares represented by each ADR will remain unchanged, i.e., 1 ADR = 2 common shares. Thus, the total number of ADRs will be adjusted in the same proportion as the stock split, one-for-two. The common shares after the split will confer equal rights and benefits, including dividends, capital interest and future capital remuneration compared to the other common shares issued by Gafisa.
 
Gafisa is extremely well positioned in the Brazilian market. The company is a recognized brand and has been growing by acquiring less competitive companies in order to consolidate its leading position in the Brazilian market.
 
Despite some challenging short-term conditions, we remain optimistic about the medium-term outlook of the construction business in Brazil based on the continuous steps taken by the Brazilian government in order to stimulate the construction sector. The government housing program will help Gafisa expand its business for the development of projects also in the lower income sector.
 
It is undeniable that Brazil had a great economic performance in 2009 and surprised the market in the way it recovered quickly from the economic crisis. The bad news at this point is that Brazil will probably follow other economies that successfully manage the crisis and will increase its domestic interest rates sooner than later. In fact, we expect Brazilian rates to be again over 10% by the end of 2010.
 
Despite this short-term concern, we believe the Brazilian real estate market will experience continued growth in the medium-to-long-term. There has been a tremendous expansion in the construction business in Brazil in recent years. We believe Gafisa has a distinct competitive advantage, which will help it to grow even in challenging situations.

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