Gafisa Reports First Quarter 2009 Results
--- EBITDA Increase of 69% to R$108.3 million on Revenue Increase of 59% to R$542 million ---
--- Sales Increase 11% to R$558 million, from R$502 million in 1Q08 ---
--- 2009 Guidance: Consolidated Sales R$2.7 billion to 3.2 billion, EBITDA Margin 16% to 17%---

FOR IMMEDIATE RELEASE – São Paulo, May 14, 2009 – Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), Brazil’s leading diversified national homebuilder, today reported financial results the first quarter ended March 31, 2009. The financial statements were prepared and presented in accordance with Brazilian GAAP and in Brazilian Reais (R$). Only financial data derived from the Company’s accounting system were subject to review by the Company’s auditors. Operating and financial information not directly linked to the accounting system (i.e., launches, pre-sales, average sales price, land bank, PSV and others) or non-BR GAAP measures were not reviewed by the auditors. Additionally, financial statements and operating information consolidate the numbers for Gafisa and its subsidiaries, and refer to Gafisa’s stake (or participation) in its developments. The first quarter of 2008 has been adjusted in accordance with Law 11638, new Brazilian GAAP, for comparison purposes to the first quarter of 2009.

Commenting on first quarter performance, Wilson Amaral, chief executive officer of Gafisa, S.A. said, “I am pleased that our operating results remained strong for the first quarter of 2009. With the environment still in flux throughout much of the period, we took a conservative approach to launches and kept our development schedule in-line with market demand and internally generated cash flow. On the other hand we were able to successfully ramp-up our sales efforts to generate over R$558 million in sales, resulting in a significant reduction of inventory.”

Amaral added,” With the announcement at the end of March of the government housing package, and the landmark R$600 million debenture from Caixa Econômica Federal, our subsidiary Tenda is now in an excellent position to aggressively execute its expanded business plan for development projects in the lower income sector. We have a strong management team in place and, as a group, we have the expertise and execution capacity to meet what we believe will be significantly accelerated demand in the near future. At Gafisa and Alphaville, we will continue to dedicate resources to selected launches as well as marketing and sales efforts.”

		Operating & Financial Highlights
IR Contact		Consolidated launches totaled R$160 million for the quarter, a decrease of 72% as compared to the first quarter of 2008.     Pre-sales from current launches and inventory reached R$558 million for the quarter, an 11% increase over 1Q08.     Net operating revenues, recognized by the Percentage of Completion (“PoC”) method, rose 59% to R$541.9 million from R$340.9 million in 1Q08.     1Q09 EBITDA reached R$108.2 million (20.0% EBITDA margin), a 69% increase compared to EBITDA of R$64.1 million (18.8% EBITDA margin) reached in 1Q08.     Net Income before minorities and stock options was R$57.1 million for the quarter (10.5% net margin) an increase of 21% compared with R$47.2 million in 1Q08. Net income  was R$36.7 million (6.8% margin) and EPS of R$0.28 compared to R$39.8 million (11.7% margin) and EPS of R$0.31.     The Backlog of Results to be recognized under the PoC method reached R$1.0 billion, a 67% increase over 1Q08. The Backlog Margin to be recognized reached 33.3%.     Gafisa’s land bank totaled R$17.1 billion at 1Q09, representing a 53% increase over 1Q08 and a 4% decrease over the previous quarter.     Gafisa’s consolidated cash position exceeded R$1 billion at the beginning of May including the proceeds from the securitization of Gafisa´s receivables in the first quarter and the closing of Tenda’s debenture in May.  Note: Starting in 4Q08, we consolidate Tenda.
Julia Freitas Forbes
Email: ri@gafisa.com.br
IR Website:
www.gafisa.com.br/ir
1Q09 Earnings Results
Conference Call
Friday, May 15,2009
> In English
11AM EST
12AM Brasilia Time
Phones:
+1 800 860-2442 (US)
+1 412 858-4600 (other countries)
Code: Gafisa
> In Portuguese
2PM EST
3PM Brasilia Time
Phone: +55 (11) 2188-0188
Code: Gafisa

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As the outlook for the housing industry in Brazil begins to brighten, I am pleased to report that Gafisa remains in a very strong position overall in the homebuilding market. Only two months ago, there remained uncertainty with respect to the full extent and the timing of the government’s commitment to introducing incentives to stimulate development and demand within our industry. Today, we have a housing finance and incentive plan in place, Minha Casa, Minha Vida, which is already showing signs of early success. Tenda’s rate of sales is picking up daily and we were able to close on a landmark debenture in record time to support the development of over 80 projects this year. Our diversified range of products, national presence, and well-respected brands in each segment make us a leader in the sector. We are well-positioned to meet the considerable demand for housing across all segments in Brazil and in particular, expect to focus in the near term on supporting Tenda in its plan to take full advantage of the substantial opportunity in the lower income segment.

Gafisa continued to take a conservative approach to launches, focusing on cash generation and preservation during a period of still-uncertain trends of macroeconomic growth. The Company’s special attention to harvesting cash from previous year’s launches achieved solid results, with sales from previous year’s launches reaching 93% of the quarter’s sales. While new launches were not a high priority due to low visibility as to future demand toward the end of 2009, Gafisa did enjoy successful launches in the states of São Paulo, Rio de Janeiro, and Pernambuco.

In March, Gafisa raised R$70 million through a sale of receivables of completed units, and the Company has an additional R$200 million worth of receivables available for sale in the future, should management choose that option. We continue to enjoy strong relationships with banks that have been developed over many years. Today we need to change a covenant established on financing from 2006, when our equity was R$807 million - we are a much larger company now, with over R$1.6 billion in equity and more than R$2.0 billion in equity including minority interests. We are confident that this will be a successful exercise.

Speaking of financing transactions, we are also honored that Tenda was chosen as the first recipient of an innovative financing instrument during the first quarter, a ground-breaking R$600 million debenture. The only national company with a track record of exclusive dedication to the low-income segment, its growth promises to be accelerated also by the over R$30 billion government housing package targeting the affordable/entry-level segment that was implemented in April.

As we look at the remainder of 2009, Gafisa will continue to develop its well respected brands in new and existing markets, leverage complimentary sales channels to maximize sales of portfolio products, and take advantage of the increased availability of working capital financing, particularly as it applies to the construction of affordable housing. We believe that these efforts will allow us to best serve Brazilian homebuyers and extend our record of growth.

Wilson Amaral
CEO – Gafisa S.A.

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Government plan announced and already showing results: “Minha Casa, Minha Vida”, the Government Housing Program, was announced in late March. The Program comprises investments of more than R$ 30 billion, which will be directed to foster the construction of one million houses for families with monthly income from one to ten minimum wages. Tenda is well positioned to benefit from this Program with over two thirds of its current business concentrated in the targeted segment as well as meet potential demand with a current landbank in excess of 60,000 units. The Company already saw accelerated sales beginning in the second half of April at its Tenda subsidiary.

The main measures of this Program include: longer mortgage terms; lower interest rates; higher percentage of financed LTV; higher subsidies, provided on a inverse proportion to the income level; lower costs related to insurance and origination; and creation of a Guarantee Fund to allow for a bridge of mortgage payments in case of unemployment.

Tenda completed a R$600 million debenture with Caixa Econômica Federal: receipt of the net proceeds took place in May and will serve to finance 81 existing projects, accelerating the Company’s delivery cycle and freeing-up working capital The 5 year debenture is priced at TR+8%, is revolving in nature and provides a 3 year initial grace period. Guarantees include land, construction already performed and client receivables from the financed projects. Gafisa’s pro-forma consolidated cash balance including proceeds from this debenture is over R$1 billion.

The ceiling for units to be eligible for subsidized SFH loans was raised from R$350K to R$500K. In addition, the government has allowed employees to withdraw their FGTS (unemployment severance fund) funds to buy apartments up to R$500K. Those measures benefit Gafisa directly.

Gafisa sold receivables of completed units: Gafisa structured its first securitization of receivables of completed units with immediate net cash proceeds of R$70 million. The Company has approximately R$ 200 million additional receivables that may be available for sale.

2006 debenture covenant negotiation underway: a 2006 debenture covenant established that we could not have net debt over R$1 billion. We are negotiating this covenant with bondholders as we are a much larger company now, and this absolute covenant does not correspond to the current size of our company, specially when compared to our consolidated equity position.

Gafisa agreed to transfer Cotia development to Tenda: In the beginning of May, Gafisa and Tenda agreed to transfer the Cotia project, which was originally part of the Bairro Novo joint venture with Odebrecht to Tenda at book value of R$42.5 million. The transaction is subject to due diligence expected to last 30 days. The 5-phase project comprises 2,338 units with R$ 191 million PSV. The first phase of 574 units has already been delivered. Tenda expects to achieve further economies of scale through the integration of this type of development into its portfolio.

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Gafisa continued to take a conservative approach to launches, focusing on cash generation and preservation during a period of still-uncertain trends of macroeconomic growth. Consolidated launches decreased 72% to R$160 million in 1Q09 compared to 1Q08. While new launches were not a high priority due to low visibility as to future demand, Gafisa did enjoy successful launches in the states of São Paulo, Rio de Janeiro, and Pernambuco. The Gafisa segment accounted for 86% of launches and Alphaville for the remainder.

The tables below detail new projects launched in the first quarters of 2009 and 2008:

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In this quarter, pre-sales reached R$558 million compared to R$502 million in the first quarter of 2008, an 11% increase. Pre-sales reached 248% of new launches. The tables below set forth a detailed breakdown of our pre-sales for the first quarters of 2008 and 2009:

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Sales velocity during the first quarter of 2009 was 16% for the consolidated company. Tenda showed the highest speed at 18% while Gafisa maintaind the same level as last quarter.

Sales velocity is calculated as follows:

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The Company owns approximately R$ 17.1 billion in its land bank composed of 207 different sites in 21 states, equivalent to 108 thousand units. In accordance with our land bank diversification strategy, at the end of the quarter 43.1%% of the consolidated land bank was outside of the Rio de Janeiro and São Paulo states.

Net operating revenues for 1Q09 rose 59% to R$541.9 million from R$340.9 million in 1Q08.

Revenues for the industry are recognized based on actual cost versus total budgeted costs of land and construction (Percentage of Completion method or PoC method) and the pre-sales portfolio is recognized in future periods even if the company has already completely pre-sold developments.

The table below presents detailed information of pre-sales and recognized revenues by launch year:

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Gross profits for 1Q09 totaled R$154.6 million (R$110.1 million for 1Q08), an increase of 40%, reflecting continued growth. Gross margin for 1Q09 was 28.5%, 380 basis points lower than 1Q08, in part because of a 124% increase in capitalized interest expensed through cost of goods sold, from R$7.9 million in 1Q08 to R$17.7 million in 1Q09. Capitalized interest during the quarter decreased 5%.

SG&A ratios were impacted by the consolidation of Tenda – which shows a lower SG&A dilution to sales and revenues – and higher marketing efforts in Gafisa when compared with the last year.

The incorporation of our subsidiary Fit into Tenda generated a gain of R$210.4 million, to be amortized over the construction of Fit developments at the time of the incorporation. In 1Q09, our results show a positive impact of R$29.9 million, net of provisions.

EBITDA for the first quarter totaled R$108.3 million, 69% higher than the R$64.1 million for 1Q08. As a percentage of net revenues, EBITDA increased from 18.8% in 1Q08 to 20.0% in 1Q09.

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Depreciation and amortization in 1Q09 amounted to R$8.0 million, compared to the R$9.4 million in 1Q08. We no longer amortize goodwill because a new accounting rule requires the assessment of such assets on a yearly basis only to determine a reserve for impairment.

Net financial expenses totaled R$9.2 million in 1Q09 compared to positive R$14.0 million in 1Q08, due to an increase in the company’s net debt position.

Income taxes, social contribution and deferred taxes for 1Q09 amounted to R$16.3 million versus R$13.6 million in 1Q08, a growth in line with the company’s operations. The effective tax rate was 25% in 2009 and 24% in 2008.

Net income before deduction of minority shareholders and stock option expenses in 1Q09 was R$57.1 million (10.5% of net revenues), compared to R$47.2 million in 1Q08, a growth of 20.8% .

Net income in 1Q09 was R$36.7 million, with earnings per share of R$0.28 in 1Q09 compared to R$39.8 million net income in 1Q08 or R$0.31 EPS in 1Q08.

Shares outstanding were 129.9 million in 1Q09 compared to 129.5 million in 1Q08.

The backlog of results to be recognized under the PoC method reached R$1.0 billion in 1Q09, from R$602 million in 1Q08 and R$1.0 billion in 4Q08.

The table below shows our revenues, costs and results to be recognized, as well as the amount of the corresponding costs and the expected margin:

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Cash and Cash Equivalents

On March 31, 2009, cash and cash equivalents were equal to R$500.8 million, 17% lower than R$605.5 million on December 31, 2008, and 31% lower than 1Q08’s R$726.6 million.

If we included the proceeds from the R$600 million debenture completed by Tenda received in early May, our consolidated cash position would exceed R$1 billion.

Accounts Receivable

Accounts receivable decreased 1.7% to R$5.6 billion in March 2009, compared to R$5.7 billion in 4Q08, and increased 111.8% compared to R$2.6 billion in March 2008.

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Inventory (Properties for Sale)

Our inventory includes land, construction in progress, and finished units. Our inventory reached R$1.8 billion in 1Q09, a dencrease of 9% as compared to R$2.0 billion registered in 4Q08 due to sales higher than launches this quarter.

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Liquidity

On March 31, 2009, Gafisa had a cash position of R$501 million and over R$200 million of receivables available for securitization if needed. On the same date, Gafisa’s debt and obligations to investors totaled R$1,888 million and net debt and obligation to investors was R$1,387 million. As of March 31, 2009, our net debt and obligation to investors to equity and minorities ratio was 61.9% compared to 59.8% in 4Q08.

Our cash burn rate was reduced from R$360 million in 4Q08 to R$115 million in 1Q09.

We have a total of R$3.4 billion in construction finance lines of credit provided by all of the major banks in Brazil. At this time we have R$1.9 billion in signed contracts and R$458 million in contracts in process, giving us additional availability of R$ 1.0 billion. We do not have exposure to foreign currency through financial instruments. We have R$200 million of debt raised by banks in foreign currency, which were swaped into CDI.

The following tables set forth information on our indebtedness as of March 31, 2009.

These ratings were revised prior to the additional cash infusion as a result of the securitization of receivables and the receipt of R$ 600 million by Tenda.

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Our 2006 debenture established that we could not have net debt over R$1 billion. We are negotiating this covenant with bondholders as we are a much larger company now, and this absolute covenant does not correspond to the current size and equity position of our company. Our other covenants were not impacted by the growth of the company, since they are based on relative measures.

This covenant is under negotiation with debenture holders and does not breach any other financial obligation of the company. The dates for assessment of this covenant are June and December of each year.

Based on current market outlook, Gafisa’s consolidated sales for the full year 2009 is expected to be between R$2.7 and R$3.2 billion. Gafisa is expected to account for between R$1.0 - 1.2 billion, Tenda for R$1.4 - R$1.6 billion and Alphaville from R$0.3 – R$0.4 billion. Consolidated EBITDA margin is expected to be in the range of 16% - 17%, while EBITDA margin for Tenda is expected to be between 14% - 16%. We will continue to launch new developments in accordance with demand and our cash position. Given recent announcements that are expected to impact the rate of demand for housing as well as builders ability to access financing, we are monitoring the scenario closely and may update these numbers during the year.

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Glossary

Backlog of Results – As a result of the Percentage of Completion Method of recognizing revenues, we recognize revenues and expenses over a multi-year period for each residential unit we sell. Our backlog of results represents revenues minus costs that will be incurred in future periods from past sales.

Backlog of Revenues – As a result of the Percentage of Completion Method of recognizing revenues, we recognize revenues over a multi-year period for each residential unit we sell. Our backlog represents revenues that will be incurred in future periods from past sales.

Backlog Margin – Equals to “Backlog of results” divided “Backlog of Revenues” to be recognized in future periods.

Land Bank – Land that Gafisa holds for future development paid either in Cash or through swap agreements. Each decision to acquire land is analyzed by our investment committee and approved by our board of directors.

PoC Method – Under Brazilian GAAP, real estate development revenues, costs and related expenses are recognized using percentage-of-completion (“PoC”) method of accounting by measuring progress towards completion in terms of actual costs incurred versus total budgeted expenditures for each stage of a development.

Pre-sales – Contracted pre-sales are the aggregate amount of sales resulting from all agreements for the sale of units entered into during a certain period, including new units and units in inventory. Contracted pre-sales will be recorded as revenue as construction progresses (PoC method). There is no definition of "contracted pre-sales'' under Brazilian GAAP.

HIG (High Income) – segment with residential units sold at minimum price of R$3,600 per square meter.

MHI (Mid-High) – segment with residential units sold at prices ranging from R$2,800 to 3,600 per square meter.

MID (Middle Income) – segment with residential units sold at prices ranging from R$2,300 to 2,800 per square meter.

MID (Mid-Low) – segment with residential units sold at prices ranging from R$1,800 to 2,300 per square meter.

AEL (Affordable Entry Level) – residential units targeted to the mid-low and low income segments with prices below R$1,800 per square meter.

LOT (Urbanized Lots) – land subdivisions, or lots, with prices ranging from R$150 to R$600 per square meter

COM (Commercial buildings) – Commercial and corporate units developed only for sale with prices ranging from R$3,000 to R$7,000 per square meter.

SFH Funds – Funds from SFH are originated from the Governance Severance Indemnity Fund for Employees (FGTS) and from savings accounts deposits. Banks are required to invest 65% of the total savings accounts balance in the housing sector, either to final customers or developers, at lower interest rates than the private market.

Swap Agreements – A system in which we grant the land-owner a certain number of units to be built on the land or a percentage of the proceeds from the sale of units in such development in exchange for the land. By acquiring land through this system, we intend to reduce our cash requirements and increase our returns.

PSV – Potential Sales Value.

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About Gafisa
We are one of Brazil’s leading diversified national homebuilders. Over the last 50 years, we have been recognized as one of the foremost professionally-managed homebuilders, having completed and sold more than 970 developments and constructed over 10 million square meters of housing, which we believe is more than any other residential development company in Brazil. We believe “Gafisa” is one of the best-known brands in the real estate development market, enjoying a reputation among potential homebuyers, brokers, lenders, landowners and competitors for quality, consistency and professionalism.

Investor Relations
Julia Freitas Forbes
Phone: +55 11 3025-9242
Email: ri@gafisa.com.br
Website: www.gafisa.com.br/ir

Media Relations (Brazil)
Patrícia Queiroz
Máquina da Notícia Comunicação Integrada
Phone: +55 11 3147-7409
Fax: +55 11 3147-7900
E-mail: patricia.queiroz@maquina.inf.br

This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Gafisa. These are merely projections and, as such, are based exclusively on the expectations of management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors; therefore, they are subject to change without prior notice.

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The following table sets forth projects launched during the first quarter of 2009:

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The following table sets forth the financial completion of the construction in progress and the related revenue recognized (R$000) during the quarter ended on March, 31 2009.

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