Material Fact – Capital Increase by Private Subscription

Material Fact

Capital Increase by Private Subscription

Rossi Residencial S.A. (the "Company"), in accordance with CVM Instruction nr. 358, enacted January 3 2002, as amended, hereby informs its shareholders and the market in general further to the capital increase plan disclosed in the Material Fact of September 5, 2012, the Company completed the negotiations to guarantee the subscription of a private capital increase of R$ 600 million.

The Company and the Company executed on October 21, 2012, binding and irrevocable investment agreements with the controlling shareholders and financial investors, which assure the subscription of the capital increase at an issuance price of R$ 4.00 per share. The transaction is conditional upon customary conditions precedents for this type of transaction and the previous approval by the Brazilian Administrative Council for Economic Defense – CADE. The Company believes that CADE will approve the transaction in the summary proceeding, in order to assure the conclusion of the capital increase until the end of January 2013.

The capital increase will be approved by the Company’s Board of Directors within the new authorized capital limit approved by the Extraordinary Shareholders’ Meeting of October 8, 2012, after the CADE approval. The shareholders will have preemptive rights in the shares subscription. The subscription rights will be listed and traded on the BM&FBOVESPA under the ticker "RSID1", as from the date of publication of the Notice to Shareholders informing the beginning of the subscription period.

As previously reported, the capital increase intends to strengthen the capital structure of the Company.

Sincerely,

Cássio Elias Audi
CFO and Investor Relations Officer
Rossi Residencial S.A.

Investor Relations:
Tel. +55 (11) 4058-2502
ri@rossiresidencial.com.br