Fortress to Cut Stake in German Landlord Gagfah

Fortress Investment Group LLC (FIG) cut its stake in Gagfah SA (GFJ), the second-largest owner of German homes, to less than 50 percent as part of a transaction in which Gagfah also sold shares.

Fortress, a private-equity and hedge-fund manager, sold 20 million Gagfah shares to reduce its holding to 48.8 percent, according to a statement today. Gagfah sold 10.5 million treasury shares and 9.5 million new shares for 8.85 euros each, raising about 176 million euros ($226 million).

Fortress previously owned about 61 percent of Gagfah, according to the statement. The New York-based firm’s assets under management were $55.6 billion as of March 31, a 4 percent increase from the end of 2012, according to a May 2 report.

“Gagfah is on track to become a more conventional residential real estate company,” Andre Remke, an analyst at Baader Bank with a buy rating on the stock, said in a research note today. The company “can now refocus on operational performance and investments,” he said.

Gagfah fell 6.5 percent to 8.75 euros at the close in Frankfurt, the biggest percentage drop since January 2012. The shares have lost 1.3 percent this year.

The Luxembourg-based company said yesterday it will resume dividend payments in 2015. The last payment was in 2011. Gagfah said last month it was issuing a 2 billion-euro commercial-mortgage backed security to pay most of its debt.

Gagfah also reiterated a forecast that funds from operations will rise by 5 percent to 10 percent per share this year. The company is targeting an increase of 7.5 percent to 12.5 percent for 2014.

To contact the reporter on this story: Andrew Blackman in Berlin at ablackman@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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