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Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

ESSEN, GERMANY-Shares in GAGFAH, Germany’s largest listed housing company controlled by US private equity group Fortress Investment, have been heavily traded in recent weeks, with various media reporting that 12.5 million in stock – around 5.5% of the outstanding capital – was recently sold by Goldman Sachs for an unnamed institution at a price of €5.50 per share.

A GAGFAH spokesman said the group had no notification of any change in voting rights despite the size of the transaction. The share was last trading around €6. The reports said Fortress, which cut its stake at the end of March to 60% of equity from a prior 70%, was not the seller of the latest packet. The second largest shareholder is Highbridge Capital, a unit of JP Morgan, which most recently reporting holding 5.24%. The investment bank Morgan Stanley has downgrade the stock to Underweight, with a target price of €2.90.

For the first half of the year GAGFAH last week reported a significant depreciation in valuation, marking the portfolio down by just over €600 million for its nearly 170,000 German housing units to €9.1 billion from €9.8 billion at end-December and €10.1 billion in June 2008. However, the latest depreciation came after a reduction of nearly 5,000 units in 1H09, of which 1,116 were privatised to tenants or third parties. GAGFAH said its net asset value is €13.17 per share and gross asset value is €855 per square meter. on the 10.2 million square meters. residential space it now owns.

Profit from leasing increased to €246.1 million in the first six months from €242.5 million in 1H08 on a weighted average of 4,800 fewer units. FFO reached €0.18 per share or €39.6 million in second quarter 2009 and €88.3 million or €0.39 per share in the first six months of 2009. GAGFAH rental growth rate was 1.3% annualised or 0.7% for the first six months of 2009 on a like-for-like basis. Privatisations were made at a margin of 19% for a total value of €54.0 million at an average net cold rent multiplier of 16x. The overall vacancy was at 4.6%.

“Our residential leasing business continues to deliver highly consistent cash flows,” GAGFAH CEO William Joseph Brennan commented. “Rents have increased by 1.3% on a same store basis for the year, and vacancies are low and stable. This permits us to focus and execute on the strategy we outlined last quarter; namely, to aggressively attack costs, recycle capital through asset sales when appropriate, and further strengthen our balance sheet. While we are fortunate to have very limited debt maturities over the next several years, we will continue to be proactive in our refinancing plans.”

He added that GAGFAH’s first half performance puts it on track for its full-year goal. “While we have made good progress thus far this year, we have a series of initiatives to deliver on before the end of this year.”

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