Gagfah SA (GFJ), Germany’s second-largest property company by market value, may refinance a 1.1 billion- euro ($1.5 billion) loan maturing in May as early as this month, according to two people with knowledge of the matter.
Gagfah, controlled by Fortress Investment Group LLC (FIG:US), wants to refinance the loan, used to buy apartments in Dresden in 2006, rather than sell the homes, said the people, who asked not to be identified because the information is private. In August, Gagfah said it may divest the 38,000 properties it owns in Dresden to pay off the loan. Most of the funding will probably come from U.S. banks, including Bank of America Corp (BAC:US)., the people said.
Fortress is among the private-equity firms facing debt deadlines after buying German real estate with the cheap credit available in the years before the global financial crisis started in 2008. The New York-based company owns about 66 percent of Gagfah, according to data compiled by Bloomberg.
Dirk Schmitt, a spokesman for Luxembourg-based Gagfah, and John McIvor, a Bank of America spokesman, couldn’t immediately be reached for comment.
Gagfah was little changed at 9.20 euros at the 5:30 p.m. close in Frankfurt, after gaining as much as 1.9 percent earlier. The stock has more than doubled in the past 12 months, making it the second-best performer on the 50-member MDAX Index for medium-sized companies, which has gained about 28 percent. Gagfah has a market value of about 1.9 billion euros.
Gagfah’s Dresden homes account for about 25 percent of the company’s portfolio. Deutsche Wohnen AG (DWNI), Germany’s largest publicly traded residential landlord, said in August it was interested in buying the properties.
Gagfah has an additional 2.1 billion euros to repay in August 2013, which it will probably refinance after completing the refinancing of the loan at its Woba Dresden unit.
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