Gagfah S.A. : Financial results for 2011

GAGFAH S.A. Financial results for 2011

Luxembourg, March 20, 2012 - GAGFAH S.A. (Frankfurt Stock Exchange: GFJ) today announced its financial results for the fourth quarter and full year 2012.

William Joseph Brennan, CEO of GAGFAH S.A.'s German subsidiaries: "GAGFAH delivered a solid operational performance with an EBITDA of more than EUR 326 million and an FFO of almost EUR 160 million or EUR 0.73 per share, both in line with the prior-year results considering the 12,500 fewer units due to sales. The operational key figures of 1.5% rent growth, 5.1% vacancy rate and 12% fluctuation rate are all in line with our expectations. We financially closed asset deals of more than 7,600 units for a total consideration of almost EUR 390 million in 2011. In addition we completed a sales transaction to GSW in Berlin, in which we sold about 4,800 residential units by way of a share deal worth EUR330 million, making it one of the largest residential real estate transactions in Germany in 2011.

We are satisfied that the WOBA litigation has been resolved in a positive manner by amicable agreement after the City Council approval on March 15, leaving only the formal clearance from the supervisory authority outstanding, which is expected shortly. We had always said that we were open to an out-of-court solution and believe that this settlement will also be for the benefit of our tenants.

Our focus in 2012, in addition to our core business, will be on the optimization of our capital structure, focusing on the two largest loans that will mature next year."

Highlights

• FFO for 2011 from the core rental business of EUR 0.52 per share. Including the contribution from sales, the Company delivered EUR 0.73 of FFO per share for 2011. Fourth quarter 2011 FFO per share was EUR 0.24 including sales, of which EUR 0.17 came from the core rental business.

• Profit from leasing was EUR 419.6 million in 2011 compared to EUR 460.1 million in 2010, on an average basis of ca. 12,500 fewer units due to sales.

• Operating profit margin for 2011 of 48.1%.

• Operations on track with 1.5% same-store1) rent growth, turnover at 12.0% and vacancy rate of 5.1%, all in line with our targets.

• Sales: Financial closing of 7,605 units for a total value of EUR 388.8 million. 4,897 of these units for EUR 325.8 million came from our condo and large multi-family homes sales programs out of our core portfolio and the remaining 2,708 units for EUR 63.0 million were non-core asset sales.

• Share deal: In addition, we financially closed the sale of approx. 4,800 units by way of a share deal in the fourth quarter of 2011, generating EUR 330.0 million of gross proceeds and EUR 67.0 million of net cash.

• Cost to manage per unit was EUR 380 for 2011 after EUR 374 for 2010 and on an average basis of about 7.0% fewer units.

• NAV of EUR 12.53 per share and gross asset value of EUR 849 per square meter as of December 31, 2011.

City of Dresden Litigation
In the interest of a timely resolution of the disputes and a good and trustful future cooperation, the WOBA companies and the State Capital of Dresden agreed to fully resolve all their disputes by mutual agreement and, on March 2, 2012, entered into a settlement agreement subject to the approval by Dresden's city council and supervisory authority. While the settlement has already been approved by the City Council of Dresden on March 15, it is still subject to formal approval by the legal supervisory authority of Saxony which is expected to be rendered on or before March 21, 2012.

Key Financial Information

Consolidated Statement of Comprehensive Income (EUR million)	2011	2010	Q4 2011	Q4 2010
Income from the leasing of investment property	872.2	911.5	211.2	215.5
Profit from the leasing of investment property	419.6	460.1	112.2	108.0
Profit from the sale of investment property and assets held for sale	22.0	16.2	6.9	3.5
Loss from the fair value measurement of investment property	-41.9	-69.5	-11.5	-12.2
EBITDA	326.5	365.8	79.4	87.8
EBIT	306.9	348.3	72.6	80.2
EBT	20.6	51.2	10.6	17.8
FFO	159.5	170.6	48.8	42.0
Number of shares (weighted average, undiluted, in million) 1)	218.8	225.9	207.1	225.9
FFO in EUR per share 1)	0.73	0.76	0.24	0.19

Group Capitalization	12-31-2011 EUR million	12-31-2011 %	12-31-2010 EUR million	12-31-2010 %
Total equity	2,136.9	25.5	2,302.7	24.9
Financial liabilities	5,427.9	64.9	6,011.2	64.9
Other liabilities	801.6	9.6	947.8	10.2
Total equity and liabilities	8,366.4	100.0	9,261.7	100.0

Operational Figures (core portfolio)	12-31-2011	12-31-2010
Group residential portfolio Units	148,694	158,314
Sqm	9,027,693	9,597,660
Net cold rent/sqm (in EUR)	5.11	5.07
Vacancy rate (in %)	5.1	5.2
Sold units (financial closing) 2)	4,897	7,521

FFO is a non-IFRS financial measure used by our Group's management to report the funds generated from continued operations. FFO is an appropriate measure of underlying operating performance of real estate companies as it provides shareholders with information regarding the Group's ability to service debt, make capital expenditures or pay dividends. GAGFAH's calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited. The following is a reconciliation of EBIT to FFO for our Group:

FUNDS FROM OPERATIONS - FFO (EUR MILLION)	2011	2010	Q4 2011	Q4 2010
EBIT	306.9	348.3	72.6	80.2
Reorganization and restructuring expenses	14.6	12.8	5.9	6.2
Depreciation and amortization	5.0	4.7	0.9	1.4
EBITDA	326.5	365.8	79.4	87.8
Loss from the fair value measurement of investment property	41.9	69.5	11.5	12.2
Realized valuation gains through sales	35.3	7.3	10.0	3.7
Expenses for share-based remuneration	3.8	1.8	0.5	0.2
Net interest expenses	-290.9	-296.4	-61.9	-64.4
Current tax expenses	-17.3	-4.7	-8.7	-4.4
Property development business	2.4	-2.4	-0.2	0.2
Sales expenses (non-condo)	8.0	26.9	3.7	7.7
Other	49.8	2.8	14.5	-1.0
FFO	159.5	170.6	48.8	42.0
Number of shares (weighted average, undiluted, in million) 1)	218.8	225.9	207.1	225.9
FFO in EUR per share 1)	0.73	0.76	0.24	0.19

1) Excluding treasury shares.
2) In addition, we closed the sale of 2,708 non-core units in 2011. The numbers do not include the share deal in which we sold approximately 4,800 units.

Management will host an earnings conference call today at 2:00 P.M. Luxembourg time (1:00 P.M. London time, 9:00 A.M. New York time). All interested parties are welcome to participate in the live call. You can access the conference call by dialing

• 1 866 966 9439 from the U.S.
• 0800 694 0257 from the U.K.
• 8002 7512 from Luxembourg
• 0800 101 4960 from Germany
• [phone] from all other countries

ten minutes prior to the scheduled start of the call. Please refer to "GAGFAH S.A. 2011 Earnings Call". The conference ID will be 59550037.
A webcast of the conference call will be available to the public on a listen-only basis at http://www.gagfah.com/. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for twelve months following the call on http://www.gagfah.com/. The 2011 Annual Report of GAGFAH S.A. is available on http://www.gagfah.com/.

Contact
GAGFAH S.A.
Investor Relations
2-4, rue Beck
L-1222 Luxembourg
Tel.: [phone]
Mail: [e-mail]
http://www.gagfah.com/
R.C.S. Luxembourg B 109.526

About GAGFAH S.A.
GAGFAH S.A. is a joint stock corporation organized under the laws of the Grand Duchy of Luxembourg qualifying as a securitization company under the Luxembourg Securitization Law of March 22, 2004. The core business of GAGFAH S.A.'s operating subsidiaries is the ownership and management of a geographically diversified and well maintained residential property portfolio located throughout Germany. With a portfolio of almost 150,000 apartments, GAGFAH is the largest residential property company listed in Germany.

Forward-Looking Statements
This press release contains statements that constitute forward-looking statements. Such forward-looking statements relate to, among other things, future commitments to acquire real estate and achievement of acquisition targets, timing of completion of acquisitions and the operating performance of our investments. Forward-looking statements are generally identifiable by use of forward looking terminology such as "may", "will", "should", "potential", "intend", "expect", "endeavor", "seek", "anticipate", "estimate", "overestimate", "underestimate", "believe", "could", "project", "predict", "continue", "plan", "forecast" or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results from operations or of financial conditions or state other forward looking information. Our ability to predict results or the actual effect of future plans or strategies is limited. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance may differ materially from those set forth in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results or stated expectations, including the risk that GAGFAH S.A. will be unable to extent existing financing at suitable terms, be unable to increase rents and occupancy, to sell further units or further reduce management costs.

Percentages and figures in this press release may include rounding effects.