Fortress pays off $35m of Gagfah debt

The asset manager raised capital from its limited partners, including the Oregon Investment Council, to repay margin debt on the German apartment owner which has reportedly been struggling with its debt load.

Fortress Investment Group has repaid $35 million of debt owed on Gagfah, Germany’s largest publicly traded apartment owner, after turning to its limited partners for capital.

The asset manager had asked LPs in Fortress Investment Fund III to inject additional capital into the $2 billion vehicle earlier this year as it sought to recapitalise the fund’s portfolio, according to a spokesman for the $47.8 billion Oregon Investment Council.

“They are paying down margin debt with more long-term financing,” an Oregon spokesman told PERE in February. “Fortress asked whether LPs would consider providing funding rather than them go to outside sources.”

In a statement today, Fortress said it had paid down $35 million of margin debt on Gagfah.

Gagfah had been reportedly struggling with its debt obligations since last year. At the time, the German company said it had no need to raise additional equity or debt. “There is no truth whatsoever to [the] rumours,” Gagfah said on 17 October. The company added that its debt started maturing in 2010 with the bulk of the company’s debt set to mature in 2013.

In addition to the $35 million of debt on Gagfah, Fortress reportedly needs an addition $20 million to bolster its listed property fund, Eurocastle, and Nationstar Mortgage LLC, a residential loan-servicing company acquired in 2006.

Fortress acquired Gagfah in 2004 for €3.5 billion.  At the time, the New York-based investment firm said it had assumed €1.4 billion of existing debt, taken out a €1.4 billion loan and provided €700 million of equity.