Luxembourg, March 02, 2012 - GAGFAH S.A. and the City of Dresden agree on amicable settlement to end legal dispute over the WOBA DRESDEN GmbH Privatization Agreement. The settlement is subject to approval by the City Council of Dresden and clearance by the City's legal supervision authority. Key points:

  • Resolution of the legal dispute directly benefits the tenants
  • Investment in portfolio agreed to be increased with about EUR 15 million allocated to social projects
  • Occupation rights for the city increased; Social Charter extended

In the interests of a timely resolution of the disputes and in order to maintain good relations and cooperation, GAGFAH S.A. and the City of Dresden have agreed to fully resolve their dispute by way of an amicable settlement that will primarily benefit tenants in Dresden. Towards that end, the WOBA companies and the City of Dresden have signed and notarized a settlement agreement today. This agreement is subject to formal approval by the City Council and clearance by the City's legal supervisory authority. The City Council will probably decide about the approval on March 15, 2012.

The settlement agreement provides for the withdrawal of all lawsuits and the mutual waiver of all claims made in connection with the litigation. It has been agreed that in the future disputes between the parties will be handled through an extrajudicial settlement process, and a cure period will be employed to avoid contractual penalties. Furthermore, the City of Dresden and the WOBA companies have agreed on several changes to the social protection provisions, the 'Social Charter,' of the WOBA Privatization Agreement. Certain defined Social Charter protection provisions will be extended by five years until April 2021. The current contractual annual minimum repair and maintenance investments for the properties of the WOBA companies will be raised from EUR 5.00 per square meter to EUR 7.56 per square meter (net). The City's occupation rights will also be raised by 2,000 to 10,000.

In addition, the City of Dresden will receive nine annual payments for the period between 2012 and 2020 in the amount of EUR 4 million per year (a total of EUR 36 million), of which 40% will be invested in social projects that are to benefit GAGFAH's tenants in Dresden. The WOBA companies will also reimburse the City of Dresden for the City's litigation costs up to an amount of EUR 4 million. GAGFAH Group had already made provisions for litigation expenses in the amount of EUR 8 million as of September 30, 2011. The asset strategy of the WOBA companies will not be impacted by the settlement.

William J. Brennan, CEO of GAGFAH Group said, "We have always said that we were open to an out-of-court solution and have always believed that any settlement would have to be for the benefit of our tenants. We would be satisfied if the dispute could be resolved by this agreement."

By way of background, on March 31, 2011, the City of Dresden filed legal actions against WOBA Holding GmbH, Wohnbau Nordwest GmbH and SÜDOST WOBA DRESDEN GmbH, claiming contractual penalties of EUR 1.084 billion for alleged breaches of the WOBA Privatization Agreement. The WOBA companies defended against these lawsuits and in response issued counter suits against the City of Dresden as well as against the City's Finance Mayor, Hartmut Vorjohann.

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 approximately 155,000 apartments, GAGFAH is the largest residential property company listed in Germany.

Contact:

Gagfah M Immobilienmanagament GmbH
Dirk T. Schmitt, Head of Communications
Tel. +49 170 302 8833, dschmitt@gagfah.de
Bettina Benner, Press Officer
Tel. +49 172 206 0336, bbenner@gagfah.de

Rene Hoffmann
Head of Investor Relations
GAGFAH S.A.
Tel. +352 266 366 21, rhoffmann@gagfah.com