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TAG Immobilien AG (TEG) agreed to buy DKB Immobilien AG, a real-estate unit of Bayerische Landesbank (BLGZ), for 160 million euros ($213 million) in cash to increase its number of residential properties by more than 80 percent.
TAG will also assume about 800 million euros of debt by purchasing DKB, spokeswoman Dominique Mann said earlier today. The Hamburg-based buyer’s portfolio will increase by 25,000 homes to about 56,000 as a result of the deal, according to a statement today.
BayernLB, Germany’s second-biggest state-owned lender, has to sell some units to gain approval from the European Commission for its bailout during the financial crisis. The lender, based in Munich, needed 10 billion euros in fresh capital and a 4.8 billion-euro risk shield for a portfolio of asset-backed securities from its home state of Bavaria, which now owns 94 percent.
“TAG takes a sustainable, long-term approach to residential property management,” Chief Executive Officer Rolf Elgeti said in a separate statement. “By taking over DKB Immobilien AG, we have attained a structure and magnitude that lets us do this economically.”
TAG climbed 25 cents, or 3.8 percent to 6.85 euros in Frankfurt trading, the highest since Aug. 3. The shares have gained 11 percent this year, raising the company’s market value to 661 million euros.
DKB’s properties were valued at about 1.06 billion euros at the end of last year with a vacancy rate of 10.9 percent, TAG said. Almost all of them are in the former East German states of Thuringia, Berlin and Saxony.
The acquisition will probably be completed in the next few days, TAG said in the statement. The company will use the money raised from a share sale last week, which generated gross proceeds of about 127 million euros, to pay for the acquisition.
As part of its reorganization, BayernLB plans to sell its GBW AG real estate unit, which owns about 32,000 apartments. BayernLB owns 92 percent of the company and in February agreed to hold exclusive talks with Bavarian municipalities about a transaction.
The lender also plans to sell its LBS Bayern mortgage lending unit to Bavarian savings banks.
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