Bloomberg News

German Property Sale Said to Draw Blackstone, Morgan Stanley

July 17, 2012

The German government’s sale of its TLG Immobilien GmbH real estate unit is attracting interest from investors including Blackstone Group LP (BX:US) and Morgan Stanley (MS:US) in what could be the country’s largest property transaction this year, according to four people with knowledge of the matter.

The Finance Ministry in Berlin will decide this month which financial and strategic investors will enter the next round of bidding for TLG, said the people, who asked not to be identified because the talks are private. TLG owns properties valued at 1.86 billion euros ($2.3 billion), according to a sales prospectus obtained by Bloomberg News.

The government is seeking to take advantage of a pick-up in real-estate purchases in Germany as investors seek havens amid the European debt crisis. About 3.23 billion euros of deals have been announced this year, compared with 1.91 billion euros of deals in all of 2011, according to data compiled by Bloomberg.

Firms chosen for the next round will be given access to the company’s financial data and taken on property tours before submitting a binding offer, according to the prospectus. The Finance Ministry hired Barclays Plc (BARC) and law firm White & Case LLP to advise on the sale.

The government may sell the residential business, which the sale prospectus values at 482 million euros, and the commercial unit, priced at 1.38 billion euros, separately if it can’t find a buyer for the whole company, the people said. Morgan Stanley’s real estate unit is only interested in the commercial property, one of the people said.

Officials at TLG, Blackstone and Morgan Stanley declined to comment.

On Schedule

The sale is progressing according to plan, a Finance Ministry spokeswoman said, speaking on customary condition of anonymity. The bidders include strategic and financial investors, she said.

The spokeswoman said the Finance Ministry’s policy is not to comment on specific bidders.

Wolfgang Schaeuble, the finance minister, said June 12 that the federal government is “ahead of the curve” in meeting legal requirements that compel him to cut the budget shortfall to 0.35 percent of Germany’s gross domestic product by 2016.

The sale of one of the government’s last major property assets is drawing interest from institutions seeking a profitable investment amid Europe’s sovereign debt crisis. Investors spent about 7 billion euros on deals for at least 50 apartments in the first six months, about 170 percent more than a year earlier, according to data compiled by Los Angeles-based brokerage CBRE Group Inc. (CBG:US)

TLG replaced Treuhand Gesellschaft, the company that oversaw the sale and restructuring of thousands of companies after the collapse of communist East Germany. As a result, most of its assets are in the six eastern states, including Berlin.

In Germany’s biggest real estate deal this year, a group including Patrizia Immobilien AG agreed to buy Landesbank Baden- Wuerttemberg’s real estate unit, LBBW Immobilien GmbH, for 1.4 billion euros. The transaction was announced in February.

To contact the reporters on this story: Dalia Fahmy in Berlin at dfahmy1@bloomberg.net; Aaron Kirchfeld in London at akirchfeld@bloomberg.net.

To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net.


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Companies Mentioned

  • BX
    (Blackstone Group LP/The)
    • $35.57 USD
    • -0.05
    • -0.14%
  • MS
    (Morgan Stanley)
    • $32.91 USD
    • 0.36
    • 1.09%
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