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Goldman’s LEG Property Unit Said to Consider Second-Quarter IPO

October 22, 2012

LEG NRW GmbH, the German residential landlord owned by Goldman Sachs Group Inc. (GS:US)’s Whitehall Street Real Estate Funds, is considering an initial public offering as early as the second quarter of 2013, two people with knowledge of the plan said.

LEG, based in Dusseldorf, plans to select banks to run the share sale by the end of the year, said one of the people. Both of them asked not to be identified because the talks are private. LEG’s 90,000 apartments are valued at about 4.7 billion euros ($6.1 billion), according to LEG’s 2011 annual report. The homes are in North Rhine-Westphalia, Germany’s most populous state.

Manfred Neuhoefer, a spokesman for LEG, and Roland Leithaeuser, a spokesman at Goldman, declined to comment.

Goldman Sachs, which bought LEG from the state government for about 3.5 billion euros in 2008, is seeking to profit from the boom in German residential real estate. The FTSE EPRA/Nareit index of German property stocks has gained 32 percent this year as investors seek a safe place to put their money amid the European sovereign-debt crisis.

Goldman Sachs is one of the most active foreign investors in German real estate. In 2011, the firm spun off GSW Immobilien AG (GIB), now Germany’s third-largest residential landlord by market value, in an IPO that raised about 468 million euros.

Goldman’s Whitehall Street made a failed bid to buy Baubecon, the residential property portfolio that Barclays Plc (BARC) agreed to sell to Deutsche Wohnen AG in May in a deal valued at 1.24 billion euros.

More Liquidity

An IPO would help make Germany more attractive to real estate investors by adding liquidity to the market, said Torsten Klingner, an analyst at Warburg Research in Hamburg.

“The German residential listed market is too small by international standards and fairly illiquid,” Klingner said.

Deutsche Annington Immobilien GmbH, Germany’s largest owner of apartments, also plans to sell shares in an IPO next year. Annington, which has 186,000 apartments, is controlled by Guy Hands’ Terra Firma Capital Partners Ltd.

LEG is preparing to access capital markets and an IPO is possible, Chief Executive Officer Thomas Hegel said at a press conference in September.

LEG reported a net loss of 15 million euros for 2011, compared with a profit of 29 million euros a year earlier, after spending money to upgrade its technology and refinancing debt, according to Neuhoefer. The company generated rental income of 244 million euros, up from 241 million euros. Funds from operations excluding sales of properties, a measure of a property company’s ability to raise cash, amounted to 112 million euros.

To contact the reporters on this story: Dalia Fahmy in Berlin at; Aaron Kirchfeld in London at

To contact the editor responsible for this story: Andrew Blackman at

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