July 23 (Bloomberg) -- Merrill Lynch & Co. raised its bid for Berenice Fondo Uffici to 439 million euros ($606 million), topping an offer by Goldman Sachs Group Inc. for the owner of about 50 Italian office buildings from Milan to Palermo.

Merrill's improved offer for the real estate fund is 774 euros ($1,070) for each Berenice unit, compared with the previous bid of 770 euros a unit, its Luxembourg-based Galante Sarl unit said in a statement posted on the Milan exchange's Web site today.

Goldman on July 18 raised its bid to 771 euros per Berenice unit. Berenice owns properties valued at about 845 million euros with tenants including Telecom Italia SpA, Italy's largest telephone company, and the country's government. Merrill and Goldman are vying for the asset to capitalize on strong demand for office buildings.

The fund has attracted nine bids from three groups in two months. Pirelli & C. Real Estate SpA, Italy's biggest property investment company, manages Berenice and made a first offer for the fund on May 22. The bid, in partnership with Morgan Stanley, amounted to 540 euros per unit. The group's second offer of 685 euros lapsed earlier this month.

Merrill would sell five of Berenice's properties in Rome for at least 300 million euros, according to a prospectus published July 6. The five properties cost a combined 135 million euros, according to a Berenice filing, and were valued at 260.8 million by CB Richard Ellis at the end of June, Pirelli Re said July 17.

The offers from Merrill and Goldman both run through August 9. The two banks won't be able to raise their bids after July 26, according to Italian regulations. On that day the two banks can both make an improved offer, according to rules set by stock market regulator Consob.

Units of Berenice were unchanged at 771 euros in Milan, after being suspended earlier pending the statement. About 1,518 units, less than 0.3 percent of the total outstanding, changed hands today. Berenice units have advanced 59 percent in the past six months.

To contact the reporters on this story: Marco Bertacche in Milan at at mbertacche@bloomberg.net.

Last Updated: July 23, 2007 12:00 EDT