Investors led by Patrizia Immobilien AG (P1Z) are in talks to buy 1 billion euros ($1.4 billion) of offices from a German bad bank that’s winding down assets of failed lender Hypo Real Estate Holding AG, two people with knowledge of the matter said. It would be the country’s biggest commercial-property deal this year.
The 18 buildings, a portfolio known as Leo I, are leased to the state government of Hesse and include the finance ministry and Frankfurt police headquarters, one of the people said. Both people asked not to be identified because no decision on the sale has been reached.
Representatives of Augsburg, Germany-based Patrizia and FMS Wertmanagement, as the bad bank is known, declined to comment.
About 28 billion euros of German offices, shops and warehouses will change hands in 2013, 11 percent more than a year earlier, according to data compiled by CBRE Group Inc. In September, Patrizia bought 36 Hesse buildings that make up the Leo II portfolio from CA Immobilien Anlagen AG (CAI) for 800 million euros in this year’s biggest commercial property deal.
Patrizia’s shares closed little changed at 7.92 euros in Frankfurt trading. The shares have gained about 35 percent this year, raising the company’s market value to 500 million euros.
Patrizia has increased its assets under management to 12 billion euros, from 7 billion euros in 2012, as it pools cash from pension funds and insurers to make large acquisitions. The company in April agreed to make Germany’s biggest residential-property acquisition in five years with the purchase of Bavarian landlord GBW AG valued at 2.5 billion euros.
FMS is selling Leo I after Hypo Real Estate financed the properties for former owner Commerzbank AG with a 1 billion-euro loan that defaulted, one of the people said. The portfolio was sold to Commerzbank in 2005 for 1.07 billion euros by the Hesse government, which then leased the properties back.
Hypo Real Estate, once Germany’s second-largest commercial property lender, transferred assets to FMS following a government bailout during the financial crisis.
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