Germany’s government is seeking potential bidders for its TLG real-estate unit by April 16 and aims to close a sale of as much as $2.3 billion by the end of the year, the Finance Ministry said.
The Berlin-based ministry hired Barclays Capital Plc as its financial adviser and White & Case Europe LLP as legal counsel, a ministry official said today. Barclays, which has begun a Europe-wide search for bidders, was chosen by the commission based on its international experience and potential to co-finance bids, the person said.
The value of TLG, short for TLG Immobilien GmbH, was assessed at 1.76 billion euros ($2.3 billion) in 2010, when it held debt of 727 million euros, its financial statement shows. The government is optimistic it will attract bids over the 2010 price amid increased demand for commercial and residential property units in Germany, said the official, who spoke to reporters on terms of anonymity.
Germany shelved an attempt to sell TLG in 2008, shortly after the collapse of Lehman Brothers Holdings. Real estate transactions in Germany picked up last year, and this year’s deal volume of 1.45 billion euros is already half the total for all of 2011, according to Bloomberg data. The government expects to make more money from selling TLG to an investor or investors than via an initial public offering, said the official.
Chancellor Angela Merkel has slated asset sales of 5.1 billion euros in her 2012 budget, including TLG, Duisburg’s harbor and holdings tied to the European Recovery Program investment fund, as she strives to narrow the deficit.
A group including Patrizia Immobilien AG agreed in February to buy Landesbank Baden-Wuerttemberg’s real-estate unit for 1.4 billion euros, and Bayerische Landesbank is selling its property business, after taxpayers bailed out the two state-owned lenders during the financial crisis.
TLG, based in Berlin, was split into commercial and residential units in January to increase competition in the bidding, the person said. Commercial properties accounted for 69 percent of the company’s assessed value in 2010, the person added. TLG’s balance sheet in 2011 was close to the 1.85 billion euros reported in 2010, said the official. The company, which reports earnings in May, has made a profit every year since 2002.
The company was originally known as Treuhand Gesellschaft, a holding company that owned eastern German property after reunification in 1990. TLG now manages assets concentrated on the Baltic Sea coast and in Berlin, Halle and Leipzig.