Deutsche Bank AG and Prelios SpA plan to sell German homes valued at about 1 billion euros ($1.3 billion), two people with knowledge of the matter said.
The companies are seeking to sell the DGAG portfolio this year, according to the people, who asked not to be identified because the information is private. DGAG owns about 10,000 apartments in northern German cities including Hamburg and Luebeck, said one of the people. Spokesmen at RREEF, the Deutsche Bank real estate investment unit that holds the property, and Milan-based Prelios declined to comment.
Property owners are trying to profit from demand for German homes as investors seek alternatives to lower-yielding fixed-income assets. Offer prices for existing German apartments rose 7.4 percent in 2012, according to data compiled by Berlin-based online broker ImmobilienScout24. Hamburg was one of the biggest gainers, with a 10 percent increase.
At least two other big German home portfolios are on the market. Bayerische Landesbank is seeking a buyer for 32,000 homes valued at about 2.4 billion euros. Blackstone Group LP, the largest manager of real estate private-equity funds, intends to sell almost 8,000 Berlin apartments that it bought last year, two people with knowledge of the firm’s plans said.
Pirelli RE’s Successor
Prelios, the real estate company formerly known as Pirelli RE, bought DGAG in 2007. At the time, DGAG’s apartments were valued at about 1.4 billion euros. Prelios then sold some of DGAG’s residential properties to its partnership with RREEF.
In 2007, RREEF and Prelios also bought 27,000 German apartments from Cerberus Capital Management LP. The properties, known as the Baubecon portfolio, were valued at about 1.6 euros, according to a statement from Pirelli.
The Baubecon and DGAG deals, both financed with about 80 percent debt, are legacies of the buyout boom in German multifamily housing before the credit crisis hit in 2008. Barclays Plc, the lender for the Baubecon purchase, took over those homes in 2011 when Prelios and RREEF refused to inject more money after building-maintenance costs and a slide in values wiped out their investment. Barclays sold Baubecon to German residential landlord Deutsche Wohnen AG in 2012.
In December, Prelios said it plans to gradually divest its property holdings with the goal of focusing on property servicing. That month, the company was one of a group of owners that sold Berlin’s KaDeWe department store as part of a deal valued at 1.1 billion euros.