Cerberus Said to Consider IPO of German Retail Properties

Cerberus Capital Management LP, the buyout firm that’s seeking $3.75 billion for a new fund, is considering an initial public offering of its German retail-property assets, two people with knowledge of the plan said.

Cerberus, based in New York, is exploring the option with investment banks, said the people, who asked not to be identified because the plans are private. Cerberus owns buildings valued at about 2 billion euros ($2.7 billion) that house German department stores, including Woolworth, and big-box retailers, one of the people said.

Foreign investors are seeking to profit from soaring demand for German property assets. Goldman Sachs Group Inc. is due to complete an IPO of residential landlord LEG Immobilien AG tomorrow, seeking to raise about 1.4 billion euros.

In 2011, Cerberus sold its stake in GSW Immobilien AG, Germany’s third-largest residential landlord by market value. That IPO raised 468 million euros.

The firm has brought in more than $1.5 billion for its latest distressed fund, people familiar with the matter have said. Fundraising is expected to be completed late in the first quarter, the people said.

A spokeswoman for Cerberus declined to comment on any potential IPO.

Cash & Carry

Cerberus is one of Germany’s most active foreign real estate investors. In 2011, the firm bought 45 stores from Metro AG, Germany’s biggest retailer, including 42 Cash & Carry wholesale shopping buildings. The properties, located in large cities, had 900,000 square meters (9.7 million square feet) of rentable space.

In 2007, Cerberus bought 112 buildings leased to the retailer Woolworth, according to a statement by Linklaters LLP, a law firm that advised Cerberus on its investments.

The FTSE EPRA NAREIT index of German property stocks has gained 34 percent in the past 12 months, while the German benchmark DAX Index has gained 21 percent.