Patrizia Buys GBW in Deal Valuing Company at $3.3 Billion

Patrizia Immobilien AG agreed to buy Bayerische Landesbank’s GBW AG unit in a transaction that values the residential landlord at 2.5 billion euros ($3.3 billion) including debt. The deal would be the largest in Germany’s property market in five years.

Patrizia will lead a group of insurers, pension funds and savings banks from German-speaking countries to buy BayernLB’s 92 percent stake in GBW, Patrizia said in a statement today. The Augsburg, Germany-based real estate asset manager will pay 882 million euros excluding assumed debt.

The acquisition would enable Patrizia to achieve its goal of managing 10 billion euros of properties by 2015 from about

7.5 billion euros now. Most of the real estate is in Germany, though the company’s also buying in Scandinavia and the U.K. Last year, Patrizia led a group that bought apartments valued at

1.4 billion euros from Landesbank Baden-Wuerttemberg, in the biggest German property transaction of 2012.

“For Patrizia, the acquisition is important because it increases their fee flow,” said Georg Kanders, an analyst at Bankhaus Lampe KG. “The stock has room to climb a little bit.”

Patrizia was up 48 cents, or 6.7 percent, at 7.62 euros at the 5:30 p.m. close in Frankfurt, the most since July. The shares have climbed 57 percent in the past six months.

Competing Bidders

The European Union required BayernLB to sell its stake in GBW by the end of 2013 after it received state aid in 2008. The auction attracted investors because GBW has well-maintained properties in Bavarian cities including Munich, where home prices are climbing.

Munich home prices rose 14 percent in 2012, according to data compiled by ImmobilienScout24. German real estate is drawing investors who are seeking a safe place to put their money amid Europe’s sovereign-debt crisis.

Patrizia raised cash from one Swiss institutional investor and 26 German funds, including Sparkassen Versicherung and Versorgungswerk der Apothekerkammer Westfalen-Lippe, Patrizia Chief Operating Officer Klaus Schmitt said on a conference call today. The group has agreed to buy additional shares from other owners, bringing its stake to more than 96.5 percent, he said. Patrizia invested 58 million euros of its own capital.

The GBW sale, due to close in the second quarter, would be the biggest residential property deal in Germany since Goldman Sachs Group Inc. bought LEG NRW for about 3.5 billion euros including assumed debt in 2008, according to data compiled by Jones Lang LaSalle Inc. The deal announced today is subject to antitrust approval.

At least four other investors participated in the final round of bidding, including Austria’s Conwert Immobilien Invest SE and Immofinanz AG, and Wohnen in Bayern, a group of Bavarian municipalities, four people with knowledge of the matter said.