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Investment firm 'buys 22,000 German flats'
Photo: DPA

Investment firm 'buys 22,000 German flats'

Published: 10 Apr 2012 15:54 GMT+02:00
Updated: 10 Apr 2012 15:54 GMT+02:00

A notoriously aggressive American investment company, attracted to the German market by rising prices, is spending nearly €1 billion on more than 22,000 flats across Germany, the Financial Times Deutschland reported Tuesday.

Cerberus, together with the real estate management company, Corpus Sireo, is reportedly paying as much as €900 million to get the 22,000 flats from Speymill, a bankrupt UK firm, the newspaper said. Germany's federal cartel office has already approved the deal.

The huge deal is a sign of the German real estate market's renewed attractiveness for foreign investors, following several years in which real estate money went elsewhere, the FTD said.

Whitehall Blackstone, a Goldman-Sachs fund and Morgan Stanley were also reportedly interested in Speymill's property portfolio.

Cerberus is the Greek mythology name of the dog who watched over the entrance to hell, noted Der Spiegel, and suggested it was a deliberate choice as the firm has a reputation for being particularly aggressive.

In 2004 Cerberus, together with a Goldman Sachs subsidiary, bought GSW, a housing management owned by the state of Berlin that had more than 60,000 flats in its portfolio. Last year the investors went public with part of the company and sold the rest, removing them from the public housing market.

Germany's property market became less attractive to investors after credit dried up in 2007, but it is now much easier to get financing – either to buy apartments after they are renovated or as a package, as Cerberus has done.

The Speymill holdings were considered a tough sell because the flats are spread out all over Germany, Kai Klose, a real estate analyst with the Berenberg Bank told the FTD. He calculated, based on market rates, that Cerberus would pay as much as €900 million for the deal.

The federal government also plans to capitalize on the improved market conditions, the FTD said, with Finance Minister Wolfgang Schäuble planning a second attempt at selling the government-owned TLG company. It succeeded the Treuhand company that administered state-owned property from the former East Germany.

Schäuble tried to unload a package of offices, industrial areas and flats in Berlin and eastern Germany in 2008 but couldn't find a buyer. The minister now sees a better chance for a sale, since prices are on the rise, the paper wrote.

TLG's offerings, which include 11,500 flats, are valued at around €1.7 billion. Schäuble wants to insert language in the sales documents that would prevent luxury renovations of the flats, but that's not enough for Left party parliamentary leader Gregor Gysi, who is worried that a sale would make tenants "purely investment objects."

Those interested need to hurry up. Potential buyers have until this coming Monday to make their interest known, the FTD said.

The Local/mw

The Local (news@thelocal.de)

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Your comments about this article

17:57 April 10, 2012 by catjones
To prevent tenants as being seen as 'investment objects', Cerberus' management will visit each of the 22,000 tenants personally and bring offerings of beer and bretzels as part of their Welcome Wagon approach to real estate investment management. "We want to get to know our objects on a personal level, sit with them, go through old scrapbooks together. We then invite the tenants to our corporate headquarters so they can touch our workstations. We don't want to frighten them, poor dears.'
19:26 April 10, 2012 by murka
I can well turn out to be an idiotic move, given the shrinking population. Goldman Sachs owned a building site here in the city, let it crumble unfinished for 10 years, and finally sold for a penny back to the city. A great management of investors' money, isn't it?
08:57 April 11, 2012 by siba
@ murka: that does not apply to berlin. berlin has a big influx of (mostly western so not poor) immigrants and grows year by year - and buying or renting appartments becomes increasingly unaffordable... though the housing market is still good compared to london or paris.
21:34 April 11, 2012 by Sayer
I smell a rat!
08:49 April 13, 2012 by stephang
It's true that Berlin is now seeing population growth, unlike Germany as a whole. Rents are still low but have started rising substantially over the last years, and so have house prices. Low interest rates represent a major impetus for the local housing market. For more see http://www.berlinhousingboom.com/
20:33 April 15, 2012 by Englishted
Have I missed something?

I believed the world downturn was due to American investment companies attempting to make a killing by "investing " in real estate,all be it in the U.S.A. last time.

Take your carpetbags and get out of town.
16:56 April 27, 2012 by jabulani
German property market has been very stable up to now. Yes ...prices are going up but one has to be careful of the devaluation of the Euro. already the Euro lost about 15 % to the British pound. I believe that well positioned properties will attain good capital appreciation...keep in mind that ONLY THE PRIME POSITION ones win and never loose value. What about all the rest? If you cannot buy the best....dont buy.

If you buy for rental income as long as you live in an Euro zone country will be ok., if you live in uk....mmmm take care.
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