SHARE
COPY LINK

REAL ESTATE

Investment firm ‘buys 22,000 German flats’

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.

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

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

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

READ ALSO:

With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

SHOW COMMENTS