EUROPE – Austria's Immofinanz has bought almost 2,000 flats in Berlin through its subsidiary BUWOG – bringing it one step closer to a planned IPO.

Immofinanz had announced earlier this year that it wanted to buy at least 10,000 residential units in Germany before floating half of BUWOG on the stock exchange and eventually exiting the formerly state-owned company.

For an undisclosed sum, BUWOG acquired more than 1,900 flats in Berlin-Neukölln with a total rental space of more than 126,000 square meters.

The portfolio is in "very good condition", it said, with a gross yield of 8% and a vacancy rate of only 2%.

Capricornus, the German real estate subsidiary of Dutch group Euréal, was the seller.

Alexander Hoff, managing director at BUWOG, which now owns around 4,200 flats in Germany, said: "This is the first of several planned purchases in Germany."

The company said shifting to German residential from low-yielding Austrian properties would help increase net return and allow it to "position itself more clearly" within the German residential space.

Daniel Riedl, COO at Immofinanz, added: "Further acquisitions are already under review."

BUWOG is building 500-700 flats annually in Vienna and Berlin, and around 5,000 flats are currently either already under construction or in the planning phase in those two cities.

Immofinanz had been among those initially expressing interest in the GBW residential portfolio in Bavaria, eventually snapped up by a consortium led by Augsburg-based Patrizia earlier this month.