GERMANY - Property group Deutsche Wohnen is to acquire the 23,500-unit BauBeCon German residential portfolio from UK investment bank Barclays for €1.2bn.
Deutsche Wohnen has up to now concentrated its investments in Berlin and the area around Frankfurt am Main, although the company has been looking outside its core markets for the past year to bypass aggressive pricing in core cities.
The acquisition, announced this week, adds 9,000 Berlin assets - 30% of the overall BauBeCon portfolio - to Deutsche Wohnen's existing holdings in the city. The addition would "allow for efficient management", the firm said in a statement.
"In Berlin it's difficult to acquire a portfolio at the price we need because there are so many investors in the market," Deutsche Wohnen spokeswoman Manuela Damianakis told IP Real Estate.
She added that the 9,000 assets in Hanover and Magdeburg, which make up 40% of the BauBeCon portfolio, provided the company with sufficient local footprint to justify entering the new markets.
"In our core market, we're happy to acquire portfolios of hundreds of apartments. But if you're in a new region you need a bigger amount," she said.
Annual rent on the overall portfolio totals around €95m. The vacancy rate is below 3%.
A source at Barclays said that, although it had taken control of the assets in November last year, it had never intended to hold them.
Barclays Capital, as it was then, came by the assets when it called in a €1.36bn loan originally issued by Cerberus to a joint venture between RREEF and Prelios with the portfolio, valued in June last year at €1.42bn, as collateral. Barclays acquired the loan in 2007.