GERMANY – The German government has sold the TLG property group to private equity firm Lone Star for €1.1bn, the finance ministry said this week.

Dallas-based Lone Star will use the newly acquired group, which comes with a 780-asset portfolio, as a platform for further strategic investment in the German market.

The assets will likely be managed by the private equity firm's second real estate fund, which earlier this year took over a portfolio of former Lehman Brothers assets acquired for €1.4bn from the Bundesbank in a two-part deal.

German finance minister Wolfgang Schäuble said in a translated statement: "The federal government believed the current market situation would be ideal for the sale of the TLG group and achieve good revenue for taxpayers.

"The results of the privatisation process confirm this assessment was correct."

TLG's diversified portfolio is located in eastern Germany – primarily in what the group described as growth regions.

The portfolio comprises office, business parks and retail assets, as well as 'alternative' real estate assets such as hotels and retirement homes.

An earlier attempt to privatise the firm had to be aborted in 2008 because of the financial crisis.

The finance ministry announced that it planned to re-start the process back in March, when it split the lots into commercial property firm TLG Immobilien, which accounted for 69% of the portfolio, and residential firm TLG Wohnen in a bid to widen the potential pool of buyers.

Private housing company TAG last month acquired the residential firm, complete with substantial rent protection for existing tenants, for €471m.

The finance ministry said this week that competition for the commercial portfolio had until recently been "intense".

Earlier bidders for the group are understood to have included Blackstone and Morgan Stanley.