Arcandor adds EUR 4.5 bn property deal to Christmas wish list

Arcandor, the largest department store owner in Germany, has expressed confidence it will be able to put a signed contract for the sale of EUR 4.5 bn worth of property holdings to Pirelli Real Estate and Deutsche bank's RREEF unit 'under the Christmas tree'. This is the third time that Arcandor has suggested that negotiations for one of the largest European deals of the year are on the verge of completion. Previous targets of end-September and end-November have passed without result.

But Peter Wolf, the Arcandor board member who runs the Karstadt department store chain, told journalists at an event on Wednesday that a definite contract was in sight. 'We expect that we'll be able to put it under the Christmas tree,' he said. Arcandor hopes to realise capital gains of EUR 800 mln on the sale of its 49% stake in the joint venture with Goldman Sachs's Whitehall funds that owns 85 Karstadt department stores.

Pirelli Real Estate has been more reserved about the negotiations. Following media reports that a deal was imminent, Pirelli issued a short statement earlier this week to say that the talks were ongoing but that no agreement had yet been reached, and 'no economic terms and conditions have been defined yet'.

One source familiar with the negotiations suggested Arcandor's frequent forecasts of an impending deal may be a negotiating tactic.

Wolf also tipped the Italian property giant as its potential development partner for a new luxury-goods chain in Europe. He said Pirelli Real Estate was interested in cooperating in the venture and that Arcandor plans to open its first department store outside Germany in 2009, the same year that the luxury goods chain is due to start operating.