(Bloomberg) -- A Deutsche Bank AG fund and Prelios SpA are in talks to sell almost 18,000 homes in northern Germany to Immofinanz AG’s Buwog unit. The properties are valued at about 942 million euros ($1.3 billion).
The acquisition will increase Buwog’s real estate assets before an initial public offering planned for 2014, Immofinanz said in a statement today. A deal may be reached by the end of the year, the Vienna-based property company said.
Immofinanz has been adding German apartments as it prepares to sell Buwog. Deutsche Bank and Prelios are seeking to profit from demand for German homes as investors seek alternatives to lower-yielding fixed-income assets.
Offer prices for existing German apartments have gained about 10 percent since 2007, according to data compiled by Berlin-based online broker ImmobilienScout24.
The homes Buwog is considering buying are managed by DGAG Wohnimmobilien GmbH, a company based in Kiel. Prelios bought DGAG with 22,000 apartments in 2007 for about 1.4 billion euros. The Deutsche Bank property fund then invested in the company, making it a co-owner.
On June 30, DGAG had 18,000 apartments with a book value of 942 million euros, according to Prelios’s second-half financial report. They were financed with 683 million euros in debt and had a vacancy rate of 2.2 percent. At the time, Prelios said the debt is due to mature at the end of this year
In December, Prelios said it planned to gradually divest its property holdings with the goal of focusing on property servicing. That month, the company was one of a group of owners that sold Berlin’s KaDeWe department store as part of a deal valued at 1.1 billion euros.
