Goldman Sachs buys 93,000 German apartments for $1.2 billion to give out on rent

12 June 2008

Goldman Sachs Group Inc. is buying 93,000 apartments from the German state of North Rhine-Westphalia for €787 million ($1.2 billion) in cash to take advantage of rising rents.

The takeover of state-owned Landesentwicklungsgesellschaft's (LEG) apartments, valued at about €3.4 billion including debt, will be carried out by Goldman's Whitehall real-estate funds, state finance minister Helmut Linssen said on Wednesday at a briefing in Dusseldorf.

The deal, which follows months of bidding, marks the largest property transaction in Germany since the beginning of the financial market turbulence, according to media reports.

The purchase is one of few large property transactions to complete since the advent of the credit crunch last summer. Goldman Sachs beat rival bidders Deutsche Annington, the German property company controlled by UK investor Terra Firma, and Irish investor Tomkin Estates with German fund manager Corestate Capital.

A consortium of Apollo Real Estate Advisors, Brack Capital and Lehman Brothers was an early bidder for the company but pulled out of the battle in the spring.

The price includes about €79 million worth of loans from stakeholder BVG, the finance ministry said. The government's share of the transaction is valued at about €700m, as LEG has €2.7 billion of debt.