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TAG buys German state-owned residential flats
November 20, 2012
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FRANKFURT: TAG Immobilien won a bid for the residential arm of state-owned real estate firm TLG, paying 471 million euros including debt as part of a deal that may be the German property sector’s biggest this year.

Financial sources had said that TAG and private equity investor Lone Star were the favourites to buy the two separate portfolios of properties, which cover 12,000 flats in former East Germany and some commercial properties.

The sale of the commercial property unit will likely be wrapped up by year-end, two sources told Reuters on Monday after the announcement that TAG would buy the residential arm.

“Talks are on a good path,” said a financial source.

Separately, the German finance ministry said the sale of TLG’s commercial properties was in its final phase and expected to be completed in the coming weeks.

The combined transaction will likely be the country’s largest real estate deal this year, surpassing the 1.4 billion euro ($1.78 billion) acquisition of 22,000 flats that a group led by Patrizia Immobilien bought from public-sector bank LBBW in February.

International investors are vying for property in Germany, which has avoided the boom-and-bust prices of Spain or Ireland and instead seen stable increases in property values in the past couple of years.

TAG said on Monday it would issue up to 30 million new shares as part of a rights issue to refinance the equity purchase price of 218 million euros and for the financing of additional smaller acquisitions.

The net debt portion of the acquisition price was worth 253 million euros, TAG said.

Based on Friday’s closing price of 8.39 euros, the newly issued shares would be worth around 250 million euros.

It said the rights issue would have a subscription ratio of five new shares for every 17 old shares, with the price to be determined on Dec.3.

As of 1017 GMT, TAG shares were down 2.5 per cent at 8.28 euros while the mid-cap index was up 1 per cent.


Reuters

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