The German government has signed an agreement to sell sate owned property firm TLG Immobilien to Lone Star Funds for $1.4 billion (€1.1 billion). This deal represents the company’s largest commercial property transaction of 2012. TLG Immobilien owns approximately 800 buildings in the eastern part of Germany.
German Chancellor Angela Merkel
Lone Star is a Dallas-based private equity firm. Under the terms of the deal, it will acquire TLG’s hotels, warehouses, stores, and offices. Lone Star will pay €594 million in cash. Under the terms of the deal, it will assume €500 million in debt, according to government officials.
German Chancellor Angela Merkel’s government made the move to sell the company to reduce its budget deficit. German property prices are on the rise and interest rates are at historically low interest rates. Last month, TLG Group, the residential branch of the management company that includes TLG Immobilien, was sold to TAG Immobilien AG (TEG) for $283 million (€215 million).
TLG Immobilien manages several types of commercial buildings. Its holdings include a factory in Chemnitz, a Porsche showroom in Dresden, and a former brewery in East Berlin that has been converted into bars and restaurants. Most of these properties have been acquired and developed over the past decade. Lone Star’s new assets will be managed by the company’s Real Estate Fund II.
Lone Star agreed to buy property loans held by the German division of Lehman Brothers Holdings Inc. from the Bundesbank. The deal, signed in April, was for a nominal value of €1.4 billion, according to the German central bank.
The German government chose to accept Lone Star’s offer for the properties because it offered a high price and had arranged financing in advance. The company will keep TLG Immobilien intact after the transaction is completed, rather than selling its assets. TLG employs 250 people.
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