Whitehall Buys Majority Stake in German Apartment Firm, 93,000 Units

The German state of North Rhine-Westphalia has sold its majority stake in LEG GmbH to Goldman Sachs Group Inc.’s Whitehall real estate funds for $1.2 billion. The transaction, which includes 93,000 apartments located in cities such as Cologne, Essen and Bonn, is valued at approximately $5.4 billion including debt, according to state finance minister Helmut Linssen, Bloomberg reported. The state owned approximately 68 percent of LEG, or Landesentwicklungsgesellschaft Nordrhein-Westfalen, and another 22 percent through a bank, making it the seller’s largest shareholder. In March, it agreed to bail out the bank by covering as much as $7.7 billion in potential losses, the report said. The German residential market has faced difficulty over the past year, especially with the subprime situation, and prices have fallen, Roy Frydling, who leads Savills Germany, told CPN. Plans for residential projects have fallen through, and investors have placed more focus on office and industrial product. He added that this is the largest residential transaction so far this year in Germany and will likely remain so. The acquisition adds significantly to Whitehall’s assets in Germany. Last year, Allianz sold the fund a 190-office portfolio for $2.4 billion in December and a 27-property portfolio for $3.3 billion in May. Other significant Whitehall transactions over the past year included: the purchase of four Nevada casinos from Ichahn Enterprises for $1.2 billion; the $1 billion purchase of 230 Park Avenue in Manhattan as part of a multi-investor consortium; the 75 percent financing of a $680 million Groupe Casino-Whitehall JV to build shopping malls in Poland; and the acquisition of Equity Inns for $2.2 billion.