Barclays to sell €1bn German residential portfolio

The global investment bank is looking to sell a 26,000-unit German residential portfolio owned by BauBeCon. The Blackstone Group is reported to be one of the interested parties looking to buy.

Barclays Capital is looking to sell a portfolio of German multifamily assets worth roughly €1 billion. According to various media reports, the 26,000-unit residential portfolio, which is owned by German residential landlord BauBeCon, was valued at €1.42 billion as of 30 June. 

New York-based private equity giant The Blackstone Group and German residential real estate firm Deutsche Wohnen are among the firms in talks to acquire the portfolio, the bulk of which is located in Berlin, Hannover and Magdeburg. Citing sources familiar with the matter, news reports are putting offers between €900 million and €1.2 billion.

Barclays took control of the BauBeCon portfolio last month after exercising a call option on a €1.36 billion loan, for which the portfolio served as collateral. The loan, purchased from Cerberus Capital Management at the peak of the market in 2007, originally was issued to a 60:40 joint venture between Deutsche Bank’s RREEF and BauBeCon’s Italian parent Prelios. 

Initially, Barclays Capital had intended to securitise the loan and sell it through the capital markets. However, in the second half of 2007, the commercial mortgage-backed securities market collapsed, so that option was taken off the table. The CMBS market in Europe has yet to return.

The selling of the BauBeCon portfolio comes amid Barclays looking to sell its stake in Archstone. After agreeing to sell half of its stake in the Denver-based apartment REIT to Equity Residential, co-owner Lehman Brothers Holdings filed suit against Barclays and fellow co-owner Bank of America, citing breach of contract.