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Banking

Real estate: Record deal highlights German opportunities

The largest deal of its kind in Europe will herald an active period in property finance

Hands: Putting his money to
work in German property

Germany's residential real estate market is increasingly being seen as an attractive opportunity for international investors. In May, Terra Firma, the investment vehicle run by UK-based financier Guy Hands, agreed to purchase utility E.ON's property subsidiary, Viterra, for approximately €7 billion – the largest such private equity deal in Europe – as E.ON focuses on its core The price was considerably higher than initial expectations of between €5.5 billion and €6 billion, but David Pascall, head of Terra Firma in Germany, insists the company paid a fair price. It won the portfolio ahead of the cover bid from a consortium consisting of Cerberus and the Goldman Sachs' private equity group, Whitehall. Fortress was the third bidder.

Viterra has a portfolio of roughly 150,000 flats across Germany properties, and will be merged with Terra Firma subsidiary, Deutsche Annington, which has around 80,000 flats in Germany, creating the largest residential real estate company in the country.

Yield spread

The deal is mirrors Terra Firma's acquisition of Deutsche Annington four years ago, which was a portfolio of 64,000 railway flats.

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