Patrizia snaps up LBBW Immo on behalf of European pension funds

GERMANY - German property company Patrizia has acquired more than €1.3bn worth of local residential real estate on behalf of a group of pension funds and insurers.

The consortium consists of the Swedish buffer fund AP3 (25%); an unnamed Swiss pension fund (5%); three German first-pillar pension funds (25%); five German insurers (40%); a savings bank (3%); Patrizia itself (2%).

The purchase of LBBW Immo - the real estate arm of the regional bank in the South German province of Baden-Württemberg - will increase Patrizia's assets under management to around €7bn.  

During a conference call with journalists, Klaus Schmitt, chief operating officer at Patrizia, said the 21,000 flats in LBBW Immo's portfolio comprised one of the "most attractive real estate portfolios in Germany".

He confirmed that Patrizia would also be looking into the sale of the GBW Immobilien in Munich, a subsidiary of the Bayerische Landesbank, as this was a "similarly interesting" portfolio.

Patrizia said it would again aim to create a consortium of national and international long-term investors similar to that used for the LBBW deal, an "absolute novelty" for the German market, according to Schmitt.

He pointed out that the LBBW deal had been the first under the 'alternative investments' strategy Patrizia introduced last year, where it set out to offer investors opportunities in distressed portfolios or shares in real estate companies.

Schmitt said he expected around €10bn in property to come up for refinancing over the next three years, and that Patrizia would consider financing or taking on some of that total.

He said the company aimed to get over the €10b-mark in assets under management within the next 2-3 years.

Schmitt said LBBW Immo would remain on the market as a separate entity, with Patrizia managing it indirectly through supervisory boards.

However, the purchasing contract obliges Patrizia to change LBBW Immo's name, although "we would have liked to keep it", Schmitt said.

He stressed that the subsidiary would not be dismantled, but rather be "used as a basis for increasing the business of managing existing portfolios".

Patrizia expects to close the deal in the first quarter, pending regulatory approval.