Cerberus close to 900 mln euro German property deal

FRANKFURT, April 10 Tue Apr 10, 2012 10:14am EDT

FRANKFURT, April 10 (Reuters) - Cerberus has joined the growing list of private equity firms looking into German property as it is close to buying 22,000 German flats from Speymill Deutsche Immobilien (SDIC) for some 900 million euros ($1.2 billion).

Ernst & Young has been mandated to sell the apartments for SDIC as the rents no longer provided sufficient guarantees for SDIC's lenders, SDIC Company Secretary Nigel Caine told Reuters on Tuesday.

"The sale is imminent," Caine said. "The German market is still relatively buoyant."

International investors, including private equity, are flocking to the German property market, attracted by a steady rise in values in the last couple of years, which contrasts with the boom-and-bust of Spanish and Irish real estate markets.

Private equity also has a track record of investing in German real estate. Goldman Sachs, Cerberus and Goldman advised-Whitehall Funds held 40 percent of GSW Immobilien until they started reducing their stake last year.

A person with knowledge of the matter said that the SDIC sale would probably happen in two to three weeks. SDIC's main lender, Dutch bank NIBC, began the process in Aug. 2011. The person declined to be identified as the process is still confidential. Ernst & Young declined to comment.

The German cartel office already approved the sale last week. The regulatory approval, though, does not mean that a deal is concluded.

The assets consist of the remaining three portfolios of SDIC with properties throughout Germany after Benson Elliot said in March it bought a first portfolio with 3,000 flats.

The value of SDIC's property assets was 1.4 billion euros at the end of June 2010, according to the latest published annual report of the group.

SDIC, incorporated in the Isle of Man, will be wound down , p robably by the end of the year, o nce all its assets, which also include property management company GOAL in Berlin, have been divested, Caine said.

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