UPDATE 1-Immofinanz in talks to buy 18,000 flats in Germany

Thu Nov 7, 2013 11:33am EST

* Transaction may wrap up by year's end

* BUWOG adding flats before flotation next year

FRANKFURT/VIENNA Nov 7 (Reuters) - Austrian property group Immofinanz's BUWOG unit is in talks to acquire nearly 18,000 housing units in Germany, as the group aims to increase its portfolio in Europe's largest economy, Immofinanz said on Thursday.

Immofinanz said talks are being held with Solaia RE S.a.r.l. Group, a joint venture of Italian real estate management company Prelios and an investment fund managed by Deutsche Asset & Wealth Management.

"The outcome of these discussions is expected around the end of 2013," it said in a statement.

Taking over the so-called Baubecon portfolio would mark an important step towards BUWOG's plans to list on the Frankfurt stock exchange next year. It aims to have at least 15,000 to 20,000 units in Germany by then to whet investors' appetites.

Immofinanz has 7,200 units in Germany now and 27,200 in Austria.

Baubecon flats are mostly in Berlin, Hanover and Magdeburg. Deutsche Bank fund unit RREEF and Pirelli Re bought the portfolio, then including 27,000 units, from U.S. investor Cerberus in 2007 for around 350 million euros ($473.5 million).

RREEF had 60 percent and its Italian partner the rest.

Immofinanz did not say how it would finance a takeover, which would still leave it smaller than rivals Deutsche Annington with 179,000 units, Gagfah with 145,000 and Deutsche Wohnen with 89,500.

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