Lone Star picking banks for listing of German property group TLG - sources

FRANKFURT, June 25 Wed Jun 25, 2014 10:17am EDT

FRANKFURT, June 25 (Reuters) - Private equity investor Lone Star has asked banks to pitch for roles in a planned stock market listing of its German commercial real estate group TLG Immobilien, three people familiar with the situation said.

The buyout group is likely to mandate advisors before the end of July and launch a flotation in autumn, the sources said. The real estate company is worth about 1.5 billion euros ($2 billion) including debt, they added.

While Europe has seen a flurry of initial public offerings (IPOs) this year, investors are getting more choosy over where they park their money and are turning away from businesses with the most questionable valuations.

"The IPO comes quite soon after Lone Star's acquisition of the unit, but they have to use the current market window," one of the sources said.

TLG Immobilien and U.S.-based Lone Star declined to comment.

Lone Star bought TLG Immobilien, which manages about 800 in commercial properties, for 1.1 billion euros in 2012 from a government agency that organises the privatisation of east German companies in the wake of the reunification of Germany in 1990.

At the time, the government also sold a portfolio of residential properties dubbed TLG Wohnen for nearly 500 million euros to real estate group TAG Immobilien.

Germany's real estate sector has seen a string of deals in recent months, with investors attracted by the reliable income stream that property projects typically offer and by higher yields than German sovereign bonds. Investors are also betting on rising property prices in Europe's largest economy.

Earlier this year, Austria's Immofinanz spun off its German arm Buwog into a separate company. In February, Deutsche Annington bought residential units worth 1.4 billion euros from Blackstone and Round Hill Capital. In 2013, GSW and Deutsche Wohnen merged to create Germany's No. 2 real estate company.

Over the past 10 years, TLG Immobilien has spent 1.4 billion euros on portfolio investments and acquisitions, according to its website.

Its office buildings, hotels and retail properties are mainly located in eastern German cities like Berlin, Dresden and Rostock. Landmark buildings include Kulturbrauerei, a former brewery which now hosts restaurants and clubs, and office building Spreestern, both in Berlin, as well as Dresden's Zwinger-Forum, which houses a shopping arcade and a hotel.

TLG tenants include car maker Daimler and software maker SAP.

($1 = 0.7355 Euros) (Reporting by Arno Schuetze and Alexander Hübner; Editing by Pravin Char)

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