January 13, 2015 / 10:56 AM / 4 years ago

KKR plans multi-billion-euro expansion into German property market

FRANKFURT, Jan 13 (Reuters) - U.S. buyout group KKR said it is entering the German property market, setting up a business that a person familiar with the transaction said planned to invest 5 billion euros ($5.9 bln) over the next five years.

German Estate Group AG (GEG), which will focus on commercial real estate, will take over the operating business and 40 staff from real estate developer Deutsche Immobilien Chancen (DIC), KKR and DIC said in a joint statement on Tuesday.

“With this new platform, we will be able to accelerate our access to investments in Germany across the risk spectrum,” said KKR’s Global Head Real Estate, Ralph F. Rosenberg.

Germany’s real estate sector has grown in recent years and investors are betting on a further rise in property prices in Europe’s largest economy, which have lagged many other euro zone countries for years.

Investment volumes in the market rose by almost a third to nearly 40 billion euros last year, the fifth consecutive annual increase, property investment manager JLL said last week.

DIC is the largest shareholder of listed firm DIC Asset AG , which focuses on managing existing assets rather than developing new office space and retail buildings.

KKR has appointed DIC Asset’s Chief Executive Ulrich Hoeller to head GEG and is planning to invest its own capital as well as third-party money, it said.

KKR launched its real estate platform in 2011 and has since pumped $1.6 billion of equity into 26 transactions in the United States, Europe and Asia.

$1 = 0.8468 euros Reporting by Arno Schuetze, editing by John Stonestreet

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