Goldman Said to Seek Up to $2 Billion in German Property IPO

(Updates with Annington share sale in seventh paragraph.)

Jan. 18 (Bloomberg) -- LEG Immobilien AG, the German residential landlord owned by Goldman Sachs Group Inc., may raise as much as 1.5 billion euros ($2 billion) in an initial public offering, according to three people with knowledge of the plan. It would be the largest IPO by a German property company.

LEG, based in Dusseldorf, will probably list about 50 percent of the company, said the people, who asked not to be identified because the information is private. LEG is valued at about 2.1 billion euros to 3 billion euros, the people said.

Goldman Sachs, which bought the company for about 3.5 billion euros in 2008, is seeking to profit from a boom in German residential real estate. The FTSE EPRA/Nareit index of German property stocks has gained 38 percent in the past 12 months.

LEG’s share sale will probably take place on Feb. 1 and the final amount raised will depend on investor demand, the people said. LEG is due to announce details of the IPO at a press conference on Jan. 21.

LEG owns 91,000 apartments in North Rhine Westphalia, Germany’s most populous state. Goldman Sachs’ Whitehall Street Real Estate fund holds about 95 percent of the company. Perry Capital owns the rest.

Goldman Sachs and Deutsche Bank AG will be lead managers for the IPO. Officials at LEG, Goldman Sachs and Deutsche Bank declined to comment.

Deutsche Annington

Deutsche Annington Immobilien AG, Germany’s largest owner of apartments, also plans an IPO this year. Annington, controlled by Guy Hands’ Terra Firma Capital Partners Ltd., has about 186,000 homes.

After the share sale, LEG will be Germany’s second-largest publicly traded residential landlord by properties with 91,000 apartments. The biggest is Gagfah SA, controlled by Fortress Investment Group LLC, which has about 145,000 apartments.

LEG’s profit from its main business of renting apartments was 243 million euros in 2011 and its funds from operations were 111.8 million euros, according to its last annual report. FFO measures a property company’s ability to generate cash.

By comparison, Gagfah generated a rental profit of 419.6 million euros in 2011 and its FFO was 159.5 million euros, according to its annual report.

Active Investor

Goldman Sachs is one of the most active foreign investors in the German real estate market. In April 2011, Whitehall Street and Cerberus Capital Management LP raised 468 million euros in an IPO of Berlin-based residential landlord GSW Immobilien AG.

Whitehall Street also made an unsuccessful bid to buy Baubecon, the residential property portfolio that Barclays Plc agreed to sell to Deutsche Wohnen AG in May in a deal valued at 1.24 billion euros. Whitehall Street agreed to sell its stake in 17 German department stores, including Kaufhaus des Westens, the country’s largest, in December.

--With assistance from Julie Cruz in Frankfurt and Ruth David in London. Editors: Andrew Blackman, Chris Nicholson.