Lone Star Said to Plan IPO of German Property Owner TLG

May 09, 2014 7:51 am ET

(Updates with Cerberus IPO plans in fifth paragraph.)

May 9 (Bloomberg) -- Lone Star Funds plans to sell TLG Immobilien GmbH, the German property company it bought for 1.1 billion euros ($1.5 billion) last year, in an initial public offering, three people with knowledge of the matter said.

The sale of shares in Berlin-based TLG will take place as early as the second half of this year, said the people, who asked not to be identified because the information is private. Lone Star, the Dallas-based private-equity firm, hasn’t hired banks to manage the IPO, they said.

A spokesman for Lone Star and a spokeswoman for TLG declined to comment.

Owners of German real estate are using IPOs to take advantage of investor demand as property values rise. The EPRA/FTSE NAREIT index of German property stocks has gained 11.4 percent this year, compared with 0.2 percent on the German benchmark DAX index.

Last year, Goldman Sachs Group Inc. and Terra Firma Capital Partners Ltd. sold shares in two German residential landlords. Cerberus Capital Management LP plans to sell shares in a German retail property portfolio that’s valued at about 2 billion euros, two people with knowledge of the matter said in October.

Offices, Warehouses

TLG Immobilien managed about 800 offices, warehouses and hotels in eastern Germany when Lone Star bought the company. Its assets include the Hotel de Saxe in Dresden to an office building in Rostock and the Kulturbrauerei, a former brewery in east Berlin that was converted into restaurants, bars and music venues, according to TLG’s website.

The company declined to say how many properties are currently in its portfolio.

Lone Star bought TLG for its Real Estate Fund II for about 594 million euros in cash and 504 million euros of assumed debt. TLG replaced Treuhand Gesellschaft, the German company that oversaw the restructuring and sale of thousands of companies after the collapse of communist East Germany and the 1990 reunification.