Goldman's Whitehall real-estate funds will pay 3.5 billion euros ($5.4 billion) for LEG GmbH, the owner of the homes, the Financial Times Deutschland reported today. The newspaper cited unidentified lawmakers in Dusseldorf, where LEG is based.
The auction of apartments in cities such as Cologne, Essen and Bonn attracted 13 bidders, including British financier Guy Hands. In 2004, Goldman and the Cerberus investment fund purchased homes in Berlin for 2 billion euros including debt.
The German market offers investors ``stable returns with little risk,'' said Lars Dierkes, an analyst at research firm Investment Property Databank. ``As long as rents increase faster than interest on loans, we'll see bidders queue up for these properties.''
Monika Schaller, a spokeswoman for Goldman in Germany, declined to comment on the transaction.
North Rhine-Westphalia, Germany's most populous state, is striving to balance its budget by raising money from asset sales. The state is the largest single shareholder in WestLB AG and in March agreed to bail out the Dusseldorf-based bank by covering as much as 5 billion euros in potential losses.
LEG, whose full name is Landesentwicklungsgesellschaft Nordrhein-Westfalen GmbH, earned 16.8 million euros in 2006 while revenue amounted to 553 million euros. The company has debt of about 2.4 billion euros, Die Welt reported May 16.
Investments in German residential properties returned 6 percent last year, according to IPD.
That was more than the overall return of 4.5 percent for stores, offices and homes in the country.
Goldman and Arcandor AG set up a company in 2006 to buy most of the German retailer's properties. Goldman's Whitehall funds owned 51 percent of the venture and the deal was valued at about 4.5 billion euros, Arcandor, then known as KarstadtQuelle AG, said at the time.
Last year, the Whitehall funds bought 2.45 billion euros of German property assets from Degi Deutsche Gesellschaft fuer Immobilienfonds mbH, a real-estate investment company then owned by Allianz SE, Europe's biggest insurer.
North Rhine-Westphalia owns about 68 percent of LEG directly and another 22 percent through a bank. The state government is due to hold a briefing about the transaction at 2 p.m. in Dusseldorf.