Deutsche Bank to Sell And Leaseback 51 European Properties to Blackstone Group for $1.23 Billion

International Herald Tribune - November 25, 2003

Deutsche Bank has agreed to sell 51 European properties to the U.S. private-equity firm Blackstone Group to raise funds for its banking business. The assets comprise a mixed real estate portfolio of 51 bank branches and offices in nine jurisdictions across Europe with a total lettable area of around 490,000 square metres. About two-thirds of the buildings are in Germany, such as Berlin, Düsseldorf, Frankfurt and Munich. The remaining properties are in major European cities including Barcelona, Brussels, Lisbon and Milan.

The deal, valued at E1.04 billion, or $1.23 billion, includes office buildings in German cities like Frankfurt and Munich, as well as in Barcelona, Brussels, Lisbon and Milan, said Klaus Thoma, a Deutsche Bank spokesman. The company expects to book a loss of about E100 million on the sale which will be completed by the end of the year. The bank is selling and leasing back the properties now to take advantage of "cheap" rental prices, Thoma said. The company said most of the proceeds will be used for its banking business, without providing specifics.

Deutsche Bank, under its chief executive, Josef Ackermann, has been selling or finding partners for businesses to free funds to invest in banking operations after the industry had its worst year since World War II in 2002. The bank said it would lease back most of the property it is selling, adding that it may reduce its real-estate holdings further.

'This sale fits in with Deutsche Bank's strategy to sell assets, and I expect more significant sales of other stakes to come up soon,' said Wulf Weiler, an analyst at WGZ-Bank. The sale allows for the flexible management of the bank’s future occupational requirements, locking in rents at a tenant friendly low point in the letting cycle.

For New York-based Blackstone, which manages the world's largest buyout fund, the purchase marks the biggest property acquisition the firm has made on its own, according to Chad Pike, who runs the company's European real-estate operations. Blackstone has invested in more than 100 real-estate assets, valued at $13 billion, since 1992. It has four property funds, representing a combined $4 billion, for investment in the United States and Europe. Sphere: Related Content