FRANKFURT (Reuters) - German property group DIC Asset has agreed to buy German Estate Group (GEG) for 225 million euros ($253 million) in cash from real estate investor TTL and private equity firm KKR, the companies said on Wednesday.
GEG is an investment management platform specialized in commercial real estate properties that are placed with institutional investors. With 3.6 billion euros in assets under management, it owns landmark properties such as the Sapporobogen in Munich and the Garden Tower and Villa Kennedy in Frankfurt.
The deal will result in a significant increase in profitability per share, DIC Asset said, and raised its core profit (FFO) guidance for 2019 to 88-90 million euros from 70-72 million.
Following the deal, DIC Asset’s assets under management (AUM) in its institutional fund business will rise to more than 5 billion euros. That unit will in the future account for roughly half of the company’s profits.
In total, DIC Asset’s AUM are set to rise to 7 billion euros.
Shares in TTL, whose subsidiary TTL Real Estate owns 75% in GEG, fell 6% on the news while DIC Asset shares were up 4%.
GEG was founded in 2015 by TTL and KKR and was until April led by Chief Executive Ulrich Hoeller, who previously headed DIC Asset and who will serve at the helm of a different property firm, ABG, from next year.
DIC Asset already handles the property management for the majority of GEG’s assets.
Reporting by Arno Schuetze, editing by Riham Alkousaa and Thomas Escritt