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Goldman Sachs outsmarts the world. Again

German real estate
AP Photo / Markus Schreiber
Berlin real estate
By Matt Phillips
EuropePublished Last updated This article is more than 2 years old.

We recently told you about how investors are turning German real estate into a new flight-to-safety trade as they scour global markets for investments that are a) relatively safe and b) pay some sort of return, or yield. And though many are just catching onto this trade and becoming buyers, everyone’s favorite investment bank now looks like a seller. Dow Jones reports:

German residential real estate company LEG Immobilien GmbH Monday said it plans to go public in the first half of 2013, allowing majority owner Goldman Sachs Group Inc. to cash in on improved stock market valuations …LEG owns around 91,000 housing units, located mainly in the north-western German region of North Rhine-Westphalia and is valued at around 4.7 billion euros ($6.22 billion) including debt, according to industry sources.

Goldman isn’t the only member of the so-called “smart money” crowd that looks to be selling. DealBook notes:

Another German real estate company, Deutsche Annington Immobilien, which is controlled by the private equity company Terra Firma Capital Partners, is also reported to be planning a public offering this year …  In 2011, Goldman and the private equity firm Cerberus Capital Management also raised about €470 million through the initial offering of the German property company GSW Immobilien.

Rising housing prices are becoming more and more of a political issue in Germany, where the government exerts a strong hand in real estate markets. Spiegel reports:

The fight against what has been dubbed “rent shock” is forcing its way onto the political agenda. Germany will hold national parliamentary elections in September 2013, and no party wants to be accused of not taking voters’ concerns about housing seriously. About half of German voters rent their houses or apartments. And even those who own their homes have often heard stories from family members or friends about skyrocketing costs, brazen brokers and overpriced hovels.

Those rising rents that are causing such consternation in Germany are precisely the returns on investment that international investors—likely far less sophisticated to the ins and outs of German property than Goldman Sachs—are after. So the fact that Goldman Sachs seems to be lightening up its holdings of such assets suggest that they may indeed be getting out while the getting is—as they say in Germany—gut.

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