German Merger Control: German Federal Cartel Office Provides Detailed Guidance on its Analysis of Residential Real Estate Transactions

Sullivan & Cromwell LLP - 3 March 2015

On 28 January 2015, the German Federal Cartel Office (“FCO”) approved the acquisition of Luxembourg-listed Gagfah S.A. (“Gagfah”) by German-listed Deutsche Annington Immobilien SE (“Deutsche Annington”).  The FCO’s approval of this transaction paves the way for the creation of the largest residential real estate company in Germany, and the second-largest publicly listed real estate company in continental Europe.

Deutsche Annington is Germany’s leading private-sector residential rental real estate company both in terms of portfolio value and the number of units owned.  Its portfolio currently comprises around 210,000 residential units.  Gagfah, with a portfolio of around 145,000 residential units, is the third-largest publicly listed residential rental real estate company in Germany.

Much of Germany’s residential rental real estate still is state or municipally owned, and these assets have increasingly become the target of mergers and acquisitions by listed and private real estate companies.  The take-over by Deutsche Annington of rival Gagfah marks the largest residential real estate transaction in Germany to date.  With the publication of its case study of the transaction on 26 February 2015, the FCO has provided some much anticipated guidance on its analysis of transactions in the residential rental real estate sector in Germany.