(Bloomberg) -- A real-estate company owned by the Berlin government agreed to buy about 6,000 apartments for 920 million euros ($1 billion) from ADO Properties SA, as the administration responds to public outrage over surging rents.
The deal is the largest such purchase by the city in its history, according to housing Senator Katrin Lompscher. The transaction is aimed at securing affordable housing as the administration seeks to freeze rents and counter efforts to force the government to expropriate large landlords.
“This serves the purpose of keeping rents in Berlin stable and providing security for the tenants,” Mayor Michael Mueller said in a statement. “‘At the same time, we will continue to build new apartments and make the rent freeze legally secure.”
Property manager Gewobag will buy some subsidiaries of ADO Properties, the municipal company said in a release. The apartments are mainly located in the outer districts of Spandau and Reinickendorf.
“Our first calculations indicate a rather high price for a lesser-quality product,” Jefferies analyst Thomas Rothaeusler said in a note. He estimated the purchase price is roughly 10% above the units’ book .
ADO Properties’ share price rose as much as 5.6% on Friday and were up 2.4% at 10:21 a.m. in Frankfurt.
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