North Rhine-Westphalia to sell 100,000 homes

MUNICH - Germany's most populous state, North Rhine-Westphalia, plans to sell off around 100,000 residences in an attempt to reduce debt, the state's finance minister Helmut Linssen announced on Tuesday. The state intends to privatise its Landesentwicklungsgesellschaft (LEG) real estate firm, which owns around 100,000 residences, by selling to an investor or consortium by early 2008 at the latest, Linssen said. The state hopes to raise 'significantly more' than EUR 2.5 bn with the sale, in order to pay off LEG's debts of EUR 2.5 bn.

MUNICH - Germany's most populous state, North Rhine-Westphalia, plans to sell off around 100,000 residences in an attempt to reduce debt, the state's finance minister Helmut Linssen announced on Tuesday. The state intends to privatise its Landesentwicklungsgesellschaft (LEG) real estate firm, which owns around 100,000 residences, by selling to an investor or consortium by early 2008 at the latest, Linssen said. The state hopes to raise 'significantly more' than EUR 2.5 bn with the sale, in order to pay off LEG's debts of EUR 2.5 bn.

Several conditions will be attached to the sale in order to protect the interests of LEG's 300,000 tenants. These include limits on rent increases during the next ten years, and a life-long right to live in a property for tenants over 60.

Linssen was confident that an investor could be found quickly, despite the conditions attached to the sale. Both the recently-floated property concern Gagfah and private equity group Terra Firma have expressed interest, the minister said. Linssen belongs to the right-of-centre Christian Democratic Union (CDU) party, who govern North Rhine-Westphalia in coalition with the liberals, the FDP.

The decision was criticised by politician Norbert Roemer from the left-leaning Social Democratic Party (SPD), who said the state had made a 'serious mistake'. The conditions to protect tenants' rights could not be checked after the sale, he said. The city of Dresden made headlines earlier this year when it sold 48,000 residences to the American investment group Fortress for EUR 982 mln. The city managed to free itself from debt in one go as a result of the sale.

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