The complex deal is the result of a direct and an indirect investment. The indirect part of the buy comes in Pirelli's intent to purchase 95.3% of B&L Immobilien, which owns 62% of DGAG. The direct purchase—of 38% of DGAG—is being made with the current owner, a HSH Nordbank unit, according to a statement from the firm. The enterprise value of DGAG should be about euro 1.5 billion ($1.9 billion) at the closing after ongoing divestments.

"I am satisfied with this operation because of the quality of assets under management, but above all because of the quality of the management that will allow us to accelerate expansion in Germany," says Pirelli RE CEO Carlo Puri Negri. Residential property, mainly in Hamburg, Lubeck and Kiel, comprises about 88% of the DGAG portfolio, while retail and office property makes up about 12%.

Pirelli intends to apply its own business model to DGAG, involving a combination of investment, asset management and services to the real estate sector. DGAG's residential portfolio, which is worth about euro 1.1 billion ($1.4 billion), will be transferred to Pirelli's 35/65 joint venture with Deutsche Bank's Rreef, it said. The retail and office portfolio, worth about euro 330 million ($415.9 million), will go to Pirelli's 30/70 JV with Morgan Stanley's real estate funds.