German real estate group Deutsche Wohnen (DWNG.DE) said it has agreed to buy a real estate portfolio valued at about 1.24 billion euros ($1.55 billion) from Barclays (BARC.L).

The deal comprises about 23,500 apartments with a low average vacancy rate of 2.7 percent, most of which are located in or near cities including Hanover, Berlin and Magdeburg, Deutsche Wohnen said late on Sunday.

Investors are flocking to the German property market, attracted by a steady rise in values in the last couple of years, which contrasts with the boom-and-bust of the Spanish and Irish real estate markets.

Sources told Reuters earlier this month that other parties interested in Barclays' apartments included Deutsche Wohnen's peer GSW (GIBG.DE) and former owner Whitehall Funds.

Deutsche Wohnen said it will use equity and debt to finance the deal, in which it is paying about 13 times annualized net rent to boost its stock of apartments by almost half to 73,500. It said it expects the deal to close in coming months.

The acquisition comes after a string of similar deals this year, including TAG Immobilien's (TEGG.DE) purchase of 25,000 flats from BayernLB BAYLB.UL and Patrizia Immobilien's (P1ZGn.DE) agreement to buy 1.4 billion euros worth of properties from LBBW LBBW.UL.

German property group Gagfah (GFJG.DE), majority owned by Fortress (FIG.N), said this month it was considering selling more than 35,000 flats, a quarter of its total portfolio.

($1 = 0.7992 euros)

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