Germany's planned sale of 12,000 flats and some commercial properties, which could fetch a price tag of at least 1.7 billion euros ($2.1 billion), has attracted private equity and strategic bidders, four people close to the transaction said.

Private equity groups including Blackstone, Cerberus and Apollo, a Morgan Stanley real estate fund as well as the German real estate groups TAG Immobilien and KWG Kommunale Wohnen are among the bidders for TLG Immobilien, the sources said.

The transaction, in which the German government is about to pick those that will be allowed to place second rounds, is likely to be the country's largest real estate deal this year.

International investors are vying for property in Germany, which has not seen boom-and-bust prices like in Spain or Ireland, but has stable increases in property values in the last couple of years.

The flats the German government is putting up for sale have stable rental income and a low vacancy rate of only 3 percent and the portfolio also comprises 300 commercial properties.

Any investor will likely have to pay a premium. In February, a group led by Patrizia Immobilien paid 1.4 billion euros for about 22,000 flats sold by Germany's biggest public-sector bank LBBW.

TLG, the bidders and Barclay's Capital, which is managing the sale, declined to comment.

German Finance Minister Wolfgang Schaeuble aims to finalise the sale of the assets - all located in eastern Germany - by the end of this year.

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