(Reuters) - Sweden-based Heimstaden has agreed to buy rival Akelius Residential Properties' 599 properties in Germany, Denmark and Sweden for 92.5 billion Swedish crowns ($10.6 billion).
Heimstaden said late on Sunday that the properties - which contain 28,776 apartments, half of which in Berlin - have 2.8 billion crowns in annual rental income. The deal includes the company's first investment in Hamburg.
"We are growing our presence in markets where we have strong knowledge and experience, markets that share key attributes, such as supply/demand imbalance, favourable demographical trends, and growing economies," co-chief investment officer Christian Fladeland said.
"We are particularly pleased to grow and expand geographically in Germany, the largest and most mature residential market in Europe, and establishing a presence in Hamburg," he said in a statement.
The deal, which is subject to merger clearances, follows on a string of smaller portfolio acquisitions this year by Heimstaden across northern and central Europe.
Heimstaden said it would pay for Akelius' portfolio with a mix of cash at hand, new equity and a 65.7 billion crown bridge financing facility with a 2-year maturity. Deutsche Bank served as financial adviser to Heimstaden.
Akelius had announced in June that it was considering selling its mature properties in the three countries.
($1 = 0.1157 Swedish crowns)
(Reporting by Shubham Kalia in Bengaluru; Editing by Daniel Wallis and Louise Heavens)