German retail and leisure group Arcandor has confirmed it is to sell its 49% stake in one Europe’s biggest property portfolios to Deutsche Bank’s property fund management arm RREEF, Italy’s Pirelli Real Estate and Borletti Group.

Today, the holding company said it would sell the stake in a portfolio including 85 Karstadt department stores valued at about €4.5bn (£3.2bn) to the partners. The net value of the transaction, amounts to €800m (£572m). The selection of RREEF and Pirelli’s bid for the assets was revealed by Property Week last month.

The sale means Arcandor, formerly known as KarstadtQuelle, will have sold out of its entire department store portfolio, having sold the other 51% to Goldman Sachs’ Whitehall Fund for €3.7bn (£2.6bn) in March 2006.

In a statement, Arcandor said: ‘Arcandor has thus managed to successfully negotiate a complex transaction under attractive conditions, despite an extremely difficult market environment.’

In addition to the properties, including 12 sports stores and various Arcandor controlled office space, the buying parties will enter into a two-way strategic alliance whereby RREEF, Pirelli and Borletti will hold an up to 25% interest in Arcandor while Arcandor will assume up to 25% of Pirelli’s Italian La Rinascente retail business and the French Printemps retail business.

The tie-up will mean that one representative of each partner is to occupy a seat on the supervisory boards of Karstadt, La Rinascente and Printemps.

Arcandor said: ‘The aim of the alliance is to create a unique European department store portfolio in the premium segment and to leverage the high synergy potential. A further goal is clear market leadership in Europe luxury segment.’