Karstadt generates more than 90% of its sales in Germany

A joint venture, involving Karstadt and Goldman Sachs investment bank, has bought the 162 sites - including 85 department stores and 29 car parks.

The news came as Karstadt, which has been battling a slowdown in its key German market, posted narrower losses.

Net losses shrank to 316.5m euros for 2005 from 1.63bn euros the year before.

In 2004, the Essen-based group was under severe pressure as it struggled with rising costs and falling sales.

Since then the group has embarked on a restructuring drive which has led to 25,000 job losses.

We are on track to becoming an absolutely normal company again Thomas Middelhoff, Karstadt See Karstadt's shares

Karstadt also brought in 1bn euros by selling off smaller department stores and specialist shopping chains.

Under the latest sale and leaseback deal, Karstadt says it will get an immediate cash payment of 3.7bn euros, and an additional 800m euros from its holding in the venture.

Before the property deal, its debt levels - including the newly consolidated Thomas Cook travel venture - stood at 3bn euros, down from 4.5bn euros at the same point last year.

'Back to normal'

"We are on track to becoming an absolutely normal company again. In 2004, we fought for survival," chief executive Thomas Middelhoff said.

"Over the past year, we considerably increased the pace of restructuring. Now we are taking the next step of creating a retail and tourism group that is successful on a long-term basis."

Looking ahead, the group added it expects sales to rise slightly in 2006, while profits should increase by 20%.