An announcement of exclusive talks between the business owners could be imminent according to Bloomberg, which cited three people familiar with the matter.
Vitus, a German residential property landlord, could be one of the largest real estate transactions in Germany this year if the sale goes through, Reuters added.
Deutsche Annington is the biggest private residential landlord in Germany with nearly 180,000 owned units.
It was created in 2001 when Terra Firma acquired 64,000 residential properties from the German Federal Railways, and has almost tripled in size through add-on acquisitions.
The company owns, maintains and rents the properties and sells individual units to tenants and third parties.
Terra Firma revived an IPO for Deutsche Annington in July having previously decided against floating the business due to adverse market conditions.
The company is offering 34.8 million shares at between €16.50 to €17.00, down from its original range of €18 to €21.
That offering could fetch as much as €592m, down from previous estimates of €1.2bn.
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