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announced Thursday the $649 million purchase of an apartment company that owns properties in cities across southern and western Germany.

Archstone, a real estate investment trust that focuses on luxury apartments, entered the German market last year. With the acquisition of Deutsche WohnAnlage GmbH (DeWAG), the company's total investment in the country now stands at $744 million, or roughly 4% of its enterprise value, according to Bank of America analyst Ross Nussbaum.

"Many real estate opportunity funds have made recent investments in German apartments in anticipation of a strong economic recovery there and the privatization of multifamily housing from the government," Nussbaum wrote in a research note.

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Nussbaum doesn't expect the acquisition to have a large effect on near-term earnings. Archstone said it will provide additional details on the deal after it closes in July.

"DeWAG's residential portfolio is renowned for its high quality assets and outstanding locations within Germany's most desirable residential markets. This acquisition will provide our company with an outstanding management team and significant opportunities to expand our platform within Germany," said Archstone CEO R. Scot Sellers in a statement. DeWAG owns about 6,100 apartment units in the country.

Nussbaum believes that the market will take a wait-and-see attitude toward Archstone's European expansion, given that it is the first international market for Archstone, whose properties are mostly located in cities like Washington D.C., New York and Southern California.

"We think this risk could dilute some of Archstone's story in the near term," Nussbaum wrote. "However, Archstone's management team has proven its ability to allocate capital and move successfully into green-field apartment strategies, and this does help mitigate concerns."

Archstone shares rose 18 cents to $49.82 in morning trading Thursday.