It will issue up to 43.8m new shares and offer investors three shares for each of the seven they already own.
The capital raising comes just days after Deutsche Wohnen agreed to buy the €1.24bn property portfolio, known as Baubecon, from Barclays.
German real estate group GSW and its former owner Whitehall Funds were also thought to be interested in the portfolio.
The deal is made up of about 23,500 apartments with a low average vacancy rate of 2.7 per cent, most of which are located in or near cities including Hanover, Berlin and Magdeburg. It boosts Deutsche Wohnen’s stock of apartments by almost half to 73,500.
Deutsche Wohnen said the subscription price for the share issue would be set after the close of trading on June 19 at the latest.
Baubecon fell into Barclays’ hands at the end of 2011 when its former owners were unable to pay back loans.
The sale is one of several divestments of large German property portfolios. Investors are flocking to the German property market, attracted by a steady rise in values in the last couple of years, which contrasts with the boom-and-bust of the Spanish and Irish real estate markets.