ING divests real estate arm
ING has divested itself of most of its real estate arm ING REIM, with US property giant CB Richard Ellis acquiring the majority, as the firm continues to shed its non-banking businesses following bailout by the Dutch government during the financial crisis.
In a deal worth an estimated $1bn, ING sold four real estate investment management businesses on 15 February 2011.
Frontrunner in the speculation running up to the sale, CB Richard Ellis, bought three of the four real estate businesses.
ING REIM Europe, ING REIM Asia and Clarion Real Estate Securities (CRES), its US manager of listed real estate securities, sold for $940m in cash.
Additionally, the US manager purchased part of ING’s equity interests in funds managed by the businesses for approximately $100m.
The Dutch bank said it will continue to hold equity interest in some REIM funds in Europe, Asia, the US and Australia, although it plans to cut its stake.
“The equity stakes held by the Bank will be monetised over time as it continues to steadily reduce its exposure to real estate,” it confirmed in a statement.
CB Richard Ellis also becomes the new fund manager of assets held by ING Insurance.
ING REIM’s fourth business, US private market real estate investment manager Clarion Partners, went to Clarion management in partnership with US private equity group Lightyear Capital LLC for $100m.
The two separate sales make up part of an overall planned “divorce” between ING’s banking business on the one side and its insurance and asset management unit on the other, said Dirk Adriaenssens, general manager of retail and private banking at the financial group’s Luxembourg private bank.
In 2010, the European Commission told ING it needed to reduce its balance sheet, he said.
The bank hopes to disentangle its insurance and asset management businesses by the end of 2012 or 2013, he added.
ING earlier stated its intention to sell REIM, in an attempt to help the group pay back the Dutch government after being bailed out during the financial crisis.
The group owes the Dutch government a remaining €5bn, half of its €10bn bailout. It expects to raise approximately €500m after tax from the two latest sales.
ING maintains its Australian real estate investment management arm, although it also plans to relinquish that business.
“ING will undertake a phased withdrawal from its Australian real estate investment management activities in a timely and controlled manner,” it said in a statement.