Citi Property Investors platform for sale

Just five years after launching it, Citi is following the lead of other institutions and trying to exit its private equity real estate funds business. CPI must first win approval from 67% of its LPs.

The management company of Citi Property Investors (CPI) has been put up for sale after its corporate parent decided to exit the private real estate funds business, sources have confirmed to PERE. The move comes just five years after Citi launched CPI.

Citi’s decision to sell CPI follows similar decisions at Bank of America/Merrill Lynch and Lehman Brothers, which are in the process or have sold the management entity governing their closed-ended property funds.

People familiar with the matter said it was still early days for Citi, which is currently speaking with limited partners and interested parties about the issue. Sixty-seven percent of LPs in Citi Property Investors’ funds need to approve the sale.

The decision was first made in May, and Citi is believed to be closely watching the sale of Merrill Lynch’s private equity real estate platform to gauge the success of its own disposition. Sources said there could be three outcomes: a sale to an external fund manager, a management buyout or Citi keeping the platform on its books.

A spokeswoman for Citi said in a statement: “Citi recognises the importance of our fiduciary duties and we are working closely with CPI management to continue to create growth opportunities for the business. While exploring options that may enhance future growth potential for CPI as an organisation, we will remain focused on maximising value for CPI’s existing investors.”

CPI’s fate was sealed when Citi placed the entity into Citi Holdings, in essence its “bad bank” structure, where assets are placed before being sold, sources said.

The upcoming September issue of PERE magazine will include further analysis of the intended sale.