ING A$2.5 billion industrial fund to be sold to Goodman consortium

ING Real Estate Investment Management has agreed the sale of its A$2.5 billion Australian Securities Exchange-listed industrial fund to a consortium of buyers led by Sydney-based Goodman Group. The sale is the latest in a string of real estate offloads by Dutch parent company ING.

ING Industrial Fund, the Australian Securities Exchange-listed industrial fund managed by ING Real Estate Investment Management, is to be sold to a consortium of investors led by Sydney-based Goodman Group and including a number of sovereign wealth funds.

According to announcements from the consortium which includes the Canada Pension Plan Investment Board (CPPIB), Netherlands-based Algemene Pensioen Groep (APG) and the China Investment Corporation (CIC), the deal sees it purchase 60 logistics properties in Australia and Europe valued at approximately A$2.5 billion (€1.8 billion; $2.5 billion).

The consortium is expected to pay $0.55 a unit, before any distributions, reflecting a 15 percent increase on the closing price of the units on 27 October, 2010.

The deal had been approved by ING Management Limited, the entity responsible for the fund, although it is still dependent on approval by unit holders and regulatory approvals.

The fund was used to invest in assets located near major infrastructure networks which could provide both income and capital growth potential over the medium term. According to ING marketing, the fund had shifted its focus to predominantly Australian assets and was planning a phased withdrawal from Europe over the next two to three years.

As such, the portfolio consisted of 44 assets in Australia and 16 in Europe. As of June 30, the portfolio, which comprised 5.1 million square feet of real estate, was 96 percent occupied with a weighted average lease term of 4.6 years.

The purchase will be made via a special investment vehicle called GTA. In addition to obtaining approval for the investment, Goodman said the consortium had arranged A$1.1 billion of debt refinancing from a syndicate of banks. It plans to expand the portfolio by growing a development pipeline from which further investments will be made.

Graeme Eadie, senior vice-president, real estate investments at CPPIB said: “This transaction is an opportunity for CPPIB to invest in a portfolio of high quality industrial properties and represents our largest real estate investment in Australia.”

Dutch daily news paper Het Financieele Dagblad said APG  had invested in a 25 percent share in the consortium.

The sale by ING Real Estate Investment Management comes amid a strategic review of the business by parent company ING which is expected to result in a sale of all or parts of the $96 billion real estate investment manager. A decision on which party or parties will buy some or all of the business was expected last month but has yet to be announced.

In the meantime, ING has disposed of various real estate arms including ING Real Estate Canada. In August, King Sett and AIMco, the consortium of Alberta pensions and endowments, bought the fund management platform alongside a 50 percent stake in its Canada-focused Summit Industrial Fund for just less than $2 billion.