ING RE shelves $1.5bn global opportunity vehicle

ING Real Estate has indefinitely shelved a plan for its first-ever global opportunity vehicle.

The Netherlands-based company recruited David Gilbert in 2007 from JP Morgan Real Estate to lead the platform and subsequently added Wilson Lee in Europe and Peter Kim in Asia as regional heads. 

However, now that real estate markets worldwide have caved in, ING Real Estate has taken the decision to put the idea of an opportunistic vehicle on ice in order to concentrate on its existing assets under management which are typically held in its core, core-plus and value-added investment funds.

As PERE reported last year, ING Real Estate was hoping to raise $1.5 billion from investors for its first foray into the sector.

It is switching its focus to maintaining its cost base and client management as well as expanding its segregated accounts business in the USA, UK, real estate securities and fund of fund businesses. In addition, it is understood that there will be very few new fund launches across ING Real Estate’s indirect business in the immediate future.

ING Real Estate, which manages €66.5 billion of real estate assets, hired Gilbert from JP Morgan Real Estate in New York. Lee, a former UBS and Lehman Brothers real estate professional in Europe and Kim, also formerly of Lehman Brothers, joined last year. It is understood that all three are to be re-allocated to other parts of the business.

ING Real Estate declined to comment on its plans to freeze the opportunistic platform, but Pieter Hendrikse, chief executive officer of its European investment management business, told PERE: “Capital markets are not very busy at the moment so it’s a case of wait and see. This is not just for opportunistic vehicles but for all funds.”

He added: “Today, investors want to see the active management of existing vehicles. It is not all about growth anymore. Why test the market with investors if you already know what the answer will be?”

Hendrikse also said that, more generally across the market, funds are seeing redemptions from investors keen to improve their liquidity resulting in reduced equity available for new vehicles.

He expected the European investment market, as a whole, not to reach the bottom until towards the third or fourth quarter of 2010, and that values could fall by a further 5-10 percent before then. He anticipated that the UK would be among the first markets in Europe to come back.