ING Real Estate targets €4.3bn of deals

The global investment manager is launching five property funds including two inaugural vehicles focused on infrastructure and healthcare.

ING Real Estate is embarking on its largest ever combined fund launch with plans to start raising five new vehicles between now and early 2007 with an investment target of €4.25 billion ($5.3 billion).

The real estate fund manager, which has approximately €50 billion under management, is launching three European funds – The Central & Eastern European Property Fund, the Nordic Property Fund, and the French Residential Property Fund. The target sizes are €1 billion for the first two vehicles and €500 million for the third.

ING is also launching the Infrastructure Fund and the Healthcare Property Fund aiming for €1 billion and €750 million of acquisitions, respectively. The healthcare vehicle will be the last of the five to launch, set for the first quarter of next year.

Although ING has launched a series of alternative asset funds in recent years, it is the first time it has decided to target infrastructure and healthcare.

It envisages investing in transport, energy, and social infrastructure assets among others in the UK and Continental Europe in joint venture with ING Infrastructure Finance.

For the healthcare fund it will invest in nursing homes, hospitals, clinics and surgeries in the UK.

There has been a flurry of deals in the healthcare sector recently, including the €2 billion acquisition of Four Seasons by Three Delta, a recently established private investment firm funded by the State of Qatar.

Infrastructure has also been attracting attention. Just yesterday, the private equity infrastructure team of UK fund manager Henderson agreed to a €1.3 billion takeover of John Laing, which has more than €669 million of projects to construct schools, hospitals and roads.

In a statement, David Blight, chief executive of ING Real Estate, said: “We are seeing the emergence of alternative asset classes, for example, infrastructure and we expect that will continue to grow. We are also seeing the emergence of asset classes for the ageing demographic and these assets are highly sought after.”

ING is putting its own equity into the five funds alongside institutional investors, it said.

It already has €560 million of seed property for the Nordic Property Fund and will also inject  €75 million of equity into the vehicle, which it will leverage at 50 percent. The company says the Nordic countries enjoy above EU average economic growth prospects and that the markets are becoming more liquid and transparent. Low vacancy rates are expected to boost property values.

It is less advanced with the other two property funds.

ING has assembled €70 million of assets for the French Residential fund. It is injecting €50 million into the fund, which will also be leveraged at 50 percent.

It has € 73 million of assets for the Central & Eastern Property Fund into which it is injecting €60 million. That fund will be 60 percent leveraged.