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Merrill Lynch shelves Asia platform sale

Merrill Lynch’s global real estate principle investments division has halted plans to offload its Asian real estate investment management business. The platform may be placed on the market again late second quarter 2010.

Merrill Lynch has placed its plan to divest the management of its Asian real estate investment management platform on ice until late second quarter 2010 in a sign of improving market conditions in Asia.

The sale of the platform, which includes the management of $4billion in committed capital including $2.65 billion from its Asian Real Estate Opportunity Fund, was being led by the bank’s global real estate principle investments group from New York.

Before deciding to suspend the sales process, Bank of America-owned Merrill Lynch had reduced its shortlist to two bidders: ING Real Estate Investment Management and LaSalle Investment Management. The former is currently one of three bidders vying to acquire the management of Citi Property Investors’ $8 billion global platform.

It is unclear at this stage whether a completely new sales process will be instigated next year or whether the current situation will simply thaw.

PERE reported in September that Merrill Lynch was considering retaining the Asia business while market conditions improved. Since then, the platform is believed to have benefited from sales and improved valuations across its various target markets including China, where it has sold more than $100 million of assets since being placed on the market during the summer.

The decision to suspend the sale is also thought to have been taken in light of the departure of Bank of America chief executive officer Ken Lewis in October. One source close to the matter said: “In the last couple of months since he announced his departure, a lot of initiatives have been placed on hold. When turmoil happens at the top nobody takes risks. They want to see what happens first.” Yesterday Bank of America annouced it had promoted its chied of consumer banking, Brian Moynihan, to replace Lewis.

The platform is led by Martin Seol, who took charge in March this year, however the sale was being led by Doug Sesler, head of global real estate principle investments.

The firm’s smaller European platform, however, is a step closer to being offloaded. Its head, Roger Barris, is believed to be in the midst of negotiating a management buyout on behalf of its European team. Barris joined Merrill Lynch in 2004, following spells at Starwood Capital and DB Real Estate. He led the team from London but is planning to relocate the business to Switzerland.