PERE FORUM NY: CBRE plans major expansion

With the completion of CBRE Group’s takeover of ING REIM, the Los Angeles-based real estate investment management firm is poised to ramp up investment activities in targeted areas worldwide.

CBRE Global Investors is looking to capitalise on real estate investment opportunities within its newly expanded geographic footprint, following the acquisition of ING Group’s real estate investment management operations, the firm’s global head said yesterday.

CBRE Group, now the world’s largest real estate services firm, completed the acquisition of ING Real Estate Investment Management (REIM) last month, merging with the company’s existing real estate investment management business to form CBRE Global Investors. As of 30 September, the firm had more than 1,100 employees in 21 countries and assets under management (AUM) totaling approximately $94.8 billion.

“In the next 12 months, we’ll be all about expanding geographically,” said Matt Khourie, CBRE Global Investors ’ global president, during a keynote interview at the PERE Forum in New York yesterday.  In particular, the firm will be targeting “four to five areas that look promising,” he said.

One is the US, where the firm is likely to focus on building up its portfolio of core retail assets, said Khourie. CBRE Global Investors has “very little retail” in the country as compared to other areas like Europe, where retail accounts for 50 percent of the region’s $35 billion in AUM, he noted.

Another area of focus will be Asia, where the firm currently is “very underweighted,” with $5 billion of AUM, according to Khourie. “We need to have a multiple of that over the next four to five years,” he said. CBRE Global Investors is “overstaffed” in Asia at the moment as it gears up to expand its business in the region, he noted, adding that the firm has “a pretty sizable infrastructure” in Japan, Singapore, Hong Kong and China.

With high-end residential assets currently experiencing a bubble in China, CBRE Global Investors instead is targeting assets “the next tier down” in quality, located in mid-tier cities with populations of around 5 million, said Khourie.

Meanwhile, CBRE Global Investors, which owns a fair amount of assets in Italy, Portugal and Spain, is “fearful about further investment in Southern Europe,” Khourie said. Instead, he stressed a need to be more active in Germany and was bullish about real estate in Nordic countries such as Norway and Sweden, which he considered “one of the best-performing regions in the world,” as well as Eastern European nations such as the Czech Republic and Poland.

While CBRE Global Investors also has looked at investments in Brazil, Mexico and Canada, “there’s not going to be a major focus to expand” in those areas in 2012, Khourie said. With an abundance of opportunities available in the 21 countries where the firm already has a presence, “it doesn’t make sense to jump into another two or three,” he explained. When it comes to targeting new areas of investment, “it’s all about using the infrastructure we already have.”