If recent history is anything to go by, selling a sponsored real estate investment management platform is an arduous task. From Lehman Brothers to Citi Property Investors to Merrill Lynch, the disposition of private equity real estate groups backed by financial institutions has been far from smooth sailing.
That is why the sale of ING Real Estate Investment Management (REIM) is being so closely watched. But with final bids for the group due at the end of November, real estate professionals are suggesting the ING sale will be one of the first “healthy parent” platform sales the industry has seen.
“You almost had to pay someone to take over some of the other platforms, but someone is going to need to pay for ING,” one advisor said. “People are watching this to see how the market values a healthy [financial institution-sponsored] platform.”
Morgan Stanley, which is running the sales process on behalf of ING, has been instructed to sell the business whole. However, it is believed that the group might ultimately be broken up, given that bids also have come in for the European, North American and Asian parts of the business.
Allianz, the German insurance company that wants to radically expand its real estate business from €17 billion to €30 billion over the next few years, is thought to be interested. APG, the Dutch asset manager and a significant client of ING REIM, also is thought to be examining a deal. Other parties such as Legal & General, the UK insurer, are thought to have expressed an interest in just the UK and European business of ING.
However, some of the parties initially reported to be bidders have not pursued the opportunity. These include The Blackstone Group and AXA Real Estate.
According to one source who received presentations from the group, ING has put around €3 billion of co-investment globally into its funds, but the amount ING would be prepared to accept might be closer to €800 million. In addition, ING could want around €200 million for the platform itself. This means that swallowing ING REIM whole is for a group with deep pockets.
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