Deals

Schroders pays €28m for Aareal’s property fund business

Continuing its efforts to grow its global real estate platform, Schroders has agreed to acquire the property asset management arm of the German bank.

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UK asset management company Schroders has agreed to acquire Aareal Asset Management (AAM), the real estate fund management arm of the German financial institution Aareal Bank, for €28 million ($36 million).

This acquisition is an important component of our strategy to offer international property products to our clients base.

William Hill, head of property, Schroders

AAM currently has assets under management of €1.9 billion and manages seven real estate funds across Europe. In 1999, AAM launched its first fund, Aareal Europe Fund No. 1, to invest €500 million in shopping centers and office properties in France, Italy and Spain. One of the most notable deals in that vehicle was a €150-million investment in the Fiumara Shopping Center in Genoa, Italy. Additional vehicles managed by AAM include the Aareal Italy Fund, a €500-million vehicle for commercial investment in Italy, and Aareal EuroLogistics Fund, an industrial fund with an equity target of €500 million.

As part of the transaction, Schroders has agreed to acquire certain assets owned by Aareal in AAM’s underlying funds that are currently valued at €21.4 million. In addition, the UK asset manager may also purchase additional assets held by AAM for up to €30 million if those assets are not sold prior to March 31, 2007.

The acquisition of AAM comes as Schroders is actively building its global property business. Earlier this year, Schroders launched two new real estate fund of funds, the $250-million European Fund I, which will invest in unlisted vehicles across Europe, and the $250-million Continental European Fund I, which will be aimed at UK investors looking to invest outside their home country. The firm also launched two new public securities fund, one targeting the global market and another focused on Asia.

“This acquisition is an important component of our strategy to offer international property products to our clients base,” William Hill, head of property for Schroders, said in a statement.

Schroders’ property business currently has assets under management of £7.6 billion, approximately 6 percent of the firm’s total assets under management of £122.8 billion.