NETHERLANDS - Dutch pension fund ABP should sell its 37% share in Corio to one of the developers circling the Dutch real estate firm, according to sector analysts.
The advice, from analysts at Dutch banks ABN AMRO and Petercam, comes after Corio announced it would sell €1.1bn in office and industrial that makes up just under 20% of a portfolio largely focused on retail in the Netherlands, France, Italy, Spain and Turkey. Sale of the commercial portfolio is expected before the end of Q2 2008. (See earlier IPE Real Estate story: Corio to divest office and industrial portfolios)
The €215bn Dutch pension scheme's consent will be essential for Corio to move on the block decision as ABP is the only investor with an above-5% shareholding in the firm.
Asked whether the scheme would favour a sale - especially since it recently reduced its larger equity stakes - ABP spokesman Thijs Steger declined to comment, stating:"We never reveal any intentions about selling or buying, nor do we share our views about how a company is operating."
Corio's investor relations manager Ingrid Prins said a corporate sell-off would be a shareholder decision. However, she pointed out retaining office assets would have added to the firm's value.
"The economy's good, and the assets are well-occupied. There's lots of interest in that portfolio and we expect a number of offers," she said. "Why sell it now if we were going to go off-market with office?"
She played down claims the sale of the firm's office portfolio was a prelude to wholesale divestment. "We already said back in 2000 we were planning to focus on retail. We're doing what we promised. It was no big secret. The only secret was the timing."
Stephan van Weeren, an analyst at Dutch bank Petercam, told IPE Real Estate he expected "more corporate activity" in the near future, possibly involving a bid from developer Westfield.
"These are non-core assets and it's a question of setting up the shop window," he said. "Corio and a professional developer would be a great combination."
He added: "If the price is right, ABP won't see it as a bad proposition. In the long term, it's possible the fund might tend more towards private equity and less towards listed companies."
Recently-posted nine-month results from Corio showed a year-on-year increase in operating profit to €149m fr0m €146m, despite higher financing costs offseting an 11% increase in rental income. Although the results are attributable to market-wide negative investor sentiment, criticism has centred on the firm's management and concern over leadership succession.
ABN AMRO analyst Rogier Quirijn, said: "It makes sense for ABP to make use of consolidation in the retail sector with better management than Corio has - though at last the management seems to be doing a better job.
"La Pierre is looking to grow via a big merger and Corio is a natural target. If La Pierre or Westfield were to pass by and present ABP with a plan - in my view, they'd take it."
Corio has €61bn in assets under management.
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