EUROPE - ING Real Estate Development has sold its 77% interest in the holding company of Warsaw's Zlote Tarasy centre in a deal that has been simmering for the past decade.

Under the complex €475m agreement signed this week, AXA Real Estate and CBRE Global Investors Central European property fund will become GPs in the holding company, which will be set up as the Zlote Tarasy Fund. 

Unibail-Rodamco, originally a 50% owner of the troubled development, will be an LP in the fund.

CBRE Global Investors fund manager Jan Kubicek said the deal had been structured to close a long-term process before the parties ran out of time and to placate European Commission anti-monopoly officials.

Although a Commission investigation instigated last month raised no objection to the deal in principle, Unibail-Rodamco had to limit its management involvement in the retail component of the project to retain its financial exposure.

Kubicek said the deal struck this week would mark an end to the complexity.

"As a matter of fact, it should be the other way around," he said. "We used this opportunity to properly set up relations within the venture.

"The position of municipality remains the same. Actually, it could even improve because the new investors will take a long-term view of the project."

The centre was originally a mixed-use development joint venture between ING and Warsaw municipality, intended to be handed over in a 50:50 split between ING and Rodamco, now Unibail-Rodamco, which did not respond to requests to comment this week.

However, the €500m project quickly ran into trouble with extended delays, recalcitrant contractors and vexed investors.

Repeated delays forced the resignation of Paul Trip, then development chief executive at ING Real Estate, which is understood to have paid significant compensation for lost rent to Rodamco.

A spokeswoman for ING Real Estate declined to disclose the size of the loss made on the sale this week, saying only that it marked a milestone in strategic reduction of the firm's exposure to real estate.

"Progress is good," she said. "We have significantly lowered our commitments.

She added that the firm would now focus on reducing its exposure in Spain and the Netherlands, and on winding down its leasing business.

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