AUSTRALIA - ING Real Estate has sold the ING Entertainment Fund to one of the listed vehicle's unit-holders to avoid a fire sale of assets.
A board of independent directors approved the transfer to a subsidiary of Torchlight, a property investment company which holds 17.6% of the fund, after failing to attract a compelling offer for the acquisition of all units.
ING Real Estate, which has already sold the majority of its real estate investment management business to CBRE, is working through a phased withdrawal from its Australian listed fund activities.
It's latest deal with Torchlight's subsidiary Bodiam will see the relinquishing of AUD$8.3m (€6.3m) in contingent management fees due on transfer.
The Entertainment Fund, which invests in freeholds of Australian entertainment premises, would otherwise have been forced to divest assets - an option described by the fund's chairman Michael Coleman as "less attractive due to the significant time this option may take to executing the exposure to market pricing risk when the fund would be a known seller of assets".
Coleman told a meeting of unit-holders last week the sale represented "the optimal outcome" for investors because it would create a platform with access to capital and management expertise.
Bodiam has committed to underwrite AUD$15m with a view to acquiring the assets of the fund's largest tenant, Icon Hospitality Leasing.
Bodiam said it would continue to evaluate an ING Real Estate proposal to bring management of the Entertainment Fund in-house and restructure it into a hotel property and operating business.
ING Real Estate believes the sale announced this week should remove any uncertainty surrounding its phased withdrawal from the Australian fund management market.
Its presence in the market originally comprised five real estate investment trusts (REITs). The Entertainment Fund announcement follows the sales earlier this year of the ING industrial Fund to Goodman, the Office Fund to Investa Property Group, and the Healthcare Fund to APM Funds Management.
A spokeswoman for ING Real Estate said the investment firm would continue to evaluate options for ING Community Living Fund, the only remaining REIT.