CBRE clinches ING REIM deal

CB Richard Ellis Group is to acquire the majority of the real estate investment management business of Netherlands-based ING Group for $940 mln (EUR 696 mln) in cash.

In total, CBRE is taking control of approximately $59.8 bn of assets under management (AUM), including $29.5 bn in Europe, creating a giant with nearly $100 bn of AUM. CBRE currently has AUM of $37.6 bn. The merged company will become the world's biggest real estate investment manager, ahead of AXA REIM.

In a statement on Tuesday, CBRE said the acquisitions include substantially all of the ING REIM operations in Europe and Asia, as well as Clarion Real Estate Securities (CRES), its US-based global real estate listed securities business. CBRE will not acquire ING's US-based private market real estate investment management company.

The ING REIM operations being acquired will become part of CBRE's Global Investment Management segment (CBRE Investors), which will continue as an independently operated business unit of the company upon completion of the acquisitions.

CBRE claims there is little overlap between the two investment management companies. CBRE Investors has primarily focused on value-add and separate accounts while ING REIM has concentrated on core funds and global listed real estate securities funds, except in Asia, where it manages value add and opportunity funds. There is also expected to be little overlap in the companies' client bases: the majority of CBRE Investors' clients are US-based while ING REIM's are mainly based in Europe.

'ING REIM, when combined with our existing Global Investment Management operations, will provide us with a significantly enhanced ability to meet the needs of institutional investors across global markets with a full spectrum of investment programs and strategies,' said Brett White, CBRE's Chief Executive.

CBRE plans to finance the acquisitions with cash on hand and borrowings under its secured credit facility. The company ended 2010 with more than $500 mln of cash on its balance sheet, $650 mln undrawn on its revolving credit facility and a $800 mln unutilized accordion facility. Later in the year, subject to market conditions, CBRE may pre-pay a portion of the loans under its secured credit facility.

The acquisitions are expected to close in the second half of 2011 and are subject to approval by certain stakeholders, including regulatory agencies in the US, Europe and Asia.

CBRE will also acquire $55 mln of CRES co-investments from ING and potentially interests in other funds managed by ING REIM Europe and ING REIM Asia. In addition, the company expects to incur transaction costs relating to the acquisitions of $150 mln (pre-tax), including financing, retention and integration costs.