ING fund to open up German market, eyes distressed debt market

ING Real Estate Investment recently launched EUR 1 bn German Austrian retail fund could open up the German market for investors that have so far found it difficult to get into the market. 'We been approached by a couple of major investors who have been trying to get in to the German market for more than two years, but it's such a closed shop. Now we have people on the ground who know the market and can break down some of the barriers to incoming investment,' said Will Rowson, ING Real Estate's chief investment officer for continental Europe.

Rowson said he foresees no problem raising the targeted fund, given ING REIM's solid reputation in the European shopping centre market. Turning to the current credit squeeze, Rowson said we could see forced sales of assets in the near future, especially among players who bought assets using heavy debt leverage. 'They will have to refinance that debt, so we could well see them knocking on doors. And it's the equity players, like us, that will be able to take advantage of any fire sales.' He added that ING REIM has recently launched a global Opportunity Platform, targeting $1.5 bn (EUR1.1 bn), lifted to $4 bn with modest leverage.

'We expect to see a lot of distressed debt, which will create a lot of opportunities. Take Lehman, which bought the Coeur de Paris building for EUR2.2 bn at what was the very top of the market. They were still trying to offload that when they went bankrupt.' Investors - with a lot of money - are sitting on the fence right now, but they will come back to the market given the right opportunities, Rowson said. On the UK market, Rowson said the property market would not bottom out until a big player, like Mike Slade, jumped back in, signalling it is time to get back in.