ING Real Estate has reported lower than expected levels of revaluations in its investment portfolio for the fourth quarter of 2007, but the company is positive that overall returns are good and that investor demand for property investment remains robust.
ING Real Estate has reported lower than expected levels of revaluations in its investment portfolio for the fourth quarter of 2007, but the company is positive that overall returns are good and that investor demand for property investment remains robust.
Underlying profit before tax declined 37.5%, reflecting lower gains on the sale of completed projects in the development business and a lower level of revaluations in the investment Portfolio. Over the full year, however profit before tax was up 5.2% to EUR 664 mln. The real estate portfolio also grew by EUR 3.7 bn to EUR 107.2 bn, and EUR 16.5 billion in the full-year 2007.
The RAROC after tax decreased to 32.7% in 2007 from 40.1% in 2006, mainly due to lower returns on development. However, the development portfolio rose in the fourth quarter from EUR 2.8 bn to EUR 3 bn. The project pipeline grew slightly to EUR 7.9 bn.
Despite the slowdown, investor demand for property investments remained robust. Assets under management at ING Real Estate Investment Management were up 10% compared with a year earlier despite a marginal decline in the fourth quarter to EUR 72 bn. Fund performance proved to be a key strength in 2007, with 69% of ING Real Estate Investment Management funds outperforming their benchmarks. The company launched eleven funds in 2007, attracting 150 new investors and 24 new separate accounts.
ING Real Estate's Finance business also grew strongly in the fourth quarter. Takingadvantage of the dearth of lenders in the real estate market to increase its portfolio. The lending portfolio increased by EUR 3.8 bn in the fourth quarter to EUR 32.1 bn at the end of 2007,a 42% increase on the previous year.
