RREEF sale edges closer; final bids due this week

RREEF Real Estate, the real estate investment arm of Deutsche Bank’s asset management division, is up for grabs, with a sale expected to be pushed through by the end of June, sources close to the sale told PropertyEU.

The remaining four bidders are all financial services groups, including Australia’s Macquarie Group and US-based Ameriprise Financial Inc, JP Morgan and State Street, according to those who track the market. It is believed that final bids are due in next week. A spokesman for RREEF declined to comment. The other firms could not be reached for comment.

However, according to one Frankfurt-based analyst, Macquarie is likely to be the forerunner, not least because it often competes with RREEF for the same assets, most notably infrastructure assets. ‘They’re always competing, so there are synergies, and the due diligence process would also be a great chance for them to look at RREEF’s books,’ he said. RREEF is likely to appeal to JP Morgan and State Street because of their ability to manage institutional assets and would also give them greater exposure to the German market, he said. Ameriprise Financial Inc. is well-known in the US but has a lower profile here in Europe.

According to Martin Braun, head of the capital markets group at C&W in Frankfurt, both Macquarie Group and JP Morgan would be a good fit with RREEF. ‘Macquarie, like RREEF, has a strong position in the infrastructure sector. It has also built up a strong presence outside Australia. JP Morgan, for its part, has also taken part in some high-profile real estate deals and the infrastructure segment would nicely complement its existing business,’ he said.

While Deutsche Bank has not disclosed its target sale price for RREEF, analyst expectations vary widely. Many expect RREEF to sell for between EUR1bn and EUR1.5bn, although some estimates have been as low as EUR500mln.

Deutsche Bank announced back in November that it was conducting a strategic review of its global asset management business - which includes RREEF Real Estate - sparking speculation in the industry that RREEF Real Estate could be put up for sale. RREEF Real Estate had EUR43.6bn of assets under management as of 30 September 2011. On Thursday, Deutsche Bank announced net income of EUR4.3bn in 2011.