CB Richard Ellis Group struck a deal to buy most of the real estate investment management business of Dutch financial company ING Group NV for US$940 million ($1.3 billion), making it the world’s biggest real estate investment manager.
The deal, which nearly triples CB Richard Ellis’s assets under management, ends an auction process that lasted over a year and attracted more than 40 others, including CB Richard Ellis’s chief rival, Jones Lang LaSalle.
The ING real estate investment business last year generated US$305 million in revenue and includes US$59.8 billion in assets under management.
By giving CB Richard Ellis a bigger investments management base, the deal also gives the company a better chance to sell its real estate services – property management, sales and leasing, corporate services – to the newly acquired business.
“It completes the construction of a preeminent global investment management platform,” CB Richard Ellis chief executive officer Brett White told Reuters. “We now have opportunities for investors to invest in virtually the entire risk spectrum and the entire global geography. No one’s ever done that before.”
CB Richard Ellis also will benefit from the timing of the deal, which is at the point where commercial real estate is recovering from a severe downturn.
“We’re buying a business that has already gone through the massive downturn in the industry, whatever impact that business had on profit, on asset write-down, on stress on their team, that’s all behind them now,” Mr White said. “We’re buying the business at that trough valuation.”
For ING, the deal will help it pay down part of the balance left from its US$10-billion government bailout in 2008.
CB Richard Ellis shares closed up 2.9 per cent at US$25.34 on the New York Stock Exchange.
Source : Today – 16 Feb 2011