ING Group's phased disposal of its real estate investment management businesses has continued with the sale of its Australian entertainment-related real estate fund.
In the same week the Dutch banking group announced it had concluded the sale of its European real estate investment management platform to property services giant CBRE Group, it agreed to transfer management of its ING Real Estate Entertainment Fund (IEF).
The agreed exit to New Zealand-based private equity firm Torchlight Group, one of IEF’s major unit holders, was part of a parallel process by ING to exit from its Australian real estate investment management business alongside the wider global business.
The trust-structured IEF, which has A$235.6 million of assets under management, is one of the smaller components of the former ING Real Estate Investment Management property empire – once the largest of its kind in the world. The IEF contains 22 pubs and 15 clubs in Australia and New Zealand with a weighted average lease expiry of 10 years.
Other funds under the ING REIM Australia banner included the ING Office Fund, ING Industrial Fund, ING Real Estate Community Living Group and Australia’s only healthcare REIT, ING Real Estate Healthcare Fund.
According to an Australian Securities Exchange announcement by ING Management, the entity responsible for the IEF, it has entered into an “implementation deed with Torchlight as general partner of the Torchlight Fund 1 LP” which would see the Torchlight assume responsibility for the fund’s assets.
If approved, Bodiam RE, part of Torchlight, would undertake a rights issue or entitlement offer underwritten by Torchlight, valued at A$15 million, next March. Unit holders would be able to participate after that point. ING said: “The equity raising will assist IEF in funding its future capital requirements and may assist in reducing the gearing levels within the fund.”
The agreement would effectively see ING walk away from this fund empty-handed as it has “unconditionally waived” its entitlement to contingent management fees.
Of its wider strategy and decision to exit its position as manager of the fund, ING said: “In June 2010, ING Group announced that it was conducting a strategic review of its global real estate investment management business,” ING said.
“The Australian real estate operation, ING Real Estate Investment Management Australia, was included in the review. In February 2011, ING announced that as a result of the evaluation it would undertake a phased withdrawal from the [business] in a timely and controlled manner,” it added.