ING Real Estate Canada has been sold to a Canadian investment firm and a consortium of institutional investors after the troubled insurance group sold its 50 percent stake in a 400-property industrial portfolio.
KingSett Capital and Alberta Investment Management Corporation (AIMCo) acquired ING Group’s interest in the Summit Industrial Fund for C$2 billion (€1.5 billion; $1.9 billion), including the assumption of debt. An Australian listed ING property fund, ING Industrial Fund, will continue to own the remaining half of Summit.
As we focus on improving the performance of the banking and insurance businesses, managing risk and our business portfolio remain important priorities. Jan Hommen, ING Group chief executive officer
As we focus on improving the performance of the banking and insurance businesses, managing risk and our business portfolio remain important priorities.
Jan Hommen, ING Group chief executive officer
The move heightens speculation that ING could sell its real estate investment business piecemeal, rather than whole. ING announced last October it would exit the property business by 2014 at the latest, after coming under political pressure to concentrate on core businesses following a €10 billion European Union bailout.
In June, ING hired Morgan Stanley to start the sales process, with initial bids expected by mid-September, according to sources. Morgan Stanley has been charged with selling ING REIM intact, however industry professionals suggested a likely outcome would be for ING to sell its regional arms, including New York-based ING Clarion, ING REIM Europe and ING REIM Asia, separately.
Jan Hommen, chief executive officer of the Dutch insurer, said in a statement today the sale of ING Real Estate Canada was part of the company’s “objective of reducing its exposure to the real estate industry”.
The deal will see KingSett and AIMCo take over ING REIM Canada’s 50 percent interest in the former Summit REIT portfolio, which ING acquired in 2007. According to The Canadian Press, ING has taken a C$1.2 billion writedown on the assets.
A DBRS ratings report on the Summit fund in July said the portfolio was generating positive cash flows, but needed to refinance or repay $226.5 million of mortgages this year, with a portfolio loan-to-value ratio of between 40 percent and 50 percent. The portfolio also faced a “large amount of lease maturities” over the next few years, with 14 percent of the portfolio’s 34 million square feet of gross leasable space set to mature each year before the end of 2012.
ING said the deal was expected to close in the fourth quarter of 2010, subject to regulatory approvals