NEW YORK CITY-Now that Deutsche Bank AG and locally-based Guggenheim Partners have ended exclusive negotiations over the sale of RREEF after both parties “were unable to agree on terms for the sale of the business,” commercial real estate sources tell that several factors could have contributed to the fizzle-out, including pricing discrepancies and euro zone concerns.

“Quite simply, they could not agree on terms,” Arthur M. Milston, managing director at Savills LLC, tells following the announcement, which came on the heels of the Frankfurt-based bank’s mutual agreement with Guggenheim to pull the plug on exclusive negotiations with three other entities just one month ago: DWS Americas, the bank’s mutual fund business in the Americas; DB Advisors, its global institutional asset management business; and Deutsche Insurance Asset Management, the global insurance asset management business. 

“I don’t think it is any way indicative of groups like Guggenheim looking to become bigger, because I think everybody in this space is undergoing some kind of consolidation or strategic review,” he says. “Everybody is finding that bigger is better. If you look at the fund management business, the top 20% of funds – the Blackstones and Lone Stars of the world – are finding it to be a very good environment to be going out and raising money, but if you are not at that level and you fall into the middle of the pack, it is very difficult to raise money.”

The transaction was rumored to go as high as $2 billion US, or 1.5-1.6 billion Euros. While Deutsche declined to comment beyond a news release about why the negotiations fell through, a June 1 press statement says the bank will establish a new business division called Asset & Wealth Management, which will stand equally alongside other divisions in corporate banking & securities, global transaction banking and private & business clients. Called “AWM,” the bank will integrate its existing asset management and wealth management business together. 

In a prepared statement issued on June 20, Deutsche says it “will make a further update on its asset & wealth management division as part of its commitment to communicate a long-term, bank-wide strategy in September.”

But Milston says bigger global factors may have played a role in the decision. “It’s possible that they’ve looked at recent events in Spain and their banking system,” he says. “Maybe they have gotten a little bit more cautious and said maybe this isn’t worth as much what we thought it was worth in light of current economic issues, but I don’t know that, and I certainly don’t think the idea of not buying it would be a direct result of that. It could have influenced their pricing, and I think they probably couldn’t get together on price, especially given the fact that things are not as rosy as they were. I think there is no doubt that there are a lot of groups still looking to build significant platforms, and therefore, this is very attractive being one of the largest ones out there. It is a very attractive opportunity, but the numbers need to make sense.”

A spokesperson for Guggenheim Partners declined to comment to for this story.