corporate breakup.

The five-year program, with a $250-million equity seed, will mimic one that TCC launched last year with the Des Moines-based Principal Financial Group. The US development pipeline will be divvied on "a straight alternating basis. We have convinced both of them that we have enough product for both of them," Colin Murphy, fund manager for both programs, tells GlobeSt.com. "What ING is buying into, as did Principal, is we have 28 experienced development teams on the ground and access to office development product that those teams are bringing forward." At year-end 2006, TCC had $8 billion of development in process or in the pipeline.

The first assets for the ING Clarion program are under construction: the $65-million, 257,000-sf Max at Kierland in Scottsdale, AZ and $27-million, 125,000-sf first phase for Innovation Village in Los Angeles. The Max will deliver in the fourth quarter. Innovation Village will come on line in second quarter 2008. "Those deals were done with the understanding that we were working toward a fund," Murphy explains.

The class A development pipeline will have buildings from 125,000 sf to 600,000 sf in single and multi-phases, predominately in the Sunbelt and both coasts. Murphy says negotiations are under way for development sites in Southern California and the Florida coasts. Before the year ends, he says the plan is to ramp up work on four more office projects, representing $200 million to $300 million of product. CB Richard Ellis has exclusivity for managing and leasing the projects, according to Murphy.

ING Clarion also has an industrial development program with TCC. Plus, it's under negotiation to set up programs for other product types, says Doug Bowen, ING Clarion's managing director.

Bowen says the national office development program--funded by just one of its clients--is strictly market driven. "There is a huge contrast between now and 1.5 years to two years ago, when it was hard to justify new office markets" he says. "There are more and more opportunities for us now." On ING Clarion's new markets map is Austin and Denver while its preferred list contains Florida, Los Angeles, New York City metro, Phoenix, Seattle and Washington, DC.

Both execs say the goal isn't to build just trophies coast to coast and border to border in major metros. "This is driven by the ability to generate profits," Bowen explains. "It's not to build trophies, but to generate profits for our clients."

After lease-up, the deed-holders will decide if the building will be held or sold. Murphy says "in every instance, we'll be a seller." He foresees 60% to 70% of the finished product ultimately being sold after the heavy lifting's done.

A decision to sell "will be a function of the market," Bowen says. "You try to look forward. We may sell or we may hold the majority of it. Crow may get out and we may stay, but we have the mechanisms for them to get out. It will be a case-by-case basis."

Instant Insights /

TCC, ING Clarion Launch $1B Office Program

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