CBRE Agrees to Buy ING Management for $940M

LOS ANGELES-CB Richard Ellis Group Inc. has entered into agreements to acquire the majority of the real estate investment management business of Netherlands-based ING Group N.V. for approximately $940 million in cash. The acquisitions include substantially all of the ING Real Estate Investment Management (ING REIM) operations in Europe and Asia, as well as Clarion Real Estate Securities, its US-based global real estate listed securities business. CBRE will not acquire ING’s US-based private market real estate investment management company; the New York City-based management of ING Clarion Partners is buying that unit in partnership with Lightyear Capital for $100 million.

The operations that CBRE acquires will become part of the company's Global Investment Management segment (CBRE Investors), an independently operated business unit of the company. CBRE will also acquire approximately $55 million of CRES co-investments from ING and, potentially, interests in other funds managed by ING REIM Europe and ING REIM Asia.

Brett White, CEO of CB Richard Ellis, commented on the agreements in a prepared statement: “ING REIM, when combined with our existing Global Investment Management operations, will provide us with a significantly enhanced ability to meet the needs of institutional investors across global markets with a full spectrum of investment programs and strategies,” White said. “Our firms fit together well and our investment program offerings are highly complementary," and the deal will further diversify CBRE's revenue sources, White added.

Explaining how the businesses "fit together exceptionally well," CBRE's announcement points out that CBRE Investors has primarily focused on value-add and separate accounts. ING REIM has primarily focused on core funds and global listed real estate securities funds, except in Asia, where ING REIM manages value add and opportunity funds.

"There is also expected to be little overlap in the companies’ client bases, with a majority of CBRE Investors’ clients being US-based and a majority of ING REIM’s based in Europe," the announcement says.

CBRE expects to incur transaction costs relating to the acquisitions of approximately $150 million (pre-tax), including financing, retention and integration costs. The acquisitions are expected to close in the second half of 2011 and are subject to approval by certain stakeholders, including regulatory agencies in the US, Europe and Asia.

As of Dec. 31, the assets under management in the ING REIM portfolio CB Richard Ellis is acquiring totaled approximately $59.8 billion, including $29.5 billion in Europe; $5.1 billion in Asia; $19.4 billion in listed securities; and $5.8 billion in global fund of funds. CBRE Investors’ assets under management totaled $37.6 billion as of Dec. 31.

CB Richard Ellis plans to finance the acquisitions with cash on hand and borrowings under its secured credit facility. The company ended 2010 with more than $500 million of cash on its balance sheet, approximately $650 million undrawn on its revolving credit facility and a $800 million unutilized accordion facility.