Dutch Parent May Sell Firm That Provides Real-Estate Investment Advice
January 22, 2002 3:20am
Jan. 22--The Dutch parent of real estate investment adviser RREEF is close to a deal to sell the firm, which has an $18 billion investment portfolio and offices in Chicago and San Francisco.
The sale price is expected to be about $400 million, or nearly twice what Netherlands-based RoProperty Investment Management paid for RREEF more than four years ago, sources said.
Barring an 11th-hour collapse of the deal, the buyer will be Deutsche Asset Management, the investment advisory unit of Deutsche Bank AG. A representative of RREEF confirmed that a sale of the firm was being considered, but would not comment on the identity of the buyer.
Henderson Global Investors Ltd., a subsidiary of an Australian insurance company with offices in Chicago, also made a strong offer, sources said. Other firms that expressed interest in RREEF were Boston-based AEW Capital Management LP and Connecticut-based UBS Realty Investors LLC.
RREEF, founded in California in 1975 and originally known as Rosenberg Real Estate Equities Fund, is a leading advisers to major pension funds, with a $16.2 billion real estate portfolio.
In October, a joint venture of RREEF and the California Public Employees' Retirement System acquired a real estate investment trust, Boston-based Cabot Industrial Trust is deal worth about $2.1 billion.
As a result of that deal, industrial properties account for 44 percent of RREEF's portfolio, but the firm also invests in other types of real estate. Office buildings account for 23 percent of its management holdings, while apartment buildings make up 14 percent. Retail real estate constitutes 11 percent, while the rest is in land and other investments.
The firm also has a $2 billion real estate securities portfolio.
A RREEF sale would be the second major real estate transaction this year involving Dutch owners. RREEF' parent, RoProperty, is in turn owned by four Dutch real estate companies including Rodamco North America, which earlier this month said it was selling off its U.S. shopping center portfolio.
RoProperty decided to sell RREEF earlier this year in order to leave the advisory business and focus on internally funded real estate investment.
A spokeswoman for Deutsche Asset Management could not be reached for comment, but the giant German financial institution has been afraid to bolster its U.S. operations through pricey acquisitions. Last month, Deutsche Bank completed its $2.5 billion purchase of New York-based Zurich Scudder Investments Inc. from its Swiss-based parent, Zurich Financial Services Group.
Deutsche Bank has had a strong presence in American financial markets since its 1999 Bankers Trust acquisition, but has not been a major player in the lucrative, real estate advisory business, experts said
"Getting RREEF is a very good way a large, non-real estate asset manager to build an real estate investment platform," said Quintin E. Primo III, co-chairman of Chicago-based real estate investment firm Capri Capital. "RREEF has an established client base and highly experienced personnel."
As a part of the transaction, most of RREEF's top executives are expected to remain with the firm, which is expected to continue to have the autonomy under Deutsche Bank that RREEF had under its Dutch owners.