Bloomberg and the Wall Street Journal have reported that CB Richard Ellis has acquired the Real Estate Management operations of ING. This transaction furthers CBRE's stated objective of increasing the company's fee based business. It will bring assets under management to just under $100 billion and add a significant portfolio of core type properties to the value-added portfolios the company already has under contract. Thew acquisition also brings a highly European client base to complement CBRE's US investors. Finally, the acquisition includes an operation called Clarion Real Estate Securities (Clarion), which appears to be in the bossiness of creating product for retail and institutional investors.
CBRE is currently raising funds in a non-traded REIT, CB Richard Ellis Realty Trust (CBRERT), in a partnership with CNL. The REIT has raised approximately $1.5 billion of equity in two public offering over just under four years.
Investors in CBRERT will get the benefits of the additional management competencies and business scale. There may also be some specific opportunities to participate min transactions that have not been fully funded by the ING organization. However, longer-term, it would appear that this may be CBRE's last advisor distributed fund. I certainly would not expect them to partner with CNL again. A non-traded REIT is an expensive vehicle in which to raise capital, and four years is a very long time in whi8ch to increase AUM by just over 1.5%. AS CBRE now has in-house experience in creating product and raising capital (through Clarion), I would look for CBRERT to close soon, and their capital raising efforts to be focused elsewhere.
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