ING Continues to Mitigate CRE Risk with Sale of Stake in $1.9B Canadian Industrial Portfolio

August 27, 2010
By Barbra Murray, Contributing Editor

Amsterdam-headquartered global financial institution ING Group continues to downgrade its presence in the tumultuous commercial real estate market with a deal to sell its 50 percent interest in ING Summit Industrial Fund L.P., a fund with a 32 million-square-foot industrial portfolio in Canada. A joint venture involving KingSett Capital and Alberta Investment Management Corporation will snap up ING’s stake in a transaction based on the portfolio’s aggregate value of approximately $1.9 billion.

The Summit assets consist of 400 light-industrial properties sited primarily in Toronto, Calgary, Edmonton, Montreal and Halifax. In addition to selling its 50 share of the Summit portfolio to KingSett and Alberta Investment Management, the company will sell the joint venture its 7.8 percent stake in ING Industrial Fund, an ING-managed entity that owns the other half of the Summit portfolio. And with one last step, ING will completely extricate itself from all involvement with Summit; in a separate transaction, the company will sell ING Real Estate Canada, the managing entity of Summit, to KingSett and Alberta Investment Management.

ING noted in its 2009 annual report that fair value changes in the portfolio had negatively impacted its exposure in the Americas. “As we focus on improving the performance of the Banking and Insurance businesses, managing risk and our business portfolio remain important priorities,” Jan Hommen, CEO of ING Group, noted in a press release. “This transaction is in line with ING’s stated objective of reducing its exposure to the real estate industry.”

With that, ING makes it clear that it has no plans of deviating from its current real estate strategy, despite having noted in its second quarter report that “the stabilisation of real estate markets continued in the second quarter, resulting in substantially lower negative fair value changes and impairments.”