http://www.smh.com.au/business/ing-talks-stir-property-revival-20101012-16hv5.html
A SLEEPING giant is starting to wake. Australia's $80 billion property trust sector - becalmed in the wake of the financial crisis - is nearing its first big domestic management deal since Charter Hall mopped up the beleaguered Macquarie stable of management rights early this year.
The directors of Goodman Group and Investa Property Group were summoned to the office of the new chairman of ING Real Estate Investment Management, Kevin McCann, on Monday to nut out a process for the sale of the management rights of ING Office and ING Industrial funds. The two funds manage property worth $6 billion.
Goodman already has a 7.1 per cent holding in the industrial fund and, if successful in buying the management rights, would keep the trust listed but undertake an asset reshuffle.
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Investa's submission is said to follow a similar path by keeping the office fund as a separate entity while also absorbing some of its own assets into the fund to make it a formidable Australian-focused trust.
Mr McCann was appointed chairman late last month to replace the retiring Richard Colless and has made it clear his first order of business is to finalise the sale of the management of the trusts.
ING's chief executive, Denis Hickey, revealed the group was undertaking a review of the management of the trusts after the Dutch ING parent declared it was a seller of its management rights.
Charter Hall undertook a similar deal with Macquarie in March when it took out the management of the Macquarie Office and Macquarie CountryWide trusts for a nominal $279 million.
Last week the funds manager 360 Capital proposed a plan with the Becton Group to buy a 58.9 per cent stake in the Becton Diversified Property Fund, which in turn has co-investments in most of the other 14 Becton funds.
That would give 360 Capital a majority say in the management of the Becton trusts.
Management of the other ING trusts, including the Entertainment Fund, Healthcare and Community, could be internalised and remain under the ING umbrella.
The anticipated ING deal comes as Australia's $80 billion REIT sector limps towards the end of another quiet year.
Since January corporate deals have been limited to small takeovers such as Mirvac's offer for Westpac Office Trust and Stockland's grab of Aevum, which is near completion.
This is about 70 per cent less activity than occurs in an average year and reflects how spooked investors are about rising interest rates, limited access to capital and an investment market that has dropped its collective exposure to the sector.
In the past three years, the value, on average, of the REIT sector has collapsed by as much as 50 per cent or more for some trusts' share prices. Commercial property was the hardest hit sector during the financial crisis and many of the REITs are still struggling to regain the lost ground.
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