Pension fund ABP and ING Real Estate have announced that they have entered into a real estate transaction with regard to KFN, a Dutch non-listed real estate investment trust, wholly-owned by ABP. KFN owns a portfolio of approximately €1.6 billion comprising some 600,000 m² of prime office properties, located across the Netherlands. The 80 office buildings are currently 94% let. The portfolio includes landmark properties such as WTC Amsterdam (50% share), WTC Schiphol (43%), Jaarbeursplein Utrecht and the Weena Tower, Rotterdam
Under the terms of the transaction the KFN portfolio will be held by two investment funds initiated and managed by ING Real Estate. KFN's employees will transfer to ING Real Estate. The transaction results in a significant expansion of the ING Dutch Office Fund, improving the fund's risk profile while maintaining its expected total returns and creating additional investment opportunities for clients. ING Real Estate also strengthens its fund teams with the addition of the 44 experienced KFN staff.
The transfer of KFN represents an important step for ABP as it marks the culmination of its strategy to reduce its wholly-owned indirect property investment in the Netherlands to a minority stake. It will also enable ABP to further diversify its real estate exposure more widely across the global real estate markets. ABP's decision to transact with ING Real Estate follows an extensive bidding process involving 14 parties.
While ABP will retain an investment of €365 million in equity, ING Real Estate will provide €140 million bridge equity.
Commenting on the transaction, Roderick Munsters, Chief Investment Officer of ABP, said: "The transaction with regard to KFN is a historic moment for ABP. In 1995, ABP placed its direct real estate investments at arm's length in separate retail, housing and office funds. From the beginning, it was our intention to reduce our interest in these funds to a minority share in order to diversify our real estate portfolio further internationally and to increase liquidity. Over the past few years, we have realised our ambitions for the retail fund (now Corio) and the housing fund (now Vesteda). We are proud that as a last step in the process our Dutch office portfolio and the KFN team will be moving to a global player, ING Real Estate. Moreover, through our co-investment in ING Dutch Office Fund, we can keep a considerable stake in prime Dutch office property."
George Jautze, Chairman and CEO of ING Real Estate, added: "We are delighted that we have been able to create an innovative, custom made solution with ABP, furthering our long-standing relationship with them, while also providing existing and potential investors with the opportunity to gain exposure to the prime Dutch office market. The quality of the portfolio is unique and in the current market conditions this deal offers significant growth opportunities and is a very strong addition to the existing portfolio. It is very rare that an office portfolio of this calibre becomes available on the market. Being able to secure this portfolio and to structure the transaction in such a way that we retain ABP as a co-investor confirms our position as the leader in real estate investment management."
The ING Dutch Office Fund ('DOF') will obtain 228,226 m² of offices. ABP will have an equity stake of €300 million in DOF. DOF has been in operation since 1998 and is an unlisted, semi open-ended investment vehicle. It currently owns 652,220 m² of offices across the Netherlands. Following the transaction DOF's portfolio will comprise 880,446 m² of prime office property. Existing investors in the fund have unanimously given their consent to the transaction and have the option to invest further in the fund.
The balance of the portfolio comprises 367,861 m² of offices and will be held by ING Real Estate Office Fund Netherlands ('REOFN'), a vehicle designed to hold, rework and ultimately sell the assets in the medium term. Both ABP and ING Real Estate will each invest