ING Real Estate continued to capitalise on investor demand for property funds at Investment Management, while results from Real Estate Development posted a strong improvement over last year. Underlying profit before tax from ING Real Estate rose 77.0% to €154 million in the third quarter.
Development turned from a loss of €37 million in the third quarter last year to a profit of €35 million, supported by high results on the sale of finished projects, including The New York Times Tower project in the U.S. Profit before tax from Investment Management rose 38.1% to €29 million as assets under management increased by €12.1 billion to €54.8 billion. Profit from Real Estate Finance rose 6.7% to €48 million, supported by growth of the portfolio which increased by €2.9 billion to €21.7 billion. The pre-tax RAROC of ING Real Estate rose to 49.0% from 30.3% as higher returns more than offset a €22 million increase in economic capital.
ING Real EstateAssets under management at ING Real Estate, including the Investment Management and Development portfolios, increased 6.1% to €57.5 billion. The total portfolio of ING Real Estate, including the lending portfolio of Real Estate Finance, increased 5.5% in the third quarter to €79.2 billion. Growth was driven mainly by the Investment Management business, which continued to capitalise on strong appetite for property funds among institutional investors. The assets under management at the Investment Management business increased by €3.3 billion in the third quarter to €54.8 billion, driven by a strong net inflow of €1.9 billion at ING Clarion in the U.S.
ING Real Estate Investment Management launched a takeover bid in the third quarter for Summit Real Estate Investment Trust in Canada, which will make ING Real Estate Investment Management the largest industrial property manager in Canada. In addition, six new funds were launched for institutional investors, with target investments of more than €4 billion.
The Development portfolio remained stable at €2.7 billion. Several large projects were successfully sold in the third quarter including The New York Times Tower project in the U.S. The Finance portfolio increased by €0.8 billion to €21.7 billion. The strategy to diversify the portfolio from the Dutch market to international markets progressed on plan, and the share of international lending increased to 35% in the third quarter, up from 30% at year-end 2005.
Source: ING Group