CBG Leads Race, to Rule Industry? - Analyst Blog

Amid wide speculations, CB Richard Ellis Group Inc. (CBG), the world's largest commercial real estate services company (on the basis of 2009 revenues), has emerged as firm favorites to acquire the lion's share of the real estate division of ING Groep NV (ING), a financial services company, leaving behind rival bidders such as Vornado Realty Trust (VNO). The deal, worth approximately €1 billion, would create the world's largest property funds business entity with over $100 billion of assets under management.

Over the past year, ING Real Estate Investment Management had been scurrying for potential bidders to raise funds by divesting its non-core business. The company offers a broad range of funds and separate accounts across private equity and listed shares (including hedge funds).

ING Real Estate's investment policy is based on an indigenous in-depth study provided by its global research team through top-down research that develops portfolio strategy and identifies target markets; and bottom-up research that integrates local market analysis into each investment decision. With a global footprint managing a portfolio of €65.3 billion, the company consistently ranks as one of the largest real estate managers of the world.

The real estate management business has recovered significantly in 2010 with a strong growth in assets under management after a testing time during the global downturn in 2008 and 2009. Consequently, if CB Richard Ellis is successful in pursuing the deal, it would transform itself as the largest investment manager and adviser in the world and create a behemoth of sorts in the financial industry.

The company is expected to merge the acquired unit with its existing fund management division, called CBRE Investors, which currently has over $35.7 billion assets under management.

CBRE Investors is an independently operated affiliate of CB Richard Ellis and harnesses the research, investment sourcing and resources of the parent company for the benefit of its investors. The acquisition is a strategic fit for CBRE Investors as stable fee income from the property fund management segment of ING Real Estate is expected to complement its advisory business.

CB Richard Ellis is the global market leader in commercial real estate brokerage and advisory services for property leasing and sales, forecasting, valuations, origination and servicing of commercial mortgage loans, as well as project and real estate investment management.

The company has a broad range of real estate products and services, and an extensive knowledge of domestic and international real estate markets that enables it to operate as a single-source provider of real estate solutions.

CB Richard Ellis offers a range of services to occupiers, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estate assets globally under the CB Richard Ellis brand, and provides development services under the Trammell Crow brand.

We maintain our ‘Neutral' rating on CB Richard Ellis, which presently has a Zacks #1 Rank translating to a short-term ‘Strong Buy' recommendation and indicates that the stock is expected to outperform the overall U.S. equity market for the next 1−3 months.

 
CB RICHARD ELLS (CBG): Free Stock Analysis Report
 
ING GROEP-ADR (ING): Free Stock Analysis Report
 
VORNADO RLTY TR (VNO): Free Stock Analysis Report
 
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