ING Real Estate
ING Real Estate had another year of solid growth, with assets under management increasing by 10% over the year, despite the weaker dollar, its loan portfolio growing by 42% and a development portfolio growing by 17%. At the year-end ING Real Estate’s total business portfolio was EUR 107.2 billion up 18.2% on 2006 and profit before tax increased by 5.2% to EUR 664 million.
After a sustained period of double-digit returns from real estate, 2007 marked a turning point in the market, with returns from core real estate reverting to more normal levels. The benefits of a well diversified business became especially apparent in the second half of 2007, which saw lower, but still positive, growth from real estate investments and volatile stock markets starting to impact on listed real estate holdings. At the same time, ING Real Estate Finance took advantage of these changed market circumstances which resulted in strong profit growth.
ING Real Estate Investment Management
ING Real Estate Investment Management expanded its product range to incorporate value-added and opportunistic investment strategies as well as new funds such as the China Opportunity Fund and Iberian Value-Added Fund. It continued to be acquisitive. Among a number of notable transactions were the purchase of the Apple 2 hotel portfolio in the US and the acquisition of two retail assets in Japan. In early 2008, a transaction had been concluded with ABP Pension Fund, in respect to the KFN office portfolio, following which the KFN EUR 1.6 billion Dutch office portfolio will be held by two ING Real Estate funds. Performance and customer service remained a central theme: 69% of funds outperformed their benchmarks on an asset-weighted basis. Eleven new funds were launched in 2007 in response to investors’ needs, and during the year 150 new investors and 23 new separate accounts were gained.
ING Real Estate Finance
ING Real Estate Finance had a very strong year, growing its loan portfolio, increasing income, and continued very low risk costs. It achieved further international diversification while remaining market leader in the Netherlands. Almost half its loan portfolio is now international, up from 35% last year. Market conditions in the latter part of the year were positive and ING Real Estate Finance took advantage of the dearth of lenders in the real estate markets to grow its portfolio. During the year it also embarked on a comprehensive change programme to ensure that it remains at the forefront of real estate lending.
ING Real Estate Development
ING Real Estate Development maintained its focus on Europe while strengthening its position as an area developer. Major regeneration and inner city projects in Amsterdam, Hamburg and Hull were progressed, projects that require strong relationships and a shared vision across a wide group of stakeholders. It also concentrated on building sustainability and enhancing its research capabilities. It continued to expand its activities, opening a Romanian office in 2007 and acquiring Geo-de, a Lyon-based small French developer, in January 2008.
Ambitions
ING Real Estate anticipated that 2007 would be the last year of exceptional performance for real estate but demand from investors and borrowers remains robust and, while growth may moderate, with a diverse business model ING Real Estate believes it is well-placed to weather the current turmoil in property markets.
