F&C Reit will be the sole real estate business in the enlarged $269bn (£163bn) BMO Global Asset Management group, following its £708m takeover of F&C Asset Management.
The wealth management arm of the Bank of Montreal will swallow up a 70% stake in F&C Reit, as part of its proposed takeover.
The management of F&C REIT, led by Leo Noe, will retain a 30% ownership stake in the company, which was created when F&C Asset Management bought Leo Noe’s REIT Asset Management in 2008.
Under the original agreement, the minority stakeholders could increase their share to 40% over the period to 31 December 2014 if certain EBITDA performance targets are hit.
A spokesman said F&C Reit was “very supportive and excited about the proposed deal”.
He added: “BMO’s intention is to expand its wealth management business and we believe this transaction will provide us with added impetus and a platform for our growth going forward.”
However, sources said that the takeover could prompt F&C Reit’s management to consider its position with options including a sale of its remaining stake to the new owners, or undertaking an exit from the business. F&C REIT has £7bn of real estate AUM.
F&C’s flagship UK pooled vehicle is the £1bn F&C Commercial Property Trust, which it runs alongside its F&C Commercial Property Trust and the recently merged F&C UK Real Estate Investments.
Prior to the deal just 1% of BMO’s $133bn AUM comprised alternatives, which include real estate. Fixed interest and equities comprise 85% of its AUM.
Just 4% of its clients came from Europe; 93% are based in the US and Canada.
Following its proposed 120p a share takeover, alternatives will comprise 5% of its $269bn AUM, with 52% of its clients drawn from Europe.
Bridget.O’Connell@estatesgazette.com
