CBRE Global Investors has scooped an appointment to build up and manage a £500m commercial property portfolio for insurance group Direct Line.
The world’s largest property fund management firm beat competition from five other short-listed parties, which is understood to have included a number of heavyweight rivals, to secure the new mandate.
Direct Line’s move into real estate has been prompted by the sale of the group by owner Royal Bank of Scotland.
The part-nationalised lender must shed the insurance business by 2013 in order to meet European competition rules.
It is aiming to sell a minority stake in Direct Line through an initial public offering in the second half of 2012, followed by another sale in 2013, taking its holding to less than 50%.
The prospect of becoming a standalone business is understood to have driven the change in Direct Line’s investment allocation strategy and its expansion into property.
It is expected that the group, which includes the Churchill and Green Flag brands, and is the UK’s largest motor insurer, will want to establish a core to core-plus UK diversified portfolio investing in retail, industrial and offices.
It is understood that the brief will be led by fund manager Richard Dean, who is a director in CBREGI’s global corporate services asset strategies division.
Direct Line is expected to sign off the mandate imminently.
The segregated account appointment is CBREGI’s largest win since its $900m (£565m) purchase of ING Real Estate Asset Management in November last year, which boosted the business’s assets under management to $94.8bn (£60.28bn) as of 31 March.
All parties declined to comment.
? Guggenheim Partners has walked away from the purchase of RREEF after failing to agree terms with parent Deutsche Bank.
Talks have been ongoing since February when the US investment manager secured an exclusive position to buy all of the German bank’s asset management businesses, before narrowing its focus to just the real estate business in May.
Deutsche Bank said it would “make a further update on its asset & wealth management division” in September.
