Competition Heats Up for Deutsche Bank’s Giant Property Portfolio

By Craig Karmin and Laura Stevens

The field of a dozen suitors vying for Deutsche Bank’s asset management business, which includes a giant real estate investment program, could be whittled in half with binding bids due on Wednesday, according to people familiar with the matter.

Those left are expected to include State Street, Ameriprise Financial, Macquarie Group, Aquiline Holdings LLC and Guggenheim Partners, these people said. Deutsche Bank is hoping to raise as much as $2 billion from the sale. Deutsche Bank spokeswoman Mayura Hooper in New York declined to comment on the bidders.

More than 50 of the biggest players in the money management and private equity industries showed initial interest in the business, though most have walked away after taking a closer look at it. J.P. Morgan Asset Management is among the recent firms to exit the process, say people familiar with the process.

The divisions up for sale represent about $524 billion in assets, but much of the interest has been on RREEF, a group of alternative investment funds with about $63 billion in assets under management and a staff of 600. With the vast majority of that in property, it represents one of the largest real estate portfolios in the world.

Asset management firms looking to build or quickly expand their real estate platform were eager to look at the funds. But some potential buyers said they were concerned that RREEF had suffered high staff turnover at the top since 2007, and that the performance of some funds has not recovered much since the financial crisis.

Some private equity firms, meanwhile, that favor higher-risk, higher-return funds were not interested in the real estate platform that features primarily property funds with a more conservative investment strategy.

Deutsche Bank is still interested in selling the division as a whole – in part because of the complications seen in breaking up the intertwined legal entities – but it could also be that the divisions will be divided and sold, say people familiar with the matter.

In addition to RREEF, Deutsche Bank is selling its fixed-income, insurance and U.S. retail mutual fund business. The move is expected to help boost capital at the bank, which analysts estimate faces a gap of between 10 billion euros and 20 billion euros in the next few years as new regulations are phased in.

—Dan Fitzpatrick and Eyk Henning contributed to this article.

Write to Craig Karmin at

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