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EXCLUSIVE: LaSalle sparks sale of $1bn Japan portfolio

The Chicago-based real estate investment management firm has appointed advisors to sell a portfolio of retail assets only assembled over the last two years in response to sizeable current demand from buying institutions.

LaSalle Investment Management, the real estate investment management business of global property services firm Jones Lang LaSalle, has placed a portfolio of six large retail properties in Japan on the market, PERE can reveal.

The firm is understood to have appointed the Japan office of London-based property brokerage Savills to market the portfolio with a view to garnering bids from institutional investors of more than $1 billion. The sale is expected to reflect a going-in yield of around 4.75 percent.

A first round of bids is expected to be called before the end of the year with a preferred bidder chosen shortly after the New Year.

The portfolio comprises a range of different types of retail property. It includes Malera Gifu, a large suburban shopping center in Motosu City, Gifu, which was acquired from New York asset management giant BlackRock for about $204 million in 2014.

LaSalle is selling the assets on behalf of a separate account it raised in 2014 expressly for investments in Japan. As such, the sale marks a remarkably quick holding period and demonstrates further the current high levels of institutional demand for properties in the world’s major property markets.

The account has a value-add strategy, meaning LaSalle was expected to add value to the assets by actively repositioning its tenant mix, renegotiating leases and engaging in some redevelopment. Nonetheless, according to sources already familiar with the portfolio, there remains scope to add further value, particularly on the redevelopment side, and that should provoke a wide array of investors into making bids.

Indeed, it is thought that, should the assets be repositioned to their potential, the portfolio could stabilize at a 5.5 percent yield.

“The scale and income profile of this portfolio should appeal to a lot of people,” one source said. “I can see core, core-plus and maybe even value-add buyers placing bids.”

LaSalle has also been on the other side of the fast-moving Japanese market. Last year, it surprised the market when it emerged as the buyer of Meguro Gajoen, a large office complex in Tokyo, alongside China’s sovereign wealth fund, China Investment Corporation, for $1.2 billion from Mori Turst, the Tokyo-based property company. Mori Trust held the asset for only six months after buying it from Dallas-based private equity real estate firm Lone Star Funds.

LaSalle declined to comment. Savills was unavailable for comment.