LaSalle Investment Management, the Chicago-based investment arm of global property services firm Jones Lang LaSalle, has secured a $1 billion boost to its Asia business with the final close of its fourth Asia fund and two separate accounts, according to a firm statement.
LaSalle hauled $585 million of capital for its LaSalle Asia Opportunity Fund IV (LAOF IV) altogether, $485 million for the blind-pool vehicle itself and $100 million in co-investment capital specifically for China logistics deals.
The remaining $415 million was spread between two separate account mandates for Japan and Australia focused on income-producing assets. The firm is targeting value-added returns in the mid-teens for those vehicles, according to the statement. LaSalle said it is expecting a significant portion of those returns to come from existing cash flow in the acquired properties.
The investors for these mandates were not disclosed, but investors for LAOF IV included sovereign wealth and pension funds from the United States, the Middle East and Europe. LaSalle pointed to several prominent US pensions, such as the Illinois Teachers Retirement System, San Diego City Employees’ Retirement System (SDCERS) and Arkansas Teachers Retirement System as examples of investors that have backed the fundraise.
“Global investors continue to see the potential of investing in Asia-Pacific and are generally under-allocated to real estate in the region,” LaSalle’s global head of client capital said in the statement. “What is interesting about this particular capital raise is that some international investors are recognizing that Asian income producing assets can provide stable returns and are pursuing real estate investment strategies with reduced risk premia for the region.”
LAOF IV, like its predecessors, will be used to target the four major markets of Australia, Japan, China and South Korea. “LaSalle sees attractive investment opportunities in income producing assets in Japan, logistics assets and special situations in Korea, retail and urban for-sale residential developments in Australia, and the development of logistics assets in Tier 1 and Tier 2 cities in mainland China,” Mark Gabbay, co-head and co-chief executive of LaSalle’s Asia-Pacific operations, specified.
The capital raising by LaSalle for its fourth Asian opportunity fund marks something of a turn in fortunes for the fund series after the performance of its $2.9 billion LAOF III, raised in 2008, was hit alongside its peers during the global financial crisis.
The firm has persevered with the series, however, implementing favorable terms for its investors and committing up to 10 percent of its equity. Those factors, combined with solid post-crisis performances for the latter investments of LAOF III and early investments made for LAOF IV, have led to continued backing from certain of its investors and new backing from others. According to an SDCERS investment committee note, gross returns from $914 million of investments made for the two funds since 2009, both realized and unrealized, currently are valued at 17.1 percent IRR and a 1.7x equity multiple.
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