LaSalle holds $600m first close for US value-add fund

The vehicle has already surpassed the size of its predecessor as it targets a $1bn final close.

Downtown city skyline of Chicago, Illinois

LaSalle Investment Management has reached the first close for its Income & Growth Fund VIII on more than $600 million, according to an investor.

Dan Gallagher, chief investment officer of the Ventura County Employees Retirement Association, told PERE that the firm held a first close for the fund on January 31. LaSalle is working toward a $1 billion final close later this year.

VCERA’s retirement board approved a $100 million commitment to the fund during its January meeting. The Arkansas Teachers’ Retirement System also has committed $50 million to the fund, more than double its previous investments of $20 million a piece to LaSalle Income & Growth Fund VII and VI.

LaSalle declined to comment on the fundraise.

The Chicago-based manager launched the vehicle in April 2018 targeting a value-add strategy focused on non-core assets in suburban multifamily, urban office, distribution centers and certain types of urban retail in the US. LaSalle is eyeing a final close in the third quarter of 2019 for Income & Growth VIII, which has a hard-cap of $1.5 billion.

LaSalle hopes to deliver a 12 to 14 percent net internal rate of return to investors and a total value net to paid-in multiple of 1.6x, according to VCERA’s January meeting minutes.

LaSalle plans to make between 20 and 25 investments ranging from $40 million to $50 million in equity each, with a maximum fund-level leverage of 65 percent.

Fund VIII is already the second-biggest vehicle in the firm’s Income & Growth series, behind only 2008’s Fund V, which closed on $729 million. LaSalle’s previous fund, 2016’s Income & Growth VII, gathered $511 billion.

As of June 30, 2018, LaSalle’s last three Growth & Income Funds had delivered net IRRs of 13 percent or higher. The net multiples for Fund VII, Fund VI and Fund V were 1.2x, 1.5x and 1.7x, respectively.

According to a summary compiled by NEPC for VCERA, Fund VIII will build its investment portfolio around three main demand drivers: aging population, human capital trends and consumer behavior. Specifically, it will seek multifamily assets in top school districts, modern offices in growing cities, distribution centers and high-traffic, non-luxury urban retail.