The Chicago-headquartered firm initially targeted $1.5 billion for Fund VI, according to a release seen by PERE. No official hard-cap was set for the fund. The vehicle becomes the second largest in the series, after LaSalle Asia Opportunity Fund III took $3 billion in 2008, according to PERE data. The firm raised just over $1.1 billion for Fund VI’s predecessor, LaSalle Opportunity V, in 2018.
The firm received commitments from California State Teachers’ Retirement System, Teachers’ Retirement System of the State of Illinois and Los Angeles Water & Power Employees Retirement Plan, all existing investors in the series. New commitments represented 34 percent of the capital, with an increase in share from investors in APAC and Europe, according to data provided by LaSalle.
The increase in interest from Asian investors came as a surprise, Mark Gabbay, global chief executive officer told PERE in an exclusive interview. Asian investors can take a while to get comfortable with global managers that invest in the region. Seeing that validation was a big positive for the vehicle, he added.
The full total has been boosted slightly by the firm’s employee co-investment scheme.
Fund VI is the first time LaSalle has expanded the program to include every employee who meets SEC requirements, as opposed to just senior executives and those involved with the fund, PERE reported last year. The firm raised $46 million from the program in the latest fund, expanding from 18 employees invested in Fund V to 200 employees invested in Fund VI.
“We’re looking forward to using that same strategy in some of the other value-add funds,” Gabbay said.
The firm’s success on this fundraise comes at a time of transition in its leadership. The fundraise was the first in the Asia series post-global financial crisis not to be overseen by Gabbay, who has since been promoted to global CEO from his joint Asia CEO/chief investment officer role. The fund’s investment strategy is now looked after by Kunihiko Okumura and Claire Tang. Okumura is mainly focused on Japan, while Tang is responsible for the rest of the investments on the continent. Marc Montanus serves as the fund manager.
Okumura has worked on the fund for 10 years and Tang has done for 12 – this tenure gave returning investors a feeling of comfort with the new offering, Gabbay said.
“We laid the groundwork for that pretty clearly and communicated with our investors about what was happening,” he said.
The continuation of a long-tenured team does not mean a complete continuation of the strategy of past funds, however. The firm invested almost three-quarters of Fund V in Japan and China, Gabbay said. In the latest fund, there are decreases in the target range to facilitate an increase in investment in Singapore, South Korea and Australia, which could each increase by as much as 5 percent of overall exposure.
In South Korea and Australia, that will primarily be in logistics. Online shopping continues to penetrate in Korea, driving demand for the properties that facilitate it. E-commerce market growth is forecasted to grow by 14.5 percent this year and 13.7 percent in 2023, according to a report from Colliers. The Australian logistics market is projected to grow 5.85 percent year-over-year, reaching a valuation of $114.3 billion by 2027, according to a ResearchandMarkets.com report from February.
In Singapore, the firm is primarily targeting office. It will do the same in its core market of Japan. The work-from-home culture is not as prominent in Asia generally, Gabbay said, maintaining office as a viable asset class.
In China, LaSalle will look to invest more in the growing multifamily sector. It has mostly focused on industrial properties in the country before this fund. High levels of urbanization, a growing population of migrant workers and valuations pricing out residential buyers and leading more people to rent are creating a confluence of factors strengthening the asset class in the region, according to Funlive, a Chinese multifamily operator and manager.
“We think it is [getting] more and more defensive,” Gabbay said of multifamily in China.