LaSalle plans $1bn China logistics fund debut – Exclusive

A year after closing on $1.15bn for its latest Pan-Asia opportunity fund, the Chicago-based manager is looking to raise another billion for logistics in China.

LaSalle Investment Management, the Chicago-headquartered real estate manager, is planning to launch its debut logistic fund in China, according to PERE sources.

LaSalle declined to comment, but PERE understands that the China Logistic Development Fund has a target of $1 billion and is expected to come to the market before the end of this year. The fund is seeking 16 percent net return, according to the sources.

Despite already being an active investor in China logistic, this is LaSalle’s first dedicated discretionary logistic fund vehicle in the country. It has traditionally invested in China via partnerships and its regional, blind-pool funds.

Last year, the manager formed a $300 million joint venture with local developer China Logistic Property Holdings (CNLP) to invest in warehouses in China. The partnership with CNLP gave LaSalle certain preemptive rights to CNLP’s development projects and assets, according to a statement. CNLP announced that it would be the asset manager and would invest up to $90 million in the joint venture.

Listed in Hong Kong, CNLP had developed 65 logistic parks in China as of December 2018.

In addition to joint ventures, LaSalle also has invested in Chinese logistic through its Pan-Asia opportunistic funds. LaSalle Asia Opportunity V (LAO V), the latest vehicle in the series, reached a final close of $1.15 billion in April 2018, exceeding its initial target of $750 million. The fund also has a greater allocation in China than its predecessors – potentially more than a quarter of its equity can be invested in the country, according to a previous report by PERE.

According to PERE sources, the firm’s logistic investments in China have seen an average return of mid-20 percent IRR.

Despite the on-going US-China trade war, real estate brokerage Colliers expects demand for logistics real estate will continue to be strong as domestic consumption will be the major drive to support the country’s GDP growth, according to a report published in November 2018. The same report points out that China’s domestic consumption accounts for 39 percent of total GDP.