LaSalle IM Teams with Korea’s NPS for $64M Prague Office Acquisition

LaSalle Investment Management has bought a prime office complex in Prague from Slovakia’s IAD Investments for approximately 57 million euros ($63.8 million), the companies announced last week. The US-based real estate investment specialist is making the acquisition on behalf of its LaVA (LaSalle Value Add) mandate, a limited partnership serving Korea’s National Pension Service (NPS), according to a filing with the British government.

The transaction comes as NPS, which with $430 billion in assets is the world’s third largest pension fund, looks to expand its overseas allocation by nearly 11 percentage points to 35 percent in the next four years.

The acquisition is the first deal publicly announced by the LaVA investment vehicle, which has a total equity commitment of 300 euros ($335.8 million). The mandate focuses on well-located properties of all types (excepting hotels) in the UK, France and elsewhere in Europe that can be upgraded or repositioned into core assets.

LIM Heads into Central Europe

Completed in 2012, the eight-storey River Garden I features 16,593 square metres of Grade A office accommodation, along with retail and storage space. The property, which LaSalle says is fully leased and includes international tenants, is located about 100 metres from the nearest subway station in the Czech capital’s former industrial hub of Karlin. The area has emerged as an important office district and hip cultural enclave since it was nearly destroyed by flooding in 2002, and has a number residential projects under development.

“This is the first acquisition by LaVA in the Czech Republic and it represents an excellent opportunity to acquire flexible, high quality office space which can be developed. The acquisition further underlines our confidence in the Karlin office market as we acquired River Garden II – III at the end of last year on behalf of another fund,” said Chris Zeuner, head of acquisitions for Northern, Central and Southern Europe at LaSalle Investment Management.

This past January, it was reported that the investment manager had partnered with  London-based Aviva Investors to scoop up the adjacent River Garden II and III office buildings for 84 million euros ($94 million) on behalf of LaSalle’s pan-European fund Encore+. The acquisition is among the 220 million euros ($246.3 million) that LaSalle says it has invested in Prague on behalf of the funds it manages, prior to the most recent deal.

Korean Pension Fund Plans 30% Boost in Outbound Deals

The Prague deal marks the latest overseas investment by Korea’s NPS, which has made some $8.2 billion worth of overseas acquisitions since 2009, according to data firm Real Capital Analytics. Like the country’s other big public funds, including the Government Employees Pension Service and Korea Teachers Pension, NPS is shopping for global real estate assets to boost returns as a rapidly aging population puts pressure on the nation’s retirement funds.

NPS, which has an investment portfolio of around $495 billion, plans to increase the share of overseas assets from 24.3 percent in 2015 to 35 percent by 2021, Reuters reported in March 2016. Last September, NPS joined a consortium of investors that included China Investment Corporation to purchase the Port of Melbourne for a total of A$9.7 billion ($7.3 billion).

LaSalle, which manages about $58 billion of assets worldwide as of the end of 2016, says that South Korean institutional players have committed over $2 billion in equity to the company’s vehicles globally over the last four years. At the end of last month, Korea Teachers Pension committed $50 million to LaSalle’s Income & Growth VII fund focused on value-add real estate assets in the US, alongside an unnamed Japanese institutional investor.