Mark Gabbay, CEO of Asia Pacific at LaSalle Investment Management
LaSalle Investment Management, the US-based real estate investment firm, is boosting the fundraising target for its Asia Opportunity V Fund (LAO V) amid strong demand from institutional investors for the region’s property assets.
Launched in August of last year, LAO V has secured $335 million in capital commitments, with pending commitments that would bring the total raised to $700 million, according to a statement by the company. LaSalle now expects the final fund size to surpass its initial target of $750 million with the goal of reaching a full $1 billion in capital.
LaSalle Piles Up Capital for Value-Add Deals
LAO V is the fifth in LaSalle’s series of closed-end, pan-Asia opportunistic vehicles. Like its predecessor fund, LAO V targets mispriced assets that can be repositioned and redeveloped to add value, while taking on a limited amount of development risk focused on logistics markets in China and South Korea. The fund seeks to capitalize on the trends of solid rental growth and rising demand for core assets in Asia.
“We are pleased with the depth of institutional demand for our opportunistic fund product in the region, as it highlights the successful track record we’ve built in recent years in deploying capital and generating strong investment performance for our clients,” commented Mark Gabbay, CEO of Asia Pacific at LaSalle. “We look forward to building additional momentum for this fund, and expect global investor demand to remain strong.”
LAO V’s target markets include Japan, Australia, China, Singapore, Hong Kong and Korea. As of March, LaSalle had $7.8 billion of assets under management in Asia Pacific, of which Japan accounted for $5.34 billion (68.5 percent of the regional total) and China comprised $330 million (4.2 percent), according to a Reuters report.
The fund is a successor to the LaSalle Asia Opportunity Fund IV (LAOF IV), which committed $485 million with a similar strategy and risk profile as LAO V. LaSalle expects the predecessor fund, which had its final close in August 2014, to significantly exceed its target net return of 18 percent.
LaSalle has made about 150 investments totalling over $10 billion on behalf of its LaSalle Asia Opportunity Series. The firm, a unit of NYSE-listed Jones Lang LaSalle, has 161 personnel in Asia, with offices in LAO V’s six target markets.
Asian Private Equity Real Estate Continues to Heat Up
LaSalle’s fundraising success comes amid a wave of global capital chasing Asian real estate in search of stable yields. Singaporean private equity real estate shop SC Capital Partners is said to have launched a $1 billion real estate fund targetting major markets in Asia Pacific earlier this month.
Gaw Capital closed its Gateway Real Estate Fund V this past April at $1.3 billion with a sidecar co-investment of up to US$500 million, marking the Hong Kong’s firm’s largest fund to date. The new vehicle is aimed primarily at gateway and secondary cities in Greater China, with selected investments in Japan, South Korea, Southeast Asia and Australia.
In January, US private equity behemoth Blackstone was reported to be planning a new pan-Asian real estate fund of at least $5 billion focused on warehouses and shopping malls in China, India, southeast Asia and Australia. The vehicle would build on the asset manager’s current $5 billion Blackstone Real Estate Partners (BREP) Asia that closed in 2014.
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