LaSalle Launches $1 Bil Asia Opportunity Fund

LaSalle Investment Management is looking to raise $750 million to $1 billion for its latest Asian investment fund, LaSalle Asia Opportunity Fund V (LAOF V), following the successful deployment of $485 million under the previous vehicle in the series of opportunistic funds by the US-based real estate investment specialist.

The firm is targeting a first close of $300-$400 million in October, according to a statement from the company and LaSalle indicated that it already has a number of pending or executed commitments from existing institutional clients in North America and Europe totalling more than half of this target.

“I am delighted to announce the preliminary closing of the latest fund in the very successful Asia Opportunity series,” said Mark Gabbay, CEO of Asia Pacific at LaSalle Investment Management. He added that, “LaSalle’s current fundraise is testimony to the firm’s successful track record and deep experience in property investment in Asia-Pacific with an emphasis on asset enhancement coupled with the strength of our global client base.”

The fund’s first seed asset, the 76,653 square metre Kishiwada Cancan Bayside Mall near Osaka, Japan, was acquired in August, with LaSalle indicating it sees significant opportunity to reposition the asset after the shopping center lost its anchor tenant and occupancy fell to 50 percent.

New Fund Follows Familiar Strategies

Following the same value-add risk profile as its predecessor fund, which secured $1 billion in new equity for investment in property opportunities throughout Asia Pacific in 2014. Specifically, LAOF IV raised $100 million of co-investment capital for logistics investments in China.

LaSalle says the fifth in its Asia Opportunity series will seek to take advantage of mispriced assets with opportunities to add value via repositioning and redevelopment. Target markets include Japan, Australia, China, Singapore and Hong Kong, and the company mentioned investments in the logistics markets in China and Korea, as particularly of interest. The Chinese logistics sector is drawing a lot of attention with Carlyle Group revealing they are actively seeking opportunities for warehouses, which are in short supply in China.

While no specific commitments for logistics have been announced, many of the same favorable conditions, namely high yields, depleted supply and real demand, are still to be found in China. LaSalle pointed out that investment yields for warehouses stand at 8 to 9 percent in the country’s Tier 1 and Tier 2 cities.

Apart from the emphasis on logistics, the fund will also focus on income producing properties in Japan and Australia that require active asset management plans and allow LaSalle to leverage its retail operational ability.

LaSalle Sees Asia as a Stable Haven

With the hysteria surrounding the Brexit causing investors to reconsider their plans in the UK and EU, Asia’s comparatively stable property markets could be more enticing, especially since the fallout isn’t expected to trouble the region.

“If more volatility or uncertainties arise in other parts of the world, Asia Pacific’s relatively stable collection of nation states and treaties could be viewed more favorably by international investors,” Elysia Tse, Head of Research and Strategy for Asia Pacific at LaSalle, told Mingtiandi last month.

LaSalle also noted that there are several trends in the Asian property market, including solid growth in rents, potential capital value appreciation over the near term and the rising demand for core assets in the region, that make it compelling for investors.