LaSalle Investment Management has secured $80 million worth of fresh capital commitments from two US public institutions in support of the LaSalle China Logistics Venture fund.
The Texas Permanent School Fund, a sovereign wealth fund that provides education revenue in the second-biggest US state, has pledged $50 million to LCLV, the Chicago-based fund manager’s first dedicated China logistics vehicle, according to a recent account on IPE.com.
Meanwhile, the Sacramento County Employees Retirement System, a pension fund serving the area around California’s state capital, chipped in $30 million during this quarter to LCLV, which is targeting a fund size of $1 billion, according to figures in an August report of SCERS’s investment activity.
LaSalle, an independent affiliate of property services firm JLL, raised $681 million for LCLV’s first closing last year, seeding the non-core fund with two development sites in the Shanghai area, plus one stabilised asset each in Wujiang (Jiangsu province), Huizhou (Guangdong province) and Tianjin.
Casting a Wider Net
In announcing last year’s first closing, LaSalle said LCLV had attracted a diverse mix of investors from Europe, the Middle East and Asia.
This time around, the fund tapped North American sources in the form of the Texas PSF, which had assets under management of over $48 billion as of August 2020, and SCERS, which managed $11.5 billion as of December 2020.
In other regional moves, the Texas PSF invested in KKR’s Asia Real Estate Partners fund last year, Hong Kong-based PAG’s Special Situations Fund III in 2019 and Blackstone’s Real Estate Partners Asia II in 2017, contributing $75 million to each vehicle.
SCERS’s regional investments have included commitments to Carlyle Group’s 2017-vintage China real estate strategies, including $40 million to Carlyle China Project Rome Co‐Investment and $10 million to Carlyle China Realty.
Key Regions Targeted
The two development projects in LCLV’s initial portfolio are located in Jiaxing, just south of Shanghai in Zhejiang province, and Kunshan, an industrial hub west of east China’s largest city in Jiangsu.
The fund is targeting locations in first- and second-tier cities in China’s key logistics regions, including the Yangtze River Delta, the Bohai Bay area near Beijing, and Guangdong in southern China. The goal is to develop a diversified portfolio of distribution facilities in top markets in order to capture attractive development margins, according to LaSalle.
The fund manager sees the opportunities in China’s warehouse real estate sector as being driven by increased spending by mainland consumers and especially the revolution in online shopping.
“Growth in domestic consumption, and e-commerce in particular, will continue to boost demand for modern logistics properties,” Claire Tang, head of Greater China at LaSalle Investment Management, said last year in announcing the fund’s first closing.
LaSalle has completed more than $1.5 billion in China warehouse deals since 2008. Worldwide, the firm manages $73 billion worth of assets in private equity, debt and public real estate investments.