LaSalle Investment Management on Wednesday announced the acquisition of two warehouses in Icheon on behalf of a Korean logistics joint venture between the firm and an unnamed Middle Eastern sovereign wealth fund.
The warehouses are run by LaSalle’s Logiport logistics arm and have a combined gross floor area of 53,942 square metres (580,627 square feet). They are 65 percent occupied and are anchor-tenanted under a long-term lease by one of the largest third-party logistics operators in South Korea, LaSalle said in a release.
The investment management affiliate of JLL also disclosed that it made a high-yield loan earlier this year on behalf of its LaSalle Asia Opportunity VI fund to finance the acquisition of a land plot valued at KRW 116 billion ($89 million) in Seoul’s Seongsu district. The unidentified borrower is set to develop a 21,421 square metre office building on the site.
“We are finding attractive risk-adjusted entry points into deals whether investing through equity or through debt, while still targeting the property sectors and locations we maintain conviction on,” said Steve Hyung Kim, senior managing director and head of Korea at LaSalle.
Newly Built Warehouses
The pair of sheds in Icheon’s Bubal district, dubbed Logiport Bubal Center-1 and Logiport Bubal Center-2, were built between 2021 and 2022. Situated in the southeastern corner of Greater Seoul, the warehouses offer occupiers access and connectivity to South Korea’s dense and online-connected consumers, LaSalle said.
The 10-storey office project in Seoul is expected to break ground this year and finish construction in the first quarter of 2026. The borrower of the collateralised loan has a track record of developing, leasing and selling similar investments, and this will be its fourth office project in Seongsu district.
The Seoul office market has bucked the prevailing trend in other global cities that are pivoting towards some form of work from home, according to JLL Korea, which reported an average office vacancy rate across the capital of 1.1 percent in this year’s first quarter.
“Widened credit spreads have allowed us to execute high-yield secured debt financings on behalf of our opportunistic strategy; and in the logistics sector near to mid-term with the new supply headwinds, we will also selectively invest in recapitalisation situations as the market de-levers from vintage loans maturing against unstabilised projects,” Kim said.
Loaded for Bear
LaSalle announced last year that it had raised more than $2.2 billion in equity for its LaSalle Asia Opportunity VI fund, handily exceeding the firm’s initial target of $1.5 billion.
LAO VI is the sixth in LaSalle’s closed-ended opportunistic fund series focused on Asia Pacific, which seeks to take advantage of mispriced assets with opportunities to add value through repositioning and redevelopment in the region’s key markets.
The vehicle was enriched by a $300 million commitment in the second half of 2021 from the California State Teachers’ Retirement System, which manages a $318.1 billion investment portfolio on behalf of public school educators in America’s biggest state. The support from CalSTERS came around the same time that the fund obtained a $200 million commitment from the Teachers’ Retirement System of Illinois.
Chicago-based LaSalle managed more than $79 billion in assets across private and public real estate property and debt investments as of the fourth quarter of 2022.