UNITED STATES - The recent capital raising by LaSalle Investment Management for its Income & Growth Fund V is further proof that pension funds in the United States are not as keen to move capital into real estate.
The real estate manager raised $728m (€461.6m) of equity for the commingled fund - short of the $750m it had targeted before the fund raising began.
Many US pension funds are now investing substantially less capital in real estate at present because of the uncertainty of the real estate markets and of the overall economy.
LaSalle is planning to put up to 65% leverage on the commingled fund, to give the firm total buying power on the fund of around $2bn over three years.
One of the investors in the commingled fund was the Indiana State Teachers Retirement System, and it made a $45m contribution to the fund.
Investors in the fund are projected to achieve a net return of 12-14%, as the return factors in a five-year holding period.
There is one asset in the fund at this time: a 700-unit apartment complex in Gaithersburg, Maryland, acquired for just under $100m.
The value-added nature of the complex is to physically improve it and increase the rents in the near future.
Elsewhere within the fund, LaSalle will be investing in all four of the majority property types and deals will be considered nationwide in the major metropolitan areas, looking specifically at growth and recovery markets.
The strategy requires the firm to buy high quality and well-leased properties as they will need to produce high levels of current income and improve the income over time through a focused property and leasing upgrade program.