LaSalle Investment Management has moved into the US property debt sector with the acquisition of Latitude Management Real Estate Investors (LMREI).
The $60bn real estate manager has agreed to buy an 80% stake in the $1.2bn debt fund business of LMREI. The senior management team of LMREI will retain a minority ownership position.
Following completion, which is expected in the first quarter of next year, the LMREI debt business will join LaSalle’s $21bn North America private equity platform.
The debt fund business will continue to be managed by its existing team and operate under the same structure, LaSalle said.
LMREI provides short-term, floating rate loans against middle-market commercial real estate assets owned by sponsors seeking targeted real estate solutions. The company’s primary focus has been originating new bridge loans for value-add and transitional properties in sustainable growth markets throughout the US.
LMREI has managed a series of debt funds, the most recent being the $480m Latitude Management Real Estate Capital IV, a vehicle backed by US pension funds Ohio Bureau of Workers Compensation Fund and Employees Retirement System of Texas.
Jason Kern, LaSalle Americas CEO, said: “This transaction is mutually beneficial for both firms, with LaSalle gaining a market-leading capability and track record in a debt product that is highly desirable to domestic and foreign investors, and Latitude gaining access to the scale and resources a global firm like LaSalle can provide.”
There continues to be a substantial amount of debt financing volume in the US commercial real estate market, Kern added.
“Importantly, Latitude’s lending model targets a differentiated market segment that has enabled them to grow significant share in the value-add, transitional asset space, while avoiding the risks associated with development lending or higher leverage strategies.
“We think their debt strategy is a perfect complement to our range of real estate private equity offerings in the U.S., as well as our existing European debt platform. We look forward to welcoming our new colleagues and are excited about the growth prospects ahead,” Kern said.
Glenn Sonnenberg, Latitude President and CEO, said: “LaSalle enhances the professional expertise our clients have come to expect, and possesses a similar client-focused culture that we have striven to maintain at Latitude.
“They are like-minded in their view of investment management, singularly focused on the pillars of client service, rigorous underwriting and delivering stable risk-adjusted returns. Our entire team is enthusiastic about the capabilities and momentum associated with this partnership.”