LaSalle Investment Management has raised US$370m (€318m) for a global decarbonisation real estate fund, attracting investment from California State Teachers’ Retirement System (CalSTRS) and the Development Bank of Japan (DBJ).
The LaSalle Property Planet Protection Fund (LP3F) will target buildings that require improvements in energy efficiency and carbon reductions while generating double-digit returns.
IPE Real Assets reported earlier this month that CalSTRS had committed $200m to the fund, but no further information was made available and LaSalle declined to comment at the time.
Today, LaSalle said the fund “intends to accelerate the delivery of a decarbonised solution for commercial real estate around the world, while providing institutional capital allocators with an investment product that strives to achieve accretive risk-adjusted returns”.
The fund will target double-digit value-add returns and a reduction of energy-use intensity of more than 30%.
LaSalle said it would adopt a retrofit-led ‘brown-to-green’ approach, including deep retrofits of vacant buildings and light retrofits where improvements are made with tenants remaining in place. A smaller portion of the portfolio may involve ground-up ‘build-to-green’ new developments.
Other investors in the fund include DBJ, an unnamed wealth management firm, a “large international pension plan”, and co-investment from LaSalle and its parent firm JLL.
Fund manager Ryu Konishi said: “Securing these initial foundational capital commitments to LP3F is a validation of the significant market opportunity presented by the transition to a more decarbonised global economy. It also speaks to the strength of investor appetite for real estate assets whose decarbonisation pathways align them with the Paris Agreement targets to limit global warming to 1.5°C and their faith in the LaSalle platform to manage transition and physical climate risks.
“With sustainability-related performance and investment returns becoming increasingly correlated, we believe that the launch of Lp3F will allow us to stay ahead of the curve and seek attractive risk-adjusted returns.”
Guy Grainger, global head of sustainability services and ESG at JLL, said: “We are thrilled with the strong commitments to LP3F. We are proud to be partnering with LaSalle to leverage our joint expertise to deliver best-in-class decarbonisation of real assets and drive investor value.”
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