LaSalle Investment Management is seeking fresh capital for its evergreen US real estate debt strategy, having raised an initial $700m (€603m) at its launch last February.
The manager expects to deploy between $2bn and $3bn of investor equity over the medium term, predominantly into multifamily and multi-tenant industrial properties in US growth markets and gateway cities.
Brad Gries, LaSalle’s CEO, told IPE Real Assets: “Our deployment pace has been stronger than anticipated and so we are backbooking to deploy the next round of capital.”
Gries explained that under the evergreen open-ended structure, it would not have been prudent to take on more capital until it had made progress on the deployment of the initial raising.
“The LaSalle US debt strategy is focused on core-plus first mortgage debt positions that provide reliable, strong income. There’s no upside participation in those, but you’re getting your return through income that exceeds what we expect equity to return, at least in the next couple of years.”
Compared with equity investment, he said debt was “a very risk-off position”. “Let’s say values are broadly down 20% but we are protected because we are investing at 65% loan-to-value ratio.”
The typical size of its loans is $25-$75m on three-year terms. Gries said: “We will recycle that capital. Which is also important from a liquidity standpoint for an open-ended fund, is that as you ladder out your originations, you’re also laddering out your maturities.
“And therefore, once you get seasoned in the fund, you’ve constantly got loans that are maturing, that are paying you back, and if you have a need for liquidity, you’ve always got it through those loan paybacks,” he said.
Although the LaSalle US open-ended debt strategy is its first globally, the manager has a long history of running commercial real estate credit in close-ended vehicles. Over more than two decades, LaSalle’s US debt team have completed more than $6bn in first mortgage transactions.
The new strategy has replaced the closed-end vehicles in the US but continues to offer the latter in Europe.
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