BVK mandate marks a first for La Salle Investment Management

The €500 mln investment mandate extended to LaSalle Investment Management by Germany's largest pension fund BVK marks a first for both parties, Andy Watson, LaSalle’s managing director for Continental Europe, told PropertyEU.

‘It is the first genuinely global separate account for BVK but also for us. BVK wants diversity above all and we were able to pull together our world platform with our team from Europe, America, Japan and Australia in a fabulous pitch,’ he said.

Good chemistry between the BVK and LaSalle teams in Munich also helped, he added. ‘We were able to join up the right people in the right areas. LaSalle has a local and a global presence. It’s something of a cliché, but it does work.’

Last summer, LaSalle Investment Management announced BVK had mandated it to seek real estate investment opportunities across all property types, various risk profiles, capital structures, and geographies. The €55 bn Bavarian umbrella pension scheme acts on behalf of self-employed professionals including doctors, lawyers and architects.

The first investment is expected to be made this year.

The negotiations for the investment management agreement (IMA) were initiated at the end of 2012, but the final details of the contract were not settled until last month. Finalising the legal issues can be time-consuming, Watson conceded. LaSalle’s investments on behalf of BVK will be channelled through its German KAG vehicle and the administrative details needed to be ironed out first, he explained. But the machine is already rolling, he added. ‘We have already put bids out in Japan, Canada and Australia.’

Focus on UK and France
A portion of the BVK mandate - 20% - will be spent in Europe, but not in the first phase, Watson said. The European focus will be primarily on retail and logistics in the UK and France as BVK already has a strong presence in the European office sector.

In the first half of 2013, LaSalle Investment Management raised almost $3 bn of capital globally, and $1.8 bn (€1.4 bn) during the second quarter alone.

The capital was primarily raised from private equity commitments, Jones Lang LaSalle said in a statement coinciding with the presentation of the company's second-quarter figures earlier this month.

Watson expects more separate mandates will follow, also in Europe, but declined to give further details. ‘This is definitely where the action is,’ he said.

Almost half - or 45% - of the figure raised in the first half is targeting Europe, he said. The landscape is also broadening in terms of countries targeted, he added. ‘Between 2009 and 2012 France and Germany were pretty much the only Continental markets where we were putting out bids. As investors seek to diversify, we’re widening our sights now and have submitted LOIs this year in Spain, Italy, the Netherlands and Central Europe.’

With a large number of closed-end funds coming to maturity and selling off assets, product is becoming more readily available, he added.

National differences
LaSalle is well-positioned to facilitate pan-European investment programmes, Watson said. ‘Pan-European property investment is not an easy thing to do,’ he said, pointing to the different property jurisdictions and tax issues. ‘Only the bigger houses can afford the expense of keeping up with the latest changes to tax laws and other regulations. We have a licence for a KAG vehicle in Germany and an OPCI vehicle in France, which is an investment in itself. You also have to keep working at them and make sure you’re working with the regulations. That ability will be one of the big differentiators.’

In his new position as managing director for Continental Europe, Watson aims to bring the European business closer together. From his base in Paris, he will also oversee the rapidly evolving Germany business. ‘The goal is to grow the business and one of the first objectives to this end is to better unite the people on the ground in France, Germany, Spain and Czech’

In early August, JLL reported that assets under management at LaSalle Investment Management totalled $46.3 bn as of June 30, 2013, down 2% from $47.7 bn in the previous quarter. JLL attributed the decrease primarily to foreign currency movements.

Personal profile
Andy Watson has been appointed managing director for Continental Europe at LaSalle Investment Management. Based in Paris, he will be responsible for business development and progressing growth initiatives across the region including Southern and Central Europe, while continuing the recent strong momentum LaSalle has gained in driving synergies across its European platform, particularly in Germany and France.

Watson has 23 years of real estate experience in Continental Europe, having worked in Berlin, Frankfurt and Paris. He speaks German and French fluently, in addition to his native English. Watson will continue to report to Simon Marrison, CEO Europe. Watson has been a key member of LaSalle's senior management team in Continental Europe since he joined in 2004.

In January 2010, he was appointed head of Core Funds for Continental Europe and was promoted to president of LaSalle France in November 2011. He is a member of the LaSalle European Management board and SFS (Europe).