LaSalle Investment Management has seen its separate account business grow strongly in Europe since the outbreak of the global financial crisis.

LaSalle Investment Management has seen its separate account business grow strongly in Europe since the outbreak of the global financial crisis.

Since 2008, the global separate account business has increased by no less than 70% but in Europe the growth has been even stronger at some 150%, the company’s European CEO Simon Marrison told PropertyEU.

The UK has traditionally been the mainstay of LaSalle IM’s separate account business in Europe and continues to account for the bulk of recent expansion but mainland Europe is catching up, Marrison said, pointing to growth figures of 80% in the last eight years.

New mandates
Over the summer, the Chicago-based investment manager won a mandate to invest in real estate in the eurozone on behalf of Swiss pension fund Testina which represents public-sector employees in the city of Zurich and Migros staff among others. The investment manager, which is part of global advisory firm JLL, has also recently landed mandates to invest indirectly in real estate via core and core-plus vehicles on behalf of two Italian institutional investors, the pension fund for the postal sector Poste Vita and Inarcassa, the pension fund for engineers and architects.

LaSalle IM also counts French public service supplementary pension scheme ERAFP and the €65 bn Bavarian umbrella pension scheme as key separate account clients. In 2013 it won a €500 mln global investment mandate from BVK, marking a first for both parties. The mandate was subsequently doubled to €1 bn. The Bavarian pension scheme acts on behalf of self-employed professionals including doctors, lawyers and architects.

A recent report by fund data provider Preqin revealed that capital invested in private real estate separate accounts reached an all-time high in 2014. In total, investors awarded some $17.8 bn (€16.6 bn) to 45 private equity real estate separate accounts throughout 2014, the highest annual amount on record. This is up from the $16.1 bn awarded to 48 real estate separate accounts throughout 2013. Indeed, investor appetite for separate account use has been growing steadily in recent years, with 29% of real estate investors globally looking to invest in separate accounts as of the end of 2014, compared to 21% of investors as of the end of 2011.

Control
Since the GFC, LaSalle IM and many other major investment managers have seen their separate accounts business grow at the expense of their pooled investment funds. But LaSalle IM's global CEO Jeff Jacobson believes that change is on its way. ´Since the Global Financial Crisis, some people decided that funds were terrible and that they want control. The pendulum swung in one direction with an emphasis on control, but it is swinging back towards a more balanced and nuanced assessment of the optimum ways for different investors to access the real estate market. This is particularly true when investors seek to access new sectors or invest cross-border.’

Some investors don’t necessarily start by wanting a separate account, they are simply interested in attractive deals, added Jon Zehner, global head of capital markets. ‘What is beginning to happen is that individual deals may morph into separate accounts and other things in some cases. This type of one-off deal approach to investing is a way of doing business that’s new to us, and most of our competitors as well. We’d be lying if we said we have it totally figured out, but it’s an interesting dynamic and a new phenomenon post-GFC.’