LaSalle IM sets up Dutch unit

LaSalle Investment Management is deepening its footprint on mainland Europe with a new office in the Netherlands where it recently appointed Diederik de Bakker to head the Dutch operations.

The Dutch business is a template for other growth markets in mainland Europe, according to Andy Watson, who was appointed chief investment officer for continental Europe earlier this year. ‘In the Netherlands we have been able to buy core buildings at core plus prices and there have so far been a relatively limited number of bidders. What we’re seeing now is that the market is recovering but that some investors are struggling to get product.’

The new Dutch country head is charged with doubling AUM - currently at over €400 mln - in the country over the next 18 months, notably in residential. ‘We have been trying to grow efficiently and we did well in the Dutch market. With resources based in Paris, Munich and London, we acquired seven assets for a total of €300 mln in 2013-14. Now we are stepping up a gear with local resource based in Amsterdam,’ Watson said.

Aside from a residential portfolio acquired at the beginning of this year in Maastricht, LaSalle has bought logistics assets in Venlo (Geodis), single-let offices in The Hague and Amsterdam; and a pair of canal houses in the Dutch capital.

Real estate finance
The investment manager's debt and special situations team has also put the Benelux on its agenda, a spokesperson confirmed. While the focus is Dutch debt investment, LaSalle also has the capacity for re-development and development finance.

According to Amy Aznar, head of debt investments and head of special situations, the fund manager is currently supporting some 'capable' sponsors who are purchasing and refinancing high-quality real estate. 'Our approach is selective, and transaction volume is significantly lower than other places such as the UK, but there is less banking competition in the Netherlands which enables non-traditional lenders to fill an interesting gap.'

Watson added that he was seeking to repeat the Dutch model in parts of Southern and Central Europe in particular. ‘Central and Eastern Europe sounds an enormous zone, but what we want to do is quite specific. We will be focusing specifically on Prague and Warsaw for offices and strong retail throughout Czech and Poland.’

The new investment targets are linked to the growth of LaSalle's separate mandates business. Just over 18 months ago, it received a ‘standby’ mandate from French public service supplementary pension scheme ERAFP, Watson said. ‘The mandate has been active since the end of 2014 and we will be exporting French capital around Europe in the course of this year. Where to? Germany, the Netherlands, and Italy are all on the list.’

In 2013 LaSalle IM won a €500 mln global mandate from German pension fund BVK which was subsequently doubled to €1 bn. French institutional capital is different to German, Watson said. ‘One of the interesting knock-on effects of the economic crisis is that for the first time French investors are looking to diversify. After years of good domestic performance, it’s harder for them to get decent returns at home so they’re now starting to target other countries.’

Not great travellers
While French hypermarkets such as Carrefour and Auchan are active throughout Europe, French real investors have not generally been great travellers, Watson said. ‘French investors tend to be more conservative and home based. But the financial crisis and anti-business regulation has provided an impetus to diversify. A growing number want to invest in the eurozone, somewhere which feels nice and simple to them, like Germany.’

LaSalle is seeking to source more capital from institutional investors in Germany and France, Watson said. The Germans have been exporting capital regularly over many years, he added. ‘We obtained a KVG licence in 2011. The up-front investment was considerable at the time, but since then the business has grown and grown. In retrospect it has proven to be the right strategy.’

Watson is hopeful that LaSalle IM will get more capital from European institutional investors to ‘travel’ both inside and outside Europe. ‘The French are a great source of capital. The Italians have also got passports to travel, particularly the pension funds for Italian engineers and architects. These are being managed by the indirect team out of our UK office. We also have a foot in the door with other sources of capital wanting to start exporting. In Spain we have commitments from pension funds that want to come into our institutional products. The sources of capital (for our separate mandates) are broadening and gaining momentum.’

Separate accounts are ‘hugely important’ to LaSalle IM, Watson said. ‘We live and die by the performance of our investments on behalf of separate accounts. That’s why we have a strong commitment to client service. Being faithful to our clients is part of the LaSalle/JLL DNA.’