LaSalle’s Europe debt fund collects $110 mn from three Korean investors

The Military Mutual Aid Association, the Employment Insurance Fund and an unidentified South Korean institutional investor have committed a total of $110 million to LaSalle Investment Management’s 804 million-pound ($1 billion) debt fund focusing on the UK and western Europe.

LaSalle said on Nov. 21 that it had closed the LaSalle Real Estate Debt Strategies III (LREDS III) platform with commitments from 17 institutional investors across the Middle East, Asia and Europe.

It targets a return of around 10% before fees, according to industry sources.

The US-based real estate investment firm began the fundraising in October last year and increased the cap to 800 million pounds from 750 million pounds with a big commitment from a global investor.

But the commitments from South Korea are short of its target of up to 300 billion won ($274 million).

Sources declined to give the reason and to break down the commitments from the three South Korean institutions.

The vehicle lends whole loans or mezzanine loans backed by real estate in the UK and western Europe. They tend to deliver higher returns than senior notes, filling the void created by the retreat of banks from high-yield loans.

“With Europe tightening banking regulations, real estate investment firms are aggressively pushing for real estate lending, targeting up to 10%-range IRR,” said an investment banking source.

LREDS III has initiated lending tens of millions of euros, including subordinated facilities, on a student housing project in Spain, a shopping center in England and a designer outlet in Scotland.

Year to date, LaSalle has collected 1.1 billion pounds in aggregate for its two debt funds, including 260 million pounds for LaSalle Residential Finance III (LRF), a lending vehicle for residential property assets.

Simon Marrison, CEO of Europe for LaSalle Investment Management, said in a press release in May that real estate lending is one of its most secure income yielding strategies in a low-interest rate environment.

He added that in the UK, the partial retreat of traditional lenders from development finance and higher loan-to-value loans will continue to generate opportunities for non-traditional real estate lenders.

LaSalle, part of real estate consulting company Jones Lang LaSalle, managed $59 billion in assets as of end-June, 2017.

By Daehun Kim

daepun@hankyung.com

Photo: Getty Images Bank