LaSalle Investment Management has held the first close for LaSalle Real Estate Debt Strategies IV, the fourth fund in the company’s Real Estate Debt Strategies series, with €435 million ($512.6 million) of aggregate commitments.
This first close reportedly puts the fund on track for achieving a total capital raise of €1 billion ($1.18 billion). The commitments, LaSalle said, came from both existing clients to the LREDS series and new clients, and from a broad range of European and Asian pension funds and insurance companies.
The investment strategy for LREDS IV focuses on mezzanine debt investments secured by real estate across Western Europe, with a focus on Germany, the Netherlands, U.K., France and Spain. The strategy seeks “compelling risk-adjusted returns with downside protection and high cash-on-cash yields,” according to a prepared statement.
Ali Imraan, managing director and fund manager for LREDS IV, said in the prepared statement that the company is seeing compelling opportunities, given that the traditional banks remain relatively cautious, while being able to wait and take advantage of any dislocation opportunities that arise from the current uncertainty. LaSalle could not be reached for further comment as of press time.
Active in a troubled market
LaSalle’s European Debt & Special Situations platform has been investing across both traditional asset classes (office, logistics and residential) and alternative asset classes (student housing and self storage). Since 2010, the platform has committed €3.4 billion ($4.0 billion) to investments across 78 transactions.
The pandemic has caused not only a downturn in commercial real estate across Europe, but has caused a larger fall in investor and occupier sentiment there than in other world regions, according to a second-quarter survey from the Royal Institute of Chartered Surveyors.
No surprise, the outlook for retail space is especially negative, with expectations that rents and capital values will see double-digit annual decreases in secondary markets across Europe. As it typically has been in the U.S., industrial space in Europe is seen as much more resilient, with lease rates for prime space projected to hold steady over the next 12 months.
So far this year, LaSalle has: