LaSalle Investment Management Inc. is seeking $1 billion for the latest iteration of its flagship U.S. real estate fund, according to people with knowledge of the matter.
The fund, the eighth of a series driven by a so-called value-add real estate investing strategy, will be known as LaSalle Income & Growth Fund VIII. It’ll target returns of 10 percent to 15 percent after fees, according to the people, who asked not to be identified because the fundraising is private. A LaSalle representative declined to comment on the eighth fund.
The value-add strategy involves improving properties through “a combination of capital upgrades, creative property repositioning and active leasing,” according to a presentation about the seventh fund made to the Contra Costa County Employees’ Retirement Association in September 2016.
If the $1 billion target is met, the new vehicle will be roughly double the size of the seventh iteration of the fund, which raised $510 million and closed in 2017. The seventh fund has spent roughly 80 percent of its capital, according to one of the people. Its recent investments include multifamily properties in Austin, Texas; an office tower in Chicago; and the real estate associated with a Restoration Hardware store in Atlanta.
LaSalle, the asset-management arm of Jones Lang LaSalle Inc., oversees almost $60 billion on behalf of clients and has been fundraising in other regions too. Earlier Monday, it said it has raised $1.15 billion for its fifth fund dedicated to opportunistic real estate investments in Asia. That figure exceeded the firm’s original target of $750 million and is almost double the $585 million fourth pan-Asian fund, which it said has delivered an internal rate of return of 39.1 percent, before fees.
Investors are continuing to allocate large sums of capital to real estate, reflected in the more than $100 billion collectively raised by property funds in each of the past five years, according to data from Preqin. The fact that the sector is awash with capital has led to higher valuations and increased competition, especially for value-add real estate, according to investors surveyed by Preqin.