LaSalle Investment Management Inc., the property-fund unit of Jones Lang LaSalle Incorporated (JLL) – a leading real estate investment trust (REIT), has recently raised a huge corpus of about $780 million (€ 560 million) from investors to acquire properties in Europe.
The fund was provided by a group of German mutual-insurance companies that contributed about half of the total amount, while the remaining half was provided by an unnamed major U.K.-based institution.
With the current inflow of cash, LaSalle Investment presently has approximately $1.1 billion (including debt) to invest in high revenue-generating commercial buildings. The company is mulling to acquire strategically located office properties in Paris, which is arguably the largest market by floor space in Europe, and high-quality retail properties in Germany.
The investment strategy of LaSalle Investment reinforces market sentiment that commercial real estate (CRE) properties are on a boom in Germany. According to a report published by CB Richard Ellis Group Inc. (CBG), the world’s largest commercial real estate services company (on the basis of 2010 revenues), global real estate investors are increasingly focusing on CRE properties in Germany, making a paradigm shift from the erstwhile strong market of the U.K.
Earlier in 2010, the U.K. had led a market recovery from recession in Europe in terms of both transaction volumes and property values. However, recent surveys have unearthed that investors are currently concentrating on other lucrative markets such as Germany, possibly due to the degree of capital value growth already realized in the U.K.
In its report, CB Richard Ellis has anticipated about 32% of the global investors to purchase in Germany in 2011, up from 18% in 2010. The report divulged that investor confidence has plummeted in the U.K. as surveys revealed that investors are mulling to spend about half the amount it did in 2010.
The report also unearthed that retail properties have surpassed office properties as the most attractive purchasing proposition in 2011, with 43% of the investors vying for them compared to 34% in 2010. Furthermore, strategically located shopping malls in Germany have been found to offer yields almost similar to the peak values realized in 2006.
Jones Lang provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. The company operates as a single-source provider of real estate solutions with a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets.
We maintain our Neutral rating on Jones Lang LaSalle, which presently has a Zacks #1 Rank translating into a short-term Strong Buy recommendation.
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