LaSalle to Partner With Australian Developers, Take More Risks
February 08, 2010, 10:03 PM ESTBy Nichola Saminather
Feb. 9 (Bloomberg) -- LaSalle Investment Management, a division of the world’s second-largest commercial real estate brokerage, plans to partner with Australian developers and take on more risk to invest in the nation’s property market.
The unit of U.S.-based Jones Lang LaSalle Inc. is actively seeking tie-ups in Australia to increase its investments in the office and logistics space, and may announce a deal in the first half of this year, Asia-Pacific Chief Executive Officer Ian Mackie told reporters in Sydney today.
“We’re in discussions with a variety of developers,” Mackie said, without naming the companies. “We’re in the act of pursuing, considering, negotiating deals.”
The partnerships would aid LaSalle’s plans to increase its exposure to Australia’s commercial property market through its $3 billion Asia Opportunity Fund III, Mackie said. LaSalle, which manages some $40 billion in real estate investments globally, expects more growth opportunities in this part of the world, particularly in prime office properties in city centers, the company said.
Australia’s lack of distressed and value properties means that LaSalle would have to move towards riskier projects to take advantage of growth and obtain the “mid- to high teen” returns suitable for its opportunities fund, Mackie said.
The company will take on more risk in spending some of the remaining $2 billion in the opportunity fund to invest in Australia, he said. LaSalle expects effective rental growth of up to 7 percent annually for commercial properties in Australia.
“In some countries, such as Japan, we can buy standing assets and make the sort of returns that are appealing to an opportunity fund,” Mackie said. “We’re under no illusion that we can do that in Australia. So we’d expect to go further out on the risk curve and become involved in development projects.”
--Editors: Malcolm Scott, Andreea Papuc
To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net.
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
