LaSalle closes third mezzanine fund on £804m

LaSalle Investment Management has closed its third mezzanine and whole loan fund on £804 million (€903 million).

The firm said the LaSalle Real Estate Debt Strategies III capital-raising was oversubscribed and exceeded its initial £750 million target.

LREDS III attracted 17 investors from Europe, the Middle East, Asia and the US. The fund retained support from existing investors as well as attracting capital from investors new to the fund series, LaSalle said.

The LREDS III closing, combined with the LaSalle Residential Finance third tranche of £260 million secured earlier in the year, brings the capital raised for the firm’s debt investment platform to approximately £1.1 billion in 2017. LREDS III invests across western Europe, with a focus on the UK.

“We have already completed several debt investments this year, working with strong sponsors and senior banking partners across Europe, which has reinforced our position as a leading debt provider in the market,” Amy Klein Aznar, head of Debt Investments and Special Situations at LaSalle Investment Management, said.

The fund’s recent deals include a loan secured against a prime Spanish student housing portfolio for Global Student Accommodation and a £27 million mezzanine loan secured against a shopping centre in the UK for a real estate private equity firm.

The fund has also completed a £24 million mezzanine loan to finance the acquisition of a designer outlet centre in Scotland for Blackstone and a £38 million, five-year mezzanine loan to finance the acquisition of a UK retail portfolio for BMO.

One of the early movers into the mezzanine lending space in 2010, LaSalle has adapted its high-yield strategy to remain relevant to the market; pairing with senior lenders to approach sponsors with complete financing packages, or simply underwriting whole loans with the intention of selling down the senior slice and creating a mezzanine piece.

Speaking to Real Estate Capital in July, Aznar said: “Early on, just after the financial crisis, pricing on mezzanine was much wider because there was a massive dislocation in the finance market, and while standard mezzanine was in the 12 percent to 14 percent range, it has now settled at more sustainable levels – between 7 percent and 11 percent.”