LaSalle hits first closing for second property debt fund

Real Estate Debt Strategies ll will focus on high-margin European lending

LaSalle Investment Management is believed to have held a first closing for its next debt fund. LaSalle Real Estate Debt Strategies II is a follow-on fund to the £100m LaSalle UK Special Situations Fund, which was launched in 2010 and is now almost fully invested.

Aznar: head of Special Situations fund has focused on 'constrained' senior debt investing
Aznar: head of Special Situations fund has focused on ‘constrained’ senior debt investing

The new fund will make higher-margin senior and mezzanine loans in the UK and continental Europe. Special Situations had a wider remit, making some preferred equity investments and acquiring the Notting Hill Estate in a £131m joint venture with Pears Group.

The Special Situations team, headed by Amy Aznar, had a total of £400m of discretionary capital to invest in debt, which included £300m in mandates from several separate accounts.

One of the team’s last deals was to lend £13m of mezzanine alongside Wells Fargo, which lent £54.3m of senior debt, to Blackstone, against a portfolio of seven distribution warehouses in the UK.

LaSalle’s relationship with Blackstone has been very successful; it has provided more than £120m of mezzanine debt for the US private equity group’s accumulation of logistics buildings in the past 15 months.

The Special Situations team has also focused on what Aznar has called ‘constrained’ senior investing, or senior debt for assets requiring active manage- ment, for which bank finance has been particularly scarce.

A number of other managers are fund raising for follow-on mezzanine debt funds, including DRC Capital and M&G Investments.

Henderson Global Investors is said to have interest in the higher-return strategy of two potential debt funds it launched last year, called the High Income Real Estate Debt Fund. LaSalle declined to comment.