Investment manager helps finance retail specialist’s boutiques purchase
LaSalle Investment Management has made its first European mezzanine investment outside the UK.
LaSalle, which invests in mezzanine for its Special Situations Fund and separate account clients, provided a mezzanine loan for Thor Equities’ purchase of a 25,000 sq ft retail block on Cannes’ Croisette in the south of France.
LaSalle’s clients are funding 65 Boulevard de la Croisette with Helaba, which provided £50m of senior finance. The deal closed last month.
The boutiques, between the Carlton and Martinez hotels, are let to eight luxury brands, including Burberry, Yves Saint Laurent, Emilio Pucci, Jimmy Choo and Bottega Veneta.
US investor Thor Equities is run by New York-based Joseph Sitt, a specialist in high-street urban retail, who created the Ashley Stewart retail brand.
In 2010, Thor partnered with Meyer Bergman in its first European deal, buying Mayfair’s Burlington Arcade for £104m.
LaSalle is fundraising again after making nearly £400m of investments in UK mezzanine deals in two years. Its team is led by Amy Aznar.
It initially saw the opportunity to make at least mid-teen returns as a short-term one, but is said to have revised its view.
The strategy for its follow-on fund is expected to capitalise on an expected increase in German deals, as distressed capital structures there lead to sales.
According to CBRE’s second annual mezzanine market report, LaSalle is one of six asset managers raising follow-on funds to mezzanine debt funds raised in 2010/2011 (see table).
“Reflecting mezzanine market conditions, the new funds offer a wide selection of products for different risk appetites – senior debt, stretched senior and whole-loan facilities – not just mezzanine finance,” says the report.
CBRE said investors’ average internal rate of return is 15.6%, with hedge funds such as SAFANAD, Och-Ziff and Chenavari able to offer the highest loan-to-value ratios.