LaSalle Investment Adds $1.2B Debt Fund Business
- Jan 16, 2019
LaSalle Investment Management has entered the U.S. real estate debt sector with the $1.2 billion acquisition of a majority stake in Latitude Management Real Estate Investors and named the new debt platform LaSalle Mortgage Real Estate Investors. LMREI will be part of LaSalle’s North American Private Equity platform, which comprises about $21 billion of the company’s approximately $64 billion in assets under management.
Top executives from Latitude have stayed on and will continue to lead the day-to-day business of LMREI—President & CEO Glenn Sonnenberg, Executive Vice President Chip Sellers and Managing Directors Craig Oram and Brett Mayer. The firm’s 20 employees are also part of LMREI and will continue to operate under the same structure, systems and processes to provide continuity to stakeholders. The senior management team has retained an ownership position in LMREI, executed multi-year employee agreements and will be actively involved going forward in strategy, product development and growth planning.
“LMREI’s cultural alignment and fiduciary-focused mindset will serve the broader firm well as we seek to expand the platform in the years ahead,” Jason Kern, LaSalle Americas CEO, said in prepared remarks. Sonnenberg added in a statement that joining LaSalle “affords us a tremendous opportunity to build on the strong track record we have established over the past 19 years.”
Bridge loan business
Latitude’s primary focus has been originating new bridge loans ranging from $5 million to $35 million for value-add and transitional commercial real estate properties in sustainable growth markets throughout the U.S. The firm’s lending portfolio of at least $4 billion in closed transactions covered the primary CRE sectors including office, hotel, retail, industrial and multifamily. In late November, Latitude provided Archway Holdings with $28 million in acquisition financing to purchase two multifamily properties totaling 363 units in Nashville, Tenn., from Belew Rentals, according to Yardi Matrix data.
When the acquisition plan was announced in November, Kern said the transaction would be “mutually beneficial for both firms, with LaSalle gaining a market-leading capability and track record in a debt product that is highly desirable to domestic and foreign investors.” He described Latitude’s debt strategy in the value-add, transitional asset space as “a perfect complement to our range of real estate private equity offerings in the U.S., as well as our existing European debt platform.”
For then-Latitude, gaining access to the scale and resources of an international firm like LaSalle only enhanced “the professional expertise our clients have come to expect,” Sonnenberg noted. “Our team has done a great job building a nationally recognized real estate debt platform,” he said in a November statement. “While we have achieved great success independently, we see tremendous upside in joining LaSalle’s well-established global platform.”
Latitude also managed a successful series of commingled debt funds, the most recent being Latitude Management Real Estate Capital IV (LMREC IV) with total equity raised of approximately $480 million. DLA Piper acted as legal adviser to LaSalle. Berkshire Capital acted as financial adviser and Sheppard Mullin was the legal advisor to Latitude.
Earlier LaSalle acquisitions
The transaction comes seven months after LaSalle purchased Aviva Investors real estate multimanager business and took full ownership of the management of the Encore+ fund, an open-ended Continental European real estate fund both parties had jointly managed for 11 years. At the time of acquisition, that fund had a gross asset value of about $2 billion and was recognized as a top performing fund.
The double deal made the firm one of the top five largest global non-listed indirect real estate investment managers. This week, LaSalle announced it had acquired ElseBella, a two-building office portfolio in Munich for about $193.8 million on behalf of the LaSalle Encore+ Pan European Fund.