Chicago-based LaSalle Investment Management Inc. is launching an open-ended fund Monday that will try to capitalize on “mispriced” commercial real estate in major Canadian cities such as Ottawa, Toronto and Vancouver.
The new LaSalle Canada Property Fund is starting off with a $440-million portfolio of assets, the company says, with the potential to add another $310 million worth of properties over the near term.
The fund is pursuing domestic and international pension funds and other institutional investors looking for opportunities to invest in industrial, multifamily and office properties in the Canadian real estate market “through a diversified, income-oriented vehicle,” a release said.
“We are excited to launch our first Canadian open-ended fund with a sizable portfolio that directly aligns with the vehicle’s investment parameters given its high asset quality, potential to generate strong recurring cash flows and desirable locations,” said John McKinlay, chief executive of LaSalle Canada, in a release. “We are strong believers in the long-term potential of the Canadian real estate market and are confident in our ability to build a high-quality portfolio of income-producing assets.”
LaSalle added that the fund, “with its near-term pipeline of potential future investments … will seek to take advantage of mispriced assets as it continues to grow.”
LaSalle is a wholly-owned and independent subsidiary of Jones Lang LaSalle Inc., one of the world’s largest real estate companies. The company has already been involved in Canadian property transactions worth approximately $5 billion since 2000, the release said, and has a US$58-billion global portfolio of investments in private and public equity, as well as in private debt, that it manages.
LaSalle’s fund launch comes at a time when demand is high in the Canadian commercial real estate market and rental markets in British Columbia and Ontario are already “drum-tight,” according to Scotiabank Economics.
“Notwithstanding increased new purpose-built apartment completions and rising investor-leased condominium supply, the average vacancy rate for purpose-built rentals has dropped to 1 per cent in Toronto and 0.9 per cent in Vancouver, well below the 3 per cent level typically considered balanced,” Scotiabank said in a report released Friday.
“The creation of LaSalle Canada Property Fund advances our strategy to offer our global investor base access to a best-in-class suite of products targeting a diverse range of real estate investments,” said Jason Kern, chief executive of LaSalle Americas, in a release. “Canada’s large, transparent real estate market is one we know very well, providing us with a sustainable competitive advantage as we invest into core assets.”