LaSalle has secured the first $370m of capital, for its new global decarbonisation fund, the LaSalle property planet protection Fund (Lp3F).
Lp3F aims to economically align landlords and tenants, capitalising on shared cost savings. LaSalle believes the Fund will benefit from growing scarcity of energy-efficient properties relative to market demand.
With the launch of Lp3F to professional investors, LaSalle intends to accelerate the delivery of a decarbonised solution for commercial real estate around the world, while providing institutional capital allocators with an investment product that strives to achieve accretive risk-adjusted returns.
LaSalle has secured these funds from leading global institutional investors, such as the Development Bank of Japan Inc. (DBJ), the California State Teachers’ Retirement System (CalSTRS), clients of a leading wealth management firm, a large international pension plan, and LaSalle and JLL (Sponsor Alignment Co-investment).
The fund will target properties in need of capital expenditures with the aim of improving energy use intensity (EUI) and delivering measurable carbon reductions. It will create long-term value through enhanced operating income and asset appreciation.
“Securing these initial foundational capital commitments to Lp3F is a validation of the significant market opportunity presented by the transition to a more decarbonised global economy.
“It also speaks to the strength of investor appetite for real estate assets whose decarbonisation pathways align them with the Paris Agreement targets to limit global warming to 1.5°C and their faith in the LaSalle platform to manage transition and physical climate risks.
“With sustainability-related performance and investment returns becoming increasingly correlated, we believe that the launch of Lp3F will allow us to stay ahead of the curve and seek attractive risk-adjusted returns.”
Ryu Konishi, Fund Manager of Lp3F, LaSalle
To fulfil its aim of creating a global supply of future-ready decarbonised real estate assets in key cities, the Fund will adopt a retrofit-led ‘brown-to-green’ approach. This includes deep retrofits of vacant buildings and light retrofits where improvements are made with tenants remaining in place.
A smaller portion of the portfolio may involve ground-up ‘build-to-green’ new developments. Lp3F will target double digit value add returns and an EUI reduction of more than 30%.
The Fund will be executed by LaSalle’s global real estate platform, with a demonstrated track record over 40 years and more than $86bn of real estate AUM across Europe, North America and Asia.
“We are thrilled with the strong commitments to Lp3F. We are proud to be partnering with LaSalle to leverage our joint expertise to deliver best-in-class decarbonisation of real assets and drive investor value.”
Guy Grainger, Global Head of Sustainability Services and ESG, JLL
Lp3F benefits from LaSalle’s track record in repositioning and delivering retrofitted assets, systematically reviewing real estate assets for risk of stranding or otherwise susceptible to brown discounts, and success in re-investing in capital expenditures to reduce operational carbon and operational expenses.
LaSalle intends to partner with JLL, reinforcing its in-house expertise with JLL’s extensive capabilities across energy, sustainability and property management services, in addition to a combined global network of relationships, to deliver on Lp3F’s objectives.
Lp3F is conducting due diligence on several initial investments and has identified a strong pipeline of further acquisitions.
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