EXCLUSIVE INTERVIEW – LaSalle Investment Management a leading British real estate investment manager

You may not have heard of LaSalle Investment Management, one of the companies that enabled the recent Completely Trade & Industrial Event for the UK property industry in Old Spitalfields Market, at which Warehouse & Logistics News was a media partner. But you’ve almost certainly visited one of the industrial properties in their portfolio.

LaSalle Investment Management is one of Britain’s biggest property investment management companies, with over 100 trade parks and other industrial assets under their management, with a value totalling over £1 billion. Led by some of the most experienced property professionals in the industry, they have considerable expertise in the warehousing and logistics property market, and in the last five years have been responsible for a number of major logistics property deals in the UK.

And that’s just here. Globally, LaSalle Investment Management is one of the world’s leading real estate investment companies, with nearly 700 employees in 24 offices worldwide. As of Quarter 2, 2013 LaSalle manages over US$46 billion worth of private and public property equity investments.

But don’t be put off by the company’s size. In the competitive warehousing and logistics sector, which has a growing emphasis on shorter leases, the LaSalle team understands that landlord-tenant relationships are key and that both sides benefit from making these relationships as friendly, easy and efficient as possible.

In an exclusive interview for our first Property Focus supplement, Warehouse & Logistics News spoke to Paul Till, the Head of the National Business Space Team and Regional Director of LaSalle Investment Management.

Warehouse & Logistics News – First of all, Paul, as Head of National Business Space and a Regional Director of LaSalle Investment Management’s UK office, what does your role cover day to day? Do you go to see individual clients as part of your role?

I manage a portfolio of properties and run a team of 12 asset managers who look after LaSalle’s Business Space portfolios. Between us we have over £3 billion under management for our retained clients, consisting of over 250 assets and more than 2,000 tenants. We meet our clients regularly, but our transparent reporting regimes, linked to our largely discretionary investment management mandates, mean that these meetings have, if anything, become less frequent in recent years. As asset managers, we tend to spend most of our time speaking to tenants. They pay our clients’ returns by way of rent, so they are the most important component when it comes to keeping income flows robust. Historically, landlord and tenant relationships have tended to be adversarial in the commercial property arena, but we see this as counter-productive. That is not to say we are a pushover landlord, but good landlord and tenant relationships tend to promote trust and trust tends to lead to mutual benefit in terms of tenant loyalty and re-leasing.

WLN – How long have you been with LaSalle for? Have you always been personally involved with the industrial property in your career?

I have been with LaSalle Investment Management for over 26 years. That sounds like a long time but I have probably been involved in nine or ten quite different roles over the years, for different clients and across varied commercial portfolios. LaSalle is one of those organisations that feels like a family, although one where we are all focused on optimising our client investor returns. Throughout this period and as I have risen to more senior positions with the firm, I have kept in touch with market trends by working directly with tenants. Property is not just bricks and mortar; we understand that first and foremost, we are in a people business, whether you are investing, managing, letting or refurbishing space. Our job is to stay ahead of the curve and ensure we are offering the right space and facilities to keep our occupiers happy and productive. We work hard at understanding our tenants’ businesses to ensure they will stay and pay the rent.

WLN – Who owns LaSalle?

LaSalle Investment Management is a wholly owned subsidiary of Jones Lang LaSalle Inc, one of the world’s largest real estate companies, listed on the New York Stock Exchange (JLL), with $3.9bn revenue in 2012, trading in over 180 markets in 60 countries spanning five continents. Jones Lang LaSalle is also active here in the UK, offering real value in a changing world for real estate owners, investors and users. We trade completely independently of each other from day to day.

WLN – What was your involvement in the Completely Trade & Industrial Event in London? How did the event go for you? Any plans to do anything similar, going forward?

LaSalle Investment Management is one of the main sponsors of the Completely Trade & Industrial website, and as a result the Completely Trade & Industrial Show. The inaugural event was very successful and we have already had some follow up meetings with the other sponsors, organisers and attendees to discuss ways to improve the event for 2014.

WLN – When was LaSalle Investment Management set up in the UK? What different services do you offer to property owners and occupiers?

We have been investing in the UK property market for over 30 years and have a mature, established platform of 146 staff here. LaSalle invests solely in real estate and we provide clients with a fully integrated investment management process, including strategy and research, deal sourcing and acquisitions, asset management, debt and tax structuring, client and fund accounting and reporting. LaSalle manages capital for institutions and private investors all over the world through a complete range of investment vehicles to meet our clients’ investment objectives, including customised separate accounts, commingled funds and joint ventures. We currently manage £9.4bn of assets within the UK.

WLN – Does LaSalle Investment Management cover the whole UK?

LaSalle covers the whole of the UK, with investments in all the major real estate sectors managed by our dedicated, sector-focused asset management team of 41 in the UK, whose responsibility is to identify, develop, execute and monitor initiatives for maximum possible income and value from assets following their acquisition. LaSalle’s 149-strong UK platform is led by Alan Tripp, UK Managing Director.

WLN – How are you set up to cover the different types of asset?

We operate a dedicated team model with investment teams operating as entrepreneurial groups, pursuing a clear investment philosophy for each client and fund. Each team is responsible for the entire life cycle of investment management, including acquisitions, ongoing asset management and sales – and is directly accountable for performance. This approach, which guarantees alignment with a client’s investment objectives, is overseen by Regional Investment Committees, comprised of the most senior people at LaSalle, which provide fiduciary oversight for all accounts and funds.

WLN – What is your specific proposition to tenants in the UK warehousing and logistics industry?

Quite simply, we’re not only experts in the area with comprehensive geographical coverage, but also easy to work with. If you’re looking for space, check out our http://lasalle.completelygroup.com/ site. If you are one of our tenants and want to talk about your property, give us a call.

WLN – How is the industrial property market doing in the UK?

The warehousing and logistics sector is possibly the fastest moving and developing property sector. The expense of fitting out an automated warehouse needs to be defrayed over a long period, which is leading to logistics operators and retailers seeking longer leases. This provides a good income profile for pension funds, who are big investors in the logistics property sector.

WLN – How does the industrial market compare in the different parts of the UK?

Everyone talks about a North/South divide, and there is no doubt that London and the South East have fared better through the recession than other parts of the UK. But if you have a well-located estate that has been well managed and maintained, with the right style and size range, you have a head start over competing schemes. Our void rate in these sectors, right across the UK, is well below the industry average, as we understand how to manage assets to ensure the most profitable tenant profiles. With empty rates now applying to vacant industrial property, these asset management skills are even more important to ensure the best client returns.

WLN – What kind of industrial properties do you look after?

We cover everything from smaller, long established local industrial estates to large, modern industrial estates and the vast new state of the art logistics facilities warehouses.

WLN – Do you own any properties in your own right and let them out, or do you act as letting agents?

Generally we manage property portfolios on behalf of institutional clients. We employ external letting agents where required, but are very comfortable talking directly to potential occupiers as well.

WLN – What do you mean by institutional clients?

Our diverse client base includes public and private pension funds, insurance companies, governments and endowments from across the globe.

WLN – How hands on are you in how you manage your portfolio?

Generally, as the landlord’s representatives, we are given a discreet mandate to act on their behalf.  We couldn’t be more hands-on – our clients expect that approach, as it delivers better returns for them.

WLN – Are you looking for more tenants? Who should people approach?

We are always keen to speak with potential tenants – they can easily check availability through the Completely Trade & Industrial link at http://lasalle.completelygroup.com. Our letting agents also refer to this link.

WLN – With the global resources at your disposal, it must be tempting for a company like yours to build and develop industrial properties on spec. Do you get involved in such projects?

While we don’t generally fund speculative projects ourselves, we will consider joint venture partnerships.

WLN – Should people who want to sell warehouses and other industrial properties contact you in the first instance?  

They would be best advised to speak to a commercial property agent like Jones Lang LaSalle.

WLN – Do you act as project managers when it comes to modernising the individual properties in your portfolio?  

We take an active role in determining what needs to be done, but we hire external consultants to project manage the actual build.

WLN – Can you expand on the point we quoted in the introduction about how you strive to make your relationships with tenants as friendly and easy as possible?

Quite simply, we’re a commercial organisation, with our clients’ investments at heart, but at the same time we’re well aware that some potential occupiers might be put off coming to us because we’re a big company, so we try not to act like one. We go out of our way to meet and get to know our tenants, even organising our asset managers by sector and geography to ensure they know their patch well.

WLN – Can you tell us about the kinds of businesses who are tenants in your properties?

We have a diverse portfolio covering everything from logistics to standard industrial operators including catering, storage, electronics and the motor industry, from large multiples to small individual businesses.

WLN – As a company do you get involved in helping landlords and tenants make their properties greener and reduce their carbon footprint?

Where possible we use our knowledge and experience to guide our occupiers to use the buildings in an energy efficient way, highlighting the cost savings available to them. We also encourage sustainable use of our buildings through our green leases, which include clauses encouraging tenants to use their property optimally and in compliance with ever tightening environmental regulations.  LaSalle is a member of the Better Buildings Partnership, a group of leading commercial building owners in the UK who are determined to improve the sustainability of existing commercial stock.

WLN – Finally, where do you see the UK warehousing property market and LaSalle Investment Management going from here?

We recognise that continuing advances in e-commerce will ensure the ongoing evolution of the UK logistics sector. We will continue to assess and absorb new developments as they come along, as LaSalle is determined to remain in the forefront of this fast moving marketplace.

LaSalle Investment Management

Tel: 0207 852 4000

www.lasalle.com