About the building

20 Tuas South Avenue is comprised of three industrial buildings totalling over 150,000 square meters in the Tuas submarket of Singapore. Tuas is one of the major industrial submarkets in Singapore and is well supported by an extensive road network. The asset is close to another major industrial region, Jurong, which is set to be Singapore’s second central business district, under the Master Plan. The future Tuas Mega Port, the largest port in Singapore opening progressively from 2021 onwards, is also less than 5 kilometers from the property.

Sitting over 25 hectares, the property has an attractive land tenure of more than 45 years remaining, which is uncommon for industrial assets in Singapore. The existing gross floor area (GFA) of the property is much lower than the maximum allowable GFA, indicating a total of approximately 100,000 square meters of development potential.

Investment rationale and value creation

The existing property is master leased to a quality tenant for a long-term lease. To utilize the underdeveloped GFA, the development was split into two phases to construct a four-story and a two-story warehouse to utilize approximately 100,000 square meters of undeveloped GFA. The new development is expected to complete by end of 2022, and the property will be multi-tenanted with a master-lease tenant anchoring 60% of the space.

LaSalle GPS has pooled commitments from our clients to secure appropriate governance rights such as an AC member seat, to actively monitor and control various aspects of the project, alongside working together with the underlying General Partner.

Future plans

The leasing of the development portion has been progressing well with key tenants being secured. With the property achieving stabilized occupancy and construction completed in December 2022, LaSalle GPS will focus on potential divestment in late 2023.

About the buildings

The Oakmont Logistics portfolio consists of four recently built (2021 and 2022) logistics warehouses in the greater Atlanta, Georgia area. They feature a range of modern design feature, including cross-dock/front-load configuration, Ductilcrete floors, clears heights of between 36 and 40 feet, and ample space for trucks.

Investment rationale

The Oakmont Logistics portfolio presented an opportunity for LaSalle to acquire, on behalf of a custom account client, a high-quality, well-located portfolio of diversified industrial assets in a primary US market. Atlanta is the ninth-largest metropolitan area in the United States, the largest in the southeast, and the regional hub for finance, commerce, communications, transportation, education and culture. It is also the fifth largest warehouse market in the US, with demand outstripping supply for the foreseeable future.

On acquisition, the assets were fully leased to high-quality tenants, including clothing, grocery, automotive and online fulfilment solutions companies. LaSalle’s custom accounts team believes that Atlanta’s attractive regional market, combined with the diversified, high-quality tenant base currently occupying the assets should result in both attractive total returns and stable cash flow for our client.

About the buildings

The Toronto Airport Mid-Bay Industrial Portfolio is an eight-building industrial portfolio on 21 acres originally constructed in the mid-1980s and is located in Mississauga, Ontario, near Toronto’s Pearson International Airport.

The well-constructed mid-bay buildings range in size from 20,000 to 80,000 square feet with an average size of 49,000 square feet and a total rentable area 398,000 square feet.

Investment rationale

The assets are in a prime location, with the Greater Toronto Area West industrial submarket having some of the strongest fundamentals for industrial property in the Americas. Additionally, buildings in this mid-bay size are ideal for tenants who are capitalizing on rising e-commerce, services and “last-mile” logistics. Meanwhile, no remaining land in the area, paired with rapidly escalating replacement costs, have further restricted industrial development in the submarket, driving up the price of existing inventory.

Current weighted average lease terms are quite short at less than three years and in-place rents are well below market rates, representing a significant upside opportunity to capitalize on rental income growth. Conversely, over 85% of the purchase price was embedded in the value of land the assets sit on, providing excellent downside protection

About the building

Heinrich-Barth-Straße is a state-of-the-art logistics facility of nearly 45,000 square meters. Its current tenant, a third-party logistics company, has a 10-year fixed lease. The property is located in the greater Cologne-Bonn area. The site is very well connected to the major highways A1, A61 and A565 which form an integral part of a dense motorway network that crosses the region. A nearby bus stop ensures access to public transportation as well.

Investment rationale

The LaSalle E-REGI team has invested in the facility as it is a state-of-the-art property capable of generating a long-term stable cash flow with very good re-leasing options due to its high flexibility.

The property’s prime location near three major cities and three major motorways makes it particularly desirable to logistics companies such as the current tenant, and the expected growth of e-commerce will continue to drive the importance of well-located logistics assets such as Heinrich-Barth-Straße.

Improvement works

Heinrich-Barth-Straße was selected as the first asset held by the LaSalle E-REGI Fund to have a solar panel system installed on its roof as it is both relatively new (built in 2019) and offers an ample amount of roof space (40,000 square meters). The solar power system is due to be installed in late 2022 and comes with a 20-year lease agreement.

Due to the size of the installation, enough energy should be produced to power the equivalent of 1,400 homes and reduce carbon dioxide emissions by over 2,000 tons per year. The energy will be made available to the tenant at stable and low prices, which gives the building another competitive advantage.

Recognition

Heinrich-Barth-Straße has been certified DGNB Gold. Once the solar panel system has been installed, the asset will be re-assessed.

About the building

Purchased as part of a joint-venture agreement, LaSalle’s Toronto Industrial Portfolio is comprised of 21 mid-bay industrial properties totalling nearly 810,000 square feet in Mississauga’s industrial note and a short drive to Toronto’s Pearson International Airport.

Investment rationale

Purchased as part of a joint venture, the LaSalle Canada Property Fund’s Toronto Industrial Portfolio represents a compelling investment opportunity given current rents in the facilities are well below current market rates and weighted average lease terms are quite short.

The Greater Toronto Area (GTA) stands out as one of North America’s top industrial markets, driven by high population growth through immigration and exceptional rent growth. LaSalle’s investment management team believes that sustained population growth should continue to drive e-commerce demand which relies on well-located mid-bay industrial facilities such as the ones purchased as part of this deal. Through the last three years, the GTA’s industrial market rents have experienced a compound annual growth rate of 20%, meaningfully outpacing the 8-12% growth seen in top US markets over that same period.

Additionally, rental growth should also increase owing to the fact that land in and around the GTA is constrained due to protective zoning in the surrounding “Greenbelt” area. Historically, these factors have created strong tenant demand for industrial property, driving vacancy for industrial product in the Greater Toronto Area to less than 1%, the lowest of any North American market.

About the buildings

Acquired between 2014 and 2017, the six properties in the Southern Ontario Industrial Portfolio represented over 840,000 square feet of industrial space.

The portfolio consisted of small-bay industrial assets, and a mix of highly functional warehouse and distribution facilities ranging from 38,000 to 298,000 square feet which could accommodate a variety of tenants. Three assets were located in Ottawa, two in Whitby and one in Cambridge.

Investment rationale and value creation

The Canadian value-add investments team’s research-driven thesis of higher demand for industrial space, particularly in the Southern Ontario marketplace where vacancies were below 4.0%, led them to believe that a portfolio of assets such as this one could result in significant value creation for investors.

By signing leases with a number of well-known tenants, the team was able to enhance the portfolio’s income risk profile by doubling the percentage of gross rentable area leased to credit-rated tenants and create a stable cash flow profile combined with net operating income growth potential. The geographic, tenant and asset composition of the portfolio created was able to offer a truly diverse portfolio of assets that offered a combination of stable income plus value creation opportunities for its purchaser.

What we achieved

When the Southern Ontario Industrial Portfolio was sold in December 2018 it was 96% leased with a weighted average lease term of over three and a half years. The agreed sale price represented a solid profit for our investors.

About the building

Isle d’Abeau is a recently completed 21,248 square meter logistics development. The property was the first of three deliveries in a partnership with French logistics developer JMG. The facility consists of 19,966 square meters of warehouse space, 1,050 square meters of office space and 268 square meters of loading area. Specifications include a 10-meter clear height, 24 loading docks, ESFR (early suppression, fast response) sprinklers, and parking for 110 vehicles and 6 trucks.

Investment rationale

Adhering to LaSalle Encore+’s location-driven investment strategy, the asset is located along the French logistics backbone, 30 kilometres east of Lyon. It benefits from excellent connectivity to French population centers as well as major European markets, particularly in Italy and Switzerland.

Purchasing the building while it was still in a development stage provided an excellent opportunity to add an asset to the fund that had not yet reached its full value.

Achievements

On completion in 2019, the asset was fully let on a long-term basis with no break clause for eight years, meaning the building is able to offer long-term stable income, while its attractive location and new condition leaves space for rent reversion and capital appreciation.

The property has an insulated double skin on courier areas, a rainwater recovery system and the office areas have a reversible heating and cooling system. It has received a BREEAM “Very Good” environmental certification for new construction. BREEAM certifications are used to assess the design, construction, intended use and futureproofing of new building developments, including the local, natural or human-created environment surrounding the building.

The fund managers are currently (February 2022) exploring the possibility of further reducing the building’s environmental impact by installing solar panels on the roof and automating energy consumption.

About the building

Tigery is an industrial logistics development located southeast of Paris. The Class A building was completed in 2020 and includes 35,400 square meters of lettable area (33,900 square meters of warehouse space and 1,500 square meters of office space). The asset also benefits from various operating permissions to let to a variety of users. It offers 140 parking spaces for cars as well as trailer storage.

Investment rationale

The asset is in the Sénart logistics hub and complements LaSalle Encore+’s location-driven investment strategy. Sénart is 37 kilometers southeast of Paris and is the second largest logistics market in France with 1.4 million square meters of warehouse space. The site benefits from excellent road access to Paris and to the southern cities of France through the A5 Autoroute. The property also benefits from proximity to Orly airport and frontage on the “Francilienne”, the highway circling Paris.

Purchasing the building while it was still in a development stage provided an excellent opportunity to add an asset to the fund that had not yet reached its full value.

Achievements

On completion in 2020, half of the asset was fully let on a long term-basis with no break clause for nine years with the other half being let on similar terms in 2021. As result, the building is able to offer long-term stable income, while its attractive location and new condition leaves space for rent reversion and capital appreciation.

The property has 80mm insulation on the roof and facades, a reversible heating and cooling system in the office areas, a LED lighting system, and six charging units for electric vehicles. It has received a BREEAM “Very Good” environmental certification for new construction. BREEAM certifications are used to assess the design, construction, intended use and futureproofing of new building developments, including the local, natural or human-created environment surrounding the building.