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Our global real estate investment management business, a member of the JLL group that we operate under the brand name of LaSalle Investment Management, has three priorities:
We provide investment management services to institutional and retail investors, including high-net-worth individuals. We seek to establish and maintain relationships with sophisticated investors who value our global platform and extensive local market knowledge. As of December 31, 2014, LaSalle managed $53.6 billion of public real estate securities and private real estate assets, including debt and equity, making us one of the world’s largest managers of institutional capital invested in real estate assets and securities.
LaSalle provides clients with a broad range of real estate investment products and services in the public and private capital markets. We design these products and services to meet the differing strategic, risk/return and liquidity requirements of individual clients. The range of investment alternatives includes private investments in multiple real estate property types including office, retail, industrial, health care and multi-family residential, as well as investments in debt. We act either through commingled investment funds or single client account relationships (‘‘separate accounts’’). We also offer indirect public investments, primarily in publicly traded real estate investment trusts (‘‘REITs’’) and other real estate equities.
The geographic distribution of LaSalle’s assets under management is as follows ($ in billions):
We believe the success of our investment management business comes from our investment performance, industry-leading research capabilities, experienced investment professionals, innovative investment strategies, global presence and coordinated platform, local market knowledge and strong client focus. We maintain an extensive real estate research department whose dedicated professionals monitor real estate and capital market conditions around the world to enhance current investment decisions and identify future opportunities. In addition to drawing on public sources for information, LaSalle’s research department utilizes the extensive local presence of JLL professionals throughout the world to gather and share proprietary insight into local market conditions.
The investment and capital origination activities of our investment management business have become increasingly global. We have invested in direct real estate assets in 19 countries across the globe, as well as in public real estate companies traded on all major stock exchanges. We expect that cross-border investment management activities, both fund raising and investing, will continue to grow.
Private investments in real estate properties (separate accounts and fund management)
In serving our investment management clients, LaSalle is responsible for the acquisition, management, leasing, financing and divestiture of real estate investments across a broad range of real estate property types. LaSalle launched its first institutional investment fund in 1979 and currently has a series of commingled investment funds, including 12 funds that invest in assets in the Americas, 10 funds that invest in assets located in Europe and seven funds that invest in assets in Asia Pacific. LaSalle also maintains separate account relationships with investors for whom we manage private real estate investments.
LaSalle is the advisor to Jones Lang LaSalle Income Property Trust, Inc., a non-listed real estate investment trust launched in 2012 that gives suitable individual investors access to a growing portfolio of diversified commercial real estate investments.
As of December 31, 2014, LaSalle had approximately $41.6 billion in assets under management in commingled funds and separate accounts.
Some investors prefer to partner with investment managers willing to co-invest their own funds to more closely align the interests of the investor and the investment manager. We believe that our ability to co-invest alongside the investments of clients’ funds will continue to be an important factor in maintaining and continually improving our competitive position. We believe our co-investment strategy strengthens our ability to raise capital for new real estate investments and real estate funds. At December 31, 2014, we had a total of $297.1 million of investments in real estate ventures that are included in LaSalle’s $53.6 billion of assets under management.
We may engage in merchant banking activities in appropriate circumstances. These involve making investments of the Firm’s capital to acquire properties in order to seed investment management funds before they have been offered to clients. Historically, we have done this substantially through investment vehicles such as LaSalle Investment Company II (‘‘LIC II’’) as further described in Note 5, Investment in Real Estate Ventures within the Notes to Consolidated Financial Statements. We may also provide investment capital directly, as we have increasingly done more recently.
LaSalle conducts its operations with teams of professionals dedicated to achieving specific client objectives. We establish investment committees within each region whose members have specialized knowledge applicable to underlying investment strategies. These committees must approve all investment decisions to make private market investments. We utilize the investment committee approval process for LaSalle’s investment funds and for all separate account relationships.
LaSalle is generally compensated for investment management services for private equity investments based on capital invested and managed (known as advisory fees), with additional fees (known as incentive fees) tied to investment performance above benchmark levels. In some cases, LaSalle also receives fees tied to acquisitions. The terms of contracts vary by the form of investment vehicle involved and the type of service we provide. Our investment funds have various life spans, typically ranging between five and nine years, but in some cases they are open-ended. Separate account advisory agreements generally have specific terms with ‘‘at will’’ termination provisions, and include fee arrangements that are linked to the market value of the assets under management, plus in some cases incentive fees.
Investments in public equity
LaSalle also offers clients the ability to invest in separate accounts focused on public real estate equity. We invest the capital of these clients principally in publicly traded securities of real estate investment trusts and property company equities. As of December 31, 2014, LaSalle had approximately $12.0 billion of assets under management in these types of investments. LaSalle is typically compensated by securities investment clients on the basis of the market value of assets under management.