LaSalle Partners, Lend Lease reach an agreement on Compass acquisition.

LaSalle Partners Incorporated (NYSE: LAP) and Lend Lease Corporation Limited (AUS: LLC) have announced that they have reached a definitive agreement for LaSalle to acquire two Lend Lease real estate services businesses: COMPASS Management and Leasing, with operations in the United States, Australia, Brazil and the United Kingdom, and the U.S. retail property management business.

The businesses would be combined with LaSalle Partners Management Services to create the largest real estate management services company in the United States based on total square feet under management. The acquisition also would secure LaSalle's position as a facility management industry leader, by nearly doubling the size of its existing portfolio.

LaSalle has agreed to pay Lend Lease $180 million at closing, with provisions for an earnout payment of up to $77.5 million over five years. In addition, LaSalle would capitalize certain transaction and integration costs, and anticipates incurring approximately $10.6 million in after-tax transition expenses, which would be charged primarily in 1998 and the first half of 1999. The transaction is subject to certain conditions, including governmental and regulatory approvals, and there can be no assurance it will be completed.

The combined organization would continue to be called LaSalle Partners Management Services, Inc., and would be headquartered in Chicago, with approximately 400 million square feet of office, retail and industrial assets under management. The business would be equally divided between property management for institutional owners and facility management for corporate and other real estate owner-occupants and would have improved geographic coverage to serve clients in nearly 190 markets in the United States and six key international markets.

"This combination of industry. leaders would provide the high-quality, value-added, integrated real estate services that clients require in this dynamic economic environment," said Stuart L. Scott, chairman and CEO of LaSalle Partners. "We would expect this acquisition to offer a variety of synergies by allowing us to spread our infrastructure over a larger base, as well as provide significant business building opportunities."

"As the industry's largest facility manager, with approximately 200 million square feet under management following the acquisition, LaSalle Partners Management Services would also be able to capitalize on economies of scale in emerging services and technology applications," added Scott.

The acquisition would significantly increase LaSalle's retail portfolio with the addition of 30 million square feet in 36 regional malls, shopping centers and community centers in 19 states. LaSalle's current retail portfolio consists of 20 regional malls, mixed-use, specialty retail and community centers in 12 states and the District of Columbia.

Lend Lease's global real estate advisory business, Lend Lease Real Estate Investments, is not part of the transaction. Also excluded from the sales agreement are the investment management operations of Lend Lease's U.S. retail management business and its retail property and investment management businesses outside the United States.

As part of the acquisition, LaSalle Partners and Lend Lease would develop a strategic alliance for LaSalle Partners Management Services to service the future property management needs of Lend Lease Real Estate Investments where appropriate. Lend Lease Real Estate Investments manages $28.5 billion in real estate and mortgage portfolios for 350 institutional clients, including the Equitable Life Assurance Society of the U.S.