LaSalle Investment, BGC Partners Start Derivatives Business

The property fund of broker Jones Lang LaSalle Inc. (JLL) set up a real-estate derivatives business with wholesale market broker BGC Partners Inc. to tap revived interest in the financial instruments.

The focus will initially be on the U.K., growing to other countries, LaSalle Investment Management Inc. said today in a statement. It didn’t say how much business it expects to handle.

Investors want to put money into a combination of derivatives and physical buildings, Alan Tripp, U.K. managing director of LaSalle Investment Management, said in the statement.

“There appears to be appetite for this sort of diversified strategy,” he said. “The market is developing and we want to offer our clients the ability to access it.”

Trading in U.K. property derivatives declined in the wake of losses during the global credit crisis. The value of trades fell to 192 million pounds ($309 million) in the last quarter of 2010 from 731 million pounds in the prior three months, according to research group Investment Property Databank Ltd. The number of trades fell by a third to 52 from 78 over the period.

A derivative is a financial obligation whose value depends on interest rates, the outcome of specific events, or the price of underlying assets such as real estate, debt, equities, commodities and currencies. Chicago-based Jones Lang LaSalle is the world’s second-largest publicly traded property broker and its property fund has $40 billion under management. BGC Partners, based in New York, is an interdealer broker that separated from Cantor Fitzgerald LP in 2004.

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