Hines raises $650m for new fund to buy properties in US

Real estate investment firm Hines, which has a number of significant developments in Ireland, has raised $650 million (€553 million) for a new fund dedicated to snapping up properties within the US.

Including a $100 million commitment from Hines, the open-ended, or perpetual, vehicle is projected to amass $1 billion by September 30th with a goal of collecting about $1 billion per year in fresh capital in coming years, said Alfonso Munk, the firm’s chief investment officer in the Americas.

The fund plans to supplement equity bets with leverage of roughly 40 per cent to deliver so-called “core-plus” annual returns of 9 per cent to 11 per cent, after fees, he added.

The fund, known as Hines US Property Partners, will initially focus on multifamily, industrial and other property types, said Adriana de Alcantara, its manager. Multifamily real estate, viewed as a “necessity” by Hines, offers growth in markets with favorable demographic trends, while industrial real estate - or warehouses 3 – have significant tailwinds due to increased e-commerce penetration and the scarcity of land near large cities, she said. The new vehicle’s first purchase is expected to be a multifamily property in Austin, Texas, for more than $100 million, de Alcantara added.

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Niche sectors

“We also like niche sectors such as life sciences, data centers and self-storage,” she said, citing their strong performance through the pandemic. Within residential real estate, Hines is also exploring bets on student and senior housing. Unlike many other real estate investment firms, Hines manages its properties, which helps generate additional returns, Munk said.

“We also add value by modernising and upgrading buildings to improve rents as opposed to buying something that is fully-leased and perfect,” he said, crediting Hines’s team of engineers and architects who facilitate renovations and installations of amenities.

Hines is seeking opportunities in submarkets within cities such as Seattle, Atlanta, Denver, Los Angeles and Dallas, Munk said. Its newest fund was backed by public pensions, insurance companies, family offices and non-profits.

The Houston-based, privately owned firm was founded by the late Gerald Hines and has $81.7 billion in assets under management.

- Bloomberg