Hines U.S. Property Recovery Fund with a total target of $1 billion, secures $590 million at first closing and undertakes two initial acquisitions
(HOUSTON) – Hines, the international real estate firm, today announced the launch of Hines U.S. Property Recovery Fund (“HUSPRF”), the first in the firm’s new flagship tactical fund series in the United States with approximately $590 million of equity committed, giving the fund nearly $1.5 billion in immediate investment capacity. In total, the fund is targeting a final equity raise of $1 billion – with a purchasing power of $2.5 billion after leverage – by the anticipated last close in May 2022. In addition, investors have also allocated an incremental $150 million for co-investments alongside the fund.
Concurrently with the launch of HUSPRF, Hines has acquired two logistics properties in California representing a total investment of $186 million. The first is 550 Piercy Road, a 25.6-acre site to develop two Class-A industrial buildings totaling 414,000 square feet in San Jose, California and the second is 3130 Fairview, a 3.9-acre site to develop an 82,000-square-foot Class-A industrial building, in Santa Ana, California.
HUSPRF is a closed-end, diversified fund, targeting tactical investment opportunities across 30 of the largest U.S. metropolitan statistical areas (MSAs). The fund will leverage the sourcing and execution capabilities of Hines’ in-market teams to reimagine standing assets and develop new assets—all with the goal of creating future-facing real estate that aligns with shifting occupier and investor preferences. The fund will pursue investments across the four major property types of residential, industrial, office and mixed-use assets, as well as certain niche product types including student housing, senior housing, data centers, self-storage and life sciences.
HUSPRF’s first closing is comprised of a wide set of foreign and domestic institutional investors, including pension funds, financial institutions, family offices, foundations and insurance companies. As part of this initial capital raise, Hines’ co-investment commitment to the Fund emphasizes the firm’s conviction behind the strategy and creates strong alignment of interests with its investors.
“The ways in which we use real estate have changed drastically over the last 10 years, but the built environment hasn’t always kept pace. There’s a lot of product that needs to be reimagined and reenergized,” said Dan Box, HUSPRF fund manager at Hines. “In an environment where returns are getting thinner, we believe the right approach is to focus on asset-level value creation and actually boosting net operating incomes rather than just relying on a buy-low, sell-high thesis.”
Despite a long track record of higher-yielding projects, this is the first time Hines will offer its investor-partners direct, priority access to this segment of its pipeline through a Hines-managed fund allowing investors to benefit from Hines’ experienced suite of in-house development, construction and property management resources.
“We believe our vertically-integrated structure allows us to execute more efficiently on behalf of our clients. Our team’s ability to manage most of the aspects of our investment thesis in-house means more of the economics stay with our investors,” added Alfonso Munk, Hines’ Chief Investment Officer – Americas. “We’re also seeing how our expertise across product types can unlock opportunities at this pivotal moment in the real estate cycle.”
Hines and HUSPRF are committed to creating healthier, more sustainable assets to respond to the opportunities posed by worldwide ESG initiatives. As HUSPRF works to reimagine real estate, the fund will incorporate sustainability, health and wellness considerations in its investment decisions. The fund is set to align with Hines’ corporate ESG standards that focus on addressing climate issues and reducing the carbon footprint of the built environment. Hines believes there will be continued demand by tenants and investors for future-facing product that aligns with ESG priorities.
When complete, both 550 Piercy Road and 3130 Fairview will feature top of the market characteristics to provide new offerings in supply constrained markets with robust demand from a wide range of users including tech, logistics, life sciences and advanced manufacturing companies seeking new state-of-the-art facilities. Construction on 550 Piercy Road is anticipated to begin in Q3 of 2023, while 3130 Fairview is expected to start in Q4 of 2022.
Kirkland & Ellis LLP served as legal adviser to Hines in connection with the fund.
Hines is a privately owned global real estate investment firm founded in 1957 with a presence in 255 cities in 27 countries. Hines oversees investment assets under management totaling approximately $83.6 billion¹. In addition, Hines provides third-party property-level services to more than 367 properties totaling 138.3 million square feet. Historically, Hines has developed, redeveloped or acquired approximately 1,486 properties, totaling over 492 million square feet. The firm currently has more than 171 developments underway around the world. With extensive experience in investments across the risk spectrum and all property types, and a foundational commitment to ESG, Hines is one of the largest and most-respected real estate organizations in the world.
About Hines U.S. Property Recovery Fund
Hines U.S. Property Recovery Fund is Hines’ flagship tactical fund in the United States targeting higher-return investment opportunities arising from broken developments, distressed sellers and sectors, and credit-driven asset opportunities. The fund intends to reimagine standing assets and develop new assets—all with the goal of aligning with next-generation, future-facing real estate that aligns with shifting occupier and investor preferences. It is managed by a growing dedicated team including Dan Box, Fund Manager; and Ryan Moses, Assistant Fund Manager.