Texas Firm Hines Raises $650M for US Property Bets, Including Data Centers

Gillian Tan (Bloomberg) -- Real estate investment firm Hines has raised $650 million for a new fund dedicated to snapping up properties within the U.S.

Including a $100 million commitment from Hines, the open-ended, or perpetual, vehicle is projected to amass $1 billion by Sept. 30 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% to deliver so-called “core-plus” annual returns of 9% to 11%, after fees, he added.

The fund, known as Hines U.S. 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 -- 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.

“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 modernizing 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 sub-markets 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.

Hines’s capital raise comes amid a broader effort by real estate investment managers to tap institutional investors. As of June 30, a record 1,240 real estate funds were seeking to raise an aggregate $360 billion, according to data provider Preqin.