(HOUSTON) – Hines, the international real estate firm, announced today that HCB LP, its first Brazilian development fund with the California Public Employees’ Retirement System (CalPERS), has been fully monetized.
The fund was formed in 2005 and was capitalized with US$100 million of equity, which was invested in a total of US$270 million of real estate assets over a six-year investment period.
With an initial target of 20 percent IRR, the fund ultimately provided a 60-percent return, generating US$160 million in profits for CalPERS and Hines through a strategic asset investment thesis leveraging off internal growth in Brazil’s emerging economy.
During its investment period, the fund developed, operated and sold nine projects consisting of two office, three residential and four logistics projects located in São Paulo, Rio de Janeiro, Curitiba and secondary cities in the State of São Paulo.
“The success of the HCB I fund can be attributed to a timely development execution in real estate product types that attracted commercial tenants and residential buyers who benefitted from Brazil’s internal economic growth,” said Hines Vice President and fund manager Steve Dolman.
“Brazil is Latin America’s largest economy with increasing earnings, a growing middle class and favorable demand for the development of shopping centers, warehouses, offices and residential units,” said Ted Eliopoulos, senior investment officer for the CalPERS real estate program. “We have an investment strategy in place to take advantage of the opportunities.”
CalPERS and Hines have subsequently invested twice in the HCB II fund, the first of which was in 2007 and the second in 2010, totaling US$500 million of equity commitments.
HCB II has funded 20 subsequent projects.
CalPERS and Hines intend to announce another major investment in the near future.
“CalPERS’ real estate team understood the enormous potential provided by the explosion of Brazil’s middle class – and the success of our Brazilian strategy happened alongside the global economic downturn underscoring the wisdom of a global real estate strategy for portfolio risk mitigation,” said Doug Munro, Hines’ in-country managing partner.
Hines entered the Brazilian real estate market in 1998. Since then the firm has developed more than 15 million square feet of premier office, industrial and residential space in the country, and currently manages 9.5 million square feet there. Hines has operations in seven markets throughout Brazil, including São Paulo, Louveira and Embú (suburban São Paulo), Rio de Janeiro, Curitiba, Campinas and Manaus.
CalPERS is the nation’s largest public pension fund with approximately $240 billion in market assets of which $20 billion is invested in real estate. It administers retirement benefits for 1.6 million active and retired state, public school, and local public agency employees and their families and health benefits for 1.3 million members. For further information on CalPERS, please visit the System’s Web site at www.calpers.ca.gov.
Hines is a privately owned real estate firm involved in real estate investment, development and property management worldwide. The firm’s historical and current portfolio of projects that are underway, completed, acquired and managed for third parties includes 1,126 properties representing more than 459 million square feet of office, residential, mixed-use, industrial, hotel, medical and sports facilities, as well as large, master-planned communities and land developments.
With offices in 106 cities in 17 countries, and controlled assets valued at approximately $23.7 billion, Hines is one of the largest real estate organizations in the world. Hines is also a world leader in sustainable real estate strategies, with extensive experience in LEED®, ENERGY STAR®, BREEAM, Haute Qualité Environnementale and DGNB green building rating systems.
Visit www.hines.com for more information.