(LONDON) – Hines, the international real estate firm, is pleased to announce the first closing of its Hines European Value Fund 2 (HEVF 2), securing approximately €637m of equity commitments, exceeding 50% of the € 1.25 billion total target.
The first close has been made less than three months after the launch of HEVF 2 in September 2019, with subsequent closings expected to take place through 2020, with Hines co-investing 5% of the total investor commitments. When factoring in leverage, the fund is expected to have total purchasing power approaching €3 billion. At this first closing, Hines accepted investments from 13 institutional investors.
HEVF 2 has been launched following the success of the first Hines European Value Fund (HEVF 1), a Core Plus/Value-Add fund for which Hines raised €721 million of equity commitments in closings from July 2017 to August 2018, exceeding the original fund target size by over 40%. HEVF 1 has successfully secured a portfolio of nine investments in Germany, the UK, Denmark, Spain, Italy and Poland within less than two years of closing its first acquisition and ended its investment period.
Building on the investor appetite for asset level value add strategies, HEVF 2 will target a return of 11-13% net IRR, adopting a diversified approach across top institutional city markets, risk profiles and asset classes, with a primary focus on the office sector.
Hines will be adopting its philosophy in value-add investing by focusing on mature, primary city markets which demonstrate reliable liquidity across the cycle, while capitalising on the firm’s proprietary research to help identify the subset of markets with the most attractive pricing and fundamentals momentum at each phase of investment.
Hines has secured and signed two seed assets for the fund in recent weeks to secure a rare value-add office opportunity in Munich and a market-leading residential for rent scheme in Madrid, Spain. Both transactions were originated off-market through the Hines network of local market teams. A third HEVF 2 acquisition, this time a mixed-use office/retail project, has since been taken into exclusivity in the West End of London. The total equity allocated across the three deals is €300m. Further acquisitions are expected in early 2020.
HEVF 2 will also embrace GRESB, the leading Environmental, Social and Governance (ESG) benchmark for real estate and infrastructure investments across the world, aiming to follow in the footsteps of HECF 1, which has been recognized as the most sustainable fund in Europe amongst all diversified portfolios and Global Sector Leader in Real Estate Assessment for an unprecedented third consecutive year.
Paul White, HEVF 1 and HEVF 2 fund manager, said, “The pace and quality of our deployment of the first HEVF value-add fund led us to accelerate the anticipated launch of the follow-on fund. HEVF 2 will closely follow the philosophy of its predecessor, prioritizing skilled asset-level value creation in prime locations of Europe’s most institutional city markets. We expect that HEVF 2 will be almost twice the size of HEVF 1, to reflect the strength of the opportunity pipeline the Hines platform is able to originate, and it is anticipated to be Hines Europe’s largest closed-ended fund to date. That clearly demonstrates the firm’s emphasis on this flagship value add series.”
“In attracting this level of commitments at the first closing of the fund and securing our first significant seed assets, we’re continuing our track record of speed and agility in both raising funds and generating off-market deals. The GRESB benchmark adds a new dimension to this second fund, and one which will undoubtedly be a compelling factor to many of our investment partners, who are increasingly prioritising ESG in their investment strategies.
Alex Knapp, Chief Investment Officer for Hines Europe, added,“As our flagship value add fund, HEVF 1 has been a huge success story, with HEVF 2 representing the next chapter. The fund series builds on our unparalleled European platform with local team members in 17 offices across 12 countries, providing unique local intelligence across the key European city markets.
“Our strength in depth across the continent and trust and confidence we instill in our investment partners, while leveraging our proprietary research, enables us to quickly deploy capital and execute key off-market transactions across multiple locations and sectors, as we’ve demonstrated with our first seed assets for this fund.”
Hines is a privately owned global real estate investment firm founded in 1957 with a presence in 219 cities in 23 countries. Hines has approximately $124.3 billion of assets under management, including $63.8 billion for which Hines provides fiduciary investment management services, and $60.5 billion for which Hines provides third-party property-level services. The firm has 148 developments currently underway around the world. Historically, Hines has developed, redeveloped or acquired 1,362 properties, totalling over 449 million square feet. The firm’s current property and asset management portfolio includes 514 properties, representing over 222 million square feet. With extensive experience in investments across the risk spectrum and all property types, and a pioneering commitment to sustainability, Hines is one of the largest and most-respected real estate organizations in the world. Visit www.hines.com for more information.
Since entering Europe in 1991, Hines has grown its European platform to include offices in 16 cities as well as a presence in 47 cities in 12 countries, with €18.2 billion of assets under management in Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Poland, Spain and the United Kingdom.