Global real estate firm Hines has created a closed-end fund for up to $2 billion in investment capacity dedicated to key markets in Toronto, Vancouver, Montreal and Calgary.
Avi Tesciuba, country head for Hines Canada, said the fund was established to develop and acquire properties with a focus on:
– mixed-use developments including office, residential and retail;
– multiresidential rental buildings, which are highly differentiated and amenitized; and
– highly amenitized office buildings.
“Over the past two decades in Canada, Hines has built a track record that gave our investor partners confidence that we can be a robust fiduciary of their assets and deliver strong risk-adjusted returns,” Tesciuba said in an interview with RENX.
“Canada offers a stable investment climate and with this capital at our disposal, we can act quickly and scale faster than ever, working with our local partners to bring the talent and the capital to get projects realized.
“It’s ready to deploy . . . in either development or redevelopments by which I mean repositioning, releasing projects that need some TLC.”
Hines remains bullish on Canada
Tesciuba said Hines has been very bullish on investing in Canada for a number of years mainly because of the country’s macro-economics.
“It’s got a strong immigration policy, an open immigration policy. It’s a very safe environment, highly educated, very stable financial markets controlled by a few large financial institutions.
“So all the fundamentals are strong and have been strong. We’ve been interested in the market for quite some time,” he said.
“In terms of the specific dynamic going on right now, you’ve got high construction cost escalation, you’ve got high inflation and you’ve got high interest rates. We think that combination of short-term dynamics is going to create some opportunities as well that we hope we can leverage.”
Since the launch of its Canadian operations in 2004, Hines has developed, acquired and/or managed over 14 million square feet of signature projects representing a wide variety of product types – from office buildings to retail, residential and mixed-use developments.
$5 billion in assets in Canada
Tesciuba said Hines has about $5 billion in assets under management, primarily in Toronto, Calgary and Vancouver. It has offices in Toronto, Vancouver, Calgary and Edmonton with about 110 employees. The two largest are Toronto and Calgary.
Tesciuba said Hines is focusing on those four major markets because of their size and strong demographics.
“There’s not a lot of markets in Canada with over a million people. What we do is so much tied to demographics, population growth specifically. And on the office side, the office-using population.
“So we focus on large urban centres and those four are where a lot of the Canadian population lives and have strong growth trajectories,” he explained.
“So far we’ve primarily been focused on the urban cores but I think we’re open to looking further afield within those major metros,” he continued. “Potentially outside of the core.”
Hines’ first Canadian fund fully deployed
The new investment fund is the second for Hines Canada. The initial fund was created in 2016 and raised about $1 billion. Tesciuba said that fund has been fully deployed.
“It no longer has any available bandwidth, so we’re raising a new fund to be able to capitalize on these opportunities,” he added.
Hines is a privately owned global real estate investment firm founded in 1957 with a presence in 285 cities in 28 countries. It oversees investment assets under management totalling approximately $90.3 billion.
Hines also provides third-party, property-level services to 373 properties totalling 114.2 million square feet.
Hines has developed, redeveloped or acquired approximately 1,530 properties, totalling over 511 million square feet.
The firm currently has more than 198 developments underway around the world.
“There are significant opportunities to invest in the highest-quality assets in the Canadian market,” Alfonso Munk, Hines chief investment officer, Americas, said in a statement.
“The venture will provide us with the flexibility to utilize decades of experience and our relationships to source and execute future-focused investment strategies across the risk spectrum.”