Real estate is becoming more of a service than an asset, with the growing influence of occupiers and technological trends. Private real estate development and investment firm Hines’ uniquely structured $1.5 billion joint venture partnership with one of the world’s biggest pension giants, South Korea’s National Pension Service, announced in December, exemplifies the changing complexion of real estate.
Leading the company’s efforts is chairman and chief executive Jeffrey Hines, who has been awarded PERE’s Global Industry Figure of the Year (and Lifetime Achievement Award). Hines inherited the chairmanship from his late father and company founder, Gerald Hines, last year, and currently oversees a portfolio of $144.1 billion of assets under management.
Under the younger Hines’ leadership, the firm was able to raise capital from NPS for the trend-defining, long-term discretionary mandate to develop properties across property types and across the world. Hines’ vision, as the firm’s executives explained to PERE back in December, includes developing assets that can cater to the fast-changing occupier needs across sectors, demonstrating resilience and permanence in a post-crisis world.
Hyo-Joon Ahn, NPS’s chief investment officer, said at the time that the long-term strategy is to “capitalize on the transformation of living environments, consumer behavior and space-use patterns combined with the latest technology in real estate
This was not the only feat achieved by the Houston-based manager last year. The firm successfully completed seven office transactions in the US, totaling roughly $3.8 billion. These include the $492 million acquisition of a 49 percent share of One Madison Avenue alongside NPS, and a partnership with the Canadian investor Ivanhoé Cambridge for a 10-million-square-foot office portfolio asset management separate account. The volume and scale of deals executed in the sector has helped Hines bag the Office Investor of the Year award as well. The firm won 33 percent of the total votes for this category, ahead of Tristan Capital Partners and Brookfield Asset Management, both of whom invested significant equity in European and Indian office sectors, respectively.
The coronavirus pandemic and the subsequent economic shutdowns the world over have raised existential questions about the future of office assets. With remote working becoming commonplace, there have been concerns surrounding the occupancy and leasing appetite for offices in the coming years, especially in urban city centers such as New York and London.
That Hines was successful in executing such large office deals, in a year of record-low office transaction levels amid all the headwinds, speaks volumes about its capabilities and conviction in the sector as a long-term investment.
Another property sector that saw some headwinds in the initial months of the pandemic, but has since made a comeback, especially in the US, is student housing. Total volume of student housing investments in the US was just shy of $4.5 billion in 2020, according to data provided by the property services firm CBRE. It is also a sector that features prominently in the transactions closed by the award winners last year, across different categories.
German insurer Allianz Real Estate has been awarded global Institutional Investor of the Year for its massive outlays globally, beating other investor heavyweights like Singaporean sovereign wealth fund GIC and the Canada Pension Plan Investment Board.
A highlight transaction was Allianz’s investment in the accommodation provider Scape Australia’s A$2 billion ($1.47 billion; €1.2 billion) purchase of the Urbanest Australian student housing business.
The niche property sector was also a primary investment target for investment management firm Harrison Street, which has won the Alternatives Investor of the Year award. According to PERE data, in August the firm raised $7.42 billion for Harrison Street Core Property Fund, which is an open-end vehicle investing in student housing as well as other diversified sectors across the US.
Harrison Street was also successful in extending a syndicated line of credit on a student housing portfolio to $700 million in November, which the firm has described as one of the largest real estate loan syndications to have taken place in 2020. And in Europe, the firm formed a partnership with CA Ventures in December to acquire and develop student accommodation in the UK, its most recent investment as part of its ambitious European expansion efforts.
Another ambitious transaction, which ended up becoming last year’s largest private equity real estate deal, has won four awards in the global category and several more in the North American region. New York-headquartered real estate giant Blackstone’s $14.6 billion recapitalization of BioMed Realty Trust, its mega life sciences platform, in October, has helped the firm sweep the global Firm of the Year and Deal of the Year awards.
The headline-grabbing transaction helped Blackstone win 41 percent of the total votes that came in for the Deal of the Year category, far ahead of the 24 percent of the votes received by the runner-up. Check out PERE’s detailed analysis of the deal under the North America award write up.
Additionally, CBRE Global Investment Partners has also won the global Indirect Firm of the Year award for its role in the transaction. The firm invested $500 million in the recapitalization; in addition to making a $500 million secondaries purchase of units in the Prologis European Logistics Fund and committing $300 million to NREP’s fund and a logistics co-investment.