A pair of Hines executives has left the Houston-based investment manager to build out a real estate business focusing on secondary markets in the US.
On Monday, Starling Cousley and Clint Myers joined venture capital firm Revolution as partners. Cousley, formerly a fund manager for Hines’ value-add and core-plus platforms, and Myers, previously Hines’ chief strategy officer, will be charged with launching a direct real estate platform, focused on investing in office, multifamily and retail properties.
A spokesman for Hines declined to comment about the pair’s departure.
Washington, DC-based Revolution was founded in 2005 by Steve Case, the co-founder of AOL, to invest technology hubs outside the East and West coasts. The firm manages funds for growth, venture and seed-stage investments, with investors in the seed fund including Carlyle co-founder David Rubenstein, Amazon founder Jeff Bezos and former Hewlett-Packard chief executive Meg Whitman, according to its website. Revolution has $1.3 billion in assets under management, a spokeswoman said.
Previously, Revolution invested in real estate indirectly. Earlier this month, for example, the firm took part in a Series D funding round for shared meeting and workplace space provider Convene.
Cousley said that he and Myers had spent the last three years specifically focused on learning about the US’s non-gateway cities, eyeing markets with highly-educated residents and greater affordability than large coastal cities. Last year, the pair connected with Case and JD Vance, the best-selling author of the rural America-focused book “Hillbilly Elegy” and Revolution’s managing partner of its Rise of the Rest Seed Fund. In meeting the executives, Cousley said he found common ground between his real estate vision and Revolution’s non-Silicon Valley venture capital approach, as the new direct real estate business would help make such markets more attractive for startup and growth firms.
“We’re not going to these places just because yields are higher. We’re intent on changing neighborhoods and fostering areas for startup activities in these cities”
– Clint Myers
“In order for their VC thesis to ultimately reach its full potential, these places need good real estate,” Cousley said. “For companies to choose to locate in these markets, there needs to be good office [stock]. To attract good workers, there needs to be good retail and apartments.
“For us to go and try to do this on our own would not make sense. It would not allow us to maximize our full potential.”
Cousley noted that it was too early to talk specifics on how the platform would be capitalized, though he said the firm will hold assets for longer than private equity real estate funds would – likely for at least a decade. One area of focus will be investing in “opportunity zones” – low-income areas with tax incentives for investment. Additionally, Cousley highlighted markets including Ann Arbor, Michigan; Madison, Wisconsin; and Columbus, Ohio as areas of interest that are poised for further growth.
“We do recognize there’s a disparity between where capital goes and where opportunity is,” Myers said. “There’s a bias toward the large markets. At the end of cycles or in the second half of cycles, investors start reaching for yield. Some investors who are migrating from primary to secondary could be doing that, but what we’re doing is different. We’re not going to these places just because yields are higher. We’re intent on changing neighborhoods and fostering areas for startup activities in these cities.”
The duo plans to hire a larger team to support their efforts.
“You get good returns, at least in real estate, from being contrarian,” Cousley said. “The strategy we’re putting together is contrarian, so it can earn outsize returns and have social impact because we’re doing things that fly under the radar of what larger investment managers are doing.”
Cousley and Myers are the latest private equity real estate executives to join or launch venture capital or startup firms. Blackstone in particular has seen a number of employees leave to start their own ventures: Ryan Williams founded New York-based real estate investment manager Cadre after leaving Blackstone in late 2014. Brad Greiwe and Brendan Wallace, two former Blackstone employees, teamed up to found property technology venture capital firm Fifth Wall Ventures in 2016.