Hines eyes €40bn AUM target for European business – Exclusive

The Houston-based real estate investment manager is seeking to double its assets in the region in five years with a major push in urban logistics.

Hines is aiming to grow its assets under management in Europe from €20.9 billion to over €40 billion over the next five years, Alex Knapp, Hines’ chief investment officer for Europe, told PERE.

Alex Knapp, Hines’ chief investment officer for Europe

“In terms of the AUM of the business, we set a goal to double its size over five years, and I think that’s possible. The majority of AUM growth we expect to come through discretionary vehicles and a few key separate accounts. So, some very material growth on how we capitalize our business, with an orientation away from one-off joint ventures and towards discretionary vehicles.”

The firm has put logistics at the heart of its growth plans for the region, a bet highlighted recently by the strategic appointment of Logan Smith as head of European logistics. Smith will work closely with Hines’ dedicated country teams to identify opportunities in both major and emerging markets in the region. He will be based in Hines’ Amsterdam office.

Urban logistics is currently one of the most interesting investment opportunities in Europe to Hines, said Knapp. “Logistics is a clear winner in the eyes of the investor, so the repricing and any arbitrage we’ve seen in logistics have been the smallest” among the property sectors.

As part of Hines’ push in the space, the firm expects to launch a new separate account exclusively targeting European urban logistics developments. The new account, explained Knapp, will be Hines’ fourth vehicle investing in the regional sector. The other three are Hines’ European core and value-add funds and the Hines Global Income Trust.

Hines has acquired logistics assets in Copenhagen, Amsterdam and Utrecht through Hines Pan-European Core Fund this year and purchased industrial properties in London, Munich and Madrid through Hines European Value Fund 2. Hines Global Income Trust also invests in the industrial sector, but globally. The real estate investment trust currently has around $1 billion-worth of European real estate in its portfolio.

According to Knapp, all three vehicles will increase their exposure to logistics as part of the firm’s push in the sector. The new account, however, will invest exclusively in European urban logistics and with a focus on developments.

“We are going to focus on more complex urban logistics areas, where our skills in development and getting permissions and entitlements is a differentiator,” said Knapp.

Under its growth plan, Hines is looking to enter the French, Italian and Nordics logistics markets. It already has around €1.5 billion of assets under management in logistics assets across the UK, the Netherlands, Germany, Poland and Spain.

Despite this logistics push, “we are planning to continue to be a diversified business focusing on four product types,” Knapp said. From the firm’s €20.9 billion European portfolio, around €4 billion is allocated to the living sectors, some €4 billion to retail and mixed-use, around €1.5 billion to logistics and the remainder to the office sector.

Since entering Europe in 1991, Hines has grown its European platform to include offices in 16 cities and €20.9 billion of assets under management spanning 49 cities in 11 countries.