Hines raises €390m for emerging Europe fund

The Houston-based real estate firm has corralled a total of €390 million for its Hines Russia & Poland Fund, giving the vehicle total leveraged purchasing power of €900 million in the region.

Hines, the international real estate firm, has raised a total of €390 million ($497 million) in equity commitments for its Russia & Poland Fund (HRPF), PERE has learned.

Houston-based Hines, which is one of the 30 largest private equity real estate firms in the world, is due to announce as early as tomorrow that it has achieved a final close of its fourth fund concentrating on Russia and Poland. It also is expected to highlight how the vehicle has total leveraged firepower of €900 million for opportunistic real estate investments in the region, characterised as emerging and undersupplied.

The firm has won commitments from an array of financial institutions, sovereign wealth funds, pension plans, trusts and other institutional investors from across the three main geographies of Europe, Asia and the US. Though it is not expected to identify any LPs in its fund, it is known that one is the European Bank for Reconstruction and Development (EBRD). The EBRD revealed in public minutes of a board meeting on 17 April that it had approved a €25 million increase in its equity investment to the lower of €100 million or 30 percent of the total capital commitments upon the fund’s final close.

That decision followed a €75 million commitment the EBRD made to the vehicle in 2010, when the bank described it as one of its “biggest regional projects.” In the 17 April minutes, the EBRD said: “The additional capital will allow the fund manager to continue to invest in development opportunities, expand its activities into the regional cites in the targeted countries and invest in distressed opportunities as they arise on the market.”

The Hines Russia & Poland Fund already has allocated equity to three new projects in Russia in the retail sector. Projects include outlet mall developments in St. Petersburg and Moscow and a ‘big box’ retail development in Moscow. The outlet projects are the second and third such developments by Hines in Russia, providing retail space that is in high demand by tenants.

Hines has long been operating in Russia and Poland, having started operations in 1992 and 1996 respectively, and it already has around $2 billion in assets under management in the region. The opportunistic HRPF strategy will operate alongside the core acquisition strategies of Hines in both Russia and Poland, with country managers Lee Timmins and Mietek Godzisz executing and managing investments on behalf of the fund. The vehicle aims to invest approximately 80 percent of its capital in Russia and 20 percent in Poland

Hines president and chief executive officer, Jeff Hines, is expected to say tomorrow that Russia and Poland have long been markets where Hines has enjoyed competitive advantages and exceptional performance.

Russia manager Timmins added: “We are very excited about the development prospects in Russia in the retail, warehousing and residential property sectors, which take advantage of the growth of the Russian middle class and the rapidly growing consumer spending power.”

Mietek Godzisz said: “Poland remains a growing and vibrant economy in spite of European economic headwinds. We continue to believe that very interesting opportunities for investment in the office, retail and mixed-use sectors are available in multiple cities throughout Poland.”