Ontario Teachers returns to Asia with Hines’ debut regional fund

With over 20 years of relationship, the Canadian investor has anchored the manager’s first open-ended pan-Asia fund to invest across different sectors.

Cadillac Fairview, the real estate investment arm of Canadian pension fund Ontario Teachers’ Pension Plan, has anchored US real estate manager Hines’ debut pan-Asia flagship fund.

The Canadian investor has committed $400 million to Hines Asia Property Partners. The investment marks as OTPP’s return to Asia real estate, having made its last property investment in the region in the early 2000s. OTPP has offices in both Hong Kong and Singapore but reportedly has no property professionals or real estate assets in the region. According to its 2020 annual report, the investor has 85 percent of its C$25.2 billion ($20.5 billion; €17 billion) real estate portfolio invested in Canada, 7 percent in emerging markets, 2 percent in the US and 1 percent in the UK.

With a goal to diversify its portfolio in the long term, OTPP will treble its overall exposure in region from 10 percent to 30 percent in the next five years, according to media reports. Within real estate, the investor will be increasing its exposure to  the region in part through its two-decades-long relationship with Hines.

“[Hines] have a proven track record as a trusted manager and operator with demonstrated history of successfully executing investments through their local market teams,” Duncan Osborne, executive vice-president of investments at Cadillac Fairview, said.

With the $400 million initial commitment from Cadillac Fairview, the fund will have an investment capacity of approximately $900 million. Targeting core-plus returns, the open-ended fund will look at core, core-plus, value-add and develop-to-core investments across different sectors in Japan, Australia, South Korea, Singapore and China.

Prior to launching its first pan-Asia flagship fund, Hines invested in the region with capital from its four global funds and three dedicated Asia-focused country funds, in addition to capital raised on a deal-by-deal basis. Apart from its investment business, the real estate firm also launched operating platforms in China in 1996, India in 2006, Australia in 2012 and Korea, Japan and Singapore in the past two years. These local operating platforms provide property management, leasing and other services to their clients. Currently, it has $5.3 billion of assets under management in Asia-Pacific.

To pave the way for its new pan-Asia fund, Hines opened its Singapore office in 2020 to help build its investment capability in the region. Before that, the firm handled its investment management for Asia out of its global headquarters in Houston.

Earlier this year, it hired former M&G Asia chief investment officer Chiang Ling Ng to lead the firm’s investment business in the region out of its Singapore office. Hines also expanded its presence in Japan and South Korea with two new hires and expects to recruit additional acquisition and development personnel in both countries this year. The new business initiatives in both countries will be overseen by managing director and 10-year veteran Drew Huffman, who relocated from Hong Kong to Tokyo in early 2020.