Hines, the global real estate developer and fund manager, is moving into two new property types for tenants at opposite ends of the age spectrum.
The Houston-based firm said last month it is partnering with a healthcare real estate investment trust to build a senior living center in Manhattan’s Midtown neighborhood, a new strategy for the firm in an area known more for office skyscrapers than for senior housing. The firm, which had $89.1 billion in assets under management as of May, plans to demolish the current buildings and construct a 15-story property on the development site with ground-floor retail for an undisclosed price. This is Hines’ first foray into senior housing, with future investments likely, said chief investment officer Hasty Johnson.
“The fact that Manhattan is not your typical senior housing market is exactly what drew us to this project,” Johnson told PERE. “The city is vastly underserved when it comes to quality care for assisted living and memory care services.”
In a separate deal last month, Hines bought a student housing portfolio comprising six development sites in the UK for £150 million ($220 million; €192 million), marking its entry into another real estate strategy where it also plans to expand. Hines made the purchase on behalf of a group of German pensions, according to the firm’s announcement.
“We are not in a rush and intend to move carefully, but we do have plans to expand the strategy in the UK and select other markets in the future,” Johnson said.
Some industry onlookers observed that Hines is arriving relatively late to these sectors, which have moved from niche areas with few players to mainstream real estate strategies. Smaller firms, such as Chicago-based Harrison Street Real Estate Capital, have carved out a name for themselves in these spaces over the past 10 years, while other established investors, such as Prudential Financial’s PGIM, have raised multiple funds to deploy capital in these investment strategies alongside investments in more traditional property types.
Johnson countered the criticism, saying that the time was right for Hines to make investments in these additional areas.
“It took the right combination of timing, partnership and opportunity to enter these two new platforms,” he said. “We are confident in our ability to execute and operate good real estate assets regardless of the type.”