Heitman Latest Firm Looking for Overseas Opportunities

Chicago-based real estate investment management firm Heitman L.L.C. has just wrapped up the first closing of Heitman European Property Partners IV, the company’s fourth European value-added property investment vehicle, with approximately $486 million in hand. The sizeable amount of money raised will facilitate leveraged buying power totaling nearly $950 million for acquisitions of commercial real estate and debt in Europe, where some hard-hit markets could present long-term opportunities to investors. The Heitman fund’s investment activity will encompass various sectors of the real estate market, including retail, multi-family, offices and logistics properties, but not hotels. As is the case in the United States, the sorely limited availability of credit in Europe opens the door for funds with cash to pounce on good deals. According to the Urban Land Institute and PricewaterhouseCoopers’ emerging European trends report, wary investors–whose assessment of prospects for all property types this year does not exceed the “fair value” category–retail ranks highest, followed closely by hotels and mixed-use, with apartments, offices and industrial not far behind; when taking subsectors into consideration office assets in central business districts top the list. The fund will rely on joint venture partnerships with entities possessing expertise in the field of property operations to increase the value of the assets, as well as to develop new projects. “We want to mitigate and minimize risk, but we have the ability to work with stabilized assets and development opportunities,” Gordon Black (pictured), managing director of Heitman’s international private real estate equity division, told CPN. As for locations, it’s not just Western Europe that will be targeted. “We have the geographic ability to buy from France to Russia and everyplace in between,” Black noted. “When we look at Europe–and we have to take into context where the global economy is–we’ve seen, for example, in Central Europe they’re in growth mode. There are some fiscal issues but we still see opportunity in those markets that are emerging. And given some of the dislocation in the markets, we think we’ll be well positioned to take advantage of those opportunities.” While desirable investment prospects exist for those with cash, HEPP IV will not be hasty in making its first moves; engaging in prudent, measured actions will be the guiding principle, according to Black. “We have a long investment period of three years, so we’ll make sure we are going into the markets in the right way,” he said. “We don’t feel any pressure to dive in.” It is quite possible that HEPP IV will have even more money to spend in Europe. There’s a 12-month window for subsequent closings. “Our target is no more than $600 million in terms of capital, but it’s clear we can execute our strategy at the current level, as well.” Other real estate concerns are eyeing Europe, too. CB Richard Ellis Realty Trust announced a public offering last month with the hopes of raising as much as $3 billion to invest in commercial properties; 30 percent of those investments will be made abroad.