Hines Completes First Closing of $1.4B European Fund
- Jan 14, 2020
Less than four months after Hines launched Hines European Value Fund 2, the investment vehicle’s first closing has reached completion with equity commitments totaling €637 million, or approximately $708.9 million. The initial commitments leave the fund with more than 50 percent of its target equity raise of €1.25 billion, which equates to roughly $1.4 billion.
HEVF 2 launched in September 2019 and like predecessor Hines European Value Fund, it is a core plus/value-add fund. The overwhelming success of HEVF 2’s first closing didn’t quite come as a surprise to Hines, as investors making larger commitments came aboard early in the process. However, Hines’ priority for the initial raise was not about securing a certain amount of equity. “The important thing was to hold the closing on schedule to allow HEVF 2 to begin to harvest from the strong value-add pipeline Hines Europe is generating, for an unbroken time series of investing in the region,” Paul White, HEVF 1 and HEVF 2 fund manager at Hines, told Commercial Property Executive.
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HEVF 2 will be active in leading institutional city markets, targeting a range of risk profiles and asset classes with a particular focus on office properties. Hines has already landed two seed assets, a value-add office property in Munich and a residential rental community in Madrid, both of which the company sourced in off-market transactions. Upon completing the purchase of a mixed-use office and retail asset in London’s West End, HEVF 2 will have invested €300 million, or roughly $333.4 million.
Fans Old and New
Thirteen institutional investors contributed to HEVF 2, with approximately half the group having participated in HEVF 1, which raised €721 million, or nearly $810 million, over an 11-month period before closing oversubscribed in August 2018. “Our hope has always been to create a journey of vintages across cycles for a group of returning investors, diversifying their value-add exposure across time as well as diversifying across markets, sectors and profiles,” White told CPE. “At the same time, of course, we are delighted to welcome new LPs into HEVF 2, as the second fund is a significantly larger vehicle. That fact in itself opens up HEVF 2 as a potential investment for certain large institutions.”
Hines will hold additional closings for HEVF 2 through 2020 and will co-invest 5 percent of the total investor commitments. The firm anticipates that HEVF 2 will have leveraged buying power in the €3 billion range, or $3.3 billion, and will be Hines Europe’s largest closed-ended fund thus far.