Hines, a global real estate investment, development and property manager, has raised an additional €305 million of equity from institutional investors for the Hines European Value Fund 3.
The fund has raised over €1.45 billion since its launch in mid-2022, with an initial target of €1.5 billion in equity. Final closing of HEVF 3 is planned to take place in November 2023, with the fund’s investment period running until mid-2026. Hines has previously raised over €1.8 billion of commitments for the first and second HEVF funds in 2018 and 2020 respectively.
After adopting a prudent and patient stance for much of the last year, in recent weeks, the pace of allocation of HEVF 3 has accelerated, it said. The fund has completed its third investment and has another four in exclusivity. If all are successfully acquired, these investments would bring HEVF 3 to around 25% allocated.
"We have been patient with our dry powder and very intentionally applied a high threshold of selectivity over the last year, only committing to two investments up to May 2023," said Paul White, senior managing director and fund manager of the HEVF series. ""We are finally feeling steadier market ground and returning liquidity at appropriately re-based pricing. We are convinced we can invest into a generational cycle correction, while post-COVID behaviours and the ESG agenda cut across existing supply and demand patterns..”
Like the other HEVF funds, HEVF 3 is expected to acquire a value-add portfolio diversified across major sectors in primary European markets. A key emphasis of the fund series is proprietary deal origination through Hines’ 17 local office teams in Europe, and Hines’ in-house ability to underwrite and execute complex value creation initiatives across both commercial and residential real estate, the company said.
The series places high priority on sustainability credentials, and each project investment HEVF 3 acquired aims to target the highest ESG certifications and performance. HEVF 2 achieved a score of 94 out of 100 in GRESB for 2022 and was also recognised as ESG Closed-End Fund of the Year globally in 2022 by the US industry body Pension Real Estate Association.
Despite a challenging macroeconomic and capital raising environment, with this latest closing, HEVF 3 has now attracted commitments from 30 limited partners, including major institutional investors, alongside a Hines co-investment. Fifty-seven percent of the commitments have been made by existing investors in the HEVF series, Hines said, which demonstrates "strong conviction in the strategy and Hines’ ability to execute it effectively".
The HEVF series sits alongside Hines’ other European flagship funds including its open-ended core-plus vehicle, Hines European Property Partners and long-term core strategy, Hines European Core Fund.