NEW YORK CITY—The team of 22 people responsible for Harvard endowment's $3.4 billion real estate portfolio will be moving to Bain Capital, effective February 1, 2018. Dan Cummings, currently the managing director and head of real estate at Harvard's endowment, will maintain his same title but at Bain Capital. He had helped found the real estate group at Harvard in 2010.
“Harvard will be a client with a separate account. We will have responsibility for the existing direct real estate investment portfolio that we created while at Harvard,” says Cummings in a GlobeSt.com interview.
Cummings explains Harvard is moving to a generalist model, and a team of generalists will be managing and executing the real estate investment strategy for Harvard for investments in the future going forward. Although Harvard had a pre-existing relationship with Bain, it did not include the real estate sector.
The move is a major coup for Bain Capital, which had not previously been involved in the real estate investment class.
Cummings says that the Harvard Management Company and Bain share an investment philosophy. “We invest thematically in real estate investment strategies that we research significantly before we begin our investment activity in a space,” says Cummings. “Typically these themes are underpinned by a longer term secular trend.”
While working on the strategies, Cummings' group would employ experts that have an edge in sourcing and in operating assets. His team would then focus on executing business plans, designed to add value and improve the earning power of the assets.
As examples for real estate, Cummings says with the theme of aging of America, the Harvard real estate investments have been active in senior housing, independent living, assisted living and memory care. With technology, they have been active life sciences and innovation spaces, developing properties that serve the growing and changing needs for research. With another theme, millennials moving into the city and changes in lifestyle of work and play, the real estate team had acquired and developed self-storage across the US.
Many of the Harvard real estate team's themes overlap with significant areas of focus for Bain including life sciences and the retail sector. Bain's experience in Europe and international credit will enhance real estate opportunities. The addition of the real estate team will benefit the existing businesses such as Bain Capital Credit's global distressed and special situations portfolio, that have a real estate component.
It has been widely reported that N.P. “Narv” Narvekar, Harvard Management's CEO hired a year ago, has been seeking to lay off employees at the endowment and make changes to improve less than stellar investment results. Bloomberg reported that Narvekar announced in January that he would be revamping the endowment, spinning out the real estate team.
However, Cummings notes the Bain real estate team has Harvard's continued support for future real estate investment strategies while at Bain.
“Since inception, this senior team has been a constant top performer at Harvard at the endowment, where it invested $3.4 billion in more than 350 properties,” says Cummings. “We're moving to Bain Capital managing a portfolio with an equity value of more than $3 billion as we start the business.”
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Betsy Kim
Betsy Kim was the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
