Hines Launches $1B US Tactical Fund

International real estate firm Hines has launched the first fund in its tactical series, aimed to redevelop and develop real estate assets to better serve the current market needs. Hines U.S. Property Recovery Fund has a equity raise target of $1 billion by the final close in May 22. The fund has $590 million in equity commitments, resulting in $1.5 billion in buying power.

Operating under the acronym HUSPRF, the closed-end fund will target “tactical” opportunities in the 30 largest metros in the US, seeking both development and redevelopment business plans across a wide variety of asset classes, from the core food groups to niche property types, like student housing, data centers and life science. According to Dan Box, HUSPRF fund manager at Hines, in a statement about the launch, “The ways in which we use real estate have changed drastically over the last 10 years, but the built environment hasn’t always kept pace. There’s a lot of product that needs to be reimagined and reenergized. In an environment where returns are getting thinner, we believe the right approach is to focus on asset-level value creation and actually boosting net operating incomes rather than just relying on a buy-low, sell-high thesis.”

The first fundraise round garnered interest from foreign and domestic institutional investors, including pension funds, financial institutions, family offices, foundations and insurance companies. Hines also secured an incremental $150 million from investors for co-investments alongside the fund.

HUSPRF has already closed on its first two investments: The purchase of 550 Piercy Road, a 25.6-acre site in San Jose, California, where Hines will develop two class-A industrial buildings totaling 414,000 square feet, and the purchase of 3130 Fairview, a 3.9-acre site in Santa Ana, California, where the fund will develop an 82,000-square-foot class-A industrial building. The two acquisitions represent a total investment of $186 million. Construction on the former will begin in late 2023, while construction on the later will begin late this year.

Hines is actively pursuing a range of new business models. Late last year, the firm raised $750 million for a fund targeting next-gen assets in top-performing markets across the US.  The capital raise included a $100 million investment from Hines, giving it $1.2 billion in immediate investment capacity. Known as Hines US Property Partners, or HUSPP, the fund expects to invest across multifamily, industrial, office, and mixed-use sectors as well as niche sectors like the burgeoning life sciences and self-storage asset classes with a mission to deliver future-proofed, sustainable assets that align with the Hines’ corporate ESG initiative.