Hines has raised an additional €305 million of equity from institutional investors for the Hines European Value Fund 3 (HEVF 3).
The fund has raised over €1.45 billion since its launch in mid-2022, with an initial target of €1.5 billion equity raising. The 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 vintages in 2018 and 2020 respectively.
Despite a challenging macro-economic 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. Furthermore, 57 percent of the commitments have been made by existing investors in the HEVF series, demonstrating strong conviction in the strategy and Hines’ ability to execute it effectively.
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. The fund has completed its third investment and has a further four in exclusivity. If all are successfully acquired, these investments would bring HEVF 3 to around 25 percent allocated.
In keeping with the consistent strategy of the HEVF series, 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 HEVF series places a high priority on sustainability credentials, and each project investment HEVF 3 acquired aims to target the highest ESG certifications and performance. Predecessor fund HEVF 2 achieved a score of 94/100 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 (PREA).
The HEVF series sits alongside Hines’ other European flagship funds including its open-ended core-plus vehicle, Hines European Property Partners (HEPP), and long-term core strategy, Hines European Core Fund (HECF).
Paul White, Senior Managing Director and Fund Manager of the HEVF series commented: “We expect to exceed our original fund-raising target of €1.5 billion, despite the very challenging market conditions, and we are excited about the potential for HEVF 3. 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. We are finally feeling the steadier market ground and returning liquidity at appropriately re-based pricing. We are convinced we can invest in a generational cycle correction, while post-Covid behaviours and the ESG agenda cut across existing supply and demand patterns. We anticipate this being a productive period for us to use our off-market origination network, our expert knowledge of fundamentals, and our value-creation skillset across the lifecycle of real estate assets to great effect for our investors.”