Heitman closes three new investment funds totalling USD3.2bn in equity commitments
Heitman (Heitman), a global real estate investment management firm, has held the closing of three private market investment funds, exceeding the cap for Heitman Value Partners V (HVP V), a North American private equity fund, reaching the cap for Heitman Real Estate Debt Partners II (HDP II), a high-yield debt investment fund, and reaching the target for Heitman Global Real Estate Partners II (G II), a global core plus fund.
Combined, the closings totalled approximately USD3.2 billion in equity commitments, which includes commitments to the funds and co-investment vehicles that will deploy capital alongside certain of these funds.
“We are pleased to announce the closes of HVP V, HDP II, and G II,” says Maury R Tognarelli, Heitman CEO. “The formation and subsequent capital raises for these funds aligns well with the improvements in economic and property market conditions as the globe continues to recover from the public health crisis. The funds are well positioned for the targeted investment opportunity sets and should benefit from the favourable entry points expected to evolve as the recovery extends. In this environment, strategies underpinned by secular trends, and in sectors such as multifamily, single-family rentals and self-storage, that generate returns from a combination of income and value creation opportunities are attractive.”
“We are grateful for the trust of our new and existing clients,” says Lewis Ingall, Heitman Senior Managing Director. “Early in the pandemic, we recognised the need to accelerate the timelines of strategies positioned to benefit from deploying capital early in the recovery period of a market cycle. We are pleased to have launched and closed these three new funds, which meet the market needs and broaden the range of investment strategies available to our clients to assist them in achieving their portfolio objectives.”
The three investment funds are:
Heitman Value Partners V (HVP V), a North American value-add, fund series with the primary strategy of investing in the equity of US property where some type of mispricing of risk is present and whose value can be increased through the implementation of value-creation strategies. These value-creation strategies require the prudent use of capital, modest leverage, and active asset management in order to achieve enhanced investment returns.
Heitman received capital commitments of approximately USD1.9 billion to this strategy, surpassing its initial target and hard cap. The total capital commitments include commitments to the fund and co-investment vehicles that will deploy capital alongside the fund. Through these commitments to HVP V, Heitman has invested or has the capacity to invest in approximately USD4.75 billion of property targeting sectors delinked from the broader economy and positioned to perform across economic cycles including multi and single-family rentals, medical office, self-storage, student and senior housing.
Heitman Real Estate Debt Partners II (HDP II), a North American high-yield debt fund series that will provide financing to high-quality borrowers seeking short- to medium-term loans secured by properties with strong operations in order to implement value creation strategies and benefit from the expected market recovery. The fund will seek to aggregate a portfolio of high-yield debt investments arising from the dislocation in US real estate capital markets triggered by the pandemic, using structure to manage risk while generating the majority of the fund’s return through income.
Heitman received capital commitments of USD500 million to the strategy, reaching its hard cap. Through these commitments to HDP II, Heitman has originated or has the capacity to originate approximately USD1.5 billion of loans targeting property sectors poised to perform well during a market recovery in US primary and secondary market locations via a variety of loan structures including subordinate debt, senior bridge loans, and senior construction loans.
Heitman Global Real Estate Partners II (G II), a global core-plus fund that will assemble and operate a global portfolio of properties diversified across sector, geography, and investment strategy. Heitman’s global investment approach is rooted in a proprietary framework that covers three investment themes: divergence or smart diversification among traditional property types, convergence or capitalisation of maturing or mispriced property types, and delinked or seeking assets with defensive traits less tied to economic cycles.
Heitman received capital commitments of approximately USD750 million to the strategy, reaching its target for the fund. Through these commitments to GII, Heitman has invested or has the capacity to invest approximately USD1.5 billion in global property.