(MILAN) – Hines, the international real estate firm, has finalized the investment into a residential real estate portfolio in Milan on behalf of the Hines European Value Fund 2 (HEVF 2) marking the Fund’s first closing in Italy.
This investment represents an opportunity for HEVF 2 to create market-leading Build-to-Rent (BTR) with superior amenity provision and placemaking. Milan’s residential sector is expected to benefit from strong market fundamentals of rising demand, driven by accelerated trends in the demographic shift toward renting and creating world-class assets for long-term institutional investors.
The portfolio, spanning 40,000 square meters, is located in the South-East quadrant of Milan in Via Trivulzio 6/8, Via Roncaglia 8 and Via Villoresi 11/13/15, respectively. In keeping with the growing demographic expansion of the city in which some 300,000 new inhabitants are expected by 2035, Hines expects to launch approximately 300 residential units onto the market by 2023 to meet growing BTR product demand.
The assets, built in the 1970s and currently in disuse, will undergo extensive regeneration in keeping with the latest international standards for sustainability, with the aim of obtaining the highest LEED certification level. The properties are located in the heart of Milanese historical residential neighborhoods in the De Angeli, Via Washington and Navigli areas, and are less than 15 minutes from Piazza Duomo by public transport. In recent years, the area has seen major infrastructure improvements alongside the development of a dense network of public transport connections, including the new M4 underground line which will be operational in 2022.
Paul White, Senior Managing Director and Fund Manager HEVF 2, at Hines, commented: “From an investment perspective, it has been relatively hard for many cross-border investors to gain market exposure to the residential sector in Milan, so achieving this rare, off-market opportunity and quality in one transaction is a great success for the Fund. Our advantage of a ‘boots on the ground’ team in Italy with in-depth knowledge of the local market has enabled us to make thorough on-site diligence of the assets and is yet another example of this advantage we have enjoyed repeatedly across Europe since Q1 2020. It has meant the pace of our deal origination and execution has not suffered.”
The HEVF Series invests across all the major real estate sectors. Hines’ deep local market platform across the region allows for versatility and enables the fund vintages to adjust strategies to find the best opportunities in markets and sectors at any given time. HEVF 1 focused on core-plus and value add office, whereas HEVF 2 is most active in BTR and logistics. This acquisition further increases the Fund’s allocation to BTR which is already a significant portion of HEVF 2.
HEVF 2 capital raising is concluding and in parallel, with this investment, the Fund will be approximately 50% allocated to 7 investments across Germany, Italy, Spain and the UK with further investments in France, Italy and the Netherlands expected to conclude in the coming months which, upon completion, would mean the Fund would be almost 70% allocated.
This acquisition marks Hines’ latest investment in the living sector in Milan, following a string of recent deals, including MilanoSesto, Nodo Bovisa, Borgospesso 15, Ex Trotto, Torre Valesca, Giovenale 15 and Ripamonti 35. Hines ongoing strategy is to develop over 5,000 new BTR units in Italy by 2025 by transforming urban areas or individual buildings that have been in a state of disuse into innovative residential solutions aimed at professionals, couples and young families. This model is designed to meet modern living needs including flexibility of space, affordable rents, fantastic amenity provision, spaces dedicated to coworking, gyms and nurseries on site, communal areas to encourage socializing and community interaction, and green areas including external and internal gardens.
“We continue to push ahead with the growth of our living platform in Milan. We believe in the sustainable development of this constantly evolving city, which increasingly requires new rental options paired with services designed for wellbeing to meet ever-increasing demand, confirms Mario Abbadessa, Senior Managing Director and Country Head of Hines Italy. “The creation of new living spaces, accompanied by innovative ancillary services at sustainable and affordable rents, will improve the quality of life of residents, and at the same time regenerate historic residential areas in Milan that have been long neglected. In essence, we are contributing to the redevelopment of the neighborhood in its entirety and the city of Milan, while creating value for all residents, characterized by mobility, connections and greenery, with a focus on environmental and social responsibility.”
Hines is a privately owned global real estate investment firm founded in 1957 with a presence in 240 cities in 27 countries. Hines oversees a portfolio of assets under management valued at approximately $160.9 billion¹, including $81.7 billion in assets under management for which Hines serves as investment manager, and $79.2 billion representing more than 172.9 million square feet of assets for which Hines provides third-party property-level services. Historically, Hines has developed, redeveloped or acquired approximately 1,450 properties, totaling over 485 million square feet. The firm has more than 180 developments currently underway around the world. With extensive experience in investments across the risk spectrum and all property types, and a pioneering commitment to ESG, Hines is one of the largest and most-respected real estate organizations in the world.
Since entering Europe in 1991, Hines has grown its European platform to include offices in 16 cities as well as a presence in 62 cities in 13 countries. Hines oversees a portfolio of assets under management valued at approximately €26.3 billion of assets under management in Europe, including €21.9 billion for which Hines serves as an investment manager and €4.4 billion representing more than 3.8 million square metres of assets for which Hines provides third-party property-level services, in Austria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Poland, Spain and the United Kingdom.
¹Includes both the global Hines organization as well as RIA AUM as of December 31, 2020.
Visit www.hines.com for more information.
About Hines European Value Fund 2 (HEVF 2)
HEVF 2 is a euro-denominated, Luxembourg-based investment fund launched in December 2019. Managed by Hines, its objective is to acquire a portfolio of core-plus and value add profile commercial real estate investments throughout the major European markets on behalf of an institutional investor group. Whilst the fund has broad flexibility across sectors, the portfolio is largely focused in Logistics, Residential and Office usages.
HEVF 2 follows its predecessor HEVF 1 (2017 vintage) in continuing the flagship HEVF series for Hines in Europe, alongside the Hines European Core Fund (HECF) open-ended core flagship vehicle. HEVF 1 raised €721 million of equity commitments, exceeding the original fund target size by over 40%. HEVF 2 secured €637 million of investor commitments in its initial closing in December 2019, and held a number of subsequent closings through 2020. Final closing is expected to take place by July 2021.