Hines, NPS of Korea Form $1.5B Joint Venture

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Hines and the National Pension Service of Korea have joined forces on a new enterprise with the formation of a build-to-core venture. The $1.5 billion equity joint venture will invest in developments in urban infill locations across the globe.

While a great many investors are wary of initiating developments amid the uncertainty caused by the global pandemic, Hines and NPS are all in, having already committed 20 percent of the new venture to projects in North America and Asia. However, the partners didn’t take the issue of timing lightly when they decided to launch the venture. “We firmly believe this strategy will benefit from market timing in the sense that distress in some markets will create opportunity for new development, which would not have been possible at the peak of the last cycle,” David Steinbach, global chief investment officer with Hines, told Commercial Property Executive. “This is about getting ready for what comes next after the pandemic.”

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The venture will focus on producing a portfolio of premier assets that are resistant to market uncertainties. The projects will be complex, one-of-a-kind undertakings requiring a substantial amount of time to realize. “We do think there will be a flight to quality on the other side of this and with this venture we have the opportunity to build what will resonate the most with our customers next,” Steinbach said.

With an eye on high-barrier-to-entry markets buoyed by innovation and new technology, Hines and NPS are pursuing developments in a bevy of sectors, including mixed-use, residential, office and logistics. “Both NPS and Hines firmly believe a globally diversified portfolio across not only geography but also sectors will produce uncommon outcomes,” Steinbach noted. “Solving for one product type, one sector, in a dynamic world today restricts the ability to focus on the right outcome for long-term investments.” Simply put, he added, the venture’s investment strategy targets developing best-in-class in the best locations.  

Collaborations

On behalf of the partnership, Hines will oversee sourcing, designing and the execution of development opportunities for the venture, while bringing other valuable tools to the table. “The ability that the Hines global platform affords is boots on the ground in all major markets globally which provides access to permanent land sites with the flexibility to determine the best use appropriate for the location will create lasting value,” Steinbach said.

The new build-to-core venture marks the continuation of a relationship Hines and NPS established years ago. Previous endeavors include the two companies’ creation of a joint venture with SL Green Realty Corp. in 2017, calling for Hines and NPS to acquire an interest in SL Green’s One Vanderbilt Avenue, a 1.7 million-square-foot office skyscraper in Midtown Manhattan, for a minimum equity commitment of $525 million. More recently, in May 2020, Hines and NPS partnered on another deal with SL Green, taking a minority stake in the REIT’s 1.4 million-square-foot One Madison Avenue office redevelopment project in Manhattan in exchange for a minimum equity commitment of $492.2 million.