- MBA Real Estate Program
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By Sasha Binderow ’19 & Kenny Thompson ’19
The fireside closing conversation with three executives from Hines gave the audience a sense of what Hines is and has always been at its core: a family business. Laura Hines, a Managing Director at Hines, was quick to credit her cousin Serena Hines ’19 with helping to organize the session and told the story of her grandfather, Gerald, who started the company in Houston nearly 60 years ago. The business was originally built by investing warehouse and office space on the outskirts of the city but has since grown into the unique private development and management platform with 4,300 employees and a presence in 24 countries and 200 cities.
The secret to Hines’ success and steady growth throughout the last 60 years has been a commitment to its values. The company was founded upon a simple investment thesis: that quality product coupled with good management will outlast cycles. To actualize opportunities across the globe, Hines has embraced real estate is a local business to generate both alpha and beta returns by performing at the local level as a vertically integrated and operated company. Success is driven by knowing the details of each market but also by listening to and prioritizing the needs of investors first and by branding the feel of Hines product—you can walk into a Hines office anywhere in the world and recognize that unique style.
But the firm has also expanded its product focus away from solely office over the years with $9 billion of multifamily investments since 2011. And Hines conducts this business in its own way—what most investors call “multifamily,” Hines calls “the living sector.” This focus spans from a senior housing venture with Welltower in New York City on 56th & Lexington to an experiential student housing project in the UK and everything in between. Right now, the firm is investing heavily into the living sector and has high expectations for international markets like Brazil and India where housing is currently in short supply. Other bullish areas for the firm are industrial real estate, creative office spaces, and timber office buildings.
Though Hines is known for holding a lot of high profile, trophy assets in their portfolio, Laura Hines along with Chris Hughes, CEO of Capital Markets Group and Senior Managing Director, and Tommy Craig ’82, Senior Managing Director, all agreed that they see a great opportunity in smaller development as well as acquisitions of established properties. The Hines way has also grown to bring their research efforts in house, to utilize their own conceptual construction group to provide expertise during every development project, and to stress the internal rate of return structure when underwriting deals to encompass a dynamic reinvestment rate.
The key takeaway about Hines fireside conversation is that the company is thinking ahead and planning for the future. Chris highlighted how he thinks of today as if a recession were yesterday, and pressure tests everything ranging from the capital structure to the tenancy of an asset. By running their business more conservatively, Hines is finding opportunities in the core and core-plus space which have better performance records through turbulent market cycles. The importance of managing risk at a local level and leveraging the expertise of a global investment committee has only increased for Hines as its business has become more multi-faceted.
The fireside conversation gave us all an in-depth insight into how the company conducts business and has had tremendous success throughout the last 60 years. Hines has a special strategy that gives it a competitive advantage today—as a local-managed, family business, they have superior market knowledge allowing them to make the best decisions while also using their global presence and expertise to help bring their deals to fruition with consistent success.
Sasha Binderow ’19 is a second year MBA student with a focus in Real Estate. She comes from a background in finance and economics from her undergraduate studies at Vanderbilt University and her work experience as a Financial Advisor at Morgan Stanley. She interned during the summer and fall with Beachwold Residential working for their acquisitions department underwriting value-add multi-family deals. Sasha is also a board member and volunteer in the Financial Education Society at CBS.
Kenny Thompson ‘19 is second-year MBA student at Columbia Business School focused on real estate investment and development. He serves as a co-VP of Alumni & Mentorship for the Real Estate Association and also serves on the boards of the Black Business Student Association and the Hospitality & Travel Association. He graduated with a BA in Economics from Brown University where he was also Co-Captain of the Men’s Track & Field team. Prior to CBS, Kenny was an Associate in the Real Estate Finance & Securitizations group at Credit Suisse where he focused on the origination of large commercial mortgage and mezzanine loans for a variety of institutional sponsors.