Hazelview Investments is a global alternative investment manager focused on real estate and has been for over 20 years . We maximise returns for investors by employing a value-oriented investment philosophy combined with an active management style to identify assets that will generate predictable cash flow over the long term. We have earned a reputation for providing conservatively managed, risk-averse investment opportunities for institutions, trusts and endowment funds, discretionary investment advisers and qualified individuals. Our core competency is our ability to accurately value cash-flowing assets based on a comprehensive analysis of the quality and sustainability of their current and future revenue streams. This fundamental knowledge of bricks-and-mortar investing is critical to identifying high-quality real estate investment opportunities. Hazelview’s global real estate investment platform currently manages over C$12.2bn* in both private and public real estate equity and debt in North America, Europe and Asia- Pacific. Investment structures include core, value-add and opportunistic strategies that are offered through separate accounts and commingled private and public funds. Hazelview is headquartered in Toronto with offices in New York, Hamburg and Hong Kong. 

*As of December 2023. 

Sector forecasts

Data Centres: 

In an era propelled by the transformative power of AI, 5G, and cloud services, the demand for data centers has grown significantly. As our digital landscape evolves, these data hubs — clustered in a handful of key locations around the world — have become the cornerstone upon which our interconnected world relies, and the trajectory of growth shows no signs of slowing down. These specialized hubs, catering from retail to hyperscale, play a pivotal role in managing data storage and processing needs. 

The market, valued at USD $263 billion in 2022, is poised to skyrocket to USD $602 billion by 2030, with North and South America taking the lead on that growth. Investors are lured by the sector’s stable income, growth potential and a surge in mergers and acquisitions. Notable public REITs, such as Equinix and Digital Realty Trust, stand out as promising investment options. 

Cell towers:

Cell towers play a crucial role in wireless communication. Major industry players like American Tower (AMT), Crown Castle International Corp. (CCI), and SBA Communications (SBAC) manage cell towers globally, each with a unique focus on international expansion or specific markets. 

With a current market valuation of $140 billion, cell tower REITs have showcased strong performance over the past two decades, delivering 17.3% annualized total return. Noteworthy mergers and acquisitions in 2022 indicate a growing global presence, particularly in the Asia-Pacific and European regions. The adoption of 5G is increasing the demand for cell towers, with mid-single digit annual growth projected into the future. 

Despite potential risks such as wireless carrier consolidation, cell tower REITs showcase a robust business model with stable cash flows and rent escalations, making them compelling investments. Moreover, the promising opportunity of international expansion, especially in emerging markets, aligns with the global trend toward advanced wireless networks. In summary, investing in cell tower REITs presents a strategic opportunity for diversification and enhanced returns in real estate, driven by the growing demand for dependable digital infrastructure. 

Office: 

In 2024, our outlook for the office market remains cautious, even as signs of stabilization begin to emerge. Despite this, a significant recovery in fundamentals may still be a way off. Over the past few years, there has been a notable increase in office assets being put up for sale, often at distressed prices facilitated by lenders. However, market-wide demand remains subdued compared to pre-COVID levels. 

Interestingly, the demand that does exist is increasingly concentrated in a select group of top-tier properties, which are experiencing robust interest, enabling them to maintain or even increase their rental rates. This phenomenon is particularly evident in cities where a smaller pool of tenants are vying for these trophy assets. 

The role of tech firms, traditionally a cornerstone of office leasing, has shifted. Many have been sidelined by remote work trends and are now focusing on cost reduction strategies, including staff cuts and office space consolidation. While a return to growth mode for big tech is inevitable, we don’t anticipate it happening in 2024. 

Geographically, markets less reliant on the tech sector, such as those on the US East Coast (New York City, Boston, Washington DC), have been outperforming their West Coast counterparts (San Francisco, Silicon Valley, Los Angeles). This trend is expected to persist throughout the year, reflecting the varying impacts of remote work and tech industry dynamics across different regions. 

Industrial 

Despite the influx of new industrial supply in 2024, our outlook on demand in this sector remains positive. In 2023, macroeconomic uncertainties caused many tenants to postpone space planning decisions. However, as confidence in an economic soft landing increases, tenants are now committing to longer-term business plans, including expanding logistics and warehouse footprints to support the continuous development of their supply chains. 

Major industrial REITs in the public markets are notable for their robust balance sheets and conservative leverage, which offer protection against prolonged periods of higher interest rates. This financial strength, coupled with lower interest expenses compared to other REIT sectors, positions industrial REITs favorably for potential earnings growth. The continued rise of e-commerce adoption is expected to sustain demand for industrial real estate in the long run, highlighting the critical role of logistics and warehouse facilities in adapting to evolving consumer behaviors. 

When considering investment opportunities, we favor REITs with a presence in coastal regions of the US, where barriers to new construction are higher and costs are prohibitive. Conversely, we exercise caution in Midwest markets, where entry barriers are minimal, posing greater supply risks. 

Retail 

Despite a cooling labor market, the overall job market remains strong, which continues to bolster consumer spending. Recent performance indicators from strip plazas have aligned with expectations, showcasing improvements in both leased and economic occupancy on a quarter-over-quarter basis, alongside robust leasing spreads. Landlords currently hold the upper hand in negotiations due to limited available space and no significant new supply expected in the near future. However, the closure of Bed Bath and Beyond stores in 2023 is tempering growth prospects for this year. Notably, strip centers operate as slow-moving entities, with approximately 10% of leases expiring annually, contributing to stability in the sector. 

The compound annual growth rate (CAGR) for strip centres’ revenue per available foot (RevPAF) remains steady at a healthy yet uninspiring 2.5% from 2024 to 2028. Tenant turnover, a consistent factor in the retail industry, may constrain rent growth. Projections for same-property net operating income (NOI) growth are largely unchanged for 2024 at around 3% but are expected to dip slightly in 2025 to 3.9%. While balance sheets remain healthy, concerns arise from diluted funds from operations (FFO) per share due to debt refinancing at higher rates. 

Despite these challenges, demand for strip plazas remains strong across the risk spectrum, as evidenced by recent dispositions by Site and Kimco. REITs are encouraged by increasing deal flow, with sellers enticed by a sense of greater macro stability. 

Investment principles & strategy 

Hazelview focuses on identifying and valuing real estate investment opportunities on a risk-adjusted basis. We source investment opportunities across the capital stack and access stable, inflation-hedged cash flow by investing in real estate both privately and publicly that own investment-grade real estate. Over the past 20 years we have built a full-service, active management platform with capabilities that stretch across the entire spectrum of real estate, investing privately and publicly in equity and debt. Our experienced team of real estate professionals are strategically located in key global markets including 

Canada, the US, Europe and Asia, providing us with a deep understanding of local dynamics and enabling us to accurately and efficiently source, underwrite and monitor global real estate investments. 

Private Real Estate Investments: Hazelview offers exposure to multi-residential and commercial real estate through direct investments under core, value-add and opportunistic strategies. With over 20 years of real estate investment experience, we have a proven track record for executing; and our success in doing so is supported through a fully integrated investment, development and property management platform. 

Public Real Estate Investments: Hazelview offers global real estate exposure through investments in public equity and debt securities. Our global securities platform allows us to create tailored solutions for investors seeking global real estate exposure and to provide investment strategies that can efficiently capitalise on mispricing in different global markets. We employ the same bottom-up approach we take to real estate investments when investing in public securities, which is to underwrite the assets directly, but primarily access the bricks-and-mortar through publicly listed real estate securities. 

Four Quadrant Global Real Estate Partners (the Four Quadrant Fund): is specifically designed to combine Hazelview’s various investment strategies into one globally diversified, integrated real estate investment solution. The Four Quadrant Fund offers access to real estate private equity investments, while providing income and liquidity. By investing both publicly and privately in real estate debt and equity, the Four Quadrant Fund is designed to minimise volatility, while maximising the total return for investors. 

Performance verification 

Hazelview Securities Inc. (HSI), a subsidiary of Hazelview Investments, is the manager of Hazelview’s global real estate securities strategies. HSI claims compliance with the Global Investment Performance Standards (GIPS®). To receive a list of composite descriptions and/or presentation that complies with GIPS standards, contact HSI at info@hazelview.com. 

COMPLIANCE STATEMENT 

This information is provided for use by qualified accredited investors for informational purposes only. It is not intended for, and should not be distributed to, or relied upon by, the public. Information described herein reflects the views of Hazelview Securities Inc. as of the date hereof. No representation or warranty is made concerning the accuracy of any information provided herein and there can be no guarantee that any forecast or opinion set out in these materials will be realized. This is not investment advice and may not be construed as investment, legal or tax advice, or as sales or marketing material for any financial product or service sponsored or provided by Hazelview Investments Inc. or any of its affiliates or agents.