Founded in 1966, Heitman is a global real estate investment management firm. We operate in North America, Europe, and Asia-Pacific, in public and private markets, executing debt and equity strategies across the return spectrum. Through extensive research, innovative investment products, a seasoned management team, and hard work from some of the most talented professionals in the industry, Heitman has the experience and the resources to capitalise on opportunities and achieve our clients’ investment objectives. Our three complementary business units are:
- Private Real Estate Equity: Investing in direct real estate in North America, Europe, and Asia-Pacific on behalf of our commingled funds and separate account clients
- Public Real Estate Securities: Investing in publicly traded real estate securities in North America, Europe, and Asia-Pacific via separate accounts, UCITS portfolios, and a mutual fund, acting as a sub-advisor, and additionally participating in UMA programmes
- Real Estate Debt: Origination and management of debt investments secured by real estate in North America.
Strategic corporate development
The firm’s five-year business plan is to continue to selectively grow assets under management across our three business units. We do not have any pre-specified limits on the number of accounts or assets under management, but instead focus on measured growth and a philosophy of only taking on new business when we are confident we can add value to our clients without jeopardising the quality of work for existing relationships. Our business plan is consistent with the firm’s mission, which is to be the leading real estate investment management firm by consistently outperforming benchmarks on both an absolute and risk-adjusted basis and by providing exemplary client service. We do not seek to be the biggest real estate investment manager in terms of assets under management, but rather to grow our business organically through delivery of strong performance and excellent client service.
INDUSTRIAL: Since 2010, the industrial sector has experienced a recovery and expansion cycle that is unprecedented in the strength of market fundamentals. Trailing four-quarter net absorption outpaced net completions for 33 consecutive quarters until Q1 2019, when supply overtook demand and vacancy increased modestly. This cycle has been markedly different in both the sustained strength of tenant demand and the difficulties developers have faced in match- ing supply to demand due to the presence of more constraints on development. In the first half of 2019, net absorption decelerated noticeably. This was in part due to a decline in business confidence and investment as trade tensions escalated. It was also the result of tight conditions in the most in-demand metros, which have few blocks of available high-quality space. Still, the national vacancy rate of 4.8% remains at historically low levels and rents continue to grow to new record highs. The long-term outlook for the sector is strong given continued growth in demand related to supply chain optimisation and e-commerce.
OFFICE: Since the Global Financial Crisis, the consistent theme in office leasing has been ‘tech’ and this remains the case in 2019. In fact, there has been no sign of a slowdown in tech leasing, which is now spreading out from the top tech markets to other metros. Tech-heavy gateway markets like San Francisco, Seattle and Boston average 91.5% occupancy, compared with 87.6% in the other gateway metros. However, rising rents and tight labour markets in top tech metros are causing firms to look further afield to markets like Orlando, San Diego, and Chicago.
RESIDENTIAL: The apartment sector is flourishing in the midst of the summer leasing season. Occupancy hit a cyclical high of 96.2% in Q2 2019 as the pace of absorption was the highest in five years. Effective rent growth was 3.2% year- over-year in Q2, an improvement of 70bps over this period last year. Apartment fundamentals are propelled by slowing, but still solid job growth. A moderation in construction has also boosted recent performance, with the number of units delivering in the four quarters ending Q2 2019 down almost 15% from the year- earlier period. Looking ahead, it appears that new deliveries have yet to peak for the cycle, which is likely to place pressure on market fundamentals.
RETAIL: Midway through 2019, national retail market fundamentals look balanced. Vacancy is 6.1%, unchanged from the previous quarter and a year ago thanks in part to limited new construction. However, the overall sector average smooths over substantial variability. Vacancy in low-quality centres increased by more than 1,300bps year-over-year to 45.1%. Conversely, vacancy at high- quality centres fell by 127bps to 2.3%. Only the best centres are currently able to grow rents while many others are seeing rents roll back. This divergence in fortunes is growing as store closures adversely impact low-quality centres and expanding retailers want to locate in only the best properties. The latter should survive the current upheaval and emerge in a stronger position. This process will take years, but it is underway.
Investment principles & strategy
Heitman is a research-driven investment firm. Our strategies reflect constant analysis of economic and demographic trends, property market shifts, and capital flows. In addition, Heitman’s various business lines include public market professionals, direct property investors, debt investment professionals and global resources, fostering a creative atmosphere within Heitman. This translates into an information exchange that helps us stay abreast of changing conditions in all areas of real estate. We then use this information to create innovative strategies, resulting in superior performance for our investors.
Heitman appreciates the importance of Global Investment Standards (GIPS®). Performance returns for Heitman’s public real estate securities group have been prepared and presented in compliance with GIPS. Performance returns for Heitman’s North America private real estate equity group have also been prepared and presented in compliance with GIPS. Returns for Heitman’s public real estate securities group have been verified by the accounting firm Deloitte & Touche through 31 December 2017 and returns for Heitman’ s North America private real estate equity group have been verified by the accounting firm Deloitte & Touche through 31 December 2018. To date, our European and Asian private equity composites consist of leveraged investment level time-weighted returns.
Certain Heitman subsidiaries are registered with the appropriate regulatory authorities in the US and abroad and, as such, are subject to applicable regulatory schemes. These operating subsidiaries have implemented their own tailored compliance policies to insure adherence to governing rules and regulations.
News from Heitman [Real Estate - North America]
Heitman LLC, a global real estate investment management firm, today announced two new personnel appointments designed to support the company in achieving its long-term growth objectives and delivering best-in-class performance to its clients.
News from IPE Real Assets
US pension fund backs Carson Companies for first time
US pension fund invests through separate account with Heitman
Investment manager buys California Plaza
US pension fund, however, expects exposure to asset class to fall
US pension fund increases targeted allocation from 6% to 8%
White Papers / Research from Heitman [Real Estate - North America]
Rising Sea Levels Pose Risk to Institutional Real Estate Investment: Featured in Urban Land Magazine download
“Gateway markets”—the largest global cities, including New York City and the San Francisco Bay area in the United States—represent a large share of total investment and carry a heavy weight in institutional real estate portfolios
Featured in Private Debt Investor’s US Special Report 2016: The Road Ahead
The US economy continued to lumber forward in Q3, as evidenced by the just-released GDP reading of 1.5% growth on an annualized basis.
July’s economic data for the US, to a large extent, represented more of the same with some mixed economic news.
Advancing into the seventh year of an extended and bumpy economic recovery, amidst global uncertainty on the direction and pace of growth, questions naturally arise about the relative attractiveness of alternative real estate investment strategies.
Analysis from IPE Real Assets
Specialist REITs in the US are carving out a new niche in the self-storage sector – and impressive returns, writes Christopher O’Dea
Opportunities in student housing are abundant, but a number of factors determine success or failure, says Stephanie Schwartz-Driver