HQ Capital Real Estate L.P.

2017 Real Estate Top 100 ranking: 108http://www.hqcapital.com

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Manager Details

Corporate overview

HQ Capital Real Estate (HQCRE) is a member of the HQ Capital Group, a leading independent manager of alternative assets investing in US real estate and global private equity on behalf of institutions, family offices and high-net-worth individuals for nearly three decades. Leveraging a global platform of over 150 employees and 10 offices worldwide, HQ Capital offers the necessary resources to develop and deliver investment solutions that meet its clients’ specific requirements in today’s market. The firm has approximately $11bn in assets under management in real estate and private equity as of 30 September 2018.

Since its inception in 1989, HQCRE has invested in $14bn of US real estate on behalf of domestic and foreign institutional investors, family offices, and high-net-worth individuals worldwide. The firm sponsors and actively manages US multifamily residential funds, while also providing separate account real estate investment advisory and asset management services for commercial and residential properties, with the goal of creating value and delivering strong risk-adjusted returns. We offer investors a variety of strategies including core, core-plus, value-add and opportunistic investments in multi-family residential or commercial properties throughout the US. Our portfolio of investments, both development and acquisition, includes multifamily residential, office, industrial, retail and mixed-use properties totaling more than 69,000 apartment units and nearly 21m sq ft of commercial space located in more than 30 states, with a focus on the coastal markets. As of 30 September, 2018, the company manages approximately $4.3bn in real estate assets from its joint venture funds, separate accounts and third-party asset management mandates. Please visit hqcapital.com for more information.

Sector forecasts

RESIDENTIAL: The US multifamily market in the first half of 2018 recorded some of the strongest absorption in years as long-term demographic trends, and a robust economy drove demand. Despite record new apartment supply in 2017 and 2018, rent growth is increasing, and vacancy rates are declining. The positive trend is anticipated to continue over the coming years (2019–22) as strong demographic-driven demand persists over the forecast period.

HQCRE believes that the US multifamily opportunity is significant, driven by a combination of the following key factors:

  • US Housing Shortage – The US population is projected to increase over the coming years, and overall housing supply is not sufficient to meet the anticipated increase in demand. Much of this population growth is forecast for the Sunbelt region of the US, where HQCRE has significant experience and an established network of partners. According to the US Census Bureau, the US population is projected to grow by 16.3m people between 2018 and 2025. Single-family home starts dropped by 73% from 2005 to 2009, and though they have recovered in recent years, the current levels remain 50% below the 2005 peak. Overall housing starts in 2017 matched the levels seen in 1992 when the US population was approximately 256m, or 69m lower than census estimates for 2017. The “multifamily supply wave” over recent years has been primarily focused on urban mid- and high-rise product, leaving large gaps in the market for moderately priced apartments in the suburbs.
  • Robust US Economy Fuelling Renter Demand – In August 2018, the US unemployment rate was at 3.9%, the lowest measure in 18 years, and consumer confidence hit an 18-year high in September 2018. An already strong economy was boosted in late 2017 by the passage of the Tax Cuts and Jobs Act, which cut corporate income taxes and individual income taxes, without offsetting spending cuts, which is projected to result in a significant fiscal stimulus. The personal tax cuts are most pronounced for residents of Texas, Florida and other states with low or zero state income tax rates. According to CoStar, the top five US markets (out of 54) for rent growth projections over the next two years are all located in states without state income taxes (four markets in Florida, one in Nevada). These markets, long the beneficiaries of above-average population growth and job growth, highlight the long-term trend in the US of the population and dynamic markets shifting south. Additionally, the reduction in homeownership subsidies in the 2017 tax bill combined with higher mortgage interest rates has improved the desirability of renting compared to homeownership.
  • Multifamily Class Demand – Emerging as a “niche” asset class in the 1980s and 1990s, multifamily represented 31% of all institutional real estate transactions in 2017, making it the most liquid asset class. Multifamily has benefited from the potentially existential threats to office properties (from the rise of co-working companies) and retail properties (from the emergence of e-commerce). Multifamily, due to the sharp fall in single-family home construction, is an increasingly important component of the US commercial real estate landscape. Additionally, investors have seen the more consistent cash flow streams of multifamily assets compared to office or retail. Much of the stability of the cash flows can be attributed to the low leasing costs and capital reserves required for multifamily compared to the other primary real estate asset classes. In summary, multifamily real estate, especially suburban properties in the Sunbelt regions, represents a sought-after proposition for renters and a compelling investment for institutional investors.

Investment principles & strategy

HQ Capital Real Estate has a long history of investing in US real estate and leverages its market knowledge, investment and capital markets expertise, and disciplined investment approach to develop targeted investment strategies for its own funds and separate account mandates. For the past 29 years, the firm has offered its clients real estate investment solutions across the risk/return spectrum within all major property types (multifamily, office, retail and industrial) throughout primary and secondary markets, and has demonstrated the ability to adeptly fine-tune its strategies to the market cycles and supply/ demand balance.

  • Sponsored Funds – For entrepreneurial investors, HQCRE typically meets investment goals through its joint venture opportunistic funds, which have a primary focus in multifamily developments and in value-add acquisitions located in growth-oriented markets and have a three-to five-year holding period.
  • Separate Account Mandates – HQCRE works directly with individual investors and strives to meet specified investment parameters, including return goals and threshold to risk. Historically, these investments have primarily focused on core and core-plus properties in gateway cities and growth markets with a longer-term holding period. Additionally, the firm offers a full range of third-party asset management services to foreign real estate owners in search of local US expertise.

HQCRE’s core skillset lies in creating value for its investors. The firm accomplishes this through its in-house capabilities, which include acquisitions/dispositions, financing, asset/construction management, investment structuring, and detailed reporting. Equally important is HQCRE’s extensive external relationships and longstanding network of industry contacts, which provide the firm with access to attractive investment opportunities.

Strategic corporate development

HQ Capital Real Estate has focused on advising international investors on their US real estate investments since its inception in 1989. With a global client base and an experienced team to service inbound capital, the firm works closely with investors to structure tax efficient investment vehicles.

HQ Capital Real Estate’s business plan is focused on continuing to provide clients with strong performance and personal service. With an average tenure at the firm of 18 years and an average of 27 years of industry experience, HQ Capital Real Estate’s senior management team is dedicated to growing assets under management across its business lines.

COMPLIANCE STATEMENT

General: This information is being provided at your specific request and does not constitute an offer to sell, or a solicitation of an offer to buy, any security and may not be relied upon in connection with the purchase or sale of any security. The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Past performance cannot assure any level of future results. HQ Capital makes no guarantee of any specific outcome or targets. There is no assurance that any investment objectives discussed will be achieved.

Current information: Any projections and forecasts contained in this document are based on a variety of estimates and assumptions. There can be no assurance that the assumptions made in connection with the projections and forecasts will prove accurate, and actual results may differ materially. Opinions expressed are current opinions as of June 30, 2018. While the data contained herein has been prepared from information that HQ Capital believes to be reliable, HQ Capital does not warrant the accuracy or completeness of such information.

Risks: The information contained herein is not complete, and does not contain certain material information about alternative investments, including important disclosures and risk factors associated with an investment in these types of vehicles. Alternatives entail substantial risk and are not intended as substitutes for a complete, diversified investment program.

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Head Office
1290 Avenue of the Americas
10th floor
New York
NY 10104
United States
Company website:
http://www.hqcapital.com

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