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Heitman Raises $3.2 Billion for Real Estate Equity and Debt Bets

The firm’s three new funds are now closed and have a three-year investment horizon.

(Bloomberg)—Heitman, a Chicago-based real estate investment firm, raised $3.2 billion for three new funds, including pools of capital dedicated for co-investments, Chief Executive Officer Maury Tognarelli said in an interview.

The firm has started making bets out of its three latest vehicles, which are now closed and have a three-year investment horizon: North America-focused Heitman Value Partners V, high-yield credit-focused Heitman Real Estate Debt Partners II and Heitman Global Real Estate Partners II.

Heitman -- which had roughly $44 billion in assets under management as of June 30 -- raised money from institutional investors including sovereign wealth funds, pension plans, foundations and corporations across the globe.

“The Covid environment has accelerated secular changes in retail and office,” Tognarelli said. “We believe they still merit inclusion in portfolios because they offer favorable entry points.”

Heitman’s equity funds employ “modest leverage” and its credit fund will seek to originate approximately $1.5 billion of borrowings such as subordinated debt, senior construction loans and senior bridge loans.

The firm will focus on deploying its new funds on commercial real estate investments such as self-storage, medical offices, apartments, student housing, senior housing and warehouses and offices, Tognarelli said.

The three Heitman funds will also seek to provide capital to re-purpose retail and office buildings, potentially as residential, mixed-use or hospitality assets.

Offices may be used differently going forward as employers embrace a hybrid approach as opposed to full-time in-person attendance, according to Tognarelli.

“As property investors, we’re entering an era that’s quite attractive,” he said.

© 2021 Bloomberg L.P.

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