Earlier this month, global real estate investment management company Hines launched the Hines Private Wealth Solutions platform. Paul Ferraro, who joins Hines, said the move is more of a rebranding than a launch as the company has spent the past 20 years providing real estate investment opportunities to private wealth investors, raising nearly $11 billion by the end of 2023. Plastic. The Carlyle Group led the effort two months ago.
The company, whose offerings in the private wealth space include non-traded REITs and real estate exchanges, has relied primarily on independent broker/dealers to attract high-net-worth investors. Ferraro will be tasked with replicating what he did at Carlyle – developing Hines’ relationships with RIAs and family offices as well as wire houses, launching new semi-liquid funds and expanding the business in Europe and Asia.
Wealth Management Network recently spoke with Ferraro about his new role and what we should see as Hines Private Wealth Solutions grows.
This Q&A has been edited for length, style, and clarity.
WealthManagement.com: Hines has been working in private wealth pipelines for the past two decades. What’s the impetus for creating private wealth solutions now?
Paul Ferraro: The Hines Private Wealth Solutions platform builds on the momentum of the company’s 20-year history that you mentioned. We call it a rebrand rather than a launch. In my opinion, this is part of the natural evolution of the business. It truly embodies a commitment to providing quality products to a variety of investors in the United States and around the world.
Like our peers, we see significant potential in private wealth pipelines. What sets Hines apart is that we believe our position as a real estate leader with a global footprint and more than 65 years of experience uniquely positions us to develop, manage and operate real estate assets in an ever-changing environment.
My job is to capitalize on the anticipated growth in private wealth, broaden and deepen our relationships across the distribution pipeline, expand across Europe and Asia, and deliver investment opportunities within a risk/return spectrum designed to meet client objectives.
WM: Has Hines set a target for how much money he hopes to raise from private wealth sources?
PF: We will not publicly declare such a goal. What we’re trying to do, though, is build a platform that’s diversified across distribution channels in the U.S. and globally, so I think you can probably understand that the financial goals should be aggressive.
WM: Prior to joining Hines, you served as head of private wealth management at The Carlyle Group. What was your biggest takeaway from there in terms of how you expanded Hines’ access?
PF: At Carlyle, I am employee number one at Carlyle Private Wealth. I brought in Morgan Stanley to really build this business. If you fast forward to ten years ago when I was there, our distribution business spanned wire houses and independent broker/dealers, RIA and family office teams, teams in Europe, Asia and Canada, and we had accumulated about $50 billion USD assets. Commitment during that time. During this time, we also created four evergreen semi-liquid products covering credit and equities in the U.S., Europe and Asia.
Only a handful of people in the industry have built similar businesses. My plan is to use the manual as a guide on how to do it successfully and execute it in Hines.
WM: How does the firm currently offer advisors products to individual investors?
PF: The firm has historically been very focused on one particular pipeline of private wealth. What I was asked to do was to significantly expand the business through new client forums, RIAs and joint and single family offices.
In order to get our products in front of these customers, number one, we need to build the necessary infrastructure, and that’s happening now. This will allow us to launch new products that cater to the way RIAs and financial advisors consume today. We also want to effectively deliver our direct transaction content (not just funds) directly to RIAs, wealth management partners and family offices.
It’s the first two things – creating the necessary delivery systems, but it’s also coming up with the right strategy, return profile and risk tolerance for these markets.
WM: You have said that the firm is primarily focused on a specific pipeline of private wealth. How was it before?
PF: This will be an independent broker/dealer pipeline.
WM: You just mentioned that the press release announcing Hines Private Wealth Solutions also mentioned deepening the distribution pipeline. How are you going to build these delivery systems?
PF: Again, it’s a function of three things. This is the internal infrastructure we need and we are building it, it is a work in progress. But it also involves working with some of the platforms that RIAs and wealth managers like to use. We’re doing that now, we’re building these relationships that will allow us to deliver these products to RIAs and financial advisors in the way they want them.
WM: Are you talking about alternative investment platforms like CAIS, iCapital and Yieldstreet?
PF: Yes, iCapital and CAIS are two that we have an established relationship with and are developing.
WM: Are the products that Hines has offered in the past or currently offers available to retail investors? Or are they primarily focused on accredited investors?
PF: At Hines, these products have historically been designed specifically for high-net-worth individuals and high-net-worth individuals who typically work through third-party wealth managers. For example, this would focus on non-traded REITs or real estate exchange programs. These are two important products we have on the market right now.
But we want to expand that to potentially add things like real estate credit strategies and direct deals, where we bring direct Hines deal flow to investors through their wealth management partners.
I would say the way the industry has evolved, the way financial advisors invest in private markets strategies today tends to be through open-ended semi-liquid products. For us, any new product we launch hopes to meet the needs of the majority of financial advisors and RIAs.
WM: It sounds like Hines wants to bring a wider variety of evergreen investment vehicles to the market. Do you know what types of products you might be eyeing?
PF: This is absolutely accurate. I would say it’s expanding our product lineup from where we are today focused on income and capital appreciation to more real estate credit strategies that may also be focused on income and capital appreciation but in a different way than traditional credit strategies. way. Stock strategy meeting.
WM: The past two years have been tough, with a particular focus on real estate as an investment option. For many people who are not in the industry, the perception of what is happening in the commercial real estate market may not match reality. Are you aware of how advisors feel about allocating funds to real estate right now?
PF: Let me start by admitting that the real estate asset market has been difficult over the past two years. I think financial advisors are still reluctant to step back in with both feet.
What I want to say to them is that our data shows that the real estate industry operates in a long-term cycle. Usually 15 to 17 years. A typical recession lasts an average of 26 months. Where are we today? The real estate correction began about two years ago, when the Federal Reserve began raising interest rates. We’re two years into this cycle, and we think that should mean we’re about to end it. When you look at the data, we believe we are seeing the beginning of a new long growth cycle. If, as we expect, this is a multi-year recovery, I think investors could see an increase in distribution income; they could see valuations and capital appreciation be more stable.
We hope investors see the same opportunities as we do, because eventually those windows close and opportunities don’t last forever.
WM: Does Hines currently have an education program in place for advisors to get them up to speed on what real estate investing can offer and how the different tools Hines uses work?
PF: The first place I direct people to is our website. The Hines Private Wealth Solutions website provides a wealth of quality information on real estate and private real estate investing.
We also conduct a number of personal and client workshops for financial advisors to talk to their clients about real estate rather than specific products. This is truly an educational opportunity for them. We will continue to build on this foundation. Most importantly, we have a talented and experienced sales team in the market. These guys have been with us for 15-20 years in many cases, so they’re not new to the industry and they’ve been through multiple cycles. They can talk about them very intelligently.
WM: Is there anything else you think is important for our audience to know about Hines Private Wealth Solutions?
PF: As we build our brand in the private wealth space, I want them to know who we are, that we are a real estate investment management company that develops, operates and owns assets. We have a strong diversity track record dating back 65 years. Private wealth is not new to us. We have a 20-year history in the private wealth industry. Based on the financial advisor or RIA’s return profile and the risk tolerance they are looking for, we should provide them with a solution.
