Hampshire Real Estate Cos., a Morristown-based real estate investment firm, has launched a new real estate income fund, in partnership with Hermes Real Estate Investment Management Ltd., one of the largest real estate managers in the United Kingdom, and UOB Global Capital, a subsidiary of Singapore’s United Overseas Bank Ltd.
The new fund, called the HUH US Real Estate Income Fund, is the 10th fund the 35-year-old company has launched, and its first with an Asian investor, said Jon F. Hanson, chairman.
“The idea is to increase the amount of capital you have to invest,” said Hanson, whose firm has equity in assets valued at over $2 billion.
The fund, which will likely have a 10-year life, will focus on investing in properties typically located outside of major city central business districts in the United States, particularly on the East Coast, and “inefficiently priced,” meaning the seller is under pressure to dispose of the asset.
About 50 percent of the properties would be in New Jersey, Hanson said. “The properties we have identified are primarily retail, but I anticipate we will also have warehouse, medical office buildings and self-storage facilities,” he said.
British Telecom, through its subsidiary Hermes, will invest up to $150 million of its pension plan in the new fund, with Hampshire and UOB each committing $25 million.
The partners are looking to raise an additional $200 million for the fund over the next two years, and also plans to use up to 50 percent debt financing for transactions, Hanson said. Hermes and UOB will be reaching out to other investment groups, primarily pension funds, to also invest in the fund.
“We would anticipate that there are offshore investors who would be interested in investing in the HUH fund,” he said.
Hampshire had been working on the venture for the past two or three years, and first formed a partnership with UOB about 18 months ago, he said.
“We were trying to have an investment vehicle with partners that were interested in ‘core-plus’ real estate,” Hanson said, referring to properties that are fully or substantially leased at the time of acquisition.
Hampshire also wanted a new fund that would not compete with its other sponsored funds, which are value-added and invest in assets that can require significant repositioning and leasing efforts, he said.