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New Hines JV broadens individual investor reach as inflation pressures rise

Hines Securities and iCapital will work with registered investment advisers and other financial professionals.

Hines Securities, the broker-dealer of Houston-based Hines, has formed a partnership with alternative fintech company iCapital that will allow it to distribute investment products more easily to registered investment advisers and high-net-worth individuals.

Mark Earley, CEO of Hines Securities, told Real Estate Capital USA the firm is responding to what it sees as the increasing democratization of real estate through the venture – and increased interest in real estate as an inflation hedge.

“One thing about alts is there is a lot of friction when you invest and we saw many wealth advisers, family offices and institutions looking for an environment that was as frictionless as possible to build their investment portfolios,” Earley added. “This will also help with the adoption of more alternative investments.”

The iCapital platform provides an interface that makes it easier for RIAs and other advisers to assess, perform due diligence and register investors for products that fit in with their asset allocation, Lawrence Calcano, chairman and CEO of iCapital Network, told REC USA.

“Wherever advisers choose to practice, whether at a large wirehouse, an independent RIA or an independent broker-dealer, we are trying to create that frictionless automated experience so that high-quality GPs can help with their goals or objectives and, at the same time, really help advisers get access to products like those at Hines that they haven’t historically had access to.”

While the venture is initially focused on equity-oriented product, the partnership has ramifications for debt-focused managers which are also trying to expand their platforms to individual investors, market participants told REC USA.

How it works

Hines Securities is the dealer-manager for investment products that include private placements and public, non-listed real estate investment trusts. Working with iCapital will allow advisers to more easily handle the administration, documentation, document management and reporting that goes along with investing, Calcano noted.

This interest in alternatives – particularly real estate – has been heightened by rising inflation in the US. According to October data from the Federal Reserve, the Consumer Price Index rose by 6.2 percent, the fastest level seen since 1990.

“Given the long-term run of low interest rates, some of the products we are offering are higher-yielding and that gives us opportunity to reach these clients. There is a long continuum of people whod’ like access from retail investors on one end to the large institutions on the other. The Fed has kept rates low for a long time and that has increased this appetite for yield, and we believe that will continue. But people have had a hard time accessing this in a direct way,” Earley said. “The more you can decrease the friction, the more you can increase the adoption and then have better outcomes for the portfolios.”

The firm is finding that investors across the board are seeking yield.

“Retail advisers typically are really income-focused now but when you start to move up into high-net-worth family offices, they are more concerned with wealth preservation and real estate can preserve wealth. What we hope to do is add a suite of products that addresses the different needs of different clients because you can’t put everyone in one box and use the iCapital platform to address these issues.”

 

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