Earlier this month, global real estate investment manager Hines launched the Hines Private Wealth Solutions Platform. Paul Ferraro, who joined Hines, said the move comes as the company has been providing real estate investment opportunities to private wealth investors for the past 20 years and has raised nearly $11 billion through the end of 2023. It was said that it was more like a rebranding than a launch. I was hired by The Carlyle Group to lead this effort two months ago.
The company, which provides private wealth services such as non-traded REITs and real estate exchanges, has traditionally relied heavily on independent broker-dealers to reach high-net-worth investors. Mr. Ferraro’s task is to replicate what he did at Carlyle: develop Mr. Hines’ relationships with RIAs, family offices and news agencies, launch a new semi-liquid fund, and expand operations in Europe and Asia. It’s about expanding.
wealthmanagement.com We recently spoke with Ferraro about his new role and what to expect from Hines Private Wealth Solutions as it grows.
This Q&A has been edited for length, style, and clarity.
WealthManagement.com: Mr. Hines has already worked in the private wealth channel for the past 20 years. What made you decide to start 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 talked about. We call this a rebrand, not a launch. In my opinion, this is part of the natural evolution of the business. This reflects our commitment to providing quality products to a variety of investors in the United States and around the world.
Like our peers, we see great potential in the private wealth channel. What sets Hines apart is our global footprint and position as a real estate leader with over 65 years of experience, making us uniquely qualified to develop, manage and operate real estate assets in an ever-changing environment. That is what I believe.
My work is expected to include growing and deepening relationships across distribution channels, expanding into Europe and Asia, and providing investment opportunities across the risk/reward spectrum designed to meet client objectives. It is about leveraging the growth of private assets.
WM: Does Hines have any goals in terms of how much capital it wants to raise from private wealth channels?
P.F.: We have not publicly stated such goals. But what we’re trying to do is build a diversified platform across distribution channels here in the U.S. and around the world. So it’s probably understandable that your financial goals are aggressive.
WM: Before coming to Hines, you led personal assets at The Carlyle Group. What’s the biggest lesson you learned from your role there about how to expand Hines’ distribution channels?
P.F.: At Carlyle, I was employee number 1 at Carlyle Private Wealth. I was brought in from Morgan Stanley to actually build the business. And fast forward 10 years later when I was there, we had a distribution business covering news agencies and independent broker/dealers, RIA and family office teams, teams in Europe, Asia and Canada, and we had about 50 billion He was accumulating assets in dollars. A promise during that time. During this period, we also created four evergreen semi-liquid products covering both credit and equities in the US, Europe and Asia.
Only a handful of people in the industry have built similar businesses. My plan is to use that playbook on how to make it successful and implement it here at Hines.
WM: How does the company currently get products available to retail investors in front of advisors?
P.F.:The company has historically focused on specific private wealth channels. And what I’m looking for is to significantly expand that business through new client forums, RIAs, and multifamily and single-family offices.
To get our products in front of these customers, we first need to build the necessary infrastructure to do so, and that is currently underway. This allows us to launch new products that address the way RIAs and financial advisors spend today. We also aim to efficiently deliver not only capital but also direct transactions directly to RIAs, wealth management partners, and family offices.
Those are the first two. It’s about building the delivery systems you need, but you also need to come up with the right strategy, return profile, and risk tolerance for those markets.
WM: You said the company is focused on specific private asset channels. What was that?
P.F.: It would have been an independent broker/dealer channel.
WM: As you mentioned earlier, the press release announcing Hines Private Wealth Solutions also mentioned deepening distribution channels. How do you plan to build these delivery systems?
PF: Again, it depends on three features. What we need is an in-house infrastructure, which is currently being built and is a work in progress. But it’s also about partnering with specific platforms that RIAs and wealth managers prefer. We’re doing that now, and we’re building those relationships so that we can offer these products in the way that RIAs and financial advisors want.
WM: Are you talking about alternative investment platforms like CAIS, iCapital, and Yieldstreet?
P.F.: iCapital and CAIS are two that we have built a relationship with and continue to grow with.
WM: Have any of the products Hines has offered in the past or currently been available to retail investors, or is it primarily focused on accredited investors?
P.F.: At Hines, in the past, these products have been designed specifically for high-net-worth individuals, typically those working through third-party wealth management companies. That could focus on non-traded REITs or real estate exchange programs, for example. These are his two big products currently on the market.
However, we are looking to extend this to things like real estate credit strategies and direct deals, offering Hines direct deal flow to investors through our wealth manager partners.
I think the way the industry operates today, the way financial advisors invest in private market strategies, tends to be through the offering of open-ended, semi-liquid products. For us, when we bring a new product out, we want to structure it in a way that meets the needs of most financial advisors and RIAs.
WM: It sounds like Hines wants to offer more types of evergreen investment vehicles to the market. Do you know what type of product you’re considering?
P.F.: That’s exactly right. I would say that our product line has expanded from what is currently focused on income and capital growth to real estate credit strategies that are also focused on income and capital growth; It is done in a non-traditional way. That will be the case with stock strategies.
WM: I’ve been focusing specifically on real estate as an investment option, and the past two years have been tough. The perception of what is happening and the reality of the commercial real estate market may not align with many people outside the industry. Do you know how advisors feel about allocating money to real estate right now?
P.F.: Let’s start by recognizing that the past two years have been a tough market for real estate assets. And I think financial advisors are still reluctant to jump in with both feet again.
What I would say to them is that our data shows that the real estate industry operates in long cycles. It is usually 15-17 years. A typical recession lasts an average of 26 months. Where are you today? The real estate correction began about two years ago when the Fed began raising interest rates. We’re two years into that cycle and that should mean we’re nearing the end of that cycle from our perspective. Looking at the data, we believe we are seeing signs of the beginning of a new long-term growth cycle. If this is a multi-year recovery, as we expect, we think investors could see increased income from distributions. They are likely to see more stability in valuation and capital appreciation.
Our hope is that investors see the same opportunities as we do. Because those windows will eventually close and the opportunity won’t exist forever.
WM: Is Hines currently doing any educational work to help advisors understand what real estate investing can offer and how the various instruments Hines employs work?
P.F.: The first thing I want to introduce people to is our website. His website at Hines Private Wealth Solutions has a lot of useful information about investing in real estate and personal real estate.
We also hold a number of individual seminars and client seminars for financial advisors, where we talk about real estate with clients without talking about specific products. It’s really an educational opportunity for them. We will continue to base our efforts on that. In addition to that, we have a talented and veteran sales team that is well established in the market. Often these people have been with our company for 15-20 years, so they are not new to this industry and have been through multiple cycles. They can talk about themselves very intelligently.
WM: Is there anything else you think is important for our audience to know about Hines Private Wealth Solutions?
P.F.:As we build our brand within the private wealth space, we want people to know who we are: real estate investment managers who develop, operate and own assets. We have a strong, diversified track record spanning over 65 years. And personal wealth is not new to us. We have his 20 year history in the private wealth industry. And depending on the return profile and risk tolerance of financial advisors and RIAs, we need to create solutions for them.
