South Carolina-based real estate investment manager Greystar is expanding into infrastructure following the hiring of Michael Hoverman.
Hoverman, who held various roles at CIM Group over the past decade, most recently as principal in its infrastructure unit and a member of its investment committee, has joined Greystar to lead the programme as executive director for infrastructure. Greystar will look to hire a team alongside Hoverman for an infrastructure strategy that will be US-focused, but will invest globally.
“The world is urbanising and that’s created amazing opportunities as we have built our platform over the last 30 years,” Bob Faith, Greystar’s chief executive, told Infrastructure Investor. “What started as a narrow focus on multi-family housing has grown. What we’ve recognised as we’ve built this global platform is the opportunity to take advantage of that knowledge of where people want to live, which has expanded the kind of things we can do. It seems like a very logical progression of what to be doing to take advantage of this great platform and secular tailwind of the growth of the great cities in the world.”
Greystar was formed in 1993 and now has $76 billion of assets under management, spanning across North America, Latin America, Europe, Asia and Australia. Its most recent fund close was the $1.9 billion raised in May for Greystar Equity Partners XI, its multifamily value-add strategy focused on acquiring and developing rental housing across the US. It also has separate funds dedicated to Europe and Asia-Pacific.
“Our advantage in knowing how to develop projects, be it internally or externally, will be brought to bear in how we execute them in infrastructure,” Faith added.
An increasing convergence between the real estate and infrastructure asset classes has been taking place, according to Hoverman, who noted that the energy transition, digitalisation and deglobalisation trends are affecting both sectors and will be themes the new unit will invest towards.
Faith said he also saw some of this convergence in some of the deals it was doing. For example, in August 2022, Greystar sold Spanish student accommodation group RESA to PGGM Infrastructure Fund, while he said he was also encountering infrastructure buyers in logistics deals.
“It will be about how we can identify and develop infrastructure that will improve the lives of the people and communities where Greystar operates,” Hoverman said. “Our goal with opportunities in infrastructure will be providing cleaner air and water, better and more efficient waste management and cleaner and more reliable power and grid infrastructure.”
Faith said that some balance sheet capital will be made available for the new infrastructure team to invest, although third-parry capital will be tapped going forward.
“Over the 30-year history of Greystar, we tend to have strategies across the risk and return spectrum. Anything we choose to do will initially have a value-add element in various types of structures, with the potential to add core strategies over time,” chief investment officer Wes Fuller said.
Against the grain
Greystar building an infrastructure team from within is the atypical approach compared with other private markets groups seeking infrastructure exposure recently, such as CVC Capital Partners buying DIF Capital Partners and General Atlantic acquiring Actis. Faith, though, is unconcerned about the scale of the challenge.
“At Greystar, we’re a family-owned enterprise, we’re not a public company. We have a forever outlook. This is going to be a multi-generational, privately owned enterprise and so we don’t have to hurry to achieve an earnings growth target, which perhaps doing an acquisition could accelerate that,” he said.
“What is much more important to us is the culture of the business must be consistent with the overall Greystar culture. If that means it takes us a little longer to get started, that’s just fine. We’re going to build a business that’s consistent and plugs in perfectly.”
Hoverman is also focusing on the long-term and the opportunities that may be presented to Greystar.
“The trends we’re seeing are very long-term and, particularly in the mid-market, there’s a lot of room to run because we believe there’s so much opportunity and a dearth of institutional involvement,” he said. “There’s a need for better institutional players in that space and that’s where Greystar sees it’s going to have a home.”
That will include bringing core competencies of Greystar’s, such as development and an operational approach, to infrastructure, Faith added.
“Data centres, for example, are neither just real estate nor just infrastructure. It’s a shell that’s very similar to real estate, but there’s operational and capital intensity to the business that is very different to traditional real estate,” Hoverman said. “It’s the marriage of those two things that I’m very excited about.”