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Responsible Investment

Diverse
Investors
Hines is a fiduciary for a diverse group of investors, clients and partners, from large institutions to pension funds and families. We undertake a variety of investment strategies that continue to create value for each of our stakeholders. And through local market knowledge and central resources we address and mitigate the diverse risks of each of our investments. Hines operates with the philosophy that what is good for the investor is good for the firm.
Karl Johans Gate 45, Oslo, Norway
Karl Johans Gate 45, Oslo, Norway
Goals:
What We Said:
A head of Investor Relations will be appointed to support the coordination of Investment Management, Capital Markets, Central Resources and our regional teams to provide consistency to our service model for investors. This furthers our objective to be the best investor in the world.
What We Did:
Appointed a tenured Hines investment officer to oversee investor relations. Centralizing this service enables the firm to better serve and retain our investment clients and partners through increased connectivity.
What’s Next?
Hines will enhance the software capabilities of the Hines Track Record Project in order to further analyze investment performance across multiple factors and scenarios to inform strategy and enhance investor relations.

Responsible Investment

  • Hines’ Responsible Investment Statement
  • Governance Structure
  • Fund and Separate Account Managers
  • Hines Policies
  • Risk Management
  • Sustainability Investment Considerations
  • Investment Management
  • Investor Engagement
  • Hines Investment Portal
  • Investor Relations Group
  • Investment Strategy Group
55 number of Hines investment funds/programs sponsored since 1991
29 number of countries represented by investors
185+ institutional investor clients/partners
600+ high-net-worth investors
120K+ retail investors
Governance Structure

At the highest level, the primary bodies for governance and decision-making at Hines are the Executive Committee, Audit & Compliance Committee and Investment Committee. Hines’ decentralized regional structure puts decision-making closer to the real estate. Regional CEOs, who are members of the firm’s Executive Committee, direct the activities of regional organizations that source and execute investments and oversee regional development and operations.

New Executive Committee Members
In 2016, Sherri Schugart and Lars Huber were appointed to the firm’s Executive Committee, which functions as a board of directors. Ms. Schugart is the Senior Managing Director/CEO of the Core Fund, REIT & BDC Group and currently serves as the President and CEO of Hines Real Estate Investment Trust, Inc.; Hines Global REIT, Inc.; Hines Global REIT II; Hines U.S. Core Office Fund LP; and HMS Income Fund, Inc. She is also the Executive Sponsor of the OneHines Women’s Network Steering Committee.

As CEO for the firm’s European region, Mr. Huber is responsible for all development activity, acquisitions and operations. As a member of the Capital Markets Group, he oversees the European and Asian Capital Markets teams and is involved with key investor relationships, structuring of commingled funds, joint ventures and capital raising globally.

Executive Committee
The Hines Executive Committee sets policy for the firm. It is composed of ownership, regional and central leadership, and the firm’s Chief Risk Officer.

Management Committees
These committees serve as vehicles for change and communication. They complement the work of existing departments and committees responsible for day-to-day operations at Hines. The Management Committees are: Strategy; Investments & Performance; Finance, Operations & Tenant Relations; Capital Markets; Compensation, HR & Morale; Risk, Sustainability & Corporate Citizenship; and Steering.

Audit and Compliance Committee
The primary function of the Audit and Compliance Committee is to serve as an objective and independent party in ensuring compliance with policies and systems of internal control in the areas of finance, accounting, operations, legal compliance and business ethics. Current membership consists of the Chief Executive Officer and President, Chief Financial Officer, Chief Risk Officer, Treasurer, Chief Administrative Officer and Vice President – Legal. The committee meets quarterly, more frequently as circumstances dictate.

Investment Committee
The Investment Committee has final authority over all investment decisions. Members are the Chief Executive Officer, Chief Investment Officer, Chief Financial Officer, CEO of Capital Markets, CEO of Investment Management and Chief Risk Officer. The head of Hines Research is also a member of the committee and consults with it on each investment being considered. The fund manager for the asset being considered also has a vote on the Investment Committee for that specific decision. Voting is blind. Any three “no” votes or a single “no” vote from the Chief Risk Officer stops any approval. Where investment approval guidelines specific to an individual fund exist, those guidelines prevail and take precedence over the approval authority stated above.

Personnel Committee
Responsible for setting and maintaining the Code of Conduct and other employee policies, the Personnel Committee also sets guidelines for employee compensation.

Investment Review Group (IRG)
The purpose of the Investment Review Group is to bring discipline and organization to Hines’ relationship with investors. The IRG will review and approve all funds, strategic offerings and programmatic joint ventures before their presentation to investors. The IRG is the final decision-making body and resolves disagreements involving what is presented to investors; works closely with the CEO of Capital Markets on terms and structuring; and is the deciding body for performance-related compensation issues.

Hines Regions
Hines’ decentralized regional structure puts decision making closer to the real estate. Regional CEOs, who are members of the firm’s Executive Committee, direct the activities of regional organizations that source and execute investments and oversee regional development and operations. They work in strong collaboration with Central Resources and with the investment fund and separate account management teams. Investment decisions for properties within a fund or in a separate account are made at the fund level.

For each property, a senior regional staff member is appointed to serve as a “single point of responsibility” in the execution of the business. Experience has shown that this structure maximizes accountability and streamlines decision making.

Hines Policies

Hines policies are divided into three categories: 1) Hines U.S. Policies coordinated through the Personnel Committee and issued by Human Resources; 2) Regional and International Policies issued by the appropriate Regional CEO; and 3) Department Policies issued by the respective department heads. Department and regional policies may not conflict with or contradict company policies.

The following are key foundational policies:

Code of Business Conduct
The Hines Code of Business Conduct sets forth fundamental principles of law and ethics governing the way that Hines does business. Hines employees at every level must comply with the Code and associated policies and guidelines. In particular, employees contributing to financial record keeping must comply strictly with Hines’ finance and accounting standards. Managers are expected to review the Code with their teams on at least an annual basis and whenever there is a significant change.

Hines requires its suppliers, consultants, contractors and partners to conduct their businesses in a legal and ethical manner.

Conflicts of Interest Policy
This policy states that employees should actively avoid any activity that might influence their ability to act in the interest of the company or perform their work objectively. Specifically, it addresses procedures relating to: business gifts and entertaining; gifts to staff of public pension funds; ownership of competitive real estate; service on the board of banks, financial institutions or for-profit enterprises; and seeking political office in jurisdictions in which Hines owns or manages real estate.

Political Contributions Policy
In order to ensure compliance with applicable laws governing political contributions, all Hines officers and any other employee who solicits a government entity for investment are required to obtain pre-authorization of any intended political contribution. In addition, any intended support by the firm, or its officers and employees, of any state or local referenda or initiatives are required to be cleared using local counsel and Hines Vice President—Legal.

Anti-Corruption Policy
It is the policy of Hines that all employees, including employees of all U.S. and international affiliates, comply with the Foreign Corrupt Practices Act (FCPA) as well as local anti-bribery laws in the conduct of international business. Hines provides annual training on compliance with the FCPA and other relevant anti-corruption legislation to all employees.

Under the FCPA, it is unlawful for a U.S. person or U.S. business to pay or offer a bribe of any kind to a foreign official. Accordingly, the company’s policy prohibits the payment of money, gifts, services, entertainment or any other thing of value to such officials. Hines provides FCPA training to employees.

OFAC Compliance Policy
It is the policy of Hines to avoid transactions with any party confirmed by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) to be on the Specially Designated Nationals (SDN) List, and to comply and report to OFAC in the event Hines controls assets that are required to be frozen. In Europe, Hines complies with similar regulatory requirements existing in the UK, Luxembourg and Italy, where Hines operates regulated activities.

Environmental Policy
The Hines Environmental Policy states that employees should use reasonable efforts to accomplish the following:

  • Conduct business in accordance with applicable environmental laws and governmental directives
  • Minimize potential environmental liability arising from the ownership, development and management of land and property
  • Address the environment responsibly
  • Create and manage guidelines in appropriate environmental areas, including but not limited to the following: asbestos, hazardous materials, indoor air quality, refrigerant management and underground storage tanks
  • Strive to reduce the volume of commercial solid waste at Hines facilities, while promoting cost-effective waste recycling and reuse
  • Communicate the organizational commitment to environmental stewardship throughout the company

The policy further defines the roles and responsibilities of regional management, employees and corporate risk management to ensure the development, communication and implementation of the controls, standards and procedures necessary to achieve compliance with the Hines environmental guidelines. Hines’ international regions have adapted the environmental policy to best address local contexts.

Risk Management

The successful implementation of policies and environmental and operational standards by Hines employees and contractors is fundamental to a risk management program that strives to eliminate or minimize risk in order to protect ownership, investors and related entities from financial and physical loss.

The Central Resources risk management team supports regions by overseeing these functions: risk exposure identification and analysis; insurance procurement and administration; contractual risk transfer review and negotiating; litigation management; claims management; and loss prevention and control coordination.

Sustainability Resilience and Responsible Investment Considerations

A guidance document identifies what to consider when completing the sustainability section of a Hines Investment Committee proposal. Sustainability elements are considered in the context of investor objectives, market factors and local regulations, among other things. Questions to consider on a particular investment include:

  • Is the sustainability objective for this investment to acquire a building with strong environmental performance or to acquire an environmentally underperforming asset with an emphasis on improvement?
  • Is this property a candidate for net-zero?
  • How will Hines’ investment in or development of this project enhance the community?
  • How is the building able to be repurposed to respond to evolving tenant use?
Investment Management

Hines’ investment partners and clients include major public and private pension funds, government investment authorities, insurance companies, financial institutions, endowments and individual investors.

Hines-managed investments generally fit in the following classifications:

  • “Separate accounts” consist of one investor plus Hines. These funds can be either open-ended or have a clear end date
  • “Commingled funds” include multiple investors with an investment strategy or mandate and can be open-ended or closed-ended
  • One-off investments typically target a property or project with a primary investment partner in cases where Hines has identified a strategic opportunity
  • Independent investment projects are pursued and financed by the firm, provided this strategy creates no conflict with existing discretionary funds or separate accounts

Within each type of fund or separate account, Hines is typically designated as the managing general partner, and all other investors are limited partners, reserving certain decision-making and approval rights as established in each fund’s partnership agreement.

Hines’ management of regulated funds in Luxembourg is overseen by relevant national regulators. Capital raising for Hines is regulated by FINRA in the United States and FSA in Europe.

Hines REIT / Global REIT / Global REIT II
Hines sponsors three publicly offered investment programs. Classified as “real estate investment trusts” for U.S. federal income tax purposes, Hines REIT, Hines Global REIT and Hines Global REIT II are separate legal entities and are subject to regulation by the U.S. Securities and Exchange Commission.

Financial Reporting
Hines, as an investment manager, seeks to achieve superior rates of return on its investments, providing complete, timely and accurate financial and operational information. For each fund or investment project, Hines and its clients agree in the documents that govern the relationship to reporting standards and requirements.

As a private investment firm, Hines continues to evaluate the benefits of voluntary adoption of standardized financial and non-financial reporting frameworks for efficiency, comparability and transparency. Such frameworks include the European Association for Investors in Non-listed Real Estate Vehicles (INREV) and the Global Reporting Initiative (GRI). Hines seeks ongoing feedback from its stakeholders to help inform the completeness and effectiveness of its reporting.

Investor Engagement

With professionals in Europe, North America and Asia, the Hines Capital Markets group works closely with investors ranging from the largest sovereign wealth funds to individuals. Deep, long-standing relationships with investors, together with participation in investor conferences worldwide, allow Hines to identify early how investors’ needs and preferences are evolving. As it develops investment offerings, the Capital Markets group relies heavily on Hines Research for insight on the economy, property markets and risk/return tradeoffs.

Hines asks investors for feedback through a variety of channels. Investor surveys are conducted periodically via telephone interviews by a third party. Hines hosts an investor roundtable every 18 months, bringing together investors from around the world to share ideas and inform Hines practices.

Hines Investment Portal

The Hines online investor portal is a secure web environment that provides access to reports and other information related to an account’s assets and performance. The portal supports more rapid distribution of financial information and provides a repository for historical data in a secure manner that is available worldwide at the investors’ convenience.

Investor Relations Group

The Investor Relations group works closely with Investment Management, Capital Markets, Corporate Communications and our region/country teams to lead company-wide efforts to add more structure and consistency to our service model for investors and partners around the globe.

A head of Investor Relations oversees the coordination of internal and external investor communication to maximize the engagement of our existing investors and strategically build upon the relationships we have cultivated over our tenure as a developer, service provider and investment manager.

Hines is committed to providing our investors with best-in-class service, and this group helps bring us closer to reaching our goal of being the best real estate investor, partner and manager in the world.

Investment Strategy Group

The Investment Strategy Group (ISG) helps prioritize new initiatives across the firm. The four-member group acts as a forum where ideas proposed by Hines employees can be reviewed, developed and, if approved, implemented and disseminated. Additionally, the ISG focuses on the application of actionable results developed by Hines Research into investment action. Across Hines, the “four pillars” of Research, the Hines Regions, Investment Management and the Capital Markets group will provide guidance on the strengths and weaknesses of a proposed strategy. ISG works closely with all four groups to ensure that every initiative receives buy-in from each of the four groups and a clear consensus to move forward.