Hines finally pulling out of Russia

A year after Russia’s invasion of Ukraine, real estate investment giant Hines is readying its exit from Vladimir Putin’s country.

In recent months, the Houston-based investment firm has sold assets in Russia and started dismantling its business there, Bisnow reported. Hines began considering pulling out of the country a year ago, but didn’t publicly indicate it was doing so.

Various sanctions on Russia and its political and business leaders have made it harder for foreign businesses to leave.

“The process is complex and requires us to be fully compliant with multiple sanctions, government requirements and necessary regulatory approvals,” a Hines spokesperson told the publication.

Hines has been operating in Russia since the 1990s, often investing in assets in tandem with partners. The company has $2.3 billion in assets under management there and employs 236 people.

At the time of last February’s invasion, the company listed 11 owned or managed assets in Russia. That’s down to nine, as the 14-story Ducat Place III in Moscow and a phase of outlet village Belaya Dacha have been wiped from the firm’s website.

Hines’ remaining assets include its biggest Russian investment, a 50 percent stake in Moscow’s Metropolis shopping center, purchased from Morgan Stanley a decade ago in a deal that valued the asset at $1.2 billion. CalPERS is a partner in that stake.

In the immediate aftermath of Russia’s invasion, other real estate companies quickly made their intentions clear. Commercial real estate firms Knight Frank and Savills suspended operations and Colliers discontinued operations in Russia and Belarus.

Brokers leaving the market had the advantage of light asset holdings in the country, though. For a company like Hines or Ikea, exiting the country means selling assets and sanctions make that a significant challenge.

Researchers who evaluated 1,400 EU or G7-based companies determined that only 8.5 percent of them had fully exited the country by the end of last year. Russian commercial real estate volumes hit approximately $3 billion last year, according to CORE.XP, growing significantly year-over-year because of the sale of properties by foreign owners.

— Holden Walter-Warner