Heitman LLC (Heitman) is an American real estate investment firm headquartered in

Chicago Chicago is the List of municipalities in Illinois, most populous city in the U.S. state of Illinois and in the Midwestern United States. With a population of 2,746,388, as of the 2020 United States census, 2020 census, it is the List of Unite ...

. It has three main business areas,

private equity real estate Private equity real estate is a term used in investment finance to refer to a specific subset of the real estate investment asset class. Private equity real estate refers to one of the four quadrants of the real estate capital markets, which incl ...

, real estate debt and investment in real estate securities such as

Real estate investment trust A real estate investment trust (REIT, pronounced "reet") is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of real estate, including office and apartment buildings, studios, warehouses, hos ...

s (REITs). Outside the United States, the firm has offices in Europe and Asia-Pacific.

Background

Heitman was founded in 1966 in Chicago with an early focus on Mortgage Banking and servicing. At the time it was trying to find a way to capitalize real estate development activity as few

institutional investor An institutional investor is an entity that pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked ...

s were making equity investments in real estate. By the 1970s, Heitman was moving into equity investment management to complement its debt business. Institutional investors such as pension plans and state public retirements systems were beginning to invest in real estate. By the 1980s, Heitman started forming commingled funds where capital was pooled from institutional investors to purchase real estate properties. In 1989, Heitman established Heitman Real Estate Securities which would invest in public securities related to real estate such as REITs. During the 1980s, Heitman received large fees from buying and managing commercial real estate for

pension fund A pension fund, also known as a superannuation fund in some countries, is any program, fund, or scheme which provides pension, retirement income. The U.S. Government's Social Security Trust Fund, which oversees $2.57 trillion in assets, is the ...

s and other institutional investors. However the US Real Estate Crash of the 1980 caused many of the investments to produce losses. In 1993 Heitman sold itself to United Asset Management (UAM) and became a subsidiary of it. In 1994, Heitman acquired

JMB Realty JMB Realty was a real estate investment company based in Chicago. In 1993, after suffering during the early 1990s recession, the company spun off its retail properties as Urban Shopping Centers, Inc., which was acquired by Rodamco in 2000 and b ...

's institutional asset management and non-retail property management businesses. These businesses were in the same area as Heitman and was believed to complement the firm. After the acquisition Heitman's

assets under management In finance, assets under management (AUM), sometimes called fund under management, refers to the total market value of all financial assets that a financial institution—such as a mutual fund, venture capital firm, or depository institutio ...

doubled in size from $6 billion to 12 billion. In early 1997, Heitman proposed to its investors that it would perform a conversion that involved a

rollup A rollup (also "roll-up" or "roll up") is a process used by investors (commonly private equity firms) where multiple small companies in the same market are acquired and merged. The principal aim of a rollup is to reduce costs through economies o ...

$3 billion of finite-life commingled investment funds it managed into three new REITs that it would continue to manage. At this point, many of Heitman's funds were going mature soon resulting in a loss of management fees. In late April, Heitman invited all investors to Chicago for a presentation on the plan. The Orange County's pension plan who was not an investor in the funds but had co-invested in the properties through Heitman, sent a representative who asked Heitman to conduct a straw poll of investors to gauge support for the plan. Heitman chairman Norman Perlmutter in an emotionally charged manner criticized the request stating Orange County wasn't a fund investor so it had no right to ask. It was stated this was a turning point for many people who were on the fence. Eventually the investors rejected the proposal with reasons including REITs liquidity concerns, cost of conversion being too high, wanting to cash out and not wanting to pay more management fees to Heitman who was seen as wanting to retain control over the assets. In addition it was believed existing public REITs could pay more for properties than Heitman. On May 15, in a letter to investors, Heitman stated it would abandon the conversion attempt resulting in 18 funds being required to be liquidated as originally planned. In early 1998, Hetiman underwent restructuring in an attempt to get clients who were not satisfied with the firm's performance to reinvest in it. Heitman would move its focus from commingled funds to high-yield real estate, REITs and overseas investing. Multiple senior executives left the firm. In the last two years, the firm had lost several billion in

. In July that year, Kennedy Wilson acquired

Beverly Hills Beverly Hills is a city located in Los Angeles County, California, United States. A notable and historic suburb of Los Angeles, it is located just southwest of the Hollywood Hills, approximately northwest of downtown Los Angeles. Beverly Hil ...

-based Heitman Properties, the commercial real estate management and leasing arm of Heitman for around $20 million. In September 2000, UAM was purchased by

Old Mutual Old Mutual (officially Old Mutual Limited) is a South African investment, savings, insurance, and banking group, operating across Africa. It is listed on the Johannesburg Stock Exchange, the Zimbabwe Stock Exchange, the Namibian Stock Exchan ...

. There was a change in ownership where 50% of Heitman would be owned by Old Mutual while the other 50% were held by Heitman's management team. In the early 2000s, Heitman started expanding its operations into Asia. In 2018, Heitman acquired Old Mutual's stake of the firm making it entirely owned by its management team. Most of Heitman's investments are in

. Its biggest market is North America followed by Europe and Asia.

Lawsuits

In May 2020, Heitman sued

Jenner & Block Jenner & Block is an American law firm with offices in Century City, Chicago, London, Los Angeles, New York City, San Francisco, and Washington, D.C. The firm is active in corporate litigation, business transactions, the public sector, and oth ...

alleging it failed to pay it more than $3.7 million in rent during the months of April and May 2020. In June 2020, Jenner filed a counterclaim stating Heitman actually owed it $840,000 in credits as it was unable to use its Chicago office at the start of the

COVID-19 pandemic The COVID-19 pandemic (also known as the coronavirus pandemic and COVID pandemic), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), began with an disease outbreak, outbreak of COVID-19 in Wuhan, China, in December ...

. In September 2021, both parties reached a settlement.

References

External links

* {{authority control 1966 establishments in Illinois American companies established in 1966 Companies based in Chicago Financial services companies established in 1966 Investment management companies of the United States Privately held companies based in Illinois Private equity firms of the United States Real estate companies of the United States Real estate companies established in 1966