This Skyscraper Billionaire Is a Master at Sharing Risk
August 26, 2016


Gerald Hines, the 91-year-old real estate developer, has always been known for his belief in the striking and iconic. He built the Lipstick Building in Manhattan, helped develop Goldman Sachs Group Inc.’s Jersey City tower and today is constructing the tallest skyscraper in San Francisco.

But it was a little lesson he learned back during the oil bust of the 1970s that deserves equal attention when explaining his firm’s longevity and his family’s billionaire status. As the crash hit Hines and most others in his home base of Houston hard, he increasingly reduced his risk by pulling in partners to take big equity stakes in each project.

That model has served the Hines Group well during economic downturns -- most recently when oil prices collapsed again in 2014, just a year after the firm had embarked on a $1.7 billion development spree in Houston. This summer, when Hines and its investors walked away from a six-building office complex in the city that they’d owned since the 1990s, the developer’s exposure to the 70 percent-vacant Greenspoint Place was largely limited to its role as property manager.

"They have a lot of different ways they structure transactions," Mark O’Donnell, a director at brokerage Savills Studley, said. "They’ve done a damn good job of exiting equity positions and continuing to maintain less risky positions like property management..."

This Skyscraper Billionaire Is a Master at Sharing Risk




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