From Homes To Hydrogen Power: Inside Greystar’s Move Into Infrastructure Investing

When you’re one of the biggest names in rental housing worldwide, with more than $75B of assets under management, where do you go next? 

For Greystar, the answer isn’t just moving into other real estate asset classes. In August, the company announced it is setting up an infrastructure division and would be buying and building assets in sectors like renewable energy, digital infrastructure and transportation. 

As part of the move, Greystar hired infrastructure veteran Michael Hoverman as executive director of infrastructure. Hoverman spent seven years at Macquarie and more recently, 10 years at CIM, where he also led the diversification of what was once a pure real estate firm into the world of infrastructure. 

The move by Greystar is part of a growing trend. Real estate investors like Prologis have been diversifying into areas like data centers and energy generation in recent years, and big institutional investors like Nuveen and APG now have real assets divisions rather than separate teams for real estate and infrastructure. The world’s second-largest REIT, American Tower, owns and rents out cell towers, not buildings. 

Hoverman talked Bisnow through exactly what Greystar means when it talks about investing in infrastructure and how the strategy would be rolled out over the next few years. 

“I think investors are increasingly realizing that real estate and infrastructure are in many ways codependent and structuring themselves accordingly,” Hoverman said. “You can't be building new housing stock, new developments, if the power, the water, the waste management, the transportation are not aligned and there to support that long term.”

Greystar has already started to diversify beyond its core residential focus, managing almost 1 million apartments globally. At $1.5B in assets under management, its logistics portfolio is surprisingly big for a company so associated with housing. But this is a step further. 

Infrastructure is one of those terms that can be vague. Infrastructure investment can include assets that a traditional real estate investor might recognize, like data centers, and things that they almost certainly would not, like a toll road. The wide spectrum in between includes airports, cell towers, power storage facilities and solar farms. 

Hoverman said that Greystar will be investing in areas aligned with the needs of an increasingly urbanized population, a demographic trend that the company has ridden. It will also invest in areas touching the increasingly digital nature of modern life. 

Digitization, the green energy transition and transportation are the key areas of focus, he said. 

Digitization could mean data centers or other digital infrastructure, like cell towers, Hoverman said. Transportation could mean investing in electric vehicle charging infrastructure. Green energy transition investments could include established technology, like solar panels, or emerging technology, like battery storage. It also includes cutting-edge technology such as hydrogen power generation and storage. 

“The energy transition will will require significant investments in things like hydrogen and renewable fuels, like renewable natural gas, in order to be successful,” Hoverman said, adding those investments could be done in parallel with investments in the infrastructure that that's required to support the transition.

“It's an exciting time on the renewable fuel side as well as the electrification of our transportation systems. I think they are two opportunities within the transportation space that we are very excited about.”

Hoverman said that Greystar is looking to make infrastructure investments that are beneficial for existing residents and society more widely as well as its investors. 

The company could invest in infrastructure on or adjacent to its existing properties, Hoverman said, including adding solar panels to apartment block roofs or installing EV charging points at resident parking areas. 

But the strategy will not be limited to existing or new residential projects, he said. It could include investment in large-scale greenfield projects, most likely in areas where it already has a residential presence. 

Hoverman said he is building out a dedicated infrastructure team, and that team would take advantage of Greystar’s existing staff. Some are already active in areas of interest, such as solar installation and EV charging. 

Greystar will work with existing capital partners and new investors, bringing in capital dedicated to the infrastructure investment strategy, he said. That investment could come in the form of investments in companies active in these areas as well as the assets themselves. 

“I think the capital will be coming through where we are investing in companies, platforms that have a specific expertise and specialization in doing this,” he said. “The opportunity for us is taking an approach of investing in backing management teams that have this capability.”