TIAA-CREF launches new real estate fund for high new worth investors
TIAA-CREF Asset Management has announced the launch of TIAA-CREF U.S. Real Estate Fund I, a closed-ended fund that will invest in a diversified portfolio of primarily high-quality core real estate assets in the office, retail, industrial and multifamily sectors.
U.S. Real Estate Fund I offers primarily high net worth investors represented by registered investment advisors access to the institutional real estate experience of TIAA-CREF, and the company's 60 years of experience with that asset class.
'The fund will aim to provide investors with a total return experience through an actively managed portfolio of primarily office, retail, industrial and multifamily properties in a wide variety of markets across the United States,' says Philip McAndrews, managing director and head of portfolio management for TIAA-CREF Global Real Estate. 'The seven- to 10-year term of the fund provides the portfolio management team latitude to seek maximum capital appreciation over the long term.'
Shawn Paulk, head of TIAA-CREF Asset Management's advisor services group, says: 'We look forward to working with financial advisors offering suitable investors, with a long-term investment horizon, the opportunity to invest in direct ownership of real estate properties through TIAA-CREF.
'This opportunity was formerly only available to institutions and eligible TIAA-CREF plan participants.' TIAA-CREF U.S. Real Estate Fund I is directed at investors with a net worth of at least USD3m, who wish to diversify their personal portfolio and participate in the direct ownership of real estate properties.
The fund has an initial minimum investment requirement of USD150,000. A subsidiary that will elect to be taxed as a real estate investment trust is expected to make substantially all real estate asset transactions. The term of the fund is seven years after the end of the offering period, which the general partner may extend to a maximum of 10 years.
'At least 80 per cent of our investments are expected to be in high-quality core properties in the 50 largest US markets,' says Suman Gera, managing director of TIAA-CREF Global Real Estate and the portfolio manager for the fund.
'We intend to use a top-down and bottom-up research approach to select commercial properties, primarily in the office, retail, industrial and multifamily sectors, which are expected to provide a stable, predictable income stream, have high occupancy levels, credit-worthy, financially sound and reputable tenants, and a low or modest level of projected near-term tenant turnover.'
The remainder of the fund's assets will be invested in value-add assets, including properties that feature generally higher vacancy rates, present more varied leasing opportunities and near-term lease expiration exposure and may require capital infusions to enhance their leasing profile.
TIAA-CREF is one of the largest US institutional real estate investors, with a USD70bn portfolio of direct and indirect investments at the end of last year. The organisation originated its first commercial mortgage in 1934 and began direct investment in commercial real estate in 1947.
Today TIAA-CREF Global Real Estate directly owns more than USD25bn of primarily high-quality properties in the office, retail, industrial and multifamily sectors in the US, Canada and Western Europe on behalf of individuals, public and private institutions in the US and abroad.
TIAA-CREF Asset Management, a division of Teachers Advisors, provides institutional investors and registered investment advisors with access to TIAA-CREF's investment management, research and analytical capabilities covering a wide spectrum of asset classes, from traditional equity and fixed income to real estate and other alternatives.
Teachers Advisors is a wholly-owned subsidiary of Teachers Insurance and Annuity Association of America. TIAA-CREF is a provider of retirement services in the academic, research, medical and cultural fields with more than USD435bn in combined assets under management at the end of last year.