Union Investment, TH Real Estate enter US retail-property joint venture

Union Investment has made its first US urban retail investments by entering into a joint venture with TH Real Estate.

The German fund manager is buying a 49% stake in four high-street properties for its open-ended Unimmo: Global fund.

The TIAA-CREF Core Property Fund, an open-ended vehicle being renamed the US Cities Fund Series, owns the assets.

The name change is part of a wider move to merge TIAA Global Asset Management’s US real estate operations with TH Real Estate.

The 133,500 sq ft portfolio will continue to be 51%-owned and managed by TH Real Estate, which now manages more than $97bn (€86.9bn) in assets as a result of the merger, most of which is located in the US.

The acquisition of the four properties located in New York City, San Francisco and Philadelphia marks Union Investment’s first step in building a retail portfolio in the US.

Approximately 30% of Union Investment’s €28.5bn global portfolio consists of retail assets.

Its strategy will be to target the full spectrum of assets, from urban retail to grocery-anchored shopping centres.

Henrike Waldburg, head of retail investment management at Union Investment Real Estate, said: “Diversification and internationalisation are two strategic goals for our retail portfolio that go hand in hand.

“Four properties in major cities with global reputations are an excellent start in the US market, with our ambition being to significantly increase our retail exposure.”

Adriana De Alcantara, senior director and member of the TH Real Estate portfolio management team in the US, said: “These four properties offer diversified exposure to prime urban retail, an asset class we believe will remain in high demand as the trend toward urbanisation continues, and both residents and businesses seek the convenience of urban centres.”

Two of the properties are in New York and together represent around 70% of the total value of the portfolio: 43,300 sq ft of space at 1511 Third Avenue and 18,300 sq ft at 636 Sixth Avenue.

The former is let to fashion retailer GAP and a fitness studio, and the latter is let to a pharmacy on a long lease.

The remaining 30% of the portfolio is split between 856 Market Street in San Francisco and 1608 Chestnut Street in Philadelphia.

The tenant of the 9,100 sq ft of space close to Union Square in San Francisco is sportswear manufacturer New Balance.

The 42,800 sq ft, three-floor property in Philadelphia is located in the city centre and let to Japanese fashion retailer Uniqlo.

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