Nuveen Real Estate has raised an initial $550m (€485.9m) for a newly launched US cities multifamily properties fund.

The $125bn manager’s US Cities Multifamily Fund has received a $450m capital commitment and seed portfolio from a third party investor, alongside a $100m co-investment from Nuveen Real Estate’s parent company, TIAA.

The seed portfolio is made up of nine assets spanning eight core markets and totaling more than 3,000 units.

The open-end perpetual life real estate investment vehicle will acquire and manage institutional quality multifamily rental properties in select cities across the US, Nuveen said.

James Martha, the head of US housing at Nuveen Real Estate, said: “As investors look to commercial real estate for income and diversification, we are well-positioned to build an attractive portfolio of apartment assets that reflect the dynamic and stable growth attributes of this sector.

“We have over six decades of experience investing in the multifamily sector and have established a strong platform to match client capital with investment opportunities that respond to modern living needs.”

Nikita Rao, a portfolio manager of the fund, said: “Millennials and middle-income households represent a stable and sustainable long-term source of demand for apartments, and Nuveen Real Estate believes this demand will continue to keep occupancy rates strong, particularly in metro areas benefiting from job growth and an expanding economy.”

Nuveen Real Estate’s US direct multifamily residential equity and mortgage debt investments are currently valued at over $17bn.