TIAA Henderson Real Estate has been one of the most active investors in Europe so far this year following the launch of the new combine on 1 April.
TIAA Henderson Real Estate has been one of the most active investors in Europe so far this year following the launch of the new combine on 1 April.
According to PropertyEU Research, the joint venture has racked up deals totalling around €1 bn so far this year and a similar amount or more is in the pipeline, according to Mike Sales, managing director of Europe at TIAA Henderson Real Estate.
Within Europe, TH Real Estate is not straying from its traditional focus on the northwestern and southern countries, Sales added. ‘Growth is slowly coming back to the European market but it is city-specific. As a long-term investor, we focus on transparent and liquid markets. Russia, for example, is not on our playlist.’
First announced in mid-2013, TIAA Henderson Real Estate brings together the European and Asian real estate businesses of US financial services provider TIAA-CREF and UK-based fund manager Henderson Global Investors.
The company's shopping splurge follows a number of recent fundraises. In May this year, TH launched a German retail fund with a target investment volume of €400 mln. The Core German Retail Fund will invest across retail parks, department stores, malls and inner-city shopping centres. That initiative followed the launch of another new retail fund focusing on Poland and the Czech Republic via Warburg-Henderson, a joint venture between the UK firm and German private bank Warburg.
Fund vehicles continue to be successful in Germany, Sales said. ‘There’s still demand for pooled funds there. You don’t get big yield swings in Germany, certainly not to the extent that you see in the UK and some other markets.’
Other markets that Sales is targeting in Europe include Dutch offices and Italian and Nordic retail, ‘We have €500 mln to deploy in the Nordics, primarily US and European money. Altogether we have a pipeline of around €1 bn through to the end of the year. We’re looking to invest for our funds as well as TIAA-CREF’s general account and hopefully some of those deals will come through before the year-end.’
FUND EXTENSIONS
Investors seem happy with that focus given TH Real Estate’s success in extending existing fund vehicles. Last week, the company announced it has extended its UK Retail Warehouse Fund by six years, to December 2021. The original £1.1 bn (€1.4 bn) fund was due to expire in December 2015. All 70 unit holders, comprising UK and European institutions, elected to extend their participation in the vehicle.
The change also allows the fund to raise extra equity of up to 10% per year. It currently holds 16 retail warehouse assets across the UK and has shown a five-year total return of 17.6% per year to June 2014.
The move follows the creation of a new European Outlet Mall Fund in April to replace its €1.5 bn vehicle which expired in February following a 10-year life during which it delivered IRRs of around 12% per annum. The new fund will continue with around 80% of unit holders in the original Outlet Mall Fund, including a range of pan-European institutional clients as well as European designer outlet specialist McArthurGlen and TIAA Henderson Real Estate itself.
In addition to its European Outlet Mall Fund, TH Real Estate also extended the life of its Central London Office Fund – a Jersey-based Property Unit Trust – by a 10-year term, earlier this year. Sales: ‘On the whole, investors want more control of their property investments, but there is still appetite for the right funds and with good assets and governance. Successful extensions are a definite vote of confidence from our investors, as are those funds which trade regularly in secondary markets.’
Click on the link below for the full interview with Mike Sales.