TIAA consolidates real estate operations to create $97bn giant

TIAA Global Asset Management is merging its US real estate operations with its European and Asia-Pacific subsidiary TH Real Estate.

TIAA, one of the largest owners of US real estate, will combine the entities to create a third-party fund management business with $97bn (€87bn) of assets held in nearly 80 funds and mandates.

The enlarged TH Real Estate business, which will remain part of the global real assets unit of TIAA, will be led jointly by Mike Sales, head of Europe and Asia, and Chris McGibbon, head of Americas.

Sales has worked for the business for more than 20 years – including when it was part of Henderson Global Investors – and took over as CEO of TH Real Estate last year. He will share overall responsibility with McGibbon who was previously real estate and mortgage portfolio manager of TIAA’s General Account.

The move reflects TIAA’s ongoing efforts to expand its third-party fund management business.

TIAA’s core open-ended US property fund is being relaunched under TH Real Estate brand and is being restructured to enable investors to choose sector-specific exposure.

The TIAA-CREF Core Property Fund is being renamed US Cities Fund, bringing it line with the open-ended European Cities Fund, which TH Real Estate launched earlier this year.

Investors will have the option to invest in one single overarching master fund or select exposure via four sector funds.

Randy Giraldo, managing director and portfolio manager for the US Cities Funds, said: “Investors are increasingly seeking access to sector-specific core funds and now TH Real Estate offers investors the opportunity, with a single manager, to customise their exposure to the four main property sectors.”

The US Cities Funds and other vehicles including the US Super Regional Mall Fund – for which TIAA raised $1.25bn last summer – will reside on the TH Real Estate platform. 

“We’ve been offering cross-border investment solutions for years, but having a unified investment approach will allow us to deliver a consistent menu of global real state solutions across geographies, styles and sectors,” said McGibbon.

“Integrating capabilities across all three regions to form a fully unified and commercialised global real estate platform ensures that we are squarely focused on delivering innovative products supported by local knowledge, expert execution and a long-term view that goes beyond market cycles.”

TH Real Estate was established in 2014 when TIAA (then TIAA-CREF) and Henderson Global Investors formed a joint venture between their real estate operations.