UNITED STATES - TIAA-CREF has created its first commingled fund to be backed by third-party investment capital.

The US Real Estate fund I has a target capital-raising of $300m (€193.1m) but will include a $50m co-investment from TIAA-CREF.

The firm believes its arrangement will give investors access to good deal flow, built on relationships established through a long history of investing in real estate.

The company directly owned a real estate portfolio which included a mixture of office, industrial, retail and apartments in the United States, Canada and Europe, and was worth $25bn by the end of 2007.

Terms of the commingled fund means most of the monies - which in turn carries up to 50% leverage - will be in core assets, meaning as much as 80% of the fund could be placed in a mixture of office, industrial, retail and apartments.

TIAA-CREF defines ‘core' as existing properties with high occupancy and leased to strong tenants, where there is little tenant rollover.

The remaining 20% of the fund will be invested in value-added transactions with higher vacancy rates or in need of capital infusion, and could include hotels.

A typical deal size for the fund is $15m to $50m and TIAA-CREF will be looking for core-like returns on deals.

Real Estate Fund I has a seven-year life with three one-year extension options.

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