REAL ESTATE - US pension fund TIAA-CREF last week announced that it is to acquire community retail real estate in a complex $3bn joint venture.
The venture, with Developers Diversified, will acquire 67 local retail sites across southeastern states. Developers Diversified, a REIT, specialises in operating and managing community real estate and prides itself on "aggressive" asset management.
Complicating the deal is a merger-in-progress between Developers Diversified and Inland Retail Real Estate. Completion of the merger, scheduled for completion in Q1 2007, is a condition of the TIAA-CREF deal.
Under the terms of the deal, a TIAA affiliate will contribute 85% of the equity.
Tom Garbutt, head of the pension fund’s global real estate unit, indicated said the deal showed the fund "can move nimbly on large and complex transactions". The fund, which covers employees in the academic, medical and cultural sectors, is already one of the US’s largest institutional real estate investors with around $68bn invested directly and indirectly across the US, Canada and Western Europe.
Garbutt added that the deal was "an attractive way to bring value to our clients". He claimed the pension fund’s early involvement in the deal had enabled an attractive price and the prospect of attractive rate of a return for the fund’s investors as a result of the Developers Diversified’s operating proficiency and strong tenant relationships.
A spokesman for the pension fund did not rule out further, similar joint ventures.
TIAA-CREF pension fund covers employees in the academic, medical and cultural sectors. It has assets under management of £390bn.