TIAA-CREF has joined forces with Swedish national pension funds AP1 and AP2 to form a €4.2bn (£3bn) European office investment platform.
The jv was brought together by TIAA-CREF affiliate TH Real Estate, which will manage the venture.
Known as Cityhold Office Partnership, the jv will target pan-European office investments, seeded with 2.7m sq ft of existing properties, nine owned by the TIAA General Account, and six from AP1 and AP2.
TIAA-CREF will hold a 50% interest, with each AP fund holding 25%.
The vehicle will yield an initial platform valued at €2.2bn and embark on an investment programme with new capital from the TIAA General Account, AP1 and AP2, that will target a further €2bn of deals over the next three years.
The jv will seek core investments in tier one cities including London, Paris, Munich, Hamburg, Frankfurt and Berlin. It will also buy into leasing, renovation and development opportunities in tier one cities, and stabilised core investments in tier two cities such as Madrid, Amsterdam and Milan.
The base assets include 12-14 New Fetter Lane, EC4, and One Kingdom Street, W2; Tour Areva in Paris; and Atlantic Haus in Hamburg.
TIAA-CREF chief investment office Phil McAndrews said: “Our investing partnership with AP1 and AP2 – like-minded investors who share our long-term investing horizon and focus on high-quality assets – enables us to further diversify TIAA’s existing European office portfolio across asset, tenant and market exposures while establishing a broader platform to expand our European investments.
“Working collaboratively with two established players in the European office space is exactly the type of growth opportunity we envisioned for TH Real Estate when we launched the firm in 2014 and acquired full ownership earlier this year.”
AP2 chief executive Eva Halvarsson said: “In 2011, in partnership with AP1, we established Cityhold Property AB with a view to investing in real estate in the major European cities. Now that Cityhold’s property portfolio is being merged with TIAA-CREF’s European portfolio of commercial real estate, we have successfully enhanced and diversified the portfolio of European real estate, in line with the strategy originally outlined for the company. Moreover, with TH Real Estate, we gain an operating partner of considerable expertise, especially with regard to local markets.”
The transaction is expected to close in September.
