TIAA-CREF, AP1 & AP2 Create Strategic Joint Venture to Invest in European Office Properties

Joint venture, established and managed by TH Real Estate, to create a leading, pan-European office platform committed to building €4bn+ office portfolio

NEW YORK--()--TIAA-CREF, a leading financial services provider, and the Swedish National Pension Funds AP1 and AP2 have agreed to combine forces in a new joint venture to create a leading, pan-European office investment platform. TIAA-CREF’s affiliate, TH Real Estate, brought the parties together and will manage the vehicle on the investors’ behalf, providing investment and asset management services.

The joint venture will be seeded with existing properties owned by the TIAA General Account, AP1 and AP2, creating an initial platform valued at €2.2 billion / US $2.52 billion. The venture will also commence an active investment program with new capital from the TIAA General Account, AP1 and AP2 targeting an additional €2 billion / US $2.29 billion of investment over the next 3 years. It will primarily target ‘core’ investments in Tier 1 cities such as London, Paris, Munich, Hamburg, Frankfurt and Berlin. Additionally, the investment program will invest in ‘value-add’ opportunities such as leasing, renovation and development opportunities in Tier 1 cites, or stabilized core investments within Tier 2 cities that include Madrid, Milan and Amsterdam, among others.

Phil McAndrews, Senior Managing Director and Chief Investment Officer of TIAA-CREF Global Real Estate 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.”

Eva Halvarsson, CEO AP2 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.”

Johan Magnusson, CEO of AP1, said: “We are excited to merge the existing Cityhold properties with those owned by TIAA-CREF, while also making a commitment to make further investments in the coming years. The greater capital base provides the vehicle with better opportunities to make good long-term investments in commercial properties in a number of selected large European cities.”

The newly formed investment vehicle will be named ‘Cityhold Office Partnership’. TIAA-CREF will hold a 50% interest in the vehicle and each AP fund will hold 25%. The 15 seed assets, (9 contributed from the TIAA General Account and 6 from AP1 & AP2), total 2.7 million square feet and include landmark assets such as 12-14 New Fetter Lane and One Kingdom Street in London, Tour Areva in Paris, and Atlantic Haus in Hamburg.

The joint venture extends the long-term investing relationship between TIAA-CREF and AP2, which has been co-investing with TIAA-CREF since 2011 in various real asset strategies including TIAA-CREF’s timberland strategy and two farmland investment partnerships spanning numerous geographies across North America, South America and Australia.

Real estate has been a key part of TIAA-CREF’s investment platform since 1934 and represents $86 billion in assets under management, as of June 30, 2015. TIAA-CREF has deep exposure across the office, retail, industrial and multifamily sectors, and is a leading joint venture partner to sovereign wealth funds and pension funds around the globe seeking high quality exposure to prime U.S. real estate assets in top-tier markets. TIAA-CREF’s global real estate platform includes TH Real Estate’s $28 billion in assets under management across 50 funds and mandates.

The transaction is expected to close in September.

About TIAA-CREF:

TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $869 billion in total assets under management (as of 6/30/2015) and is the leading provider of retirement services in the academic, research, medical and cultural fields.

About TIAA-CREF Asset Management:

TIAA-CREF Asset Management (www.tiaa-cref.org/public/assetmanagement) is part of the TIAA-CREF group of companies and provides investment advice and portfolio management services to individual investors, intermediaries and institutional clients through its subsidiaries. Its strategies cover a wide array of global asset classes, including equities, fixed income, real estate and alternative investments.

About TH Real Estate:

TH Real Estate is an established investment management company with specialization in real estate equity and debt investing worldwide. As one of the largest real estate managers in the world, TH Real Estate has the scale, capital resources and knowledge to provide creative and effective real estate investment solutions for clients. With a focus on the retail, office, logistics, debt and multi-family sectors, TH Real Estate emphasizes sustainable practices to protect assets and maximize their value. www.threalestate.com

About AP1:

Första AP-fonden is one of five AP funds in the Swedish national income pension system. The capital reserves in the AP funds ensure that pension benefits can be paid even when disbursements from the pension system exceed contributions into it. Första AP-fonden has assets under management of SEK approximately 300 billion* in a global portfolio comprising equities, fixed income securities, real estate, private equity funds and hedge funds. Första AP-fonden invests to achieve high and long-term sustainable return. More information about Första AP-fonden at www.ap1.se

About AP2:

The Second AP Fund (AP2) is one of northern Europe’s largest pension funds, managing assets totaling more than SEK 300 billion of Sweden’s national pension assets, which are invested worldwide. The Fund is tasked with generating a solid return on investment, while implementing a consistent policy of responsible and sustainable investment. www.ap2.se

Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.

TH Real Estate securities products distributed in North America are advised by UK regulated subsidiaries or TIAA-CREF Alternatives Advisors, LLC, a registered investment advisor and wholly owned subsidiary of TIAA, and distributed by Teachers Personal Investors Services, Inc., member FINRA.

TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, for details. Past performance does not guarantee future results. You cannot directly invest in the TIAA General Account.

©2015 Teachers Insurance and Annuity Association-College Retirement Equities Fund, New York, NY 10017. C24633

Release Summary

TIAA-CREF, AP1 & AP2 have created a strategic joint venture to invest in European office properties, looking to create a €4 bn portfolio managed by London-based investment manager TH Real Estate.