Individual employees of America's colleges and universities soon will get a chance to invest in commercial property, which to date has been the province of high-net-worth individual and institutional investors.
The $73.3 billion Teachers Insurance and Annuity Association, New York, will offer a variable annuity that will invest primarily in property. It also may buy commercial mortgages and real estate investment trusts.
TIAA investment professionals will manage the fund, which is targeted at $300 million. It would be the largest property-backed variable annuity.
As the fund matures, investments in foreign property and real estate investments will be considered. It is expected foreign real estate will make up no more than 25% of the portfolio. Between 20% and 30% will be invested in debt and money market securities for liquidity.
The majority of the real estate investments will be direct ownership interests.
The universe of variable annuities investing in property is small, and the performance has not been good. According to Morningstar Inc.'s variable annuity report, the only other sponsors of property-backed variable annuities are The Guardian Life Insurance Co. of America, New York, and Prudential Insurance Co. of America, Newark, N.J.