TH Real Estate, the business that now reflects TIAA-CREF’s entire real estate division, is transforming its $2 billion U.S. diversified core real estate open-end fund — TIAA-CREF Core Property Fund — into five open-end funds: a diversified fund and four sector funds, said Randy Giraldo, managing director and portfolio manager of the new funds.
The new U.S. Cities Fund series will have separate open-end funds for retail, office, industrial and multifamily properties in top urban markets in the U.S. TH Real Estate launched a European Cities fund in March. TH Real Estate said it is now the only real estate manager to sponsor open-end core funds in the four main property sectors.
Existing investors could keep their assets in the diversified fund by doing nothing or allocate their capital among the sector funds. Existing investors that choose to do nothing will have the same exposure as they do now under the same terms and conditions, Mr. Giraldo said in an interview.
“We tried to make it seamless,” he said.
TH Real Estate is also considering creating a series for the Asia-Pacific region, Mr. Giraldo said.
New investors will have a choice of investing in a diversified domestic fund or investing in the sectors individually.
The real estate money management business is maturing and investors want more control over the design and construction of their portfolios, Mr. Giraldo said.
TIAA has just completed the unification of its $97 billion real estate business that had been in TIAA Real Estate and TH Real Estate. TH Real Estate was formed in 2014 as a joint venture between TIAA-CREF and London real estate manager Henderson Global Investors as a way for TIAA to acquire expertise in European and Asian real estate. TIAA bought the 40% owned by Henderson in 2015.
Chris McGibbon, managing director and head of TH Real Estate Americas, and Mike Sales, head of Europe and Asia, TH Real Estate, will co-lead the unified business. In February, TIAA announced the expected departures of Tom Garbutt, senior managing director and head of TIAA’s global real estate business, and Philip McAndrews, senior managing director and chief investment officer. Both left in the spring, said Daisy Okas, TIAA spokeswoman.
As part of the unification, TH Real Estate is restructuring into a more regional model, mirroring the European and Asian TH Real Estate structure.