San Francisco Retail Asset Part of Portfolio JV Sale to Foreign Capital Source

TH Real Estate, Union Investment Real Estate, San Francisco, Bay Area, TIAA Global Asset Management, TIAA-CREF Global Asset Management

By Jon Peterson

New York City-based TH Real Estate and Germany-based Union Investment Real Estate GmbH have formed a joint venture on four urban retail assets totaling 113,000 square feet in the United States. One of the properties in the venture is 856 Market Street in San Francisco. The value of the transaction was not disclosed.

TH Real Estate is the operating partner of TIAA Global Asset Management. This real estate manager had acquired 856 Market Street on its own two years ago for $23.5 million. The property totals around 9,100 square feet and is 100 percent occupied by sports retailer New Balance. This tenant recently moved into the property.

The venture calls for TH Real Estate to keep a 51 percent ownership in the assets with the other 49 percent going to Union Investment. The other three properties in the venture are two assets in New York City and one in Philadelphia. This transaction was a direct deal between the two parties in the JV with no brokerage firm involved.

“This transaction is the first deal we have done with Union Investment. It also represents the first retail transaction that Union Investment has done in the United States. We are hopeful of doing more business with them in the future,” says Adriana De Alcantara, a senior director and a member of the TH Real Estate portfolio management team in the US. She works out of the company’s New York office.

The four of the properties were packaged together as a way to make the bundle more attractive for potential investors. “All of the assets we have acquired over the past couple of years. We felt that if we put them together in a transaction that would-be capital sources interested in them as they are in prime urban retail in major markets around the country. This type of retail asset is drawing interest from many institutional investors,” said De Alcantara.

TH Real Estate had acquired these assets under the name of TIAA-CREF Global Asset Management. TH Real Estate is the operating division of TIAA-CREF. The capital source for these deals is the TIAA-CREF Core Property Fund. This investment entity is being re-launched into the U.S. Cities Fund Series. The total assets under management for this entity is currently at $2 billion. It typically invests in core office, industrial, retail and apartments in major markets.