TIAA-CREF has taken ‘tough and rugged’ Australia by the horns with a sizable joint venture alongside Mirvac Group. Though not its maiden real estate investment in the country, it is without a doubt the $487 billion financial services conglomerate’s most significant.
Under the alliance, the New York-based investor will have the exclusive first right to all of Mirvac’s prime office deals sourced or developed in Australia over the next three years. For each deal in which TIAA-CREF elects to co-invest, it is expected to take a 50 percent ownership with Mirvac taking the remaining 50 percent. The deals are expected to have an average ticket size between A$200 million and A$400 million each.
Both parties declined to disclose how much TIAA-CREF hopes to invest through this platform over the next three years, but Mirvac chief executive Susan Lloyd-Hurwitz told PERE that the listed developer currently has an office development and deal pipeline of about A$3.1 billion (€2 billion; $2.8 billion) for TIAA-CREF to consider.
While Lloyd-Hurwitz did not expect TIAA-CREF to invest in all the deals that Mirvac offers – the mandate is more focused on assets in Sydney and Melbourne specifically – she expected that the investor would take up a good number of them. “Collectively, we haven’t gone to the effort of setting up this program to create something that’s not meaningful,” she said.
This is just the latest of TIAA-CREF’s real estate joint ventures. In February 2013, it announced a joint venture with Norges Bank Investment Management, manager of Norway’s Government Pension Fund Global, to invest in core office properties in Boston, New York and Washington DC. Then, in June, TIAA-CREF joined forces with Henderson Global Investors to form TIAA-CREF Henderson Global Real Estate, with a combined $19.8 billion in assets across Europe and Asia.
As Australia recently has fielded several sizable real estate plays from international players, TIAA-CREF’s alliance with Mirvac is one more indicator that the long-isolated market is making its way onto the radar of international investors.