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TIAA closes debut US mall fund on $1.25bn

The New York-based firm is seeking to capitalize on demand from major institutional investors to invest in the country’s largest malls.

TIAA Global Asset Management has wrapped up fundraising for its first super-regional mall fund, the investment manager said Monday.

The New York-based firm closed its T-C US Super Regional Mall Fund LP (US SRM Fund) on $1.25 billion after about a year and a half in the market, sources with knowledge of the fundraising process told PERE.

The fund’s target has not been publicly disclosed. The International Council of Shopping Centers, an industry group, categorizes super-regional malls as those that are on average about 1.2 million square feet with three or more anchor tenants.

The fund’s investor base includes several domestic and foreign institutional investors, as well as an undisclosed investment from TIAA’s General Account, according to Monday’s statement. The firm has invested about $685 million from the fund to date.

“We believe that US super-regional malls present a sound long-term investment given the current lack of mall construction and the shift towards consumers seeking entertainment experiences outside the home,” said Scott Kempton, the fund’s portfolio manager.

TIAA’s first investment with capital from the fund was the April 2015 acquisition of a 12.5 percent stake in the Ala Moana Center (pictured) in Honolulu, Hawaii, a spokeswoman for the firm said. The firm bought the minority interest in the high-end shopping center from General Growth Properties, a real estate investment trust, for $454 million, according to real estate data provider Real Capital Analytics.

“Major institutional investors are very keen on super-regional mall investing, as top regional malls often have a virtual monopoly in their markets given their size and the aggregation of top retailers,” Suzan Amato, a managing director at TIAA, told PERE. “Owners of top regional malls are expanding and upgrading their best properties in order to introduce new retail concepts and secure the value of the property over the long term. We have a robust pipeline of purchase opportunities with operators who seek capital to fund programs that keep their best product on the leading edge.”

TIAA manages $97 billion in real estate assets, according to Monday’s statement.