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TIAA Henderson kicks off with €400m German retail fund

The merger between Henderson Global Investors and TIAA-CREF has kicked off with the launch of a fund for investments in retail assets including retail parks, self-service department stores, hybrid malls and inner city shopping centers.

TIAA Henderson Real Estate (TH Real Estate), the global real estate investment management business resulting from the merger between US financial services firm TIAA-CREF and property asset manager Henderson Global Investors, has launched its first European property fund since announcing the official start of the merged company yesterday.

TH Real Estate said it had launched a spezialfond focused on core retail real estate assets in Germany. The firm wants to raise approximately €400 million for the German Retail Fund, via which it will acquire specialist retail parks, self-service department stores, hybrid malls and inner city shopping centers.

Thilo Wagner, TH Real Estate’s director of investment in Germany said the firm would target assets with at least 75,000 square feet of gross rental area. 

He said: “German retail property offers an attractive distribution yield combined with prospects for further value appreciation. The Core German Retail Fund will seek sites in established, competitive locations across German metropolitan areas and medium-sized towns.”

“Asset management will play an important role in the process in order to optimize both the term of lease agreements and the tenant mix,” he added.

Investors that commit to the vehicle should anticipate a distribution yield of about 5.5 percent a year over its ten-year life. Leverage employed for the fund would be at a loan-to-value ratio of approximately 40 percent to 45 percent.

The news of the fund comes just one day after TH Real Estate announced it has officially started as a company following the merger of Henderson Global Investors with TIAA-CREF last year.

The company, owned 60 percent by TIAA-CREF and 40 percent by Henderson, has about $22.6 billion of real estate across approximately 50 funds and mandates. The wider TIAA-CREF real estate operation, including TH Real Estate, has a total of about $71 billion of real estate assets on its books, making the business one of the largest real estate investment managers globally.