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TIAA makes biggest-ever real estate purchase

In a record Las Vegas transaction, the investment manager bought a stake in a premier shopping mall for $1.25bn.

TIAA Global Asset Management has made its biggest-ever acquisition with the purchase of a 50 percent stake in a class A Las Vegas mall for $1.25 billion.

TIAA, the New York-based investment manager, closed on its third transaction with real estate investment trust General Growth Properties (GGP), acquiring half of GGP’s interest in Fashion Show Mall (pictured), the REIT said in its second-quarter earnings call last week. The deal, which values the property at about $2.5 billion, is the largest non-hotel transaction in Las Vegas history, according to real estate data provider Real Capital Analytics (RCA).

The deal also is TIAA’s largest-ever real estate purchase. Prior to the Fashion Show Mall transaction, the company’s largest acquisition was the 2015 purchase of a 12.5 percent stake in Hawaii’s Ala Moana mall for $454 million from GGP, according to RCA.

GGP acquired the Fashion Show Mall on the Las Vegas Strip in November 2004 when it purchased another REIT, Rouse Company. Since then, GGP has re-tenanted the shopping center, adding anchor retailers Urban Outfitters and Dick’s Sporting Goods, along with dining and entertainment-focused tenants. The mall was 99 percent occupied over the last six years, according to GGP.

TIAA bought the stake in the 836,000 square foot property through the TIAA Real Estate Account, a real estate investment platform for individual investors that has nearly $24 billion in assets under management, according to the firm.

“We were attracted to this asset based on our productive partnership with GGP and the continued alignment of interests generated through these joint ventures. Fashion Show is a top location for both new and established retailers in Las Vegas and over the years has demonstrated an ability to withstand economic cycles and new supply in the market,” Mike Fiske, a senior director at TIAA, said in a statement. “From a long-term perspective, our research points toward continued positive indications for regional mall performance given a modest new supply pipeline, re-leasing opportunities and expected high productivity as consumers increasingly seek entertainment experiences outside the home.”

The investment firm purchased two malls stakes from GGP previously. In addition to the Hawaiian mall, in 2013, the firm acquired a 49.9 percent stake in Las Vegas’ Grand Canal Shoppes for $410 million, according to RCA.

TIAA has also shopped for other retail centers recently. Last month, the firm bought a 70 percent stake for an undisclosed price in the Pacific City Shopping Center in Huntington Beach, California from DJM Capital, PERE previously reported. The firms said that California-based DJM will retain a 30 percent stake and manage the 109,000 square foot outdoor retail center. DJM, a local developer, bought the property in November 2012 as a development site for $25 million, according to RCA.