TIAA-CREF, TIAA Henderson Close Value-Add M-F Fund

TIAA-CREF and TIAA Henderson Real Estate closed their CASA fund with a $420 million price target in value-add workforce housing.

TIAA-CREF and TIAA Henderson Real Estate have closed CASA Partners VI L.P., the sixth in a series of multi-family housing funds, after raising $260 million in equity from investors.

With leverage, the equity commitments will allow the fund to target a portfolio of approximately $420 million.

“We’ve been investing in the value-add CASA series of apartment funds for our institutional third party clients for the past 20 years,” Jay Martha, TIAA-CREF Asset Management’s managing director of North American real estate, told Commercial Property Executive. “Market demand for apartments continues to grow, particularly in the value range of product we’ve focused on throughout our CASA series. As we transitioned our team to the TH Real Estate platform it was extremely important that we stayed active in the market and our clients continued to support the CASA strategy and the investment team. The closing of CASA VI achieves these objectives.”

CASA VI is focused primarily on U.S. workforce housing and seeks to provide its investors enhanced returns with high sustainable income.

The portfolio team for the CASA funds has a track record exceeding 20 years and manages $2.2 billion in apartment assets with more than 18,850 units across 26 U.S. markets.

According to Martha, the creation of TH Real Estate, through the joint venture of TIAA-CREF and Henderson Global Investors, was designed to take the strengths of two well-respected real estate investment management companies and design core and specialist products for institutional investors.

“CASA VI represents a specialist product that will continue to be supported and enhance by the new joint venture going forward,” he said. “Our team and our clients benefit from the access to the greater band of knowledge and expertise.”

Since its initial close, the CASA VI portfolio has acquired two properties, Boca Vista Apartments in Altamonte Springs, Fla., and Paseo Park Apartments in Glendale, Ariz.

“The first two properties acquired for CASA VI are an excellent fit for the investment strategy. Both properties are being repositioned in their markets to take advantage of the increasing demand for value apartments,” Martha said. “In addition to specifically designed unit upgrades, our investment strategy also targets enhancement of the common area amenities and overall appearance of the communities.”

These first two investments are being strategically positioned to provide Class A type amenities and apartment features while offering value rental pricing to the market. In addition, both Paseo Park and Boca Vista utilize below market financing secured through the issuance of tax-exempt bonds that help to drive up the current income component of total return.

Looking ahead, Martha said its CASA team remains very active in the market and has targeted a number of properties secured through both traditional brokerage channels as well as through off-market relationships to close into the fund prior to year end.

Since inception in December 1993, the CASA Series has executed on more than $3 billion in apartment transactions and successfully implemented diverse value-add investment strategies over multiple market cycles.