TIAA Sells Stake in European Office Venture for $682M

CBRE Global Investment Partners purchased the 25 percent interest in the Cityhold Office Partnership, which owns a $2.7 billion portfolio in several European markets.
70 St. Mary Axe. Image via Google Street View

In a transaction valued at around €625 million ($682 million), the TIAA General Account has sold to CBRE Global Investment Partners half of its 50 percent interest in a major European office venture. TIAA’s investment manager, Nuveen Real Estate arranged the recapitalization and will continue to act as portfolio and asset manager.

The office venture is Cityhold Office Partnership, whose other investors include Swedish national pension funds AP1 and AP2. Launched in 2015, CHOP is currently targeting both core and value-add office investments in Tier 1 cities across Europe, including Paris, Berlin, Frankfurt, Amsterdam, Madrid, Milan and London.

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The partnership’s portfolio of assets includes 70 St. Mary Axe in London, 36 rue La Fayette in Paris, Burstah Offices in Hamburg and EDGE Olympic in Amsterdam. In addition, CHOP is committed to two high-profile developments: The Morland Mixité mixed-use project in Paris and EDGE Grand Central in Berlin.

In a prepared statement, Ian Gleeson, CEO of CBRE Global Investment Partners, said that the fundamentals for prime office markets in European gateway cities remain strong with favorable leasing dynamics driving rental growth. As such, the recapitalization of the CHOP venture was a rare opportunity to access a high quality and sustainable European office portfolio.

TIAA was advised by EY and by Linklaters, together with local legal advisers; Jones Day and Deloitte advised CBRE GIP.

Stable Despite Jitters

Though fears about the European economy are becoming more pervasive, deal flow has been active.

Just this past month, Hines completed the first closing of its $1.4 billion Hines European Value Fund 2, with equity commitments to date of about $709 million.

Office properties remain the most sought-after asset class in Europe, though value-add investment strategies are becoming more popular than the traditional core investment focus, according to a September report from Catella Group.