Nuveen Pursues Multifamily Assets, Launching New Fund
The fund’s first round closed with $450 million from a third party investor and $100 million from Nuveen’s parent company, TIAA.
NEW YORK CITY—One of the world’s largest investment managers with $125 billion AUM, Nuveen Real Estate, on Tuesday announced the launch of an open-end perpetual life real estate fund focused on acquiring and managing institutional quality multifamily rental properties across the US. The US Cities Multifund is anchored by a $450 million capital commitment and seed portfolio from a third party, unnamed investor and a $100 million co-investment from Nuveen’s parent company, TIAA.
The fund will be for investors looking to commercial real estate for income and diversification, according to James Martha, head of US housing at Nuveen. “We are well-positioned to build an attractive portfolio of apartment assets that reflect the dynamic and stable growth attributes of this sector,” he says. “We have over six decades of experience investing in the multifamily sector and have established a strong platform to match client capital with investment opportunities that respond to modern living needs.”
The fund will focus on millennials and middle-income families whom Nuveen looks at as “renters by necessity rather than by choice.” It will be looking to buy well-located properties with high, stable occupancy levels in top-tier cities and growth markets across the US.
At its launch, the fund’s portfolio has nine assets totaling more than 3,000 units in Class A and Class B properties across eight markets.
Not only betting on multifamily, the fund is focusing on the demographic Nuveen sees as driving apartment demands, anticipating this group’s economic activity.
“Millennials and middle-income households represent a stable and sustainable long-term source of demand for apartments, and Nuveen Real Estate believes this demand will continue to keep occupancy rates strong, particularly in metro areas benefiting from job growth and an expanding economy,” says Nikita Rao, the fund’s portfolio manager.
For real estate professionals in major cities, this means even more capital investment or more competition—depending on where you sit. But Nuveen Real Estate is far from new to multifamily. The global investment manager states it has direct multifamily residential equity and mortgage debt investments valued at over $17 billion as of the end of 2018. The portfolio includes 245 investments across 50 markets, including Class A, Class B, luxury, and workforce, student and senior housing.
The fund is part of Nuveen Real Estate’s Global Resilient Series. Investors select allocations among four main property types: multifamily, retail, office and industrial. Nuveen says their investments are based on global market and economic forecasts, thematic recommendations, local market analyses and execution.
This announcement follows last week’s MBA CREF/Multifamily Housing Convention and Expo 2019 in San Diego, CA. As covered by GlobeSt.com, Jack Gay, managing director and global head of debt at Nuveen Real Estate, pointed to the open market in alternative capital sources, which he described as “an opportunity rich environment.”