TIAA-CREF Asset Management manages a wide range of assets spanning a variety of portfolios. Learn more about how we implement our innovative investment strategies through these short case studies from around the globe.
WITH GIACOMO BARBIERI, SENIOR DIRECTOR, GLOBAL REAL ESTATE
Real estate investing at TIAA builds on the idea of unlocking generational value that can come from a property. Whereas many other investing institutions focus on the short-term returns of properties, TIAA takes a long-term approach and sees real estate investments as investment journeys that may take many years to realize. Even in property acquisitions, TIAA patiently executes investments when the organization deems the real estate market is at its most likely state for gaining returns for the organization and participants.
Within real estate, TIAA leverages two major competitive advantages: brand value and an established team of seasoned investors.
“TIAA has a very collaborative approach to real estate investing. We’re able to analyze the risk and relative value of an investment,” said Senior Director, TIAA Global Real Estate, Giacomo Barbieri.
The organization is a trustworthy business enterprise with the power to reliably execute on real estate offers it makes. This stellar reputation in the high level real estate market can give a profitable edge to a deal—a seller may opt for a lower price because of the certainty the sale will be completed.
TIAA’s teams of experienced analysts provide perspective on the organization’s acquisition process to ensure that the deal is completed from beginning to end. TIAA real estate professionals know that on the closing day, the day the organization takes control of the building, is when the asset plan must be implemented. It is just the beginning of the asset’s life under TIAA. Analysts work on the acquisition; setting the repositioning plan for the asset; understanding the needs, strengths, and weaknesses of the asset; and executing the plan to realization. This is the lifecycle management of a building, and at TIAA, this process is called “cradle to grave execution.” TIAA’s name and reliability facilitates the asset acquisition, and the real estate sector teamwork drives the positioning campaign to completion.
In July 2010, TIAA acquired 685 Third Avenue, New York, NY, a 635,000 square foot office building. Previously owned by and used as headquarters for a large pharmaceutical company, the building will be repositioned by TIAA as a multi-tenant office building.
It was a strategic purchase for the organization’s real estate portfolio because the former owners put the building on the market during a significant downturn. Competing buyers, affected by the financial market, were relying on debt to purchase the building, but TIAA stepped in and acquired the building without the need for third-party financing. This purchasing power meant the building was bought for the site’s land value at the time.
“Buying the property unleveraged allowed TIAA to stay true to the plan that was set. Instead of chasing the market trying to get the building leased, we can be patient and wait for the market to come to us,” said Barbieri.
The physical aspects of the building also encouraged the organization to jump on the acquisition: 685 Third Ave is located less than two blocks from Grand Central Station and next to a small park. Transportation is fundamental in adding value to an asset, because TIAA approaches real estate investments as investing in social relationships.
“The organization’s analysts recognize assets that are driven by the aspirations of people: the way people interact, shop, work, sleep, vacation, and travel… that’s part of the value we realize as investors,” added Barbieri.
685 Third Avenue’s location and centrality in New York City set TIAA up for a great marketing and repositioning advantage, especially to potential tenants sensitive to access to transportation. While the infrastructure and the mechanics of 685 Third Avenue were well maintained by the previous owners, TIAA identified marketing opportunities not previously pursued.
After examining the building’s desired amenities and its necessary renovations, TIAA’s future plans for 685 Third Avenue include transforming the property to a multi-tenancy-based building and revamping the Third Avenue lobby. Because of the grade of the adjacent street, the lobby steps down, and along the street is a long line of windows that open to a small park. The organization’s analysts have realized the value in marrying the urban interior with the green, rustic neighboring scenery, and incorporating natural light in the lobby design.
TIAA’s ability to execute on an investment purchase, combined with the real estate sector’s experience and teamwork, provides the ultimate combination to long-term real estate investing. The TIAA brand is known for its excellence and steadfast commitment, which gives the organization better financial positioning during a new acquisition, while the organization’s analysts execute property-repositioning campaigns from procurement to fruition.
The property described above is just one of many investments of TIAA’s General Account, an account solely owned by TIAA that is not available to individual investors and whose performance is not directly allocated to any specific contract or obligation. TIAA’s General Account invests in a broad range of diversified investments to support TIAA’s contractual guarantees and business operations.
Past performance is not indicative of future results. The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons.
© 2012 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund, New York, NY 10017
Past performance is not indicative of future results. The information on this website should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons.
TIAA-CREF Asset Management provides investment advice and portfolio management services for the TIAA-CREF group of companies through our investment advisers including Teachers Advisors, Inc., a registered investment adviser and wholly-owned indirect subsidiary of Teachers Insurance and Annuity Association (TIAA). TIAA® personnel in its investment management area provide investment advice and portfolio management services through the following entities: Teachers Advisors, Inc., TIAA-CREF Investment Management, LLC, and Teachers Insurance and Annuity Association® (TIAA®). TIAA, TIAA-CREF, Teachers Insurance and Annuity Association, and TIAA-CREF Asset Management are registered trademarks of Teachers Insurance and Annuity Association.