TIAA-CREF merges property business with Henderson to boost Asia exposure

The new joint venture, TIAA-CREF Henderson Global Real Estate, will comprise TIAA-CREF's European property business and Henderson's European and Asia Pacific assets. TIAA-CREF will hold a 60% interest in the entity - and provide investment management services - with Henderson controlling the remainder. The transaction is expected to close in the first three months of 2014.

Comparisons have been drawn between this deal and BlackRock's recent acquisition of Germany-based real estate developer MGPA. The majority of MGPA's portfolio is spread across Asia. Much like Henderson, the company recognized that, with the real estate fund management industry still under pressure following the global financial crisis, larger operators were finding it easier to raise money, attract staff and generate efficiencies of scale.

"The combination of TIAA-CREF's and Henderson's European and Asian real estate interests create a new powerhouse in global real estate," James Darkins, managing director of property at Henderson, said in a statement. "Between us, we have the scale and capital resources to serve the real estate investing needs of our existing clients, as well as create exciting new opportunities to co-invest alongside them around the globe."

Darkins will become CEO of the new company, with Tom Garbutt, head of TIAA-CREF global real estate, serving as chairman. The company will be headquartered in London with offices in Europe, Asia Pacific and North America.

In a related transaction, TIAA-CREF will acquire Henderson's US real estate business. The combined total of real estate assets under management for TIAA-CREF and the new venture is GBP41.5 billion ($63 billion). The value of the new venture alone has been put at GBP13 billion.

Henderson will receive GPB114.2 million in cash from the deal and TIAA-CREF has the option to buy an additional 15% stake in TIAA-CREF Henderson Global Real Estate.

Henderson has $104.6 billion under management across equities, fixed income, property and private equity. TIAA-CREF, which stands for The New York-based Teachers Insurance and Annuity Association - College Retirement Equities Fund, has $520 billion in assets, providing retirement services to academic, research and health workers.

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