The part-owner of the Westfield Stratford City shopping centre today struck a deal to create a £13 billion property fund after joining forces with a larger transatlantic rival.
Fund manager Henderson is spinning off £11 billion of European and Asian property from its Global Real Estate arm into a new joint venture with TIAA-CREF, a Fortune 100 giant whose roots go back to 1918 and which has £342 billion of assets under management. Henderson is also selling its £1.7bn US portfolio to TIAA-CREF and will receive a total of £114.2 million as a result of the two transactions.
It will own 40 per cent of the new company, to be called TIAA Henderson Global Real Estate, with TIAA-CREF owning the other 60 per cent. The deal enables Henderson to focus on its core global and European equity and fixed income businesses, while the new joint venture has access to capital from the US firm.
The deal marks another move in the consolidation of property investment management, with capital scarcer and more competition from the likes of sovereign wealth funds. It comes a month after Larry Fink’s giant BlackRock snapped up MGPA to expand its Asian presence. CBRE bought ING’s real estate arm in 2011.
JPMorgan analyst Rae Maile said: “This is a strategically sensible deal, in our view, as it addresses the changed - and more capital-intensive - nature of direct property investment and it strengthens Henderson’s balance sheet.”
Henderson chief executive Andrew Formica said: “Henderson has long recognised that its property business would benefit from greater scale and access to capital to accelerate its future growth.”
Industrial property specialist Segro today confirmed talks with Canada’s Public Sector Pension Investment Board over funnelling its European assets into a joint venture that the firm would manage while retaining a 50% stake.