One of Britain’s leading property asset management firms has teamed up with an American financial services group to create a global real estate powerhouse.
London-based Henderson Group (LON:HGG) announced yesterday, June 24 that it was merging its real estate business into a new joint venture with New York-based specialist in retirement services for academic and health workers, Teachers Insurance and Annuity Association – College Retirement Equities
Seeking to add bulk to its property investments in Asia and strengthen its balance sheet, Henderson is spinning off £11 billion of European and Asian property from its Global Real Estate arm into the new joint venture with TIAA-CREF. Henderson said in a statement that the tie-up deal was expected to be completed in the first quarter of 2014, and was not conditional upon the sale of its U.S arm to TIAA-CREF.
Henderson and TIAA-CREF will contribute their existing real estate asset management businesses outside North America to TIAA Henderson Global Real Estate. TIAA-CREF will also make a cash payment to Henderson, following which Henderson will own 40 percent and TIAA-CREF will own 60 percent of TIAA Henderson Global Real Estate. The combined company will have £13 billion of assets under management,
which will make it one of the top five global property fund managers.
Tom Garbutt, the head of TIAA-CREF Global Real Estate, will become chairman of the new real estate fund, which will be based in London. Henderson’s managing director of property, James Darkins, is to be the combined company’s Chief Executive Officer. He said yesterday: “The combination of TIAA-CREF’s and Henderson’s European and Asian real estate interests creates a new powerhouse in global real estate. 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.”
Revealing some of the venture’s plans, Henderson’s Chief Executive Officer Andrew Formica said on a call with reporters yesterday that TIAA Henderson Global Real Estate would invest $1.5 billion in cash from TIAA-CREF “over the next few years” in real estate deals. The new company would also open a business in commercial real estate debt, including co-investment from TIAA-CREF. The property fund would further look at investments outside of the real estate industry.
Darkins also told reporters that London, Australia and the U.S were among the top investment destinations the new fund would focus on.
!m[British Real Estate Manager and U.S. Investment Group to Form 13bn Property Fund ](/uploads/story/3366/thumbs/pic1_inline.jpg)
**JV Deal Boosts Henderson’s Share Price**
Henderson, whose stock has appreciated almost 50 percent in the past year, closed yesterday’s London trading session 0.14 percent down at 139.50p. Today, however, the stock headed upwards immediately after the opening bell in reflection of investor optimism regarding the joint venture with TIAA-CREF. As of 08:37 GMT the Henderson share price was 143.90p, almost three percent above its previous day’s closing level.