"TIAA-CREF Asset Management"
TIAA-CREF Asset Management S ecti on In January, Geoffrey Dohrmann, publisher and editor-in-chief of TIAA-CREF COMBINES BREADTH AND DEPTH OF EXPERIENCE The Institutional Real Estate Letter, IN ALL FOUR QUADRANTS spoke with Thomas Garbutt and David Brown, managing direc- PRIVATE PUBLIC tors of TIAA-CREF. The following is an excerpt of their conversation. Spons ored EQUITY $23 Billion $1 Billion Real Property ($21 Billion) Real Estate Securities Dohrmann: How did TIAA-CREF Real Estate Fund Investments get started? ($2 Billion) Brown: Back in 1918, Teachers Insurance Annuity Association was formed by the Carnegie Founda- DEBT $20 Billion $25 Billion tion with an endowment of $1 Private Commercial Mortgages Commercial Mortgage–Backed million from the Carnegie Corp. Securities and REIT Debt of New York. At the time, the mis- sion was to provide life insurance and retirement plan investing for TIAA-CREF real estate assets under management as of Sept. 30, 2007. professors and employees of col- ments such as agriculture, timber, finance, lease finance and private leges and universities. oil and gas, infrastructure projects, equity. It also includes alternative- Garbutt: In 1952, TIAA launched and the like. We’re involved to type equity in sectors like agricul- the College Retirement Equities some degree in all of it. ture, timber, oil and gas, as well as Fund or CREF, a variable annu- Dohr mann: Who ar e your some private emerging market and ity account that invests in com- investors? high-yield investing. mon stocks. This was a method Dohrmann: What types of prod- of managing retirement savings Garbutt: While we are best known for serving the higher edu- ucts do you offer? and income that was unusual and innovative at the time but has cation market, we now offer our Garbutt: The equity real estate become common among progres- asset management expertise to a group currently offers separate sive retirement systems. wide range of investors includ- accounts as well as other invest- Dohrmann: How long has TIAA- ing institutional investors, financial ment vehicles to institutional, inter- CREF been investing in real estate? advisors and other intermediaries. mediary and individual investors. Brown: We’ve been investing in Dohrmann: What is the TIAA- Dohrmann: What does the Global commercial mortgages and real CREF Global Real Estate platform? Private Markets group offer? estate for decades, starting in the Garbutt: TIAA-CREF’s global Brown: We are capable of the 1930s, and we were responsi- real estate platform manages $69 whole spectrum of financial ble for one of the first regional billion in assets across the four investing. Our private finance and mall concepts back in the 1950s. quadrants. Our platform leverages commercial mortgages are the Today, we’re a major player in the combined experience of our critical components of what we all the major property types — dedicated teams and its compre- do in the global private market office, retail, hotels, multifam- hensive infrastructure to provide space. The private finance port- ily and industrial, as well as the a strategic foundation and tactical folio stands at $16 billion, while four quadrants. guide to portfolio construction and the commercial mortgage portfolio Dohrmann: How would you management. I am responsible totals more than $20 billion. describe TIAA-CREF today? for the private equity portion of Dohrmann: What defines your Brown: We are a global asset the Global Real Estate platform. investment strategy and approach? management organization, which As head of TIAA-CREF Global Garbutt: We have a very strong moves nimbly across sectors to Real Estate my mandate is to build commitment to the top-down/bot- find the best opportunity that pro- a world-class direct real estate tom-up approach. I know you vides relative value for our clients. investment management group. hear that a lot, but I think what That could be within corporate, Brown: As head of TIAA-CREF we do is a bit different than oth- public or private investments such Global Private Markets, I’m respon- ers in that we apply the same as equities, fixed income, real sible for all of our global private consistent approach to all of our estate equity, commercial mort- investment activity, which includes portfolios irrespective of style. Our gages or structured products. It commercial mortgages, private investment strategy is research- could also be alternative invest- placements or financings, project driven, and we have a very robust dedicated research group that uses experienced manager through a chance to provide liquidity to proprietary models to supply great thick and thin in many different the marketplace, and the transac- insights on where to navigate aspects of the marketplace. tions we’ve done in the second S ecti on both inside and outside the U.S. Dohrmann: With the upheaval half of the year have significantly We couple that with our extensive in the debt markets and repric- wider spreads with typically con- on-the-ground staff throughout the ing of assets, is this the right time servative loan-to-values and very U.S. — and soon the European — to be putting more capital into favorable terms. markets to put together a series of real estate? Dohrmann: How do you see the well-constructed portfolios. This Brown: It is if you can find the Global Real Estate group evolving? consistent approach has resulted best relative values, which we in some very strong results for Garbutt: Since we’ve opened try to do. We’re major players our clients. our doors as a third-party money across the board, so we’re able to Spons ored Dohrmann: What competitive manager about three years ago, see opportunities wherever they advantages do you bring to the we have won multiple separate occur. So we are actively investing table? account mandates and launched in the market, but we’re investing closed- and open-end funds. Garbutt: One of our biggest com- prudently and very selectively. We’ve been a big investor in the petitive advantages is the sheer Dohrmann: Where do you see European and Canadian markets size of our operation. We manage the opportunities today? for the past 15 years and are look- about $25 billion of direct real Brown: We’re trying to find ing to expand our global oper- estate in the U.S., Canada and areas and opportunities in the ations and gain a better global Europe, and we’re in the fore- marketplace where we can footprint. During the next five to front of all activity in the mar- bring our expertise, our invest- 10 years, we expect to expand ketplace, whether it’s on market ing knowledge and our liquidity the products we already have by or off market. We see more than to bear — and get paid for it. broadening our offerings along 3,000 investment opportunities a The tightening of the credit mar- the risk spectrum as well as geo- year. And the reason we do is kets has given portfolio lenders graphic focus. v because of the size of our plat- form and our ability to deliver. So whether a mandate is large INTERVIEWEES or small or core or value-added, Thomas Garbutt, managing director, is head of the what really benefits these man- TIAA-CREF Global Real Estate group, which includes dates is the fact that our platform worldwide acquisitions, sales, portfolio and asset man- has access to all of these prod- agement, and business and product development. He ucts. We try to find the best rela- has 27 years of experience in the real estate finance and tive value for our investors. investment industries. Dohrmann: How quickly can you place capital? David Brown, managing director, is head of the TIAA- Garbutt: We place capital very CREF Global Private Markets group. Brown is responsible quickly. Our platform is disci- for overseeing the private fixed-income portfolio includ- plined, but it is also very nimble ing commercial mortgages, which totals more than $40 and responsive to the market. We billion. He has 25 years of experience in the real estate buy $5 billion to $7 billion worth finance and asset management industries. of high-quality real estate a year. In addition, we sell $2 billion worth CORPORATE OVERVIEW of assets. We’ve grown our portfo- TIAA-CREF is one of the largest institutional real estate investors in the lio from about $5 billion to about nation, with a $69 billion global portfolio of direct and indirect invest- $25 billion. To achieve this type of ments as of Sept. 30, 2007. Best known as a national financial services volume year after year, you need organization and provider retirement services to the academic, research, to be quick and responsive. medical and cultural fields, TIAA-CREF has more than $437 billion in Dohrmann: What type of expe- combined assets under management (9/30/07). Through TIAA-CREF Asset rience does TIAA-CREF have Management, institutional investors, financial advisers and other interme- through the various market cycles? diaries worldwide can access the extensive investment, research and ana- lytical capabilities of the TIAA-CREF organization including the 60 years of Garbutt: One of the strengths we real estate investment experience of the Global Real Estate group. bring to the table is our depth of experience. We bought our first CORPORATE CONTACT equity property 60 years ago. I’m TIAA-CREF Asset Management not sure how many people in Kevin Maxwell, CFA this space can make that claim. Managing Director, Real Estate Sales In addition, we have one of the 730 Third Ave • New York, NY 10017 deepest senior teams in the indus- Tel: (212) 916-4812 • Fax: (212) 916-5553 • firstname.lastname@example.org try in terms of duration in the www.tcasset.com business. We are an extremely