TIAA-CREF Gets Real About Real Estate
It's "a battle out there" when it comes to winning deals. (Pens and calculators and spreadsheets are the weapons.) That's according to TIAA-CREF head of Northwest acquisitions Rich Kimble, aka one of S.F.'s biggest investors at the moment.
Comparing this year to last, there is substantially more deal flow; brokers are telling him the volume of deals this year will be nearly three times the amount in 2013. Teachers started off the year with a bang, winning the KPMG Building at 55 2nd. It was a strategic buy for them, he says, and a rare find—only 12 buildings were built since 1992 in the city. TIAA-CREF, aka Teachers, also bought the Orrick Building on behalf of a JV between one of its real estate funds and Norges.
But that partnership deal won't be their last; he's continuing to find more properties for the JV. He said the Orrick Building, or Foundry II, had many traits he liked: it's in a strong location, which will be enhanced by the future Transbay Transit Center. It's also one of four Foundry buildings and has giant 69k SF floor plates at the lower base of the building—that offers a unique advantage he doesn't find much, he says.
So what's it like to be a buyer in what he calls one of the top-performing cities in the US? Teachers certainly loses quite a bit more than it wins, he tells us. Fortunately Teachers won those two office buildings this year. Another smaller addition to its portfolio this year was in Menlo Park, at 200 Middlefield. He's also hot on finding buildings with a competitive advantage in the South Bay market. Expect it to continue to go after "Foundry Squares" in the city, as well as smaller ones down in the Peninsula in the $30M to $75M range.
Deciding to put up 275 Battery on the market, above, was a portfolio management call, as Teachers is constantly looking at rebalancing its portfolio. The pension fund is typically a very long-term holder (that one it's had for almost 10 years). Buyers are shortening time on due diligence as the process has morphed into a compressed timeline. What was traditionally 30 days to go in and do it is being cut down to a couple weeks or even days.
