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Deals & Dealmakers

German firm Union Investment buys stake in UES, Flatiron retail properties

Union Investment has formed a joint venture with TH Real Estate to purchase a 49 percent stake in four U.S. retail properties.

Photo via Friends of the Upper East Side Historic Districts
Photo via Friends of the Upper East Side Historic Districts

In its first investment in U.S. urban retail, Union partered with the TIAA-CREF subsidiary on the purchase of retail located in New York, San Francisco and Philadelphia.

“Diversification and internationalisation are two strategic goals for our retail portfolio that go hand in hand. Four properties in major cities with global reputations are an excellent start in the US market, with our ambition being to significantly increase our retail exposure,” said Henrike Waldburg, head of Retail Investment Management at Union Investment Real Estate GmbH, the investment arm of the DZ Bank Group headquartered in Frankfurt.

Two of the properties that make up the portfolio are in New York and together represent around 70 per cent of the total value.

Located in the Upper East Side of New York, 1511 Third Avenue, which comprises approximately 43,300 s/f is occupied by fashion retailer GAP and a fitness studio.

At 636 Sixth Avenue, 18,300 s/f of ground floor space belongs to the portfolio and is let to a pharmacy on a long lease. Both buildings date from the early 20th century and have been upgraded in recent years.

The remaining 30 per cent of the portfolio is split between 856 Market Street in San Francisco and 1608 Chestnut Street in Philadelphia.

TH Real Estate will act as the managing member and the assets are owned by its open-ended U.S. core real estate fund, the TIAA-CREF Core Property Fund LP. The Fund will continue to hold a 51 per cent stake in the portfolio. The purchase price was not disclosed.

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