Nuveen Real Estate Launches $550M Multifamily Fund

The new fund, which targets renters by choice, will focus on acquiring well-located multifamily rental properties with stable occupancies in top-tier cities.
District at Washington pool

Nuveen Real Estate has launched its U.S. Cities Multifamily Fund with $550 million on first close. The fund is an open-end perpetual life real estate investment vehicle that will acquire and manage institutional quality multifamily rental properties in select U.S. cities. The first close is anchored by a $450 million capital commitment and seed portfolio from a third-party investor. It is augmented by a $100 million co-investment from TIAA, the parent company of Nuveen Real Estate.

When the anchor investor and seed portfolio came together, we knew it was the right time to launch the U.S. Cities Multifamily Fund,” the fund’s Portfolio Manager, Nikita Rao, told Multi-Housing News.

The multifamily sector is in the development phase of the cycle and new supply is evident in most markets, creating softness in high-end product, Rao noted. “At the same time, many of those same markets lack sufficient numbers of well-appointed affordable apartments that meet the needs of middle-income households. By acquiring assets with modest rent levels, the team believes the fund will be serving the deepest segment of demand in the housing market and in doing so can provide a more durable cash flow than a portfolio limited to upper income renter demand only,” she added.

Upscale Properties in Emerging Markets

The fund seeks to acquire well-situated multifamily properties with large, stable occupancies, located in the country’s top-tier cities and select growth markets. The fund will focus on high-quality properties attractive to the most sizable renter base: Millennials middle-income households renting not by choice but by necessity.

The fund’s launch saw its portfolio holding nine assets, made up of Class A and B properties across eight primary markets and collectively totaling 3,000 units.

Nikita Rao

Nuveen believes that as their future contributions to the U.S. economy continues expanding, Millennials and middle-income households will continue to propel demand for apartments in the decade ahead.

“Millennials and middle-income households represent a stable and sustainable long-term source of demand for apartments,” Rao said. “Nuveen Real Estate believes this demand will continue to keep occupancy rates strong, particularly in metro areas benefitting from job growth and an expanding economy.”

 Strong Platform

With income- and diversification-intent investors looking to commercial real estate, the company is well-positioned to build an attractive portfolio of multifamily assets that reflect the sector’s dynamic and stable growth. “We have over six decades of experience investing in the multifamily sector and have established a strong platform to match client capital with investment opportunities that respond to modern living needs,” said James Martha, head of U.S. housing, Nuveen Real Estate.

Last month, Nuveen teamed up with the Preiss Co. to acquire Signature 1505, a 525-bed student housing community in Raleigh, N.C.