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TIAA Henderson Real Estate and TIAA-CREF close CASA VI

TIAA Henderson Real Estate (TH Real Estate), and TIAA-CREF, have announced that CASA Partners VI, L.P. (“CASA VI”), the sixth in a series of multi-family housing funds, has now closed, having raised $260m in equity from investors.

CASA VI is expected to reach a gross size of approximately $420m, including leverage.

CASA VI focuses primarily on U.S. workforce housing and seeks to provide its investors with enhanced returns with high sustainable income. The portfolio team has a track record exceeding 20 years and manages $2.2bn in apartment assets, with more than 18,850 units across 26 U.S. markets.

Since its initial close, the CASA VI portfolio has acquired two properties, each financed through municipal bonds that are exempt from federal, and in some instances, state income tax, in exchange for providing affordable workforce housing to communities. Tax-exempt bonds are issued for the development or rehabilitation of market rate housing. This debt strategy provides below market leverage for the fund, which supports enhanced income returns for the investors.

The two properties acquired for the CASA VI portfolio to date are:

  • Boca Vista Apartments – Altamonte Springs, FL
  • Paseo Park Apartments – Glendale, AZ

Tax-Exempt Bond Financing

Tax-exempt bond financing for apartments arose out of the desire of municipalities to foster home building targeted at middle-income residents.  The local government issues tax-exempt bonds in order to provide below-market financing for such developments. In return, housing developers agree to set aside a certain percentage of units for renters with incomes below a ceiling that is based on the median income for that area.

These developments typically share the same physical characteristics and amenities as other core apartment properties and are often indistinguishable from neighbouring multifamily housing communities. When a developer sells the property, the bonds and the unit set-asides remain with the asset.

James Darkins, Chief Executive, TH Real Estate, added: “Since inception in December 1993, the CASA Series has executed on more than $3bn in apartment transactions and successfully implemented diverse value-add investment strategies over multiple market cycles. The strong US capability, across the multi-family housing sector, is a key part of our global offering. The specialist team in place offers a market leading capability in this sector.”

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