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TH Real Estate expands relationship with Korean Teachers Credit Union, to seek additional US debt investments


TH Real Estate and the Korean Teachers’ Credit Union have entered into an agreement to establish a new joint venture where both parties will contribute up to a combined $1bn to invest in US commercial real estate loans. TH Real Estate’s contributions to the joint venture are on behalf of the TIAA General Account.

"The low interest rate environment has investors looking for yield and for defensive investments at this mature stage in the real estate cycle," said Jack Gay, TH Real Estate’s Global Head of Debt. "We continue to see strong demand from foreign capital looking for opportunities in the US which appear to be especially attractive on relative basis, given global trends. Mezzanine loans in particular hold the potential to offer returns that are very close to equity returns."

The agreement expands upon an existing relationship which has invested over $950m in US commercial real estate debt since 2014.  In 2014, the parties co-invested $455m in commercial mortgages backed by three office buildings located in New York and Houston and then expanded the relationship later that year to seek up to $1bn in additional assets via a joint venture. The joint venture’s first investment was the mezzanine loan on the Mobil Building, a Class A office property located in Manhattan on 42nd Street and Lexington Avenue. Subsequent investments included a mezzanine loan on 1285 Avenue of Americas in New York, a portfolio of US life science and biotech office buildings, and CMBS bonds backed by Market Square in San Francisco.

Chairman Yonglin Moon of the Korean Teachers’ Credit Union, said: "TIAA shares a similar mission to KTCU and is a market-dominant investor in the United States. We plan to expand our joint venture relationship in real estate by seeking additional investments in other areas of real assets such as infrastructure."

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