Nuveen Closes on $257M for Australia Real Estate Debt Fund Backed by TIAA, Temasek

Nuveen has reached a first closing of its maiden Australia real estate debt strategy, with the US fund manager scoring A$400 million ($257.2 million) in anchor investments from parent company TIAA and Singapore state holding firm Temasek.

The new vehicle will focus on institutional senior and junior secured real estate loan investments in Australia, primarily in the industrial, logistics and residential sectors, with a selective approach to retail, office and alternative assets, Nuveen said in a release. Further fund commitments are expected from investors still undertaking due diligence.

The strategy is led by Dugald Marr, Nuveen’s head of debt for Australia and New Zealand. His team has secured a large seed loan portfolio and pipeline with the backing of Manhattan-based Teachers Insurance and Annuity Association of America, of which Nuveen is an affiliate.

“We believe investment in Australian commercial real estate debt offers investors a compelling blend of stability, attractive yields and strong collateral protection,” Marr said. “Australia’s mature market, supported by robust economic foundations, strict regulatory requirements for banks and the need for more alternative capital sources provides a good foundation for long-term investment in this space.”

Investment Checklist

The debt strategy looks for institutional borrowers, conservative lending parameters and prime assets or projects in sectors that benefit from Australia’s population growth and limited supply, according to Chicago-based Nuveen. No target size was disclosed for the fund, but Marr told the Australian Financial Review that the vehicle would likely grow to A$750 million.

To align with company policy, investments will take into account waste reduction and energy consumption, climate risk analysis and social aspects, with the ability to structure green or sustainability-linked loans where applicable to “incentivise ESG targets” on behalf of clients.

Temasek’s commitment comes as the Singaporean giant continues to up its bets on private debt after reaching a final closing of a $1.3 billion private credit fund targeting Asia Pacific and agreeing to acquire a minority stake in APAC-focused private credit fund manager ADM Capital. Both deals were made via wholly owned asset manager Seviora.

Attracting limited partners of Temasek’s calibre underscores Nuveen’s pedigree in real estate investment and ability to bring regionally tailored solutions across equity and debt platforms, said Gracee Teo, head of Southeast Asia institutional at Nuveen.

“We believe Nuveen’s offering across real assets more broadly is well-positioned to help clients across Asia navigate volatility alongside managing their responsible investment goals,” Teo said.

Asset Class Attracts

After the APAC private credit market nearly doubled in size over the last five years, according to data provider Preqin, fund managers have been launching new vehicles to target the asset class, including several Down Under strategies.

In October, private equity major Warburg Pincus revealed its A$490 million commitment to MA Financial Group’s A$1 billion Australian private credit platform targeting the country’s residential real estate sector.

In July, Hong Kong’s Gaw Capital Partners announced a A$500 million partnership with Ray White Capital to invest in and manage private credit opportunities across Australia and New Zealand. The same month, Bloomberg reported that US-based PGIM was raising A$750 million for its first Australian real estate debt fund.