Nuveen Global Cities REIT Is Newest Nontraded REIT Offering
January 2, 2017 | James Sprow | Blue Vault
Nuveen Global Cities REIT, Inc. is a newly organized nontraded REIT formed to invest primarily in stabilized, income-oriented commercial real estate. It will seek to invest in properties in or around certain global cities selected for their resilience, long-term structural performance and ability to deliver an attractive and stable distribution yield. The REIT expects that a majority of its real estate investments will be located in the United States and that a substantial but lesser portion of its portfolio will include real properties located in Canada, Europe, and the Asia-Pacific region. It is externally managed by the advisor, TH Real Estate Global Cities Advisors, LLC, an investment advisory affiliate of TH Real Estate. TH Real Estate is the real estate investment management division of the sponsor, Nuveen, LLC. Nuveen is the asset management arm and the wholly owned subsidiary of Teachers Insurance and Annuity Association of America (“TIAA”).
London-based TH Real Estate, an affiliate of New York-based Nuveen LLC with $107 billion of real estate assets under management, is ranked as the fourth-largest real estate investment manager by the National Council of Real Estate Investment Fiduciaries (NCREIF).
Nuveen filed a registration statement on December 21, 2017, for a proposed initial public offering by Nuveen Global Cities REIT looking to raise up to $5 billion. Nuveen Securities, LLC, member FINRA and SIPC, will act as the dealer manager for the offering on a best efforts basis and will engage selected broker-dealers to participate in the distribution of shares to individual investors.
The offering is similar to the recent offerings by Blackstone, Starwood Capital Group, and Cantor Fitzgerald. Blackstone Real Estate Income Trust first filed its offering in August 2016, breaking escrow in January, 2017 after raising over $200 million. Since its offering began, Blackstone REIT has raised over $1.7 billion as of November 30, 2017, according to Blue Vault’s monthly alternative investment sales reports.
According to CoStar, Nuveen Global Cities REIT has already made its first two acquisitions. Last week, it acquired an industrial warehouse/distribution building totaling 264,981 square feet within the Papago Industrial Park in Phoenix. And earlier this month, it acquired Kirkland Crossing Apartments a 266-unit complex in Aurora, Illinois, for $54.1 million.
The REIT is offering on a continuous basis up to $5,000,000,000 in shares of common stock, consisting of up to $4,000,000,000 in shares in its primary offering and up to $1,000,000,000 in shares pursuant to its distribution reinvestment plan. It is offering to sell any combination of four classes of shares of common stock, Class T shares, Class S shares, Class D shares, and Class I shares, with a dollar value up to the maximum offering amount. The share classes have different upfront selling commissions and dealer manager fees, and different ongoing stockholder servicing fees. TIAA has agreed to purchase $200 million in shares of the Class N common stock prior to the commencement of the offering and another $100 million in shares of Class N common stock during the period commencing January 1, 2018, and ending two years after the commencement of the offering. As of December 21, 2017, TIAA has purchased an aggregate of $74.45 million in shares of the REIT’s common stock.
The purchase price per share for each class of common stock in the Nuveen Global Cities offering varies and is generally equal to the prior month’s net asset value (“NAV”) per share, as determined monthly, plus applicable upfront selling commissions and dealer manager fees. Although the REIT does not intend to list its common stock for trading on an exchange or other trading market, in an effort to provide its stockholders with liquidity, it has adopted a share repurchase plan whereby, subject to certain limitations, stockholders may request on a monthly basis that it repurchase all or any portion of their shares. The REIT may choose to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any particular month, at its discretion, subject to any limitations in the share repurchase plan. Subject to deductions for early repurchase, the repurchase price per share for each class of common stock would be equal to the then-current offering price before applicable selling commissions and dealer manager fees (the “transaction price”), as determined monthly, for such class.
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