Real estate unit of TIAA buys majority stake in Morningstar portfolio

John Egan
Published January 28, 2019

Nuveen Real Estate, a unit of New York City, NY-based financial services giant TIAA, has purchased a majority stake in a portfolio of 21 Morningstar Storage facilities. Financial terms weren’t disclosed.

Under their new joint venture, Nuveen Real Estate owns 90 percent of the portfolio, while Morningstar Storage owns the remaining 10 percent and serves as operating partner.

The portfolio comprises 11,130 units within 1.3 million square feet. The facilities are in nine markets across the South and Southeast, including Atlanta; GA; Charlotte, NC; Houston, TX; and Tallahassee, FL.

Nuveen Real Estate has a few other self-storage investments in its portfolio, but the company thus far not been a major player in the sector.

William Harrison of Charlotte, NC, who is Nuveen Real Estate’s managing director of housing for the Americas, said in a news release that the Morningstar properties “provide Nuveen Real Estate immediate scale and exposure to one of the fastest-growing [alternative] sectors of real estate in some of the most sought-after submarkets in the U.S.”

The facilities, which average 11 years in age, boast an overall occupancy rate of 85 percent. Nearly two-thirds of the facilities are climate-controlled.

“Nuveen Real Estate sees the self-storage sector as a defensive asset class with relatively low capital requirements, making it a strong complement to our core holdings in the housing, retail, office and industrial sectors,” Harrison said.

Gray Bouchillon of Dallas, TX, leads the U.S. industrial team at Nuveen Real Estate, including its self-storage investment strategy.

London-based Nuveen Real Estate is one of the world’s largest investment managers, with $125 billion in assets under management. Earlier this year, TH Real Estate was rebranded as Nuveen Real Estate.

Morningstar Storage is a division of Matthews, NC-based Morningstar Storage LLC. Over the years, it’s been an active buyer and seller of self-storage facilities. For instance, Morningstar said in December 2018 that it purchased three Devon Self Storage facilities in Georgia and South Carolina. One of Morningstar’s biggest deals in the past decade was the 2013 sale of 43 facilities to Glendale, CA-based REIT Public Storage for $315 million.

In 2018, Morningstar Storage was ranked among the 20 largest self-storage operators in the U.S. based on square footage, with 63 facilities across nearly 5.7 million square feet, according to Inside Self-Storage.

John Egan

John is a freelance writer and editor. He first moved to Austin in 1999, when downtown Austin wasn't nearly as lively as it is today. John's loves include pizza, University of Kansas basketball and puns.

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