What Invesco, TIAA-CREF and Trigate Want to (But Can’t) Buy in Dallas
Dallas is facing an anomaly. It was recently ranked the fourth-cheapest market in the country relative to value, meaning US investors consider Dallas real estate among the best bang for the buck. And yet, some of Dallas’ biggest owners have stopped buying locally because pricing is too high.
TIAA-CREF senior director Duane Hale, Trigate Capital VP Jason Obenhaus and Invesco director Bert Crouch told attendees of Bisnow’s Capital Markets Summit last week that they’re not doing many deals here because they’ve gotten priced out, an amazing sentiment since these guys have billions of dollars to place. We broke down what they want and how the Dallas struggle is impacting their strategy.
Invesco
Capitalization: $800B globally, manage about $65B of real estate
New: Starting first-ever infrastructure and MLP funds
Targeting in DFW: Industrial acquisitions
Recent strategy: Director Bert Crouch says the firm typically has been a net buyer, but now Invesco’s selling twice as much as the last three years’ average. (That’s skewed a bit because it recently sold 1000 Main in Houston and 230 Park Ave in New York, huge deals.)
Missed opportunity: Bert says he stopped buying multifamily in Dallas a few years ago because he thought the segment was winding down. But it’s actually the top multifamily market across Invesco’s 30 markets.
Pictured: Plaza of the Americas, adjacent to Marriott City Center (which hosted our event). The property is an example of Invesco's recent penchant for selling in DFW. It purchased the asset in 2011 with M-M Properties and put it on the sales block earlier this year.
TIAA-CREF
Capitalization: $86B of global investment
Existing Dallas portfolio: 1.6M SF of core and core-plus office and industrial
Targeting: Office and industrial acquisitions over $20M (it typically targets up to $100M, but has done $1B deals)
Recent strategy: Senior director Duane Hale says it’s been a net buyer in Texas, especially in Houston. However, that's not playing out locally. It’s tried to buy industrial in Dallas recently (it bid on two larger assets) but keeps getting priced out. TIAA-CREF’s also been eyeing DFW retail but hasn’t seen any opportunities large enough for its acquisition threshold. That’s kept it steady in Dallas with very few acquisitions or dispositions lately.
Pictured: Duane with Sealy & Co’s Thomas Herter and Comerica’s Melissa Buck.
Trigate Capital
Capitalization: Working through a $300M equity fund. (The company’s been growing fast; its first fund was $100M.)
Targeting: Value-add deals requiring $15M to $20M of equity, with 18% returns.
Recent strategy: VP Jason Obenhaus says Trigate’s been selling lots of smaller properties and doing fewer but larger acquisitions. It invested heavily in Dallas at the beginning of this cycle through Fund I. It’s been hard to find opportunities since, so he’s had to turn his attention to markets that are trailing recovery, like Florida and Atlanta.
Pictured: Our equity panel moderator, Churchill Capital’s Jim Neil, between Momentum Commercial Realty’s Bryan Lurie and Churchill Capital’s Trip Neil.
