One of the world's largest real estate investment managers is launching a new fund focused on multifamily properties.

Nuveen Real Estate, the recently rebranded subsidiary of TIAA, announced Tuesday the launch of its U.S. Cities Multifamily Fund, and it already includes a nine-property nationwide portfolio.

With the launch of the fund, a third-party investor contributed its $450M equity stake in a nine-property portfolio with a total asset value of $850M. The investor, which Nuveen declined to name, is a limited partner in the fund. TIAA also invested $100M along with the launch.

The nine seed properties span eight markets, including Portland, Seattle, Phoenix, Dallas, Houston, Raleigh, Atlanta and D.C, according to Nuveen Real Estate Managing Director Nikita Rao, the portfolio manager for the fund. The fund is an open-ended vehicle that will continuously raise and invest capital with no targeted size or closing date. Nuveen aims to buy stabilized properties that will produce consistent cash flow for the investors, rather than value-add properties that require capital improvements but could yield higher returns.

Rao, based in D.C., previously worked for FCP before joining Nuveen in August. She said the fund will target apartment buildings that are not brand-new developments, but not old enough to require significant renovations. It is focused on lower-rent, Class-B apartments that draw demand from millennials and middle-income renters, she said.

"When we looked across Class-A rents over a period of time compared to Class-B, we found the most stability came from Class-B, which typically attracts middle-income renters," Rao said.

Rao expects to find this type of apartment property throughout the country, but she said it is focused on what it calls the "Smile" section of the country, a "U"-shaped band along the West Coast, across the South and up the East Coast of the U.S.

"In the short term, we will probably focus more on markets that have a lower cost of living but continue to see job growth," Rao said. "Over the long term, we believe demand drivers exist all over the country."

Nuveen is not the first major investment manager to shift its focus toward the Class-B, workforce-level multifamily segment. PGIM Real Estate, the investment arm of Prudential Financial, has acquired over $2B of workforce housing in the southeast U.S. and Texas since December 2017. Starwood CEO Barry Sternlicht said at a November Bisnow event his firm is focusing on Class-B apartments in markets where it expects to see rent growth.

CORRECTION, FEB. 19, 2:15 P.M. ET: A previous version of this story incorrectly stated the size of the equity contribution in the Nuveen fund from a third-party investor. The story has been updated.