Nuveen has launched a new vehicle that it hopes will convert property sellers hoping to avoid capital gains taxes into investors in its $2.1B nontraded REIT.
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TIAA’s global investment management arm launched a Delaware Statutory Trust fund to allow investors to roll over proceeds from the sale of commercial real estate assets into properties in its CRE portfolio through a 1031 exchange, it announced Thursday.
Nuveen can elect within two years of the investment to convert those funds from the DST into shares in its Global Cities Real Estate Investment Trust platform without incurring a tax hit, a process known as a 721 Exchange or UPREIT.
“With global real estate rebounding and property values stabilizing after a challenging post-COVID period, we believe the market environment presents an opportune time and attractive entry point for the asset class,” Jeff Carlin, Nuveen’s head of Global Wealth Advisory Services, said in a statement.
A 1031 exchange offers sellers of real estate the chance to shelter their profits from capital gains taxes if they reinvest the proceeds into a similar property or a DST within 180 days.
DSTs have become increasingly popular investment vehicles as the average age of the country's commercial property owners has crept up and baby boomers are grappling with how to transfer their assets to family members who might have no interest in managing properties.
Transferring capital from real estate into shares of GCREIT would give property sellers passive income rather than the need for active property management of physical real estate, while still deferring capital gains, Nuveen spokesperson E-Soo Kim said.
Nearly $1.2B was raised by DSTs in the first two months of 2025, up from the $844M raised in the first two months of 2024, AltsWire reported, citing data from Mountain Dell Consulting.
Nuveen’s GCREIT has been middling compared to some of the nontraded REITs operated by Blackstone, Apollo, Hines, JPMorgan and others in terms of fundraising and performance.
Its annualized returns over the 12 months ending in March were just over 3%, ninth among the 18 net asset value REITs tracked by Robert A. Stanger & Co. By comparison, Apollo Realty Income Solutions returned 6.1%, JPMREIT returned 6.4% and BREIT returned 2%.
Nuveen raised roughly $320M for the fund in the first quarter, compared to $2.1B raised by BREIT, $807M raised by Ares Management and $493M raised by Apollo.
