UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172019
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number: 33-92990; 333-216849333-230322
TIAA REAL ESTATE ACCOUNT
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
NOT APPLICABLE
(I.R.S. Employer Identification No.)
C/O TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NEW YORK 10017-3206
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (212) 490-9000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES o NO ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act:
YES o NO ý
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES ý NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 or regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: Not Applicable
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES ý NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” or "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): |
| | |
Large accelerated filer o | | Accelerated filer o |
Non-accelerated filer x | | Smaller Reporting Company o |
| (Do not check if a smaller reporting company) | | Emerging Growth Company o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
YES o NO o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO ý
Aggregate market value of voting stock held by non-affiliates: Not Applicable
Documents Incorporated by Reference: None
TABLE OF CONTENTS
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| | | Market for the Registrant's Securities, Related Stockholder Matters, and Issuer Purchases of Equity Securities | |
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| | | Management's Discussion and Analysis of the Account's Financial Condition and Results of Operations | |
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| | | Form 10-K Summary | |
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PART I
ITEM 1. BUSINESS.
General. The TIAA Real Estate Account (the “Real Estate Account”, the “Account” or the “Registrant”) was established on February 22, 1995, as an insurance company separate account of Teachers Insurance and Annuity Association of America (“TIAA”), a New York insurance company, by resolution of TIAA’s Board of Trustees (the “Board”). The Account, which invests mainly in real estate and real estate-related investments, is a variable annuity investment option offered through individual, group and tax-deferred annuity contracts available to employees in the academic, medical, cultural and research fields. The Account commenced operations on July 3, 1995, and interests in the Account were first offered to eligible participants on October 2, 1995.
The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.
The Account is regulated by the New York Department of Financial Services (“NYDFS”), and the insurance departments of certain other jurisdictions in which the annuity contracts are offered. Although TIAA owns the assets of the Real Estate Account and the Account’s obligations are obligations of TIAA, the Account’s income, investment gains and investment losses are credited to or charged against the assets of the Account without regard to TIAA’s other income, gains, or losses. Under New York insurance law, the Account cannot be charged with liabilities incurred by any other TIAA business activities or any other TIAA separate account.
The Real Estate Account is designed as an option for retirement and tax-deferred savings plans for employees of non-profit and governmental institutions. TIAA currently offers the Real Estate Account under the following annuity contracts:
RAs and GRAs (Retirement Annuities and Group Retirement Annuities)
SRAs (Supplemental Retirement Annuities)
GSRAs (Group Supplemental Retirement Annuities)
Retirement Choice and Retirement Choice Plus Annuities
GAs (Group Annuities) and Institutionally Owned GSRAs
Traditional and Roth IRAs (Individual Retirement Annuities) including SEP IRAs (Simplified Employee Pension Plans)
Keoghs
ATRAs (After-Tax Retirement Annuities)
Real Estate Account Accumulation Contract
Note that state regulatory approval may be pending for certain of these contracts and these contracts may not currently be available in every state. TIAA may also offer the Real Estate Account as an investment option under additional contracts, both at the individual and plan sponsor level, in the future.
Investment Objective. The Real Estate Account seeks to generate favorable total returns primarily through the rental income and appreciation of a diversified portfolio of directly held, private real estate investments and real estate-related investments, while offering investors guaranteed, daily liquidity.
Investment Strategy
Real Estate-Related Investments. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. These investments may consist of:
Direct ownership interests in domestic and foreign real estate;
Direct ownership of real estate through interests in joint ventures; or
Indirect interests in real estate through real estate-related securities, such as:
public and/or privately placed, domestic and foreign, registered and unregistered equity investments in real estate investment trusts (“REITs”), which investments may consist of registered or unregistered common or preferred stock interests;
private real estate limited partnerships and limited liability companies;companies (collectively, "real estate funds");
investments in equity or debt securities of domestic and foreign companies whose operations involve real estate (i.e., that primarily own, develop or manage real estate) which may not be REITs; and
conventional commercial mortgage loans, participating mortgage loans, secured domestic and foreign (including U.K.) mezzanine loans, subordinated loans and collateralized mortgage obligations, including commercial mortgage-backed securities (“CMBS”), collateralized mortgage obligations ("CMOs") and other similar investments.
The Account’s principal strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail and multi-family properties. The Account is targeted to hold between 65% and 80%85% of the Account’s net assets in such direct ownership interests.
In addition, while the Account is authorized to hold up to 25% of its net assets in liquid real estate-related securities, such asincluding publicly traded REITs and CMBS, managementCMBS. Management intends that the Account will not hold more than 10% of its net assets in such securities on a long-term basis. Traditionally, less than 10% of the Account’s net assets have comprised interests in these securities; although, the Account has held approximately 10% of its net assets in equity REIT securities at times. In addition, under the Account’s current investment guidelines, the Account is authorized to hold up to 10% of its net assets in CMBS. As of December 31, 2017,2019, publicly traded REIT securities comprised approximately 5.0%3.0% of the Account’s net assets, and the Account held no CMBS as of such date.
In making commercial real estate investments within the Account, TIAA seeks to make investments that are suitable from a financial perspective and whose activities are generally consistent with industry recognized environmental, social and governance (“ESG”) criteria. The Account intends to promote awareness of these criteria to its joint venture partners, vendors and other stakeholders in connection with portfolio related activity involving commercial real estate transactions. TIAA believes awareness, and, as appropriate, implementation of ESG criteria in commercial real estate holdings is beneficial to total long-term returns for the Account. In its evaluation of commercial real estate opportunities, the Account will take ESG considerations into account as part of the financial assessment of a commercial real estate portfolio asset, and not to achieve a desired outcome or as an investment qualification or screen. Ultimately, the Account will make an investment decision that incorporates ESG criteria only to the extent that the criteria is reasonably expected to enhance the ability to achieve desired returns for the Account.
Non-Real Estate-RelatedLiquid, Fixed-Income Investments. The Account will invest the remaining portion of its assets (targeted to be between 15% and 25% of its net assets) in publicly traded,the following types of liquid, fixed income investments; namely:
Short-term government related instruments, including U.S. Treasury bills;or U.S. Government agency securities;
Long-term government related instruments, such as securities issued by U.S. governmentGovernment agencies, U.S. States or municipalities or U.S. government-sponsoredGovernment-sponsored entities;
Short-term non-governmentIntermediate-term or long-term government related instruments, such as money market instrumentsbond or other fixed-income securities issued by U.S. Government agencies, U.S. States or municipalities or U.S. Government-sponsored entities as well as foreign governments and commercial paper;their agencies (including those in emerging markets) and supranational or multinational organizations (e.g., European Union);
Long-termIntermediate-term or long-term non-government related instruments, such as corporate debt securities or asset-backed securities (“ABS”) issued by domestic or foreign entities, including domestic or foreign mezzanine or other debt, mortgage backed securities (“MBS”), residential mortgage backed securities (“RMBS”), debt securities of foreign governments, and collateralized debt (“CDO”), collateralized bond (“CBO”) and collateralized loan (“CLO”) obligations, but only if such non-government related instruments are investment-grade securities;
Money market instruments and other cash equivalents. These will usually be high-quality, short-term debt instruments, including U.S. Government or government agency securities, commercial paper, certificates of deposit, bankers’ acceptances, repurchase agreements, interest-bearing time deposits, and corporate debt securities; and
Stock ofTo a limited extent, privately issued (or non-publicly traded) debt securities, including Rule 144A securities, issued by domestic and foreign companies that do not primarily own or manage real estate.estate, but only if such domestic and foreign privately issued debt securities are investment-grade securities.
However, from time to time, the
The Account’s non-real estate-related liquid, fixed-income investments may comprise less than 15% (and possibly less than 10%) of its assets (on a net basis and/or a gross basis), especially during and immediately following periods of significant net participant outflows. In addition, the Account, from time to time and on a temporary basis, may hold in excess of 25% of its net assets in non-real estate-related liquid, fixed-income investments, particularly during times of significant inflows into the Account and/or a lack of attractive real estate-related investments available in the market.
Liquid Securities Generally. Primarily due to management’s need to manage fluctuations in cash flows, in particular during and immediately following periods of significant participant net transfer activity into or out of the Account, the Account may, on a temporary basis (i) exceed the upper end of its targeted holdings (currently 35% of the Account’s net assets) in liquid securities of all types, including both publicly traded non-real estate-related liquid investments and liquid real estate-related securities, such as REITs, ABS, RMBS, CMBS and CMBS,MBS, or (ii) be below the low end of its targeted holdings in such liquid securities (currently 15% of the Account’s net assets).
The portion of the Account’s net assets invested in liquid investments of all types may exceed the upper end of its target, for example, if (i) the Account receives a large inflow of money in a short period of time, in particular due to significant participant transfer activity into the Account, (ii) the Account receives significant proceeds from sales or financings of direct real estate assets, (iii) there is a lack of attractive direct real estate investments available on the market, and/or (iv) the Account anticipates more near-term cash needs, including to apply to acquire or improve direct real estate investments, pay expenses or repay indebtedness.
Foreign Investments. The Account from time to time willmay also make foreign real estate and foreign real estate-related investments and foreign liquid, fixed-income investments. Under the Account’s investment guidelines, investments in direct foreign real estate and real estate loans, together with foreign real estate-related securities and foreign non-real estate-related liquid, fixed-income investments may not comprise more than 25% of the Account’s net assets. However, management doesn't intend such foreign investments, in the aggregate, to exceed 10% of the Account's net assets. As of December 31, 2017,2019, the Account did not hold any foreign real estate investments.
In managing any domestic or foreign mezzanine debt or other domestic or foreign loans or securities, the Account may enter into certain derivatives transactions (including forward currency contracts and swaps, futures contracts, put and call options and other hedging transactions) in order to hedge against the risks of exchange rate uncertainties, interest rate uncertainties and foreign currency or market fluctuations impacting the Account’s domestic or foreign investments. The Account does not intend to speculate in such transactions.
Investments Summary. At December 31, 2017,2019, the Account’s net assets totaled $24.9$27.3 billion. As of that date, the Account’s investments in real estate properties, real estate joint ventures, limited partnerships,real estate funds, loans receivable and real estate-related marketable securities, net of the fair value of mortgage loans payable on real estate and outstanding loans on the line of credit, represented 84.4%84.8% of the Account’s net assets.
At December 31, 2017, the Account held a total The remaining 15.2% of 138 real estate investments (including its interests in 28 real estate-related joint ventures), representing 79.5%net assets is primarily comprised of the Account’s total investments, measured on a gross asset value basis. As of that date, the Account also held investments inshort-term marketable securities such as U.S. Treasury securities, government agency notes, representing 10.6% of total investments, REIT equity securities representing 4.6% of total investments, U.S. Treasury securities representing 3.7% of total investments, loans receivable representing 1.1% of total investmentscorporate and real estate limited partnerships representing 0.5% of total investments. See the Account’s audited Consolidated Financial Statements for more information as to the Account’s investments as of December 31, 2017.municipal bonds.
Borrowing. The Account is authorized to borrow money and assume or obtain a mortgage on a property (i.e., make leveraged real estate investments). Under the Account’s current investment guidelines, management intends to maintain the Account’s loan-to-value ratio (as defined below) at or below 30% (measured at the time of incurrence and after giving effect thereto). Forms of borrowing may include:
placing new debt on properties;
refinancing outstanding debt;
assuming debt on the Account’s properties;
extending the maturity date of outstanding debt; or
an unsecured line of credit or credit facility.
The Account’s loan-to-value ratio at any time is based on the ratio of the outstanding principal amount of the Account’s debt to the Account’s total gross asset value.value and excludes leverage, if any, employed by REITs and underlying partnerships or investment funds in which the Account invests.This ratio will be measured at the time of any debt incurrence and will be assessed after giving effect thereto. The Account’s total gross asset value, for these purposes,
is equal to the total fair value of the Account’s assets (including the fair value of the Account’s interest in joint ventures), with no reduction associated with any indebtedness on such assets. In calculating outstanding indebtedness, we include only the Account’s actual percentage interest in any borrowings on a joint venture investment and not that of any joint venture partner. Also, at the time the Account (or a joint venture in which the Account is a partner) enters into a revolving or other line of credit, management includes only amounts outstanding when calculating outstanding indebtedness.
As of December 31, 2017,2019, the aggregate principal amount of mortgages secured by the Account's wholly-owned properties was $2.3 billion. When combined with the Account’s equity share of the $3.1 billion in mortgages held within and serviced by the Account’s joint venture investments, a $48.2 million loan collateralized by a loan receivable and a $250.0 million draw against the Account's line of credit, the total outstanding debt (including the Account’s share of debt on its joint venture investments) was $4.6is $5.7 billion, andwhich is used to derive the Account’s loan-to-value ratio was 15.5%of 17.1%.
In times of high net inflow activity, in particular during times of high net participant transfer inflows, management may determine to apply a portion of such cash flows to make prepayments of indebtedness prior to scheduled maturity, which would have the effect of reducing the Account’s loan-to-value ratio. Such prepayments may require the Account to pay fees or ‘yield maintenance’"yield maintenance" amounts to lenders.
In addition, the Account may obtain a line of credit to meet short-term cash needs, if needed. Management expects the proceeds from any such short-term borrowing would be used to meet the cash flow needs of the Account’s properties and real estate-related investments.
The Account may only borrow up to 70% of the then-current value of a property, although construction loans may be for 100% of costs incurred in developing the property. Except for construction loans, any mortgage loans on a property will be non-recourse to the Account, meaning that if there is a default on a loan in respect to a specific property, the lender will have recourse to (i.e., be able to foreclose on) only the property encumbered (or the joint venture owning the property), or to other specific Account properties that may have been pledged as security for the defaulted loan, but not to any other assets of the Account. When possible, the Account will seek to have loans mature at varying times to limit the risks of borrowing.
Risk Factors. The Account’s assets and income can be affected by a variety of risk factors. These risks are more fully described under Item 1A of this report.
Personnel and Management. The Account has no officers, directors or employees. TIAA employees, under the direction and control of the Board, manage the investment of the Account’s assets, following investment management procedures TIAA has adopted for the Account. References to “Management” herein refer to the employees and officers of TIAA responsible for management of the Account. In addition, TIAA performs administration functions for the Account (which includes receiving and allocating premiums, calculating and making annuity payments and providing recordkeeping and other services). Distribution services for the Account (which include, without limitation, distribution of the annuity contracts, advising existing annuity contract owners in connection with their accumulations and helping employers implement and manage retirement plans) are performed by TIAA-CREF Individual & Institutional Services, LLC (“Services”), a wholly-owned subsidiary of TIAA and registered broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”). TIAA and Services provide investment advisory,management, administration, and distribution services, as applicable, to the Account on an “at-cost” basis.
Contracts. TIAA offers the Account as a variable option for the annuity contracts listed earlier in this Item 1, although some employer plans may not offer the Account as an option for certain contracts. Each payment to the Account buys a number of accumulation units. Similarly, any transfer or withdrawal from the Account results in the redemption of a number of accumulation units. The price paid for an accumulation unit, and the price received for an accumulation unit when redeemed, is the accumulation unit value (“AUV”) calculated for the business day on which the participant’s purchase, redemption or transfer request is received in good order (unless a participant asks for a later date for a redemption or transfer).
Subject to the terms of the contracts and a participant’s employer’s plan, a participant can move money to and from the Account in the following ways, among others:
from the Account to a College Retirement Equities Fund ("CREF") investment account, a TIAA Access variable account (if available), TIAA’s Traditional Annuity or a mutual fund (including TIAA-CREF affiliated mutual funds) or other options available under the plan;
to the Account from a CREF investment account, a TIAA Access variable account (if available), TIAA’s Traditional Annuity (transfers from TIAA’s Traditional Annuity under RA, GRA or Retirement Choice contracts are subject to restrictions), a TIAA-CREF affiliated mutual fund or from other companies/ plans;
by withdrawing cash; and/or
by setting up a program of automatic withdrawals or transfers.
Importantly, transfers out of the Account to a TIAA or CREF account or into another investment option can be executed on any business day, but are limited to once per calendar quarter, although some plans may allow systematic transfers that result in more than one transfer per calendar quarter. TIAA reserves the right to stop accepting transfers into the Account at any time. Other limited exceptions may apply. Also, transfers to CREF accounts or to certain other options may be restricted by an employer’s plan, current tax law or by the terms of a participant’s contract. In addition, with most contracts, individual participants are subject to certain limitations on making internal transfers into their Account accumulation if, after giving effect to such transfer, the total value of such participant’s Account accumulation (under all contracts issued to such participant) would exceed $150,000. Categories of transactions that TIAA deems “internal funding vehicle transfers” for purposes of this limitation are described in the applicable contract or endorsement form in the Account’s prospectus. The effective date of the limitation as it applies to an individual participant will be reflected on his or her applicable contract or endorsement form.
Appraisals and Valuations. With respect to the Account’s real property investments or associated interest in the underlying property held by a joint venture investment (collectively "real properties"), following the initial purchase of a property or the making of a mortgage loan on a property by the Account (at which time the Account normally receives an independent appraisal on such property), each of the Account’s real properties are appraised, and mortgage loans are valued, at least once every calendar quarter or sooner as circumstances arise. Each of the Account’s real estate properties are appraised each quarter by an independent third-party state-certified (or its foreign equivalent) appraiser (which we refer to in this report as an “independent appraiser”) who is a member of a professional appraisal organization. In addition, TIAA’s internal appraisal staff performs a review of each of these quarterly appraisals, in conjunction with the Account’s independent fiduciary, and TIAA’s internal appraisal staff or the independent fiduciary may request an additional appraisal or valuation outside of this quarterly cycle. Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).
In general, the Account records appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments and thus adjustments to the valuations of its holdings (to the extent adjustments are made) happen regularly throughout each quarter and not on one specific day in each period. In addition, an estimated daily equivalent of net operating income is taken into consideration and is adjusted for actual transactional activity. The remaining assets in the Account are primarily marketable securities that are priced on a daily basis. See “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations—Critical Accounting Policies” in this Form 10-K for more information on how each class of the Account’s investments are valued.
Liquidity Guarantee. The TIAA General Account provides the Account with a liquidity guarantee enabling the Account to have funds available to meet participant redemption, transfer or cash withdrawal requests. The Account pays TIAA for the risk associated with providing the liquidity guarantee through a daily deduction from the Account’s net assets. If the Account cannot fund participant requests from the Account’s own cash flow and liquid investments, the TIAA General Account will fund them by purchasing accumulation units issued by the Account (accumulation units that are purchased by TIAA are generally referred to as “liquidity units”). ThisThe liquidity guarantee is required by the NYDFS. TIAA guarantees that participants can redeem their accumulation units at the accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. Liquidity units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s participants.
ThisThe liquidity guarantee is not a guarantee of the investment performance of the Account or a guarantee of the value of a participant’s units. Primarily as a result of significant net participant transfers in the second half of 2008 and the first half of 2009, pursuant to this liquidity guarantee obligation, the TIAA General Account purchased an aggregate of $1.2 billion of liquidity units issued by the Account between December 2008 and June 2009. Since July 1, 2009, and through the date of filing this Annual Report on Form 10-K, no further liquidity units have been purchased.
Redemption of Liquidity Units. The independent fiduciary is vested with oversight and approval over any redemption of TIAA’s liquidity units, acting in the best interests of Real Estate Account participants.
As of March 31, 2013, the independent fiduciary completed the systematic redemption of all of the liquidity units held by the TIAA General Account. Approximately one-quarter of such units were redeemed evenly over the business days in each of the months of June, September and December 2012, and March 2013, representing a total of $940.3 million and $325.4 million redeemed during 2012 and 2013, respectively.
To the extent liquidity units are held by the TIAA General Account, the independent fiduciary reserves the right to authorize or direct the redemption of all or a portion of liquidity units at any time. Upon termination and liquidation of the Account (wind-up), any liquidity units held by TIAA will be the last units redeemed, unless the independent fiduciary directs otherwise.
Independent Fiduciary. Because TIAA’s ability to purchase and sell liquidity units raises certain technical issues under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), TIAA applied for and received a prohibited transaction exemption from the U.S. Department of Labor in 1996 (PTE 96-76). In connection with the exemption, TIAA has appointed an independent fiduciary for the Account, with overall responsibility for reviewing the Account’s transactions to determine whether they are in accordance with the Account’s investment guidelines.
RERC, LLC, a real estate consulting firm whose principal offices are located in West Des Moines, IA (“RERC”), was appointed as independent fiduciary effective March 1, 2006 and currently serves as the Account’s independent fiduciary, pursuant to an amended and restated letter agreement effective March 1, 2018, whose term expires on February 28, 2021. The independent fiduciary’s responsibilities include:
reviewing and approving the Account’s investment guidelines and monitoring whether the Account’s investments comply with those guidelines;
reviewing and approving valuation procedures for the Account’s properties;
approving adjustments to any property valuations that change the value of the property or the Account as a whole above or below certain prescribed levels, or that are made within three months of the annual independent appraisal;
reviewing and approving how the Account values accumulation and annuity units;
approving the appointment of all independent appraisers;
reviewing the purchase and sale of units by TIAA to ensure that the Account uses the correct unit values; and
requiring appraisals besides those normally conducted, if the independent fiduciary believes that any of the properties have changed materially, or that an additional appraisal is necessary to ensure the Account has correctly valued a property.
In addition, the independent fiduciary has certain responsibilities with respect to the Account that it had historically undertaken or is currently undertaking with respect to TIAA’s purchase and ownership of liquidity units, including among other things, reviewing the purchases and redemption of liquidity units by TIAA to ensure the Account uses the correct unit values. In connection therewith, as set forth in PTE 96-76, the independent fiduciary’s responsibilities include:
establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for changing the trigger point;
approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of liquidity units reaches the trigger point; and
once the trigger point has been reached, participating in any program to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. If the independent fiduciary were to determine that TIAA’s ownership should be reduced following the trigger point, its role in participating in any asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines, and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of liquidity units.
Available Information. The Account’s annual report on Form 10-K, quarterly reports on Form 10-Q, and any amendments to those reports, filed by the Account with the Securities and Exchange Commission on or after the date hereof, can be accessed free of charge at www.tiaa.org. Information contained on this website is expressly not incorporated by reference into this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS.
The value of your investment in the Account will fluctuate based on the value of the Account’s assets, the income the assets generate and the Account’s expenses. Participants can lose money by investing in the Account. The past performance of the Account is not indicative of future results. There is risk associated with an investor attempting to “time” an investment in the Account’s units, or effecting a redemption of an investor’s units. The Account’s assets and income can be affected by many factors, and you should consider the specific risks presented below before investing in the Account. In particular, for a discussion of how forward-looking statements contained in this annual report on Form 10-K are subject to uncertainties that are difficult to predict, which may be beyond management’s control and which could cause actual results to differ materially from historical experience or management’s present expectations, please refer to the subsection entitled “Forward-Looking Statements,” which is contained in the section entitled “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations.”
RISKS ASSOCIATED WITH REAL ESTATE INVESTING
General Risks of Acquiring and Owning Real Property. As referenced elsewhere in this report, the substantial majority of the Account’s net assets consist of direct ownership interests in real estate. As such, the Account is particularly subject to the risks inherent in acquiring and owning real property, including in particular the following:
Adverse Global and Domestic Economic Conditions. The economic conditions in the markets where the Account’s properties are located may be adversely impacted by factors which include:
adverse domestic or global economic conditions, particularly in the event of a deep recession which results in significant employment losses across many sectors of the economy and reduced levels of consumer spending;
a weak market for real estate generally and/or in specific locations where the Account may own property, including, among other reasons, as a result of an epidemic, pandemic or other health-related issue in one or more markets where the Account owns property;
business closings, industry or sector slowdowns, employment losses and related factors;
the availability of financing (both for the Account and potential purchasers of the Account’s properties);
an oversupply of, or a reduced demand for, certain types of real estate properties;
natural disasters (including hurricanes and tsunamis), rising sea levels due to global climate warming or otherwise, flooding and other significant and severe weather-related events;
terrorist attacks and/or other man-made events; and
decline in population or shifting demographics.
The incidence of some or all of these factors could reduce occupancy, rental rates and the fair value of the Account’s real properties or interests in investment vehicles (such as limited partnerships)real estate funds) which directly hold real properties.
Concentration Risk.The Account may experience periods in which its investments are geographically concentrated, either regionally or in certain markets with similar demographics. Further, while the Account seeks diversification across its four primary property types:types (i.e., office, industrial, retail and multi-family properties,multi-family), the Account may experience periods where it has concentration in one property type, increasing the potential exposure if there were to be an oversupply of, or a reduced demand for, certain types of real estate properties in the markets in which the Account operates.
Also, the Account may experience periods in which its tenant base is concentrated within a particular industry sector. For example, the Account owns and operates a number of(e.g., retail mall shopping centers, industrial properties which typically feature larger tenant concentration. The insolvency and/or closing of a single tenant in one of our industrial properties may significantly impair the income generated by an industrial property, and may also depress the value of such property.
In addition, the Account owns and operates a number of properties in the Washington, D.C. metropolitan area and a prolonged period of significantly diminished federal expenditures could have an adverse impact on demand for office space by the U.S. government and the sectors and industries dependent upon the U.S. government in such region or other regions where the government or such related businesses are large lessees.
space). If any or all of these events occur, the Account’s income and performance may be adversely impacted disproportionately by deteriorating economic conditions in those areas or industry sectors in which the Account’s investments are concentrated. Also, the Account could experience a more rapid negative change in the value of its real estate investments than would be the case if its real estate investments were more diversified.
Leasing Risk. A number of factors could cause the Account’s rental income, a key source of the Account’s revenue and investment return, to decline, which would adversely impact the Account’s results and investment returns. These factors include the following:
A property may be unable to attract new tenants or retain existing tenants. This situation could be exacerbated if a concentration of lease expirations occurred during any one time period or multiple tenants exercise early termination at the same time.
The financial condition of our tenants may be adversely impacted, particularly in a prolonged economic downturn. The Account could lose revenue if tenants do not pay rent when contractually obligated, request some form of rent relief and/or default under a lease at one of the Account’s properties. Such a default could occur if a tenant declared bankruptcy, suffered from a lack of liquidity, failed to continue to operate its business or for other reasons. In the event of any such default, we may experience a delay in, or an inability to effect, the enforcement of our rights against that tenant, particularly if that tenant filed for bankruptcy protection. Further, any disputes with tenants could involve costly and time consuming litigation.
In the event a tenant vacates its space atin one of the Account’s properties, whether as a result of a default, the expiration of the lease term, rejection of the lease in bankruptcy or otherwise, given current market conditions, we may not be able to re-lease the vacant space either (i) for as much as the rent payable under the previous lease or (ii) at all. Also, we may not be able to re-lease such space without incurring substantial expenditures for tenant improvements and other lease-up related costs, while still being obligated for any mortgage payments, real estate taxes and other expenditures related to the property.
In some instances, ourthe Account’s properties may be specifically suited to and/or outfitted for the particular needs of a certain tenant based on the type of business the tenant operates. For example, many companies desire space with an open floor plan. WeThe Account may have difficulty obtaining a new tenant for any vacant space in ourits properties, particularly if the current structure of the developed property (e.g., floor plan or otherwise) limits the types of businesses that can use the space without major renovation, which may require usthe Account to incur substantial expense in re-planning the space. Also, upon expiration of a lease, the space preferences of ourthe Account’s major tenants may no longer align with the space they previously rented, which could cause those tenants to not renew their lease, or may require usthe Account to expend significant sums to reconfigure the space to their needs.
The Account owns and operates retail properties, which, in addition to the risks listed above, are subject to specific risks, including the insolvency and/or closing of an anchor tenant.tenant for certain properties. Many times, anchor tenants will be “big box” stores and other large retailers that can be particularly adversely impacted by a global recession, competition from online retailers and reduced consumer spending generally. Factors that can impact the level of consumer spending include increases in fuel and energy costs, residential and commercial real estate and mortgage conditions, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors. Under certain circumstances, co-tenancy clauses in tenants’ leases may allow certain tenants in a retail property to terminate their leases or reduce or withhold rental payments when overall occupancy at the property falls below certain minimum levels. The insolvency and/or closing of an anchor tenant may also cause such tenants to terminate their leases, or to fail to renew their leases at expiration.
Competition. The Account may face competition for real estate investments from multiple sources, including individuals, corporations, insurance companies or other insurance company separate accounts, as well as real estate limited partnerships, real estate investment funds, commercial developers, pension plans, other institutional and foreign investors and other entities engaged in real estate investment activities. Some of these competitors may have similar financial and other resources as the Account, and/or they may have investment strategies and policies (including the ability to incur significantly more leverage than the Account) that allow them to compete more aggressively for real estate investment opportunities, which could result in the Account paying higher prices for investments, experiencing delays in acquiring investments or failing to consummate such purchases. Any resulting delays in the acquisition of investments, or the failure to consummate acquisitions the Account deems desirable, may increase the Account’s costs or otherwise adversely affect the Account’s investment results.
In addition, the Account’s properties may be located close to properties that are owned by other real estate investors and that compete with the Account for tenants. These competing properties may be better located, more suitable for tenants than our properties, or have owners who may compete more aggressively for tenants, resulting in a competitive advantage for these other properties. WeThe Account may also face similar competition from other properties that may be developed
in the future. This competition may limit the Account’s ability to lease space, increase its costs of securing tenants, and limit ourthe Account’s ability to maximize our rents and/or require
the Account to make capital improvements it otherwise would not, in order to make its properties more attractive to prospective tenants.
Operating Costs. A property’s cash flow could decrease if operating costs, such as property taxes, utilities, litigation expenses associated with a property, maintenance and insurance costs that are not reimbursed by tenants, increase in relation to gross rental income, or if the property needs unanticipated repairs and renovations. In addition, the Account’s expenses of owning and operating a property are not necessarily reduced when the Account’s income from a property is reduced.
Condemnation. A governmental agency may condemn and convert for a public use (i.e.(i.e., through eminent domain) all or a portion of a property owned by the Account. While the Account would receive compensation in connection with any such condemnation, such compensation may not be in an amount the Account believes represents the equivalent value for the condemned property. Further, a partial condemnation could impair the ability of the Account to maximize the value of the property during its operation, including making it more difficult to find new tenants or retain existing tenants. Finally, a property which has been subject to a partial condemnation may be more difficult to sell at a price the Account believes is appropriate.
Terrorism and Acts of War and Violence. Terrorist attacks may harm our property investments. The Account can provide no assurance that there will not be further terrorist attacks against the United States or U.S. businesses or elsewhere in the world. These attacks or armed conflicts may directly or indirectly impact the value of the property we ownthe Account owns or that secure our loans. Losses resulting from these types of events may be uninsurable or not insurable to the full extent of the loss suffered. Moreover, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States, worldwide financial markets, and the global economy. Such events could also result in economic uncertainty in the United States or abroad. Adverse economic conditions resulting from terrorist activities could reduce demand for space in the Account’s properties and thereby reduce the value of the Account’s properties and therefore your investment return.
Risk of Limited Warranty. Purchasing a property “as is” or with limited warranties, which limit the Account’s recourse if due diligence fails to identify all material risks, can negatively impact the Account by reducing the value of such properties and increasing the Account’s cost to hold or sell properties.
General Risks of Selling Real Estate Investments. Among the risks of selling real estate investments are:
The sale price of an Account property might differ, perhaps significantly, from its estimated or appraised value, leading to losses or reduced profits to the Account.
The Account might not be able to sell a property at a particular time for a price which management believes represents its fair or full value. This illiquidity may result from the cyclical nature of real estate, general economic conditions impacting the location of the property, disruption in the credit markets or the availability of financing on favorable terms or at all, and the supply of and demand for available tenant space, among other reasons. This might make it difficult to raise cash quickly which could impair the Account’s liquidity position (particularly during any period of sustained significant net participant outflows) and also could lead to Account losses. Further, the liquidity guarantee does not serve as a working capital facility or credit line to enhance the Account’s liquidity levels generally, as its purpose is tied to participantscontract owners having the ability to redeem their accumulation units upon demand (thus alleviating the Account’s need to dispose of properties solely to increase liquidity levels in what management deems a suboptimal sales environment).
The Account may need to provide financing to a purchaser if no cash buyers are available, or if buyers are unable to receive financing on terms enabling them to consummate the purchase. Such seller financing introduces a risk that the counterparty may not perform its obligations to repay the amounts borrowed from the Account to complete the purchase.
For any particular property, the Account may be required to make expenditures for improvements to, or to correct defects in, the property before the Account is able to market and/or sell the property.
Interests in real estate limited partnershipsfunds tend to be, in particular, illiquid and the Account may be unable to dispose of such investments at opportune times.
Seller Indemnities.When the Account sells property, it is often required to provide some amount of indemnity for loss to the buyer. While the Account takes steps to try to mitigate the impact of the indemnities, such indemnities could negatively impact the sale price or result in claims by the buyer for indemnity in the future, which could increase the Account’s expenses and thereby reduce the return on investment.
Valuation and Appraisal Risks. Investments in the Account’s assets are stated at fair value, which is defined as the price that would be received to sell the asset in an orderly transaction between market participants at the measurement date. Determination of fair value, particularly for real estate assets, involves significant judgment. Valuation of the Account’s real estate properties (which comprise a substantial majority of the Account’s net assets) are based on real estate appraisals, which are estimates of property values based on a professional’sprofessional's opinion and may not be accurate predictors of the amount the Account would actually receive if it sold a property. Appraisals can be subjective in certain respects and rely on a variety of assumptions and conditions at that property or in the market in which the property is located, which may change materially after the appraisal is conducted. Among other things, market prices for comparable real estate may be volatile, in particular if there has been a lack of recent transaction activity in such market. Any future disruptions in the macroeconomy,macro-economy, real estate markets and the credit markets, such as those that occurred from 2008-2011, could lead to a significant decline in real estate transaction activity in most markets and sectors in which the Account is invested. The resulting lack of observable transaction data may make it more difficult for a property appraisal to determine the fair value of the Account’s investment in one or more real estate assets. In addition, a portion of the data used by appraisers is based on historical information at the time the appraisal is conducted, and subsequent changes to such data, after an appraiser has used such data in connection with the appraisal, may not be adequately captured in the appraised value. Also, to the extent that the Account uses a relatively small number of independent appraisers to value a significant portion of its properties, valuations may be subject to any institutional biases of such appraisers and their valuation procedures.
Further, as the Account generally obtains appraisals on a quarterly basis, there may be circumstances in the period between appraisals or interim valuation adjustments in which the true realizable value of a property is not reflected in the Account’s daily net asset value calculation or in the Account’s periodic Consolidated Financial Statements.consolidated financial statements. This disparity may be more apparent when the commercial and/or residential real estate markets experience an overall and possibly dramatic decline (or increase) in property values in a relatively short period of time between appraisals.
If the appraised values of the Account’s properties as a whole are too high, those participantscontract owners who purchased accumulation units prior to (i) a downward valuation adjustment of a property or multiple properties or (ii) a property or properties being sold for a lower price than the appraised value will be credited with less of an interest than if the value had previously been adjusted downward. Also, those participantscontract owners who redeem during any such period will have received more than their pro rata share of the value of the Account’s assets, to the detriment of other non-redeeming participants.contract owners. In particular, appraised property values may prove to be too high (as a whole) in a rapidly declining commercial real estate market. Further, implicit in the Account’s definition of fair value is a principal assumption that there will be a reasonable time to market a given property and that the property will be exchanged between a willing buyer and willing seller in a non-distressed scenario. However, an appraised value may not reflect the actual realizable value that would be obtained in a rush sale where time was of the essence. Also, appraised values may lag actual realizable values to the extent there is significant and rapid economic deterioration in a particular geographic market or a particular sector within a geographic market.
If the appraised values of the Account’s properties as a whole are too low, those participantscontract owners who redeem prior to (i) an upward valuation adjustment of a property or multiple properties or (ii) a property or properties being sold for a higher price than the appraised value will have received less than their pro rata share of the value of the Account’s assets, and those participantscontract owners who purchase units during any such period will be credited with more than their pro rata share of the value of the Account’s assets.
Finally, the Account recognizes items of income (such as net operating income from real estate investments, distributions from real estate limited partnershipsfunds or joint ventures, or dividends from REIT stocks) and expense in many cases on an intermittent basis, where the Account cannot predict with certainty the magnitude or the timing of such items. As such, even as the Account estimates items of net operating income on a daily basis, the AUV for the Account may fluctuate, perhaps significantly, from day to day, as a result of adjusting these estimates for the actual recognized item of income or expense.
Investment Risk Associated with Participant Transactions. The amount the Account has available to invest in new properties and other real estate-related assets will depend, in large part, on the level of net participant transfers into or out of the Account as well as participant premiums into the Account. As noted elsewhere in this report, the Account intends to hold between 15% and 25% of its net assets in publicly traded liquid investments (other than real estate and real estate-related investments), consisting of publicly traded, liquid investments. These liquid assets are intended to be available to purchase real estate-related investments in accordance with the Account’s investment objective and strategy and are also available to meet participant redemption requests and the Account’s expense needs (including, from time to time, obligations on debt). Significant participant transaction activity into or out of the Account’s units is generally not predictable, and wide fluctuations can occur as a result of macroeconomic or geopolitical conditions, the performance of equities or fixed income securities or general investor sentiment, regardless of the historical performance of the Account or of the performance of the real estate asset class generally.
In the second half of 2008 and in 2009, the Account experienced significant net participant transfers out of the Account, eventually causing the Account’s liquid assets to comprise less than 10% of the Account’s assets (on a net and total basis) throughout all of 2009 and into early 2010. Due in large part to this activity, the TIAA liquidity guarantee was initially executed in December 2008. See “Liquidity and Capital Resources—Liquidity Guarantee,” in the section of this report entitled "Management's Discussion and Analysis of the Account's Financial Conditions and Results of Operations." Among other things, this continued shortfall in the amount of liquid assets impaired management’s ability to consummate new transactions. If a significant amount of net participant transfers out of the Account were to recur, particularly in high volumes similar to those experienced in late 2008 and 2009, the Account may not have enough available liquid assets to pursue, or consummate, new investment opportunities presented to us that are otherwise attractive to the Account. This, in turn, could harm the Account’s returns. Even though net transfers out of the Account ceased in early 2010, there is no guarantee that redemption activity will not increase again, perhaps in a significant and rapid manner.
Alternatively, periods of significant net transfer activity into the Account can result in the Account holding a higher percentage of its net assets in publicly traded liquid non-real estate-related investments than the Account’s managers would target to hold under the Account’s long-term strategy. As of December 31, 2017, the Account’s non-real estate-related liquid assets comprised 15.6% of its net assets. At times, the portion of the Account’s net assets invested in these types of liquid instruments may exceed 25%, particularly if the Account receives a large inflow of money in a short period of time, coupled with a lack of attractive real estate-related investments on the market. Also, large inflows from participant transactions often occur in times of appreciating real estate values and pricing, which can render it challenging to execute on some transactions at ideal prices.
In an appreciating real estate market, generally, this large percentage of assets held in liquid investments and not in real estate and real estate-related investments may impair the Account’s overall returns. This scenario may be exacerbated in a low interest rate environment for U.S. Treasury securities and related highly liquid securities, such as has existed since 2009 and which may persist in the future. In addition, to manage cash flow, the Account may temporarily hold a higher percentage of its net assets in liquid real estate-related securities, such as REIT and CMBS securities, than its long-term targeted holdings in such securities, particularly during and immediately following times of significant net transfer activity into the Account. Such holdings could increase the volatility of the Account’s returns.
Risks of Borrowing. The Account acquires some of its properties subject to existing financing and from time to time borrows new funds at the time of purchase. The Account may borrow pursuant to mortgages placed on individual properties, under the Account’s Credit Agreement or under ananother unsecured line of credit or credit facility.facility into which the Account enters in the future. Also, the Account may from time to time place new leverage on, increase the leverage
already placed on, or refinance maturing debt on, existing properties the Account owns. Under the Account’sAccount's current investment guidelines, the Account intends to maintain its loan-to-value ratio at or below 30% (measured at the time of incurrence and after giving effect thereto).
As of December 31, 2017,2019, the Account’s loan-to-value ratio was 15.5%approximately 17.1%. Also, the Account may borrow up to 70% of the then-current value of a particular property. Non-construction mortgage loans on a property will be non-recourse to the Account.
Account, except for standard non-recourse carve outs. Among the risks of borrowing money, including borrowing under athe Credit Agreement or under another line of credit or credit facility, or otherwise investing in a property subject to a mortgage are:are the following:
General Economic Conditions. General economic conditions, dislocations in the capital or credit markets generally or the market conditions then in effect in the real estate finance industry, may hinder the Account’s
ability to obtain financing or refinancing for its property investments on favorable terms or at all, regardless of the quality of the Account’s property for which financing or refinancing is sought. Such unfavorable terms might include high interest rates, increased fees and costs and restrictive covenants applicable to the Account’s operation of the property. Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, rising interest rates or failures of significant financial institutions could adversely affect our access to financing necessary to make profitable real estate investments. Our failure to obtain financing or refinancing on favorable terms due to the current state of the credit markets or otherwise could have an adverse impact on the returns of the Account. Also, the Account’s ability to continue to secure financing may be impaired if negative marketplace effects, such as those which followed from the worldwide economic slowdown following the banking2008-2011 financial crisis of 2008 andor the subsequent sovereign debt and banking difficulties recently experienced in parts of the eurozone,Eurozone, were to persist. These difficultiesoccur. Such marketplace effects could includeresult in tighter lending standards instituted by banks and financial institutions, the reduced availability of credit facilities and project finance facilities from banks and the fall of consumer and/or business confidence.
Default Risk. The property or group of encumbered properties may not generate sufficient cash flow to support the debt service on the loan, themortgage loan. The property may also fail to meet certain financial or operating covenants contained in the loan documents and/or the property may have negative equity (i.e.(i.e., the loan balance exceeds the value of the property) or inadequate equity. In addition, income from properties or investments or any other source of income for the Account may not generate sufficient cash flow to support the debt service on a line of credit or credit facility. In any of these circumstances, we (or a joint venture in which we invest) may default on the loan, including due to the failure to make required debt service payments when due. If a loan is in default, the Account or the venture may determine that it is not economically desirable and/or in the best interests of the Account to continue to make payments on the loan (including accessing other sources of funds to support debt service on the loan), and/or the Account or venture may not be able to otherwise remedy such default on commercially reasonable terms or at all. In either case, the lender then could accelerate the outstanding amount due on the loan and/or foreclose on the underlying property, in which case the Account could lose the value of its investment in the foreclosed property. Further, any such default or acceleration could trigger a default under loan agreements in respect of other Account properties pledged as security for the defaulted loan or other loans. Finally, any such default could subject the Account to the costs of litigation, increase the Account’s borrowing costs, or result in less favorable terms, with respect to financing future properties or entering into future lines of credit or credit facilities.
Balloon Maturities.If the Account obtains a mortgage loan that involves a balloon payment, there is a risk that the Account maywill not be able to make the lump sum principal payment due under the loan at the end of the loan term, or otherwise obtain adequate refinancing on terms commercially acceptable to the Account or at all. The Account then may be forced to sell the property or other properties under unfavorable market conditions, restructure the loan on terms not advantageous to the Account, or default on its mortgage, resulting in the lender exercising its remedies, which may include repossession of the property, and the Account could lose the value of its investment in that property.
Variable Interest Rate Risk.If the Account obtains variable-rate loans, the Account’s returns may be volatile when interest rates are volatile. Further, to the extent that the Account takes out fixed-rate loans and interest rates subsequently decline, this may cause the Account to pay interest at above-market rates for a significant period of time. Any interest rate hedging activities the Account engages in to mitigate this risk may not fully protect the Account from the impact of interest rate volatility.
Variable Rate Demand Obligation (“VRDO”) Risk. To the extent the Account obtains financing pursuant to a variable rate demand obligation subject to periodic remarketing or similar mechanisms, the Account or the joint ventures in which it invests could face higher borrowing costs if the remarketing results in a higher prevailing interest rate. In addition, the terms of such variable rate obligations may allow the remarketing agent to cause the Account or venture to repay the loan on demand in the event insufficient market demand for such loans is present. In particular, RGM 42, LLC, a joint venture in which the Account holds a 70% interest, is the borrower under a VRDO loan program.
Valuation Risk.The market valuation of mortgage loans payable could have an adverse impact on the Account’s performance. Valuations of mortgage loans payable are generally based on the amount at which the liability could be transferred in a current transaction, exclusive of transaction costs, and such valuations are subject to
a number of assumptions and factors with respect to the loan and the underlying property, a change in any of which could cause the value of a mortgage loan to fluctuate.
Underlying Leverage Risk by Certain Portfolio Investments. Certain of the Account’s portfolio investments, including investments in certain REITs, joint ventures and real estate funds and other investment vehicles often utilize leverage in connection with their investment activity. Such leverage is generally not included in the Account’s loan to value calculation. In addition, higher amounts of leverage by such portfolio investments could cause the investments to lose money and negatively impact the Account's performance.
A general disruption in the credit markets, such as the disruption experienced in 2008 and 2009, may aggravate some or all of these risks.
Investment and Cash Management Risks Associated with Participant Transactions. The amount the Account has available to invest in new properties and other real estate-related assets will depend, in large part, on the level of net participant transfers into or out of the Account as well as participant premiums into the Account. As noted elsewhere in this prospectus, the Account intends to hold between 15% and 25% of its net assets in liquid, fixed-income investments. These liquid assets are intended to be used to satisfy participant redemption requests and meet the Account’s expense needs (including, from time to time, obligations on debt). Significant participant transaction activity into or out of the Account’s units is generally not predictable, and wide fluctuations can occur as a result of macroeconomic, geopolitical or market conditions (including market disruptions, volatility or downturns), the performance of equities or fixed income securities or general investor sentiment, regardless of the historical performance of the Account or of the performance of the real estate asset class generally. In the event that the Account were to experience significant net participant transfers out of the Account, such transfers could eventually cause the Account’s liquid, fixed-income investments to comprise less than 10% of the Account’s assets (on a net and total basis). Such situations could require the need to execute the TIAA liquidity guarantee. Among other things, this continued shortfall in the amount of liquid assets impaired management’s ability to consummate new transactions. If a significant amount of net participant transfers out of the Account were to recur, particularly in high volumes, the Account may not have enough available liquid assets to pursue, or consummate, new investment opportunities presented to us that are otherwise attractive to the Account. This, in turn, could harm the Account’s returns. Even though the Account has over time experienced both net inflows (purchases) and net outflows (redemptions) of contract owner investments on an annual basis, there is no guarantee that net outflow or redemption activity will not increase, perhaps in a significant and rapid manner, particularly in response to market cycles in the domestic and foreign securities and commercial real estate markets and other factors.
Alternatively, periods of significant net transfer activity into the Account can result in the Account holding a higher percentage of its net assets in liquid, fixed-income investments than the Account’s managers would target to hold under the Account’s long-term strategy. As of December 31, 2019, the Account’s liquid, fixed-income investments comprised 15.2% of its net assets. At times, the portion of the Account’s net assets invested in these types of liquid instruments may exceed 25%, particularly if the Account receives a large inflow of money in a short period of time, coupled with a lack of attractive real estate-related investments on the market. Also, large inflows from participant transactions often
occur in times of appreciating real estate values and pricing, which can render it challenging to execute on some transactions at ideal prices.
In an appreciating real estate market generally, this large percentage of assets held in liquid, fixed-income investments and not in real estate and real estate-related investments may impair the Account’s overall returns. This scenario may be exacerbated in a low interest rate environment for U.S. Treasury and Agency securities and other liquid, fixed-income investments. In addition, to manage cash flow, the Account may temporarily hold a higher percentage of its net assets in liquid real estate-related securities, such as REIT and CMBS securities, than its long-term targeted holdings in such securities, particularly during and immediately following times of significant net transfer activity into the Account. Such holdings could increase the volatility of the Account’s returns.
Joint OwnershipVenture Investment Risks. Investing in joint venture partnershipsventures or other forms of joint property ownership may involve special risks, many of which are exacerbated when the consent of parties other than the Account is required to take action.
The co-venturer may have interests or goals inconsistent with those of the Account, including during times when a co-venturer may be experiencing financial difficulty. For example:
a co-venturer may desire a higher current income return on a particular investment than does the Account (which may be motivated by a longer-term investment horizon or exit strategy), or vice versa, which could cause difficulty in managing a particular asset;
a co-venturer may desire to maximize or minimize leverage in the venture, which may be at odds with the Account’s strategy;
a co-venturer may be more or less likely than the Account to agree to modify the terms of significant agreements (including loan agreements) binding the venture, or may significantly delay in reaching a determination whether to do so, each of which may frustrate the business objectives of the Account and/or lead to a default under a loan secured by a property owned by the venture; or
for reasons related to its own business strategy, a co-venturer may have different concentration standards as to its investments (geographically, by sector, or by tenant), which might frustrate the execution of the business plan for the joint venture.
The co-venturer may be unable to fulfill its obligations (such as to fund its pro rata share of committed capital, expenditures or guarantee obligations of the venture) during the term of such agreement or may become insolvent or bankrupt, any of which could expose the Account to greater liabilities than expected and frustrate the investment objective of the venture.
If a co-venturer doesn’t follow the Account’s instructions or adhere to the Account’s policies, the jointly owned properties, and consequently the Account, might be exposed to greater liabilities than expected.
The Account may have limited rights with respect to the underlying property pursuant to the terms of the joint venture, including the right to operate, manage or dispose of a property, and a co-venturer could have approval rights over the marketing or the ultimate sale of the underlying property.
The terms of the Account’s ventures often provide for complicated agreements which can impede our ability to direct the sale of the property owned by the venture at times the Account views most favorable. One such agreement is a buy-sell"buy-sell" right, which may force us to make a decision (either to buy our co-venturer’s interest or sell our interest to our co-venturer) at inopportune times.
A co-venturer can make it harder for the Account to transfer its equity interest in the venture to a third party, which could adversely impact the valuation of the Account’s interest in the venture.
To the extent the Account serves as the general partner or managing member in a venture, it may owe certain contractual or other duties to the co-venturer, including fiduciary duties, which may present perceived or actual conflicts of interest in the management of the underlying assets. Such an arrangement could also subject the Account to liability to third parties in the performance of its duties as a general partner or managing member.
The venture may incur higher than normal levels of investment leverage, including levels that exceed the Account’s typical loan-to-value ratio.
A partner that administratively operates a particular co-venture may not sufficiently assess ESG-related criteria when acquiring commercial real property, and any resulting ESG-related concerns with the commercial property
have the potential in certain circumstances to negatively impact the value of, and subsequent investment returns on, the property.
Risks of Developing or Redeveloping Real Estate or Buying Recently Constructed Properties. If the Account chooses to develop or redevelop a property or buys a recently constructed property, it may face the following risks:
There may be delays or unexpected increases in the cost of property development, redevelopment and construction due to strikes, bad weather, material shortages, increases in material and labor costs or other events.
There are risks associated with potential underperformance or non-performance by, and/or solvency of a contractor we select or other third party vendors involved in developing or redeveloping the property.
If the Account were viewed as developing or redeveloping underperforming properties, suffering losses on our investments, or defaulting on any loans on our properties, our reputation could be damaged. Damage to our
reputation could make it more difficult to successfully develop or acquire properties in the future and to continue to grow and expand our relationships with our lenders, venture partners and tenants.
Because external factors may have changed from when the project was originally conceived (e.g., slower growth in the local economy, higher interest rates, overbuilding in the area, or changes in the regulatory and permitting environment), the property may not attract tenants on the schedule we originally planned and/or may not operate at the income and expense levels first projected.
Risks with Purchase-Leaseback Transactions. To the extent the Account invested in a purchase-leaseback transaction, the major risk is that the third party lessee will be unable to make required payments to the Account. If the leaseback interest is subordinate to other interests in the real property, such as a first mortgage or other lien, the risk to the Account increases because the lessee may have to pay the senior lienholder to prevent foreclosure before it pays the Account. If the lessee defaults or the leaseback is terminated prematurely, the Account might not recover its investment unless the property is sold or leased on favorable terms.
Real Estate Regulatory Risks. Government regulation at the federal, state and local levels, including, without limitation, zoning laws, rent control or rent stabilization laws, laws regulating housing on the Account’s multifamily multi-family
properties, the Americans with Disabilities Act, property taxes and fiscal, accounting, environmental or other government policies, could operate or change in a way that adversely affects the Account and its properties. For example, these regulations could raise the cost of acquiring, owning, improving or maintaining properties, present barriers to otherwise desirable investment opportunities or make it harder to sell, rent, finance, or refinance properties either on economically desirable terms, or at all, due to the increased costs associated with regulatory compliance.
In addition, some state and local municipal jurisdictions, such as New York City, Washington D.C. and the State of Washington, have enacted legislation which compels building owners to meet standards for energy efficiency or carbon emission limits which may result in unplanned capital expenditures or require amendments to leases or other financial agreements with tenants (which represent a significant portion of building energy consumption) to improve building efficiency. If standards are not met, the Account could be subject to fines and/or other regulatory penalties that may impact the value of non-compliant building held in the Account’s portfolio. Additional state and local jurisdictions (including foreign jurisdictions where the Account could own commercial property) that have committed to achieve carbon reduction, clean energy standards and other ESG-related criteria for commercial real estate may implement similar legislation that could increase costs and negatively impact the performance of such properties in the Account’s portfolio.
Environmental Risks. The Account may be liable for damage to the environment or injury to individuals caused by hazardous substances used or found on its properties. Under various environmental regulations, the Account may also be liable, as a current or previous property owner or mortgagee, for the cost of removing or cleaning up hazardous substances found on a property, even if it did not know of and was notwasn’t responsible for the hazardous substances. If any hazardous substances are present or the Account does not properly clean up any hazardous substances, or if the Account fails to comply with regulations requiring it to actively monitor the business activities on its premises, the Account may have difficulty selling or renting a property or be liable for monetary penalties. Further, environmental laws may impose restrictions on the manner in which a property may be used, the tenants which may be allowed, or the manner in which businesses may be operated, which may require the Account to expend funds in order to comply with these laws. These laws may also cause the most ideal use of the property to differ from that originally contemplated and as a result could impair the Account’s returns. The cost of any required clean-up relating to a single real estate investment (including remediating contaminated property) and the Account’s potential liability for environmental damage, including paying personal injury claims and performing under indemnification obligations to third parties, could exceed the value of the Account’s investment in a property, the property’s value, or in an extreme case, a significant portion of the Account’s assets. Finally, while the Account may from time to time acquire third-party insurance related to environmental risks, such insurance coverage may be inadequate to cover the full cost of any loss and would cause the Account to be reliant on the financial health of our third-party insurer at the time any such claim is submitted.
Uninsurable LossesLoss Risks. Certain catastrophic losses (e.g.(e.g., from earthquakes, wars, terrorist acts, nuclear accidents, hurricanes, wind,tsunamis, high winds, wildfires, inland or coastal floods, rising sea levels or environmental or industrial hazards or accidents) may be uninsurable or so expensive to insure against that it is economically disadvantageous to buy insurance for them. Further, the terms and conditions of the insurance coverage the Account has on its properties, in conjunction with the type of loss actually suffered at a property, may subject the property, or the Account as a whole, to a cap on insurance proceeds that is less than the loss or losses suffered. If a disaster that we have not insured against occurs, if the insurance contains a high deductible, and/or if the aggregate insurance proceeds for a particular type of casualty are capped, the Account could lose some of its original investment and any future profits from the property. Also, the Account may not have sufficient access to internal or external sources of funding to repair or reconstruct a damaged property to the extent insurance proceeds do not cover the full loss. In addition, some leases may permit a tenant to terminate its obligations in certain situations, regardless of whether those events are fully covered by insurance. In that case, the Account would not receive rental income from the property while that tenant’s space is vacant, and any such vacancy might impact the value of that property. Finally, as with respect to all third-party insurance, we arethe Account is reliant on the continued financial health of such insurers and their ability to pay on valid claims. If the financial health of an insurer were to deteriorate quickly, we
the Account may not be able to find adequate coverage from another carrier on favorable terms, which could adversely impact the Account’s investment returns.
Physical Climate Change Related Financial Risks. Many of the Account’s commercial properties are located within geographical regions in the United States and likely foreign jurisdictions in the future that currently are, and in the future will continue to be, affected by increasingly severe and adverse weather conditions across the globe, including, among others, earthquakes, hurricanes, tsunamis, high winds, wildfires, inland or coastal flooding, and rising sea levels. As regions experience changes to the climate and extreme weather events become more frequent and intense, commercial real estate assets within the Account that are located in such regions could be adversely impacted by direct damage to buildings and other improvements thereon and result in loss of revenue, the incurrence of unplanned capital and other expenses not covered by insurance, and increase operating expenses for such properties, including utility, insurance and maintenance costs. Climate related changes and resulting hazards may stress local populations, real estate financing and operational systems, and local infrastructure to the point where such changes and hazards negatively impact local market attractiveness of such properties as investments, rental market growth, and ultimately decrease demand for and value of commercial real estate in such regions. Any resulting losses from such climate changes and hazards could adversely impact the Account’s investment returns.
ESG Criteria Risks. Management of the Account looks to utilize industry recognized environmental, social and governance ("ESG") criteria in its commercial real estate underwriting given TIAA’s view that the application of such criteria, as part of the underwriting process, is beneficial in achieving positive long-term returns for the Account. In its evaluation of commercial real estate opportunities, the Account will take ESG considerations into account as part of the financial assessment of a commercial real estate portfolio asset, and not to achieve a desired outcome or as an investment qualification or screen. Ultimately, the Account will make an investment decision that incorporates ESG criteria only to the extent that the criteria is reasonably expected to enhance the ability to achieve desired returns for the Account. However, the application of ESG criteria may, when coupled with other criteria in the underwriting process, result in the Account deciding to forego some commercial real estate market opportunities that could be beneficial to the Account. Consequently, the Account may underperform other investment vehicles that do not utilize such ESG criteria in selecting portfolio properties.
Foreign Real Property Investment Risks. Investment in foreign commercial real properties, foreign real estate loans, and foreign debt investments may present the following special risks:
The value of foreign investments or rental income can increase or decrease due to changes or fluctuations in foreign currency exchange rates, imposition of currency exchange control or market control regulations, possible expropriation or confiscatory taxation, political, social, diplomatic and economic developments and foreign regulations. The Account translates into U.S. dollars purchases and sales of securities, income receipts and expense payments made in foreign currencies at the exchange rates prevailing on the respective dates of the transactions. The effect of any changes in currency exchange rates on foreign debt investments and loans payable is included in the Account’s net realized and unrealized gains and losses. As such, fluctuations in currency exchange rates, even if hedged, may impair or reduce the Account’s returns and result in poorer overall performance of the Account than if it had not acquired such foreign investments or entered into any foreign currency hedging transactions.
In managing any domestic or foreign commercial real property investments, the Account may, but is not required to, use or enter into forward currency contracts and foreign currency swaps, and may buy or sell put and call options and futures contracts on foreign currencies as well as other types of derivatives transactions (including interest rate swaps and options, futures contracts or swaps) in order to hedge against the risks of currency or exchange rate uncertainties, interest rate uncertainties and foreign currency or market fluctuations impacting the Account’s domestic or foreign real estate investments. Changes in exchange rates and exchange control regulations or interest rates may increase or reduce the value of domestic or foreign real estate investments. Currency hedging, interest rate hedging and similar transactions involve special risks and may limit potential gains due to increases in a currency’s value or changes in interest rates. Unanticipated changes in interest rates, domestic or foreign securities prices or currency exchange rates may result in poorer overall performance of the Account than if it had not entered into any such currency-related or interest rate-related hedging transactions for such real property investments. In addition, the Account could incur additional costs of paying hedge unwind fees, if it has to terminate cross-currency or interest rate swaps, futures contracts or options prematurely due to early repayment of domestic or foreign mortgage loans related to such properties. The Account does not intend to speculate in foreign currency exchange transactions, forward currency contracts, interest rate options, futures contracts or swaps or other types of hedging transactions related to its portfolio of domestic or foreign real property investments.
Non-U.S. jurisdictions may impose withholding taxes on the Account as a result of its investment activity in that jurisdiction. TIAA may be eligible for a foreign tax credit in respect of such tax paid by the Account and such credit (if available to TIAA) would be reimbursed to the Account. However, there may be circumstances where TIAA is unable to receive some or all of the benefit of a foreign tax credit and the Account would thus not receive reimbursement, which could harm the value of the Account’s units.
Foreign real estate markets may have different liquidity and volatility attributes than U.S. markets.
The regulatory environment in non-U.S. jurisdictions may disfavor owners and operators of real estate investment properties, resulting in less predictable and/or economically harmful outcomes if the Account were to face a significant dispute with a tenant or with a regulator itself.
The Account may be subject to increased risk of regulatory scrutiny pursuant to U.S. federal statutes, such as the Foreign Corrupt Practices Act, which, among other things, requires robust compliance and oversight programs to help prevent violations. The costs associated with maintaining such programs, in addition to costs associated with a potential regulatory inquiry, could impair the Account’s returns and divert management’s attention from other Account activities.
It may be more difficult for the Account to obtain and collect a judgment on foreign investments than on domestic investments, and the costs to the Account that are associated with contesting claims relating to foreign investments may exceed those costs associated with a similar claim on domestic investments.
RISKS OF INVESTING IN REAL ESTATE INVESTMENT TRUST (REIT) SECURITIES
The Account invests in registered and unregistered REIT securities for diversification, liquidity management and other purposes. The Account’s investment in REITs may also increase, as a percentage of net assets, during periods in which the Account is experiencing large net inflow activity, in particular due to net participant transfers into the Account. As of December 31, 2017,2019, REIT securities comprised approximately 5.0%3.0% of the Account’s net assets. Investments in REIT securities are part of the Account’s real estate-related investment strategy and are subject to many of the same general risks associated with direct real property ownership. In particular, equity REITs may be affected by changes in the value of the underlying properties owned by the entity, while mortgage REITs may be affected by the quality of any credit extended. In addition to these risks, because REIT investments are securities and generally publicly traded, they may be exposed to market risk and potentially significant price volatility due to changing conditions in the financial markets and, in particular, changes in overall interest rates, regardless of the value of the underlying real estate such REIT may own. Also, sales of REIT securities by the Account for liquidity management purposes may occur at times when values of such securities have declined and it is otherwise an inopportune time to sell the security. Volatility in REITs can cause significant fluctuations in the Account’s AUV on a daily basis, as they are correlated to equity markets which have experienced significant day to day fluctuations over the past few years.
REITs do not pay federal income taxes if they distribute most of their earnings to their shareholders and meet other tax requirements. Many of the requirements to qualify as a REIT, however, are highly technical and complex. Failure
to qualify as a REIT results in tax consequences, as well as disqualification from operating as a REIT for a period of time. Consequently, if the Account invests in securities of a REIT that later fails to qualify as a REIT, this may adversely affect the performance of our investment. Certain provisions of recently “Enacted Tax Legislation,” as described under such heading below and related guidance that may be issued by the Treasury and Internal Revenue Service may impact REIT qualification in an unforeseen manner. The Account will continue to monitor such developments.
RISKS OF MORTGAGE-BACKED SECURITIES
The Account from time to time has invested in mortgage-backed securities and may in the future invest in such securities. Mortgage-backed securities, such as CMBS and RMBS, are subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. The underlying mortgage loans may experience defaults with greater frequency than projected when such mortgages were underwritten, which would impact the values of these securities, and could hamper our ability to sell such securities. In particular, these types of investments may be subject to prepayment risk or extension risk (i.e.(i.e., the risk that borrowers will repay the loans earlier or later than anticipated). If the underlying mortgage assets experience faster than anticipated prepayments of principal, the Account could fail to recoup some or all of its initial investment in these securities, since the original price paid by the Account was based in part on assumptions regarding the receipt of interest payments. If the underlying mortgage assets are repaid later than anticipated, the Account could lose the opportunity to reinvest the anticipated cash flows at a time when interest rates might be rising. The rate of prepayments depends on a variety of geographic, social and other functions, including prevailing market interest rates and general economic factors. Further, it is possible that issuers of U.S. Government Securities will not have the funds to meet their payment obligations in the future, and the U.S. governmentGovernment may change its support of, and policies regarding, Fannie Mae and Freddie Mac, Fannie Mae and thus,Freddie Mac have been operating under conservatorship, with the Account may be unableFederal Housing Finance Administration (“FHFA”) acting as their conservator, since September 2008. The entities are dependent upon the continued support of the U.S. Department of the Treasury and FHFA in order to acquire agency mortgage-backed securities incontinue their business operations. These factors, among others, could affect the future status and evenrole of Fannie Mae and Freddie Mac and the value of their securities and the securities which they guarantee. Even if the Account so acquired them,such securities, such changes may result inhave a negative effect on the pricing of such securities. Other policy changes impacting Fannie Mae and Freddie Mac and/or U.S. governmentGovernment programs related to mortgages that may be implemented in the future could create market uncertainty and affect the actual or perceived credit quality of issued securities, adversely affecting mortgage-backed securities through an increased risk of loss.
Importantly, the fair market value of these securities is also highly sensitive to changes in interest rates, liquidity of the secondary market and economic conditions impacting financial institutions and the credit markets generally. Note that the potential for appreciation, which could otherwise be expected to result from a decline in interest rates, may be limited by any increased prepayments. Further, volatility and disruption in the mortgage market and credit markets generally (such as was the case in 2008 and 2009) may cause there to be a very limited or even no secondary market for these securities and they therefore may be harder to sell than other securities.
RISKS OF U.S. GOVERNMENT AGENCY SECURITIES AND CORPORATE OBLIGATIONS
The Account invests in securities issued by U.S. government agencies and U.S. government-sponsored entities. Some of these issuers may not have their securities backed by the full faith and credit of the U.S. government, which could adversely affect the pricing and value of such securities. Also, the Account may invest in corporate obligations (such as commercial paper) and while the Account seeks out such holdings in short-term, higher-quality liquid instruments, the ability of the Account to sell these securities may be uncertain, particularly when there are general dislocations in the finance or credit markets. Any such volatility could have a negative impact on the value of these securities. Further, transaction activity may fluctuate significantly from time to time, which could impair the Account’s ability to dispose of a security at a favorable time, regardless of the credit quality of the underlying issuer. Also, inherent with investing in any corporate obligation is the risk that the credit quality of the issuer will deteriorate, which could cause the obligations to be downgraded and hamper the value or the liquidity of these securities. Finally, any further downgrades or threatened downgrades of the credit rating for U.S. government obligations generally could impact the pricing and liquidity of agency securities or corporate obligations in a manner which could impact the value of the Account’s units.
RISKS OF LIQUID INVESTMENTS
The Account’s investments in liquid investments (whether real estate-related, such as REITs, CMBS or some loans receivable, or non-real estate-related, such as cash equivalents and government securities, and whether debt or equity), are subject to the following general risks:
Financial / Credit Risk. The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value.
Market Volatility Risk. The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets even regardless of the credit quality or financial condition of the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility in recent years. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.
Interest Rate Volatility. The risk that interest rate volatility may affect the Account’s current income from an investment. As interest rates rise, the value of certain debt securities (such as those bearing lower fixed rates) held by the Account is likely to decrease.
Deposit / Money Market Risk. The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. In addition, there is some risk that investments held in money market accounts or funds can suffer losses.
Further, to the extent that a significant portion of the Account’s net assets, at any particular time, consist of cash, cash equivalents and non-real estate-related liquid securities, the Account’s returns may suffer as compared to the return that could have been generated by more profitable real estate-related investments. Such a potential negative impact on returns may be exacerbated in times of low prevailing interest rates payable on many classes of liquid securities, such as is the case as of the date hereof and which may persist in the future.
RISKS OF FOREIGN INVESTMENTS
In addition to other investment risks noted above, foreign investments present the following special risks:
The value of foreign investments or rental income can increase or decrease due to changes or fluctuations in currency exchange rates, imposition of currency exchange control or market control regulations, possible expropriation or confiscatory taxation, political, social, diplomatic and economic developments and foreign regulations. The Account translates into U.S. dollars purchases and sales of securities, income receipts and expense payments made in foreign currencies at the exchange rates prevailing on the respective dates of the transactions. The effect of any changes in currency exchange rates on foreign mezzanine (including U.K.) debt or other foreign debt investments and mortgage loans payable is included in the Account’s net realized and unrealized gains and losses. As such, fluctuations in currency exchange rates, even if hedged, may impair or reduce the Account's returns and result in poorer overall performance of the Account than if it had not acquired such foreign investments or entered into any foreign currency hedging transactions.
The Account may, but is not required to, hedge its exposure to changes in currency rates, which could involve extra costs. Further, any hedging activities might not be successful. Such hedges may also be subject to valuation changes. In addition, a lender to a foreign property owned by the Account could require the Account to compensate it for its loss associated with such lender’s hedging activities.
Non-U.S. jurisdictions may impose withholding taxes on the Account as a result of its investment activity in that jurisdiction. TIAA may be eligible for a foreign tax credit in respect of such tax paid by the Account and such credit (if available to TIAA) would be reimbursed to the Account. However, there may be circumstances where TIAA is unable to receive some or all of the benefit of a foreign tax credit and the Account would thus not receive reimbursement, which could harm the value of the Account’s units.
Foreign real estate markets may have different liquidity and volatility attributes than U.S. markets.
The regulatory environment in non-U.S. jurisdictions may disfavor owners and operators of real estate investment properties, resulting in less predictable and/or economically harmful outcomes if the Account were to face a significant dispute with a tenant or with a regulator itself.
The Account may be subject to increased risk of regulatory scrutiny pursuant to U.S. federal statutes, such as the Foreign Corrupt Practices Act, which, among other things, requires robust compliance and oversight programs to help prevent violations. The costs associated with maintaining such programs, in addition to costs associated with a potential regulatory inquiry, could impair the Account’s returns and divert management’s attention from other Account activities.
It may be more difficult to obtain and collect a judgment on foreign investments than on domestic investments, and the costs associated with contesting claims relating to foreign investments may exceed those costs associated with a similar claim on domestic investments.
We may invest from time to time in securities issued by (i) entities domiciled in foreign countries, (ii) domestic affiliates of such entities and/or (3) foreign domiciled affiliates of domestic entities. Such investments could be subject to the risks associated with investments subject to foreign regulation, including political unrest or the seizure, expropriation, repatriation or nationalization of the issuer’s assets. These events could depress the value of such securities and/or make such securities harder to sell on favorable terms, if at all.
RISKS OF INVESTING IN MORTGAGE LOANS AND RELATED INVESTMENTS
The Account’s investment strategy includes, to a limited extent, investments in mortgage loans (i.e., the Account serving as lender).
General Risks of Mortgage Loans. The Account will be subject to the risks inherent in making mortgage loans, including:
The borrower may default on the loan, requiring that the Account foreclose on the underlying property to protect the value of its mortgage loan. Since its mortgage loans are usually non-recourse, the Account must rely solely on the value of a property for its security. In addition, there is a risk of delay in exercising any contractual remedies due to actions of the borrower, including, without limitation, bankruptcy or insolvency of the borrower.
The larger the mortgage loan compared to the value of the property securing it, the greater the loan’s risk. Upon default, the Account may not be able to sell the property for its estimated or appraised value. Also, certain liens on the property, such as mechanic’s or tax liens, may have priority over the Account’s security interest.
A deterioration in the financial condition of tenants, which could be caused by general or local economic conditions or other factors beyond the control of the Account, or the bankruptcy or insolvency of a major tenant, may adversely
affect the income of a property, which could increase the likelihood that the borrower will default under its obligations.
The borrower may be unable to make a lump sum principal payment due under a mortgage loan at the end of the loan term, unless it can refinance the mortgage loan with another lender.
If interest rates are volatile during the loan period, the Account’s variable-ratevariable rate mortgage loans could have volatile yields. Further, to the extent the Account makes mortgage loans with fixed interest rates, it may receive lower yields than that which is then available in the market if interest rates rise generally.
Interest Rate Risk. The risk that the value or yield of fixed-income investments may decline if interest rates change. In general, when prevailing interest rates decline, the market values of outstanding fixed-income investments (particularly those paying a fixed rate of interest) tend to increase while yields on similar newly issued fixed-income investments tend to decrease, which could adversely affect the Account’s income. Conversely, when prevailing interest rates increase, the market values of outstanding fixed-income investments (particularly those paying a fixed rate of interest) tend to decline while yields on similar newly issued fixed-incomefixed income investments tend to increase. If a fixed-income investment pays a floating or variable rate of interest, changes in prevailing interest rates may increase or decrease the investment’s yield. Fixed-income investments with longer durations tend to be more sensitive to interest rate changes than shorter-term investments. Interest rate risk is generally heightened during periods when prevailing interest rates are low or negative. During periods of very low or negative interest rates, a fixed-income investment may not be able to maintain positive returns. In general, changing interest rates could have unpredictable effects on the markets and may expose fixed-income and related markets to heightened volatility. Additional interest rate-related risk include the following:
London Interbank Offered Rate ("LIBOR") Risks. LIBOR is an average interest rate, determined by the ICE Benchmark Administration, that banks charge one another for the use of short-term money. In addition, the terms of many investments, financings or other transactions in the U.S. and globally have been historically tied to LIBOR, which functions as a reference rate or benchmark for various commercial and financial contracts. The United Kingdom’s (“UK”) Financial Conduct Authority has announced plans to discontinue supporting LIBOR and transition away from LIBOR by the end of 2021. There remains uncertainty regarding the future use of LIBOR and the nature of any replacement rate, and any potential effects of the transition away from LIBOR on the Account or on certain instruments in which the Account invests are not known. Various financial industry groups have begun planning for that transition and certain regulators have taken actions to establish alternative reference rates (e.g., the Secured Overnight Financing Rate, which measures the cost of overnight borrowings through repurchase agreement transactions collateralized with U.S. Treasury securities and is intended to replace U.S. dollar LIBOR with certain adjustments). The transition process may involve, among other things, an increase in volatility or illiquidity of markets for instruments that currently rely on LIBOR, a reduction in the value of certain instruments held by the Account or a reduction in the effectiveness of related Account transactions such as hedging transactions. Any such effects, as well as other unforeseen effects, could result in losses to the Account; and
Negative Interest Rate Risk. Certain European countries and Japan have pursued negative interest rate policies, the consequences of which are uncertain. A negative interest rate policy is an unconventional central bank monetary policy tool where nominal target interest rates are set with a negative value (i.e., below zero percent) intended to help create self-sustaining growth in the local economy. If a bank charges negative interest, instead of receiving interest on deposits, a depositor must pay the bank fees to keep money with the bank. As a result, certain debt instruments have recently begun to trade at negative yields. Negative interest rates may become more prevalent among foreign (non-U.S.) issuers, and potentially within the U.S. These market conditions may increase the Account’s exposure to the risks associated with rising interest rates. A wide variety of factors can cause interest rates or yields of U.S. Treasury securities (or yields of other types of bonds) to rise. This is especially true under current conditions because, as of the date of this registration statement, interest rates in the United States and in certain foreign markets are at low levels. Thus, the Account currently faces a heightened level of risk associated with rising interest rates. This could be driven by a variety of factors, including, but not limited, to central bank monetary policies, changing inflation or real growth rates, general economic conditions, increasing bond issuances or reduced market demand for low yielding investments. To the extent the Federal Reserve Board continues to raise interest rates, there is a risk that rates across the financial system may rise. To the extent the Account has a bank deposit or holds a debt or mortgage instrument with a negative interest rate to maturity, the Account would generate a negative return on that investment. A number of factors may contribute to debt instruments trading at
a negative yield. While negative yields can be expected to reduce demand for fixed-income investments trading at a negative interest rate, investors may be willing to continue to purchase such investments for a number of reasons including, but not limited to, price insensitivity, arbitrage opportunities across fixed-income markets or rules-based investment strategies. If negative interest rates become more prevalent in the market, it is expected that investors will seek to reallocate assets to other income-producing assets such as investment-grade and high-yield debt instruments, or equity investments that pay a dividend. This increased demand for higher yielding assets may cause the price of such instruments to rise while triggering a corresponding decrease in yield and the value of debt instruments over time. In addition, a move to higher yielding investments may cause investors, including the Account, to seek fixed-income investments with longer duration and/or potentially reduced credit quality in order to seek the desired level of yield. These considerations may limit the Account’s ability to locate fixed-income instruments containing the desired risk/return profile. Changing interest rates, including, but not limited to, rates that fall below zero, could have unpredictable effects on the markets and may expose fixed-income and related markets to heightened volatility and potential illiquidity, increasing the potential for losses for the Account.
Extension Risk. The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing the Account from reinvesting principal proceeds at higher interest rates, resulting in less income than potentially available. These risks are normally present in mortgage- backedmortgage-backed securities and other asset-backed securities.ABS. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can lengthen depending on homeowner prepayment activity. A decline in the prepayment rate and the resulting increase in duration of fixed-income securities held by the Account can result in losses to the Account.
Prepayment Risks.Risk. The Account’s mortgage loan investments will usually be subject to the risk that the borrower repays a loan early. Also, the Account may be unable to reinvest the proceeds at as high an interest rate as the original mortgage loan rate, resulting in a decline in income.
Interest Limitations. The interest rate we charge on mortgage loans may inadvertently violate state usury laws that limit rates, if, for example, state law changes during the loan term. If this happens, the Account could incur penalties or may be unable to enforce payment of the loan.
Risks of Investing in Domestic and Foreign MezzanineDebt or Loans.The Account may invest from time to time in domestic and foreign (including U.K.) mezzanine and other debts or loans to entities which own real estate assets. Generally these loans will be secured by a pledge of the equity securities of the entity, but not by a first lien security interest in the property itself. As such, the Account’s recovery in the event of an adverse circumstance at the property (such as a default under a mortgage loan on the property) will be subordinated to the recovery available to the first lien mortgage lender(s) to the property. The Account’s remedy may solely consist of foreclosing on the equity interest in the entity owning the property, and that equity interest will be junior in right of a recovery to a loan secured by the property owned by the entity. Also, as a subordinated lender, the Account may have limited rights to exercise control over the process by which the mortgage loan is restructured or the property is liquidated following a default. Any of these circumstances may result in the Account being unable to recover some or all of its original investment.
Risks of Currency Hedging Strategies for Domestic and Foreign Mezzanine Loans.Loans and Securities. In managing any domestic or foreign (including U.K.)
mezzanine debt or other domestic or foreign debt,loans or securities, the Account may use or enter into forward currency contracts and foreign currency swaps, and may buy or sell put and call options and futures contracts on foreign currencies as well as other types of derivatives transactions (including interest rate swaps and options, futures contracts or swaps) in order to hedge against the risks of exchange rate uncertainties, interest rate uncertainties and foreign currency or market fluctuations impacting the Account’s domestic or foreign portfolioloan and securities investments. Changes in exchange rates and exchange control regulations or interest rates may increase or reduce the value of domestic or foreign (including U.K.) mezzanine debt or other debt.types of loans and securities. Currency hedging, interest rate hedging and similar transactions involve special risks and may limit potential gains due to increases in a currency’s value.value or changes in interest rates. Unanticipated changes in interest rates, domestic or foreign securities prices or currency exchange rates may result in poorer overall performance of the Account than if it had not entered into any such currency-related transactions.or interest rate-related hedging transactions for such loans and securities. In addition, the Account could incur additional costs of paying hedge unwind fees, if it has to terminate cross-currency or interest rate swaps, futures contracts or options prematurely due to early repayment of domestic or foreign mezzanine or other foreign debt.debt or securities. The Account does not intend to speculate in foreign currency exchange transactions, or forward currency contracts.contracts, interest rate options,
futures contracts or swaps or other types of hedging transactions relating to its portfolio of domestic and foreign loans and securities.
Risks of Participations. To the extent the Account invested in a participating mortgage, the following additional risks would apply:
The participation feature, in tying the Account’s returns to the performance of the underlying asset, might generate insufficient returns to make up for the higher interest rate the loan would have obtained without the participation feature.
In very limited circumstances, a court may characterize the Account’s participation interest as a partnership or joint venture with the borrower and the Account could lose the priority of its security interest or become liable for the borrower’s debts.
RISKS OF U.S. GOVERNMENT AND GOVERNMENT AGENCY SECURITIES LENDINGAND CORPORATE OBLIGATIONS
In lending itsThe Account invests in securities issued by U.S. Government agencies and U.S. Government-sponsored entities. Some of these issuers may not have their securities backed by the full faith and credit of the U.S. Government, which could
adversely affect the pricing and value of such securities. U.S. Government securities that are supported by the full faith and credit of the United States present limited credit risk compared to other types of debt securities but are not free of risk. Other U.S. Government securities are supported by the right of the agency or instrumentality to borrow an amount limited to a specific line of credit from the U.S. Treasury or by the discretionary authority of the U.S. Government to purchase financial obligations of the agency or instrumentality, which are thus subject to a greater amount of credit risk than those supported by the full faith and credit of the United States. Still other U.S. Government securities are only supported by the credit of the issuing agency or instrumentality which are subject to greater credit risk as compared to other U.S. Government securities. The maximum potential liability of the issuers of some U.S. Government securities may exceed then current resources, including any legal right to support from the U.S. Treasury. Because the U.S. Government is not obligated by law to support an agency or instrumentality that it sponsors, or such agency’s or instrumentality’s securities, the Account bearsonly invests in U.S. Government securities when TIAA determines that the marketcredit risk associated with respect to the investment of collateral and the risk the borrower or Agent may default on its contractual obligations toobligation is suitable for the Account. Each Agent bearsIt is possible that issuers of U.S. Government securities will not have the funds to meet their payment obligations in the future. Uncertainty regarding the status of negotiations in the U.S. Congress to increase the statutory debt ceiling may increase the risk that the borrowerU.S. Government may default on payments on certain U.S. Government securities, including those held by the Account.
In addition, the Account may invest in corporate obligations (such as commercial paper and other types of corporate debt obligations) and while the Account seeks out such holdings in short-term or intermediate-term, higher-quality liquid instruments, the ability of the Account to sell these securities may be uncertain, particularly when there are general dislocations in the finance or credit markets. Any such volatility could have a negative impact on the value of these securities. Further, transaction activity may fluctuate significantly from time to time, which could impair the Account’s ability to dispose of a security at a favorable time, regardless of the credit quality of the underlying issuer. Also, inherent with investing in any corporate obligation is the risk that the credit quality of the issuer will deteriorate, which could cause the obligations to be downgraded and hamper the value or the liquidity of these securities. Finally, any further downgrades or threatened downgrades of the credit rating for U.S. Government obligations generally could impact the pricing and liquidity of agency securities or corporate obligations in a manner which could impact the value of the Account’s units. On one occasion, the long-term credit rating of the United States has been downgraded by at least one leading rating agency as a result of disagreements within the U.S. Government over raising the debt ceiling to repay outstanding obligations. Similar situations in the future could result in higher interest rates, lower prices of U.S. Treasury securities and increase the costs of various kinds of debt, which may adversely affect the Account.
RISKS OF LIQUID, FIXED-INCOME INVESTMENTS
The Account’s investments in liquid, fixed-income investments, whether real estate-related securities (such as REITs, CMBS or some loans receivable) or non real estate-related securities (such as ABS, MBS, RMBS, CLOs, CMOs, CDOs, cash equivalents and municipal bond securities and other domestic and foreign government and corporate securities), and whether debt or equity, are subject to the following general risks:
Issuer Risk (often called Financial Risk). The risk that an issuer’s earnings or revenue prospects and overall financial position will deteriorate (or be perceived to deteriorate by market participants, rating agencies, pricing services or otherwise), causing a decline in the value of the issuer’s financial instruments over short or extended periods of time.
Credit Risk. The risk that the issuer of fixed-income investments may not be able or willing to meet interest or principal payments when the payments become due.
Credit Spread Risk. The risk that credit spreads (i.e., the difference in yield between securities that is due to differences in each security’s respective credit quality) may increase when market participants believe that bonds generally have a greater risk of default. Increasing credit spreads may reduce the market values of the Account’s securities. Credit spreads often increase more for lower-rated and unrated securities than for investment-grade securities. In addition, when credit spreads increase, reductions in market value will generally be greater for longer-maturity securities.
Market Volatility, Liquidity and Valuation Risk. The risk that volatile or dramatic reductions in trading activity in securities make it difficult for the Account to properly value its obligationinvestments and that the Account may not be able to returnpurchase or sell a securities investment at an attractive price, if at all. This risk is particularly acute to the loanedextent the Account holds equity securities, which have experienced significant short-term price volatility in recent years.
Interest Rate Risk. The risk that increases or volatility in interest rates can cause the prices of certain fixed-income investments to decline. This risk is heightened to the extent the Account invests in fixed-income investments and during periods when prevailing interest rates are low. As of the date of this report, interest rates in the United States and in certain foreign markets are near historic lows, which may increase the Account’s exposure to risks associated with rising interest rates. In general, changing interest rates could have unpredictable effects on the markets and may expose fixed-income and related markets to heightened volatility.
Downgrade Risk. The risk that securities are subsequently downgraded should TIAA and/or rating agencies believe the issuer’s business outlook or creditworthiness has deteriorated. If this occurs, the values of these investments may decline, or it may affect the issuer’s ability to raise additional capital for operational or financial purposes and increase the chance of default, as a downgrade may be seen in the financial markets as a signal of an issuer’s deteriorating financial position.
Income Volatility Risk. Income volatility refers to the degree and speed with which changes in prevailing market interest rates diminish the level of current income from the Account’s portfolio of fixed-income securities. The risk of income volatility is that the level of current income from a portfolio of fixed-income securities may decline in certain interest rate environments.
Call Risk. The risk that an issuer will redeem a fixed-income investment prior to maturity. This often happens when prevailing interest rates are lower than the rate specified for the fixed-income investment. If a fixed-income investment is called early, the Account may not be able to benefit fully from the increase in value that other fixed-income investments experience when interest rates decline. Additionally, the Account would likely have to reinvest the payoff proceeds at current yields, which are likely to be lower than the fixed-income investment in which the Account originally invested, resulting in a decline in income.
Prepayment Risk. The risk that, during periods of falling interest rates, borrowers may pay off their loans sooner than expected, forcing the Account to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in income. These risks are normally present in mortgage-backed securities and other asset-backed securities. For example, borrowers have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can shorten depending on borrower prepayment activity. A rise in the prepayment rate and the resulting decline in duration of fixed-income securities held by the Account can result in losses to the Account.
Extension Risk. The risk that, during periods of rising interest rates, borrowers may pay off their mortgage loans later than expected, preventing a Fund from reinvesting principal proceeds at higher interest rates, resulting in less income than potentially available. These risks are normally present in mortgage-backed securities and other asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can lengthen depending on homeowner prepayment activity. A decline in the prepayment
rate and the resulting increase in duration of fixed-income securities held by the Account can result in losses to the Account.
U.S. Government Securities Risk. Securities issued by the U.S. Government or one of its agencies or instrumentalities may receive varying levels of support from the U.S. Government, which could affect the Account’s ability to recover should they default. To the extent the Account invests significantly in securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, any market movements, regulatory changes or changes in political or economic conditions that affect the securities of the U.S. Government or its agencies or instrumentalities in which the Account invests may have a significant impact on the Account’s performance.
State and Municipal Investment Risk. Events affecting states and municipalities may adversely affect the Account’s investments and its performance. These events may include severe financial difficulties and continued budget deficits, economic or political policy changes, tax base erosion, state constitutional limits on tax increases, and changes in the credit ratings assigned to state and municipal issuers of debt instruments.
Foreign Securities Investment Risk. Foreign investments, which may include securities of foreign issuers, securities or contracts traded or acquired in non-U.S. markets or on non-U.S. exchanges, or securities or contracts payable or denominated in non-U.S. currencies, can involve special risks that arise from one or more of the following events or circumstances: (1) changes in currency exchange rates; (2) possible imposition of market controls or currency exchange controls; (3) possible imposition of withholding taxes on dividends and interest; (4) possible seizure, expropriation or nationalization of assets; (5) more limited financial information or difficulties interpreting it because of foreign regulations and accounting standards; (6) lower liquidity and higher volatility in some foreign markets; (7) the impact of political, social or diplomatic events; (8) economic sanctions or other measures by the United States or other governments; (9) the difficulty of evaluating some foreign economic trends; and (10) the possibility that a foreign government could restrict an issuer from paying principal and interest to investors outside the country. Brokerage commissions and custodial and transaction costs are often higher for foreign investments, and it may be difficult for the Account to use foreign laws and courts to enforce financial or legal obligations.
Emerging Markets Risk. The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their financial markets may be very small, share prices of financial instruments in emerging market countries may be volatile and difficult to determine. Financial instruments of issuers in these countries may have lower overall liquidity than those of issuers in more developed countries. In addition, foreign investors such as the Agent is contractually obligatedAccount are subject to indemnifya variety of special restrictions in many emerging market countries. The risks outlined above are often more pronounced in “frontier markets” in which the Account may invest. Frontier markets are those emerging markets that are considered to be among the smallest, least mature and least liquid. These factors may make investing in frontier market countries significantly riskier than investing in other countries.
Fixed-Income Foreign Investment Risk. Foreign fixed-income securities investments, including securities or contracts payable or denominated in non-U.S. currencies, can involve special risks that arise from one or more of the following events or circumstances: (1) changes in currency exchange rates; (2) possible imposition of market controls or currency exchange controls; (3) possible imposition of withholding taxes on dividends and interest; (4) possible seizure, expropriation or nationalization of assets; (5) more limited financial information about the foreign debt issuer or difficulties interpreting it because of foreign regulations and accounting standards; (6) lower liquidity and higher volatility in some foreign markets; (7) the impact of political, social or diplomatic events; (8) economic sanctions or other measures by the United States or other governments; (9) the difficulty of evaluating some foreign economic trends; and (10) the possibility that a foreign government could restrict an issuer from paying principal and interest on its debt obligations to investors outside the country. It may also be difficult to use foreign laws and courts to force a foreign issuer to make principal and interest payments on its debt obligations. In addition, the cost of servicing external debt will also generally be adversely affected by rising international interest rates because many external debt obligations bear interest at rates which are adjusted based upon international interest rates. The risks described above often increase in countries with emerging markets. For example, the ability of a foreign sovereign issuer, especially in an emerging market country, to make timely and ultimate payments on its debt obligations may be strongly influenced by the issuer’s balance of payments, including export performance, its access to international credit and investments, fluctuations of interest rates and the extent of its foreign reserves. If a deterioration occurs in the foreign country’s
balance of payments, it could impose temporary restrictions on foreign capital remittances. In addition, there is a risk of restructuring certain foreign debt obligations that could reduce and reschedule interest and principal payments.
Sovereign Debt Risk. The risk that the issuer of non-U.S. sovereign debt or the governmental authorities that control the repayment of such debt may be unable or unwilling to repay principal or interest when due. This may result from political or social factors, the general economic environment of a country, levels of foreign debt or foreign currency exchange rates, among other possible reasons. To the extent the issuer or controlling governmental authority is unable or unwilling to repay principal or interest when due, the Account may have limited recourse to compel payment in the event of default and could result in losses to the Account.
Supranational Debt Risk. The risk that the issuer of multinational or supranational foreign debt (e.g., the European Union or the International Monetary Fund (IMF)) that controls the repayment of such debt may be unable or unwilling to repay principal or interest when due. This may result from, among other possible reasons, political or social factors (e.g., the sudden or gradual disintegration of the multinational or supranational organization), the general economic environment of the countries or foreign markets that comprise the organization, levels of foreign debt or foreign currency exchange rates. To the extent the issuer or controlling multinational or supranational authority is unable or unwilling to repay principal or interest when due, the Account may have limited recourse to compel payment in the event of default and could result in losses to the Account.
Active Management Risk. The risk that the Account’s strategy, investment selection or trading execution for securities, including REIT stocks, may cause the Account to underperform relative to a stated benchmark index or funds or accounts with similar investment objectives.
Currency Risk. The risk of a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that foreign currency. The overall impact on the Account’s holdings can be significant and long lasting depending on the currencies represented in the portfolio, how each currency appreciates or depreciates in relation to the U.S. dollar, and whether currency positions are hedged. Foreign currency exchange rates may fluctuate significantly over short periods of time, particularly with respect to emerging markets currencies. Currency exchange rates can also be affected unpredictably by intervention by U.S. or foreign governments or central banks, or by currency controls or political developments.
Derivatives Risk. The risks associated with investing in derivatives may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. Derivatives such as swaps are subject to risks such as liquidity risk, interest rate risk, market risk, and credit risk. These derivatives involve the risk of mispricing or improper valuation and the risk that the prices of certain options, futures, swaps (including credit default swaps), forwards and other types of derivative instruments may not correlate perfectly with the prices or performance of the underlying security, currency, rate, index or other asset. Certain derivatives present counterparty risk, or the risk of default by the other party to the contract, and some derivatives are, or may suddenly become, illiquid. Some of these risks exist for futures, options and swaps which may trade on established markets. Unanticipated changes in interest rates, securities prices or currency exchange rates may result in poorer overall performance of the Account than if it had not entered into derivatives transactions. The potential for loss as a result of investing in derivatives, and the speed at which such losses can be realized, may be greater than investing directly in the underlying security or other instrument. Derivative investments can create leverage by magnifying investment losses or gains, and the Account could lose more than the amount invested.
Currency Management Strategies Risk. Currency management strategies, including forward currency contracts, may substantially change the Account’s exposure to currency exchange rates and could result in losses to the Account if currencies do not perform as TIAA expects. In addition, currency management strategies, to the extent that such strategies reduce the Account’s exposure to currency risks, may also reduce the Account’s ability to benefit from favorable changes in currency exchange rates. There is no assurance that TIAA’s use of currency management strategies will benefit the Account or that they will be, or can be, used at appropriate times. Furthermore, there may not be a perfect correlation between the amount of exposure to a particular currency and the amount of securities in the portfolio denominated in that currency. Currency markets are generally less regulated than securities markets. Derivatives transactions, especially forward currency contracts and currency-related futures contracts and swap agreements, may involve significant amounts of currency management strategies risk.
Counterparty and Third Party Risk. Transactions involving a counterparty to a derivative or other instrument, or a third party responsible for servicing the instrument, are subject to the credit risk of the counterparty or third party, and to the counterparties or third party’s ability to perform in accordance with the terms of the transaction. If a counterparty defaults, the Account may have contractual remedies but the Account may be unable to enforce them due to the application of bankruptcy, insolvency and other laws affecting the rights of creditors. Counterparty risk is still present even if a counterparties obligations are secured by collateral because, for example, the Account’s interest in collateral may not be perfected or additional collateral may not be promptly posted as required. The Account is also subject to counterparty risk to the extent it executes a significant portion of its securities or derivatives transactions through a single broker, dealer, or futures commission merchant.
Regulation S and Rule 144A Securities Risk. The risk that SEC Regulation S and Rule 144A securities may be less liquid, and have less disclosure and investor protections, than publicly traded securities. Such securities may involve a high degree of business and financial risk and may result in losses to the Account;
Illiquid Investments Risk.The risk that illiquid investments may be difficult to sell for the value at which they are carried, if at all, or at any price within the desired time frame. Illiquid investments are those that are not reasonably expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The Account’s investments in illiquid investments may reduce the returns of the Account because it may be unable to sell the illiquid investment at an advantageous time or price, which could prevent the Account from taking advantage of other investment opportunities. Illiquid investments may trade less frequently, in lower quantities and/or at a discount as compared to more liquid investments, which may cause the Account to receive distressed prices and incur higher transaction costs when selling such investments. Securities that are liquid at the time of purchase may subsequently become illiquid due to events such as adverse developments for an issuer, industry-specific developments, market events, rising interest rates, changing economic conditions or investor perceptions and geopolitical risk.
Deposit/Money Market Risk. The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. In addition, there is some risk that investments held in money market accounts or funds can suffer losses
Further, to the extent that a default by a borrower, some or allsignificant portion of the loanedAccount’s net assets at any particular time consist of cash, cash equivalents and non-real estate-related liquid securities, the Account’s returns may suffer as compared to the return that could have not been returned.
generated by more profitable real estate-related investments. Such a potential negative impact on returns may be exacerbated in times of low prevailing interest rates payable on many classes of liquid securities, such as is the case as of the date hereof and which may persist in the future.
CONFLICTS OF INTEREST WITHIN TIAA
General. Officers of TIAA that provide advice with respect to the Account may also provide investment advice with respect to investments owned by TIAA, and investments managed by affiliates of TIAA. In addition, TIAA and its affiliates offer (and may in the future offer) other accounts and investment products that are not managed under an “at cost” expense structure. Therefore, TIAA and its officers may at times face various conflicts of interest. Many of the officers of TIAA involved in performing services to the Account will have competing demands on their time. The officers will devote such time to the affairs of the Account as TIAA’s management determines, in its sole discretion exercising good faith, is necessary to properly service the Account. TIAA believes that it has sufficient personnel to discharge its responsibility to the Account, the TIAA General Account, and other accounts to avoid conflicts of interest. TIAA or its affiliates may form and/or manage other real estate investment vehicles in the future and we will take steps to assure that those vehicles are integrated into appropriate conflict of interest policies. TIAA does not accept acquisition or placement fees for the services it provides to the Account. (Each of the Account, the TIAA General Account, and such other accounts, funds or real estate investment vehicles that are established or may be established by TIAA or its affiliates in the future, are herein referred to as an “account.”)
Allocation Procedures. TIAA and its affiliates (including THNuveen Alternatives Advisors, LLC (“NAA”) and Teachers Advisors, LLC (“TAL”), its wholly owned subsidiaries and registered investment advisers, and Nuveen Real Estate, (“THRE”) and other subsidiaries of Nuveen, LLC (“Nuveen”NRE”)) allocate new investments (including real property investments and commercial mortgages, but generally not, its wholly owned subsidiary) have interests in other real estate limited partnership investments) amongprograms and accounts and also engage in other business activities. As such, they will have conflicts of interest in allocating their time between the accounts (includingAccount’s business and these other activities. Also, the Account)Account may be buying properties at the same time as TIAA affiliates that may have similar investment objectives to those of the Account. There is also a risk that TIAA will choose a property that provides lower returns to the Account than a property purchased by TIAA and its affiliates. Further, the Account will likely acquire properties in geographic areas where TIAA and its affiliates own or manage properties. In addition, the Account may desire to sell a property at the same time another TIAA affiliate is selling a property in an overlapping market. Conflicts could also arise because some properties owned or managed by TIAA and its affiliates may compete with the Account’s properties for tenants. Among other things, if one of the TIAA entities attracts a tenant that the Account is competing for, the Account could suffer a loss of revenue due to delays in locating another suitable tenant. TIAA has adopted allocation policies and procedures applicable to the purchasing conflicts scenario, but the resolution of such conflicts may be economically disadvantageous to the Account. As a result of TIAA’s and its affiliates’ obligations to TIAA itself and to other current and potential investment vehicles sponsored by TIAA affiliates with similar objectives to those of the Account, there is no assurance that the Account will be able to take advantage of every attractive investment opportunity that otherwise is in accordance with a written allocation procedure as adopted by TIAA and such affiliates and modified from time to time.
Under the allocation procedure, an internal real estate acquisitions team adds transactions as they are identified into an internal deal pipeline. Proposed transactions in the pipeline are presented at regular internal real estate review meetings, at which the portfolio managers for each of the accounts will evaluate acquisition opportunities which conform to theAccount’s investment strategy of the applicable account. If only one portfolio manager is interested in making a bid to pursue the transaction, the transaction is allocated to that account and there is no change in the rotation order. However, if more than one account expresses an interest in a transaction in a particular sector, a strict rotation system will be used so that the accounts are treated equitably and transactions are impartially allocated.
Under the rotation system, an allocations coordinator will allocate a transaction to the interested account in the top most position of the rotation for a specific real estate sector, but the Account will then drop to the bottom of the rotation for new or additional investment opportunities in that sector. This rotation system is employed on a sector-by-sector basis for each of the office, retail, industrial, multi-family, student housing and other sectors; and each sector has its own rotation. As a result, an account (including the Account) could, at any one time, be at the top or the bottom of the rotation for new investment opportunities in any one or all five of the sectors in which the Account could invest. If an account chooses not to pursue a transaction that has been allocated to it, the acquisitions team may bring the transaction back into the main rotation. New funds or accounts with the ability to invest in transactions without a co-investor (i.e., “stand alone” accounts), will be added to the main rotation. Where such new funds or accounts are a co-investor with TIAA as a joint venture partner, and the portfolio manager for TIAA or THRE does not have discretion to deploy investors’ capital for acquisitions within such mandate (i.e., a non-discretionary mandate), such mandates will be part of a sub-rotation within the account that was allocated the transaction and will not have a separate place in the main rotation. New funds or accounts where TIAA is a joint venture partner and the portfolio manager for TIAA or THRE affiliate does have discretion to deploy investors’ capital for acquisitions within such mandate (i.e., a fully discretionary mandate), regardless of the ownership percentage, are added to the main rotation.
Also, there may be circumstances where multiple properties are presented to TIAA for sale as a single acquisition opportunity, and the proposed price is inclusive of all the properties. If more than one account has interest in all or a portion of such bundled acquisition opportunity, the acquisitions team will investigate with the seller whether the properties can be unbundled and offered to the accounts on an individual basis and the sector-based rotation system described above will apply to the allocation of such unbundled properties.
The allocation procedure contains substantive requirements for proceeding through the different stages of the bidding process prior to allocation to preserve the fairness, equitability and transparency of the transaction. The procedure also provides a process for handling exceptions to the allocation process when requested by a portfolio manager for the accounts.objectives.
The allocation procedure is overseen and monitored by senior officers of TIAA and its affiliates, including THRE and other subsidiaries of Nuveen, pursuant to Nuveen’s existing compliance policies and processes.
Liquidity Guarantee.In addition, as discussed elsewhere in this report,prospectus, the TIAA General Account provides a liquidity guarantee to the Account. While an independent fiduciary is responsible under PTE 96-76 (as defined below) for establishing a “trigger point” (a percentage of TIAA’s ownership of liquidity units beyond which TIAA’s ownership may be reduced at the fiduciary’s direction), there is no express cap on the amount TIAA may be obligated to fund under this guarantee. Further, the Account’s independent fiduciary oversees any redemption of TIAA liquidity units. TIAA’s ownership of liquidity units (including the potential for changes in its levels of ownership in the future) from time to time could result in the perception that TIAA is taking into account its own economic interests while serving as investment manager for the Account. In particular, the value of TIAA’s liquidity units fluctuates in the same manner as the value of accumulation units held by all participants.contract owners. Any perception of a conflict of interest could cause participantscontract owners to transfer accumulations out of the Account to another investment option, which could have an adverse impact on the Account’s ability to act most optimally upon its investment strategy.
RISKS OF SECURITIES LENDING
In lending its securities, the Account bears the market risk with respect to the investment of collateral and the risk the borrower or securities lending agent (the “Agent”) may default on its contractual obligations to the Account. Each Agent bears the risk that the borrower may default on its obligation to return the loaned securities as the Agent is contractually obligated to indemnify the Account if at the time of a default by a borrower some or all of the loaned securities have not been returned.
REQUIRED PROPERTY SALES UNDER THE PTE
If TIAA were to own too large a percentage of the Account’s accumulation units through funding the liquidity guarantee (as determined by the Account’s independent fiduciary), the independent fiduciary could, pursuant to its obligations under the prohibited transaction exemption issued to the Account in 1996 by the U.S. Department of Labor ("PTE 96-76"), require the Account to sell commercial real properties or other portfolio assets in the Account to reduce TIAA’s ownership interest. Any such required sales could occur at times and at prices that depress the sale proceeds to the Account and result in losses to the Account.
NO OPPORTUNITY FOR PRIOR REVIEW OF TRANSACTIONS
Investors do not have the opportunity to evaluate the economic or financial merit of the purchase, sale or financing of a property or other investment before the Account completes the transaction, so investors will need to rely solely on TIAA’s judgment and ability to select investments consistent with the Account’s investment objective and policies. Further, the Account may change its investment objective and pursue specific investments in accordance with any such amended investment objective without the consent of the Account’s investors.
RISKS OF REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940
The Account has not registered, and management intends to continue to operate the Account so that it will not have to register, as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Generally, a company is an “investment company” and required to register under the Investment Company Act if, among other things, it holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities, or it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of such company’s total assets (exclusive of government securities and cash items) on an unconsolidated basis.
If the Account were obligated to register as an investment company, the Account would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things, limitations on capital structure, restrictions on certain investments, compliance with reporting, record keeping,record-keeping, voting and proxy disclosure requirements and other rules and regulations that could significantly increase its operating expenses and reduce its operating flexibility. To maintain compliance with the exemptions from the Investment Company Act, the Account may be unable to sell assets it would otherwise want to sell and may be unable to purchase securities it would otherwise want to purchase, which might materially adversely impact the Account’s performance.
CYBERSECURITY RISKS
With the increased use of connected technologies such as the Internet to conduct business, the Account and its service providers (including, but not limited to, TIAA, Services, the independent fiduciary and the Account’s custodian and financial intermediaries) are susceptible to cybersecurity risks. In general, cybersecurity attacks can result from infection by computer viruses or other malicious software or from deliberate actions or unintentional events, including gaining unauthorized access through “hacking” or other means to digital systems, networks, or devices that are used to service the Account’s operations in order to misappropriate assets or sensitive information, corrupt data, or cause operational disruption. Cybersecurity attacks can also be carried out in a manner that does not require gaining unauthorized access, including by carrying out a “denial-of-service” attack on the Account or its service providers’ websites.providers. In addition, authorized persons could inadvertently or intentionally release and possibly destroy confidential or proprietary information stored on the Account’s systems or the systems of its service providers.
Cybersecurity failures by the Account or any of its service providers, or the issuers of any portfolio securities in which the Account invests (e.g., issuers of REIT stocks or debt securities), have the ability to result in disruptions to and impacts on business operations and may adversely affect the Account and the value of your accumulation units. Such disruptions or impacts may result in: financial losses; interference with the processing of contract transactions, including the processing of orders from TIAA’s website; interfere with the Account’s ability to calculate AUVs; barriers to trading and order processing; Account contract owners’participants’ inability to transact business with the Account; violations of applicable federal and state privacy or other laws,laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs,costs; or additional compliance costs. The Account may incur additional, incremental costs to prevent
and mitigate the risks of cybersecurity attacks or incidents in the future. The Account and its contract ownersparticipants could be negatively impacted by such cyber-attackscybersecurity attacks or incidents. Although the Account has established business continuity plans and risk-based processes and controls to address such cybersecurity risks, there are inherent limitations in such plans and systems in part due to the evolving nature of technology and cybersecurity attack tactics. As a result, it is possible that the Account or the Account’s service providers will not be able to adequately identify or prepare for all cybersecurity attacks. In addition, the Account cannot directly control the cybersecurity plans or systems implemented by its service providers.
ENACTED TAX LEGISLATION
On December 22, 2017, H.R. 1 was enacted into law as P.L. 115-77, popularly known as the “Tax Cuts and Jobs Act” (the “Act”), permanently cutting the corporate tax rate from 35% to 21%, temporarily reducing individual tax rates and providing a partial deduction for certain income earned by pass-through entities until 2026, while making fundamental changes to the taxation of foreign persons and income. To broaden the income tax base to pay for the rate cuts and pass-through income deduction, many corporate deductions have been eliminated or modified and many individual deductions suspended until 2026. With most provisions effective on January 1, 2018 the Joint Committee on Taxation (“JCT”) estimates that the Act will increase the federal deficit by approximately $1.5 trillion over 10 years. The JCT also estimates that the Act will result in some economic growth over the same period. While the Act is expected to have effects on the economy that will impact the performance of real estate and credit markets, those effects cannot be predicted.
Certain provisions of the Act should have more direct impacts on real estate and credit markets. A limitation on the aggregate deduction for state and local income taxes and property taxes to $10,000 and certain limitations on the deduction for qualified residence interest could impact the housing market in certain areas, affecting the performance of certain real estate investments. Limitations on deductibility of business interest and increased expensing provisions could impact the market for commercial real estate. Other provisions of the Act may also impact real estate or credit markets, and ultimately the Account, in certain circumstances and in ways that cannot be predicted. Future guidance to be issued by the Treasury Department and Internal Revenue Service may alter these effects.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
THE PROPERTIES—GENERAL
In the table below, participants will find general information about each of the Account’s investments as of December 31, 2017.2019. The Account’s investments include both properties that are wholly-owned by the Account and properties owned by the Account’s joint venture investments. Certain investments include a portfolio of properties.
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| Property | Location | Year Built | Year Purchased | Rentable Area (Sq. ft.)(1) | Percent Leased | Annual Avg. Base Rent Per Leased Sq. Ft.(2) | Fair Value(3) (in millions) |
| OFFICE PROPERTIES |
| 1001 Pennsylvania Ave | Washington, D.C. | 1987 | 2004 | 780,425 | 79.9% | $ | 51.84 |
| $ | 785.0 |
| (4) |
| Fourth & Madison | Seattle, WA | 2002 | 2004 | 845,533 | 86.7% | 25.18 |
| 530.0 |
| (4) |
| 501 Boylston Street | Boston, MA | 1940, 1961 | 2006 | 610,075 | 97.4% | 51.41 |
| 505.2 |
| (4) |
| 99 High Street | Boston, MA | 1971 | 2005 | 732,432 | 90.1% | 48.02 |
| 502.1 |
| |
| 780 Third Avenue | New York, NY | 1984 | 1999 | 489,985 | 82.1% | 59.90 |
| 427.0 |
| (4) |
| 701 Brickell Avenue | Miami, FL | 1986 | 2002 | 677,667 | 94.5% | 24.06 |
| 368.5 |
| (4) |
| Lincoln Centre | Dallas, TX | 1984 | 2005 | 1,625,465 | 88.1% | 22.99 |
| 358.0 |
| |
| 55 Second Street | San Francisco, CA | 2002 | 2014 | 379,328 | 77.6% | 49.58 |
| 355.5 |
| (4) |
Colorado Center(5) | Santa Monica, CA | 1984 | 2004 | 1,128,745 | 82.4% | 55.81 |
| 351.0 |
| |
Four Oaks Place(13) | Houston, TX | 1983, 2016 | 2012 | 2,333,310 | 81.6% | 24.53 |
| 338.7 |
| |
| 1900 K Street NW | Washington, D.C. | 1996 | 2004 | 345,781 | 98.5% | 47.78 |
| 330.0 |
| (4) |
| Wilshire Rodeo Plaza | Beverly Hills, CA | 1935, 1984 | 2006 | 252,305 | 78.2% | 65.71 |
| 327.8 |
| |
400 Fairview(12) | Seattle, WA | 2015 | 2015 | 341,868 | 97.5% | 35.72 |
| 263.7 |
| |
Foundry Square II(17) | San Francisco, CA | 2002 | 2014 | 508,527 | 98.5% | 55.02 |
| 262.7 |
| |
| 21 Penn Plaza | New York, NY | 1931, 2012-2014 | 2014 | 373,335 | 94.2% | 29.05 |
| 261.2 |
| |
One Boston Place(6) | Boston, MA | 1970 | 2002 | 804,444 | 79.9% | 44.59 |
| 229.1 |
| |
| Fort Point Portfolio | Boston, MA | 1890-1920, 1986-2010 | 2016 | 406,754 | 92.7% | 40.20 |
| 223.1 |
| |
| 837 Washington Street | New York, NY | 1938, 2012-2014 | 2015 | 55,497 | 100.0% | 172.70 |
| 210.0 |
| |
409 & 499 Illinois Street(20) | San Francisco, CA | 2008, 2010 | 2015 | 463,985 | 99.0% | 51.37 |
| 209.3 |
| |
225 Binney Street(19) | Cambridge, MA | 2013 | 2015 | 305,212 | 100.0% | 40.50 |
| 201.9 |
| |
| 1401 H Street NW | Washington, D.C. | 1992 | 2006 | 350,787 | 74.5% | 49.13 |
| 201.1 |
| (4) |
| Millennium Corporate Park | Redmond, WA | 1999, 2000 | 2006 | 536,958 | 96.3% | 19.63 |
| 184.1 |
| |
| 88 Kearny Street | San Francisco, CA | 1986 | 1999 | 227,882 | 84.1% | 58.69 |
| 174.2 |
| |
| Castro Station | Mountain View, CA | 2000, 2013 | 2015 | 114,809 | 93.7% | 90.29 |
| 169.0 |
| |
| 430 West 15th Street | New York, NY | 1950 | 2016 | 98,087 | 100.0% | 102.61 |
| 145.8 |
| |
| Urban Centre | Tampa, FL | 1984, 1987 | 2005 | 555,434 | 83.2% | 29.65 |
| 143.3 |
| |
Campus Pointe 1(22) | San Diego, CA | 1980, 2012 | 2016 | 449,759 | 72.9% | 37.30 |
| 143.0 |
| |
| Wilton Woods Corporate Campus | Wilton, CT | 1974, 2001 | 2001 | 531,606 | 78.6% | 24.01 |
| 133.0 |
| |
Campus Pointe 2 & 3(22) (30) | San Diego, CA | 1997, 2016 | 2016, 2017 | 305,006 | 100.0% | 36.83 |
| 127.1 |
| |
| Pacific Plaza | San Diego, CA | 2000, 2002 | 2007 | 217,823 | 48.9% | 22.16 |
| 115.2 |
| |
| The Ellipse at Ballston | Arlington, VA | 1989 | 2006 | 196,817 | 85.4% | 41.51 |
| 83.7 |
| |
1500 Owens(21) | San Francisco, CA | 2009 | 2015 | 158,267 | 100.0% | 50.59 |
| 77.5 |
| |
| 200 Middlefield Road | Menlo Park, CA | 1967, 2012-2013 | 2014 | 41,933 | 100.0% | 78.51 |
| 61.4 |
| |
| West Lake North Business Park | Westlake Village, CA | 2000 | 2004 | 197,366 | 95.1% | 29.96 |
| 60.3 |
| |
|
| | | | | | | | |
| Property | Location | Ownership Percentage | Rentable Area (Sq. ft.)(1) | Percent Leased | Fair Value(2) (millions) | |
| OFFICE PROPERTIES |
| 1001 Pennsylvania Ave | Washington, D.C. | 100.00% | 766,893 | 89.4% | $ | 798.4 |
| (3) |
| 99 High Street | Boston, MA | 100.00% | 730,210 | 94.4% | 543.7 |
| (3) |
| Lincoln Centre | Dallas, TX | 100.00% | 1,625,465 | 83.0% | 413.2 |
| |
| 701 Brickell Avenue | Miami, FL | 100.00% | 684,708 | 88.4% | 406.6 |
| (3) |
| 780 Third Avenue | New York, NY | 100.00% | 494,423 | 75.9% | 389.1 |
| (3) |
| Colorado Center | Santa Monica, CA | 50.00% | 1,128,600 | 100.0% | 384.5 |
| (4) |
| Four Oaks Place | Houston, TX | 51.00% | 2,343,612 | 84.0% | 352.8 |
| (4) |
| Wilshire Rodeo Plaza | Beverly Hills, CA | 100.00% | 255,891 | 88.6% | 336.4 |
| |
| 1900 K Street, NW | Washington, D.C. | 100.00% | 345,781 | 95.8% | 335.4 |
| (3) |
| 21 Penn Plaza | New York, NY | 100.00% | 379,960 | 92.2% | 334.9 |
| |
|
| | | | | | | | | | | | |
| Property | Location | Year Built | Year Purchased | Rentable Area (Sq. ft.)(1) | Percent Leased | Annual Avg. Base Rent Per Leased Sq. Ft.(2) | Fair Value(3) (in millions) |
| Camelback Center | Phoenix, AZ | 2001 | 2007 | 232,615 | 86.1% | $ | 24.86 |
| $ | 59.8 |
| |
The Hub(25) | Long Island City, NY | 1924 | 2016 | 303,803 | 42.0% | 15.27 |
| 56.9 |
| |
| 8270 Greensboro Drive | McLean, VA | 2000 | 2005 | 158,341 | 86.0% | 30.92 |
| 50.3 |
| |
817 Broadway(26) | New York, NY | 1900 | 2016 | 139,410 | 73.0% | 16.37 |
| 23.0 |
| |
Campus Pointe 4(22) | San Diego, CA | 1991, 2015 | 2017 | 44,034 | 100.0% | 25.02 |
| 8.8 |
| |
| Subtotal—Office Properties | | | | 85.9% | | $ | 9,057.3 |
| |
| INDUSTRIAL PROPERTIES | | | | |
| Ontario Industrial Portfolio | Various, CA | 1997-1998 | 1998, 2000, 2004 | 3,361,599 | 100.0% | $ | 5.03 |
| $ | 398.6 |
| |
| Dallas Industrial Portfolio | Dallas and Coppell, TX | 1997-2001 | 2000-2002 | 3,684,941 | 94.1% | 3.34 |
| 213.2 |
| |
| Great West Industrial Portfolio | Rancho Cucamonga and Fontana, CA | 2004-2005 | 2008 | 1,358,925 | 100.0% | 5.42 |
| 167.0 |
| |
| Cerritos Industrial Park | Cerritos, CA | 1970-1977 | 2012 | 934,213 | 100.0% | 5.86 |
| 142.0 |
| |
| Southern CA RA Industrial Portfolio | Los Angeles, CA | 1982 | 2004 | 920,078 | 92.1% | 7.27 |
| 138.0 |
| |
| Pinto Business Park | Houston, TX | 2014, 2015, 2016 | 2015, 2016 | 1,641,141 | 57.2% | 5.26 |
| 131.6 |
| |
| Rainier Corporate Park | Fife, WA | 1991-1997 | 2003 | 1,104,399 | 95.9% | 5.48 |
| 123.7 |
| |
| Amazon Distribution Center | Teterboro, NJ | 1958, 1974 | 2013 | 616,992 | 100.0% | 9.00 |
| 110.0 |
| |
| Seneca Industrial Park | Pembroke Park, FL | 1999-2001 | 2007 | 882,182 | 95.2% | 6.34 |
| 108.8 |
| |
| Chicago Industrial Portfolio | Chicago and Joliet, IL | 1997-2000 | 1998, 2000 | 1,427,748 | 100.0% | 4.40 |
| 100.3 |
| |
| Regal Logistics Campus | Seattle, WA | 1999-2004 | 2005 | 968,535 | 100.0% | 4.06 |
| 100.0 |
| |
| Weston Business Center | Weston, FL | 1998-1999 | 2011 | 679,918 | 67.0% | 7.75 |
| 92.8 |
| |
| Shawnee Ridge Industrial Portfolio | Atlanta, GA | 2000-2005 | 2005 | 1,422,922 | 100.0% | 3.66 |
| 91.1 |
| |
| South River Road Industrial | Cranbury, NJ | 1999 | 2001 | 858,957 | 100.0% | 3.94 |
| 87.8 |
| |
| Oakmont IE West Portfolio | Fontana, CA | 2014-2015 | 2015 | 709,941 | 100.0% | 5.16 |
| 87.6 |
| |
| Northern CA RA Industrial Portfolio | Oakland, CA | 1981 | 2004 | 657,602 | 94.8% | 7.11 |
| 87.4 |
| |
| Chicago Caleast Industrial Portfolio | Chicago, IL | 1974, 2005 | 2003 | 1,145,152 | 100.0% | 4.34 |
| 80.5 |
| |
| Rancho Cucamonga Industrial Portfolio | Rancho Cucamonga, CA | 2000-2002 | 2000, 2001, 2002, 2004 | 573,000 | 100.0% | 11.41 |
| 71.9 |
| |
| Northwest Houston Industrial Portfolio | Houston, TX | 1981 | 2014 | 1,010,912 | 100.0% | 4.45 |
| 70.7 |
| |
| Ontario Mills Industrial Portfolio | Ontario, CA | 2014 | 2014 | 435,733 | 100.0% | 5.23 |
| 58.5 |
| |
Commerce LIC(27) | Long Island City, NY | 1949 | 2017 | 255,564 | 81.4% | 13.38 |
| 58.2 |
| |
| Frontera Industrial Business Park | San Diego, CA | 1989, 2015 | 2017 | 517,207 | 69.1% | 8.81 |
| 56.4 |
| |
| Broward Industrial Portfolio | Various, FL | Various | 2017 | 401,368 | 83.2% | 8.57 |
| 54.2 |
| |
| Pinnacle Industrial Portfolio | Grapevine, TX | 2003, 2004, 2006 | 2006 | 899,200 | 100.0% | 2.70 |
| 53.3 |
| |
| 200 Milik Street | Carteret, NJ | 2013 | 2015 | 232,134 | 100.0% | 10.96 |
| 53.1 |
| |
| Stevenson Point | Newark, CA | 2000 | 2015 | 312,885 | 95.6% | 11.46 |
| 50.9 |
| |
| Centre Pointe and Valley View | Los Angeles County, CA | 1965, 1989 | 2004 | 307,685 | 83.4% | 7.57 |
| 47.8 |
| |
| Pacific Corporate Park | Fife, WA | 2006 | 2012 | 388,783 | 100.0% | 5.17 |
| 45.5 |
| |
| Landover Logistics | Landover, MD | 2013 | 2014 | 360,550 | 46.4% | 8.21 |
| 43.4 |
| |
|
| | | | | | | | |
| Property | Location | Ownership Percentage | Rentable Area (Sq. ft.)(1) | Percent Leased | Fair Value(2) (millions) | |
| Foundry Square II | San Francisco, CA | 50.10% | 515,370 | 100.0% | $ | 318.4 |
| |
| Fort Point Creative Exchange Portfolio | Boston, MA | 100.00% | 406,857 | 88.5% | 275.0 |
| |
| One Boston Place | Boston, MA | 50.25% | 805,589 | 84.2% | 246.8 |
| |
| 409 & 499 Illinois Street | San Francisco, CA | 40.00% | 463,985 | 99.0% | 237.5 |
| |
| 837 Washington Street | New York, NY | 100.00% | 55,497 | 100.0% | 232.0 |
| |
| 225 Binney Street | Cambridge, MA | 70.00% | 305,212 | 100.0% | 231.5 |
| |
| 88 Kearny Street | San Francisco, CA | 100.00% | 228,866 | 96.1% | 221.0 |
| |
| 1401 H Street, NW | Washington, D.C. | 100.00% | 356,182 | 84.3% | 211.4 |
| (3) |
| 501 Boylston | Boston, MA | 50.10% | 610,075 | 99.3% | 206.9 |
| (4) |
| Fourth and Madison | Seattle, WA | 51.00% | 845,533 | 97.0% | 167.3 |
| (4) |
| Campus Pointe 1 | San Diego, CA | 45.00% | 449,759 | 91.7% | 163.5 |
| |
| Campus Pointe 2 & 3 | San Diego, CA | 45.00% | 305,006 | 100.0% | 143.6 |
| |
| 440 Ninth Avenue | New York, NY | 88.52% | 410,815 | 88.8% | 133.1 |
| (4) |
| Campus Pointe 6 | San Diego, CA | 45.00% | 314,103 | 100.0% | 116.6 |
| |
| 1600 Broadway Street | Denver, CO | 100.00% | 441,391 | 88.9% | 116.0 |
| |
| Vista Station Office Portfolio | Draper, UT | 100.00% | 400,000 | 100.0% | 115.4 |
| (3) |
| Pacific Plaza | San Diego, CA | 100.00% | 218,164 | 69.8% | 112.7 |
| |
| Wilton Woods Corporate Campus | Wilton, CT | 100.00% | 531,606 | 77.3% | 112.1 |
| |
| 150 Industrial Road | San Carlos, CA | 98.00% | 229,640 | 100.0% | 98.0 |
| |
| 101 Pacific Coast Highway | El Segundo, CA | 100.00% | 24,402 | 87.7% | 96.1 |
| |
| The Ellipse at Ballston | Arlington, VA | 100.00% | 197,226 | 80.9% | 82.2 |
| |
| 1500 Owens | San Francisco, CA | 49.90% | 158,267 | 100.0% | 81.5 |
| |
| The Hub | Long Island City, NY | 95.00% | 304,821 | 33.7% | 74.8 |
| (4) |
| 200 Middlefield Road | Menlo Park, CA | 100.00% | 41,933 | 87.9% | 68.0 |
| |
| West Lake North Business Park | Westlake Village, CA | 100.00% | 197,366 | 96.8% | 62.3 |
| |
| 9625 Towne Centre Drive | San Diego, CA | 49.90% | 163,648 | 100.0% | 53.1 |
| |
| 8270 Greensboro Drive | McLean, VA | 100.00% | 158,341 | 71.8% | 49.6 |
| |
| Camelback Center | Phoenix, AZ | 100.00% | 232,615 | 60.2% | 49.0 |
| |
| 101 North Tryon Street | Charlotte, NC | 85.00% | 523,600 | 83.5% | 47.9 |
| (4) |
| 3131 McKinney | Dallas, TX | 100.00% | 146,551 | 70.8% | 46.4 |
| |
| 30700 Russell Ranch | Westlake Village, CA | 100.00% | 136,262 | 97.5% | 39.0 |
| |
| Campus Pointe 5 | San Diego, CA | 45.00% | 269,048 | 100.0% | 37.4 |
| |
| 817 Broadway | New York, NY | 61.46% | 139,312 | 23.5% | 33.7 |
| (4) |
| Campus Pointe 4 | San Diego, CA | 45.00% | 44,034 | 35.0% | 9.6 |
| |
| Subtotal—Office Properties | | | 88.1% | $ | 8,584.4 |
| |
| | | | |
| INDUSTRIAL PROPERTIES | | | |
| Ontario Industrial Portfolio | Various, CA | 100.00% | 3,361,599 | 100.0% | $ | 506.9 |
| |
| Dallas Industrial Portfolio | Dallas and Coppell, TX | 100.00% | 3,684,941 | 94.2% | 237.9 |
| |
| Great West Industrial Portfolio | Rancho Cucamonga and Fontana, CA | 100.00% | 1,358,925 | 100.0% | 203.0 |
| |
| Cerritos Industrial Park | Cerritos, CA | 100.00% | 934,213 | 100.0% | 164.0 |
| |
| Rainier Corporate Park | Fife, WA | 100.00% | 1,104,399 | 97.3% | 161.3 |
| |
| Pinto Business Park | Houston, TX | 100.00% | 1,641,141 | 82.8% | 154.1 |
| |
| Southern CA RA Industrial Portfolio | Los Angeles, CA | 100.00% | 920,078 | 89.9% | 151.8 |
| |
| Colony Industrial Portfolio | Various, U.S.A. | 100.00% | 2,237,856 | 97.7% | 135.9 |
| |
| South River Road Industrial | Cranbury, NJ | 100.00% | 858,957 | 100.0% | 133.5 |
| |
| Seneca Industrial Park | Pembroke Park, FL | 100.00% | 882,182 | 99.9% | 126.7 |
| |
|
| | | | | | | | | | | | |
| Property | Location | Year Built | Year Purchased | Rentable Area (Sq. ft.)(1) | Percent Leased | Annual Avg. Base Rent Per Leased Sq. Ft.(2) | Fair Value(3) (in millions) |
| Northeast RA Industrial Portfolio | Boston, MA | 2000 | 2004 | 384,126 | 100.0% | $ | 6.30 |
| $ | 40.9 |
| |
| Northwest RA Industrial Portfolio | Seattle, WA | 1996 | 2004 | 312,321 | 99.2% | 3.46 |
| 38.5 |
| |
| One Beeman Road | Northborough, MA | 1985 | 2017 | 342,900 | 100.0% | 7.01 |
| 33.8 |
| |
| Atlanta Industrial Portfolio | Lawrenceville, GA | 1996-1999 | 2000 | 495,440 | 100.0% | 7.86 |
| 32.4 |
| |
| Beltway North Commerce Center | Houston, TX | 2014 | 2015 | 352,000 | — | — |
| 19.3 |
| |
| Park 10 Distribution | Houston, TX | 1980 | 2014 | 152,638 | 50.1% | 4.71 |
| 10.3 |
| |
| Subtotal—Industrial Properties | | | | 92.4% | | $ | 3,099.5 |
| |
| RETAIL PROPERTIES | | | |
Fashion Show(24) | Las Vegas, NV | 1981 | 2016 | 1,899,875 | 98.3% | $ | 36.00 |
| $ | 844.4 |
| |
The Florida Mall(8) | Orlando, FL | 1986 | 2002 | 1,071,832 | 100.0% | 55.12 |
| 758.4 |
| |
DDR Joint Venture(7) | Various, U.S.A. | Various | 2007 | 8,351,983 | 91.6% | 15.61 |
| 636.2 |
| |
| The Forum at Carlsbad | Carlsbad, CA | 2003 | 2011 | 265,707 | 96.5% | 39.95 |
| 221.0 |
| (4) |
Miami International Mall(8) | Miami, FL | 1982 | 2002 | 304,269 | 100.0% | 54.04 |
| 166.0 |
| |
Florida Retail Portfolio(9) | Various, FL | 1974, 2005 | 2006 | 436,277 | 99.6% | 25.29 |
| 150.6 |
| |
West Town Mall(8) | Knoxville, TN | 1972 | 2002 | 961,143 | 100.0% | 17.60 |
| 140.4 |
| |
Valencia Town Center(16) | Valencia, CA | 1991 | 2012 | 1,076,311 | 97.1% | 17.85 |
| 138.8 |
| |
Pacific City(23) | Huntington Beach, CA | 2015 | 2016 | 189,945 | 92.9% | 36.95 |
| 134.9 |
| |
| Westwood Marketplace | Los Angeles, CA | 1950 | 2002 | 202,202 | 100.0% | 30.56 |
| 131.9 |
| |
| Bridgepointe Shopping Center | San Mateo, CA | 1998 | 2017 | 229,769 | 81.5% | 28.41 |
| 124.5 |
| |
| Plaza America | Reston, VA | 1995 | 2014 | 164,398 | 92.7% | 34.32 |
| 117.0 |
| |
The Shops at Wisconsin Place(14) | Chevy Chase, MD | 2007-2010 | 2012 | 117,202 | 97.5% | 49.91 |
| 110.0 |
| |
| Marketfair | West Windsor, NJ | 1987 | 2006 | 242,866 | 97.8% | 27.85 |
| 102.9 |
| |
| Charleston Plaza | Mountain View, CA | 2006 | 2012 | 132,590 | 100.0% | 36.71 |
| 93.0 |
| |
| Publix at Weston Commons | Weston, FL | 2005 | 2006 | 126,922 | 98.9% | 28.42 |
| 74.8 |
| |
| South Denver Marketplace | Denver, CO | 1996-1998 | 2013 | 261,135 | 100.0% | 16.16 |
| 72.7 |
| |
| 32 South State Street | Chicago, IL | 1925 | 2016 | 96,354 | 100.0% | 27.58 |
| 48.3 |
| (4) |
| Southside at McEwen | Franklin, TN | 2012 | 2014 | 92,470 | 100.0% | 25.34 |
| 48.2 |
| |
401 West 14th Street(18) | New York, NY | 1923, 2007 | 2014 | 62,200 | 100.0% | 136.94 |
| 46.4 |
| |
| 1619 Walnut Street | Philadelphia, PA | 1937, 2013 | 2013 | 34,047 | 100.0% | 41.33 |
| 24.1 |
| |
| Subtotal—Retail Properties | | | | 95.3% | | $ | 4,184.5 |
| |
| OTHER COMMERCIAL PROPERTIES | | | |
425 Park Avenue(10) | New York, NY | N/A | 2011 | N/A | N/A | N/A | $ | 457.0 |
| |
Storage Portfolio I(11) | Various, U.S.A. | 1972, 1990 | 2003 | 1,681,229 | 93.2% | 18.70 |
| 177.5 |
| |
Storage Portfolio II(29) | Various, U.S.A. | Various | 2017 | 2,300,756 | 95.8% | 11.78 |
| 91.8 |
| |
9625 Towne Centre Drive(28) | San Diego, CA | N/A | 2017 | N/A | N/A | N/A | 15.1 |
| |
| Subtotal—Other Commercial Properties | | | | 94.7% | |
| $ | 741.4 |
| |
| Subtotal—Commercial Properties | | | | 91.6% | |
| $ | 17,082.7 |
| |
| RESIDENTIAL PROPERTIES | | |
| | |
| Palomino Park | Highlands Ranch, CO | 1996-2001 | 2005 | N/A | 94.2% | N/A | $ | 329.7 |
| (4) |
| The Colorado | New York, NY | 1987 | 1999 | N/A | 96.0% | N/A | 256.2 |
| (4) |
| The Corner | New York, NY | 2010 | 2011 | N/A | 91.8% | N/A | 251.0 |
| (4) |
| The Woodley | Washington, D.C. | 2014 | 2014 | N/A | 94.3% | N/A | 191.0 |
| |
MiMA(15) | New York, NY | 2010 | 2012 | N/A | 97.0% | N/A | 189.2 |
| |
|
| | | | | | | | |
| Property | Location | Ownership Percentage | Rentable Area (Sq. ft.)(1) | Percent Leased | Fair Value(2) (millions) | |
| Regal Logistics Campus | Seattle, WA | 100.00% | 968,535 | 100.0% | $ | 121.0 |
| |
| Northern CA RA Industrial Portfolio | Oakland, CA | 100.00% | 625,447 | 80.9% | 111.9 |
| |
| Oakmont IE West Portfolio | Fontana, CA | 100.00% | 709,941 | 100.0% | 109.2 |
| |
| Shawnee Ridge Industrial Portfolio | Atlanta, GA | 100.00% | 1,422,922 | 98.4% | 99.9 |
| |
| Frontera Industrial Business Park | San Diego, CA | 100.00% | 691,407 | 98.7% | 90.0 |
| |
| Rancho Cucamonga Industrial Portfolio | Rancho Cucamonga, CA | 100.00% | 573,000 | 100.0% | 88.3 |
| |
| Chicago Caleast Industrial Portfolio | Chicago, IL | 100.00% | 1,145,152 | 96.1% | 85.6 |
| |
| Northwest Houston Industrial Portfolio | Houston, TX | 100.00% | 1,010,912 | 81.1% | 77.2 |
| |
| Weston Business Center | Weston, FL | 100.00% | 455,268 | 100.0% | 75.0 |
| |
| Broward Industrial Portfolio | Various, FL | 100.00% | 355,088 | 97.5% | 67.7 |
| |
| Pinnacle Industrial Portfolio | Grapevine, TX | 100.00% | 899,200 | 80.2% | 66.7 |
| |
| Stevenson Point | Newark, CA | 100.00% | 312,885 | 100.0% | 66.6 |
| |
| Ontario Mills Industrial Portfolio | Ontario, CA | 100.00% | 435,733 | 100.0% | 65.4 |
| |
| Pacific Corporate Park | Fife, WA | 100.00% | 388,783 | 86.7% | 62.5 |
| |
| Centre Pointe and Valley View | Los Angeles County, CA | 100.00% | 307,685 | 94.4% | 60.7 |
| |
| 200 Milik Street | Carteret, NJ | 100.00% | 232,134 | 100.0% | 56.4 |
| |
| Northwest RA Industrial Portfolio | Seattle, WA | 100.00% | 312,321 | 100.0% | 49.7 |
| |
| Landover Logistics | Landover, MD | 100.00% | 360,550 | 100.0% | 44.7 |
| |
| Northeast RA Industrial Portfolio | Boston, MA | 100.00% | 384,126 | 100.0% | 43.5 |
| |
| Atlanta Industrial Portfolio | Lawrenceville, GA | 100.00% | 495,440 | 100.0% | 41.0 |
| |
| One Beeman Road | Northborough, MA | 100.00% | 342,900 | 100.0% | 34.6 |
| |
| Otay Mesa Industrial Portfolio | San Diego, CA | 100.00% | 264,679 | 57.8% | 33.7 |
| |
| Beltway North Commerce Center | Houston, TX | 100.00% | 352,680 | 100.0% | 30.2 |
| |
| Chicago Industrial Portfolio | Chicago, IL | 100.00% | 334,824 | 100.0% | 30.1 |
| |
| Riverside 202 Industrial | Phoenix, AZ | 100.00% | 319,860 | 100.0% | 29.6 |
| |
| 10 New Maple | Pine Brook, NJ | 100.00% | 266,338 | 95.0% | 21.9 |
| |
| Park 10 Distribution | Houston, TX | 100.00% | 152,638 | 79.4% | 11.1 |
| |
| Subtotal—Industrial Properties | | | 95.3% | $ | 3,649.3 |
| |
| RETAIL PROPERTIES | | |
| SITE Centers Joint Venture | Various, U.S.A. | 85.00% | 7,077,947 | 92.8% | $ | 878.0 |
| (4) |
| The Florida Mall | Orlando, FL | 50.00% | 1,108,432 | 92.4% | 748.3 |
| (4) |
| Fashion Show | Las Vegas, NV | 50.00% | 1,901,982 | 96.6% | 706.9 |
| (4) |
| The Forum at Carlsbad | Carlsbad, CA | 100.00% | 264,915 | 98.4% | 224.0 |
| (3) |
| Florida Retail Portfolio | Various, FL | 80.00% | 437,905 | 99.5% | 158.4 |
| |
| Miami International Mall | Miami, FL | 50.00% | 305,692 | 96.8% | 157.5 |
| (4) |
| Westwood Marketplace | Los Angeles, CA | 100.00% | 202,202 | 100.0% | 150.0 |
| |
| West Town Mall | Knoxville, TN | 50.00% | 950,452 | 93.4% | 144.0 |
| (4) |
| Valencia Town Center | Valencia, CA | 50.00% | 942,423 | 95.3% | 136.4 |
| (4) |
| 350 Washington | Boston, MA | 100.00% | 147,273 | 92.5% | 134.0 |
| |
| Bridgepointe Shopping Center | San Mateo, CA | 100.00% | 231,519 | 74.7% | 129.0 |
| |
| Plaza America | Reston, VA | 100.00% | 164,232 | 81.5% | 113.3 |
| |
| Marketfair | West Windsor, NJ | 100.00% | 243,354 | 93.9% | 106.2 |
| |
| Charleston Plaza | Mountain View, CA | 100.00% | 132,590 | 100.0% | 100.0 |
| |
| The Shops at Wisconsin Place | Chevy Chase, MD | 100.00% | 117,202 | 95.7% | 95.6 |
| (5) |
| Publix at Weston Commons | Weston, FL | 100.00% | 126,922 | 94.7% | 74.5 |
| |
| South Denver Marketplace | Denver, CO | 100.00% | 261,135 | 100.0% | 71.2 |
| |
| Pacific City | Huntington Beach, CA | 70.00% | 189,951 | 85.8% | 62.2 |
| (4) |
| | | Property | Location | Year Built | Year Purchased | Rentable Area (Sq. ft.)(1) | Percent Leased | Annual Avg. Base Rent Per Leased Sq. Ft.(2) | Fair Value(3) (in millions) | Location | Ownership Percentage | Rentable Area (Sq. ft.)(1) | Percent Leased | Fair Value(2) (millions) | |
| 32 South State Street | | Chicago, IL | 100.00% | 96,354 | 100.0% | $ | 51.4 |
| (3) |
| Southside at McEwen | | Franklin, TN | 100.00% | 92,470 | 94.6% | 49.2 |
| |
| 401 West 14th Street | | New York, NY | 42.19% | 62,200 | 92.1% | 44.8 |
| (4) |
| Riverchase Village | | Hoover, AL | 100.00% | 175,673 | 94.4% | 40.3 |
| |
| 1619 Walnut Street | | Philadelphia, PA | 100.00% | 34,047 | 100.0% | 23.0 |
| |
| Subtotal—Retail Properties | | Subtotal—Retail Properties | | | 93.9% | $ | 4,398.2 |
| |
| | | | | | |
| OTHER PROPERTIES | | OTHER PROPERTIES | | |
| Storage Portfolio II | | Various, U.S.A. | 90.00% | 2,674,316 | 93.7% | $ | 130.5 |
| (4) |
| Storage Portfolio I | | Various, U.S.A. | 66.02% | 1,683,513 | 92.9% | 93.6 |
| (4) |
| Lincoln Centre - Hilton Dallas | | Dallas, TX | 100.00% | 384,791 | 66.9% | 76.5 |
| |
| Storage Portfolio III | | Various, U.S.A. | 90.00% | 88,205 | 91.2% | 37.3 |
| |
| Almond Avenue | | Fontana, CA | 100.00% | N/A | 9.5 |
| (6) |
| I-35 Logistics Center | | Fort Worth, TX | 95.00% | N/A | 6.9 |
| (6) |
| Subtotal—Other Properties | | Subtotal—Other Properties | | | 91.2% | $ | 354.3 |
| |
| Subtotal—Commercial Properties | | Subtotal—Commercial Properties | | | 92.7% | $ | 16,986.2 |
| |
| | | | | | |
| RESIDENTIAL PROPERTIES | | RESIDENTIAL PROPERTIES | | | |
| Simpson Housing Portfolio | | Various, U.S.A. | 80.00% | N/A | 94.0% | $ | 431.2 |
| (4) |
| Palomino Park | | Highlands Ranch, CO | 100.00% | N/A | 92.1% | 361.0 |
| (3) |
| The Colorado | | New York, NY | 100.00% | N/A | 97.7% | 259.0 |
| (3) |
| THP Student Housing Portfolio | | Various, U.S.A. | 97.00% | N/A | 95.1% | 186.8 |
| (4) |
| The Woodley | | Washington, D.C. | 100.00% | N/A | 94.3% | 180.3 |
| |
| Stella | Marina Del Rey, CA | 2013 | N/A | 93.4% | N/A | $ | 179.7 |
| | Marina Del Rey, CA | 100.00% | N/A | 91.4% | 175.1 |
| |
| Mass Court | | Washington, D.C. | 100.00% | N/A | 91.6% | 168.9 |
| |
| The Louis at 14th | Washington, D.C. | 2013-2014 | 2014 | N/A | 93.3% | N/A | 176.0 |
| | Washington, D.C. | 100.00% | N/A | 95.1% | 164.2 |
| |
| Mass Court | Washington, D.C. | 2004 | 2012 | N/A | 85.7% | N/A | 171.0 |
| (4) | |
| 250 North 10th Street | Brooklyn, NY | 2014 | 2015 | N/A | 95.3% | N/A | 163.1 |
| | |
| Houston Apartment Portfolio | | Houston, TX | 100.00% | N/A | 88.8% | 162.3 |
| |
| Holly Street Village | | Pasadena, CA | 100.00% | N/A | 95.2% | 158.1 |
| (3) |
| BLVD63 | San Diego, CA | 2014 | 2016 | N/A | 92.2% | N/A | 162.1 |
| | San Diego, CA | 100.00% | N/A | 89.0% | 158.0 |
| |
| Houston Apartment Portfolio | Houston, TX | 1984-2004 | 2006 | N/A | 90.3% | N/A | 158.7 |
| | |
| The Manor at Flagler Village | Fort Lauderdale, FL | 2014 | 2015 | N/A | 90.8% | N/A | 148.1 |
| | |
| Holly Street Village | Pasadena, CA | 1997 | 2013 | N/A | 94.4% | N/A | 148.0 |
| | |
| Larkspur Courts | Larkspur, CA | 1991 | 1999 | N/A | 87.9% | N/A | 143.7 |
| | Larkspur, CA | 100.00% | N/A | 91.1% | 155.0 |
| |
| The Legacy at Westwood | Los Angeles, CA | 2001 | 2002 | N/A | 94.7% | N/A | 143.0 |
| (4) | Los Angeles, CA | 100.00% | N/A | 92.5% | 149.1 |
| (3) |
| Terra House | | San Jose, CA | 100.00% | N/A | 89.9% | 146.0 |
| |
| 250 North 10th Street | | Brooklyn, NY | 100.00% | N/A | 95.3% | 138.1 |
| |
| The Manor at Flagler Village | | Fort Lauderdale, FL | 100.00% | N/A | 89.5% | 138.1 |
| |
| The Palatine | Arlington, VA | 2008 | 2011 | N/A | 94.3% | N/A | 123.2 |
| (4) | Arlington, VA | 100.00% | N/A | 93.1% | 128.0 |
| (3) |
| Union - South Lake Union | Seattle, WA | 2012 | 2015 | N/A | 93.7% | N/A | 111.0 |
| | Seattle, WA | 100.00% | N/A | 97.9% | 115.0 |
| (3) |
| MiMA | | New York, NY | 70.00% | N/A | 99.8% | 113.0 |
| (4) |
| Ashford Meadows Apartments | Herndon, VA | 1998 | 2000 | N/A | 91.1% | N/A | 107.3 |
| (4) | Herndon, VA | 100.00% | N/A | 92.5% | 105.3 |
| (3) |
| South Florida Apartment Portfolio | Boca Raton and Plantation, FL | 1986 | 2001 | N/A | 93.1% | N/A | 105.1 |
| | |
| Regents Court | San Diego, CA | 2001 | 2002 | N/A | 93.2% | N/A | 99.1 |
| (4) | San Diego, CA | 100.00% | N/A | 91.6% | 105.0 |
| (3) |
| Henley at Kingstowne | | Alexandria, VA | 100.00% | N/A | 92.5% | 103.0 |
| (3) |
| Casa Palma | | Coconut Creek, FL | 100.00% | N/A | 91.4% | 102.0 |
| |
| Circa Green Lake | Seattle, WA | 2009 | 2012 | N/A | 93.0% | N/A | 97.5 |
| | Seattle, WA | 100.00% | N/A | 92.0% | 102.0 |
| (3) |
| Casa Palma | Coconut Creek, FL | 2014 | 2015 | N/A | 90.3% | N/A | 95.0 |
| | |
| Rancho Del Mar | | San Clemente, CA | 100.00% | N/A | 92.0% | 94.7 |
| |
| Oceano at Warner Center | | Woodland Hills, CA | 100.00% | N/A | 91.4% | 94.4 |
| |
| 803 Corday | Naperville, IL | 1999 | 2017 | N/A | 84.1% | N/A | 94.5 |
| | Naperville, IL | 100.00% | N/A | 93.0% | 93.8 |
| |
| Township Apartments | Redwood City, CA | 2014 | N/A | 96.2% | N/A | 89.8 |
| | |
| Oceano at Warner Center | Woodland Hills, CA | 2012 | 2013 | N/A | 95.1% | N/A | 89.0 |
| | |
| The Residences at the Village of Merrick Park | Coral Gables, FL | 2003 | 2012 | N/A | 79.2% | N/A | 76.0 |
| | |
| Greene Crossing | Columbia, SC | 2015 | 2016 | N/A | 99.7% | N/A | 67.2 |
| | |
| The Bridges | Minneapolis, MN | 2014 | 2017 | N/A | 100.0% | N/A | 62.4 |
| | |
| Prescott Wallingford Apartments | Seattle, WA | 2012 | N/A | 94.8% | N/A | 62.0 |
| | |
| Allure at Camarillo | Camarillo, CA | 2003 | 2017 | N/A | 87.3% | N/A | 59.6 |
| | |
| The Maroneal | Houston, TX | 1998 | 2005 | N/A | 91.3% | N/A | 56.6 |
| | |
| The Manor Apartments | Plantation, FL | 2013 | 2014 | N/A | 97.0% | N/A | 52.6 |
| | |
| Westcreek | Westlake Village, CA | 1988 | 1997 | N/A | 93.7% | N/A | 51.4 |
| | |
| The Cordelia | Portland, OR | 2014 | 2015 | N/A | 87.4% | N/A | 49.0 |
| | |
| Cliffs at Barton Creek | Austin, TX | 1994 | 2013 | N/A | 89.0% | N/A | 45.9 |
| | |
| Orion on Orpington | Orlando, FL | 2007 | 2017 | N/A | 99.5% | N/A | 44.4 |
| | |
| The Ashton | Washington, D.C. | 2009 | 2015 | N/A | 69.4% | N/A | 37.5 |
| | |
| The Knoll | Minneapolis, MN | 2013 | 2017 | N/A | 99.8% | N/A | 34.0 |
| (4) | |
| Subtotal—Residential Properties | | 93.5% | | $ | 4,520.6 |
| | |
| Total—All Properties | 92.0% | | $ | 21,603.3 |
| | |
| Creekside Alta Loma | | Rancho Cucamonga, CA | 100.00% | N/A | 92.8% | 85.2 |
| |
| Fusion 1560 | | St. Petersburg, FL | 100.00% | N/A | 89.2% | 84.1 |
| (3) |
|
| | | | | | | | |
| Property | Location | Ownership Percentage | Rentable Area (Sq. ft.)(1) | Percent Leased | Fair Value(2) (millions) | |
| Greene Crossing | Columbia, SC | 100.00% | N/A | 99.9% | $ | 79.7 |
| |
| Sole at Brandon | Riverview, FL | 100.00% | N/A | 93.2% | 79.0 |
| |
| The District at La Frontera | Austin, TX | 100.00% | N/A | 92.0% | 76.6 |
| (3) |
| Centric Gateway | Charlotte, NC | 100.00% | N/A | 85.2% | 75.0 |
| |
| Biltmore at Midtown | Atlanta, GA | 100.00% | N/A | 87.0% | 73.5 |
| (3) |
| Churchill on the Park | Dallas, TX | 100.00% | N/A | 90.4% | 73.0 |
| |
| The Residences at the Village of Merrick Park | Coral Gables, FL | 100.00% | N/A | 94.2% | 72.3 |
| |
| Prescott Wallingford Apartments | Seattle, WA | 100.00% | N/A | 92.9% | 70.6 |
| |
| Ascent at Windward | Alpharetta, GA | 100.00% | N/A | 87.8% | 68.4 |
| (3) |
| Carrington Park | Plano, TX | 100.00% | N/A | 90.1% | 67.3 |
| |
| The Bridges | Minneapolis, MN | 100.00% | N/A | 95.5% | 67.2 |
| |
| Lofts at SoDo | Orlando, FL | 100.00% | N/A | 92.5% | 64.7 |
| (3) |
| Allure at Camarillo | Camarillo, CA | 100.00% | N/A | 92.1% | 63.9 |
| |
| Boca Arbor Club | Boca Raton, FL | 100.00% | N/A | 94.4% | 62.9 |
| |
| 5 West | Tampa, FL | 100.00% | N/A | 88.1% | 62.3 |
| |
| Cherry Knoll | Germantown, MD | 100.00% | N/A | 91.0% | 60.1 |
| (3) |
| Westcreek | Westlake Village, CA | 100.00% | N/A | 87.3% | 57.1 |
| |
| The Maroneal | Houston, TX | 100.00% | N/A | 87.1% | 56.4 |
| |
| Glen Lake | Atlanta, GA | 100.00% | N/A | 92.2% | 55.3 |
| |
| Orion on Orpington | Orlando, FL | 100.00% | N/A | 99.2% | 52.4 |
| |
| The Manor Apartments | Plantation, FL | 100.00% | N/A | 93.9% | 51.5 |
| |
| Lakepointe at Jacaranda | Plantation, FL | 100.00% | N/A | 95.1% | 48.8 |
| |
| Cliffs at Barton Creek | Austin, TX | 100.00% | N/A | 88.6% | 47.2 |
| |
| The Cordelia | Portland, OR | 100.00% | N/A | 89.6% | 43.2 |
| |
| The Knoll | Minneapolis, MN | 100.00% | N/A | 95.1% | 37.3 |
| (3) |
| The Ashton | Washington, D.C. | 100.00% | N/A | 87.8% | 30.6 |
| |
| Subtotal—Residential Properties | | 93.0% | $ | 6,053.0 |
| |
| Total—All Properties | 92.8% | $ | 23,039.2 |
| |
| |
(1) | The square footage is an approximate measure and is subject to periodic remeasurement. |
| |
(2) | Based on total contractual rent for leases existing asWholly owned properties are represented at fair value and gross of December 31, 2017. The contractual rent can be either on a gross orany debt, while joint venture properties are represented at the net basis, depending on the terms of the leases.equity value. |
| |
(3) | Fair value reflects the value determined in accordance with the procedures as stated in the valuation section of the Notes to the Consolidated Financial Statements. |
| |
(4)
| Property is subject to a mortgage. The fair value shown represents the Account's interest gross of debt. |
| |
(5)(4)
| This property is held in a joint venture primarily with Boston Properties. FairThe fair value shown reflects the value of the Account’s 50%Account's interest in the joint venture and is net of debt. |
| |
(6)
| The Account owns a 50.25% interest in a private REIT, which owns this property. A 49.70% interest is owned by Societe Immobiler Trans-Quebec, and 0.05% is owned by 100 individuals. Fair value shown reflects the value of the Account’s interest in the joint venture. |
| |
(7)
| This investment is held in a joint venture with DDR Corp. and consists of 23 properties located in 10 states. Fair Value shown reflects the value of the Account's 85% interest in the joint venture, net of debt. |
| |
(8)
| This investment is held in a joint venture with the Simon Property Group. Fair value shown reflects the value of the Account’s 50% interest in the joint venture, net of debt. |
| |
(9)
| This investment is held in a joint venture with Weingarten Realty Investors and contains two neighborhood and/or community shopping centers located in the Orlando and Tampa, Florida areas. Fair value shown reflects the value of the Account’s 80% interest in the joint venture. |
| |
(10)
| Represents a fee interest encumbered by a ground lease real estate investment. |
| |
(11)
| This investment is held in a joint venture with Storage U.S.A. Fair value shown reflects the value of the Account’s 75% interest in the joint venture, net of debt. |
| |
(12)
| This property is held in a joint venture with SCD 400 Fairview, LLC. Fair value shown reflects the value of the Account’s 90% interest in the joint venture. |
| |
(13)
| This property is held in a joint venture with Allianz US Private REIT LP. Fair value shown reflects the Account's 51% interest in the joint venture, net of debt. |
| |
(14)(5)
| Fair value shown reflects a retail property wholly-owned by the Account, as well as the Account's 33.3%33.33% interest in a joint venture investment. |
| |
(15)(6)
| This property is held in a joint venture with The Related Companies. Fair value shown reflects the value of the Account’s 70% interest in the joint venture, net of debt. |
| |
(16)
| This property is held in a joint venture with Westfield LLC. Fair value shown reflects the value of the Account’s 50% interest in the joint venture, net of debt. |
| |
(17)
| This property is held in a joint venture with Norges Bank Investment Management. Fair value shown reflects the value of the Account’s 50.1% interest in the joint venture. |
| |
(18)
| This property is held in a joint venture with Taconic Investment Partners LLC. Fair value shown reflects the value of the Account’s 42.2% interest in the joint venture, net of debt. |
| |
(19)
| This property is held in a joint venture with ARE - MA Region No. 54 LLC. Fair value shown reflects the value of the Account’s 70% interest in the joint venture. |
| |
(20)
| This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account’s 40% interest in the joint venture. |
| |
(21)
| This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account’s 49.9% interest in the joint venture. |
| |
(22)
| This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account’s 45% interest in the joint venture. |
| |
(23)
| This property is held in a joint venture with DJM Capital Partners. Fair value shown reflects the value of the Account’s 70% interest in the joint venture. |
| |
(24)
| This property is held in a joint venture with General Growth Properties. Fair value shown reflects the value of the Account’s 50% interest in the joint venture, net of debt. |
| |
(25)
| This property is held in a joint venture with Metro Realty Holdings. Fair value shown reflects the value of the Account’s 95% interest in the joint venture, net of debt. |
| |
(26)
| This property is held in a joint venture with Taconic Investment Partners, LLC. Fair value shown reflects the value of the Account’s 61.46% interest in the joint venture, net of debt. |
| |
(27)
| This property is held in a joint venture with MRA 48-49 LIC, LLC. Fair value shown reflects the value of the Account’s 97.5% interest in the joint venture. |
| |
(28)
| This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account’s 35.86% interest in the joint venture. |
| |
(29)
| This investment is held in a joint venture with Extra Space Storage, Inc. Fair value shown reflects the value of the Account’s 90% interest in the joint venture, net of debt. |
| |
(30)
| A portion of this investment consists ofrepresents land for development that was acquired on December 19, 2017.currently under development. |
Commercial (Non-Residential) Investments
At December 31, 2017, the Account held 100 commercial (non-residential) investments in its portfolio, including two portfolios of storage facilities located throughout the United States. Of these investments, 27 were held through joint ventures and 23 were subject to mortgages (including 13 joint venture investments). Although the terms vary under each lease, certain expenses, such as real estate taxes and other operating expenses are paid or reimbursed in whole or in part by the tenants.
Management believes that the Account’s portfolio is diversified by both property type and geographic location. The portfolio consists of:
Office. 39 investments containing approximately 18.3 million square feet located in nine states and the District of Columbia.
Industrial. 35 investments containing approximately 30.1 million square feet located in ten states.
Retail. 22 investments containing approximately 18.1 million square feet located in 16 states. One of the retail investments is an 85% interest in a portfolio containing 23 individual retail shopping centers primarily located throughout the Eastern and Southern regions.
Other-Land (425 Park Avenue). The Account has a fee interest encumbered by a ground lease real estate investment located in New York, NY.
Other-Land (9625 Towne Centre Drive). The Account has a joint venture investment in land held for future development.
Other-Storage. The Account has two joint venture investments of storage facilities located throughout the United States containing approximately 4.0 million square feet.
Major Tenants: The following tables list the Account’s ten most significant tenants based on the total space they occupied as of December 31, 20172019 in each of the Account’s commercial property types.
| | | Major Office Tenants | | Occupied Sq. Ft. | | % of Total Rentable Area of Account’s Office Properties | | % of Total Rentable Area of Non-Residential Properties | | Occupied Sq. Ft. | | % of Total Rentable Area of Account’s Office Properties | | % of Total Rentable Area of Non-Residential Properties |
BHP Petroleum (Americas), Inc.(1) | | 1,143,464 |
| | 6.2 | % | | 1.7 | % | | 1,103,312 |
| | 5.6 | % | | 1.6 | % |
Microsoft Corporation(2) | | 479,193 |
| | 2.6 | % | | 0.7 | % | |
WeWork(3) | | | 434,881 |
| | 2.2 | % | | 0.6 | % |
Crowell & Moring LLP(2) | | 399,471 |
| | 2.2 | % | | 0.6 | % | | 391,757 |
| | 2.0 | % | | 0.6 | % |
Bank of America(3) | | | 325,950 |
| | 1.7 | % | | 0.5 | % |
Atmos Energy Corporation(2) | | 312,238 |
| | 1.7 | % | | 0.5 | % | | 312,238 |
| | 1.6 | % | | 0.5 | % |
Biogen MA Inc(1) | | 305,212 |
| | 1.7 | % | | 0.5 | % | | 305,212 |
| | 1.6 | % | | 0.5 | % |
Eli Lilly and Company(1) | | 305,006 |
| | 1.7 | % | | 0.5 | % | | 305,006 |
| | 1.6 | % | | 0.5 | % |
Bank of New York Mellon(1) | | 281,071 |
| | 1.5 | % | | 0.4 | % | |
Hulu LLC(1) | | | 261,823 |
| | 1.3 | % | | 0.4 | % |
Fibrogen Inc(1) | | 238,707 |
| | 1.3 | % | | 0.4 | % | | 238,707 |
| | 1.2 | % | | 0.4 | % |
Bridgewater Associates LP(2) | | 227,883 |
| | 1.2 | % | | 0.3 | % | |
Pearson Education Inc(2) | | 225,299 |
| | 1.2 | % | | 0.3 | % | |
Mylan Pharmaceuticals Inc.(1) | | | 229,640 |
| | 1.2 | % | | 0.3 | % |
| | | Major Industrial Tenants | | Occupied Sq. Ft. | | % of Total Rentable Area of Account’s Industrial Properties | | % of Total Rentable Area of Non-Residential Properties | | Occupied Sq. Ft. | | % of Total Rentable Area of Account’s Industrial Properties | | % of Total Rentable Area of Non-Residential Properties |
Wal-Mart Stores, Inc.(2) | | 1,099,112 |
| | 3.7 | % | | 1.7 | % | | 1,099,112 |
| | 3.5 | % | | 1.6 | % |
Regal West Corporation(2) | | 968,535 |
| | 3.2 | % | | 1.5 | % | | 968,535 |
| | 3.1 | % | | 1.4 | % |
Restoration Hardware, Inc.(2) | | 886,052 |
| | 2.9 | % | | 1.3 | % | | 886,052 |
| | 2.8 | % | | 1.3 | % |
Kumho Tire U.S.A. Inc.(2) | | 830,485 |
| | 2.8 | % | | 1.2 | % | | 830,485 |
| | 2.7 | % | | 1.2 | % |
Del Monte Fresh Product, N.A., Inc.(2) | | 689,660 |
| | 2.3 | % | | 1.0 | % | | 689,660 |
| | 2.2 | % | | 1.0 | % |
Amazon.com(2) | | 684,988 |
| | 2.3 | % | | 1.0 | % | |
R.R Donnelley & Sons Company(2) | | 659,157 |
| | 2.2 | % | | 1.0 | % | | 659,157 |
| | 2.1 | % | | 1.0 | % |
Rheem Sales Company, Inc.(2) | | 656,600 |
| | 2.2 | % | | 1.0 | % | | 656,600 |
| | 2.1 | % | | 1.0 | % |
Global Equipment Company, Inc.(2) | | 647,228 |
| | 2.1 | % | | 1.0 | % | | 647,228 |
| | 2.1 | % | | 1.0 | % |
Campbell Soup Supply Company(2) | | 573,000 |
| | 1.9 | % | | 0.9 | % | | 573,000 |
| | 1.8 | % | | 0.8 | % |
Meiko America, Inc.(2) | | | 557,500 |
| | 1.8 | % | | 0.8 | % |
|
| | | | | | | | | |
| Major Retail Tenants | | Occupied Sq. Ft. | | % of Total Rentable Area of Account’s Retail Properties | | % of Total Rentable Area of Non-Residential Properties |
Dick's Sporting Goods, Inc.(1) | | 599,887 |
| | 3.3 | % | | 0.9 | % |
Macy's Inc.(1) | | 496,603 |
| | 2.7 | % | | 0.7 | % |
Belk, Inc.(1) | | 371,706 |
| | 2.1 | % | | 0.6 | % |
Kohl's Corporation(1) | | 349,777 |
| | 1.9 | % | | 0.5 | % |
J.C. Penney Corporation, Inc(1) | | 327,027 |
| | 1.8 | % | | 0.5 | % |
Ross Stores, Inc.(1) | | 320,189 |
| | 1.8 | % | | 0.5 | % |
PetSmart, Inc.(3) | | 308,294 |
| | 1.7 | % | | 0.5 | % |
Nordstrom Inc.(3) | | 304,610 |
| | 1.7 | % | | 0.5 | % |
Bed Bath and Beyond Inc.(3) | | 274,897 |
| | 1.5 | % | | 0.4 | % |
Best Buy Co., Inc.(3) | | 266,914 |
| | 1.5 | % | | 0.4 | % |
|
| | | | | | | | | |
| Major Retail Tenants | | Occupied Sq. Ft. | | % of Total Rentable Area of Account’s Retail Properties | | % of Total Rentable Area of Non-Residential Properties |
Dick's Sporting Goods, Inc. (1) | | 564,453 |
| | 3.3 | % | | 0.8 | % |
Macy's Inc. (1) | | 496,603 |
| | 2.9 | % | | 0.7 | % |
Belk, Inc. (1) | | 372,812 |
| | 2.2 | % | | 0.6 | % |
Kohl's Corporation (1) | | 349,777 |
| | 2.1 | % | | 0.5 | % |
J.C. Penney Corporation, Inc (1) | | 330,096 |
| | 1.9 | % | | 0.5 | % |
PetSmart, Inc.(3) | | 313,559 |
| | 1.8 | % | | 0.5 | % |
Best Buy Co., Inc. (3) | | 313,219 |
| | 1.8 | % | | 0.5 | % |
Nordstrom Inc. (3) | | 304,610 |
| | 1.8 | % | | 0.4 | % |
Bed Bath and Beyond Inc. (3) | | 274,897 |
| | 1.6 | % | | 0.4 | % |
Ross Stores, Inc. (1) | | 268,728 |
| | 1.6 | % | | 0.4 | % |
| |
(1) | Tenant occupied space within joint venture investments. |
| |
(2) | Tenant occupied space within wholly-owned property investments. |
| |
(3) | Tenant occupied space within wholly-owned property investments and joint venture investments. |
The following tables list the rentable area for long term leases subject to expiring leases during the next ten years and an aggregate figure for expirations in 20282030 and after, in the Account’s commercial (non-residential) properties that are both wholly-owned by the Account and held within the Account’s joint venture investments. While many of the leases contain renewal options with varying terms, these charts assume that none of the tenants exercise their renewal options, including those with terms that expired on December 31, 20172019 or are month to month leases.
Office Properties
| | Year of Lease Expiration | | Number of Tenants with Expiring Leases | | Rental Income Associated with Such Leases (in millions)(1) | | Expiring Rent as a % of Rental Revenue(1) | | Rentable Area Subject to Expiring Leases (sq. ft.) | | % of Total Rentable Area of Account’s Office Properties Represented by Expiring Leases | | Number of Tenants with Expiring Leases | | Base Rent Associated with Such Leases (millions)(1) | | Expiring Rent as a % of Rental Income(1) | | Rentable Area Subject to Expiring Leases (sq. ft.) | | % of Total Rentable Area of Account’s Office Properties Represented by Expiring Leases |
| 2018 | | 145 |
| | $ | 31.9 |
| | 2.0 | % | | 1,804,560 |
| | 9.8 | % | |
| 2019 | | 107 |
| | 26.6 |
| | 1.7 | % | | 1,490,087 |
| | 8.1 | % | |
| 2020 | | 112 |
| | 24.8 |
| | 1.6 | % | | 1,238,303 |
| | 6.8 | % | | 154 |
| | $ | 42.5 |
| | 2.4 | % | | 1,655,972 |
| | 8.5 | % |
| 2021 | | 100 |
| | 39.7 |
| | 2.5 | % | | 2,169,627 |
| | 11.8 | % | | 124 |
| | 55.5 |
| | 3.1 | % | | 2,364,874 |
| | 12.1 | % |
| 2022 | | 86 |
| | 27.3 |
| | 1.7 | % | | 1,447,026 |
| | 7.9 | % | | 124 |
| | 34.5 |
| | 1.9 | % | | 1,819,315 |
| | 9.3 | % |
| 2023 | | 51 |
| | 31.2 |
| | 2.0 | % | | 1,076,236 |
| | 5.9 | % | | 89 |
| | 45.5 |
| | 2.5 | % | | 1,380,512 |
| | 7.1 | % |
| 2024 | | 49 |
| | 34.6 |
| | 2.2 | % | | 1,389,215 |
| | 7.6 | % | | 84 |
| | 34.1 |
| | 1.9 | % | | 1,676,625 |
| | 8.6 | % |
| 2025 | | 49 |
| | 38.8 |
| | 2.5 | % | | 1,075,773 |
| | 5.9 | % | | 74 |
| | 55.8 |
| | 3.1 | % | | 1,454,158 |
| | 7.4 | % |
| 2026 | | 23 |
| | 36.8 |
| | 2.3 | % | | 1,242,177 |
| | 6.8 | % | | 41 |
| | 33.1 |
| | 1.8 | % | | 1,362,107 |
| | 7.0 | % |
| 2027 | | 14 |
| | 9.5 |
| | 0.6 | % | | 283,086 |
| | 1.5 | % | | 22 |
| | 18.8 |
| | 1.0 | % | | 799,394 |
| | 4.1 | % |
| 2028 | | | 35 |
| | 27.4 |
| | 1.5 | % | | 1,198,988 |
| | 6.1 | % |
| 2029 | | | 22 |
| | 12.3 |
| | 0.7 | % | | 455,966 |
| | 2.3 | % |
| Thereafter | | 38 |
| | 157.8 |
| | 10.1 | % | | 2,421,977 |
| | 13.2 | % | | 54 |
| | 128.4 |
| | 7.2 | % | | 3,017,906 |
| | 15.4 | % |
| Total | | 774 |
| | $ | 459.0 |
| | 29.2 | % | | 15,638,067 |
| | 85.3 | % | | 823 |
| | $ | 487.9 |
| | 27.1 | % | | 17,185,817 |
| | 87.9 | % |
Industrial Properties
| | Year of Lease Expiration | | Number of Tenants with Expiring Leases | | Rental Income Associated with Such Leases (in millions)(1) | | Expiring Rent as a % of Rental Revenue(1) | | Rentable Area Subject to Expiring Leases (sq. ft.) | | % of Total Rentable Area of Account’s Industrial Properties Represented by Expiring Leases | | Number of Tenants with Expiring Leases | | Base Rent Associated with Such Leases (millions)(1) | | Expiring Rent as a % of Rental Income(1) | | Rentable Area Subject to Expiring Leases (sq. ft.) | | % of Total Rentable Area of Account’s Industrial Properties Represented by Expiring Leases |
| 2018 | | 91 |
| | $ | 12.8 |
| | 0.8 | % | | 5,389,412 |
| | 17.9 | % | |
| 2019 | | 98 |
| | 8.6 |
| | 0.5 | % | | 2,831,141 |
| | 9.4 | % | |
| 2020 | | 84 |
| | 15.0 |
| | 1.0 | % | | 5,217,347 |
| | 17.3 | % | | 98 |
| | $ | 16.0 |
| | 0.9 | % | | 5,588,133 |
| | 18.0 | % |
| 2021 | | 67 |
| | 15.7 |
| | 1.0 | % | | 4,182,295 |
| | 13.9 | % | | 104 |
| | 18.9 |
| | 1.1 | % | | 6,162,686 |
| | 19.8 | % |
| 2022 | | 68 |
| | 15.1 |
| | 1.0 | % | | 5,211,508 |
| | 17.3 | % | | 110 |
| | 18.6 |
| | 1.0 | % | | 5,841,382 |
| | 18.8 | % |
| 2023 | | 22 |
| | 6.7 |
| | 0.4 | % | | 1,671,885 |
| | 5.6 | % | | 81 |
| | 17.4 |
| | 1.0 | % | | 5,333,041 |
| | 17.1 | % |
| 2024 | | 10 |
| | 3.9 |
| | 0.2 | % | | 1,380,239 |
| | 4.6 | % | | 82 |
| | 12.6 |
| | 0.7 | % | | 3,419,781 |
| | 11.0 | % |
| 2025 | | 12 |
| | 5.0 |
| | 0.3 | % | | 705,155 |
| | 2.3 | % | | 32 |
| | 6.6 |
| | 0.4 | % | | 1,035,026 |
| | 3.3 | % |
| 2026 | | 6 |
| | 5.6 |
| | 0.4 | % | | 829,665 |
| | 2.8 | % | | 9 |
| | 2.2 |
| | 0.1 | % | | 492,561 |
| | 1.6 | % |
| 2027 | | 7 |
| | 1.0 |
| | 0.1 | % | | 293,352 |
| | 1.0 | % | | 11 |
| | 2.8 |
| | 0.2 | % | | 553,062 |
| | 1.8 | % |
| 2028 | | | 5 |
| | 2.5 |
| | 0.1 | % | | 612,157 |
| | 2.0 | % |
| 2029 | | | 3 |
| | 0.6 |
| | — | % | | 142,306 |
| | 0.5 | % |
| Thereafter | | 1 |
| | — |
| | — | % | | 19,320 |
| | 0.1 | % | | 5 |
| | 1.0 |
| | 0.1 | % | | 312,451 |
| | 1.0 | % |
| Total | | 466 |
| | $ | 89.4 |
| | 5.7 | % | | 27,731,319 |
| | 92.2 | % | | 540 |
| | $ | 99.2 |
| | 5.6 | % | | 29,492,586 |
| | 94.9 | % |
Retail Properties
| | Year of Lease Expiration | | Number of Tenants with Expiring Leases | | Rental Income Associated with Such Leases (in millions)(1) | | Expiring Rent as a % of Rental Revenue(1) | | Rentable Area Subject to Expiring Leases (sq. ft.) | | % of Total Rentable Area of Account’s Retail Properties Represented by Expiring Leases | | Number of Tenants with Expiring Leases | | Base Rent Associated with Such Leases (millions)(1) | | Expiring Rent as a % of Rental Income(1) | | Rentable Area Subject to Expiring Leases (sq. ft.) | | % of Total Rentable Area of Account’s Retail Properties Represented by Expiring Leases |
| 2018 | | 257 |
| | $ | 17.8 |
| | 1.1 | % | | 1,412,539 |
| | 7.8 | % | |
| 2019 | | 258 |
| | 16.1 |
| | 1.0 | % | | 1,861,769 |
| | 10.3 | % | |
| 2020 | | 248 |
| | 18.4 |
| | 1.2 | % | | 1,607,886 |
| | 8.9 | % | | 270 |
| | $ | 17.1 |
| | 1.0 | % | | 1,238,038 |
| | 8.1 | % |
| 2021 | | 263 |
| | 19.4 |
| | 1.2 | % | | 1,990,624 |
| | 11.0 | % | | 281 |
| | 19.4 |
| | 1.1 | % | | 1,852,164 |
| | 12.1 | % |
| 2022 | | 226 |
| | 15.8 |
| | 1.0 | % | | 2,305,081 |
| | 12.7 | % | | 252 |
| | 16.3 |
| | 0.9 | % | | 2,196,998 |
| | 14.4 | % |
| 2023 | | 161 |
| | 12.8 |
| | 0.8 | % | | 1,575,690 |
| | 8.7 | % | | 251 |
| | 19.5 |
| | 1.1 | % | | 1,679,198 |
| | 11.0 | % |
| 2024 | | 127 |
| | 13.4 |
| | 0.9 | % | | 753,031 |
| | 4.2 | % | | 218 |
| | 19.5 |
| | 1.1 | % | | 1,568,556 |
| | 10.3 | % |
| 2025 | | 140 |
| | 20.5 |
| | 1.3 | % | | 931,649 |
| | 5.1 | % | | 174 |
| | 20.7 |
| | 1.2 | % | | 1,318,388 |
| | 8.6 | % |
| 2026 | | 101 |
| | 10.4 |
| | 0.7 | % | | 931,213 |
| | 5.1 | % | | 108 |
| | 11.0 |
| | 0.6 | % | | 1,253,925 |
| | 8.2 | % |
| 2027 | | 77 |
| | 6.7 |
| | 0.4 | % | | 564,358 |
| | 3.1 | % | | 85 |
| | 8.1 |
| | 0.5 | % | | 619,466 |
| | 4.1 | % |
| 2028 | | | 60 |
| | 5.9 |
| | 0.3 | % | | 500,067 |
| | 3.3 | % |
| 2029 | | | 51 |
| | 3.1 |
| | 0.2 | % | | 349,298 |
| | 2.3 | % |
| Thereafter | | 47 |
| | 12.8 |
| | 0.8 | % | | 1,070,538 |
| | 5.9 | % | | 50 |
| | 15.2 |
| | 0.8 | % | | 1,610,421 |
| | 10.5 | % |
| Total | | 1,905 |
| | $ | 164.1 |
| | 10.4 | % | | 15,004,378 |
| | 82.8 | % | | 1,800 |
| | $ | 155.8 |
| | 8.8 | % | | 14,186,519 |
| | 92.9 | % |
| |
(1) | Rental income includes incomeIncludes base rent from wholly-owned properties which is shown as Rental income on the Consolidated Statements of Operations, as well as income fromand properties held inthrough joint venture investments, which is included in Income from real estate joint ventures and limited partnerships on the Consolidated Statements of Operations.ventures. |
Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts, sales volume or contractual increases as defined in the lease agreement. These contractual contingent rentals are not included in the table above.
The following table details the leasing activity during the year ended December 31, 2017.2019.
|
| | | |
| | Leasing Activity (sq. ft.) | |
| Vacant space beginning of year | 5,382,9015,888,086 |
| |
| Vacant space acquired during the year | 413,658364,706 |
| |
| Vacant space disposed of during the year | (41,73628,723 | ) | |
| Vacant space placed into service during the year | (6,255,4849,651,602 | ) | |
| Expiring leases during the year | 6,186,4758,593,975 |
| |
| Vacant space end of year | 5,685,8145,166,442 |
| |
| Average remaining lease term* | 48 months |
| |
*Includes office, industrial and retail properties.
Based on leases in place at December 31, 2017,2019, leases representing approximately 12.9%12.6% of net rentable area are scheduled to expire throughout 2018.2020. Rents associated with such lease expirations are generally at or below prevailing market rents in the Account’s primary metropolitan markets.
Residential PropertiesInvestments
The Account’s residential property investment portfolio consisted of 38 properties as of December 31, 2017,is comprised of first class or luxury multi-family, garden, mid-rise, and high-rise apartment buildings, including one investment held in a joint venture. The portfolio contains approximately 12,924 units located in 11 states and the District of Columbia. The portfolio was 93.5% leased as of December 31, 2017. Ten of the residential properties in the portfolio are subject to mortgages, including one joint venture investment.buildings. The complexes generally contain one to three bedroom apartment units with a range of amenities, such as patios or balconies, washers and dryers, and central air conditioning. Many of these apartment communities have on-site fitness facilities, including some with swimming pools. Rents on each of the properties tend to be comparable with competitive communities and are not subject to rent regulation. The Account is resp
onsibleresponsible for the expenses of operating its residential properties. As of December 31, 2017,2019, the Account’s residential properties had an aggregate fair value of approximately $4.5$6.1 billion.
The following table contains detailed information regarding the apartment complexes in the Account’s portfolio as of December 31, 2017.2019.
| | | Property | | Location | | Number Of Units | | Average Unit Size (Sq. Ft.) | | Avg. Rent Per Unit/ Per Month | | Location | | Number Of Units | | Average Unit Size (Sq. Ft.) |
| 5 West | | | Tampa, FL | | 318 |
| | 978 |
|
| 250 North 10th Street | | | Brooklyn, NY | | 234 |
| | 676 |
|
| 803 Corday | | | Naperville, IL | | 440 |
| | 937 |
|
| Allure at Camarillo | | | Camarillo, CA | | 165 |
| | 880 |
|
| Ascent at Windward | | | Alpharetta, GA | | 328 |
| | 1,075 |
|
| Ashford Meadows Apartments | | | Herndon, VA | | 440 |
| | 1,050 |
|
| Avana | | | San Clemente, CA | | 250 |
| | 841 |
|
| Biltmore at Midtown | | | Atlanta, GA | | 276 |
| | 766 |
|
BLVD 63(2) | | | San Diego, CA | | 913 |
| | 361 |
|
| Boca Arbor Club | | | Boca Raton, FL | | 304 |
| | 896 |
|
| Carrington Park | | | Plano, TX | | 364 |
| | 936 |
|
| Casa Palma | | | Coconut Creek, FL | | 350 |
| | 1,123 |
|
| Centric Gateway | | | Charlotte, NC | | 297 |
| | 890 |
|
| Cherry Knoll | | | Germantown, MD | | 300 |
| | 968 |
|
| Churchill on the Park | | | Dallas, TX | | 448 |
| | 868 |
|
| Circa Green Lake | | | Seattle, WA | | 199 |
| | 765 |
|
| Cliffs at Barton Creek | | | Austin, TX | | 210 |
| | 952 |
|
| Creekside Alta Loma | | | Rancho Cucamonga, CA | | 290 |
| | 887 |
|
| District at La Frontera | | | Austin, TX | | 512 |
| | 920 |
|
| Fusion 1560 | | | St. Petersburg, FL | | 325 |
| | 833 |
|
| Glen Lake | | | Atlanta, GA | | 270 |
| | 1,199 |
|
Greene Crossing(2) | | | Columbia, SC | | 726 |
| | 444 |
|
| Henley at Kingstowne | | | Alexandria, VA | | 358 |
| | 930 |
|
| Holly Street Village | | | Pasadena, CA | | 374 |
| | 879 |
|
Houston Apartment Porfolio(1) | | | Houston, TX | | 877 |
| | 1,158 |
|
| Lakepointe at Jacaranda | | | Plantation, FL | | 246 |
| | 880 |
|
| Larkspur Courts | | | Larkspur, CA | | 248 |
| | 1,001 |
|
| Lofts at SoDo | | | Orlando, FL | | 308 |
| | 961 |
|
| Mass Court | | | Washington, DC | | 371 |
| | 834 |
|
| MiMA | | | New York, NY | | 500 |
| | 739 |
|
| Oceano at Warner Center | | | Woodland Hills, CA | | 244 |
| | 935 |
|
Orion on Orpington(2) | | | Orlando, FL | | 624 |
| | 324 |
|
Palomino Park(1) | | Highlands Ranch, CO | | 1,184 |
| | 1,100 |
| | 1,765 |
| | Highlands Ranch, CO | | 1,184 |
| | 1,100 |
|
Houston Apartment Porfolio(1) | | Houston, TX | | 877 |
| | 1,158 |
| | 1,722 |
| |
Greene Crossing(2) | | Columbia, SC | | 727 |
| | 369 |
| | 830 |
| |
| Prescott Wallingford Apartments | | | Seattle, WA | | 154 |
| | 665 |
|
| Regents Court | | | San Diego, CA | | 251 |
| | 886 |
|
Simpson Housing Portfolio(1) | | | Various, U.S.A. | | 3,827 |
| | 1,010 |
|
| Sole at Brandon | | | Riverview, FL | | 366 |
| | 1,060 |
|
| Stella | | | Marina Del Rey, CA | | 244 |
| | 970 |
|
| Terra House | | | San Jose, CA | | 348 |
| | 814 |
|
| The Ashton | | | Washington, D.C. | | 49 |
| | 1,600 |
|
The Bridges(2) | | Minneapolis, MN | | 720 |
| | 262 |
| | 514 |
| | Minneapolis, MN | | 359 |
| | 523 |
|
Orion on Orpington(2) | | Orlando, FL | | 624 |
| | 324 |
| | 592 |
| |
South Florida Apartment Portfolio(1) | | Boca Raton and Plantation, FL | | 550 |
| | 888 |
| | 1,452 |
| |
| MiMA | | New York, NY | | 500 |
| | 739 |
| | 4,547 |
| |
| The Colorado | | | New York, NY | | 175 |
| | 876 |
|
| The Cordelia | | | Portland, OR | | 135 |
| | 667 |
|
The Knoll(2) | | Minneapolis, MN | | 452 |
| | 230 |
| | 442 |
| | Minneapolis, MN | | 226 |
| | 459 |
|
| Ashford Meadows Apartments | | Herndon, VA | | 440 |
| | 1,050 |
| | 1,712 |
| |
| 803 Corday | | Naperville, IL | | 440 |
| | 937 |
| | 1,540 |
| |
| The Manor at Flagler Village | | Fort Lauderdale, FL | | 382 |
| | 964 |
| | 2,309 |
| |
| Holly Street Village | | Pasadena, CA | | 374 |
| | 879 |
| | 2,318 |
| |
| Mass Court | | Washington, D.C. | | 371 |
| | 834 |
| | 2,791 |
| |
| Casa Palma | | Coconut Creek, FL | | 350 |
| | 1,123 |
| | 1,943 |
| |
| BLVD 63 | | San Diego, CA | | 332 |
| | 1,250 |
| | 3,521 |
| |
| The Maroneal | | Houston, TX | | 309 |
| | 928 |
| | 1,590 |
| |
| Union - South Lake Union | | Seattle, WA | | 284 |
| | 696 |
| | 2,065 |
| |
| The Louis at 14th | | Washington, D.C. | | 268 |
| | 665 |
| | 3,066 |
| |
| The Palatine | | Arlington, VA | | 262 |
| | 1,055 |
| | 2,689 |
| |
| Regents Court | | San Diego, CA | | 251 |
| | 886 |
| | 2,237 |
| |
| Larkspur Courts | | Larkspur, CA | | 248 |
| | 1,001 |
| | 3,273 |
| |
| Oceano at Warner Center | | Woodland Hill, CA | | 244 |
| | 935 |
| | 2,200 |
| |
| Stella | | Marina Del Rey, CA | | 244 |
| | 970 |
| | 3,527 |
| |
| 250 North 10th Street | | Brooklyn, NY | | 234 |
| | 676 |
| | 3,609 |
| |
| The Woodley | | Washington, D.C. | | 212 |
| | 1,117 |
| | 4,631 |
| |
| Cliffs at Barton Creek | | Austin, TX | | 210 |
| | 952 |
| | 1,615 |
| |
| Circa Green Lake | | Seattle, WA | | 199 |
| | 765 |
| | 2,157 |
| |
| The Manor Apartments | | Plantation, FL | | 197 |
| | 977 |
| | 2,176 |
| |
| The Corner | | New York, NY | | 196 |
| | 791 |
| | 6,442 |
| |
| The Legacy at Westwood | | Los Angeles, CA | | 187 |
| | 1,181 |
| | 4,804 |
| |
| The Colorado | | New York, NY | | 175 |
| | 876 |
| | 6,298 |
| |
| Allure at Camarillo | | Camarillo, CA | | 165 |
| | 880 |
| | 2,036 |
| |
| Prescott Wallingford Apartments | | Seattle, WA | | 154 |
| | 663 |
| | 1,888 |
| |
| The Cordelia | | Portland, OR | | 135 |
| | 667 |
| | 1,838 |
| |
| Township Apartments | | Redwood City, CA | | 132 |
| | 914 |
| | 3,565 |
| |
| Westcreek | | Westlake Village, CA | | 126 |
| | 951 |
| | 2,563 |
| |
| The Residences at the Village of Merrick Park | | Coral Gables, FL | | 120 |
| | 1,231 |
| | 3,484 |
| |
| The Ashton | | Washington, D.C. | | 49 |
| | 1,612 |
| | 4,277 |
| |
|
| | | | | | | | |
| Property | | Location | | Number Of Units | | Average Unit Size (Sq. Ft.) |
| The Legacy at Westwood | | Los Angeles, CA | | 187 |
| | 1,181 |
|
| The Louis at 14th | | Washington, DC | | 268 |
| | 665 |
|
| The Manor Apartments | | Plantation, FL | | 197 |
| | 977 |
|
| The Manor at Flagler Village | | Fort Lauderdale, FL | | 382 |
| | 964 |
|
| The Maroneal | | Houston, TX | | 309 |
| | 928 |
|
| The Palatine | | Arlington, VA | | 262 |
| | 1,055 |
|
| The Residences at the Village of Merrick Park | | Coral Gables, FL | | 120 |
| | 1,231 |
|
| The Woodley | | Washington, DC | | 212 |
| | 1,117 |
|
THP Student Housing Portfolio(1)(2) | | Various, U.S.A. | | 4,143 |
| | 433 |
|
| Union - South Lake Union | | Seattle, WA | | 284 |
| | 696 |
|
| Westcreek | | Westlake Village, CA | | 126 |
| | 951 |
|
| |
(1) | Represents a portfolio containing multiple properties. |
| |
(2) | This investmentInvestment is a student housing asset. Units at this investment are rented per bedroom, and multiple bedrooms can exist in one unit. Average rent per month in the table above is reflective of average rent per bedroom.apartment. |
Other Real Estate Investments
In addition to the Account's commercial and residential real estate investments, the Account has other real estate investments comprised of three storage portfolios, two properties under development, and a hotel. The storage portfolios are held through joint ventures with an established operator in the self-storage industry. The storage portfolios are diversified throughout the United States, with exposure present in more than twenty metropolitan areas. The properties under development are industrial sites located in metropolitan areas where tenant demand for space is strong and is expected to continue over the long term. The development properties are scheduled for completion in 2021. The hotel, located in Dallas, TX, is located within the Lincoln Centre campus, which is also the location of an office property held by the Account.
ITEM 3. LEGAL PROCEEDINGS.
In the normal course of business, the Account may be named, from time to time, as a defendant or may be involved in various legal actions, including arbitrations, class actions and other litigation.
The Account establishes an accrual for all litigation and regulatory matters when it believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted, as appropriate, in light of additional information. The amount of loss ultimately incurred in relation to those matters may be higher or lower than the amounts accrued for those matters.
As of the date of this annual report, management of the Account does not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material effect on the Account’s business, financial position or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S SECURITIES, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information. There is no established public trading market for securities issued by the Account. Accumulation units in the Account are sold to eligible participants at the Account’s current accumulation unit value, which is based on the value of the Account’s then current net assets, and are redeemable in accordance with the terms of the participant’s annuity contract. For the period from January 1, 20172019 to December 31, 2017,2019, the high and low accumulation unit values for the Account were $398.329$440.422 and $381.785,$416.977, respectively. For the period January 1, 20162018 to December 31, 2016,2018, the high and low accumulation unit values for the Account were $381.636$418.185 and $362.267,$397.520, respectively.
Holders. The approximate number of Account contract owners at December 31, 20172019 was 1,045,110.
Dividends. Not applicable.1,035,232.
Securities Authorized for Issuance under Equity Compensation Plans. Not applicable.
Use of Proceeds. Not applicable.
Purchases of Equity Securities by Issuer. Not applicable.
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be considered in conjunction with the Account’s Consolidated Financial Statements and notes provided in this Form 10-K (amounts in millions except for per accumulation unit amounts).
| | | | | Years Ended December 31, | | Years Ended December 31, |
| 2017 | | 2016 | | 2015 | | 2014 | | 2013 | 2019 | | 2018 | | 2017 | | 2016 | | 2015 |
| Investment income: | | | | | | | | | | | | | | | | | | | | |
| Real estate income, net | | $ | 582.0 |
| | $ | 546.4 |
| | $ | 486.2 |
| | $ | 457.0 |
| | $ | 391.0 |
| | $ | 572.9 |
| | $ | 561.8 |
| | $ | 582.0 |
| | $ | 546.4 |
| | $ | 486.2 |
|
| Income from real estate joint ventures and limited partnerships | | 214.1 |
| | 161.8 |
| | 140.1 |
| | 148.1 |
| | 104.7 |
| |
| Income from real estate joint ventures and funds | | | 214.0 |
| | 204.7 |
| | 214.1 |
| | 161.8 |
| | 140.1 |
|
| Dividends and interest | | 80.4 |
| | 58.9 |
| | 57.6 |
| | 47.7 |
| | 45.1 |
| | 196.2 |
| | 171.2 |
| | 80.4 |
| | 58.9 |
| | 57.6 |
|
| Total investment income | | 876.5 |
| | 767.1 |
| | 683.9 |
| | 652.8 |
| | 540.8 |
| | 983.1 |
| | 937.7 |
| | 876.5 |
| | 767.1 |
| | 683.9 |
|
| Expenses | | 205.2 |
| | 202.0 |
| | 182.9 |
| | 163.0 |
| | 145.1 |
| | 208.9 |
| | 192.8 |
| | 205.2 |
| | 202.0 |
| | 182.9 |
|
| Investment income, net | | 671.3 |
| | 565.1 |
| | 501.0 |
| | 489.8 |
| | 395.7 |
| | 774.2 |
| | 744.9 |
| | 671.3 |
| | 565.1 |
| | 501.0 |
|
| Net realized and unrealized gains on investments and mortgage loans payable | | 387.1 |
| | 619.8 |
| | 1,145.4 |
| | 1,628.4 |
| | 1,060.2 |
| |
| Net realized and unrealized gains on investments and loans payable | | | 652.8 |
| | 436.7 |
| | 387.1 |
| | 619.8 |
| | 1,145.4 |
|
| Net increase in net assets resulting from operations | | 1,058.4 |
| | 1,184.9 |
| | 1,646.4 |
| | 2,118.2 |
| | 1,455.9 |
| | 1,427.0 |
| | 1,181.6 |
| | 1,058.4 |
| | 1,184.9 |
| | 1,646.4 |
|
| Participant transactions, net | | (420.5 | ) | | 759.8 |
| | 884.6 |
| | 802.9 |
| | 916.3 |
| | 38.3 |
| | (281.6 | ) | | (420.5 | ) | | 759.8 |
| | 884.6 |
|
| TIAA redemption of Liquidity Units | | — |
| | — |
| | — |
| | — |
| | (325.4 | ) | |
| Net increase in net assets | | $ | 637.9 |
| | $ | 1,944.7 |
| | $ | 2,531.0 |
| | $ | 2,921.1 |
| | $ | 2,046.8 |
| | $ | 1,465.3 |
| | $ | 900.0 |
| | $ | 637.9 |
| | $ | 1,944.7 |
| | $ | 2,531.0 |
|
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | Years Ended December 31, |
| 2017 | | 2016 | | 2015 | | 2014 | | 2013 | 2019 | | 2018 | | 2017 | | 2016 | | 2015 |
| Total assets | | $ | 27,453.6 |
| | $ | 26,985.2 |
| | $ | 24,399.4 |
| | $ | 22,408.7 |
| | $ | 19,417.1 |
| | $ | 30,209.9 |
| | $ | 28,818.2 |
| | $ | 27,453.6 |
| | $ | 26,985.2 |
| | $ | 24,399.4 |
|
| Total liabilities | | 2,511.0 |
| | 2,680.5 |
| | 2,039.4 |
| | 2,579.7 |
| | 2,509.2 |
| | 2,902.0 |
| | 2,975.6 |
| | 2,511.0 |
| | 2,680.5 |
| | 2,039.4 |
|
| Total net assets | | $ | 24,942.6 |
| | $ | 24,304.7 |
| | $ | 22,360.0 |
| | $ | 19,829.0 |
| | $ | 16,907.9 |
| | $ | 27,307.9 |
| | $ | 25,842.6 |
| | $ | 24,942.6 |
| | $ | 24,304.7 |
| | $ | 22,360.0 |
|
| Number of per accumulation unit amounts | | 61.3 |
| | 62.4 |
| | 60.4 |
| | 57.9 |
| | 55.3 |
| | 60.8 |
| | 60.7 |
| | 61.3 |
| | 62.4 |
| | 60.4 |
|
| Net asset value, per accumulation unit | | $ | 398.329 |
| | $ | 381.636 |
| | $ | 362.773 |
| | $ | 335.393 |
| | $ | 298.872 |
| | $ | 440.422 |
| | $ | 417.416 |
| | $ | 398.329 |
| | $ | 381.636 |
| | $ | 362.773 |
|
| Mortgage loans payable | | $ | 2,238.3 |
| | $ | 2,332.1 |
| | $ | 1,794.4 |
| | $ | 2,373.8 |
| | $ | 2,279.1 |
| |
| Loans payable and line of credit | | | $ | 2,615.0 |
| | $ | 2,608.0 |
| | $ | 2,238.3 |
| | $ | 2,332.1 |
| | $ | 1,794.4 |
|
Quarterly Selected Financial Data
The following quarterly selected unaudited financial data for each full quarter of 2017 and 2016presented are derived from the Consolidated Financial Statements of the Account for the years ended December 31, 20172019 and 2016 (amounts in millions)2018 (millions). | | | | | 2017 | | Year Ended December 31, 2017 | | 2019 | | Year Ended December 31, 2019 |
| For the Three Months Ended | | For the Three Months Ended | |
| March 31 | | June 30 | | September 30 | | December 31 | | March 31 | | June 30 | | September 30 | | December 31 | |
| Investment income, net | | $ | 139.2 |
| | $ | 166.0 |
| | $ | 180.6 |
| | $ | 185.5 |
| | $ | 671.3 |
| | $ | 172.4 |
| | $ | 208.4 |
| | $ | 202.4 |
| | $ | 191.0 |
| | $ | 774.2 |
|
| Net realized and unrealized gain on investments and mortgage loans payable | | 135.1 |
| | 32.3 |
| | 86.2 |
| | 133.5 |
| | 387.1 |
| |
| Net realized and unrealized gain on investments and loans payable | | | 270.4 |
| | 140.3 |
| | 110.1 |
| | 132.0 |
| | 652.8 |
|
| Net increase in net assets resulting from operations | | $ | 274.3 |
| | $ | 198.3 |
| | $ | 266.8 |
| | $ | 319.0 |
| | $ | 1,058.4 |
| | $ | 442.8 |
| | $ | 348.7 |
| | $ | 312.5 |
| | $ | 323.0 |
| | $ | 1,427.0 |
|
| Total return | | 1.13 | % | | 0.81 | % | | 1.08 | % | | 1.29 | % | | 4.37 | % | | 1.71 | % | | 1.32 | % | | 1.17 | % | | 1.19 | % | | 5.51 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 2016 | | Year Ended December 31, 2016 | | 2018 | | Year Ended December 31, 2018 |
| For the Three Months Ended | | For the Three Months Ended | |
| March 31 | | June 30 | | September 30 | | December 31 | | March 31 | | June 30 | | September 30 | | December 31 | |
| Investment income, net | | $ | 121.7 |
| | $ | 153.0 |
| | $ | 136.5 |
| | $ | 153.9 |
| | $ | 565.1 |
| | $ | 179.9 |
| | $ | 200.6 |
| | $ | 178.0 |
| | $ | 186.4 |
| | $ | 744.9 |
|
| Net realized and unrealized gain on investments and mortgage loans payable | | 302.1 |
| | 144.5 |
| | 25.9 |
| | 147.3 |
| | 619.8 |
| |
| Net realized and unrealized gain on investments and loans payable | | | 55.0 |
| | 204.8 |
| | 119.2 |
| | 57.7 |
| | 436.7 |
|
| Net increase in net assets resulting from operations | | $ | 423.8 |
| | $ | 297.5 |
| | $ | 162.4 |
| | $ | 301.2 |
| | $ | 1,184.9 |
| | $ | 234.9 |
| | $ | 405.4 |
| | $ | 297.2 |
| | $ | 244.1 |
| | $ | 1,181.6 |
|
| Total return | | 1.89 | % | | 1.28 | % | | 0.68 | % | | 1.26 | % | | 5.20 | % | | 0.95 | % | | 1.63 | % | | 1.17 | % | | 0.95 | % | | 4.79 | % |
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE ACCOUNT’S FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of the Account's financial condition and results of operations should be read together with the consolidated financial statementsConsolidated Financial Statements and notes contained in this report and with consideration to the sub-section entitled “Forward-looking Statements,” which begins below, and the section entitled “Item 1A. Risk Factors.” The past performance of the Account is not indicative of future results.
Forward-looking Statements
Some statements in this Form 10-K which are not historical facts may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about management’s expectations, beliefs, intentions or strategies for the future, include the assumptions and beliefs underlying these forward-looking statements, and are based on current expectations, estimates and projections about the real estate industry, domestic and global economic conditions, including conditions in the credit and capital markets, the sectors, and markets in which the Account invests and operates, and the transactions described in this Form 10-K. While management believes the assumptions underlying its forward-looking statements and information to be reasonable, such information may be subject to uncertainties and may involve certain risks which may be difficult to predict and are beyond management’s control. These risks and uncertainties could cause actual results to differ materially from those contained in any forward-looking statement. These risks and uncertainties include, but are not limited to, the following:
General Risks of Acquiring and Owning Real Estate.Property. The risks associated with acquiring and owning real property, including general economic and real estate market conditions, the availability of, and economic cost associated with, financing the Account’s properties, the risk that the Account’s properties become too concentrated (whether by geography, sector or by tenant mix), competition for acquiring real estate properties, leasing risk (including tenant defaults) and the risk of uninsured losses at properties (including due to terrorism, natural disasters, and acts of violence);
General Risks of Selling Real Estate.Estate Investments. The risk that the sales price of a property might differ, perhaps significantly, from its estimated or appraised value, leading to losses or reduced profits to the Account, the risk that the Account might not be able to sell a property at a particular time for a price which management believes represents its fair or full value, the risk of a lack of availability of financing (for potential purchasers of the Account’s properties), risks associated with disruptions in the credit and capital markets, and the risk that the Account may be required to make significant expenditures before the Account is able to market and/or sell a property;
Valuation.Valuation and Appraisal Risk. The risks associated with property valuations, including the fact that appraisals can be subjective in a number of respects and the fact that the Account’s appraisals are generally obtained on a quarterly basis and there may be periods in between appraisals of a property during which the value attributed to the property for purposes of the Account’s daily accumulation unit value may be more or less than the actual realizable value of the property;
Borrowing.Borrowing Risk. Risks associated with financing the Account’s properties, including the risk of default on loans secured by the Account’s properties (which could lead to foreclosure), the risk of default under unsecured line of credit or credit facilities underwritten by third-party lenders, the risk associated with high loan-to-value ratios on the Account’s properties (including the fact that the Account may have limited, or no net value in such a property), the risk that significant sums of cash could be required to make principal and interest payments on the loans and the risk that the Account may not have the ability to obtain financing or refinancing on favorable terms (or at all), which may be aggravated by general disruptions in credit and capital markets;
Participant TransactionsInvestment and Cash Management.Management Risks Associated with Participant Transactions. Investment risk associated with participant transactions, in particular that (i) significant net participant transfers out of the Account may impair our ability to pursue or consummate new investment opportunities that are otherwise attractive to the Account and/ or may result in sales of real estate-related assets to generate liquidity, (ii) significant net participant transfers into the Account may result, on a temporary basis, in our cash holdings and/or holdings in liquid non-real estate-related investments exceeding our long-term targeted holding levels and (iii) high levels of cash and liquid non-realnon-
real estate-related investments in the Account during times of appreciating real estate values can impair the Account’s overall return;
Joint Venture Investments.Investment Risk. The risks associated with joint ventures organized as limited partnerships or limited liability companies, as applicable,and real estate funds, including the risk that a co-venturer or fund manager may have interests or goals inconsistent with that of the Account, that a co-venturer or fund manager may have financial difficulties, and the risk that the Account may have limited rights with respect to operation of the property and transfer of the Account’s interest;
Real Estate Regulatory Matters.Risk. Uncertainties associated with environmental liability and regulations and other governmental regulatory matters such as zoning laws, rent control laws, and property taxes;
Foreign Investments.Environmental Risk. The risks associated with purchasing, owningthat the Account may be liable for damage to the environment or injury to individuals caused by hazardous substances used or found on its properties. Federal and disposingstate environmental laws may also impose restrictions on the manner in which a property may be used, impose significant costs for environmental clean-up relating to certain real property investments (including remediating contaminated property), and require the Account to acquire third-party insurance related to environmental risks, all of which could adversely impact the Account’s investment returns;
Uninsurable Loss Risk. Certain catastrophic losses (e.g., from earthquakes, wars, terrorist acts, nuclear accidents, hurricanes, tsunamis, high winds, wildfires, inland or coastal floods, rising sea levels or environmental or industrial hazards or accidents) may be uninsurable or so expensive to insure against that it is economically disadvantageous for the Account to buy insurance to cover such losses. In such an event, the catastrophic losses could adversely impact the Account’s investment returns;
Physical Climate Change Related Financial Risk. Many of the Account’s commercial real estate assets are located within geographical regions in the United States and foreign investments (primarily foreignjurisdictions that currently are, and in the future will continue to be, adversely impacted by increasingly severe and adverse weather conditions across the globe, including, among others, earthquakes, hurricanes, tsunamis, high winds, wildfires, inland or coastal flooding, and rising sea levels. Any resulting losses from such climate-related changes and hazards could adversely impact the Account’s investment returns;
ESG Criteria Risk. The risks that the Account’s utilization of ESG criteria in its commercial real estate underwriting may result in the Account foregoing some commercial real estate market opportunities that could be beneficial to the Account. Consequently, the Account may underperform other investment vehicles that do not utilize such ESG criteria in selecting portfolio properties;
Foreign Real Property Investment Risk. Foreign commercial real properties, foreign real estate loans, and foreign mezzanine and other debt), includingdebt investments may experience unique risks such as changes in currency exchange rates, imposition of market controls or currency exchange controls, seizure, expropriation or nationalization of assets, political, risk, the risk associated with foreign currency fluctuations (whether hedgedsocial or not),diplomatic events or unrest, regulatory and taxation risks and risks ofassociated with enforcing judgments;judgments in foreign countries that could cause the Account to lose money. The risks described above often increase in countries with emerging markets;
ConflictsRisk of Interest.Investing in REIT Securities Conflicts. Investments in REIT securities are subject to many of interestthe same general risks associated with TIAA serving as investment managerdirect real property ownership. In particular, equity REITs may be affected by changes in the value of the Accountunderlying properties owned by the entity, while mortgage REITs may be affected by the quality of any credit extended. In addition to these risks, because REIT investments are securities and providergenerally publicly traded, they may be exposed to market risk and potentially significant price volatility due to changing conditions in the financial markets and, in particular, changes in overall interest rates, regardless of the liquidity guarantee atvalue of the same time as TIAA and its affiliates are serving as an investment manager to otherunderlying real estate accounts or funds, including conflicts associated with satisfying its fiduciary duties to all such accounts and funds associated with purchasing, selling and leasing of properties;REIT may own;
Required Property Sales.Risks of Mortgage-Backed Securities. The Account from time to time has invested in mortgage-backed securities and may in the future invest in such securities. Mortgage-backed securities, such as CMBS and RMBS, are subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. The underlying mortgage loans may experience defaults, are subject to prepayment risk or extension risk and are highly sensitive to changes in interest rates, liquidity of the secondary market, economic conditions impacting financial institutions and the credit markets generally, and changes in governmental policies impacting Fannie Mae and Freddie Mac and/or U.S. Government programs related to mortgages that may be implemented in the future;
Risks of Investing in Mortgage Loans and Related Investments. Because the Account’s investment strategy includes investments in mortgage loans (i.e., the Account serving as lender), the Account will be subject to the risks inherent in making mortgage loans, including, among others, (i) borrower default, bankruptcy and insolvency that results in the Account being unable to recover some or all of its original investment, (ii) mechanic’s or tax liens that may have priority over the Account’s security interest, (iii) a deterioration in the financial condition of tenants, (iv) changes in interest rates for the Account’s variable-rate mortgage loans and other debt instruments that may increase or decrease the investment’s yield, (v) the risk that if TIAA were to own too largeborrowers pay off their mortgage loans earlier or later than expected resulting in a percentagedecline in income, and (vii) the costs of hedging strategies for domestic and foreign loans or securities that may increase the Account’s accumulation units through funding the liquidity guarantee (as determined by the independent fiduciary), the independent fiduciary could require the sales of properties totransactions costs and reduce TIAA’s ownership interest, which sales could occur at times and at prices that depress the sale proceeds to the Account;its performance;
Risks of U.S. Government and Government Agency Securities.Securities and Corporate Obligations.Risks associated with investment securities issued by U.S. governmentGovernment agencies and U.S. government-sponsoredGovernment-sponsored entities, including the risk that the issuer may not have their securities backed by the full faith and credit of the U.S. government,Government, which could adversely affect the pricing and value of such securities. Such securities are also subject market movements, regulatory changes, changes in political or economic conditions or downgrades or threatened downgrades of the credit rating for U.S. Government obligations generally that transaction activity may fluctuate significantly from time to time, which could negatively impact the value of the securities and the Account’s ability to dispose of athe security at a favorable time;time. U.S. Government securities generally present limited credit risk compared to other types of debt securities but are not free from risk. In addition, the Account’s investment in corporate obligations (such as commercial paper and other types of corporate debt) may be subject to general dislocations in the finance or credit markets, fluctuations in transaction activity that could impair the Account’s ability to dispose of a corporate debt security at a favorable time, and the risk that the credit quality of the corporate issuer will deteriorate, any of which could have a negative impact on the value of the investment; and
Risks of Liquid, AssetsFixed-Income Investments and Other Securities. Risks associated with investments in liquid, fixed-income investments and real estate-related liquid assets (which could include, from time to time, registered or unregistered REIT securities and CMBS), and non-real estate-related liquid assets, including:
Financial/credit risk—RisksIssuer Risk (Financial risk)-The risk that the issuer will not be able to pay principal and interest when due or that the issuer’s earnings will fall;
Credit Risk (a type of Issuer Risk)-The risk that the issuer of fixed-income investments may not be able or willing to meet interest or principal payments when the payments become due;
Credit Spread Risk-The risk that credit spreads (i.e., the difference in yield between securities that is due to differences in each security’s respective credit quality) may increase when market participants believe that bonds or other fixed-income securities generally have a greater risk of default, which could result in a decline in the market values of the Account’s debt or other fixed-income securities;
Market volatility risk—Volatility, Liquidity and Valuation Risk (types of Market Risk)-The risk that the changing conditions in financial markets may cause the Account’s investments to experience price volatility;
Interest rate volatility risk—Rate Risk (a type of Market Risk)-The risk that interest rate volatility may affect the Account’s current income from an investment or the pricing of that investment. In general, changing interest rates could have unpredictable effects on the markets and may expose markets to heightened volatility;
Downgrade Risk-The risk that securities are subsequently downgraded should TIAA and/or rating agencies believe the issuer’s business outlook or creditworthiness has deteriorated.
Income Volatility Risk-The risk that the level of current income from a portfolio of fixed-income investments may decline in certain interest rate environments;
Call Risk-The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Account’s income;
Prepayment Risk-The risk that, during periods of falling interest rates, borrowers may pay off their loans sooner than expected, forcing the Account to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income;
Extension Risk-The risk that, during periods of rising interest rates, borrowers may pay off their mortgage and other loans later than expected, preventing the Account from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available;
U.S. Government Securities Risk-Securities issued by the U.S. Government or one of its agencies or instrumentalities may receive varying levels of support from the U.S. Government, which could affect the Account’s ability to recover should they default. To the extent the Account invests significantly in securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, any market movements, regulatory changes or changes in political or economic conditions that affect the securities of the U.S. Government or its agencies or instrumentalities in which the Account invests may negatively impact the Account’s performance;
State and Municipal Investment Risk-The risk that events affecting states and municipalities, including severe financial difficulties and continued budget deficits, may adversely impact the Account’s investments and its performance;
Foreign Securities Risk-Foreign securities investments may experience unique risks such as changes in currency exchange rates, imposition of market controls or currency exchange controls, seizure, expropriation or nationalization of assets, and political, social or diplomatic events or unrest that could cause the Account to lose money. The risks described above often increase in countries with emerging markets;
Emerging Markets Risk-The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their financial markets may be very small, share prices of financial instruments in emerging market countries may be volatile and difficult to determine. Financial instruments of issuers in these countries may be less liquid than those of issuers in more developed countries. In addition, foreign investors such as the Fund are subject to a variety of special restrictions in many emerging market countries. Frontier markets are those emerging markets that are considered to be among the smallest, least mature and least liquid, and as a result, the risks of investing in emerging markets are magnified in frontier markets;
Fixed-Income Foreign Investment Risk-Investment in fixed-income securities or financial instruments of foreign issuers involves increased risks due to adverse issuer, political, regulatory, currency, market or economic developments. These developments may impact the ability of a foreign debt issuer to make timely and ultimate payments on its debt obligations to the Account or impair the Account’s ability to enforce its rights against the foreign debt issuer. These risks are heightened in emerging or developing markets. Foreign fixed-income investments may also be less liquid and more difficult to value than fixed-income investments in U.S. issuers;
Sovereign Debt Risk-The risk that the issuer of non-U.S. sovereign debt or the governmental authorities that control the repayment of such debt may be unable or unwilling, due to social, political or economic factors, to repay principal or interest when due, resulting in losses to the Account;
Supranational Debt Risk-The risk that the issuer of multinational or supranational foreign debt (e.g., the European Union or the International Monetary Fund (IMF)) that controls the repayment of such debt may be unable or unwilling, due to social, political or economic factors such as the sudden or gradual disintegration of the multinational or supranational organization, to repay principal or interest when due, resulting in losses to the Account;
Active Management Risk-The risk that the Account’s investment strategy, investment selection or trading execution may cause the Account to underperform relative to a comparison index or accounts or issuers with similar investment objectives;
Currency Risk-The risk that foreign (non-U.S.) currencies may decline in value relative to the U.S. dollar and adversely affect the value of the Account’s investments in foreign currencies, securities denominated in foreign currencies or derivative instruments that provide exposure to foreign currencies;
Derivatives Risk-The risks associated with investing in derivatives and other types of hedging strategies may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Account may use futures, options, or forwards, and the Account may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk. When investing in derivatives, the Account may lose more than the principal amount invested;
Currency Management Strategies Risk-Currency management strategies, including the use of forward currency contracts and other derivatives, may substantially change the Account’s exposure to currencies and currency exchange rates and could result in losses to the Account if currencies do not perform as TIAA anticipates;
Counterparty and Third Party Risk-The Account’s transactions involving a counterparty to a derivative or other instrument, or to a third party responsible for servicing the instrument, are subject to the credit risk of the counterparty or third party, and to the counterparty’s or third party’s ability to perform in accordance with the terms of the transaction;
Regulation S and Rule 144A Securities Risk-The risk that SEC Regulation S and Rule 144A securities may be less liquid, and have less disclosure and investor protections, than publicly traded securities. Such securities may involve a high degree of business and financial risk and may result in losses to the Account;
Illiquid Investments Risk-The risk that illiquid investments may be difficult for the Account to sell for the value at which they are carried, if at all, or at any price within the desired time frame; and
Deposit/money market risk—RisksMoney Market Risk-The risk that the Account could experience losses if banks fail.
More detailed discussions of certain of these risk factors are contained in the section of this Form 10-K entitled “Item 1A. Risk Factors” and also in the section entitled “Item 7A. Quantitative and Qualitative Disclosures About Market Risk,” that could cause actual results to differ materially from historical experience or management’s present expectations.
Caution should be taken not to place undue reliance on management’s forward-looking statements, which represent management’s views only as of the date that this report is filed. Neither management nor the Account undertake any obligation to update publicly or revise any forward-looking statement, whether as a result of new information, changed assumptions, future events or otherwise.
Commercial real estate market statistics discussed in this section are obtained by the Account from sources that management considers reliable, but some of the data areis preliminary for the year or quarter ended December 31, 20172019 and may be subsequently revised. Prior period data may have been adjusted to reflect updated calculations. Investors should not rely exclusively on the data presented below in forming a judgment regarding the current or prospective performance of the commercial real estate market generally.
20172019 U.S. ECONOMIC AND COMMERCIAL REAL ESTATE OVERVIEW
The Account invests primarily in high-quality, core real estate in order to meet its investment objective of obtaining favorable long-term returns through rental income and the appreciation of its real estate holdings.
Economic Overview and Outlook
The U.S. economy was resilient during 2017, despite political uncertainty and several major natural disasters. According to the “advance estimate” from the Bureau ofKey Macro Economic Analysis (“BEA”), U.S. Gross Domestic Product (“GDP”) growth moderated slightly to 2.6% in the fourth quarter from 3.2% in the third quarter. Consumer spending made the largest contribution, but growth was also supported by business investment, particularly on equipment, the housing market, and government spending. The trade deficit and weak inventories brought down growth. Despite the moderation in fourth quarter growth, the current three-quarter stretch for GDP growth was the strongest in three years. For all of 2017, GDP increased at a 2.3% annual rate compared to 1.5% in 2016. The U.S. labor market also continued to expand during 2017, and is at or near full employment, a term used to indicate a labor market operating with little to no slack.Indicators*
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| | | | | | | | | | | | | | |
| | | | | Actuals | | Forecast |
| 2019 | | 1Q 2019 | | 2Q 2019 | | 3Q 2019 | | 4Q 2019 | 2020 | | 2021 |
Economy(1) | | | | | | | | | | | | | | |
| Gross Domestic Product ("GDP") | | 2.3% | | 3.1% | | 2.0% | | 2.1% | | 2.1% | | 1.8% | | 1.9% |
| Employment Growth (Thousands) | | 2,096 | | 417 | | 477 | | 609 | | 593 | | 1,584 | | 1,296 |
| Unemployment Rate | | 3.7% | | 3.8% | | 3.7% | | 3.5% | | 3.5% | | 3.6% | | 3.7% |
Interest Rates(2) | | | | | | | | | | | | | | |
| 10 Year Treasury | | 2.1% | | 2.7% | | 2.3% | | 1.8% | | 1.8% | | 1.9% | | 2.1% |
Sources: Blue Chip Economic Indicators, Blue Chip Financial Forecasts, BEA, Bureau of Labor Statistics, data indicate that fourth quarter job growth totaled 647,000 as compared to 425,000 during the third quarter. For the year, 2.2 million jobs were added, generally consistent with 2.3 million in 2016. The unemployment rate ended the fourth quarter at 4.1%, down from 4.7% at the end of 2016 and has not been this low since late 2000.
Economic Indicators*
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| | | | | | | | | | | | | | |
| | | 2017 | | 1Q 2017 | | 2Q 2017 | | 3Q 2017 | | 4Q 2017 | | Forecast |
| 2018 | | 2019 |
Economy(1) | | | | | | | | | | | | | | |
| Gross Domestic Product ("GDP") | | 2.3% | | 1.2% | | 3.1% | | 3.2% | | 2.6% | | 2.7% | | 2.4% |
| Employment Growth (Thousands) | | 2,173 | | 532 | | 569 | | 425 | | 647 | | 1,986 | | 1,644 |
| Unemployment Rate | | 4.4% | | 4.5% | | 4.3% | | 4.2% | | 4.1% | | 3.9% | | 3.8% |
Interest Rates(2) | | | | | | | | | | | | | | |
| 10 Year Treasury | | 2.3% | | 2.4% | | 2.3% | | 2.2% | | 2.4% | | 2.7% | | 3.2% |
Sources: BEA, BLS, Federal Reserve Blue Chip Consensus Forecasts, and Moody’sMoody's Analytics
| |
| * | Data subject to revision |
| |
(1) | GDP growth rates are annual rates. Quarterly unemployment rates are the reported value for the final month of the quarter while average annual values represent a twelve-month average. |
| |
(2) | The Treasury rates are an average over the stated time period. |
According to the Bureau of Labor Statistics, the U.S. economy added 593,000 jobs during the fourth quarter of 2019, with an average of 186,000 jobs per month over the past three months, exceeding the 12-month average of 176,000. The unemployment rate remained at 3.5%, maintaining the lowest U.S. unemployment rate in over fifty years. The strength of the labor market paired with steady business and consumer confidence continue to serve as the key drivers to U.S. economic growth.
The Federal Open Market Committee (“FOMC”("Committee") voted in December to raiseunanimously maintained the target range of the federal funds rate at 1.50%-1.75% in its December meeting. The Committee indicated that no additional cuts are expected in 2020, with rate increases equally unlikely. The current target range is "appropriate to a range of 1.25%-1.50%, based on growing optimism regardingsupport sustained economic growth and employment. Theactivity, strong labor market has continued to strengthenconditions, and economic activity is rising at a solid rate. Despite hurricane-related fluctuations, job gains have been solid, andinflation near the unemployment rate has continued to decline. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. The increase marked the third 25 basis-point increase of 2017 and fifth hike since December 2015. Following the December 2017 increase, FOMC chairperson Janet Yellen noted that tax reform could potentially drive an increase in GDP growth.
Economic conditions suggest a continued positive foundation for real estate performance in 2018. However, uncertainty surrounding the economic and political outlook has increased. Interest rates have been increasing, and the Federal Reserve may be prompted to respond more aggressively with future increases than previously anticipated if recently enacted fiscal policy proves to be inflationary. Yields on U.S. Treasuries rose from under 2.00% to 2.60% as of early 2018 due to expectations of stronger economic growth and higher inflation over the longer term. Additionally, significant changes to the tax law, government spending, and the regulatory environment could generate near-term economic benefits, while others, such as restrictive trade and immigration policies, could have negative economic impacts over the longer term.
Economists’ expectations for the U.S. economy have not changed materially as of early 2018. Macroeconomic imbalances that have characterized previous downturns do not appear evident, despite the mature phase of the expansion, which is now entering its ninth year. Consequently, the January 2018 Blue Chip Economic Indicators publication puts
the odds of a 2018 recession at 16%, down from 18% a year ago. Blue Chip economists expect a modest near-term boost to GDP in 2018 and 2019 to 2.7% and 2.4%, respectively, as compared to the 2.3% annual rate for 2017. Contributing factors include cuts in corporate and personal income tax rates which could spur stronger business and consumer spending and increased potential government spending on infrastructure. Employment growth is expected to remain steady in 2018, due to a tight labor market and shrinking numbers of skilled workers. Continued GDP and employment growth of this magnitude would support ongoing improvement in commercial real estate market conditions.Committee's 2% objective."
Real Estate Market Conditions and Outlook
Commercial real estate transaction activityconditions remained healthy,steady throughout 2019, with investor demand largely able to absorb the increase of new supply entering the market, most notably within the industrial sector. Market rents have steadily increased in most key markets, with the most significant increases present in cities with strong financial or technology exposure (e.g., San Francisco, New York). Declining interest rates during the year have also benefited real estate, providing institutional investors easier access to capital while simultaneously allowing the yields on real estate investments to remain attractive. Market conditions are not expected to change significantly in 2020, but less active than during 2016. Real Capital Analytics reportedit should be noted that salesthe the real estate cycle is mature and a moderation of office, industrial, retail, multi-family and other commercial properties totaled $122.3 billion inreturns may occur.
Property pricing as calculated by the fourth quarter of 2017, down 13% from fourth quarter 2016. For all of 2017, transaction volume totaled $463.9 billion; down 7% from 2016 levels. The Green Street Advisors’Advisor Commercial Property Price Index (“CPPI”) has been relatively flat throughout 2017, withincreased 2.5% on a less than 1% decline in 2017 as comparedyear-over-year basis from 2018 to 2016. Reflecting changes in consumer spending and growth of e-commerce, the industrial and regional mall CPPI had the largest swings of 9% and -11%, respectively, over the past 12 months.
The NAREIT All Equity REIT index registered its fourth consecutive quarterly increase during the fourth quarter when the index increased2.48%, as compared to a 1.11% increase during the third quarter.2019. For the year the NAREIT All Equity REIT index posted an 8.67% gain, essentially the same as 2016. For the quarter ending December 31, 2017,2019, the NCREIF Fund Index Open-End Diversified Core Equity (“NFI-ODCE”) Equal Weight total return, net of fees increased considerably to 1.94% compared to third quarter’s 1.68% total return. For the year, the NFI-ODCE Equal Weight total return, net of fees was 6.92% The NFI-ODCE is a fund-level return index which includes property investments at ownership share, cash balances, and leverage. The Account’s directly held real estate assets generated a 1.70% total return during the fourth quarter. Total returns were positive for the 31st consecutive quarter, but at this stage in the cycle, income is the primary driver of returns.5.82%.
Data for the Account’s top five markets in terms of market value as of December 31, 20172019 are provided below. TheseThe five markets presented below represent 46.1%41.3% of the Account’s total real estate portfolio. Across all markets, the Account’s properties are 92.0%92.8% leased. Occupancy for properties in the Account’s Washington D.C. market is the weakest of the top five, reflective of elevated vacancy at two of the Account’s assets. Recently signed leases will increase future occupancy at these assets.
| | | Top 5 Metro Areas by Fair Value | | Account % Leased Fair Value Weighted* | | Number of Property Investments | | Metro Area Fair Value as a % of Total RE Portfolio** | | Metro Area Fair Value as a % of Total Investments** | | Account % Leased Fair Value Weighted* | | Number of Property Investments | | Metro Area Fair Value as a % of Total RE Portfolio** | | Metro Area Fair Value as a % of Total Investments** |
| New York-Jersey City-White Plains, NY-NJ | | 93.4% | | 16 | | 12.9% | | 10.3% | |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | | 85.9% | | 13 | | 11.2% | | 8.9% | | 90.4% | | 14 | | 10.9% | | 8.4% |
| Los Angeles-Long Beach-Glendale, CA | | 89.9% | | 12 | | 8.8% | | 7.0% | | 94.3% | | 15 | | 9.7% | | 7.5% |
| New York-Jersey City-White Plains, NY-NJ | | | 88.4% | | 13 | | 8.5% | | 6.6% |
| Boston, MA | | 91.7% | | 5 | | 6.9% | | 5.5% | | 92.2% | | 7 | | 6.6% | | 5.1% |
| San Francisco-Redwood City-South San Francisco, CA | | 89.7% | | 8 | | 6.3% | | 5.0% | |
| San Diego-Carlsbad, CA | | | 91.7% | | 13 | | 5.6% | | 4.4% |
*Weighted by fair value, which differs from the calculations provided for market comparisons to CBRE-EA data and are used here to reflect the fair value of the Account’s monetary investments in those markets.
**Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.
Office
Leasing in the office sector is historically driven by companies involved in the financial services sector and the professional services sector, with technology-related companies included within this classification. The sectors added 36,000 and 98,000 jobs, respectively, in the fourth quarter of 2019. Nationwide office vacancy remained level from the prior quarter, as reported by CB Richard Ellis Econometric Advisors (“CBRE-EA”("CBRE-EA") reported that the national office vacancy rate rose to 13.0%, as new construction delivered during the fourth quarter. The change in vacancy reflects a 10 basis-point increase fromquarter absorbed the third quarter as well as from the end of year 2016 rate of 12.9%. The increase represents the first year-over-year increase since 2010. Conditions varied across markets, but CBRE-EA data indicate that on a national basis, rents increased 1.8% in 2017, as compared to 1.3% growth in 2016. Demand for office space isdemand driven by employment trendsemployment. Vacancies continue to trend lowest in office-using sectors such as finance and professional & business services. Incities with significant technology or research exposure (e.g., San Francisco, Seattle), but the fourth quarter, job growth remained steadylargest vacancy declines in both. The financial services sector added 21,000 jobs during the fourth quarter as compared to 33,000recent months have been present in the third quarter while the professional and business services sector increased by 115,000 jobs during the fourth quarter compared to 120,000 in the third quarter. The financial services and professional and business services sectors added 134,000 and 527,000 jobs, respectively. For comparison, those same sectors added 176,000 and 534,000 jobs, respectively for 2016. Supply has increased from its post-recession lows, but continued projected steady employment growth bodes well for office market conditions in most majornon-primary metro areas (i.e., metropolitan areas in 2018.
The CBRE-EA reported market vacancy rates in the Account’s topwith less than five office markets remained steady during the fourth quarter of 2017, except in San Francisco where increasing supply caused vacancy rates to increase. Market vacancy rates in Washington, DC are elevated despite office-using employment growing at a favorable rate in the metro division. The smaller federal government footprint, along with a swollen pipeline of new supply has contributed to higher vacancy levels in the office market compared to other markets.million people). The vacancy rate for the Account’s office portfolio improvedAccount declined to 14.1% during11.9% in the fourth quarter as compared to 15.1%of 2019, driven by lease inceptions at properties in the third quarter.Boston and Denver metro areas. The averageabove-average vacancy rate of the Account’s properties in Boston, Washington D.C., New York, and Seattle are above their respective market averages. Vacancy in the New York market remains high,metro area is driven by two properties currently undergoing redevelopment to increase the long term value of the properties. The vacancy rate in the New York metro will remain elevated over the near term as legacy tenants fully vacate the properties and can be partially attributed to an industrial building that is being repositionedredevelopment efforts continue. The Account's overall vacancy rate for the office use.
portfolio, excluding the two New York properties under redevelopment, was 10.6% in the fourth quarter of 2019.
| | | | | | | Account Square Foot Weighted Average Vacancy | | Market Vacancy* | | | | Account Square Foot Weighted Average Vacancy | | Market Vacancy* |
| Top 5 Office Metropolitan Areas | | Total Sector by Metro Area ($M) | | % of Total Investments | | 2017 Q4 | | 2017 Q3 | | 2017 Q4 | | 2017 Q3 | | Total Sector by Metro Area ($M) | | % of Total Investments | | 2019 Q4 | | 2019 Q3 | | 2019 Q4 | | 2019 Q3 |
| Account / Nation | | | | | | 14.1% | | 15.1% | | 13.0% | | 12.9% | | | | | | 11.9% | | 13.1% | | 12.1% | | 12.1% |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | | | $ | 1,477.0 |
| | 4.9% | | 12.8% | | 13.0% | | 13.8% | | 13.9% |
| Boston, MA | | $ | 1,459.5 |
| | 5.4% | | 11.0% | | 10.9% | | 9.8% | | 9.8% | | 1,272.4 |
| | 4.3% | | 8.6% | | 11.8% | | 8.8% | | 8.6% |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | | 1,450.2 |
| | 5.3% | | 16.5% | | 16.5% | | 15.3% | | 15.4% | |
| New York-Jersey City-White Plains, NY-NJ | | | 1,197.5 |
| | 4.0% | | 28.2% | | 27.3% | | 8.7% | | 8.6% |
| San Francisco-Redwood City-South San Francisco, CA | | 1,140.5 |
| | 4.2% | | 7.5% | | 8.3% | | 7.8% | | 7.1% | | 1,024.3 |
| | 3.4% | | 1.1% | | 5.1% | | 5.2% | | 4.9% |
| New York-Jersey City-White Plains, NY-NJ | | 1,123.7 |
| | 4.1% | | 22.1% | | 22.5% | | 9.4% | | 9.4% | |
| Seattle-Bellevue-Everett, WA | | 977.7 |
| | 3.6% | | 8.2% | | 8.2% | | 7.6% | | 7.8% | |
| Los Angeles-Long Beach-Glendale, CA | | | 879.3 |
| | 2.9% | | 3.4% | | 1.9% | | 11.5% | | 11.9% |
*Source: CBRE-EA. Market vacancy is defined as the percentage of space vacant. The Account’s vacancy is defined as the square foot-weighted percentage of un-leasedunleased space.
Industrial
The industrial sector remains solid and continues to expand supported by thirty consecutive quarters of positive net absorption. Industrial market conditions benefit from economicare primarily influenced by GDP growth, which includes industrial production, international trade, flows, and consumer spending.spending, especially e-commerce sales. The appreciation of the dollar continued to weigh on export activity, but the decline in exports has been partially offset by growth in imports, which are a key driver of warehouse demand. Strong consumer spending has also had a positive impact on the industrial market, particularly in the e-commerce space, which has supported strong demand for warehouse space in many markets. Economic conditions and the increasing demand for warehouse space is reflected in the national industrial availability rate of 7.4% for 2017,was level from the lowest rate since 2001. Construction has increased in response to historically low availability rates, but is concentrated in relatively few markets and often with a tenant lined up. National rent growth remained strongprior quarter at 5.0% in 2017 as compared to 5.1% in 2016. With supply beginning to increase, the industrial market may be approaching a plateau; vacancy improvements are likely to become more modest, and near-term rent growth expectations more tempered.
Market availability rates7.2%, as reported by CBRE-EA were near or below CBRE-EA. Completions have been steady throughout 2019, but demand has largely absorbed new construction as it becomes available. The supply pipeline is expected to remain strong in 2020, which will likely cause
the national average in four of the Account’s top five industrial markets. As shown in the following table, the average vacancy rate ofto trend upward during the Account’syear. The sector is in favorable health overall, as the U.S. labor market shows continued strength and American business and consumer confidence remains high. U.S. protectionist trade policies remain a notable headwind for the sector. The Account's average industrial properties decreased duringvacancy rate increased to 4.7% in the fourth quarter to 7.6%, from 9.7% during the third quarter. The assets4.5% in the previous quarter, driven by scheduled lease maturities, most notably in the Dallas and Los Angeles market saw a decreasemetro areas. Elevated vacancy in vacancy from the third quarter; however, vacancy sits 1.3% aboveHouston metro area is expected to return to the market average and is attributed to the timing of lease expirations. In the Tacoma-Lakewood market, vacancy decreased to 1.7%in 2020 due to future lease inceptions scheduled to begin during the recent signingfirst and second quarters of a number of small leases.2020.
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| | | | | | | | | | | | | | |
| | | | | | | Account Square Foot Weighted Average Vacancy | | Market Vacancy* |
| Top 5 Industrial Metropolitan Areas | | Total Sector by Metro Area ($M) | | % of Total Investments | | 2017 Q4 | | 2017 Q3 | | 2017 Q4 | | 2017 Q3 |
| Account / Nation | | | | | | 7.6% | | 9.7% | | 7.4% | | 7.4% |
| Riverside-San Bernardino-Ontario, CA | | $ | 783.6 |
| | 2.9% | | 0.0% | | 0.0% | | 6.5% | | 6.2% |
| Los Angeles-Long Beach-Glendale, CA | | 327.8 |
| | 1.2% | | 5.7% | | 9.0% | | 4.4% | | 4.2% |
| New York-Jersey City-White Plains, NY-NJ | | 309.1 |
| | 1.1% | | 2.4% | | 2.4% | | 6.9% | | 6.6% |
| Tacoma-Lakewood, WA | | 307.7 |
| | 1.1% | | 1.7% | | 7.3% | | 4.7% | | 4.7% |
| Dallas-Plano-Irving, TX | | 266.5 |
| | 1.0% | | 4.7% | | 4.7% | | 7.9% | | 7.6% |
Market availability is the percentage of space available for rent. Account vacancy is the square foot-weighted percentage of un-leased space. |
| | | | | | | | | | | | | | |
| | | | | | | Account Square Foot Weighted Average Vacancy | | Market Vacancy* |
| Top 5 Industrial Metropolitan Areas | | Total Sector by Metro Area ($M) | | % of Total Investments | | 2019 Q4 | | 2019 Q3 | | 2019 Q4 | | 2019 Q3 |
| Account / Nation | | | | | | 4.7% | | 4.5% | | 7.2% | | 7.2% |
| Riverside-San Bernardino-Ontario, CA | | $ | 972.8 |
| | 3.3% | | 0.0% | | 0.0% | | 6.2% | | 5.7% |
| Tacoma-Lakewood, WA | | 394.5 |
| | 1.3% | | 2.9% | | 2.9% | | 5.3% | | 5.7% |
| Los Angeles-Long Beach-Glendale, CA | | 376.5 |
| | 1.3% | | 5.1% | | 2.8% | | 4.5% | | 4.3% |
| Dallas-Plano-Irving, TX | | 304.5 |
| | 1.0% | | 8.5% | | 5.3% | | 8.2% | | 8.4% |
| Houston-The Woodlands-Sugar Land, TX | | 272.6 |
| | 0.9% | | 16.0% | | 16.8% | | 9.7% | | 9.5% |
*Source: CBRE-EA. CBRE-EA considers Tacoma part of the Seattle industrial market. Market availability rates reflect the Seattle total.
Market availability is the percentage of space available for rent. The Account's vacancy is the square foot-weighted percentage of unleased space.
Multi-Family
Apartment demand is generated fromby a combination of economic, demographic and socio-economic factors including job growth, household formations, and trends in the U.S. homeownership rate. Of the four main property types, the apartment market is the furthest along in its real estate cycle.The national apartment vacancy rate increased forto 4.3% in the seventh consecutive quarter on a year-over-year basis and is now 4.9%, up slightly from 4.8% during fourth quarter, 2016. At this pointup from a historically low 3.7% vacancy rate achieved in the cycle, softening market conditions are not unexpected as rentthird quarter, according to RealPage. Strong job growth, decreasedwage growth and delayed deliveries have helped sustain strong occupancy.
The sector continues to -0.3% for 2017 as compared to 1.6% in 2016. A few major marketsbenefit from strong fundamentals, such as Boston, Chicago, Houston,a tight labor market, wage growth, and New York had negative rent growthdelayed deliveries into the market. The sector is also the beneficiary of long-term U.S. housing trends, such as first-time buyers delaying home ownership and a growing preference for the year, which brought down the overall national average. With completions finally peaking, CBRE-EA expects that the apartment market will generally stabilize, with demand supported by increasing household formation and steady job growth.
housing near urban areas. The vacancy rate of the Account’s multi-familyapartment properties increased to average 6.5%7.0% in the fourth quarter of 20172019 as compared with 6.4%to 6.1% in the thirdprior quarter. As shownThe increase to the vacancy rate in the following table,fourth quarter was primarily attributed to three acquisitions during the quarter with vacancy rates slightly above the Account average. The elevated vacancy in the San Diego metro area is attributed to a student housing property where the related university modified requirements for students living off-campus, reducing the supply of students available to lease space. Vacancy is expected to stabilize at the current level over the near-term due to the change. The Account's overall vacancy among apartments has trended above the market average vacancy rateover the last few quarters, primarily due to renovation efforts at multiple properties across the portfolio to improve the long term value of the Account’s properties declinedproperties. Renovations will continue in three of its five top markets. New York’s increases2020 as units become available from expiring leases, which will likely keep overall apartment vacancy higher than the market average in vacancy are primarily reflective of seasonal leasing patterns. Vacancy rates in Denver, Washington D.C., Los Angeles, and Fort Lauderdale can be attributed to the high amount of higher end product competing directly with the Account’s assets that have yet to be absorbed.near term.
| | | | | | | Account Units Weighted Average Vacancy | | Market Vacancy* | | | | Account Units Weighted Average Vacancy | | Market Vacancy* |
| Top 5 Apartment Metropolitan Areas | | Total Sector by Metro Area ($M) | | % of Total Investments | | 2017 Q4 | | 2017 Q3 | | 2017 Q4 | | 2017 Q3 | | Total Sector by Metro Area ($M) | | % of Total Investments | | 2019 Q4 | | 2019 Q3 | | 2019 Q4 | | 2019 Q3 |
| Account / Nation | | | | | | 6.5% | | 6.4% | | 4.9% | | 4.6% | | | | | | 7.0% | | 6.1% | | 4.3% | | 3.7% |
| New York-Jersey City-White Plains, NY-NJ | | $ | 859.5 |
| | 3.2% | | 4.4% | | 3.1% | | 5.0% | | 3.3% | |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | | 806.0 |
| | 3.0% | | 9.5% | | 8.2% | | 5.0% | | 4.7% | | $ | 880.4 |
| | 2.9% | | 7.1% | | 7.3% | | 4.0% | | 3.4% |
| Los Angeles-Long Beach-Glendale, CA | | 559.7 |
| | 2.1% | | 5.6% | | 6.2% | | 4.1% | | 3.8% | | 695.7 |
| | 2.3% | | 7.0% | | 8.3% | | 3.7% | | 3.3% |
| New York-Jersey City-White Plains, NY-NJ | | | 510.1 |
| | 1.7% | | 1.8% | | 1.7% | | 2.5% | | 2.3% |
| Denver-Aurora-Lakewood, CO | | 329.7 |
| | 1.2% | | 5.8% | | 7.7% | | 5.6% | | 4.9% | | 422.6 |
| | 1.4% | | 7.0% | | 9.0% | | 5.1% | | 4.2% |
| Fort Lauderdale-Pompano Beach-Deerfield Beach, FL | | 295.7 |
| | 1.1% | | 8.1% | | 8.3% | | 5.7% | | 5.8% | |
| San Diego-Carlsbad, CA | | | 317.3 |
| | 1.1% | | 10.3% | | 4.0% | | 3.6% | | 3.3% |
*Source: RealPage. Market vacancy is the percentage of units vacant. The Account’s vacancy is the percentage of unleased units.
Retail
Retail sales aredemand in the Account's portfolio is driven by economic, demographic, and socio-economic factors. Overall, preliminaryUS consumers, whose willingness to spend directly correlates with retailers' need for domestic rental space. Preliminary data from the U.S. Census Bureau indicatedindicate that retail sales excluding motor vehicles and parts has increased 5.7%3.8% in 20172019 as compared to 2018. The holiday season was a mixed result for the retail sector, with overall sales increasing from 2016.the prior year, but with most of the increase occurring through e-commerce channels. The most recent quarter saw a 2.6% increase over third quarter 2017 sales. Sales growth duringlong-term trend of consumers turning to e-commerce is an ongoing headwind for the fourth quarter was led by rising gasoline pricessector. Consumers are less likely to frequent traditional retail outlets in favor of more modern lifestyle options, which combine retail space with residential, office, and recreation options. These properties are best positioned for success in the non-storechanging retail segment, which suggests that e-commerce was likely a significant contributor.
Retailers have been increasingly challenged by shifting demographic and shopping trends. Negative news headlines continue to generalize about the entireeconomy. The Account's retail industry rather than its most vulnerable segments. As online retail sales continue to push weak retailers outportfolio is composed primarily of business, surviving retailers are adjusting to consumer habits and are altering their stores to foster e-commerce and emphasize the customer experience. Additionally, landlords have begun adding new tenants and re-purposing their retail centers by adding medical offices, health clubs, gourmet grocery stores, and public spaces with regular community events. Management believes that the end result will be a set of financially healthier retailers andhigh-end lifestyle shopping centers that offer customers more compelling products and curated experiences. Ultimately, e-commerce will make retailers more efficient, but it will require substantial investmentregional malls in large metropolitan or tourist centers. The retail portfolio is managed proactively to create a seamless, interactive in-store experience that resonates with consumers.
The Account’s retail properties are high-quality assets that are well-leased and strategically-positioned in strong markets. The national availability rate remained essentially unchanged at 9.6% in the fourth quarter, but saw an increase
from 9.0% in 2016. Favorable labor market conditions and rising wage growth bode well for consumer spending in 2018.minimize significant exposure to financially compromised retailers. The vacancy rate for the Account’sAccount's retail portfolio increaseddecreased to 4.7% for6.1% in the fourth quarter from 4.0% during6.8% in the third quarter; however, vacancy rates in individual markets are substantially lower than their respective market rates.
Outlook
The economic expansion is now entering its ninth year, making itquarter, primarily due to the deployment of retail space at one of the longestAccount's properties in U.S. history.California.
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| | | | | | | | | | | | | | |
| | | | | | | Account Square Foot Weighted Average Vacancy | | Market Vacancy* |
| | | Total by Retail Type ($M) | | % of Total Investments | | 2019 Q4 | | 2019 Q3 | | 2019 Q4 | | 2019 Q3 |
| National Retail | | | | | | 6.1% | | 6.8% | | 6.1% | | 6.1% |
| Lifestyle & Mall | | $ | 2,381.1 |
| | 8.0% | | 5.3% | | 5.4% | | 5.4% | | 5.4% |
| Neighborhood, Community & Strip** | | 1,410.9 |
| | 4.7% | | 7.1% | | 8.8% | | 8.6% | | 8.7% |
| Power Center** | | 606.3 |
| | 2.0% | | 5.3% | | 2.7% | | 7.0% | | 7.0% |
*Source: CBRE-EA. Market vacancy is the percentage of space available for rent. The labor market remains healthyAccount's vacancy is the square foot-weighted percentage of unleased space.
**The Power Center designation is reserved for properties with three or more anchor units. Anchor units are leased to large retailers such as department stores, home improvement stores, and growing. warehouse clubs. Properties with the Neighborhood, Community and Strip designation consist of two or less anchor units.
Hotel
The unemployment rate has fallen toAccount purchased its lowest level in 17 years and the consensus predicts its average this year will drop to the lowest level in almost five decades. With the labor market at full employment, wage growth has begun to pick up resulting in a rise of consumer confidence. Consumer spending remains healthy, holiday spending was the best in years, and consumer confidence stands at or near record levels. Export growth has accelerated from last year, helped by a weaker dollar and improved growth abroad. As demand from consumers and businesses has improved, growth in industrial production has accelerated and is now growing at its fastest pace in several years. Adding to the increased optimism was the passage of tax reform legislationfirst hotel investment in December 2017, with cuts in individual and corporate tax rates. Consequently, the U.S. economy appears well-positioned for continued growth.
Leading indicators of US commercial real estate performance, including labor market conditions, property market fundamentals, credit availability, and investor risk appetites remain steady.2019. The FOMC raised the federal funds rate for the third time in 2017 and the fifth timehotel, based in the last decade and indicatedDallas metro area, provided the potential for three or four similar quarter-point hikes in 2018. The recent increase inAccount an attractive value-add investment opportunity while simultaneously enhancing the ten-year Treasury likely limits the potential for additional returns from appreciation. Income growth will be the primary driver of returns. The outlook for real estate fundamentals in the coming year are promising given expected GDP and employment growth and the supply/demand balance in most markets.
Commercial real estate property markets are generally well-balanced nationally and a short-lived financial shock would likely be well tolerated. Economists expect GDP growth approaching 2.7% in 2018, 2.4% for 2019 and for the unemployment rate to drop further from the year-ending rate of 4.4%. Interest rates will rise, but should remain historically low and inflation is still below the FOMC’s target rate. Consequently, real estate market conditions should remain healthy in 2018 if domestic economic conditions approximate economists' expectations.
Account Overview and Outlook
In 2018, management intends to continue its focus on property management and leasing at its existing assets, while carefully evaluating acquisitions in selected property types in target markets. To supplement the Account’s high quality portfolio of core properties in prime locations with strong occupancy histories, management will also evaluate opportunities to purchase assets where value can be enhanced by repositioning. Management will continue to evaluate opportunities to invest in commercial mortgage debt including conventional commercial mortgage loans, participating mortgage loans, secured mezzanine loans and commercial mortgage-backed securities.
A portion of the Account’s liquid investments is held in publicly traded REITs. The Account’s portfolio consistsAccount's existing office investment at the same location. Key metrics to track hotel performance include occupancy, the average daily rate ("ADR") and revenue per available room ("RevPAR"). For the fourth quarter ended December 31, 2019, occupancy of REIT stocks intended to approximate the NAREIT All Equity REIT index, thereby providingproperty was 65.2%, and ADR and RevPAR of the property were $129.76 and $84.63, respectively. In 2020, the Account with exposurewill begin a significant renovation of the property to a diverse mix of property typesenhance the hotel's performance and geographic markets. REITs provide liquidity and exposure to real estate, albeit with added volatility as compared to direct investments in commercial real estate property. Management will continue to monitor REIT valuation compared to direct property in order to manage the REIT allocation.
Management intends to continue to monitor the Account’s cash position to maintain adequate liquidity in order to fund participant payments, for operating expenses, capital expenditures for existing properties, and for additional investments. In addition to active investment activities, management will carefully evaluate opportunities to place commercial mortgage debt on select properties and refinance existing debt on assets at lower interest rates in order to further reduce the Account’s overall weighted cost of capital. Management believes that a disciplined investment strategy in the current economic and real estate market environment will position the Account for favorable long term performance.value.
INVESTMENTS
As of December 31, 2017,2019, the Account had total net assets of $24.9$27.3 billion, a 2.6%5.7% increase from December 31, 2016. The increase in the Account’s net assets was primarily due to net investment income and net appreciation in value of the Account’s investments, partially offset by net participant outflows.2018.
As of December 31, 2017,2019, the Account owned aheld 77.1% of its total of 138investments in real estate investments (110 of which were wholly-owned, 28 of which were held in joint ventures). Theand real estate portfolio included 39 officejoint ventures. The Account also held investments (including 13 held in joint ventures), 35 industrialU.S. Treasury securities representing 8.7% of total investments, (including one held in a joint venture), 38 apartmentloans receivable representing 5.2% of total investments, (including one held in a joint venture), 22 retailcorporate bonds representing 4.2% of total investments, (including ten held in joint ventures), two storage facilities that are joint venturereal estate-related equity securities representing 2.8% of total investments, one joint venture interest in land held for future development and one leasehold interest encumbered by a ground lease. Of the real estate funds representing 1.0% of total investments, 33 are subject to debt (including 14 joint venture investments).U.S. government agency notes representing 0.7% of total investments, foreign government agency notes representing 0.2% of total investments and municipal bonds representing 0.1% of total investments.
The outstanding principal on mortgage loans payable on the Account’s wholly-owned real estate portfolio as of December 31, 20172019 was $2.2$2.3 billion. The Account’s proportionate share of outstanding principal on mortgage loans payable within its joint venture investments was $2.4$3.1 billion, which is netted against the underlying properties when determining the joint venture investments fair value presented on the Consolidated Schedules of Investments. When the mortgage loans payable within the joint venture investments are considered, totalTotal outstanding principal on the Account’s portfolio as of December 31, 20172019, inclusive of loans payable within the joint venture investments and any loans outstanding on the unsecured line of credit, was $4.6$5.7 billion, which represented a loan-to-value ratio of 15.5%17.1%. The Account currently has no Account-level debt.
As of December 31, 2017, the Account held 79.5% of its total investments in real estate and real estate joint ventures. The Account also held investments in government agency notes representing 10.6% of total investments, real estate-related equity securities representing 4.6% of total investments, U.S. Treasury securities representing 3.7% of total investments, loans receivable representing 1.1% of total investments, and real estate limited partnerships representing 0.5% of total investments.
Management believes that the Account’s real estate portfolio is diversified by location and property type. The Account’s largest investment, Fashion Show Mall, located in Las Vegas, NV, represented 5.3% of total real estate investments and 4.3% of total investments. The Account does not intend to buy and sell its real estate investments simply to make short-term profits. Rather, the Account’s general strategy in selling real estate investments is to dispose of those assets that management believes (i) have maximized in value, (ii) have underperformed or face deteriorating property-specific or market conditions, (iii) need significant capital infusions in the future, (iv) are appropriate to dispose of in order to remain consistent with the Account’s intent to diversify the Account by property type and geographic location (including reallocating the Account’s exposure to or away from certain property types in certain geographic locations), or (v) otherwise do not satisfy the investment objectives of the Account. Management, from time to time, will evaluate the need to manage liquidity in the Account as part of its analysis as to whether to undertake a particular asset sale. The Account may reinvest any sale proceeds that it does not need to pay operating expenses or to meet debt service or redemption requests (e.g., participant withdrawals or benefit payments).
The following charts reflect the Account’s ten largest investments based on the fair values and the diversification of the Account's real estate assets by region and property type and the Account's ten largest investments based on fair value at December 31, 2017.2019.
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| | | | | | | | | | | | | | | | | | | | | | | | |
| Ten Largest Real Estate Investments |
| Property Investment Name | | Ownership Percentage | | City | | State | | Type | | Gross Real Estate Fair Value(1) | | Debt Fair Value(2) | | Net Real Estate Fair Value(3) | | Property as a
% of Total
Real Estate
Portfolio(4) | | Property as a
% of Total
Investments(5) |
| Fashion Show Mall | | 50% | | Las Vegas | | NV | | Retail | | $ | 1,263.1 |
| | $ | 426.9 |
| | $ | 836.2 |
| | 5.3% | | 4.3% |
| DDR | | 85% | | Various | | U.S.A. | | Retail | | 1,219.4 |
| | 596.1 |
| | 623.3 |
| | 5.1% | | 4.1% |
| The Florida Mall | | 50% | | Orlando | | FL | | Retail | | 925.5 |
| | 173.0 |
| | 752.5 |
| | 3.9% | | 3.1% |
| 1001 Pennsylvania Avenue | | 100% | | Washington | | D.C. | | Office | | 785.0 |
| | 328.6 |
| | 456.4 |
| | 3.3% | | 2.7% |
| Colorado Center | | 50% | | Santa Monica | | CA | | Office | | 588.6 |
| | 267.9 |
| | 320.7 |
| | 2.5% | | 2.0% |
| Fourth and Madison | | 100% | | Seattle | | WA | | Office | | 530.0 |
| | 199.8 |
| | 330.2 |
| | 2.2% | | 1.8% |
| 501 Boylston Street | | 100% | | Boston | | MA | | Office | | 505.2 |
| | 210.8 |
| | 294.4 |
| | 2.1% | | 1.7% |
| 99 High Street | | 100% | | Boston | | MA | | Office | | 502.1 |
| | — |
| | 502.1 |
| | 2.1% | | 1.7% |
| 425 Park Avenue | | 100% | | New York | | NY | | Ground Lease | | 457.0 |
| | — |
| | 457.0 |
| | 1.9% | | 1.5% |
| 780 Third Avenue | | 100% | | New York | | NY | | Office | | 427.0 |
| | 168.7 |
| | 258.3 |
| | 1.8% | | 1.4% |
|
| | | | | | | | | | | | | | | |
Diversification by Fair Value(1) |
| | | West | | East | | South | | Midwest | | Total |
| Office | | 13.1 | % | | 18.8 | % | | 5.3 | % | | — | % | | 37.2 | % |
| Apartment | | 10.1 | % | | 7.7 | % | | 7.4 | % | | 1.0 | % | | 26.2 | % |
| Retail | | 6.9 | % | | 3.9 | % | | 7.7 | % | | 0.8 | % | | 19.3 | % |
| Industrial | | 9.0 | % | | 1.6 | % | | 4.7 | % | | 0.5 | % | | 15.8 | % |
Other(2) | | 0.5 | % | | 0.4 | % | | 0.6 | % | | — | % | | 1.5 | % |
| Total | | 39.6 | % | | 32.4 | % | | 25.7 | % | | 2.3 | % | | 100.0 | % |
| |
(1) | Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value. |
| |
(2) | Represents interests in Storage Portfolio investments, a hotel investment and land. |
Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY
Properties in the “East” region are located in: CT, DC, DE, KY, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV
Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX
Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| Ten Largest Real Estate Investments |
| Property Investment Name | | Ownership Percentage | | City | | State | | Type | | Gross Real Estate Fair Value(1) | | Debt Fair Value(2) | | Net Real Estate Fair Value(3) | | Property as a
% of Total
Real Estate
Portfolio(4) | | Property as a
% of Total
Investments(5) |
| Fashion Show | | 50% | | Las Vegas | | NV | | Retail | | $ | 1,119.7 |
| | $ | 427.0 |
| | $ | 692.7 |
| | 4.3% | | 3.4% |
| SITE Centers Corp | | 85% | | Various | | U.S.A. | | Retail | | 986.2 |
| | 159.2 |
| | 827.0 |
| | 3.8% | | 3.0% |
| The Florida Mall | | 50% | | Orlando | | FL | | Retail | | 900.1 |
| | 156.9 |
| | 743.2 |
| | 3.5% | | 2.7% |
| Simpson Housing Portfolio | | 80% | | Various | | U.S.A. | | Apartments | | 822.5 |
| | 401.3 |
| | 421.2 |
| | 3.2% | | 2.5% |
| 1001 Pennsylvania Avenue | | 100% | | Washington | | D.C. | | Office | | 798.4 |
| | 322.8 |
| | 475.6 |
| | 3.1% | | 2.4% |
| Colorado Center | | 50% | | Santa Monica | | CA | | Office | | 632.5 |
| | 277.2 |
| | 355.3 |
| | 2.4% | | 1.9% |
| 99 High Street | | 100% | | Boston | | MA | | Office | | 543.7 |
| | 286.3 |
| | 257.4 |
| | 2.1% | | 1.7% |
| Ontario Industrial Portfolio | | 100% | | Ontario | | CA | | Industrial | | 506.9 |
| | — |
| | 506.9 |
| | 1.9% | | 1.5% |
| Four Oaks Place | | 51% | | Houston | | TX | | Office | | 431.9 |
| | 84.9 |
| | 347.0 |
| | 1.7% | | 1.3% |
| Lincoln Centre | | 100% | | Dallas | | TX | | Office | | 413.2 |
| | — |
| | 413.2 |
| | 1.6% | | 1.3% |
| |
(1) | The Account's share of the fair value of the property investment, gross of debt. |
| |
(2) | Debt fair values are presented at the Account's ownership interest. |
| |
(3) | The Account's share of the fair value of the property investment, net of debt. |
| |
(4) | Total real estate portfolio is the aggregate fair value of the Account's wholly-owned properties and the properties held within a joint venture, gross of debt. |
| |
(5) | Total investments are the aggregate fair value of all investments held by the Account, gross of debt. Total investments, as calculated within this table, will vary from total investments, as calculated in the Account's Schedule of Investments, as joint venture investments are presented in the Schedule of Investments at their net equity position in accordance with U.S. Generally Accepted Accounting Principals ("GAAP"). |
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| | | | | | | | | | | | | | | | | |
Property Investments Acquired in 2019 (millions) |
| Property Name | | Ownership Percentage | | Property Type | | City | | State | | Net Purchase Price (less closing costs) | | Mortgage Debt | |
| Wholly-Owned | | | | | | | | | | | | | |
| Glen Lake | | 100.00% | | Apartments | | Atlanta | | GA | | $ | 54.8 |
| | $ | — |
| |
| 1600 Broadway | | 100.00% | | Office | | Denver | | CO | | 109.1 |
| | — |
| |
| Colony Industrial Portfolio | | 100.00% | | Industrial | | Various | | Various | | 137.0 |
| | — |
| |
| Sole at Brandon | | 100.00% | | Apartments | | Riverview | | FL | | 77.6 |
| | — |
| |
| District on La Frontera | | 100.00% | | Apartments | | Austin | | TX | | 73.8 |
| | 44.0 |
| |
| Vista Station Office Portfolio | | 100.00% | | Office | | Draper | | UT | | 111.2 |
| | 66.0 |
| |
| Riverside 202 Industrial | | 100.00% | | Industrial | | Phoenix | | AZ | | 29.6 |
| | — |
| |
| Almond Avenue | | 100.00% | | Land | | Fontana | | CA | | 8.8 |
| | — |
| |
| 350 Washington | | 100.00% | | Retail | | Boston | | MA | | 134.4 |
| | — |
| |
| Henley at Kingstowne | | 100.00% | | Apartments | | Alexandria | | VA | | 102.9 |
| | 71.0 |
| |
| 101 Pacific Coast Highway | | 100.00% | | Office | | El Segundo | | CA | | 96.4 |
| | — |
| |
| Terra House | | 100.00% | | Apartments | | San Jose | | CA | | 145.4 |
| | — |
| |
| Lincoln Centre - Hilton Dallas | | 100.00% | | Hotel | | Dallas | | TX | | 74.4 |
| | — |
| |
| Creekside Alta Loma | | 100.00% | | Apartments | | Rancho Cucamonga | | CA | | 85.3 |
| | — |
| |
| Total Wholly-Owned | | | | | | | | | | $ | 1,240.7 |
| | $ | 181.0 |
| |
|
| | | | | | | | | | | | | | | |
Diversification by Fair Value(1) |
| | | West | | East | | South | | Midwest | | Total |
| Office | | 16.1 | % | | 20.2 | % | | 5.6 | % | | — | % | | 41.9 | % |
| Apartment | | 8.4 | % | | 8.0 | % | | 3.6 | % | | 0.9 | % | | 20.9 | % |
| Retail | | 8.1 | % | | 3.0 | % | | 7.6 | % | | 0.7 | % | | 19.4 | % |
| Industrial | | 7.5 | % | | 2.0 | % | | 4.1 | % | | 0.8 | % | | 14.4 | % |
Other(2) | | 0.6 | % | | 2.6 | % | | 0.1 | % | | 0.1 | % | | 3.4 | % |
| Total | | 40.7 | % | | 35.8 | % | | 21.0 | % | | 2.5 | % | | 100.0 | % |
|
| | | | | | | | | | | | | | | | | |
Property Investments Acquired in 2019 (millions) |
| Property Name | | Ownership Percentage | | Property Type | | City | | State | | Net Purchase Price (less closing costs) | | Mortgage Debt | |
| Joint Ventures | | | | | | | | | | | | | |
| The Theory | | 97.00% | | Apartments | | Raleigh | | NC | | $ | 63.0 |
| | $ | 31.3 |
| |
| Storage Portfolio III - Mideast | | 90.00% | | Storage | | Various | | Various | | 17.9 |
| | — |
| |
| I-35 Logistics Center | | 95.00% | | Land | | Fort Worth | | TX | | 9.6 |
| | — |
| |
| 101 North Tryon Street | | 85.00% | | Office | | Charlotte | | NC | | 113.4 |
| | 69.0 |
| |
| Campus Pointe 6 | | 45.00% | | Office | | San Diego | | CA | | 111.9 |
| | — |
| |
| Campus Pointe 5 | | 45.00% | | Office | | San Diego | | CA | | 37.2 |
| | — |
| |
| Storage Portfolio III - Southwest | | 90.00% | | Storage | | Various | | Various | | 18.4 |
| | — |
| |
| Cabana Beach Gainesville | | 97.00% | | Apartments | | Gainesville | | FL | | 64.4 |
| | 31.9 |
| |
| T-C 4th & Madison, LLC | | 51.00% | | Office | | Seattle | | WA | | 307.5 |
| | 145.5 |
| |
| 150 Industrial Road | | 98.00% | | Office | | San Carlos | | CA | | 98.1 |
| | — |
| |
| Total Joint Ventures | | | | | | | | | | $ | 841.4 |
| | $ | 277.7 |
| |
| Total | | | | | | | | | | $ | 2,082.1 |
| | $ | 458.7 |
| |
|
| | | | | | | | | | | | | | | | | |
Property Investments Sold in 2019 (millions) |
| Property Name | | Ownership Percentage | | Property Type | | City | | State | | Net Sales Price (less selling expense)(4) | | Mortgage Loan Payoff | |
| Wholly-Owned | | | | | | | | | | | | | |
1858 Meca Way(1) | | 100.00% | | Industrial | | Norcross | | GA | | $ | 2.9 |
| | $ | — |
| |
| 55 Second Street | | 100.00% | | Office | | San Francisco | | CA | | 400.1 |
| | 137.5 |
| |
| Township Apartments | | 100.00% | | Apartment | | Redwood City | | CA | | 88.1 |
| | 49.0 |
| |
| Fourth and Madison | | 100.00% | | Office | | Seattle | | WA | | 602.8 |
| | 285.4 |
| |
| 425 Park Avenue | | 100.00% | | Ground Lease | | New York | | NY | | 598.6 |
| | — |
| |
Weston Business Center - Building B(2) | | 100.00% | | Industrial | | Weston | | FL | | 31.7 |
| | — |
| |
| 12910 Mulberry Drive Industrial | | 100.00% | | Industrial | | Whittier | | CA | | 26.8 |
| | — |
| |
| Total Wholly-Owned | | | | | | | | | | $ | 1,751.0 |
| | $ | 471.9 |
| |
| Joint Ventures | | | | | | | | | | | | | |
Westside Centre(3) | | 85.00% | | Retail | | Huntsville | | AL | | $ | 29.8 |
| | $ | — |
| |
Barrett Pavilion(3) | | 85.00% | | Retail | | Kennesaw | | GA | | 35.2 |
| | — |
| |
| Total Joint Ventures | | | | | | | | | | $ | 65.0 |
| | $ | — |
| |
| Total | | | | | | | | | | $ | 1,816.0 |
| | $ | 471.9 |
| |
| |
(1) | Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.Property held within Colony Industrial Portfolio. |
| |
(2) | Represents interests in Storage Portfolio investments, a fee interest encumbered by a ground lease real estate investment and land. |
Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY
Properties in the “East” region are located in: CT, DC, DE, KY, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV
Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX
Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI
|
| | | | | | | | | | | | | | | |
Property Investments Acquired in 2017 (in millions) |
| Property Name | | Ownership Percentage | | Property Type | | City | | State | | Net Acquisition Cost (less closing costs) | Mortgages Acquired |
| Wholly-Owned | | | | | | | | | | | |
| One Beeman Road | | 100.00% | | Industrial | | Northborough | | MA | | $ | 33.5 |
| $ | — |
|
| The Bridges | | 100.00% | | Apartments | | Minneapolis | | MN | | 60.9 |
| — |
|
| The Knoll | | 100.00% | | Apartments | | Minneapolis | | MN | | 32.5 |
| 17.7 |
|
| 803 Corday | | 100.00% | | Apartments | | Naperville | | IL | | 92.9 |
| — |
|
| Broward Industrial Portfolio | | 100.00% | | Industrial | | Various | | FL | | 54.1 |
| — |
|
| Orion on Orpington | | 100.00% | | Apartments | | Orlando | | FL | | 42.3 |
| — |
|
| Bridgepointe Shopping Center | | 100.00% | | Retail | | San Mateo | | CA | | 124.1 |
| — |
|
| Frontera Industrial Business Park | | 100.00% | | Industrial | | San Diego | | CA | | 56.0 |
| — |
|
| Allure at Camarillo | | 100.00% | | Apartments | | Camarillo | | CA | | 59.7 |
| — |
|
| Total Wholly-Owned | | | | | | | | | | $ | 556.0 |
| $ | 17.7 |
|
| Joint Ventures | | | | | | | | | | | |
| Commerce LIC | | 97.50% | | Industrial | | Long Island City | | NY | | $ | 54.3 |
| $ | — |
|
| DDR - Village Crossing Phase I | | 85.00% | | Retail | | Niles | | IL | | 44.4 |
| — |
|
| Storage Portfolio II | | 90.00% | | Storage | | Various | | U.S.A. | | 267.5 |
| 175.0 |
|
| 9625 Towne Centre Drive | | 35.86% | | Land | | San Diego | | CA | | 13.8 |
| — |
|
| Campus Pointe 3 | | 45.00% | | Land | | San Diego | | CA | | 13.0 |
| — |
|
| Campus Pointe 4 | | 45.00% | | Office | | San Diego | | CA | | 8.7 |
| — |
|
| Total Joint Ventures | | | | | | | | | | $ | 401.7 |
| $ | 175.0 |
|
| Total | | | | | | | | | | $ | 957.7 |
| $ | 192.7 |
|
|
| | | | | | | | | | | | | | | | |
Property Investments Sold in 2017 (in millions) |
| Property Name | | Ownership Percentage | | Property Type | | City | | State | | Net Sales Price (less selling expense) | | Mortgages Paid |
| Wholly-Owned | | | | | | | | | | | | |
| Mazza Gallerie | | 100.00% | | Retail | | Washington | | D.C. | | $ | 74.3 |
| | $ | — |
|
Atlanta Industrial Portfolio(1) | | 100.00% | | Industrial | | McDonough | | GA | | 39.1 |
| | — |
|
Ontario Industrial Portfolio(1) | | 100.00% | | Industrial | | Various | | CA | | 66.0 |
| | — |
|
Rancho Cucamonga Industrial Portfolio(1) | | 100.00% | | Industrial | | Various | | CA | | 104.8 |
| | — |
|
| The Pepper Building | | 100.00% | | Apartments | | Philadelphia | | PA | | 51.7 |
| | — |
|
| Kierland Apartment Portfolio | | 100.00% | | Apartments | | Scottsdale | | AZ | | 147.1 |
| | — |
|
| The Caruth | | 100.00% | | Apartments | | Dallas | | TX | | 82.2 |
| | 45.0 |
|
| Total Wholly-Owned | | | | | | | | $ | 565.2 |
| | $ | 45.0 |
|
| Joint Ventures | | | | | | | | | | | | |
DDR - McFarland Plaza(2)(3) | | 85.00% | | Retail | | Tuscaloosa | | AL | | $ | 14.7 |
| | $ | 7.4 |
|
DDR - Costco Plaza(2)(3) | | 85.00% | | Retail | | White Marsh | | MD | | 11.0 |
| | 8.9 |
|
| Total Joint Ventures | | | | | | | | | | $ | 25.7 |
| | $ | 16.3 |
|
| Total | | | | | | | | | | $ | 590.9 |
| | $ | 61.3 |
|
| |
(1)
| Partial sale of propertyBuilding B held within this investment. |
| |
(2)
| The net sales price represents the Account's interest.Weston Business Center investment portfolio. |
| |
(3) | Represents assets sold and mortgages paid fromProperty held within DDRTC Core Retail Fund, LLC. |
| |
(4) | The net sales price represents the Account's DDR joint venture investment.interest. |
Results of Operations
Year Ended December 31, 20172019 Compared to Year Ended December 31, 20162018
Net Investment Income
The following table shows the results of operations for the years ended December 31, 2017 and 2016 and the dollar and percentage changes for those periods (dollars in millions).
|
| | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | Change |
| 2017 | | 2016 | | $ | | % |
| INVESTMENT INCOME | | | | | | | | |
| Real estate income, net | | | | | | | | |
| Rental income | | $ | 1,059.6 |
| | $ | 1,009.0 |
| | $ | 50.6 |
| | 5.0 | % |
| Real estate property level expenses: | | | | | | | | |
| Operating expenses | | 221.2 |
| | 218.1 |
| | 3.1 |
| | 1.4 | % |
| Real estate taxes | | 166.7 |
| | 158.7 |
| | 8.0 |
| | 5.0 | % |
| Interest expense | | 89.7 |
| | 85.8 |
| | 3.9 |
| | 4.5 | % |
| Total real estate property level expenses | | 477.6 |
| | 462.6 |
| | 15.0 |
| | 3.2 | % |
| Real estate income, net | | 582.0 |
| | 546.4 |
| | 35.6 |
| | 6.5 | % |
| Income from real estate joint ventures and limited partnerships | | 214.1 |
| | 161.8 |
| | 52.3 |
| | 32.3 | % |
| Interest | | 54.1 |
| | 26.4 |
| | 27.7 |
| | 104.9 | % |
| Dividends | | 26.3 |
| | 32.5 |
| | (6.2 | ) | | (19.1 | )% |
| TOTAL INVESTMENT INCOME | | 876.5 |
| | 767.1 |
| | 109.4 |
| | 14.3 | % |
| Expenses | | | | | |
| |
|
| Investment management charges | | 72.0 |
| | 72.6 |
| | (0.6 | ) | | (0.8 | )% |
| Administrative charges | | 59.3 |
| | 62.1 |
| | (2.8 | ) | | (4.5 | )% |
| Distribution charges | | 25.7 |
| | 27.7 |
| | (2.0 | ) | | (7.2 | )% |
| Mortality and expense risk charges | | 1.2 |
| | 1.2 |
| | — |
| | — | % |
| Liquidity guarantee charges | | 47.0 |
| | 38.4 |
| | 8.6 |
| | 22.4 | % |
| TOTAL EXPENSES | | 205.2 |
| | 202.0 |
| | 3.2 |
| | 1.6 | % |
| INVESTMENT INCOME, NET | | $ | 671.3 |
| | $ | 565.1 |
| | $ | 106.2 |
| | 18.8 | % |
N/M—Not meaningful
The table below illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the entirety of each respective year, "same property," as compared to the comparative increases or decreases associated with the acquisition and disposition of properties throughout each respective year.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Rental Income | | Operating Expenses | | Real Estate Taxes |
| | | Change | | | | Change | | | | Change |
| 2017 | 2016 | $ | % | | 2017 | 2016 | $ | % | | 2017 | 2016 | $ | % |
| Same Property | | $ | 971.1 |
| $ | 947.1 |
| $ | 24.0 |
| 2.5 | % | | $ | 201.1 |
| $ | 199.5 |
| $ | 1.6 |
| 0.8 | % | | $ | 151.7 |
| $ | 147.3 |
| $ | 4.4 |
| 3.0 | % |
| Properties Acquired | | 70.3 |
| 21.6 |
| 48.7 |
| N/M |
| | 15.0 |
| 5.4 |
| 9.6 |
| N/M |
| | 12.5 |
| 6.0 |
| 6.5 |
| N/M |
|
| Properties Sold | | 18.2 |
| 40.3 |
| (22.1 | ) | N/M |
| | 5.1 |
| 13.2 |
| (8.1 | ) | N/M |
| | 2.5 |
| 5.4 |
| (2.9 | ) | N/M |
|
| Impact of Properties Acquired/Sold | | 88.5 |
| 61.9 |
| 26.6 |
| N/M |
| | 20.1 |
| 18.6 |
| 1.5 |
| N/M |
| | 15.0 |
| 11.4 |
| 3.6 |
| N/M |
|
| Total Property Portfolio | | $ | 1,059.6 |
| $ | 1,009.0 |
| $ | 50.6 |
| 5.0 | % | | $ | 221.2 |
| $ | 218.1 |
| $ | 3.1 |
| 1.4 | % | | $ | 166.7 |
| $ | 158.7 |
| $ | 8.0 |
| 5.0 | % |
Rental Income:
Rental income increased $50.6 million, or 5.0%, as a result of net acquisition activity and an increase in income generated by wholly-owned properties held for the duration of the last two years. The rise in same property income was driven by rising market rents and improving occupancy across most properties within the Account. The strongest increases were concentrated along the West Coast, within the apartment and industrial sectors.
Operating Expenses:
Operating expenses increased $3.1 million, or 1.4%, as a result of a modest increase in same property operating expenses paired with the impact of net acquisition activity. Of the $1.6 million same property increase, no single property type had a significant impact to the increase.
Real Estate Taxes:
Real estate taxes increased $8.0 million, or 5.0%, as a result of rising property tax assessments for properties held throughout 2017 and 2016, combined with the impact of net acquisition activity. The most significant property tax increases have been concentrated in the Boston and New York metro areas, primarily within the office sector.
Interest Expense:
Interest expense increased $3.9 million, or 4.5%, primarily due to higher average outstanding principal balances on mortgage loans payable.
Income from Real Estate Joint Ventures and Limited Partnerships:
Income from real estate joint ventures and limited partnerships increased $52.3 million, or 32.3%, related to net acquisition activity, primarily the acquisition of Fashion Show, which was acquired during the third quarter of 2016.
Interest and Dividend Income:
Interest income increased as a result of the Account’s higher average investment in loans receivable held throughout each respective year, while dividend income decreased proportionately with the Account's average REIT holdings.
Expenses:
Investment management, administrative and distribution charges are costs charged to the Account associated with managing the Account. Investment advisory charges are comprised primarily of fixed components, but fluctuate based on the size of the Account’s portfolio of investments, whereas administrative and distribution charges are comprised of more variable components that generally correspond with movements in net assets. These expenses decreased $5.4 million, or 3.3%, from the prior year primarily as result of general cost measures.
Mortality and expense risk and liquidity guarantee expenses are contractual charges to the Account from TIAA for TIAA’s assumption of these risks and provision of the liquidity guarantee. The rate for these charges is established annually; the current rates are effective May 1, 2017 through April 30, 2018, and are charged at a fixed rate based on the Account’s net assets. These expenses increased $8.6 million or 22.4% as a direct result of the increase in overall net assets of the Account from the previous year.
Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable
The following table shows the net realized and unrealized gains (losses) on investments and mortgage loans payable for the years ended December 31, 2017 and 2016 and the dollar and percentage changes for those periods (dollars in millions).
|
| | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | Change |
| 2017 | | 2016 | | $ | | % |
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE | | | | | | | | |
| Net realized gain (loss) on investments: | | | | | | | | |
| Real estate properties | | $ | 42.0 |
| | $ | (6.2 | ) | | $ | 48.2 |
| | N/M |
|
| Real estate joint ventures and limited partnerships | | (21.9 | ) | | 0.6 |
| | (22.5 | ) | | N/M |
|
| Marketable securities | | 17.6 |
| | 25.6 |
| | (8.0 | ) | | (31.3 | )% |
| Total realized gain on investments: | | 37.7 |
| | 20.0 |
| | 17.7 |
| | 88.5 | % |
| Net change in unrealized appreciation on: | | | | | |
| |
|
| Real estate properties | | 135.5 |
| | 317.5 |
| | (182.0 | ) | | (57.3 | )% |
| Real estate joint ventures and limited partnerships | | 146.8 |
| | 236.9 |
| | (90.1 | ) | | (38.0 | )% |
| Marketable securities | | 50.0 |
| | 30.0 |
| | 20.0 |
| | 66.7 | % |
| Loans receivable | | 1.2 |
| | 0.3 |
| | 0.9 |
| | N/M |
|
| Mortgage loans payable | | 15.9 |
| | 15.1 |
| | 0.8 |
| | 5.3 | % |
| Net change in unrealized appreciation on investments and mortgage loans payable | | 349.4 |
| | 599.8 |
| | (250.4 | ) | | (41.7 | )% |
| NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND MORTGAGE LOANS PAYABLE | | $ | 387.1 |
| | $ | 619.8 |
| | $ | (232.7 | ) | | (37.5 | )% |
N/M—Not meaningfulReal Estate Properties, Joint Ventures and Limited Partnerships:
Net realized gains in the Account are primarily due to the sale of wholly-owned real estate property investments and marketable securities. See the Recent Transactions section herein for additional disclosure regarding the sale of the Account’s real estate property investments.
Real Estate Properties:
Wholly-owned real estate investments experienced net realized and unrealized gains of $177.5 million during 2017, compared to $311.3 million of net realized and unrealized gains during 2016. Appreciation slowed during 2017 but appreciation continued across most asset sectors held by the Account, primarily in the Industrial sector. Appreciation was most significant in the Western region of the country, primarily due to strong tenant demand for industrial space in California.
Real Estate Joint Ventures and Limited Partnerships:
Real estate joint ventures and limited partnerships experienced net realized and unrealized gains of $124.9 million during 2017, compared to net realized and unrealized gains of $237.5 million during 2016. While the rate of appreciation slowed during 2017, the Account continues to see continued appreciation across most asset sectors of the Account's joint venture portfolio. The strongest appreciation during 2017 was among the Account's office investments in the Western region. Conversely, appreciation from joint venture regional malls in the Southern region was especially strong in 2016, flattening during 2017, due to moderating market conditions.
Marketable Securities:
The Account’s marketable securities positions experienced net realized and unrealized gains of $67.6 million for the year ended December 31, 2017, compared to $55.6 million for 2016. The performance of the Account’s REIT portfolio was in line with the FTSE NAREIT All Equity REITs Index during the year-long period. The Account's real estate-related equity securities appreciated in line with the index. Additionally, as of December 31, 2017, the Account held $3.9 billion of investments in government agency notes and U.S. Treasury securities, which had nominal changes due to the short-term nature of these investments.
Mortgage Loans Payable:
Mortgage loans payable experienced unrealized gains of $15.9 million during 2017 compared to unrealized gains of $15.1 million during 2016. The unrealized gains in both periods were consistent with the directional movement of U.S. Treasury rates.
Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Net Investment Income
The following table shows the results of operations for the years ended December 31, 20162019 and 20152018 and the dollar and percentage changes for those periods (dollars in millions)(millions).
| | | | | Years Ended December 31, | | Change | | Years Ended December 31, | | Change |
| 2016 | | 2015 | | $ | | % | 2019 | | 2018 | | $ | | % |
| INVESTMENT INCOME | | | | | | | | | | | | | | | | |
| Real estate income, net | | | | | | | | | | | | | | | | |
| Rental income | | $ | 1,009.0 |
| | $ | 919.1 |
| | $ | 89.9 |
| | 9.8 | % | | $ | 1,103.5 |
| | $ | 1,083.2 |
| | $ | 20.3 |
| | 1.9 | % |
| Real estate property level expenses: | | | | | | | | | | | | | | | | |
| Operating expenses | | 218.1 |
| | 207.4 |
| | 10.7 |
| | 5.2 | % | | 237.5 |
| | 228.6 |
| | 8.9 |
| | 3.9 | % |
| Real estate taxes | | 158.7 |
| | 144.4 |
| | 14.3 |
| | 9.9 | % | | 187.4 |
| | 178.9 |
| | 8.5 |
| | 4.8 | % |
| Interest expense | | 85.8 |
| | 81.1 |
| | 4.7 |
| | 5.8 | % | | 105.7 |
| | 113.9 |
| | (8.2 | ) | | (7.2 | )% |
| Total real estate property level expenses | | 462.6 |
| | 432.9 |
| | 29.7 |
| | 6.9 | % | | 530.6 |
| | 521.4 |
| | 9.2 |
| | 1.8 | % |
| Real estate income, net | | 546.4 |
| | 486.2 |
| | 60.2 |
| | 12.4 | % | | 572.9 |
| | 561.8 |
| | 11.1 |
| | 2.0 | % |
| Income from real estate joint ventures and limited partnerships | | 161.8 |
| | 140.1 |
| | 21.7 |
| | 15.5 | % | |
| Income from real estate joint ventures and funds | | | 214.0 |
| | 204.7 |
| | 9.3 |
| | 4.5 | % |
| Interest | | 26.4 |
| | 10.1 |
| | 16.3 |
| | N/M |
| | 173.0 |
| | 120.4 |
| | 52.6 |
| | 43.7 | % |
| Dividends | | 32.5 |
| | 47.5 |
| | (15.0 | ) | | (31.6 | )% | | 23.2 |
| | 50.8 |
| | (27.6 | ) | | (54.3 | )% |
| TOTAL INVESTMENT INCOME | | 767.1 |
| | 683.9 |
| | 83.2 |
| | 12.2 | % | | 983.1 |
| | 937.7 |
| | 45.4 |
| | 4.8 | % |
| Expenses | | | | | | | | | | | | | |
| |
|
| Investment management charges | | 72.6 |
| | 69.3 |
| | 3.3 |
| | 4.8 | % | | 68.1 |
| | 62.1 |
| | 6.0 |
| | 9.7 | % |
| Administrative charges | | 62.1 |
| | 56.9 |
| | 5.2 |
| | 9.1 | % | | 50.0 |
| | 50.9 |
| | (0.9 | ) | | (1.8 | )% |
| Distribution charges | | 27.7 |
| | 23.9 |
| | 3.8 |
| | 15.9 | % | | 31.7 |
| | 28.0 |
| | 3.7 |
| | 13.2 | % |
| Mortality and expense risk charges | | 1.2 |
| | 1.1 |
| | 0.1 |
| | 9.1 | % | | 1.3 |
| | 1.3 |
| | — |
| | — | % |
| Liquidity guarantee charges | | 38.4 |
| | 31.7 |
| | 6.7 |
| | 21.1 | % | | 57.8 |
| | 50.5 |
| | 7.3 |
| | 14.5 | % |
| TOTAL EXPENSES | | 202.0 |
| | 182.9 |
| | 19.1 |
| | 10.4 | % | | 208.9 |
| | 192.8 |
| | 16.1 |
| | 8.4 | % |
| INVESTMENT INCOME, NET | | $ | 565.1 |
| | $ | 501.0 |
| | $ | 64.1 |
| | 12.8 | % | | $ | 774.2 |
| | $ | 744.9 |
| | $ | 29.3 |
| | 3.9 | % |
The table below illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the entirety of each respective year, "same property," as compared to the comparative increases or decreases associated with the acquisition and disposition of properties throughout each respective year.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Rental Income | | Operating Expenses | | Real Estate Taxes |
| | | Change | | | | Change | | | | Change |
| 2019 | 2018 | $ | % | | 2019 | 2018 | $ | % | | 2019 | 2018 | $ | % |
| Same Property | | $ | 914.3 |
| $ | 893.6 |
| $ | 20.7 |
| 2.3 | % | | $ | 193.5 |
| $ | 191.0 |
| $ | 2.5 |
| 1.3 | % | | $ | 156.2 |
| $ | 153.0 |
| $ | 3.2 |
| 2.1 | % |
| Properties Acquired | | 118.4 |
| 37.5 |
| 80.9 |
| N/M |
| | 29.9 |
| 8.1 |
| 21.8 |
| N/M |
| | 20.8 |
| 6.7 |
| 14.1 |
| N/M |
|
| Properties Sold | | 70.8 |
| 152.1 |
| (81.3 | ) | N/M |
| | 14.1 |
| 29.5 |
| (15.4 | ) | N/M |
| | 10.4 |
| 19.2 |
| (8.8 | ) | N/M |
|
| Impact of Properties Acquired/Sold | | 189.2 |
| 189.6 |
| (0.4 | ) | N/M |
| | 44.0 |
| 37.6 |
| 6.4 |
| N/M |
| | 31.2 |
| 25.9 |
| 5.3 |
| N/M |
|
| Total Property Portfolio | | $ | 1,103.5 |
| $ | 1,083.2 |
| $ | 20.3 |
| 1.9 | % | | $ | 237.5 |
| $ | 228.6 |
| $ | 8.9 |
| 3.9 | % | | $ | 187.4 |
| $ | 178.9 |
| $ | 8.5 |
| 4.8 | % |
N/M—Not meaningful
Rental Income:
Rental income increased $89.9$20.3 million, or 9.8%1.9%, driven by rising market rents, scheduled lease step-ups and declining rent concessions as a result of net acquisition activity, increased occupancy and higher rental rates primarilycompared to the previous year. The largest increases were concentrated in the Eastern office sector.and and industrial sectors in the West and Northeast regions, most notably in cities such as Los Angeles, San Francisco, and Boston.
Operating Expenses:
Operating expenses increased $10.7$8.9 million, or 5.2%3.9%, primarily relatedattributed to net acquisitions of real estate investments.
acquisition activity coupled with rising pricing for services such as groundskeeping, security, and property maintenance. The U.S. labor market continues to support wage inflation, and the rising pricing reflects vendors' efforts to pass along such costs.
Real Estate Taxes:
Real estate taxes increased $14.3$8.5 million, or 9.9%. Increases were4.8%, primarily associated with theattributed to net acquisitions of real estate investments. An additional factor to the increase was higheracquisition activity as well as rising property tax assessments resulting from increases in values across the real estateAccount's portfolio, particularly inmost notably within the Easternoffice and Western office sector.industrial sectors.
Interest Expense:
Interest expense increased $4.7decreased $8.2 million, or 5.8%7.2%, primarily due to a higherlower average outstanding principal balancebalances on mortgage loans payable.outstanding loans.
Income from Real Estate Joint Ventures and Limited Partnerships:Funds:
Income from real estate joint ventures and limited partnershipsfunds increased $21.7$9.3 million, or 15.5%4.5%, attributed primarily related to net acquisition activity. The Account acquired over $1.1 billion ina larger portfolio of joint venture investments duringand real estate fund investments. The increase is also attributed to the year.impact of rising market rents, most notably among the Account's joint venture office investments.
Interest and Dividend Income:
Interest income increased $52.6 million, primarily attributed due to an larger loan receivable portfolio in 2019 as a resultcompared to the prior year. Additional contributing factors include higher average short-term interest rates in 2019 as compared to 2018, and the acquisition of the Account’s investment in loans receivable, while dividendinvestment-grade corporate bonds midway through 2019. Investment grade corporate bonds provide moderately higher yields than short-term U.S. government securities. Dividend income decreased proportionately with the Account's average$27.6 million due to a smaller REIT holdings.portfolio in 2019 as compared to 2018.
Expenses:
The Account’s expenses increased $19.1 million, or 10.4%. Investment advisory,management, administrative and distribution charges are costs charged to the Account associated with managing the Account. Investment advisory charges are comprised primarily of fixed components, but fluctuate based on the size of the Account’s portfolio of investments, whereas administrative and distribution charges are comprised of more variable components that generally correspond with movements in net assets. Increases inThe expenses were primarily attributed toincreased $8.8 million, or 6.2% from the increase inprior year, consistent with the overall growth of the Account's net assets. Other factors, such as higher allocated expenses related to the complexity of administering and distributing the Account, contributed to the increases. Investment advisory, administrative and distribution charges were, collectively, 0.69% and 0.71% of average net assets during 2016 and 2015, respectively.
Mortality and expense risk and liquidity guarantee chargesexpenses are contractual charges to the Account from TIAA for TIAA’s assumption of these risks.risks and provision of the liquidity guarantee. The rate for these charges is established annually and are charged at a fixed rate based on the Account’s net assets. These expenses increased $7.3 million or 14.1% as a result of the increase in the net assets of the Account pared with a four basis point increase to the expense charge for the liquidity guarantee effective August 1, 2019.
Net Realized and Unrealized Gains and Losses on Investments and Loans Payable
The following table shows the net realized and unrealized gains (losses) on investments and loans payable for the years ended December 31, 2019 and 2018 and the dollar and percentage changes for those periods (millions).
|
| | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | Change |
| 2019 | | 2018 | | $ | | % |
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND LOANS PAYABLE | | | | | | | | |
| Net realized gain (loss) on investments: | | | | | | | | |
| Real estate properties | | $ | 583.1 |
| | $ | 242.7 |
| | $ | 340.4 |
| | N/M |
|
| Real estate joint ventures and funds | | (114.4 | ) | | 75.9 |
| | (190.3 | ) | | N/M |
|
| Marketable securities | | 301.1 |
| | 12.8 |
| | 288.3 |
| | N/M |
|
| Loans payable | | — |
| | (0.4 | ) | | 0.4 |
| | N/M |
|
| Total realized gain on investments: | | 769.8 |
| | 331.0 |
| | 438.8 |
| | N/M |
|
| Net change in unrealized appreciation (depreciation) on: | | | | | |
| |
|
| Real estate properties | | (56.8 | ) | | 73.1 |
| | (129.9 | ) | | N/M |
|
| Real estate joint ventures and funds | | 50.3 |
| | 55.5 |
| | (5.2 | ) | | (9.4 | )% |
| Marketable securities | | 0.7 |
| | (103.0 | ) | | 103.7 |
| | N/M |
|
| Loans receivable | | (3.8 | ) | | 0.3 |
| | (4.1 | ) | | N/M |
|
| Loans receivable with related parties | | (0.3 | ) | | — |
| | (0.3 | ) | | N/M |
|
| Loans payable | | (107.1 | ) | | 79.8 |
| | (186.9 | ) | | N/M |
|
| Net change in unrealized (depreciation) appreciation on investments and loans payable | | (117.0 | ) | | 105.7 |
| | (222.7 | ) | | N/M |
|
| NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND LOANS PAYABLE | | $ | 652.8 |
| | $ | 436.7 |
| | $ | 216.1 |
| | 49.5 | % |
Real Estate Properties:
Wholly-owned real estate investments experienced net realized and unrealized gains of $526.3 million during 2019, compared to $315.8 million during 2018. Gains were driven most notably by the Account's ground lease investment in New York City, which was sold in 2019. Appreciation within the portfolio was strongest among the industrial and office investments in the West and Northeast regions of the country, due to rising market rents driven by strong tenant demand.
Real Estate Joint Ventures and Funds:
Real estate joint ventures and funds incurred net realized and unrealized losses of $64.1 million in 2019, compared to $131.4 million in net gains during 2018. Net losses were driven by the joint venture retail portfolio; retail rents have flattened across many markets, and competition among lessors has driven up rental concessions. Appreciation among the Account's joint venture office investments were a notable offsetting factor during the year, driven by rising market rents.
Marketable Securities:
The Account’s marketable securities positions experienced net realized and unrealized gains of $301.8 million for the year ended December 31, 2019, compared to net realized and unrealized losses of $90.2 million for 2018. The performance of the Account’s REIT portfolio was generally in line with the FTSE NAREIT All Equity REITs Index during the year. U.S. Treasuries, government agency notes and investment-grade corporate bonds had a nominal impact in both periods due to the short and intermediate-term nature of these investments, respectively.
Loans Receivable, including those with related parties:
Loans receivable, including loans receivable with related parties, experienced an unrealized loss of $4.1 million during the 2019 compared to a $0.3 million gain in 2018. The changes in both periods were minimal as there were no significant changes in the credit quality of the underlying collateral of the debt investments in either period.
Loans Payable:
Loans payable experienced unrealized losses of $107.1 million during 2019 compared to net realized and unrealized gains of $79.4 million during 2018. The changes in both periods were consistent with the directional movement of U.S. Treasury rates.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
Net Investment Income
The following table shows the results of operations for the years ended December 31, 2018 and 2017 and the dollar and percentage changes for those periods (millions).
|
| | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | Change |
| 2018 | | 2017 | | $ | | % |
| INVESTMENT INCOME | | | | | | | | |
| Real estate income, net | | | | | | | | |
| Rental income | | $ | 1,083.2 |
| | $ | 1,059.6 |
| | $ | 23.6 |
| | 2.2 | % |
| Real estate property level expenses: | | | | | | | | |
| Operating expenses | | 228.6 |
| | 221.2 |
| | 7.4 |
| | 3.3 | % |
| Real estate taxes | | 178.9 |
| | 166.7 |
| | 12.2 |
| | 7.3 | % |
| Interest expense | | 113.9 |
| | 89.7 |
| | 24.2 |
| | 27.0 | % |
| Total real estate property level expenses | | 521.4 |
| | 477.6 |
| | 43.8 |
| | 9.2 | % |
| Real estate income, net | | 561.8 |
| | 582.0 |
| | (20.2 | ) | | (3.5 | )% |
| Income from real estate joint ventures and limited partnerships | | 204.7 |
| | 214.1 |
| | (9.4 | ) | | (4.4 | )% |
| Interest | | 120.4 |
| | 54.1 |
| | 66.3 |
| | 122.6 | % |
| Dividends | | 50.8 |
| | 26.3 |
| | 24.5 |
| | 93.2 | % |
| TOTAL INVESTMENT INCOME | | 937.7 |
| | 876.5 |
| | 61.2 |
| | 7.0 | % |
| Expenses | | | | | | | | |
| Investment management charges | | 62.1 |
| | 72.0 |
| | (9.9 | ) | | (13.8 | )% |
| Administrative charges | | 50.9 |
| | 59.3 |
| | (8.4 | ) | | (14.2 | )% |
| Distribution charges | | 28.0 |
| | 25.7 |
| | 2.3 |
| | 8.9 | % |
| Mortality and expense risk charges | | 1.3 |
| | 1.2 |
| | 0.1 |
| | 8.3 | % |
| Liquidity guarantee charges | | 50.5 |
| | 47.0 |
| | 3.5 |
| | 7.4 | % |
| TOTAL EXPENSES | | 192.8 |
| | 205.2 |
| | (12.4 | ) | | (6.0 | )% |
| INVESTMENT INCOME, NET | | $ | 744.9 |
| | $ | 671.3 |
| | $ | 73.6 |
| | 11.0 | % |
N/M—Not meaningful
The table below illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the entirety of each respective year, "same property," as compared to the comparative increases or decreases associated with the acquisition and disposition of properties throughout each respective year.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Rental Income | | Operating Expenses | | Real Estate Taxes |
| | | Change | | | | Change | | | | Change |
| 2018 | 2017 | $ | % | | 2018 | 2017 | $ | % | | 2018 | 2017 | $ | % |
| Same Property | | $ | 922.7 |
| $ | 912.0 |
| $ | 10.7 |
| 1.2 | % | | $ | 197.9 |
| $ | 191.6 |
| $ | 6.3 |
| 3.3 | % | | $ | 154.7 |
| $ | 145.9 |
| $ | 8.8 |
| 6.0 | % |
| Properties Acquired | | 81.7 |
| 13.4 |
| 68.3 |
| N/M |
| | 17.2 |
| 1.8 |
| 15.4 |
| N/M |
| | 14.0 |
| 2.0 |
| 12.0 |
| N/M |
|
| Properties Sold | | 78.8 |
| 134.2 |
| (55.4 | ) | N/M |
| | 13.5 |
| 27.8 |
| (14.3 | ) | N/M |
| | 10.2 |
| 18.8 |
| (8.6 | ) | N/M |
|
| Impact of Properties Acquired/Sold | | 160.5 |
| 147.6 |
| 12.9 |
| N/M |
| | 30.7 |
| 29.6 |
| 1.1 |
| N/M |
| | 24.2 |
| 20.8 |
| 3.4 |
| N/M |
|
| Total Property Portfolio | | $ | 1,083.2 |
| $ | 1,059.6 |
| $ | 23.6 |
| 2.2 | % | | $ | 228.6 |
| $ | 221.2 |
| $ | 7.4 |
| 3.3 | % | | $ | 178.9 |
| $ | 166.7 |
| $ | 12.2 |
| 7.3 | % |
N/M—Not meaningful
Rental Income:
Rental income increased $23.6 million, or 2.2%, as a result of net acquisition activity and an increase in income generated by the Account's properties. The increase in income was driven by rising market rents, expiring rent concessions and improved occupancy. The largest increases were concentrated in the apartment and industrial sectors of the Western region, most notably in California.
Operating Expenses:
Operating expenses increased $7.4 million, or 3.3%, as a result of increases in operating expenses paired with the impact of net acquisition activity. Increases in operating expenses among the Account's largest office properties were a key driver, as well as modest increases across the Account's apartment portfolio. Operating expenses as a percentage of rental income remained relatively flat year-over-year.
Real Estate Taxes:
Real estate taxes increased $12.2 million, or 7.3%, as a result of rising property tax assessments across the Account's portfolio, most notably within the office and apartment sectors coupled with net acquisition activity.
Interest Expense:
Interest expense increased $24.2 million, or 27.0%, primarily due to higher average outstanding principal balances on mortgage loans outstanding.
Income from Real Estate Joint Ventures and Limited Partnerships:
Income from real estate joint ventures and limited partnerships decreased $9.4 million, or 4.4%, due to lower distributions received in 2018, primarily from a large office joint venture in Texas. Although distributed income declined year-over-year from the venture, overall income from the venture was flat. Undistributed income will be released to the Account in future quarters.
Interest and Dividend Income:
Interest income increased significantly as a result of growth in the Account’s loans receivable portfolio during 2018, which added eleven new loans in 2018. The increase was also attributed to higher yields on the Account's investments in short term securities such as U.S. Treasuries, due to rising interest rates throughout the year. Dividend income increased due to a larger REIT portfolio and an increase in dividend yields in 2018.
Expenses:
Investment management, administrative and distribution charges are costs charged to the Account associated with managing the Account. Investment advisory charges are comprised primarily of fixed components, but fluctuate based on the size of the Account’s portfolio of investments, whereas administrative and distribution charges are comprised of more variable components that generally correspond with movements in net assets. These expenses decreased $16.0 million, or 10.2%, from the prior year primarily as result of cost reduction efforts by TIAA.
Mortality and expense risk and liquidity guarantee expenses are contractual charges to the Account from TIAA for TIAA’s assumption of these risks and provision of the liquidity guarantee. The rate for these charges is established annually; the current rate isrates are effective May 1, 20162018 through April 30, 2017,2019, and isare charged at a fixed rate based on the Account’s net assets.
These expenses increased $3.6 million or 7.5% as a result of the increase in overall net assets of the Account, in addition to an increase in the fixed rate for the liquidity guarantee from the previous year.
Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable
The following table shows the net realized and unrealized gains (losses) on investments and mortgage loans payable for the years ended December 31, 20162018 and 20152017 and the dollar and percentage changes for those periods (dollars in millions)(millions).
| | | | | Years Ended December 31, | | Change | | Years Ended December 31, | | Change |
| 2016 | | 2015 | | $ | | % | 2018 | | 2017 | | $ | | % |
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE | | | | | | | | | | | | | | | | |
| Net realized gain (loss) on investments: | | | | | | | | | | | | | | | | |
| Real estate properties | | $ | (6.2 | ) | | $ | 215.4 |
| | $ | (221.6 | ) | | N/M |
| | $ | 242.7 |
| | $ | 42.0 |
| | $ | 200.7 |
| | N/M |
|
| Real estate joint ventures and limited partnerships | | 0.6 |
| | 167.3 |
| | (166.7 | ) | | (99.6 | )% | | 75.9 |
| | (21.9 | ) | | 97.8 |
| | N/M |
|
| Marketable securities | | 25.6 |
| | 235.8 |
| | (210.2 | ) | | (89.1 | )% | | 12.8 |
| | 17.6 |
| | (4.8 | ) | | (27.3 | )% |
| Mortgage loans payable | | | (0.4 | ) | | — |
| | (0.4 | ) | | N/M |
|
| Total realized gain on investments: | | 20.0 |
| | 618.5 |
| | (598.5 | ) | | (96.8 | )% | | 331.0 |
| | 37.7 |
| | 293.3 |
| | N/M |
|
| Net change in unrealized appreciation (depreciation) on: | | | | | | | | | | | | | | | | |
| Real estate properties | | 317.5 |
| | 487.2 |
| | (169.7 | ) | | (34.8 | )% | | 73.1 |
| | 135.5 |
| | (62.4 | ) | | (46.1 | )% |
| Real estate joint ventures and limited partnerships | | 236.9 |
| | 288.6 |
| | (51.7 | ) | | (17.9 | )% | | 55.5 |
| | 146.8 |
| | (91.3 | ) | | (62.2 | )% |
| Marketable securities | | 30.0 |
| | (255.1 | ) | | 285.1 |
| | N/M |
| | (103.0 | ) | | 50.0 |
| | (153.0 | ) | | N/M |
|
| Loans receivable | | 0.3 |
| | 0.6 |
| | (0.3 | ) | | (50.0 | )% | | 0.3 |
| | 1.2 |
| | (0.9 | ) | | (75.0 | )% |
| Mortgage loans payable | | 15.1 |
| | 5.6 |
| | 9.5 |
| | N/M |
| | 79.8 |
| | 15.9 |
| | 63.9 |
| | N/M |
|
| Net change in unrealized appreciation on investments and mortgage loans payable | | 599.8 |
| | 526.9 |
| | 72.9 |
| | 13.8 | % | | 105.7 |
| | 349.4 |
| | (243.7 | ) | | (69.7 | )% |
| NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND MORTGAGE LOANS PAYABLE | | $ | 619.8 |
| | $ | 1,145.4 |
| | $ | (525.6 | ) | | (45.9 | )% | | $ | 436.7 |
| | $ | 387.1 |
| | $ | 49.6 |
| | 12.8 | % |
Real Estate Properties, Joint Ventures and Limited Partnerships:
Net realized gains in the Account are primarily due to the sale of wholly-owned real estate property investments.
Real Estate Properties:
The Account’s wholly-ownedWholly-owned real estate investments experienced net realized and unrealized gains of $311.3$315.8 million for the year ended December 31, 2016,during 2018, compared to $702.6$177.5 million during 2017. Appreciation was strongest among industrial and office investments in the Western region of net realized and unrealized gains for 2015. The resulting $391.3 million decrease, when comparedthe country, most notably in California, due to the prior year, was primarilyrising market rents driven by market stabilizations across the sectors.strong tenant demand.
Real Estate Joint Ventures and Limited Partnerships:
The Account’s realReal estate joint ventures and limited partnerships experienced net realized and unrealized gains of $237.5$131.4 million for the year ended December 31, 2016during 2018, compared to net realized and unrealized gains of $455.9$124.9 million for 2015. The resulting $218.4 million net decrease, when comparedduring 2017. Appreciation was strongest among office investments, most notably in California due to the previous year, wasrising market rents driven by market stabilizations across the sectors.strong tenant demand.
Marketable Securities:
The Account’s marketable securities positions experienced net realized and unrealized gainslosses of $55.6$90.2 million for the year ended December 31, 20162018, compared to net realized and unrealized lossesgains of $19.3$67.6 million for 2017. The performance of the year ended December 31, 2015. During 2016, the markets for REITs increasedAccount’s REIT portfolio was in the U.S. as measured byline with the FTSE NAREIT All Equity REITs Index;Index during the Account’s real estate related equity securities were in line with these market movements.
year. Additionally, as of December 31, 2018, the Account maintains a portfolioheld $4.1 billion of investments in government agency notes and U.S. Treasury securities, which had nominal changes due to the short termshort-term nature of these investments.
Mortgage Loans Payable:
Mortgage loans payable experienced net realized and unrealized gains of $15.1$79.4 million for the year ended December 31, 2016during 2018 compared to unrealized gains of $5.6$15.9 million for 2015.during 2017. The unrealized gains in both periods were consistent with the directional movement of U.S. Treasury rates.
Liquidity and Capital Resources
As of December 31, 20172019 and 2016,2018, the Account’s cash and cash equivalents and non-real estate-related marketable securities had a value of $3.9$4.2 billion and $4.1 billion, respectively (15.6%(15.2% and 16.7%15.8% of the Account’s net assets at such dates, respectively).
Participant Flows: Year Ended December 31, 2017 compared to Year Ended December 31, 2016
During the years ended December 31, 2017 and 2016, the Account had $420.5 million of net outflows and $759.8 million of net inflows from participants, respectively.
Liquidity Guarantee
Primarily as a result of significant net participant transfers out of the Account during late 2008 and mid-2009, pursuant to TIAA’s existing liquidity guarantee obligation, the TIAA General Account purchased $1.2 billion of liquidity units issued by the Account in a number of separate transactions between December 2008 and June 2009. Subsequent to June 2009, the TIAA General Account did not purchase any additional liquidity units. In accordance with thisthe liquidity guarantee obligation, TIAA guarantees that all participants in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. The Account pays TIAA a fee for the riskrisks associated with providing the liquidity guarantee through a daily deduction from the Account’s net assets.
Management cannot predict whether any future TIAA liquidity unit purchases will be required under this liquidity guarantee. If net outflows were to occur, (even if not at the same intensity as in 2008 and early 2009), it could have a negative impact on the Account’s operations and returns and could require TIAA to purchase additional liquidity units, perhaps to a significant degree, as was the case in late 2008 and early 2009.
TIAA’s obligation to provide Account participants liquidity through purchases of liquidity units is not subject to an express regulatory or contractual limitation, although as described in the following paragraph, the independent fiduciary may (but is not obligated to) require the reduction of TIAA’s interest through sales of assets from the Account if TIAA’s interest exceeds the trigger point. Even if the independent fiduciary so requires TIAA’s obligation to provide liquidity under the guarantee, which is required by the New York State Department of Financial Services, will continue. Management believes that TIAA has the ability to meet its obligations under this liquidity guarantee.
Whenever TIAA owns liquidity units, the duties of the Account’s independent fiduciary, as part of its monitoring of the Account, include reviewing the purchase and redemption of liquidity units by TIAA to ensure the Account uses the correct accumulation unit values. In addition, the independent fiduciary’s responsibilities include:
establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for reviewing the trigger point;
approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of liquidity units reaches the trigger point; and
once the trigger point has been reached, participating in any program to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. If the independent fiduciary were to determine that TIAA’s ownership should be reduced following the trigger point, its role in participating in any asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of liquidity units.
In establishing the appropriate trigger point, including whether or not to require certain actions once the trigger point has been reached, the independent fiduciary will assess, among other things and to the extent consistent with the Prohibited Transaction Exemption (PTE 96-76) issued by the U.S. Department of Labor in 1996PTE 96-76 with respect to the
liquidity guarantee and the independent fiduciary’s duties under ERISA, the risk that a conflict of interest could arise due to the level of TIAA’s ownership interest in the Account.
Redemption of Liquidity Units. The independent fiduciary is vested with oversight and approval over any redemption of TIAA’s liquidity units, acting in the best interests of Real Estate Account participants.
As of March 31, 2013, the independent fiduciary completed the systematic redemption of all of the liquidity units held by the TIAA General Account. Approximately one-quarter of such units were redeemed evenly over the business days in each of the months of June, September, and December 2012, and March 2013, representing a total of $1.3 billion redeemed during this period.
As a general matter, the independent fiduciary may authorize or direct the redemption of all or a portion of liquidity units at any time and TIAA will request the approval of the independent fiduciary before any liquidity units are redeemed. Upon termination and liquidation of the Account (wind-up), any liquidity units held by TIAA will be the last units redeemed, unless the independent fiduciary directs otherwise.
Net Income and Marketable Securities
Net investment income continues to be an additional source of liquidity for the Account. Net investment income was $671.3$774.2 million for the year ended December 31, 20172019 as compared to $565.1$744.9 million during 2016.in the prior year. Total net investment income increased as described more fully in the Results of Operations section.
As of December 31, 2017,2019, cash and cash equivalents, along with real estate-related and non-real estate-related marketable securities comprised 20.6%18.3% of the Account’s net assets. The Account’s real estate-related marketable securities primarily consist of publicly traded REITs. The Account’s liquid assets continue to be available to purchase suitable real estate properties, meet the Account’s debt obligations, expense needs, and participant redemption requests (i.e., participant withdrawals or benefit payments).
Leverage
The Account may borrow money and assume or obtain a mortgage on a property to make leveraged real estate investments. Also, to meet any short-term cash needs, the Account may obtain a line of credit that may be unsecured and/or contain terms that may require the Account to secure the loan with one or more of its properties.
The Account is authorized to borrow money in accordance with its investment guidelines. Under the Account’s current investment guidelines, the Account’s loan-to-value ratio (as described below) is to be maintained at or below 30%. Such incurrences of debt from time to time may include:
placing new debt on properties;
refinancing outstanding debt;
assuming debt on acquired properties or interests in the Account’s properties;
extending the maturity date of outstanding debt; and/or
an unsecured line of credit or credit facility.
In calculating this limit, only the Account’s actual percentage interest in any borrowings is included, and not that percentage interest held by any joint venture partner. Further, the Account may only borrow up to 70% of the then-current value of a property, although construction loans may be for 100% of the costs incurred in developing a property. At the time the Account (or a joint venture in which the Account is a partner) enters into a revolving line of credit, for the purpose of calculating the loan-to-value ratio, management includes only amounts outstanding when calculating outstanding indebtedness.
As of December 31, 2017,2019, the Account’s ratio of outstanding principal amount of debt (inclusive of the Account’s proportionate share of debt held within its joint venture investments)investments and any loans outstanding on the Account's line of credit) to total gross asset value (i.e., a “loan-to-value ratio”) was 15.5%17.1%. The Account intends to maintain its loan-to-value ratio at or below 30% (this ratio is measured at the time of incurrence and after giving effect thereto). The Account’s total gross asset value, for these purposes, is equal to the total fair value of the Account’s assets (including the fair value of the Account’s net equity interest in joint ventures), with no reduction associated with any indebtedness on such assets.
As of December 31, 2017, there are no mortgage obligations secured by real estate investments wholly-owned2019, principal and interest payments due in the next twelve months for mortgages on properties held directly by the Account maturing within the next twelve months.are $170.9 million and $88.0 million, respectively. The Account currently has sufficient liquidity in the form of cash and cash equivalents and short term securities to meet its current mortgage obligations.
The Account has a $500.0 million unsecured revolving credit agreement to facilitate short-term cash needs. As of December 31, 2019, the Account had an outstanding borrowing of $250.0 million on the line of credit.
In times of high net inflow activity, in particular during times of high net participant transfer inflows, management may determine to apply a portion of such cash flows to make prepayments of indebtedness prior to scheduled maturity, which would have the effect of reducing the Account’s loan-to-value ratio.
Recent Transactions
The following describes property and property-related transactions by the Account during the fourth quarter of 2017.2019. Except as noted, the expenses for operating the properties purchased are either borne or reimbursed, in whole or in part, by the property tenants, although the terms vary under each lease.
Real Estate Properties and Joint Ventures
Purchases
|
| | | | | | | | | | | | |
| Property Name | | Purchase Date | | Ownership Percentage | | Sector | | Location | | Net Purchase Price (1) |
| Bridgepointe Shopping Center | | 11/10/2017 | | 100.00% | | Retail | | San Mateo, CA | | $ | 124.1 |
|
| Frontera Industrial Business Park | | 11/16/2017 | | 100.00% | | Industrial | | San Diego, CA | | 56.0 |
|
| Allure at Camarillo | | 11/30/2017 | | 100.00% | | Apartments | | Camarillo, CA | | 59.7 |
|
Storage Portfolio II (2)(3) | | 11/30/2017 | | 90.00% | | Storage | | Various, U.S.A. | | 267.5 |
|
| 9625 Towne Centre Drive | | 12/19/2017 | | 35.86% | | Land | | San Diego, CA | | 13.8 |
|
| Campus Pointe 3 | | 12/19/2017 | | 45.00% | | Land | | San Diego, CA | | 13.0 |
|
| Campus Pointe 4 | | 12/28/2017 | | 45.00% | | Office | | San Diego, CA | | 8.7 |
|
|
| | | | | | | | | | | | |
| Property Name | | Purchase Date | | Ownership Percentage | | Sector | | Location | | Net Purchase Price (1) |
| 350 Washington | | 10/11/2019 | | 100.00% | | Retail | | Boston, MA | | $ | 134.4 |
|
| Henley at Kingstowne | | 11/01/2019 | | 100.00% | | Apartments | | Alexandria, VA | | 102.9 |
|
| 101 Pacific Coast Highway | | 11/15/2019 | | 100.00% | | Office | | El Segundo, CA | | 96.4 |
|
| Terra House | | 11/15/2019 | | 100.00% | | Apartments | | San Jose, CA | | 145.4 |
|
| Lincoln Centre - Hilton Dallas | | 12/05/2019 | | 100.00% | | Hotel | | Dallas, TX | | 74.4 |
|
| 150 Industrial Road | | 12/06/2019 | | 98.00% | | Office | | San Carlos, CA | | 98.1 |
|
| Creekside Alta Loma | | 12/19/2019 | | 100.00% | | Apartments | | Rancho Cucamonga, CA | | 85.3 |
|
| |
(1) | The net purchase price represents the purchase price lessand closing costs. |
| |
| The Account purchased 36 storage properties located in various locations throughout the U.S. |
| |
(3)
| Concurrent with the purchase of this property, the Account acquired a $175.0 million mortgage loan (the Account's share), as further discussed in the Financings section.
|
Sales
|
| | | | | | | | | | | | | | | |
| Property Name | | Sales Date | | Ownership Percentage | | Sector | | Location | | Net Sales Price (1) | Realized Gain (Loss) on Sale(2) |
| Kierland Apartment Portfolio | | 10/27/2017 | | 100.00% | | Apartments | | Scottsdale, AZ | | $ | 147.1 |
| $ | (27.2 | ) |
The Caruth (3) | | 11/13/2017 | | 100.00% | | Apartments | | Dallas, TX | | 82.2 |
| 10.8 |
|
DDR - Costco Plaza (4) | | 12/21/2017 | | 85.00% | | Retail | | White Marsh, MD | | 11.0 |
| (12.3 | ) |
|
| | | | | | | | | | | | | | | |
| Property Name | | Sales Date | | Ownership Percentage | | Sector | | Location | | Net Sales Price (1) | Realized Gain(Loss) on Sale(2) |
| 425 Park Avenue | | 11/25/2019 | | 100.00% | | Ground Lease | | New York, NY | | $ | 598.6 |
| $ | 280.7 |
|
Weston Business Center - Building B(3) | | 12/10/2019 | | 100.00% | | Industrial | | Weston, FL | | 31.7 |
| (1.5 | ) |
| 12910 Mulberry Drive Industrial | | 12/20/2019 | | 100.00% | | Industrial | | Whittier, CA | | 26.8 |
| 4.4 |
|
Barrett Pavilion(4) | | 12/20/2019 | | 85.00% | | Retail | | Kennesaw, GA | | 35.2 |
| (62.0 | ) |
| |
(1) | The net sales price represents the sales price, less selling expenses. |
| |
(2) | Majority of the realized gain/lossgain has been previously recognized as unrealized gains/lossesgains in the Account's Consolidated Statements of Operations. |
| |
(3) | Concurrent with the sale of this property, the Purchaser assumed $45.0 million in outstanding mortgage debt, as shown in the Financings section.
Building B held within Weston Business Center investment portfolio. |
| |
(4) | Concurrent with the sale of this property, the Account extinguished $8.9 million in outstanding mortgage debt, as shown in the Financings section.
Property held within DDRTC Core Retail Fund, LLC. |
FinancingsReal Estate Funds
|
| | | | | | | | | | | | |
| Property Name | | Financing Date | | Ownership Percentage | | Sector | | Location | | Financing Amount(1) |
| The Caruth | | 11/13/2017 | | 100.00% | | Apartments | | Dallas, TX | | $ | (45.0 | ) |
Storage Portfolio II (2) | | 11/30/2017 | | 90.00% | | Storage | | Various, U.S.A. | | 175.0 |
|
DDR - Costco Plaza | | 12/21/2017 | | 85.00% | | Retail | | White Marsh, MD | | (8.9 | ) |
|
| | | | | | | | | | |
| Fund Name | | Date of Initial Capital Contribution | | Amount of Initial Capital Contribution | | Total Commitment |
| Grubb Southeast Real Estate Fund VI, LLC | | 12/20/2019 | | $ | 13.7 |
| | $ | 100.0 |
|
| IDR - Core Property Index Fund, LLC | | 12/24/2019 | | 25.0 |
| | 25.0 |
|
Townsend Strategic Ventures LP(1) | | — | | — |
| | 250.0 |
|
| |
(1) | Positive values represent new mortgage loans incurred duringNo capital contributions have been made to the period (or mortgage loans assumed by the Account through property acquisition). Negative values represent mortgage loan payoffs (or mortgage loans assignedfund to a buyer upon disposition).date. The funds legal formation was effective 12/31/2019. |
Loans Receivable
Originations and purchases
|
| | | | | | | | | | | | | | |
| Investment Name | | Financing Date | | Interest Rate | | Sector | | Maturity Date | | Location | | Amount |
| Liberty Park | | 10/24/2019 | | 2.30% + LIBOR | | Office | | 11/09/2021 | | Herndon, VA | | $ | 65.5 |
|
| Colony New England Hotel Portfolio | | 11/08/2019 | | 2.80% + LIBOR | | Hotel | | 11/09/2022 | | Boston, MA | | 135.3 |
|
| Exo Apartments | | 12/10/2019 | | 2.30% + LIBOR | | Apartments | | 01/09/2023 | | Reston, VA | | 135.5 |
|
| |
(2)(1)
| ThisAmount represents the Account's principal balance of the loan has anreceivable position. |
Sales
|
| | | | | | | | | | | | | |
| Investment Name | | Sales Date | | Interest Rate | | Sector | | Maturity Date | | Location | | Amount |
Liberty Park(1) | | 12/27/2019 | | 3.410% | | Office | | 11/9/2021 | | Herndon, VA | | 49.1 |
|
| |
(1) | On December 27, 2019, the Account sold its $49.1 million position in the senior mezzanine note. Concurrent with the sale of the senior mezzanine position, the interest rate on the remaining junior mezzanine position of 4.175%, and matures on December 1, 2027.$16.4 million was modified to 6.080%. |
Financings
New financings and assumptions of debt
|
| | | | | | | | | | | | | | | |
| Collateral | | Financing Date | | Ownership Percentage | | Interest Rate | | Sector | | Maturity Date | | Location | | Financing Amount |
| Henley at Kingstowne | | 11/01/2019 | | 100.00% | | 3.60% | | Apartments | | 05/01/2025 | | Alexandria, VA | | 71.0 |
|
Payoffs and assignments of debt
|
| | | | | | | | | | | | | | | |
| Collateral | | Payoff Date | | Ownership Percentage | | Interest Rate | | Sector | | Maturity Date | | Location | | Payoff Amount |
| DDRTC Holdings Pool 1 LLC | | 10/29/2019 | | 85.00% | | 2.00% + LIBOR | | Retail | | 11/30/2019 | | Various, U.S.A. | | 96.6 |
|
Contractual Obligations(1)
The following table sets forth a summary regarding the Account’s known contractual obligations, including required interest payments for those items that are interest bearing, as of December 31, 2017 (amounts in millions)2019 (millions):
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| | | Amounts Due During Years Ending December 31, |
| 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | Thereafter | | Total |
| Mortgage Loans Payable: | | | | | | | | | | | | | | |
| Principal Payments | | $ | 13.7 |
| | $ | 107.2 |
| | $ | 171.7 |
| | $ | 125.0 |
| | $ | 335.7 |
| | $ | 1,485.3 |
| | $ | 2,238.6 |
|
Interest Payments(2) | | 86.7 |
| | 85.4 |
| | 80.3 |
| | 71.5 |
| | 62.3 |
| | 150.7 |
| | 536.9 |
|
| Total Mortgage Loans Payable | | $ | 100.4 |
| | $ | 192.6 |
| | $ | 252.0 |
| | $ | 196.5 |
| | $ | 398.0 |
| | $ | 1,636.0 |
| | $ | 2,775.5 |
|
Other Commitments(3) | | 32.0 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 32.0 |
|
Tenant improvements(4) | | 47.6 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 47.6 |
|
| Total Contractual Obligations | | $ | 180.0 |
| | $ | 192.6 |
| | $ | 252.0 |
| | $ | 196.5 |
| | $ | 398.0 |
| | $ | 1,636.0 |
| | $ | 2,855.1 |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Amounts Due During Years Ending December 31, |
| 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Thereafter | | Total |
| Loans Payable: | | | | | | | | | | | | | | |
| Principal Payments | | $ | 170.9 |
| | $ | 19.7 |
| | $ | 455.5 |
| | $ | 418.2 |
| | $ | 165.4 |
| | $ | 1,108.3 |
| | $ | 2,338.0 |
|
Interest Payments(2) | | 88.0 |
| | 81.9 |
| | 72.7 |
| | 56.3 |
| | 41.2 |
| | 90.2 |
| | 430.3 |
|
| Total Loans Payable | | $ | 258.9 |
| | $ | 101.6 |
| | $ | 528.2 |
| | $ | 474.5 |
| | $ | 206.6 |
| | $ | 1,198.5 |
| | $ | 2,768.3 |
|
Ground Leases(3) | | 1.2 |
| | 1.2 |
| | 1.2 |
| | 1.2 |
| | 1.3 |
| | 375.9 |
| | 382.0 |
|
Other Commitments(4) | | 586.8 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 586.8 |
|
Tenant improvements(5) | | 52.1 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 52.1 |
|
| Total Contractual Obligations | | $ | 899.0 |
| | $ | 102.8 |
| | $ | 529.4 |
| | $ | 475.7 |
| | $ | 207.9 |
| | $ | 1,574.4 |
| | $ | 3,789.2 |
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(1) | The contractual obligations do not include payments on debt held in joint ventures, which are the obligation of the individual joint venture entities. |
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(2) | These amounts represent interest payments due on mortgage loans payable based on the stated rates at December 31, 2017.2019. |
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(3) | These amounts represent future minimum annual payments related to ground leases at December 31, 2019. |
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(4) | This includes the Account’s commitment to purchase interest in its limited partnerships,real estate funds, which could be called by the partner at any time. |
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(4)(5)
| This amount represents tenant improvements and leasing inducements committed by the Account as of December 31, 2017.2019. |
Effects of Inflation and Increasing Operating Expenses
Inflation, along with increased insurance, taxes, utilities and security costs, may increase property operating expenses in the future. Any such increases in operating expenses are generally billed to tenants either through contractual lease provisions in office, industrial, and retail properties or through rent increases in apartment complexes. The Account remains responsible for the expenses for unleased space in a property as well as expenses which may not be reimbursed under the terms of an existing lease.
Critical Accounting Policies
Management’s discussion and analysis of the Account’s financial condition and results of operations is based on the Account’s consolidated financial statements,Consolidated Financial Statements, which have been prepared by management in accordance with GAAP. The preparation of the Account’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgments about the effect of matters that are inherently uncertain and that may change in subsequent periods. Management evaluates its estimates and assumptions on an ongoing basis. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities of the Account that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Determination of Investments at Fair Value: The Account reports all investments and investment related mortgage loans payable at fair value. Thevalue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies. Further in accordance with the adoption of the fair value option allowed under ASC 825, Financial Instruments, and at the election of Account management, loans payable are reported at fair value. The FASB has defined fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
The following is a description of the valuation methodologies used to determine the fair value of the Account’s investments and investment related mortgage payables.loans payable.
Valuation of Real Estate Properties—Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. Accordingly, the Account does not record depreciation. Determination of fair value involves significant levels of judgment because the actual fair value of real estate can be determined only by negotiation between the parties in a sales transaction. The Account’s primary objective when valuing its real estate investments will be to produce a valuation that represents a reasonable estimate of the fair value of its investments. Implicit in the Account’s definition of fair value are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, capital expenditures, discount rates and capitalization rates. Valuation techniques include discounted cash flow analysis, prevailing market capitalization rates or multiples applied to earnings from the property, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties. Amounts ultimately realized from each investment may vary significantly from the fair value presented.
Real estate properties owned by the Account are initially valued based on an independent third party appraisal, as reviewed by TIAA’s internal appraisal staff and as applicable by the Account’s independent fiduciary at the time of the closing of the purchase, whichpurchase. Such initial valuation may result in a potential unrealized gain or loss reflecting the difference between an investment’s fair value (i.e., exit price) and its cost basis (which is inclusive of transaction costs).
Subsequently, each property is appraised each quarter by an independent third party appraiser, reviewed by TIAA’s internal appraisal staff and as applicable the Account’s independent fiduciary. In general, the Account obtains appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments, and thus, adjustments to the valuations of its holdings (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day or month in each period.
Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when the account receives a bona fide bid for the sale of a property held within the Account or one of the Account’s joint ventures. In addition, adjustmentsAdjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant). Alternatively, adjustments may be made to reflect the execution or renewal of a significant lease. Also, adjustments may be made to reflect factors (such as sales values for comparable properties or local employment rate) bearing uniquely on a particular region in which the Account holds properties. TIAA’s internal appraisal staff oversees the entire appraisal process, in conjunction with the Account’s independent fiduciary (the independent fiduciary is more fully described in the paragraph below)following paragraph). Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).
The independent fiduciary, RERC, LLC, has been appointed by a special subcommittee of the Investment Committee of the Board to, among other things, oversee the appraisal process. The independent fiduciary must approve all independent appraisers used by the Account. All appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices, the real estate appraisal industry standards created by The Appraisal Foundation. Real estate appraisals are estimates of property values based on a professional’s opinion. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. These independent appraisers are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent, Royal Institute of Chartered Surveyors) and state certified appraisers from national or regional firms with relevant property type experience and market knowledge. Under the Account’s current procedures, each independent appraisal firm will be rotated off of a particular property at least every three years, although such appraisal firm may perform appraisals of other Account properties subsequent to such rotation.
Also, the independent fiduciary can require additional appraisals if factors or events have occurred that could materially change a property’s value (including those identified above) and such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued appropriately. The independent fiduciary must also approve any valuation change of real estate-related assets where a property’s value changed by more than 6% from the most
recent independent annual appraisal, or if the value of the Account would change by more than 4% within any calendar quarter or more than 2% since the prior calendar month. When a real estate property is subject to a mortgage, the property is valued independently of the mortgage and the property and mortgage fair values are reported separately (see Valuation of Mortgage Loans Payable). The independent fiduciary reviews and approves all mortgage valuation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value until the next valuation review or appraisal.
Valuation of Real Estate Joint Ventures—Real estate joint ventures are stated at the fair value of the Account’s ownership interests of the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related mortgage loans payable, and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. Upon the disposition of all real estate investments by an investee entity, the Account will continue to state its equity in the remaining net assets of the investee entity during the wind down period, if any, at fair value untilwhich occurs prior to the dissolution of the investee entity.
Valuation of Real Estate Limited PartnershipsFunds—Limited partnershipReal estate fund interests are stated at the fair value of the Account’s ownership in the partnership which are recorded based uponfund. Management uses net asset value information provided by limited partners as a practical expedient to estimate fair value. The Account receives estimates from limited partners on a quarterly basis, and audited information is provided annually. Upon receipt of the changes ininformation, management reviews and concludes on whether the net asset values provided are an appropriate representation of the limited partnerships as determined from the financial statementsfair value of the limited partnerships when received byAccount's interests in the Account. Prior to the receiptreal estate funds and makes valuation adjustments as necessary. Valuation of the financial statements from the limited partnerships, the Account estimates the value of its interest in good faith and will from time to time seek input from the issuer or the sponsor of the investments. Since market quotations
are not readily available, the limited partnership interests are valued at fair value as determined in good faith by managementreal estate funds proceeds under the direction of the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole.
Valuation of Marketable Securities—Equity securities listed or traded on any national market or exchange are valued at the last sale price as of the close of the principal securities market or exchange on which such securities are traded or, if there is no sale, at the mean of the last bid and asked prices on such market or exchange, exclusive of transaction costs.
Valuation of Debt Securities—Debt securities with readily available market quotations, other than money market instruments, are generally valued at the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). Debt securities for which market quotations are not readily available, are valued at their fair value as determined in good faith by management and the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole.
Short-term investments are valued in the same manner as debt securities, as described above.
Money market instruments are valued at amortized cost, which approximates fair value.
Equity and fixed income securities traded on a foreign exchange or in foreign markets are valued using their closing values under the valuation methods generally accepted in the country where traded, as of the valuation date. This value is converted to U.S. dollars at the exchange rate in effect on the valuation day. Under certain circumstances (for example, if there are significant movements in the United States markets and there is an expectation the securities traded on foreign markets will adjust based on such movements when the foreign markets open the next day), the Account may adjust the value of equity or fixed income securities that trade on a foreign exchange or market after the foreign exchange or market has closed.
Valuation of Loans Receivable (i.e., the Account as a creditor)—Loans receivable are stated at fair value and are initially valued at the face amount of the loan funding. Subsequently, loans receivable are valued at least quarterly by TIAA’s internal valuation department based on market factors, such as market interest rates and spreads for comparable loans, the liquidity for loans of similar characteristics, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral) and the credit quality of the counterparty. The independent fiduciary reviews and approves all loan receivable valuationsvaluation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each loan receivable to calculate the Account’s daily net asset value until the next valuation review. Loan origination costs are expensed as incurred.
Valuation of Mortgage Loans Payable (i.e., the Account as a debtor)—LoansMortgage or other loans payable, including the Account's line of credit, are stated at fair value. The estimated fair value of loans payable areis generally based on the amount at which the liability could be transferred toin a third partycurrent transaction, exclusive of transaction costs. Loans payableFair values are valued internally by TIAA’s internal appraisal department and reviewed by the Account’s independent fiduciary, at least quarterlyestimated based on market factors, such as market interest rates and spreads foron comparable loans, the liquidity for loans of similar characteristics, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral), the liquidity for loans of similar characteristics, the maturity date of the loan, the return demands of the market.market, and the credit quality of the Account. Different assumptions or changes in future market conditions could significantly affect estimated fair values. At times, the Account may assume debt in connection with the purchase of real estate (including under the Account's line of credit or additional credit facilities).
Foreign currency transactions and translation: Portfolio investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of securities, income receipts and expense payments made in foreign currencies are translated into U.S. dollars at the exchange rates prevailing on the respective dates of the transactions. The effect of any changes in foreign currency exchange rates on portfolio investments and mortgage loans payable are included in net realized and unrealized gains and losses on real estate properties and mortgage loans payable. Net realized gains and losses on foreign currency transactions include disposition of foreign currencies, and currency gains and losses between the accrual and receipt dates of portfolio investment income and between the trade and settlement dates of portfolio investment transactions.
Accumulation and Annuity Funds: The accumulation fund represents the net assets attributable to participants in the accumulation phase of their investment (“Accumulation Fund”). The annuity fund represents the net assets attributable to the participants currently receiving annuity payments (“Annuity Fund”). The net increase or decrease
in net assets from investment operations is apportioned between the accounts based upon their relative daily net asset values. Once an Account participant begins receiving lifetime annuity income benefits, payment levels cannot be reduced as a result of the Account’s adverse mortality experience. In addition, the contracts pursuant to which the Account is offered are required to stipulate the maximum expense charge for all Account level expenses that can be assessed, which is not to exceed 2.5% of average net assets per year. The Account pays a fee to TIAA to assume mortality and expense risks.
Accounting for Investments: The investments held by the Account are accounted for as follows:
Real Estate Properties—Rent from real estate properties consists of all amounts earned under tenant operating leases, including base rent, recoveries of real estate taxes and other expenses and charges for miscellaneous services provided to tenants. Rental income is recognized in accordance with the billing terms of the lease agreements. The Account bears the direct expenses of the real estate properties owned. These expenses include, but are not limited to, fees to local property management companies, property taxes, utilities, maintenance, repairs, insurance, and other operating and administrative costs. An estimate of the net operating income earned from each real estate property is accrued by the Account on a daily basis and such estimates are adjusted when actual operating results are determined.
Real Estate Joint Ventures—The Account has limited ownership interests in various real estate joint ventures (collectively, the “joint ventures”). The Account records its contributions as increases to its investments in the joint ventures, and distributions from the joint ventures are treated as income within income from real estate joint ventures and limited partnershipsfunds in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Income distributions from the joint ventures isare recorded based on the Account’s proportional interest of the income distributed by the joint ventures. Income earned by the joint ventures,and losses incurred but not yet distributed toor realized from the Account by the joint ventures isare recorded as unrealized gains and losses.
Limited PartnershipsReal Estate Funds—The Account has limited ownership interests in various private real estate funds (primarily limited partnerships) and a private real estate investment trust (collectively, the “limited partnerships”).funds. The Account records its contributions as increases to the investments, and distributions from the investments are treated as income within income from real estate joint ventures and limited partnershipsfunds in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Unrealized gains and losses are recorded based upon the changes in the net asset values of the limited partnershipsreal estate funds as determined from the financial statements of the limited partnershipsreal estate funds when received by the Account. Prior to the receipt of the financial statements from the limited partnerships,real estate funds, the Account estimates the value of its interest in good faith and will from time to time seek input fromusing information provided by the issuer or the sponsor of the investment.limited partners. Changes in value based on such estimates are recorded by the Account as unrealized gains and losses.
Marketable Securities—Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. Dividend income is recorded on the ex-dividend date within dividend income. Dividends that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas dividends identified as capital gains or losses are recorded as realized gains or losses. Realized gains and losses on securities transactions are accounted for on the specific identification method.
Loans Receivable—Loans receivable are stated atThe Account may originate, purchase or sell loans collateralized by real estate. The cost basis of originated loans is comprised of the principal balance and direct costs incurred that represent a component of loan’s
reported fair value and are initially valued atvalue. The cost basis of purchased loans consists of the face amountpurchase price of the loan funding. Subsequently,and additional direct costs incurred that represent a component of the loan’s reported fair value. Additional costs incurred by the Account to originate or purchase loans receivable are valued at least quarterly by TIAA’s internal valuation department with changes inthat do not represent a component of a loan’s fair value flowing through unrealized gain (loss).are recorded as expenses in the period incurred. Nonrefundable origination fees paid by borrowers are recognized as interest income once all activities required to execute the loan are completed. Prepayment fees received from the payoff of loans in advance of their maturity date are recognized as interest income on the date the payoff occurs. Interest income from loans receivablein accrual status is recognized usingbased on the effective interest method over the expected lifecurrent coupon rate of the loan. Allloans.
Interest income from loans receivable heldin accrual status is recognized based on the current coupon rate of the loans. Interest income accruals are suspended when a loan becomes a non-performing loan, defined as a loan more than ninety days in arrears or at any point when management believes the full collection of principal is doubtful. Interest income on non-performing loans is recognized only as cash payments are received. Loans can be rehabilitated to date were originated directly bynormal accrual status once all past due interest has been collected and management believes the Account.full collection of principal is likely.
Realized and Unrealized Gains and Losses—Realized gains and losses are recorded at the time an investment is sold or a distribution is received in relation to an investment sale from a joint venture or fund. Real estate and loan receivable transactions are accounted for as of the date on which the purchase or sale transactions close (settlement date). The Account recognizes a realized gain on the sale of an investment to the extent that the contract sales price exceeds the cost-to-date of the investment being sold. A realized loss occurs when the cost-to-date exceeds the sales price. Realized gains and losses from partial sales of non-financial assets are recognized in accordance with ASC 610-20 - Gains and Losses from the Derecognition of Nonfinancial Assets. Realized gains and losses from the sale of financial assets are recognized in accordance with ASC 860 - Transfers and Servicing. Unrealized gains and losses are recorded as the fair values of the Account’s investments are adjusted, and as discussed within the Real Estate Joint Ventures, Real Estate Funds and Limited PartnershipsLoans Receivable sections above. Realized gains and losses are recorded at the time an investment is sold or a distribution is received from the joint ventures or limited partnerships. Real estate transactions are accounted for as of the date on which the purchase or sale transactions for the real estate properties close (settlement date). The Account recognizes a realized gain on the
sale of a real estate property to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A realized loss occurs when the cost-to-date exceeds the sales price.
Net Assets—The Account’s net assets as of the close of each valuation day are valued by taking the sum of:
the value of the Account’s cash,cash; cash equivalents, and short-term and other debt instruments;
the value of the Account’s other securities and other non-real estate assets;
the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;
an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non-real estate-related investments (including short-term marketable securities) since the end of the prior valuation day; and
actual net operating income earned from the Account’s properties, other real estate-related investments and non-real estate-related investments (but only to the extent any such item of income differs from the estimated income accrued for on such investments),
and then reducing the sum by liabilities held within the Account, including the daily investment management fee, administration and distribution fees, mortality and expense fee, liquidity guarantee fee, and certain other expenses attributable to operating the Account. Daily estimates of net operating income are adjusted to reflect actual net operating income on a monthly basis, at which time such adjustments (if any) are reflected in the Account’s unit value.
After the end of every quarter, the Account reconciles the amount of expenses deducted from the Account (which is established in order to approximate the costs that the Account will incur) with the expenses the Account actually incurred. If there is a difference, the Account adds it to or deducts it from the Account in equal daily installments over the remaining days of the following quarter. Material differences may be repaid in the current calendar quarter. The Account’s at-cost deductions are based on projections of Account assets and overall expenses, and the size of any adjusting payments will be directly affected by the difference between management’s projections and the Account’s actual assets or expenses.
Variable Interest Entities: Variable interests are financial relationships which expose a reporting entity to the risks and rewards of variability in the entity's assets and operations. When variable interests exist, they are subject to evaluation under the variable interest entity ("VIE") model if any one of the following four characteristics are present: a) the entity is insufficiently capitalized; b) the equity holders do not have power to control the activities that most
significantly impact the entity's financial performance; c) the voting rights of the equity holders are not proportionate to their economic interests; or d) the equity holders are not exposed to the residual losses or benefits that would normally be associated with equity interests.
ASC 810 - Consolidation prohibits a reporting entity that qualifies as an investment company under ASC 946 - Financial Services - Investment Companies from consolidating an investee that is not an investment company. This scope exception does not apply to situations in which an investment company has an interest in another investment company. Accordingly, the Account's investments in other investment companies (e.g., real estate funds) are subject to evaluation under the VIE model.
The Account consolidates a VIE if it concludes that the Account is the primary beneficiary of the VIE. The primary beneficiary has both: a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance; and b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The following activities have been identified by the Account as having the most significant impact on a VIE's economic performance:
control over the ability to acquire and dispose of investments held by the entity;
the ability to kick out a managing entity without cause, either unilaterally or with a group of equity investors;
the ability to modify the power of the managing entity without its consent; and
control over the day-to-day decision making of the underlying investments
An equity investor in a VIE may not actively be involved in the significant activities (i.e., it may cede day-to-day decision making to a third party), but if the equity investor has approval rights or some other mechanism to retain ultimate control, the equity investor with these rights would be concluded as having power over the activity.
On a quarterly basis, the Account evaluates all involvements with VIEs, including any changes to governing powers of continuing VIEs. The consolidation status of VIEs may change as a result of such continued evaluation. At the reporting date, the Account was not deemed to be the primary beneficiary of any VIEs. Refer to Note 7—Investments in Real Estate Funds for additional detail.
Federal Income Taxes: Based on provisions of the Internal Revenue Code, Section 817, the Account is taxed as a segregated asset account of TIAA and as such, the Account should incurincurs no material federal income tax attributable to the net investment activity of the Account. The Account’s federal income tax return is generally subject to examination for a period of three years after filed. State and local tax returns may be subject to examination for an additional period of time depending on the jurisdiction. Management has analyzed the Account’s tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Account’s Consolidated Financial Statements.
The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. The Act changes existing United States tax law and includes numerous provisions that will affect businesses. The Act reduces the U.S. corporate tax rate from 35% to 21%, includes several base broadening provisions, as well as, reform to the U.S. international tax system.
The Act does not result in any material impact to the Account.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Account’s real estate holdings, including real estate joint ventures, limited partnershipsfunds and loans receivable, which, as of December 31, 2017,2019, represented 81.1%83.3% of the Account’s total investments, expose the Account to a variety of risks. These risks include, but are not limited to:
General Real Estate Risk—The risk that the Account’s property values or rental and occupancy rates could go down due to general economic conditions, a weak market for real estate generally, disruptions in the credit and/or capital markets, or changing supply and demand for certain types of properties;
Appraisal Risk—The risk that the sale price of an Account property (i.e., the value that would be determined by negotiations between independent parties) might differ substantially from its estimated or appraised value, leading to losses or reduced profits to the Account upon sale;
Risk Relating to Property Sales—The risk that the Account might not be able to sell a property at a particular time for its full value, particularly in a poor market. This might make it difficult to raise cash quickly and also could lead to Account losses;
Risks of Borrowing—The risk that interest rate changes may impact Account returns if the Account takes out a mortgage on a property, buys a property subject to a mortgage or holds a property subject to a mortgage, and
hedging against such interest rate changes, if undertaken by the Account, may entail additional costs and be unsuccessful; and
Foreign Currency Risk—The risk that the value of the Account’s foreign investments, related debt, or rental income could increase or decrease due to changes in foreign currency exchange rates or foreign currency exchange control regulations, and hedging against such currency changes, if undertaken by the Account, may entail additional costs and be unsuccessful.
The Account believes the diversification of its real estate portfolio, both geographically and by sector, along with its quarterly valuation procedure, helps manage the real estate and appraisal risks described above.
As of December 31, 2017, 18.9%2019, 16.7% of the Account’s total investments were comprised of marketable securities. Marketable securities include high-quality debt instruments (i.e., government agency notes) and REIT securities. The Account's Consolidated Statements of Investments sets forth the general financial terms of these instruments, along with their fair values, as determined in accordance with procedures described earlier in Critical Accounting Policies section above and in Note 1–Organization and Significant Accounting Policies to the Account’s Consolidated Financial Statements included herewith. As of the date of this report, the Account does not invest in derivative financial investments, nor does the Account engage in any hedging activity, although it may do so in selected circumstances in the future.
Risks associated with investments in real estate-related liquid assets (which could include, from time to time, REIT securities and CMBS), and non-real estate-related liquid assets, including financial/credit risk, market volatility risk, interest rate volatility risk and deposit/money market risk.
Financial/Credit Risk—The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value.
Market Volatility Risk—The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets regardless of the credit quality or financial condition of the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility over the past year. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.
Interest Rate Volatility—The risk that interest rate volatility may affect the Account’s current income from an investment.
Deposit/Money Market Risk—The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. The Account does not believe it has exposure to significant concentration of deposit risk. In addition, there is some risk that investments held in money market accounts can suffer losses.
In addition, to the extent the Account were to hold mortgage-backed securities (including commercial mortgage-backed securities) these securities are subject to prepayment risk or extension risk (i.e., the risk that borrowers will repay the loans earlier or later than anticipated). If the underlying mortgage assets experience faster than anticipated repayments of principal, the Account could fail to recoup some or all of its initial investment in these securities, since the original price paid by the Account was based in part on assumptions regarding the receipt of interest payments. If the underlying mortgage assets are repaid later than anticipated, the Account could lose the opportunity to reinvest the anticipated cash flows at a time when interest rates might be rising. The rate of prepayment depends on a variety of geographic, social and other functions, including prevailing market interest rates and general economic factors. The fair value of these securities is also highly sensitive to changes in interest rates. Note that the potential for appreciation, which could otherwise be expected to result from a decline in interest rates, may be limited by any increased prepayments. These securities may be harder to sell than other securities.
In addition to these risks, real estate equity securities (such as REIT stocks and mortgage-backed securities) would be subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. For more information on the risks associated with all of the Account’s investments, see Item"Item 1A. “Risk Factors”Risk Factors" in this Form 10-K.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TIAA REAL ESTATE ACCOUNT
REPORT OF MANAGEMENT RESPONSIBILITY
To the Participants of the TIAA Real Estate Account:
The accompanying consolidated financial statements of the TIAA Real Estate Account (“Account”) of Teachers Insurance and Annuity Association of America (“TIAA”) are the responsibility of TIAA’s management. They have been prepared in accordance with accounting principles generally accepted in the United States of America and have been presented fairly and objectively in accordance with such principles.
TIAA has established and maintains an effective system of internal controls over financial reporting designed to provide reasonable assurance that assets are properly safeguarded, that transactions are properly executed in accordance with management’s authorization, and to carry out the ongoing responsibilities of management for reliable consolidated financial statements. In addition, TIAA’s internal audit personnel provide regular reviews and assessments of the internal controls and operations of the Account, and the Senior Managing Director, Chief Auditor of Internal Audit regularly reports to the Audit Committee of the TIAA Board of Trustees.
The independent registered public accounting firm of PricewaterhouseCoopers LLP has audited the accompanying consolidated financial statements for the years ended December 31, 2017, 20162019, 2018 and 2015.2017. The report of the independent auditors reportregistered public accounting firm expresses an independent opinion on the fairness of presentation of the Account’s consolidated financial statements.
The Audit Committee of the TIAA Board of Trustees, comprised entirely of independent, non-management trustees, meets regularly with management, representatives of the independent registered public accounting firm and internal audit group personnel to review matters relating to financial reporting, internal controls and auditing. In addition to the annual independent audit of the Account’s consolidated financial statements, the New York State Insurance Department and other state insurance departments regularly examine the operations and consolidated financial statements of the Account as part of their periodic corporate examinations.
|
| |
March 15, 201812, 2020 | /s/ Carol W. Deckbar |
| | Carol W. Deckbar
Executive Vice President, Institutional Investment & Endowment Services,Chief Product Officer of TIAA Financial Solutions, Teachers Insurance and Annuity Association of America (Principal |
| (Principal Executive Officer) |
| | |
| | /s/ Virginia M. WilsonOluseun S. Salami |
| | Virginia M. Wilson
Senior Executive Vice President, Chief Accounting Officer and Chief Financial Officer,Corporate Controller of Teachers Insurance and Annuity Association of America (Principal |
| (Principal Financial and Accounting Officer) |
REPORT OF THE AUDIT COMMITTEE
To the Participants of the TIAA Real Estate Account:
The TIAA Audit Committee (“Committee”) oversees the financial reporting process of the TIAA Real Estate Account (“Account”) on behalf of TIAA’s Board of Trustees. The Committee operates in accordance with a formal written charter (copies of which are available upon request) which describes the Audit Committee’s responsibilities. All members of the Committee are independent, as defined under the listing standards of the New York Stock Exchange.
Management has the primary responsibility for the Account’s Consolidated Financial Statements, development and maintenance of a strong system of internal controls and disclosure controls, and compliance with applicable laws and regulations. In fulfilling its oversight responsibilities, the Committee reviewed and approved the audit plans of the internal audit group and the independent registered public accounting firm in connection with their respective audits of the Account. The Committee also meets regularly with the internal audit group and the independent registered public accounting firm, both with and without management present, to discuss the results of their examinations, their evaluation of internal controls, and the overall quality of financial reporting. As required by its charter, the Committee will formally evaluate rotation of the independent registered public accounting firm whenever circumstances warrant, but in no event will the evaluation be less frequent than every ten years of the engagement.
The Committee reviewed and discussed the accompanying audited consolidated financial statementsConsolidated Financial Statements with management, including a discussion of the quality and appropriateness of the accounting principles and financial reporting practices followed, the reasonableness of significant judgments, and the clarity and completeness of disclosures in the consolidated financial statements. The Committee has also discussed the audited consolidated financial statementsConsolidated Financial Statements with PricewaterhouseCoopers LLP, the independent registered public accounting firm responsible for expressing an opinion on the conformity of these audited consolidated financial statementsConsolidated Financial Statements with accounting principles generally accepted in the United States of America.
The discussion with PricewaterhouseCoopers LLP focused on their judgments concerning the quality and appropriateness of the accounting principles and financial reporting practices followed by the Account, the clarity and completeness of the consolidated financial statementsaudited Consolidated Financial Statements and related disclosures, and other significant matters, such as any significant changes in accounting policies, internal controls, management judgments and estimates, and the nature of any uncertainties or unusual transactions. In addition, the Committee discussed with PricewaterhouseCoopers LLP, the auditors’ independence from management and the Account, and has received a written disclosure regarding such independence, as required by the Securities and Exchange Commission.
Based on the review and discussions referred to above, the Committee has approved the release of the accompanying audited consolidated financial statementsConsolidated Financial Statements for publication and filing with appropriate regulatory authorities.
James R. Chambers, Audit Committee Chair
Jeffrey R. Brown, Audit Committee Member
Lisa W. Hess,Tamara Simpkins Franklin, Audit Committee Member
Lawrence H. Linden,Lisa W. Hess, Audit Committee Member
Maureen O’Hara, Audit Committee Member
Donald K. Peterson, Audit Committee Member
Dorothy K. Robinson, Audit Committee Member
March 15, 201812, 2020
TIAA REAL ESTATE ACCOUNT
AUDITED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In millions, except per accumulation unit amounts)
| | | | | December 31, | | December 31, |
| 2017 | | 2016 | 2019 | | 2018 |
| ASSETS | | | | | | | | | | |
| Investments, at fair value: | | | | | | | | | | |
Real estate properties
(cost: $12,972.5 and $12,818.1) | | $ | 15,742.7 |
| | $ | 15,452.8 |
| | |
Real estate joint ventures and limited partnerships
(cost: $4,675.3 and $4,530.4) | | 6,003.0 |
| | 5,759.9 |
| | |
Real estate properties
(cost: $13,048.5 and $12,687.8) | | | $ | 15,835.0 |
| | $ | 15,531.1 |
| |
Real estate joint ventures and funds
(cost: $6,244.4 and $5,207.8) | | | 7,516.0 |
| | 6,532.5 |
| |
| Marketable securities: | | | | | | | | | | |
Real estate related
(cost: $991.0 and $883.9) | | 1,238.0 |
| (1) | | 1,081.5 |
| (1) | |
Other
(cost: $3,888.1 and $4,054.0) | | 3,887.5 |
| | 4,053.8 |
| | |
Loans receivable
(cost: $296.7 and $294.8) | | 298.8 |
| | 295.7 |
| | |
Total investments
(cost: $22,823.6 and $22,581.2) | | 27,170.0 |
| | | 26,643.7 |
| | |
Real estate related
(cost: $686.0 and $1,274.7) | | | 825.7 |
| (1) | | 1,415.1 |
| (1) |
Other
(cost: $4,144.7 and $4,088.9) | | | 4,150.2 |
| | 4,088.7 |
| |
Loans receivable
(cost: $1,504.5 and $910.6) | | | 1,503.1 |
| | 913.0 |
| |
Loans receivable with related parties
(cost: $69.3 and $0.0) | | | 69.0 |
| | | — |
| |
Total investments
(cost: $25,697.4 and $24,169.8) | | | 29,899.0 |
| | | 28,480.4 |
| |
| Cash and cash equivalents | | 11.7 |
| | 3.0 |
| | | 15.1 |
| | 3.8 |
| |
| Due from investment manager | | 1.0 |
| | 5.9 |
| | | 5.5 |
| | 2.2 |
| |
| Other | | 270.9 |
| (2) | | 332.6 |
| (2) | | 290.3 |
| (2) | | 331.8 |
| (2) |
| TOTAL ASSETS | | 27,453.6 |
| | | 26,985.2 |
| | | 30,209.9 |
| | | 28,818.2 |
| |
| LIABILITIES | | | | | | | | | | |
| Mortgage loans payable, at fair value | | | | | | |
| (principal outstanding: $2,238.6 and $2,316.5) | | 2,238.3 |
| | 2,332.1 |
| | |
| Loans payable, at fair value | | | | | | |
| (principal outstanding: $2,338.0 and $2,688.1) | | | 2,365.0 |
| | 2,608.0 |
| |
| Line of credit, at fair value | | | 250.0 |
| | 0 | — |
| |
| Accrued real estate property expenses | | 199.1 |
| | 202.2 |
| | | 225.9 |
| | 222.4 |
| |
| Payable for collateral for securities loaned | | 18.5 |
| | 93.0 |
| | | 25.7 |
| | 68.8 |
| |
| Other | | 55.1 |
| | | 53.2 |
| | | 35.4 |
| | | 76.4 |
| |
| TOTAL LIABILITIES | | 2,511.0 |
| | | 2,680.5 |
| | | 2,902.0 |
| | | 2,975.6 |
| |
| COMMITMENTS AND CONTINGENCIES | |
| |
| | |
| |
| |
| NET ASSETS | | | | | | | | | | |
| Accumulation Fund | | 24,430.8 |
| | 23,813.5 |
| | | 26,759.1 |
| | 25,320.1 |
| |
| Annuity Fund | | 511.8 |
| | | 491.2 |
| | | 548.8 |
| | | 522.5 |
| |
| TOTAL NET ASSETS | | $ | 24,942.6 |
| | | $ | 24,304.7 |
| | | $ | 27,307.9 |
| | | $ | 25,842.6 |
| |
| NUMBER OF ACCUMULATION UNITS OUTSTANDING | | 61.3 |
| | | 62.4 |
| | | 60.8 |
| | | 60.7 |
| |
| NET ASSET VALUE, PER ACCUMULATION UNIT | | $ | 398.329 |
| | | $ | 381.636 |
| | | $ | 440.422 |
| | | $ | 417.416 |
| |
(1) Includes securities loaned of $18.1$25.2 million at December 31, 20172019 and $91.2$67.4 million at December 31, 2016.2018.
(2) Includes cash collateral for securities loaned of $18.5$25.7 million at December 31, 20172019 and $93.0$68.8 million at December 31, 2016.2018.
See notes to the audited consolidated financial statements
TIAA REAL ESTATE ACCOUNT
AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)(millions)
| | | | | Years Ended December 31, | | Years Ended December 31, |
| 2017 | | 2016 | | 2015 | 2019 | | 2018 | | 2017 |
| INVESTMENT INCOME | | | | | | | | | | | | |
| Real estate income, net | | | | | | | | | | | | |
| Rental income | | $ | 1,059.6 |
| | $ | 1,009.0 |
| | $ | 919.1 |
| | $ | 1,103.5 |
| | $ | 1,083.2 |
| | $ | 1,059.6 |
|
| Real estate property level expenses and taxes: | | | | | | | | | | | | |
| Operating expenses | | 221.2 |
| | 218.1 |
| | 207.4 |
| | 237.5 |
| | 228.6 |
| | 221.2 |
|
| Real estate taxes | | 166.7 |
| | 158.7 |
| | 144.4 |
| | 187.4 |
| | 178.9 |
| | 166.7 |
|
| Interest expense | | 89.7 |
| | 85.8 |
| | 81.1 |
| | 105.7 |
| | 113.9 |
| | 89.7 |
|
| Total real estate property level expenses and taxes | | 477.6 |
| | 462.6 |
| | 432.9 |
| | 530.6 |
| | 521.4 |
| | 477.6 |
|
| Real estate income, net | | 582.0 |
| | 546.4 |
| | 486.2 |
| | 572.9 |
| | 561.8 |
| | 582.0 |
|
| Income from real estate joint ventures and limited partnerships | | 214.1 |
| | 161.8 |
| | 140.1 |
| |
| Income from real estate joint ventures and funds | | | 214.0 |
| | 204.7 |
| | 214.1 |
|
| Interest | | 54.1 |
| | 26.4 |
| | 10.1 |
| | 173.0 |
| | 120.4 |
| | 54.1 |
|
| Dividends | | 26.3 |
| | 32.5 |
| | 47.5 |
| | 23.2 |
| | 50.8 |
| | 26.3 |
|
| TOTAL INVESTMENT INCOME | | 876.5 |
| | 767.1 |
| | 683.9 |
| | 983.1 |
| | 937.7 |
| | 876.5 |
|
| Expenses | | | | | | | | | | | | |
| Investment management charges | | 72.0 |
| | 72.6 |
| | 69.3 |
| | 68.1 |
| | 62.1 |
| | 72.0 |
|
| Administrative charges | | 59.3 |
| | 62.1 |
| | 56.9 |
| | 50.0 |
| | 50.9 |
| | 59.3 |
|
| Distribution charges | | 25.7 |
| | 27.7 |
| | 23.9 |
| | 31.7 |
| | 28.0 |
| | 25.7 |
|
| Mortality and expense risk charges | | 1.2 |
| | 1.2 |
| | 1.1 |
| | 1.3 |
| | 1.3 |
| | 1.2 |
|
| Liquidity guarantee charges | | 47.0 |
| | 38.4 |
| | 31.7 |
| | 57.8 |
| | 50.5 |
| | 47.0 |
|
| TOTAL EXPENSES | | 205.2 |
| | 202.0 |
| | 182.9 |
| | 208.9 |
| | 192.8 |
| | 205.2 |
|
| INVESTMENT INCOME, NET | | 671.3 |
| | 565.1 |
| | 501.0 |
| | 774.2 |
| | 744.9 |
| | 671.3 |
|
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE | | | | | | | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND LOANS PAYABLE | | | | | | | |
| Net realized gain (loss) on investments | | | | | | | | | | | | |
| Real estate properties | | 42.0 |
| | (6.2 | ) | | 215.4 |
| | 583.1 |
| | 242.7 |
| | 42.0 |
|
| Real estate joint ventures and limited partnerships | | (21.9 | ) | | 0.6 |
| | 167.3 |
| |
| Real estate joint ventures and funds | | | (114.4 | ) | | 75.9 |
| | (21.9 | ) |
| Marketable securities | | 17.6 |
| | 25.6 |
| | 235.8 |
| | 301.1 |
| | 12.8 |
| | 17.6 |
|
| Loans payable | | | — |
| | (0.4 | ) | | — |
|
| Net realized gain on investments | | 37.7 |
| | 20.0 |
| | 618.5 |
| | 769.8 |
| | 331.0 |
| | 37.7 |
|
| Net change in unrealized appreciation (depreciation) on | | | | | | | | | | | | |
| Real estate properties | | 135.5 |
| | 317.5 |
| | 487.2 |
| | (56.8 | ) | | 73.1 |
| | 135.5 |
|
| Real estate joint ventures and limited partnerships | | 146.8 |
| | 236.9 |
| | 288.6 |
| |
| Real estate joint ventures and funds | | | 50.3 |
| | 55.5 |
| | 146.8 |
|
| Marketable securities | | 50.0 |
| | 30.0 |
| | (255.1 | ) | | 0.7 |
| | (103.0 | ) | | 50.0 |
|
| Loans receivable | | 1.2 |
| | 0.3 |
| | 0.6 |
| | (3.8 | ) | | 0.3 |
| | 1.2 |
|
| Mortgage loans payable | | 15.9 |
| | 15.1 |
| | 5.6 |
| |
Net change in unrealized appreciation on investments and mortgage loans payable | | 349.4 |
| | 599.8 |
| | 526.9 |
| |
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND MORTGAGE LOANS PAYABLE | | 387.1 |
| | 619.8 |
| | 1,145.4 |
| |
| Loans receivable with related parties | | | (0.3 | ) | | — |
| | — |
|
| Loans payable | | | (107.1 | ) | | 79.8 |
| | 15.9 |
|
Net change in unrealized (depreciation) appreciation on investments and loans payable | | | (117.0 | ) | | 105.7 |
| | 349.4 |
|
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND LOANS PAYABLE | | | 652.8 |
| | 436.7 |
| | 387.1 |
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,058.4 |
| | $ | 1,184.9 |
| | $ | 1,646.4 |
| | $ | 1,427.0 |
| | $ | 1,181.6 |
| | $ | 1,058.4 |
|
See notes to the audited consolidated financial statements
TIAA REAL ESTATE ACCOUNT
AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(In millions)(millions)
| | | | | Years Ended December 31, | | Years Ended December 31, |
| 2017 | | 2016 | | 2015 | 2019 | | 2018 | | 2017 |
| FROM OPERATIONS | | | | | | | | | | | | |
| Investment income, net | | $ | 671.3 |
| | $ | 565.1 |
| | $ | 501.0 |
| | $ | 774.2 |
| | $ | 744.9 |
| | $ | 671.3 |
|
| Net realized gain on investments | | 37.7 |
| | 20.0 |
| | 618.5 |
| | 769.8 |
| | 331.0 |
| | 37.7 |
|
| Net change in unrealized appreciation on investments and mortgage loans payable | | 349.4 |
| | 599.8 |
| | 526.9 |
| |
| Net change in unrealized (depreciation) appreciation on investments and loans payable | | | (117.0 | ) | | 105.7 |
| | 349.4 |
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | 1,058.4 |
| | 1,184.9 |
| | 1,646.4 |
| | 1,427.0 |
| | 1,181.6 |
| | 1,058.4 |
|
| FROM PARTICIPANT TRANSACTIONS | | | | | | | | | | | | |
| Premiums | | 2,561.7 |
| | 3,064.2 |
| | 2,852.3 |
| | 2,655.9 |
| | 2,637.4 |
| | 2,561.7 |
|
| Annuity payments | | (43.4 | ) | | (41.0 | ) | | (36.7 | ) | | (47.3 | ) | | (45.0 | ) | | (43.4 | ) |
| Withdrawals and death benefits | | (2,938.8 | ) | | (2,263.4 | ) | | (1,931.0 | ) | | (2,570.3 | ) | | (2,874.0 | ) | | (2,938.8 | ) |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM PARTICIPANT TRANSACTIONS | | (420.5 | ) | | 759.8 |
| | 884.6 |
| | 38.3 |
| | (281.6 | ) | | (420.5 | ) |
| NET INCREASE IN NET ASSETS | | 637.9 |
| | 1,944.7 |
| | 2,531.0 |
| | 1,465.3 |
| | 900.0 |
| | 637.9 |
|
| NET ASSETS | | | | | | | | | | | | |
| Beginning of period | | 24,304.7 |
| | 22,360.0 |
| | 19,829.0 |
| | 25,842.6 |
| | 24,942.6 |
| | 24,304.7 |
|
| End of period | | $ | 24,942.6 |
| | $ | 24,304.7 |
| | $ | 22,360.0 |
| | $ | 27,307.9 |
| | $ | 25,842.6 |
| | $ | 24,942.6 |
|
See notes to the audited consolidated financial statements
TIAA REAL ESTATE ACCOUNT
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)(millions)
| | | | | Years Ended December 31, | | Years Ended December 31, |
| 2017 | | 2016 | | 2015 | 2019 | | 2018 | | 2017 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 1,058.4 |
| | $ | 1,184.9 |
| | $ | 1,646.4 |
| | $ | 1,427.0 |
| | $ | 1,181.6 |
| | $ | 1,058.4 |
|
| Adjustments to reconcile net changes in net assets resulting from operations to net cash provided by (used in) operating activities: | | | | | | | | | | | | |
| Net realized gain on investments | | (37.7 | ) | | (20.0 | ) | | (618.5 | ) | | (769.8 | ) | | (331.0 | ) | | (37.7 | ) |
| Net change in unrealized appreciation on investments and mortgage loans payable | | (349.4 | ) | | (599.8 | ) | | (526.9 | ) | |
| Net change in unrealized depreciation (appreciation) on investments and loans payable | | | 117.0 |
| | (105.7 | ) | | (349.4 | ) |
| Purchase of real estate properties | | (538.2 | ) | | (623.9 | ) | | (1,229.6 | ) | | (1,059.7 | ) | | (786.3 | ) | | (538.2 | ) |
| Capital improvements on real estate properties | | (130.1 | ) | | (157.2 | ) | | (167.9 | ) | | (304.4 | ) | | (228.6 | ) | | (130.1 | ) |
| Proceeds from sale of real estate properties | | 525.5 |
| | 251.1 |
| | 442.9 |
| | 1,285.4 |
| | 1,462.7 |
| | 525.5 |
|
| Purchases of long term investments | | (592.0 | ) | | (1,379.4 | ) | | (1,102.4 | ) | | (1,373.4 | ) | | (1,422.2 | ) | | (592.0 | ) |
| Proceeds from long term investments | | 385.3 |
| | 68.3 |
| | 1,499.8 |
| | 1,210.5 |
| | 756.4 |
| | 385.3 |
|
| Increase in loans receivable | | (1.9 | ) | | (194.8 | ) | | (100.0 | ) | |
| (Increase) decrease in other investments | | 165.9 |
| | 153.6 |
| | (376.5 | ) | |
| Change in due to (from) investment manager | | 4.9 |
| | (0.2 | ) | | 1.5 |
| |
| (Increase) decrease in other assets | | 61.7 |
| | (102.4 | ) | | (33.3 | ) | |
| Increase (decrease) in other liabilities | | (72.6 | ) | | 122.3 |
| | 29.1 |
| |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | | 479.8 |
| | (1,297.5 | ) | | (535.4 | ) | |
| Purchases and originations of loans receivable | | | (695.5 | ) | | (939.2 | ) | | (1.9 | ) |
| Purchases and originations of loans receivable with related parties | | | (69.3 | ) | | — |
| | — |
|
| Proceeds from sales of loans receivable | | | 50.8 |
| | 257.3 |
| | — |
|
| Proceeds from payoffs of loans receivable | | | 50.8 |
| | 68.0 |
| | — |
|
| (Increase) Decrease in other investments | | | (54.9 | ) | | (200.8 | ) | | 165.9 |
|
| Change in due from investment manager | | | (3.3 | ) | | (1.2 | ) | | 4.9 |
|
| Decrease (Increase) in other assets | | | 23.3 |
| | (59.7 | ) | | 58.2 |
|
| (Decrease) Increase in other liabilities | | | (70.4 | ) | | 63.0 |
| | (72.6 | ) |
| NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | | | (235.9 | ) | | (285.7 | ) | | 476.3 |
|
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| Line of credit proceeds received | | | 250.0 |
| | — |
| | — |
|
| Mortgage loan proceeds received | | — |
| | 563.5 |
| | — |
| | 47.5 |
| | 712.8 |
| | — |
|
| Payments of mortgage loans | | (50.6 | ) | | (34.7 | ) | | (373.8 | ) | | (106.8 | ) | | (152.2 | ) | | (50.6 | ) |
| Premiums | | 2,561.7 |
| | 3,064.2 |
| | 2,852.3 |
| | 2,655.9 |
| | 2,637.4 |
| | 2,561.7 |
|
| Annuity payments | | (43.4 | ) | | (41.0 | ) | | (36.7 | ) | | (47.3 | ) | | (45.0 | ) | | (43.4 | ) |
| Withdrawals and death benefits | | (2,938.8 | ) | | (2,263.4 | ) | | (1,931.0 | ) | | (2,570.3 | ) | | (2,874.0 | ) | | (2,938.8 | ) |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | | (471.1 | ) | | 1,288.6 |
| | 510.8 |
| |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | 8.7 |
| | (8.9 | ) | | (24.6 | ) | |
| CASH AND CASH EQUIVALENTS | | | | | | | |
| Beginning of period | | 3.0 |
| | 11.9 |
| | 36.5 |
| |
| End of period | | $ | 11.7 |
| | $ | 3.0 |
| | $ | 11.9 |
| |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | | | 229.0 |
| | 279.0 |
| | (471.1 | ) |
| NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | (6.9 | ) | | (6.7 | ) | | 5.2 |
|
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | | | | | |
| Beginning of period cash, cash equivalents and restricted cash | | | 47.3 |
| | 54.0 |
| | 48.8 |
|
| Net (decrease) increase in cash, cash equivalents and restricted cash | | | (6.9 | ) | | (6.7 | ) | | 5.2 |
|
| End of period cash, cash equivalents and restricted cash | | | $ | 40.4 |
| | $ | 47.3 |
| | $ | 54.0 |
|
| SUPPLEMENTAL DISCLOSURES | | | | | | | | | | | | |
| Cash paid for interest | | $ | 89.9 |
| | $ | 84.2 |
| | $ | 82.7 |
| | $ | 107.8 |
| | $ | 108.7 |
| | $ | 89.9 |
|
| Debt assumed as part of a real estate acquisition | | $ | 17.7 |
| | $ | 24.0 |
| | $ | — |
| | $ | 181.0 |
| | $ | 105.1 |
| | $ | 17.7 |
|
| Loan assignment as part of a real estate disposition | | $ | 45.0 |
| | $ | — |
| | $ | 200.0 |
| | $ | 471.8 |
| | $ | 216.5 |
| | $ | 45.0 |
|
| Conversion of note receivable | | $ | — |
| | $ | — |
| | $ | 100.6 |
| |
| Stock consideration received from the merger of marketable securities | | | $ | — |
| | $ | 6.1 |
| | $ | — |
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (millions): |
| | | | | | | | | | | |
| | As of December 31, |
| | 2019 | | 2018 | | 2017 |
| Cash and cash equivalents | $ | 15.1 |
| | $ | 3.8 |
| | $ | 11.7 |
|
Restricted cash(1) | 25.3 |
| | 43.5 |
| | 42.3 |
|
| TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH | $ | 40.4 |
| | $ | 47.3 |
| | $ | 54.0 |
|
(1) Restricted cash is included within other assets on the Account's Consolidated Statements of Assets and Liabilities.
See notes to the audited consolidated financial statements
TIAA REAL ESTATE ACCOUNT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Organization and Significant Accounting Policies
Business: The TIAA Real Estate Account (“Account”) is an insurance separate account of Teachers Insurance and Annuity Association of America (“TIAA”) and was established by resolution of TIAA’s Board of Trustees (the “Board”) on February 22, 1995, under the insurance laws of the State of New York, for the purpose of funding variable annuity contracts issued by TIAA. The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account, and make withdrawals from the Account on a daily basis, under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.
The investment objective of the Account is to seek favorable long-term returns primarily through rental income and capital appreciation fromof a diversified portfolio of directly held, private real estate investments and real estate-related investments owned by the Account.while offering investors guaranteed, daily liquidity. The Account holds real estate properties directly and through subsidiaries wholly-owned by TIAA for the sole benefit of the Account. The Account also holds limited interests in real estate joint ventures and limited partnerships,funds, as well as investments in loans receivable with commercial real estate properties as underlying collateral. Additionally, the Account invests in real estate-related and non-real estate-related publicly traded securities, cash and other instruments to maintain adequate liquidity levels for operating expenses, capital expenditures and to fund benefit payments (withdrawals, transfers and related transactions).
Basis of Presentation: The accompanying Consolidated Financial Statements include the Account and those subsidiaries wholly-owned by TIAA for the benefit of the Account. All significant intercompany accounts and transactions between the Account and such subsidiaries have been eliminated.
The Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America, which requires the use of estimates made by management. Actual results may vary from those estimates and such differences may be material. The following is a summary of the significant accounting policies of the Account.
Basis of Presentation: The accompanying Consolidated Financial Statements include the Account and those subsidiaries wholly-owned by TIAA for the benefit of the Account. All significant intercompany accounts and transactions between the Account and such subsidiaries have been eliminated.
The Accumulation Unit Value (“AUV”) used for financial reporting purposes may differ from the AUV used for processing transactions. The AUV used for financial reporting purposes includes security and participant transactions effective through the period end date to which this report relates. Total return is computed based on the AUV used for processing transactions.
Determination of Investments at Fair Value: The Account reports all investments at fair value in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies. Further in accordance with the adoption of the fair value option allowed under ASC 825, Financial Instruments, and at the election of Account management, mortgage loans payable and a line of credit are reported at fair value. The FASB has defined fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.participants excluding transaction costs.
The following is a description of the valuation methodologies used to determine the fair value of the Account’s investments and investment related mortgage loans payable.
Valuation of Real Estate Properties—Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. Accordingly, the Account does not record depreciation. Determination of fair value involves significant levels of judgment because the actual fair value of real estate can be determined only by negotiation between the parties in a sales transaction.
The Account’s primary objective when valuing its real estate investments will be to produce a valuation that represents a reasonable estimate of the fair value of its investments.
Implicit in the Account’s definition of fair value are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, capital expenditures, discount rates and capitalization rates. Valuation techniques include discounted cash flow analysis, prevailing market capitalization rates or multiples applied to earnings from the property, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties. Amounts ultimately realized from each investment may vary significantly from the fair value presented.
Real estate properties owned by the Account are initially valued based on an independent third party appraisal, as reviewed by TIAA’s internal appraisal staff and as applicable by the Account’s independent fiduciary at the time of the closing of the purchase. Such initial valuation may result in a potential unrealized gain or loss reflecting the difference between an investment’s fair value (i.e., exit price) and its cost basis (which is inclusive of transaction costs).
Subsequently, each property is appraised each quarter by an independent third party appraiser, reviewed by TIAA’s internal appraisal staff and as applicable the Account’s independent fiduciary. In general, the Account obtains appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments, and thus, adjustments to the valuations of its holdings (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day or month in each period.
Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when the account receives a bona fide bid for the sale of a property held within the Account or one of the Account’s joint ventures. Adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant). Alternatively, adjustments may be made to reflect the execution or renewal of a significant lease. Also, adjustments may be made to reflect factors (such as sales values for comparable properties or local employment rate) bearing uniquely on a particular region in which the Account holds properties. TIAA’s internal appraisal staff oversees the entire appraisal process, in conjunction with the Account’s independent fiduciary (the independent fiduciary is more fully described in the following paragraph). Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).
The independent fiduciary, RERC, LLC, has been appointed by a special subcommittee of the Investment Committee of the Board to, among other things, oversee the appraisal process. The independent fiduciary must approve all independent appraisers used by the Account. All appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices, the real estate appraisal industry standards created by The Appraisal Foundation. Real estate appraisals are estimates of property values based on a professional’s opinion. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. These independent appraisers are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent, Royal Institute of Chartered Surveyors) and state certified appraisers from national or regional firms with relevant property type experience and market knowledge. Under the Account’s current procedures, each independent appraisal firm will be rotated off of a particular property at least every three years, although such appraisal firm may perform appraisals of other Account properties subsequent to such rotation.
Also, the independent fiduciary can require additional appraisals if factors or events have occurred that could materially change a property’s value (including those identified above) and such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued appropriately. The independent fiduciary must also approve any valuation change of real estate-related assets where a property’s value changed by more than 6% from the most recent independent annual appraisal, or if the value of the Account would change by more than 4% within any calendar quarter or more than 2% since the prior calendar month. When a real estate property is subject to a mortgage, the property is valued independently of the mortgage and the property and mortgage fair values are reported separately (see Valuation of Mortgage Loans Payable). The independent fiduciary reviews and approves all mortgage valuation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value until the next valuation review or appraisal.
Valuation of Real Estate Joint Ventures—Real estate joint ventures are stated at the fair value of the Account’s ownership interests of the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related mortgage loans payable, and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. The fair value of real estate and loans payable held by joint ventures is determined in the same manner described above in Valuation of Real Estate Properties. The independent fiduciary reviews and approves all valuation adjustments before such adjustments are recorded by the Account. Upon the disposition of all real estate investments by an investee entity, the Account will continue to state its equity in the remaining net assets of the investee entity during the wind down period, if any, which occurs prior to the dissolution of the investee entity.
Valuation of Real Estate Limited PartnershipsFunds—Limited partnershipReal estate fund interests are stated at the fair value of the Account’s ownership in the partnership which are recorded based uponfund. Management uses net asset value information provided by limited partners as a practical expedient to estimate fair value. The Account receives estimates from limited partners on a quarterly basis, and audited information is provided annually. Upon receipt of the changes ininformation, management reviews and concludes on whether the net asset values provided are an appropriate representation of the limited partnerships as determined from the financial statementsfair value of the limited partnerships when received byAccount's interests in the Account. Prior to the receiptreal estate funds and makes valuation adjustments as necessary. Valuation of the financial statements from the limited partnerships, the Account estimates the value of its interest in good faith and will from time to time seek input from the issuer or the sponsor of the investments. Since market quotations are not readily available, the limited partnership interests are valued at fair value as determined in good faith by managementreal estate funds proceeds under the direction of the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole.
Valuation of Marketable Securities—Equity securities listed or traded on any national market or exchange are valued at the last sale price as of the close of the principal securities market or exchange on which such securities are traded or, if there is no sale, at the mean of the last bid and asked prices on such market or exchange, exclusive of transaction costs.
Valuation of Debt Securities—Debt securities with readily available market quotations, other than money market instruments, are generally valued at the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). Debt securities for which market quotations are not readily available, are valued at fair value as determined in good faith by management and the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole.
Short-term investments are valued in the same manner as debt securities, as described above.
Money market instruments are valued at amortized cost, which approximates fair value.
Equity and fixed income securities traded on a foreign exchange or in foreign markets are valued using their closing values under the valuation methods generally accepted in the country where traded, as of the valuation date. This value is converted to U.S. dollars at the exchange rate in effect on the valuation day. Under certain circumstances (for example, if there are significant movements in the U.S. markets and there is an expectation the securities traded on foreign markets will adjust based on such movements when the foreign markets open the next day), the Account may adjust the value of equity or fixed income securities that trade on a foreign exchange or market after the foreign exchange or market has closed.
Valuation of Loans Receivable (i.e. the Account as a creditor)—Loans receivable are stated at fair value and are initially valued at the face amount of the loan funding. Subsequently, loans receivable are valued at least quarterly by TIAA’s internal valuation department based on market factors, such as market interest rates and spreads for comparable loans, the liquidity for loans of similar characteristics, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral) and the credit quality of the counterparty. The independent fiduciary
reviews and approves all loan receivable valuation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each loan receivable to calculate the Account’s daily net asset value until the next valuation review. Loan origination costs are expensed as incurred.
Valuation of Mortgage Loans Payable (i.e. the Account as a debtor)—Mortgage or other loans payable, including the Accounts line of credit, are stated at fair value. The estimated fair valuesvalue of mortgage loans payable areis generally based on the amount at
which the liability could be transferred toin a third partycurrent transaction, exclusive of transaction costs. Mortgage loans payableFair values are valued internally by TIAA’s internal valuation department, as reviewed by the Account’s independent fiduciary, at least quarterlyestimated based on market factors, such as market interest rates and spreads foron comparable loans, the liquidity for loans of similar characteristics, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral), the liquidity for mortgage loans of similar characteristics, the maturity date of the loan, and the return demands of the market.market, and the credit quality of the Account. Different assumptions or changes in future market conditions could significantly affect estimated fair values. At times, the Account may assume debt in connection with the purchase of real estate (including under the Account's line of credit or additional credit facilities). The independent fiduciary reviews and approves all valuation adjustments before such adjustments are recorded by the Account.
See Note 5—Assets and Liabilities Measured at Fair Value on a Recurring Basis for further discussion and disclosure regarding the determination of the fair value of the Account’s investments.
Foreign Currency Transactions and Translation: Portfolio investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of securities, income receipts and expense payments made in foreign currencies are translated into U.S. dollars at the exchange rates prevailing on the respective dates of the transactions. The effect of any changes in foreign currency exchange rates on portfolio investments and mortgage loans payable are included in net realized and unrealized gains and losses on real estate properties and mortgage loans payable. Net realized gains and losses on foreign currency transactions include disposition of foreign currencies, and currency gains and losses between the accrual and receipt dates of portfolio investment income and between the trade and settlement dates of portfolio investment transactions.
Accumulation and Annuity Funds: The accumulation fund represents the net assets attributable to participants in the accumulation phase of their investment (“Accumulation Fund”). The annuity fund represents the net assets attributable to the participants currently receiving annuity payments (“Annuity Fund”). The net increase or decrease in net assets from investment operations is apportioned between the accounts based upon their relative daily net asset values. Once an Account participant begins receiving lifetime annuity income benefits, payment levels cannot be reduced as a result of the Account’s actual mortality experience. In addition, the contracts pursuant to which the Account is offered are required to stipulate the maximum expense charge for all Account level expenses that can be assessed, which is not to exceed 2.5% of average net assets per year. The Account pays a fee to TIAA to assume mortality and expense risks.
Accounting for Investments: The investments held by the Account are accounted for as follows:
Real Estate Properties—Rent from real estate properties consists of all amounts earned under tenant operating leases, including base rent, recoveries of real estate taxes and other expenses and charges for miscellaneous services provided to tenants. Rental income is recognized in accordance with the billing terms of the lease agreements. The Account bears the direct expenses of the real estate properties owned. These expenses include, but are not limited to, fees to local property management companies, property taxes, utilities, maintenance, repairs, insurance, and other operating and administrative costs. An estimate of the net operating income earned from each real estate property is accrued by the Account on a daily basis and such estimates are adjusted when actual operating results are determined.
Real Estate Joint Ventures—The Account has limited ownership interests in various real estate joint ventures (collectively, the “joint ventures”). The Account records its contributions as increases to its investments in the joint ventures, and distributions from the joint ventures are treated as income within income from real estate joint ventures and limited partnerships in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Income distributions from the joint ventures are recorded based on the Account’s proportional interest of the income distributed by the joint ventures. Income earnedand losses incurred but not yet distributed toor realized from the Account by the joint ventures isare recorded as unrealized gains and losses.
Limited PartnershipsReal Estate Funds—The Account has limited ownership interests in various private real estate funds (primarily limited partnerships) and a private real estate investment trust (collectively, the “limited partnerships”).funds. The Account records its contributions as increases to the investments, and distributions from the investments are treated as income
within income from real estate joint ventures and limited partnershipsfunds in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Unrealized gains and losses are recorded based upon the changes in the net asset values of the limited partnershipsreal estate funds as determined from the financial statements of the limited partnershipsreal estate funds when received by the Account. Prior to the receipt of the financial statements from the limited partnerships,real estate funds, the Account estimates the value of its interest in good faith and will from time to time seek input fromusing information provided by the issuer or the sponsor of the investments.limited partners. Changes in value based on such estimates are recorded by the Account as unrealized gains and losses.
Marketable Securities—Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. Dividend income is recorded on the ex-dividend date within dividend income. Dividends that are identified as returns of capital are recorded as a reduction to the cost
basis of the investment, whereas dividends identified as capital gains or losses are recorded as realized gains or losses. Realized gains and losses on securities transactions are accounted for on the specific identification method.
Loans Receivable—Loans receivable are stated atThe Account may originate, purchase or sell loans collateralized by real estate. The cost basis of originated loans is comprised of the principal balance and direct costs incurred that represent a component of loan’s reported fair value and are initially valued atvalue. The cost basis of purchased loans consists of the face amountpurchase price of the loan funding. Subsequently,and additional direct costs incurred that represent a component of the loan’s reported fair value. Additional costs incurred by the Account to originate or purchase loans receivable are valued at least quarterly by TIAA’s internal valuation department with changes inthat do not represent a component of a loan’s fair value flowing through unrealized gain (loss).are recorded as expenses in the period incurred. Nonrefundable origination fees paid by borrowers are recognized as interest income once all activities required to execute the loan are completed. Prepayment fees received from the payoff of loans in advance of their maturity date are recognized as interest income on the date the payoff occurs. Interest income from loans receivablein accrual status is recognized usingbased on the effective interest method over the expected lifecurrent coupon rate of the loan. Allloans.
Interest income from loans receivable heldin accrual status is recognized based on the current coupon rate of the loans. Interest income accruals are suspended when a loan becomes a non-performing loan, defined as a loan more than ninety days in arrears or at any point when management believes the full collection of principal is doubtful. Interest income on non-performing loans is recognized only as cash payments are received. Loans can be rehabilitated to date were originated directly bynormal accrual status once all past due interest has been collected and management believes the Account.full collection of principal is likely.
Realized and Unrealized Gains and Losses—Realized gains and losses are recorded at the time an investment is sold or a distribution is received in relation to an investment sale from a joint venture or limited partnership.fund. Real estate and loan receivable transactions are accounted for as of the date on which the purchase or sale transactions for the real estate properties close (settlement date). The Account recognizes a realized gain on the sale of a real estate propertyan investment to the extent that the contract sales price exceeds the cost-to-date of the propertyinvestment being sold. A realized loss occurs when the cost-to-date exceeds the sales price. Realized gains and losses from partial sales of non-financial assets are recognized in accordance with ASC 610-20 - Gains and Losses from the Derecognition of Nonfinancial Assets. Realized gains and losses from the sale of financial assets are recognized in accordance with ASC 860 - Transfers and Servicing. Unrealized gains and losses are recorded as the fair values of the Account’s investments are adjusted, and as discussed within the Real Estate Joint Ventures, Real Estate Funds and Limited PartnershipsLoans Receivable sections above.
Net Assets—The Account’s net assets as of the close of each valuation day are valued by taking the sum of:
the value of the Account’s cash; cash equivalents, and short-term and other debt instruments;
the value of the Account’s other securities and other non-real estate assets;
the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;
an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non-real estate-related investments (including short-term marketable securities) since the end of the prior valuation day; and
actual net operating income earned from the Account’s properties, other real estate-related investments and non-real estate-related investments (but only to the extent any such item of income differs from the estimated income accrued for on such investments),
and then reducing the sum by liabilities held within the Account, including the daily investment management fee, administration and distribution fees, mortality and expense fee, and liquidity guarantee fee, and certain other expenses attributable to operating the Account. Daily estimates of net operating income are adjusted to reflect actual net operating income on a monthly basis, at which time such adjustments (if any) are reflected in the Account’s unit value.
After the end of every quarter, the Account reconciles the amount of expenses deducted from the Account (which is established in order to approximate the costs that the Account will incur) with the expenses the Account actually incurred. If there is a difference, the Account adds it to or deducts it from the Account in equal daily installments over the remaining days of the following quarter. Material differences may be repaid in the current calendar quarter. The Account’s at-cost deductions are based on projections of Account assets and overall expenses, and the size of any adjusting payments will be directly affected by the difference between management’s projections and the Account’s actual assets or expenses.
Income from Securities Lending:Variable Interest Entities: Variable interests are financial relationships which expose a reporting entity to the risks and rewards of variability in the entity's assets and operations. When variable interests exist, they are subject to evaluation under the variable interest entity ("VIE") model if any one of the following four characteristics are present: a) the entity is insufficiently capitalized; b) the equity holders do not have power to control the activities that most significantly impact the entity's financial performance; c) the voting rights of the equity holders are not proportionate to their economic interests; or d) the equity holders are not exposed to the residual losses or benefits that would normally be associated with equity interests.
ASC 810 - Consolidation prohibits a reporting entity that qualifies as an investment company under ASC 946 - Financial Services - Investment Companies from consolidating an investee that is not an investment company. This scope exception does not apply to situations in which an investment company has an interest in another investment company. Accordingly, the Account's investments in other investment companies (e.g., real estate funds) are subject to evaluation under the VIE model.
The Account may lend securities to qualified borrowers to generate additional income. When loaning securities,consolidates a VIE if it concludes that the Account retainsis the primary beneficiary of the VIE. The primary beneficiary has both: a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance; and b) the obligation to absorb losses or the right to receive benefits of owningthat could potentially be significant to the securities, including the economic equivalent of dividends or interest generatedVIE. The following activities have been identified by the securities. Cash collateral received for securitiesAccount as having the most significant impact on loan is maintained exclusively in an interest-bearing deposit account. All income generateda VIE's economic performance:
control over the ability to acquire and dispose of investments held by the securities lending program is reflected within interest income on entity;
the Account's Consolidated Statementsability to kick out a managing entity without cause, either unilaterally or with a group of Operations.equity investors;
the ability to modify the power of the managing entity without its consent; and
control over the day-to-day decision making of the underlying investments
An equity investor in a VIE may not actively be involved in the significant activities (i.e., it may cede day-to-day decision making to a third party), but if the equity investor has approval rights or some other mechanism to retain ultimate control, the equity investor with these rights would be concluded as having power over the activity.
On a quarterly basis, the Account evaluates all involvements with VIEs, including any changes to governing powers of continuing VIEs. The consolidation status of VIEs may change as a result of such continued evaluation. At the reporting date, the Account was not deemed to be the primary beneficiary of any VIEs. Refer to Note 7—Investments in Real Estate Funds for additional detail.
Cash and Cash Equivalents: Cash and cash equivalents are balances held by the Account in bank deposit accounts which, at times, exceed federally insured limits. The Account’s management monitors these balances to mitigate the exposure of risk due to concentration and has not experienced any losses from such concentration.
Other Assets and Other Liabilities: Other assets and other liabilities consist of operating assets and liabilities utilized and held at each individual real estate property investment. Other assets consist of, amongst other items, cash, tenant receivables and prepaid expenses; whereas other liabilities primarily consist of security deposits. Other assets also include cash collateral held for securities on loan.
Federal Income Taxes: Based on provisions of the Internal Revenue Code, Section 817, the Account is taxed as a segregated asset account of TIAA and as such, the Account incurs no material federal income tax attributable to the net investment activity of the Account. The Account’s federal income tax return is generally subject to examination for a period of three years after filed. State and local tax returns may be subject to examination for an additional period of time depending on the jurisdiction. Management has analyzed the Account’s tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Account’s Consolidated Financial Statements.
The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. The Act changes existing United States tax law and includes numerous provisions that will affect businesses. The Act reduces the U.S. corporate tax rate from 35% to 21%, includes several base broadening provisions, as well as, reform to the US international tax system.
The Act does not result in any material impact to the Account.
Restricted Cash: The Account held $42.3 million and $45.8 million as of December 31, 2017 and 2016, respectively,restricted cash in escrow accounts for security deposits, as required by certain states, as well as property taxes, insurance, and various other property related matters as required by certain creditors related to outstanding mortgage loans payable collateralized by certain real estate investments. These amounts are recorded within Other Assetsother assets on the Account's Consolidated Statements of Assets and Liabilities. See Note 8—Mortgage 9—Loans Payable for additional information regarding the Account’s outstanding mortgage loans payable.
Changes in Net Assets: Premiums include premiums paid by existing accumulation unit holders in the Account and transfers into the Account. Withdrawals and death benefits include withdrawals out of the Account which include transfers out of the Account and required minimum distributions.
Due to/from Investment Manager: Due to/from investment manager represents amounts that are to be paid or received by TIAA on behalf of the Account. Amounts generally are paid or received by the Account within one or two business days and no interest is contractually charged on these amounts.
NewSecurities Lending: The Account may lend securities to qualified borrowers to earn additional income. The Account receives cash collateral against the loaned securities and maintains cash collateral in an amount not less than 100% of the market value of loaned securities during the period of the loan; any additional collateral required due to changes in security values is delivered to the Account the next business day. Cash collateral received by the Account is invested exclusively in an interest-bearing deposit account. The value of the loaned securities and the liability to return the cash collateral received are reflected in the Consolidated Statements of Assets and Liabilities. When loaning securities, the Account retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the securities. All income generated by the securities lending program is reflected within interest income on the Consolidated Statements of Operations.
Securities lending transactions are for real-estate related equity securities, and the resulting loans are continuous, can be recalled at any time, and have no set maturity. Securities lending income recognized by the Account consists of interest earned on cash collateral and lending fees, net of any rebates to the borrower and compensation to the agent. Such income is reflected within interest income on the Consolidated Statements of Operations. In lending its securities, the Account bears the market risk with respect to the investment of collateral and the risk that the agent may default on its contractual obligations to the Account. The agent bears the risk that the borrower may default on its obligation to return the loaned securities as the agent is contractually obligated to indemnify the Account if at the time of a default by a borrower some or all of the loan securities have not been returned.
Adopted Accounting Pronouncements: In May 2014, the FASB issued Accounting Standard Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 supersedes all existing revenue recognition guidance and establishes a five-step model to measure and recognize revenue. ASU 2014-09 will be effective for fiscal years beginning after December 15, 2017, the Account will adopt ASU 2014-09 as of January 1, 2018 utilizing the modified retrospective adoption approach. The Account has completed its implementation analysis of ASU 2014-09 and determined it will be immaterially impacted by the adoption.
In January 2016, the FASB issued ASU 2016-1 Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-1”). This ASU amends, among other items, certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. These amendments are effective for public business entities for fiscal years and interim periods within those fiscal years beginning after December 15,
2017, and the Account plans to adopt the guidance as of January 1, 2018. Management has completed its initial scoping for the adoption of the ASU 2016-01 and does not expect the guidance to materially impact the Account.
In February 2016, the FASB issued ASU 2016-2Accounting Standards Update 2016-02 Leases (Topic 842) (“ASU 2016-2”2016-02”) which will supersedesupersedes Topic 840, Leases. This ASU 2016-02 applies to all entities that enter into a lease.leases. Lessees will beare required to report assets and liabilities that arise from leases. Lessor accounting is expectedhas largely remained unchanged; however, certain refinements were made to remain unchanged exceptconform with revenue recognition guidance in certain circumstances. The the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers ("ASU also2014-09"), specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. ASU 2016-02 contains certain practical expedients, which the Account planshas elected. The Account's exposure to elect, includingASU 2016-02 is primarily as a lessor. The Account's exposure to ASU 2016-02 from the perspective of a lessee is limited to ground leases. The Account adopted ASU 2016-02 as of January 1, 2019. New disclosures required by ASC 2016-02 are included in the Notes to the Consolidated Financial Statements, refer to Note 4—Leases.
The Account has elected the transition package of practical expedients permitted within the new standard. This practical expedient permits the Account to carryforward the historical lease classification and not to reassess initial direct costs for any existing leases.
In addition, the Account has elected the practical expedient notthat allows lessors to separateavoid separating lease and non-lease components whereby both componentswithin a contract if certain criteria are accounted for and recognized as lease components. In January 2018, the FASB issued a proposal for comment that would allow lessors to elect a similar practical expedient by class of underlying assets to not separate non-lease components from the lease component.met. The Lessor’slessor’s practical expedient election would beis limited to circumstances in which (i) the timing and pattern of revenue recognition are the same for the non-lease component and the related lease component and (ii) the combined single lease component would be classified as an operating lease. If the exposedThis practical expedient is issued in its existing form, the Account expects to elect the practical expedient which would allowallows the Account the ability to combine the lease and non-lease components if the underlying asset meets the two criteria above. This ASU is effective for public business entities for fiscal years beginning after December 15, 2018, including all interim periods within those fiscal years. Management has completed its initial scoping for the adoption of the ASU 2016-2 and does not expect the adoption of such guidance to materially impact the Account.
In August 2016, the2018, FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements ("ASU 2018-13"). ASU 2016-15 clarifies how to present cash receipts and cash payments2018-13 modifies the disclosures required for certain activity in the Statement of Cash Flows. These amendments are effective for public business entities within those fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and should be applied using a retrospective transition method to each period presented. Management has completed its initial scoping for the adoption of the ASU 2016-15 and does not expect the adoption of suchfair value measurements. This guidance to materially impact the Account. The Account plans to adopt the guidance as of January 1, 2018.
In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). The statement of cash flows should present beginning-of-period and end-of-period total amounts that include cash and restricted cash. Transfers between cash and restricted cash will no longer be presented as operating activities within the statement of cash flows. ASU 2016-18 is effective for annual financial statements issued for fiscal years beginning after December 15, 2017 and should be applied using a retrospective transition method to each period presented. Management expects that the impact of ASU 2016-18 will require modification to the presentation of restricted cash on the Account's Consolidated Statements of Cash Flows. The Account plans to adopt the guidance as of January 1, 2018.
In January 2017, the FASB issued Accounting Standard Update 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 provides guidance for evaluating whether a set of transferred assets and activities is a business, which may result in certain real estate acquisitions being accounted for as asset acquisitions rather than business combinations. ASU 2017-01 will be effective for fiscal years beginning after December 15, 2017, however, this guidance will2019. The Account adopted ASU 2018-13 as of January 1, 2019 and concluded that the adoption did not have a material impact on the Account.Notes to the Financial Statements.
In March 2017,February 2019, the FASB issued ASU 2017-05, Other Income-Gains2019-01, Leases (Topic 842) Codification Improvements (“ASU 2019-01”). ASU 2019-01 addresses two lessor implementation issues and Lossesclarifies an exemption for lessors and lessees from a certain interim disclosure requirement associated with adopting the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments in ASU 2017-05 clarify the scope and application of ASC 610-20 on the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. ASU 2017-05new lease accounting standard. This guidance is effective for public business entities for annual periodsfiscal years beginning after December 15, 2017, including2019 and interim periods within those annual periods. The amendments may be either retrospectively applied to each period presented within the financial statements or by a cumulative-effect adjustment to retained earnings or net assets as of the beginning of the fiscal year of adoption.years. The Account will elect the modified retrospective approach upon adoption. Management has completed its initial scoping for the adoption of theadopted ASU 2017-05 and does not expect the guidance to materially impact the Account. The Account plans to adopt the guidance2019-01 as of January 1, 2018.2019 and concluded that the adoption did not have a material impact on the Consolidated Financial Statements.
Note 2—Management Agreements, Arrangements and Related Party Transactions
Investment advisorymanagement, administrative and distribution services are provided to the Account at cost by TIAA. Services provided at cost are paid by the Account on a daily basis based upon projected expenses to be provided to the Account. Payments are adjusted periodically to ensure daily payments are as close as possible to the Account’s actual expenses incurred. Differences between actual expenses and the amounts paid by the Account are reconciled and adjusted quarterly.
Investment management services for the Account are provided by TIAA employees,officers, under the direction and control of the Board, and its Investment Committee, pursuant to investment management procedures adopted by TIAA for the Account. TIAA’s investment management decisions for the Account are subject to review by the Account’s independent fiduciary. TIAA also provides various portfolio accounting and related services for the Account.
The Account is a party to the Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account (the “Distribution Agreement”), dated January 1, 2008, by and among TIAA, for itself and on behalf of the Account, and TIAA-CREF Individual and Institutional Services, LLC (“Services”), a wholly-owned subsidiary of TIAA, a registered broker-dealer and a member of the Financial Industry Regulatory Authority. Pursuant to the Distribution Agreement, Services performs distribution services for the Account which include, among other things, (i) distribution of annuity contracts issued by TIAA and funded by the Account, (ii) advising existing annuity contract owners in connection with their accumulations and (iii) helping employers implement and manage retirement plans. In addition, TIAA performs administrative functions for the Account, which include, among other things, (i) maintaining accounting records and performing accounting services, (ii) receiving and allocating premiums, (iii) calculating and making annuity payments, (iv) processing withdrawal requests, (v) providing regulatory compliance and reporting services, (vi) maintaining the Account’s records of contract ownership and (vii) otherwise assisting generally in all aspects of the Account’s operations. Both distribution services (pursuant to the Distribution Agreement) and administrative services are provided to the Account by Services and TIAA, as applicable, on an at cost basis.
Thebasis.The Distribution Agreement is terminable by either party upon 60 days written notice and terminates automatically upon any assignment thereof.
In addition to providing the services described above, TIAA and Services provide investment management, administrative and distribution services at cost. TIAA and Services receive payments fromcharges the Account onfees to bear certain mortality and expense risks, and risks with providing the liquidity guarantee. These fees are charged as a daily basis according to formulaspercentage of the net assets of the Account. Rates for these fees are established each year and adjusted periodically with the objectiveannually.
Once an Account participant begins receiving lifetime annuity income benefits, payment levels cannot be reduced as a result of keeping the payments as close as possible to the Account’s actual mortality experience. As such, mortality and expense risk expenses actually incurred. Any differences between actual expenses and the amounts paid by the Account are adjusted quarterly.contractual charges for TIAA’s assumption of this risk.
TIAA also provides aThe liquidity guarantee to the Account, for a fee, to ensureensures that sufficient funds are available to meet participant transfer and cash withdrawal requests in the event that the Account’s cash flows and liquid investments are insufficient to fund such requests. TIAA ensures sufficient funds
Expenses for the services and fees described above are available foridentified as such transfer and withdrawal requests by purchasing accumulation units of the Account.
In accordance with this liquidity guarantee obligation, TIAA guarantees that all participants in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is receivedaccompanying Consolidated Statements of Operations and are further identified as "Expenses" in good order. Liquidity units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s participants. Management believes that TIAA has the ability to meet its obligations under the liquidity guarantee.
In accordance with a prohibited transaction exemption from the U.S. Department of Labor (PTE 96-76), the Account’s independent fiduciary, RERC, has certain responsibilities with respect to the Account that it has undertaken or is currently undertaking with respect to TIAA’s purchase of liquidity units, including among other things, reviewing the purchase and redemption of liquidity units by TIAA to ensure the Account uses the correct unit values. In addition, as set forth in PTE 96-76, the independent fiduciary’s responsibilities include:
establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for changing the trigger point;
approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of liquidity units reaches the trigger point; and
once the trigger point has been reached, participating in any program to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. The independent fiduciary’s role in participating in any such asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of liquidity units.
To the extent TIAA owns accumulation units issued pursuant to the liquidity guarantee, the independent fiduciary monitors and oversees, among other things, TIAA’s ownership interest in the Account and may require TIAA to eventually redeem some of its units, particularly when the Account has un-invested cash or liquid investments available. TIAA also receives a fee for assuming certain mortality and expense risks.Note 11—Financial Highlights.
The independent fiduciary, which has the right to adjust the trigger point, has established the trigger point at 45% of the outstanding accumulation units and it will continue to monitor TIAA’s ownership interest in the Account and provide further recommendations as necessary.
TIAA and Services provide certain services toThe Account has loans receivable outstanding with related parties as of December 31, 2019. The loans are with joint ventures in which the Account onalso has an equity interest. The loans are held at cost basis. Seefair value in accordance with the
valuation policies described in Note 9—Financial Highlights1—Organization and Significant Accounting Policies. for detailsThe following table presents the key terms of the expense charge and expense ratio.loans as of the reporting date:
|
| | | | | | | | | | | | | | | | | | | | |
| | | Related Party | | Equity Ownership Interest | | Interest Rate | | Maturity Date | | Fair Value at |
| Principal | | | | | | December 31, 2019 | | December 31, 2018 |
| 2019 | | 2018 | | | | | | |
| 36.5 |
| | — |
| | MRA Hub 34 Holding, LLC | | 95.00% | | 2.50% + LIBOR | | 9/1/2022 | | $ | 36.5 |
| | $ | — |
|
| 32.8 |
| | — |
| | THP Student Housing, LLC | | 97.00% | | 3.200% | | 9/1/2024 | | 32.5 |
| | — |
|
| TOTAL LOANS RECEIVABLE WITH RELATED PARTIES | | $ | 69.0 |
| | $ | — |
|
Note 3—CreditConcentration Risk Concentrations
Concentrations of creditConcentration risk may arise when a number of properties or tenants are located in a similar geographic region such that the economic conditions of that region could impact tenants’ obligations to meet their contractual obligations or cause the values of individual properties to decline. TheAdditionally, concentrations of risk may arise if any one tenant comprises a significant amount of the Account's rent, or if tenants are concentrated in a particular industry.
As of December 31, 2019, the Account hashad no significant concentrations of tenants as no single tenant hashad annual contract rent that makesmade up more than 2%3% of the rental income of the Account. Moreover, the Account's tenants have no notable concentration present in any one industry. There are no significant lease expirations scheduled to occur over the next twelve months.
The Account’s wholly-owned real estate investments and investments in joint ventures are located in the United States. The following table represents the diversification of the Account’s portfolio by region and property type as of December 31, 2017:2019:
| | Diversification by Fair Value(1) | Diversification by Fair Value(1) | Diversification by Fair Value(1) |
| | | West | | East | | South | | Midwest | | Total | | West | | East | | South | | Midwest | | Total |
| Office | | 16.1 | % | | 20.2 | % | | 5.6 | % | | — | % | | 41.9 | % | | 13.1 | % | | 18.8 | % | | 5.3 | % | | — | % | | 37.2 | % |
| Apartment | | 8.4 | % | | 8.0 | % | | 3.6 | % | | 0.9 | % | | 20.9 | % | | 10.1 | % | | 7.7 | % | | 7.4 | % | | 1.0 | % | | 26.2 | % |
| Retail | | 8.1 | % | | 3.0 | % | | 7.6 | % | | 0.7 | % | | 19.4 | % | | 6.9 | % | | 3.9 | % | | 7.7 | % | | 0.8 | % | | 19.3 | % |
| Industrial | | 7.5 | % | | 2.0 | % | | 4.1 | % | | 0.8 | % | | 14.4 | % | | 9.0 | % | | 1.6 | % | | 4.7 | % | | 0.5 | % | | 15.8 | % |
Other(2) | | 0.6 | % | | 2.6 | % | | 0.1 | % | | 0.1 | % | | 3.4 | % | | 0.5 | % | | 0.4 | % | | 0.6 | % | | — | % | | 1.5 | % |
| Total | | 40.7 | % | | 35.8 | % | | 21.0 | % | | 2.5 | % | | 100.0 | % | | 39.6 | % | | 32.4 | % | | 25.7 | % | | 2.3 | % | | 100.0 | % |
| |
(1) | Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value. |
| |
(2) | Represents interests in Storage Portfolio investments, a fee interest encumbered by a ground lease real estatehotel investment and land. |
Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY
Properties in the “East” region are located in: CT, DC, DE, KY, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV
Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX
Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI
Note 4—Leases
The Account’s wholly-owned real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2090.2049. Rental income is recognized in accordance with the billing terms of the lease agreements. The leases do not have material variable payments, material residual value guarantees or material restrictive covenants. Certain leases have the option to extend or terminate at the tenant's discretion, with termination options resulting in additional fees due to the Account. Aggregate minimum annual rentals for wholly-owned real estate investments owned by the Account through the non-cancelable lease term, excluding short-term residential leases, are as follows (in millions)(millions):
| | | | Years Ending December 31, | For the Years Ending December 31, |
| 2018 | $ | 592.3 |
| |
| 2019 | 556.9 |
| |
| 2020 | 503.6 |
| $ | 550.4 |
|
| 2021 | 426.7 |
| 505.0 |
|
| 2022 | 354.1 |
| 442.1 |
|
| 2023 | | 381.2 |
|
| 2024 | | 316.6 |
|
| Thereafter | 2,764.6 |
| 1,078.4 |
|
| Total | $ | 5,198.2 |
| $ | 3,273.7 |
|
Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts, sales volume or contractual increases as defined in the lease agreement. These contractual contingent rentals are not included in the table above.
The Account has ground leases for which the Account is the lessee. The leases do not contain material residual value guarantees or material restrictive covenants. The fair value of right-of-use assets and leases liabilities related to ground leases are reflected on the balance sheet within other assets and other liabilities, respectively.
The fair values and key terms of the right-of-use assets and lease liabilities related to the Account's ground leases are as follows (millions):
|
| | | | |
| | | As of December 31, 2019 |
| Assets: | | |
| Right-of-use assets, at fair value | | $ | 25.7 |
|
| Liabilities: | | |
| Ground lease liabilities, at fair value | | $ | 25.7 |
|
|
| | | |
| Key Terms | | |
| Weighted-average remaining lease term (years) | | 84.4 |
|
Weighted-average discount rate(1) | | 6.15 | % |
(1) Discount rates are reflective of the rates utilized during the most recent appraisal of the associated real estate investments.
For the year ended December 31, 2019, operating lease costs related to ground leases were $1.3 million. These costs include variable lease costs, which are immaterial. Aggregate future minimum annual payments for ground leases held by the Account are as follows (millions):
|
| | | |
| | For the Years Ending December 31, |
| 2020 | $ | 1.2 |
|
| 2021 | 1.2 |
|
| 2022 | 1.2 |
|
| 2023 | 1.2 |
|
| 2024 | 1.3 |
|
| Thereafter | 375.9 |
|
| Total | $ | 382.0 |
|
Note 5—Assets and Liabilities Measured at Fair Value on a Recurring Basis
Valuation Hierarchy: The Account’s fair value measurements are grouped categorically into three levels, as defined by the FASB. The levels are defined as follows:
Level 1—Valuations using unadjusted1 fair value inputs are quoted prices for assets tradedidentical items in active, liquid and visible markets such as stocks listed on the New York Stock Exchange. Active markets are defined as having the following characteristics for the measured asset or liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information regarding the issuer is publicly available. Level 1 assets held by the Account are generally marketable equity securities.stock exchanges.
Level 2—Valuations for assets and liabilities traded in less active, dealer or broker markets. Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities. Level 2 inputs for fair value measurements are inputs other than quoted prices included within Level 1, that are observable information for similar items in active or inactive markets, and appropriately consider counterparty creditworthiness in the valuations.
Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an asset or liability either directly or indirectly. Level 2at the measurement date. The inputs include:
| |
a. | Quoted prices for similar assets or liabilities in active markets; |
| |
b. | Quoted prices for identical or similar assets or liabilities in markets that are not active (that is, markets in which there are few transactions for the asset (or liability), the prices are not current, price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly); |
| |
c. | Inputs other than quoted prices that are observable within the market for the asset (or liability) (for example, interest rates and yield curves, implied volatilities, prepayment speeds, loss severities, credit risks, and default rates that are observable at commonly quoted intervals); and |
| |
d. | Inputs that are derived principally from or corroborated by observable market data by correlation or other means (for example, market-corroborated inputs). |
Examples of securities which may be held by the Account and included in Level 2 include certificates of deposit, commercial paper, government agency notes, variable notes, United States Treasury securities, and debt securities.
Level 3—Valuations for assets and liabilities that are derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observableunobservable in the market and require significant professional judgment in determiningto the fair value assigned to such assets or liabilities.valuation estimate.
Examples of Level 3 assets and liabilities which may be held by the Account from time to time include investments in real estate, investments in joint ventures, and loans receivable and payable.
An investment’s categorization within the valuation hierarchy described above is based upon the lowest level of input that is significant to the fair value measurement. The Account’s limited partnershipReal estate fund investments are excluded from the valuation hierarchy, as these investments are fair valued using thetheir net asset value per share as a practical expedient which excludessince market quotations or values from independent pricing services are not readily available. See Note 1 - Organization and Significant Accounting Policies for further discussion regarding the investments fromuse of a practical expedient for the valuation hierarchy.of real estate funds.
The Account’s determination of fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon vendor-provided, evaluated prices or internally developed models that primarily use market-based or independently sourced market data, including interest rate yield curves, market spreads, and currency rates. Valuation adjustments will be made to reflect changes in credit quality, counterparty’s creditworthiness, the Account’s creditworthiness, liquidity, and other observable and unobservable inputs that are applied consistently over time.
The methods described above are considered to produce fair values that represent a good faithan estimate by management of what an unaffiliated buyer in the marketplace would pay to purchase the asset or would receive to transfer the liability. Since fair value calculations involve significant professional judgment in the application of both observable and unobservable attributes, actual realizable values or future fair values may differ from amounts reported. Furthermore, while the Account believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments, while reasonable, could result in different estimates of fair value at the reporting date. As discussed in Note 1—Organization and Significant Accounting Policies in more detail, the Account generally obtains independent third party appraisals on a quarterly basis; there may be circumstances in the interim in which the true realizable value of a property is not reflected in the Account’s daily net asset value calculation or in the Account’s periodic Consolidated Financial Statements. This disparity may be more apparent when the commercial and/or residential real estate markets experience an overall and possibly dramatic decline (or increase) in property values in a relatively short period of time between appraisals.
The following tables show the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 20172019 and 2016,2018, using unadjusted quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); significant unobservable inputs (Level 3); and Practical Expedient (in millions)(millions):
| | | Description | | Level 1: Quoted Prices in Active Markets for Identical Assets | | Level 2: Significant Other Observable Inputs | | Level 3: Significant Unobservable Inputs | | Fair Value Using Practical Expedient | | Total at December 31, 2017 | | Level 1: Quoted Prices in Active Markets for Identical Assets | | Level 2: Significant Other Observable Inputs | | Level 3: Significant Unobservable Inputs | | Fair Value Using Practical Expedient | | Total at December 31, 2019 |
| Real estate properties | | $ | — |
| | $ | — |
| | $ | 15,742.7 |
| | $ | — |
| | $ | 15,742.7 |
| | $ | — |
| | $ | — |
| | $ | 15,835.0 |
| | $ | — |
| | $ | 15,835.0 |
|
| Real estate joint ventures | | — |
| | — |
| | 5,860.6 |
| | — |
| | 5,860.6 |
| | — |
| | — |
| | 7,204.2 |
| | — |
| | 7,204.2 |
|
| Limited partnerships | | — |
| | — |
| | — |
| | 142.4 |
| | 142.4 |
| |
| Real estate funds | | | — |
| | — |
| | — |
| | 311.8 |
| | 311.8 |
|
| Marketable securities: | | | | | | | | | | | | | | | | | | | | |
| Real estate-related | | 1,238.0 |
| | — |
| | — |
| | — |
| | 1,238.0 |
| | 825.7 |
| | — |
| | — |
| | — |
| | 825.7 |
|
| Government agency notes | | — |
| | 2,872.3 |
| | — |
| | — |
| | 2,872.3 |
| | — |
| | 259.6 |
| | — |
| | — |
| | 259.6 |
|
| United States Treasury securities | | — |
| | 1,015.2 |
| | — |
| | — |
| | 1,015.2 |
| | — |
| | 2,589.1 |
| | — |
| | — |
| | 2,589.1 |
|
| Loans receivable | | — |
| | — |
| | 298.8 |
| | — |
| | 298.8 |
| |
Total Investments at
December 31, 2017 | | $ | 1,238.0 |
| | $ | 3,887.5 |
| | $ | 21,902.1 |
| | $ | 142.4 |
| | $ | 27,170.0 |
| |
| Mortgage loans payable | | $ | — |
| | $ | — |
| | $ | (2,238.3 | ) | | $ | — |
| | $ | (2,238.3 | ) | |
| Corporate bonds | | | — |
| | 1,268.3 |
| | — |
| | — |
| | 1,268.3 |
|
| Municipal bonds | | | — |
| | 33.2 |
| | — |
| | — |
| | 33.2 |
|
Loans receivable(1) | | | — |
| | — |
| | 1,572.1 |
| | — |
| | 1,572.1 |
|
Total Investments at
December 31, 2019 | | | $ | 825.7 |
| | $ | 4,150.2 |
| | $ | 24,611.3 |
| | $ | 311.8 |
| | $ | 29,899.0 |
|
| Loans payable | | | $ | — |
| | $ | — |
| | $ | (2,365.0 | ) | | $ | — |
| | $ | (2,365.0 | ) |
| Line of credit | | | $ | — |
| | $ | — |
| | $ | (250.0 | ) | | $ | — |
| | $ | (250.0 | ) |
(1) Amount shown is reflective of loans receivable and loans receivable with related parties.
|
| | | | | | | | | | | | | | | | | | | | |
| Description | | Level 1: Quoted Prices in Active Markets for Identical Assets | | Level 2: Significant Other Observable Inputs | | Level 3: Significant Unobservable Inputs | | Fair Value Using Practical Expedient | | Total at December 31, 2018 |
| Real estate properties | | $ | — |
| | $ | — |
| | $ | 15,531.1 |
| | $ | — |
| | $ | 15,531.1 |
|
| Real estate joint ventures | | — |
| | — |
| | 6,356.6 |
| | — |
| | 6,356.6 |
|
| Real estate funds | | — |
| | — |
| | — |
| | 175.9 |
| | 175.9 |
|
| Marketable securities: | | | | | | | | | | |
| Real estate-related | | 1,415.1 |
| | — |
| | — |
| | — |
| | 1,415.1 |
|
| Government agency notes | | — |
| | 2,050.7 |
| | — |
| | — |
| | 2,050.7 |
|
| United States Treasury securities | | — |
| | 2,038.0 |
| | — |
| | — |
| | 2,038.0 |
|
| Loans receivable | | — |
| | — |
| | 913.0 |
| | — |
| | 913.0 |
|
Total Investments at
December 31, 2018 | | $ | 1,415.1 |
| | $ | 4,088.7 |
| | $ | 22,800.7 |
| | $ | 175.9 |
| | $ | 28,480.4 |
|
| Loans payable | | $ | — |
| | $ | — |
| | $ | (2,608.0 | ) | | $ | — |
| | $ | (2,608.0 | ) |
|
| | | | | | | | | | | | | | | | | | | | |
| Description | | Level 1: Quoted Prices in Active Markets for Identical Assets | | Level 2: Significant Other Observable Inputs | | Level 3: Significant Unobservable Inputs | | Fair Value Using Practical Expedient | | Total at December 31, 2016 |
| Real estate properties | | $ | — |
| | $ | — |
| | $ | 15,452.8 |
| | $ | — |
| | $ | 15,452.8 |
|
| Real estate joint ventures | | — |
| | — |
| | 5,622.4 |
| | — |
| | 5,622.4 |
|
| Limited partnerships | | — |
| | — |
| | — |
| | 137.5 |
| | 137.5 |
|
| Marketable securities: | | | | | | | | | | |
| Real estate-related | | 1,081.5 |
| | — |
| | — |
| | — |
| | 1,081.5 |
|
| Government agency notes | | — |
| | 2,308.9 |
| | — |
| | — |
| | 2,308.9 |
|
| United States Treasury securities | | — |
| | 1,744.9 |
| | — |
| | — |
| | 1,744.9 |
|
| Loans receivable | | — |
| | — |
| | 295.7 |
| | — |
| | 295.7 |
|
Total Investments at
December 31, 2016 | | $ | 1,081.5 |
| | $ | 4,053.8 |
| | $ | 21,370.9 |
| | $ | 137.5 |
| | $ | 26,643.7 |
|
| Mortgage loans payable | | $ | — |
| | $ | — |
| | $ | (2,332.1 | ) | | $ | — |
| | $ | (2,332.1 | ) |
The following tables show the reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 20172019 and 2016 (in millions)2018 (millions):
|
| | | | | | | | | | | | | | | | | | | | |
| | | Real Estate Properties | | Real Estate Joint Ventures | | Loans Receivable | | Total Level 3 Investments | | Mortgage Loans Payable |
| For the year ended December 31, 2017 | | | | | | | | | | |
| Beginning balance January 1, 2017 | | $ | 15,452.8 |
| | $ | 5,622.4 |
| | $ | 295.7 |
| | $ | 21,370.9 |
| | $ | (2,332.1 | ) |
| Total realized and unrealized gains included in changes in net assets | | 177.5 |
| | 123.5 |
| | 1.2 |
| | 302.2 |
| | 15.9 |
|
Purchases(1) | | 682.9 |
| | 419.0 |
| | 1.9 |
| | 1,103.8 |
| | (17.7 | ) |
| Sales | | (570.5 | ) | | — |
| | — |
| | (570.5 | ) | | — |
|
Settlements(2) | | — |
| | (304.3 | ) | | — |
| | (304.3 | ) | | 95.6 |
|
| Ending balance December 31, 2017 | | $ | 15,742.7 |
| | $ | 5,860.6 |
| | $ | 298.8 |
| | $ | 21,902.1 |
| | $ | (2,238.3 | ) |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Real Estate Properties | | Real Estate Joint Ventures | | Loans Receivable(3) | | Total Level 3 Investments | |
Loans
Payable | | Line of Credit |
| For the year ended December 31, 2019 | | | | | | | | | | | | |
| Beginning balance January 1, 2019 | | $ | 15,531.1 |
| | $ | 6,356.6 |
| | $ | 913.0 |
| | $ | 22,800.7 |
| | $ | (2,608.0 | ) | | $ | — |
|
| Total realized and unrealized gains(losses) included in changes in net assets | | 526.3 |
| | (100.3 | ) | | (4.1 | ) | | 421.9 |
| | (107.1 | ) | | — |
|
Purchases(1) | | 1,534.9 |
| | 953.0 |
| | 764.8 |
| | 3,252.7 |
| | (228.5 | ) | | (250.0 | ) |
| Sales | | (1,757.3 | ) | | — |
| | — |
| | (1,757.3 | ) | | — |
| | — |
|
Settlements(2) | | — |
| | (5.1 | ) | | (101.6 | ) | | (106.7 | ) | | 578.6 |
| | — |
|
| Ending balance December 31, 2019 | | $ | 15,835.0 |
| | $ | 7,204.2 |
| | $ | 1,572.1 |
| | $ | 24,611.3 |
| | $ | (2,365.0 | ) | | $ | (250.0 | ) |
| | | | | Real Estate Properties | | Real Estate Joint Ventures | | Loans Receivable | | Total Level 3 Investments | | Mortgage Loans Payable | | Real Estate Properties | | Real Estate Joint Ventures | | Loans Receivable | | Total Level 3 Investments | |
Loans Payable |
| For the year ended December 31, 2016 | | | | | | | | | | | |
| Beginning balance January 1, 2016 | | $ | 14,606.2 |
| | $ | 4,068.4 |
| | $ | 100.6 |
| | $ | 18,775.2 |
| | $ | (1,794.4 | ) | |
| For the year ended December 31, 2018 | | | | | | | | | | | |
| Beginning balance January 1, 2018 | | | $ | 15,742.7 |
| | $ | 5,860.6 |
| | $ | 298.8 |
| | $ | 21,902.1 |
| | $ | (2,238.3 | ) |
| Total realized and unrealized gains included in changes in net assets | | 311.3 |
| | 242.8 |
| | 0.3 |
| | 554.4 |
| | 15.1 |
| | 315.8 |
| | 116.3 |
| | 0.3 |
| | 432.4 |
| | 79.4 |
|
Purchases(1) | | 786.4 |
| | 1,313.6 |
| | 194.8 |
| | 2,294.8 |
| | (587.5 | ) | | 1,151.8 |
| | 941.5 |
| | 939.2 |
| | 3,032.5 |
| | (817.9 | ) |
| Sales | | (251.1 | ) | | — |
| | — |
| | (251.1 | ) | | — |
| | (1,679.2 | ) | | — |
| | (257.3 | ) | | (1,936.5 | ) | | — |
|
Settlements(2) | | — |
| | (2.4 | ) | | — |
| | (2.4 | ) | | 34.7 |
| | — |
| | (561.8 | ) | | (68.0 | ) | | (629.8 | ) | | 368.8 |
|
| Ending balance December 31, 2016 | | $ | 15,452.8 |
| | $ | 5,622.4 |
| | $ | 295.7 |
| | $ | 21,370.9 |
| | $ | (2,332.1 | ) | |
| Ending balance December 31, 2018 | | | $ | 15,531.1 |
| | $ | 6,356.6 |
| | $ | 913.0 |
| | $ | 22,800.7 |
| | $ | (2,608.0 | ) |
| |
(1) | Includes purchases, contributions for joint ventures, capital expenditures, lending for loans receivable and assumption of mortgage loans payable. |
| |
(2) | Includes operating income for real estate joint ventures net of distributions, principal payments and payoffs of loans receivable, and principal payments and extinguishment of mortgage loans payable. |
| |
(3) | Amount shown is reflective of loans receivable and loans receivable with related parties. |
The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of December 31, 2017.2019.
|
| | | | |
| | | | | |
| Type | Asset Class
| Valuation
Technique(s)
| Unobservable Inputs | Range (Weighted
Average)
|
|
Real Estate Properties and Joint Ventures | Office | Income Approach—Discounted Cash Flow | Discount Rate | 5.5%–8.0% (6.5%) |
| | | Terminal Capitalization Rate | 4.5%–7.0% (5.5%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.8%–7.0% (4.8%) |
| |
| Industrial | Income Approach—Discounted Cash Flow | Discount Rate | 5.5%–8.9% (6.8%) |
| | | Terminal Capitalization Rate | 4.5%–8.3% (5.5%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 4.0%–7.5% (5.0%) |
| |
| Residential | Income Approach—Discounted Cash Flow | Discount Rate | 5.0%–8.0% (6.1%) |
| | | Terminal Capitalization Rate | 3.5%–6.5% (4.8%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.3%–6.0% (4.3%) |
| |
| Retail | Income Approach—Discounted Cash Flow | Discount Rate | 5.0%–10.5% (6.4%) |
| | | Terminal Capitalization Rate | 4.3%–8.8% (5.2%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.8%–8.8% (4.7%) |
|
Mortgage Loans Payable | Office and Industrial | Discounted Cash Flow | Loan-to-Value Ratio
| 37.7%–69.5% (45.6%)
|
| | | Equivalency Rate | 3.7%–5.2% (3.9%) |
| |
| | Net Present Value | Loan-to-Value Ratio | 37.7%–69.5% (45.6%) |
| | | Weighted Average Cost of Capital Risk Premium Multiple | 1.2–1.5 (1.3) |
| |
| Residential | Discounted Cash Flow | Loan-to-Value Ratio | 28.1%–64.2% (38.6%) |
| | | Equivalency Rate | 3.3%–3.6% (3.4%) |
| |
| | Net Present Value | Loan-to-Value Ratio | 28.1%–64.2% (38.6%) |
| | | Weighted Average Cost of Capital Risk Premium Multiple | 1.1–1.5 (1.3) |
| |
| Retail | Discounted Cash Flow | Loan-to-Value Ratio | 17.9%–56.0% (32.7%) |
| | | Equivalency Rate | 3.1%–4.4% (3.8%) |
| |
| | Net Present Value | Loan-to-Value Ratio | 17.9%–56.0% (32.7%) |
| | | Weighted Average Cost of Capital Risk Premium Multiple | 1.1–1.4 (1.2) |
|
Loans Receivable | Office, Retail and Storage | Discounted Cash Flow | Loan-to-Value Ratio | 59.4%-77.3% (75.1%) |
| | | Equivalency Rate | 4.2%-8.3% (6.2%) |
|
The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of December 31, 2016.
|
| | | | |
Type | Asset
Class | Valuation
Technique(s) | Unobservable Inputs | Range (Weighted
Average) |
| |
| Real Estate Properties and Joint Ventures | Office | Income Approach—Discounted Cash Flow | Discount Rate | 5.5%–8.3%8.5% (6.6%) |
| | | Terminal Capitalization Rate | 4.0%–7.5% (5.5%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.9%–7.0% (5.0%) |
| |
| Industrial | Income Approach—Discounted Cash Flow | Discount Rate | 5.3% - 9.0% (6.7%) |
| | | Terminal Capitalization Rate | 4.3% - 8.1% (5.5%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.9% - 7.4% (4.9%) |
| |
| Residential | Income Approach—Discounted Cash Flow | Discount Rate | 5.3% - 7.8% (6.4%) |
| | | Terminal Capitalization Rate | 4.3% - 6.8% (5.1%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.8% - 6.0% (4.6%) |
| |
| Retail | Income Approach—Discounted Cash Flow | Discount Rate | 5.3% - 11.7% (6.6%) |
| | | Terminal Capitalization Rate | 4.8% - 9.4% (5.4%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.3% - 11.0% (4.9%) |
| | | | |
| Hotel | Income Approach—Discounted Cash Flow | Discount Rate | 10.0% (10.0%) |
| | | Terminal Capitalization Rate | 7.8% (7.8%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 7.5% (7.5%) |
| | | | |
| Loans Payable | Office and Industrial | Discounted Cash Flow | Loan-to-Value Ratio
| 31.6% - 59.5% (46.3%) |
| | | Equivalency Rate | 3.1% - 4.3% (3.4%) |
| |
| | Net Present Value | Loan-to-Value Ratio | 31.6% - 59.5% (46.3%) |
| | | Weighted Average Cost of Capital Risk Premium Multiple | 1.2 - 1.5 (1.3) |
| |
| Residential | Discounted Cash Flow | Loan-to-Value Ratio | 30.2% - 69.0% (47.8%) |
| | | Equivalency Rate | 3.0% - 3.6% (3.3%) |
| |
| | Net Present Value | Loan-to-Value Ratio | 30.2% - 69.0% (47.8%) |
| | | Weighted Average Cost of Capital Risk Premium Multiple | 1.2 - 1.7 (1.3) |
| |
| Retail | Discounted Cash Flow | Loan-to-Value Ratio | 33.3% - 63.3% (41.1%) |
| | | Equivalency Rate | 3.3% - 4.0% (3.5%) |
| |
| | Net Present Value | Loan-to-Value Ratio | 33.3% - 63.3% (41.1%) |
| | | Weighted Average Cost of Capital Risk Premium Multiple | 1.2 - 1.5 (1.3) |
|
| Loans Receivable, including those with related parties | Residential, Hotel, Industrial, Office, Retail and Storage | Discounted Cash Flow | Loan-to-Value Ratio | 31.7% - 81.5% (72.5%) |
| | | Equivalency Rate | 3.2% - 8.4% (6.0%) |
The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of December 31, 2018.
|
| | | | |
| | | | |
| Type | Asset Class | Valuation Technique(s) | Unobservable Inputs | Range (Weighted Average) |
|
| Real Estate Properties and Joint Ventures | Office | Income Approach—Discounted Cash Flow | Discount Rate | 5.5%–8.6% (6.5%) |
| | | | Terminal Capitalization Rate | 4.3%4.0%–7.5% (5.4%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 4.0%–7.0% (4.8%) |
| |
| Industrial | Income Approach—Discounted Cash Flow | Discount Rate | 5.3%–8.9% (6.8%) |
| | | Terminal Capitalization Rate | 4.4%–7.3% (5.5%) |
| | |
| | | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.8%4.0%–7.0% (4.7%) |
| |
| Industrial | Income Approach—Discounted Cash Flow | Discount Rate | 5.7%–8.7% (6.7%) |
| | | Terminal Capitalization Rate | 4.8%–8.0% (5.6%) |
| |
| | Income Approach—Direct Capitalization | Overall Capitalization Rate | 4.0%–7.5% (5.0%(4.9%) |
| | |
| | Residential | Income Approach—Discounted Cash Flow | Discount Rate | 5.3%5.5%–7.3% (6.2%7.8% (6.5%) |
| | | | Terminal Capitalization Rate | 3.8%–6.0% (4.8%6.8% (5.0%) |
| | |
| | | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.3%–5.5% (4.2%6.0% (4.5%) |
| | |
| | Retail | Income Approach—Discounted Cash Flow | Discount Rate | 5.0%–10.4%10.7% (6.4%) |
| | | | Terminal Capitalization Rate | 4.3%–8.5% (5.2%9.0% (5.3%) |
| | |
| | | Income Approach—Direct Capitalization | Overall Capitalization Rate | 3.9%3.3%–8.3%8.5% (4.7%) |
| |
Mortgage Loans Payable | Office and Industrial | Discounted Cash Flow | Loan-to-Value Ratio
| 35.7%36.4%–71.0% (43.4%67.8% (47.6%)
|
| | | | Equivalency Rate | 3.7%3.9%–4.7% (3.9%6.2% (4.6%) |
| | |
| | | Net Present Value | Loan-to-Value Ratio | 35.7%36.4%–71.0% (43.4%67.8% (47.6%) |
| | | | Weighted Average Cost of Capital Risk Premium Multiple | 1.2–1.61.4 (1.3) |
| | |
| | Residential | Discounted Cash Flow | Loan-to-Value Ratio | 29.5%31.9%–61.2% (41.4%63.6% (48.1%) |
| | | | Equivalency Rate | 2.9%3.4%–3.6% (3.3%4.6% (4.1%) |
| | |
| | | Net Present Value | Loan-to-Value Ratio | 29.5%31.9%–61.2% (41.4%63.6% (48.1%) |
| | | | Weighted Average Cost of Capital Risk Premium Multiple | 1.2–1.5 (1.3)1.1–1.4 (1.2) |
| | |
| | Retail | Discounted Cash Flow | Loan-to-Value Ratio | 18.3%31.9%–51.6% (31.3%55.3% (39.3%) |
| | | | Equivalency Rate | 2.9%4.3%–4.0% (3.5%5.3% (4.5%) |
| | |
| | | Net Present Value | Loan-to-Value Ratio | 18.3%31.9%–51.6% (31.3%55.3% (39.3%) |
| | | | Weighted Average Cost of Capital Risk Premium Multiple | 1.1–1.3 (1.2) |
| |
| Loans Receivable | Residential, Industrial, Office, Retail and Storage | Discounted Cash Flow | Loan-to-Value Ratio | 55.6%70.8%-79.2% (75.8%(75.6%) |
| | | | Equivalency Rate | 4.2%6.0%-8.3% (6.3%(6.9%) |
| |
Real Estate Properties and Joint Ventures: The significant unobservable inputs used in the fair value measurement of the Account’s real estate property and joint venture investments are the selection of certain investment rates (Discount Rate, Terminal Capitalization Rate, and Overall Capitalization Rate). Significant increases (decreases) in any of those inputs in isolation would result in significantly lower (higher) fair value measurements, respectively.
Mortgage Loans Payable: The significant unobservable inputs used in the fair value measurement of the Account’s mortgage loans payable are the loan-to-value ratios and the selection of certain credit spreads and weighted average cost of capital risk premiums. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value, respectively.
Loans Receivable: The significant unobservable inputs used in the fair value measurement of the Account’s loans receivable are the loan-to-value ratios and the selection of certain credit spreads. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value, respectively.
During the years ended December 31, 20172019 and 20162018 there were no transfers between Levels 1, 2 or 3.
The amount of total net unrealized gains included in changes in net assets attributable to the change in net unrealized gains relating to Level 3 investments and mortgage loans payable using significant unobservable inputs still held as of the reporting date is as follows (in millions)(millions):
|
| | | | | | | | | | | | | | | | | | | | |
| | | Real Estate Properties | | Real Estate Joint Ventures | | Loans Receivable | | Total Level 3 Investments | | Mortgage Loans Payable |
| For the year ended December 31, 2017 | | $ | 185.1 |
| | $ | 125.2 |
| | $ | 1.2 |
| | $ | 311.5 |
| | $ | 15.9 |
|
| For the year ended December 31, 2016 | | $ | 314.2 |
| | $ | 242.4 |
| | $ | 0.3 |
| | $ | 556.9 |
| | $ | 15.1 |
|
|
| | | | | | | | | | | | | | | | | | | | |
| | | Real Estate Properties | | Real Estate Joint Ventures | | Loans Receivable | | Total Level 3 Investments | | Mortgage Loans Payable |
| For the year ended December 31, 2019 | | $ | 355.2 |
| | $ | (94.7 | ) | | $ | (4.1 | ) | | $ | 256.4 |
| | $ | (96.8 | ) |
| For the year ended December 31, 2018 | | $ | 282.6 |
| | $ | 80.8 |
| | $ | 0.3 |
| | $ | 363.7 |
| | $ | 86.2 |
|
Note 6—Investments in Joint Ventures
The Account owns interests in several real estate properties through joint ventures and receives distributions and allocations of profits and losses from the joint ventures based on the Account’s ownership interest in those investments. Several of these joint ventures have mortgage loans payable collateralized by the properties owned by the aforementioned joint ventures. At December 31, 2017,2019, the Account held investments in joint ventures with ownership interest percentages that ranged from 33.3% to 97.5%98.0%. Certain joint ventures are subject to adjusted distribution percentages when earnings in the investment reach a pre-determined threshold. The fair value of the Account’s equity interest in these joint ventures was $5.9 billion and $5.6 billion at December 31, 2017 and 2016, respectively. The Account’s proportionate share of the mortgage loans payable held within the joint venture investments at fair value was $2.4 billion and $2.1 billion at December 31, 2017 and 2016, respectively. The Account’s share in the outstanding principal of the mortgage loans payable held within the joint venture investments was $2.4 billion and $2.1 billion at December 31, 2017 and 2016, respectively.
A condensed summary of the gross financial position and results of operations of the combined joint ventures is shown below (in millions)(millions):
| | | | | December 31, | | December 31, |
| 2017 | | 2016 | 2019 | | 2018 |
| Assets | | | | | | | | |
| Real estate properties, at fair value | | $ | 14,240.8 |
| | $ | 13,539.0 |
| | $ | 17,455.8 |
| | $ | 16,134.1 |
|
| Other assets | | 337.1 |
| | 316.1 |
| | 485.9 |
| | 460.3 |
|
| Total assets | | $ | 14,577.9 |
| | $ | 13,855.1 |
| | $ | 17,941.7 |
| | $ | 16,594.4 |
|
| Liabilities & Equity | | | | | | | | |
| Mortgage notes payable and other obligations, at fair value | | $ | 3,995.7 |
| | $ | 3,452.9 |
| | $ | 5,185.3 |
| | $ | 5,035.3 |
|
| Other liabilities | | 150.7 |
| | 213.9 |
| | 256.3 |
| | 262.5 |
|
| Total liabilities | | 4,146.4 |
| | 3,666.8 |
| | 5,441.6 |
| | 5,297.8 |
|
| Total equity | | 10,431.5 |
| | 10,188.3 |
| | 12,500.1 |
| | 11,296.6 |
|
| Total liabilities and equity | | $ | 14,577.9 |
| | $ | 13,855.1 |
| | $ | 17,941.7 |
| | $ | 16,594.4 |
|
| | | | | Years ended December 31, | | Years ended December 31, |
| 2017 | | 2016 | | 2015 | 2019 | | 2018 | | 2017 |
| Operating Revenue and Expenses | | | | | | | | | | | | |
| Revenues | | $ | 869.2 |
| | $ | 714.6 |
| | $ | 609.5 |
| | $ | 1,126.5 |
| | $ | 950.6 |
| | $ | 869.2 |
|
| Expenses | | 426.9 |
| | 365.0 |
| | 318.6 |
| | 604.1 |
| | 487.1 |
| | 426.9 |
|
| Excess of revenues over expenses | | $ | 442.3 |
| | $ | 349.6 |
| | $ | 290.9 |
| | $ | 522.4 |
| | $ | 463.5 |
| | $ | 442.3 |
|
Note 7—Investments in Limited PartnershipsReal Estate Funds
The Account invests in limited partnerships, limited liability companies and private real estate equity investment trusts that own real estate properties and real estate related securities including mezzanine debt. The Account receives distributions from these investments based on the Account’s ownership interest percentage. At December 31, 2017, the Account heldhas ownership interests in threereal estate funds ("Funds"). The Funds are setup as limited partnerships or entities similar to a limited partnership, and oneas such, meet the definition of a VIE as the limited liability company ranging from 5.3%partners (as a group) lack the power, through voting or similar rights, to 60.0%. Asdirect the activities of the Fund that most significantly impact the Fund's economic performance. Management has determined that the Account is not the primary beneficiary for any of the Funds, as the Account lacks the power to direct the activities of the Fund that most significantly impact the Fund's economic performance, and the Account further lacks substantive kick-out rights to remove the entity with these powers. Refer to Note 1—Organization and Significant Accounting Policies for a description of the methodology used to determine the primary beneficiary of a VIE.
No financial support (such as loans or financial guarantees) was provided to the Funds during the year ended December 31, 20172019. The Account is contractually obligated to make additional capital contributions in certain Funds in future years. These commitments are identified in Note 13—Commitments and 2016,Contingencies.
The carrying amount and maximum exposure to loss relating to VIEs in which the fair value ofCompany holds a significant variable interest but is not the Account’s ownership interest was $142.4 millionprimary beneficiary and $137.5 million, respectively.
As ofwhich have not been consolidated were as follows at December 31, 2017, one of the limited partnership investments was in dissolution. Colony Realty Partners LP began liquidation in May 2014, with final dissolution anticipated during 2018.2019.
Transwestern Mezzanine Realty Partners III, LLC (“Transwestern”) may engage in liquidation activities in 2018 based on the terms of its partnership agreement. The Account may elect to sell or transfer its ownership units by giving notice and acquiring consent from the management committee of Transwestern, which requires approval by a majority of the members. Redemption of the Account’s interest in Transwestern prior to liquidation is prohibited, unless a supermajority of the members approves the redemption request.Clarion Gables Multi-Family Trust LP allows redemptions with an advanced notice of three months or more. Redemptions are funded using the partnership’s available cash, which may not immediately be in excess of the redemption amount, and may not be sufficient to fund the redemption amount for several months. The general partner has sole discretion in identifying how much cash is available to process redemptions. The partnership allows the Account to sell its interest in the partnership, subject to the consent and approval of the general partner. |
| | | | | | | | | | | |
| Fund Name | Carrying Amount | | Maximum Exposure to Loss | | Liquidity Provisions | | Investment Strategy |
| | (in millions) | | | | |
| LCS SHIP Venture I, LLC (90.0% Account Interest) | $ | 216.1 |
| | $ | 216.1 |
| | Redemptions prohibited prior to liquidation. | | To invest in senior housing properties. |
| | | | | | Liquidation estimated to begin no earlier than 2025. | |
| | | | | | The Account is permitted to sell or transfer its interest in the fund, subject to consent and approval of the manager. | |
| SP V - II, LLC (75.0% Account Interest) | $ | 23.3 |
| | $ | 23.3 |
| | Redemptions prohibited prior to liquidation. | | To invest in medical office properties in the U.S. |
| | | | | | Liquidation estimated to begin no earlier than 2022. | |
| | | | | | The Account is permitted to sell or transfer its interest in the fund, subject to consent and approval of the manager. | |
| Taconic New York City GP Fund, LP (60.0% Account Interest) | $ | 29.8 |
| | $ | 29.8 |
| | Redemptions prohibited prior to liquidation. | | To invest in real estate and real estate-related assets in the New York City metropolitan statistical area ("MSA"). |
| | | | | | Liquidation estimated to begin no earlier than 2024. | |
| | | | | | The Account is permitted to sell its interest in the fund, subject to consent and approval of the general partner. | |
| Veritas - Trophy VI, LLC (90.0% Account Interest) | $ | 4.2 |
| | $ | 4.2 |
| | Redemptions prohibited prior to liquidation. | | To invest in multi-family properties primarily in the San Francisco Bay and Los Angeles MSA. |
| | | | | | The Account is not permitted to sell or transfer its interest in the fund until August 2022. After this date, the Account can sell or transfer its interest in the fund with the consent and approval of the manager. | |
| | | | | | |
Taconic New York City GP Fund, LP prohibits redemptions in the partnership prior to liquidation. Liquidation of the partnership is estimated to begin no earlier than 2024. The partnership allows the Account to sell its interest in the partnership, subject to the consent and approval of the general partner.
|
| | | | | | | | | | | |
| Fund Name | Carrying Amount | | Maximum Exposure to Loss | | Liquidity Provisions | | Investment Strategy |
| | (in millions) | | | | |
| IDR - Core Property Index Fund, LLC (2.0% Account Interest) | $ | 25.0 |
| | $ | 25.0 |
| | Redemptions are permitted for a full calendar quarter and upon at least 90 days prior written notice, subject to fund availability. | | To invest primarily in open-ended funds that fall within the NFI-ODCE Index and are actively managed. |
| | | | | | |
| | | | | | The Account is permitted to sell its interest in the fund, subject to consent and approval of the manager. | |
| Grubb Southeast Real Estate Fund VI, LLC (67.0% Account Interest) | $ | 13.4 |
| | $ | 13.4 |
| | Redemptions prohibited prior to liquidation. | | To acquire office investments across the Southeast. |
| | | | | | Liquidation estimated to begin no earlier than 2026. | |
| | | | | | The Account is not permitted to sell or transfer its interest in the fund until June 2021. After this date, the Account can sell or transfer its interest in the fund with the consent and approval of the manager. | |
| | | | | | |
| Total | $ | 311.8 |
| | $ | 311.8 |
| | | | |
Note 8—Mortgage Loans Receivable
The Account’s loan receivable portfolio is primarily comprised of mezzanine loans secured by the borrower’s indirect interest in commercial real estate. Mezzanine loans are subordinate to first mortgages on the underlying real estate collateral. The following property types represent the underlying real estate collateral for the Account's mezzanine loans (millions):
|
| | | | | | | | | | | | | | |
| | | December 31, 2019 | | December 31, 2018 |
| | | Fair Value | | % | | Fair Value | | % |
Office(1) | | $ | 768.0 |
| | 48.8 | % | | $ | 512.1 |
| | 56.2 | % |
| Industrial | | 199.6 |
| | 12.7 | % | | 176.4 |
| | 19.3 | % |
| Retail | | 158.5 |
| | 10.1 | % | | 101.6 |
| | 11.1 | % |
| Storage | | 82.0 |
| | 5.2 | % | | 63.2 |
| | 6.9 | % |
Apartments(1) | | 228.8 |
| | 14.6 | % | | 59.7 |
| | 6.5 | % |
| Hotel | | 135.2 |
| | 8.6 | % | | — |
| | — | % |
| | | $ | 1,572.1 |
| | 100.0 | % | | $ | 913.0 |
| | 100.0 | % |
(1) Includes loans receivable with related parties.
The Account monitors the risk profile of the loan receivable portfolio with the assistance of a third-party rating service that models the loans and assigns risk ratings based on information provided by TIAA, such as loan-to-value ratios, yields, credit quality of the borrowers, property types of the collateral, geographic and local market dynamics, physical condition of the collateral, and the underlying structure of the loans. Ratings for loans are updated monthly. Assigned ratings can range from AAA to C, with a AAA designation representing debt with the lowest level of credit risk and C representing a greater risk of default or principal loss. Mezzanine debt in good health is typically reflective of a risk rating in the B range (e.g., BBB, BB, B), as these ratings reflect borrowers' having adequate financial resources to service their financial commitments, but also acknowledging that adverse economic conditions, should they occur, would likely impede on a borrowers' ability to pay.
The following table presents the fair values of the Account's loan portfolio based on the risk ratings as of December 31, 2019, listed in order of the strength of the risk rating (from strongest to weakest):
|
| | | | | | | | | |
| | | Number of Loans | | Fair Value | | % |
| AA | | 1 | | 48.3 |
| | 3.1 | % |
| BBB | | 7 | | 456.1 |
| | 29.0 | % |
| BB | | 13 | | 787.4 |
| | 50.1 | % |
| B | | 3 | | 205.0 |
| | 13.0 | % |
NR(1) | | 3 | | 75.3 |
| | 4.8 | % |
| | | 27 | | $ | 1,572.1 |
| | 100.0 | % |
(1) "NR" designates loans not assigned an internal credit rating. As of December 31, 2019, this is comprised of two loans with related parties and one loan to an unaffiliated entity. The loans are collateralized by equity interests in real estate investments.
The Account had no loans in non-performing status as of December 31, 2019.
Note 9—Loans Payable
At December 31, 20172019 and 2016,2018, the Account had outstanding mortgage loans payable secured by the following properties (in millions)(millions):
|
| | | | | | | | | | | | |
| Property | | Interest Rate and Payment Frequency(2) | | Principal Amounts Outstanding as of December 31, | | Maturity |
| 2017 | | 2016 | |
The Legend at Kierland(4)(5) | | 4.97% paid monthly | | $ | — |
| | $ | 21.8 |
| | August 1, 2017 |
The Tradition at Kierland(4)(5) | | 4.97% paid monthly | | — |
| | 25.8 |
| | August 1, 2017 |
Mass Court(1)(4) | | 2.88% paid monthly | | 92.1 |
| | 92.6 |
| | September 1, 2019 |
Red Canyon at Palomino Park(4)(6) | | 5.34% paid monthly | | 27.1 |
| | 27.1 |
| | August 1, 2020 |
Green River at Palomino Park(4)(6) | | 5.34% paid monthly | | 33.2 |
| | 33.2 |
| | August 1, 2020 |
Blue Ridge at Palomino Park(4)(6) | | 5.34% paid monthly | | 33.4 |
| | 33.4 |
| | August 1, 2020 |
Ashford Meadows Apartments(4) | | 5.17% paid monthly | | 44.6 |
| | 44.6 |
| | August 1, 2020 |
The Knoll(1)(4) | | 3.98% paid monthly | | 17.5 |
| | — |
| | December 5, 2020 |
The Corner(4) | | 4.66% paid monthly | | 105.0 |
| | 105.0 |
| | June 1, 2021 |
The Palatine(1)(4) | | 4.25% paid monthly | | 78.8 |
| | 80.0 |
| | January 10, 2022 |
The Forum at Carlsbad(1)(4) | | 4.25% paid monthly | | 88.9 |
| | 90.0 |
| | March 1, 2022 |
The Colorado(4) | | 3.69% paid monthly | | 91.7 |
| | 91.7 |
| | November 1, 2022 |
The Legacy at Westwood(1)(4) | | 3.69% paid monthly | | 46.7 |
| | 46.7 |
| | November 1, 2022 |
Regents Court(1)(4) | | 3.69% paid monthly | | 39.6 |
| | 39.6 |
| | November 1, 2022 |
The Caruth(4)(8) | | 3.69% paid monthly | | — |
| | 45.0 |
| | November 1, 2022 |
Fourth & Madison(4) | | 3.75% paid monthly | | 200.0 |
| | 200.0 |
| | June 1, 2023 |
| 1001 Pennsylvania Avenue | | 3.70% paid monthly | | 330.0 |
| | 330.0 |
| | June 1, 2023 |
1401 H Street NW(4) | | 3.65% paid monthly | | 115.0 |
| | 115.0 |
| | November 5, 2024 |
32 South State Street(4) | | 4.48% paid monthly | | 24.0 |
| | 24.0 |
| | June 6, 2025 |
780 Third Avenue(4) | | 3.55% paid monthly | | 150.0 |
| | 150.0 |
| | August 1, 2025 |
780 Third Avenue(4) | | 3.55% paid monthly | | 20.0 |
| | 20.0 |
| | August 1, 2025 |
701 Brickell Avenue(4) | | 3.66% paid monthly | | 184.0 |
| | 184.0 |
| | April 1, 2026 |
55 Second Street(4)(7) | | 3.74% paid monthly | | 137.5 |
| | 137.5 |
| | October 1, 2026 |
| 1900 K Street, NW | | 3.93% paid monthly | | 163.0 |
| | 163.0 |
| | April 1, 2028 |
501 Boylston Street(4) | | 3.70% paid monthly | | 216.5 |
| | 216.5 |
| | April 1, 2028 |
| Total Principal Outstanding | | | | 2,238.6 |
| | 2,316.5 |
| | |
Fair Value Adjustment(3) | | | | (0.3 | ) | | 15.6 |
| | |
| Total mortgage loans payable | | | | $ | 2,238.3 |
| | $ | 2,332.1 |
| | |
|
| | | | | | | | | | | | |
| Property | | Interest Rate and Payment Frequency(2) | | Principal Amounts Outstanding as of December 31, | | Maturity |
| 2019 | | 2018 | |
| Mass Court | | 2.88% paid monthly | | $ | — |
| | $ | 90.2 |
| | September 1, 2019 |
Red Canyon at Palomino Park(4) | | 5.34% paid monthly | | 27.1 |
| | 27.1 |
| | August 1, 2020 |
Green River at Palomino Park(4) | | 5.34% paid monthly | | 33.2 |
| | 33.2 |
| | August 1, 2020 |
Blue Ridge at Palomino Park(4) | | 5.34% paid monthly | | 33.4 |
| | 33.4 |
| | August 1, 2020 |
| Ashford Meadows Apartments | | 5.17% paid monthly | | 44.6 |
| | 44.6 |
| | August 1, 2020 |
The Knoll(1) | | 3.98% paid monthly | | 16.4 |
| | 16.9 |
| | December 5, 2020 |
| Ascent at Windward | | 3.51% paid monthly | | 34.6 |
| | 34.6 |
| | January 1, 2022 |
The Palatine(1) | | 4.25% paid monthly | | 75.9 |
| | 77.4 |
| | January 10, 2022 |
The Forum at Carlsbad(1) | | 4.25% paid monthly | | 85.7 |
| | 87.3 |
| | March 1, 2022 |
| Fusion 1560 | | 3.42% paid monthly | | 37.4 |
| | 37.4 |
| | June 10, 2022 |
| San Diego Office Portfolio | | 3.62% paid monthly | | 48.2 |
| | — |
| | August 15, 2022 |
The Colorado(1) | | 3.69% paid monthly | | 88.1 |
| | 89.9 |
| | November 1, 2022 |
The Legacy at Westwood(1) | | 3.69% paid monthly | | 44.9 |
| | 45.8 |
| | November 1, 2022 |
Regents Court(1) | | 3.69% paid monthly | | 38.1 |
| | 38.8 |
| | November 1, 2022 |
| Fourth & Madison | | 3.75% paid monthly | | — |
| | 198.2 |
| | June 1, 2023 |
| Fourth & Madison | | 4.17% paid monthly | | — |
| | 90.0 |
| | June 1, 2023 |
1001 Pennsylvania Avenue(1) | | 3.70% paid monthly | | 320.7 |
| | 327.0 |
| | June 1, 2023 |
| Biltmore at Midtown | | 3.94% paid monthly | | 36.4 |
| | 36.4 |
| | July 5, 2023 |
| Cherry Knoll | | 3.78% paid monthly | | 35.3 |
| | 35.3 |
| | July 5, 2023 |
| Lofts at SoDo | | 3.94% paid monthly | | 35.1 |
| | 35.1 |
| | July 5, 2023 |
| 1401 H Street, NW | | 3.65% paid monthly | | 115.0 |
| | 115.0 |
| | November 5, 2024 |
The District at La Frontera(1) | | 3.84% paid monthly | | 39.3 |
| | — |
| | December 1, 2024 |
The District at La Frontera(1) | | 4.96% paid monthly | | 4.4 |
| | — |
| | December 1, 2024 |
| Circa Green Lake | | 3.71% paid monthly | | 52.0 |
| | 52.0 |
| | March 5, 2025 |
| Union - South Lake Union | | 3.66% paid monthly | | 57.0 |
| | 57.0 |
| | March 5, 2025 |
| Holly Street Village | | 3.65% paid monthly | | 81.0 |
| | 81.0 |
| | May 1, 2025 |
| Township Apartments | | 3.65% paid monthly | | — |
| | 49.0 |
| | May 1, 2025 |
| Henley at Kingstowne | | 3.60% paid monthly | | 71.0 |
| | — |
| | May 1, 2025 |
| 32 South State Street | | 4.48% paid monthly | | 24.0 |
| | 24.0 |
| | June 6, 2025 |
Vista Station Office Portfolio(1) | | 4.00% paid monthly | | 20.5 |
| | — |
| | July 1, 2025 |
| 780 Third Avenue | | 3.55% paid monthly | | 150.0 |
| | 150.0 |
| | August 1, 2025 |
| 780 Third Avenue | | 3.55% paid monthly | | 20.0 |
| | 20.0 |
| | August 1, 2025 |
Vista Station Office Portfolio(1) | | 4.20% paid monthly | | 44.7 |
| | — |
| | November 1, 2025 |
| 701 Brickell Avenue | | 3.66% paid monthly | | 184.0 |
| | 184.0 |
| | April 1, 2026 |
| 55 Second Street | | 3.74% paid monthly | | — |
| | 137.5 |
| | October 1, 2026 |
| 1900 K Street, NW | | 3.93% paid monthly | | 163.0 |
| | 163.0 |
| | April 1, 2028 |
| 99 High Street | | 3.90% paid monthly | | 277.0 |
| | 277.0 |
| | March 1, 2030 |
| Total Principal Outstanding | | | | $ | 2,338.0 |
| | $ | 2,688.1 |
| | |
Fair Value Adjustment(3) | | | | 27.0 |
| | (80.1 | ) | | |
| Total Loans Payable | | | | $ | 2,365.0 |
| | $ | 2,608.0 |
| | |
| |
(1) | The mortgage is adjusted monthly for principal payments. |
| |
(2) | Interest rates are fixed. Some mortgages held by the Account are structured to begin principal and interest payments after an initial interest only period. |
| |
(3) | The fair value adjustment consists of the difference (positive or negative) between the principal amount of the outstanding debt and the fair value of the outstanding debt. See Note 1—Organization and Significant Accounting Policies. |
| |
(4) | These properties are each owned by separate wholly-owned subsidiaries of TIAA for benefit of the Account. |
| |
(5)
| Mortgage loans on the individual properties in the Kierland Apartment Portfolio were paid off on May 1, 2017. |
| |
(6)
| Represents mortgage loans on these individual properties which are held within the Palomino Park portfolio. |
| |
(7)
| This mortgage is comprised of three individual loans, all with equal recourse, interest and maturity. The principal balances by loan are $79.0 million, $45.0 million, and $13.5 million. |
| |
(8)
| This mortgage loan was assumed by the Purchaser of the property, which was sold on November 13, 2017. |
Principal payment schedule on mortgage loans payable as of December 31, 20172019 was as follows (in millions)(millions):
| | | | Amount | Amount |
| 2018 | $ | 13.7 |
| |
| 2019 | 107.2 |
| |
| 2020 | 171.7 |
| $ | 170.9 |
|
| 2021 | 125.0 |
| 19.7 |
|
| 2022 | 335.7 |
| 455.5 |
|
| 2023 | | 418.2 |
|
| 2024 | | 165.4 |
|
| Thereafter | 1,485.3 |
| 1,108.3 |
|
| Total maturities | $ | 2,238.6 |
| $ | 2,338.0 |
|
Note 9—10—Line of Credit
On September 20, 2018, the Account entered into a $500.0 million unsecured revolving credit agreement (“Line of Credit”) syndicated across four national banks (“Lenders”), with each Lender providing a $125.0 million commitment. Access to the Line of Credit expires on September 20, 2021, with an option to extend the Line of Credit for two consecutive twelve terms at the Account’s election. The Account may request an additional $250.0 million in commitments from the Lenders at any time; however, this request is subject to approval at the sole discretion of the Lenders and is not a guarantee that an expansion beyond the original $500.0 million commitment will be granted. Draws against the Line of Credit can take the form of Eurodollar Loans or Alternate Base Rate Loans (“ABR Loans”). Eurodollar Loans and ABR Loans both require a minimum funding of $5.0 million. The Account is charged a fee of 0.20% per annum on any unused portion of the Line of Credit. For the year ended December 31, 2019, $1.0 million was charged to the Account for expenses related to the Line of Credit.
Eurodollar Loans are issued for a term of twelve months or less and bear interest during the period (“Interest Period”) at a rate equal to the Adjusted London Interbank Offer Rate (“Adjusted LIBOR”) plus a spread ranging between 0.85%-1.05% per annum (the “Applicable Rate”), with the spread dependent upon the leverage ratio of the Account. The Adjusted LIBOR Rate is calculated by multiplying the Statutory Reserve Rate, as determined by the Federal Reserve Board for Eurodollar liabilities, by the LIBOR rate, as determined by the Intercontinental Exchange on the date of issuance that corresponds to the length of the Interest Period of the Eurodollar Loan. The Account may prepay Eurodollar Loans at any time during the life of the loan without penalty. The Account is limited to five active Eurodollar Loans through the Line of Credit; however, the Account may retire and initiate new Eurodollar Loans without restriction so long as the total number of loans in active status never exceeds the limit.
ABR Loans are issued for a specific length of time and bear interest at a rate equal to the highest rate among the following calculations plus the Applicable Rate: a) the Prime Rate on the date of issuance, with the Prime Rate being defined as the rate of interest last quoted by the Wall Street Journal as the Prime Rate; b) the Federal Reserve Bank of New York (“NYFRB”) Rate as provided by the NYFRB on the date of issuance plus 0.5%; or c) the Adjusted LIBOR Rate plus 1.0%. The Account may prepay ABR Loans at any time during the life of the loan without penalty.
As of December 31, 2019, the Account had a $250.0 million loan outstanding on the Line of Credit. The Account is in compliance with all covenants required by the Line of Credit.
Note 11—Financial Highlights
Selected condensed financial information for an Accumulation Unit of the Account is presented below. Per Accumulation Unit data is calculated on average units outstanding.
| | | | | Years ended December 31, | | Years ended December 31, |
| 2017 | | 2016 | | 2015 | | 2014 | | 2013 | 2019 | | 2018 | | 2017 | | 2016 | | 2015 |
| Per Accumulation Unit Data: | | | | | | | | | | | | | | | | | | | | |
| Rental income | | $ | 17.132 |
| | $ | 16.433 |
| | $ | 15.538 |
| | $ | 15.862 |
| | $ | 15.313 |
| | $ | 18.165 |
| | $ | 17.757 |
| | $ | 17.132 |
| | $ | 16.433 |
| | $ | 15.538 |
|
| Real estate property level expenses and taxes | | 7.722 |
| | 7.534 |
| | 7.319 |
| | 7.788 |
| | 8.112 |
| | 8.734 |
| | 8.548 |
| | 7.722 |
| | 7.534 |
| | 7.319 |
|
| Real estate income, net | | 9.410 |
| | 8.899 |
| | 8.219 |
| | 8.074 |
| | 7.201 |
| | 9.431 |
| | 9.209 |
| | 9.410 |
| | 8.899 |
| | 8.219 |
|
| Other income | | 4.762 |
| | 3.594 |
| | 3.342 |
| | 3.459 |
| | 2.759 |
| | 6.752 |
| | 6.162 |
| | 4.762 |
| | 3.594 |
| | 3.342 |
|
| Total income | | 14.172 |
| | 12.493 |
| | 11.561 |
| | 11.533 |
| | 9.960 |
| | 16.183 |
| | 15.371 |
| | 14.172 |
| | 12.493 |
| | 11.561 |
|
Expense charges(1) | | 3.318 |
| | 3.290 |
| | 3.092 |
| | 2.880 |
| | 2.672 |
| | 3.439 |
| | 3.161 |
| | 3.318 |
| | 3.290 |
| | 3.092 |
|
| Investment income, net | | 10.854 |
| | 9.203 |
| | 8.469 |
| | 8.653 |
| | 7.288 |
| | 12.744 |
| | 12.210 |
| | 10.854 |
| | 9.203 |
| | 8.469 |
|
| Net realized and unrealized gain on investments and mortgage loans payable | | 5.839 |
| | 9.660 |
| | 18.911 |
| | 27.868 |
| | 19.015 |
| |
| Net realized and unrealized gain on investments and loans payable | | | 10.262 |
| | 6.877 |
| | 5.839 |
| | 9.660 |
| | 18.911 |
|
| Net increase in Accumulation Unit Value | | 16.693 |
| | 18.863 |
| | 27.380 |
| | 36.521 |
| | 26.303 |
| | 23.006 |
| | 19.087 |
| | 16.693 |
| | 18.863 |
| | 27.380 |
|
| Accumulation Unit Value: | | | | | | | | | | | | | | | | | | | | |
| Beginning of period | | 381.636 |
| | 362.773 |
| | 335.393 |
| | 298.872 |
| | 272.569 |
| | 417.416 |
| | 398.329 |
| | 381.636 |
| | 362.773 |
| | 335.393 |
|
| End of period | | $ | 398.329 |
| | $ | 381.636 |
| | $ | 362.773 |
| | $ | 335.393 |
| | $ | 298.872 |
| | $ | 440.422 |
| | $ | 417.416 |
| | $ | 398.329 |
| | $ | 381.636 |
| | $ | 362.773 |
|
| Total return | | 4.37 | % | | 5.20 | % | | 8.16 | % | | 12.22 | % | | 9.65 | % | | 5.51 | % | | 4.79 | % | | 4.37 | % | | 5.20 | % | | 8.16 | % |
| Ratios to Average net Assets: | | | | | | | | | | | | | | | | | | | | |
Expenses(1) | | 0.83 | % | | 0.86 | % | | 0.86 | % | | 0.89 | % | | 0.92 | % | | 0.78 | % | | 0.76 | % | | 0.83 | % | | 0.86 | % | | 0.86 | % |
| Investment income, net | | 2.72 | % | | 2.41 | % | | 2.37 | % | | 2.68 | % | | 2.50 | % | | 2.90 | % | | 2.95 | % | | 2.72 | % | | 2.41 | % | | 2.37 | % |
| Portfolio turnover rate: | | | | | | | | | | | | | | | | | | | | |
Real estate properties(2) | | 2.7 | % | | 1.3 | % | | 5.7 | % | | 6.5 | % | | 2.1 | % | | 7.8 | % | | 11.8 | % | | 2.7 | % | | 1.3 | % | | 5.7 | % |
Marketable securities(3) | | 5.7 | % | | 3.5 | % | | 10.0 | % | | 15.9 | % | | 8.4 | % | | 28.7 | % | | 5.1 | % | | 5.7 | % | | 3.5 | % | | 10.0 | % |
| Accumulation Units outstanding at end of period (in millions): | | 61.3 |
| | 62.4 |
| | 60.4 |
| | 57.9 |
| | 55.3 |
| |
| Net assets end of period (in millions) | | $ | 24,942.6 |
| | $ | 24,304.7 |
| | $ | 22,360.0 |
| | $ | 19,829.0 |
| | $ | 16,907.9 |
| |
| Accumulation Units outstanding at end of period (millions): | | | 60.8 |
| | 60.7 |
| | 61.3 |
| | 62.4 |
| | 60.4 |
|
| Net assets end of period (millions) | | | $ | 27,307.9 |
| | $ | 25,842.6 |
| | $ | 24,942.6 |
| | $ | 24,304.7 |
| | $ | 22,360.0 |
|
| |
(1) | Expense charges per Accumulation Unit and the Ratio of Expenses to average net assets reflect the year to date Account level expenses and exclude real estate property level expenses which are included in real estate income, net. |
| |
(2) | Real estate investment portfolio turnover rate is calculated by dividing the lesser of purchases or sales of real estate property investments (including contributions to, or return of capital distributions received from, existing joint venture and limited partnershipFunds investments) by the average value of the portfolio of real estate investments held during the period. |
| |
(3) | Marketable securities portfolio turnover rate is calculated by dividing the lesser of purchases or sales of securities, excluding securities having maturity dates at acquisition of one year or less, by the average value of the portfolio securities held during the period. |
Note 10—12—Accumulation Units
Changes in the number of Accumulation Units outstanding were as follows (in millions)(millions):
| | | | | Years ended December 31, | | Years ended December 31, |
| | | 2017 | | 2016 | | 2015 | | 2019 | | 2018 | | 2017 |
| Outstanding: | | | | | | | | | | | | |
| Beginning of period | | 62.4 |
| | 60.4 |
| | 57.9 |
| | 60.7 |
| | 61.3 |
| | 62.4 |
|
| Credited for premiums | | 6.6 |
| | 8.2 |
| | 8.1 |
| | 6.2 |
| | 6.5 |
| | 6.6 |
|
| Annuity, other periodic payments, withdrawals and death benefits | | (7.7 | ) | | (6.2 | ) | | (5.6 | ) | | (6.1 | ) | | (7.1 | ) | | (7.7 | ) |
| End of period | | 61.3 |
| | 62.4 |
| | 60.4 |
| | 60.8 |
| | 60.7 |
| | 61.3 |
|
Note 11—13—Commitments and Contingencies
Commitments—TheAs of December 31, 2019 and 2018, the Account had $32.0 million and $39.0 million of outstandingthe following immediately callable commitments to purchase additional interests in its limited partnership investments as of December 31, 2017 and 2016, respectively. The commitment at December 31, 2017 is related to the Taconic New York City GP Fund, LP, in which the Account has entered into an agreement toreal estate funds or provide funding. As of December 31, 2017, $13.0 million of the original $45.0 million commitment has been funded. Once the remaining commitment is funded, the Account anticipates holding a 60% - 90% interest in the fund.additional funding through its loan receivable investments:
The Account has committed a total of $47.6 million and $38.8 million as of December 31, 2017 and 2016, respectively, to various tenants for tenant improvements and leasing inducements. |
| | | | | | | | | | |
| | | Commitment Expiration | | December 31, 2019 | | December 31, 2018 |
| | | | | | | |
Real Estate Funds(1) | | | | | |
| | Taconic New York City GP Fund | 11/2020 | | $ | 11.4 |
| | $ | 26.0 |
|
| | LCS SHIP Venture I, LLC | 12/2020 | | 28.1 |
| | 75.0 |
|
| | Veritas Trophy VI, LLC(2) | 02/2020 | | 35.8 |
| | — |
|
| | SP V - II, LLC | 09/2022 | | 74.9 |
| | — |
|
| | Grubb Southeast Real Estate Fund VI, LLC | 06/2021 | | 86.6 |
| | — |
|
| | JCR Capital - REA Preferred Equity Parallel Fund | 12/2022 | | 100.0 |
| | — |
|
| | Townsend Strategic Ventures LP | 03/2021 | | 250.0 |
| | — |
|
| | | | | 586.8 |
| | 101.0 |
|
Loans Receivable(3) | | | | | |
| | 311 South Wacker Mezzanine | 06/2020 | | 7.6 |
| | 11.9 |
|
| | Rosemont Towson Mezzanine | 09/2022 | | 1.2 |
| | 2.3 |
|
| | 1330 Broadway Mezzanine | 09/2022 | | 14.0 |
| | 14.8 |
|
| | SCG Oakland Portfolio Mezzanine | 03/2021 | | 7.0 |
| | — |
|
| | BREP VIII Industrial Mezzanine | 03/2026 | | 14.1 |
| | — |
|
| | San Diego Office Portfolio Senior Loan | 08/2022 | | 10.0 |
| | — |
|
| | San Diego Office Portfolio Mezzanine | 08/2022 | | 3.3 |
| | — |
|
| | MRA Hub 34 Holding, LLC
| 09/2022 | | 1.5 |
| | — |
|
| | Liberty Park Mezzanine | 11/2023 | | 5.0 |
| | — |
|
| | Colony New England Hotel Portfolio Senior Loan | 11/2022 | | 14.1 |
| | — |
|
| | Colony New England Hotel Portfolio Mezzanine | 11/2022 | | 4.7 |
| | — |
|
| | Exo Apartments Senior Loan | 06/2020 | | 7.1 |
| | — |
|
| | Exo Apartments Mezzanine | 06/2020 | | 2.4 |
| | — |
|
| | | | | 92.0 |
| | 29.0 |
|
| | | | | | | |
| | TOTAL COMMITMENTS | | | $ | 678.8 |
| | $ | 130.0 |
|
| |
(1) | Additional capital can be called during the commitment period at any time. The commitment period can only be extended by the manager with the consent of the Account. The commitment expiration date is reflective of the most recent signed agreement between the Account and the fund manager, including any side letter agreements. |
| |
(2) | The fund manager is granted 18 months from the initial contribution date, August 2019, to make its first capital call. If none have occurred, the Account's commitment will be reduced by $15.0 million. If a capital call occurs during the initial 18 month window, the commitment period will be modified to three years from the first capital call date. |
| |
(3) | Additional advances from the Account can be requested during the commitment period at any time. The commitment expiration date is reflective of the most recent signed agreement between the Account and the borrower, including any side letter agreements. Certain loans contain extension clauses on the term of the loan that do not require the Account's prior consent. If elected, the Account's commitment may be extended through the extension term. |
Contingencies—In the normal course of business, the Account may be named, from time to time, as a defendant or may be involved in various legal actions, including arbitrations, class actions and other litigation.
The Account establishes an accrual for all litigation and regulatory matters when it believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted, as appropriate, in light of additional information. The amount of loss ultimately incurred in relation to those matters may be higher or lower than the amounts accrued for those matters.
As of the date of this annual report, management of the Account does not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material effect on the Account’s business, financial position or results of operations.
Note 12—Securities Lending
The Account may lend securities to qualified borrowers to earn additional income. The Account receives cash collateral against the loaned securities and maintains cash collateral in an amount not less than 100% of the market value of loaned securities during the period of the loan; any additional collateral required due to changes in security values is delivered to the Account the next business day. Cash collateral received by the Account is invested exclusively in an interest-bearing deposit account. The value of the loaned securities and the liability to return the cash collateral received are reflected in the Account's Consolidated Statements of Assets and Liabilities. As of December 31, 2017, securities lending transactions are for real-estate related equity securities, and the resulting loans are continuous, can be recalled at any time, and have no set maturity. Securities lending income recognized by the Account consists of interest earned on cash collateral and lending fees, net of any rebates to the borrower and compensation to the agent. Such income is reflected within interest income on the Account's Consolidated Statements of Operations. In lending its securities, the Account bears the market risk with respect to the investment of collateral and the risk that the agent may default on its contractual obligations to the Account. The agent bears the risk that the borrower may default on its obligation to return the loaned securities as the agent is contractually obligated to indemnify the Account if at the time of a default by a borrower some or all of the loan securities have not been returned.
Note 13—14—Subsequent Events
Real Estate Properties and Joint Ventures
Purchases
30700 Russell Ranch—Westlake Village, CA |
| | | | | | | | | | | | |
| Property Name | | Transaction Date | | Ownership Percentage | | Sector | | Location | | Net Purchase Price (1) |
| Sole at City Center | | 01/15/2020 | | 100.00% | | Apartments | | West Palm Beach, FL | | $ | 103.6 |
|
| Park Creek Apartments | | 02/10/2020 | | 100.00% | | Apartments | | Fort Worth, TX | | 41.7 |
|
Warwick Shopping Center(2) | | 02/19/2020 | | 100.00% | | Retail | | Warwick, RI | | 11.1 |
|
Overlook at King of Prussia(2) | | 02/19/2020 | | 100.00% | | Retail | | King of Prussia, PA | | 55.1 |
|
Shoppes at Lake Mary(2) | | 02/19/2020 | | 100.00% | | Retail | | Lake Mary, FL | | 21.0 |
|
Winslow Bay Commons(2) | | 02/19/2020 | | 100.00% | | Retail | | Mooresville, NC | | 50.9 |
|
Bellevue Place(2) | | 02/19/2020 | | 100.00% | | Retail | | Nashville, TN | | 7.8 |
|
Eisenhower Crossing(2) | | 02/19/2020 | | 100.00% | | Retail | | Macon, GA | | 10.1 |
|
Pavilion at Turkey Creek(2) | | 02/19/2020 | | 100.00% | | Retail | | Knoxville, TN | | 49.9 |
|
Town and Country(2) | | 02/19/2020 | | 100.00% | | Retail | | Knoxville, TN | | 30.1 |
|
Creeks at Virginia Center(2) | | 02/19/2020 | | 100.00% | | Retail | | Glen Allen, VA | | 41.7 |
|
Alexander Place(2) | | 02/19/2020 | | 100.00% | | Retail | | Raleigh, NC | | 39.9 |
|
Market Square(2) | | 02/19/2020 | | 100.00% | | Retail | | Ft. Myers, FL | | 20.4 |
|
Cypress Trace(2) | | 02/19/2020 | | 100.00% | | Retail | | Ft. Myers, FL | | 39.7 |
|
Columbiana Station(2) | | 02/19/2020 | | 100.00% | | Retail | | Columbia, SC | | 43.8 |
|
Village Crossing(2) | | 02/19/2020 | | 100.00% | | Retail | | Skokie, IL | | 160.7 |
|
Birkdale Village(2) | | 02/19/2020 | | 100.00% | | Retail | | Huntersville, NC | | 128.9 |
|
Birkdale Village Apartments(2) | | 02/19/2020 | | 100.00% | | Apartments | | Huntersville, NC | | 70.8 |
|
River Ridge(2) | | 02/19/2020 | | 100.00% | | Retail | | Birmingham, AL | | 28.0 |
|
Woodstock Square(2) | | 02/19/2020 | | 100.00% | | Retail | | Woodstock, GA | | 33.7 |
|
Newnan Pavilion(2) | | 02/19/2020 | | 100.00% | | Retail | | Newnan, GA | | 39.7 |
|
Marketplace at Mill Creek(2) | | 02/19/2020 | | 100.00% | | Retail | | Buford, GA | | 71.5 |
|
Heritage Pavilion(2) | | 02/19/2020 | | 100.00% | | Retail | | Smyrna, GA | | 41.6 |
|
Fayette Pavilion(2) | | 02/19/2020 | | 100.00% | | Retail | | Fayetteville, GA | | 88.4 |
|
Pacific City(3) | | 03/09/2020 | | 100.00% | | Retail | | Huntington Beach, CA | | 153.9 |
|
| |
(1) | The net purchase price represents the purchase price and closing costs. |
| |
(2) | On February 19, 2020, the Account purchased the 15% ownership interest of SITE Centers Corp in DDRTC Core Retail Fund, LLC, a joint venture between the Account and SITE Centers Corp. All properties and associated debt formerly held within DDRTC Core Retail Fund, LLC are now wholly-owned by the Account. |
| |
(3) | On March 9, 2020, the Account purchased the 30% ownership interest of DJM Capital in PC Borrower, LLC, a joint venture between the Account and DJM Capital. The retail property and associated debt formerly held within PC Borrower, LLC is now wholly-owned by the Account. |
Sales
|
| | | | | | | | | | | | | | | |
| Property Name | | Transaction Date | | Ownership Percentage | | Sector | | Location | | Net Sales Price (1) | Realized Gain(Loss) on Sale(2) |
| The Woodley | | 01/08/2020 | | 100.00% | | Apartments | | Washington, D.C. | | $ | 176.7 |
| $ | (25.2 | ) |
| Beltway North Commerce Center | | 01/14/2020 | | 100.00% | | Industrial | | Houston, TX | | 29.8 |
| 4.3 |
|
| 250 North 10th Street | | 01/15/2020 | | 100.00% | | Apartments | | Brooklyn, NY | | 137.1 |
| (37.6 | ) |
DDRTC Core Retail Fund, LLC(3) | | 02/19/2020 | | 85.00% | | Retail | | Various, U.S.A. | | 932.8 |
| (422.2 | ) |
PC Borrower, LLC(4) | | 03/09/2020 | | 70.00% | | Retail | | Huntington Beach, CA | | 107.7 |
| (31.3 | ) |
| |
(1) | The net sales price represents the sales price, less selling expenses. |
| |
(2) | Majority of the realized gain(loss) has been previously recognized as unrealized gains(losses) in the Account's Consolidated Statements of Operations. |
| |
(3) | On February 19, 2020, the Account purchased the 15% ownership interest of SITE Centers Corp in DDRTC Core Retail Fund, LLC, a joint venture between the Account and SITE Centers Corp. All properties and associated debt formerly held within DDRTC Core Retail Fund, LLC are now wholly-owned by the Account. |
| |
(4) | On March 9, 2020, the Account purchased the 30% ownership interest of DJM Capital in PC Borrower, LLC, a joint venture between the Account and DJM Capital. The retail property and associated debt formerly held within PC Borrower, LLC is now wholly-owned by the Account. |
Loans Receivable
Originations and purchases
|
| | | | | | | | | | | | | | |
| Investment Name | | Transaction Date | | Interest Rate | | Sector | | Maturity Date | | Location | | Amount |
| Sol Y Luna | | 01/07/2020 | | 6.55% | | Apartments | | 01/06/2030 | | Tucson, AZ | | $ | 53.0 |
|
Payoffs and sales
|
| | | | | | | | | | | | | | |
| Investment Name | | Transaction Date | | Interest Rate | | Sector | | Maturity Date | | Location | | Amount |
| Crest at Las Colinas Station Mezzanine | | 01/30/2020 | | 5.11% + LIBOR | | Apartments | | 05/10/2021 | | Irving, TX | | $ | 20.0 |
|
| DJM Capital Partners Mezzanine | | 03/09/2020 | | 5.00% | | Retail | | 03/02/2020 | | Huntington Beach, CA | | 6.3 |
|
Financings
New financings and assumptions of debt
|
| | | | | | | | | | | | | | | | |
| Property Name | | Transaction Date | | Ownership Percentage | | Interest Rate | | Sector | | Maturity Date | | Location | | Amount |
Overlook at King of Prussia(1) | | 02/19/2020 | | 100.00% | | 3.82% | | Retail | | 09/11/2027 | | King of Prussia, PA | | $ | 40.8 |
|
Winslow Bay Commons(1) | | 02/19/2020 | | 100.00% | | 3.82% | | Retail | | 09/11/2027 | | Mooresville, NC | | 25.8 |
|
Birkdale Village(1) | | 02/19/2020 | | 100.00% | | 4.30% | | Retail | | 04/01/2024 | | Huntersville, NC | | 78.4 |
|
Marketplace at Mill Creek(1) | | 02/19/2020 | | 100.00% | | 3.82% | | Retail | | 09/11/2027 | | Buford, GA | | 39.6 |
|
Pacific City(2) | | 03/09/2020 | | 100.00% | | 2.00% + LIBOR | | Retail | | 10/01/2023 | | Huntington Beach, CA | | 105.0 |
|
Payoffs and assignments of debt
|
| | | | | | | | | | | | | | | | |
| Property Name | | Transaction Date | | Ownership Percentage | | Interest Rate | | Sector | | Maturity Date | | Location | | Amount |
DDRTC Core Retail Fund, LLC(1) | | 02/19/2020 | | 85.00% | | Various | | Retail | | Various | | Various, U.S.A. | | $ | 156.8 |
|
PC Borrower, LLC(2) | | 03/09/2020 | | 70.00% | | 2.00% + LIBOR | | Retail | | 10/01/2023 | | Huntington Beach, CA | | 73.5 |
|
| |
(1) | On February 19, 2020, the Account purchased the 15% ownership interest of SITE Centers Corp in DDRTC Core Retail Fund, LLC, a joint venture between the Account and SITE Centers Corp. All properties and associated debt formerly held within DDRTC Core Retail Fund, LLC are now wholly-owned by the Account. |
| |
(2) | On March 9, 2020, the Account purchased the 30% ownership interest of DJM Capital in PC Borrower, LLC, a joint venture between the Account and DJM Capital. The retail property and associated debt formerly held within PC Borrower, LLC is now wholly-owned by the Account. |
Financings - Other
On January 4, 2018,21, 2020, the Account purchased an office property located in Westlake Village, California for $32.8 million.
Carrington Park—Plano, TX
On February 22, 2018,paid off the Account purchased an apartment property located in Plano, Texas for $64.2 million.
Churchill$250.0 million loan outstanding on the Park—Dallas, TX
On March 1, 2018, the Account purchased an apartment property located in Dallas, Texas for $71.2 million.
Sales
Urban Centre—Tampa, FL
On March 8, 2018, the Account sold an office property located in Tampa, Florida for a net sales priceLine of $141.1 million, realizing a loss of $12.1 million from the sale, the majority of which has been previously recognized as unrealized losses in the Account’s Consolidated Statements of Operations. The Account’s cost basis in the property at the date of the sale was $153.2 million.Credit.
Loans Receivable
Aspen Lake Office Portfolio —Austin, TX
On March 2, 2018, the Account entered into a $20.0 million mezzanine loan receivable position secured by Borrower's ownership interest in Aspen Lake Office Portfolio. The loan has an interest rate of 8.25% and is interest only through maturity. The loan matures on March 10, 2028.
Financings
Storage Portfolio I—Various, U.S.A.
On February 2, 2018, Storage Portfolio I, LLC joint venture investment, in which the Account holds a 66.02% interest, refinanced a mortgage loan that is secured with a portfolio of storage properties located throughout the United States.The mortgage loan now has an outstanding principal balance of $151.2 million. The debt has an interest rate of 4.5325%, maturing March 1, 2028 and is interest only.
Circa Green Lake—Seattle, WA
On February 21, 2018, the Account entered into a new mortgage loan with a principal amount of $52.0 million, secured by an apartment property investment located in Seattle, Washington. The debt has an interest rate of 3.710%, maturing March 5, 2025 and is interest only.
Union - South Lake Union—Seattle, WA
On February 21, 2018, the Account entered into a new mortgage loan with a principal amount of $57.0 million, secured by an apartment property investment located in Seattle, Washington. The debt has an interest rate of 3.660%, maturing March 5, 2025 and is interest only.
99 High Street—Boston, MA
On February 22, 2018, the Account entered into a new mortgage loan with a principal amount of $277.0 million, secured by an office property investment located in Boston, Massachusetts. The debt has an interest rate of 3.900%, maturing March 1, 2030 and is interest only.
Marketable Securities
On February 22, 2018,In the first two months of 2020, the Account purchased $100.0sold approximately $304 million ofin real estate-related securities.
Other
Storage Portfolio I—Various, U.S.A.
On February 2, 2018, the Account restructured its Storage Portfolio I, LLC joint venture, which holds a portfolio of storage properties across the United States, reducing the Account's interest in the joint venture to 66.02%.
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
REAL ESTATE PROPERTIES—57.9%53.0% and 58.0%54.5%
| | | Location/Description | | Type | | Fair Value at December 31, | | Type | | Fair Value at December 31, |
| 2017 | | 2016 | 2019 | | 2018 |
| | | | | | | |
| Alabama: | | | | | | |
| Riverchase Village | | | Retail | | $ | 40.3 |
| | $ | 40.0 |
| |
| Arizona: | | | | | | | | | | |
| Camelback Center | | Office | | $ | 59.8 |
| | $ | 56.4 |
| | | Office | | 49.0 |
| | 63.4 |
| |
| Kierland Apartment Portfolio | | Apartments | | — |
| | 127.9 |
| (1) | |
| Riverside 202 Industrial | | | Industrial | | 29.6 |
| | — |
| |
| California: | | | | | | | | | | |
| 55 Second Street | | Office | | 355.5 |
| (1) | | 335.0 |
| (1) | | Office | | — |
| | 368.2 |
| (1) |
| 88 Kearny Street | | Office | | 174.2 |
| | 172.3 |
| | | Office | | 221.0 |
| | 189.1 |
| |
| 101 Pacific Coast Highway | | | Office | | 96.1 |
| | — |
| |
| 200 Middlefield Road | | Office | | 61.4 |
| | 60.5 |
| | | Office | | 68.0 |
| | 61.8 |
| |
| 12910 Mulberry Drive Industrial | | | Industrial | | — |
| | 21.7 |
| |
| 30700 Russell Ranch | | | Office | | 39.0 |
| | 34.6 |
| |
| Allure at Camarillo | | Apartments | | 59.6 |
| | — |
| | | Apartments | | 63.9 |
| | 61.8 |
| |
| Almond Avenue | | | Land | | 9.5 |
| | — |
| |
| BLVD63 | | Apartments | | 162.1 |
| | 157.0 |
| | | Apartments | | 158.0 |
| | 164.0 |
| |
| Bridgepointe Shopping Center | | Retail | | 124.5 |
| | — |
| | | Retail | | 129.0 |
| | 125.0 |
| |
| Castro Station | | Office | | 169.0 |
| | 158.2 |
| | |
| Centre Pointe and Valley View | | Industrial | | 47.8 |
| | 42.8 |
| | | Industrial | | 60.7 |
| | 51.2 |
| |
| Cerritos Industrial Park | | Industrial | | 142.0 |
| | 126.3 |
| | | Industrial | | 164.0 |
| | 153.1 |
| |
| Charleston Plaza | | Retail | | 93.0 |
| | 92.0 |
| | | Retail | | 100.0 |
| | 100.0 |
| |
| Creekside Alta Loma | | | Apartment | | 85.2 |
| | — |
| |
| Frontera Industrial Business Park | | Industrial | | 56.4 |
| | — |
| | | Industrial | | 90.0 |
| | 74.0 |
| |
| Great West Industrial Portfolio | | Industrial | | 167.0 |
| | 166.1 |
| | | Industrial | | 203.0 |
| | 178.5 |
| |
| Holly Street Village | | Apartments | | 148.0 |
| | 146.0 |
| | | Apartments | | 158.1 |
| (1) | | 152.1 |
| (1) |
| Larkspur Courts | | Apartments | | 143.7 |
| | 140.5 |
| | | Apartments | | 155.0 |
| | 146.0 |
| |
| Northern CA RA Industrial Portfolio | | Industrial | | 87.4 |
| | 76.7 |
| | | Industrial | | 111.9 |
| | 93.3 |
| |
| Oakmont IE West Portfolio | | Industrial | | 87.6 |
| | 82.7 |
| | | Industrial | | 109.2 |
| | 103.5 |
| |
| Oceano at Warner Center | | Apartments | | 89.0 |
| | 88.3 |
| | | Apartments | | 94.4 |
| | 89.3 |
| |
| Ontario Industrial Portfolio | | Industrial | | 398.6 |
| (11) | | 438.0 |
| | | Industrial | | 506.9 |
| | 421.8 |
| |
| Ontario Mills Industrial Portfolio | | Industrial | | 58.5 |
| | 52.0 |
| | | Industrial | | 65.4 |
| | 61.8 |
| |
| Otay Mesa Industrial Portfolio | | | Industrial | | 33.7 |
| | 29.4 |
| |
| Pacific Plaza | | Office | | 115.2 |
| | 115.0 |
| | | Office | | 112.7 |
| | 116.5 |
| |
| Rancho Cucamonga Industrial Portfolio | | Industrial | | 71.9 |
| (11) | | 174.2 |
| | | Industrial | | 88.3 |
| | 76.2 |
| |
| Rancho Del Mar | | | Apartment | | 94.7 |
| | 92.5 |
| |
| Regents Court | | Apartments | | 99.1 |
| (1) | | 89.9 |
| (1) | | Apartments | | 105.0 |
| (1) | | 104.0 |
| (1) |
| Southern CA RA Industrial Portfolio | | Industrial | | 138.0 |
| | 135.0 |
| | | Industrial | | 151.8 |
| | 143.4 |
| |
| Stella | | Apartments | | 179.7 |
| | 173.1 |
| | | Apartments | | 175.1 |
| | 183.7 |
| |
| Stevenson Point | | Industrial | | 50.9 |
| | 49.3 |
| | | Industrial | | 66.6 |
| | 61.3 |
| |
| Terra House | | | Apartments | | 146.0 |
| | — |
| |
| The Forum at Carlsbad | | Retail | | 221.0 |
| (1) | | 221.5 |
| (1) | | Retail | | 224.0 |
| (1) | | 225.0 |
| (1) |
| The Legacy at Westwood | | Apartments | | 143.0 |
| (1) | | 142.1 |
| (1) | | Apartments | | 149.1 |
| (1) | | 144.0 |
| (1) |
| Township Apartments | | Apartments | | 89.8 |
| | 89.6 |
| | | Apartments | | — |
| | 90.5 |
| (1) |
| West Lake North Business Park | | Office | | 60.3 |
| | 60.0 |
| | |
| Westcreek | | Apartments | | 51.4 |
| | 48.2 |
| | |
| Westwood Marketplace | | Retail | | 131.9 |
| | 125.0 |
| | |
| Wilshire Rodeo Plaza | | Office | | 327.8 |
| | 320.7 |
| | |
| Colorado: | | | | | | |
| Palomino Park | | Apartments | | 329.7 |
| (1) | | 314.1 |
| (1) | |
| South Denver Marketplace | | Retail | | 72.7 |
| | 73.0 |
| | |
| Connecticut: | | | | | | |
| Wilton Woods Corporate Campus | | Office | | 133.0 |
| | 141.9 |
| | |
| Florida: | | | | | | |
| 701 Brickell Avenue | | Office | | 368.5 |
| (1) | | 380.7 |
| (1) | |
| Broward Industrial Portfolio | | Industrial | | 54.2 |
| | — |
| | |
| Casa Palma | | Apartments | | 95.0 |
| | 97.0 |
| | |
| Orion on Orpington | | Apartments | | 44.4 |
| | — |
| | |
| Publix at Weston Commons | | Retail | | 74.8 |
| | 73.0 |
| | |
| Seneca Industrial Park | | Industrial | | 108.8 |
| | 102.7 |
| | |
| South Florida Apartment Portfolio | | Apartments | | 105.1 |
| | 104.1 |
| | |
| The Manor Apartments | | Apartments | | 52.6 |
| | 53.6 |
| | |
| The Manor at Flagler Village | | Apartments | | 148.1 |
| | 150.8 |
| | |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2017 | | 2016 |
| The Residences at the Village of Merrick Park | | Apartments | | $ | 76.0 |
| | | $ | 74.1 |
| |
| Urban Centre | | Office | | 143.3 |
| | | 121.4 |
| |
| Weston Business Center | | Industrial | | 92.8 |
| | | 92.7 |
| |
| Georgia: | | | | | | | | |
| Atlanta Industrial Portfolio | | Industrial | | 32.4 |
| (6) | | 62.8 |
| |
| Shawnee Ridge Industrial Portfolio | | Industrial | | 91.1 |
| | | 86.7 |
| |
| Illinois: | | | | | | | | |
| 32 State Street | | Retail | | 48.3 |
| (1) | | 46.5 |
| (1) |
| 803 Corday | | Apartments | | 94.5 |
| | | | |
| Chicago Caleast Industrial Portfolio | | Industrial | | 80.5 |
| | | 81.8 |
| |
| Chicago Industrial Portfolio | | Industrial | | 100.3 |
| | | 85.5 |
| |
| Maryland: | | | | | | | | |
| Landover Logistics Center | | Industrial | | 43.4 |
| | | 39.8 |
| |
| The Shops at Wisconsin Place | | Retail | | 90.0 |
| | | 92.8 |
| |
| Massachusetts: | | | | | | | | |
| 99 High Street | | Office | | 502.1 |
| | | 514.1 |
| |
| 501 Boylston Street | | Office | | 505.2 |
| (1) | | 490.3 |
| (1) |
| Fort Point Creative Exchange Portfolio | | Office | | 223.1 |
| | | 223.0 |
| |
| Northeast RA Industrial Portfolio | | Industrial | | 40.9 |
| | | 41.3 |
| |
| One Beeman Road | | Industrial | | 33.8 |
| | | — |
| |
| Minnesota: | | | | | | | | |
| The Bridges | | Apartments | | 62.4 |
| | | — |
| |
| The Knoll | | Apartments | | 34.0 |
| (1) | | — |
| |
| New Jersey: | | | | | | | | |
| 200 Milik Street | | Industrial | | 53.1 |
| | | 51.2 |
| |
| Marketfair | | Retail | | 102.9 |
| | | 104.2 |
| |
| Amazon Distribution Center | | Industrial | | 110.0 |
| | | 101.0 |
| |
| South River Road Industrial | | Industrial | | 87.8 |
| | | 71.9 |
| |
| New York: | | | | | | | | |
| 21 Penn Plaza | | Office | | 261.2 |
| | | 275.2 |
| |
| 250 North 10th Street | | Apartments | | 163.1 |
| | | 162.0 |
| |
| 425 Park Avenue | | Ground Lease | | 457.0 |
| | | 450.0 |
| |
| 430 West 15th Street | | Office | | 145.8 |
| | | 116.1 |
| |
| 780 Third Avenue | | Office | | 427.0 |
| (1) | | 425.0 |
| (1) |
| 837 Washington Street | | Office | | 210.0 |
| | | 215.0 |
| |
| The Colorado | | Apartments | | 256.2 |
| (1) | | 258.1 |
| (1) |
| The Corner | | Apartments | | 251.0 |
| (1) | | 250.0 |
| (1) |
| Oregon: | | | | | | | | |
| The Cordelia | | Apartments | | 49.0 |
| | | 50.0 |
| |
| Pennsylvania: | | | | | | | | |
| 1619 Walnut Street | | Retail | | 24.1 |
| | | 23.4 |
| |
| The Pepper Building | | Apartments | | — |
| | | 52.9 |
| |
| South Carolina: | | | | | | | | |
| Greene Crossing | | Apartments | | 67.2 |
| | | 65.8 |
| |
| Tennessee: | | | | | | | | |
| Southside at McEwen | | Retail | | 48.2 |
| | | 48.8 |
| |
| Texas: | | | | | | | | |
| Beltway North Commerce Center | | Industrial | | 19.3 |
| | | 19.5 |
| |
| Cliffs at Barton Creek | | Apartments | | 45.9 |
| | | 45.8 |
| |
| Dallas Industrial Portfolio | | Industrial | | 213.2 |
| | | 201.3 |
| |
| Houston Apartment Portfolio | | Apartments | | 158.7 |
| | | 159.3 |
| |
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2019 | | 2018 |
| West Lake North Business Park | | Office | | $ | 62.3 |
| | | $ | 62.6 |
| |
| Westcreek | | Apartments | | 57.1 |
| | | 55.0 |
| |
| Westwood Marketplace | | Retail | | 150.0 |
| | | 142.0 |
| |
| Wilshire Rodeo Plaza | | Office | | 336.4 |
| | | 312.4 |
| |
| Colorado: | | | | | | | | |
| 1600 Broadway | | Office | | 116.0 |
| | | — |
| |
| Palomino Park | | Apartments | | 361.0 |
| (1) | | 348.0 |
| (1) |
| South Denver Marketplace | | Retail | | 71.2 |
| | | 72.7 |
| |
| Connecticut: | | | | | | | | |
| Wilton Woods Corporate Campus | | Office | | 112.1 |
| | | 121.0 |
| |
| Florida: | | | | | | | | |
| 5 West | | Apartments | | 62.3 |
| | | 62.2 |
| |
| 701 Brickell Avenue | | Office | | 406.6 |
| (1) | | 394.3 |
| (1) |
| Boca Arbor Club | | Apartments | | 62.9 |
| (9) | | 60.3 |
| |
| Broward Industrial Portfolio | | Industrial | | 67.7 |
| | | 59.1 |
| |
| Casa Palma | | Apartments | | 102.0 |
| | | 102.0 |
| |
| Fusion 1560 | | Apartments | | 84.1 |
| (1) | | 82.0 |
| (1) |
| Lakepointe at Jacaranda | | Apartments | | 48.8 |
| (9) | | 48.4 |
| |
| Lofts at SoDo | | Apartments | | 64.7 |
| (1) | | 66.7 |
| (1) |
| Orion on Orpington | | Apartments | | 52.4 |
| | | 49.2 |
| |
| Publix at Weston Commons | | Retail | | 74.5 |
| | | 74.6 |
| |
| Seneca Industrial Park | | Industrial | | 126.7 |
| | | 117.5 |
| |
| Sole at Brandon | | Apartments | | 79.0 |
| | | — |
| |
| The Manor Apartments | | Apartments | | 51.5 |
| | | 52.9 |
| |
| The Manor at Flagler Village | | Apartments | | 138.1 |
| | | 137.1 |
| |
| The Residences at the Village of Merrick Park | | Apartments | | 72.3 |
| | | 72.7 |
| |
| Weston Business Center | | Industrial | | 75.0 |
| (10) | | 97.8 |
| |
| Georgia: | | | | | | | | |
| Ascent at Windward | | Apartments | | 68.4 |
| (1) | | 68.4 |
| (1) |
| Atlanta Industrial Portfolio | | Industrial | | 41.0 |
| | | 35.5 |
| |
| Biltmore at Midtown | | Apartments | | 73.5 |
| (1) | | 70.4 |
| (1) |
| Glen Lake | | Apartments | | 55.3 |
| | | — |
| |
| Shawnee Ridge Industrial Portfolio | | Industrial | | 99.9 |
| | | 89.2 |
| |
| Illinois: | | | | | | | | |
| 32 South State Street | | Retail | | 51.4 |
| (1) | | 50.4 |
| (1) |
| 803 Corday | | Apartments | | 93.8 |
| | | 94.2 |
| |
| Chicago Caleast Industrial Portfolio | | Industrial | | 85.6 |
| | | 82.8 |
| |
| Chicago Industrial Portfolio | | Industrial | | 30.1 |
| | | 28.7 |
| |
| Maryland: | | | | | | | | |
| Cherry Knoll | | Apartments | | 60.1 |
| (1) | | 59.2 |
| (1) |
| Landover Logistics Center | | Industrial | | 44.7 |
| | | 44.3 |
| |
| The Shops at Wisconsin Place | | Retail | | 65.6 |
| | | 76.9 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2017 | | 2016 |
| Lincoln Centre | | Office | | $ | 358.0 |
| | | $ | 347.0 |
| |
| Northwest Houston Industrial Portfolio | | Industrial | | 70.7 |
| | | 68.2 |
| |
| Park 10 Distribution | | Industrial | | 10.3 |
| | | 11.3 |
| |
| Pinnacle Industrial Portfolio | | Industrial | | 53.3 |
| | | 52.8 |
| |
| Pinto Business Park | | Industrial | | 131.6 |
| | | 134.2 |
| |
| The Caruth | | Apartments | | — |
| | | 84.3 |
| (1) |
| The Maroneal | | Apartments | | 56.6 |
| | | 52.1 |
| |
| Virginia: | | | | | | | | |
| 8270 Greensboro Drive | | Office | | 50.3 |
| | | 47.6 |
| |
| Ashford Meadows Apartments | | Apartments | | 107.3 |
| (1) | | 107.2 |
| (1) |
| Plaza America | | Retail | | 117.0 |
| | | 109.0 |
| |
| The Ellipse at Ballston | | Office | | 83.7 |
| | | 79.8 |
| |
| The Palatine | | Apartments | | 123.2 |
| (1) | | 130.9 |
| (1) |
| Washington: | | | | | | |
| Circa Green Lake | | Apartments | | 97.5 |
| | | 92.5 |
| |
| Fourth and Madison | | Office | | 530.0 |
| (1) | | 521.0 |
| (1) |
| Millennium Corporate Park | | Office | | 184.1 |
| | | 190.1 |
| |
| Northwest RA Industrial Portfolio | | Industrial | | 38.5 |
| | | 31.7 |
| |
| Pacific Corporate Park | | Industrial | | 45.5 |
| | | 42.0 |
| |
| Prescott Wallingford Apartments | | Apartments | | 62.0 |
| | | 58.8 |
| |
| Rainier Corporate Park | | Industrial | | 123.7 |
| | | 104.0 |
| |
| Regal Logistics Campus | | Industrial | | 100.0 |
| | | 83.1 |
| |
| Union - South Lake Union | | Apartments | | 111.0 |
| | | 105.3 |
| |
| Washington D.C.: | | | | | | |
| 1001 Pennsylvania Avenue | | Office | | 785.0 |
| (1) | | 810.0 |
| (1) |
| 1401 H Street, NW | | Office | | 201.1 |
| (1) | | 230.0 |
| (1) |
| 1900 K Street, NW | | Office | | 330.0 |
| (1) | | 335.0 |
| (1) |
| Mass Court | | Apartments | | 171.0 |
| (1) | | 169.0 |
| (1) |
| Mazza Gallerie | | Retail | | — |
| | | 78.0 |
| |
| The Ashton | | Apartments | | 37.5 |
| | | 39.2 |
| |
| The Louis at 14th | | Apartments | | 176.0 |
| | | 183.2 |
| |
| The Woodley | | Apartments | | 191.0 |
| | | 203.0 |
| |
| TOTAL REAL ESTATE PROPERTIES | | | | | | | | |
| (Cost $12,972.5 and $12,818.1) | | | | $ | 15,742.7 |
| | | $ | 15,452.8 |
| |
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2019 | | 2018 |
| Massachusetts: | | | | | | | | |
| 99 High Street | | Office | | $ | 543.7 |
| (1) | | $ | 506.4 |
| (1) |
| 350 Washington | | Retail | | 134.0 |
| | | — |
| |
| Fort Point Creative Exchange Portfolio | | Office | | 275.0 |
| | | 247.1 |
| |
| Northeast RA Industrial Portfolio | | Industrial | | 43.5 |
| | | 42.0 |
| |
| One Beeman Road | | Industrial | | 34.6 |
| | | 34.0 |
| |
| Minnesota: | | | | | | | | |
| The Bridges | | Apartments | | 67.2 |
| | | 64.9 |
| |
| The Knoll | | Apartments | | 37.3 |
| (1) | | 36.1 |
| (1) |
| New Jersey: | | | | | | | | |
| 10 New Maple Avenue | | Industrial | | 21.9 |
| | | 18.0 |
| |
| 200 Milik Street | | Industrial | | 56.4 |
| | | 54.0 |
| |
| Marketfair | | Retail | | 106.2 |
| | | 104.3 |
| |
| South River Road Industrial | | Industrial | | 133.5 |
| | | 102.5 |
| |
| New York: | | | | | | | | |
| 21 Penn Plaza | | Office | | 334.9 |
| | | 317.8 |
| |
| 250 North 10th Street | | Apartments | | 138.1 |
| | | 151.0 |
| |
| 425 Park Avenue | | Ground Lease | | — |
| | | 461.0 |
| |
| 780 Third Avenue | | Office | | 389.1 |
| (1) | | 418.7 |
| (1) |
| 837 Washington Street | | Office | | 232.0 |
| | | 222.0 |
| |
| The Colorado | | Apartments | | 259.0 |
| (1) | | 254.9 |
| (1) |
| North Carolina: | | | | | | | | |
| Centric Gateway | | Apartments | | 75.0 |
| | | 70.0 |
| |
| Oregon: | | | | | | | | |
| The Cordelia | | Apartments | | 43.2 |
| | | 41.7 |
| |
| Pennsylvania: | | | | | | | | |
| 1619 Walnut Street | | Retail | | 23.0 |
| | | 24.1 |
| |
| South Carolina: | | | | | | | | |
| Greene Crossing | | Apartments | | 79.7 |
| | | 75.1 |
| |
| Tennessee: | | | | | | | | |
| Southside at McEwen | | Retail | | 49.2 |
| | | 48.6 |
| |
| Texas: | | | | | | | | |
| 3131 McKinney | | Office | | 46.4 |
| | | 49.7 |
| |
| Beltway North Commerce Center | | Industrial | | 30.2 |
| | | 26.3 |
| |
| Carrington Park | | Apartments | | 67.3 |
| | | 65.1 |
| |
| Churchill on the Park | | Apartments | | 73.0 |
| | | 71.3 |
| |
| Cliffs at Barton Creek | | Apartments | | 47.2 |
| | | 46.7 |
| |
| Dallas Industrial Portfolio | | Industrial | | 237.9 |
| | | 222.3 |
| |
| District on La Frontera | | Apartments | | 76.6 |
| (1) | | — |
| |
| Houston Apartment Portfolio | | Apartments | | 162.3 |
| | | 164.4 |
| |
| Lincoln Centre | | Office | | 413.2 |
| | | 372.6 |
| |
| Lincoln Centre - Hilton Dallas | | Hotel | | 76.5 |
| | | — |
| |
| Northwest Houston Industrial Portfolio | | Industrial | | 77.2 |
| | | 75.6 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
101
REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS—22.1% and 21.6%
REAL ESTATE JOINT VENTURES—21.6% and 21.1%
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2017 | | 2016 |
| California: | | | | | | |
CA—Colorado Center LP Colorado Center (50% Account Interest) | | Office | | $ | 351.0 |
| (2) | | $ | 567.8 |
| |
PC Borrower, LLC Pacific City (70% Account Interest) | | Retail | | 134.9 |
| | | 128.5 |
| |
TREA 9625 Towne Center, LLC 9625 Towne Centre Drive (35.86% Account Interest) | | Land | | 15.1 |
| | | — |
| |
TREA Campus Pointe 1, LLC
Campus Pointe 1 (45% Account Interest) | | Office | | 143.0 |
| | | 137.5 |
| |
TREA Campus Pointe 2 & 3, LLC
Campus Pointe 2 & 3 (45% Account Interest) | | Office (12) | | 127.1 |
| | | 85.7 |
| |
TREA Campus Pointe 4, LLC
Campus Pointe 4 (45% Account Interest) | | Office | | 8.8 |
| | | — |
| |
T-C 1500 Owens, LLC 1500 Owens Street (49.9% Account Interest) | | Office | | 77.5 |
| | | 74.8 |
| |
T-C Foundry Square II Venture LLC Foundry Square II (50.1% Account Interest) | | Office | | 262.7 |
| | | 200.1 |
| (2) |
T-C Illinois Street, LLC 409-499 Illinois Street (40% Account Interest) | | Office | | 209.3 |
| | | 196.8 |
| |
Valencia Town Center Associates LP Valencia Town Center (50% Account Interest) | | Retail | | 138.8 |
| (2) | | 128.0 |
| (2) |
| Florida: | | | | | | |
Florida Mall Associates, Ltd The Florida Mall (50% Account Interest) | | Retail | | 758.4 |
| (2) | | 755.8 |
| (2) |
TREA Florida Retail, LLC Florida Retail Portfolio (80% Account Interest) | | Retail | | 150.6 |
| | | 147.6 |
| |
West Dade County Associates Miami International Mall (50% Account Interest) | | Retail | | 166.0 |
| (2) | | 161.1 |
| (2) |
| Maryland: | | | | | | |
WP Project Developer The Shops at Wisconsin Place (33.33% Account Interest) | | Retail | | 20.0 |
| | | 19.4 |
| |
| Massachusetts: | | | | | | |
One Boston Place REIT One Boston Place (50.25% Account Interest) | | Office | | 229.1 |
| | | 224.2 |
| |
T-C 225 Binney, LLC 225 Binney Street (70% Account Interest) | | Office | | 201.9 |
| | | 194.9 |
| |
| Nevada | | | | | | | | |
Fashion Show Holding I, LLC Fashion Show (50% Account Interest) | | Retail | | 844.4 |
| (2) | | 839.1 |
| (2) |
| New York: | | | | | | |
401 West 14th Street, LLC 401 West 14th Street (42.19% Account Interest) | | Retail | | 46.4 |
| (2) | | 41.1 |
| (2) |
817 Broadway Owner, LLC 817 Broadway (61.46% Account Interest) | | Office | | 23.0 |
| (2) | | 20.8 |
| (2) |
MRA Hub 34 Holding, LLC The Hub (95% Account Interest) | | Office | | 56.9 |
| (2) | | 54.9 |
| (2) |
RGM 42, LLC MiMA (70% Account Interest) | | Apartments | | 189.2 |
| (2) | | 194.7 |
| (2) |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2017 | | 2016 |
TREA 35th Street LIC Investor Member, LLC Commerce LIC (97.5% Account Interest) | | Industrial | | $ | 58.2 |
| | | $ | — |
| |
| Tennessee: | | | | | | |
West Town Mall, LLC West Town Mall (50% Account Interest) | | Retail | | 140.4 |
| (2) | | 154.4 |
| (2) |
| Texas: | | | | | | |
Four Oaks Venture LP Four Oaks Place LP (51% Account Interest) | | Office | | 338.7 |
| (2) | | 342.3 |
| (2) |
| Washington: | | | | | | |
T-C REA 400 Fairview Investor, LLC 400 Fairview (90% Account Interest) | | Office | | 263.7 |
| | | 243.6 |
| |
| Various: | | | | | | |
DDRTC Core Retail Fund, LLC DDR Joint Venture (85% Account Interest) | | Retail | | 636.2 |
| (2,3) | | 552.8 |
| (2,3) |
Storage Portfolio I, LLC Storage Portfolio (75% Account Interest) | | Storage | | 177.5 |
| (2,3) | | 156.5 |
| (2,3) |
Storage Portfolio II, LLC Storage Portfolio (90% Account Interest) | | Storage | | 91.8 |
| (2,3) | | — |
| |
TOTAL REAL ESTATE JOINT VENTURES (Cost $4,534.5 and $4,393.2) | | | | $ | 5,860.6 |
| | | $ | 5,622.4 |
| |
| | | | | | | | | |
| | | | | | | | | |
| LIMITED PARTNERSHIPS—0.5% and 0.5% | | | | |
| | | | | | | |
| Clarion Gables Multi-Family Trust LP (7.74% Account Interest) | | $ | 126.7 |
| | | $ | 121.6 |
| |
| Colony Realty Partners LP (5.27% Account Interest) | | — |
| | | 3.1 |
| (10) |
| Lion Gables Apartment Fund (18.46% Account Interest) | | — |
| | | 0.2 |
| (5) |
| Taconic New York City GP Fund, LP (60% Account Interest) | | 10.8 |
| | | 4.8 |
| |
| Transwestern Mezz Realty Partners III, LLC (11.708% Account Interest) | | 4.9 |
| | | 7.8 |
| |
TOTAL LIMITED PARTNERSHIPS (Cost $140.8 and $137.2) | | | | $ | 142.4 |
| | | $ | 137.5 |
| |
TOTAL REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS (Cost $4,675.3 and $4,530.4) | | $ | 6,003.0 |
| | | $ | 5,759.9 |
| |
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2019 | | 2018 |
| Park 10 Distribution | | Industrial | | $ | 11.1 |
| | | $ | 10.0 |
| |
| Pinnacle Industrial Portfolio | | Industrial | | 66.7 |
| | | 51.2 |
| |
| Pinto Business Park | | Industrial | | 154.1 |
| | | 144.9 |
| |
| The Maroneal | | Apartments | | 56.4 |
| | | 56.1 |
| |
| Utah: | | | | | | | | |
| Vista Station Office Portfolio | | Office | | 115.4 |
| (1) | | — |
| |
| Virginia: | | | | | | | | |
| 8270 Greensboro Drive | | Office | | 49.6 |
| | | 47.5 |
| |
| Ashford Meadows Apartments | | Apartments | | 105.3 |
| (1) | | 107.1 |
| (1) |
| Henley at Kingstowne | | Apartments | | 103.0 |
| (1) | | — |
| |
| Plaza America | | Retail | | 113.3 |
| | | 116.3 |
| |
| The Ellipse at Ballston | | Office | | 82.2 |
| | | 82.4 |
| |
| The Palatine | | Apartments | | 128.0 |
| (1) | | 122.0 |
| (1) |
| Washington: | | | | | | |
| Circa Green Lake | | Apartments | | 102.0 |
| (1) | | 98.2 |
| (1) |
| Fourth and Madison | | Office | | — |
| | | 580.0 |
| (1) |
| Northwest RA Industrial Portfolio | | Industrial | | 49.7 |
| | | 43.0 |
| |
| Pacific Corporate Park | | Industrial | | 62.5 |
| | | 52.8 |
| |
| Prescott Wallingford Apartments | | Apartments | | 70.6 |
| | | 66.5 |
| |
| Rainier Corporate Park | | Industrial | | 161.3 |
| | | 141.6 |
| |
| Regal Logistics Campus | | Industrial | | 121.0 |
| | | 109.1 |
| |
| Union - South Lake Union | | Apartments | | 115.0 |
| (1) | | 114.0 |
| (1) |
| Washington D.C.: | | | | | | |
| 1001 Pennsylvania Avenue | | Office | | 798.4 |
| (1) | | 782.8 |
| (1) |
| 1401 H Street, NW | | Office | | 211.4 |
| (1) | | 209.5 |
| (1) |
| 1900 K Street, NW | | Office | | 335.4 |
| (1) | | 342.1 |
| (1) |
| Mass Court | | Apartments | | 169.0 |
| | | 166.1 |
| (1) |
| The Ashton | | Apartments | | 30.6 |
| | | 30.5 |
| |
| The Louis at 14th | | Apartments | | 164.2 |
| | | 162.0 |
| |
| The Woodley | | Apartments | | 180.3 |
| | | 196.0 |
| |
| Various: | | | | | | | | |
| Colony Industrial Portfolio | | Industrial | | 135.9 |
| (3)(10) | | — |
| |
| TOTAL REAL ESTATE PROPERTIES | | | | | | | | |
| (Cost $13,048.5 and $12,687.8) | | | | $ | 15,835.0 |
| | | $ | 15,531.1 |
| |
REAL ESTATE JOINT VENTURES AND REAL ESTATE FUNDS—25.1% and 22.9%
REAL ESTATE JOINT VENTURES—24.1% and 22.3%
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2019 | | 2018 |
| California: | | | | | | |
CA—Colorado Center LP Colorado Center (50% Account Interest) | | Office | | $ | 384.5 |
| (2) | | $ | 376.2 |
| (2) |
PC Borrower, LLC Pacific City (70% Account Interest) | | Retail | | 62.2 |
| (2) | | 59.5 |
| (2) |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
102
MARKETABLE SECURITIES—18.9% and 19.3%
REAL ESTATE-RELATED MARKETABLE SECURITIES—4.6% and 4.1%
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 | |
| 90,769 |
| | 84,437 |
| | Acadia Realty Trust | | $ | 2.5 |
| | $ | 2.8 |
| |
| 31,513 |
| | 26,717 |
| | Agree Realty Corporation | | 1.6 |
| | 1.2 |
| |
| 2,309 |
| | 2,132 |
| | Alexander's, Inc. | | 0.9 |
| | 0.9 |
| |
| 103,464 |
| | 83,175 |
| | Alexandria Real Estate Equities, Inc. | | 13.5 |
| | 9.2 |
| |
| 53,951 |
| | — |
| | Altisource Residential Corporation | | 0.6 |
| | — |
| |
| 43,804 |
| | 41,010 |
| | American Assets Trust, Inc. | | 1.7 |
| | 1.8 |
| |
| 148,817 |
| | 138,467 |
| | American Campus Communities, Inc. | | 6.1 |
| | 6.9 |
| |
| — |
| | 6,347 |
| | American Farmland Company | | — |
| | 0.1 |
| |
| 263,720 |
| | 233,916 |
| | American Homes 4 Rent | | 5.8 |
| | 4.9 |
| |
| 462,615 |
| | 443,315 |
| | American Tower Corp. | | 66.0 |
| | 46.8 |
| |
| 171,065 |
| | 163,592 |
| | Apartment Investment and Management Company | | 7.5 |
| | 7.4 |
| |
| 231,041 |
| | 223,733 |
| | Apple Hospitality Inc. | | 4.5 |
| | 4.5 |
| |
| 47,395 |
| | 38,282 |
| | Armada Hoffler Properties Inc. | | 0.7 |
| | 0.6 |
| |
| 27,462 |
| | 27,631 |
| | Ashford Hospitality Prime Inc. | | 0.3 |
| | 0.4 |
| |
| 88,009 |
| | 96,553 |
| | Ashford Hospitality Trust, Inc. | | 0.6 |
| | 0.7 |
| |
| 150,694 |
| | 143,728 |
| | Avalonbay Communities, Inc. | | 26.9 |
| | 25.5 |
| |
| 24,509 |
| | 21,354 |
| | Bluerock Residential Growth, Inc. | | 0.2 |
| | 0.3 |
| |
| 168,560 |
| | 160,997 |
| | Boston Properties, Inc. | | 21.9 |
| | 20.3 |
| |
| 189,208 |
| | 183,336 |
| | Brandywine Realty Trust | | 3.4 |
| | 3.0 |
| |
| 336,302 |
| | 319,555 |
| | Brixmore Porperty Group Inc | | 6.3 |
| | 7.8 |
| |
| 99,633 |
| | 91,727 |
| | Camden Property Trust | | 9.2 |
| | 7.7 |
| |
| — |
| | 89,419 |
| | Care Capital Properties, Inc. | | — |
| | 2.2 |
| |
| 85,789 |
| | 64,966 |
| | CareTrust REIT Inc. | | 1.4 |
| | 1.0 |
| |
| 48,438 |
| | 43,788 |
| | Catchmark Timber Trust, Inc. | | 0.6 |
| | 0.5 |
| |
| 185,540 |
| | 178,895 |
| | CBL & Associates Properties, Inc. | | 1.1 |
| (9) | 2.1 |
| |
| 92,124 |
| | 92,124 |
| | Cedar Shopping Centers, Inc. | | 0.6 |
| | 0.6 |
| |
| 49,866 |
| | 39,759 |
| | Chatham Lodging Trust | | 1.1 |
| | 0.8 |
| |
| 64,702 |
| | 63,363 |
| | Chesapeake Lodging Trust | | 1.8 |
| | 1.6 |
| |
| 32,933 |
| | — |
| | City Office REIT, Inc. | | 0.4 |
| | — |
| |
| 15,330 |
| | — |
| | Clipper Realty, Inc. | | 0.2 |
| | — |
| |
| 583,920 |
| | — |
| | Colony Northstar, Inc. | | 6.7 |
| | — |
| |
| — |
| | 50,961 |
| | Colony Starwood Homes | | — |
| | 1.5 |
| |
| 131,158 |
| | 130,704 |
| | Columbia Property Trust Inc. | | 3.0 |
| | 2.8 |
| |
| — |
| | 161,499 |
| | Communication Sales & Leasing, Inc. | | — |
| | 4.1 |
| |
| 17,855 |
| | 13,231 |
| | Community Healthcare Trust, Inc. | | 0.5 |
| | 0.3 |
| |
| 130,237 |
| | 117,878 |
| | CoreCivic, Inc. | | 2.9 |
| | 2.9 |
| |
| 12,695 |
| | 12,695 |
| | Corenergy Infrastructure Trust, Inc. | | 0.5 |
| | 0.4 |
| |
| 37,213 |
| | 35,452 |
| | CoreSite Realty Corporation | | 4.2 |
| | 2.8 |
| |
| 109,361 |
| | 98,668 |
| | Corporate Office Properties Trust | | 3.2 |
| | 3.1 |
| |
| 458,712 |
| | 358,876 |
| | Cousins Properties Incorporated | | 4.2 |
| | 3.1 |
| |
| 440,146 |
| | 378,286 |
| | Crown Castle International Corporation | | 48.9 |
| | 32.8 |
| |
| 197,633 |
| | 189,128 |
| | Cubesmart | | 5.7 |
| | 5.1 |
| |
| 98,521 |
| | 80,245 |
| | CyrusOne Inc. | | 5.9 |
| | 3.6 |
| |
| 101,202 |
| | 95,203 |
| | DCT Industrial Trust, Inc. | | 5.9 |
| | 4.6 |
| |
| 340,952 |
| | 326,844 |
| | DDR Corp | | 3.1 |
| | 5.0 |
| |
| 219,132 |
| | 211,566 |
| | DiamondRock Hospitality Company | | 2.5 |
| | 2.4 |
| |
| 223,448 |
| | 166,911 |
| | Digital Realty Trust, Inc. | | 25.5 |
| | 16.4 |
| |
| 174,051 |
| | 146,715 |
| | Douglas Emmett, Inc. | | 7.1 |
| | 5.4 |
| |
| 388,940 |
| | 371,513 |
| | Duke Realty Corporation | | 10.6 |
| | 9.9 |
| |
| — |
| | 79,039 |
| | DuPont Fabros Technology, Inc. | | — |
| | 3.5 |
| |
| 46,776 |
| | 38,107 |
| | Easterly Government Properties, Inc. | | 1.0 |
| | 0.8 |
| |
| 36,626 |
| | 34,448 |
| | EastGroup Properties, Inc. | | 3.2 |
| | 2.5 |
| |
| 82,652 |
| | 76,609 |
| | Education Realty Trust, Inc. | | 2.9 |
| | 3.2 |
| |
| 139,642 |
| | 128,313 |
| | Empire State Realty Trust | | 2.9 |
| | 2.6 |
| |
| 68,867 |
| | 66,086 |
| | EPR Properties | | 4.5 |
| | 4.7 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 | |
| 85,048 |
| | 74,499 |
| | Equinix Inc. | | $ | 38.5 |
| | $ | 26.6 |
| |
| 132,344 |
| | 132,412 |
| | Equity Commonwealth | | 4.0 |
| | 4.0 |
| |
| 89,456 |
| | 81,207 |
| | Equity Lifestyle Properties, Inc. | | 8.0 |
| | 5.9 |
| |
| — |
| | 97,735 |
| | Equity One, Inc. | | — |
| | 3.0 |
| |
| 390,235 |
| | 378,516 |
| | Equity Residential | | 24.9 |
| | 24.4 |
| |
| 39,142 |
| | 39,142 |
| | Escrow Winthrop Realty Trust | | 0.3 |
| | 0.3 |
| |
| 71,499 |
| | 68,928 |
| | Essex Property Trust, Inc. | | 17.3 |
| | 16.0 |
| |
| 133,620 |
| | 123,598 |
| | Extra Space Storage, Inc. | | 11.7 |
| | 9.5 |
| |
| 33,146 |
| | 20,247 |
| | Farmland Partners, Inc. | | 0.3 |
| (9) | 0.2 |
| (9) |
| 78,850 |
| | 75,390 |
| | Federal Realty Investment Trust | | 10.5 |
| | 10.7 |
| |
| — |
| | 146,636 |
| | FelCor Lodging Trust Incorporated | | — |
| | 1.2 |
| |
| 130,114 |
| | 122,078 |
| | First Industrial Realty Trust, Inc. | | 4.1 |
| | 3.4 |
| |
| — |
| | 62,454 |
| | First Potomac Realty Trust | | — |
| | 0.7 |
| |
| 266,222 |
| | 247,510 |
| | Forest City Realty Trust A | | 6.4 |
| | 5.2 |
| |
| 68,809 |
| | 62,347 |
| | Four Corners Property Trust | | 1.8 |
| | 1.3 |
| |
| 119,538 |
| | 105,457 |
| | Franklin Street Properties Corp. | | 1.3 |
| | 1.4 |
| |
| 221,037 |
| | 215,403 |
| | Gaming and Leisure Properties, Inc. | | 8.2 |
| | 6.6 |
| |
| 674,285 |
| | 528,439 |
| | General Growth Properties, Inc. | | 15.8 |
| | 13.2 |
| |
| 134,715 |
| | 75,332 |
| | GEO Group Inc./The | | 3.2 |
| | 2.7 |
| |
| 36,337 |
| | 27,304 |
| | Getty Realty Corp. | | 1.0 |
| | 0.7 |
| |
| 30,560 |
| | 24,752 |
| | Gladstone Commercial Corporation | | 0.6 |
| | 0.5 |
| |
| 11,775 |
| | — |
| | Gladstone Land Corporation | | 0.2 |
| | — |
| |
| 14,323 |
| | 14,323 |
| | Global Medical REIT, Inc. | | 0.1 |
| (9) | 0.1 |
| (9) |
| 73,715 |
| | 169,785 |
| | Global Net Lease, Inc. | | 1.5 |
| | 1.3 |
| |
| 102,459 |
| | 74,542 |
| | Government Properties Income Trust | | 1.9 |
| | 1.4 |
| |
| 173,959 |
| | 439,336 |
| | Gramercy Property Trust Inc. | | 4.6 |
| | 4.0 |
| |
| 513,801 |
| | 488,199 |
| | HCP, Inc. | | 13.4 |
| | 14.5 |
| |
| 133,528 |
| | 121,172 |
| | Healthcare Realty Trust Inc. | | 4.3 |
| | 3.7 |
| |
| 221,345 |
| | 148,194 |
| | Healthcare Trust of America | | 6.6 |
| | 4.3 |
| |
| 45,394 |
| | 38,921 |
| | Hersha Hospitality Trust | | 0.8 |
| | 0.8 |
| |
| 111,471 |
| | 105,127 |
| | Highwoods Properties, Inc. | | 5.7 |
| | 5.4 |
| |
| 179,103 |
| | 172,557 |
| | Hospitality Properties Trust | | 5.3 |
| | 5.5 |
| |
| 799,202 |
| | 784,264 |
| | Host Hotels & Resorts, Inc. | | 15.9 |
| | 14.8 |
| |
| 171,423 |
| | 130,545 |
| | Hudson Pacific Properties, Inc. | | 5.9 |
| | 4.5 |
| |
| 93,383 |
| | 64,154 |
| | Independence Realty Trust, Inc. | | 0.9 |
| | 0.6 |
| |
| 130,841 |
| | 130,841 |
| | Investors Real Estate Trust | | 0.7 |
| | 0.9 |
| |
| 320,427 |
| | — |
| | Invitation Homes, Inc. | | 7.6 |
| | — |
| |
| 302,923 |
| | 251,283 |
| | Iron Mountain Inc. | | 11.4 |
| | 8.2 |
| |
| 1,500,000 |
| | 1,500,000 |
| | iShares Dow Jones US Real Estate Index Fund | | 121.5 |
| (9) | 115.4 |
| (9) |
| 94,915 |
| | — |
| | JBG Smith Properties | | 3.3 |
| | — |
| |
| 106,012 |
| | 96,739 |
| | Kilroy Realty Corporation | | 7.9 |
| | 7.1 |
| |
| 451,921 |
| | 446,152 |
| | Kimco Realty Corporation | | 8.2 |
| | 11.2 |
| |
| 90,119 |
| | 86,474 |
| | Kite Realty Group Trust | | 1.8 |
| | 2.0 |
| |
| 91,259 |
| | 86,839 |
| | Lamar Advertising Corporation | | 6.8 |
| | 5.8 |
| |
| 124,427 |
| | 118,625 |
| | LaSalle Hotel Properties | | 3.5 |
| | 3.6 |
| |
| 257,171 |
| | 246,697 |
| | Lexington Realty Trust | | 2.5 |
| | 2.7 |
| |
| 161,972 |
| | 154,875 |
| | Liberty Property Trust | | 7.0 |
| | 6.1 |
| |
| 50,130 |
| | 48,870 |
| | Life Storage, Inc. | | 4.5 |
| | 4.2 |
| |
| 42,489 |
| | 41,261 |
| | LTC Properties, Inc. | | 1.9 |
| | 1.9 |
| |
| 99,130 |
| | 93,046 |
| | Mack-Cali Realty Corporation | | 2.1 |
| | 2.7 |
| |
| 29,800 |
| | 23,475 |
| | Medequities Realty Trust, Inc. | | 0.3 |
| | 0.3 |
| |
| 399,374 |
| | 337,220 |
| | Medical Properties Trust, Inc. | | 5.5 |
| | 4.1 |
| |
| 123,965 |
| | 118,873 |
| | Mid-America Apartment Communities, Inc. | | 12.5 |
| | 11.6 |
| |
| 80,492 |
| | 69,038 |
| | Monmouth Real Estate Investment Corporation | | 1.4 |
| | 1.1 |
| |
| — |
| | 175,519 |
| | Monogram Residential Trust Inc. | | — |
| | 1.9 |
| |
| 43,294 |
| | 38,542 |
| | National Health Investors, Inc. | | 3.3 |
| | 2.9 |
| |
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2019 | | 2018 |
TREA GM Industrial Road Investor Member, LLC
150 Industrial Road (98% Account Interest) | | Office | | $ | 98.0 |
| | | $ | — |
| |
TREA 9625 Towne Center, LLC 9625 Towne Centre Drive (49.9% Account Interest) | | Office | | 53.1 |
| | | 45.5 |
| |
TREA Campus Pointe 1, LLC
Campus Pointe 1 (45% Account Interest) | | Office | | 163.5 |
| | | 153.7 |
| |
TREA Campus Pointe 2 & 3, LLC
Campus Pointe 2 & 3 (45% Account Interest) | | Office (5) | | 143.6 |
| | | 132.8 |
| |
TREA Campus Pointe 4, LLC
Campus Pointe 4 (45% Account Interest) | | Office | | 9.6 |
| | | 9.2 |
| |
TREA Campus Pointe 5, LLC
Campus Pointe 5 (45% Account Interest) | | Office | | 37.4 |
| | | — |
| |
ARE-SD Regions NO. 58, LLC
Campus Pointe 6 (45% Account Interest) | | Office | | 116.6 |
| | | — |
| |
T-C 1500 Owens, LLC 1500 Owens Street (49.9% Account Interest) | | Office | | 81.5 |
| | | 78.8 |
| |
T-C Foundry Square II Venture LLC Foundry Square II (50.1% Account Interest) | | Office | | 318.4 |
| | | 290.1 |
| |
T-C Illinois Street, LLC 409-499 Illinois Street (40% Account Interest) | | Office | | 237.5 |
| | | 223.9 |
| |
Valencia Town Center Associates LP Valencia Town Center (50% Account Interest) | | Retail | | 136.4 |
| (2) | | 140.5 |
| (2) |
| Florida: | | | | | | |
Florida Mall Associates, Ltd The Florida Mall (50% Account Interest) | | Retail | | 748.3 |
| (2) | | 769.7 |
| (2) |
TREA Florida Retail, LLC Florida Retail Portfolio (80% Account Interest) | | Retail | | 158.4 |
| | | 156.0 |
| |
West Dade County Associates Miami International Mall (50% Account Interest) | | Retail | | 157.5 |
| (2) | | 170.3 |
| (2) |
| Maryland: | | | | | | |
WP Project Developer The Shops at Wisconsin Place (33.33% Account Interest) | | Retail | | 29.9 |
| | | 20.4 |
| |
| Massachusetts: | | | | | | |
One Boston Place REIT One Boston Place (50.25% Account Interest) | | Office | | 246.8 |
| | | 239.1 |
| |
T-C 225 Binney, LLC 225 Binney Street (70% Account Interest) | | Office | | 231.5 |
| | | 220.2 |
| |
T-C 501 Boylston Street Member, LLC 501 Boylston (50.1% Account Interest) | | Office | | 206.9 |
| (2) | | 195.6 |
| (2) |
| Nevada | | | | | | | | |
Fashion Show Holding I, LLC Fashion Show (50% Account Interest) | | Retail | | 706.9 |
| (2) | | 819.1 |
| (2) |
| New York: | | | | | | |
401 West 14th Street, LLC 401 West 14th Street (42.19% Account Interest) | | Retail | | 44.8 |
| (2) | | 48.4 |
| (2) |
440 Ninth Avenue Owner, LLC 440 Ninth Avenue (88.52% Account Interest) | | Office | | 133.1 |
| (2) | | 121.4 |
| (2) |
817 Broadway Owner, LLC 817 Broadway (61.46% Account Interest) | | Office | | 33.7 |
| (2) | | 28.0 |
| (2) |
MRA Hub 34 Holding, LLC The Hub (95% Account Interest) | | Office | | 74.8 |
| (2) | | 59.2 |
| (2) |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 | |
| 165,743 |
| | 154,142 |
| | National Retail Properties, Inc. | | $ | 7.1 |
| | $ | 6.8 |
| |
| 49,957 |
| | 44,249 |
| | National Storage Affiliates Trust | | 1.4 |
| | 1.0 |
| |
| 90,062 |
| | 83,324 |
| | New Senior Investment Group | | 0.7 |
| | 0.8 |
| |
| — |
| | 175,401 |
| | New York REIT | | — |
| | 1.8 |
| |
| 19,294 |
| | 17,140 |
| | Nexpoint Residential Trust, Inc. | | 0.5 |
| | 0.4 |
| |
| 61,800 |
| | 59,329 |
| | NorthStar Realty Europe Corp. | | 0.8 |
| | 0.7 |
| |
| — |
| | 189,799 |
| | NorthStar Realty Finance Corp. | | — |
| | 2.9 |
| |
| 214,048 |
| | 181,435 |
| | Omega Healthcare Investors, Inc. | | 5.9 |
| (9) | 5.7 |
| |
| 16,324 |
| | 16,324 |
| | One Liberty Properties, Inc. | | 0.4 |
| | 0.4 |
| |
| 152,483 |
| | 144,614 |
| | Outfront Media Inc. | | 3.5 |
| | 3.6 |
| |
| 225,256 |
| | 157,741 |
| | Paramount Group Inc. | | 3.6 |
| | 2.5 |
| |
| 159,738 |
| | — |
| | Park Hotels & Resorts, Inc. | | 4.6 |
| | — |
| |
| — |
| | 45,533 |
| | Parkway Properties, Inc. | | — |
| | 1.0 |
| |
| 75,337 |
| | 75,815 |
| | Pebblebrook Hotel Trust | | 2.8 |
| | 2.3 |
| |
| 69,866 |
| | 69,866 |
| | Pennsylvania Real Estate Investment Trust | | 0.8 |
| | 1.3 |
| |
| 195,747 |
| | 141,267 |
| | Physicians Realty Trust | | 3.5 |
| | 2.7 |
| |
| 159,189 |
| | 153,053 |
| | Piedmont Office Realty Trust, Inc. | | 3.1 |
| | 3.2 |
| |
| 44,326 |
| | 39,487 |
| | Potlatch Corporation | | 2.2 |
| | 1.6 |
| |
| 39,774 |
| | 25,352 |
| | Preferred Apartment Communities, Inc. | | 0.8 |
| | 0.4 |
| |
| 577,161 |
| | 549,455 |
| | ProLogis | | 37.2 |
| | 29.0 |
| |
| 21,348 |
| | 20,916 |
| | PS Business Parks, Inc. | | 2.7 |
| | 2.4 |
| |
| 161,952 |
| | 152,197 |
| | Public Storage, Inc. | | 33.8 |
| | 34.0 |
| |
| 53,551 |
| | 47,125 |
| | QTS Realty Trust, Inc. | | 2.9 |
| | 2.3 |
| |
| 104,106 |
| | 98,883 |
| | Quality Care Properties | | 1.4 |
| | 1.5 |
| |
| 84,467 |
| | 82,342 |
| | Ramco-Gershenson Properties Trust | | 1.2 |
| | 1.4 |
| |
| 140,926 |
| | 129,796 |
| | Rayonier, Inc. | | 4.5 |
| | 3.4 |
| |
| 308,355 |
| | 270,184 |
| | Realty Income Corporation | | 17.6 |
| | 15.5 |
| |
| 163,631 |
| | 109,616 |
| | Regency Centers Corporation | | 11.3 |
| | 7.6 |
| |
| 118,002 |
| | 113,887 |
| | Retail Opportunity Investment | | 2.4 |
| | 2.4 |
| |
| 248,555 |
| | 247,302 |
| | Retail Properties of America | | 3.3 |
| | 3.8 |
| |
| 83,912 |
| | 67,197 |
| | Rexford Industrial Realty Inc. | | 2.4 |
| | 1.6 |
| |
| 185,465 |
| | 131,026 |
| | RLJ Lodging Trust | | 4.1 |
| | 3.2 |
| |
| 48,519 |
| | 50,994 |
| | Ryman Hospitality Properties | | 3.3 |
| | 3.2 |
| |
| 191,602 |
| | 68,440 |
| | Sabra Health Care REIT Inc. | | 3.6 |
| | 1.7 |
| |
| 11,006 |
| | — |
| | Safety Income and Growth, Inc. | | 0.2 |
| | — |
| |
| 12,343 |
| | 14,267 |
| | Saul Centers, Inc. | | 0.8 |
| | 0.9 |
| |
| 131,401 |
| | — |
| | SBA Communications Corporation | | 21.5 |
| | — |
| |
| 69,474 |
| | 71,466 |
| | Select Income Real Estate Investment Trust | | 1.7 |
| | 1.8 |
| |
| 259,176 |
| | 248,749 |
| | Senior Housing Properties Trust | | 5.0 |
| | 4.7 |
| |
| — |
| | 36,820 |
| | Silver Bay Realty Trust Corp. | | — |
| | 0.6 |
| |
| 340,430 |
| | 329,687 |
| | Simon Property Group, Inc. | | 58.5 |
| | 58.6 |
| |
| 105,521 |
| | 106,453 |
| | SL Green Realty Corp. | | 10.7 |
| | 11.4 |
| |
| 498,344 |
| | 483,032 |
| | Spirit Realty Capital Inc. | | 4.3 |
| | 5.2 |
| |
| 102,712 |
| | 78,649 |
| | Stag Industrial, Inc. | | 2.8 |
| | 1.9 |
| |
| 187,343 |
| | 162,012 |
| | STORE Capital Corporation | | 4.9 |
| | 4.0 |
| |
| 113,544 |
| | 88,627 |
| | Summit Hotel Properties, Inc. | | 1.7 |
| | 1.4 |
| |
| 83,430 |
| | 68,173 |
| | Sun Communities, Inc. | | 7.7 |
| | 5.2 |
| |
| 247,441 |
| | 227,526 |
| | Sunstone Hotel Investors, L.L.C. | | 4.1 |
| | 3.5 |
| |
| 101,087 |
| | 100,862 |
| | Tanger Factory Outlet Centers, Inc. | | 2.7 |
| (9) | 3.6 |
| |
| 64,816 |
| | 63,335 |
| | Taubman Centers, Inc. | | 4.2 |
| | 4.7 |
| |
| 58,066 |
| | 48,484 |
| | Terreno Realty Corporation | | 2.0 |
| | 1.4 |
| |
| 149,606 |
| | 150,999 |
| | The Macerich Company | | 9.8 |
| | 10.7 |
| |
| 54,543 |
| | 50,411 |
| | Tier Inc. | | 1.1 |
| | 0.9 |
| |
| 289,926 |
| | 280,233 |
| | UDR, Inc. | | 11.2 |
| | 10.2 |
| |
| 34,876 |
| | 27,329 |
| | UMH Properties, Inc. | | 0.5 |
| | 0.4 |
| |
| 182,231 |
| | — |
| | UNITI Group, Inc. | | 3.2 |
| (9) | — |
| |
| 14,449 |
| | 14,676 |
| | Universal Health Realty Income Trust | | 1.1 |
| | 1.0 |
| |
| 112,531 |
| | 93,500 |
| | Urban Edge Properties | | 2.9 |
| | 2.6 |
| |
|
| | | | | | | | | | | | |
| Location/Description | | Type | | Fair Value at December 31, |
| 2019 | | 2018 |
RGM 42, LLC MiMA (70% Account Interest) | | Apartments | | $ | 113.0 |
| (2) | | $ | 118.4 |
| (2) |
TREA 35th Street LIC Investor Member, LLC Commerce LIC (97.5% Account Interest) | | Industrial | | — |
| | | 0.6 |
| |
| North Carolina: | | | | | | | | |
CC 101 North Tryon, LLC
101 North Tryon Street (85% Account Interest) | | Office | | 47.9 |
| (2) | | — |
| |
| Tennessee: | | | | | | |
West Town Mall, LLC West Town Mall (50% Account Interest) | | Retail | | 144.0 |
| (2) | | 154.3 |
| (2) |
| Texas: | | | | | | |
Four Oaks Venture LP Four Oaks Place LP (51% Account Interest) | | Office | | 352.8 |
| (2) | | 344.6 |
| (2) |
TREA I-35 Logistics Investor Member, LLC
I-35 Logistics Center (95% Account Interest) | | Land | | 6.9 |
| | | — |
| |
| Washington: | | | | | | |
TREA 4th and Madison Investor Member, LLC Fourth and Madison (51% Account Interest) | | Office | | 167.3 |
| (2) | | — |
| |
| Various: | | | | | | |
DDRTC Core Retail Fund, LLC DDR Joint Venture (85% Account Interest) | | Retail | | 878.0 |
| (2,3,10) | | 655.8 |
| (2,3) |
Simpson Housing LLP Simpson Housing Portfolio (80% Account Interest) | | Apartments | | 431.2 |
| (2,3) | | 400.1 |
| (2,3) |
THP Student Housing, LLC
THP Student Housing Portfolio (97% Account Interest) | | Apartments | | 186.8 |
| (2,3) | | 112.4 |
| (2,3) |
Storage Portfolio I, LLC Storage Portfolio (66.02% Account Interest) | | Storage | | 93.6 |
| (2,3) | | 92.4 |
| (2,3) |
Storage Portfolio II, LLC Storage Portfolio II (90% Account Interest) | | Storage | | 130.5 |
| (2,3) | | 120.4 |
| (2,3) |
Storage Portfolio III, LLC
Storage Portfolio III (90% Account Interest) | | Storage | | 37.3 |
| (3) | | — |
| |
TOTAL REAL ESTATE JOINT VENTURES (Cost $5,971.1 and $5,030.9) | | | | $ | 7,204.2 |
| | | $ | 6,356.6 |
| |
| | | | | | | | | |
| REAL ESTATE FUNDS—1.0% and 0.6% | | | | |
| Clarion Gables Multi-Family Trust LP (0.0% Account Interest) | | $ | — |
| | | $ | 30.1 |
| |
| LCS SHIP Venture I LLC (90.0% Account Interest) | | 216.1 |
| | | 129.7 |
| |
| SP V - II, LLC (75.0% Account Interest) | | 23.3 |
| | | — |
| |
| Taconic New York City GP Fund, LP (60.0% Account Interest) | | 29.8 |
| | | 15.7 |
| |
| Transwestern Mezz Realty Partners III, LLC (11.7% Account Interest) | | — |
| | | 0.4 |
| |
| Veritas Trophy VI, LLC (90.0% Account Interest) | | 4.2 |
| | | — |
| |
| IDR - Core Property Index Fund, LLC (2.0% Account Interest) | | 25.0 |
| | | — |
| |
| Grubb Southeast Real Estate Fund VI, LLC (67.0% Account Interest) | | 13.4 |
| | | — |
| |
TOTAL REAL ESTATE FUNDS (Cost $273.3 and $176.9) | | | | $ | 311.8 |
| | | $ | 175.9 |
| |
TOTAL REAL ESTATE JOINT VENTURES AND FUNDS (Cost $6,244.4 and $5,207.8) | | $ | 7,516.0 |
| | | $ | 6,532.5 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
MARKETABLE SECURITIES—16.7% and 19.4%
REAL ESTATE-RELATED MARKETABLE SECURITIES—2.8% and 5.0% |
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 | |
| 25,333 |
| | 110,762 |
| | Acadia Realty Trust | | $ | 0.7 |
| | $ | 2.6 |
| |
| 77,213 |
| | 46,535 |
| | Agree Realty Corporation | | 5.4 |
| | 2.8 |
| |
| 20,424 |
| | 94,479 |
| | Alexander & Baldwin, Inc. | | 0.4 |
| | 1.7 |
| |
| 635 |
| | 2,986 |
| | Alexander's, Inc. | | 0.2 |
| | 0.9 |
| |
| 114,902 |
| | 146,953 |
| | Alexandria Real Estate Equities, Inc. | | 18.6 |
| | 16.9 |
| |
| 14,387 |
| | 52,670 |
| | American Assets Trust, Inc. | | 0.7 |
| | 2.1 |
| |
| 40,898 |
| | 188,889 |
| | American Campus Communities, Inc. | | 1.9 |
| | 7.8 |
| |
| 31,822 |
| | 75,276 |
| | American Financial Trust, Inc. | | 0.4 |
| (7) | 1.0 |
| (7) |
| 241,918 |
| | 357,614 |
| | American Homes 4 Rent | | 6.3 |
| | 7.1 |
| |
| 298,037 |
| | 606,653 |
| | American Tower Corp. | | 68.5 |
| | 96.0 |
| |
| 247,312 |
| | 118,616 |
| | Americold Realty Trust | | 8.7 |
| | 3.0 |
| |
| 44,204 |
| | 213,704 |
| | Apartment Investment and Management Company | | 2.3 |
| | 9.4 |
| |
| 62,827 |
| | 301,399 |
| | Apple Hospitality Inc. | | 1.0 |
| | 4.3 |
| |
| 15,666 |
| | 69,576 |
| | Armada Hoffler Properties Inc. | | 0.3 |
| | 1.0 |
| |
| 26,793 |
| | 108,956 |
| | Ashford Hospitality Trust, Inc. | | 0.1 |
| | 0.4 |
| |
| 106,486 |
| | 190,742 |
| | Avalonbay Communities, Inc. | | 22.3 |
| | 33.2 |
| |
| 7,650 |
| | 30,596 |
| | Bluerock Residential Growth, Inc. | | 0.1 |
| | 0.3 |
| |
| 106,065 |
| | 213,492 |
| | Boston Properties, Inc. | | 14.6 |
| | 24.0 |
| |
| 8,938 |
| | 39,766 |
| | Braemar Hotels & Resorts, Inc. | | 0.1 |
| | 0.4 |
| |
| 52,132 |
| | 243,776 |
| | Brandywine Realty Trust | | 0.8 |
| | 3.1 |
| |
| 88,801 |
| | 418,058 |
| | Brixmore Property Group Inc | | 1.9 |
| | 6.1 |
| |
| 19,539 |
| | 173,572 |
| | Brookfield Property REIT | | 0.4 |
| | 2.8 |
| |
| 2,900 |
| | 12,485 |
| | BRT Apartments Corporation | | — |
| | 0.1 |
| |
| 27,796 |
| | 123,044 |
| | Camden Property Trust | | 2.9 |
| | 10.8 |
| |
| 28,420 |
| | 115,194 |
| | CareTrust REIT Inc. | | 0.6 |
| | 2.1 |
| |
| 14,592 |
| | 64,018 |
| | Catchmark Timber Trust, Inc. | | 0.2 |
| | 0.5 |
| |
| 50,454 |
| | 239,329 |
| | CBL & Associates Properties, Inc. | | 0.1 |
| (7) | 0.5 |
| |
| 25,522 |
| | 112,105 |
| | Cedar Shopping Centers, Inc. | | 0.1 |
| | 0.4 |
| |
| 13,659 |
| | 65,187 |
| | Chatham Lodging Trust | | 0.3 |
| | 1.2 |
| |
| — |
| | 80,952 |
| | Chesapeake Lodging Trust | | — |
| | 2.0 |
| |
| 15,789 |
| | 47,817 |
| | City Office REIT Inc. | | 0.2 |
| | 0.5 |
| |
| 5,192 |
| | 21,288 |
| | Clipper Realty, Inc. | | 0.1 |
| | 0.3 |
| |
| 492,974 |
| | 661,676 |
| | Colony Capital, Inc. | | 2.3 |
| | 3.1 |
| |
| 34,825 |
| | 163,866 |
| | Columbia Property Trust Inc. | | 0.7 |
| | 3.2 |
| |
| 5,492 |
| | 23,436 |
| | Community Healthcare Trust, Inc. | | 0.2 |
| | 0.7 |
| |
| 35,462 |
| | 162,853 |
| | CoreCivic, Inc. | | 0.6 |
| | 2.9 |
| |
| 3,830 |
| | 16,269 |
| | Corenergy Infrastructure Trust, Inc. | | 0.2 |
| | 0.5 |
| |
| 11,903 |
| | 57,463 |
| | Corepoint Lodging, Inc. | | 0.1 |
| | 0.7 |
| |
| 11,149 |
| | 50,118 |
| | CoreSite Realty Corporation | | 1.3 |
| | 4.4 |
| |
| 33,505 |
| | 142,696 |
| | Corporate Office Properties Trust | | 1.0 |
| | 3.0 |
| |
| 43,565 |
| | 580,413 |
| | Cousins Properties, Inc. | | 1.8 |
| | 4.6 |
| |
| 248,664 |
| | 572,594 |
| | Crown Castle International Corporation | | 35.3 |
| | 62.2 |
| |
| 57,474 |
| | 255,847 |
| | Cubesmart | | 1.8 |
| | 7.3 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 | |
| 31,959 |
| | 31,959 |
| | Urstadt Biddle Properties, Inc. | | $ | 0.7 |
| | $ | 0.8 |
| |
| 388,195 |
| | 371,296 |
| | Ventas, Inc. | | 23.3 |
| | 23.2 |
| |
| 1,065,264 |
| | 1,012,629 |
| | VEREIT, Inc. | | 8.3 |
| | 8.6 |
| |
| 188,214 |
| | 177,780 |
| | Vornado Realty Trust | | 14.7 |
| | 18.6 |
| |
| 203,651 |
| | 193,859 |
| | Washington Prime Group, Inc. | | 1.4 |
| | 2.0 |
| |
| 85,659 |
| | 78,200 |
| | Washington Real Estate Investment Trust | | 2.7 |
| | 2.6 |
| |
| 132,066 |
| | 120,820 |
| | Weingarten Realty Investors | | 4.3 |
| | 4.3 |
| |
| 401,236 |
| | 380,425 |
| | Welltower Inc. | | 25.6 |
| | 25.5 |
| |
| 816,991 |
| | 783,938 |
| | Weyerhaeuser Company | | 28.8 |
| | 23.6 |
| |
| 38,883 |
| | 32,110 |
| | Whitestone Real Estate Investment Trust B | | 0.6 |
| | 0.5 |
| |
| 116,079 |
| | 95,234 |
| | WP Carey Inc. | | 8.0 |
| | 5.6 |
| |
| 118,158 |
| | 113,720 |
| | Xenia Hotels & Resorts Inc. | | 2.6 |
| | 2.2 |
| |
TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES
(Cost $991.0 and $883.9) | | $ | 1,238.0 |
| | $ | 1,081.5 |
| |
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 | |
| 60,485 |
| | 144,491 |
| | CyrusOne Inc. | | $ | 4.0 |
| | $ | 7.6 |
| |
| 59,944 |
| | 284,793 |
| | DiamondRock Hospitality Company | | 0.7 |
| | 2.6 |
| |
| 94,906 |
| | 284,543 |
| | Digital Realty Trust, Inc. | | 11.4 |
| | 30.3 |
| |
| 49,622 |
| | 222,742 |
| | Douglas Emmett, Inc. | | 2.2 |
| | 7.6 |
| |
| 244,465 |
| | 493,225 |
| | Duke Realty Corporation | | 8.5 |
| | 12.8 |
| |
| 22,034 |
| | 86,054 |
| | Easterly Government Properties, Inc. | | 0.5 |
| | 1.3 |
| |
| 41,238 |
| | 48,463 |
| | EastGroup Properties, Inc. | | 5.5 |
| | 4.4 |
| |
| 44,235 |
| | 196,612 |
| | Empire State Realty Trust | | 0.6 |
| | 2.8 |
| |
| 23,023 |
| | 102,222 |
| | EPR Properties | | 1.6 |
| | 6.5 |
| |
| 60,851 |
| | 110,827 |
| | Equinix Inc. | | 35.5 |
| | 39.1 |
| |
| 256,618 |
| | 118,255 |
| | Equity Lifestyle Properties, Inc. | | 18.1 |
| | 11.5 |
| |
| 283,999 |
| | 495,921 |
| | Equity Residential | | 23.0 |
| | 32.7 |
| |
| 188,894 |
| | 47,818 |
| | Essential Properties Realty | | 4.7 |
| | 0.7 |
| |
| 54,492 |
| | 90,861 |
| | Essex Property Trust, Inc. | | 16.4 |
| | 22.3 |
| |
| 107,410 |
| | 168,808 |
| | Extra Space Storage, Inc. | | 11.3 |
| | 15.3 |
| |
| 8,142 |
| | 39,335 |
| | Farmland Partners, Inc. | | 0.1 |
| | 0.2 |
| |
| 66,222 |
| | 100,845 |
| | Federal Realty Investment Trust | | 8.5 |
| | 11.9 |
| |
| 37,538 |
| | 171,124 |
| | First Industrial Realty Trust, Inc. | | 1.6 |
| | 4.9 |
| |
| 20,389 |
| | 95,288 |
| | Four Corners Property Trust | | 0.6 |
| | 2.5 |
| |
| 30,896 |
| | 148,193 |
| | Franklin Street Properties Corp. | | 0.3 |
| | 0.9 |
| |
| 14,739 |
| | 66,846 |
| | Front Yard Residential Corp. | | 0.2 |
| | 0.6 |
| |
| 180,230 |
| | 279,615 |
| | Gaming and Leisure Properties, Inc. | | 7.8 |
| | 9.0 |
| |
| 160,000 |
| | — |
| | GDS Holdings LTD ADR | | 4.0 |
| (7) | — |
| |
| 35,427 |
| | 164,774 |
| | GEO Group Inc./The | | 0.6 |
| | 3.2 |
| |
| 9,933 |
| | 45,390 |
| | Getty Realty Corp. | | 0.3 |
| | 1.3 |
| |
| 9,121 |
| | 40,600 |
| | Gladstone Commercial Corporation | | 0.2 |
| | 0.7 |
| |
| 6,226 |
| | 17,897 |
| | Gladstone Land Corporation | | 0.1 |
| | 0.2 |
| |
| 9,380 |
| | 27,913 |
| | Global Medical REIT, Inc. | | 0.1 |
| | 0.2 |
| |
| 26,663 |
| | 97,753 |
| | Global Net Lease, Inc. | | 0.5 |
| | 1.7 |
| |
| — |
| | 134,722 |
| | Government Properties Income Trust | | — |
| | 0.9 |
| |
| — |
| | 651,177 |
| | HCP, Inc. | | — |
| | 18.2 |
| |
| 39,221 |
| | 170,298 |
| | Healthcare Realty Trust Inc. | | 1.3 |
| | 4.8 |
| |
| 60,957 |
| | 285,255 |
| | Healthcare Trust of America | | 1.8 |
| | 7.2 |
| |
| 496,493 |
| | — |
| | Healthpeak Properties, Inc. | | 17.1 |
| | — |
| |
| 10,385 |
| | 50,946 |
| | Hersha Hospitality Trust | | 0.2 |
| | 0.9 |
| |
| 30,535 |
| | 140,879 |
| | Highwoods Properties, Inc. | | 1.5 |
| | 5.5 |
| |
| — |
| | 225,198 |
| | Hospitality Properties Trust | | — |
| | 5.4 |
| |
| 661,737 |
| | 1,014,135 |
| | Host Hotels & Resorts, Inc. | | 12.3 |
| | 16.9 |
| |
| 275,440 |
| | 213,134 |
| | Hudson Pacific Properties, Inc. | | 10.4 |
| | 6.2 |
| |
| 26,784 |
| | 123,683 |
| | Independence Realty Trust, Inc. | | 0.4 |
| | 1.1 |
| |
| 19,292 |
| | 88,878 |
| | Industrial Logics Properties | | 0.4 |
| | 1.7 |
| |
| 134,775 |
| | — |
| | Interxion Holding NV | | 7.0 |
| | — |
| |
| 3,467 |
| | 16,729 |
| | Investors Real Estate Trust | | 0.3 |
| | 0.8 |
| |
| 559,204 |
| | 414,132 |
| | Invitation Homes, Inc. | | 16.8 |
| | 8.3 |
| |
| 84,852 |
| | 393,221 |
| | Iron Mountain Inc. | | 2.7 |
| | 12.7 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
106
OTHER MARKETABLE SECURITIES—14.3% and 15.2%
GOVERNMENT AGENCY NOTES—10.6% and 8.7%
|
| | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
| $ | — |
| | $ | 22.0 |
| | Fannie Mae Discount Notes | | 0.416% | | 2/1/2017 | | $ | — |
| | $ | 22.0 |
|
| — |
| | 42.0 |
| | Fannie Mae Discount Notes | | 0.366% - 0.482% | | 3/1/2017 | | — |
| | 42.0 |
|
| — |
| | 10.0 |
| | Fannie Mae Discount Notes | | 0.427% | | 3/3/2017 | | — |
| | 10.0 |
|
| — |
| | 20.0 |
| | Fannie Mae Discount Notes | | 0.427% | | 3/6/2017 | | — |
| | 20.0 |
|
| — |
| | 20.0 |
| | Fannie Mae Discount Notes | | 0.406% | | 3/13/2017 | | — |
| | 20.0 |
|
| — |
| | 30.3 |
| | Fannie Mae Discount Notes | | 0.406% | | 3/27/2017 | | — |
| | 30.3 |
|
| — |
| | 25.0 |
| | Fannie Mae Discount Notes | | 0.406% | | 3/28/2017 | | — |
| | 25.0 |
|
| — |
| | 30.0 |
| | Fannie Mae Discount Notes | | 0.518% | | 4/18/2017 | | — |
| | 29.9 |
|
| — |
| | 24.0 |
| | Fannie Mae Discount Notes | | 0.483% - 0.579% | | 4/19/2017 | | — |
| | 24.0 |
|
| — |
| | 31.5 |
| | Fannie Mae Discount Notes | | 0.447% - 0.539% | | 5/1/2017 | | — |
| | 31.5 |
|
| — |
| | 49.9 |
| | Fannie Mae Discount Notes | | 0.518% | | 5/2/2017 | | — |
| | 49.9 |
|
| — |
| | 39.9 |
| | Fannie Mae Discount Notes | | 0.539% | | 5/5/2017 | | — |
| | 39.9 |
|
| 10.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.077% | | 1/9/2018 | | 10.0 |
| | — |
|
| 14.2 |
| | — |
| | Fannie Mae Discount Notes | | 1.093% | | 1/10/2018 | | 14.2 |
| | — |
|
| 40.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.115% | | 1/11/2018 | | 40.0 |
| | — |
|
| 19.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.118% | | 1/19/2018 | | 19.0 |
| | — |
|
| 30.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.038% | | 1/22/2018 | | 30.0 |
| | — |
|
| 46.2 |
| | — |
| | Fannie Mae Discount Notes | | 1.038% | | 1/23/2018 | | 46.1 |
| | — |
|
| 35.1 |
| | — |
| | Fannie Mae Discount Notes | | 1.038% | | 1/24/2018 | | 35.1 |
| | — |
|
| 14.6 |
| | — |
| | Fannie Mae Discount Notes | | 1.088% | | 1/29/2018 | | 14.5 |
| | — |
|
| 35.1 |
| | — |
| | Fannie Mae Discount Notes | | 1.079% | | 1/30/2018 | | 35.1 |
| | — |
|
| 26.2 |
| | — |
| | Fannie Mae Discount Notes | | 1.109% - 1.225% | | 2/7/2018 | | 26.2 |
| | — |
|
| 25.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.145% | | 2/16/2018 | | 25.0 |
| | — |
|
| 50.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.140% - 1.150% | | 2/20/2018 | | 49.9 |
| | — |
|
| 30.2 |
| | — |
| | Fannie Mae Discount Notes | | 1.140% | | 2/21/2018 | | 30.2 |
| | — |
|
| 40.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.221% | | 3/7/2018 | | 39.9 |
| | — |
|
| 40.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.221% | | 3/8/2018 | | 39.9 |
| | — |
|
| 34.1 |
| | — |
| | Fannie Mae Discount Notes | | 1.221% | | 3/9/2018 | | 34.0 |
| | — |
|
| 20.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.303% | | 3/13/2018 | | 19.9 |
| | — |
|
| 37.2 |
| | — |
| | Fannie Mae Discount Notes | | 1.313% | | 3/19/2018 | | 37.0 |
| | — |
|
| 15.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.303% | | 3/20/2018 | | 15.0 |
| | — |
|
| 10.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.308% | | 3/22/2018 | | 10.0 |
| | — |
|
| 39.3 |
| | — |
| | Fannie Mae Discount Notes | | 1.318% | | 3/29/2018 | | 39.1 |
| | — |
|
| 30.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.323% | | 4/2/2018 | | 29.9 |
| | — |
|
| 35.2 |
| | — |
| | Fannie Mae Discount Notes | | 1.313% - 1.323% | | 4/3/2018 | | 35.1 |
| | — |
|
| 40.0 |
| | — |
| | Fannie Mae Discount Notes | | 1.334% | | 4/9/2018 | | 39.9 |
| | — |
|
| — |
| | 19.9 |
| | Farmer Mac Discount Notes | | 0.682% | | 6/1/2017 | | — |
| | 19.9 |
|
| 14.0 |
| | — |
| | Farmer Mac Discount Notes | | 1.169% | | 2/1/2018 | | 14.0 |
| | — |
|
| — |
| | 15.5 |
| | Federal Farm Credit Bank Discount Notes | | 0.376% - 0.381% | | 2/22/2017 | | — |
| | 15.5 |
|
| — |
| | 34.7 |
| | Federal Home Loan Bank Discount Notes | | 0.304% - 0.355% | | 1/3/2017 | | — |
| | 34.7 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 0.345% | | 1/4/2017 | | — |
| | 40.0 |
|
| — |
| | 29.2 |
| | Federal Home Loan Bank Discount Notes | | 0.355% - 0.447% | | 1/6/2017 | | — |
| | 29.2 |
|
| — |
| | 7.1 |
| | Federal Home Loan Bank Discount Notes | | 0.299% - 0.345% | | 1/9/2017 | | — |
| | 7.1 |
|
| — |
| | 25.0 |
| | Federal Home Loan Bank Discount Notes | | 0.325% | | 1/10/2017 | | — |
| | 25.0 |
|
| — |
| | 50.0 |
| | Federal Home Loan Bank Discount Notes | | 0.304% - 0.396% | | 1/11/2017 | | — |
| | 50.0 |
|
| — |
| | 33.0 |
| | Federal Home Loan Bank Discount Notes | | 0.365% - 0.396% | | 1/12/2017 | | — |
| | 33.0 |
|
| — |
| | 50.0 |
| | Federal Home Loan Bank Discount Notes | | 0.386% | | 1/13/2017 | | — |
| | 50.0 |
|
| — |
| | 36.0 |
| | Federal Home Loan Bank Discount Notes | | 0.345% | | 1/17/2017 | | — |
| | 36.0 |
|
| — |
| | 42.1 |
| | Federal Home Loan Bank Discount Notes | | 0.294% - 0.365% | | 1/18/2017 | | — |
| | 42.1 |
|
| — |
| | 20.0 |
| | Federal Home Loan Bank Discount Notes | | 0.284% | | 1/20/2017 | | — |
| | 20.0 |
|
| — |
| | 50.0 |
| | Federal Home Loan Bank Discount Notes | | 0.335% | | 1/23/2017 | | — |
| | 50.0 |
|
| — |
| | 47.0 |
| | Federal Home Loan Bank Discount Notes | | 0.345% | | 1/24/2017 | | — |
| | 47.0 |
|
| — |
| | 34.8 |
| | Federal Home Loan Bank Discount Notes | | 0.304% - 0.360% | | 1/25/2017 | | — |
| | 34.8 |
|
| — |
| | 45.0 |
| | Federal Home Loan Bank Discount Notes | | 0.294% - 0.406% | | 1/27/2017 | | — |
| | 45.0 |
|
| — |
| | 25.0 |
| | Federal Home Loan Bank Discount Notes | | 0.416% | | 1/30/2017 | | — |
| | 25.0 |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
| $ | — |
| | $ | 34.7 |
| | Federal Home Loan Bank Discount Notes | | 0.467% - 0.497% | | 2/1/2017 | | $ | — |
| | $ | 34.7 |
|
| — |
| | 42.0 |
| | Federal Home Loan Bank Discount Notes | | 0.406% | | 2/3/2017 | | — |
| | 42.0 |
|
| — |
| | 15.0 |
| | Federal Home Loan Bank Discount Notes | | 0.416% | | 2/7/2017 | | — |
| | 15.0 |
|
| — |
| | 10.2 |
| | Federal Home Loan Bank Discount Notes | | 0.376% | | 2/10/2017 | | — |
| | 10.2 |
|
| — |
| | 50.0 |
| | Federal Home Loan Bank Discount Notes | | 0.386% - 0.487% | | 2/17/2017 | | — |
| | 50.0 |
|
| — |
| | 30.0 |
| | Federal Home Loan Bank Discount Notes | | 0.365% | | 2/21/2017 | | — |
| | 30.0 |
|
| — |
| | 30.0 |
| | Federal Home Loan Bank Discount Notes | | 0.437% | | 2/22/2017 | | — |
| | 30.0 |
|
| — |
| | 50.0 |
| | Federal Home Loan Bank Discount Notes | | 0.396% | | 2/24/2017 | | — |
| | 50.0 |
|
| — |
| | 20.0 |
| | Federal Home Loan Bank Discount Notes | | 0.533% | | 2/27/2017 | | — |
| | 20.0 |
|
| — |
| | 10.1 |
| | Federal Home Loan Bank Discount Notes | | 0.518% | | 3/3/2017 | | — |
| | 10.1 |
|
| — |
| | 15.0 |
| | Federal Home Loan Bank Discount Notes | | 0.523% | | 3/6/2017 | | — |
| | 15.0 |
|
| — |
| | 30.0 |
| | Federal Home Loan Bank Discount Notes | | 0.538% | | 3/8/2017 | | — |
| | 30.0 |
|
| — |
| | 45.8 |
| | Federal Home Loan Bank Discount Notes | | 0.447% - 0.574% | | 3/10/2017 | | — |
| | 45.8 |
|
| — |
| | 20.0 |
| | Federal Home Loan Bank Discount Notes | | 0.543% | | 3/14/2017 | | — |
| | 20.0 |
|
| — |
| | 40.5 |
| | Federal Home Loan Bank Discount Notes | | 0.528% - 0.579% | | 3/17/2017 | | — |
| | 40.5 |
|
| — |
| | 49.9 |
| | Federal Home Loan Bank Discount Notes | | 0.538% | | 3/20/2017 | | — |
| | 49.9 |
|
| — |
| | 36.1 |
| | Federal Home Loan Bank Discount Notes | | 0.533% | | 3/22/2017 | | — |
| | 36.1 |
|
| — |
| | 28.0 |
| | Federal Home Loan Bank Discount Notes | | 0.427% - 0.518% | | 3/23/2017 | | — |
| | 28.0 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 0.528% | | 3/24/2017 | | — |
| | 40.0 |
|
| — |
| | 25.0 |
| | Federal Home Loan Bank Discount Notes | | 0.548% | | 3/28/2017 | | — |
| | 25.0 |
|
| — |
| | 31.0 |
| | Federal Home Loan Bank Discount Notes | | 0.558% | | 3/29/2017 | | — |
| | 31.0 |
|
| — |
| | 6.4 |
| | Federal Home Loan Bank Discount Notes | | 0.477% | | 3/31/2017 | | — |
| | 6.4 |
|
| — |
| | 49.9 |
| | Federal Home Loan Bank Discount Notes | | 0.559% | | 4/17/2017 | | — |
| | 49.9 |
|
| — |
| | 26.0 |
| | Federal Home Loan Bank Discount Notes | | 0.548% - 0.605% | | 4/19/2017 | | — |
| | 26.0 |
|
| — |
| | 20.1 |
| | Federal Home Loan Bank Discount Notes | | 0.488% | | 4/28/2017 | | — |
| | 20.1 |
|
| — |
| | 25.0 |
| | Federal Home Loan Bank Discount Notes | | 0.538% - 0.600% | | 5/5/2017 | | — |
| | 25.0 |
|
| — |
| | 37.2 |
| | Federal Home Loan Bank Discount Notes | | 0.558% - 0.641% | | 5/12/2017 | | — |
| | 37.2 |
|
| 20.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.069% | | 1/2/2018 | | 20.2 |
| | — |
|
| 40.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.079% | | 1/3/2018 | | 40.0 |
| | — |
|
| 40.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.068% | | 1/5/2018 | | 40.0 |
| | — |
|
| 40.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.068% | | 1/8/2018 | | 40.0 |
| | — |
|
| 33.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.058% | | 1/9/2018 | | 33.0 |
| | — |
|
| 50.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.068% - 1.118% | | 1/10/2018 | | 50.0 |
| | — |
|
| 30.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.089% - 1.108% | | 1/12/2018 | | 30.0 |
| | — |
|
| 38.1 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.068% | | 1/16/2018 | | 38.1 |
| | — |
|
| 50.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.094% - 1.118% | | 1/17/2018 | | 50.0 |
| | — |
|
| 30.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.063% | | 1/19/2018 | | 30.1 |
| | — |
|
| 20.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.134% | | 1/22/2018 | | 20.0 |
| | — |
|
| 38.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.063% | | 1/25/2018 | | 37.9 |
| | — |
|
| 36.1 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.063% | | 1/26/2018 | | 36.1 |
| | — |
|
| 29.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.069% - 1.290% | | 1/29/2018 | | 29.1 |
| | — |
|
| 24.3 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.225% | | 2/6/2018 | | 24.2 |
| | — |
|
| 47.1 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.069% - 1.220% | | 2/9/2018 | | 47.1 |
| | — |
|
| 11.8 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.140% | | 2/14/2018 | | 11.8 |
| | — |
|
| 25.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.130% | | 2/16/2018 | | 25.0 |
| | — |
|
| 10.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.306% | | 2/21/2018 | | 10.0 |
| | — |
|
| 40.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.120% | | 2/26/2018 | | 39.9 |
| | — |
|
| 39.4 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.120% - 1.186% | | 2/27/2018 | | 39.3 |
| | — |
|
| 22.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.161% - 1.232% | | 3/2/2018 | | 22.1 |
| | — |
|
| 45.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.212% - 1.313% | | 3/12/2018 | | 44.9 |
| | — |
|
| 28.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.176% | | 3/13/2018 | | 27.9 |
| | — |
|
| 5.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.318% | | 3/16/2018 | | 5.0 |
| | — |
|
| 40.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.304% | | 3/27/2018 | | 39.9 |
| | — |
|
| 47.4 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.304% | | 3/28/2018 | | 47.2 |
| | — |
|
| 40.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.324% | | 4/11/2018 | | 40.0 |
| | — |
|
| 15.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.359% | | 4/12/2018 | | 15.2 |
| | — |
|
| 29.1 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.354% | | 4/16/2018 | | 29.0 |
| | — |
|
| 39.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.365% | | 4/19/2018 | | 39.0 |
| | — |
|
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 | |
| 163,782 |
| | 1,500,000 |
| | iShares Dow Jones US Real Estate Index Fund | | $ | 15.2 |
| (7) | $ | 112.4 |
| (7) |
| 36,559 |
| | 144,518 |
| | JBG Smith Properties | | 1.5 |
| | 5.0 |
| |
| 95,936 |
| | 136,455 |
| | Kilroy Realty Corporation | | 8.0 |
| | 8.6 |
| |
| 120,171 |
| | 563,416 |
| | Kimco Realty Corporation | | 2.5 |
| | 8.3 |
| |
| 24,663 |
| | 113,467 |
| | Kite Realty Group Trust | | 0.5 |
| | 1.6 |
| |
| 25,456 |
| | 116,496 |
| | Lamar Advertising Corporation | | 2.3 |
| | 8.1 |
| |
| 71,595 |
| | 293,991 |
| | Lexington Realty Trust | | 0.8 |
| | 2.4 |
| |
| 46,357 |
| | 204,392 |
| | Liberty Property Trust | | 2.8 |
| | 8.6 |
| |
| 13,885 |
| | 63,299 |
| | Life Storage, Inc. | | 1.5 |
| | 5.9 |
| |
| 11,718 |
| | 54,350 |
| | LTC Properties, Inc. | | 0.5 |
| | 2.3 |
| |
| 25,783 |
| | 123,992 |
| | Mack-Cali Realty Corporation | | 0.6 |
| | 2.4 |
| |
| — |
| | 44,471 |
| | Medequities Realty Trust, Inc. | | — |
| | 0.3 |
| |
| 152,801 |
| | 503,539 |
| | Medical Properties Trust, Inc. | | 3.2 |
| | 8.1 |
| |
| 220,000 |
| | — |
| | Megaport, LTD | | 1.7 |
| | — |
| |
| 85,000 |
| | — |
| | MGM Growth Properties, L.L.C. | | 2.6 |
| | — |
| |
| 103,823 |
| | 157,147 |
| | Mid-America Apartment Communities, Inc. | | 13.7 |
| | 15.0 |
| |
| 27,502 |
| | 121,059 |
| | Monmouth Real Estate Investment Corporation | | 0.4 |
| | 1.5 |
| |
| 12,615 |
| | 56,533 |
| | National Health Investors, Inc. | | 1.0 |
| | 4.3 |
| |
| 50,907 |
| | 219,159 |
| | National Retail Properties, Inc. | | 2.7 |
| | 10.6 |
| |
| 17,663 |
| | 78,758 |
| | National Storage Affiliates Trust | | 0.6 |
| | 2.1 |
| |
| 24,918 |
| | 97,013 |
| | New Senior Investment Group | | 0.2 |
| | 0.4 |
| |
| 5,632 |
| | 25,395 |
| | Nexpoint Residential Trust, Inc. | | 0.3 |
| | 0.9 |
| |
| — |
| | 60,527 |
| | NorthStar Realty Europe Corp. | | — |
| | 0.9 |
| |
| 14,200 |
| | — |
| | Office Properties Income Trust, Inc. | | 0.5 |
| | — |
| |
| 64,786 |
| | 273,749 |
| | Omega Healthcare Investors, Inc. | | 2.7 |
| | 9.6 |
| |
| 4,628 |
| | 21,786 |
| | One Liberty Properties, Inc. | | 0.1 |
| | 0.5 |
| |
| 42,727 |
| | 192,190 |
| | Outfront Media Inc. | | 1.1 |
| | 3.5 |
| |
| 58,127 |
| | 289,253 |
| | Paramount Group Inc. | | 0.8 |
| | 3.6 |
| |
| 71,359 |
| | 276,143 |
| | Park Hotels & Resorts, Inc. | | 1.8 |
| | 7.2 |
| |
| 38,713 |
| | 186,399 |
| | Pebblebrook Hotel Trust | | 1.0 |
| | 5.3 |
| |
| 20,665 |
| | 96,360 |
| | Pennsylvania Real Estate Investment Trust | | 0.1 |
| (7) | 0.6 |
| |
| 55,271 |
| | 250,372 |
| | Physicians Realty Trust | | 1.0 |
| | 4.0 |
| |
| 37,274 |
| | 177,784 |
| | Piedmont Office Realty Trust, Inc. | | 0.8 |
| | 3.0 |
| |
| 3,863 |
| | — |
| | Plymouth Industrial REIT, Inc. | | 0.1 |
| | — |
| |
| 19,688 |
| | 91,285 |
| | Potlatch Corporation | | 0.9 |
| | 2.9 |
| |
| 13,220 |
| | 54,653 |
| | Preferred Apartment Communities, Inc. | | 0.2 |
| | 0.8 |
| |
| 472,201 |
| | 865,465 |
| | ProLogis | | 42.1 |
| | 50.8 |
| |
| 5,958 |
| | 27,314 |
| | PS Business Parks, Inc. | | 1.0 |
| | 3.6 |
| |
| 82,126 |
| | 205,162 |
| | Public Storage, Inc. | | 17.5 |
| | 41.5 |
| |
| 105,041 |
| | 69,517 |
| | QTS Realty Trust, Inc. | | 5.7 |
| | 2.6 |
| |
| 38,741 |
| | 178,720 |
| | Rayonier, Inc. | | 1.3 |
| | 4.9 |
| |
| 197,129 |
| | 408,129 |
| | Realty Income Corporation | | 14.4 |
| | 25.7 |
| |
| 159,520 |
| | 210,244 |
| | Regency Centers Corporation | | 10.1 |
| | 12.3 |
| |
| 33,519 |
| | 155,276 |
| | Retail Opportunity Investment | | 0.6 |
| | 2.5 |
| |
| 63,727 |
| | 298,353 |
| | Retail Properties of America | | 0.9 |
| | 3.2 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
| $ | 40.2 |
| | $ | — |
| | Federal Home Loan Bank Discount Notes | | 1.365% | | 4/20/2018 | | $ | 40.0 |
| | $ | — |
|
| 33.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.365% | | 4/23/2018 | | 33.0 |
| | — |
|
| 34.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.375% | | 4/24/2018 | | 34.1 |
| | — |
|
| 15.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.371% | | 4/25/2018 | | 15.2 |
| | — |
|
| 28.4 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.403% | | 5/4/2018 | | 28.2 |
| | — |
|
| — |
| | 16.1 |
| | Freddie Mac Discount Notes | | 0.345% | | 1/9/2017 | | — |
| | 16.1 |
|
| — |
| | 25.0 |
| | Freddie Mac Discount Notes | | 0.335% | | 1/10/2017 | | — |
| | 25.0 |
|
| — |
| | 30.0 |
| | Freddie Mac Discount Notes | | 0.391% | | 1/20/2017 | | — |
| | 30.0 |
|
| — |
| | 13.1 |
| | Freddie Mac Discount Notes | | 0.426% | | 1/30/2017 | | — |
| | 13.1 |
|
| — |
| | 40.0 |
| | Freddie Mac Discount Notes | | 0.447% | | 2/6/2017 | | — |
| | 40.0 |
|
| — |
| | 36.9 |
| | Freddie Mac Discount Notes | | 0.436% - 0.457% | | 2/7/2017 | | — |
| | 36.9 |
|
| — |
| | 44.2 |
| | Freddie Mac Discount Notes | | 0.360% | | 2/8/2017 | | — |
| | 44.2 |
|
| — |
| | 25.0 |
| | Freddie Mac Discount Notes | | 0.360% | | 2/10/2017 | | — |
| | 25.0 |
|
| — |
| | 40.0 |
| | Freddie Mac Discount Notes | | 0.365% | | 2/13/2017 | | — |
| | 40.0 |
|
| — |
| | 30.0 |
| | Freddie Mac Discount Notes | | 0.376% | | 2/14/2017 | | — |
| | 30.0 |
|
| — |
| | 20.0 |
| | Freddie Mac Discount Notes | | 0.467% | | 2/21/2017 | | — |
| | 20.0 |
|
| — |
| | 27.0 |
| | Freddie Mac Discount Notes | | 0.386% | | 2/27/2017 | | — |
| | 27.0 |
|
| — |
| | 15.0 |
| | Freddie Mac Discount Notes | | 0.401% | | 3/3/2017 | | — |
| | 15.0 |
|
| — |
| | 35.2 |
| | Freddie Mac Discount Notes | | 0.406% | | 3/7/2017 | | — |
| | 35.2 |
|
| — |
| | 14.0 |
| | Freddie Mac Discount Notes | | 0.411% | | 3/14/2017 | | — |
| | 14.0 |
|
| — |
| | 50.0 |
| | Freddie Mac Discount Notes | | 0.427% | | 3/21/2017 | | — |
| | 49.9 |
|
| — |
| | 18.0 |
| | Freddie Mac Discount Notes | | 0.600% | | 4/21/2017 | | — |
| | 18.0 |
|
| — |
| | 39.9 |
| | Freddie Mac Discount Notes | | 0.457% | | 5/3/2017 | | — |
| | 39.9 |
|
| — |
| | 22.9 |
| | Freddie Mac Discount Notes | | 0.483% | | 5/4/2017 | | — |
| | 22.9 |
|
| 41.2 |
| | — |
| | Freddie Mac Discount Notes | | 1.101% - 1.149% | | 2/2/2018 | | 41.2 |
| | — |
|
| 50.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.101% - 1.139% | | 2/5/2018 | | 49.9 |
| | — |
|
| 25.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.090% | | 2/6/2018 | | 25.0 |
| | — |
|
| 20.1 |
| | — |
| | Freddie Mac Discount Notes | | 1.100% | | 2/7/2018 | | 20.0 |
| | — |
|
| 42.2 |
| | — |
| | Freddie Mac Discount Notes | | 1.099% | | 2/12/2018 | | 42.1 |
| | — |
|
| 40.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.099% | | 2/13/2018 | | 39.9 |
| | — |
|
| 30.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.109% | | 2/14/2018 | | 30.0 |
| | — |
|
| 39.5 |
| | — |
| | Freddie Mac Discount Notes | | 1.120% - 1.130% | | 2/23/2018 | | 39.4 |
| | — |
|
| 50.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.151% | | 3/5/2018 | | 49.9 |
| | — |
|
| 50.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.151% | | 3/6/2018 | | 49.9 |
| | — |
|
| 49.8 |
| | — |
| | Freddie Mac Discount Notes | | 1.182% - 1.202% | | 3/14/2018 | | 49.6 |
| | — |
|
| 34.2 |
| | — |
| | Freddie Mac Discount Notes | | 1.182% | | 3/16/2018 | | 34.1 |
| | — |
|
| 10.8 |
| | — |
| | Freddie Mac Discount Notes | | 1.192% | | 3/19/2018 | | 10.7 |
| | — |
|
| 32.8 |
| | — |
| | Freddie Mac Discount Notes | | 1.202% | | 3/20/2018 | | 32.7 |
| | — |
|
| 40.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.202% | | 3/21/2018 | | 39.9 |
| | — |
|
| 30.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.182% | | 3/22/2018 | | 29.9 |
| | — |
|
| 40.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.212% | | 3/23/2018 | | 39.9 |
| | — |
|
| 40.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.223% | | 3/26/2018 | | 39.9 |
| | — |
|
| 24.1 |
| | — |
| | Freddie Mac Discount Notes | | 1.228% | | 4/4/2018 | | 24.0 |
| | — |
|
| 57.7 |
| | — |
| | Freddie Mac Discount Notes | | 1.228% - 1.269% | | 4/5/2018 | | 57.5 |
| | — |
|
| 35.2 |
| | — |
| | Freddie Mac Discount Notes | | 1.289% | | 4/6/2018 | | 35.0 |
| | — |
|
| 34.9 |
| | — |
| | Freddie Mac Discount Notes | | 1.325% - 1.330% | | 4/10/2018 | | 34.7 |
| | — |
|
| 40.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.325% | | 4/11/2018 | | 39.8 |
| | — |
|
| 27.2 |
| | — |
| | Freddie Mac Discount Notes | | 1.324% | | 4/12/2018 | | 27.0 |
| | — |
|
| 40.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.334% | | 4/13/2018 | | 39.8 |
| | — |
|
| 30.1 |
| | — |
| | Freddie Mac Discount Notes | | 1.365% | | 4/17/2018 | | 30.0 |
| | — |
|
| 35.2 |
| | — |
| | Freddie Mac Discount Notes | | 1.365% | | 4/18/2018 | | 35.0 |
| | — |
|
| 4.0 |
| | — |
| | Freddie Mac Discount Notes | | 1.366% | | 5/4/2018 | | 4.0 |
| | — |
|
TOTAL GOVERNMENT AGENCY NOTES (Cost $2,872.8 and $2,309.0) | | $ | 2,872.3 |
| | $ | 2,308.9 |
|
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 | |
| 4,440 |
| | 21,416 |
| | Retail Value, Inc. | | $ | 0.2 |
| | $ | 0.6 |
| |
| 282,611 |
| | 126,860 |
| | Rexford Industrial Realty Inc. | | 12.8 |
| | 3.7 |
| |
| 50,071 |
| | 239,679 |
| | RLJ Lodging Trust | | 0.9 |
| | 3.9 |
| |
| 23,246 |
| | 113,496 |
| | RPT Realty | | 0.3 |
| | 1.4 |
| |
| 13,660 |
| | 61,126 |
| | Ryman Hospitality Properties | | 1.2 |
| | 4.1 |
| |
| 167,181 |
| | 244,568 |
| | Sabra Health Care REIT Inc. | | 3.6 |
| | 4.0 |
| |
| 3,168 |
| | — |
| | Safe Hold, Inc. | | 0.1 |
| | — |
| |
| — |
| | 10,996 |
| | Safety Income and Growth, Inc | | — |
| | 0.2 |
| |
| 3,537 |
| | 16,999 |
| | Saul Centers, Inc. | | 0.2 |
| | 0.9 |
| |
| 76,914 |
| | 154,833 |
| | SBA Communications Corporation | | 18.5 |
| | 25.1 |
| |
| — |
| | 121,549 |
| | Select Income Real Estate Investment Trust | | — |
| | 0.9 |
| |
| 70,465 |
| | 326,164 |
| | Senior Housing Properties Trust | | 0.6 |
| | 3.8 |
| |
| 48,715 |
| | — |
| | Service Properties Trust | | 1.2 |
| | — |
| |
| 200,628 |
| | 426,117 |
| | Simon Property Group, Inc. | | 29.9 |
| | 71.6 |
| |
| 394,633 |
| | 209,816 |
| | Site Centers Corporation | | 5.5 |
| | 2.3 |
| |
| 115,766 |
| | 113,961 |
| | SL Green Realty Corp. | | 10.6 |
| | 9.0 |
| |
| — |
| | 59,766 |
| | Spirit MTA REIT | | — |
| | 0.4 |
| |
| 29,513 |
| | 117,972 |
| | Spirit Realty Capital Inc. | | 1.5 |
| | 4.3 |
| |
| 39,632 |
| | 135,097 |
| | Stag Industrial, Inc. | | 1.3 |
| | 3.4 |
| |
| 228,776 |
| | 264,895 |
| | STORE Capital Corporation | | 8.5 |
| | 7.5 |
| |
| 30,813 |
| | 141,848 |
| | Summit Hotel Properties, Inc. | | 0.4 |
| | 1.4 |
| |
| 123,951 |
| | 116,162 |
| | Sun Communities, Inc. | | 18.6 |
| | 11.8 |
| |
| 66,821 |
| | 313,714 |
| | Sunstone Hotel Investors, L.L.C. | | 0.9 |
| | 4.1 |
| |
| 27,198 |
| | 126,963 |
| | Tanger Factory Outlet Centers, Inc. | | 0.4 |
| (7) | 2.6 |
| |
| 39,475 |
| | 81,759 |
| | Taubman Centers, Inc. | | 1.2 |
| | 3.8 |
| |
| 139,538 |
| | 80,363 |
| | Terreno Realty Corporation | | 7.6 |
| | 2.8 |
| |
| 42,266 |
| | 188,118 |
| | The Macerich Company | | 1.1 |
| (7) | 8.1 |
| |
| — |
| | 73,743 |
| | Tier Inc. | | — |
| | 1.5 |
| |
| 86,400 |
| | 366,433 |
| | UDR, Inc. | | 4.0 |
| | 14.5 |
| |
| 10,668 |
| | 46,595 |
| | UMH Properties, Inc. | | 0.2 |
| | 0.6 |
| |
| 150,082 |
| | 231,999 |
| | UNITI Group, Inc. | | 1.2 |
| (7) | 3.6 |
| |
| 3,816 |
| | 18,151 |
| | Universal Health Realty Income Trust | | 0.4 |
| | 1.1 |
| |
| 34,264 |
| | 150,757 |
| | Urban Edge Properties | | 0.7 |
| | 2.5 |
| |
| 8,803 |
| | 42,533 |
| | Urstadt Biddle Properties, Inc. | | 0.2 |
| | 0.9 |
| |
| 85,000 |
| | — |
| | Vanguard Real Estate ETF | | 7.9 |
| | — |
| |
| 190,949 |
| | 491,993 |
| | Ventas, Inc. | | 11.0 |
| | 28.8 |
| |
| 318,132 |
| | 1,342,240 |
| | VEREIT, Inc. | | 2.9 |
| | 9.6 |
| |
| 377,486 |
| | 554,541 |
| | Vici Properties, Inc. | | 9.6 |
| | 10.4 |
| |
| 51,469 |
| | 238,674 |
| | Vornado Realty Trust | | 3.4 |
| | 14.8 |
| |
| 55,611 |
| | 257,311 |
| | Washington Prime Group, Inc. | | 0.2 |
| (7) | 1.3 |
| |
| 23,876 |
| | 110,436 |
| | Washington Real Estate Investment Trust | | 0.7 |
| | 2.5 |
| |
| 36,198 |
| | 165,849 |
| | Weingarten Realty Investors | | 1.1 |
| | 4.1 |
| |
| 300,767 |
| | 514,421 |
| | Welltower Inc. | | 24.5 |
| | 35.7 |
| |
| 386,918 |
| | 1,035,575 |
| | Weyerhaeuser Company | | 11.7 |
| | 22.6 |
| |
| 11,404 |
| | 54,425 |
| | Whitestone Real Estate Investment Trust B | | 0.2 |
| | 0.7 |
| |
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | |
| Shares | | Issuer | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 | |
| 50,897 |
| | 219,891 |
| | WP Carey Inc. | | $ | 4.1 |
| | $ | 14.4 |
| |
| 33,741 |
| | 154,344 |
| | Xenia Hotels & Resorts, Inc. | | 0.7 |
| | 2.7 |
| |
TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES
(Cost $686.0 and $1,274.7) | | $ | 825.7 |
| | $ | 1,415.1 |
| |
OTHER MARKETABLE SECURITIES—13.9% and 14.4%
U.S. GOVERNMENT AGENCY NOTES—0.7% and 7.2%
|
| | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | — |
| | $ | 20.0 |
| | Fannie Mae Discount Notes | | 2.270% | | 1/9/2019 | | $ | — |
| | $ | 20.0 |
|
| — |
| | 3.6 |
| | Fannie Mae Discount Notes | | 2.350% | | 2/6/2019 | | — |
| | 3.5 |
|
| — |
| | 22.6 |
| | Fannie Mae Discount Notes | | 2.390% | | 2/13/2019 | | — |
| | 22.5 |
|
| — |
| | 17.6 |
| | Fannie Mae Discount Notes | | 2.350% | | 3/1/2019 | | — |
| | 17.5 |
|
| — |
| | 6.0 |
| | Farmer Mac Discount Notes | | 2.440% | | 3/15/2019 | | — |
| | 6.0 |
|
| — |
| | 9.1 |
| | Federal Farm Credit Bank Discount Notes | | 2.380% | | 3/18/2019 | | — |
| | 9.0 |
|
| — |
| | 18.0 |
| | Federal Farm Credit Bank Discount Notes | | 2.490% | | 5/2/2019 | | — |
| | 17.9 |
|
| — |
| | 20.0 |
| | Federal Farm Credit Bank Discount Notes | | 2.540% | | 5/23/2019 | | — |
| | 19.8 |
|
| 65.4 |
| | — |
| | Federal Home Loan Bank | | 1.734% | | 11/19/2021 | | 65.5 |
| | — |
|
| 50.0 |
| | — |
| | Federal Home Loan Bank | | 1.700% | | 12/20/2021 | | 50.0 |
| | — |
|
| — |
| | 33.0 |
| | Federal Home Loan Bank Discount Notes | | 2.167%-2.195% | | 1/11/2019 | | — |
| | 33.0 |
|
| — |
| | 37.6 |
| | Federal Home Loan Bank Discount Notes | | 2.220% | | 1/14/2019 | | — |
| | 37.6 |
|
| — |
| | 36.2 |
| | Federal Home Loan Bank Discount Notes | | 2.220% | | 1/15/2019 | | — |
| | 36.2 |
|
| — |
| | 35.0 |
| | Federal Home Loan Bank Discount Notes | | 2.220% | | 1/16/2019 | | — |
| | 35.0 |
|
| — |
| | 40.9 |
| | Federal Home Loan Bank Discount Notes | | 2.189%-2.197% | | 1/18/2019 | | — |
| | 40.9 |
|
| — |
| | 29.5 |
| | Federal Home Loan Bank Discount Notes | | 2.190% | | 1/23/2019 | | — |
| | 29.5 |
|
| — |
| | 25.6 |
| | Federal Home Loan Bank Discount Notes | | 2.330% | | 1/28/2019 | | — |
| | 25.6 |
|
| — |
| | 12.0 |
| | Federal Home Loan Bank Discount Notes | | 2.250% | | 1/29/2019 | | — |
| | 12.0 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 2.260%-2.265% | | 1/30/2019 | | — |
| | 39.9 |
|
| — |
| | 14.3 |
| | Federal Home Loan Bank Discount Notes | | 2.290% | | 2/8/2019 | | — |
| | 14.3 |
|
| — |
| | 30.0 |
| | Federal Home Loan Bank Discount Notes | | 2.300%-2.319% | | 2/11/2019 | | — |
| | 29.9 |
|
| — |
| | 24.7 |
| | Federal Home Loan Bank Discount Notes | | 2.340% | | 2/15/2019 | | — |
| | 24.6 |
|
| — |
| | 35.0 |
| | Federal Home Loan Bank Discount Notes | | 2.331%-2.353% | | 2/19/2019 | | — |
| | 34.9 |
|
| — |
| | 36.8 |
| | Federal Home Loan Bank Discount Notes | | 2.235%-2.353% | | 2/20/2019 | | — |
| | 36.6 |
|
| — |
| | 45.0 |
| | Federal Home Loan Bank Discount Notes | | 2.294%-2.314% | | 2/22/2019 | | — |
| | 44.8 |
|
| — |
| | 14.1 |
| | Federal Home Loan Bank Discount Notes | | 2.330% | | 2/25/2019 | | — |
| | 14.0 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 2.330% | | 2/26/2019 | | — |
| | 39.9 |
|
| — |
| | 21.5 |
| | Federal Home Loan Bank Discount Notes | | 2.330% | | 2/27/2019 | | — |
| | 21.4 |
|
| — |
| | 26.4 |
| | Federal Home Loan Bank Discount Notes | | 2.310% | | 3/1/2019 | | — |
| | 26.3 |
|
| — |
| | 31.5 |
| | Federal Home Loan Bank Discount Notes | | 2.316%-2.355% | | 3/6/2019 | | — |
| | 31.4 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 2.370% | | 3/8/2019 | | — |
| | 39.8 |
|
| — |
| | 37.3 |
| | Federal Home Loan Bank Discount Notes | | 2.432%-2.437% | | 3/11/2019 | | — |
| | 37.2 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 2.420% | | 3/12/2019 | | — |
| | 39.8 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 2.400% | | 3/13/2019 | | — |
| | 39.8 |
|
| — |
| | 10.0 |
| | Federal Home Loan Bank Discount Notes | | 2.360% | | 3/15/2019 | | — |
| | 10.0 |
|
| — |
| | 30.0 |
| | Federal Home Loan Bank Discount Notes | | 2.360% | | 3/19/2019 | | — |
| | 29.8 |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | — |
| | $ | 12.0 |
| | Federal Home Loan Bank Discount Notes | | 2.430% | | 3/21/2019 | | $ | — |
| | $ | 11.9 |
|
| — |
| | 22.4 |
| | Federal Home Loan Bank Discount Notes | | 2.410% | | 3/26/2019 | | — |
| | 22.2 |
|
| — |
| | 25.3 |
| | Federal Home Loan Bank Discount Notes | | 2.370% | | 3/27/2019 | | — |
| | 25.1 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 2.460% | | 4/5/2019 | | — |
| | 39.7 |
|
| — |
| | 40.0 |
| | Federal Home Loan Bank Discount Notes | | 2.470% | | 4/8/2019 | | — |
| | 39.7 |
|
| — |
| | 50.0 |
| | Federal Home Loan Bank Discount Notes | | 2.440% | | 4/10/2019 | | — |
| | 49.7 |
|
| — |
| | 24.1 |
| | Federal Home Loan Bank Discount Notes | | 2.440% | | 4/12/2019 | | — |
| | 23.9 |
|
| — |
| | 14.1 |
| | Federal Home Loan Bank Discount Notes | | 2.440%-2.500% | | 4/24/2019 | | — |
| | 14.0 |
|
| — |
| | 10.6 |
| | Federal Home Loan Bank Discount Notes | | 2.450%-2.500% | | 4/26/2019 | | — |
| | 10.5 |
|
| — |
| | 87.0 |
| | Federal Home Loan Bank Discount Notes | | 2.470%-2.510% | | 4/29/2019 | | — |
| | 86.3 |
|
| — |
| | 24.0 |
| | Federal Home Loan Bank Discount Notes | | 2.470%-2.510% | | 5/3/2019 | | — |
| | 23.8 |
|
| — |
| | 18.5 |
| | Federal Home Loan Bank Discount Notes | | 2.440%-2.550% | | 5/15/2019 | | — |
| | 18.3 |
|
| — |
| | 40.5 |
| | Federal Home Loan Bank Discount Notes | | 2.520% | | 5/17/2019 | | — |
| | 40.1 |
|
| — |
| | 30.0 |
| | Federal Home Loan Bank Discount Notes | | 2.530% | | 5/22/2019 | | — |
| | 29.7 |
|
| 4.8 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.521%-1.572% | | 1/6/2020 | | 4.8 |
| | — |
|
| 21.2 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.680% | | 1/10/2020 | | 21.2 |
| | — |
|
| 26.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.700% | | 1/15/2020 | | 26.0 |
| | — |
|
| 43.0 |
| | — |
| | Federal Home Loan Bank Discount Notes | | 1.575%-1.593% | | 1/31/2020 | | 42.9 |
| | — |
|
| — |
| | 25.0 |
| | Freddie Mac Discount Notes | | 2.130% | | 1/2/2019 | | — |
| | 25.0 |
|
| — |
| | 32.4 |
| | Freddie Mac Discount Notes | | 2.146%-2.174% | | 1/4/2019 | | — |
| | 32.4 |
|
| — |
| | 35.1 |
| | Freddie Mac Discount Notes | | 2.146%-2.175% | | 1/7/2019 | | — |
| | 35.1 |
|
| — |
| | 35.0 |
| | Freddie Mac Discount Notes | | 2.130% | | 1/8/2019 | | — |
| | 35.0 |
|
| — |
| | 40.0 |
| | Freddie Mac Discount Notes | | 2.130% | | 1/9/2019 | | — |
| | 40.0 |
|
| — |
| | 36.1 |
| | Freddie Mac Discount Notes | | 2.179%-2.217% | | 1/22/2019 | | — |
| | 36.1 |
|
| — |
| | 40.0 |
| | Freddie Mac Discount Notes | | 2.190% | | 1/25/2019 | | — |
| | 39.9 |
|
| — |
| | 16.0 |
| | Freddie Mac Discount Notes | | 2.200% | | 1/28/2019 | | — |
| | 15.9 |
|
| — |
| | 15.0 |
| | Freddie Mac Discount Notes | | 2.200% | | 1/29/2019 | | — |
| | 15.0 |
|
| — |
| | 39.9 |
| | Freddie Mac Discount Notes | | 2.190% | | 2/1/2019 | | — |
| | 39.8 |
|
| — |
| | 25.9 |
| | Freddie Mac Discount Notes | | 2.240% | | 2/4/2019 | | — |
| | 25.8 |
|
| — |
| | 35.0 |
| | Freddie Mac Discount Notes | | 2.240% | | 2/5/2019 | | — |
| | 34.9 |
|
| — |
| | 30.0 |
| | Freddie Mac Discount Notes | | 2.240% | | 2/6/2019 | | — |
| | 29.9 |
|
| — |
| | 39.3 |
| | Freddie Mac Discount Notes | | 2.300% | | 2/12/2019 | | — |
| | 39.1 |
|
| — |
| | 15.0 |
| | Freddie Mac Discount Notes | | 2.250% | | 2/20/2019 | | — |
| | 15.0 |
|
| — |
| | 21.3 |
| | Freddie Mac Discount Notes | | 2.290% | | 3/4/2019 | | — |
| | 21.3 |
|
| — |
| | 17.1 |
| | Freddie Mac Discount Notes | | 2.330% | | 3/5/2019 | | — |
| | 17.1 |
|
| — |
| | 23.8 |
| | Freddie Mac Discount Notes | | 2.380% | | 3/20/2019 | | — |
| | 23.6 |
|
| — |
| | 19.5 |
| | Freddie Mac Discount Notes | | 2.390% | | 3/22/2019 | | — |
| | 19.4 |
|
| — |
| | 25.9 |
| | Freddie Mac Discount Notes | | 2.380% | | 3/25/2019 | | — |
| | 25.8 |
|
| — |
| | 30.0 |
| | Freddie Mac Discount Notes | | 2.410% | | 4/1/2019 | | — |
| | 29.8 |
|
| — |
| | 16.1 |
| | Freddie Mac Discount Notes | | 2.380%-2.430% | | 4/2/2019 | | — |
| | 16.0 |
|
| — |
| | 20.1 |
| | Freddie Mac Discount Notes | | 2.430% | | 4/3/2019 | | — |
| | 20.0 |
|
| — |
| | 40.0 |
| | Freddie Mac Discount Notes | | 2.460% | | 4/17/2019 | | — |
| | 39.7 |
|
| — |
| | 24.1 |
| | Freddie Mac Discount Notes | | 2.520% | | 5/20/2019 | | — |
| | 23.8 |
|
TOTAL U.S. GOVERNMENT AGENCY NOTES (Cost $210.2 and $2,050.8) | | $ | 210.4 |
| | $ | 2,050.7 |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
OREIGN GOVERNMENT AGENCY NOTES—0.2% and 0.0%
|
| | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | 49.3 |
| | $ | — |
| | Japan Bank for International Cooperation | | 1.750% | | 10/17/2022 | | $ | 48.9 |
| | $ | — |
|
| 0.2 |
| | — |
| | Korea Development Bank | | 2.610% | | 10/1/2022 | | 0.3 |
| | — |
|
TOTAL FOREIGN GOVERNMENT AGENCY NOTES (Cost $49.5 and $0.0) | | $ | 49.2 |
| | $ | — |
|
UNITED STATES TREASURY SECURITIES—3.7%8.7% and 6.5%7.2% |
| | | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | — |
| | $ | 33.8 |
| | United States Treasury Bills | | 2.147%-2.334% | | | 1/3/2019 | | $ | — |
| | $ | 33.8 |
|
| — |
| | 50.0 |
| | United States Treasury Bills | | 2.330% | | | 1/8/2019 | | — |
| | 50.0 |
|
| — |
| | 189.9 |
| | United States Treasury Bills | | 2.162%-2.321% | | | 1/10/2019 | | — |
| | 189.8 |
|
| — |
| | 82.1 |
| | United States Treasury Bills | | 2.279%-2.316% | | | 1/15/2019 | | — |
| | 82.0 |
|
| — |
| | 150.1 |
| | United States Treasury Bills | | 2.204%-2.315% | | | 1/17/2019 | | — |
| | 149.9 |
|
| — |
| | 153.0 |
| | United States Treasury Bills | | 2.226%-2.332% | | | 1/24/2019 | | — |
| | 152.8 |
|
| — |
| | 50.0 |
| | United States Treasury Bills | | 2.370% | | | 1/29/2019 | | — |
| | 49.9 |
|
| — |
| | 67.3 |
| | United States Treasury Bills | | 2.235%-2.405% | | | 1/31/2019 | | — |
| | 67.2 |
|
| — |
| | 100.0 |
| | United States Treasury Bills | | 2.254% | | | 2/7/2019 | | — |
| | 99.8 |
|
| — |
| | 61.9 |
| | United States Treasury Bills | | 2.391%-2.401% | | | 2/12/2019 | | — |
| | 61.7 |
|
| — |
| | 108.0 |
| | United States Treasury Bills | | 2.253%-2.334% | | | 2/14/2019 | | — |
| | 107.7 |
|
| — |
| | 20.0 |
| | United States Treasury Bills | | 2.410% | | | 2/19/2019 | | — |
| | 19.9 |
|
| — |
| | 84.4 |
| | United States Treasury Bills | | 2.276%-2.277% | | | 2/21/2019 | | — |
| | 84.1 |
|
| — |
| | 18.0 |
| | United States Treasury Bills | | 2.440% | | | 2/26/2019 | | — |
| | 17.9 |
|
| — |
| | 31.8 |
| | United States Treasury Bills | | 2.298%-2.331% | | | 2/28/2019 | | — |
| | 31.7 |
|
| — |
| | 73.7 |
| | United States Treasury Bills | | 2.309%-2.379% | | | 3/7/2019 | | — |
| | 73.4 |
|
| — |
| | 130.0 |
| | United States Treasury Bills | | 2.339%-2.372% | | | 3/14/2019 | | — |
| | 129.4 |
|
| — |
| | 50.0 |
| | United States Treasury Bills | | 2.340% | | | 3/21/2019 | | — |
| | 49.7 |
|
| — |
| | 100.0 |
| | United States Treasury Bills | | 2.415% | | | 3/28/2019 | | — |
| | 99.4 |
|
| — |
| | 89.9 |
| | United States Treasury Bills | | 2.360%-2.450% | | | 4/4/2019 | | — |
| | 89.3 |
|
| — |
| | 99.5 |
| | United States Treasury Bills | | 2.420%-2.460% | | | 4/11/2019 | | — |
| | 98.8 |
|
| — |
| | 110.3 |
| | United States Treasury Bills | | 2.460%-2.470% | | | 4/18/2019 | | — |
| | 109.5 |
|
| — |
| | 57.1 |
| | United States Treasury Bills | | 2.390%-2.490% | | | 4/25/2019 | | — |
| | 56.7 |
|
| — |
| | 33.7 |
| | United States Treasury Bills | | 2.470% | | | 5/2/2019 | | — |
| | 33.4 |
|
| — |
| | 38.4 |
| | United States Treasury Bills | | 2.430%-2.500% | | | 5/9/2019 | | — |
| | 38.1 |
|
| — |
| | 62.7 |
| | United States Treasury Bills | | 2.430%-2.510% | | | 5/16/2019 | | — |
| | 62.1 |
|
| 11.9 |
| | — |
| | United States Treasury Bills | | 1.540% | | | 1/2/2020 | | 11.9 |
| | — |
|
| 40.0 |
| | — |
| | United States Treasury Bills | | 1.537% | | | 1/14/2020 | | 40.0 |
| | — |
|
| 238.3 |
| | — |
| | United States Treasury Bills | | 1.530% | | | 1/21/2020 | | 238.3 |
| | — |
|
| 10.1 |
| | — |
| | United States Treasury Bills | | 1.629% | | | 1/23/2020 | | 10.1 |
| | — |
|
| 26.1 |
| | — |
| | United States Treasury Bills | | 1.526% | | | 1/30/2020 | | 26.1 |
| | — |
|
| 39.9 |
| | — |
| | United States Treasury Bills | | 1.538% | | | 2/4/2020 | | 39.9 |
| | — |
|
| 20.0 |
| | — |
| | United States Treasury Bills | | 1.550% | | | 2/6/2020 | | 20.0 |
| | — |
|
| 149.7 |
| | — |
| | United States Treasury Bills | | 1.503% | | | 2/11/2020 | | 149.8 |
| | — |
|
| 49.9 |
| | — |
| | United States Treasury Bills | | 1.575% | | | 2/13/2020 | | 49.9 |
| | — |
|
| 13.0 |
| | — |
| | United States Treasury Bills | | 1.554% | | | 2/20/2020 | | 13.0 |
| | — |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
| $ | — |
| | $ | 35.9 |
| | United States Treasury Bills | | 0.345% - 0.369% | | | 1/5/2017 | | $ | — |
| | $ | 35.9 |
|
| — |
| | 47.9 |
| | United States Treasury Bills | | 0.423% - 0.428% | | | 1/19/2017 | | — |
| | 48.0 |
|
| — |
| | 36.1 |
| | United States Treasury Bills | | 0.371% - 0.401% | | | 1/26/2017 | | — |
| | 36.1 |
|
| — |
| | 60.1 |
| | United States Treasury Bills | | 0.363% - 0.423% | | | 2/2/2017 | | — |
| | 60.1 |
|
| — |
| | 75.0 |
| | United States Treasury Bills | | 0.315% - 0.426% | | | 2/9/2017 | | — |
| | 75.0 |
|
| — |
| | 48.0 |
| | United States Treasury Bills | | 0.325% - 0.437% | | | 2/16/2017 | | — |
| | 48.0 |
|
| — |
| | 48.0 |
| | United States Treasury Bills | | 0.448% - 0.473% | | | 2/23/2017 | | — |
| | 48.0 |
|
| — |
| | 36.0 |
| | United States Treasury Bills | | 0.368% - 0.477% | | | 3/2/2017 | | — |
| | 36.0 |
|
| — |
| | 48.7 |
| | United States Treasury Bills | | 0.386% - 0.518% | | | 3/9/2017 | | — |
| | 48.7 |
|
| — |
| | 59.9 |
| | United States Treasury Bills | | 0.406% - 0.481% | | | 3/16/2017 | | — |
| | 60.0 |
|
| — |
| | 129.0 |
| | United States Treasury Bills | | 0.380% - 0.533% | | | 3/23/2017 | | — |
| | 129.0 |
|
| — |
| | 25.9 |
| | United States Treasury Bills | | 0.396% - 0.518% | | | 3/30/2017 | | — |
| | 25.9 |
|
| — |
| | 58.9 |
| | United States Treasury Bills | | 0.411% - 0.509% | | | 4/6/2017 | | — |
| | 58.9 |
|
| — |
| | 130.8 |
| | United States Treasury Bills | | 0.518% - 0.529% | | | 4/13/2017 | | — |
| | 130.8 |
|
| — |
| | 49.9 |
| | United States Treasury Bills | | 0.514% - 0.559% | | | 4/20/2017 | | — |
| | 49.9 |
|
| — |
| | 48.2 |
| | United States Treasury Bills | | 0.554% - 0.781% | | | 4/27/2017 | | — |
| | 48.2 |
|
| — |
| | 49.9 |
| | United States Treasury Bills | | 0.514% | | | 5/4/2017 | | — |
| | 49.9 |
|
| — |
| | 42.0 |
| | United States Treasury Bills | | 0.601% - 0.623% | | | 5/11/2017 | | — |
| | 42.0 |
|
| — |
| | 30.1 |
| | United States Treasury Bills | | 0.584% - 0.620% | | | 5/18/2017 | | — |
| | 30.1 |
|
| — |
| | 32.0 |
| | United States Treasury Bills | | 0.587% | | | 6/8/2017 | | — |
| | 32.0 |
|
| — |
| | 74.8 |
| | United States Treasury Bills | | 0.541% - 0.654% | | | 7/20/2017 | | — |
| | 74.7 |
|
| — |
| | 86.7 |
| | United States Treasury Bills | | 0.574% - 0.591% | | | 8/17/2017 | | — |
| | 86.6 |
|
| — |
| | 34.8 |
| | United States Treasury Bills | | 0.696% - 0.934% | | | 9/14/2017 | | — |
| | 34.8 |
|
| 17.8 |
| | — |
| | United States Treasury Bills | | 1.036% - 1.177% | | | 1/2/2018 | | 17.8 |
| | — |
|
| 75.0 |
| | — |
| | United States Treasury Bills | | 1.063% - 1.084% | | | 1/4/2018 | | 75.0 |
| | — |
|
| 21.2 |
| | — |
| | United States Treasury Bills | | 1.128% - 1.236% | | | 1/11/2018 | | 21.2 |
| | — |
|
| 40.0 |
| | — |
| | United States Treasury Bills | | 1.114% | | | 1/18/2018 | | 40.0 |
| | — |
|
| 71.0 |
| | — |
| | United States Treasury Bills | | 1.132% | | | 1/25/2018 | | 70.9 |
| | — |
|
| 36.0 |
| | — |
| | United States Treasury Bills | | 1.106% | | | 2/1/2018 | | 36.0 |
| | — |
|
| 93.0 |
| | — |
| | United States Treasury Bills | | 1.075% - 1.077% | | | 2/8/2018 | | 92.9 |
| | — |
|
| 98.0 |
| | — |
| | United States Treasury Bills | | 1.106% - 1.122% | | | 2/22/2018 | | 97.8 |
| | — |
|
| 81.0 |
| | — |
| | United States Treasury Bills | | 1.060% - 1.117% | | | 3/1/2018 | | 80.8 |
| | — |
|
| 154.0 |
| | — |
| | United States Treasury Bills | | 1.374% - 1.433% | | | 3/29/2018 | | 153.5 |
| | — |
|
| 24.0 |
| | — |
| | United States Treasury Bills | | 1.440% | | | 5/24/2018 | | 23.9 |
| | — |
|
| 85.0 |
| | — |
| | United States Treasury Bills | | 1.432% | | | 6/7/2018 | | 84.5 |
| | — |
|
| — |
| | 69.9 |
| | United States Treasury Notes | | 0.431% - 0.451% | | | 1/31/2017 | | — |
| | 69.9 |
|
| — |
| | 46.9 |
| | United States Treasury Notes | | 0.441% - 0.471% | | | 2/15/2017 | | — |
| | 47.0 |
|
| — |
| | 49.7 |
| | United States Treasury Notes | | 0.502% | | | 2/28/2017 | | — |
| | 49.7 |
|
| — |
| | 50.0 |
| | United States Treasury Notes | | 0.542% | | | 3/15/2017 | | — |
| | 50.0 |
|
| — |
| | 50.0 |
| | United States Treasury Notes | | 0.515% | | | 3/31/2017 | | — |
| | 50.0 |
|
| — |
| | 69.6 |
| | United States Treasury Notes | | 0.550% - 0.621% | | | 5/31/2017 | | — |
| | 69.6 |
|
| — |
| | 40.1 |
| | United States Treasury Notes | | 0.580% | | | 6/15/2017 | | — |
| | 40.1 |
|
| — |
| | 50.0 |
| | United States Treasury Notes | | 0.586% | | | 6/30/2017 | | — |
| | 50.0 |
|
| — |
| | 30.0 |
| | United States Treasury Notes | | 0.668% - 0.710% | | | 7/31/2017 | | — |
| | 30.0 |
|
| 50.0 |
| | — |
| | United States Treasury Notes | | 1.148% - 1.180% | | | 1/31/2018 | | 50.0 |
| | — |
|
| 40.0 |
| | — |
| | United States Treasury Notes | | 1.175% - 1.184% | | | 2/15/2018 | | 40.0 |
| | — |
|
| 48.0 |
| | — |
| | United States Treasury Notes | | 1.200% | | | 2/28/2018 | | 47.9 |
| | — |
|
| 40.0 |
| | — |
| | United States Treasury Notes | | 1.179% | | | 3/15/2018 | | 40.0 |
| | — |
|
| 43.1 |
| | — |
| | United States Treasury Notes | | 1.333% - 1.378% | | | 6/15/2018 | | 43.0 |
| | — |
|
TOTAL UNITED STATES TREASURY SECURITIES (Cost $1,015.3 and $1,745.0) | | $ | 1,015.2 |
| | $ | 1,744.9 |
|
TOTAL OTHER MARKETABLE SECURITIES (Cost $3,888.1 and $4,054.0) | | $ | 3,887.5 |
| | $ | 4,053.8 |
|
TOTAL MARKETABLE SECURITIES (Cost $4,879.1 and $4,937.9) | | | | $ | 5,125.5 |
| | $ | 5,135.3 |
|
|
| | | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Yield(4) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | 49.9 |
| | $ | — |
| | United States Treasury Bills | | 1.583% | | | 2/27/2020 | | $ | 49.9 |
| | $ | — |
|
| 46.1 |
| | — |
| | United States Treasury Bills | | 1.515% | | | 3/5/2020 | | 46.1 |
| | — |
|
| 54.5 |
| | — |
| | United States Treasury Bills | | 1.576% | | | 3/12/2020 | | 54.5 |
| | — |
|
| 44.8 |
| | — |
| | United States Treasury Bills | | 1.780% | | | 3/19/2020 | | 44.9 |
| | — |
|
| 38.9 |
| | — |
| | United States Treasury Bills | | 1.515% | | | 4/2/2020 | | 38.8 |
| | — |
|
| 99.8 |
| | — |
| | United States Treasury Notes | | 1.375% | | | 5/31/2020 | | 99.9 |
| | — |
|
| 100.4 |
| | — |
| | United States Treasury Notes | | 2.625% | | | 7/31/2020 | | 100.6 |
| | — |
|
| 249.5 |
| | — |
| | United States Treasury Notes | | 1.500% | | | 8/15/2020 | | 249.8 |
| | — |
|
| 653.1 |
| | — |
| | United States Treasury Notes | | 2.625% | | | 8/15/2020 | | 653.9 |
| | — |
|
| 100.8 |
| | — |
| | United States Treasury Notes | | 2.250% | | | 4/30/2021 | | 100.8 |
| | — |
|
| 199.4 |
| | — |
| | United States Treasury Notes | | 1.625% | | | 6/30/2021 | | 200.0 |
| | — |
|
| 99.9 |
| | — |
| | United States Treasury Notes | | 1.750% | | | 7/31/2021 | | 100.2 |
| | — |
|
| 49.6 |
| | — |
| | United States Treasury Notes | | 1.250% | | | 10/31/2021 | | 49.7 |
| | — |
|
| 100.0 |
| | — |
| | United States Treasury Notes | | 1.750% | | | 7/15/2022 | | 100.3 |
| | — |
|
| 100.7 |
| | — |
| | United States Treasury Notes | | 1.875% | | | 7/31/2022 | | 100.7 |
| | — |
|
TOTAL UNITED STATES TREASURY SECURITIES (Cost $2,586.3 and $2,038.1) | | $ | 2,589.1 |
| | $ | 2,038.0 |
|
CORPORATE BOND SECURITIES—4.2% and 0.0%
|
| | | | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Coupon Rate | | Credit Rating(8) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | 11.5 |
| | $ | — |
| | Air Lease Corporation | | 2.250% | | BBB | | 1/15/2023 | | $ | 11.5 |
| | $ | — |
|
| 13.8 |
| | — |
| | American Honda Finance | | 1.700% | | A | | 9/9/2021 | | 13.7 |
| | — |
|
| 19.7 |
| | — |
| | American Honda Finance | | 2.050% | | A | | 1/10/2023 | | 19.7 |
| | — |
|
| 27.7 |
| | — |
| | Apple, Inc. | | 1.700% | | AA+ | | 9/11/2022 | | 27.7 |
| | — |
|
| 29.2 |
| | — |
| | Banco Santander SA | | 3.500% | | A- | | 4/11/2022 | | 30.0 |
| | — |
|
| 12.0 |
| | — |
| | Bank of America Corporation | | 2.369% | | A- | | 7/21/2021 | | 12.0 |
| | — |
|
| 21.6 |
| | — |
| | Bank of America Corporation | | 2.503% | | A- | | 10/21/2022 | | 21.8 |
| | — |
|
| 29.5 |
| | — |
| | Bank of New York Mellon Corporation | | 1.950% | | A | | 8/23/2022 | | 29.6 |
| | — |
|
| 8.1 |
| | — |
| | Truist | | 2.150% | | A- | | 2/1/2021 | | 8.1 |
| | — |
|
| 3.5 |
| | — |
| | Berkshire Hathaway Energy | | 2.400% | | A- | | 2/1/2020 | | 3.5 |
| | — |
|
| 10.0 |
| | — |
| | Boeing Co. | | 1.650% | | A- | | 10/30/2020 | | 10.0 |
| | — |
|
| 28.9 |
| | — |
| | Boeing Co. | | 2.300% | | A- | | 8/1/2021 | | 29.0 |
| | — |
|
| 10.9 |
| | — |
| | BPCE SA | | 2.750% | | A+ | | 12/2/2021 | | 11.0 |
| | — |
|
| 8.0 |
| | — |
| | Canadian National Railway | | 2.400% | | A | | 2/3/2020 | | 8.0 |
| | — |
|
| 21.8 |
| | — |
| | Capital One, NA | | 2.150% | | BBB+ | | 9/6/2022 | | 21.8 |
| | — |
|
| 4.8 |
| | — |
| | Caterpillar Financial Service | | 1.850% | | A | | 9/4/2020 | | 4.7 |
| | — |
|
| 42.5 |
| | — |
| | Caterpillar Financial Service | | 2.185% | | A | | 3/8/2021 | | 42.6 |
| | — |
|
| 12.0 |
| | — |
| | Centerpoint Energy Resource | | 4.500% | | BBB+ | | 1/15/2021 | | 12.2 |
| | — |
|
| 27.0 |
| | — |
| | Columbia Pipeline Group | | 3.300% | | A3 | | 6/1/2020 | | 27.1 |
| | — |
|
| 24.5 |
| | — |
| | Diageo Capital PLC | | 4.828% | | A- | | 7/15/2020 | | 24.9 |
| | — |
|
| 34.5 |
| | — |
| | Exxon Mobil Corporation | | 1.902% | | AA+ | | 8/16/2022 | | 34.7 |
| | — |
|
| 14.0 |
| | — |
| | Fifth Third Bank | | 2.875% | | BBB+ | | 7/27/2020 | | 14.1 |
| | — |
|
| 5.0 |
| | — |
| | Fifth Third Bank | | 2.250% | | A- | | 6/14/2021 | | 5.0 |
| | — |
|
| 4.0 |
| | — |
| | General Dynamics Corporation | | 2.875% | | A+ | | 5/11/2020 | | 4.0 |
| | — |
|
| 2.3 |
| | — |
| | Georgia Power Company | | 2.000% | | A- | | 3/30/2020 | | 2.3 |
| | — |
|
| 15.0 |
| | — |
| | Georgia Power Company | | 2.000% | | A- | | 9/8/2020 | | 15.0 |
| | — |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Coupon Rate | | Credit Rating(8) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | 8.0 |
| | $ | — |
| | Georgia Power Company | | 2.400% | | A- | | 4/1/2021 | | $ | 8.0 |
| | $ | — |
|
| 7.5 |
| | — |
| | Goldman Sachs Group, Inc. | | 2.600% | | BBB+ | | 4/23/2020 | | 7.5 |
| | — |
|
| 12.2 |
| | — |
| | Goldman Sachs Group, Inc. | | 2.600% | | BBB+ | | 12/27/2020 | | 12.2 |
| | — |
|
| 25.0 |
| | — |
| | Goldman Sachs Group, Inc. | | 2.350% | | BBB+ | | 11/15/2021 | | 25.1 |
| | — |
|
| 10.5 |
| | — |
| | HSBC Bank USA, NA | | 4.875% | | A | | 8/24/2020 | | 10.7 |
| | — |
|
| 11.7 |
| | — |
| | John Deere Capital Corporation | | 1.950% | | A | | 6/13/2022 | | 11.7 |
| | — |
|
| 25.0 |
| | — |
| | JP Morgan Chase Bank, NA | | 2.604% | | A+ | | 2/1/2021 | | 25.0 |
| | — |
|
| 20.0 |
| | — |
| | JP Morgan Chase Bank, NA | | 3.086% | | A+ | | 4/26/2021 | | 20.1 |
| | — |
|
| 65.0 |
| | — |
| | Mitsubishi UFJ Financial Group | | 2.190% | | A- | | 9/13/2021 | | 65.2 |
| | — |
|
| 9.2 |
| | — |
| | Morgan Stanley | | 2.650% | | BBB+ | | 1/27/2020 | | 9.2 |
| | — |
|
| 20.0 |
| | — |
| | Morgan Stanley | | 2.800% | | BBB+ | | 6/16/2020 | | 20.1 |
| | — |
|
| 8.3 |
| | — |
| | Morgan Stanley | | 2.500% | | BBB+ | | 4/21/2021 | | 8.4 |
| | — |
|
| 7.0 |
| | — |
| | Morgan Stanley | | 2.625% | | BBB+ | | 11/17/2021 | | 7.1 |
| | — |
|
| 18.4 |
| | — |
| | MPLX LP | | 2.785% | | BBB | | 9/9/2021 | | 18.5 |
| | — |
|
| 50.8 |
| | — |
| | Nextera Energy Capital | | 2.403% | | BBB+ | | 9/1/2021 | | 51.2 |
| | — |
|
| 20.0 |
| | — |
| | Occidental Petroleum Corporation | | 2.854% | | BBB | | 2/8/2021 | | 20.1 |
| | — |
|
| 14.9 |
| | — |
| | Occidental Petroleum Corporation | | 2.600% | | BBB | | 8/13/2021 | | 15.0 |
| | — |
|
| 31.1 |
| | — |
| | Occidental Petroleum Corporation | | 2.700% | | BBB | | 8/15/2022 | | 31.4 |
| | — |
|
| 35.0 |
| | — |
| | Omnicom GP/Omnicom CAP | | 4.450% | | BBB+ | | 8/15/2020 | | 35.5 |
| | — |
|
| 20.0 |
| | — |
| | Oracle Corporation | | 1.900% | | A+ | | 9/15/2021 | | 20.0 |
| | — |
|
| 11.6 |
| | — |
| | Paccar Financial Corporation | | 2.000% | | A+ | | 9/26/2022 | | 11.7 |
| | — |
|
| 19.3 |
| | — |
| | Paypal Holdings, Inc. | | 2.200% | | BBB+ | | 9/26/2022 | | 19.4 |
| | — |
|
| 20.0 |
| | — |
| | Skandinaviska Enskilda | | 1.875% | | A+ | | 9/13/2021 | | 19.9 |
| | — |
|
| 5.0 |
| | — |
| | Sumitomo Mitsui Financial Group | | 2.934% | | A- | | 3/9/2021 | | 5.1 |
| | — |
|
| 5.0 |
| | — |
| | Sumitomo Mitsui Financial Group | | 2.058% | | A- | | 7/14/2021 | | 5.0 |
| | — |
|
| 23.0 |
| | — |
| | The Walt Disney Company | | 2.157% | | A | | 9/1/2021 | | 23.1 |
| | — |
|
| 17.1 |
| | — |
| | Toronto Dominion Bank | | 2.500% | | AA- | | 12/14/2020 | | 17.2 |
| | — |
|
| 14.5 |
| | — |
| | Toronto Dominion Bank | | 2.170% | | A | | 3/17/2021 | | 14.5 |
| | — |
|
| 20.0 |
| | — |
| | United Technologies Corporation | | 1.900% | | BBB+ | | 5/4/2020 | | 20.0 |
| | — |
|
| 12.8 |
| | — |
| | Wells Fargo Bank, NA | | 3.325% | | A+ | | 7/23/2021 | | 12.9 |
| | — |
|
| 30.0 |
| | — |
| | Wells Fargo Bank, NA | | 2.082% | | A+ | | 9/9/2022 | | 30.0 |
| | — |
|
| 10.0 |
| | — |
| | Toronto Dominion Bank | | 1.900% | | A | | 12/1/2022 | | 10.0 |
| | — |
|
| 32.9 |
| | — |
| | Citigroup, Inc. | | 2.312% | | BBB+ | | 11/4/2022 | | 32.9 |
| | — |
|
| 19.6 |
| | — |
| | DTE Energy Corporation | | 2.250% | | BBB | | 11/1/2022 | | 19.6 |
| | — |
|
| 101.4 |
| | — |
| | Swedish Export Credit | | 1.625% | | AA+ | | 11/14/2022 | | 101.0 |
| | — |
|
| 20.0 |
| | — |
| | PNC Bank, NA | | 2.315% | | A | | 12/9/2022 | | 20.0 |
| | — |
|
| 20.0 |
| | — |
| | PNC Bank, NA | | 2.028% | | A | | 12/9/2022 | | 20.0 |
| | — |
|
| 20.0 |
| | — |
| | MUFG Union Bank, NA | | 2.100% | | A | | 12/9/2022 | | 20.0 |
| | — |
|
TOTAL CORPORATE BOND SECURITIES (Cost $1,265.4 and $0.0) | | $ | 1,268.3 |
| | $ | — |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
MUNICIPAL BOND SECURITIES—0.1% and 0.0%
|
| | | | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Coupon Rate | | Credit Rating(8) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
| $ | 0.7 |
| | $ | — |
| | Broward County Florida Airport System Revenue | | 1.844% | | A+ | | 10/1/2020 | | $ | 0.6 |
| | $ | — |
|
| 0.6 |
| | — |
| | Broward County Florida Airport System Revenue | | 1.874% | | A+ | | 10/1/2021 | | 0.5 |
| | — |
|
| 0.6 |
| | — |
| | Broward County Florida Airport System Revenue | | 1.936% | | A+ | | 10/1/2022 | | 0.6 |
| | — |
|
| 2.0 |
| | — |
| | California State Health Facilities Financing Authority | | 1.896% | | AA- | | 6/1/2021 | | 2.0 |
| | — |
|
| 1.0 |
| | — |
| | California State Health Facilities Financing Authority | | 1.893% | | AA- | | 6/1/2022 | | 1.0 |
| | — |
|
| 1.3 |
| | — |
| | Colorado State Health Facilities Authority HOS | | 2.075% | | A+ | | 11/1/2020 | | 1.2 |
| | — |
|
| 0.8 |
| | — |
| | Colorado State Health Facilities Authority HOS | | 2.185% | | A+ | | 11/1/2021 | | 0.8 |
| | — |
|
| 1.1 |
| | — |
| | Colorado State Health Facilities Authority HOS | | 2.237% | | A+ | | 11/1/2022 | | 1.1 |
| | — |
|
| 0.8 |
| | — |
| | Florida State Municipal Power Agency | | 1.966% | | A2 | | 10/1/2020 | | 0.8 |
| | — |
|
| 1.1 |
| | — |
| | Florida State Municipal Power Agency | | 1.986% | | A2 | | 10/1/2021 | | 1.2 |
| | — |
|
| 1.0 |
| | — |
| | Florida State Municipal Power Agency | | 2.064% | | A2 | | 10/1/2022 | | 1.0 |
| | — |
|
| 0.6 |
| | — |
| | Hamilton County Ohio Healthcare Facilities | | 2.135% | | AA | | 6/1/2020 | | 0.6 |
| | — |
|
| 0.9 |
| | — |
| | Harris County Texas Cultural Education Facilities | | 2.015% | | AA- | | 5/15/2020 | | 0.9 |
| | — |
|
| 1.3 |
| | — |
| | Harris County Texas Cultural Education Facilities | | 2.065% | | AA- | | 5/15/2021 | | 1.3 |
| | — |
|
| 1.3 |
| | — |
| | Harris County Texas Cultural Education Facilities | | 2.102% | | AA- | | 5/15/2022 | | 1.3 |
| | — |
|
| 0.5 |
| | — |
| | Indiana State Finance Authority | | 2.242% | | AA- | | 3/1/2020 | | 0.5 |
| | — |
|
| 1.1 |
| | — |
| | Lansing Michigan Board of Water and Light Utility System | | 1.952% | | AA- | | 7/1/2022 | | 1.2 |
| | — |
|
| 7.1 |
| | — |
| | Massachusetts State Water Resources | | 1.661% | | AA+ | | 8/1/2020 | | 7.1 |
| | — |
|
| 1.2 |
| | — |
| | Massachusetts State Water Resources | | 1.702% | | AA+ | | 8/1/2021 | | 1.2 |
| | — |
|
| 2.9 |
| | — |
| | Massachusetts State Water Resources | | 1.734% | | AA+ | | 8/1/2022 | | 2.9 |
| | — |
|
| 0.3 |
| | — |
| | Matanuska-Susitna Borough Alaska | | 2.016% | | AA+ | | 3/1/2023 | | 0.3 |
| | — |
|
| 0.5 |
| | — |
| | Midland County Texas Fresh Water Supply | | 1.872% | | AA- | | 9/15/2021 | | 0.5 |
| | — |
|
| 0.5 |
| | — |
| | Midland County Texas Fresh Water Supply | | 1.910% | | AA- | | 9/15/2022 | | 0.5 |
| | — |
|
| 0.2 |
| | — |
| | Park Creek Metropolitan District Revenue | | 2.292% | | AA | | 12/1/2022 | | 0.2 |
| | — |
|
| 0.2 |
| | — |
| | Stockton California Public Financing Authority | | 1.942% | | AA | | 10/1/2020 | | 0.2 |
| | — |
|
| 0.2 |
| | — |
| | Stockton California Public Financing Authority | | 2.048% | | AA | | 10/1/2021 | | 0.2 |
| | — |
|
| 0.1 |
| | — |
| | Stockton California Public Financing Authority | | 2.145% | | AA | | 10/1/2022 | | 0.1 |
| | — |
|
| 0.7 |
| | — |
| | Texas State University System Revenue Finance | | 1.760% | | Aa2 | | 3/15/2020 | | 0.7 |
| | — |
|
| 0.5 |
| | — |
| | Texas State University System Revenue Finance | | 1.810% | | Aa2 | | 3/15/2021 | | 0.5 |
| | — |
|
| 1.7 |
| | — |
| | Texas State University System Revenue Finance | | 1.839% | | Aa2 | | 3/15/2022 | | 1.7 |
| | — |
|
| 0.5 |
| | — |
| | University of Akron | | 1.976% | | A1 | | 1/1/2021 | | 0.5 |
| | — |
|
TOTAL MUNICIPAL BOND SECURITIES (Cost $33.3 and $0.0) | | $ | 33.2 |
| | $ | — |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
|
| | | | | | | | | | | | | | | | | | | | | | |
| Principal | | Issuer | | Coupon Rate | | Credit Rating(8) | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | 2019 | | 2018 |
TOTAL OTHER MARKETABLE SECURITIES
(Cost $4,144.7 and $4,088.9) | | $ | 4,150.2 |
| | $ | 4,088.7 |
|
TOTAL MARKETABLE SECURITIES
(Cost $4,830.7 and $5,363.6) | | $ | 4,975.9 |
| | $ | 5,503.8 |
|
LOANS RECEIVABLE—5.0% and 3.2% |
| | | | | | | | | | | | | | | | | | | | | | |
| Principal | | | | | | | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | Borrower | | Property Type | | Interest Rate(6) | | | 2019 | | 2018 |
| $ | 6.3 |
| | $ | 6.3 |
| | DJM Capital Partners Mezzanine | | Retail | | 5.000% | | 3/2/2020 | | $ | 6.3 |
| | $ | 6.3 |
|
| 87.5 |
| | 83.2 |
| | 311 South Wacker Mezzanine | | Office | | 4.70% + LIBOR | | 6/7/2020 | | 86.8 |
| | 83.2 |
|
| 92.2 |
| | 95.2 |
| | Blackstone RioCan Retail Portfolio Mezzanine | | Retail | | 4.65% + LIBOR | | 6/9/2020 | | 92.2 |
| | 95.3 |
|
| 60.0 |
| | 60.0 |
| | River North Point Junior Mezzanine | | Office | | 4.30% + LIBOR | | 7/9/2020 | | 60.0 |
| | 60.0 |
|
| 128.6 |
| | 176.4 |
| | Project Glacier Mezzanine | | Industrial | | 4.40% + LIBOR | | 11/9/2020 | | 128.6 |
| | 176.4 |
|
| 53.8 |
| | — |
| | SCG Oakland Portfolio | | Office | | 4.25% + LIBOR | | 3/1/2021 | | 53.8 |
| | — |
|
| 20.0 |
| | 20.0 |
| | Crest at Las Colinas Station Mezzanine | | Apartments | | 5.11% + LIBOR | | 5/10/2021 | | 20.0 |
| | 20.0 |
|
| 60.0 |
| | — |
| | SoNo Collection Mezzanine | | Retail | | 6.75% + LIBOR | | 8/6/2021 | | 60.0 |
| | — |
|
| 125.0 |
| | 125.0 |
| | State Street Financial Center Mezzanine | | Office | | 6.500% | | 11/10/2021 | | 124.4 |
| | 125.3 |
|
| 20.0 |
| | 20.0 |
| | Modera Observatory Park Mezzanine | | Apartments | | 4.34% + LIBOR | | 6/10/2022 | | 20.0 |
| | 20.0 |
|
| 15.6 |
| | — |
| | San Diego Office Portfolio Mezzanine | | Office | | 2.45% + LIBOR | | 8/9/2022 | | 16.1 |
| | — |
|
| 46.9 |
| | — |
| | San Diego Office Portfolio Senior Loan(1) | | Office | | 2.45% + LIBOR | | 8/9/2022 | | 48.2 |
| | — |
|
| 20.8 |
| | 19.7 |
| | Rosemont Towson Mezzanine | | Apartments | | 4.15% + LIBOR | | 9/9/2022 | | 20.8 |
| | 19.7 |
|
| 27.5 |
| | 26.7 |
| | 1330 Broadway Mezzanine | | Office | | 5.01% + LIBOR | | 8/10/2023 | | 27.5 |
| | 26.8 |
|
| 82.0 |
| | 63.0 |
| | Great Value Storage Portfolio Mezzanine | | Storage | | 7.875% | | 12/6/2023 | | 82.0 |
| | 63.2 |
|
| 85.0 |
| | — |
| | Park Avenue Tower Mezzanine | | Office | | 4.35% + LIBOR | | 3/9/2024 | | 85.0 |
| | — |
|
| 71.0 |
| | — |
| | BREP VIII Industrial Loan Facility Mezzanine | | Industrial | | 5.00% + LIBOR | | 3/9/2026 | | 71.0 |
| | — |
|
| 20.0 |
| | 20.0 |
| | Aspen Lake Office Portfolio Mezzanine | | Office | | 8.250% | | 3/10/2028 | | 20.0 |
| | 20.2 |
|
| 95.0 |
| | 95.0 |
| | Merritt on the River Office Portfolio Mezzanine | | Office | | 8.000% | | 8/1/2028 | | 95.0 |
| | 95.7 |
|
| 100.0 |
| | 100.0 |
| | Charles River Plaza North Mezzanine | | Office | | 6.080% | | 4/6/2029 | | 100.0 |
| | 100.9 |
|
| 14.7 |
| | — |
| | Liberty Park | | Office | | 6.080% | | 11/9/2021 | | 14.7 |
| | — |
|
| 33.8 |
| | — |
| | Colony New England Hotel Portfolio Mezzanine | | Hotel | | 2.80% + LIBOR | | 11/9/2022 | | 33.8 |
| | — |
|
| 101.4 |
| | — |
| | Colony New England Hotel Portfolio Senior Loan | | Hotel | | 2.80% + LIBOR | | 11/9/2022 | | 101.4 |
| | — |
|
| 33.9 |
| | — |
| | Exo Apartments Mezzanine | | Apartments | | 2.30% + LIBOR | | 1/9/2023 | | 33.9 |
| | — |
|
| 101.6 |
| | — |
| | Exo Apartments Senior Loan | | Apartments | | 2.30% + LIBOR | | 1/9/2023 | | 101.6 |
| | — |
|
TOTAL LOANS RECEIVABLE (Cost $1,504.5 and $910.6) | $ | 1,503.1 |
| | $ | 913.0 |
|
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)
LOANS RECEIVABLE—1.1%RECEIVABLE WITH RELATED PARTIES—0.2% and 1.1%0.0%
|
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Maturity Date | | Fair Value at December 31, |
| | | | | Borrower | | Interest Rate(7) | | | 2017 | | 2016 |
| | | | | DJM Capital Partners(8) | | 4.200% | | | 7/1/2018 | | $ | 34.2 |
| | $ | 32.3 |
|
| | | | | Simply Self Storage Portfolio | | 8.250% | | | 9/6/2021 | | 37.6 |
| | 37.6 |
|
| | | | | State Street Financial Center Junior Mezz | | 6.500% | | | 11/10/2021 | | 125.1 |
| | 125.2 |
|
| | | | | Charles River Plaza North | | 6.080% | | | 4/6/2029 | | 101.9 |
| | 100.6 |
|
TOTAL LOANS RECEIVABLE
(Cost $296.7 and $294.8) | | | | $ | 298.8 |
| | $ | 295.7 |
|
TOTAL INVESTMENTS
(Cost $22,823.6 and $22,581.2) | | | | $ | 27,170.0 |
| | $ | 26,643.7 |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| Principal | | | | | | | | Maturity Date | | Fair Value at December 31, |
| 2019 | | 2018 | | Borrower | | Property Type | | Interest Rate(6) | | | 2019 | | 2018 |
| $ | 36.5 |
| | $ | — |
| | MRA Hub 34 Holding, LLC | | Office | | 2.50% + LIBOR | | 9/1/2022 | | $ | 36.5 |
| | $ | — |
|
| 32.8 |
| | — |
| | THP Student Housing, LLC | | Apartments | | 3.200% | | 9/1/2024 | | 32.5 |
| | — |
|
TOTAL LOANS RECEIVABLE WITH RELATED PARTIES (Cost $69.3 and $0.0) | $ | 69.0 |
| | $ | — |
|
TOTAL INVESTMENTS (Cost $25,697.4 and $24,169.8) | $ | 29,899.0 |
| | $ | 28,480.4 |
|
| |
(1) | The investment has a mortgage loan payable outstanding, as indicated in Note 8.9 - Loans Payable. |
| |
(2) | The fair value reflects the Account'sAccount’s interest in the joint venture and is net of debt. |
| |
(3) | Properties within this investment are located throughout the United States. |
| |
(4) | YieldFor zero-coupon securities issued at a discount or premium to par, yield represents the annualized yield.yield to maturity. For all other securities, the coupon rate is presented. |
| |
(5) | The assets held inA portion of this investment were liquidated on February 18, 2015, with final dissolution on December 13, 2017.consists of land currently under development. |
| |
(6) | A partial disposition of assetsFixed interest rate loans are represented with a single rate. Variable interest rate loans are presented with their base spread and the corresponding index rate. All variable interest loans currently held by the portfolio was completedAccount use the one month London Interbank Offered Rate ("LIBOR") rate on February 1, 2017.U.S. dollar deposits as the index rate, as published by ICE Benchmark Administration Limited. |
| |
(7) | Represents the fixed interest rate on this investment. |
| |
(8)
| This loan has the option to increase the principal balance up to $35.0 million and includes a one year extension option at a 5.0% annual interest only rate. |
| |
(9)
| All or a portion of these securities are out on loan. The aggregate value of securities on loan is $18.1 million.December 31, 2019 and December 31, 2018 were $25.2 million and $67.4 million, respectively. |
| |
(8) | Credit ratings are sourced from Standard & Poor's ("S&P"), Moody's or Fitch. Ratings are presented using the S&P rating tier definition. |
| |
(9) | Property previously held within South Florida Apartment Portfolio. |
| |
(10) | The assets held in this investment were in liquidation as of May 2014, with final dissolution expected in 2018. |
| |
(11)
| A partial disposition of assets held by the investment portfolio was completed on August 17, 2017. |
| |
(12)
| A portion of this investment consists of land for development that was acquired on December 19, 2017.occurred in 2019. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Teachers Insurance and Annuity Association of America and Participants of TIAA Real Estate Account
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of the TIAA Real Estate Account and its subsidiaries (the “Account”) as of December 31, 20172019 and 2016,2018, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended December 31, 2017,2019, including the related notes (collectively referred to as the consolidated“consolidated financial statements)statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Account as of December 31, 20172019 and 2016,2018, and the results of theirits operations and theirits cash flows for each of the three years in the period ended December 31, 20172019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Account’s management. Our responsibility is to express an opinion on the Account’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Account's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 15, 201812, 2020
We have served as the Account's auditor since 2005.
ADDITIONAL INFORMATION
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES.
(a) The registrant maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the registrant’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the registrant’s Principal Executive Officer (“PEO”) and the Principal Financial Officer (“PFO”), as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and participation of the registrant’s management, including the registrant’s PEO and PFO, the registrant conducted an evaluation (as required under Rules 13a-15(b) and 15d-15(b) under the Exchange Act, under the supervision and with the participation of our PEO and PFO, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon management’s review, the PEO and the PFO concluded with reasonable assurance that the registrant’s disclosure controls and procedures were effective as of December 31, 2017.2019.
(b) Management’s Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), is a process designed by, or under the supervision of the Account’s PEO and PFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Account’s Consolidated Financial Statements for external purposes in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has made a comprehensive review, evaluation, and assessment of the Account’s internal control over financial reporting as of December 31, 2017.2019. In making its assessment of internal control over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, management has concluded that as of December 31, 2017,2019, the Account’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
This annual report does not include an attestation report of the registrant’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Registrant’s independent registered public accounting firm pursuant to the rules of the U.S. Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
(c) Changes in internal control over financial reporting. There have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEMS 10 AND 11. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANT; EXECUTIVE COMPENSATION.
The TIAA Real Estate Account has no officers or directors. Rather, TIAA officers, under the direction and control of the Board, manage the investment of the Account's assets, following investment management procedures that TIAA has adopted for the Account. No TIAA trusteeTrustee or executive officer receives compensation from the Account. The Trustees and certain executive officers of TIAA as of March 1, 2018,2020, their years of birth and their principal occupations during at least the lastpast five years, are as follows:
Trustees
Ronald L. Thompson (Chairman)(Chairman of the TIAA Board of Trustees), YOB: 1949
Senior Non-Executive Director, Fiat Chrysler Automobiles (2014 to present). Lead Director (2011 to 2014) and Director (2009 to 2014), Chrysler Group LLC. Member, Plymouth Ventures Partnership II Advisory Board (2010 to present). Director, Medical University of South Carolina Foundation (2013 to present), and. Trustee, Washington University in St. Louis (1987 to 2013 and 2014 to present).
Jeffrey R. Brown, YOB: 1968
Josef and Margot Lakonishok Professor of Business and Dean of the Gies College of Business at the University of Illinois at Urbana-Champaign (2015 to present). Chair (2019 to present) and Member (2016 to present), Board of Managers of UI Singapore Research, LLC. Member, Board of Managers of University of Illinois Research Park (2016 to present). Professor of Finance and Director of the Center for Business and Public Policy, University of Illinois at Urbana-Champaign (2007 to present)2015). Board Member, Center for Audit Quality (2016 to present).
Priscilla Sims Brown, YOB: 1957
Group Executive, Marketing and Corporate Affairs, Commonwealth Bank of Australia (2019 to present). Chief Executive Officer, Emerge.me (2017 to 2019). Senior Executive Vice President and Chief Marketing Officer, AXA Financial, Inc. (2014 to 2016). Senior Vice President, Chief Marketing & Development Strategy Officer, Amerihealth Caritas (2013 to 2014).
James R. Chambers, YOB: 1957
Special Advisor, Board, Weight Watchers International, Inc. (2016). Director, President and Chief Executive Officer (2012(2013 to 2016), and Special Advisor, Board (2016), Weight Watchers International, Inc. President, US Snacks and Confectionary at Kraft Foods (2010Chairman (2018 to 2012).present), Director (2012 to present), Big Lots, Inc. (2012
Tamara Simpkins Franklin, YOB: 1966
Vice President, Media & Entertainment Industry Solutions for North America (2018 to present), Vice President, Chief Digital Officer for North America (2017 to 2018), International Business Machines (IBM). Executive Vice President, Digital (2014 to 2016), Senior Vice President (2009 to 2014), Scripps Network Interactive. Director, Dream Academy (2017 to present).
Lisa W. Hess, YOB: 1955
President and Managing Partner, SkyTop Capital (2010 to present). Director, Radian Group, Inc. (2011 to present). Director, TIAA, FSB (a wholly owned subsidiary of TIAA) (2015 to present).
Edward M. Hundert, M.D., YOB: 1956
Dean for Medical Education, Associate Director of the Center for Bioethics and Daniel D. Federman, M.D. Professor in Residence of Global Health and Social Medicine and Medical Education, Harvard University Medical School (2014 to present). Senior lecturer in Medical Ethics (2007 to 2014), Director of theFaculty member, Massachusetts General Hospital Center for TeachingLaw, Brain and Learning, Harvard Medical School (2011 to 2014).
Lawrence H. Linden, YOB: 1947
Founding Trustee, Linden Trust for Conservation (1993 to present), Director, World Wildlife Fund (2002 to present). Advisory Director, Redstone Strategy Group (2006 to present). Strategic Advisory Board Member, New World Capital GroupBehavior (2011 to present).
Maureen O’Hara, YOB: 1953
R.W. Purcell Professor of Finance, Johnson Graduate School of Management, Cornell University (1992 to present), where she has taught since 1979. Professor of Finance, University of Technology Sydney (2016 to present)2018).
Donald K. Peterson, YOB: 1949
Director, Sanford C. BernsteinTrustee, AllianceBernstein Multi-Manager Alternative Fund Inc. (2007(2019 to present). Director, Bernstein Fund Inc. (2015 to present). Director, Sanford C. Bernstein Fund Inc. (2007 to present). Trustee Emeritus, Worcester Polytechnic Institute (2015 to present). Director, TIAA, FSB (a wholly owned subsidiary of TIAA) (2015 to present). Director, National Organization for Disorders of the Corpus Colossum (2020 to present).
Sidney A. Ribeau, YOB: 1947
Professor of Communications, Howard University (2014 to present). President, Howard University (2008 to 2013). Senior Consultant, Academic Search (2018 to present). Co-founder and Principal Consultant, TM2 Education Search (2016 to present)2018). Director, Worthington Industries (2000 to present).
Dorothy K. Robinson, YOB: 1951
Senior Of Counsel, K&L Gates (2016 to present). Senior Counselor to the President Yale University (2014 to 2015)., General Counsel (1986 to 2014), and Vice President and General Counsel,(1995 to 2014), Yale University. Trustee, Swarthmore College (2019 to present). Trustee, Yale University (1995Press, London (2015 to 2014)present).
Director, Oak Spring Garden Foundation (2018 to present). Director, TIAA, FSB (a wholly owned subsidiary of TIAA) (2015 to present).
Kim M. Sharan, YOB: 1957
Founder and CEO, Kim M. Sharan, LLC (2004(2014 to present). President of Financial Planning and Wealth Strategies and Chief Marketing Officer, Ameriprise Financial (2002(2005 to 2014). Board Member, Partner HerePartnerHere (2014 to present). Director, Girls Inc. (2014 to present). Executive Advisor, Own the Room (2016 to present). Executive Advisor, Hearsay Social (2019 to present).
David L. Shedlarz, YOB: 1948
Director, Pitney BowesTeladoc, Inc. (2001(2016 to present). Director, The Hershey Company (2008 to present). Director, Teladoc,Pitney Bowes Inc. (2016(2001 to present). Director, TIAA, FSB (a wholly owned subsidiary of TIAA) (2015 to present).
Marta Tienda, YOB: 1950
Maurice P. During ’22 Professor in Demographic Studies (1999 to present) and Professor of Sociology and Public Affairs (1997 to present), Princeton University (since 1999).University. Director, Novume SolutionsRobin Hood Foundation (2017 to present). Trustee (2004 to present), Board Chair (2017 to present), Trustee (2004 to present), Alfred P. Sloan Foundation. Trustee, Jacobs Foundation of Switzerland (1999(1998 to present). Board member, Robin Hood Foundation (2017Trustee, Urban Institute (2019 to present). Director, Holdsworth Center (2019 to present).
Officer—Trustees
Roger W. Ferguson, Jr., YOB: 1951
President and Chief Executive Officer of TIAA and CREF (since 2008).
Other TIAA Executive Officers
Carol W. Deckbar, YOB: 1962
Executive Vice President, Institutional Investment and Endowment ServicesChief Product Officer of TIAA andFinancial Solutions, TIAA. Executive Vice President, of CREF. Prior positions: Executive Vice President, CEO,Chief Executive Officer, TIAA-CREF Asset Management, at TIAA; Executive Vice President, COOChief Operating Officer of Asset Management, at TIAA.
Virginia M. Wilson,Lori Fouché, YOB: 19541969
Senior Executive Vice President, Chief Executive Officer of TIAA Financial Solutions, TIAA. Prior positions: Senior Vice President, Individual Solutions, Prudential Financial, Inc.; President, Prudential Annuities, Prudential Financial, Inc.; Chief Executive Officer, Prudential Group Insurance, Prudential Financial, Inc.
Glenn Richter, YOB: 1962
Senior Executive Vice President, Chief Financial Officer, of TIAA andTIAA. Prior positions: Senior Executive Vice President, Chief FinancialAdministrative Officer, and Principal Accounting Officer of CREF. Prior position:TIAA; Executive Vice President, Chief FinancialOperating Officer, of TIAA.TIAA Global Asset Management; Chief Operating Officer, Nuveen Investments.
Ronald Pressman,Oluseun S. Salami, YOB: 19581977
Senior Executive Vice President, Institutional Financial Services Chief ExecutiveAccounting Officer of TIAA, and Executive Vice President of the TIAA-CREF Fund Complex.Corporate Controller, TIAA. Prior positions: Executive Vice President, and Chief Operating Officer of TIAA.
Kathie J. Andrade, YOB: 1960
Global Controller - Corporate Solutions, Jones Lang LaSalle; Senior Executive Vice President, Retail Financial Services Chief Executive Officer of TIAA. Prior position: Executive Vice President, Head of Individual Advisory Services of TIAA.Manager, Deloitte & Touche LLP.
Portfolio Management Team
Randy Giraldo, YOB: 1975
Managing Director, Portfolio Manager, Head of TIAA Real Estate Account. Head of Portfolio Management for THRE division of Nuveen.Account, TIAA. Prior position: Managing Director.Director, TIAA.
Gordon (Chris) McGibbon, YOB: 1972
Senior Managing Director, Head of Americas, THNuveen Real Estate. Prior positions: Managing Director, PMHead of GAU.S. Real Estate; Managing Director, Portfolio Manager of General Account Mortgage and Real Estate Portfolios, TIAA. Managing Director, PM of Direct, Flagship Open Ended Real Estate Fund.
Audit Committee Financial Expert
On February 10, 2016,13, 2020, the Board of Trustees of TIAA determined that Jeffrey R. Brown, James R. Chambers, Lisa W. Hess, Maureen O’Hara and Donald K. Peterson qualify as Audit Committee Financial Experts. Each such Trustee is independent (as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934) and has not accepted, directly or indirectly, any consulting, advisory or other compensatory fee from TIAA, other than in his or her capacity as Trustee.
Code of EthicsConduct
The Board of Trustees of TIAA has adopted a code of ethicsconduct for senior financial officers, including its principal executive officer, principal financial officer, principal accounting officer, or controller, and persons performing similar functions, in conformity with rules promulgated under the Sarbanes-Oxley Act of 2002.
The code of ethicsconduct is filed as an exhibit to this annual report.
During the reporting period, there were no implicit or explicit waivers granted by the Registrant from any provision of the code of ethics.conduct.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Not applicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The TIAA General Account plays a significant role in operating the Account, including providing a liquidity guarantee, and investment advisory, administrative, and other services. In addition, Services, a wholly-owned subsidiary of TIAA, provides distribution services for the Account.
Liquidity Guarantee. If the Account’s liquid assets and its cash flow from operating activities and participant transactions are insufficient to fund redemption requests, the TIAA general account has agreed to purchase liquidity units. TIAA thereby guarantees that a participant can redeem accumulation units at their net asset value next determined. For the year ended December 31, 2017,2019, the Account expensed $47.0$57.8 million for this liquidity guarantee from TIAA through a daily deduction from the net assets of the Account.
Investment Advisory and Administration Services/Mortality and Expense Risks Borne by TIAA. Deductions are made each valuation day from the net assets of the Account for various services required to manage investments, administer the Account and distribute the contracts. These services are performed at cost by TIAA and Services. Deductions are also made each valuation day to cover mortality and expense risks borne by TIAA.
For the year ended December 31, 2017,2019, the Account expensed $72.0$68.1 million for investment management services and $1.2$1.3 million for mortality and expense risks provided/borne by TIAA. For the same period, the Account expensed $85.0$81.7 million for administrative and distribution services provided by TIAA and Services.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
PricewaterhouseCoopers LLP (“PwC”) performs independent audits of the registrant’s consolidated financial statements. To maintain auditor independence and avoid even the appearance of conflicts of interest, the registrant, as a policy, does not engage PwC for management advisory or consulting services.
Audit Fees. PwC’s fees for professional services rendered for the audits of the registrant’s annual consolidated financial statements for the years ended December 31, 20172019 and 20162018 and review of consolidated financial statements included in the registrant’s quarterly reports were $1,198,800$1,139,969 and $1,163,900$1,149,969 respectively.
Audit-Related Fees. The registrant had no audit-related services for the years ended December 31, 20172019 and 2016.2018.
Tax Fees. PwC had no tax fees with respect to registrant for the years ended December 31, 20172019 and 2016.2018.
All Other Fees. Other than as set forth above, there were no additional fees with respect to registrant.
Preapproval Policy. In June of 2003, theThe audit committee of the Board (“Audit Committee”) has adopted a Preapproval Policy for External Audit Firm Services (the “Policy”), which applies to the registrant. The Policy describes the types of services that may be provided by the independent auditor to the registrant without impairing the auditor’s independence. Under the Policy, the Audit Committee is required to preapprove services to be performed by the registrant’s independent auditor in order to ensure that such services do not impair the auditor’s independence.
The Policy requires the Audit Committee to: (i) appoint the independent auditor to perform the financial statement audit for the registrant and certain of its affiliates, including approving the terms of the engagement and (ii) preapprove the audit, audit-related and tax services to be provided by the independent auditor and the fees to be charged for provision of such services from year to year.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
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| (1) | (A) | |
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| (3) | (A) | |
| | (B) | |
| (B) | Amended Bylaws of TIAA6 |
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| (4) | (A) | |
| | (B) | |
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| (B) | Forms of Income-Paying Contracts2 |
| | (C) | |
| (C) | Form of Contract Endorsement for Internal Transfer Limitation7 |
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| (D) | |
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| (E) | |
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| (F) | |
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| | (G) | |
| | (H) | |
| | (I) | |
| (J) | |
| (K) | |
| (L) | |
| (10) | (A) | |
| | (B) | |
| (B) | Custodian Agreement, dated as of March 3, 2008, by and between TIAA, on behalf of the Registrant, and State Street Bank and Trust Company, N.A.N.A.8 |
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| (14) | | |
| (31) | | |
| (32) | | |
| (101) | | The following financial information from the annual report on Form 10-K for the periodsyear ended December 31, 2017,2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Statements of Assets and Liabilities, (ii) the Statements of Operations, (iii) the Statements of Changes in Net Assets, (iv) the Statements of Cash Flows, and (v) the Notes to the Financial Statements. Any other required schedule has been omitted because the schedule is not applicable to the registrant.** |
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| ** | Furnished electronically herewith. |
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| (1) | Previously filed and incorporated herein by reference to Exhibit 4(A) to the Account’s Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed April 29, 2004 (File No. 333-113602). |
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| (2) | Previously filed and incorporated herein by reference to the Account’s Post-Effective Amendment No. 2 to the Registration Statement on Form S-1 filed April 30, 1996 (File No. 33-92990). |
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| (3) | Previously filed and incorporated herein by reference to the Account’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed May 2, 2005 (File No. 333-121493). |
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| (4) | Previously filed and incorporated herein by reference to Exhibit 1(A) to the Account’s Registration Statement on Form S-1, filed with the Commission on March 15, 2013 (File No. 333-187309). |
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| (5) | Previously filed and incorporated herein by reference to Exhibit 3(A) to the Account’s Registration Statement On Form S-1, filed with the Commission on April 22, 2015 (File No. 333-202583). |
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| (6) | Previously filed and incorporated herein by reference to Exhibit 3(B) to the Account’s Registration Statement on Form S-1, filed with the Commission on April 22, 2015 (File No. 333-202583). |
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| (7) | Previously filed and incorporated by reference to Exhibit 4(C) to the Account’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and filed with the Commission on November 12, 2010 (File No. 33-92990). |
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| (8) | Previously filed and incorporated herein by reference to Exhibit 10(B) to the Annual Report on Form 10-K of the Account for the fiscal year ended December 31, 2012 and filed with the Commission on March 14, 2013 (File No. 33-92990). |
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| (9) | Previously filed and incorporated by reference to Exhibit 4(D)(1) and 4(D)(2) to the Account's Registration Statement on Form S-1, filed with the Commission on March 21, 2017 (File No. 333-216849). |
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| (10) | Previously filed and incorporated by reference to Exhibit 4(E)(1) and 4(E)(2) to the Account's Registration Statement on Form S-1, filed with the Commission on March 21, 2017 (File No. 333-216849). |
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| (11) | Previously filed and incorporated by reference to Exhibit 4(F)(1) and 4(F)(2) to the Account's Registration Statement on Form S-1, filed with the Commission on March 21, 2017 (File No. 333-216849). |
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| (12) | Previously filed and incorporated by reference to Exhibit 10.1 to the Account's Current Report on Form 8-K, filed with the Commission on March 1, 2018 (File No. 33-92990). |
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| (13) | Previously filed and incorporated by reference to Exhibit 4(G) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 15, 2018 (File No. 33-92990). |
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| (14) | Previously filed and incorporated by reference to Exhibit 4(H) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 15, 2018 (File No. 33-92990). |
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| (15) | Previously filed and incorporated by reference to Exhibit 4(I) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 15, 2018 (File No. 33-92990). |
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| (16) | Previously filed and incorporated by reference to Exhibit 4(J)(1) and 4(J)(2) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 14, 2019 (File No. 33-92990). |
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| (17) | Previously filed and incorporated by reference to Exhibit 4(K) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 14, 2019 (File No. 33-92990). |
ITEM 16. FORM 10-K SUMMARY.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant, TIAA Real Estate Account, has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on the 15th12th day of March, 2018.2020.
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| | TIAA REAL ESTATE ACCOUNT |
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| | By: | TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA |
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March 15, 201812, 2020 | | /s/ Carol W. Deckbar |
| | | Carol W. Deckbar |
| | | Executive Vice President, Institutional Investment & Endowment Services |
| | Chief Product Officer of TIAA Financial Solutions, Teachers Insurance and Annuity Association of America (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed by the following trustees and officers of Teachers Insurance and Annuity Association of America, in the capacities and on the dates indicated.
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| Signature | | Title | | Date |
/s/ ROGER W. FERGUSON, JR. | | President and Chief Executive Officer of Teachers Insurance and Annuity Association of America and Trustee | | March 15, 201812, 2020 |
/s/ CAROL W. DECKBAR | | Executive Vice President, Institutional Investment & Endowment ServicesChief Product Officer of TIAA Financial Solutions, Teachers Insurance and Annuity Association of America (Principal Executive Officer) | | March 15, 201812, 2020 |
/s/ VOIRGINIAM. WLUSEUNILSON S. SALAMI | | Senior Executive Vice President, Chief Accounting Officer and Chief Financial Officer,Corporate Controller of Teachers Insurance and Annuity Association of America (Principal Financial and Accounting Officer)
| | March 15, 201812, 2020 |
/s/ RONALD L. THOMPSON | | Chairman of the TIAA Board of Trustees | | March 15, 201812, 2020 |
/s/ JEFFREY R. BROWN | | Trustee | | March 15, 201812, 2020 |
/s/ PRISCILLA SIMS BROWN | | Trustee | | March 12, 2020 |
/s/ JAMES R. CHAMBERS | | Trustee | | March 15, 201812, 2020 |
/s/ TAMARA SIMPKINS FRANKLIN | | Trustee | | March 12, 2020 |
/s/ LISA W. HESS | | Trustee | | March 15, 201812, 2020 |
/s/ EDWARD M. HUNDERT, M.D. | | Trustee | | March 15, 2018 |
/s/ LAWRENCEH. LINDEN
| | Trustee | | March 15, 201812, 2020 |
/s/ MAUREEN O’HARA | | Trustee | | March 15, 201812, 2020 |
/s/ DONALD K. PETERSON | | Trustee | | March 15, 201812, 2020 |
/s/ SIDNEY A. RIBEAU | | Trustee | | March 15, 201812, 2020 |
/s/ DOROTHY K. ROBINSON | | Trustee | | March 15, 201812, 2020 |
/s/ KIM M. SHARAN | | Trustee | | March 15, 201812, 2020 |
/s/ DAVID L. SHEDLARZ | | Trustee | | March 15, 201812, 2020 |
/s/ MARTA TIENDA | | Trustee | | March 15, 201812, 2020 |
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT
Because the Registrant has no voting securities, nor its own management or board of directors, no annual report or proxy materials will be sent to contract owners holding interests in the Account.